Equities were favored over bonds but the flows into equities moderated into october. As for december, it historically has been the best month on the average for the dow and the second best month for the s p. This morning the futures, when we get into the trading month for december, you can see they have barely budged. Dow futures by 4 points, s p down by 1 and nasdaq up by 1. 5. Among the eye lights, we have the European Central banks last meeting of the year. In the u. S. , a first revision to the Third Quarter gdp comes on thursday. Friday, the big number. The november jobs report. Markets watching that very closely to try to figure out what the fed is thinking about all of this. Steve, ill send it over to you. Thanks, becky. Lets talk shopping. After the First Official weekend of Holiday Retail. The National Retail federation reports shoppers spent less than they did a year earlier. The nrf suggests shoppers spent 407. 20. Online sales soared. Meantime, Research Firms say the traffic at brick and Mortar Stores increased. Sales rose by 2. 4 thursday and friday. Well talk to famed retail analyst dana telsey in a few minutes. Are you okay . Me . Are you a little scratchy . No, im good. You are . Yeah. You have no issues . Im just fighting something that my kids had, thats all. You are . Yeah, im good. Oh, no. I feel good. I feel good. You wont come over here i can stay over here if you want, joe. Thats okay. The whole show. You know, he sat in your seat on friday so that means that was before my kids had it. The germs are already there. Isnt there like a sevenday incubation period . You were making me think that i was not hearing it in your voice. There is something going on, i can hear it. All right. All right. You can come over here, relax. This is not that Dustin Hoffman who have movie. Okay. Lets check on markets this morning because december is a big month. What are we up now . Are we up 25 . 10 is possible to do in a month. You think this is 35 . I dont know. I never thought it would happen again. I said how much how great it was when it happened three straight years in the 90s. That was a stock market. That gets people excited. That makes people money. Im not saying thats going to happen, but december historically is one of the strongest months. Its not completely unfathomable to think that the s p could be up maybe 30. I mean, 30 is possible, isnt it . I made it that was a while ago. For 2012 but we were up in 2012. I cant get it exactly right, but the market has been up i think 40 since then. Just getting the direction right is a good thing. No one knew what was going to happen. Anyway, so, lets we talked possible. Drones. Were going to talk drones. We will. We will. We will. Called a tease. Theres a million things to think about with the drones. My mind youve been racing with this. Because its like the jetsons. Have you seen the future of this . Yeah. And theyre designing flying cars now supposedly. You saw that last week. There will be a lot of things up there supposedly. Were not gravity will still be around, right . Right. Not the movie. Amazon can repeal that . Dont they have enough money for that . You know the website designer theyre using for the navigation on this. The Canadian Firm that did obama care. Thats the one that theyre using for you know, i hear my mother saying, you could put an eye out with that. You could put an eye out with one of these things, couldnt you . The place where you it would be way far away from everything. The place theyre using it are where youre getting most orders, manhattan. Thats insane. Ive said that lets say we get the biggest business guest in the world, who is it . Is it warren buffet, is it bill gates . Right. Right. Our biggest business guest is not charlie sheen, is not as good as a d level lindsay lohan. Right. So when d in terms of eye balls . Yes. So when 60 minutes decides to go slumming into our realm where theyre doing business people. They get meredith whitney, she says the world is going to end. They need something big. Jeff, were thinking about putting you on. What have you got . Give us something. Yeah. I think laura logan said, hey, buddy, you were there. Whats the biggest thing youve got . Maybe that didnt happen n. This case i think they ask him, bezos, what have you got thats going to make you worthy they just kind of cooked this up, you think . I think he thought, you know, 60 minutes, they think theyre so smart, lets see if theyll actually run this story. Lets see if theyll believe that im going to send packages through drone delivery. You just are a scrooge on this bun. I mean, i think i think im all over this. Did you see what the faa said . In 2017. Are you kidding me . They said 2026 before theyre going to get the majority of the route. Im going to be the people will demand it. The singularity could happen before this. I might be cybor. I think whats more interesting is you sitting on your property with a shotgun and shooting down a drone when it comes over your property. Thats interesting to me. The first organ im going to have replaced by a machine, too, are my eyes. Your snoois. My eyes to be able to see. You were worried, werent you . I know you were. Anyway, in global my eyes. Why, what did you think . Joe, i had no thought at all. Okay. I had no thought. It didnt even occur to me what organ you were talking about. In global news it expanded in november. Major asian markets closed as you can see, a nice one in hang seng. Lets get now to europe. What would they think of this . The drones . Yeah standing by in london. As they leave the distribution center, ross, carrying something, are they theyre not like 30 feet off the ground. Do they start out high and then come down . Given air space that theyll be able to travel in and theyll travel at that level. Thats crazy. I was at a fancy party and im not going to mention who in the hamptons last summer . Recently. There was a drone taking pictures of people. You had one of these things. Bumping into the house. Ross, did this make its way across the do you think hes junk yanking our chain . Do you believe in drones by 2015 . Number of issues. Im not sure it works in a builtup area. I dont know how a drone is going to deliver anything in london, for example. There isnt the space. You cant just land a drone for an apartment. I dont think thats going to work. Ive talked to firms that are using drones for delivery for aid and in remote parts of the world. In most markets where you have very poor road access, drones there work brilliantly because its literally up and over and down the other side of the mountain. Couldnt a drone get you a beer at the pub . That would be something that would capture the imagination there, right . Thats an australian barman. Exactly. We dont need theres nothing wrong with a nice australian pulling a pint down at my local. Thats perfectly fine. Dont need the robot to do that. Theres an art as well. You have to get the head right, steve, on pints, all right . And i dont know if a machine could do that better than man. Drones aside, today we are down. Decliners outpacing advancers by roundabout 7. 38 and were on the session lows as well. Joe was talking about the data we had out of china. Plenty of data out of the european area as well with pmi. Footsie was down. Up 43 points. Xetra dax is fairly flat. Were up. Alltime highs, 9,300. The ftse down 1 1 3 . Talk about the china pmi data. That did have an impact in terms of booting commodity accounts. The kiwi and the aussie. Take a look at the sector breakdown. Retail resources, one of the best performing sectors though it is still fairly flat. Travel learn sure up. 4 . Food and beverages are up. Pmis in the eurozone that ticked higher but they were still weak in france. In fact, that economy is contracting and better pmis out of the u. K. The u. K. Economy firing on all front at the moment. Back to you. Ross, thank you very much. Again, ross westgate, well check in with you tomorrow. Retail, another holiday kickoff, its come and gone. How did the retailers do. Joining us is dana telsey. The reports that ive seen suggest this wasnt really a build. Sales were actually down over the weekend. It makes you wonder if opening earlier on thursday is worth it for all of the big Retail Companies . It definitely seemed as if sales on thursday pulled from friday. Even a little bit from over the weeken weekend. Overall when speaking to retailers, low Single Digits is where the game was. So what does this mean . Was this a mistake for them to open early like this . Was this simply an issue that the retailers started talking about the holiday sales as early as november 1st i think in walmarts case . What happened here . I think that you basically had the promotions and all the advertising for it starting way before this thursday or friday of thanksgiving and black friday. You had many deals begin on monday and tuesday, and the consumer got washed out as they went through the weekend. I think you still have 40 of Holiday Season sales that typically occurs december 15th through the 25th. I think when all is said and done, well get some reports on thursday from the retailers themselves. It will show a low single digit increase at best. I think we will have more retailers opening on thanksgiving day more this year than last year. If it didnt work this year y would they do it next year . Because you had big traffic 8 00 p. M. Until 2 00 until morning. That was midnight to 6 a. M. You had probably better sales growth, 8 00 p. M. On thanksgiving day than you did midnight to 6 00 a. M. If thats the case, do you buy these stocks. I think overall First Quarter and end of the fourth quarter, best performing times for the retailers. The names that did well, best buy, deckers, it was gap, it was macys, it was kohls who we thought had good weekends. Id say you buy the stocks going into this Holiday Weekend. You do get a lull in the next two weeks and then they come back. You want to watch the names right now. Dana, did you see this National Retail federation report that everybody is talking about which kind of put the gloom on the Holiday Shopping weekend . Yes, i saw the lower average amount spent and this was a survey of 4,000 people. I think when you look at their numbers compared to others numbers, it seems like directionally certainly maybe a little bit slower than last year, but a decline seems harsh. Let me give you one piece of data from here, which is that nonHoliday Shopping actually fell. The percent of people who said they shopped for nonholiday stuff fell 3 points and the percent who shopped for holiday rose 3 points. So we cant really say that Holiday Shopping is down to the extent that people are just not shopping for nonholiday stuff. A lower percent of people are shopping for nonholiday stuff. What accounts for that, do you think . I think overall you still have selfgifting thats very important. I think black friday, a lot of it is buy for yourself and then look for the gifts for others. You have the cyber monday coming up also. I think spending on the home is what consumers are spending on themselves . Selfgifting. I like that term. I think it is. Well learn more about that. Dana, thank you. Great talking to you. Now back to the horrible story we mentioned at the top of the hour. Four People Killed and more than 60 injured after a crash in the bronx. Mary thompson joins us. Mary . Reporter thanks, steve. Over my right shoulder you can see the scene of sundays fatal accident which you said killed four and injured at least 63 ores. Now from our Vantage Point we can see the accident scene which is very well lit. There are emergency workers down there. Investigators have been there since noon wednesday. The National Transportation safety board is heading up the investigation into the accident and it expects that investigation will take anywhere from 7 to 10 days. Heres ntsb board member earle wenner. Throughout the next few days our investigators will work on scene to thoroughly document the accident scene gathering the factual information. Our mission is to understand not just what happened but why it happened with the intent of preventing it from happening again. Reporter now yesterday morning at around 7 20 a. M. A seven car train with about 100 passengers was traveling to Grand Central administration. It jumped the tracks about 11 miles from its destination. It stopped just short of the intersection with the hudson and harlem rivers. The black box has been recovered. The trains engineer who was injured will be questioned by federal authorities today. Some reports say the engineer said he applied the brakes as he approached a significant curve up here on the bronx but the brakes did not work. This is the latest in a series of problems for the nations busiest Commuter Railroad. This means likely that 2013 will be the deadliest for metronorth since 2007 when seven were reported. It also means the commute for those taking metronorths hudson line which serves about 19 or 53,000 of its average weekday passengers will be disrupted until the mta can repair the tracks. That wont happen until the ntsb includes i had investigation. The ntsb is expected to hold a press conference and well bring the latest to you when we have that information. Thanks, mary. Joe . Scary. We took the train twice since ive been in to work on thursday to go down to the parade and then we went to a rangers game. Then the next morning, shocking. Its the last thing youre thinking about around the holidays, that all youre trying to do is get somewhere. You think youre doing it safely. Right. Exactly. Just really bad story. My familys been traveling metronorth for 50 years. Yeah. I mean, it is a rare thing and but i i saw some of the coverage and i recognize exactly where that is, you know . I mean, its right outside the harlem river. Hovering over us. Coming up, much more on the buzz story were calling it of the morning. Amazon testing the delivering some packages using drones. I guess anything is possible. I mean, the jetsons was in the 60s, right . Taking a long time to get to that. That was a cartoon . I know that. But you can talk about the possibility of these things long before its really going to happen, cant you . Well have some comments from jeff bezos. Hell never be on our show. First as we head to break, alex wilson joins us from the weather channel. Were talking about our newest winter storm. Snow and rain are coming to parts of washington and oregon this morning. A lot of the western part of the u. S. Going to see that. Parts of idaho and montana. Around fargo, minot, wintery mix from bismarck over towards min knee app poe lis. Duluth, snow. Cleon bringing wintery mix to places like minneapolis. Snow through parts of north dakota and northern minnesota. Even on to wednesday weve got more snow ahead for parts of minnesota and the dakotas. Rain snow into places like green bay. Heres your snowfall forecast, 18 to 24 but in this deep purple a foot to a foot and a half. Snow isnt the only story. Were talking about some very cold temperatures. Arctic invasion pressing south ward as we go through the week. Much colder air. We are talking about serious and dangerous cold. These temperatures are going to be plummeting. 