An address to congress tonight. And stocks getting a slow start to the week. The s p falling for a fifth straight monday. Today is tuesday, anyway, february 12th, 2013. And squawk box begins right now. Asian markets shrugging off the tests in north korea. But markets in china, taiwan remain closed. North korea says a miniaturize ed Nuclear Missile was tested. The u. S. Ambassador to south korea responding to all of this. Its a very provocative act that undermines Regional Peace and stability and i think it would be critical for us to coordinate very closely with you and our colleagues in south korea going forward. Were going to talk more about washingtons reaction and what this all means for geouncertainty and our guest hosts for this hour, Jared Bernstein who works as the chief economist for joe biden. Tony is joining us and Capital Alpha markets managing director Chuck Gabriel. Theyre also going to talk state of the union. John harwood sat down with dave axlerod yesterday. He will join us. Later were going to be joined by valley jarrett, denny hoyer and Jeb Hensarling. And our corporate newsmaker of the morning, mutar kent, the cocacola chairman and ceo set to talk earnings and outlook, thats all coming at 8 00 a. M. Eastern. But first, michelle has this mornings headlines. Michelle. Yeah. The National Transportation safety board investigating whether tiny fibers inside the lithium ion batteries could have played a role in battery failures on boeing dreamliners. The tiny formations are known as dendrites. Battery experts say they can cause short circuits. Banquets hosty brands has received the go ahead to continue with bankruptcy for some of its brands. Moodys says down side risks have proceeded in the last few months. The Ratings Agency expects real growth of the g20 of around 2. 9 this year followed by 3. 3 in 2014. Joe. Michelle, lets get back to todays main political event, the state of the union. Cnbcs washington corespondent john harwood joins us from chicago. I know, you have David Axelrod. Well, we have valley jarreerie. So there. What did you find out, john . It will be interesting tonight. I know youll be watching. I sat down with david. Hes never going to leave barack obama very far. We talked to him about the state of the union, about its impact on some of the fights like the budget sequester. He said hes not sure that the sequester is going to happen or not, whether theyre going to make a deal, but this is the single biggest opportunity hes got to make his case on why we need revenues as well as spending cuts. Here is David Axelrod on the significance of the state of the union to that effort. We have a standoff on these issues. This is the largest audience hes going to have. The goal is to move Public Opinion because thats what moves congress. I think some of the reasons we now see some moment on issues like Immigration Reform, for example, has to do less with what the president said and more with what the American People have said. I also talked to david about the attitude the president has shown since the election. He certainly had a little bit more spring in his step. Some people say hes been cocky since that election, throwing a couple of elbows at republicans in the inaugural address. David said the demands of the job dont let you get too cocky, but he didnt deny the president is certainly feeling its oats since winning a second term. I dont think that the array of challenges that he wakes up to every day allows for cockiness, but certainly theres a confidence that comes with affirmation of the American People. But i also think that a wise president doesnt overreact to that. He understands these are tough politics and the politics are still difficult. Its a determination to try and push that that and get things done. Finally, i talked to david about some comments i got from a top wall street executive who said david was responsible for some of what he called the demonization of wall street figures by the administration after they took over. David said, well, maybe a word or two went in the wrong direction or maybe we stepped slightly over the line at times. But fundamentally, the problem was irritability on wall street not with the Strategic Decisions at the white house. I dont think i was responsible for that. What was responsible for that was irresponsible behavior. I dont think anybody was, you know, as a strategy dem demonizing the Business Community. We were too busy trying to save the country from the impacts of some irresponsible decisions and a handful of people on wall street made. So, joe, weve set the table for tonights speech and the president is going to try, as youve seen, to focus on the economy, the middle class and some Spending Priorities in addition to fiscal austerity, joe. Right. Were going to be investigating a lot of what we hear. Weve got guys this morning, steny on later. We have Jared Bernstein grabbing my script. Do you just want to see what youre saying . Yes. Hes not saying anything that was written there. Yeah. He never does. Joe, axelrod didnt drop a dime on jarrett, but its possible that jarrett was the one demonizing wall street. I find that hard to believe. Whenever he comes on, he does. You know what . I was and we have to go and keep it business oriented, but i just wonder if chuck todd is really yanking your chain a lot about because theyre much better than duke this year, miami. They were in one game. But who is voting duke income one still . Who are those people . Fortunately, joe have they been on vacation for the last month spp. Fortunately basketball seasons are longer than one game and were going to have another shot at miami. I believe theyre going to come into Cameron Indoor stadium and well see whether they beat us by 30 points. If they beat us by 30 points in cam dem indoor stadium, im bowing doing. Indiana, its going to be great. But i digress. John, thank you. And nice work. Youve got connections, but we have valley jarrett. I dont know what im talking about. See you later, john. Thank you. Okay. Lets get a check on the markets this morning. The price of oil this morning, flat. Wti, 97 a barrel. See if we see any reaction of what are the reports of a Nuclear Explosion in north korea. We get the yield at 1. 