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For everyone except those earning 400,000 and above. Thats above the 250,000 threshold that the president has been demanding for months, but it is still far from speaker John Boehners request of 1 million. A source familiar with the talk says this is by no means the final offer for the white house. The move by the president was welcomed, albeit with some reservations. We will talk about the latest developments in just a few minutes. In the meantime, the Global Markets seem to be taking note of the optimism. You can see right now that those dow futures are up by 54 points. This comes after a decent rally for the markets yesterday. S p futures at this point are up by better than seven points and the nasdaq futures up, as well, by about 17. European shares rising. Germany is up, the ftse is up, the france, the cac in france has turned slightly down. But, again, this is a marginal loss of about three points. Most of the major asian stock markets were higher overnight. And among the catalyst here, signs that chinas recovery is gaining traction. Sources say that the bank of japan will ease Monetary Policy this week and consider adopting a 2 inflation target no later than january. Policymakers are seen responding to pressure from the incoming Prime Minister there. Shinzo abe for stronger efforts to beat deflation. In the meantime, Indias Central Bank kept Interest Rates on hold yesterday ignoring pressure to reduce borrowing costs. Policymakers said they were shifting the focus to reducing the economy and that raises the odds of a rate cut as early as january. Andrew olson, over to you. Ubs reportedly nearing a fine of up to 1. 5 billion. The bank is close to finalizing a deal with regulators according to the financial times. About three dozen bankers and senior managers are said to face criminal or civil charges. And its official this morning, tend of an era for aig. Details emerged during squawk yesterday. Today, the u. S. Insurer rates 6. 5 billion from the sale of its remaining stake in aia group. And boeing is raising its dividend by 10 . It will resume share purchases in 2009. The Quarterly Dividend of 48. 5 cents a share will be reportedly on march 8th. Boeing will not join the list of Companies Giving dividends this month to avoid the possibility of tax increase earlier in the year. And then we have a federal judge denying requests by apple to ban u. S. Samsung smartphone models sales. The request came after a judge said samsung illegally used Apple Technology at that time. Finally, Morgan Stanley will pay a 5 million fine to massachusetts for violating securities laws. Morgan was the lead underwriter for facebooks ipo, massachusetts topped that a top Morgan Stanley banker had improperly coached facebook on how to disclose financial information. Wasnt there Something Like a hand written script . There was a handwritten script to the analyst. Lots to talk about. Walmart. Joe, what have you got over there . Its malfeasance. I think its a are you ready to use that word . The headline is bribery. Tell the audience what were talking about. The front page article on the New York Times is titled bribery aisle. Its about walmart and the mechanics cal can business that was aggressive and creative and a corrupter offering large payoffs to get what the law otherwise prohibited. The times reports that the retailer wanted to build a store in an alfalfa field in a towns main entrance which was barely a mile from some ancient pyramids. The towns elected leaders had prevented the new zoning map that would have prevented it. Walmart officials decided to undo the damage by a well played bribe and the guy drawing the map drew it a little differently. Thats exactly what happened. They found the old map and the new map. They found a disk in a shoe box showing the differences. It was incredible. The zoning map would not become law until it was published in a government newspaper, so walmart reportedly arranged to bribe an official to change the map before it was sent to the newspaper. Walmart issued a statement saying the allegations are part of that companys Ongoing Investigation of the last New York Times piece. That wasnt a denial. No. But we knew about this. And then, you did this did you when you were calling cerberus to get background on the piece, they knew you were going to write the piece. Is that what happened . Well, let me tell you what happened and we can go through some of the back story. Cerberus saying this morning, overnight about 2 30 in the morning that it is immediately going to bin selling its investment in gunmaker Freedom Group in light of last weeks School Shooting in newtown, connecticut. It did have a stake in Freedom Group. It has invested 751. 4 million as of the end of march. Cerberus acquired bushmaster last year. And my column today focuses on the number of private equity firms that have major stakes in gunmakers. Colt, by the way, is another that is one of them. Mid ocean owns a piece of bushnell. Doesnt make guns, makes everything but the gun itself. What do you mean, the components . If you want a 25 round magazine loader, they have it. If you want a military grade night vision, they have it. If you need laser guided things, thats what they make. But if you look at the numbers, the sales of a lot of these gunmakers, Freedom Group in particular have been rising sharply. And, you know, the day after and the automatic rifle, thats where the growth is coming from. Absolutely. The day after president obama was elected, you saw a sharp jump in sales. I should say as of last night when i was working on this piece, there was a a briefly statement been Eliot Spitzer wrote an item on his blog. At the time, it was not clear that you will that they were going to take any action. There was a question about whether they should be donating money to education programs. Clearly overnight theyre putting it up for sale. Let me read what they sale. They said its apparent that the ansi hook tragedy has raised questions regarding gun control to a new level. Our role is to take positions for investments. It is not our role to take a role regarding gun control. Theyre going to take a hit on it right now, too. I imagine they will. Not the best time to be selling. In truth, it looks like its been quite a successful investment for them. Again, will there be a tremendous discount selling . Right. You dont know. But given that other teachers pensions and others did have stakes in this and probably are now saying, weve got to get out of here, this is they sold it probably Law Enforcement agencies and the military. Absolutely. And i should say colt defense, which i had mentioned earlier, blackstone has a piece of that. There are a number of pieces that fit into that. That is a military grade company. They do that for Law Enforcement. Thats not for the public. However, people worry that some of those firearms ultimately and calcet as a result had a 6 stakes in this country. Unfortunately the criminals dont read the laws that closely a lot of times. And if youre manufacturing them for people that are bona fide defenders or military or whatever, then well, its certainly not the only thing that needs to be done as the question about spending on Mental Health has been a huge one, too. Yes. Dan, he was the first person to identify the investor. His phone call initially made earlier to them inspired some of this, as well. But that was a very quick turn of events. Very quick. Theres the guys who got aide from the nra, and others are talking about this changed my mind. We have senator bob corker on a little later this morning, too. And we can talk to him about that. Hes a big defender of gun rights, particularly in his state of tennessee. We did show you the futures. They are indicated higher. You can see right now the dow futures up by 6 points. The nasdaq is up by just about 13 points. Weve been watching oil prices this morning, as well. Oil prices are up about 50 cents. You take a look at the tenyear, the tenyear note is yielding 7 of 68 . And the dollar this morning is down across the board. Euro is trading at 1 is 31. 79. The dollar yen is at 83. 86. Gold prices have barely budged. Theyre up about 1. 80 to 1700 an ounce. Maybe kelly knows, that euro, is that a sixmonth high . Well, yeah. You guys have to keep up. Youre not keeping up. You guys have to print. Lets go here. One of the aggressions after japanese elections, now the bank of japan is under huge pressure to bring more quantitative easing and much more stimulus. One big question is are we going to see the eurozone rs theed to copy that and were going to see 2013 with quantitative easing. Its your problem over there and were doing our part to help you. David tepper, interesting, he said yesterday we missed it when we didnt see the ecb signaling that it could be just as quick to lower rates, too. If thats the case, you wonder why the euro has been so strong against the dollar. They havent yet. They havent, but theyre ready at any time. We are. We were going to talk about it, then we did it with 40 billion. Then we said, you know what . 40 billion for a year isnt going to do it, but were going to do 85 billion forever. Mario draghi is involved with a subtle game of dancing. Every time it looks like the system is going to go over the edge, essentially the ecb steps in to try and pull them in from the brink and calm the markets. But he doesnt want to have too much of an atmosphere. Why not lower rates . Thats part of the german situation . Its part of that. Also, wepts to keep the next flareup for hopping. So we should be agraze because he sees something bad coming down the road. I think its more avenue a question they know they want to keep up with the politicians. At the same time, they dont want a full blown crisis. Wouldnt that help if you exported something . Thats the whole point, isnt it . Youre exacerbating your crummy economies. Yeah. But the issue, as far as nor the economies, youre dealing with a mixed bag of different economies inside that eurozone, trying to find one single policy is pretty tough. Why dont we bring in kelly evans right now. Kelly is standing by in london. Kelly, maybe you can shed more light on this, as well. Naung. Hi. Julia just put her finger on it. This comes down to all those diverse economies within the eurozone. If you think about the fact that the dax in germany is one of the best Asset Classes in the world, up Something Like 30 , and consider Monetary Policy. Its extremely different. Thats the real nub. And in an interesting and almost unfortunate way, the weaker germany looks from here, the more likely the ecb is going to cut rates. Remembering the history, the psyche of the germans who are very reluctant to pursue policies that they think would incite internal inflation explains how complicated this situation is for mario draghi. Its one reason why i highlighted that story of the day for you guys. He was looking for a 6. 5 wage increase. Were starting to see rebalancing towards the german consumer and towards germany as powering the eurozone forward, but remining as that happens, it means the prospect for outright rate cuts is less. If we can flip ahead through the stock boards and show i wyou whs going on with currencies, we had a generally positive session overnight. Over here, despite the aussie dollar outperforming, the euro dollar adding 0. 15 too just high of 1. 32. It is extraordinary. In an overnight session with very little else going on we minds you, if this is the setup we see going on next year, there are a lot of countries across europe that would love a weaker currency, but may not get it under current conditions. Lets turn back to the latest developments in the fiscal cliff negotiations. Jillian is on the set with us and youll be here with us for the rest of the hour. We finally have movement. This is a cliffhanger. I think its going to carry on for another couple days. Thats a much better outcome. Today is tuesday, isnt it . They dont want to spend christmas in washington, do they . You have thursday, friday and monday, right . You have a lot of aides prepared to come back after christmas to try and make sure theyre not too far away from d. C. It does look encouraging. Youve had movements on both sides. Youve had boehner indicating that hes willing to accept and rising tax rate for the wealthiest. At the same time, youve had the president scaling back the limit to which those tax rates go up the. And theyre not arguing about idealogical points any more. Exactly. And what about the debt ceiling . Do you think this gets thrown to the mix or not . Well, i think the white house knows very strongly that as far as the markets are concerned, they want to try and get some kind of clarity for the next few months. After the last couple of years, no one really trusts the government or trusts the administration to not have a series of crisis and tiptoeing to the edge. So my bet is they will try to get some sort of deal. Who has more trouble convincing the people they need to sign off . Boehner could get enough with democrats and then you get a few republicans in the house. But obama has to get the the cost of living, he made a major concession there. Absolutely. Its always a good news that both sides are dealing with fracturus situations internally. Part of it is just the way that the how they think he caved the last time. Do you think theyre satisfied that hes held out long enough this time . I think theres probably a better chance this time around. But youve had issues like raising the medicare age. You wont get your payroll tax cut, either. No. And you should not be looking at a time in the medicare age. You should be looking at payroll cuts, instead. Thats a real issue. Theorizing above a little bit. I think the campaign is taking hold. I think they finally turned on cnbc and saw it and said, you know what . These guys have a point. The one thing thats Crystal Clear is if they do get a deal done in the next week or so, this will be a very Big Christmas present for the markets. Right now, there is so much money sitting on the side lines, not junk among big american companies. You had ges jeff immelt come out yesterday indicating yet again so much as investment is being put on the side while people are waiting for clarity and investors that have been running away from the stock market for the last few weeks could come back again if they think theres some kind of deal. If you look at the figures yesterday, you had about 240 billion going into bond funds so far this year. Youve had 127 coming out of equity funds and thats partly because of the concern about where were going with the economy, but also fiscal cliff. So there is real potential for pent up demand going into the market if people begin to trust that actually a framework has been put in place and a bit of political sanity has suddenly broken out. That could be a Big Christmas present. We were all obsessed with this, cliff, cliff, cliff, cliff, cliff, and then newtown hits, as well. And its like, what are we talking about . Were talking about two