Guys, thanks. Gentlemen, thank you. Thank you. Good to be here. Good to see you both. Becky, thank you. Make sure you join us tomorrow. Squawk on the street starts right now. Good tuesday morning. Welcome to squawk on the street. Im Carl Quintanilla with melissa lee, jim cramer and david faber here at the new york stock exchange. Retail sales out about 30 minutes ago, up half a percent in december. Europe also fighting off the blues this morning, as germany has some lower than expected estimates, Fourth Quarter gdp. Our road map begins with a warning this morning from fitch. That the u. S. Could lose its top Credit Rating again if theres a delay in raising the debt ceiling. Fitch said the pressure on the aaa is, if anything, increasing. We are four hours away from facebooks secret announcement in menlo park. So far, the guesses range from a facebook Search Engine to a facebook phone. Would either product help lift the stock back with a high water mark. The debate kicks off whether dell can, a, raise the money to go private, and b, reinvent itself without going through cash flow. The journal said the talks have been serious for weeks. Lululemon doing a downward dog this morning. Raises guidance but not enough to impress investors. The battle over the debt ceiling has warranted a warning from fitch. They said it will prompt a formal review of u. S. Credit ratings. Fitch does add it expects congress will ultimately approve a ceiling increase. The head of global sovereign ratings for fitch, david riley, will join us in the next hour. Bernanke weighing in on the debt ceiling in michigan late yesterday. Raising the debt ceiling, which congress has to do periodically, gives the government the ability to pay its existing bills. It doesnt create new deficits, it doesnt create new spending. So not raising the debt ceiling is sort of like a family which is trying to improve its Credit Rating saying, i know how we can save money, we wont pay our credit card bills. Not the most effective way to improve your Credit Rating. The metaphors, jim, whether its a family not paying the credit card bills, the president saying its like dining and dashing at a restaurant, the only thing is weve got two weeks of respite and then were off to the races again. After the civil war, there was tremendous partisanship in this country. A tumultuous time. The level of bipartisanship. Theres such hatred that you cant get in a room. It never seems like obama gets in the room. Biden got in the room beforehand. But look, everybody hates each other down there. Its exactly the opposite of what you would expect from a respected nation. It makes us look mickey mouse. I dont blame fitch. Look, we have to pay bills, the constitution says it, but everybody doesnt seem to care much about the constitution right now. I thought yesterday at the president s News Conference, i thought the partisanship was at an alltime high in regards to the fiscal cliff debate. They, referring to republicans in congress, they can either acts responsibly and pay americas bills or act irresponsibly and put america through another economic crisis. It feels a little bit worse, markets sort of shrugged that off. That was good news in all this. But it seems like the dividing line is real firm and real deep between republicans and democrats at this point. I wonder whether we know anything. One of the things thats gripped me is there was almost universal belief that dividend taxes were going to go up dramatically. Even down to the last day of december. You come in, dividend taxes barely go up. I find that, like facebook, which were going to talk about in a moment, were not really privy to whats going on. It kind of drives me crazy. Were in a democracy and youre supposed to know. But i do feel that when i look at spain, when i look at france, when i look at germany, i look at the United Kingdom they do not get caught up in this kind of wrangling. They are better governed nations right now. Thats easy to say, i guess, when your comparison seems to be what is a completely Dysfunctional Congress at this point. Jim, how do you go about trying to gauge how to even play this . You look at what happened over the end of the year, the fiscal cliff. And at the end of the day you might take away, well, they did get something done and the markets reacted positively. Look at the rally in the first week of the year. Do you approach it the same way . It seems to be to a certain extent were not ignoring it, but at least saying im not going to i dont want to own Domestic Companies as much as i want to own foreign companies. S. A. P. Not included. I think some of thats americas shakeup there. I think there are a lot of companies doing well. If you look to ppgs Conference Call yesterday, theyre seeing a turn in asia. Theyre seeing europe getting better. So i want to be more oriented toward ppg and a little less toward target. Ending a partnership with radio shack today. Thats going to be another one to talk about today. People are looking for positive things to say about radio shack. I want to stay in front of the idea of what davids talking about, how do you play it. The answer is, you dont overreact. How about that. You dont overreact. Do you think theres a scare tactic going on in washington saying, either you do this or you do this, and you put america through another economic crisis . Is that real . Should americans actually hear the president say another economic crisis, in 2008 comes to mind . The market did drop 19 then. But i think some of it is, okay, they fooled me once, they fooled me twice, i sold all my dividend stocks. Got out of my partnerships. Theyre not going to fool me again. I do think that in the end this is one of those situations where you know whats going to be resolved. They have to resolve it. Were not going to default. Were just mickey mouse as you may see, were still a great nation. Lets talk about facebook. It is set for widely touted media event at the california headquarters in just about four hours from now. No ones exactly sure what the