Transcripts For CNBC Squawk Box 20100126 : vimarsana.com

good morning. a parade of earnings, applel and texas instruments, two huge tech stories after the bell. today s views include travelers, verizon, dupont and johnson & johnson. fed fight, the central bank convening for a two-day mean. meantime, ben bernanke is still waiting on word about his confirmation. squawk box begins right now. good morning. welcome to squawk box on cnbc. i m joe kernen. becky and carl are off for the day. i just talked to becky. she s in davos in switzerland. carl is sotu ing. for those of you that don t know, that s state of the unioning. also, pretty in pink today, gary ko minski is joining us today. steve, when you become an actual not someone commenting on markets, but involved in the markets, you get these things things. i noticed you don t have them. no, i don t. anyway, we ll be watching shares of apple today, the tech giant that in the past i have called a gadgetmaker. i was so stupid and so uninformed. unbelievab unbelievable. did you see the rise in earnings? 50% all i had to do was go to best buy and the place is empty except for the place where they re buying the apples. steve jobs, we were having a joke yesterday, the guy who saved christmas or stole christmas. from somebody else. from efbls, yeah. do you have a notebook? we have only maces now. everybody has a ipod. there s no training i mean, i can t work it, but my 7-year-old immediately knew how to do everything on this notebook. now this tablet is coming out. i was talking to david garrity in makeup. we all have makeup. anyway, but i digress. it was the most profitable quarter ever for apple pb but let s check out dupont, which won t be easy to do since it s hitting right now. let s try and do it. steve, are you up to speed on how to do earnings quickly? no, i m not. 48 cents a share on a 10% rise in sales and that is 7 cents ahead of expectations. fiscal 2010 at 215 to 245, which brackets the 226 expectations. as i said, that s not bad. sales rising 10% at 6.4 billion and the estimate was for 6 .16. last year wasn t great, so it s no more not same-store sales, but the comps aren t going to be as scary as they were a year ago for something like dupont. here, the first number i gave you of 48 includes a couple of items. so 3 cents ahead of expectations for dupont. let me just check the bid and the ask. we ve got 32.77 to 33.64, a big, widespread after a 32.82 close. we ll talk more about that. volume up in all regions, up 10% everywhere, asian pacific sales, everything. let s get back to apple. tech giant, this was the most profitable quarter ever. investors, though, had a hard time analyzing the results because apple changed how it accounts for revenue. the company reported better than expected mac sales. i think i was in there. we ll delve deeper into the apple story with david garrity in just a couple of minutes. but if you had told me that apple would have a market cap of $184 billion when it had a market cap a couple of years ago of $8 billion i mean, after jobs left, do you remember the clowns they had running? skully in there. gill amelia. it was a point where the stock was basically trading at cash. didn t microsoft come in there and give them a $2 billion loan to save the company? they did. when jobs came back and i don t remember spind ler. yeah. we re probably talking early 90s at that point. and the guy from pepsi, which was bizarre. skully, right. and this is unbelievably great news for the company, but it s not unexpected. this was spec d by the marketplace for the last six weeks. it will still be up, though, 2.06 to 2.75, which gives it almost a $1 billion let me see. $184 billion. i m just going to check general electric. $10 billion more than ge. what about the entire automobile industry? oh, if you add in the debt. that market cap is one weekend store cap of all the sales combined. texas instruments reports better than expected earnings. shares sold off a bit after the bell. analysts say that they re worried about demand for chips peaking too soon. then there are others citing supply constraints at t.i. steve, this is political stuff coming up. will you read this? i m going to read this. president obama is seeking a three-year freeze on domestic spending in his budget coming out in a few weeks. it would save $215 billion by 2020. president obama will then unveil business budget. in an interview yesterday, president obama said bernanke has its strongest support and is doing a good job. what we need is somebody at the federal reserve who can make sure that the progress that we ve made in stabilizing the economy continues. and i think bernanke is the best person for that job. senate majority leader harry reid expects a confirmation vote by the end of the week. our account is 3316, yea so far with 40 declared right now, joe. never thought it would be anything more than 20 at the moment. opposed? yeah. at current rates, he will get 32 nay votes here if everybody were to break who have declared the way the existing declared have broken. if the rest of the house went as massachusetts with it was a senate race there, but if the metrics held up with independents, he would have 79 house seats. yep. and you re starting at 606 with the benefit bank some of. i was taking from you socialist to democrat. gary, you re with me. where is gary, by the way? he s baseman. all business men are republicans, is that what you re trying to say? no, ynk i said that. but you know what? this is a big tin. everybody is in. let s check on the markets this morning. the futures are indicated down after what i d have to say was a disappointing it was up yesterday, but, gary, not that i was somewhat surprised when i heard a number of people saying, you know, yesterday was a nice comeback monday and a nice rally. i thought the action yesterday was terrible. you know, i ve been short. i was short all last week. i continue to be short. and yesterday s action told me we re running out of buyers. that s the same feeling we had in july before we got another 25 percentage points, gary. yeah. you ve never embraced this move that much, up till july, maybe. no, no, i recognized incorrectly late in the fall that the meltup would continue and the meltup did continue because all these closet index and those who had performed through the summer. and i think that is what you have now. but that has been what has happen on things since early january. don t you think there s something to the notion that the scott brown situation removes the possibility of the government being so free and easy with the dollars wsh but that may have been kourntd acting what we know were going to be tax increases and more regulation. so at least you had the easy money, what would be on the plus side. all these other things are looming. bush tax cuts are going away, dividends, taxes all over the place plus regulation. that s going to scare some people away at some point. absolutely. and historically, what i heard last tuesday was, you know, gridlock is good, gridlock is good for the markets. and that s true. historically, it is. but right now, what s happening? this economy is not going to be able to degree without the government. so gridlock may not be good this time. it s probably all good unless it s a sugar high, unless they took the place of the consumer that you re looking at. they brought profits. they brought command forward from the future. the question is how you ultimately pay it off. they ve got this new bipartisan commission out there now, which is the way they re going to solve the deficit problem along with a three-year freeze. right. let s get to the overseas markets. christine tan is standing by in singapore, and first, though, to carolina in london. good morning, guys. things are not looking great in the market here. all of the european markets are trading on the negative side at the moment. look at this. they are extending declines for a fifth day after chooinl china implemented the clamp down with lending on banks and commodities. the major fallers here in europe. now, the big fallers here in europe are the uk economies come out of its biggest recession in 2009. so only a far weaker growth rate than expected. the 0.18% is the good news and the economy still remains fragile. the end of the recession news may boost consumer confidence just like it happened in france. we learned today thso at least some good news coming out of europe. and if you look at the corporate side, siemens are trading on the top of the zxetra dax at the moment. let s take a look at asia. good evening to you, christine. good evening, carolina. asian markets are falling sharply today. sentiment was following by news that china s central bank ordered reserve ratios higher. that coupled where a budget freeze in the u.s. lowered closing at leave the one month. that coupled with new supplies. hong kong fall 2.4%, as well. all that risk aversion sending the japanese yen higher, hurting the exporters in japan. the nikkei falling 1.8%, a five-week closing low after the markets closed to s&p cutting its sovereign debt rating from japan from negative to stable. elsewhere, taiwan was the big eft loser today, plunging 3.5%. now authorities want to high sigh south korea. so not a pretty picture here in asia, joe. back to you. christine, thank you. back to apple s store for this morning. we can talk specifics, david, or we can talk what someone said at one point that there is no company or ceo better than actually looking out there at the kind of demand he can create and do something for a company. they did it with the ipod. you ve got a greater and greater base of content. the people are using different device toes access increasingly through the internet. we ve seen tablet pcs come and go in the crash. they ve all crashed and burned. the reason why this one is likely to succeed is because the intrent has advanced to the point where people can download rich media files fairly quickly and where apple has gone out and will put in place the relationships and make sure that people take the form factor and run with it. all of our post protects have this elegant design. he doesn t light buttons and tough. so there are screens. no mouse. it s going to do more than a pc can do but be much more usable and elegant, right? certainly. and people were expecting this would be apple s answer to the net book. this is obviously more fully featured and obviously, as we said earlier, it delves more into the area of media. if there s somebody out there, who should be really threatened is the is the net dd book. any diagrams that used to be in books, there will be multi media available on anything you re doing, right? and it will be interactive, as well. so no drawings or sketches like in the books of old? people have doubts about where is the next buyer for apple stock going to be? to the extent that the company s management has continued to expand their addressable end markets, you support the valuation for a company. going to an economy where people have concerns as to the pace of economic growth over the course of 2010, investors will grave tate towards those names that offer greth admittedly at a reasonable price. do you want to pay one time, one and a half times? right now, if you paid 1 1/2 times with apple s growth, you d say a $280 number would be a fair value. obviously, no one wants to run out in front of a bus right now. nobody wants to run out in front of the state of the union. nobody wants to run out on china stopping bank lending. but there are values out there to emerge and appearing has to be in people s portfolio. you know what s amazing? the difference between their stuff and other people s stuff is their stuff works. i ve got a windows net vista computer at home, but apple s stuff works. windows 7 obviously presents the different user experience. and one could say that yes, apple s products to work. to the extent you have outsource of manufacturing, over time they break down. but silicone valley doesn t mind the fact that your computer breaks down. but the other thing that s important to note here is that apple has a very quick cadence in terms of new product introductions. so there s always demand out there being created for you to trade up before these things break down. we could talk about that. but let s look at a item of issues that may come up that were at this post yol place? will this take away from the idea that you had to have a mac and an itouch? will it hurt their own sales? there is the point of that happening. probably apple will change the price points on the other parts of their product line to make sure that the risk of that is somewhat addressed. at the same time, people are expecting we ll have 4 million of units in tablet sales. you re in a situation right now where the most recent quarter, you came out with almost 3 1/2 million maces. so booernt at a point where we can see this is undermined. you re not going to find people using spreadsheets. david, how much cash does apple have? probably more cash than the u.s. government 3/. that is not hard. apple wants to make sure that they have that cash on their balance sheet in order to make sure apple is not going away. apple wants to get into the corporate market right now. but guys like gary ael going to start a resolve here? gary and i are not going to give us the stocks. they don t necessarily have to. it earned 250. what is it going to earn for next year, do you think? with the new accounting standards going into effect, when they recognize the full benefit of an iphone sales, earning res probably somewhere north of $16. it s trading at 200 and growing at 50%. well, i wouldn t say 50% continues. you have transitional benefits. i know. but nobody grows at 50%. you just wonder, in the past, story stocks that weren t moves because of the underlying earnings in rev knew growth were higher. this thing, it s almost like you can t hold it down on what it back up the numbers with. i d talk about expanding the addressable end market. expand the opportunity for the company and the stock will trade into that. obviously, people