Mission critical, rise above d. C. Welcome back from our nations capital. Im Mario Bartiromo with brian sullivan. We continue our fiscal cliff coverage, mission critical, rise above d. C. Weve heard a lot after a morning of interviews and action on capitol hill. Here is what we know now. Just a short while ago House Speaker boehner said hes still waiting on a solid plan from president obama. Im hopeful we can reach an agreement. This is a serious issue. Theres a lot at stake. The person people sent us here to Work Together towards the best possible solution, and that means cutting spending. The president doesnt agree with our approach, hes got an obligation to put forward a plan that can pass both chambers of the congress. Meanwhile despite all of the back and forth, the market is seemingly optimistic today. At least some form of a deal will be released. Weve been up 100 points on the dow industrials for the past hour. Senator mark warner of virginia perhaps putting it best saying compared to the size of our economy the current proposals are relatively small and government should step up and get a deal done. Were joined by representative lee terry, republican from nebraska represents the district home to a guy we all know, warren buffett. Pretty famous guy. We spoke to some folks already today. Were not hearing many details. What details have you received specifically from the democrats on the spending cuts they are willing to make. None. We havent heard any details from the democrats, even bust talking around the capital. Nothing. What they are doing snch thats a good question. Frankly Speaker Boehner is getting heat from our own conference because hes putting offers out. Were not getting real counteroffers. Its like were bidding against ourselves. When the president came out with his proposal theres 600 billion in cuts in the proposal. Those 600 billion in cuts, where do they come from and is this something youve heard before. It wasnt specified and heard before, less than what we heard in past negotiations from the debt limit talks of 11. He was putting more on the table. So it looked to us like we were going backwards on the discussion. No details though. Do you feel some of the cuts proposed are reductions in future spending growth and not actual cuts . I will say there was one. There was savings. 400 of that was going to be savings within medicare. Where you found that, hes already taken 700 billion out in savings for obama care, so we dont know where that was actually going to be. How does this play out. Is it possible you guys go home for the holidays without a deal done . Youve been told what about christmas and the day after . Weve already been told to prepare to come back after christmas because this may not be finished. When were you told that . Eric cantor at our conference. The reality, and i hate this, it really frustrates me, but sometimes deals dont get done until theres one minute left on the clock rainfall according to the urban institute, cato institute, other research institutions, typical household will extract 3 of medicaid for every 1 they pay in. A single working household, six to one. 6 for every 1 they pay in. No wonder were bankrupt. Are you willing to tell people no . Are you willing to tell grandma, dad, look, you cant have this. There is a lot of inefficiencies in medicare. Just the way the system is done breeds that kind of waste in the system. If were going to do medicare and it needs to be done. Thats what were looking at. If you look at today and into the future, if you dont tackle issues of future debt, which are big entitlement programs, then all were doing is punting bankruptcy, in essence. Doing things like increasing the age, were not going to do that on seniors. For me im almost 51. If i have to wait until im 66 or 67 for medicare or later for social security, im in. Ive got three Young Children in grade school, middle school and high school. They will have to wait a little bit longer. Those are the type of things we could do now and really save billions, hundreds of billions of dollars in the future. You have said in the past that you think that going over the fiscal cliff is in president obamas best interest. I really believe that. Frankly, the lack of Credible Solutions and backtracking like the amount of spending. Doubling the taxes he wants raised and the fact he wants stimulus package that he knew nobody was going to support here. Doesnt look like hes trying to engage in ernest discussions, which leads me to believe he wants us to go over the cliff and be able to blame the republicans and maybe its more about politics. Congress people themselves said the election was a referendum on the president s ideas. Part of that was the very clear message of tax hikes on the top 2 . Thats great, but he didnt win my district and i did. So my mandate is something else. Good appoint. If we only represent our own slices well never get anything done. You hit the nail on the head. What were being asked is the republican conference, jump off the cliff alone. If this is going to be a deal, weve got to grab hands together and jump off together. They have got to put the longterm obligations on the table if were going to get our Fiscal Health back in order. If thats part of raising taxes and cutting, as long as its sensible, youll get the majority of republicans. So you will accept higher taxes, then, if there are equal spending cuts on the table. Absolutely. Look, at some point youve got to give us something we say are we willing to lose our reelections over this. Just jumping off the cliff and raising taxes, were not going to buy into that. The president has to realize this has got to be a dual effort and we both have to go over the political cliff. Are you guys talking about all the layoffs that will occur if, in fact, we go over the cliff in your Congress Meeting . Yes, as a matter of fact we do. In fact, in my district i have a major base and defense