Transcripts For CNBC Squawk Box 20121127

And find a solution. Among our guests, three men who understand washington, wall street and Corporate America very well. We have the chairman of president george w. Bushs council of economic adviser, ed lazear, roger altman, and real estate tycoon don peebles. But lets cover this mornings top headlines. We do have a lot in the corporate headlines this morning including Equity Residential and avalon bay communities agreeing to buy archstone from Lehman Brothers holdings. The price tag, about 6. 5 billion in cash and stock. The deal gives lehman cash to help pay its creditors as it liquidates. But it paid 22 billion for this company originally. So 6. 5 billion versus 22 billion, and you can see how lehman got into some of the problems it did. Also this morning, europe set to delay the introduction of stricter rules on bank capital. The eu reportedly prepare to go follow the United States while it lobbies for a reconsideration of the u. S. Stance. The delay could push back the start of basel iii by about six months. The law was mepts ant to be pha in by the start of 2013. Archstone was not part of the zell asset, was it . I feel like zell was related to it. But he sold right at the top. So that was part of the problem. It wasnt just a total lack of due diligence. I mean, everything was valued hire when archstone was first sold, right . Yes. But as im looking at this, no, sam zell i do not believe was involved. That was the Equity Office and and then blab stone. But blackstone even though they bought at the top figured out a way to then sell pieces of it very, very quickly. And they did very well. Entrade is no longer accepting u. S. Customers citing legal and regulatory pressures. That announcement coming hours after the u. S. Commodities regulators sued the exchanges owner alleging that it allowed unauthorized trading by u. S. Customers, u. S. Customers must close their accounts and withdrawal all funds by the end of the year. And a group of former mf Global Customers is asking a court for permission to subpoena the commodities brokers executives, including former ceo jon corzine, although no ones seen him. The Commodity Customer Coalition is an advocate for trader customers who lost money when mf global went under. It wants to question mf executives under oath. We used to have him on here a lot. Have we placed the call . Is he returning our calls . Yeah, call me. Judge denied a similar request in february. And while corzine has stepped down, some executives remain at the company and theyre assisting in its wind down. Bankruptcy beard dino, california has devoted to halt payments in an effort to try to balance its budget. The city will present the plan to a bankruptcy judge on friday. Sa they need to close a nearly 46 billion budget deficit. New york and new jersey need at least 71. 3 billion to recover from the devastation of super storm sandy and prevent similar damage from future storms. This is according to the states latest estimates. That total of course could grow. Steve liesman has been crunching the newspaperup i numbers and hn the next hour. This is to try to build up some sort of protection, some massive floodwalls. Governor cuomo was saying this would be like 9. 1 billion to start building. Questions about the future of the sec following mary shapiros exit. Elyse walter could run the agent until december 2013 when she would have to be renominated and reapproved by the senate. Among the issues, and ongoing battle over regulating the 2. 5 trillion Money Market Fund industry, some 63 unfinished rule making requirements that are all part of doddfrank and continuing fears of course about market stability and High Frequency trading. P. Money markets used to be covered by the fdic when the crisis first came on. And also worth pointing out, there was one failure of mary sha piros time in office, shall was this was it. She wanted to regulate that business. You remember that vote. If there was any regulation, the money Market Industry claimed they would go out of business because there would be too much collateral set aside. I have money in a Money Market Fund because the bank talked me into it. I dont know why im keeping it there. 0 interest. Not covered by the fdic. What do you you get on 10,000 per year . A couple pennies. I think like a couple hundred dollars for way more than 10,000. Thats what i mean. So most interesting sentence in any article this morning related to mary shapiro owe s departure, the floating of salary crawchek as the next sec chairman. Elyse wont be there . Theyre not calling heart interim. Shes sort of like the interim interim. She may stay, but may not. Sally looking for a job . We got her last job at bank of america. She admitted that. Anyway, her maim is on the list. He have not put her name forward. She doesnt need the money of a big job at this point. You cant make any money unless youre accepting bribes, which i dont think is legal. Did you see the other name floated by a regular squawk guest last night for treasury secretary . Who . Warren buffett was interviewed on charlie rose and asked remember we asked him and he was erskine bowles. On charlie rose, he said the perfect person would be jamie dimon. Wish i would have heard that before he came on. Jamies not going to do that, is he . I dont think james pie will that. I still think in this environment, i dont think the president is ready to take on they dont see eye to eye on a lot of things. He wouldnt even talk about how he really feels. Last january he was on with you you from davos and still a democrat barely was his wording on it. But hed also like to have someone who understands the markets. Get around all the free market stuff, completely abolish free markets . If europe become as big issue, if something rises up with the bond markets that was the point Warren Buffett made. He said if you want someone who understands the markets and the turmoil that well be in. And also they even talked about the london whale and what that meant. Probably wont be a bankster this time. We had a guy who ran a metals company. A railroad dude. Thats true. Chief of staffer. Wed like erskine bowles. But that will never happen. That would be one way to rise above. Which were not seeing a lot of. Im going to put my pin on, but i feel like its around here somewhere. You didnt wear yours later. Afraid to get on camera . You have a spiky haircut. Ill keep trying, but well get to other quick headlines. We have new numbers showing more americans fell behind on their auto loan payments in the third quarter. Credit reporting Company Trans union now saying the raft auto loan payments at least 60 days overdue rose to 0. 38 . Trans union says the uptick is likely only a seasonal blip. Yeah, rising above. On wednesday, the president will have a bunch of people standing behind will him again. Hell do the thing again, ive got my pen, the senate has the bill, extend it on everyone except 250. So hes going to insist on that. But theyre not going to curb any entitlement spending. So thats where we are. Really. Theyre not rising above, theyre sinking. Do you think roger altman knows anything . Because the democrats have pretty entrenched in totally entrenched. Although the president is in a position, hes not running for reelection again, kind of look at things hes in a position of compromise you would think. 2014, if you can get a Democratic House, then you can consolidate everything and you can get a Democratic House how . By making them by saying the republicans are obstructionists, blah, blah, blah. And then you play for the last two years. Playing to just consolidate all your redistribution. I get it, but also a tough way to play the game. Did you see drudge . I did. Bush 3. Jeb bush talking about 2016. And then christy already talking about 2016. We are. And christie is getting his Reelection Campaign ramped up. He has unprecedentedly high approval rating. After sandy. And he says this is a job he feels leak he needs to continue. Stanley wants him to stay. Some other Corporate News involving erickson. Its filed a lawsuit against samsung alleging patent infringement. Ericcson says two years to trike a deal were unsuccessful. And an hp shareholder filed a lawsuit alleging the tech companys top executives misled investors about two key acquisitions that have caused billions of dollars in losses. The lawsuit alleges that hp management concealed the problems and another recent acquisition which weve talked about, electronic data, in an attempt to boost hp stock price. Meantime in the wall street journal, former employees, Business Partners and attorney attorneys say its not difficult to conclude that the company autonomys accounting was overly aggressive, they say such behavior tip filed autonomy long before hp bought it. And mike lynch says the companys culture was aggressive. They start off talking about how originally the ceo put up a sign on a door that said authorized personnel only and he would tell people there are 500 engineers back there working on top secret projects. Turns out it was a broom which was eithcloset. So part of the extbravado. It is complicated on some of those things. If you dont know to pick up the bench when i went with Boone Pickens in china, i had no krid. Really . Yeah, have you seen, you have to lift up that bench. Being a child. Obviously. I know. Watch shares of yahoo i agree with you very much. Guy back there just scratching his head. They that had clean up after he left the bathroom apparently. For these people on the middle seat . Jetblue watching us, theyre not enjoying this. What are we talking about . Yahoo shares touched 19 yesterday. First time its trade that had high in more than 2 1 2 years. I cant you hugh has been buying back its own stock and more investors are betting on Marissa Mayers ability to turn around the long struggling company. On the economic agenda, we did have october durable goods at 8 30. At 9 00, we get the case shiller home price index. And then Consumer Confidence. Federal Housing Finance agencys house price index and rich mopped f richmond fed survey. Lets get a check on the markets. The futures are a little bit weaker. Right now done by about 21 points. S p by less than 3. In europe, you have seen a few green arrows on the news that there is going to be a deal for greece. Although it does look like theyre giving back some of the gains. In asia overnight, you did see modest declines for most of these markets. Shanghai, market down by about 1. 3 , but the hang seng and the kospi and korea both have just slight declines and in japan the nikkei up by about a third of a percentage point. Oil prices are a little higher, up by about 3 cents. And the ten year note at this point is actually yielding 1. 652 . Not a lot of movement there either. The dollar this morning is up against the euro. Euro at 1. 2941. Dollaryen unchanged. And gold prices are down about 3. 50. Time for the Global Markets report. Kelly evans is standing by in london. Great to see a yyou, especially given the green behind you. Great to be back. Lets give you a sense of whats happening. Its actually a pretty interesting morning because every market seems to like the greece deal except the greek one. Some of the strongest gainers would i seeing in the europe stoxx 600 are the bank stocks. We saw rbs, morgan stanley, gaining almost 3 to the up side. Walking over here, you can look at the stoxx 600 still up 0. 3 , but we are giving up the gains we saw earlier in the session. Want to focus in particular on on whats happening with greek banks. First lets look at the bond wall where we are seeing some differentiation interestingly enough. We did initially have the relief rally and rotation out of the core into the periphery. Yield moving up a little bit despite the better relief in spain. No, i mentioned greek banks. Heres whats interesting. Even as were seeing banks in spain and some of the u. S. Listed companies rallying, take a look at whats happening here. Alpha bank down 7. 5 . National bank of greece, you get the idea, down about the same amount. We saw even losses on on the range of 12 for parias. Its bringing the greek composite down almost 2 last time we checked in. Effectively when youre writing down the deal agreed, it includes provisions that extend maturities, that lower Interest Rates. And guess who will take the hit on some of those holdings. Yep, the greek bank which is have the greek debt. So ironically enough at the same time that these negotiations are giving rise to a rally across the rest of the region, were seeing the concern play out here with regard to what that will mean for those holding some of this will paper. And certainly some of the unresolved issues just about the ability for greece to fund itself going forward. It hardly means weve solved all of our problems. Back to you. So you say kevins . Kevins. I like that. Kevins, yes p. Okay. Kevins. Yeah, im going to regret that i told you that. Yes, you are. And this whole flying private thing, i was gist happy to have an exit row seat on the plane the last time i was flying. Ive had the middle seat the last four or five times and had the baby in my lap, so thats my norm, too. You know they have changing tables in the bathrooms on the planes . I dont know how the bathrooms are that big. I didnt realize they had it. Its a little cramped, but they do have like the pull out things. Theres plenty of room in those. Youve told me. To do terrible things in there. Anyway, coming up what is a mile, 500 2 how high are re talking about. 