Transcripts For CNBC Squawk On The Street 20121116

Will come here and speak for a couple hours. Day one of negotiations. Nobody is expecting huge news but as jim has already tweeted out this morning, the market is going to look for signs that this tone of compromise that weve heard so much about all week long is that for real or are talks going to break down in early stages . The market specifically is going to depend on that tone today and well bring that live when the meeting happens a little after 10 00 a. M. Weve seen reaction of futures to the possibility of a deal. Weve been down for six of the past seven days but the dow this morning implied open is up 33 points. Sapp looks s p looks to add fiv. Here we have italy down threequarter percent and mixed bag for the rest. Carl . Okay. Were going to go to the road map this morning. That is where carl is in washington d. C. Reports this morning that hard decisions surrounding deficit reduction could be kicked down the road until 2013 in favor of a smaller package of tax increases and spending cuts. What does that mean for the markets . Already since the elections the s p has lost more than 600 billion in market cap. Weve got stocks down six of the last seven sessions. A tale of two retailers this morning. Gap continues to show signs of a turnaround posting earnings at top estimates and raising guidance. Sears holdings slumps on its earnings miss. Wi at 10 15 eastern, president obama will host senate and house leaders to discuss ways to solve the fiscal cliff. Sources telling tthe wall stret journa journal, white house are in advance internal discussions to replace sweeping spending cuts set to begin in january with a smaller separate package of targeted spending cuts and tax increases and this certainly changes the story entirely in terms of what were looking at over the next few weeks if this is true . Why is that . We are just going to live with uncertainty until 2013. If we have a smaller package and we kick the can down the road so to speak to 2013, we dont have any clarity. Im saying that this morning weve got i see. We have this kind of plan. This is a 1990 playbook here. I know its an old playbook. That was iraq kuwait. Every friday there was a Short Covering rally because there was a belief that over the weekend there would be some agreement. Im not saying that this is saddam versus president bush. If you go over that period, its relevant. You hear maybe theres a deal. We had multiple moves on friday from 3,000 to 2,300 and back to 2,600 on the dow on percentage bases are important. They all started like this. They would float something really good. And really good meaning it would avoid the cliff in this case or mean a rapid pullback from kuwait. A lot of Short Covering because shorts have done a magnificent job. Made a lot of money. 8 decline from the top. What were stuck with is a world where the shorts cover and it looks like this might be a deal and theres huge disappointment and thats how you have up friday, down monday. Like what we saw with europe. You go into the weekend worried something will fall apart in greece and then there may be relief on monday. Are you a proponent of the theory they can Say Something positive enough where we reverse some of the pain from this week . I think the process will be played out there will be people like the republican from idaho saying his job is to stop us from rising above. Hes saying that rise above thing, this is the way i read it. Cnbc is doing it and its nonsense. Whats important is to stop anybody who might go for compromise. These people shoot down what happens today and they make anybody who was fooled into buying realize it was a thing that was floated and didnt work. Anything can happen. I want to caution people that there are going to be many moments where it seems like theres a deal and people fight the deal which is why we have featured the notion of rising above. The fighters have to give way. Carl, i do think its important in terms of what were hearing from the journal to start thinking i mentioned this yesterday. I dont have sources that journal has in washington but i did have a couple conversations with Senior Business leaders who at least seemed to be aware of the policy making choices that were coming. This idea that well find ourselves moving this debate into next year, there may be some sort of package of smaller spending cuts, excuse me, in terms of pushing off sequestration but we have to extend the tax cuts for some small period of time. Well see whether that starts to enter the mainstream conversation at this point, carl, and perhaps youll pick things up today when youre down in d. C. About that. That of course, jim, moved things every day it will be like this. Carl mentioned jim cramer on twitter. It hit at 3 30 in morning. This is a crisis. Im trying to get my arms around it every day figuring out what the analogs are and help people with this stuff as you are and everyone is. I come back to say were so oversold that any news would be a better time to sell if you dont believe in washington and would be a reason to hold on. You have to have a view. You have to have a view about whether theres possibility if people will rise above and compromise. Everyone is stymied about the idea that they feel pressure. Carl, do they feel pressured . Do you see anyone or hear anyone that says i was against compromise. Theres so much pressure going on, i am more procompromise. Ive not heard that publicly. You know the difference so well about whats being said publicly. There are traders, im sure you are aware, who think theres a deal thats basically cut but that both sides are trying to get respective parties in a position to digest it. Thats how wide the expectation is on this thing. There are Hedge Fund Managers who i have spoke to even today saying im ignoring most of this and im not pulling back really. Im just focused on trying to figure out what to do in this environment like i would be in any which brings us to the stock market. Already sending a message to washington perhaps about the necessity of a deal on the fiscal cliff. Six out of the last seven sessions have been negative. Down more than 5 on fears about it but youve been bringing up the Market Action similarity to a certain extent to 20 plus years ago. A year ago lets not forget we were starting to deal with europe. It did not end until we got ltro, longterm refinancing operations from ecb that said were going to its not going to go bankrupt today. Thats when we were watching italy above 7 . Today those tenyear yields up 4. 5, 4. 6. Talk about how italy has come. The economy is better than other countries. Northern part of italy is increasing Industrial Production. Thats impressive. They never gave up. Italian banks some are happy with no problems funding. The reason i go back which is of the analogy why i go back that far. Thats a tuesday, wednesday thing in europe. You focus on when ecb meets. Here its the belief theyll have secret sessions. Something is going to happen thats truly remarkable. And then when you dont have it, you come in on monday and say what were we thinking . What were they thinking . Thats what i here. The upside to any mini deal on fiscal cliff is there is some clarity surrounding tax policy. What kind of cuts will we have . What kind of tax increases will we have when it comes to Capital Gains and dividends and that will alleviate pressures on the market or give investors a clear road map on why they are selling and what they should sell and when they should sell in terms of a time frame if theres a silver lining. At this point a bad known is better than any unknown. It allows executives to plan. Tax planners to recommend ideas. Allows people at home to say i see i have to sell apple and ill sell a d and net the gain and protect myself. These are things that would lead to more rationale market where people might be opportunistic. Right now theres no reason to be opportunistic. Deere was on today. Sure enough, what does the executive say from the ceo . I got to cut back. I got to cut back because of the fiscal cliff. I think thats kind of what youre going to hear from now. David cote told you that. A parade of ceos who are cautious. Cote has a good business. I mention deere and honeywell, these are companies that right now were growing. And so they had a reason to hire. Honeywell has done a remarkable job. Made an acquisition in refining dirty oil. Talk about something we really need. Making shale gas into liquified natural gas. Thats a growth business. He should be the guy who is bringing people to work. For every eight people who retire, hes hiring one back. He should be hiring eight back but he says, listen, i got to do this right for the shareholders. On january 1st, its not as though the world will come to an end if we dont get a deal. People are still going to spend. They may just not spend quite as much or perhaps pull back down in anticipation of not spending much then. Its unknown enough that it feels like its armageddon. You go on twitter, how many geddons do you have . You know, whats important is that we dont know. We dont know and we have these discussions. We have so much to talk about. We havent got to retailers. Gap and sears in just a moment. Meantime, theres more Economic Data for wall street today. Breaking news on Industrial Production just moments away. Stay tuned for that. Also ahead, Senate Budget Committee Chairman kent conrad, todays fiscal cliff talks and what he thinks should be the main parts of a deal. And a Wireless Networking firm thats taking on cisco is going public today. Well talk with selina lo after the companys first trade. Well have to see where we open. More squawk on the street is straight ahead. For many, nexium helps relieve heartburn symptoms caused by acid reflux disease. Osteoporosisrelated bone fractures and low magnesium levels have been seen with nexium. Possible side effects include headache, diarrhea, and abdominal pain. Other serious stomach conditions may still exist. Talk to your doctor about nexium. Well, having a ton of locations doesnt hurt. And my daughter loves the santa. Oh, ah sir. That is a customer. Lets not tell mom. [ male announcer ] break from the holiday stress. Fedex office. Welcome back to squawk on the street. Rick santelli here. We are ten seconds away from october. Industrial Production Capacity utili utilization. Here we go. 77. 8. Thats really a big drop when you consider our last look was 78. 2 in expectations for a number very close to 78. 2. Some had it as high as 78. 3. If we now look at the production side, that was down 0. 4. Down 0. 4. Our last months look was up 0. 4 revised up 0. 2. This is split in half. Thats multiples less than the expectation of 0. 2 in october. On production side unlike isms weve seen, this number isnt reflecting a positive outlook and well have to monitor the response of the marketplace has been on the light side but remember, deal, no deal, its friday. Its been a wild week. We have issues in middle east. Traders down here will be conservative for the trade today. Look for trend reversal. Melissa lee, back to you . Thank you very much. A pair of retailers in the spotlight this morning. Gap raising fullyear Earnings Guidance posting a jump in Third Quarter profits. The apparel retailer reporting an increase in north american sales and stronger profit margins. Sears holding reporting a narrower than expected loss but a decline in sales at sears and kmart stores. Two different retailers and two different stories and one thats turning around being the gap. One thats struggling and that being sears. Numbers from gap are extraordinary. This is a remarkable job. They did that accelerated buyback. Old navy up 9 . These are among the best numbers ive seen. Sears i actually know that no one likes sears. I understand that. Sears, the actual stores, were down less than 2 for Comp Store Sales. Contrast that with jcpenney down 26. Sears domestic down 1. 6. Kmart was down 4. 8 . Doesnt seem like a turnaround. A slow, steady decline they are managing to some end thats hard to understand but involves trying to generate cash along the way. Its in a better position than it was a year ago when there was real concern at one point that they managed to stem about factors and whether they could get financing for christmas and selling season. Whats the strategy here . Whats the end game . The end game is you figure out what are 200 or 500 stores that actually make money and you put chips on them. Thats what i said they should do for a long time. Many years ago i had my fanciful view about what should happen there. Sears has a good brand name. I dont shop there anymore. Like many people i feel like the time has passed by. I do think they do generate cash. They made a series of spinoffs and theyve done a lot of very creative things. This new ceo came in. Its not a disaster. The entire strategy seems to be generate enough liquidity and potentially generate enough cash at some point until what . I dont know. In canada you have to wonder in terms of sears canada was down 5. 7 . Target is making a giant push into canada as well. Will sears feel more pressure on the Canadian Business . Will that interfere with the overall objective of having 1 billion in liquidity. Gary chronicled this better than anybody. Number one in his accounting class in canada in the 80s. Longer than anybody. Whats he saying . Dollar went to 1,000 . He said we dont feel liquidity is an issue for sears. It does have assets it can spin off. The balls stay in the air. People get shorted and they keep hoping that something will go disaster and it doesnt. Again, jcpenney is the end game of when you dont have the right merchandise and you dont have the money. Right. Amazingly sears stock is a double so far this year. Despite all of with the short interest, et cetera. Lets not forget. Controlled company of course. All right. You mean like communist chinese control . Yes, actually. Just like that. Last night on mad money, cramer gave you top five reasons not to sell everything right now. How should you make the run for profit . Thats coming up next. And ruckus president and ceo selina lo will join us. More squawk on the street just you a hid. 6 30 before the opening bell to close out a difficult week if youre long at least on wall street. Time for cramers mad dash. It will make you happy. I dont know if dell shareholders will be happy. The company is struggling for relevance. Pc sales. 