contractors are there. They are already telling me they are laying off. How many cuts are you expecting . We dont know in total but we know there will be because they are telling us. I think you have to be willing to commit political harry kerry because you have to say no. Our day in washington isnt done, just beginning. Top of the next hour maria and i will be joined by senator johnny isakson. Back to you guys. Maria, brian, thank you very much. Will a fiscal cliff deal be done in time . Why dont you register your opinion. Finance. Cnbc. Cast your vote. Results will come up later on power lunch. Sue. We have a triple digit rally on the floor of the New York Stock Exchange with the Dow Jones Industrial just off the highs of the trading session. Were up 109 points on the dow despite the gridlock in washington. Nasdaq is up 41 points and s p 500 is up 13 points. All three of those averages moving back above their 50day moving average. First time weve seen that since october. Trader from cnbc, and ceo of destination Wealth Management. Ken y, im going to start with you. You were champing at the bit listening to the interview that was done in washington. Why is this market up triple digits . Is it up because they think there is a deal or isnt a deal . Very interesting. Im beginning to think the market is rallying because there is no deal, were going over this cliff. Lets not forget, it was a Bipartisan Committee that couldnt come to an agreement which created the situation were in. That senator said one side jumping off the cliff. In fact, grab hands. Were all jumping off the cliff. Both sides are jumping. In that case the market could, in fact, be rallying. If we go over, its going to force spendsing cuts, compliance. Yes, taxing will go up. Maybe what it really wants is spending cuts. What do you think, michael . At this point a lot of people also think if we get those cuss and taxes go up, then the republicans can cowme in and sa its going up. Is that why the market is moving up because theres a resolution . I think so. We need to stop focusing on the grand bargain but the initial part and move the goalpost six or seven months. Thats why the market is trading up. Michael, couldnt it be the market decided, hey, what difference does it really make if we get a deal before january 1 or, quote, go over the cliff for a few days a week, punts into the next congress, and then there is a, quote, down payment on future bargain. Everybody says, wow, once you solve the immediate problem, they will never get back to i think thats whats going to happen. People are going to basically say, as long as theres some movement and the can is moving a little bit. They are kind of saying it doesnt matter, arent they . Are investigators saying it doesnt matter. As long as we have the initial down payment. Kenny thinks were beginning to look a little like europe. They are punting. The market, as we saw in europe, they rallied the market ahead of what they thought was going to be a deal, kicked the can down the road. In fact, if thats the case. Michael may be right theres going to be a framework but not a deal, yes, we rallied the market, they will become disappointed and take it back. Thats not the case. If you look at whats happening, economy better, earnings solid, Interest Rates are low. The fed probably this week will announce they are going to continue their policies to flood the system with money. But theres your answer. The fed is going to keep pumping the system with money. Fundamentally are we really where we should be. Were not talking about fundamentals. Were talking about what the market is going to do. Theres reality and what the market is going to be. If theres free money, we might be broke but theres free money. All right. That sounds like a good recipe. Michael, well have you back later in the hour. Kenny, do you buy into the rally. You buy into the rally because like mike said with all the money they are forcing the risk trade. If you look at financials and a weakening global environment, it gets a little bit nervous in terms of how far could it go. Well talk to you later. Over to you. Rise above d. C. Congressman yoder will join us a republican who refused to sign the Grover Norquist pledge to not raise taxes, never, ever getting back together. Taylor swift. Well get his solution. Delta taking a big stakes in virgin. Fill lebeau, what does it mean for both . For both . Delta, more business over to the uk, lucrative business. Well talk to the ceo of delta in a few minutes. Rick santelli tracking the action at the c mulch e. What was it like today . It wasnt bad. Were going to give this auction a hook, an absolutely dead smack in the middle of the curve c. Theres some strange inputs in this auction. 32 million yields a. 327, which is exactly in the middle bitten off on wi. So pricing is fine. If you look at internals, a bid to cover to find a lower bid to cover they have to go back to february. If you look at direct bidding at 24. 8, that is a record. Thats almost twice 13 . If you look at indirect bids its almost exactly the opposite. 22. 9 well below 32 auction average and lowest since may of 07. We walk away thinking not so great. Now that yield i mentioned,. 327 is a record alltime low yield for the threes. After i sypher all that we come up with an average and look forward to 21 billion, ten years, early auction because of the fed decision. Back to you, tyler. Rick, thank you very much. Delta air lines buying 49 of britains Virgin Atlantic. The two lines agreeing on a transatlantic joint venture. Delta. Lets take a look at the stock now up 0. 70, 10. 