points of some its like wage you know, theres things that are much less important at that point. And, you know, its like just do it, would you . And lets move on and then try and figure out some of these other stuff. I honestly think that that in some way made it seem so trivial. You would think it was the end of the world. Wasnt there a piece in the times, the journal yesterday that said the situation in newtown might have brought some of the legislators in washington together. Thats what im saying. They have something that they can share, a common horror. Something that you know. Really, it was like this was all we could talk about breathlessly. That the world cant go on with so family situation. Get your priorities straight. When youve had two parents rallying all day long about something domestic, who is going to take out the trash and suddenly a tragedy happens it brings everyone together. Lets hope for that. Were going to continue to talk about all these issues this morning. We have a number of big guests to talk about not only what is happening with the markets, but gun control and that issue, too. Its only money, right . Thats true. And a lot of us have a lot to be thankful for and this reminds us of that. When we come back, fox con is confirming that it has plans for a sed set country in india. But first, the hawaii senator Daniel Inouye died at the age of 8837 hes a veteran and war hero. He was the senate pro item. Welcome back to squawk this morning. Applemaker is confirming plans for a hand set factory in indonesia. Foxconn now saying no timeline has been set. It would cost 5 billion to 10 billion following worker deaths, sudz and other things foxconn and apple has set pledged to bridge a new building steemt. Leo g ray kowski is the asset managements. Really, leo . Do you oversee 178 billion . I have a lot of help, swroe. That sounds like you would have a lot more wrinkles and look a lot more haggard if you had that responsibility. If we get a cliff deal which is looking closer, are our problems over in terms of this sort of market thats been stuck in the mud for a decade, do you think . I think a lot depends on time frame, but no is the short answer to your question. I think, you know, markets being discounting mechanisms, i think its very unlikely that here in the shortterm, we get the type of meaningful entitlement reform and a thoughtful and cogent tax code that businesses and individuals can rely on for many, many years. I think thats what will provide us some multiple expansion. So i think well get a relief and this is certainly heading in the right direction. But i think in terms of the you know, the ten years forward, we still have a fair amount of work to do. We might get a down payment and a promise to do something within a year on those other we noticed the cliff is followed by our longterm problems and it seems like we focus now a public attention on our longterm structural problems which need to be addressed. Were probably close to actually doing some at this point, even if its in a year than before. Will that be enough . Theres a lot of Corporate Cash on the sidelines, isnt there . There sure is. 2. 6 trillion the last time i checked, earning zero or close to zero. As was mentioned before the break, you know, a lot of money has found its way into bond funds, including short and safe funds like incidenter immediate term bond funds. So weve been warning clients and other investors that at a 177 yield, all it takes is a back up to a 2. 25 on the tenyear and over the course of the next 12 months, we have a money losing investment. So i think investors have certainly been very cynical, justifiably skeptical. Thats kept a lot of money in cash and even the cash thats been put to work has been put to work in shortterm bonds. That could be a very unrewarding after tax real return over the next couple of years. Could you really write a story with a happy ending where, you know, we do make some progress, the market looks better, corporations free up some of that cash, unemployment comes down and the fed really just had a bridge if its not qe perpetual that it could start exiting . Right now, i think one of the worries is if theres a new i think its kaud a in the ru, but if the new normal is above 6. 5 , weve got permanent fed. It would be knenice the fiscal congress, with if we could free that up and take the onus off those guys. Can that happen . I think it can happen and its start to go happen at least directionally. Hope is not a strategy, but i think its certainly more hopeful than all right. Weve had got a target of 1550 s p and i think that could be a conservative target. All right. You better get going. We understand. Thanks, joe. When we come back, well have more on this story about walmart and the allegations of bribery. Stick around. Well be back. [ penelope ] i found the best cafe in the world. Nespresso. Where i never have to compromise on anything. Where just one touch creates the perfect coffee. Where every cappuccino and latte is only made with fresh milk. And where the staff is exceptionally friendly. Nespresso. What else . 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. Good morning and welcome back to squawk box here on cnbc. Im joe kernen along with becky quick and andrew ross sorkin. Our top stories this morning, the fiscal cliff and negotiations which seem to be moving forward. Im afraid to say too much. Steve liesman reports that the white house is now proposing leaving lower tax rates in place for everyone except those earning 400,000 and above. Yeah. I read that everywhere. Liesman . Liesman is agreeing with what is written everywhere . Thats excellent, steve. Good job. Thats up from 250,000 and did you know . No one else cited him. They need to cite him. I dont like it when they dont. They should. The president has been demanding for months, its a little above the 250,000. Its still below the 1 million that john boehner wants. Weve been saying all along it probably goes up to 500. Maybe you get up to 650 at this point. And then we have to decide, does it go back to 39. 6 . Yeah. I had seen yesterday that there was some commentary is it 39. 6 or 397 . 29en 6 of. Some commentary that john boehner has said okay on the 39 39. 6. And the president said for two years. They would like to do it by christmas. I think that would be nice if they did it by christmas. Youre watching its a wonderful life. And you realize that both sides rose above and did what was right . Wouldnt that be nice . Time to have pulled out this big would we actually say that it was squawk box that it did it . Do we have ins for boehner and the president . That would be nice. Where is yours . Oh, yeah, i meant to wear it. I have like four of them. I bring it up. I put one on here and then i take it off and then i forget to bring it down the next day. I have to give you credit and becky, weve always been rising above for the laugh few days. Youre not saying anything other than just, you know, lets do something. Lets get it together. Right. Were not saying obama cave or boehner cave. Just grow up and talk to each other. Exactly. Govern. Not too much. It is that time again. This is when yearend Investment Decisions and forecast for us nrt yenext year. Tim keenen is with us this morning. Hes managing director and head of finance at blackrock. Also kevin ferry of cronus futures management is standing by at the cme. Jim, start off by telling us where you see the bond market. Weve had some raging debates about whether the bond market at this point is overvalued, how it matches up against the stock market. Yesterday we spoke with david tepper who said its richly valued, compared to where the stock market is valued. What do you think about that . I think we have to separate the markets were going the talk about with regards to the credit yield and the high yield and loan markets. Those two markets are more tied towards the health of the economy. I would think about those as youre investing in equity wes put options. The bond market and where that is overvalued i think is more talking about the u. S. Treasury markets and how low yields are across the curve. High yield, corporate america, still around 6. 5 and loans are around 5 and a more short duration assets. She should be trading at the higher end of the market. When when we talked to david tepper, he said equities are the better value at this point. Would you agree with that . Yeah. I think if we get past this fiscal plan, all likelihood is next year will be a positive year. Think about what can drive equity returns next year, it will be more about multiple expansion. He think there will be some leverage growth. Where are you going the drive equity returns will be if multiples increase and really drive equity valuations. The high yield market in a lower growth stable market is going to get you good, stable returns with a lot less volatility. We do like some equities here, but we also like the credit markets and the loan markets. Kevin, why doebts you weigh in on where things stand right now. We know what the fed is doing at this point. If washington gets its act together and we see some sort of an agreement, does that change the situation drastically . Well, the market moved in the past week in that direction. Though fairly significantly in the last five sessions for the bond market have been very debilitating. It is a strong concession. I would say functionally, the street is percentaging inventory. So even though the fed is still on a big program that continues to buy, the street is purging down inventory hard into the end of the year. So were getting a dramatic concession this month over month for some of these rates. And well get a look at how its going today with the fiveyear note option. So i think its fallen a little dramatically when that 400,000 started circulating last night. The market really fell out on there is no bid. So its recovered somewhat. So i think that although its been a rough week since the fed meeting for bonds, the concession is fairly significant now and we should see a decent bid come back. Is it still the situation, though, that you cant fight the fed, that they are the biggest player at the table, no way around it . Well, certainly in the medium term. Theyre going to keep coming in, you know . But i think its more about process as the other guest was talking about. If the fed is going to take care of this and people to go play elsewhere. And i think thats a much more bigger theme for people outside of the front lines like us who, you know, traders that are trying to maneuver large amounts for shorter periods of time. Hey, jim, can you kind of focus in within the high yield market . Are there certain areas that look a lot better than others . Yeah. I think it is very similar to some of the things that youre seeing in the equity market where you see positive growth. Away from the macro story there are some really good stories going on. The housing recovery and all the derivatives that kerr with housing. You think about what that means for trucking sales or what that means for some of the Component Parts of housing, roofing and lumber. Those things that we see some positive growth. The technology space. As we go into next year, i think there will be a recovery in some of the tech spend. And certainly in some areas where you think about ipad and the new smartphones, you think about the infrastructure behind that. So those are things where were seeing real idiosyncratic recovery in those names where we see high growth in the market, as well. When you start thinking about things like the ipad and areas around that, weve heard about the recovery for some time. That hasnt played out in the bond market yet . Well, in the high yield market, it has. If you think about where equities are trading in and around housing, right, in the housing valuations are now trading more times two times book value, youre seeing the same thing as you have the growth in their equity value, theyre derisking. And so the credit risk premium res coming down, which is leading to higher returns in the high yield market. So we are seeing still that. Thats very different than when you have a healthier economy and that the u. S. Treasury curve will steepen which is going to be more of of a negative for other durations. High yields and loan res still tied to much shorter deration assets and are improving with the equity market. Kevin, very quickly, whats the most important thing youre watching right now . Two things i would say real quick. The first is the flood of cash when they killed the tag last week. Youre going to talk about 300 billion in cash flowing into the very short end, so bills are at zero into january. And then the other end of the spectrum, which is past the plt, the curve is steepening dramatically. Theres some positive consequence to that, so you have to catch that closely. Kim, kevin, thank you very much. Regarding the fiscal cliff, theyre missing the other banking cliff if you like or the bond cliff that could come with tax. Well talk more about this. Gentlemen, thank you both. Jillian will be with us for the rest of the hour. Coming up, walmart responding to new allegations of bribery at its mexican affiliate. Michelle Caruso Cabrera has the details. And then whats christmas without some of the finest chocolates of the world . Still ahead. [ engine revs ] [ male announcer ] the mercedesbenz winter event is back, with the perfect vehicle thats just right for you, no matter which list youre on. [ santa ] ho, ho, ho, ho [ male announcer ] lease a 2013 c250 for 349 a month at your local mercedesbenz dealer. At your local wooohooo. Hahaahahaha oh. There you go. Wooohooo. Hahaahahaha im gonna stand up to her no youre not. I know. You know ronny folks who save hundreds of dollars switching to geico sure are happy. How happy are they jimmy . Happier than a witch in a broom factory. Get happy. Get geico. Fifteen minutes could save you fifteen percent or more. Welcome back, everyone. In our headlines this morning would be toyota will pay about 17. 