Transcripts For CNBC Squawk Box 20100111 : vimarsana.com

good morning. earnings season is back. alcoa gives results. prices dipping today. yield curve steepening to the most on record. the equity markets this hour, asian and european stocks off to a strong start. u.s. equity futures pointing to a positive open after a great first week of january. squawk box starts right now. good morning, everybody. welcome to squawk box here on cnbc. i m becky quick along with joe kernen. carl is out today earning season opening for play after the bell today. alcoa holds the honor of the first dow component to report results. s&p 500 earnings are forecast to soar in the fourth quarter of 2009 because we re coming up against very easy comparisons to the awful fourth quarter for 2008. the fourth quarter of 2008 was the worst quarter in the history of earnings season as tracked by thompson reuters. profits plunged 67%. we never see anything like that. in addition to alcoa after the bell today, other notable releases coming this week include intel and jpmorgan chase. jpmorgan coming up on friday. intel is something. next week. next week. do you know we re off monday? yes. which means the four days next week will be crammed full of earnings. as we hurtle towards friday it s monday 6:00 a.m. it s a three-day weekend. something to look forward to. like carl s weekend this past week. report on international trade tomorrow. the government releases december federal deficit on wednesday. watch for beige book. thursday weekly jobless claims which will be important again and you know what? so is the next employment report. we have retail prices to finish the week. cpi, empire state survey, industrial production and consumer sentiment. did you see some people wondering if the market was up because of the bad numbers we got on employment report means easing will be around for a while. also the notion that eventually when we when all of this stuff is confirmed that the market was right, when things do look better, that s always the time when human nature and buying humor and selling news. we ve done this much as we ve gotten less negative on the jobs number we ve gotten 63%, 64%. what happens when things improve? what would happen with a great jobs report? i know. you saw gold today and oil today. oil is not acting like we re double dipping. that s for sure. neither is gold. let s talk about washington today. president barack obama is planning more economic stimulus measures. white house council of economic advisers chairwoman christina romer says cutting the jobless rate while reducing the deficit a is a challenge. the government is doing a lot to hold up demand. the recovery act has been incredly importaincred ably important. we got a picture of this guy. he always too young to me. he looks like he could be like an apprentice fed guy. you said that about geithner for years. it s nice to look young. he does. maybe the picture is old. james bullard says the central bank is unlikely to be pushed offcourse. he s a voting member. eric rosengren have you seen him before? home loan rates could rise by as much as .75% in the spring as central bank ends its mortgage bonds purchase program. the fed is expected to end the $1.25 trillion program by the end of march. 30-year mortgage rates averaged 0.59% in the first week of the month. i talked to a ceo last week who pointed out we have been throwing around trillions and billions so frequently in washington that he doesn t think anyone in washington knows the difference between a million, a billion and a trillion. just to point out what we re doing, we looked up what s next in case we need 1,000 trillion. it s quadrillion. if you need to use it. if we get to quadrillion, he ll pop a blood vessel. the first u.s. bank failure of the new year. regulators closing horizon bank of washington state on friday. it s expected to cost the fdic s insurance fund $139 million. bank failures will peak in 2010 and then start to subside. let s look at the futures this morning. they are in positive territory after it was a phenomenal week up 2%. last four days of the week it barely budged. the most amazing thing is we held onto that. we closed at 10, 610. impressive start to the week. dow futures up already. it s more compressed as opening session or first week of the year goes that will tell you about the year. oil prices up by more than 1% this morning. up 85 cents to 83.60. things taking off. the ten-year note at this point if you take a look at where yields send, 3.38%. earnings news will come out but you have so much economic data coming. the dollar is down against the yen but up against the euro and pound. also gold prices at this point up almost $20 this morning. that s 1.7% back at $1,158.50 an ounce. quite a bit of activity with the commodities this morning. let s get to overseas markets. cy let s start things off in london. she has the latest out of europe. good morning to you. i thought you were going to laugh. i thought you were going to make a point there. drum roll please. what comes after quadrillion? i ll look it up. it s got to be maybe you start over again. i ll look it up. we are using quadrillion. the goldman bonuses are coming. we ll need that number. go ahead. yeah. right. fingers crossed for some lucky ones out there. let me show you the european markets. european markets are a bit higher first and foremost. somewhere in the reasonable of a percent or so. you were talking about the nonfarm payroll data and why we saw positive reaction on the back of it. i would say november figure was revised so on comparison to november figure it s actually a gain of 4,000 on november and it s been five consecutive months of gains that we have seen so far. you didn t see that in the recovery in 1991. you didn t see that in the recovery of 2003 either. so it could be taken to be just a bit better than what was forecast obviously. let me just show you also some of the individual stocks that we re following. heineken is one of the stories because higher by 6% after confirming this morning that it is buying femsa, mexican beer business, for right around $5.5 billion which means they will get a top position in the mexican and brazilian markets. now, over to asia. christine, hello. hello. asian markets rose to a 17-month high today on strong export and import data coming from china. chinese exports jumped 17.7% in december way above the 4% forecast. imports did even better surging 55.9%. much more than 31% increase economists expected. the chinese economy may be overheating a bit. strengthening the case on monetary tightening and appreciation of the currency. chinese imports of oil hitting a monthly record. oil shipments second highest ever with copper eper imports g expectations. the share index to a 15-month high up 0.9%. some call for the currency to hit parity. hong kong and china benefited. the hang seng rose 0.5%. brokerages were top percentage gainers there. in shanghai, sentiment was cautious over worries of monetary tightening. japan closed today for a public holiday. on that note, back to you. thanks, christine. pretty simple here. we could easiest way is scientific notation. 12, 15 times ten to the 12th. let s get to our monday morning strategy session. joining us is the ceo of global equities at federated investors and anthony chan. steve, are we on our way to 1,250 by the end of the quarter? yeah. the end of the quarter could be what would the low be on the s&p? i think we hit the low. okay. so we re not going lower on the s&p than around 1,140 or so? we ll go up near term? will we have a pullback eventually? who knows the course of the market. i think long-term direction is up. 1,130 was a big support level. may bounce back there at some point. we don t correct from here and by the end of the year we re as high as 1,300 on the s&p? i would guess above 1,200 we might be in for a correction. people have been waiting for a correction since may. that could take us down below where we are now if it was 10% but then rebound from there and head back. it could be scary. people will say it was a sugar high. we were ahead of ourselves. we ll panic if we go down 5% and by the time we get to 10% we ll think it s a double dip. i don t think we ll get as much as a 10. all right. anthony, how will economic backdrop play into that scenario? i think the economic backdrop continues to show improvement. the employment report everyone will agree was a disappointment but i look at someone driving a long distance trip going along the highway making good time and they hit a huge traffic jam. we re three or four exits away from showing some real significant improvement in employment but now we have this traffic jam and we ll have to wait longer and that s what the employment report was all about. temporary employment still continues to rise. we ve had several months. if you look at almost all of the indicators of labor markets, temporary employment is one of the best and continues to show improvement. we re headed in the right direction. we ll see delays. policy members nobody can do anything until unemployment comes below 10% and if that s still rising, even though it might not be the right thing to do to keep the spigots on full blast. what you see with the unemployment rate is that one is not really going to tell you how good the labor market conditions are. what did you see in last employment report? you saw a huge decline in the number of people dropping out of the labor force. that s not normal. as things get better, more people will join that labor force so i would not be surprised if you will see a significant increase in the unemployment rate even if labor market conditions get better and even if jobs start to be created. the fact that more people start joining the labor force will put pressure on the unemployment rate. the 10% unemployment rate as much as i would like to celebrate it is exaggerating how good labor market conditions are right now. you saw gold and oil today? are we back to this notion that as long as everybody is going to remain on hold that the dollar is susceptible and commodities will go again? we think the dollar is in a strengthening trend here. because of the economy? as the u.s. economy starts to recover, we think that s good for the dollar. what gold and oil are reacting to is china. really good news out of china. it s a sign that chinese growth, which is a big engine in the world right now, and auto market is bigger than the u.s. today if you can believe it. we have been saying we are back to the old new. ten years ago the investment consensus was the new parity. we think it s the new normal. very low rates for a long period of time, good liquidity conditions, accelerating and improving economy, earnings are going to be better than expected through the course of this year. good top line growth this year we think that will help along with bottom line corrections. valuations are half what they were ten years ago. the yield curve overnight between two-year and ten-year treasury strpreading to 300 points. what s going on with that? that s a function of where the fed is. 0% interest rates and you ll have a very wide curve. as rates back up, it s not necessarily bad for the equity market. it really depends, becky, on what drives that. if what drives rates up is improving economic conditions, that means earnings will be better. that s what will drive rates higher. that s okay. and we can certainly sustain higher rates as the fed comes off this 0% interest rate policy. as we were just discussing, where the unemployment rate is, it s hard to come off the low interest rate policy. what about the dollar? you think it s going down again or is it going to go up on the economy? i think the dollar is certainly a bit of a crowded trade. you look at the dollar versus asian currencies you have the opportunity for the dollar to get stronger. against the euro you get into a bit of a problem. with regard to yield curve, i thought i would chime in and say when you see the yield curve getting steeper and steeper, that s clearly in these type of economic environment that we re in a sign that market and investors are more confident that the economy is getting better. i would not be disappointed or spooked by the fact that the yield curve is getting steeper. that s encouraging to me and should be to most people that watch the yield curve. okay. gentlemen, appreciate your time this morning. see you again soon hopefully. all right. are you okay? absolutely. all right. you got a car waiting for you? you be able to find your way. we have two entrances. east and west. where are you? no idea, joe. all right. did you see the moon this morning? very weird. central banks convening a meeting in basel, switzerland. the group is gathering to discuss monetary policy and worries that banks have returned to the excessive risk taking that triggered the financial crisis. we go to switzerland for the latest. good morning. reporter: good morning, joe. now, the timing of this bimonthly meeting of the central bank governors at the bank of international settlements couldn t are more suitable because there have been warning shots from regulators in europe and the united states. for instance, the chairman of the financial stability board said over the weekend here that markets are taking on too much risk once again. he also said that the financial system is still very fragile. also last thursday the fed and fdic calling on their bank to prepare for the end of the low interest rate cycle. there s definitely fear that history may repeat itself again and banks taking on too much risk let it be leveraged also and driving up asset or new asset price bubble here but the fears are that they may be caught doing so when interest rates rise mid 2010. that means of course margins will decrease and profits will fall and some of these banks may be in need of more capital. we ll get an assessment of the latest state or health of the global economy and also proposals for the health of the financial system. with that, i ll send it back over to you. thank you very much. when we return on squawk box, florida s citrus crop escapes widespread destruction from a weekend freeze but temperatures have farmers scared. we ll get the forecast from the weather channel straight ahead. take a look at last week s winners and losers. thing as taking a chance? as having to decide to go for it? at the hartford, we help businesses of all kinds. feel confident doing what they do best. by protecting your business, your property, your people. you ve counted on us for 200 years. let s embrace tomorrow. and with the hartford behind you, achieve what s ahead of you. welcome back. futures are well above fair value right now up better than 36 points. it s coming up as we watch oil prices that are skyrocketing. oil crude futures at the highest level in 15 months. you re talking about big gains in gold prices this morning up by $20. also in headlines this morning, heineken is buying the beer business of femsa for $4.5 billion giving the dutch brewer a top position in mexican and br brazilian markets. nbc announcing it is dropping the jay leno show from the 10:00 p.m. lineup because of pressure from local affiliates. nbc wants to move leno back to his old slot. conan o brien to 12:05 a.m. and jimmy fallon to 1:05 a.m. but nothing has been settled yet. let s get your national weather forecast. right now it s time to check in with our friend scott williams at the weather channel. scott, how are thing faring especially in the south where the cold air has men concerning issues for farmers. i have a question for you, rapid city, south dakota, or