Transcripts For CNBC Squawk On The Street 20121205

Our road map begins with a 20 billion deal. Freeport mcmoran getting into the Energy Business making two acquisitions. Plains exploration and mcmoran exploration. Concerns over the u. S. Economy as adp misses estimates. The blame goes to superstorm sandy. Goldman says the party is officially over for gold. Starbucks at an investors conference will add 1,500 stores in the u. S. Over the next five years. Wait until you hear what they said about china. A big day in media. Pandora ceo joins us live later this morning as the stock fell nearly 20 on weak guidance and netflix signs a big exclusive with disney. How much are they having to pay up for that . Lets deal with this big deal. As ive been telling you well see a lot of big deals i was wrong. Here we are. Freeport mcmoran buying not one but two companies. The combined price if you add it all together gets close to 20 billion. That does include debt. Lets go through some of the details. Its somewhat complex. Lets start with bigger of the two deals. Freeports purchase of plains. Approximately 6. 9 billion in total now. Its a cash and stock deal. 6531 shares and 39 bucks a share in cash. That adds up to 50 a share. Thats a fairly significant premium when we look at where pxp, that being the Ticker Symbol in question here had been trading. Lets go to the second deal as well and give you details on that. There the actual cash outlay is last. 3. 34 billion total. Freeport already owns about 4. 5 , 5 of mmp and pxp owns 31. 5 . You get 31. 5 and you get the other 4. 5 and only pay for 65 of the company overall. Theres the Royalty Trust which i wont get into. 14. 75. Significant premium over a stock that dropped dramatically, that being mmr because of the davy jones thing and gulf of mexico, 30,000 feet below the surface. They are a wildcatted r and they missed. Pxp. They picked off bp. Got some unbelievable assets. People scoffed at the deal at the time because people are so interested in eagleford which is onshore. This is offshore. Wow. They bought it. This is september they bought this. Pxp bought bp. The gulf of mexico from bp for 5. 5 million. Bp has a fire sale. Theres been discussion that pxp was having a bit of a funding gap. And that there were talks potentially that they would need to sell mmr stake. Some people speculating. I havent got a lot of background here at this point that perhaps that sparked it. The conversations started with do you want to buy ppr stake. When you have it overnight like this, its probably true. A lot of guys have funding gaps because they are huge believers. Theres a wildcat mentality. I got to tell you, this is fcx saying were a copper company. We could be in places other than arizona because they have trouble in indonesia and congo and who wants to be levered to two places where they could wake up and be nationalized. Most money assets are overseas. This gets them a bigger foot hofoothold in the United States. Bhp did this. Its not the only Mining Company getting more leverage in the energy market. Well keep an eye on shares of freeport. This is not your typical deal that investors immediately understand. What dont they know about the fiscal cliff . They look to be down 10 . Well watch it. As people know in this market, many times the stock price has been going up. Well keep an eye on this. It may be throwing people. What does it say about copper overall and the price of the metal. I worry, by the way, watch energy 21. This is exxi. Another company that bought old properties. One of the things thats happening thats driving this, okay, is that theres new technology. American technology thats able to access oil that the big guys have given up on whether it be exxon given up on energy 21 has or bp and it turns out that these fines may have been bigger so pxp takes advantage of the fact theres new technology. Pxp is a deal maker but ready to trade because Capital Gains taxes are going up. Could be a fiscal cliff. The gulf is hotter than its ever been even a few years ago it was ice cold. Big story in the journal about exploration in this country. Production 15year high. Brand new chapter here. Look at the bottom of your screen. Citigroup is cutting 11,000 jobs. We want to get to Kayla Tausche with more on that. We have a release that just hit the wire in citigroup where those jobs are coming from and a charge that the Company Plans to take in the Fourth Quarter because of these job cuts even though it expects them to generate 900 million in cost savings next year. Interestingly this is the first move toward really slimming down citi by the new ceo. He has a quote in here saying these actions are logical next steps in citis transformation and says theyre committed to strategy that continues to leverage in the Global Banking market. If you go through the list of where these jobs are actually coming from, Institutional Clients Group which is Investment Banking a quarter of the job cuts are going to come from there. My 2013 predictions i said that group would slim down by half. Interesting that they are cutting a big chunk of that group. Global Consumer Banking is responsible for 35 of the cuts and then going on through the other business lines like citi holdings, those are responsible for smaller portion of those jobs. Citi getting smaller. A billion dollars going to be the pretax charge in the Fourth Quarter of next year. 11,000 jobs a big move from the new ceo over there. Carl . All right. Thank you very much, kayla. Were reading through the release right now ourselves. Big strategic move. How many people work at this bank . I feel like theyve been firing forever. Citi did nothing after that great quarter. I think this may be keeping with the idea that citi is an international company. Dont need as much stuff here. Maybe. To the extent Financial Services are being commotitized. Reflective of changes going on overall at Financial Services as you get out of markets that are so transparent now that you cant make the margin that you once again. Therefore you have to focus on the cost size. I dont think people understand how much money they used to make. In a transaction you could hide gross credit. You could say youre buying this at 100 but you are getting to 98. No one is taking two anymore. Those were the ways you really made a lot of money if you were a sales trader. The bulk of the layoffs is from global Consumer Banking. Global consumer. They are talking brazil, hong kong those are growth markets. Thats fascinating. 35 coming from that. And 25 from institutional clients. What the heck are they doing . Are they retreating . The whole thing was to put everybody there. I guess its not a supermarket. They want to be bodega. They didnt think pandas strategy was any good. They wouldnt have fired him. Sorry. He quit. Speaking of jobs, as tough as citi news is moving onto jobs and economy in this country, adp says 118,000 private sector jobs were added in november. Thats below octobers 157. The slowdown in hiring due of course to superstorm sandy. Goldman lowering Fourth Quarter gdp to 1 from 1. 3 and they make a call this morning on gold. Lowering their 12month target to 1,800 saying if you believe growth is going to start to resume in 2013 is not tenable. 11year bull market in gold. I dont know why it would end. I didnt find look. Maybe you think that we go to fiscal cliff and its so deflationary that no one wants to own gold. You could argue that this is a return to the great recession. I dont know. In terms of slowdown in the economy and why inflation is dead. Inflation would be dealt a mortal blow if there was inflation by going over the fiscal cliff. Austerity does not breed inflation. Do you believe that sandy is a convenient excuse here for these adp numbers . I think sandy was terrible. Goldman upgrades Waste Management today. Anyone who has ever been to the giant dumps that Waste Management has, its where you dump dumping is an expensive thing. When youre a contractor and you have to clean up sandy of which theres immense damage, Waste Management gets a cut of everything. I think sandy is gigantic. The ripples continue to come. I think new york is going to be hurt very badly by sandy. Lets move onto starbucks. Starbucks today brewing more than coffee. Worlds Largest Coffee Company announcing during investor day today it plans to open 1,500 stores in the u. S. In the next five years. It plans to add more than 20,000 new cafes worldwide by 2014. Much of its growth coming from china. And of course there are a couple points that investors were looking carefully at and that is what it might say about Green Mountain coffee and its relationship there. Didnt say too much. Were watching gmc jump in the premarket. I know that you were saying hedge funds were watching whether the deal would go through over these allegations that perhaps tea isnt as organic as it is purported to be. They back the deal. They did indeed. They reiterate their intent to close that transaction prior to the end of this year. Any number of Hedge Fund Managers have been sending tea out and ordered it looked at by labs and found theres small amount of pesticides. It didnt go to a health issue but a representation issue and whether saying they were organic or free of pesticides entirely might have been misrepresenting things. They charge a high price for that tea. There were questions as to whether the clause which was in the merger agreement could be invoked by starbucks. During this meeting as part of this overall announcement this morning for this Analyst Meeting they reaffirm their commitment to that deal so those shorting the stock a little bit up and a lot down if the deal were to break this morning recovering and well see that deal should close very soon. That pesticide number that parts per million, this that something that everything has . I would think so. Not like youre drinking roundup. Im covered in pesticide right now. If you were to lick me it looks great. Its a sheen. Doubles as a hair gel. They do say that china will be the second largest market by 2014. Thats been one of their things. Other data point on starbucks is the new 400 gift card, which they will only make 5,000 of. You cant actually buy. You have to go to gilt. Com. Luxury item sold on gilt. Made of steel. I have a i thought they were talking about a 4 cup of coffee. If you go through it in 40 days, is that somehow a wakeup call . Wait a second. I spent 400 bucks on coffee. They are worried about lines. When they add 1,500, theyre worried about lines. Anyone that has seen they dont have concession at airports. They dont manage it. Theres lines. Howard schultz chipotle problem do. They want to eliminate the line issue. They are putting stores up. Schultz mae be a better adder of stores. I want to hear more about india. I think one thing that Howard Schultz said when he was on our show right here was that europe is turning. If europe turns, china is strong. This is not a yum situation. Those revenues are at 50 in 2012. This is a major, major group for starbucks. Now theyll link rewards card to some of these products. You go to the supermarket and somehow that will be linked that reinforces the ecosystem so consumers can get rewards even if they buy starbucks products out of the store. Short of the line, more complex the kitchen can be. The pipeline for new products in years to come. They have great stores. If the stores can handle more, Gross Margins could go up. Remember, the price of coffee has come down dramatically. Has the price of your cup of coffee come down . They dont really pass that on. Its like the prime rate when that gets lower. Rough morning for pandora. Ceo joe kennedy will discuss challenges facing that Company Later this morning live when he talks to Julia Boorstin and live coverage of the president with remarks on the fiscal cliff before the Business Roundtable. Can he convince Corporate Leaders he has the right solution for avoiding the fiscal cliff. One more look at futures this morning on a wednesday. Look like open 28. Squawk on the street is back in a minute. Theres a look at citi. The news on the bank this morning cutting 11,000 jobs. Still working on a percentage of what that is on the overall workforce. They think it will be a pretax charge of about a billion dollars. Savings of 900 million in 2013. Rising to about 1. 1 billion in 2014. Well keep an eye on that name. Very big. Yeah. Shares of pandora taking a hit in premarket trade. Online Music Service beat expectations with Third Quarter results. Ceo joe kennedy says pandoras advertisers are displaying caution about spending because of the fiscal cliff. Hell be on squawk on the street at 11 40 eastern time. And netflix paying for exclusive rights to stream disney movies. A lot of happenings moving stocks in a big way. With pandora, analysts give pandora a pass but they keep putting out bright spots in Third Quarter that did come in better than expected. Mobile monthization. This is the First Company that came out and blamed the fiscal cliff. One of the few companies that would not be worried about the fiscal cliff because of great growth opportunities. Could this be a competitive thing . I use them both. A huge fan of both. Jpmorgan says it doesnt change the thesis. The theme is that they, like others, monthization and mobile continues to do well and you get guidance and morgan says its frustrating. Guidance was terrible. Another disaster. It may be too early to buy pandora to put it in zynga groupon. Groupon, i dont know if you call the deal today. Its awesome. One of three different i can do. You can get two in one day. I dont know i was going to do my job but the opportunity of this is 28 deal for 14. One hour. What do you do for a whole hour . Do you read . Get a message. Pandora is joining that group. Everyone loves kennedy. Thats one of the things. We were skeptical. Contact costs is percent of overall. Netflix has the good news is they got the letter p. Remember robert klein . Songs that begin with the letter p. Here we go. We got a stock that begins with letter p. I remember robert klein. Hes still around. Is he . Last night on mad money, cramer focused on where he thinks you should steer your focus as countdown to the fiscal cliff is on. Find out how he gives you a head start this trading day with his mad dash up next and meet the ceo of the company combining social networking with the power of video and see if it should be the twitter of video. Look at future as we count you down to this wednesdays open. Implied open on the dow up 30 points. More squawk on the street straight ahead. If you think running a restaurant is hard, try running four. Fortunately weve got ink. It gives us 5x the rewards on our internet, phone charges and cable, plus at Office Supply stores. Rewards we put right back into our business. This is the only thing weve ever wanted to do and ink helps us do it. Make your mark with ink from chase. So, the 5. 