4 million in civil penalties. Toyota failed to report a safety defect. This is the fourth time in the last two years that toyota has been fined like this. Toyota is paying the penalty without admitting or denying guilt. In a front page article in todays New York Times, walmarts mexico business offered bribes to get what the law there would otherwise allow. Now michelle Caruso Cabrera joins us with todays headlines. They have a new story today, another doozy, extremely long, very, very detailed. The New York Times outlines what they see as a pervasive pattern of bribes connected to 19 different stories. When you read the whole article, they do a deep dive into one specific store near the ancient pyramids in mexico. Im glad glad we assigned you to this story. This is a mile from the ancient pyramid necessary question. No doubt, the most controversial walmart in mexico because there were, at the time, allegations of bribery because people saw with what efficiency the store was getting built and they assumed that bribes had to have been done. Something is happening. Thats the kind of culture. Walmart has come out with a statement saying among other things, we are committed to having a strong and Global Anticorruption program everywhere we operate and taking appropriate action for any instance of noncompliance. Then they go on to outline all the things that they have done including hiring 300 legal andthing experts. Theyve dedicated 79,000 hours to this, 85 incountry visits. They are conduct an internal investigation that resulted from the first New York Times article that andrew mentioned. We had a chance to actually ask mike duke a question about that investigation. Hes the ceo of walmart. When he spoke at the council of foreign rlgz Relations Just la week, i asked him a question. Here is how he responded. When can you see the results into the internal allegations of bribery . Im sorry, i wouldnt be able to say. I dont know. I think these things are intended to be very, very thoughtful, deliberate, well done and very, very complete. So a couple of just now, observation bes the article. We traveled to seosaquan. We interviewed some of the people involved. I introduced emma and emma never brought up culture, she never brought up protecting the pyramids. What she was worried about was her Small Business losing money. You talk to officials there right now and theyre like, oh, yeah, we wanted to welcome walmart, but we asked them to build this new cemetery and could they help us with the school. This was very much tit for tat. The other thing i would say is when they talk about, oh, there is a concern about whether or not the local markets were going to be destroyed, i think a lot of people think, oh, local markets, very charming and quaint. But the fact is, if you will to a local market in a lot of latin American Country webs theyre felty, theyre dirty, theyre filled with flies. So the walmart there was welcome by a lot of people who felt it was clean. And the other thing to remember about Walmart Stores and any other box market stores, they call them [ speaking Foreign Language ]. Selfservice stores. These were brand new ten years ago. You could walk into the store, take an item off the shelf yourself, ten years ago, and still in many parts of mexico, theyre shopping the way we shopped during the victorian era. When i go in and say [ speaking Foreign Language. [ youre asking for services . Two beers. Okay. Its different. Can i just say [ speaking Foreign Language ]. Thats right. I like what you said, though, that i mean, and im not going to make any comments, im not going to argue with you about anything, andrew. Bribery is wrong. But knowing that, hey, theres something being done, there might be a bribe, its just very telling about the culture. Something is actually happening, theres progress being made here, there might be a bribe. Otherwise, nothing is going to happen at all. Take it with a grain of salt. Thats because they rewrote the map. They found the illustrations of the map. There was a zoning map that was supposed to be written one way to prevent the construction of this particular walmart in a certain field. They managed to get to the person before it was published in the newspaper and they rewrote the facility alleged in the paper. Like i told you, buy the stock last time. Youre up. I dont think this moves the stock today. Do you . I dont believe so. The bid ask is spread. By the way, the headline, the bribery aisle . They do a really good job of documenting. From the New York Times, you just hate walmart in general. Im giving david barso the full surprise if i can. You gave the nobel to crudeman. Coming up, were going to ask the ceo of godiva on his take of luxury gifts. H siness. With business. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above. And still pay the midsize price. I could get used to this. [ male announcer ] yes, you could business pro. Yes, you could. Go national. Go like a pro. We dont let frequent heartburn come between us and what we love. So if youre one of them people who gets heartburn and then treats day after day. Block the acid with prilosec otc and dont get heartburn in the first place [ male announcer ] one pill each morning. 24 hours. Zero heartburn. Given the fiscal cliff have you put things on pause, on hold . We havent stopped investing because weve been worried about it. Weve been investing around the world. Any compromise is going to involve some dose of austerity. The kind of deal youre reading about is like a grand bargain. Thats what wed all like to see happen. The presumption is we want the government to do things. When the government does things it usually doesnt end well. We are one decision away from restoring our fiscal and our moral authority around the world. Lets just do it. You can feel it, really. What is today . Tuesday . A week away. I love that. Yeah, its good. For the holiday tree or the Christmas Tree . I still call it a Christmas Tree. Obviously i know, i know. Most people are not enjoy the holiday. Wait a second. Youre jewish . I am. Do you have a hanukkah bush . No but thats what my grandmother likes to call it because she doesnt like to call it christmas. Shes always, many years, the whole thing a yule log . In excuse me . One godiva chocolatier, jim goldman the ceo is here and we know that its christmas because jim comes around. How is business . Good morning, good morning. Good to see you. Business is good, but the next several days are key. Are they really . Hence youre here. Waits, waits, waits. Get a big bump on black friday as we did and now is the time to go out there and stuff your stockings with godiva chocolates. I see all these ads today, 50 off if you come in the door for places like toys r us. Do you offer discounts like this . Everyone is doing a level of promotional activity. So we do some. So we have specials on our gold boxes if you want to buy two, theres special pricing. Multiple chocolate bars like dark chocolate peppermint punch. You can buy multiples on that. The consumer is very savvy. Theyre looking for quality, value, we work really hard to deliver that. How much more does it cost than last year . Have prices gone up . Prices have edged up everywhere. But we have very accessible price points. This is one of the favorites this year. 10 price point for godiva chocolate. This is my favorite. These are limited edition truffles. So like cranberry, like ginger bred, raspberry linzer tort, theyre limited edition truffle. 15. Sounds good, huh . The things, the 12 things, whatever it is. You know, went up the most. The geese alaying. The geese alaying . Because of what it cost to feed the geese. You can get ladies dancing. You can get ladies dancing, no change in price, andrew. So the same same price as it was last year. Out of all the ingredients, what went up the most . Cocoa prices are edging up. Bounces around a little bit. I feel like im the most fortunate guy around, im selling chocolate at a time when theres a lot of stress and strain out there. And you know, cocoa edging up is kind of small how much chocolate do you eat a day . I the most fun i have is when i get together with our chef, and i get to taste the new stuff. And its hard not to really have the whole every piece, eat the whole thing. Its fantastic. Do you ever get sick of chocolate . Never. You know, we have a belgian chocolate brand that just does amazing things. This gold, three dozen godiva chocolates and i get to taste those before a lot of people. Youll be back for valentines day, i guess, probably, wont you . This is our biggest time of the year. It is . On the internet in particular. Bigger than valentines day. In totality. So today is a big day, by the way, on the internet. Thank you. Thanks very much. Well hopefully eat our way through the commercial break. Our thanks to our guest host this hour, thank you. Thank you. Im sorry we didnt spend more time together. Quick break now. Mornings top stories when we return. Plus, is a deal on the fiscal cliff within reach . Former white house economic adviser Larry Lindsey will tell us if the latest offers are for real. Nespresso. Where i never have to compromise on anything. Where just one touch creates the perfect coffee. Where every cappuccino and latte is only made with fresh milk. And where the staff is exceptionally friendly. Nespresso. What e . To the best vacation spot on earth. all the gulf it doesnt matter which of our great states folks visit. Mississippi, alabama, louisiana or florida, theyre gonna love it. Shaul, your alabama hospitality is incredible. Thanks, karen. Love your mississippi outdoors. I vote for your florida beaches, dawn. Bill, this louisiana seafood is delicious. Were having such a great year on the gulf, weve decided to put aside our rivalry. Now is the perfect time to visit anyone of our states. The beaches and waters couldnt be more beautiful. Take a boat ride, go fishing or just lay in the sun. Weve got coastline to explore and wildlife to photograph. And theres world class dining with our world famous seafood. So for a great vacation this year, come to the gulf. Its all fabulous but i give florida the edge. Right after mississippi. You mean alabama. Say louisiana or theres no dessert. This invitation is brought to you by bp and all of us who call the gulf home. 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. Progress on averting the fiscal cliff. The latest details and what it means for your money. Gun control and Mental Health care taking Center Stage Among lawmakers in the wake of the newtown shootings. We speak to a connecticut congresswoman who is fighting to make Mental Health care more affordable. And were officially one week away from the big mans arrival. Ho, ho, ho yeah its me, buddy find out which retailers should be on your naughty and nice lists as the second hour of squawk box begins right now. Good morning, everybody, welcome back to squawk box on cnbc. Im becky quick along with joe kernen and andrew ross sorkin. The futures are indicated a little higher. You can see right now, actually, dow futures up by 64 points. S p futures up by more than 8 points as we get to hear more about the fiscal cliff. Sounds like the two sides are getting closer together. They are rising above. That hope for a deal has been helping things this morning, not only here but in europe and asia. Lets get to your other morning headlines. A New York Times investigation says walmarts mexican unit routinely used bribery to secure desirable locations in mexico. The article says walnext was an aggressive corruptive. Walmart is looking into the investigations. Also, night capitals board still hasnt decided which of two takeover offers it favors. The board is reportedly split on the competing bid from getgo and virtu. Getgos cash and stock offer is worth about 1. 8 billion. Hmm. Clearwire, in the past, this will be sooner or later this deal will be done. It will. Which one . I dont have any preference. Do you . I dont. You have no preference whatsoever . Whats better, all cash or stock and cash . Cash. Show me the money . Bird in the hand. A federal judge has turned down apples request to ban certain samsung models from being sold in the united states. The models in question were recently found to have infringed on apple patents with samsung ordered to pay apple more than 1 billion. But the judge ruled that banning the phones was too broad of a punishment since only a small fraction of the features involved are covered by apples patents. In other apple news the wall street journal reporting that apple is in early discussions to integrate local data from foursquare into its mapping application. Apple has been talking to a number of companies that collect local data to improve its mapping application. Map service has, of course, had a rocky reception and faces competition, well established Companies Like google, google maps, foursquare developed apps that help people find local businesses and tell their friends where they are, venues like bars and restaurants. And cerberus says it will immediately begin to try and sell its investment in gunmaker Freedom Group in light of last weeks School Shooting in connecticut. Yesterday, calster said it was reviewing its investment with the firm. They invested 751 million with cerberus at the end of march. Cerberus acquired firearms maker bushmaster in 2006 and later merged it with other Gun Companies. I remember this. Did a big piece on remington and and bushmasters, you may or may not know is the manufacturer of the ar15 rifle used by the shooter in the newtown killings. Just got a great column on this today. In the New York Times. The private equity guys that are out there. They would be the ones that would be making the calls on this. And now they wont be. Its very interesting how fast they move. This is literally between everybody else who is talking about this yesterday and but also they lived theyve been through the gauntlet before. Remember cerberus was chrysler. They owned chrysler. This is one of those times where theyre saying you know what . Were getting out of the way right now. Its amazing. Ive never seen anything move this quickly. A big game hunter . I think hes a deer hunter is my understanding. His colleague is also a big hunter that belongs to hunting club upstate. Signs of a fiscal cliff compromise helping boost market sentiment. New details coming out of a meeting between the president and House Speaker john boehner. Eamon javers has the latest for us. Good morning, andrew. The movie that youre watching in washington is now a lot less like apocalyptico where were doing a forced death march through the jungle and a lot more like when harry met salary where we kind of flirt for years and the two parties come together and do Something Special at the end. That seemed to be where were headed, at least based on the president s offer last night, which is much closer than speaker John Boehners offer from last week. Let me run you through the details of what the president offered, starting with the issue of tax increases, what the president is asking for is 1. 2 trillion now in revenue increases on individual income. Thats down from his earlier request of 1. 4 which is down still from 1. 6, which is where he started. Permanent extension of the provision for below 400,000. That means that those people making 400,000 and above would be hit by tax increases. 1. 22 trillion in spending reductions, the president s offering, and fast track processes for corporate and individual tax reform, as well as spending reform, and there are a bunch of spending details in here. Lets put those up on the screen now. You can take a look at exactly what the president is proposing in terms of the spending reductions. 800 billion plus 290 billion of interest, 130 billion of what they call cpi spending savings. The 290 billion of interest is going to be controversial among republicans. They dont think that interest savings should count towards this deal. 400 billion in health. 