5200 feet, isnt it . That club. All right. So youre eight miles high basically. Coming up, a busy day on the economic front. Housing, consumer manufacturers, well ask if any of these numbers move the meter for the markets next. But first, it is the first tuesday after thanksgiving. And a new tradition starts today. Its giving tuesday. Organizers say they hope that youll give more of yourself and then share the good deed on social media to encourage others to do the same. Social media aspects of the campaign is intended to attract younger. Take a look at futures ahead of the markets. Right now things setting up in negative territory. Dow jones would open up about 16 points off. S p and nasdaq both off, as well. Todays national forecast, eric fisher from the weather channel. Good morning. Watching a little bit of snow move into the northeast. Nothing too to get too worried about, but more novelty snow than anything else. Take a look at the radar. This is where its really starting to come done hewn here. New york and philly, it will start likely as a bit of rain, mix in with wet snow, but the roads should be in good shape. Harrisburg along i81 and higher terrain, one to three inches of snow. So not a major event. Well track it across southern new england this afternoon. This evening into southeast mass, we will see snow flying that will slow you down. A little bit of accumulation. Plymouth, you might see some of that adding up on the ground. As we get into the day tomorrow, sun starts to come out, temperatures warm and it will all melt away. During the accumulations, one to three highest elevations. If you get out north and west of new york city, youll find spoke especially on the grass and higher elevations, eastern sections of connecticut. Ought side of this, all rainfall. Storms from atlanta stretching back through birmingham and down toward new orleans. All this marching off to the east. Well be seeing a pretty decent a rainfall. In the southeast, they really could use it. Not a bad thing here. Okay. Eric, thank you. Squawk sports news, monday night football, panthers beating the eagles 3022. Cam newton threw for two touchdowns and ran for two more. A lot of times now theres sunday night, monday night, and i think a lot of times theres thursday night. A lot of football. If you want it, you can definitely see it. At least the nfl is still almost as good as college whereas basketball, i dont think its close. In the pros versus for me. Just me personally. I agree with that. Really . Yeah. What y with the school, you can get behind it. Are you Still Holding out some chance on this thursday . Do you think im going, yes. You dont think youll walk out of there with your tail just feeling oh, no. You saw the pittsburgh game. Yeah. Everybody can have a bad day, an off day. All right. Would i go if i thought they were going to lose . Im going to stay up late and get in here early in the morning . I dont want you to be i want you to go in to this realistically. I might cry. I know thats what im worried about. I want you to have realistic expectations. Im going because i think theyre going to win. I said i want you to have realistic expectations. Hope springs eternal. It is a busy day for economic numbers. Joining us is the chief economist with he was snickering over there. Only because of you. We do have a lot of numbers coming out. Maybe the Consumer Confidence the most interesting one just because im still trying to figure out why everything the ceos are concerned about hasnt really trickled down yet. I think one thing about the different reactions consumers versus ceos is these tax changes are so complicated that i think that the ceos have worked it all through and are really worried about what could happen p. And i think the attitude of consumers is its too complicated, theyll have to sort something out, i cant figure it out. And so it is really a streeg differential in behavior that weve seen. The ceos have cut the core Capital Spending orders, postponing them up after the fiscal cliff is resolved. Consumers continuing to spend, responding to the fat that the Unemployment Rates come down, people who have jobs have somewhat less fear theyll lose their job. And spending has been okay on the consumer side. Gr do you have two models for next year, one assuming we have a deal, one assuming we dont . Really about 20 different ones because there are different kinds of deals. I think the most likely case is that we get a fix for the fiscal cliff maybe early january, maybe we go over the cliff for a couple days. And i think the political pressure then to fix it would be intense because of the amt shock. Normally 4. 5 million pay pay alternative minimum taxes. If we didnt fix this on the 2012 income, whats due in 2013 will be additional taxes of several thousand dollars by an extra 28 million households. 33 million instead of 4. 5 million on 2012 taxes. If youre going to file your tax return in january and you expect a refind, if youre in the 75,000 to 300,000 income bracket, forget about it if they dont fix that amt. So i think senators will get calls from a good portion of 28 billion households saying what are you doing raising my taxes. I never withheld. Are you going to penalize me because you didnt fix what you fix every year . I think that amt shock is going to drive if we go over the fiscal cliff, it will drive a very, very fast fix. But then well just have a small bargain later this year. Theres not going to be a grand war bargain. That could be the worst Case Scenario is just letting everything ride. May not be bad news in the immediate future, but it does mean were not dealing with any of the problems. Thats right. I think the problems will be dealt with by ten different pieces of legislation over the next decade. I think it is a romantic hope to believe that these politicians can agree to a grand bargain that will fundamentally fix our budget deficit issues. I think that it totally unrealistic. Then that means continued uncertainty. It means you continue as either a consumer or business and say we dont know whatsof. The bond vigilantes are missing in action. Were not fixing the budget problem and ten year treasury is 1. 6 . But we look like a better solution than some of the other places. You cant go to europe an find any solutions there. Plus the fed is buying all the treasuries. I understand. I think the bond market is overpriced. Its the end of a 31 year bull market. I like stocks much better than bonds. If it means divided government and there are shall people that they dont have a big problem with it, the government it will grow by itself bigger, but it wouldnt be able to just add huge we didnt think they could add obamacare, but they did. Weve had a permanent upward shift in the federal spending. But you cant do anything above and beyond that in the near future given that it will remain divided unless republicans lose the house. Youll need budget discipline to stay down to it a higher 24 federal spending share of gdp. You could go to 28 if you dont have budget discipline. You need budget discipline to limit the amount by which federal spending should and this piece in the journal today which says our debt is 16 trillion. People need to keep saying this because it doesnt include what we owe. 16 trillion, the title of this, 16 trillion only hints at our true commitments. I understand. But its probably 40. If youre trying to forecast the economy, what matters is what america actually decides, not what it should decide. What its actually going to decide is a small bargain that gets us through 2013 and doesnt fix the problem. Thats the reality that were going to face. So your gdp under that scenario for 2013, 2014, 2015 yeah, for 2012, well have about two quarters of 1. 5 . I think well get some resolution by mid year so well grow 2. 5 , maybe 3 . Mid year. Yeah. And then in 2013, i think you can grow 3 , maybe more as long as you have if you just let it ride . Thats my forecast. Were not going to fix these fundamental problems except over a ten year period with 10 or 15 pieces of legislation. Medicare alone is 42 trillion unfunded. Social security 20. 5 trillion. And then you add the 16 that we know about to that. None of these are in black and white those first two that i mentioned. You add it all together, 86. 8. A lot depends on what happens to medical care. I mean, one thing that could change these estimates tremendously, find a cure for alle alzheimers. Youll change the estimated how much spending you have to do. If you think over time, many of these forecasts long term forecasts assume no fundamental powerful change. Find a cure for cancer and everybody livesoff 100. But alzheimers is a very expensive disease. But anything that extends life in an expensive way will be net i dont think its cheaper. These budget problems are fixable problems that the United States has decided not to fix. This is the decision were making through our political process. The decision is were just going to fix it enough to get by another year. Were not going to fix on a grand bargain basis. Will it pay if we get little bargains over the next ten years . Is the economy okay with that . Its still uncertain. Depends on future political decisions in 2014, 15, 16, 17, 18. It depend everything doesnt rest on the decisions we make this year. Its a sequenceoff over an extd period of time and its possible you could do it gradually. But the idea that were going to have these politicians agree to a grand bargain that will solve it all, i think thats romantic nonsense. I dont see this look, this kindergarten class of political leaders is being held back in winter g kin dar sger tdergarten because couldnt play well last year and they cant play well this year. We dont have to have this level of uncertainty. We dont have to have ceos holding back the Capital Spending orders because of uncertainty in washington. This is politically created uncertainty. You saw one of the things is raising medicares eligibility to 67 from 65. At some point way in the future. And not everyones healthy at 67, but a lot more people a healthy at 67 if mick jagger came keep his job past age 65, there are other people who although its supposed to have a lot of these plans would include exemptions for people doing hard, back breaking absolutely. One question is what percentage of your life are you going to be working. So as education has become longer and peoples longevity has increased, its a real challenge to having early retirement. Back in greece, they had the rule that you could retire at age 50 on full pension if you were in a hazardous profession which included being a beautician or a steam room attendant. Really no surprise that greece ran into financial problems with that kind of an attitude. But the question is what percentage of your life do you work in a world in which you have longer education and greater longevity and you live to if youre going to live to 92, do you really retire at 62. It immediately solves three quarters of our problem. Pushes a lot of people into unemployment. Its bad policy to have a 5 gdp fiscal cliff. But it does automatically solves things that well never solve. Yeah, its like my car is going too fast, so let me run it into a brick wall. It is really bad policy. This is Banana Republic policy. We do not have to have fiscal policy as disruptive as we have in the United States today. Dick, thank you very much. Coming up, economic data, fiscal cliff negotiations, geopolitical concerns. Kevin ferry will connect the dots for us. [ male announcer ] this december, remember you can stay in and like something. Or you can get out there and actually like something. The lexus december to remember sales event is on. This is the pursuit of perfection. I heard you guys can ship ground for less than the ups store. Thats right. Ive learned the only way to get a holiday deal is to camp out. You know weve been open all night. Is this a trick to get my spot . [ male announcer ] break from the holiday stress. 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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. This is awesome. [ male announcer ] yes, it is, business pro. Yes, it is. Go national. Go like a pro. To a currency market for everyone. The potential of fxcm unlocked. Nyse euronext. Unlocking the worlds potential. The potential of yelp unlocked. Nyse euronext. Unlocking the worlds potential. Sfx sounds of african drum and flute look whos back. Again . Its embarrassing its embarrassing we can see you carl. We can totally see you. Come on youre better than this. All that prowling around. Yeah, youre the king of the jungle. Have you thought about going vegan carl . Hahaha you know folks who save hundreds of dollars by switching to geico sure are happy. How happy are they jimmy . Happier than antelope with nightvision goggles. Nice get happy. Get geico. Fifteen minutes could save you fifteen percent or more. Kevin ferry joins us from the cme. How are you, kevin . Good morning. You even brought up jerry kozinski. There will be growth in the spring. We will put water on the roots and we will see growth. You had to love that guy yesterday. A young strategist, and that was have you seen a blanker look in your entire life some but if you had seen that movie, would you be using that as your analogy . Would you hang your hat on being chauncey . I dont know. It was great. Made me day. If he watches it, hell feel silly. Hell come up with a different way. Anyway, whats happening today, kevin . I think the market yesterday proved that its had some bid underneath it because definitely a couple waves of selling went through the equity market after the big run. But there the bond standpoint is what i would concentrate as the data comes out through the rest of of the week. And thats because first of all the decline in the yen has mitigated for the time being and thats allowed the bond market flow to come back to positive. And the one really big metric that were watching is the yield on the ten year and the nominal growth rate is back to a very wide level. The widest level we saw was the end of may last spring. And obviously that signaled a big downturn. The spread rectified itself by a big downturn in the growth rate. So were wooatching that differential. Either the ten year yield has to rise or the data is going to force the economic numbers back down. How should we read the we were talking about the lack of vigilantes anywhere. And as our deficit grows by leaps and bounds, is it tacts o the fed, is it the slow growth of the entire Global Economy and the new normal that were in as we work through all the debt we built up . We talk about that a lot because i call them bond yetties. Because theyre always talked about but rarely seen. But theyve moved offshore and they attack other countries, and theyve also moved to the equity markets. What used to be considered hot money was in the bond market. Now that money is much faster in the equity market and etf products. And they can really exact the change quickly by what they do to not just here in the states, but in other countries. So i think they have equity market vigilantes and those type of things produce the quick short term volatility that weve seen. Even in the past two weeks in our market, talk about a v bottom, thats what you experience right here. All right. Kevin, thank you. Good to see you. If you have any comments or questions about anything you see here on squawk, squawk cnbc. Com. Or you can follow us on twitter. squawkcnbc is our handle. When we come back, an organization representing worlds richest nations has visits advic advice for europe. Rethink the cut backs. Details after this. If you are one of the millions of men who have used androgel 1 , theres big news. Presenting androgel 1. 