Transcripts For CNBC Squawk Box 20121212

Wrong. Poor ross. All right. Power players coming up. No 13th month . In the world of investing. Carlisles David Rubenstein, steve shoresman blackstone, venture capitals marc andreesson, and jamie dimon. Look at that in addition we have jerry webb. Make us all the rest of us feel we have one youre an economist or something . You play on to have you can think about the 121212 thing in the meantime because youre good at math. Yeah. All that stuff. All right. As we move closer to the edge of the fiscal cliff, every move is being magnified by the markets. President obama and House Speaker john boehner spoke by phone on tuesday, exchanging new proposals. The president gave boehner a revised offer on monday, reducing his demand for new tax revenue from 1. 6 trillion to 1. 4 trillion over ten years. Boehner responded with a plan that largely sticks to his original offer a week ago. Reports say the white house has told republicans it would include an overhaul of Corporate Taxes in any budget deal. That hasnt been done before. In an exclusive interview with Barbara Walters of abc news, president obama says he still expects a deal before the end of the year. I remain optimistic that there are enough people of goodwill in this town that recognize our economy will be much better off. American families will be much better off if we get this done. The most important thing we can do is make sure that middleclass taxes do not go up on january 1. And im pretty confident that republicans would not hold middleclass taxes hostage to try to protect tax cuts for highincome individuals. Prediction are you going to be able to raise taxes, yes or no . Oh taxes are going to go up one way or the other. They are . I think the key is to make sure that taxes go up on highend individuals like you and me, barbara. We can afford it. You can see the rest of that interview on 20 20 this friday. Markets are watching every move out of washington. The industrials opened higher by 45. The nasdaq would open higher by 10. The s p 500 would open higher by six. And the fed wrapping up its twoday meeting this afternoon. Its latest policy statement is expected at 12 30 eastern. That will be followed by a News Conference at 2 15 p. M. The fed is expected to announce a new round of bond purchases as its last program known as operation twist set to expire at the end of the month. Well have special coverage at cnbc of the decision and Ben Bernankes News Conference starting at 12 15. Well talk to steve leaseman live later in the program. Another story that you heard about yesterday, the you know, violence and Death Threats and blood and guts. Big implications for big labor. That is michigans decision to become a righttowork state. Thousands of protesters and Union Members converged on the capitol in lansing yesterday to object to the measure that would bar unions from requiring workers to pay membership dues and to join the union. Governor snyder signed the measure into law. Shouldnt the unionsing putting out a proposition that workers want to join a union . And shouldnt workers feel free to make that choice to say their dollars are going to the union or not based on they feel theyre getting results . So thats what this is really doing. So thats why i view this as proworker, not antiunion. The righttowork clause regarded as a big blow to organized labor which has seen membership decline across the country. Down to private sector 7 . You think overall, isnt it, 7 . More than 50 of those work for the government. 7 and more than that if you go up, like i think its 16 if you include 13 if you include public, which is where it is. A contentious issue. They point to what happened in indiana. You know, more jobs, better better economy i think the the righttowork states seem to be it seems to have been born out that its better for the overall state. Better for all the occupants in the state when you go to righttowork. You got somebody in the white house whos a big friend of labor. And yet they are losing on the state level in a lot of places. And he named some comment made a comment. I cant remember how he characterized what righttowork laws do. But it seemed like sort of an overstatement of what were talking about. I guess the only other side is this oldfashioned collective choice view or free rider problem. If you want to pay dues, i get the benefits, i dont have to ride along. Its not like its a completely onesided argument. Right. You know where your contributions are going. You know exactly where theyre going. Theyre ending up in someones campaign whos a democrat. And and youre going to help elect what if youre a republican and work in the union and you dont want your union dues sent to its a matter of personal freedom you also have to have the higher negotiators to listen, i dont i dont belong in a union. Im not going to make a huge listen, i values it hire negotiators who will sit down with management. I want to hire competent people and lawyers a better option for all workers is to have the ability to say, im going somewhere else. Dont need anybody to negotiate for me because that would be a wonderful thing. And thats how its trending. Talking about child labor and stuff like theres Civil Service laws that protect a lot of workers rights at this point. And if were competing globally with wage rates in the world, where theyre not 50, 60, 70 an hour and you want to be competitive globally most controls, wage or price controls, dislocate the markets. And if you hurt the companies, youre also hurting their ability to hire more people and compete and to grow and everything else. I think in the age of big streelg, when you think of huge auto plants, it wasnt manageable st. Clair lewis and being the nasty stuff. I mean, if im running a huge auto plant and i got thousands of employees, i dont want to have a bunch of different deals. I want one deal and want somebody competent on the other side or negotiating that deal for me. The decline in the unions in this country have had nothing to do with laws being passed really. Its been sort of falling under their own weight. It doesnt entrepreneurship. Dividing up. And going into a servicedriven economy where its not big industry didnt fall from 50 to 60 to 70 . It was an effective thing. Exactly. The idea of coercion. I mean, i think the governors right. If you believe they provide value, youre going to put up the money. It reminded me on the waterfront. I dont want to talk about it on tv. Anyway, fast money halftime rick snyder Governor Snyder not just talking about you unionized at work . Union . No. You guys cant agree on anything. So right. The fast money are they unionized . No. The fast money Halftime Report will get 121212121212. Lucky. 12 00 hour, the 12th minute, and the 12th second. But im told that theyll probably be in commercial. Which would be a real tragedy. I dont know whether they can change their break structure today. I would want to be there for 121212121212. Do you know who died . A couple of hours ago . Robby shankar. 92 years old. Really . I dont think were allowed to play any beatles music. Although he didnt george learned how to play. We better try and check the markets. Well try to play something. The most famous indian musician of all time. Yoga they do . A from india. Like the movie. He almost won guess what movie he almost won an oscar for what . Not hard to figure out. Gandhi. Oh. Okay. All right. Its going to be 100 years until we get to 131313. Well add a month next year. Rob, was that you . Tell the truth. Hes referring to copy he read earlier. Am i wrong, is there a way in 100 years . How, what would it be . 1212 of 2112. Oh isnt all right. Lets check on the markets. Were going to roll so i can see whats first. Usually the futures. Futures now in positive open. Not next year. 100 years. Right. That you know, fractional gains, half a percent gain,. 3 gain for the dow. Nasdaq would rise. 4 . Lets show oil. Along with all the tension going on at the opec meeting in vienna now. You know, wti higher by 41 cents. 86. 20 per barrel. London, 108. 53. A gain of. 5 . The treasuries and tenyear yield now is very close to 1. 7 . Decline of 1 8 point. The dollar is mixed across the board. 82. 84 for every dollar. The pound would cost you 1. 61. The price of gold this hour is higher by 5. 20. A gain of. 3 , 1,714 per ounce. Time for the Global Markets report. Kelly evans is standing by in london. Michelle, hello. You might be here 12122110. I think the date is 1221 . Today is 1212. 1221 it when the world ends. I think weve only got nine days left of the Global Market report. Im worried about the fiscal cliff once we get the world which is worse . The world ending or the fiscal cliff . About the same i think. One could bring about the other. I think its no accident theyre both approaching. Thats how im going to read the tea leaves. As you see, a mixed picture this morning. People mostly waiting on the fed decision later today. The major boards green, the ftse adding. 25 . The same for the xetera dax and idex. We saw the news of montis resignation on monday. Theyve recovered from then. Wanted to show the ibex 35, up. 3 in spain. There was an italian debt auction that went over well. Thats helping sentiment. The owner of zara, one of the strongest retailers in europe, out with sales. You see that their shares are down. Even though their ninemonth sales figure was up 17 year on year, they said so far in the Fourth Quarter that figure was slowing to something in the range of 15 . So still a strong set of figures from inbitex. If youre concerned about the consumer, but not as strong as we have seen in the past. Thats whats happening in spain. I want to draw your attention use guys were talking about unions. Heres a union story that tells something about the rebalancing in the eurozone. Potentially germany. We know with the xetera dax up. 3 . And almost 30 this year. Investors see if the euro project hangs together, its going to mean renation in germany. That is some wage inflation, some price inflation. The Public Sector union verde, powerful union, along with some others with its contract up at the end of the year is asking, guys, for a 6. 5 pay rise next year. It got about 2. 5 for the last couple of years. It is on the Public Sector side but also an example of what kind of pay hikes we may see flowing through to the german economy. If that helps support spending, despite weak Industrial Production figures and concern about growth prospects, there may be some rebalancing toward the german consumer taking on more of the heavy lifting across the eurozone. So one to keep an eye on, guys. Thank you very much. We shouldnt see that as the unions pressuring they probably are pressuring for higher wages, but theres been pressure on germany to drive more inflation in germany to help lift the southern part of europe. The outgoing president or chairman of the bank of england said, you know, if youre going to have countries with big deficits, reduce their deficits and people with big sur pluses will have to reduce surpluses. He didnt say germany, but thats who and pay everybody more money. They can buy stuff and go back on vacation in greece and all that stuff. Do we count im getting theres nothing like this to get the twitterers going wild. 111 is 112001 2001 . Yeah. Yeah . 2101. Yeah . Less than you got a zero in there. Less than 100 years. But its 111 but 01 youd write it probably. You would want to get to ten 101010. 10102110. I had someone call me dummy and say you . Yeah. Said its 988 years. Then he called me a dummy. I tweeted back to the guy, im the dummy . Im the dummy . 988 years . Im the dummy . The fed is meeting today i admit it, i resemble that remark. Youre with me, pal. The fed is meeting to discuss whether operation twist will expire at the end of the month. And jerry webman is here. I showed up. Chief economist. And union member. A unionyist. Honorary union member. So is leaseman actually. Maybe you can the president maybe you probably with workers fly i guess. We are strong, solid, more than ever. You probably need protection. Probably do. Are you surprised at the 2. 7 in the market and everything in the face of what were telling people as such a horrifying possibility that the things have been the jobs number, were going along pretty well, arent we . We kind of are. I think sometimes we forget that that the market discounts economic stuff and doesnt discount political preferences. We also forget how well american businesses have done over the last four years. So its been i think wed agree, whatever side of the political divide you fall on, this has not been the friendliest possible situation for business. I think american corporations have done a terrific job of coping with a tough regulatory environment, a tough financial. The aftermath of this financial crisis. A lot of negative publicity. And made a lot of money. We want to rise above. Do we not have a debt ceiling right after that . The debt ceiling. The interesting question whether theyre going to roll heres what i think. We havent talked about this. So i say president obama allows us to go over the cliff temporarily so that all the rates go up. Then the democrats introduce a bill to lower it for 9 , do some other stiff 98 , do some other stuff they want to do. Then the republicans say fine but weve got to hold the debt ceiling, thats the next bargaining chip. I dont think we can use rides above for the debt ceiling because we dont want to rise above the debt ceiling. We have to come one new buttons pins, the whole thing. Yeah. That is a dilemma. What a polemic constantino is cutting me off. Youre going to hold that against me . All right. You can hear the voice in my head. Yeah. Hes mad because i attributed in fact, he was right. So sort of right. Coming up, well be talking to you in a second. Whats that . One in a row. Youre right, bob. Thats it. Coming up, well head to vienna where opec leaders are talking crude prices and production. And what is the ceo of the Worlds Largest retailer saying about the fiscal cliff . I bet he wants to rise above. Find out your next question on squawk box. Twins. I didnt see them coming. I have obligations. Cute obligations, but obligations. I need to rethink the core of my portfolio. What i really need is sleep. Introducing the ishares core, Building Blocks for the heart of your portfolio. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Welcome back. U. S. Equity futures are suggesting a positive open. The dow would open 45 points, the dow 6. 