tampa, florida? well, i m going to go with tampa. rapid city is 33 degrees. as we look at the temperature for tampa, florida, 28 degrees. words are falling right now as we speak. as we move into the sunshine state and certainly that s having an impact on citrus farmer and tropical fish are dying due to cold weather. look at record low so far this morning. key west, 42 degrees. a record low for you. miami, 36 degrees. gainesville, 19. so continuing to find the record cold. it looks like today will likely be the last of the coldest days ahead for florida. but for today, watching snow showers around the great lakes into interior sections of the northeast due to a clipper that we re watching. pittsburgh, look for some moderate delays. cleveland also into cincinnati as we look at the radar right now you can see the snow is falling due to that clipperlike system as we continue to keep tabs on the situation in detroit and cleveland and columbus you continue to find snow showers not expecting heavy amounts of snow from this clipperlike system. pittsburgh, you ll see activity and then as we move into your tuesday the activity will approach the boston area just a few flurries. we ll continue to find concerns around pittsburgh also buffalo. you ll deal with temperatures in the teens with that snow but then by the middle part of the week we re back to dry conditions and mixture of sun and clouds but temperatures 30 degrees as we move into boston and also into pittsburgh. now back to you. all right. thank you very much. we like your trivia question. try to stump us tomorrow morning. i thought he would say who is the real morning joe ? he s drying to say he s the real morning joe. you don t have to believe it. you re the real morning joe. how about that? yippy. thank you. we ll see you back in just a bit. coming up, more of this morning s top stories and pictures from the futures pits and nation s automakers gathering in detroit today. a ritual made famous by supermodels, flashy car unveils but no need to take the trip to detroit. up next we have a top bmw executive showing one of his company s promising new product first on cnbc. stay tuned. you re the colon lady! diarrhea, constipation, gas, bloating. that s me! can i tell you what a difference phillips colon health has made? it s the probiotics. the good bacteria. that gets your colon back in balance. i m good to go! phillips colon health. welcome back to squawk box here on cnbc. carl quintanilla is off today. we ll have a rundown of the day s headlines and then we ll head to the detroit auto show where phil lebeau will join us. 15 minutes later a trip to future pits are in the cards. a review of the market day ahead and commodities are hot today. then later senator judd greg only one of the senators we ll be talking to for two hours as our guest host. he s with the gop but we have howard dean coming on also. we have chris dodd also coming on who is kind of a personal idol of mine. 65. did you see his kids? 3 and 7. getting it done. i m still trying to i m just trying to they keep you young. i had that nagging annoying birthday last week and i m thinking get over it. you re young. i would feel younger with a little it s not happening. it could. it could. it s still possible. if dodd can we ll talk to christopher dodd not only about that but also regulatory reform. yeah. that s right. we may touch on that. this is the first time he s speaking publicly. we ve got him. when i read in the piece that his 4-year-old daughter was there, i thought were they wrong about that? yeah. happened a couple years ago. i m giving him the thumb s up. also in headlines this morning, airbuses on track to post record 2009 deliveries. the european jet maker will give the summary tomorrow. if reports of delivery figures are confirmed, airbus would beat its outlook target and keep a lead over boeing for the seventh year in a row. a chinese developer is in talks to buy shanghai residential property from goldman sachs. that deal worth more than $200 million. saudi arabia s finance minute tister says they will coe to invest in crude prices. saudi arabia is opec s most influential member and the crude oil futures are at the highest levels in 15 months up better than 1% again today. crude oil back at $83.90. the detroit auto show takes center stage this week. that s where we find our very own phil lebeau and joins with us a special guest. phil, good morning. good morning. i m joined by jim o donnell, president of bmw north america. interesting show. last year it was really gloom and doom. this year it s an industry trying to find itself a bit. yes. last week was a wake. that s an exaggeration. a wake is fun in ireland. here it was terrible. this year you are walking around the show and you see it looks better. the americans are back. last year it was just german manufacturers. bmw, mercedes and volkswagon group. will you take a reduction in 20% but will you take that? we would have taken anything. it was down 20%. our mix was better. we made more money. we managed it better. we got cost under control. we actually were okay for last year. that s going to be a lot of focus about electric vehicles here. the question becomes is bmw the company going electric and how quickly are you going electric? you have the mini e and we ll talk about the active e in a bit. when you look at the electric market, where are we in that whole stage in terms of you have your tree huggers that want it now and others that say never. i want my gas car forever. we re at the start of a long journey. the mini e is our experiment and we re the only one out there in the marketplace. we have 450 live customers in cars and we re monitoring their experience. their experience for example in the winter your mileage is down to about 90 instead of 120 in the summer. climate has a big affect on it. the experience as they develop in the charging station and infrastructure is difficult. you re dealing with local authorities and not national but a local building inspector who decides what you need to do. it s very difficult and very complicating. many sales last year were down. it brings up the question does mini need high gas prices in order to succeed? mini was one of two brands in 2009 that had a sales volume higher than 2007. it doesn t. even though it was down from 08. it was down from 08. 08 gave an uplift. last year was a bit more normal. so as you look around this show and you hear everybody talking we re going green and this is all about being electric and having phybrids, do you say at the end of the day give me a well styled war and it will sell? that s what the american people want. it s like an ipod. they didn t know they wanted it. we have to develop a car equally attractive whether an electric, hybrid or diesel. we have to give them the best car possible. let s walk up here. we are going to see the e concept. this is the first chance anyone had to look at this vehicle here. this is a fru four seater and you re going to have these on the road by 2011? we ll have these on the road and we ll have between 500 and 1,000. we will offer them up to our consumers. as you see this one, it has four seats as proper but again we lliwe ll i be learning a lot. we ll learn how far consumers travel. where infrastructure is going. do we have enough charging stations in place? obviously at the moment we don t. you need to make sure you have the bmw performance. not enough to say we re electric in there with everyone else. no. this has to deliver in terms of performance. this vehicle for example we anticipate will be top speed of 90 miles an hour and will be 0 to 60 in nine seconds. that s the performance our consumers expect. everyone wants efficiency. our customers want to be fast as well. jim o donnell, our first guest on squawk box here at the detroit auto show. our first peek at the active e-concept. we ll be here all day long. lots more coming and more executives including next hour bob lutz from general motors. don t miss what maximum bob has to say. we ll talk to you then. phil, jim, thank you very much. phil, we look forward to that interview in just a few minutes. phil will host a special from the detroit auto show tonight from 8:00 to 9:00 eastern time with hottest models getting ready to hit a showroom near you. stick around. more coverage coming up from the detroit auto show. comments, questions about anything you see on squawk e-mail us at squawk@cnbc.com. what are you doing.? calling chase sapphire, seeing if we have enough points to stay longer. now? you don t have enough time. and you have to push all those buttons. no buttons, someone answers every time. yeah, right. beu a yeah, ok. hi, julie. i have a question about my points. hi, what button do i press for a massage? hello? new chase sapphire. you call. we answer. no waiting. just press right here. go to chase.com/sapphire. chase what matters. welcome back. those futures are well above fair value this morning talking about dow futures up. keep an eye on commodities this morning. oil future at the highest level in 15 months and gold prices soaring by more than $20. crude oil is poised to jump above $84 a barrel. in headlines this morning, target will begin selling an exclusive line of food network line. twitter is hiring engineers to turn the web phenomenon as a money maker. also, usda is proving a skin cancer vaccine for dogs that will launch later this weekend. because the vaccine is for dogs, the usda approved it and not the fda. all right. time for a check on the news outside of the world of business. monica novotny is here with us this morning and joins us with a roundup. good morning. good morning. good to see all of you this morning. we ll start talking about harry reid making headlines over the weekend. senate majority leader harry reid under attack for past comments he made about president obama. they re in a new book and quoted prior to the 2008 election as saying then candidate obama could win because he s a light skinned african-american with no negro dialect. some republicans are calling for reid to resign. reid whose apology has been accepted by the president says he has no plans to quit. just a week after a security scare at newark airport, the landing gear failed on as passeng passenger jet. no one was injured in the emergency landing. at the box office this weekend, avatar beating expectations. the top film with $48 million. the number one release of 2009 now stands as the sixth all-time top grossing film. becky, international hall saying at 906 million puts it at 1.34 billion worldwide. right behind titanic, right? yes. i was not a believer in this. i saw it this weekend. way better than i was expecting. i haven t seen it. did you see it in 3-d? i saw it in imax 3-d. wow. it was pretty out there. it s a long movie. all right. i m up for it now. if i don t see it, i ll be the only one in the world. there becomes a point where you have to see it or be a big loser. let s get to the future pits now. let s go to george right now. there are a lot of things happening this morning. you have the two-year, ten-year, spread highest level its ever bi been. 300 points. oil prices skyrocketing. i think a lot of it son the back of employment numbers on friday. dollar weakening helping commodity markets and employment number on friday was an interesting number. it caught people off guard. for me i m sort of still a bit bearish on the labor markets but data leading up to friday s number excludeing adp looked pretty good. initial claims and everything else. i think there was a lot of optimism that we would have good number and we didn t get it. the market reaction is the fed will be on hold or keep rates low for a little longer and let the economy recover and so you see the dollar weaken on that. equities have done okay in light of a bad number on the back of that. we ve got a bit of data out later in the week. retail sales on thursday will be an interesting number. third positive read in a row third month in a row and 75% of the time that number is between minus 1% and plus 1% and both last reads have been above 1%. the empire number is sixth positive on friday if we get a positive number there. you can see signs that maybe the economy is turning around but the number on friday from employment was discouraging. look at what the rate would have been if participation rate wouldn t have dropped so much. from reading i did over the weekend, it would have been 10.8%. that s just not a real encouraging number for unemployment by anybody s standard. are people looking at these numbers and saying, okay, maybe this employment number was a oneoon one-off and we ll see jobs creation and all of the other numbers have been good so maybe they look at this thinking it s the best in both worlds and the economy is improving and things are better than the job number let on and more jobs created than that and the fed will be stuck in a hard position and not be able to raise rates. fed being stuck in the hard position is the right comment. after that number on friday you don t really know where the labor market is. you had those good numbers but then after friday s number you start to think maybe we re worse off than i thought and jumped the gun getting optimistic. look at a chart of unemployed over 26 weeks, it looks like a flagpole. there is still a lot of concerns in the labor market that need to be addressed before you get the fed to move to a more aggressive stance. you re not talking about real concerns showing up in other places like the oil market. if people were worried about a second downturn, wouldn t it be reflected in oil prices pushing toward $84? to an extent that s right but part of that is on dollar weakness. you can see commodities rally because the dollar is weakened and i guess one of the textbook champl examples as zimbabwe stock market where they weren t doing anything special on the currency side but it was devalued. you will see commodities up, crude, based on dollar weakening and then as far as how much is that how much of those gains are due to perceived oncoming strength in the economy, that is part of it but i don t think its 100%. thank a lot. great to see you. coming up, we ll take a trip over the chairs and chat on weekend happening headlines catching our attention this morning. talk a little tiger maybe. watched that tournament. any way, stay with us. tuesday on squawk box, exclusively interviews with bill miller, one of the world s largest hedge fund managers peter clark and ron williams and blackrock s quarterly outlook and our guest host obama insider john rogers. that s tomorrow right here on squawk box. and as a progressive customer, you get to use any of our concierge claim centers. so i can just drop off my car and you ll take care of everything? yep, even the rental. what if i m stuck at the office? if you can t come to us, we ll come to you in one of our immediate response vehicles! what if mother won t let me drive? then you probably wouldn t have had an accident in the first place. and we re walkin ! and we re walkin . making it all a bit easier now that s progressive! call or click today. welcome back. we re over here. hi. i want to talk tiger quickly. i tried to watch a little bit. geoff ogilvie is a great player. i played with him. great swing. it s just not you know, it was maybe he would have won anyway. he might have beat tiger, who know. but it s better when tiger is it just is. butch harmon over the weekend, who used to be tiger s coach, said he expects tiger to come back in march. from his lips. why? why did he say that? because tiger is he s a golfer. he says he can t he wouldn t be able to take off any more time? this is