Transcripts For CNBC Squawk Box 20140107 : vimarsana.com

Pole. Almost 2,000 cancellations have been made for today for the flights. Jet blue is hoping to get back in the air after shutting down completely in new york and boston yesterday. The airline says operations will begin to ramp up again at 10 00 eastern time this morning. It expects to be fully operational by 3 00 this afternoon. In the meantime, amtrak says it plans to operate on a reduced schedule throughout the northeast corridor today. It is cold out there if you havent been out already. We will have the latest from the Weather Channel in about 15 minutes. Thank you, becky. In Corporate News this morning, chilly news, actually. Sources say executives will be spared in jp morgans madoff deal. While the bank is expected to pay about 2 billion to settle that criminal and regulatory investigations in dealings with bernie madoff, no individuals at the bank will be implicated. That deal could be announced as soon as today. Some boeing machinists planning to contest a crucial vote on their latest labor contract. The move could extend a long running drama over which state will get to work on boeings new 777xjet. Union leaders argued there would be a need to take a reason to say we dont need to do that and say no formal request for such an action has yet been made. Of course, on the other side, boeing quietly threatening that that is the possibility. And take a look at shares of sonic today. Youre going to want to watch them because the driving restaurant chain posting Quarterly Earnings in line with estimates. Its fouryear forecast roughly announcing consensus and the Company Announced it will buy back stock in 2014. Have you ever had a burger at sonic, joe . Im not sure. Ive had the cherry limeade. They have one out here in new jersey, as well. How about steak and shake . Those are in the midwest. Theres a place in new york that you cant even get. Big jacks. So you think youre entitled to i mean, you walked from your door the door man opened it and you walked to the curb and get in a car that a car that was already warm. You dont get in a freezing cold car and have to warm it up and sit on that no, no, he comes around and holds the door open like this. And then i with the common man like everybody else. Youre not the common folk like us. I will admit, i have i have a remote starter. You dont have a remote starter for yours . No. But i had trouble getting my door to even open. I did, too. How far is the curb from the door man, sorkin . About so but you identify with us somehow on this . Its challenging to identify with you, joe. When it drops you off here, does he pull a euey and get i have him come right up so i can just actually, the doors clink when i open them to the building. I was dreading waking up this morning. I was dreading going out there. You have got to go on the deblasio staff. I mean deblasio shovels his own walkway. As you know, i dont wear a coat because you go from did you ever see the guys in new york never wear a coat, you understand why they never wear a coat. Those who ride in a limo and identify with the common folk its my favorite thing. I didnt see any of this. I thought Florida State would win. Auburn must have i didnt think they were really as good, but they must have been because they had to come back to win. The sports story of the morning. It says here as i predicted. I always thought Florida State was good, but obviously it could have been either team. Won the bcs championship. What an ending. So sad that they do it at night and we couldnt see this. I follow the College Football the entire time and then its on too late. Florida state was down four points with more than a minute to play. And Heisman Trophy winning quarterback Jameis Winston led the seminoles 80 yards for the gamewinning score. I have an idea for the bengals. Maybe draft jameis when he comes out. Anyway, the go ahead touchdown was scored with just 13 seconds to play. Or we could get teddy whats his name from louisville. I think hes coming out. Im ready to get a new quarterback. Youve got your thing on, your davos god, i got one just like that, i think. What . Your davos flannel. While youre going from car to car and the door man to the so the driver opens your car door, but the door man opens your do you know how to open a door at this point . I try not to let jeeves open the door for me. Youre a common man. Youre a man of the people. Stay in the vehicle, joe. You are a man of the people. Thats nice. In washington, did you see this . I never look closely at this. I know youve got one. Here is yellen. She was confirmed yesterday. Shes carrying a magic wand to make the economy, right . And shes riding on a dove. Dove. And then it looks like the elephant is kicking the donkeys [ expletive ] there sort of. What . Doesnt it kind of look like the elephant is winning . The elephant is bigger, ill give him that. Its a standoff. Theyre head to head. But they dont alternate who is winning. You think its a standoff . I think they set it up like that. But shes riding the lord of the rings. Shes on the back of a dove. Anyway, you know what . This market will be up 78 today. You still think over the next few days we could erase the losses . I dont know whether thats going to happen. Im willing to give the s p a pass because it did so well. The last two weeks of the year these are future things to look at. Its like a football indicator. Right. So if we dont make it if we dont make it, that indicator is definitely wrong. If we do make it, the indicator is right. Exactly. In washington news, a test vote on extending jobless benefits for the longterm unemployment. The measure was delayed yesterday after more than a dozen lawmakers were unable to return to the washington because of the weather. President obama is expected to speak on the topic from the white house east room a little bit before noon east coast time. And then in other political news, ill tell you, i watched this guy yesterday and i was going, i like you, governor. New York Governor Andrew Cuomo says he would back proposals to cut taxes in the state by 2 billion over the next few years. Cuomo i dont think hes play along. The democrats up for reelection. There are parts of Northern New York that have zero taxation. What a concept. Maybe youll bring some businesses back to new york instead of having everyone exit. He says hes trying to change the states image. Apparently someone indicated to him that businesses from time to time to hire people and give them jobs and then these people become mroit employed and then theyre able to pay taxes. I wish he would fire up an email to the white house and say someone just informed me. Anyway, a Tax Commission suggested changes including a twoyear freeze on property tax. You guys are way overtaxed. Yep. An increase in the state threshold. Lowering Corporate Taxes and phasing out a surcharge on utilities. This is your democratic governor. Theres more to do, but keep going. Proposals call to cut the Corporate Tax from 6. 5 to 7. 1 . And the elimination of taxes for manufacturing firms, as i just said, theyre in upstate new york. You know what i want him to do . To create new startup nobody wants to start up a new company in new york if youre just like a oneperson firm because it costs 4,000. You have to buy an ad in one of these newspapers like the law journal or something to announce that youve created your new company. So nobody wants to if youre a one person why because they wanted to make it public back in the old days. You can put it on the internet for free. Exactly. So now they incorporate in new jersey or in delaware or whatever. But we have friends to tried to start new companies in new york and they say you never incorporate in new york for these silly reasons. But these will take care of some of the bigger issues. Because the way that i watched it last night, they were back to back stories about the universal preschool. And he once again i like the way he says it. Hes going to ask rich folks to pay a little bit more. Ask. Thats how youre doing it . Youre asking . Youre not asking, my friend. Whoa. Were going to ask. Can you say no . If you ask and you can say no . And hes using the folks, the obama folks the way he always does. Well see. I hope. I just you know, you elected him. I just really want to see what happens there. Hes a tall man. Hes a very tall man. 66. He has a nice presence. I live in the city and im very hopeful. I have to be hopeful. One way or the other. I dont know. That first press conference, man. He was ready to talk for six hours. Not very much of it was about the weather. I was concerned about the strip tease. I saw that part. I didnt really he asked how many layers he had on and he literally starts doing he thought it was funny, it was not that funny, unfortunately. Not. You didnt think it was funny . No. And you know my sense of humor. Whoa. Wow. Listen to this. In global news, two goodyear bosses are being held captive by workers in northern france. The plants director and Human Resources chief spent the night inside a factory there that the Company Wants to close. Goodyear has tried to shelter the plant for years now. It is said to be a. M. An emblem of frances issues. Ross westgate is joining us now. What can you tell us about the market there . Good morning, electricky. Well talk more about that goodyear story, as well. Right now, stocks even stevens decliners versus vnsers. Although were up, when you break that down and look at the indices, its a slightly different picture. The ftse has been flat since the start of the year. It was flat last year, up about 0. 3 . Now, the german and french markets, up about 0. 6 at the moment. The red inflation tipping down to 0. 8 on the year. The core number coming in at 0. 7 . Now ecb has a records rate around 2 . But if that continues, they may well be forced to take more action and ease policy more than they extend ltros. But this inflation rate is getting lower may caught them to come up with more action. So well have to see what happens with that. But its certainly worth looking at. Take a look at how the sectors break down today, insurance and banks ticking higher this morning. Household goods, technology, retail down slightly. But, you know, we havent got any major moves in either direction. And back to this goodyear story, goodyear executives tried to close this plant in amiens. Its north of paris. These are the pictures were currently rolling at the moment. Goodyear is saying were not going to talk about the plant and whether we can give better payoff to workers until you release the two executives that have been put in a room there. Meanwhile, the unions are saying were not going to release them until you start talking. So there is a stand yaoff. There are representatives from the french government there. But at the moment, no police intervention. Theyre trying to keep things rather peaceful and not antagonistic. But this may go on for a while. Boss napping has happened before in paris. But not for a while. It is an amazing thing. All right. Back to you guys. Thank you, ross, for its a crazy story. It is. What was i going to talk to ross about . Whats the temperature for you this morning . Is it metric or something . Can you tell us in fahrenheit . Whats the temperature over there . Fahrenheit in the uk today, its probably mid 50s. So the polar vortex hasnt reached you. All right. Is it raining . No. It has been raining a lot. What we have got is weve got the jet streams. We have been affected. The jet streams have been piling in, so weve had a lot of rain dumped in the uk in the last three weeks. How could you tell . It rains there all the time, right . Basically . When you when it rains a lot, joe, you get to measure the intensity. You know the difference between light rain and heavy rain. Okay. Thanks, ross. Well see you. Coming up, were going to dive into the world of reality tv with a business twist. The cohost of shark tank, kevin oleary will join us. You go in the water, sharks in the water. Our shark. Well, if you think you have what it takes to be a business entrepreneur, our next guest, kevin oleary, chairman of the ee leery funds of the hit show shark tank. Hes author of the book men, women and money. Its good to see you, kevin. Weve been watching you. Do you know me . Do you know who we are . Have you ever seen squawk box before . You know, joe, i hate to admit this, but ive been watching you for 25 years. Brutal. No one has told me that. I was taking a shot. It would have been horrible if you said, well, ive been watching this morning and youre pretty good. That know thats fan tastic. Theres something tangible about being able to take a business show mainstream. Its been tried many different ways, success in some, not so much in the other. What is the secret for how you did it . You know, its grown geometrically in the last few years. What are you watching when you watch shark tank . Youre watching the pursuit of freedom and that is the core and essence of america. Particularly in the last five years when weve gone to this turmoil and financial markets, people are concerned about money, they find a sweet smart in going back and remember whag made this country great in the first place. Starting your own business. Thats all that matters. You know, im almost religious about it, as well. Individual freedom the is number one, but Economic Freedom is number two. And the American Dream is involved with having both. And, you know, you mentioned the last five years. Admittedly, a financial crisis has something to do with it. But maybe the response to it has made it more important that you get the message out and people can see that it can still be done. Joe, im worried because this was always the country where anybody in the world came to create their own freedom. And i feel weve lost some of that in terms of what weve done. How weve beaten down this purely spirit. This minimum wage debate is insane. Can you imagine any way that will help . Its crazy. On top of that, new health care costs. I see they ever day. Its not good. What about just your own selfimage as you succeed in starting a business and youre part of the problem with income disparity . Here you are, separating yourself from the rest of the pack doing exactly what youre not supposed to do in a country that were now hearing almost on a daily basis that you sort of have to feel guilty about succeeding. I think what we have to do, as a society, is think back and ask ourselves, where does all of the great things we provide in america come from . It comes off the back of the taxpayer. The government doesnt create anything. Its the man and woman starting a business that pays tax that provides everything. Is and if we forget that, which we have, weve vilified our financial leaders, we call them fat cats, thats completely insane. Are you on which network are you how did you get earn the radar . Did their executives not watch the stuff youre spewing . What, abc . What are you right now . Listen, im just telling the truth. I know you are, but apparently management didnt get the executives, the programmers didnt get a whiff of this cutthroat capitalism that youre pushing. Joe, we have 40,000 applications on shark tank, all Small Businesses, all have the American Dream. You should hear their stories. Our leaders and politicians should talk to them. Wait, 40,000 applications for people who want to come on. Show you their ideas . Yes. And it grows every year. Theres a desire to be successful. People realize shark tank is a business. Take a commodity like cup cakes. There are thousands of cupcake companies in the world. I find one in boston doing 15,000 a month in cupcake sales. One eightminute session on shark tank, the next month they sold 360,000 of cupcakes. Last month, december, they were still clipping at 260,000. This is a multi Million Dollar business in cupcakes. Thats a measurable evidence of the power of what shark tank can do to any Small Business. Let me ask you a question. I dont know what the right answer is, but i do know this. I was reading an essay yet yesterday by a fellow talking about he was paying 2. 