Transcripts For CNBC Squawk Box 20130108

The third in four years. Well have more details in squawk sports a little later this hour. But notre dame didnt show up at the beginning of this game. No. Alabama was the superior team. I didnt see a single inning. A single inning . You didnt make it to the ninth . Those rednecks spanked those catholic boys. Thats i watched the first half and then went to bed. I think a Rutgers Notre Dame game might have been better for the viewing audience. It was a bad, bad first half. The s. E. C. , you know, theyre looking for somebody to come in that can give them a decent game. Im telling you, they were the only team that showed up. Alabama, they deserved this national title. Yeah, but they got beat. Johnny manziel beat them. But they looked so good. Weve seen other teams, lsu has played them tough. Im telling you, alabama is lsu played them tough. People say notre dame didnt play anyone. Notre dame beat michigan, michigan state, stanford, oklahoma, usc. There were some squeakers in there, though. I think i could have picked theres some people that i could have picked that might have given the viewing audience is a better show. The 1973 situation where these two played each other in the rose bowl and if you were going to see this, the same thing, last time around alabama had a tenyear favor. We could have played the linebacker and played i dont know. It was bad. I really went to bed. If i didnt stay up the previous night i know. You didnt stay up for it . I did not. And if i didnt stay up to that, im not staying up for some Football Game, ill tell you that. My soap opera boys who are here. I was thinking about you watching the because we hadnt seen the actual end of season two. And i was thinking about what youre missing. Theres no way you should not be watching it. Eventually i will watch it. There are. I can watch the one thats on. I need to watch it when i its like the new way people view. When you can, when you get a chance. Did you see that Michelle Caruso cabrera has the third season on dvd . She gave me my soap. She did . She did. She came over the other day. You werent there at the time, but she was going to show them off. Yeah. Lets start with the markets this morning, as well. The s p retreating from a fiveyear high yesterday. The stocks finished the session off their lows. U. S. Equities are indicated a little weaker. Dow futures down by about nine points. As for a gauge of fear in the markets, it extended losses. Now its at 13. 79. European stocks in early trading this morning, youll see are indicated just a little higher. Nos a lot of strength there, although the cac is up by almost. 5 . Major asian markets overnight closing at well, the hang seng was down by almost 1 . The nikkei in japan you was off a little over. 8 . Shanghai composite a little weaker. We will have more from our colleagues overseas in just a few minutes. Now to the corporate story of the morning and its the buzz you want. Aig reportedly considering whether to sue uncle sam over the terms of the insurers bailout. The New York Times supporting that the companys board is going to be meeting tomorrow to consider joining a 25 billion shareholder lawsuit against the government. The suit deals with the nature of the rescue, what became of a 92 stake in the company. Deals with high Interest Rates and the funneling of billions to the insurers that wall street clients. The lawsuit says these terms deprive shareholders of tens of billions of dollars and violated the fifth amendment which profits the taking of private property for public uses out compensation. This is ridiculous. This is former ceo Hank Greenberg is pitching aig to join the suit. Greenberg was ousted by the company in 2005. The company is running thank you ad campaigns right now. Hes the one who brought the suit. Hes trying to get them to sign on to it. By the way, to put some context around it, i think there was maybe a 1 or 2 chance before this article came out that the board was ever even now i think theres a zero percent chance. But i think the chances before the article, after the article were next to nothing, anyway. And you could say that they have to do this because of fiduciary reasons or of all things. The worst thing that could happen is that Hank Greenberg pursues the lawsuit on his own and Hank Greenberg actually wins. Didnt a judge already throw out this lawsuit . It was thrown out in new york. So it creates this backwards bizarre situation. Having said that, i think running the ads saying thank you, america, and trying to move ahead with a suit, i think its crazy. Just the idea that you would say thank you or were back on our feet and moving along, theres a Public Relations nightmare from this. The smart readers in the paper today, when you read the statement from aig basically says we have to consider it as part of our fiduciary issue. Man, talk about bad pr. Anyway, the federal governments consumer watchdog is set to unveil new home lending rules. The move could potentially reshape the Mortgage Market by ushering in more standardization and preventing the return of the exotic loans. The cfpb will define standards that all mortgage lenders are likely to follow when originating home loans. The new rules are expected to be contentious because they will determine the type of loans that banks will offer as well as to whom and on what terms. There had been concerns that new regulations would restrict credit and make get ago mortgage too hard. In our real estate news, apartment rent continues to rise as vacancies are falling. A Quarterly Report is set to be unveiled today by rias. The average nationwide monthly apartment rent was 1,048 in the forty quarter, up. 6 from the third quarter. Year over year, its up about 3. 8 . Meantime, the vacancy rate is at its lowest cincinnati 2001. Chesapeakes ceo will be the receive a bonus for 2012. The oil and gas company is battling a financial crisis and a regulatory strain. Other actions taken include cuts to incentive pay and mistakens to increase shareholder influence. And in some other corporate news, yum brands warnings earnings will fall below companys expectations. Sales in its two china divisions shrank deeply in the Fourth Quarter. Yum is blaming adverse publicity about the poultry supply. A guy made a joke about the poultry supply and this is what happened. It wasnt you, necessarily, but you did make a completely unfair characterization. Unfounded. Apparently the Chinese Government did, too. I dont know, the Chinese Government didnt say it wasnt real chick. What did you say . You said it was a cat or something. I like all animals. You might not have been here. It was terrible i couldnt m didnt like it and they shouldnt have liked it. They did . And yum is still sensitive from that frivolous, ridiculous suit that went nowhere about the taco meat that wasnt taco. Wasnt meat. Wasnt taco . Wasnt meat. But anyway, this Chinese Government had some bad publicity and it did impacted sales. What did china say about the meat . I dont know. Thats what i wanted to look up. Late last month, the chicken was expected to contain large omts of antibiotics. This is the only tweet ive seen. You all look very nice today. Lets forget yesterday ever happened. Youre referring to the shirt . Someone is. Someone is. Wait, you guys did this again. This is a new its like a uniform today. This is an uncle sam. The last kick the can was a i like that one. Why did you get that one from . Same place. Since the fiscal cliff, this is uncle sam kicking the can. I heard Ross Westgate earlier this morning saying that they have banned that phrase, kicking the can. I said it yesterday and i cringed as i said it. We overuse it completely. I think hes probably right. I like your tie. Probably a year ago we tried to change it to something else. But i did cringe as i said it. Eddie lamp ard is saying the ceo is stepping down next month citing Family Health reasons. Chairman Eddie Lampert is going to be assuming the role. He had a 31. 1 stake in sears holding. Shares of sears during the last year, take a look at this. Its like going nowhere fast. Pretty much has been the story of sears. Can we take a look at that . I dont know if we can take what look was lampert never the ceo . There was a period where he was the this eo, but it has been minimal. This is a better look at whats going on in this Company Opinion you can see there in 08, there are 100 dollar stocks. It looks like lampert was really going to get it going. This is a better look at things. And i think if he did this i have to go back and look at when that transaction happened. Back in 03 or 04. Here we are, 42. 92. Another question, how long is he going to be the ceo for . Is he a retailer, is it not . A lot of questions about whats happened this year during his tenure. Having said that, you know, your year on year ibetas retailing is hard work. Through there is a basis that year on year, its better. Did you see the terry l u u n lungrens piece on electric . Oh, yeah. It was a great piece. More importantly, i didnt realize he had been on the dating game. How did the date go . I was going to ask him. But back in the 70s, could you expect things to work out successfully . I dont think so, right . Unless Jennifer Granholm oh, my gosh. He is like got a sense of passing. Daddy called him, he looks look 007. I went to the jets game, we were sitting next to each other. Its freezing, everyone else is wearing hats. He looks perfect. Absolutely his hair is perfect. He would freeze before he would look bad. They say he looks like pierce. I think he looks like a super hero before hes change. Superman, but not super nerds. Lets get to the Global Markets report. Kelly, we did hear you stand by this morning to hear about that kick the can phrase. Not allowed to be said any more. We agree. He wouldnt even let me ask if that was the phrase we were talking about. As you say, the struggle is coming up with something to replace it. I feel a feeling were going to use that one quite a bit. Lets take a look at whats happening overseas this morning. For the most part, european equities are higher, shaking off the news that the eurozones Unemployment Rate rose to 11. 18 in november. That is a euro area high. If you move forward into decent, you can see the aumt of prices. Theyre prizing in some easing from the central bank down the road. Quick look at what is happening at the bond curve. 5. 1, just under 5. 1 . The spanish treasury outlining the funds you will need for 2013. You can expect theyre going to take as many advantage of these conditions as possible. Italy, 4. 3 on the tenyear. The gilt yield, above 2 . We will explore whats happening with growth Going Forward. Slipping over now to currencies, here is what weve seen some interesting moves. May not look like much this morning. The euro dollar is roughly flat. But the dollar yen moving down by about. 3 . It was really actually some support from the euro that came from comments out of japan. Japan will be investing, bonds buying in the esm. That is an order to indicate some level of support for the eurozone project. But it also works to help, yes, weaken the yen. On that note, back over to you. Its always about the yen. Kelly evans in london. The can. Thank you. Were not going to forget that one. Coming up, why electric cars may soon make more money. And well be welcoming drew mattes to the table to find out what he says will draw todays trading session. Stay tuned for that and a lot more. Welcome back to squawk box there morning. Take a look at how u. S. Equity futures are opening the day. The s p would be off about 1. 5 points, dow jones off about 9 noints and nasdaq off 3 points. The government wants all hybrid and electric vehicle toes make noise when traveling under 18 miles per hour. The national Highway Safety Administration Says the vehicles dont make enough speed to warn pedestrians. You hear this all the time. Did you ever see a hybrid car . Theyre so quiet. They are quiet. You dont want to step out in front of it. Theres no sound there. Is it the same thing with the camera, some of them dont have a shutter noise . I like the ones that put the fake shutter sound back in. The sound would be very cool, i think. If youve ever discuss add loaf of just purchased bread that has mold, microzap claims its Technology Allows bread to stay mold free for about 60 days. This process, by the way, could eliminate baker eps a needs for conservatives and ingredients used to preserve flavors. I like the idea of getting more of those preservatives out. Mike seidel is now joining us from the weather channel. Good morning. Another great day in the northeast. Things are warping up. It doesnt feel like january. New york city, sunny and 47. Waudz, 53. Back in charleston, west virginia, down to 53 degrees. Now another story developing, rainfall is beginning to hit parts of texas. Some areas could get 5 to 7 inches of rain over the next couple of days. If youre flying out of houstons airport or dallas, there may be delays tonight and tomorrow. Some of these storms could produce severe weather. Theres a chance of a tornado tonight or tomorrow. Not a huge chance, but there will be some severe storms. Florida looks terrific for the foreseeable future. Highs, upper 70s and low 80s. Even in miami, 82 is above average. Your average high now is about 76 or 77 degrees. Sunny and mild, midwest. Chicago looks terrific. A little clipper system with some light snows north of minneapolis. Better chance of snow there by friday night and saturday. The west is quiet now, but a storm coming in will reintroduce fresh powder for all the west beginning today for the next couple of days. In the meantime, sunny skies in l. A. , wind and rain in seattle. As far as the form goes thats tracking out of texas, this will be the big weather story for the next couple of days. Also the big weather story is the fact that theres rain. Even up into chicago and the midwest, some of these areas under flat flash flood watches for 5 to 7 inches of rain. Here comes an area towards chicago. That rain eventually will head to the east coast which brings us to the wrap up here. New york citys fiveday forecast, and you wouldnt think it was january by these numbers. Thursday, 44. A little rain with a front than behind the front. Look at the weekend numbers. Lows in the mid 40s and highs in the 50s. Very mild weather. Late next week, it will get colder. But, again, a lot of us, thank you in the east and in the west. Lets talk markets now. Joining us now from ubs, senior economi economist. Weve been talking about the debt ceiling and one issue weve not talked about on this show yet is what i think is a crazy idea, but i think you know where im going with this about this platinum coin that everybody is talk about. About whether the treasuries get over the debt ceiling, can actually mint a platinum coin worth 1 trillion and call it a day. But i feel like its getting transaction in weird places. Well, among politicians, so theres your point. Look, here is a couple problems i have with it. One is that the fed is not allowed to buy platinum. So how does the money get created . The government can print whatever it wants on any coin it wants. Its a clever idea. Gold coins work and the amount of gold is more than ta face value so you never sell it at face value. So you would have to have a coin that would be worth more than 1 trillion after you melt et down and but would that convince anybody that we have any situation on whats going on and weve managed it . Absolutely not. And the person who came up with this idea would be the first to say that. Who came up with it . I dont know. I forget the exact name. But the 14th amendment the white house is the 14th amendment is that the president can do whatever it takes in order to maintain the u. S. Debt. So basically to avoid default. The problem with that, though, is that who is guy to buy the u. S. Treasury securities if the president went ahead and said the debt ceiling doesnt matter and they issued this debt . As an investor wes i dont want to own a piece of debt that might be illegal three months into the future. So these are interesting ideas, but i think there was a