Transcripts For CNBC Squawk On The Street 20121217

Right after the open. As for the action in europe, taking its cues from the United States. Well see a big rally in china extending one of its biggest rallies in three years. We have a mixed bag in europe with italy up by about. 2 of 1 . Well do our best to keep focused on the business day. Well be following the tragic shooting in connecticut, of course. The New York Stock Exchange will hold a moment of silence to honor the victims in the next few moments, and well be looking at the president s call for meaningful action and the politics of gun control. Lets get to a road map for this morning. It starts with apple. Under pressure once again. Even dipping below 500 a share at some point this morning. Shares will remain range bound near term. Iphone 5 sales and cannibalization among the region. Other concessions from the gop, the speaker proposing tax hikes for millionaires. Could this be the tipping point. Moving the talks beyond deadlock. A big week for earnings. Yes, earnings. Fedex, research in motion among the companies reporting. So finally maybe well be talking about fundamentals in the stock market more than just the cliff. Weve got to talk about apple reversing its move lower this morning, sold more than 2 million iphone 5s in china. The best debut for any iphone in the china market. Apple shares are higher as we mentioned. Moving away from market bear territory. Apple has been downgraded from a buy rating here. Interesting, in very detailed analysis, by three citigroup analysts, jim, among them, its interesting because they cited this of what you hear a lot about, and even though theyre inconclusive, you cant rule out the fact that iphone 5 sales werent as good as they expected. Theyre saying, you know what, well pull back here. Analysts react to stocks. Its unfortunate. Stock goes down, you find a reason to not like it. A stock goes up, you find a reason to like it. Iphone 5, maybe, maybe not. The suppliers are so tightlipped. Im talking to a company this week who is an assembler of it. They would lose the contract if they spoke out loud about it. If i were an analyst, i would say, this stocks going down. I dont want to not like it. What about the sentiment change and is it something investors should take note of . I think it is fascinating how now again, you get approached, im sure, all the time, i do as well, baseball practice, whats going on with apple, whatever, during the course of a weekend. Because it is so widely owned. It has to go down because of that. Sentiment has changed. Suddenly its well, yeah, those margins have to be under attack giving how much market share samsung has. How can they maintain that margin. China came out, the news is good. Because the stock was going down, we have to presume the news was not as good as the downgrade said. Its not an expensive stock. Its a stock thats overowned. You need to have the i went to a doctor this morning, and apple didnt come up. I was thinking, hey, could be closer to it did not come up. The first stock that didnt come up. I had to go to the dentist just to get a dentist check. How many people are worried about apple. We did crack 500, just below 500. Its funny you talk about the snowball effect, from bmo, from pacific, i mean, this thing is taking on a bit of a life of its own. The point, of course, the stock goes down, this much cash, and that much dividend, i know that people dont want to hear this. I know my friend doug doesnt want to hear this. But again, your taxes are going up. Stock goes down. Analysts get negative. Taxes going up. Lets sell the stock. I converted my i. R. A. To my roth i. R. A. Last week, because i want to be able to pay the taxes now. It just makes a lot of sense. Maybe we revisit the stock in 2013. My trust owns it. Its like, am i excited about line in the sand. It tends to be erased by the waves. To davids point, theres a real focus now on the fundamental story. So within citigroup theyre saying samsung is gaining share. The samsung analysts in asia, aggressive on samsung shares. About 27 market share. Their surveys are indicating that the competitive advantages that apple used to have in the marketplace are no longer. Theyre diminishing. Apple doesnt have the mobile deal locked up until late in 2013. Theyre really at a disadvantage at this point in terms of expanding their markets at this point. That will be one of many questions well hear. Everybody comes back to the multiples. Time and again. As we did when it was going up. Why cant it be 700 a share, its only trading at 14 times, you know. You do wonder if there isnt some 600 billion plus limit to have market caps above that. And then we never seem to once you Start Talking about a trilliondollar market cap, its like the cover of sports illustrated. To be a little facetious, at the beginning of my show, for years i always say the dow, s p, nasdaq, and now i say, and apple. Im just saying that the overfocus, ill play that game. But samsung, i have been saying for about six months that samsung was kicking butt in asia. Because one of my best ceos just said, on air, listen, samsungs crushing them. When the stock goes down, were deeply focused on how much better samsung is doing. You get to the end of the tax year, and Apple Unveils a new product. They need to knock this over. If they dont blow us away, people go, you know i have a couple of friends at samsung. They kind of like it. I dont have anyone younger who likes the samsung. But this is america. I know samsungs better, the wireless works better, europe doesnt have the right sink syn apple. On that point, some analysts staying firm on their target. Topeka with their famous 1,111. Brians not moving. No, hes not. Katie in her firing of apple as well. What was her qualcomm target . Remember, my friend, henry had some highpriced targets. They were realized on amazon. That turned out to be one of the great stocks ever. I caution people if youre an analyst, you feel really pressured by the stock. By the stock to be negative. You feel like youve got to find some way to distance myself from apple. Their doctor probably had it. But not to be too facetious about it, its an overowned stock and getting overhanded as it goes down. Lets see when the people with big profits are done taking profits. In 2013 you dont want to take a profit necessarily, because youll have to pay higher taxes. Speaker boehner offering 1 trillion in revenue enhancements, including higher tax rates on top earners. But spending cuts as well from the white house in return, the oneforone ratio we talked so much about. The one year lift in the debt limit which could be another talking point. But harwood this morning on squawk, guys, saying there is suddenly signs of optimism, hope that this actually gets done. The president giving in at all . I thought the president was just saying, dont bother me now, not ever. I think the debates changed. I really feel like the republicans said raise taxes. Arent they all at risk . Running the risk that norquist, king of the republican party, will now strike against them . The question is how much boehner can get the vote in the house. Grover has said point blank, youre finished if you vote for a tax increase. Grover so far has been much more powerful than boehner. Kind of like the shadow government of the republican party. What im saying is, groefrvers been saying this on air. Saying, basically, listen, those who get out of line will be dealt with. Period. Thats very powerful. What is boehners threat, to remove you from a committee, versus grovers threat to remove you from your seat . Who has the power . Ill tell you who has the power, the president does. As of january 1st, everybodys taxes go up and we start having a conversation about tax cuts. And thats where i think thats where its going. Its the 17th today. Check your watch while youre on the air. With my eyes i cant even see the date anyway. Hes always on me, this one. Does the president want to go over the cliff . It seems like he wants to go over the cliff. I refer to grover, because boehner doesnt seem to have the power and grover does. The point, again, bob corkers pledge is not to me, it is to the voters of tennessee, thats the argument hes made again and again. If he wants to have a different conversation with the voters, thats his choice. Why is corker the coolest man on earth . Who does he play golf with . Peyton manning. Really . Hes giving me all the big the minimum tax. I said, what are you up to this weekend . He said, i played golf with peyton manning. I said, are you kidding me . That seems to be more important to you than the fiscal cliff. 113 . They still need home field advantage. Theyre competing for a first round playoff. What peyton has done is just amazing. Steve liesmans exclusive with lacquer. One more look at futures this morning. Well cover what 10 on squawk earlier today. And a lot more when squawk on the street comes right back. [ male announcer ] at scottrade, we believe the more you know, the better you trade. So we have ongoing webinars and interactive learning, plus, inbranch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. Our teams have the information you want when you need it. Its another reason more investors are saying. [ all ] im with scottrade. Its another reason more investors are saying. Who helped make slea difference last yearose for thousands of california foster kids. Thank you for helping foster kids. Thank you for the school supplies. Thank you for the new shoes. Thank you, secret santa. And thank you for donating money. Your generosity proves that while not everyone can be a foster parent, anyone can help a foster child. Thank you. Thank you. Gracias por su ayuda. Thank you. Busy week shaping up with futures currently up about 45. A lot of data on the way. Got empire this morning. But later on in the week, housing numbers final q3 gdp. Keeping a close eye on newtown, connecticut, our hearts and prayers going out to the victims there. Remembering those who lost their lives at sandy hook elementary in newtown. A moment of silence observed at the New York Stock Exchange. In remembrance of those who lost their lives in the newtown, connecticut, shootings. [ male announcer ] you build a reputation by not breaking down. Consider the silverado 1500 still the most dependable, longestlasting fullsize pickups on the road. And now weve also been recognized for lowest total cost of ownership based on important things, like depreciation, fuel, and maintenance costs. And now trade up to get a 2012 Chevy Silverado allstar edition with a total value of 9,000. From outstanding value to standing the test of time, chevy runs deep. Time for the mad dash on a monday morning. Apple gets an inordinate amount of attention. But its not the sole source of pain. No. Ill tell you something, carl, we used to try to figure out who is in the apple device. Tear it down, what do you find, qualcomm had been in there, skyworks, very big contracts. Well, anybody who is tainted, neighbor who is in is now tainted. Bernstein comes out and says, look, the whole qualcomm related apple selloff, it should be a reminder that there are other things going for qualcomm. They do have 4 g. Skyworks, skws, has been similarly appointed. When you see a stock like this break down, people dont know what to do, because youre not allowed to come out, youre not allowed to mention apple. Jpl, an assemble erassembler. Tim cook, the ceo of apple says, dont worry about your apple business anymore, you just lost it. Jay reports this week, i think a lot of it has been, maybe apple is slowing. So be careful. Theres a lot of hidden apple stories. The other side is true, too. Now, Texas Instruments was downgraded this morning. It will be very interesting to see, cypress, lets mention cypress, it is not an apple story. When you see these stories that are not apple, even though they havent done that well, if we can look at cypress. Very big yield. This started bottoming when we heard problems. Theyre a kindle play. People are scrambling to be away from apple. Look at kindle. Lets look at amazon. If you really believe you can get a yield here, you get terrific management by t. J. Rogers. Maybe thats where you have to be. The chip equivalent of what dell and hp have done over the past couple of weeks. The problem with all of this is, the reason why these are going up is because theyre not apple. Why did they go down . Because they were not theyre not apple. I want to caution people, you ought to have more reason to buy stock than apple tiein. Qualcomm is a good company, doing a lot of things right. The idea of throwing it away, it shows theres an uninformed panic about anything apple. Its a contagion apple. I would caution people not to just throw away a stock because it has apple in it. As you said to a twitter follower today, whats your edge. Youve got to know something. Im not talking about inside information. Im just saying, when you bought something, did you buy it just because of apple . Because now youre going to have to sell it. If you bought qualcomm because of why it may do well in the revolution of 4 g, then you can stick with it. If you only bought it because you thought it was apple, i know youre going to blow it out. Im trying to caution people, really learn why you buy something. Skyworks solution has been just crushed, because its an apple play. When they first didnt get into apple, it got crushed. Sure. Lets be common senseical. Whether you should look at hersheys and be a Consultant Company like accenture. Dont be so apple centric as to feel like, wow, im done with this market entirely. Great advice, jim. Can apple shake off the jitters after falling below 500 free market. And the richmond fed president is at odds with bernanke. A week of action gets under way after the opening bell which is, of course, in just a few minutes. I always wait until the last minute. Can i still ship a gift in time for christmas . Yeah, sure you can. Great. Wheres your gift . Uh. Whew. [ male announcer ] break from the holiday stress. Ship Fedex Express by december 22nd for christmas delivery. He loves risk. But whether hes climbing everest, scuba diving the Great Barrier reef with sharks, or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesnt nickel and dime him with hidden fees. So he can worry about other things, like what the market is doing and being ready, no matter what happens, which isnt rocket science. Its just common sense, from td ameritrade. Youre watching cnbc squawk on the street. Were here at the Financial Capital of the world. The opening bell should ring in just about 4 1 2 minutes time. Oracle on tuesday, fedex on wednesday, thursday nike and research in motion. Monster over the past three months outperforming apple hands down. Its amazing to see the stock turn around on the anticipation of an operating system which is much delayed. So finally out is good. The. One thing they did do, i was always surprised when they did the restructuring, they closed so many factories, whatever cash flow they bring in, it can be monetized. And perhaps their Balance Sheet would be in trouble. The Balance Sheet is quite good. The device itself shows you where apple has fallen, too. Suddenly we think, maybe that device is a killer. Maybe people wont defect to apple. Apple isnt as good as samsung. It allows research in motion to sneak up. People at one point said, apple storming the enterprise. Now we think that apples losing the enterprise. Wow. We should mention a big coffee deal just announced. Its big in the sense of who is buying it and what they bought already. Ben kaiser is buying caribou coffee at 16 a share. A 13 premium over fridays closing price. Keep in mind that ben kaiser already