3liter v8 silverado can tow up to 9,600 pounds . 315 horsepower. Whats that in reindeer power . [ laughing ] [ stops laughing ] [ male announcer ] chevys giving more. 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Are we talking a rush here . These are cheap assets in this country and they are deeper and a lot of other countries are blocking shale and fracking. Not in this country. We havent talked enough about shanghai up 3 . They will let Insurance Companies own more banks but other things are going on too. Thats important. Banks have been dogs. Consumer stocks are up. If you want the cheap play, baird talking about a china truck play and fracking play because they made engines. You think that china is coming back, you can pay for cummins. China warring last night. Gigantic move. They had it coming. Look, china was up big. Its small today versus other news. Think about that. This may be the end of the bear market in china. Apparently the lowest Assets Holding the stock market by consumers. This is huge and its overshadowed by the other bigger news. Well talk more about that in a bit. The special dividend parade marches on. Are companies that wont join in at a disadvantage. Well talk about that. Best buy now on board. The sound isnt sweet this morning for pandora. Stay tuned for a live interview with ceo. 11 40 a. M. Eastern. Having you ship my gifts couldnt be easier. Well, having a ton of locations doesnt hurt. And a santa to boot [ chuckles ] right, baby. Oh, sir. That is a customer. Oh. Sorry about that. [ male announcer ] break from the holiday stress. Fedex office. He loves risk. But whether hes climbing everest, scuba diving the Great Barrier reef with sharks, or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesnt nickel and dime him with hidden fees. So he can worry about other things, like what the market is doing and being ready, no matter what happens, which isnt rocket science. Its just common sense, from td ameritrade. Welcome back. Looking for news after a relatively light news day yesterday, you are in luck. Multibillion Dollar Commission between mining and oil and gas. A major western bank starting to deglobalize. The president will speak on the fiscal cliff. What a day shaping up this morning. Theres a look at s p on the top of your screen. Opening bell in a moment here at the big board. A limited partnership formed by marathon. Celebrating the recent ipo. Over at the nasdaq, a limited Liability Company celebrating the recent listing. Fabulous company for people looking for high yield in the 401 k . They cant use it because of the tax break. Very nice. A couple interesting notes about today. The anniversary of greenspans speech on this date back in 1996 in which the dow closed at 6,437. A classic buy opportunity that was. When it hit 6400 in 09 it was a Good Opportunity too. Yesterday s p closes at 1,407. One year earlier 1,409. Lost two points over the course of the year. It does look like nothing has happened. Its all beneath the surface. Intel will be one to keep an eye on. 6 billion buyback going back to markets to fund that theme that is intact. Obviously there is secular decline of pcs. Raymond james goes from hold to sell. Intel has a Balance Sheet that no one cares if they sell a product that is in less demand. That includes the perception of the future. If they had taken that money and bought arm holdings when it was a 4 billion company they would have apple business and apple is down. Speaking of which, down by 1. 4 . We didnt spend much time on this yesterday. We did dissect this report out from ubs last night. Expressing skepticism about the ability of apple to see more multiple expansion. Pe on the decline since 2009. A steady decline at that. Back in 2009 that was a peak marked by the release of iphone 3gs. A buy rating on it but still he says that apple needs to see more innovation when it comes to phone releases and new product categories and geographic expansion and most notably in china where we make inroads. Were watching the impact being felt in todays session. Yesterday apple was down 1. 75 as the market was flat. Citi is the top s p gainer. Freeport is getting hammered. Biggest s p loser. Well go through this in more detail in the faber report in a bit. Just a huge deal this morning. Down over 16 . A lot of investors investors saying what are you doing . Spending money to move into a high risk area. Pxp and mmr are two deals were talking about. Were seeing a fleeing of that. The pressure here will be endless. Theres a lot more i would expect of people saying big changes happening. Freeport was the play on china. It was copper. It was a copp eper etf seen as proxy for copper market. More liquid than copper etf itself. People in it for that reason now have oil hedge along with it. Were going to go into it in even more deal. Netflix off 1. 5 after 15 move up yesterday. Announcing that Distribution Deal with disney exclusive deal. 300 million. Thats the sum thats being reported. I hear that same number that has not been released by the companies. It will allow for streaming of all disney movies. New and Everything Else on the netflix platform. They are getting paid 30 million bucks a year for it. Questions about net flicks when it comes to increasing cost per content. Can they continue to have subscriber ramp be there. Pressure put on the company about how much they are spending to go international. Yesterday investors applauded it. How much money does netflix have. They are in a situation where they have negative cash flow. Expanding internationally as they said. They need the money. People get excited. If you believe in the business plan, you believe in the business plan. 27 million or whatever subscribers it is and going higher. Lmca. What happened to liberty media. Does it reconsider a spinoff . Already. Its higher. Yesterday it did selloff on the back of this deal. As for disney stars is out there. Questions as to whether that should be consolidated into another company. Disney. After lucas film now this showing their ability willingness to take some risk and do some things differently. Its also the anniversary of walt disneys birth on this date in 1901. Great real estate guy. Disney creeping back to where it was reporting the socalled bad quarter. It is a huge deal. Unexpected of course. This time of year given concerns about the fiscal cliff, there are not a lot of expectations for large m a transactions. Lets go through the details of the deals themselves as you can watch shares down sharply. I want to reset in terms of the deal itself. There it is. Were talking about 6. 9 billion. You add in 25 and cash not worth that now given significant drop in freeport shares that were watching at this point. As i pointed out, you will have selling pressure as a result of people setting it up shorting the shares being freeport in this case. Mmr in which you have ownership by the way of the chairman of freeport. Owns both. Chairman of both. 2. 1 billion is net cash outlay. 31 owned by pxp. Are you following along . Ownership stake as well. How does this smell . 1475. You get 1. 15 units of Royalty Trust. I find it interesting when Companies Make bold decisions to move in different directions. Its not as though they are abandoning the copper business. This is a wildcatter. He always has been. How many times does he come on our show talking about that . I find this is akerson i want to know how much he really loves this deal given the fact that hes mr. Copper. Now were going to talk more about davy jones when it comes to freeport, arent we, at the end of the day . 29,000 feet below the bottom of the gulf of mexico. People felt that was a highrisk project. It sure has proven to be. To be fair, this is a hedge on the business. Energy is the biggest input cost when it comes to mining. If you are exposed to energy and you get it on the upside and get dinged on the other side, its not it has been done before. They owned mmr. Lets not forget that. It was in 1994 or something along those lines. The point is well taken. If you are an investor and your thesis is a pure one about copper and its exploration, you have been thrown a bit. A lot of people who do business in indonesia have said that freeport is challenged in terms of subtle exploration. They do seem to ask for more and more and more and the oar is not as good as it used to be. There are real problems with fcx. I remember when i spoke to the ceo where i said do you want to do business there and he called me a sissy for not doing business in a lot of places that have gold. I would say where freeport is not where you want to bank on. You want to bank on the gulf and not on those areas. In the end the real value has been onshore u. S. Not offshore. Davy jones, the monkeys. Hey hey. Passed away. He did pass away. We miss him. Rest in peace. Lets check in with bob on that note. Hey, bob. China. Finally something from the leadership. We have been waiting for weeks, months, remember, everyone has been waiting for them to try to find where their desks are and find out where they can live and where they can stay and sit down and get used to the furniture and look around and say what are we going to do with the economy. Weve been waiting no comment. We got comment from the party chief who made a speech in beijing and talked about what was going on. He used words like expanding domestic demand. Used words like supporting urbanization. This is what everyone wanted to hear. Those are buzz words. Those are code words for stimulus. Thats what the market is reacting to today. 2 move up in china in shanghai and even hong kong stocks. They moved together. This hasnt happened in a long, long time here. The bottom line is were finally starting to hear from the leadership. They found their offices and things are starting to move and that is certainly very, very good news because now there is talk maybe that well see some more expansion for more infrastructure programs next year and that could benefit things like copper which is what is so ironic. I listened to what you were saying about freeport about whats happening today with freeport in this deal. The street is surprised. Theyre not very happy about it. One of the reasons theyre not very happy about it is that it takes the company back to the 1990s essentially with dual strategy and brings it backward making it harder to value. You have a copper component. Its a copper company. Gold. Its a copper company. On top of an oil and natural Gas Exploration company. The street liked the idea that the company was a copper company. A lot of news recently about the possibility of chinas economy slowly improving next year even with a little stimulus or even without it. And copper may be having a very good year next year. Did not have a great year this year. Everybody knows that. Freeport did not have great year. There were a lot of notes circulating that freeport would do better and china is biggest copper importer in the world. This is part of the chagrin of why the street is reacting so negatively to the whole concept here. I think making it hard to value and bringing it back to 1990s is the issue. The company has had close ties for years with all of these between these three companies. I dont think the street has been particularly impressed here and you can see what the stock has been doing down 15 right now. Back to you. Remember people at home, you want to play copper and you play with etf. You want to play gold. You play with gld. People are in freeport because it was a copper and gold company. You wake up and its an overpriced oil company. Incredible. Lets head to the bond pits. Rick santelli at the cme group in chicago. Rick . Thank you, jim. Obviously we had an adp report and obviously there was some sandy effects, superstorm sandy. It was still a dismal number. We need more job growth. We see that rates moved a bit lower. Lets take a step back and look at a number of different sectors. Its very interesting. If we look at a chart going back to the sixth which happens to be the election on tens, you will notice this is weird. This is a 21st session that were going to be looking to close in a range between 158 and is 169. We were at the 175 mark. That was really a changing moment for treasuries. If you open the chart up to a 20year chart, maybe sometimes some out there forget exactly how low these yields are. Look at that 20year chart. Contrast it with s p 500 chart. What a difference. Obviously the feds program to push people to risk in some ways is working but in ways its not working. Look at flows. Its in treasuries. Not in the equities. Now if we look at the euro, lets look at euro from yeartodate. Doesnt look bad. About month and a half high. Lets go back to 2000. Doesnt look nearly as good. The winning chart on perspective perspective is dollar yen. Look at that yeartodate. It looks like its really going to explode. If you look at a 20year chart, were just dancing