congressman yesterday who is putting together a bill to stop this from happening. Yeah. I dont think the fed would take it, right . First of all, the fed cannot buy it because its not gold. They cant buy mratd numb. That rules out the idea of the fed monetizing it. And if youre not going to deal with Federal Reserve notes, which is what you and i have in our wallet, its trying to get somebody to take it as payment for something is a whole other matter. Lets talk about things that are more realistic. Earnings season begins today. Alcoa were going to get after the bell, right . Your sense on where we are . I mean, it will probably be okay. Firms have been very aggressive, imagine their cost structures. One of the reasons why we think terms are going up is because shares are moving towards appear ex and labor is more variable. You could still end up with a decent earnings season despite relatively weak growth in the Fourth Quarter. And your chance on fomc . Mountain out of a mole hill. This is the same fomc that gave us the doubling of the fed Balance Sheet. Were supposed to believe theyre hawkish in some way. The idea that theyre going to have to stop buying a mess of securities sounds great until you get a negative equity market reaction. My experience with ben bernanke, just watching how it works out, is that when the equity market sells off, ben bernanke gives the equity market whatever it wants in order to keep it up. He is worried about the wealth effect and hes going to do whatever it takes to keep that wealth effect. And you dont think theres going to be a pullback at the end of year . There could be a small pullback at the end of the year, but were not talking about the complete elimination of purchasing. Were talking about maybe going from 45 to 35. Were not talking about anything thats going the lead the u. S. Treasuries not filling a massive amount of debt, especially for the Federal Reserve. I learned a lot. Thank you. Appreciate it very much. Coming up, black hawks chief Investment Officer after a pause in the rally yesterday, well ask if the bulls come back today. But first, celebrations are planned today for the 78th birthday of the king of rock and roll. Elvis presleys hometown of tupelo, mississippi, have a number of events including a film tribute and the lighting of its first statue. The graceland mansion in memphis a ceremony planned with live music and tours of the house ask the grounds. [ male announcer ] some day, your life will flash before your eyes. Make it worth watching. The new 2013 lexus ls. An entirely new pursuit. She knows you like no one else. And you wouldnt have it any other way. But your erectile dysfunction you know, that could be a question of blood flow. 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Ask your doctor about cialis for daily use and a 30tablet free trial. [ male announcer ] how do you turn an entrepreneurs dream. Into a scooter that talks to the cloud . Or turn 30million artifacts. Into a hightech masterpiece . Whatever your business challenge, dell has the technology and services to help you solve it. Good morning. Welcome back to squawk box here on cnbc. Im joe kernen along with becky quick and Andrew Ross Sorkin. U. S. Equity futures at this hour are slightly lower. Did close down 51 points or so yesterday. Making headlines, a Pilot Program for volt in the stock market is now not likely to be rolled out until april. Not seeing a whole lot of volatility. We could use a little volatility. I dont know whether we need to ramp down the volatility at this point . We got a 13 on the vix. Changes and financial Industry Groups want more time to prepare. Its the socalled limit up limit down initiative was approved by the s. E. C. Back this june. It would pause trading of individual u. S. Listed stocks if they loved outside of praise range based on where they had recently traded. During the timeout, traders would assess whether they get a timeout. Actually, this is a good thing. It will prevent the flash crash test. It will give us a chance to find out whether the stocks move was a glitch or a move. There were proposed testing schedules for the program to traders on yesterday. Do you think the timeout is going to work . You should get a timeout. My boy has a timeout, he keeps going. Thats why it may not work. Kyle has a teacher that says, this is my timeout shirt. Is there one youre thinking of he gets his trip and then he says he wants to stay there because hes happy. The timeout is not working at all. He can escape from the crib, though. Hes really smart. He now has a tent on his crip because he knows how to escape. And he loves it. He says, close the door. Do you have a padlock on it . No. But he now knows how to open it. Blackrock is out with its whats next in to 2013 report. Joining us now on set is russ, blackrocks chief investment strategist. You say there are a lot of risks still out there for 2013, but maybe the biggest one is that youll miss out on any up site if the market takes off. Any one of the things which is distinguishing this year from others in the market is the tail risk in the market. If anything, its more entered on the u. S. But a lot of the more macro, larger risks that really kept a lot of investors on the sidelines in 2012 have come off the table. Europe is much less of a risk than it was a year ago. We dont see the same type of concerns about a dissolution of the euro. It really was a headwind for the markets, a lot of early 2012. Is that good news for u. S. Stocks when you look at it or is this something that makes europe look more attractive relatively speaking . Its probably both. It does make europe look more attractive. Theres some companies that sell cheap, they sell globally. But its good for the u. S. It lowers the risk premium for u. S. Stocks. It helps the valuations. Its good for Global Equities. Youre not necessarily looking at u. S. Sent ricentric . The u. S. Was the safe haven. We could argue whether that was deserved or not, but it was the best house on a bad block. But because of that, the u. S. Is a bit expensive compared to other markets. Stocks are still cheap, but not as cheap as they are in asia or other parts of the world. One of the themes is cast is wider net. Some of the better opportunities were seeing are not just in the u. S. , theyre in europe, as traul ya and emerging markets. Is there an assumption that this will get dealt with, whether its in the final hours or whether this is something thats messy along the way. The prices right now, is that reflecting the assumption that something gets dealt with . I think so it does. The vix is at 13. Its difficult to argue theres a lot of fear in the market. I think investor webs theres the belief that theres always an 11th hour compromise was reinforced by the fiscal deal. At least it happened. That convinced investor thats no matter how many drama you get out of washington, that you could see it. Does that mean if the deal does come through, were not going to see an upside and if the deal doesnt happen, youll see a big clash . I dont believe the u. S. Is going to default on its debt. That said, the risk is similar to the fiscal cliff. You get a bad deal. To your point, i think if you do get a bad deal if it happens in the last minute, if theres another downgrade, there is risk in the market which makes last weeks rally hard to understand given that you get three big fiscal issues coming up. Youve got the debt ceiling, youve go the sequester. On march 11th, you get a continuing resolution or the government cant fund itself. But, again, weve seen all the upside to a solution being worked out, however bad that solution is, weve seen the gains based on what we saw last week . I think we have seen the gains. From here on in, it is dependant on the fundamentals, you get a betterthanexpected earnings, you can with stand the fiscal flag on it. To me, those are the big factors that will drive the equity markets. When it comes to earnings and the season that kicks off tonight with alcoa, its all going to be about guidance. Were not looking at the Fourth Quarter as much given all the weird things that happen. This is about how confident ceos are on the calls. I think it is about confidence. Are Companies Going to send . What is the expectation for the consumer . At the end of 2012, it wasnt awful. Its still conforming to the slow growth sluggish economies have had. On top of that, youve now put on about 1. 5 of fiscal drag. You may put more on top of it if the sequester gets kicked in. You have to be concerned about growth in key one and two. I heard that consome consumer sectors, things like leisure travel, consumers continue to spend. What sectors are you looking at as ones that are the best place where you might see the most up side . I think the places we see the most up side are those that are less leveraged in u. S. Consumption. So places like u. S. Technology, Energy Particularly in the service sector, places where even if you do get some disappointment on the consumption, are going to be worried about q1, that these Companies Still have the ability to outperform because they leverage a global growth, theyre leveraged to emerging market. One other things thats suggested is looking at larger companies. I had a big rally in small caps last week, but the companies that are from the best positions are the mega and the large caps, not the small caps. If youre looking at Big Companies that are global companies, what are you talking about, a cisco or something . Yaes. I think thats a good example. Companies that are leveraged in infrastructure, companies not so dependent on that consumer wallet share. Thank you very much for coming in today. Thank you very much. Coming up, were going to take a crip to the futures pits and check on the early action this morning. But first, check this out. Mcdonalds changing its name in the land down under. For one month, Mcdonalds Restaurants are going to be renamed macas, a local nickname for the change. The fast foot giant is making the change in honor of australia day. A roent survey found at least 50 of the ought trailans use the name maccas instead of mcdonalds. I dont spend money on gasoline. I am probably going to the gas station about once a month. Last time i was at a gas station was about. I would say. Two months ago. I very rarely put gas in my chevy volt. I go to the gas station such a small amount that i forget how to put gas in my car. [ male announcer ] and its not just these owners giving the volt high praise. Volt received the j. D. Power and associates appeal award two years in a row. Are you flo . Yes. Is this the thing you gave my husband . Well, yeah, yes. The name your price tool. You tell us the price you want to pay, and we give you a range of options to choose from. Careful, though that kind of power can go to your head. That explains a lot. Yo, buddy i got this. Gimme one, gimme one, gimme one the power of the name your price tool. Only from progressive. Welcome back, everybody. Take a look. U. S. Equity futures barely nudging at this pour. Markets trying to figure out which direction it wants to go. We did see big gains at the beginning of the year. Now things have stalled out. We have earnings season coming up and a lot of people are going to be looking to see what the guidance is, figure out which direction to go from here. In our headlines this morning, a chinese businessman pleaded guilty to selling stolen American Software that was used in defense. Space technology and engineering and u. S. Officials say that this case is the first of its kind. Prosecutors report that the products held a retail value of march than 100 million. The Sophisticated Software was stolen from an estimated 200 american manufacturers and sold to 325 black market buyers in 61 countries between the years 2008 and 2011. And now to the futures pits and kevin ferry. You know, kevin, youve been, you know, sitting around watching grass dry, watching paint grow in the tenyear. Finally, a little bit of movement, anyway. What do you expect for 2013 . Okay. Yeah, you know, quite active obviously until the end of the year. As becky was pointing out, i think the really interesting thing is that since the information on friday, all the markets have calmed down appreciably. So, you know, i dont think thats necessarily a bad thing. So there was a lot of the tenyear notes topped a lot. That was the high. All of a sudden in the last week of december, everybody recognized that it was lower. And you started to hear things like the fed was going to stop or that we were in a bear market. I think its way too early to get excited about that. But you did see that the market moved back what i think was better value and now allows for these other debates about the debt ceiling and whatnot to take place with what i would tr a much more constructive cushion or a rate concession built into the market. So the other market that you might not follow as closely, how about currency markets, gold . What are you seeing . Its early. Here is the thing. The big thing for us back there is after being frustrated quite a bit, it started to see the last part that worked out quite well. But here is the difference. It started that the yen was pushing down highly correlated to driving the market here down behind it. If you noticed, in the last week, it was the note market here. The yen was trying to stabilize. And those lows began to beat the yen up a couple last time. So as we stabilize on friday, now youve seen a twoday correction up in the yen. But abe and aso now seem to be committed that they have to make it go down again. And so the timing of that trade to start beating up on it i think is only a matter of hours or days, certainly not weeks. And what over the next 12 months or so, theyre still in a i dont know, a notion that gold is still going to creep its way back up towards 2,000 because of the global easing by all the central banks. I dont know. If stocks were to get more attractive or if the economy were to do better and there were other places to go, is it possible gold continues to consolidate for the next year in 1500, 1550 is possible . Multiple years. Im not much of a gold person, obviously. We look at gold and the term structure of real Interest Rates. And beyond that, i dont really have much use for it. But we were a big fan of selling silver as i pointed it out to you guys on your show one morning. So i think that was a temporary trade and those people will come back to it for a veert of reasons. But if other things yield better, i think that, you know, theyll move money out of it and it doesnt have to collapse. It will move sideways like it did for the decade at the low. I think that the other thing that you see is that for us, you were able to take advantage of prices in 2012 and buy things on the chael and is remain constructive. You know, what we told our clients at the beginning of the year was its harder to do that. You cant keep tricking people that he end of the world is coming. That was last years modum operandi. We think its going to be tougher. Thats not necessarily a bad thing, either. Id say one point id like to make real quick about the debt ceiling. My friend ed bradford and i have been talking about this. Forget about the coin. Forget about the constitution. The United States could, like britain, issue annuities for what they call console. You could become a never ending equity owner in the United States of america. That goes it would have nothing to do with the debt ceiling and they would be able to finance themselves easily at a low rate. And i think that the whole country could get behind that concept. Although theres still a dysfunctional washington and thats not good news over the longterm. You bet. But at least it takes people out. I mean, you know, i guess if you dont know that washington is completely dysfunctional by now, then were not doing a good enough job of getting the message out. Im just saying that theres a lot of misinformation, as you know, about the debt and what the debt needs and how the United States finances itself. And there are other alternatives in playing gimmicks with coins or taking the real attention away from what needs to be