will sit down and do their own speculation. let the analysts know wall street starts working with their spreadsheets and start seeing what numbers analysts come up with. david, appreciate it. coming up, ford s late he explorations, a look at the jobs. tdd# 1-800-345-2550 to help with my investments. tdd# 1-800-345-2550 so where s that help when i need it? tdd# 1-800-345-2550 if i could change one thing. tdd# 1-800-345-2550 we d all get a ton of great advice tdd# 1-800-345-2550 just for being a client. tdd# 1-800-345-2550 i mean, shouldn t i be able to talk about my money tdd# 1-800-345-2550 without it costing me a fortune? tdd# 1-800-345-2550 if i had my way, investment firms would be tdd# 1-800-345-2550 falling all over themselves to help me with my investments. tdd# 1-800-345-2550 (announcer) at schwab investors rule. tdd# 1-800-345-2550 are you ready to rule? welcome back. ford plan toes announce it s going to build the next version of the explorer suv at its chicago assembly plant. the chicago plant was prommed a new vehicle program last year when the uaw approved a cost cutting agreement. the fda meanwhile the green lighting novo nordisk s diabetes drug victoza. there s now a 5.1 billion market for diabetes drugs in the united states. let s turn to our task force to analyze the markets. gary cominutesky is our guest host. richard, our guest host, gary, says there s no more money to get into stocks at all. is that right? i don t think so. but earnings are going to be pretty good this year. $7 is the consensus. we think it could be closer to 80. after this market pulls back and you get some of the risk adjustment and money away from the spec laters, don t forget, we ve had crowded overseas trades. once that works its way out, we think you can tell have 10% upside which could be like a 15 multiple on 80 bucks in earnings. but everybody is not fully invested right here? i think there is still plenty of cash. we took money off the table in emerging markets in the last couple of weeks and i think there s decent levels around. what are you going to do in fixed income? you can t high in fixed income. the 1046 year bond was down 10% last year. rates are going to go back up and money markets are playing nothing. people have to be invested in the equity market, but it will be bumpy in the short run. gary, you ve accounted for every dollar? look, the cash on the sidelines has been a major thesis of managers now going back to october. the cash on the sidelines is waiting for more yields or that cash is going to stay there. you had a 10-year run where equities get you no returns. it s very hard for people to reae just risk. but the idea of putting money into stocks, that s been thrown out. that melt up is now reversing. you see the action now. yes, stocks may do better, but i look at the next five years. stocks aren t going to go anywhere. but what is the environment like with this economy, in your opinion? we re looking at something to be kind of a lazy u or a mixed crawling out of what was the worst recession since world war ii. the signs are still positive, but mixed, of course. and so we are expecting unemployment to rise. do you have a positive payroll number this year inspect. yeah, we re still expecting a slight downward number. but we re saying, say, by the second half of this year, we re going to look at positive numbers, maybe even 100,000 at some point. are you factoring in the punch bowl being taken away from the fed or fiscal tightening from washington? we have that in line. especially the fl fiscal pullback. we re expecting that more in 2011. we re expecting the bus excuse me, the bush tax credits to be pulled aside and we certainly are already seeing some of the measures that were put in place for the stimulus package starting to unwind or just not be extended. richard, good morning. you mentioned that there were a number of overcrowded areas. where else do you see that action impacting short-term results here in terms of stocks? well, i think that the commodity trade, highly correlated to emerging markets is still very crowded. and if you get the dollar strengthening against the euro, it s about 1.40 right now. you start to get a breakdown there, you ll see money coming out of ifa, which is a fairly heavy allocation in both endowmentes and let net worth clients because they ve made so much money in the past. in europe right now, we call tilt double eyed p.i.g.s, portugal, ireland, spain, huge issues. richard, what sectors are not crowded right now? we think that the obama rhetoric around health care gives us spr peace and opportunity there and we like energy. i think with energy pulling back here, energy could be pulling back. thanks to richard and beth ann. we ll get some more thoughts from you this morning, gary kaminsky. and then the picture from the futures pits in chicago with kevin ferry. squawk box is coming right back. they ve served for decades as a golden, tasty sidekick. to the all-american meal. french fries, and our national passion for them, are legendary. classic. iconic. but times change and people want better foods. so cargill helped a restaurant chain create. a zero trans fat cooking oil for their french fries. canola plants. and innovative processing techniques. while preserving their famous taste. because no one wants to give up a classic. this is how cargill works with customers. 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. good morning. welcome back to squawk box here on cnbc. i m joe kernen along with steve liesman and our guest host, gary kaminsky. becky and carl are off today. we have your top headlines this morning and then john harwood is back with ben bernanke s latest confirmation votes. later, corning s cfo joins us with an economic outlook from the world s biggest maker of lcd glad glass for flat screen tvs. he s been on for years and years and years. read this. i have to read it? you re up. a bailout watchdog launching two probes into the government s rescues of aig. neil barofsky arguing that fed withheld documents he requested when auditing the back door bailout with banks. barofsky will testify before the house oversight reform. barofsky plan toes blast treasury for misleading public statements to outline new investigations into the federal reserve and the new york fed. chinese state media stepping up a war of words with the u.s. today. a top newspaper there is claiming a u.s. conspiracy for politicizing the google affair. the chinese paper warns the internet row is hurting bilateral relations. you re using google over there, you hit up tee an ma square and the computer just freezes up. it looks at you. there s nothing there. it s a myth. there used to be a square somewhere near there. and google and yahoo! how can you go along with that? it s a tough situation. but what about the business decision of it? should kogoogle walk away from revenues? if the government is hacking into their software, yeah. i agree. but what happens to the stock? didn t the stock fall off a bit? a little bit, but it fell off more because of the revenue hack or whatever it you know, what is that, that traffic acquisition cost or whatever it is. i think the fact that the insiders had decided to reduce their holdings at this point had more of an impact than deciding be in china or not be in china for google. we have a busy week in washington. john has comments, too. president obama is going to deliver a state of the union address tomorrow night. congressional committee is ready to hear testimony from tim geithner and ben bernanke waiting to be reconfirmed. john, you ll be there with carl. carl had a couple of days off, but then he ll be down there with you for the state of the union. where is the bernanke camp? don t you think 70, at worse it would be 70 pluses? i don t know. that sounds a little high to me. really? but i think in the low 60s. by the way, joe, do you know what happens if you type joe kernen into google when you re in china? it explodes. you re being facetious, and i appreciate that, but go ahead and go to baidu.com and press it in because there are thousands, thousands. over own there, it says real morning joe in haiku. anyway, john, you figure that eventually, you have to admit this is political theater when you ve got i don t want to say wackos on both sides of the right and left because i don t want any of our guests to if you did, i wouldn t argue with you. i don t want any of our guests cancel today. but you have the real outliars on both sides of the political aisle united in their opposition to ben bernanke which almost is a compliment at some point, isn t it? i sort of feel that way. and look, i think ben bernanke and steve liesman is a much greater expert on this than i am, but i think ben bernanke gets a lot of credit for people who understand markets and business and the way government works for innovation and, really, rescuing a situation that threatened to get out of control. and he had he worked with hank paulson, we worked with tim geithner. we heard from yesterday, he gave credit across the aisle. i think that s why he s going to make it. but that doesn t mean in a stressful time like this when a lot of people are hahniced, that they re going to use him as a bunching bag. i read in the journal i think yesterday that it was interesting that he s already lost some of his independence because when he comes under criticism for being side by side with green span and keeping rates too low, he s already said, no, that wasn t it. it s these bad bankers. he s succumbed to the easy populist explanation of what happened so he s less independent than he was from all this criticism and that s why we need somebody else in there. well, i would be surprised if that is the case. i don t see why a lot of people talk about him being wounded by this. a fed chairman has a constituency of one, in the president. he has his term. he doesn t center to follow tracking polls. he s not a politician. he has surely been sensitized to the concerns of americans, but i don t think he s like a member of congress who every day is worrying about running for re-election or what can i do to get more popular? he strikes me as a guy who has got a decent compass internally, and so i wouldn t personally worry about that. steve, i don t know, what do you think? you know, i have concerns, john, about the effect of all of this on the federal reserve and the whole political aspect. i m looking for a thing where rush ard wrote that this is going to medicine with the fed s independence and inflation. but john, what i wanted to ask you was this whole iag scandal. this is like a watergate style cover-up. you have barofsky, glowing, pro filed in the new york times this morning. how much damage is this story doing to geithner or bernanke? i think it s doing some damage and i think it s doing damage to washington and the obama administration. aig has become a symbol for inside deals, for the kind of rescue that makes the public most angry because you ve got bonuses involved, you ve got the money paying off all their counterparties, a huge investment by the government. and the more stories you have coming out that suggest that i mean, everybody is consuming this out of context, right? so if the context was five alarm five, what do we do to put it out, let s act fast and worry about cleaning it up later, now, you know, we re long past that and people are dissecting each individual move. and what was your motivation in taking that step at that time? aim about 15 pages into this 22-page report that came out by darrel issa about this whole cover-up thing. but i didn t see any smoking gun in the e-mails. they investigated giving less than 100 cents on the dollar to the counterparties and it was not feasible given what they could do under the law. joe, i don t see it. and i want to keep an open mind here. but my thinking on this is that the worst part about this is they tried to keep the qcip numbers and the actual names from congress and went to extraordinary length to the fcc to get this national security cover in there to keep them from having to re-leigh lease it. steve, do you hear from washington that the politicians trying to oepdz oppose bernanke, if he goes in and it s done, do you think that they take this in terms of their even re-election campaigns? does this become the next thing that what did he do, how did he know how did they move their demagoging? they have to go from one populist the pivot. and the whole house is up in november. john has the vote on geithner. but this is a scandal. there s going to br hearing, more testimony. it s the populist demagoging. somebody has to pay. no. somebody has to provide the opportunity to demagog in a populist way for these guys. joe, i want to give you a sta.ic here. the people running for re-election, republicans, only 25% support bernanke. 