Transcripts For CNBC Squawk Box 20130211

Of 2013, but im back now. In corporate news, boeing completing what it calls an uneventful test, a flight of the 787 dream liner. And opposition is growing to dells big buyout, that 24 billion buyout and a Carnival Cruise ship is floating in the gulf of mexico after an engine fire. Plus, digging out, the northeast hit hard by a weekend blizzard. Hundreds of thousands are still without power. Airlines are trying to restore service. And news out of the vatican about the pope. If you havent seen it, well bring you that, as well. Its monday, february 11th, 2013. Squawk box begins right now. Good morning. Im Andrew Ross Sorkin along with joe kernen. Becky is off. Breaking news, the vatican has Just Announced the pope will be resigning on february 28th. The blizzard brought as much as three feet of snow to some areas in the northeast. Here is the Massachusetts Governor. Were, woulding hard to make sure that the t is fully functional by the morning commute. Utilities seem to be making progress. Bertha coombs will join us with the latest from Power Outages to grounded flights. Then, of course, there is the topics of the markets. Earnings season is winding down. Only 53 s p 500 Companies Set to report. One event to watch, janet yellen is scheduled to speak on the Economy Today and our guest host this hour will be the former managing director at pimco. Hes currently the share of global societies of fellows. And also we have Rebecca Patterson. Weve got a lot to did you discuss with them. Before we do that, were going to head over to michelle who has the morning headlines. Thank you for that, andrew. Usair and nmr are set to meet. Boeing completed what it called a, quote, uneventful test flight of the 787 dream liner on saturday. It was the companys first test since the airlines were grounded more than three weeks ago. Carnival cruise ship in the gulf of mexico will need to be towed to port. Carnivals triumph, as it was called, was heading back to galveston, texas, when the fire occurred. The ships extinguishing system kicked in, no injuries were reported. Lets get over to Ross Westgate and kelly evans oh, its Ross Westgate standing by. Ross, theres big market news and big news out of italy. Do we know why and whats happening here . An announcement has been confirmed from the vatican. Pope benedict is due to resign on february 28th. Apparently he spoke in latin this morning and announced this move. We dont yet know why. There have been a number of stories surrounding it. He is going to resign. The vatican spokesman has confirmed that in the last five minutes or so. February the 28th is going to be the date. Now, i have just been doing some digging. The last time a pope resigned might have been way back in 1415. Clearly, unprecedented in modern times and well have to wait and see what the reasons will be given. There is going to be a press conference at 11 30 g. So, in other words, 27 memberships from now there will be a press conference from the vatican to outline exactly whats going to happen and maybe the biggest question to be answered is why is the pope going to stand down . And if he does, how will they choose the replacement and in what types of time scale . Interesting, of course, is the timing of this is before easter, but its just a few days after the italian election webs which is very important for investors, as well. From one sense, the worlds media will certainly be there, anyway, for the event. Anyway, the pope has confirmed from the vatican he will step down on february 28th. Im now hearing kelly tell me kindly it is apparently for Health Reasons. Apparently it is for Health Reasons that hes going to step down. And there have been other speculation about that, as well. We havent actually got the ftse mib up. European stocks mildly higher at the moment. The xetra dax up 0. 2 . The ftse 100 up 0. 3 . One stand out stock today, novo nordi nordisk, the worlds biggest maker of insulin drugs. Its stock off 12. 3 . The fda coming out and saying were not going to a prove your drug. We want more information. And thats somewhat on a shock. Thats the company saying, look, we think we can get through this and it may not impact 2013 but investor res clearly taking it as a big negative right how. Thats why we stand right now in europe. The pope will resign on february 28th for Health Reasons. He was old, ross. When he took over, you wouldnt call it a it was sort of an interim pope, but he was pretty elderly to start with. When you said you heard some story, you couldnt say that without allude to go something. Health would make more sense. How long highways been pope . He will be 86. But even for health, you remember, we all remember how Pope John Paul ii was so young when he was elected. I think he was 56 or 57. A young man. He used to go skiing all the time. He was elected when he was 78 years old. Yeah. So we watched him turn into an elderly man that was very frail. Remember how long it took, we waited and waited. I can remember i was on a plane when he finally passed. But he didnt i mean, he was not healthy at the end and he didnt resign. So thats what i dont really understand, ross, right . Well, traditionally, they havent resigned. So 1415, yeah. So hes 2005, hes 86. So thats five, six, seven, eight i think what were all dancing around the issue of whether or not theres more to it, right . Is that what were getting at . Is there Something Else we dont know about. All of them have gotten elderly and they have essentially died in office and thats when they begin to look for a new pope. That is no happening in this case. Right. You said it would be pure speculation. Its probably best not to specula speculate, at least you filled us in that at this point its been called for Health Reasons. And well find out more about about a half an hour. All right. Thanks, ross. Send it over to bertha couples who is tracking the latest in the northeast powerful winter storm. Its not what anyone wants to hear, but the northeast is bracing for another storm tonight making its way through the midwest even as the cleanup continues from the massive weekend blizzard that dumped up to thee feet of snow in new england. Theyre still digging out on the long island expressway. The boston mayor ordered skuls there to remain closed today as the hub digs out from its top five highest snowfall ever. Close to 120,000 customers remain without power. The vast majority more than 118,000 in the bay state. New york has a large number, as well. About 1400. Mostly out in long island which we all know suffered under sandy with a very long power outage. Folks will be looking to see whether theyll be get online sooner this time. Youve got about 850 people 850 customers in rhode island, more than 300 in connecticut and about four dozen in new jersey. Airports resumed operations for the most part in new york and boston on saturday and a limited service in connecticut on sunday morning. Some 5800 flights were canceled on friday and saturday, according to flight tracking services wide aware. Its going to take a while to get them all back on track. Meanwhile, amtrak service, north to boston, it has resumed mostly on the northeast service. In addition the springful service has resumed operation, as well. But once again, we do have another storm coming our way. Yep. February. Weird, isnt it . It is winter. Weird. But i thought it was supposed to get warmer and warmer. No. Global warming . No . Sorry. Drought, water, cold, warm, the weather keeps changing. Thats the point. Thats the point, though. The weather keeps changing. The climate is changing. The weather keeps changing. Snow in february. More snow coming. I dont know. I just have to shake my head. A number of tech stories so discuss today. Google executive chairman eric schmidt selling roughly 42 of his stake in the company. A google spokes woman would not say why schmidt is selling the shares at this time. Maybe because he wants 2. 3 billion. This is a little weird. I was talking about this last week, andrew. He owns about 7. 6 million shares. A good job, but he was not the thunder. In this case, im not bothered by that at all. What im bothered by is that a year ago google put in place a third class of shares so that eric sch mi dt, larry paige, and and survei could all keep control of the country and do what theyre doing now, which is sell their shares. And you wonder whether that qualified for evil. They do no evil and yet, at the time, we said this looks evil. Did it not . Right. Theyve had theyre supposed to do no evil. That was not an altruistic thing, is it . Isnt that their corporate montra, do no evil . The question is, when you have so many different constituencies, people dont realize how you sell run constituency to benefit the other. And its pretty nice for the ceo to amass an 8. 2 stake in the company that he didnt found. He may not away founder, but hes close to it. Before he showed up, this was not a company that was making money. Look at the market cap. They had not figured out a revenue model. Back then, they were a Great Technology firm. In the market cap gains, if you look at what the stock reviewed, market cap and were giving him a little part of it, right . There may have been some momentum in that company and the algorithms that it had that a lot of people i mean, theres people that say that Oil Company Executives should not be benefited from their company mistaking a lot of money. I think what happens in search and everything, the algorithms were already there. Did he manage it 5 billion worth, andrew . He might have, actually. Im glad to get you to im glad you took my side here. Im with you. Im glad you took my sign. Remember when you told lloyd blankfein, say it loud and say it proud . When you were gone last week, he was demanding that he fire ceos. What is getting into you . Ite just a fairness thing because there are people working a hell of a lot harder than eric schmidt and making less money. The fairness issue is still something in my mind that seems like its not fair. Unless help the ditch diggers. School teachers, i want them to and get tenure after three years and all right. Never mind. And none of their kids can read in fourth grade. Thank you for coming back. Im going to go and get a coffee. And you wore a sweater. It is not a sweater. It is a sweater. And you probably know about this, too. People dont want to do this. The biggest shareholder. Michael, but he cant vote. No, but i think he wants to do it. And he gets the company back, right, for pretty cheap. Opposition is a big landout. Three of the companiess largest objectors are joining us. Theyre set to be standing nirm on their 13 and that is cheap for its investments. Coincidentally, i think theyre in at 22. Here is the issue. Of the top 25 investors, Something Like 16 of them, theyre all under water. So they all want more. Having said that, part of him says, let him have it. Im not sure you can get your money back. Im not sure michael dell can get his money back. I think this will be a hard deal to pull off, dont you think . You think even to get the deal done . No, theyll get the deal done. Im saying five years from now, is he going to be happy, is he going to be sad . Ur use saying the turn around is going to be difficult. Extremely challenging. So your point is that those complainers right now ought to take what they can get right now . Yes. I dont know how many better that quickly. He was brilliant as creating a prices change. But when it comes to exchange, with they thaelt involve that . Silver lake, they bought it for peanuts. If there is value here, if im michael dell, i would rather buy it and have it as mine instead of sharing it with the company. And think what he could make on this if it works out. Hes worth 4 billion or 5 billion, so i probably makes rike 250,000. And he may do great with this. The question is, are these shareholders willing to sit around and whit . Its unfair. But i remember his whole career, looking at him and as we try to feel good about ourselves and our career and seeing someone like michael dell makes it hard for everyone. If this was about the supply chain, why keep trying to deal with you find some other business where you can redo the supply chain . Youre seeing michael dell should leave and if its all about the supply chain, supply chain Something Else. Some people say he was the washer pony. They did very well for a period of time. They commoditized the pc. The question is can he re invent himself . Were going to talk more with Jonathan Geller at 7 15. Including. Apple news. We will see about that. Okay. What . I dont know. Watches . Like dick tracy. Coming, were going to talk about the trading week ahead with Paul Macaulay and Rebecca Patterson. Plus, if youre just waking up, theres breaking news out of the vatican. Pope benedict is resigning on february 28th, citing Health Reasons. Speaking earlier today, he said he doesnt have the strength any more. He was in when he was elected pope, that he was almost 80. Well have a live report from italy when we return. Welcome back. The vatican has announced he will resign on february 28th citing Health Reasons. Good morning. This is news that just came out moments ago that was announced officially ten minutes before noon in a statement, an official statement and absolutely shocked everyone. The statement says that he is not able to the pope is not able to continue with his work because of his health. He does not have the strength or the energy to go forward. Now, he will be stepping down on the 28th of february. That is the official day. And really, again, it came as much of a surprise. He did become pope in april of 200 5 after john paul ii passed away. And has been affected by a weak health, but apparently what happened is that he became more unhealthy in the last month because of a degenerative problem in his bones which makes moving around very, very difficult. But he was last seen on the 8th of february and on sunday did once again do his mass vatican. So things appeared quite normal up until ten minutes of 12 00 today when he did announce that he can no longer move forward in his position. Thank you so much, claudia. I saw the pope speak live in cuba and i gave him a lot of credit. He was staring at raul castro in the front row. And i thought it was very brave to talk about democracy and freedom in a place that so desperately needs it. Hes never loved as much as i always refer to him as want pablo its a tough act to follow. The papacy, according to the vatican, will be vacant as of february 28th until how long does it take to you never know. They have to vote on it. Its like congress. Its similar. They do rounds and rounds of voting. Theres a lot of politics back and forth. And its interesting its right around the italian lekdz which is around the end of this month. They shouldnt effect each other at all. But its a big election. Its one of the reasons european markets have been trading down lately. You wonder if this has any impact on that election tall. I doubt it, but you could have some fun with conspiracy theories. Which are big over there. Oh, yeah. I helped cover the vatican as a journalist a long, long time ago. And im not catholic. It was fun as an objective observer watching this whole whole thing. Conspiracy theories . Are you kidding . Oh, yeah. Well get back to the papal watch in a moment. But first, lets get the forecast from the weather channels mike bettis. Hey there, still digging out for you. Hamden, connecticut, 40 inches. In portland, the biggest snow in city history, 32 inches of snow falling in portland, maine. We have a messy commute for you, more freezing snow, more rain rolling in. For new york, it will be all rain for you. Put it on top of the foot of snow that you had, its a crummy morning. Light snow rolling in towards boston and freezing rain, temperatures at 26 degrees. 