Transcripts For CNBC Squawk Box 20131210

Havent seen inflation. Because investors have spent so much time tapering, investors are interested in bond yield. If youve been watching the tenyear, right now the yield is at 2. 827 . Also, october wholesale trade and the labor departments latest job openings and latest Turnover Survey that a lot of economists watch closely. Futures at this hour are indicated higher, dow up by just about 20 points, s p up over 2. 5 points. And a big call today on Deutsche Bank. The firm says that a horde of pent up cash means that the stock partys punch bowl isnt running drooi dy anytime soon. Deutsche points out shored up cash is likely to make its way into equities in the next month. Andrew, good morning. Good morning to you, becky quick. Thank you very much. We have Corporate News for you this morning, as well, as joe was just mentioned. The u. S. Government is now officially out of gm. Theyve sold their last shares of general motors. Tack payer res taking a welcomed 10 billion loss into the automaker in 2009. There will be an ongoing raging debate about whether this was the right investment. In tech news this morning, Texas Instruments are narrowing their Fourth Quarter outlook. Semi conductor earnings and revenue, their view on the theyre baskracketing the consensus. The founder of lululemon is now leaving the company after that uproar of his critique of customers bodies. Chip faced a media storm after saying in part frankly some womens bodies just dont work for the pants. Shares of the up market yoga pantmaker hitting an alltime high, 81. 43 back in june. It closed just over 70 yesterday. What did he say . He came out hes the founder of the thing and he said for some women, they dont look good in the pants. Its not our pants, its your butt . Basically thats what was being said and i didnt have to i was trying to not say it myself. You said it. Couldnt you fix it . Couldnt you wear spanx under the no. Its kind of one and the same. The founder said that and now hes out. Theres a lot of things that my body is not good for. I would hate the person to say youre not suitable for that. You know what, actually . I would want someone to tell me. Andrew, if i come in here some day and you want penelope to tell you. Hold on. Now im going to defend this guy. There are certain types of clothes that run very skinny, there are things that run wide. Im kind of a tall guy. Theres certain clothes i can wear and you cant you can say that. Im not arguing that. But i think as the founder of a company, you are alien indicating your customers. Its not my product, its you. Customer service 101. Thats not like the abercrombie guys, where we only want the cool kids this is sort of like, well, we only want the hot kids. Andrew, that collar youre wearing today stnt fit your next. Its an issue. It crosses over like this. Ill have to talk to my people. Since you opened up the gate to all the criticism, i figured id i know. It crosses over. People have to take a look at that. Well talk to the fashion folks later. And i think a lot and i share a lot of what i think. I think the tenyear has been well behaved. I think people arent expecting a taper in december. If we get it, i think the tenyear will act up more. Maybe thats true. But i think that 10 billion, 20 billion, i dont think we care any more. I think you still get a knee jerk reaction. I was surprised at bullards comments. And the bullard theory and maybe the today story, i dont know that it matches up quite the same. The other thing that i thought, which is what led me to the next thing, yesterday a lot of on people made this point, that after the stock market is very strong in any given year, you think, wow, it cant repeat it. But whatever factors were causing the momentum to cause money to go in, a lot of times that continues and its more than just a and the other thing, if you ever look at a chart of anything thats rising, any kind of commodity or stock market, it has every one of those, when its a new high, it keeps hitting new highs. And people would say, wow, i cant guy it now, it hit a new high. For them to be right about its this high, this high, this high, this high, if every one of those times you said i think this is the end of this trend, how many of those will you say its the end of the trend until the tren starts, right . The problem is you might miss the opposite trend. But why dont you give it 10 before you jump in. Mo because most of the time its a fake to try and shake out people that arent that confident. Until you happen for sure. The market doesnt recognize the calendar year. No. I like the Deutsche Bank call. What else is going on . Theres a budget, theyre going to do that deal. That could be huge. And theyre going to do that. I think they are, too. Paul ryan and patti murray have been really good about keeping quiet on it. Theyre not commenting to reporters. The producers have put an actual story and words that go together that tell this story. Im going to say that now. Go for it. The movie is coming out soon, isnt it . Anchorman. Im channeling it. As i do everything. In washington news, congressional aides say a budget deal could come today. Today. They better hurry. Theyve got in the nl next friday is when the house goes to recess. When they go into recess it could be a big bullish market. We need will ferrell to come and do this. He did it at some south dakota local station. Is there a day youre going to be out . Because we people have never seen the two of us in the same room. Why, andrew . Why do you want me out . I dont want you to be out. I want you to be sitting here. Because if any of us is like him to get out, it would be me. I didnt say that. Thats okay. Patti murray and republican representative paul ryan are scheduled to meet today. Theyve been discussing what has been called an unambitious plan, but we like it. The deal would raise revenue by cutting federal employees retirement budgets and raising fees such as those paid by air travelers. Theyre going to double the tax on airplane tickets. But they call it fees instead of taxes so they think they can swing it by. I heard you yesterday, youre very cheap. And your first concern about usair. American, youre sure theyre going to raise it . Im sure. Theyre the same prices now as when i was a teenager, basically. To go to california, its like 400 round trip. Thats whan the 70s, andrew. If you look at the fees on airline tickets, its astronomical. But it only ads up to 400 to go to l. A. And back. If you want to oh, you mean the no, i mean the fees themselves. From new york to San Francisco has not gone up materially. I agree with you. But if you look across the country, they have outpaced inflation by not over the past 25 years . No, but over the past five or ten years, yes. The Biggest Issue with conis on sole addition, you cant get direct flights to a lot of smaller markets. In our d. C. News, lawmakers are proposing a compromised defense bill that would reduce spending on Missile Defense by 358 million to 9. 5 billion. It would mandate an additional Homeland Defense radar system and increase funding for u. S. Israeli cooperative efforts. Leaders of the senate and House Armed Services committee are calling for a measure at least by the end of the year. And a new study says its stake tax Revenue Growth peaked earlier this year. Preliminary figures softened significantly. Gains in the first half of the year were led by western states, andrew. Thank you. Thank you very much. The other big news of the morning, the volcker rule. Regulators are about to sign off on the volcker rule after five years. Kate kelly joins us now with this story which has been a long time in the making. Good morning to you, andrew. Its been three years since the dodd frank rule was passed, 3 1 2 and a lot over 2 years as we saw a publicly available position on this volcker rule. Based on the leaks were hearing about the big this morning within one, is theres this sort of ban on portfolio hedging. In other words, you cant make the vague assertions about the positions taking on offsetting whatever youre exposed to as a bank however reasonable ta may seem. These hedges have to be tied to quote unquote reasonable, identifiable sets of risks. In addition, they also have to justify the positions theyre taking as being needed by clients that they reasonably expect clients to need these things, either to buy them or sell them, obviously, in the near future. Ceos will be expected to attest to the fact that they have compliance programs to follow the volcker rule. Theres a trade on any situation tied to traders which seems like something they would do. Now, an interesting thing that is a bit of a car bout, the fact that theres going to be wider leeway in terms of treasuries and municipal bonds, essentially the Government Bond market somewhat protected in terms of the curbs being imposed by the volcker rule as are sovereign bond markets in other countries. So that is something that the industry may be happy about. I think its interesting overall, because in terms of what i was being told of what to expect today, and by the way, today will be interesting because we have a federal government closure in d. C. Due to snow thats expected to fall, the schools are closed, the cftc canceled their public meeting, were standing by for more details on the fed. Im told the rule will be voted on regardless because these agencies that need to vote today can do that through a process where they do it behind closed doors. But in any case, this leeway in the Government Bond market, i think, is interesting and shows you or at least based on what im told by sources, guys, that the rule writers were worried about distortion of spreads in those markets if it became too difficult for banks to hedge themselves. Ive got a couple quick questions for you. I read some of the material and talked to a couple people in d. C. , as well. The thing i cant know is when they talk about a specific edge, and thats the quote, has to be specific. If i am wells fargo and i am long the Housing Market, right, can i now be can i put a hedge on the Housing Market or is that too broad . Is that specific . My sense is thats too broad, andrew. And i think this whole thing, and the journal pointed this out, too, this is sort of the london whale band were seeing here. We have 350 billion in broad exposure to the corporate sector because were a bank and we do so much lending, therefore, were going to take on sort of large hedging positions that are hedges on Corporate Credit rimp. That apparently is not going to pass muster. However, as you know, this is a 900 plus page document. Theres a lot to be seen in the interpretiveness. Well see more how they define it. And one other point you made, when you talk about the sovereign to sovereign debt that u. S. Banks were able to buy outside of the u. S. , im told that the pressure that was brought to them there was not actually the banks themselves, it was actually the Foreign Countries who were saying, talk about our spreads in the United States and were going to have problems. I can see it. I think theres a concern that that will whhappen is if banks cant raise revenue by prop trading, which was a huge revenue driver leading into the financial crisis, and if they cant hedge losses through some sort of proprietary trading, what theyll do is essentially widen spreads not by design, but just because theyre not going to be willing to make as efficient markets. We may see customers getting those costs passed on to them. And the fear was that that would affect these essential government markets. So that will be an center argument that comes out, i would think, and i think people are ready to go with lawsuits as soon as they can pars through this language and figure out what theyre going to take issue with. Kate kelly, thank you for that. Stay warm and we hope to see you today. It doesnt look like its snowing right behind you this second, but it sounds like well key you posted. Ayman jabbers and i are here regardless of the weather. Joining us at 6 30 a. M. Eastern is bart chilton. And well continue this conversation. Time for the globe markets. Is there snow coming today . Supposedly theres snow coming here and theres definitely snow going down there. Schools canceled . Not here. Here . Really. I did. Happy people in my house. Ross westgate is standing by. Morning, joe. Hi, ross. Go to it. Youre green. You should be. We are. And not by much. It might be said. Modestly higher this morning, joe. Good morning, everybody. 6 to 4, a little bit more than that. We are up to the session highs, very good gains there. The ftse yesterday was up some 7 points and this morning moved a little bit more than that. You put the prices up, just up 10 points, around 0. 2 higher for the german market. The cac 40 is up around 0. 2 . Good data out of france today, coming down 0. 3 in the month of october. We expect to pick up another piece of data that reflects france back into. The ftse mib is up 0. 25 . Breaking that down by sectors today here in europe. Well show you where the division of the split is. We have media and its not doing too badly. Basically resources down once again. The prospect is the fed essentially tapering next week. Now weve got a Euro Group Meeting going under way today, as well, in brussels. And they are saying that theyve put an agreement together to put a fund together to help close banks. There has been big discussion in europe of what happens when a bank fails, how do we wind it up . Do we have a fund to do it . Now, theres a proposal on the table. The problem is that the germans have been dead set against using that fund to wind up banks. So while theres a proposal which may lead to this wider Banking Union and the Single Market resolution is a key part of that, not sure or clear that the germans are going to necessarily change their position. For them, of course, its mutualzation of debt and they run a long way away from that, as well. And ahead of there on the sidelines of that, there is some good news. Julia has been speaking to the greek finance minister who suggests that by next year or some part during next year, they should be able to reaccess the market. Im very optimistic about next year. Were going to have positive growth so we can have market excess. And how do you continue to leading to success next year, but it will be the First Time Since 2010. So it is very important. And that would be some achievement if indeed they can manage that. As far as bond yields are concerned, treasury yields are lower this morning. Weve seen lower yields in italy and spain, as well. Just above this 0. 