Transcripts For CNBC Squawk Box 20131220 : vimarsana.com

Tenyear yield would rise or fall. I hear him yelling from across the room. Fortunately, viewers, you cant. That bet was for something we would we looking at, Something Like 2. 87 . Where is it, joe . Go ahead. Turn on his microphone on. Noumber one, it watts the en of the session today. How are you going to bow to me if we wait until tend of the session snm i am not here next week. And youre talking about less than two basis points. A win is a win, baby. Thats a fifth of a point. Ill take it. My point was youve been practicing . Listen, i looked up today, theres a curb your enthusiasm episode. And i thought, you know what . Any curb your enthusiasm episode, you can probably get fired for even talking about it, but there is one where he wants to get a bow from someone and he see these guy give a 90 degree bow. The complete one, right . And he gets a 15 bow, which he finds out is dismissive. It is. And youre getting a 15 you are a welcher. No, im not. Here is your bow. Youre a sore loser. Its not even a fifth of a point, beck. You want me to start saying that everything sorkin says is right for 20 basis okay. A point in the other direction, you would say dont worry about it, beck, you dont have to bow to me . Im picking up my pen. This is not a bow. All right, all right, igy degre i digress. I thought it was tend of the session. Okay. We can wait until the end of session and you can bow when we come back after january 1st. Well talk about the important stories of the morning. The Senate Getting some Business Done after leaving for the holidays, including a deal surrounding some of the president obamas nominees. As part of the deal, the confirmation of janet yellen is now expected to happen on january 6th. There had been a take of a talk of a rare saturday session where they would actually go ahead and put her through. But yellen is going to have to wait until the new year. One of the appointments expected to be approved today is John Koskinan as the new leader of the irs. The other major piece of the Senate Agreement is to vote to pass the 620 pentagon bill or the National Defense authorization act. Lawmakers have been under pressure to get this done before december 31st. And this bill gives the Defense Department authority to issue combat and hazard pay as well as recruitment. Right now, lets get over to appeared rue with more of todays top corporate stories. I think if joe wants to change the rules of the bet, we should also change the outcome, maybe even sitting on one knee. Could you sit on one fooe for one week . Congratulations. 20 basis points. Fooel feel really good about that. Not even a quarter point. The basic thus of what i was saying, its true. And i gave you credit for that on thursday morning. Nothing happened. All you did was piggyback on bec beckys call, yesterday. Sure. Ill take what i get. Here is your bow. See if you can get it. Im ready to bow. Did you see it . That was like a 11 bow, not even. That was like you went backward. Also, lets talk about yeah, i did. It was a reverse bow. Well see whether these guys are going to bow today. Blackberry is expected to report Quarterly Results about 7 00 a. M. Eastern time. This will be the first time that theyre reporting under the leadership of their interim chief, john chen. Hard to believe they could do that much in a month or two here. He was expected to turn things around at that troubled smartphonemaker. Chen will talk exclusively with our own jon fortt today. Thats coming at 11 00 eastern time. Dont miss that. Also, Sycamore Partners is expected to buy jones group at about 1 15 a share. Do you wear any of this stuff . And get this one, citigroup reportedly getting ready to make a move. Theyre going to cheaper real estate in new york city. Crane real estate saying the company is going to relocate their headquarters from Lower Manhattan from their current address. They already are down downtown in the big citigroup building with the red umbrella in front of it. Do they still have the umbrella, guys . You guys arent paying attention. I dont know. Youre talking to yourself. I am. Its endearing to watch that. Im looking over and telling me more about larry david. Honestly. I saw the episode. But it involves a japanese restaurant. Theres no you cant im not going to even go there at all. Theres not a single curb your enthusiasm episode you can talk about without and yet here we are. Anyway, nike is a stock to watch today. The dow component reporting Second Quarter profit at 59 cents a share. Revenue is in line at 6. 43 billion. Its futures orders were up better than expected 13 . And one comment id like to make, here we are, blackberry is such a social phenomenon that we dont care now that its a 6 stock with a 3 billion market cap. We act like were talking about like a dow component or something. Its because everyone has one. Thats why we still care what they say, right . Its minor. Its the inflexion point of a kodak. Everybody had a camera. They dont have it any more, but they have these romantic notions about it, becky quick. Ste has one. And thats sort of whats going on. Right here on set somewhere. I drove around yesterday looking for a photo mat to drop some film. Seriously . No. Is there any place that develops photos any more. I have a place. Oh, you do . A couple blocks from but they dont develop stuff that youve got in a camera that you hand over . You could if you would like to. You still can do that . Yes. We dont do that, but you could do that if youd like. You can also email your photos. It is incredible the way music changes, too. Someone just a couple of years ago someone on some tv show is getting a cd player for christmas or something. Its do they sell cd players any more . I believe you can still buy cd players. Its unbelievable how apple its gone. The cd is basically do you remember having a 3. 5 floppy disk drive . You have to be real careful with that one. You have to be real careful with floppy disks. How about a 5. 52 floppy disks. Do you remember the big one . Oh, i do. They were square. I more remember the 8track tapes. Those things, trying to carry them around in your car and what . You dont i never had an 8track. I know what they are. And you know what people would if you had one that was in your dashboard that came with the car, it was like amazing. Most of them were like these big clunky things hanging underneath and they would have a thing where you could remove it. My parents have one, too. We have one with metal records. Really . Yeah. The markets the big story yesterday and suddenly, i mean, its weird. I guess 1200 was the number that people decided they were waiting for because did you see the wall street journal making a huge deal that the putting the brakes, gold tumbles, putting brakes on long rally. Now, the brakes on that rally were put on a long time ago. Two years ago. But i did the same thing. Yesterday was silver under 20. It is staggering. And thats one thing that if you want to look for a market, you know, unlike the tenyear, which barely reacted, the gold settled at a threeyear low yesterday. Unlike the tenyear, which showed really no reaction whatsoever. I can give you credit for that. Yeah, i know, in the market, 300 points. Anyway, the markets have more data to react to this morning. A final revision of the Third Quarter gdp will be at 8 30 a. M. Eastern time. Thats still a half hour before i actually have to pay off the you make it one you had a rough week. You had a flai flat tire. You have this bet that youre probably going do lose. I have a cold. You still have the cold. I do. But i have been, you know, a pretty good record for december. I know you have. Economists looking for a 3. 6 today, and one of the big issues facing washington and wall street in the new year will be the debt ceiling. Trer treasury secretary jack lew warning that the government could run out of money as soon as february to take care of its bills. Paul ryan has said they want some concessions before they sign off. He said may keystone. I think harold has recently bought a bunch of railroad stocks. Because hes given up on the pipeline deal . Yeah. Now i think no, i dont know what his motivation is. Warren buffett, now its rail because of what is happening . Someone yesterday like the north haern huge lights around that area, too. But part of it is you have to bow to the president as my bow or a true 90degree bow . I dont even know who does a 90degree bow . If youre really serious about it . Thats a downward facing dog bow. No, i was thinking about i have seen some of those bows. Usually thats like giving your no, ive seen the president in some Foreign Countries bow. In japan or some other parts of asia . Thats what the larry david bow was with the card, with a Business Card . In a restaurant. Im doing a 20 point basis bow. Sore loser. No, im okay. This they courtesy over there with the queen, right . Arent you supposed to courtesy still . You dont courtesy to the queen. What is the etiquette, prince . If youre introduced to the queen, i think ladies do do a small courtesy and men do a bow. A bow. A 90degree bow . A 20 degree bow . Yeah. You know, yeah, that would be fine. We will take it. I want a courtesy. And theres a lot of things if you meet the queen region schneider you should read up on it. Right. I dont think youre allowed to turn your back on her. Theres a bunch of different rules that go along with that. I think Silvio Berlusconi broke the rules when he met the queen. I think he might have touched her. I dont even want to here we are. Two days yeah, two days after the fed and its a quiet session for european stocks today. We are still waiting for the upside, but weve come down for the session low. 6 to 4 advancers outpatsing decliners at the moment. And weve had options expire here, as well. Quadruple witching in the United States. And it has actually taken these levels down. The ftse 100 earlier was up around 0. 5 . Take a look ate now. Its just up 3 points. Whats been happening is plenty of traders have been offloading long ftse position because theyve been having theyve had a lot of put options on. The put options have expired and thats basically i meant the ftse has come back to the flat position, as well. The cac 40 is down 5 points and the ftse mib is up 5 points, as well. Its been expiring impact today here in the uk. Looking at bae systems, down 4. 75 . This is a defense contractor. Yesterday we talked about saab doing well because it won that brazilian contract at the expense of dassault. Dassault may have picked up a contract and the bae may not be having great negotiations, either, in saudi arabia. So that is weighing on a little bit, as well. And weve had current accounts data, twin deficit problems for the uk. Weve had the biggest current account deficit in decades for the uk. Is that is the biggest since weve seen 1989. At the same time, government borrowing was more than we expected it to be in the uk at 16. 5 billion of Public Sector and we thought it would be around 14 billion. Thats where we stand. Back to you. Thank you very much. Appreciate that, ross. A little courtesy . No. Dont you put one leg back a little bit . Do you want a courtesy . There you go. That is nice. Dont do that in your kilt, please. Now that we know about kilts. Weve got a couple of International Stories to talk about this morning. A high profile pardon and a strip i stripping explain. As in taking off his clothes. Its a him . Yes. Its not a her. The president of mexico is expected to sign the new oil reform law into law today, which is going to law Foreign Investment into oil for the first time in 70 years. Weve had an exclusive view of one of the leaders. They needed to do this because im getting to the stripping congressman. Its coming. How about that big guy in mexico . Hes not we dont need all right. Good. They yeed to be selfsufficient. Theyre not any more. They definitely need Foreign Investment. Here is what they think the ramifications will be according to the undersecretary. In mexico, we have had for the last eight years a decrease in oil production. We have fell from 3. 5 Million Barrels per day to 2. 5. We have almost lost a Million Barrels a day. We believe we can increase production to 2. 5 Million Barrels a day by 2025. Sounds great,ite . Some people arent happy about this. Members of the Opposition Party in mexico, take a look at congressman keneho last week in front of parliament, he did not want this law to pass. And so he demonstrated to everyone what he thought was stapg, that they were stripping mexico and mexicans of their assets and their oil. All right, guys, he has his pants off. It gets better. He has sorkin underwear on, too. I dont have underwear like that, please. This is an underware inspired show. That guy has a lot more fabric than your underware. Black tighties. We cant caught this tidy whiteys. Stop. Thats wow. I wouldnt strip with that body. Or mine. I agree. Yeah. So hot times in mexico over oil reform. So he thinks theyre stripping them of their assets . In mexico, its always been deemed that the oil in the ground is owned by all the mexican people. Its very different in the United States. In mexico, its communal. Theyve always felt if there was too much Foreign Investment, you would be stripping mexicans of what they own communally. So the plan to take it out and export it or is the plan to take it out and use it internally . No. The plan is simply to allow Foreign Investment, they need to do deep water drilling that they cant afford to do on their own. Now theyre going to have production sharing contracts which allow Foreign Companies to claim some of the reserves in a as part of the payment . Right, exactly. Theres a lot of semantics because they couldnt violate the spirit of the mexicans and at the same time. In your book, you know im ride, did you talk about Property Rights . Prohibit rights like crazy. Because that came about around the same time that adam smith. And you started and tragedy of the commons, which someone doesnt own something, no one takes care of it or replenishes it after they use it. Hence mexico. Hence mexico. Mikhail khodorkovsky has been in prison for more than ten years. He was one one of the richest men in rush ra. 15 billion he was worth. He ran the Largest Company in russia. Putin dismantled it. What was his crime . Supposedly it was tax evasion. Many people believe it was simple live because khodorkovsky funded opposition against putin. So what happens to him now . Thats a good question. Justice in russia is capricious. The message were getting from putin is putin is embarrassed that so many high level delegations are not coming to the sochi olympics. I think he finds it insulting. Hes trying to look magnanimous ahead of this. So is he going to be running around the olympics . No. Khodorkovsky . Yeah. I dont know. Do you know when we heard about . Yesterday. Putin does a fourhour News Conference yesterday. And then at the end, as hes walking out, he mentioned, oh, by the way, khodorkovsky is getting out of jail. They went on to his jet in the siberian air strip, arrested him and and putins 100 billion net worth is how much is that they dismrajtsed the he probably moved over. Unknown. They dismantled the company, right . That would be a testimony to why you want banking secrecy laws in the world, right . Because everybody thinks these Swiss Bank Accounts are evil and bad, but when you live in a country where they can take anything from you, thats why you want to have a nice swiss bank account, right . A place where there is no justice. Good argument. I agree with that. Did you use your credit card at target . This is not the present that millions of customers were expecting this holiday, now the retailer is in full blown damage control with several critical shopping days left until christmas. The executive edge is next. Announcer before you hit the road, here is your travelers check. The Airline Industry is expected to make nearly 13 billion globally this year. That is according to the International Air transport association. So whats the outlook for 2015 . Thats next. vo you are a business pro. Seeker of the sublime. You can separate runway ridiculousness. From fashion that flies off the shelves. