Transcripts For CNBC Squawk Box 20131126

Later, the Consumer Confidence number is released for september. We were originally speccing Housing Starts at 8 30 eastern today. Permits will hit the tape, but the government is delaying the starts and completions again. They are still blaming the shutdown for this. The Commerce Department now plans to share that information on december 18th. We go from the economy to earnings. This mornings horts include hormel, tiffanys, and barns noble. Also, other market related news, takeover premiums are shrink to go historic lows. The wall street journal reports more than 9300 deals and so far this year the average premium has only by 19 of a target the week before. That compares to a historic average of 30 . Among those factor tos are booming economy, a worry Interest Rates will rise. Market vaum is an issue. You have to look in two different places to figure out what that word might be. Beyond the market is the other top story, the severe storm threatening parts of the country. The big mess that hit omaha, arkansas and texas now sweeping across the east coast. Good morning, andrew. This storm has an awful time as were calling it here at the weather channel, winter form boreous. Maybe is the possibility of Severe Weather as we head into today. Meanwhile, a prestorm street, if you will, across the northeast. We have some slight snow ongoing. Thats no the the big problem, though. Boreas gets winding into tomorrow. Today, rain down towards atlanta. Much of the southeast. Thunderstorms there, as well. And then tom, kind of depends how you look at it here. Good news, its not a major snowstorm on the busiest travel day on the year. Bad news, its down into new york city, washington, d. C. , as well. You have to head west to see that cold air get in there and thats where well see icy mixture getting into upstate new york and vermont. Western pennsylvania, some great lakes enhancement, if you will. It is going to stay away from the i95 corridor, so that will make things a little bit better. Timing not great. 3 to 5 inches in that cold air is able to sink into winner form boreous. So, andrew, the thing with this storm isnt that its an unheard of storm. Its that its on this busy travel day. Thank you for that. Its going to miss us. And i still want to know what it does to retail. Oh, no. Youre worried . We didnt see each other yesterday. I became worried about retail. When you get concerned about a news story, its due to courteous detachment. Is that what they say . Courtis detachment. Thats her newest thing after read to go kill a mocking bird, shes always giving me the courteous detachment and i go, ill courteous detachment you. Anyway, the nasdaq for a while, you could overlay it with japan. And suddenly, though, 4,000 . I tried to get back to well, look at the nikkei, though. But you know the name of this building. When was this building built, do you remember . Since weve been here how long . I would say 2003, maybe. No, i think it was before that. 2002 . It was before that. We moved in in 2003. We did . Yeah. Because they started building it during well, they planned it and starting well it during the nasdaq 500 building. Northbound had never built a structure from the ground up to watch. For a while, the nasdaq was going to be a tree that grew to the sky, it made sense. And the stock market wasnt nearly as popular, we used to refer to it as the nasdaq 5, but here we are at 4,000. And a lot of it is social, is it not . A lot of it is linkedin and facebook. Theres pieces, though. If you look at whats really behind that well, microsoft is not back to 80. Amazon is doing well. But the four horsemen never cisco is not back. Theyve never gotten back to the they have never gotten back to any of them. The nasdaq, the ultimate, you know, sort of canary in the coal mine for frovt, but maybe we deserve to be back here. In other news, new jersey gambliing regulators had given okays to offer gambling statewide. The decision came after four days of testing. And gamblers must be within new jersey. The garden state now joins nevada and delaware as the only states offering internet gaming. Well talk more about this story with a gaming analyst in the next hour. Then in retail news, canadas globin mail approached sears to sell its canadian business. But so far, sear has come up independent. And in other industry news, shares of jcpenney got a boost in extended traying, disclosing a purchase of 8. 935 apiece. Obviously now hes more arrested than he was. Reuters is reporting that tool Industrial Packaging segment could fetch about 3 billion. In late september, itp authorized a plan to begin a sale process for the Industrial Packaging segment. Why dont we take a look at the markets again. As we mentioned, there are some modest advances this morning. Right now, the dow futures up by about 12. 5 points. S p futures up by 1. 5. As joe has mentioned, the nasdaq rose above the close. Oil prices also of interest. Yesterday, you did see a big decline initially because of that Iranian Nuclear deal. Some of those declines kind of passed away as we got through the day. People started bringing up skepticism about the deal. Oil prices are up to 94. 46. Natural gas prices have been pushing higher as weve been wrachg this cold weather push across the country. Right now, the tenyear note is yielding 2. 762 . Thats numbers the fed will be watching, as well. The dollar this morning is down across the board. Euro is trading at 1. 355 and the dollar yen is at 101. 45. Gold prices yesterday settled at their lowest settlement since july 8. You can see right now that gold prices are up by about 10. 30. This comes after three le clines after the last four sessions. Right annoy, its time for the Global Markets report. Ross westgate is tanding by if london. Ross, good morning. Good morning to you, becky. A little softer right now for european equities. Were not quite on the session low. Mild losses. 5 to 4 decliners currently outpacing advancers at the moment. We hit the session low around about an hour or so ago in the trade so far today. The ftse 100 yesterday was up some 20 points this morning. Its down 26 points, so wiping out the gains of about a third. The xetra dax still on alltime highs. The cooke 40 is currently down 0. 2 and the ftse mi byis down 0. 2 , as well. Now, i remember the argentinean government confiscated its stays in ypf in 2012. Now it looks like there will be some kind of settlement. We dont know the numbers, but it has given repso will a bit of a boost. Remy cointreau is down 10. 8 based on a profit warn because they had a slow yun in china. Elsewhere, bonds yields have gotten lower as wheelchair gone through the session. Spanish yields, 4. 148 . Well be looking tomorrow towards mr. Berlusconi. He could be finally kicked out of parliament in a full senate vote, but i never know with the former italian prime minister. Thats where we stand in europe. Back to you. Quantro, some people, ross, try to replace triple sec in margaritas. They pry to replace quantro are triple sexx do not do that. Really . Yes. And i went and got some quantro. I dont think ive rch had a room one. If the, if you want the make it, autos hardly any soort. You were explaining some other stuff. The remy is a cognac, which is a choice for thanksgiving . The margarita or the brandie . I make something more fufu for the softer okay, mr. White wine, for you, too . Pomegranate margarita. You do basically the same thing, du and a frozen one . And i do put ice in there and blend it. I will do that for you, but youre talking a virgin margarita, as well, right . Could you make me a Shirley Temple . I dont even have to do it any more. Whats the other one, coke mixed with grenadine, thats the opposite . Cherry coke . No. You do grenadine with sprite, a Shirley Temple. And then you do grenadine with coke, what is that . I dont know that one. Ross is gone. Hes gone. He wants to be gone for this. Roy rogers. Back to blackberry, many are asking if theres a smartphone alternative. One option weve got for you took us by surprise when we return. But first, a little bits of squawk football news. The San Francisco 49ers beating the washington redskins, 276. Colin kaepernick threw for 235 yards, 3 touchdownes and no interceptions. The 49ers improved to 74 for the final nfc wild card berth. Squawk box coming right back after this. Welcome back, everybody. Right now, its time for the executive edge. This is our daily segment focused on giving Business Leaders a leg up. Businesses looking to wean themselves off the blackberry have had few options over the years. But an old tech firm is breathe something new life into corporate mobility. Kayla tousche is here with this story. Kayla, im listening, trying to figure out if there is an option i would take over the blackberry if its not the iphone. Youre our main audience here, becky, because i know you have had a hard time weaning yourself off the blackberry. But companies have long treated it has standard issue. But theyve recently been warming to iphones and androids, even letting employees bring their own devices. Its a trend housed by one startup that show businesses that blackberry is no good. Big banks are doing rogue, ditch i ditchi ditching dwass, paying top dollar for the app that puts apple and Android Devices in good company. We have the large aeft warningest tell care organizations. We want the rest. Employees where data is on a secure twice as good as blackberry. Just as a former citigroup executive. For me, it was sort of a liberation. You need to be able to conduct business no matters where you are. Before her stint on wall street, she worked at motorola, palm and google. Her timing couldnt be better. With the future of its biggest rival blackberry unclear, Good Business is skyrocketing. Weve actually grown our users by 50 within the last three quarters. Theyre not subtle about stealing market share. With webinars, conferences, and full page ads targeting companies to make the leap at what wyatt calls an inflation point. The next step, an ipo. Thess offers, foreher and her team, the outcome is not good. Sthaels have seen a noticeable jump over the last couple of days. Shes finally seeing cios of some of these big Multi National companies coming to her and saying, listen, were not interested in upgrading our blackberrys what are you offering us and how big can you scale this one our company . But i dont understand. Why is it that much biretter th using the apple version or the android version, whatever it is. Especially regulated Industries Like the banking industry, like, you know, washington has kept the blackberrys because of security. The interesting thing to me about good is blackberry has a level two certification, good has a level four certification. So when companies dont want things to be forwarding things to this gmail or texting to their personal phone, they would rather keep it all on a device and be able to make sure that that information is secure. But it works on any device . It works on any device. Its a firly expensive license. Theyre trying to change their pricing model so more employees within an organization can have a license to use it because that saves the skp money. Does it make it et any includekier or is that something you would even notice . You know, it doesnt. I didnt really notice that on the app. I would have it. I would love it if cnbc got this. But i havent experienced it on my own device with pictures, music, a ton of that storage on there. But the thing about good is its not keeping all your information native. I asked her about Cyber Security and thats one thing were going to be talking about later today. One of all these industry owes this one platform, does that make you more susceptible . She said no because we dont store the messages, we just allow the employee to connect to a company server. So i dont think it would make it necessary, but same thing. Its competitors are citrix and a few other startups not as secure as good. Thats why theyve been able to capitalize on this. Another story, the New York Times reports nsa may have penetrated internet cable links that connect cables around the world. Internet cable centers are locked down under heavy security. But the fiber optic cable res said to contain information that is un encrypencrypted and an ea target for interception. Were back to are we okay with this . This creeps me out, not just sail, look, we want to work of in this information, but looking and targeting it sounds as though but theres so many data that the only thing thats interesting is when you see some money wired to yemen. Theres so much data that none of it really will but instead of cooperating with companies and saying, look, help is flag suspicious looking trng transactions, but theyre saying forget it, were going to go spy without even your approval. The amount of data that theyre talking about to be able to organize it and, like, spy on andrew, spy on me, spy on you without it being something that just raises a red flag, theres so much mass data that i dont care if they and im not you know, i do minor stuff. Theres nothing there. I understand that. But the point is, you are using spying technology to capture americans information, spying on American Companies without their approval ig. Now the respects are my question is, have they found another way in . It creams me out. It bothers me at this point. The nsa operates independently. What does your guy do, andrew . Hes a nice guy. Hes not a nasty republican. Im agnostic. I dont care who youre talking about being my guy. Youre my guy. And youre my guy. There you go. Okay. Lets talk about the fda now warning 23 and me to halt sales of its genetic tests because they have not received regulatory clearance. The company 23 and me is backed by google and sells a 99 dna test that it says can provide information about a Persons Health risks. But regulators are worried that certainly false positive could and a false negative could failure to recognize a risk on a this is so ridiculous. Number one, a false negative is better than no information. Youre not going to get any information. You wouldnt do it, otherwise. So youre in the same position if you didnt do it n first place. And no one in their right minds is going to take a mail order test and go and get a mass tmas. Now here we are with more oversight from the fda which has other things to focus on. Andrew and i have both done this. Weve both done it. I think it was like 200 when i did it, about 2 1 2 years ago. I never even looked up the results because i was doing it because i was interviewing ann wojicki who is the founder and ceo of the