5. Gains of. 4 to. 5 across the board. Now the weather channels eric fisher with the national forecast. Eric . Hey. Good morning, everyone. Our Stormy Weather for today is mainly across florida, in the dry season. St. Augustine to jacksonville, the first coast dealing with rain. Weve got some moving into the panhandle. And a wide view will show that basically the southeast, this is where we find most of the rainfall for today. Southeast of atlanta, north carolina, south carolina, georgia or florida, this is where were going to find the storms. Going to be around for today, then tomorrow, most of this moves out. We get a break from all the storminess that weve been tracking here. By tomorrow afternoon, most of the area looking at drier, much cooler weather. Cools the name of the game across northeast midwest. Everyone waking up to december for a change. Weve got 20s and 30s on the map. Teens in minneapolis. Subzero numbers in international falls. Most of this is what you expect. You get into december, you expect to be cold. You dont expect a lot of daylight. Thats the forecast for today as we get toward new york. High around 43 degrees. Buffalo up to around 38. Boston, high of 40. Into the midwest, were warming up a little bit here around chicago. Weve got temperatures working into the 40s today. 51 in st. Louis. 38 in minneapolis. Thats going to feel nice after a couple of days in the teens. Heres the preview for the next storm. This arrives for saturday. Mostly rain. Snow across minnesota. Northern wisconsin doesnt look like a major event. But for some of the ski areas, new york state up into new england, sunday, this could be a goodlooking forecast. Maybe some snow here. Looks like rain down the city toward washington, d. C. Too warm for snow out of this one. Stay tuned. Next wednesday, guys, could be talking about a noreaster, its been a while since weve seen one of those. Oh, no. Just want snow. Its not correct me if im wrong because ive been wrong, its not winter yet, is it . Im afraid to say how many days it is because ill mess up the math. Its not winter yet. We its technical. In weather world, winter starts on december 1. Wally world . Meteorological winter. Weather world. Not clark griswald. December 1 . It is winter. According to the sun the start of winter is december 21. Also the end of the world. Maybe we wont see weather. Thats right. Thats right. It is. You know, the the vatican says the world is not im going to go with the vatican on this. As opposed to the mayans. Yeah. Pagans versus yeah. I think thats fair. I expect being here on the 22nd like the fiscal cliff. If you cant be an optimist, you cant show up. But if the end of the world is coming, we could stop talking about the fiscal cliff. That might be a relief. That would be the big right. It would happen before the yeah. Right. Thats first. Okay. All right. Thank you. I love our weather guys. Theyre chatty. Can play ball. A bunch that weve been breaking in. You throw the ball, they throw it back. When you go to the local cutins, no one says anything. Theyve got to boom, boom. Opec leaders meeting in vienna today. Steve sedgwick Steve Sedgwick with more. Steve . Reporter hey, just head the prompt. Its me in vienna. It does feel like winter, minus three here. But i can tell you that opec should be happy. It is producing nearly 31 Million Barrels a day. Its got brent over 108 a barrel. Brent will be over 110 a barrel on average for 2012. For the first time ever. Olympic making a trillion dollars in opec is making a trill dollars trillion dollars in oil. Theyre worry good oversupply going into 2013. They are concerned that the call on their oil is going to be less than 30 Million Barrels a day even though theyre producing the best part of 31 Million Barrels ail day. Surely they should be taking a little off the table if they want to keep it at current levels. The problem is they dont take any off the table officially. It would send out the wrong message politically. But theres a real concern that oecd inventories, the consuming, western nations, eventually got inventories above 59 days, which is the first time weve seen that in 2012. And its above the average over the last five years. So theres concern that although prices are in equilibrium now, theyll go down in 2013. Now, i tried to i spoke to the nigerians, all kind kind of people. And trying to talk to naeme, the big producer, efforts werent very good. How are you, sir . What i look like . Reporter you look well, comfortable with the world ill prices. Happy with the volumes youre pumping at the moment. Very good try. Reporter i presume you have no comment on the level of production, whether you need to take oil off the table, sir. No comment. Reporter okay. Youre not going to do much trading on the back of those comments. It is something that the saudis want to remain behind the scenes at opec rather than in the limelight. The problem is weve got to have a new secretary general. The libyan whos been in the post for six years is retiring at the start of 2013. The iranians have tried to get m than in charge. As all the viewers know, theres a huge dispute in the middle east between the sunnis and shiites, iranians and saudis. And the saudis dont want an iranian in charge of opec. The saudis have had to put forward their own man, as well, to replace him. Is there going to be a delay . I spoke toal badri. Listen to what he had to say about that and oil prices. Do not jump to conclusion. Let us let us hear what the conference will say. In terms of the oil price, sir. Appears ostensibly everyones happy with the current price. Would you say the storm clouds are brewing in terms of levels of inventories, the amount of supply needed from opec compared to what its currently pumping . When you look at the political situation, the situation in the United States, the fiscal cliff, you look at a lot of factors, there are really they contradict each other. I dont know where the price will go up or go down. I think the price will stay the same for next year. I dont think the price will come down. Yes, there is some maybe 59, maybe 30 Million Dollars day, fiveyear average. And thats 30 million barrel only, the fiveyear average, as far as the stock is concerned. The market is well balanced. As he said, contradictory signals. One for u. S. Viewers on the statistics, u. S. In 2012, its producing 6. 5 Million Barrels of oil equivalent. That is the highest levels in 15 years. Set in 2013 to produce over seven Million Barrels, the highest levels in 20 years. No wonder paperworkopecs worri demand. Especially with the situation with shale and natural gas and everything. Thank you very much. Coming up, the fiscal cliff, the dividend tax rate, a Power Company ceo will tell us about his biggest concern if a deal doesnt get done by the end of the year. Also, what the ceo of walmart thinks about that, as well. He had really explosive data. Mike duke last night. Well bring it to you. Squawk box is coming back. Whats next . Hes going to apply testosterone to his underarm. 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I dont know. She is youre a two namer now . The sorkins out . Caruso cabrera. Do you want it . Absolutely. In for becky quick. Andrew ross sorkin is joining us in the next hour with a lineup that you wont believe. Second to none power players in the world of investing. Carlisles David Rubenstein, steve schwartzman, mark andreesen, jamie dimon among the people well be talking to. In the house of representatives, a busy day ahead for fed policy in the day ahead, a busy day for fed policymakers. Fed expected to announce another bondbuying plan that will replace the expiring operation twist. It will also issue its latest Economic Outlook at 2 00 p. M. Eastern followed by 50 minutes later by a News Conference starring chairman bernanke. I bet youll hear about the fiscal cliff. A couple of earnings reports of note out this morning. Costcos reporting fiscal First Quarter profit of 95 cents a share. Two cents above estimates. The results helped by an increase in sales. Also higher membership fees. And joy global earned 2. 13 a share in its Fourth Quarter. That excluded items, estimates were for 1. 91. Its fiscal 2013 outlook was shy of street consensus. Saying that excess mine capacity is going to hurt its results. Speaking of the fiscal cliff, walmart ceo mike duke says the fiscal cliff debate is having an impact on consumers. Speaking to the council on Foreign Relations last night, duke said whats going on in washington is affecting his customers Holiday Shopping plans. The week before the election, only 1 4, 25 of our core customers even knew what fiscal cliff meant. One week after the election, it was up to 75 . Now these same customers, 15 of our customers are telling us this discussion about fiscal cliff will affect what they spend on christmas. Walmart shares trading near a 52week high. I was at the event last night. There were you were . Uhhuh. What was it . The council on Foreign Relations. Really . Im a member. Yeah. Youre kidding me. No. Thats why youre our International Correspondent probably. Yeah. You got the chops. You got the yeah. There were 100 protesters outside last night. And i asked every single one udo you work at walmart. Not one worked at walmart. I was just who were they . A lot looked like college students. Yeah. Approve eshl protesters. They said they had solidarity. I said if walmart people were so upset, why arent they here . Theyre working. They got insulted with the question. They were mad at me for asking. Is it a globalization thing . They were upset, one person was very upset with the way walmart treated pigs. Something about the way they treated hogs or something. And then there were environmental issues. What they have supermarkets the way they do in preparing meat or something i i wasnt supposed to interact with them as a member. I couldnt ask a lot of questions even though i did. You shouldnt do that. Youre a council member. Press pass, right . I wasnt there as press. I see. You were there as a member. You werent supposed to i see. Okay. I got it. Mike duke did mention the fiscal cliff. Were going to talk about it now. Death and taxes among the things were talking about. Will a higher dividend tax rate essentially kill taxpayers at every income level . Joining us to talk about this and more on the fiscal cliff is thomas fanning, chairman, president , and ceo of electric giant Southern Company. How does a utility, tom, how do you prepare for the uncertainty surrounding the fiscal cliff and these washington issues . I guess its you know, in the back of your mind, but you got to run a business, dont you . Sure. Look, we plan with uncertasrcer all the time. Our whoerizeons are 30, 40 years. There are big time economic horizons going on. One of the thing were a indicator of is the future health of the economy. What we have seen is First Quarter this year was a really good quarter. Second quarter was okay. Third quarter went to a dead stop in terms of economic growth. At least in the southeast. We have over 300 projects sitting on the shelf representing about 45,000 jobs. 15 billion of investment that is waiting to see how this fiscal cliff situation gets resolved. That will determine the future direction of the health of the economy, i think. Dividend taxes are going up, tom. Well, so heres the deal there. You know, theres this theres this notion that, well, weve got to strike a deal. And frankly, this isnt a republican issue or a democrat issue, this is an american issue. Effects yaerve. Weve got to affects everybody. Weve got to reduce spending, thats clear. We probably have to be flexible on revenues. What we have to do as an outcome of this is to be for growth. When you think about tax policy relating to the dividends and can Capital Gains, thats all about growth capital. Our industry spends about 90 billion a year or so every year on capex. When you increase the cost of capital like theyre talking about with dividends and Capital Gains, that just slows everything down and causes companies not to commit long term. Heres what were for what we would like to see asson outcome is that there is parity between the tax rate of dividends and tax rate of Capital Gains. Dont create an artificial incentive for investors to pick one or the other. Secondly, keep those rates as low as possible. Keeping them low makes us globally competitive as a nation and encourages businesses to commit to capex, grow jobs, grow personal income. Wow. Youre giving policymakers i had trouble with math with 1 121212. Youre taking policymakers maybe go up on the margial rates but deep the differential between ordinary income and Capital Gains and dividends and make sure that theyre the same at that point. You know, simpsonbowles does a lot would simpsonbowles be okay with you if we went to an income would be 28 i guess, then maybe try to have some differential for Capital Gains and dividends . Yeah. Joe, i guess thats at squawk box before we went through these issues. I think the issue that weve got to think about it s this really at the end of the day what we need to drive for in tax policy is a whole comprehensive reform. Well, thats not going to happen now. Thats a 2013 issue. So one potential outcome that i think would work well for our industry is defer the whole decision on dividends and Capital Gains until we look at the whole comprehensive issue. And then we can kind of figure out what the right course of action is. To cherry pick any one issue at this point really doesnt serve everyones interests as well as it can. Are you optimistic that were reading that Corporate Tax reform is on the table, to get really something don that front . Well what do we want that to look like . Michelle, thats an awfully big issue in a short amount of time. Ive been very clear about what Southern Company is willing to do. So lets assume we keep what we have and keep normalization in place, Going Forward we would be willing to trade all of our tax preference items in exchange for certainty around a lower Corporate Income tax rate. The math for us from an indifference standpoint equals about 25 . Well, go ahead well, yeah. I think it gets tough for these tax preferences. I think if im not sure thats the position most businesses are in because every one of those tax preferences is in there because somebody says if i get it ill create jobs, if i get it, ill ill invest more. Than if i dont have it. If i take it away, 50 people are going to lose jobs in in, you know, you name what city, in north platte. You heard him say that go ahead, go ahead. Well, look. Im a member of the business round table. We talk about those things. Im cochair of the finance committee for our industry group. These are enormous issues. And i guarantee you the math for southern is similar to the math for our industry, similar interesting interestingly for the management of industrial america. For the good of america, we know that there will be winners and losers. Coming to resolution is good for the country. Weve got to use that as our gie guide post. Last year boehner and the president were at were at 800, that looked like it might get done on new revenue. Then supposedly the president heard from read the tea leaves from some republicans and thought he could go up another 400 to 1. 