75% oppose. democrats running for reelectric, where is that number there? they oppose, 43%. so that is where, whereas overall 85% of democrats are supportive for bernanke. if you re running for re-election, you re generally going to run against bernanke. hey, guys? yeah? you don t want to talk about this budget freeze obama is proposing? not that much. i was being slightly facetio facetious. it s a freeze of one-third of one-sixth of the budget. are you excited about that, john? well, you know, freeze is a good word, right? one of the things that s hard in washington is to communicate what you re doing. so you talk about health care, people here like a dollar figure and they hear a lot of people are going to get insured. you use the word freeze in the budgets, that if you can make it stick, that tells people, oh, wait a minute, they re disciplined, they re stopping. but you don t think, john, that obama has any chance of really turning around the perception that s out there in the public of a big spending democrat? well, you ve got to try and that s exactly what yeah, but overall in terms of the actual back xwa? i will say one thing, the republicans have been successful in hanging $700 billion bank bailout on obama, even though it wasn t his bailout. i think what s more interesting is who is going to win between rahm, the centrists and how do you see it, plufe? you re mispronouncing that on purpose, aren t you? yeah, absolutely. we have to know, is he going to move this way, this way or that way? i think you ll hear strings of both guys. the budget freeze is part of that and some of the between deficit reduction panel is part of that, but you re going to hear from populist fighting words. and we might be able to detect what they ve decided to do about health care, too. they haven t given up yet, joe. i know they vnts. we had kanjorski on yesterday. he said once they didn t go to conference, they lost him. you can only lose five guys. they don t have those five guys for the house, john. i m sorry. we ll see. can we do a half an hour with harwood? yeah.thanks, john. see you later. thank you. xlents, questions about anything you see here on squawk, e-mail us at squawk@cnbc.com. ah, auto! sir? finding everything okay? i work for a different insurance company. my auto policy s just getting a little too expensive. with progressive, you get the name your price option, so we build a policy to fit your budget. wow! the price gun. ah! wish we had this. we d just tell people what to pay. yeah, we re the only ones that do. i love your insurance! bill? tom? hey! it s an office party! the freedom to name your price. only from progressive. call or click today. welcome back to the futures pits now. kevin ferry is standing by at the cme. kevin, bass going on right now. good morning, steve. well, the dollar is much stronger this morning against most of the currencies. and a big story that i think is probably not getting enough coverage is the continuing fall in yields since the beginning of the year. yeah, i thought we were off to the races there, kevin. everybody was sure that here we go, up over 4%, 4.5%, no stopping up. 3.57% on the ten-year right now. every day this month and the short end leading the way. the 2-year note below 75. and the euro/dollar complex institute, 2011, steve, new contract highs, virtually every day. so with can he just conclude right here, kevin, that this shows that people who think they know what they re talking about when it comes to the currency or yields and the relationship have no idea what they re talking about? the dollar is up, yields are down, it s supposed to go the other way, right any. yeah. maybe not as critical as that. but there s a lot of different cross currents. over a short period of time, you can see that these investment themes start to get switched around. certainly the idea of inflationary themes, higher commodity produces and, that is getting turned around rapidly in january. kevin, you re a fed watcher. tell us this whole thing from bernanke. from a fixed income perspective, what does it say to you about the ability of the fore, its power, its authority to control inflation? here are my thoughts and i keep them to myself and just sit there and rub my head. all you have to do is go on the frb mission page and read what the federal reserve s mission is. and then ask yourself if the chairman has held to those four statements. and certainly, in every aspect, he has. and therefore, it s impossible for me to think that there s anything like a quid pro quo, or any type of replacement of this guy gieven that he s held to the mission of the federal reserve in an incredibly different time. from that standpoint, the markets, it s a lot like watching one of these reality tv shows. you just wonder why these people are famous. but kevin, the question is going forward here, when if bernanke comes in 70/30, what does it say to you about his ability, for now, eight months from now, to begin to withdraw stimulus from the economy? does it change the outlook in that regard at all? no. i think that, in fact, they ve been consistent on their message. they ve also been consistent to say that there s a whole other constituency who gets to vote every day, and that s the bond market. and so far this year, they ve been going along with it. it may be because there s panic coming back to the world. i think that s the key. if he does the wrong thing, the bond vigilantes are going to come running into town. kevin, we have to leave it right there. we have breaking news. joe, you ready on that? yeah, i m ready, steve. let s pretty good for thanks, kevin. dow component travelers, operating share 212. the estimate on the machine here is $1.49. quite a bit better than that. operating share for 2010, 5:20 to 5.55. that s a little bit disappointing in that the estimate for the year is 5.56. i just said 5.20 to 5.55. that s below the 5.56. revenue rose 11% to 6.64 billion, which is way above the $5.26 billion the street was looking for. so, you ve got a nice beat and a nice on the top and bottom line in the current quarter and a tepid guidance for next quarter or next year. how do you miss $1.4 billion on revenue? i don t know. i have no idea. the analysts were just out to lunch on that, right? huge miss. most you know, if that s we always got to apples to apples. yeah. coming up, we re quaiting for quarterly results from verizon, johnson and onson and a whole host of others. becky is in davos, switzerland. i talked to last night on e-mail about 7:00 and she just arrived. apparently it s a long flight. you lose time over there. five hours or something? it s later over there. oh, you gain it on the way back. thanks. that michael jackson was talented, too, wasn t he? the world s most powerful business leaders, conversation you can t miss. i was just in town for a few days, and i was wondering if i could say hi to the doctor. is he in? he s in copenhagen. oh, well, that s nice. but you can still see him! you just said he was in. copenhagen. come on! that s pretty far. doc, look who s in town. ellen! copenhagen? cool, right? vacation. but still seeing patients. oh. [ whispering ] workaholic. i heard that. she said it. i. [ female announcer ] the new office. see it. live it. share it. on the human network. cisco. and still no one knows the sun life financial name. 144 years of financial stability. that changes today. i hear you re the clown in charge. so, cirque du soleil becomes. .cirque du sun life. because soleil means sun.. (gibberish) i ll take that as a yes. (announcer) sooner or later, you ll know our name. sun life financial. now i understand the problems you can see coming up this morning s top stories. figure out what this is. plus the biggest maker of lcd glass for flat-screen tvs and computers, corning out with quarterly results. tdd# 1-800-345-2550 to help with my investments. tdd# 1-800-345-2550 so where s that help when i need it? tdd# 1-800-345-2550 if i could change one thing. tdd# 1-800-345-2550 we d all get a ton of great advice tdd# 1-800-345-2550 just for being a client. tdd# 1-800-345-2550 i mean, shouldn t i be able to talk about my money tdd# 1-800-345-2550 without it costing me a fortune? tdd# 1-800-345-2550 if i had my way, investment firms would be tdd# 1-800-345-2550 falling all over themselves to help me with my investments. tdd# 1-800-345-2550 (announcer) at schwab investors rule. tdd# 1-800-345-2550 are you ready to rule? stocks, snapping a three-day losing streak. on the docket this morning, dow component j.&j. will be xeepg vinnesters busy. the fed kicks off a two-day meeting while the senate gets ready to vote on a possible second term. what it means for your money and the economy. and two cheers for tech. texas instruments sees strong demand for its chips and apple lunians buying apple i phones at record, as we wait for the apple tablet as squawk box begins right now. good morning and welcome to squawk box here on cnbc. i m joe kernen along with senior economics reporter steve liesman and joining us for the remainder of the show, the pursuit david faber to join me. high-five on the hair. good. and today s guest host gary komen ski still looks great. it s not dyed, real. and high-five, high-five woo hoo. they have no idea what it s like the great response you get gary s here, too. because we ve got nothing else. two representatives of the political spectrum here. it s really the hair/no hair split, the big divide on the table. the morning rundown. we speak to corning cfo you know so much about corning, david. you have for years. i used to. you don t know anymore? well, i think i can probably they re going crazy. nuts! what my question is, lc do they make the l.e.d. glass, too? you don t know. that s the big thing. he s saying the lcd stuff has gone crazy. that s still great, too. we ll talk about telecom business, ben bernanke and the market. we ll kick off a two-day fed meeting today and discuss the upcoming reconfirmation vote. dow component verizon will be out with earnings this hour. that s another thing faber knows all about. first, a look at this morning s top headlines, which steve liesman i m going to read? we begin with texas tech and texas instrums fourth quarter profits soaring after the company says demand for chips is rebounding. ti earning an adjusts 52 cents a share. apple having its most profitable quart ever ever, selling twice many iphones and mac computers than ever before. employees of aig financial products unit have to decide whether to accept a cut in retention payments in return for an earlier payout. the deadline comes a day before tim geithner and others are set to testify before a congressional panel looking into the collapse and government bailout of aig. president seeking a three-year freeze in domestic spending in his 2011 impbudget. the president will outline the plan at tomorrow s state of the union address. how was that, joe? all right? it was okay. reading promp ter is not my best. we ll talk apple, too. the apple lunians weren t loony. they were dead on. it s ridiculous. two dow xoens reporting, both beat estimates on top and bottom line. travelers earned 63 cents ahead of expectations. revenue also beat. even though maybe they were a little cautious about next year, the stock is called higher now. a 49 bid and a 50.50 ask. dupont earned 46 cent a share. company raised guidance and beat on the top line as well. and that will help the dow. both of those stocks could help the dow a little bit today, which was indicated a little lower. we ll talk about the mentions about the aforementioned pursuit s a good word. yes. it means hairy. hair, hair. the old sound effects. we have john still. we re going to talk more about the markets right now. joining us is liz ann sanders, chief investment strategist for charles schwab and gary kaminski. liz, been choppy this last week or so. concerns about what s coming out of dollar. dollar firmed up a little bit yesterday. where do you think we are right now? where are we going? last spring i was quite a bit more optimistic about the market relative to the economy. and i was say this year it s a little bit the mirror image. i think the economy is going to be the area that surprises on the upside. and to see the choppiness we saw last week, you know, bouts of kind of mid single corrections, periods of volatility is more the game in 2010 versus last year. what do you mean by volatility? the volatility index has come up alg bit. i don t think we ll have the straight shot up. i think the path of least resistance for the market even this year is probably still up. but with nowhere near the kind of degree of velocity we saw last year. i think it s going to be a choppier environment this year. for a whole host of reasons i think we ll re-address a lot of the risks that were in place last year, how we deal with this debt and deficit situation, not to mention uncertainty on taxes. i think they become more front front and center this year. gaeshgs you agree with that? i want to ask liz a question. you re not going to answer my question? no. there s a lot of talk about cash and the cash on the sidelines coming into the equity markets as one reason stocks should do well. obviously where you sit at schw schwab, you have a good sense if you think the clients have park money in cash, even with zero percent interest rates, are going to bring the money into equities. i don t i think it s going to happen. what do you think? i don t know that i necessarily agree with it. there s been a bias toward the fixed income pie. within equities we re seeing it particularly at schwab and also broadly when looking at fund flows across the board, a focus on the non-u.s. equity market, particularly emerging markets. i don t know there s a tremendous amount of cash literally sitting on the sidelines, however you want to define that, that could come back in. i think there s rebalancing opportunities that could serve the benefit of the u.s. equity market relative to some other areas. i think it s a motion issue more than it is just this pot of money waiting to come in. liz ann, i was looking at some research. you seem to be a little more optimistic about jobs and the consensus. seeing the turnaround has been different from the 91 and 2001 jobless recoveries. if you look at the decline in initial unemployment claims and you well know, steve, the best way to look at it is the four-week average. that path of improvement is closing in on the 1983 kind of recovery pace, well stronger than 1991 or 2001. so i think we ll end up being somewhere in between. if you do a regression analysis of the decline in gdp relative to what we should have seen in payroll losses, we should have seen a 4% drop in payrolls. we saw it instead of 5.2%. that s only 1.2 percentage points but 30% differential. and i think we have a catch-up phase. the problem, i think, is the bridge between the job loss phase and the job creation phase is going to be a longer bridge because of all these aforementioned uncertainties we ve already touched on. gary, if that s the case, and if we re going to have a stronger than expected better than expected rebound in jobs, is the market ready for that? well, again, if we do see i don t think we re going to see, but if we see significant positive jobs numbers, you know and i know the focus will be on interest rates. the glass is completely half empty, right? no