Transcripts For CNBC Squawk Box 20091201 : vimarsana.com

universal. joining us now is andrew ross sorkin. this, i guess, clears the way to see this deal get done. absolutely. i think you re going to see a transaction announced. hopefully. i ll tell you, this saga has dragged on. on thursday morning, the deal was reached or tentatively over the weekend and the papering over of the transaction started yesterday. so why a deal announced on thursday? what are we hearing about this now? i ll tell you what the big issues were. first, there was a bid/ask/spread on the transaction itself. that will be the value to vivendi. so there s three partners or pieces in this. there s vivendi, which is getting out. there s ge, which is getting out in its own way, and then there s comcast, which is the buyer. part of the problem over the past couple of weeks has been two things. a, the valuation of vivendi and b, the closing risk. that is if comcast doesn t close the deal over the next 12 months, what happens to vivendi? is ge still going to go ahead and pay them? and it looks thiek that hurdle has been cleared in that actually ge in this case actually will pay them the first $2 billion, which was sort of the important hiccup in all of this. do you know what the original bid/ask was, andrew? i think they were off by about $500 million to $600 million. so we were talking in the low to mid fives and now we re closer to a $6 billion deal. did we meet in the middle or did vivendi have enough you know, it seems like they were vivendi has the parent of the network a little over the barrel in this case. does it start at 4.862 expend at 5.8? i think it s the former. i think that vivendi had ge for a barrel and got for the most part what they wanted, not all. but the $2 billion up front, which is not exactly what that means, but to the extent that a comcast deal doesn t happen or for some reason that gets blocked by regulators or for some reason it busts up, vivendi still gets $2 billion and that was actually, i think, the big hurdle for all of this. how justified, andrew, are vivendi s concerns about not getting done? why is there so much sterm and drag about this, either taking so long or not getting approved at all? the regulatory risk is that there are a number of groups already, and, in fact, my blackberry was going off this morning already with organizations coming out against this transaction, suggesting it will raise cable prices, it will raise tv prices, not just by the way on comcast terminals, but across the board because of the pricing power that a ge or a nbc comcast would have. what are we talking about, these other cable companies or no, no, for the most part, there are a number of grassroots organizations. rupert murdock went on a mini jihad against those transactions through a number of quote/unquoquote/u quote/unquote drafts organizations. david faber has joined us at the table. do you want to weigh in, david? what do you know? what should we be think about this morning? well, i think we can expect that we ll get an announcement, most likely on thursday. i m done predicting here, though. given how many days we ve predicted, of course, the vivendi/ge negotiations have been paramount here. and as andrew has been discussing, they have more or less completed, at least tentatively. comcast and ge have a deal and have had a deal for a couple of weeks now in terms of being hours away once they got the word. that being said, we re not going to get an announcement today or tomorrow. but most likely, you can expect that we will see something on thursday. the deal is essentially unchanged from what we have reported numerous times. comcast taking a 51% ownership stake in nbc universal, contributing at what is a fairly high multiple given the overall multiple that has been recorded nbcu. $9 billion in debt. ge will have an opportunity to exit at 3 1/2 years and 7 years. comcast, my last check, back stopping $6 billion of that should ge request it. however, the expectation is that ge will be able to ultimately sell out at that time period through the cash flow of the company that will essentially pay them off or incur debt to pay off ge. but the deal largely, as i said, has been done for a week or two awaiting a conclusion for these negotiations between ge and vivendi. david, this new company, you mentioned it s going to take on a lot of debt to pay vivendi out and pay ge out as they try to drop their stakes from 49% to even lower levels. is this amount of debt they re taking on a concern? you know, it s only going to be about three times levered. so it s really not that bad. when you think about your typical leverage buyout, five or even six times, this would be closer to three. so not that large a concern, but nonetheless, depending on the fortunes, of course, of nbcu, it can become a concern. if things don t go the way they planned, then comcast could be on the hook pipt will be interesting to see what the reaction will be of comcast shareholders. brian roberts has not had the ability to articulate what the strategy is behind it. the stock has found some balance at around the $40 level or above that. do you think it was hard to tell brian roberts, this is worth odds 30 easy and tell brian that 20% of vivendi yeah. how do you ur a that i m only paying you five when i m getting you just need to do it, though. you need to go in and try and buy a hard bargain. but also, i think ge s argument was we re taking 80%, we get the control premium, you don t. so it is legitimate. that is what the argument was based on. vivendi was saying, no way. 0% is at least six. and should everyone be happy with 578? vivendi gets close to what they wanted, and ge has to pay a little more, but they obviously want to do the transaction. they want to. and no one around this transaction, joe, expected that this would derail it. in the last couple of weeks, despite what had been numerous delays, nobody said, we re in danger over this thing not happening. everybody expected they would get to an agreement on price. because that s what it was about. price and time. versus hundreds of millions in a billion dollar a $30 billion transaction. yes. do you think the approval process is going to be tumultuous? it could be. well, you know, i don t think anybody expects that it won t be approved. but the question is, will there need to be divestitures snp. the fcc has a role and it applies the public interest standard and that can be fairly broad ranging. we ve got a new fcc commissioner, julia janikowski. we ll see. but i think some people expect that it could be somewhat onerous. meaning they would lose local, lose broadcast, lose you know, who knows. they can ask for a lot of things. under, again, under the public interest. now, we don t know. we ll see how the process goes. it may not be difficult at all. i know all the parties are expecting at least 9 to 12 months. we ll see. we re not going to get a press release today or tomorrow. these are the kinds of things we ll see. will they stay 12 to 14 months? and we ll get a much better look at the numbers when the announcement is made in terms of just how much money all these cable networks are making. that s the key to the entire deal. it s not about the nbc network or the movie studio. it is about cable networks like our own. didn t espn factor largely into into disney s earnings? isn t this going to be a formidable possible competitor to espn when you take comcast and golf channel and they would like to believe that. that was one of the early arguments i was hearing from people who had been working on this deal, that we can create a real competitor to espn, merging nbc sports with these regional sports comcast has. can you imagine golf coverage with joe? putting golf channel and cnbc together is probably anti-trust issues, although the golf channel might not be quite as profitable as it used to be without this guy showing up, which he is not going to make the tournament this weekend. they re talk about it, that it could hurt nbc. he ll be back, though. i mean, it s not going to derail him for too long, is it, joe? i m sure he ll be back. i would hope so. the post has the exclusive with the other woman, who says she s not another woman at all. when is the national inquirer wrong on this kind of stuff? i wouldn t call the i d be hesitant to andrew, what do you think? has espn got something to worry about? i don t know about espn. i think the larger question, we haven t talked about this on this broadcast. what does this transaction mean to ge? i know we got it, but what does it mean to tv and nbc and the bet that ge is making which is that they re hedging their bet or they re getting out? and i actually worry because i think jeffrey immelt is a pretty smart guy, so the question becomes does he know something we don t about the future of this mead use? you re worried, too? i come on and see you guys in the morning. i m worried about you, carl. are you a contributor? i m with you guys. we talked about this a month ago. the future of ge, certainly the xlegz of the company is going to change significantly. and there s been a decision made. they will describe this as a partnership. it is a partnership, no doubt about it. but ultimately, i think there s been a decision made by the leadership in ge that nbcu is not a core business is that ultimately it will get rid of nbcu and what is ge then? what will it andrew called it tyco. i heard that, yeah. not in a bad way. it becomes an industrialized company. i would never called tyco right. david, i have a question for you, which is how about united technologies? this transaction started not last year, but earlier this year in the middle of the winter & at possibility the worst time in the market. so one of the things that i always wonder is to the extent markets have come back, do you think this deal would have happened had it come later? again, i m looking forward to hopingly getting some answers to those questions on the record certainly and it is my sense that this, as you say, transaction began in the late winter/early spring, which is a difficult time, as you well know, for our parent company, stock price. the key chairman was sitting here one day when the stock price was $6 a share. and that has a real power in concentrating the mind, i would think, in terms of your future. and it wouldn t surprise me if you re a jeff immelt and you think, okay, if i survive this, how am i going to allocate capital in my businesses? and my sense is, andrew, that that transaction was born out of that moment in time. would they do it again? i don t know. but you know, at the end of the day, i think the decision was made to no longer allocate capital and to change the mix of ge which is maybe i think the bigger story ultimately. it s still about i mean, how much is left in ge capital on the aetss? isn t it over $600 billion? very large. some of it i mean, the criticism, a lot of it is not marked, right? yeah. so if you re thinking about where you need to invest money, do you want to try and invest in fl bc prime time and find some kind of drama that s going to be a hit or do you want to take care of that said 650 that had you staring into the abyss at one point? right. you want to probably take care of that first. now, if this deal does work, do you look for a model for some of your other businesses? is it possible to spin a ge capital into a large bank and maybe take a again, if ge is willing to take a 49% ownership or even 51, do you try and do something like that? i think that s what they re fighting at this point sdmrp because you sound like a banker. have you suggested this to no. i bet they ve thought about it most likely for reasons that i don t know. i think we re going. aren t we going? yep. andrew, thank you the. you know, the moon is full. i saw it this morning. you don t see it most mornings, but i saw it this morning. really nice. you might at well oh, we are going to talk about dubai. you might as well stay. i should. i could go work out, i suppose. do we want a bankrupt company running its ports? that would be a problem, wouldn t it? you were arguing in favorite of that when it came. i know. the ports deal was turned down. i know. it was a fear of bankruptcy for dubai world. that s what it was. late yesterday, dubai world announced that its planned restructuring of some units involved $26 billion in debt and that eased some of the worries about the size of dubai s financial process. erin winging her way or yet or is she i think she s maybe going back through london today. she did leave dubai. i don t know if she s going to london or flying straight home. dollars in danger. little did we know. also, the bank of japan voting at an emergency meeting to adopt new measures to ease monetary policy. it s going to try and push down money market rates in a new operation. the central bank has been under pressure to try and respond to the surging yen and falling consumer price. but the bank of japan has kept its key short-term interest rates unchanged at .1%. still, this news really sparked a rally in tokyo. you saw stocks taking off. currency markets on this news, you can see the yen is a little bit higher against the yen. it s down against both the euro and the pound at this point. but really, this kicked off a market rally sending stocks up about 2.4% in tokyo. meantime, tokyo raising its key percentage point for the third month in a row. this move had been expected and the brings the cash rate to 3.7%. australia is the first major economy to raise rates following the global financial crisis. i ll prices nearly $78 a barrel overnight. some traders are worried that iran s detention of five british sailors will raise tensions. the british government says iran is holding the sailors after stopping their racing yacht in the persian gulf last week. becky told you the overall weaker dollar. that s another reason oil is higher today and it s one reason futures aren t doing too badly, as well. we re going taupe up about 60 points above fair value and other commodities also on the rise with the dollar down. the 10-year note, yield yet about 3.22. about the same as it was 24 hours ago on the ten-year. and then with the weaker dollar, has gold managed to find some sea legs after losing quiet a lit baft week? yeah. to $1,194. let s get overseas this morning, christine tan is in zing pore. first, we want to go to zurich with carolin schober. good morning, carl. european markets are recovering from yesterday s losses. and risk appetite is back on the table. and worries about dubai, they seem to be fading, especially given those debt restructuring efforts. let s take a look at the markets here. the ftse, the cac and the dax higher between 1.5% and almost 2% here. in terms of the sectors, the banks and the commodities stocks are leading the gainers. deutsche bank, ubs and barclay s all trading higher. but take a look at the greek banks. they have been suffering very hard last week on concerns about funding and this morning, efg euro bank and national bank adding between 6% and 7 percentage points here. before i