did a coffee deal not too long ago. They bought petes coffee and tea last summer. That was almost it was a 970 million deal. Theyre going big, doubling down in coffee at this point. One way to look at this. I was thinking, starbucks is in a position, i had a great meeting a couple weeks ago. Maybe this is just a sign that this coffee bull market continues. If theres enough room for all these different brands, i find this rather surprising, but there are a lot of people who have not cut back on coffee for certain. And its still an expanding market. Starbucks billed its tea is in the market. But this is a bull market in coffee. I drink it all the time. I do, too. We need magic cups here on the set. Yeah. Wow. You mentioned on friday a lot of big earnings this week. Oracle, fedex, as we said, nike. What do you think . In terms of earnings, it doesnt feel like the last couple of weeks of december. No. Its really an amazing time. Everything is being put through a fiscal cliff analysis. Heres nike, a chinese play. Oracle, expectations big data play. Heres darden, can they turn around red lobster. I think one of the problems is, theres an article today about what cliff. And thats because when the individual stocks, unless they reference the cliff, you just dont feel that it plays a role. Youve got the journal and the times with both stories about how next year might be okay in terms of cap x. Tepper on squawk today, using a phrase, im not sure if we can repeat, in terms of putting your assets toward stocks when the fed is printing so much do you want to say it . Ill let david say it. No. When you are saying youre driving fast, another way of saying pedal to the medal to the wall. To the wall, all right. He also made a mention of carried interest, saying get rid of it. Thats the conversion, by the way, people during the 80s, Ronald Reagan hated the conversion of ordinary income to Capital Gains. It was a scourge for him. Theyve so discredited it, now reagan seems like a radical democrat. Fedex also on tap this week. Theyre actually here doing the honors this morning. Fedex workers celebrating the Holiday Shopping season. Look at the run in copper that weve had, is up for at least five sessions. You mentioned the copper, the china plays. The comments. The caterpillars of the world. Remember when ets, used to buy the actual commodity, i dont know how much, but i do see theres a lot of things that tell me that it indicates maybe we reverse. I dont like big up monday openings. I feel like they often tend to fool people. The empire was not good. Its mixed here. Its just definitively mixed. Were thirsty for those earnings. Oracle could be big. Ge analysts meetings could be big. It is expected to give guidance for 2013. Theres a 2 00 p. M. Eastern time Conference Call, i believe, associated with that. So we may be learning some things in terms of at least our expectations next year from ge. Increased its dividend last week, that not that long ago during the financial crisis was cut. Rather substantially. Over the last year, ge capital has begun paying a dividend yet again to its parent ge. And so it will be interesting to hear. We should point out ge still owns 49 as well as universal. Ge made a major move. Into oil and gas. Particularly natural gas. Which hardly a day goes by that we dont see an article that says, natural gas could be part of the revolution. Theres not a lot going on in the country, because theres too much natural gas. Wall street journal this morning looks at best buy, says it might not even be worth its current value. Last week, postponing a deadline for any bid. We want to look at shares, just up 1 or so after a tumultuous end of the week. Up huge on thursday. Down about the same on friday. Well see. February 1st to february 28th is now the window by which the founder, cofounder, mr. Schulze, has an opportunity to make a bid. Well see if he comes with anything, and more importantly well sew how christmas does and how the fiscal year went for this company. Which we know is under certain pressures. New ceo who does have a plan. No timelines associated with that plan. Hes not going in like jcpenney, 29 done, 35 done. He wont give any metrics in terms of measuring. There is belief perhaps theres a chance there. Well see. Actively picking up other companies in the fast moving consumer goods, beauty, fashion. Do you regard them as something as a company who has just decided to build are they in people hear about pitch their business all the time. They are aggressive. They really are. Who are those guys . They control coty, which made the hostile bid and failed for avon some time back, earlier this year. Yeah, they are very aggressive. I know you and i, when we get well what were you going to say about you and david . One of the places i like to shop. I had a feeling that jimmy chu was going to break your mold. This is interesting. Me and carl are battling. It just seems to be that like this is this quiet accumulator of really fastmoving, high multiple brands. Maybe its a company we ought to put on the radar screen as being the next great big Consumer Products company out there. Kind of impressed with them. They are being very aggressive. At a time when we say assets are cheap, they seem to be listening. Fascinating piece in the times about instagram and how they reportedly had an offer from twitter for 500 million and change in cash and stock. And facebook bought for more than 1 billion. It wasnt exactly a billion. Weve seen that knob of times for these early stage companies, instagram being one of the key ones. How many employees did they have . 13 employees. You like to aim for the value. They promised to have fewer people. It was 90 people. Very close ratio. We also point out its been a home run because it seems like an antidote. 11 billion well spent, david. One of the more interesting deals weve seen this year. Its a per capita thing. We could go that route, yeah. Staples announcing the resignation of its coo, thats at the top of the hour. Stock moving down about half a percent. Michael miles jr. Is leaving to go to an Investment Firm in boston. But this is not something you want to see, a top manager leave a company. Office max has been the star of late. This group is a horrible group. A lot of people feel its been amazoned. Or walmarted. Not a lot of Small Businesses creation obviously. Its been staples was a great stock for a long time. And it has been a total bust. Just bust. All right. Lets check with bob pisani on the floor this morning with whats going on. Happy monday, everyone. I want to bring you news on night capital. The Board Meeting has begun. Remember, they are considering competing offers from two competitors. Its not clear if both companies have increased their offers. We know what they are roughly. Weve been trying to get information over the weekend about whether theyve increased the offers or not. Not clear well get any information on whether they make a decision today or not. They could decide to do nothing. The board could decide to do nothing and keep the company intact. But there is a problem with that. It was a 2. 50 stock before this. Once they had competing offers, the stock went up to 3. 20, 3. 30. So if i get anything more on this throughout the day, ill let you know. Meantime, the stories over the weekend about boehner and the fiscal cliff. The good news is, do nothing is off the table. So now well either get a grand bargain or something that is at least the minimum necessary. Theres a Little Something in between. A lot of people are passing around the senate bill that raises taxes on the wealthy over 250,000, but also increases the taxes on certain classes to about 20 overall. Thats very, very important overall. Im talking about dividends and Capital Gains. There might be a compromise in between a grand bargain and just doing minimum necessary. I think thats where a lot of the negotiations are going. Did you see asia . Catching a bid all over the place. Land slide victory for the conservatives in japan. You know what the conservatives stand for . Unlimited easing stimulus. The new Prime Minister is back in again. Increase defend spending. Increase Infrastructure Spending in japan. Thats why the asian markets were up overall. Did you see what was going on in shanghai index . Up another 0. 5 . Finally, did you see the Airline Stocks . Nice upgrade at a couple of the firms there, upgrading the Airline Indexes, moving the last several weeks on better news overall. Minimal impact from Hurricane Sandy. So they upgraded the Airline Stocks today. The coal stocks up, too, on talk over in barrons that coal would be in much higher demand over in china. Guys, back to you. Thank you, bob. Lets go over to the bonds and dollars. How are you . Good morning, jim. Well, Interest Rates, once again, have trickled a bit higher. If you look at it in the context where weve been, basically held the bottom of the range. The pivot, 1. 60. We talked quite a bit about how 160 was an important level. We have built on that as weve distanced ourselves, a dozen bases points above it. Its fascinating to look back towards europe. Many hedge funds forsaking some of their short positions on the french fixed income market. And so their rates are moving a bit lower, as that buying comes in. But look at how the boon has such a different pattern. Still a lot of anxieties in the european sector. Theres going to be a lot of protests in spain, for example, today. Foreign exchange, if we look at the dollar yen, we look how quantitative easing is going to be a much more enhanced program in japan after the elections. You can clearly see how the dollar has performed quite admirably against that weakening of the currency issue on quantitative easing. Remember, for an export economy, this is not something theyre so upset about. Last, but not least, even our weakened partner in europe, we just discussed, look how the euro versus the dollar is at some of the best levels weve seen since early may. Something to Pay Attention to. We also had empire index on the weak side. And minus 56 billion on october treasury, International Capital flows. Thats the weakest level since the summer of 2011. Now were going to go to david faber whos talking about a sprint clear wire deal. How clear is it, david . We did get the deal itself, Rick Santelli. Thank you very much. After a couple of months of which weve been talking about this. If you recall, back on october 10th, we got the deal this morning in terms of the special committee. Clearwire allowing the company to be acquired by sprint. It is about a 2. 2 billion equity Purchase Price to sprint. If you recall, owns roughly 50 or so of the company. As we pointed out so many times in discussing this, clearwire is as much, if not more, a debt story than an equity story. We Start Talking about this the day the soft bank deal with sprint was announced, or we reported on it. And clearwire shares ran up markedly every since then. As i told you back then and along the way, it was sprints intention to acquire clearwire. They will point out to the unaffected stock price, the stock price clearwire had prior to october 10th. Why all this talk about price . Youre going to hear a lot more about it. It is because they do need a majority of the minority shareholders, the shares not owned by sprint, to vote in favor of the transaction. Now, they already have commitments from comcast, intel, they own about 13 of the voting shares. Take out sprints side of it and it ends up being 26 of that minority. So the hurdles not that high for sprint and clearwire. They only have to get 25 of the other shareholders out there to vote in favor. Judging from the Conference Call, the conversations ive had, the press release itself, they want the world to know, hey, this special committee did not shirk its duty. It took it quite seriously. It looked around, tried to see what else was out there in terms of value. It wants to remind you as well, this is a company with a lot of liquidity needs, a funding gap. And i think they even had blackstone listed for restructuring advice. Restructuring meaning, we had to take this thing into the distressed situation, even potentially bankruptcy. They raised 2 billion in debt over the last few years. They have limited access for new debt capital. Substantial funding gap. Restructuring is possible. All these things said in the Conference Call, because they are going to have a shareholder vote down the road. Thats 90, 120 days away. We have a proxy yet to come. They want to set the stage and say, come on. They hired an Investment Bank to inspect an option in 2010. By the way, we got incredible proposal the last few weeks to potentially sell spectrum, but we concluded that was not any better. In fact, a bit worse. Squishy is the term some were using with me to the sprint deal as well. So all those things cited as reasons why this special committee agreed to 2. 97 a share. That, by the way, the ceiling on what soft bank, which does have the right here to say yes or no to sprint, willing to go to the same price that was paid to eagle river. Mccall started clearwire way back when. Google got out way below these prices some time back. My guess is, they get it all done. It is a distressed situation in some ways. Then the question will be, what does sprint do with it. The deal itself wont close immediately, so those who are paying north of this price may end up being hurt. They may. Now, theres always hope when you get close to it, they may not have the vote, theyll bump a bit. We shall see in time. Theyre certainly making an endorsement of why they agreed to 2. 97. And why an alternative is not one that shareholders should in any way save for. You saved viewers a lot of money. There. All right. Ill take it. All right. Giant changing a recipe for a wellknown soda. Well tell you which one were talking about and what is behind this move. And later, mcdonalds bringing back the mcrib today. What the bacon, onion and cheddar sandwich did for november sales. I love the holidays. And with my bankamericard cash rewards credit card, i love em even more. I earn 1 cash back everywhere, every time. 2 on groceries. 3 on gas. Automatically. No hoops to jump through. Thats 1 back on. [ toy robot sounds ] 2 on pumpkin pie. And apple. 3 back on 4 trips to the airport. Its as easy as. [ man ] 1. [ woman ] 2. [ woman ] 3. [ male announcer ] the bankamericard cash rewards card. Apply online or at a bank of america near you. Omnipotent of opportunity. You know how to mix business. With business. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above. And still pay the midsize price. I could get used to this. [ male announcer ] yes, you could business pro. Yes, you could. Go national. Go like a pro. Yes, you could. Customer erin swenson bought so, im happy. Today. Sales go up. Im happy. It went out today. Im happy. What if shes not home . together she wont be happy. Use ups she can get a text alert, reroute. Even reschedule her package. Its ups my choice. Are you happy . Im happy. Im happy. Im happy. Im happy. Im happy. Happy. Happy. Happy. Happy. together happy. I love logistics. Take a look at the dow. Bank of america leading the way. This is a new 52week high for bank of america. What a year bank of america has had. The stock at 10. 74 right now, up by 1. 