Transcripts For CNBC Squawk Box 20131122

And the nasdaq is up by nearly 31 . By the way, if those numbers arent big enough for you, check out how far stocks have come from their march 2009 lows. The dow over that time period gaining nearly 145 , the s p 165 , and the nasdaq nearly 213 . Yeah. March 2009 lows, what a long way weve come. As you take a look at futures this morning, theyre flatlining at this point, probably unsure what to do after yesterdays big gains. As for the rates with the tenyear, at this point the tenyear is yielding 2. 782 , so below 2. 8 , but its been rising and rising on the expectation that the fed is going to have to start tapering at some point, and that will eventually lead to higher Interest Rates. The obama rallys in full force. 2009. What happened in 2008 . The election. Yeah, thats right. Here we are, baby. Rich people are getting richer, though. Thats the only problem. I know thats your new problem. Heres my two anecdotes. Yesterday, over at the gym trying to, you know, get rid of whats the name of that new issue . Potbelly. Com . Whenever i see that, i think what . Well, i just, i was running yesterday. Im going to get this down to where i look like Bradley Cooper or something. When you put on your jacket, i had no idea how much you wait until i have the sixpack, when i replace the keg with the sixpack. Anyway, so, a guy says to me, joe, double, right . Double. Okay, that was number one. Because if people are talking about bubbles, the bubbles not here. Its only when youre not talking about a bubble that it finally bursts. Sneaks up on you. This morning, i have another ocd, and that is that i have to top off my tank. I need to get it all the way up so that it stays on full for, you know, how well, you dont know, but it stays on full. Thank you. Yes. Thats when you get it stays on full for a long time the gas station guy said no, not the gas station guy. So, i have to get it up there. Otherwise, if it starts here, it goes right down. So, im out of the car and i hear a guy i love these. I hear a guy, hey, kernan i look over and he says, you say cab drivers dont watch or talk about the stock market. Hes in a gw cab, which is right on route 46. Yes. Hes getting gas, and he says, i watch every day and im watching the stock market, i love the stock market, i love squawk box and i watch every day. Yay so, but hes not representative, i dont think. I dont think were there yet in terms of where everybody right. But that does sound like things are starting to percolate. Yeah, i think its in the good stage where its starting to spread out to maybe that means Retail Investors are ready to jump back in. Last night, nightly news made a point about this, the first time the dows traded above 16,000, so the words getting out. But cab drivers. He said he was watching thinking is that true . Thought id mention him. So, what does that mean . One guy says bubble, the other guy says hes watching. I think it means i think theyre starting to still a ways to go. Fourth or fifth inning . Middle of the fifth . Bottom of the fifth. Fourth . Doubleheader . So far from seven, eight, nine. Thats the point. And up 25 . Im not going to mention my call for its not one, two or three, though. Its not first three innings when you look at the gains. Were somewhere in the middle of the game, but where, im not sure. And you know, people is thank you democrats are always better for that is true, by the way. If you want to live like a republican but you i cant remember. If you want to live like a republican, vote like a democrat. Thats what they say. There you go. And is it because of stimulus . Is it because of is this the obama rally or the bernanke rally . Thats the other thing to think about. I would argue the bernanke rally is the obama rally, because obama, he wasnt the one that he wasnt i agree with that. You know who was the original decider and who was on jay leno and who was with Chris Christie yesterday. Oh, i didnt know he with with Chris Christie. I knew about leno. You have to think about this 43. Hes an artist now. I know, hes been painting. Had mccain been on or a republican, hear this, its possible that they would have replaced bernanke. Oh. With somebody who probably would not have pursued this type of you might have kept bernanke the first time. And you may be right i think you would have been crazy not to have kept him in the midst of everything they had done. Well you dont know the plot of your next book yet. I dont know the plot as to how we exit. Ive got to work on that. See who wrote this piece about how qe is bad . No. A guy whos name is frickin saving. Thomas saving. How did they find a guy named saving to write a book about how savers dont are getting crushed . Yeah. His name is saving. Hes been unable to save. Anyway, he wrote it with phil gramm. Last but not least yes, sir. The one guy who wrote against if you like the rules, you can keep them. Obviously not. The senate rule. One of the democrats well, three. There were three. Manchin, in a republican state, and the other one i have disparaged carl levin before. I have to say, class yesterday. Class, right . Right, because hes a look, i dont think this is a partisan move. This is about protecting the institution of the senate, and the minority was always supposed to have some room there. Now, it takes two to tango, and the republicans have done some stupid things with blocking and just refusing to put any judges through. But it was just as bad when bush was trying to do it. There are more there have been more they started it. Anyway, heres the journal got a little pissy here. Listen to this obama care would have never passed if mr. Franken hadnt stolen the minnesota recount and if prosecutors hadnt hidden the expulcatory evidence that would have showed that alaskan republican senator ted stevens, false ethics charges, but this hid some of it. But it says if franken hadnt the former comedian whos got the biggest mouth in the senate now if he hadnt stolen the recount, then there wouldnt be obama care in the first place. But you know what . Obama care is the more that well, no, i just [ everyone talking at once ] you know, without obama care, we wouldnt have anything to talk about every day. This is true. But it does say that the rise above message is not getting through. This is about ramming it down do you think they listen to us . No, this is about not working together with the other side. This is a problem. This is bad for the institution. And by the way, a lot of the people who voted for it voted against it back in 2005, eight years ago when it was the republicans who were trying to do the same thing. Everybodys changed sides. But obama now, after voting to raise the debt ceiling, he was also adamantly opposed to doing this as well. So, we know how politicians operate, but i was going to ask you just all these guys, tom harkin, a democrat in favor of it, says hes been waiting for 18 years, eight years ago said this was absolutely the wrong thing to do with the institution s. Mcconnell who was in favor of it eight years ago is opposed to it. Basically, they just traded sides. Am i okay with what . Heres what happens now, hes not going to get anything through legislatively yes. So, hes governing through regulatory measures now. Correct. Now, any of the regulatory measures that are challenged at the District Court of d. C. , he can stack that court so he can yes, he can. Okay. The other thing is, polls have him at 37 , 40 , somewhere between there not a good well, no he cant whos going to be how much below i dont think he had 47 , like romney said, but hes got 37 . Hes got 37 that will never waver for him, so he cant go any lower i dont think hes worried about it. Hes a lame duck. Not now how many votes do you need to repeal obama care in the senate now . Thats a good question. 51. Well, 51 because they figure if they got the majority, they would change the rules to continue this nuclear option. Because why not change the rules at this point . When youve lowered the standards. If you like your rules, you can keep them. Lets talk about the markets a little bit more. We went off on a little bit of a tangent, but a good tangent at that. One of the Big Questions during the stealth rally, which weve been calling it, is whos actually taking part in this. Lets follow the money. Inflows of 4. 28 billion in the week that ended wednesday, roughly in line with the fourweek moving average. Etf investors added a net 1. 6 billion to their accounts. What about other investment vehicles . So, the ft reports that global money market funds are projected to lose 33 of assets under management next year. The paper citing moodys for that. The firm says that headwinds for money market funds include low Interest Rates, and of course, new regulations in the in the u europe. The thing about these numbers is whos participating, right . This goes to the cab driver thing and whether the cab drivers actually participating. Thats a lot of money thats going into the market during this period. I would have thought people, given the conversation weve been having on this set, where everyone seems to be a little anxious, that would have been the opposite. I think its new money. But there was a time when people liked to, you know, if they they see social media and take a shot at something, and the stock market, im not saying its gambling, necessarily, but there was a time where you could dabble a little bit and make a little money and take a vacation, you know . It used to work, and now people are just deathly afraid of another move to 6,000 or something on the dow. I mean, i think weve got time to slowly get people back in before they become bag holders, which happens to bad thats your point, maybe fifth inning or something. Yes. Not seventh, eighth or ninth. Are you seeing in the seventh . No, no, no. Do you sing in the seventh . Is that the seventh Inning Stretch . Thats the seventh Inning Stretch. You sing take me out to the ball game. I think you want to be out before you get there, because you dont want to be around for eight or ninth. And you want to be out before the fullfigured gal sings. Thats true. Is that how we say it now . Shes a lady. The plussized lady. Before the plussized lady sings. What else is going on with stocks and bonds this morning . I dont think you can use the f word, right . Youre skating very close to that right now. Im drinking a diet coke. All right, we mentioned stocks and bonds, but what about the broader markets . I want to know what they said about gold, because we laughed when they said it, when they were saying it was going up, gold. Goldman sachs is predicting a significant decline in gold in 20 2014. The precious metal is already down 20 this year and i could have sworn goldman was bullish on gold. Look, David Einhorn was bullish on gold i saw him yesterday. He said, well, i bought it in 2009, it was a pretty good trade. I remember him with his donut comments. We were up at about 1,500 on gold, werent we . He was completely wrong with that. These guys never admit theyre wrong. Hes also got a new hairdo. Did you notice that . No. I dont know. Anyway, the firm says that bouillon is set to fall at least 15 next year. Goldman issued a report of the top ten market themes for 2014. A warning of the growing Downside Risk for commodities. Gold this morning this probably would affect the precious metal because goldman had some sway, but its only down 1. 60, but thats a new, pretty close to a new intermediate term low. Not quite. I guess it could almost touch 1,200 to get down to recent lows. As for oil, which were waiting. I paid 3. 30 for premium this morning. Were waiting for this to help the consumers, but we didnt see it yesterday, thats for sure. Not from target or from the others. Finally, as far as currencies go, as the tapering, i think, gets closer, but maybe it isnt, but were back above 1. 35. It is a relatively quiet friday on the data front. Two economic reports of note. The Labor Department is going to release job openings and labor turnover, the survey for september. Thats at 10 00 eastern, not on our show. Then an hour later, the Kansas City Fed survey. As for earnings, Companies Reporting this morning include foot locker, which for a while was that the one that was no. No, that was woolworth. And also, petsmart. Someone the other day said people that have pets live longer, and i said, well, im going to live long, then. A lot of dogs. Three dogs, a bunch of fish, a couple hamsters. There may be a shortage of data beta fish. I like the beta fish. You knew the second you went from true. But we still have plenty to discuss about im starting to know you. When you start with hamsters, its just its hamsters that got me. How did that i dont know. When did hamsters become some kind of sick joke . I dont its not a joke. Has it come to that in society, where little kids cant have cute little hamsters at this point without some disgusting nuance i dont know. I dont even know what youre talking about. So, were bringing in a special guest this morning, not right now, but later. Atlanta fed president Dennis Lockhart, hell join us live at 7 30 eastern. Hes also going to talk about the rebuilding of atlanta after being ground zero for the walking dead and the walkers. Theyve made great progress. They have made some progress, but there was it was a wasteland for a while, just people, right . Well, theyve done well. I think the cdc is doing much better than it was, too. Cdcs a real that was a rough case. That was rough. It blew up. Why dont we talk about the Global Markets now with the Global Markets report . Ross westgate is standing by in london. Ross, good morning. Hi, good morning, becky. Good to see you. Yeah, not much followthrough for european stocks following that close on the dow last night. Were about 54 decliners outpacing advancers, so fairly flat, but we are just about at the session lows. There was a bit of a kick on first thing this morning, then it sort of evaporated, the early gains. The ftse yesterday was pretty flat, and thats where we stand right now as well. This mornings gains down 14 points. The xetra dax is off 13. The big story this morning was a tick up in the ifo, institutes Business Climate index, europes probably most important Sentiment Index that covers germany. 109. 3, better than the expected 107. 7. They say manufacturers are more optimistic and theyre doing well on the back of stronger exports. That did just boost the euro up to the session highs as well against the dollar. The euro also up fouryear highs against the yen. The kaycac is up. Ftse mib down half a percent. Breaking down the sectors this friday, pretty even steven, which reflection the normal sort of focus. Basically, resources weaker once again. We are, we had that disappointing manufacturing pmi from china yesterday. Thats followed through to today as well, and the dollar firmer against the yen. Media, technology a little bit firmer. Keep our eyes on technology with the launch of the xbox as well today and see how that does against playstation games. We also heard from mario draghi today as well, two days in a row. Hes sort of saying they talked about deposit rate cuts yesterday, but with the ecb meeting, there was nothing more on that today. He was much more focused on putting together a single resolution for winding up european banks, and this big disagreement between germany, who dont really want any mutualization of debt and banks in france and italy who say we need to have a fund to do it. Draghi today very much trying to toe a middle line and get some consensus around that, but that will be a big focus for european politicians before the end of the year. Yields as a result today on bunds just a little bit higher as well post that data. But otherwise, fairly flat market right now. Back to you. Ross, thank you for that. We also have Corporate News to get to this morning. The wall street journal reportion that Charter Communications is near a deal to get a loan to make a bid now for Time Warner Cable. Sources say that if charter turns to outside equity from sovereign wealth funds or other sophisticated investors, the amount would be less than 10 billion. Keep an eye on time warners stock, because theres going to be a lot of rumors floating around for the next couple weeks about whether they really are a takeout target. We talked about them as a possible one for quite a while now. Expensive, right . It would be expensive, and the biggest ever, wouldnt it . No, no, no. 45 billion, 40 billion, Something Like that . From the biggest ever deal . Biggest ever deal is vodafone buying management for 183 billion. So, theres a lot of room between yeah, but this for a Cable Company . 