Transcripts For CNBC Squawk Box 20131216

Will rise. Only 5 think it will crash, but this poll suggests the general public is less optimistic than investment officials. I dont know if thats a counter indicator or not. Well talk about that. In the meantime, if you are looking for a vote of confidence, you can check out the Corporate Bond market. Buyers of corporate debt are looking at comparable bonds since 2007. Theyre on pace to surpass last years record. Sales of Investment Grade bonds are already at the highest ever. These statistics are all evidence of bond buyers increasing effort that companies will repay them. Andrew, good morning. Hey, thank you, becky. Good morning to you. Hope you have a great weekend. We have Corporate News including a headline. I imagine were talking about a lot today. Aig reportedly valuing its Aircraft Leasing business at 4. 5 billion. We have them tomorrow. Aig boss Bob Benmosche will talk about it. Workers at amazons german operation is going on strike today. Its part of a longrunning pay dispute. It comes in the midst of the crucial Holiday Season. Amazon employs about 9,000 people in germany. Today expected to be the busiest day of the year for ups. Some 34 million packages will be picked up across the world. Thats double the u. S. Volume. They expect to deliver 129 million packages the week before christmas. They say the company will be delivering 300 packages per second at its busiest time. Also we should say the u. S. Postal Service Calls today its peak mailing day for cards, letters and packages. If you have a holiday card to get out, today is the day to do it. U. S. P. S. Expects to process 607 million pieces of mail today. Joe, where do you stand on digital holiday cards versus the in print by mail snail mail version . They dont do it for me. They dont do it for you . No. Get the real thing. I didnt know if you thought the whole world was moving in this digital direction. Theyre free, too, right . Actually not anymore. I mean, some are. What . Well, if you do paperless post, that costs money. Paperless what . Paperless post. The clever cards that look like theyre real. That actually costs you money per card. You have to buy the digital stamps. Like bitcoins. Who had the bitcoin. That was your paper, wasnt it . Did you read it . Which piece. No. Was it that or the washington post. No, that was the New York Times. That suggested what . That bitcoin is an idea oelg. Yes, it is an ideology. Ive written that. It was interesting. It covers the gamut from, you know, crazy libertarian conservative all the way to socialist. Everybody can embrace it. The libertarian because they want to get all the Central Banks out of the picture and no longer worry about, you know, defacing the currency and not printing too much and its secret and surreptitious. I dont understand it. Mark andres son says the media has it wrong on this. I dont have it wrong because i really dont understand it. I think marks view is that Digital Currency i could be wrong on this. The Digital Currency is the future, not necessarily bitcoin. So my view is hes zblsh bitcoin goes to hel in a hand basket. I think it becomes the napster. Mark andreson said you had it right. Im not surprised. No, that john got it right. That will be the day. What did you say . He said it was like the beginning of the internet where there was something there, we didnt know what it was and some things survived and some didnt. Purely by accident. I put it in the napster category. I put it in the napster category. Digital currency will exist. Im not sure bitcoin will be it. If you send me one of those you know, if you send me some stupid card on the internet, thats not going to fly with me, andrew. As far as gifts go, you know i dont need the nose hair clipper anymore. Ive got that down. I marked that. Its tough to buy for wives. Do you use it . Oh, my gosh, you did use it. Very easy to breathe today. But you dont want to do too much. You dont have any hair left up there. Well, i dont really know whether have you looked before . How do the ears look . How clean are the ears . The ears are good. Although it was the Opening Weekend for the new hobbit movie. Hair on your toes and your how do the ears look . Are they feeling clear . Ears are good. Ears are good. Shoulder hair . No. No. No. In washington news, the senate is going to do this. You know, these guys. The senate will convene this afternoon. They all have to get their say, dont they . Then each one of them comes along and says im going to support it. Im going to support it. Thanks. Now we know your name and your names in the paper now. The budget, theyll support the budget. The chambers number two democrat dick durbin says the legislation i think hes just trying to make sure we have enough. He says its still short of the votes needed to pass. The struggle is still on in the United States senate. We will need about eight republicans to come our way. I feel well have a good strong showing from the democratic side. We need bipartisan support to pass it. Yeah. Its a new idea for some of the democrats, bipartisan. So now he wants some bipartisan support. Didnt always have that for everything. It should it was a huge lopsided victory in the house. Thats normally the one you worry about. Last week the house passed a budget deal that was negotiated by paul ryan and i didnt know about it. I didnt see it. Got his irish up. Paul ryan said that boehner had gotten his irish up a bit. Good phrase. He did. Sick of some of this stuff. And then whats going on with keystone . What is going on with keystone, joe . Turns out the pipeline is losing support from a major u. S. Customer. Harold hands, Continental Resources had committed to ship crude. The company now says it is no longer needed. In the years since pipeline construction has been delayed, its turned to railroads to get its oil. Weve had harold hamm on a few times. He says theyre no longer counting on keystone. Really . If they built the pipeline, would they still stick with the railroads . I dont know. What does canada think . Speaking of the oil industry, exchesapeake ceo have filed for a Public Offering to raise up the 2 billion. The money would be used to buy and drill oil and gas within the United States. Mcclendon started this in 2008. He left in april after clashing with the board. Will you give him money . I dont have any money. If you had money . If i had money id probably find somewhere else to i dont know. Would you . Led to civil and criminal probes of the company. Yeah. An internal investigation by chesapeakes board cleared him of any intentional wrongdoing. He created this whole series of other companies that were his personal sort of peaks that somehow did business with the companies. Very clever exchange. Right. I dont know. The money. I dont know. Ive got my eye now on a jet, a used jet. Thats what youre thinking of buying . Right. Is it this big . Is it this big . Fly it around. Oh, yeah, its at least that big. Toy. Geez. Your jet. Yeah, my jet. So we were talking last week about that cessna citation. So one of our viewers who was in the commercial Aviation Business for four years said look at a dussault falcon 10. How much does that run for. Eight seventyfive. 875,000. Presnoend. Yes. Still costs 4,000 an hour to run. I came to the conclusion that you need to buy one of those cards and then spend 4,000 and then sings you need like a fivehour flight down and back, its ten times as expensive as commercial so were back to commercial people. We just are. I dont think any of us are not ever going to be commercial people. But, but i could get together with like 50 or 60 people and pool our resources and own a jet. And then what . Park it. Isnt it nice to sit here i told greco like his boat, hed have it on one of those trailers. Blocks. On blocks in front of his double wide. Maybe if we get next to the above ground pool. Right. No, but you should look i will show you a picture. Its beautiful. Beautiful. 1990. Only 7200 miles on it. Nothing like ply g5. I cant really have this conversation. I fly jetblue. We have robert frank on all the time. We sit next to these guys and we know them and we think were like them. The rich really are different. You know why . They have money. They have money. Ive heard about that. Im not lusting to are this anymore. Im lusting for happiness, a long life. And world peace. And world peace. You gave me your cold. I gave you my cold. We have some legal news talking about how the rich may be different. Closing arguments are expected in the insider case in the case of michael steinberg. The government resting its case on friday after four weeks of testimony. Steinbergs lawyer says the defense will call at most only a few witnesses and present its case in less than one day. A former sec manager is charged with five counts of securities fraud and conspiracy to commit securities fraud for trading based on alleged insider information. He denies wrongdoing. He will not be testifying himself so i always wonder remember when fab didnt testify. They rested immediately. This is almost like that. Is that the right strategy . 7200 hours, not 7200 miles. Im going to show you a picture. You do that. In the meantime, a former top swiss banger is due to appear in a Florida Court today. He faces charges for allegedly helping rich americans avoid taxes hanging over him. He was arrested in italy after first being charged in 2008. He denies the charges. I dont know if anybody saw the piece over the weekend in the New York Times about a new island i never focused on called the coats. No. This is a new tax haven. You can put all of your money its better than the caymans. Its better than switzerland or anywhere. Apparently the u. S. Government is not going after them. Nobody is going after them. All of these people in the now that the New York Times has written the story, that will be the next target. If you have money over there and i sue you in the United States yeah. People have been settling for seven to ten cents on the dollar because they know how difficult it actually is to get the money from overseas. The regulators have done better at going after these and now that theyve broken the swiss banks, money is fungible. Regulators travel, too. We will see. We will see. This island is used for mostly individuals, not for multinationals. Not for multinationals. Which is one of the reasons they thought it would continue. Smaller potatoes at that point. Right. We should mention the aig news that you mentioned earlier is official now. That company is selling its Aircraft Leasing business. Selling it to air kpap holdings of the nether lands. Thank god. This has taken a year. I want to talk to bob about this. The whole thing was strange how they got into this deal, they didnt get into it, now they have a new buyer today. This is the major airlines. They leagues two of the major airlines. Not like a business youre planning on running. No. Citation. Heres one right here, 575. 575,000. Get it and put it on blocks. Did you know you could buy a jet for 575,000. Doesnt matter, i cant afford any of it. Thats ridiculous. One days worth of work. It is. Anyway. How much is you could easily buy one and take us around with him. Couple thousand of those planes. Anyway let me tell you about another story. Christies is about to tell detroit about how much its artwork is worth. It may have to sell off its artwork to pay off its bills. Theres a private campaign to raise 500 million to keep the artwork from being sold. Christies could also suggest alternatives, maybe Something Like using the art as collateral to secure loans or lines of credit or to create a partnership with another museum where detroits art would be leased on a longterm basis. The auction house said that detroit could establish a frus for which museums get the art. I wonder if this raises questions. If you give art, if youre someone who does it, why would you continue to give art to the museum if you know it could eventually be sold off to repay their debts. My guess is people will come up with new things like trusts where you give it to them and if they ever want to sell it or you let them borrow it or keep it on a permanent basis, if they ever try to sell it it reverts back to the trust or something. Why would you if you give it to a museum you want the public to see it. If they turn around and sell it, then it defeats the entire purpose of why you gave it to them. Lone personal nentsly loan. Permanent loan but a way to claw back if you think youll sell it off and put it in private hands. You should become a Legal Advisor to the art industry. Im sure theyve already gotten there. Im sure theyve thought about this. Right now lets talk about the Global Markets report. Ross westgate is standing by in london. Good morning. Good morning to you, becky. Good morning, everybody. We are a little bit further as we go to the first trading session of the week here in europe. Last week the ftse 100 was down 1. 7 . Investors are currently outpacing decliners. The ftse, the numbers are up half of 1 . Xetra dax is up 1 . We had eurozone pmis out today. They were a tick up to 51. 7 in november. Again, sharp divergence between germany and france new manufacturing numbers paring through the german business activity. French composite pmiss on a seven month low. 47 in december. They were 48 in november. France looks like it could well be in recession. They had a negative Third Quarter. Big divergence and big problem for the ecb. Ftse up 1. 4 this morning. A big focus on moncler jackets. If you are a big skier, they have the big, puff ji jackets. Soaring on its debut this morning. The stocks soaring up 40 . Trading for the first time in milan. Shares said to be 27 times oversubscribed. Theyve had a bit of a party in milan as a result. Staying in italy as well, Telecom Italia stock up. Biggest gain in europe. This is how they raised their stake in the Telecom Operator around 10 . It didnt break the rules by not disclosing it earlier. Deutsch telecom up 3. 8 today. Sprint reporting modeling for deutsch telecoms tmobile. They may make an offer in the first half of the year. They long argued for more consolidation. What the regulator has to say for it will be another matter. Thats the update in europe. Back to you. Okay. Thanks, ross. Well see you coming up. Google robots in the news. Google is joining a race. Why the company is snapping up the creator of the worlds fastest running robot. That story is next. Google also has my guy working there, raymond kerzwall who is working on a few things like curing debt. First squawk news. I watched the first series. I saw all of that. That was beautiful. Very first time the bengals get the ball they missed getting the first down by inches. I thought they should go for it. Instead they decided to punt it and he snand too far left. Cant hang on to t. Why do i bother to watch the steelers. 