2. This time he started at 1. 6, and now the new offer yesterday is reportedly 1. 4. What can what can the country take do you think that wont hurt growth . Is it 1. 4 you got to raise the high end, you got do the 2 going to 39. 6. Then you got to do stuff with dividends and you got to do to get to 1. 4, youre talking about maybe doing stuff with muni bonds. You got to go all over the place to get that number. Yeah. And joe, look, i mean, any kind of tax increase has the effect of putting the brakes on the economy. Weve got to reach a resolution between cost reductions and revenue flexibility. I would hope that marginal rates dont move that much. So that unless the only way to get there is to let all the bush tax cuts expire. If all you do is the top 2 that doesnt do anything. Theres a lot of other stuff you have to do to get close to 1 trillion even. Sure. Sure. Sure. And your dividends and Capital Gains are going to be part of that. Yeah. Now all right apparently weve got to run. Im looking at your yield. What 4. 5 yield on Southern Company. After tax, what is that 3,. 5 or something . By the time we get done, youll is to raise that about 100 to get the same aftertax yield. I hope youre willing to do that for a shareholder. Let me hit this issue quickly. This is important. Focusing on increasing tax rates and dividends hurts every investor. Not just people i saw that. 100,000, 62 at 100,000 or less have something and they have already so get this our average shareholder age is 63 years old. A lot of its tax deferred, isnt it, tom . Im sorry . A lot of its in taxdeferred accounts, 401 k s joe, heres the deal. Its not just dividends. We have already seen a reduction in asset values, stock prices in our industry of about 7 . If you have an average aged shareholder, 63 years old, investing in a growth and income stock like ours to save for retirement, reducing the nest egg itself as a consequence of poor decisionmaking here has an impact to everybody. You can always sell it and buy a cd at. 6 . Thats high. Yeah. Thanks. Thank you. Appreciate it. Thank you, good seeing you again. Good seeing you. It irks me that they tax dividends. Theyve been taxed at the corporate level. If you have comments, questions, email us at squawk cnbc. Com. So as you can see, geicos Customer Satisfaction is at 97 . Mmmm tasty. And cut very good. People are always asking me how we make these geico adverts. So were taking you behind the scenes. This coffee cup, for example, is computer animated. Its not real. Geicos Customer Satisfaction is quite real though. This computeranimated coffee tastes dreadful. Geico. 15 minutes could save you 15 or more on car insurance. Someone get me a latte will ya, please . Welcome back. U. S. Equity futures up 45 points. I think we have five straight days. Its actually we came off our highs yesterday. It was still okay. Boehner came out and said something. We were up over 100 happy talk. Was it happy . I dont think it was that happy. Im being sfwhinide about ha reid. Solar equipment maker solar city has scaled down the size of its planned initial public offering. An sec statement says the Company Plans to sell about 11 million to 12 million shares, could be 11. 5. At 8 apiece. It had previously planned to sell 10. 1 million shares at 13 to 15. Technology, entrepreneur, elam musk is solar citys chairman. I didnt know that. Have you met him. No. Ive driven a tesla. Theyre beautiful, right . Gorgeous. Theyre silent. The 20two seater i was in i not that big. Hard to get the clubs in . No, no. Cant fit a golf ball in there. I interviewed musk years ago. I think one of the most interesting people in business in the world. Like a fast golf cart. No sound. Walking along and all of a sudden they should add a sound. Yeah. For safety. Doesnt it make a whoosh with the wind and stuff. The sound itself is just silent. And really like when a maserati rrrs, its awesome. You like that noise. Still to come, more news on the holy grail of tech. Apple tv. Plus, a virtual whos who in the world of investing coming up on squawk box. Carlisles David Rubenstein, Steve Schwarzman of blackstone, Marc Andreesen, and jamie dimon. Change engineering in dubai, aluminum production in south africa, and the Aerospace Industry in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Cmon, michael get in the game [ male announcer ] dont have the hops for hoops with your buddies . Lost your appetite for romance . And your mood is on its way down. You might not just be getting older. You might have a treatable condition called low testosterone or low t. Millions of men, fortyfive or older, may have low t. So talk to your doctor about low t. Hey, michael [ male announcer ] and step out of the shadows. Hi how are you . [ male announcer ] learn more at isitlowt. Com. [ laughs ] hey [ engine revs ] [ male announcer ] the mercedesbenz winter event is back, with the perfect vehicle thats just right for you, no matter which list youre on. [ santa ] ho, ho, ho, ho [ male announcer ] lease a 2013 ml350 for 599 a month at your local mercedesbenz dealer. At your local try running four. Ning a restaurant is hard, 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. Live from capitol hill today, own couraging lawmakers to try and rise above gridlock. The fiscal cliff, of course, is a complete madeup deadline. Discretionary spending is 1 trillion 280 billion. Were 18 billion short of having nothing if we cancel the entire government. What do you think the best possible outcome could be . To take Something Like simpsonbowles and work off that. When a deal is announced, if the left and the right arent angry, theres not a real deal. A new report on the much anticipated apple tv. Wall street journal reporting apple is testing a few designs for large screen High Resolution television but the project is still in the early phases of testing. The journal cited officials at companies in asia that supply apple. In an interview with Brian Williams this month, apple ceo tim cook said the companys interest in television had progressed beyond a quote hobby. He likened turning on the television today by going back in time by 20 to 30 years, ages ago. Yeah. Joe, congratulations lets hear this twitter story. Yeah. Its big. I was alerted yesterday by had the of all media. Social media. Almost like howard stern. What is he king of all media. Shes queen of all cnbc media. She was very excited about this. I have been named by twitter. Listen on twitter as one of the new voices to follow in the news category. What i dont understand, ive only tweeted 220 times and most have been retweets from my daughter from her blog. Look at who im with. Steve carell. Betty white. Awesome patrick stewart. Keep going down. Matt lauer. You cant you cant im right below jeffrey toobin. You cant go down . Why would any even there it is. There it is. All right. But then i look to see, like cram cramer. Yeah . Who is not on the list by the way. Do you know how many times hes tweed . 26,600 times. Ive got to start i dont know im uncomfortable tweeting. Jim has jim has, by the way, jim is the pope of all investing, he has more followers than the pope. Than the holy father. Im not surprised. He has 600 some,000. The pope only got a twitter handle last week. If youre ever ahead of the pope, if the pope is tweeting and youre ahead of the pope, youre having a good day. I tweeted something this morning. Some guy called me a dummy. Thats all i really respond to. Negative stuff. Dont insult them back. Antisocial media. At this point, apparently you can tweet photographs somehow. Thats so dangerous we dont even want to that that. You know who wishes he hadnt done that. A. W. A. W. Root beer. Exactly. Jerry, thanks for spending time with us. You tweet you go and tweet about your experience . If i can get it through our compliance, i will tweet about how much fun it is to be on the squawk box at 6 00 in the morning. Zombies and not in a good way, the walking dead. I wont do that. I wont. Thank you very much. Thanks. We are approaching the top of the hour, this mornings top stories when we return. Dont move. Plus, exclusive access to some of wall streets most powerful players, an ddry, davi rubenstein, Steve Schwarzman, and jamie dimon. Youll have a front row seat when squawks b box returns. I need to rethink the core of my portfolio. What i really need is sleep. 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A and andy is out today. And in a moment, the power summit, big names coming up. Andrew wrote for the New York Times in high school and became like their most wellknown reporter and started deal book, a huge deal. Hope he has an equity stake. The only thing the New York Times has going for it anymore and now they will have this great Conference Today with huge power plays. And bestseller and the movie. And bestseller and movie. No emmys but nominated. Should have won. House Speaker John Boehner spoke by phone tuesday exchanging new fiscal cliff proposals. The president gave boehner a revised offer on monday and he went down a couple of hundred billion from 1. 6 trillion to 1. 4 trillion over ten years. In an exclusive interview with Barbara Walters, of abc news, president obama says he still expects a deal before the end of the year. Remain optimistic there are enough people of good will in this country families will be much better off when we get this done. The most important thing is make sure middle class taxes dont go up on january first and im pretty sure republicans would not hold middle class tax cuts hostage to protect tax cuts for high income individuals. Prediction, are you going to be able to raise taxes yes or no . Taxes will go up one way or another. The key is to make sure taxes go up on high end individuals, like you and me, barbara, we can afford it. You can see the rest of that interview on abcs 20 20 this friday. Hopefully, you will hear Barbara Walters come pellingly say will be able to cut spending . Did she ask that question . Theyre not really interested in that question. I dont understand this relatively to talk about entitlement reform or raising taxes. Shes more interested to know whether he if you means test medicare thats away to raise taxes. Barbara is more interested whether he can banquish republicans. Its just you and me. Rob, who would you prefer . Hes not saying. Ive got to do it. I get paid. Fed wrapping up its two day meeting. I get paid. I know you do. I cant shirk. The decision is at 12 30 eastern and followed by a News Conference at 2 15, where you really get the juicy stuff from the fed chairman. Im sure he will reference the fiscal cliff. At least when asked the question once it moved the markets by 50 points. Feds expected to announce a new round of bond purchases. Operation twist will expire the end of the month and we will have a cnbc special coverage of the fed decision in Ben Bernankes News Conference. That starts during scotts very compelling Halftime Report. 121212. When 121212 will occur. Futures indicated it could be the sixth straight day of gains. We made back most of the post election selloff that we saw. Now, we were just talking about him andrew, i went over your like your resume, about high school, writing for the New York Times, you did other stuff, too, you had a company, you made money, and then you started deal book, which is why youre even down there. The rest of the companies are glomming onto you with your success basically the, not. It doesnt compare with how many twitter followers i imagine you will now have as a suggested user. Youve got more man the pope right now, you and cramer, andrew, but youre not tweeting quite as much as jim. Who do you have first . I need to tweet a little bit more. You have your questions ready for this guy . I do. We have a huge day. Let me give you a rundown whats to come today at the conference. It is a great lineup of the conference kicks off a little bit later on quasquawk with je dimon at 8 30, 8en the40, and t mark an dreessen, and the list continues. And Dick Costollo of twitter and schwarzman on the conference with squawk as well and its remarkable. I think we have a lot of issues we have to get to. The big one were starting with to start squawk off this morning is David Rubenstein with the carlyle group. We thank david for being here. And joe jump in any time throughout the conversation, and michelle. They were talking about the cli cliff, you spend a lot of time traveling talking to foreign so soverei sovereigns invests. Give us an indication how theyre viewing the entire situation on the tax and entitlement side. Since ive been doing this 25 years, ive never seen such an interest in an issue outside the ut United States as i have seen in the fiscal cliff issue. Everybody is obsessed what happens because were the biggest economy and what we do will affect everybody. Everybody including sovereign well funds want to know what has happened. What do you tell them . I tell them its unlikely a deal wont be reached. I dont know whether its december 23 or 24 or 28. Very unlikely a deal wont be reached. What about post january 1st . Were talking about a deal nine months of this fiscal year, we have nine months left of it. Were talking a down payment and have the next nine months and talking about a down payment to make it go away in terms of fiscal cliff for january 1 and still have a lot next year. Youre as close to wall street guy washington insider, thats what carlyle is, what have you seen behind the scenes or conversations that has made you this optimistic . I talked to people in congress and people involved in negotiations and my belief is they know a deal has to be done and each side wants to posture themselves not to give away the things they shouldnt give away. Im pretty sure they know a deal has to be done. Explain this. You recently compared to whats going on in washington to panda be bears trying to have sex. Whats this about . There are only 1600 pandas in the world and the reasons theres so few they can only mate four hours a year. Theyre very inexperienced at mating. Like members of congress. They know what theyre supposed to do but dont quite too it as well as we would like. I think they will get it and come up with a deal with the president by the end of the year. Higher taxes. Youre seeing ceos coming out with higher taxes, unclear whether theyre saying higher rates. I think thats now the suggestion. Where are they . I believe higher taxes are inevitable on the personal side and people have accepted that. What business want not worry whether the rate goes up a couple points, they want to worry about whether or not we will get our economy going again. They believe if this fiscal cliff is behind us, we can stimulate the economy that way and basically getting down to doing investments in the United States. The growth in the United States has been slow in the last couple of years and lower than we like. We think if the fiscal cliff issue is resolved and we can get a decent recovery, i think we will likely get much better growth than we had in recent years. Joe kernen of twitter fame has a question for you. You have the guy from twitter on today, too. Thats good. We had the ceo of Southern Company on. Hes worried about what we do with dividends and Capital Gains and still thinks there should be a differential and thats important. I think about that number, the president s at 1. 