wrap it up, let s take a look at the positive economic data we had out this morning. euro zone pmi, that s for november. that was revised higher. we saw an unexpected drop in the november figures for german jobless figures and switzerland, finally emerging from the recession in the third quarter. now let s get an upcan date on the asian trading session with christine in singapore. carolin, thanks for that. asian markets extending gains recovering from last week s steep falls. central banks and asia in focus. the reserve bank of australia raising rates for the third consecutive month to 3.75% while japan said the boj said it would pump $115 billion into its financial system in hopes of addressing inflation and prevent the world s second largest economy from slipping into a recession. the news came out after the markets closed with hopes of more quantitative easing sending the nikkei higher by 2.4%. a two-week closing high. the boj said the latest measures were to be considered quantitative easing in a broad sense. china getting a boost from upbeat manufacturing data. we had purchasing data showing china s manufacturing survey extending for the ninth consecutive month in december. airlines rose. the china stock regulator approved. hong kong rose 1.3%, as well. concerns about the dubai crisis easing. that s the action here in asia. bec becky, back to you. coming up, we have key reports today on manufacturing, construction, housing, autos. we ve got a special squawk task force ready to tackle it all. first, though, as we head to a break, let s take a look at yesterday s winners and losers. (announcer) we re in the energy business. but we re also in the showing-kids- new-worlds business. and the startup-capital- for-barbers business. and the this-won t- hurt-a-bit business. because we don t just work here. we live here. these are our families. and our neighbors. and by changing lives we re in more than the energy business we re in the human energy business. chevron. welcome back, everybody. the futures at this hour are showing a positive are opening at least if things stay where they are, we re talking about dow futures about 70 points above fair value. china eps leading video online website saying it will break even next year. this is preparing for a nasdaq like listing in the next three years. pfizer plans to add more sales representatives in the country as we approach that day. joining us now is michelle gerard, senior economist at rbs. also mark harris is the head of global research. mark, watching what s been happening over the last several days with the markets, dubai seems to have not done some of the damage people worried about. but you are seeing a much stronger dollar, and that s having an impact, too. no doubt about it. we ve been talking since last week when all this broke about dubai being a teapot. my straft gist, nick jamie, who is our emerging market specialist and our head of emerging markets was looking at it and saying, look, this is relatively isolated. we re talking about an abu da buy issue. but again, we re seeing the dxy heading down hard. gold, we re hitting new highs today. we ve got copper, yeah, we clearly are back to the races. are you going to see something of a change with dubai, though? does this create some concern about overseas markets, particularly emerging markets, and would that be something that would eventually benefit the u.s. market? i think if anything, actually, this tells you that in many wayses, there is more decoupling than everybody thought. back in the day, we went from believing that the world was completely unconnected to all of a sudden saying, oh, my, it is connected together. i think this time around, we panic the other direction. we say to otherwise, dubai is having a problem. that clearly doesn t need to be quite the case right now. some of these are more isolated. and in the end, when it came down to it, this is a black box. anybody who invested in abu dhabi, these were very much black box incentives. we didn t have a good sense of exactly how much debt was outstanding. just during the fact of this unfolding over 72 hours, we saw the amount of debt that was outstanding and the amount of problematic issues going 60 billion and right now we have about 20 plus billion. that s a big change and tells you this is a very isolate d issue in many ways. the jobs situation is so key. i mean, i think right now, everybody acknowledges that the economy has probably emerged from recession and the debate is what will next year look like? will it be strong in terms of growth or weak? and i think what separates the optimist from the pessimist is jobs. if you don t have jobs, you don t have income growth to support consumer spending. if you don t have consumer spending, which is two-thirds of the economy, then the outlook for growth can t be all that good. so really, i think the construction of the numbers and the importance of the numbers this week all build to friday s employment report. i think actually the numbers are going to look better. it s going to continue to show that the job losses are waning. you have more optimistic about that jobs cuts number. they talk about construction jobs that are getting pushed by the wayside now. well, i have to tell you, you know, we re skeptical of the number of jobs that have been estimated to have been created by the stimulus. one of the things that we ve said is unlike many others, we don t think a lot of the strength in the u.s. or just the economy in general is the result of stimulus. i mean, the good news is, we re not worried about stimulus fading and that i think here the jobs story is going to be dominated by how the u.s. economy does and whether or not businesses start to feel confident enough about the stus takenbility of this recovery to see recovery. they re getting more out of their workers. productivity is rising. the question is, how much can they get from workers before they re going to sort of be forced to hire back at least some of the hundreds of thousands of workers that were let go during this downturn. the white house is hosting a big jobs fair on this thursday. the focus on that is looking for new areas of jobs. what do you expect to have coming out of this? yeah. i mean, again, i think we re going to continue to see efforts by the administration to get out in front of the employment situation. clearly, that s where the concerns are. and i think if the administration can be seen to be doing something about it, that s the way to approach the uncertainty that the americans feel about the economy. but again, in the end, it s going to be the private sector that is going to be, you know, creating the jobs that we need to support the economy in general. i think the government s ability here to boost employment is limited. but what they basically can do is to reduce uncertainty. it will hold the tax argument and so forth. health care reform and the possibility that the cost of hiring workers is going to go up is a big detriment to employment. so on one hand, they re trying to do things to boost job growth. on the other hand, the uncert n uncertainty surrounding the cost of employment and the cost of workers continues to work against it. do you think tax credits are a legitimate fool now knowing what they would do to the deficit or tax receipt? yeah. first of all, anything temporary, it doesn t do much at all. you would have to see permanent cuts in payroll taxes if you really wanted to have an effect. as you said, that just is not going to happen in this deficit environment. mark, i know that stocks no longer look cheap after the 60% rally that we ve seen coming since march. but you still like some areas. do you think in the first half all like areas like telecoms, some of those areas will outperform the markets? absolutely. our strategist, miles zybok has been talking for a while about the idea that in essence, we re due for that transition area. we re probably not going to have the 60% or 70% gains we ve had since march. but we ll be back to a more traditional 70%, 80% equity gain. and yes, it s about getting into more extensive sectors. this is a market where this is a rally where turkeys were flying. would you have had companies that were not great companies that were rallying far more than the most defensive companies. i think now we re moving back to that place where it s going to be health care, consumer staples. i think we re going to have to be satisfied by 2010 looking at 70% or 80%. mark, thank you very much for your time. michelle, thank you for coming in today. coming up this morning, we ll get some of the top stories. plus, kevin ferry has the picture from the futures pits and a lot more on ge and vivendi reaching that tentative deal for nbcu. david faber is here with the latest. and then squawk box is where billionaires turn first. joining us in the next hour, look at this lineup. sam zel, donald trump, wilbur ross, rush ard lefrak. we will talk the economy, debu and a lot more. stick around. over 20 million customers have put their faith in sun life financial. we should be a household name. and we will be. so you re suggesting that we change our name from florida, the sunshine state, to.? florida the sun life state. the posters will be so cool. sooner or later, you ll know our name. sun life financial. because we believe in the strength of american businesses. ge capital understands what small businesses need to grow and create jobs. today, over 300,000 businesses rely on ge capital for the critical financing they need to help get our economy back on track. the american renewal is happening. right now. i just want fewer pills and relief that lasts all day. take 2 extra strength tylenol every 4 to 6 hours?!? taking 8 pills a day. and if i take it for 10 days that s 80 pills. just 2 aleve can last all day. perfect. choose aleve and you can be taking four times. fewer pills than extra strength tylenol. just 2 aleve have the strength to relieve arthritis pain all day. welcome back. our top story, general electric reach ago tentative deal to buy vivendi s 20% stake in nbc universal. let s get more reaction now. david faber remains on the set with us in boston. jack is going to take a look at this from a perspective of a long time ge shareholder. he s the chief investment officer at harbor advisory. jack, i guess, what brings to mind with me is that the wrap on selling nbc was that it takes away some of the diversity of ge s revenue and profits and it makes ge even more of a financial a ge capital operation. but getting out of an asset that has been losing value, maybe it makes sense. are you happy or sad today or a little bit of both? joe, i m happy. thanks. i think part of the problem no, i think cnbc will do well no matter who the owner is. and that is clearly one of the better assets at nbc us. i think as a shareholder, we believe part of the conglomerate discount and part of the disappoint in this stock has been that the business got so diverse that clearly management s focus was diminished in this area. the industrial base is what ge s forte is. and they should focus on the industrial base and the part of the financial basis that supports that. there is clearly synergy between the industrial base and ge financial assets that are used to support that. where they ran amuck was with ge men on the capital side and with going away from their industrial strengths in their diversification efforts. a lot of assets have been bought and sold over these last five or six years. many of the prices people said were fairly high. i m just curious, when you think about the last five-year period in terms of the changes that have taken place at the company, do you think it has moved in the right direction or the wrong direction? unfortunately, david, it s destroyed shareholder value, but it s moving in the right direction. i think that sounds contradictory. but the point is, ge s strength during the latter part of the 80s and the 90s was they used their balance sheet to acquire assets during difficult times. they got great prices and they created shareholder value. they got into a situation here where they had too much short-term financing, ran into a credit crisis which is what happens, you know, every 20 or 30 years and they had to start selling assets at values that did not create and actually destroyed shareholder value. that s unfortunately, but what do you do? you have to come up with a strategy, the strategy to dereceiver and to refocus on the industrial base and the parts of ge capital that are important is a good long-term strategy. it s just unfortunate they re doing it in this environment. it would have been so much better too tack these parts of the strategy 3 to 5 years do you think it ultimately will result in a higher multiple snm. yes. you do? yes, i do. and it won t be immediate because this news, obviously, is already in the shares. the stock is trading at perspective valuation based on probably 20 1 earnings. so the stock is fairly valued in here. however, on the other side of this, if they re a more streamlined industrial company where the capital assets have less of a retail focus, i think it will get evaluation more in line with its peers, less of a conglomerate discount, and that is why i think the longer term target is still in the 20s. but you use the proceeds, you know, when they finally are available to ge to just shrink the business, the ge capital business, or what do you do, buy green assets or energy, green energy? is that the way you expect immelt to go here? i would like to see him use the proceeds to increase the industrial side of the business, not necessarily on the green side because i think when that is so much en vogue you re paying premium prices for those assets. the drawdown of ge capital can happen just through runoff. and i think that is the way it should be handled. it would be great to see this money go into some good acquisitions on the industrial side while prices are still depressed. and i think ge should go back to what they did very well ten and 15 years ago, which is to look for strategic acquisitions in a depressed market. all right. zach, thank you. thanks for having me, joe. you re welcome. and we ll hear more from david later. actually, health care, what do you do? as an investment banker, which you constantly are you talk to them but you play them on at this point, no, i m not. i don t want to be one. if you just keep shrinking a business, though, that doesn t really i mean, that doesn t prepare you to flourish in the future, does it? you have to play offense, don t you? you do. you do. and where do you play? windmill in the sky? certainly mr. immelt has made a point that green is an important part of the future of the company. health care? he thinks a lot of jobs will be created there. health care is a big component of diagnostic. and the industry. i mean, i don t know the answers. obviously, none of us do. but certainly the complexion of the company is changing. don t forget, you re going from 80% to 90% right now. it s not that huge an ownership change in nbc dd u. you re taking $9 billion that you re getting paid up to the parent that will allow ge to deleverage. so it works for ge now. bites not as though this is going to take place over a short amount of time. this is a long-term thing we re talking about here. but you are turning the ship. absolutely. you are very definitely putting down a but you walk into bar, you see immelt at one table and brian roberts at the other, who do you send the drink to? both? i would say both. a shot to both guys. you re going to send it to you re not going to quibble at 2%, do you? whose table to you sit the? i m asking you. you re the investor you re the greatest suck up of all time. i think you sit at whatever table you get invited to, don t you? i think you sit at whatever table you can in the middle. you asked the question. you.did. and you won t answer. no, i won t answer. kevin, watching everything you ve seen playing out the last couple of weeks, a lot of turmoil, a lot of change, what s the underlying position you re left with? confusion. here is what i would say. outside of all the hype, the big theme that i think you see developing right now that is going to go straight through into next year, becky, is that central banks and economic news is going to become far more domestically oriented. and that is going to have repercussions where in the past year and a half, everything has been oriented the same way, which is flood it with liquidity and see what floats up. so i think that that differ yenation is going to become key. and even this week when the ecb startsd to have its q&a, those are going to be important issues. i would weigh in on this, though. it was just bad timing, what happened with the recognition in the middle eastern economies with regard to dubai. because friday was the day in which the alternative was entering into the libor rates for europe and america. and so there was already that apprehension about what was going to develop for those four days that end up being the end of the year. i would like to say nothing happened. and even with what was going on in the middle east, that shows that the lux quiddity and the real scare here is diminished. and i think that s going to be important as we go throughout the rest of the end of december. kevin, let me ask you this. there s been all this talk that does this mean a change for at least the inverse relationship between the dollar and the markets? is there a point where, you know, just because the dollar is going higher doesn t mean the u.s. stock markets are going to go lower? does this decouple that at all? well, i d sure like to see it. that s been a we think that that is an overstated type of investment theme. and so you have this strange world in which half the world betts on inflationary themes, especially through gold, and the central banks and the businesses deal with deflationary themes. so i think that some realignment there is important. what i would say about the dollar is this. in a fiat world, all currencies are reflected light. and to they re reflected light in terms of the dollar. and so i think that perhaps what people should really understand is if you should invest in these emerging economies, these developing worlds with strange pictures on their currencies, then you should recognize that they re risk canning plays. and so i think that we re more inclined to believe that not only is the dollar still the reserve currency of the world, but our economy is more plexble. so we tend to be more domestically invited than this theme of debasing currency is a good thing. kevin, thank you. it s always good to see you. when we come back, we ll talk to intel s chief technology officer. plus, a virtual who is who in terms of technology. tdd#: 1-800-345-2550 if i m breathing, i m thinking about trading. tdd#: 1-800-345-2550 i always have my eye out for a stock on the move. tdd#: 1-800-345-2550 doesn t matter if a company sells computer chips tdd#: 1-800-345-2550 or, i don t know, fish and chips. tdd#: 1-800-345-2550 i ll look at all kinds of stocks before i settle on one. tdd#: 1-800-345-2550 if i think i m onto something i ll check it out, tdd#: 1-800-345-2550 you know, see what other traders are up to. tdd#: 1-800-345-2550 when everything feels right though, tdd#: 1-800-345-2550 that s when i get serious. tdd#: 1-800-345-2550 and the minute i get into something, tdd#: 1-800-345-2550 i already know when i want to get out. tdd#: 1-800-345-2550 of course, every now and then i ll talk with somebody tdd#: 1-800-345-2550 who knows what i m trying to do. tdd#: 1-800-345-2550 (announcer) switch to schwab today. tdd#: 1-800-345-2550 you ll get the tools, the technology tdd#: 1-800-345-2550 and the support to trade your way. tdd#: 1-800-345-2550 go to schwab.com/trader tdd#: 1-800-345-2550 or call 1-800-540-7304 tdd#: 1-800-345-2550 right now. tdd#: 1-800-345-2550 but opportunities can vanish like that. tdd#: 1-800-345-2550 .so most days, i m right there tdd#: 1-800-345-2550 when the market opens. coming up, keeping america great. intell s ceo joins us next. he see in washington, d.c. today. he s meating with education secretary arne duncan, larry summers and many others. the focus is on innovation. stay right here. taken government bailout money, yet no one knows our name. get down tonight that s about to change. so you ll pay for the tour, but i have to change my name? 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(announcer) get an exceptional offer on the mercedes-benz you ve always wanted at the winter event going on now. but hurry - the offer ends soon. you all want to run your businesses more efficiently, so we ve brought in a team of experts to help. one suggestion is to make your shipping more efficient with priority mail flat rate boxes from the postal service. shipping s a hassle! weighing every box. actually, with flat rate boxes you don t need to weigh anything under 70 pounds. if it fits, it ships for a low flat rate. call or go online for a free flat rate box shipping kit that includes free boxes and our helpful shipping guide. do it today, and we ll ship it all right to your door for free. ok, but i ship all over the country. you can ship anywhere in the country for a low flat rate. ship international, too. and remember flat rate boxes come in four sizes and shipping starts at just $4.95. call or go online for a free shipping kit with a full supply of free boxes, plus the shipping guide. act now, and you ll get them all delivered right to your business free of charge. priority mail flat rate boxes only from the postal service. a simpler way to ship. call or go online now to get started. addressing the recession, addressing 10.2% unemployment, is a matter of very great urgency. it s not something that s going to be fixed in a week or a month or a year. after wasn t made in a week or month or year. speaking at the innovation conference in d.c. last night. joining us from there is justin ratner, chief technology officer for intel. we ve gone from first to sixth in innovation, justin. are those real numbers or the way that we look at things? we hear our health care is 46, that s when you include uninsured. we still have great delivery of health care, state-of-the-art. are we really sixth in innovation worldwide now? i think so. i think as larry summers pointed out last night, when the economy is down and people are not feeling terribly optimistic, it s not unusual for them to have a somewhat dimmer view of the competitiveness of the country. i was wondering, we seem to be at the forefront of a lot of industries and we do see the rest of the world take a lot of our ideas, maybe, and make them cheaper, with cheaper labor. i would think especially being at intel you know where advances are made in semiconductors and computing, and it s still here. no? that s right. i think that s true. i m responsible for a network of research laboratories around the world, and i still depend primarily on the work that s being done here in the u.s. i still think when it comes to innovati innovating, u.s. is the top dog. we have a number say we innovate but as soon as we innovate something like an ipod we ship it off to china. is innovation worth anything if you can t make it here in the united states? i certainly think so. i think that s perhaps why they are confused. they buy a product and flip it over and it says, made in china or wherever and they think the innovation is taking place in china or whatever foreign country is responsible for manufacture. but the innovation is here. if you ve ever bought an iphone or ipod it says designed in california. i think that s apple s way to say the innovation took place here in the united states. justin, do you think to get back to where everyone agrees we re number one, obviously we need work in education and everything else, is this a federal government s role? is this a role for the feederal government or are we talking about vc and the way it s always been done in the past will lead the way? the intel view is that we need to drive investment and innovation across all the sectors and the government certainly has a role to play. as we heard from secretary of education duncan yesterday, the role of education in creating the kinds of future employees that are going to drive innovation, intel is absolutely critical. so the government has a role to play in education. i think the government is also in a position to create the investment environment that will drive innovation. through tax policy? i think tax policy has a role to play, but i think we d like to see something on the order of a national innovation initiative that really highlights to the american people how critical innovation is to our economy. justin, what s the most important innovative idea intel is working on right now? yes, that s like asking me which of my children i love more. there are many, many technologies. i ll just site one that we talked about in the last few months. it s called light peek. it s high-performance, optical to pcs, consumer devices of all kinds. you ll see it in the market beginning in the second half of 2010. we re excited about it and the rest of the industry is pretty excited about it as well. justin, i had trouble sleeping last night. i ve got to be honest with you, worried about moore s law hitting the wall at some point in the near future. can i can i sleep? what s wrong? it s moore s law, honey. it s alive and well and in fact we we have a pretty clear view, three generations of technology. that s pretty much been the historical case. we ve always been able to look at about eight or ten years and be confident that we can evolve technology according to the law for that length of time. you can rest easy and give me your phone number when we do off the air and i ll call you next time i see a break in the law. thank you for understanding. justin rattner, thank you. much more on the conference including steve case and s.e.c. chairman on power lunch. koupg, top stories plus the lineup for the next hour. donald trump, sam zell. on squawk straight ahead. u li. because you are. .clown, yes? female valve: come, you hit me again and i break you. male valve: oh, you messed with wrong pipe now, car. ha, ha trust me.i have to live with her. announcer:accidents are bad. but geico s good with guaranteed repairs through auto repair express. this is a special squawk box presentation. three of the most prolific businessmen, wilbur ross, real estate legend richard lefrak and private investor entrepreneur sam zell join becky and carl for a roundtable like no other. their thoughts on the global economy, the stay of the credit markets and why washington matters to wall street more than ever. three business icons, one big roundtable discussion as the second hour of squawk box begins right now. good morning, everybody. welcome back to squawk box on cnbc. i m becky quick along with joe kernen and carl quintanilla. our billionaire roundtable is just ahead. we ve got heavy hitters, wilbur ross, richard lefrak, sam zell plus at the bottom of the hour donald trump will join us as well. first headlines. a dubai world calms investors with its plan to restructure $26 billion in debt. the government controlled investment arm unveiled it s plan yesterday. it will cover debt owned by primary real estate firms. other big story is ge and vivendi tentatively agreeing to buy the stake in nbc universal for under $6 billion. it clears the way for a deal that would give comcast a 51% stake in nbcu. david faber joins us with more on that. good morning. good morning. the deal between ge and vivendi which has been negotiated over the last few weeks and was the last outstanding issue in this long negotiation that has taken place over the last months between ge and comcast now paves the way for ge and comcast to move ahead with the deal that was forged as long ago as last spring, or the spring of 2009, under which comcast would take a 51% controlling interest in nbcu. ge would go from 80% to 49% and have the right to reduce its interest over time taking in about the $9 billion in cash. that $9 billion would be debt that would be put on the balance sheet of nbcu. comcast contributing $6 billion roughly in cash along with its cable networks to this new company. of course the divestiture would begin with a purchase of rca that began in 1986. the announcement of the deal, people close to the situation tell me is expected this thursday. it will not be today or tomorrow. thursday. that day is right now they are saying looks good but i have learned from having reported on this for the last month and a half that it is difficult to absolutely say definitively it will be thursday. on that day we are likely to learn a few more details around the deal we ve talked so much about. of course it will give an opportunity of ge and comcast to speak to shareholders. for ge to explain the rational behind the decision to divest ownership of part of nbcu and what its future holds and for comcast, a more important order for its shareholders, to explain exactly why it has been focused on acquiring content assets for quite sometime. don t forget the hostile bid made for disney a number of years ago. as we look at that stock price, we will learn more, but not today, most likely not tomorrow, not until thursday. nonetheless, it does appear this deal will happen. thank you, david. we will check back in with you in the next half hour. meantime the special roundtable. richard lefrak, the lefrak organization will be with us, as with wilbur ross, chairman of ross & company and sam zell, chairman of equity group investments. gentlemen, welcome to all three of you. i can t think of a better panel to have to talk about commercial real estate today. let s start out with what s happening in commercial real estate. a lot of questions, especially with what we ve seen in dubai over the last few days. why don t you weigh in on where things stand. you think dooms sayers have overplayed it. it reminds me a little of mark twain who was famous for saying reports of his death were greatly exaggerated. i think as far as commercial real estate is