done. Theres a lot of debt. Theres going to be debt. And you have to really draw the line between what is the budget deficit and what is the large amount of debt in the system. People like to leave off what is on the other side of the Balance Sheet. Those are all the great as etss that go against those liabilities. I dont know about washington being dysfunctional. If in two years the country wants to elect, you know, a completely Democratic House that will agree with everything that the Obama Administration wants, then well do that and well electric more democratic senators, the democrats can control the house, the senate and the white house and well give the president a rubber stamp on everything and washington will be totally fixed and well live in this great, great european country. So maybe it will go that way. But if it doesnt go that way and its not washington, its the people that send these representatives to washington who disagree with theres a 50 50 people split in this country of people who love entitlements because theyre people on the receiving end and theres people on the other side who is funding everything. I dont know. I dont know whether its a broken washington or were just at a crossroads in the way the republic is governed and we have to make a decision as a country which way we head. Right. Thats definitely a lot of the ltage. Theres still a lot of assets on the other side of the Balance Sheet of all those liabilities. You have to focus on growth. Growth should be the you know, thats still the best way out of of this whole thing. It is. I know. Anyway, kevin ferry, thank you. See you later. Okay. Coming, were getting highlights from last nights National Championship game. But first, in media news, late night tv is getting even more competitive. Abcs jimmy kimmel is making a move tonight to 11 35 and displacing night line from that long time position on the network. The network says its going to see higher ad rates due to the move. Nightline moves to after jimmy kimmel at 12 35. What are you doing . Nothing. Are you stealing our Daughters School supplies and taking them to work . No, i was just looking for my stapler and my. This thing. I save money by using fedex ground and buy my own supplies. Thats a great idea. Im going to go. We got clients in today. [ male announcer ] save on ground shipping at fedex office. Impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 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. Welcome back to squawk this morning. Making headlines, Samsung Electronics says its likely earned a quarterly profit of 8. 3 billion, selling about 500 handsets a minute. Samsung also benefiting from a pickup in demand for flat screens it makes for mobile devices, including those for rival apple products. But some analysts say investors are concerned samsungs momentum may slow in the first half. Also at ces theyre selling a 20,000 television that starts what . The new tvs start at 60 inches and go up to 100. 85 . I heard about it. 85, thats life size at some point . Oh, no. We wanted right. It will be in like two years. Wait. That would be it would be more expensive to remodel your living room. Now to sports and i like the sweater. I like you in that sweater. Thats the sweater. I was in wisconsin when you said that i wore i dont think the guy could wear a sweater. But youre casual. You got the casual, almost a suito jean type thing going on. Do a couple interviews in the field today and this is what they want me in. And were talking sports. What team could have been a Good National champion . I think texas a m might have been the team. Well we talked about this off camera. It shows ow good Johnny Manziel is for how he played against alabama. They say the georgia alabama game and the s. E. C. Title was for the national title. Obviously notre dame got smoked. Just waking up, 4214. They didnt show up. Becky summed it up. You guys have to go to bed. Literally the first play was stopped for a loss then after that it was a big pass and then it was over and becky said she turned it off at halftime and i think that thats basically what everyone in america. Ratingswise i think its not going to be as big as some expected. Analysts kept trying to say things like oh, this will be the play where they might be able to your honor it around. No chance. In fact, theyre not going to turn this around. I was going to bring this up later. But you know who Katherine Webb is . Oh, yes i do. Have a listen. Shes got like 300,000 followers now. Have a listen to Brent Musburger in the first half on Katherine Webb. Thats a. J. Mccarrons girlfriend. And right there on the right is dee dee bonner. Thats a. M. s you quarterbacks. You get all the goodlooking women. What a beautiful woman. Wow. A. J. Is doing some things right. Take it easy, brent. On national television. He had 585 twitters followers before that. Then she had like 300,000. She got 100,000 during the game twitter followers. Shes miss alabama, went to auburn and thats a. J. Mccarron the quarterbacks girlfriend. Brent was a legend. Technically captivated attention because the game wasnt captivating his attention. The other thing i want to point out to you guys is vegas. The big money, i was toltd, was on alabama, but there were more bets on notre dame. That means people who went with their hearts rather than and the smartd money took alabama. What was the spread . It ended up ten points by the end of the afternoon yesterday. So vegas did not make out because they wanted alabama to win and not cover. So early on, as notre dame before they were undefeated, they were hoping for a foil to go or not a foil, but a, like a david to up against. It was almost like a fantasy thing to get someone who go up and be this years, you know, other side. I heard some people complaining about some of the calls and stuff last night. But i got to tell you, alabama was just a better team. Roll tide. They won. They were a better team. Even before alabama got beat by a m there were a couple of close games where they looked didnt lsu play them tough . Yeah, the s. E. C. Is so tough, theyre not perfect. You cant paint them as some, you know, juggernaut. They had then florida got beat by some crappy team in the bowl game. Not crappy. Well. Youre right though but they clearly were the best. We have more of this mornings top stories including some executive shakeups at three companies. Woman were helping joplin, missouri, come back from a devastating tornado. Man and now were helping the east coast recover from hurricane sandy. Were a leading Global Insurance company, based right here in america. Weve repaid every dollar america lent us. Everything, plus a profit of more than 22 billion. For the American People. Thank you, america. Helping people recover and rebuild thats what we do. Now lets bring on tomorrow. [ male announcer ] how do you turn an entrepreneurs dream. Into a scooter that talks to the cloud . Or turn 30million artifacts. Into a hightech masterpiece . Whatever your business challenge, dell has the technology and services to help you solve it. The calm before the earnings storm. Whats on investors minds as the busy season kicks off today after the bell. Mark fauber will tell us what he is seeing ahead. The next fiscal threat to america. We are doubling our efforts to rise above with wisconsin senator ron johnson, and former bb t ceo john allison. And the latest read on how Small Business owners are coping with the debt ceiling debate, and what it means for the economy. Second hour of squawk box starts right now. Good morning and welcome to squawk box here on cnbc im Andrew Ross Sorkin along with joe kernen and becky quick. Take a look at futures. See how the market is setting up today. Red arrows across the board. Dow looks like it will open off about three points. Nasdaq and s p 500 marginally lower. We also have some executive changes to report prominent in the headlines this morning. Dells Senior Vice President for Corporate Strategy David Johnson is leaving to take a senior position at the blackstone group. Johnson joined dell in 2009 from ibm and you might remember this. It was a controversial move. Ibm had announced an unsuccessful legal challenge to keep johnson from joining dell in the first place citing a noncompete clause. Also this morning sears chief executive louis deambrose yo is stepping down on february 2nd. Citing Family Health measures for the reason. Chairman Eddie Lampert has been taking over as the ceo position at that time. Of course, the company had a hard time with its stock down about 6 over the past five years. Compare that to walmart which was up 50 and you can see where this is going. Also American Airlines Senior Vice President craig keyinger is going to become ceo of virgin atlantic. Hes going to assume that job as of february 1st. Current ceo Steve Ridgeway is retiring after 11 years on the job. Lets welcome our two guest hosts who will be with us for the next two hours. First up we have senator ron johnson who is a member of the commerce and budget committees. Also john allison, former bb t ceo, also president of cato. Welcome to the both of you. We have a lot to discuss with you. First we want to get to some of the things were going to be talking about over the next two hours. Guys, we have you here because we have some serious issues. Things that are facing our nation and i know you both have some very serious thoughts about them. True. Senator, you brought some cups that i think lay out some of your concerns. Listen, what i like to talk about, obviously, is how do you start decreasing the level of uncertainty, bring certainly back to this economy, you know, restore confidence so we can get our economy growing again which is the primary, thats the best way to solving our fiscal situation. I think the other problem weve got to solve is the fact that people really dont understand the steph sit problem. Youre aware, im big into charts and graphs and we put some of those on cups, things like the bankrupt universal security system. So it really is about getting the American People to understand the full depth of our situation so we can fully do the make tough choices. Weve had a lot of people who have talked to us who said that this is not something that washington will be able to handle on its own. That its not something they expect to get passed unless the American People kind of step up and push for this. I guess thats your opinion, as well . Absolutely. The American People need to understand what the problem is so they actually support the solutions which arent going to be real fun, quite honestly. Okay. And john, same situation . The thing i want to focus on is the fact that the real challenge is Government Spending. How our spending is financed is less important. Than the fact were spending too much. Government expenditures, including the regulatory cost, which is really a government cost, now are over 50 of our gross domestic product. A country that operates that level ends up with much Slower Growth rates and the compounding fact of that is to radically reduce the quality of our lives in 15 or 20 years and its proven. Friedman proves this a long time. The president of the Cato Institute not the cato welcome, right . Yeah. When did you take over, john . October 1st. The whole deal, cato. So breathing more objectiveism into some entity that already got a little bit of objectiveism into it already, doesnt it . Enlightened selfinterest . And limited government. The history of limited government is good and the history of Big Government is bad. Well talk in two seconds. I just made a point with kevin offhand about everybodys says washingtons broken and its like, you know, there are people sent to washington that are trying to stop a Freight Train headed in what they feel is the wrong direction. I dont know if washington is broken or gridlock is the last thing weve got going for us from trying to keep u. S. Ending up where we dont want to be. The governing body of government reflects really how broken government is, quite honestly. I dont know why anybody would expect i dont know too many people that think government is particularly effective or efficie efficient. So by definition government is stuck and when youve got a country this divided about which way we want to proceed, you know, when weve got these entitlements that people love entitlements but we way overpromised. And you know, there are people that dont want to give up any of them, there are people that feel were not going to have any entitlements if we dont reform. Thats literally true. Were going to dig into this a little deeper because we have both these gentlemen with us for the next two hours. In the meantime were talking more about the recent wall street rally. Its hit a little bit of a speed bump offer the last few sessions. Joining us on the squawk news line is marc faber, managing editor and publisher of the gloom, boom and doom report. One of the Key Takeaways is that you dont think the asian stock markets are going to necessarily do very well in 2013 and as a result youre trimming back your exposure to some of them. What do you think is going on and which markets in particular do you think will not perform as well . Well, what i basically said is that markets that had performed extremely well since the lows in march, 2009, in other words malaysia, indonesia, the philippines, thailand, they are not going to do particularly well in 2013. On the other hand, if i look at the kind of money that is sloshing around the world, i think investors will look at markets that have performed very badly such as vietnam, china, and also japan until recently, and that money will chase from some of the high valued markets to these markets that had a horrible performance. As an investor if you need to own stocks, then i think vietnam, in china, in japan, i think particularly in japan, and maybe also in ukraine, and would avoid the markets that have performed spectacularly well. Is that just a bunch of what goes up must come down or what goes up wont continue to go up . Well im negative about 2013. I think we had a huge runup in stock prices from the lows in march 2009. The valuation in asia are not particularly priced compared to say zero Interest Rates on deposits with the banks. And less than 2 yields on tenyear treasury. But at the same time i think there has been a deceleration in the technicals of the markets and so im relatively cautious about 2013. But having said that i also pointed out in my recent report we have so much Government Intervention into the free market its very difficult and that has always been the case. Very difficult to make any predictions about the future and some Research Papers show that forecasters are at often wrong as they are right. So in other words, you cant predict the future. But when there is Government Intervention you can predict it even less. You know, it sounded like you almost, theres a little bit of a caveat. You said that you would be buying in markets like vietnam, china, and japan, if you had to own stocks. Are there other assets that you like more . Well actually, i dont particularly like any assets at this stage. I mean i a diversified portfolio, im not liquidating anything but i have a lot of cash. I just feel deeply uncomfortable, a, about the future economic position of the world, b about the geopolitical situation in the world, and c, about social unrest in different countries. So if you keep it in cash, though, thats taking a bet on the currency itself. Correct, youre right. Well, i am reasonably confident that the u. S. Dollar will not collapse right away. That it can actually rally somewhat. I have some reservations about the u. S. Energy positions and that the u. S. Dollar will rise strongly against that. But i dont think that the u. S. Dollar is the worst currency outside the euro. But i happen to also own gold i dont think it will go up right away and maybe we still have a correction of another 10 or so on the downside. I just think that government will print money and that there will be competitive devaluation, and so i want to have gold as an insurance. Wow. But, am i right to read on that that you deem the u. S. Dollar as the, you