4 trillion. Do you know of a way to get even over a trillion dollars . You cant raise marginal rates on the 2 fluenough to get up there. You have to start going to deductions and loopholes. Can you figure out a way to get to a number like that that wouldnt hurt theeconomy . My belief is if you increase taxes it will not necessarily hurt the economy if theres enough sense in the economy among Business People that we will grow at a rate, which will be the best thing for the country. Right now, we had a situation where people are nervous about whats going in washington. Because theyre nervous, they havent been investing. Once this is behind us whatever the resolution is, there will be enough confidence in our country and outside our country, people will invest. Where would you go for the trillion . If you go down to 100,000 in income, if all the clinton tack cuts sorry. If all the bush tax cuts expire, its a much bigger number. Nice if some of that was growth revenue. Some of that trillion came from growth, wed all like that. Thats not the way theyre doing it. No. Its not going to come from growth at the point were talking about now. Right now, you cant presume there will be higher growth for the purpose of these numbers but i believe you will see higher rates on Capital Gains and dividends and marginal rates. I dont think its possible to do this deal without higher rates on Capital Gains and dividends. Still im sorry . There should still be a differential . Whats the right rate . I believe it will go to except . President bush 43 never actually proposed 15 . It was the ways and Means Committee that pushed 15 . He was happy with 20 , the rate he inherited. 20 wouldnt be the end of the earth. Dearare i raise the interest . This doesnt pick up any revenue. Are you still pushing back on this issue at this point given all the other issues out there . We want to resolve the fiscal cliff issue an it wont be helped with carat interest one way or another and it doesnt pick up any revenue. Its a modest revenue rate. Thats the fairness argument with every other element. Not the same. If you raise the carat Interest Rates you wont pick up revenue. Michelle. Raising taxes on the top 1 of the wealthiest americans, when you talk about means testing on medicare, a lot of people on the left get very upset. To me it seems natural we have millionaires and billionaires on the set all the time get a Social Security check and if they had to pay for their own health care that would be like raising taxes on the wealthy. There was a time to be elderly in america you were likely to be poor. Thats not the case. This is the wealthiest retiring generation in history. Tom brokaw on cnbc talked about it. Why is it not okay to talk about issues with medicare . Some issues are easier to resolve than others. That means testing of medicare is much more complicated. I dont think theres enough time to resolve it. Why is it more complicated . Im sorry. Why is it more complicated . Because it involves virtually a much larger segment of the population and i dont believe the political will is there to deal with it right now. Were trying to deal with an issue that probably has to be dealt with in the next two weeks and i dont think there hes enough political will to deal with it in the next two weeks. In the context of resolving our problems the next several years, that issue has to be dealt with. I dont think its an issue in the next two weeks. Do you think its a good idea to means test medicare . Means testing medicare is a complicated issue. The definition of means testing varies who you are and how you define it. Its too easy to say we should do it or not do it. Its an issue like all issues to be looked at but i dont think it will be resolved in the next two weeks. Investing, given the fiscal cliff, have you put things on pause or hold . Doing anything differently, making preparations on companies you do own . We presume the fiscal cliff issue will be resolved and havent stopped investing because weve been worried about it and invest around the world and not just the United States. We are investing relatively actively, maybe a little bit less than last year but not clear yet. What is the fair rate of return in this new world were living in. When Interest Rates are zero, moreorless, depends what type of risk profile you have. For private equity if you can get a rate of wrureturn for hig net teens still realistic . It is and we have done that. David rubenstein, thank you, and joe, back to you. Thank you. It wont be long. You were gone eight days. Im happy about that. You have Steve Schwarzman next, has a lot coming. Excellent. We have you to thank for that and we do thank you. Thank you. Thanks. Comments or questions, send to squawk. Next, the impact on the middle class. And we will go fed watching and what should the markets expect from the chairman later on today. That preview coming up next. Comments, questions, send them to squawk cnbc on twitter. Follow the show and look for updates from andrew, becky, joe and the squawk staff, squa squawkbox on cnbc and on twitter. Americans are always ready to work hard for a better future. Since Ameriprise Financial was founded back in 1894, theyve been committed to putting clients first. Helping generations through tough times. Good times. Never taking a bailout. There when you need them. Helping millions of americans over the centuries. The strength of a Global Financial leader. The heart of a onetoone relationship. Together for your future. Live from capitol hill today, encouraging laurms to rise above gridlock. Welcome back. Lets check the futures. Dow opens up and a half a percent for all the major averages. Opec managers decide to leave production levels unchanged. It has a lot of tension. Wti, higher by 63 cents and brent higher 73 cents. All signs are pointing to more easing and the fed pointing to a new round of purchasing to replace operation twist that expires at the end of 2012. Has the fed run out of firepower. Joining us from washington, the u. S. Economics editor, economist and cnbc contributor. Good to see you. Hi. How are you. The fed is running out of firepower. What will they do as a result . I think the consensus, they will take the 45 billion a month of treasuries theyre buying through operation twist and convert that to quantitative easing. I would look to two possible things, instead of taking that 45 billion of operation twist and use it for treasuries, maybe they use nmore mortgage back securities and many came out and said you get more bang for your buck and bullish for the market. Are you going to talk about their commitment to keep Interest Rates low until the end of time . Heres what i think might be interesting, michelle. A lot of people at the fed arent happy having a specific date out there. Theres an active discussion right now they should replace that date with a number on the Unemployment Rate. Lets keep rates low until unemployment is 6 1 2 . That discussion is ongoing. Another possible surprise they might give us that target for unemployment today. If they did so, that would create a lot of confusion. I would be interested whether that happens. And bernanke talks about the fiscal cliff in some way. No . I was wondering if that is the first or second question he gets in the press Conference Today. Heres the cool number. I was just working it out in my head. Bernanke said last year, they think all the quantitative easing and bond purchases around 2 trillion has boosted gdp by 2 and created 2 million jobs. Thats almost exactly the size of the hit we will get if we go over the fiscal cliff. When the fed is worried about what they will do if the country goes over the cliff, you can see why. Politicians basically wipe out all the benefits theyve done. Greg, good to see you this morning. Thanks so much. Okay, michelle. Stay tuned for that. A major blow for big labor as michigan becomes a right to work state and bar members from requiring them to pay union dues. The governor signed the measure last night. Shouldnt unions be putting out a proposition workers want to join a union and feel free to make a choice their dollars are going to that union or not based on results. Thats what this is really doing. Thats why i view this as pro worker, not antiunion. Is it the right to work bill good for middle class economics. At the center for american progress, david, what does this make . 20 . How many is that 25 or 27 states now . 23. 23. This is you know, we have seen a couple states recently, for a long time, it was about 40 years ago states have passed these laws. Unfortunately the evidence is really clear that these laws have a Significant Impact on the middle class. They really harm them. You look at the typical worker in a right to work state they earn about 1500 less than a comparable worker in a nonright to work state. We need to look at it a lot of different ways. The number of people employed. Are more people able to be employed if the wages are slightly lower and global competitiveness. It many must be youve seen the other side, david, claims all these benefits that accrue to states that are right to work. You can systematically shoot down every claim as an loosery . Pretty much. Take the jobs claim. The state that has the highest Unemployment Rate right now is a right to work state. Its not the right to work gives you jobs. The bestest we have is oklahoma, the most recent state to go right to work over which is there enough time to study and manufacturing declined after they went right to work. What really it does, it lowers wages and hauls out the middle class. By hauling out the middle class. That is not good for the economy. Sure, you might have lower wages and might be an incentive to invest. There are other reasons businesses invest, transportation infrastructure, quality of the workforce and consumers to buy their goods and hauled out by a weaker middle class. One thing i dont understand. If something really helps and something is really a positive for society, its almost like Natural Selection causes it to stay vibrant and active and alive. Do you attribute the decline in overall union rates in the United States, is that due to a concerted attack on unions by evil forces or is it just dropped to 7 from being antiquated through its own weight of not being competitive . I think most of the story with the decline of the percentage of workers in union is that our current law allows employers to really attack workers who want to exercise basic rights to join a union. For dexample, if a worker is illegally fired for attempting to join a union, the law is so weak, at best, after years, they might get some percentage of their back pay. No other penalties, nothing. With really weak laws like that, you have incentive for businesses to not protect workers rights. That is much of the story. You also see polls show the majority of workers, when asked, said they would like to join a union. You have High Percentage saying they would like to but low percentage joining. That disconnect is largely explained by a weak state of our current law and right to work goes further by undercutting the ability of work others to join unions. What it does, takes away any Financial Model of any business is to charge workers for services. Workers get away without benefits of Union Membership without paying them. Thats all the time we have today. We have power players from the conference. He is a power player. I didnt mean to exclude you from that. You werent at the conference. More headlines and with hair like that, he should be at the conference. I like his hair. Blackstone joins us and mark an dreessen at 8 clm clm a. M. [ male announcer ] break from the holiday stress. Save on ground shipping at fedex office. Time for citi price rewind. 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Futures right now indicate a higher opening on wall street. That would be a really long win winning streak. Next, more power players from wall street. And Steve Schwarzman. Squawk box is coming right back. Try running four. Ning a restaurant is hard, 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. Hey, welcome back to squ squawkbox. Headlines, lawmakers will issue a policy statement followed by a forecast at 2 15 eastern. Later, we get chairman ben bernanke News Conference. Mortgage applications were up 2. 6 last week. The Mortgage Association says the average rate fell to 3. 