200 billion in Discretionary Spending cuts. So a lot of spending cuts there. The white house says this is a good offer. We should not expect necessarily that this will be a final offer here. I spoke to this office of Speaker Boehner last night. They say that this offer, although it moves closer to where the speaker is, is still not even close to in balance, which is what theyre hoping for in a deal here. So were getting closer to a deal but we dont have one just yet, guys. Take a lot of chances there with the harry met sally references. You think i pulled that off . Its a little early in the morning. Kind of. When you mention it, most people go back to that one meg ryan scene in the diner. Were not there yet. Yeah, exactly. Ill have what hes having. Ill have what hes having. But thats, you know, rise above, all the stuff we talk about, that would be a great that would be the happy ending that were looking for in all of this. Right . Thats a good phrase to use. You started it. To describe this consummation of this dealmaking process. Oh, geez. Do we all have a cigarette afterwards . Anyway, for more once we do holy cow. For more on the fiscal cliff and the markets were joined by Larry Lindsey, former National Economic counsel director of the Lindsay Group and someone who is definitely ready to get down, jerry bernstein, former chief economic and policy adviser to Vice President biden and senior fellow of the center on budget and policy priorities. And you got gentlemen, probably represent to some extent the two sides that were dealing with here. But, so ill ask each of you, gerald ill ask you first, are you okay if we lets say we end up at 500 and go up 2 or 3 and then the president does make some concessions on spending . Will your i was thinking 2 or 3 in terms of the tax rate . The 500,000 threshold . And go up 2 or 3 , and then the president gets a year for the debt ceiling, and then will he be able to deliver those spending cuts, cost of living increase . I think that that does seem to be the direction where things are moving. And i think is he okay with that . I think both sides would be okay with that. I think the important thing here is that youve got 1. 2 trillion in revenue on 9 table now and i wouldnt want to go below that. If youre going to go up to 500,000 youre going to have to find other ways to make sure youre not going too far below wait a minute. You do by only going up two or three Percentage Points instead of going back to 39. 6 . The reports i read suggested that boehner was okay with in order to do that. If youre not going to get to 39. 6 and youre going to try to raise at least a trillion, i dont think the president s going to come down below that then you have to find some base broadeners. By the way, in this deal the president presented last night as eamon was talking about, theres considerable base broadeners in there. Theres only one rate increase. Its not taking the two rates, two top rates up, only taking the highest rate up, and then he gets the rest 6 the revenue by Capital Gains and dividends going up to 20 , by the way, not to ordinary income, and by closing a bunch of loopholes by the 28 deduction that the president s been talking about. That kind of a deal. Id rather have two years on the debt ceiling but one year, maybe we could live with that. Larry, how many guys could boehner get to sign onto that . Enough to go with the democrats to do it . Well, jared and i were talking about this in the green room. Whats surprising here is what the president campaigned on, tax increases over 250. Its total 970 billion. So were now at 1. 2 trillion, and were moving closer to the center . I dont think so. Were moving further away from what he campaigned on. Now, three days after the election, 970 to 1600, then 1600 to 1400. Then from 1400 to 1200, then oh, my gosh the president s compromised. No from what he campaigned on, hes still moving the goalpost away from a compromise. It sounds like hell probably end up where he started. Hell probably end up where he started. Oh, i think well, a trillion seems to be the right number. If you look to last years negotiation, the deal fell through at 800, and then the president countered with 1200. Then he campaigned on 970. So you know, started going to washington, a trillion larry hes learned to negotiate. People to move the goalposts outside of the ball park is what he learned to do. Boehners got guys that are way to the right of you, and then people with jared that are to the left of jared, the president s got to make it look good for these people or hes going to get pilloried on the huffington post. On the cpi chain, which the white house is making i think positive sounds about, theres a lot of people on the left who are not happy about this. Im talking about im making a factual statement about where the aarp is sharply thats true. Youre not just talking about and by the way, just aarp is pretty hard left. If you do chain the cpi so Social Security benefits grow more slowly you get more tax revenue, as welt, because your tax brackets grow more slowly. So nominal Income Growth passes into higher tax brackets more quickly. So thats another part of this deal. But does it hurt the it hurts low income, old elderly, considerably, and thats why the white house is saying well take the changed cpi but we need a bumpup in their benefits. What does that look like . A measure that increases Social Security benefits for old, elderly people who have low income by some amount thats undisclosed. Separate for veterans, too . Yeah. I think tax brackets. You didnt look you dont want to help trail people . Poor, old people. Because thats of course. Thats a position i take. If you resist thats what this is the christmas season. You need to give another one time increase in benefits . A permanent youre going to bump up the benefits of low income people to offset the compounding of switching to the chained cpi for poor elderly. By the time you get to be 80, 85, 90 years old, that difference between the two price index represents a real serious benefit cut. You mean less of an increase in benefits . So the question begins, what promised benefits. What i believe in is we should have correct indexing for Social Security. And so, lets resolve the debate on what the right price index is. And get away from this cut increase stuff. But i do agree that we should shift to a more accurate price index. The one we had now was not accurate . The one we have now exaggerates the price increase. Thats right. So what youre actually saying is we should continue with the overindexation of Social Security no, no, im saying we should switch to the chain cp ooichlt for a more accurate price but we need to be mindful do you know what the Median Income of the Social Security beneficiary is . 23,000. I agree that we need changes in Social Security. But thats very different from whats being talked about here. I think, you know, the the motion behind all this is not the right way to deal with budget numbers. The way to deal with the budget number is to decide what the right rate of price increase is. Because thats what people really need, and lets adopt it. Now if you also want to say, well, yes, benefits are too low for some people, im for that, too. Youve got to approach this with your brain like youre doing, and youve got a big one, and with your heart. And the issue here is that the Median Income for Social Security beneficiaries is 23,000 for the typical Social Security beneficiary, Something Like 70 of their income comes from Social Security. But i thought i just heard agreement between you two on one a plan you could both live with, which larry just said is get the appropriate indexing, which youve also said. If you look at the people who are at the lowest end of the spectrum and you want to increase their benefits, then you would go that was in bowlessimpson, as well. That bumpup. Right. Which is the best separate issue. The other thing we should do, by the way, when were changing the index is we have these things called bend points. Im sorry the audience, we should a little early for bend points. Well, but thats i meant in the morning. Its definitely early in the morning. But we should index the bend points, too. That would balance just doing that, just really . Just doing bend point indexing would make Social Security solvent forever. Would you agree thats not on the table right now. So my question for the president is, why isnt it . If youre going to go with this, why dont you solve the problem. We take Social Security off the table. I dont think were going to do Social Security reform in the next two weeks. I would say this, how about raising the taxable maximum income, which used to cover 90 of earnings, now covers 84 , because theres so much more earnings inequality. The tax max on Social Security doesnt reach as many earnings as it did before. Im with fdr on this. I dont think we should turn Social Security into a welfare program. This is a greenspan idea, larry. Keep it at 90. Im with fdr on this. All right. Thanks, larry. Thanks jared. Theyll be with us for the rest of the show. Coming up next signs of fiscal cliff progress sparking a lateday rally with all key s p sectors finishing in positive territory. But will the momentum continue this morning . Were going to talk markets next. Then at 7 30 eastern, important conversation connecticut congresswoman is going to be pushing for access to quality Mental Health care in light of the tragedy in her state. [ male announcer ] how do you trade . With scottrader streaming quotes, any way you want. Fully customize it for your trading process from thought to trade, on every screen. And all in real time. Which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. Try our easytouse scottrader streaming quotes. Its another reason more investors are saying. [ all ] im with scottrade. Welcome back to squawk box. Weve got a takeover deal this morning and its one people around this table are going to care about. Nielsen, the Holding Company well known for its tv ratings, buying arbitron. The deal is worth 48 a share in cash. Thats a 26 premium over yesterdays close for arbitron. The two will hold a Conference Call in the next hour to talk more about that deal as it happens. But we do care about that. We do. I wonder some days whether, you know, with all the the question is, the set top boxmakers know everything and nielsen is such a blunt instrument, i dont understand the politics of why that still dictates. Privacy. Because they cant hand out the information. Spying on your if you went to every customer, if comcast, whomever, time warner customers said well give you a 5 discount every month if we track what youre doing on a blind basis, i think a lot of people would sign up for that. What if the set top boxmaker can see what youre doing . Would that be okay with you . Can see what im doing . Actually watching you. Watching people. Know that youre a live body watching the oh, like an xbox style camera . Can see everything youre doing in your living room . Youre fine with that . You need to identify that theres actually someone on the other end. Maybe theres not a whole lot going on in your living room. We understand. You got twins. Theres nothing going on. The s p 500 at a nearly twomonth high on optimism over the fiscal cliff solution. Our next guest is upbeat about the market prospects. Joining us is ed gardeni. You were positive about this even before we got these movings that we saw last night suggesting that were closer to a deal. So many folks have been focusing on the downside, been looking over the cliff and saying how horrible it could be. So i actually have been studying most of my time wondering what the upside could be. But i thought we would avert the cliff. Were doing that right now. The upside is the u. S. Economy could be surprisingly strong next year. I think we could have a second recovery led by housing and autos. And, if thats the case, i think the markets go higher. How much higher . Well, i got three numbers of mine, 1465, 1565, and 1665, just to keep things simple here. 1465 being the cyclical high for the market, which we hit on september 14. I think were about to take that out very shortly, and the prospect that there will be a deal. If the deal is actually announced, which i think it will be before the end of the year, i think we could take out the alltime record high, if not by the end of this year, probably next year, and thats 1565. And then 1665 is what id be using for the end of next year. For the end of next year . Thats assuming weet get growth of 2 , 2. 5 . Thats a reasonable assumption, he growth of 5 from 2013 and twour. The market looks ahead. As we get in 2013 will focus on 2014. I think we can do s p 500 earnings in 2014, slap on a multiple of 14, which i think we could do. 13 has been sort of a jinx. Every time weve gone to 13 the past three rallies, failed. So were going to take it out and go up to 14. So i think wow. And you think 14 is even with Interest Rates eventually back back up we could do 14. As you know if Interest Rates back up, there will be a sign the economy is doing pretty well. That makes sense why we have such low multiples with zero Interest Rates, because its all sort of a converse soar Interest Rates posit that something is wrong. Tepper was in the opposite, right . Hed say dont fight it is probably what he said. We appreciate your time today. Always a pleasure. Thanks for not insulting us while you were talking about things. That was nice, too. I never do that. I know that. Appreciate that. In the wake of the tragedy in connecticut. Gun control and Mental Health care taking center stage, now congresswoman rosa delauro has been fighting for better Mental Health care. Shell join us at the bottom of the hour. Still to come, retailers that have been naughty, and nice. We break down the Holiday Season for specialty retailers, and tell you what it means for your portfolio. 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. If you have any comments or questions about anything weve been talking about on squawk, email us at squawk cnbc. Com. You can follow us on twitter as well, squawkcnbc is our handle. Up next the shooter in the newtown tragedy reportedly suffered from a mental disorder. Well speak to one of the lawmakers holding the Purse Strings for federal Mental Health care funding. [ male announcer ] this december, remember you can stay in and like something. Or you can get out there and actually like something. The lexus december to remember sales event is on. This is the pursuit of perfection. The lexus december to remember sales event is on. Sfx sounds of african drum and flute look whos back. Again . Its embarrassing its embarrassing we can see you carl. We can totally see you. Come on youre better than this. All that prowling around. Yeah, youre the king of the jungle. Have you thought about going vegan carl . Hahaha you know folks who save hundreds of dollars by switching to geico sure are happy. How happy are they jimmy . Happier than antelope with nightvision goggles. Nice get happy. Get geico. Fifteen minutes could save you fifteen percent or more. The latest coffee machine from nespresso. Modular. Intuitive. Combines espresso and fresh milk. The new u. Nespresso. What else . Available at these fine retailers. Welcome back to squawk box. In our headlines this morning there are a handful of economic reports on the calendar for investors to start thinking about. In just about an hour from now we will get the Third Quarter current account deficit. It is expected to shrink somewhat from the Second Quarter levels. At 10 00 eastern time the Sentiment Survey from the National Association of home builders. It is showing slight improvement from a month ago. Toyota has been fined about 17. 