35 today in great falls. 25 in minot. Might think thats cold enough. No, tomorrow, 7 in great falls, 14 for a high in minot. By wednesday, minot will hit 1 degree for a high temperature. By thursday, minot, north dakota, this is your high temperature. Minus 7. Well be dealing with lows minus 18, 19, 20. Minot, north dakota, today 14, tomorrow 1, minus 7 and minus 12 by the end of the week. Well be back after the break. Every day were working to be an Even Better Company and to keep our commitments. And weve made a big commitment to america. Bp supports nearly 250,000 jobs here. Through all of our energy operations, we invest more in the u. S. Than any other place in the world. In fact, weve invested over 55 billion here in the last five years making bp americas Largest Energy investor. Our commitment has never been stronger. Right now right now to start the day with executive edge, this gives Business Leaders a leg up. Amazon is testing delivering packages using drones. The unmanned vehicles that could drive through the air, that will represent 86 of the packages maam zon delivers. I know it cant be before 2015 because thats the earliest that we could get the rules from the faa. My guess is thats probably a little optimistic but could it be, you know, four, five years . I think so. It will work and it will happen and its going to be a lot of fun. Yeah. Hes even starting to look like megamind to me now. You know, im going to take the other side now. Oh. If someone had told you ten years ago that you would be Walking Around with a little thing that you could watch tv on and send, you know, wireless messages, we wouldnt have believed that either. Four to five years from now . What concerns me is theres a limited amount of space. I think people try and work these drones. Theres really not a limited if you think about how much is up there. You look at how many planes are flying at any given time. Do you know what they call this corridor right down the hudson next to our offices . This corridor down the hudson, they call that suicide alley. There are so many plaines. The fact that you put drones on top of all of those things. Drones seem to be big enough where if you hit one with a small plane, even if you hit one with i dont know, how high do they fly . There would be a lot of you know, you have to have a lot of air traffic control. We need the rules from the faa. But i also as theyre coming down, you dont want one landing on your head. Right. You know, because theyre you know, to keep something heavy in the air, it takes a lot of massive power on the whirlie. I think the two of you guys should just get used to t. Its coming. Drones are coming. I think its coming. Theyre going to be an efficient way of delivering goods. Its exciting. Big game changer. I cant get a pizza in half an hour. Im skeptical about the you know, becky, that may be another possibility. It takes a while. Can you imagine a pizza delivery it captures my imagination. Im ready. I think 2015, im not necessarily buying that. He admitted himself, 2015 might be optimistic. Four to five years. If youre saying four to five years down the road you have to reassess but i am highly skeptical. Well see. It certainly is a buzz story everybody is talking about. I guess if you look is there a way to check twitter . Look at the hash mark and look at drone . Im interested in drone decals. You have your own drone. Advertising on it . Advertising on the drone. Personalize your drone. Im already in the drone business. Will the sky ever look ugly, like locusts . I mean, would there be so many flying around . They have their own on board radar, they avoid each other, use the Global Positioning system. I still use a blackberry. Im the wrong one to ask about this. I have a lot of questions. Altitude. Even when it lands on your front porch, what do you do . It stops and you reach out and you push it back out . It drops it and flies away. It drops it and flies away so you hope it doesnt drop the book on your head. You cant sign for things . No. You could acknowledge it. Acknowledge it with your smart phone. Acknowledged delivery. I dont know. I think it will take a lot longer than four to five years. Im not saying forever. In 2018 who wants to take a bet that these r landing on your doorstep in 2018. I had a vision of amazon as the big, Bad Corporation in the futuristic movies. Theyll be everything. The stuff that theyre into i will take 100 bucks from each of you and say inflation adjusted 100. Regular 100. Nominal bet. I had a tweeter something with Jonathan Waller about robocop and that that corporation was really bad. I just saw robocop last week. They were protecting a city, a crime ridden city. It was detroit. It was detroit which was kind of scary that they picked that. Can you imagine our great leader jeff bezos with that laugh . Do we put do we put it side by side with megamind . That would be mean. Exactly. Tell you guys about the next story. China launched its first ever extra terrestrial landing map en route to the moon. Its being haled as a major milestone to the science program. China will send someone to the moon in 2020 now that we can no longer send someone to the moon. We know whats there. Were worried about what they want to use it for at this point. What is this jade thing, it drives around . Yeah, like a buggy that will go around and check out the surface. Maybe if it drives everywhere it could find a moon rock more interesting than what weve got. If they could cover the whole rock, the whole satellite. Maybe theyre going to deliver packages. Maybe theyre going to do that. Deliver amazon packages to the moon. I love the moon, its beautiful. It makes you feel nice, but im done with the moon. We need to go somewhere else to make it interesting. One of these 40 billion earth like planets that are supposed to be out there nerds, listen up. The largest known private memorabilia collection from the lord of the rings collection will be released this week. There will also be props used by the evil ring reichs, prosthetic hobbit feet, boots, shields, vests, arrows and more. If the items reach their stated guide prices this auction will bring in more than 1 million. Im not buying this. This isnt the actual sword that froto used. Yeah, it is. This is the sword from the this is not the one. I understand what youre saying, joe. This is from the movie. If you told me you could get me a sword that glowed blue, would i have use for that. This is from the movie that they made about the actual events. Yes. Coming from a guy who has a model of the walking dead sword. No one knows about that. Thats going to be a christmas present. Ixmay on the presentmay. The daily beast was going to have a story. You would not have brought up that sword. You would not have brought up that sword. I dont want to buy actual movie props from a movie thats five years old for 100,000. Maybe the maltese falcon or something that withstood the test of time. These are great movies. What would the real photo sword be . Middle earth. I dont know. Some of the hobbit feet. Prosthetic hobbit feet. Put them on you. We dont know about your whole thing with feet. You never told us about that. You would buy harry hobbit feet . No, i would buy them for you if you agreed to wear them around the set. It would be good. When we come back, were going to talk about the 12 days of christmas investor style. What the cost of things in 2013 dollars can tell us about inflation. Squawk box will be right back. Over the next 40 years the United States population is going to grow by over 90 Million People, and almost all that growth is going to be in cities. Whats the healthiest and best way for them to grow so that they really become cauldrons of prosperity and cities of opportunity . What we have found is that if that family is moved into safe, clean Affordable Housing, places that have access to great school systems, access to jobs and multiple transportation modes then the neighborhood begins to thrive and then really really take off. The oxygen of Community Redevelopment is financing. And all this rebuilding that happened could not have happened without organizations like citi. Citi has formed a partnership with our company so that we can take all the lessons from the revitalization of urban america to other cities. So we are now working in chicago and in washington, dc and newark. Its amazing how important safe, Affordable Housing is to the future of our society. Its that its that time. Were calculating the real cost of christmas. The 34th annual pnc christmas price index. Joining us from pittsburgh, jim dunnigan, chief Investment Officer from pnc. Anything go down in price . No, nothing that went down in price was the pear tree this year. The only item, decrease, 2. 9 . You have to buy the pear tree and the partridge . Thats the item in the song, absolutely. So you have to have the tree and the okay. So what was the what went up the most . The most this year were the nine ladies dancing. Increase, the ladies got a 20 increase. They had not seen an increase in the last two years so theyre playing a little bit of catchup. Now, you know, you had to go the there. Who are these women and where are they dancing . How did you pick what to call dancing . These are ballettype dancers . Over the 30 years we try to keep a lot of consistency. We use philadaco. The pennsylvania dancing company. Leaping. And if you did have to count dollar bills to figure out how much a dancer costs, that would be a lot more thats the other part. I think they call that crowd funding in the investment world. Okay. I saw this movie, Jennifer Aniston is a stripper. How funny is jason effing. I cant believe i missed it in theaters. She says, i only take 20s. Yes. Anyway, did we ask you what the lords a leaping is . Yeah, lets get back to that. I repeated the same line. No, its a really funny movie. You have to see it. How inappropriate was that movie . It even showed the guy after he got bitten by the spider. My kids saw it. One of them. Okay. We have the ladies dancing. What else went up a lot . The musicians went up. 2. 9 . Similar to the overall event. Our service side went up. What about gold rings . Gold rings had no increase, becky. I think theyre working more on the fifo inventory, first in, first out. Trying to sell rings from last years prices. Those should have gone down, jim. The big part for us is our website, you can go in and build each of the individual items in the workshop and educators can get lesson plans to use in the classroom. You dont use sugar for any of these things, right . Sugar has seen a big decrease in the last five weeks. Sugar prices have dropped pretty steadily in the last five weeks. Theres nothing surprisingly in the 12 days that uses sugar, right . If you remember last year, becky, we had the drought in the summertime which drove up food prices and grain prices. Right. Right. Which caused the bird costs to go up. This year both energy and food prices are down. We were going to play a little music or something so the total price is, did you tell us that already, 27,993. 17. Up 7. 7 this year, joe. 7. 7. Inflation. All right, jim. Thank you. Good to see you. Happy holidays. Folks, it is cyber monday. Thats when people return to work and do some shopping online. Were going to talk about ecommerce prospects when squawk box comes right back the most wonderful time of the year capital to make it happen . Without the thinking that makes it real . Whats a vision without the expertise to execute it. And the financing to make it grow . Whatever your goal, it can change more than your business. It can change the future. Thats why, at barclays, our ambition is to always realize yours. Life with Crohns Disease or Ulcerative Colitis is a daily game of what ifs. What if my abdominal pain and cramps come back . What if the plane gets delayed . What if i cant hide my symptoms . What if . But what if the most important question is the one youre not asking . What if the underlying cause of your symptoms is damaging inflammation . For help getting the answers you need, talk to your doctor and visit crohnsandcolitisinfo. Com to get your complimentary q a book, with information from experts on your condition. Welcome back to squawk box, everyone. In our headlines this morning, newly named Nobel Prize WinnerRobert Schiller is warning of a u. S. Stock market bubble. Schiller said that he believes sharp rises in equity and property prices could lead to a dangerous financial bubble and may end badly. He describes the financial and Technology Sectors as overvalued and says, i am most worried about the boom in the u. S. Stock market. Also because our economy is still weak and vulnerable. Hes talked about irrational exub ber rangs in the past. When he wrote it last time there were still several years. He said that. And in what i read, he said, not yet. Im not saying were here yet. Right. You cant be always right with the timing. He sees stuff starting to build up and hes worried about how it will end. Now we listen to him more because he has a nobel price. And the case shiller index. I saw it on one of the aggregation sites. Nobel economist. Oh, its shiller. Yeah, because he just won. Anyway, that gives you some additional you think it matters. I you dont . No. Winning a nobel give you anymore foresite . Its not a nobel. He did not set aside any money for economic prizes, alfred nobel. In the 60s. The society made this up. Should we recap the running fiveyear debate over whether the nobel is a real prize as okay no, maam mix and science . You were an english guy. I think theres a lot of smart guys doing a lot of research there. Thats all. They do a lot of research and one ends up saying up is up and the other says up is down. They both get nobel prizes. All physicists agree. Theres no objective truth. Amazon is having seven days of deals. Theyll offer deals as early as every ten minutes. With us is victor anthony. Good morning, victor. Good morning. Lets get this out. The drone story . I cant say i anticipated that one. Youre a really good analyst but you didnt anticipate that one. I was somewhat surprised. I can see it working in rural areas. In densely Populated Areas im not sure. Would it make sense. You werent using them constantly. You can use them