what he does. you know, if he s trying to reconcile, i wish him luck. i understand. i hope elin is i hope they work things like that out, but i just hope they work things like that out so he can come back and do what he does. because on the saturday night live with they did that parody, we re going to be fine, we don t need tiger ppt first person he mentioned is one of the stars, geoff ogilv geoff ogilvie as kind of a star, and then the guy won the first tournament. he won last year, too. he s a great player. nice guy. but, you know, tiger s got to be there for the masters. if he s not there, the open is at pebble beach. for so long it s do you want tiger or the rest of the field, when right. that s how you bet. you can imagine, you know, tiger, who knows what his state of mind is, but you know the one so will la solace he has is banging balls. that s like a fish out of water. we ll have senators on, lead editorial. you ve been following what s going on in massachusetts? they vote i know. the democrats now, they should not for democrats, they have to worry about massachusetts shows you how messed up things are in the world right now. you know, coakley used to have a big lead. brown, some polls put him even or ahead. bill clinton is going up to campaign now. they re calling in the big guns there s been a kennedy in that seat for so long true. now we re hearing some democrats are whispering, even if brown were to won, they ll delay the swearing in. can t do that. yeah, they can. they can delay the swearing in to get the the guy who was appointed, a democrat, they ll get him to vote for the 60th vote to make sure health care you ve got to be kidding me? they can automatically they will delay a swearing in long enough to let paul kirk, the appointed senator that s why there s such a rush. it s not so much about the state of the union address it s more about this. we ll have judd gregg on, he s in a neighboring state. i want to talk about the unintended consequences of some of the laws that go through. one of the lead stories in the journal is how states are pushing back on the epa emission rules for greenhouse gases. you might expect you d see some red states who would be upset with some of these things. the state that are complaining the loudest are pennsylvania, florida, kansas, which is talking about how some of their animal feeding operations may be affected by this and some of the municipal solid waste facilities as well. they re also talking about administrative burdens being too much if they push it up too quickly and the budget shortfalls. they say they don t have enough money to do the things they re required to do so they would have to raise taxes. one of the most shocking is that california is jumping on board as well. california, which is known as a green state, it s been way out in the forefront for trying to make sure that their state is a little more green, is saying they think that the epa s proposal will likely retard rather than facilitate reductions in greenhouse gases because they were already so far down the road they were talking about how you have to use solar and wind. for those potential areas they need natural gas plants up and running to make sure they don t lose power all together. they say these new guidelines will get a lot of new power plants stuck. it s never a great time for a lot more regulation for business and for a lot more in taxes. after friday, we re still in the middle of you re hearing complaints from places you might not think, like the state of california. we need clean air, as you know. if you live in l.a., one day you discover they re mountains surrounding it, but it might take six, seven months before you see them. we ll have more of this morning s top stories. we re rolling out the red carpet for the famous squawk walk, treatment worthy of a u.s. senator, new hampshire senator judd gregg. host: could switchio 15% or more on car insurance? host: does charlie daniels play a mean fiddle? fiddle music charlie:hat s how you do it son. vo: geico. 15 minutes could save you 15% or more on car insurance. can the new year s rally continue? a slew of economic data, central bankers meeting in switzerland and some feds speak will be the focus of wall street. we find out if the bulls can remain in control or if the bears will fight back. he s not doing anything. today s guest host likes to speak his mind. i genuinely believe health care will be undermined by this because who s going to invest in innovation of health care when they know their rate of return will be reduced because government will manage the marketplace? from health care to the deficit and the future of the republican party, senate budget committee ranking member, judd gregg is here with his thoughts. rolling into the motor city. a bruised detroit trying to turn that frown upside down as the auto show comes to town. we speak to gm s bob lutz on the future of the industry and the challenges that lie ahead as the second hour of squawk box begins right now. good morning. welcome to squawk box here on cnbc. i m joe kernen along with becky quick. carl is off today. let s take a look at the rundown in what we have. a former deputy treasury secretary, roger altman, frequent guest on squawk box. plus we re live at the detroit auto show. phil lebeau will sit down with gm s bob lutz to talk about the future of the company. and citizens against government waste, president tom schatz, we call him the grinch you call him the grinch. he s a mean one. he reveals his list for porker of the year. we re not talking about, you know, full-figured gals and guys. we re talking about wasteful spending. i call him that. let s be clear on that. i call him the grinch. he smiles and sort of rubs it all over me. he loves being the grinch. in studio, guest host senator justice greg, republican from new hampshire, senate budget committee ranking member. we ll get his thoughts in a minute. great to see you, senator. thank you. we have some guys that will argue with you today. i suspect so. i m looking forward to hearing from mr. altman. i m sure he want to cut taxes. and your other friend from neighboring stated, governor dean. i want to talk to him about all the ice in vermont, because we ve got good snow in new hampshire. that s that s good. and then chris dodd, also which chairman of the committee i m on. you re friend with dodd, right? i like chris. we ve done a lot of issues together. we ve worked hard on things that were critical, like t.a.r.p. surprised at his decision, but obviously he did what he thought was right for he and his family. long public service. very much so. 30 years in the senate. at least. and then more before that. yeah, absolutely. and their child is, what, 3? i m going to high-five him. that s what i said to becky. there s hope for. you he s my my idol. and he has a 6 or 7-year-old. and he s a great father. yes. men, this is what we think about. trying to stay young, becky. senator s wife is here. i m going to sit with her while you have this discussion. top headlines, first off the futures have been well above fair value. right now, you re talking about the dow futures up by about 34.5 point above fair value. all coming as we re watching gold prices up by better than $20. oil prices pushing back towards $84 a barrel. meantime, boston fed president eric rosengren says home loan rates could rise by as much as three-quarters of a percentage point in the spring as they end the mortgage bond purchase program. the fed is expected to end the 1.$1.25 trillion program by the end of march. president barack obama is planning more economic stimulus measures. mostly of the targeted variety. white house counsel of economic advisers chairman says that cutting the jobless rate while reducing the bulging budget is a longer term challenge. the big variable in all of this is the private sector. the government has been doing a lot to hold up demand. i think the recovery act has been incredibly important in that regard. and the whole question is, when does the private sector get its sea legs again? she says the president will focus on getting the u.s. fiscal house in order owe the longer run. airbus flying high in 2009, delivering three a380 super jets in december. that brings delivery of the world s largest airliner to oh, to deliveries of the largest airliner to ten. total delivers, 498 planes. the company had targeted 490 total aircraft deliveries. boeing said it delivered 481 planes in 2009. once again, airbus does come out on top. central bankers, meanwhile, meeting in switzerland. the key issue, regulation and how fast monetary stimulus will be unwound. cnbc s is basel following the meeting. reporter: good morning to you, again, joe and becky. as i m standing here, they are speaking to the press inside of this building at the bank of international settlements. he s been in meetings with other top global governors of the central bank, this morning, a few banking executives. on the agenda, bonuses, the state of the global economy at this current moment. of course, also excessive risk-taking. the head of the board of financial stability has been warning that markets are overly optimistic about the state of the economic recovery. he says that markets are taking on or market participants, rather, are taking on too much risk here, especially as rates will be rising through the course of the year. that, of course, will be a problem. not just for the big banks but even more so for the smaller banks in the u.s. the regional banks, banks that are focused on credit such as the mortgage lenders, they will really be feeling the pinch here as they will have to cope with higher financing costs. very difficult task of regulators inside this building today is not just to protect the bigger banks, those banks probably that are too big to fail, but to protect the smaller banks and to make sure that they will weather the rate hikes and the withdrawal of stimulus in 2010. back over to you. carolyn, thank you. our guest host this morning, go back to him, one of the most vocal voices in washington on many issues, the budget deficit, health care reform, joining us now republican senator judd gregg from new hampshire. budget committee ranking member, member of the banking committee as well. you are ready, or not running, we know that. how long have you about been saying what s on your mind? even more so since you not running. hopefully forever. in new hampshire you have running room. people really expect you to be fairly plain. say what you re thinking about and not try to be too flamboyant but simply say it. anyone who does this public service and who enters the field of politics, i mean, it s hard enough. we shouldn t question why you re leaving but we wish you we kind of need you. don t you think at this point what s your excuse? ? why are you quitting? have you asked kathy. she s right here. and that is but been there done that. i ve been in people have been nice enough to elect me more crucial, crucial times. it is really crucial, especially as we look out five, ten years, because our debt situation is getting to such a critical situation where our capacity to sustain our government and our fiscal policy is really in question as we go forward. so hopefully we can make some change over this next year. i ve got some ideas working. kent conrad, i have a proposal to change the formula and get us on the right path. as a practical matter, at some point you ve got to say, you know, you ve been there, you ve done it, and you want to try something else. we ll have chris dodd on a little later. you said you were surprised at his decision. i guess, why? because he s been so engaged recently. i mean, basically he shepherded the health care bill through the health committee after ted got very sick. that was a really complicated exercise. then he went right into shepherding the financial reform package through the senate. he s doing it in a constructive way. he s brought republicans in on his committee and membership. we re dealing on complex issues. i ve been asked to work on the derivative side. and i think he s just been very constructive. of course, he was key on putting together the financial rescue package relative to t.a.r.p. so he s been the player, really, on all these big issues recently. is it fair for people to think regulatory reform will not get the same focus after this announcement once we see these things? well, maybe gives them a little running room. to do things to do things he might is that what he s told you to this point? no, but i can see that. in a practical matter we re not doing in the sthat what the house is. that package was unbelievable. the language on if you re too big we re going to break you up? where does that stop? break up coca-cola and then walmart because they simply don t like them because they re large companies? it s an absurd position. then the ron paul lack language, which puts the congress in charge of monetary policy, which is just scary. you ve got a lot of nerve quoting from his book. trying to pin that on him. if it s crazy to think that big banks are too should never be broken up, how do you protect it s not the issue of breaking up the banks. the issue is, if a bank is a systematic risk because of policies and the way its structured and the things it s done, then there has to be capacity for that bank to fail. stockholders lose their money, bond holders lose their money to the extent their not secured. you don t want to group members of congress, made up of academics and intellectuals that says we don t like that institution because they re too big. they may be profitable, strong, successful, may be adding to our economy because international activity is important as a function of size in many instances but we re going to break you up because we re pop you lass and we don t like you. who should be making that decision and nobody should be making that decision. how did we wind up where all the banks got into so much trouble and needed so much money from the taxpayers? that s a long story. but if you want to thumbnail it, fed kept rates too low, too long. number two, a complete breakdown of underwriting standard where you separated underwriters from the people who owned the assets. number three, you simply had a regulatory community where people were shopping for the weakest regulator. how do we make sure that doesn t happen again, though? you can do that without this idea that you just get beyond a certain size and you re going to be broken up? yes. you make sure what we re going to do is have resolution authority. where we essentially have the major players in the regulatory community looking at what systematic risk institutions are and if they feel one has a problem, that are going to put it at risk and the system at risk, they can step in and resolve it. the resolving exercise will not be a conservation exercise. we re not going to keep them alive. we ll resolve them. how do fannie and freddie fit into that world? they should be resolved right now. the fact we re keeping them on life support at the cost of billions of dollars, american taxpayers dollars, is a huge mistake, in my opinion. we should be have in plan a game plan for privatizing those institutions and moving those people off the federal books. you know, back to chris dodd, do you think i mean, the white house was pretty quick to tell paterson to take a hike. do you feel there are any fingerprints here? you have to ask chris. we don t expect i m sure i have no idea. they get to keep i don t think he listens they ll probably keep blumenthal, he s popular, so you keep that senator. that doesn t mean they ll keep 60. i don