good morning. decision 2012. president obama re-elected to a second term. republicans retain control of the house. while the democrats keep power in the senate. >> tonight, in this election, you, the american people, reminded us that while our road has been hard, while our journey has been long, we have picked ourselves up. we have fought our way back, and we know in our hearts that for the united states of america, the best is yet to come. >> we have left everything on our field. we have given our all to this campaign.

i so wish that i had been able to fulfill your hopes to lead the country in a different direction. but the nation chose another leader. and so ann and i join with you to earnestly pray for him and for this great nation. >> investors say they've been waiting for this answer for months, after uncertainty that's been hanging over the markets. but what will the status quo in washington mean for stocks, bonds, currencies, and commod y commodities, and qe-3. but there's still the issues of that fiscal cliff. this morning, we're calling on leaders to solve this, to rise above partisan politics and come together to find a solution and save the u.s. economy from going down a dangerous road. it is wednesday, november 7th, the day after and a special early presentation of "squawk box" follows the late presentation that we had yesterday. but it starts right now.

good morning, everyone. welcome to "squawk box" here on cnbc. and yes, we know it's only 5:00 a.m. on the east coast, but you don't have to double check your clocks. on the morning after election day, we couldn't wait until 6:00 a.m. to get back on the air. the american public handing president obama four more years in the white house. meantime, the balance of power stays the same in the senate. this morning, we have two main items on the squawk agenda. after months of handicapping the race, we'll find out how the global markets react to the decision and ask how you need to position your portfolio. we have a number of people on hand to help us with that task, including mike santoli. he is our guest the next hour. chuck gabriel, his job is to try to connect the dots between washington and investors.

we have jeremy seigel. also, vincent rinehart. we'll be join by bill gross. our second item this morning is the fiscal cliff. joe talked about this. this ticking clock can be heard from washington to wall street. we turn our attention to this immediately today. you have corporate leaders from jamie dimon, warren buffett to jeff immelt. among our partners in the crusade, we have a trio of duelling guest hosts. we are joined by jared bernstein. also tony fratto. at 7:00 eastern, roger altman, and david walker. in the final hour, we have two former chiefs of staff. john pedesta and ken uberstein.

>> let's begin with the presidential race. phil lebeau has been working overtime. he spent the night at obama headquarters in chicago. hampton pearson is with the romney team in boston. but phil, we will start with you. >> andrew, good morning. it's only been a couple of hours since president obama gave his victory speech here at mccormick place. and that speech a lot of people were looking at and said did it set at least initially the tone for his second term in office. during the speech, he talked about the country coming together and ending the divisiveness that has been typified by the campaign over the last several months. in particular, he made mention about the deficit and coming together to work on solving the deficit, and more importantly, the republicans and democrats finding some solutions. >> whether i earned your vote or not, i have listened the you. i have learned from you. and you've made me a better president.

and with your stories and struggles, i return to the white house more determined and more inspired than ever about the work there is to do and the future that lies ahead. >> president obama will return to the white house later this afternoon. he spent last night here in chicago. he and his family will go to the white house this afternoon. and what will be interesting to see what happens now is when we might hear from the president when he sits down and says okay, at least initially, here's some of the things on our agenda for the beginning of my second term. when he got elected the first time around, he sort of sat down and mapped out exactly what he wanted to do, at least initially. that time, there was the crisis with the economy. this time around, will he do the same thing? that will be what a lot of people are focused on over the next several weeks. >> good morning, phil. when all was said and done, even

an 11th hour challenge by the romney campaign in ohio wasn't quite enough to offset what the obama campaign did, and that was almost running the table as far as winning those key battleground states and the electoral college count. so we saw mitt romney take stage here, almost at times apologizing to his supporters for not quite getting across finish line, but also at the same time, acknowledging the choice made by the american people. >> paul and i have left everything on the field. we have given our all to this campaign. i so wish -- i so wish that i had been able to fulfill your hopes to lead the country in a different direction, but the nation chose another leader, and so ann and i join with you to earnestly pray for him and for