40 billion thats not bad. What was aol . That tha was that was 134 billion, right . You had to pay the premium for it. The kind of premium for this . 20 . Yeah, probably. Its a pretty rare deal. Its a rare deal. In this environment . Its a rare deal, so, well see. What was the last one that was big deal of this magnitude . We havent had a big deal of this magnitude in quite a while, so. No, i mean, vodafone buying the other piece of verizon. But thats not a real merger, so well see. Also, this is a little deal but big deal to them. A jury awarding apple about 290 million in damages against the retrial of samsung. The decision restoring a large chunk of a historic verdict that the iphone maker won last year. Samsung had argued it should only have to pay about 53 million, so to samsung, 290 million is a lot. To the coffers of apple, maybe not. Right. Maybe not so much. A decision on whether to approve bank of americas proposed 8. 5 billion settlement with investors in Mortgage Securities is now in the hands of a new york state judge. A nineweek Court Proceeding ended yesterday. The judge now must decide whether its reasonable for the trustee of the securities to enter into the settlement, which is binding on investors. All right, coming up. Well, number one, you know, you read things in the post. I guess when the post had that thing about the bag man and the they sullied the two guys, the boston bombers, that but did you see the front page of the New York Post today . Thats not what im going to talk about. But i was interested in that, the reprint of what they printed 50 years ago. The daily news did the same thing. Its pretty easy to print your old i dont know. Interesting. When youre reading the post, heres the top line of the main article. Larry kudlow, the charismatic msnbc anchor what . Larry kudlow, the charismatic msnbc anchor. So, you know, theyve got number one, youve got the writer, number two, youve got the editor. Number three, youve got it just, i mean, can you ever imagine larry, number one, our conservative friend, larry, at msnbc, number one . But just not knowing enough about larry kudlow to know that he works at cnbc . Just read it with a grain of salt. When you read the post, know what youre reading it for, for entertainment. Its like mad magazine. People make mistakes. Its a good newspaper and people make mistakes. Oh, thats big of you. Anyway, there but for the grace of god, the the new york times. Thats why. They wont correct this. Im pretty sure that ive read things about myself that have said im from msnbc. I cant believe youre not anyway, coming up, the ability i mean, that was your calling. Anyway, the ability to talk on your cell phone during a flight. A major tech advancement or a coming annoyance. Well discuss that next. But in all the stuff you read in the business section about us, about anything, i just, thats a pretty good example of how much you should i believe about, what, should you believe 50 . 40 . And fox sports news and theyve already done stuff about me and cant get any worse. The saints handed the falcons a fifth Straight Loss last night. Drew brees throwing a pair of touchdowns. The nfc southleading saints improve to 92. The falcons fell to 29, officially eliminated from the Division Race with five weeks left in the nfl season. First as we head to break, lets check out the National Forecast with the weather channels alex wallace. Hey, alex. Good morning to you tracking some showers this morning across parts of the northeast. And thats generally going to be the case for a majority of the day. Just sort of in and out of light showers out there for us, generally going tomorrow north of d. C. , up into new england dealing with that threat for the rain. A little rain and snow mixing in as well, getting into the green and White Mountains dealing with that. Then by tomorrow, it will be a drier time for that 95 corridor, but back through the interior, close to the lakes, snow showers for the start of the weekend. Tracking a line of showers and storms rights now moving through the Lower Mississippi valley. With it, some heavy downpours and lightning. Headsup mississippi into louisiana. Then back into the southwest, heavy downpours here into parts of arizona, including phoenix. And a winter storm taking shape. This is going to dump quite a bit of snow through parts of the rockies and then we have a potential for icing through parts of texas. That will continue into tomorrow as well. And continuing with our snow back across colorado and new mexico into tomorrow, there will be some spots doing pretty well. The ski resorts here, as you get into the san juan, could pick up close to 2 feet of snow. Well, thats your National Forecast. More squawk box on the way. Welcome back, everybody. Right now its time for the executive edge. This is a daily segment focused on giving Business Leaders a leg up. Federal regulators are considering whether to allow airplane passengers to use their cell phones for calls and Text Messages during flights. The announcement by the fcc sets up a debate over technical and social implications. If this story sounds familiar, its because last month the faa said it would allow expanded use of Electronic Devices aboard planes, but the devices are still not allowed to connect to any ground networks, but guys, the social implications here are, do you really want to listen to people talking on a crosscountry flight for five hours . Greatest fear. But you have the buds to go in little buds. I still dont want to hear people on the phone. Im okay with emailing and texting until the last second. That part im okay with. The phone part a little less so. I wish i could have them banned in supermarkets. I wish i could say that the microwave is rotting the food or something, which is probably about as realistic as this. I have a different question for becky and joe here. And i know most of us often sit in the back of the bus during these flights, but to the extent you have an opportunity to sit in the front of the bus, where the seats are wider and things are more spread apart, especially international flights, do you think that those people should be allowed to be on the phone . Well, you know, on the acela they have a quiet car. They have a quiet car. But in the other place where i know you demand to sit with your tickets, the front, you know, where youll see all the muckedy muck going back and forth, people are on the phone there, in the most expensive its loud. They do use them. And if im right next to them, it does sort of irritate me if a person is doing business for the whole three hours. Its like, oh, my god, but i do listen. Remember, thats how that guy found out all the information, the reporter sitting there listening to them. I go back and forth because i can understand wanting to be on the phone, wanting to keep connected for business, maybe check in with the family, be able to make sure that a car can get you. Its not off the record, but i go back and forth, the idea of being stuck on a plane listening to people talk endlessly and having no escape, whoo. You would see someone petraeus, his wife was sitting behind him and i didnt know his wife was there and i saw him talking to some other young women and stuff, so i was watching that and i go, oh, his wifes here. But this all should be off the record, right . No, what happens on the acela stays on the acela . [ everyone talking at once ] i think its on the record. Yeah, its fair game. Its fair game. Hey, can i just you know, andrew convinced me, we have to be afraid like, the post . This is all ill say about the New York Post, if theres one paper i read every day, no matter what exactly. Its the New York Post. There you go. Its the most fun paper to read out of all. If i miss the post, i feel like i havent read the newspaper. And page 6, its that stuff you read you love it. You read it and you think, oh, my gosh, i cant believe they did that unless its about you, then thats not true they put jamie dimon, they put pictures of people, make it fun to read. They make it fun. Page 6 is by far the best gossip column. If you dont read the post, you need to buy it every day because it is the best paper. Is that okay . Its a great paper. I always loved the new york times, but i read the post every day. Not the daily news, if youre sleeping, you cant sleep. You pick up that thing let me talk about the next story. New jersey is in the process of being the third state to offer internet gambling. A trial period began last night with some serious glitches. The most serious was some refused to believe some people were inside new jersey borders, when they were miles inside the state line. Technical glitches, any time you have a new rollout, its not surprising to see. Thats true. What else happened yesterday . I dont really like this. Im not a big fan of it either. I see the online gambling, its just a bad idea. In fact, one of the stories we were reading today about it was a guy complaining that he couldnt do it. The reporter was following him around, i guess, as he went different places, tried to get on. They also said he was an unemployed bartender. The idea that youre making it easier, even though at this point, there are still some difficulties trying to get on im not a huge fan of gambling, but what i really dont get about this, if you think atlantic citys suffering already, how is this going to get anybody in the door . Although the casinos who are located there are offering these things, so maybe its still i get that, but i dont get the strategy. I think its just to keep its certainly not jobcreation. Weve always argued the reason we need this is to create jobs. This is not creating jobs. Its the technology. To say ideologically pure, anything that starts trending towards the nanny state and saying i dont approve of this type of behavior, therefore im going to try and do things as the state that makes you not want to i mean, its its hard to put blinders on, though when you see what it does to peoples lives. They do it to themselves, though, sort of, and theyre going to do it one way or another. Its like trying to stop smokers from smoking. You can try but weve done a great job of getting people but they do it themselves. They realize i want to get off. I want to stop doing this. Well, but weve also made the incentives and the cultural incentives different. You dont think . Because you cant go to a bar and smoke. Therefore, if your friends but you can in certain places. But its harder and more expensive. You can in the casinos in atlantic city. You need to go outside sometimes, but more and more, people just realize whats wrong with it, right . The kids. But i would argue the nanny state, if thats what you want to call it no, no, no. Has made you decided that on your own. You dont think so . No, youre deciding that on your own. You think had none of those happened, had the prices not gone up, taxes not gone up know when to walk away lets go to break and then read the post. The read on retail, the gap better than expected on profit and backing its profit forecast for the year. So, why are shares under pressure . Well ask Anjohnito Willet list right after this. First, did your list of the top ten bans of all time make our list . This is your chance to find out, or you can post your own top ten for future consideration. Check out the latest talking squawk blog at squawk. Cnbc. Com. Bravo i loved that it was great it wasnt bad. Well, there were parts of it that werent bad. It could have been better. It was terrible it was bad take itway. Boo the ocean gets warmer. The peruvian anchovy harvest suffers. It raises the price of fishmeal, cattle feed and beef. Bny mellon turns insights like these into powerful investment strategies. For a university endowment. It funds a marine biologist. Who studies the peruvian anchovy. Invested in the world. Bny mellon. Welcome back to squawk box. Gap reporting Quarterly Results of 72 Cents Per Share, beating the street by a penny. Thats the good news, but theres bad news in here as well. Were going to talk now to oliver chan, retail analyst at citigroup. Good morning to you. Thanks a lot, andrew. Thanks. So, okay, overall number good, but lets talk about some of the things that put a little pressure on the stock in the market afterwards, or, well, the market was closed at the time. But nonetheless, the big issue being that Comp Store Sales did not look very pretty. Yeah, Comp Store Sales were plus one. What i would say is gap continues to illustrate great consistency. So, this was the seventh quarter of positive comps, but a plus one maybe wasnt what people were looking for in terms of the bar. I would also speak to the comments around the promotional nature of the atmosphere right now. Right. And if theres one trend for holiday, its everythings on sale, and thats whats happening. So, this margin i mean, to me, the two takeaways from that release is the margin compression sort of a la what youre hearing from walmart, target and everyone else, who says the next month is going to be a tough one. Then you talked about samestore sales being up 1 at gap. That was true, but if you looked at banana republic, it was down 1 . So, the only Thing Holding this thing up in terms of the continued growth of this thing seems to be the online business. Well, online is the major theme, and shoppers are definitely moving that way, and we do have a problem with mall traffic. Mall traffic has been persistently negative, negative 1 to 4 , while online is growing at 20 plus. So, online and global are definitely key trends, you know, for retail at large, as we think about that. Margins are a big deal. Margins across the space. The Gross Margins are declining 100 to 200 basis points. And most of our retailers are expecting this trend to continue. Do you think gap needs to shrink its footprint in terms of the number of stores . Well, its selective. I think selective store closures are pretty smart domestically as a whole. There are some pockets of good opportunities. You know, shoppers are gravitating towards deals, so the outlet channel is a compelling idea, but a lot of the success or failure does come down to the product. We are kind of within this fashion dynamic, and its discretionary. Okay. Oliver, just real quick before you go, whats your target on this stock . 48 and 15 times. Okay, so weve got a little bit of room to move. Up side. We appreciate it. Thank you. Happy holidays. You, too. All right, thanks. When we come back, the latest xbox launching early this morning as fans lined up for hours. But how does the microsoft console stack up against rival playstation . Jon fortt will join us with the answers right after this. And then later, a squawk box icon and rebel, billionaire entrepreneur sir Richard Branson. He is headed for space, but before he does, hes going to join us from his private island. Thats coming up at 8 40 eastern. Stick around. Squawk box will be right back. Life inspires your trading. 0 tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. 