19 decline year over year. Very negative for windows 8. They didnt say that. Negative for intel. Again, Hewlett Packard, dell, time is passing them by. You are getting hit by two things. Corporate side where they sell a lot of computers. Fiscal cliff concerns. Perhaps not spending as much. We know that. Then you have consumers who are just saying why do i need another pc . Bring your own device. Thats been one. Michael dell said that would not happen. Its clearly happening. What do you do here . Theres a lot of cash. Sorry. Thats where it is going. Why apologize . I dont know. I think you have to go. I think you need to raise on debt. Theres a lot of stocks whether it be nokia or research in motion. These are of our era. Its where we are in the cycle. Some companies do not have other than cash, a reason to live. Lets look at this. This company has taken its future into its own hands. A game operator, some companies are not sitting down. Theyre tied of it. Fiscal cliff. Whatever. Will vegas come back . Right. Lets stop letting the fates dictate and get control. I applaud Penn National gaming for doing the right thing. A lot of Companies Choosing to do that. Whether Outdoor Advertising or gaming. If they have the real estate, theres an opportunity to do it and make it tax free and they go for it. One reason you want to be in. Your friend, jeff, decided to become a reit. Good. Companies do take matters into their own hands. Dont sell every stock because of the fiscal cliff. Five minutes until the opening bell. Were back after this. [ 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. All right. Welcome back. Were gearing up for that last opening bell here for the week on this friday. Ruckus wireless ipo set to debut today. A lot of people here at the face of the podium and a lot of black labrad labrador. Not real ones. Stuffed animal dogs. Very large ones outside. Very large. Not real also. Big ones. Still. Out there. But one of the few ipos top bra brave the waters this week. Ruckus priced at the top end of the range. One of those companies that gives you because of the overload of data, gives you a wifi alternative and great blood lines. I think that this frontier and at t decided to go back and spend money to wipe competitors out. A name like ruckus and can others choose to withdrawal because of the choppy waters . Its symbolic of whats going on more broadly. I cant remember a name we have seen here that hasnt gone up in the first trade in a number of weeks when they first go public whether a Growth Company like this one or deleveragine deleverageing exercise as we have seen. Ruckus has growth. We want growth. Theyll give it to us. We lost about 600 billion in market cap since the close on november 5th, the night before the elections. Its been a very rocky ride down 5 overall for the markets. Down six of the past seven trading sessions as we get set to reopen the bell here. Ruckus wireless celebrating the ipo today. Well speak to the ceo in just a few moments. A Alzheimers Association of america is at the nasdaq. Right now apple looks to open lower initially. At t is beginning to sell the new ipad mini and the ipad 4. We could see some numbers. Its always fun to see all of the new ipad applications. Theres a terrific article in usa today talk about how shoppers use it. They give you coupons. Nice company where they are trying to interact with the people. They help retailers interact with people in the store and give you coupons. This is again another growth business. Paypal very involved in that. The ceo has talked a lot about that. The ability of merchant to know who is in the store at any given moment. One day well look back and say why are they putting inserts one of the worst jobs i had in my career was putting inserts into the sunday papers. Ive done that too. Ive done that too. I used to assemble the New York Times when my parents owned a drugstore when i was growing up. My sister and i would assemble the times and put it in the news section the next morning. That was valuable thing. Money saving coupons. Exactly. Money saving coupons. They still stick them in the newspapers now. Jcpenney relies on them. They did and they didnt. We dont need to snip. Starbucks is a nice mover today given the generally flat market. Starbucks is up threequarter perce percent at this point. Starbucks getting more into the tea game. They intend to keep those outlets open. No rationalization of real estate. Howard schultz on fast money told us that customers are completely separate. I thought that was an interesting interview. The resistance by analysts to this was remarkable. No positive news. When i spoke to howard, those of us who have shopped there as i have, my daughter likes tea. She doesnt like coffee. I said lets go get a cup of tea. The problem is that it doesnt serve tea. Howard noticed that. If you actually serve tea that could bring a new leg, which is why i thought it was brilliant. Do you think if they served tea, people would buy more tea and more tea gadgets. I said i would like to have a cup of tea. Lets get lipton going. They didnt serve it. Howard is a brilliant man. I think that people sell him short. Thats not been a great game to play. I think that the acquisition is brilliant. People dont think it is. I think theyll be wrong. Its a premium that investors are leery of. 53 premium the day before the announcement of the deal and a company that went from 46. You wonder what howard and starbucks sees at this point that could turn it around. He does. Shares of sears which we of course have discussed are down sharply over 8 right now. Shld shares down right now after what was a quarter in which Comp Store Sales were down but i cant really remember a quarter where that hasnt been the case. I think its been a huge number. A big scathing quarter so sales have dropped off. I dont really we tend to see big moves on the stock to see it recover one way or the other so often. Great Hedge Fund Manager doing a lot of great things. Im watching nike today. Announced a 17 boost in the dividend. I want to talk about something thats so ridiculous and facetious to some degree. If apple because of the bizarre nature of what the individual is holding, if apple did a 10 for 1 stock split, the stock would go up. Of course youre not creating any value. Do you remember during 1997, 98, 99 people would hear about a stock split and stocks would go up 20 , 30 , 40 . People somehow thought it was adding to value. I remember three for one stocks that cocacola did when they realized they had a retail base and followed by pepsico stock split. The individual says, wow, okay, and it is excitement sorely lack. Is it what we want versus Buffalo Bills playing Miami Dolphins where they could use five stock splits. I would cut back and say we need a pulse. Nike gave us a pulse today. Just a stock split without the Dividend Increase you would be less excited . Apple Board Meeting they announce a dividend boost and stock split and people say why did i sell apple . Again, it does not create value. It does create excitement in a market where the excitement went out when we were working in 98, 99. There have been moments of sheer panic which is kind of exciting. Yeah. Speaking of excitement, a lot of excitement on the floor here. You can see the huge crowd surrounding post 9 just looking over ruckus will debut and lets head to bob pisani because i think were starting to get some sort of indication at this point. We are. 15 to 15. 25 are indications. You do see duncan over there. I dont know if you can see sell selina lo. Shell make the first trade as we always do here. First 100 shares done by the ceo traditional. Price talk 13 to 15 today. Pricing top end of that range. Did you see the pop in the futures . This mini deal some are calling it or no deal at all. A rally on reports of a mini sequestration deal. This is according to the journ journal here. No cuts in medicare. No medicaid. No discussions of any grand bargains. Nothing like that. A lot of people said theres no reason to rally on this particular deal. Others said, remember, the big point here is the white house is concerned about spending cuts. Thats the weak part for them. If they can suddenly get some deal on spending cuts even a mushy mini sequestration deal, that is a big plus for them and then move on to address the issue of tax hikes for the wealthy. Thats the easy part of the overall deal. Traders are in a tough position. Should hear the frustrations i hear. Its very hard to play the fiscal cliff right here. Its dangerous to go to cash right now because of the president announcing over the weekend we have some kind of deal even mini sequestration markets will rally and youll get hurt. If you stay out here and if you completely have nothing to do with the market and youre also in a lot of trouble. Dangerous to say in and dangerous to stay out. Traders are reactive now and not proactive. If we come in monday and market is down 200 points, im going to buy into it. Up 200 points, im going to sell into it. Theres reactive trading going on rather than proactive and fancy options going on here. I was asked about office max this morning. It was up 18 , 19 in preopen. Up big now. Its not because of any thanksgiving deals. There was ipo announced and they could get a significant cash payout from a ipo. I dont have exact numbers. Office max is up very big today on that. Finally, ruckus here. 15 to 15. 5 right now. Were not quite there in terms of opening yet. Back to you. Again, i was talking about that with office max. Companies are tired of where their stocks are. They do have firepower. Balance sheets are good for the most part. Rick santelli at the cme group in chicago. Go ahead, rick. If you look at a twoday chart of ten years, you can see that were hovering on that 160 area. Rates have started to creep up just a little bit. Maybe optimism that the weekend effects will be soothing to the downside that weve seen in equities. When you open the chart up to oneweek chart, definitely were down a little on the week. Thank god for computer generator scaling. In reality every single day this week has been in a closing range of two basis points between 1. 59 and 1. 61. Talk about consolidation. What kind of conclusions am i going to draw from a market thats so tight at these levels in the fixed income market, treasury market, the safe harbor market, my conclusion is theres not a lot of change in the landscape. Thats what treasuries are telling us. Whether its europe or whether its whats going on with the fiscal cliff. Where we do see Proactive Movement is based on politics in japan. Today is one of the few days this week that the dollar isnt rallying. The twoday charts its not give be up ground it gained and when you look at the oneweek chart on the dollar yen, forget about scaling issues here. Its a whopper of a move. Jim, back to you. Fabulous report. We were talking about japanese being buyers. Treasuries. Its moving up to almost number one on the list behind china. Lets check with the latest news in energy and metals and go to Sharon Epperson at the nimax. Jim, its all about the middle east. Thats what traders are focused on at the moment. Its the reason why were looking at wti oil prices above 86 a barrel and brent crude moving higher as well. As we continue to see fighting escalate in the gaza strip as we continue to watch what israel and what palestinians are doing in the area and the fact that there does not appear to be any ceasefire on the horizon although egypts Prime Minister is in gaza today urging some international cooperation. Were also looking at the fact that oil prices here in the u. S. Have basically erased this weeks losses because of the gains that were seeing currently in the oil complex. Were also hearing reports about iraqi enjoy saying that arabs should use oil to press israel over gaza. Those headlines helping to cause this bid in the oil complex. In the gold market, weve seen steady declines over the last several sessions and now a little bit of stabilization in the gold market. There are concerns based on the World Gold Council report about demand particularly out of china. Weve seen the cme lower margins for gold and silver so that may have an impact on the trading activity from here. Carl, back to you at the white house. All right. Thanks so much. In a half hour from now the president will hold key meeting with top congressional leaders on solving the fiscal cliff. Well be over this crit aleveic event. Both sides of the aisle will be covered. Squawk on the street is coming right back. 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. 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Now low on dell. Now down more than 7 and the bloodshed is being felt with Hewlett Packard down 2. 4 as well. Everything is going against them right now. Tough competition from apple and others. And people just arent using pcs as much. When you get that kind of decline in pcs and even the emerging market numbers were terrible. Theyve got server business that had been their hope. I struggle for a reason to own dell other than the fact that they have a good billion sheet. I think that time is passing them by. One of the things that is so hard for people to grasp is that there will be a name like dell and theyll say that was always a great trader, great investment. Dell is one of the stocks that during the 90s would double and double. Remember, bunncr reinvented its and honeywell reinvented itself. So did ibm. Im just saying that when you see Companies Just because you know that they have a big brand name, whether they are nokia, which is trying to reinvent itself or rimm, dont think thats necessarily an entitlement. Jcpenney, an entitlement. Just because you know the brand. I remember the letter z was walworth. We thought who would take them private . Best buy. Thats this years walworth. Who will take them private . Theres no reason why Companies Must necessarily live. Youre right. The larger story in covering business as we have for so long is always a fascinating one to watch the companies that are able to embrace change and most often during a period thats actually not bad for them. When you have a leader who is able to say we need to go over here even though right now looks okay here. Thats hard to do. Really hard to do. Thats perhaps why there is some questioning the apple store. If there are questioners of the apple story, apple is in a position where its not dominant. Comfortable in terms of cash position. Is it identifying the next big thing down the line . We dont have clarity on apple tv yet. Some analysts say next year. We dont really know what that product is and whether or not thats going to be the next thing and so at this point, what do you do . By the way, you always have to innovate. You can tell that to hostess. You cant just keep having wonder bread when people want to eat something else. Why mcdonalds domestic president lose the job . When you go through the fine print, no new innovation at the stores. Bacon cheese didnt work. Everybody has to continually have some reason to go. This is where you want to come to costco because youll be surprised. In the interim youll buy 60inch tv and buy it there and not sears. Or best buy. These are clever merchants to figured it out. Ruckus has opened for trade. Looks like it is trading lower at the getgo. I dont know if bob pisani is out there in the crowd now. Price talk with 13 to 15. It was wobbling around between 15 and 15. 