25 an hour back in 1963. Inflation adjusted today, those numbers would equate to something on the order of about 16. 50. Minimum wage today is not near 16. 50. I want Small Business to succeed. I want our economy to succeed. But i do wonder whether there is a discrepancy in what you do about that. And if you do believe and this is a fundamental issue for every one of us. If you believe its easier to leave the money in the pocket of an entrepreneur and a business or is it better to tax it . Frankly, a minimum wage is a form of taxation and put it through the meat grinder in efficiencies of government and feed it back to the economy. I argue as an entrepreneur and an investor that onethird of every dollar we accumulate through taxation is completely wasted through bridges to nowhere, the interest of politicians and i agree with you 100 on that. On that particular point, i agree with you completely. But a question remains whether more money has been made at the top, which i think is true over the past 30 years than at the bottom and what you do about that. And i dont know what the answer is. Welcome to america. Thats what were supposed to do. Youre suppose to aspire, to achieve, to become one of the 1 . Thats what drives this whole economy. I think we vilify this. Ite a huge mistake. Ill tell you a story that to me is very powerful. I was in San Francisco airport and a 9yearold girl came running up to me, her mother chasing me saying whats my daughter doing going after that old guy. And she stopped me and said i want to go on shark tank. And i said, why . She said i want to be free. At 9 years old, she figured out, she assimilated what happens through the creation of wealth and your own personal freedom. And so anything we do to try and vilify financial leaders or aspirations for wealth, i just think its really unhealthy. And thats whats happened. On that score, were 11 00 in alignment. I think the vilification of wealth in this country is wore offic. You cant connect the dots on where we go 16 on minimum wage i dont think we should go 16 on minimum wage. Thats price control. Theres a and the question is what do you do about it . It hasnt happened because of not raising the minimum wage and its not cured by raising minimum wage. But i dont think we should velly phi wealth or the creation of these startups. Andrew has the president and the whole Democratic Party on his side. Why isnt it the ability of the market to determine what minimum wage is . Why do you or i know what that should be . Dont you think if you raise the wage to 16, there would be a lot of people losing their jobs. Where did this idea come from in the first place . Lets examine the fundamentals of why we need a minimum wage . The market takes care of it. Thats an argument against unions, thats an argument against yes, absolutely. But look, i agree that you can have a very strong market economy, but you have to have protections on the other side. What protections do unions provide at this point without i mean, if you stress that no one said that. But with Civil Service laws, you dont have workplace conditions. I agree. Theres a reason that private unions have dropped to 7 . 7 . Let me ask you this the only place you finance is in the public sector. You would argue this will hurt jobs on the lower end and makes Companies Less competitive. Yes. And theyll take it out somewhere else. If you look at the social unrest this causes, would you say okay, let them do this, not a massive jump on things, if you allow a slight increase, would you take the good will that that would buy you from the other side . I dont know what i dont know what the right number is. Just give them a bone when you know its not going to help . I see the outcomes that they try to orchestrate in europe. I dont think and i see what its done to economic progress. I agree that its not but instead of outcome, do opportunities, not outcome. They talk about how its going to automate a lot of things and that could certainly hurt job creation. No, kevin, i need you theres already minimum wage there to allow becky, what i would want to do is i would love to bring ten entrepreneurs that we meet on shark tank and come and tell their stories and listen to what they say. I swear to you, our own leaders arent listening to them. These are the people that create the next what you guys are doing is fantastic work. Thats why we are so excited to have it here on cnbc, too. Its something well get to watch every tuesday night. We need to hear more about these. Thousands of jobs are being created. Its not going to be helped by going up 2 on minimum wage. I want these guys and how much of the population does i love a great entrepreneur. Yeah, yeah, okay. And im just trying to figure out how you make the whole thing work. Kevin, thank you. And i dont know kevin oleary, thank you. Shark tank tonight at 7 00 p. M. Youll be able to talk. Anyway, tonight at 8 00 p. M. Eastern on cnbc. When we come back, the big show on the markets. So far, 2014 has been a hostile environment for equities. So will that change when the markets start to get more data points . Thats coming up right after this. Find out why tmobile aes o outspoken ceo is getting a new title, chief party crasher. That and more squawk right after this. Let me just put this awa. Could you teach our kids that trick . [ male announcer ] by not acting that way. Its how edward jones makes sense of investing. Everything looking good. Velocity 1,200 feet per second. [ man 2 ] your looking great to us, eagle. 2,000 feet. Still looking very good. 1,400 feet. [ male announcer ] funny thing happens when you shoot for the moon. Ahh, thats affirmative. [ male announcer ] you get there. 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If you have any sudden decrease or loss in hearing or vision, or any allergic reactions like 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 experiencing cialis for daily use and a free 30tablet trial. That its given me time toabout reflect on some of lifeseen biggest questions. Like, if you could save hundreds on Car Insurance by making one simple call, why wouldnt you make that call . See, the only thing i can think of is that you cant get any. Bars. Ah, thats better. Its a beautiful view. I wonder if i can see mt. Rushmore from here. Geico. Fifteen minutes could save you fifteen percent or more on Car Insurance. Good morning and welcome back to squawk box here on cnbc. Im joe kernen along with becky quick and andrew ross sorkin. Making headlines, a slump in trading is said to be threatening wall streets biggest profit engines. The wall street journal has this as the biggest story. The industry proposes its 11th trading decline in 15 quarters. Executives warn that lackluster markets could lead to year over year declines. But these are the markets that theyre talking about. Its almost like the equity markets, even though theyre up, theyve havent really taken the baton. Commodities with a tenyear super cycle which totally fizzled out. Currency trading is down. So youre going to have to sooner or later, youre going to have to learn how to manage wealth for clients and do it in a proper way. And thats how youre going to make it. Youre not going to be able to do this any more, taking your cut. Unless theres a lot of volatility returns. The fed has tamped down a lot of the xhvolatilities which has probably helped the commodities at bay. Thanks should get back to doing what theyre supposed to do. Like we had Merrill Lynch on. Get back to where you take clients, try to prepare for their retirement, gather assetes and try to do whats best as far as asset allocations for your client. Instead of getting one every trade or whatever. The u. S. Department vacancy rate falling to the Fourth Quarter. A sluggish job market and weak wage growth help keep growth at 0. 8 . An industry reports note this is well below the level usually associated with such low vacancy rates. And high demand is putting a premium on Recreational Marijuana prices in colorado. Thats suggested pot is selling for an average of 400 an ounce in the state, twice the 200 charge for an average ounce of medical marijuana. Friends that i knew in my past friends you knew . Friends i knew in my past, years ago, told me that they had remembered prices at 300. 400 an ounce. That does not sound that ex object tantly expensive based on in the past. But you know that over the years prices will come down. A lot. But im not sure how i feel about this whole thing, seriously. Does it bother you . What bothers me is that what bothers me is that, number one, i dont think its good for your lungs, number one, because its not even filtered. And number two, you cant just theres a lot of people that drink because they like getting drunk. But you dont have to be drunk to drink. What kind of society does friends told me that if you took a puff one puff or two, it wouldnt have an impact. Not of this 400 stuff, my friend. Its 100 times more powerful than in my past, friends in my past. Exactly. Theres a story last week saying because this is pot you have to pay taxes on, there are some that can still get drugs cheaper from their dealers and not pay taxes on it. Thats the best argument for doing this is the whole underground you get rid of and increase your tax head. But i forget what it was saying, its cheaper for me to go through do you want it to be legal or decriminalized . You still have all the unsavory characters involved in the business and people get rubbed out and all that kind of stuff. It would be nice to just i dont know. Lets take a look at the markets this morning. You will see that the futures after three down days for the markets are indicated sharply higher. Right now, the dow futures are up by 63 points. You can look at the s p futures up by just over 5. 5. Crude oil this morning, yesterday crude oil was down to a onemonth low of 93. 41. This morning, up higher at 93. 84. Yesterday, it was at a onemonth low. The markets stumbling to their worst start in 200 5. Joining us now is peter bain. Also, j. J. Kennahan, chief strategist. Pet peter, when you see what happened for the first three trading days of the year, do you worry about it . No. The first three days of the year are a giant shrug. We had a strong 2013. It is already fine. I think the jobs data out of germany was wrong. A little nervousness about the services industry, reduction in growth, not shrinkage, reduction in growth, but manufacturing was good and i think were going to see solid economic data. I think were fine. I dont think this is an issue at all. What you said earlier, if we make it back in the next thee days, the indicators are right and if w dont make it back, the raters are wrong. Joe, how about on you . If you look at the first five days historically is what matters. Historically, if were down the first five days, we have just about a 60 chance of being down for the year. And if were up the first five days, we have just under a 75 of probability for being up for the year. So those are kind of interesting. Again, people say they may not mean stuff. But creating options in the past, i always look at probabilities. With that being said, becky, we came off a key support level on the asx. Many of the traders down here, myself included, believe we can go up to 1850. We may have a chance to do it by the end of the week if the employment report is solid. With that all being said, i think this employment report will be more watched because its the first once since we have the official announcement that taper is going to begin, even though as weve talked about before, qe is still truly in place. Its just a small taper. But any number involving jobs or housing is now going to have an extra effect and everything is saying its because of the taper of the fed or they need to taper more. Peter, how about you . Are you concerned about the taper or is this a situation where you think the economy is picking up steam and the fed can hand the baton off . The fed can hand the baton off. And im speculating on this one, but ive been thinking about this over the holiday. I think there was some intent behind bernankes decision to go ahead and begin tapering before the beginning of the year. I was in london planning for a 2014 cycle and we were meeting with folks in south africa, latin america and europe. None of them were as bullish about the u. S. Economy as i was and as our team was. It turned out i think we were right. Others outside the u. S. Are beginning to see that. I think youll see capital flow this direction. I think bernanke was sending a message to the administration and congress before the debt ceiling debate, guys, were going on record, the economy is handle tapering. That leaves it to you all to screw this up by messing up the debt ceiling conversation. I think he wanted to put some pressure on them and i want he wanted to get out there before yellen connecticut firmed yesterday. Do you think there was a message that signals