t know they ll keep that senator. look at massachusetts, you have a real race going on in the most liberal state in this country after vermont. is it really in my opinion, brown can win that race because of the fact people are frustrated and angry. they re from us freighted and angry people say it s the bank bailout, health care plan, that s part of it. what they re really angry about is they think they re losing american, the tradition of america, one passes on a stronger, healthier, more prosperous country. that s changing. corzine was going to pull it out, he was ahead by five and he lost by ten. that s a good example. new jersey, of course, is right there with massachusetts, a state which has been traditionally strong bed of democratic activity. we ll talk about this in the chairs. it s the 19th. we have time for a senatorial election, right, in massachusetts. january 19th. very strange. they did this because they took away the power to appoint from romney because they were afraid that, you know, he might appoint a senator. so they took it away from him. and then kennedy died, so they had to go into special session and give the power and create this election structure to get the election on track fast. you know, i mean, it s they appeared to have been hung by n unintended consequences. why didn t they make it february or march or something? well, well they messed up. sometimes politicians do that. let s just say that the republican wins, which is a longshot still. maybe. maybe you don t think so. well, i think it s but it s a shot. i mean, it s better than cincinnati s chances of yeah, i know. i know. the super bowl. any jets fans should thank me for making the jets look like a super bowl-bound they did look good. they did. you know, koun count on the bengals it was a bad day for the patriots, too. it was a bad day for the patriots. let s say this weird thing happens and brown gets elected in massachusetts. how long can they delay the swearing in? long enough to pass the health care bill, otherwise they won t be able to pass it. they ko do that? absolutely. this is chicago politics out there right now. they re not going to let this thing they re not going to let the health bill go down because a massachusetts elects a senator. senator, there was a piece yesterday, of all places, the new york times. i think it was sheryl gates, talking about how it would be bad if the democrats didn t pass something. they would get that would hurt the party if they don t pass it. that s the primary reason they re passing but they won t be helped if it does pass. they don t get a co-memensurate amount that s the politics situation but the substance of the situation is that this is a really terrible bill. the impact on our economy is going to be devastating. you re taking the federal government howard dean doesn t like it either. howard dean hates it. he s going to come on today and talk about that s great but he agrees on a different reason. he want a nationalized system. my problem is you re exploding the size of government, and you should have been the resources we have, medicare cuts, trillions of dollars over 20 years, and using it to expand a brand new entitlement. if you reduce medicare by that much you should make it to make medicare insolvent, $23 trillion of unfunded liability. this concept of what s being done here n the end they can claim, we re giving health care to the main people but the real result is going to be government s not going to be affordable. colorado voters, they wanted reform. the piece in the new york times, dying for health care reform, please, please. and then the actual bill itself, no one wants it. like the new york times. that s in the times, too. new york started out in the same boat and they changed their mind, leaders in new york city. there s a lot of second-guessing in massachusetts right now. the senator s going to be with us for the rest of the program. if you ve got any comments or questions for him, anything you d like to see us address on squawk, go ahead and e-mail us at squawk@cnbc.com. next up, what the president s various reform ef efforts mean for four portfolio. we ll be talking with roger altman. and later have you seen this pig? he is wanted for wasting taxpayer money on everything from a bridge to nowhere to puppet shows in minneapolis. on the pork hunt with us this morning is tom schatz, citizens against government waste. time now for today s aflac trivia question. what is the longest river in the united states? the answer when cnbc squawk box continues. this is not pay the hospital insurance. this is not pay the doctor insurance. this is not major medical insurance. this is affordable-we-pay-cash -directly-to-you- fast-when-you re-sick -or-hurt-insurance. if all you know about us is. aflac! .then you don t know quack. to find out all the ways aflac s got you covered, visit knowquack.com yeah. would you like a pony ? yeah ! ( cluck, cluck, cluck ) oh, wowww ! that s fun ! you didn t say i could have a real one. well, you didn t ask. even kids know when it s wrong to hold out on somebody. why don t banks ? we re ally, a new bank that alerts you when your money could be working harder and earning more. it s just the right thing to do. now the answer to today s aflac triyeah question. what is the longest river in the united states? the answer, the missouri river. checking the futures, indicated higher again after a good week last week. indicated up about 31 point. alocoa will kick off earning season after the bell today. the symbol is aa. you know, people you pick acme for your name when you re starting a company because you ll be the first one in the phone book. alocoa will be the first one to report. s&p 500 earnings are forecast to have soared about 213% in the fourth quarter 2009, plus you get to be, you know, in all the road runner, everything in road runner was acme, so you get free advertisement, everything that comes in the box. you guys are quick. very good. alocoa, after the bell today, notable releases this week include intel and jpmorgan. we have some big numbers coming up this week. but those we ve given you did you see the last one we had to pick? kb home. we re interested in kb home it s a slow start then the flood gates open. just wait. do you want to be standing at earning central. we will be. i know. but you don t have to sell it to do this this week, do you? no, i agree. but you can talk about tiger woods. tiger woods, yeah. he better let me ask you a question, joe. if you re hitting the head with your 9 iron by your wife, does that affect the grooves on it so and the ball. i mean, unlike you to speculate and inquire type hearsay i was just wondering because they asked his wife how many times she hit him. she says, i m not sure, put me down for a five. let s talk about markets in washington. joining is roger altman, chairman of evercore capital partners. thank you for joining us. it s a pleasure. we ve been talking about where things stand in washington right now. judd gregg, as you know, the senator is here with us. why don t you weigh in on where you think we stand after all the news we heard last week about potential people who would be stepping down and not running again. well, i think it s inevitable that the democrats will suffer losses this coming november in both the house and the senate. i m not a political prognosticator but i see people like charlie cook, who probably follows congressional races closer than anyone, talking about 25 seat in the house, maybe 30, four or five seats in the senate, which would change hands. and that kind of a shift would be a profound one for governing because it would mean the administration would have to alter itself from a left of center focus to a right of center focus going forward because it could not govern without republican votes. do you think that the administration controls its fate in the time between now and the election, or is this more a situation of what happens with the jobs picture between now and then? the jobs picture is the dominant factor. and, unfortunately, while we re going to see any month now positive numbers on jobs creation, obviously we saw minus 85 on friday, but shortly we ll see that number turn black, nevertheless, we need about 2% real growth in this economy to get the unemployment rate down. i think we re going to i think it s going to be a while before we get to that. therefore, the unemployment rate is likely to remain in the 10% vicinity through november. might tick down to 9.5, but it s gok high. that s going to be a very difficult environment for democrats. that s why i think it s inevitable you ll see those losses. is there anything they can do? yes, there is an agenda they can adopt. more quick-acting stimulus, and president obama is talking about that. i think they re going to have to be more credible and take a stronger stance on deficit reduction, which senator gregg has done a lot of work on, is a leader in. i d like to see them smooth out their relations with the business community. and i also think they ve been restrained, perhaps a bit too restrained, towards wall street. roger, doesn t one of the issues here that s going to sort of dampen the willingness of some of our of the private sector to expand, the fact you re going to have the cost of capital really be dramatically affected by tax increases? interest rates going to maybe tax on dividends going to maybe 35%, 40%, and then carry interest treated under ordinary income. all of this is going to happen this year. aren t you going to see that dampening expansion also? well, some of those anticipated tax changes, senator, are baked in to the minds of decision-makers. i think everyone expects the top two marginal rates to return to the clinton era levels of 36%. there will be some adjustment in the capital gains rates. as to what happens to carried interest, i don t believe that s clear. as to where the tax rate on dividends goes, don t believe that s clear either. but i believe the world, including the business world, expects that certain tax rates will go up. and how they go when they go up and how much they go up will have a bearing, as you say. but some increases are built in. roger, you know, having been in the clinton administration, what you described that could happen where the president is forced to move back to the center, maybe it s revisionist, maybe it s republicans looking back. they say that was the greatest thing that ever happened to president clinton s presidency and that things really worked well when he was forced to move to the center. i mean, would it would it be a good thing again if that were to happen or you re saying it would be a bad thing? well, joe, i think it s hard to know. president clinton, as you say, made lemonade out of lemon by turning the extreme defeat of 1994, the fall of 94, into a plus for himself and his administration by what historians call triangulting after that. he won an easy victor against senator dole and had several years, about six years, of great success in there. after that move to the center. what that would mean for the obama administration is very difficult to know, but i think we can we can assume there will be losses of the type i ve described. we can speculate about the exact numbers but we can assume there will be losses. for example, the democrats number in the state will be below 60, which means by definition they have to have republican support and that, in turn, requires a bipartisan approach, at least at the margin. roger well, you know sorry. go ahead. basically, there s a big difference between bill clinton and barack obama. i mean, bill clinton was a centrist when he was elected. barack obama, this is a government of community organizers that believes growing the government is growing prosperity. if they pass this health care bill, there s not going to be much opportunity to entrench. you ve expanded the government that it will be at the margin. it s not going to be like a 94, 96 situation where you were able too put into place a budget that was balanced because you had clinton tax increases and a republican congress radically controlling spending. that s not going to occur once you put in this health care plan, which essentially explodes the size of the government and drives massive costs in the out year. roger senator gregg, i have a lot of respect for you, but i think your memory on that one is a little bit off. the biggest one of the big reasons why we saw a whole series of balanced budgets in the 90s was because of spending restraint. correct. average annual increase of federal spending around president clinton was around 2%, 2.5%, under president bush it was three times that. i m not arguing the clinton administration was profitable. one structure that occurred with with the first republican congress, supported by the president at the time, so it was a bipartisan effort, you re right. roger, i guess my question is, you have been very public about your thoughts about what the obama administration needs to do. you ve written editorial pieces suggesting some of these things you just mentioned. do you think the obama administration is listening? i don t know, becky, whether they listen to me. it s not important whether they do or don t. i do think they re shrewd, they understand the political lay of the land, god knows, and they re going to be taking a series of steps in the months between now and november to try to soften the political blow that would occur then. and i think you will see, for example, tougher talk and efforts to make serious steps towards deficit reduction. it s clear that the public is restive and anxiety-ridden about spending deficits and debt. and that s one of the reasons why the president s approval ratings on managing the economy are not as good as he would like. and i think you re going to see the administration taking that issue on more seriously. it s going to require cooperation from the republican side. senator gregg has talked, i think, quite well about a deficit reduction commission with fast track authority for its recommendations and so forth and something along those lines, i believe, is going to be necessary. but i think the administration is going to pivot towards deficit reduction right after the state of the union. all right. mr. altman, thank you very much for joining us today. we appreciate your time. pleasure. it s hard to pivot when you ve jumped off the cliff. that s just my view. it s a debate we will continue this morning, which is go ahead. which is correct. this is something we ll be talking about an awful lot this morning. senator gregg will be with us for the rest of the program. another hour and a half this morning. we ll be joined by howard dean, coming up just a little later this morning. and by senator chris dodd. in the meantime, let s take a look at sop of the top stories. behind kin heineken is buying femsa will be the second biggest stake holder. boeing is reconsidering its plan to built a short-range version of the 787 dreamliner jet, according to the wall street journal. the news comes after the only order for the short-range jet was converted to one for the regular version that 28 jet order was from japan. avatar f you haven t heard it, is now the number one movie of all those released in 2009, after the epic topped the box office charts for the fourth straight weekend. avatar has sold $429 million in u.s. tickets since december releases. worldwide you re talking about quite a bit more. over a billion. wow, that s strong. that is amazing. and you like the plot, too. it was a good story. i was not really interested in going why were you not one other time