25. Theres celeselina lo right then the bright red dress. The ceo and quite noticeable here. Ruckus wireless play essentially. 13 to 15 price talk. Priced at 15. Opens at 15. Right now trading at 14. 81. Back to you. Thats a bummer. Well speak to ms. Lo in just a few minutes on the heels of this. Of course their competitors here are cisco systems, Hewlett Packard. Cisco had a good quarter. Its up. Its still up. Were still up. Thats not bad. I keep pointing out that im beginning to see the circle into the companies that will deliver numbers no matter what. Lets go back to companies that did well in previous debt ceilings wrangle and wrangling. Thats going to be where the money is going to go to. Well talk to the ceo of ruckus, celeselina lo opening a. Now trading lower. Much more squawk on the street straight ahead. [ male announcer ] the way it moves. The way it cleans. Everything about the oralb power brush is simply revolutionary. Oralb Power Brushes oscillate, rotate and even pulsate to gently loosen and break up that sticky plaque with more brush movements than manual brushes and even up to 50 more than leading Sonic Technology brushes for a superior clean. Oralb Power Brushes. Go to oralb. Com for the latest offers. Ruckus wireless celebrating its ipo today. Trading lower by 2. 5 right now. Joining us is selina lo. Great to have you with us here at post 9. Hi. So many other ipos this week withdrew because of market conditions. You opened at 15 but the stock is trading lower. Any regrets . Any thoughts about possibly delaying this thing prior . No. We had had incredible reception when we were on the road. We had some high quality investors. I believe that this we cant control the economy or the stock market but we feel good about our economy and the level of interest. Ms. Lo, can you talk about who your competitors are and one of the things weve been talking about is dell is going by the wayside. Sears. Who are you replacing . Who would i have used before and now i use you . We make wifi equipment for Service Providers and enterprises. Our equipment is extremely reliable and easy to deploy. And now with so many mobile devices and the whole interest in mobile internet, we are helping Service Providers add capacity to the network. So were actually replacing older wifi equipment but were adding capacity and not replacing anything. So what differentiates you . I dont understand what differentiates you from much larger competitors like cisco. We have some unique technologies, one of which is a Smart Antenna system that can in realtime steer signals around interference. With the increasing number of wireless devices and number of networks out there, there is just a lot of noise in the air and everybodys work slows down when that happens. Our Smart Antenna technology is able to in real time go around interference and let devices transmit in a reliable consistent way and let mobile users get the best experience. So Service Providers who are overloaded at various times, maybe at t overload and how do they signal that it is your turn to help us . Our systems can learn by itself. In realtime it adapts to the environment. Nobody needs to turn any knobs or touch anything. In terms of your geographic revenue mix, 65 of sales come from foreign customers. What are geographies youre most exposed to . We have geographically distributed. Our business came from geography. Were not dependent on any particular region. However, this whole mobile internet is really a Secular Movement that crosses all regions as well as different markets and so we are not dependent on any single market. About 90 million in net proceeds to the company from this ipo. What are you going to do with the money . I think we will buy some shoes. No. Thats a lot of shoes. Theres a lot of investment to be made. We feel very strong about the market so in the near term we are going to certainly invest in our engineering and sales and service but also i think, you know, there are lots of technologies in adjacent markets that are interesting. We may want to grow faster than we would thank you for stopping by. Selina lo, ceo of ruckus wireless. Latest ipo at the new york stock exchange. Use money to hire people. Like that. What do we have coming up on mad money tonight . We have a bunch of new restaurants that have come public and were going to tell you which ones are worth being in and which ones you should sell. Ill tune in for that. Definitely. I hope so. Tune in at dinner. Thank you, jim. Have great weekend. See you tonight. Lets head down to carl in d. C. I cant wait to hear on monday where jim shopped over the weekend, guys. In the meantime, the economy and your money at stake as the president and congressional leaders get ready to begin talks to avoid the fiscal cliff. Well get views from opposite sides of the aisle in the next hour. Republican senator mike lee of utah and then later senator kent conrad, democrat from north dakota. Dont go away. [ female announcer ] today, its not just about who lives in the white house, its about who lives in the yellow house, the green, and the apartment house, too. Today we not only honor the oval office, but we honor the cubicle, and the home office as well. Because today its about all of us. And no matter who you are, youre the commanderinchief of your own life. Ive got a nice long life ahead. Big plans. So when i found out medicare doesnt pay all my medical expenses, i got a Medicare Supplement insurance plan. [ male announcer ] if youre eligible for medicare, you may know it only covers about 80 of your part b medical expenses. The rest is up to you. 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Well sit down with a member of the coalition Organization United for respect at walmart for his thoughts on walmarts wages, health care and black thursday policy. Apples market cap dipped below 500 billion as shares sit down more than 20 in the last month alone. Now below 520 a share. Should you buy this dip in the stock . First, lets head back to d. C. Where of course carl is anchoring our coverage there. Two sides getting together on the fiscal cliff within the next 15 minutes. Not far away from the arrival of boehner, mcconnell, pelosi and reid. John harwood made his way to the north lawn. Good morning to you. I was thinking this morning. You have made good calls this year. You said it was going to be romney as nominee when people thought newt or perry. You th i got to ask you this morning. Does this get solved before there is some serious before the countdown clock is dangerously close . I think so actually. I dont think it will get solved by december 31st. I think there will be some mechanism put in place to get the country and economy past december 31st. Some way of avoiding the sequester. It is possible that the tax cuts will expire with no solution but i think we will get one early in 2013 probably around the time that the debt limit would need to be raised which would be in february. A journal story about the white house having talks. Is it filler ahead of the real news today. Is it something of an offering to civic organizations coming later on . What does it mean . Everyone is looking at alternative to the sequester. They want an alternative plan to avoid the sequester. Both sides want to do that it im hearing in my ear that harry reid arrived for the talks. Harry reid of course is one of those who has drawn a hard line since the election. Everybody, white house and democrats as well as republicans, have got to find a way to avoid the sequester because it was designed so it wouldnt take place. Any doubt in your mind that rates go to 39. 6 . Yes. The president , i dont think, has a principle objection or principle reason for insisting on 39. 6 per se. He wants more revenue from the top end. What he said in his News Conference the other day is hes skeptical that you can get the revenue required by getting rid of loopholes and deductions. My guess is that you end up in negotiated solution that involves loopholes and rate going up partway to 39. 6. Theres been chatter this week that treasury and this is just a rumor, might tell businesses and their payroll departments dont change your withholding calculations after the end of the year. We may go over through new years but there may be a solution quickly enough where you dont want to revamp your computers again. That supports the idea that i mentioned which is you may go over the cliff for a short period of time while they negotiate a solution, but i do think were going to get one. With all of that we await the arrival of Speaker Boehner. Harry reid has already shown up. I believe that is the Vice President making his way to the west wing not too far from here. Melissa, over to you. Were going to bounce back to headquarters. Breaking news here on gm. Kayla tausche has the latest. I learned from my sources that gm and ally are near a deal. That deal is set to be announced monday. 4 billion for operations of alley a ally in europe. Its critical for gms operations there and weve been expecting this since ally put International Operations up for sale. That will be announced monday and ally will have 9 billion to repay treasury for its bailout. Back to you. Thank you for that. Kayla tausche at headquarters. With one week to go before the biggest shopping day of the year, lets get back to earnings movers this year. Shares of gap higher. Retailer look likes its on a roll. Roxanne has a mutual rating up 37 a share. Good to see you the. Thanks for having me. Do you believe the turnaround story is firmly in place at the gap . They are making a ton of progress. Third consecutive quarter where all three divisions are comping positive. Over the last 12 years they comped positive for 2 of 12. This is certainly a good start. Were going to be continuing to look for momentum to continue. Really key is going to be whether or not traffic can also turn and whether they can get new customers back in the store. Are you getting a sense at all whether or not its gaining back market share from the competitors to which it lost the share . Namely the likes of a j. Crew or h m . I think what is really important to keep in mind is that for every comp point that gap does get back, thats hundreds of millions of market share thats lost by someone else. So for retailers that arent on their game as much as they were before, we are seeing that the misses are a little bit bigger. You could look to a number of retailers thought the second that have underperformed this year and probably in part because of gap. The stock price has been as you know better than i has been phenomenal yeartodate up 80 . The question particularly when you see how it has come back down over the last month has got to be whether we have run out of momentum on the upside. I see they are throwing in the towel on the sell today. That may be the last shoe to drop in terms of upward momentum. Management raised guidance for the full year. We took our numbers up quite a bit for next year. Knowing that gap is going to be one of the biggest beneficiaries of sourcing costs reversals, were looking for a sizable margin gains not only in Fourth Quarter but early next year and if you were a believer that the comp momentum is in early innings. Story has legs. Thats something to look out for. We dont necessarily think the run is done. In terms of trying to figure out where they are gaining market share from, roxanne, if you look at banana republic, same store sales up 6 . Who is losing at the gaps expense . You know, its really hard to pinpoint specifically who could be losing. Its a pretty diverse retail backdrop. You could say to some extent its a little bit at the Department Stores and really it varies across Specialty Retail space as well. Could it be a jcpenney . Thats not normally cited as someone who is gaining market share from jcpenney but it does seem that perhaps jcpenney same store sales decline of 26 in the latest quarter. Its so big that maybe they are losing and just leaving customers to others. It sounds like jcpenneys problems may be selfinflicted. I dont cover them. My colleague does. Whats your favorite going into the Fourth Quarter . My top picks have been tjx and ross at this point. Okay. Good to speak with you. Thanks for your time. Questioning what is really at stake during the fiscal cliff negotiations in about six minutes time. Well take you back to d. C. For the view from the heart of the Republican Party with the senator for utah. Walmart making headlines again as thousand was employees vow to hold protests leading up to black friday in advance of retailers being open for thanksgiving day. Well hear from an employee in just a few. Heres another fiscal cliff fact as we head to break. Over president Barack Obamas first term, the federal debt to gdp ratio increased over 19 and is projected to increase over 20 by the end of his second term. [ male announcer ] dont just reject convention. Drown it out. Introducing the allnew 2013 lexus ls f sport. An entirely new pursuit. [ male announcer ] this is karen and jeremiah. They dont know it yet, but theyre gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, theyll find some retirement people who are paid on salary, not commission. Theyll get straightforward guidance and be able to focus on other things, like each other, which isnt rocket science. Its just common sense. From td ameritrade. I have said hes wandering the earth and what can he do . He cant murder you. He cant burn your house. Only thing can he do is defeat you for reelection and that means more to you than your country, you shouldnt even be in congress. That was former republican senator alan simpson yesterday orrin closing bell with maria talking about governor norquist. The president s meeting