know, the best place to be in terms of currencies . You dont think i suppose. I mean, i also own Singapore Dollars, the Singapore Dollar is probably very good currency to own, down through my exposure to use the currency. But, i dont think that the euro is now a very desirable currency to own. And do we have a lot of problems as senator ron johnson explained just now, in the u. S. , but we have the same problems, or even more in europe. So in the beauty contest of the ugliest currencies, the u. S. Dollar is not winning. Its okay. And i think id rather be in dollars at the present time, than say euros. Marc, thats fascinating stuff. We really appreciate your time this morning and we will see you on camera again very soon. Yes, i hope so. Thank you. Thank you. Byebye. The other big talker of the morning, aig reportedly considering whether to sue uncle sam over the terms of the insurers bailout. The New York Times reporting on the front page of the paper this morning that the companys board is going to be meeting tomorrow to consider a 25 billion shareholder lawsuit against the government. The suit deals with the nature of the rescue. But what became what became of that 92 stake in the company, the deals high Interest Rates and the funneling of billions of the insurers wall street clients the lawsuit says these terms deprived shareholders of tens of billions of dollars and violated the fifth amendment, which prohibits the taking of private property for public use without just compensation. A former ceo greenberg is pitching aig to join the suit. Greenberg was ousted by the board back in 2005 but is still a substantial shareholder in the company as we were talking about in the last hour, chances of aig actually bringing this suit seem to me to be quite de minimis simply because theyre now out with an ad campaign saying thank you, america, we paid back our money. How can you then go back and turn around and sue . The flip side is, if you dont participate in the lawsuit, and somehow greenberg happens to win you expose yourself also to shareholder lawsuits. So thats on the table today. We will see what happens tomorrow. Before the particle 2 chance, after the article maybe a 1 to 0 chance. Here we are. Coming up next, guest host senator ron johnson and cato president and former bb t ceo john allison talking about the debt ceiling and more. Heres a look at the futures. Narrowed the loss down a couple of points on the dow. Comments, questions . Send them to squawkcnbc on twitter. Follow the show and look for updates from andrew, becky, joe and the squawk staff. Squawk box on cnbc. [ 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. Welcome back, everyone. Shares of vodafone this morning rose in europe after verizon ceo said that it would be, quote, feasible to buy out vodafones 45 stake in Verizon Wireless. Some analysts say that a deal could be worth as much as 100 billion. However, theres a report this morning saying a direct purchase of the vodafone stake of Verizon Wireless is unlikely because of tax consequences for vodafone. All right. Real quick m a guy having covered that, about ten years, weve all been waiting for that deal to happen. Never going to happen. Lets get to our guest host senator ron johnson is a member of the commerce and budget committee, and john allison is a former bb t ceo. Now the new president of the Cato Institute. Senator, you know what the inner workings are going to look like for the debt ceiling. What are your colleagues saying at this point . Weve got weve got the other side saying its not going to be about spending cuts. We need another whatever 2 trillion. They want to go 50 50 again. They want another trillion dollars, and so they got the higher marginal rates. Theyre going to want to do the other thing now. Tax reform by closing loopholes, but not revenue neutral tax reform. But to raise another trillion dollars. Will republicans go along with that . Well, first of all, from the republican standpoint i think our thoughts are that president obama got the revenue portion, the tax increase portion of his balanced approach. He got 600 billion, plus we also have to keep in mind weve got 1 trillion worth of tax increases on obama care. By the way, those are middle income tax increases. Theyre indirect, but theyre going hes not going to agree with that. Hes going to say i was at 1. 6 trillion and then i made a concession to 1. 2. Its pretty jaw dropping when he says hes not even going to debate the debt ceiling. Yes, he is. Hes going to have to. Any time the president of the United States comes to congress and wants the authorization to increase the debt burden on our children and grandchildren, thats a debate we should have. My guess is were going to have this ongoing debate time and time and time again, because i dont see a grand bargain occurring. I mean i just dont. I wish there was. But i dont think this is going to be solved withs 09yard hail mary pass. I think this is going to be a ground game, 3. 5 yards. A lot of blood, sweat and dust. So this is going to be the argument Going Forward four years. How do you restrain the rate of growth in government . And like your previous guest was talking about. I certainly come from the position i think john would agree with me that the root cause of the problem is the size, the scope, and the cost of government. And government creates high level of uncertainty. Lets face it, business is hard enough. Theres enough uncertainty just competing in a marketplace, much less, you know, what government throws at you, with increasing taxes and regulatory government is back. Back in vogue. 2008 we usher in hope and change. Beautiful. It was beautiful. Hope and change. By 2010 the tea party swept in on the biggest gains weve seen in years and years. Theres a totally different feel. By the time 2012 came around we were back to obama care is going to be the laugh the land, entitlements are growing, and we know, you know, obama care, not only is medicare already a huge entitlement, obama care just doubled down on all of our entitlements. People voted for it. And people voted for government. Youre running the Cato Institute right now. Whats 2014 going to look like . And what can Cato Institute do to try to, i dont know, orchestrate some type of a comeback for your side . Were working on that very hard. And the idea we have to do is convince people that the consequences of these policies are incredibly destructive, particularly for their children and grandchildren. Totally fell on deaf ears in the past election. But we have to keep fighting that fight. Unfortunately its going to be a hard message to get through. Because i dont think were going to fall off the cliff. I would love look, lets say last night maybe i wanted notre dame to win because of for whatever reasons just maybe i shouldnt have. Because maybe it wasnt very realistic. But if i could, take the side of the team saying, were going to nail 10 of the people and were going to promise a bunch of stuff to the other 90 , i would go with the 90 . I think they can get more i think its easier to get 51 out of the 90 than it is to get 51 out of the 10. And i just, i would short your efforts right now, john. Well i think its a real struggle. But i dont think its one we can give up on. Because its a huge i think its the future of western civilization. These policies were implementing today dont work. Theyve been proven to fail in history. Countries have fallen over and over again there have been periods like this before, john . Weve never had this many people on the receiving end of government in the United States. Not in the United States. No. But i think, i do think that the republicans need a real message thats a more libertarian message. Its hard to know whether obama won over economics or whether he won over social policies. That everybody gets to use their own theres a lot of i understand. Simpson bowles, alan simpson and erskine bowles, bipartisan group, they have been trying like mad to get people to Pay Attention to this message. Theyre out against today. Theyre going to have another timeout and the fiscal message, the bipartisan fiscal message doesnt seem to be picking up speed, even though they have been out there working their tails off to get attention. I think its a hard fight. But i dont see how we can help but fight it. I do not particularly think, and my efforts have always been directed at policy who have a Huge Investment in this and are open to new ideas. What you see in colleges more and more, theyre still a minority, even though the majority of them voted for somebody like obama, a lot over social issues, theyre starting to understand the longterm consequences and are open to, i believe, the libertarian ideas versus traditional conservative ideas. You feel like mcgovern did at the end of the second reagan term. The liberal ideas were about as popular then as conservative ideas are right now. Part of the problem is we just ran an election about 7 billion was spent, and what information did we get out there other than president obama and the American People basically saying that 2 can carry the burden. They can solve the problem. Its not going to solve the problem. Were going to continue this conversation. Coming up cohen and Company Voice chairman Thomas Strauss is going to join us to discuss what hes expecting from the markets in 2013. Plus how is Small Business feeling about the state of the economy . National federation of independent business is going to be releasing its latest survey and weve got chief economist to break down those numbers. At 1 45, the aflac duck was brought in with multiple lacerations to the wing and a fractured beak. Surgery was successful, but he will be in a cast until it is fully healed, possibly several months. So, if the duck isnt able to work, how will he pay for his Living Expenses . Aflac. Like his rent and car payments . Aflac. What about gas and groceries . Aflac. Cell phone . Aflac, but i doubt hell be using his phone for quite a while cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a getwell card at getwellduck. Com. [ male announcer ] how do you make 70,000 trades a second. Reach one customer at a time . Or help doctors turn billions of bytes of shared information. Into a fifth anniversary of remission . Whatever your business challenge, dell has the technology and services to help you solve it. Olaf gets great rewards for his Small Business pizza [ garth ] olafs Small Business earns 2 cash back on every purchase, every day helium delivery. Put it on my spark card [ pop ] [ garth ] why settle for less . Great businesses deserve great rewards awesome [ male announcer ] the spark Business Card from capital one. Choose unlimited rewards with 2 cash back or double miles on every purchase, every day whats in your wallet . What are you doing . Nothing. Are you stealing our Daughters School supplies and taking them to work . No, i was just looking for my stapler and my. This thing. I save money by using fedex ground and buy my own supplies. Thats a great idea. Im going to go. We got clients in today. [ male announcer ] save on ground shipping at fedex office. Now the answer to todays aflac trivia question. Which two teams played the firstever intercollegiate Football Game . Princeton and Rutgers University in 1869. Yes, rutgers won that. We do have some breaking news. Kate, bring us up to speed. Interesting news out of Blue Mountain Capital Management the 12 billion hedge fund. They are hiring jeff daly, former Investment Bank ceo of jpmorgan. He served that role for three years and stepped down from it late last year. Hes going to be joining Blue Mountain which was founded by former jpmorgan folks, notably ceo and cio. Couple of interesting things about this, he has Asset Management experience. He ran the Asset Management unit within jpmorgan and was responsible for their highbridge deal. Hes very experienced in this area. The other thing Blue Mountain in a year where hedge funds had a lot of tumult, a lot of tough performances and redemptions in one sense actually was a huge winner there up north of 10 in r fl fund from what im told and theyre probably going to be expanding and considering staley to be part of the institutionalization process. And finally, you know, those two entities had an interesting relationship last year, becky, as jpmorgan got into these london whale trades, and lost six or more billion dollars. Fieldstein at Blue Mountain was on the other side of that trade and made a profit although im told it was a very friendly transaction as much as these things can be. All right, kate. Thank you very much. Breaking news and we will continue to follow that as we get through the day. Still to come on squawk this morning, some turbulence hits boeing after a fire breaks out on a parked plane. [ male announcer ] dont just reject convention. Drown it out. Introducing the allnew 2013 lexus ls f sport. An entirely new pursuit. We dont let frequent heartburn come between us and what we love. So if youre one of them people who gets heartburn and then treats day after day. Block the acid with prilosec otc and dont get heartburn in the first place [ male announcer ] one pill each morning. 24 hours. Zero heartburn. Office superstore ink retailer in america. Now get 6 back in staples rewards for every ink cartridge you recycle when you spend 50 on hp ink. Staples. That was easy. When you spend 50 on hp ink. We replaced people with a machine. R, what . Customers didnt like it. So why do banks do it . Hello . Hello . if your bank doesnt let you talk to a real person 24 7, you need an ally. Hello . Ally bank. Your money needs an ally. Welcome back to squawk box, everyone. In our headlines this morning, one of the few companies in the world to give apple a run for its money says that it will report Fourth Quarter profit. Samsung says it will earn about 8. 3 billion for the quarter. Thats up 89 from a year earlier. About 70 of samsungs profit comes from its mobile division. Thats where it recently overtook apple in smartphones there. Also u. S. Regulators want those nice, quiet, hybrid vehicles to make a little noise. Thats according to the national highway Traffic Safety administration. Those cars dont make enough noise which presents a danger to pedestrians and cyclists. The proposed rule would require noise when the vehicles travel under 18 miles an hour. And the greek Prime Minister is meeting with german chancellor Angela Merkel this morning. Hes in berlin to update german officials on recent progress, battling its debt problems. He told reporters that his country is delivering on his promises. And the nfibs latest read on the economy and Small Business is out. Senior economics reporter Steve Liesman joins us with the details and a special guest. Thanks very much, andrew. Following the second biggest decline in the history of the nfib survey the Small Business optimism gaining a scant, wait for it, half a point in december. The decline in november worse than what followed 9 11 and just a tenth better than what followed lehman in 2008. The only good thing you can say is the survey was done before the fiscal cliff deal. So maybe theres some chance of a bigger bounce in january. Theres that little bump right there. You can see the decline. The 6. 2 point decline. The nfib index was up 0. 5 points in december to just 88. 