3 below in bangor. In the Capital District about 32. In new york, temperatures close to 42 degrees this morning. A little bit more snow to go, mostly through northern new england, as much as half a foot. And in watertown. But now, in addition to that, the staff has gotten very, very active. Yesterday evening, a tornado touching down in hattiesberg, mississippi. Many people injured, hitting southern mississippi campus here. More storms firing up this morning, not ruling out tornados. More storms in pensacola, florida, including val ves ton and houston. Low chance of tornado, but a high threat for flooding. Guys, no matter how you slice it, north or south, some very unwelcome weather this morning. Yeah. Were okay, though, with that. Were okay at least up here with a little bit more snow and its snowing out west. Its supposed to snow like six out of seven days in colorado. Great for skiing. Thank you. The dow snamd a fiveweek winning streak. Paul macaulay, currently chair of the global interdependent Center Global society of fellows and Rebecca Patterson is with bessemer trust. And i saw the wall street journal at a Convenience Store this morning as i was getting gas. Others are coming, but im told there is a front page piece about companies not being at all certain about their future. Did you get a chance to see that, rebecca . Does that matter for whether we continue to see new highs or does that build the i like bricks in the wall of worry and maybe complacency is something we dont necessarily want. Yeah, absolutely. Companies not being sure where the world is going matters a ton for the economy and whether the stock market can keep going up. If companies are still cautious, were not going to see as much cap ex as we would like. Were not going to see that peck up in hiring that we want. We started to see some good leading indicators in january. I think the ism services sector, jobs component, thats a mouthful this early in the morning, but it was at 57. 5. Thats well above the expansion contraction line and tells me, anyway, that at least from a sentiment perspective, people are getting a little more hopeful about hiring. But we need to see it in the numbers and we havent yet. Paul, youre at a bond firm and i think of you as a fed watch or an Interest Rate guy. But that never stopped bill gross from making stock market predictions and putting numbers on where the dow was headed. You never got into that as much as she did, right . Do you have a feeling on whether the stock market is high or low at this point . Ive certainly had Vice President s of my lifetime. Well, now you can share them. I think the key thing in the whole outlook for the Financial Markets is the fact that were in a liquidity trap and Central Banks led by the fed are unambiguously committed to easing Monetary Policy. And i think thats the the cause of the levtation in risk assets. And i guess i would disagree at the margin about the issue of uncertainty. Uncertainty internal is negative for the economy. But its actually positive for the markets to the extent that uncertainty in the economy and sluggishness in the economy gives you certainty of a friendly fed. Yes. And a friendly fed over my 55 years has been something that weve always longed for and now we have it for as far as the eye can see. And i think the critical thing that we talk about from the standpoint of tail risk is whether or not we get too much of a good thing and the potential for irrational exuberance and risk asset. But the stock market itself has an incredible friend. So you have the paradox, the weaker it is, the more uncertain it is and the real economy, the more of a green light you have for ever rising valuations for yeah. New normal goldilocks, right . Growth is subtrend. Its disappointing. Its positive, but its anemic. But thats perfect for your view on the fed, which i agree with. And thats good for risk assets. I think one of the more encouraging signs of the markets more broadly, though, is in the last few weeks, were seeing more correlation breakdown. The risk on risk off trade we had in the last few years seems to be fading into the sunset. You saw for the last couple of weeks what about the breakdown of the way corporations are actually theyre true earnings power versus what seems to be a chopty market. Central banks breaking down. If you went to 2008, if you went to 9 11, everybody coordinated policy. And today it feels like thanks to the fed, opening the flood gates on do whatever you like, bank of japan, switzerland everybody is easing. The uk, mark carney. Its not just easy, its just doing whatever they want and no one is coordinating any more. But wouldnt you say directionally its all the same . Directionally the same, but taking a lot of different paths in going there. In japans case, its an inflation target, unlimited qe. Now mark carney going over to the bank of england talking about more flexibility. You were just there last week. What does that mean . But the good news, i think, is if we get less correlation. I think theres a lot of bad news here. But the good news is if theres less correlation, we have the potential for dispersion and we can get value out of stock picking again. That would be good news. Policy may be not coordinated, but its all reacting to a common call. Your liquidity trap. And until we ultimately, perhaps, get closer to merging fiscal. Monetary policy, Monetary Policy is the only game in town and the proverbial cliche of pushing on a string does comply in some respects. That is the straw that serves the drink in the frothy asset market. Frothy. Back to where we were 12 years ago, but is it still frothy based on what we deserve . Based on what we deserve . Yeah. As earnings have tripled and multiples have contracted from 40 down to 10 or 11, you would still refer to it as frothy, now that we put in 12 years of consolidation to get back to where we were long ago . Let me amend that, joe. Its frothy in the fact that its an asset by default that people are moving into. So its still not great in terms of the i mean, companies are doing pretty well in terms of Profit Margins being flush with cash and everything else, right . But why are you tying so much of it into fed action . Valuations are reflected in the fact that the xwhes are doing very well. But the Macro Economy is in a modern day depression. And really . Yeah, it is. Thats not consensus right now, i dont think, is it . I dont think its consensus. I dont think its consess yuns. Im basically giving you my opinion on how you describe it. I think my friend paul krugman might use that expression. But in general, we have a situation that weve not been in in my lifetime. You see, when you said frothy, i thought you were talking about the bond markets. I thought that was your easy out. No, actually, im not. I think perspective returns in both the bond market and the stock market are quite feeble when you look at underlying Interest Rates on the bond side. And earnings, i think the stock market is cheap. But the reality is that liquidity will give you and the certainty of liquidity going forward, i sense that we can shrink risk premiums dramatically and weve done so. The junk bond market is the one thats the most intense now in shrinking risk premium. So when i say frothy, maybe i should use a different word, joe. Call it elevated. Well, the reason for the depression, did the world live beyond its means by borrowing into its future and now were still paying for that . Is that whats happening . We had a credit bubble. That we used to fund this lifestyle that made us look pretty good and live pretty well and now its coming had home to roost . When your cab drivers owns five houses on leverage, you would consider that to be a bubble, i think. And after the tech crash over a year ago we had intense money and relaxation of underwriting centers and we had a bubble in housing and a bubble in credit and a bubble in the shadow banking system. And it all came a crosser in 2007 and 2008 in a moment and we were basically living in the aftermath. Such metaphors. Not the night they raided plus, you know who really is involved with housing . That was barbie. Did you see . She no longer wants to live in malibu and shes looking for a new house. She has like 25 million. Shes not getting rid of the pink corvette, is she . I dont know whether shes keeping that. All the news that anyway, more from our guest host throughout the show. Coming up, were going to get the early picture for the futures pits in chicago. But first, in the broader world of news, well bring you the big story of the morning, the morning, major developing story, Pope Benedict will be resigning on february 28th. He is citing Health Reasons. Speaking earlier today, he said he doesnt have the strength any more. Were going to continue to follow this big story and bringing the latest as the morning continues. To grow, we have to boost our social media visibility. More likes. More tweets. So, beginning today, my son brock and his whole team will be our new senior social media strategists. Any questions . Since we make radiator valves wouldnt it be better if we just let fedex help us to expand to new markets . Hmm gotta admit thats better than a few likes. I dont have the door code. Whos that . He won a contest online to be ceo for the day. How am i supposed to run a business here without an office . [ male announcer ] fast, reliable deliveries worldwide. Fedex. Welcome back. Dell is respond to go share h d holdser objections to its buyout deal. It is saying it is in the best interest of shareholders and it provides shareholders the opportunity to evaluate potential alternatives. Some of dells largest shareholders say the 13. 65 a share undervalue tess computermaker. People have big debates in question about shops and whether people ever really show up. Is there a legitimate response saying were going to have an auction and anybody that wants to buy it can come. No. They said there was a go shop from day one. The interesting part is michael dell said he would effectively roll into somebody elses deal if it appears. Korea. On the exact same terms. The question is if it happens and how it happens. Roger altman is the one that has to find the alternative deal. If he can find the alternative deal, hell do well. And his pay scale is structured in such a way that he gets paid a lot more money if he finds an alternative deal. Hes a capitalist, right . He is a capitalist. He was here last week. He said it last week and you werent here. It was me, myself and i. There were three democrats on the set last week. The fourth one called in sick. The broad definition. Brod broad, yeah. Lets get a quick check on the markets. Skol scott joins us now from the cme. Good morning. Good to see you, scott. What do you think here as we head into the week compared to last week . Well, i guess you have to close your eyes and say full steam ahead. Ultimately, we havent had a blow up in asia. Im not quite sure what these numbers are going to show us this week in asia. We have big numbers on the docket. It hasnt fallen apart like everybody want thad to. Here we sit in the u. S. With everybody is buying hand over fist. Ive been doing it a long time and im still conflicted. I know these corporations have been showing better results. But at the end of the day, we still have qe because of no growth. Rebecca patterson would tell you you have just enough growth, actually, you have a wonderful spot where its just weak enough where the fed keeps their foot on the pedal and thats why its the perfect moment, at least now, for the market. I guess its that little circle we used to have on our baseball bats. We have to be careful about that thing cracking in half. Thats what i think a sweet spot is. Here we are, you have a 7. 9 rate. I can debate all long about whether the Housing Market is Getting Better or not. Thats the reason why we have this influx of qe. Why would we be without qe . Ultimately, its all about growth and we just dont have it. Here we go, the stocks are full steam ahead. I cant tell my customers not be on board, but i can tell them not the be on board with both feet. Got it. Scott, much appreciated. Paul and rebecca will be with us throughout the rest of the hour, as well. Korea. And is that sheledy . Yes. Did i pronounce it wrong . No. Weve been pronouncing it wrong for five or six years. Thats all right. But that wasnt a very big mess. I do love the jacket. We always mention that. We do. He wears it without shame whenever he comes on. But hes like a commodities trader. Right. So its perfect. He trades milk. Butter. Hes not like on a you know, like in an Insurance Company wearing that. Coming up, do you want to be excellent at just about anything that you want to be excellent at . Then you want to hear from our next guest. He promises the solution when squawk box returns. Hey, its me, progressive insurance. You know, from our 4,000 television commercials. Yep, there i am with flo. Hoohoo watch it [chuckles] anyhoo, 3 Million People switched to me last year, saving an average of 475. [sigh] it feels good to help people save. With great discounts like safe driver, multicar, and multipolicy. So call me today. Youll be glad you did. Cannonbox [splash ] welcome back. U. S. Equity futures suggest the s p is up by 1, dow jones higher by 16 and nasdaq up by 0. 