84. Speaking with ceo. Phil. More access to the lucrative market, thats what this is about. When you look at what delta has done, here is how the deal breaks down. Getting a pretty good deal by most estimates. When i talk to insists, 360 million for a 49 stake for delta, not a bad deal. Remember, they are buying this from Singapore Airlines which had that 49 stake in Virgin Atlantic. Again, the increase here is all about delta increasing its exposure to london heathrow. The approval rate, we expect its probably going to happen in mid 2013 according to Richard Anderson the ceo of delta. Frequent flyer reciprocity is a huge deal. In other words, if youve got miles on both airlines, youll be able to use them once this deal goes through. New york city to heathrow flight, will there be changes, perhaps after the deal is approved. Richard anderson told us ultimately about increasing the number of flights into heathrow. Its really about the access to the uk u. S. Marketplace. Its by far by 200 the largest market between europe and the u. S. And delta has had an 8 market share, fifth place. With this transaction we get to second place with a quarter of the market. Thats a huge increase for delta. What about for Virgin Atlantic and Richard Branson, the ceo. Well, the brand remains. Remember, theres been some speculation that delta would take over Virgin Atlantic. Not going to happen. Ceo Richard Branson will be staying in charge. He was part of the announcement today here in new york city by satellite coming from down in the dominican. As we look at shares of delta, take a look at this. Stock up, a nice gain today, almost 7 . Tyler, in the end, what were going to see is more of these types of deals in the industry, as you see the domestic u. S. Carriers tried to increase their exposure to some of these lucrative markets. You answered my question. Virgin gets to remain a virgin after it jumps into bed with delta. Im in the touching that. Come on, thats a no win situation. Yes, it remains, the brand remains. The brand remains. Whats it going to do for airfares . Anything . Is there anything that will affect the flying public really . I think its too soon to know. Conjecture to say were going to see airfares go up or down because of this. Sue. Gentlemen, analyzing the analyst, Goldman Sachs making calls on Retail Sector coach and michael kors. Back in two. You wont take my life. You wont take our future. Aids affects us all. Even babies. Chevron is working to stop mothertochild transmission. Our employees and their families are part of the fight. And were winning. At chevron nigeria, we havent had a reported case in 12 years. Aids is strong. Aids is strong. But we are stronger. And aids. Aids is going to lose. Aids is going to lose. Governor of getting it done. You know how to dance. With a deadline. 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. This is awesome. [ male announcer ] yes, it is, business pro. Yes, it is. Go national. Go like a pro. I heard you guys can ship ground for less than the ups store. Thats right. Ive learned the only way to get a holiday deal is to camp out. You know weve been open all night. Is this a trick to get my spot . [ male announcer ] break from the holiday stress. Save on grounipping at fedex office. [ male announcer ] tis the season to discover the kid in all of us. Enjoy Free Shipping and great values on your Holiday Shopping from l. L. Bean. Goldman sachs, michael, initiated coverage on the Specialty Retail space. Highlight three of the stocks beginning with michael kors. Top idea Michael Kors Holding with 75 price target, stop up 89 . To do you like this call . Yes. Lets talk about michael kors product. Its really a lower cost luxury item. Louis vuitton, 1,000, michael kors, maybe 400. I know someone who only buys 700 armes bag. Only a few can afford that. Michael kors isafter forwardable. Affordable luxury compared to others. The fact its up 90 doesnt scare you off. Evaluation is reasonable and earnings momentum is fine. Lets move to another one, gap sort of the other side of the deal here. In addition kuwaited with a buy, 41 price target, shares up 70 . A buy on gap. Hot for me. Ill tell you why. Im still trying to figure out exactly what gap is. As you know, when left i went to j. Crew. They lost their way. They may be starting to get it back. You see that in samestore sales. Another thing when you read analysts opinions, a Goldman Sachs said about this stock one of the tail winds is the cotton crisis will likely go down which will actually increase margins. Now, thats fine, as long as that happens, if we have any kind of sustained Global Growth maybe cotton doesnt go down. I prefer to buy on as long as that happens and as long as they have stuff people want to buy. They know when they go to gap, what am i buying. What is the style . Am i buying for 25, 35 years old, are they buying for you . I dont know. I got the pleated one, the khakis with the pleats. Lets go to a sell in this group. It is on coach, which is another one of those affordable luxury brands, shares of coach down about 10 for the oneyear period. What do you think of this . This is a sell they say. I probably would not sell the stock. If you look at analysts notes its not a problem stock, just nearly fully valued. Coach is another one of those michael kors sort of brands, sells more affordable goods. I will tell you when you go to outlet malls. An outlet mall that opens, most Popular Store is coach outlet. Another thing coach is doing, very interesting. They are starting to separate stores, starting to have a coach mens and ladies store side by side. They are targeting consumerers, wont have to sort through writes the man, the womans product. A smart idea. Its a rich stock but i wouldnt sell at this point. Thank you very much. Sue, down to you. In the next hour, well talk with kansas republican congressman jordaner, refused to sign Grover Norquists pledge not to raise taxes. Well ask him what his solutions are to the fiscal cliff. A member of the Rolling Stones will join us here on power lunch. We have a triple digit advance in the dow were up 106 points. [ male announcer ] this is joe woods first day of work. And his new boss told him two things cook what you love, and save your money. Joe doesnt know it yet, but hell work his