around the bottom. Jim cramer, back to you. Drives me crazy that i cant figure that out. Lets check out the latest news in energy and metals. Thank you, rick. Theres been a lot of momentum in gold prices in the last week. A nearly 50 drop in that period of time and we are looking at gold prices right now trading just around the 100day moving average under 1,700 an ounce level. Goldman sachs lowering its forecast for pt the 12month ped with gold prices closer to 1,800 over the next 12 months rather than 1940 level they were previously forecasting. For 2013, the average price is going to be around 1810. Goldman sachs says. It will be 1750 in 2014. Why . They are seeing Growth Potential in the u. S. Outweighing any further fed easing. Thats why they say that this is not the time necessarily to be long gold. Well continue to watch what happens in the Energy Sector as well as we wait for the Energy Departments report coming out at 10 30 on oil supplies and right now we see a pop before numbers come out. The Industry Data that came out showed a big drawdown. Well see what that shows and keep your eye on natural gas. We saw natural gas hitting almost a threeweek low coming up from those levels right around those levels right now so well continue to watch Natural Gas Prices as well. Back to you. Thank you, sharon epperson. Starbucks making a heavy metal move. How much will it cost you. We have the answer coming up. In a little more than an hour from now, president obama will address the fiscal cliff before ceos at the Business Roundtable. Well bring you live coverage including the q a session. As we head to break, look at movers on wall street. Melons oh yeah well that was uncalled for. Folks who save hundreds of dollars switching to geico sure are happy. How happy, ronny . Happier than gallagher at a farmers market. Get happy. Get geico. Chances are, youre not made of money, so dont overpay for motorcycle insurance. Geico, see how much you could save. Tdd 18003452550 this morning, im going to trade in hong kong. Tdd 18003452550 after that, its on to germany. Tdd 18003452550 then tonight, im trading 9500 miles away in japan. Tdd 18003452550 with the new global account from schwab, tdd 18003452550 i hunt down opportunities around the world tdd 18003452550 as if im right there. 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Watch for a firm close above 10 and that will give them hope that perhaps they can stay and go higher at this point. Watching the stock along with other bank stocks off of news from citigroup. Citi laying off 11,000 people. Starbucks card for the 1 has arrived. At least that is what some are calling the new 450 starbucks gift card made from steel. It comes loaded with 400 bucks, cost 50 to make and only 5,000 of them will be sold exclusively through luxury Online Retailer gilt. Com and that sale starts friday in case you wanted to buy one. I think i probably will. Really . 50 bucks to make a steel card . You get 400 worth of coffee. It cost 450. It cost 50 to make the card. Can you get i assume you can get it replenished . Thats a good question. If you want to use it again. Ill probably pass. Steel card is heavy. I was thinking about how much it would weigh in your pocket. Maybe by u. S. Steel. What . They are only making 5,000. Its odd. Lots of questions here. Its not what i would buy the stock off of. No. China cpg, maybe thats the case. Now that we know that they are not saying that teavana is equivalent of drinking a big thing of ortho. Thats quite a marketing slogan. Its not roundup. Its not roundup. Its not fracking food. What is it not . Its not fracking fluid. Its not arsenic. Its all sorts of things its not. Starbucks reversal is now trading lower. When we come back, a new study tracking global corruption says the three cleanest countries are denmark, finland and new zealand. Question is which countries are the most corrupt . Stick around to find out. First announcer coming up, it takes a lot of work to build up muscles especially the ones in your portfolios. We have the guy who will train you just right. Jim cramers six stocks in 60 seconds when squawk on the street returns. But when i was in an accident. I was worried the Health Care System spoke a language all its own with unitedhealthcare, i got help that fit my life. 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Its going to be something to do with 10 00 a. M. , right . For sure. For sure. In addition to that, the White House Team is reporting that it is apparent the gop may not dig in over the fiscal cliff and we may delay the fight. President obama addresses the Business Roundtable and that could be critical. David has an exclusive interview with ken moelis. Back to you guys. Lets get six in 60. Six stocks in 60 seconds. Yesterdays news overshadowed by many things. A fantastic quarter. We knew it would be household formation buying on weakness. 17 straight. Number of quarters where they beat it. This was a major miss. Rbc does not like clf. This is again china. I dont like it either but china is coming back. Naz 100 taking on facebook. Money is an index to the naz 100. People paid for this in premarket. It was a mistake. Citi thinks limited can do a special div. Limited has a lot of cash. Gap said no yesterday. Hurt the stock. Goldman starts utx neutral. Great company. A slap in the face, carl. Boom. Slap in the face. You got that right. Whats on mad tonight . I have been featuring these investment look, the etf. Ive been feeling they know america. I have to know how bad america is. They do the southeast. Great company. Weve not talked a lot about the cliff today. Its been kind of refreshing. Cover of the Washington Post today. Why doesnt the market care, right . I think the market doesnt understand to some degree. Theres a whole new school of thought that says it would be good. Another school of thought that says it doesnt matter that much. They created the cliff to be able to drive us into recession to force compromise. Its rise above. To think that this wont mean anything is just i dont know. I think its silly. We do have some other things to balance it out whether it is china today or freeport. Im stunned by freeport. Come on squawk on the street and tell us why you think this is a decent deal. No stranger to our airwaves. He should call in right now. Why is this a good deal for shareholders . You have destroyed your own stock. Well see you tonight, jim. When we come back, were moments away from potential market mover. Breaking news on ism services is coming up and factory orders plus the president as we said talking to Business Roundtable about fiscal cliff. Hell take questions at 10 50 a. M. Dont miss that. Back in a minute. Welcome to chevys yearend event. So, the 5. 3liter v8 silverado can tow up to 9,600 pounds . 315 horsepower. Whats that in reindeer power . [ laughing ] [ stops laughing ] [ male announcer ] chevys giving more. This Holiday Season, trade up to get the 2012 Chevy Silverado allstar edition for 0 apr financing for 60 months plus 2,000 cash allowance or get a total value of 9,000. Welcome back to squawk on the street. October factory orders stronger than expected up 0. 8 of 1 . Looking for a goose egg unchanged. In the last month it did strip away 0. 3. Now stands at 4. 5. The big number november ism nonmanufacturing. 50. 47. Much better than 53. 5 we were looking for. How does it stack up . A high for the year is 57. 3. The low, 52. 1 in june. You can see it slips in there nicely at 54. 7. A pretty decent number for the largest swath of the economy, the service sector. Back to you. Thank you so much. Lets get a quick check on reaction on the markets. Dow added to gains a bit here looking at a gain of 48 points. 49. S p roughly flat. 14. 07. Almost exactly where it was a year ago today. Nasdaq down 15 points being dragged in some part by apple which is having a tough time this morning. Road map for the next hour goes like this. Citi cutting 11,000 jobs. A massive cost cutting move. Well get more details on that in a moment. Investment banks paralyzed by the fiscal cliff. Well find out what it will take to get deals going once again. We expect the president to speak on the fiscal cliff before the Business Roundtable. Well bring you his comments live. Citigroup cutting 11,000 jobs taking a billion dollar charge. Kayla tausche has more. Investors see this as a positive. A big move for a new ceo who is just getting his sleeves rolled up. The cuts will span across nearly all of the companys divisions but biggest slice of the pie coming from global Consumer Banking cutting 6,200 jobs there. The cuts are broad. Nearly 2,000 jobs cut from the Institutional Clients Group including Investment Banking six times the layoffs reported to take place in the securities business earlier this month. Jim cramer said earlier that it feels like citigroup has been cutting jobs forever but thats because the bank has downsized by a third since peak employment in 2007. Most of that cutting took place after he took the reigns. It will have 261,000 jobs once these cuts are done. The 11,000 announced today is a big number but it represents just about 4 of citis worldwide workforce. Investors see it as a strong sign they will improve the banks operations but hes preparing a bigger Strategic Plan for the bank. Weve seen the chairman of the board play a very strong role in operation of citi. They are in discussions about what to do from here. This is an early stage thing that he can get done. All right. Thanks on that. Lets get more on this mornings data and look ahead to the jobs report this friday. Lets bring in brian westbury. Brian, always great to see you. Melissa, great to be with you. What are you expecting from fridays report and will it be a decent read even on the economy given sandy . Yeah. Adp today coming in at 118 helped us raise our forecast from 60,000 private sector jobs to 75,000. And sandy is the big culprit here. Uncertainty in some Business Investment slowdown. Bottom line is todays report helped us raise our forecast. Were looking for a better number on friday. The cliff is most peoples focus at this point. Weve seen some impact of the cliff on hiring but in terms of whether or not it goes into january, how much does that impact the budgets for next year on the part of corporations in your view . We heard moynihan say it will impact because people are get together the budgets at the beginning of the year for the following. It has already impacted us. No doubt about it. We had 12 quarters in a row of increases in Business Investment and then in q3 we had a dip. We may have another little one in q4. I think businesses are holding back partly because of the election, which is now passed obviously. And the fiscal cliff. I still believe that were going to end up kicking the can down the road. I think theres lots of pentup demand in the economy so were not going to go into a recession. In fact, i think next year we could see some acceleration. One of the key ways to see this is just to look at auto sales for november. They surged to 15. 5 million. Every time we have a dip in demand because of sandy or something else, we come back. This economy is super resilient and i think well be able to go over the cliff or go through the cliff without having a recession. I hope youre right. My concern is that you are absolutely wrong. Actually the economy is slowing to stall speed and markets could correct badly on the news moving forward. We learned this week that manufacturing contracted in november for the first time in three months. We had analysts on the program talking about the channel checks indicating softness for a second month and today goldman has downgraded growth in the Fourth Quarter. They believe well grow in the last three months of this year. That is stall speed at a time when the fed is buying 85 billion of assets a month to keep the whole thing moving. My concern is that suddenly the market wakes up to this and we have a major correction. Sure. You know, weve called it the plow horse economy. It certainly is not a racehorse. A plow horse may move slowly but it keeps going. It has big sturdy legs. Thats what we saw today in the productivity data. They are keeping the economy growing. I listened to what you just said and i heard similar things for the last 3 1 2 years whether it was dubai and bp oil spill or greece or spain or the deleveraging or foreclosures. Any of these things that were supposed to take us out and yet we keep moving. I think the fiscal cliff is another one of these. Let me ask you about the timing then. Deutsche bank had a note out yesterday where they suggested that Central Banks have bought us a six months of time on the markets. If pmis do not improve, will we see growth . What would you say to that view . I mean, im Pretty Simple on this. I do not believe and we could debate this probably all day that quantitative easing itself has helped the economy at all. Banks put that money right back to the fed as excess reserves. It hasnt boosted money in the economy. I dont believe that weve seen a false rally or sugar high. I think the growth in the economy and growth in the markets has been driven by productivity and profits. I think its real. Its slow. Its real. Were going to have a weak Fourth Quarter. I believe most of that weakness is because of sandy. Were going to pick up later in the quarter. Well have 2. 