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. natalie ooooh, i like your style. vo so do we, business pro. So do we. Go national. Go like a pro. Right now, its time for the executive edge. The fallout from the target credit card security breach, customers jammed up the phone lines, the websites, they left scores of angry posts on various social media sites. Thats because target warned that 40 million credit and debit card accounts may have been breached between november 27th and december 15th. Anyone who shops at a target store in the United States during those dates could potentially have been left vulnerable in this situation. Target is in full blown crisis mode and has hired the forensic unit at verizon. All of this happened within a handful of shopping days until christmas. Guys, look, i dont know what theyre supposed to do. I think it was a malware that got sent in, software at the credit card swiping areas. I think theyre right to come forward and tell everybody to be on the lookout for this. But now youve got 40 Million People who shopped there between those days thinking, oh, my gosh, am i vulnerable inspect. Who is laibel in this . If Credit Card Company protects you initially, but can they go after target later . I dont know. I was very concerned about this whole story because i had shopped at target. I think he said, joe, penelope had once, too. But i think this is a much bigger story for retailers in general and just the idea of Cyber Security is an iffy situation. We are so reliant on these credit cards and debit cards. If somebody can get in and attack target like this, my guess is there are other retailsers who are equally vulnerable. The nightly news can quickly find someone who is affect by it. They had a lady on last night, the reason she knew about it, it was a debit card and she looked in her account and someone spent 1,200 in an apple or bought some microsoft something or other. I had my card stolen. I was trying to piece back. It recently canceled my card and got a new one. I was trying to figure out how long ago it was. Oh, really . Yeah. Because it got stolen within the last four to five weeks. I thought it was from another place that i visited. I caught charges from toys r us, American Girl store, but i caught it immediately. I caught it on the day. The thief went to American Girl . Korea. That sounds like a real are you sure you just didnt forget . No. I went back through because then they said we shipped it to some address in miami. So i had the actual name of the guy. But they dont know if thats the guy who stole it or if he bought something on ebay. I think its good that people have a heads up. Now, its scary if they get your debit card because i had my Checking Account wiped out completely once, ten years ago. Every single day, they would take just enough money that you wouldnt notice. Ten years ago, was that like 600 or 700 at the time . Yeah. It was a couple thousand bucks from a Checking Account and they would take it out, they took it from israel is where they would take it. I had used an atm card at one of those bodegas on eighth avenue in new york city and apparently it had a skimmer on it so every time anyone put their thing in, it would take the information and then they sent it off to israel and they took off the money out. And i will say that i give target props for this because the first inclination for a lot of place webs if youre a bank thats been breached, is to not tell anybody. This is a pr nightmare, but i think theyre doing the right thing by coming forward and telling people so they can be on the lookout and watch their account. Lets talk about the in, tinew times. The s. E. C. Considered financial companies, but backed after. And even warning those companies that Enforcement Actions were possible. They shelled those cases and at least to others because there was a lot of disagreement about whether or not they would be successful. Did you see they waited four years even to think about it then . So there was a lot of public pressure to look at it. Unfortunately taking big betts, stupid, big betts and losing your [ expletive ] is not against the law. Now what we need to do is hire Capital Requirements is number one, but you look at all the other no one knew how this was going to turn out. No one expected this to be the biggest housing bust in ohahis. Not anticipating that and betting too much is not against the law. But judge reykoff, and others think that maybe this is five years later when weve been hearing from the populist anger all along. I agree with you. But guys, listen in this piece, there was suggestion that the people would actually take these cases to court, certain cases wanted to bring them. Well, no, i thought it in this case it was the trial lawyers who were concerned. It was the head of the trial lawyers there who said it was the investigators who were pushing. He said wait a second. We cant make it but the guy who actually mike martin, who takes it and goes to court in some cases wanted to bring him. Maybe i misread that. You should hire Capital Requirements and making sure that something can fail without bringing down the system. You know, let people if they want to do that, theyre idiots, i guess you dont want depositors, obviously, losing the money. So you get higher Capital Requirements. But after that, people should have to be responsible for big, bad betts that they make, right . Thats the way capitalism works. You can win big, lose big, you know what youre getting into when you get into it. You shouldnt take down the system. Thats what you tried to do with dodd frank, right . Correct. Andrew, you made so much money on the term too big to fail with your book. Is it thank you. Its about a buck o 05 for every time you mention it. Out of your paycheck, joe. Like every time a bell rings an angel gets a fig. Friday just started in hawaii. We have a ges guest who is staying up late there to talk about the economy. So aloha to all of you watching in the middle of the pacific this morning. Good morning. Plus, bitcoin mania is alive and well, but does the Virtual Currency have a real future in china . That story is coming up in the next half hour. Squawk box will be right back. My mantra . Family first. But with less energy, moodiness, and a low sex drive, i saw my doctor. A blood test showed it was low testosterone, not age. We talked about axiron. The only underarm low t treatment that can restore t levels to normal in about 2 weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. Women especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these symptoms to your doctor. Tell your doctor about all medical conditions and medications. Serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting and increase in psa. Ask your doctor about axiron. The energy in one gallon of gas is also enough to keep your smartphone running for how long . 30 days . 300 days . 3,000 days . The answer is. 3,000 days. Because of gasolines high energy density, your car doesnt have to carry as much fuel compared to other energy sources. Take the energy quiz. Energy lives here. Welcome back, everybody. Its here, its already here. Lets get a check on the markets of what will likely be a quiet trading week. Joining us right now from Honolulu Hawaii is anthony chan. You dog. Chief economist at chase wealth management. Right here on set to join us, less lucky man, kevin giddes. Anthony, wow, good for you. Youre in hawaii and is youre joining us this morning. Happy to be here. Well, were very happy to have you here. He means happy to be here, there, in hawaii. Not there. What time is it there . Five hours, i think, isnt it . I think its even more, isnt it . Might be six. Yeah. So anthony, youve been there, youve been in hawaii trying to digest all of this. Did the feds move come as a surprise to you . Well, i think the surprise was certainly in the timing of it. We certainly knew that it was going to take place over the next month or so. The timing was a little bit early. But the truth of the matter is that it was gradual in nature and basically is consistent with what we expected them to do over the next 12 months. So does this change anything about your Economic Predictions for next year . And what are you looking for for gdp for the First Quarter and is beyond . For the First Quarter, were looking for Economic Growth in the neighborhood of about 2. 5 . For the year as a whole, we look for Economic Growth to be in the neighborhood of 2. 5 to 3 . Remember, the budget deal is probably going to add as much as 0. 2 to real gdp growth. The fact that the Federal Reserve action has taken place will remove some of the uncertainty and allow businesses and consumers to move along and get along with their plan for the year. So i think the reduction in uncertainty is going to be a positive for Economic Growth in 2014. It certainly has seemed that way for the bond market, kevin. We were debating before the tamer took place as to how the bond market might take all this, whether yields would drop or go up. Theyve gone up, but its been a slow and steady process. Nothing that should concern the fed, correct . No, correct. The hours before post the fiveyear auction before the fed acted, we said what are your positions, what are your hedges . What do you think is going to happen . If they taper, around if table, it was fairly mixed whether they thought they would taper and what the reaction would be. But at the end of the day, we didnt think it was going to be a whole lot either way. I thought it was brilliant by the fed to tie inflation in with the taper, which means the bond market is going to settle down if you talk about 1. 5 inflation and the goal for 2. 5 inflation. Im not surprised by the fact that the market is not running to yield, even though i think it will test 3 in the near future. So what do you tell investors to do at this point . Well, stay the course, right . So with inflation, somewhat subdued, you do have the ability to stay a little bit longer in the market than you might have been if the economy was running away from you and inflation was following right behind. So the intermediate part of the curve is the safest part of the curb. Its kind of the cop out bet that if you want to be there. But still, 7 to 10 years, ten years and out, its not going to be a sense of urgency to get out of that market yet. Were still in about the same forecast as we were six months ago. The same we were six months ago, you think things are chugging along smoothly and its okay . Yeah. The economy is obviously growing in a better state than it was in the beginning of the year. And as we go into the new year, its going to continue to see the growth somewhere around what anthony talked about when he talked about 2 , 2. 5 growth, youre going to talk about yields around, you know, 3. 25 max for the first half of the year on the tenyear. Anthony, we do feel like things are chugging along, and some of the news that weve gotten with the Holiday Shopping period has been weaker than people had anticipated. How do you match up those two stories . Well, becky, remember that the holiday sales season is challenged by the fact that there are less shopping days, 26 shopping days to be exact as compared to last year when there were 32 shopping days. Obviously, Consumer Confidence is coming back after the government shutdown. So there have been a lot of challenges out there, but you have to start thinking about what is life going to be like in the next 12 months and the Economic Statistics are improving. The outlook is improving, confidence is picking up. So even if we see some stumble during the holiday sales season, the outlook for the next 12 months is very favorable. Okay. Anthony, thank you for joining us from all the way out there staying up late probably at this point. Not getting up early. Merry christmas to both of you. You, too. Coming up next, bitcoin growing in onesixth of the world. That onesixth is china and despite warnings from the government, Virtual Currency is booming. Find out how big next. And remember when clark was counting on that bonus in christmas vacation . A little short with everyone lately. Ive been waiting for this bonus. Well, were going to look at that time on wall street and it may be better than the jelly of the month club, but it may not be setting any records, even with the markets at alltime highs. Weve got that story when squawk box returns. Tdd 18003452550 searching for trade ideas that spark your curiosity tdd 18003452550 can take you in many directions. Tdd 18003452550 you read this. Watch that. Tdd 18003452550 you look for whats next. Tdd 18003452550 at schwab, we can help turn inspiration into action tdd 18003452550 boost your trading iq with the help of tdd 18003452550 our live online workshops tdd 18003452550 like identifying market trends. Tdd 18003452550 now, earn 300 commissionfree online trades. Call 18886282419 or go to schwab. Com trading to learn how. 