you said you had no desire to see some movie blue guys running around. i know. if it s not like beaches or some stupid steel magnolias, some relationship he s not that into you did you see the proposal ? she probably did. wasn t that a great movie? sandra bullock oh, my i would rather put needles in my eye. mrs. gregg took you. see, there, joe. kathy liked it. so young, so brave. you re the wind beneath my wings. i didn t like that one. anyway, coming up, gm s bob lutz live from the detroit auto show. also the future of the auto industry. as we head to a break, why don t we take a quick look at where oil is trading this morning. oil 83.88, the highest level we ve seen crude oil in the last 15 months. keep an eye on this this morning because it is pushing towards $84. squawk box will be right back. what are you doing.? calling chase sapphire, seeing if we have enough points to stay longer. now? you don t have enough time. and you have to push all those buttons. no buttons, someone answers every time. yeah, right. bet you a massage. yeah, ok. hi, julie. i have a question about my points. hi, what button do i press for a massage? hello? new chase sapphire. you call. we answer. no waiting. just press right here. go to chase.com/sapphire. chase what matters. welcome back to squawk box. still to come in a couple of minutes, we ll head to the detroit auto show for an interview you don t want to miss. gm s bob lutz joins our own phil lebeau. and tom schatz of citizens against government waste will reveal porker of the year. voting will begin right after the interview. stick around for that. at 8:10 eastern governor howard dean joins guest host senator judd gregg for an in-depth discussion of the health care bill, which they both think is a lousy bill. it will be a love fest. a check on the market. right now the futures indicating another positive opening. lat monday was the big day and the rest of the week we spent looking to see if the market could hold onto the gains and it added to them slightly on thursday and friday and tech came back and the financials acted pretty well last week. and the market traded higher on friday, even after that disappointing jobs number. although we were positive in november. but we went back negative on adding jobs. in december, oil is on a roll again. the ten-year getting close to four, but again the price is down today. up at around 10.85%. the dollar weak against the yen but a little bit, anyway, but up against the euro and the pound. and gold is surging up $19. it s had a pretty good beginning for 2010. 2010 or 2010? 2010. when we come back, we head to the detroit auto show for an interview with bob lutz. at&t s 3g network lets you talk and surf the web at the same time. verizon s doesn t. [ cellphone rings ] excuse me. yeah. hey, rick. what, you re on a game show right now? what s the capital of peru? [ rick ] come on, man, hurry. you got to help me. [ luke ] that would be lima. [ rick ] my answer is lima. [ man ] you just won a million dollars! okay, now, i-i better get a cut of that. [ male announcer ] when you compare, there s no comparison. at&t. a better 3g experience. get an exclusive pantech messaging phone free after mail-in rebate. only from at&t. welcome back, everybody. the detroit auto show kicking off this morning. our very own phil lebeau joins us with a special guest. phil, take it away. vice chairman of general motor, bob lutz joining us first on cnbc this morning on squawk box. bob, it s always good to see you. good to he sue, phil. reporter: this is an interesting show. you and i were talking before we went on the air that it s one of those shows that definitely not the feeling we had last year. no. reporter: but we re still trying to find ourselves. you know, i think this is i think we ve all gotten the impression that economically we ve bottomed out and that 2010 we re going to see overall market demand of somewhere between 11 and 12 million units, so definitely an improving trend. nobody s quite sure of that yet. reporter: if let s throw it out there. let s say that we see 11.5 million vehicles sold this year f that s the case, does general motors make money this year? 11.5, you know, i sure as heck wouldn t want to definitely say yes. in fact, ed whitaker, who said we hope to make a profit, did definitely say yes. it depends on a lot of factors. i think the goal would be to make money on an operating basis. then there still might be some restructuring charges and other stuff that still might push the figure to a negative. but we re sure going to fight for profitability. a lot depends on level of incentives. so far we re agreeably surprised that the buick lacrosse selling, for all intents and purposes, selling without incentive, camaro, terrain is reporter: you brought up ed whitaker. what s the difference with him in charge of gm now? if i rn to use a presidential analogy, i would say ed is more like ronald reagan, that is, doesn t want to be concerned with the doesn t want to get down into the detail, has the ov over-arching details, and picks executives to get the results and if the results aren t there he won t hesitate to swap them out. reporter: you ve seen what works and doesn t work. does ed whitaker have the game plan and foot soldiers in place to make this work at general motor? i obviously believe yes or i wouldn t hang around. reporter: so you believe that this broad vision where he set the goal and he says, you know, if we re going to increase production on equinox, let s not argue about whether or not it makes sense three or four years reporter: correct. no, absolutely. ed is ed is very much of a commonsense person. and an intuitive manager. the problem with this industry is you get a lot of people who are very highly trained in the world s best business schools, highly analytical and they start losing sight of common sense. because they re always looking for the next level of sophistication down. and then finally you get some people in this business who are so bright that they can convince themselves that it isn t really nighttime, it s really daytime. you re just they ll give you 15 reasons why you re not seeing the sun. whereas ed whitaker says, if it s dark, it must be night. reporter: let me ask you some specifics. ch chevy, you fell as far as brand sales in u.s. to number three. is chevy in trouble? no, i don t think chevy is in trouble. chevy, perhaps, lacked a truly excellent subcompact. and the chey cobalt, a good car but getting on in years, but with the continuing good sales of the malibu and with the chevy equinox, i see chevy coming back big time. reporter: and the volt coming out later. yeah, the volt you know, the volt isn t going to account for a lot of big numbers. reporter: but it will give you a charge as far as publicity. charge, no pun intended, yeah. reporter: bob lutz, vice chairman of general motor joining us first on cnbc, with a cold, no less. gutting it out? well, it started yesterday. i m sorry about that. at least i didn t at least i didn t sneeze on camera. reporter: there you go. we ll take it. thanks, phil. reporter: guys, we ll be here all day long. more executive interviews to come. next hour, we ll be talking with john krafcik, head of hyundai usa and with more executives throughout the day. back to you. phil, thank you very much. we look forward to that. by the way, you can join phil for a prime time show tonight at 8:00 p.m. eastern time, all-access detroit auto show. it will be highlighting the hottest models. you don t want to miss it. we have coverage all day long from detroit. the polls are open for the annual porker of the year vote from citizens against government waste and the democrats, it says here, have an early lead with 4 out of the 6 dnominees. this is going to be fun, tom. before we get to, it can i ask you one quick question? and that is, what we saw with with ben nelson and maybe with la some others, is that with your views? if we had the porker of the month for december done later in the month, they certainly would have qualified and probably been chosen, but we had it earlier in december. people can certainly write in senator nelson, anybody else they want. not only the six we have nominated that were already chosen. yes, we would consider that pork. no question about it. it s a big payoff, huge amount of money going to one state. and it s certainly in that area. because they say i shouldn t give mine up. that s just all 50 states, or any state with a democratic senator. i don t mean anybody with two republicans but anyone with a december senator should get what senator nelson gets and that s the way it should work. if do you that, you have everybody in the federal coffers paying for the medicaid costs for the states. what is-t showed is how much the states have to take on as part of this health care bill. huge amounts of money. governors of new york and california said it will essentially bankrupt the states, many others are objecting, republican governors, gement governors. let s go over your nominees. can we do it? sure. who we got? russ carnahan, congressman from missouri, who misled constituents about the cost of the health care bill. congressman barney frank who has said the private sector should cut private pay and defended fannie mae and freddie mac for years, even after they got into trouble. we ve got secretary of transportation ray lahood. congressman abercrombie took the most pork in the house in 2009 and one of the hypocriticical members of the senate, kay bailey hutchison of texas who wanted $1.6 billion in earmarks for fiscal year 2010. finally, congresswoman maxine waters of california who had almost a fist fight with the chairman of the appropriations committee over naming an employment center after her. she wanted the money ppt chairman, to his credit, said, i m not giving any money. my money is on waters. if they have a fist fight on that, i would there would be no odds on that one. no. senator greg, you are known as someone who s fiscally conservative as well. this definition of pork, does it always fit the standards or are there things you think should actually get passed? well, i think there s no question the system is abused. you know, i ve been on the list tom s list on occasion. i didn t abuse it. there were reasonable things. my view is what you should first you set a budget top line that s hard. and that s very conservative. within that budget top line, if there are going to be earmarks, they should be transparent and be subject to amendments so that people can take them out if they feel they don t qualify. that s the way i would approach this. actually, as we develop the next budget, which i m responsible on the republican side for, we re going to propose, i believe, what i m suggesting we propose, hopefully my colleagues will agree, freeze discretionary spending and reduce it by here 100% of the earmarks from last year or 50% of the earmarks from last year so we get the savings. i hope we can accomplish that but i support we ll run into a fair amount of problems. what good is it if you can get deals made, like the health care bill health care was unique. tom was right. this is really egregious what happened under health care. what you re dealing with here are intilentitlement account. the big spending in the government is an entitlement. nondiscretionary defense spending is probably 15%. nondefense discretionary, it s about 15% of the budget. 60% of the budget is intilgtmentes. and this health care bill explodes the size of entitlements and takes them and uniquely carves them up so that some people benefit from them and some don t, which has never been the concept of entitlements. i think tom was absolutely right. the state are just going to get killed under this proposal. tom, do you have do you have anyone who won or can we vote? how does it work? online at our website, runs through february 1st. as i said, we will accept write-ins if people think there are others that deserve it, other than the ones on the list. first of all, i want to think tom. i think he s a constructive player in the exercise because he brings sunlight onto earmarks. granted, i wish he wouldn t bring it to mine but he brings them on to earmarks and people have is-v to again them. they say, this is why it made sense. if it doesn t make sense by the way, there is an enhanced revision idea senator carper is proposing i m a co-sponsresponse i. he should have the power to knock out these special earmarks. all right. of course, the reason i m saying all these nice things is because i don t want to make the list. right. i know nbc has the biggest loser but why not do porker of the year and who can gain the most weight? no, that would be society would look down on that probably. you ve got the name already, right, tom, so they can t really do that. right. we ll be watching. who s winning so far? we just started, literally you re the first to get it out. we ll keep it up to date. they can go on the website, again, cagw.org and i ll be back february 1st to tell everybody the winner. perfect. thank you. coming up, we have howard dean and our guest host senator judd gregg. they ve got the same prognosis for health care and that bill. but they are prescribing very different cures for that problem. stick around. we ll have more when squawk comes back. the police often question him just because they find him interesting. his beard alone has experienced more than a lesser man s entire body. his blood smells like cologne. he is the most interesting man in the world. i don t always watch cnbc, but when i do, i prefer stocks to watch and the animal orchestra. keep watching, my friends. what are you doing.? calling chase sapphire, seeing if we have enough points to stay longer. now? you don t have enough time. and you have to push all those buttons. no buttons, someone answers every time. yeah, right. bet you a massage. yeah, ok. hi, julie. i have a question about my points. hi, what button do i press for a massage? hello? new chase sapphire. you call. we answer. no waiting. just press right here. go to chase.com/sapphire. chase what matters. let s take a look at a quick stock to watch, a dow component called walt disney, downgraded from neutral to buy. fair value according to that firm is $34, so that s close enough, i guess. and they are citing valuation for that downgrade. bonus season kicks off for the banks this week. that s when we start to get earnings and that s when they tell them how much they pay them. congress will hold first hearings of the financial crisis inquiry. top executives from goldman sachs, jpmorgan, and morgan stanley will be among those testifying. our guest host is senator judd gregg. senator, the focus this morning in all the papers is the banks getting ready for a big backlash with bonuses being paid out. let me read you one comment from andy stern, the head of the service employees international union. they backed up the truck to ft. knox in broad daylight, emptied it out, we rescued them and they get $250 billion in bonuses. is that a fair assessment? no. if the banks have some sort of investment from the taxpayer, then the taxpayer has a right to control and have a large say in their compensation. if the banks are not getting an investment from the taxpayer, then the banks can do whatever they want. i mean, it s their stockholders they have to answer to. if stockholders are willing to pay those type of bonuses, they must think they re getting value for that. it s fair to say, though, this is a situation where you can expect to see some political backlash? oh, absolutely. you know, it s course 101 on populous poptics, demogog, don t exaggerated