5 points. Ibm in terms of weighting on the dow is higher by one full percentage point, or two points here. Meantime, a sweetener shakeup over at pepsi. Diet pepsi is looking to invigorate its recipe by using a mix of two artificial sweeteners rather than just aspartame. Its to help preserve the taste. Supposedly, guys, this is happening ahead of a big rebrand coming, that is still to come. Start messing with soda formulas, and you need to be very, very careful. Its been four weeks now since ive had a diet soda. Really . Are you going through withdrawal . As per my cardiologist. I miss them tremendously. I feel like i got addicted for a while. Americans especially love the bubbly. Is that before or after he asked you about apple, your cardiologist . No, he was not in apple. Which is why i decided to stick with him and his advice. That is now the deciding factor. The litmus test. Now that i recall, he had apple. Im going to buy a whole case of dr. Pepper today. Speaking of apple, apple just turned lower. It had been trading higher. Up marginally, up from the session so far, but now it is down just under 2 a share. Contending with downgrade from citi, a number of price target reductions this morning. And then defended on the other side by the likes of morgan stanley, as well as barclays. Interesting stock move here. Battleground. Truly a battleground right now. At my old hedge fund, we used to talk about the battle of the psalm, where 60 british soldiers were killed that morning. You just dont know whats going to happen. I dont like the maxims. Weight until 2013. Meantime, the dow is up close to twomonth highs here. Despite the skepticism we went into december with, regarding policy. The market was the big point among some of the papers. I went through the charts this weekend, spending about five hours going through the hand charts. And it was just there were so many positive ones. I like the hard copy. Since 1988. Why not. It was a good deal. I had a lot of hair then. I was i was having a good time. When we come back, jim cramers thoughts, six stocks in 60 seconds. I love this show. 18th, five days later, i had a massive heart attack. Bayer aspirin was the first thing the emts gave me. Now, im on a bayer aspirin regimen. [ male announcer ] be sure to talk to your doctor before you begin an aspirin regimen. [ woman ] learn from my story. Final for six in sixty, six sox in 60 seconds. We start with unilever. Run by a guy who used to run proctor. I think the stock goes higher. Late recognized by credit suisse. Rbc making travelers a top pick. This group i mentioned the charts. This is an amazing chart. This is just total breakout. Whether it be aflac, travelers, breakout mode. Google. Its true that the ftc just a slap on the wrist, google is up and away. Tractor supply, shortterm buy. This stock has been horrendous since the storm. I think it works. Cqp, signing a deal. This is incredible. People understand when you hear the natural gas being exported, theres only one company that has the license to do it. These guys are signing up everybody. I skipped over all the perigo is a knockoff of the brands at the store. They just dont do well. Talk to me about tonight. Whats coming up . Look, were analyzing, were talking about the way to make money off of apple, not acting well. And i think its important to recognize that this has become two worlds. And the tech stocks that are not apple, their charts are so beautiful, carl. That i just find it breathtaking. Were also take a look at something that happened with Hurricane Sandy that has produced an actual boom in some part of the economy. You know, tragedy sometimes there are companies that do well when the gdp expands and theres a lot of money coming to the federal government to jersey and new york and its having an impact. You have to watch the flow of money, even as a result of tragedy. Obama said obviously the governors wanted it. The governors have done a magnificent job of fighting for their states. We should keep it in front of us because it was horrendous. Lets frame the atmosphere with regards to the cliff. On friday you were pretty critical. You said politicians dont understand, with Small Business you need traffic, right . Its the customer. Youve got to get the customer in. You dont do a small you dont create Small Business having bought and trying to recreate an in. What matters is customers. Believe me, i have partners who are very caring about the tax situation. We care about customers. If you give something that makes the customers more confident, every business does well. If you dont give us confidence, our customers pull back. And they pull back not because of taxes, they pull back because theyre scared of what will happen. The wheels of negotiation are moving. We dont know how quickly. As david tepper said, they could have a deal inning hours. Should you get in now or will it continue to slide at 5. 07 . Liesmans exclusive with jeff lacquer, who is at odds with his fellow fed policymakers. Keep it right here. [ engine revs ] [ male announcer ] the mercedesbenz winter event is back, with the perfect vehicle thats just right for you, no matter which list youre on. [ santa ] ho, ho, ho, ho [ male announcer ] lease a 2013 c250 for 349 a month at your local mercedesbenz dealer. At your local to the best vacation sp all the gulf it doesnt matter which of our great states folks visit. Mississippi, alabama, louisiana or florida, theyre gonna love it. Shaul, your alabama hospitality is incredible. Thanks, karen. Love your mississippi outdoors. I vote for your florida beaches, dawn. Bill, this louisiana seafood is delicious. Were having such a great year on the gulf, weve decided to put aside our rivalry. Now is the perfect time to visit anyone of our states. The beaches and waters couldnt be more beautiful. Take a boat ride, go fishing or just lay in the sun. Weve got coastline to explore and wildlife to photograph. And theres world class dining with our world famous seafood. So for a great vacation this year, come to the gulf. Its all fabulous but i give florida the edge. Right after mississippi. You mean alabama. Say louisiana or theres no dessert. This invitation is brought to you by bp and all of us who call the gulf home. Well, having a ton of locations doesnt hurt. And a santa to boot [ chuckles ] right, baby. Oh, sir. That is a customer. Oh. Sorry about that. [ male announcer ] break from the holiday stress. Fedex office. [ male announcer ] break from the holiday stress. Sfx sounds of african drum and flute look whos back. Again . Its embarrassing its embarrassing we can see you carl. We can totally see you. Come on youre better than this. All that prowling around. Yeah, youre the king of the jungle. Have you thought about going vegan carl . Hahaha you know folks who save hundreds of dollars by switching to geico sure are happy. How happy are they jimmy . Happier than antelope with nightvision goggles. Nice get happy. Get geico. Fifteen minutes could save you fifteen percent or more. Welcome back to squawk on the street. Well start with the troubles in tech land. Specifically, apple, falling below 500 premarket. Bouncing back and then falling again. Citi downgrading shares to neutral. Several other firms coming out in support of the tech titan. As the street takes sides, we dig deeper into how to play the dow trend. The favorite is back on the mcdonalds menu as of today, but will the seasonal sandwich save christmas and boost sales for the fastfood chain. Plus, liesmans exclusive with jeff lacquer. Why hes at odds with chairman bernanke. Thats at 10 30 eastern time. Shares of apple after dipping below the key 500 mark after a downgrade from citigroup. Citi going to a neutral from a buy rating. Marshall, Senior Analyst at isi, great to have you with us. Thanks, melissa. To be clear, youre sticking with your buy rating and 700 buy target, is that correct . Thats correct. We actually thought the 2 Million Units in china over the first threeday weekend was very solid. That represents about a 1. 5 penetration rate of the 3g subbase of the china unicom. That compares to the threeday rate in the u. S. Markets. Verizon, at t, as well as sprint of only 1 penetration. We saw a deeper penetration with china than the u. S. We think demand is very solid. All right. At the same time, brian, that doesnt move you to move any of your eps targets or anything like that. It can have a very deep penetration in the china market. Theres no china mobile, but it doesnt move the needle at the end of the day. Typically apples been 15 to 20 or china has been 15 to 20 for apples revenues. Shipping in about 4. 5 million iphones into that country. We think thats pretty phenomenal and think its only going to get better when china mobile ram ups up the iphone 5. While we didnt raise our numbers today, were still forecasting pretty solid growth, 48 million for the december quarter. We think fundamentals are not the issue here on apple. Lets get to some of the arguments that were laid out by your cohorts over at citi. One of them is good, but not great demand for the iphone 5. Specifically theyre citing competition from samsung. What we saw in the second quarter, when apple was out of the china market is it lost market share significantly in the second quarter. If it does launch and get the china mobile deal in the second half of 2013, have people already bought their galaxies and android phones out there, so thats a loss opportunity for them. The market obviously is very large. Over 2 billion units globally for cell phones. Obviously samsung is the top dog. They ship about twice as many smartphones every quarter than apple does currently. We think the market is big enough for multiple parties to win. If you look at it from a profit perspective, apple dominates the market share, the lions share of taking the profits out of the cell phone space. We still that still has legs for a couple of years. We think pulling the trigger here on apple and selling is not the right move. Valuation is cheap. We think theres a lot of catalysts ahead of us. So i think things are moving in the right direction. The problem with the valuation argument, brian, is a lot of people say we could have made that valuation market when the stock was up at 700 a share, and now were sitting at 507 and change. Has sentiment in your view turned to the extreme opposite from when it was at 700 . Theres no way of modeling that in, the rapid and sharp change in sentiment on the stock. Sure. The sentiment obviously is very negative. If you look at the technicals, extremely weak. 50 days below the 200 day. Ten day headed straight down. You know, clearly from a mechanics perspective, apple probably has the most embedded Capital Gains in it. Fiscal cliff issues and taxes rising, people want to sell that, take chips off the table. As the stock comes down almost every day, Portfolio Managers and analysts throw their hands up and say, i need to reduce my exposure here, just in prudence. I think all that stuff is not related to the fundamentals. We think fundamentals are solid. The valuation ultimately will come back up in our view as people realize that things are better than what the stock is indicating today. I think well see multiple expansion Going Forward. Brian, you talk about a china mobile deal like its almost guaranteed, just a matter of timing. Is there no risk that this never comes to pass . Well, its well delayed. If you look at it, people were expecting this deal 12 months ago. But i think the issues here are joint marketing costs as well as care and subsidy rates. You know, we think those issues are probably going to be ironed out. China mobile is over 700 million subscribers, the Worlds Largest carrier. Obviously apple is probably the best brand out there. So i think those two want to get together and do business. I think it would be good for both parties. If they dont, thats a problem . It would definitely be a negative. China mobile is not in our model currently in terms much numbers. So that would be an incremental upside. If it doesnt happen, that would be an incremental negative. Brian, were going to leave it there. Thanks for your time. Brian marshall over at isi. Thank you. There could be a breakthrough in the fiscal cliff negotiations. Boehner asking for an equal amount of spending cuts in return. John harwood joins us this morning with the latest. Listening to your comments on squawk with joe earlier this morning, you sound pretty encouraged here. Yes. You know, ive been optimistic all along that wed get a deal, but i said the other day that my optimism was being tested by the appearance of stalemate. You had a long period of time in which the speaker was not budging on the issue of tax rates. Well, that breakthrough moment has occurred. That point of principal has been conceded, and that really is going to be the trigger for bargaining now. And you can see the administration starting to engage more significantly with john boehner, now that hes offered that made that offer in a telephone call on friday afternoon. Lets go over to the main components. First of all, he wants the rate to go up to 39. 6 on milliondollar incomes only. However, the president wanted the top rate to go up on 250,000 incomes. Boehners offer is more limited than that. Hes offering 1 trillion in new revenue over ten years. The president has been asking 1. 4. So theyre getting closer there. And john boehner also suggested putting off the fight over the debt limit, which is a big concession to the administration. Now, the Speakers Office has said, we are still going to insist as we have in the past on spending cuts, at least as large as the debt limit increase that we approve. But by delaying it on the calendar, that increases the possibility that were going to get a deal sooner rather than later. Dont know that it can be enacted before the cliff, but i think if confidence rises highly enough, carl, among both parties, you could see a brief punt to the early part of next year when they could iron out the details. So this is a positive sign. If you want a deal on the fiscal cliff, you should be feeling better today, because it looks more promising right now. I dont hear you commenting as much as to whether the rank and file would follow suit. Or does boehner have everybodys proxy . No, he does not have everybodys proxy. I think john boehner is stronger than hes ever been in the republican caucus. I think he can make this stick. Theres no guarantee of that. But one of the things that you could have happen is that some democrats close to the administration have pushed this idea, that john boehner would put it on the floor, invite republicans to vote no if they want, knowing that he would get a sufficient number of republicans to go with democrats to pass it. So hes not going to get all of his caucus. He may not even get most of his caucus. But it appears John Boehners got enough confidence and freedom of movement within the caucus that he could propose this, get it passed, and keep his speakership. Interesting. Things moving quickly here. John harward in washington here today. Thanks a lot. The cheddar, bacon, onion sandwich that boosted sales for mcdonalds in december. Steve liesmans exclusive interview with richmond fed president jeffrey lacquer. The lone dissenter at every fed policy meeting this year. More squawk on the street after this. The. All right. If the sight of this sandwich makes your mouth water, then you are in luck. Because the mcrib is back at mcdonalds today. But how much do limited time offers really impact on sales . Were here to break down the mcrib effect. Ladies, great to have you with us. Rachel, ill start off with you. What sort of impact could we see potentially in the month of december . I read in the past, in 2010 at least, one of these limited introduction offers that it actually boosted sales by almost 5 . I think it depends on what the lto is and what the prior year samestore comparison is. I wouldnt expect to see a positive number of the magnitude that youre discussing. Actually, frankly, it will probably be something in the single digit negatives. But at least its a triedandtrue product they know customers will come in for. Nicole, if the mcrib is so loved, is that why its always limited, a limited time offer . Why dont they just put it on the menu . Absolutely, its one of the most anticipated product launches of the year. By to some degree its tried and tested, but the best thing is to use what you know. Theyre going up against the most difficult comparison of the year at plus ten. We think a down low single digit would be good. If they could get the flat, it would be great. 