company. I wanted to do the whole test, but things got crazy. How many x chromosomes did you have . It did not i it didnt specifically say i did it seven years ago when they were prototyping it and they were using tight test people were testing it in java, they were swapping you. And i looked at it to figure out whether i would get alzheimers. And you didnt have any of those markers . I always joked that i could get it early because i have such a bad memory on the show. I could lose my hair. You learn all sorts of things about your family, different cancers you could get, but theres no way i would go and get a surgery or some kind of something i might be more aware of something, and maybe talk to my doctor about it, but thats about as far as it would ever get. And you guys know that the company is keeping a huge debate of all this stuff and adding to the knowledge we have about different did geno type phenomenon and this is all really useful information. We studied a lot about the xxxy, xxyy, its actually pretty interesting because its hard to find actual examples where you can definitively said this pheno type aim from this again it genetic marker. I dont think they can continue to do the tests at this point. But it sound pd like there was paperwork back and forth. Maybe theyve been complying but not as fast as the agency wanted. I wanted to know if theyre being halted what that really means. I dont know. That was not my understand, but there is growing pension. Overreaching here is well, if someone wants their you should be able to get the information. Im worried by the nsa. I have to say, reading this stuff is getting spookier. Well, you know, i want to hear what youre doing, where you think you might get in trouble for doing it. Im worried about our Civil Liberties being eroded. Im worried about Technology Getting better and better. We have a pretty Good Government over here in terms of Civil Liberties. So when they start telling you you can only have one kid, then start worrying about your civil lib terties. When we come back, were going to become back time. Does this tell us something about the Broader Market environment . Blue, how the central bank plays into the skagz. Ready to run your lines . 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. 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Theres a lot of people that arent around. Dont you think . At some point that people do go people that can afford to a lot of times leave around thanksgiving and they might leave around christmas. Are you going anywhere, sorkin . No . Im not going anywhere. Ill go away next week, but ill be here for christmas. But you are going away next week. Thats right. A preholiday holiday. And i know your plans. I like that because it involves the staff. I like that. The house is do you have a chef . I dont know what youre talking about. I dont know what youre talking about. Thats the true sign of the thats the true sign of the caviar economy, when you go to a developing country where you can have like 40 people working for you. I didnt say which developing theres developing countries all over the place. Do you not like the staff never mind. Lets forget it. Theres an upstairs downstairs going on with this thing, right . Have you got your white dinner jacket ready . Hes totally speechless, which is rare. You have to leave at some point, too. And when you do, you should be careful. I will be putting on my own clothes when i go. Im sure he is, too. Im not going to be like this with someone yes, sir. Lets talk about the Federal Reserve. It has still offered few real clues as to when a scaling back of its Bond Buying Program is going to begin, but most agree one key driver will be the feds data dependance. Is that the most effective situation . Joining us now, chief executive at vining starts, craig, i know youre fared up about the position the fed is in right now and the potential risks. What worries you the most . Well, good morning. I think the thing that worries me the most about where the fed is today is that losing credibility and when you look at what theyve done from the beginning of this process, they started with saying theyre going to keep the overnight rates low for an extended period. Then they move to 2013. Then they move to 13, then to 14, then to a 6. 5 Unemployment Rate. How do we affect Forward Guidance . Clearly they have lost confidence in asset purchases and theyre trying to look at what can we do to replace and i think theyre losing credibility by continuing bad forecast. By the time the future policy decisions to those forecasts, its easy to say you guys can say youre not going to raise rates until x and then theyre not going to believe them. How much of this was because they chose not to taper in september . I think a lot of it. Absolutely a lot of it. Theyve cleared forecast to the market through the various methods that they used, that they would be tapering in september. And the ironic part of that when when they announced qe3, they said it would take substantial in the economy. And yet in june, i think its hard to argue there had been substantial improvement. And just one indicator, they had gone from 148,000 to 185,000. I think the real reason is theyre concerned about the risks being created by the Balance Sheet growing to large. And potentially wonder background tefkiveness of the program at this point, too. Absolutely. The efficacy of it is in question. Yet they continue to do it in september. So i think as part of that, the market now looks and if the fed comes out and says were not going to raise rates until 2017, i think the market knows that if the conditions change, theyre willing to change course. I mean, this is an argument against transparency in some in some level. I mean, the fed has said were going to be transparent, were going to tell the market what were doing. And i guess there are some major risks to that idea of transparency. Sure. And you have to look at transparency as two things. First of all, its a policy tool. Clearly, when rates are going down, when youre trying to make the policy more accommodative, you can use it as a tool, especially when youre lost by the zero bound on the overnight rate. It makes it very clear your errors. And by project b it will be 2013 and 14 and 15. Asset purchases are supposed to be done by 7 Unemployment Rate. What is your forecast . If youre watching the jobs number, if youre watching the other numbers that trickle in, are we improving . When do you think theyll start this take placer . I think theres momentum building to start the taper. So i think theres a group on the fed worried about the risks being associated with asset purchases. Theres a group that wants them to be data dependent. So i think theres momentum building to slow. So i think you will start to see them taper. My forecast is the economy continues to grind along at a fairly slow rate, 2 type of growth rate. But that theyre going to have to move to something other than asset purchases to be stimulative. Craig, we want to thank you for joining us today. Appreciate your time coming in. Thank you. We have other headlines for you this morning. This one, we talked a little bit about, but not this piece of it. The eu is accusing the United States now of improperly trolling the citizens online data. The ft reporting that brussels is warning washington that u. S. Tech Companies Risk losing their exemption from privacy rules unless the u. S. Changes the way it treats eu citizens online data. And this is what we this is google, microsoft, everybody who does business in europe, that goes to the larger issue of how much more challenging its going be for u. S. Businesses to do business abroad because of the politics of the moment and whether other countries are going to say, you know what . Were alnxious that youre because youre a u. S. Company that your information is going to be somehow blow over. Cisco tried to say that and then they asked was it material to your results . Oh, no, no. I dont think its material yet, but i think it could be a assuming this becomes a bigger and bigger story. No, no. You saw that they unless you have an incompetent spy agency, youre doing it, too. And then if youre not doing it, then you just feel incompetent. I think the france, uk, im not sure germany and doing it the way you might thing. Germany wouldnt be doing it . I think theres something countries not doing things as aggressive as we are. Germany is morally above us in this issue . I think in a post world war there theyre still a little limited on certain things that they do. I think theres a cultural thing about a lot of this stuff. I wouldnt know. The chinese im sure are doing it like crazy. Anyway, we have a lot more news for you coming up. New jersey gambling regulators have given the okay to six casinos to offer internet gambling statewide. Well talk to wins and losers when squawk box returns. We went out and asked people a simple question how old is the oldest person youve known . We gave people a sticker and had them show us. We learned a lot of us have known someone whos lived well into their 90s. And thats a great thing. But even though were living longer, one thing that hasnt changed much is the official retirement age. The question is how do you make sure you have the money you need to enjoy all of these years. Im a careful investor. When you do what i do, you think about risk. I dont like the ups and downs of the market, but i cant just sit on my cash. I want to be prepared for the long haul. Ishares minimum volatility etfs. Investments designed for a smoother ride. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus, which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. New jersey is permitting online sggambling. Joining us now is harry curtis, from nomura securities. Harry, initially, i dont know, i liken it to being able to watch movies at home, but that doesnt mean no one is going to go to a theater. Its a totally different experience going to a casino, isnt it . You dont need to get in your car. But youre sitting at a computer screen gambling. At least at the casino you can have a couple of cocktailes and its social. If youre in your basement gambling on your computer, how is your selfimage working out for you at that point . It seems a bit desperate to me. My question is is this a huge threat to obviously, some think its a huge threat to ka seennies, right . In the United States, i dont think so. I think in the u. S. A company like sheldon nadelson, mgm, theyre making most of their money iventer nationally. So at this point, its a small piece of their business. How can we make this story something to think about . Number one, andrew, you dont like the idea of people being able to main line something that can be negative to their family by sitting at home, right . Yes. Is there any truth to that to be should we be opening this up for people who cant control them in the first place . I think thats the debate thats going to rage at the state level. And the interesting thing about gambling, particularly in new jersey, because its the first full scale gambling that youll see in the states, and youll see states like connecticut and california and new york watch it carefully. And theyll monitor particularly the tax revenues. And if the tax revenues are high, then theyll be by the we, if tax revenue res high, its almost worse. With see the ads, its happy and instead of losing 10 grand apiece, thats 100,000 people losing 2 apiece. But youre separating people from their money with no chance of winning anything, right . My sense is thats right. As a practical matter, though, as we take this one or two steps further, my guess is that its going to be very difficult to get a National Gaming bill through congress. Can you bet on Like College Football online now . In or basketball . I dont think so. Youve got to pay up front, right . You cant build up a tab, can you . You cant get in trouble with the people that will come visit you for the money . Ones that know how to use their knuckles. Yeah, exactly. Youll be limping for the rest of your that scares me. If you can build up a let it rides on the next one, that would away problem. But i just dont think thats likely to happen. This is all being done realtime fast with your credit cards, which is another issue. If we happen to invest in this, what should we buy . Its difficult to say because its such a small piece of the total gambling picture. The biggest investments are generally have their cash flow coming from asia and specifically macau. So the two companies that do have the greatest exposure to new jersey gambling would be boyd gaming and mgm. All right. So if you want to try to go along for the ride, if you want to cash in on other peoples misery, those are the companies that you would all right. Thank you. There you go. Very simple. You look like a buttoned up guy that would think this is just horrible. No . Youre i dont sit in my baste and go online. This should bother b but andrew, if the nsa bothers you. A bunch of people with just they have circles under their eyes. Theyre up all night. I dont love it. Is it blackjack . Its all those things, right . It is in new jersey, anyway, its just poker and in nevada and delaware. Thanks. Later this morning, well talk to former senator blanch lincoln. May throw an obama care question at her, too. When we come back, a dangerous winter storm is threatening thanksgiving travel for million of people. The impact on the Airline Industry right after that. And then, economic out who is happening out in the squawk green room. Former fed governor kevin warsh. He is a key member of Ben Bernankes inner circle during the financial crisis. Well talk to him about the economy, tapering and the fed coming up at the top of the hour. Ure, a confident retirement. Those dreams, theres just no way were going to let them die. Like they helped millions of others. By listening. Planning. Working one on one. Thats what Ameriprise Financial does. Thats what they can do with you. Thats how ameriprise puts more within reach. Shes always been able to brighten your day. Its just her way. But your erectile dysfunction that could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. 