and don t point the finger at people responsible, which is congress. if you want to look at systematic risk, it s the united states congress. we re the one spending this country into a fiscally insolvent situation. we allow freddie mac and fannie mae in a way to create the real estate problems. so if you want to start pointing fingers, let s look in the mirror. senator, you ll be with us for the next hour as well. stick around for that. up next, we have the road to health care reform. our guest host, senator gregg, he has a problem with it, howard dean has a problem with it as well, but coming at it from entirely different perspectives. that battle right after this. senator chris dodd deciding not to run in 2010. is there plenty of unfinished business? you bet. he ll be talking about that with us right after this. that s why i book with expedia. so i can find someplace familiar. or somewhere more distinctive. nice! then i can compare dates to find out when i can save the most cash. done and done. we should do this more often. more choices, more savings. where you book matters. expedia. dot com we re shopping for car insurance, and our friends said we should start here. good friends we compare our progressive direct rates, apples to apples, against other top companies, to help you get the best price. how do you do that? with a touch of this button. can i try that? [ chuckles ] wow! good luck getting your remote back. it s all right i love this channel. shopping less and saving more. now, that s progressive. call or click today. yeah. would you like a pony ? yeah ! ( cluck, cluck, cluck ) oh, wowww ! that s fun ! you didn t say i could have a real one. well, you didn t ask. even kids know when it s wrong to hold out on somebody. why don t banks ? we re ally, a new bank that alerts you when your money could be working harder and earning more. it s just the right thing to do. the clock is ticking on health care reform. the house and the senate at odds over what should and should not be in the bill. you have 24 hours to live. 24 hours! well, 22. i m sorry i kept you waiting so long. former vermont governor, former dnc chair howard dean tells us where it s going wrong. hanging it up after 35 years. i will not be a candidate for re-election this november. senator chris dodd, chairman of the banking committee, will talk to us about the efforts to make financial restorm a reality. first on cnbc. hyundai gave the competition fits in 2009. the ceo of hyundai usa will give us the new game for the new year. squawk box begins right now. welcome back to cnbc, squawk box, first in business worldwide. our guest host, senator judd gregg, so much to talk to him about over the next hour. if he was a banker, he d be so cheap and you d never believe me. he would not you would never lendmy money to anyone with the way your fiscal discipline is being manifested today, would you? bill gate. you might be able to i d ask for collateral. yeah, you d ask for collateral under a q rating or what is it you need? becky has some top stories. let s get you caught up to speed on the markets. we ve been watching the futures and they re well above fair value. the dow futures up by better than 37 points above fair value. all this is coming as we get ready for earning season. remember, that kicks off after the bell today with alocoa, the first dow component, giving us its earnings. meantime, take a look at crude oil prices. up by 1.3%. you re talking about up another $1.12, pushing towards $84 a barrel. this is the highest level we ve seen for crude oil futures in about 15 months. also, heineken is buying mexican beer femsa giving the dutch brewer a top position in the mexican and brazilian markets. femsa is the baker of dos and other brands. fed president james bullard is a voting member of the fmoc this year. the self-described bank for central banks convening a meeting in switzerland today. that group gathering to talk about monetary policy and their biggest worries. steve liesman is here with a little analysis of what is going on. bottom line is the job boning continues. central bankers issued a warning to bank, you may be overrating improvement in economy and in financial markets. mario draghi said while market have settled down, there are, quote, substantial fragilities in the system. he pointed to concerns over all the government financing going on, the huge amount of debt they ll be issuing around the world you ll year and concerns over sovereigns can pay it back, greece. the warning comes after the federal reserve issued a similar warning to u.s. banks about rising rates. an advisory seen not since 1996. they said central bankers gathered in switzerland this week. top private bankers from around the world were also scheduled to attend. our spies on the ground said vikram pandit was in attendance. financial settlements where global bank regulation is coordinated. they expressed concerns financials are returning to the aggressive behave that prevailed during the precrisis period. they published a draft of global banking standards that would phase in tougher standards until 2012, including liquidity ratio and could include contingent capital that could convert to equity. two things going on, first is this job boning about what s going on right now. what they re trying to do, it s very, i guess, hiptd credypocri. they want them to lend, don t want them to lend. and also developing these tougher capital standard. supposed to be done in 2010. they developed the standards and implemented basically they want to put them in place when times are better. they don t want burden the banks with tougher capital standards. appreciate it. house speaker nancy pelosi s push to get health care through congress raising eyebrows among member of her own party. medical doctor, former vermont governor, probably most important is cnbc contributor, probably the thing you pout your card now, isn t it, governor? joe, that s exactly right. that s what we like to hear. chairman of the democratic national chairman, and judd gregg is still with us. i get a little teary when i see you two together because it s nice you agree. it s a lousy bill. this is a nice bipartisan meeting we have today. neither one of you like this bill. i don t agree with judd about much but he s a good yankee conservative. i d put my money in his bank any time. you re not going to lose there. he ought to be running some of these banks on wall street going nuts again. you re going to get negative interest rates, like we had for a little while, but that s just because he s so cheap. governor, do you think that and, you know, we re being a little cute there because you disagree with different things about the bill, obviously. but do you think that there is a problem here with keeping a closed door? no. look, that happens one way or the other. that was bound to happen. i think the i mean, those are the kind of things people cluck about in washington. i think the final work product is what really matters. the reason i m not crazy about the bill is i think insurance companies continue to get to be able to charge lots of money. they can charge twice as much or even in the senate bill two or three times as much for older people as they do for younger people. the problem is that s not really health insurance. so i think there should have been a public option. okay, there s not going to be a public option. let s make the best of this we can. there s a lot of stuff to be fixed. one thing i agree with judd about is it s probably too expensive. and, howard, we were both governor at the same time. isn t it isn t it just inappropriate for the congress to pass an expansion of medicaid up to 150, 133% of income levels and then basically send the bill to the states? i mean, how would you as a governor as i governor, deal with that? we don t have the capacity we don t have the elasticity in our state and in your state i suspect also, the on only way in our state is people from vermont buying liquor, but as a practical matter we don t have elasticities in our budget and then you get this bill from the federal government that says to pay another, in new hampshire s case, $250 million. what ben nelson did was a good idea. with i was governor we expanded medicaid to 300% for kids and we ve had universal health care for everybody under 18 years old in my state. i think medicaid is a good program. it needs to have reimbursements increased for primary care people. the problem where i agree with you is the financing. you can t finance this out of the states right now. i think they ought to expand the what do they call it, the cornhusker something or other whatever they call it down there, but the deal ben nelson got, i think that could be expanded to all the states, it would be expensive, but it would be worth it. it would be worth it. there are a lot of people who say, wait a minute, he was holding them up for ransom. look, i ve got 15 years experience. it works really well and it covers people. how do you pay for it? as a practical matter, the federal government doesn t have the dollars to pay for it. they re cutting medicare or reducing medicare expenditures by $500 billion over ten years, $1 trillion over the first ten years it s in place and they re taking those funds and creating this new entitlement, which basically funds the expansion of medica medicaid. well, that doesn t seem fair to folks who are getting medicare who are already in the system heading toward insolvency. i would probably support many changes but shouldn t those dollars go to making medicare a more solvent program rather than creating a new entitlement or expansion of medicaid, which we can t afford? as you pointed out you would support most changes because they come out of durable equipment makers who are really, as a collective group, not as individuals medicare advantage is the primary one. yes, there s a lot of problems. except in the three lower counties of florida, which were exempted out by the senator from florida. yes, well, we know how the senate works. i don t blame you for getting out. but, in fact, i think it is a good we re never going to rationalize this system and make any sense out of it unless everybody s in it. that s a fact. that s why i believe everybody in america ought to have a health care system. that s the case in most of the industrialized democracies in the world. i don t shy away from wanting universal health care. we can have a big discussion about how to pay for it. i think we have to agree, we have to do it. i m glad howard used the term rationalized because that s a derivative of rationing. we have rationing right now. 34 million people don t have health care. governor, i want you to put it wasn t so long ago you were chairman of the dnc. i saw an article yesterday that said it would be bad for democrats if something doesn t get passed but it s not necessarily you re not going to get a lot of points if something like this bill does get true. is it were worth it, if you were chairman of the dnc, would you say, wow, i don t know if we ve done this the right way to try to maintain control of both houses in november? well, i think if i were chairman of the dnc i certainly wouldn t because i d be obligated to defend my party right or wrong, which is what i did for four years. i m not chairman of the dnc anymore. if it were up to me, i think we ought to get a bill. i don t like this bill very much. i think it faulgz short. it s a big disappointment. i think a bill for the country s sake, not talking politically here, is better than no bill. there are some things we re going to work hard in the next three weeks to try to make a difference in some of these deals that insurance companies have gotten and all that kind of stuff. how can you justify you say you ll work hard for the next three weeks. nobody s going to see it. you ll work hard in a closed room somewhere in the capitol or white house, five or six peaopl in that room, they ll make decisions affecting everybody s life in america, no transparency, no committee hearings, no chance to amend it on the floor. this bill was brought onto the senate floor on a sunday, voted the next wednesday, christmas eve, no amendments were allowed. that s not the way a democratic process is supposed to work. wait a minute. that s the stuff the minority party and my party did when we were in the minority, alleges brings up, and the american people, we want no, that s not true, howard. when we did you guys used reconciliation to pass the president s tax cuts and then you screamed and yelled we were going to use it to pass health care. process stuff i m not sympathetic towards. i really am not. i would have to disagree with something this big has ever been handled in this matter. i realize you aren t going to agree on this point but let me ask you, you started out at the beginning of this conversation saying something about wall street banks going wild again. are you referring to the compensation deals out there? the compensation is bad optics. the shareholders have some influence on that. but, in fact, they really don t. here s what bothers me about wall street. look, my what s i come from a wall street family, four generations. i was always taught the reason for wall street was to allocate capital. i see venture capital firms, you know, cutting back on their investments in places like biotechnology, which is the cutting-edge industry of our country. i see wall street firms investing in things that don t produce any wealth except for themselves like clatized debt obligations and credit default swaps. i see congress not regulating through the derivative market, except to have people report afterwards. where the hell is the wall street my family grew up with four generations where capital allocation is what matter? howard, how do you expect people to put dollars, which are liquid, into investments where you re going to have the government coming in and setting the rate of return, if the government the government doesn t set the rate of return. under this bill you ll clearly limit innovation that s not so. that s simply not so. smack, since i do some work for the biotechnology industry, i ll tell you there s some very good things in this bill for the biotechnology industry. that s the most innovative and important industry for the future of our country. it s the only place where you have 10 to 1 lead over the next country. you cannot defend as a basics on the basic element of common sense that when the government comes in and starts to manage a part of our economy, the people are going to invest and take risk in that part of the economy because they know the rate of return will be affected by a government decision, made by people who are essentially out of the main stream of the concept that profit makes sense. in fact, they don t like profit. and don t believe there should be adequate capital of return. it does not work. defense contractors were doing just fine. their business is mostly the government. this idea that big government is always bad is wrong. does government manage some things as well as worse than the private sector? yes. do they manage some things better? yes, we do. this is why we have a problem between vermont and new hampshire. our maple syrup is better than yours. oh, my goodness. but our skiing is better than yours. mortally wounded. all right. thanks, governor dean. we appreciate it. you were governors at the same time? we did. we had a great time. we did. thank you. hope to see you again soon, governor dean. thank you very much. you know that poster from the u.s. news & world report. we ve got it in all the lobbies. have you been in the