3020 steelers over the bengals. New orleans lost yesterday to st. Louis. The patriots lost. Very weird. Know as we head to break, lets check on the national forecast. Another winter storm. You know who i got a message from . Who. Russell wilson. Bring it. We are talking to the seattle. That team looks good. Dick is friends with him. Hes coming on. He went to wisconsin. Were going back and forth. Hey, russell. I let you watch the squawk. Anyway, another winter storm what . Yeah, another winter storm pounding large parts of the country. Reynolds wolf joins us from the weather channel. He can explain how all of this snow like in egypt and israel actually indicates the planet is warming. Explain that. Absolutely. We can do that and we can do that in 30 seconds. A, we have these weird fluctuations. They happen from time to time. There was the case by the pyramids. Were going to see some fluctuations in our own part of the world. This weekend we did have some snow in places like maine, certainly in new york city. A few locations got up to a foot in upstate maine. Were going to see changes later on. Blame it on the jet stream. Well see a ridge develop for the eastern third of the country. Warmer times for nashville, charlotte. The nations capital. Not quite into new york city but it will be close enough that you will see a dramatic improvement in terms of the warmer conditions. Enjoy. We will see a big downturn. Your forecast, los angeles, partly sunny skies. Dallas, same story. New york, looking fine. No delay for a commercial break. Sit tight. We have more squawk box coming up right around the corner. I wanna spread a little love this year [ male announcer ] this december, experience the gift of true artistry and some of the best offers of the year at the lexus december to remember sales event. This is the pursuit of perfection. Time now for the executive edge. This is our daily segment focused on giving Business Leaders a leg up. First of all we got a word on amaz amazons drones. Now google has robots. This video shows an example of one of the firms creations. This is called big dog. Its a fourlegged robot that can climb over uneven terrain even when attacked, even when youre kicking it trying to knock it off course. Then theres cheetah which the ft says claims holds the worlds record for the fastest legged robot in the world. It can run super fast. Run Something Like 29 miles an hour. Googles objective for its growing collection of robots is still unclear. Theres the guys kicking it. Theres the guys kicking it. Gentleman, what do you think . So i saw actually a year ago at the google event, i dont know if it was the founder of the company or the ceo came and spoke and showed the videos of these robots. It was just astonishing. What i wonder is what google is up to. If you look at these images, it will stay on its feet with the ice. I think those are two people in there. No. Its an amazing you should see i dont know how much more video we have cheerlly these guys have never watched these movies. Its going to get mad some day and rip their leg off. Would you try to do a downward dog with either of those machines . No. We saw that video after you had seen them. I remember seeing it. Remember . You showed this. You brought it back. The question is what do you do with it . Yeah. What do you think google wants to do . What do you think this is about . I think theyre about exploring all kinds of they have the money, the brain power, the ability to do it. I think they had to borrow the money to two pieces. This company is effectively a military contractor. Thats what this company is. Now google is in business with the u. S. Government. I think theyre super smart, interesting people who want to learn about everything they can. It is pretty neat. Someone wrote the code for the way those legs were moving i guess. I know. Its amazing. Its amazing. Good chance to show a video. It is. Lets talk about another story. You can move over lab rats. Researchers have another study. Amgen is using grizzly bears to learn more about obesity. Grizzly bears can take inasmuch as 58,000 calories a day. They can weigh 1,000 pounds. They add massive amounts of weight before hibernating, like 100 pounds or more. It creates bad cholesterol that rises for them. Their bloop spiked pressure spi. I dont know if you read through that whole story, but there was a story about sharks where sharks have its almost impossible to give a shark cancer. They have anticancer somethings to fight tumors. Yeah. Theyve tried that. A lot of like latril, when you go to these Different Countries to get stuff thats not fda approved, shark, you know, extracts from shark or something that people use. I dont know at this point whether you hear the anecdotal story that it does something but then i dont think that its ever really been proven that its effective. You know, we can learn a lot from just the metabolism of all of these different animals, how they process the bad cholesterol. Do they get Heart Disease from the bad cholesterol . Its interesting. Their metabolism to be able to do that before you hibernate. How do you think their metabolism compares to yours . Im not sure really. When you sleep, dont you like getting all dont you feel like youre have you ever tried to sleep without a blanket . I cant. I like the weight of a blanket. I do. Even if its a summer, i like the weight. I have something thats heavy and it slowly slides down. Somebody im sleeping with throws off my side. But not naming any names. Not mentioning any names. I like that. Makes us feel safe. I dont know. I like the heaviness. My wife, same thing. Whats with these women . I think theyre very warm blooded. Im under the covers. Im the one that gets them ripped off. Youre the tv wife. You have two husbands. Thats the reverse. Thanks. You guys are more like brothers. Beyonce, did you guys hear this . Yes. She is turning to social media to sell her latest album and is up ending the music industrys conventional wisdom in the process of this. At midnight last thursday she released her latest album by writing something that said, surprise, to her over 8 million instagram followers. At the same time, her full album appeared for sales on itunes. When the numbers are in the New York Times reports that beyonce is expected to have one of the biggest sales. She was bored by the way they were doing it. I was impressed. You can be beyonce, you can be lady gaga. Lady gaga, the story is what happened to her. Right. You saw that story. Shes struggling. She jumped the shark like four years ago. Shes gotten crazier and crazier. Did you see her in a picasso outfit. I saw her in a christmas tree. The picasso outfit, her face had stuff to look like boardwalk empire. Beyonce, she wont have a record zmp. It gives her a lot of independence. If she does it all herself, she doesnt need any help. She should get all of the money. Probably weighed it. Probably thought, you know, jayz, some brain power together. Sports agent. Whos going to buy img. Ari might buy it. Ari gets it or peter chernon. The bids come in a little lower. You read that one. And i think the other folks it would help wme with something. I dont think icm gets it. Theyre hooked up with carlisle. I dont believe theyll get it. Are we done . Everybody very unhappy about the bids. You two keep talking amongst yourselves. When we come back, will it be ben or janet who kicks off the taper . Its coming down to the wire and now the feds policy announcement is just two days away so is the economy ready for the fed to start to pull away . Joe, he has some pretty strong thoughts on this. Well talk more about that right after this. Also, amazon wants to be the king of the retail jungle, but at what cost . And whos paying the price for Online Consumer domination. Well go on that in the next half hour of squawk box. First, as we head to break, take a look at last weeks 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. Yep. Got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. So i knit until it was full. Youd be crazy not to. Is that nana . [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. [ male announcer ] fedex one rate. voseeker of the sublime. Ro. You can separate runway ridiculousness. From fashion that flies off the shelves. 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. natalie ooooh, i like your style. vo so do we, business pro. So do we. Go national. Go like a pro. Welcome back, everybody. The fed will hold its last policy meeting this year at the end of the week. On wednesday afternoon we will finally learn if we get a december taper or if we have to wait until 2014. Joining us is drew mattis, the deputy economist at ubs and let me ask you, neither one of you thinks that were going to really get a taper . In december . Right not this week . Probably not. Too soon. Theres too little inflation, right, and unemployment is still a little too high. I think its funny. Everyone went to these are the Biggest Group of doves to oh, theyre going o taper in december. Because leaseman told us, too. They have a budget due. There will be no liquidity this week. If they go this week thats interesting. It will be a mistake as much as i think they should taper as soon as possible. Tapering in my mind does not include december. Because theres so little trading it could throw things out of whack. You lost your nerve. I havent lost my nerve. Im as nervy as i ever was. 10 billion. Just cut it by 10, 15. Were looking for a 10 billion taper all treasuries. What are you doing what they do it . What do i do when they do it . I say i told you so as loudly as possible. What about you, michael . Do you think theyll hold off and they should hold off . I think theyre looking for signs of more sustainable growth. As drew mentioned, inflation performs under. You put those two pieces together. We think it could go as late as march. Possibly in january. If they think its not as effective as it was before not as effective. They dont think its ineffective. If you think the economy is improving. If youre looking for a reason to get out of it and use another tool, theyve been talking up this idea that rates are going to stay at zero for basically forever. For some time, right. By doing all of that and putting all that talk out and having so many different fed officials saying the same coordinated message, it makes everybody think they want to start the taper as soon as possible. I think they want to start the taper when theyre pretty comfortable the economy is worth it. The worst thing is to start to taper and take it back. Real option value for waiting. Real premium for being patient right now. I think thats what were seeing. Thats why generally on the street people are thinking december, probably not. Were looking to see a little bit better data, payroll, clarity on the fiscal side. The news was we may be battling over the debt limit. In the end it wont hold the fed back if the data is good. The data is not quite as good as theyre looking for. Close call. Is december bernankes last meeting or does he still have january . He still has january. The reason we went in january is because i kind of view it as him backing up again. Bernanke wants a chapter of his book. Once we get past the Holiday Shopping season, if you risk driving Mortgage Rates higher, you want them driven higher. A lower credit period. Opening lemding standards. What you need in this economy is lower lending. Everyone thought they were going to taper 90 . We were calling for january back in september. Even when everyone thought they were going to taper . We were out on a limb. It was a lonely place to be but it turns out everyone who thought they were going to taper last time got burned. No, is saying they dont think theyre going to taper. They had to change. And you got the budget deal done. If you thought they were going to do it back then, then you must certainly think theyre going to do it now. We moved it to january. You thought they were going in september . Now you say theyre not going to go. Heres the question. Why didnt they go . I cant explain it. Neither can i explain why they should go now . If you thought theyshed go back then then you think they should go now. Thats not the case. Theyre actsing irrationally. How can you forecast that . I would disagree. Of course you do. They are data dependent. The data is getting better. The data is better and we got the deal. Is the data good enough . We talked about this in the beginning. The Inflation Numbers have continued to fall. Do you want to disrupt christmas . I will say the if the fed is watching every data point thats coming out, the retail mood has not been a great one. Thats right. Consumers have not been willing to spend as much as they thought. Even the people who are wealthier, steves survey and the nrf. Consumer spending in the Fourth Quarter looks like it can be above three. Everyone is sitting at one, were sitting above two. People told us we were crazy. Some of the tracking estimates, you would be high twos for the Fourth Quarter depending ong inventories and imports. The numbers have gotten better in a rapid fashion for no discernible reason. Thats where the fed will fall back on the inflation sides and say, lets weight. Let me throw Something Back at you. This is the meeting where bernanke can answer questions. He can answer all of the questions surrounding it and make sure people understood. The fed has made it clear. They dont want to feel like they can only move four times a year. He also said, look, we can call one any time we want to. Theres a press conference. Im not sure thats true, actually. In the feds view, they go small. They go very slow. We dont think it will be done until the end of the year at the earliest. They will be gradual. They dont want to pull the rug out of the markets. They dont see this as the best tool. Why dont they start it with one . Well, at some point and that really raises the question. When 90 of the market was looking for september and youre worried about disrupting the market, why not meet Market Expectations by going in september. This is where the disconnect between the fed and the markets come in. 5 billion, no taper. Theres no difference between those two. Anyone in the market understands theres a significant difference. If they fully did it based on congress and their notion that they would go through what we went through, they fully didnt do it because of that. Now we didnt do it. I think it was really data first and sort of back up the data was why we thought they were going to do it. But it wasnt from basically from july on the data was on the down side. If we did it on low inflation we might never taper. Well, do you need to see some inflation . You know where i stand on this. I think loan rates are holding the economy back. Im not listening to you. Im writing you off. Ill see what this guy says. Well see what my fan base says to your fan base. Well call the jokers back and see what happens. Drew, michael, thanks a lot. Coming up, another weekend of lousy weather. Did the snow, rain and ice keep movie goers from the box office and shoppers from the mall . Well find out if there was any winners and losers thanks to mother nature. Later, aig chief will be our very special guest. Should we expect any new deals in the coming year . We got one this morning. Find out at 8 00 a. M. Eastern time. Squawk box continues next. A better future, a confident retirement. 