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Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting and increase in psa. Ask your doctor about axiron. Welcome back, everybody. The Holiday Shopping season has arrived, and so have two new rival gaming systems. Jon fortt joins us with the battle between xbox and playstation. Who wins . In the short term, i think sonys got a pretty good chance with the ps4, because they didnt have momentum heading into this console season. I mean, the xbox and now the xbox one had a lot of buzz. Microsoft has been gaining a lot of momentum, but they made some key missteps about requiring at first the new kinect eye to be on, watching people, requiring online connectivity all the time. Gamers didnt like that. Sonys ps4 box is more of a social gaming appliance. It really focuses on the gaming aspect and it does its own marketing because it lets gamers pull other people in to watching what theyre doing. Its good at multiplayer. So, in the near term, plus, its 100 bucks cheaper. So, in the near term, i think sonys got a lot of momentum. But is that microsoft just kind of, like, you have to do it our way . Why did they go that route . Well, i think they thought they could. And also, you know how these companies are. They have this grand vision for how it will be if everybody does it their way. Right. And they think, apple can actually pull it off, but they think if they can convince everybody and get everybody into the fold, it will be awesome. And sometimes, it backfires on them. But what microsofts really doing is making a big play for the entertainment center. The xbox one, if you hook it up the way they want, it can really allow you to Voice Control everything. This kinect thing is amazing. The new kinect is even better. It really is. You know p 90 x, the gym thing . They have supposedly a new game where you actually look like youre on the screen doing it with tony horton or you can have him abuse you from inside the xbox. That is awesome. Thats pretty cool. But for a while, you needed my son mentioned something about that, that he didnt like, that kinect had to be on to do something . They basically wanted to micro manage your experience. Kinect has to be on, you have to be online the whole time. Its going to be watching you, feeding you ads, that kind of idea. Is it overstating it to say that the Christmas Season has a lot riding on video games . And the reason i say that, there havent been any new hardware, and thats hurt the software in like eight years, yeah. And its a big enough part of what you buy at christmas to where really successful video game, or it could add like a full point on to whether its a good Christmas Season, couldnt it . Yeah, for the season overall, it is important. This is the sort of thing thats going to draw people into stores. Because yesterday we got really crappy numbers about other stuff and there are worries about it. Lets face it, best buy needs this. Well, look how good best buy is doing. Yeah, target needs this. The Holiday Season is six days shorter this year, right . So, thats why were getting all this discounting. Something like this that is a big draw into stores when did they change that . Thats not fair. Thanksgiving is later six days . I didnt even know they did that. They do that in the senate with the filibuster stuff . So theres six less days, the democrats voted its the calendar. They voted to take away six days from the calendar . What is the eye . It actually watches you . Could a hacker break in and be able to see you on these things, too . Thats the worry. And everybody says no until somebody figures it out. Really, its for the gaming experience. You know, this one can recognize exactly who you are when youre playing the game, capture your motions, not Pay Attention to the people standing behind you, so you dont end up with them screwing with your game. If microsoft succeeds with this, they have more to gain. Right. Because can you cover the eye . You can do that. You can cover the eye, but then some of the functionality wont work, right . Isnt that part of the issue. I dont understand why they wont let you turn it off, though. They have let you turn it off now, but at first, it was like, they werent going to, and it was after pressure from the uproar online, they said, okay, okay, okay. After a couple okay, okay, okays, the message is a little muddy. Plus, they have to fix the software. So, some reviews say the softwares not completely baked at launch, theyre still making tweaks to get this exactly how people want it. So, thats why sonys got a shot here at a lose of positive buzz. Did you buy one or the other, or are you going to . No, since the kids, you know . I turned to my dad. Remember back in the late 80s, early 90s when dad tried to pick it up, how does this work . There are too many buttons . Thats me now. I have become that dad. I dont think you can overstate it. Didnt the latest do 1 billion on the first day or something . You look at the cultural influence of these stupid movies and all the actors and how much cultural influence they have. It takes them it might take them overseas sales in three months to do 1 billion. The video game does it in we get excited about firstday sales, a Million Units, but if the ipad only did a Million Units on the first day of sales, wed be like, oh, its a disaster so, relatively speaking, theyre both roughly 500 bucks. Video games arent as big as they used to be. There are other things that have sort of exceeded them. But you think of old toys and kids dont want to, like, use their imagination. You can do unbelievable stuff with, parachute out of a plane. Anyway. Coming up, thanks, jon. No need to go to washington. Well bring both sides of the debate to our set. Political strategists sound off on everything from health care to the debt ceiling next. And then in the 7 00 hour, depending on where you are, in the next hour, one of our newsmakers of the morning, atlanta fed president Dennis Lockhart will be our special guest at 7 30 eastern. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Welcome back to squawk box, everyone. Today, november 22nd, marks 50 years since the death of president john f. Kennedy. Youre looking right now at a picture of Arlington National cemetery. This is where there will be a remembrance wreath laying ceremony taking place at 8 30 eastern time to commemorate that date. Well come back and check in a little later this morning. A number of political stories to discuss today. Joining us now michael feldman, democratic strategist and founder i always say danny glover. Is it glover or glover . Thank you for giving me this opportunity to mention that again. Its what again . Glover say it one more time. Www. Gloverparkgroup. Com. And kelly conway is a founder and strategist, we still love you although we used to call you a lot during the elections. You did. Now its rare we but here you are again. But i watch every morning. Excellent. Michael. I just read this and i dont want to start anything with you, but go ahead. He says this with a straight face about obama care. We forget this was a bill that was litigated in congress for a year and a half and passed by both houses and signed by a single republican vote. I didnt forget that. Did you forget there wasnt a single a third of the economy or 20 of the economy. Every other huge step like this, you would think to not cause a schism in the country and you see the schism we have right now, youd think you try to do this with at least one republican. It didnt actually start with health care. A divided congress polarized. Look, were in a legislative process. We saw the latest incarnation of this yesterday with the socalled nuclear option. There is no bipartisan legislation. The senate is stuck both sides are to blame for this horrible environment were in right now. Youve got to admit, youre reaping what you sewed. Well, first of all, both parties havent been able to get anything done in congress for a long time. You got obama care done, but look at the price you paid. Was it worth it . Well, i guess the question is if youre one of the millions of people who dont have insurance or somebody concerned about the drain on our economy. There were other proposals on the table that rahm was pushing, the preexisting conditions open up states to competition. Ways to getting it done in a bipartisan way. You needed al franken, needed the nebraska purchase, you needed, you know, scott walker came in and you needed to do it through reconciliation. It was an ugly way to get it done. There were a lot of ideas that began with thoughtful republicans who at some point abandoned those you kind of no, no. Look, i worked in the senate 23 years ago. I worked for George Mitchell when bob dole was the republican leader. And during those periods of time, thoughtful people could get together and actually compromise on legislation and advance not just the president s agenda, but the countrys agenda. And not try to take over 20 of the economy. And force americans to buy a product they dont need and cant afford. Well, actually, i think there are thousands of people in california who are signing up for it who do need it. I think there are people in the country who are uninsured. If youre one of the millions of people uninsured or had a preexisting condition, you couldnt get Health Insurance and now you can, youre happy to have an option. And we can have a political fight all day long about how it was passed, but nobodys addressing the underlying problem. Its not like and kelly, ill ask you, is there a republican agenda out there other than stop the president , make obama care the issue . Yes, i know theres a new mean about your side. Forget him, hes going to twist in the wind with or without us. I want to talk about the policy. Im a policy person. And a thoughtful republican. Look, there are three options moving forward. You either go to single payer, which is what a lot of people wanted from the beginning. Kind of designed. And were not going there now because theres no credibility for the president to push even farther to the left on that. Number two im going to talk about three policies. Single payer no, not talking about the votes, im talking about the president preening in front of the bully pulpit. The second one is to revert to the insurance centric system, which i dont think most people will do. And the third is to start over and look for a patient centric free market solution. A portability across state lines, tax equity, all the things people and republicans have been talking about for five years about health care. And, of course, Health Savings accounts. And look at some best practices within the states. The president isnt just losing republicans. He never had them to begin with on obama care. Hes now losing in state insurance commissioners, democrats who are up for reelection in 2014. This is not partisan. If you try to make it about obama, i think you lose even bigger and your party will lose moving into 2014, 2016. Forget him and focus on obama care. People dont have insurance who should have it. We all agree on that. And i think itd be difficult for the republicans, any plan they have to take out the preexisting condition coverage. There are some useful elements that have been litigated as you said. I think there are. But to say its not partisan and were making it about obama is a little strange when, in fact, the entire gop strategy stated overtly by senator mcconnell at the beginning of the administration has been to stop the president. What is the republican strategy now . How can you stop them . Just answer this question. The republican strategy now seems to be to abandon whats left of the legislative agenda and make everything about the repeal of obama care. Michael, what happened yesterday is not moving towards these open relationships where you work across the aisle. I agree. I agree what happened to the senate is devastating for the senate, the body of the senate. Its a horrible development. I never thought id see it come. But what do you do when youre president of the United States whose legislative agenda has been thwarted. I think its fair to say that president obama has done more reaching out. Hes hardly ever oh my god oh, thats tough. You really think this president has reached out to the other side. He doesnt even show up in congress. Whens the last time he visited congress. He was there two weeks ago. Wow. Its that time of the month again, im going to congress. He needs to get there. Behind closed doors. Everything, the president , hes got the earnest americans behind him nodding on some bully pulpit with another of the same speeches. Its frustrating for all of us. Weve got to thank kellyanne and michael. Appreciate it. Coming up Dennis Lockhart will join us. And it feels like your lifeate revolves around your symptoms, ask your gastroenterologist about humira adalimumab. Humira has been proven to work for adults who have tried other medications but still experience the symptoms of moderate to severe crohns disease. In clinical studies, the majority of patients on humira saw significant symptom relief, and many achieved remission. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. Blood, liver and nervous system problems, serious allergic reactions, and new or worsening Heart Failure have occurred. Before starting humira, your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Ask your gastroenterologist about humira today. Remission is possible. Another market milestone. The dow closing above 16,000 for the First Time Ever and spurring a global rally. Well tell you where to ride the next rally wave and what areas you should avoid. Fed speak to end the week. Atlanta Federal Reserve president Dennis Lockhart is our special guest from janet yellen to taper talk, were going to cover it all. And guest host Southern Company ceo tom fanning joins us for the remainder of the show. His views on energy independence, health care and the looming budget deadline. This is from one of the nations Largest Energy producers as the second hour of squawk box begins right now. Good friday morning, and welcome to squawk box right here on cnbc. Im Andrew Ross Sorkin along with joe kernan and becky quick. Our guest host, thomas fanning, chairman and ceo of the Southern Company. One of the largest producers of electricity in the United States. Weve got a lot to talk to him about. Energy, i actually want to talk to you about obama care and a lot of other things. Take a look at the futures right now. See how things are setting themselves up for the day. Dow looks like it would open up off about a point. Lets get you through some of the morning headlines. Dow coming off the first ever close over 16,000. Yesterdays triple digit gain also wiping out the dows losses for the week putting it on track for the seventh straight weekly gain. The dow is up more than 22 for the year while the s p 500 has jumped 26 . Weve got more on the markets in just a minute and i think weve sort of decided were in the fourth, fifth, or sixth we have people who can tell us. Paulson and biancos here. What the innings are. Yeah, jim paulson, not hank paulson. Whos the other one, not john. Theres a lot of paulsons. We also have other quick stories. The white house planning to push back the obama care sign up period for the second year of operation according to dow jones. Now, the start of the 2015 signup period is reportedly going to be pushed back one month to the mid november of 2014. So think about a year from now. People would then have until mid january rather than early december to complete that process. Also, Charter Communications reportedly closed to completing a funding deal to make a bid for Time Warner Cable. Weve talked about the potential for Time Warner Cable to become a takeover target. The wall street journal saying a multibillion dollar agreement is close to completion but it isnt clear yet which banks might participate. And you can see time warner stock there. And what did we say . About 45 billion deal . 