lobbies? no, i haven t been in the studios. all the lobbies. you re across from eric cantor. got to see it. we ll kick around health care reform, financial reform and future of the democratic party with senator chris dodd who just announced his decision to retire. at 8:40 a.m. eastern. coming up, we ll get you ready for earning season. the numbers are about to start pouring in. we ll tell you what to expect. up next, we re headed back to motor city where phil lebeau will talk to the ceo of hyundai usa after a banner year for the korean automaker. can they do it again? we ll find out after this quick break. % % % % % % % % % % % %  take a look at where the futures stand this morning. futures picking up a little steam. right now you re talking about those dow futures up by better than 43.5 point above fair value on this monday morning. let s get back to the detroit auto show. it takes center stage this week. that s where we find our phil lebeau this morning. he has a special guest with him as well. go ahead. reporter: becky, we are joined by john krafcic, ceo of hyundai usa. that smile on your face, you guys have momentum going right now. how do you keep it going in 2010? we had a great year in 09. the industry was off about 20%. we were up about 8%. we took our market share up 40 percentage points. it was a great year for us. the interesting thing about 09 is we didn t have a lot of new product in our volume segment. what s different for hyundai in 2010, all new tucson, and right around the corner, all new sonata, four-cylinder line-up. reporter: three brand boosted market share last year, hyundai, kia and subaru. that s it in the u.s. all the rest were down. a lot attribute the success you had last year to two things, obviously, the genesis, which we re standing in front of, and marketing moves, the assurance program was saying, let me take a look at hyundai for the first time. assurance gave us permission, gave american car buyers permission to consider the brand. we launched that last january, about a year ago. i think it really broke through the consciousness of a lot of american people and they realized, wow they asked the question, what is this brand with this emp thetic voice that will take care of me if i lose my job? which was a major concern for american car buyers. reporter: we stand in front of the genesis. there s been talk of spinning it off into a luxury brand. do you need a luxury brand at some point to continue growing in the u.s.? why can t you just stay hyundai? this strategy and what we ve done has worked out remarkably well for us. we launched this car as hyundai genesis, won car of the year in 2009, followed up with what we call the fraternal twin genesis coup and access behind it. we ll have three competent rear-wheel drive cars. and it s casting a halo across the whole hyundai brand and every hyundai product. we honestly haven t fully decided how we re going to handle the branding going forward. we will be launching a new hyundai. reporter: you say, stay humble, stay hungry. that s right. reporter: you ve got a taste of success in a down year of being up and you have buzz. you want to build off that but you ve got to be careful not to be overconfident. absolutely. and we do say, stay hungry, stay humble every day. those are our marching orders at hyund hyundai. we had success in 09. we have to look forward and continue to stretch for every advantage. this industry is the toughest industry on the planet, no doubt. we like to think of ours at hyundai as the hardest working car company on the planet and that will fuel us going forward. reporter: you succeeded with genesis and sonata, you had the redesign coming yeah. reporter: how much emphasis are you going to put on hybrids and electrics coming up in the next year? you ve clearly shown, if you ve got a well-styled, well-made internal combustion car, you can do just fine. one thing we re proud of, we re number one in fuel economy in the u.s. first brand to ever brake 30 miles per gallon, 30.1 according to the epa, number one manufacturer reporter: why bring out a hybrid? we think it s important to demonstrate you have that technology. this year we ll be launching our first hybrid, hybrid blue drive and feature the industry s first lithi lithium polymer battery. those will be third gen lithium polymer. reporter: you already surprised the industry last year. thanks, phil. reporter: sales up, kia, hyundai, subaru. speaking of car of the year, which genesis was last year, just heard ford won car and truck of the year. we ll be talking with ceo coming up later this morning. you don t want to miss what he has to say. back to you. phil, thank you very much. by the way, phil will be hosting a special from the detroit auto show tonight from 8:00 to 9:00 eastern time. he ll have the hottest models and latest unveils getting ready to hit a showroom near you. from the motor city to the nut meg state, chris dodd announcing his retirement last week. now he s talking to us from financial reform to bank bonus ba backlash. coming up next. as we head into break, check out the price of crude. what are you doing.? 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down a little? down. it s that time again. it says here when earnings central comes alive. really next week. but alocoa about to you re trying to push that back. alocoa about to kick off the flood of quarterly results. and senator chris dodd anoinsing his retirement. he s talking to us today. financial and health care reform on top of his agenda. there s things he wants to get done before he leaves. that interview in the next half hour of squawk box. ask me. even if you think your mattress is just fine. ask me what it s like to get your best night s sleep every night. why not talk to someone who s sleeping on the most highly recommended bed in america. it s not a sealy. or a simmons. or a serta. ask me about my tempur-pedic. ask me how fast i fall asleep. ask me about staying asleep. these are actual tempur-pedic owners! ask someone you know -check out twitter. try your friends on facebook. you ll hear it all.un-edited. ask me how it feels after 10 years. ask me if it s a good value. just ask me. there are 4 million tempur-pedic owners! and they re more satisfied than owners of any traditional mattress brand. ask me why i feel better every morning. ask me why someone who s never had an ache or a pain is in love with this bed. start asking real owners. ask me how we took the first step. take the first step right now! call or click today for your free information kit with dvd. call the number on your screen or visit tempurpedic.com. tempur-pedic. the most highly recommended bed in america. welcome back to squawk box here on cnbc, first in business worldwide. we re in our sixth half hour, becky, i think. we are. one to go. been wonderful today, though, with judd gregg. but here is the squawk rundown. earnings central about to open up for business. we ll set up the quarter with some forecasts for what to expect, and maybe even for how to view the outlook these companies will be trying to put together, which is important, since it s 2010 now. or is it 2010? i keep messing that up. we ll talk to senator dodd about financial reform and the right candidate to replace him on the senate floor. and a final roll call with our guest host senator judd gregg. i don t know what that was but started to hear it was the squawk music. it was? or the cnbc. futures at this hour are indicated up again after a great week, great week out of the gate for the first week of january, which sometimes can portend what the month looks like. let s check out some of this morning s top futures. oj sales are soaring. forecasters are warning farmers they could see the coldest temperatures on record in coming days. what do they go back, 160 years? what do you keep waving me off on? you talk about orange juice futures and now no, on record. i m not talking about climate change. but on record, what s 150 years? that s iguanas are falling out of trees. because it s so cold. and thousands of fish dying. because it s so cold. the citrus industry has been worried about possible damage to the state s orange crop. think if there wasn t a lot of new co2 up there? do you know how cold it would be? you have to grow oranges, i suppose in brazil or something. think if there was no global warming where we d be right now. oil prices bounding above $83 a barrel. among the cal list, weak dollar data shows china s crude oil imports surged last month. citigroup announcing terry dial will step down as consumer banking of north america. the company citing personal reasons. dial joined the company in march of 2008. know anything about terri dial? she was heralded as a big hire when she came in to take this over. so there are people watching this. now it s time for a look at the etf industry. bob pasani joins from boca raton, florida. good morning. good morning, becky. it is 32 degrees in boca raton. you re true, joe, the iguanas are falling out of the tree. the woman who delivered my coffee this morning delivered it to my door at the hotel wearing a ski parka. a ski parka in boca raton! that s where we are right now. how cold is it? i see your breath. there was supposed to be a joke there, how cold is it? i was expecting i see your breath. we re waiting you can. look, you can see my breath. we re waiting for the locusts to desce deskend on us. we have 800 financial professionals, trying to get a piece of this etf pie because it s growing. the assets up over $800 billion. challenging the mutual fund industry even though it s a fraction of the business. schwab got in, pimco, blackrock bought in in a very big way. 2010 goldman sachs will be getting in, probably putnam, maybe fidelity. that s the big talk. what s going on, the big discussion is not about bond etfs or stock etfs. the big growth area is currency etfs. they ve had explosive growths in the last few months and commodity etfs. the big concern, the big worry is on the education front. there s huge amounts of money sitting in the bond etfs. everybody thinks interest rates are going up and everybody s worried about the value of these bond etfs possibly dropping. you ll hear a lot about education outreach, convincing people to diversify their assets a little more than we ve been seeing this year. we re the exclusive provider for television coverage for this conference. we ll have all the big names here. blackrock, state street, pro shares, power shares here, all throughout the next two days. if i can get everybody to just come outside and talk to me. back to you. bob, your hair looks really good. it never looks like that on the big board. judd gregg said it s frozen. what really is going on? you throw just a dab of brill cream, and it s frozen paste. man, oh, man i m not even going there. i thought you were going to end with greed is good, greed is right. i thought you were going to do a gordon gekko spat. the geckos are having a tough time down here. thanks, robert. you have waited three long months and it is finally here. earning season kicks off with alocoa reporting after the bell. let s take a look at what we can expect. joining us is the global head of research for thompson reuters. ashanwi, we re looking for good growth. the financials are in 550 a share in the fourth quarter of last year. we re looking for i i m sorry, the s&p earned roughly 550 a share. we re looking for the s&p to earn about $16 a share, equates to about 184% growth. yes, it s due to favorable comparisons year owe year. if you exclude financials we re looking at 8 #% growth, which is pretty decent. quality is pretty decent as well. if you look at the earnings quality, we re looking for 7% top line growth for the fourth quarter, our first top line growth since the first quarter of 2007. we re not necessarily talking about low bars that the analysts are setting at this point, are they? are they back to looking for serious i think 2010 is where we re really you know, the bar has been really raised. if you look at it by the fourth quarter of 2010, we re going to start reaching earnings peaks that we reached in the second quarter of 2007. we re looking at almost, you know, four quarters where we ll see an earnings peak. that s where the bar s been raised and we ll get back to 2007 levels. i think right now the bar is still low but 2010 is really when the bar starts going up. when we start hearing the outlooks for these companies for the full year, that s where you could see some real surprises or some shocks. people worried that, hey, wait a second, you re not going to meet the numbers we thought you were back to? absolutely. that s going to be the key. what the company the company language is going to be key for 2010. as is projections have been getting higher and higher the revenue projections have gone from 6, 7-odd percent. this earnings season the bar will be higher but will be real high ahead of futures going forward. the company language is important. if the company language disappoints, we could be in for a shock in the equity markets. you mention that when you strip out the financials, you ve got about 8% growth. what are the sectors that lead the way after growth? it s materials. materials is benefits from commodity prices really year over year. consumer discretionary, a sector we haven t talked about in a long time. but that sector was under pressure in the fourth quarter of last year. those are the two sectors that are going to lead the way excluding financials. because consumers may be starting to come back a little? i think so. i think, you know, autos have stabilized a bit. things that really faced a tremendous headwinds in the fourth quarter of last year. you know, one thing to keep in mind, you ll see outrageous year over year gains for companies. when jpmorgan announces their results on friday, they re going to have like a 700% increase in earnings. now, everything everything s going to be taken into with a grain of salt, but i think the key to really focus on is what is going to go forward. i think the wild card for this earning season is the financials. i think if the financials can really get out of the gate, get us going, get everybody really psyched about earnings, i think we could have a good earning season from an equity market performance. what about alocoa? we get them after the bell tonight. i think alocoa is very important because alocoa sets demand for, you know, demand like aluminum demand, whether it s it s very corporate-driven in terms of building. also global. you could see how things are reacting globally. i think alocoa is a very important report. it will probably beat estimates. i don t think there s any question about that. i think that would be an interesting report. the company language will be very important as well. thanks for coming? any time. thank you. coming up next, senator chris dodd, chairman of the banking committee, he s not going to run again after 35 years on the senate floor. he ll be our special guest as we discuss a lot of things, futures of financials and health care reform. stick around. well, look who s here. it s ellen. hey, mayor white. how you doing? great. come on in. would you like to see our new police department? yeah, all right. this way. and here it is. completely networked. so, anything happening, suz? she s all good. oh, my gosh. is that my car? 