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The dissolution of smaug. There was no three pieces of the hobbit. It was much shorter than lord of the rings. Its warner brothers. Hes not in it but hes in the movie. I think theyre going two for the final. Thats okay. I like it. They can stretch it out as long as they want. The hobbit wasnt as good as the lord of the rings. Anyway, taking the top spot at the Weekend Box Office for 73. 7 million in ticket sales. Disneys animated tail frozen fell to number two. It brought domestic sales to 164. 4 million. Apparently legolus is shooting arrows everywhere along new york city with his friend leonardo. These guys are cutting a wide swath. Because they are men, youre saying . Yeah. The sword. Can you imagine those two guys . I cant imagine. Huh . I cant imagine. Youve thought about it vicariously. Im looking forward the wolf of wall street. Im not. I want to see it. That guy was such a we had him here. The writer of the book . The person that real person. Yeah. The bucket shop operator. Hes not interesting. Hes just a low life. Theres nothing interesting he stole from widows a and orphans. Thats the story. They did it. Hes making a lot of money on it, too. Anyway, we will continue this debate during the commercial break. In the meantime is it universal . If it was, would you say it was fantastic . Yes. Coming up, amazons world. The Online Retail giant taking yet another big step to take on Warehouse Clubs but how far will jeff bezos go to get control of your wallet. Weve got the answer when squawk box returns. 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. Coming up not really coming up, were going to talk about amazon continuing to expand its empire with the latest venture, amazon pantry. The buy in bulk Delivery Service will give Warehouse Club stores like costco and sams club a run for their money. What other kinds of innovations is the company hiding up its sleeve . Joining us now to talk about is Technology Reporter usa today and our own jon fortt. What is this about . What is amazon going to be in five years from now . All about getting you to spend as much money as possible at amazon. Com. If you buy your electronic gadgets and your Christmas Gifts but they want you spending much more frequently and they want you spending a lot more. They want it to be more like a walmart where a lot of people go to get their groceries as well as other types of products. Heres the thing i cant figure out. Do they become the last mile provider of distribution. Not just for amazon but for everything . Theres part of me that thinks the starting pantry but theyre also starting to do groceries. Once you get into the grocery business and delivering same day and doing same day in other places, that their ambition and you think about the drones they claim coming in the air, which i think is kind of a pr stunt thats never going to happen. Theres actually sort of a grander ambition that even being what alistair suggests is the walmart of everything. And bezos is in newspapers now. To get stuff to your door or driveway. They do seem to be working on that. Logistics an issue for them. But its interesting, theyre moving not just into that area of getting stuff to your door but also into more consumer packaged goods, trying to figure out how to make it profitable or at least right. Almost profitable for them to deliver that sort of stuff to you. Thats where this pantry thing fits in. And, of course, the drone experiment. The one thing that doesnt make sense about pantry, pantry stuff, except for paper towels light in terms of weight, most of the stuff is relatively heavy. So how do you distribute that and get it to your home at a reasonable price given the enormous weight and typically the way shipping costs relate to how heavy these things are . Yeah, thats the key. And thats why this type of sector, which is huge hasnt really taken off ecommerce wise yet. And amazons approach is going to be with a set size box and its going to have a weight limit and prime members only. So youre going to have to pack as many cans as you can. The problem is, as you say which is like take the typical pack of coke. It would cost amazon about the same amount as that coke costs to ship it. They want to pack as many products in there as possible. We always talk about amazon in the context of a retail experience. And yet a huge part of their business has nothing to do with retail at all. Its basically providing the cloud. Its a Storage Services company. Longterm, how big is that a piece of the business versus this sort of consumer facing piece that we all focus on . I tried to press bezos on that a little bit when we talked a couple of months ago. That area is rapidly growing. It started off, they were just using their sort of unused cycle of their equipment they were using for retail to do the cloud stuff. Now, its its own area. Googles jumping in. Theyre going to have price competition there. But they clearly have a philosophy and a road map for that business thats pretty extensive. Its going to be a long time before revenue wise it gets anywhere close to the retail business. But its significant because of the insider. By the way, did you see the robot that google just bought . That freaks me out. That freaks you out . Yeah. Thats what we were talking about in the last of hour. Thank you, guys. Appreciate it. When we come back, fed matters, whole world is watching Ben Bernankes new moves. Hell tell us what he sees in terms of the taper timing. And at 8 00 a. M. , aig ceo Bob Benmosche, hell join us for an hour. Its been one year since the financial giant got out from under the governments thumb. Squawk box will be right back. Tdd 18003452550 searching for trade ideas that spark your curiosity tdd 18003452550 can take you in many directions. Tdd 18003452550 you read this. Watch that. Tdd 18003452550 you look for whats next. Tdd 18003452550 at schwab, we can help turn inspiration into action tdd 18003452550 boost your trading iq with the help of tdd 18003452550 our live online workshops tdd 18003452550 like identifying market trends. Tdd 18003452550 now, earn 300 commissionfree online trades. Call 18886282419 or go to schwab. Com trading to learn how. Tdd 18003452550 sharpen your instincts with Market Insight from schwab tdd 18003452550 experts like Liz Ann Sonders and randy frederick. Tdd 18003452550 get support and talk through your ideas with our tdd 18003452550 trading specialists. Tdd 18003452550 all with no trade minimum. And only 8. 95 a trade. Tdd 18003452550 open an account and earn 300 commissionfree online trades. Call 18886282419 to learn more. So you can take charge of your trading. I wanna spread a little love this year [ male announcer ] this december, experience the gift of exacting precision and some of the best offers of the year at the lexus december to remember sales event. This is the pursuit of perfection. A new week for squawk box. Snow on the ground and a chill in the air. Wicked weather causing havoc for holiday shoppers. But who wins when jack frost is nipping at your nose. Squawk rings up the retail winners and losers. Former fed governor rick mishkin will weigh in on the taper timing. And then at 8 00 a. M. , the squawk ceo call, aigs Robert Benmosche will join the gang in the studio to provide wisdom ahead of the holidays. Squawk box begins right now. Good morning. And welcome back to squawk box right here on cnbc. Im andrew ross sorkin. Our top story this morning, fed policy makers. Theyre going to be gathering tomorrow for the start of a twoday meeting. An announcement is due wednesday afternoon. And chairman ben bernanke will hold a News Conference right after it. Some economists are looking for the fed to announce the start of the taper with the backdrop of improving data. Steve liesman will have a little bit more in a moment. He is on their side. And then theres other people on the other side of this debate. Also, stocks coming off their second weekly loss in a row. Futures at this hour, take a look, dow looks like it would open much higher. Nasdaq would open up close to 20 points higher and the s p 500 a little over eight points higher. In Corporate News, it is official, aig selling the Aircraft Leasing business to air cap holdings of the netherlands. The deal worth about 5 billion in cash and stock. And Bob Benmosche is going to join us in the next hour starting at 8 00 eastern time. We can talk to him about that transaction and a lot more. And then global news, watching the situation in the ukraine, russia reportedly says it could grant ukraine a loan. Thousands of protesters camping out on the bitterly cold main square yesterday. Camping in independent square since last month, angry at the lastminute refusal signing an agreement bringing the country closer to the european union. And now senator john mccain is warning that the unite could take concrete action against ukraine if the government cracks down on descent. Sanctions would deserve serious consideration by congress if yup cra ukraine signed a deal. The buzz story this morning about is google and this crazylooking robot. Looks like a dog sort of. Google acquired the maker of the worlds fastest running robot and other realistic animallike machines supplied to the u. S. Military. This video shows one example of the firms creations called big dog. Its a fourlegged robot that can climb over uneven terrain even when attacked. Then theres cheetah that holds the record for the fastest legged robot in the world. Running at more than 29 miles an hour. But at the same time, google has filed to change their name legally to sky net, which no one has mentioned in all of this. Look at that. It is cool. Looks like a person. Looks like two people. Dressed up like a robot. Two very strange people. Can i Say Something . You give andrew for such grief how he says manhattan and button. Legged . No, what are those things the whole time you said robut. Its like autos. Well, german guy had something to do with making the auto initially, right . Auto. Why do you see margariter margarita. Thats what i dont know. You put r. Where am i putting an r . My friend from long island had a friend named linder. You got the button and manhattan. It is worse. Now your children are saddled with this now. Hopefully not. Im still working on that. Well see. Lets get back to the weeks top market story, the fed. Steve liesman joins us onset and, steve, you still feeling totally confident its coming this week . Were past that. We did that last week. Lets now go back to the text. Lets go back to the text. You want to deemphasize your call . No, what i normally do on the week of the meeting. Well, we just said a lot of people are expecting a taper. Theyre not. I would say 1 in 10 are expecting a taper. Exact data on that tomorrow when we present the results of our cnbc fed survey. What do you think it is . Can i get to my script . What do you think its going to be tomorrow . Tomorrow . Is tuesday. How many people are expecting the taper . Give me your ballpark. I think somewhere at a third. A third. All right. Go ahead. Were going to look at hide behind your script. Go ahead and read it. Im not hiding. If youre uncomfortable lets go back to what janet yellen said about tapering. Okay. During her is as the fomc indicated in the most recent statement, we do see strength in the private sector of the economy. And we are expecting continued progress going forward. So while theres no set time that we will decide to reduce the pace of our purchases at each meeting were attempting to assess whether or not the outlook is meeting the criterion that we have set out to begin to reduce the pace of purchases. Theyre going to talk about it. Theyre going to think about it. Now lets go through what different people have said. Jim bullard who said on the wall. Have a look there. A small taper at the december meeting might recognize labor market improvement. That is so different than when he was onset with us. Very different. I changed along with him. I thought jim was a good guy to follow along. Dennis lockhart, the atlanta fed president. What did he say . The trajectory of the recovery, outlook of the economy justifies consideration of such a move. Moving on to even charlie evans, noncommittal, ill be openminded. Everything else equal, id like to see a couple of months of good numbers. Couple more months . Couple months. Whats different. Then theres John Williams San Francisco fed president , i wasnt as far away from being willing to initiate a small taper as some other fed officials. Now if the great stek could take the wide view. This is the center of the board. So its certainly a close call. And my call is more likely than not. One other thing, i want to leave you with what bernanke said in a very important november 19 speech. When ultimately asset purchases do slow, it will likely be because the committee has progressed sufficiently for the economy progressed sufficiently for the committee to rely more heavily on rate policies. The associated Forward Guidance and the substantial continued holdings of securities to maintain progress towards maximum employment and price stability. This is what the chairman wants to do. He wants to pivot. And thats a big story. He wants to pivot from a qe policy to one thats based on Forward Guidance and based on rates. Whether or not thats december or january, its coming soon. Thats the direction of policy. Echoed by several fed officials, too. Going back to this idea that we will keep rates low for an extended period of time. Its been coordinated almost, it seems. Exactly. And the other thing, becky, he said in the november 19th speech. He said at 6. 