this great nation. >> and in a matter of minutes, it was all over. romney and his running mate paul ryan and their families exiting the political stage. the pictures and the imagery kind of said it all. back to you guys. >> hampton, thank you very much. we go from the white house to capitol hill. the balance of power stays the same in congress. eamon joins us now for that side of the story. >> democrats needed 25 seats to take over the house of representatives. they didn't get there. i think we've got a graphic here that will show what the spread was in the house. and you look at that, you see the democrats had a long way to go. 197, 238. and look at the senate. in the senate, republicans were hoping going into the night that they might be able to get four pickups in the end of the day, we looked at a democrat-plus two situation. two independents, angus king,

the independent who was elected last night from the state of maine, has not said which party he'll caucus with. in the end, it won't make the difference in the balance of control in the senate. we're expecting that he'll caucus with the democrats, but i talked to his aufts eaoffice ea the week, he said he wasn't going to decide until after the election. >> is he just wait for the best offer? >> if it was going to come down to a one-vote margin, it would put him in a heck of position. >> as a voter, you're waiting for a good offer, but as a voter, you'd think you'd want to know what you were going to be getting before he went into it. >> i think you know you're getting a guy who's very savvy and not telling you exactly where he's going to caucus. so you go into it as a voter knowing this is the type of guy you're voting for. in maine, it worked for angus king last night. in maine, you have a history of moderate republicans and now independents. it's sort of a maverick political environment up there. so look, the united states

senate stays with the democrats. they have a little bit more strength now than they had before. house is with the republicans. the white house stays the same. so now the deal making for the fiscal cliff begins. we know where all the musical chairs are. paul ryan, not the vice president. he won his house race last night. he'll go back to the house of representatives and he'll be a leading figure at the table, making this deal on the fiscal cliff. now they have to get down to brass tax. >> the comments that i heard from john boehner yesterday morning, which i don't know if they were yesterday morning or if they had come out the night before, still stand -- party lines, sticking by things and not bending on anything. when we talked to eric cantor yesterday, the leader in the house, when we talked to eric cantor, he sounded like he was maybe at a point where they would negotiate a little bit more. >> a lot of people looked at that boehner comment as i draing a line in the stand about not raising taxes. saying it's going to cost us 700,000 jobs. why would we do that?

interesting enough, boehner made those comments before the election. he's from ohio. a lot of people thought he's telegraphing that he thought obama was going to get re-elected and he wanted to put a marker down. we've had democrats like schumer putting markers down on the left. boehner putting markers down on the right. so we're exactly where we started a year and a half ago when we started this whole debate about taxes and spending in this country. somebody's going to have to give. obama, the word compromise came out of his mouth during the speech last night. is there a moment now post-election where people can maybe all come together and meet in the middle? possibly, but people are pretty entrenched on this thing. >> john harwood has followed every twist and turn of this election. he joins us onset this morning. there's two issues, john. we've got the fiscal cliff issue and then we've got the fiscal abyss issue. i'm wondering -- here's my biggest question. now that the republicans don't have as their single mandate to prevent a second term, that's off the table now, that's a

whole new ball game for these guys. that's not going to be the thought behind every thing they do. the president no longer is thinking about re-election, so maybe he doesn't have to look at his base all the time with the bush tax cuts. remember, he did it once. he got in trouble with his base and he heard a lot of flak. could he now say all right to that base and say maybe i'll let all of these go to solve the fiscal cliff for another year and the republicans say fine? or does he have to stick with that 250 and above they expire? >> well, look. if you care about reducing the deficit, letting all the tax cuts expire is not a bad option. >> that's the fiscal cliff. that's why we're wearing these buttons. that can't happen. >> it can happen. >> no, it can't. the market would go down. don't let that happen. we'll go into a recession. we'll have negative gdp growth. >> well, look. the fact that most people in office do not want to raise

taxes on everybody, but that's going to happen -- if nothing happens, gives president obama a negotiating leverage. so does the fact that he won re-election last night. >> i know. elections have consequences. >> exactly. and so what you have is president obama is in a stronger position. republicans are in a weaker position. significantly weaker. you look at what happened in the senate, it's stunning, that given the number of democratic seats at risk, that democrats may come out with a stronger majority. they went in with 53. if they win in montana and in north dakota where their candidates are leading, we don't have all the votes in, but for them to come out of a race where most of the seats at risk were democratic, and instead of a slam dunk republican takeover, democrats are stronger, that puts them in a better position to negotiate. the real question, joe, is going to be will the house republicans -- and that's why becky's comment about what eric