47 . Executi executives reportedly sold more than 23 million in stock earlier this year ahead of news that sank the stock price according to the wall street journal that says those sales were made outside of prearranged trading plans. Lets get back to the New York Times deal book conference. Andrew ross sorkin joins us with another guest. Youre ready, andrew . Im ready to go. We have another great guest. Steve schwarzman of blackstone, glad to have him. Thank you, andrew. Lets talk about the fiscal cliff. I want to talk to you specifically about Something Else going on in the washington. You were no fan of the president in the run up to the election and there were so many people on wall street who frankly were not fans and were outspoken about it. Now, there seems to be a move afoot within washington and some level on wall street to try to mend those fences. Whats going on . Can you take us behind the scenes a little bit . I think its pretty clear were supposed to be one country. We have a new president , we have a four year run and i think people have to find some Common Ground. I think the president is reaching out pretty aggressively in the context of trying to make connections to the other side to get a budget deal done which i think hes really very committed to wanting to do. When you look at the election results, and you look at where we are in this conversation about the fiscal cliff and raising taxes, do you say to yourself, that he has a mandate to raise tax rates or not . Well, geez, i think he thinks he does in a certain way. I think that the numbers we have in the fortunateederal budget d lot of change. And were spending 25 of the gdp and were taking in 15 1 2 in tax revenue. These are yawning, massive, 9 1 2 differences. We used to, as a country, for decad decades, have 18 1 2 revenue and 20 spending. So, as you look at this budget deal, what should be doing and the eddie ieeasiest way to make is get back to where you started. Youd let things expire . No, no. When i say get back to where we started is you really want to spend 20 instead of 25 of gdp. And you want tax revenue to go back up to 18. Everyone has different prescriptions how you get there. What is the Steve Schwarzman prescription . Im not trying to micromanage the congress. I know where we have to get and i know if the two groups are prepared to go back to square one, which is 18 taxes, and 20 spending, there would be plenty of Common Ground to make a deal. Now, the deal that was put on the table by the administration was 19 taxes and 22 1 2 spending and they didnt get much of a reception for that. The front page of the wall street journal today says now potentially, the Corporate Tax rate is on the table as part of this negotiation. What is the right number and do you think thats real . I think its probably on the table, but not not to be done completely. Foreign taxes may not go to the socalled territorial taxes. I think the Business Community would like something thats more easily comprehensible and equitable, sort of a flat kind of number. I think that the administration thinks thats fine. Everyone wants it to be moreorless revenue neutral. I dont see a lot of controversy with that. I asked david ruben stay in the question so ill ask you jr, carried interest doesnt seem to be on the table now but maybe it comes back up. Where would you be on this right now . I think almost everyones taxes thats making a lot of money will probably go up. In the context of an overall look at that gap between 15 1 2 and what i think should be back to normal of 18. There are different ways to do it. You know, carried interest is a capital asset, Capital Gains itself will be going up. Whats the right number on Capital Gains . 20 . 25 , what will you take . Andrew, i dont determine these things, im just a receiver. Its scheduled to go up to 20. That would not be a surprise to anybod anybody. Michelles got a question. Lets bring her into the conversation. Hi, steve, its michelle. Youre around 65, sorry to reveal your age on television. Theres a reason, we keep talking about Different Things that could be done to balance the budget. What about means testing medicare and things like Social Security. Would you give up your Social Security check, steve . Are you willing to contribute more to your Health Care Costs . Well, on Social Security, i was actually disappointed that that was taken off the table. Its an important thing to get reformed. And its an easy thing to do. Combination of age, were all living longer, hopefully. We certainly are, as a group. Youve got means testing, youve got things such as the inflation adjustment. If youve got the people in the congress who know about this area, which are many many people, and put them in a room, the odds are that within a day you could make a deal on this. I would have, if i were managing this process, which im not. Have dealt with that because its sort of low hanging issue because the solutions have already been well discussed and dont involve as much i ideological friction as in the other types of issue and the budget issues. Steve, handicap it. Your sense, David Rubenstein said, by january 1st he thinks theres some sort of a deal. You do, too, no . I think by january 1 therell probably be a different type of deal than youre reading about. The kind of deal youre reading about is like a grand bargain kind of issue. And thats what wed all like to see happen. Neither side, and from listening to both of the people, who are the principals, neither of them want to go over the fiscal cliff and trigger the kinds of issues. So my instinct is that theyll either come up with something thats more modest, where they can make a deal and not visit on the United States difficulties of our own creation, as a country. So therell be something that probably will be done, but not what needs to be done next year. Long term. Joe, you have a question for ste steve. Steve, youre political, and i just want to ask you something about boehner used the term the president is slowwalking towards this deal. Because its going to be so hard to raise marginal rates to 39. 6, people think we will get a deal of 500 thousand go up two points to 37. If the president really wants to go to 39. 6, boehner might lose too much face doing that and hed have to give other things, too. Why wouldnt the president go through january 1st and all the rates go back up and then do a deal where he gives it to the republican and says, i will cut rates on everyone except for the top 2 , you guys need to go along with this . Head have 39. 6 and then republicans would have a hard time voting against a tax cut for everybody else. How do you know that everybodys negotiating in good faith and thats not the actual strategy thats being employed here . I think that the scenario youre talking about is a scenario that could happen. I think the parties would like to have a broader solution to this and put this behind them. I dont know that, from the administrations point of view, this is an issue they want to spend a year or two dealing with, in the second term. Is that too cynical. I guess thats too cynical a viewpoint. Then we have the debt sealiceil coming up, republicans would be holding the cards in the next one, the kind of law that would be passed for tax cuts after january 1st, they could hold back on that with some kind of bargain. I mean, its a mess. I dont know. It might be better to do it before january 1st. If you could do a deal thats easier on everyones life, i think they would prefer to do that. Both sides . Well see. I have to ask you one question. The next secretary of treasury, a lot of names get bandied about. One is tony james of blackstone. What do you think . Tony would be terrific. Hes a terrific guy. Hes your partner. That would be terrible for us, for sure. Its the last thing i would want. What do you think the chances are . Have you heard anything . Making phone calls . He doesnt confide in you . I have no idea about that. I think that the probability is that it would be somebody who is dealing with these types of complex issues, because i dont think theyll all get resolved. That means whether its an insider, like a jack lew. Would he be good enough . Its not my call. Guys like irskin, there are people who have dealt on a regular basis with the congress, given the complexity of these issues, that would be a more logical call. Thank you for joining us. Appreciate it. I will send it back to the studio. Thanks, andrew. Dont be a stranger, steve. Would you tell him that, andrew, for me, please . He will come on all the time. Hopefully i dont look too strange, joe. No, i dont mean you lo look new jerseys not that far. I dont know what youve got against jersey, but, you know, we have a seat here for you. Thank you very much. No commitment. Typical man. Breakfast at the st. Regis, he has the whole new york thing going, hes not coming out here. Coming up, can you put a price on loyalty . Marriott can. Your repeat business could score you a hotel room when others are being turned away. A huge lineup in the next hour. Tech guru, mark dreessen and michael dell and Ceo Jamie Dimon. Take that. Thats all coming up in just the 8 00 hour. Dont move. To the best vacation spot on earth. all the gulf it doesnt matter which of our great states folks visit. Mississippi, alabama, louisiana or florida, theyre gonna love it. Shaul, your alabama hospitality is incredible. Thanks, karen. Love your mississippi outdoors. I vote for your florida beaches, dawn. Bill, this louisiana seafood is delicious. Were having such a great year on the gulf, weve decided to put aside our rivalry. Now is the perfect time to visit anyone of our states. The beaches and waters couldnt be more beautiful. Take a boat ride, go fishing or just lay in the sun. 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Tdd 18003452550 call 18008368799. Jay checking the futures, will we do it . Will we have six straight up days . We made up most of the selloff after the post election swoon we had. Were back to where we were and maybe headed higher today. Most people assume that sold out hotel means theres no room left. Thats not necessarily the case. Scott walkner reports for a new cnbc documentary on marriott. Thats not always true for everyone. When it comes to getting a room on a busy night, it does pay to be loyal. Reporter sellouts happen. 1015 of the time, theres no room to be had, or is there . What happens if youre sold out and im a platinum member and i come walking through the door and i say, i need a room. A lot of times hotels will save a couple rooms open just for last minute platinums, because we dont ever want to turn a platinum away for any reason. They would tell other people that theyre sold out. Oh, yeah. If i called up, theyd say, sorry, sir, we dont have any rooms available . Absolutely. For more secrets of Hotel Availability and pricing, tune into hotel, behind closed doors at marriott tonight at 9 00 eastern and pacific. Scott, i was talking to him about it last night. I asked him why he didnt did he do the blue light thing in the rooms . He did not do that. Testing whether the sheets are really clean or not, that kind of stuff . Whether the ceiling is clean. They do that in local news. You dont do that . Always fun to do. Bedbugs are always fun. I dont think marriott has any problem with either one of those. I would hope not because i stay at them frequently. They have great management and its a great chain and a great guy running it although his name is not marriott anymore. Arnie. Got it. Go on. Sorry. Tunisia . What about tunisia. That is where the secretary of state was supposed to leave for tunisia today. Is she set to do wellesley again . Not directly. She went to wellesley and you went to wellesley. The only democrat you could ever support for president. Exactly. She went to wellesley. She got a stomach flu. She got a stomach flu. She wanted to go to tunisia for a specific reason. We talk about the arab spring, this is one of the places theres great hopes this may turn into a really functioning democracy and a place with Economic Freedom as well. This is a place where the arab spring started. Remember, this wasnt a democratic revolution, it turned into one. The man who started the arab spring was a vendor whose scale had been taken from him many times from a bureaucrat. He lit himself on fire and his words were, how do you expect me to make a living. We can talk about democratic freedom but Economic Freedom is just as important. And in tunisia, theyve been trying to be as market friendly as possible. Spoke with the secretary of state of tunisia. He is so wellspoken about the Capital Markets and everything that needs to be done. Listen to this a little bit. Hes terrific. We are introducing new forms in terms of transparency, new governance and we think if we provide the legal basis or the Legal Framework for investors, they can really make profit. Talking about rule of law, talking about taxation that is fair and equal across the board. Ill say this, joe, i deal with so many foreign governments, representative on the phone, like cnbc, okay, low level. I called the ton indonesian government, cnbc, when . Where . How often. I mean, really smart about can they get everything done . Theyve really struggled in the last year or so trying to get the economy up and running again, but openly friendly to the Capital Markets and trying to get to a place that would look was this at the council of for ren relations . Where kdid you see him . I did see him there originally but was impressed. Got it. Are you allowed to divulge that . Im not sure. Never mind. Shes supposed to be in tunisia and im sure shes heartbroken she cannot go. She is probably ready to stain one place. And get ready for 2016. Will it be christie or bush . I would like to see christie but i love bush. Would you like to see a bushchristie rematch . In the end, a wellesley woman in the white house i think would be very good for the country. Its very strange for me you cast aside all your ideology just because of going to the same school. Yeah. Coming up at the top of the hour, tech guru, venture cap laltist, Marc Andreesen will tell us why the year will be remembered. And del founder and Ceo Michael Dell and jamie dimon. Stick around. Up next on squawk box, dont start your day without knowing the names that will make you money. Joe has your list of stocks to watch right after the break. You wont take my life. You wont take our future. Aids affects us all. Even babies. Chevron is working to stop mothertochild transmission. Our employees and their families are part of the fight. And were winning. At chevron nigeria, we havent had a reported case in 12 years. Aids is strong. Aids is strong. But we are stronger. And aids. Aids is going to lose. Aids is going to lose. Look this isnt my first christmas. These deals all seem great at the time. But later. [ shirt ] merry christmas, everybody not so much. Ho ho ho this isnt that kind of deal. [ male announcer ] break from the holiday stress. On ground shipping at fedex office. That is not robbie. It was inspired by him. That would be the beatles for people under 30. This is actually similar to an indian melodies. I guess the birds were the first ones to incorporate it. And then robbie. And then george, when he wrote Norwegian Wood. Beautiful song. That had some influence from it. Later, this. Then he got, went and studied for six weeks and got all the mysticism and became the best known indian musician on the planet and he passed away unfortunately. Thats why were talking about it. Its a sad reason why but Robbie Shankar is gone at 92. Lets take a look at some stocks to watch. Joy global earned 2. 