5 , we dont have to hike rates. We can pause and look around. This concept, the semantics are its a threshold, not a trigger. We can do it at that point. I would like to point out, remember 7 in june what it was, chairman bernanke. The place where qe would end. Thats interesting. How things have changed. 10 billion is so minor, steve. Are you going to sit there and sell stocks because the fed is buying 75 billion not 85 billion . If youre a simpleton like me, if they didnt do it because they were worried about it. We got a budget deal. And the market have gotten there already. And two good employment reports. And ive been emphasizing this whole week the behavior of the short end of the curve tells the fed that its okay. They believe in the promise of what you talked about, becky, that theyre going to be lower for longer even amid the taper. And inflations not going to pick up between now and january. Not like people can say, well, theres no inflation. Thats the only consideration on the other side. Its not going to pick up by january. Why ever do it . Right. Lets bring in another voice, as well. Joining us with his thoughts with how the fed will be handling any sort of tapering is rick michigan. An economics professor at columbia, and, rick, its great to see you. Good to see you. Help us out a little bit here. What do you think in terms of i know you thought back in september they should have tapered at that point but they blinked. What do you think happens now . Well, i think that i agree with steve that i think the moved slightly over 50 that theyre going to taper. But i think the key thing to understand here is that whats going on is that theres really two different kind of tools the fed has in terms of expansion monetary policy. The issue of asset purchases is one that has a lot of extra baggage. Way of thinking of this is theres a Balance Sheet capacity of the fed and theyre running up against that. They dont want this huge Balance Sheet. They want eventually the Balance Sheet to return to normal. And also, they do not plan to sell assets. So this is why they need to taper and why i think they should have done it earlier. On the other hand, they dont they actually do want to have more expansionary policy. They want to do this pivot. Want to move to using their Forward Guidance as the key policy tool. And basically put the tapering and the Balance Sheet tool away for use during more crucial and more critical times when, in fact, they may need it. So they have to do this at some point. I think as long as the markets are stable. And i think thats the key that the markets seem to have been able to adjust to the talk of taper this time where they havent in september. And also the fact that the budget deal, the congress looks like its backing away from this insanity, you know, they may have a little bit of craziness there, its not quite the same. All of this helps them to move to the main tool of monetary policy. The thing that makes me most nervous are the number of people who say they wont. They argue its the circular logic where the fed wont taper because the markets not ready for it. Its like sort of closing your eyes to the tank in front of you. That tank is not there because ive closed my eyes and dont see it. How does that factor in right now. Is that sort of i guess i could call that willful blindness on the part of market participants. Is that decisive for the fed . Well, i think that its actually ben bernanke was involved thinking about some of these issues which is you dont want to get into the circular kind of situation where you always follow the market. The markets going a certain way, you keep on following it. Its extremely important in terms of managing expectations to have the central bank do what it thinks is right and hope the market gets it. I think the market will get this and i think thats what the fed needs to do. Rick, i want to go back to your first point. Because what you say is really important. Everyone may have grasped what you may have said. Part of it is the size of the Balance Sheet. Its going to create a political problem down the road because if you want to lay out your theory on this, theyre giving money to the treasury. Thats not going to be the case as Interest Rates go up. Right. Big time. Typically the Federal Reserve gives on the order around 30 billion to the treasury every year. Its been a lot more than that recently because of the fact the Balance Sheet has been so huge. The problem is that as we get back to more normalcy, the fed is locked into holding all these longterm assets where they will not get any increase in the Interest Rates and, yet, theyll be raising Interest Rates on what they have to pay out to banks on reserves. The result will be the income situation will deteriorate. And that means at some point, theyre not going to be able to pay any money to the treasury and that could be a political problem for them. The bigger that Balance Sheet is, the more its in longterm assets, which very key is that the purchases are not shortterm assets, theyre longterm security where is the Interest Rates are locked in, more of a problem that creates for them. Thats the Balance Sheet capacity problem that they have to deal with. And this is one of the reasons why although the tapering is a tool for expansion excuse me, although asset purchases is a tool, it has a major flaw and thats one of the reasons why the fed wants to move to the other tool which is much cleaner for them. Rick, we have your former colleague who argued that one of the risks or costs of quantitative easing was misallocation of credit. And he said that one of the things you see is a lack of capital expenditures. And he thinks thats because of fear of the unwind of quantitative easing. Do you find that is that one of the valid criticisms in your opinion of qe . No. You know, i really dont think thats a big issue. The markets basically can work around this. That the biggest problem its a remarkable problem is that, for example, corporations are rolling in cash. The banks are more than willing to lend. Theres plenty of money out there. Its people basically are reluctant to invest. This is because theres been a lot of uncertainty. I think one of the things that the fed needs to do is decrease the uncertainty. September, the problem there was that they basically said sort of said they were going to do something and then backed off. That creates uncertainty. But the big problem here is the u. S. Government, which has been creating a lot of uncertainty. But maybe the congress is backing off of this, you know, lets play chicken with each other. And i think thats very, very healthy. That may actually may be more important to helping the economy than anything else. Right. Professor, that you think very much for joining us. We hope to see you again. Youre very welcome. Coming up, the top movie at the Weekend Box Office. First, though, two hollywood passings, peter otoole died at age 81, an eighttime oscar nominee, appeared in dozens of film during a career spanning decades and joan fontane has died. She gained fame in suspicion and rebecca. Welcome back to squawk box. Warner brothers the hobbit, taking the top spot. Smaug, smug. Smaug. 73. 7 million in sales. Frozen falling to number two in the third weekend while bringing the overall domestic ticket total to 164. 4 million. Not bad. Its frauzen. Andrew mentioned the hobbit, t its like a problem with the air and l. A. Smaug. Heres our own eunice eun with a look at real life desolation from smog. Try breathing in this town. The desolation of smaug hits theaters in china next year, but the desolation of smog is already here. Cities are battling with whats known here as the airpacolypse. People here live in fear of the death cloud. But the state media has been making the most of it and that it could block potential military strikes. Smog could be one of the last dragons of middle earth, but our smog can be seen from space. Cnbc, beijing. Good story. Still to come on squawk box, our newsmaker of the morning. Aig boss Bob Benmosche will have his companys multibillion dollar deal today. Plus his outlook for the new year. 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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. Welcome back. A new Associated Press poll shows most americans see the stock market flat or lower by next year. Only 14 believe the market will rise. 5 think it should crash. The general public is less optimistic than investment professionals. So youve got to youve got to pick your group to do the opposite. And who is the real contrarian . I think the markets going to be up next year. And the reason ive said it because the factors, its hard to even with commodities, a trends usually your friend. And youve got to be really smart to cause the or to call a reversal in realtime. Its really easy to look back and say it was obvious. Right. But most of the time, a trend continues. And if the momentum in the economy is something overall globally thats giving people confidence to boost stock prices 20 in one year, its unlikely youre going to be smart enough to know when to get off of that train. Right. Even if its only 5 or 10 or 15 . I think well be higher next year. I agree with you. And in im sorry, but a lot of times the public unfortunately is not in early on. And a lot of times they come in towards the end. Left holding the bag. Yeah. To let the people with that already have money end up getting cashing out and theyre left holding the bag and thats bad. Meantime, if youre looking for a vote of confidence in the economy, check out the Corporate Bond market. A story in todays wall street journal points out that buyers of corporate debt are demanding the smallest Interest Rate premium to comparable government bonds since 2007. Sales of new junk rated Corporate Bonds are on pace to surpass last years record. All of this is bolstering confidence that, you know, the overall economys better. And sales of Investment Grade bond this year already at the highest ever. These stats are all evidence that bond buyers are increasingly comfortable that companies will repay them, which would be nice if youre buying bonds. It would be nice, right . Yeah, that would make it a whole lot easier to feel good about buying them. Joining us for the rest of the hour is director of global macro at Fidelity Investments, coportfolio manager. Can we talk to you about not only stocks but any asset class . We can . Can we talk to you about all of these assets, not just in this country but globally . Yeah. Really . Yeah. Youre like a renaissance man. I may not have a good answer, but you can ask me. We can talk to you about it. So mac owe trends for since were getting close to the end of 2013. What do you think about 2014 . And, you know, go over bonds and equities and here as well as emerging markets or even europe . Well, good morning. I see three paths. The path that the fed would like to see i think is one of escaped velocity of a sustained higher growth rate of gdp, obviously havent had it so far. Is that just for here in this country . Or does it matter globally . Here for this country, but in the context of a more synchronized Global Expansion, which were getting now. If you look at the pmi, about 3 4 of countries are hitting 50 now. Europe has improved, germanys pmi at 54, china around 51. The japanese survey was very strong. So were definitely seeing an uptick in Economic Activity and its more synchronized around the world. We had synchronized Global Expansion from 03 to 07, the whole globalization emerging market boom at the time. And then it was synchronized on the way down, but the deleveraging. And then it was synchronized in 09 and 10. And since 2010, its been very fragmented. And things are starting to come together a little bit. The fed, if they could see 3 plus growth and payrolls, they can taper all they want and nobody will care. Hold that thought. Jurriens going to be with us for the rest of the hour. Well get your answer all straight through equities, bonds. You got it. When we come back, though, Stormy Weather for the retailers. Did this winter storm delay more big spending or are retailers in a panic because the spending may not happen . Well have that story right after this. [ male announcer ] this december, experience the gift of unsurpassed craftsmanship and some of the best offers of the year at the lexus december to remember sales event. This is the pursuit of perfection. You stand behind what you say. Theres a saying around here, around here you dont make excuses. You make commitments. And when you cant live up to them, you own up, and make it right. Some people think the kind of accountability that thrives on so many streets in this country has gone missing in the places where its needed most. But i know youll still find it when you know where to look. [ male announcer ] this december, experience the gift of true artistry and some of the best offers of the year at the lexus december to remember sales event. This is the pursuit of perfection. Welcome back to squawk box on cnbc, first in business worldwide. A number of global headlines weve got for you this morning. New surveys showing that chinese manufacturing continue to expand slightly in december. Growth was a bit slower than the previous month. Its the latest sign that the worlds second biggest economy is undergoing a shaky recovery. Meantime, check this out in japan, a Quarterly Survey of Business Sentiment showing that manufacturers are more upbeat about the state of the worlds Third Largest economy under abes recovery program. And we continue to watch the situation in ukraine. Reportedly said it could grant ukraine a loan if kiev asked for it. Now senator john mccain warning that the u. S. Could take concrete action against ukraine if the government cracks down on descent. Dissent. Joining us now is michael pont. Also, our guest host this hour is Jurrien Timmer. Thanks for joining us. Thanks, becky. You think 2014 is going to be a grind higher for Interest Rates around the globe . We do. And itll be different from the move higher this year in that we expect its the economy that will be leading rates higher, not just the fed. Earlier this year, it was really the feds reaction function that pushed rates higher. We expect that gdp growth in the u. S. Will be a bit higher as well as Global Growth and thats what we think will push rates modestly