96 . So, no, not much. As for the dollar, weve seen a recovery in the yen. 94. 25. 1. 34 for the euro, the pound at 1. 26. And the price of the yield this morning, 1632. Kelly evans is standing by in london. Michelle, thanks. I wanted to turn your attention to right here barclays up 4 today. This after the bank delivered its long awaited turn around plan. Investors thought the plan was somewhat less aggressive when it came to restructuring the business than it might have expected. Just swinging around, its otherwise a generally quiet session. Advancers outpacing decliners by about a three to two ratio. Overnight, china is still closed. We closed all week to celebrate the Lunar New Year. But, again, lets take a look at whats been happening with shares of barclays. So the investors saw a knee jerk reaction up 4 after the bank delivered 2012 earnings. Came out and talked about his restructuring plan. The way it deemphasized the Investment Bank under the new ceo Anthony Jenkins who came in in the middle of last year after the libor, after a series of the bank. Analysts do have a series of concerns about the bank. Its r. O. E. Last year was up. I think the analysts havent had a chance to digest what were launching today because we havent done the mess tagsz. So what we are is asking everyone to work, we have to extra teej cannilily or cost base to our net income. That is what were talking about today. Its a confident plan. Im confident as the investors digest it, they will appreciate it the. As ross pointed out, he nicely matched his tie there with barclays blue. G7 is out saying it wants to see market Oriented Exchange rates amid all the rhetoric about currency wars. That may sound type. The real point is that theyre not coming out to more harsh talk about what japan is trying to do to weaken the yen and immediately we saw this knee jerk reaction with the yen going up towards the 95 level and now its pulling back a little bit. The swiss franc has been weakening after those comments and after the s b Thomas Jordan came out and said he thinks the franc are overvalued, but theyre going to maintain the 170. Effectively, no one saw that statement as meig its a no go when it comes to using currently as a policy tool. Pay by tweet, that is the question. Why American Express buying a new xbox or even a gift card will soon be as simple as a hashtag. But first, its fat tuesday. 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Equity futures at this hour suggesting a flat open. The dow would open higher by 9 points. Making headlines, twitter and American Express are teaming up to introduce a pay by tweet service. Joe cant believe that. He cant wait. I have no idea what youre talking about. I know. Am ex card holders who link their card to their twitter account will be able to purchase products directly from within the social network. It can happen. Here is an example of how it will work. Say you want to buy ads 25 American Express gift card. Youll be able to buy it for a discount today by tweeting buyamexgiftcard25. Really long. American express will ask you to confirm your request in a tweet. All products will be shipped with free twoday shipping. Its basically a promotion to get people to tweet more about American Express and these products, right . And then they give you a discount for effectively advertising. What is a hashtag what does it do . Its a number, isnt it . So i can go on to tweet deck and do a search for that hashtag. I dont know what a tweet deck is. They collect tweets. Jarrett and i have no idea. So if i hashtag westminster, every westminster tweet will come up the. Im really not that interested. I know. Can you do it on a blackberry . Today is the day i switch. Im powering it down right now. Those people deserve it, those crack berry people. Torsten hines is not crackberry. Yeah, but hes you know where he broadcasts from . Waterloo. What does that say to you . Didnt something bad happen at waterloo . Really bad. Jared bernstein, Chuck Gabriel and brian bradsateen, lets talk. I want to go to washington first and understand your perspective on it. Jared, now what do you hope we see . What do you think we see . I think we see a follow on to the kind of inauguration address where the president talked about the role of government in society. Tonight, i think hes going to talk about pretty robust role of government in the economy and hes going to focus on mice. Not the rodent. Its an acronym for manufacturing, infrastructure, clean energy and education. Those are the four topics i think youre going to hear. There are republicans around the country rolling your eyes as youre saying this. Yes. I understand that. I think part of the president s job tonight is to explain how hes going to bring republicans along, but remember, hes talking over