in highly Populated Areas. It will be the worst place. I would imagine you have to be home. Is there a serious stories in the drone way . This is a story thats so big, profitable, ubiquitous that theyre actually doing drone research. Does that tell you something about just how big a company this is, amazon, how profitable they are. Google and amazon, those two companies have become the new bell labs of today. A lot of the innovation that we see coming out of the u. S. Is coming out of these Companies Facebook to some extent as well. Jeff bezos has stepped into the shoes of apples former ceo. Thats futuristic. So bezos is the new steve jobs . I think so. Based on what . Not just the drone story but other research and stuff theyre doing . Other innovations . His ability to put the amazon platform into other areas. He has aws which is a Client Services business which has become essentially the largest Cloud Services business. And the thats a smart take on it. Hes a really thoughtful guy. He does a lot of time big thinking like Steve Jobs Used to do. He does. I think so. Lets talk about the retail season and how amazon is doing versus ebay. Whats caught your attention . For me over the weekend, the big story was e bay, the stock has been flat. Amazon is up over 60 . The first three days of cyber five, thanksgiving, black friday as well as saturday, sales up 30 up year over year. Amazon was up roughly 30 . Most Third Party Data sources were high teens, low 20s. It took a lot of market share. That was surprising to me. Can we go back to the ebay chart . Thats a highly volatile stock, right . They gave us really robust thr threeyear forecast. It feels like a penny stock. A few weeks later they came out with actually missed numbers in the First Quarter of 2013. So the stong has been extremely volatile. Theres been periods of time where theres been competition for paypal. Thats taking the stock down. You like it here at this level. You like did relatiit relative. You think the numbers for the Holiday Shopping season are better. If they sustain cyber monday, i think it will be a significant shift in the stock and the stock is likely to go well. I think this is a Huge Positive for ebay. I like it here. Victor, thank you for joining us. Well check in. Keep your insights coming. Thank you. Thank you very much. Victor anthony. Coming up, a drop in corporate bankruptcies and what the stat tells us about the state of the global economy. Well be back with more squawk box. Announcer all this week, squawk box, the Higher Learning project. Education reimagined. Disrupting the classroom, putting universities to the test. How innovations and technology will lead the work force of the future. Education advocate, former senator bob kerry kicks off his exclusive series today at 7 00 a. M. Eastern time. [ male announcer ] this store knows how to handle a saturday crowd. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. With historically low Interest Rates and easy access to capital, bankruptcy filings are down 12 this quarter compared to last year. Alex partners is an advisory that specializes in corporate turn around and restructuring and Fred Crawford is the firms ceo in okay, so yearoveryear, what about last year versus the prior year . Was that down, as well . It was, you remember in the 08 09 financial crisis, we saw credit markets froze up. Since then, with the feds policies along with very accommodative Interest Rates and lending policies, weve seen really historical low restructurings for the last three or four years. If you have declared bankruptcy with the fed at zero and with all of this accommodation, you should probably get out of the business of managing of trying to start a business. If you cant start a successful business in the last couple of years, youve got problems, right . For sure. And certainly in an environment like this, companies that historically wouldve went into bankruptcy have not. Have not. Theyve had time, the ability to push out or restructure their debt. And its given lots of businesses the opportunity for longer runway to recover. Are we in a position where the old expression is that when the tide goes out, you get to see who had a bathing suit on and who didnt have a bathing suit on . Everybody, the tide is not going out are we covering up companies that should not be in business . And is that hurting the more Efficient Companies that theyre allowed to stay in business . Yeah, what i really think is as many times as you know in the u. S. , our Bankruptcy Code is there to allow for a Second Chance kodak emerged from bankruptcy successfully. It wasnt successful. It was a nifty fifty. What are they now . Right. Business to Business Company now. Do you know offhand . I dont know offhand, but theyve had a very good start in the new world. Gives firms a Second Chance and new leases on life. And in this situation, were seeing companies extend. So what in terms of size, how do you break up the universe that youre looking at . In terms of sales or market cap or what . We look for the amount of debt, the term of the debt and whether or not a companys cash flow will allow are Big Companies going bankrupt . Whos going bankrupt now . Its small firms. Small. That are how old most of the time . Hard to say in terms of age. But its the firms smaller and less access to capital. We know that three out of four fail the first time around. Therell continue to be, this is a normal process of doing business. Thats right. Are we down to 07 levels yet . We are, were below that, as a matter of fact, historically low levels of corporate default. So no one at this point is really a year from now, can it drop another 12 . No. Is this something that we should watch to gauge how the economy is . Or is it more of a reflection of the fed . Yeah, my guess is that with fed beginning to hint at an end of the policies now and history would show over multiple decades that corporate default ebbs and flows. Weve had a three or fouryear run. Our expectations you could probably see this in commercial real estate. The other shoe never dropped. Everybody was able to roll over a lot of debt because of this is another effect of the feds easing you heard the term, kick the can down the road. A lot of restructuring of debt and refinancing as opposed to outright you wonder is this another dislocation from this, steve . That none of the companies that maybe i think youre overstating it a little bit. There was a lot of trouble, the people who went out of business as a result of the crisis. Some are probably in business as a result of it. Everybody can get credit . Not everybody. Its the big firms that have access to big firms had access to it and maybe one of them wouldve gone under. Any longterm negative effect of all of the Big Companies being able to float 30 year stuff at zero . I think what will happen is as with most cycles, weve had a prolonged low value, if you will. And i think when we secret tighten up and Interest Rates pop up, we will see higher than normal levels of corporate default. Therell be naked swimmers then. All right. All right. When we come back, well have this mornings top stories, including amazon drones, Holiday Retail sales and much more, squawk box will return after a quick break. [ male announcer ] this december, experience the gift of exacting precision and some of the best offers of the year [ ding ] at the lexus december to remember sales event. This is the pursuit of perfection. If every u. S. Home replaced one light bulb with a compact fluorescent bulb, the energy saved could light how many homes . 1 million . 2 million . 3 million . The answer is. 3 million homes. By 2030, investments in Energy Efficiency could help americans save 300 billion each year. Take the energy quiz. Energy lives here. 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. Click click and buy, how two of the nations Biggest Shipping Companies are handling the volume without drones. Well get an update from the Fedex Distribution Center and speak to the cfo of u. P. S. We kick off the Higher Learning series. Executive chairman and former senator bob kerry joins us. And the first day of trading for the last month of 2013. Well preview this months jobs report as the second hour of squawk box begins right now. Good morning, everybody. Welcome back to squawk box here on cnbc. Im becky quick along with joe kernan and steve liesman. Weve been watching the futures this morning and theyre barely budging as we head into the first trading day of december. Again, this comes after a month of huge gains. This morning, you see the dow futures down by 6 1 2 points, s p by under a point. Remember, all three are up by better than 20 for this year. This is the day that online sales surge after the thanksgiving weekend retailers are hoping they can make up for the Holiday Weekend when the National Retail federation says the total spending fell by 2. 9 compared to a year ago. A retail reporter Courtney Reagan will join us with more in a moment. Etfs continue to be popular. That is the sixth month in a row of gains. However, that was actually a slowdown from octobers 53. 2 billion. We also have two key reports on the u. S. Labor picture. The monthly adp report will be out on wednesday morning why the gulfs november jobs report is set for saturday morning. 173,000 new private sector jobs expected, while they expect fridays numbers to show 180,000 new nonfarm jobs. A deadly derailment in new york. Four people were killed, more than 60 injured after a metro north commuter train derailed in the bronx. Mary thompson on the scene and will bring us an update in a couple of minutes. Also in our headlines today, the global headlines, iran is saying it wants stronger cooperation with saudi arabia. Its trying to ease concerns about a potential resurgence and influence after a deal with arab powers. Some proliferation experts are worried the deal could fuel the spread of dangerous technologies across the middle east and asia. Saudi arabia could seek to buy Nuclear Weapons if more isnt done to stop iran. Todays guest is bob kerry who served on the Intelligence Committee when he was in office. And its great to have you here today. We have a lot of things to talk about. But we want to get you thoughts about what happened with this deal with iran. Was it a good thing or not . I think it is a good thing. I think, you know, this sixmonth freeze is worth the risk. Its not north korea, its not kprashl to what happened in the 1990. They have a significant middle class, the sanctions were having a major impact. And this is a slight loosening of the sanctions. I think its worth the chance. It is their backyard. Well, its their neighborhood. Id be concerned about it, as well. But as i said, i think it is worth the chance. You have two options. Take it down with military efforts or diplomacy. Or you could have left the sanctions in place. They did seem to be having a huge well, they did leave the sanctions in place. It actually puts a lot of pressure on iran to comply. If they dont comply, therell be significant pressure to put the sanctions back on, perhaps Even Stronger than what we had before. The agreement, though, allows for some continuation of uranium enrichment. And that has saudi arabia so worried. You can keep them. They just said no new centrifuges. Youve got two choices here. You can try diplomacy or get military action. Those are the choices. Its not a binary world. Weve seen this movie before with what happened when we appeased north korea. This is not north korea. Its a different country, different set of conditions. They have a very strong middle class. You think hes out of his mind . No, i dont think hes out of his mind its not a binary world. Im completely sympathetic with saudi arabia and israel. I read in the journal and other places, people were adamantly opposed to. Youre saying its either this or military action. Look, it may turn out to be the worst thing weve ever done. Im saying its worth taking a chan chance. If you believe its a danger. The question is, what do you do about it . You either take. And weve been planning, a significant amount of planning for some kind of military act n action. This is a very big country. If we thought iraq was a problem, iran would be a bigger problem. We dont want to do anything that will enable them to continue to do it with lesser sanctions. Thats right. Its worth taking a chance as considerable amount of attention now and pressure to comply and take additional steps. If they dont, the sanctions will go back on stronger than they were before. Well see what happens. Well see what happens. As i said, its a big gamble. Its not the same thing as the 1990s. Its a gamble were taking. Thank you, senator. Well have more on that. Amazon testing delivering packages. Could deliver packages that weigh up to 5 pounds. That represents roughly 86 of packages that amazon delivers. In an interview on 60 minutes last night, jeff bezos already has the technology in place. It could be at the earliest 2015, but he was doubtful that would happen. But the technologys there. I have a totally new viewpoint because im looking on my screen here that says dominos, test drone pizza delivery. What was the date line on this . 87 . No, but june 4th, 2013. But no one and, in fact is there a patent . They developed something. And the person covering the story called it a publicity stunt. Saying in the first bit of Technological Research flying pepperoni, they developed a drone capable of delivering pizzas. While its likely a pr stunt. Bezos does it i think he was serious. So is dominos. I have a picture of it. The domicopter. Multiple pizzas. And its in one of their warming bags which keeps it warm. Yeah. The peaceful use of drones, i like this idea. You know, pizza. And now youve got my attention here. You could get the book. And the pizza delivered. You dont need a book. That comes right over. And if they crass, you should have Parmesan Cheese all over your book. Do you know its cyber monday . All over the place. The Holiday Weekend shopping sprees arent over yet. 131 million americans will shop on this cyber monday. And Courtney Reagan is following the shipping action for all the online ordering all day. You were at the mall. You didnt say mall, though, in ohio. Now youre in tempe, arizona. Whats going on . I travel fast, joe, what can i say . Im in tempe, arizona. And were here at fedex for the first time in its history, the Company Expects that today cyber monday not only the busiest day of the season but busiest day ever. And about an hour from now, the sort happens right here behind me on the conveyers and with the trucks. That will mark the busiest hours in the companys biggest day in history the bulk will be the purchases made over the thanksgiving weekend. They have to get loaded on to the trucks for delivery before the cyber monday packages can enter the queue. Most think it was somewhere around 15 over the Holiday Weekend. Because of the orders, fedex projects that 22 million shipments will be in today. That marks an increase over 2012s busiest day. And we know it no longer stands alone as a key shopping day. Retailers are blurring the lines, offering week long black friday events and cyber weeks as opposed to just one day. Now, ibis world projects online sales will hit 1. 