concerned, particularly as it represents some kind of a threat to the system or the next leg down, i just don t believe that s the case. and i support my position by basically going back to what i think are the fundamentals of real estate. and that is supply and demand. there are a lot of things real estate is attributable to, supposedly inflation, et cetera, but none of that works unless it s imbalance. we haven t had a new real estate asset of any significance committed since july of 07, and i suspect we aren t going to have anything new committed for another 24 to 36 months. i think that that, combined with the fact this was a demand recession, as opposed to an oversupply recession suggests to me that i m not a big fan of the equity owners of those buildings. but i think on the debt side, the providers of the debt, generally speaking, are not going to get hurt. i think dilution is going to be the solution. richard, you ve said the same thing. you think this is a buying opportunity in a lot of ways. yeah. well, prices have come down 35 to 40% already. and this is, i think, a generational opportunity for people to buy commercial real estate, if they have cash available to them. the problem is that many of the owners are locked into that i ve heard called negative leverage purgatory, which is kind of a fancy way to say they have overborrowed. now, they are caught in complex structures which are very hard to untangle right now. so how you free up the assets that are tied up under these conditions, that s going to be the trick. and right now, a lot of these structures have been untested legally and we ll have to wait and see about how it emerges. i do agree with sam about one thing. if you want to get a laugh from a bank, go ask them for a construction loan. that s not going to happen. so the supply definitely is just going to be choked off now and hope fully if the economy heals a little bit, you re going to see some normalization. but i don t think that normalization, richard, is going to provide equity to the current owners. i think current owners to a large extent, 60, 70% of commercial real estate in america has been sold or leveraged since 2000. i think whether you use difficult structures, methodology, there s more debt than value. equity holders don t have any value. consequently you re not going to get anything, you re not going to sell. that s why there has been no traffic. wilbur, that s certainly what we ve seen in dubai. do you think there s other problems like dubai ready to pop up around the globe? i do think so. but i think there s a new saying. what happens in dubai stays in dubai. i don t think there s going to be the terrific contagion some people had thought. nor do i think we should say good-bye dubai. i think it s more going to be, play it again, sam. i think what will happen, they will restructure the debt. a lot of projects will get completed. they may have a new owner or new ownership. but in major projects it s not unusual for the second owner or third owner to really be the one this makes the money. i don t think that s strange. domestically, if real estate values are down, i think we all agree 35 or 40% already, that has to mean negative equity. very few of these properties only had two-thirds debt at the time. more likely they had 80, 90% debt and debt based on values that were using very low cap rates, very generous assumptions about rent rules and rent rates of increase. so i think it s going to be a long, hard struggle, even without new construction. you d be amazed how little office space and retail space unemployed people need. right. sam, you sold your $39 billion real estate empire at the height back in 2007. did you see all this building up? is that why you got out when you did? no. i d love to tell you i was brilliant and i sold my office company at the very top because i recognized it was the very top. what i did recognize was somebody made me a godfather offer. you know, when we owned the equity office, we validity every quarter because we needed to be on top of what we perceived to be values. somebody made us an offer that i couldn t justify. the classic scenario, any day you don t sell, you re buying. at that rate, i didn t want to buy, so it was a relatively easy decision to sell. better to be lucky than smart. every day of the week. every day of the week. i think sam is being a little modest. i think he s being a little modest. you know, the fact of the matter is, he did sell at the very top of the market and most of the people that purchased the properties from him are suffering now or have actually passed the ownership on to somebody else. i give sam single-handed credit for starting the collapse of real estate. remind me what the quote was, commercial real estate will result in tragedies. were those the words you used? i think it will be tragic for the equity owners and for some of the lenders. beyond what sam is saying, i.e. dilution. collision is a nice way of saying wiping out equity owners and converting debt to equity. i think that s exactly what s going to happen. i think the biggest victims are going to be the regional banks. 80% of all the maturities coming due in the next two years in commercial real estate are held by banks, mostly regional banks. typical regional bank will have 25% of its entire assets in commercial real estate loans compared to equity of maybe 5%. from there we draw a straight line to small businesses and from there we draw a straight line to jobs. but guys, you ve got to understand that technically what wilbur just said is absolutely correct. however, the kind of real estate that the regional banks lent against was development, was smaller, was local, and was not part of what i would call the institutional real estate market, which i think is where the key questions for the future are going to be resolved. sam, you know, i know that you know a little about chicago and i think you know a little bit about the bank. i m not sure the assets of the bank that wilbur and i were part of the purchasing group you would describe them typically as assets held by regional banks. i would also tell you condominiums do not qualify as commercial real estate. we love condominiums. that s a good thing. we love condominiums. you better love them. you re going to own a lot of them. we just bought 12,000 of them. are we going to sneak in a break? guys, if you will stay around for one moment, we ll sneak in a break and be back in one moment with this conversation. if you have comments or questions, want to ask any of these gentlemen a question, ask them for a handout or loan, because i m going to do that, squawk box will be right back. still to come on squawk box, trump calling. donald rings in on the squawk news line. his thoughts on everything from tiger woods to the state of real estate. up next, our exclusive roundtable discussion with sam zell, wilbur ross and richard lefrak continues right after the break. time now for today s aflac trivia question. ford motor company introduced the continuous moving assembly line on this day in what year? the answer when cnbc squawk box continues. dental bills. gazooks. you need 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(santa): aflac. we ve got you under our wing. rudolph s better. but now blitzen s sick! now the answer to today s aflac trivia question. ford motor company introduced the continuous moving assembly line on this day in what year? the answer, 1913. welcome back to squawk box, everyone. the futures at this point are indicating a higher open. right now you re talking about dow 82 points above fair value as the bank of japan boasts an emergency meeting to adopt measures to ease monetary policy. latest move pushing down money market rates. surging yen and falling consumer prices. boj has kept its key short-term interest rate changed at a tenth of a percent. check out currency markets on this. yen down broadly, actually right now the dollar is higher against the yen but down against the euro and pound. we continue our exclusive conversation this morning with richard lefrak, president of lefrak organization. wilbur ross, chairman and ceo of w.l. ross & company and sam zell chairman of equity investments. guys, we touched on dubai in the last block. everyone is trying to tell us the situation is not as bad as we thought or we somehow dodged a bullet. can you at this point, wilbur, characterize the danger we experienced over the last four or five days? i think there s a couple of aspects to it. investors, just as they learned from securitizations, learn real collateral should understand here. as i understand, dubai fought very, very hard, very unlikely they may foreclose on anything. and that was laid out very carefully and the perspectus. the debt they are trying to restructure and postpone is only about half the money they put into the u.s., into mgm grand. if they can get out on $0.50 on the dollar they can get out on the entire debt restructuring they have imposed. it s a punch but a punch we can handle. wilbur made a good point. there s been lots of capital that runs in emerging markets. but i don t think everyone understands the legal structure they are diving into. maybe the old u.s. green back with a set of laws isn t such a bad place to have money tied up. were you spooked by anything you saw or read out of dubai? are you a fan of any kind of contagion theory at this point? no. i pretty much agree with wilbur. i will tell you, however, i think the dubai situation was a lot like the people who bought subprime debt based on the ratings. they didn t at the underlying debt. they just looked at the rating and said, well, if it s rated a i can buy it. therefore they substituted diligence for intelligence. i think the same thing happened in dubai. there was no justification for the amount of construction in dubai. you had whole neighborhoods that were literally speculative purchases that were never occupied. it was anybody who walked the streets of dubai said, this just doesn t make any sense. and the only reason people kept lending them money, was, well, abu dhabi was going to bail them out. i know the people in abu dhabi, i never read they were going to bail them out and they ain t going to bail them out. the sooner everybody came to realize that, the more prudent they were going to be in dealing with dubai. our friend sent something you wrote in barons right after you sold those offices where you totally knew what you were doing. you said there s a debt crisis coming caused by ir spops i believe and egregious amounts of debt. you ll never get anyone to take the other side of a trade. if you don t pretend it s luck, you ll never get anyone to take the other side. we know what you re doing. paul newman did this in the hustler. he has no response to that. something people might question. the newspaper business and its future. you re pulling no punches in what looks like a dire forecast for the whole industry. it s got to move to the internet or it s dead? well, one of my executives at the tribune yesterday described the newspaper business as a melting ice cube. namely that there are answers to the future of newspapers. i think the model has to be changed. i think, you know, issues like can you keep giving it away for free doesn t make any sense. can you keep delivering it to people s homes at costs that are unjustifiable? i think there are a lot of issues that the newspaper industry has to challenge and take advantage of and recognize that technology is changing their role and they have to adopt accordingly. it seems piracy and google, will rupert be successful trying to charge for it. team up with? do you need to team up with them, the minute you create contact. restrict google access. it becomes free. i m more than willing to let rupert take the first sort, really. if it works, i think everybody will follow him and should it in the first place. will it? i think there s a good chance. newspapers do create unique content, particularly locally, that people want to know and want to understand. and if, in fact, the cost of access to that is pennies, i don t think it s going to be an impediment to getting it done. yeah, but i think what s going to change is the important thing is content. the important thing is not the mechanism of delivery. ink on paper, pretty inefficient way to move information or opinion. especially because it can t be immediate. people now are used to getting news as it happens, not the next day, not the next week, not the next month. i think all print media are obsoleting themselves. and they will all end up like i think the word print i think you re right. i think the future is going to be home delivery by pdf, which will make it current and updatable. the role of newspapers in generating news, generating information and delivering that content i think is a valid long-term position that needs to be both protected and encoura d encouraged. another phenomenon, now that the value of information has gotten to be about zero is in overload. i think what s going to be the end result is the value of expertise is going itting to infinity. it s harder and harder for people to digest all these inputs, let alone make sense out of them, let alone transfer them to investment decision. having the chicago tribune dropped at your front door, that s a valuable franchise. to get it digitally you have to dial in. who says dialing into one as opposed to the other. as wilbur says, you have to be best at what you re sending, or else people are going to dial into another resource. sam, we ve only got you for a couple more minutes. i wanted to ask you a couple of big, broad, macrothings. when it comes to your money are you putting up a wall to fight inflation in the years to come? are you loading up on gold, your view of the dollar? no, i m not loading up on gold. i do believe that the current administration is insensitive to the risks of the scale of debt being created. consequently, if there isn t any radical change in this current administration s direction, very hard to imagine that we re not going to be confronted with inflationary pressures going forward. we may have a year or two of pass on that, but i think that if you continue to raise the debt levels, if you continue the levels of deficit spending that s going on, it s just mathematically impossible for us not to have inflation. to some extent the lack of velocity is currently a governor on inflation, but that s only a matter of time. are you worried about inflation the way we ve dealt with it historically or are you talking about more significant things like lack of confidence in money, a default by the u.s. treasury? well, i think part of the reason you ve seen the price of increase in gold is the fact that if you really step back from the world, almost universally and in tandem, all of the paper currencies of the world have been devalued together. and there s only the issue is what s the relative devaluation. i m very concerned about the dollar going forward. there is no other reserve currency right now, nor do i think there is going to be any one shortly. but