5 to 3 growth next year. Its going to surprise people which by the way is why weve been surprised for 3 1 2 years. Everyone is waiting for the next shoe to drop. The double dip. It hasnt come. I think 2013 is going to be more of that same story. All right. Good to speak with you. Good to see you. Thanks a lot. Ahead on the program, well talk about the fiscal cliff in particular and whether it is really tying the hands of Corporate America as some argue uncertainty is now halting decision making. Well talk about deal making in a postfiscal cliff landscape whenever that might be. Pandora shares sliding over 20 after Third Quarter results did fall short of the estimates. What does ceo have to say . Pandoras president and ceo joe kennedy will join us at 11 40 a. M. Eastern. Nnouncer ] at scottrade, you wont just find us online, youll also find us in person, with dedicated support teams at over 500 branches nationwide. So when you call or visit, you can ask for a name you know. Because personal Service Starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. Our support teams are nearby, ready to help. Its no wonder so many investors are saying. [ all ] im with scottrade. Sven gets great rewards for his Small Business how does this thing work . Oh, i like it [ garth ] svens Small Business earns 2 cash back on every purchase, every day woohoo so thats ten security gators, right . Put them on my spark card why settle for less . Testing hot tar. Great businesses deserve great rewards [ male announcer ] the spark Business Card from capital one. Choose unlimited rewards with 2 cash back or double miles on every purchase, every day whats in your wallet . Heres your invoice. What is concerning on a technical basis is that 50day moving average is downward sloping and could soon cross the 200day moving average to the downside which could be of course a debt cross. Ubs had a note out yesterday questioning the multiples. You can argue that it is cheap. It has been on the decline since 2009. What is the secret here . Since 2009. After you have Product Announcement you get decline and then you get corporate announcement. A steady pe decline since 2009. That was a release of iphone 3gs. More expensive stock during that time . Decline. You are looking at yeartodate gain of almost 38 . Three to four times what s p has done this year. Thats true. All in context and it could be people taking profits ahead of potential tax change on Capital Gains. Thats true. Jim cramer would argue theres a bull market somewhere. Today we learn that turmoil around the world is breeding corporation. Scott cohen is back at hq with more on that. Theres always corruption somewhere too. The anticorruption Group Transparency international put out rankings since 1995 measuring perception of corruption in the public sector. 176 countries rank zero to 100. Cleanest countries in the world denmark, finland and new zealand. They scored 90 out of 100. Here are dirty ones. Somalia, north korea and afghanistan. They scored eight points for what the organization calls a lack of accountable leadership. Transparency International Says it looks at a variety of independent data to calculate the ratings. Greece fell. How did the u. S. Do . Not so great. 19th place out of 176 countries scoring just 74 points out of 100. Canada, germany, hong kong did better. It looks like improvement over last years 24th place finish, it has changed methodology this year so year to year comparisons dont work. Fighting corruption has not been a top priority in this country although the financial crisis is focused more attention on the issue that accounts for improvement. A couple of oil rich countries that we profiled earlier this year are among the most corrupt in the world. Ranks 139th out of 176 countries and the tiny west african nation whose forestry manager finishes 163rd. You can find out more about them in an encore showing of our documentary filthy rich tomorrow night at 8 00 p. M. Eastern on cnbc and more about this years rankings of corrupt countries at cnbc. Com. Interesting, scott. Especially when you look at some of these companies that are now embroiled with foreign practices act. If you were going to do business around the world, its either play by some different rules or dont play at all. There is the global crackdown on that. You can see from this that corruption is still an issue and even though we have this foreign corrupt practices act which will become a much bigger player in the u. S. Next year, it still is a mind field out there. How does this get calculated . Under foreign corrupt practices act if a u. S. Company pays a bribe to north korea, wherever, does it get counted against them or the u. S. . This index is ranking of perception. They look at a bunch of different indexes out there where bribes are paid the most and things like that. Its more of a perception thing as opposed to who is actually suffering from the penalties. Its a different area where it is trying to reign some of that in. As i said, theres been a coordinated crackdown around the world of antibribery law in the u. K. And a big run in russia. Corruption is everywhere. Why isnt the United States further up the ranking . Part of the problem and United States is always ranked around this area below top 10 . What they say is a lot of it has to do with just corruption not being enough of a priority. They say that the financial crisis changed some of that and people are starting to Pay Attention and citing a poll that 80 of americans believe that the financial crisis was the result of some public corruption. So its more in the consciousness there and that affects the perception. It still has a long way to go. Fascinating. Thanks very much. Still ahead this morning, weve seen a wide range of companies unloading special dividends this quarter. Have the nonissuing companies now made the wrong move. Well take a deeper dive into that and talk about names that have yet to declare one and what it means for them ahead of the fiscal cliff. Try running four. Ning a restaurant is hard, fortunately weve got ink. It gives us 5x the rewards on our internet, phone charges and cable, plus at Office Supply stores. Rewards we put right back into our business. This is the only thing weve ever wanted to do and ink helps us do it. Make your mark with ink from chase. I always wait until the last minute. Can i still ship a gift in time for christmas . Yeah, sure you can. Great. Wheres your gift . Uh. Whew. [ male announcer ] break from the holiday stress. Ship Fedex Express by december 22nd for christmas delivery. [ male announcer ] tis the season to discover the kid in all of us. Enjoy Free Shipping and great values on your Holiday Shopping from l. L. Bean. To provide a Better Benefits package. Oahhh [ male announcer ] it made a big splash with the employees. [ duck yelling ] [ male announcer ] find out more at. [ duck ] aflac [ male announcer ]. Forbusiness. Com. Ha ha that makes tv even better. If your tv were a space captain, zeebox would be an alien, first officer. Just like an officer helps a captain explore the universe, zeebox helps you discover what shows are most popular, where the biggest buzz is, or what the stars are watching now. Download zeebox free, and let your tv go where its never gone before. As we continue to try to solve the fiscal cliff the thing we always continued to look at is our economy wanting it to continue to grow. Today well have small family owned businesses in there talking about ways that we can protect the family business, continue to grow and at the same time make sure we solve this fiscal cliff. Each and every day as we walk the halls you continue to ask the question. We want the answers solving fiscal cliff. We put be a offer on the table. The president now has to engage. I think the next 72 hours are critical. He sits back and continues to play politics, that will give you answer of where were going. This is an opportunity for this country to lead. This is an opportunity for the president to lead. As fiscal cliff negotiations and debate continues, i think its important to remember that washington doesnt have a revenue problem. It has a spending problem. Under this administration under president obama we have seen record deficits and a record debt accumulate and yet he keeps demanding that we raise taxes those are some of the Republican Leadership in the house as you can see responding to the white houses response to their counteroffer of a couple days ago as a reminder the president is going to speak to the Business Roundtable at 10 50 this morning. We think hell take some questions even as gop leadership is meeting with Small Businesses as negotiations or lack thereof over the fiscal cliff continue. Did you see that the nbc White House Team is reporting the belief that perhaps the republicans dont have the fight in them anymore to really dig in now on the concessions on the way which is good news if you dont want to go over the fiscal cliff but they are dispelling the real argument for later on. Fuel line inspections being ordered for boeing 787 dreamliner. Phil lebeau has more on this story. A rough day yesterday if you are tracking whats happening with the dreamliner. One of two important stories that broke yesterday. The first one involving a dreamliner that had to make an Emergency Landing. It was flying from houston to newark, new jersey. It had to turn and it had to make an Emergency Landing in new orleans and united crew reporting mechanical problem. They delivered the dreamliner two weeks ago. Boeing Technical Team is right now in new orleans investigating the problem along with united teams. Theyll have an update later today hopefully. Boeing coming out and saying that it expects faa to mandate what its been pushing its customers to do for some time requiring fuel line checks for the dreamliner. Checking the installation of two connectors and half of the dreamliners have already been inspected according to boeing. We expect the faa to make this a mandatory requirement later on today. By the way, almost 40 dreamliners have been put in service in the last year. Boeing recently increased dreamliner production from 3. 5 to 5 per month. Production is still on track to reach the goal of ten per month by the beginning of 2014. No reaction today on shares of boeing. These are the teething pains that go along with ramping up production of a brand new airplane and there are going to be people that look at this and say we have more problems with the dreamliners. Others say this is natural when you have a new airplane. We expect an update on the new orleans plane later on today. Guys . All right. Phil, thank you so much for that. Want to get more on this rollover that were seeing in shares of apple during the session. Want to bring in collin. Great to have you with us. What do you think is behind this decline . There are two factors. I would even say three factors. First off, its clear were not going to get a special dividend. The clock is running out for apple to part with some cash to shareholders. Reality is thats too bad. With 120 billion even though 80 is offshore, you have 40 onshore. Thats more cash than any Company Needs to have. It would have been the right thing to return some of that to shareholde shareholders. Thats part one. Data is out showing the tablet market is growing leaps and bounds. Apple has its share. You are seeing that android and competitors are kriincreasing a well. Strength for apple but also strength for the competition. And then whether or not it has not been confirmed but theres talk about margin requirements. That may be contributing to weakness as well. Margin requirements, you said . Thats right. Correct. Okay. Lets be clear. You have been more of a skeptic on apple than your cohorts on the target at this point . Apple is what it is. Its one of the best names out there. We understand why people want to own it. We think that those people who think were going to have this rocket ship ride to 1,000 may be mistaken. Margin pressure is coming in. With market capitalization this large, the expectations are quite high for the name. We like to collect premium on the name at these levels. Right. Meaning sell calls . You want to get into the name and you could sell a put and take proceeds and buy calloffs. And then what will tip you into the buy rating . If you have a 600 price target and we trade at 557 or so, thats a decent upside. It is. And so we would like to see where the stock settles in the next few days. There is some upside to our target here. Again, i dont see any new piece of information coming out of this name. No tv product. No significant upside to our estimates. Its going to significantly move the needle for apple. Im interested that you havent mentioned nokia in any of your reasoning for the move that we have today. Nokia has rebounded very strongly today from a very low base on the launch now of this lower price phone specifically for china mobile. Do you think the competitive threat might be shifting for apple and that might also be why we have losses today . Thats an excellent point. One of the big Growth Drivers for apple is china. Theres a lot of expectation that when that iphone finally comes to china mobile then the rocket ship ride is back on. There are tons of subscribers. To your point, the fact that nokia is getting into china mobile first before apple, that is significant. Plus if you look at the entire chinese market, you see the android penetration has been growing fast and strong over the last few months and apple is in danger of becoming a smaller minority player in that market. Colin, we want to be careful on the rumor about the margin requirements. Other analysts on street are knocking it down. I dont want to revisit that too much. There is an article suggesting that component orders may be down and sources say 20 . Aga is the First Quarter going to be a valley here in the near term . Look, its very unlikely that your going to see any significant new products being released at least in terms of the refresh. We have new ipads. We have new iphones. Weve had the computer lines refreshed. Whether or not they bring out new products to help fill that void, the market tends to be forward looking and right now apple looks to be soft. In terms of the market requirements, i have no information out there. Thats something thats floating around that traders have been talking about. Well have to see as that news develops. Tomorrow on rock center tim cook is going to