higher from here. So thats actually good news, right . Its a situation with higher rates, but its higher rates for the right reason and the markets should be able to handle that . Thats right. The fed earlier this year was worried about the rise in rates, tightening of financial conditions because the economy hadnt lifted off yet. We think the fed will be more comfortable with a further rise in rates next year because it will be under a stronger economy. Jurrien sounds like something you agree with. Something you were explaining, too. I agree thats what the fed would love to see. This liftoff, escape velocity. Larger payroll gains, they can taper all they want. Bond yields would go up, nobody would care, therell be stronger growth. In the summer, they tried that, liquidity conditions tightened and they had to sort of backtrack. I think the thinking is that maybe now theyre getting enough momentum and now the fiscal problems are sort of pushed aside for a while. But the question is, are the upticks were seeing in the economic data, the pmi, the payrolls, the gdp, are they going to last . Are they part of a trend or a seasonal blip . We dont know yet. What do you think . What are the biggest risks that would prevent us from hitting that escape velocity . Well, were watching Consumer Spending quite closely. Consumer spending appears to have actually picked up from the Third Quarter to the Fourth Quarter. Real final sales are actually running close to 3 in q4 after around 2 of the past several quarters. So growth does look to have picked up. Were watching the consumer pretty closely. What would you if youre the fed and watching the consumer pretty closely, is that an argument for waiting and not actually starting the taper until maybe january or march . Well, the markets pretty set up to taper whether it be december, january or march. So we think that matters less than the potential for increased Forward Guidance. Thats what well be watching more for this week of whether they try to disentangle tightening from tapering. Right. Because the markets already set up for tapering. Michael, lets talk a little bit about global issues. In japan, theres a lot of concern because of the drop of public support for shinzo abes cabinet at this point. What does that tell you . What is your concern about that . Well, the big concern were watching for next year is the impact of the consumption tax where essentially going from 5 up to 8 . Thats a big hit to the japanese consumer. At a time when the big increase from fiscal spending and the move in the currency is already starting to wane. So what would you tell people in terms of what theyre looking at bonds, japanese bonds. We do think theyll go higher here, but, again, theres greater concern in japan that things were lower in the u. S. Michael, thank you very much for joining us today. Thanks, becky. Well have more from jurrien in a little bit. Hes our guest host for the hour. Were going to talk retail winners and losers next. And at the top of the hour, a special squawk ceo call with aig ceo Robert Benmosche. Hell be our special guest starting at 8 00 a. M. Eastern. Squawk box will be right back. announcer scottrade knows our clients trade and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Retailers from the midwest to the northeast probably took a hit from winter storm electra as it dropped accumulating snow, sleet and freezing rain on the second to last shopping weekend before christmas. Cnbcs Courtney Reagan joins us from Herald Square in new york with more on this. And the retailers love it when its cold but they dont love the snow and the sleet, right . Thats exactly right, becky. They like the cold, but they want to keep it dry. Although, right here, you can hardly see evidence of the snow in Herald Square. But electra did move through, dropping snow and ice from missouri to maine. It was a pretty big storm, disrupting one of the key Holiday Shopping weekends before christmas. Now weve only got one more. And if you take a look at the damage that electra did, dropping up to 18 inches of snow in some parts of maine and vermont, retailers really white knuckling it through the last eight days. Typically, the last two weeks pulling anywhere between 20 and 30 of all holiday sales. But with this years compressed season and a lot of procrastination were hearing from consumers, it seems that the final stretch is actually going to be more important than ever before. The latest nrf survey indicates consumers are further behind when it comes to checking off those lists. Some shoppers did brave the malls this weekend. Of course, finding the shorter lines sidelined many and they shopped online. Those Online Consumers could likely have some problems, too. Take a look at fedex, theyre saying its memphis hub and Flight Operations experience substantial disruptions on december 13th due to Winter Weather and high winds, potential delays are possible for shipment deliveries across the u. S. So now, of course, andrew, the big question remains, was this past weekend lost all together, or will the traffic and sales shift to this week and this weekend . It all remains to be scene. But im sure that retailers remain very, very nervous. We know this Holiday Season has been tepid at best, especially for the sales and those promotions continue to tick up. Back to you guys. So heres my question for you, courtney. How much does it ultimately matter if so many of the sales are supposed to be online anyway, this season . Well, so, it actually depends on where the sales come from online. If you think about it, andrew, macys is a winner on a lot of lists. And macys wins online and in store. That all sort of goes to the same pot. Of course, we talk about amazon taking share. I know you talked about it earlier on the show. Anywhere between 85 and 95 of all retail sales are done in store. It really, really does matter. And when you lose a weekend due to weather, youre running out of time. So people like my mother are going to get a little nervous when it comes to online shipping. Shes going to hit the stores when she had intended to do it online. Shes nervous shes running out of time now. Are there any publicly traded retailers that have a bigger presence on the west coast than the east coast and so theyre actually going to do better because of the weather situation . Well, certainly, there are. In some even off price. Exactly, nordstrom or offprice stores are more in the west, southwest and southeast. So theyre going to miss a lot of these big snowstorms. Youve got jc penney, macys, big concentration in the northeast. Then, again, its december, it snows at this time every year and christmas comes on the 25th every year. So some people are going to go out and brave it no matter what. You know, courtney, evan if people do show up for the last nine days, were on the countdown at this point. Even if people show up at this point, my guess is, the retailers who have had issues to this point, its too late because theyre nervous, they have all of this inventory. Theyre offering things at deep, deep discounts. Even if they make the sales, theyre not going to be profitable sales. Reporter exactly. And i think some consumers have actually gotten smarter over the years and started to realize that. And instead of bulking up on the black friday weekend, they wait until the end because theyre taking advantage of those discounts that come out of desperation more or less. So while they do make the sale, it is in a muchcompressed margin. And youve got folks who have waited until last minute and will pay whatever price they need to pay to make sure they have something to give. You get a little bit of both. But in the grand scheme of things, youre going to be getting those sales at a compressed margin. Ill admit. I was out yesterday, and if youre waiting, you could be in a bad situation because some retailers are going to run out of stock. I was at a disney store, i was looking for pajamas, they were 40 off. None of the right sizes, they sent me to the online place. Im out of luck. I waited too long. Whats matt wearing . It was. The rest of us all got something. He wears disney jammys. I was going to get him a pair, but he gets none now. They have a little thing in the back that opens up no, they were mickey pants. Hes getting none because the men who were the ones sold out first. He started out with this as a joke, but its turned serious. Im horrified. Yes, courtney, its an issue. There are certainly places where supplies are running out. Reporter it is. Right. Reporter and retailers have kept inventories low this season on purpose. They dont want to get stuck with the situation they were in a couple years ago. They had way too much. That, of course, is not what investors want to see. Not what they want to deal with at the end of the season. They keep that inventory low. If you wait, you could be in trouble. And im hearing the same thing about how there is product but the sizes could be the issue. One other question. We had who did we have on last week who said the winters actually good for certain retailers who sell winter apparel. Steve saddove. Its a highmargin product. Is there a winner from that perspective in all of this . Exactly. So thats what becky and i were kind of talking about at the top. The retailers like it when its cold, but when its dry. So anybody that sells the winter apparel, thats the department stores, the macys, the kohls, the jc penney, they like it. They can sell the sweaters, the coats, which didnt move well last year. December was the warmest in about 11 years. Exact opposite situation occur where they dont sell any winter coats. Thats even worse. Exactly. Things should go according to plan. Courtney, thank you for that report. Thanks. Stay warm. You look warm. How cold is it out today . Shes ignoring you. No. Shes like no, its like shes like, im not the weather man. It was 27 when i came in. Its chilly out. I do have a i have some batman bottoms. And do they open up in the back, too . No, they dont. Theyre the cool batman insignia. Blue with like a yellow bat you looked like the caped crusader himself. Batman is cooler than disney. Do you wear the cape, too . No, just when im whole different thing were talking about. Yeah. Well, when we come back, were going to talk about stories making headlines. Plus, what to watch in 2014. Finally thoughts from our guest hosts, well have Jurrien Timmer talking about the markets. Then well welcome Bob Benmosche for an hour. How aig is fairing one year after paying off the debt from the financial crisis. Squawk box will be right back. Welcome back, everybody. Today is expected to be the busiest day of the year for u. P. S. Some 34 million packages will be picked up across the world. That is double the normal volume. The Company Expects to deliver more than 129 million packages the week before christmas. Half of them coming to my house because i did all of my shopping online. A u. P. S. Spokesman says the company will be delivering about 300 packages a second at its busiest time. The United States Postal Service also calls today its peak mailing day for cards, letters and packages. And man, im behind on that issue. The u. S. Postal service expects to process 607 million pieces of mail just today. Thats crazy. Do you know, andrew, when we go to barnes and noble, right, you look at what you want to buy and dont buy them there. The guys there tell you to you buy them online. What do you mean . Its cheaper to buy the same book online . And have it sent. Really . Oh, the salespeople are telling you that . I dont know whether eshd have said that, but i think so. It wasnt me, i was there when it was happening. I was there when it was happening. Well, sometimes when they were out of stock. I had a store tell me instead of carrying it, it was sent to us. And maybe because you put them all together. Im not sure why. I dont know why either. I walked into barnes and noble yesterday and thought about buying a book and didnt. Im going to get a history of everything that happened from like the year 1,000 till all through the renaissance in every country because i was looking and i dont know any of it. What happened to us with history in school . Natalie is studying the middle ages and ive had to go back and bone up on it. Do you know any of it . Some of it. Some of it kind of comes back to you. I wish i would have been more engaged. We all do, after the fact. Instead of worrying about every social i wish id done all studying. Right. And when your parents told you and you thought yeah. I know about that. In washington news, the senate will convene this afternoon. On the agenda, take a look. The budget deal, but chambers number two democrat, says the legislation is still short of the votes needed to pass. The struggle is still on in the United States senate. We will need about eight republicans to come our way. I feel well have a good, strong showing from the democratic side. But we need bipartisan support to pass it. And last week, the house passed the budget deal negotiated by the leaders of the house and Senate Budget committees. 55 democrats. That means you only need five. Someones hanging out, holding on for it. In legal news, closing arguments are expected today in the Insider Trading case against fo michael steinberg. Steinbergs lawyers say the defense will call at most just a few witnesses and present its case in less than a day. The former s. A. C. Manager is charged with five counts of securities fraud and conspiracy to commit securities fraud for trading in dell nvidia and others or at least those two based on alleged insider information. But he denies any wrong doing. Lets get back to our guest host Fidelity Investments Jurrien Timmer. Stocks globally possibly an attractive investment . We like the u. S. , europe, japan. At least i like japan. Think itll be an up year . If the fed gets even remotely close to escaped velocity and it can taper and the market doesnt care and the rates can go up a little bit. I think stocks can have an up year. The problem is price has exceeded the fundamentals. Earnings growth up, s ps up 25 plus. Theres a disconnect. Multiple expansion and that comes from the easy money sort of liquidity of the fed. How do you manage to taper, obviously, is going to matter. I think one of the outcomes we could be seeing is if we dont get escaped velocity and the fed is unable to taper and we stay in the 1. 