6. Could you be doing more or less . We have the answer this morning, tony swartz ceo of the Energy Project and the author of be excellent at anything. Hes also the author of this weekends piece called relax, youll be more productive. So here is the question. And i just cant figure out. I read the piece and it said we should only work in 90minute blocks. How is that even possible to work in 90minute blocks. You mean how can you possibly Pay Attention for that long . No. We do a show for three hours. Well, i read the piece and was fascinated. But the entire premise of the piece is you need to take lots of breaks and you need to sleep and youll be more productive while youre working. But i wonder if i followed this whether i could do as much as im doing. I cant even fathom doing more. We hear here is the deal. Its a paradigm shift. Right now, we assume that time is the resource we use to get things done. But the north here is, in fact, what matters is energy because if you can focus and concentrate energy, even for or especially for short periods of time, so, say, 60 to 90 minutes, but youre fully focused, youre not distracted, then you can get more done in less time. I tell the story in this piece of writing my last two books in 90minute sprints with breaks in between each of those sprints. I was able to where is those in less than six months. When i worked ten hours a day and for months upon months, the other books took me over an hour to write. I was transformed by research about sleep. Stanford, who worked with stanford athletes, she has discovered when she gets them to move from an average to 7 to 7 1 2 hours of sleep to ten hours of sleep for a period of ten weeks, they increase their shooting by 10 . We have undervalued all forms of renewalal and recovery. Dramatically undervalued them. So when you are really rested or renewed, youre capable of higher cognition, of greater creativity. Now, you worked with lots of companies and you talk about this. How receptive are companies to this idea of napping in the middle of the day, to going to theingly gym, so say everybody should sleep 8 1 2 hours, we should go on vacation a lot. Well, the answer is i im glad you chose google and apple. Those are companies that are doing pretty well trying to push into the environment of much more thoughtful progressive policies about these issues the. They have lots of money, though. So those are very successful companies. And you could argue because your doing some of the things youre augusting. No question. Take me to a company thats struggling been take me to a company that cant afford to give out free food throughout the day and free massages throughout the day. Theyre not going to let people sleep for two hours in a room somewhere, are they . No. But this is make missing the point. Until you make this intellectual shift, more hours means more productivity. Even one less hour of sleep gives us one more hour to be productive. Thats nonsense. What it gives us is one more hour to by be partially productive because youre tired. Do you think europe is productive . They rest a lot over there. Youve got naps after lunch, you work a slightly longer day, but its its overdetermined. There are too many factors going on for me to answer that question and the German Economy is very different than the French Economy and both of them give very long vacations. Do i believe that a Work Environment in which people move rhythmically like the body does between extending energy and recovering energy will be a more productive environment and a more sustainable one . Overwhelmingly, the answer is yes. I run a Small Company company we have 25 people. Nobody works after 6 00. We dont ask people to email on the weekends or in the evenings. We get four weeks of vacation as soon as you start. Youre going to get a lot of resumes. Exactly. But the point is, we have grown at an and youre a service business. And we have helped our clients to understand that its in their interest that we dont respond at these crazy hours. We have socialized our clients to realize its good for them, its good for us. Tony, one final vacation question. Is it better off that a take a week or twoweek stretches or lots of three or four days, take a friday, take a monday . Is that better or do i want to be gone for a long time once a year . Well, what i would answer is both. But what i would say is that you need enough you need short breaks during the day. You need real weekends. You need some periods of threeday vacations and a long vacation. Does sleeping more on the weekends make up yes, it does. It drives his wife crazy so if i double up for sleep on the weekends it reduces your sleep debt but it doesnt make you more functional on the nights that you get too little sleep. All right. Whats the long vacation . How long does it have to be . You know what . Because im telling you, we have we have the same vacation. No, no, no. We have a different we cant take long vacations. Yeah. Were on the air, and you leave and i totally understand that. You leave for three weeks and the ratings go i totally understand. And joe, listen, you have to adapt it to the particular Work Environment youre in. But even a week, would be tremendous okay. If, joe, youre good at recovering during that week. All right. So its not how long you recover. Just as its not how long you work. Its how well you recover just as its how well you work. So when youre vacationing, you need to go on vacation. Going and playing really bad golf in front of a lot of people laughing at you for eight hours, thats not really a vacation . Well, its golf. Right. A good walk spoiled. A bad day at vacation is better than a good day at work. The worst oh, no, i cant tell you that. I got you guys going now. You did. You did. Coming up, a final market prediction from Rebecca Patterson. Wed be remiss if we didnt talk about that yen . Its going to 100 . Yes. Belowing away the s p. Before we let her leave for her day job shes getting a break being on the show today. Plus a programming note. Dont miss cnbcs coverage of the state of the union tomorrow. I know michelle is going to be watching it. It starts at 9 00 p. P. Eastern. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . If you dont have something important to say . Try running four. Ning a restaurant is hard, fortunately weve got ink. It gives us 5x the rewards on our internet, phone charges and cable, plus at Office Supply stores. Rewards we put right back into our business. This is the only thing weve ever wanted to do and ink helps us do it. Make your mark with ink from chase. How do you keep an older car running like new . You ask a ford customer. When they tell you that you need your oil changed you got to bring it in. If your tires need to be rotated, you have to get that done as well. Jackie, tell me why somebody should bring theyre car here to the ford dealership for service instead of any one of those other places out there. They are going to take care of my car because this is where it came from. Price is right no problem, they make you feel like youre a family. Get a Synthetic Blend Oil change, tire rotation and much more, 29. 95 after 10. 00 rebate. If you take care of your car your car will take care of you. A final word from Rebecca Patterson who is leaving us here. Lets talk about the currency markets. Because the yen move, its been incredible. Where does the yen go from here . I think fair value for dollar yen is probably closer to 1. 15 or 1. 10. Were around 93. I think the yen is still strong. It could weaken further. Were going to get those new bank of japan officials coming up in the next few weeks. That could be the next leg of this. Does europe then respond with trying to weaken their currency . This is the question, right . Exactly. A 10 appreciation of the euro knocks about 1 off euro gdp over the next two to three years. Right. So they cant let this continue the way its been going the last six months or so. Im curious about the g20 this week. So we have the group of 20 ministers meeting. Are they going to get into a fight over the yen, the euro, et cetera . I think its hard. The fed opened the floodgates. So i think all the Central Banks to the point we made earlier, easing helps stocks. Thank you. For being it was great to be here. Coming up. This mornings top headlines. Including Pope Benedict resigning on february 28th. At farmers, we make you smarter about insurance. Because what you dont know can hurt you. What if you didnt know that weeping willows have invasive roots . What if you didnt know that a trampoline. Could affect your liability . And what if you didnt know that most cars. Get broken into when the weather warms up . Here, buddy. The more you know, the better you can plan for whats ahead. Get smarter about your insurance. We are farmers bum pa dum, bum bum bum bum all stations come over to mithis is for real this time. Step seven point two one two. Verify and lock. Command is locked. Five seconds. Three, two, one. Standing by for capture. The most Innovative Software on the planet. Dragon is captured. Is connecting todays leading companies to places beyond it. Siemens. Answers. Money matters. But the stock market itself has an incredible fringe. Joining the discussion this hour former vermont governor howard dean. Gaining momentum. You know ive always wanted a path with a giant lou ferrigno statue. Get the real deal on real estate. Robert shiller of case shiller fame joins us pop and hedging your bets. Its a cnbc exclusive interview with an energy activist investor, as the second hour of squawk box starts right now. Good morning and welcome to squawk box on cnbc im joe kernen along with Andrew Ross Sorkin and michelle car use so cabrera who is in for becky quick. A story breaking out of vatican today, Pope Benedict, going to resign at the end of the month. We heard that its been since basically a couple years since Something Like this has happened. 1415 was the last time according to Ross Westgate. This is due to Health Reasons, were hearing. And the pope hasnt stepped down in a long, long time. What would that be, 600 almost 600 years. Yeah, 14 yeah, almost. 600, right. This is likely to pave the way for a new pontiff by easter but the papacy, well lets get to our guest. The papacy will be vacant after february 28th. I would imagine, father Robert Sirico joins us. The president of the Action Institute. Father, did you have any were there anything in the tea leaves that could have predicted this . I guess the popes health, even when he was elected he was elderly. But anything that would have predicted Something Like this . Well, this pope, in fact, when he was cardinal had written about the possibility of papal resignati resignation. Theres a whole provision in canon law for such eventuality. I should correct one thing, he has resigned for health, he has resigned for age. So theres no particular malady that were aware of. The letter that he read to the consist ory of cardinals in roam, canon law requires that he manifest this. That he speak about it openly to certain officials, it doesnt specify which ones, so this would cover a wide body of them. But the second thing is that he underscored that hes doing this of his own free will. Which he does in the official statement that he made. Right. Hes 85 years old now . But thats like splitting hairs anyway, i think, father. When one dies of old age at 95, you know, death means your health isnt so good. What i meant was he doesnt have cancer no, i understand. But im not 60 yet but i can tell you that the health does start changing. Yes. At 61 ive heard about that. You might be familiar with it a little bit, too. Im trying to figure out, okay, after Pope John Paul i died i guess the papacy was vacant for months at that point, too, wasnt it . Yes. This is called the seat is vacant st. So what happens in the church is all of the Administrative Functions continue but they tender their resignations. That can be accepted upon the election of a new pope. Interestingly enough, catholics will note after february 28th, until a new pope is elected, that part of the mass where we pray for the pope by name, we pray for the pope and the local bishop, will be left blank. I think one of the most well miss the pope. I hate to do this. We will miss him. But immediately we got to move on to what who the leading candidates are, if we can even identify any, and what who is the ideal candidate, given where the church is, and where the world is in 2013 . Would it be a young, virile pope like Pope John Paul ii . Or do you have any idea whos in the running . Are there five cardinals who are well, you know, usually this ripens as the pope becomes weaker and weaker. And benedict didnt do it. This is a complete surprise to even those who are in the know. So i would say that i would look for kind of heading out burke, who is the head of the supreme court, so to speak, of the church. Hes an american. That would be unbelievable. That would be a first, obviously. And im not ranking them in any order. Okay. Scola in venice, who is a student of the pope, and intellectual on the youker side. Pell of australia, would be another interesting one, simply because hes vigorous, and known. He was follow very much in the line of benedict. And then youve got a scattering of latin american and last time i remember some other italians. I wouldnt be surprised if we get another italian. Because the italians are smarting from this, having lost the papacy now in the two rounds. Yes. Okay. Father, were going to leave it there. We appreciate your calm analysis of this. Robert Robert Sirico is president of the Action Institute acton institute, acton. Thank you. Were going to continue to follow the news out of the vatican. The northeast, meanwhile, still cleaning up from a historic and deadly storm. A blizzard brought as much as three feet of snow to some areas. Heres Massachusetts Governor duvall patrick. Were working very hard to make sure that the t is fully functional by the morning commute. Utilities seem to be making progress. Bertha coombs is going to join us with the latest numbers from Power Outages to grounded flights. Then theres the topic of the markets. Earnings season winding down. Only 53 s p 500 companies are going to report. One of them to watch, fed vice chair candidate yellen is scheduled to speak on the Economy Today and shes probably, is she number two, would you say . Our guest host this hour Paul Mcculley, former managing director of pimco, currently chair of the global dependent center and the Global Society of fellows. And hodi is here. Does that bother you . Only coming from you. J. Lo disrespectful to call you basically an icon . Oh, well, thats different. A person that has stand up for hode is short for howard dean. Brad whats the other one . Ben ever . Frangelina. This is great. I come on cnbc and somebody compares me to half of angelina jolie. What more do you want . Theyre both thats pretty good. I want to talk about the policy. At some point if were going to do the pope story we ought to talk about the politics of the zhunch and what this means inside the church. Not right now. No, not right now. But really interesting. Its a potential watershed for a church thats had has had a lot of institutional instability. Thats what i was wondering about, you know, who thats exactly right. Thats where i thought that question was going. But first, dell says its proposed 24. 4 billion buyout deal is in the best interest of shareholders. Thats from an s. E. C. Filing this morning. This comes after three of dells largest shareholders join Southeastern Asset Management in objecting to the deal. Southeastern says both dell say dell is worth more than 20 billion, 20 dollars a share. The current bid is 13. 