do his first tv interview with brian williams. Do you think that he has the confidence of the market as ceo . Thats a great question. Listen, tim has some amazing attributes on what hes done on the supply chain is genius. Is that the same as product genius and marketing genius that steve jobs had . Well have to evaluate that over the next year. He has taken apple to be the largest listed market Capitalization Company on any u. S. Exchange. Now well see what he can do over the next 12 months or 14 months to find new markets and to continue growth. All right. Colin, thank you for phoning in. Euro retreating from a sevenweek high against the dollar on poor demand for spanish bond auction today and indeed it must be said weaker than eurozone retail sales figures. Andy, welcome. Where does the euro go from here . Hi, simon. Theres a couple things that make me worried about the euro today. We made a higher high and are making a lower close. As we get into this week, we have only one more week before things turn over as far as risk goes in the Financial Markets. Im worried about the fiscal cliff, yes. Negotiations look ugly. Also im worried about u. S. Stocks once they start to go exdividend and costco and disney on december 10th will be poster children for what happens to a stock after it pays out its dividend. So what im interested in is selling euro on the unemployment data that comes up. Im taking an event like unemployment day and trying to sell it on a rally. I want to do that around 13175. Profit down around 12975 and stop loss at 13250. Again its just this week. We have decent risk. Most of the risk on trades will hold including euro. Next week not so much. Not least because the fed is meeting and may substantially weaken the dollar on its announcement on qe or are we not as sensitive on the greenback to that at the moment . I think thats priced in. Whats not priced in is what happens after the exdividend date for stocks. I think they rallied back from their postelection blues because so Many Companies have issued new dividends. The fact that you were talking about apple and then not payi i a dividend and thats why they are selling it. Several companies have issued special dividends. Disney and costco especially costco with that 7 dividend is really important. Thank you very much for that. Andy bush from bmo Capital Markets. Be sure to catch money in motion currency trading on fridays 5 30 eastern and if you want more education about currencies, go to currency class money motion. Cnbc. Com. A bigger than expected slide in the past week down by 2. 4 Million Barrels. Crude supplies fell by 2. 4 Million Barrels. 7. 9 Million Barrels was the rise in gasoline inventories. Then we are also looking at fuel supplies that were up by 3 Million Barrels. Up by 3 Million Barrels. We are looking right now at a selloff in the oil market. Were Still Holding above the 88 mark for wti crude futures. Were also looking at lower prices for gasoline because of that huge build we saw and higher prices for heating oil. A proxy for diesel fuel and reflecting the distillate fuel supply number. Bigger builds than were anticipated for gasoline and a bigger decline than was expected for crude supplies. Send it back to you. Thank you so much. When we come back, deal making in a postfiscal cliff world. Faber has an exclusive interview with the ceo of Investment Bank moelis and company. More in just a moment. Announcer the Holiday Season is here and that means lots and lots of photos with a certain someone. Now you can display it in style with a picture frame signed by the entire squawk on the street gang. If you can guess fridays nonfarm jobs number its all yours. Tweet your guess and dont forget hash tag nail the number. You have to be at least 18 years of age to enter. Sorry, kid. For all of the official rules and details, go to cnbc. Com. You have until 8 29 a. M. Eastern this friday morning. Good luck and say cheese. Melons oh yeah well that was uncalled for. Folks who save hundreds of dollars switching to geico sure are happy. How happy, ronny . Happier than gallagher at a farmers market. Get happy. Get geico. Chances are, youre not made of money, so dont overpay for motorcycle insurance. Geico, see how much you could save. You can stay in and like something. [ car alarm deactivates ]. Or you can get out there with your family and actually like something. The lexus december to remember sales event is on, offering some of our best values of the year. This he pursuit of perfection. An hour into trading. Some of the stories were squawking about at 7 34 on the west coast and 10 34 on wall street. Big news out of citi. They will cut 11,000 jobs around the world. A blockbuster deal in the Energy Sector, Freeport Mcmoran will acquire plains and then lastly goldman lowering price for gold in 2013 citing growing Downside Risk to the metal. Slashed to 1825 an ounce and sixmonth to 1805 an ounce. As you heard carl discuss, citi the latest to cut the workforce. 11,000 jobs being eliminated. Is that trend here to say . Ken is a student of Financial Markets and the Financial Services industry. In fact, hes built recently a 600person Investment Bank in that industry. I always love talking to you about these things. Lets start there. We see citi 11,000 job cuts coming from the Global Consumer bank to a certain extent. Is it something we should anticipate seeing time and again from these big Financial Services companies . I do think the world has changed in a way that people underestimate for the large Financial Services company, david. I think one of the major things happening is the internet. We talk about it in every other industry but Price Transparency and availability of information is changing Financial Services in a fundamental way like it has every other industry and i do think youre going to continue to see firms struggle with that. In what way . You started at drexel quite some time back. There was one guy thats different these days. Are you talking about things like that . Going back there i wish you would stop with how long ive been in the industry. Thats it. The fact is 30 years ago, yes, in high yield bond industry it was one person. It wasnt one firm. There was a lot of margin when you have price information that is asymmetric to the rest of the world. Fast forward to today. What is a bigger commodity than an interest rate, currency swap, dollar bill. And pricing is available on everybodys iphone. You can call up the price of a junk bond that traded yesterday and know within four decimal points. My information advantage over you, your access to information is as good as mine. Like all commodities that requires firms to take a very different view of the size they should be. The margin is coming out of these parts of the business. Were talking now about fixed income where we have seen significant margin compression but also as a result of higher capital requirements, regulatory issues of course there, less risk taking as well. By the way, happened in common stocks too. We went from commissions of 20 cents a share to ill pay you to trade on my exchange. So weve had very big price compression on almost everything where information is a big source of margin. What that leads to is scale and i think its not different for people who dont understand what were saying. Its not much different than the Electronics Firms that are getting showroomed. The big box retailers are getting what we call showroomed and im not sure that the big Financial Institutions dont have the same thing going on where you can shop, compare pricing and then the consumer can take lowest cost. That requires then people to go either one of two directions. Scale. As you become a commodity, lets look at the other industries. They scaled up. Size matters. Volume matters. Thats why you see a big move to large, large scale providers of processing transactions. And the alternative would be to do what i did five years ago which is go much more toward nonscale relationships, judgment, experience, thats what were trying to provide. I think youll see the firms divide. Right. So you have no interest in getting into the Capital Markets game in a big way. You are happy with providing that judgment, that experience at Moelis Company through advice. We want to be in nothing thats scale orientated. The players in that field have scaled up over 100 years. Its hard to compete there. I think we want to stay at a scale where we want to say in anything where relationships count. I think relationships have been undervalued now. Why do you think that . Because as you move toward scale. All of the firms at that disappeared in early 2000s through mergers were on their way toward scale and when youre on your way toward scale, relationships tend to be undervalued. I do think firms heading toward scale are making the right decision. Its also very hard to accomplish both. Which creates an opportunity for Companies Like your own. 600 people. You have gotten big and quickly. We have offices in hong kong and singapore. Are you too big too fast . Is there a risk here perhaps of trying to be too many things too quickly in terms of around the world . Just the opposite. The world is global. I have no right to go to a client and ask them to get more information. I want to go to a client who wants my advice and say youre not losing. If theres information you need in mumbai, sidney, australia, i can find that for you. I didnt want to ask any client to lose any benefit of having a large scale information source. In order to cover clients i want to cover, i need to be able to provide them information. Will your company continue to grow at the rate that it has and can you continue to do so . Do you have access to enough capital to do that . You cant grow at the rate were going to continue to grow. We have grown as fast as facebook did the first five years and i dont think its sustainable to grow that fast. You dont need three offices in mumbai but you need one. Theres only so many places well continue to grow but not at the same rate. We do have 14 offices around the world. Youre not going to go public any time soon, right . We have no plans. What about money from japanese its an alliance. We have an alliance. Japan is a very important market for corporate activity. Its very difficult market to access. So we became partners in order to access their clients and bring our expertise to them and their expertise to us. In two minutes we have left, lets talk about the current environment. What are you hearing from a lot of the Senior Executives that are asking for your advice or if youre in a board room or chatting with them especially in terms of the fiscal cliff and concern about making Big Decisions or lack thereof and not putting money at it. The interesting part is talk about the fiscal cliff is the talk about the talk about the fiscal cliff. I dont think people are as concerned as the level of chatter that goes around. I think the chatter is more than the concern. The fiscal cliff just happens to be a preset deal on a scale of one to ten. Its a deal that is possible as outcome. I think what the country should hope for is that we come up with a better deal. Business wants the rules. I understand why business is very much do a deal. Do a something. Because a business then can make their plans around that. If a marginal tax rate goes up too high here, theyll put a plant somewhere else. You can make those decisions. They want to know the rules. Know the rules of the road. Theres an america out there. Theres a country. The rules we put in place have to take into account a lot more than just lets get a deal done, any deal done. Im very hopeful that we get a principle deal done and what thats good for the growth of america for a long period of time. Cant have any conversation with you without asking about m a. Merger and acquisition activity has been fairly muted. 