on the fiscal cliff is happening this morning with congressional leaders from both parties scheduled to begin just about right now. Were beginning to see arrivals on the north lawn. Republican mike lee of utah joins us this morning from capitol hill. Senator, good morning. Good to have you. Good morning. Thank you. Good to be with you. I assume you heard what simpson said. Do you feel held hostage by the likes of Grover Norquist . Certainly not. Grover norquist is sometimes credited with this movement. Its not about governor norquist. Its about a commitment to the idea that people are overtaxed and that raising taxes only raising taxes on the top rate payers will inehurt the poor. Well lose 700,000 jobs even if we just increase taxes on the rich, on the top rates. If you raise taxes on the rich, it hurts the poor. Raise them on the poor, it hurts the poor. Thats the concern. Senator lee, its john harwood. Yesterday i led a discussion sponsored by the Bipartisan Policy Center on the fiscal cliff. One of the people i was talking with was the senator you defeated for reelection last year or two arizona ago in utah. He said two things about the fiscal cliff. One, that there will be a deal in the end that involves some tax increases and, two, one of the reasons for that is that the tea party, the influence of the tea party peaked and is declining. Do you think both of those things are right . Look, its difficult to predict whats going to happen. Im not going to claim to have the ability to predict what is going to happen. A lot of people disagree about what is or what isnt a tax increase. As far as the insinuation that the grassroots conservative Movement Gaining Momentum in 2009 has somehow peaked and is in decline is simply not true. Even after losing an election where all of the swing states except one went for the president . All three new republicans in the senate easily identified with the tea party movement. Democrats gained seats in the election. They did gain seats. And where we had tea party candidates, they well. We have to remember this is still the movement that brought about an historic shift in the house of representatives in 2010. We held onto nearly all of those. This is not a movement in decline. The fact is what you referred to as tea party is part and parcel of what is the Republican Party. The tea party is about conservative principles and Republican Party is the conservative party. Lets take your point of view that part of party is not in decline. Its been said that the tea party in and of itself is not a huge fan of millionaires or certainly not intent on protecting millionaires and they are more about smaller government. Why should your opposition to tax rates on the wealthy be so robust . For the exact reason i described a minute ago. When we raise taxes on the rich as young predicted , we kill 700,000 jobs. Those are not ceo jobs. Those are going to be americans living paycheck to paycheck. Hard working americans who are struggling to get by. We dont raise taxes because it hurts those that are most vulnerable. There are disagreements over what constitutes a tax increase. Are you saying that there are ways that the tax code can be reformed to raise additional revenue that you would accept and not consider it a tax increase . I dont mean dynamic scoring. Im talking about raising revenue that is in a straightforward way. Im certainly saying i believe in the need for comprehensive tax reform. There are those that could describe that as tax stabilization. That could give us a more steady revenue stream. We have to remember regardless of where the top marginal rate is, historically we demonstrated that we can produce only an average of 18. 5 of gdp for our income tax system. Thats true whether its at 35 as it is now or 75 as it was three decades ago. The trick is we need to find a stabilization mechanism so we dont have peaks and valleys. Last year we generated 14. 5 of gdp through our tax system. One of the main reasons it needs to be reformed is because of that volatility and will give us more revenue in that we get a more consistent stable source of revenue. Its got to be a good week to be young. All of the publicity theyve got from you citing their study and speaker citing their study. We keep hearing from Business People that say tax rates in and of themselves never altered their incentive to invest or to work harder. Other studies from hamilton project that basically hint the same thing. Are those people wrong . Are they lying . I dont think theyre lying. They may well believe that. The studies that i reviewed and studies i trust suggest that it does have an Economic Impact thats not a positive one. Now, president obama himself two years ago and a year before that himself indicated that in a time of economic downturn, its a bad idea to raise taxes. Its a bad idea to raise taxes on anyone. So there is pretty broad bipartisan consensus around the fact that when people are struggling and unemployment is as high as it is now, its not a good idea to raise taxes. An important day here in washington. Appreciate your time as always. Thank you. Senator lee from utah. Melissa . All right, carl. Walmart kicking off black friday earlier than ever this year Opening Stores at 8 00 p. M. On thanksgiving day. Employees arent happy about it. Well talk to one walmart worker dusting off his protest gear and setting get so take on the Worlds Largest retailer. Back in two. [ male announcer ] tis the season to discover the kid in all of us. The memories that last, start with the gifts that last. Enjoy Free Shipping and great values on your Holiday Shopping from l. L. Bean. 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You never know how investors are going to react to a poor quarter at sears. There have been plenty of them. This time they are voting with their feet. Stock down almost as much as 17 perhaps bottomed on the morning. Made a couple calls. Best i can come up with is there were hopes there are more shared donation from jcpenney to sears. Perhaps not the case where same store sales down 4. 8 . Came up 1. 6 at sears domestically. Theres a look at jcpenney. Thats one rough week for that retailer continuing this morning. Investors are pointing out looking at jcpenneys debt as you point out. The debt markets often get things out before equity markets here and indications are that jcpenney may be having increasing trouble here. Its confirmed. Lets stay in retail. Several Stores Including walmart are moving black friday into turkey thursday. The thinking is Opening Doors earlier actually on thanksgiving will help give shoppers a jump on the holidays. For some walmart employees already upset about health care and wages, this is frankly the last straw. We cross now to colby harris who worked at the produce department of walmart for three years. Where are you joining us from . Im joining you from dallas, texas. Are you working today . I was actually scheduled to work today, but i called off the job today. Im officially on strike. Why are you on strike . Well, im on strike because of walmarts continuous retaliation against those of house choose to speak out against all of the injustices we have inside of our job and me and quite a few other associates have been taking actions last month building up to black friday. And why the move now . What is happening internalaly a far as you are concerned . Weve done everything within our power to sit down and talk with Corporate Executives of walmart. We tried to talk to our managers and address these issues as far as treatment of associates who choose to speak out, the retaliation and they seem like they just dont want to listen to us and address these issues so we just feel like now is a time for all of us to stand up and to speak out and let everyone know that the things that go on inside of walmart are sometimes treacherous and were struggling really bad. What are the consequences of you now talking to me on National Television . What will happen to you now . Well, nothing is going to happen to me. Were not going to take any form of retaliation. This is just to let the public know and to let the media know that the image that walmart paints that everything is peachy and associates are ecstatic and living great is not true. Theyre not going to retaliate against me. Are you trying to join a union . There are a lot of walmart workers that would like to join a union and theres an effort and possible walkout on black thursday by workers who are voicing outrage at the discrimination they feel from walmart, those who want to join a union. Is this all a part to try to unionize . This is us trying to let them know that were not going to take anymore of whats going on. I wouldnt say were trying to unionize. I would say were trying to get these issues that we all have addressed. And where thats through unionizing or protesting or whatever means that we have, were going to do. I wouldnt really necessarily say that were trying to unionize. We want these issues addressed and fixed. Why dont you think youre going to be retaliated against . I mean, typically thats often the case. Dont you think you may lose your job as a result of this . If i lose my job as a result of this, im pretty sure quite a few people would stand up and protest about that because if i were to get fired because of this, that would be another form of retaliation. There would be a lot of Media Attention if they were to take that step and to fire me because im choosing to speak out. It would prove our point further about the fact that with we do speak out, we get retaliated against. I dont think that would be a good idea for them to do that. I think ill have my job after this. Isnt it the case that maybe this is just not a great job and that conditions that walmart offer are just not great . Thats the way that it is. That may cant be changed. In fairness to walmart and the business, they have released a statement in part about what may happen on thanksgiving saying that this is just another exaggerated publicity campaign, headlines to mislead our customers and associates. We have more than 1 million associates working throughout the Holiday Weekend and they are excited about our black friday plans. How would you respond to that . Well, my response to that would be thats just walmarts attempt to just avoid the issues that we have brought to their attention and they know need to be fixed. Thats just another attempt to try to show their customers that things arent going the way that we say they are and thats not true. I work for walmart so im pretty sure i know what conditions are and theyre not good. Thats just another attempt for them to try to sway the customers and make them believe that things are as good as they say they are and thats not true. Its good to meet you, sir. Thank you very much. Colby harris joining us from dallas. Thank you. Shares of dell are taking it on the chin today. Of course after releasing Third Quarter earnings after the bell. Revenues fell short. The companys outlook has really sparked some concern. Does dell have the tools necessary to adjust to a rapidly changing market. Tension in the middle east, looming fiscal cliff and much more. Find out whats catching attention of traders as we head into the weekend ahead of the thanksgiving holiday. [ male announcer ] how could a luminous protein in jellyfish, impact Life Expectancy in the u. S. , real estate in hong kong, and the optics industry in germany . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Thats an agenda that democrats and republicans and independents and people all across the country share. Our challenge is to make sure that we are able to cooperate together, work together, find some common ground, make some tough compromises, build some consensus to do the peoples business and what folks are looking for and i think all of us agree on this is action. They want to see that were focused on them, not focused on our politics here in washington. So my hope is that this is going to be the beginning of a fruitful process where were able to come to an agreement that will reduce our deficit in a balanced way, that we will deal with longterm impediments to growth and that were also going to be focusing on making sure that middle class families are able to get ahead. I want to thank all of the leadership for coming. And with that, were going to get to work. Thank you very much, everybody. Appreciate it. Wait. Wait. Excuse me. Theres actually one other point that i want to make. And that is that my understanding is tomorrow is Speaker Boehners birthday. For those of you that want to wish him a happy birthday, were not going to embarrass him with a cake because we didnt know how many candles were needed. Yeah, right. We do want to wish him a happy birthday. Thank you. Thank you. All right. Thank you, everybody. The president pulling a steve jobs. One more thing. A room full of congressional leaders and cabinet members, you know, one question is going to be the degree to which the president is involved and that moment was choreographed to some degree, right, that pat on the back and that happy birthday. Those are two key figures. President obama and john boehner almost got a deal in 2011. Thats a place to pick up the discussions and i think you saw the president econfident there just winning the election there and House Republicans back in the majority in the house and thats the dance to the finish line and i think they will. Politico talked about whether or not the white house has learned its lesson in going into a room, a bunker, with the speaker, since it didnt work out the way they wanted last time around. Do you think the president will be as involved or can he hand this off to someone else to negotiate . I think hell be as involved. I think hell be involved inside the room and outside of the room. The strategic turn the president made in fall of 2011 after the failure of the talks, he took the case to the public. I dont think hell stop doing that. Hell try to keep the pressure on say i got mandate to raise taxes for people at the top. If you are willing to accept that, well get a deal. There code words youll look for afterwards to see whether or not today was successful, a bust, fruitful as the president said . Weve been hearing them from both sides in their public statements and the president s News Conference the other way. One of the magic words for republicans of course is revenues. And the same thing for the president. That is to say revenues, meaning money, opposed to rates necessarily. The president did not draw an absolute red line at his News Conference saying i have to get 39. 