34 billion, what would you ask for . I think id throw 20 on top. However, somebody would say this thing has already run on the premiums already built in. Right. You know what someones going to do. Theyre going to look at the 30 or 60day average before rumors emerged. And thats sort of where you probably got and then maybe you look for 25 premium. Tom, what would you do . About what . Youre selling Southern Company youd say youd need 100 premium. Oh, absolutely. Somebodys got to provide clean, safe, affordable, Reliable Energy for people. Similar market caps, its amazing. Yeah. Thats another good one. You can own four Southern Companies or facebook. Were going to start doing these annoying comparisons, right . I mean Southern Company. Its legitimate. You wonder how, you understand the growth potential. Some day boeing might sell enough of these jets to be worth it is astounding when you consider the value of electricity to the economy and how important it is to grow. And i wonder, if we had a big well talk about this later if we had a huge solar flare, is it possible for one of your things to get knocked out for a year. Highly unlikely. Those kinds of things, they would tend to happen more like should i buy tuna . Cans of tuna . Absolutely not. Listen, joe, were in great shape. Dont worry about that. Yeah, sounds like. Glass in bag, nothing to worry about here. Nothing to see here. The dow very unlikely. Thats all i got. Very unlikely the grid could go down for like four years. No, no, no. The dow coming off a record close while the s p 500 is two points below the alltime closing high. Joining us now is jim paulson, chief investment strategist, and here onset we have david bianco. Im sorry, david, but paulson, weve talked about him so much. When hes here, we talk about him. This is like his own pr machine, squawk box. But the reason we talk about you is were trying to gauge where we are because the market as you correctly thought and, david, i think, too. But as you correctly thought has been going up. And you always make the point when you go through what we went through, for years, people are scared. First, theyve got to get it out of their system that the worlds going to end again any time soon. And then theres a long period after that its not actually overheated. Its just back to normal. What inning are we in right now at 16,000 in a baseball game and not a softball game . I think were in the middle of the game. I think maybe in the fourth or fifth inning, joe. I really think this thing probably has another five years to go. And im talking about the economic recovery and that means the stock market probably, as well. And i do think its because its going to take that long before people get confident enough before they start doing stupid things and start blowing themselves up again. People are getting more comfortable. But i wouldnt exactly say theyre confident or exuberant. And that tells me we probably have longer to go. I do think that next year is going to be kind of a volatile year maybe and flat a little bit in the stock market. I think money velocitys picking up, we just dont know it yet. And the initial response to that is the economy gets better and the stock market goes nuts and i think thats part of whats happening here. But ultimately, when we find out next year that money velocitys starting to turn faster, that will really change the conversation of the fed, make tapering a panic, if you will, and probably cause a correction in the stock market. So i could see the market running up, letsz sas say the o 2,000. But if we have a flat year next year, i think we might proceed higher than the 2015 and beyond. Well get to david. But if we had another five years without a recession in the economy, wouldnt that make this like a tenyear period without a recession . And recessions in the past usually they come from a variety you know, they only come from a couple of different places. And certainly we dont look like were overheating from inflation. But you think we can go ten years without a downward move in gdp . I do, joe. Actually, since demographics have slowed in the rate of growth in working age populations slowed down since the middle 80s, weve had longer recoveries. We used to have the variety of boom bust, but the 80s were that recovery was eight, nine years long. 2000s was six, seven years long. Were having longer recoveries because they grow slower, they grow longer. I think thats what were doing here. You were here when Ronald Reagan was president in the 80s. Yep. Im joking. Hes not your your heros in right now. David, what do you think . Well, my thoughts are similar to jims, which i feel good about because im a huge fan of jims. We talk about jim quite a bit on the east coast. Its like their own pr. Its important to recognize inventories are moderate, capex, Balance Sheets are great, the Financial System is derisked. I think this is a long last cycle. Most investors want to know how much upside in 2014. My message to them has been youve got several years of a healthy return still ahead. Obviously, i just have one different question, though. For this year, if youre an investor, were coming up on december. Right. Why dont do you lock in your gains and are people going to get out . If youre a hedge fund . Hard to get back in. No, i know its hard to time things. But invariably, theres always december can be a dangerous month. Andrew, many of my clients ask the same question and thats why we do have a 1750 yearend target. Markets ahead of that. For longer term investors, i would say stick with the course. But theres a few pieces of Unfinished Business that we have to look to next year particularly getting a tapering, a continuing resolution. If you need that money before when. I think if you want to protect gains, lock up a good year, you can do it, but we would advise doing it with big cap tech rather than defensives. Where are you on that, jim . You think theres going to be a little bit a tough december . People going to get out . I dont think so. Dont they have to call it a day and get out . Yeah. I dont think so. I mean, i dont know. Its sort of random when youre talking about 30 days about anything could happen, i think. Its really tough to time. But i think my gut is, andrew, that we go higher yet get even get more exuberant and then have maybe a little correction some time later next year. I just as soon ride through this. I get a sense we dont have a top and theres some indicators suggesting that, as well. I would like to stay more cyclically oriented. My favorite sector is material stocks. I think commodities might have the best year. I think stocks might be flat, bonds get killed. I think the tenyear yield goes to 4 . And i think commodities have positive returns. In stocks, you could play that in material stocks. Can you play that in caterpillar . Are they just too hard hit by whats been happening in mining right now . I like caterpillar overall. Those types of stocks, becky. I think thats a good play. One surprise next year too on top of a panic tapering thats forced on the fed because velocity turns up. I think were going to see Capital Spending come to life. You look around the globe right now, this is the first time in this recovery as a ceo sitting on unspent cash i can look around and go, look, u. S. Is accelerating to three. Ive got positive and rising growth in europe, in japan and reacceleration of the emerging world all entertainment. So we dont have fast growth. Thats the kind that presents opportunities for ceos that havent existed until now. David, final word, yeah. Well, we think chinas doing well, but we think a lot of the companies exposed will be under pressure for longer. But i do think capex picks up and like most of the industrial companies, i do agree quite a bit with jim. We do probably have a bit of a santa rally. But looks like we pull january into 2013. But the bigger message is its been a great four or five years. Those who have the courage to participate. Were telling them to stay in the market for the next several years. Hes in minnesota. Hes positive. I mean, its like, i hear little christmas, you know, like parable. I also suggest the gophers are going to beat the badgers this weekend. Thats how optimistic we are out here. Gophers beating and you said it just like like youre in fargo, the gophers. They might do that this week, jim, okay. David, thank you. Thank you. Appreciate you. Dont forget, you elected a wrestler and then a comedian. Theres something in the water in minnesota. Huh . We have a sense of humor. You certainly do. You certainly do. Up next, guest host and Southern Company ceo tom fanning on energy independence, obama care and much more. A governor with a boa, like a yellow feathered boa. He used to wear that. Hulk hogan, right . No. Yeah, it was. No. I thought it was at the bottom of the hour, were going to be joined by atlanta fed president Dennis Lockhart, the latest fed minutes. Opportunities arent always obvious. 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The white house is under pressure to pick the pause button on obama care. How are ceos tackling the Affordable Care act. Were going to ask tom fanning, ceo of Southern Company and hes going to be named deputy chair of the atlanta Federal Reserve come january 1st. We want to get your views on tapering and the markets. We can go to obama care. But actually, i want to go one place first. You said during the commercial break after we heard from jim paulson who is very optimistic about the world that youre a little less so . Look, i think we are seeing a recovery. What we thought would happen this year in fact did happen. We saw a flat First Six Months and said the second six months were going to start to recover. But the recovery has been so much more fragile than what we thought it would be. Its been lower in nominal terms and more fragile. Look at things Like University of chicago thats had this uncertainty index. Its two to three times higher than what its been in history on a nominal level and way more volatile. And why is that . I think there is so much event risk. When you think about the frozen politics we have and the cliffs and Everything Else we have to fight through. Theres a lot to be done on the fiscal side that would improve the economy on a sustainable basis. W were just not seeing it. And i think these kind of hurdles that stay in front of the economy will inhibit people from making longterm bets in capital and employment and a variety of other things. People like you, you mean . Well, we have ceos not spending money to do what they need to do. But were almost on the extreme case. I know, but all longterm investment. Ceos have to think about things longer than a year. Thats right. Look, you know, i share the optimism, things are Getting Better. Theyre not Getting Better nearly the rate we have potential i know youre a ceo and not a market player per se, but does the dow at 16,000, tdoes that make sense to you . The potential is so much higher. Hes just like some investor of his own money. I know. But listen, how i translate that question, would be how the southeastern economy going to grow and how do i put assets in place to make sure energy is going to support the growth we need to have to grow the economy. It drives me nuts, you talk about how fiscal things going on and one persons fiscal thing is the opposite of another persons fiscal thing. You dont want these guys to get together and vote for another 800 billion stimulus bill, do you . No. Joe, i think there are so many is tax reform fiscal wise . I do want tax reform. You dont want these guys to get together and well, i wrap tax reform in there, wrap the whole kind of downsizing a government. Thats what i mean. Downsizing of government. Other people want fiscal parties to get together. No, no, no, no. Ive been on the record a long time on that. Youre going to be on the atlanta fed soon. Well, im on the but no, would you want would you be in favor of tapering . Or do you think things are so fragile you wouldnt . Well, so i want to leave that decision to yellen and bernanke and my friend Dennis Lockhart and all that. But ill tell you what i see. Right. And that is the potential for the economy is so much better than what were showing. And the nominal growth rate is, you know, i dont know half of what we should see and theres so much event risk and volatility out there pulling the support out of the economy right now is probably not a great thing. But as an electric company, you have a very good idea about how consumers are doing. You bet. How businesses are doing. Tell us exactly what you see at this point. Well, its roughly what we said. In other words, the First Six Months were flat. The second six months we thought wed see somewhere around a 2 growth rate, were seeing about 1 . Do you think that was because of the Government Shutdown . Its all of that. I think people, you look at consumer spending. I think this whole event risk and shutting down the government and are we going to pay our debts. That makes people at a very elemental level nervous. And i think one of the greatest things. You talk about fiscal policy. Weve got to be for growth somehow. What weve got to do and i think there are things we could do i could talk about later to give the United States where we can give ourselves an unassailable advantage to grow jobs and make american lives better. You know, 48 of the families we serve in the southeast. We serve 4 1 2 million. 48 of them make less than 48,000 a year. And those families want better. A better place to live, they want better medical care, education, kids to have a better life. And what were seeing right now is so much uncertainty that those folks that are just trying to make ends meet are having to make tough economic decisions every day. And why cant we . We have frozen government and one of the things i want to talk about a little bit later is how the Business Community can step up and try and fill that void. This is the argument we have every day. We want growth. One side wants private sector growth, the other side thinks that most of that growth can be engendered somehow by government policy. I think its pretty clear that if the government tries to step in the middle and supplant certainly the private sector, what you do is democrats at all. Well. That is not clear at all. Well, i would argue the good intentions of democrats theres a bridging strategy. The only type of growth you hear proposed by the white house is they call it investment, which means higher taxes to spend on stuff like infrastructure or whatever thats all we hear about. Education. And theres nothing wrong. We need to fix the education system. Thats right. Thats all you hear about, the growth is going to be engendered by more Government Spending not by getting out of the way of the private sector. And the answer is clear and not higher taxes. Of course its not clear. They get a budget deal, they want more revenue. Its interesting, which is right, its a bridging strategy. What . A bridging strategy. But how do you you get from here to there. It is a bridging strategy. But how do you get unaddicted to it . Thats the issue. I dont disagree. You want to build the bridge to nowhere. You want to build a bridge where there arent any rivers. Were building bridges at this on this table. Building them, tearing them down and building them back up. Up next, bill ackman is back. And check out the blog, this week our top ten bands list. Share yours with fellow viewers. Check out squawk. Cnbc. Com for more. Still to come from taper talk to janet yellen, atlanta fed president Dennis Lockhart goes on the record with squawk box. Its an interview you cant afford to miss. And its only right here on squawk box. As this. At bny mellon, our business is investments. Managing them, moving them, making them work. We oversee 20 of the worlds financial assets. And that gives us scale and insight no one else has. Investment management combined with investment