65 per share. Boeing says the weekend test flight of the 787 jet was uneventful. It was the first flight since all 787s were grounded more than three weeks ago. Boeing wanted to test the 787 lithiumion batteries under flight conditions. Carnivals triumph cruise is being towed to port after an engine fire sunday cut power to the propulsion system. There were no injuries reported and the ship does have electricity from generators along with food and water. Thank goodness for that. Customers will be given a full refund. Now lets head over to bertha coombs. They should be given a lot more than that. Want another cruise . The headline we were just talking about, there is a Carnival Cruise ship floating in the gulf. I was like, well, good. Theyre supposed to float. If theyre not floating wouldnt there be more of a story if it wasnt floating . That would be much bigger, i thought, anyway. Bertha coombs is tracking the latest in the aftermath of the northeasts powerful winter storm. The weekend storm shattered snowfall records in connecticut and other parts of new england. Some transportation has started getting back to normal. All the major airports in the northeast reopened by yesterday. Flight tracking service flightaware says nearly 6,000 flights were canceled due to the storm over the course of the weekend. The vast majority on friday but both schedules getting back to normal. About ten canceled out of newark, liberty airport and less than a handful out of boston. Northeast corridor Train Service on amtrak to boston and some asell exservice has resumed. Boston 4i9 with two feet with snow. The governor ordering schools to remain closed. The Obama Administration declaring a state of emergency in connecticut which will help them get federal moneys for the cleanup. They saw record snow, over three feet. Schools there also remaining closed today. Weve got some updated outage numbers. Some of the figures we had from the weather an hour ago, particularly in rhode island, significantly underreported. Here are the new numbers that we have. Only 135,000 customers still without power across the northeast. Majority in massachusetts, over 110,000. Thats down from about 400,000. So theyve worked really quickly there. In rhode island the number is now 20,000 down from peak of around 70,000 over the weekend. Close to 1400 still in the new york area. And over 200 in connecticut. But that connecticut number might also be higher. The numbers well below Hurricane Sandy overall. Fords head of u. S. Sales says the auto dealer doesnt see any major impacts like they saw during sandy due to the snowstorm. During sandy they lost nearly 200,000 cars. Ford doesnt see any impact on february sales because of this storm. Andrew . Okay. Thanks, bertha. The next two hours were going to be expanding our discussion which has already started over markets and the economy. Were going to be talking to former pimco managing director Paul Mcculley, whos currently the chair of the global interdependent Centers Society of fellows, and also our squawk regular joining us for the next two hours, howard dean. Hode, former government of vermont and a cnbc contributor. Good morning to both of you. Doctor. And a doctor. We can say a lot of things. And joe usually does say them. Hes going to i go back getting warmed up. I talk about your resume for how many things youre able to discuss, howard. Thats the only reason. Dont make it a negative. I want to go straight to the sequester. You say over the sequester cliff we should go. Ive always thought that. I thought we should go over the tax sequester. You thought we should have gone over the fiscal cliff the first time. I did. Look what theyve taken. Theyve taken three quarters of the potential revenue for deficit balancing off the table. They is . Congress. Or are we saying the democrats, the president . Everybody. This is what they all agreed to, right . So thats problem number one. Problem number two is on the spending side, now are we going to make serious cuts or not . I dont think they are unless we go over the cliff. Theres not going to be any opportunity to cut Pentagon Spending in any serious way if you dont go over the cliff. So there is some stuff in there that i as a democrat dont like. But i think everybodys going to put something in the pot in order to balance the deficit. We did a lousy job in january on the tax side and i hope that i think its better to go over the cliff than do a lousy job how many people do you know on your side of the field who actually agree with you . Very few. Look theyre politicians. They want to spend as much money as they possibly can and they dont want to pay for it. Who agrees with you . Oh, i dont know. I bet oh, god, joe agrees with me. You forgot. The other thing, howard, and im just alluding to it, there will be no return to the bush era tax rates on anyone under 400,000 . Right. Okay. So take that amount of money, whatever that is per year. How much do you need how many loopholes do you need to close . What is the marginal rate have to be on people above 400 to replace that potential revenue . Its 100 , isnt it . But i dont i think the tax rates you and i have disagreed on raising taxes. But i dont think they can go any higher or should go higher. On the high end. I dont think they should. Then where do we get it . Ive always said if you want bill clintons economy youve got to pay bill clintons taxes. So why arent republicans really, if they like tax cuts, if they like tax cuts, they got a huge amount thats not going to come out of the private economy and go to the government. They should be happy. I have said many times that republicans won the fight in january they just dont know it. And nobody washington is upside down. Its certainly is if we agree. Well, but the they think that common political wisdom inside washington is that the president won and the republicans lost. The fact is, the republicans won an enormous victory. They stabilized taxes for middle class people at the bush tax rates for everybody below 400,000. And they took all that revenue off the table and we cant use it to balance the budget. The cults are going to have to be much deeper if youre ever going to get anywhere towards fiscal stability . Does the market believe were going over the sequester cliff . And does it care . Does it matter . All of the above, i think, in some respects. I actually think i agree with you that it wouldnt be a disaster to go over the sequester cliff. The whole debt limit issue was a very different issue. That was just the height of stupidity. That was a disaster. This is just a view on National Debate about how we spend our fiscal resources. And i actually think going over the sequester cliff may be the only way to get the Defense Budget clearly on the table, and that, in my viewpoint, you know, with my own political philosophy, needs to be on the table. That will bring the republicans put your market hat on. What happens if we do . I think youll probably have, you know, a pullback in the marketplace as uncertainty goes up. Its only 85 billion in 2013. Its like sandy. Its like nothing. Its not a big deal when you model it out. We have larry myer can tell us the precise numbers but the issue is uncertainty. And the risk premium associated with all risk assets reflects uncertainty. No volatility equals uncertainty equals risk premiums. So i think you probably would have some skittishness in the marketplace. But it doesnt fundamentally change matters. We put way too much emphasis on the budget deficit. Okay. Austerity now is actually stupid. Coming up, i know you want to go on with that. But squawk in toyland. Weve really got to get to this. Hasbro ceo Brian Goldner joins us on the set and hes brought toys and his brand building plan for 2013. Stay tuned. Coming up, its hardly childs play. Toys mean big business these days and industry giant hasbro is going to join us next. The patient, presented with a hairline fracture to the mandible and contusions to the metacarpus. What do you see . Um, i see a duck. Be more specific. I see the aflac duck. I see the aflac duck out of work and not making any money. I see him moving in with his parents and selling bootleg dvds out of the back of a van. Dude, thats your life. Remember, aflac will give him cash to help cover his rent, car payments and keep everything as normal as possible. I see lunch. [ monitor beeping ] lets move on. [ male announcer ] find out what a hospital stay could really cost you at aflac. Com. We all work remotely so this is a big deal, our first full Team Gathering i wanted to call on a few people. Ashley, ashley marshall. Here. Since were often all on the move, ashley suggested we use fedex office to hold packages for us. Great job. [ applause ] thank you. And on a protocol note, id like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh im sorry guys. Ah sometimes the caps lock gets stuck on my keyboard. Hey do you wanna get a drink later . [ male announcer ] hold packages at any fedex office location. Hey do you wanna get a drink later . Try running four. Ning a restaurant is hard, fortunately weve got ink. It gives us 5x the rewards on our internet, phone charges and cable, plus at Office Supply stores. Rewards we put right back into our business. This is the only thing weve ever wanted to do and ink helps us do it. Make your mark with ink from chase. The Worlds Largest toymakers are in new york this week for the 2013 toy fair. Joining us on set, Brian Goldner, president and ceo of hasbro. Looking at all your toys. Great to see you. Good to see you guys. Whenever i think about it, i guess not every kid decides its going to be all video games all the time. Theres still stuff that physically you can play with. But it is a changed world to some extent. Also reminds me of the newspaper business, thats probably a bad analogy. But, you still playdoh in china is still something you oh, yeah. If you look at the brands like a brand like my little pony. Weve done a joint venture with discovery. We have the hub kids tv network. So my little pony is not only on the air in the United States, its on the air in 10 countries around the world. Theres a digital game so the kids can play, a mobile game with a game lock game from hasbro. Is this my little pony right here . The biggest my little pony ive ever seen. Got a little pony. Razzaroo, they were all very small. This happens to be a big one. Its got a paul krugman unicorn. Because ive called him a unicorn in the miest way. I didnt know if people like him existed anymore. This is a whole new theme about the crystal empire. Unicorns do exist. And they have wings and they fly, too. This is first class this is a great example. My little pony is a great example. Brand that was in the 80s, brought back, reinvented across all these different platforms. Its clear that kids want all those kinds of experiences where they go across all these different platforms. On the other hand, Something Like iron man, obviously marble characters. You know with disney coming on board, and having acquired marvel, having acquired star wars the fact is, those superhero brands going out around the world. How excited were you when eisner said on cnbc, never mind the three sequels that everybody knew about and there are going to be even more. Is that just more revenue for you . It certainly is. Obviously with disney not only is there disney scope its the fact they have such a great consumer orientation and the fact that they are charging up the star wars franchise. 2015 and three movies and then of course whatever spinoffs they do, huge fan base, and the fact that disney takes these brands and puts them out so globally. I mean it was always a great business for us. If you think about avengers and where the marvel business has gone, thats a benefit to hasbro. I guess its a dorky question. You now make angry birds. Which is based off the business the app. Thats right. Is that popular . Oh, my gosh, super popular. Does the brand translate from the iphone or ibad or almost just a brand on its own . Its a brand on its own. But it does translate. This fall well show you, were working on this huge new platform all around mobile gaming. Youre making the physical, like a little puffy angry birds no, no, no. You know jenga. So we have a jenga death star game where you flick the birds and it lands so this is angry birds star wars. But a physical game. For kids though. For kids, yeah. And so people who started these people are starting on the iphone with the game and then deciding i want to go physical or do they go for the most part they do. Ople that have played t 2 angry birds game. So around the world you dont think about that. Its 2 billion people. The fact is once you have set up an angry birds you can feed the next game and you have all the cross selling so were actually working. We have our brands on all these digital games. Hasbro has created about a billion and a half dollars of revenue from all of our games. So we have deals with ea and how much does this cost, by the way . That would probably be 30. How much does that cost to make . How much does it cost to make . Well, you know i dont know that we would no. Remember, we have to make it. It has to be if it was cheaply made no, no, no. Whats the markup on most toys . We made last year 14. 7 operating margin. We brought it back up from 14. 2 the year prior. Were back to that kind of margin. This is a brand if you look at not only the margin but where the growth is, emerging markets, hasbro grew 16 last year. Over the last five years. That emerging market the emerging middle class, right . They can all afford more toys. No question. Half of the population of china now lives in the city which is a brandnew thing and access to media. Brian, good luck. Thanks, guys. We love those. Anyway and prefers u. S. Iron man a lot. In terms of thank you, coming up, maybe shes watching. He invested. My iron man. He could be the future of the hedge fund industry. Our next guest has been ranked among the most successself up and commerce. [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready real business. Welcome back to squawk. In the headlines this morning, Pope Benedict is resigning on february 28th. He says hes doing this for Health Reasons. Its the first time a pope has resigned in nearly 600 years. And theres been a big setback for blackberrys attempt at a corporate comeback. Even as it gets ready to gets set to introduce blackberry 10 phones in the u. S. All Things Digital is now reporting that home depot is dumping blackberry for apples iphone and reportedly plans to transition 10,000 workers over the next few months. And finally, gasoline prices seem to be much higher than they were just a few weeks ago, they actually are. The latest lundberg survey shows prices rose nearly 25 cents a gallon for the past two weeks. The average price now at just over 3. 