4 market. Still very contained. Back to you guys. All right, ross. Thanks. Coming up, a commuter controversy for google. And how would you like to get a late slip for work . Those stories are coming in. Andrew would have a slew of them. Are coming in in this mornings executive edge. And we have a big lineup of guests coming up, ken langone, steny hoyer, norquist and the ceo of brockstone will tell us what kind of cool stuff should be under your tree this year. But before we head to break, here is the National Forecast from the weather channels alex wilson. The snow is going to advance closer to philly. Time now for the executive edge. A google commuter bus was blocked in San Francisco for about a half an hour yesterday. Protesterses were complaining an influx of Technology Workers has been driving up costs in the city. Protesters chanted and held up signs saying things like San Francisco is not for sale. Stop evictions now. Maybe made for some discomfort for the people on that bus. Google scum read one notice that the keep catching your bus. So let me get this straight. They dont want any high tech jobs and job creators in their neighborhood . They do. They just want them to leave after hours and go away so that they can stay in those places. Its the same sort of gentrification youve seen in those places. Oh, who wants that . If you have some ridiculous yupp yuppie pc take on this i have some ridiculous pc take, which is i dont think i want to ask you this. No, no, do you want artists, school teachers, nurses, doctors cant we all just get along . They cant did coexist with goo people . They may not be able to afford to live next to. What you want . This is the same diblasio argument. No but youre so hypocritical in your ivory tower on the Upper West Side there. I am. Im not disputing that. Im suggesting in a perfect world, what would you want . And where is that . Dont they have rent control like they do in new york city . They do, but do you have rent control . I wish i did. Because some of the biggest loud mouths about this are you find out boy, do i wish i had rent control. You would take it, too. No, no, i would say please, thank you maam, may i have another. We just have to embrace the technological i would be so happy if i was in San Francisco or silicone valley that thats where these people decided to put their company. So i have some friends who have kids in school, private school in new york city. And they say, you know, do you want to go to a school where all of your kids colleagues region you know, all work on wall street or all own hedge funds or would you want them to all come from different backgrounds because thats going to help the kids grow up in a different way or have a broader experience . Its just a question. I dont know the answer and i dont know how to get there, but i raise the question. Is that an argument for Public School . That is an argument for Public Schools, but its a larger argument about what is city and what is life supposed to look like. Now im going to look like a socialist. Im just raising the issue. I hear your point about making sure everybody has diverse backgrounds and i think everybody wants that for their kids. I mean, weve been grappling this for, you know, 50 years, how to make sure that everybody gets an equal education and we dont know whether we do it, we transport kids or we just improve the schools in their neighborhoods. I dont know the answer to any of it. Its tough. Right. But i think that is but thats where i think this type of story comes from. Thats whats going on behind the scenes. It certainly gets to the roots of that. Guys, let me tell you about one more story. If you were late for work, the mta could come to your rescue. The Transit Authority could give you a note called a subway delayed verification. In other words, yes, boss, i really am telling the truth. Passengers are asked to provide information like their subject lines, locations of their entries and exists. Then you get this late pass you can hand over to your boss. Andrew, this is your story. Ive had a couple of near miss in the mornings here. If i can have brought the note we had money on you not even though it was your first day back because yesterday there was some bat bad weather and we thought you were going to get your makeup on set again. Which makes for a great 6 00 a. M. Hour. Andrew is late, watch what happens, the makeup lady comes out here, she doesnt have to draw in those eyebrows. People dont believe that because those things theyre real. That is wow. Every expression is gives you a little extra umph. I need some of that. Look at these. You cant even see them. I can pencil them in for you. Would you do that . Keep the cameras rolling. One more story for you guys. Really . You already said it was the last story. Apparently we have some time. So requickly, i will tell but the real story. An article on the front page of the wall street journal today says companies and activists are declare ago truth in board room battles. Yeah, right. Both sides are finding it is easier and cheaper to negotiate rather than risk a public side. Others say the companies are becoming more receptive. Traditionally, they had sided with management, but, guys, even carl icahn is saying, yeah, ive been surprised how many board seats ive gotten. You saw what carl says. People understand the right. People understand that the things im talking about are very successful and theyre morons. Who did we have we had a guest host recently who said you absolutely i would advise if the activist investor comes open up and youre right. Keep your friends close and your enemies closer, exactly. I agree with what you said when you were talking about why they bring them in cheaper and easier. The second part is they get the support of the longterm shareholder cant we all just get along . We are. Patti murray and paul ryan are getting along. Its nice as we head into the holidays. When we come back, were going to be talking about the voting on the volcker rule. Bart chilton will join us. Hes going to cast his vote later this morning. But first hes talking to us. And later, we are squawking dead with the host of talking dead. Chris hardwick will be joining us in studio. Were all excited about this, but especially joe. Also, as we head to a break, take a look at yesterdays winners and losers. If yand youre talking toevere rheuyour rheumatologistike me, about trying or adding a biologic. This is humira, adalimumab. This is humira working to help relieve my pain. This is humira helping me through the twists and turns. This is humira helping to protect my joints from further damage. Doctors have been prescribing humira for over ten years. Humira works by targeting and helping to block a specific source of inflammation that contributes to ra symptoms. For many adults, humira is proven to help relieve pain and stop further joint damage. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. Blood, liver and nervous system problems, serious allergic reactions, and new or worsening Heart Failure have occurred. Before starting humira , your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Ask your doctor if humira can work for you. This is humira at work. 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. [ male announcer ] how could a luminous protein in jellyfish, impact Life Expectancy in the u. S. , real estate in hong kong, and the optics industry in germany . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 70 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Good morning. And welcome back to squawk box here on cnbc. Im joe kernen along with becky quick and andrew ross sorkin. Making headlines this morning, the east coast is bracing for another major winter storm. Millions of americans are set for more travel chaos. The winter storms expected to dump as much as 6 inches of snow on washington, philadelphia, new york and boston. Thats right up the track of the it must be following in a cell of the amtrak train. Nearly 800 flights have been canceled in wilmington. So far this morning, Toll Brothers are reported Fourth Quarter results that beat the street by 11 cents. Revenue basically in line. The cautious comment from the ceo leading to a little bit of pressure on the stock this morning. He said demand is leveling off as Interest Rates creep higher. Also theres Political Uncertainty in washington. Uncertainty might be going away and, you know, 2. 8 isnt going to kill anyone. Maybe thats why the market is up. Maybe its all about washington than just the fed. Theres a lot of good things happening. After years in the making, the volcker rule is find finally up for a vote which would bar banks from proprietary trading and strictly limit their alternative investment activity. And bart chilton, which is like its tough for everyone, bart chilton, commissioner of the cftc joins us now. Trying to get through this vote is going to be one of his last major acts as a commissioner before the leaves the cftc. Are you going to be able to speak without your voice wavering, bart . I think so. I can probably handle it. Leaving government is not the worst thing in the world. Ive got to get you one more time. Have you met a regulation that you dont like, ever . Yeah. You know my answer, too. Box office futures. We shouldnt be betting on movies. Thats the one and im holding on to it. Thats the one you always come up with. Well always remember that. The way this rule looks at this point, its much tougher than a lot of people think. Its a good thing that it is. Its not going to hurt capital formation. All of it is going to be benefits. Theres no downside p, in your view . Well, you know, these things are never perfect. So there may be something that we dont anticipate. But i think its a rigorous rules thats good, that it does exactly what the law said, joe. It stops the wild flyer betts that are just for the house. It will allow legitimate hedging activity for legitimate Business Risking. But as kate kelly was saying earlier, it has to be defined what this Business Risk is. So i think ultimately its going to be, you know, good for markets and there may be some complaining a little bit right now. But i think ultimately, its going to be a really good thing. Theyre like most things, usually it goes too far and then you fix it as you see some of the unintended consequences. We had a banker on yesterday, medium size Citi National out in l. A. Talking about just dealing with dodd frank has been some of the provisions that were unintended in that. But thats been sort of a wet blanket in certain ways. Well do it again, right . Yeah. I mean, it is this balance and we talk about that a lot. But its true. Sometimes regulators are overzealous and go too far. Theres been a couple of instances where maybe weve done this, but were erring on the side of caution given a decade of deregulation between 1997 and 2007 led to the economic collapse. So if were going to err one way or another, i think we want to err on the side of protecting the economy and protecting the consumers, right . But all you really got that was a result of this, you got the whale that was it was material to jpmorgan, but it certainly never threatened taxpayers ever. It never got close to being an issue. And then you got the financial crisis that wasnt even the commercial bank. It what the was the investment banks. So as bad as it got with all these horrible activities that they were supposedly engaged in, it wasnt even the root cause of the financial crisis. Well, this Systemic Risk certainly with all of them and tlshl some wh there were some troublesome duplexities. What is that . Troublesome duplexities. Im a psychologist this morning, too. You have the banks, when they have a proprietary interest and they bet for themselves, what they did and there were two major banks that did this. They encouraged their own customers to get into a fund and then the banks took the opposite side. Who did that . Goldman did it and citi did it. There were plenty of people on both sides of those trades. All they did was supply what both sides were looking for. And they were with the losing side. Goldman was with the losing they lost 90 the Million Dollars on that. A federal judge fined them hundreds of millions of dollars. My guess is they probably did something wrong. Just by getting paying a fine in this day and age, nobody has even admitted doing anything wrong because all they want to do is settle because they know the government has the other thats an assumption you cant make. Nobody yeah, i dont i dont think that that advocates track do you feel that that trade was not we only know John Paulsons name now because he was like the only guy that really saw what was happening. Those banks over in europe were crying for product. This wasnt average investors who were on the other side of that trade. No. They were guys who knew exactly what they were doing. Both sides had product. All goldman did was facilitate the trade, bart. They created the fund, encouraged customers to get in it, they took the other side and nobody said no, they lost money. They had money on both sides of that trade. They lost money. They were with the european bhanks more than with paulson been. Joe, is that the new standard, you only have to pay a fine if you make money . If you violate the law, youve done something wrong. Its not only if you profit from it. Who violated if someone violated the law i think they paid a fine because of the marketing materials. And if someone violated he a 29yearold trader was the only guy that was brought to trial, right . They paid hundreds of millions of dollars and a fine for doing something they shouldnt have done and that was creating the fund, populating it with their own customers and then taking the or position. I dont buy that. Thats a false narrative. Lets be honest, the volcker rule is a very difficult issue. It relates to that, but thats a small piece of this. The question i have about this new law relates actually to the standard and whats going to happen, meaning when people talk about specific, it has to be a specific hedge, how specific that ultimately has to be. And the question id ask kate kelly is if im wells fargo and im long the Housing Market, can i make a specific hedge against the housingkets a hedge . You can, but it has to be comparably correlated. You cant say this is a hedge and then you speculate. It has to have some parameters on the i wonder, this looks like its a pretty big tool for regulators to then go back to the banks and say this doesnt work, this doesnt work, this doesnt work. If im a bank, it might be pretty concerned about trying to do anything because the interpretation is going to be if