88, by the way, still one of the lowest in the 38year history of the index. Joining us now, the guy who puts all this together, and is not afraid to put his face to the data, bill dunkleberg. Bill, this is one of the most pathetic increases ive ever reported on in my history. How can you call this an increase . Well, you know, its not a decrease mathematically so i guess well call it an increase. You are right professor liesman, its bad news. You know, we needed to see Something Better. But again, you know, not a whole lot happened. There wasnt even a great deal, you know. So im not sure what the cliff solution is going to help. But Congress Took us right up to the bitter end. Everybody was thinking nothing would happen. Disaster would happen. Yeah. And thats what we got in the data. But were looking at a list of what went up and what went down. I dont think it matters. I went through this in great detail. The one point up, the one point down are all from this very low level. And i was really just amazed at what happened in december, or sorry, in november, was equal in the mind of Small Businesses, to 9 11. It was worse than that. And just a little bit, or not quite as bad as Lehman Brothers. Well, thats right. You know, and theyre looking at the whole economy, i guess and saying, this is bad news, you know, and looking ahead theyre not very optimistic about where the economys going to be going. You got 45 of the owners think the economy, the Business Conditions will be worse six months from now than they are, you know, than they were at the end of the december, anyway. Thats not really very optimistic. Thats only 10 thought it would be better. So nobodys going to hire. Nobodys going to spend. Everybodys going to sit tight. Thats what theyre doing. Thats the other thing worth pointing out. Because a lot of times in these surveys you get people who assess the Current Situation as negative but they dont lose hope for the future. You see that a bit in the Consumer Confidence numbers. But not here. The pessimism is both about the Current Situation and where were going. Bill, when you drill down into what exactly is troubling Small Business, what do you guys come up with . Well, we ask them about their most important problem, of course, and 23 said taxes. No surprise there. That was the big issue. 19 said weak sales. Thats down a few points. And 21 said regulations and red tape. Only 1 , thats a record low number, said financing is their top problem. Theres no issue there. Bill, when you look at these numbers, what do they portend for hiring in the months ahead and what do they portend for Economic Growth overall . Well, the net percent of our owners who said they plan to create some jobs, that is increase total employment, fell from 5 to 1, thats pretty low. Didnt go negative. But that doesnt look like a lot of job creation there, job openings fell a little bit. So, it doesnt look very strong. And, again, given their expectations for sales, they probably arent planning to hire anybody, because theyre not expecting the customers to be there, and dont have to take care of them. So if you put a number on it, bill, is it a 2 economy . Is it a 1 . Is it a zero . Id say its the high 1s, maybe close to 2, where right in that territory. Bill, thanks for joining us this month and we appreciate you coming with the data, no matter what it says. Thanks, steve. Data says ill go back i think it could go either way. Okay. Another big talker this morning, sears announcing that ceo Louis Dambrosio is going to be stepping down early next month citing Family Health reasons. Chairman Eddie Lampert is going to be assuming the role of ceo in addition to his current role. As of november 30th lamperts hedge fund had a 14. 1 stake in sears holdings. Shares of sears during the last year, down to 44. Up actually in premarket. Over the tenyear period, not a great situation. Over a fiveyear period down close to 60 at a time when you look at target and walmart up nearly 50 during the same time period. And Eddie Lampert was the ceo briefly of this company before, and hes been criticized in large part because of the failure of his company to really reemerge, the transaction, original transaction between kmart and sears putting these things together, but never really being able to get the next take the next step. We talked to him, too, how long ago . We talked to him remember about richard rainwater. One of those great shows. He came on to talk about richard rainwater. But he did talk a little bit about retailing. He gets retailing but hes not hes not necessarily a retailing ceo. So the question is going to be how long is he the ceo for . Who do they bring in . These are all the open questions. And the questions always been what kind of investments he put in versus what you can take back out. Remember when they did the original transaction everybody thought this was some kind of real estate deal. Thats what this was supposed to be about. Years and years have gone by and they are still a retailer. They are still a retailer. Interesting on the good news category, i think i splay mentioned this before, online their year over year, Something Like 20 . Theyre actually doing better online than they are in the stores and that probably mirrors how the world is going. All right. Checking the futures at this hour, not a whole lot of action so far this morning. Now, down about five points. Or so. After losing 50 or so. But a great week last week. Still to come on squawk box, second time we said this, i guess, you know, turbulence for boeing after a fire breaks out on a parked dreamliner at bostons Logan Airport. Still to come, after a strong start to 2013, investors took a breather yesterday. Find out if this rally still has legs, or if the market just ran out of steam. Squawk box is back in just two minutes. Where is flo . Anybody know where flo is . Are you flo . Yes. Is this the thing you gave my husband . Well, yeah, yes. The name your price tool. You tell us the price you want to pay, and we give you a range of options to choose from. Careful, though that kind of power can go to your head. That explains a lot. Yo, buddy i got this. Gimme one, gimme one, gimme one the power of the name your price tool. Only from progressive. Sven gets great rewards for his Small Business how does this thing work . Oh, i like it [ garth ] svens Small Business earns 2 cash back on every purchase, every day woohoo so thats ten security gators, right . Put them on my spark card why settle for less . Testing hot tar. Great businesses deserve great rewards [ male announcer ] the spark Business Card from capital one. Choose unlimited rewards with 2 cash back or double miles on every purchase, every day whats in your wallet . Heres your invoice. Welcome back to squawk. Our next guest says liquid investments are key successful investing in the current climb. Joining us tom strauss chairman of the 12 billion fund to fund and vice chairman of the cowan group. What do you mean by that . Well, i think investors clearly the growth of liquid alternatives presents them with opportunities that theyve not had before. Previously if you wanted liquid portfolios, you owned stocks and bonds, and today the growth in liquid alternatives is significant and gives investors an opportunity to diversify their exposures. Okay. But what about the issue of fees . Traditionally in the investments youre talking about the Fee Structure is so much higher, at a time, by the way, when so many other people seem to be going the exact opposite direction. As the business grows, fees are more competitive. You talk about 1940 act, mutual funds and i think theres a modest premium for the smaller investor. But its pretty reasonable. And there are competing products, and were going to see fees under some pressure. Can the Retail Investor thats watching squawk now get in to some investments . Yes. Thats always the big issue. Thats a good question. And oftentimes its not that you cant get in you can get into a fund run by a great manager but you cant necessarily get into the fund thats outperforming. Theres almost like a separate fund you hear about thats not doing nearly as well as the original fund. I think when it comes to funds access is very open, and any investor can get into open funds. Its not like hedge funds that, you know, can be more selective for the rich investors they want to take. Whats your sense on where we are in the markets right now . Oh, i think the markets vary. Concerned. Confidence is at a low level. I think if were going to turn this thing around, clearly, its all about confidence. And i think we saw in the november election that the voters voted for attention to the fiscal cliff problems. They were not addressed appropriately at the end of the year. We just kicked the can down the road. And if you think about confidence, its all about hundreds of thousands of little decisions that get made by consumers, and businesses. Right. All over the country. Are you a buyer of this market or not . I think fixed income prices are high. Yields are low. I think vulnerability in fixed income, you could go for a couple of years. Take the coupon, take capital depreciation and you could earn nothing. Equities . I think equities are probably at a reasonable foundation and youre going to see bond money move into what are you doing with your money . Thats fair. I own almost no bonds. And dont believe in them. High yield bonds have had a huge run. You look at the return in high yield bonds last year, half of it came in coupons, half of it came from compression. That cant continue. So i think high yield bonds have pretty much run their course. Which means you have to look at other alternatives. You look at World Class Global companies, you want to own some of those. I am with david faber on this and he was telling the world. I think there are very serious Global Economic problems. Unfortunately i think whats driving the stock market is what the fed does. If it keeps printing money, its got to go somewhere. Until we have some really bigger negative consequences or dramatic thing around the debt thing, the market will probably keep going up. Although it shouldnt. Certain longterm economic sense but i think the market is driven by traders right now and traders say, well, if the fed keeps printing money its going somewhere, and stocks is one place it will probably go for awhile. And for people who are looking towards retirement after just saving and trying to save some money up, i know, senator, youve been looking at where that money would have gone if it wasnt going into Social Security. Right now, i do spread sheets. I do the spread sheet and just made the assumption, if you took the payroll tax from an individual thats retiring today, they put that into just an index fund in the dow jones, not even counting the dividends and pay the maximum payroll tax amount theyd have an asset worth 1. 2 million versus that present value theyre expected Social Security benefits, about 255,000 if you discounted 7 . Now, it hasnt been a very good deal. We get people who write in and say that, look, the Social Security, you can talk about cutting benefits. This is my money, i put in for it and i want it back. How much do you put in versus how much you want back . Social security theyre not getting a very good deal. Its medicare that theyre getting a really good deal. Theyre putting in a little over 100,000 and their expected return is about 350,000. I mean, last year we spent about 1. 25 trillion on Social Security and medicare but the payroll tax only brought in about 850 billion. Was that because of the cuts that Social Security that was about 100 billion of that. But still, so we underfunded those programs by about 400 billion. So in other words we paid out 50 more than we brought in. These programs are unsustainable. And thats really what we have to start addressing. How do we reform those entitlement programs so theyre available for future generations . Thats what this president must lead on, and he hasnt brought any leadership to date. Thanks for being here. Pleasure. Appreciate it. No, no, were still on tv. Relax. Come on back. Up next, should boeing customers be concerned about safety issues after a fire breaks out on a parked plane at bostons Logan Airport . Cnbcs phil lebeau has that story next. And check this out. Silvia, john, keon, Emerson Blake and palmer. Its bill emerson and john rogers our lineup for the next hour to guide you through todays trading today. Tell you where to put your money and whats working now. Squawk box is coming right back. [ male announcer ] how do you make 70,000 trades a second. Reach one customer at a time . Or help doctors turn billions of bytes of shared information. Into a fifth anniversary of remission . Whatever your business challenge, dell has the technology and services to help you solve it. Comments about the airlines this morning. The firm is upgrading shares of southwest to a buy from hold saying the company has turned the corner on the air tran acquisition at the same time deutsche has lowered its rating on jetblue to hold from buy. Its expecting only modest Earnings Growth this year. Okay. A fire breaking out on a parked boeing dreamliner at Logan Airport in boston sparking concerns about safety issues. Cnbcs phil lebeau joins us now with more on this story thats riveted at least me and i know so many other people who have been very interested in this, phil. It was interesting, andrew. I just heard from carl quintanilla. He tweeted out for one of the hosts of marketplace on npr that his flight this morning, dreamliner flight tokyo to l. A. X. Has been canceled. Now we dont know why or if thats just something separate related to safety concerns but a lot of people are saying whats going on with the dreamliner. Is there a problem . In part because of what happened yesterday in boston. Any time you mention fire on a plane, its going to make a lot of people nervous. The ntsb is now investigating the 787 on the tarmac at Logan Airport yesterday morning, catching fire, after the plane had landed. The crew and the passengers had all deported. The fire was found in a compartment with batteries and electrical components. And again the passengers and crew were not on board during the fire. But this is the fourth incident since november or since december 4th where weve had a problem with the dreamliner. Now remember united had its first domestic 787 flight back on november 4th. Just a month later united had a flight from houston to newark, it made an Emergency Landing in new orleans. After experiencing mechanical problems, a loss of power. Qatar air on december 9th said it grounded one of its 737 or 787s because of a faulty generator. Similar problem, loss of power in flight. And then on december 14th, united grounds two of its four dreamliners due to problems with an Electrical Panel and then finally, yesterday you have the emergency crews responding to a 787 fire at Logan Airport. Now the dreamliner, and this is of particular concern to people, it uses lithium ion batteries to power the onboard electronics. Now the faa issued special rules in 2007 when it comes to lithium ion batteries and their use on planes saying in general lithium ion batteries is significantly more susceptible to internal failures that are result in selfsustaining increases in temperature and pressure. The metallic lithium can ignite, resulting in selfsustaining fire or explosion. Again, thats the faa back in 2007. Take a look at what happened with boeing shares yesterday once these reports came out. Stock took a huge hit. Down 2 at the end of the day. And then when you take a look at boeing over the last year, some are going to say listen, it was due for some sort of a pullback and this was just the catalyst behind it, but theres no doubt, andrew, that the ntsb is looking at two things right now, the electrical issues that boeing 787s have been experiencing, and the reports of loss of power not only from united and qatar and then also this fire being in the electrical compartment yesterday. But also the lithium ion batteries. Was this fire caused by those batteries . Or was it caused by an electrical issue and then that caused the batteries to then have a problem . Thats what theyre investigating right now. And remember, this is a long haul aircraft that goes over the pacific ocean, the atlantic ocean. Thats what its designed for, to connect midsize cities. Its not like you can say well we need to bring the plane down, were in the middle of the pacific ocean. Thats of particular concern. Thats what i was going to ask, phil. If this had happened actually in the air, what would have happened . Well, they would have brought it down as quickly as possible. I mean, when they had that Emergency Landing in new orleans, they brought it down in part because they had a loss of power, and the pilots, if im not mistaken, reported well, you know, is there a potential fire here . They never reported that there was a fire. Lets be clear about that. But they wanted in this case youre