20 a share, on certain items come paired to 19. 91. But the forecast was below expectations. Costco was ahead of estimates and revenue and Profit Margins also above. Dupont forecasting four year earnings above the projected ran range. I believe that 25 to 330 number, it coincided when the company had issued disappointing guidance. See it right there. Exactly. So now it will be a little better than they thought. Maybe they overshot being conservative. And coinstar, the xaes red box unit launching a streaming video plan that comes with four nights of physical dvd rentals. Awesome. And that was something about netflix when they got rid of physical dvds, because the really hot movies are only on physical dvds. Is that true . I wasnt aware. When do you watch movies . Youre out every night. Im not. Coming up, mark c andreesenn the year of software as a service and michael dell on Consumer Tech and the effects of the fiscal cliff and we will cap off the hour with a little guy, jpmorgan ceo, jamie dimon, banking, economy. You never know what hes thinking. He cheaps it close to the vest. So as you can see, geicos Customer Satisfaction is at 97 . Mmmm tasty. And cut very good. People are always asking me how we make these geico adverts. So were taking you behind the scenes. This coffee cup, for example, is computer animated. Its not real. Geicos Customer Satisfaction is quite real though. This computeranimated coffee tastes dreadful. Geico. 15 minutes could save you 15 or more on car insurance. Someone get me a latte will ya, please . The chairman of ceo and dell set to talk strategy and investors. Dude, youre getting a dell . And one of the original tech disrupters and board member of facebook and handicap, Marc Andreessen. One of the original squawk makers of the hour [ horn noise ]. News team, assemble . Jpmorgan ceo, jamie dimon on the economy, the fiscal cliff and the future of banking, an hour of squawk box you wont want to miss, it begins right no now. Welcome back to squawk box on cnbc business. Im joe kernen. And andrew joins us from new york where he will be talking in a couple minutes to Marc Andreessen. First, michelle has your morning headlines, the first was john lennon wrote Norwegian Wood and harrison wrote the sitcom. People are going crazy. Go ahead, i dont want to get bogged down. The fed is meeting this afternoon and followed by ben bernanke News Conference at 2 00 p. M. Eastern time, the fedex suspected to announce a new round of bond purchases as the last program, operation twist, is set to expire the end of the month. Ben bernankes News Conference starts at 12 15 p. M. Eastern time. Steve joins us in a few minutes with the preview from washington. Another story with big implications is michigans decision to become a righright work state. It would bar members from requiring to pay member dues. The governor signed the law. Shouldnt unions be putting out the proposition workers want to join a union and shouldnt workers be able to make a choice their dollars are going to that union based on whether theyre getting results that. s what this is doing. Thats why i view this as pro worker, not antiunion. It is viewed as a big blow to organized union that has seen membership decline across the country. Dow opened higher by 56, nasdaq by 13 and s p by a little more than 7, a gain half a percent across the board. In asia, higher across the board, not a lot. Hang seng did well, higher by 181 points. Europe still open at this hour, higher across the board. A gain for germany and quarter percent for the ftse, fairly flat where decide iing he will longer be a frenchman and be a belgian. Its on the boarderboarder r and speaks french. Almost reaganesque. Well see how long it lasts. Anyway, lets get back to the New York Times, a deal book conference, cnbc is the broadcast partner on this event, which will be talking live throughout or taking live throughout the day. Andrew, do you remember when you came up with the term, deal book. You named it, too, right . I did name it. We were going back and forth between deal book and pitch book. Was it before facebook . It was before facebook . It was before facebook. Well, you know, can i just tee up who we have here . He might know the answer better than i do. We have Marc Andreessen here, who needs no introduction but on the board of facebook. When was facebook . 2004. 2004. I think you have a really good grounds for a lawsuit. Wow. Your dads an attorney. Its been a very popular thing to sue facebook. We might have some business to do. Its a line of people. You have to get in line. Thank you for being here. We appreciate it very much. Weve been talking all morning about the fiscal cliff and investing. I want to asking, the last time you were on the show, you were out promoting governor romney for president. You said, frankly, that if he didnt win, it might change things, might change the world of investing. President obama won. Your guy lost. Yeah. Has it changed how youre seeing the world . Were so long term focused, the stuff we fund is 710 years to see if it will work as a business. It doesnt change anything we do at the moment. I think it changes the political situation a lot and the budget situation a lot. In the venture world, does this issue matter . We talk about it all the time for big businesses that employ a lot of people, it matters. In your world does it matter . Matters less at the moment but a lot in the long run. Questions we always worry about in the valley these days, whats the level of regulation . What are the industries we can regulate and industries we can Fund Innovators to cause disruptive change. The thing im worried about right now is presumption including discussions around the fiscal cliff the presumption we want the government to do things. Im pro gridlock. It doesnt bother me in the least if the government is ground to a halt and doesnt do anything. Even in the context of fiscal cliff . Yes. Even gridlock means go over it. It would be preferable to go into gridlock and fiscal cliff than have an active government that gets things done. I watched you show yesterday called rise above. I think its wellintentioned and i think its dangerous. The last thing we want is the gross profit to ri government to rise above politics and do things. I almost want to stop the interview for a minute. What do you think happens if we go over the cliff . What good happens . Good or bad we raise taxes and cut spending. This is the paradox of the thing. All Business People i talk to, they ought to fix the long run situation. How do you do that . Cut spending and raise taxes. Youre not worried about short term . Im sure there will be short term confusion no matter what happens. The next thing after fiscal cliff is potential for government shutdown. Were almost over the fiscal cliff and looking at government shutdown. Theres no end on short term but long term. Except for a the rise above stuff you said, marc, you want to marry me . Youre absolutely right. I dont like government to do things, everybody getting along, youre so right. Theres this huge perception somehow government has always gotten along in america until now. Isnt it crazy . Its such a small voice, so few people who think that way. Exactly. Its a rosy eyed view at the past. The Founding Fathers never got along and competed with each other bitterly. Did you think you would get a Marriage Proposal on tv this morning . Sn i will have to consult wit my current wife. Let meask you Something Else in the headlines, this news apple may be getting closer to producing an apple tv. Your take . Does it really happen . Nobody knows because apple is locked down like a vaulted in the valley. I dont know anything. The assumption of the valley is they will do it in 2013, 2014. My take is when they do it, it will be a great product, one of the best ever built by any of our coaning on with smart tvs a netflix doing a ton of stuff. All kinds of experiments. Why isnt any following apple . Sn apple does it right and th ipad and everybody goes, oh, thats what the future will look like and people create competitors to that. Android phones are on fire and android tablets starting to do really well. In 10 years, 90 of the tvs in the world will probably be android tvs and smart tvs and 10 will be apple and apple will make a fortune. Have to ask you about twitter. You have an invest in twitter and on the board of facebook. Joe is a suggested user on twitter. Excellent. Now, has a lot more followers than before. Theres a big fight going on between twitter now and facebook and instagram. Given that youre on both sides of it, how do you see it and what do you do . I dont have a lot to say about it. I think these Companies Make their own decisions. The founder of instagram is still running instagram at facebook, an incredibly capable guy. Explain to the viewers. I dont know if everybody understands whats happening. If you use instagram,s which an app, you used to be able to post it directly to your twitter feed. Now you cant because twitter is also going into this photosharing business as well. So the two companies are heading into more direct competition and more concerned about each other. Youre hedging your bets . We have a pass investment in twitter, were a secondary investor in twitter were fond of and im a fb member so im a partisan. You may not be able to address this. Hewlettpackard. It watts said in the news you were behind the acquisition of autonomy. Were not going through that, a unanimous vote, were going on. I im a huge fan of meg in charge of that company doing a great job. What do you think of hp . The Largest Company and major supplier that runs the plumbing of businesses and consumers lives in 27 countries. What about microsoft, potentially tied to hp and bl k blackberry behind us and talking about apple a moment ago, are their best days behind them at this point . I think its a product business more than company question. Theyre making a huge push with windows 8, a huge advance than products that came before. They have a lot of work to do because apple has gol gotttten ahead and android ahead with tablets. They are a big company and has tremendous staying power and putting a lot of effort into what theyre doing. Next, tease us, what is the next great product coming up . I think education is coming up. There is too much regulation and areas we cant touch with unions and bureaucracy. Especially college education. College education going online will be big in the next five years. Do you have investments in that . The have an investment in the guy who did the google car doing Online Education, a stanford professor and decided Online Education is next and google didnt want to do it and were backing him and it will be fun to see. Marc andreessen, thank you for being here. Send it back to the studios. This is embarrassing. She is like throwing herself at the camera. Ive never seen this side of you. Theres so few voices willing to say what he said out loud. Andrew, we asked him to guest host. He can talk the disrupter stuff and politics. Hes the ultimate disrupter. Another guy came out. Will you do that . Marc . We will have him come out. Hes on his way back. Becky will be back by then so you dont have to worry about me. Right. Exactly. Got it. Shell leave the ring. Need some muscle to keep you away. The weird thing with twitter you have only tweeted in your career 709 times. Youre tracking me . No, i just looked. I dont know why they picked me. They must like the silent. I guess less is more because were not big tweeters, the two of us. Hold on. While we are on this topic and before he goes, Marc Andreessen not only has an investment but has a twitter handle. I dont think you use it. I tweeted twice. Why only twice. The first time before they invented the word tweet and said, hi, im twittering. Its hard for me to top that. You decided to give it up. I figure my best tweeting days are behind me. What was the second one . About three years later, i said, hi, has anything happened since ive been gone. That was pretty much it. There you have it, guys. I was uncomfortable. Breaking news here at the deal book conference. When they named me, i said i dont really want to be part of a group that would include me as a member and i had no choice in the matter. Great job bringing marc out. Great. A twist on grouch0 marx. That would make you a marxist. That would make me a marxist in a good way. Coming up, the fed wrapping up its meeting and what to expect. And we will talk tech with michael dell and ask about the trends in the computer industry and the fiscal cliff. And jpmorgan ceo, jamie dimon on the effect of the economy and fiscal cliff. Stick around welcome back to squawk b box. The futures have been around 50, now 52 points. A look at the percentage move. Not a lot. At least it is up and will be up for six straight days. Youre very ingagnostic about a these things, overall wed like prosperity to increase globally . Absolutely. Is that ever in doubt . With some places it is. In europe, does prosperity seem to be having a good century in europe . No. Good decade . No. With the tail end of the feds 2day interest meeting, feds are suspecting outright asset purchases to replace operation twist. Has the fed run out of firepower. Steve joins us on what to expect when we hear from them later on today. Hey, steve. Hi, michelle. The fed doesnt think its run out of firepower although the market may have a different point of view. The big debate is how the fed replaces operation twist. For background its short term securities and buys long term securities in an effort to bring down long term Interest Rates. We know it will replace it. How much . Thats about a 45 billion operation. If it replaces it dollar for dollar, what that will mean the fed in total, if you take the 40 billion in mortgages will be replacing 45 billion a month the strongest intervention in markets its done for quite a while. Big question, how does it do this . When we polled the market, theyre divided in terms of 50 think it will be treasuries only, 50 think treasuries and mbs. The stead has come into more