you decide to come after me, you can do what you want with it. Well, theres that concern, becky. But thats why its been so difficult, quite frankly, in writing this. Because you want to take care of all these nuances. I think weve hit the right balance. So what the language says is that if you have a risk and then you want to place a hedge on that, then it has to be comparable. That it has to be roughly comparable. Its not just in the eye of the beholder. If you can prove what it is, show what it is, then thats fine. The other key thing weve added here is theres an ongoing recall bragz. So things like the london whale that kept losing and losing money, that would have to be recalibrated. That circumstance wouldnt have happened. And the other way, if you were making lots of money on what was a hedge, but you made all sorts of money, then over time, youd have to recalibrate that position to ensure that it remains roughly correlated with the actual risk. Which makes sense. Hey, bart, we have to go, but since you are going and leaving the department, make you can tell us some secrets. What happened in the last couple of weeks here . Who is on which side of this thing . Who is in the pocket of wall street, as i imagine you might think some of them were. Who made a win here, who made a loss . All ill say is you can burn some bridges on your way out. Its okay. Yeah, right. I have a history of doing that. The bottom line is this thing got weaker from the time it was proposed and just before thanksgiving, i thought there was no way it could be resurrected. But i think its righteous and rigorous regulation. How do you like that, joe . Um no. I guess you havent had the government bring any a lot of those things are not settled because theyre settled just to get them out of the way. Thats why the language in them never says i admitted guilt. You live in a ewe taupan world where it proves that there was wrongdoing in the first place. People dont pay the bottom due to emaculate conception. Try fighting an audit, bart. Maybe ill get a chance. No, im the one that has to issue. A big lineup kicking off at 7 00 a. M. We have ken langone, steny hoyer, Grover Norquist and the ceo of brookstone with some cool gifts for the holidays. As we head to a break, check out the futures this morning opinion you can see green arrows once again. S p futures up by just over three. Squawk box will be right back. We talked about axiron. The only underarm low t treatment that can restore t levels to normal in about 2 weeks in most men. 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Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Every day were working to 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. It is now time for the squawk box market planner. Amazon begins shipping a 4g version of its 8. 9 inch kindle fire tablet in the United States today. You can go out and get it, priced at 479. You have to click to get it. The tablet, featuring hd display, improved battery and life. Watch out for the october wholesale trade and labor departments job openings and labor turnover. And on wall street, the nyse Tree Lighting ceremony. The annual tradition includes live music, hot cocoa and performance of christmas carols. Coming up, the feature in michael lewiss the big short. Now paul is back with more insight and opportunity ahead. He joins us on set right after the break. Announcer coming up, can a budget deal be reached . House minority whip senny hoyer is here. Rise above with squawk box only on cnbc. The American Dream is of a better future, a confident retirement. Those dreams, theres just no way were going to let them die. Like they helped millions of others. By listening. Planning. Working one on one. Thats what Ameriprise Financial does. Thats what they can do with you. Thats how ameriprise puts more within reach. I want to spread a little love this year [ male announcer ] this december, experience the gift of unsurpassed craftsmanship at the lexus december to remember sales event. Some of the best offers of the year. This is the pursuit of perfection. Welcome back to squawk box, with the fed signaling tapering to likely kick off in the next few months, how is the smart money playing defense with their portfolios . Joining us the partner and global head of event strategies at hedge fund white box advisers. Approximately 2. 8 billion in assets under management. And as we said in the tease, youre part of the big short. Yes. Which is always kind of cool. Yeah, always great to bring it up, too. Do people talk to you about that . Is that now . The big short is has that created a halo . Not i was probably the least well known person of the people involved in it. So not really. And it was quite aways away now. Kind of distant past. When we teased the segment, we also said tapering in the next couple of months. Where are you on that . Weve been debating that for a while now. They have to taper because they continually are buying a greater percentage of debt being created because we were creating less debt. So if they dont taper some, theyre increasing the percentage they buy. Its really the degree of the taper. And our concern isnt really for the 50 basis point move in either direction. Our biggest concern is if they were to somehow lose control of longterm Interest Rates and yet have a significant selloff. Because in that dynamic, we think that it would be incredibly dislocative to markets. And dislocative to portfolios. Odds of Something Like that . I dont think its great. But i think its greater than zero. And i think the biggest problem is that people think that it really cant happen. I guess tieing back to the mortgage trade. I remember in 2006 when we were ramping up the short, i was at a security conference and i overheard a conversation between some investor and one of the rating agencies. And they asked the question, well, what happens to these mortgage bonds if the Housing Market declines 5 . And the answer was, well, we dont really know because that cant happen. Ding, ding, ding. You know, maybe it can happen and thats really when we ramped up the trade. That was but i think, when you have things that people believe cant happen that do happen, thats when its most disruptive to markets and destroy the greatest amount of wealth. The whole idea of the fed losing control, do you think thats more or less likely than it was six months ago . Probably about the same. Really . Its basically as you print money and i lose arguments with welltrained economists all the time. An abnormal inflation environment, you could ask, like argentina or zimbabwe, did they ever have monetary was there any monetary velocity and there wasnt. Its for an abnormal inflationary type period. You dont need that. Now, i dont im not predicting this is going to happen, but i think its a risk and probably the risk to protect our portfolio against. And youre long municipal bonds. Yes. Youre like the antimeredith whitney in this case. Yes. Why . Well, we are we are long the best credit municipal bond. We hedge out the Interest Rate exposure in those. Its one of the few places where you can still get rewarded for your risk. Its a pricebased argument. Theyre too cheap. Youre getting over an 8 after tax yield. You have a lot of cushion against Interest Rates there. And most municipals are very solid. Were only trading for the most part in the top rated municipals. We have some university bonds that are trading, you know, at 4. 8 , 4. 9 , for tax, over 8 after tax. Theyre significantly cheap. And what happened when there was a first taper talk, municipals traded off higher than any other fixed income instrument which is odd because the fed doesnt buy any bonds. Retail got out first, so we just think from a risk reward opportunity. And real quick, equities. We keep making new highs. Are we going to keep making new highs in 2014 . Were a little bit more negative on equities than weve been in the past. Were fairly positive this year. When you say fairly positive, how were you balances . Well, we stay pretty Market Neutral in our cases, but were probably a little bit bias to the long compared to being exactly Market Neutral. Were probably a little bit biased to the short now. But were basically always have somewhat of a long bias simplicity. The only part of the equity market we really liked right now, i think, are mortgage reits. Okay. And theyve been huge disfavor. I think most of thats priced in and youre getting rewarded for that. Thank you for coming in this morning. Thank you. Coming up, instead of us going to capitol hill, the hills coming to us, steny hoyer will join us onset to take on the biggest facing washington. Ken langone is all fired about whats going on in washington, wall street and everywhere else. Well 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. Embracing the taper or throwing a taper tantrum . Is bernanke about to leave wall street with a lump of coal . Thats about to keep our squawk market watchers very busy. Clark, its the gift that keeps on giving the whole year. Our guest host is ready to play. Ken langone is fired up about the economy, obama care and Pension Plans across the country. One Year Membership in the jelly of the month club. And dealing with Unfinished Business on capitol hill. Steny hoyer making a rare appearance on the squawk box set. Squawk box begins right now. Good morning, everybody. Welcome back to squawk box on cnbc. Im becky quick along with joe kernan and andrew ross sorkin. Nearly 100,000 mourners flooding the soccer stadium today for Nelson Mandela memorial. Dignitaries and World Leaders are speaking, including president obama a few minutes ago. He was not a bust made of marble, he was a man of flesh and blood, a son and a husband, a father and a friend. And thats why we learned so much from him and why we can learn from him still. A steady rain has been falling, but the crowd has been singing and dancing in celebration of mandelas life. Also, in wall street news, the s p 500 coming off another record close while the nasdaq finished at the highest level since september of 2000. Investors now focusing their attention on next weeks fed policy meeting and the possibility that the fed could scale back the bondbuying program. Well have more on that in a moment. Thats why steve is here and thats the conversation around the table. The futures in the meantime are indicated slightly higher. Dow futures up by about 21 points, s p by about three points. Treasury in the meantime, has sold the last of the general motor shares. That means the automaker can pay a dividend and is no longer subject to executive pay caps. With that sale, the final cost of the governments gm bailout is around 10. 5 billion. And a budget deal could emerge in washington today. Democratic senator patty murray and paul ryan are reportedly set to meet today and hope to finalize a budget deal. Each as the head of the Budget Committee in the respective chambers. An agreement would avoid a january 15th Government Shutdown. Theres a lot of hope around this deal. A small deal it may be. Were going to be talking to House Minority whip steny hoyer. And then at the top of the next hour, tax crusader Grover Norquist. Oh, good, you will get a question. You know what im going to ask . Dont tell us now. Hell get it all prepared. Lets blind side him. You got a good one . I think so. Weve been talking about a bullish market call from Deutsche Bank this morning. Means that the rally can continue and suggests that the s p will see a 10 gain early in the new year. Deutsche bank estimates around 169 billion is around in pent up cash and short interest. And thats likely to make its way into equities over the next three to four months. And, i dont want to say from their lips because i dont want to say that i dont care one way or another. But its nice. Nice, its lovely. Some people think its going to go down. Some people think the fed will taper in december and some people think they wont. I wish i knew someone who knew. Well, we might have a guy who thinks he knows. Its impossible to know, isnt it . Well, this guy is closer than others and his name is Steve Liesman and were going to talk about the fed. Liesman i believe. Liesman i believe. Let me warn you, folks. The New York Times says one things, the other guys not going to happen. Others say not going to happen. I want to warn viewers, joe is agitated this morning. At the end of this report, hes going to have a word for me. Give the report. Im going to give the report and, joe, its your show, you take what time you need. Burn me once, my fault, burn me twice twice. I take what you say as gospel and i have to gospel is a strong word. A taper by the Federal Reserve in the next meeting in my opinion looks more likely than not. The economic data, reaction to it and statements point to a strong possibility the fed could move next week to reduce the amount of stimulus it provides the economy through bond purchases known as quantitative easing. The fed offered three tests and look near to being met. Lets go through them one by one. Confidence in the outlook. Threemonth average job growth now 193,000, thats up 44,000 from what the fed thought threemonth average job growth was in september. Its been revised higher. The Unemployment Rate down by. 2 since september. Budget deal in the works between murray ann ryan. So less of that for a couple of years. And Interest Rates. The june 15th fed fund futures are down from 90 basis points on september 5th to being unchanged yesterday at 27 basis points on jobs friday. That to me is very key. The behavior of the fed funds rate tells the fed theyve been successful so far in convincing the market itll remain lower for longer and that tapering is not tightening. Of course, predicting the fed the past several months for me and many others has been a tough proposition. They defied conventional wisdom in june by announcing a taper schedule and in september by not tapering. They could wait another month so they dont think it matters a whole lot in the grand scheme of things if they start now or next month. Jim bullard from st. Louis yesterday talked about a small taper in december. Atlantas Dennis Lockhart said it should be discussed at the next meeting as did plosser. Began laying the groundwork in the september 19th speech with dovish talk about how the committee can react once it hits the threshold for raising rates. Even after unemployment drops below 6. 