62 . Both are used to treat men with low testosterone. 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Serious side effects include worsening of an enlarged prostate, possible increased risk of prostate cancer, lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep, and blood clots in the legs. Tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. Talk to your doctor today about androgel 1. 62 so you can use less gel. Log on now to androgeloffer. Com and you could pay as little as ten dollars a month for androgel 1. 62 . What are you waiting for . This is big news. A new report just released by the orgts for Economic Cooperation and Development Warning europes debt crisis is pushing the eurozone into a new recession. Oecd joining us from paris. Good morning. We have a huge debate in this country about austerity and what it means. Reading your new report, will seems to be a suggestion that the austerity in europe is actually Holding Things back. Is that right . The thrust of the report shows that number one there is a need that the United States dont go over the fiscal cliff. But also that if you dont, there is growth in the United States and that in fact is the area that will be recovering faster. Second, in the case of europe, good news, the greek package yesterday, thousand we still have to address institutional issues having to deal with countries under pressure like spain or italy, and of course solving the whole of the debt problems and getting all the elements of the machinery in place, a bazooka has to be fully loaded ready to fire, are made k markets have to know the bazooka is there in case there is greater volatility. But there is institutional progress, but we see a 2013, 4 2014 scenario of slow growth, sluggish growth, picking up a little in 2014. When you say the fiscal cliff needs to be solved in the u. S. , from your perspective where you sit, what does that solution look like . Well, first of all, you have a great team now with tim geithner in charge, with gene sperling, with jack lew, botale and experience and politically savvy. I think the republicans have also got you now very clear signal that now is the time to strike a deal because nobody wants to be responsible for having precipitated the United States over the cliff. And then the question is to put the short term measures in the medium term context so that people will see the signals and they will see that it is a credible medium an long term scenario that were talking about. One of the big issues, though, is entitlements. And it seems that thats an issue that has not changed here in the u. S. The democrats seem to be more entrenched than perhaps i dont want to say ever, but it feels like theyre more entrenched than before. In terms of coming up with a compromise, how important is cutting back entitlements, having a longer tierm plan that gets at these issues . This has been the object of analysis by practically every country in the world. Some countries are already taken some decisions. It has to do of course with pensions, it has to do with the age of retireretirement, itle a also has to do with the cost of Services Like in the United States i would mention the cost of health care. All the economies that are assumed in the Health Care Act have to actually materialize. And then there is a tax side where regardless of letting some of the tax benefits elapse for the higher earners, then theres a question also of tax structure like the treatment of taxes for in some Health Care Items and also on the mortgages. So there are a number of areas where thisof will there will have to be a negotiation, have to be give were talking here about medium and longterm viability of the United States economy to not only avoid the fiscal cliff but get to the moment where the debt stops rising and the debt to gdp starts coming down into an area where we all can breathe more comfortably. Secretary, were going to leave it there. Thank you for joining us this morning. Thank you. Coming up, were going to kick off a rise above road trip. John harwood begins in ohio visiting the home state of House Speaker john boehner asking constituents if their representative is representing them or not. The currents to rise above all day and i guess they mean their representative in congress and the representative in the white house asking both all day on squawk box. Tdd 18003452550 you shouldve seen me today. Tdd 18003452550 when the spx crossed above its 50day moving average, tdd 18003452550 i saw the trend. 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Theres a story in the wall street journal that says the power of the soninlaw is incredibly important in terms of relating to your inlaws whether you feel close to them. Theres been some research thats been done and in this study it found that couples where the husband initially reported being close to his wifes parents where they ask him out of the gate in the beginning they say first year of marriage do you feel close to your wifes parents. The risk of divorce over the next 16 years was 20 lower than for the group overall. It works the opposite way for wives though. It seems to have a detrimenbtri affect. Interesting. Im not going to comment at this point. The personal journal i see the headlines every day. I shake my head. And then i look at the way its presented. Youre looking at the probiotics story. Then they have meat head talking to edith. And then i will admit this is a study with 373 couples. Stupid. Motherinlaw. Its a loaded term. Its cultural ego. Motherinlaw jokes. Do you have a motherinlaw joke . I dont have a joke. I have a great motherinlaw. My motherinlaw just had a birthday. Shes 83. She still looks good. She still gets attention at 83. Thats a good sign. Thats a good sign. When we come back, well talk taxes, spending and the economy. Or you can get out there with your friends and actually share something. The lexus december to remember sales event is on, offering some of our best values of the year. This is the pursuit of perfection. [ penelope ] i found the best cafe in the world. Nespresso. Where i never have to compromise on anything. Where just one touch creates the perfect coffee. Where every cappuccino and latte is only made with fresh milk. And where the staff is exceptionally friendly. Nespresso. What else . Getting a deal done. Can leaders meet halfway before all americans take a hit in their wallets . Our guests are here to rise above and provide solutions. Money matters. Find out whats at stake for your investments as the clock is ticking toward the fiscal cliff. Disrupting your main course. Food fight why life in the kitchen could change the health of america. The second hour of squawk box begins right now. Good morning, everyone. Welcome back to squawk box here on cnbc. Im becky quick along with joe kernen and andrew ross sorkin. European shares are higher on news that they agreed to steps to make the countrys debt sustainable including an extension of loans maturities and Interest Rate cut. We have other headlines for you right now as well. Dallas fed president Richard Fisher says the central bank should consider defining the employment target and inflation goal and setting a limit on assets that it is willing to buy. A longterm inflation hawk says unemployment is a real concern and that Monetary Policy would not be enough to create jobs. Also, online sales we saw big jump on cybermonday. That was yesterday. Ibm tracks transactions data for more than 500 retailers. It says sales were up about 28 . And sales are projected to reach 1. 5 billion. Well get their numbers tomorrow morning. We have breaking news thats coming through just now. We have takeover tuesday. Conagra buying ralcorp. 28. 2 premium. Worth noting this has been in the works for a long time. Kayla tausche reported in 2011 that conagra was interested in buying ralcorp. There was an effort to rebuff this offer. It looks like a year later we have a transaction. In total the transaction valued at 6. 8 billion including the assumption of debt. It creates one of the largest packaged Food Companies in north america. A deal thats been in the works for quite some time that people have been watching this morning. Packaged food. They dont have many brands anymore. Its really just private label. Its the food part of ralston purina. It started with dogs and they made cereal and spun that off and then it became mostly private label. Its cash. Interesting i guess. Its not stock. Conagra may not go down. People have wanted this deal to happen for a while. The question is whether they would overpay. Its worth noting at the time that they were first looking at this or at least the last time a real price was on the table, my understanding was they were offering 94 per share. That was prior to the spinoff of post. If you back out post, you are now at 90. Thats still a decent premium for the company. All right. Were just a little over a month away from the fiscal cliff. Do lawmakers have the courage to rise above and get a deal done . Our guest hosts this hour are here to talk about it. Roger altman, chairman of ever corp partners. In recent days, ill start with you, ed, i dont know if we have gotten any closer or further away. I know the president is going to talk tomorrow and say he wont cross that line at 250 for the bush tax cuts. The New York Times lead story is any effort to curb social spending in any way on entitlements is going to face a lot of resistance. That seems like were as far apart as we were all along. Thii think we are far apart. Im an optimist. What you see in negotiations is everybody plays tough and pushes it to the 11th hour. Is it a can kicking deal we get done or an actual deal . Roger and i were talking about this before we came on. We both want to see it get done. My view is that it needs to get done correctly and what the it is is we shouldnt lump taxes and spending in the same bucket. When you call it the fiscal cliff, think about how they account for that. They add up taxes and the spending together and treat them as if they are the same thing. Theyre not the same thing. Tax increases have longterm permanent harm on the economy. Spending cuts do potentially have harm in the short run. Its a onetime deal. So if you look at the evidence on this and you look at the ability to do Fiscal Consolidation, what people have found is that tax increases are much less effective in terms of bringing about longterm Fiscal Consolidation than spending cuts. Its not what you want to hear, is it, that we take a shortterm hit if we cut spending but tax increases are bad longterm. Did you tell him thats the same republican talking point. What did you say . Did you roll your eyes . Were you rising above . Yes, we were rising above. We were talking about i was talking about the importance of solving it now as compared to kicking the can down the road. Do you agree with what he just said though . Let me say one of two things here. Historically the opportunity for greatest change occurs at the beginning of a new president ial term. So over the next two or three months, is the opportunity, the best opportunity to really do this decisively. Stop these corrosive deficits, stabilize debt to gdp ratio and solve this. Ive been talking to quite a few ceos over the past seven to ten days about the fiscal cliff. Made a point of doing it. And what i find is that almost all of them are focused on solving it now, not kicking the can down the road, a reasonably balanced solution, most are not opposed to additional revenue. Most are not opposed to marginal changes slightly upward in marginal rates. And most are focused on just a solution and clearing the air and moving on and i must say most think that if we can solve the fiscal cliff and not kick the can down the road, theres an opportunity for a boost of confidence and an opportunity over the next couple years you didnt mention anything about the economy side. It has to be balanced. We have to see additional cuts in mandatory spending. Yes. Clear about that. Yes. We also need to see new revenue. So we had about 1. 5 trillion enacted through the budget control act of 2011. We should do another half trillion on the spending side meaning entitlements and an additional like amount on the revenue side. Add those two together one for one. Simpsonbowles is three for one. You add interest savings. You have 1 for 1. 