saying yesterday i thought there was a fire. There was not a fire yesterday . Were talking about that new orleans Emergency Landing. Yesterday there was a fire. What happened is, it was on the tarmac, the crew and the passengers had left, a mechanic was doing a walkaround on the plane, noticed what looked like some smoke down in that compartment in the auxiliary power unit. Thats when they called in the Fire Department and there i see pictures of whats happening when they were putting out that fire down there in the auxiliary power. Clearly that plane is now going to be taken out of service. For how long is a plane like that going to be taken out of service for . I think it depends . The first order of business is how quickly will they be able to assess exactly what caused this fire . Thats the first issue. Once they have that, then it becomes an issue of how quickly they can repair this. Now theres the larger structural issue which is that these planes use the lithium ion batteries as opposed to what i can understand, you can explain it better, traditional planes use the actual Wind Generation that goes through the engines to power the planes . Right. Thats the bleed air. And that bleed air usually does everything from controlling the environment within the cabin, the heating and the cooling, onboard electronics. What makes the dreamliner so different, so unique, is the amount of innovation thats gone in to using these lithium ion batteries in order to run the electronics on the plane. Well, part of the problem here is, youre taking an amount of electricity that is coming off of these generators, in a very confined and small space, andrew, i mean this would be different if you were in the middle of a power plant. Youd say no problem. Companies do this all the time. Now youre trying to do this inside of an airplane. We should point out, this has gone through certification at the faa, repeated testing. Its not like theyre just throwing these planes up there and there hasnt been any kind of safety checks. They went through extensive tests. If the issue now is was there, and this is something i think were going to hear about in the next couple of days, is there a specific, perhaps malfunction with some of the electronics and electron ig panel, and specific part that was provided by a supplier. I think thats one of the things theyre going to be looking into. Weve got to go. Fine point on it is there any possibility that the faa would decide theyd ultimately have to retro fit the planes and decide, were not using batteries or doing electrical system, going back to an older system . I youre watching i cant say that theres not that possibility, andrew. But i think given the amount of testing that was done here, i think were several steps away from that happening. Okay. Phil lebeau, thank you for that. As we just mentioned, stock is off. About 1. 5 on a day when the market overall is looking flat. So this is having some impact on the stock this morning. When we come back we will have more from our guest hosts senator ron johnson and john allison. Plus were going to talk mortgages and the Housing Market with ceo of quicken loans bill emerson. Find out if now is the time to buy, and where rates are headed. Squawk box will be back. [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa, and the Aerospace Industry in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 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. [ male announcer ] some day, your life will flash before your eyes. Make it worth watching. The new 2013 lexus ls. An entirely new pursuit. At the start of the year, markets look ready to take off. Reinforce the takeoff jamp . No, we didnt have time. Yesterday the rally stopped short. Oh. Can pulls take charge or will uncertainty in washington keep money on the sidelines . Plus, a portfolio Planning Session. Our whats working now series continues with aerial investment ceo john rogers. And a read on the Housing Market. Thats our offer, andy. We want it all. The ceo of quicken loans is going to join us on the companys record year and the outlook for the Home Mortgage industry. The third hour of squawk box starts right now. Welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernen along with becky quick and Andrew Ross Sorkin. Our guest host this morning, wisconsin senator ron johnson. And john allison, president of the Cato Institute and a former chairman and ceo of bb t bank. Well have more from them in just a minute. First becky has your morning headlines. Thats right, joe. Lets start with what the market is doing. The s p retreating from the fiveyear high yesterday although stocks did finish off their session lows. You can see this morning that nings have barely budged as people kind of wait to hear whats happening with earnings. Tonight we get the very first of those reports from alcoa and the first of the big reports. People are going to be looking at the guidance that all these companies are giving. Thats what the real story is. How confident are ceos once weve gotten through the fiscal cliff that we still have that debt ceiling hanging over us. Overseas in asia, you did see some losses from some of these major markets. The nikki was down by 90 points. Hang song by 218 points. Also in europe at this hour green arrows but these are modest gains at this point. The dax in germany has barely budged. In france the cac is up by about 20 points and the ftse 100 up by ten points in london. Also, aig is reportedly considering whether to sue the u. S. Government over the terms of their bailout. New york times reports that the companys board will be meeting tomorrow to talk about joining a 25 billion shareholder lawsuit against the government. The suit deals with the nature of the rescue, at what became a 2 92 stake in the company. The lawsuit says that these terms deprived shareholders of tens of billions of dollars, violated the fifth amendment, which prohibits taking of private property for public use without just compensation. A little bit of crazy lawsuit because it happens when aig just paid back all of that loan and is launching a Public Relations bid and saying thank you to washington for bailing us out. So this is going to create quite a bit of noise. Former ceo Hank Greenberg was ousted by the board back in 2005 but is still a substantial shareholder in the company. Again some weird things that are happening. To me it seems ridiculous theyre going to take a huge black eye for even considering this. Although they may have to do it for fiduciary reasons. I dont think they will do it. Even though i think there are fiduciary obligations. I do not think that aig needed to be bailed out by the u. S. Government. They could have easily gone into normal bankruptcy, reorganization procedure. It would not have taken out the Insurance Market because their subsidiaries werent in bad shape. Shareholders would have been wiped out. Possibly. Possibly. Or some of them could have ended up in some kind of subordinated debt issue, which comes out of some of the depends how bad of shape they were in. You really cant answer that question now. The company took the bailout . Shareholders. And the knockon effects to all of the other banks that were being protected by aig were would have been potentially exposed. I think it would have hurt some of those organizations. But i dont think it would have caused any of them to fail. Goldman sachs is a classic one. Why would the u. S. Government want to bail out Goldman Sachs . I think goldman might have been one of the few that would have been fine. You start listing the european banks on the hook, and knockdown effects it becomes a little bit more questionable. Why would the u. S. Government want to bail out european banks . Thats not exactly were on the other side of the european banks. Its a global system. I do not believe that would happen. I do not. I was involved in doing all this stuff and we Capital Markets were working. Capital markets were working in september of 2008 . They were working until we announced the t. A. R. P. Program. Thats what closed the Capital Markets because people then that created were going to disagree on this because i think the facts are different. I think the Capital Markets, i think they fell apart in the fall of 2008. Not were incredibly it was if you were a high risk institution. If you were a healthy institution we were getting buried with cash. It was a huge transfer of wealth to healthy wellrun company. It was a natural correction that happens in markets. We would have gone deeper and wed be radically better off today. There were Major Companies that could have had issues meeting payroll because of the freeze june of some of these markets, too, though. Could have been. But i dont think so. Cash youve got to remember this was not cash was coming out the fed was printing cash like crazy, making runs to financial institutions. A lot of what they did was unnecessary, and was also part of a process that created i went through 1980, went through 1990. We didnt have were going to talk we didnt have that panic. What do you think about this . The bond market was completely frozen. No trading was taking place. None of us liked what the government had to do. But i would argue that if we hadnt stepped in, remember that was one week after Lehman Brothers that aig was rescued. Action needed to be taken to keep Financial Markets with this commercial paper . Not enough. The bond market, the entire United States bond market what about commercial paper plus fdic. We could talk about commercial paper with money markets . We were in the midst of a fullblown panic, and its my view, and i think your book shows the facts of what actually happened. All right. Aggressive action was necessary to prevent the system from collapsing. We created a panic by how we handled it. We let bear stearns fail early on, lehman would have gone a different direction. Other institutions. And if we had a plan, it was the random im not going to disagree change the facts leading up to it who knows what would have happened. I wont disagree with you if you handle bear differently, i think given the way the dominoes fell the options were limited. Because were reliving history. Because we caused we made an unnecessary crisis. If you were a board member of aig and going to this meeting tomorrow your answer is that youre not taking i dont think they can the Public Relations would be awful. And what happens if Hank Greenberg actually pursues the case and wins . Then you have to deal with that when it happens. Youre going to be sued. Youre going to be sued and youll have to zeal with that when it happens. Two bad choices. Right. Lets talk about another story this morning. Sears announcing ceo Louis Dambrosio will step down early next month citing Family Health reasons. Chairman Eddie Lampert is going to be assuming the role of ceo in addition to his current role. As of november 30th, lamperts hedge fund had a 34. 1 stake in sears holdings. Where its come since 2004, big climb up and climb back down. Read on the markets, on set is ed keon. Portfolio manager at Quantitative Management Associates a unit of prudential where hes toiled for years. And john silvia is wells fargo chief economist. Ill just start with you because i want to know what your forecast is for, not funny, what your forecast is for 2013, in terms of gdp for the year. Continued Economic Growth. Somewhere around 2 . I liked your earlier leadin with quicken loans. Because youre talking a little bit about housing coming back. When we look at the Capital Markets, again, a discussion point you had just earlier, high yield, high grade bonds, leverage loan finance, Asset Backed Securities for auto lending. All strong. I think the financial side, joe, is really giving a lot of support for continued Economic Growth. Its 2 2 doesnt, you know, doesnt get me excited. What about 2014 . Well, 2014 probably even a little bit better. I think there is a constant ongoing mending of the financial and Economic System. But youre happy. Youre sounding like you think 2 is okay . I think 2 is okay. Because i think when you look at the reality, joe, 2 is what weve had now for the last three years. And i think 2 is what we have to deal with in the u. S. Economy. But it certainly isnt a downdraft. Its not a recession. No. Were not doing a double dip. I think were moving forward and i think thats important. You like 2 , ed . I mean i guess thats what were stuck with. I think 3 is more like 1 . I think the upside potential is greater than the downside. It will be a fiscal drag because of the tax increases. But if you look at the momentum we had on the Housing Market, look at some momentum in the job market. Its not great. But it is getting better. Hours worked are up. Wages are up. Payrolls are up. Not at a great rate but were starting to gain some traction. I guess what were getting at, there are still people that think that obama care and other what they feel are misguided policies are holding us below plan. Are we permanently held below our potential as a country . To grow at 2 it would do so much if we could do 3, 3. 5 , 4 in terms of we wouldnt worry about Government Spending as much. We wouldnt worry about the revenues would go up without raising taxes. Theres so many positive things that would happen. Thats all true, joe. Thats all true. But were not getting it. Youre hoping were not getting it. Youre hoping for 2 . We have to deal with the 2. Why . What we have is 2 . Why do we have 2 because of the hangover from the financial crisis or because of misguided government policy . Again, going back to an earlier theme you had this morning a lot of uncertainty out there. Its very hard to do longrun investing, longrun developing in terms of the lab market if you dont know what policy so what about a grand plan . Would a grand plan, some type of big deal, would that free up, would that allow us to grow at 3 , 3. 5 , 4 again . I think if you were dealing also with entitlements, in that grand plan, my answer would be yes. So thats what we need. Well, i see the grand plan would be great. But the strength of the economy, and the Financial Market does not come from washington. It comes from the innovation why . Washington is certainly getting away weve seen in the last couple of years. On Business People and entrepreneurs is not nearly as great in my view. Last year, the big theme was uncertainty, how many times we talk about uncertainty on the set. Now we have certainty. We may not like the certainty that we got. Two months. But now we have a better sense of whats happening. Business is always uncertain. Its not like the normal state of business is going to know exactly whats going to happen. I think that the momentum of the economy, not just the United States, but around the world, is starting to improve, and its the private sector, thats always been the key driver. The drag from the financial crisis is slowly ending, and i think this year is going to be a little bit better than the last couple. Im not arguing with you about the private sector. But the private sector needs to be able to do what it wants to do without and longer than two month horizon, too. I mean its going from january to march. I think also, heres another simple fact. I think the best tax code we ever had in the United States was the 1986 after the second reagan tax cut. Agreed. The growth in the economy since then has actually been slightly lower than the growth in the same period before that. Even before the financial crisis. My point is simple. The impact of taxes and tax rates, although theyre important, are not critical. Theyre not do or die or the economy. I could say that just based the 86 tax code didnt last very long i agree. But the impact on the economy, just look at the numbers, is not nearly as dramatic as we would think sometimes. We have 30 years of added regulations as well. Did you just see the Small Business report . Thats a terrible report before a half million additional businesses are going to get their taxes dramatically increased. Thats going to reduce the demand for those businesses that didnt get their tax increased. Ive been a Small Business, people will react to sales. When they start having customers coming in the door, thats when theyll start to hire and spend money. My opinion, they havent had that much so far because growth has been slow. Its chicken egg thing. Now the guys argue his point would say thats why demand is down as well. Housing has really changed the margin tremendously in the last six months or so. Also the Global Situation is not nearly as big a drag now as it was last year. So, not great, dont get me wrong, but i think we will see some traction this year. But 2 in 2013 and 2. 