Every morning here since the election. Fiscal cliff, big, big issue. There are now, it seems, growing numbers of people on both the right and the left who would like to see us just go over that fiscal cliff. How big of a problem would that be . That would be a big problem. I actually still believe that those the democrats, the administration, republicans in the final analysis dont want to see that happen. They do understand that not only would that present a problem in the near term as we went over the cliff at the end of the year, but we still then have the whole debt ceiling fight that would transpire shortly into the new year. The issue isnt simply the negative result of going over the cliff, but its also that business, consumers, everybody continues to hold back on the uncertainty. And we believe the economy is pretty well positioned potentially in 2013 if we can put this behind us. So i think a lot of whats going on is what you would expect to see in this negotiation, very public negotiation, which is not the best way to do it. I think at some point, the president and the speaker are going to get in a room and have some very serious dialogue as this gets closer. My view is that both the administration and the republicans would prefer to put a deal together, and the outlines of that are on the table. You talk about the cliff or the abyss . We need to separate the two. It would be nice to have like a bridge to that 4 trillion deal that includes entitlement, tax reform. In fact, i dont know why the president isnt talking about that more with the simpsonbowles. The president did say that he doesnt think theres anything we can get done. As a bridge to that. Always talking about the high end. Actually, joe, i think the administration wants to see a deal come together here. For what, the fiscal cliff or the fiscal abyss . For both. For both. So that a down payment a compromise down payment on approximately 4 trillion. I think when you pull it apart, you have about a trillion dollars in Discretionary Spending that has mostly been agreed upon and you have taxes and the entitlements, the mandatory. The entitlements are the sticking point. Whoa. Did you see that . You think thats funny . Set that up for you. You think thats funny, mac . You do this . Look at this. This is booby trapped, man. It wont stay up. Which can really be a problem. You can laugh at that. Its okay. Nobodys watching. Its 6 00 a. M. That got you going. When you look through, i guess the devil is in the details in terms of what youre looking at in spending, cuts, entitlement cuts and with the tax increases, and youre right, both sides have put a plan on the table. Theyre pretty far apart, but at least now you know theres some framework for how you get to the middle. What do you think, 1. 2 trillion in tax increases . I think the exact number is part of the negotiation. I think the administration is looking for as much as a trillion six. The republicans have 800 billion on the table in terms of revenues. I think the deal is in and around the republicans getting real commitment to entitlement reform and reduction. Thats not there yet. No. In return for the president getting more of what he wants on the revenue side of the equation and potentially higher rates, which i think he is serious about wanting to be part of. Sounds like hes doubling down on that. Even though Simpson Bowles is 28 . So he just wants to go up there and we may never come back down. But joe in the final analysis if we get a deal that is real, this is from a market standpoint and i think from the American Public standpoint, we get a deal that is real where the 4 trillion the spending cuts, actual spending cuts did you see the journal today, greg . The lead editorial of the journal shows what those supposed savings are. Its winding down the war, which is already happening. They call it totally mythical numbers, that nothing is actually being done at all. The Washington Post did a column on this where they look through some of Tim Geithners numbers and it was a little concerning. Smoke in mirrors. Goes after the entitlements. But this is the deal thats going to happen. The cuts there are going to be real or the republicans wont play. Right. And in return, the revenue side of the equation is going to be more consistent with what the president s looking for. I think hes serious about the rates. You cant even guarantee that guys like demint and that wing of the part you saw what he said yesterday. I didnt see what he said. He said no way. 800 billion in tax increases. Were saying it now like its normal. 25 of gdp for Government Spending and youve got bloated government already, you start there. You start at Government Spending. You dont immediately start spending another 50 billion in stimulus. Thats going to be the question that boehner has to deal with. The president will have to deal with the far wings of his party. Boehner started doing it. Did you see they removed two Tea Party Members from the Budget Committee . I dont want to raise taxes to fund 25 of gdp. And actually, the american taxpayers are being told to pay their fair share. They want to see real entitlement reform as well. But you have to deal with the issue on the table. I mean, the spending right now is a percentage of gdp is 24 . Its projected to go substantially higher. Do you know that medicare and medicaid didnt exist 50 years ago and theyre now a quarter of the federal budget . I know. It was supposed to be supplemental. David walker was on the other day talking about obama care which is supposed to save us a trillion dollars and the actual cost, what it added the our entitlement is 12 trillion. Just that we did in the last two years. Or whenever it was. But in terms of where we are now in this negotiation, i believe that both sides in the final analysis want a deal and the compromise is in the revenue side for the president and potentially rates which i think hes serious on and real entitlement reform for the republicans and the american