cantor said is so significant. will republicans wake up in the house and say we've got to make a deal with this guy? alan simpson told me a couple months ago that if obama's re-elected, republicans having failed in a very long attempt to defeat him, there's going to be a window where they say look, we've got to do business with them, and the key part of doing business with him, with respect to the fiscal cliff, is agreeing to some tax increases, whether it's rate increases, whether it's revenue from the top end. that's the president's ask in return for entitlement cuts. republicans say yes. >> get back to the same deal that they all walked away from, the deal that blew up, which was $3 that he cut from spending for every dollar that you raise in revenue. or sit something a little different? >> i think we could get back there. i think something's got to get both sides off the dime. president obama and john boehner, the house speaker, got to about the two yard line of

their negotiation. but the problem was republicans in the house were not willing to go along with tax increases. and if that changes, if they're willing to do that, i think we'll get a deal. we'll not be consummated in the lame-duck session. we'll have the beginning of the negotiation that will be complete in the early part of 2013. >> that's why the john boehner question was so important. >> he was waving a big red flag out there saying we're not going to do that. that's what he was saying. he was saying we're going to hold the line. >> the tea party dominated the house. don't you think? >> remember, john boehner would raise taxes in a heart beat to make that deal with president obama. it's the caucus of the house republicans that has been holding back. >> back in 2010, the argument was okay, so we didn't defeat

harry reid. but still a net positive, the tea party. look what it did. now you've got to add about three or more more. republicans lost lugar's seat after how many. you have to look at it now and say that from 2010, the pendulum swung back in the general population much further. >> it's also the self-destructive parts of the republican party. >> the tea party is probably a negative in this most recent election. you could still argue in 2010 it was a positive. but at this point, you're cutting off your nose to spite your face. >> they are taking slam dunk victories and just throwing them away. >> the house might be weakened. >> i don't think if i was a tea party guy elected for one term, i wouldn't be nearly as emboldened. >> if i was boehner, i wouldn't

pay nearly as much attention. >> the experience of the debt limit increase, which took a manifesto on the republican party, made an impression on some of those members of the republican caucus. so you already saw beginning in the late summer of 2011 a shift in outlook by some of those members. you couldn't presume the negotiation until you had an election, but they've been chacined by their experience by going to the cliff with president obama in the debt limit and i think that is a sign that the negotiating climate had changed and will change more now. >> inside the republican party right now is there a discussion about buying a bigger tent? >> of course. >> has to be. >> absolutely. >> everybody. they lost colorado. >> you have to do immigration. you have to do women.

you have to do minorities. the whole thing. >> i told you my story. listening to the radio, people that had been decided in the last week -- this guy eloquently made the case for free markets and initiative and then he goes, but i happen to be gay, and i voted for president obama because i want to be living in a country where i have the same freedoms as everybody. he wants to be a republican and he can't be a republican. that's got to change. it's got to change with women, too. >> and immigration issues. immigration is a key issue that every business leader wants it addressed. there has been no progress. >> fiscally conservative but socially liberal. >> you take the evangelical, the conservative christians out of the republican party, there is

no republican party. >> where did it get them yesterday? they satisfied the base. where did it get them? >> it doesn't get them all the way there. as andrew said, they've got to figure out a way to broaden the tent. but they've got to figure out a way to do that. >> we've got to start over. >> buy a bigger tent, that's what they need to do. >> we touched on this issue, but the fiscal cliff is here. if there's not negotiation, if there's not something where you find a way to compromise across the aisle, how does the market react? >> i think the market is putting its chips on the idea that both sides can recognize this is not -- there's nothing actually real about this deadline. it's manufactured. it can be deferred, if nothing else. so i think the market figures -- look, we kick this a little bit down the path and then we can figure out the big picture. >> but that's the key, is a little bit. we may have six months to go, but it looks like if we are kicking this continually down the road, then you've got bigger

problems, too. >> i think the market, as long as they feel as if the ingredients might be there -- and i don't know how to exactly war game the whole thing in terms of who's got the most to lose in a cliff scenario. but if you do actually go over the cliff, then guess what, republicans are not voting for a tax increase if you come somewhere below what the rates revert to. so all these things i think get into the mix. and to me, it is about, as john said, what happened with the debt limit increase. what they believe was a principled stand, what did that ultimately win them? what was the point of maximum pain for how they actually stood in that debate? >> let me tell you something last night about these tea party freshmen from 2010 in the house of representatives. 19 of them joined the tea party coalition in the house of representatives. of those, 17 were in totally safe seats, right? so for these guys, it's not really about their political futures. it looks like they'll continue to get re-elected.