people move your assetes from overseas to here . I dont think its a signal to move to here, i think its a signal to congress dont screw up the debt ceiling debate. What im hearing from my colleagues over in europe and asia is, wait a minute, you were right. Your economy is a little stronger than we were giving it credit for. We need to take a look at our allocation again. We were probably underweight u. S. Last year. And i think that can help our markets this year. Very quickly, you think this market has a little bit of room to run this year. What is your end of the year target . I would say, becky, right around 1900. Okay. Great. Jj, thank you very much. We appreciate it. Peter, thank you for coming in. I love that name. Can we just introduce you as bain . You can always introduce me as bain. That gives me a concerning Dennis Hopper reference, as well. Oh, yeah. Dont look at me dont look at me. Thats right. Lets be clear on that one, joe. I watched the hoosiers yesterday. Love that movie. Dennis hopper was nominated for that. Scary, though. Can you stick around . Do you know movies and stuff . Yeah, sure. Movies, football. Football, too . Sure. Coming up, how you get thrown out of a at t how do you get thrown out of an at t party . A blockbuster meltdown, hollywood director michael bay deals with alien transformers big budget films, but well show you the one thing he cant deal with, right after the break. Announcer coming up, did this weather catch you by surprise . Byron wien has even more surprises that should give investors the chills. Squawk box is coming right back. Welcome back. How is everything . Theres nothing like being your own boss and my customers are really liking your flat rate shipping. Fedex one rate. Really makes my life easier. Maybe a promotion is in order. Good news. I got a new title. And a raise . Management couldnt make that happen. [ male announcer ] introducing fedex one rate. Simple, flat rate shipping with the reliability of fedex. Im here to get the lady of the house back on her feet. [ all gasp ] oj, veggies youre cool. Mayo . Corn dogs . You are so outta here aah cause im reworkin the menu, keeping her healthy and you on your toes. [ female announcer ] the complete balanced nutrition of greattasting ensure. 24 vitamins and minerals, antioxidants, and 9 grams of protein. I see you, cupcake uhoh [ bottle ] the number one doctor recommended brand. Ensure®. Nutrition in charge™. Over the pizza place on Chestnut Street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i95. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment the Consumer Electronics show has always been known for unveils. Last night, samsung was holding an event to showcase its new bajts. Michael bay, the director of transformers and other action blockbusters, when his teleprompter didnt work properly, things unraveled rather quickly. What i try to do as the director, i try to the type is all off. Sorry. But ill just wing this. Excuse me, im sorry. Im sorry. Okay. Ladies and gentlemen, lets thank michael bay for joining us. We cut out the best part. What was that part . The best part was the moderator goes, dont worry about it, just explain to us in your own words what youre trying to do. And then it was deer in the headlights and he said how about its a curved screen. What can this curved screen do for your movies that you usually make. Its not easy. Just talk to me about how you make movies. And just total fear. Wind the camera. We take it for granted. Its in addition not easy. Weve been doing it a little while. The first first time i was on, too, you were there. The first time i was on, i went there it is. This is stuck right now. What do you do when those dont work . Youre leaving . Hes leaving because the teleprompter is not working properly. Okay. Well pick it up for him. In other notable ceo buzz, tmobiles ceo worked his way into a party that at t was throwing for its developers. He told rico that he wasnt looking to make a scene. He was insisting that he wanted to see the companys act. At t didnt agree. They asked Hotel Security to have him removed. He was wearing his tmobile shirt under a leather jacket. Well re codes cara fisher about it. Coming up, how simple changes can improve Corporate Culture. Wien is going to give us the information for corporate leadership. Aflac aflac got em. Yeah, hes clean, boss. Now listen to me, duck. I have an associate that met with, uh, an unfortunate accident. While hes been incapacitated, somebodys been paying him cash. Now, is this your doing . Aflac . Now, if i met with some such accident, would aflac pay me . Nice. This is your stop. [ male announcer ] find out what aflac can do for you and your family. Aflac . [ male announcer ]. At aflac. Com. For you and your family. But with less energy, moodiness, and a low sex drive, i had to do something. 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 two 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. Welcome back to squawk box. How can simple changes in the Corner Office dramatically improve Corporate Culture . Our next guest sat down with 200 ceos to hear their strategies for successful leadership. With us now is adam bryant. Hes the author of quick nimble, lessons from leading ceos on how to create a culture of innovation out today. Good morning, adam. Good morning, andrew. Heres my big question for you. The big takeaway i had in the big is what you call adult conversations, the feedback mechanic six with which good executives have good conversations with underlinks and bad executives dont. Right. I think this has got to be the toughest thing that goes on in management, period. Nobody likes to tell the other person youre not doing the right thing. So the question is, how do you tell the other person that theyre lousy without telling them theyre lousy . I heard a great expression. Dont go over the net. When youre giving tough feedback, dont make statements that make summings about the other persons motivation. You talk about how you feel and how and your take on things rather than saying youre lazy, youre not smart. Thats what makes the conversations difficult. I think people avoid these conversations. I feel like youre lazy. That might be telling. Youre lazy and youre not very smart. You dont show up at work or you know, youre not responding to my email or not doing this. Those are simple. Those are simple ones. Tougher ones is probably somebody who is strong on some levels and has weaknesses. Every strength at some point becomes a weakness. People go out of their way to avoid these conversations. People rationalize reasons not to have them. Theyll say lets wait nine months and bring it up in their performance reviews. Having these conversations is like stepping into a knife fight in a phone booth. You interviewed over 200 people for this book and columns. Is there one person that floored you one on a particular issue or generally. How do you hire, what questions do you ask . I hired tony sharazappo. On a scale of one to ten, how weird are you . Can i answer that . Of course. Its not on the one to ten ranking. Another one he has, what is the biggest misperception that people have about you . Turns out thats just a setup. The punch line is once you answer that he says whats the difference between perception and misperception. A lot of these questions are around selfawareness. Weirdness scale, one to ten, does he want you to be weird or not weird . Most people probably come in between four and seven. If somebody goes 12, he probably wants to drill down on that. If somebody says 1, he probably wants to ask about that, too. The question is smart. It acknowledges that everybody is a little bit weird. The smart answer is 4 to 7. Id say 5. The smart answer is, you have no idea. Zappos is a weird culture. Coaches, can they tell you anything . Kansas city, the eagles, ceos can really mack a difference, which is hard to believe sometimes. I think leadership is huge. You get the right leader it can be a game changer. It really does matter. Yes. Which almost once you acknowledge that, then you get the ceo pay and you realize, wow, maybe some of these guys are worth some of the money they make, right . You want to comment on that . I do. One of the takeaways from the book is i think one of the most important things ceos do is create what i call a simple plan. Because i think one of the biggest problems that can top all Great Companies is silos. You get different divisions propping up to pursuing their own agenda. The moment ceos earn their pay is take a complicated company, say these are the three things well pursue this year. These are our goals, this is how well measure them. Everybody can feel like they have a hand. They have clarity about what their work does to help those goals. Real quick because its practical for everybody. Email. Your best ceos dont use it for anything complicated at all. They understand whenever theres anything high stakes to avoid it because the key phrase to me as stuff gets lost in translation. Pick something up thats not there, like oh, man what is he saying there . You read tone. You misread it. A lot of ceos have a lot of rules about email, just dont do it. If anything is high stakes, have the conversation in person. Adam bryant, thank you, the book, quick nimble. Do you see him there . Is your pod at the New York Times . Unfortunately, not. Its a football throw away. Its a football throw away. Is there a cafeteria in the building . There is. Thats nice. The building with all the bars on it, right, the capitalists out . Yes. Theyre not welcome here. Were trying our best. Thank you, joe. Trying to keep you out. Exactly. Dont worry, i wont be down there. When we come back, we count down byron wiens top ten surprises for 2014. 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. Welcome back to squawk box, another chilly day for investors. Are the bulls starting to get caught up in the polar vortex . Blackrocks Russ Koesterich gives squawk his forecast for equities. Ready for some surprises . Wall street veteran byron wien is out with his top ten surprises for 2014. And squawk is counting them down. Plus, its shark tank tuesday. Its all about what . Money. Are you ready to get back in the water . Squawk box begins right now. Good morning, everybody. Welcome back to squawk box here on cnbc. Im beckry quick along with joe kernen and andrew ross sorkin. Futures are indicated higher after three days of declines for the first trading days of the year. The dow futures up about 66 points above fair value, s p value up by close to 6 points above. The nasdaq is up 11 point above fair value. The tenyear is still below 3 . Too late for joes bet. Well see. How many basis points away . Thats eight basis points away. Your point was accurate. I do give you credit for your point. Yesterday i was arguing with people. Weve been hearing rates are definitely going up, definitely going up. Because of inflation . Oh, no there wont be inflation. Why are rates going up. Theyre going up. Because the fed is going to pull all their hoping youll sign your mortgage now. Is that why . I dont know. Well see. This is the slam dunk that were going only above 3 . If i was signing a mortgage right now i wouldnt get an adjustable rate mortgage, though. I dont know. I still might get a sevenyear. I dont know. Really . Maybe id go 30. Ill be 88, although i plan on you think rates are not going up. Im going to be 88. In seven years . Yes. Ill be 88 when the 30year would be up and when ill be signing up for my next 30 years. If im going to do a full 60 years he almost collected the full 30 years on that. There was a guy at the golf club who bought new clubs when he was 93, this doctor. Brand new golf clubs at 93. Thats the right way to look at it. Lets give you a lit bit of whats happening in the world with the morning headlines. There is extremely coral weather. It continues to wreak havoc with airline schedules. More than 4,400 flights were canceled yet. According to flight aware, more than 2,000 will be canceled today. Jetblue is gradually assuming their flights today. Well have more on the cold snap from the Weather Channel in just a few minutes. The senate has confirmed janet yellen. She will take over for ben bernanke on february 1st, although the change is not expected to result in any dramatic shift in federal policy. Also the senate has a high profile item on its agenda today. It is expected to vote on a bill to extend jobless benefits for 1. 3 million americans that vote was expected to happen yesterday but harry reid had the vote delayed amid doubts about whether the bill had the 60 votes iness to stop a republicanled procedural road block. Part of the problem was the bad weather, which prevented a number of key senators to make it to capitol hill for that vote. Corporate news this morning, samsung posting Fourth Quarter profits below estimates. The reason why, a huge bonus payout. They handed out an estimated 1 billion in bonuses to mark 20 years since its chairman set it on the road to becoming a global behemoth. A case of boss snapping in europe today, two goodyear bosses are being held captive by workers in northern france. The plants director and Human Resources chief spent the night inside a factory there that the Company Wants to close. Goodyear has tried to sell or shut the plan the for five years now. The situation is said to be an enblem or enblematic. I remember when eddie kidnapped the boss because he didnt give bonuses. Eddie takes the rv over, brings him back, gets in a lot of trouble. Our guest host for the next two hours, Russ Koesterich, ceo at blackrock. Thanks for being here. Midtohigh Single Digits for the s p. Okay. We got that. Thats what everybody is saying. Lets talk about what you think the actual corporations are going to be able to do in the economic environment. Are Profit Margins at a peak . Will earnings per share rise at certain number that you can give us . Then we can make our no one knows what the market is going to do. No one has any idea. All you have to do is Say Something at the beginning of the year that youll have to defend at the end of the year. The easiest thing is to say midtohigh sing the digits. Lets start with the fundamentals. The fundamentals are youll have a decent year for earnings. This is probably what the advantage is for the market. Unlike 2012 and 2013, youll have a better economy. Your question about margins, i think the reality is, the environment where rates stay low and wages are stay low, margins stay relatively high. You kansas 9 , 10 , 11 Earnings Growth. The problem next year, what happens to multiples . Most of the gains you have in 2013 came because the market multiple was rising much faster than the market. Thats going to be tougher to do in 2014 to me. Thats the big headwind. Although, what do you call the market multiple right now . And what are you basing it on . The market multiple is on trailing basis about 17. Okay. Us cycle lick cyclically adjusted number, its 10. Whats the historic multiple at 2 or 3 rates . How many observations do you have . What do you mean . There havent been that many instances in the past 17, whats the average multiple. The average if you go back to 1954 is 16. 