servicing. Bringing the power of investments to peoples lives. Invested in the world. Bny mellon. Over the next 40 years the United States population is going to grow by over 90 Million People, and almost all that growth is going to be in cities. Whats the healthiest and best way for them to grow so that they really become cauldrons of prosperity and cities of opportunity . What we have found is that if that family is moved into safe, clean Affordable Housing, places that have access to great school systems, access to jobs and multiple transportation modes then the neighborhood begins to thrive and then really really take off. The oxygen of Community Redevelopment is financing. And all this rebuilding that happened could not have happened without organizations like citi. Citi has formed a partnership with our company so that we can take all the lessons from the revitalization of urban america to other cities. So we are now working in chicago and in washington, dc and newark. Its amazing how important safe, Affordable Housing is to the future of our society. Welcome back to squawk box. William ackman is renewing his attack on herbal life at a conference today. Its been almost a year now since he shocked wall street with the 1 billion short bet against the Weight Loss Company accusing herbal life of being behind a pyramid scheme. He plans to present his case a second time now likely with hundreds of power point slides. All over again at the robin hood Investment Conference in new york. Herbal life has denied it is a pyramid scheme, which tries to make money by new members who pay fees rather than relying only on the sales of goods. Hes covered that, has he not . Hes covered a lot of his shorts. I dont know what hes done in terms of what hes done. Thats painful. A painful situation. This has been a tough situation the whole year. Yesterday, dan loeb what was the stock he mentioned . I dont know. They did, they did, they did. Im going to tell you right this second. I saw einhorn liked micron. Dennis lockhart joins us up next. And later, tis the season for celebration, were going to talk about the beer business in a moment. On the need to fix our broken immigration system, there are signs both Political Parties in washington get it washington is lagging behind the country on this. This issue has been around far too long. And yet, we wait. Reforming our immigration system would dramatically reduce our nations debt. Grow the economy by 5. 4 . And take bold steps to secure our borders. On this, both parties say they agree democrats. We are very very strongly in favor of moving immigration reform. And republicans. I wouldnt underestimate the houses ability to pass the immigration bill. And yet, we wait. Americans are tired of empty rhetoric. It is time for every leader to come through on their promise. And fix our broken immigration system Tell Congress the time is now. Fix americas broken immigration system. Welcome back to squawk box, everyone. In our headlines this morning, one of apples biggest suppliers coming to the u. S. Its going to be investing 40 million to build a plant in pennsylvania and hire 500 workers. That plant is not intended for specific customers like apple. But will have a general focus on the highend of the tech market. The bank of japan chose to keep the current Monetary Policy in place after a twoday meeting. There had been thought that they would boost the economy after the Economic Growth slipped to 1. 9 . That is half of the prior quarters rate. And a new york state judge will now decide if bank of americas 8. 5 billion settlement with mortgage investors should be approved. This comes after a nineweek Court Proceeding that ended yesterday. There is no indication when that ruling might come. Ive got one quick mention because i screwed this up, ackman did cover 40 of i knew that. He did that back in october. And we should say herbal life stock is up. And herbal life, unless theyre selling a bunch of stuff that people then like sit on it and arent able to sell it to the end user. It seems like their results have made it harder to prove his case. Dont they keep selling a lot of stuff . They do. They do. Is that lending up some where in some channel and never getting to the end user where people take it . I dont think its possible now. The question is herbal life hasnt told you some of the statistics. I like the candy bars. I want to clarify that. Thats why i asked you. I thought he had covered some. We should also tell you the Senate Banking committee approving Janet Yellens nomination by a 148 vote. That does send the nomination to a full senate. Joining us now to talk about the future of the fed is Dennis Lockhart. He is the president of the Federal Reserve bank of atlanta. Also our guest host today is tom fanning, the ceo of Southern Company. And will be named the deputy chair come january 1st. President lockhart, thank you very much for joining us this morning. First of all, your thoughts on janet yellen. Well, janets a very qualified candidate for this position. As qualified as probably any person who has been put up in recent years. Shes certainly a highly respected colleague. Ive gotten to know her very well over the last few years. And one of the things i emphasized isnt stressed so much because of the stress on Monetary Policy is that shes been a reserve Bank President like me. So she knows something about supervision and regulation. She knows something about the Different Services we provide the Financial System. Shes really well rounded. We need to fix president lockhart, were having no, its on his end. Were having some problems with president lockharts microphone, were going to get this fixed. If we could take a break right now. When we come back, well continue this conversation with the atlanta federal atlanta Federal Reserve president Dennis Lockhart. Well be right back. Gonna be a. Youre talking to the guy who hasnt approved a new stapler purchase in three years. But then i saw the new windows tablet, with a real keyboard, usb port, and full office. Its a tablet that works for work. Plus, its got apps and games, for after hours, of course. Compared to an ipad way more value. These tablets are such a steal; i couldnt find a reason not to buy them. Honestly, i wanna see you be brave customer erin swensoneason ordebut they didnt fit. Line customers not happy, im not happy. Sales go down, im not happy. Merch comes back, im not happy. Use ups. They make returns easy. Unhappy customer becomes happy customer. Then, repeat customer. Easy returns, im happy. Repeat customers, im happy. Sales go up, im happy. I ordered another pair. Im happy. both im happy. Im happy. Happy. Happy. Happy. Happy. Happy happy. I love logistics. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. [ male announcer ] 1. 21 gigawatts. Today, thats easy. Ge is revolutionizing power. Supercharging turbines with advanced hardware and innovative software. Using data predictively to help power entire cities. So the turbines of today. Will power us all. Into the future. Welcome back, everybody. We fixed our technical problems, lets get back to president lockhart. You were just talking about what you think about janet yellen. Go ahead, sir. Yeah, so i get another chance to praise my colleague janet yellen. Shes extremely wellqualified for the position. You know, she is a fine economist. But one of the things i would stress which is part of the job is that shes familiar with the reserve bank. She was the president of the Federal Reserve bank of san francisco, of course. That means she knows something about supervision and regulation. She knows about the various services we provide the banking system. Shes extraordinarily well rounded for this position. And i certainly hope shes confirmed. President lockhart, weve been trying to get a feel for the economy and thats the one thing weve been talking to tom about this morning. Whats your sense of where we are in the economy right now . And how things are chugging along or arent . Well, i think tom and i see the economy in a similar way. Its certainly growing, but growing at a slow pace. The anticipated acceleration and growth that we hope for in the second half of the year really hasnt materialized yet. Im forecasting that we will see a pick up in 2014. But at the moment, seeing a slow growth mode. That doesnt sound like you think tapering should begin as early as december. No, im not saying that. I think it should be on the table at the coming meetings. Chairman bernanke said that in his recent speech. And i fully expect well be talking about in december, january and march. The way i think about this is the the tapering decision should happen if it is going to happen when the economy is ready and when the market is prepared. We had, president lockhart, its joe kernan. We had our buddy bullard on. And he convinced me. He made such a case that since nothings going on inflation wise, well do this forever if we have to. He said, why not basically im paraphra paraphrasing. Consequences to this. So as long as employment is this high and inflation is this unemployment is this high and employment is this low, why not . It says every month that it goes on, the exit strategy becomes more difficult and more dangerous. Its fine that everythings going along right now. But i just wondered, do we really know what lies ahead . And as the old expression, the guy that jumps off a 50story building, you know, thinks hes flying for 49 floors. Well, i do think theres a fair amount of uncertainty the longer term consequences of the Balance Sheet. At the moment, i dont think were in the danger zone. I think its manageable. The exit will be manageable when the time comes and the shrinking of the Balance Sheet in all likelihood years ahead of us, plenty of time to prepare for that, get the necessary tools in place. Even running some experiments, that kind of thing. The reality is, weve never been in this place before and managing a very large Balance Sheet and ultimately normalizing it. And consequently there could be some things that happen that are unanticipated and theres some risk associated. Is there any canary in the coal mine . Any canary if theres nothing to see in terms of something coming, is there anything that would be, you know, a sign of real trouble . How would you know . You said you dont think weve gone along weve gone too far in this process. How would you know if you dont have a canary in the coal mine . How is it . Well, you know, some things just arent knowable. And, again, the way i think about this question is its not any one risk or cost as we use that term a lot of financial stability, disruption of markets, trouble with downsizing the Balance Sheet. Its not any one thing, its likely a scenario in which things come together at the same time and in a combination thats unanticipated. Those kinds of things, that kind of scenario planning very, very difficult to do and particularly years ahead. And i have been one who has been somewhat favoring the idea of beginning to phase out and change the mix of policy tools, phase out the asset purchases. Im simply one that to some extent works from his gut. The bigger the Balance Sheet gets, the more were dealing with an unknown factor in the Economic Future of the country. So my message at the moment is were going to remain very accommodative for quite some time. And all likelihood, a number of years but the mix of tools that we use can change. And thats where the tapering decision comes in. You said, though, the tapering decision is going to be based on two things. One is when the economy is ready and one is when the market is prepared. What does that mean . The market is prepared . Well, i think with ef been trying to get across a couple of points that are very important and the market may or may not actually to the extent there is a mind of the market actually buy into these points. One is that theres a distinction between the great policy. The targeting of the federal funds rate and the asset purchases. Those are two separate tools and theyre not tied together when we make a move on for example, on asset purchases. It is not necessarily signaling that theres any change in the policy for the Interest Rate. Right. In other words, tapering second point weve been trying to put across that view and its not been broadly accepted. Certainly not as you look at some of the reaction in the market to either the minutes or to discussion in the public about the possibility of tapering. But they are two separate tools. We have a mix of tools. We can put together, i think, a mix of tools that will preserve the very accommodative stance of policy for quite some time. Hey, dennis, this is tom. Appreciate you being on. You and i have had this chat before that value is a function of risk and return and how the fed thinks about that relationship. Weve talked a lot in joes commentary about the risk side. In other words, how do we feel about growing the Balance Sheet and how do we unwind . Give a little more insight on the return side. In other words, gdp growth. In other words, unemployment when were really facing significant underemployment. How do you think about those . Well, the way i think about this. Yeah, the way i think about it is, you know, theres a cost and a benefit to any policy, as a matter of fact, and there are winners and losers with any particular stance of policy. So with quantitative easing, we take on, perhaps, some longterm considerations, concerns, risks. But i think up until now certainly, i think the net impact of the asset purchases has been positive, certainly they have influenced longterm rates. The stock of securities that the fed now owns certainly puts weight in the economy on riskier assets and investment in riskier assets. Have supported the recovery. But certainly it is supported what weve been able to achieve so far. I think its worth noting the initiation of the most recent round of asset purchases in september of 2012, we have, in fact, made quite a bit of progress on the employment front. A lot of people have been put to work. Weve had rather good employment numbers now for the last year, really. And certainly in the last three months its over 200,000 jobs net per month. I think that all speaks to the total package of policy being somewhat effective. And so i think the benefits have outweighed the costs, certainly up until this point. President lockhart, i have a question for you, we love having you on this program, we love having all fed president s on this program to learn how they think about all this. But i wonder what you think of the communication strategy of the fed. And how you think the markets take the varying different views of different president s who make public statements or public speeches and what kind of conversations happen between you behind the scenes about what youre willing to say or what you arent saying out there. Well, andrew, let me take the second question first. Theres very little coordination and we all really are independent agents and can say pretty much whatever we want. We have rules of the road that all of us conform to. But we do operate as individual voices. I think the lets say the well versed observers of the fed understand exactly what theyre taking in when they listen to us. Theyre taking in individual opinions that are taken to the table for what turns out to be a consensus decision at the end of the day on policy. And then that in turn becomes a vote and the 12 who have the vote are the ones who actually make the final decision on policy. But we are speaking as individuals. And no one should take what i have to say, for example, as speaking for the fed. Hey, dennis, we all thought you did a great job preparing the markets for tapering last time. And i think the stock market had gotten back to where it was so it was a perfect time. And im going to give you the benefit of the doubt you were anticipating the problems in washington and didnt make for a good time. Maybe that was the fact that did it. But at the time i was worried that you guys got spooked by what happened in the stock market. And im hoping a 3 move in the stock market wouldnt cause you guys to rethink retapering. Is it the stock market or the 2. 