4 trillion package. Does that work for you, ed . I think there are two things to remember. First of all, the short run problem fiscal cliff is a tax problem not primarily a spending problem. So in terms of the longterm problem, the longterm problem is not a tax problem. Thats a spending problem. We have really two things going on at the same time. I think what we have to remember is that i agree with roger. Hes absolutely right the time to solve it is now. You have the chance to get you both agree the time to solve it is now but you disagree on how to solve it. I think we do need to focussing on the long run. If we compromise and solve it short run and get the fiscal cliff handled for the next year or two years but do it in a way thats not constructive in terms of longterm economic growth, well be shooting ourselves in the foot. Think of where weve been. Think of the economy over the last four years. Since the recovery weve had about 2 growth. Slightly lower in the past few months. Theres not a lot of evidence that things are turning around. Were kind of muddling around right now. Unless we do something to change the path that were on, i dont see us growing. If we dont grow, were not going to solve this problem in the long run. How would you do mandatory spending cuts . Does that include entitlements and trying to set things up longterm . I think there has to be an additional tranche of entitlement cuts. You can focus on means testing. You can focus on adjusting the cost of living indices. If you put through can you put that on the table . Will the president be able to i cant speak for the president. I dont know the answer to that. Ed and his people in the house will not give you one to one. This is like a lot of business problems that everyone on this show sees and talks about. In order to solve it, everyone has to make some sacrifice. Everyone. There has to be sacrifice if you want to use that word on the spending side and there has to be sacrifice on the revenue side. I dont think i think the time for ideology is over. It was three to one now you want one to one. You expect people to take that . One to one or 1. 5 to 1. Three to one under simpsonbowles. Why not go further . You mean in terms of larger deal . In terms of more spending cuts. Focus on the numbers. As i said, theres about a trillion five enacted in 2011. Thats in the pipeline. That was done by law. Thats there. So lets add another tranche of spending cuts. Im not religious about these things. Another half a trillion. Thats 2 trillion. Lets do 1. 2. Something like that on the revenue side. Add in interest savings. 3. 5, 3. 6 trillion. I would like to see it bigger. Thats a reasonable deal. Its not a perfect deal. There isnt any perfect deal. Its a reasonable deal. And i think thats the main point in the spirit of rising above. Its time for everyone to sacrifice a little bit and solve this now and its not the time for ideology. No question about it. Details are where sticking points happen. We hear people from both sides saying this is the time to rise above and time to get to it. The more i hear about details, the more concerned i am there wont be an agreement. Heres one way to think optimistically in the spirit of market vigilantes. One of the parties sitting at the negotiating table albeit invisibly is the equity markets. As we get closer to december 31st, and if theres a sense that the situation is stuck or negotiations arent progressing, especially if it looks like we might actually go over the cliff, i think the markets may become very disorderly on the equity side. We saw that play out in t. A. R. P. And i dont think the idea of going over the cliff will be received well at all by the equity markets. You could see a degree i think this at least 5050. You can see a degree of disorderliness which central bankers like to refer to as disorderliness which could put irresistible pressure on negotiators to either reach an agreement or kick the can down the road. The most likely scenario under that is we kick the can down the road. Its christmastime. Everyone gets what they want on both sides. Thats the worst Case Scenario for the nation. I think that would be such a disappointing income and received very poorly throughout the world, by the markets and the Business Community. The Business Community would im skeptical about the markets. I think the markets saw that, they might say time to continue the party and keep drinking and they relax and pressure is off the negotiators. And ceos. My next quarter is okay. Options are okay. The ceos are transparent. Sometimes i wonder i see them i dont see anything past three to six months for their outlook on how it affects them. An outcome like that my two cents would be unfortunate. It will be a blame game. Both sides are still so far apart on this. As markets going down, one side is going to point i know its not were stuck with it. One side is pointing at one and the other side is going to point at the other. It will start on wednesday. Watch the speech tom im not persuaded that two sides are that far apart. I understand posturing. Ed is way far apart from you. Im looking at your expression. Remember, joe, you always tease me about being the nerdy technical guy and not the political guy. Good company. I think we have got to get it right. Thanks. Well be back with you guys. Americans believe they should be in charge of their own future. How theyll live tomorrow. For more than 116 years, Ameriprise Financial has worked for their clients futures. Helping millions of americans retire on their terms. When they want. Where they want. Doing what they want. Ameriprise. The strength of a leader in retirement planning. The heart of 10,000 advisors working with you onetoone. Together for your future. Welcome back. They hit the United States at different times and different places but more and more Hurricane Sandy is looking like Hurricane Katrina in one key respect and that is the price tag. Steve liesman joins us now with more. Billions and billions more. Yeah. Becky, the cost of sandy keeps rise and while it has not risen to the price tag of katrina, as the rubble is removed and the costs are tallied, the two storms are looking similar in the tale of devastation they tell. Aid will arrive on a city focused on cutting spending. Federal emergency money is subject to automatic cuts if we get over the cliff. This is the latest data putting at 70 billion to 90 billion. Yesterday Governor Cuomo came out with this number. We know that includes what mayor bloomberg said was 19 billion. Add that to what governor christie said of 29 billion. 360 million . For connecticut. And yesterday a company that weve been following since the beginning practically doubled their estimates of insured losses. Originally 7 to 15. Now 16 to 22. What i cannot tell you folks is whether or not the insured losses are included in the new york and new jersey governor statements. It could be 70 billion. Governor cuomo talked about it yesterday. We talked about comparison to katrina and how this was more impactful. The total dollars in katrina were the subject of about six separate appropriations. So as time went on, they found more and more damage, which is normally the way these things tend to unfold. We did the best we could to come up with a snapshot of the damage now. And that snapshot has some comparisons that show more power outages, more homes destroyed, and a whole lot more mess here in new york compared to what was in louisiana and obviously maybe, ed, you talk about this. Theres a bit of campaigning that goes on. You want to make the best case for your town, for your city, for your state. And washington either provides or it doesnt. How much is borne locally and thats a subject to negotiations. What is that number . In the 42 billion that cuomo is talking about . I think hes talking about 9 in new york and another huge number for 42 for the state. Its unclear. I want to know how much of that is that seems like a big number. Its a big number. I thought about connecticut. Connecticut was how do i respond to you without dissing louisiana . Its new york. More expensive homes. People more packed together. More power outages. Everything is bigger and more expensive here. Ive seen the devastation in shore areas. Youve seen it. Think about new york city and manhattan being swamped. You remember hurricane andrew which flattened homestead down in florida. There were parts of new jersey and long island that look like that. Not nearly the size houses down there were 150,000 a piece. The homes that were destroyed up here were millions of dollars a piece. Thats what im saying. Its much more money. The other difference is in new york theres not a lot of moral hazard that you worry about in the sense of people werent building homes in the wrong places. A terrific comment. There had not been a storm there in decades and decades and decades. Its another thing in florida on the coast. There were counties i found along North Carolina that have fema money on top of fema money from the prior storm on top of fema money. Thats not the case in new york. Three storms hit new york in 1954. All of them twice as big as the one that just hit three in one year. I dont want to give you a nodule but people are making a leap with Global Warming thing. It may be true. I dont think theres evidence of it. I tell you, its our living in sin thats bringing on all this weather. That we know to be true. Right. Especially your living in sin, joe. Its moral decline bringing on natural disasters. The end of the world is near. I look at both sides im not a scientist. No, youre not. Im not. Neither are you. You are a preacher. Im somebody who reads enough to know that most scientists believe the climate is warming. Most believe that. Connecting the storms is where up next, a couple friend requests from investors and later strategies for the changing market environment. Well talk equities, fixed income. Europe and the fiscal cliff with Hedge Fund Pro tom strauss. Squawk box is back in two minutes. Time for todays aflac trivia question. Speculators of which commodity sparked the stock market crash for which black friday was named . The answer when cnbcs squawk box continues. Yeah, how will you pay for things like food. Electricity . Dental bills. Gazooks. You need a backup plan. [ santa ] ho, ho, ho. Thats why we have aflac so ill have cash to help pay bills great. But what if youre still not better by christmas . Hmm. Afllaaccccccccc [ male announcer ] aflac. Weve got you under our wing. Rudolphs better. But now blitzens sick two years ago, the people of bp made a commitment to the gulf. Bp has paid over twentythree billion dollars to help those affected and to cover cleanup costs. Today, the beaches and gulf are open, and many areas are reporting their best tourism seasons in years. And bps also committed to america. We support nearly 250,000 jobs and invest more here than anywhere else. Were working to fuel america for generations to come. Our commitment has never been stronger. 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You can see the stock now at 26. 40. Coming up next, stories making headlines and disrupter in aisle 12. How lyfe kitchen is changing how people go grocery shopping. Well explain when the companys ceo joins us in just a bit. Tomorrow on squawk box, 30 minutes with the oracle of omaha. Warren buffett will join us to talk about the looming fiscal cliff and the buffett tax. You cant afford to mix squawk box starting tomorrow at 6 00 a. M. Eastern. I put away money. I was 21, so i said, hmm, i want to retire at 55. And before you know it, im 58 years old. Time went by very fast. It goes by too, too fast. But i would do it again in a heartbeat. [ laughs ] well that was uncalled for. Folks who save hundreds of dollars switching to geico sure are happy. How happy, ronny . Happier than gallagher at a farmers market. Get happy. Get geico. Chances are, youre not made of money, so dont overpay for motorcycle insurance. Geico, see how much you could save. Nespresso. Where i never have to compromise on anything. Where just one touch creates the perfect coffee. Where every cappuccino and latte is only made with fresh milk. And where the staff is exceptionally friendly. Nespresso. What else . Welcome back. Making headlines, Conagra Foods obtaining ralcorp for cash. Ralcorp chose to spin off its post cereal business but we do have a deal. Kayla tausche did report that news over a year ago. That deal finally came to fruition. Its a cash deal. This is a big function of the fact that they planned savings as in theyre going to have cost cutting. Also, reaffirming guidance with the transaction in place. Greeces lenders agreeing on a plan to reduce athens debt and change the debt target to 124 of gdp by 2020. I dont know how people would feel if we did that here. Target was 120 previously. On the u. S. Economic agenda later today, october durable goods at 8 30 a. M. Eastern time. Well bring them to you of course and then at 9 00, the s p caseshiller home price index and we have the richmond fed survey. Lots of data to chew on in addition to this deal. Weve been watching markets this morning wondering where the smart money is going. Joining us on set is thomas strauss, president and ceo of the 12 billion fund to funds group. Thank you for coming in today. Weve been talking with our guest hosts about what the markets expect. You know roger. He brought up this idea if we dont see an agreement as we get closer to december 31st, the markets will react. The equity markets will be more uncertain. Do you agree with that . I would like to be controversial but i cant. I agree with what roger said earlier. I think were tinkering with a carburetor. We should be careful in dealing with issues, consequences of which we dont understand. Weve never had anything like this before. If you think back to Lehman Brothers in 2008 and Lehman Brothers was permitted to fail, did anybody really think through carefully what the consequences of that decision was . I think the answer was probably not. If they did, they miscalculated seriously. I would say in terms of the fiscal cliff, we should deal with it now. Politics should be set aside. Perhaps unrealistically. We have to deal with this problem now. We have to deal with this problem now. If we dont though, weve already seen the dow drop 