5. Now you have an environment on stocks, trailing, theyre moderate. At the end of bull runs what are multiples typically. In 200044. Average. 17 is not expensive. 17 is not expensive. Especially on trailing. Which is why stocks can probably go higher. Its giving you a flash you said 9 or 10 in profit growth. I think that would be a given if you stay at 17. If you get 18 or 19 you could be up 20 . Right. Which is why i get to high Single Digits. 20 is double digits. I dont think youll get the extra multiple expansion or 20 profit growth. Part of the problem is youll have to deal with the earnings this year and youre probably not going to get that big tail wind from multiples going from 17 to 19. Possible, less likely. What inning are we in . Are we in a bull market. Were in a bull market. What inning are we in . Call it the 6th, 7th. In the 8th and 9th innings, multiples should be above 20. Depends on the market. In 2007, multiples peaked at 18. 5. Which year. 2007. What happened in 2007, did something come and stand in our way . Some black swan. Market peaked in october of 2007. I think that, if you look at the stages, you know, the denial stages and then being more comfortable and then getting a little bit excited and public starts getting in and then you start to the final stages where everybody thinks you just buy and hold and you always will make money you end up with a higher multiple than 17. I think youll get a higher multiple, whether or not youll get to 20, 25, thats a stretch. What gets left out some of the time, you have slower growth. If i have an environment where growth is, lets call 2. 5, 2. 75, the multiple in that environment will be lower than back in the late 90s when youre printing 3. 5, 4, 4. 5 growth. What are you guying, s p, large caps, small caps. Buy large caps. Why . One, theyre cheaper. You have less good news discounted into the earnings estimates. The other thing that worries me about small caps, small caps have historically been the big beneficiary when monetary conditions are loosening. When that starts to change, typically what happens is the large and the mega caps remain resilient in terms of evaluation. Small to midcap tend to get a haircut as you have less monetary liquidity. All right. And you just farm out individual names to all your minions or do you like stocks. Generally i dont call them minions. They do on despicable me. Which is a Universal Studios picture. As far as sequels go, sorkin . Phenomenal. Billion dollars, right . Phenomenal, phenomenal. What do you call your minion, the little people. The people making the money . Portfolio managers. The people that pick the stocks. Did they give you some names. Id focus on the sectors. Whats your favorite sector. We like energy. We like technology. Id be cautious on the more defensive sectors, probably also youre hearing from other people. The problem is people look to places like utilities and staples with the notion being, all right, we might get volatility. Depends where i get the volatility. If its happening because rates are going up, those are the worst places to hide. All right. Okay. Are those penguin cuff links . Those are penguin cuff links, thank you for noticing. Why . Who doesnt love penguins, birds with tuxedos. Who doesnt love that. When we come back, are you ready for a fee surprises in 2014. Byron wien has put together a list. Well couldnt the them down. Plus, its shark tank tuesdays on cnbc. Thats tonight at 8 00 p. M. Eastern time. Tdd 18003452550 trading inspires your life. Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. Welcome back, everybody. Checking the futures this morning, you will see after a rough start to the year, it does look like the futures are indicated higher this morning. Dow futures are up by about 70 points above fair value. S p are up and nasdaq is up by 12. 5 points. Oil prices are rising after five straight declines. You can see right now crude oil prices are up by about 55 cents to 93. 98. Gold prices are trying to extend gains for a sixth straight session. Traders note the funds are rebalance weightings of gold at the start of the year, right now, 1,238. 09 an ounce. Bankruptcy filings dropped by 24 last year. The American Bankruptcy Institute reports that bankruptcy by individuals and businesses combined fell by 13 . For the last 29 years our guest has been announcing his top ten surprise predictions for the year ahead. Joining us right now for the hour with his top ten surprises for 2014 is byron wien. He is vice chairman of blackstone advisory partners. Thank you so much for coming in today. Always a pleasure to be here, becky. Great to have you here. We should start off with taking a look at 2013. 2012 was a good year for predictions. 2013, not quite as strong. Thats very generous of you, i would say. Lets take a look at, your biggest thing i think was looking at the direction of stocks for last year. You thought corporate profits would be trimmed somewhat. I think my view on the economy wasnt too far off. Right. I thought the economy would grow at a feeble rate. It grew at 2 . Picked up momentum at the end of the year. Well talk more about that. I think profits would actually suffer. If you look at net income, it did suffer. Net income was up about 1 . But because of share buybacks, profits were up about 4 for the s p. Lets talk about what you think for this year, though. You do think this is the year that the economy really kind of takes off. It was picking up momentum at year end. You saw that in durable goods, over a millioning starts in november at an annual rate. You have higher level of Consumer Confidence. Im optimistic that youll have better earnings and as you were talking earlier in the show, i think the price earnings ratio can actually rise. One of the things that didnt happen and probably wont happen again this year, is that Profit Margins didnt come down. Theyre peaking but they could stay flat. That translates into what when it comes to the market . You think this is a dickensian market. That means the best of times, the worst of times. I think it is vulnerable to a shortterm correction at the beginning of the year. The market will really pick up speed later on in the year when some of the negatives clarify. Some of the negatives such as . Affordable care act gets better. The computer glitches are resolved. More young people sign up. The general political environment in washington improves. Byron i into yknew that would arou, joe. Your earlier comment about being in the snow is what aro e aroused me. Lets not get into that. My real question has to do with whether were way ahead on the s p. Were at 1,826. Were 22 points away, which is unlikely in two days but not impossible. Some ways we can do that. Byron, you were expecting last year and, as you said, you were much more right on about the economy itself than the market. A lot of people say its because of fed. But even though you see the economy improving this year, at 1850 versus you thought wed be at 1,400. Are we 450 points above fair value . No. Do we need to go back there do we need your forecast . We dont need to go back. Do we need to go back to 1600 or 1700 . I said we could have a 10 correction. That wouldnt get us anywhere near where you wanted us to be last year. Youre argument on the correction is that well see it in first six months. By the end of the year were back to where. Up 20 from december 31st, 2013. This will be a 20 year. 20 year with a 10 sort of okay. So if youre an investor, you do what right now . If youre an investor . Cash out, wait for the 10 correction to show. If youre an investor you dont do that. If youre a trader thats what you do. Good answer. If youre a trader you would be liquid now and wait for the dip. You rarely have a time when investors are as optimistic as they are right now wihere the market doesnt have a pullback. Think about what may drive that pullback. Do you think it will come from too much or too little growth . Is the pullback going to happen because the bond market overshoots or we get a patch of disappointing economic numbers . I think the tenyear will surprise you. That was one of my ten surprises. I think everybody will say the tenyear will go to 3. 25 or 3. 5. I think the ten years can go to 4 . I wouldnt be surprised. Look, the normal, if you look back over the tenyear yield over 50 years, its 6 . You know, were playing with the house money here. It could more than double and still not be right. If you look at the way the market performs, as long as Interest Rates stay below or the tenyear stays below 4 , multiples can actually expand. Last year the tenyear started the year at 172 and ended at 303. And during that time, the market was up a total return 32 . Which you hadnt gotten negative. Because you were so right for so long. There was a guy in the 80s, i dont remember, one of the big sayers in the 80s. He had been bullish. It hit him when he was looking around, wow, this market is too expensive. He came back and put up it doubled from there. You should have never gone bearish last year, because you were on a roll. Being bullish. Now calling 1400 last year for the end of the year and were at 1850, thats a total then 1900 in gold, totally wrong on gold. Yes. We were sympatico. Ive been doing this for 29 years. You cant always be right. Ive had good years and bad years. Fortunately ive had a lot more good years than bad years but i have had bad years. Last year was a bad year. Ron barron, he looks at earnings, the multiple on 2014 is 14. 7. Thats yes, 12month trend. He says fixed income guys are always too bearish. All right. Im global macro. I dont know where that puts me. I dont know if thats bearish, bullish. Were going to have more of those surprises. Byron is with us for the rest of the hour. Well talk about what this means for the dollar and other surprises when we come back. Coming up, well also talk about cold as ice. He was spending some time out there. I wont say what he was doing outside. Plunging temperatures forcing Flight Cancellations across the country. Well get an update on weather when we come back. Aflac aflac got em. Yeah, hes clean, boss. Now listen to me, duck. I have an associate that met with, uh, an unfortunate accident. While hes been incapacitated, somebodys been paying him cash. Now, is this your doing . Aflac . Now, if i met with some such accident, would aflac pay me . Nice. This is your stop. [ male announcer ] find out what aflac can do for you and your family. Aflac . [ male announcer ]. At aflac. Com. Theres nothing like being your own boss and my customers are really liking your flat rate shipping. Fedex one rate. Really makes my life easier. Maybe a promotion is in order. Good news. I got a new title. And a raise . Management couldnt make that happen. [ male announcer ] introducing fedex one rate. Simple, flat rate shipping with the reliability of fedex. Youre as cold as ice youre willing to sacrifice our love plunging temperatures across the nation this morning. Lets get to julie martin in atlanta with more on the big freeze. You cant be in atlanta dressed like that. You know, ive never had to break out this kind of gear to be in atlanta. Usually more places like minnesota or wisconsin. This morning, it is definitely necessary, joe, here. We are at 6 degrees. It has not been this cold since 1996 in the city of atlanta. And the wind chill is minus 9. So definitely needing the layers today, needing to bundle up, as you can imagine, a lot of businesses are closed. School is out for the kids here in the metro area and in the suburbs where we are going to be dealing with temperatures not getting much over 20 degrees throughout the day today. And really not going to get above freezing here in atlanta until thursday of this week. So the city of atlanta opening an Emergency Shelter as a result of all of this and people here just kind of shaking their heads at this bitter cold. Back to you guys. Wow julie, thank you. We thought it was cold here but were used to dealing with colder weather. That must come as a super shock to people there. Yes, absolutely. All right. Get inside. Stay warm. Well talk to you again soon. Thank you, julie. More when we come back more surprises from byron wien as he mixes politics into the mix. Hollywood director michael bayh steals the show after a teleprompter malfunction. Well get a preview from ricos cara swisher a little later in the program. My watch [ male announcer ] it pays to double check, with state farm. Over the pizza place on Chestnut Street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i95. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment about the most tracktested is ever. But the truth is. We dont have to. The experts have spoken. Now its your move. Welcome back to squawk box, everyone. In our headlines this morning, investors are more focused on tomorrows fomc minutes and fridays december jobs report. They will have one economic report to consider today. Well get the trade deficit for november at 8 30 eastern time. Its expected to come in at 40 billion. That is down slightly from october. Some boeing machinists plan to contest the recent vote that approved a new eightyear labor contract. That pact was narrowly approved, a 4951 vote. Those workers have indicated they may seek a recouldnt the or new vote. Even though the contract assures that boeing 777x will be built in washington state, it also replaces worker Pension Plans with a defined contribution plan. And Jp Morgan Chase officials wont be penalize as part of a settlement being negotiated with the government. Our scott cohn reports that no individuals will be implicated in the expected 2 billion settlement which could be announced as soon as today. Its time for more economic and political predictions for 2014 from byron wien, the vice chairman of blackstone advisory partners. I want to get to number three. The strength of the u. S. Economy relative to europe and japan will allow the dollar to strength strengthen. Right. How solid are you on that. Very solid. Thats going to happen because. Because the u. S. Economy will grow at better than 3 . Thats not a surprise. Thats not one where you can say i wanted to go against the grain. I think than consensus. 