matter what happens, whether jobs sell, no jobs sell? you know, you saw that with the you saw that with the december numbers. i felt whatever happened in december, whether the number was weak or whether the number was strong, it was going to be half empty because you just have too many people that are positioning their port foal yoes right now for no rise in interest rates. the same people telling you in october last year that the dollar will never go up the same people saying that the ten-year was going to 5%. instead it went down to 360. interest rates going up traditionally there s a thought that that s bad for stocks. not the case. stocks actually do better when rates are rising. but there s a perception right now that rising rates will be bad for equities. that s the fear with better job numbers. liz ann, what about earnings right now. you know, we re a quart of the way through, or more through earning season. it s looked good and yet the market isn t baifing what one might expect given what we ve seen. would you expect that trend to continue? i certainly hope not. i think we re in the sweet spot in terms of the denominator doing the heavy lifting. we had the valuation expansion era for the first three quarters from the march bottom. that was tied to the improvement in the leading indicators. now we need to see the juice come from earnings, which i think we re going to. i think some other near-term issues over the past week or so just happen to core respond with an earnings period and it s overshad doed what i think would be a positive reaction by the market to what we re seeing so far. liz ann, we ve had a lot of people in here, 1250 is a popular number to call for at some point this year. with what you said, that maybe the economy that won be surprising to see the economy do better and the stock market not match what it did when the economy wasn t better? that s usually the way things work. are you saying we won t see 1250 this year on the s&p? i have always thought the task of strategist having a year-end price tar make an exception. it doesn t have to be year end. how about some point in the next 18 months. 1250, yes. i think the first half of the year is likely to be rougher than second half of the year. kaminski said stocks will never go up again in the next five years. i heard him. no, no, no, no. i said, if you close your eyes, the averages will be where they are today five years from today, the averages. that s a 15-year period. that s a rare thing when i look at stocks versus bond returns over 10 and 20-year rolling periods, you look at the last two times and only two times where we went through such an extended periods where bonds outperformed stocks, the next five to ten years is quite favorable to stocks relative to bonds. and i think we re going to have at least a reversion to the mean here. all right. we ll see. as always liz ann come back in five years and we ll revisit that. absolutely. good. still to come, we are getting some requests, gary musical requests or no. i m going to give you two symbols, i m not going to spell out the stocks, but this viewer would like to you say both of those stocks. just say them. suncore and nucore. oh, you cheated. the viewers want you to say nucore and suncore. sun core was the single kaminski s on, they re saying, could you get him to say nucore and suncore. that was really nice. i spent the week in indianapolis. i have a new accent now. suncore. still to come on squawk box they don t know how to talk in indianapolis. they know how to play football. plus, they know how to get the greatest quarterback in history probably, don t you think? yeah. like a bionic man. like on a string. plus, corning s recipe for innovation, we ll hear from the company s cfo on what the market for computer monitor and tv component may be telling us about the overall economy. 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 now the answer to today s aflac trivia question. what show featuring two good ol boys aired for the first time on this date in 1979? the answer, t the dukes of hazzar hazzard . welcome back to squawk box. taking a look at how we look on the futures there. you can see where fair value is and where we re looking, dow future looking down no matter what, i know that much. even though earnings are coming in better than expected. dow earnings. and the market doesn t seem to care. we ve got some headlines for you as well. general motors will spend almost $250 million to build an electric motor manufacturing facility. right now they get electric motors from suppliers but hopes to reduce costs by producing them in-house. if all goes as planned, gm will be able to build motors for hybrids and electrics by 2013. ford will built the next version of the ford explorer suv at the chicago plant. the decision is expected to add 1200 jobs. the chicago plant was promised a new vehicle program last year when the uaw approved a cost-cutting agreement with ford. so and mr. whitaker decided he wanted to take that job at gm. you ve got to some of the stuff he s been doing, you needed to shake that company by right? you needed to do that. it s interesting. the guys retire and they clearly don t want to. b benmosche, he never wanted to work again. now he s at aig. it s the game, i guess. you could retire but you re here at 7:00 in the morning. or go do something else. fovartis the news or go somewhere else. could have done that. why would i? love it. you love it here. how long has it been, david? 16 years. you, joe? 19. talking about that, 14 years daniel stepping down as ceo of novartis. do you know how old he is? i don t know. i vane seen the official announcement. i know this happened they re way ahead of us. their day s long begun over there but he may be running for political office. is that right? he s not an elderly man at all. that s interesting. well joe jimenez will take over, as we see right there. that s going to be something huckman will be on today. has novartis did anything big? buying a significant amount of alcon and they re also involved in a very combative fight with the minority shareholders of alcon because it offered them less than they offered nestle. that is a big fight. the alcon market cap we both wear contacts. the water costs $6 for a little bottle. saline solution in there, too? it s an enormous company. jim flaws ready to go. specialty glass and ceramics maker corning out with fourth quarter results and results rert better than expected. joining us, cfo, jim flaws. so we can understand it, jim, what were you selling? where were you selling it that made for a pretty good quarter? good morning, joe. mostly lcd were sold around the world. we have great result for tvs in china and europe. very strong demand. that was the real driver for the quarter for us. and i talked earlier because we re l.e.d.its, some of us, i am. your lcd is glass. you can t make an l.e.d. from your glass, can you? yes. it still has our two pieces of glass in it. you finally break down and have one, you ll have your glass it it. i ve got a couple. i thought if you were lcd, that would have been a problem down the road because l.e.d. is unbelievable in terms of the picture quality. you hang it like a picture. you know that. they re great. yeah, they re phenomenal. you re selling in china. so the emerging middle class is a real story that we could probably extrapolate to all kinds of industries, then. about 70% of all televisions sold in china this past year were lcd. the volume of them almost doubled year over year. and it will eventually be the largest market for televisions. it is already the largest installed base of televisions. we re quite optimistic about the chinese market for this upcoming year. chinese government just extended the subsidy to include large size televisions so we think that will be good for 2010. we were just talking about how long we ve been here, doing this, so long i remember talking about your company when fiber optics was the big name. talk about and you were on with us back then. tell us about telecommunications, though. i know there have been declines year over year. what are you seeing in that business? telecom generally lags in a downturn like this. so, other than china, our telecom business around the world has been down. it s a capital spending business by our customers and people pull down in soft times. plus, verizon is coming to the end of their premise project. so we definitely have seen some slowdown, other than china, expected to continue into the first quarter. what s the business mix in terms of telecom versus lcd and other things used for televisions? well, for us, telecom sales are about a third of our just under a third of our refer new. obviously, lcd is the largest business for us. of course, we still have the environmental business for cat littic converters. we ve seen an upsurge in the car business so we re excited about that. decent profits, good revenues. any prospects of hiring this year at corning? limited hiring probably in the united states. a little bit in research. but probably not much in telecom. we make most of our product here in fiber but running our fiber factory full out so not much room for growing. overseas we ll be hiring. for the lcds we ll see good growth again there. again, all of our customers, immediate customers, are in asia, not here in the united states. we make our new gorilla gas in the united states. we ll be expanding employment there a little bit down in ken. jim, what can you tell us about visibility with your customers since january 1st? how have things been in terms of orders since the new year? orders have been very strong. we normally anticipate there might be a slight seasonal slowdown as we head into the new year. in lcds. we haven t seen that. actually, our customers are ordering more. we re very comfortable with where inventories are in the supply chain. so that feels pretty good to us. environmental business orders have been strong so far in the first part of january. so we feel pretty good. all right. we re done. good, thanks, jim. we appreciate the update on the situation. we ve got to g but i was going to ask you a question about it. i know that the really big ones still cost a lot because you have to use one big sheet you make for the whole thing. you can t make two, so you ve got to charge twice as much for like a 90-incher or something, right? can you fix that? i think you can afford one. oh, please. amen, yeah. stop complaining. he s so cheap. all right, all right. thank you, jim flaws, good to see you this morning. still to come on squawk box, federal reserve chairman ben bernanke gaining more support as he prepares to work around a two-day policy meeting that starts today. oh, yeah, the fmoc meeting. i ve been growing algae for 35 years. most people try to get rid of algae, and we re trying to grow it. the algae are very beautiful. they come in blue or red, golden, green. algae could be converted into biofuels. that we could someday run our cars on. in using algae to form biofuels, we re not competing with the food supply. and they absorb co2, so they help solve the greenhouse problem, as well. we re making a big commitment to finding out. just how much algae can help to meet. the fuel demands of the world. we re just getting our earnings in from verizon. largest telecommunications company in the country largest wireless company, certainly. 54 s in line. yep. 54 in line. revenue slightly below. up about 10% to 27.1 27.3 was the estimate. okay. and so there we have it. we ll get a closer look. i want to look through the release itself. 153,000 in net customer additions for fios internet and fios tv. 2.2 million total net customer additions for verizon wireless. 153,000 each for fios. that s the effort verizon is making, spending quite a bit of money to the con center nation initially of some shareholders. seidenberg s decision to go right up to the home, hook people up with an enormous amount of megabits for what we call a cable product, but it s a broad range in telecommunications product. they ve had a good amount of success at this point. time will tell. are they stealing customers from at&t because of the service issue? in the wireless arena, we ve seen, they re keeping the networks in you watch a football game, that s all there is, verizon wireless versus at&t. they re not competing against at&t, of course n terms of fios. that s against cable vision, comcast when you come to work up the west side highway there s an ad for at&t. there s no service there. do you ever notice that? wilson s brother, you doesn t need to ever act again, that guy. i don t know who that is. luke wilson. what happened to luke wilson? i don t know. he can t even be that old. come on, man. you want him to do better than that? man, get it together. comments, questions about anything it s lumpy. comment, questions about anything you see here on squawk, e-mail us at squawk@cnbc.com. still to come, we will break down those verizon numbers with an analyst, chris king. and we ll check into the fewer of the telecom business with chris as well. sun life financial should be famous.d bad, we re working on it. so you re seriously proposing we change our name to sun life valley? do we still get to go skiing? (announcer) sooner or later, you ll know our name. sun life financial. at the end of the day in sitka, alaska, everyone awaits the return of the fishing boats. their safe arrival is highly anticipated, as is something else. a shipment of natural sea salt from cargill, essential for preserving the catch. we deliver the salt on precise schedules. and ship it efficiently all along the alaskan coast; saving the fishermen money, and their catch. this is how cargill works with customers. welcome back to squawk box. still to come this morning, earnings from we had verizon. we ll have reaction from an analyst at the top of the hour. ones on johnson & johnson will report. jim bunning on the upcoming vote for ben bernanke. he says he s against it. we ll see if he has changed his tune. he hasn t, right? steve liesman? i was yeah you don t you never listen. but first, a look at what s making headlines this morning. you know per nechnell the la cartwright died. left the show after six years. it went another seven or eight years, but went back to the stage. back to the stage. went back to the stage. but married four times, yeah. had only one son. remember him? he was also trapper john. do you want to get a check on the markets right now? i don t know. let s just talk about guys who died. yeah, we re not dead, woo. check, make sure. getting to that age. oh, it s me. that s why okay, let s take a look. fair value i need mark haines to tell me what the. you want to know? you add it up i m just teasing. we re down 25 on the dow. so that would mean we re down about 4.5 or so, 4.4 on the nasdaq. 