and more the fed has come into more and more criticism. What were finding this is market is increasingly concerned all these purchases will disrupt market function and pollute the pricing information inside the market. They didnt feel that way in september of 40 and apparently were crossing a threshold of concern in the market. A couple other points, we want to know what bernankes view is on the drop in employment. We think he will say i dont think its for real, doesnt tell me the labor market is improving because of the reasons the Unemployment Rate is dropping. Then there will be some discussion about using economic targets versus calendar targets at the moment for fed watch. When it does change c the market has to Pay Attention to the change in guidance. Right now, i dont think theyre ready to do that. Michelle. What about the fiscal cliff . The fiscal cliff is something he will talk about, say they have to solve this. Hes talked before about the upside and said twice already the Federal Reserve cannot offset the effects of the fiscal cliff. The fed could one idea the fed could keep a little bit of powder dry if we do go off the cliff, the fed has something it could do. Mike duke last night the ceo of walmart spoke and he sa said they poll their shoppers all the time. A week before the election, 25 of walmart customers knew about the fiscal cliff. One week after the election, 75 of their shoppers know about the fiscal cliff and 15 say it means they will spend less on christmas. Its pretelling, right . Apparently the walmart shopper is more informed than the average american. We showed 70 . Thats out there. Its something that affects people. It was clear in the data there was an effect of the fiscal cliff on Overall Economic attitudes. The more important thing we found is that it affects businesses and businesses slow down in capital spending. Youre an economic student and you know the connection between Company Spending to buy big capital goods, buy machinery and hiring the thing everybody wants to have happen in this country. The other thing interesting in the fed survey yesterday, michelle, 41 say we are going to go over. 46 say no. 13 arent sure. Personally, i add the people think were going over the cliff to those who arent sure, i come up with 54 . More than half of the people think it will either happen or uncertain if theyre going to happen and both lead to a lousy outcome of uncertainty and holding back. Good point. Thank you. Cnbcs coverage begins 12 15 p. M. Eastern time. Still to come on squawk box, we will hear from the ceos of two Iconic Companies and michael dell the ceo of the company that bears his name and jamie dimon, chairman and ceo of jpmorgan. His company is rated highest among the big banks. Why are we playing norah jones . Robbie shankars daughter. Come on he passed away. According to the satisfaction index, thats where jami is. [ male announcer ] this is karen and jeremiah. They dont know it yet, but theyre gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, theyll find some retirement people who are paid on salary, not commission. Theyll get straightforward guidance and be able to focus on other things, like each other, 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 ] i have obligations. Cutestress. Tobligations, but obligations. G. I need to rethink the core of my portfolio. What i really need is sleep. Introducing the ishares core, Building Blocks for the heart of your portfolio. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Steenburgen. News stories of note out of europe this morning. Greece looking for an additional 1. 4 billion in euros so it can accept all the offers in a Buyback Program and additional 10 billion euros to buy back those bonds. And despite political turmoil, todays sale came in at 1. 46 down from 1. 76 at the prior auction and saying it wont stay around much longer. Coming up, two big interviews you dont want to miss. Talk to the ceo and chairman of del and his plans for 2013 and effects on the fiscal cliff and michael dell joins us next and Ceo Jamie Dimon joins us live. As we head to break, look at u. S. Equity futures higher across the board and that would be six days in a row. Dell chairman Ceo Michael Dell is preparing his strategy at the world conference but he will talk to us first. Dell chairman and Ceo Michael Dell joins us from austin, texas. Good i say Dell Dell Dell dell, music to your ears, right . A good idea. Were just trying to keep it easy for you, joe. Thanks. Michael, the strategy, i would imagine is similar to what you employed since you came back and took over, no . What we have been doing is building a portfolio of solutions to help customers solve challenges they have. You have seen dell expand aggressively into software and services and deeply into the data center. Now here at dell world with over 5,000 customers and partners, were able to demonstrate all those capabilities and really help our customers transform and modernize their it. It really enabled their businesses. I think about the world before dell, michael. You barely remember, i remember, youre a little bit younger. There werent a bunch of Dell Computers every world, it was different world and dell came along and there were Dell Computers everywhere and now it seems like a different world and i dont see a different world with dell pcs everywhere. You had to make this move early. You did. Is it possible to be a huge success . Well, there are still a billion and a half pcs in the world. Certainly, it is much broader than just pcs, a 3 trillion industry. The expansion we have been following the last four or five years really has broadened the range of things we can do. Last quarter our cash flow was 1. 3 billion, up 50 from the prior year. Clearly dell is a Company Investing for its future. We made 5 billion of acquisitions this year, really adding a lot of Key Technology that addresses the opportunities that we see in the market, he helping customers move to the cloud and addressing mobile and tablet devices, dealing with it security, modernizing application, dealing with all the social media and opportunities that creates for companies that jacky ies that i large numbers of companies and zooming in on points that help our customers succeed. You were getting close to 20 and then it came back down. I know youve seen some of these comments. What did you make of that recommendation . Goldman went from a sell to a buy on the possibility dell got so cheap somebody might want to buy it or lbo it or private equity. What do you make of Something Like that . Is it that cheap . Weve been following a discipline strategy of capital allocation. Recently, the company introduced a dividend, so we just declared our second quarterly dividend. Weve been using capital certainly for acquisitions. I think any looking at this company can see this is a company that is investing for its future. I mean, you wouldnt disagree with an analyst going from a sell to a buy. I know youd say thats a brilliant brilliant call on dell. Would you disagree with the rationale behind that upgrade. Im not really going to comment on a specific report or rumors, that kind of thing. What i can tell you is we have aggressively transforming this company, investing for our future and building out a broad set of solutions. Certainly, if you look over the last several years, youve seen the Gross Margins of the company have really shifted quite dramatically where over 50 are now derived from the new areas of dell, the software, the services, network, data center. I will say with windows 8, we are quite excited about the future of the pc. There are a billion and half pcs out there and we believe theres an upgrade cycle coming. Ive always seen you as like a child prodigy or something, the way you started. Can you solve this fiscal cliff . What should we be what should we try to do . Whats the right path out of this morass . Ive been watching the show, i know you guys have been working on that. I think clearly, theres a need for a compromise here. I suspect well get one in the short term. Longer term, theres no question any government cant spend more than it takes in over a long period of time and have anything good happen. Thats fairly obvious to everyone. We need a short term and longer Term Solution and it will require the sides to come together. Were hopeful that something happens before the end of the year. It is, will tell you, causing some degree of pause and delay. Uncertainty is never good. Wed like to see it resolved. You just lucky or smart to settle in texas . You know, texas has been great for us. We really have been well supported here. I know you had the governor on a week ago talking about how great texas is. Its really true. We have a fantastic environment, rich culture, great universities. Im talking about business and taxation and regulation, thats what im talking about, work with me. Its a great place to do business. Can we learn i dont know we we cant learn from texas. I dont know. Envy, size envy, maybe. Come on down and do a big show about that. Wed be glad to assist. Invite us down. Wed love to. Good luck. Its always great to see you. Thanks for coming on today, michael. Thanks very much. Byeby byebye. Id rather marry him. Coming up, the squawk box newsmaker of the hour. Jamie dimon with the comments. Bring you live after a quick break. What impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . If you dont have something important to say . Try running four. Ning a restaurant is hard, 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 chas wooohooo. Hahaahahaha oh. There you go. Wooohooo. Hahaahahaha im gonna stand up to her no youre not. I know. You know ronny folks who save hundreds of dollars switching to geico sure are happy. How happy are they jimmy . Happier than a witch in a broom factory. Get happy. Get geico. Fifteen minutes could save you fifteen percent or more. Welcome back. Were about to dip into the deal book conference. Deal book was started by andrew, a daily email. Hes giving a speech. Hes talking to the audience, getting them warmed up before jamie dimon comes out. There he is. Deal book was started by andrew, very successful with the New York Times, here we go. Heres jamie dimon on the stage. This is their first deal book conferenc conference. Jamie, thank you for being here today. We are in the midst, as we all know, in the fiscal cliff cliff. Im hoping for this audience, if you could, try to handicap what you think will happen over the next two weeks. First, let me give you whats important here. We could go off the cliff which will create enormous problems. I see a lot of people that say it wont be a big deal, it might be a big deal. We could have rational policy and i think the country could take off. I think its a big deal to do it right, save jobs, get the country going again and return confidence in the United States and globally. I dont know the odds. I think the odds is the prosecution politicians sometimes between december 21st and 28 will do something. They will wait follow the last minute because everybody has to make sure they have the last ounce of blood. What does the other side of the cliff look like . Is it a cliff or bunny slope . How do you think about this . I put it in the irrational category and irresponsible. You could easily say, go off, not a big deal. It may not be as big a deal as people think but it might be. Why would you take that chance . Why would you say its not a problem. We dont really know it will go through and they say maybe they will fix it january 4th or 5th or 6th or 7th. If they dont get it done january 28th, they might not get it later either. You have seen businesses reacting and dropping dramatically like in 09 and in the great depression. Business has already taken some action and its antidotal. Consumers have taken no action. My guess is they might. If consumers stop buying you will see it rapidly get bad like the debt ceiling crisis. Is jpmorgan taking any steps to go in the right direction . Were praying. Jpmorgan will be fine. Im worried about our customers and the Global Financial system. It is not a jpmorgan issue per se. We have 50 million consumer clients. We do clients that are 30,000 companies and governments around the world. Theyre all watching. Were one decision away from restoring our fiscal and moral authority around the world. Lets just do it. What is the role of business in this conversation . I ask because over the past several weeks the Obama Administration has tried to reach out to wall street in a way perhaps it hadnt earlier. Want to talk a little bit about that relationship post election. In terms of where you think business should be trying to influence or be part of this discussion. The Business Roundtable put a letter today in some newspapers signed by 150 ceos of mostly large companies. I think a lot of Smaller Companies feel the same way, we want a rational deal. Want it market credible. Know there will be increases in tax revenues link together with rationale entitlement reform with a rational multiple. Thats what the Business Community wants, not the one specific thing people argue about whether this goes up. Business wants a rational deal to go up because it would be good for the United States of america . Youll take a higher tax rate. Yeah. I dont personally care. Its not the 39. 6 . They are linked together. No one says i will take a higher tax rate so we can still be irresponsible in spending. You can de link that all you want no one does that in the Business Community. They are linked together. The attachment bait could ne 25. They know all the cards. You can lay them out and debate all day long everyone knows what they are. If they decide now you might have a booming economy in a couple months. In a couple months. What does that look like . Growth at 4 not 2 . Employment gains of 200,000 a month. Unemployment coming down, jobs going up, houses being bought. Its possible. The table is set very well right now. Corporations, middle market companies, Small Businesses in good shape. 