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It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. Welcome back to squawk box. A powerful storm could threaten one of the busiest travel days of the year. And michael boyd is president of boyd group international. Good morning to you. Morning, sir. So a couple things, what are the airlines doing now to avoid this . Can they avoid this . And how much money gets lost in a period like this . Well, truth be known if the airlines could choose when it would strike, this would be the time. Mainly because there are no more airplanes in the sky over thanksgiving. As a matter of fact, the tenday period, there are fewer airplanes in the sky. The difference is, youve got a lot of people who arent used to flying. When god decides to lay a snowstorm on us over thanksgiving, it could be a real mess. But as far as the airlines go, its going to be less of a hit than a normal weekend would be. I dont understand. Youre saying theres more planes in the sky but not on the ground, is that what youre suggesting . No, airlines dont schedule anymore flights over the holidays. This holiday will have more departures than it did a year ago and 4 fewer than a normal period of the year. Why is that . Simply because, everyone talks about how bad wednesday is and how bad sunday is, but when you get to friday and saturday, its dog city as far as revenue goes. And airlines dont fly as much. And do they actually cut back on flights on those days . Typically they will cut back as much as they can. Youve got to run airplanes through the sky. Tip kwli theyll cut back. Theres going to be about 4 1 2 to 5 fewer than a normal period. The difference is, you dont have youve got wives and husbands and children. Are airlines able to bring more planes on during the peak moments or no . No, they dont have more planes. Thats what i was assuming, i didnt know if there was something they could do. In a peak period like that, if you fill up that extra flight on wednesday, when it comes back on thursday, its empty, theres no percentage in that. Thats why airlines dont add more flights over the holiday season. Separate issue, its not related to this weekend, but its actually been in the news. You saw this news over the weekend about the 747 and the 787 and this engine issue of icing. You know what im talking about . Yeah, i do. Its not going to affect many airplanes. Its a 7878, its mainly going to be cargo airplanes and we still dont have as many as 100 787s in the sky right now. Its going to affect a lot of people. But its one of those things the manufacturer will put notifications out to watch out for. Is that something that will concern you or no . No, it really wouldnt. Its one of those things they can deal with. Its not like an airplane wings going to come off or anything like that. If theyre saying the plane cant fly near thunder, what does that say . What does that mean . You avoid it and there isnt that much out there. And remember, the number of airplanes affected by this is very low. Okay. Thank you for joining us. Thank you. Happy thanksgiving. Same to you, sir. Hopefully the travel season wont be that difficult this time around. Anyway, coming up, the nasdaq hitting levels not seen in 13 years. Plus, we are going to be welcoming former fed governor as he makes his way to the table right now to talk about the economy tapering and much, much more. Weve got a big two hours coming up in a moment. Clients are always learning more to make their money do more. ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Inside the fed. Former governor gives us the inside track on what to expect from janet yellen in 2014. And he will join us for the remainder of the show. A thanksgiving travel nightmare. A major storm across most of the country causing travel headaches. But will it slow down Holiday Shoppers . We take a look at retailers that could be impacted. Plus, we talk spam, chili, and the consumsecond hour of s box begins right now. Good morning and welcome back to squawk box here on cnbc. Im Andrew Ross Sorkin along with becky quick and joe kernan who is back in the hot seat. See whats going on right now. Green arrows with the dow looking like it would open up over 12 points higher. S p 500 up almost 2 points higher and the nasdaq 2 points higher, as well. Lets get you through some of the morning headlines, more changes in the offing at blackber blackberry. Interim Ceo John Chen will continue to weed out personnel and remove those he deems ineffective. That comes a day after the company replaced the chief financial officer, chief marketing officer and chief operating officer. Also, a day after we heard the chryslers initial Public Offering wouldnt take place this year, we do know more about the ipo. Chrysler says it plans to list on the New York Stock Exchange and also plans to use the Ticker Symbol cgc. The automaker is hoping to go public in the First Quarter of next year. Mark your calendar. Also, at least six private equity firms reportedly want to buy the Industrial Packaging unit of illinois tool works. Such a deal could bring in more than 3 billion. Among the contenders, carlisle, blackstone, bain capital, seeking to sell that business. Joining us as our guest host to talk about the markets tapering, janet yellen and much more is former Federal Reserve board governor, a distinguished visiting fellow at stanfords hoover institution. And kevin, thank you so much for being here. Becky, thanks for having me. We havent gotten to talk to you since Janet Yellens nomination. And i wonder how you think shes going to do as the head of the fed. We got a chance to Work Together when she was running the San Francisco fed. Shes got a ton of experience. No one prepared for meetings the way that janet did. So she was the one who came with her notes fully in line. Her prepared remarks, the rest of us would write down a note card like this. Shes got all the experience, all the background. Shes taking over at a very, very challenging moment for the fed and for the markets. And as you know, Financial Markets tend to test new chairman. They did it to paul volcker, did it to alan greenspan, 87, for better or for worse, from our perspective for worse, they challenged ben bernanke and his team a few years ago. Ive got every bit of confidence shes going to realize that being chairman is, frankly, very different set of responsibilities than being a governor vice chairman where most of us get to chatter from the cheap seats, shes got to make the tough decisions. And yet, youve been concerned about qe and what the feds doing. Youve been concerned for some time. A lot of people think she is even more dovish than bernanke is. Where does that get us . Right. So its easy to think on a hawkish dovish spectrum. And theres no question she believes in the efficacy of the feds tools even more so than chairman bernanke. I dont think shes more dovish than ben. I think the biggest difference is in some sense that she really does believe very much in the models and in a model centric view of the economy. What does that mean . What it means is, when i look at the economy, i look at the models that come from the Federal Reserve, with the whole series of outputs and projections, but also a set of market conditions. I look at the ticker tape, whats happening with asset prices and volatility. The models from the fed havent been working. The feds predictions have been way off. So so its the feds models have basically been wrong for about four or five years. There are a lot of excuses we can offer. We can say the models didnt anticipate the crisis and the Crisis Response was a surprise. But the models are enough to give me pause. Enough to say, well, theyre an important input, but maybe somethings happening on the real side of the economy that the models cant well appreciate. And what the models do is look at the kmip since the Second World War and figure the next five years will follow some mean regression because the economy has snapped back from recessions, itll snap back this time. And what i wonder about and wonder if the models are taking into account is the policy response has been quite different this time. The policies have been remarkably different, more aggressive id even say a little bit more myopic. And whether theyre going to be right or wrong in the next few years is more of a challenge for janet or my colleagues at the fed. The models, even though they didnt predict this, they might be it could have been much worse than maybe we werent it could have been a continued recession after 2008 without all of this, theoretically, proponents of all of this accommodation would argue that we could have been at zero, not two. So maybe by saying we should be at three and didnt hit two i mean, models are so if you spent enough time working on models, you realize that the outputs, you can make whatever you want. We should judge the feds performance by what they promised us, in my days, what we promised. And in 2009, the fed promised that the economy will be much stronger in 2010. Growth will be at three, the Unemployment Rate will be coming down. It disappointed, in 2010, the same thing to 2011 and thats true right now. I think what well hear in december is the economy will be much stronger in 2014. Ultimately, it could be true, but its not obvious thatll happen in the next couple of quarters. Did you say this quantitative easing is nothing but the at the zero lower bound of Interest Rates . Did you use the word normal . Do you remember when they first started this . You called it shock and awe, the most earth shattering development in the history of Monetary Policy to do qe, now youre calling it the normal operation. Have you changed . What changed . Joe, i wish that you read every word of my editorial. Im reading this here. What i tried to do a couple weeks ago in the wall street journal is lay out about seven or eight of the foundations of Monetary Policy, the current leadership believes in and then i rebut them. Oh, okay. So what concerns me and what, joe, i think youre bringing is that qe is unprecedented, it is extraordinary, and we shouldnt be fooled into thinking its just what central bankers normally do. Yeah. In the old days when i showed up at the fed in 2006, we basically had one tool Interest Rates, you try to get it about right. You raise rates or cut rates. The new innovation was qe, which we did not know it was going to work. And my sense is that we get to the end of this year, early next year, qe has gotten a little tired in that room. Looking from their perspective, it may have done about all they can do. Whats the instinct . The instinct is to create a new tool, a third tool, which goes under the very kind sounding name of Forward Guidance. Yeah. And so as they pull back on the second tool, theyre trying to reinsert the third tool and see if they can convince all of us in Financial Markets those are pretty good substitutes. Is this what bernanke is saying, forget it, were not going to raise rates for a long, long, long time to come. Dont worry about it, this tapering is not tightening. They started with that. Is it nearly is that tool nearly as effective as actually what theyve already done, which is real . One is sort of but talk is cheap, right . Yes. And we also dont know. And they can change. And they can change. I was going to ask what you thought about the credibility of the fed given the markets thought something over the summer and had a rude awakening in the fall because the fed didnt do what people thought. So the u. S. Experience over the course of the last several years and the experience in japan today is that markets know what qe is. They figured it out. They now know that risk assets melt up. What theyre running right now and the chairman speech of about ten days ago was to set in place a natural experiment. See whether they can get away with words what previously constituted trillions of dollars of asset purchases. If they looked at market prices today from the chairmans speech where he laid out this new framework with the introduction of the third tool and a possible pulling back of the second, theyve got to be reasonably happy with what theyre seeing. Treasure yields havent spiked as they did in the spring and summer, volatility and fixed income markets is lower, as set prices continue to move up. Theyre running a natural experiment. Although, weve had plenty of economists who have come in here and said, look, if its data dependent and youre not going to begin the taper until the data justifies it, is there a case for starting to pull back . Lets say in march or even in december. Is there a case for it at this point . So by their own standard, it does not seem to me as though weve seen a substantial and significant improvement across the economy. In fact, if you look at the economy over the last 4 1 2 to 5 years, looks to me remarkably stable. Growth has been around 2 . The underlying fundamentals in the economy have not broken out. The promise in december is they will break out next year. Next year will be the year we get to escaped velocity. If you look at realtime indicators, the real data, it is hard to see the turn in the u. S. Economy. What happens to qe . If theyre kind of tied in by what theyve set up themselves, is there a way to get out of this if the data isnt what they think . I think the challenge for them in december is to convince the markets that both their economic forecasts are right, that is the economy will be growing at 3. 