so does that free them up then to make some decisions and say hey, wait, we were learning from experience, we don't want to go over the cliff. >> or does it free them up to say hey, i'm going to be completely principled. >> or do they get to say i want to be what i can came here to be and i'm going to continue to be that no matter what. i'm not going to be defeated. whatever wave is happening at the presidential level is not affecting these tea party republicans in the house of representatives. they can be there for as long as they want, unless there's a scandal, which there always is in the house of representatives every now and then. but these guys, they can stay. so who do they want to be now? that's the question. >> so did joe biden know what he was doing when he forced the president's hand on gay marriage? was that all planned at this point? >> well, it was planned. >> you look at immigration got them to 75%. that's never been that high before. gay marriage -- >> what do you mean? >> won 75% of hispanics. >> but he didn't pass immigration.

>> i know. but you know the move that put him in stark contrast to what romney had to do. had to move right to get the nomination. i'm looking at axelrod and thinking -- >> that mustache. >> that is a coalition that ended up a million votes or two million ahead of the other side. and it included women as well. but each one kind of got something and the republicans didn't have the same thing to offer those people. >> they offered tax cuts, but tax cuts are not popular right now. mitt romney barely talked about it. >> so the question is what's the group that the republicans can reach out to and add to their coalition and take away from the democrats right now? >> if you're just selling small government to people, small government and less stuff -- i mean, it's a weird person that says yeah, i like that. give me something. >> that will get you a certain

number of people, but republicans have built an economic and social conservative base. the two parts are equally matched and they need both of those things to get anywhere near 40, 45, 50% of the nation. how do they find another group out there that's big enough. >> even if you get away from the social stuff, you lose the whole party? >> yes. conservative christians are the base of the republican -- the foundation stone. >> there's not enough angry white men in the world. >> goes against republicans over the next couple of years. you're going to see huge seat changes. >> angry white men? that's the republican party's base, angry white men? >> you, maybe. >> when you say that, that doesn't describe me at all in terms of the social issues. i don't see that as the base of the party at all. i see the base of the party, almost more libertarian than republican at this point.

less government, having prosperity come from the private sector and not from the public sector. that's all it is for me and all it is for a lot of people. where did the social issues get -- that's why so many of the republicans last night, like sort of the mouthpieces of the party were wringing their hands with this has to change. jeb bush -- remember what he said about three or four months ago? he said look, regardless of what happens in this election -- >> you don't need a big brain to figure this out. >> how smart was christie? i think christie is pretty smart, too. >> how so? >> yeah, he maneuvered. >> how so? he's in a stays where new jersey is going to vote for the president by 19 points. we just had a hurricane. >> he was always in a state -- >> i know that. he did not push himself away from the president most recently. >> he's the keynote at the republican convention. >> what christie did, though with the hurricane was really good for the state. >> it was good for the state. >> it's good for the state. >> it was also good for him in a

couple years and it was also not a great idea to push -- >> you think it would have sh e changed the outcome? >> it might have. >> you might be right. >> the pick of ryan, it solidified romney's right wing -- >> i like paul ryan a lot, but i think the second they picked paul ryan, it pushed them to the right. >> chris christie showed at the republican convention that he's not a great number two. he doesn't carry out orders, which is what a vice presidential candidate has to do. >> what if the "post" story was right, that he would have been vp but he didn't want to do it because he didn't think he was going to win. >> politico reported that chris christie was not in the end offered it and was a little bit of a jilted bride. so there's a couple different narratives out there. >> there are. >> so maybe when the books are written on all this, we'll find

out. >> that was in politico that said romney got back from the euro trip and had settled on ryan, even though he went over there thinking christie. >> and christie felt like well, wait a second, how come i didn't get a more polite response. >> christie served in the bush administration and still wouldn't back romney because of women's issues. as of yesterday, she didn't say who she was voting for. she was the epa person in the bush administration. because of social issues couldn't support -- >> she said last night the idiotic comments he had out of some of these senate comments, the things they said about women, there's no way republicans can continue. >> the question is where is that other group that's going to get them over 50% that they can bring into the tent? >> it's not a hard question to solve. latinos. they already know that. >> 10% of the electorate versus about 2%. >> so you're saying keep the social issues but work on immigration? >> they're going to keep the social issues. >> we have to get to braechbeak.