59 per gallon. Joe . Thanks, andrew. Are oil and Gas Companies ripe for active interference in 2013 . Joining us on the set, julian balkani. He is cofounder of the hedge fund and recently took a break from the industry to run for french for the french legislature. But he is back in the Hedge Fund Hot seat today. An apprentice politician . I want to be a hedge fund manager, at the end of the day you have to campaign in politics. So this is similar thing. Whats i mean talking about whats happening in france right now is a totally different issue i guess. Lets talk about what youre here to talk about. This is not the first time. There are some activist players in energy right now that whos the gentleman we had on dinacar. Recently we have seen a lot of hedge fund active hedge fund committing stakes in energy, oil and Gas Companies, seems that this year there will be a lot of activity in the sector and i think it might have to kick up a wave in the oil and gas industry. Almost been too successful with natural gas. Because its nice to find a lot of it, but when it used to be 8 and now its 2, youre almost a victim of your own success, arent you . This may be an issue, its why maybe if you cannot focus so much on organic growth. The only way for companies to will be to go out and look for candidates. Therefore i believe there will be a lot of acquisition in the oil and gas. Its also, 3, or 3. 25 now. It makes it hard to gauge what other energies really have become competitive with that. You know, when will some of these renewable forces be competitive with natural it was better when it was 8 and 10 for these other technologies, wasnt it . If you think about the shell gas boom in the u. S. When you look at the dislocations of prices, clearly you can see that there is still space and unfortunately already still very expensive right now. Yeah, and you expect that to continue, because the worlds not actually Global Growth is not exactly gangbusters right now. And were still almost over at yeah, i think the interesting part is that now for a couple of months we have seen quite a stability in oil prices. Much less volatility than the last years and maybe once again that might be a reason why great confidence, oil and Gas Companies. What is the is there a Common Thread for how oil and gas executives, management, are screwing things up that allow activists so see that theyre making errors in terms of getting the full value of their companies . What are they doing wrong . We have conversation of management of oil and Gas Companies to were mentioning tpg going after sandwich. Clearly there are a lot of questions like oxy where all the directions are making average above 600,000 for the year. Being on the board. Clearly theyve question about how it is sustainable. And so far i can see that investors are very satisfied, unhappy to see activity in the position in oil and Gas Companies. You have seen a lot of entrenched management. Ahead with the recent none of this is new either, is it . I can remember some of the highest paid where was it, oxy, all along, right . Even before i mean arm and hammer, and then who is ray correct. Making 80 million a year. Just above 60 million. So that was a lot of i dont want to argue that we shouldnt be trying to push entrenched boards but do you think that the kinds of things you do are better for the longterm or just shortterm pops . Meaning you push people to sell so quickly its a nice little pop, its great for the fund, its great for the investor, but longterm is it the right thing for the company . I think at the end of the day you need to be aligned with shareholders in what you want to max maze the value for all the shareholders. And if it means that you need to put some immediate pressure on the company and push for changes i think thats good for everybody. This is an area where the chinese all over the rest of the world are scooping up assets like crazy but seem terrified to come back in here after the whole unical situation. Are we any closer to them being able to buy assets or is that not any part of the equation whatsoever . Recently bit for here in the u. S. Obviously that is some question as a lot of the assets have been in the u. S. , traditional route goes through. But so far it has been accepted. So i think its only a question of not the right time but i think it will likely come back. If i bring up hollande will you cry and get upset . I have been a supporter of nicolas sarkozy. I live in new york cant even keep their sarkozys movement because hes not, right . No, i think that its a great hope and lets see i really wish that hell be back in 2017. Who knows what will happen the next election. They may learn are you sad about depardieu. I think im very whether he decided to move to russia and but i hope it will be a wakeup call for the Current French government and president hollande, and maybe leading france in the wrong direction. Dont count on it. Julien, thank you. These guys only hollande would move here and run, right . Whats going to happen in the shale gas market in europe. Well save that for another day. Coming up yeah. The signs of momentum in the housing recovery. But can the trend continue . Were going to ask Robert Shiller next. And find squawk box online and on mobile. Follow us on twitt twitter squawkcnbc. Like us on facebook. Visit our show page squawk. Cnbc. Com. [ kitt ] you know whats impressive . A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . 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All day today on cnbc weve got a very special look at etfs. The latest developments, biggest players. Bob pisani who loves etfs. Loves them. Live exclusively at inside etf in florida. Thats why he loves the conference, because its florida in the middle of january. No its february. Its the Worlds Largest etf get together. Be sure to check out etf. Cnbc. Com for etf strategies that youre not going to find anywhere else. To get things going, what do you think will be the hottest etf asset class this year . U. S. Equities, bonds, International Markets . Tweet right now, use insideetfs. The head winds to real estate may be turning. Is real estate godfather Robert Shiller as enthusiastic as investors . Joining us now on the squawk newsline, bob shiller, professor of economics at yale university, cofunder of the case shiller index. I understand you havent had your road plowed yet. Thats why we cant see you in person. I was just shoveling ten minutes ago. Really . So listen, a lot of people say real estate has turned, its one of the reasons why the market is moving higher. Do you agree . Well, its turned several times since the boom. Ended. Its just like we have a strong seasonal. Its hard to, you know, seasonality has gotten much stronger. Kind of hard to judge. I think there are positive signs, definitely. But, im not confident at all that it will keep going up. Why . Well, it depends on so many factors. You know, basically what im saying is speculative markets are risky. Thats not boilerplate. Thats a fact of life. It depends on so many things. Like, for example, what happens to talking about a longerrun forecast, not next month. What happens to fannie and freddie. What happens to the mortgage deduction . What happens to europe . What happens to asia . What happens to our attitudes toward housing . And what kind of housing we want. Maybe were becoming a more urban society. Maybe we dont care so much about mcmansions. All these things are in the mix. You know, after a major financial crisis weve often had a decade of weak performance in the economy. So we may be halfway through our weak period. You think right now that theres actually a bubble in one area of real estate, two major bubbles, right . Farmland. Yeah, farmland. Why dont people talk about that . I wrote a column a couple years ago about it. And so far i wish i i dont think my own investment advice. I didnt go out and buy a farm. I should have. I write a column and i dont do it. But it certainly, you know, last year, especially in the midwest, middle of the country, farm prices just last year are up over 20 . Amazing. But youre saying theres no fundamental reason for that oh, there is. Or its going to go bust at some point you know, you never know whether its really a bubble. It doesnt have all the hall marks of a bubble. One of them is most people have never heard of it. In my view of a bubble its something that gets people excited. Well, some people are excited. But most people dont even know about it. So when there is an etf for farmland then were going to know that weve arrived, right . Yeah, i would like to start one. Paul has got a question for you. Good morning, bob. Hi, paul. When we think in terms of bubbles were always looking for some type of anchor or valuation for the Property Market in residential is always, you know, ratios relative to rent. Right. A roof over your head you either have to rent it or you have to buy it. And with farmland youre thinking in terms of year more short in food and you have to have food. How do you look at the valuation of the two markets . The residential now relative to rent, and the farmland relative to form Commodity Prices . Well, i looked at a study usda has some studies but its not very up to date on price for farmland. And it didnt show that dramatic evidence of a bubble as of a couple of years ago, anyway, were increasing. And i think that is a sign it might not be it might be an overreaction. Its hard to say. Its always hard to say. Im not the worlds expert on farmland. There are things driving rents up, notably biofuels are becoming more important. And not just biofuels but plastics and other things, soybean and corn so more things are competing. Theres a world food shortage thats been remarked about in the newspapers. All these things are fundamental, that might well drive farmland up. Seems to me very likely the market could overreact to that but i cant prove that. How important do you think Bank Underwriting standards are . Is credit too easy for this farmland . I doubt it. I doubt it the way banks are lending. Not everything is driven by credit. You know, in fact thats one reason to doubt that the farmland epidemic will really be a huge bubble okay. Because banks are more cautious now. Bottom line, what do you think of home prices in real terms . Whats going to happen to them in the nearterm, medium term . Well, you know, the futures market, the cme futures market has an increasing 1 to 2 in real terms. For the next five years. I think thats a plausible scenario. I think youd do better to invest in farmland, stocks, lots of alternatives to that. That could happen. But i think it could sag by 1 or 2 a year, too. If you were forced to bet between those two choices what would you pick . I see in the notes, i think home prices will continue to go down in real terms. Im not a betting man. I dont see these things. I mean, its sort of flat. You know its not going to be an exciting market. Excitement will be somewhere else. Good to talk to you mr. Shiller. All right. My pleasure. See you later. All right. Coming up, from apple stock to dells deal to go private. A lot of tech stories to watch today. Up next, were going to talk to jonathan gellar, founder and editor in chief of the boy genius report. Well talk to him about all those issues. Take a look u. S. Equity futures. We have green arrows across the board. Im a conservative investor. But that doesnt mean i dont want to make money. I love making money. I try to be smart with my investments. I also try to keep my costs down. Whats your plan . Ishares. Low cost and tax efficient. Find out why nine out of ten large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Omnipotent of opportunity. You know how to mix business. With business. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above. And still pay the midsize price. I could get used to this. [ male announcer ] yes, you could business pro. Yes, you could. Go national. Go like a pro. Yes, you could. How do you keep an older car running like new . You ask a ford customer. When they tell you that you need your oil changed you got to bring it in. If your tires need to be rotated, you have to get that done as well. Jackie, tell me why somebody should bring theyre car here to the ford dealership for service instead of any one of those other places out there. They are going to take care of my car because this is where it came from. Price is right no problem, they make you feel like youre a family. Get a Synthetic Blend Oil change, tire rotation and much more, 29. 95 after 10. 00 rebate. If you take care of your car your car will take care of you. Take a look at a couple of stocks to watch. Sanofi is up. Demanding additional tests for a new long acting insulin. The fda is demanding those additional tests by novo nordisk. Boeing completed a weekend test flight of its 787 jet. Thats the first one its done since the dreamliner was grounded more than three weeks ago. Boeing says the flight was uneventful. Carnival says its triumph cruise ship, the ship here dangerous. Careful. But a cruise ship, is there a ship probably merged with adrift. Its being towed towards port after an engine fire that left it without propulsion power. There were no injuries reported, and the passenger do have food, water and electricity. From generators. But passengers will receive a full refund, and a future cruise credit. Second prize is two future cruise credits. Wells fargo upgraded to buy from hold. Wells fargos Strong Management Team and superior profitability and nike was upgraded to overweight from neutral at jpmorgan. The firm says nikes robust Product Pipeline and strong margins will drive Earnings Growth over the next few years. I never cruised. I have. I have, too. I wont do it again. I did one, joe, and youll be glad to know it was with the nation magazine. That doesnt surprise me. A lot of food. It was a lot 6 fun. Bit the whole scheevey water recycling i mean everybody gets it if youre there and somethings on the ship. That is a serious problem, actually. Nobody gets sick on the cruise i was on. But that happens. You didnt give a speech, right . Well you were probably nauseated a lot. I was the house conservative on the nation. Okay the other issue were talking about this morning is tacking on. The founder and editor in chief of boy genius report. This is a story that ran there the New York Times today. Where apple and dick tracy may converge. This is a story about whether apple is going to be making an iphone on your wrist. Also another story i want to talk about, you got this one here . Challenging apples cool as a phone revival samsung takes a different tack. Samsung is now apparently cooler, im told, than apple. Certainly spending a lot more money. This dick tracy idea. Are we sure apples trying to make a watch . Were not short. New york times had a great report. Wall street journal followed up. Its supposed to be curved, fits around