5 in 2016, the Unemployment Rate will be in the fives, and yet, to andrews point, Interest Rates still at zero. My view is one of those has to give. If the economy is roaring as much as they say, markets will not believe that the Federal Reserve will keep the fed funds rate at zero in that environment. The alternative is the economy is stuck at around 2 growth in which case it is possible that rates and yields stay quite low even if theyre just talking rather than acting. The effect on savers and the effect on wealth distribution. I even saw germany there as a big piece over the weekend. A lot of criticism that the disparity of wealth in europe is being exacerbated by zero Interest Rates. The positive effects counteracted by the negative effects yet . This is a real problem. When Congress Talks about tax reform, any other policy comes up, the New York Times runs a distribution table. Who are the winners and who are the losers . And we see that some policies favor the socalled rich. I would say that the reality is qe policy favors those with big Balance Sheets. They favor those with risk appetit appetites, access to free money. And real people that are living off their income statements that have w2 income, they are still looking around and saying what is fed policy doing for me. Instead of ending that program, which exacerbates it, progressives, we design another program which will then address the redistribution. And we now know what it is. Its called obama care. And even your paper over the weekend finally talked about that it is pure and simple from the very beginning redistribution. And thats one of the reasons and even axelrod defended it by saying redistribution doesnt have a dirty connotation anymore because theres been so much redistribution of the wealthy that now its only normal and its a positive thing to talk about redistribution back to the people that dont have when did he say that . Over the weekend, i think on one of the shows. But in light of how much the wealthy have gained over the past 20 years that a redistribution to the lower did you know he came on the show and talked he never has. Dont we employ him now . Lets design another program to layer over. Keep qe going and well redistribute it back. So we can come up with a whole bunch of plans. Might be better to the reality would be if we could get this economic high to grow at 3 instead of 2 . Fix a lot of things. Wed be in a lot better shape on a broad set of issues. All right, im going to read this. So, are there any visiting fellows that arent distinguished . Its a very secret list, joe, i cant tell you. You know what i mean are there a bunch of visiting people . No, youll get invited to be a fellow, you are distinguished by definition. Everybodys distinguished then. You looking for work, joe. No, i hear that, its a great distinguished visiting fellow he wants his title to be distinguished anchor. I do. Up next its real. Its so real. Im going to ignore that. Will rain or snow ruin your thanksgiving week travel plans . Well get an update from the weather channel. Later, the retail blame game, which companies will be hit by this winter storm. Andrew has expressed some consternation about the effect on retailers. Names you need to watch as the Holiday Shopping season kicks off. Welcome back, everyone. Shares of tiffany jumping in the premarket trading this morning. The luxury goods retailer reporting profit of 73 cents a share, that was 15 cents better than the street was expecting. Take a look at that stock. Its up by 5. 5 this morning to 85. 50. Revenue also came in well above wall street forecast. Tiffany reporting a 7 increase of same store sales compared to a year earlier. But, again, this shows the tale of two different retail worlds where walmarts and targets have been struggling and a company like tiffany really outperforming. If youre living in the midwest right now, you know how bad it is what a mess it is outside. A major winter storm dumping heavy snow and ice across much of the midwest, its now heading east just in time for thanksgiving for us folks over here. The weather channels keith carson with your latest forecast. Thanks, andrew. Yeah, the timing on this thing is awful. Were calling it winter storm boreas at the weather channel. And right now its largely a liquid, rain event, across the southeast, heavy rain. Were watching northern florida for the possibility of some tornadoes. This system is multifacetted for sure. Meanwhile, suburbs of boston and Downtown Boston at last check, seeing light snow. New york city, marching toward new york, as well. This is not part of boreas. Theres snow out ahead of it. Heres a setup for this storm. Its come out of the gulf of mexico, boreas has, its juiced up. And were going to interact some of that cold air in here on wednesday. The combination will give us some snow. Good news is, itll be pretty far to the west of the i95 corridor. Thats the deal. Today, atlanta, much of georgia, seeing rain, and wednesday, obviously the biggest travel day of the year looks to be a mess from bostons Logan Airport into new york city, into washington, d. C. Its not the snow there that were concerned about. Therell be no snow accumulating there. Itll be the rain and the wind, could see gusty winds enough to cause domino effect as far as the airports go. And you head further inland into central and western new york state. You see that icy mix down into the carolinas and further still west into the eastern great lakes where we start seeing snow totals there. Enough cold air in place. We recently updated the forecast. And weve got bulls eyes, we get that cold air over the relatively warm still lake waters and end up with the bulls eye 12 to 18 inches. But, again, youll notice that rain snow line is staying away from a lot of major cities. The exception being pittsburgh, could see a good 5 to 8 inches of accumulation. Thats the deal with this storm. Its a large storm, largely warm, but the timing is absolutely awful for travel plans for thanksgiving. Do we know anything about thanksgiving day parade, the macys thanksgiving day parade. Thats a good question. Will the balloons fly . Yeah, you know, looks like the wind criteria for that is 23 miles an hour sustained. So were going to be really close to that and gusts could be 30 to 40 miles an hour. So if i was a betting man, they might ground them. Wow. And keith, one more question for you, not that were trying to look for personalized Weather Forecasts or anything. But if you were to leave on wednesday before noon, are you still going to get caught in all of the ice and snow . Where would this hypothetical person be leaving from . Lets say engelwood cliffs, new jersey. Were probably going to have a backup. Planes from atlanta will have a hard time getting to the north. Theres no escaping this, right . Its not leak youre going to get out of this. Unless you want to leave right now. Cut the show short. No, im back friday. Im back friday. Wednesday on a plane . No, im driving. Shes driving. Im driving. Hearing the rain snow forecast. Then the rain is fine. Youll be too far east. Its going to be a mess on the turnpike. You dont have a convertible, right . No. Keith, thank you. Convertible would be bad. Would be bad but i think with the rain youre going to deal with extra bad traffic trying to get anywhere. Dont mess your hair up. Never. When we come back on squawk box, though well take a look at retailers who may be impacted by the storm and what it means for holiday sales. Before we get to that, though, the ceo of hormel on his latest quarter. Consumer trends, food prices and spam. Squawk box will be right back. [ female announcer ] what if the next big thing, isnt a thing at all . Its lots of things. All waking up. Connecting to the global phenomenon we call the internet of everything. Its going to be amazing. And exciting. And maybe, most remarkably, not that far away. Were going to wake the world up. And watch, with eyes wide, as it gets to work. Cisco. Tomorrow starts here. Shes always been able its just her way. Day. But your erectile dysfunction that could be a question of blood flow. 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Ask your doctor about cialis for daily use and a 30tablet free trial. Avo thesales event sis back. Drive which means its never been easier to get a new 2014 jetta. It gets an impressive 34 highway mpg and comes with no charge scheduled maintenance. And right now you can drive one home for practically just your signature. Sign. Then drive. Get zero due at signing, zero down, zero deposit, and zero first months payment on any new 2014 volkswagen. Hurry, this offer ends december 2nd. For details, visit vwdealer. Com today now, andrew, would you call that space x or space ten . Space x. Its delayed its first commercial satellite launch. Technical glitch sidelined the falcon 9 rocket yesterday. The rocket will carry a 100 Million Communications satellite. The launch has been rescheduled for no earlier than thursday. Space x now has a backlog of nearly 50 launches worth 4 billion. And you remember a few years back every time, was it russia . Someone was trying to launch over there. Maybe it was china. Everyone they sent up was like a dud or turned sideways or fell into the ocean or whatever. Which is why its not easy stuff. No kidding. Its rocket science. So youre going to take a ride up with them . Im not either. Did you see branson when we asked him, did you see gravity yet . No, i dont want to see. He said intentionally. Well, someone tell me theres no air up there. Right. Or gravity. Well, we go from one disaster to another. The coast guard is actually responding to a sinking vessel and Oil Discharge into the mississippi river. About 100,000 gallons of Petroleum Products reported to be on this sunken vessel. Yesterday afternoon, a 144foot tow book struck a submerged object, and began to sink. All nine crew members made it to safety, though. Back to what it says distinguished anchor. So distinguished. Distinguished anchor joe. Why havent we put that in all along . Well, it goes without saying. Its redundant. Youre right. More to come ron burgundy would be distinguished. My daughter saw him last night. That guy looks just like will ferrell. He does, does he not . With the mustache. Plus, weve heard it before, companies muttering the words due to weather during earnings season. How will this affect sales this holiday season. This totally unexpected Winter Weather in november. Well find out. Still to come pepperoni, bacon, chili and spam, the wonderful products of hormel. We talk earnings and the consumer with the ceo, squawk box on cnbc. Ready to run your lines . 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. Were going to be getting fresh data on housing this morning. But not some of the numbers we originally thought. The Commerce Department has pushed back september and october Housing Starts numbers. Those numbers were supposed to come out at 8 30 eastern and something economists were hoping to give them insight into whats been happening with housing. Those numbers have been delayed because of correction problems related to the government shutdown. That data will now come out on december 18th. We will be getting Building Permits for those two months coming at 8 30 eastern time. And half an hour later at 9 00 eastern, we get the report on home prices. Economists are expecting to see a 13 yearoveryear increase on september home prices for the countrys largest markets. Takeover deals arent as big for investors this year. The average premium at just 19 . Thats the lowest level since at least 1995. The historical average for takeover premiums is closer to 30 . Theres just so few deals. If we were like in a big deal boon. A heated a heated deal boon, but now you can hardly get a deal going. Anyway. Joining us this morning as our guest host is kevin warsh. Weve been talking about a lot of things this morning. And kevin, weve been noticing Energy Prices. Theyve come down significantly and that has helped the consumer. How does the fed kind of view that . And where do they see Oil Prices Heading . So my sense is generally when Energy Prices come down in the u. S. , its thought of as a tax cut. Its a tax cut that allows some incremental consumption because the economy is so dominated still by consumption, business capex, the mergers and acquisitions pipeline that andrew was talking about. Theyre relying on the consumer getting back in the game. And the move in Energy Prices has been pretty useful in the fed model to say the consumer might be on his front foot in the First Quarter of next year. Theyll take that as good news. We saw Oil Prices Pull back significantly yesterday morning because of that iranian deal announced over the weekend. By the end of the day, people were looking at it much more skeptically and played that off. How do you view iran and whether this is a real deal and what it means . The iranian deal and the idea that the middle east might have a calmer 2014 instead of as aggressive or belligerent one as some thought, take some geopolitical risk out of some markets, takes it out of the energy markets, risk premium and asset prices. But if you believe that we have just moved the risk aside, then markets might be too complacent about that. Yeah. Thats the concern. I mean, do you i think youd have a hard time finding anybody who says they trust the iranians. So risk is highest for the Federal Reserve and for the u. S. Economy. If i were in chairman bernankes shoes or chairman yellens shoes to come and i see risk levels volatility this low across the stock market and the bond markets, see geopolitical risks coming out of the energy markets, that would be just enough to make me very nervous about what can be unexpected over the next 12 months. I can make the case that t the what happened with the oil markets could even worry you and it gives the fed more cover to continue to say theres no inflation. Because we had did you see bullard when he was on . He looked me straight in the face and said as long as theres no inflation, we dont see any problem. Basically im paraphrasing, basically said we will go pedal to the metal with this 85 billion. And if inflation were to actually come down or unemployment were to stop going down, they have no worries about keeping this Program Going because they see no inflation whatsoever. And you make the case that it isnt necessarily hyperinflation that will let you know you have messed up. Itll be the misallocation of capital which we find out. You can find out in some way it was totally not inflation. So you guys have to be careful about current central bankers. All we care about is core. And when Energy Prices move down, we say well, were looking at the whole mix of Commodity Prices and inflation and saying its very low. That inflation is low around the world. With some exceptions, indonesian come to mind, that should be not license to throw more chips on the table. They are using that as they feel invincible theres nothing bad that can happen from the crazy, which is really unprecedented as you pointed out. In a debating society, it is useful to say that the other side is worried about hyper inflation. That hyper inflation hasnt come, hence there are no risks. And your point, joe, is the right one. There are plenty of risks of these unprecedented policies, including misallocations of capital, malinvestment, and to your point, things we dont know. Rates have been at zero for a long time. I said last week, okay, its not inflation. Theres all this capital misallocation. Whats what do you watch . Whats the canary in the coal mine that tells you youve gone too far. There isnt one, is there . So in the model, there isnt one because zero rates from 2009 until 2016 or 17 do great things for asset prices, the economy. We feel really good. Capital is not likely finding place for the highest and best use. Its wasted. Whats been the biggest disappointment in the forecast the last several years . Business capex. Proxy is mergers and acquisition volumes. You made the case that all of this accommodation could explain the crappy 2 growth were getting because the capital isnt going to where its treated best. Right. The model says the economy should be growing above three, the reality is two and thats