26 grams much fat. If that doesnt want to make you run, i dont know what will. In addition to the mcrib, getting on the menu in december, we also have a lot of other products coming down the pike, as well as the grilled cheddar, bacon onion. Do you think mcdonalds is getting back on track at this point . I think what they did in 2012 is hit on their core competency which is value. I think we saw wendys and burger king, they were pushing on premium. I think for 2013, theyll take a barbell approach to pricing, not just having the core value offerings, but trying to trade customers up in the u. S. With an increased number of ltos and new Product Offerings at higher price points which will drive not only traffic, but check as well. Rachael had mentioned the tough december comparisoncompar nicole. Is it time to step away from mcdonalds and go elsewhere as mcdonalds gets back on track . Its probably not a bad idea. In all honesty, the stock does factor in from a valuation perspective, the difficult december comparisons. But one of our favorite stocks, one of our top picks for 2013 is burger king. I believe theyre taking a page from the mcdonalds playbook early on in this decade and basically filling in the gaps of their menu and improving their marketing and service, and basically taking market share. And im wondering, rachael, in terms of mcdonalds and how it performed in november, it was a better than expected month of november. Were they able to take market share . What accounted in your view for that boost in sales . Im trying to understand the landscape if anybody at this point is starting to lose shares of mcdonalds as opposed to gain. Mcdonalds continued to lose share in november despite the better number. I think they underperformed qsr sandwiches on a whole by a hundred basis points. Which is where they had been performing. This is a setup for a 2013 story, where they should once again begin to take share as they introduce Premium Products and use their advertising scale, not just to drive traffic, but drive check as well. Thats where we look for the main re version trade. Im just curious, guys, do either of you know what the margin is on a mcrib . Nicole, do you have any idea . Is it better than any other sandwiches that they have . Its got to be very, very good. As long as they can combine something with a product. Because they do offer, you know, a value entry price point. The most critical point is getting you in the restaurant and getting you to actually step out and weight with two of them, not just one, then they can make money. Well leave it there. Thank you very much to you both. Rachel rothman and Nicole Miller reagan. Well send it back to hq for a market check. Financials this morning, the Top Performing sector in the s p in early trade today, we have a mixed bag as far as what types of companies those are. Big Banks Like Bank of america, citi, goldman sachs, and hartford financial which is an insurance company. Lets take a look specifically at bank of america. That stock hitting a 52week high. Actually in just the last year, four bank of america stock, shares up 108 . We heard bullish comments on the housing recovery from Ceo Brian Moynihan on friday. Thank you so much, kayla, over at headquarters. The tragedy of newtown, connecticut, a new dialogue about gun control in this country. A democrat from West Virginia, a member of the nra, speaks to us next. Dont go away. [ male announcer ] you are a business pro. Executor of efficiency. You can spot an amateur from a mile away. While going shoeless and metalfree in seconds. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. Now this. Will work. [ male announcer ] just like you, business pro. Just like you. Go national. Go like a pro. 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. In the coming weeks all use whatever power this office holds to engage my fellow citizens from lapd, to Mental Health professionals, to parents and educators in an effort aimed at preventing more tragedies like this. Because what choice do we have. We cant accept events like this as routine. That was the president at the vigil in newtown, connecticut, last night, the Elementary School shooting that left 26 dead. Democratic senator from virginia is calling for a bipartisan conversation on reforming gun laws. Senator mansion joins us this morning. Good to have you with us. Good morning. Thank you, carl. Good to be with you. This is a bit of a statement coming from you, obviously youve been endorsed by the nra, used pictures of you holding guns in campaign material. Can you walk us through the thought process that leads you to this conversation . Carl, first of all, as a parent and as a grandparent, and the people of West Virginia, our hearts go out i mean, i can only imagine i cant imagine the grief and pain that these family members, and this entire country is mourning right now. Were all hurting. With that being said, i am a proud member of the nra, and theres an awful lot of good quality people that are great members of the nra for the right reason, to protect the Second Amendment. Were not talking about infringing on the Second Amendment rights at all. What were talking about is having not only dialogue, but Movement Towards the types of weapons that youre seeing being used. And it has changed me. Its changed me, that when we saw young innocent children slaughtered, if you will, just unbelievable, incomprehensible. And i think we shouldnt be ville nizing any Group Organization or we should be bringing people together, how do we move forward as a civilized society. Right. And one who basically are responsible for protecting our children. Senator, i know its early stages and hard to discuss specifics, but what do you think you are reasonably equipped to consider . Is this about assault im sorry, go ahead. The assault weapons, i think basically, Dianne Feinstein wants to discuss it. The culture in West Virginia is hunting and sporting, and we love it, its part of who we are. But were taught at a very young age how to do it responsibly and use them safely for the purpose of hunting and sporting. With that being said, ive never been hunting with anyone with an assault weapon. Ive never been hunting with someone with multiple clips with 20, 30 rounds in it. In deer hunting, we maybe have three shells in our gun, and thats the sport of what we do. And i just think that when you have Chuck Schumer, my friend Chuck Schumer basically saying we should look at these larger clips, those are things we should be talking about. When you have joe lieberman, just the most decent human being, saying, listen, we need to have this is bigger. Its about mental illness. Its about keeping our children safe in schools. One of the basic promises we should keep to our children, every child should have a safe place. It might not always be the home. But its always usually been the school. Now thats even taken off. Just unbelievable. Agreed here, senator. The nra themselves have been relatively quiet on the issue. Theyve deactivated their facebook page. Have they spoken to you, and what do you think their response would be to a feinstein bill if it got support . Were the nra, i have reached out and spoken to them. I intend to do an awful lot more. I want them engaged in this dialogue. These are good people. And they need to be at the table. And bottom line is, what were asking is for all of us to come together and see reasonable approaches we can take. Still protecting the Second Amendment rights. Thats their concern. And my concern also. And again, they dont need to be ville nized, nor should they be. Theyre going to be a strong participant and they should be at the table. Im going to do everything i can to make sure they are. Senator, we had a ban on assault weapons in this country that expired in 2004. Its the early days, but to the extent there is any momentum reinstating such a ban, do you think it has a realistic chance of passing the house and senate . Carl, i would think this is a reasonable approach to taking and looking at, you know, it was on for ten years. Looking statistically how it was able to protect the citizens of this country. Is it capable of doing that again . I believe its a discussion. And its worth elevating it to that level to where all of us are looking at it. Weve never been in these waters before. Weve had horrific crimes throughout our country. But never have we seen so many of our babies put in harms way. And their life taken from them. And the grief i mean, thats changed me. And its changed most americans, i would think. And with that, lets look at ways we can bring a commonsense reasonableability to this discussion and bringing all the adults to the table. Senator, when thinking about a new potential ban. What could that look like . Im asking, because that federal ban that david had mentioned, that expired in 2004, there are ways of manufacturers were able to get around that ban by making small tweaks to the weapons, but essentially keeping them assault weapons, for all intents and purposes. What sort of specifics are you going to get into . I think we need to look at everything. I think Dianne Feinstein has had a bill, shes bringing that to the floor. Im anxious to sit and talk to her, and senator schumer and senator lieberman to find out how we can collectively come together as americans to protect our children. Thats really what this is about. Its changed the level of discussions. Senator, before we let you go, do you agree that this could potentially cost you politically . And does that matter to you at all at this point . I dont think that you know, if people start thinking about politics in this time, theres a time, i guess, for everything. But when you have children, and we see i can only imagine as a parent and grandparent, carl, the grief, the pain. And i just dont think we should ever put one child in harms way. And if we can prevent that, we should. And im willing to, i guess, face whatever would come. But the bottom line is, i think that we can elevate that, protect the second right, amendments of the Second Amendment. I think we can do this in an intelligent manner, and thats what i intend to be part of. Joe manchin from West Virginia, thank you for your time. Thank you, carl. Lets take a closer look at gun sales, trends both before and after the election of president obama for a second time and recent tragedies. Mary . David, whether or not any change happens with regards to gun laugs, president obama has been good for the gun industry, largely because hes been seen as being bad for it. The newtown shooting will probably spike gun permits. In truth, the gun industry has been growing for the past few years. A presentation this month, smithansmith and wesson on track to exceed last years total of 2. 7 billion. A powerful motivator for gun owners, nra telling members in october a sweeping gun ban would be a near certainty in obamas second term. Its not the first time thats happened. 1994 marked the prior peak in u. S. Gun manufacturing, the expired ban on assault rifles went into effect. The increase to the rush to make and buy these weapons prior to the ban. Rising market lead low since 2008, when obama was elected. In fact, background checks by the fbi set a monthly record of over 1. 5 million last month and marked the 30th straight check in gun applications. Largest single day, black friday. Checks dont always translate into sales, but certainly reflect interesting guns. The guns at smith wesson. The stocks like gun sales showing upward trend over the past few years. A trend smith wesson seeing continuing. 35 to 38 increase in sales over last year. Thank you very much, mary thompson. A mover in the Software Solutions space. Lets get over to kayla for that. The companys ticker is ctwr. Two activists in it as of last month, one of them Elliott Associates just making an offer to buy the company at 11 a share. A big spike in the stock. It was previously halted. Well wait for the companys response at this point. He was the lone dissenter at last weeks fed meeting. In an exclusive, Steve Liesman will ask jeffrey lacquer about the new economic thresholds. Look, if you have copd like me, you know it can be hard to breathe, and how that feels. Copd includes chronic bronchitis and emphysema. Spiriva helps control my copd symptoms by keeping my airways open for 24 hours. Plus, it reduces copd flareups. Spiriva is the only oncedaily inhaled copd maintenance treatment that does both. Spiriva handihaler tiotropium bromide inhalation powder does not replace fastacting inhalers for sudden symptoms. Tell your doctor if you have kidney problems, glaucoma, trouble urinating, or an enlarged prostate. These may worsen with spiriva. Discuss all medicines you take, even eye drops. Stop taking spiriva and seek immediate medical help if your breathing suddenly worsens, your throat or tongue swells, you get hives, vision changes or eye pain, or problems passing urine. Other side effects include dry mouth and constipation. Nothing can reverse copd. Spiriva helps me breathe better. blowing sound ask your dr about spiriva. Last weeks fed meeting seeing a lone dissenting vote, courtesy of jeffrey lacquer. So what does lacker think we should do now when it comes to the economy. Steve liesman is now joined by jeffrey lacker. Steve, take it away. David, thanks very much. Im here with jeff lacker, the lone dissenter in the last fed meeting. I think you dissented all year long. True. Lets get into the reason why you dissented. In the past you dissented on the purchases. This time there was a new aspect to the statement. You dissented on the issue of the economic targets. Whats wrong with 6. 5 unemployment and 2. 5 . I was happy to get rid of the calendar date. I thought it was flawed, created awkward problems for us when the time came to adjust it one way or another. I was happy to get rid of that. I agreed to that part of the committees decision. I think that setting a numerical threshold for unemployment, i would have preferred a qualitative approach to describing conditions under which wed were likely to start raising rates. Numerical threshold for unemployment is risky for a couple of reasons. First, because no ones statistic can really capture everything we think is going on in the labor market. The Unemployment Rate can fall for bad reasons. It can stay high even though the labor market is improving dramatically. The chairman did make it pretty clear, as did the statement, that theyre going to be looking at more than just the Unemployment Rate. Thats true. But what do you need the threshold for. The danger is people become fixated on it. As we said in the january statement on the longer run goals and policy strategies, its inappropriate for the central bank to set a target for the Unemployment Rate, or for a labor market. Because thats determined by things that are largely outside the control of the central bank. Central banks can influence labor market conditions, but those influences tend to be transitory, and not sizeable. In this case, i dont think we can have a huge effect on Labor Market Outcomes over the next couple of years. What kind of negative results do you expect from this . How are people misinterpreting it . I think the risk is that we become people become fixated on it. It becomes an interference in our communication, a distraction from our communication. Down the road it has the potential to set up a problematic sort of tension between two commitments. We have a commitment to price stability, and now we have this commitment, or implied commitment to 6. 