5 , and so long as inflation remains wellbehaved, the committee can be patient in seeking assurance that the labor market is sufficiently strong before considering any increase in the target for the federal fund rates. What the fete is trying to do now is pivot from quantitative easing to Forward Guidance and guidance on rates. Next week could be the beginning of that process. Okay. So thats my report. You changed your mind over the last week or so. I went from close call to after seeing how the market reacted to the data, i think its now over the i think i asked you before the jobs report. And you said, no, i dont think its happening in december. I thought that same thing, too. And ive changed my mind. Steve like the fed is data dependent. There have been a couple and i saw those comments, too, and like you before you came here, thought they were going to taper in september. And not everyone is, like the New York Times. But when was the last time . The last time there was something you were definitive and things did change. September, we thought there was going to be and you came back and changed it. Yeah. And there was another time you thought there wouldnt be another round of quantitative easing. And then it became clear there would be and you said there will be quantitative easing. I dont want to take i idolize you, you know that, and when you Say Something, i switch all of my thinking and commentary. And then when you flipflop, i feel betrayed and i feel like then i have to flipflop. Its gotten personal, hasnt it . I get that. I call it the way they give us three tests. Will you give me a heads up . I will. I made an argument the three tests have been met. They look like theyre close, i know they wanted to do this for a while. And you know what else you just mentioned . They have its almost been comical watching them all on the same me . No, watching them all on the same page doing the, we dont need qe, were going to do the longer at zero. Someone said, look, weve got to really tell people that the Forward Guidance is what were going to theyve all had that same message. Its almost been comical. Its like, weve got it, we understand. And this would allow them. Watching the way the market reacts has been really key. Havent you been gratified by the tenyear. Its been nicely contained at 2. 82. And i talked to Jeff Rosenberg yesterday from blackrock. And he says, the market is looking over the right shoulder at short rates because which market . Fixed income market. Okay. At short rates because it knows the fed wants to keep a lid on that. And over the left shoulder, both shoulders at long rates because it feels if it goes too far, the fed could act there. The fed seems to have the tentative control on both sides of the curve. Isnt that in part because theres such a question mark in the market about whats really going to happen . For you to come out and say this and then yesterday with the times and i dont know where he stands, the market i dont think knows im not sure the markets biased one way or the other at the moment. I think the biased is built in here. I think if you look at the fed funds about a 66 probability of a quantitative easing. And i think the market, stock market believes you and i think its rallying anyway. We finally gotten to the point where its the economy. I know the fed feels like. The economy, not the taper. The fed feels like the progress it has gained in convincing the market about tapering, not tightening has been hardearned, but they think theyve earned it at this point. And the underlying economy looks better. I want to introduce our guest host right now because i want his comments on this. Ken langone is here, the cofounder of home depot. Ken . Where is your factor of the consumers confidence in all these numbers . I think because, frankly, frankly its tepid at best. Right. Confidence is tepid but its also tentative in the sense that its something that can change quickly. What we see, ken, is growing household wealth. What we dont have is a propensity on the part of the consumer to spend that money and the confidence to spend it and or to borrow. We still seem to be in a deleveraging thing. In a deleveraging phase right now. But if the consumers have the wealth, then you can have the confidence to spend it over t e time. The connection between confidence and spending, ken, is very tentative. Sometimes like after 9 11 is my favorite example, i would say its a terrible example. Confidence plunged after 9 11, they sold more cars than theyve ever sold after 9 11. So the connection is very is very tentative. I give Auto Industry a pass because the age of the cars on the road for instance, i own a fullservice Truck Leasing business. We deferred purchases of new equipment in 08, 09, and 10, our maintenance costs went like that. I was talking to Robert Sanchez yesterday, same thing. They realize and now were buying a lot of equipment because the cost of maintaining the old equipment and this is not unlike the owner of a personal car. I think they say tepid to what was the word you used . Tentative . Come on. Those arent economic terms, those are adjectives. What im saying is, look, im bullish, im excited about the next five years for a lot of reasons other than what the fed does. But i really believe that the consumer is a lot smarter than most of us are because they have to live every week with the bills and the obligations they have. So theyre smarter and see something that maybe the rest of us dont not so much they dont see something that bothers them, but theyre saying to themselves with this mess in washington, im thrilled youre going to have congressman stoyer on. If you get a budget deal, even if its a small budget deal, gets us through the next couple of years, how much of the uncertainty does that clean out . This is who you want to put to work, theyre in the age where theyre spending more, buying homes, buying cars. Are you making an argument for the fed not to taper . No, i dont think tapering matters because theres no demand for money. I kind of think that theres not going to be much of a change. Corporate Balance Sheets are in great shape. Well, the fed has talked about the waning influence and the waning ability for qe to really make much of a move. Its not as effective as it was. Absolutely. Look, look, give the Consumer Credit for one thing, theyre the people you want to read about. Okay. Theyre the people that ultimately drive where were going. We should change there and all the consumer talk to she. Thats the people that know what theyre talking about say she because most of the consumption is not done by us. You talking about men . Youre a sexist. No, im saying that when we have retailers in here they always say she because thats with their stores, thats whos doing the spending. I understand. Im the one who is politically correct. Youre not. And you do you have any idea how much it would be . All youre telling us i learned long ago in college to go to plural. How much would it be . 20 billion i think ten. I think its ten, but i think they melee out a schedule, by the way of how they do this. Really . Theres some support. Wrote about this on monday for the fed going with the idea that plosser broke on our air, something of a cap to this thing and saying this is how much were going to do this year. Also got to wait for bernanke to lock in a legacy. You know, i think bernanke wanted to have been done by now. But i dont think he feels like having being in a situation of not being done that he needs to rush this or do this any faster. What i cant figure out is how significantly things have changed. A month ago, bullard was on the set and, look, we can go a long time and not change anything because we dont see any inflation. Im comfortable with that. I think thats right. But what i didnt appreciate is how much the fed was spooked in the summer by the move in the tenyear. The long end was, you know, thats going to fluctuate around. But if the short end is moving, it shows they dont believe us. Keeping rates low for a while. Wasnt so much the stock market, it was more and watching if you show look at the twoyear. Watch how wellbehaved thats been, which is in the horizon of their promise to keep rates low. Thats the thing that gives them confidence to move here. You see that spike right there in september, all the way up. That says we dont believe you, fed, now at 31 basis points says, you know what, in the horizon, that the fed is talking about, i can see the rates remaining low from the Federal Reserve. Ken admitted he doesnt buy anything except jets. He buys jets. Anything up to a jet is a she. My wife reminds me that i do more in one purchase than she does that is true. All right. Coming up, could a controlled could a you were just hear and now i have to read this. Can a controlled taper turn into a panic taper . We spark up a debate which has been sparked with our market watchers. Plus steny hoyer of maryland is going to be joining us to talk about the budget and all the Unfinished Business on capitol hill. And later, the return of the squawking dead. Remember our halloween show . Weve got Chris Hardwick, host of the talking dead and Comedy Centrals at midnight, almost like a game show about social media. Really cool. And were going to talk about zombie, going to talk about nerdists and a lot of stuff with chris. 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. Welcome back to squawk. Coming up, a taper tantrum or are the markets ready to embrace change . Were going to set up that discussion next. 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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. 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. 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. Weve been talking about the fed and the taper whether it happens in december. Joining us now is jim paulson. He wants it to. Chief investment strategist at Wells Capital management. And dr. Phil is Portfolio Manager and chief Investment Officer oh, no, its neil hennessy. Oh, i had some problems i was going to bring to you. Its not he has the most popular show on tv, dr. Phil, did you know that . Issues what did he say . Good line. Were going to have to settle for neil. Hes the chief Investment Officer at hennessy funds. You are jonesing for a taper so bad, you wish theyd end the whole thing this month, dont you . I always hope theyd end it a lot sooner already, joe. I really think if we have a controlled methodical linear taper that the fed suggests that the markets going to be fine with that. Its been wellcommunicated. I think theyre ready for it in september showing all signs its going to be fine. The problem is, i think it might start out a controlled taper, but i think it might turn into more of a panic taper. And the difference would be if money supply of velocity turns up, then you cannot any longer have a slow major taper. Its going to have to be done rather quickly. And i think that might happen next year. What might turn out to be okay at the start might turn into a little more volatile as the year progresses. Thats what i kind of suspect. What you just said, youre right. We were so ready for it. And then they didnt do it because of the, you know, the prospect of the Government Shutdown, supposedly. And because of the action in some of the money markets. And now both of those things, maybe we get a deal and the fed funds rate. If they were going to do it then, they should definitely i dont know what the New York Times you know what, krugman, krugman wants them to stay at 85 billion. I dont know how i just read him. I mean, again, i read the first paragraph before i cant read anymore. I just read him. He doesnt want any stimulus cutback. Neil, what do you think . I dont think i agree with mr. Langone. You really you have to separate out washington, the economy and what the companies are doing. And when i just look at the numbers and look at what companies are doing, theyre initiating dividends, raising dividends, doing stock buybacks. Theyre making acquisition. This is all very, very good for the market and going forward. And im looking for the dow jones over the next three to five years to go to 20,000. People are saying thats kind of crazy, but thats only 5 a year. And if you add in dividends, talking in five years, 40 on your money. I didnt hear. What do you mean . You agree with ken, the consumers not ken sort of thinks theyre a little tepid in terms of if you were i agree with ken from the standpoint that tapering doesnt make a bit of difference to me. I mean, Everybody Knows theyre going to taper. Its not like its going to be a surprise. The bottom line is, look at the amount of money sitting on the sidelines. U. S. Fixed income mutual funds, theres 3. 4 trillion and 2. 7 trillion in money market funds virtually earning nothing. At some point in time, that has to move. And it will move into the equity markets, especially if rates happen to go up and people start getting their quarterly and monthly statements and finding their fixed income products, investments are down. You know something, neil, i dont think people get. Forget about liquidity, you give business a friendlier environment than it has right now, including cleaning up some of these absurd regulations. And you watch and see where the money will go. Itll go into plants, itll go into technology, itll go into modernization. Its incredible what business will do if its encouraged to be successful instead of punished for being successful. Thats what paulsen said. Were out of time somehow, but thats why you think the velocitys going to increase and we might get a panic taper. Yeah. Id just say, joe, real quick, the history of changes in fed policy really all Public Policy is never rarely done in a controlled linear fashion. Theyre generally monetary boat is turned in policy hard left or hard right under panic conditions. And i think thats what probably is the way that this monetary programs going to change, as well. The last great example was 87 where velocity finally bottomed in the First Quarter of 87 picked up. The market initially rallied hard and corrected hard because people realized velocity started to improve. Correct it hard. 87, yeah, thats one way of what it was called. A corrected hard. Weve got to leave it there. Neil, youre not on later. No, im confused. Anyway, see you later. Thank you. Up next, using big data in the wild. How hp has created an Early Warning system for endangered species and possible environmental threats. And a special guest in the next half hour, steny hoyer will join us on the set. Well tackle the budget, obama care and the minimum wage debate. But there are no branche . 