5 to 2 growth track, at what point does the fed Balance Sheet get so big theyre going to have to get out even though the data isnt ready yet. And next year, i was talking to becky, theyre gaining and losing rosengren and evans who are doves from the voting ranks. And so the whole fomc is going to tilt more hawkish. The fed tapering next year with more dissent. Theyre probably not going to like that. How they navigate and decouple forward rate guidance from tapering. I think that was the Communications Error they made over the spring and summer they didnt really distinguish well enough between the two. So the market just said, okay, theyre starting a tightening cycle. And then, you know, you saw what happened to Mortgage Rates and they had to backtrack. So this time i think the market is more prepared, you see the s p close to 1,800. You know, the tenyear at 2. 90 or so. I think the market is in a better place now to handle it. Really decouples the rate guidance from the taper. Would double digits in the s p surprise you for 2014 . It would surprise me just because the market is well ahead of whats happening in earnings. Earnings growth has slowed down to a couple of percentage points. Earnings would have to reaccelerate and, you know a lot of companies have bought back so much stock. Thats going to help them in terms of earnings per share. Yeah. The earnings per share is actually stronger than net income if you take away the share buybacks. Net income, i think, is negative in terms of growth. So earnings would need to reaccelerate. You would need to see that synchronized Global Expansion. Where would the tenyear be . Can we handle 4 if its with economic growth. If its with escaped velocity, i think the market can handle 3. 5 to 4 . If the market if the bond market sells off because rates rise because investors are selling their bond funds and the economy is not strong enough, then it will hamper growth like it did in the spring and the fed would have to backtrack once again. And commodities are china. China has structural issues. Any inflation on the horizon . No inflation. And thats the big threat to the fed. The core barely at 1 . Which is below the target. And that would be a reason not to taper. The feds going to lead into Balance Sheet capacity issues. They cannot keep doing this forever. Theyre going to be at 5 trillion or 6 trillion. And they cant grow that big. Its beautiful, too. Do you know who makes it . I can tell you, its a hackett suit. And the tie of a similar the tie is a hackett tie. The reason i bring this up. Did you get a flannel suit for davos . I own youve got to wear flannel in the winter. Anywhere in a cold climate. You could wear it outside. By this guy zegna. Zenya. I say zegna. Weve got another man who is wearing a beautiful suit right over there. Coming up, a very special hour with the ceo of aig. Its been a year since the insurance and financial giant paid off the bailout. Robert benmosche tells us where the company stands. His outlook for 2014 and his comments on a very big deal announced just about an hour ago, were back in a moment. vo you are a business pro. Seeker of the sublime. You can separate runway ridiculousness. From fashion that flies off the shelves. 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. natalie ooooh, i like your style. vo so do we, business pro. So do we. Go national. Go like a pro. But with less energy, moodiness, and a low sex drive,y first. 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. Whatswithout the thinking capitathat makes it real . . Whats a vision without the expertise to execute it. And the financing to make it grow . Whatever your goal, it can change more than your business. It can change the future. Thats why, at barclays, our ambition is to always realize yours. Aigs ceo Robert Benmosche joins us for a special onehour event. A year after paying back its government bailout. Where does the company stand . How has the economy changed . What does 2014 have in store . Benmosche goes on the record with squawk box. And it all begins right now. Welcome back. Just kidding. Welcome back to squawk box here on cnbc first in business word wide. Im joe kernan along with becky quick and andrew ross sorkin. In studio for the remainder of the show. Bob benmosche. Chairman and ceo. And among corporate stories, aig is selling its Aircraft Leasing business to air cap holding of the netherlands. The deal is worth about 5 billion in cash and stock. And we will get mr. Benmosches thoughts on that deal in a minute. First, though, andrew is going to bring us this mornings other top stories. Better be good. Im going to try. Weve got a couple stories this morning. Policy makers, theyre going to be gathering for the first time to start that twoday meeting tomorrow an announcement due wednesday afternoon and chairman ben bernanke will hold a News Conference. Some economists looking for the fed to announce the start of a taper. Others are not. I want to get bobs view on that one, as well. In washington news, the senate will convene this afternoon on the agenda, the budget deal. The chambers number two democrat says the legislation is still short of the votes needed to pass. Also, a hot ipo that promises to keep consumers warm. Shares of the luxury quilted jackets monclair. Up 40 in europe after going public. I was admiring matt lauers coat, he was wearing it on thanksgiving. He had one . It was a beautiful coat. Thats all you need to say, then. Watch shares of twitter, theyre under pressure after downgrades by suntrust and wells fargo. Now citing the valuation as being too high at 57. 98. So there you have it. But you dont have one yet. I dont. But i will try to hes a very dapper gentleman. So if you try to keep up with him. Just follow in his footsteps, thats all you need to do. Once we know that somebody else, you know, thinks hes pretty cool, too, right . Hows that . You ask, you know where hes going. Lets get a check on markets this morning. Your wife . Yeah. My wife loves him. Shes at home with your children taking care my wife loves matt lauer. Its true. Thank you, becky. Were going to run right through. The equity futures are looking higher this morning. This is coming after a rough start for the week, last week after the markets. Dow futures up by 111 points above fair value. Up by better than 10 points. Anybody who is waiting for that big pullback to buy. Well, you may have missed it already. Looks like the markets are moving again. Overseas in asia, things werent as bright. The hang seng was also down by more than. 5 . Gains of better than 1. 5 for germany with the dax. The france ca krrc is up by ove, and ftse by. 9 . We have a very special hour ahead, it was exactly one year ago from saturday that insurance giant aig repaid the u. S. Government in full for its bailout back in 2008. And he also brings us news this morning. Did you hold this news just knowing you were coming on . I thought it would be good with ratings as they are, i want to help everybody out in the industry. A backhanded compliment. As good as they are to get them better. Absolutely. Tell us about this deal. The Airline Leasing deal. This is a transaction you tried to pull off a year ago. The chinese tried to buy this and somehow reneged and nobody understood why that happened and how that happened. Give us the back story of how you got to hear. I dont know. Some of that has to come from china. But it was very clear that keep in mind when we did it we were going through regime change in china. So old and new was occurring and, in fact, we signed a deal during the previous regime, the new regime came in, i recall, around march. So as you have changes going on in any company, any country, people have different points of view. And so what may have been okay for one group of people may not have been okay for the next group of people. So new china trust was, in fact, the core of the negotiations. And thats where the money was coming from. Once new china trust was no longer able to continue in this transaction and they withdrew, then it left the group in hong kong with a big hole and they began to attempt to fill that hole either through investors in hong kong or went on to taiwan with an effort to see if they couldnt raise the money in taiwan and had a great deal of difficulty doing it because its a huge transaction. Without the cash that was originally there, it became a bridge too far for them. They are pretty close, but they werent able to get to the finish line. You satisfied with this price a year later . Oh, im very satisfied with it because the fact is, we negotiated a deal for about 5 billion, which included a fixed number of shares at the time we negotiated the transaction. I think its about 96 million shares. If you look we negotiated it. Were probably up 4 a share. When you look at the announced price, were up 400 million. I think youll see retaining about 46 ownership of the new company. We worked really hard to get ioc. You continued on 46 . We sold all of the company, we sold all of the company to air cap. Right. Air cap then has to mark down the assets to market. Okay. Fair value accounting to our market values. So therefore they will own the property, they paid us in cash and in stock. In stock. So therefore we wound up owning 46 . What you actually accomplished here was an ipo and a merger all at once. And you get the accounting treatment so we can right the assets down once to market which is very important. Okay. Im going to go big picture for a second. Which is we keep talking all day about the taper. The taper, the nontaper, whens it happening . Doesnt matter. What is the aig view on all this . Well, weve been crawling around and nobody will tell us at the fed we see that the economy continues to be stronger than people think. Were not expanding as much as we should. That doesnt mean theres a weakness in it. I think theres a fear. I go around, my fellow ceos. People are frindened about how much based upon regulatory requirements. The other thing is banks are concerned about lending. Anywhere near a risky loan and they get in trouble, why bother. With capital troubles, im not sure what the charges should be. We think its a strong economy. And i think look at the jobs growth and employment. Our turnover for our employees is high. This year relative to last year and prior years. Were finding it difficult to find certain skilled employees. If we want to find high quality actuaries, for example, its hard to recruit. So people are able to find jobs. And if you look at what i said three years ago, we had high turnover going on in this market. But people were finding jobs. Its a question whether they wanted those jobs or not. If you want to go to work and get started, you can find opportunity. Whats that a function of . I think its that much better. People are looking for work right now. And waiting for Something Else to open up. Would you rather make nothing an hour or ten bucks an hour . I have somebody that i work with. His daughter is home for winter break and its a wonderful story. She says shes working for a Bread Company today and tomorrow because they took her back parttime. Shes trying to work for one of the Trucking Companies that deliver packages and so shell probably do that. What am i going to do . Sit at home for three weeks . Ill have extra spending money. Theres opportunity to do that if theres a will to do that. One of the conditions we hear over and over again is that ceos are concerned about reinvesting not only for the reasons you cited, but also because of the uncertainty in washington. When you saw a deal, obviously it has to pass the senate. When you saw this deal get done, does that give you any more faith than whats happening in washington . No, because of the rhetoric around coming together like we dont come together. And so its when families feud and so on, we just dont make were not going to be friendly with that part of the family. So, in fact the rhetoric and the leadership from top down says were now going to do these things, some of them are harder than youd like to hear, but were going to get stuff done and all work together, i think its great. When you take a couple of very Competent Congress people and put them in a room and say lets really get this worked out, you came out with a work out, but that doesnt mean the rest of the government has the right leadership to really get the Company Optimistic and on the right track. Can you name any names . I have trouble with names, joe. At my age you said from the top down, though. Woodward was out over the weekend. He got mad at the president for some reason. He said the reason it wasnt involved. Wasnt involved. Well, ive heard several senior senators i wont mention names, say its tough to negotiate when everybody doesnt come to the table. That means everybody has to be the leadership of the country as well as the leadership of the congress. Has to come together and discuss. How much time do you spend in washington now . Before i assume it was all the time because you were effectively an arm or they were a major investor in your company. Actually, thats everybodys perception. The only time i spent, i would say at most a day collectively. Not at one time, but over several days when we were negotiating the compensation with ken feinberg. I would say i spend no more than 8 to 12 hours a year in washington. Really . No more than 8 to 12 hours. What i say all along, no, you were the government and all these things were said. What i said was that the Federal Reserve was the bank. And as a result, they had to sign off on everything. They gave us over 1,000 waivers during this period of time because the issue was they gave money, they werent supposed to give money. Wanted to make sure they got that money back. Once we paid the 85 billion and closed that out in terms of giving back the line and so on. We kept them informed. They attended board meetings, our manager meetings, which the fed does now as a regulator, and we didnt have any kind of an issue other than the compensation period was intense. Does that change in terms of the dynamic between you and the Federal Reserve and other Government Agencies in the u. S. . I think it improves it in my mind because now all of a sudden. Look, we had we wanted to pay a dividend. Right. We wanted to buy back shares. And we felt we were strong enough. We go through our own stress testing. And, you know, i think i shared with you. We consider the fact over the 2013 and 14, about 23 billion is the shortfall of our earnings. We dont earn 23 billion. The stock market goes down 50 . Bonds, you know, fall out of bed because of credit issues. Unemployment goes to 12. 