your wrist, it can do everything from maybe let you into your house, you never have to worry about a passcode anymore, to be your wallet, an extension of your phone. Does apple plant stories . Absolutely. Absolutely. All day long. I thought they were supposed to be so secretive they never planted stories. They do plant stories. Andrew is wondering is why arent they planting them with him . Right. Other people at the New York Times. They plant stories with you . I mean, honestly you cant stay . You know, i think its interesting timing, right . Their stock price has taken a hit. Maybe its the kind of to quash some of the apple speculation. Maybe this is something that were really going to see pretty soon. Its really, really interesting how theyre going to take this and maybe even in an event the new smartphone. What if you dont need a phone in the future, you just maybe need a tablet. You could have this watch device that kind of acts as a phone and negates the need to carry a smartphone. Will we see apple iglasses . Any i mean i can see he needs the google glasses to watch the apple watch. Watchle has got, i dont know. So you havent heard about the apple back scratcher. I hear thats on the on the development. I mean im running out of stuff, im sorry, andrew. Thats where i was going with the second story. Which is challenging apples cool. Which is do we believe that apples no longer cool . Or samsung is cooler . An apple belt. I mean i think you have to think of it like this. Kids growing up today, what are they using . Theyre mostly using ipads and iphones. Apple is still pretty cool . When you look at things like dell or hp these are the companies that are now having so much trouble and in the future these kids arent going to grow up wanting a dell or hp. Theyre going to grow up wanting an apple device. Exactly where theyre in. I think if you look at it like that, i dont think apple is losing their cool. I think apple is becoming more and more main stream. Our parents have an iphone or ipad. That might make them uncool. Exactly. I think its really interesting, i actually think theyre moving so fast that apples cool is not as marketable, and as investable as somebodys cool was 30 years ago. Because it moves so quick. You guys would switch in a minute if samsung had a device that apple and the consensus thinking is that apple has all these market share gains to still get, that they havent penetrated all these markets. Thats the consensus thinking. Ive heard from people recently say that when samsung and some of these other guys, you just cant take it for granted that apple continues to gain all and its also what michelle said, correct me if im mistaken, because i have a couple of people your age in my family, doesnt matter. Its not this has to be cool because my parents dont like it. Thats what it was when we were there. But it is we actually follow what you think is cool because it works. These guys are unbelievable here. It is . Its switched over. It happened last week. I wasnt here and they said were ready to set it up. So i will have and my wife borrowed one, she sent me a message, and i couldnt read it because every letter was wrong because of those little thank you for coming in this morning. Thanks. Appreciate it. Coming up, more from our guest hosts, and still to come, were going to talk fed policy with larry meyer plus gop strategy. Sam tanninhaus editor of the New York Times book review. The patient, presented with a hairline fracture to the mandible and contusions to the metacarpus. What do you see . Um, i see a duck. Be more specific. I see the aflac duck. I see the aflac duck out of work and not making any money. I see him moving in with his parents and selling bootleg dvds out of the back of a van. Dude, thats your life. Remember, aflac will give him cash to help cover his rent, car payments and keep everything as normal as possible. I see lunch. [ monitor beeping ] lets move on. [ male announcer ] find out what a hospital stay could really cost you at aflac. Com. 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. With earnings season winding down and congress no closer to a deficit agreement to avert the sequester can bulls harness optimism and continue the rally . Monetary policy is the only game in town. I think everybodys going to have to put something in the pot in order to balance the deficit. One more hour with market guru, literally, Paul Mcculley and former governor howard dean. Europes road to recovery. Hello hello who is it . Can the group of 30 get growth on track or are we destined for a long slog . What a strange person. And health care in the crosshairs. The looming cuts to medicare if Congress Fails to reach a debt agreement by the end of the month. 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 with us on set this morning. Just won a grammy last night. I know they did. They used to be someone i thought was cool. Because grammys have you unlessed that have you noticed that i got it, never mind. The grammys have an award. Theyre all the same but its a big moneymaking complex. Everybody that they want to promote will get some grammy because album of the year, song of the year, group of the year urban contemporary band of the year. Vocalist, with a banjo, Everybody Wins a grammy, and then because its tough to make money in that business now, andrew. Its like little league. This morning were with Paul Mcculley from the global interdependent center a former Portfolio Manager at pimco. And howard dean former vermont governor, also dnc chair and a cnbc contributor. Probably is that on the top of your resume now . Absolutely on the top. More from them in just a minute. First andrew has headlines. Surprising announcement from the vatican this morning. 85yearold Pope Benedict announcing he plans to resign at the end of the month. Saying he no longer has the mental and physical strength to cope with the demands of his ministry. He becomes the first pontiff to step down since the middle ages, and leaving aides incredulous. Among other stories, dell says its proposed 24. 4 billion buyout deal is in the best interest of shareholders. That from an s. E. C. Filing this morning after three of dells largest shareholders joined Southeastern Asset Management in objecting. Southeastern Investment Managers say that dell is worth more than 20 a share. The current bid, 16. Im sorry, 13. 65 per share. And boeing says the weekend test flight of the 787 jet was uneventful. The first flight since all 787s were grounded more than three weeks ago. Boeing wanted to test the 787 lithiumion batteries under flight conditions. And carnivals triumph cruise ship being towed to port after an engine fire cut power to the propulsion system. No injuries reported in the incident and the ship does have electricity from generators along with food and water. Customers will be given a full refund. If i was on that boat id want a lot more than a full refund. Whats a good thing . Like the fire didnt hurt anyone. No ones been hurt. Theres plenty of food and water. Theyre going home. No children died here today. Right, right, youre right. In fact, since theyre cruising, back to where thats basically what they were doing before, arent they . Theyre still basically theyre still floating in the gulf. Theyve got food. They have broadway shows. Were going to get the ceo from carnival to come on here and defend themselves. You said you were on one. It was actually i kind of liked you were the speaker people paid to go on it with you . Oh, thats true, they did. But you got the free cruise. I got the free cruise. It was fun. People paid to cruise with you. Yeah. You imagine that group . Dont go there. No. Kind of like floating around the caribbean in an 11 Story Building with everything you could imagine. How about the shows . We didnt have any of that. But on most of them, fullon, broadway you were the show. That was the show. Lets get a check on the markets. U. S. Equity futures are suggesting a slightly positive open to the averages. The dow would open higher by 12, the s p a little more than one and the nasdaq by 3 and a half. In europe most of the asian overseas most of the asian markets are closed for the new year. In europe, theyre higher across the board, 23 points for the ftse. The cac quarante in paris higher by 22. German dax is relatively flat. Im curious what italy is doing with this announcement of the pope resigning. Now lets head over to bertha coombs, tracking the latest in the aftermath of the northeast powerful winter storm. Bertha . Michelle, it could literally be tough flying to work for a lot of Hedge Fund Traders in greenwich. Connecticut governor dan malloy has asked nonessential workers to stay home. A record 40 inches of snow in areas like hamden south of new haven. The state of emergency remains they will receive federal funds for the cleanup. Airline travel back to normal. A new weather system working its way could cause new disruptions today. Amtrak has resumed Acela Service from new york to boston but most travel north of new york remains on a limited schedule on the rails. And not a record snow fall for massachusetts, two feet still causes a megs. It remains the largest area impacted by Power Outages with more than 110,000 customers still without electricity. Down from a peak of about 400,000. And in rhode island more than 20,000 customers remain without power down from 70,000. Andrew . Okay. Now in other news google executive eric schmidt is selling roughly 42 of his stake in the company. For more on this story, jon fortt joins us from silicon valley. Good morning. Good morning. This is a big deal. Eric schmidt who was ceo when google went public, until about a year ago, selling about 7. 6 million shares which were estimating would net him about 2. 5 million. Hell have plenty of shares left. At least 4. 4 million shares left. This is significant, too, because he is one of the few professional ceos, nonfounders, technically, to become billionaires based on their stakes in the companies they led. Meg whitman is another one over at ebay. She came in after the company was founded. But its also an historic moment for google because from the beginning it described its Leadership Structure as a triumph verate with sergey brin, larry page and eric schmidt. Schmidt came in serving as adult supervision. It could be argued his role is less now than it used to be. Page is back in the ceo seat where he was when the company was founded. The stock is near alltime highs. And Government Relations one of the areas where schmidt had really focused as executive chairman, his current title maybe a little bit less important now that the ftc has settled with google, a little bit less of a focus there. But googles also got more of an emphasis than it has in awhile on longterm projects like google glass the eye wear and the driverless cars. Thats something sergey brin likes to focus on. So, not as much in immediate of that adult supervision. Perhaps, the signals a little bit less of an emphasis on the need for his leadership. Of course hes still in that executive chairman position. But definitely page, and more than usual, britain, running the show. Real quick, hes not selling his stake overnight . Hes not selling it this week. This is just a plan being put in place that hes going to sell over several months or years. I dont know how long it is. Do you know . Not clear exactly how long it will take him to sell that stake. This has just been putting out there that he intends to do this. And of course, last year they set aside plans for a new class of stock class whatever happened have they issued those shares . Yeah, theyve done that. And the stock theyll be issuing has no voting power. This makes it maybe a little bit clearer why they did that with schmidt planning to sell some of his shares. Page and brynn will still maintain their control of the company. Okay. John thank you for that. Jon, and you guys got to hang. He was reporting. You saw him. You probably i did see him. You werent paying attention that much. We were paying attention. No. I have no idea i watched eastwood. All right. Carol bartz. Yeah, okay. Come on. Lets get lets get some thoughts on the fed and the economy from our next guest, former fed insider joining us now from d. C. Is larry meyer, former Federal Reserve board governor and cofunder and managing director of Macro Economic advisers. What do you think were growing what do you think gdp really is . Whats our run right now, larry, after that contraction that we saw, which was a surprise to everyone . Well, it wasnt too much of a surprise for us. We thought it was going to be a little bit below half a percentage point. There were a lot of special factors involved. Im not really looking at that as signaling a decline in underlying momentum of the economy. Indeed, i think many of the forces that show domestic demand look maybe a little brighter. And i think the economy is going to grow stronger this year than it did the last year. And maybe in the range of 2. 5 . Given the rebounding thats not very good but thats where we are for this year. We think things will gradually improve over the next two years. Because ill tell you why i was surprised. I know there were a lot of different factors, we had seen so many positive things in the employment picture, and some of the other indicators that we follow, that the the group of people that said why is the fed still here, why are the training wheels still on, that group had been growing. And then all of a sudden we got hit with that, you know, with the negative number which made it i think it gave more cover to the fed whether the people worried about an exit are right or not. Of course the fed has made an absolute commitment to continue to keep rates where they are until the Unemployment Rate gets at least at 6. 5. So we know theyre going to be aggressive. And maintain that aggressiveness well into the improvement. Lets hope theres not a new normal there. Lets hope pimco is not right and the new base level is 6. 8 because then were never, ever, the fed will always be with us. It will be a permanent fact of life for us. Unless well, no would inflation go up, if we got into stagflation would the fed stop . Look, i dont worry about stagflation. Thats about the least thing i would worry about. Unless theres some massive oil shock that is unpredictable and would be a surprise. I think were in a situation where its going to be hard to get the inflation rate up to 2 . Yeah. The tolerance zone is virtually irrelevant here. Thats why the 6. 5 is a virtual commitment. Now, thats not whats interesting. The feds on hold with respect to forward rate guidance. Whats interesting is, when they would end purchases on the qe3 and why they would end it. Thats interesting. Right. I think youre absolutely right that in our lifetime weve never had a more articulation of the feds reaction function than we have right now. You just plug in your forecast into two numbers, 2. 