4.6 yeah, on the nasdaq, yeah, yeah. see? dow component do yupont s cad higher? yes. after they raised it s 2010 guidance. what do you want me from me? we don t do this show. travelers also beat estimate. moments ago we got earnings from ver sgron. they were in line with estimates, 54 krengts cents a share. there s a look at dupont, though. probably not going to get 2004 today. fy had some, won t you put in, just for the check of it? somebody s going to make a nice spread on that one. why not try? absolutely, i did. the national retail federation dolling out a small dose of optimism. it says retail sales should rise 2.5% this year indicating the worst of the downturn is over for retailers. we will see whether they are right. toyota is predicting global sales will rise about 6% this year, putting sales at about 8.25 million vehicles, keeping it comfortably ahead of its two nearest competitors, volkswagen and general motors. steve? thank you. support may be mouning but time is running out for a senate vote on ben bernanke s confirmation. that s what i was thinking about when you we were talking about bunning. he s not going to switch his vote, right? no way. he s very strident. has he vote for any fed chairman or just to have the position abolished? we have him on later on. i want to know how he feels of being in the same camp as bernie sanders. i love that part of the story. right to our upcoming panel, joining us neil irwin, writer for the washington post, greg ips. neil, on the politics of this there is no particular consensus that comes out of washington when it comes to which way they want the fed to go when it comes to the opposition, is there in. right. these objections to bernanke are coming from all dierrections. why aren t you doing more to do something about unemployment? but, you know, this isn t going to go away. once bernanke gets confirmed in the next few days, now looks like is probably going to happen, he s going to be dealing with this for the next four years. congress is unhappy with the economy, unhappy with the fed. that set of pressure is going to be there for some time to come. let s bring that to greg. what does that mean for policy if bernanke gets confirmed, call it 70/30, which is the estimate out there right now, what happens to policy to the fed and how much congress intrudes on the fed? the interesting thing about this debate is that even though we re fighting over the federal reserve and it s independence it s not a traditional fight about monetary policy. it s about how the fed supposedly screwed up and led to this crisis. that said, my sense is that this actually leans the fed towards being tighter than it otherwise would want to be. i mean, if you recall, one of the reasons they didn t expand their quantitative easing, purchases of the treasury and mortgage bonds s they were getting so much blow back about printing money. if they were inclined to do more of it, given how lousy the forecast is, there s certainly a case for it but, greg i think they would stay their hand. that s a good point. neil, the meeting today, aren t the hawks sitting around kind of with their arms folded saying, i told you so? i told you if you started to buy these mortgages, if you did these kind of bailouts here, it was going to ruin the fed? and now it seems like they re right. you saw a little of that in the op-ed on the wall street journal editorial page today. it s absolutely the case. you know, they might have considered widening the spread between the fed fund rate and discount rate at the meeting tomorrow. now i strongly doubt it. you know, the idea of doing anything that sounds like a rate increase in the middle of this debate over bernanke, i have a hard time imagining this now that this debate s heated up. where does it go from here after bernanke? market participants want to know those that oppose this have to take this somewhere else. who is it going to be? what are they going to do after this? first of all, i think most of the senators voting on this just want the issue to go away. i don t think many of them thought about it much prior to the last week. only one-third of the senate is up for re-election. for the rest, it s a cheap symbolic vote. if they vote against him, it s substantial risk to the economy. there s bigger risks in the house of representatives where the populous strength is much stronger. you saw people like ron paul, conservative republican, allen gr grayson, joining hands to beat up on the feds. the other risk is there are still two vacancies on the board of governors, the possibility of other retirements down the road and there will be a fight to get those people through. it s a delicate time for the fed. i want to lay out what i understand to be the proz. you go you file for cloture, then you have to wait a full calendar day, and then there s a maximum of 30 hours of debate, which can be shortened. that s my understanding of the process. here s my question the president s going to be delivering the state of the union without the bernanke issue decided. does he need to mention it in the state of the union address? i don t think so. it s you know, you never know, but he has enough on his plate with the budget and with a whole set of financial regulatory issues, health care, everything on the table. i m not sure if bernanke makes the cut. the lobby battle over bernanke has been waged in quiet. president made calls over the weekend, geithner, summers, emanuel have been working the hill. the question now is do they get confirmation by sunday. you mentioned the procedural steps. iffen we ll have don kohn for a few days. richard fisher writing in the journal this morning, the impulse to use ben bernanke as political punching bag raises the spector instead of doing the right thing congress may pressure the fed to print its way out of the crisis. how real a threat is that? i don t i think it s reali realistic right now. with an unemployment rate of 10% and so much spare capacity in the economy, the risk of inflationary policy is very low. i think it s the opposite. that with all this pressure on the fed, the richard fischers around the table are going to be, as you are saying, more resistant to additional steps. i think it get even bigger than that. i think that bernanke goes to him with his pile of mortgages and goes to the treasury and says, you take this. i m not doing this anymore. take the maiden lanes, take the nbs. that s all the time we have 37 appreciate you joining us this morning. i think there s going to be a big treasury/fed accord coming out of this thing as a result of this because the fed has looked at this and i think they feel like they were driving to work in the morning and almost hit a kid in the road and they re going to say no more, not going to do this. we ll have an accord, a way of walling us off because i think they feel this whole thing with bernanke threatened the very core of the institution. interesting. does that mean an end to quantitative easing in a sense? i think it means when they start to do quantitative easing first of all, i think 133 goes away. i think it goes away. i think from now on it will on the treasury with fed having very limited ability to come in. i think they eventually say, these nbs on our portfolio, we did it for you in an emergency situation. so their balance sheet is not going to keep expanding? they ll depoliticalize the balance sheet. maybe not in the next six months but the following six months. coming up, we ve got an analyst we re going to talk to about verizon s prospects. tomorrow, squawk box will be live from davos. becky s in switzerland holding court with the world s most powerful business leaders. they all went back this year. some of them afraid to go last year. a lot of them are definitely flying commercial. take a look at the dollar. right now 1.2 million people are on sprint mobile broadband. 31 are streaming a sales conference from the road. 154 are tracking shipments on a train. 33 are iming on a ferry. and 1300 are secretly checking email on vacation. that s happening now. america s most dependable 3g network. bringing you the first and only wireless 4g network. right now get a free 3g/4g device for your laptop. sprint. the now network. deaf, hard-of-hearing and people with speech disabilities access www.sprintrelay.com. let s take a look. shares of verizon right now well, we ll see how they re doing. dow component, you ve got a sense for them. not really. that s not going to help you much. 3015 from 30167. a bid/ask is always better. but, whatever. yeah, whatever. whatever. 54 cent a share. revenues roughly in line, a bit short, perhaps. let s take a little bit more of a look at the numbers. joining us on the squawk news line to tackle these numbers, christopher king, senior analyst at stiffle and company. christopher, anything stand out to you from this earnings report? good morning. fairly unspectacular quarter, really, across the board. i think one of the major headlines is going to be that we really see very little improvement from an economic standpoint, particularly in a lot of the business markets, which i think may be surprising for some people, given the fact that, you know, so many talking heads were talking about some signs of stabilization or strength going into the fourth quarter last year. see very little of that in these numbers. i notice cap x, i don t know if it s it s not a significant containing. they came in a bit below in terms of their initial guidance for 09. now they re giving guidance in the range of 16.8 to $17.2 billion. is that what you expected or a little light? yeah, right, down a little bit, certainly. that is what we expected. their fios spend will be slowing down certainly in 2010 going into 2011. on the wireless side it will be ramping up a little bit with their 4g long-term evolution network wireless build. certainly until the economy gets humming once again, a lot of the cap x spending as it relates to enterprise and small and medium business will suffer. i m curious as to when you think we ll hear investors talk about 4g as a post of growth ahead. i don t think we ll see much in the way of 4g products or handsets out there until 2011. probably late 2011. i think verizon remains committed to covering 100 million pops with the network this year. that will mainly be in the form of laptop cards. i think as much speculation is centered around their relationship with the tablet or iphone later this year, i think one of their goals is going to be to get as much data traffic onto that lt network as they can because it is essentially brand new spectrum, a brand new network. anything on the call we should be listening for? anything related to 2010 guidance. i think anything that they have to say with respect to apple s much anticipated announcement tomorrow as well. all right. christopher king, thanks for joining us. christopher king, telecom analyst. still to come on squawk box every day people that go to work and work like heck to pay their bills are not benefiting from what tim geithner and particularly ben bernanke have done to the u.s. economy. jim bunning with some harsh words for bernanke the last time he appeared here on squawk box with a confirmation vote nearing, what is he thinking now? we find out. memories up next on squawk box back together, penguins, the animal orchestra in full harmony next. 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[ female announcer ] the new classroom. see it. live it. share it. on the human network. cisco. memories like the colors in my mind i know you re on that other show, i doane the name of this, it comes on after this. it s also a squawk show, it s called squawk on the street. it s a fine show. includes two of your former colleagues not former, i mean joey was a spinoff from frien friends, too. it s similar to that spinoff. i m the only one who comes back for guest appearances. do you remember joey ? yes, yes, fine show. was it like friends . didn t get enough time, really. here are it would have clicked, like so many other shows at nbc. if they just give them a little more time. verizon is indicated lower. you got a beef about verizon or something? it s not a beef but ipts important to bring up two points. shareholders are concerned about what the acquisition costs of new customers is going to be. verizon is fighting at&t and fighting the cable companies. and there s real concern about how much more it s going to cost to maintain customer reconvention. number two, i brought this up a come weeks ago and it s important point to remember which is that many institutional owners of these stocks, verizon and at&t, own them for the income and growth. dividend plus the capital appreciation. if interest rates go up in 2010, as some suggest, these stocks will be hurt as they always are when rates go up. it s important to remember, fighting each other at the same time that the ownership of these stocks can be negatively impacted with rising rates. they haven t been good stocks to own over the last decade. look at the total return. i d like to see a ten-year on verizon. there s a one-year. that is a nice yield, gary, with the ten-year where it is. you re talking about a 6% yield on something that s pretty stable here at 30. absolutely. that s why they ve been good stocks to own for the dividend. all right. again, those have been the funds, those have been the mutual funds yeah, but that s a little worse than the s&p over ten years. yeah, a little worse. unless you ve bought in 02 at that one point, then you add in that s not including the total return. that s just the performance of the stock. even the compound dividend you re still below the s&p. you probably are. you have to know who are the owners of these securities when thinking about s this a stock i want to own for the next five years. anyway, that s one dow component out. also dupont. take a look at bid/ask. 33 cents ahead of expectation. revenue above. we ll go with charts. people worry, david, that you re not going to be able to tell the close is right between the bid and the ask today. travelers at 212 was way above $1.48 and then the company s revenue was also well above. so that dow component at this point indicated sharply higher. a $48.89 close, so that s something that should be visually represented on our screen, but is not. if that held would actually yep. there it is. see how nice that is? see, i can figure that thank you. there it is, 50.55 to 50.75. price-weighted index. oh, don t start complaining about that again. that s one thing i don t miss, complaining about the dow? yes. i won t. you know, when you listen to brian williams at night and he says the stock market is up or down, it s still the dow. i m sorry. the world has not changed because you like the s&p better. you know it s a news corp. company, the dow. j&j is out. 1.02 excluding items, 97 cents of the estimate so above on revenue. rising 9% to 16.6 $billion. that is above the $15.7 billion estimate. i would like to know about the actual drug sales to see whether that was up, because pharmaceutical sales were was that up? no. you haven t lost a thing. you re still as fast as you ever were. on this stuff? yes. thank you. wow. can you tell whether because that has been one of the issues. let me get to the nongap forecast for 2010. 