at the same time as the owners of that reserve currency, that gives the united states enormous international power that it should not put away. sam, you didn t think the first stimulus maybe was that effective. yeah. i don t think you think a second stimulus is necessary. right. we know where you re sitting. you re a wealthy guy. let s go down the list of some of the other initiatives you talked about the administration. which are good and which are bad. tax policy of the administration, cap and trade, health care, are you universally opposed to everything or are some of these things a good idea? no. i think in the most simplistic terms, in 1992, bill clinton ran for president of the theme of his running for presidency was, it s the economy, stupid. and right now and for the last year, it has been the economy, stupid. and in the middle of that kind of a difficult period, the idea of running up $800 billion or a trillion dollars of deficits on health care to serve 15% of the population or cap and trade expense, all kinds of other tax increases, all this done in the middle of probably the weakest economy since the depression, i don t get it. i think washington should focus its efforts on the economy, on making ourselves more efficient, and dealing with jobs, jobs, and jobs. and all this other stuff should be postponed for a time when we re in an economic position to do it. i totally agree with sam. i think that many of these initiatives, however worthy they may be societally, are contradictory to strengthening the economy. it s going to take more money out of every day people s pockets and that s really the weak part of the economy. i also agree with sam on gold. to me gold is a psychological commodity. it s not really an industrial commodity. there s plenty of gold producib producible, especially at these prices. it s really a momentum trade on a global sale rather than anything with intrinsic value. farther to go, with etf, momentum. with sponsor ship, it could go to 2,000. based on something at the wall street journal blog, sam zell, this is wilbur ross, commercial real estate salve ants. all the new, i find their knowledge in seriously related to the industry. wilbur, that was absolutely my statement at a conference last week. and i promise you, wilbur, if i ever say anything about the steel business, you have the right to do the exact same to me. sam, i accept your apology. i didn t apologize. sam, i don t know if you can see this, but i brought something because i figured you and wilbur would be going at it and i d be the referee. what, going to prison? sam, we had a question that came in, before we let you go, question to a viewer. scottsdale, arizona, writes in, this is for all three but mr. zell in particular. he says this commercial real estate market is a victim of increased demand and oversupply, he wants to know what specific industries will lead demand, office, industrial, retail, which one will be the first to recover. i think probably the most severe slowdown has been in office real estate. and i would suspect that probably will be the first recovery, particularly since i think the corporations are in much better shape than the consumer. sam, i ve got to disagree with you on that one. i think the apartment rental apartments are going to i m sorry. that wasn t part of what she defined. i couldn t agree with you more. apartments always are the leaders and they will be again. i don t disagree with that. i laid it out, office, industrial, retail. do you think that retail is maybe as quick to recover? what s the new norm? i keep hearing that on the show. the new norm is nobody goes shopping and spends money, they just save it. if you believe that, nobody is going to go shopping, i have a bridge to sell you. it s in brooklyn. brooklyn is good. but my opinion, you ve got 3 million population is increasing 3 million annually. eventually they are going to move out of grandma s house and get their own apartment if there s a job available to them. there s no question in my mind the multifamily sector will, of all the categories, will emerge first. i read yesterday what are mall vacancy rates, 20%? no, they are not that high. 11 or 12%. but i think the key in the mall business is obsolescence. when you have excessive capital available, you have all kinds of retail or all kind of real estate that gets created for which there s no justification. we have this whole lifestyle center concept which has been a failure because there are no anchors. we have a lot of marginal both strip and malls that i think will ever recover. on the other hand, the prime malls i think will do just fine and will get through this without an issue. sam, in the past, you ve been on panels here and you always have a pretty rosey outlook to some extent long-term. you re a half full guy. is this recovery, in your view, going to be worse than previous ones because of what led us into it, or are we underestimating the strength of the economy to come back? i think the answer to your question is different than you proposed. okay. i think the question is if washington doesn t screw it up, i think we will have a normal recovery. if washington screws it up with new taxes and new burdens on the economy, then all bets are off. okay. so you know, under the medical thesis, the rule is do no harm. and i think somebody needs to go to washington and tell them to do no harm. you re in chicago. chicago politics. these guys know how to play. a lot of this stuff is going to end up law, don t you think? i hope not. all right. sam, always good to see you. you always bring it straight. we appreciate your time this morning. thank you very much. good morning. richard and wilbur are going to stick around until the end of the show, we re grateful for that. questions or comments, our address, squawk@cnbc.com. when we come back, squawk friend and business magnet donald trump will join the conversation with rich and wilbur. we continue in just a couple of minutes. work with people far outside the firewall. collaborate with business partners. get insights from suppliers anywhere. unlock knowledge from our supply chain. smarter technology means the choice. .between being open. .and being secure isn t a choice anymore. i can have both. helping to secure an open world. that s what i m working on. i m an ibmer. let s build a smarter planet. in these markets, i m glad i turned to fidelity for an annuity with guaranteed income for life. that s right, guaranteed income for life. my annuity from fidelity means my retirement income is safe. it s guaranteed, no matter what happens. if guaranteed income for life sounds good to you, do what i did let fidelity be your guide. call fidelity at. for details about guaranteed income for life. welcome back. want to get a check on the markets of as the dollar weakens, risk trade relatively speaking back on, going to add about 70 points to the dow when we open in a couple hour s time. couple of key stories, gm and vivendi tentatively agreed to value the stake in nbcu at $5.8 billion. that agreement clears the way for ge and comcast to proceed with plans for a joint venture which would give comcast a controlling stake. auto delinquencies on the rise. transunion shows percentage of loans 60 or more days past due rose to .8% in the third quarter to .3 in q2. that comes on the day major auto sales report. wilbur ross and sam zell but always room for one more billionaire, joining us on the line domd trump chairman of the trump organization. mr. trump, good morning. good morning. i think i ll start with dubai. in the heyday, that place, dubai needed a trump or something or other over there. it was going strong. they almost had it. they almost had it. what s the bottom line? what happened and what s going to happen? well, i know dubai very well. i was going to do a deal there. they paid a lot of money to go into a partnership. they were getting ready to start the building about a year ago. they were all excited, then the market collapsed on them. and there s a lot of problems and dubai has bigger problems. i can t tell you, a lot of people were saying, as sam was saying before and wilbur were saying, what s the purpose of dubai, what s the purpose of building so much. you walk through those streets and it was like new york city times ten in its heyday. i ve never seen anything like it in my life. where do these people come from? turns out they didn t come. no there there. i guess buy them at tremendous discounts. if you have cash, this is a great time to be in the real estate business. you can buy things phenomenally priced. i ll give you a better description of that in five years, joe. maybe it s not such a great time to buy. we re buying a lot. i know richard and wilbur are buying a lot and our bets are on real estate at discounted prices. what s going to happen with city center? city center is really a mess. city center is a job that number one is not a very good looking job. i passed it the other day. it s not architecturally beautiful job. it s a hodgepodge. when you have different architects that design different buildings in the same job, you never know what it s going to look like and that s what you have. dubai is in there for tremendous amounts of money and mgm. i know they are selling apartments, they were selling apartments at tremendous discounts. in real estate, banks are not responding because there s no demand, or are they still turning people down for cause, for no reason. well, i think it s a little of both. if you have an ibm lease or prime tenant lease and you take that lease to the bank, the bank still won t loan you money. so with all the money the government gave various banks they are not putting out money at all. if you want to create jobs by doing a good building someplace in manhattan, because the manhattan market really has not been hit like the rest of the universe. if you want to build a building in manhattan and you have a good tenant, you have a good chance of not getting financing. the banks are not loaning money. i see they come out and say oh, we ve loaned money. they are not loaning money, no matter how prime, how rich, how good your development, the banks are not loaning money. frankly this economy cannot come back until the banks are forced to loan money. it s really the money they were given by the government but they are not making loans. most of the loans are pre-existing lines of credit where the buyer is drawing them down so they are contractually obligated to make the loan. i don t see a lot of new loans, voluntary loans. or they are refinancing an existing loan because nobody has any place to go with it. they are all trapped in the same place. donald, the government has done everything but beg the banks to make those loans again. what has to happen before they start doing that. maybe they have to do more than beg. maybe the word beg is a bad word. maybe they have to be told to make loans. this economy is not coming back i have friends that really have good projects, not only in real estate, they tell me they go to the bank they have been dealing with for 25 years, they have shown great loyalty to in the good times and the bank halves at them when they suggest making a loan. unless the government is going to take harsh action i ve been saying this on your show for the last year and a half, this is nothing new. unless the government is going to take very harsh action with the banks and force them to loan money, it s not going to happen. this economy is not going to come back. isn t it a mixed message from the regulators? they are saying the banks have to hold more in reserve. they need to be more well positioned for downturns that come? we d like to you make loans but you need reserves there. there are great loans to be made. i m not talking about risky loans. there are loans backed up by fortune 500 companies, fantastic companies. and they still won t loan. i ve seen deals and i have friends that have deals and richard can tell you the stories. we have deals that are so good, you go into a bank and they won t make loans. i don t know of any bank soliciting loans. yet when i read the wall street journal and other places the banks are bragging about making loans but they are not. when it comes to new york residential real estate, couple the stingy banks with initial condo defaults in cities above average, does new york real estate have another 10 to 15% to fall in the next six months? it could fall. we re doing a building in panama. you don t think in terms of panama being the greatest. the the greatest. happen to be building a panama canal. you know why? this government was so stupid we gave the panama canal to panamanians, they are signature on a gold mine and they are doubling and tripling the size of it. there are pockets of strong markets. new york city was never hurt as badly as many other places. i know people that are in phoenix, i think it s worse than probably miami. but between miami and phoenix and certain places in california, those places were hit. new york city is pretty solid. yes, it s gone down a little bit but it s pretty solid. if you made retail leases a year flaf, two years ago, you got some great price. now, you make them today, you can still get a pretty good price. new york city has not been hit like the rest of the world. any international gateway city, new york is the international gateway city in the united states, has attraction for capital other than just local capital, and so it s going to fare better than the rest. that s true about, frankly, washington, miami, los angeles, all those markets are not going to they will recover faster because there s a reason for people to be there, places like maybe phoenix or loss vegas. do you know how bad hit, an apartment $41 now $30 million. that s a bad hit. we ve suffered worse. i think you could solve a lot of the real estate problem in the u.s. if you did what canada did. if a foreigner invested a certain amount of money in commercial real estate can get a visa. don t have to give them a green card, citizenship, give them a visa. saying that a few years ago. another savant. i said you can fix the problem with no money letting people with capital, they have to behave, be vetted, come here and buy a house. you get rid of problems, one, two, three. doesn t add anything to the federal deficit. if anything it would help it and stimulate the economy. a job creator. lou dobbs for president. donald, remember when banks could just off load all the risk and securitize everything, get a aaa rating? doesn t that have something to do wit, you can t do that anymore? the banks went crazy. there was a time, if wilbur, myself or richard went in for a loan and asking for $500 million, they would say, no, we re not going to give it. we think you should take $600 million. they have bankers that could give percentages. i could name names because they are friends of richard s. the banks would get percentages of the deal. in the old days you got paid a salary and you got a turkey for christmas. these guys were making $100 million as bankers for loans that weren t