4 million by the department of transportation for allegedly failing to report a safety defect in a timely manner. This is the fourth time that toyota has been assess aid fine like this in the last two years. Toyota does not admit or deny guilt in settling this claim. In other auto news the redesigned 2013 honda accord won top honors from consumer reports. That comes just a year after the magazine panned the companys redesign of the popular honda civic model. And cerberus says it will immediately begin selling its investment in gunmaker Freedom Group in light of last weeks shooting in connecticut. Yesterday calsters said it is refewing that investment with that firm. They had invested 751. 4 million with cerberus as of the end of march. Cerberus acquired bush master in 2006 and merved it with other Gun Companies to create freedom grup. Bush master is the manufacturer of the rifle that was used by the shooter in the newtown killings. This is an issue thats received a lot of attention. Andrew has a column in todays New York Times that points out how private equity would be calling the shots in this. And quick for them to turn around. Im still very surprised by how quickly theyve urn turned around on this issue. We are awaiting were going to talk to congresswoman from connecticut, about one of the issues that has come to the fore, which is what will we do with Mental Health . Thats an issue that we can talk about, and have a couple of shows on that. Larry, youre youre a conservative thinking in certain respects, but, very even keeled about things. Youve seen a lot of politicians with a ratings from the nra because this was this was different than i mean, i hesitate to stay different than some of the other things that weve seen. But, these are kids in first grade and second grade, and youve seen a lot of people say, everything ive ever thought, im rethinking now. And everything is on the table. How do you think about that . I mean what we want to do is protect our kids, no matter what. Im thinking gunfree zones, i dont know. Armed guards. Why cant there be one armed guard at the entrance to schools . Is that the wrong way to approach it . It seems like criminals can always get guns. Mentally ill people can get a gun. You know, as a father of three this is really an unthinkable tragedy. You just my heart goes out to those parents. Its just awful. Its an awful thing. Its affecting everything, you cant stop i cant stop thinking about it. Its you know, what i think there are a few things interesting about it. And how much coverage its getting. You know, every almost every day in inner city neighborhoods, a child gets shot. And it doesnt make the news. Thats in every one of those neighborhoods. We never talk about it. I think this is bringing it to our attention because its neighborhoods like we live in, right . And that bothers me that suddenly society becomes gripped when you have a much bigger ongoing tragedy. I think that says something about our mentality. And you know, i actually think thats why we have a constitution. Because, its when you have tragedies, and when emotion is running high, that you actually need a break to step back from the emotion and think about whats going on. Wait a second. Some of the things that have been proposed have been simply bringing back a ban on assault rifles that was brought here in 1994. Which the Justice Department studied and found it was ineffective. You know, sure if we want to do it, thats fine. It passed the constitutional test. But, i dont think that is going to solve our problem. It may not solve the problem. It may not have stopped this situation. But it would certainly have some impact. Again the Justice Department studied this in the late 1990s, and found that the ban didnt work. Heres a question, of the top 23 richest countries in the world, 80 of gun related deaths happen in this country. All right, 87 of kids in the world who get killed by guns in the 23 riches country, happens here. That cant be the right outcome. We have a broader ownership of guns than anywhere else which is the basis of the statistic. So you can say, well, why is that the case . I would simply suggest that there are a lot of other issues that are related to we probably have the most Swimming Pool drownings in the world, too, in this country, because we have the most Swimming Pools. I mean, we have 700 kids a year die in Swimming Pools. But maybe people are okay having pools but theyre probably less okay having guns. But i would not own a gun. For various reasons. I dont like the safety. I think the fact is we all have to respect the rights that other people have. And i am forring so that would be pass a costbenefit test. Were going to be talking to a congresswoman. The fair question to ask her is, are you willing to ease the privacy laws that prevent Mental Health professionals from reporting people to police . Some of the countries youre talking about ban the ownership of guns. Some do. Right. Absolutely. Thats unreasonable to you with the Second Amendment where it is . I dont know if i could even the most even the most i think even people that have totally changed their view, no one is saying anything about banning them entirely. But you are fully ready to do that, which i can see, which is thats just not the way larry said, thats why we have a constitution. I think this horrible tragedy put a lot of this in focus. I think people who were on another side of this debate two or three days ago are starting to switch sides. No one is talking about banning the ownership of of handguns. Lets continue this conversation with the congresswoman. Before i do that. Let me read a blog post which is getting a lot of attention, titled, i am adam lanzas mother, and it was written by a boise idaho resident and gaining a lot of national attention. It goes into some of the very painful details of raising her 13yearold son with Mental Illness and the strug ams she is having getting him the proper care. She shared a recent incident she experienced when she writes the following. I love my son, but he terrifies me. Michael pulled a knife and threatened to kill me and then himself after i asked him to return his Overdue Library books. His 7 and 9yearold siblings knew the safety plan. They ran to the car, and locked the doors, before i even asked them to. I managed to get the knife from michael, and methodically collected all the sharp objects in the house into a single tupperware container that now travels with me. Throughout it all he continued to scream insults at me, and threatening to kill or hurt me. This is just one story of many, and many people struggling to find the right care and needs for people who are mentally ill. Now joining us to talk to us all about this, congresswoman rosa delauro who is the Ranking Member of the appropriations, labor, health and Human Services subcommittee which has jurisdiction over funding federal Mental Health care and grants to states, and congresswoman, thank you for joining us today. Thank you very, very much. So good to be with you. Weve been having this debate around the table. Weve been having this debate around the country. Are we not spending enough money on Mental Health . We are not spending enough money on Mental Health. I, too, read that article that you just quoted, and it was very its poignant. Someone seeking help. I think it was an in other news show yesterday where someone indicated that, where you can, you know, purchase a militarytype weapon. And i think thats what were talking about in this instance. A much more quickly than you can access Mental Health services. And we need to confront this issue, and make this a part of the National Dialogue as we are addressing this serious issue of violence. For me, this is a my response to what happened, in addition to how overwhelming it is, to see the slaughter of innocents, which is what happened in newtown last friday. But it is about militarytype weapons and a ban on assault weapons, the highcapacity magazines, it is about background checks. But it is about Mental Illness. As well. The focus, that needs to be on parity in the discussion today. You know, theres so much talk about arming our schools, turning them into fortresses, i would like to i believe in the safety of our schools, the physical structure of the school. But in addition to it, why arent we talking about putting trained Mental Health professionals in each one of our schools . As part of the Nurses Office where someone who is well trained who can recognize a symptoms or can, having conversations with youngsters on a regular basis, being able to engage with parents on what is going on in the minds and lives of their children. Congresswoman, my gut instinct is the same as yours, this idea of the assault weapons ban, seems to me like common sense. But our guest host Larry Lindsey is laying out there was a study from the department of justice or from the department of justice . I think it was justice, yeah. What did it find . That the ban was ineffective. It had to do with definitions of what the weapon was. But, by the way, i am very sympathetic to what the congresswoman is saying. But if were going to link the two, then dont we also have to say, will those Mental Health professionals be able to report the people that are troubled to the police . I am all for banning in fact we now have a ban that if you have a Mental Health history or a criminal history, you cant get a gun. Okay. I think thats a great idea. But we may have that history, larry, but the fact of the matter is, is that people are getting around that. And i dont know about the department of justice study that you are talking about. Clearly, one of the ways in which people could get around the ban was with regard to the definition of what constitutes an assault weapon. But that needs to be debated and discussed and we are talking about militarytype weapons. But can we agree that if someone is one of the Mental Health professionals finds someone has a problem that they can actually report that problem to the police . That would seem to be an important step here. Lets step back for a second in terms of, if we find that a youngster has difficulty, the issue is how to prevent that. What kind of treatment should that youngster be getting . You seem to move in the direction of calling the police. We have very trained, very professional look, im from new haven, connecticut. I have a wonderful asset in my Community Called the yale child study center. And i was there yesterday, with dr. Steven marin and dr. Volkner and we were talking about how, in fact, we need to use these facilities that we have that have trained personnel. What kind of treatment would a youngster need in order to be able to address the Mental Health problem that he or she may have . How do you help the woman who writes this story about pointing her in the direction of where she can get help . The answer isnt whether or not you take this to the police department. Whether you stigmatize someone with Mental Health illness. But should a young man in idaho ever be able to buy a gun . Well that was part of what we were doing in terms of the vetting process. Thats right. But are we going to be able to vet were supposed to be looking at background checks. And the effectiveness i would imagine of that system where there are a lot of loopholes. And look i see it every day. The way we want to skirt around some of the efforts that we have. Congresswoman, how can you do a background check if the Mental Health professional cant report the person . It never shows up in the background check. Its when you go to buy and purcha purchase first of all so i go and purchase a gun if a youngster is going in, im talking about children, at the moment a kid cant buy a gun. We agree. So this young man grop to be 23 years old, with this history no, he was 20 years old. Not 23. Well, im and, in fact, he took the guns that his mother had that were registered. Let us get the facts correct. We know maam hes talking about if someone hypothetical. Just listen. The person in idaho, that story, should that young man who is now 9, when he is 23, ever be able to buy a gun . I would say no but the only way were going to be able to have the background check work is if, in fact, the Mental Health professional can report this incident to the data base that has those things. The background check doesnt work. The background check right. But i understand what youre saying. And i think there is a way in which we can, and we need to be talking to the professionals in this area, about how one does protect an individuals privacy at the same time be able to address the problem of Mental Health. And if you what is the incident of a youngster . What is symptomatic about a youngster, where they can get the kinds of treatment that is necessary to address the problem that they have . So you have two rights that were comparing. Youre for taking away Second Amendment rights. No, no, im not. I can understand part of that. I am not. I am not. But dont we have to balance that against the privacy rights of mentally ill people being able to get guns . I am not talking about that seems to me to be a 67 more directly related problem here. It is. But i am. Please do not put words in my mouth. I am not trying to bridge peoples Second Amendment rights. I am saying that the militarytype weapons, the type of weapon that was used in sandy hook, last friday, in my view, should be banned. That is not a i dont believe that that abridges someones Second Amendment rights. The high capacity magazines do not abridge peoples constitutional rights. And i think youre seeing more and more people on all sides of this issue come to the table and say, lets reason together, and look at how we avoid the situation in the future. Congresswoman were going to have to leave it there. This is a conversation that, of course, is going to continue. We thank you for joining us this morning. Up next, former omb director David Stockman ready to rise above and tell us why he thinks the fed is at the heart of the problem when it comes to solving our nations budget woes. Squawk box will be right back. Time to market reduced. Those are good things. Upstairs, they will see fantasy. Not fantasy. Logistics. Ups came in, analyzed our supply chain, inventory systems. Ups . Ups. Not fantasy . Who would have thought . I did. We did, bob. We did. Got it. We believe the more you know, the better you trade. So we have ongoing webinars and interactive learning, plus, inbranch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. Our teams have the information you want when you need it. Its another reason more investors are saying. [ all ] trade. 