8 billion today. Thats up 13 over cyber monday of last year. Thats an impressive growth rate. But, remember, very small when you think about how much was projected to have been spent over the black friday weekend at 57 billion. Now, if you could tune into squawk on the street when we actually get to see some of the action of the sort the packages loaded on to the delivery later on in the day, were going to make our way over into an Amazon Fulfillment Center to see the new orders fulfilled for cyber monday. For now, back to you guys at squawk box. Thank you. Steve was taking this opportunity to check out deals since you reminded. Amazon. Com, the kindle fire, just took 50 off. Everybody in the survey says theyre not using their Work Computers to shop. Uhhuh. Im watching, im reporting here, watching the deals. Well talk more about cyber monday as things get moving. Well check in with you, squawk on the street. Checking out the deals on cyber monday. All this week, it is squawk boxs Higher Learning series. Reimagine the way we learn, one of the men on the front lines is todays guest host. Former senator bob kerry. Hes the executive chairman for research and scholarship. And were very pleased to have you here this morning. Nice to be with you. Lets talk about a little bit first of all about whats wrong with Higher Education. If you have a child of college age, you probably know this well. If you dont, if you havent been paying attention, what got you to the point where you realize we need to address things . Well, i spent ten years running the university of new york city. What i saw was the primary regulators were the primary. Issuing credits that transfer to another institute. And they closed the system down. They make it very difficult for a new intern to get accreditation. And any time youve got an environment where everybodys competing in a closed system, you increase supply and demand. And we had tremendous increase since the cold war ended. And socialism is largely discredited. You think thats the reason that College Tuition prices have skyrocketed . Listen, youll get price increases beyond the rate of inflation. Theres nothing you can do about it. Universities and colleges are intensely competitive and they do compete. But theyre adding things that dont necessarily add much in the way of value. Like what . Oh, they add buildings, classrooms, faculty, often times arent teaching at all. Theyre adding things that will enable them to recruit that marginal student. That later student, more to get that donor excited about what it is theyre doing you cant make a case other than in a close system where supply is limited. And we really need to examine, it seems to me what the regional creditors are doing. Im very supportive of the quality theyve produced. But its time now for them to try to grant. Let me put it this way. If you said to me, i got 1 billion and id like to do one of two things, either start a college thats going to be teaching Political Science 101 or a Heart Transplant Center and the only variable that matters is the length of time to get regulartoritory approval. You can get Regulatory Approval in the time that you can do Political Science 101. It demonstrates the problem weve got. Weve created this logjam. Whats wrong with the Accreditation Process . Whats wrong with it is, lets say im the accrediter and you say i want to start a college. You cant even apply to what youd say how do you get kids to come if i dont they need to start giving regional accreditation prior to the admission of the first students and raise the bar. Tell me what your standards are. And i think the regional creditors are looking to do just that. Theres a lot of pressure on congress. Theyre starting to Pay Attention to these entities because these six entities determine who does and who doesnt get regulatory permission to sell their credits. Were going to talk more later in the program. But its not accredited yet. The problem with lets look at any of the schools, state schools, could you fix those schools from within . Or when you left the new school, was that your thought that you have to come from the outside to change things . Well, its difficult to do it. You get alumni with the exceptions of the schools that have great revenue coming off of espn, its possible for them to make money, but all the rest of them lose money and that gets billed to the undergraduate students. A lot of support, a lot of Political Support internally. Youve got all kinds of work rules that make it difficult to do what you want to do, which is to manage the cost down and quality up. In tenure . And all kinds of other rules. Any kind of business entity knows it has to manage the quality up, keep costs under control and thats almost impossible to do in the current Regulatory Environment for Higher Education. And those are the key things that this were having an argument now about everything. In terms of whether the profit incentive is positive or negative. Were seeing it in health care right now. And weve got one side that says the administrative costs and satisfying shareholders and in the case of for profit schools, youd be bringing in students that shouldnt be there just to make more money and youre greedy and seeking money. And the other side says, wait a second, without the profit incentive, theres no profitability. Theres no reason to mind your ps and qs, and were having this huge argument right now. And i think partly because the Obama Administration about whether the profit incentive is even relevant in todays world. I think thats a fair point. I think its a very important argument to have. By the way, Higher Education, the for profit guys are the ones paying taxes, both property and income taxes, whereas the not for property guys are the ones receiving subsidies. As far as im concerned, money is money. The only difference in private and public money is ideological. You draw a line between the two. Public money becomes purer but its worth ten cents on the dollar. I dont disagree with you. Youre one of the old democrats. Youre looking around saying what am i. I dont by the way, its sort of what we were talking about earlier with iran. I dont think its a question of choosing one or the other. I think you need to have a healthy balance of both. But if you start off with a regulatory bias against the for profit sector. You do. I understand, i dont disagree. Im appealing to you, stand up and be im sitting down i think bill clinton was a republican. Are you sure he was a democrat . I have no idea. Senator kerrey will be with us for the rest of the program. Do you want to be called senator or governor . You can call me bob. He wants to be senator. Dont call anyone governor. Walking dead, dont spoil it. Up next, dow chemical announces significant revamp, joining us after the break. And later this morning, what brown can do for you this Holiday Season. We hear from the cfo of u. P. S. About how to handle the holiday rush. Dow dow chemical has announced its intention to sell part of the commodity Chemicals Business representing up to 5 billion in total revenue. And joining us now is the president , chairman and ceo of the dow chemical company. Andrew, its good to see you. And we always kind of grapple with this. Business is attractive to someone. Its a commodities business. A good business, a steady business. Why is it attractive to someone other than dow . Why is it more attractive to the buyer than to you at this point . So, joe, the last many years weve been on a steady drum beat of exiting commodities businesses because of the cyclicality. Weve been investing in growth businesses. We make the chemicals that make the chips that go in the servers that enable online retailing. Thats a growth business. Or we make the packaging that keeps fresh meat fresh in grocery stores. With this move, as you say, these are good businesses. Makes them even more attractive. Chlorine. Its a good molecule. Were not in that. So we know there are people out there who have expressed interest because weve been working on this for about 12 months. Its really as we exited commodities plastics, this is the next tranche of commodity chemicals of dow to make us a hightech, highmargin, steady earnings grower in markets that are growing. I can see how i would like to buy some of these because of what you just said. The input costs will go down so much given the energy boom here. Seems like you should get a much better price for these things than you would a year ago or two years ago. I think the timing is exactly that. If you look at overseas interests in particular in american shale gas, there are a lot of emerging country players who are very interested in that low energy imports. And weve been in chlorine for 100 years, joe, this is the ultimate commodity. We literally, when i say invented it, invented the process to make it. Right. I didnt think he founded that. Well, he may have, but i mean, at the end of the day, were the number one player in the world and putting chlorine and related assets up for sale or put it in a Business Model where somebody will benefit from it, i think the timing is perfect for us and for the buyer. And you dont need any of this for any of your other businesses . So its not like all of a sudden you dont have access to what youre getting rid of at this point. You can move on, make sense to be a Growth Company instead of a Commodity Company in terms of margins. Chlorine, well put it forward and make an agricultural product or chemical product out of it or polyurethane. Well keep all the value add part for dow because were going downstream as i said a few minutes ago. But for the commodity pieces, pvc is a commodity plastic. Dry cleaning fluids, theyve been commoditized for a long time. So exiting commodity chemicals is the move weve announced today. This is a complex carve out for dow. I mean, to move it out of our systems, its going to take us 12 to 24 months but weve made the decision to do it and thats the announcement this morning. It represents how much just quickly of the whats 5 billion . Well, 5 billion in revenues is what itll be. 2,000 employees, 11 manufacturing sites. Its about 15 of our asset price. And the economy is a 2 economy you see right now or 3 economy . In your view . Right between your two numbers, in my view, joe. It is . Yeah. So its okay. We want it to be better, obviously. All right,mate. Thats what you call each other there, right, mate . See ya. Andrew, thanks. Coming up, a deadly Train Derailment in new york yesterday, details at 7 30. And then, what if you could send your kids to college for four years for free . Thats the bold approach of the project. Ceo ben nelson joins us to talk Higher Education in a few minutes. She loves a lot of the same things you do. Its what you love about her. 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In the headlines this morning, though investors are focusing on wednesdays adp report on fridays government jobs report, we have two sets of economic numbers coming out this morning. Management is out with the monthly Manufacturing Index and the government will issue both the september and october reports on construction spending, both are out at 10 00 a. M. Eastern. We have more information this morning on the planned initial Public Offering by hilton hotels. Hilton now says it expects to price about 113 million shares of 18 to 21 a share raising up to 2. 4 billion. Hilton has increased the size of the planned offering several times now. Its currently owned by blackstone group. Dow chemical announced the intentions to sell part of the commodities chemical business. The unit comprised of about 5 billion in annual sales. Dow says this continues its move to emphasize higher margin businesses, the stock moving higher following the news. Its chlorine theyre getting rid of. A molecule theyve been creating. They invented it. Invented chlorine. Its weird. Who invented the other elements . Dupont the other half. Dupont did . Dow did onehalf and yeah. Tough segue. A commuter train derailed on sunday. The ntsb has recovered the data recorder. Its going to continue the investigation today. Mary thompson joins us from the bronx, new york, with the latest. And immediately we heard the guy was, i dont know, trying to hit the brakes, mary and, you know, its like a 90degree turn. Youre going 70, got to get down to 30. That seems like theyll focus on that, i guess. Thats certainly one of the things theyll be addressing, the ntsb. I want to give you a sense of what were seeing. Were couple hundred feet above the accident site. And there are police boats and theyve also brought in two cranes. We could see four or five cars that turned over on their side. Theyve turned two of them upright and put them back on the tracks right now. This kind of work will continue throughout the day. The ntsb will conduct an onsite investigation from anywhere from seven to ten days. And as part of that investigation, ntsb board member says today they will interview the trains engineer. Well certainly want his recount of what the situation was, what actions he took, and any observations he has. The engineer and 62 others were injured when the sevencar train jumped the tracks 11 miles north of Grand Central station. Four passengers are confirmed dead and the ntsb will be looking for other victim when it uses these cranes to right the trains overturned yesterday. In addition to interviewing the engineer, investigators will be inspecting tracks and gathering accounts from passengers to help them determine the cause of the accidents. Now, reports say as joe mentioned earlier that the engineer told others he tried to brake before hitting the significant curve in the bronx but the brakes didnt work. For commuters, of course, the accident will disrupt services on the north hudson line. This serves about 53,000 passengers on average during each weekday. Although the latest in a series of problems. It is the busiest Commuter Rail in the country. Sundays fatal accident means the 2013 could be the deadliest four metro north according to the railroad authority. In 2007, there were seven fatalities, but if you total up the number in 2013 and add the four victims that were killed