good. they would be paid on signing, on closing. nobody worried what was going to happen in five years. it was incredible. those were crazy times. they won t be back for a long time. in five years, 10 years, 12 years, they will be back because the world is a crazy place. the pay czar you can t make any loans anymore. maybe the pay czar isn t wrong. if you re paid a commission on a loan. take this money. if you re paid a commission on the loan maybe after four or five years when the loan proves to be a good one. or when you get paid back. i haven t cleared this with page, donald, can we talk about lefrak on the apprentice. we can, indeed. have you talked it over with her? are you sure we can talk about it? you can talk about it 100%. page will approve it. richard was on the apprentice. was it tough? it airs after the olympics on the super bowl. what does he do with blagojevich? he was wild. i can t tell you i have a confidentiality agreement i signed so i m not allowed to discuss any of this. we have cyndi lauper, daryl strawberry, another wild one, the baseball player. but richard went on. wilbur, you would have been so proud of him. i m always proud of him. he was not at all nervous. how many cameras, 32 cameras on his beautiful face. he wasn t nervous. he was absolutely great. thank you, donald. when was that? right after the super bowl/olympics. what network? your network, nbc. oh, yeah, that s still our network. i m all confused about who i am, donald. when i say yours, i m referring to today. donald, should i ask comcast for my check? i think so. i think so. by that time, it could be a switch. i know the current people at nbc and they are great people. jeff is a fantastic guy. i hope it all works out well for everybody. i hope everybody is happy. we appreciate your time this morning. we re glad you re happy. i haven t seen ivanka. i saw them shopping at a kmart. they are very price conscious. very good. appreciate your time. have a good time. all right. still to come on squawk, if you wondered what we re talking about with donald, ge s tentative agreement with vivendi on nbc universal clearing the way for a potential deal with comcast. more on what this could mean for the future of media right after this. somewhere in america, there s a home by the sea powered by the wind on the plains. there s a hospital where technology has a healing touch. there s a factory giving old industries new life. and there s a train that got a whole city moving again. somewhere in america, the toughest questions are answered every day. because somewhere in america, 69,000 people spend every day answering them. siemens. answers. all right, carl. i hope that s okay with you. wilbur loves animal orchestra. i m so glad you ve changed and just play music. play music over. it depends. if we play yoko, we do. fair enough. stocks to watch, staples, a penny ahead of expectation, $6.52 billion, above expectations on the top line verse 6.45. north american comps were flat, street account down 3.6%. this is all a little bit better. but the fourth quarter guided 36 to 38 versus estimate of 37. then aig news. shares were up yesterday after a closing transaction which had been previously announced reducing aig s outstanding principle balance under federal reserve bank in new york. you can see that is causing shares to go up. remember those shares have gone up to $55 at one point. i forget what split was, reverse split. so it s not like it s back anywhere near what it was. it s so convoluted. i have no idea how much money we ve given them and how much they owe us. their last came out. $80 billion. at least. at least 80. it s more than dubai, i think. all right. general electric tentatively agreeing to $5.8 billion for vivendi s current stake in nbc universal. this clears the way for the proposed deal to give comcast 51% stake in nbcu. joining us now is michael wolf, vanity fair columnist and cnbc contributor and david faber covering this story from the beginning. why don t you give an update. sure. we ve been waiting for a number of weeks on the conclusion of negotiations between vivendi and ge about the sale of vivendi s 20% ownership stake in nbcu, a sale that needed to take place in order for a deal that has been in the works for quite sometime between ge and comcast to take place. we now know that tentatively at least, a price has been agreed to under which vivendi will sell that 20% stake to ge pafrg tvin way for an announcement of a deal where ge will sell part of its stake, reduce its stake in nbcu allowing comcast to buy the other 51%, a change in control. an announcement of the deal itself should come on thursday, though that is not definitive. that is expected at this point. that s what we know. michael, we ve been waiting for this deal to happen. what does this mean for the future of media? how does this change business? actually it s not going to change business. it s going to continue the way business has been run and the way the business has been, i dare say, rather poorly run. this is just another deal of the kind of deals that we have seen for the past 20 years, none of which let s shine a light on this, on that statement none of which has never worked out. so the that doesn t sound very hopeful. well, it s not very hopeful. remember, this is the media business. in the media business, there aren t too many things that are hopeful. now, on the other hand, if i were comcast and looking at the inevitable disintermediatiation of my fundamental core basic pipe business, then i would be saying, what can i do? and i d be running around like a chicken with my head cut off and i d probably buy nbc, too. michael, i don t know. none of the deals worked out? time-warner buying turner, that was probably a good deal. no, that was not a good deal. control of a lot of cable networks. by the way nbc buying nbc universal was probably not a bad deal. i m going to give it to you. i m just going to pull your pants down right here. not one of these deals has kept pace, not one of these companies has kept pace with the s&p. that s it. if you were an investor in an intermediate company engaged in these kinds of transactions, you re deeply under water. that s not working out. when you look at it from that perspective. what other perspective is there, david? it could be worse if they hadn t done the deals they did. that s the only thing. they may have created more value as a result of doing those deals? no, david, it could not have been worse, because we know the value of capital. if they just put their capital into a savings account, they would have done better. guys, hold on. i ve got to pull out the referee shirt. got it from richard. stay right there. keep your pants on everybody. we re going to continue this conversation right after the break. with fidelity, you can take your trading around the world, because now you can trade u.s. and foreign stocks online, in 12 markets, 24 hours a day, all from the same account, and settle in u.s. dollars or the local currency. plus, we ll guide you with international research and realtime quotes, so you can diversify your portfolio, wherever whenever. and we ll be on call around the clock, while you trade around the globe. fidelity investments. turn here. (announcer) we call it the american renewal. because we believe in the strength of american businesses. ge capital understands what small businesses need to grow and create jobs. today, over 300,000 businesses rely on ge capital for the critical financing they need to help get our economy back on track. the american renewal is happening. right now. good morning. in a media minute, general electric one tep closer to an nbc joint venture with comcast. manufacturing, construction, housing, autos, economic stats flying fast and furious. our featured market guest, former morgan stanley president steve crawford. plus billionaires unite. guest hosts wilbur ross and richard lefrak. i think it s going to be a long, hard struggle, even without new construction. maybe good old u.s. greenback with a real set of laws isn t such a bad place to have money tied up now. the final hour of squawk box begins right now. welcome back to squawk box here on cnbc, first in business worldwide. i m joe kernen along with becky quick and carl quintanilla. our guest host this morning wilbur ross, chairman and ceo of w.l. ross & company and richard lefrak, president of the lefrak organization. the futures at this hour look good. market finally managed to close on a positive note yesterday after being mixed through most of the session, after a brief scare we had, dubai scare on friday after the market reopened after the thanksgiving holidays. solidly higher this morning. i don t know why. things are feeling a little bit better, i guess. dubai turn out to be number a little lower. dollar weaker to the yen. maybe zero, we ll be at 20,000 on the dow. making headlines this morning, national economic council director larry summer says tackling high u.s. employment is a crucial challenge. addressing the recession, addressing 10.2% unemployment, is a matter of very great urgency. it s not something that s going to be fixed in a week or a month or a year. after all, these problems weren t made in a week or a month or a year. president obama is host ag jobs summit on thursday. guess, what squawk will be there. we ll be reporting live from the treasury department where we ll be with tim geithner at the treasury office for an extended interview. today is a day for extended statistics. ism manufacturing, construction spending, pending home sales and auto sales as well. also general electric reaching a tentative deal to buy vivendi s stake in nbc universal. david faber joins us with the latest on that deal. david. thanks, becky, that s right. 20% of nbc universal has hung in the balance for sometime now as comcast and ge essentially reached a deal a number of weeks ago that would transfer control of nbcu to comcast from ge. the sticking point, those negotiations between ge and vivendi for the sale of vivendi stake. they have reached a tentative deal valued at 5.8 billion, under which vivendi will ultimately receive that amount and that allows the deal between ge and comcast to go ahead. we expect an announcement of said deal on thursday. at that point we may get a little more insight into the deal itself. although at this point we know a great deal having reported on this possibility for the last five weeks. we know that comcast will own 51%, will contribute roughly $6 billion to new co. nbcu. $5 billion in debt, ge will own 49% of nbcu, comcast 51% with comcast cable networks. probably going to take a year, many think, for a regulatory review to be completed before this deal is closed. carl. all right, david. don t go away. stay with us. mike holland, chairman of holland & company and michael wolf, vanity fair columnist and cnbc contributor. before the break wolf and faber were having a back and forth about, a, is this good for ge portfolio and b, media mergers. which one do you want to tackle. i understand michael wolf pants david, which is interesting. on the face of it here and the market s reaction, kind of my reaction, for what its worth, there are no losers in this deal, more importantly to the deal itself. michael wolf s comments about the media industry set aside for a second. stocks of ge and vivendi went up on the announcement. i bumped into bob wright who used to run nbc several days ago. i asked him about this deal. his reaction was vivendi is a tough negotiator. i think it was crucial to show up in paris last week and get this deal structured in a way he didn t have to be viewed by the marketplace as giving up a ridiculous amount of money to get this done. full disclosure in comcast and ge, a good deal for both of them, ge is a cleaner better business without it. roberts can probably make something out of this. so what happens to the ge multiple as a result then? i don t think it goes down. i think this has been something where people over the years try to figure out how does this really fit. it helps him address financial stuff and use proceeds over the next several years, or his successor over the next several years to make the financial side of the business less onerous in the next downturn. that s always been the problem with ge stock. michael, has it been the mergers you have a problem with or decline of media in the face of the internet and digital age and piracy? it doesn t matter where you merge or not, it s tough to try to figure out how to steer through the waters of the future in the digital age with media, isn t it? hold on a second. that s absolutely true. there may be no hope for anybody now. but even before the digital age came around these mergers weren t working. they weren t working for lots of reasons, number one, the people bought we suddenly combined all these disciplines under one roof, one management and they were different. so people didn t know what they literally didn t know what they were doing. the magazine guys were running the television business. the television business was running some other business, the movie business. and it was it turned out to be a colossal mess. there s also you know, just a sort of relative breakdown in economics you can argue. there was no value created. value that you were merely changing, moving money from value from one pocket to another pocket within the same company. you know, there is in the long consideration of these deals, i don t know anybody who has looked at them closely that says, hey, this was really a good idea. the acquisition of cnbc was a great acquisition. you re missing the point here. i know. you have make of these things that work out in the short-term. disney? how about abc disney? disney abc, how about that? excuse me? disney? we had a moment in which it looked good, in which michael eisner rose up, then just a sourpuss. aol time-warner, that worked out. i m kidding. we don t want to go down the list. david? media stock have not performed well during the last almost decade at this point. plenty of examples of poor mergers. that being said, it will be interesting to see how it s received of the structure works for what both companies are trying to achieve. comcast wants control of content assets. it s not going to put up that much to gain control. ge wants out of nbcu but wants to hedge its bets, so the structure works very well for both sides. ultimately we ll see about vertical integration in terms of content and cable. remember time-warner, as one example, recently divested time-warner cable from its stable of companies. directv also jettisoned by news corp. as well. so many content companies decided it was not necessarily in their best interest to control distribution. in this case, mr. roberts feel it s in comcast s best interest to have some control of content. david, mike holland, can i ask you a question? i m not pulling my pants down. pull them up. you reported when comcast tried its disney sortee, chieftan capital was a big problem for brian roberts in terms of valuation and strategy or lack of strategy. this time