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 ] they are a glowing example of what it means to be the best. And at this special time of year, they shine even brighter. Come to the winter event and get the mercedesbenz youve always wished for, now for an exceptional price. [ santa ] ho, ho, ho, ho [ male announcer ] lease a 2013 glk350 for 399 a month at your local mercedesbenz dealer. The fiscal cliff countdown continues. Could we be closer to a deal . Joining us now, David Stockman, was omb director under president reagan. What do you mean its the fed . Its the fed because the fed has driven Interest Rates so low that money is free. You can borrow up to five years right now for 70 basis points, three years for 30. The congress is in no hurry to do anything. Were now in month 44 of the recovery, ten years ago no one would have said you needed a 7 of gdp deficit to keep the economy going. So i think whats going on is a farce. They should go home. They should let all these tax cuts expire. We couldnt afford them in 2001. We shouldnt have expanded them in 2010. And we cant afford them Going Forward for the long haul. Let it happen. Nobody has to vote on it, they can blame each other. Defense. Let the sequester happen. The Defense Budget is stupid big at 700 billion in a world where we dont have any enemies left. So, instead of fooling around on the margins, pretending theyre going to cut 800 billion, which is really a trivial number when you realize over ten years spending baseline is 48 trillion. You are not rising above at all. I am opposed to rising above. I think we should go over the cliff. I think we should take our broccoli, i think we should start paying our bills and not pretend that we can use this keynesian snake oil to keep medicating the economy. And if you really hate your children, then support this policy, because youre burying them in debt. Dont you think that the fed has yesterday we had someone make a very compelling case that, you know, the fed, everything that its done has been at least marginally effective in letting us sort of heal from the financial crisis. Letting us get, slowly, not in one pulse, get rid of all the debt, letting us sort of rebuild savings, and now even, you know, its 8 unemployment or 7. 7 , whatever it is. We continue to do this, inflation is not bad. We get it down to a better level, peoples lives arent as difficult. Is it really that bad what the fed is doing . We havent had to the negative effects have not been felt yet. Thats what they said in 2006 and 2007 when we had the 1 Interest Rates. There was no housing, you know, boom. This is just a healthy economy where do you think it is now . Were going to end up with the fed having a trst 4 trillion or 5 trillion balance sheet. They cant keep it up. If that was true lets all stop working, have the fed print 10 trillion a year of money, drop it out of helicopters and live happily ever after. Theyre painting themselves into a corner and i dont know when its going to blow up but its going to blow up. Are you sure . This sounds like are you sure were going to have five foot tidal waves hit manhattan, too . I hear a lot december 21st were going to be okay, right . Yeah, december 21st is going to be okay. But you ought to ask yourself if zero Interest Rates for six years, which means a sixyear money earns nothing, before tax but is your point that congress is able to just not do anything because of the fed . The fed is the enabler. The cause of the deficit is bernanke and his merry money printers. Did you call him bernanke, too . Did you leave out the second n. David, you want a pin while youre here . Yeah. So im going to turn in my pin. The thing is, our political system is broken. If you actually look at what republicans want to do youll get 17 of gdp in revenue. Democrats want to defend everything. Put that out over ten years, and its 16 trillion of new deficits. Now, that is going to sooner or later, you cant print that much money. You cant. Its just worth ten cents instead of a dollar. I dont know if it will be an inflationary blow off or just a collapse in the bond market. But theyre inviting a bad time. Thank you. Were going to sell some advertising with the sharply devalued dollars right now. Weve got to sell more. Thank you. Come back and join us again soon. When we come back the futures pointing to a higher open on hopes of a fiscal cliff deal. We have republican senator bob corker right after this quick commercial break. At optionsxpress were all about options trading. We create easy to use, powerful Trading Tools for all. Look at these streaming charts theyre totally customizable and they let you visualize what might happen next. 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I cant stop theres a cliff but can president obama and Speaker Boehner get their parties to come together on a compromise deal . We dont take no prisoners. We dont take no for an answer. Oh, yeah. We dont take no for an answer. We dont take no for an answer. Well ask senators from both sides of the aisle. Republican bob corker and democrat kent conrad. Plus the sector names that will make you money in the new year. Our whats working serious continues with artisan Portfolio Manager james keeper. The third hour of squawk box starts right now. Welcome back to squawk box. Im joe kerner along with becky quick and andrew ross sorkin. Our guest, Larry Lindsey, former National Economic Council Director and republican senator bob corker, will join us in just a few minutes to talk about the latest in the fiscal cliff negotiations. But first, andrew has your mornings headlines. A New York Times investigation this morning saying that walmarts mexican unit routinely used bribery to secure desirable locations in mexico. The front page article says that walmex was, quote, an aggress ever and creative corrupter. Walmart says its looking into the story and claims its part of a broader investigation into foreign practices that was gun more than a year ago. And cerberus is saying it will immediately begin selling its investment in gunmaker Freedom Group in light of last weeks School Shootings in connecticut. Yesterday, calster said it was reviewing its investment with the private equity firm. Calsters has invested 71. 4 million with cerberus as of the end of the year as of the end of march. Cerberus acquired firearms maker bushmaster in 2006, later merged it with other Gun Companies to create Freedom Group. Bushmaster is the manufacturing of the rifle used by the shooter in the newtown killings. Samsung plans to withdraw injunction requests against apple in five eu countries. The company says its dropping legal cases in germany, the netherlands, italy, france and the uk. This comes one day after a federal judge denied a request by apple to ban u. S. Sales of Samsung Smart phone models. The devices in questions are the ones that a jury back in august say illegally used Apple Technology. At that time apple had been awarded 1. 1 billion in damages. The markets, dow looks like it will open up about 68 points higher. S p up about 10 points, the nasdaq up 22. 5 points coming on some of this news that we may be getting closer on the fiscal cliff. Lets check out whats going on in asia. Hang seng was down off marginally. Shanghai composite up marginally and the nikkei up as well. Quickly in europe, you can take a look at whats going on there. The ftse up about 0. 38 . Cac flat, and the german dax up about 0. 5. The white house is proposing a new deal to avoid the fiscal cliff. Lets get to Steve Liesman with more of the details. Youre surprised, arent you . Isnt it happening. Soon as they want it done they can do it. You said it this morning. Its a fictitious thing. Were going to show you the movement in just a second, which is kind of interesting. The outlines of the deal to avoid the cliff appear to be taking ship with the president last night moving for the first time off the threshold of who will pay higher taxes. Here are the details as we understand them. Tax hikes on those making 400,000 and above. Remember that was 250,000. Immutebly. I guess its mutable now. Is that the opposite of immutable . Dividend taxed to 20 . Thats an important number. I couldnt get geithner to tell me what that number was. Now theyre at 20 , not 49 or 43. Estate tax to 2009 levels. Total is 1. 2 trillion. Thats down from 1. 6 trillion. What is the 2009 level for the estate tax . Its all different. Its 35. 35 . They reached a compromise. They dont do that, it goes to 55, and the pressure goes down to a million, and theres a lot of folks out there who would really be affected. Small businesses. Let me show you the spending plan now, which is 130 billion going to the chain cpi. Thats different from the existing cpi general agreement. The current cpi over states cost of living, theyll go to a different index. Ive got to figure out what that actual index is. Whatever. Health savings. You know what it is, larry . What is it . Yeah. Its a chain index where you change the market value. But is it connected to gdp . No its a cpi collected data. Right. But its like the cpe, they change the Market Basket every year. Okay. Thats why it could change. All right. I believe health savings. I think air health savings, that could be Something Like, you know, means testing for medicare. Could be. Nonhealth savings equally split, we dont know thats correct, larry. Additional discretionary cuts. Interest savings, anyway, theres the total 1. 2 trillion on the spending side. The two sides are getting closer. But a spokesman for Speaker Boehner told eamon javers it is not even closed to the balanced proposal. I want to show you a look at where weve come from and where were going shows the progress. Here are the numbers. Weve got that nice chart ready. We had been at obama had been 1. 6 trillion on revenue when boehner was on zero. He went to 800 billion thats boehner. Now his number is just under 1 trillion. I have a call in to the speaker to confirm that. 800 billion gap is now 200 billion. The president also asking congress for a twoyear debt ceiling deal instead of his original request for an infinite debt ceiling. I want to just give you one point of fact here that i dont think is mentioned very much. Even though obama says hes aiming for or we need 4 trillion. The Congressional Budget Office estimates we need only 3 trillion to get to the baseline to put the deficit on a sustainable path. Theres a little bit of fudge in that. What we want to do, this is a thing that matters. All the stuff back and forth get to a point where the growth of the deficit equals the growth of gdp. Thats what were in for. Stick around because were going to continue this conversation right now. We are joined by republican senator bob corker. Hes a member of the banking committee. And senator corker, weve been talking with you just a week ago you told us that you would have to see some serious budget cuts and some serious issues to address entitlements before you would agree on any deal. Yeah. Does this proposal from the president do it . No. Im really surprised, at the reporting today. Unless something happened this morning at 6 00, were not close to a deal. And ive been trying for three weeks. Ive been standing on my head, doing cart wheels to try to pivot towards entitlement reform. This is not a deal here. This is i think the house is going to move today to rescue the bulk of our country from a tax increase, and unfortunately, thats all thats going to happen this year. Because, think about this. I mean, theres if my understanding, only 400 billion in real cuts that are offered, only 200 billion of those are in entitlements. The rest of it is to be determined down the road. Giving up the debt ceiling. Giving up the 1. 2 trillion in sequester. So, again, everybody seems to be focused on the revenue issue. Its like were dancing on the head of a pin as it relates to that. But theres been no focus on entitlement reform. And until we have entitlement reforms were not going to save our country. We need a 4. 5 trillion, cumulative deal at a minimum that has at least a trillion dollars in entitlement reforms or basically what were doing is going back wrtds. So im surprised at the reporting today. Again, unless something happened at 6 00 a. M. This morning, i think the house is moving to rescuing the most of the country from tax increases, and unfortunately, this will be taken up next year, something thats terrible for our country. I think all of us know, if we could get a big deal, and thats what boehner wants, and thats what kantor wants, and ive got to tell you, i think they have done an outstanding job of trying to get where we need to go, but when you have these nebulous offers of cuts, giving up debt ceiling, giving up sequester, its really taking us backwards in many ways. So i dont think were anywhere near where the reporting is today and im very disappointed. Because i want to get this in the rear view mirror and start this year with economic growth. Senator, lets go through these numbers. We look at the numbers and we assume that its getting closer. But your point is because these are unclear numbers or the areas where you see the cuts coming from are not the areas where they need to come from, that is enough for this to be a deal breaker. Theyre not even determined. Theyre creating another fiscal cliff in a year to deal with this fiscal cliff. What ive been saying all this year is we know what decisions need to be made on entitlement. Every one of them has been scored. Theres legislative language. We actually wrote the legislative language. And all we need to do now is make decisions. What we dont need to do is create another fiscal cliff in a year to deal with issues that we know how to deal with now. So, i dont think things are where youre saying they are at all. Senator i just dont. Senator, so last week, ron johnson and you and others said what we need to do, the house passes 98 and below, allows the top 2 to go up to 39. 