2013 better than 2012 . I think so, yes. Its not just m a. What a good Investment Bank should do is solve financial problems for people. With things like the fiscal cliff coming up and a radical change in tax rates and possible future growth rates, i just think there are going to be lots of decisions that need to be made. Lots of interesting decisions that arent just m a. Corporate boards need advice on that. Im optimistic it will be a decent year. We hope to visit you during that year. Thank you. Back to you, melissa. News for investors out there. Lets send it to Mary Thompson for a market flash. Cnbc obtaining a notice that the company is raising margin requirements for apple to 60 from 30 effective at midnight tonight. One thing we want to note is cnbc has spoken to other people on the equity desk. They say they are not planning to follow the raise of margin on requirements for apple. We want to note that core clearing will issue a statement on this later. Back to you. All right. Thank you very much, Mary Thompson. Still ahead, live coverage of president obamas remarks on the fiscal cliff before the Business Roundtable. Can the president convince Corporate America that hes got the right solution for avoiding the cliff . Well bring you live coverage in just a few minutes. [ male announcer ] when it comes to the financial obstacles military families face, we understand. At usaa, we know military life is different. Weve been there. Thats why every bit of Financial Advice we offer is geared specifically to current and former military members and their families. [ laughs ] dad dad [ applause ] [ male announcer ] life brings obstacles. Usaa brings advice. Call or visit us online. Were ready to help. Or that printing in color had to cost a fortune. Nobody said an allinone had to be bulky. Or that you had to print from your desk. At least, nobody said it to us. Introducing the business smart inkjet allinone series from brother. Easy to use. Its the ultimate combination of speed, small size, and lowcost printing. Santelli is back after a day off. We see the holidays all around us. There are a lot of seasons. Some people have alarm clocks that wake them up with birds. Some people have alarm clocks that wake them up with outdoor sound. Heres the sound i listen to when i wake up. Do you hear that . Do you know what that is . Thats a scissors. I think that Edward Scissorhands out to be sent a videotape or cd to every republican and democrat and the president so they can learn what cutting is all about. Okay . Let me get this straight. If were going to spend one of these and were going to try to project how many we spend, if we do this and we cut it up, okay, thats a real spending cut. Thats what we need to do. We need to take ben franklin and were talking trillions and theres a lot of bens and we need to cut them. Hear how that sounds . Heres the problem that i see. We look at issues and then we talk about savings and then we go to a camera and we being all politicians and talk about the tenyear savings. We spend about 80 billion of these, 80 billion, on two wars. For the most part other than how many troops were going to keep in afghanistan, theyre over. So if you are spending 80 billion a year on two wars and they end, youre not spending 80 billion a year so 80 billion a. Should you say youre cutting the deficit 800 billion . The real issue is this. If were going to get serious about negotiating, okay . We can have programs that arent on the books anymore now, i understand that were not spending that money, but when you come to the table to rise above for a compromise, dont bring me air and say, see . Im not spending this, so its a savings. Its only a saving when you hear the scissors cutting through it, carl. So people need to get real on both sides of the aisle and address real, not baseline, real savings by cutting spending. Back to you. Rick, is that real money youre cutting up down there . You know what . Even though this is one of the last bastions of capitalism, those were not real Benjamin Frank lynn. So, see . Im ready for negotiation. Put me on the team. I just did a lot of cuts that mean nothing. Boy, how much did i save us over ten year. Thank you, rick. More santelli in the third hour. Still ahead, of course, live coverage of president obamas remarks on the fiscal cliff and the negotiations before the Business Roundtable. Well bring that to you live in just a few minutes. [ male announcer ] citi turns 200 this year. In that time thereve been some good days. And some difficult ones. But, through it all, weve persevered, supporting some of the biggest ideas in modern history. So why should our anniversary matter to you . Because for 200 years, weve been helping ideas move from ambition to achievement. And the next great idea could be yours. With the internet streaming space, hey, there melissa, were looking at netflix bouncing around based on comments from the chief content cipher but the stock took a bit of a hit when he said that netflix has to plans to cover the costs of the disney deal. Nevertheless causing the stock to come off the best levels of the day. Back to you, carl. The president is about to speak in front of the Business Roundtable. Good morning, john. Good morning, carl. Hes talking to the Business Roundtable. You can expect him to highlight one aspect of the discussions, that the Business Roundtable has championed. John edge her, who heads the roundtable has suggested a fiveyears fix to the debt ceiling issue. You know, we have these periodic debt limit fights in washington, one in 2011 caused a downgrade in u. S. Credit and created a real catastrophe politically for the republican party, for president obama as well, and so jo engler has talked about a resolution that would last for five years. The republicans dont want to go along with it. The administration has proposed a permanent fix. Dont expect the administration to get that in the end, but at least it gives them something to talk about with this probusiness group, carl. The republicans spoke just a minute ago, john boehner saying his fellow republicans do in fact, as we watch the president work the room ahead of his remarks, they do back his opposition to raising rates outright. This chatter that the coalition is fraying, how complicating is that . The question is whether it frays enough to caught a fundamental shift in strategy. I think at the end of the dahl the republicans will give on higher rates. The question is when . Does 2 happen before december 31st . In which case republicans and conservatives would argue republicans are agreeing to a tax increase. Does it happen after january 1st when rates will have already risen . And if they cut them to 37 top rate, then republicans could say, hey, we just cut taxes. Thats really the question. The president has made an argument that it is not practical to get all the money he wants from merely closing loopholes and deductions. Hes said Different Things in the past. Hes acknowledged significant amounts of money can be raised through closing loopholes. Can you get it done quickly . By the end of the year . That is an ongoing fight thats taking place both publicly and the positions that are being struck in meetings like this that the president is having in meetings that hes been having with governors, business, labor, that sort of thing, but alsos in private discussions as well. This particular meeting is getting off to an awkward start. We understand theres some audio difficulties. Hes working the way around the room. He spoke with the theres ursula burns, of course. Youve got to the style, when the p. A. System cant to go around like this as they work that out, well take a breech commercial when we have a chance. Dont go away. 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Risk includes possible loss of principal. Maybe you want to incorporate a business. Or protect your family with a will or living trust. And youd like the help of an attorney. At legalzoom a legal plan attorney is available in most states with every personalized document to answer questions. Get started at legalzoom. Com today. And now youre protected. I heard you guys can ship ground for less than the ups store. Thats right. Ive learned the only way to get a holiday deal is to camp out. You know weve been open all night. Is this a trick to get my spot . [ male announcer ] break from the holiday stress. Save on ground shipping at fedex office. [ male announcer ] break from the holiday stress. The audio issues are fixed. Thanks for your leadership, jim. Originally my team had prepared some remarks. They had always get nervous when when im out there on my own, i never know what i might say. Given the dialogue december and spent most of our time having a conversation. Let me begin by saying all of you in this room are not just Business Leaders, not just ceos of your companies, but also economic leaders and thought leaders in this country. I recognize that all of you have an enormous investment not only in your own companies, but in the wellbeing of america. There are a lot of patriots in this room, people who care deeply not only about the bottom lines, but also the future of this country. You have shown that over the last four years. Weve gone through as difficult an economic period as weve seen in most of our lifetimes, and weve emerged not yet where we need to be but we certainly have made progress. Weve made progress in part behalf outstanding management and product activity, gains and efficiencies and competitiveness that you have been able to achieve in each and every one of your companies. I am passionately rooting for success. If the companies in this room are doing well, Small Businesses and mediumsized businesses up and down the chain are doing well. If the companies in this room are doing well, folks get jobs, consumers get confidence and were going to compete around the world. There is progress in keep sectors. Weve seen housing finally bounce back. Consumer confidence is high as its been. Many of you have experienced record profits or near record profits, and have money where youre prepared to convenience. Either obviously global will you the economy is soft. Europe will be in the doldrums for quite some time, asia is not charging forward in some emerging market, maybe a few years ago. I think what many of you have told me is that everybody is looking to america. Because they understand that if were able to put forward a longterm agenda for growth and prosperity, broadbased here in the United States that confident will not just increase, but well get the whats holding us back right now ironically is a lot of stuff thats going on in this town. Many of you are trying to see if we can break will you the logjam and get things done. Im here to tell you nobody wants to get this done more than me. I know you have a lot of briefings, but let me describe where the situation is right now. What also the challenges are. I campaigned over the last year on the idea that we need to make sure that this economy is gr growing providing layers of opportunity all right. Theres the president ease video signal coming to an interruption. I think we have the president s feedback. Here he is. Okay we have video. I dont know if thats a problem here or in washington, but i guarantee some audio guy is in very, very big trouble. My budget reflects the balanced response, and ive shown myself willing to make tough decisions when it comes to government spending. Because despite my reputation i think there are efficiencies that can be gained, some programs used to work and just dont work now, as a consequence with working with democrats and republicans last year we were able to cut over a trillion of spending. The largest cut, by the way, in Discretionary Spending in history. So were prepared to make some tough decisions when it came tough to when you look at whats needed for us to stabilize our budget, stabilize our deficit to gdp ratio, then every credible will follow. We cant just do it on spending cuts. There has to be a balanced approach in which we also are bringing partly because our revenue levels are as low as theyve been were trying to decide if this is worth sticking with. Its clearly not the president s mike that is turned on. You can sort of hear what hes saying, but not very well. As he makes headlines well bring them to you. So well get to some reas is lynn jenkins, republican tiff from kansas currently serving on the house ways and means. Good morning, congressbottom. Good morning independents do you expect this to be a hostile audience or not . I have not been informed of what group the president is with, so i cant really speak to what hes saying right now. Earlier we had, of course, the Republican Leadership, majority whip mccarthy said the next 72 hours, in his words are critical to the negotiation. What is so special about the next few days . Well, the American People are hurting. Were running out of time, as long as we have uncertainty across this nation, the American People are going to be concerned about what were doing here. So the next 72 hours are critical. We have, as republicans an offer on the daschle to the president a balanced approach, one that puts revenues on the table, which he demanded, but also addresses the spending side of the ledger, adding some of our autopilot spending programs, the ones that are the drivers of our debt. Clearly the white house wants to see you raise rates. Even the speaker said theyre coming from the rich why does is it matter so much if its through a limit on deductions or outright marginal rates . Whats the difference . Well, our point exactly. Revenue is revenue. We have concerns with the president s approach to raising rates. Number one, raising those top rates gets you eight days of federal spending. Thats hardly a solution to what ails this nation. Its just a distraction. In addition, the ernst young study that was done on his proposal said the tax proposal will cost the American People 700,000 jobs. Thats the wrong direction to go. Finally as a cpa i will tell you if its just raising rates, theres no cpa in this country worth their salt that doesnt already have a plan to plan around those higher rates. Republicans, on the other hand, have proposed revenues that actually work toward solving whats wrong with the retch side of our ledger. Thats a comprehensive fundamental overhaul of a very broken and antiquated tax code. Congresswoman, appreciate your time very much. I think they might have fixed the audio issues back where the president is. Lets listen once again to the president. By closing deductions and loopholes for high earners. We would have to eliminate or severely cap the charitable deduction. Folks in this room, you guys are not only ceos i cant imagine a person here who doesnt sit on a number of notforprofit boards, university boards, hospital boards, in your respective communities are supporting an entire infrastructure that is the glue that holds or communities together. So the notion that somehow were just going to eliminate charitable deductions is unlikely. What that means is that any formula that says we cant increase tax rates probably only yields about 300 to 400 billion realistically, well short of the revenue needed for a balanced package. So what we have said instead is lets allow higher rates to go up for the top 2 . Thats includes all of you, yes, but not in any way thats going to affect your spending you are your lifestyles or the economy in any significant way. Lets make sure that 98 of americans dont see it a single dime in tax increases next year, 97 of Small Businesses dont see a single dime of tax increases next year, and by doing that alone, we raise almost a trillion, without any adverse effects on the economy. Lets combine that, then, with some additional spending cuts, and some longterm entitlement reform that can get us to a number close to 4 trillion, which stabilizes our debt and our deficits relative to gdp for at least a decade, perhaps