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[ male announcer ] introducing the all-new lexus gx. it has the agility to avoid the unexpected. .the power to take on any mission, and the space to accommodate precious cargo, because every great action hero needs a vehicle. welcome back to squawk box, everybody. those futures are are above fair value. up by better than 35 points above fair value for the dow future. in the headlines this morning, ecb president says that governments around the world must address excessive budget deficits in order to reassure investors. he wassing in switzerland at a meeting of investment banksers. our next guest announced his retirement last week after 35 years of service. joining us in a special interview from his hometown, democratic senator chris dodd. it s great to see you, senator. good morning, how are you? judd gregg is here, too. thank you, sir, for your service over the years. what are your thought this morning? you ve had a couple days since you made the announcement. what was the thought process and how are you feeling now? i feel very good about it. took my daughter to see disney on ice, went sledding on saturday, judd will appreciate this, and sort of a liberating feeling in a sense after almost 40 years in public life. and have enjoyed every minute of it. i still like it. i love the senate immensely. i like to work with people like judd gregg, even though we disagree from time to time. a remarkable senator. we spent a lot of time together over the emergency stabilization bill, health care, and now financial reform. i ll miss people i ve enjoyed serving with but in our democracy, it s always time to move on and step aside, let other people come in. no one s said anyone s irreplaceable and those who think so are dangerous. i m grateful to the people of connecticut. going to look forward to a new chapter in life. i don t. what that will be yet but i have a long year to determine that. i ve got a busy day today. i m visiting several hospitals in connecticut to talk to them about health care. life moves on. look forward to a very productive year. we talked about your young daughters. you know, i m i m impressed. i m an old father. when you say you went sledding, did you take her sledding or did you go sledding? i went sledding. it s easy enough to get down on the sled. the problem is getting up off the sled. if you could paint the perfect picture for the next year, what would you get done? well, hopefully we ll get the health care bill done in the next few weeks. judd and i know they ve been working very intensely owe the last several months on a financial reform package. i think we re very close to what i would call a consensus bill. quite a different approach than the health care, that is where we re actually working together to come up with some common ideas. then i think we have to focus our attention on the deficit issue, the governance questions. and i know the president s thinking in those terms. i can t tell you any specific ideas but clearly we cannot continue the road we re on. that has to be a major, major effort as soon as we get these other issues out. way. i m i m hopeful we ll get them out of the way fairly quickly one way or another. chris, you ll be missed. you played a major role in all these issues, especially the t.a.r.p. issue, of course, and the health care that you got through the committee. didn t happen to vote with you, but you got through the committee. and, obviously, this financial reform issue, which i think you ve been incredibly good leadership you ve shown incredibly good leadership on. on top of all that, we ll miss your sense of humor. you ve got it in perspective and it s been a pleasure to serve with you, to say the least. likewise. i ve enjoyed immensely my work with you. when history gets written about last year and the t.a.r.p. issue and the emergency economic stabilization bill, there was a clear example where literally a handful of people, you among them, obviously, that worked together to try to come up with a package that made sense. while it certainly wasn t appreciated at the moment, still there are those that criticize it it, i share the view with you that if-h we not acted, paulson and bernanke not acted in the way they did, we would be in a much more dire situation in the country. we have a lot of work to do, obviously. i think you re absolutely right. it s like driving over a bridge that gets fixed before you get there. you never realize it gets fixed. senator, you mentioned the health care bill that s making its way towards the president s desk. do you believe that that bill will make its way back to the senate before president obama has to sign off on it? well, i think so. again, as judd knows, this is a precarious road. look, this is far from a perfect piece of legislation. first of alling taking on the issue, as judd knows, from the nixon administration, clinton administration, going back to the truman administration, congress and administrations have realized the present situation could not persist. obviously, it needed reform and change. and this bill has its difficulties. but if essence moving forward on the question of how you include more people, try to reduce those costs, are going to be critical. the idea we re consuming as much of our gross domestic product, and those who are knowledgeable claim in the absence of some reform, that could raise to 30, 35% of gdp. unacceptable. so my hope is we ll get this done. i ll be the first to admit and tell you this is going to require a lot more work for future congressing and future administrations to get this right. but in the absence of getting it forward, moving it forward, so i m hopeful that will happen. it s hanging by a thread, obviously. one or two votes could determine the outcome of this vote. might be a good idea, wouldn t it, to step back and start all over again so we do get it right? i think i ve heard that argument before, judd. i appreciate it. senator, you mentioned this is hanging on by a thread. maybe one or two votes. who among your senators who voted for this in the past do you think might step away, if it came back to the senate again? well, i think you d have to have been living on the moon not to follow what s happened over the last month or so in terms of those who are hanging in the balance. obviously, my good friend and colleague from nebraska has concerns about the bill. my colleague here in connecticut has had some as well, joe lieberman, among others, blanche lincoln, they re watching it carefully. i admire their judgments and opinions. we disagree on some issues but when you re dealing with a situation as complicated as this with many moving parts, as included in health care, there are any number of people that have concerns. i know a lot of people are the more progressive side are deeply disappointed we don t have a public option on this bill moving forward. everyone feels to some degree, who have been for this, that they would have liked something different. that s not uncommon when you re considering an issue of this magnitude, there would be as many different popinions about what the final bill ought to look like. the president s deeply involved. i ve spent about 2, 2 1/2 hours with him last thursday at the white house, along with max baucus, talking about the bill and the differences between the house and the senate version. so a lot of work needs to be done, but i can tell you the staffs are working literally overtime all weekend to try to resolve those differences. my hope is that we can get this done. senator, in your view, and i know, you know senator kennedy wanted it for a long time, but is it has it been worth it, do you think, with all even the president s approval ratings have probably suffered for maybe not focusing his attention somewhere else. has it been worth it, do you think, if november doesn t turn out in the democrats favor? i think it well, hopefully november will turn out, but, you know, pat moynahan used to say that administrations, new administrations, get somewhere between 18 months and 24 months to actually do anything of any magnitude. and if you don t take advantage of that window, then it passes by very quickly and you become it s a re-election effort. if you re re-elected it s a lame duck presidency and very difficult to take on major questions and issues. and while we had no choice but to deal with the financial reforms because of the condition we ve been in, this is an issue that you could easily kick down the road for someone else to worry about. but i think all of us recognize, even those who fundamentally disagree with this bill, that we clearly need to reform the system. otherwise it s going to strangle our economy. so the fact that this president decided he would try and do this and take this on, i admire. i m so tired of small bore politics where we deal on the fringes of issues rather than the central questions that we need to grapple with, such as this. judd gregg has worked tirelessly for years on the whole issue of managing our deficits, overall economy. he was right, we need to spend more time. that s a major issue that we need to deal with, how we deal with intilgtmentes in the future. that s a big question. we need to have administrations and congress that are willing to take the risk. if this is about surviving politically, then we re missing the whole purpose of what we re supposed to be doing in this remarkable democracy we live in. so i admire the president for l. i admire the president for taking it on. chris, moving off health care because obviously we disagree fundamentally as to where we re going but you have been taking the lead here and the chairman of the committee on this financial reform which i suspect is very interesting to listeners of this program. why don t you give us your timetable on where you see us going on in this in the senate and the differences with the house as you see them coming down? it s a great question. i ve tried to keep the ball moving forward. we ve set some deadlines but they re fluid because i am more interested in the product we produce than meeting an arbitrary timeline. obviously at some point you have to move forward even if there are some disagreements. we re getting very close in my view on big questions, fundamental questions, such as too big to fail. that this ought to become, i think in view of historic terms, never again ought we to be in a situation where any private institution in this country gets an implicit guarantee that if things go south the federal government will step up with taxpayer money to bail them out. we re looking at a a bankruptcy concept of receivership. we ll make resolution a very painful process if we go that route. that s going to be a major step forward in this bill. dealing with the issue of derivatives and the like so we need to get a far better handle on those vehicles, those instruments, as creative and imaginative as they are. we need to have a lot more clarity, a lot more transparency about them so we don t have the run the risk of the the systemic risk. that is where these entities or product lines end up causing our entire economy to be in trouble. looking at the question obviously of trying to consolidate the number of regulators out there. we had a hearing one time you gentlemen remember about eight months ago where i invited all of the various bank regulators to the senate banking there were like 11 agencies represented at the table. the photograph bespoke of the problem. this process has grown out of control. so we need to give it far more we need to consolidate that to the extent we can. rating agencies, governance questions are all part of this effort. so that s where we re headed. my hope is that sometime around the end of this month, other staffs are working as we are speaking, judd, and trying to resolve these issues among ourselves, my hope would be toward the end of the month if possible we d mark the bill up in committee and then go forward. now, there are differences. we also take a very strong look at the federal reserve system to try to get them back to their core functions. there is a very legitimate debate about supervisory functions within the fed and i respect ben bernanke immensely. we ve got to reconfirm or confirm his nomination to be succeed himself as the chairman of the federal reserve bank, but in the meantime i think there is a legitimate debate about that. i happen to subscribe to the motion that the fed get back to core functions, the monetary responsibilities, payment systems, and issues like consumer affairs and protection ought to be left in my view to a more independent solution. one of the ideas we have is of course the strong, independent consumer protection function. how that s structured is obviously the subject of significant debate within our committee but no debate about whether or not there ought to be someplace where consumers, that is the purchasers of stocks, insurance policies, mortgages ought to have some protection in the process. so we re working on that as well. i think a point which listeners might be interested in, chris, is what happens to bernanke s position if he s not confirmed by the end of january? well, that s true. this is by the end of january if we don t confirm him then he could not serve as chairman. he can serve as a member of the board but you then have to have the vice chairman become the chairman and i think the signals at a time as fragile as this could be very harmful. it s very important that there be a sense of consistency and while there are many legitimate concerns people have raised about the chairman s tenure, i think you said it very well, judd, in our confirmation vote the other day that if you re going out to shop for a chairman of the federal reserve, ben bernanke would be the leading candidate. he s done a very good job in my view in the last several years and managing one of the most difficult times in our nation s history economically. i think a very good listener, been very available, he s come before our committee on countless occasions, had numerous private conversations i know with members about his ideas and thoughts. i think it would be a travesty for us to not get this job done or not to confirm him for this job. i think it would be very harmful to our economy. senator, bonus time again. can t open a paper or look at the front page of a paper without knowing it. are the optics the problem here or judd says if you re shareholder, sell the stock if you don t like what the ceos are making or the partners are making. what s the answer? well, my view is sort of a say on pay approach. i get uneasy about congress trying to set compensation. i think that s very dangerous in my view. i think under certain circumstances where taxpayer money is involved as it has been we have a legitimate right to talk about compensation. but in the absence of that, i just get very uneasy about the idea that somehow we re going to tell some private entity what their compensation ought to be. the owners of these public companies ought to be the ones that have that right and i think there is a legitimate point in giving them more of a say in all of that but i would be very reluctant to write into legislation what compensation tables ought to look like. this chair that judd is sitting in is always open for you, too. you know, you can do a lot more on the airwaves or cable in this case than maybe even, or as much. so consider that as some point if you would, senator. i wouldn t disagree. you ve got a good host this morning in judd gregg. some good irish humor with chris. there we go. thank you. need a little humor in the midst of all this. senator dodd, thank you. thank you all very much. all right. up next we have a final roll call with our guest host senator judd gregg. squawk will be right back. hoo really save you 15% or more on car insurance? 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