6 as the top rate. What he said was he is skeptical that without some increase in the rate, you can get as much money as he thinks is necessary to make this deal. Meantime, people are beginning to wonder if in fact there is a logjam at this level. Is there another path through which the white house goes to, a corker or alexander or a conrad and works out a deal with other rank and file congressional members rather than the leadership . I dont think so. I dont think that can work in the house of representatives. In the senate, we have a group of senators, bipartisan, somewhere between 20 and 40 who are in support of a balanced plan who negotiated one in 2011. They didnt get very far. You really have got the house to move as a precondition for getting the senate to go. With that spray that just saw, president and speaker, wheels are in motion regarding the fiscal cliff discussions. Well be here all morning long and well try to bring you the latest as it happens. Squawk on the street is back in a minute. When you take a cl. At the best schools in the world. You see they all have something very interesting in common. They have teachers. With a deeper knowledge of their subjects. As a result, their students achieve at a higher level. Lets develop more stars in education. Lets invest in our teachers. So they can inspire our students. Lets solve this. Lets talk about apple. It has lost 25 of market capitalization since september highs. Will power joins us live. And also we have a senior analyst. What do you say to people who hold apple stock at this stage . Theres a huge opportunity not only in mobile but also new markets like tv and particularly the near term is data that weve had is that iphone 5 is doing better than what the street is thinking and that should carry for a few quarters. I tell them that it doesnt look pretty today but theres Brighter Future in the next month or two. So it bounces back in your view . The stock is going higher . Absolutely. I think that the stock is going to react to better iphone numbers and based on our checks throughout the quarter we survey people and keep doing checks. The supply right now we check 70 stores a night at 97 of sprint phones. So we need that to get to 100 . As soon as that does, theyll be at a point where they supply demand. Good news is demand is there. If gene is right, why has the stock fallen so dramatically. I think its a bit of a death by thousands of cuts. We talked a lot as stocks fall that questions are around pace of innovation and concerns around structural changes to gross margins. Questions are on competition. You have profit selling. You have a combination of those factors that impacted. We like stock at these levels. Its always difficult to pick a hard bottom. If you have a 12 to 18month holding period, youll be rewarded off these levels. These are deep cuts concerning the massive cut weve seen in just a couple months. Were at a point in Investor Sentiment where it doesnt matter what you say about iphone 5 sales and ipad mini sales and all that. People expected that. Thats what got us to 700 plus a share back in september. Any analysis as to where stocks should be know if we take your estimates for the Fourth Quarter. Is there even a premium thats not been reflected in the stock based on just what we know about the Fourth Quarter . With just on the Fourth Quarter it comes down to what the multiple is that youre going to pay for it. If you assume 11 times multiple you can get to a stock at 900. Significantly higher. Its just hard to believe. At the end of the day the earnings power is going to be there. So as we talk about it death by 1,000 cuts. The reality is stocks should be significantly higher and i think 900 is not going to be there tomorrow but we should be on a pace to that based on these earnings. We have a development from one of your rivals today. A note suggesting that a major cable operator is conducting tests to determine if it could handle the sort of band width demands that connected hdtv capital might generate and Time Warner Cable ceo at a goldman conference suggested that the company would consider selling tv subscriptions using thirdparty technology. Is apple tv on the way and what do we make of that now for investors . I think theres no question that theyve been working on a tv product. What form that takes remains to be seen. We think they have looked at multiple paths. Our expectation is that they would roll out a product in 2013. Aside from the opportunity opening up a new market, it could really help redemonstrate apples ability to be a leader in innovation. Thats what we need to make sure its still there. Provided they get it right. Presumably there is an execution risk here. The product doesnt fly like so many tv products have not flown. Notably the present apple tv. Theres no question about it. Apple has a great track record of not only innovating but integrating software and hardware above and beyond anyone else in the marketplace. If anyone can find a way to turn the cable industry and tv industry upside down, you know, i would bet on apple. Gene, do you agree with that briefly . I would. Now i would just ask one other thing. 90 of investors that i talk to believe that apple tv is going to be just a little box and thats the future. I think very differently. Im on the same page as will. An Actual Television in 2013 and that will be good for the multiple. Thank you very much. Still ahead as reports surface that decisions surrounding deficit reduction could be kicked down the road to 2013, what does democratic senator kent conrad have to say. Rick santelli, what are you working on for the next big hour . Today is easy. Well have a civics lesson. I heard a lot of talk about tax increases and the president. Hes a constitutional lawyer. You know what i can contend . Today well talk about article 1 section 7 of the constitution. You know what it says . Ill read it. I want to make sure we get it right. It says that all bills for raising revenue shall originate in the house of representatives. Well talk about that little fact at the top of the hour. At optionsxpress were all about options trading. We create easytouse, powerful Trading Tools for all. 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How big is this going to be for fab . Big potential. Facebook is starting to launch this gifts product which makes it easy for people to send gifts to facebook friends. Well see how well commerce does on facebook. Were one of the first few partners working with them on this. This Holiday Season well have about 100 fab products on facebook. Maybe more. 200 to 300 products on the site right now. Its just real easy. Look at one of the facebook friends whether its their birthday or go to their time line and send them a gift and transaction happens on the facebook side. As they open this up to a few Million People in the u. S. , it has big potential for us. Any indications yet . Is this live and at one point do we say it works out . It went live last night. Well learn a lot over the next few days. They seem to be pushing good. Its a great user experience. Live on mobile as well. I bought gifts on facebooks mobile app this morning. Two clicks to send someone a gift. Real great experience. So difficult to know whether it will translate into hard dollars a lot of these ideas for everybody. What are you doing . Are you stocking up on inventory for this . Can you give us an idea of your expectation, your physical expectation here . We actually went out and bought more inventory. How much did you buy . Were going to sell a few million products during the Holiday Season if we went out and bought a few hundred thousand more. Well see what it amounts to in terms of potential sales. Were seeing the Holiday Season start early this year. We saw for instance in the lasts almost a doubling of sales. A few hundred thousand . Yeah. Absolutely. This is going to be worth in revenue hundreds of thousands of dollars, not millions. If not billions. But a few million. You know, we have an average price point of a gift around 40 and we bought a few hundred thousand items and significant amount of money. You launched Free Shipping permanently. Permanently. This week. On orders over 75. 2 right now of orders would qualify . The other way around. 98 of product on fab qualify for Free Shipping for orders over 75 an its something thats here to stay. We think that shipping should be fast and free. And its up to us as a merchant to work that out with the numbers. How does that work out with the margins . If typical gift is 40 and order a couple, how does that work out eating the shipping costs . Since launching Free Shipping just yesterday, you saw a 8 increase in the average order value. Do i want to pay 5 for shipping or another item . For us, you know, on the long term it works really well for the markets. Is there Free Shipping going back, as well . Might be more inclined to buy something with Free Shipping but may be impulse items and might return them at the end of the day. On fab, we sell over 10,000 unique every day designed products every single day. We have very little low return rates on the products. It is a lot of home wares, art, jewelry. Not the kind of stuff people send back too much. So not really worried about that part of it. Okay. Well leave it there. Well check with you in the Holiday Shopping season. Thank you. Ceo of fab. Com. Dell shares sliding today after the Third Quarter earnings not great and revenue, of course, missing estimates. Outlook also a cause for concern. Lets bring in the Senior Equity Research analyst. Has a neutral rating on dell. 10 price target. You have to quickly target the price target if youre neutral on the stock. Down over 6 . Expected on your part or perhaps a bit of an overreaction . I think its a little bit of an overreaction. Clearly, the results were nothing new in terms of what we saw, what we saw was that degradation is what we expected. Especially pcs. They were weaker and only bright spot and 4 growth is nothing to get too excited about but in this environment those clearly is somewhat of a bright spot. The stock reaction is a little too much but over time we think its worth 10 and where it gravitates towards in the near term. Not a great endorsement. The longterm prospects for this company and think about right now at least the pullback or unwillingness perhaps on the part of corporations to spend a lot more money, meaning less pcs, fewer pc sales and then the changes of consumer behavior, what is the growth trajectory if there is one for this company . Its extremely hard. Clearly the results clearly underscore the big challenge they have. The big part of their business is in pcs and theyre not growing and even within the pc market their growth areas is not participating. Tablets against pcs and more than 50 of the revenues from that segment. It is really hard for them to show growth from there and on solar side, enterprise side, making progress. Theyre doing some things but its too small to move the needle for the overall company. I think its a really long time before we see growth from the company. So youre at a neutral because theres an upside of 8 to 10 at this point . Im trying to understand the thesis of investing in a company like this where you say, you know, you acknowledge that this is going to be a very, very, very long slog. Yeah. And thats exactly why we have a neutral. We think investors are going to not get good returns on the money on dell. Theyre better off looking elsewhere for their returns and this is a place where the turnaround takes much longer than i think even management thinks it would. And thats whats driving the neutral rating behind it. We dont think theres much on the stock at this point. The theme of perhaps shorting or staying away from companies rely a lot on pcs applying to other companies, including hewlettpackard. Do you think this is a change in terms of pc demand or a dell problem . Yeah, no. I think there are two things. I think its little bit of both. Basically, there is a change in the pc market. Pcs are led by tablets and with windows 8 theyll be more cannibalized with hp and dell and the winners are going to be some of the asian makers selling pcs less than 500, around 500. Some of them do well but in the longer term its market is slow and dells focus at the high end of the market which is even slower. Thanks for your time. Appreciate it. Till to come, the markets may not be flying today but you can privately less than you might have thought. Our Million Dollar minute when we come back. Melons oh yeah well that was uncalled for. Folks who save hundreds of dollars switching to geico sure are happy. How happy, ronny . Happier than gallagher at a farmers market. Get happy. Get geico. Chances are, youre not made of money, so dont overpay for motorcycle insurance. Geico, see how much you could save. Boproductivity up, costs down, thtime to market reduced. Those are good things. Upstairs, they will see fantasy. Not fantasy. Logistics. Ups came in, analyzed our supply chain, inventory systems. Ups . Ups. Not fantasy . Who would have thought . I did. We did, bob. We did. Got it. Try running four. Ning a restaurant is hard, fortunately weve got ink. It gives us 5x the rewards on our internet, phone charges and cable, plus at Office Supply stores. Rewards we put right back into our business. This is the only thing weve ever wanted to do and ink helps us do it. Make your mark with ink from chase. In todays Million Dollar minute, how sharing could have you flying private for a fraction of the cost. Robert frank explains. Reporter this is your chance to fly like a millionaire jet setter at a fraction of the price. Single share of this aircraft is 1 16th of the plane is 1. 