people, markets, business, confidence, the able to move forward in 2013 is all a function of doing both of the things you talk about, joe. Having an agreement to avoid the debt, the fiscal cliff, and then having a down payment on actually getting the 4 trillion identified. Howard dean is a deficit hawk. Liberal, but he is a deficit hawk. He doesnt say maybe if we cant get a deal together, maybe wed be okay with the fiscal cliff. He says that is the best deal for everyone, the best deal for progressives, just to do it. To go back to the clinton era rates. You get rid of three quarters of the deficit just on tax increases at that point. And he says you get defense cuts. You cant get defense cuts any other way. And hes not the only one. Theres a lot of people on the left and theres quite a few people on the right. Im glad youre optimistic and a lot of ceos and guys in your position if you run a company, you dont need consumers petrified and Business People petrified. This is the last thing we need if you run a company. I understand you have a horse in the game. But you also have the double trigger. If you go over the cliff, weve got the debt ceiling fight right afterwards. Its not like thats six months down the line. Thats in if first month, six weeks of the new year. The other thing, depending on where you stand, the idea that we just get rid of congressional approval of the debt ceiling at all, which is that ludicrous proposal that was in the president s plan. Thats not and would you really want that . Would you really want not having any more oversight over whether we keep raising the debt . But theres also a compromise thats potentially there on that as well. You are all about compromise today. Hes a deal maker. You guided that place through the financial. You sold that company and to bank of america, right . I had a lot to do with it. You did it, i thought. I thought you said weve got to do this. Im allowed to say that. You were under fire. You were cool and you did that. It was a difficult time. It was. This negotiation is very important for the country. And so i was going back on the debt ceiling. Mitch mcconnell has something out there from the middle of 2011 thats a potential compromise, where you dont have the fight about the debt ceiling every time the president proposes it. Congress can with 2 3 override it and the republicans can maybe say theyre not happy with the progress or maybe you have triggers along the way so you dont have the debt ceiling fight every time as long as the expense agreement cuts that have been reached are hit along the way. Theres a potential compromise on that one as well. Its a very important topic and its not going to get done if both side dont walk away. Neither side can do this by themselves. No. Both of them can go over the cliff. But neither side can reach an agreement. With real consequence. I know. But even howard dean said we might have a recession, but it would be worth it because wed finally clear the debt. Id like to see some real math. The Washington Post laid out that tim geithner i think is a great guy, but 44 billion in his savings that he found was just because they pushed a payment out at the end of the ten years. They moved the timing. Volcker put us into a recession. That was fully orchestrated for a reason and there was a lot of pain, but it set up an incredible two decadeperiod. And i think thats what howard is talking about now. It did with hindsight, but you never know. You dont. But you look at japan, they never did what they needed to do. And here we are, we escaped the financial crisis and the money market, it looked like it was going to freeze up and the huge fortune 500 companies. We avoided that but we just keep its like we think were permanently okay from negative situations and i dont know if we are. Things happen in this world. Its still tough, right . It is. But this is a very important topic. You borrow too much and sooner or later austerity is awful. But if you cant just keep the credit card going if your kid has if its 50,000, you dont say heres another 50. I dont want you to tighten your belt. Thats why in the final analysis i think the administration recognizes that and theyre going to this administration . Yeah, is going to come to the table on the entitlement cuts that need to happen to make the deal work. You were with him a couple days ago, right . With some of his top advisers. You cant say which one . A group valerie jarron and neil wallen and i was with group of seven or eight. And you walked away from that feeling optimistic that there will be an agreement reached . Yes, that the administration wants to reach an agreement. There are things they want. Things they know the republicans want. The republicans know the same thing in reverse. Whos going to get the ambassadorship to russia . You or anna wintour . Thats not why i was there. I was there because of the importance of the topic to the country, to our clients, to our employees, to everybody. Can you imagine did you see that . Yes, i did see that. Whoever doesnt get wasnt, i heard Sarah Jessica parker. I read something about lazarus. Im supporting mark. I dont know, the queen of mean . The prada thing . They deserve it, though, over there. Lets talk about some know,s that actually have a much happier ending. There is a deal to end the eightday los angeles port strike. Striking harbor clerks reached a tentative settlement with management with the ports of los angeles in long beach last night. That strike idled most of americas strongest cargo complex. I think the strike originally started on november 27th. If you think its not a big deal, theres a billion dollars in goods that goes through this port every single day. Its the largest port in the United States and it was affecting not only that port and all of the ships that had been sitting out waiting to get in with those goods. Also truckers who come in and bring those good across america. They had been idled, too. It looks like the port is going to be open once again