24 7. Im sorry, im just really reluctant to try new things. Really . Whats wrong with trying new things . Look mommys new vacuum cat screech you feel that in your muscles . I do. Drink water. Its a long story. Well, not having branches lets us give you great rates and service. Id like that. A new way to bank. A better way to save. Ally bank. Your money needs an ally. Impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 70 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. [ engine revs ] [ male announcer ] the mercedesbenz winter event is back, with the perfect vehicle thats just right for you, no matter which list youre on. [ santa ] ho, ho, ho, ho [ male announcer ] get the allnew 2014 cla250 starting at just 29,900. Welcome back to squawk box this morning. In the headlines, lululemon will have a new chief executive come january. Joining lululemon, and founder chip wilson will be stepping down as nonexecutive chairman. Lululemon embroiled in a controversy of the recall of the black yoga pants. They were too sheer for joe. No, actually, what was going on i dont do yoga, i cant touch my toes, its a problem. But the real issue was that wilson found himself in pretty hot water over comments. You know about this, ken. That apparently he said customers body shapes were to blame, not the pants. Well talk more about what that all means with the lululemon retail analyst. Womens butts were too big is what he really said. Thank you for that. You cant touch your toes . If i bend my knees. You said you couldnt touch your cant you do this . Straighten your knee, then touch it. You didnt say that. You going to do downward dog later . Oh, you know what it is, dont you . Downward facing downward dogs a totally different thing, sorkin. Thats a totally man, oh, man, dont go there. This squawkward moment has been brought to you by andrew ross sorkin. As we move on have you heard of that . Thank you, excuse me. Toll brothers, its earnings and revenue beat, street estimates for the latest quarter you cant start barking like that. But the Company Says Demand has been leveling off because of higher Interest Rates and because of political discord in washington. Youre negative today. No, im not. And also, we should note a winter storm disrupting planned events in washington today. We heard a little bit about this at 6 30. But the cftc has canceled the public portion of its meeting on the volcker rule. Its possible the commission will still vote behind closed doors to approve it. And the ntsb has postponed the schedule hearing on the july crash of a flight in San Francisco. People were taking pictures of it, posting it on twitter when they landed or crashed, rather. Now set for tomorrow. All right. Its depending on the too much depending on the plane flying itself all the time. Itd be nice to have a pilot up there. Otherwise this is a larger issue. All right. Big data is revolutionizing the way that companies are analyzing their information. Hewlettpackard is playing a key role in this transformation. And joining us right now from the discover conference in barcelona is carl mahoney. And i know you have an announcement today with hp where youre talking about a deal, a partnership thats created the first of its kind Early Warning system for threatened species. That sounds like a really huge problem. And im just wondering, is this for real . It is absolutely for real. And good morning, becky, great to be back on the show. Thank you for having me. We are tremendously excited about this project. I think you often hear about big data. And sometimes its hard to really put it into reality. And so what this project is and this partnership that weve done with Conservation International on the earth project is to set up cameras and thousands of different trap locations throughout primarily rain forest regions in africa and south america. Were collecting not only imagery data, but also combining that with information about climate change, temperatures, humidity. And trying to, number one, set a baseline for where we are. Our ceo meg always says, if you cant measure it, you cant fix it. So step one, lets set a baseline. Lets figure out where we are with all different types of species, whether theyre plants or animals, measure those and continue to measure those so we can create this trend line and try to intervene as fast as we can. Its about near realtime analysis and analytics so we cannot only see the data and analyze it, but most importantly, we can act on it. And whether youre a business or the environment or a person with your own health, this type of analysis and intervention is really critical and to us thats really what big datas all about. So this is just being announced. I take it its been created but not rolled out and so you cant see what species are endangered at this point just yet . No, it absolutely has been rolled out. All the information is publicly available. You can see it on the Conservation International website. Weve got demos going here at the hp discover show behind me in barcelona, spain, right now. Weve got interactive touch screens where you can actually see photos of the animals, drill down by seeing how theyre doing, how many species have been seeing. You can see the photos and imagery coming through. Its live. We know that hp has been doing very well recently, better than the market had been participating, better than analysts had been anticipating. I wonder big data, what kind of a role it has played in that. Well, i think it plays a big role. I think big data is one of those areas that really lets hp shine. People dont want to hear the bits and bites. And last time i was on we talked about terabytes. We talk about this new style of i. T. Cloud, mobility, security, and its big data, its about the solution, and very few companies can do what we do. Take the Conservation International example. We went from tablets to the cloud to our servers to our software and professional services. We didnt talk about any one individual product. But we talked about, heres our solution. And big datas something that just says come help us, hp. Come help us focus on our problem and solve it for us. So i think it has played a big part in our rally and in all the innovation and all the things were doing here at hp. I want to thank you very much for your time today. We appreciate it. All right. Coming up, another its going to snow again. Its another wintery mix headed for the east coast today. School closings, right. Yeah, the latest forecast in a few minutes. And a reminder, you can get a leg up on the trading day with the morning squawk. What did you say . A downward dog. Is that a yoga position . Downward facing dog is what the yoga position. Is it called downward facing dog . Not downward dog, thats i dont know. Im not is that a freudian slip. Its downward facing dog. Go to our squawk page at cnbc. Com and sign up now. Its the snapshot of todays top story. I look up in the dictionary whether anything means anything and apparently, i dont know, maybe you didnt know. Economic earnings news, guests and some fun water cooler stories which well be squawking about all morning long. Sign up and get morning squawk delivered to your inbox every weekday morning and never miss a beat of your favorite morning business show and this is why. Coming up, can a budget deal be reached . Steny hoyer is here. Plus, antitax activist Grover Norquist. Rise above with squawk box only on cnbc. Its estimated that 30 of the traffic in a city is caused by people looking for parking. Thats remarkable that so much energy is, is wasted. Streetline has looked at the problem of parking, which has not been looked at for the last 30, 40 years, we wanted to rethink that whole industry, so we go and put out these sensors in each parking spot and then theres a mesh network that takes this information sends it over the internet so you can go find exactly where those open parking spots are. The collaboration with citi was important for providing us the necessary financing; allow this small startup to go provide a service to municipalities. Citi has been an incredible source of advice, how to engage with municipalities, how to structure deals, and as we think about internationally, citi is there every step of the way. So the end result is you reduce congestion, you reduce pollution and you provide a service to merchants, and that certainly is huge. Welcome back to squawk. In global headlines, we are continuing to watch the situation in ukraine. Last night, police began dismantling barricades in front of the government buildings there. Local reports say special forces lining up forced the protesters to retreat. No clashes, though, were reported. Computer Security Firm is reporting that chinese hackers have eavesdropped on the computers of five european foreign ministries before last septembers g20 summit. The meeting was dominated by the syrian crisis. And the hackers had infiltrated the networks by sending emails to staff containing tainted files. When recipients opened those documents, they loaded, apparently, malicious code right on their personal computers. Becky. Up next, were going to talk more about leadership on squawk box. Steny hoyer joins us here on the set. Well talk about the budget, health care, minimum wage and much more. Squawk will be right back. 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. Budget negotiators are hoping to complete a deal that would fund the government for the next two yearsme. Joining us now steny hoyer. Democratic congressman from maryland. And once a leader, always a leader. Easy for me to remember. I cant call you whip hoyer, can i . Its leader. Leader works for me. Those were the good old days. Not to return any time soon. No. Joe, youre such a cynic and such a pessimist. You better keep your eyen on the senate at this point. This deal can you say that . You dont like the deal. I dont like the deal ive heard about but there is no deal. But the one weve heard about, read about. But the fact of the matter is, Chris Van Hollen has not been in any of these negotiations, nor have any of the other. Its been senator murray and congressman ryan. So really, nobody knows what the parameters of alleged agreement or deal is. What we do know is this morning i read in the paper where Heritage Action and other conservative members of the Republican Party are saying we dont like the deal that they hear about because it involves some additional revenues and some modification of the sequester which is irrational and undoable. How many guys is that . Well, they had 144 people voting against opening up government. They wont have that many this time, though . Probably not. But the answer is, i dont know, im not counting votes. If you had guys like you on your side and guys like them. This is not a done deal. Were counting on this being a done deal and the fed tapering because this is a done deal. Well, the last time the fed tapered, you said they were tapering, the stock market you and i had that discussion. The fact is it went up, now its been going up on the good jobs number. Some people think the economy can handle being passed the baton at the fed. You dont agree with that . Would you like the fed to continue at 85 billion a month . No, i think all of us would like to see the economy growing better and the fed back off on the quantitative easing. I think everybody would like that to be the case. The policy perceived by the congress and administration has not allowed the fed to do that. Were talking about more jobs, healthier economy. Do you think two questions for you, do you think, possibly overregulation could be a serious problem with businessmen like me saying ill put my money into passive assets. 370,000 employees. Weve created jobs, we know how to create jobs. My partner is very involved in the job creation council. Do you people ever take a step back and say, hey, wait a minute, i dont see humor in my question. You share with me, ill laugh with you. You people, oversimplification. Let me make it simpler, ive got a more basic question. And ive asked john boehner and eric cantor this question, so its bipartisan. Do you people in congress, do you really care how the American People think of you . Of course. So what are you doing about it . We have deep differences of opinion as youve seen, ken. You dont argue with a poll. First of all, the reason i was laughing a the you people. The simplification of all members of congress are the same. You people or them youre the good guys watch it closely enough youre the good guys and theyre the bad guys. I thought he meant democrats. Thats what i thought. Thats what i thought he meant. All you mentioned was look, im an avowed republican, but im more a american than i am a republican. We should all be that. Exactly. And you know what, thats not what were seeing, were seeing pettiness, arguing. I agree with that. Okay. Im asking you this question. I think you ought to get all leaders from both parties in the same room and say the public Approval Rating is 11 . I know in my industry if we felt the public was felt that way about us as retailers, id go in a room and say, not just home depot, macys, id say, guys, weve got to do something about this. And frankly do you have those meetings . Sure, we do. In fact, ive had a meeting with five republicans and five democrats for 2 1 2 years, ended up with a letter with signatures of 100 people which said if the Super Committee came out with a deal, we would help pass that deal. Why didnt they come out with a deal . Its very difficult as youve seen. I think the Congress Performance is dismal. And to that extent, i think youre right, the American Public holds us all accountable for it. I dont think all of us are equally responsible. There are some people who are ideologically committed to a particular point of view. Thats when i say 144 republicans voted against opening up government. That made no sense for you or the American People. Let me ask you 198 democrats voted to open up government. Let me ask you this question. Sure. There are extremists on the Republican Party and if you want me to throw out a name, i will. How about you throw out a name of an extremist. I dont think there are extremists what more can i say . Congressman, im very concerned about the opinion of the American People. The opinion of the American People, with all due respect is. Yes, there is one party now who has 50 or 60 members in the congress of the United States and Heritage Action and club for growth who do not want to see compromise. And theyve made that very clear. And as a result, we havent gotten compromise. Now, the 198 democrats that voted for the deal that kept government open now that now youre ignoring me and say im listening to every word youre saying. Most of those people did not agree with the number, becky and i this little argument. Wont you compromise. We took the republican number of sequester, we