>> hispanics are the growth potential for republicans. the question is how that they get out of the thrall of people so concerned on the immigration issue. it's a break they have to make but they haven't been able to. >> we're going to slip in this break. if you have comments, questions about anything you see here, shoot us an e-mail. coming up, the global markets reacting to the u.s. election. we've got live reports from london and singapore. that's next. first, as we head to this break, check out the futures after this -- it was a surprise for me. [ female announcer ] want to spend less and retire with more?

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i believe we can seize this future together, because we are not as divided as our politics suggest. we're not as cynical as the pundits believe. we are greater than the sum of our individual ambitions, and we remain more than a collection of red states and blue states. we are and forever will be the united states of america. >> welcome back to "squawk box," everyone. it is approaching 5:30 on the east coast. we've been watching the u.s. equity futures this morning after president obama has been declared the winner of this latest presidential election. you can see now the dow futures are indicated higher. s&p futures up by just over five

points. dow futures up by just over 35 points. let's get to the overseas markets. emily is standing by in hong kong, but we're going to start things off with kelly evans who has the latest on the reaction out of europe. >> we've spent so much time looking at the u.s. state map that i thought we'd give europe its share of the time this morning. take a look at the map behind me. you see the message is print consistent. it can be summed up basically in two words -- risk on. whether it's the ftse here in london. we're seeing gains in the range of a third to half to 2/3 of a percent. even france and spain are playing into the rally. i do want to sound a note of caution this morning. and it's coming from greece. the athens composite, this quote is a little bit delayed, but it is now down more than one percent. tonight, greek politicians must vote to get the next round of

aid, otherwise they'll run out of funds by the middle of the month. this comes at a time when the coalition government is struggling to stay a coalition. this is the one to watch. the selloff that we've seen in this market, which started positively today, could be a sign of what's to come if the risk attitude continues to fade. as i mentioned for the time being, we are seeing the supportive mood. we're seeing the italian ten-year fall into 4.87%. the spanish tenure will be back up 5.63%. in both of these key barometers, we have seen a significant rally overnight on the news of president obama's re-election. if there is something that could maybe give traders a bit of pause today, it's going to be the news out of greece, where there are major protests for the second straight day. athens is effectively shut down. the vote tonight could well determine the future of greece in the eurozone. on that note, i'll send it to emily chan in hong kong. >> it was a mostly green arrows across asia with obama's re-election. the nikkei recovers early losses to end the day off two points.

over in south korea, shares rise to a two-week high on exporter stocks. australian markets are bumped up by banks and minors, and with the u.s. election done, we wait on a key leadership meeting in china, which will usher in a once in a decade change of power. that meeting kicks off on thursday and lasts for one week. the china composite ended the day flat. here in hong kong, the hang seng index produced its first gain in three sessions propped up by developers. that's a look at your trading day in asia. back to you guys state side. >> emily, thank you very much. our guest host is mike santoli. we were just talking in the commercial break a little bit about how you look back and it's really easy with hindsight to go back and say what went wrong with the losing candidate. >> yeah. well, initially, if you really look 20 years down the road, you'll see we had this massive financial crisis. banking system and leverage was right at the center of it. a couple years later, the

republicans say we need a private equity guy who made his fortune in leverage and he's got this massive personal fortune as well. maybe in retrospect, that was kind of a fatal handicap. clearly, it was close enough that it could have gone either way. but i also think that the race from romney's perspective was framed and probably correctly so a year ago as we can stipulate that the economy is going to be not only the biggest issue, but the public is beginning to be so ornery about it and so disconsulate about it that they're going to want a change. you'll tell them whatever we offer, it's going to make the economy better. >> the economy was the main issue. >> there's no doubt about it. it's just stabilized enough. we've been over a year without a real crisis. you've had this very slow steady kind of grinding improvement in a lot of the measures, houses and cars. and jobs to some degree. i think the consumer confidence number, this balance we got in consumer confidence to a level not seen since 2008 just showed you that that really huge pressure on people's economics