1 million. Now, that buys you a fiveyear contract, 250 hours over the 5 years. Reporter the fractional jet Ownership Program allows multiple owners to share a private jet and looking at the newest member of the fleet, the leer jet 85. The lear is made from a special carbon fiber composite to be lighter, faster and thinner fuselage for more room on the inside. You will see immediately that its almost 50 larger than any aircraft lear jet has ever built. Reporter it hits speeds of mach 82 and a range of 3,000 miles and ones one of the most efficient engines on the market. For cnbc, im robert frank. David, youre saying that thats not enough flying time for you. 250 over 5 years, 50 a year, california alone youre a jet setter. He is. No, no, no, no. Not at all. Just joking. One day maybe we can all aspire. We can share. Hows that . Never a private jet. There you go. If i can share, youre welcome. Thank you. Thank you, david, in advance. Turning to the downside, lets head it down to the nations capital. I want to ride on davids jet. Thats all i care about, guys. See you later. As congressional leaders and the president convene to discuss solving the fiscal cliff, were at the white house to bring you the news first. Both sides far apart. Will they rise above partis partisansh partisanship . Committed to solving our fiscal challenges. But i refuse to accept any approach that isnt balanced. And thats why we say to this president , we want to work with you on solutions. This is an opportunity time for us and for the American People. To demonstrate to all americans that we are here to get the job done. So many challenges that are ahead of us, the American People need to see us act courageously, think selflessly and lead boldly. I believe this is solvable. Im confident it can be done. Can these two parties rise above partisan politics to avoid the fiscal cliff . Time is ticking down. As squawk on the street begins right now. Good friday morning. We are live at the white house. It is a big day here in washington. Of course, the president meeting with congressional leadership about the fiscal cliff right now. We are covering it from every angle today. First, a check on the marks, though, of course. The dow which some have said is well oversold and waiting for good news out of washington, down 26 points currently. S p down almost 5 and nasdaq down almost 10. Ruckus priced at 15, the top of the range and quickly fell. Trading just above 14 a share. Officemax surging today hoping to benefit of an ipo of Boise Cascade to raise up to 200 million for an ipo. Officemax made an investment in the paper and pulp company. Our road map for this morning, both sides of the aisle to get a deal on the fiscal cliff. Democratic senator kent conrad will join us live for his take on the negotiations today. Then the man with the direct line of strategy republicans will use to get a deal through the house, chief deputy whip and members of the ways and Means Committee, representative peter roskam is here and then well show you how you should be positioning your portfolio no matter what happens. And democratic congresswoman loretta sanchez, a member of the jec, will join us live. All that and more in the next hour live from the white house. First, though, the president making some comments on the meeting not too long ago. Heres what he had to say. Our challenge is to make sure that, you know, we are able to cooperate together, work together. Find some common ground. Make some tough compromises. Build some consensus to do the peoples business and what the folks are looking for and i think all of us agree on this is action. They want to see that we are focused on them, not focused on our politics here in washington. I want to bring in chief washington correspondent john harwood here at the north lawn with me as the negotiations continue inside. Good morning once again. Good morning. That piece of tape right there, how does it differ from the way the negotiations kicked off in the first attempt . When they tried the first time, the president was back on the heels. Remember, he had just lost the party had just lost a tremendous defeat in the 2010 midterm elections. The republicans came in with a head of steam. The president was reluctant to go first on a deficit reduction proposal and shied away from embracing simpsonbowles. There were a series of contentious negotiations over the debt limit. Those in the end worked to the benefit of the democratic party. They hurt the republican brand m m. Some of those republican members were chastenned and then a president ial election winning 9 out of 10 swing states and now coming in with a little bit more wind at his back at this point. Will they leverage that if they see weakness in boehners caucus, division, the results of the election . What willingness would there be, is there to compromise on the white houses side . The president s got to compromise some. The issue of entitlement cuts is one the president engaged in. He was waiting for a sign that republicans were willing to give on tax increases and we are seeing some of that postelection. Bob mcdonald, govern forof virginia at a meeting said, elections have consequences. The president campaigned on this. I think that is precisely the kind of leverage the president s looking for. You mentioned mcdonald. Haley barbour said similar things and this quote of bobby jindal. We cannot be, we must not be the party that protects the rich so they get to keep their toys. Does he speak for a significant part of the party right now . Sure he does. Theres a significant moderate group in the Republican Party, not huge, moderate is a relative term compared to moderates in the past. But theres a Significant Group that wants to make a deal. The problem is so many republicans are now scared of challenges from the right in primaries. Dick lugar, the very secure senator of indiana was knocked off that way. Bob bennet of utah that beat him in 2010. So the challenge is republicans who want to make a deal like boehner, can they get the flexibility . Can they get the room to operate from the right within their party and they have a better chance of getting it now after a president ial election defeat than before. Last question on the markets. Were obviously down today and been down all week as the president and speaker have said things about keeping an open mind, not closing the door the various scenarios. What could possibly be said today that would be market positive in your view . I assume that the markets want to hear constructive rhetoric from the meeting. I wouldnt expect anything to cause a big rally on wall street. And i think the declines that we have seen so far pale next to what would happen if they failed to get a deal by the time the debt limit has to go up early next year. Thats where you see the croix sis in the market. We have some experience with that kind of thing. A lot more with john over the next hour. Meantime, the cme group. Rick santelli has a friday edition of the santelli exchange. Good morning. Good morning. Guess what, you figure prominently in the exchange and so does mr. Harwood and this button, rise above. Believe me. I want to rise above politics, as well. Theres a cautionary tone here and for the second time today im going to read article i section 7 of the constitution. Its called the origination clause. All bills for raising revenue shall originate in the house of representatives. Okay . Lets not rise above the facts here. We might have lost it and we meaning fiscal conservatism. Im a fiscal conservative. I admit it. But the house, their majority in that regard stands a couple of seats change but it stands. And the president , he could suggest programs for taxes, and he can veto and the senate concur with the house but its about the house of representatives. So when i hear about mandates, heres the mandate i hear. That the people that hold the Purse Strings is designed by the constitution, their 2010 mandate other than a couple of house switches still stands. Thats the fact we cant rise above. Now, lets read something that came out of that bowlessimpson interview, that wonderful interview with maria yesterday. Lets throw it on the screen. This is bowles. Well, theyre talking about getting somewhere between 100 and 80 billion a year, taxes on the upper percent. Its no small number but when you consider the fact we have 1. 1 trillion deficit, you can see, oh, thats not going to solve our problem. We must also reduce spending and we must put our fiscal house in order. Also said yesterday is our total tax intake is 1. 3 trillion. That sound familiar . Not far off deficits of last several years and said something else. He said that its possible by 2020 that just servicing the debt is going to cost 1 a year. The point is, that im tired of this tax bait and switch game thats going on because if everything on the fiscal side caves, okay, and, yes, ill say caves, then what incentive is there for tax reform in 2013 . That doesnt make any sense. I dont believe in politicking. I dont believe in leverage but it is what it is. Am i advocating tax policy . No. But theres a right way to do things and too fast just like in t. A. R. P. Maybe some out there or most believe t. A. R. P. Was necessary. Im not going to get in to that discussion but the discussion im going to get in to is how many years after t. A. R. P. Are all of the issues surfacing that we didnt take care of because we rushed it through . We didnt put qualifiers on and clauses and stipulations. You know what . We cant do anything too fast. We can come up with a solution so people understand that the jobs going to get done in 2013 but the end of the day if people think the fiscal conservatives in the house of representatives are the bad guys, get used to it. Theyre there legally and you have another couple of years to deal with them. Back to you. Rick, before i let you go, you talk about t. A. R. P. Being pushed through in a hurry. We got 45 days to do this. Is this enough time . No, we dont. Listen. Carl, do you think we get good tax reform and deal with the gorilla in the room that nobodys talked about today. You are talking about the 1 . Nobodys talking about entitlements. Bowlessimpsons, theyre good guys. They know thats not the issue. You never fix it between december 31st. The reason its sped up is to get the leverage. You know what . I think americans are sick of leverage. For once, do it right thats a message to carry to politicians today, rick. Thanks so much. Rick santelli and should be here, john, at the white house. Sporting Goods Companies flexing muscle today. Lets get to Brian Shactman. He is using some wicking technology for that undershirt maybe today. A little hot. Foot locker with double digit comps and sports with strong numbers. Trading to the downside today and although off the lows mainly because maybe Bloated Inventories and nike quickly. You talked about the dividend hike. The stock split. Its obviously in play quite a bit. You see foot locker up above 4 and upside for nike although, carl, still underperforming for the year. Down about 5 . Back to you. Thanks a lot. When we come back, well talk to representative peter roskam what he hopes to hear today from the leadership. [ 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. Take a look at oil. We are getting news. Ap reporting that the coast guard in new orleans is investigating a fire on an oil rig in the gulf of mexico. And dow jones is now reporting that two are dead and two are missing in an offshore platform explosion. Of course, comes a day after the big settlement between the government and bp. Well get more on this, of course, as details become available. Meantime, former chief of staff for bill Clinton Bowles on closing bell yesterday talking about the longterm consequences of the fiscal cliff. If we do get our house in order, the future of america is bright and can compete with the best and brightest wherever they are. If we dont, were on our way to becoming a secondrate power. Joined by illinois congressman peter ross couple. He sits on the ways and Means Committee and joins us with john harwood and myself at the white house. Congressman, good morning. Hey, good morning, great to be with you. We already have the president wishing the speaker a happy birthday. I guess baby steps. Right . How do you think the tone is shaping up today . I think the tone is good. Look. President obama won on tuesday last. The speaker of the house congratulated him and lid out a pathway for the president to lead the nation on how to avoid the fiscal cliff and transform us in to the world class status we want to stay and maintain. So far i think the language is good. Theres opportunities i think to find common ground. Theres no voices on the republican side really saying lets go over this fiscal cliff. Instead, lets find a remedy and move forward. Weve already gotten a trial balloon of sorts this morning from the journal talking about various talks within the white house to revamp a sequester. As we go our way in to thanksgiving, obviously, a holiday week, a shortened week, how attuned is your radar to some of these trial balloons and which do you think are going to resonate . We are all very attuned to whens going on but remember the house of representatives already acted on these both of these issues relating to the fiscal cliff by arguing to extend the current rates for another year and use it as a bridge to tax reform and offered an alternative to sequestration. The debate shifted to wait for the president and what he might propose but the lions share of the administrations argument so far has been all on the revenue side. And the president s own admission he said, look, that has to be a 3 to 1 ratio. Three cuts to every 3 in cuts to every 1 in revenue. We are discussing, wringing hands, chatting, talking about revenues but the white house is not come forward with anything as it relates to the cutting side. House republicans have acted with the ryan budget in the past. Have won majorities again. The second biggest House Republican majority since world war ii and ready to get to work and we want to see the president lead on the spending side in particular. Congressman, its john harwood. We have heard from the speaker that republicans are open to revenues. The question is going to be, can you get enough from loopholes and deductions or does the rate have to go up at some point . The president hasnt drawn an absolute line at 39. 