didnt like that number. But we also understood youve got to move the government forward. And so we voted for that number, notwithstanding that, and everybody voted for it no matter how much they hated it because they thought that was the right thing to do. So to that extent, there were no extremists. Are there some more liberal and conservative in my party . There absolutely is. Ive been at this business a long time, and ill tell you, nobody in my caucus, unlike john boehner, nobody in my caucus i cant go to and say, look, this is not perfect, you dont like it, but this is the deal. 198, not a democrat who voted against a number they did not like because they thought it was the right thing to do. And let me give you a different example. Youre in the business community. Yes, sir. I dont know what you thought about the temporary the troubled Asset Relief Program that george bush, hank paulson asked us to pass. I have no problem with that. You didnt have any problem with it, but 2 3 of george bushs party had a problem with it. Youre making my point right now. I dont think i am. Your argument about the whole collective body being in low regard. Youve taken it now to a partisan issue. I think i know if i want to make a deal with a guy this is the most partisan congress in which ive served and ive been there a long time. Explain one thing to me. And i dont want to make it partisan. I really dont. I mean when i say, i put that pin on every morning. I say grandma, and grandpa, thanks for coming to america. Not for making me a republican. With all due respect, sir, i love this country and i think all of you love this country. But in the meantime, why cant you somebody make an effort to say, look, what are we going to do about the low regard our voters for us . Well, some of us youve converted this into 198, we were here, they were there, this gets you right back to where we started from. Facts make a difference. Accountability ought to be held to those who are not cooperating and understanding Newt Gingrich understood this. Newt gingrich talked to his perfectionist caucus in 1997 when he made a deal with bill clinton. And a lot of people in his party didnt disagree with it. Conservative element, ironically, and he said to them, look, i want to talk to my perfectionist caucus people. The American People elected i have one more thing. The senate that disagreed. And weve got to cooperate and make it facts matter . Facts do matter. You guys lost control of the house three years ago, four years ago. Yep. That would make me take a step back and say what do i have to do to get back to being where i want to be . You said, well, you called him the whip instead of the majority leader. I listened to every word here. Yours too. Every word. Steny, one thing ive always thought is things dont can i Say Something . Please. Elections make a difference. We had an election more recently than 2010 in 2012. President obama won. What were the two issues in that . Taxes and health care. It made no difference. If you do i know you dont but you know that obama cares at 57 . Forget it. If that was the issue, it was just obama care, you wouldnt have gotten 51 . But what elected what spawned the tea party, what spawned that 2010 route was the way the democrats passed obama care where you took 20 of the economy without a single republican vote. You even lost ted kennedys seat in the process as it was happening, had to do reconciliation. It was ugly, thats why were sitting here in this poisonous atmosphere. And look what were dealing with with obama care. Do you think you should have done it that way . But the fact of the matter is, we were also in the deepest recession anyone here has experienced. Can i ask one question . Which leads to anger and fear and reaction against all of those that they felt responsible had to put them in that trick bag. We are up against a hard break with the commercial. But, leader, would you stay for the next break so we can talk a little bit more . Sure. Im enjoying this conversation. By the way, when we leave this, going to say hoyer was right. We have more of a great lineup. Up next, we also have antitax activist Grover Norquist. Hell be joining us after. Were going to finish our conversation with leader hoyer first and then well talk about that. Also, the world of gifts and gadgets. Well talk to the ceo of brookstone. Plus, Chris Hardwick, the host of the talking dead is going to join us to talk about social media. vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. 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. Avo thesales event sis back. Drive warp speed. Which means its never been easier to get a new 2014 jetta. It gets an impressive 34 highway mpg and comes with no charge scheduled maintenance. And right now you can drive one home for practically just your signature. Sign. Then drive. Get zero due at signing, zero down, zero deposit, and zero first months payment on any new 2014 volkswagen. Hurry, this offer ends january 2nd. Visit vwdealer. Com today welcome back, everybody. We are joined again by House Minority whip steny hoyer from maryland. And leader hoyer, we talked a little bit about what you didnt like. And the reports weve heard of this budget deal being worked out right now. This potential budget deal that was obviously just being done right now between paul ryan and patty murray. What would you like . What would be a deal that would be something you could take . As you know, i want a big deal. I want something that does this for ten years. We need to deal with taxes, we need to deal with regulations. We need to make it in america. We need to manufacture things in america. We need to grow our economy and grow jobs. We need to be focused on jobs. Theres so much on the agenda we havent done. And were talking about a very small nick in what we ought to be doing. I think thats not the congress ought to be better than that. We ought not to be dealing in small we need to give confidence to our community and people and we need to get our country on a fiscally sustainable path longterm. Not in months. The way you get there and the way he gets there are different. And thats the issue. You said regulation, we need to focus more or less . Less. Thank god. The fact of the matter is that every bipartisan commission. You said the way i would get there, Simpson Bowles, bipartisan. Absolutely. Gang of six, bipartisan. Can you get the rest of your party there . I can get enough of them, more than half, yes. Can you get your guys going . Youre not a d. C. Man. Im not the most popular guy in washington because i tell i talk to these people the way i talk to them because im an american not youve got to stop talking about these people. 435 people, believe me the American People think of you all the same. I agree. But they dont have as much information as you have. Simpson bowles was the president s commission. What happened to it . Whos got a longterm balanced provision on the table . The president of the United States. It wasnt exactly Simpson Bowles. It was not Simpson Bowles. And hes one of you people. That hes talking about. I have you said it was far from what he adopted was entitlement reform. Revenues and cuts in spending. So when you say it was far from Simpson Bowles, that was accurate. But it was certainly consistent with his discussion why not take it just the way it was . You could have done it, the republicans probably couldve done it. The republicans, who walked away from Simpson Bowles . I know, thats because of obama care. You still got 12 or something or 13. They walked away. Because of obama care. Thats what ryan said, he came in and told us. Everythings about obama care. They ought to get off this lets get off it, please. Yeah. I have a question. Right now, and you i would love for you to sit down with two people. Stan druckenmiller about generational theft. Children arent born yet. I talk about that all the time. You know what, heres an effort where we can make it together. Lets get out to all these colleges because you know and i know if you energize these kids and youre going to vote on an entitlement bill. Youve got a bunch of people trying to vote you out of office. We all know one thing, the first thing that matters down here is getting reelected. What ive told my caucus, you cannot govern a great country like america in a 24month cycle. I agree with you. You cant do it, youre going to take longterm risk, longterm view. Thats why the budget deals so bad. Let me tell you something, we have Unemployment Insurance to talk about. We go out this week. 1. 3 Million People going to go off unemployment and wont be able to buy any products or food or anything of that nature. We ought to pass that. Immigration reform, comprehensive Immigration Reform is good for business. Absolutely. Were not dealing with that. The Senate Passed a 68 im getting you, working on you. Youre not see, im covering my half. Earlier about regulations and taxes and all that. Was that cater to cnbcs audience . We loved hearing that. We never im a big make it in america person. I want to expand manufacturing. Ive talked about that all the time. We needed it with taxes, regulations, and we need to deal with getting our country on a fiscally sustainable path. We wont be going to the precipice of debt limit every six months or eight months, we wont be going to the precipice of not funding government. Well have a stability in the government. The fact of the matter is, sgr, the reimbursements of docs for medicare. It shouldnt be an issue. Two days, three days left to go in this session. Very frankly, if i were the majority leader, id be ashamed we had this much on the table with three days to go. That leads to inability in our country. Grovers coming on. I hate to miss grover. Grovers for a balanced deal, i know. When you get a chance to watch me and him, youll understand im bipartisan. You go after all of us. Absolutely. Let me tell you what i tell the press. They say theyre 9 , 10 , 11 of the people that think congress is worth a darn. I say, i want to find those 10 and tell them whats going on. If stan and jeff come down, these are numbers, hard numbers and understand whats happening specifically. I think it would be illuminating for you all to understand why we need entitlement reform badly. They dont need to convince me. For the last 2 1 2 years, right, becky . This has been a message very consistent on. We appreciate it. Im glad i came on your program. Youre the guest. Steny, thank you very much for joining us and spending extra time with us. Appreciate it very much. Again, steny hoyer. Lets continue this conversation. Joining us now is Grover Norquist. Grover, im sure that you heard a lot of this conversation that weve been having. Weve been talking about this potential deal that could be there with senator patty murray and with congressman paul ryan. Obviously, we dont have a lot of details on this. What do you think about the proposal . Whats important is we maintain the sequester. Patty murray, the democrat, head of Budget Committee from the senate side. Her opening request was 1. 4 trillion in higher taxes. No spending cuts and breaking the sequester so we could spend into the future beyond what the president promised. And when he proposed and agreed to the sequester. So that was a democrat partys negotiating position. Paul ryans position was, first of all, paul ryan is the only person in congress and the republicans endorse his position who has actually written down a budget. You let him get away with seeing, the president had a budget. Really, can we see it written down . Is it in legislative form . No, its not. Its in talking points and the only numbers are the page numbers. It would be nice if the president would put some effort into putting together a budget that does all the things hoyer talked about or hoyer could do it. Paul ryans budget actually fixes the entitlements, fixes the welfare programs, the means tested welfare programs, 185 of them around the country so that we remain at 20 of gdp eaten by the government not drift up to 40 which is what happens if nothing is done. The ryan plans been voted on by every single republican, house, and senate. There is a plan written down to do the longterm reforms youre talking about. What about the specifics of the deal . What weve heard so far are additional fees that would be raised by putting fees on airlines. Would you be okay with Something Like that . Okay. The best thing they should do. And again, ive not seen the plan. The key thing i know theyre doing and this is the line in the sand that ryan put. Were not raising taxes. They may do some user fees, i would prefer not to. I think thats not the way to go. Needs to come out of spending. And second, they maintain the sequester savings over the decade. The democrats want to break the sequester, they can spend more. This deal will keep the sequester for the next decade. Its the only fiscal discipline that we have in this country is the sequester. And the president and democrats are trying to break it. So if the sequester has some give but no break, if its a choke collar thats been loosened, not removed, then were in okay shape. Thats important. Lets talk about this. I wasnt sure where you were going to come down on this. The idea of user fees, not something you prefer, but youre not going to go back to the congressmen and say thats a violation of it. You really have to look at exactly what youre doing. Its possible it could be okay. Its certainly not preferable. I would support any effort to replace any user fee revenue with actual spending restraint. But if this is what weve said, if the sequester is not broken. If youre still looking at savings over ten years and even if theres some user fees along the way, this is okay. Sounds like theres the potential for a deal that you and many of the congressmen have signed on would go along with this. Does it feel like this is a deal that might get done that we might have something in place before the holidays or january 15th . Without having seen it, paul ryan is the most serious budget guy, maybe the only fulltime serious budget guy in congress. He understands the importance of maintaining the sequester spending restraint. And thats the whole thing that patty murray and the president have been trying to break ever since they agreed to it in 2011. They dont like it. It was their idea but they dont like it, dont want to live with that spending restraint. If we maintain that spending restraint, it allows us to buy time to keep ten years of that and thats 1. 