45 to 495. 494 is the estimate. the 485 to 495 brackets where the estimate is right now. johnson & johnson is going to dictate the way the meaningless average moves today that david doesn t like. 62 #.53 on the bid, 63.65 on the ask. details, up 9%. and then their adjusted earnings per share for 09 was up only 1.8% for they did have a negative impact from currency of 6.2%. domestic sales were down 4.4%. international sales down 1.4%. again, would he flekting operational growth of 3.9% but negative currency impact well above that of yeah, that was for the full year. i m sorry, that s full year. . yes, i gave you full year numbers. i m sorry. out of practice. that s what i m interested in, is actually seeing whether they were able to do year over year gains in the pharmaceutical business. for the fourth quarter. year over year for the fourth quarter. they re a big consumer group. i know my love of baby powder. chafing is a big problem, especially as a man gets to your problem. as you age, as you close in on where i am yes. it s not like you re standing still. no, having an impact. soon i ll be 4 feet tall. go ahead and read this and then we ll coming up we ll get get an analyst reaction to the j&j results and senator jim bun willing tell us why he is just saying no to ben bernanke s renomination for a second term as fed chairman. squawk box coming right back. not that long ago, many families were priced out of an overheated housing market. but the times have changed. get the facts at remax.com. it s a great place to see all the listings in thousands of cities and towns. with tax credits for buyers, low interest rates and down-to-earth prices, the dream of owning a home seems more attainable than ever. find out what an experienced re/max agent can do for you. nobody sells more real estate than re/max. visit remax.com today. the fed fight rages on. another expected no-voter on ben bernanke s renomination will join us. senator jim bunning of kentucky. plus, the senator wants to know more about the fed connection with the aig bailout. squawk box begins right now. welcome back to squawk box here on cnbc, first in business worldwide. i m joe kernen. becky s in davos. carl s getting ready for the state of the union. but i have plenty of help today. i ve got senior economics reporter steve leaiesman. they tried to put a junior reporter on here and i said, can t you get the senior economics reporter? david faber s here. also today s guest host who probably was on at least were you in the first week of squawk of the squawk box first week. you were a guest host 15 years ago. the whole age thing is freaking me out. 19 years here and 16 years, and he goes back to 15. former you were it says, yeah, former yeah, you were a manager. he used to do something. at neuberger berman. you re kind of retired but doing a bunch of stuff? yeah. you re still razor sharp on this show. thanks, joe. let s check the markets. we ve improved a lot during the morning. was it 35 or something? it s good but we ve had good numbers coming in. we haven t had anything bad. dow blowing out on revenue and bottom line. you made that point earlier. yeah. david was complimenting you on how sharp you still remain, despite your my that s a big improvement from the futures at 6:00 a.m. that s what i just said. i wasn t sleeping. you didn t hear me, gary. i was getting up. travelers is definitely helping. dupont wasn t bad. j&j, i don t have a decent feel for where that s going to trade at this point. verizon. and verizon was also not great. down 20 cent. yeah, again. we ll see what the s&p does. but quite a few and we also heard we figured out that pharma for the quarter was actually up year over year, which is not the way that it s been. pharma was up 5.4% for j aechd j. why wouldn t you expect that? why wouldn t pharmaceuticals they ve had some of the same problems with patent expirations. it s not an economy thing. no, not an economy thing. it s sort of it s not immune. some people during the height of will have a script from a doctor and they won t get it filled. or they re sub for a generic. device makers, people put off you won think you d put off a hip replacement, knee replacement but they do. certainly, cosmetic surgery,en suggesting it or anything, but cosmetic i wasn t going to suggest the hip surgery thing at all either. why are you looking do i need implants? i wasn t looking at anything. i don t know what you re talking about. where do i need the implants? both places? go ahead, steve. why don t you you looked atmy moon for a second. the longer i wait, the more you stew, joe. top stories, president obama seeking a three-year freeze on his domestic spending in 2011. it would save $250 billion by 2020. the president will outline spending plans in his state of the union address wednesday evening and then unveil his budget on monday. we continue to follow ben bernanke s quest to be reconfirmed as chairman of the federal reserve. in an interview yesterday, president obama says bernanke has strong support and is doing a good job. what we need is somebody at the federal reserve who can make sure that the progress that we ve made in stabilizing the economy continues. and i think bernanke is the best person for that job. senate majority leader harry reid expects a confirmation vote by the end of the week en. apple posting most profitable quarter ever but investors had a hard time analyzing results because they changed the way they account for profits from the iphone. they had better than expected mac sales but iphone fell just below wall street expect takings. verizon more or less in line, they said they experienced strong wireless customer growth. added about 153,000 customers each to for its both fios tv and fios internet services. of course, that s another large undertaking of the company. as it s transformed itself in the last decade from a wire line company to a wireless/cabletelecommunications provider. joining us, howard ward, gamco manager and guest host gary kaminsky, managing director for neuberger berman. howard, let me start with you. we ve gotten earnings this morning. you surprised you? think it will sort of fuel, perhaps, a little bullishness on the part of investors, given post are strong? yes, we ve been expecting a strong earning season. the apple number was good on any metric you really want to look at. this morning s numbers generally coming in a little bit better than expected. you ve seen futures improve a little bit. so i think if sets up the market for, you know, an optimistic day. coming in earlier this morning, didn t look so good with problems in asia. everyone s concerned about the chinese sort of putting their brakes on a little bit. but having the problem of too much growth in china is not a bad it s not a bad problem to have when you consider where we ve been in the last year. i m glad you brought up china. we ve got more it s always tough, somewhat an he can doelgt but more stories about them reining in bank lending, requiring higher capital for many banks, perhaps trying to stem an enormous growth in money supply, so to speak, over there. how important is that to what goes on here and how important is that overall in terms of the worldwide economy? first of all, wall street s fixated on china. appropriately. it has been the engine that has been driving this recovery and been pulling us with it. that s all very positive. let s not forget, our economy is about three times the size of china s. so sometimes we probably exaggerate the importance of china. having said that, we are fixated on it and it is going to be important. but we have hiccups in the emerging markets. this is not the end of the emerging market story. this is an economy growing at 11% or more in china right now. they need to tone it down. as you said, the bank loan growth has fueled monumental growth in money supply ppt authorities have to get control of that or they will have an inflation problem down the road. they re not going to kill the recovery. this is a hiccup. if you invest in the emerging markets, will you have hiccups frequently. it s not the end of the story and not the end of the commodity story either. good morning. how did the top five positions in your growth portfolio look today versus what was in that portfolio a year ago? the same top five holdings? how has it changed? yeah, it s mostly the same. apple, google, microsoft are three of our top five. they ve been there for the last for the last year. frankly, there s just been very incremental changes in our top ten. we tend to have about a two-year holding period for our stocks with annual turnover averaging about 50%. it hasn t changed. we re focused on the area where we think we re going to get the most bang for our buck in the sense of strong earnings growth driving the share prices. we see technology leading that charge. and so about 30. of the fund is invested in technology. we have very large positions in those leading names. we think that, you know, for example, apple is probably the well, no probably, it is the most innovative company in the large technology space today. you mentioned commodities. i m curious, we ve seen them come down a bit over the last week. perhaps well, not concern but perhaps some expecting less spending here in the united states. you ve mentioned china, the dollar getting a bit stronger. but you think that s going to reverse? let me say this, we ve got some good growth in this economy baked in for a while here as a result of the upturn in inventories we re going to see. the inventory rebuild that has started. and the consumer has awakened. 2% to 3% growth in consumer spending is not enough to sustain this recovery once we get past this bump in inventories. so what we really need as a catalyst for our stock market and to overwhelm any concerns we may have about asia is growth in jobs. what i would like to see when i commend when i come into the office a week from friday, i want to see job growth in january. it s very possible. you know, we re sort of running out of time. we really need to start generating jobs in order to get that consumer spending moving up. the consumer is liquidating, deleveraging. the biggest payback in consumer credit in the month of november on record. and so what we have to have is growth in jobs. we need that to sustain our recovery. howard i m hoping it s about to start. howard, we keep putting ceos on our air with good profits and they keep telling us they re not hiring. that seems to be the outlook here. what i m wondering is, the last number i looked at, i think it was the last quarter where we had a full quarter, $820 billion of cash on the books of the s&p nonfinancials, or the industrials. how do you look at cash in a condition right now? as i understand it, there was a dollar of cab for every $10 of market cap. is that a good thing as far as you re concerned as an investor? well, cash is absolutely a good thing to have on the balance sheet, especially during these difficult economic times. you know when does that change? that cannot be the case all the time if you have investment prospects out there that will yield a better return for the balance sheet than the cash will. well, certainly, i think we should look at this on a case by case basis with individual companies. and industries. but generally speaking, cash is a good thing to have on your balance sheet, not a bad thing. investors right now are have taken on a more conservative flavor. i don t think we re looking to invest in companies highly leveraged right now. how about you, gary, why do you look at cash on the books of the balance sheets? we did a lot on this years ago at neuberger. historically if companies sit on cash, that s the least attractive over the long term use of the cash. you want to be doing organic growth acquisitions dividends, m&a? of the five things you can do with cash, that s the least attractive. the last two years having cash gave stability. back on the jobs thing, steve, you hit it right on the head. there is no ceo right now who s going to get out there and say he s in a position to want to go out and hire people. you re not going to be rewarded for that. you may be rewith regarded for building