6 but are republicans willing to let the top rate go up at all if you cant get significant amount of deductions from loopholes . Republicans arent convinced in the house that the best place to go or the remedy is to raise taxes, to raise these rates. Theres openness as you pointed out to revenues through growth and revenues through the abolition or limitation of deductions and other loopholes. Thats where the action is. Look. Heres where the president has an unbelievable opportunity to eclipse this entire debate and to be the transformational president that he described himself as during the when he was a candidate in 2008 and thats this. There is nobody thats defending the current tax code. Theres no choice thats out there saying that the current tax code is great. Instead, what the president can do is say, i dont want to litigate the old tax code. Lets bridge this now and move and have a transformational tax code. The house ways and Means Committee under david camps leadership as chairman is trying to work on this making the u. S. The most competitive Tax Jurisdiction in the world. Thats an opportunity. I want to clarify one thing. You talked about growth. My understanding of what the speaker said is that hes willing to entertain static revenue, not just revenue of growth. Do you mean to suggest something otherwise or also open to static revenue . Yeah. Static revenues is part of the conversation clearly. Thats the deductions and the loophole effort but lets not underestimate the power of growth in this whole debate. And i just keep coming back. I served with president obama in the state senate in illinois and i have had a perspective and an experience with him where i have seen him move beyond traditional donkeys and elephants and bring winsomeness to the debate. I think the country is looking to president ial leadership. Hes talked about the tax side. We need to hear her from the white house in terms of where the spending cuts are to gain a level of confidence of House Republicans who also won big majorities last tuesday. Finally, congressman, trying to draw a contrast between the negotiations and the last round. One difference is the degree to which Corporate America inserted themselves in this debate, whether its the fix the debt group, the business roundtable. Do their arguments resonate at all with you, and do you think that their view has been balanced between revenue and reform . Their view is interesting and, of course, they have influence and they need to be taken in to consideration but you know whos lost in the shuffle in this conversation . Its the Small Business owners largely pass throughs and llcs clearly paying at the individual rate so if the individual rate goes up and theyre earning more than 250 then all of a sudden theyre rich. Thats a dry cleaner in my community having a higher Tax Liability and looking at very little relief under the president s current plan so, yeah, big business always has a voice. But i think its very important that were listening to the little manufacturers in suburban chicago that also need a voice. Congressman, thank you for your time. Thank you. Interesting day shaping. When we come back, explaining the u. S. Is about to repeat the economic history of the 1970ss. Wouldnt that be fun . First, a sector break down. Wheres the performers . Squawk on the street from the white house is back. [ male announcer ] when it comes to the financial obstacles military families face, we understand. At usaa, we know military life is different. Weve been there. Thats why every bit of Financial Advice we offer is geared specifically to current and former military members and their families. [ laughs ] dad dad [ applause ] [ male announcer ] life brings obstacles. Usaa brings advice. Call or visit us online. Were ready to help. Having you ship my gifts couldnt be easier. Well, having a ton of locations doesnt hurt. And my daughter loves the santa. Oh, ah sir. That is a customer. Lets not tell mom. [ male announcer ] break from the holiday stress. Fedex office. Welcome back. We are live at the white house. Myself and john harwood as the president and congressional leaders beginning day one of the negotiations of the solution, potential solution to the fiscal cliff. One thing we hear from outliers, traders in some cases, there is some sort of deal that is already been agreed to in structure but its a matter of getting each party prepared to accept it, to digest it. How likely is that . Well, i think that is not literally true but its not far off. In the sense that we start with a framework that the president and the House Speaker came to in the summer of 2011. You also have in addition to that the different, more ambitious framework that was agreed to by the gang of six and simpsonbowles and the plans are there. The question is political will. Will they be able to, democrats accept cuts in programs, medicare and Social Security . The president was willing to do that in the summer of 2011, although republicans want deeper cuts than that. And are republicans willing to go with tax increases . We heard peter roskam were open to static growth. Thats a key conceptional change since the election. Where does that revenue come from . I think we are in the zone where they can reach an agreement and then the question is, can you get the votes in the house and the senate . You brought up the static argument weeks ago and obviously a big part of the discussion now. This idea that the president says lets put out the biggest fire first, right, the tax increases on those families making less than 250,000 at year end. I dont think the republicans are likely to trust him on that. If trust him means pass legislation now, extending only the tax cuts for people under 250 because that is, that is the republican leverage. Remember, think eve been resisting the decoupling of rates at the top of rates in the middle and lower income groups ever since this debate has ripened since the president took office, so i think thats the game of chicken going on. The president s saying extend them for people under 250. Or well go over the cliff. Patty murray whos an influential senator said today we would rather go over the cliff than make a deal extending the rates and i think they mean it. We were talking off camera about the other chapter of todays meetings which is civil organizations meeting with the president. Does he have to worry about the bis at this point . You hear people talk about legacy. How valid is that argument . Some. He has to worry about the base and reelected him to a second term but the president is in a very strong position as a leader of the democratic party. If he takes a position and decides that hes going to support a certain level of cuts, very difficult for democrats to resist that. Some will try. But i think that he can bring democrats. The question is, can boehner and mcconnell bring republicans . We are on the lookout for those who are going to be leaving the meeting in the hour or so to come and getting a clue as today has gone, well bring it to you. Europe is about to close. Well get the details and how it might affect the afternoon session with the dow still in the red. What makes the sleep number store different . You walk into a conventional mattress store, its really not about you. We have so Much Technology in our store to really show the customers whats going on with their bodies. You can see a little more pressure in the shoulders and in the hips. Now you can feel what happens as we raise your sleep number setting and allow the bed to contour to your individual shape. Oh, wow. That feels really good. At sleep number weve created a collection of innovations dedicated to individualizing your comfort. The sleep number collection, designed around the innovative sleep number bed a bed with dualair technology that allows you to adjust to the exact comfort your body needs. Each of your bodies. So whatever you feel like, sleep numbers going to provide it for you. During the final days of our semiannual sleep sale, save 500 on our classic series special edition bed set plus special financing on selected beds but hurry sale ends sunday. Youll only find the innovative sleep number bed at one of our 400 stores, where queen mattresses start at just 699. Welcome to the world leader in derivatives. Welcome to superderivatives. European markets are closing now. With that, a sea of red in europe. Simon hobbs at post 9. Simon . The risk aversion is growing. You see the degree of the red and quite bad in some parts. Didnt mean to come in there. Down over 1 . Bad really throughout the session and the risk aversion grows in to the weekend. Have a chart of where we have traded so far this week. Bmy had an interesting note out suggesting the fiscal cliff conversation and the greek conversation more or less going to plan. The real point you moved in the week on what was happening in the gaza strip between israel and hamas and they felt thats the bigger dynamic in the week. Others disagree. One things for sure, if you look at a longer chart, we have raised the gains of europe since september the 6th with the clear promise of the ec b that they would if required to have that unlimited buying of the bonds. Still, of course, we work our way through disappointing corporate results. You dont know the german player and might know personal detergent or lock tight glue. They had organic growth announcement below what the market was opening for. You see that stock down 4 . After a good run. Telecom lower around europe today. Not paying the dividend. Well, we thought they were going to spin off the fixed line business and maybe not happening and also some of the banks were lower in a general down day across europe today. There you go. The Portuguese Bank down 7 . Carl, let me just leave you with one thought if i may as we discuss the fiscal cliff and working through whats happening in washington. Deutsche banc with a note out today where it pointed out that was it not for the ability of washington to squeeze out stimulus at the feds and with the huge budget deficit that america is running at the moment, the economy would not have performed so well, and in fact, america stands alone with south korea and china of all the Major Economies around the world as a result of stimulus not to have tipped back in to a contraction at some point during the past year. In fact, they said if the america now running a europeanstyle budget deficit it would probably be in recession, though, obviously, the fiscal cliff an important conversation. Have a great weekend. Back to you. Thanks so much. I do want to draw your attention to a live shot at the white house next to the north lawn and reporters begun to gather. Theres a marine guarding the door to the west wing and waiting and expecting some of the congressional leaders to come out of the meeting with the president and make a statement, perhaps. If they do well bring it to you when it happens. Meantime, back to the nyse. Bob pisani is on the floor. Were expecting headline risk. The president meeting with congressional leaders and the parties break up and everybody comes out with a spin on whens going on. A lot of things can happen right now. The dow industrials, not far from the lows of the day but a weak opening and didnt have a lot to do with the fiscal cliff but an extraordinary Industrial Production number and the comments right in the top paragraph, out of the fed, interesting. I think important for people the look at. Industrial production was much weaker than anticipated but the fed came out with a statement at the top saying sandy reduced Industrial Production output by nearly 1 percentage point so the bottom line is the Industrial Production would have been above expectations were it not for sandy. And a lot of people took a while for them to read that. I think that helped turn the markets around a little bit right now. Elsewhere, the sectors hit hard by concerns of the fiscal cliff on the downside today. Its been an ugly week for industrial trust. Down 6 since the election. The association met this week in san diego. Had an annual meeting and my understanding is fairly downbeat. A little bit of concern. Even though the fundamentals of real estate doing well. Supply is muted. Capital is cheap. In theory, not a bad time to be in the real estate business. Utilities down more than 6 . They were hurt by sandy a little bit. The northeast ones. Theres a onemonth chart. Finally today, a positive print on the overall utilities but a rocky road for them and same situation with telecom. Theyre the most affected by the fiscal cliff issues. Telecom down about 5. 5 since the election began and down another 1 today. Carl, back to you. All right. Bob, thanks so much for that. At least one consumer still has some money. Video gamers. Get to Brian Shactman at headquarters with that story. Unbelievable numbers here. Take a look at how its trading. Strongly to the upside on huge volume. Call of duty 500 million sell through in the first 24 hours. Microsoft released halo 4 a week ago with 220 million in the first day. Double that. Huge numbers. Raised the guidance last week based on expectations. Trading 8 million shares a day. Already up to 11. Back to you. Thanks a lot. Lets get to Rick Santelli talking the fiscal cliff with a special guest at the cme. Hey, rick. I am, indeed. Before the special guest, you know in one of the last interviews Anna Schwartz world famous economist talked about that in the Great Depression we did have a liquidity crisis. A run on banks but she doesnt think or didnt think that we have a liquidity crisis today which is the cornerstone of many of the feds programs and ben bernanke is an expert on the Great Depression but in her words problem this time is toxic Balance Sheets and mistrusted banks. We have our leading authority, one of my favorite authors. Amity shlaes and the book is, well, the forgotten man. A new history of the forgotten man. Welcome, amity. Can you weigh in on what i paraphrased . She was afraid dumping money was not the solution in a downturn always and more than fiscal stimulus didnt work. Now what were looking at, i mean, you raise the parallel to the Great Depression. What were looking at is whether were repeating 1936 and 37. After a democrat in that instance Franklin Roosevelt was reelected and the market crashed. I was listening with great interest because Industrial Production then as today was the signal number that went down so fast. In 37, the depression within the depression leading the unemployment in to the higher teens. The question is whether you have a repeat of that, now sir. Being the expert on that particular time, and in the book obviously great book, you pretty much think that fdrs policies along with the hoovers policies really were the wrong policies. Nour director of the 4 growth project. What are some suggestions that you would put forth to see a handle on gdp . Yes, thats right. You kindly flashed our book. It has to do with optimism and thinking about what makes people want to work. The problem recently has been the emphasis on blaming people, assigning blame, getting certain parties and that was very, very familiar in the 1930, too. They said bring down the rich, basically. You have to make the rich want to create jobs. That was how you begin to get out of a depression. One of the reasons they got out of the depression was as the war came, Franklin Roosevelt needed them to help them arm so he stopped attacking them. If you dont know what the government will do, the Health Care Legislation is our example now. Then it was the labor law. And then you freeze up and companies freeze up and park money. Very familiar scenario that were seeing now. For growth, taxes matter the most. Thats what we say in the 4 book. Well, amity, its been an absolute pleasure. And im really looking forward to the new book on president coolidge. The president saved in taxes. Thank you. Thank you. Carl, back to you. Anyone who hasnt read the forgotten man needs to. More from the white house when we come back. Theyve been committed to putting clients first. Helping generations through tough times. Good times. Never taking a bailout. There when you need them. 