today. Also today is expected to be a big day of protests in egypt. This is video that youre looking at right now from Cairos Tahrir square earlier this morning. Things were quiet when this video was taken, but expected to be much different later on. Television stations across the country planned to go dark today, joining a growing list of industries on strike against newly elected president Mohamed Morsis power grab. Weve seen what hes done over the last couple of weeks. These protests are in response to several decrees issued by morsi that gives him near absolute power. Last night an estimated 10,000 people crowded in the center of alexandria. Tens of thousands rallied in tahrir square. And 100,000 demonstrated in front of the president ial palace. And back here in tus, a busy economic calendar. We get the adp employment report, which is i dont know whether its better or worse now. Well see. Theyre looking at oh, private payrolls. Coming in at 125 in private jobs. 79,000 or 80,000, which was closer to the total number. We must still be losing government jobs. 8 30 eastern, a revision to Third Quarter productivity and costs. And then later this morning, a november ism number, but its nonmanufacturing. Heres a few early stocks to watch. Facebook is going to join the fa face the nasdaq indix. Pandora media is lowing its Fourth Quarter guides. They are worried about the fiscal cliff. Shares dropped after hours. Thats not where theyre trading anymore. You can see theyre actually down at around 7. 70. Its a big haircut. Shares of Mattress Firm also falling sharply. Wow. Thats like 7. The Company Giving a dim earnings and revenue outlook, noting lower traffic growth last month. The Company SellsNational Mattress brands like seeley and simmons as well as its own exclusive brands. Time for the Global Markets report. Ross we Ross Westgate standing by in london. Anna wintour is going to be your ambassador. Nothing will surprise me anymore. You could get Sarah Jessica parker. I dont know. Take your pick. Sex the city. Yeah. And youve got me. Is that okay . Kate might be having twins. Yeah, go ahead. Were getting down to the flat line at the moment. We had a bit of a bounce this morning. European stocks yesterday very flat indeed. About as flat as the pancakes i make. Take a look at the european board. Were down just up eight points. The ibex actually down five. Very disappointing retail sales out of the eurozone for the month of october. Follows a shop revision downwards as well for september. So austerity really biting in. Despite some better data out well, i say better. The services pmi final print for the eurozone came in up better than expected, but its still deeply in contraction territory. So were firmly in recession here in the eurozone and in the uk as well. We saw services pmi come in weaker than expected. Contraction territory for new orders this is the british chancellor today. George osbourne will be delivering his autumn statement where hes probably going to say growth isnt Strong Enough so were going to not really meet our budget targets as well. All these things coming into play at the moment as we wait for the u. S. Session. We did have a good piece of news, though, out of china. The new leadership saying wle do whatever it takes to maintain solid Economic Growth. The shanghai composite up nearly 3 today. That boosted retail stocks. We also had a spanish bond auction, prefunding for 2013. Got nearly the 4. 5 billion they wanted. Yields in spain. The tenyear did come lower on that auction, so not a bad result. And bid to cover was okay. So spanish yields slightly higher after that. Didnt raise the maximum amount. Thats where we stand. Its another cautious day under way in europe. Back to you guys. Might get my haircut like hers, ross. You know, that anna wintour. That bizarre do you think you can manage it . A page boy. You think you carry that one . Youd look awful. You know what . Were going to do it. Youre asking these guys to put me youd look good in that one from dumb dumber. Yeah. I make that sound. The most annoying you want me to do that . No, we dont. Morgan stanley is trying to bolster lending. Some advisers are said to have left the firm due to a lack of lending capacity. You didnt bargain for this, did you . Were asking you about your company. Is that okay . Absolutely. Greg funding we already know he joins us. You did provide investors with an update. Yes. Ross, you want to get into this conversation as well . You hear him . Hes gone. Hes gone now. Our audio guy is drinking or something. What did you tell them . I told them that we have a great business in wealth management. Weve got 16,800ish Financial Advisers. We feel like were well positioned for growth Going Forward. Weve come through a difficult integration and are still putting enhancements and adding functionality to our technology platform, which is one of the things that our advisers have been concerned about. And were positioned for growth. So particularly if we get some market in 2013 thats always the thing. Youve got 16,700 retail brokers. Financial advisers. You really want the fiscal cliff to be settled. I mean, this would be awful for you and your firm and for a lot of americans, too. Be for Financial Advisers to have people paralyzed again. It would be the worst case scenario. One of the things i said at the Investor Conference was that we feel like we can grow our business even if the market backdrop remains cautious, which is how its been now for transactional activity has been lighter. A percentage of assets. Thats a big part of our growth story. We call it our managed accounts platform. We have 556 billion in managed accounts at Morgan Stanley wealth management. Thats one of our two major growth areas. The second being the lending business, which you talked about earlier. Weve been working the last couple years to build our out banking and lending business. Our peers are bigger in that. But as we get more and more of our Financial Advisers to lend with t