around have you talked to chieftan and greenberg and can you report on what they are seeing. that s a good point. i have not at this point heard from them. i don t know how large their comcast position tends to be. it s still large. i d be interested to see what a lot of different shareholders ultimately have to say here. i ve talked to some. i haven t talked to them, michael, i ve talked to some that question values and ultimately to michael wolff s point they are going to create value, even though everybody agrees from what they are trying to accomplish the structure works well. charter communications, another cable company is coming out in bankruptcy today. i think managements do make a difference in these deals. michael wolff s observations is right on the one hand. on the other hand, roberts family has not been stupid over the years. they have been successful cable entrepreneur. it s important to point out that the roberts family doesn t really know about the business they are now getting into. or getting out of. yeah, exactly. their cable assets have not been managed as well many would argue as the cable assets of nbcu. people are hoping the assets of the properties will start to move up. mike and mike, good to have both your insights this morning. thanks for that. david, i think you re going to stick around as well. faber. yeah. what s cnbc on a cash flow basis, what s the value of cnbc right now? i d say close to $4 billion. the deal was $160 million? yeah, it was a good deal. where is michael wolf forecast, put that in your pipe, 160 to $4 billion. yeah. a lot of that came as a result of you and me personally. when are we going to see a little bit of that. yeah. yeah. all we got was ge stock. keep digging, david. you re pretty brave when it s 49%. hasn t gone through just yet. i ve got my pants off. good. a break, former morgan stanley co-president steve crawford will join us with miss market musings after this. stay right here. squawk will be right back. thursday president obama hosts a job summit with the nation s leading ceos. fed chairman ben bernanke sits on the capitol hill hot seat for a reappointment hearing. and tim geithner invites squawk box into the halls of the treasury department. joe, becky and carl go to washington thursday at 6:00 a.m. eastern. our next guest is a former executive at a major investment bank advising nation s well-known corporations when it comes to merger deals. co-founder of synergy partners, co-president at morgan stanley and we have with us continuing along. the show is so big we had to move to the chairs just to get enough room here. billionaire wilbur ross and steve lefrak. steve, good to see you. good to be back. you were here in late september. you were i don t know if you had yes. you were more negative than you had been. i think in a nut shell what got us into this mess, toxic assets and leverage, there s still some around. we haven t cured everything, have we, or have we? i don t think we ve cured hardly any of it. when you look at it proliferation of debt through every part of the economy is still there. massive dependence on foreign capital. when you look at the financial system, the risk capital and liquidity position of the financial system is probably at a historic low. the financial services sector s contribution to the economy overall is bigger than it s ever been. all of that suggests more instability and volatility to come. we are thinking about some new regulations down the road? it s interesting, i was watching the segment before, the indictment of the banks. yes. clearly mistakes made there. when you think about it, banks aren t all that different from the rest of corporate america, right? there are two major problems to have. one, they don t understand where the economy is headed. in addition, in particular in regulated industries, they have no idea what the ground rules are going to be going forward. so for them to make long-term commitments in the face of those two uncertainties i think is difficult. nobody is levered up where they were. we ve also had this nice yield curve. we ve been sitting here building reserves back up a little bit. charts too much to put on the air, but when lou at the financial system, wilbur knows this well, and compare it to where it s been over the last 20 or 30 years, the risk dimensions, the liquidity dimensions, the capital dimensions are wholly different than anything we ve ever seen. we are a far cry away from having focused balance sheets. when you look at the lending business for financial institutions, in the late 80s, early 90s, a third were corporations, a third to real estate. almost 60% of the lending is to real estate, okay, which is much less a cash flow oriented loan, much more a collateral-based loan with market value exposure. so we re a long way from having balance sheets in the financial sector. wilbur, do you agree with that? i think i have a little different point of view. to me what s really happening is nationalization of liabilities. when banana republics take over they nationalize assets, we re nationalizing liabilities. this is going to be the most massive transfer of liability from private sector to public sector in the history of the world. i think that s the real change. as a result to me, washington is the new wall street? we also pointed out earlier when we go to a bank an get commercial real estate they laugh at you. donald trump came on earlier, what needs to happen, banks lending again. i take it that s the exact wrong thing to do? the great thing, you can always make appeal to investors. we do have capital markets. they are open. to convince the banks they need to invest, right, you can also go directly to the investors. if they are not willing to take it, why should we, as joe public, who ultimately demonstrated to be underwriting the banks be willing to underwrite. steve, the problem lies in the real estate sector, the public companies, reits, have access to capital markets and they have been going through frequently. you have later on david simons on the show, he s been back three times. so the haves in our industry actually can get all the money they want and actually at terrific prices right now. so what s occurring is occurring really in the private sector, not necessarily in the public sect or. i m not so sure about there s no access to capital. i just think there s no access to capital for some people. would you agree even though you say we re a long way from fortress balance societies, conditions have been set for some kind of financial rehabilitation of these banks? we re on the way. we re in the process of making baby steps. yes or no. we re in the process of making baby steps, remember, financial institutions are derivative of the rest of the economy. that s what makes them more complex. when lou at their credit, not just a function of how they are capitalized. it s actually how all of their customers are doing. going back to something said just a minute ago, when you look at debt and the economy on an overall basis, we re still at historic levels. all we ve done to really make sure we don t end up in debt deflation is add more debt to that. we really haven t started to adjust long-term balance sheet challenges the country has, which is why when most of the professional investors that i sit down and talk with, you know, they are investing, trading. they are not investing. when you get them to talk about long-term prognosis, it s predominantly bearish. in terms of you running a company still, right? run a boutique with three or four other partners. that s recommending mattress for everything. there must be some things, some ways to do, this right? fundamentally, you know, we clearly have the best house in a bad neighborhood when you look at the dynamics in the u.s., it s still the most vibrant economy. there is a lot to be optimistic about. i think unless people talk about these challenges, the problems are cumulative. how do we set ourselves up for you have to start addressing some of the long-term things that are challenges. one of the most important things we can deal with are social security and really medicare and medicaid. things that are long-term challenges to the company. we re going to double what we owe for medicare and medicaid. i m sorry, we re not going to deal with that. four times as big. unfortunately the best case, as we talked about earlier, is going to be lower growth over a longer period of time as we pay off the debts we ve accumulated. steve, thank you. sure. appreciate it. thanks for coming in. we ll hear more from wilbur and richard still ahead. also simon says shop. i guess simon says. simon property, that is, head of the mall giant joins us. not the old guy from the faber five, this is a different david simon. squawk box will be right back. tdd#: 1-800-345-2550 if i m breathing, i m thinking about trading. tdd#: 1-800-345-2550 i always have my eye out for a stock on the move. tdd#: 1-800-345-2550 doesn t matter if a company sells computer chips tdd#: 1-800-345-2550 or, i don t know, fish and chips. tdd#: 1-800-345-2550 i ll look at all kinds of stocks before i settle on one. tdd#: 1-800-345-2550 if i think i m onto something i ll check it out, tdd#: 1-800-345-2550 you know, see what other traders are up to. tdd#: 1-800-345-2550 when everything feels right though, tdd#: 1-800-345-2550 that s when i get serious. tdd#: 1-800-345-2550 and the minute i get into something, tdd#: 1-800-345-2550 i already know when i want to get out. tdd#: 1-800-345-2550 of course, every now and then i ll talk with somebody tdd#: 1-800-345-2550 who knows what i m trying to do. tdd#: 1-800-345-2550 (announcer) switch to schwab today. tdd#: 1-800-345-2550 you ll get the tools, the technology tdd#: 1-800-345-2550 and the support to trade your way. tdd#: 1-800-345-2550 go to schwab.com/trader tdd#: 1-800-345-2550 or call 1-800-540-7304 tdd#: 1-800-345-2550 right now. tdd#: 1-800-345-2550 but opportunities can vanish like that. tdd#: 1-800-345-2550 .so most days, i m right there tdd#: 1-800-345-2550 when the market opens. we ve got insights and analysis from dueling billionaire guest hosts this morning wilbur ross and richard lefrak. that is still to come. as you can see futures are well in positive territory, dow up by 74 points. plus more on ge and vivendi reaching that tentative deal for nbc. david faber has the latest. we ll speak with larry halfty. a lot more to come. squawk box will be right back. 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[ children scream ] [ laughs ] the lexus december to remember sales event, with some of the best values of the year. special lease offers now available on the 2010 rx 350. now through january 4th. debeers long providing health care to diamond mining communities. we want health y, productive employees. and we ensure they have the infrastructure they can tap into. that includes teaming up with organizations like africa health placements or ahp to provide critical support for hospitals like the one in mussina, south africa. they provide health care workers for skill shortages. fighting everything from poverty related diseases to hiv/aids this. year alone the not for profit has placed 550 workers, half of them foreign doctors, in rural areas. not only do these doctors attract other qualified physicians. the realities, these doctors become leaders in the community and make a massive impact well beyond completing a surgery. building more sustainable communities and ensure not just diamonds are forever. for more people, planet and profit, check out sustainability@cnn.com. #ñ#ñ#ñ#ññ welcome back to squawk. futures up as dubai concerns are fading a bit. dollar is lower, a lot of commodities and stocks are higher at this hour. more on that a little later. want to get you to the breaking news desk where steve liesman is bringing us news from the treasury department. steve. thank you very much. treasury mountainsed a secondary offering of 12.7 warrants to purchase common shares of capital one financial. these capital one warrants will be offered through a modified dutch auction. previously announced warrants are jpmorgan capital, tcf financial, these are warrants obtained when it basically gave money to through the banks thro the t.a.r.p. program. the way to maximize taxpayer concerns is to sell warrants through an auction rather than negotiating with the company. it s a quicker process and i think they think it s going to result in higher returns to the taxpayer of these warrants it received when they gave capital through the banks in the t.a.r.p. program. carl. steve, thank you for that, bringing us that news right on the button at 8:30. quick comment from wilbur or richard. i think it s a good idea. it s inconsistent with the idea of making banks stronger to buy back warrants. in effect, it s off loading from the bank and eventually they will get capital from the exercise of the warrants. i think it s a good way to do it. it also takes the heat off treasury, people second-guessing, you should have gotten a nickel more, a dime more. i wonder which wall street demon they are using to conduct the auction. in other words, the same peoplevillifying they are running through to try to get the best price. your mother, your sister, right? okay. thanks very much. beck. all right. i think we re going to be bringing in another special guest coming up this morning. david simon is the ceo of simon property group. he runs the largest real estate investing trust when it comes to shopping malls in the entire country. david, thank you very much for joining us this morning. it s great to see you. thank you very much. good to be here. we ve been talking an awful lot about what s been happening in the holiday shopping season so far. you probably have a better idea of that than anybody in the country. what s your sense of whether the consumer is hanging in or not based on what you ve seen so far? i think they are doing okay. i think they are hanging in there. traffic generally was slightly up compared to last year, and i think sales resulted so so far what we re hearing slightly up from last year as well. slightly up from last year. you sound a little hesitant. are you waiting to see what happens over the next few weeks. i think so. look, i think it s too early to declare victory for the consumer. they were out in large numbers over the last weekend. the mood is better. i think the trajectory is up. it s too earlyish as i said, to declare victory. david, we ve been talking an awful lot about commercial real estate. richard lefrak and others have said this is an incredible buying opportunity. i think, richard, you called this a generational buying opportunity when you look around. what s the sense you get? are you thinking the same thing? i agree with richard. hi, richard, how are you doing? okay, david. richard is a great friend and a good partner of ours. so i just wanted to say hello to him, even though i can t see him. it s hard for me to say hello. i m not that good looking. well, we both suffer from the same fate. but generally, you know, we ve done in our career