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Com to read about when i thought i was cool as a kid. Ooh, im worried about what that was. Becky getting i never thought i was that cool. Becky getting ready for rutgers in the pinstripe bowl. This all happened this week. And joes tmi on his vitamin regiment. That i remember very well. And Steve Liesman talking as nostridamus. Walking around, it was vitamins. Its a vitamin regiment that you have. Me, i am a regiment. We both are on the same page with the vitamins, right . Im a vitamin guy. You do the centrum silver. I do. Fiber con is much more important. But you dont have an aarp card. Not yet. But im working on it. They keep sending it to me, but i wont join. I keep resisting. You should be 65 to get an aarp card. Talking about regiments, were going to china right now. Getting tough on Bitcoin Trading and thats not discouraging some people from getting in on the action. Eunice yoon joins us right now from bay zinger. Good evening. Hey, guys. Trading in bitcoins has been wildly popular here, but the government just this week decided to stop all thirdparty Payment Systems dealing in a Virtual Currency. Betting on bitcoins has paid off for li lynn. Li opened an exchange with a Virtual Currency in beijing just months ago. Hes minted souvenir bitcoins out of silver for his clients, believing bitcoins are just as necessary as precious metal. He says its virtual gold. Chinese investors are driving the prices of bitcoin worldwide. The currency is a popular way to invest here as people have few Investment Options and see bitcoin as a coveted commodity. Traders buy and sell bitcoins at this coffee shop. They hold seminars here and swap information about the Virtual Currency. Chandler loe prefers the currency because it helps him transfer Money Worldwide fast, a luxury chinese have never had before due to the countrys currency controls. Bitcoin is actually a financial network, he says. If youre in the u. S. And im in china, if i ask you to send me two bitcoins, you can transfer them right away. The authorities are weary of anything that could disrupt chinas tightly controlled Financial System and are unnerving bitcoin believers by cracking down on its trade here, most recently stopping schaks from yuan deposit, a key to driving prices higher. Li isnt worried. He says his firms Trading Volume is the equivalent of 50 million a day. Bitcoin is more trustworthy because its credit is based in science, he says, not in an individual or a state. Perhaps not exactly what the government would like to hear. And everyone in the bitcoin bit here in china is waiting for clarity from the government because theyre warning if all these recent moves are a way for the government to try to dampen the euphoria or is it actually a warning that theyre going to shut the currency down here . Guys. Eunice, thank you for that report. The bitcoin story is not going to stop for quite a while. Not well, we dont know, but probably not. Is the jeanie out of the bottle . Toothpaste is out of the tube. The horse has left the barn. Actually, yes, but it may come back to the barn when all is said and done. Fallen off the wall, humpty dumpty, cant put him back together. The potato head you can put back together. Weve been doing that a lot at my house. You and pilar . Pretty much. Toy story is pretty cool because he can have an ear somewhere, have an eye somewhere and check under the door and see things. He could do a lot. Coming up, the clock is ticking on the Holiday Shopping season. We are under a week now until christmas. And you may be forced to hit the to hit your you may be forced to leave your home. You may be forced to hit leave your home. Hmmm. To actually go shopping. You might. To hit the mall and leave your home with your vitamin regiment. Were going to check out lastminimal traffic next. And the backen discovery has been a major boom to the Nations Energy sector, but is there a glut building in our own supply inspect Billionaire Oil man harold hamm will give us the real deal on production coming up at 8 00 a. M. Eastern time. As we head to break, check out the price of crude. The American Dream is of a better future, a confident retirement. Those dreams, theres just no way were going to let them die. Like they helped millions of others. By listening. Planning. Working one on one. Thats what Ameriprise Financial does. Thats what they can do with you. Thats how ameriprise puts more within reach. Thats how ameriprise puts more within reach. So when my moderate to severe chronic plaque psoriasis them. Was also on display, id had it. I finally had a serious talk with my dermatologist. This time, he prescribed humiraadalimumab. Humira helps to clear the surface of my skin by actually working inside my body. In clinical trials, most adults with moderate to Severe Plaque Psoriasis saw 75 skin clearance. And the majority of people were clear or almost clear in just 4 months. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer have happened. Blood, liver and nervous system problems, serious allergic reactions, and new or worsening Heart Failure have occurred. Before starting humira, your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Make the most of every moment. Ask your dermatologist about humira, today. Clearer skin is possible. Thats pretty good. Yeah, i love that. Its good. It sounds like the beginning of one of the annual christmas shows. I dont know which one but, cartoon or something. We are entering the last shopping weekend before christmas. With the tale of two consumers and more shoppers using the internet this holiday season, how are the malls fairing . Nate forbes is managing partner of the Forbes Company . Areas where no Luxury Brands are offered. Good morning, nate, and i figure malls are being affected by online but also by weather which is a bigger factor as far as a negative . I cant hear. I cant hear, can you . Different people. Oh, there you go. Start over. Am i back . Start over, nate. Okay. Yeah. I think the onlines a great online is a great supplement to the luxury mall business and mall businesses in general. And its really a flight to quality. I think the Online Business supplements what it can offer the online consumers. Its a good experience, too, at times. I try to think about my childhood and just growing. I dont want to be all online. I remember the decoration, i remember what happens at the mall. I think its kind of like a lot of things where the demise is greatly exaggerated. Do you therell be malls . I think its a great way, great part of our social fabric. I think therell be a shuttering of some malls on the lower end. I think the better position malls that have a pointed difference in the merchandising and store offerings will be the ones that succeed and are here longterm. If you wanted to write a Survival Guide for mall operators, there are some things you need to change, probably, and ways of ensuring your that youre a viable place to go. What malls theres a lot in my hometown that are ghost towns. What differentiates between a really successful mall and generating traffic in one where no one goes anymore . I think you really need to have a point of difference. A lot of our retail properties, 40 of our inline retailers are the only stores in that market. If youre a brand shopper, a designer shopper, you have to drive and make the decision to come to that asset and make the decision to drive there, youre going to stay longer and spend longer. Really create a point of difference through your best of class merchandising strategy is a key element to being a successful operator of regional malls. You probably hope you dont have jc penney as your anchor tenant, right . Yeah. In our world, we try to stay with the top flight brands, neiman marcus, bloomingdales, macys. Need a Big Food Court . Not necessarily. Food courts are a part of the business depending on which markets youre trying to serve. I think great sitdown restaurants with the complement of food course uses and other unique food offerings that really speak to different groups is very important to have as part of the offering of your shopping development. All right. Just is there between now and the next five years, do you see more malls in the country . Or will we will down 10 , 15 . I would say well be closer to being down 10 to 15 than being on the upswing. Some of the older shopping centers, the ones that havent kept current with the times dont have current stores that are speaking to the shopping public today are the ones really going to suffer. All right. Thank you. Merry christmas, i hope you have a great season, happy new year, happy holiday. Make sure i cover all my bases. Thanks, see ya. Thank you. When we come back, is the talk about taper starting to taper off . Well get the read of the markets, right around the corner. Then its health care. Oil and energy with herald hamm and the world of real estate with remax ceo margaret kelly. vo you are a business pro. Seeker of the sublime. You can separate runway ridiculousness. From fashion that flies off the shelves. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. natalie ooooh, i like your style. vo so do we, business pro. So do we. Go national. Go like a pro. [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa, and the Aerospace Industry in the u. S. . At t. Rowe price, we understand the connections of a complex, Global Economy. Its just one reason over 70 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Its bonus time for the financial industry. Ive been waiting for this bonus. Stocks trading at alltime highs, will that translate into record bonus checks . Or something less than spectacular . OneYear Membership in the jelly of the month club. The holiday hunger games. Jane wells and Courtney Reagan go head to head in the battle for grocery delivery dominance. Find out who makes it out alive. Plus, Oil Billionaire herald hamm answers a big question, does the nation have an oil glut . No one can get at it except for me. Squawk box is all pumped up for business and it starts right now. Good morning, everybody. Welcome back to squawk box here on cnbc. Im becky quick along with joe kernan and andrew ross sorkin. Weve been watching the futures. And there are some green arrows even after the gains weve seen this week since the decision on wednesday from the fomc. The dow futures up by another 23 points above fair value. S p futures up by 1 1 2 points. Its the tenyear weve been watching so closely all week long. That yield continues to tick higher. But its been a very slow and steady progression and thats why stocks have behaved so well. Take a look at the price of gold. This is a huge story, closing below 1,200, and the lowest level in three years for gold, 1,194. 80 an ounce. I could think about that if we ever see that again. Think we will . Its not its not a stretch. I dont think its a stretch. I know. Weve been watching that price under pressure for quite a while. But this week in particular since weve heard from the fomc, massive pressure on gold prices. Bitcoin went up, though. Since wednesday . Yes, which makes no sense. What day was the day it was down . It was supposed to be what happened two days before that. I dont disagree, but i would think it would drop even more. I would thought it would drop even more. If its supposed to be some kind of digital gold. No, but it was already down on that specific. Once it got into the 400, it was going back up. Thats 12 , since when is 12 a small move. 75 billion a month still buying that. Knew it had to end at some point. Really . Did we . Well, we did call it qe infinity. A lot of programs. Theres a word for that. Launch a program during a crisis. Where is liesman . Hes taking off a week because he was right . He was working hard this week down in washington. He should be fishing, playing music. He should be gloating, taking a victory lap. Because you would allow him. Would you bow . Can you do the show on one knee for three hours . To who . Liesman . We took his side of things with that and made sense. It was the right call. It made sense to me. The Senate Finally getting things done before leaving for the holidays, including a deal regarding some of president obamas nominees. The combination of janet yellen as new Federal Reserve chairman is expected to happen on january 6th. There was expectation it could happen this saturday. But it was rand paul who said he wanted his vote to come up to make sure they would do the auditing of the fed. They didnt agree to that, so, instead, this will get pushed to january 6th. Couple stocks to watch. First one being nike. It is the big stock to watch. Second quarter profits of 59 cents a share. Revenues in line coming in at 6. 43 billion. In the future orders. Better than expected 13 . One of the big issues, of course coming up in the new year of 2014 is going to be the debt ceiling and the debate over that. Treasury secretary jack lew Warning Congress that the government could run out of money to pay its bills as soon as february and, of course, debate becomes whats really going to happen. Santa claus finally do you think theres going to be a debate . About what . The debt ceiling . No. You think its just going to sail right through . I think it will. I hope so. Yeah. So optimistic today. There was something, i saw it on something where it says paul line he actually did help. Its the wall street journal editorial section and title of the piece is the lucky house credibility. I think that was you know, he was able to avoid criticism by the tea party in the far right. They respect him and deferential toward him. For hardcore conservatives, for the way they felt about this deal. Passed in the house and senate after they said it wouldnt. Its like pavlovian. This is much better than what happened with the previous time. When the debt ceiling comes around this time, hopefully they have enough, you know, muscle memory to remember its better to do it this way. Were getting news from blackberry. Wall street was expecting very little from blackberrys Third Quarter report and didnt disappoint. They came in worse than expected. Revenue coming in about a quarter below the Second Quarters results of just 1. 2 billion. The Company Recognized revenue on just 1. 9 million devices, just half of the Second Quarters level. Retail inventories were still well supplied. Though, 4. 