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Other side effects include dry mouth and constipation. Nothing can reverse copd. Spiriva helps me breathe better. blowing sound ask your doctor about spiriva. [ male announcer ] some day, your life will flash before your eyes. Make it worth watching. The new 2013 lexus ls. An entirely new pursuit. Heres Speaker Boehner addressing the press outside the west wing. I outlined a framework that deals with reforming our tax code and reforming our spending. I believe that the framework that i have outlined in our meeting today is consistent with the president s call for a fair and balanced approach. To show our seriousness, we have put revenue on the table. As long as its a company by significant spending cuts. And while were going to continue to have revenue on the table, its going to be incumbent for my colleagues to show the American People that were serious about cutting spending and solving our fiscal dilemma. I believe that we can do this and avert the fiscal cliff thats right in front of us today. This isnt the first time we have dealt with these issues. We feel we understand what the problem is. And we felt very i feel very good about what we were able to talk about in there. We have the cornerstones of being able to work something out. Were both going to have to give up some of the things that we know are a problem. And so, its like when we arrive at a point where we all know something has to be done. There is no more lets do it some other time. Were going to do it now. I think we feel very comfortable with each other and this isnt something were going to wait until the last day of december to get it done. We have a plan. Were going to move forward on it. And were going to work during the thanksgiving recess. Well meet with the president when we come back the first week. At least thats as i understand it. So i it was a very constructive meeting. I feel very good about what we were able to talk about. Mitch . Thank you. It was a very constructive meeting. It was we had a recognition that every person in america knows that we must reach agreement. We had the speaker spoke about a framework going in to next year. I was focusing on how we send a message of confidence to consumers, to the markets in the short run, too. That is to say that we should have a goal in terms of how much deficit reduction. We should have a deadline before christmas. We should show some milestones of success so that confidence can build as we reach our solution because if we do not reach agreement, not only will we miss the opportunity for doing something good for our economy and lifting the spirits and the confidence in our country, we will have an economic downturn that must be avoided. We understand our responsibility there. We understand that it has to be about cuts. It has to be about revenue. It has to be about growth. It has to be about the future. So, as we cut investments and as we talk about revenue, we have to do so in a way that promotes growth and supports the future. It was good. I feel confident that a solution may be in sight. Mitch . Yeah. I could only echo the observations of the other leaders that it was a constructive meeting. We all understand that where we are. I can say on the part of my members that we fully understand that you cant save the country until you have entitlement programs that fit the demographics of the changing america and the coming years. Were prepared to put revenue on the table providing we fix the real problem. Even though most of my members i think without exception believe that we are in the dilemma not because we tax too little but spend too much. Another observation on another issue. I had a chance to talk to the president yesterday about the trip to burma. A country i have had a long standing interest in over 20 years. I want to commend him to go. I think its an important step for him to take. Thank you, everybody. And looks like theyll be no q a today but the markets trying to build some momentum. The dow briefly growing in 0 the green and talking about cornerstones of putting something today. Addressing the markets specifically should be milestones, open communication, a deadline before christmas and in her view. What just happened . I think thats as positive a readout to get from congressional leaders. First of all, there was the subtle stuff and the explicit stuff. They introduced each other by their first names. Very congeal yal but nancy pelosi saying we have to have cuts. About as good as you can expect at an hour or two. Especially talking about the possibility of getting this done, not at the very last minute but with some room to spare. I dont know what getting it done but it means having all of the elements of a deal completed or whether it means a mechanism or getting it done in the early part of next year but i think every sign that we just got out of the meeting was positive. Lets bring in senator kent conrad of north dakota. Had a busy day already. Thank you for being with us. You bet. Im sure you were able to hear senator reid say we wont wait until the last day of december, working through the thanksgiving recess. Do you agree with john that this was a good first step . Extremely positive. Im even more encouraged. You know, i felt all along theres a good chance to arrive at a Framework Agreement in this lame duck session, lay out the size of the package, how it would be distributed to how much to cut in spending and raise in revenue. Lay all that out before the end of the year. And have a down payment so that everybody understood we were serious about this. And i think all of that can happen. Senator, let me ask you about the revenue side of the equation. Republicans have said theyre open to revenue. Not just dynamically scored revenue but static revenue. Through loopholes and exclusions. Theyre resisting an increase in the top rate. Im wondering what you think happens if as the president said you find that you cant get enough from loopholes and deducti deductions. Do you see republicans giving on the top rate and goes up somewhat or do you see another source of revenue coming in aside from the loopholes and exclusions . Look. Whats very clear and i have, you know, spent five years working on these issues since judd gregg and i proposed a president ial commission to close this gap, whens very clear from the numbers is you cant do it without raising rates at least on Capital Gains and dividends. Thats very clear. So you do have to have rate increases. You could do it mathematically by not going up on the top rate, that is from 35 to 39. 6 . But that presents some very difficult challenges in terms of the socalled tax expenditures because if you dont go up on the top rate, you have to go deeper in to tax expenditures. You start affecting very popular things like Home Mortgage deduction, like the health care deduction. Like other things that are popular with the American People. What is absolutely clear is you do have to go up on rates on Capital Gains and dividends because as you know right now theyre taxed at 15 . Everybody else all other income, earned income is taxed at 35 . Senator, is that where you think the sweet spot in the negotiations might be, that is, you sharply limit deductions for people at the top end, keep the top rate at 35 but have the rates go up . That im just saying this. That could work mathematically. Whether it works politically, because of the tax expenditures you then have to alter, is a separate question. But i think the president has been entirely correct to say, youve got to negotiate from that 39. 6 rate. Because believe me it is hard to make this all work. And so, you have to begin the negotiations at that 39. 6 top rate to really force people to deal with reality. Senator, the speaker just talked about the other side. Its incumbent upon them to talk about reforms and entitlements just as much as they talk about revenue. I wonder if the conversation this week has been skewed to the revenue side and whether were not talking about some of the more painful things that eventually have to be dealt with. Well, look. Revenue is the issue. I have been involved as you know in intensive negotiations with the republicans in bowlessimpson, the group of six, the group of eight, hundreds an hundreds of hours and at the end of the day the big difference is on revenue. Republicans until now have absolutely been opposed to any change in revenue. Now thats starting to change. So i commend them for it because thats reality. Look, revenue is almost at a 60year low in this country as measured as a share of our gross domestic product. On the entitlement side, democrats expressed including the negotiations last year a willingness to deal with the health care accounts if there was a revenue component. But so far, until now, republicans have resisted that component. I think thats why it is so much emphasis this week. Senator, following on carls question, you and i talked in the summer right after mitt romney had selected paul ryan as his Vice President ial running mate and ryan proposed farther reaching proposals in medicare than democrats were willing to support. What do you think is the effect of the candidacy on where we pick up the negotiations now . I dont think its had much effect. Really. Other than really extreme proposal that congressman ryan had in his first budget has been pretty much rejected by even his own party. I dont think anybody is going to accept shredding medicare in order to get an agreement. That cannot be the answer. Senator, one last question here. The dow is up 30 points. When these negotiations began, they were down 40, 50 points. Pelosi makes a point of potentially creating a method to create to the market how negotiations are going without negotiating in public. Is there a way to do that between now and year end . Yeah. Thats to get a result. You know . At the end of the day, what really has to happen is that we agree on a down payment, something that would be put in place right away. And we agree on a framework so that we know how much were gong to save. Im in favor of 5 trillion. And to do it how its to be done. How much is revenue . How much is spending . What are the categories of spending with precision. And then to work out the details how those goals are to be met over the First Six Months of next year. That is a practical and responsible way to proceed. Well, we got chapter 1 under the belts. Senator, appreciate your time as always. You bet. Senator kent conrad from the hill. A lot more when we come back. So anyway, ive been to a lot of places. You know, ive helped alot of people save a lot of money. But today. sfx loud noise of metal object hitting the ground things have been a little strange. sfx sound of piano smashing roadrunner meep meep. Meep meep . sfx loud thud sound awhat strange place. Geico®. Fifteen minutes could save you fifteen percent or more on car insurance. Welcome back. New orleans coast guard investigating a fire on an oil rig in the gull of mention co. Sharon . Cnbc learned that the fires are extinguished. That explosion in the shallow waters 25 miles off the louisiana coast near grand isle, louisiana. And this explosion occurred on a shallowwater rig by black elk energy. Apparently four people medevacked from the location and two others are missing and not accounted for. The coast guard continues to investigate an bringing viewers up to date on whens happening there in the shallow waters in the gulf of mexico. We did see oil prices react immediately, spiking more than 1. 50 on the news and then giving back the gains. We are seeing a slight recovery and in line with what were seeing in equities, as well. Back to you. Thank you so much. Sharon epperson watching that breaking story from the nymex. To debrief the last hour, republicans have put revenue on the table and i guess you could argue thats a big change from two years ago, even a year ago. I wonder if you think we have made theres been a little more progress than were giving the situation credit for given the fact were so myopic about the daytoday negotiations. I absolutely do. This is building over time, since the collapse of those grand bargain negotiations in the summer of 2011. Over the summer, for example, chuck grass ri of iowa longtime member of the finance Committee Said we need revenue on the table. Now that you have had an election result, democrats gained seats in the senate, they gained seats in the house and republicans have the majority, you are seeing republicans embrace that reality that the president campaigned on this. They want to be seen as cooperating with him. And its a very positive environment at this moment but the hard part is not getting the leaders to negotiate. They can do it easily. I asked you this morning how this would all end. Your guess at the time to get done but maybe not before the end of the year. Is that intact after what you just heard . I think so. I wasnt quite sure what harry reid was saying saying we wont wait until the end, whether he was talking about a bridge or a framework to the early part of next year or getting it all done. Ins highly ambitious and skeptical to get it done. I think thats what were looking at is a framework to get filled in early next year but i suppose its possible not to be optimistic enough. Weve been burned before. Of the four people that spoke at the mike are phones, whens the key player aside from the speaker himself . I think the speaker. I think its very clearly the speaker and the House Republican caucus. Constructive that nancy pelosi said cuts on the table, growth is something to Pay Attention to. Shell deliver votes from the left, yes . Yes. Is there a deal with half the Republican Caucus or a we pond rans . I appreciate your sharing your insight with us. Important day and the