6. Just what the president wants. And then we start talk pg about spending and entitlement cuts in light of the debt ceiling coming in in february . Is that what youre talking about now . So were going to were going to have to see whether the rank and file that boehner tries to get, if they dont go along youre saying they should mutiny and not do this deal he wants to do now and do this other one that puts the onus back on the president next year to come to the table for entitlement cuts. Is that what youre saying . I dont even think Speaker Boehner unless, again, somethings happened early this morning, hes not even going to try to sell this deal because he knows that the offer that theyve made is not real yet. In other words, again let me say the cuts are to be determined down the road, with another fiscal cliff, thats being created. So what i would hope, joe, is right now, we would go ahead and implement the entitlement reforms that need to happen. And weve been trying to pivot to this for three weeks. Im confused. Youre complaining about the reports, which ostensibly means my reporting, so i just need to im not criticizing your reporting hes talking about how we are classifying this as being closer to a deal. Hes saying thats the thing im a little confused about maybe theyre not. The numbers may be closer just numerically closer to but numerically closer may not be the right why is there not numerically closer are they not closer . Because theyre not talking about spending cuts in the same areas. Hold on, its a negotiation. Thats what we figured out. But senator corker tell us, is this a situation where weve been looking at this thinking this is rhetoric on both sides, that there is movement on a deal thats coming closer together . I think there has been movement. And i think Speaker Boehner candidly has been heroic in his efforts to try to keep our country from going through this again next year. I agree with all of yall youd like to solve it now. For three weeks ive been trying to get us all to pivot to entitlement reforms. Were just now beginning to talk about entitlement reforms. Nor just explain what, so everyone whos watching understands. Okay. About a minute and a half ago, the take away was that were no closer than we were a week ago. Were closer just so we understand exactly. Are we going to have a deal by the end of this week . No. Were not . I think the house will move, this is my guess, unless theres a huge change thats occurred this morning, i think the house will move to rescue the bulk of the country from a tax increase. Its possible that if something hugely dramatic occurs very different than whats happened already, maybe something happens by year, but i think its unfortunate that, again, we havent gotten down into the crux of real entitlement reforms that both republicans and democrats know has to happen. We havent done that. And so let me just say what the speaker would be trying to sell this morning. Okay, guys, im going to sell a trillion dollars in reductions. We can identify 400 billion but were going to kick the can down the road on the 600. Were going to create another fiscal cliff in a year. And in the process, im going to give up 1. 2 trillion in sequester. And im going to give up the debt ceiling. But, so if you look at the numbers, youre actually going backwards. Okay . As it relates to the amount of savings. I really have a hard time understanding how youre saying that senator. The president just went from 250 to 400, he threw in something i am talking about hes been opposed to two facts out of your equation. First of all the little bar graph. You didnt have what the president wants for the entire Campaign Season which was 970. The cost of raising or eliminating the bush tax cuts on people making over 250,000. And boehner is the hero. How is that helpful . What you left out excuse me, steve, may i finish the sentence . You went the president went from 970 before the election to 1600 after the election. Now youre reporting not from the 970 to 1600. The second fact that was left out of the presentation was that to get to the revenue numbers theres a tax line that was neglected which is the 28 rate on itemized deductions which affects charity, which affects state and local taxes, and the value of the but i think its fair to say that there has been movement. What everybody is saying around the table and what senator corker has said, there has been movement. We are not at some standoff. We are no longer talking necessarily but maybe were mischaracterizing in saying we are no longer talking about ideological points. Let me just say to becky, who seems to always be the most sane one, my respects to all of you, but i think i think the fact that weve moved away from the idealism is correct. Ideology. And i think that is a healthy place for us to be in solving this problem. Unfortunately, weve waited until december the 17th to begin talking seriously about entitlement reform. But senator, the thing that and im reasonable, too. The thing that im seeing is that were still were still talking about boehner, maybe we go to 500. Hes at a million now. Youre talking about the house actually saying go all the way to 39. 6 on the top 2 . Youre saying give them that. Completely. Dont well, im not youre saying thats what theyre going to do and then go back and really argue next year with the debt ceiling coming up about entitlements. That is throwing down. I mean thats how is that any different, joe . Because let me just for next year. Let me propose a solution. Thats a long way from compromise. Thats even more ideological to do it that way by giving up the fight on the 98 and then saying were really going to take it to you with entitlements next year. Well heres what i would hope would happen. I know its not. But i wish the house would just pass a debt ceiling increase today of 1 trillion, accompanied with 1 trillion in entitlement reforms. Ive written a bill that does just that. Offered it on the floor last week. And so, joe, before the end of the year, you could have that settled but youd actually have your 1 trillion in entitlement reforms. Put in place. We were argue youing about 400,000. 500,000. You want to end it on just go off on the top 2 . No, no, no. I think we will be at four, five, six, seven hundred, maybe 1 million. I think the house will do something in that area. Oh, the house is the house bill wont be just back to the clinton level . No. I do not think so. Oh. Thank you. Senator corker, thank you for, gives you a lot to think about and adding to the conversation this morning. We always appreciate it. By the way, while you were talking the market gave back about 20 points in the dow futures. Well see what happens. Okay. When we come back were going to hear from the other side of the aisle, democratic senator kent conrad on the latest white house debt proposal. [ male announcer ] this is joe woods first day of work. And his new boss told him two things cook what you love, and save your money. Joe doesnt know it yet, but hell work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. Hell start investing early, hell find some good people to help guide him, and hell set money aside from his first day of work to his last, which isnt rocket science. Its just common sense. From td ameritrade. Welcome back to squawk box. We are just a week away from christmas and the Holiday Shopping frenzy is on. What are retailers thinking is hot this season . Joining us now to share the research, tom landro the senior retail analyst for susquehanna retail group. What is the hot idea of the season . Well, outside of obviously consumer electronics, which we all know about the iphones and so forth and tablets. I think within specialty apparel, sparkle, glam and glitter in sweaters. Sparkles in sweaters . Do you have any of those becky . Yeah, i know exactly what hes talking about. Theyre everywhere. If we go off the fiscal cliff women are going to go out in style because theyre wearing jeggings and leggings with colors and pat ernst. Theres even a resurgence of meggings which is the male jeggings. Would joe look okay . I was going to ask you whether they make sparkles for men . That may be a whole other jean leggings. Oh, jean leggings. The Lenny Kravitz look. Sort of a hot rocker. Are they stretchy . They are stretchy. So skinny jeans that are i have some jeans but theyre not stretchy. They need to be stretchy. We all know how that feels. Judging from the industry, black friday business was very, very strong. Weve seen this polarization around those big events. So this week we expect to see a big surge in business as well. Theres been a pronounced low after the black friday selling, the season overall has structured to be good. You know, most Single Digits call it. The narrow sector our favorite stocks right now are abercrombie fitch. We upgraded the stock in july. Its up 40 . Remains a top pick of ours. We think there are some merchandising issues going on over there as far as increasing the flow of newness. Theyve cut inventories dramatically. We think theyre a very relevant brand and this is an opportunity to so productivity increase. Thats a stock we like into next year. What do you think . Look, i think theyre ceding market share. This Promotional Campaign they have in place. You can list 100 reasons why it doesnt work, doesnt make sense. Its not instant. Youve got pins you cant put in your pocket, you cant give them to your kids. Youve got to go home to a computer to look at a very tiny number to figure out if you won something. People want instant gratification. You talk about abercrombie fitch. You called gap before it turned. Is there something that we havent seen thats made some of those improvements that you think could be the next thing thats going to turn around . I think abercrombie continues to be one of these places. The stock is up sharply. I think hot topics is an interesting story. Youve got a nice little kiss with 3. 2 yield in this name. And this frances cue story which is a high growth story. Controversial, a lot of things going on there. But thats another one to focus on. Tom, thank you for that. A little kiss. A little kiss. Happy holidays. To you, as well. I saw demi moore just throwing herself at anyway, coming up, pictures coming up, president obama with a new proposal to avoid the fiscal cliff. But are we really closer . Were going to ask democratic senator kent conrad in a few minutes. [ male announcer ] they are a glowing example of what it means to be the best. 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Welcome back to squawk box, everyone. Lets take a look at one of the mornings big movers. Arbitron is being bought by Nielsen Holdings for 48 a share in cash about 1. 3 billion. That is a 26 premium over yesterdays close. Arbitron is best known for Radio Ratings while nielsen, of course, has made its name with rating television viewership. When we return, breaking economic numbers. We are just a few minutes away from current account data for the Third Quarter. That plus senator kent conrad. Squawk box will be right back. [ penelope ] i found the best cafe in the world. Nespresso. Where i never have to compromise on anything. Where just one touch creates the perfect coffee. Where every cappuccino and latte is only made with fresh milk. And where the staff is exceptionally friendly. Nespresso. What else . All right. Welcome back to wk skwk. Were going to talk to democratic senator kent conrad in just a minute. First some breaking news. We are seconds away from Third Quarter current account data. Can you believe its time for that again, rick . In exactly five seconds rick is standing by at the cme. You ready, rick . Oh, absolutely. Three, two, one, buzzer. 107. 5 billion on the Third Quarter current account balance. Which, of course, is a deficit. The last time we were at a number so low, only 107. 5 billion. Let me see, looks around Third Quarter of 09. Third quarter of 09. So indeed that is a bit of a reversal at least from a chronological standpoint. You know what i find fascinating real quickly, a twoyear note yield of 26 basis points. I know that doesnt sound like a lot but weve been pretty much nailed to the wall at 24 basis points. So it goes to show you that there is a little bit of maybe agita going into the end of the year, profit taking under the guise of a hawkish fed under the guise that they may actually use a door for an exit. I dont think the last two guises, well theyre more disguises. We want to continue to monitor the yearend events. Whether its apple or treasuries if it was performing in 2012 it is most likely in the checkout line. Back to you. Laughing at becky yesterday. The ten year from 1. 65 to 1. 75. You just went from 24 basis points to 26 basis points. That got your attention. Thats unbelievable. The world we live in. It is unbelievable. I guess the short maturities, even a see thats why you cant use percentages. I only want to talk to the calm one, becky. Isnt that what mr. Corker said. I want to know if hes really a republican. Wait a second he said no deal here, rick. And this is a bad deal and youre questioning whether hes a republican . Its a horrible deal. Its a terrible deal. Thats what he said. No, thats not what he said. I walked away thinking that he said, you know whats going to happen. Were going to end up passing something and doing all the details later. Which is exactly why both sides play this little game. We were just talking off camera, i think theres rick, hes with ron johnson, whos one of you, hes a Tea Party Guy who wants to go ahead, and have the house pass an extension of the bush tax cuts just for the 98 and then go over the cliff in january, and then use the debt ceiling to extract entitlement and spending. I have a better idea. Theyve already done their compromise. They rose above. You know, playing this little game. Millionaire tax cuts really 250. Go to a million. Lets go to 400. Year not going to rename it 400,000 millionaire and billionaire and thousandaiare. They should say no deal unless its three to one. Spending versus revenue. Thats the ticket. Otherwise, lets take a walk on the wild side all right we have kent conrad waiting. The white house proposing a new deal, thanks, rick. Earlier on squawk box senator bob corker said the two sides are much further apart than is being reported. Listen to this, kent. Were not close to a deal. And ive been trying for three weeks, ive been standing on my head doing cart wheels to try to pivot towards entitlement reform. This is not a deal here. We have a clock that shows when we go over the cliff, if we add a couple of days its when youre done smelling the stables, too, arent you, senator . Does it smell, good, retirement, or not retirement, getting out of the senate . Getting close. Getting very close. Yeah. You heard what senator corker said. What do you make of that . Well, i may not be an agreement that he can endorse and support but i think they are getting close to an agreement that significant majority can support. Its not going to be everything a lot of us had hoped for. Certainly those that were involved in bowlessimpson, the group of six, would probably have had a bigger package. But this is significant, moving in the right direction, and i think quite close to an agreement. And i guess we dont even need to speculate. Maybe, i dont know, Something Like go to 500, do we end up at 500, a little bit less than 1. 