5 , to keeping interests lower until we get to 6. 5 . The question is, what happens if incipient inflation were to rise before we get down to 6. 5 , would that set up a quandary. In all fairness to the committee, theres this inflation safety clause that says, were going to keep Interest Rates low unless we get to 6. 5 , but also as long as inflation is expected to be within a half a percentage point of our 2 goal and Inflation Expectations remain stable, but the historical episodes weve had in which inflation pressures have emerged, inflations accelerated, all had the property that private and central Bank Forecasters expected inflation to fall. And so we might not trip that threshold. Until its too late. Until its too late. I think theres more of a basic question on the minds of the market watchers right now. Is a 6. 5 unemployment target, easing monetary policy, the market certainly acted, or reacted as if that was a hawkish move, or tighter policy. The sentence right after the one that contained the number 6. 5 made clear that the committee used this as a clean slate. In the one period, the one statement overlap, we view this as consistent with the mid2015 language. Going forward, you can decide for yourself what the date is likely to be. That should change with Economic Conditions one way or another. I can decide for myself or i can ask you, when is 6. 5 unemployment . You can look to our forecast, which we publish once a quarter. Trace out there when the committee as a whole views it as likely that we get to 6. 5 . And that would be the beginning of the time period at which consistent with the statement you would expect the committee to start raising rates. When is that . I think three years. I see unemployment coming down to the low 7s sometime next year, or sometime after next year, 2014 or so. And it could take a while to get down to 6. 5 . Im pretty thoroughly confused about the reactions. If youre going to be half a point above the target, youre going to stay wide open at 0 Interest Rates even though youre just a half a point above the target . It should be clear from the way we worded this, that 2 is our goal. 2 inflation. But i mean half a point above unemployment. Oh. Youre going to stay down to youre going to be a half a point above the unemployment target and still going to be at zero. Is there any reaction function in there . Or is 6. 5 a trip point . The sentence after the one that had 6. 5 in it, the rest of the paragraph makes clear were going to look at wide array of market indicators. I think its with whats happening in the labor markets. And decide accordingly. Ive got to press you on this. If youre telling me youre going to be at 6. 9 , and still a zero funds rate, is that your point, that it doesnt change until then . Or how does that work . Well, markets have got to parse this language where weve got the 6. 5 in there, and later on in the paragraph theres a range of other conditions that were also going to look at. So there is that escape clause later in that paragraph. Do you think weve gotten less confusing here, or more confusing . Well, it should be pretty clear that this committee is straining to provide as much stimulus as possible, without endangering our price stability credibility. My worry, and the reason i dissented on this, and the asset purchases, is that we seem to be willing to test the very limits of that credibility. And when you make a test, sometimes it doesnt come out right. Let me ask you about your economic outlook. Were doing 2 economic growth. Whats your forecast . 2 is my forecast actually. Thats what i wrote down for 2013. I think we have a good chance of picking up after that. If weve done 2. 5, 2. 25, rather, since the beginning of the recovery, weve been a little softer this year for various reasons. Anticipation of the cliff, some other sources of uncertainty are keeping us at a low rate of growth. I dont see those dissipating very rapidly next year. And i think the headwinds are going to be with us for some time. What about inflation, youve been concerned about it for a while and it hasnt come to pass. Whats your forecast for next year and do you think maybe you should revisit your inflation framework . I think inflation will come in a little under 2 . I put in 2. 8 for 2013. I think its impressive that weve achieved exactly 2 during this recovery, given all that weve gone through, given the potential for us for people to question our credibility, given what weve done with the Balance Sheet. Having said that, ive never thought that the major inflation risk was during this time of, kind of low growth that were seeing. Its always struck me that the time, when inflation risks would be most present are times when the growth rate picks up, and with the huge amount of reserves on bank Balance Sheets, they start seeing more lending opportunities to businesses and consumers. They take advantage of those, trying to all convert their reserves to loans. And we dont reduce the quantity of reserves. The only thing that can give is loans and deposits. And that creates a potential of inflationary pressures, because of the expansion of the monetary assets in the economy. Thats always been the fear ive had. So its not next years inflation that im worried about. Its when the economy picks up more substantially. And we obviously have to take Interest Rates up. The fear is that with a large Balance Sheet, we become much more vulnerable to small errors. I think in principle, we can raise rates rapidly enough in principle. And we can sell off assets rapidly enough in principle. The question is, how to do so, and are we going to correct course in time, and are we vulnerable to large mistakes. Jeff, appreciate your explaining your views on your dissent at the fomc. Jeff lacker. Melissa, back to you. Thank you very much, steve, for that exclusive. Lets look at this chart here. You dont have to adjust your tv sets, youre actually seeing that correctly. Research in motion, handily outperforming apple over the past three months. What does this mean for your investing strategy. Apple versus rimm later on in the show. Ally bank. Why they have a raise your rate cd. Tonight our guest, thomas sargent. Nobel laureate in economics, and one of the most cited economists in the world. Professor sargent, can you tell me what cd rates will be in two years . No. If he cant, no one can. Thats why ally has a raise your rate cd. Ally bank. 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And im just talking about the, quote end quote, superficial debt, not the underfunded liabilities. But the numbers are staggering. In the year 2000, we had 5. 6 trillion of debt. You can see what happens. In 08, 10. 6. Currently were bumping against the debt ceiling right now. A little over 16 trillion. The estimates are that by 2016, were going to have 22. 8 trillion. Get used to it, because obviously as the discussion moves towards the debt ceiling, as well it should, thats the number were going to be referencing the most. Lets consider some of the stories of late. The rating agencies havent necessarily weighed in on the fiscal cliff issues. Because as perverted as it may sound, im sure many of you have listened to howard dean or greenspan, they believe the rating agencies must think along the same lines. No matter how horrible or haphazard or sequestered spending cuts can be, the rating agencies, and some prominent economic people in the economic community, believe that is a start. I dont necessarily. But many governors have been on this show. We had mark warner. They talked about, well, as a state governor, i think the debt ceiling games are crazy. Well, for the most part, other than vermont, all states have some form of a balanced budget. They might not call it that way, and games can be played. But for the most part states try to close up the books every year. Maybe if the president doesnt want a limit on the debt ceiling, which i think would be a mistake, hes the president , hes not the king, maybe we should swap. Maybe the effective is you dont want no debt ceiling, if we put forth a balanced budget amendment, we could get there. Theres also another thing i notice on that debt clock i like to play around with. You can see, for example, how many taxpayers there are. You can also see how many retirees there are. The retiree category includes people with disabilities. But as one final thought. When you look at the percentage of retirees as a function of taxpayers in 2000, it was about 42 . Right now, its about 60 . So when we look at the debt, and then we look at how we pay our bills, and who taxpayers are, this dynamic along with number really need to be thought of quite seriously. Whether you raise taxes, whether you groe the economy, i guess one of the problems is, we have to have a bigger percentage of people working, or a bigger revenue stream to pay for the demographic time bomb that was warned many decades ago that we happen to be in the midst of right now. Carl, back to you. Rick, well see you in a few moments with your guest. Dont go too far. You heard from kayla back at hq, news there. Elliott management making 11 share offer. 20 billion Fund Management company. Has been a very strong activist. You may recall bmc software company. Also a number of years ago, it succeeded evest eventually. The offer is subject to due diligence, subject to them finding financing. They have had conversations about that. Well see what compuware. Theyll see whether there are potential buyers out there for compuware. It is having the effect of sending the stock price not quite to, but close to that 11 a share cash offer, which they point out is a 21 premium over the companys 30year volume weight average price. Busy man over on that side of the table. Meantime, up next, proof that success can come in small packages. How birch box is raising millions of dollars in funding. The companys founders will join us at post 9 right after this us at post 9 right after this break. [ 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. You can stay in and like something. Or you can get out there and actually like something. The lexus december to remember sales event is on. This is the pursuit of perfection. The lexus december to remember sales event is on. So as you can see, geicos Customer Satisfaction is at 97 . Mmmm tasty. And cut very good. People are always asking me how we make these geico adverts. So were taking you behind the scenes. This coffee cup, for example, is computer animated. Its not real. Geicos Customer Satisfaction is quite real though. This computeranimated coffee tastes dreadful. Geico. 15 minutes could save you 15 or more on car insurance. Someone get me a latte will ya, please . Can i still ship a gift in time for christmas . Yeah, sure you can. Great. Wheres your gift . Uh. Whew. [ male announcer ] break from the holiday stress. Ship Fedex Express by december 22nd for christmas delivery. Special delivery, its beauty by mail. Each month birchbox members receive a box of Luxury Beauty items. A delivery of exciting products that help their daytoday routine. This isnt just for ladies, either. Birchbox men launched in the spring. Its the convenient place to get the latest beauty bootie, and stay in vogue. Baby you light up my world haley barna and Katia Beauchamp are the cofounders birchbox and join us live. You pay for a subscription. How do you get the suppliers to give you these products . Are you paying for them in any way . Whats the cost on your side . Basically suppliers have been giving samples, getting customers to try the pukt for ever. Birchbox is the first way where they can track the roi and get the samples in somebodys hands in a targeted way. Theyre excited to get them to us in kind of a marketing expense but were also retailing those products. Were a Marketing Partner and a retail partner. If i get a sample of a foundation or carl does ive tried them all. And he likes it, you go onto the site and actually buy it from you, or do you put it through to the actual manufacturer of that . Try, learn, and buy. The print model. We send monthly boxes of customized samples. We have editorial content teaching you how to use that foundation, but we also sell the fullsize version. Its a complete 360 from discovery to purchase. You have warehouses where you keep this product on the inventory side . Yes. Its totally aligns with our partners. We want to send that sample to the right customers whos most likely to buy it. What is the return on investment . Lets say youre a company and giving away samples of foundation to you guys. What can i expect . There are a lot of things we do with partners. We put together a fullfledged campaign. If you think of a brand, youre launching a product, you spend so much money to get a customer to walk up to your display. Birchbox gets the product right in her home and then we create a campaign thats editorial, social media, and its also marketing, in her inbox, in her email, and we make it so easy for her to buy. Thats the idea, youre already a subscriber, you can click and buy. The two of you met at hbs as youve seen on the screen. Almost a million in venture funding. Capital easy to come by these days . Its doing very well. Weve reached two rounds. A speed round in 2010 and seriesa of 10. 5 in 2011. To be honest it was sort of tough telling venture capitalists about a beauty prescription company at first. Then when we got significant traction, we were able to get Great Investors behind the concept. When do you need to do another round . Were in a great place because our Business Model is very clear revenue. On the other side. So thats wonderful. But if we decide were going to go faster well be looking at raising money again. Nothing in the immediate future. You guys are global. You do a fair amount of business in europe. Environment there getting easier, tougher, the same . We actually launched birchbox in 2008 in a tough environment in the u. S. So even though the environment there, people know its a little bit shaky, were still relatively Small Business though. Were not being impacted at this stage. We are in the france, uk and spain and all of our businesses are growing in each market. Were hiring in all of those markets. Anybody who wants to know. Have you changed the mix of samples depending on the economic environment . For instance in 2008 did you have maybe a lower end price point product as well as a higher end or no . Thats one thing about the beauty industry, trends are always changing. Its an accessible luxury. Youve heard of the lipstick effect. When the company goes down people want to treat themselves. One thing weve seen this year is male trends. Nail polish, nail art. Carl loves nail polish. He just loves it. What are all those people who give out samples in Department Stores going to do when you put them out of business . Theyre doing something different. Department store sampling and sampling in stores is a loyalty moment. Its not a great thing to do for Customer Acquisition. You still have to get a customer to walk up to you. Were doing something really different. Its Customer Acquisition and its in a very targeted and smart way. Katia, hayley, thanks so much for coming by. Thank you. Speaking of retail, holiday shoppers, you have unbelievable one week left before christmas. So which retailers are set to see the biggest gains this final week ahead of the holidays . Well name a couple of the names when we come right back. Bob, these projections. Theyre. Optimistic. Productivity up, costs down, time 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. A decent size gain on the back of what david tepper said this morning and a lot more. You got a lot to talk about tonight. Looks like apple is carrying its losses beyond that trade. Well also give you the four tech stocks that are better than apple. And that better than apple . The 496 stocks in addition to that. The top three tech stocks for 2013 at least. See you tomorrow, carl. In case youre just tuning in, heres what you missed earlier this morning. Welcome to hour three of squawk on the street. Heres whats happening so far. If we get to january 1st well have the biggest tax increase in history, and the president can turn around on january 2nd and propose the biggest tax decrease in history for everybody under, and you pick the number. I would just beg, you know, its like you want to beg these guys in d. C. To do something. To help this country just get to where it was. Get people to work. They can do it. They really can. I went to a doctor this morning, and apple didnt come up and i was thinking, hey, could be closer to it did not come up. This is the first thought that didnt come up, tempted to go to the dentist just to get a dentist check. Get an opinion on how many people are worried about apple. Grover has said point blank that youre finished if you vote for a tax increase. And grover so far has been much more powerful than boehner. Like the shadow governor of the republican party. Everyone knows that Conference Call that grover runs keeps everybody in line. When do you think were going to get to 6. 