out some new product lines. but it s the last thing that ceos want to do in terms of capital allocation right now and that s why maybe there is a disconnect for some time between jobs and an economic recovery. one thing i d like to point out, if i may, there s a lot of history that says that the strength of a rebound is related to the sharpness of the decline. right. and we think it s different this time. but we don t know enough about that yet. a lot of these economic numbers are going to be revised time and time again, perhaps even over a period of years. and we simply can t rule out the historical evidence that says that a sharp decline in the economy is always has always been followed by a sharp increase in the economy. and that will lead to jobs. we re going to leave it there. howard from gamco, thank you. gary kaminsky will be with us for the remainder of the show. speaking kaminsky and david, you see us years ago oh, no! we haven t changed one iota. oh, no. you really believe that? yes. let me show you. let s see what kaminsky used to look like. you see what we used to look like. oh, my. whoa. and that gentleman on the right is supposedly mark haines. now, kaminsky has tried i mean, you ve been through every you ve been through the stuff they sell off the back of those wagons. you ve tried everything, basically, right? and that s that is amazing, is it not? the hair. that s 15 years. i know, but david and i look if i had been working here for 15 years, i d look the same. so it was the lehman thing. took years off his life. yeah. he got out, man. he was smart. i rest my case. we haven t changed it s so much easier steve when i look at it i think, oh, my god, my lost youth. this show s getting depressing. let s not be depressed. you re all over the time thing. come on, let s move ahead. we re moving ahead. we re kicking. we re above ground. we re still kicking. we still have our hair. next we put j&j s results through a battery of tests to find out if the stock is still a buy. then later, he s just saying no to bernanke s renomination as fed chief. kentucky snorl jim bunning, who was an unbelievable guy on the mound. gets his chance to sound off on the chairman and the fed s role and the aig bailout. do you remember? bunning? you do? and we ll get the traders edge with art cashin. if you can t get enough gary kaminsky this morning, he ll be outside the box appearing on fast money tomorrow night. at 5:00 p.m. eastern time. tdd# 1-800-345-2550 investors got lost in the shuffle. tdd# 1-800-345-2550 investment firms forgot whose money it is. tdd# 1-800-345-2550 enough is enough. tdd# 1-800-345-2550 it s time investors got what they deserve. tdd# 1-800-345-2550 real help that s there when you need it. tdd# 1-800-345-2550 pricing that leaves you with something to actually invest. tdd# 1-800-345-2550 at schwab, we offer a lot more help for a lot less money. tdd# 1-800-345-2550 because at schwab. tdd# 1-800-345-2550 investors rule. tdd# 1-800-345-2550 are you ready to rule? welcome back to squawk box. steve look at that, look at that. now only down four points. you did it. it s the dow components that did it, but gary helps making everyone feel better about how they look now after but now how they invest. i mean, this guy s i m just depressed. look at the s&p is lagging behind. yeah, the s&p is that s faber s thing. because these are do you components that reported so we have good reports from the dow so maybe it s diverging a little bit. you can see the nasdaq is now a positive. the dow s still not a positive, but getting more so. closer to it anyway. making headlines, japan s central bank leaving its key rate interest rate unchanged. it s very depressing to read this. 0.1% still in japan. they would give anything for inflation. anything. 0.1%. i know. they re out of policy options, right? what do they do, build more bridges it s a very difficult time. remember, that interview i did a couple weeks ago oh, get him to come on. its made its way around the internet. s&p has put, i believe, japan on watch at least for a credit downgrade. well, they ve got they need to have more babies, number one. they ve got all the domestic savings rate is so high at this point. the demographics are scary for japan. now we re going back up where are we going? whoa, i m getting sea sick watching this. ford says it will build the next version of the explorer at a chicago assembly plant, making 1200 new jobs. let s get to j&j. earned $1.02 ex-items for the fourth quarter. on the news line with his reaction is senior medical device analyst. we ll ask you to look at all the different parts of the company, not just medical devices. overall, the quarter seems pretty much in line with what the street was looking for. was it good they were able to have year over year growth in pharmaceutical sales? yeah, i think if you look at the if you look at the entire spectre of the company s difference, the pharmaceutical came in ahead of expectations, devices came in ahead of expectations and consumer came in ahead of expectations. i think you re looking at a pretty good quarter for j&j. if it s instructive for the rest of the market, the strength, i think, is could be indicative of earnings for other companies as well. not everyone i don t know where i saw the piece recently but it was a very rare, sort of a negative piece on johnson & johnson. might have been barons. i can t remember where i saw it. but the stock is not responding positively. it s one of the dow components that reported that s down today. nothing wrong with the numbers? not really. if you look at them, you know, the everything came in, i think, as expected. perhaps what is happening is there were higher expectations or expectations were pretty high for the stock and maybe there s a little bit of buy on the rumor, sell on the news. all in all, i don t think you could look for a quarter a better quarter for j&j at this point. yeah, it s at the top of its rage, too. 63 and the high is it was baked in before the numbers came out. perhaps. in the currency translation, they had a negative currency translation. is that because they manufacturer here in the state and their international sales suffer? yes. to a large degree, that s true. if you look at the operational growth, 4.5% on the top line, but, you know, overall growth is nine and it got 4.5 from fx. overall, you are looking at a lot of manufacturering in new york. yeah, procter & gamble had some problem with a little bit, anyway, with the you know, the private label competition. j&j has a huge consumer products, too. it s more in terms of a m uchl rk in how they try to maneuver around the world. is that something to be worried about with johnson & johnson, or does that add to the takes away from the volatility, i guess, of the results? it definitely takes away from the volatility. if you look at the performance, its operational growth was 2% this quarter. good consumer business. currency took, you know, 2.6% away from that. so you re looking overall it was 1.6% decline, but operationally it grew. if you think about the economy, and what the consumer business sells into, i think that s pretty remarkable. well, you know, the company had revenue growth. it s above expectations. so the wrap that none of these companies are having no revenue growth is slowly going to the past but but is that execution? is that execution in a bad market or is that a sign that the economy is better out there than we re giving it credit for, jan? you re looking at revenue growth on i think the economy is probably better than where we re expecting it to be. the company also did some restructuring, so, you know, you saw you saw a good number on the bottom line. that s due to restructuring as well as, you know, what we saw on the top line. jan, thank you for your time. thank for calling in this morning. appreciate it. all right. see you later. coming up, itg chief economist bob barbera gives ben bernanke a letter followed by jim bunning, telling us on why he gives bernanke an f . heading to break, check out the price of crude. down 67 cents. there s the down 15 again. down 15 and up 6 on the fair values minus 21. it was positive a second ago was it actually positive or the futures were positive. oh, the futures itself. not the fair value. not the fair value. coming up, we have the bernanke countdown. steve checks out the chairman are you going to do that again? i know how to turn i know how much you love it. i know how to turn. then senator jim bunning, pitching us his story of why he s going to vote no on the bernanke renomination. he s around in the third. and then tomorrow squawk box live from davos. becky s in switzerland holding court with the world s most powerful business leaders. conversations you can t afford to miss. welcome back to squawk box here on cnbc, first in business worldwide. we re one hour away from the opening bell. here s the rundown. steve will have the bernanke countdown and then reaction from itg, chief economist bob barbera and senator jim bunning will tell us why he plans to vote no on the bernanke renomination. he will call it the bernanke renomination. then art cashin bringing us the trad trader s edge. looking at a lower open, down about 21 base that s about 19 points below. terrible three days at the end of the week. a bit of a bounce today but we re still in that area where we re wondering whether there s something more to this than the five identi five-percenter we ve got so five. we don t know. verizon did match wall street estimates. you see the stock not doing much. maybe down a little bit. revenues essentially in line. j&j earned $102, ex-items, five cents above estimates. revenues were above consensus although i just saw a headline, coming off the call, that the fourth quarter tax rate was lower than had been the case previously. there s a look at apple shares. where they re going tick by tick before the open. some volatile moves after apple did exceed estimates for both earnings and revenue. iphone sales not quite matching the most optimistic of expectations. there was also some confusion over the fact that apple changed the way it accounts for some of its revenue. let s get over to steve liesman with the bernanke countdown. steve? here it is, guys. six days yesterday. i want to emphasize one thing. this mass hysteria. that was massachusetts hysteria. not everybody got that joke because as joe pointed out, it was missing the period here. anyway now, five days left. he s going to have time to read hank paul san s coming out with a book called on the brink coming out some time soon. why didn t we disclose on aig? i don t know what they got out of it. they made effort to keep the counterparties from being disclosed. they made efforts to keep the amount of the payment to them. most of all, the qcips. i kind of get that part. these are illiquid cdos and you don t want the market to know what you have because then they can go and trade against you. but the counterparties now, it all eventually came out. some of the things they were just asking for delay about, there s a 22-page report from darrell issa and then a whole explanation from the new york fed. do you get that part on the qcips, why they don t want those out? not necessarily, unless they didn t want unfavorable information or what they thought was, in a sense, almost material information, nonpublic in a way, to get into the market. but that s not clear to me. listen, to the point of not ultimately disclosing why or redacting they were paying 100 cents on the dollar to close out these cdos, of course, we did find out, but it s it s bizarre. they paid 100 cents on the dollar but they also got back the underlying securities at 50 cent on the dollar. and they kept the par from being public, but it s unclear to me they were either confident in what they were doing i mean, you remember, we were sitting on that table on that night am they did that deal. i don t think anybody understood it, maybe the fed didn t understand it. look, clearly, as we know. i ll be interested, of course, to read paulson s book as so many other people will. they were reacting every skd to something. they were caught unaware to a certain extent by aig, i think, in and of itself. it was only a week or two prior that paulson first really learned, is my sense, of exactly how bad things really were there. they were about to go bankrupt. these guys were rereng, you know, split second. and a lot of decisions were made that perhaps some people wish they could take back now. plus the idea that you had to negotiate, if you re going to get less than 100 cents on the dollar you would negotiate with every single counterparty, let s bring in bob barbera. how damaged do you think bernanke is by aig? obviously, the aig piece more generally just the decision to bail out the banks with mostly no strings attached, has hurt him with the populous side. i still think, and i know you ve been talking about this the last several days and the last few minutes, it was a wild, wild moment. and i think they did a great job in preventing what could have been the next great depression. bob, has anybody brin in gary kaminsky on this. has anybody given us a deal that would have been a better deal in the market at the time? when you went to close out a cds position, you paid the money and got the collateral. that s how it worked, right? yes. i think the giant issue was contagon. one thing you don t go around telling everybody who owns what and what size. a senator yesterday who was very proud of the fact that he had sent a letter that said, i want to know exactly which banks are borrowing from the fed and bernanke said, i won t tell you. now, he didn t say that because he thought it was going to help his re-election campaign at this time. he said that because he recognized that it would be looked upon as weakness if you went to the fed window and yet they wanted banks in trouble to be able to go there. at the time it was the right thing to do to be clan destin and now it s a witchhunt to say it was inappropriate then. as we think about the future of the fed here, one thing