7 or 2. 8 on the tenyear that did it which could hurt the housing recovery. Which causes you to like we mentioned earlier, the reaction in the market. Which market are you talking about . Hopefully its not a stock market. No, its not the stock market, its a broad Financial Market that move Interest Rates and have ultimate influence on the real economy as economists call it. And it is the real economy effect that really matters at the end of the day. The Housing Market would be one. And other interest sensitive markets, just including general consumer activity. As i remember the period in september prior to the decision to not go forward with a tapering move, the jobs numbers had weakened. We could see the fiscal deliberations in congress coming. And so there was some concern about whether the jump in Interest Rates was really going to have an influence on the recovery of the housing sector. All of those things, at least, i took into consideration. Tom fanning earlier was talking about event risk. Well, certainly looking forward to october and the resolution of the fiscal questions in congress begin to look like a clear example of an event risk. So i think the decision to hold off has been vindicated, really, by what has developed and event risk may be with us again in january. All right. President lockhart, we want to thank you very much for joining us today. We appreciate your time and we hope to see you again soon. Thank you, becky. Okay. There wasnt a sole soul behind him in atlanta. I thought that was still photograph. Oh, was that a still photo . I think it was a still photo. I didnt see a living soul. When we come back, were going to talk about whether obama care is killing employersponsored Health Insurance. Home depot and ge are just a few dropping their plans for employees. Now a second wave of cancellations could be headed our way. You need a permit. To be this awesome. 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. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. We are squawking about the business of booze this morning. The warm rays of summer may be long gone, but in the winter, its nice to get a nice craft beer. Its still the season for drinking beer. And after the success of its summer shandy, irish guys, right . Yeah. Looking to boost sales with a variety of fresh fall and winter flavors. Were joined with the brothers jake and is president and ceo of the company, jacob see, they make me keep saying this, andrew. Can you imagine . Which was a Family Business and a craft beer maker which is a tough decision to make in the first place. Has it paid off . Been good . Absolutely. Excellent partner, 25 years now and for a lot of reasons our family decided to go with back then, the second largest brewer in the country to partner with them so they could learn about being more creative and innovative about making craft styles of beer from our family. Its been a great success. I love i love beer, but it doesnt love me sometimes in terms of my thats the thing that wears me out. I dont know what to drink. Ive never drank bourbon and hard liquor, i dont know about that. Now im drinking white wine and i dont really feel, you know, like you drink white wine . Yeah. Its hard to order white wine for me and i kind of hide. I like beer. I like beer, but it just adds to my problems. One of the things you have to do is always enjoy beer in a glass. Pour it vigorously in the glass you release the carbon dioxide, you get rid of the gas, the beer adds more flavor when its enjoyed in a glass. The other thing, by the way, youre not supposed to drink the beer cold. What ive said is ive used bottles cold. Right. Big difference. Try to drink it around 45 to 55 degrees, which is a little bit warmer than ice cold. But youll get more flavor, the aromas will be terrific and our styles of beer, we make a wide variety, theyre all different. The first six go down so smooth that, you know, then im on god bless you. The other thing we always say at our club is were always in search of the perfect beer. We hope we never find it. Yeah. And its fun to see how you come up with innovations around taste. Tell us about it. This is shandy and you talked about summer shandy, the explosive style of beer weve been able to make and take nationally for the first time this past year. Its been a huge success. This is the fall version of summer shandy, which summer shandy is lemonade and beer. How would you describe this . Its not sweet. Its a little bit more tart, its very bright flavor, citrus flavor and people are absolutely loving it. Yeah, sold twice as much as what we expected. And then for the big beer drinkers, youd love this because its got a lot of dark, rich malts with it. With a little vanilla. And its absolutely done with real vanilla bean which imparts the flavor. Its absolutely wonderful for the holidays. Give us a cutoff on what we can accept from people. How cold are one of these things . You should try one. If youre going to have that, try the heres the thing, though. Thank you. Andrew this is good. Yeah. You and i can drink together now. Just the girls. Thank you, cheers. My bottles are gone now. Coming up, Richard Branson on the stage of his Global Business and the economy when we come back. Honestly . No way did i think a tablet was gonna be a good deal. Youre talking to the guy who hasnt approved a new stapler purchase in three years. But then i saw the new windows tablet, with a real keyboard, usb port, and full office. Its a tablet that works for work. Plus, its got apps and games, for after hours, of course. Compared to an ipad way more value. These tablets are such a steal; i couldnt find a reason not to buy them. Honestly, i wanna see you be brave at bny mellon, our business is investments. I couldnt find a reason not to buy them. Managing them, moving them, making them work. We oversee 20 of the worlds financial assets. And that gives us scale and insight no one else has. Investment management combined with investment servicing. Bringing the power of investments to peoples lives. Invested in the world. Bny mellon. Afghanistan in 2009. On the u. S. S. Saratoga in 1982. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation because it offers a superior level of protection and because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. Think your companys Health Insurance plan is safe . Well, a new study says as many as 100 million small and Large Business policies could be canceled next year. Find out where the cuts could hit hardest. Goldmans bond guru expecting job growth in the near future. Calling it the housing handoff. How to prepare your portfolio. Sir Richard Branson joining us to talk about the future of space flight and more. Catching fire, the second installment in the hunger game series expected to be a big draw at the box office this weekend. The third hour of squawk box begins right now. Welcome back to squawk box on cnbc, first in business worldwide. Im joe kernan along with becky quick and andrew, my good sport, because the wine cooler jokes go all the way back to faber, 17, 18 years. I know. If youre in manhattan, im going to say you drink wine coolers. And you drink white wine. I go, make it two of those. I prefer chilled zima. Has to be chilled. Our guest host this morning, definitely, i can tell you are a beer drinker. Hes like a bourbon drinker. Im democratic with my desires. When they took it away, i saw you reach for it. Im not proud of it. What are you going to do . More from tom still ahead. And he drinks because he knows the entire grid could go down at any second from a solar flare which he admitted earlier. First becky has your morning headlines. Were going to start things off with the markets. The u. S. Equity futures today have barely budged but thats because after yesterday, we did see a triple digit gain to the first close. The s p 500 has jumped 26 , you have seen incredibly big moves. Okay. And weve got Corporate News, as well. Charter communications reportedly close to completing a funding deal to make aed by for Time Warner Cable. Its close to completion, but it isnt clear which banks might be participating or if a formal bid will be made for Time Warner Cable. That stock has run in anticipati anticipation, i would argue at some rate that a deal is coming. Also, the console wars are officially underway with the launch of Microsofts Xbox one. You going to get one . Yes, both. Youre going to get both. Gamers in more than a dozen countries started snapping up the console at midnight. The predecessor, the xbox 360 was the top selling console in north america. But sony reported strong sales in the ps4 debut that happened last week. Check out shares of sony and microsoft over the past year, and sony cutting 250 million from the entertainment business yesterday. Some people giving some credit to dan loeb, the activist investor. We were talking about activists and what all that means. And a new report analyzing the impact of obama care is estimating that somewhere between 50 and 100 million jobs im sorry, policies could end up being canceled with small to medium sized businesses when its all said and done. Here now to explain it, the resident scholar at the aei who conducted the analysis. Stan, i mentioned that report to someone yesterday who said that was it was vastly overstated. Can you make the case . Are you talking about the certain amount of time. Isnt it a year . A lot of these policies come due at the small to medium sized companies. They wont be in compliance with obama care. Next year. Is it one year . Its in the coming year. So, look, the administration talking point has been that only 5 Million People are affected and will see the current policies change. Only . Yeah. Which is, you know even though they say, hey, we had 26,000 sign up, like thats a good number. Yeah, exactly. But only 5 million will lose their right. Exactly. Theyve gone to saying, no, if you like your plan, you can keep it to saying, well, look, its only millions and millions of people. The point ive tried to make is that its not its not thats not even true. Its not just millions and millions of people. Its tens of millions of people. Theres a lot of people in the Small Group Market who will see their plans be canceled or changed over the coming year because their plans even though they predate the law will no longer have grandfather status. And a lot of the new Minimal Essential benefits and theyll be subject to community ratings. And even in the large group market, of course, plans will be subject to new taxes, like the reinsurance tax and things like that. Couldnt Companies Just say, okay, what do we need to do . We want to keep it. To coming to compliance. Isnt it possible on the exchanges that some of the plants could be the same price and they would come into compliance and thered be no reason . Its possible. Of course, 100 million individuals affected is the very high end of the estimate. It depends on, you know, how material does it change have to be to qualify as a cancellation. But it certainly, right, you go on to the Small Business exchanges. Its a bit of a lottery whether you have, whether youll see plans that are similar to what you had, how the Provider Networks are different. And, especially, i think, for firms that have relatively young and healthy workers. Theyll see plans that are much more expensive than the ones that were able to at this point, how much cheaper would it be for these companies. They need to pay a penalty if they get rid of their plans . How much would the plants have to go up to where theyd say, hey, im paying the penalty and you go on the exchange . Well, itll vary from firm to firm, of course. Therell be i think a more attractive option for firms that have relatively low pay. Young workers, maybe construction firms and things like that. But i think a lot of firms, i think, in the end, are competing for especially more innovative firms with high skilled workers are directly competing with large firms that arent faced with as many of these problems. And they will try and continue to offer health plans. And this will make it harder for them to compete for talent. Is it a bad thing if a person who has an employer plan thats not that great. Is it a bad thing if they end up in a really good plan on one of the exchanges at an affordable price . Well, i think what is a bad thing is that they are not given the option to choose for themselves. Its obviously very subjective what a bad plan is. Do i need a plan that covers me for acupuncture and Maternity Care . Not really. I think in the ideal situation you give people the chance to choose. Although, stan, right now if you are covered by a big employer, you are covered for maternity and you are paying for that. No matter what. For sure. And thats how it works and makes Maternity Care more affordable. Oh, of course. And if the Large Employer wants to Fund Maternity wants to have all the employees to pay for Maternity Care to make the total benefit packages that it offers more attractive to the employees, then thats fine. What im just saying is, you know, you go from a situation with people who have plans and the administration promised them theyd be able to keep those plans. Now they arent and theyre clear winners and losers and its not true that only 5 Million People in the individual market are affected as lots and lots of people with employerprovided insurance who will see their plans disappear or change materially. Whats scary is if you remember when they were trying to pass obama care, theyd take one example of someone that had a preexisting condition. And that can go you get so many mileage out of look when you do the personal story of this person that was affected by not having insurance. If you went to every one of those 5 Million People, this is going to get really ugly for people that are mad. Youre going to be able to find people in every state that are willing to go on record saying this is what happened to me and my plan was canceled. I dont see how you if its 5 million there and even if its only 20 million more based on yeah, seriously. I dont see how the pr battle gets won. Especially because a lot of this will materialize in the runup to the midterm elections. To november, i know. No, i agree. Well, you know, its fun i wish everything i do wish everybody could get Great Health Care and everyone was covered. But being in the News Business is going to be interesting for the next 12 months. Thats for sure. And, apparently, andrew, zima is such pajoritive, not even andrew should be labeled. I dont know if they make it anymore. It is unfortunate. Its unfortunate . Thank you. Thank you. Appreciate that. It is unfortunate that you drink zima. On monday, were going to talk to the white hat hacker. This is another thing. The security vulnerabilities of the obama care website and advised congress to scrap the site and start over. David kennedy. This is another one. We had one on here yesterday. The whole thing is a mess. Coming up, hes been called goldmans bond guru. Going to join us next. He overseas more than 575 billion in assets. Hell explain how we could see job growth thanks to the housing handoff. And later, sir Richard Branson will talk to us about the future of space flight. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. They always have. They always will. Thats why you take charge of your future. Your retirement. Ameriprise advisors can help you like theyve helped millions of others. Listening, planning, working one on one. To help you retire your way. With confidence. Thats what Ameriprise Financial does. Thats what they can do with you. Ameriprise financial. More within reach. Customer erin swensonan do ordebut they didnt fit. Line customers not happy, im not happy. Sales go down, im not happy. Merch comes back, im not happy. Use ups. They make returns easy. Unhappy customer becomes happy customer. Then, repeat customer. Easy returns, im happy. Repeat customers, im happy. Sales go up, im happy. I ordered another pair. Im happy. both im happy. Im happy. Happy. Happy. Happy. Happy. Happy happy. I love logistics. Welcome back to squawk box, everyone. Equities may be on fire with the dow closing above 16,000 yesterday. Lets take a look at how fixed income and the credit markets are performing. Joining us onset is john biner, cio and cohead of fixed income. He overseas more than 570 billion in assets. And jonathan, weve been talking about what it means for the fed. What its going to mean for the tenyear, bond prices overall. Dont you think this is going to be something that can slide into easily if they start tapering . Or is the market going to have a severe reaction . Well, i think the actual tapering itself may not cause a severe reaction. Im really hoping theyre going to do it soon so we can stop saying the word taper. I would say the market is ready for a reduction in the asset purchases. I think the market is a little bit on edge, though. Because in some sense the feds been the biggest buyer of fixed income instruments for a while now. So investors are not sure of the price they see on the screen. Is that the real price . Right. Once the fed starts to step away, you know, where are we going to settle out . Its going to be interesting. What do you think . Is it creating a big distortion in prices right now . Well, we do think that Interest Rates are likely to continue to go higher. Its a combination of positive Economic Growth view. And the fed through qe has been successful in keeping longer term Interest Rates lower than they would otherwise be. We do think were going to key seeing rates go higher in the long end. Where would the tenyear go . They would say they were going to start tapering, start pulling a little bit back. Well, i think its a combination of that and the data beginning to be stronger. Just them coming out and saying were going to taper, i think youre going to see pressure there. We could see that on the tenyear some time soon and could see a 4 rate some time before the end of next year. Sounds like they decided to go out with that. To try to prevent the tenyear from going up when it happens. Its almost like they consciously said, hey, listen we have to coordinate this. I think they did. Everybody says that. They all say the same thing. You heard from lockhart, too, who said the economy is ready. Thats the thing. They directly control the short rate, theyve essentially controlled the longer term rates through qe but dont want to stick with that policy. So theyre in a bind. Theyre trying to keep longer term rates low for longer but its going to be tough for them to do that. I found it notable i heard words like large unknowns, risk, experiment, hunch, those are words that dont give investors a lot of comfort. All right. What got me is that we dont see anything. We have no idea what were looking for but we dont see any signs this is going to be a problem to unwind. But we wouldnt know what the signs were anyway. Well, he did say he went on his gut, though. The idea that bigger is harder, were in uncharted territory. It was an interesting conversation. Weve been talking with tom fanning, our guest host and he was talking about how he sees the economy growing but at a slower than expected rate. I wonder how that plays out, where youre trying to decide where to put your money. Sure, its something were always focusing on and trying to figure out where we are in the economy, where do we see growth going . Inflation going and so on. Look, we actually weve been in a period since the recession of this very sort of bumping around the bottom, 2 , weve sort of gotten used to this 1 , 2 gdp levels. We feel pretty confident, though, this is it, the time we start to accelerate. Not into a boom, but something that may feel like a boom. Something like 3 , 3. 5 gdp starting in 2014. Its a big part of that. Not that were going to see big price gains. Weve seen, actually, pretty big price gains in home prices. But we actually think were going to start putting construction workers back to work. We way overbuilt then we way underbuilt and now we think were going back to an equilibri equilibrium. Yeah, weve been seeing a resurgence and then a pullback, resurgence and pullback. And the rate of growth has been roughly half of what we thought it would be. It is accelerating, but theres so much uncertainty out in the market. So much event risk that youre creating a fundamental for businesses that will create a sustainable Economic Growth rate to not show up. So long as theres that much uncertainty, people wont commit to longterm growth. Thats my worry. I hope youre right. And i think youre right. In fact, i think the uncertainty has caused such anemic growth over the last few years. Companies have been sitting on cash, cash has been piling up on Balance Sheets, but were starting to see that uncertainty to some extent go to the wayside. I think the ending of qe, i think, actually, theres uncertainty now, but i think once we get beyond that, i think thats another thing to get past. Weve had elections, weve had fiscal issues, you know, some of that has calmed down. So we do think combination of a less uncertainty and, you know, a lot of money sitting on Balance Sheets that basically needs to get put into the real economy and earning zero right now probably going to earn zero for another couple years, we think its going to happen this year into next. I know this is not your topic, but goldman just came out with a big call on gold. Did you see this . I did not. Then i wont go there. I wasnt going to answer the question anyway. Joe was saying its a big company. You have a big call on gold going up and now on gold going down. Were you involved in that deal . No idea what youre talking about. Just wondered. Bonds have a sort of implicit sometimes relationship. One last question for you, have you seen, weve been waiting for this great rotation out of bonds into stocks, have you seen that . What kind of moneys going into bonds right now and what do you hear from your clients . Well, its interesting, i think youre starting to see it. Youre seeing some, weve seen flows into equities, havent seen in a while. But its interesting within the bond market, theres a great rotation within fixed income. More core bonds, taxable bonds, highquality tax exempt bonds which you think about what drives the returns. Its income. But those coupon rates are very, very low right now. And its price appreciation or depreciation. When rates go higher, you see prices going down. Weve seen negative rates of return and those highquality bonds and longterm bonds this year. You start to see people moving away from the traditional and more towards the untraditional. People buying floating rate securities, Bank Loan Funds have been popular, maybe too popular, we do like the asset class. But theres been tremendous flows there because you have rates that are going to float as Interest Rates go higher. And a big one for us and across the industry has been the socalled unconstrained bond fund. What these really are portfolios that dont focus on buying high quality longterm government bonds, they go across the entire Global Fixed Income universe. They tend to use strategies to mitigate Interest Rate risks. Even if they go up, these funds dont necessarily get hurt. We use hedging strategies to try to essentially cause fixed rate bonds to turn into floating rate bonds and they could be really opportunistic. So when theres sellers in the market, these funds can actually come in because theyre not tied to a particular index. They can come in and generate a better return. So going much more flexible and hedging a lot of that Interest Rate risk is really what investors are focused on. Are you credit sensitive there . Yeah. So the thing is, these are not money market funds, theyre not earning zero, which is good. But they also have to take some risk. What were saying is dont load up on taking longterm Interest Rate risk. Take other types of risks. Its some currency, its some credit, its some emerging market exposure. Taking advantage of the distress in the muni market lately. Its risk. There is risk there youre trying to achieve a pretty attractive income stream and total return. But its different kinds of risk. A great diversifier to what a typical allocation, a bond portfolio, which is essentially buying highquality longterm bods bonds and sort of sitting on them. That strategy may not work over the next few years. Thank you for coming in. Thank you for having me. Just moments ago, virgin Group Chairman sir Richard Branson tweeted the following, said, want to spend your big coins . How about a ticket to space . Well discuss live o on squawkcnbc. Hell join us in about ten minutes. [ male announcer ] once, there was a man who found a magic seashell. It told him what was happening on the Trading Floor in real time. The shell brought him great fame. But then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their Trading Platform. [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a. Shell. Get live squawks right in your Trading Platform with think or swim from td ameritrade. Okay, who helps you focus on your recovery . Yo, yo, yo. Aflac. Wow. [ under his breath ] that was horrible. Pays you cash when youre sick or hurt . [ japanese accent ] aflac. Love it. [ under his breath ] hate it. Helps you focus on getting back to normal . [ as a Southern Belle ] aflac. [ as a cowboy ] aflac. [ sassily ] aflac. Uh huh. [ under his breath ] i am so fired. Youre on in 5, duck. [ male announcer ] when youre sick or hurt, aflac pays you cash. Find out more at aflac. Com. Welcome back to squawk box, everyone. Federal regulators are considering whether to allow airplane passengers to use their cell phones and calls. For calls and Text Messages during flights. This is an announcement by the fcc. It sets up a debate over technical and social implications. Guys, we were talking about this earlier. Those technical considerations are one issue, the social ones are a very different one because the question again becomes, do you want to listen to people talking the entire plane ride when youre trapped and cant escape. Andrew and joe, i think you felt like i did about that. Yes. Yes, we did. And we we dont disagree on a lot of things, do we . No, but a lot of times well have a different take on a story, kind of bring a different opinion. This one, were all in cahoots on. We both like white wine, chardonnay and zima. And this is the next question and i guess theyve figured out, look, itd be really tough for flight attendants. Flight attendants, i think their union came out and is going to be opposed to this. Theyre going to have to police all this and its difficult in the airs right now. How is so you can do it in the air . You dont need cell phone towers . Because you run off of wifi. I think theyre going to find a way so youre not going tower to tower, but i dont know every plane is equipped for that. To do that in coach. And most of the planes they added an extra seat per row. You have more people talking. In new york city, they dont allow you to do it in the subways. Having said all this, i would love if i could be the one talking and staying connected to work. He is an original squawk box icon and rebel, sir Richard Branson tweeting the bit coins could buy you a trip to space. Hell join us in a few minutes to explain. This week squawk box is live with your top bands of all time. See which viewers made the cut. On the need to fix our broken immigration system, there are signs both Political Parties in washington get it washington is lagging behind the country on this. This issue has been around far too long. And yet, we wait. Reforming our immigration system would dramatically reduce our nations debt. Grow the economy by 5. 4 . And take bold steps to secure our borders. On this, both parties say they agree democrats. We are very very strongly in favor of moving immigration reform. And republicans. We do want to make some progress in reforming our broken immigration system. And yet, we wait. Amicans are tired of empty rhetoric. It is time for every leader to come through on their promise. And fix our broken immigration system Tell Congress the time is now. Fix americas broken immigration system. Welcome back to squawk box. Lets look at some stock to watch in todays trading. Petsmart reported Third Quarter profit of 88 Cents Per Share, 2 cents above estimates. Revenue, however, was slightly below consensus and below analyst forecasts. Also, take a look at footlocker, beating estimates by 2 cents, revenue also beat consensus, footlocker, 4. 1 increase in samestore sales was better than the 3. 5 average analysts had estimated. Comps. Easier. Better phrase, yes. And then United Continental was upgraded to buy from neutral at goldman sachs. Goldman says the airline is in a position to post outsized earnings and growth in 2014. And specialty grocer, the fresh marketer earned 23 Cents Per Share in the fourth quarter. Sales were also below forecast and the company cut its fullyear forecast for the second time. Catching fire already off to a massive start. How big will it be . And what does it mean for the studio behind it . Julia boorstin joins us onset. I cant wait, i have tickets to go tonight. I saw it monday and i thought it was good. I really enjoyed it. Its already well on its way to setting some new records. It could be the biggest non3d Opening Weekend projected to hit as much as 175 million even in the u. S. This weekend. Now, 175 million would make it the second biggest Opening Weekend of all time. Fant fandango says its top selling of the year with 90 of all this weeks ticket sales and we dont have midnight sales yet. But analysts are expecting more than 30 million from last nights u. S. Box office. Now, overseas, the films expected to bring in more than 400 million over its run where it will benefit from a bigger fan base for jennifer lawrence, the star of the film, as well as bigger fan base just for the franchise as a whole and the books theyre based on. Now lions gate has been wise to extend the successful franchise. Its splitting the third and final book and series into two films. Really. I didnt know that. And the final film is hitting theaters in november of 2015. The big question, what then . Its recent enders game film was fine, but wont spawn a successful franchise the size of hunger games or twilight. Warns of a potential earnings cliff coming up in the fiscal 2017 when the hunger games franchise wraps up. The question is, can the studio parlay the success of twilight and hunger games to consistent success with young adult films. Earlier this week, Michael Burns came on the air and remarked that the rest of the studio is on the rise. Were not just a onetrick pony. Weve got an enormous library, our Television Business is doing great. We have a new show were kicking off with hulu, orange is the new black is doing great for netflix. The hunger games this weekend, the more powerful lions gate brand will be to launch new franchises down the line. Youre seeing it tonight, becky . Yeah, the kids are dying to see it. We bought tickets long in advance. The first time around, you were kind of opposed to this because people were killing each other. Well, i found the first film somewhat appalling. The first film was about kids killing kids. I wasnt that big of a fan. She won, didnt she . Theyve got its kids killing kids. Its a twist because theres also this entire trying to keep the man down and her being the symbol of the whole thing. Theres a lot of different layers. You said it was the second if you say it was the the first