2. 5 to 3 is definitely consensus 3 plus hes say exceeding. He says 1. 25 against the euro. I want par. That should be at par. It probably should be. A couple other ones, shinzo abe keeps printing money like crazy and the nikkei rises in a major way. Right. But then there is a correction. Because they are increasing the sales tax from 5 to 8 . There is a peaking in the work force and the population is aging. I think japan could have a serious correction later in the year. Thats the only place people are getting older. People are getting older everywhe everywhere. People are getting older in china. The makeup, the demographics. Yes. Talking about china, you say, this is number five, you say the growth rate in china will go down to 6 . Right. I dont think i havent seen that number from anything. That would be a surprise. Yes. Let me ask you about this one. Emerging market investing treacherous except for mexico and south korea. What happens in 2014. Mexico, first of all the u. S. Will do better. Thats good for mexico. Mexico has a sound manufacturing base. And mexico has a number of reforms being implemented. I think people are not paying enough attention to mexico. They focus on the bricks. They dont focus on mexico. I agree with that. Goodlooking ceos make better ceos and goodlooking leaders make better leaders. You must be bullish on america. Hes an attractive man. Ill give you that. Yes. You dont think hillary will run . Those are in the lets get to those. I want to talk about that, too, with you. You say hillary is not running. That would be a surprise. Id be stunned. No way. Why do you think that . What forces her handed . What forces her hand is the frustration of being president of the united states. Fish has to swim. Birds have to fly. Hillary has to run. It would be a surprise. Birds got to fly. Anything in the also run category youre iffy on . Exactly. I like the rand paul thing, too. Or the ted cruz thing. Ill tell you why. Go ahead. You like that . I like that youre saying that. Ill tell you why. You say ted cruz becomes a frontrunner for president in 2016. Right. Youre saying it in a way where you think these crazy tea partiers are out of their minds. You hated sarah palin. I dont know if you saw george will on one of the talk shows on sun, theres Nothing Better fon american conservatism hes talking about de blasio, et cetera, et cetera. I could see where this country gets pushed so far right that ted cruz could almost be viable. I dont think it will happen. Thats the point i want to make to you. He could actually be viable giving what well experience in the next year or so. Hes a smart guy. Harvard educated. Harvard and another ivy league school, i think. He went to princeton. Princeton and harvard. You feel the devil comes that way, right . He comes up through the ranks . This is oman one or two for you. I think they need somebody with star quality, somebody who can appeal to the whole nation by being flexible. Hes been a tea party person up to now. He could become closer to the center, and that could make him a more viable candidate. There are people in the Republican Party that say, look, we cant run a conservative candidate. It will never work. We need to run a moderate. Who did they run last time . Romney. Before that . Mccain. Who moderates, both got smoked. Hes suggesting cruz becomes more moderate. Becomes more moderate. Yes, but still hes way out there. Your political thats your wish list is that cruz runs. It isnt my wish list. He doesnt have a chance and hillary will be a shooin for you. Hes not going to run either. Hes nudging her. Two other of the also rants. You say bitcoin is a failure. Is that a surprise . Proven out this year . I think it has some life in it. Certainly does. Based on the current trajectory, looks like bitcoin has staying power. If it collapses, and thats the verbal i use, that would be a surprise. Thats an amazing point you make. Gold, theres a reason, a store of value. What the hell is the store value in a bitcoin . Even with the dollar i have conviction about that one. But i dont feel i know enough about it. I might have to go around the country and the world really and defend these things. I didnt really bitcoin you feel yes, i didnt feel one other. Cuba. You say president obama will start some kind of relationship with cuba in a much more meaningful way in the next year . Right. What will inspire that to happen . Its long overdue. Weve been hanging out there, denying cuba recognition and, you know, enough time has passed, i think. And it would make sense for cuba and it would make sense for us. Okay. Byron is going to stick around. I think we have three or four more to get through for the surprises. For the auto industry. It would be good if we opened up cuba, right . We have 11yearold cars in this country, average year. Whats the average american car in cuba . Its like a 52 ford. Not a lot of american cars left to cuba. If we do open up to cuba, well sell a few. They love buicks in china. What does your guy drive. I dont have a guy. Now thats a surprise from byron wien. I dont have a guy. Thats a surprise. Did he jump in a cab with you at one point . Ill tell you something you did. You glommed on to me because i had a car. I think i stuck you with it. I stuck Morgan Stanley with it. It was worse than that. You said to the driver, this guy is rich. Be sure to get a big tip. Thats right. I did. I gave the biggest tip i had ever given a driver. Pape money . Paper money. It was before bitcoin. More surprises from byron coming up, including commodities, predecks and where Interest Rates will end the year. You owe us for your muffin, too. Those things are expensive. Up next, a recap of a very interesting interview we had with shark tanks michael oleary. Plus Marissa Mayer ready to kick things off at ces. Well talk tech trends, announcements and more. Well be right back. [ male announcer ] the new new york is open. 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. Were open to it. Fifteen minutes could save you fifteen percent or more on Car Insurance. Everybody knows that parker. Well, did you know auctioneers make bad Grocery Store clerks . Thatll be 23. 50. Now. 75, 23. 75, hold em. Hey now do i hear 23. 75 . 24 hey 24 dollar, 24 and a quarter, quarter, now half, 24 and a half and. 75 25 now a quarter, hey 26 and a quarter, do you wanna pay now, you wanna do it, 25 and a quarter sold to the man in the khaki jacket geico. Fifteen minutes could save you. Well, you know. Shark tank is on tonight. We have 0,000 applications on shark tank, all Small Businesses, all have the American Dream. You should hear their stories. Our leaders and politicians should talk to them. Youre supposed to aspire to achieve to become one of the 1 . Thats what drives this whole economy. I think we vilified this whole thing. Its a huge mistake. Yes, this i think we ran a couple of these episodes on new years or something. Didnt we . Yes, they did well. They did incredibly well. Yes. Especially see, i think this is the answer. I think this is the answer. This is the answer. Innovation and excitement and entrepreneurialship. And creating jobs, not, you know, working around the edges with 2 here and there on 6 of the work force which might even push some people out. This is whats exciting. This is what weve always done. Not buying shares back. Right. Private sector jobs. Then those people pay taxes and we can do the things we want to. 4 growth solves everything, income disparity, it solves income inequality, entitlement issues. Easier said than done. Well grow 5 a year. Sound good . How do you get there . Were getting there without doing it. We have 5 growth . Ill take the under. We could get 3 to 4. 3 to 4 is youre going back what would you do to get there . 3 to 4 wouldnt solve the problem. What would you do to get there. You have to recognize part of whats been slowing the growth, you pointed out demographics, you pointed out the country is getting older. Long term your growth rates are you talking immigration . What are you talking about . Immigration, having people work longer, having a faster growth in the work force is the easiest thing you can do. What about making you have Secular Forces working against you. For example you do. All the Capital Spending or virtually all the Capital Spending that has been done has been done to buy laborsaving equipment. We had a guest this week that said this is the year that Capital Spending really kicks back in, the industrial kms will do a lot of these things, Technology Companies doing these things. That will create job growth. I agree. Thats part of my feeling that the economy will grow faster than the consensus expects. Some of the Capital Spending, look whats happening in energy. This is not creating millions of jobs because it isnt that labor intensive. Growth would have been a lot worse the last five years if you havent had the shale gas revolution. Right. You need an Industrial Base to start spending money on capital equipment. You think they are . I think they will. I think it will be better than its been the last five years. Where do you think labor will be by the end of the year, Unemployment Rate . 6. Because of job participation or it falls further. The participating rate i hope will start to go up. As more jobs are created, more people come back on the work force. Its not just baby boomer . Right. Its at a 40year low. There are a lot of young people getting out of school, people where you went to school have trouble getting jobs. Its popular now to add those people back in and put out a 12 number on real unemployment. Thats what people do. I think thats fair. Really . Yes. 12 you would be at 9. 5, 10 if the Participation Rate was at or 12. 12 is a stretch. Unemployment an issue. Big issue. Well talk more about this in a moment. Catch the premiere of shark tank right here on cnbc tonight at 8 00. Coming up at the top the hour, markets looking ahead to the december jobs report. Well preview the numbers and what theyll signal to the markets. Squawk will be right back. Aflac aflac got em. Yeah, hes clean, boss. Now listen to me, duck. I have an associate that met with, uh, an unfortunate accident. While hes been incapacitated, somebodys been paying him cash. Now, is this your doing . Aflac . Now, if i met with some such accident, would aflac pay me . Nice. This is your stop. [ male announcer ] find out what aflac can do for you and your family. Aflac . [ male announcer ]. At aflac. Com. Theres nothing like being your own boss and my customers are really liking your flat rate shipping. Fedex one rate. Really makes my life easier. Maybe a promotion is in order. Good news. I got a new title. And a raise . Management couldnt make that happen. [ male announcer ] introducing fedex one rate. Simple, flat rate shipping with the reliability of fedex. Time now for the final four top ten surprising predictions for 2014. Byron wien has those. Do you remember those . I do. Commodities. Commodities do what. Agricultural commodities come back. You know, ive felt for a couple years that the weather patterns are going to be rerattic and it will lead to crop that will be different now . Erratic, so there would be more did you ever hear the expression someone changes like the weather . Thats been around for 4 billion years, i think, erratic weather patterns are the way things work. Thats why its called crazy weather. What else you got. Plus the increasing demand from the developing world. Yes. Gmos. I mean, for years we did breeding to get seeds the way we wanted them to have certain characteristic along with livestock. Now we can do it in a much more ra rationale way, now the left doesnt like gmos. With using less land to grow more stuff to feed the world. Where are you on that as a renaissance man . Renaissance man. I think there will be more crop failures and more demand as diets improve in the developing world. Okay. As a result, one of the indications is theres less correlation in commodities and so i think, you know, thats one that is a clear contrarian view. There is nobody positive on Agricultural Commodities out there. How about where were you last year on oil . Didnt you think oil was going to go down. Right. Now you think its going to go up. Right. 