5 . I think it will take three years. Really . I think it will take awhile. I see unemployment coming down to the low 70s, sometime next year. Or sometime after next year, 2015 or so. Good monday morning, were live here at post nine at the New York Stock Exchange. Lets get a check on the markets this morning. The dow hanging onto a pretty good gain up 48 points. S p up about 7. 5. Nasdaq up 12. A lot of things at work here this morning. Sprint, for instance, winning over the clearwire board with a sweetened 2. 97 a share takeover bid. Sprint now offering 2. 2 billion to buy the portion of clearwire it doesnt already own. The new offer was approved by japans softbank and has the backing of clearwires objectives like comcast and intel. After the company reduced inclusions of infringing products. So lets get to the road map tis morning. Something you cant say very often, rim is beating apple, at least in Stock Performance over the last few months. Is that a trend thats going to continue . Well consult the charts. Plus shoppers beware, theres only one week of shopping left until christmas. Well find out which retailers are set to gain the most this week, and which ones have the most to lose. Then its a big week for earnings. Fedex, rim, just a few of the companies reporting. Weve got a preview of which one might be discreet and which ones may disappoint. And from 300 shoes to 10 pajama pants. Iconic brands covers it all. The companys president and ceo will join us live to give us his take on holiday retail. The two Tech Companies apple taking a tumble, while rim enjoys a boost, up more than 90 in the same three months. Dan fitzpatrick is a Technical Analyst and president of Stock Market Mentor dotcom. Good morning. Nice to see you. Lets talk about what happens if it bounces. Right . And the sort of trading range that that sets up post the bounce on apple. What is it . Well, heres the thing, tom. 500 is a really, really key inflection point. A lot of traders are looking at that. And thats what makes it so important. If we get a bounce off of 500, if we get a bounce off of 500, we can go in a trading range from between 500 and 600 points. But if we fall below, if apple falls below 500, watch volume. Volumes going to be very important. Because what were setting up is, a head and shoulder pattern. Now thats not bearish yet. But if apple falls below 500, carl, were definitely going to get more downside. And it could be pretty substantial. Lets define substantial. If it backs the volume tell us anything on that . Yeah, they do. This is just a pure, measured move. Please stop the hate mail. Apple could fall down to 310. It sounds like a pretty substantial move. But when you consider the fact that apple has gone up, even if it at 300 now, it would be the 13th best performer on the s p since the 2009 low. So, if you just take a measured move from the neckline, which i think you can see that on the chart, its a line connecting two support levels, if you just take that, if you extend it downward, we get 190point drop from 500 bucks. And so what i would suggest, though, is dont look so much at the target, just look at the fact that there could be substantial downside in apple, so i dont think it dips below 500 is a buy the dip situation. Right. Before we move on to rim, dan, what is magic about 500 and apple . Why 500 . Well, for one thing, its just a key point. Traders like even numbers. Sure. I dont know why. A lot of folks say ill buy 500. Few say ill buy at 509. But also, 500 is just a simple kex of the last two lows. The lows in between that Left Shoulder and the head. And the head, and the right shoulder. Its just really interesting that that now intersects 500. And so thats what everybodys looking at. Not so much that its an even number, just that where Technical Support is. Most traders particularly on apple are trading this very, very technically. Its not a fundamental story anymore. Everybody knows its cheap. Lets move on to rim. 120 . In less than three months but it sounds like youre telling people be careful. Yeah. I think, look, if youre buying rim today, guess what . Youre late. All the smart money is already bought. Thats what called the big parabolic move. Right now research in motion is up 50 above the 50day moving average. Now, a lot of stocks will get that overbought, but research in motion has really gone parabolic and so its very, very overbought, and you have to look at the potential catalysts. Earnings on thursday after the market closes. Given the rise that research in motion has seen over the past, you know, ten weeks or so, what possible catalyst could there be to bring in more buying . Short interest isnt that high so youre not going to get a short squeeze. So its really just a simple case of whats the most dominant group of players in the stock right now . Whats the most dominant group . Potential buyers, or potential sellers . All those potential buyers have bought, once you own a stock you can only do one thing. And thats sell it. Weve got a big overhang at 15. I think youve got to get out of this stock. Even if you get in after earnings, this is a very, very risky stock to be holding right now. You better not stick around for long . Well, full disclosure, im Short Research in motion. Im looking for a pullback to 12, maybe 10. But again, the thing is, what is the point of buying research in motion now . How good to earnings have to be for traders to continue to pile in to the stock . Its just the news is already baked in. Maybe the blackberry 10 is going to be really well received. But thats in january. Right now we have to look at earnings. Yeah. It has been, the world has been upside down on those two names for a long time. Yeah. Buy the anticipation, tell the news. Thats what we got here. Dan, thanks so much. Thanks, carl. Dan fitzpatrick, stock market analyst. Over to hq for a market flash. Kayla, i know you enjoyed that first flash segment. I did, carl. Good morning. Unfortunately i tweeted that i got a subscription for my roommate, i forgot she follows me on twitter. Happy birthday. Were watching shares of caribou, agreed to be taken private for 16 a share. Stock up about 30 today. The agreement says that it will be continued to be run as an independent company but the big question here is whether it would be combined with the german private equity house that is actually buying pit also bought peace coffee for about 1 billion five months ago. Big question about more consolidation in the coffee industry. Kayla tausche back at hq. There could be a major move on the fiscal cliff negotiations. The speaker of the house john boehner offering the white house higher rates on top earners and other measures totalling about 1 trillion in new revenue. Hes asking for an equal amount in return. Our eamon jaffrays is in washington. Just when we thought we had no progress at all from that mystery meeting last week between Speaker Boehner and president obama over at the white house we learned there was a phone call on friday in which boehner made this new offer to the president , let me walk you through the specifics of boehners offer, starting as you say with raising tax rates on those who have incomes above 1 million. Theyre proposing overall about 1 trillion in new tax revenue. And theyd like to extend the republicans would the debt ceiling, but only in exchange for what theyre calling substantial spending cuts and reforms. Theyd like a one for one ratio on the spending cuts in order to extend the debt ceiling. Take a look at how that compares to where barack obama has stood so far. Hes saying he wants to raise tax rates at above 250,000 in income and hes looking for 1. 4 trillion in new tax revenue. Thats about 0. 4 trillion higher than the speaker as of right now. And hes looking for a near permanent extension of the debt ceiling. Hed like to get rid of that problem altogether. So, right there, carl, you can get a sense that theyre not all that far apart. There is still some distance to be bridged here. If you talk to people in washington today, as ive been doing, they dont get a sense that a deal is imminent, you know, in the next 24 to 48 hours but we are definitely inching that way in this new offer from Speaker Boehner is encouraging to those who would like to see a deal here, carl. Eamon just mechanically say they came out arm in arm so to speak in the next few days. Could the wheels get something on paper in time for us to get this done before year end . They might be able to get it done before year end or what they might be able to do is sort of codify a deal, announce it publicly, have both sides, as you say, arm in arm, although thats rare there washington, to say the least. But to come out and announce the deal, codify it in some kind of writing and actually process it after the new Congress Comes back, after the first of the year. So theres a way to do this that doesnt necessarily involve passing legislation by december 31st. All right. It will be fascinating if the market, which has been gently anticipating this all month long, eamon if it turned out to be right. Well see, still early days. Eamon javers in washington. Holiday shoppers just one week left of shopping before christmas. When we come back were going to find out which retailers may be set to benefit the most this week. Well name some names. First Rick Santelli is working for something a little later on. Absolutely. In about 15 to 20 minutes my guest is going to be peter shift. You all know peter shift. Hes pretty hard on the fed. Were going to talk to about the historic changes at the fed. Remember the word historic can be used but it isnt always a good word. We have historic debt. That isnt a good thing. Lets see what peter shift thinks about a 4 billion potential, im sorry, 4 trillion potential. Bottom of the hour. [ male announcer ] you are a business pro. Executor of efficiency. You can spot an amateur from a mile away. While going shoeless and metalfree in seconds. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. Now this. Will work. [ male announcer ] just like you, business pro. Just like you. Go national. Go like a pro. But i am youru. Rmarket data. I know what youre looking for. Im not chained to your desk anymore. Im faster and smarter now. And so much less expensive. I am your market data. And if i do say so myself, i have never looked better. Superderivatives introduces dgx. Data done differently. One more week to get your Christmas Shopping done. So which retailers might get the biggest boost in the home stretc stretch . Joe feldman and roxanne myers, good to have both of you with us. Good morning. Joe, ill start things with you. I didnt realize 40 of sales are in the ten days prior to the holiday itself. You think theyre going to be very clear winners, both in discounters, and apparel . Walk us through it. Thats right. Yeah, now is critical for the retailers. As you mention, 40 of sales happen now. We think that, you know, walmart is still going to have a good Holiday Season. I think costco is going to come in down the home stretch. Some of the big box discounters. Target is also going to have some good sales ahead. This weekend, started off a little slow. Its good that we have next weekend with another saturday in there to really help drive some sales. But people still looking for electronics and other fun items. Yeah. Roxanne, you make the point that december, whether it was the weather or who knows what, started out a little shouldish, right . Mmhmm, absolutely. Warm weather early in the month, plus we had the traditional lull following black friday weekend. Probably started off december a bit slow. Categories like outer wear were particularly sluggish. For specialty retailers, outer wear is a small component of the total, and we think sweaters which are the musthave item are actually fairly strong. As the weeks have progressed weve actually seen rational promotional levels on balance and we dont think the panic button has been hit just yet. You make the point some of the less promotional things, old navy obviously part of gap, anf, an taylor, more professional gap itself, loft discounted about 40 , right . Thats right. I think its interesting that the average discount of 40 is actually flat to black friday. So at this point youre actually not getting a better deal but youre not getting a worse deal, either. Teen retailers, you think american eagle, best positioned. Why . I think theyre just done a terrific job with their assortment. The fashion is right. Theyre targeting a much more sophisticated, older customer within the teen niche and theyre executing really well. On abercrombie i think it really comes down to a question of comparisons. For last year, it was really just a bloodbath in terms of promoti promotional levels. Joe, roxanne is talking a lot about the level of promotion. Does part of that lead you to your discounter thesis . Why do you think theyre going to do so well this final week. I just think that thats where the average american needs to shop, and this one stop shopping. Great prices. Good deals across the spectrum of general merchandise. A lot of customers through the store anyway. Food, i think that they do a good job having the key hit items. If you look, you know, costco as an example has been sending out every day, you know, a deal of the day. And theyre up to 24 now, and probably six or seven of them have just sold out, plain and simple. Theyre already done. So i think that they find key items and they do a good job with that. Walmart specifically mentioned that to us, as well. Anybody whos been to a costco knows that a lot of times you go and what was there last time isnt there this time. Joe, lulu in terms of large cap picks, you like it with minimal inventory, right . Lulu is set up really well. Its still an indemand item. Theres not a ton of discounting that goes on. Dana is a huge fan of it. Its still one we like very much. Roxanne what about lets say we get through this week, the following week, dwi2013, are na starting to pop on your screen automatically . Yeah, i would throw out lulu. We think theyre one of the premiere growth companies. Really holding onto their market share and growing it at a terrific rate. Ann taylor is being set up very well. They have new leadership earlier this year. Theres a lot of catalysts that are going to play out. And the multichannel model is going to continue to be a big theme into 2013. Anns primed to take advantage of that as well as urban outfitters. So well be looking at that. Interesting. And joe, last comment to you. What is next years depth, so to speak . Bed, bath and beyond has not been acting all that well. I think they could have a decent year next year. Home furnishings have been solid. A good, Quality Company with moderate growth ahead of it. Excellent wellrun company and generate a lot of free cash flow. If the sector gets anywhere near the amount of attention it got this year were in for another wild ride. Roxanne, joe, thank you very much. Thank you. When we come back, all of these Companies Set to report earnings this week alone. Question is, who should you bet on . Well get a preview, tell you how you should play all the earnings action when squawk on the street comes right back. [ male announcer ] its that time of year again. Time for citi price rewind. Because your daughter really wants that pink castle thing. 