5 . Therefore we felt it was prudent. We go to the rating agencies, they say, hey, its great. Its okay. Aig can do that. Knowing that the Federal Reserve is buzzing around, we have eight or nine fulltime people watching everything we do. And while the Federal Reserve does not make it clear, Federal Reserve does not approve or disapprove what we do, they observe what we do. Therefore it is the decision of management to recommends it to the board. We and do that Capital Management. If youre a regulator some place else in the world and see aig doing this, they would have to say, look, if this is going to be something around safety and soundness, the Federal Reserve would stop them. And to me, thats good. So prudential, for example. Good housekeeping seal. Of course. Thats not what they want to do. But thats what theyve accomplished. Prudential said i dont want to be a sifi. Is there a magnitude in terms of size where they should be . Does it matter to you . Like it or not when youre big and you make promises and guarantees for peoples lifetimes, you have to have somebody overseeing that. And if you as an Insurance Company make sure that you have very little resources at the Holding Company. And i think they dont need to be anything. The problem is what they say is, well, i need to have some flexibility as a Public Company bringing money out of the Insurance Companies into the Holding Company for limited Capital Management or whatever. Once youre in the whatever category and its outside the Insurance Companies and youre big enough, you could cause a destabilization. And i believe solvency accounting thats gone on at the Insurance Company level is great. But the fact is any company that has panic and the regulators cant stop the panic you have issues. Now, look, we have examples of where the industry paid a big price. Thats where even just recently we had to cough up more money because of what happened where the money moved from stocks to bonds during the crisis. We have to contribute to make whole but youre not making a whole, but youre giving them more of the money they were promised before they went insolvent. There are examples Insurance Companies didnt do so well. And now, where the world is today, i think sifi is not a bad thing. Run your company the right way and the chances are, youll be fine. One other quick question. Blackrock, apparently. May become a sifi, the government may designate them that. How do you think these should be made . Look, blackrock, the overall business, i dont know if its 4 trillion. Its amazing. Larrys done a phenomenal job there. I think what is the money market industry. You got several trillion dollars of money market funds that are basically guaranteed but not really at a dollar. You can actually break a buck. If one has had one happen, right . And the government guarantee is the only way to stop they stopped in right away. Anybody who has a large amount of money market funds should be designated and thought through because youre now selling, you know, deposit accounts. Right. Principal guaranteed, which is not what the is really there. And so if you want to talk about run, thats a run where you can see several trillion dollars coming out of the market. Like that. And going into a Banking Institution for safety and that i worry about more than people who invest in stocks and bonds who understand theres a risk. Right. Okay. Bob, youre sticking around. Thank you for being here. Pleasure. Its great. Appreciate it. A lot more to talk about today. When we come back, well talk about whether ikea is spying on employees in france. And the last fomc meeting of the year. As we wind down 2013, find out what the market is predicting. First, though, a monday morning deal for you. Avago is buying lsi corporation, this is an allcash transaction, valued at 6. 6 billion. Squawk box will be right back. , you stand behind what you say. Around here you dont make excuses. You make commitments. And when you cant live up to them, you own up, and make it right. Some people think the kind of accountability that thrives on so many streets in this country has gone missing in the places where its needed most. But i know youll still find it when you know where to look. Welcome back to squawk box. Ikea is being accused of providing private investigators with personal info about employees in france. The review of Court Records by the New York Times indicates investigations were conducted for various reasons, including the vetting of job applicants. Efforts to build cases against employees for wrong doing and more. A former employee accuses the company of ordering personal investigations against hundreds of employees in the past decade and the case that caused public outrage in france. So far, no accusations such surveillance occurred in any of the other 42 countries in which ikea operates. Very little of the surveillance yielded information. And ikea that they were able to use against the target. The Court Documents indicate that investigators suspected ikea may have used knowledge of personal information to quell workplace grievances or to prompt a resignation. Its not something that you dont have an ikea. Youve got to put them together. Used to have some ikea stuff. When you were in college . After college. Theyve gone upscale. Kind of austere, isnt it . Used to be. Its not as austere. No, its pretty i thought it was very anyway. Coming up, weve got much more from our special guest Bob Benmosche. Look at that thing unbelievable. Squawk coming back right after this. [ male announcer ] once, there was a man who found a magic seashell. It told him what was happening on the Trading Floor in real time. The shell brought him great fame. But then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their Trading Platform. [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a. Shell. Get live squawks right in your Trading Platform with think or swim from td ameritrade. Welcome back, everybody. In our headlines this morning, the wall street journal reports that the u. S. Exchanges are near a deal for an infrastructure upgrade. At issue is a central piece of trading infrastructure that critics say has been neglected and caused a serious market outage last august. The plan under consideration would establish faster backups for a key part of that markets plumbing known as a securities information processors or s. I. P. S. , consolidate the quote and trade data before it is displayed to the public. When we return, a stern warning from senator john mccain in ukraine yesterday where he was speaking to protesters. That story and other headlines after this. Take a look at the u. S. Equity futures. Triple digit gains for the dow up by about 105 points above fair value. S p up by 10 1 2 coming after a disappointing week last week. Stick around, squawk box will be right back. Clients are always learning more to make their money do more. ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Welcome back to squawk box here on cnbc. First in business worldwide. Weve got Morning Headlines for you. Avago is purchasing lsi corporate. Allcash transaction valued at 6. 6 billion. How did she say it . You werent paying attention. Never mind. Lets do them all. Well get one of them right. She said avago. She said it very clearly. Avago you want to make her look why not go with what you said, nobody at home nows. Now youre enjoying to say lsi. Leesi. The ipo the ipo story of the morning, moncler shares up is that how you say it . I think so. Trading after going public on the italian stock exchange. The stock at this point you can see there is now up 41 . It has an italian coat maker . Beautiful coats. But its italian . It is. And you think they are warm . They look warm to me. I cant imagine theyre as warm as canada. Canada goose. Which is what were wearing. Just purchased by bain, which is what were going to wear in davos. Yours is a black color mine is a gray color. Yes. You going to leave the fur on the i did last time and got in trouble for that. It wasnt real fur. No, it was fake fur. What did you get in trouble for . For having the fur on the coat. Empire state and a revision to productivity hitting the wires, Rick Santelli standing by at the cme in chicago. The numbers . Its one of the early signs. So. 98, close to one, its not as good as the five, six that was expected. But if you think durable goods volatile, this is definitely volatile. Right now, unit labor output down 1. 4 if we look at the actual productivity, that was 3 . So the costs are down 1. 4 , pretty close to expectations in the productivity at 3 is exactly what we were expecting. So no big surprises there. And theres a lot of data this week, especially if youre interested in housing. Lots of housing numbers. Here we are at 2. 85, no great shakes there, but its a great shake we havent shaken the tree to lower rates. Hanging very tough, its going to be interesting today look at the big opening in front of the fed meeting and consider that equities were one of the reasons rates were a bit calm last week because it wasnt a terrific week for equities. But obviously they must have fallen asleep and had that same fairy tale they always have before fed meetings because i dont think by looking at current numbers theyre really taking to heart the notion of the taper. Well have to wait and see, gentlemen. Back to you. Rick, thank you. Right now, lets get over to cnbcs all America Economic survey. Whats most remarkable is that they are not more negative. Steve liesman joins us to talk about that. Steve . Yeah, becky, thanks. Last friday weve watched the retail numbers in the Holiday Spending plans in the economic attitudes. Today, were continuing what we began in september which is really detailed views of americas views on obama care and the economic effects. And as you said, whats remarkable is, yeah, these numbers are terrible for obama care. But our pollsters, democratic Republican Team cant believe theyre not much worse. So september, 29 had a positive attitude. Over the three months, which youll remember, there has been a drubing in the headlines of this program, fallen to 26 . Those who are neutral has fallen down to about 9 . And a slight decline slight increase in those who have a negative opinion. But look at this, the dont knows are up quite a bit. You can see right there. Thats where weve ended up in terms of people who have gone from positive, more into the dont know. Who are these dont knows . An Interesting Group according to our pollsters. A third of the people dont own a home, dont know. Dont have an opinion on the health care plan. 30 of latinos. What they say is this a group of people who would stand to benefit from the obama care plan. They dont know enough to have an opinion on it. So thats something thats going to be ahead in terms of an educational program. How about the negative economic effects. Weve asked people. Have you had your hours reduced because of obama care, any others . You can see, gone up to 15 . When you look at the actual numbers, a 1 percentage point increase in those who say the hours are reduced because of the health care act. How about losing their insurance . Again, very, very little change here in terms of losing insurance because of obamacare. Look at this gain here, up one point. And as we look down on the demographics of this, very Interesting Development that shows maybe there are some people actually being helped by this program. Take a look, now, by income group. And what you see is those in the 30,000 to 50,000 income range, the percentage who got it for the first time went down. But look at this, 19 , we dont know if this is a statistical problem, but a big jump in the under 30,000. We dont know why they got it, it could have been for employment, any other reason. But right now, a big jump in those earning less than 30,000 who got health care for the first time in the past year, guys. Okay. Hes the president and ceo of aig. Bob, we talked a little bit about changes in health care. We were just talking offcamera about it. Your thoughts on what you think is happening whether or not this is a good thing. Look, the fact is Health Care Costs are going up. And having more access and thinking Healthy People will come into the system to pay for the unhealthy is a failed strategy. Think about tort reform, make sure doctors are not afraid to practice as they get older. Doctors moving to states, for example, like texas because of tort reform. Therefore they can practice having moving out of california and other states. It should have started with how do we make the system where its about medicine and not about the costs of protecting yourself if something goes wrong. Doctors are afraid to be sued, they order way too many tests. Might be necessary. Then once weve thought that there at that level, how do we think about access and appropriate access so that you have the right balance. So my sense right now is employers are continuing to do okay. Medicare is still there. But a lot of it is not going to be affordable. And my worry is and its the worry of the medical profession is that youre going to see them cutting back on research. Theyre going to see youre cutting back oncoming up with things that will prevent disease and spend more money on treatment. And while treatments important, i think part of the treatment cost goes to the cost of some other stuff. I think were going to find ourselves in a hole over the next three to five years for ten years for sure. Look, we have 15 million or so people undocumented in america today. The fact is we know theyre here, theyre working here, they would love to get an i. D. Card, pay taxes. And they go to the emergency room. And if you look at the costs of hospitals today, its those people gaining access to the Emergency Rooms paid for by the insurance programs. Argument not only for tort reform by immigration reform. Its essential as we begin to rationalize all of the people that have to deal with the medical system. Look at whats happening in hospitals. Theyll tell you. When you have people who are homeless on the streets, where do they go when theyre in desperate need. They go to the emergency room. Let me ask you a philosophical question. Aig was kind of partnered up with the government for a while. You know how the government operates. And you were it was probably beneficial to aig to have the government partnership, obviously. Or else aig might not exist today. Looking at the size and scope of the undertaking to try to bring more of the whole Health Care Network under the federal government. Is it eventually going to be worth it . Is it going to be doable . Do we want the government so intimately involved in such a large part of the economy . Dont forget