3 million smartphones were sold to users in the Third Quarter. Blackberry coming in with news that while we were expecting lousy news, this is even worse than had been anticipated. Well continue to keep an eye on this. Two things to note. They are getting into business with fox con to do their devices. Foxcon makes apple devices. So thats worth noting. And one other thing if you think about these earnings this quarter. If youre the new ceo who is coming in, who is going to be on our air got to put everything bad in. The point is that you want a honeymoon. Youve got to put everything behind you and say that hall happened before i showed up. If you these numbers are worse than expected. To me, that almost. Youve still got to sell people some blackberries next year. Im just suggesting if you think therell be extra writedowns or other things that arent so pretty. Why would anyone buy one next year versus a samsung or iphone . So heres what i cant answer that. The gamble has to be that youre going to somehow create devices on android or some other platform that has the keyboard, the stuff and people decide theyre buying that. Thats what i think is going to happen. I think motorola is going to win again with their flip phones. My bets there. If you love the keyboard. Do you have a flip phone . Theyre coming back. Theyre coming back. Am i holding on too long for this . Maybe they dont come back. I think its sort of theyre finished, someone wrote in. I dont know what they turn those little booths into at this point. Lets find out whether the markets going up or down next year. Santa claus arrived in a really weird way, i thought. We didnt know whether he was coming, a lot of people said it was too late. And the fed announces a taper. And were up to new highs. Here right now is phil orlando, chief equity Market Strategist at federated. Whats your whats your gain next year youre forecasting, phil . Weve got a 2,100 forecast on the s p 500. So from where we are now its about 15 , not a bad year. Roughly half of where we are this year. So we get 2 3 of that with normal Earnings Growth and multiples dont contract. They continue to expand in a rising rate environment . No, absolutely. Were in the sweet spot of the cycle in terms of multiple expansion and treasury yields. That multiples will continue to expand until treasury yields get up to that 5 level. Thats the point where they start to contract. So we absolutely expect the multiple expansion to go from 1 11 rates are rising because the economys improving. Exactly. That takes away some of the absolutely. Weve got an above consensus gdp forecast next year, consensus right now at 2. 5. That suggests corporate earnings for us are going to be a little bit better. A little bit more earnings, more multiple expansion, market continues to do well. I think you have similar views . Well, actually, no, phils going to make me look pretty cautious. Were at 1,900. I dont disagree with the thesis. Above where we are now. Not by much. Do you like Consumer Discretionary . Yes, weve liked discretionary industrials. We think the taper validates the cyclical focus for sectors. So i agree with all the points, its just a matter of degree, were not above consensus on gdp. We dont think earnings are we think wed be lucky to get consensus, which is 11 growth. Were not looking for upside, looking for it to be weaker. Whats the lowest earnings per share growth well see . This year were at six. Thats supposed to drive 10 or 11. Were expecting eight or nine. Whats 1,900 from where we are right now . Its 5 . Then why wont the gain in stocks at least match what youre looking for 8 or 9 for Earnings Growth. You think they might contract . Well, theyd have to get to get their number. When we talk about targeting, most people are revising that more than theyd like. And have to think about what could be acting on the market within the year. And the next issue tapering, i think, manageable. But people are going to start to focus on when did they actually tighten . And if the economy does as well as some people think, thatll come in the radar and the markets a leading indicator. Actually raise Interest Rates. Right now people are saying thats not until late 2015, but if it comes in a little, the market will be pricing that in the fall of, you know, in october of next year. Gotten used to zero but is going to. 5 or 1 the end of the world . No. These are not normalized Interest Rates historically. This is crazy. Thats true. But you saw the tantrum we got over the taper. 300point tantrum . We got 6 , you know, in may. The first time . You know, at least you could say tapering isnt tightening. Youre not going to have that excuse. So we may overshoot our target. But we have a yearend target. Thats where we think we finish that doesnt mean we cant go higher. I dont disagree with a lot of the points. Do you have a forecast on the tenyear . Yeah. So we thought wed be roughly 3 level by the end of this year. Kind of there. So we think we grind up towards 5 over the next say four or five years. If im looking at 12 months, 3. 5 , 3. 25 , seems like a reasonable guess. Inflation come back at all . I think its tough to argue right now. And one of the reasons the streets so bullish on the taper is low inflation means its going to be a while before they actually tighten. Why would we go to 5 on the tenyear if inflation didnt come back . Wed have 5 normalized rates . Sitting at 1. 1 right now. Over the next five years or so as we get continued economic improvement, we think inflation will double. But that means 2. 5 . Thatd be perfect for the fed that would be perfect. And thats the environment in which we see the funds rate move up. Yellens already told us, bernankes told us, thats a couple years into the future. Its really great to know that the government and a big even more powerful than fiscal authorities like the most powerful man in the world is going this is all going to play out perfectly . Its all going to work. He came in, we did qe 1, 2, and 3. Were going to exit perfectly. Everythings going fine, the economy gets better. They did it right . What are the chances of that . Probably zero. I cant believe its going to work out. Thats why well be on what about murphys law . Nothing bad. Theres nothing dislocated anywhere . No bubbles built up anywhere that we have to the. My boss likes to say a box r boxer hes your boss. I knew his father when his father was barely a boss. I think his father roberts still working. I worked with him. I remember. He was at dean whither, he was a big wig. He was. Who knows, theres always these exogenous unpredictable things that have an impact. All right. All right. Thank you, gentlemen. Thank you. Thanks. Merry christmas. You, too. When we come back, more on our report from blackberry. Some concerns that are out on this. Also, we have a big show coming up on monday. Jeffrey lacquer will be our special guest host. 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S. , real estate in hong kong, and the optics industry in germany . At t. Rowe price, we understand the connections of a complex, Global Economy. Its just one reason over 70 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. With investment information, risks, fees and expenses lifes an adventure and it always has been. But your erectile dysfunction it could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. Tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. Do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. Do not drink alcohol in excess with cialis. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, seek immediate medical help for an erection lasting more than 4 hours. If you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a 30tablet free trial. Welcome back to squawk box, the white house has tapped a former executive from microsoft to help fix the troubled obamacare website. Here to talk about new solutions, our guest host Jonathan Bush, chairman, president , ceo of Athena Health. Good morning. Just tell me on the website itself, measured, graded, how much better is it today than a month ago if you see a difference . The federal government will pull off the operation of a website. It will always be lame. It will never be a marketplace. They were able to get the guy who invented desk top who ran desk Top Microsoft Office to create the amazon of federal purchasing. It was the guy who created control, alt, delete. Yeah, the error is arriving with Microsoft Office think. To save the day and bring us to Microsoft Office performance. But anyway, thats what we asked for. We gave up on the market, overregulated the health plan, they couldnt make cheaper products. We hit the panic button when obama got in there. Now were going to have this thing which is going to be lame. The thing to watch now is not whether the website. Theyll get it to work. How many people are going to go through the registry of Motor Vehicles to, you know, do their oath of compliance. And how many are going to say, screw this i think about a third of people you say a third of the people and theyll be the younger, healthier people. And the people who dont like to sit for three hours. And the people who dont make so much money that the tax is more than the for me, i cant wait to pay the fine. Does that mean that doesnt work . Im saying the tax is not going to pay for the problem. The redistribution will need to be turned up. The president s already on that front now. And hes going to finish the redistribution job as hard as he can until he leaves. Wow, youre really speaking frankly today. Ill tell you what im worried about. The first two minutes here. I know, it was awesome. The people that choose the lowest Premium Products which is what theyre going to do, cost im reading about deductibles that would knock your eyes out. Do you know you must know actuarial stuff. When you work an employer, the employer can the average deductible is 1,100 right now. Yeah. People with the lowest premium plans are seeing deductibles of much more. 25 i think is the rule. I dont think you can go over 2,500 if you get into bronze and pay 40 . Its going to have to be subsidized if the actual number is 6,000 or 7,000. Were going to get to the edge of the subdization. You have to have all your can eat everything if you want to be in obama care. So the guys that just choose Health Insurance as insurance. Hey, if it goes over 10,000 or if i get hit by a truck. Appetizer, dessert, salad. You have to eat the dessert every time t. So assuming its as screwed up as you think it is. And the president called you after the show at 9 00 and said, look, its come up and come down to see me. Tell me what can be done with what weve got, not that were scrapping the whole thing. Hi, your name is bush, id like to get advice from you. I need advice. This is president obama, can you help me your name is bush . Have you noticed theyre trying to come together. I would say, mr. President , thank you for returning my call from seven years ago. But all youve got to do is get the definition, the fundamental definition of the legally required minimum health plan to be about half as big. Because most americans say, look, im ready to dump 200 to 300 a month into this thing and im happy to do it. And if a tractor rolls over on me, ill be covered. He left a window in, now you have another year of this. The poor health plan is like, do we create this product again for 12 more months and then shut it down . But if they said, look, we are going to allow the product that everyone has to have to be much smaller and much more affordable by more people and then the stuff which the market will have to sell to you will have to make attractive, make Cost Effective will be nonrequired. Youll have a very different total cost curve because the only way you get people in the market is if you make it sexy and attractive. Catastrophic for 200 to 300 . Absolutely, you can do anything. Depends on what you cover. If you cut out stage 4 cancer care, if you cut out a lot of the chronic care, you just said, look, this core stuff whatever you can get for 300, whatever the customers ready to pay, start with that, make Everything Else a market. Youll get all these people into the market, into the bottom floor and youll start to see some product i hope the president is listening or calls at 9 00. Sir, i am ready to go. I have an airplane, ill be there in one hour. You do . Well, its 1 . Its a propeller plane. We love you. Were going to take a quick pause and come back to this conversation in a moment. Great. Up next, though, breaking down blackberry with jon fortt. Plus, a race you dont want to miss jane wells versus Courtney Reagan in the battle for grocery delivery dominance. Americans take care of business. They always have. They always will. Thats why you take charge of your future. Your retirement. Ameriprise advisors can help you like theyve helped millions of others. Listening, planning, working one on one. To help you retire your way. With confidence. Thats what Ameriprise Financial does. Thats what they can do with you. Ameriprise financial. More within reach. Thats what they can do voseeker of the sublime. Ro. You can separate runway ridiculousness. From fashion that flies off the shelves. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. natalie ooooh, i like your style. vo so do we, business pro. So do we. Go national. Go like a pro. Welcome back to squawk box. In our headlines this morning, the russian tycoon has been released, he was pardoned by president putin yesterday. No details about his latest whereabouts. He had been in jail for the past ten years and seen by the kremlin as a political prisoner. Also new data shows that fees rising 5 in 2013 as Companies Hire banks to advise on all those share offerings. Banking fees totaled 74. 7 billion, thats with a b. As of wednesday, thats up from 71. 3 billion back in 2012. And jpmorgan chase, they were ranked the topranked bank in terms of fees breaking in a total of 5. 8 billion. Truck and engine maker navistar international, due to weak demand across businesses. Failed engine redesign this year apparently affecting navistars market share and hurting sales in the quarter. Revenue dropping 2. 75 billion in that Fourth Quarter. Smartphone maker blackberry reporting a huge quarterly loss because of an inventory writedown and asset impairment. A bigger loss than the street had been expecting. Jon fortt joins us right now. And, jon, the question becomes how much more bad news can blackberry investors take . Reporter probably a bit more. Its interesting. Theres also a revenue shortfall, the revenue for the Third Quarter was 1. 2 billion. The street had been looking for something a little better than last quarter around 1. 