company will announce, although speculation has ranged from a mobile phone to a new building. Facebook shares are up 60 over the past three months. Stock pulled back in yesterdays session. But what do you think its going to be . I know that we were getting some chatter that look, theres a possibility that its some new search. These guys, they remind me of Steve Jobs Used to call these press conferences. And you say, you know ha hes going to do . Hes going to unveil x and it turns out to be 10x. Is Mark Zuckerburg capable of that amount of surprise . I dont know. He actually came up with the goods. Its so exciting. I have no idea, all i know is theyve got a lot of shareholders who are much happier than they were not long ago. One harkens back to the week when it went public. Think of Morgan Stanley, the criticism that firm took as a result of that ipo. The ceo said give us a year, lets see where things stand. Maybe hell end up looking better. Would you use a video messaging product on facebook if we got that . Well, i wouldnt. Are you on facebook . No, i am not. That would be a bainier. However, im sure many would. I think so. 1 billion users. Some sort of a voiceover ip, skype, they would go there, microsoft bought skype, or at least had looked at it, would they go down that road. I dont know. Well see. Theyve done a good job of keeping the lid on it. Nothings leaked out. This has been out there for over a week. Youve got a company with 9 of the u. S. Mobile app market versus googles 57, leading you to a Search Engine theory. On the other hand, 70 million users in the u. S. Every day logon on a phone to facebook. That leads some people to think maybe a facebook phone, regardless of what zuck has said in the past is not possible. Maybe it is a steve jobs moment. Maybe we literally cant fathom it. Maybe they have something so special, we cant fathom it. I mean, you go, whoa, what is that thing . I dont need one of those. Now 70 Million People have them. This could be a massive but you wouldnt get short in front of it, would you, today . Theres no reason facebook has good fundamentals. I think that you short ones that dont have the fundamentals. I think their mobile solutions are really being adopted by the big advertisers who are trying so hard to get in front of an audience. If theyre paying fortunes to be in front of the super bowl, you mentioned the other day, how many super bowls, that was thei sales pitch, theyre very compelling. They make you feel like, holy cow, this is the new holy grail. Simply because when you look at something on your phone, you do your best to not look at the ad. But theyve got these solutions which are embedded. Kind of clever. The good thing about delivering in terms of the steve jobs way of delivering 10x, when the stock hit the bottom, addressed mobile montization, that was a delivery of two times expected. Maybe the bar is lower so you deliver two times and thats enough to juice the stock higher. He did say, listen, we were bad at something, but were going to get good at something, and thats the sign of a good executive. Any growth, any growth, look, see, our company is making microprocessors, but were also making these dynamic random access memory, and were not even in the top ten semiconductors, were done with that. Were going to make it so that this size device is more powerful than an ibm. Bob reuss said that, one of the founders. Its kind of like, wow, maybe weve got some wowing going on. It can happen. Well see. If they can recreate now, the Conference Call which you praised over and over again, was digging out of a hole. That was amazing. If they can recreate some of that magic in a positive sense today its not that much. On the Conference Call he sounded like an adult ceo. Thats not asking too much of any ceo. Previous Conference Call they said how brilliant they were in mobile. And that was one of the Conference Calls if you remember sent the stock down. And you think it was only the finkleweiss twins that this company could break out. Let them go to the club and have their vacation. I prefer zuck. He became the z man. Speaking of men, one Company Named after a man is dell, rising in the premarket on top of yesterdays surge. The company held talks with Silver Lake Partners about going private. Weakness in the pc market has taken a toll obviously. David, it does raise the question, if you dont do pcs, what will you do and how do you make that transition even if you are private. Its a difficult one, especially if conceivably youre going to be crimping margins. This is possible, but unlikely is where i would come out on it at this point. Possible, because when you do put the numbers down, you cant argue that its not going to happen. At the same time, the financing, the equity check that would be needed, even if you assume, as i do, that michael doug would roll in his 15 stake, still is a very big number. Its a very big number. Maybe its as low as 4 billion, but its probably closer to 5 billion. That argues for two, if not three firms. Perhaps even more. Silver lake is not that large. Youre talking about percentages of funds that would be devoted to dell. You might get the lps to participate directly. In other words, the private Equity Investors in the funds would actually step up for an individual investment in this deal. But theres a very high hurdle to getting something done. While weve had guests on our show from jpmorgan saying, we can get something done, come. Its likely to get done. But again, the Interest Rate that dell would pay, a company that theres a lot of questions about t would not be easy, per se. And so i do come back to the equity check, the financing. We dont know how much cash they have overseas, how much would be able to be returned which could help the overall picture in terms of the enterprise value and lower the overall cost. You get into the complexities with michael dell dealing with private equity. We saw this in j. Kru, the founder. Youre not going to go after this company if you dont have the participation of michael dell. That keeps the potential sbresht in a certain area. Why does jeffries say is it just idle . When you do the math on a 15 deal, youre talking 25. 