110 . Right. Here or west texas. West texas goes to 110 because of better global because Global Demand is increasing and most people think the price will come down. Because of fracing. No, three things, fracing, iraq and iran. I dont think iraq and iran will produce a lot more. I think fracing ing is runningo trouble. Youre losing production out of the middle east right now, libya, south sudan, north africa, nigerian. You have a great renaissance in the u. S. But losing it in the rest of the world. Thank you, because joe is tiring me out. Now we go to the Affordable Care act. You get some sleep last night. Yes. The computer access problems are significantly diminished, younger people start signing up. Obamas Approval Rating rises and in the november elections, the democrats not only retain control of the senate but even gain seats in the house. I think this is one of your outlying surprises, i think. Yes. The glitches notwithstanding. Im surprised your voice didnt crack when reading that. The glitches notwithstanding, i think is the tip of the iceberg. I think a lot of people do. People will start using their health care now and there may be companies that have never even heard their name when they try and pay for something at this point. Youve also got are we net positive yet on the number of people who have signed up versus the people who have lost policies . Do you know at this point . I dont know the answer. You seen some of the i dont know, maybe its conservative rhetoric that you have to drive past two or three hospitals now in some cases or certain doctors arent covered. Havent you seen the underlying problems other than the computer glitches. Whats the surprise, joe . Thats what i mean. How is this going to be better recover and be better than expected . Just fixing the computer is not going to do it. No. I think younger people are going to why . Why are they going to sign up . Yes. Theyre going to realize they are going to need health care. That theyre going to become believers in the universal health care concept. Youve seen polls say 78 are not going to sign up. Yes. What im saying there will be a turnaround before the end of the year. When it becomes more accessible, easier to sign up, when some of the cost problems and the supplemental expense problems where youre given aid if you cant afford it, those become clearer, clarified, i think youll see more people sign up. I know its a contrary view. What im saying is were in the nader of it now. You think this is the nader . I do. One thing where i would agree with you, the costs of the program will be greater than the government says. Will it be the biggest entitlement ever . It wont be the biggest entitlement ever. As baby boomers get older, weve had some the medicare growth has slowed recently but theres a piece in the paper today that says dont look for 14 to slow anymore, because as people get older theyll utilize medicare more because the baby boomers will be 65 and using medicare at this point. We may have seen the last year of a slowdown in health care increases. I dont think thats the case. You think it will continue to come under a lot of people say it was the recession. Other people say its the aca. I think, first of all, were continuing to make technological improvements in the whole health care system. Right. Thats been one of the big surprises in the last few years that health care is a percentage of gdp has declined from 18 to 14. Right. I think thats going to flatten out at worst. All right. We should do check back on how these are going once in a while. We shouldnt do it once a year. What are you doing in three months . If we get a muffin you will come. Corn muffin no less. When we havent had corn muffins you should see what happens to the staff. Three months from now they cant sit down for weeks after that. All right. Okay. Thank you, byron. Thank you. Thank you for the surprises. Well see if they turn out to be surprises 0 are not. Coming up, wells fargo senior economist mark vitner. Plus, Delicious Food combined with clicking glasses and a whos who crowd at michaels in new york every day where joe occasionally likes to go. We have been there together. We have been together. Well speak with the owner, michael mccarty, about the Restaurant Business when squawk returns. She keeps you on your toes. You wouldnt have it any other way. But your erectile dysfunction it could be a question of blood flow. 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Ask your doctor about experiencing cialis for daily use and a free 30tablet trial. A look at why investors are cautious ahead of the jobs report. What to expect from ces, the Global Electronics trade show ready to kick off in las vegas. Tech titans come together to talk innovation, products and business. A preview of the show and a sneak peek at possible announcements. Weve got a table at one of new yorks hottest restaurants, the owner of michaels new york serves up his outlook for the Restaurant Business and tells us what hes hearing around the table from customers as the final hour of squawk box begins right now. A bottle of white a bottle of red perhaps a bottle of rose instead welcome back. Squawk box here on cnbc, first in business worldwide. Im joe kernen along with becky qui quick. Were here with Russ Koesterich. The s p indicated up 638. We figure we need about 20, 22 between today and tomorrow to be up for the year. If you care about that fiveday indicator. Which weve already decided we dont care about it. No. Unless it goes our way we dont care about it. There you go. In the headlines, the Senate Confirmed janet yellen has the next chairman of the federal reserve. The Senate Voting 5626 to approve her. Democrats were joned by 11 republican senators. Shell be preceding ben bernanke when his second fouryear term expires at the end of this month. The senate will hold a test vote on extending jobless benefits to the longterm unemployed. That measure was delayed yesterday after more than a dozen lawmakers were unable to return to washington because of bad weather. President obama is also expected to speak on the topic from the white house east room a little bit before noon eastern today. And manhattan u. S. Attorney pret could make an announcement today. No individuals will be implicated. This makes me nuts. What. Either an individual did something wrong or they didnt. End of discussion. Guess you werent here. Go after the guy who has the problem or not. But it cant be that you can hold these institutions up whoa, whoa, whoa, did you miss the entire reign of Eliot Spitzer as attorney general . I lived through it, i saw it. So what. Its just another example. Why forgo the money . What are you saying. If you can shake people down, why not do it . Because its wrong. Oh because its wrong. Im going to sit on my high moralistic okay. Look at how many settlements there have been. How many have gone to conclusion . How many . Zero. Very few. How much money has been raised. Billions and billions and billions. Thats the problem. Go after the individual or change the law so you can go after the individual. Where are you on this . This is one of the Reasons Bank Stocks are cheap by historical standards. They dont know what the liability will be. Whether that goes on youll have a discount. Record cold hitting as many as 187 million americans. Meteorologists are calling it a polar vortex. Joe, do you buy into the whole polar vortex thing . Thats weather. Yes. Thats whats happening. Not hard to understand. Flight aware i dont know how Global Warming caused it. The polar vortex did. Flight aware reporting almost 2,000 cancellations already today, jetblue is hoping to get back in the air after shutting down completely in new york and in boston yesterday. The airline says operations will begin to ramp up again. Thats going to happen at 10 00 eastern time this morning. It expects to be fully operational. It says by 3 00 this afternoon. Meantime, if youre traveling the eastern corridor, amtrak says it plans to operate its trains on a reduced schedule throughout the northeast corridor today. Well have the latest forecast from the weather chan until just a couple minutes. The squawk sports story of the morning, a memorable ending, Florida State was down 4 points with more than a minute to play and Jameis Winston led the seminoles 80 yards for the gamewinning score. The goahead touchdown was scored with 13 seconds to play. I really would have liked to have seen this. They do replay it. I know what happens. Now you know what happened. The final 3431. Were transitioning. Its march mads in. Getting ready for march madness. There are undefeated teams still around. About five or six of them, arizona, wichita state, i think, although i didnt check yesterday. Theres five or six that are still syracuse. Ill look it up. Well check it out. In the meantime, we are uncotting down to friday and the december jobs report. Joining us right now to talk more about it is mark vitner, senior economist at Wells Fargo Securities and our guest home, Russ Koesterich. Mark, welcome to the table. What number are you talking about the jobs report. Our model came out between 2 and 3, i think it will be somewhere around that range, 300, 210. The ism, nonmanufacturing survey showed strength. The Consumer Confidence index noted improvement in the both the present situation and expectations with regard to employment conditions. So it looks like we had solid momentum in december. What about the Unemployment Rate . Byron wien was here with us for the last hour and he was suggesting of the surprises for the year, we could be looking at 6 sometime this year. Thats very possible. We fell 0. 8 percentage point over the last year. We could fall that much this year easily. It would take us down to close to 6 . Were expecting the Unemployment Rate to fall to 6. 9 in december. And jobless claims have been very low for the most part. T theres been volatility but theyve been exceptionally low. Here in North Carolina where weve been without the emergency Unemployment Benefits for quite some time, the Unemployment Rate has fallen 1. 5 Percentage Points since the program expired back in july. Yet you have plenty of areas of the country, russ, where youre looking at higher than average unemployment. Thats what brings us to this debate today about the Unemployment Rate. The Unemployment Benefits being extended. What do you think should happen . This is an interesting question, going back to something mark just said. Weve seen this drop in North Carolina in the Unemployment Rate, which youve seen a pretty precipitous drop in the Participation Rate. You may see the Unemployment Rate drop but if thats happening because people that have been unemployed for a long term drop out of the labor force, is that necessarily getting the fed to where they want to go. Thats a good question. Mark . Thats not whats happened, though. It is a story thats being told out there. The labor force has declined over the last year. But since the law has been changed, the thing that has changed is employment has gone up. And both were declining in the first half of the year. Both declined in the second half of the year, labor force and employment. Ill start that again. The labor force declined all throughout the year, employment declined in the first half of the year but its increased since the law changed. Since weve had so many people who have been unemployed for long periods of time theyve exhausted their savings. Once the emergency Unemployment Benefits ended, many of them have taken parttime jobs they would have past over in the past. Can i ask you a slightly different question . We focus on the Unemployment Rate and job creation. It seems to me one of the ingredients that has been missing over the last three, four years is Earnings Growth. Will we see that push Earnings Growth ahead of the 2 rate in Hourly Earnings thats defined the last few years . It should be a little better in to 14, manly because construction is coming back and manufacturing looks better, too. We still have significant underemployment. And i was at the meeting in philadelphia and Larry Summers was talking about how far away the economy is from potential. Thats the way out there kind of concept. What that means is even though we have a low Unemployment Rate, we have a lot of people underemployed, so theres slack in the labor force. Looking at North Carolinas law, looking what happened. Your point is people have been taking parttime jobs that people would have passed over before. Is this a temporary stop gap . Are they going to rely on more social services because a parttime job is not going to cut it. I dont know how to answer that in one specific way. There certainly are positives to it in that when youre working youre earning income and producing output as opposed to just receiving Unemployment Benefits where youre spending money. Both ways youre getting about the same. The maximum unemployment benefit is about 300 a week. If youre working a parttime job, youre probably earning 240, 250. Its a pretty close call from an economic standpoint, from a social benefits standpoint its difficult for folks that have been out of work and are now significantly underemployed. Mark, im sorry. Im asking because im trying to get my head around all of this. What do you think congress should vote on this . Well, i think that given that the longterm Unemployment Rate is as high as its been, theres probably a very strong case for extending emergency Unemployment Benefits. I think that the net result of that will be that the Unemployment Rate will not drop as much. Will not drop as rapidly as it did in North Carolina. That doesnt really address the problem, though. Emergency Unemployment Benefits are like a bandaid or cold medicine. They dont cure anything. The real challenge is getting more money for Training Programs so that we can retrain workers and get them reemployed. Recessions result because are caused because assets are misallocated. We allocated way too many assets to the housing sector. After the recession you see the investment pull back and workers need to reorient themselves into parts of the economy that are growing again. Extended Unemployment Benefits slow that process down, but as a person, its understandable that you want to help somebody who is really struggling. We just have to strike that balance. Historically with longterm unemployment as high as it is, weve extended weve had those emergency benefits. Mark, thanks a lot. Its great talking to you. More from russ throughout the show as well. Hes our guest host. All right. I guess well talk weather. Arizona, syracuse, ohio state, wisconsin and wichita state, five of them. Two of them play today, Michigan State plays ohio state. Thats big. And then baylor is ranked higher than iowa state and they play today. Up next, the vortex is here, a blast of arctic air, pushing as far south as atlanta, creating a 140 degree temperature change. And then the crystal ball on markets. Squawk box will be right back. Mine was earned orbiting the moon in 1971. Afghanistan, in 2009. On the u. S. S. Saratoga in 1982. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection. And because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. I proc a pulse of frigid air gripping much of the nation. Cold temps expected to last through tomorrow. The Weather Channels julie martin joins us now with more. Thats where the Zombie Apocalypse was, too, atlanta, on walking dead. Now its cold. Theres a lot going on down there. Theres too much going on down here. I havent had to break out this hat or my big moon boots until i worked in boston a few years ago for a winter blast. Were here in atlanta, 6 degrees, wind chill of minus 9. It has not been this cold since 1996. School is out for the kids. The city is opening Emergency Shelters. Its not just here but throughout the deep south. In fact, the freezing line extends all the way in through tampa, florida. A lot of the citrus and strawberry crops should be protected down there. Temperatures here in the south have dropped anywhere from 20 to 40 degrees overnight. In the east, also as much as 50 degrees in just a matter of a day. Were dealing with maybe up to 3 feet of lakeeffect snow in upstate new york. So this winter grip Still Holding on for another couple of days. The good news is, by about thursday, friday of this week, we will see temperatures start to rebound and finally here in atlanta, at least, well get above freezing by thursday. Joe . By thursday. Wow. Okay. Then nobody knows after that, right . This is probably a oneshot deal you would think. Hopefully. We hope so. Yes. I wish the atlanta weather would move north. Wed like to see temperatures from the south. South carolina. Instead of the north dropping down on us. South carolina in new jersey. Some of the cold temperatures go all the way down to the gulf coast. They do. Youre talking about cold, cold weather. Unprecedented. See you, julie. Thank you. Stay warm. Still to come, we have breaking economic numbers. International trade data is just ahead. Up next, though, we gaze into the squawk box crystal ball and get business predictions for 2014. Reuters breaking news global editor will join us, right after the break. Thats correct. Cause im really nervous about getting trapped. Whys that . Uh, mark . Go get help i have my reasons. Look, you dont have to feel trapped with our raise your rate cd. If our rate on this cd goes up, yours can too. Oh that sounds nice. Dont feel trapped with the ally raise your rate cd. Ally bank. Your money needs an ally. Aflac aflac got em. Yeah, hes clean, boss. Now listen to me, duck. I have an associate that met with, uh, an unfortunate accident. While hes been incapacitated, somebodys been paying him cash. Now, is this your doing . Aflac . Now, if i met with some such accident, would aflac pay me . Nice. This is your stop. [ male announcer ] find out what aflac can do for you and your family. Aflac . [ male announcer ]. At aflac. Com. Welcome back to squawk box. Time now to peer into the crystal ball and see what the future holds. Reuters breakingviews is releasing its annual predictions for 2014. Good morning, rob. Good morning, andrew. Lets go through some of these. We had byron wien on, he had big surprises for the year. Ten. Two of yours match up with him. Im not going there fast. Your number one is there are six people who pack the power to surprise in 2014. Who are those people. People with incredibly low expectations, right . If you think about it, someone like john boehner. Theres not a whole lot a world expects of the u. S. House of representatives or u. S. Congress, right . I think 30 of people think the guy should be house speaker. That means 70 dont. I think it would be amazing to us if we were able to get something done if the u. S. Congress were able to do something beyond a tiny little deal that paul ryan got with patty murray, that would be an upside surprise. You think he does do you have an idea of what he does . No. This is Midterm Election year. Nobody ever does anything. Something more on the budget would be extraordinary or even this, lets say he could quell party radicals and actually not hold the debt ceiling hostage, move through, let the u. S. Economy power through. Would be a start. Lets go to number two. You say wall street in for another lousy year when it comes to mergers and acquisitions and when it comes to wells fargo and jp morgan why . We had 2. 5 trillion of m a last year. We had the same number the year before and the year before that. Theres thompson, reuters and freeman came out with a poll saying it will be another great year. Investment bankers saying 2014 will be another awesome year. Weve had interesting examples of great deals, people buying things and stock going up a lot. Our view, thats not going to be the case. For a whole bunch of reasons. But that doesnt mean its going to be lousy. 2. 5 trillion of m a is still pretty good. Well see a lot of good deals, hopefully. Thats the idea. Maybe well see in 2014 more of the same and the same has been good in the sense that we havent seen a lot of daft deals. Wells fargo, these guys are the biggest bank no one talks about on wall street. After they bought wachovia, they had about a billion or so of underwriting and advisory fees. Last year they had about 2 billion. They have about 5 of underwriting market share. Thats half of what jp morgan, Goldman Sachs own other folks have. They have the most to shoot for. They have a loan to deposit ratio of 80 . As you know, you cant tie lending to fees but ask jamie diamond, anywhere else out there, how did they get their market share up . They used their Balance Sheet in innovative ways to make sure they got the fees. I want to go back to john boehner, this is Russ Koesterich of blackrock. On the budget side, i think weve seen all were going to see. What about Immigration Reform . The boehner could surprise the economy, the market, by pushing through something this year which at this point most people do not expect. Absolutely. Hed have to override the sort of extremists in his party, hed have to do a bipartisan deal. Thats all possible. Theres so much to shoot for, actually. Immigration is one example. You have six people. Why doesnt obama have the power to surprise by overcoming the extremists in his own heart and party and hes not one of the six people that can do something great . Of course he is. We cant expect our president to rise above and do something great. What can he do without congress, though . He has to get congress on board. You could argue why cant he do Corporate Tax reform . Why cant he do things that would be amenable to do. He should do all those things. Whatever he suggests dont l doesnt have to be the antithesis of the radicals in the other party. Who has the lower Approval Rating . Its actually congress. Pretty close. Its pretty close, definitely but who has the lowest expectations . Who has the capacity to lead and to bring people together in the country . Hopefully john boehner has that capacity. Thats what the president is supposed to do. He hasnt shown it yet either. Both of them havent shown it. He hasnt shown it yet either. The president is the one with the bully pulpit. Dill marusaf, expectations are extremely low. The world cup will be a raging success, infrastructure. Also on this list we have kim jongun. Expectations cowl be any lower for the leader of north korea. I want to go to what i think is the most intriguing prediction. Activists target General Electric in 2014. Again, everyone is saying activism, activism is going to keep going. We had it on the Time Magazine cover. Activism is going to keep going. Lets go down the list. Microsoft last year was targeted, and that happened. Apple was targeted. Still being targeted by carl icahn and others. Who is on that list . A big, big, Big Companies who have been immuned to it. We looked at General Electric, you said this is interesting. You have probably for the first time in many years that ive been covering General Electric, the most robust the best strategy, really focused on Global Infrastructure but you have a lump, this 350 billion Balance Sheet called ge capital. They whittled it down by a third since the height. You want them to spend it off. Theres a lot of opportunity. You talk to people out there, theyre examining it. Theres a question of degree. How much further can you go in terms of whittling down that Balance Sheet . And theres still a lot of room to go. At the same time you have jeff who i think has gotten the strategy, the ceo, hes gotten the strategy right. When you look at the playbook of activists, they look at management. Youve had management since 2001. The stock is half of where it was. The earnings are bps this year, not that much bigger than 01. Thank you for the predictions. Hopefully we can check back, see where they land. See you next year. Appreciate it. Bye. Up next, breaking economic data. International trade figures for november and Marissa Mayer of yahoo . Stay with us. And it feels like your lifeate revolves around your symptoms, ask your gastroenterologist about humira adalimumab. Humira has been proven to work for adults who have tried other medications but still experience the symptoms of moderate to severe crohns disease. In clinical studies, the majority of patients on humira saw significant symptom relief, and many achieved remission. 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. Ask your gastroenterologist about humira today. Remission is possible. Welcome back to squawk box, every. We are just a few seconds away from International Trade numbers. Jim is standing by. Take it away. The number comes in at negative 34. 3 billion. Thats a pretty big number. This number is complicated because the markets sometimes have a difficult time interpreting it. On balance we want it trend closer to 0 like it is, then we can convince ourselves that overseas economies are getting better. We know domestically things are getting better. The stock market should like that. The tenyear is 2. 95. Its gone up a hair from there. This is interesting. Its not Employment Data. Were getting a lot of Employment Data this week. The market will key on that more than this starting with the adp tomorrow. All right, jim, thank you, standing by. Stay with us. Well bring in some other guests, too, Steve Liesman is here and our guest host, Russ Koesterich. You were stunned by the numbers as well. We were looking for 40, we got 34. Looks like they revised down a little bit october. What im looking for right now is the inflation adjusted number which the number that would feed into gdp. Lets assume for the moment that the inflation against numbers Lower Oil Prices . Im trying to figure out the reasons for it. If you want to talk to jim for a little bit, youre welcome to. Ill look at the numbers a little bit. The key were looking for, this is another that will flatter Fourth Quarter gdp. Whether or not its for the right or wrong reasons, ill get to that in a second, the key is we had a strong Third Quarter number. The consensus would be that the Third Quarter would be in the dumps. Slowly from a 1. 2 number, even some down below 1, we have slowly climbed back up to 2. 5. So the second half of 2013 is looking like a 3 half. I dont know what byron wien was saying earlier. Exports were part of this. Increases in capital goods supplies and automobiles. Exports to china were the highest on record. Wow. If you think about what happened in q3, that was ab inventory buildup. What youre seeing on the export numbers, manufacturing, some of this is enduser demand. Its not just a function of inventory building up. Petroleum fell 15 billion, nonpetroleum fell 37 billion. This is total trade in goods here. Exports were up a little bit and imports were down. The question becomes, this is probably part of the inventory workoff in the Fourth Quarter. What youre going to get here in lower imports you probably are going to take away later here when we get the inventory numbers. What comes into the ports ends up on the shelves. We couldnt the them, if they come in less than expected its a negative. We follow both of those numbers. But for the moment, without any further analysis from some of the economists out there about how this factors in to their tracking forecast, this is going to be a number thats going to, i think, perhaps will certainly push the Fourth Quarter data up towards 3 . So 3 and 4 is 7 divided by 2 is 3. 5. Thats what youll have. Think about the dickensian economy. The key question, is that momentum real . Most important, does it continue into this quarter . I think thats the value play in the stock market right now. What does it mean for unemployment . Well be getting those numbers on friday. What i liked about, ive said this all along, becky, what i liked about the revision upward in gdp is it made the stock market make more sense and it made the jobs number make more sense. It suggested to us it was less than hot air underneath the market, less than just pure accounting stuff inside the jobs numbers. But i will tell you that im getting a couple reports now, i dont know, jim, if youre hearing this stuff. The cold weather is going to play a factor in the friday numbers. Sure. Theres a Goldman Sachs report out there. Heres what i worry about, too. Weve had a slew of pretty good Employment Data. The market is becoming used to this. Market position can be the biggest factor going into these things. Its almost like a stock thats sometimes priced for perfection going into earnings. Were pricing in a rosie outlook for Employment Data. To me it leaves us exposed potentially for a punch tomorrow or friday. If its because of the cold, so be it. Either way were starting to convince ourselves that things are gaining traction. What are the parameters of that punch, real quickly. Is it under 200, is that the thing that upsets the market. If its under 180 it upsets the market. If its just a little bit bad we convince ourselves its the weather. Wee have some traction but we are not going to get as quickly of a taper from the fed and the market will love that. I think it has to be worse than 180 for us to really think its significant. 