65 is what the street wanted. Clearly john chen coming in here, new ceo, wanting to take the lumps early. Said hes looking for a more profitable Business Model for the device business. Talking about software in this release. The progress theyre making on bbm, blackberry messaging service, wanting to really push blackberry enterprise server into its new incarnation with bez 10, talking about games since september. Pivoting the focus more toward enterprise, more toward software, clearly trying to figure out how to get the costs down in the devices business. Ill have lots of questions for them about that clearly when i talk to him exclusively here at around 11 30, guys. Thank you very much. Well be watching. Still to come this morning, selfmade Oil Billionaire harold hamm. Why he has a major beef his name is hamm with the Keystone Pipeline. Plus his 2013 outlook for oil demand and race for buying a holiday dinner online. Jane wells faces off against Courtney Reagan as they compare their Online Shopping experiences when it comes to ordering food when it comes to the christmas feast. Squawk box coming right back. Coming up, its bonus season on wall street. Wall street head hunter elana winestein tells us what employees could be expecting when the checks roll in. With this bonus check, im putting in a swimming pool. Will it be swimming pools for all . Or one Year Membership in the jelly of the month club. Thats the gift that keeps on giving the whole year. We find out when squawk box returns. Innovation. Open to ambition. Open to bold ideas. Thats why new york has a new plan dozens of tax free zones all across the state. Uh here, or start a new business here and pay no taxes for ten years. Were new york. If theres something that creates more jobs, and grows more businesses. Were open to it. Start a taxfree business at startupny. Com. Welcome back, everybody. Try the latest edition of talking squawk block. Blog. You can find out things like this week when andrew thought he was cool as a kid or joe was razzing him about this. He was harassing you because of your smoking your views on the smoking the electric cigarette. Oh, you thought it was cool when you were a kid to smoke . I didnt smoke but you thought it was cool. I thought the kids that did were cool. Because i wasnt cool. They were cool. Yeah. Right . Yeah. They were cool and im looking at them later in life and theyre still cool. Its like the hedge funds, with the huge funds and they can to be the ones with the money. Its unbelievable. Theyre good. You can talk about that. Or find out how Steve Liesman play eed nostradamos. And the markets have been on a tare this year. Breaking records after records. But will this years bonuses on the street do the same . Joining us now to talk about that onset and a lot more, wall streets top head hunter. Founder and ceo. Good morning. Good morning. Help us here. Lets start actually, just go i want to talk about hedge funds, banks relative to hedge funds. So many years you wanted to work at a bank and now i assume you have to interest in working at a bank. You have to work at a hedge fund to make a lot of money. If you were in pre90s, early 2000s, thats where you wanted to work, a bank. Thats where you followed the money and youd be a big prop trader who could earn high seven figures, eight figures. Thats not the case anymore. Regulators have regulated that out of the system. And yes, you want to work at a hedge fund or you want to start a tech company. So give me some numbers. If i am not if im running the firm. Then im making hundreds of millions of dollars. But just if im 35yearold guy, 40yearold guy managing director at a hedge fund, i made how much this year . Well, heres the way theres actually an interesting way to think about it. You can be younger than that. People dont care about age. Thats true. They care about your ability to deploy capital. And the reality is, the two things that drive compensation are in this order, performance and assets under management. If you have good performance and youre doing it off of a high aum, the founder doesnt have that many investment professionals to pay. Its a very scaleable business. If you go from 1 billion to 10 billion, you dont necessarily have to grow your investing team by 10x. Give us some examples. It really depends. He has, thats a 220 fee stream on capital and good performance, its in the millions. In the millions. The kid that comes out of wharton who goes straight to the hedge fund, he starts at what, you think . Thats, you know, he starts much lower than that. Hes starting at a couple hundred thousand dollars. So its and more likely hes going to a bank in reality to get some training. Thats why you want to go to a bank. You want to sit in the Investment Banking division of goldman for two years. Fine then, im now at goldman, i go from goldman to the hedge fund. Go from 300,000 at goldman to probably not that different. You havent proven how good you are. Its a pay for performance culture. If you can get in to one of those tiny number of hedge funds, youd do anything. I think if youre at a bank and you feel that you have the potential to be a Greater Investor and sitting in the analyst program, youd be silly not to take that call at any price. Different question on the money. This is sort of on the bonus structure. Currently at a bank, a lot of the money you have to invest over a long period of time. Correct. At the hedge fund, how does it work . Okay. So at a bank, not only does it invest for a long period of time, if you were at Morgan Stanley last year, okay, and you earned over 350,000, 100 of your bonus was deferred. And if you earned considerably more than that in absolute numbers, a huge percent of that came in the form of equity. Lets call it 500, it was 50 equity, and 50 cash deferred. At a hedge fund at worst and i say at worst but with a wink. People elect to put even more. The reality is, 50 would maybe be reinvested in the fund. But thats the 50 the rest is in cash. The rest is in cash a big number and youre reinvesting in the fund, you should be okay with that. Youre one of the people pushing the moving the needle in terms of performance and you can impact that. So if youre not okay with that, youre working in a wrong place. New topic in the news, s. A. C. Capital. I knew you were going to ask me about that. I want to know. So all of those what does that firm look like a year from now . I assume all those people are calling you saying i need a job elsewhere. Youd be surprised. I think a year from now, itll look different. Heres whats happened. Theres been an 80 20 rule over there. Steve has cared about the top 20 . And those are the people he has hung on to. And the rest have sort of if they leave, fine, or theyve been let go, as well. Right. The top people, actually, i think have been very sticky. Part of it is, i think, they are tone deaf to whats going on out there and what the Public Perception is of s. A. C. Theyve been there a long time, they have now a 23 payout and they also feel loyal. So for now, theyre going to stick with them. Is it how easy or hard is it for you to place somebody who worked at s. A. C. . Meaning if im potentially hiring you and you worked at s. A. C. , do i say i dont know if i want to hire this guy because im anxious . I understand. That im going to find out he was involved in something hopefully not. So it runs the gamut. Some of our clients, its do not touch, we dont want to see them. Others, if you came out of tmt health care or consumer, were not interested. Because those were the sectors where people thought there were problems. Where there were problems. Right. And then others are willing to just examine it on a casebycase basis and be opportunistic and vet it as best as they can in terms of whether the person theyre bringing onboard, what the likelihood there would be an issue. And we were talking about a similar polarity, kind of a bipolar nature of this market where youve got a very small number. Forgot the number you gave me, but a small number of hedge funds that are all that, turning away money, that can have anyone they want and are making absurd amounts of money. And youve got this vast majority that are undifferentiated. I dont know how much people realize how concentrated an industry this is. So, you know, when you see those headline numbers, the average hedge funds performance, theyre tracking typically 8,000 hedge funds to come up with that percent. Right. 80 and the hedge fund industry, another point, ill pull it together, 2. 3 trillion is in the hedge fund industry, 87 of that money is managed by less than 5 of the hedge funds tracked. So the money chases performance and thats the thats the universe you really need to look at in terms of how they have done. Turns tout to be anchorman and the big top guys are terrifying. I thought that was amazing. Thanks for coming in this morning. Sure. Are you placing a lot of people . Or does it happen after january . Because Everyone Wants their bonus before they leave . Well, work is going on now but the Actual Movement once people are paid. Its a little late in the year to be buying people out of bonuses. Happy holidays. You, too. More on the fallout from the target credit card security breach. Customers tied up the phone and jammed the website. Left scores of angry posts, 40 million credit and debit card accounts may have been breached between november 27th and december 15th. Targets in full blown crisis mode and hired the forensic unit at verizon. And all of this happened with just a handful of shopping days left until christmas. When we come back, though, a race to get dinner on the table. Jane wells versus Courtney Reagan. We wanted to test two Delivery Services for christmas dinner on two coasts. Find out which one of us would get our food first and at what price. The ocean gets warmer. The peruvian anchovy harvest suffers. It raises the price of fishmeal, cattle feed and beef. Bny mellon turns insights like these into powerful investment strategies. For a university endowment. It funds a marine biologist. Who studies the peruvian anchovy. Invested in the world. Bny mellon. Impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u. S. . At t. Rowe price, we understand the connections of a complex, Global Economy. Its just one reason over 70 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Love that music, cant get enough of it. Welcome back to squawk box. Sameday grocery Delivery Services are expanding rapidly promising to streamline the task of getting a dinner on the table. Can they really save you time during the holidays . Our own jane wells and Courtney Reagan set up a race to put whole foods and amazon fresh to the test. Jane ordered a christmas dinner for four from amazon fresh and courtney ordered a whole foods, and lets see how it went. So we sent in our order to the personal shopper at whole foods and we have a fourhour delivery window. The clock is ticking. This race is all about convenience. Im going to order from amazon fresh here at work and see how quickly i can get the food. Im at the house and amazon said the groceries would be delivered between 3 00 and 6 00 p. M. Ill be right back. Let me see if we got everything. They certainly i could not get a single large pie so we have four individual ones. Six hours after we placed our order with the personal shopper, whole foods, we have our holiday dinner. So i didnt have to go to the store, but i did have to pay 299 to join amazon fresh. So hopefully 63 plus a 10 tip is enough to beat my colleague jane wells on the west coast getting dinner ordered and to the table. And courtney and jane, theyre both here onset with us. So, ladies, it seems to me, i think courtney won. I did. I won. Take that, jane, and amazon. I won this round. What was the would you do it again . What do you think . I would say, no. You guys on the east coast are used to getting food delivered. The only thing i ever get is a pizza delivered. And so i have tried food Delivery Services before, and i dont find it that convenient. And in the case of amazon fresh, it costs you 300 to join. And i couldnt get a turkey. I had to get a roast and i couldnt get a pie. I have to say, i actually Test Services myself. I use fresh direct and pea pod and i game it back and forth to find out when im going to get the best delivery time. It started when i was on maternity leave. And i started gaming the system. If youre organized and put things into advance. Youve got to think ahead, think about your menu, think about what you need. If you do that, it is a lifesaver. And for me, i felt, i could go to the store and do this faster myself. It took six hours since i placed the email order and i waited and got a couple phone calls, well, we dont have this, we have this. If you dont have it, pull it off the website. The ones ive used. If you get into it and get into the rhythm, i can order food for a week no problem. They leave it on your porch. Pea pod wont leave it on your porch. The drone may land on your front lawn. But in l. A. , i cant imagine trying to do it over those highways. You well, its i think it was it was a twohour delivery window. Well, if youre in pasadena and order something in malibu, its a sixhour takes six hours. I know, you can walk there faster. Also, the food quality, we want to say whole foods wins. I didnt taste janes, i did eat it. We had dinner that night. It was fine. It was fine . Yeah. The idea you couldnt get a pie. Amazon will get better at it. Whether theyll ever make any money on it like anything else. Like all Disruptive Technologies start as these tou turds compared to the established approach. Amazon itself, got the wrong book and it was packed in the wrong thing and gets worse. We looked at Athena Health at Amazon Web Services five years ago, and it was like i would no sooner trust this protected Health Information to amazon than fly to the moon. Today the cia is moving 600 million of business to the same cloud we looked at and rejected. I feel like you guys are the mid wives of the new thing. It will grow up and it will smoke the stores. I dont know. L. A. s different. Dont forget the drones. The drones. The drones is never happening. Never. So far from never happening. I want to be on record. Never. The liability is if one of those drones falls out of the sky, the game is over. Falls out of the sky. How high is it going to be . Then drone crashes. No, i have a friend who owns a drone. One of those your friends wouldnt own drones. Right . And it can go so high in the sky you cant actually see it. Planes will hit them. The whole thing is a bad idea. I cant even get started. So on squawk on the street, were going to show we did the same thing but walmart versus amazon with free products. And we test out the amazon lockers at 7eleven. Very cool. Very cool. That you like . Yeah. Very nice. Thank you, guys. And well see you for the second round of squawk on the street in just a little bit. Becky . I want to tell you. I was just talking with targets because there have been so many concerns about the 40 million debit and credit cards that had been unauthorized access had been granted to these things, just talking to them because obviously there have been thousands of people calling into them, trying to figure out what this means for them. If you shopped there any time between november 27th and december 15th, that was the problem times. Now, those cards while there was unauthorized access granted to that, they say that does not necessarily equal fraud. And thats what we should be paying attention to. Make sure you are monitoring your account looking for things. They say the incidents of fraud, theyve been speaking with visa and mastercard. Typically its low instance of fraud. They say in this case, its been very low. How many transactions of fraud there have been for these things that have gone through. But a lot of times theyve been getting calls saying i dont remember making that charge. Did 40 Million People shop at target . I did too. It was 4 million debit and credit accounts. 