5 billion value, and youve got to take it down a bit because of the cash position. We dont know how much is overseas, and if you bring it back would get taxed significantly. But the numbers are significant in terms of the equity check. That is probably the largest gaining factor. Maybe there are big Pension Funds that want to step up and own a lot of dell and would help out here. But private equity, listen, club deals are frowned upon. Two or more players getting involved in one deal. Fighting charges of collusion on another matter. I have a hard time seeing it potentially happen. But its not impossible. Whats some angel we havent thought of. Im always thinking and overseas. Maybe were being too United States centric. There are billionaires galore overseas. There are. I havent heard any of those names. Then you have to come back to the economics of the business itself. You know better than i do. What kind of challenges are they facing. What could they expect next year and the year after. What is their market share going to look like. Do you want to invest in a potentially declining cash flow stream. Best buy was kicked around for a while. I just think when i look at dell, michael dell is a very motivated individual. When you talk with him, he is clearly, like listen, my company is worth a lot more now. He obviously missed mobile, all right . He believed in the desktop. But at the same time, if europe turns, if asia turns, 50 of the business overseas they still need to do deals, they still need to invest in a competitive industry. And theyre constrained somewhat by the capital of the company. Its cheaper, i suppose. They could return a lot of capital by levering up. Obviously up again today, as we begin the first full day of discussing that story. Lululemon up last year, but the street not impressed with the latest guidance. Is blue lu lemon more of a lemon today. Bill simon on everything from the state of retail and job creation to what new gun control regulations could mean to the sale of firearms. Shares of lululemon falling premarket trade. It includes the Holiday Shopping season, but the forecast is still below street expectations. Lululemon seems fourthquarter samestore sales down from 26 growth in the yearago period. Tough comparisons. It seems like a battleground stock, because people have come out this morning and saying, you know what, its a buy on the weakness. Others are saying, maybe dont touch it. Credit suisse talking about productivity. Most of the people want to use it as an opportunity to buy. This is what happens when you have a company that historically says were going to do x, and then they do 20 better. And suddenly they say theyre going to do x and they do a little bit better. And lulu said its up from this fall. They need to Start Playing like everybody else. They need to say, heres what we need to do. The expectations here are just created by lulu historically. It aint going to do it. It sounds like theyre setting up for a pretty decent start to 2013. Theyre presenting at this icr retail conference in miami. Theyre entering 2013 in a clean inventory position. They talked about the marketdowns in the holiday season. Maybe the upside is you dont have much inventory going into 2013. Gross margins are coming in slightly ahead of planned. So a little bit of a fact there. I know one of the big thesis there was the big overseas expansion. I come back and say this market doesnt like retail right here. The market is focused on the payroll, your check. The market is focused on kind of the rebuilding of sandy. Lulu is like the wrong time to come out and saying were not blowing it away. It all happened like sox like coors, not the beer, the kors goes down a bit. You dont look at a great manager says something good. You say, wow, if lulu cant do it, then this company cant do it and that company cant do it. Were kind of in a funk here. Especially at the high end. Talking about how the high end is disproportionately at risk as these tax hikes come in. I havent seen it yet. But ethan allen today, that the high end is at risk. Everybody wants to believe that you look at the macro and you cant spend as much. Its refutablrefutable. They do have less. Just a few minutes to go until the opening bell. Well get some of cramers advice with the mad dash when we come back. And david faber with an interview. [ male announcer ] some day, your life will flash before your eyes. Make it worth watching. Introducing the 2013 lexus ls. An entirely new pursuit. Introducing the 2013 lexus ls. We replaced people with a machine. R, what . Customers didnt like it. So why do banks do it . Hello . Hello . if your bank doesnt let you talk to a real person 24 7, you need an ally. Hello . Ally bank. Yooney needs an ally. [ male announcer ] you are a business pro. Omnipotent of opportunity. You know how to mix business. With business. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above. And still pay the midsize price. I could get used to this. [ male announcer ] yes, you could business pro. Yes, you could. Go national. Go like a pro. Time for the mad dash, a few minutes before the opening bell on a tuesday. Lennar making news here. Whos perfect and what does the stock do. Lennar, sales are down. Youve got orders that are terrific. Youve got Gross Margins that are expanding. If you had to craft what this market is like more than anything else in the world, its what theyve announced. And i think thats because the market is a little tired. Wants to recharge. But there was nothing wrong with lennar. I think what people do is say, hey, you know what, that stock is down. Lets find the problem with lennar. Stewart miller, who his father, leonard miller, great home builder, the brilliance, this is a perfect quarter and a perfect quarter is not enough. What does it say about the ones that arent. If there is a problem to be ferreted, is it the mortgag