one will be the avengers. This will be the biggest non 3d of all time. What was the biggest . The avengers. Whats that . A big marvel film. Heres the the hulk and 2d films, tickets arent as expensive. So this would be the biggest 2d opening and the second biggest of all time. I thought i l bought 3d tickets. Its on imax but not 3d. Yeah. The hobbit they did three, they split the last one to do two. Thats tricky, isnt it . Theyre smart. Leverage it a little bit. Thank you, julia. Richard branson making news this morning tweeting. Explaining why hes getting behind the alternative currency. Back with richard in a moment. In a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Welcome back to squawk box. Were going to speak to Virgin Group Founder Richard Branson in a minute. But in the meantime, lets get back to our guest host tom fanning, ceo of Southern Company. Wecht talked about we havent talked about obama care in a real way with you. Were talking about these other issues. But has it actually impacted your business in any way . Well, it absolutely is impacting everybodys business, right . When you look at whats going on right now, its a disaster, okay. And, in fact, im so sympathetic, i think, to the problems theyre having. I had 15 different jobs at Southern Company in my 15 years there. One of them i was cio. And we all know that means career is over. The challenges these guys face in putting these big complex systems is enormous. And if you think youre going to get the thing solved by the end of november, you know, i think thats a pipe dream. So this is going to be something in my opinion thats going to go on for a long time. So, the problem remains, what are we going to do about kind of health care . You cant solve the problem of americas longterm financial integrity without dealing with all of these issues, health care being one of them. Were seeing 8 cost increases. So we clearly need to do something. Is this comprehensive change the right way to go . Not for southern, not right now. It was interesting, i had another ceo talk to me about this. And he has we have 26,000 people, he had over 100,000 people. And his comment was any ceo that doesnt push their employees into the single payer system and let america subsidize them should be fired. Well, i just dont believe that. You know. My company, Southern Companys not run by a spread sheet. The ability to attract and retain people and something as critical as health care for the deep technical talent that we need to make, move and sell electricity is a really critical strategic issue. Its not a spread sheet kind of issue. So, of course, there are really good things that come out of the notion of Broader Health care, but there are ways i think to get there. So how is it impacting us today . We are simplifying, streamlining our offerings. We are looking at ways weve adopted a lot of the features of the Affordable Care act right now covering preexisting conditions, portability, 26yearold all that kind of thing. So theres i think a glide path were going to have to adopt going into the future. No, i was thinking the other day, we were having another discussion where people argue what has caused Health Care Inflation to subside over the last couple of years. The recessions a big one. Some people say recession, other people say obama cares already working to hold down costs. And i finally realized since obama care basically caused the recession, it did hold down costs. Its not an argument anymore. Not causing the recession, but causing it to remain. Causing it to remain weak. Weak. See how i brought all sides together . Always. Yes, it is obama care. Listen the Affordable Care act isnt going to solve that. But isnt the question is, is the shortterm pain for a longterm gain . The longterm and i imagine if you were to talk to people in the obama administration, they would suggest to you their thought is theyre going to lower costs for everybody that ultimately maybe they do move to a single payer and more Companies Move people off and thats better for the economy. Thats the argument thats made in certain circles, right . We believe health care is a huge differentiator on being able to attract and retain people. And i think weve been able to demonstrate yearoveryear over year, this is a huge benefit. And it makes a lot of sense to and we can always improve. And theres obvious dominant solutions to improve this issue. Like one is, we need a much more informed consumer. And its andrew you think you compete on your Health Care Plan . Sure, part of it. Part of it is a pension plan and everything. Absolutely. If someone even with young people. If i worked for a company that said, hey, fatty, if you want to get a discount on your Life Insurance or this insurance, youve got to do things to get in better shape. If the government tells me that, but if the company i work for, youre perfectly entitled to induce me to a more healthy lifestyle. I feel like, no, im going to have two big gulps if i want. Then its your choice. And im at a company. When its coming from the private sector. Weve experimented with those ideas. You raise the premiums to everybody and give discounts to the the people with the right behavior. Dont smoke, dont this issue of the more informed consumer is really an important issue. I wish there was a way. When you go to your doctors office, they say well bill your Insurance Agency and let you know how much it costs. Its crazy. Were going to put a quick pause on this conversation if you could only because our connection to mr. Branson has been met. Here we are. We should tell you that Virtual Currency bitcoin has a new backer this morning making news right here on squawk box. Sir Richard Branson tweeting moments ago that Virgin Galactic is accepting bitcoin. And founder and chairman of the virgin group. Sir richard, thank you for joining us. Thank you. Why accept bitcoins . Why not . Its a currency that a new currency, new, exciting currency. Im also invested in a great, exciting new payment process. There are a lot of people who got into bitcoin quite early on who made quite a lot of money and are all interested in going to space. Virgin galactic is a bold, entrepreneurial technology. Its driving a revolution and bitcoin is doing just the same when it comes to inventing a new currency that, you know, well have to see how it goes. Theres a lot of people who have done very well. It occurs to me that bitcoin or the value of bitcoin has been volatile. Its gone up and down in a very meaningful way. Even over the past couple of months. When you accept bitcoin, i dont know when your first flight is going up. You dont know what its going to be you just sold it you just sold a ticket using bitcoin, but do you know how much the value of that ticket is going to be worth to you one way or the other . Yeah. The first ticket we sold was literally today, which was to hawaii, who made quite a lot of money by getting into bitcoin early on. As shes paid us in bitcoin, we transferred that money, actually, into dollars so if she ever, you know, a fixed price we can actually pay her the money back if she changes her mind about going to space in a few months time in dollars at the time she paid it. So, you know, theres not a lot of risks for us as a company taking bitcoin. And i think its, you know, its fascinating to watch what happened with bitcoin. I think congress has been spending a week looking at it. They might bring in some regulation. I hope it doesnt stifle the innovation of new technologies like bitcoin. Youre an investor in bitcoin. What is it you see about bitcoin . Some people suggest the success means that the dollar ultimately has to fail, for example. That this is the equivalent of buying gold. Well, i i wouldnt want to risk saying publicly that its the equivalent of buying gold. I think the fact that theres a limit going to be a limited number of bitcoins out there and itll ultimately be capped, you know, unlike normal currencies where governments can print more currencies, it gives it a sense of security. But obviously there are risks involved in new ventures like this. It has been only going a year. It soared up in value. Theres been spikes and lows. But i think one day it will settle at a price that, you know, i personally believe higher than the price it is at today. Do you see a day where youre not transferring . Its funny, when you said you were transferring the bitcoins into dollars, it made me think its really not the future of bitcoin. How far are we away from a time when you wouldnt be transferring those bitcoins into dollars . Well, you know, if we if we didnt have to give brief up to three months before the person flies, you know, we wo d would we could keep it in bitcoins and we could take a risk. But wed rather, you know ive invested in bitcoins, im holding on to bitcoins and i can afford to take a risk with my own personal money in it. Virgin galactic, weve got other shells and what price did you get into bitcoin at, by the way . A while ago. I think anyone who got in early on has done very well. But the people who bought last week have done well. Right. Its and how many bitcoins does it take to get to space on a Virgin Galactic flight . Its a very good question. But if you could its we convert back to dollars. If you convert 250,000 into bitcoins. The bitcoin is going up in value pretty quickly. Not many bitcoins to go to space these days. Richard, weve been talking about this proposal to allow passengers to talk on their cell phones while theyre in flight. What do you think about that . We were a little concerned about the idea of having an entire cabin full of people all chatting away at the same time and being trapped there with them. Well, look, its been bizarre youve had to turn your phones off in the past when, i think, as the Airline Owners we know that the regulators know its not an issue for safety. I think whats likely to happen if youll have talking cabins like you used to have smoking in the cabins where people can talk and quiet cabins where people can sleep and not talk and thats the kind of thing were looking at doing and introducing in the various Virgin Airlines around the world. Do we pay more for the seats in the talking cabins or more for the seats in the nontalking cabins . On virgin you pay the same price on each seat. I imagine you might have seen the news. Singapore air, which i know is in business with virgin is doing its last night from new york to singapore directly. Its an 18 1 2 hour flight. The longest flight in history. And its apparently no longer a viable business. And i wonder what that portends for other long haul flights. Well, look, i think the exciting thing with Virgin Galactic is were building were doing that for a purpose. And that is Virgin Galactic, we would like to do new york to singapore in one hour traveling around the world at 26,000 miles an hour. That will happen hopefully in my lifetime, it will definitely happen in my childrens lifetime and say maybe Singapore Airlines has seen the writing on the wall and is getting ready for our Virgin Galactic flights. That will be the future and it will be incredibly exciting. Youre still doing this, even after you saw gravity . Ive got a funny feeling when your friends start arriving there in one hour, youre still at the airport waiting to take off. Richard, real quick before you go, i dont know if its right behind you right now but the great house on your island, i know you just rebuilt it. There was the fire, we talked about it about a year ago when it happened and i had the Great Fortune of actually seeing the old house. Whats is look like . It is right behind me. Its rebuilt, its beautiful. Weve actually got [ inaudible ]. We should do the show from there. Come and do the show from here. All right you got a deal. Sir Richard Branson, thank you for joining us this morning. Save that tape there. We got an invitation. Its real. Was that an invite . That was a real invitation. Bona fide. Bona fide. Thats the word ive been looking for. Weve been sitting next to each other for a while now. We finish each others sentences. Thats exactly the word i was looking for. Coming up, your list of stocks to watch. Is today friday . It is. Thats so good. Tem, there are signs both Political Parties in washington get it washington is lagging behind the country on this. This issue has been around far too long. And yet, we wait. Reforming our immigration system would dramatically reduce our nations debt. Grow the economy by 5. 4 . And take bold steps to secure our borders. On this, both parties say they agree democrats. We are very very strongly in favor of moving immigration reform. And republicans. We do want to make some progress in reforming our broken immigration system. And yet, we wait. Amicans are tired of empty rhetoric. It is time for every leader to come through on their promise. And fix our broken immigration system Tell Congress the time is now. Fix americas broken immigration system. A lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Lets get done to the new york stock exchange. Jim cramer joins us now. We like to get substantive stuff out of you, jim. Theres not that much happening. Youve seen gravity. Are you going up in one of bransons things . No. I did fly virgin out of san francisco. It was just such a pleasure. Really . Yeah. Pilot jeff came out to me, bought a lot of Kinder Morgan on my recommendation, talked about where he got in and the situation. Just a terrific guy, terrific plane ride. If all you do is accept bitcoin and turn it into dollars as quickly as you can to make sure you dont have currency risk, is that a currency . The government didnt shut it down. I thought one of our arms of government would say this is a Money Laundering thing, we dont want to do it. This a terrific way if youre a bad guy to money launder. The government is not showing any foresight here. Its a shame because im sure if you got ben bernanke in a room, he would say this is a real bad idea. Whats the game this week . There isnt one, is there . Well i meant college. Sunday night is unbelievable we have that, the pats. A giant redskin game, they should flex that. Thats going to be like 30 million. Its going to be our biggest game of the year. A little more tom fanning before we end the day. Back in just a moment. Customer erin swenson ordered shoes from us online but they didnt fit. Customers not happy, im not happy. Sales go down, im not happy. Merch comes back, im not happy. Use ups. They make returns easy. Unhappy customer becomes happy customer. Then, repeat customer. Easy returns, im happy. Repeat customers, im happy. Sales go up, im happy. I ordered another pair. Im happy. both im happy. Im happy. Happy. Happy. Happy. Happy. Happy happy. I love logistics. Okay, who helps you focus on your recovery . Yo, yo, yo. Aflac. Wow. [ under his breath ] that was horrible. Pays you cash when youre sick or hurt . [ japanese accent ] aflac. Love it. [ under his breath ] hate it. Helps you focus on getting back to normal . [ as a Southern Belle ] aflac. [ as a cowboy ] aflac. [ sassily ] aflac. Uh huh. [ under his breath ] i am so fired. Youre on in 5, duck. [ male announcer ] when youre sick or hurt, aflac pays you cash. Find out more at aflac. Com. Welcome back. Our guest host today, tom fanning, gets the last word. Last thought . Were talking about the economy, and Affordable Care act and innovation and all this stuff going on, its fascinating that slow growth ran the economy, unacceptably high unemployment. Now it seems people are starting to doubt and its time for business to step forward. Have a great weekend, everybody. See you on monday. Squawk on the street starts now. We work hard, play hard, work hard good friday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the new york stock exchange. The dow did close about 16,000 yesterday, wants to add a little bit more. We wait for bill ackman to renew his attack on herbalife today