more. Thats our plan. Thats what we presented. The holdup right now is that Speaker Boehner took a position i think the day after the campaign that said were willing to bring in revenue, but not willing to increase rates. I just explained why we dont think that works. Were not trying to were not insisting on rates out of spite or out of any kind of partisan bickering. Rather because we need to weve seen some movement, and i think theres a recognition that maybe they can accept some rate increases as long as its combined with serious entitlement reform and additional spending cuts. If we can get the leadership on the republican side to take that framework, acknowledge that reality, then the numbers actually arent that far apart. Anotherway of putting this, we can probably solve this in about a week, its not that tough, but we need that conceptual breakthrough that says we need to do a balanced plan, thats whats best for the economy, thats what the American People voted for, thats how were going to get it done. Let me make one last point and then ill start taking questions. There have been reports, and these are not necessarily confirm confirmed, maybe some of you have more insight on this than i do, that perhaps the residence go ahead and let the middleclass tax cuts get extended, the upper income tax cuts go up, otherwise we dont get a deal, and next year we come back and the thinking is the republicansless have more leverage, and well try to extract more concessions with a stronger hand on the debt ceiling. I have to just tell you, that is a bad strategy for america, its a bad strategy for your businesses, and it is not a game that i will play. Most of you were involved in discussions and watched the catastrophe that happened in august of 2011. Everybody here is concerned about uncertainty. Theres no uncertainty like the prospect that the United States of america, the largest economy that holds the worlds reserve currency potentially defaults on its debts. That we give up the basic notion that the United States stands behind its obligations. And we cant afford to go there again. This isnt just my pin but the pin of most folks in this room. When i hear some on the other side suggesting that to resolve the possibility of a perpetual or a debt ceiling crisis, that there is a price to pay, well, the price is paid by the American People and your businesses, and the economic environment worldwide. We should not accept going through that. You know. John engler, el and i philosophically dont agree on much t. You know im just being honest about john. Hes a great politician, but he originally comes from the other party, but john is exactly right when he says that the only thing that debt ceiling is good for is a weapon is just to sdroib your credit rating. So i want to send clear message to people here. We are not going to play that game next year. If congress in any way suggests theyre going to tie negotiations to debt ceiling votes and take us to the brink of default once again as part of a budget negotiation . Which, by the way, we have never done in our history until we did it last year i will not play that game, because weve got to break that habit before it starts. So let me just say weve got one path, where we resolved this fairly quickly. Weve got some tough spending cuts, we reform our entitlements, have modest revenue increases, you do what you do best, innovate, invest, hire workers, make profits, do well by your shareholders and grow america. And we then have an open, running room next year to deal with a whole host of other issues like infrastructure, tax reform, and immigration reform, that will further make america inc. Competitive. Thats one option. The other is to engage in a selfinflicted series of wounds that will potential push us back into recession, and set back this country after all the work we have done the last four years digging ourselves out of a hole. I know the choice i would like to make. I think the brt can be helpful . Making sure that everyone makes the right choice. With that, let me take some questions. [ applause ] yeah, i think the presses they probably have enough there to all right. At caveat to all the executives in the room that the media is reporting this and listening in, of course, the president making a couple headlines, longly, john harwood, not insisting on higher rates in his words, because of spite, but because they need to raise some very often, and divorcing from the debt cele dug prettying that they would try to use it as leverage. John, your thoughts . Reporter well, as we discussed before the president came in, he was piggybacking on the suggestion that a longerterm fix to the deficit. When he said absolutely, as he did, that im not going to play that game. That suggests hes holding in reserve the option that have discussed in 2011, the president said orb concluded he didnt think he had the Legal Authority to do it. And risk a court fight. It sounds to me like the president is suggesting that would be preferable to going through the same sort of turmoil we went through in 2011, but here again you have the president trying to marshal the political capital, campaign on a pledge to seek higher rates as a partial solution to our longterm fiscal challenges, trying to mobilize business support with the idea that the support of Business Leaders like the brt would get to republicans in congress who were simultaneously as you know, having their own conversation where eric cantor was talking about the president s obsession with higher rates, which of course he responded to by saying not that, just need the money. You mentioned the public discussion about this, isnt the bottom line that the president is speaking now, boehner will talk to liesman later today, theyre talking to us and not to each other . Reporter this is one of the murky things about this process. Yes, they are all talking publicly, there is no facetoface negotiations between the principals. Staff continue toss work on this. There are contacts at the staff level. The question is how much progress is being made at the staff level. Ive gotten different opinions on that from people in both parties who have been involved in these budget fights in the past. Some say, yeah, we yield to do more work while the public posturing went on. Others say that actually there is some stuff going on, so its difficult to see. Often in negotiations of this kind, carl, it looks like theyre going absolutely nowhere, and then something pops and you have an agreement. Right. John, appreciate you being there today as we watch the president speak. Well take a quick break. When we come back, david faber with more on this incredible deal. Tonight our guest, thomas sargent. Nobel laureate in economics, and one of the most cited economists in the world. Professor sargent, can you tell me what cd rates will be in two years . No. If he cant, no one can. Thats why ally has a raise your rate cd. Ally bank. Your money needs an ally. You can stay in and share something. Or you can get out there with your friends and actually share something. The lexus december to remember sales event is on, offering some of our best values of the year. This is the pursuit of perfection. Back to the big deal today out of Freeport Mcmoran. Our david faber has been digging. Freeport mcmoran essentially saying were no longer just digging for gold and copper, we are also an oil and gas explorati exploration. Lets give you some of the details. Well have more on that in just a moment. As for the details of the two acquisition, when you add in debt to post a 20 billion in cash and stock, first lets start with mmr, mcmoran exploration. That operates largely in the gulf of mexico, and its expected to provide a large longterm lowcost source. 14. 75 a share in cash, a huge premium. Thats one reason why youre seeing significant discount taking place in freeports stock prices. You also get 1. 15 units of Royalty Trust, a 5 overriding royalty. It may be a long shot, maybe not. Deep do you there underneath the gulf of mexico, some are saying, hey, that would be the real winner here, that royalty truth. There was a belief on the part of that pxp needed to potentially address a bit of a funding gap, might have been interested in selling wharf a 31 stake they already owned. There it was a 50 deal in cash and stock before we got todays significant decline in freeport shares. The ratio is about 0. 6531 at 25 a share in cash, but again, carl, some questions here, because significant divergence in strategy, though a couple shareholders say they werent completely blindsided by it. . Terms of where we are in price, this is where we may want to move. This does seeps to be an outoutliar. David, thank you very much. David sticking around a little later today. George osborn slashing the growth forecast. Pandora hitting a sour note. Ceo Joseph Kennedy will join us in less than 30 minutes to get his plan for that Company Going forward. Dont go away. Or that printing in color had to cost a fortune. Nobody said an allinone had to be bulky. Or that you had to print from your desk. At least, nobody said it to us. Introducing the business smart inkjet allinone series from brother. Easy to use. Its the ultimate combination of speed, small size, and lowcost printing. But when i was in an accident. I was worried the Health Care System spoke a language all its own with unitedhealthcare, i got help that fit my life. So i never missed a beat. Thats health in numbers. Unitedhealthcare. [ male announcer ] tis the season to discover the kid in all of us. Enjoy Free Shipping and great values on your Holiday Shopping from l. L. Bean. Customer erin swensoning bought so, im happy. Today. Sales go up. Im happy. It went out today. Im happy. What if shes not home . together she wont be happy. Use ups she can get a text alert, reroute. Even reschedule her package. Its ups my choice. Are you happy . Im happy. Im happy. Im happy. Im happy. Im happy. Happy. Happy. Happy. Happy. together happy. I love logistics. A lot to watch this morning t we tend to ascreen the halt, the spanish didnt get away with what they wanted at the auction. Details are to come. Retail sales are down in the eurozone, 1. 2 month on month, that is the move, at the same time although we had a better reading on the positive the recession, and it isnt coming out anytime soon, lets have a look at where we are on the data coming out of spain on the spanish bonds in particular, as they failed to get away at that auction, with the demand they wanted. You see the yield in britain, the people sold out at the margin. Now clearly, you know, the rally its a small part, with the question might be if this is the top. Certainly you saw money moving to the safer area of the bond market, for example, france, so the prices rose in france and it pushed the yield below 10 . There you go, pushed the yield on the tenyear below 2 . That rally to the core, france and germany, as you might expect. As far as stocks are concerned, generally were stuck below horizontal resistance on the dow jones stock. If we break above that, it could be significant. . We fail it could be significant. Earlier in in china on the comment we got from the new head of the communist party, you have the best gains in three months on the chinese market. That fed automatically into the miners in europe. There has been some selling into it, but still broadly they are still higher. I do want to mention a couple corporate stories. Apple is clearly down, margin requirements are being raised on some of those for some people who are extending apple shares, but nokia has had a very good day today. Its launched two phones, one priced at 249 to bring it light slid lower price for most people. Most importantly launched a phone in participation with china mobile, which is which works with a local technology there. That could be a big dealing moving forward. Carl, back to you. I want to get an update on energy and commodities, certainly a big torrie . M a. Hey, sharon, a big story in m a, but what were seeing in terms of the price action has more to do with what we saw from the Energy Department just about an hour ago. That was a huge increase in fuel supplies and gasoline supplies in the last week. The big jump we saw in refinery, definitely back in action across most of the country, maybe the east coast a little bit more time needed there, but were seeing a big increase in refinery wrunz, that helped the plunge in gas and in prices. Gasoline futures dropping here significantly down more than 1. 