310 Million People. That many people going through there. But three of us sitting here did it. Ironically, if you had bought through the cloud, you wouldnt have the problem, right . Because it was the its funny because everyone worries about the security online. Its the in store. Its the problem this time. Yeah. Point of Service Machines and not in the cloud. Where was that . Burbank. Burbank. Okay. Yeah. Little post world war ii bungalow. It doesnt deliver where i live. So its the producers house. She was in a bad neighborhood. I saw that, looked like in l. A. , what was that 8 million house. Yeah, 2006, it was 8 million. Now were 435 million. Two big interviews you cant afford to miss. Oil billionaire harold hamm. The Keystone Pipeline and much more later, Mortgage Rates and how theyll be affected by the taper. Also the Housing Market, the ceo of remax is here. Well be right back. The American Dream is of a better future, a confident retirement. Those dreams, theres just no way were going to let them die. Like they helped millions of others. By listening. Planning. Working one on one. Thats what Ameriprise Financial does. Thats what they can do with you. Thats how ameriprise puts more within reach. To help secure retirements and protect financial futures. To help communities recover and rebuild. For Companies Going from garage to global. On the ground, in the air, even into space. We repaid every dollar america lent us. And gave america back a profit. Were here to keep our promises. To help you realize a better tomorrow. From the families of aig, happy holidays. Its the last trading day of the week. What investors need to watch heading into the holidays. Plus, Economic Data that could move markets, real gdp for the Third Quarter will be out. Hamms beef with keystone. Why the selfmade Oil Billionaire is no longer backing the Keystone Pipeline project. And a housing outlook with the ceo for remax. As the third hour of squawk box starts right now. Welcome back to squawk box here on cnbc. First in business worldwide. Im joe kernan along with becky quick and andrew ross sorkin. Our guest host is still with us Jonathan Bush. Should probably know his we should do some of your history. Started in your basement . Split level ranch, split laundry and world hq, up split, children, bathroom. How long ago . 97. Graduated Business School june 6th, started the company june 7th. From lincoln, mass. So we drove out 4. 8 billion company now, Athena Company now. Yeah. But whos counting. You dont own oil or texas rangers. I do own a retail mall. How do you own a retail mall . Because it was not gorgeous and right next to our new campus and i thought we could make this sexy and our employees would not have to drive and commute and got into it. Yeah . Yeah. How is it going from the retail perspective . Were, you know, this is someone said the beauty of capitalism. All this happened and then you improved the mall and it was better for everyone, right . Well, its great because i have this totally aligned, supesuper ego where the town wants something less armpit like and my employees want to not drive an hour to work so we can put up apartments and the bowling alley, the doings and makings and replace the brandings you can buy over the internet. Billy is your brother . Billy is my brother, right. So he thought, ten years ago, he was pretty cool happening he remains devastatingly cool. Now youre like yeah. Do you wave to him he looks down from his temple of coolness and says, no, really, youre very rich. Dont worry down there, you not cool guy. Here i am. Andrew still, i think, is envious of billy. Whos his coanchor . Who . Its not who you think. Shes awesome. Kate. I forgot. Its a different one. Small world. We said that you were related to some really important famous people and thats who we were talking about billy bush. Thats anybody else . No, never mind. George p. Headlines this morning, the senate is expected to wrap up its work for the year by moving forward to clear the path for janet yellen to become the next Federal Reserve chair. Its expected to be the final senate vote of the year. They would pick up on the actual confirmation in january. Probably january 6th. Also, russian tycoon has been released. He was pardoned yesterday. No details were given about the release or his current whereabouts. Hed been in jail for over ten years and was seen by the kremlin as a political prisoner. No details necessary. Yeah. Right. We talked about that earlier. I want to andrew, where are you on this . I talked to becky. Youve got a russian prison . Yeah. Is that scarier than lets rank him. What about south american prison. Im having a flash back to captain on the airplane. What are my other options . North korean prison. Have you ever been in a turkish prison . What else . Iranian prison, scary, probably. But russian, i would think russian is mid scary, you know. I actually might go russia. At some point russia would be good at it by now with as many people as theyve unjustly thrown in prison, they should know how to keep you safe. He looked okay coming out. Didnt look any worse for wear. Averted gaze, eyes down, spirit broken. I knew i brought it up. And i knew its territory you dont necessarily want to delve into. But i couldnt help think about because i thought about the scariest prisons. Feels like less. You dont know where it would be . For us. I would prefer just to avoid all of them. I think youre right. Where do you think rikers stands. Pain versus bureaucracy. What is the pain you feel of bureaucracy . They probably have the fair share of forms to fill out. Shawshank, i dont want to be in that prison. Orange is the new black. Thats the prison you want to be in. Well, its a womans prison. It is. Thats true. We have a business story to talk about this morning. Smartphone maker blackberry reporting a huge quarterly loss due to an inventory writedown and asset impairment. Company also announcing a fiveyear deal with foxcon. Jon fortt joins us now. What does all this mean, jon . I dont know why im coming on when you guys are talking about prison. Lets put that to rest. But blackberry i know, i know, its eerie. Blackberry clearly in the throes of a transition here. New Ceo John Chen shifting their focus, the initial blackberry 10 device rollout had been about taking on apple and samsung at the high end of the smartphone market. Right now with some of the moves theyre doing. This big writedown, clearly the focus is on enterprise and government services. A little bit more on some of the stuff blackberry was initially known for. Security and blackberry enterprise server. So at the top of this release before they get into the nittygritty about this results there touting the fact that they are getting more blackberry enterprise server installs that blackberry messenger that recently came out, has around 40 million users on those devices. A lot of questions about what happens with this device business. Theres a fiveyear deal with foxcon, the company says well let them get devices out into markets like indonesia and mexico more quickly. Seems like theyre focusing more on the low end which is growing quite nicely. But john chen says in this release hes looking for ways to make the devices business more profitable. Theyve taken this big writedown, usually when they do that, the hope is they get a lot of the pain out of the way and can reposition the business. John, question for you, longterm, what do you think happens to the blackberry operating system . Meaning, i have a personal view which is that ultimately this is a device that runs android or runs some other operating system and they make the handset with the great tactile keyboard. Yeah, youve got to think in john chens back pocket right now is an option to go to android and give Blackberry Services and unique software on top of android. Theyve already started to do that with bbm. It would be cheaper because pushing your own operating system not only costs you in terms of engineering resources, but also youve got to court developers. Thats expensive. Im going to ask him if thats something theyre looking to do. They can still do devices without doing their own os. I dont know if thats an option. Maybe so. Theres also, though, this idea of getting at some other larger Addressable Market. So what weve seen in the internet space and what well see everywhere is the way you use technology either o. S. Or hardware is to position yourself for a Larger Service to deliver. The world is about selling results, finished results. You know, amazon writes millions of lines of code, its all free. They get a piece of whats delivered to your house blackberrys in a similar place. The hardware was a way of getting at the larger clouds. Their focus on corporate. Theyre working hard but theyre all in scale and someones got to say throw out your outlook server. Well run the whole thing in the cloud for you. Seems like blackberry could get that. Thats a hard sell. What are they going to do . Have their stock go down . Youre on the right track, i think a strategic perhaps error that blackberry has made over the past few years is tieing its brand so much to growth in consumer markets, it turned out to not be a defensible position. It had quick growth when they started rolling out these keyboard text devices to consumers. But when the iphone came in and android came in cutting on price, they werent able to defend that. Now, obviously, we have concerns both in enterprise and in government about security, secured devices, if blackberry can reestablish itself there as a beachhead, cut costs and reestablish the brand in that area, maybe thats a direction that john chen would take, clearly thats where his background is. The Security Department and you can have the toys for free. Can it control the security if it ends up having to use another operating system . Meaning can they layer on security . This is sort of like good, right . Is it good . Is that the name of the email service thats layered on top of other operating systems, but people think its pretty safe . Oh, absolutely. Good is a competitor there. Samsung has its own program which it calls safe that its trying to layer on top of android. Some secure services. Blackberry has a different and arguably better Value Proposition if its able to bring to the fore its own network and say, hey, well run your data over our own network. It wont go over the public internet. You wont have to worry about that aspect. So, you know, if theyre able to resurrect that Value Proposition that they sold so effectively a few years back layering on top of android would be a strategic option for them. Well see if they go in that direction. Thank you for that. Appreciate it very much. Thats the exact situation that allowed little Athena Health to get into that software space. Well do the work for you. Softwares free here. But let us do the work. Let us do your billing to the insurance company, connect your patients to the hospital, the laboratory, well do the work even if its manual and unprofitable. And little by little well make it profitable. And these guys, ironically, by being basically toast, they have the freedom to not lose anything by trying that larger, Addressable Market and getting out of the sort of enterprise sale position. Theyve already lost theyre toast, yeah. Youre starting from scratch, go ahead and do it. Have fun swimming to the castle. The cloud. Athena uses the cloud. It is the cloud. Youre an expert, is that why . Who wrote your code . Ed park was the leader, but we had bob gate. A whole team of guys. But eddie came as a summer intern. We were running a womens center. The original Business Plan was a birth center. Thats so weird. It was so weird. Its fabulous, if i could do that and make you know this guy. Eddie comes, we cant deal with the insurance can companies. Theyre impossible. Every day peoples eligibility changes. Its like obamacare, hes like scraping the medical website and building electronic formats that can convert our information to the right shape to fit into this ipas claim system or that. He doesnt know how to do it, but the guy that does know how to do it, he is different. Hes got a different brain than. Im impressed by people who know how to write code. Speak for yourself. Its not writing code anymore. In the future, youll see with guys who can come up with a concept. Write a little code with an idea in mind. Half designing, half process engineer, half coder. Sit back. Im going to see whos playing. You see your result right away. You lost me. Any bowl games this weekend . I dont know. Were going to take a quick break. Because coming up, opportunity knocking, what areas of the market will work for your portfolio in 2014 . Hopefully our interview with the chief Investment Officer of Wells Fargo Bank will give you some ideas. What rising Mortgage Rates may do to the real estate. Squawk box is coming back right after this. [ male announcer ] once, there was a man who found a magic seashell. It told him what was happening on the Trading Floor in real time. The shell brought him great fame. But then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their Trading Platform. [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a. Shell. Get live squawks right in your Trading Platform with think or swim from td ameritrade. The discovery of the Bakken Oil Field is one of the biggest Game Changers on foreign oil. Will production ever spill over into a glut as some have reported. The largest bakken player joins us now with crude