because in my language, which is too wonky, joe, youre not going to like it, the macros have changed. The individual incentives for individuals, for businesses, for banks have fundamentally changed and a model thats built on the last 70 years wont reflect. That. Say that again. Micro foundations of macro. Because we have a lot of cocktail parties around this time of year, do we not . Weve got ge need to sound smart. Im writing that the micro i was thinking that. Take that with your eggnog, joe. I will. Anyway, well have more at 8 00. Well, 7 50, we have more. And then at 8 00 too. But well go back to that. Now im i dont like getting personally affected by stories like you do. He gets worried, depressed, right . And now im really worried because there is no canary you should be. In the coal mine. Hormel foods the maker of spam, skippy, jeannio. The company also raised the Quarterly Dividend to 20 cents from 17 cents. Joining us with more on the quarter, jeffrey eddinger. Good morning, jeffrey. Good morning. Im still dealing with smithfield, obviously. You weighed in on that before. We have to open our markets, i guess, to one other. Will there be any change in your supply change for hormel . No, not at all. We contract with family farms within the midwest region and theyre still all part of our program. Whats can you gauge the consumer based on your products . Or is it i would think its pretty inelastic at hormel, no . Well, we have a broad array of products in our portfolio and enjoying good success with them. Our most recent quarter was excellent with 7 increase in sales and 18 increase in profits and came in four of our five business segments. So in other words, you cant tell me whether the consumers feeling better than he or she a year ago based on your products . You basically if times are tough, people still buy hormel chili, dont they . I think thats correct. Our portfolio is broad. We have items that appeal to all consumers and income brackets and had success in different times in the economy. I think were seeing a gradual recovery overall. I think unemployments starting to go down in our home state of minnesota is now below 5 . And so we do think thats going to benefit the business in the long run. I look for things to talk to you about. I imagine that input prices are based on what happens in the meat complex. And i look up at the meat complex and how expensive its gotten because of ethanol and corn and everything else. Are you does it disturb you that Commodity Prices and certain of your input materials are up . We certainly have challenges on input prices over the last few years, particularly in the corn and soy mean complex for our protein businesses. And as weve expanded into new areas, we look at inputs such as peanuts and avocados for those franchises, as well. Overall, were looking positi positively to 2013. Would have a midpoint of about a 14 increase over the number weve turned in for 2013. We were just having a conversation with kevin warsh about inflation and whether you see it. You talk about how some of your import prices have been up. What do you think of that view . Well, there have been significant food inflation over the past few years, certainly on our turkey store side. Weve ended up having to push prices to keep up with those cost inputs. I do feel heading into the next year, were in a little bit more of a benign environment that should allow consumers to really enjoy our products, and we intend to support a number of our products with ad campaigns adding into the new year. The turkey store will have a new Campaign Featuring the new ground turkey item and we plan to relaunch skippy. We acquired that Company Early last year and well have a Campaign Early in 2014. I remember you bought skippy. Is spam we used to talk. We used to love spam. We used to talk about it all the time on the show and had a lot of paraphernalia. All of that, are sales still do they go up yearoveryear for spam . We did enjoy a sales increase domestically this year. Rolling out a new variety of spam, teriyaki spam. And just last night, 1 00 in the morning our local time, we closed on the skippy china deal. And well now in the asia countries be able to distribute spam and skippy. How big of a market do you think thats going to be . Were very excited about the potential for both spam and skippy in those markets. Spam is very popular in many countries in asia already. Okinawa, guam, were working on mainland china. And skippys a 30 million business in china. The closing on the transaction yesterday means we now own our third plant in china. And we have Great Expectations to be able to grow the Peanut Butter business throughout that region, as well. If you just talk about the 50 states, what percentage are in hawaii of your domestic sales . Well, its the largest per capita market for us. Percentage wise under 5 . Its popular overall. Great with pineapple. When you bought skippy. Spam or skippy. Spam. Yeah. Its good. I dont see any synergies with spam and skippy. Am i missing that . They really would be more on the sales and distribution side. Theyre both shelf stable items. Some of the Foreign Countries ill try anything. Im not saying to eat them together necessarily, no. You can dip them. Well, you saw for the smooth kind of skippy maybe. I have skippy. We get the low fat. I like the chunky. And i put it on everything. Pretzels, apples. I have a Serious Business question. And i know i think i know how youre going to answer it but maybe youre going to help me. Your company to me seems like a natural target for an acquisition. Just given sort of the way of the world and consolidation in the food business, i would think that one day your company would be part of a larger company. Just one mans opinion. Does that make sense to you . Well, were positioned very well, were 48 owned by a local foundation that our founders had the foresight to set up. And then the other 52 is traded on the public market. So we think that enables us to make longterm decisions for the shareholders. But also, the public side holds us to the quarterly challenges. And i think thats been a great combination for us. If you look at the last five years, weve grown sales at a clip of 5 , 6 a year and grown earnings of 10 to 11 . Would the Foundation Ever be prepared to sell . Theyre set up for the benefit of the local community. Were a major employer here in austin, minnesota, i think were confident in being an independent company. Weve just about reached 9 billion in sales this year. Peanuts are good for you, jeff. You ought to put that in your advertising. I think it works with Peanut Butter too, right . A handful of peanuts is they did 100,000 people, 20 less likely to die of everything if you eat peanuts. Really . Yeah. Im going to eat some after this show. I like peanuts. Thats good. I saw that news on nuts. Certainly another benefit for the skippy franchise going forward. Im going to smear some on some spam. Probably no one has tried it. Hes going to bring it out, but im not going to do it. Appreciate your time. Appreciate it this morning. Thank you. Wow. Well be trying that. Still to come this morning, console wars in full swing just in time for the holidays. Which company is going to win out . Well find out in a bit. And youve got to know when to fold em. Blanche lincoln on the booming business of Online Gambling and why shes trying to stop it. Coming up the retail blame game. How will this early winter storm hit retailers and consumers ahead of this big Holiday Shopping kickoff. Well tell you the companies at risk and what you need to watch before the storm hits. Squawk box is back after a quick break. But it sure feels that way. Because with power ports. And wifi. And inseat entertainment, for everyone on board, now when you fly, time flies too. Flight Attendant sir, were about to land. vo were adding a brand new plane, with all this, every week. Its just one way were building the new american. Losing thrusters. I need more power. Give me more power [ mainframe ] located. Ge deepsea fuel technology. A 50,000pound, ingeniously wired machine that optimizes raw data to help safely discover and maximize resources in extreme conditions. Our Current Situation seems rather extreme. Why cant we maximize our. Ready. Brilliant. Lets get out of here. Warp speed. I have obligations. Cute tobligations, but obligations. G. I need to rethink the core of my portfolio. What i really need is sleep. Introducing the ishares core, Building Blocks for the heart of your portfolio. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Welcome back to squawk box this morning. Take a look at shares of dsw today. The shoe retailers earnings matching estimates. Revenue came in short and samestore sales falling. 7 during the quarter. A blast of Winter Weather moving east just in time for thanksgiving. And black friday. So what impact will this storm have on the seasons shoppers . Joining us is paul walsh, the weather channels weather and business analyst. And we know that cold weather can be a good thing, but snow and rain right when youre looking at black friday, how does that measure up . Well, snow and rain would be horrible if it happened on black friday. But this year, looks like retailers are going to dodge a bullet. Were going to see the worst of this today and really tomorrow. So itll be a big travel headache, but by the time we get to thanksgiving, of course itll be windy and might impact the macys day parade, but black friday will be clear, across the country. Its going to be dry for the most part and that is perfect weather. We have a good tail wind going into the holiday. We have a lot of cold weather thats moved its way across the country. What does that generally mean for some of the retailers . For Department Store retailers . For specialty retailers and even for mass, that actually is a great sign for them. Again, as long as it stays dry. And weve seen through polling were going on weather. Com that theres been a huge increase in demand in the northeast for outerwear as we moved through the first part of november. That bodes well. And as long as we can keep the snow and the rain away from the weekends, it will be a good sign for the rest of the holiday season. But, of course, we have a week left of the shopping runway this year. Therefore, theres this big risk hanging over all the retailers, which is really an illtimed snow event for one of the last crucial weekends going up to the holiday. Right. I would guess this is also good news for the home depots and lowes of the world. I guess the question, though, is with the shorter run time, fewer days that you can actually get people into the stores, does that mean the discounts will start sooner in the season and last throughout . I think so, although there may be some benefit to the fact its turned cold and likely will stay cold at least through the first half of this holiday season. Theyll be able to move a lot of the seasonal goods anyway. What happens when youve got a cold season like this, it tends to cannibalize a bit. So whereas last year, it was relatively warm, it was warmer than normal. This year, its going to be the opposite. Itll be a lot colder. Even if its normal, itll be a lot colder than last year. Demand for the Seasonal Items will be much higher. Theyll have a better chance of increasing for those items. If we do have a weekend storm, that will certainly cut into the runway and have an immediate impact. Thats why i think time is a real problem this year and a risk of a weekend snowstorm is elevated compared to prior years. Because they dont have a margin for error. Paul, is it true that increasingly that theres really a few peaks to the Christmas Shopping season so therell be the black friday peak and the christmas rush peak. But increasingly, this christmas business is more and more happening after the christmas with gift cards and the rest . Thats right. So theres the two big weekends. The retailers are really worried about is, of course, this weekend and the weekend before christmas and then the days after christmas which makes having good weather on those two days extremely important. We also have cyber monday becoming increasingly important. Obviously people can shop while theyre at work, but the weather does influence those shopping patterns, as well, we call that the forecast factor, when the Weather Forecast is for cold weather, for cold temperatures, it starts to drive early demand and that will actually influence what people buy online. It all everything is sort of all tied back to the environment. Or a good portion of it. The weather doesnt impact the overall holiday spend, but it certainly can affect the proportion of what people buy and, of course, if we have a weekend snow event in the northeast or midwest, it could shave off a bit of overall sales. Can i ask one quick question . All this black friday, cyber monday stuff, how much is that just pulling forward the spending . Its not actually changing the overall spend . So the economics of it show that theres two shifts. Theres certainly a shift into the amazons of the world and online. But what were seeing really in stimulus and christmas. The economics is not obvious youre increasing spending over a 12month over three month. And theyre bringing the margin down, not necessarily helping them either. Its interesting what happens to the overall spend. Anyway, that was my quick question. All right. Weve got to run, though. Paul, well talk to you again soon. All right. Thanks. When we come back, more from our guest host, kevin warsh. And then Online Gambling in the garden state. Six gambling sites are now open to the public. Former arkansas senator cochairs a coalition against sites like this. Shell join us to talk about it in the next hour. Squawk will be right back. Reputable, dignified, anchor of greatness. Wow, do you see that . Thats how they titled me. Thats how you titled you. I havent gone into the teleprompter. I havent. This is our crack staff. This is me. This is me. Turning back to our guest host this morning, kevin warsh. Not just any visiting fellow. Hes a good fellow but a distinguished visiting fellow at stanfords hoover institution. Former Federal Reserve governor, you went to undergrad at stanford. I did. J. D. From harvard. Youve always been something special, i think. I got nothing for you. But think about. Thats how someone becomes a fed governor at like 18 years old or whenever it was when you did that. Heres, you know, liesman . I heard of him. Liesman, his panties are all in a bunch from talking about youve got no evidence that misallocation of capital is being demonstrated here. Where can you see it . How can you tie business spending, longterm capital investment, how could that be affected by what the fed is doing right now other than in a positive way since asset values are worth more of the wealth effect is worth more . Having trouble connecting the dots between that. And i actually argued in your case and said because the uncertainty of how the hell we get out of this thing would cause me to wonder about making longterm Capital Investments right now because its looming how we exit, no . Well, the theory of qe from the qe2 to present was we are going to print this money, create this new bid in asset markets, bring unnatural buyers into the stock market and highyield market and pick those assets up including housing. People will feel richer. Theyll spend more and hire more. Well, the first part of that has surely worked. Asset prices are inarguably higher than if none of us had uttered the word qe. Why arent businesses investing . Why is capex this historically low and the share prices are as high as theyve ever been . Can we continue this at 8 00 . Dont say why. Will you tell us when we start again after a commercial . Thats the teaser into the commercial. How we do this . Coming up, were going to talk about Online Gambling, which is kicking off in new jersey. Were going to talk to former senator Blanche Lincoln in a moment. 