that strikes me out of this whole contest with congress is, you tended to think of the federal reserve has an institution that kind of stood on its own. but it seems like now the cover s off that. now we see the fed really as something that congress, if it wants to mess with it, it can mess with it. so in that respect, the fed and its credibility and its reputation is really not coming back because we know now if congress wants in, it can get in. i m zoo i m old enough to remember paul volcker and when he would come to the senate, i worked at the senate banking committee, and testify, it was war. funds rate at 20%. senators were screaming at hill. they would bring in little blocks of wood, talking about how absurd monetary policy was. and i had a friend, must have been five years ago, who said, you know it s a problem when the central banker testifies in congress and it s all smiles. you know, the greenspan era was a soft option era. and it s not surprising that they were very comfortable with the fed and with their independence because it mostly, you know, delivered pretty happy circumstances. bunning s going to tell us in a little bit, i imagine, that one of the fed s failings was keeping interest rates too low for too long. what would you tell him? well, certainly as you know, i think that s right, but i think who do you blame for that? i think you blame main stream economic theory. the fed was implementing what the standard economic theory said was the right thing to do. those of us who said, you ve got to look at asset prices, you ve got to have a bigger definition of excess were really on the periphery. you can t expect central bankers to be paving new ways. that s hardly an endorsement of the system and how it works. you need to lead the fed alone to do what? make the same mistake again? no. if you look at what happened over the last five years, if you said, what s the biggest thing to worry about right now, i i just don t believe it s another asset bubble. you re going to get bit in the behind by something new. do you really think they ll be twid 8ing their thumbs and looking at the asset price excess somewhere down the road? one of the fallouts of this, bob, is you think asset prices have become more a part of the fed s calculus than rates? i don t think it s fallout. as you know, i wrote a book about it. the straightforward thing is what you say is i m looking at interest rates and i m looking at credit spreads. if credit spreads are getting tight, i lean against the wind of the enthusiasm not because i m trying to burst a bubble because i know credit is too easy. bob, thanks very much for your time this morning and your thoughts on this. say hi to senator bunning for me. oh, we will. will do. joe? quick bid/ask on johnson & johnson. you heard david recount some of the comments from the company. johnson & johnson said fourth quarter earnings were helped by sharply lower taxes and fourth quarter results were due in part to an extra week of sales in 2009. both of those things have the what looked at first blush as some really good results, maybe those are that accounts for a little bit of the weakness in the stock today. next, just saying no to bernanke s renomination, we ve got jim bunning. he wants him out. he wants more information on the fed s involvement in the aig bailout. he ll join us next. are on sprint mobile broadband. 31 are streaming a sales conference from the road. 154 are tracking shipments on a train. 33 are iming on a ferry. and 1300 are secretly checking email on vacation. that s happening now. america s most dependable 3g network. bringing you the first and only wireless 4g network. right now get a free 3g/4g device for your laptop. sprint. the now network. deaf, hard-of-hearing and people with speech disabilities access www.sprintrelay.com. [ male announcer ] introducing the all-new lexus gx. it has the agility and the power to take on any mission, and the space to accommodate precious cargo, because every great action hero needs a vehicle. see your lexus dealer. everyday people that go to work and work like heck to pay their bills are not benefiting from what tim geithner and particularly ben bernanke have done to the u.s. economy. that was a little over a month ago, senator jim bunning. he s again asking the senate banking committee now to subpoena documents relating to the fed and the aig bailout before it considers bernanke s reconfirmation vote. he joins us now. good morning, senator. it s great to see you. good morning. i figure a lot of what we hear from you will not be much different from last time. i was going to start if he doesn t get reconfirmed, who would you like to see as the next fed chairman? well, it s not my choice, but a guy like john taylor would be a perfect example of someone who could walk into the fed and run it better than bernanke. is that would that be possible or would it have to be steve, would it have to be a yellin or kohn or someone like that? it could be. it s strictly up to the president to do the nomination. at this point, do you know do you have a better calculus of where the senate stands right now? we re figuring 70-30. it s nice to talk about it, but probably he s going to be confirmed, right? well, it looks like it. i ve never seen a fed chairman go around and solicit votes and promise things for i don t know if it s for their votes, but the exchange that harry reid had in the nevada papers surely indicated to me that there was promises made to reid if he supported bernanke. well, senator reid s making you know, he s making i don t think he goes anywhere without making a deal with someone, whether it s landrieu, ben nelson or the unions. so that s not a shock, is it? it s a shock to me that the federal reserve chairman would have to solicit votes for his support. he ought to be an independent agent, not behooving to anybody in the congress of the united states. but he s got some guys that are like you, you re kind of on the far side of one side of the aisle and then you ve got, you know, the socialists, only socialist member of the senate on the other side. i mean, there are some strange bed fellows here. he s got to do what he needs to do, right? he s going to do what he s going to do, whether we like it or whether we don t like it. my question is, is he capable of handling the fed job for four more years? i don t think so. and i have a lot of reasons why. well, it would be much i mean, senator, i can t hopefully he isn t faced with what he was faced with and pretty calmly guided us through some pretty tumultuous times there. maybe you think he s responsible for getting us there in the first place, but when he was actually you know, when some strong men were their voices were cracking, he was a pretty steady hand a year ago or so, wasn t? he. you think so? well it looks like all the talking heads that have something to do with the market favor ben bernanke for chairman. i don t know if everyone somethidoes necessarily. those that can still go to the atm machine and have cash come out at least think it could have been worse. you couldn t get cash to come out because the banks don t have to pay a darn cent for that cash they re lending you. that s a good that s a pretty good answer. senator bunning, i m wondering if you could lay out for us what policy you would want the fed chairman or a fed chairman, assuming it s not ben bernanke, to follow right now at this moment? would you draw down interest rates, raise interest rates? first of all, the loose money we ve had have created a couple doubles. the dotcom bubble, the housing bubble, and the loose money and the non regulatory burden that they placed on housing and mortgage brokers. they didn t regulate them at all. and that really cause the housing bubble. and so i want someone who will do what the federal reserve is supposed to do. it s supposed to be an independent agency and follow the law of the land. okay, so you want higher interest rates right now, is that what you re saying? no, i didn t say that. i said, i want them to raise before we have hyperinflation facing us in the very near future. so, do i hear you saying, then, you don t have problems with the policy of the fed right now? doi have problems. how would you change that right now? would you not have purchased the mortgage-backed securities and would you sell them right now? i would not have opened all the windows and bailed out all the bankers and bailed out everybody that he bailed out over the last year. senator, once we get past bernanke, what s going to happen with treasury? i mean, do you think geithner s doing a good job? do you think he ll be the treasury secretary? no, i don t think he ll make it through the year. how will that happen? if you could give us a sense he ll get fired. he ll get fired by the president of the united states because of his inability to handle the job as treasurer or secretary of the treasury. you know, fiscal policy, this is what the treasury secretary is supposed to be involved in. senator, i m curious as to your reaction to last week s announcement from president obama about potential brakes on banks in terms of their ability to invest in hedge funds, private equity and proprietary efforts. do you agree with those proposals? it s a little late. that s all i can tell you. that should have been done about four, five years ago. and, of course, obama was not president. george w. bush was president. and he didn t do it. and he should have done it. but they re doing it now. so you support president obama on that? no, i don t support it. the reason hold on. it was supposed to have been done four years ago. it wasn t done. now it s proposed can and you don t support it? the reason i don t is because it s being done for a political reason rather than a fiscal reason. but who cares why you get there if you get there if you do the right thing? well, let s face it, to do it for a political reason, to pacify certain interests in the country, when this uprising in the country, the tea party people are screaming bloody murder about all these things that the fed and the treasury have done. so, senator, as far as aig goes, i guess you think really someone s head has to roll for that, in your view? well, bernanke played a key role in aig s bailout. and if you read what i have read, and i can t disclose it to you, but what i have read at the treasury i mean, at the fed, i went down and read the papers, and he was instrumental in allowing aig to be purchased by the federal government. right. well, heing we know that. at the time, that was a systematic risk that would have potentially lady to the downfall of the fj system. that s your opinion. no, no, no. i m not saying that s bernanke s opinion. that was his opinion. oh, boy, was it, because the yeah. his staff, his staff didn t agree with him. what are i mean, i know that you can t disclose specifically but i m curious as to what document you re talking about. i m talking about an e-mail that he sent his staff after his staff recommended that the federal reserve not touch aig. just like lehman brothers. now, treasury was also involved there. hank paulson came around to saying, we need to save aig. those of us reporting it was a day away from bankruptcy. they changed their opinion, based on at least something they must have seen there. and what they believed would happen if they didn t. it was it was an e-mail from the chairman. towards what end? why do you think bernanke was so interested in bailing out aig? i think if bernanke could go replay that purchase, that would be one thing he would not do. i sincerely believe that. every time he comes before our committee, he says, that s the worst thing we did. so he doesn t agree with his own decision. all right, senator, next time you come on, you will tell us what you really think. promise to do that next time? i promise to do that. we appreciate your time. always enjoy having you on. thanks, joe. talk about a talking head, though. right to my face. next art carbon will tell us what he s watching as the bulls and bears fight it out. help me read this. why would he call me a talking head? squawk box is coming back. time for the trader s edge. joining us, art cashin, director of floor operations at ubs financial services. art, things look pretty good this thing but they don t seem to be leading the parade. you think that s going to change? i think some of the earnings improvement is kind of baked in the cake, david. i think people were expecting some improvement. nobody had really cautioned or warned, so that s there. plus the market is still a little stunned and shacky after the last three days of last week, trying to figure out where it wants to go. so the risk appetite is not very good. what about the internals? we did have a little bit of an upmove yesterday. anything there? that was the bernanke bounce. friday one of the worries was the chorus of senators saying i m not going to go with this guy. there was a fear he might not get reappointed as fed chairman. that would break continuity, it s like paraphrasing lincoln changing horses in mid crisis. it wasn t there. if i could, let me say to senator bunning s comment about aig, my recollection at the time was that people felt they were getting calls from every financial capital around the globe. you can t let these guys go under. it s going to truly become a global event if you do, and i think they got backed into it reluctantly. no, art, your recollection is my recollection, having reports on it at the time. of course, along with steve. but, hey, i d love to see those e-mails bunning has seen. it would be a $60 billion bomb blowing up in a financial market already melting down. what s interesting, steve, that thursday we were at the brink anyway. at the end of the day no, we were at the brink. right. we bailed them out wednesday tuesday night. by thursday, we were still at the brink anyway. good point. coming up, we ll go around the horn as we countdown to the opening bell. squawk box coming right back. 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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