100 points and rebound 400 points last week. What are we in for . What kind of we dont know. Were in for a great deal of uncertainty. With Interest Rates at zero, you know, a large number of americans are looking to their equity portfolio for their Retirement Income and Retirement Assets and to see that deteriorate further would be terrible. Does it matter if its a grand bargain or small bargain or pushes the whole event down a year ago. This is about confidence. Confidence drives positive decisions of business to invest in plant equipment, to add the increme incripplement incremental person. This is one thing we could accomplish in the next number of weeks and months to really start to reestablish confidence that were on a path to solve this fiscal problem. We talked earlier with roger and with ed just about this idea that if we see the markets react and the lawmakers say we need to have some sort of an agreement and we agree that were going to figure this out at some later date and let everything extend and put off spending cuts and say tax increases are put off at bay too, if that happens, would that make you feel like theres any solutions to this . I think kicking the can down the road is not a solution. I think the American Public voted on december 6th for a solution and we need it. We need it not at the 11th hour. We need it now. If the solution becky, its not likely its not likely that at the midnight hour on december 31st negotiators will throw up their hands and say we cant do it. We need more time. Were going to work on it now for the next few months. Thats an unlikely scenario. More likely scenario is, a, you go over the cliff, that would be amidst huge market instability and you couldnt stay over for more than a few days before markets would force an agreem t agreement, or b, you set up targets on the spending side, on the revenue side and during the lame duck Session Congress passes a resolution instructing key committees in the congress to develop precise legislative steps to achieve those targets. You have a fail safe mechanism so that if the Committee Later fails to do that thats what the fiscal cliff is. Thats the difficult part of it. A fail safe mechanism. The scenario at the end of december where you say we cant do it. Thats unlikely. How much does the market fall . I think youll have a rerun of the t. A. R. P. Scenario in late 2008. Ed is nodding his head. I do think markets will fall. I actually wanted to ask tom a question. I agree with you. I think confidence is extremely important. The question is this. Suppose you deal with the fiscal cliff and you restore confidence for the short run by doing that but you do it in a way that is not conducive to longterm growth. That wouldnt be great for markets either. So my big concern is that, you know, if we look at the past three years and you say, well, markets have done pretty well. Confidence has been pretty high. At least for the short run. If you read it that way. But the question is how much longer can we tolerate very low growth rates and should we accept the structure in the short run that allows for longterm growth thats higher or longterm growth thats lower. Thats what i would want to know. Whats your tradeoff there . I think the markets and americans have basically said that they would like a solution. They want to feel confident. They want a path to deficit reduction over a protract eed period of time. Weve been overspending for decades. We could arg how many. It doesnt make any difference. We need a plan with a longterm solution that people can buy into. Thats the way you restore confidence. You dont restore confidence month by month. Its something people are going to have to believe. You mentioned this is something that we dont know whats going to happen. Anything could arise out of this. With a do you do with your money in the meantime . How do you prepare yourself with your investments . I think post2008, the world became bifercated. There has developed a substantial Mutual Fund Business based on alternative investing providing them with the ability to build out portfolios other than just owning stocks and bonds. 1 is represented by alternative mutual funds. That number is going to grow and giving the mass affluent a chance to build diversified portfolios. On the institutional side, you are being compensated to invest your money and lock it up for longer periods of time. Whether its real estate debt, whether its longshort credit and alternative using bonds outright, there are a number of things you can do to position yourself in a climate like this. We want to thank you for your time today. Appreciate you coming in. Thank you. Coming up, lyfe kitchen expanding. The company ceo and disruptor joins us with the story next. At the top of the hour, finding courage to face the fiscal cliff. Don peebles joins us for the rest of the show. Specializing in fish and game from the great northwest. Hell start investing early, hell find some good people to help guide him, and hell set money aside from his first day of work to his last, which isnt rocket science. Its just common sense. From td ameritrade. Well, having a ton of locations doesnt hurt. And a santa to boot [ chuckles ] right, baby. Oh, sir. That is a customer. Oh. Sorry about that. [ male announcer ] break from the holiday stress. Fedex office. [ male announcer ] break from the holiday stress. When you take a closer look. At the best schools in the world. You see they all have something very interesting in common. They have teachers. With a deeper knowledge of their subjects. As a result, their students achieve at a higher level. Lets develop more stars in education. Lets invest in our teachers. So they can inspire our students. Lets solve this. Heartburn symptoms causedelieve by acid reflux disease. Osteoporosisrelated bone fractures and low magnesium levels have been seen with nexium. Possible side effects include headache, diarrhea, and abdominal pain. Other serious stomach conditions may still exist. Talk to your doctor about nexium. You can stay in and like something. [ car alarm deactivates ]. Or you can get out there with your family and actually like something. The lexus december to remember sales event is on, offering some of our best values of the year. This is the pursuit of perfection. They narrowed a little bit showing down just two points on the industrials and a stock note, watch the shares of yahoo today. The stock touched 19 yesterday. The first time it traded that high in more than 2 1 2 years. Among the catalyst, company is buying back its own stock and more investors are betting on the new ceos ability to turn around the company. Our next company want to disrupt the food chain by bringing Healthy Foods to the masses. The founder and president and ceo of lyfe kitchen brands. We welcome you to the table. Thank you for being here. We were just discussing your calorie counts involved in foods. We should say by the way, not only do you sell these in supermarkets and other places, you have a restaurant. Exactly. And tim cook is one of your big customers from apple. Everything that you make is under 600 calories. Thats in the restaurant. In the grocery the calorie profile maxes at 500. Theres many items in the grocery that might be 200, 300, 400. Were not a diet brand. Were a lifestyle brand that really puts taste first. Thats the key most important thing. It has to taste good. All organic . Where possible organic. Were trying to create a brand thats available to the masses. Everyone can have access to our products, our great tasting products. Where possible organic. Heres the big question. Because so much is organic, im assuming its more expensive. When people talk about getting food to the masses and deal with obesity issues in this country and elsewhere, clearly its about cost. Exactly. Without a doubt. We have to make this affordable so that everybody can afford it. So what does a premade dinner, if you will, or Something Like that cost . As an example, we have prices as low as 2 serving. A family pack. Single portion frozen meals anywhere from 4 to 7. Very affordable. And is the idea to build more restaurants . Yes. Or is the idea to spend more of the time focused on supermarkets . Were trying to do both at the same time. Very unusual. We are growing the Restaurant Program across the country. Goal is 250 restaurants in five years. At the same time, were rolling out in almost every Major Grocery store chain in q1 and q2 next year. How much money have you raised to do this so far . 30 million. Who are backers . Friends, family, associates, suppliers. One investor at a time so to speak. What does the food taste like . If you are looking at lower calorie stuff, what would be a meal if you fed someone breakfast, lunch or dinner . In the restaurant we do burgers, pizzas, tacos, sweet spot of america but we do it in a healthful way. They taste amazing. We have some of the best chefs in the country that worked for well over a year creating taste. Oprahs chef is one of your chefs. Correct. Art smith was our first person that we brought on the team. Its all about the taste. If we can deliver taste we think the solution is very simple. Create products that are good for you that actually taste better than the alternatives. Make it affordable. Make it convenient and assessable to everyone. How much do you spend on marketing . Well, in the future well spend a lot on marketing. Right now its really word of mouth. Free marketing here on squawk. We appreciate it. Ed, you had a question. I have not been to the restaurant. I will definitely plan to do it. You know, californians are very Health Conscious and its a good place to be. I would also think there would be a lot of competition out there. How do you differentiate your product . Theres a lot of emphasis on organic and health food and eating light and right and obviously you guys have found a formula that does differentiate your product. How do you do it . In the restaurant its a very unique experience. Theres so many multiple different aspects that have created a unique experience from the menu to the quality of the food to the interior design to the sustainability. In the grocery, we have a patented product that is very unique. It comes in a pouch. The food actually plates beautifully when you put it out. So instead of the normal frozen experience that you would normally think of, this is restaurant quality food that we can sell at 5 for you. In terms of revenue, i dont know how much you can disclose, more from the restaurant right now or more from the grocery business . The grocery business will accelerate faster than the restaurant because we can be in thousands of locations across the country. But right now . Right now it would be the restaurant. Very quickly the other. Okay. Good luck. Appreciate it very much. Well all have to start eating some lyfe kitchen food. For more ongoing disruptors coverage, you can turn to disruptors cnbc. Com. When we return, were rising above political rhetoric in search of an answer to the fiscal cliff. We have Real Estate Investor don peebles joining us with his idea at the top of the hour. In the meantime, well be back with our guests hosts right after this. From local communities to local businesses. The potential of yelp unlocked. Nyse euronext. Unlocking the worlds potential. To a currency market for everyone. The potential of fxcm unlocked. Nyse euronext. Unlocking the worlds potential. Or that printing in color had to cost a fortune. Nobody said an allinone had to be bulky. Or that you had to print from your desk. At least, nobody said it to us. Introducing the business smart inkjet allinone series from brother. Easy to use. Its the ultimate combination of speed, small size, and lowcost printing. Final thoughts from roger altman, former deputy treasury secretary and chairman of ever corps partners. I was hoping you guys would come in here and we could just draft something that we could send off. I dont get the feeling that heres one thing, roger. I think we should be more optimistic. Roger, one thing that ed makes a point of, growth solves everything. I dont see the democrat side necessarily talking about growth as much as they do narrowing the income disparity. We should be talking about growth. I think the outlook for growth if we solve this fiscal cliff and i think chances for solving it or good, solving it in a reasonably balanced way, growth is better than people think. This solution can inject confidence into the system and as someone said, the cheapest form of stimulus is more confidence and i think that between housing, oil and gas, manufacturing, and the confidence surrounding this solution, we can surprise on the upside in the United States over the next two to three years. It seems like what we will probably settle on because even though we say our feet are held to the fire, i think both sides think we have time to deal with these things. Well get some kind of anemic shortterm solution to getting past january 1st that doesnt do anything longterm. Were not ready for the big deal. Lets hope that we dont get that mouse and that we get a real solution. Theres tremendous support in the Business Community for solving it now. As i said earlier, i think the Financial Markets are a force for that. I think that the biggest opportunity for change comes at the beginning of a new term and so we have a new president ial term starting right now. If you kick the can down the road, the opportunity for change diminishes. It doesnt increase. So this is the time to do it. Seems like the stock market is the market that youre worried about being disorderly. All we get from the stock market are shortterm fixes that get traders past the feks week or the next quarter. Maybe if the bond market some day sits up and takes notice to the 86 trillion that we have in unfunded liability, maybe thats all that can cause people to approach it seriously. Im focused on the stock market, joe, because the bond market we all know historical sense is strong and the