180 to 200 is a market number. I will be back later this morning with exactly how this affects the gdp forecast. Ill send you an email, becky. Steve, thank you very much. Thank you. Russ will be with us for the rest of the program. Joe . Yes, yes, thank you. A number of headlines coming out of the Consumer Electronics show in las vegas, including one high profile failure. Samsung was holding an event to showcase its latest gadgets and the company introduced michael bayh, the guy behind transformers and other action blockbusters. Although my son said crappy movies. The teleprompter didnt work properly and things went downhill quickly. As a director i try to the type is all off. Sorry. Ill just wing this. Tell us what you think. Yes. Well wing it right now. I try to take people on an emotional ride. The curve, how do you think it will impact how viewers experience your movies . Excuse me. Im sorry. Im sorry. Okay. Ladies and gentlemen, lets thank michael bayh for joining us. So painful. I didnt want to run it. Thats the first thing you wanted to run today, sorkin. We have to run it. Its sad. Its painful. Look, we all have our problems with the teleprompter. That was a big crowd of people, too. The silence is deafening. You can feel the anxiety well up inside of you. Theres no reason a lot of directors i think as introverted artsy type guys. That doesnt mean youre a great public speaker. I have an easier time talking in front of a camera than i do in front of an audience. They look back at you. I know. Have you tried looking at them like theyre all naked in the room . A lot of times you cant see them because of the lights. You dont need to see them naked. You have to imagine them as naked. I think id start laughing. I imagine you naked, andrew. You do . Yes. Watch how smooth i am here. On a blog post on his website, the director said this is even sad wow, i just embarrassed myself at ces. After recapping what happened, he goes on to write, i guess live shows arent my thing. I give him kudos for that. Its hard. Lets talk about youve run it three times now. Weve run it twice. I feel bad for the guy. Lets go out to ces. Marissa mayer is there. Shes set to give a keynote speech at ces. Joining us now to talk about what shes seeing going on, kara swisher, coceo of Revere Digital and coexecute editor of recode. We have a sharing partnership. Welcome to the family, kara. Thank you. Im in your family . Were all part of the family, maybe like a distant cousin. Were the crazy cousins. Crazy cousin. Thats fine with me. Marissa today, what do you expect to hear from her . I think shell talk a lot about advertising. Its a real weak point for yahoo . I think shell put on display advertising things yahoo is trying to do around tumblr. I heard david carp will be on stage with her. You could possibly see david pogue, who she hired from the New York Times. Shell probably talk about mobile. She likes to say mobile a lot to get the stock up. Does this make any sense to you . Does this strategy some people say there is no strategy, it seems like a scatter shot approach. Is that right or wrong . Ive been more critical than others have been on what theyre doing. Its an incredibly difficult job she has to do to turn this company around. They are lucky they own the achinese asset in alibaba. She has time to figure it out. We give the credit or alibaba the credit . Alibaba. Everybody is buying in because of the alibaba valuations. Theyre performing beautifully. Shes got to get revenue up because its declined. Its 18 months now, which is a long time. Shes doing all this product stuff and buying up all these companies. Its very noisy and hey, were moving, somethings happening. The issue is can she turn that into revenue and advertising revenue and fix the core business. I think i called it in my piece, you want to be more than a fantastic Asian Investment company. Thats what they are right now. Weve been talking about michael bayh all morning, playing the video. Is that the scuttlebutt . Are people talking about it or are we making too much of it. Its an embarrassment, of course youll make fun of it. I think its interesting that things go around so quickly. Its a nightmare for people now if they make one wrong move in public. We need insurance like career insurance or something. Everybody should have it. I guess. Ill start a company like that. Im hoping to make a spectacular disaster on your show at some point. Andrew will help you. Okay. Tmobile ceo got kicked out of an at t party. Yes, that was fun. Our staff ran into him. We ran right into him when he was being kicked out of the party. He wanted to see makele mo mack apparently, he likes thrift shop. He likes to be sassy as a number three or four contenders. He tried to crash the party and they kicked him out. Crashed the party. Yes. Quick gadget question for you. Theres a new iphone keyboard that i hear everybody talking about. Yes. The Ryan Seacrest keyboard. Yes, ryan. Is this going to work. I havent used it yet. But its interesting. Blackberry is suing him because its like the blackberry board. Its interesting. A lot of people want a keyboard to go along with these phones. I think it will go away from keyboards to this wearable embedded stuff, which is a big theme which you have talked about. Eventually everything will have sensors and we wont be staring down at our phones in this way, well be looking up. Thank you, kara. We have big plans for her. Thank you for joining the family. Big plans. Family. Okay. Im coming for thanksgiving. It will be great. Thats going to be one hell of a dinner. Have fun at ces. Coming up next, great service, Delicious Food and one heck of a hot spot. Were always trying to get a table. Were talking about michaels restaurant in the new york. Michael mccarty is joining us next to talk about what hes hearing at tables about the state of business, coming 0 our table this morning. Squawk comes back in just a sec. Welcome back. How is everything . Theres nothing like being your own boss and my customers are really liking your flat rate shipping. Fedex one rate. Really makes my life easier. Maybe a promotion is in order. Good news. I got a new title. And a raise . Management couldnt make that happen. [ male announcer ] introducing fedex one rate. Simple, flat rate shipping with the reliability of fedex. Easytouse platform. No, thank you. We know youre always looking for the best fill price. And walk limit automatically tries to find it for you. Just set your start and end price. And let it do its thing. Wow, more fan mail. My uncle wanted to say thanks for idea hub. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a 150 amazon. Com gift card. Call 18882800149 now. Optionsxpress by charles schwab. Of the dusty basement at 1406 35th street the old dining table at 25th and hoffman. And the little room above the strip mall off roble avenue. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment there is lunch in new york city and then there is lunch at new york hot spot michaels new york. Its the place that power players in media do lunch. Not necessarily four seasons theres a four seasons. Whats the other place . Italian. Charlies. Yes, yes, yes. Whats that plate . San piatro. Finance guys, theres a place they go when they want to see media people. Michael mccarty, proprietor of michaels restaurant. Good to see you. Its good to see you as well. I dont know, how do you decide to get a restaurant that becomes the food is fine. Its good. Yes. You know, its totally overpriced and expensive. We got that going for us as well. But how do you decide to make it a scene . Well, its all part of the plan. I had my restaurant michaels in santa monica for 35 years now. I opened 10 years later in 1989 here in new york city. Yes. During the 80s anybody who was from new york that was in any business, whether it was fragrance or cosmetics or movie or tv or music or the Media Business as we knew it then, ate at my restaurant for ten years in l. A. When i opened up here, we were insta instantly accepted by those people. It was sensational. It still is sensational. Andrew, this is something that i had trouble understanding. It used to be you go to like a studio 54 in l. A. , there was a place called vertigo, the velvet rope. You couldnt get in. Youd go in and drink. Its kind of the same thing at lunch at michaels but no one is drinking. Youre there purely for the gawking at the big named people that go there. Yes. We sell about 50 cases of pelligrino liters a week. I want to know about table assignme assignments. Yes. When joe and i have been there together weve gotten a good people. When im without joe im pushed back in the garden area. Wait a minute, the garden is highly how is it selected . Fortunately, again, i have enough industries, the word media is huge now. As you talked about with the finance people, the finance people are there they want us in the back. They are in both rooms depending on what theyre doing. The garden is real estate, finance, cosmetics. The front is new and old media. We have a lot of new media, we have the old media which has figured out the old media. You have a beautiful guest list like a dinner party at your house. How often do you know i cant put that person next to the other person. That happens every day. Do you make the decisions yourself. We have an editing process. I have two mater ds. They do a fantastic job. If im in l. A. , i always call at 8 00. And we do it. Andrew, do you know michael has a charity for upcoming chefs . Theres an event. Have you given money for his charity. I have not. Have you given millington money to pass out at christmastime . Is that why im sitting you have to understand. Always follow the money. Youre a bigger name than i am. Dont be so cheap. Was there ever a moment when you put two people and you knew it was a blowup . No, because really we have never again, my expertise from the west coast has created has saved those situations before they have happened. Okay. Is wednesday the big day . They all are. Diane writes her column on wednesday but actually every day is wednesday. Media bistro lunch. Yes. I want to know about pricing. It used to be in you went in there and you could not get out thereof for lunch under 200 bucks for two people. Yes. Thats with an appetizer and dessert. I love the exaggeration. The average was 110 for two people. Two people . Yes. Now you can get out of there for under 50 or 60 bucks, no alcohol. Yes. With this huge recession occurred we did an extensive study in 2010 when it wasnt going away, we determined where we were going to go. We determined in both l. A. And new york michaels had to reinconvenient the itself in a new way. The menu was where it was going. Doesnt matter whether youre old or young. Its a way of life as well as not only the pricing. We wanted people to come two, three times a week, not once a month. This has worked. How many expense accounts were cut in the last five years . Enormous. You were saying thats its a paradigm shift. Were in a new era its great. People are having more fun. They like to pick and choose on a few things. Thats why the small plates are extremely important. The pricing is important, where its 12 to 25. It creates ambience. You make it a riot. The only problem i have at my table is dillard. Your table . Because its really dillars table. You can only go when hes not there. Exactly. Barry was one of my clients in 1979 in los angeles. There you go. So i cant expect to thats number four, isnt it . Yeah, table four. My favorite. Do you know who tweets out who is there all the time . Do you remember him saying why are you tweeting my name out . The New York Times wrote a huge article, what is this, and they interviewed the four or five people on the tweet list and said wed be insulted if we werent included, but this was a long time ago. You dont have to go out and drink at night to have a lot of fun. Glad to be in your house here. Appreciate it. When we come back jim cramer on the markets rough start in 2014. And the thoughts on last nights big bcs championship game. Olympic downhill champion lindsey vonn said shell miss the sochi games because of a knee injury, wow. Shell be having surgery shortly. She can commiserate with tiger on this one. [ male announcer ] the new new york is open. 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. Jim cramer joins us right now. We saw the trade deficit that came in. It was the lowest trade deficit in four years. Caught some of the people around here around the table by surprise. How about you . Look, this is oil. Take a look at Continental Resources upgraded today. People dont understand the power of the buck and the eagle for the other currency. A lot of people have sold the stocks because they believed they moved up too much. Thats nonsense. They are the next majors. The next majors and you are staying with this call. Look, you got to go there. You got to go to utica, you got to go down to louisiana with the energy story thats being that ellen g. That goldman recommended today, because its such a powerful story and the analysts are just so far so away from understanding how strong this is. Im not going to pretend to be a huge football fan but i know joe is and we cant get you away without asking you about that game last night. Im a big Florida State fan, and this was the watchiest night for me. Im literally watching this thing on my polyiphone because that was the best technology, watching espn. I surprised it was that close, jim, but auburn was for real. What poise. What poise he has, huh . I thought georgia lost some games where i thought these guys arent that good, and i like georgia, and auburn barely eked out the win over georgia. They were the hot team coming in. San diego, san diego, the hot team. Thanks for bringing that up. I got beat bad. I know you did. Were moving on to College Hoops we were talking about it earlier. Two big games tonight, three of the undefeated play tonight so well see who escapes. Early yet. But i got to get my pool going. The mad money pool going. Wichita state. They looked good. The shockers. The shockers. Well see you in just a little bit. Coming up more on the markets with russ from black rock when we return. And stick around for squawk on the street, ron paul will join jim and the gang to talk about the future of the feds. Squawk box returns in a moment. Fifteen minutes could save you fifteen percent or more on Car Insurance. Yeah. Everybody knows that. Did you know there is an oldest trick in the book . What . Trick number one. Lookest over there. Ha ha. Madeest thou look. So endeth the trick. Hey. Yes. Geico. Fifteen minutes could save you. Well, you know. So i can reach ally bank 24 7, but there ar24 7. Branches . Im sorry, im just really reluctant to try new things. Really . Whats wrong with trying new things . Look mommys new vacuum cat screech you feel that in your muscles . I do. Drink water. Its a long story. Well, not having branches lets us give you great rates and service. Id like that. A new way to bank. A better way to save. Ally bank. Your money needs an ally. Lets get back to our guest host for the last word. Russ, if youre looking at what to expect in 2014 the biggest thing to watch . The biggest thing to watch what do investors do with their bond funds. Weve got a pretty good scenario for 2014, improving economy, low inflation, the bond yield wont rise that much. To me the wild card is youve had 1. 5 trillion going to bond funds over the last five years. So far its come out at a very modest pace. Do you think that will happen . I think it will happen more slowly. What we can expect when you go running to stocks. Instead the money probably goes to cash for a while and then over time eventually finds its way into the market. Russ, thank you very much for coming in. Thank you. Been great talking to you. Been a good day. Went through a lot of stuff. Ten years at 2 now. Make sure you join us tomorrow. Squawk on the street starts right now. Jyeah, thats the thing good tuesday morning, welcome to squawk on the street im Carl Quintanilla with jim cramer and david faber trying to stay warm after the game last night at the new york stock exchange. Futures are higher where weather is dominating the discussion from air travel to nat gas to utilities and well cover it all. Heres the ten year a day after janet yellen was confirmed by the senate 5626. Got some fed speak on the docket today as well. European inflation or the lack of it continuo