5 million more people working than four years ago, housing has turned the corner, lets keep it going. Its ready to go. Bringing back confidence and stability and longer term tax policy, you could see some very positive reaction to that. The whats your relationship like with the white house . Its fine. The last time we talk publicly, you said it was fine then. You said to me no, no. You said to me you were quoteunquote barely a democrat. Im still barely a democrat. Did you vote for president obama . Im not going to fell. I didnt tell any who i vote for. Youve been to some of these meetings. How do you look at the white house . How do you look at how both the white house and congress has been negotiating this as a dealmaker yourself . I didnt go to the meetings though i was invited. I happened to have a trip in brazil and chile i had to go to. I liked the fact the white house is reaching out. I always believed collaboration between business, government, civil society, you will have a better outcome than antagonism. I like the fact of reaching out, people engaging in conversation. I like the fact the president went to the Business Roundtable and was on tv. Its a very good thing to do. I hope it gets to the right place. Business is not the only player but hopes it gets us to the right place. Do you think the relationship between wall street and washington is going to get better or let me put it a different way. As a result of this election, has there been any Lesson Learned about how to deal with washington differently, because it took on a very antagonist stickback an forth before the electi election . Youre talking about the recent election or the first one . Yeah. Wall street is fully pragmatic in my opinion. We just want to get the right things done, get the country moving forward, have the opportunity to compete around the world. Most people on wall street support a lot of financial reform. We had a financial crisis and should have financial reform. We dont support all of it. There are 2,000 rules coming down. Hard to say you support all 2,000 rules. Collaboration is better. Even if relations werent good last month or last year or two ye years ago, we should try to make it better next month and next year, its better for the country. Thats what we should do. If it cant be great, wall street will survive that, too. Let me ask you about public trust in the banking system, wall street. Seems like everyday you read a headline about something gone wrong nefarious behavior, hfsc, this week, 1. 9 billion in a settlement. What has to be done in your estimation and what are you doing to change that perception . Will that perception change . I am very proud of jpmorgan chase. We have 260,000 people. We do a great job for clients around the world. Safe in the storm and help cities and hospitals survive. Every now and then we make a mistake and have a bad person. No one at jpmorgan condones bad behavior. That doesnt mean it doesnt happen just like it happens in newspapers, government, congress, hell, i was in chicago and illinois for seven years at bank one and two of the governors there are in jail. It happens. You cant taint every institution the same eliminates you taint everyone in an institution because theres a bad apple. The press should be judging companies do they try to do the right thing, fix it when it happens, not just a bad company one bad person. Then you feel that way about the military, ju military, judd dishry. I wont judge you that way because someone was a bad reporter at the New York Times years ago and dont judge them because they have an unethical reporter. I dont brush them with the same brush. Bad policy. Walt h wall street has to earn back trust and i cant think of any other way to do it than to do it everyday. Do you think the industry is predisposed to this, you think where we are post crisis and the way you think about the world and Lessons Learned . In some cases, yeah, i think there were some bad actors in the business, like i said, there are bad actors in every business. If we i hmade a list of any industry, i can go to every newspaper globally and show you bad actors and bad things they did. If you want to play that game, you dont like to write about yourselves a lot. We can play that game, few. I just dont think it taints everybody. I will never agree to that. You can argue all you want, i wont agree to that. Youre in the midst of compensation, figure out everyones bonuses for this year. A, what will they look like . Were not going to tell you what compensation will look lik like. [ applause ] we here again, the big picture, we for years, no change of control, no special parachutes, no special severance programs, a lot was paid to restrict stock a long period of time. We think long term not just one year. Financial profits in one year are based on decisions made over 10 years. When we evaluate you, not just did you make profit, did you build systems . Did you treat clients well . Did you retain people . Did you recruit . Did you create new clients . Do the right thing when you were under pressure . Thats how we evaluate people long term. Jpmorgan chase according to analyst estimates this year will have a record year. We had a record year last year and a record year the year before. We do a lot of good things for people. Were in a very competitive world and will pay people well competiti competitively. And i need to do that for my shareholders. The unions and companys performance. Let me ask you a more philosophical question. How do you think about money . The reason i ask you, in this day and age, post crisis, there still seem toss bes to be remar sense of growing inequality and remarkable sense in some places about the type of compensation on wall street. When you were 9 years old, famously according to all the books, your father went around the table and asked everybody what they wanted to be. And i think you said, tell me if im wrong, i want to be rich. I was never money was never that important to me. Im sure i said that at one point like every other kid said it. And i dont like the fact that we have an increase in inequality in the United States. You better be very careful if you say were having that because i paid that penn improperly. Every person has the right to say i want to be paid what im worth in the market. Perfectly fair. There are a lot of reasons for inequality. Ways to get at that. Progressive taxation, changing things properly. The biggest inequality in the United States is inner city education. Half the kids in inner schools do high school. Many of those kids are minority. Its wrong. Its unfair. It kills opportunity. We all want an equitable society. What makes it equitable . You can do it the way cuba tried. Okay. Well, then it will be equitable but it wont be much. I dont see people saying i want inequity. We want to lift society up so everyones better off. That does not mean people dont have to pay people what theyre competitively worth. If you dont want a free society, then start dictating what compensation can be. This conference is called opportunities for tomorrow. I want to get your sense in terms of where you think, in this country at least, and maybe globally, the next rate opportunity is, if you will. From an investing perspective. Ive been around in asia and hong kong and japan recently and chile and brazil. You know what the most blinding thing is . You know whos got the best opportunity in the world . Right here. Best universities, best businesses, most innovation. In the universities were sending, unfortunately, were sending the very smart immigrants back home. We need to reform immigration. We have the widest, deepest, markets. The widest, deepest and most transparent market, in this whole mosaic, Big Companies that created this thing, this is the best place in the world to do business. Not by divine right. It may not be that way in 30 years if we dont make the right decisions. If you could only invest in one place in the world, it would be here, still. That does not mean there are not huge opportunities elsewhere. We bank people around the world. You all have a lot of people up here smarter about the future of opportunities, about the things that happen in technology. But people say, technology, technology is going to is unbelievably good, strong and growing everywhere. From systems to processes to thinking it through, to globalization. Someone told me at Stanford University, you want to talk about the benefits of some of these technology, Stanford University i think has like 400 mark will correct this when he comes out here 400 graduates every year in computer science, among the best in the world. They offered that class to 100,000 people not in stanford, and hundreds did better than the best dude in stanford from around the world. From iowa to mumbai. Now, if thats true, and you can bring education to 100,000 people who can be smart as the people graduating from stanford, what will happen to society in the future . It will be unbelievable. Technology is dark matter. Its touching everything all the time, and improving things and creating productivity. So i would be very bullish about the future as long as we have good Public Policy. Good Public Policy. I cant mention all the countries we do business with, a lot of them, but i would mention north korea, cuba, venezuela, among others. Thats what Public Policy can do if youre not intelligent. One Public Policy youve advocated for is immigration reform. Yes. How would that change your business . I tell people, Corporate Taxes, our tax system is pushing capital at the margin overseas. Now were taking brains. I believe 40 of those who graduate with advanced degrees in the United States in science, technology, engineering, math, are foreign nationals. We used to welcome them with open arms. In fact, a lot of you are foreign nationals, or if you werent, your parents were or your grandparents here. They were welcomed with open arms. Life, liberty and pursuit of happiness. Were now telling most of those people you have to go back to your country. Mark will tell you how they were able to create more jobs in silicon valley. We have to change that policy and let the best and brightest stay here if they want to stay here. The political issue is linking high school immigration with low skilled immigration and obviously, illegal immigration taking place. People say, it has to be a package deal. I dont know why. But weve got to get it done. Its not good for the United States to say, come here, learn from our best universities, learn from the best and the brightest and go home. It just isnt smart. Youre talking about that philosophically for the country. Are you lacking for talent . We are not. We have huge talent. I think were going to hear more about the advanced Scientific Technology in engineering and math. Its not in financial services. Where are you on energy in this country . Where are we . Where are you . In terms of fracking, in terms of things that and ive seen youve been financing. One of my directors, i want to say we dont have an energy policy, yes, we do, its just a bad one. The United States has been one of the most profitable Energy Nation on this planet. We never put a Rational Energy policy that changed the cost of btu, gas taxes, however you want to do it fairly, its hard to do fairly because people in north dakota use coal and people in maine use hydroelectric. But if you did raise it, you would have created a less volatile market and you would have created a huge market of energy. Its hard to put hundreds of billions into alternative energy, if oil would go back to 50. It is. Youre just not going to get that kind of investment. We didnt have a great energy policy. Were importing 50 , 60 of oil from overseas, from places that want to kill us. And now, the lord looked down upon us and has given us another chance. Lets use it. That chance is unbelievable. Exxon, the United States, everyone says by 2025, were going to be energy selfsufficient in coal i mean, oil and natural gas. That will make america more competitive. It will reduce the geopolitical pressure. Reduce the deficit. The experts tell me that you can that fracking can be just its been done, by the way, im told, for 30 years. It can be done safely and rationally. Some of the deep wells in the gulf, and its certainly safer than sending hundreds of thousands of kids overseas to fight wars. So this could be its safer than what . Like that oil pipeline would have been safe in the alternative. We need to have rational policy and do whats right for america. It can be done cleanly. Would you prefer a carbon tax . I would be for eventually over time have a rational increase in Something Like a carbon tax, yes. What would that look like . By the way, we may not need it anymore. I dont want to get into policy like that. Its far more complicated than saying how you should do it. The real issue, i havent looked at it for a long time, is regional. It costs a lot more to heat your home in michigan than it does in north dakota, because theres more coal in north dakota. Hydroelectric is cheaper in maine. How do you do it thats fair to americans. You pay so much for energy and they pay a lot less elsewhere. How do you do it so its fair. Its complex, but i think it can be done. Housing policy. This is a piece of potentially a grand bargain. If we reduce the mortgage deduction, what happens . Well, you say reduce it. First of all, i think its already limited to 1 million, theres a cap on what you can deduct. It depends on how they do it. They can do it as a percentage of your adjusted gross income or size of the mortgage. Ill leave that to someone else to figure it out. It would impact your business, though . Yeah. Again, im not worried about jpmorgan. Im not going to sit here and say do whats wrong for the country because its good for jpmorgan. Jpmorgan is going to do fine if the country does fine. So let them figure it out and do something. You have an arm of lobbyists like any other institution in the country and they are arguing on behalf of your firm. So you all know, the banks of the lobbyists, there are 7,000 lobbying organizations in washington. So i believe the Financial Companies are 35 of them. Every union, every teacher, every state, you know, every age group, that is democracy, folks. So to act like thats that is what a democracy is. You have the right its in the First Amendment of the bill of rights. Freedom of speech, ability to petition your government. I always find it a little offensive when the banks say the banks shouldnt be allowed to petition the government. If you ask me what it means for our mortgage business, i can tell you. Well be fine. Im not worried about that. We want the United States government, president , congress, to have rational policy. They know what all the pieces are. Let them figure out which politically feasible pieces are, jpmorgan will be fine. Market credible doesnt mean that banks think its credible, it means when you all wake up in the morning and they talk about it, that the people who analyze it in the press, say, this is