5 , that was the biggest drag in the Energy Complex in the morning, and were also looking at the flip side of it, natural gas. Natural gas prices getting a bit of a rebound here after falling to a threeweek low. Theres still more bearishness ahead, according to technical analysts at barclays. In terms of the metals market, a mixed picture there. We are looking at gold, thereon, and of course, Goldman Sachs out today lowering its price forecast, saying were goinging to 1800 for gold, not the 1940 they were expecting saying the growth in the u. S. Will overshadow ha the fed will be doing, so thats something to keep an eye on as we continue to watch weakness in the gold market. Back to you. Thank you, sharon. Bob pisani, with a look at whats moving. Its all about one name. Apple is weak, the volume is strong, ive got a lot of questions on it this morning, a lot of things floating around. There isnt just one thing associated with it, but i think there was an at t investor today, the ceo of at t mobility gave figure foss overall smartphone sales, and implied that overall smartphone, not just for apple phones, but the whole product line might be roughly in line with the same quarter of last year, in other words Fourth Quarter sales might be the same as last year. I think thats a bit of a disappointment to some people. Theyre extrapolating maybe iphone sales are not as strong. There also may be disappointment off special different. Finally tablet sales have been strong, but maybe not as strong as some people are thinking. Remember, apple overall, still nice gains from where we were at the beginning of this year, so people got longerterm investors who goat gains still in apple, so a lot of things floating around with apple. Really on fairly wide divergence. Materials have been weak throughout the day. We see tech on the down side. Weve got altera and nvidia, oracle is also weak today. Consumer discretionary, weve had weakness in retail recently. Nordstroms down about 2 today, Energy Stocks are up, partly on some positive developments in the e p space. And financials are having an outperforming day. Thats a very interesting development. Let me comment quickly. Dave can give you his thoughts on this mcmoran deal. Its one of the reasons that energy is outperforming the rest of the area. There you see freeport down 13 . Folks, thats a huge decline. Its not just because of the saudi arabia triage thats going on. They of course are buying mcmoran, and you can see the moving to the up side. This is the problem ive heard over and over. Why do we have to spend a 46 premium and 73 premium to get these stocks if investors were interested, why do they have to do that . Obviously the man wants to continue drillings, but it complication the valuation, now its just a company out there with copper as well as oil and gas. The emp companies on the up side. If you look at copper, hasnt been a great year for copper, but a lot of people would say china would recover next year. Here as the irony, now they have complicated it all. This was a tough one, caught a love the people by surprise. Shares of citi meantime soaring on news of is the company as massive layoffs plan, what does it means for it is shareholders and broader sector as a whole . David at the present time rone is over at jmp security. Good morning. Good morning. Surprise or no . Im 23409 surprised citigroup was a company that had a lot of bureaucracy and in a lot of different parts of the world, a lot of different products. Certainly some ability to trim fat. I think the Investment Community had been looking for that for some time. They have xhitled ard for the years, but this was a bigger one, about 5 of the workforce. Its not about your kind of company, but where we are in the global kind of economy and a lot of things the president talked about. This is failed Political Leadership in the western side of the world thats really causing corporate ceos to not want to transact. Of course citi touches corporate so you see it as a function of uncertainty, or does this have more to do with the economic realities around the world . Well, again i think part was city, but i think the other half is macro. You know, certainly if we resolved our cliff and if the eu can definitively sustainably, you know, resolved its sovereign debt issues, you know, i think the sun will come out and Capital Markets activity, lending activity, transactions, all the things that citi does i think will certainly have a good amount of pentup demand. That said, youre not a big fan of the stock, underperform, 26 targets, you think its overbought. What do you prefer . Bank of america a at 10 today . No, i dont like the bulk brand market at all. I think the market is underestimating the macro risk says. I dont have a lot of confident neu situation or in our politicians here in the u. S. , either. I think the current returns, 7 for citi, for example, are reflected in the stock, if we didnt have think big risks to the down side, i think the stocks would be right. Its very binary, as you know. As i had mentioned returns could improve of the the banks have been releasing reserves, other nonnormal things. So i dont think returns really under the new Regulatory Regime get beyond 10 in the future. Given that, david, is citi doing the best then with what they have . I mean, is the idea that the thesis of leveraging, is that still intact or is todays move a reversal of that in any way . If you go beyond the macro issues, and lets say even rates go up, you know, i think being in asia and the emerging markets is really the more advantageous way to go. The u. S. Markets with regulation, i think the regulation is going to, particularly in Consumer Finance, is almost notforprofit at this point. I think youll see the big banks get out of the Consumer Finance and i think it would be a tough business. So i think citi relative to a b of a or even jpmorgan will ultimately be the right pick. Theres a lot working against them. David, thank for your time today. Thank you. Pandora is trading down over 17 after thirdquarter earnings. Revenues did fall short. And tell us what is in store for the coming months. Thats in just a moment. Twins. I didnt see them coming. I have obligations. Cute obligations, but obligations. I need to rethink the core of my portfolio. What i really need is sleep. Introducing the ishares core, Building Blocks for the heart of your portfolio. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Is what drives us to broadcast the worlds biggest events in 3d, or live to your seat high above the atlantic ocean. Its what drives us to create ecofriendly race tracks, batteries that power tomorrows cars, nearly indestructible laptops, and the sustainable smart towns of the future. At panasonic, were driven to make what matters most better. 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[ to the tune of lullaby and good night ] aflac aflac [ male announcer ] find out more at. [ duck ] aflac [ male announcer ]. Forbusiness. Com. [ yawning sound ] coming up on halftime, is there a bottom insight . The streets biggest bear outlines the major risks to your money in 2013. And facebooks entry into the nasdaq 100, is it now a mustown stock, or does this mark a top . Two trader, one big debate, at the top of the hour. Twitter has show characters instagram has the awesome filtered photos, so now what . How about video in thats where tout comes in. A platform that allows users to shoot 15 seconds of video updates stay connected to not only friends and families, but celebrities, too. Tout is breaking new ground in the social world, so now is the time to share your perspective of the world, no matter where you are. Businesses are using tout, too. Tout has partnerships with Major Media Companies including cbs, news corp. , es espn and nbc universal. Michael, good morning. Thanks for having me. I still remember shaqs first tout, thinking this is really moving the ball forward. Hes now on your advisory board. How has growth been . Tremendous. Weve been live for 18 months exactly. During that time weve had over 90 million visitors come to the platform. Over 150 million tout updates and traffic has continued to grow about 20 to 30 per month putting us on track to be one of the top individual i dont sites. So now youre layering in corporate use . We are. For example, using the wall street journal. This is a great camp of how we are generating revenue. This is a business part of our business model. If you think about why tout exists. Theres this whole notion. They said to see it and hear it. This is the show me movement, dont tell me. What it means is businesses, media companies, basically all kinds of consumer perhaps will be fors to retool and rethink. Were providing them the tools to do that. Wall street journal, which is an incredible example. They took 2,000 of that you are journalists, everybody from journalists embedded in syria, to people covering fashion in europe. And then journalists, 5 to 7 paragraphs are now captures quick tout video updates. So what that means for wall street journal is theyre now engaging the users in a much more rich, immersive way. Extra disk akind of print or textbased business. A lot of online publishers, print companies, newspaper companies, et cetera who are just still adjusting to chapter 1 of the digital movement. Its taking them in a print metaphor. A Premium Service now . Its a Premium Service. It launched in september with the wall street journal. We also have the women we, one of our big partnerships, Premium Service into their television programming, the 12 Million Viewers a week, digital as well as the live event. Over the last six, eight weeks weve had Companies Like up, broadcast tv companies, networks, capable, print, all kinds of folks. Is the Premium Service, can i subscribe as an individual, a consumer . You can as a consumer, though it has such industrial strength kind of tools, im not sure you can use it. Though i know you have a huge audience, but realistically, its realtime analystics, the ability to advertise and monetize in these realtime screens, so its big tools to turn this into a business. Where do you see the company in ten years . And how youll approach Capital Markets . On the Capital Markets, its a good question, we raised about 15. 4 million to grow to this level. Were still a relatively small company, 34 people in san francisco. Over the next three to five years, we believe this visual web movement that a lot of people are writing about, talking about, will fully take hold. It will be a dominant force in how all media companies, even individuals are connecting and communicating. Be think theres a tremendous by essentially being the plumbing that these Companies Need to profit. Why 15 seconds, before i let you go . Everybody asks that. So this whole visual web content is all about realtime conversation and engagement. Much like twitter created 140 characters or less in text, we created 15 seconds to keep the conversation flowing. Michael, thanks for coming in. Pandora slipping 17 on this revenue shortfall last night, the first interview with the ceo, after the break. Americans believe they should be in charge of their own future. How theyll live tomorrow. For more than 116 years, Ameriprise Financial has worked for their clients futures. Helping millions of americans retire on their terms. When they want. Where they want. Doing what they want. Ameriprise. The strength of a leader in retirement planning. The heart of 10,000 advisors working with you onetoone. Together for your future. Julia joins us this morning along with pandora ceo joe kennedy. Good morning. Thank you, joe kennedy, for joining us. Joe, the big headline is the fact you lowered your guidance and blamed the fiscal cliff. How specifically will it affect sure, in our fiscal quarter, the current fiscal quarter ends january 31st, so were you havely sensitive to the mix between what they spend in february and march versus what they spend . January and were watching closely, but we have concern that the q1 spending may be unusually backweighted into february and march this year. But arent you providing the kind of accountability and targeting that advertisers increasingly need . I mean, wouldnt advertisers, you know, when theyre strapped for cash, be shifting out of businesses like newspapers into pandora . It seems like you should le thriving despite whats going on. And absolutely, if you ever look at the numbers, we had a terrific revenue we just reported. 60 year on year, and even at the reduced revenue guidance for the Current Quarter, were looking at just under 50 year on year growth, so still tremendous progress, and particularly in the mobile world, where we looked to continue the trend of mobile revenue growing faster than what we used to, which is something investors have been paying very close attention to. I mean, youre discussing all sorts of good things, but you cannot deny whats happening on the stock chart. The stock is down 17 , is this really a fiscal cliff issue, or are there bigger challenges, competition, your incredibly high cost structure . If youre looking at the competitive question, look at the results we just reported again, reported over 62 million americans listen to pandora just in november for the first time, we represented over 7 share of all radio listening in this country. Clearly the american embrace of pandora personalized radio continues at an extraordinary pace, so i think we did reduce guidance. I think its prudent because of the unique situation we have were sensitive to the mix add in january as opposed to february and march. But many analysts would say user costs are prohibitively high. More than half of your revenue goes toward the licensing fees. What would you do if legislation to lower these costs is not passed . Whether legislation is passed or not, we believe the rates we pay are unfairly high, and we will participate in an arbitration that begins in 2014 to set the rates for 2016 through 2020. We are already preparing for that and we very much look forward to making our case. But is this model a model that can work, you need to look for other Revenue Streams if youre facing half of your revenue were a leader in mobile, which is said to become another 15pluses billion market. I think were on a good track there. The monetization continues to improve. With Revenue Growth outpacing i think theres very clear fundamental progress. We indicated to investors that we expect that progress to continue next year. Now, this Current Quarter you probably will see a new competitor in the form of a streaming Music Service from itunes taking on pandora headon. How will you compete with the apple behemoth . Only apple knows what apple is going to do. What were focused on every day is delivers the best personalized Radio Business in the world. For seven years weve done that. Our share of Internet Radio has only grown over time. Were going to continue to focus every day on delivering the absolute best personalized radio experience. Great. Joe kennedy, thanks so much for talking to us today. We really appreciate it. Carl, back over to you. Julia, thank you so much. The starbucks card for the 1 has finally arrived. At least thats what theyre calling this new 450 card made from real steel. 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