0 thats a good thing, but it doesnt cover everything. Only about 80 of your part b medical expenses. The rest is up to you. So consider an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, they could save you in outofpocket medical costs. Call today to request a free decision guide. With these types of plans, youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. Join the millions who have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp. And provided by unitedhealthcare insurance company, which has over 30 years of experience behind it. With all the good years ahead, look for the experience and commitment to go the distance with you. Call now to request your free decision guide. O0 c1 in a 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. Insight from a former fed head. Qes gotten a little tired in that room. Qe looks like from their perspective, it may have done about all it can do. One more hour with former fed governor kevin warsh. Online gambling is now legal in new jersey. Five. Ill stay. Not everyone is happy about that. Give me that, clark. Hes rich and i saw it. Cochair of the committee to stop internet gambling. And the battle lines have been drawn in this weeks console wars. Play station 4 and xbox one competing for the allegiance of gamers. The third hour of squawk box starts right now. Anyway, welcome back to squawk box here on cnbc. I feel like want to go to vegas. Yeah, with you and the rest of the rat pack. Our guest host this morning, former fed governor kevin warsh. Currently a distinguished fellow at the hoover institution. First, though, its not named after Herbert Hoover . I believe it is, joe. No kidding. Oh my god, were in trouble. The nasdaq crossing 4,000 yesterday for the first time in 13 years before falling back below 4,000 before the close. Yeah, you could take a look at it today and well be watching closely. If you look at the u. S. Equity futures a the this hour, at least, you do see green arrows. These are modest advances. Right now the dow futures up about 18 points above fair value. On todays economical da calend the government is delaying the release of starts and completions again blaming the shutdown. That data is now scheduled for december 18th. Well also be getting occasion shiler home price index at 9 00 eastern. In earnings news this morning, shares of tiffany jumping in the premarket trading, the goods retailer reporting a Third Quarter profit of 73 cents a share. 15 cents better than the street had been expecting. Revenue better than expectations and the Company Raised its forecast for the year. Take a look at the stock this morning. At this point, better than 6. 5 . It reported a 7 increase in same store sales for the quarter. And this is really something to be on the watch this morning. 86. 40 is the last tick. Also, watch shares of dsw today, the retailers matched estimates, but revenue came in a little short. The company said same store sales fell by. 1 . And gambling regulators offering internet gambling statewide, came four days after testing the technology involved in online betting. Under the rules, gamblers must be within the state of new jersey physically. The garden state joins nevada and delaware as the only states offering internet gambling. Former arkansas senator Blanche Lincoln is the cochair of the coalition to stop internet gambling. And the other top story weve been talking about this morning, its the severe storm thats threatening holiday travel. Giving us the rundown over the next couple of days. Thanks, yeah, you know this and right now it has a wet storm, meaning its largely rain across the panhandle of georgia into mississippi and alabama, its rain. Icy mix going on, thats ice, across portions of virginia and the western carolinas, theres icy mix to start snow shower activity moving through boston and portland. It is juiced up with a lot of energy from the gulf. As it movers up the eastern sea board tomorrow, itll collide with cold air coming down from canada we have big travel delays likely on wednesday, the biggest travel day of the year. All right, keith. Appreciate it. These two companies should be together, i think. As a result, joseph a. Banks up a buck. Youre going to like the way you look that guy was unceremoniously thrown out. I forget that guys name. Ready to engage with joseph a. Bank, we believe, immediately. Is this a bear hug . What is this . Its like its a bear hug. Theyre making it known. Unsolicited proposal. Yeah. Im trying to figure out whats gone on behind the scenes already. It sounds like theyve already its a 45 premium . No. Unaffected enterprise value, and 30 premium over theyre closing share price on october 8th. And its already gone. It was at 42 before all this started happening. Theyre very similar, arent they . What can you get a suit there for, andrew, 300 . I dont even know. I think you can. 300, 200 . Let me message and see. I knew you were going that was awful. Im kidding. They make good suits, by the way. Thats what im saying. Like youd ever, ever. You wont even walk past that store. I bought some ties years ago from mens warehouse. When you were 16 . Youre going on a Job Interview at the foundation. You wouldnt know. He wouldnt either. Would you . Youre not going to answer. You dont play along with us. Youre not a fed governor anymore, you can let your hair down a little bit. I dont want to correct you, joe, but i believe that was a reverse bear hug because you see how the one guy was going to be the acquirer and the other guy almost like a reverse pacman only a bear hug in this case. Depending on the terms, joe, it could be a reverse baby bear hug if theyve pledged not to go hostile. A reverse baby bear hug. That is interesting, though. I was looking that up when you were shopping for your suits. You were yeah, exactly. I was a glimmer in my mothers eye. Microfoundations of macro have changed. Thats what our guest host told us in the last hour. Lets get back to kevin warsh for more on the economy and the fed. You were going to actually i feel like ive climbed up this mountain and finally gotten to that point, youve gotten in the lotus position. How can misallocation of capital, visavis the feds qe, how does that cause businesses not to make longterm investment . So ceos wake up this morning and see their share prices are higher. Theyre happy about it. Right. They understand that came about for two reasons. One was they took costs out, they drove productivity, they deserve some substantial credit. But they know theres another force that drove their share price and the share price of their peers up. And thats some version of quantitative easing from the Federal Reserve. Even though theres people that still dont even admit that asset values go up on qe . There are still people who think this market is up not because of the fed. Central bankers from a central bank i came from believe they had something to do with it that we can debate how much. Okay. So youre that ceo, that board of directors and you see this high share price. Are you going to be investing large amounts of Capital Expenditures as you had done for 60 years when your share price was high and you were confident . Youre worried its not you. Youre worried its fake. You want to know what happens when the whistle gets blown on qe . You want to know what your unaffected share price is before you get on the front foot. You look around the world and see a Global Economy that is growing at 3 instead of 4. 5 . U. S. Economy thats growing at 2 instead of 3 . You dont see anyone else racing to be on their front foot, racing as a competitor to a first mover advantage. Youre going to sit this one out, wait until qe comes back and see really how strong your share price is and how strong your company is. Youre not going to get in front of it as the more virtuous story goes. Although people in the bond market seem to not care why these prices are where they are. Theyre acting on them, taking advantage of it, i guess. And theyre not saying, wow, i dont know what the real price of money is right now. They say theyre going to accept this and make longterm plans based on that, arent they . When world central bankers are setting prices, showing up with 85 billion a month, people in the bond markets are saying bring it on, yields are very low. When bond prices adjust, we will see what marginal investors will do at what price theyre willing to hang into these markets. All right. So people will be more inclined to say the fed can control bond prices so ill go with it. But if youre making a 20year investment into a planner facility and you dont know what the world is going to look like and you know even less because youre not you dont trust your stock price where it is, then you better i better keep this for a rainy day in case its not as good as it appears. And ill invest over the near term, one, two, and three years out because thats what i can control. But im no longer certain what my prospects are, the process te prospects for the Global Economy. See whether Forward Guidance is an able substitute and then ill decide whether to go big on Capital Expenditures. Its a vicious circle. Because if they are going to wait, then the feds going to watch them waiting. Its the roach motel we cant check out of. A central bank has this mirror problem. He or she are trying to learn from markets yet impacting markets with everything they do. At some point over the next several months, theyll have to make a tough judgment. They are trying to run this natural experiment now. See whether markets are okay with a modest withdrawal of qe and see if the economy is as good as they promised. One of these days, the wedge will get pulled out between stock prices and the central banks. We dont no one knows. Were hoping that the underlying economy catches up at that point and theres not as much errors as there could be two or three years ago, right . My judgment is the Federal Reserve cannot do much to take a 2 growing economy and 3 growing economy. We cant do much to take the Unemployment Rate in sevens and turn it into 5. 5 . They think they can. Janet yellen thinks she can. They believe they can. I thought and the Federal Reserves model believes they can too. They are in this business because they think they can compensate for the failings for the rest of these policies. Youve heard my views, im somewhat more skeptical. So hoover calls himself the First Student of stanford because one of the First Students and it was named for a library he built in 1919. It was founded in 1919. It was long before he was president , thats why its called the hoover. Its not j. Edgar hoover. No, it isnt j. Edgar hoover. It is former president hoover. Former president hoover. And he calls himself hes stanfords First Student. Is that like first lady probably is what he means. No that would be j. Edgar hoover in that case. Inside joke. Much more to come from guest host hes in boardwalk empire this season. President hoover . J. Edgar as a very young man. Do you watch . I saw a little piece of it the other day. You did . Yeah, i did. You just jump in. I wasnt prepared. Watching all along. Were going to get back to our distinguished fellow from stanford hoover, its the Hoover Institute at stanford . The hoover institution. Anyway, coming up, the garden state is a gaming state. Online gambling is now legal within new jersey borders, but not everybody is happy about it. An Advocacy Group to ban online gaming. Up next, well talk to the cochair of that group, former arkansas senator Blanche Lincoln. And later, the console wars thereon. Were also going to continue to watch shares of mens wear house and joseph a. Bank. 55 a share, it was supposed to be the opposite way around. Joseph a. Bank trying to buy mens wearhouse. A reverse baby bear hug. Shes always been able to brighten your day. Its just her way. But your erectile dysfunction that could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. Tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. Do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. Do not drink alcohol in excess with cialis. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, seek immediate medical help for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a 30tablet free trial. Welcome back, new jersey is the third state to legalize internet gambling. Hes launching excuse me an Advocacy Group that urges congress to restore the federal ban on betting online. And joining us now to talk about it is Blanche Lincoln, former democratic senator from arkansas and now the national cochair of the coalition to stop internet gambling. Good morning to you. Good morning. Thanks for having me. Before we get into this, how is it possible that you are on the same side as Sheldon Edelson . Well, i have to say, through the work i did particularly on behalf of children and families, you know, i have introduced a bill on child internet safety and i just think that this is something that we have to really rethink and take a look at the damages. When they come to you and say they want to support this, did you have misgivings about working with him . Well, im actually working with the coalition right. I dont know mr. Edelson and i do agree with him on this. Im excited to be a part of it. I think its something we need to focus on as a nation on behalf of our kids and families and our economy, quite frankly, when you look at the amount of debt were seeing out there. Its a good thing. Im excited about the opportunity to be able to try to move this in a direction thats going to be productive and healthy for the country. So the question is, is there a compromise . Is there a way to do some form of Online Gambling so that states can actually make some form of revenue but that it is not as deleterious to the culture and country as i imagine you may think it is. I think its going to be very difficult to work something out. You know, i know that states are interested in the revenues that it could bring in there. But is it really worth what it could the kind of damages that it could cause . Now, i know technologys amazing and theres Amazing Things you can do with technology, but at this juncture, im certainly not confident that we can put all the safeguards in place. The fbi and other Law Enforcement have indicated to us that theres a real danger out there. So i think its going to be critical that we we put a time out on what were doing here. The reason we are actually here is because a decision was made at the Justice Department two days before christmas in 2011 to reverse the interpretation of the wire act from 2006 where we did have a ban on internet gambling. So this was done, again, kind of in the dark of night. It was done without public input. It was done without congressional input. And i think its important to put a timeout on this and to stop and think about what its going to mean to us as a nation in our economy, to our children and to our society. Do people still ask you about obama care . Yeah, of course they do. What do you make looking back on it now and the way the rollouts gone and you were talking about technology how difficult it is, how are people in arkansas feeling about obama care . Actually, our exchange is coming up pretty well your exchange, yeah. Well, were working through it which is what Everybody Needs to do so. Nobody do you regret that vote at this point . No. No. You know, realizing how important it was to do something about health care, you know, i worked hard to make some changes to the law before we passed it. And there were some parts of it i didnt agree with. But by and large, if you look at the growth of our spending on health care as a percentage of our gdp. And if you look at that in terms of outcomes of what we were getting, we have to do something. We have to do something to change both mentally how we focus on health care but also financially how we deal with it. This isnt perfect. You know, when i was in the senate, i was also one of, i think 11 democrats that voted with president bush on adding a Prescription Drug component to medicare. And i got out there and worked hard to try to make sure that arkansasans would know how it worked. And we ended up being one of the top states in terms of enrollment . Medicare part d. Its going to take elbow grease and hard work and were going to have to change things and people will have to Work Together. Unless you Work Together, you know, its hard to get much of anything done really accomplished in a way that is productive. You know, senator, i can appreciate that working together message. I think that is something that is missing in washington today and wed like to see more of it. To your point to obama care just in terms of addressing that huge curve in health care spending, that continuing climb, i realize that we had two problems in this country, one was the number of uninsured people, another was the health care spend increase. I dont think obama care has attacked the spending curve, i dont think this law does that. I dont agree with you on that necessarily. I think there are better ways we can begin to start looking at the spending volume. You know, when we talk about, you know, the medicaid part of obama care and the aca, you know, theres some things there that weve got to be conscientious about. Because its going to increase some of those types of spending. But by and large, if you do not get a hold on the idea that theres a number of people out there that are not participating in the Health Care System that creates Greater Health and the healthier people are the lower the costs are going to be. But just making sure that we are managing that coverage. You know, people way underestimate the number of people that are getting their health care through Emergency Rooms or not getting it at all. So youre exactly right. The expansion of coverage was a critical part of this bill. Yep. And making sure that people are in it and involved with it is going to be its going to be essential in terms of moving down the pathway towards making our access to health care more successful in this country. So its not perfect. But people need to Work Together to make the changes. Certainly is. Weve lost more people now than have signed up, i think, which is heading in the wrong direction. Well see, december 1st is coming. Therell be more. Should be interesting. Thank you, senator. Appreciate it. Thank you. Well get Building Permits at 8 30 a. M. Eastern. First, though, more homeowners are missing payments on home equity lines of credit. Well tell you what it means for banks next. Clients are always learning more to make their money do more. ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Store and essentially they just get sold something. We provide the exact individualization that your body needs. Its the ultimate sale on the only bed clinically proven to improve sleep quality. The sleep number bed. Once you experience it, theres no going back. For one week only, queen mattresses start at just 599. 99. And save 50 on our limited edition innovation series beds. Plus special financing. Only at a sleep number store. Sleep number. Comfort individualized. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. Welcome back, everyone. Story that focusing on some concerns about home equity lines of credit. Homeowners are increasingly missing payments on home equity lines of credit they took out during the housing bubble. Banks may be hit hard as a result. Reiters is reporting that those loans are a problem now because of an increasing number are hitting their tenyear anniversary. At this point, borrowers usually have to start paying down the principal on the lines in addition to the interest theyve been paying all along and that is creating problems. When these loans go bad, loans can lose 90 cents on the door because a home equity line of credit is usually the second mortgage the borrower has. And most of those proceeds of the sale will pay off the main mortgage. That leaves little left for the home equity lender. And its another problem that we are continuing to see years after the housing bubble. Still to come this morning, weve got breaking data on the real estate market. Well get Building Permits from the Census Bureau in about three minutes time. Plus, as we head to break, take a look at the u. S. Equity futures this morning. Right now, dow futures up by about 25 points, nasdaq indicated five points higher. Thats the one were watching today because yesterday, it hit a level we havent seen in 13 years. Squawk box will be right back. Yep. Got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. So i knit until it was full. Youd be crazy not to. Is that nana . [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. Yep. Got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. So i knit until it was full. Youd be crazy not to. Is that nana . [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. Welcome back to squawk box, everyone. The Housing Starts data that we expected today is postponed until december 18th, but the Census Bureau will report in. Permits were expected to be around 925,000, over 1 million. 1. 034 million. 1. 034 million. And that now comes from a revised 974,000, 974,000, and i would consider that its going to be a little tough to get the gps on this, obviously, but its still its, what, up about 6 , 6 plus percent, not a bad number. Were going to have to wait until december as you pointed out. Interest rates, well, they were actually moderating a little bit. One could say yesterday pending home sales was a bit of a trigger. So its going to be fascinating to see if theres another onetwo punch pushing yields back up. We still have some of the case shiller data to come out, thats a month over. Thats september. And of course, we have supply coming out today. All in all, we continue to monitor the breathtaking, breathtaking rally we continue to see in equities. The fed has paint all numbers on the roulette wheel red. Rick, stick around. Lets bring in Steve Liesman to this conversation, as well. Steve, pretty strong number, at least, in terms of what youre seeing for the permits. The question becomes the starts. What are we going to see when we get those numbers. Details, becky, this looks like driven by multifamily construction. Were reporting two months now, were looking through going back to august as the baseline. You were about 299,000 in august, multifamily, now thats up to 414 in october. So thats a a consecutive jump in september and october. Whereas Single Family homes, 627 is actually below that level. Youve had a twomonth surge in multifamily. Looks like a lot happened out west and out south where permits are, at least in october, unchanged in the northeast and down in the midwest. So im not we like this number, we like it to be high. Its a number that doesnt do badly in terms of tracking gdp two quarters ahead of time. Over a million now too. Yeah. We havent been there since march. But you certainly like to see that more substantially in the Single Family ring rather than in the multifamily. Which is variable and a bunch of guys break ground on a lot of units and youve got a lot of multifamily construction. And by the way, this is a trend going on. The more you have these single parent households, the more you have these multifamily homes being built. Because thats where the housing shortage is. And i didnt see well, we dont get a price number. Were going to get three months in the month of december, well get september, october and november in december for Housing Starts. Its a bad time not to have a good read on the Housing Market. Yes, i was going to come back to that. Our guest host is kevin warsh, former governor at the Federal Reserve. And kevin, the Housing Market is a key component that the fed watches. Its as steve said, not a great time to be getting these numbers. Flying by the seat of their pants. When the government was closed for that period of time, theres a tendency for some government officials to feel as though they dont have any data from which to judge the economy. But data that doesnt come from the bureau of labor and bureau of commerce is data in Financial Markets every day. Its data coming from the real side of the economy. I think the housing equities, the big home builders, thats are good economists historically. And if you look at the trend in those, its been volatile. The trend in those has been to the upside. The housing stocks have done well, the Home Supply Stores have done well. I dont exactly this the government should be blinded because theyre getting some of the data late. The fed policy is very housing centric, the better that housing does, the more they think their policies are working. Mr. Warsh. Ive heard your distinguished criticism of the Federal Reserve. What i havent heard yet is what you think the fed ought to be doing right now. What would be the warshian prescription policy for the fed . So the more theyve been aggressive, the more they find themselves, i think, with fewer degrees of freedom. If youre stuck in this position, imagine, steve, at a Humphrey Hawkins testimony, imagine janet yellen at her first testimony long after shes been confirmed in a bipartisan basis getting a series of questions from them, urging her to do different things. Imagine if she said, senator, with all due respect to you and your 99 colleagues, if this economys not growing at 3 next year, it will not be the responsibility of the Federal Reserve, itll be the responsibility of the congress and the administration and put the burden on them to take back the baton, do good fiscal policy, trade policy, but its not going to happen, steve, easily if the Federal Reserve continues to say they can compensate. What do they do with quantitative easing . What would you have them do in december and january . I would make it clear that qe is on a path towards extinction. I would be pretty committed as to what the sell down will be from 85 to 65 to 45. Regardless of the Market Reaction absent some extraordinary very little not 3 in stocks. Not 2. 