the republicans to the American People what happened to the middle . Let me just say, the complaint i think the complaint against the president and the congress in general has not that theyre not talking to what Americans Care most about right now which is the economy ask jobs. And thats true. The budget deficit he was talking about 18 and 19. Im just saying that Global Warming and what was the other thing . Theres immigration, theres guns. Like 18, 19 and 20. Exactly. Youre going to hear a little bit about those. But it is time. I believe the white house believes its time to talk over washington and to the American People about the economy and jobs. And i think thats right. Im going to ask valley this. Weve heard about we want to help the middle class, we do. And we want to do education. We want everyone to have equal opportunity the. And maybe even, tony, infrastructure with a Public Private partnership. But why not throw a bone to the private sector . We know the government can do a few things to help job creation, but its a private sector thing. Why not throw a bone on Corporate Tax performance for the private sector . Why not say, look, im going to look at a lot of these regulations. With growth in mind. And im going to thif about growth when we cant about anything. I dont think its a good ideas. I think you mentioned a couple of areas, and ill bet tony would agree, that when you talk about education and infrastructure, historically republicans have gotten behind it because those are important. You used the phrase my way or the highway and theres a sense right now in washington that the administration has moved to the my way or the highway. That really is where theyre going to be. I think its going to be a lot of line drawing in this speech. Weve seen some of that messaging come this week where we say, you know, we can do entitlements. Its not going to be on the backs of seniors, not going to be on the backs of a lot of potentially affected communities where you say its. Thats right. Is he going to i think the market would like to see some signs that he aint just talking beyond or over congress. Hes a terrific campaigner when it comes to governing. He does do a my way or on if highway. I love dan henningers analysis last week suggesting that the president is a little like the mad max and the thunder dome. Two men enter, one man leaves. He needs to become a more a little bit more cooperative. I think this is all a tricky thing. Certainly the president in the earlier state of the Union Addresses didnt reach out to congress, said im going to work with you, and i think the sense very strongly and correctly is they really blast him away. So its not exactly like the president is out there, is the only person in washington who is not cooperating. Despite the past couple of lousy days, there has been a sort of strange at least to me honeymoon period that weve been experiencing where everybody thinks politics dont matter any more, the world moved on. Is this going to put politics into center stage . And is that going to be bad or the market . I dont believe so. I think theres enough of an underpinning for this market that they have a high threshold. So people will look past whatever threshold . It would be if we internet march 1 and we start the sequester and we go to the end of the month and have a continuing resolution expires would sequester be that bad, 85 billion in spending this year . Not at all. The only thing that would spook them, michelle, would be the debt ceiling. And the issue is whether a couple of months of sequester and maybe vary short Government Shutdown isnt enough to prompt the two sides to speak, all while were doing price discovery and budget resolutions, were finally getting one from the senate. Should we hope for one at this point . I had someone yesterday use the word lame duck already. Theres not going to be me deal with congress. Congress is not going to be very amenable to talking or at least the house and the president doesnt really seem very amenable to talk to him. So hes going to do everything through executive order so there will be no Corporate Tax reform, there will be no big dooelg deal on entitlements. Those moments have passed and that was last year or the year before. Never mind. When they did the deal of raising taxes on 400,000, you have to blow up a lot of opportunities to get things done. It will be difficult od tax reform, oregon individual. A lot of us would like to say Corporate Tax reform. Everybody says they want to it, but when you start trying to do the math and trying to find out if youre going to do tax reform, we need to have a collection of winners, right . You need to have some winners. Youre always going to have losers. How about winners in this . In fact, we try to put the pieces together and is try to do tax reform and entitlement reform. Tell me who the winners are to get this done. One thing. I find it hard to believe, chuck, that the market would just shake off the sequester. If you believe that the sequester actually shaves half a point off gdp growth this year if it sticks. I mean, thats not huge, but its not nothing. And its the different between growing below trend and growing at trend. Its the different between the Unemployment Rate staying where it is or maybe coming down a tick or two. I have a hard time believing the market would shake that off. We dont have a monetary cliff here and i dont think this is a cliff with regards to the beginning of the sequester. If we have an extended sequester, i t