yesterday, that would make this year equal in fatalities to 2007. So certainly a tough day for metro north. And, of course, all those passengers and their families who were involved in yesterdays accident. Back to you. Its commuter too, right, mary . Would it have been worse on a weekday . I guess, huh. Much worse on a weekday. There were probably 100 passengers on this train which was traveling to poughkeepsie to Grand Central station. It was early in the morning 7 20 in the morning. So, again, it being a sunday and Early Morning on a holiday related sunday, as well. There were few passengers. But, again, you know whats interesting, joe, i asked the ntsb, are all the passengers accounted for . And they say we cant tell you right now because its an open situation. Passengers get on and off and theres no accounting for whether or not they get off on the right stop and whether or not they have everyone accounted for because everyone may not use the credit card and pay for a ticket. All right. So its tough situation. It is. All right. Mary, thank you. We appreciate it. Squawks Higher Learning series continues with the minerva project. It is offering something that even harvard cant. Four years of free tuition for the first class. This is an attempt to create an elite university for the 21st century. Joining us now is ben nelson, the founder of the minerva project, also bob kerrey, the executive chairman for the institute of research and scholarship which administered scholarships and student loans. Ben, welcome. Thanks so much for having me. For people who dont know what the project is. Bob talked about it earlier this morning, how did you come up with this idea and why . Well, the idea really comes from trying to create a university thats built to train the people we all would like to see in the important positions in the world. So if we were to be able to train our future president s, prime ministers, et cetera, how would we create an institution that does that . And its actually interesting because that is effectively what the ivy league and others are doing but really come to their point through a process of evolution as opposed to through a design principle of what you want that experience to be like. Thats what minerva is trying to create. Where did you go to school . Wharton at the university of pennsylvania. And you thought you got a fine education, i take it . I did. I enjoyed my education a lot. But i think if you look at my transcript, it doesnt look like a typical wharton or penn students transcript. I took courses from all different parts of the university. I spent a lot of time trying to design my education. And the thing which was interesting was it was all based on units. So there were just interesting class here, interesting class there. But theres no connection between them. And even though i spent so much time trying to reform the university when i was there and trying to work on my own education, when i graduated i actually realized i wasnt as well prepared as i should have been coming out of an Ivy League University for the workplace. What did you think you were missing at that point . The Ivy League Education didnt offer . Well, i didnt really know what i was missing, but my employer did. I went to work for a consulting firm. And my First Six Months there, not only for myself, but for all of my colleagues that came from every Ivy League School you could think of. They spent the First Six Months of our work time teaching us how to think. Not just specific tasks . No, actually the specific tasks, wharton trained me extremely well. Isnt that what the thing that teaches you how to think . That is exactly what its supposed to if you leave college not learning how to think, then you left college too early. What happened to you . Didnt you have liberal arts . What does minerva do differently . The question is, how does a liberal Arts Education teach you how to think . And thats exactly what its supposed to do. What happens is that the assumption is you study a subject matter. And by analyzing that subject matter, youre supposed to abstract those things and apply them to other things, but that process supposed to happen by accident. Its not purposeful. The goal is to teach you that subject matter. If you are an electrical engineer or if youve had four years of calculus and physical chemistry and physics, youre telling me a liberal arts person knows how to think better than someone who has had all the science and math . Ill take the science and math person any day in terms of learning how to think. Sorry. No, gi agree with you, joe. You do. I took calculus. Liberal arts calculus. Thats like algebra. People do say its in engineering schools. And thats because engineering schools teach you how to deal with problem solving all the time. Right. But theres no reason why liberal rights education shouldnt be able to do that. It has to be restructured in order to teach you those elements and then allow you to transfer them. What does the curricula look like . We spend our freshman year actually learning the components of critical thinking. We call them critical analyses, creative thinking and Effective Communication skills. Now, those skills comprised that freshman year arent delivered through studying a subject. Its actually by studying what those habits of mind should be in students as they go and tackle problems in the future. And then as they take more specific instruction, then what the students get to do is exercise what they learn their freshman year. And, in fact, they get graded in their upper level classes on how they do in the freshman year so the freshman grades dont get finalized until they graduate. Bob kerrey, who are some of the other wellknown names . Sure, our founding dean is steven koslin. He was formally at harvard. And we managed to lure him away from stanford to join us. Dan leavitton, our dean of arts and humanities, one of the topselling science authors of the last decade wrote, this is your brain on music, its a great book. And so hes in charge of arts and humanities. Eric bonabo one of the foremost thinkers is in charge of confrontational science. We put together an Extraordinary Group of deans to lead minerva. One is that employers dont seem to be satisfied with the skills that students coming out with. And two, is more and more students we were hearing are concerned about the value proposition. All right. It seems to be an attempt to address both of those. Theres another way of describing the difference between minerva and other universities. If you go to almost any university and show up for class, youre going to pass. And you keep showing up for class, youre going to graduate. Is that the way its going to be at minerva. No. Unfortunately, at most universities you dont need to show up for class anymore. But at minerva you have to attend. 100 of the classes are limited to 19 students. No lectures, no concept of knowledge dissemination. Because effectively that, as im sure youll find out, is going to be free. The concept you need to learn microeconomics or basic calculus by sitting in a lecture hall. Its absurd, you can do it online. Our classes are about active learning and you get assessed by what you do in class as well as what you do in Group Projects and homework and tests. If you dont show up to class, you will fail. And we take education very, very seriously. The curricular design is at the heart of what its all about. Were out of time and theyre yelling at me. But Accreditation Process. When do you think you could get accredited . Well, were going through the process now. We have just an amazing partner through kgi. And theyre an accredited institution. Well be housed within kgi and we expect to have that authorization by next year. The first class is fall of 2015 . First full class is 15 and we have a small founding class in the fall of 2014 to go through the freshman year and then join the rest of the students in their sophomore year. Well, we want to thank you very much for coming in today. Its interesting and im sure well be hearing a lot more about it. Thanks for having me. And u. P. S. Getting set for the holiday rush. Well hear from the companys cfo. Take a look at the futures were watching this morning. Not a whole lot of action. [ tires screech ] [ male announcer ] 1. 21 gigawatts. Today, thats easy. Ge is revolutionizing power. Supercharging turbines with advanced hardware and innovative software. Using data predictively to help power entire cities. So the turbines of today. Will power us all. Into the future. Welcome back, welcome back, u. P. S. Expecting a 10 increase in volume as Holiday Shipping increases. Good morning, kurt. Good morning. How is it going . Are you on track for this 10 hike . Well, we think so. Well see today is, you know, one of our biggest operational days. We expect to pick up almost 32 million packages today. All reports are over the weekend that demand was solid, certainly were seeing expanded use of the internet. So in a lot of cases, what we see come into our shipping network is greater than the aggregate retail Sales Numbers and its an exciting time of year for us. What do you make of the report that sales actually fell over the weekend compared to a year ago . Well, you know, there is i think you have to be take it all in aggregate. I think for u. P. S. With the continual migration toward ecommerce and shipping on the internet, we do see greater growth than the statistics. One of the interesting things were seeing is even brick and mortar retailers now are more and more focused on their ecommerce applications and using their retail outlets as Distribution Centers. Were making pickups at hundreds of stores on a daily basis for local dlelivery. And thats one way that retailers can compete with Great Companies like amazon. Can you tell us how the shorter shopping season affects u. P. S. And delivery . Yeah, whats that really going to do is compress the, you know, the normal volume during peak season into less days. Theres about six less shopping days between thanksgiving and christmas. And so we think, you know, the aggregate amount of shipments over the holiday in total will be up modestly. But what it does is compresses our volumes down to where our volume per day will be up over 80 or 8 , excuse me. We expect today volumes will be up over 10 of last year with over 32 million shipments. Kurt, when and has. P. S. Tested tested the feasibility of drone delivering . Im not joking. Well, were were staying real busy. Joe, were staying real busy learning how to be as efficient as possible. Im not kidding. Delivering on the ground. Kurt, do you know honestly, you have not even looked into the feasibility . Youre going to be kodak, youre going to be making silver film when everybody has a digital phone. You have not looked into this feasibility whatsoever . Weve certainly heard anecdotes of people of trials in china and certainly amazon is talking about it. I think thats a long ways. Really. I dont believe you. I think youve got double secret code name at u. P. S. For doing this and youre not telling us because youre worried about fedex listening in and or the post office or something. You havent looked at a Feasibility Study of this down the road . Well, joe, 36 years ago i started with the company as a Delivery Driver and maybe were just hesitant. I think the u. P. S. Driver will be there delivering packages well, if youre not doing it, i dont think its going to happen. Im looking up drones in china deliver packages even a birthday cake. Its a cnet. Com story. I dont see how someone is missing something. Im imagining one of those trucks, you know, comes to your house, delivers the package, gets back in the truck, the blades come out from the top of the truck and the you wouldnt need a guy. Right from your im less convinced its going to happen. Because you guys would be you actually can i ask him a serious economic question . This was not if amazons talking about it. Im actually not kidding. Kurt, can you give us a sense of the most important question out there . Which i agree, drones are the most important question, maybe the second most important question, is this shopping season going to be better, worse or the same as a year ago . What can you tell us from the early results of what youre hearing from your outlets . Well, i think the large retailers we talked to are cautious this year. They do expect to see increased sales. We dont think its going to be a huge increase over last year. I think its going to be a little more of a cliff hanger, though, because of this tighter shopping season. All of us, u. P. S. And all the retailers will waiting to see as customers realize they dont have as many days left to finish their shipping. Myself included as a had procrastinator, well see a big rush, actually, the week before christmas and our largest day will be december 16th. When we pick up over 34 million packages. Wow. So, you know, it will be a very busy time. And we do think well see a big rush into our air services in the last week before the holiday. And how many people did you hire, curt, for this season . Over 55,000. How does that compare to a year ago . About the same. About the same. You know, we continue to become more efficient and use technology on the ground for routing and scheduling. So we can meet increased demand with pretty much fixed amount of resources. Kurt, ive always wondered what the retailers, when they say theyre concerned about things, i wonder if its because Online Shopping has been eating more and more into their profits. Obviously a big company like a walmart has walmart. Com, macys has macys. Com. But you see it from every end. Is there when we talk about this past week in the National Retail federation says that Holiday Shopping dropped for this past weekend if you can count for thursday through sunday, do you see any sign of that in the stuff that youre shipping . Well, i do think that, you know, the smaller businesses are struggling. And certainly we spend a lot of time working with Small Business so they can compete. Its also a differential between their Revenue Growth and their actual, you know, volume of their sales. So i think theres a lot of price pressure. And especially this whole black friday environment has become extremely price competitive. You have to differentiate a little bit from the revenue and profitability of it. We do think demand is increasing from a consumer side. Its just that there is very strong price pressures right now which gives all the more reason for retailers to streamline their distribution and supply chains. Kurt, can i ask you while youre here, too, there was news you all made about dropping benefits for 15,000 spouses of your employees. You cited that back to obama