1 in 2014 . Thats great, john. 2. 2 in 2015. Thats gang busters. Thats what youve got to deal with. 2 . Really . I want 4 . I want 4 , too. But the demographics of American Labor force are great different. All right. Gentlemen, thank you. Ed keon, john sylvia. All right. Coming up the pulse of the Mortgage Market 2012 was a record year for quicken loans. The Company Closing more than 70 billion in home loans. Were going to talk to its ceo bill emerson after the break. Are your investments is your blow yo badly in need of a booster shot . Ow thats awesome. John rogers is here with his best investing ideas as part of our whats working now series. What are you doing . Nothing. Are you stealing our Daughters School supplies and taking them to work . No, i was just looking for my stapler and my. This thing. I save money by using fedex ground and buy my own supplies. Thats a great idea. Im going to go. We got clients in today. [ male announcer ] save on ground shipping at fedex office. Welcome back to squawk box. This morning you see some red arrows there as we see how the markets shaping up before the open. Dow looks like it would be off about 25 points. S p 500 off 25 points. The nasdaq off close to 4 points. John paulsons flagship Advantage Fund made up some lost ground in december. Fund chalked up a 3. 1 game during the month trimming its fouryear loss to about 14. 3 . Still not great. Most of paulsons other funds did have positive decembers, as well. Paulsons gold fund slid another 5 last month and was down a total of 24. 6 for the year. Also in the news the federal governments consumer watch dog set to unveil new home lending rules this week. The wall street journal reporting the move could potentially reshape the Mortgage Market by ushering more standization preventing a return of the exotic loans that powered the housing bubble. There will be standards all mortgage lenders are likely to follow. The new rules are expected to be contentious because they will determine the types of loans that banks are going to be offering as well as to whom and on what terms. There have been concerns the new regulations would restrict credit and make getting a mortgage too hard. Im sure some of the gentlemen around this table have views on that, as well. Thats right. In fact for more on the Mortgage Market we are joined by quicken loans ceo bill emerson. Thanks for coming in today. My pleasure. How are you . Great. Weve been talking about the Mortgage Market. Not only the story andrew just mentioned but both of our last market guests pointed to the idea that the Housing Market is really starting to turn and that could make the difference in the economy. What do you see . So i think the market is getting better. I dont know if i would say its turned. I think its stabilized. You know, you take a look at the case shiller price index, 3 . Certainly better than that going down. Seeing pockets in the country where folks are starting to get multiple offers. But i wouldnt say that we are in a fullblown recovery. I do think stabilization is good. And i do think that its probably the best time ever to buy a home because weve got low rates and youve got affordability index at alltime high. So it really is a good time to be looking in the market place. But theres a lot of analysts, you just mentioned the cftb and the new rules coming out. Theres a whole lot of uncertainty about what the future of this industry is going to look like. I think thats got a lot of people tentative right now. What has the government done that helped recently and what have they done that hurt . I think one of the things thats helped homeowners is the harp program that allows people under water to take advantage of todays low Interest Rates. Thats only for people who have been making their payments all the way along which is different from some of those earlier programs . Thats correct. You do have to be current. You have to have been making that payment. So, but theres still a lot of folks out there that can take advantage of that. Im not sure theres a lot of people that really understand that they can take advantage of that. Right. On the flip side of that is just the uncertainty around what the future of this industry looks like when it comes to the rule writing. You know, what will you be able to qualify for . What will the size of the credit box be . Can you buy a home when these new rules come out . Who will be impacted . And i think theres a lot of uncertainty around that until these rules get written that have been sitting around on the, you know, back and forth for a couple years. So when those come out i think youll get a little bit more clarity. You know, we spoke yesterday with someone who was talking just about fannie and freddie, rick kovacevich, the former ceo of wells fargo and he thinks we should get to the point where we dont have fannie or freddie with this guarantee from the government, what would happen to the Housing Market if that were the case . And could you phase it in gradually . So thats a great question. You know, when you look at the Housing Market for the past, i dont know how many years, there has been federal involvement. Hes okay with fha. Its the fanny and freddy the explicit, implicit whatever promise there is from the government. We all know it really wasnt explicit because the government bailed out fannie and freddie. If its a purely private market initially youre going to see a smaller market. When people talk about the size of the market and tightening of credit, and the recovery that you want to see come about as a result of that, you need homeowners to be able to buy a home. You want first time home buyers to be in the game. Theres a lot of concern about fha and the fund and what that futures going to look like. Lets talk about quicken loans because you have some phenomenal numbers for the number of originations you were doing in 2012, Something Better than complete, 200 increase from what your previous record had been. And thats not an indication just of whats happening with this market . No, its not. Or stabilization. No, its not. You know, theres been a lot of things gone into that. Number one, i think a lot of the larger players changed their focus on the mortgage industry. Rates were low. So it allowed an organization like ours, who focused on technology and process to take shares. So you know, for us to more than double our business from one year to the next has a little bit to do with all of those things, and a lot to do with the platform and our ability to serve as clients in a matter that they want to be serviced. Are other banks getting out . Are other lenders getting out of the idea of originations . It just the numbers are 70 billion was the number of home loans it closed on last year, which is up from 30 billion last year the previous record the year before. I cant even figure out how that comes together. Well, you know, again, i think theres plenty of opportunity for a platform like ours. Centralized platform that has the ability to reach out to 50 states. And what were able to do in that process is to keep our turn times sub30 days. A lot of the industry couldnt do that. So when people hear that and see that they come and they want to at least talk to us. When they talk to us they give us an opportunity to do a mortgage for them. So i think theres a lot that goes in to that particular piece of it. And yes, there are, you know, when you take a look at b off a theyve changed their focus on the mortgage industry. Wells has a big piece of the market. Chase is doing okay. But youve got a lot of the bigger players that have changed their focus away from mortgages and given Companies Like ours and other companies a chance. Bb t is in the mart business. Unfortunately a lot of it is refinance. Sure. And i would definitely agree the Mortgage Market has bottomed. The Housing Market has bottomed. But its unlikely any time in the immediate future to get back to the level it was. Which it shouldnt get back. Because people are viewing housing differently i think. Housing had become an investment. But its never been an investment, its actually consumption. And i think most consumers are making more rational decisions and saying i want to consume a house, therefore it should be more affordable. Although some consumers said id love to make a more rational decision but i cant even get credit. I would also, i strongly believe we need to get rid of freddie mack and fannie may. They were one of the major contributors to the crisis we had. Im old enough to be in the market when they were big players. Down payments required were more rational. The people that were buying houses were people that basically could afford them and loss rates were very low. In sending people to overconsume which is what we did with freddie mac and fannie mae, you need the government out of the Housing Market. Except maybe with something thats really designed to help low income people. Not something that drives the whole market. This is obviously a debate thats going to continue. John is staying with us. Thank you very much for coming in. My pleasure. Coming up planning for your portfolio the year ahead. Were going to continue our whats working series with john rogers when we return. At a dry cleaner, we replaced people with a machine. What . Customers didnt like it. So why do banks do it . Hello . Hello . if your bank doesnt let you talk to a real person 24 7, you need an ally. Hello . Ally bank. Your money needs an ally. [ male announcer ] how do you turn an entrepreneurs dream. Into a scooter that talks to the cloud . Or turn 30million artifacts. Into a hightech masterpiece . Whatever your business challenge, dell has the technology and services to help you solve it. When we come back get ready for the trading day ahead. Were going to head to chicago for a look at what traders are watching. Plus a major retailer planning a year round price match program. [ male announcer ] dont just reject convention. Drown it out. Introducing the allnew 2013 lexus ls f sport. An entirely new pursuit. [ male announcer ] this is joe woods first day of work. And his new boss told him two things cook what you love, and save your money. Joe doesnt know it yet, but hell work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. Hell start investing early, hell find some good people to help guide him, and hell set money aside from his first day of work to his last, which isnt rocket science. Its just common sense. From td ameritrade. Welcome back to squawk box this morning. Lets take a look at some of the stocks that are on the move in this mornings trading day. Sears shares moving higher in premarket trading. With two pieces of news in the mix. Ceo Louis Dambrosio is leaving the company in february due to Family Health matters. Chairman Eddie Lambert is going to be taking over as ceo. Sears says they expect Comp Store Sales to show a 1. 8 decline primarily due to slumps of consumer electronics. Also watching target this morning. The retailer says it will price match year round including amazon. Com and websites run by walmart, best buy and toys r us. Target already had a Price Matching for brick and mortar retailers but not online. And yum brands says samestore sales in china fell more than expected in the Fourth Quarter due to a Chinese Government inspection of its poultry supply. China has been yums Fastest Growing market. And monsanto reported the first fiscal quarter profit of 62 cents per share, well above estimates of 37 cents. Revenue also beat consensus and the Company Raised fullyear forecast, crediting increasing contributions from latin america. And momentum in its seeds. We also have a quick headline on carlyle this morning. Carlyle announced preliminary performance metrics for carry fund, valuations increased 4 during that period. But for the full year carlyle funds were up on average 14 . Finally, jes staley is leaving jpmorgan to join Blue Mountain Capital Management. s going to be purchasing a stake in the hedge fund. He had been head of jpmorgans Investment Banking unit. Jamie diamond named two younger executives to be cochiefs of commercial Investment Banking. Staley will join kate kelly on squawk on the street at 11 00 eastern this morning. You dont want to miss that. Weve been talking about mortgages this morning and Steve Liesman is here with more on the dprop in Mortgage Applications. Rick santelli joins us from the cme in chicago as well. Steve what are you watching . First im watching this increase weve had in the tenyear yield which has gone up as you know, 10, 15 basis points over the past several weeks. 1. 9 . Right, right. But we havent seen it really in the 30year mortgage. So i thought i would draw on, you know, ricks expertise and our expertise from our cohost this morning to try to get an idea for the direction. Just want to show you some charts here. First thing is youll see the 30year rate remaining pretty much flat. And of course the Federal Reserve is going to come along and buy a whole bunch of mortgages this year. And still buy treasuries as well. What you see is the spread, i guess thats the Mortgage Application number that was going to be the second one showing its decline. You could see it down despite rates being low. And theres the one. Theres the yields going up on the tenyear, and theres the Mortgage Rate being flat, so the question for individuals out there, is this the time to get in before the 30year mortgage follows the tenyear higher . Or do they believe the Federal Reserve purchases will keep down Interest Rates . Or, what about this idea that the fed itself is acting at cross purposes and it is hammering or regulators in general hammering on one side, when it comes to underwriting standards, and yet trying to get people to take loans through its monetary policy. So let me just throw that to you. Absolutely. That is no question about that. You can see that in the banking business. Of course, the fed prints money like crazy. At the same time, to this day, the regulators have tightened lending standards across the whole industry. In fact the lending standards are the tightest in my 40year career at bb t. We think bernanke tunes in. Look in the camera and tell ben what you need . Ben we need for you to call off your regulators. One thing you cant do if youre trying to set National Standards like theyre going to do in mortgages, youre going to set the standards tie tight and take away judgment. Small business lending, for example, theres some mathematics to it and a lot of art. If you take away the art which happens with National Standards what you have to do is tighten the standards so much that a lot of people that would make it and would be successful dont get the loans. Theres no right answer to National Standards. Theres judgment that has to be made. Rick, talk about the spread dynamic and what you expect here. Its wider right now than it has been. Do you expect that gap to narrow . Rick . Are you talking to me . Yeah. You know, i dont actually see a major rise in Interest Rates. I dont see the feds programs really having a huge effect. I think well be looking at fees going up in some of the states that seem to have the most expensive process of foreclosures. But i dont see a lot of change. In my opinion its very disheartening when i hear about these settlements with banks, that i really think are, i dont see the point. I dont see whos damaged. Id like that journal article today. And on the other hand, i think while we have the zombies and the fha still integral in the process, any discussion about this is almost crazy. And then when you think about the Consumer Protection group, you know, if we need this much