extent to which it has the fed. It has all of the extraordinary easing around the world. But to the extent we dont solve this, i think taking eds point, the chances are that the bond market gets stronger because that would be negative for growth and negative for demand. The focus should be on the equity market. The equity market is what intervened in the t. A. R. P. Situation in the fall. Its 1,000 points and it comes back. If we saw a serious extended bond market decline and weve had this how long has it been since weve seen it . Its been 20 years. Longer. Maybe that would do you see what im saying . So many things that would be this shortterm the stock market all you need to do is have bernanke come in and do another round of qe or even the idea that we may have more qe and the market rallies. The problem that weve had over the past few years is that we focused only on short run. Cash for clunkers was short run. Firsttime home buyers was short run. Everything weve done is short run. Debt ceiling was short run fix. All of these have been short run fixes. It hasnt put us on a path to long run high growth. I think what we need to do at this point is get through this and im not i hope roger is right. I hope we can do it in the next three, four weeks. That would be terrific. If we cant do it in the next three to four weeks, i would prefer to see us do it right rather than do it quick. We had an economist this morning who said theres no way we can get longterm agreement over the next several months even the next several years. He thinks this is going to be ten years of piecemeal solutions to hammer this out. If thats the case, what does that do to confidence and growth . We cant get from here to ten years from now without an intervening financial crisis over our failing to deal with this. Our ratings would be adjusted downward. Moodys would lower and Standard Poors would lower again. If we dont address the trajectory were familiar with in terms of the debt to gdp ratio, would tell have a financial crisis. That will effectively mean a loss of confidence in Global Capital markets in the ability of the United States to manage its own finances. Ten years is a millennium. We wont get over the next ten years by continuously putting this off without a crisis intervening. Tony tweeted a few minutes ago that for those who think equity Market Reaction would force a budget deal, what type of a move would it actually take . How steep of a fall in the dow or s p . Remember what actually happened in late 2008. The t. A. R. P. Was proposed. The reception to the idea of the t. A. R. P. Was generally favorable. President bush supported it of course. Secretary paulson and others. Senate supported it. The house unexpectedly voted it down. I remember watching the market. Market fell from memory 800 points on the dow index. Within 48 hours, the house came back into session and voted it through. Do you remember what happened to the market . Upon the vote . Fell 500 points right after the vote. I was watching it. After the vote to pass it. It was absolutely shocking. My point is that the markets forced the house to come back and solve this. We didnt solve hold on. The t. A. R. P. Was successful. In terms of longterm growth in fact, if i can just say, the Banking System in the United States is in stronger shape than anybody four years ago could have imagined. Taxpayer has made money on the t. A. R. P. This was an important thing to do. It worked. President bush proposed it. Give him credit. Im just saying that weve been were stuck at this 2 growth and we have nothing to indicate that were going to do whats necessary. If we do solve this, as i said before, i think the case for growth on the upside over the next two to three years not necessarily the First Six Months is a good case. Roger, thank you for being here. A lot of fun. Well have to do it again. Coming up, we have don peebles joining the program. Fiscal cliff, tax policy and the state of business from a man with skin in the game as he makes his way to the table. Squawk is coming back right after this. Tdd 18003452550 and the streetsmart edge Trading Platform from charles schwab. Tdd 18003452550 gives me tools that help me find opportunities more easily. Tdd 18003452550 i can even access it from the cloud and trade on any computer. Tdd 18003452550 and with schwab mobile, tdd 18003452550 i can focus on trading anyplace, anytime. Tdd 18003452550 until i choose to focus on something else. Tdd 18003452550 all this with no trade minimums. Tdd 18003452550 and only 8. 95 a trade. Tdd 18003452550 open an account with a 50,000 deposit, tdd 18003452550 and get 6 months commissionfree trades. Tdd 18003452550 call 18004339947. Bp has paid overthe people of bp twentythreeitment to the gulf. Billion dollars to help those affected and to cover cleanup costs. Today, the beaches and gulf are open, and many areas are reporting their best tourism seasons in years. And bps also committed to america. We support nearly 250,000 jobs and invest more here than anywhere else. Were working to fuel america for generations to come. Our commitment has never been stronger. Who will have the courage to lead us away from the fiscal will lawmakers rise above partisan politics and work out the compromise that america deserves . Well ask guest hosts ed lazear and don peebles what it will take. Squawk box begins right now. Welcome back to squawk box here on cnbc. First in business worldwide, im joe kernen along with becky quick and andrew ross sorkin. Were tackling the debt crisis to try to work out a compromise deal with ed lazear and don peebles. They may disagree less than i dont know. Well see. I dont want to put words in dons mouth. Were kicking off our rise above road trip. Reporters are visiting the home states of congressional leaders. Well ask constituents if their elected representatives are rising above to get a deal or stuck in party politics. Well start with House Speaker john boehner in ohios eighth district which is right in the cincinnati area. Northern is where his father had a pub with 11 children including even though hes painted as a waspy entitled guy, he was one of 11 kids. Andrew . Lets get to Morning Headlines this morning. Were watching european equities. Greeces lenders agreeing on a plan to reduce athens debt and change the debt target for the country to 124 of gdp by 2020. Target was 120 previously. U. S. Equities at this hour take a quick look. Dow looks like it is off slightly. Seven points if we open up right now. S p 500 would be off marginally. Nasdaq up as it has been in recent days. European set to delay the introduction of stricter capital rules. The eu preparing to follow the u. S. While it lobbies for reconsideration of the u. S. Stance. The delay could push back basel 3. It was meant to be started in 2013. Well see when that will begin. Online sales jumping by 28 on cybermonday. According to ibm tracking data from retailers. Sales expected to reach 1. 5 billion. Well get numbers tomorrow morning. Becky . As we mentioned, lawmakers continuing to work on the deal to avoid fiscal disaster. Who will have the courage to take the lead on a compromise deal . Ed lazear has been our guest host for the last hour. A senior fellow at the Hoover Institution and former chairman of george w. Bushs economic advisers and joining us for the rest of the show is don peebles, chairman and ceo of peebles corporation. You have heard talk about what needs to happen. In your vision, what would washington do right now . I think that ultimately what we should do is have shared sacrifice, shared solution. I dont think relying on the top 2 to pay this entire bill is a realistic expectation nor would it be helpful to the economy. We have to have balance and significant spending cuts and i think that means across the board. Other than Social Security and medicare, i think that we need to look at entitlements. I think the other half of the country that pays no income taxes ought to share in some way. Getting rid of the bush tax cuts for everyone . I think that is probably not going to happen right now. Politics of the moment. I think what does need to happen is entitlements. Not at the lowest end. Those who are suffering who need a helping hand we need to take care of them. Were a compassionate nation. Those who are at the middle income area, they can afford to do less. They can pay more in taxes or they can give back some of these other entitlements. There has got to be some corresponding sacrifice because for example those who are entrepreneurs and thats the world that i live in that are entrepreneurs that are out here building businesses and keeping businesses open through one of the most difficult times in our nations history, theyre looking for shared sacrifice. Not that the burden all goes to them. Thats what congress is going to wrestle with. I think thats where if republicans want to carve out some ground to rebuild politically, i think thats a place to start looking. I think that our president recognizes i know he recognizes contributions to Small Businesses and there will be some support for a shared sacrifice. Roger altman in that chair in the last hour suggested that you should see a balanced approach. It should be Something Like 1 to 1 or 1. 5 to 1 when it comes to spending cuts versus revenue increases. Is that a number that you think is in the right realm . I think 1 to 1 or frankly i think we should be cutting a little more than we should be increasing revenues. 1. 5 to 1 if 1. 5 came from i think 1. 5 to 1 would be a resounding impact on confidence. Lets talk about that number. Ed, 1. 5 to 1. Where does that get you . The way i think about it is somewhat different from that. The average government size from 2001 to 2008 was 19. 6 of gdp. We shot up to 24 of gdp in a matter of a year and we have taken that as a given. Hasnt it come back down to 22 . Right now its back down to 23. 5 and thats the longterm forecast. The question i think that we have to think about is how big should government be . If you take the period 2008 during the financial crisis, we went up to 28. 8 . Thats a sustainable number, a longterm sustainable number. That was 30year average was 20. 8 . Theres no reason why we have to take as given this very high level of expenditures by the government. What i would think we need to do is think in terms of longterm target on the size of the government that is both realistic, understanding the demographics of change and understanding the economy has changed somewhat and get back down to that number and then figure out how to finance it. The other part is that revenue over the time period is 18 of gdp. 18. 3 . 20. 8 in spending. The growth that weve seen traditionally has taken care of that. If we look at lower Growth Numbers though, those numbers have to be squeezed too. Thats right. So historically our deficit has been as you just pointed out 2. 5 and you think, wow, thats not great. Its not great but it pales by comparison over the last few years. We cant be in a situation where were spending at the level that were spending now. We have to figure out a way to get back to where we were at least in terms of longterm path toward a more responsible spending pattern. So i think we can do it. I dont think that adopting a sort of 1 for 1 or 1. 5 for 1 is the right way to think about it. We should think about what the size of government should be and what we need to do to finance it. It is the way that washington is thinking about it. Every deal laid out is how much is spending cuts and how much is revenue increase. I wont concede to politics of it. The logic is what we should focus on. Look at the evidence on whats worked in the past and whats worked for other countries. And what is the appropriate thing to do. Not whats politically feasible and whats politically sound. I understand those things always matter. You have to start with whats right and then let the politics play out. Do you get frustrated heres what frustrates me with all of the things that are happening, its the single minded focus on the 250 and above going back to 39. 