care. What happened . What we did, actually, was just say the spouse of one of our employees that is employed and their employer offers health care insurance, then we would expect that employer to cover their insurance. So we didnt drop Health Care Coverage for anybody that couldnt get health care. And what then what we did what does that have to do with obama care . Well, the obama care mandates did increase and do increase costs for u. P. S. That was were managing Health Care Inflation plus some of the increased coverage mandates led us to make a decision that now that we know that most employers will provide health care, it made sense for that employer to cover the cost of that benefit. Kurt, thank you very much, and joe just registered uds, united drone services. So you better get going. You laugh. You better get going. Thanks for the tip. And patented brown for using drones. Hes got that copyrighted. Unless bezos let me know when it goes public. Unless hes playing a big trick on everyone, u. P. S. Should be looking into it. Over the next 40 years the United States population is going to grow by over 90 Million People, and almost all that growth is going to be in cities. Whats the healthiest and best way for them to grow so that they really become cauldrons of prosperity and cities of opportunity . What we have found is that if that family is moved into safe, clean Affordable Housing, places that have access to great school systems, access to jobs and multiple transportation modes then the neighborhood begins to thrive and then really really take off. The oxygen of Community Redevelopment is financing. And all this rebuilding that happened could not have happened without organizations like citi. Citi has formed a partnership with our company so that we can take all the lessons from the revitalization of urban america to other cities. So we are now working in chicago and in washington, dc and newark. Its amazing how important safe, Affordable Housing is to the future of our society. On more more on what to expect from this market in 2014. Which sites could you offer you the best online experience. The ceo of retail site tracker Stella Services joins us. Stella blue. Every day were working to be an Even Better Company and to keep our commitments. And weve made a big commitment to america. Bp supports nearly 250,000 jobs here. Through all of our energy operations, we invest more in the u. S. Than any other place in the world. In fact, weve invested over 55 billion here in the last five years making bp americas Largest Energy investor. Our commitment has never been stronger. They always have. They always will. Thats why you take charge of your future. Your retirement. Ameriprise advisors can help you like theyve helped millions of others. Listening, planning, working one on one. To help you retire your way. With confidence. Thats what Ameriprise Financial does. Thats what they can do with you. Ameriprise financial. More within reach. Squawk squawk goes shopping. The Holiday Season has arrived. But for the first time in seven years, retail spending actually fell over thanksgiving weekend. Is santa claus coming to wall street . This month is traditionally a strong one for stocks, and december will begin with a deluge of data. Drone delivery . How amazon could deliver small packages to your home in just 30 minutes as the final hour of squawk box begins right now. Welcome back to squawk box here on cnbc first in business worldwide. Were going to shut down the Patent Office because everythings been invented with the smartphone. No, here comes the drone. How much does it cost you for the guy to walk up to your house its going to be done by drone. Think about how disruptive this is. The notion of Pepperoni Pizza by drone is capturing my imagination this morning. Im starting to thinking about this. Im joe kernan chinese food. Becky quick. Andrew ross sorkin is off today, our guest host this morning, hes getting excited about this. Hes revolutionizing the Higher Education industry. But drones, maybe you should have thought about this before you decided to throw your weight in with minerva. Lets begin with the markets because its december, which is historically the best month. And the dow and the s p. I think up 25 , 26 , eightweek winning streak. The dows only been negative five months out of the last 26. Beginning with october of 2011. That means the index has been positive more than 80 of the time. It has nothing to do with ben bernanke. Heres a look at the major market returns. The dow up nearly 23 . The s p, 27 . And the nasdaq, more than 34 . For whats ahead in december, its been as i said, historically the best month on average for the dow. And the second best for the s p. And the futures this morning have turned positive. But just marginally. And weve got a lot of economic stuff coming this week. Among the highlights, the ecb. In the u. S. , first revision of the Third Quarter gdp. And then the granddaddy of them all like the rose bowl, except thats not the granddaddy. On friday, we have the jobs report for november. Where is it . 175. Thats not the actual. As we said last year, thats not the actual number. I cant say, joe. I cant say. Could be the number . Probably not. Two markets i just give you something to twitter out there, just to tweet. Two market strategists are going to join us onset to discuss all this in a couple of minutes. First, though, becky has a over here. Okay. Becky, are you still here, becky . Has a run down of the morning headlines, going to sound better from over there. They are, because im going to talk really loudly. And it says global headquarters. A lot of things happening here. Let me talk about the numbers, they are starting to come in on the Holiday Retail. The National Retail federation reports the shoppers spent less than they did a year earlier. That almost never happens, but the average shopper spent about 407 over the weekend. That is 3. 9 less than the same weekend last year. But the Industry Group says there was one bright spot. Online sales soared and that brings us to today. This is what many people call cyber monday. Jon fortts going to talk to us about expectations in a moment. In the meantime, take a look at the shares of dow chemical. Those shares getting a boost after the Company Announced it plans to sell parts of the commodities chemical businesses. The assets represent up to 5 billion of total annual revenue. The ceo joining us in the last hour. As we exited commodity plastics, this is the next tranche of commodity chemicals for dow to make us a hightech, highmargin, steady earnings grower in markets that are growing. Weve been working on this for the better part of the year with boards, our advisers. To move it out of our systems is going to take us 12 to 24 months. But we have made the decision to do it and thats the announcement we made this morning. Also, hilton says it plans to raise as much as 2. 4 billion in the ipo. The Hotel Operator is owned by a private equity firm blackstone. In a filing, hilton announcing it expects to price the offering at 118 million between 18 and 21 apiece. Four people died and dozens were injured in the metro north train accident. Investigators have recovered a black box recorder. They will look at this device for answers amid witness reports that the train was going too fast before it went off the tracks at a sharp curve. Mary thompson will join us with the latest in the next half hour. In washington news, the white house says it has met the selfimposed goal for healthcare. Gov. An obama adviser says the fiveweek emergency, quote, tech surge has doubled the capacity of the online portal. The site can handle 50,000 simultaneous users. But experts say major challenges remain. Well talk to former hhs secretary Michael Leavitt in the next half hour. Amazon testing delivering packages using drones. Could deliver packages that weigh up to 5 pounds, that represents 86 of packages amazon delivers. Ceo jeff besos making the announcement on 60 minutes last night. Thats the earliest we could get the rules from the faa. My guess is thats probably a little optimistic. But could it be four, five years. Amazon, the fellow online retailers had a lot on the line today, its cyber monday, jon fortt joins us onset. Your opinion on the drone story . Well, i think its possible to do. I worry that pranksters with my son showed me this. Theres a guy that put a submachine gun on the helicopters and used it to destroy a car. The kids get these cool videos that are out there and he found this one. We hope he doesnt get angry one day. Who is going to still have the money to order the packages to be delivered if you displace all these workers that are you have automatic retail checkout that will theyll be gone. But seriously. How many drivers does i dont know the number of drivers, but he said he hired 55,000 people for the Holiday Shopping. Questions about how it works. I have to look out my back window to see when this thing lands . Ideally, with a drone, yeah, it could message you within a certain radius of your house. If you had a smartphone, it would go the crackberry will be long gone. Itll be like a camera on a drone and you can tap in and see where your package is. Or gps, on the radar. All these things are possible. This is not going to affect this Holiday Shopping season . Not at all. What do you make of online and the deals. Looks like the online guys are sort of playing the game like the brick and Mortar Stores now. Deals every ten minutes and stuff like that. Theyve been doing that for a while. Big story is mobile. Looks like were on track for a record cyber monday. Collects data for more than 180 million visits to 1,000 retail sites and total online sales topped 1 billion for thanksgiving, 1. 9 billion on black friday. The biggest story probably isnt the numbers itself. Thats more than double last years rate and what kinds of mobile devices were people buying on . Mostly apple. Generated more than three times the sales of Android Devices even though theres supposed to be more Android Devices out there. Ipads and iphones alone were responsible for nearly 19 of online buying. One asterisk here. Did 1 10 sales volume that ipads did. People making purchases on kindle devices, which are amazon, of course, peak times for black friday shopping were between 9 00 a. M. And 2 00 p. M. Online. Volumes stayed above 120 million an hour at those times. The results wither right in line with estimates. So whats in store for today . 2. 27 billion in sales is what adobes estimating. Big category winners are expected to be toys, gadgets and Sporting Goods followed by clothes. Why does apple have so many more of the sales . Ive heard similar statistics in the past that when people are engaged with things, when theyre buying things, theyre much more likely to do it with an apple product than an android. If youre getting an apple device, you probably have a little bit more money, disposable income to spend. And then the big outperformer here was the ipad versus Android Devices. And there are more retailers who are creating tailored app experiences on the ipad specifically. Android tablets, so many different sizes, its hard to create an app. Youre more likely to be engaged, more likely to complete a purchase. That makes sense. Interesting, thanks, john. Yeah. Well talk more about shopping trends in a few minutes with the ceo of stella service, a company that tracks Online Customer service. Joe . Yeah. So you talked about this china story where they were delivering cakes. Cakes, birthday cakes and other stuff. They got grounded, though, because people were not ready for the service. They only bought three of them. In china, the pies and cakes were being delivered physically by drones for a while. Its the jetson aspect of this story that gets you. Well, you do think of the downside. But think of the upside of it. It is thats what i didnt think about immediately. Its the last trading month of the year. December, historically the best month on average for the dow. Richard bernstein, ceo of Richard Bernstein can i do it every time, rich . Im happy to sacrifice for the ratings. Go ahead. No. Just thank god your parents did not give you a middle name. They did. I gave him a middle name effing. That is an e, and people are starting to use that for a middle name, effin. Did you think this could be 30 this year for the s p. Right. I was under the impression that because earnings were only going to grow 6 from now on forever that we had to accept 6 , 7 , stock market advance. Havent you heard that as what people have been saying for the last five, ten years to explain the underperformance for the past 15. They said dont look for big gains, look at 7 for the year. Where did this come from . A number of things. You did have earnings, you know, up 6 , 7 . People didnt expect it to be up 6 , 7 . You had a little bit of multiple expansion because people had more confidence again. Thats part of whats happening is that the hangover from 2008 is finally starting to go away. Thats manifested in expanding multiples. And then we have the fed. And the fed is contributing obviously very similar to monetary policy. And that doesnt hurt either. So you put it all together. Its really, you know, not from our perspective, not that surprising that we had a big up year. What about next year . We have had three 30plus years back in the mid90s. Thats my dream. I wanted it to happen again some time. What are the chances another 30 next year . We could do 30 again. I dont know if you could do 30. But look, were expecting above average returns. Next year. Next year. Double digit. Double digits. We think more confidence is coming back into the market. We do think earnings will turn up. We think earnings will accelerate next year. And you still have an immense amount of immense audience that doesnt believe this is really happening. Think about every Hedge Fund Guy you have on this show. Right. Who talks about how it has to fall apart. Its going to be horrible things going on. Yeah, because theyre paid to hedge. And, of course, at the last peak, hedge funds were not hedging. We will see that go away. Well see them join the fund. You dont think this is that likely, do you . And weve got to navigate taper. And a fed exit too, dont we . Thats going to make next year tough. I was one of those suckers that thought mid Single Digits was going to forever. Right. I didnt think investors would want to pay a higher multiple for. We discussed it, record Profit Margins on the belief that the fed is printing all this money. But, of course, you print enough money and you can take stock prices anywhere on the upside. So, yeah, you can see 30 gain in 2014. But only if the fed adds a few more trillion