7 on the tenyear. Your strategy if you need to slow it down or dont want to go on the big jumps, what do you do . Well, weve been practicing highly discretionary fed policy and we have been stuck at Economic Growth of 2 . Given where we are, you have fewer degrees of freedom. Steve is absolutely right about this. But the more that you commit to micromanage the decision in december based on a housing permits data or payroll data which is subject to revision, i think youre suggesting that you have great foresight as to what the economys going to be in the next two and three years. This is not foresight that i think any economist has yeah, and youd probably just say what he said, i guess, right, probably, rick . No, i have one question, mr. Warsh, how important is it to divine signals on housing to try to interpret whats going on in the economy . Is that, in your opinion, a priority . No, i dont think it is. I think housing is part of the economy. But housing and housing assets are only giving you one signal. Theres a broader Cross Section of data from the consumer from the business, from trade and from exports. So this preoccupation with housing strikes me as as really quite dangerous. Do you think theres any signals in the economy that are worth paying close attention to with regard to what you believe the fed is putting on top of that list . Yeah. I think global trade matters a lot. I think if you wanted to be more confident about the economy in 2014, youd want to see global trade be picking up to the upside. Youd want to see shipments both in volume terms and price terms moving very significantly, telling you that the backlogs are moving. But as i look at global trade, trade with the u. S. , with europe, with asia, you do not see a turn to the upside. And if you wanted to make a prediction on the economy, you should be seeing it in global trade as we speak. So as japan potentially weakens their currency due to the last Stimulus Program that may be standing, i understand their trades going to pick up. But the reason is a little disturbing, dont you think . Yeah. So good policy and bad policy are both contagious. Bank of japan policy is in some sense made possible by the intellectual foundation from the Federal Reserve. It may have been one of their devices to weaken that currency to grow exports. But the reality is, that policy is still pretty early in its formulation. Exports have moved up some, but not nearly as much as they thought. Whats actually happened in the japanese economy is some return of animal spirits, some return of confidence and asset prices there have done something. Id say theyre in the early innings and like the rest of us need that third arrow. They need structural reform, we need structure reform. The europeans need it. And the real question that Steve Liesman and i have to wrestle with is are central bankers creating an opportunity for the fiscal authorities to get involved and make those sorts of fundamental changes in the economy . Or are they delaying it making it impossible . I think thats the tough question. Yeah. You know, i liked what you said. Its time for the guys in congress to do their job. I really do think that ben bernanke and company are hurting that process in a huge way. What kevin knows, i think, im not sure why hes not saying this, that the fed would never sit by and never say that it will not do what it thinks needs to be done for the economy in order to essentially cajole congress. The operative word there is thinks. Very much the way a doctor wouldnt sit by and say you know what, you know, you were not taking care of your body, not taking care of yourself, im not going to help you. Thats not what a doctor would do and not what the fed would do. Right. I think the difference, steve, neither the doctor nor the central bank should overpromise. The doctor and central bank has to say this is what i can do. Because what i can do is really going to work. You wouldnt continue to overpromise and underdeliver because at the end of the day, the doctor would no longer be perceived the head of his profession. Forecast is not a promise, though, kevin. You know that, as well. When they say were going to do this and heres my forecast, that doesnt mean theyre promising those numbers. Heres my expectation of what this policy will do. Thats right. And theyve been wrong. And theyve been wrong. I quoted yellen last week saying we will keep it where we are until we guarantee a strong recovery. She says we will keep doing this until as if its worked up to this point. Its not quite until i read it on this show. Until a recovery happens. announcer at scottrade, our clients trade and invest exactly how they want. With scottrades online banking, i get one view of my bank and brokerage accounts with one login. To easily move my money when i need to. Plus, when i call my local scottrade office, i can talk to someone who knows how i trade. Because i dont trade like everybody. I trade like me. Im with scottrade. announcer scottradeproud to be ranked best overall client experience. [ 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. Store and essentially they just get sold something. We provide the exact individualization that your body needs. Its the ultimate sale on the only bed clinically proven to improve sleep quality. The sleep number bed. Once you experience it, theres no going back. For one week only, queen mattresses start at just 599. 99. And save 50 on our limited edition innovation series beds. Plus special financing. Only at a sleep number store. Sleep number. Comfort individualized. Avo thesales event sis back. Drive which means its never been easier to get a new passat, awarded j. D. Powers most appealing midsize car, two years in a row. And right now you can drive one home for practically just your signature. Get zero due at signing, zero down, zero deposit, and zero first months payment on any new 2014 volkswagen. Hurry, this offer ends december 2nd. For details, visit vwdealer. Com today welcome back to squawk box this morning. Take a look at the futures, see how things are setting themselves up 45 minutes before the markets open. Dow looks like it would open up higher, s p 500 up close to three points and the nasdaq almost six points well call it. Take a look at shares of aeropostal, theorizing early this morning after the Company Announced it had adopted a poison pill. The retailer says its not adopting the plan to require control of the country. Also take a look at Take Two Interactive saying it is buying back all of carl icahns shares in the company. They resigned as they promised to do so once icahn resigned his position. He bought his position, i want to say back in 2010. Yeah, several years ago. Shares closer to 10. 12 back then. But he is now officially out of that one too. And we were looking at mens wearhouse and joseph a. Bank and youre going to like the way you look with the reverse baby bear hug. Baby bear hug. But not a teddy bear hug and not a bear hug. Karen finerman says its like a reverse pacman. I said that already. George zimmer. Its awful close. Like the way you look. Yeah, you are. Microsofts xbox one and play station 4 are in a battle. I made the point that, i mean, toys, you dont use that stick with like a ring where you go down the street anymore. Its hard to sell any conventional toys. Its so cool to do these things. Absolutely. Its amazing. These video games are fantastic. You can go have these massive war games and fields where you can go in tanks. Its like 20 , probably, of christmas sales of what you buy kids, i would think. It definitely is. And theres been a long wait for these consoles, the xbox 360 has been on the market since 2005. People have been waiting a long time for these consoles. I finally saw an ad for the xbox one where they tried to tell me did you see it . Its everything. Everything in the living room what weve been waiting for for so long. Is it . Thats the big selling point for the xbox one, a Home Entertainment kbis more than a gaming system. You can watch your tv through there. You can talk to it and say change the channel to cnbc if you want to and itll change the channel for you. You dont have to get out your remote anymore. It can make suggestions based on what you like to watch. And it can do things based on fitness. It is a kinect sensor, detect how active you are. Oh, great, just what i need, someone ratting me out if im not keeping pace. Or encouraging you. Play station 4 is better to play games on, is it not . More of a gaming focused device. Where microsoft tried to go with this big all powerful machine for Home Entertainment. Is it ready for that . I think so. The xbox has a ways to go before it can do these things. The Voice Recognition of the kinect isnt quite there and theres missing pieces to the table. How bad is the voice . Is it worse than siri. Probably on par with siri at this point. Your living room tends to be a noisy place and struggles to recognize you sometimes. Also does facial recognition. So when you walk in front of it, its supposed to recognize for you and sign you in for me only works half the time. You dont have anything at this point, do you . No. You dont have a wii. No, my kids are 3. Ive got to avoid 3. If possible i mean, 4, dont you get a wii . Absolutely, yeah. But ultimately, quite a few kids these days they want to play games on the ipad. And because mario cart, man. Mario cart is a good one. Is this going to be the thing that saves video games. Is this going to actually reenergize this . Theres a lot of speculation, including that the gaming markets has been declining. These consoles have been around for so long. I think that should help. But ultimately theres a huge trend of people moving toward gaming on their smartphones or gaming on their tablets because theyre successful and the games arent quite as immersive or good. Theyre right there all the time. I do think that trend is going to continue had so the whole gaming markets probably going to decline to some degree. We should see a nice bounceback. If you are an investor, forgetting about the issue of which consoles the better console, the gaming companies, the margins on those games, when you do it online or on your ipad, theyre making a lot less money. Do you think the entire business is going to decline . I think theres tough times ahead. Theyre figuring things out. Definitely getting better. Even if you only pay a dollar for a game. Youre in the game or another dollar for an extra level. Theyre getting good at that kind of thing. I think theyll find ways to get the revenue back up where it needs to be. But there are troubling times until they get things nailed down. I mean what . Your kids are growing up in a concrete jungle. Yes. No trees. You cant get a dog, cant go out and have a barbecue. No yard. For halloween, you go into a building and go door to door in some dimly hit hall. Well lit. Well lit. You cant give them a video game. You deprive them of a video game player, as well. Its too early. Theyre too young. They could see trees. They could have a virtual yard. A virtual dog. Give them something. We have something called central park, the biggest backyard you could have. How much dog poop do you have to walk through to get to central park . Just a couple of blocks. Were very close. Were close by. Do you live in the burbs . Right here in the city. But you are now the distinguished anchor after the spam reference, the poop. My title is getting longer and longer in the teleprompter. Anyway, tim, wii, get a wii at least. Kidfriendly console. Kidfriendly. Get some rock band, that i can rock out together. No guns whats the correct age . We have a wii. Kyle doesnt play it yet. No guns, andrew. We do have an xbox, too. Thanks, tim. Sure. And dont miss squawk box on friday. Our guest host is going to be bobby kotick. Well get him going on some of these hes got video games with guns. Hes one of the bad guys. Well talk about stocks on the move. Ahead of the opening bell, well talk about the proposed deal between mens wearhouse and joseph a. Bank. Our good friend jim cramer will join us after the break. Tomorrow on squawk box, well get you ready for the trading holiday. Joining us to talk portfolio strategy for 2014. Plus, a squawk box tradition. And you really want to stuff it in here. Turkey advice from the butte butterball hotline. Squawk box starts tomorrow at 6 00 a. M. Eastern. No two people have the same financial goals. Pnc works with you to understand yours and help plan for your retirement. Visit a branch or call now for your personal retirement review. The most Free Research reports, customizable charts, powerful screening tools, and guaranteed 1second trades. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. Im monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Welcome back to squawk box this morning. He weres a stock to watch in todays trading. Palo alto network beating estimates by a penny. A 73 game in subscription revenue. The company has been in the process of switching to a subscription business model. Lets go down to jim down at the New York Stock Exchange pip want to talk to you about how nice youre looking in that suit. I dont know who makes that suit. Thats a brioni. I got three for one at jos. A. Bank. Its 17,000 down to 9,000. What do you think of the reverse baby bear . I love revenge. May mens wearhouse, a bigger commonwealth. Company. They can triumph. Its a good idea. Today did a double take because jos. A. Bank was supposed to be the buyer. I think mens wearhouse wants to cole the shots and i think mens wearhouse is doing better than jos. A. Bank. Why should a Bigger Company have to report to jos. A. Bank . Lets say the guy who is biggest gets to call the shot. This sounds like an ego thing. Totally you got a problem with that, mr. Bitcoin . I like the bitcoin piece. Thank you for being honest. You had branson last week and you were right, you were right this morning. Thank you. Taking bitcoin. Tomorrow i great four for one, maybe tomorrow ill get a two for one. Youre the first guy to talk sense and not be worried if it goes up tomorrow in value. It will go up tomorrow in value. As joe knows, im the contra indicator. You told the truth. Stop it with the deny the humility thing. Even branson said the minute it clears, they sell it. They sell it into dollars. He said because of fiduciary responsibilities to shareholders. I thought that column told the truth. Youre a kind soul. Well see you in just a couple minutes. When we come back, well get the words on the fed and the economy. And Robert Shiller will be on squawk on the street to talk housing trends. Well be right back. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. 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. Lets get back to our guest host for the last word. You are close with ben bernanke. You know him well. Weve known him as our fed chairman for a long time. Whats the world going to look like . Ben bernankes life is going to be a lot better. The dynamics around the table is likely to be quite different. Jan set very well received by her colleagues at the table. But i would say controlling a room, harmonizing divergent room, having a relatively straight forward message for cnbc and watchers and the real business community, thats a challenge. Shes taking over very delicate moments as theyre changing instruments and i are say it will be a challenge in her First Six Months to remake that institution in her own image. Ben bernanke did it. Ben bernanke is thought to be running a democratic process around that table, but i can assure you he can get whatever decision he needed through that body. I was asked before the september meeting whether they were going to taper or not and i said i dont know whether theyre going to taper but i know the vote is going to be 91. So this is going to be a tough dynamic for her and shes going to need to call on all the depths of relationship and some degree of deference to take the fed, the institution, in the direction she wants. None of this will be easy when you have 19 people around the table. Youre talking about bumpier roads . More volatile messages, lets certainty, less clarity, but shell be able to develop that, but it will take her some months. Thank you. Squawk on the street begins right now. And i said what about breakfast at tiffanys she said i think i remember the film good morning. Welcome to squawk on the street. Im david faber with jim cramer live from the New York Stock Exchange. Carl quintanilla has the day off. The latest shiller home index has been released. Well show you the caseshiller index shortly and break down the numb