6. Thats what frustrates me is that raises 80 billion a yea 80. Weve got a 20 trillion a year deficit. I would like to see what people would want accomplishment in terms of entitlement reform or progrowth policies. So many things to think about but little emphasis on that speech. As a Business Owner when you watch that, isnt there anything else in your universe that makes sense to talk about other than letting it expire on the high end . I think that this idea of focusing on the 250,000 and above which is not the high end in new york city for example in San Francisco and los angeles and washington d. C. Think about all of the things we with talk about to get back to 4 growth. Its a symbol. Its become a symbol. We need answers here. I agree. I think what its become is a simp symbol and gesture that those making more should pay more. Its been a distraction. In fact, if we as you just pointed out if we let them expire on everyone at 250 or more, it wouldnt make a difference and negative impact. Negative to small Business Owner. Thats one of the points thats gotten loss a little bit is how small and medium sized Business Owners pay taxes. I pay taxes at the individual level because all of our businesses are either limited liability companies, limited partnerships or theyll say its only 2 . Im creating jobs. Its 52 of the revenue. Its a big part of the its going to be somewhere if were going to get out of this slow growth pattern that were in right now, were going to have to rely upon Small Businesses to create the jobs and theyre going to create about 80 to 90 depending on who you talk to of new jobs. You disagree with most of the stuff. I disagree with the issue in terms of focusing on increasing taxes. I think thats a wrong message to send in an economy why would you be for closing deductions . Which by the way has the same effect. If you are talking about trying to grow the economy, thats the argument Small Businesses doesnt have the same. Go ahead. Finish your point. Addressing deductions is basically deductions are another form of entitlements. More of a way to support pet causes for lawmakers. They have minimal impact when revenue starts growing. Businesses need more money to reinvest and pay employees. I would think that the president could be better served saying, you know what, this Corporate Tax rate is too high. Theres 2 trillion abroad. You hear him saying that. Not really. He has said that. He didnt say i ran on that. I got a mandate to raise taxes on the rich. He ran on reducing income taxes on those people who make 250,000 or less. Thats his message. Not raising taxes but reducing taxing. Thats not a progrowth policy. Frankly, i think part of the issue also is that we keep lumping all of these into one. Reducing taxes for 95 of the country is a good thing. Thats a good thing. What are we going to do with other 5 . And what are we going to do about cutting spending . No one is talking about 63 of the budget. Everyone is talking about this other amount. No one is talking about hardcore cuts. In his speech tomorrow, how much is going to be an emphasis on lowering Corporate Tax rates and how much of the emphasis is on cutting spending versus i got a pen here. The senate has a bill that extends them for all of the folks you have posturing right now. I know. Weve had posturing for two years on this. Weve had posturing for decades. The house of representatives is the most political body in the country. It is very political. They run every two years. They get one year to try to get anything done and then theyre in perpetual reelection mode every other year. The reality is that you have a lot of politics. A lot of political theater. Its not going to come from the house. It needs to come from the president. You have a divided congress. Its not going to get us where we need to go. Well see the president compromise. Well see how much he talks about 28 Corporate Tax rate. I doubt if thats going to be the core of what he talks about. Well see gradual transition from the activist candidate, president obama, to the leader and commander in chief president obama who is more of a person who is going to get things done. Saying that for five years. 4 1 2. 3 1 2. All right. When is it coming . It is slowly coming. Change slowly comes. All right. Well continue our guest host ed lazear and don peebles. More throughout the hour. Were kicking off the rise above road trip with a trip to ohios eighth district home of House Speaker john boehner and ask his constituents if they are being faithfully represented. 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The price is postspinoff post if you will. Shares of acadia soaring this morning. A drug has met end points in a key parkinsons disease trial. It has moved 152 in premarket trading this morning. It was 130 million so upwards to where it will open which is much higher. You can do the math. 150 more than 130 million. Probably over 300. This week john harwood and jane wells are visiting the home states of House Minority leader nancy pelosi. They are also going to see House Speaker jo eer john boehner, ha reid, theyll go to vegas, wont hear about what happens there, and Senate Minority leader Mitch Mcconnell. They can go visit him south of cincinnati. They went out to ask constituents who are we talking about . Citizens. Local Business Owners. Large company ceos. Whether their elected representative is representing them or not. John harwood kicks things off with a visit to Speaker Boehners home state of ohio. Youre not there yet, are you . Where are you going specifically . I have been there already. Here in washington the fiscal cliff is an abstract policy debate but in the southwest ohio Congressional District of john boehner, the House Speaker, which i visited last week, a tip back into recession would cause real economic pain. Middle town and rest of southwestern ohio is working its way back economically from the longterm loss of manufacturing jobs and troubles in the auto industry. The last thing this area needs now is another economic setback from the fiscal cliff. House Speaker Boehner and his colleagues in the congressional leadership have sounded conciliatory notes about prospects sounds like good news at the local chamber of commerce at middletown but only up to a point. I want to be confident. I want to be optimistic. I think i would rathering reserr be reserved at this point. Steve has a Petroleum Distribution business that like ohios economy is doing well. Hes known boehner for years and believes the speaker wants to make a deal with president obama to avoid the fiscal cliff and impact on average families but hes seen washingtons dysfunction and has his doubts. Hes somewhat just like the president. Time to go ahead and do your job. Reporter Speaker Boehner is secure enough in his own district that his constituents will give him a free hand to negotiate. His bigger challenge is pulling together republicans from districts across the country behind any deal he ultimately strikes with president obama. And thats the process that were going to be watching over the next several weeks as john boehner and eric cantor, the majority leader in the house, try to figure out what sort of deal they can support and then try to sell it with their members. Did you, john i always ask this same question. Did you have any of the chili . Yes. Did you have gold star or sky line . Sky line. We did sky line. We got a three way and a five way. Chilly spaghetti and cheese onions and beans. Correct. I dont go for full five. I tweeted out a picture of the plate. Im surprised you didnt respond to it or your hair or whoever your ultraego is. Im souring on tweeting. I havent tweeted in weeks. I got smacked down saying the four way is the sweet spot. Beans is overdoing it. Later theres issues. But how great was that chili dog . It was awesome. That also triggered another debate because a lot of people from michigan were saying that the cheese coney at skyline is a knock off of the coney island hot dogs this detroit. I did not know that. Overall, you know, i like this going out to see the representatives but i dont want us to get into the notion i dont know. Seems to put the onus on the house and the senate for why were not getting a deal. Are your representatives representing you . Are we asking the question is the white house representing you the way you want to be represented as well . Of course. Of course. Its just that hes got the whole country and its not easy to go to one place if you know what i mean. As i said, your track to the center, ive been watching it as it plays out. Why are you laughing . You know what i think caused it . You visited a flyover state. The wheels touched down in one of them. Dude, i was born in one of those flyover states. Which one . Kentucky. You guys are very close. Wow. This is why the relationship between you youve never admitted that, harwo harwood. My report later in the week will be from my birth place. Are you a coal miners daughter . No. My dad was a reporter in kentucky. Which town . Well, in louisville and also in frankfurt where he covered the legislature and Mitch Mcconnell once reminded me, his nickname when he covered the legislature in kentucky was black death. Thats because when reporters saw him coming in the capitol, they ran away like the black death was upon them. Wow, john. I thought you were most of the time you spent in d. C. I thought your family moved there. I thought your family moved to d. C. , didnt you . We did. We moved to d. C. When i was 5 years old. Youve got the solid first five years. When black death was assigned to cover the new administration of John Fitzgerald kennedy. John, thank you for that. Well look forward to the report from your hometown soon. Breaking economic data. Durable goods numbers coming in at 8 30 a. M. Eastern. Well bring you data and Market Reaction. Make or break time for retailers. Numbers behind cybermonday and black friday and what it means for the Holiday Season thus far. Y different park Service Units across the United States. The only time ive ever had a break is when i was on maternity leave. I have retired from doing this one thing that i loved. Now, im going to be able to have the time to explore something different. Its like another chapter. Or that printing in color had to cost a fortune. Nobody said an allinone had to be bulky. 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I was going to say a beautiful shot but a gray looking shot of washington, d. C. Right there. Were just seconds away from durable goods data for october. We have Steve Liesman here saying theyre going to be what did you say awful . Going to be awful. A lot working against it. Bad cap ex and you have sandy in there. Rick, the numbers. Not as awful as one would suspect. We are unchanged, which is a lot less awful than expectations of down. 75 of 1 . Last month which was unbelievably strong at 9. 9 remains pretty darn strong at 9. 2 subtle revision. Lets do the takeouts. Lets take out transportation. Were left with up 1. 5. Thats really good because we see that aircraft worked in favor of this subtraction. Now lets look at the orders. Nondefense, exaircraft, business expenditure for capital goods we Pay Attention to was definite improvement. 1. 7. Thats over 2 better on an absolute value basis than we were looking for. One fly in the ointment, if you take the last look which was unchanged which didnt make us happy for september is now down 0. 4. If we look at shipments versus orders, that is down but much less than expected down 0. 4. So to summarize, if this month is give back to last month, it could be a lot worse. Absolutely zero change in preopening equities which are unchanged. The s p may be up a little bit. Dollar index unchanged. Interest rates may be up a basis point. Thats really about it. Were a little bit gray here. You said were gray in washington. I can believe that. Back to you. Dont go anywhere. Well get more on this data. Steve liesman, you said this was surprising. So having eaten considerable amounts of turkey last thursday, let me start eating crow. Im shocked by these numbers. I did not read a single positive outlook on this number. There were so many things working against it. Beginning with the general downtrend in Capital Spending that weve had and i think rick mentioned this. The capex number, 1. 7 plus. First month of the quarter has been generally a negative quarter. We had a little bit of sandy in this number. Factory shutdowns. Boeing numbers were supposed to be down relative to the prior month and they were a little bit. You still managed to do unchanged. Where is the strength . Communication strength. General machinery strength. The number is so volatile but what we have been noticing was this tremendous dissidence between whats happening with the consumer and whats happening on the business side. This is a onemonth snap back. One thing that some economists have pointed out is you very rarely have capex being slashed without employment being slashed. We havent seen the employment being slashed so maybe there is hope for capex. We havent seen hiring. We have seen hiring in the sense that weve been doing, you know, 150, 160. No. Hiring is the same. 4. 2 million per month. 150, 160 a month. 150 per month is barely above treading water. Remember, population went up by 10 million since 2009. We should have had 5. 5 million jobs. Weve had less than that. Employment to population ratio fell by two percentage points. Used to have 61 of the country working. Now have 59 of the country working. Things are flat. This number to me is indicative of whats happening. Were flat. Were basically just moving along treading water and muddling along. To me its not a surprise. I guess i dont agree with your characterization. I dont disagree with the numbers. Were doing better than flat. We did enough growth that if we do markup on thursday from 2 to 2. 8 , there was in fact enough growth in the economy to bring down the Unemployment Rate by a couple tenths. That was not really the outlier it was portrayed at the time. A decline in the rate. Most studies i have seen suggest that half of that is because of demographics and ageing of the population and other half is people who are discouraged and walking away from the workforce. My point is that its not gangbusters but its also not flat. Its mediocre to better than that. I think maybe a semantic argument. It may be. When i say flat, if you have a growth rate that deviates from the longterm trend, were at 2 growth right now for the past three years, longterm trend is 3 growth. Not only are we not recovering but were move further and further away from the longterm trajectory. To me thats flat at best. Youre the expert on this, ed, which means that i am more than happy to argue with you. The 3 longterm trend according to ben bernanke may be too high, right . And so the issue make it 2. 6. Its not an idle issue, ed. The issue of what is trend is key to policy. What policy are we shooting for . Whats interesting about both Political Parties and has been for a long time, both are shooting for 3 growth rate. They differ on how to get there. The question is 3 the number to shoot for . Should we be happy or content with a 2. 5 underlying growth rate or even something closer to 2. 25 which was really what i thought was the suggestion inside bernankes speech last week was that maybe trend is lower, which means, by the way yuck is the right term. Good for you, becky. Theres no reason why we have to be satisfied with 2 growth or 2. 