dollars to the Balance Sheet. To me, again, this is a feddriven market. I think what weve seen in the last six months is a change in the bond market in terms of rising Interest Rates in a way tapering for the fed and i think thats the story in 2014. Because if the tenyear yield continues to move higher, i think that in and of itself can stop this rise in stock prices. This is margin driven, essentially, people are borrowing money to buy stocks and its the cheap Interest Rates that are out there that are fueling the stock market . Well, that, but also corporate Profit Margins. Yeah, but thats is that for the fedinduced . Well, a third of the increase in corporate profits off the trough of 2008 is related to lower Interest Rates how much is that going to change given that companies have termed out their debt substantially . Well, its a rolling thing. Interest rates are moving higher so that incremental marginal gain is not going to be there. I think what people are forgetting, Interest Rates are likely to go higher. Bond Portfolio Managers are the most concerned theyve ever been. Everybody thinks rates are going higher for some nefarious reason. Nobody can believe theyre going higher for the reason they always go higher. The economys getting stronger. And thats the point. So if the economy gets stronger, earnings should pick up. Margins are record highs. You guys are on different sides. The most important question is this thing, this market floating on the ether of fed i wanted to ask the reserves havent gone out into the economy. Theyve created it, but they havent been you dont see the velocity and you dont see you see some lending pick up. Thats why i was asking. You cant really say the 85 billion goes out into the economy and goes through margin. Youre saying through margin. You could have done that by staying at zero. You could have done that by staying at zero. It wouldnt be excess reserves, except for the extent that the excess reserves or the qe keeps a lid on rates in the real economy. In the real economy instead of just the fed funds rate. Okay. The feds increase their Balance Sheet this year. Theres been a huge multiplier in the size of increase of market cap. So the feds Balance Sheet about 1 trillion this year. But the u. S. Market cap could be up 4. 5 trillion. Thats confidence that the fed has everyones back. We hit a bubble in fear. I think we now have somewhat of the reverse as measured last week to have the lowest number since 1987. So even sentiment figures youre saying. But it wouldnt take long to shake that back to negative. Yeah, you have a few bad weeks, few bad months, you can change that, but right now, i think, we have the opposite of a bubble and fear we had over the last couple of years. Right. I think the longer term sentiment measures show people are pretty concerned. I mean, Credit Suisse put out, that it was the lowest in 50 years. My group at merrill shows wall street strategists are recommending the lowest allocations in 30 years. Its hard to say theres euphoria. I agree with you. People are still lending the government money, its hardly, you know, all that. There are a lot of Richard Bernsteins too. Theres tons of them. You dont have the middle initial to set you back. Whats your middle initial . D. Dont tell him. David. But richard e. Bernstein is better than not having a middle name. Im not convinced of that, joe. All right. Mixed reports of the first weekend of Holiday Shopping. Now ecommerce comes into focus. Well talk to a company that tracks Online Customer service. Thats next, but first, Florida State and ohio state now find themselves as the top teams in the latest bcs standing following alabamas shocking loss to auburn on saturday. Auburn stunned alabama with a 109 field goal return to win the game. The giants also won. What is a feel goal . Field goal . We route your order to up to 75 Market Centers to look for the best possible price maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Welcome back to squawk box, everyone. Weve been watching the welcome back to squawk box, everyone. Weve been watching the futures this morning. At this point, there are some very, very modest green arrows. Dow futures up by about 4 1 2 points, s p up by less than a point. Nasdaq just under six points. Of course, remember, we are in the first trading day of december. And it has been an incredibly strong year for all the markets. Youre talking about stocks up by about 20 across the board. Bank of americas going to be paying 404 million to freddie mac to settle all claims related to the mortgage securities. The bank says the payment is fully covered by the companies reserves. Cyber monday is upon us. And those whop didnt find what they wanted at the malls are making their way to computer screens across the country right now. The cofounder and ceo of online performance Monitoring Company stella service. Lets talk about what you do. What kind of online monitoring do you do . Sure, so we actually go out and purchase real items from all these companies every day. We call them, we email them, find out what its like to be a customer of all of these businesses and match apples to apples. You see how the Computer Systems are working . Yeah, we track the ordering experience, we track the things off the website itself. Where were you when the government was putting healthcare. Gov together . Yeah, were focused on retail right now. Whats happening with the Online Shopping experience . So everybodys chasing amazon at the end of the day. Amazon as we saw last night on 60 minutes, pushing the envelope on convenience. And everybodys trying to deliver a more seamless shopping experience. When you say chasing amazon. Because amazon has the best online experience that of that your measurements show . Yeah, in terms of fulfillm t fulfillment, especially. Theyre as fast as anybody, Distribution Centers are all over the place. So shipping and returns and refunds are just so efficient that everybodys trying to keep pace with that experience. Whos the worst . Well, we take the Warren Buffett approach. We praise by name and criticize by category. But i think a lot of the bigbox guys are having difficulty trying to keep up in terms of all the fulfillment stuff that amazon does. But thats why youre seeing Price Matching with all these guys because theyre trying to figure out some other way to keep the Playing Field level. And what about the Human Experience . Have they gotten better online and worse in terms of the human contact . Some companies, yes. If you look at the traditional players. Some of these companies are terrific, if you call them, theyre going to pick up the phone right away. Youre not going to be in a line or queue forever. But some companies lean a little bit too much on technology and people dont like losing that touch that human touch. How do you get paid . The Companies Hire you to monitor them and you give them a report . We track everybody no matter if they pay us or not. Just like nielsen or any other company. Were tracking these companies and, yes, we make money in our Business Model focused on their paying for access to our data. And its mystery shoppers. Give me some anecdotes and what you found. Over the weekend, it was interesting, placing a lot of calls and emails to these different companies. We found that the traditional guys, again, nordstrom and l. L. Bean, really quick to answer the phone and address customers. Again, some of the big box guys, walmart, best buy, lowes. If youre not naming names, whats the biggest problem you find online for the when you go and try to buy a product online . Whats the biggest mistake that retailers are making . Its a good question. A lot of times people dont realize that the customer is looking for something. And they try to upsell them or try to put other things or ideas in their mind instead of just making it easy for the customer to do what they want to do. Do you return the stuff . Yeah. We buy all this stuff and return it. We actually produce ratings for consumers. So you dont have a bunch of stuff you need to get rid of. I can put you in touch with our Mystery Shopping team. Does anybody call and go, stella . We get that a lot. From u. P. S. They yell stella . Well, were ordering millions of things and then returning it all. Coming up, well have the latest on that deadly commuter Train Derailment in the bronx section of new york. Investigators have recovered the black box recorder and Mary Thompson will join us from right near the scene when squawk box returns. All this week, squawks Higher Learning project. Innovating education by disrupting the classroom. Putting the University System to the test. How the public and private sectors can reshape the nations workforce. The brightest minds on the front lines of learning. Twins. I didnt see them coming. I have obligations. Cute obligations, but obligations. I need to rethink the core of my portfolio. What i really need is sleep. Introducing the ishares core, Building Blocks for the heart of your portfolio. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Welcome back. Four people were killed and more than 60 injured after a commuter train derailed in the bronx section of new york city yesterday. Mary thompson is live on the scene. She joins us now with the latest. Mary . Good morning, steve. You know the mta have been saying, while there are worker related fatalities and track related fatalities, this is the first time in 31 years there have been passenger fatalities on metro north, the nations busiest Commuter Railroad. Cranes have been standing up some of the cars overturned yesterday as the National Transportation safety board begins its onsite investigation which is expected to last seven to ten days. The trains black box will be analyzed, passengers will be questioned, and the tracks will be inspected. Heres the ntsb. Well, we look at track conditions, try to identify exactly where the train came off the rails, how it came off the rails, did it come off both rails and with the same amount of force, or was the force concentrated on one rail . The train was headed south to new york city early yesterday morning when it came off the tracks about 11 miles north of Grand Central station stopping right at the edge of the hudson and harlem rivers. Reports say the engineer tried to apply the brakes before a major bend in the tracks here in the bronx but said the brakes didnt work. Along with the four fatalities, 63 of the trains roughly 100 passengers were injured. Of course, this will also affect the commute of about 26,000 riders who take metro norths hudson line on average each workday. Itll continue on beyond the investigation. You need to get the mta to repair the tracks. Thanks very much, mary. Mary, do they have anything specifically about the speed of the train . Do they have a Miles Per Hour number yet . No, not yet. We, again, spoke to the ntsb early this morning and they dont want to say anything about that until they have a chance to examine the black box, speak to the engineer and also examine the tracks and eyewitness accounts, as well. Mary, thanks very much for joining us this morning. Becky . When we come back, bob kerrey on the state of washington, d. C. Were going to talk about everything from obama care to the debt ceiling and whether or not the art of compromise is dead in washington. We have the unique perspective of a former beltway insider right after this. First, though, as we head to the break, lets take a look at the biggest winners and losers on the s p yeartodate. Welcome back, everybody. Our guest host this morning, former senator bob kerrey who was the executive chairman for research and scholarship. And bob, weve had you on most of the morning and havent touched on whats been happening in washington. Big headlines this morning from all of the major newspapers focus on whats happening with obama care right now. The New York Times is claiming that insurers say the Health Care Website is still flawed. The wall street journal says that connecticut is considering bypassing some of the back ends just to check to make sure that people are actually residents and whether or not they would qualify for a lot of the aid. And with the deadline approaching january 1st for when a lot of the Health Insurance plans were supposed to kick in for consumers, it leaves a lot of questions. How would you say things have gone so far . And how confident are you of things up and running by january 1st . Well, im not going to get a nobel prize for observing, it hasnt gone well. To establish an Insurance Exchange at the federal level is an exceptionally difficult job and to forecast its going to be as good as amazon. You just had a conversation about people trying to catch up with amazon, the governments not likely to be able to do that ever. Pretty low bar. No for the peace prize. Doesnt take much. For the peace prize, right. Yasser arafat . No, i think its going to be exceptionally difficult to establish that exchange. And my general rule is i think you should have a prohibition against putting anything in a law that produces a round of applause. And thats the problem with health care. Both sides are trying to produce a round of applause. But at the center of this law is an attempt to establish individual marketplace. Thats what its trying to do. And when you establish an individual marketplace, theres going to be substantial change for all of us. But when the president gets up and says, dont worry if you got the insurance policy, youre not going to have to change it, that wasnt true. So it was sold the marketing was flawed. But when the republicans say all weve got to do is tort reform and let people sell across state lines, that also isnt true. We need to have substantial if you want to get costs under control, we have to have a substantial amount of change. But the the change that was put in place wasnt necessarily put in place to change the cost curve. I mean, thats part of the problem, you had two problems. One was uninsured people, one was the cost curve, and a lot of obama care deals with making sure millions of people are going to have insurance now. It doesnt necessarily bend the cost curve and make sure healthcare costs dont continue to climb. It would be unquestionably be the cost curve if you allow the Insurance Companies have copayments and deductible so i can carry more of the costs. At the same time, what congress is doing has been reluctant to do anything with medicare that would assume more of the costs or for that matter military retirees. Youve got plenty of evidence where on the right and on the left when it comes to health care, people are saying things that produce round of applause. Not telling people the truth of whats going to have to occur if we actually