5 for inflation, 6. 5 for unemployment, and you know what the feds going to do or not do. The only uncertainty, obviously, is what the coefficients on those variables are. We know what the variables are and thats really clear. As you point out, the uncertainty, if you will, is on how aggressive the qe will be going forward. And i want to ask you a question there. I think youre thinking in terms of when will they pull back from qe . Is there a possibility, if we continue with this near 8 Unemployment Rate, that qe could be extended with a bit more coupling to fiscal policy . Have we reached the point where some type of merger of monetary and fiscal policy is possible as the ultimate sort of means to try to get us out of this liquidity track . Well, fiscal policies would be working against that. Because were in a world where were going to have fiscal drag for the indefinite future. And theres very limited that the fed can do anything about it. So, its not like normal times where the fed would be committed to ease aggressively to offset the fiscal drag. It just really cant do that. But i think whats a surprise maybe for the markets with respect to the end of qe3, that the committee has said that theyll continue purchasing until theres a substantial improvement in the labor markets. Look at the forecast. That doesnt happen for a very long time. Its also said that theyre going to continue to assess cost and benefits of additional purchases, and the markets have underestimated the importance of that and we think that will be the effective trigger. That theres a limited tolerance of the committee for additional purchases. Okay, larry. We appreciate it. Thank you. Go back to your thinks a lot. Go back to wherever you go. Thank you. I will think. I promise. Good. See you later. Good to see you, larry. Coming up, europes road to recovery. Were going to talk to lord adair turner, economic chairman he says print baby print. And then at the bottom of the hour the gop rethinking its election strategy. How different will the party be by the 2014 elections . Were going to ask Sam Tanenhaus, editor of the New York Times book review. The group of 30 convening in london earlier this morning. This is a group of former central bankers and leaders in financial worlds. Key topics were the supply of longterm capital to support longterm investment. For more were joined by lord adair turner, chairman of the Financial Services authority and a member of the group of 30. Thanks so much for joining us. Good morning. Or good afternoon just in london. Yes, absolutely. Good afternoon to you. We really want to talk about all the news that you have created in the last week, because youre talking about helicopter money. That we should remove the taboo of monetization, just a lot more printing, am i oversimplifying it . Only slightly. I mean, the idea that governments and Central Banks should not finance deficits with money is one of the great taboos in economics. One of the interesting things about it is if you go back to what Milton Friedman wrote in 1948 or what henry simons, one of the Founding Fathers of the Chicago School wrote in 1936, they believed that it was the obvious thing to do to get economies out of a recession. And indeed, of course, it is precisely what ben bernanke suggested in 2003 in respect to the japanese economy. He said, look, youve been trying all these other mechanisms to get your economy out of a deflationary low growth situation. You should just, and hes absolutely about it in 2003, you should finance with Central Bank Money a tax cut. Now, if you ever did that, if you ever allow that, you have to place that within tight disciplines. You have to have a tech milk to make sure that you dont overuse it. And i argued in the lecture i gave last week that we can get the Central Banks the power to decide how much of that we should do. But i think we need to know, its important that we have confidence that we know how to so if you were recession. So if you were running Central Bank Policy right now in europe you would do what . Let me be clear in japan its clearest i would do exactly what ben bernanke says in 2003, i would increase the budget deficit. I would have the central bank buy the government bonds that are related to that increase in the budget deficit and i would tell the people that that is a bit of the budget deficit they will never have to pay back because it has been funded with permanent Central Bank Money. I think europe is a much more complicated thing because there are layers of problems with the way the eurozone is designed, and the essence of the problem here is, if they were going to do that, whose budget deficit do you support . You have to realize that in europe, the budget deficits dont reside at the level of the federal authority, they reside at the level of, as it were, illinois and california. That makes it much more complicated to do this in europe, without all sorts of debates about whose budget deficit youre supporting. So in europe, theres even more fundamental things we have to do before you can even debate this to get the eurozone to be a system which is capable of working. Paul mcculley has a question for you. It was wonderful to have the privilege to actually hear your lecture in person in london last week, and my question is, since you gave that lecture, whats been the response within your colleagues and brethren in the community now that youre talking in public about that which we traditionally only talk about behind closed doors . Very interesting point, paul. I think the Financial Times gave an editorial which was supportive of it. This debate has to be launched. Theres been various people getting emails from around the world saying this is great youre putting it down on the table. What is true is that there are some other colleagues who sort of, you know, their attitude is almost, well, should we talk about this in public . Because, this is one of the sort of great behind the vail hidden secrets of the way the world works. We have created, for very good reasons, a taboo about talking about this issue. And the reason why we created that taboo is that if people realize that you can print money to finance a public deficit, they may want to do it in the 99 years out of 100 when its a bad idea, as turner too much. I think people fear because they fear having to pay for bread with a wheelbarrow full of money. They think thats what happens. Well, it doesnt happen. Thats not what happened in 1940s and u. S. The u. S. Essentially did pay, as Milton Friedman explained in the fantastic history of the usa. It paid for a large slice of the Second World War with printed money. It did not produce higher inflation. Obviously the danger is if you overdo it it will produce hyperinflation. If you do a billion of it it wont produce hyperinflation. If you do 10 trillion it clearly will. Thats lake any other policy leave it depends how much you do and whether you do it within i guess the key question here is can you do this in europe without a central monetary Central Monetary Authority . No, i dont think you can. I think the difficulty in europe, and i say this clearly in the lecture, i think the eurozone is going to be a workable currency zone in order to be a workable currency zone, is going to have to progress to look somewhat more like the u. S. I think it is going to have to have federally issued euro bonds. I think it is going to have to have at least a small federal fiscal expenditure. I dont think the eurozone is a workable system. Without it, the monetary leaves at the ecb level. But all the fiscal activity at the equivalent of illinois or california, or mississippi. Lord turner its been a great pleasure and honor having you on. Thanks so much. Great. Thank you very much. Very important individual. Coming up, our interview with Clint Eastwood generating buzz over the weekend. Still. Also to come, health care hanging in the balance. If lawmakers fail to come to an agreement on deficit reduction before the end of the year, medicare is one of the programs facing sharp budget cuts. Were going to talk about that and the impact of it with the Health Care Analyst. Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. How do traders using Technical Analysis streamline their process . At fidelity, we do it by merging two tools into one. Combining your customized charts with leadingedge analysis tools from recognia so you can quickly spot key trends and possible entry and exit points. We like this idea so much that weve applied for a patent. Im colin beck of fidelity investments. Our integrated Technical Analysis is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. More likes. More tweets. So, beginning today, my son brock and his whole team will be our new senior social media strategists. Any questions . Since we make radiator valves wouldnt it be better if we just let fedex help us to expand to new markets . Hmm gotta admit thats better than a few likes. I dont have the door code. Whos that . He won a contest online to be ceo for the day. How am i supposed to run a business here without an office . [ male announcer ] fast, reliable deliveries worldwide. Fedex. Probably no one more associated with pebble beach and monterey and carmel than Clint Eastwood. He was gracious enough to talk to us again in an interview about the sorry state of washington. Candor always refreshing, and the interview did go viral online. It got drudged. Its been widely talked about on twitter and facebook. Other Media Outlets from a crappy new york tabloid that doesnt mention our name in citing it so i wont mention their nail. But on occasion they have actual news. Another paper called the examiner, and all the way to salon. Com wrote commentary about it. And here it is, im not going to read this teleprompter here because i wont say that. Here it is with clint. Check it out. Its almost like they dont give a damn. And so, if they dont give a damn, why do they expect anybody else to . And obviously, the the you know, people get complacent, and then things really go bad. So, if you want to read and watch the clint interview, and thats all you need is there another clint . Theres not another clint clint walker. Dont know who that is. But if you say clint, you know who im talking about. Go to squawk. Cnbc. Com. And check it out. Now lets us check out the markets. Rick santelli joins us from the cme in chicago. What is the most important this week to watch you think thats coming up, rick . Well, i think we need to continue to digest the notion of how equities have performed, and then pair that up with, global outlooks for not only the rest of this quarter, but the rest of 2013. You know, put everything that youre youve been talking about this morning and you could see where were going. I like complacency. I know you get a lot of people emailing you the way i do, complacency maybe has been the number one word emailed to me over the last six, seven months. You pair complacency with the idea that something very large like the dow is getting close to alltime highs. And those two things togethermy be enough for some. But i think for our viewers and listeners it isnt enough. I think this is going to be one of the weeks where we start to define that just because equities are up, thats a great thing. Dont get me wrong. And i hope every american has some profits going. But theres a whole lot more to the economy, future earnings, business, how the global dynamics, how currencies, how they all fit in. I think 2013 is going to be a bit of a tough year. And just as a side bar to that. The dollar and many currencies continue to pretty much have their way with the yen. Another record, you know, basically close to three years on a number of currency fronts against the yen. Kind of watching it play out, what we talked about, the beggar thy neighbor thing, our dollars way too strong. Its really working for japan. Right. I know venezuela went down oh, yeah. 60 or something, or 47 and europe, that was the big news. Europes going to do a bunch more stuff. Lord turner on saying print, baby, print. If we all go to zero well all be much better off . We definitely got to do that here, dont you think . What happens when everybody is frying to export something and theres no one to export anything to anymore that has any money . I dont know. But im sure that the media at large will find whatever Silver Linings are there and the general public is too busy trying to get on in life to take notice. Very odd. You know, and of course everybodys looking forward to the president s speech tomorrow night. And i always i always try to think that he will surprise me, and actually act like he cares about, you know, all of us equally. But i just dont get that impression. Im sure that were going to be surprised again. Werent you surprised at the inauguration, rick . I was surprised at the inauguration. Youll be surprised again tomorrow. I listen, joe, i wish i could be. I wish i could be surprised. Its monday morning. You know, were a week away from an anniversary. You know what anniversary im thinking of. But i dont know. I think it really depresses me that many of our leaders have become nothing but robots. You know the journal indirectly had an article about this today. You know, nobody seems to be thinking for themselves. I understand the president s the leader of the party. But oh, my god, get a brain, you guys, think on your own. Be responsible. Ask good questions. You know, total guessmen. Total agreement along party lines by either party its just nauseating. You know, we dont teach our kids to follow every nut ball over a cliff just because theyre going over. I think that its time for less complacency. Thats the big word for today, buddy. Complacency. Rick santelli. Thank you. Is it was that your that was your speech . How many years ago was that . Going to be four years next week. Really . Were going to do that. Its amazing. Record breaker on the website. You got millions of hits. I was there. But like forrest gump, im at all these things but no one knows im there. Like standing in the background behind George Wallace as kids are going into school. Im standing there. Playing ping pong . Im everywhere and nowhere. Thanks, rick. My mom always says, life was like a box of chocolates. And we go together like okay. Coming up the gop in jeopardy. Were going to talk to the editor of the New York Times book review about republican efforts to reenergize the party. The New York Times peez a conservative. Presumably. Talking about david brooks is a conservative . No, no, no. He wrote a piece on the were going to talk about it. This is your guy. Were also going to talk health care, the industry if lawmakers reach an agreement and avert automatic cuts to medicare set to kick in at the end of the month. Take a look at u. S. Equity futures, they suggest a flat hope. [ cows moo ] [ sizzling ] more rain. [ thunder rumbles ] [ male announcer ] when the world moves. Futures move first. Learn futures from experienced pros with dedicated chats and daily live webinars. And trade with papermoney to testdrive the market. All on thinkorswim. From td ameritrade. Welcome back to squawk box this morning. Lets take a look at some stocks tat are on the move. San if i shares are on the upswing thanks to a setback in rival novo nordisk. The fda is demanding for tests before it will approve novos new longacting insulin product thats seen as benefiting sanofis product. Blackberry shares under pressure. The company is losing a Major Business customer. His name joe kernen. And a major client. Is tat home depot also says that it is transitioning 10,000 employees to apples iphones. But joe did get an iphone in the past week and will be transitioning himself. A couple emailers said that they were going to go short apple. Us airways stocks are rising. Merger talks likely to be announced this week. The deal said to be worth about 11 billion and would create the Worlds Largest airliner. Youre not involved with actually putting this. Youve always said this. A long, long time. Now what your computer just went blank. And a surprising announcement hitting it is not going to help. I thought it was like surprising announcement from the vatican this morning. 