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Tdd 18003452550 tdd 18003452550 and the streetsmart edge Trading Platform from charles schwab. Tdd 18003452550 gives me tools that help me find opportunities more easily. Tdd 18003452550 i can even access it from the cloud and trade on any computer. Tdd 18003452550 and with schwab mobile, tdd 18003452550 i can focus on trading anyplace, anytime. Tdd 18003452550 until i choose to focus on something else. Tdd 18003452550 all this with no trade minimums. Tdd 18003452550 and only 8. 95 a trade. Tdd 18003452550 open an account with a 50,000 deposit, tdd 18003452550 and get 6 months commissionfree trades. Tdd 18003452550 call 18662945373. Welcome back to squawk on the street im Kayla Tausche with a market flash. Shares of harleydavidson ticking up intraday on the back of a note from web bush securities saying that retail sales acceleration is a bit better than expected. Thats leading the stock up nearly 2 intraday. All right, kayla, thank you very much. Rick santelli in chicago talking the fed and unemployment with peter shipp. Well, first of all wed like to welcome a pretty famous economist, author and currently ceo of euro Pacific Partners peter shipp. Welcome to the show, peter. Thanks for having me on, rick. Always a pleasure. All right. Lets start out with unemployment. Just generically do you believe that we have a structural unemployment problem, meaning that its stubbornly high above and beyond the Labor Force Participation rate influences and do you think it will remain stubbornly high in a real way, not it can be lower but people arent really getting jobs sort of way . I think it is structural. And i think its the government that structured it this way. The fed with cheap money, the government with our tax code and all the regulations. We have too many people consuming, not enough people producing. We dont have enough labor in manufacturing like we should. The government makes it too easy for people not to wrk, by giving them viable alternatives. So weve created a situation where people arent going to work, and were going to continue to rely on the jobs abroad as we hemorrhage red ink and the fed keeps printing money to finance our trade deficits and eventually, and im not talking about in the distance future, sometime soon this whole artificial economy is going to implode. All right. Now in that context, in that context, we can clearly see what you believe. What do you think about the fed targeting or making a goalpost the Unemployment Rate . Well, the fed is constructing these goalposts, so it never actually hits them. The fed isnt going to tighten. I started saying this, when the fed first started talking about an exit strategy back in 2009, i started saying there was no exit strategy, that the fed had checked in to the roach motel of monetary policy. There is no way for the fed to exit. All it has to do is make excuses as to why its not. The fed is going to keep printing money until the dollar implodes and the economy collapses. Because if they try to exit let me interpret you there. Yeah. I somewhat agree with you. But the problem is, its very hard to get a gps on how ugly the dollar is. Because, of course, it only could be relatively valued against something else. And fortunate or unfortunate, the main bench marks that most people look at are the yen, and the euro. And of course, both the countries or group of countries on europe, the country on the end, they have their own issues regarding quantitative easing, so how am i supposed to look at the dollar, how is the average family going to feel this in the near term . Yeah, i guess it would be like a student who brings home an f saying well, look theres another guy that got an fminus so im not doing so bad. The dollar is going down against the euro. Look at the british pound. Its almost at a 52week high today. Were going down against the pound. But look at the aussie dollar. Look at the new Zealand Dollar hitting 52week highs. You could have bought the new Zealand Dollar for half of what it is right now five years ago. Look at the price of gold. Look at oil prices. Look at food prices. Ben bernanke said that he doesnt care how High Oil Prices go, how high food prices go, hes going to look beyond that to the value of falling prices that reside somewhere in his fantasyland. Let me interrupt you again, peter. Were running out of time. I read your last newsletter, and you seemed to key on the same line i did. During the press conference somebody brought up monetization and mr. Bernanke seemed a little put off, saying something along the lines im paraphrasing like ive already addressed that were not monetizing. First of all, peter, define quickly what you think monetizing is and tell me why you believe ben bernanke is monetizing . Well, monetizing is when a Central Bank Buys the bonds that the government is selling, by printing money. That is exactly what ben bernanke is doing. The fed is buying 90 of the bonds the government is selling. And to say that its not monetization, because at some point in the distant future hes going to sell the bonds that hes buying, sell them to who . How can it possibly be how could you sell trillions of dollars worth of treasuries and mortgagebacked securities . Whos going to buy, at what price, if the fed ever tried to exit, it would create a financial crisis that would make 2008 look like a sunday school picnic. So the fed is going to print and print and print. Its going to make up one excuse after another why its not going to stop, and the only thing thats going to put an end to this party is a collapse of the dollar, even against currencies like the euro. And it is coming. The dollar is going to be in freefall one day. Prices are going to sky rocket for consumer goods. Its ultimately the bond bubble is going to burst. And then reluctantly, when his back is to the wall, the fed might finally do the right thing. But it is going to be an economic bloodbath when they do. Well, meter, once again you didnt welcome the week with a lot of optimism there, but were going to have you back and monitor the new historic movements announced in the last fed meeting. Carl, back to you. All right, rick, thanks so much. Bell is about to sound all across europe in a couple minutes. Well get the close and the impact here this afternoon. Talk maybe about berlusconis engagement we we come back. The s 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. [ male announcer ] how do you trade . With scottrader streaming quotes, any way you want. Fully customize it for your trading process from thought to trade, on every screen. And all in real time. Which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. Try our easytouse scottrader streaming quotes. Its another reason more investors are saying. [ all ] im with scottrade. The european markets are closing now. And with that we surveyed the landscape of both green and red. Want to bring in Michelle Carusocabrera as markets close in the uk and across europe. A lot going on. A lot in italy. Its an allitalian version of the european close right now, carl. Mario monti, contrary to reports last week that he did not want to run for Prime Minister again, we now hear hes undecided, and may actually run for p. M. Of the country. Right now he serves technocratically. Theres expected to be an election early next year, maybe in february or in march. He has told reporters that hes considering it. The cabinet member he spoke with earlier in the week said hes going to make an announcement sometime this week on television. When asked by reporters about his recent visit to the tomb of Saint Francis he said he did, indeed, pray there to help him make a decision about whether or not to run. A man eagerly awaiting montis decision is silvio berlusconi, the former Prime Minister of italy. Were pretty sure he has not prayed at the tomb of st. Francis lately. He has said that he devil wants to be run for Prime Minister again however at the same time hes also made noises that suggest that he wouldnt run if monti runs. Thats not set in stone. Were going to see what happens there. What berlusconi was definitive about, hes going to marry his 27yearold girlfriend he says. Political commentators in italy have cheaply suggested that hes doing this to look more like a family man ahead of his run in february. He is 76 years old. Of course. And his divorce from his second wife is not final yet. Thats been very bitter. Remember they wrote letters to the editor to each other in the paper, as the process of their separation was occurring in their divorce. Addressing the parliament is also now a banking supervisor and also saying that the medium term outlook for the european economy looks to be challenging. In the category of the sky is blue. Carl . Thank you michelle back at hq. Lets get a check on energy and commodities as well. Sharon epperson is at the miami next for us today. Looking at gold prices right now that are just under at 1700 an ounce level. Rather subdued trading in the gold market. Monday morning a lot of traders saying not willing to make any big bets with the fiscal cliff still looming and also some commenting on not sure what doddfrank will bring in the new year, as well. So all of those are reasons to stay on the side lines for the moment. We are above a key technical level for gold. Above the 1685 level. That is significant traders say and may lead to perhaps some upside momentum in the oil rice. Not much momentum in the oil price, either. Were looking at oil prices that are in a pretty tight range. We did see in the commitment of traders reports a reduction in the net long positions, though, for wti, crude futures. The big mover natural gas. Natural gas has been on a sevenday losing streak down about 10 in that period of time. Its regained some momentum, its supposed to get cooler in the middle to end of december. Thats part of the reason why, perhaps, were looking at a turn here in natural gas, as well as perhaps a technical trade here, as well. Lifting up off that 3. 25 level. Back to you, carl. All right, sharon, thanks a lot. Sharon epperson over at the nymex. Bob pisani is here with whats looking at the big board. A lot of this based on reports out of d. C. Well the good news is, were anticipating some kind of deal. And were moving in that direction. Its a good sign. Look, to me, all of this talk over the weekend, it was very simple. Let me just show you what the most important thing is. Theyre not going to do nothing. The market was afraid that they were going to do nothing. Thats not going to happen now. We now know that theyre moving towards some kind of deal. It looks like a tax hike for the wealthy. We dont know where its going to come down. Half a million or a million dollars. Some spending cuts. Capital gains. That senate bill that was passed in july, a lot of people passing around 20 , 25 for Capital Gains. And dividends. Are there. Not not 39 that we were talking about for ordinary income. The grand bargain is still a long way off. Some deal is coming at this point. Whether you sell on that news im not going to say here. But, the deal is coming of some sorts. Meantime, if you look, unusual groups that havent been doing much in awhile are up today. And i think its a little bit of optimism. New high for bank of america. Again up 2. 6 . All the Big Bank Stocks are up. 1 to 3 today. Thats certainly a nice sign. We havent seen the Leadership Groups since the earnings season came out. Take a look at some of the other ones. The airlines doing well. All the airlines to the upside except usair just turned negative. If you were to watch these, last week i did this, folks. Look what i put up on tuesday. The main reasons were going up on the airlines for a couple weeks, more consolidation is coming. Booking trends have been stronger. Theres been a minimal impact on business travel, jet knew prices have been dropping. All this has been happening for several weeks so the Airline Index has been moving to the upside. Another strong sector today, again this may be a little bit on the fiscal cliff issue, are the big Home Builders here. Ryland is up 5 . Thats a nice move, standard pacific, hovnanian, Toll Brothers to the upside. These stocks have been strong through the year. Theyve been sideways since their earnings reports came out several weeks ago. I think youve got a little bit of optimism on the fiscal cliff. And well get more housing. The sentiment indicator is coming out tomorrow. Some other numbers on wednesday. Bob, thanks a lot. Bob pisani. Kayla tausche has the market flash. Carl, weve been back and forth about whether the reception of the iphone 5 in china is going to be good or bad. Some checks on friday said it was muted. That led suppliers down. Were seeing them see some relief from that pressure. Today may be a correction from that downtrade on friday. Qualcomm one of the best trades today, also skyworks solutions. Also favorable moves for avago and cirrus logic. The likes of fedex, oracle and rim reporting results. What do you need to know before the results come out . Lets bring in christine short, senior managing of s p capital iq. Great to see you, thank you. Whats amazing is the how the expectations for income or earnings have come down just since october 1st, right . Right. And youre right. Theyve completely cratered. If you recall back during the Third Quarter earnings season, when we entered the season, we were seeing Third Quarter estimates were negative. We were looking at Fourth Quarter estimates in the double digits. And what many were saying is how is this upon that were going to have a negative Third Quarter but were going to rebound to this extent in the Fourth Quarter. Since then, analysts have certainly ratcheted their estimates down in line with what is more reasonable. Looking at s p capitalized 3. 6 for s p 500 earnings. So definitely more reasonable than the 10 that we were looking at in the beginning of october. All right. We mentioned some of the big names coming up. I dont think materials name is on the list. Thats probably a good thing given whats happened to expectations in that sector, right . Yeah, really. Materials isnt expected to be negative for this quarter. But they are the sector that have seen estimates drop to the greatest degree. So right now estimates for materials are looking to be about 4. 