as a public company, about 15 years, we ve done about $25 billion of m and a oriented transactions. i will tell you we feel like the next couple of years we ll be able to add to that activity. capital is king, and i think it also reflects that it s tougher to run a company in this environment. so i think we ll see people that, you know, kind of want to move on and consolidate with some of the larger owners. and as a great example, i mean, we have $7 billion, a little over $7 billion of firepower that we can put to work. and i think big war chest. it is a big war chest. i think over the next couple of years we ll be able to add to our quality portfolio in a way that will add value to our shareholders in a way we ve done historically. you just hired lizard and lipton to advise you on purchasing properties of general growth properties in bankruptcy right now. what are the properties you most covet. well, i think as we examine it, we really have to start in the totality of the company. any time, you know, one of our peer groups is in that kind of shape, chapter 11, it behooves us to examine it, underwrite it, see if there s an opportunity for us. and i think, you know, we ll see where it goes of but it s a unique opportunity. they have a lot of great properties, good people. and we re going to see if this is something that fits for the company in a way that makes sense for us going forward. do you think you ll have a lot of competition in the bidding for it? well, that s the nice thing about where we are in the industry. there s maybe one or two out there that can play at this kind of level. you know, it is a big company. it does have a lot of debt, but it s not going to be a number of people. i think it will be one or two. what s interesting, wilbur, is that there s a lot of institutional money that s out there to partner with us in these kinds of transactions. so i think i ve heard you guys speak to that i think it is important to note that not all commercial real estate is in the same boat. there is capital for the best of the breed. there is institutional money that wants to invest in real estate, commercial real estate at this point. i think as we look to where we want to go, i think we ll take advantage of that. david, you re really pointing out what we discussed a little bit before, which is when getting a cleavage in the industry between strength and weakness right now. simon, who was the dominant mall owner in the united states and who took advantage of the capital markets to raise a lot of money is in a position really almost to dictate his own terms right now when they buy the assets coming up. it s only going to behoof that they have that strength. a little guy, what does he do now, david? owns one or two malls, what do they do? they just lost. look, i think if it s quality real estate, that little guy will be fine. but i think what we saw obviously over the last three years, there was a lot of new retail built that s not going to suffer. there s going to be losses taken by both the developer and the lender in those cases. but again, you can t paint commercial real estate with all the same brush. i think there will be some of those opportunities available to people like ourselves that have the capital, have the ability to access capital. richard, as an example, we are a week or two away from doing our new line, revolver, which is actually going to grow in size from where they were three years ago. look i mean that s where capital is available for strong investment grade real estate companies. there s a lot of new capital coming into the reit industry in terms of new ipos and the like. so i think some of this capital will help stabilize the losses that are going to end up having to be taken by some of the investors and lenders. so with that in mind, david, as you look to 2010, are you anticipating a reversal in some key metric, whether it s vacancy rates or delinquencies or defaults, anything like that? i still think the operating fundamentals in 2010 will be challenging. i think a company like ours is best equipped to handle that given our size, diversity, and quality of properties. but you know, the consumer is not where they were a couple years ago. i mean, i look at it kind of we re back in the 04- 05 range. it s going to take time to build up the kind of metrics that we ve had historically. but you know, we re not falling off the cliff. i think year-to-date, our comparable property noi growth has been positive. we expect to kind of maintain that in 2010. but it s certainly going to be a challenge. we certainly want to see the consumer come back a little stronger. we are concerned about unemployment. but i think the good news in this recession is that generally our retailers are much better capitalized than they have been historically and they have also accessed capital both through the debt and the equity market so. that puts us in a position that when the consumer does bounce back, and i believe they will, they will be looking to grow their store profile. all right, david. we want to thank you very much for your time. we want to see you back here. maybe you can tell us how consumers are doing through the holiday season. sure, thanks very much. get that on tape. coming up more on this more than s top story, ge and comcast, whop step closer to an nbc deal. media manager larry haverty. ask him about casinoses, remember his call on that? made a lot of money on that. first as we head to break let s check on futures. squawk box will be right back. you re watching squawk box on cnbc, first in business worldwide. you know why i sell tools? tools are uncomplicated? nothing complicated about a pair of 10 inch hose clamp pliers. you know what s complicated? shipping. shipping s complicated. not really. with priority mail flat rate boxes from the postal service shipping is easy. if it fits, it ships anywhere in the country for a low flat rate. that s not complicated. come on. how about.a handshake. alright. priority mail flat rate boxes only from the postal service. a simpler way to ship. our top story, vivendi buying a stake in nbc universal. joining us from tampa, larry haverty, portfolio manager. we obviously have our guest host here. larry, before we talk about that see, i usually remember what people say. i think if they are going to be wrong i want to remember. which casino stocks did you say if they don t go away they are going to triple, because i looked at them and tripled. i think it was mgm and las vegas sands brf are you still hanging onto those. las vegas is coming back, rates are up. mccal is smoking. i think they will be up 35 to 40% in november. there s always the worry chip he s will turn off the spigot. i think growth will be phenomenal. las vegas sands will do very well. i happen to be very optimistic about las vegas. it s still a fun place to go. i think the stigma having meetings the government sponsored is probably going to slowly go away. i see more meetings in las vegas. it s now very, very good value. i think the stocks are pretty cheap. city center opens. big casino opens in two weeks. i ll be there in early january. i m crossing my fingers, because this is the kind of thing this is a very employment intensive industry. we need for this industry particularly in the state of nevada to be healthy. so i think the direction of those two stocks is certainly up. what about dubai s investment in that s not an issue for at least the next two years. that had been restructured, which is why those stocks went up. and i think by the time that debt is due, it should be pretty clear that this is an asset that s worth something, probably more than what it s written down for. isd a tour of the property six or seven months ago. it s very spectacular. the shopping mall is going to be, i think, one up on anything in this country. my bet is people are going to come to see it. we ll see. hey, larry, a lot of people talk about pure play cable properties and they pointed out those are the ones that have done well. you look at comcast. what are shareholders saying since this has been conjectured and rumored to be in the works. the stock has not done that well. are shareholders getting it wrong in your view? i think this is the casinos when i did that show in the spring, joe. this is what an emotional bottom looks like. media investors absolutely hate this deal and they have penalized the comcast stock. and i think it s inappropriate. i think i was against the disney deal because it was a hostile deal and it was going to use stock. this is a friendly deal. it s going to use debt for companies that are creditworthy like comcast, debt is extraordinarily low cost. as david mentioned, the leverage here is probably going to peak at 3.5 to 1, leverage isn t too bad. stock on current cash flow selling at about 70% of the value of a typical utility. this is a better business than the utility, joe. there s no rate commission that decides how much you re going to pay for your cable bill. it s just really comcast s decision. i don t know about your cable bill but mine goes up every year. i think in addition to that, comcast has a very, very good cable product. i m a subscriber in boston. i don t see anything terribly wrong with it. the phone product is a very, very strong value. the internet product is pretty much 100% reliable. larry, it used to be ghost buster s, some old movie, you d find it in a library and be free. we ve been doing that wait a second. everything is $2.99. everything cost. any library, $2.99. you think i ll go ahead and watch it. it s working. i think that business model might deliver. no? well, that s half the price of a soft drink at foxboro or yankee stadium, joe. it s a very, very good value. i think that s one of the things that this merger is about, trying to experiment with windows to maximize the value of pay-per-view. if you look at the cable industry over a long period of time, five, ten, 15, 20 years, it s very, very clear that pay-per-view revenue has been way, way south of what anybody would have forecast. now, what s happened is internet revenue has been way, way north of what anyone would have forecast, internet prices have been much more firm than people would have forecast five, ten years ago. it s very, very clear that people still want to see feature film entertainment. it s very clear that tvs are getting to be better places to see it. and i think it s just a matter of time before somebody pushes the right button and basically proves that demand here can be elastic. prices go down and total revenue increases. that s what comcast is trying to figure out. i think they figure they have got a better chance of figuring it out if they are in the content party. so they are going togs in the content party and they can do what they want with the pricing. we re going to need you and your expertise as we move on. we have to leave it there today. we appreciate your time. thans a lot, joe. you re welcome. there s maybe the deal michael wolff finally has to say this works. happening at the right time. the appoint about television is a good one as you know having just bought the fancy led. you hang them. the floor of the come back a art cashin in just a point. all right, welcome back, everybody. let s get down to the new york stock exchange, art cashin is standing by. he s the director of floor operations at ubs financial services. art, we ve covered a lot of ground today but it looks like the futures in good shape as we head into the open. what s going on? well, it s once again mainly about the dollar. we saw friday morning what happened when it was a very mini flight to safety into the dollar. disrupted all kinds of assets. gold, stock, oil, now the dollar has calmed down and dubai seems to have calmed down and people are returning into the stock market. i think what we re going do now is look at the cocktail napkins and see where things are going. the s&p has had a tough time in the rarefied air above 1100. the russell 2000 continues to diverge, we re going to read the entrails of the next couple of days an see what that leads to. thank you for the half a billion dollars that you fellows did in the block trade for assured guaranty yesterday. i hope it works out well for you. well, for a fellow alumnus of high school, we do the best we can, wilbur p. thank you, art. do you think there s going to come a day or what would it take to see the inverse relationship between the dollar and u.s. stocks right now? we re going to have to wait to see if it kind of stretches and moves away. my great concern, becky, i ve said this before is that we end up with some key geopolitical event. if you wind up with the rumor of israel going in to take out a feisty iran here on the nuclear front, if there was a sudden rush to the dollar in large proportion, it could really cut the legs out from under the stock market and some of the other assets. so i think by the end of the year, we get to see how they react to geopolitical events and heaven forbid there s another dubai lying out there. art, thank you, it s great to see you. thank you. when we come back the bottom line from our dine milk guest host duo this morning. all right, e-mail of the day, why did dr. evil try to pull down faber s pants and spank him? that came from john fox in dallas. if you don t know what we are talking about, you need to get up earlier. show starts at 6:00 a.r.m. get up. anyway, it s time our final thoughts from our guests today. gentlemen, let s get your best buying opportunity right now for investors. richard, why don t you start out? i just like to tell the folks out there, this is as good a time to buy a house as you re going to see for a while. you ve got a 30-year mortgage available through fannie under 5%. house prices have come down very hard and frankly, with unemployment stabilizing, it seems to be bottoming out, i think this is a great buying opportunity for people to get a house now if they want to do something. a lot of people say the fed s not going anywhere on rates for a while. how urgent would be the move be? it s not urgent, but if demand picks up a little bit on houses, the prices are start going up, too. wilbur what do you see as an interesting buying opportunity? i think soon, there will be an opportunity in municipal bonds. first of all, with tax rates going up. municipal tax-free interest has got to be a better and better buy. as states come close to a crash, there will be a good opportunity. states in general, are going to have a $350 billion budget deficit this year and again in 10. that s got to get funded somewhere. someone will close to default but i don t think they will default. thanks for your efforts in bringing on great guests. what a show. that was fun. we re done. and we have animal orchestra as we go out? i don t know if we can get that up. carl would certainly appreciate that. thanks. if you want to use that when you anchor nightly. he s the guest host, he can do what he wants. good luck in the employment summit. i hope you create some employment. make sure you join us tomorrow. squawk on the street is next.