realities. Its great to see you. Everything okay . You can hear us . Were ready to go . Yes. I can hear you just fine, thanks. Good morning. Good morning. Were all one thing we all talk about and the real positive about our future. And we hear it every day from people all over the place and every different field that we cover is that we made be on the cusp of something really exciting for the United States in terms of manufacturing because of all the the shale, natural gas we have. The one thing i want to get from you is that as far as oil goes. And we still need oil, still use oil. We will never be able to produce enough oil here to satisfy our own demand domestically. Is that fair to say . No, i dont think so, joe. I think were on the track as weve said. Back in october of 2011, we predicted that we could be Energy Independent in this country. And i believe were right on track to do it. Were not behind, were not ahead. Had a lot of skeptics then. I dont think theres any skeptics now that believe that we can be Energy Independents. I thought the thrust of your preinterview was that as far as oil goes, we have a lot more natural gas than oil and were consuming 19 billion barrels a day and producing 8 billion. Were going to get the point where were producing another 11 billion barrels here . Well, you have to add in natural gas, liquids and when you do that, were close to 10 billion. So weve come from a long ways back behind. At one point, we started with about a 60 deficit. Thats what we were importing. Everybodys comparing oil supply with natural gas. And oil supply was just about balanced in 2005. Weve got to make that deficit up. And were making it up quickly. You know, were worried about 37 imports. Now, oil is harder to find. You know, a lot of people dont understand in the generation process that the oil has to go through what we call the oil window of pressure and heat. And so its not as readily available. And you look around the country and most of the huge fields been found is natural gas. But we have some awfully big oil fields, bakken as you said is a very good example of that. And the permian is coming on, eagle ford. But were never going to be is the point that well never have a glut . Does that mean we shouldnt export oil or where are you on that issue . Will we ever have a glut . And will it ever make sense to export oil . No, i dont think well see a glut. I think well be able to supply our demands. And i think were on track to do that we said in the next decade and certainly thats the case. You know, i heard on the promotions this morning that continental hadnt supported wasnt in support of keystone xl. You know, we stepped up early on as the first supporter of keystone. But once they decided to haul bakken oil and we signed on for 35,000 barrels a day. Whats killing us and we probably could be a lot better shape, you know, in the country if xl had been approved. But, you know, this delay five years now itll take four more to build it if it were approved, those type of things just kill you on supplying in this country. Then the media is kind of misconstrued what you said. You no longer support the youre just facing reality that its taken five years already, takes four more to build. So youve got other youve made other plans in terms of rail and stuff like that. We shouldve built it all along, obviously. Well, obviously. You know, business goes on. Were in a competitive situation up there in the bakken and have to get oil to market and find other ways to do it. And weve done that with rail and other pipes and other parts are being built. So eventually, you know, when you cover the spectrum without the pipeline. So, you know, its the uncertainty that kills you. You have to have certainty in this business. Do we get another chance at the plate on that same concept, mr. Hamm, with natural gas . Do you feel we should start now so in five years we should export natural gas. Feels like a huge differential between the price of natural gas and the price of oil because how much we got all of a sudden in natural gas. Should we be exporti ining natu gas becky, natural gas i cant do it. What do you think, mr. Hamm . What do you think, harold . Well, natural gas, we did glut the market a little bit. Its coming back into balance. Were getting there quickly. This winter helped a lot to balance supply and demand. And were seeing price come into a range that you can afford to go out and drill for gas again. But we are going to always remain ahead on natural gas. I think weve got 100 year supply of natural gas in this country for sure. So export some . Export some . Excuse me, i didnt hear your question. Should we export some . Get better at sending it over to the chinese so they stop doing all that coal . If youre asking about import or exports of natural gas, sure, we should be exporting natural gas. And, you know, theres a lot more supply here in this country to justify doing that. Ill be sure to tell becky you said so. Harold, this is an overall question. The price of all this abundant natural gas we have, what does that say about the feasibility of renewables . And has it pushed out the technology on when it really will make sense to do some of these things where you know per btu its going to be much more expensive. Will it be much harder to develop, you know, solar or whatever renewable you want to talk about because the price for that we can pay for this cheap natural gas is going to make it less economically feasible for many years than we thought originally . Well, you know, theres a lot of people, you know, early on that we should just go to wind or solar and, you know, the whole battle was about market share. I think today everybodys realizing that, you know, below 6 an mcf, a lot of these things arent economically viable. And i think were going to see natural gas below that threshold for an awfully long time. Thats what i mean. Those hundred really smart people we have in d. C. That design everything and, you know, the can bring us all these great, this great life were going to have. A lot of times the market comes along and says that may not be the way were going to do things and then theyre shocked. What solyndras not going to work . Harold hamm, we appreciate it. Thanks for your time this morning. Okay. Thank you. Good to be with you, joe. As we wind down the year, were looking ahead to what opportunities 2014 could bring for investors. Joining us right now with an exclusive on what his company is expecting is ron florence, executive Vice President and deputy chief Investment Officer at wells Fargo Private bank. And i know you were just listening to the conversation we were having with harold hamm. That happens to be one of the themes you think is very important in 2014. Just this supply of energy that were finding right here in our country. Yeah. I think that energy story is important. But i think people need to look globally at it. Its not just a north dakota story. Its not just a United States story. Its really a global story. I just came back from a Research Trip to india two days ago. Theres a little bit of jet lag. 80 of the oil in india is imported, most of it from iran. So they have an opportunity to diversify their Energy Resour s resources. But even when you go beyond emerging markets to frontier markets, most of the middle Eastern Countries have not diversified cash flow away from oil. As the world is able to have better supply the middle east is going to have challenges. When you look at frontier markets, look at countries with better commodity diversification be it africa or south america are more compelling that the countries dependent upon crude oil. For investing at large not just energy . Absolutely. Investing at large. And the Economic System of these countries. And this is a story thats going to go on for a long time. Not just a story between now and june the Energy Revolution is going to change the way we consume energy. If youre in an emerging economy and youre looking to bring more power online, youre looking to build power plants that arent just reliant on crude oil, but natural gas. Frackings happening all over the world and i think thats an important story. Another important theme, whats happening with the central banks. Weve had the activist central banks. A lot of them had been acting more in concert. You think that ends in 2014. Well, as we go around the world, we see the different issues with inflation, Interest Rates and growth. In our country, weve been trying to create demand. So we forced Interest Rates very, very low to see if we can increase demand for borrowing money. Were trying to stoke inflation to try to increase demand that you buy the jeans today as opposed to waiting for tomorrow when the price might be higher. They have ample demand but limited supply. In parts of india and other emerging markets, they have unlimited demand. So as much supply as we can bring, its immediately absorbed. They have higher inflation rates, well see divergencdy ve divergence here. Slowly letting Interest Rates rise for a long period of time is starting. And i think investors need to get ready for that. Its starting, the tenyear is picking up modestly. But i did have pointed out to me today the fiveyear is what we should be watching. Thats risen much more sharply. Does that concern you . Its 2. 945 , look at the fiveyear picked up rapidly over the past couple of days. Weve been talking about increase in Interest Rates for a long time. And this has an important ramifications across your entire balance sheet. If youre a borrower and borrowing money, we know Interest Rates are going to go higher. Lock in rates today. Lock in as long of a rate as you can if youre borrowing money. On the other hand, if youre a lender, which is what you have when youre buying bonds, youre lending money, lets look at diversifying the credit risk, look at keeping those durations relatively short so we can increase our Interest Rates as the yield curves rise. Is the stable equity the new bond say again. Fat stable equity is the new bond . I dont know if id call it the new bond. Bonds have nice diversification. Ron, thank you so much for your time. Good talking to you. Open to innovation. Open to ambition. Open to bold ideas. Thats why new york has a new plan dozens of tax free zones all across the state. Move here, expand here, or start a new business here and pay no taxes for ten years. Were new york. If theres something that creates more jobs, and grows more businesses. Were open to it. Start a taxfree business at startupny. Com. [ male announcer ] this december, experience the gift of exacting precision and some of the best offers of the year at the lexus december to remember sales event. This is the pursuit of perfection. At the lexus december to remember sales event. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you open an account. You stand behind what you say. Theres a saying around here, around here you dont make excuses. You make commitments. And when you cant live up to them, you own up, and make it right. Some people think the kind of accountability that thrives on so many streets in this country has gone missing in the places where its needed most. But i know youll still find it when you know where to look. [ male announcer ] this december, experience the gift of unsurpassed craftsmanship and some of the best offers of the year at the lexus december to remember sales event. This is the pursuit of perfection. Welcome back to squawk on the street. And buckle up, four handle on our last look at gdp. 4. 1, yes, 4. 1, unbelievable. If it was only sustainable. Listen, its a good thing, but also in many ways an inventory thing and thatll turn into a great thing if we buy all those widgets were making. Of course, it was 3. 6, now 4. 1. If you look at the consumption number always important, thats pretty decent. Two, 2 , that is huge from 1. 4 to 2 . Now, if we look at the price index, which many like to look at, thats two across the board. Thats what we were expecting, that was our last look, no change there. And if we consider the fact that we are pretty much putting the tombstone on, not only on the Fourth Quarter, of course, but for the year, that means at about four weeks, were going to get our first look at Fourth Quarter gdp. And many believe theres going to be that same influence of inventory. Well have to wait and see. When we have all the bearded givers, its best to keep the stock market as high as possible. Back to you. Shouldnt the next i mean, is it purely inventory, rick, or do we start ratcheting up the pessimistic patience for the gdp. Does that mean theres less for next quarter or keep our estimates up . You know, i think its a little bit of both. Theres impact on how good this revision looks. I think there are good things going on. Were not fully in the Banana Republic yet, and we seem to be shedding the chains that may be holding us back as the great john taylor said on my spot about two days ago. In the end, many of these programs hold things back. And as we wind down even a hint of winding down, i think the good things are going to potentially clear the space. I mean, look at a twoyear note, approaching 40 basis points. That is screaming loudly that the marketplace is squeezing its tightness all along the curve. It isnt only in the long end anymore, joe. Well, that 300point move, rick, you can say it as much as you want that it was because the fed knew that the economy was Getting Better and thats why it was up so much. Thats one take, you know, that somehow their forecasts are suddenly, suddenly that we believe what theyre saying. So the other take is forget their forecast. Yeah. The other take is its the beginning of the end of this program that was actually Holding Things back. Thats the other take. And i dont know which ones right. No, and i think it is a combination. But listen, joe. Ben bernanke. You and i, see eye to eye on many issues. And i think theres a lot of people that wield a lot of power not only domestically but globally that i personally dont think have their hearts necessarily in the right spot in the sweet center. I dont think ben bernanke is one of those. I think hes a great american, i think he wants the country to do well, i just disagree with his programs. And not all of them. There was programs in the early stages, but come on, you know, the trap, theres always a trap when it comes to governments and b bureaucracy. Im optimistic, things are improving. The problem is i cant relate that to stocks. I dont know how much foam there is on the top of the stock market. How much really good stuff we need just to get to where we are to support where we are. Speaking of great americans, john lonsky is here. Do you know why the market was it relief or was it, wow, the fed is forecasting a stronger economy, its good . I think its relief were finally getting out. I think the market finally has a chance to discover where the tenyear treasury yield belongs. This is going to be beneficial to investors, businesses, theyll have a better handle of what the longterm real cost of capital is. Where were you for the Fourth Quarter . Closer to consensus is about 1. 