want the cost of health care the times has a good piece here. I thought the headline was misleading where the back end. But the back end does not work. The front end its insurers claim that the Health Website is still flawed. It is still flawed because the back end does not fit. They cant get the information. From what i can tell, Everybody Knows that the back end has not been addressed yet. But thatd be like me saying the whole thing works, the only problem is you cant buy anything. Right. I can get 50,000 people on at a single moment. But none of them can actually make a purchase. None of them can get anything that you can get when you go on the site. You werent here on friday when we reported that walmart had like 400 Million People online between 6 00 and 10 00 p. M. On thursday. On thanksgiving itself. If you dont have this how incredibly complicated it is, for the people writing the insurance, they dont know the subsidy each person gets and they dont know what the people are and they cant do the actuarial stuff for the plan. The problem is, the phrase back end is an insurance presentation. What the back end means is those are selling you what youre trying to buy. You cant get a price, dont know what the subsidies are. And as a consequence, youre not going to be able to purchase the thing thats a major problem. I dont know how you give yourself a passing grade. Well, youre creating the appearance that 50,000 people can go on and process all the way through youre saying negative things right now about obama care, bob. You know that. Am i really . Well, i think theres plenty of things i want to give you a nobel prize. Coming up, the Obama Administration says its met its deadline, 50,000, as you just heard, people can use healthcare. Gov at the same time. But the jurys still out and experts say major challenges remain. Were going to talk to former hhs secretary Michael Leavitt. But first, before we head to break, heres a sample of sunday talk show commentary on the obama care rollout. This one has a ways to go. But it is certainly working reasonably well. The information coming out the back end to the Insurance Companies is still garbage. Theyre working around the whole problem. I dont care if youre for it or against it, republican or democrat, we should not tolerate the level of inkcompetence securing this site. There are better plans for many of these people. And i think thats whats gotten really lost. Every day were working to be an Even Better Company and to keep our commitments. And weve made a big commitment to america. Bp supports nearly 250,000 jobs here. Through all of our energy operations, we invest more in the u. S. Than any other place in the world. In fact, weve invested over 55 billion here in the last five years making bp americas Largest Energy investor. Our commitment has never been stronger. To help secure retirements and protect financial futures. To help communities recover and rebuild. For Companies Going from garage to global. On the ground, in the air, even into space. We repaid every dollar america lent us. And gave america back a profit. Were here to keep our promises. To help you realize a better tomorrow. From the families of aig, happy holidays. 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. Welcome back welcome back to squawk box. Making headlines, a former bp drilling engineer charged with deleting Text Messages and voice mails about the companys response to the massive 2010 oil spill in the gulf of mexico heads to trial. Jury selection scheduled to begin today in new orleans. One of four former employees charged with crimes related to the deadly disaster or the aftermath. His case is the first to be tried, joe. The Obama Administration as you know said it met its december 1st deadline to fix the glitches in the plagued aca website. Not everyone is convinced. And weve been just looking at the daily newspapers, the times, wall street journal, lets talk to someone who knew a lot about this, still does. Michael leavitt, hes currently the chairman and founder of leavitt partners. And were all trying to secretary leavitt, were all trying to figure out to sift through sort of the administratio administrations what kind of progress was made. Well, there are two different funds in this battle. First is the political spend battle and the second is the logistical challenge of making a system work. And i suspect right now the administration is losing both because theyre dealing with a reality and not spin. People are the dilemma for anyone like you and like me trying to figure out exactly what is happening is we dont have perfect transparency. But, i think its very clear that people are not able to complete their transaction. And in many ways, i suspect the spend battle is about buying time. At the end of the day, people are either going to have purchased insurance or theyre not. None of the spin or rhetoric will have any will have any impact. However, the right now the administration in my view has to begin to change tactics. Theyve got to begin to look for what i would call the 60 solution. Theyve got to find work arounds that will allow insurers the confidence that, in fact, theyll get paid. And then theyve got to allow simplified ways of enrolling people or theyre going to have to start pushing pushing deadlines out. Yeah. Pushing deadlines out, though, there are a lot of people who have lost their Insurance Coverage and come january 1st, they need a new coverage plan. Do you think therell be a lot of people who get left out in the cold . Well, i think thats where the 60 solution comes about. I think, for example, they could come up with a onepage sheet of paper that would say if this is the persons situation, were going to estimate that their subsidy is x and the federal government will behind this and work this out as time goes on. But they could instruct the Insurance Company to say just give them insurance and well work it out with you and well guarantee it. Although, heres a quote from an insurance executive who spoke to the New York Times on the condition of anonymity. We want to be paid. We want to pay claims. We want to pay claims, we need to get paid. Youre suggesting that the government would promise to pay all of that even if it didnt work and didnt go through . Because this says that the chief digital architect says they still have 30 to 40 of the insurance marketplace is still being built. He told congress on november 19th that the back Office Systems were still being developed. I want to be clear, im not making that proposal. But i think the administration is facing a situation where if they want to get through this, theyre going to have to do Something Like that or theyre going to end up with the problem that you clearly articulated. People without insurance who were canceled as a result of this law. Theyre in a very difficult position. But theyve put other people in a bad position because they have not prepared and theyve not acted in a way that would avoid this situation. I was thinking that the way the initial rollout went, i think they should have underpromised and then overdelivered this time around. But they are not in a position to do that because theyve got nervous democrats up for reelection. They had to fix this. They had to come up with something they said was a fix. December 1st. But puts them in the unenviable position of, again, saying something that probably from what i read i mean, if you can go in and log in and maybe get on there. But if you the back end seems like its more important than the front end. And if you dont have the back end done, how do any of these companies write insurance . Signing up for it is one thing, actually getting it is another, right . That point youre making is absolutely true. Ill reflect in history back to 2006 when i had the responsibility of implementing the Medicare Part d program. We reached we had some substantial technical problems in the first eight weeks of the system. There was a stretch of about 13 days where i was in 20 states and that 13day period. And my message was basically breathe through your nose because were trying to get this fixed and were going to get this fixed. And i was buying time. I was doing what i thought was the most transparent information available. We were accepting the fact there were problems. We got the system fixed. But part of that was on a small cohort of people. We said to the pharmacy world, give them their drugs, give them a plan. We will guarantee that the payments are made. Yeah. However, it was on a very small subpart. It was not on the vast majority. And at some point, theres going to have to be some kind of work around to give insurance executives like the one who spoke that you quoted, the assurance theyre going to get paid or not going to do it. And they shouldnt be expected. Secretary leavitt, it was very impressive accomplishment to get part d up and running, but how much more difficult would it have been if in the runup to your implementation you had congress threatening to shut the government down proposing to defund the program itself . I mean, you had bipartisan support for your program, did you not . Oh, no. Youre forgetting what happened in 2006. We had exactly the same situation. We had the same things being said. It was just being said by the opposite party. This is a political game that goes on. And i understand it and you understand it. But you didnt have you didnt have democrats threatening to shut the government down to defund the program . No, they were asking simply to shut the program down. But it wasnt delay it a year. Im not comparing it with exactness. Im just reflecting a lesson of history. We were feeling that pressure. And we had to perform and we came up with up with solutions that at least met the core problem but over time the system was repaired and within within eight to ten weeks it was running smoothly. People were happy. At that point, every Congressional Office in the country wanted to do an enrollment event. Obviously, the democrats are frantic about this. They ought to be. They have a lot on the line. Im not suggesting its exactly the same but if they get the system fixed their problems will resolve. Their dilemma is they dont have a system thats working. Secretary leavitt, thank you. We appreciate it this morning. Goodbye. When we come back, investors favoring equities over bonds for six sfragt months. December is historically one of the best of the year. And we are watching shares of talisman energy. Icahn said he reached an agreement to put two of his executives on the board. Home replaced one light bulb with a compact fluorescent bulb, the energy saved could light how many homes . 1 million . 2 million . 3 million . The answer is. 3 million homes. By 2030, investments in Energy Efficiency could help americans save 300 billion each year. Take the energy quiz. Energy lives here. Take the energy quiz. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you open an account. Lets get lets get down to the new york stock exchange. Jim cramer joins us now. The water cooler story, jimmy, is, obviously, these drones and now i look at bezos. He looks like mega mind to me. His brain seems to be growing and if he hes the closest thing we have to steve jobs. Do we take him seriously on this or not . We have to take him seriously and u. P. S. Fedex, every lobbyist against this seriously, too. This was a fantastic advertisement for going to amazon. The first thing i did as soon as i saw it, i said lets see the deals amazon has and theres fantastic ones with prime, be able to gift that. What a master he is. Youre not buying it then. I wonder if you could buy a drone and have it delivered by a drone. I didnt think about that. If you look at the box delivered, what could be in that box . Do you deliver like a diamond ring . Someone shoots down the drone . They said 80 of the stuff 86 is five pounds or less. 5. 3 pounds or less. Yeah. I dont know. You get that big screen tv by chopper, im there. Im there. Im there. That would be a dynamite thing. You dont think u. P. S. Or fedex is thinking about the possibility of this . Block it. Go right and lobbying right now. Joe wants to short u. P. S. This morning. No. Theyre not involved. Its a great company. You go to the faa saying this is the most dangerous thing since allowing people to talk on a plane. On a plane. All right, cramer. See you later. When we come back, the chief u. S. Equity strategist at Goldman Sachs will share his idea. Plus top executives. And we hit the road with the ceo of ferrari many north america. Ya know, with new fedex one rate you can fill that box and pay one flat rate. How naughty was he . Oh boy. [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. 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. [ male announcer ] this december, experience the gift of true artistry and some of the best offers of the year at the lexus december to remember sales event. This is the pursuit of perfection. At the lexus december to remember sales event. 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. Welcome welcome back, everybody. Bob kerry is here. Were generally referring to technology and whens been happening out in silicone valley. You have a whole new type of disrupting with Higher Education. We are disrupting and not disrupting. We are buying into the value of liberal Arts Education and redefining what that education is supposed to accomplish. Minerva is saying this cant be done from the inside of if you start from scratch and say we give the cost s embedded and take out those things that dont add value, its shocking. Put together a curriculum for the graduates that the world needs, it is quite exciting what you can do in that environment and if you begin by saying, we wont give you anything. You have to earn everything that you want, it is surprising how motivation these young people themselves have. Im stunled there hasnt been more call for change. 50,000 a year for plenty of Ivy League Schools. 200,000 to 250,000. We dont compete trying to produce high quality and low cost. Quite the opposite. We add additional costs to keep alumni happy, create the marginal professor and opposed to trying to produce simply the highest possible quality at the lowest possible price. Thank you for coming in. Today. Nice to be with you. That does it for us. Right now its time for squawk on the street. Good monday morning hope you had a great thanksgiving. Welcome to squawk on the street. Wall street gets back to work with a busy week. Cyber monday today. A jobs number on friday. The kickoff of december. Historically, the best month of the year for the dow. A lot of data to respond to and manufacturing ism in an hour. Some losses in europe despite strong pmis over there. The uk