2 trillion in reduced spending thats locked in by law. Its essentially locked in by law of the next two years. This would be a year that would get us through another election cycle. The sequester but they could go back and retalk about some of these points. Essentially a budget deal to get us through the next two years. If it gets us through the next two years because of the trough they have in it, it actually makes the sequester much more defensible moving forward. So its not just about two years. If we get this if this works okay and its really spending restraint and no income there are not going to be any income taxes in this, paul ryan wouldnt tolerate that and the Republican Caucus wouldnt tolerate that. We get through these two years, the pressures from some there are some republicans who chafe. The good news, is the establishment republicans, theyre very good on spending restraint. Its some of those appropriators who havent yet learned that the old spending ways have come to an end. Thank you very much for joining us today. Thank you. What a conversation this morning. Coming up, were going to talk about the wintery weather headed to the east coast. Then later, squawking dead, and the new show at midnight, joining us live in studio. Still to come whats on joe, becky and andrews wish list . Sleep. World peace is on my wish list, oh, yeah, and an iphone. A little jet. Honda jet, it doesnt have a bathroom, thats fine. We see if brookstone has what theyre looking for. Squawk goes shopping. The companys ceo right after the break. Its estimated that 30 of the traffic in a city is caused by people looking for parking. Thats remarkable that so much energy is, is wasted. Streetline has looked at the problem of parking, which has not been looked at for the last 30, 40 years, we wanted to rethink that whole industry, so we go and put out these sensors in each parking spot and then theres a mesh network that takes this information sends it over the internet so you can go find exactly where those open parking spots are. The collaboration with citi was important for providing us the necessary financing; allow this small startup to go provide a service to municipalities. Citi has been an incredible source of advice, how to engage with municipalities, how to structure deals, and as we think about internationally, citi is there every step of the way. So the end result is you reduce congestion, you reduce pollution and you provide a service to merchants, and that certainly is huge. Welcome back to squawk box. Picking headlines, despite a snowinduced Government Shutdown in washington today, earlier on squawk box, bart chilton said it needed to protect consumers and the economy. It stops the wild flyer bets that are just for the house. It will allow legitimate hedging activity for legitimate Business Risk. As expected, chilton says the rule is not expected to be implemented before 2015. In economic news, a new survey finding that Small Business optimism edged a little bit higher last month. Manufacturers and professional services led modest gains in newly created jobs. The u. S. Government, they sold their last shares of general motors. Taxpayers taking roughly 10 billion loss on the funds that treasury sank into the auto maker back in 2009. The government exit, though, does allow gm to pay dividends and escape pay counts. Snow and frigid temperatures making business a struggle over the last few days. If youre looking for relief today, youll have to hold your breath a little longer. Alex wilson joins us with more. And looks like a mess in many parts of the country today. Yeah, becky. And the i95 corridor where things are tricky right now. Washington up toward baltimore. Weve seen some of the heavier snow rates north of that line where you see that rain change over to snow. Around the new york city area, as well. As we go through the rest of the morning, lunchtime going to be snowy for a lot of the big cities, new york, philadelphia, boston included. Look at what happens by the time we get to that lateday commute. 4 00, 5 00, things are dry. Still some lingering snow showers through the evening in boston. And through tonight into tomorrow, well keep lake effect snow showers into parts of new york and new england. But the i95 corridor will be quieting down. Still, though, weve got Winter Weather advisories and winter storm warnings posted for a lot of these areas. And as far as snowfall goes, could be looking at 3 to 5 inches from d. C. To philly, close to new york, probably 1 to 3 there, though. Back to you guys. Thanks, alex. Coming up, ceo of brookstone, plus lululemon in the headlines today. The company embroiled in a bit of a controversy over the recall of the black yoga pants that were too sheer. Saying its not the pants, its the person. Well speak to a retail analyst about the future of lululemon. And a reminder, get a leg up on the trading day. You can go to our page at squawk. Cnbc. Com. Sign up for todays top stories, news and water cooler stories well be talking about here on squawk. Were back in a moment. Hmm. Mmhmm. [ engine revs ] [ male announcer ] oh what fun it is to ride. Get the mercedesbenz on your wish list at the winter event going on now but hurry, the offers end december 31st. [ santa ] ho, ho, ho [ male announcer ] lease the 2014 ml350 for 599 a month at your local mercedesbenz dealer. [ male announcer ] lease the 2014 ml350 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. A confident retirement. Those dreams, theres just no way were going to let them die. Like they helped millions of others. By listening. Planning. Working one on one. Thats what Ameriprise Financial does. Thats what they can do with you. Thats how ameriprise puts more within reach. It is time to spice up your Holiday Shopping list this morning. And instead of settling for the tablets and sweaters, kick it up a notch. Weve got brookstone unveiling the hot hightech buys this holiday season. The companys ceo here onset with a couple of things i think i may want to go home with. What is this that before we get into the holiday. What is this you have on the table . So this is our latest app driven Remote Control car. This is rover revolution, brand new to the stores this week. It is a Remote Control vehicle that youre going to drive with your tablet, your iphone. It has two hd cameras on it, front facing and on the top will move around in the 360degree fashion. It has a night view camera so you can take it in the dark, you can spy on the kids in the house. And it actually has a twoway audio so you can talk to people in other rooms. And you have a drone version of this, as well, right . You guys sell one that goes in the air . We do sell a drone from parrot, its a copter weve had on the market for years now. Its got an hd camera. You can stream video, share it socially. Thats a product that has a 399 price point and extremely popular. How do you know the kids arent going to spy on the parents . Good question. What was that, again . Doing yoga pose. Called thats what it is. And its got night vision too. Can you make that thing drive . Absolutely. Can you get the camera on the iphone so you can see what he sees . Camera moving around, were going to look at ken there. Smile for the camera, ken. And just driving it forward. I dont want to drive him around too much, probably bring him off the table here. Cool. Whats the price on that . The rover revolution is 199. And then we have a tankbased version out last year, which is 119 price point. The new version for this year is incredibly faster than last year and has the addition of two cameras. So its great for sharing social video, as well. You can link directly to youtube. Tell me what this is. This is like a sand box here, this is low tech. You said you were coming in here with hightech things. This is our product called saand, made of 98 sand and 2 polymer. You can cut into what if you have a cat . Im not talking about the cat using it. Going to use it as a litter box. Thats what the table is for, joe. Is this for my kids or me . For the kids and you. The kids will be using it for molding shapes. You can make anything with it, sculptures, creations, itll never dry out. And adults, its a stress reliever. Its an incredible tactile feeling, its not wet or sticky. Very clean, yeah. Go for it. Its kind of relaxing in its own kind of way. What is this, sir . We like this. This is for your drink. Lets talk cocktails. Yeah. This is our perfect drink maker. What have weve done is taken the tablet experience and brought it into the bartender for the novice. Youre going to hook up the scale to your tablet and its got an app with a whole bunch of different drink recipes. 250 different recipes. The fun, though, is that the scale is measuring realtime the ingredients that youre pouring. Youre going to watch the level of the beverage rise on the screen so you get an exact proportion. Weve got to get whats this thing cost . The perfect drink is 69. 99. And what is this . This is heavy, by the way. This is heavy. This is our premium bluetooth speaker, fully rechargeable. This product is the top of the line of the big blue audio, desk top and portable versions, as well. This is a brand new it has five omni directional speakers. Its the best way to get the music out of your smartphone and out into out with your friends. Most importantly, did you bring a nose hair clipper for joe . I did, actually. For his beak. And this year joe, youve got to hear this. You dont have one . This year is an enhancement called duo, its got the nose and ear trimmer but also a side burn and eyebrow trimmer. I use the one i have for my eyebrows. The long ones. When you get older and becky, now, if i see that much ear hair because of some of our guests that have come on that weve looked at and talked about the furry hobbit type stuff. But i saw when they were this long. I said, you know what, im going to clean those up because youre going to look over and im not going to be one of these but i love. Is this innovative. Did you bring it in here . Its in my bag right there. You dont have one on you . Because it does happen as you get older. Im not there yet. Listen, guys well be doing a demo later in the program. The magic of brookstone, weve got gifts at all price points for all assortments. Not just the groomers you dont have a honda jet. We dont have a honda jet, but we have pretty much the entire christmas list you may have. Traffic these higher price points. So traffic is actually on an upswing. We had a fabulous black friday weekend in stores and online. These are higher price point items. They are higher price points. Theyre doing very well, actually. Our audio line is on a very nice increase this year. And this product is hitting the stores this week. Weve got to roll. Thank you for coming in. All right. Thank you, guys. Happy holidays. When we come back, well talk to a retail analyst who will talk about the controversy surrounding lululemon and the changing of the guard. And nerds unite. Chris hardwick, host of the talking dead will join us. Well talk entrepreneurs, social media and zombies. My mantra . Family first. But with less energy, moodiness, and a low sex drive, i saw my doctor. A blood test showed it was low testosterone, not age. We talked about axiron. The only underarm low t treatment that can restore t levels to normal in about 2 weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. Women especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these symptoms to your doctor. Tell your doctor about all medical conditions and medications. Serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting and increase in psa. Ask your doctor about axiron. Welcome back to squawk box, everyone. A Memorial Service for Nelson Mandela is wrapping up at this hour. Nearly 100,000 mourners flooded the soccer stadium there. Dignitaries and World Leaders spoke including president obama. The scope of his accomplishments, the adoration he so rightly earned. Its temping, i think, to remember Nelson Mandela as an icon, smiling and serene, detached from the tawdry affairs of lesser men. But he strongly resisted such a lifeless portrait. A number of early stock movers this morning, pep boys disappointing the street. Shares falling on the news its down by about 12 . Also carl icahns firm says it will sell dpeposidepository uni. And that stock is down, as well. Down by about 10 . Also, walmart named a new president and ceo of walmart international. David cheesewright will be replacing Doug Mcmillian who was named last month to succeed as the new ceo. Also, lululemon will have a new chief executive come january. Going to be joining lululemon. You were worried about it. I was worried about it. Thats true. And the founder chip wilson will be stepping down as nonexecutive chairman. Lululemon embroiled in a controversy over the black yoga pants because they were too sheer. And wilson himself found himself in hot waters over the comments suggesting it was the customers body shapes you used the word, ken, i wont, its not the pants, its you. Joining us on the squawk line is pam quintilliano. What do you make of this move . People are viewing it favorably. The stock is reacting accordingly. And in response to chip stepping down as the chairman rather than the new ceo. Even though people are relieved that a new ceo is in place as reminder Christine Day who is exiting. That was announced in june. Weve been waiting a long time to hear about it. Hes not going to have another impact from six to nine months anyway. But chip, obviously, i dont want to say rubbed people the wrong way does it matter . Pam, we were talking about this earlier in the 6 00. There are certain types of clothes that im a taller guy, i should wear. Its no the the clothes fault, its my fault. I would like to say with lulu, the bottom line is the bottom line, people are wearing it for the fit. And the fit is very attractive for a lot of people. But i dont think its really impacting whats going to happen with the sales. I think that people are just making a bigger deal out of it. I think its largely resolved. They have someone in place thats more in control of the facilities, manufacturing facilities. The problem before was a lot of things were getting caught. No one was paying attention to what was going on because people had too much of their plates and they separated out the role. The free market, about 2. 