5 , maybe 1. 6 . What i want to point out, i was pleased by the fact we have the faster rate of growth for spending. 1. 4 to 2 . We think in the Fourth Quarter real Consumer Spending goes up to 2. 8 . Its going to grow more rapidly because in part because of the price discounting brought on by the huge increase in inventories. I see. Youre not going up from 1. 6 this next quarter based on 4. 1 . Its that inventory adjustment. If we take out inventories, were close to 2. 5 . Will we get to 2 1 2 in 2014 . Definitely. I think so. I think thats right in the mid range of a number of estimates im looking at. That looks very achievable. Well see faster growth by personal income, better showing by Consumer Spending, investment spending. The economys not going to be gang busters, which is good. Were going to keep inflation in check. As a result, were not going to see a tenyear treasury yield go through the roof. All washington had to do was get a budget. Doesnt matter what the budget was, whether it goes up or goes a budget and the shackles being released by the private sector. For now they are. But the budgetary problem is a long range issue. 2018, 2020, thats where the outlays start to surge. They take off and the budget deficit swells. We can live with this deficit today quite nicely. Eventually, were going to have to face the hard reality of how an aging population and a much more slowly growing workforce puts a lot of upward pressure on government outlays for retirees. Weve got Jonathan Bush to deal with that, i think. Hopefully people will be consulting with you. Weve got to wrap, but i was going to ask, you know, instead of quarter to quarter, the biodiversity for multiple years looking out, doesnt look like were starting as many new companies and thats what scares me more than inventory and jacking and Interest Rates to keep people sort of robot fragile buying instead of trying new things. Well, companies have to deal with things Like Health Care reform, all of these different compliance issues. Its much more difficult, costly to get a business started compared to the past. And getting back to the demographic factor, very important, hugely important. Next ten years retirees growing by 3. 5 annually on average, working age population,. 5 . That doesnt speak well for Consumer Spending. You just used my line. Thats the biggest fear in the control room is when i say were supposed to wrap, but yeah, you did. Thats their biggest those are the ten worst words they hate. Im sorry. Its okay. Weve got to wrap but becky. When we come back, he was once considered Vladimir Putins arch political rival. Vladimir putin threw him in jail for ten years. Now he is free on a president ial pardon. Michelle carusocabrera will join us next with olympic sized theorys behind that decision. Still to come could rising Interest Rates kill Economic Growth . The ceo of remax sounds off on the state of housing. And why resales are slowing. Squawk box on cnbc is coming right back. But with less energy, moodiness, and a low sex drive, i saw my doctor. A blood test showed it was low testosterone, not age. We talked about axiron. The only underarm low t treatment that can restore t levels to normal in about 2 weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. Women especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these symptoms to your doctor. Tell your doctor about all medical conditions and medications. Serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting and increase in psa. Ask your doctor about axiron. After spending ten years behind bars, khodorkovsky has been pardoned by vladimir putin. Michelle carusocabrera is here and shes got thoughts on this. They say he was on a plane and headed to germany where his mother is, apparently. Hell never be going back to russia. I would assume not at this point. If people arent familiar with khodorkovsky, hes been in prison for ten years, he might still be a billionaire, we dont know. He was worth 15 billion at one point when he was the ceo of the Largest Oil Company in russia at the time. Can we roll the video . We can show the prison where hes been for the last ten years. You want to see. This is khodorkovsky. This is not fresh today. So we dont have video of him getting out of prison at this point. We dont know we dont know what he looks like. Weve had video of him the last couple of years, hes much thinner and less hair than he used to. That much we know. So, yes, he is out of prison. He was charged with corruption, with tax evasion, but many people believe it was simply because he was funding the opposition against putin and that he considered running for office against putin and, hence, why he was police went into his plane in 2003, arrested him and hes been in prison ever since. Late yesterday, putin mentions that hes going to get out of prison because hes requested amnesty because his mother is very, very ill. And hence why he has to go to germany. Very few people, investors, will say out loud with their name attached to it what they think is happening here. One of the few who will say it is a guy named bill browder. He used to be the largest private investor in russia. He says the lastminute publicity stunt is to get World Leaders to come to the Olympic Games because a number of World Leaders have refused to go to sochi because of the issues related to gays and antigay laws in place there. Bill browder once had the largest fund there, police went in, seized his assets, he lost a ton of money and his lawyer died in jail as due to lack of medical attention, kidney disease. And he says if he wants to impress the world, he ought to prosecute the people who let his lawyer die or killed his lawyer. Wow. Yes, weve had him on from davos and other places. He wont reveal where he lives because he lives under Death Threats from russians. Wow. Coming up next some holiday news. If youre thinking of selling your house, you might want to check out our interview with ceo of re max. And make sure you join us on monday, squawk reserve is going to be in session. Jeff lacker will be our very special guest host. Squawk box returns after this. Ya know, with new fedex one rate you can fill that box and pay one flat rate. I didnt know the coal thing was real. Its very real. David rivera. Rivera, david. [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. You can fill that box and pay one flat rate. How naughty was he . Oh boy. [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. Beautiful shot of our nationnatio nations capitol. Some of the top chief Financial Officers from public and private Companies Offering up 2014 predictions. And theyre off to a good start. Many accurately predict the feds moves ahead of this fed meeting. Well over 40 of our members said tapering would begin in january. When asked what is the top risk factor your firm faces heading into the new year, the council said the Global Economy neck and neck with weakening consumer demand. Also, obama care is a worry for the group. But they seem to be feeling a little bit better about it. I dont know i look at you and think of you as billy. Doesnt matter. Anyway, in october, we asked them if they thought it would work at that time. Only 36 said it would if there were some changes made. This time around, its nearly 50 . For more on our global cfo council and all of the survey results, you can check it out, cfocouncil. Cnbc. Com. U. S. Housing starts surged to the highest level in nearly six years last month. How will yesterdays news from the Federal Reserve impact the bullish Housing Market trend . Make that wednesdays news. Joining us now to talk about the recovery and the Housing Market is margaret kelly, ceo of re max. Thank you so much for being with us. Thank you. We know that things are Getting Better, but weve also been watching rates tick higher, steadily, but ticking higher, looking at the tenyear ticking at 3 . What does this mean in terms of Mortgage Rates . Well, obviously Mortgage Rates will Impact Housing a bit. I think we have to keep it in perspective. We are still at 50year lows. Mortgage rates right now around 4 . I bought my first home in 1982 at 14. 5 and i was thrilled to be able to get that. So the American People really adapt to the market that were in. Theyll be able to adapt to it. I understand completely what you mean. But i also remember earlier this year when rates rose because of what the fed was talking about at that point. We did see a Chilling Effect on housing sales. What are you seeing this week . Well, that was that was bernanke saying, we may start to taper. Now we know that the taper is beginning, now we can deal with that. Obviously the market didnt get impacted too badly. But whats happening right now in housing is the fed panicked because rates went up so quickly that they talked things back rather rapidly. Now were looking at rates higher than they were there. They are. But the fed also put in the caveat they can adjust the taper as they go forward, meaning they could increase it or they could decrease it also. So i think theres a little bit of leeway there. But the reality is we know the taper was going to start sooner or later, january makes sense. What it tells me the economy is recovering and there is confidence in it. In fact the new home starts that went up 22 this week to me says builders are very confident and the housing recovery and in the economy, otherwise you wouldnt see starts that high. Okay. What are you seeing just in terms of consumers and how positive. Housing transactions went down about 4 this month but what that tells me is were getting back into a normal Seasonal Market in the housing industry. We havent seen that for quite some time. In fact, for 28 months in a row, year over year the number of transactions increased. This is the first time in 28 months that the transactions actually went down a bit. What that says is were getting back into a normal Seasonal Market where were slow in the winter and increase again in the spring. Margaret, youre public now, m mazaltov. There is actually a retail cloud, where all the listings are on the internet, you can see them and touch them yet broker rate seems to stay at 5 of the value of the house. Do you see that keeping up or will it make it to the lady with the sign on the lawn or will it make it down to the market . Were thrilled with the ipo righthand remax thrilled to be public now. What we see is that a lot of the internet web sites actually have replaced newspapers and classified ads and real estate ads. It is an opportunity for buyers and sellers to go out, search the web, see what properties are out there, but nobodys going to click paypal and say im going to buy this house off the internet. What theyre going to do is go to a real estate professional, who actually is that knowledge broker to be able to help them navigate what happens in the real estate transaction. You may see a beautiful home on a web site but you dont know that two miles away is a dump. And thats where a real estate professional really assists the buyer and the seller to get through this transaction. That settles it. There you go. Margaret, thank you. Its going to stay 5 forever. Fabulous. On the commercial side, you guys should have the ceo of costar in here, who is really going to disrupt. Well talk about it another day. Sorry we got to run. Its a business, lets go. Get some ads going. Jim cramer coming up on post 9. Squawk box will be right back. [ male announcer ] they are a glowing example of what it means to be the best. And at this special time of year, they shine even brighter. Come to the winter event and get the mercedesbenz youve always wished for, now for an exceptional price. [ santa ] ho, ho, ho, ho [ male announcer ] lease the 2014 e350 for 579 a month at your local mercedesbenz dealer. Jim, we love this guy. I was critical about the last quarter. I didnt like that guidance. I think jonathan knows that. Jim, i love a good beating. That guidance was too you were too conservative. Too conservative. That is the first time ive been accused of that. Underpromise and overdelivers is thats true. I was hoping for the big bump because i know that youre doing well and i didnt get it. I started thinking should i be more concerned . Maybe im too positive. He likes the earnings to go up right away. Now, now, now, now, now. We want to invest in r d, invest in amazon, be the health care cloud. To 116, i didnt freak out but i was concerned. I thought maybe jonathan is saying, listen, that great hyper growth we had with the cloud, i got to pull back from it. Im used to you bumping numgs big. Were going to spend it on r d, not on earnings for you, no offense. Whats the next quarter of gdp going to be . Cant we stay above 2 . No, consumption is great. What people dont realize is the retailers are selling like mad, theyre just not making as much money. I dont want to be political about it. And the big game for philly big game, in fact, for a lot of different teams in the league. Is there a network with enough guts to televise this game do you know on sunday . Is there one out there . Actually, if dallas beats washington, the game is inconsequential. It is on nbc, though. Work with me. Work with me. Stop calling megatron megatron. When we come back to squawk on the street, john chen and he is first Live Television interview since taking the helm of the troubled telephone maker. Well be back. Move here, expand here, or start a new business here and pay no taxes for ten years. Were new york. If theres something that creates more jobs, and grows more businesses. Were open to it. Start a taxfree business at startupny. Com. They always have. They always will. Thats why you take charge of your future. Your retirement. Ameriprise advisors can help you like theyve helped millions of others. Listening, planning, working one on one. To help you retire your way. With confidence. Thats what Ameriprise Financial does. Thats what they can do with you. Ameriprise financial. More within reach. Thanks to Jonathan Bush. Have a great weekend, everybody. Well see you on monday. Right now its time for squawk on the street. Good friday morning. Welcome to