85yearold Pope Benedict announced Pope Benedict announcing his plans to abdicate at the end of the month saying he no longer has the mental and physical strength to cope with the demands of his ministry. He becomes the first pontiff to step down since the middle ages. Also want to let you know that the minister of finance from cyprus is saying that a bailin has been completely removed from the table and that depositors are safe in the country of cyprus. If youre in europe you know that this is a really big deal, involves russian money and a lot of questions about whether there will be precedents set. Right now finance minister says bailin impossible under cyprus law. Washington, this weeks top washington story the state of the union which is coming tomorrow night. Were going to hear a lot from both Political Parties before and after the president s address. But another story thats making some news already the story on the cover of the latest new republic was written by our next guest Sam Tanenhaus entitled, original sin, why the gop is and will continue to be the party of white people. Its a controversial piece. Its already gotten a lot of heat even just around this table. Sam, good morning to you. Thank you for joining us. Let me just read a little bit of what hes writing this morning. The true problem, at yet as yet unaddressed by any republican standard bearer originates in the ideology of modern conservatism. When the intellectual authors of the modern right created its doctrines in the 1950s, they drew on 19th century political thought, borrowing explicitly from the great apologists for slavery. This is not a racism argument at all, i think thats just it is to say that instead that the calhoun revival is based on his complex theories of constitutional democracy and they became the justification for conservative politicians to resist, ignore or even overturn the will of the electric electoral majority. Thank you for joining us. My pleasure. Weve already been going at this. And its going to get some people, this article is going to get some people a little crazy. I guess the big question this morning is, if youre right about what the premise, do you see a transition happening in the party and does it happen . Well, i think marco rubio is the best sign so far. Heres the problem. Is that the Republican Party in a strong period from 1968 to 88, that was really their period of dominating stod earn electoral politics. Did it with a strategy of polarization that essentially gathered up much of the population against, as it happened, africanamericans. What weve seen now is a demographic shift. So youll remember right before this latest election, this is why i wanted to write the story, all we were hearing about when it came to racial issues was how barack obama might not be able to get as much as 40 of the white male vote. Well, three or four election cycles ago, that would have ruined him. Today, that is the minority in this country. Its not just africanamericans, its asians, its latinos, its women who see themselves as an outsider group. That is the new majority that republicans have to deal with. So someone like marco rubio sees this as far as Immigration Reform goes. Here is his problem. Its party or not just about candidates, attractive candidates, and smart strategies. Theyre about history. These are the oldest two parties in western democracy. And one of them has a long history of not being so great on civil rights. I want to ask this. We have a lot of ceos and business, obviously, this is cnbc, we talk a lot about capitalism, and frankly most of the people who come on, who i think put themselves in a republican category, do so frankly for different reasons. Not about the civil liberty issues. Its about so many other things. And so the question is, rebranding the party, how do they get away from that . If you believe that thats the central issue . Well, its not just the central issue. There are a couple of things going on here. First of all, Corporate America has been pretty good on race. You know one of the issues that came up in the 1980s and 90s discussed in my piece were objections to affirmative action of preferential hiring programs. What people found was that businesses like mine, the New York Times. Probably yours here, a lot of wall streets, was happy to do this. Was happy to open the gate to have a more diverse workplace. The problem comes somewhere else. From a very hardcore ideology thats based on a politics of nullification. Thats calhoun legacy. Your minority, but you can use the power of your minority to thwart the majority will. Were seeing it now with the tea party inflected congress. So sure theyre capitalistic and Economic Issues involved. Consider the democrats were not great on race for a long time but Franklin Roosevelt won huge majorities of the black vote howard dean is here. Heres my argument about, i think actually the Republican Party does have a future. And the reason i think so is i think theyve been captured by this hardline minority. The speaker wont stand up to them because he cant get stuff through without democratic votes. They dont actually represent the traditional Republican Party. Far be it for me to defend republicans. But i remember when the republicans, when the civil rights bill passed because of republicans over the objections of southern democrats. Thats what my article says. It gives the back history of the eisenhower years. But the point im trying to make is dont you think that the republicans are not stupid the ones in washington, maybe the ones that are elected are, but the ones that are pulling the strings arent, and dont you think theyre going to figure out how to bring this thing back towards the center . Did you see lincoln yet, sam . I was wondering the same thing. Wait a minute, now. Must have skipped that. Of course i saw lincoln. And thats the point here. Is that you had party that compromised that also shared really profound moral, philosophical ideas. Theres a thing you have to remember about american politics that has not changed since the founding of the republic. And remember, too, the idea of nullification goes back to Thomas Jefferson and james madison. Was lincoln the last nonracist republican in your view . Did anybody hear read my article . Lets not talk if no one did. Yeah, i read it, sam. The first part of it says, in the 1950s, when eisenhower was president , republicans made a concerted effort to win the africanamerican vote. Did a pretty good job. Got as much as 40 of it in 56. Used the brown decision to make inroads in africanamerican precincts. In major cities. It was republicans who put through just as mr. Dean said, the Civil Rights Act of 1957. Theres no question about it. It was eisenhower who sent the 1012st airborne to little rock. And as i said, in my story, that was the moment that was the moment when the Republican Party looked ready to lead on civil rights. Instead, an Ideological Movement was born that took it the other way. Sam. That embraced the policy of massive resistance, and were living with the consequences of that still today. As a hispanic conservative, i reject some of the underlying premise in terms of whae you, for campbell, you talk about rejections of affirmative action. Republicans not necessarily rejecting affirmative action because theyre antiminority, its because they dont want to tell businesses how to do their business. How there are unintended consequences to affirmative action. Wrong. Businesses went along with it. Read businesses would have done it anyway, because they know its better for them to have a more diverse workforce. It would have happened. Actually, we dont know whether it would have happened. I have no doubt. Well you may not have any doubt. What we have is the historical record. And we know that it happened after Richard Nixon revived a phrase of john f. Kennedys from the early 60s, affirmative action. He began with the philadelphia plan, to open up closed labor unions, in that city, philadelphia, businesses embraced the idea. William f. Buckley jr. In 1970 said lets have preferential hiring. It was another wing of the conservative movement, the neoconservatives who objected to affirmative action, called it affirmative discrimination. But the author of that argument, nathan glazer, then recanted. Why did he recant . Because just as you say, businesses were willing to do it. This is not about business. This is about as howard dean said the hardcore ideology of a conservative movement which continues to drive that party. Okay, sam, were going to leave it there. Thank you for heating up the set here. Any time. We appreciate it. Joe, appreciate it. Thanks. Weve got some msnbcs viewers. Maybe just a couple of them. I dont know. Maybe not. Maybe zero. I want to shower after that. Hes right. Hes right. The difference is i think i feel like ive been called a racist. Howard dean says hes right. All right. Coming up, republicans and democrats in congress are still far apart in negotiations to avoid the automatic spending cuts set to kick in at the end of the month. 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Look at these streaming charts theyre totally customizable and they let you visualize what might happen next. Thats genius strategies, chains, positions. We put em all on one screen could we make placing a trade any easier . Mmmm. Could we . Open an account today and get a free3month e ibd™ subscription when you call 18882800149 now. Optionsxpress by charles schwab. Welcome back to squawk. As mandatory federal spending cuts move closer health care is one of the industries that investors are watching for possible impacts. Peter costa Health Care Analyst at wells fargo joins us now with more. Good morning to you, peter. Good morning. So walk through the impact of the sequester and the health care world. Just sort of give us the various permutations. Well, basically what could happen is, if sequester comes to pass on march 1, payments for medicare would be cut by 2 . Those would flow through the system, cutting providers and Health Insurers across the board. And thats 11 billion in total out of the afford act Health Care Programs . Is that the number . Thats correct. A portion of it would go to medicare, would be 11 billion. Sequester cuts in total are about 85 billion. So the portion that would come to the medicare providers would be about 11 billion. If you were to see those cuts pass through, we averted them for the first two months of this year, now were trying to avert them the remainder of the year of the having said that, the republicans and democrats have not been able to come to any kind of conclusion how exactly to do that. So were approaching that deadline. It looks like those cuts are probably coming at least temporarily for some period of time. Which companies will get hit the hardest and are there any winners in all this is this. Clearly the companies that get hit the hardest are the most exposed to medicare. Companies like humana in the Health Insurance world, which does a lot of Medicare Advantage or part d business, would be hit. Hospitals, and other Health Insurers that are also exposed to Medicare Advantage would certainly be exposed. Having said that, most of these companies have known since 2011 that the sequester was a possibility and had planned for it. So mostly in terms of the bids that they put in to medicare, in terms of what theyve done with their costs, theyre prepared for sequestration to come to pass this year. And actually, if it is averted, it could actually represent upside to the same companies that i just discussed, humana, in particular, but also United Health and others could see upside if sequestration is averted. Let me ask you a question about Nursing Homes. Nursing homes, which im on the board of a Nursing Home Company, and our thought is that wed like the sequester to go through because the payfors would hurt Nursing Homes more. In other words, if theres no sequester theres going to be a payfor somehow and that the Nursing Home Company would be cut even more. So theres a thought in the nursing Home Business that this isnt so bad, that the providers take 2 because we dont get hit at 10 . Thats correct. Theres some concern, the threat to the Health Care Industry if the sequester doesnt happen. However, if its replaced, would actually be more harmful to the industry. For example, the cuts are limited to 2 , whereas the cuts in other parts of health care, im sorry, in other parts of industries would be much greater than 2 . Weve got to leave it there. We thank you for your perspective this morning. Thank you. Well tell you why Identity Theft paid off this weekend. I know what youre thinking. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. 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After all, whats the point of talking if you dont have something important to say . Welcome back to squawk box. Identity thief, top spot of the weekend box office. The universal picture comedy stars jason mason and melissa mccarthy. Every time i think of melissa mccarthy, i think of bridesmaids. Its coming out of me like lava there you go. Coming up, speaking of hot air no. Were going to give our guest hosts the last word when squawk box returns. Tomorrow we preview president obamas state of the union. Im lorenzo. I work for 47 different companies. Well, technically i work for one. That company, the United States postal service®, works for thousands of Home Businesses. Because at usps. Com®, you can pay, print and have your packages picked up for free. I can even drop off free boxes. I wear a lot of hats. Well, technically i wear one. The u. S. Postal service®, no business too small