3 , looking at 72 right now. Whats your price target for the stock . Our price target for the stock is 78. And we also want to say they are reporting this week and we do view it favorably they came out with this announcement ahead of the report versus kind of putting it in the day of the report. We do think therell be positive commentary there too. Thank you. Thank you, pam. Lets get a shot of that prompter now. Lets try this again, andrew. Get a shot this is what weve resorted to for you, andrew. Lets go slowly. Pam quintilliano. I apologize for botching your name. Well do that from now on. From now, it should be spelled out. Go back to that, that was just wrong. Look at that, pam quintilliano. Can we do that for all the names . Weve got to do something. Were going to get back to ken langone. I have a question for you, sir. You gave it was a fascinating conversation. A lot of emails i asked him a question. No, and i think what was so special about it, you really did represent the way so Many Americans feel. Now, im going to ask you a question about the way americans feel on a completely different topic. Theres an article today in the times about hospitals in new york. Right. The cost of hospitals in new york right. You are on the board of nyu. Yes, sir. Theres the langone medical center. Yes, sir. Okay. Of all of the hospitals i could go to for a Knee Replacement surgery, for example, in the entire state of new york, the most expensive place to go is your hospital. The costs are the highest, theyre the highest not just for the individual, but the highest for the government, the taxpayers who are on the hook for this stuff. How close are we to the other hospitals in price . Not according to this piece, not so close. Not so close. How about special surgery . You were charging 110,000 for knee surgery. The some of the lower prices in the state you can do this, by the way, for 12,000. You can do this for 11,000. Theres a couple places doing it for 51,000, youre doing it for 110,000. I think this was the median price, too. The point with the survey, we dont know what things cost us as consumers when we go to hospitals. And if you could strip out some of those things, consumers would be better able to shop around. If you look at the margins of hospitals across the board, theyre not making much money. Whats the reason . The reason is the cost of doing business in new york alone, okay. Mmhmm. Thats staggering. But theres another thing that obama care completely ignored. Tort reform. We live in a very, very wellendowed city for lawyers. We have lots and lots of lawyers. And believe it or not, the defensive medicine thats practiced across the whole medical profession is staggering. I may not need that tester look, im very proud of us being not only competitive but you mentioned us and im glad you brought it up, we were just ranked number one in quality and safety. That doesnt come for nothing. You pay for that. How do you pay for it . By making sure you run your hospital in a way that you dont allow things to happen that can be adverse to the patient. Let me ask you a question, would you be in favor of literally putting up a price list. Like youre going to mcdonalds to say if you want the hip surgery, the knee surgery, youve got a cold coming, whatever it is, this is the cost. How about a complication once you go in . Then you say, oops, sorry you say, look, this is what were starting with, this is the additional fee but this is what we charged. Remember this, as you said, most of the consumers dont know what theyre costing. You can be sure the Insurance Companies that negotiate with us are tough. Tough, tough. They will chase a woodpecker through hell for a pumpkin seed. Youre against transparency . I have no trouble with transparency as long as people understand there could be complications and unfound conditions, unknown conditions that are going to complicate the process. Sure. But if youre going to have a bullet point, if you can be convinced that the consumer or Insurance Company understood that there are variables that you have no control over and might be unforeseen. I think part of the problem, when you have medicare coming in and negotiating. A lot of times, theyre paying below what it costs the hospitals so other insureds end up paying more. Of course. Do you think you run that hospital like a business . Absolutely. Do you think theres anything you could cut to make it more efficient . Im proud. We look every single day for ways to run our business better and smarter. Okay. But most importantly of all, for the benefit of the patient, what you never want to compromise on is safety right. And quality of care. Those are the every time i meet with the doctor, our number one thing is whats best for the patient. Thats why were there. All you have to do is see why am i raising money philanthropically. By the way, my latest project, st. Patricks cathedral, 175 million restoration, 150 years old, never been done before and now its better. Half my time begging for money. But were getting there. St. Pats is the third most visited tourist attraction in new york city. All right. Were going to continue this. Well have more on the state of the economy. Also, a quick programming note for you. Cnbc is live at the Goldman Sachs Financial Services conference today. Guests include ken jacobs, william rogers, the ceo of suntrust, and william conway. From the squawk dead to talking dead, Chris Hardwick joins us to talk zombies, social media and his new show at midnight coming up right here on squawk box. In todays markets, a lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. [ 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. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. Squawking dead. Our next guest wears many hosts from television host, writer, comedian, entrepreneur to multitalented nerd icon. Joining us onset is Chris Hardwick, host of amcs hit aftershow talking dead and at midnight. Hes also a founder and chief creative officer of nerdist, a website i talked about with my son. Were a nerd household. And youve got comic books there, video games, youve got a video game sweater on. I was just trying to spruce it up a little bit because its the weathers really crappy outside right now. It is. I saw a lot of ties in here. And i said, you know, today is going to be festive video game sweater day. You wear a tie on your show, but to come to the business show, you dont wear a tie. You know why . This is casual tuesday for me. This is im coming on cnbc its casual casuals going to be the c in cnbc. If calling you Ryan Seacrest wasnt sort of kind i wouldnt want to be called Ryan Seacrest. You make fun of him. But in terms of all of this stuff going on that eventually makes about 100 million a year for you. You seem like youre on your way. I like ryan. Hes i guess im sort of like his nerdy older brother, i dont know. But we do occupy due to slightly different spheres. Im the nonkardashian related spheres. Which for me is a nice place to be. Youre a standup. Yeah. To go over everything youre doing. Number one. Yes, sir. Walking deads popular, 18 to 49, i think it beats some Football Games that are very near and dear to nbc. Does almost as well as that and in terms of and then the talking dead comes out and a show about a show does higher numbers than most dramas on most of the major networks. More than family guy. Well, i would love to say, oh, that is not a surprise to me, but it was a complete surprise to us it was going to work out that way. But i think what we provide for people is shows like walking dead or breaking bad. Theres so many characters and so much the dramas dense. I think a show like ours sort of magically, its like therapy so people can come back into their lives. Its an isolated version of the water cooler where its like, oh, we can talk it out. Unbelievably illustrated that point when herschel when youre caught up. There are other people that arent. In cold blood, what a performance in cold blood. Amazing. Scott wilson. And people saw what happened to him. I wont say what happened to him, although, charlie i do have a sword, the collectors edition. He gave me a sword which worked twice that night. Im not going to say what happened to herschel if you havent seen it yet it involves a sword. And theres no more spaghetti tuesdays. Right. But it was cathartic. The actress that came on, she was crying. Anybody who plays herschels daughter was crying. People in the audience were crying. You, i swear you were kind of emotional. I was misty a little bit because you get very invested in these characters. So when things happen to them, its that feeling where you watch the show and you get caught up and afterwards youre like so many feels to process. And so thats what we do for people. Not only do we allow people to sort of process what theyre feeling but then also allow the actors to come on theyre there too. The governor came on that night. Do you get to see the show before . How many times do you see it before you do your show . Heres the thing, i have all of the episodes in advance, but i only watch it week to week. Three hours before the show airs. Do you take notes . I dont take notes. Its the silliest job to have. I talk about it. Its like the movie big. You mean, you play with this stuff . Yeah, its crazy. Im challenged with the social stuff. And this is my but i learned a lot preparing watching at midnight. Oh, thanks. I got picked up for you came in this morning that number sign thing. Yeah. Hashtag. You know about stocks, you talked about 26, and you went on some obscene things you could buy besides twitter on the ipo. Yeah. And so thats going to be on four nights a week now. Yes, we did a month, Comedy Central gave us a month. And the pairing was as executive producer myself and funny or die and tom lennon its almost like a game show with three funny comedians and its social media. In england, they have these types of panel shows and thats what it is. A panel show disguised as a game show. Its not a real game show but using the structure to comb through any social media. Not just twitter, but yelp comments and google plus. Anywhere where theres a social im trying to bone up on mine. Youve got to watch this. Im a little bit challenged with social media. Its helping. I cant believe you can do a whole show about it. We can. Essentially the internet is theoretically almost infinite with the stuff we can pull through. So, yeah, its just and its just putting comics on and allowing them to be funny about stuff we find on social media. And your billion dollar im valuing nerdists at 1 billion. Now, that valuation stands because this is squawk box. Thats an official thats your podcast, which is also something that we worry about. Youre worried about podcasts . Cord cutters, podcasts. When people dont pay cable bills, we dont like that. Ten years from now, this is a business prediction, are people going to be watching tv or doing it online . Well, im hoping that everyone will essentially have matrixstyle, but theyll be wireless, just jacked in the back of their necks and we can absorb all the sum total of human knowledge. We have breaking news on i almost said the i almost said the shih tzu word, but i didnt. Ill be seeing you on talking dead, but phil lebeaus on the phone with breaking news about general motors. Phil . Guys, this is huge news from general motors. The company has designated mary berra as the next ceo succeeding dan ackerson. Currently the head of Product Development worldwide for general motors, a veteran of the company. And the significance of this cannot be overstated. For years, decades, the Auto Industry has been pretty much accurately portrayed as an old boys club. And if youre a car guy and while there have been women who have risen through the ranks as many automakers and mary barra up until was on the high end of a female Auto Industry executive. And shell be theceo, ceo of the Worlds Largest automaker or close to the Worlds Largest automaker depending how you count the sales in china, mary barra will be the next ceo of general motors. This is really big news. The street has been trying to figure out who the next ceo would be. Mary was considered one of the contends are for this job. For car development, this is a very big position. Before that she was in human resources. That doesnt give her justice for everything shes done in her career. Shes reason a pla run a plan one time, shes an engineer. More importantly, she is highly respected. In is not going to be a d designation where a good chunk of the men will say she only got it because shes a woman. Mary will be getting this job because she earned this job. Phil, when is this going to happen . We have not gotten the exact timing on this. I would not be surprised if we see a transition by next year, the second half of next year. Last time i talked with dan akerson, he made it clear he was enjoying his job there but he would not be there forever. Mary barra, the first time a woman has been named to head one of these car companies. Lets get to the new york stock exchange. Jim cramer is standing by. Jim, what do you think of this news . Obviously the role she has will be very difficult. She has to make sure theyre still building exciting cars while theyre slashing costs along the baseline. Eig its a tough thing to do. Can they pull it off . Yeah. This company has the most momentum of the companies that i follow, with the exception of the german choice. Gm like ford, too many brands, too many different ways to manufacture. You can cut costs if you make it one way to manufacture. I think thats been one of her secrets. Under her watch the impala came out. I think its just one more great thing. Were running through trying to look at all these this evenings things today. She has done every job down the line. Went to hr. When she was there it was her responsibility to get rid of things like dress codes and slim down the guidelines and rules, to make it more about streamlining the company. I interviewed her about a month a ago. She said her goal was to change the culture at gm. Sounds like shes already done a lot of work about that. Does she strike you as someone who can stand up against entrenched interests . I think so. That was her role when she was in h. R. That was her role, streamlining the culture, standing up against some of those things. I think its a great thing. This stock is one of the hot thats i follow. Certainly theyve got much more momentum than ford. The market just ate it up as if it was aig in the mid 30s. Gm goes higher. Does anyone else think cramer should play louie c. K. s frat guy older brother . See what im saying . Or is it just me . Coming up, we have more on the gm news and well check the futures when we come back. 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. We got to go. Ken langone, thanks for joining us. Merry christmas and happy holiday. Merry christmas. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer and david faber. The automaker gm to name mary bb barra. If february of 2011 she became basicath