2 growth or even 3 growth. Theres nothing in the formula that says you couldnt have 4 growth for a sustained period of time. Whats a sustained period of time . Two decades. You could certainly have that. Thats possible. Can we just tell people, ed, what the components are so they understand. Whats really interesting is potential growth is easy to figure out. Its productivity plus growth in hours worked. Now tell me what productivity is going to be and that has to do with population and growth in the workforce and how trained the workforce is. So, ed, i would submit that some of what you say is absolutely within our control. Other parts are not. Lets say you have an increasingly uneducated workforce. We have problems. They work against each other. You take more and more people and put them to work with fewer and fewer skills, right . This gets into it. Its all about policy. Whats the policy of the government . You said it right, steve. What we need to focus on is were not going to have population growth as a solution to this. That doesnt help per capita income. You need technological change and human capital. Absolutely. So when we think about this, if i turn to don and say what is going to create productivity growth. You think about it from a business point of view. What creates productivity growth . What makes factories more productive and makes services more productive . What kinds of things would you think about there if that were the key question. That is the key question for longterm. One of the things of course is we need more demand. I think we need a better one of the challenges were having in markets that we operate in in south florida is finding skilled workforce. Stop right there. Thats a key issue and my question has been whose responsibility is it to provide skilled workers to business . I saw a story the other day where a company got so frustrated in a lack of skilled workers, it decided to train workers. I thought why have we been waiting for this for so long . Why arent more companies training and getting skilled workers they need. The economics and also the time. Economics of not having skilled workers doesnt work for you. A story in the New York Times six or eight months ago about how law firms are frustrated that law schools dont do anything to teach law students how to be lawyers and they have to train lawyers when they get there. Is our education set up properly . Is this a government responsibility . Is it a business responsibility . We just its a society responsibility. We discussed how key it is to our growth rate. Were responsible for educating our children. The question is are we educating them in the right skills and in the right training center. We are going to thank steve. We havent solved the problem. How do you move on . Theres so much to discuss. What do you want to do . Thank you very much. I want to point out theres more to talk about. Rick, we appreciate it as do steve. Thank you for coming on. When we come back, grading the retailers on holiday performance so far. Well bring you the winners and losers from black friday and cybermonday right after this. Px welcome back to squawk box everyone. With the Holiday Shopping season now in full swing, its time to get a better read on the pulse of the consumer. Joining us now is carter cunningham. You may not know the name whale shark but you may know coupon sites like retail me not. Com are part of his universe. Thank you for joining us this morning. Thank you, becky. Good morning. So you run a lot of these big coupon sites that have a lot of people coming in trying to figure out what they can get in terms of discounts from these retailers. What kind of traffic did you see over black friday and the weekend . For the fiveday period from thanksgiving through cybermonday we saw about a 36 increase year over year. Thats on a big base. Last year we had 300 million visits. This year we think well have 450 million. Its big numbers. 36 increase is substantial. Its major retailers that offer discounts. Companies like target or a sears . Absolutely. Currently some of our best offers are amazon, kohls, best buy, these are Big Companies you have heard of as well as Smaller Companies you may be less familiar with. If you are seeing an increase in visitors, does that mean that does that mean good things or bad things about the American Consumer . They are looking for deals. Are they smart shoppers or shoppers who wont be able to spend otherwise . You know, i think for us what were seeing is people preloading a lot of spending so instead of waiting until the last minute retailers have gotten smarter saying well offer 30 to 40 off but only for a twoday period or threeday period to get that deal you have to act now. I believe were seeing shift of consumer spending. The retailers have gotten smarter too. Theyre not stocking as much supply thinking they wont have to offer deep discounts down the road. What does it all add up to in terms of how we quantify or qualify this Holiday Shopping season . For the value shopper, which is what we attract, the people that want to save money, this was a great Holiday Season. They saved a lot of money. The average consumer saved 26. What kind of deals with people expect as we get deeper into the Holiday Season . I think youre going to see specific merchants really start to heavily discount things as they need to clear items off as we approach christmas. We typically see around the 20th or 21st is the last day Ecommerce Companies can ship and still make it to your house and so you see a little bit of acceleration around that period as well. Youll see best deals kind of in that 20th, 21st period of december. If you had to pick winners and losers on the retail front, who would a few of those names be . Some of the best deals weve seen most traffic weve seen so far have gone to some of the big names. Amazon, sears of all things. Kohls. Best buy. Macys. All have done really well. Weve seen travel and jewelry off on our site. I dont know if thats indicative of the economy but thats on our site. Coming up, the latest buzz from wall street. Well check in with jim cramer at the New York Stock Exchange next. Ready or not, stock of the day is coming up. Youre watching squawk box on cnbc first in business worldwide. [ penelope ] i found the best cafe in the world. Nespresso. Where i never have to compromise on anything. Where just one touch creates the perfect coffee. Where every cappuccino and latte is only made with fresh milk. And where the staff is exceptionally friendly. Nespresso. What else . We believe the more you know, the better you trade. So we have ongoing webinars and interactive learning, plus, inbranch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. Our teams have the information you want when you need it. Its another reason more investors are saying. [ all ] im with scottrade. Welcome back to squawk box. Look at futures. Well open the day a little lower. Dow jones off about six points. S p 500 off a point. Nasdaq up but only marginally. Lets get down to the New York Stock Exchange. Jim cramer joins us now. The news of the morning, ralcorp and conagra. What do you think . We thought it would happen before. It didnt. The ceo of conagra is trying to instill a growth culture into a food company. We know thats hard. Hes done a remarkable job. Stuck with a great dividend the whole time. This is huge now that he can nail this. Private label, store label so to speak, is the only real growth category in food other than Healthy Foods, whole foods kind of thing. I love this deal. I love it for both. I love it for both companies. Conagra is at a new high or close to a new high. Its a new high today on news of the deal. The acquiring company. This is a fiscal cliff motivated deal. People want to get these things done. Theres a lot of companies that say were going over the cliff. Lets just ring the register right now. Do you give credit to ralcorp for holding off for this long . Yeah. A great deal maker. Ralcorp has always been a company that put shareholders first. A long history of doing so. This was just great. Held out for the price. It doesnt matter. In the end, conagra is the winner where kelloggs is happy with the growth from buying pringles and people were critical of heinz and downgrading does it doesnt have growth, this is good news. You just said were going off the cliff. I said the sellers think that. What does jim cramer think . If Grover Norquist wins, we go over the cliff. Remember, there are a lot of democrats surfacing in this patty murray mode. We need to get taxes up. Lets go over the cliff. Then we have norquist and as far as i can tell norquist has not lost his hold on the party. Thats a the Washington Post fantasy. Norquist is unelected guy named grover. Its what he can deliver with the voters that scares these guys. Who is worse . Eagles or the jets . I was at the eagles last night. This is a very hard call. When you have three offsides calls right in a row when the game is in doubt, i got to tell you, this is an amazingly difficult question to answer. I got to punt on this one. Its so hard. Hail to the chiefs. Thank goodness chiefs are there to make everyone look good. I didnt see the jets game. I did look on youtube. Thats really a bad metaphor. Running into your own guy and falling back in for a touchdown. That sort of sums it up, doesnt . Eagles went on vacation very early on in the season. So far the vacation has been just okay. I want my money back. This has not come up for eagle fans that are some of the worst, is it, jim . I have to tell you at last nights game, the place was twothirds filled. Half of the people left by halftime. The booing was intense the whole time. They didnt throw snow balls did they . If it was snow it would have been a blizzard of snow balls. Its very unfortunate that its a dispirited place. Brian sullivan doing his show from there was the highlight. Well leave it there. We look forward to seeing you in a few minutes. Coming up, well try to reach Common Ground on a deal to avoid the fiscal cliff. The last word from our guest hosts ed lazear and don peebles is next. Tomorrow on squawk box, 30 minutes with the oracle of omaha. Warren buffett will join us to talk about the looming fiscal cliff and the buffett tax. You cant afford to miss squawk box starting tomorrow at 6 00 a. M. Eastern. If you think running a restaurant is hard, try running four. Fortunately weve got ink. It gives us 5x the rewards on our internet, phone charges and cable, plus at Office Supply stores. Rewards we put right back into our business. This is the only thing weve ever wanted to do and ink helps us do it. Make your mark with ink from chase. You have to dig a little. 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Lets invest in our teachers so they can inspire our students. Lets solve this. Stock of the day. Acadia shares soaring this morning. Its a very small market cap company. It is up as you can see now about 203 . It met its primary and secondary end points in a key drug for parkinsons but its for psychosis that happens in latestage parkinsons. You learn if you do this job enough, you learn some things. In late stage parkinsons theres some symptoms, hallucinations that are common among most patients that involves jealousies and delusions that happen and normally its very hard to treat. In this case the end point was that a third of the people that were treated saw their symptoms go down quite a bit versus 18 in patients receiving a placebo. Thats huge in terms of quality of life. I thought parkinsons my dad actually had it. I thought it was more the tremors and stuff. I didnt realize that it can be almost a psychoses. Gentlemen, we brought this idea together figure we would have representatives of both sides of the aisle come together to figure out if they could reach an agreement. Could the two of you sit down and hammer something out . Absolutely. I think were both reasonable people. Were both looking at the big picture and looking at the consequences. Were not activists. You have three minutes. Go. Give a deal together that the two of you could live with. I agree with ed in terms of we have to fundamentally determine as a government how much were going to spend and what role the government is going to have. Couldnt you both sign onto simpsonbowles . Its a step in the right direction. My problem with simpsonbowles is that it still doesnt focus on high growth for the long run. Actual growth. We need to get back to that. You think we should do three to one spending versuses t tax increase . We should have a target for the size of government and fund it in the most efficient way possible. I think in the political theater that were dealing with in the political reality were dealing with, i think it should be 1. 5 to 1 on spending cuts if well look at those numbers. Thats the wrong way to approach it i think. Ed is right we should look at just like i would look at our business. What does our business want to do . What services are we going to provide . How much of our revenues will we spend to provide those services . You would be off the reservation if you didnt spend 1. 5 to 1. By the way, as a minimum i cant believe were talking 1 to 1 and 1. 5 to 1. 25 of gdp being spent on government, we know we need to shrink that. We cant just shrink the growth of it. We certainly have to come out of this we need to say the pain has to be shared but overriding thing we need to do is shrink the size of government. Agreed. But the house of representatives is the wrong place to accomplish that unfortunately. Whats the right place . I think collectively if the senate had gone the other way a little bit i think the house of representatives will be too much of a reactionary body. I think the president should lead and should lead us in three directions. One is fundamental tax reform and trade agenda, we need to move to look to neighbors to the south and to the pacific, and the third thing is much more sensible policy on regulation which means cost benefit analysis. You wouldnt disagree with any of that . I dont disagree with that. We should add more. The president has to come up with a comprehensive plan for Small Businesses and to create jobs. I look at new york citys employment numbers for last month. Do you know that the private sector job growth decline. There was a lot of about 3,000 to 4,000 jobs in the private sector. It was the public