protection and buyer beware isnt the kind of phrase we want to put on the door, then we dont really have a mortgage problem. We dont really have a fed problem. We have an education problem, with the end consumer. And the Housing Market. But i do agree, and i happened to catch a bit earlier, that you know, looking at a house as an investment versus utility, that dynamic has been ebbing and flowing. I hope it stays with the latter. Because i think the former and all the home equity loans and all the College Educations paid for has never fully been vetted and accounted for. So rick can i just try this another way. Lets say you were going to get a new carburetor for one of your 1965 lincolns out there and the guy at the Auto Parts Store recognized you, rick santelli, im thinking about getting a mortgage now. Is now the time to do it or are rates going to go lower or higher . Do it now. Do it now. Do it now. Ive been saying that for the last year or so. And i still think its a wonderful idea. I think its a speck in history, this is all for the buyers that can get financing. No doubt. John, whats your take on the direction of Mortgage Rates . I think that theyre not going to move a lot this year. I think the fed is going to do everything it can you think if the fed didnt buy mortgages they would move a lot . No, i think theyd go up. You think the fed is, in fact, keeping them lower. I think it is artificially holding rates. Its hurting savers and urging people to consume housing. Is it helping out your Mortgage Business . Sure. All right, steve, thank you very much. Rick, thank you. We will talk to both of you guys again very soon. More from our guest host senator ron johnson and Cato Institute president john allison. Rick was talking, and i thought of something, john, that i watched the coverage last night of the mortgage settlement, and the billions that were being anted up by all the banks, and the portrayal by mainstream media, i always love it, but they looked at how many people had actually been foreclosed upon, i believe, and they divided the number of people by the amount of the settlement to show that it was only 862 per foreclosure. So that and they highlighted a lot of critics that said this is just a slap on the wrist for all these really bad actors. And then i tried to figure out if it was paperwork and floppy accounting, right . Most of the people that were foreclosed upon were late on their mortgages. There wasnt any question that the people were not paying their mortgages. Right . Absolutely no question. In fact, most states it takes years to foreclose on a house. What do you think of the medias portrayal i watched just in disbelief as i watch so much when i watch news at night, but it was that only 860 banks agreed to pay 8. 5 billion. I know. Why . Why do you why do you agree to do that just to get it to go away . To get it to go away and also because theyre regulated by the government. They cant even stay in business unless they but there were so many foreclosures going on. Where were the short cuts . They took robo signing and it was maybe not having all their things in order. I think the whole issue but they never foreclosed on people that werent never foreclosed in an error and its ignoring responsibility of the consumers. People didnt go buy a house because the bank made them buy a house, right . Watching that, i just i was just these horrible, horrible banks. Only gave 862. They did these terrible things that when you so when you divided it all out the 8. 5 billion it was only 862 per person. And i was thinking wait a minute, i think all these people were actually foreclosed important. Tort system. Thats one of the problems in our economy is a legal system but this is the attorneys general. Right. I understand across the border our legal system is also increases tort reform look, i dont know how i feel about this particular case but the larger point is, yes, absolutely the banks should have gone after the people who should have been foreclosed upon. But you have to go properly. Thats the law. If you dont do it properly you dont do it properly and you got to pay the fine. Thats the deal, right . When the federal government is in the short circuit the bankruptcy process or the law thats been dealt over decades thats a bad thing. It creates a high level of uncertainty. But these were really technical issues about how they mechanically had something signed. We didnt do it in bb t and we didnt have any problem with that. And you didnt have any part of this . We didnt have any effect. But these robo signing houses where they literally have people who were signing other peoples names, didnt know what they were signing. Thats not great, right . Mechanically its not great. But practically that debt never gets through the legal system ceo of your company is that acceptable at your company . No. End of discussion. But i dont know my point was the way that e the its presented is that the banks were foreclosing on people that didnt do anything wrong. And i agree with you. There have been media reports that i think have overplayed ill give you, congress has a responsibility and also the government is trying to free up credit so that all these locked markets can get better. And every time you hit the banks with another 150 billion, it just, theyre looked at as the bad guys. You know, fine them for 10 billion. Collect in the somewhere where its not going to do any good. But its not going to go for lending for new houses. In the end consumers pay for it. But the spreads in the Mortgage Business versus 30year bond has gone up and the reason for that is the cost of servicing has gone up radically because of these kind of issues. So the consumers today are paying for that stuff, because banks dont make high enough profit, they return on capital is below acceptable rate by a lot of trading less in the cost of capital. So, but also i want what happened. Bb t we wouldnt do for example pick a payment mortgage loans. We refused to do them because we thought it was bad for our customers. We had a lot of customers come in and say i want a pick a payment mortgage and they went over to countrywide and got it because they thought it was a better deal. They knew exactly what they were doing. Are they victims . No. All right. Well have more from john allison, new president of cato and senator ron johnson. Okay, coming up a portfolio Planning Session with Arrow Investments john rogers. Our working series continues with a look at the sectors that will profit most in 2013. And tomorrow, were going to talk Global Equities with wintergreens adviser ceo david winters. After all these years. But your erectile dysfunction you know,that could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. Tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. Do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. Do not drink alcohol in excess with cialis. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, seek immediate medical help for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a 30tablet free trial. Welcome back to squawk box this morning. Markets pulling back after a very strong start to the new year. Is slow and steady the right strategy for an uncertain political environment . Thats our question. Our whats working series continues with arrow investment chairman john rogers. The current chairman of president obamas Advisory Council on financial capability, and we are twliled to have you here this morning, john. Great to be back. So what is working in this environment . Or what do you think is going to be working in 2013 . Well, i think that the housing rate of stocks are going to continue to do very well. Warren buffetts talked about the fact of how important the recovery in the Housing Market is for the overall economy. Jobs get creative because of it. And i think that momentum is going to continue into 2013. Okay so lets go through a couple names. Names of companies that you really like. In the housing worlds. Weve had a lot of success from carpet manufacturers like mohawk and inner face. We also own First American financial which is one of our best performers last year. And were looking for any of the companies that have any ties to Housing Markets. We think that can really have a real impact on our performance in 2013. I see youre also interested in financial services. Whats the back story . Well, you know, thats a favorite area. Warren always talks about investing in the circle of confidence. Something that you understand. I serve on a number of investment committees. I run an Investment Management company about 30 years. So we feel like we know that world really well. So our favorite stocks are some of the alternative Investment Companies that have really made a difference in more and more investors going to alternatives. Subpoenas like lazard i think they do a great job. Companies like blackstone or kkr. A huge name in private equity. And janus, a controversial name but we think janus is going to benefit from the economic recovery. Lets walk through some media companies. We work for a Media Company so im happy to see youre interested in something in this world. But, i dont think youre necessarily recommending comcast right this second. You like cbs. Cbs has done a wonderful job over the last several years. Les moonves, a very powerful ceo, very effective ceo. Really made a big difference there. Theyve got great programming. Great shows. Great content. And at the same time, benefiting by the fact that people are continuing to advertise on television. And you think that holds up when nbc primetime really kicks into gear . Come on. Yeah, yeah, id give some kind of spread. Its still the best way to get a mass audience. It really is. Newspapers. I hear you got a Newspaper Company you like. That, you know, i love that. The net has been one of our favorites for a number of years. Its done very well since the bottom of the market in 2009. Does it hold up . Its held up very well. Usa today is doing well. But also there are smalltown newspapers where the local content matters. I think thats something thats really been a powerful profit and. Is that a longterm play . Or you say for yourself im going to do this for a year or two, see how it goes or then i might have to get out because i dont know how sustainable this is. Were in it for the long run. Even after the big runup, still less than 10 times earnings. Has strong cash flows, and they also have television. They have career builder. They have other internet assets. So we think theyre well noised for 2013, 2014. Were longterm investors. We want to own stocks for the long run. John i appreciate youre an investor for the long run. Over the next two months, however, things may get a little more volatile before they get better. Conversation we have often around this table is about the politics at the moment and whats going on in washington. You have a role in all of that. Your sense on how everythings going to play out and how its more importantly going to impact the markets. Well, i think that the kind of ups and downs, kind of volatility that weve seen over the last several months, it will continue to have some big up days, and some big down days. But in the long run, you know, our capitalist democracy is the best Economic System ever invented. Even with all of our wars, with all of our problems, well find a way to solve these problems, get this budget crisis solved, and you know, when we look back in 2014 well look back at this as a distant memory and wont have had any real impact. Because theres a grand bargain . Because what happens that does that . And the reason i ask is theres a sense that were now going to have a series of fiscal cliffs in to perpetuity almost. But again, you know, eventually we do find a way to get through our problems. You look out throughout history, you know, and warren talks about this, you know, we get through the oil embargoes. We get through the swine flu. We get through the horrible wars that weve had in this country. You know, things that are much more problematic, these shortterm manmade criseses that have happened in the congress. So things will be better as we go forward. And im extremely optimistic on the power of america to solve its problems, and do very, very well. Okay. John rogers, were going to leave it there. We thank you for joining us this morning. Thank you. Thank you. Coming up the latest buzz from wall street. Were going to talk aig, sears, and Eddie Lambert, among other things, with jim cramer next. Im up next, but now im singing the heartburn blues. Hold on, prilosec isnt for fast relief. Cue up alkaseltzer. It stops heartburn fast. Oh what a relief it is i am probably going to the gas station about once a month. Last time i was at a gas station was about. I would say. Two months ago. I very rarely put gas in my chevy volt. I go to the gas station such a small amount that i forget how to put gas in my car. [ male announcer ] and its not just these owners giving the volt high praise. Volt received the j. D. Power and associates appeal award two years in a row. Welcome back to squawk box. Lets get down to the new york stock exchange. Jim cramer joins us with more. We see theres two bits of news for sears, jim. Theres the Eddie Lampert news and the samestore sales down 9 . Is that good . Was that better than expected . Has sears ever had positive comps 1234. At one point they did. There was a real estate trade at one point. These are not terrible numbers. Was Eddie Lampert really running the company the whole time . I dont know. When we saw that news, it was like, i guess you know, i didnt know he wasnt running it. Thats what i thought, jim. I think thats right, joe. Not sure what happened. Obviously a Family Member is not well, wish a speedy recovery. The stock is still overvalued. If the comps for Sales Numbers are still down, Eddie Lampert getting more handson. How much more handson can he be. A rising tide lifts all housing boats. But i think retail remains challenged. Appliances were better for sears. Canada, warmer weather, not so good. Its a very mixed picture. But its, frankly, you would expect it to be down big when the ceo left. Which tells me that the ceo was always eddie. A rising tide. Rising crimson tide. Rising crimson tide. You didnt mean that, though. What else might as well stay with retailing. Is this good for target . I wouldnt want to compete that the way they decided theyre going to match all these other no, i agree. Look, this is you decide to go against amazon, youre going against a company with tremendous cash flow. Its doing a lot of things right. It doesnt have to worry about the price multiples. Its the most overvalued stock we follow. Youre going up against a company that has unlimited fire power. You dont want to be walmart or target. This group is so, so hard to navigate. And Everyone Wants to navigate it ahead of a debt ceiling discussion. Theres so many other areas that are easier. This is the toughest area i know. Weve got to go, i think, jim. Will we do 4 again in this country, gdp . Again, we had people on and its all 2, 21. Ca cant we do that . No, i dont think so, unless we cut spending dramatically. We need to cut spending in the country and then we can do that. Thats been the course of what has happened in human events in countries. They get their spending down and then great things happen. But obviously, joe, were not doing that right now. We may need another election in two years to do that, i dont know. Well see, jim. Thank you, joe. All right. That is the perfect segway, because coming up our guest host this morning has been senator ron johnson, and john allison. Tomorrow on squawk box, can markets continue to climb or will uncertainty fears about the debt ceiling stop bulls in their tracks . Well ask byron wean. Portfolio picks from a toprated fund manager, thats tomorrow starting at 6 00 a. M. Eastern on squawk box. I need you. I feel so alone. But youre not alone. I knew youd come. Like i could stay away. You know i cant do this without you. Youll never have to. Youre always there for me. Shh ill get you a rental car. I could also use an umbrella. 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