2 trillion . And kind of, these kiss your sister spending cuts kind of, senator . Well, look, the spending restraint thats here is real. If its 400 billion dollars on health care, thats real. If its 200 billion on other mandatory spending, frankly, thats real. Its not as much as some of us would have done. If we would have gotten a bigger revenue package. But look, it is what it is. At the end of the day you can only do what you can do in the congress, and this is significant. I dont think it should be underplayed. There will be significant deficit reduction as part of this plan. It does mean we avoid going over the cliff. It doesnt mean were moving in the right direction in terms of spending restraint, and disthen. So those are good things and theyre not easily achieved as readily apparent. Are we going to be creating a second cliff as a result of this . I dont know weve got to see the details before we conclude that. It does appear theyre going to clear the decks of a lot of things that have wasted an enormous amount of time here. The alternative minimum tax. How many times, joe, have we been concerned about whether the alternative minimum tax was going to come back and bite tens of millions of americans . Were going to clear the deck of that. How many times have we been worried about the fix thats going to require a 30 cut to the doctors who treat medicare eligible patients. Theyre going to clear the deck of that. Thats going to free up this place to do other serious work that needs to be done, like fundamental tax reform which i think most of us know is badly needed. Yeah. We probably want both sides really carping, so you know, so we got one side maybe we need the other. Senator, im intrigued by your mention of bowls simpson and how this didnt go far enough. So bowlessimpson had less of a tax increase than this bill, and far more spending cuts than this bill so what happens next . When do we finally get those additional spending cuts, to get back to the kind of bipartisan deal that bowlessimpson laid out . Let me just correct you on one point. Bowlessimpson had significantly more revenue than this package. Significantly more revenue. It was three two one. No. I know thats what was advertised. Thats not what it really was. The way bowlessimpson was advertised wasnt accurate f thats the way Erskine Bowles told us, senator. We asked him last week. You get into this whole question of baseline youre using. If were going to be straight with people, bowlessimpson was about 60 spending cuts, 40 revenue. Thats not true Erskine Bowles himself, though thats fine. But thats because hes using the baselines that were used in bowlessimpson, and i am not going to take your time to bore you with the details. One thing i understand very well is how to make these comparisons accurately. Hes making it on the basis of the baseline that was used at the time, that showed 31. On a fair comparison basis to whats being done now, it was 60 spending, 40 revenue. So, in bowlessimpson, on a fair comparison basis, instead of 1. 2 trillion of revenue, 2. 4 trillion dollars of revenue. Thats a huge difference. And of course more spending cuts, as well. Lets go to Steve Liesman who has a quote from the gop, from a gop person. Source familiar with the negotiations. Joe. Thats the sourcing we have on that. They did respond to our request for a response to the white house proposal and i want to give you the full quote here. Quote, our numbers are 1 trillion in spending cuts versus 1 trillion in revenue, balanced. Their numbers are 1. 3 trillion in revenue and 930 billion in spending cuts. Not remotely closed to balance. Still quite a bridge to close there. I asked whats the difference . Because, of course, the white house is saying there is 1. 2 trillion in spending and the response was they are counting interest savings as spending cuts, which is a joke. Another piece of a difference is as you go to that chain cpi you also affect tax brackets so theres an additional 95 billion in taxes, as well, from what the administration is counting. So, guys, where we are is not just competing proposals. But competing views of each other. Competing math. Of each others proposals. The other thing was, i heard other people complain that the president is also proposing some increased spending. 80 billion here. Right. Or Something Like that. And those numbers hadnt been put into the proposal. So the movement on the president s part as i understand it, he has dropped continuation of the payroll tax cuts but apparently still theres Unemployment Insurance in there, and i think that 50 billion in additional Infrastructure Spending remains part of the president s proposal. All right. Senator conrad, why dont we come back with what steve was just telling us, again, you hear this, and your interpretation of what weve laid out is very different than what weve heard from senator corker just 20 minutes ago. He looked at this and said no deal. He did agree that there was movement there but he didnt think a deal would get done this week. Do you . Well, i dont know the answer to that. I would just say that obviously theyre very close. Look, the difference for example on interest. Every Bipartisan Group has counted the savings on interest as a cut in spending because it is a cut in spending. So every Bipartisan Group has counted the interest savings as a cut in spending. Thats 290 billion. Thats a big part of the difference in this package. Clearly that difference can be bridged. Every single bipartisan has counted interest savings as a cut in spending. Including bowlessimpson. Larry is saying its not balanced. But i will give you absolutely that the Bipartisan Group used these measures and senator conrad obviously you would know as somebody whos been involved with so many of these bipartisan conferences. Look, is there still a ways to go, and its not insignificant . Absolutely. Is this a bridge that can be crossed . Absolutely. Is it in the nations interest to do so . I believe it is. Even though this wont be everything that many of us had hoped for. It is a significant step, and a welcome one. So youre familiar with all the inner workings. So there are a lot of your peers, some senators on the other side of the aisle that want the house to pass that the bush tax cuts for the 98 or some version of that. And then go over the cliff and then talk later. Do you think thats going to happen in the house . I dont know. I would say this to you, i have had two prominent republican senators come to me and say, look, weve got to go over the cliff for just a day at least so we get out from under Grover Norquist pledge. Because, as you know, if youre past january 1st then all of these things that are talked about as tax increases are scored officially as tax cuts. And so, some republicans, at least, believe very strongly that that gets them out from under Grover Norquists pledge. Wow. I see why youre leaving. Its a lot of inkrutable things happening there. Yeah, its a lot of inkrutable things. I say this to you, the complexity of these things is far more than can ever be explained in a 30second sound light. Bite. When you get into the budget world, its its own world and it takes real homework to understand whats really happening. But, again, i think its important to say, this step is an important one for the country. It moves us in the right direction. It avoids what could have been a calamity for this country. At least in terms of the economics. And its moving us in the right direction. So, hey, we can applaud that. Is there more to be done . Absolutely. There will be more chances. All right. The right is screaming too much. I definitely want the left screaming a little bit more. I do. I want the left screaming a little bit more. Theyre not screaming enough. Would you plain a little bit more . Just wait. Just wait. They will . Oh, my goodness. They are going to be very, very upset with parts of this. Really . I look forward to that. Chained cpi. Just wait. Really . Okay, now youve piqued my interest. Now you got me. You had me at hello. Okay. Coming up, morning star named in the 2011 Domestic Stock Fund manager of the year. Sector picks from james kiefer and dont miss squawk tomorrow were going to talk markets, the economy and the fiscal cliff with Evercore Partners Ralph Schlosstein and leon cooperman. Welcome back to squawk box. The futures right now are back up 50 points or so. More or less where theyve been through most of the session. We are continuing our whats working series with a look at sectors to watch. In 2013. Joining us now morningstars Domestic Fund manager for 2011 jim kiefer. He was managing director. Are you comfortable telling us what to do next year when we still dont know whats going to happen in washington . Sure, sure, business is going to last a lot longer the next year. No problems. What kind of things should we be looking at . I think you want to be busy in the tech area. Tech has been a lagger for the past year or two plus. You look at blue chip tech in particular you see some really cheap names there. Very attractive valuations. Think of things like cisco and oracle and microsoft, and these things are drowning in cash. You Love Companies that drown in cash and youre getting these in single digit multiples. I think youve really got price you really dont want them to drown. You Want Companies to drown, cash just continues to pile up. You want them alive. What about i mean, hp was one, you didnt mention hp. Didnt mention hp. Hp is a trickier situation, a lot more complex. It could be right for some investors, its not really the right next for us. Did you say ibm. Ibm is not a name we own. Google . Similar success. Google is another same that certainly is of interest to people. Apple . Apple is. Apple is a nice name, still. You know, its oh, yeah . Hey, its back up here again so its back to a level of interest for us again. Youve got a lot of potential ahead of the company. Yeah, its not going to work perfectly every quarter for the company. I dont think thats what its about at this price. Okay other than tech what about anything in health care, pharmaceuticals, manufacturing, what else . You know, watch the falcons beat the giants and i kind of felt some pity for the giants fans and thought they should invest their times in looking the other tish organization, look at lowes. Thats a cheap name. Youve got Oil Interests there. Youve got lots of energy interests, really, and insurance names and some smart capital. You can just add up the prices, ill even do it for you and youre getting it a lesser price than what its selling at in the market. Keep going. Flip side berkshire, youve got Warren Buffett saying ill buy your shares at 1. 2 times book. The smartest investor out there saying ill take those shares away from you, and youre not willing to have ownership of them i think youre missing out on something. That is interesting. What about other financials . Hatteras is a mortgage reit. A lot more controversy here. This is about steepness of the yield curve and low rates for a long time so youve got the dividend under pressure. Valuation under pressure. Business is under pressure. Youre going to see declining dividends and so forth. Beat up at a discount to book value, run by a very conservative Management Team that recognizes the task. Theyre managing it carefully, i think youll face some pressure, wont be fun between here and call it the next six months or a year, may be that the valuation is compensating you to be on board there. So you kind of backed your way into an energy investment. What about just outright some plays in that apache. Apa. Apache is a, you know, if youre looking for guys who are very smart, and disciplined about how they run their operation, apache is a goto company. I mean, it is a goto company for other companies that are looking for management players. Apache has got a lot of, what do you call it, veterans have gone on to run other businesses. So apache is one whos going to manage that sector, manage whats going on in that sector very carefully. I think the valuation is interesting. You buy anything at this multinational big cap consumer stuff . We dont have as much in the consumer stuff. Those kind of more stable businesses have been popular with folks, with the concern about the volatility in the economy, and in the market and so forth. We go into more of where if theres fear and anxiety. You want bigger moves. All right. Jim kiefer, thank you. A lot to digest. We appreciate it. Thank you. See you later. When we come back, we have more from our guest host Larry Lindsay. Were back in just two minutes. Welcome back to squawk box, everyone. Dow futures up about 41 points. S p futures up over 4. 5 points. There are questions out there about how to characterize whats happening with the fiscal cliff. We had looked at both sides, and assumed this was movement. This was progress that the two sides were coming together. We had senator bob corker on earlier who took issue with that. He said, that may be movement, but a deal is still a long way off. We just spoke with senator kent conrad who said this is the makings of a teal from here. A lot of questions of how to characterize what were hearing from the two sides overnight. The street is still going to be watching that. The New York Times reports the final settlement is likely to be close to the 870 million set aside by the company. The criminal case deals with an investigation related to sales of two anemia drugs. Most of the ten whistleblowers are expected to be unsealed for the first time today. Coming up, our guest host this morning has been Larry Lindsay. Well give him the last word when squawk box returns. Tomorrow, well talk the markets, the economy and fiscal cliff and more. [ male announcer ] you are a business pro. Omnipotent of opportunity. You know how to mix business. With business. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above. And still pay the midsize price. I could get used to this. [ male announcer ] yes, you could business pro. Yes, you could. Go national. Go like a pro. Nespresso. Where i never have to compromise on anything. Where just one touch creates the perfect coffee. Where every cappuccino and latte is only made with fresh milk. And where the staff is exceptionally friendly. Nespresso. What else . Stock of the day, arbytron, and neilsen is buying the Radio Ratings firm for 48 a share. About a 1. 3 billion. Thats a 26 premium over yesterdays close for arbytron. Did we rate our simulcast on sirius . Arbitron its straight up commercial. Yeah. Lets get back to our guest host Larry Lindsay for the last word. Whats your last word . I have a last word . Yeah. I think were going to have a lot of trouble getting to the deal. I dont think theres a lot of specifics in the president s plan. I think he made a mistake by moving from his Campaign Pledge of 970 billion to 1600 and tried to come down. I think the right number is 1 trillion. That theyre going to be compromising on. If they compromise, i dont think the president can go there. He doesnt have the specifics of spending cuts. I think what the house is going to do is basically pass the senate bill with a modified number. Is corker saying all these headlines on the front pages of the papers today, were getting closer . We may be getting closer, but i dont think were going to be close enough. I really dont think in his heart the president wants a deal. I dont think hes willing to deliver the spending cuts needed maybe he cant deliver them. And he may not be able to deliver them. His constituents are saying theyre inflexible on this. Thats why i think the president was unwilling to put forward any specifics. There are people that want to increase what the government is doing ri

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