5 . Thats compared to about 25 if we look back to the beginning of october. So, analysts have really focused in on materials. And its not surprising, considering what we saw last quarter from metals and mining companies. Specifically alcoa, Even Companies that arent really within the s p 500. Rio tinto learning that they were expecting the Fourth Quarter. When we look back at the guidance, specifically metals and mining industry, its not surprising to see analysts sort of draw down on those estimates. Yeah, of course, alcoa and a lot of the Materials Companies closely tied to china. We have seen some signs of stabilization there. I wonder if the mood has gotten too negative on that front . Last quarter we saw, rio tinto, many other Materials Companies coming through and saying look, were not going to see double digit earnings in china anymore. Thats no surprise. They were ratcheting gdp growth down from 8 . Saw it get as low as 7 . Weve seen that stabilize somewhat. So at 4. 5 , it certainly is not the negative growth we saw in the Third Quarter. But it seems as though those materials estimates have stabilized and are looking for reasonable growth in the Fourth Quarter. So this week among the big ones, the fedex, oracles, dardens, rims, are you making a call at least on a sector regarding those. Im looking for some of the mentions of those names in your latest report. Fedex comes up, but its in reference to some of the workforce reductions theyve made. As we look at industrials, they are expected to be our biggest lagger for the Fourth Quarter down about 2. 2 . You know, that in contrast to the industrials, very strong, but you think back to what fedex said in the Third Quarter, they were predicting a pretty weak Fourth Quarter. Even a weak first half of 2013. So it will be interesting to see what they report this week because they were one of the companies that had negative guideness going into the Fourth Quarter. Obviously receive knvenue fig we look at. Christine, thank you so much. Thank you very much. Christine short. Coming up how retail power house iconix brand plans to ring in the green this Holiday Season. The companys president and ceo will join us live when we come back. [ male announcer ] citi turns 200 this year. So why exactly should that be of any interest to you . Well, in that time thereve been some good days. And some difficult ones. But, through it all, weve persevered, supporting some of the biggest ideas in modern history. Like the transatlantic cable that connected continents. And the panama canal that made our world a smaller place. We supported the Marshall Plan that helped europe regain its strength. And pioneered the atm, so you can get cash when you want it. Its been our privilege to back ideas like these, and the leaders behind them. So why should our anniversary matter to you . Because for 200 years, weve been helping people and their ideas move from ambition to achievement. And the next great idea could be yours. [ engine revs ] [ male announcer ] oh what fun it is to ride. Get the mercedesbenz on your wish list at the winter event going on now through december 31st. [ santa ] ho, ho, ho [ male announcer ] lease a 2013 e350 for 579 a month at your local mercedesbenz dealer. Coming up on halftime citi downgrades apple less than a month after calling it a buy. The man who made that call is only on halftime. And vanguards chairman and ceo exclusively on how fwoes protect your money from the fiscal cliff. And is caterpillar the next stock to surge. Two traders, two opinions, one big debate at the top of the hour. Carl well see you in 15 minutes. All right, scott. You might have some news from washington as well. A white house official telling nbc news that the president and house Speaker Boehner are meeting at the white house as we speak to discuss the fiscal cliff. Dow popped on that news when it first broke on some of the wires. Currently sitting close to highs of the session up about 85 points. Want to bring you the latest details on the newtown connecticut shootings. The town is grieving after the horrific events at sandy hook elementary on friday that left 20 children dead. Danielle leigh is live in newtown with the latest. Good morning. And today is the beginning of a very hard week ahead as families begin saying goodbye to their loved ones and burying those victims who did not survive this tragedy. The first funeral will be today for those victims, starting very soon. The first for 6yearold nora whose twin sister survived the shooting in a different classroom and 6yearold jack pinto who was a big new york giants fan. These parents burying their children, something no parent should ever have to do. Unimaginebly difficult, saying goodbye, and struggling to move on and pick up the pieces. Meanwhile, police are giving us anion date in their investigation. Both the school and the shooters home remain a crime scene today. They say they are gathering a significant amount of evidence that will help them possibly determine a motive in this terrible crime. Also, later today, teachers and staff are meeting to best discuss how to handle this tragedy moving forward, as tomorrow students begin returning to their classrooms. That said, students who attended sandy hook elementary are indefinitely excused. Danielle leigh, carl back to you. Danielle, thank you so much for that report. That shooting has reignited the debate over gun control in the country and the safety of schools here. Hampton pearson is following that angle in washington. Hi, carl. First of all in the aftermath of the newtown tragedy, all kinds of examples of beefed up security at schools nationwide, a couple examples, a school board in pittsburgh suburb authorizing police to carry guns on School Property in the washington, d. C. Area, a nearby fairfax county, parents got letters over the weekend alerting them to look for a more Visibility Police presence outside schools. Back here on capitol hill, the revived gun control policy short list, especially among gun control advocates includes a call to restore the assault weapons ban. That expected from california senator Dianne Feinstein. New york senator Charles Schumer wants restrictions on those multiround bullet clips. The newsmaker today, West Virginia senator joe manchin, avid hunter and lifelong member of the National Rifle Association Making news with his call for reasonable restrictions on guns. The senator saying, in part, we can protect the accepted amendment right, we can protect it and we will protect it but we can look also at ways we can make our country and our children more safe. One other thing to keep in mind, since friday, on the white house, we the people petition website, thereve been more than 142,000 signatures calling for tougher gun control measures. Thats my update for now. Carl, back to you. Hampton, appreciate that very much. Hampton pearson in washington. Now to more on retail. They are responsible for some of the most recognizable retail brands in the market. From Badgley Mischka to joe boxer. Iconix does it all. The companys ceo will join us live after the break. Well talk about holiday sales and the state of the consumer. [ male announcer ] this is steve. He loves risk. But whether hes climbing everest, scuba diving the Great Barrier reef with sharks, or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesnt nickel and dime him with hidden fees. So he can worry about other things, like what the market is doing and being ready, no matter what happens, which isnt rocket science. Its just common sense, from td ameritrade. Take a look at the dow today, sitting about 10 points from triple digit territory, and that pop as we told you before the break came just as the white house official told nbc news that the president and Speaker Boehner are meeting at the white house over the fiscal cliff. With more on that we want to get to eamon javers in washington as to what this might mean here eamon. Carl, i think one of the key things to look for here is going to be who was in the room at this meeting. Weve been badgering the white house and capitol hill officials in the few minutes since the news broke, as to exactly when this meeting started, who is in the room, and what theyre discussing. Obviously, no details are forthcoming as of right now. Were expecting a little bit more of a readout once the meeting is over with, we might be able to find more information. Remember at last weeks meeting, we had secretary geithner in the room, rob nabors, the chief white house liaison to capitol hill, along with Speaker Boehner and one of his aides. That gave me a sense that they were getting down to a fairly specific level of details. Just the two principles, the president and speaker, youd expect more of a generalities in terms of the conversation. So were going to be looking for that. And also, who scheduled this meeting . It was a surprise to all of us here in washington. It was not something that was telegraphed in advance. So a surprise meeting but things are moving pretty fast on the fiscal cliff talks. Thats important color eamon. Thank you for that. With a week left to go until Christmas Eve retailers are prepping for a critical final seven days. Iconix brand group ceo neil cole joins our courtney reagan. Thank you very much. Iconix brand group may not be a household name. Its brands certainly. Iconix hands candys, i could go on and on. There are more and more. Neil cole is the ceo of iconix group. Thank you for being here with us, neil. A big week left to go. So you sell your brands in retailers from target to macys to saks. How is holiday going so far . It started off really well. It was a pretty big black friday or cyber monday. But the last week to ten days were pretty slow. Everyones very hopeful that the last seven, eight days are going to be strong and make for a good youve got an extra few days this Holiday Season between thanksgiving and christmas that we didnt have last year. Are you working with retailers to do anything special to amp up that energy, make sure consumers are aware of your brands, attract them to them . Theres a lot more marketing plans. A lot of retailers keep close to the vest their surprises of what theyre going to do, whether it be extra sales which i think possibly is going to happen and everyones going to do whatever they can to get those dollars in before the holiday. Right. And you sell your brand in walmart, in kmart, target. Also we have saks, bloomingdales, neiman marcus. You get the low, the mid and the high end consumer. How is each Group Feeling this Holiday Season . The fiscal cliff talk is everywhere and walmart ceo think it could impact holiday spending. Theres a strange feeling throughout. I think everyones pretty hopeful there will be a deal. Big question is the American Consumer understand it. I think they, you know, uncertainty is not good. At the end of the day i think were going to pull through and be a strong holiday. With everything thats been going on, unfortunately, with sandy hook emtry is there anything that iconix group is doing to work with malls or retailers just to make sure that there are Safety Measures in place . Because we know there are going to be a lot of people out hitting the malls. Thats a good question. And i think its going were going to be talking about the next day or two. We really worked on last week was sandy and the Hurricane Relief and all the charitable efforts weve done with our brands to help in the rockaways. But you know what happened over this weekend was just so horrific and such a tragedy. So the security that will happen at the malls im sure is just needed. But hopefully well be able to do something about gun control. And you just recently finished that acquisition of umbro from nike. That adds to your athletic brand. Is that a Growth Strategy Going Forward . Its more of a growth story international. About a third of our business comes from outside of america. Were working really hard to acquire more brands outside of this country because we think it balances out our principle yo and big opportunity for growth in countries like china, brazil, india, so were really looking at some of the emerging countries for our big growth over the next five to ten years. How are some of those emerging countries and their consumers dealing this Holiday Season . Different from what youre seeing in the United States . I think so. Were hearing a lot more strength happening in certain parts of the world. Where theres more of an emerging consumer. So its not americas difficult. Were kind of some can argue overstored and very competitive. But in countries that have such vast growth populations that are happening, whether it be china, brazil, india, big opportunity for growth like in america 20 years ago. Thank you so much, neil cole, ceo of iconix brand. Carl, back to you. Courtney, thank you so much for that. Straight ahead, highlights from your exclusive interview with richmond fed president jeff lacquer. See what liesmans take is after interviewing him earlier on. I always wait until the last minute. Can i still ship a gift in time for christmas . Yeah, sure you can. Great. Wheres your gift . Uh. Whew. [ male announcer ] break from the holiday stress. Ship Fedex Express by december 22nd for christmas delivery. Its easy to follow the progress youre making toward all your financial goals. A quick glance, and you can see if youre on track. When the conversation turns to knowing where you stand, turn to us. Wells fargo advisors. So as you can see, geicos Customer Satisfaction is at 97 . Mmmm tasty. And cut very good. People are always asking me how we make these geico adverts. So were taking you behind the scenes. This coffee cup, for example, is computer animated. Its not real. Geicos Customer Satisfaction is quite real though. This computeranimated coffee tastes dreadful. Geico. 15 minutes could save you 15 or more on car insurance. Someone get me a latte will ya, please . Richmond fed president jeff lacquer sitting down for an exclusive with Steve Liesman. Steve joins us from charlotte, north carolina, with highlights on what was a mustsee interview. Good morning, steve. Good morning, carl. I thought it was interesting that the richmond fed president , who has dissented at every meeting this year, and is known as a hawk may have done the doves a favor, pointing out that he believes that the 6. 5 Unemployment Rate target, which is in the fomc statement may be as much as three years off. He also explained in greater detail his reasons for his dissent saying the fomc appears to be straining its credibility. It should be pretty clear that this committee is straining. To provide as much stimulus as possible. Without endangering our price stability credibility. My worry, and the reason we seem to be willing to test the very limits of that credibility. He also added that one problem with the 6. 5 Unemployment Rate is people may get the wrong impression that the Federal Reserve can, in fact, affect long range unemployment. Now in a bit of the interview we did just for the web, it will be up there soon, i did ask him about whether or not people should rely upon the fed buying 85 billion a month for a total of a trillion dollars for the whole year. What the chairman emphasized in his statement at the press conference is that we would reevaluate the efficacy and the costs of these programs Going Forward. That might sound like boiler plate but i think thats going to be taken really seriously. I think that ought to be taken really seriously Going Forward. We dont want to find ourselves on a treadmill not thinking about it and bounding out asset purchases month after month. So thats a piece of the interview you can see by going to cnbc. Com. He also discusses the fiscal cliff as well as inflation. Carl, interesting interview from a dissenter. And maybe he brought a few people over to his side. I was thinking, ste,