that the government didnt get involved in aig. They gave us money and gave us money to prevent the failure of the financial system. And you worked it out yourselves. And got it back to the government. I worry about National Health programs. And if you look at examples whether theyre europe or in canada and so on. An example i use for my friends, its very simple. In the form of yugoslavia, one of my close friends, the former mayor. And somebody in slovenia called him several years ago and said i need your help, they wont treat me because they said the treatment which is under National System is too dangerous for me at 92 years old. Really feel if you can come here and help me, he went there and negotiated and got a doctor to see her. This past year, he just went to slovenia to celebrate her 100th birthday. She lived. But very few people have in that part of the world the former mayor and former member of parliament to negotiate on their behalf for medical care. Even my own mother was put into a hospital on a friday night and my sister was told shed be arrested if she got in the way so she was there during the weekend, had alzheimers. And the expectation was that they needed to observe her. By monday, when the Court Ordered her to return home, her mother had contracted a serious staff infection and almost died. The point is my mother had such strong will, she said, shell die on her terms not the people of massachusetts. And so therefore, my mother lived for two more years. And then eventually died. But, thats whats going to start happening pretty soon here because the cost of the last two years is not affordable. And were going to put people in the medical system in the position of who gets and who doesnt get. Were setting ourselves up as the baby boomers, i worry about that social issue and weve got to make sure weve got the right balance and prevention of treatment. If you want access, everyone will have access and you have to deal with the 15 million that arent here. When you come to the conclusion you just had, which is the problem with Emergency Rooms, doesnt that lead you to maybe not exactly obama care but an obamacarelike solution that keeps them away from the Emergency Rooms . Well, steve, the questions give. And right now what i think hillary had the idea a long time ago. And that is earn has to be in the system. And have to be in the system. Because like it or not, there are 15 to 20 million young people or Healthy People in america that are fine and not willing to invest that kind of money. And if they do, they want catastrophic insurance. So youve got to figure out a way to get everyone in, everyone plays. But if you have 15 million, thats a big number that wont be in the system until they need help. And so right now, the Affordable Care act does not do anything for tort reform and does nothing to do for the people that are here, help support people that need the emergency room. We havent solved it. And theres a rationale because private Insurance Companies have to consider shareholders and they have to pay their ceos and administrative costs are so much more expensive that it just just, you know, you use a magic wand and go from private to public. And its like, oh, look, now its a public entity. Now theres no accountability. Now youve got it run like a dmv, a post office, now being run like amtrak. Anything you save on the short side its shareholder accountability. And ceo accountability on the way down to employees. Thats what makes things run smoothly. And were not going to have it in 20 of the economy right now. I think thats fair. But keep in mind. Thats where liesman. You cover your emergency room workers, you could destroy the whole system in the meanwhile. Nobody has Decent Health care or access to it anymore. Now youve got people covered that were in the emergency room. Hes on a roll. We throw away the whole system for your emergency room. No matter what we do, we have to keep we talk about the shareholders, ceo and the employees. The fact is when you say were going to cover these preexisting conditions, its not going to come out of profits. There arent that many profits to cover all of the things. This is a question of saying, okay, well add it into the pool. You and i and everybody else. Why wouldnt administrative costs be cheaper everywhere . Why even have private capitalism in a sector, steve, when it would work better without the profit incentive . I was just about to say steven and i dont mean to be offensive. You dont mean what . Russia tried that experiment and it didnt work. A lot of places tried it and need to learn it over and over and over. And where is it better why do people it depends where you are, joe. On the income spectrum. Where is it better . I dont think necessarily, its great here if youve got money and you can go to see a park avenue specialist. There were ways there were ways of covering everybody as far as catastrophic goes that could have been done without and the entire political system. The question is more efficient at what . One of the things thats been documented, joe, is the number of people at these Health Care Insurance whose job it is to make sure they dont pay the bill. And thats a big infrastructure in there. After poisoning the entire political environment because of the way it was done in the partisan fashion that it was done, think if it does fall under its own weight after all of this if enough people dont sign up, everything weve gone through and go back to the drawing board and do it incrementally like other people wanted to do at the time . Guys wont be happy then. Weve got more from bob in a moment. But up next, chinas luna rover lands on the moon. That story coming up when we return. I wanna spread a little love this year [ male announcer ] this december, experience the gift of exacting precision and some of the best offers of the year at the lexus december to remember sales event. This is the pursuit of perfection. At the lexus december to remember sales event. Bny mellon combines Investment Management investment giving us unique insights which help us attract the industrys brightest minds who create powerful strategies for a countrys investments which are used to build new schools to build more bright minds. Invested in the world. Bny mellon. 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. [ male announcer ] this december, experience the gift of unsurpassed craftsmanship and some of the best offers of the year at the lexus december to remember sales event. This is the pursuit of perfection. Welcome back to squawk box. Chinese state television released video showing its space probe landing on the moon. The 300pound rover on board separated from the landing vehicle early yesterday, marks the next stage in an ambitious Space Program which aims to eventually put the chinese astronaut on the moon. I mean, they know that we were there like 50 years ago, right . Weve done this. They didnt miss that, right . Who claimed ownership . Of the cheese . We put the flag on. Do we find any interesting . Anything good up there . One of them turns you into a werewolf, according to a comic book i read. Some of its cheese. We have jim cramers reaction to our interview with Bob Benmosche. Plus, a look at whats coming up on squawk on the street. But first, congratulations to peyton manning, Sports Illustrated named the broncos quarterback sportsman of the year. On pace for record of passing yards and passing touchdowns in the season. Its like a curse, right . It has been. [ female announcer ] theres one thing daves always wanted to do when he retires keep working, but for himself. So as his financial advisor, i took a look at everything he has. The 401 k . Insurance policies. Even money hes invested elsewhere. Were building a Retirement Plan to help him launch a second career. Daves flight school. Go dave. When people talk, great things can happen. So start a conversation with an advisor whos fully invested in you. Wells fargo advisors. Together well go far. At the new york stock exchange, jim cramer joins us now. The exchange seems more comfortable. Both of us, once we think our teams are good and they always let us know they are not good, dont they . The inconsistency is maddening. Some of these outfits, we could be from dallas and be willing to hang ourselves. We are not able to generate our easy games. I want to live in seattle, for heavens sake. I would take romo any day as a quarterback. He messes up once in a while but he is good, isnt he . Very good. I dont want romo. I also dont want to play call it. That was supposed to be a running play. I know. Everybody is going to get fired. He works for the redskins. Jerry jones looks like someone you dont want to do ta for. Dan snyder and jerry jones ought to get in a claymation death match and hope nobody comes out. People are more worried about europe than we thought. The market reversed from the manufacturing pmi came out. There is also this undercurrent saying they may not do anything. I think the people are getting concerned they may have to be longer going into that fed meeting do you think that ilsc was a nonessential asset for aig . Do you think this was a good move . A great move. That was more money than i expected. This is a win. At one point, it looked like it was going to be a loss. Bob has done everything right with aig. It is not done going higher. I want to thank him for the American People for what an unbelievable job he has done with a company that should have folded. Jim, you are a darling, thank you. No, problem. You have done it for Share Holders over and over. It is pretty incredible. Thanks, jim. Next week is another week. New orleans, how do you figure any of this . Anybody can lose any time. New orleans going to carolina but brees does bounce back when we come back, we are going to wrap up our special who are with aig ceo, bob bim mo shay. Dow futures up over 110. Nasdaq up by 21. Squawk box will be right back. vo you are a business pro. Seeker of the sublime. You can separate runway ridiculousness. From fashion that flies off the shelves. 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. natalie ooooh, i like your style. vo so do we, business pro. So do we. Go national. Go like a pro. 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We know what it means to serve. Let us get back to our guest host, aig ceo, Bob Benmosche. We do have some time. Can you fix everything for the country in the last couple of minutes . We have to fix immigration. Immigration reform is essential. We have to deal with people that are here and are undocumented. Make sure we know who they are and have licenses and give them access to the Health Care System and have them pay for access to the health care and pay taxes for services. The government has to understand, we have to live within our means. We all have to do this. We have to do it as governments. You cant put off anymore tomorrow what you can do today. By doing this twoyear budget deal, which couldnt do anything for entitlements but it might let us do immigration. At least it gets us out of the way of arguing about keeping the government open. I think thats right. We need to start doing something. And do something thats positive, that starts to take the trend, starts to get us to live within our means. Show stability. So that companies here in this country can invest in this country. Look, im surprised and so many of my friends in europe are surprised that america isnt growing dramatically in manufacturing. Our energy, our energy costs are a third of what you have in europe. So when you consider that advantage, our wage differentials, the low wages of asia, are not solo anymo low an. They are rising. There is some equilibriums. We make our own judgments at aig. We move a lot of jobs to texas from other areas. Stevens point, wisconsin is a good place. They are all in america. We have all these advantages. We have to get businesses to feel optimistic about this country and what they can do. Stop beating up on people who are the financial arm who are feeding the capital into the system and they are not feeding it so much. I would like to see more optimism and more government decisions. You talk about beating up the financial system. You have a column for tomorrow. Bob lived as the whipping boy in some respects for many years. I would argue jpmorgan has sort of become that. What do you make of that situation . The Political Climate for the major part of the population, major being more than 50 is they feel that their situation is not because of them, because of what they have done with their life and the opportunities of their life. It is because of what the banks did to them. We have used that whole sector as the problem. So, yeah, they want jpmorgan to be punished, because they are not doing as well as they thought they might be. I think thats a shame. Thats where we have to get out of blaming everybody for what happened. What happened happened for a lot of reasons and i wont get into it, because it is a half hour to tell you that. We have to move forward to be positive. You also fault the government. If you were jamie dimon, would you fight or settle . I think you have to be pragmatic. You dont want do be i learned one word years ago. I didnt know what puric meant. It is a pretty ugly word. It is an empty victory. What happens is, you can win. Anderson decided, Arthur Anderson decided they are going to take them on and its gone. You have to be careful about what you do and how you take it on. I had to make judgments when i was ceo of metlife where we had to settle with the u. S. Attorney in missouri on a situation that was terribly unfair. If we proceeded, we would have won. You cant indict the subsidiary of a big Insurance Company and get away with it. You know the bobby fuller song, i fought the law and the law won. If youre jamie dimon, what do you tell him to do . I think jamie will do what he is doing, continue to perform well, keep his head down and work hard. Fair enough. Thank you for being here. This is great. Happy holidays. Doing anything fun . Im going to go south. I have my home in florida. We are going to spend time there. You have one there too. And new brof nick. Who is using new brovnik. Actually, my vineyard manager. We have to run. Thank you for being here. Squawk on the street begins right now. Good monday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer and david faber at the new york stock exchange. A big week is taking shape. A flurry of merger activity, potentially the final fed meeting of the bernanke era. If the fed tapers along with the supplies of