psychology was relieved a little bit. not terribly. and osf course the swing states had a slightly better than average unemployment declines. it was something that didn't become a no-brainer to say we think the economy is going in the wrong direction. >> so how important was bernanke in qe-3 in all this? >> for voters, not in the least. >> unless you think qe-3 was propping the markets up and adding to gain gains. >> if you look at the last three months of where the psychology of where the economy was going. >> it was clearly a level of support underneath everything that's gone on in the economy that i think you can say was instrumental. but i don't think really it's something that can be isolated that easily. i mean, the entire world right now, central banks are across the entire world are giving money away, right? >> we're leading the charnge. >> the growth here has been slightly better than average in the rest of developed world. i do think it's not automatic

that when central banks start to get aggressive, therefore the public says -- and the economy performs well enough that it satisfies enough of the public. >> joe, you also talk about that market indicator. that was higher yesterday. >> it was higher. we pretend we want austerity in europe and that we want austerity here. but then we tell greece what we really need to do in greece is to let them get out of the euro so they can devalue their currency and so they can become competitive again. what you really talk about there is none of us really want austerity and all our currencies are going to be debased. around the world, maybe we don't need any austerity. maybe we just need to print more money and keep the printing presses rolling, debase everyone's currency and we'll see where it is after it's all said and done. >> you don't need austerity now or in a hurry. you need this kind of general structural trajectory to where you're not completely going off the map. >> if we do qe-p, everyone else

is going to. >> i think you have a real life laboratory in the uk in ireland. >> what did we learn from the past ten years in europe, or the past 20 years in europe that set us up for having to do this? now we're going to have to put all that on hold. all of the stuff that people want to do. coming up, for days, the pundits said the election would come down to ohio. scott cohn is in columbus. scott? >> reporter: and the pundits were right. this was the state that put barack obama over the top. how did he do it? with a secret ingredient. and we'll tell you what that is when this special edition of "squawk box" continues.

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we're back with this special edition of "squawk box." scott cohn is in columbus to tell us what a battleground state ohio was and how it really did change the outcome. >> reporter: it did, andrew. this state with 18 electoral votes is almost an uncanny predictor of presidential elections. no republican has won the white house without winning ohio. and that record holds true again this time. how did president obama to it? he did it by closing the enthusiasm gap that people were talking about and really turning out his base. take a look at the scene last night at the polling place at ohio state university. this was a pro-obama precinct, to be sure. and as we reported last night, as the polls were closing around 7:30, there was still a two-hour wait to vote. they were stretched out the door, and they had been turning out at this precinct that we

were watching all day long. take a look now at the numbers and again, how the president and his campaign turned out the base. cuyahoga county, that is cleveland, it was perhaps more an obama stronghold than people expected. hamilton county, that was romney's best hope for urban areas. the stronghold counties, appalachian, coal country. but they didn't go for romney to the extent that they went for mccain in 2008. in fact, when all was said and done, some people stayed home. turnout was actually down somewhat according to the secretary of state from 2008, and that seems to have been the romney voters staying home. was it the last-minute attacks on the auto bailout that

backfired here? was it just the fact that ohio's economy is doing better than the rest of the country, so the economy message doesn't work? that we don't know. but the enthusiasm for the president that people were talking about actually did come back in ohio. guys? >> and that's the one poll that most people still had five or six points. some polls still had five or six for ohio. that's why everybody still felt so confident. but it came out at two. i'm from hamilton county. i looked at that. there it is. that is the difference probably right there. if a republican can't carry hamilton county, they haven't done something right. but after all is said and done, did you see the total number of votes? what was it, over five million? you're talking about a difference of 100,000. >> yeah, 5.3 million. >> 100,000. >> but your home turf, that was

the issue. when romney first said they were not conceding ohio, it was before a lot of those votes came in. when those votes came in with about a 20,000-vote lead for the president and only about 20,000 provisional ballots that might have swung it for romney. >> i was kidding, scott. i said it's not just hamilton county. it's actually my street. gayle collins lived up here and i lived like eight houses down. it was actually that street. it's unbelievable, though, that it was hamilton county again. but cincinnati is one of the most traditionally conservative places, scott. and that's very telling right there, that couldn't even carry hamilton county. and that's all she wrote. >> that's right. >> in the end, really all it did was preserve ohio's bellwether status. >> it's interesting, i saw some of the exit poll information yesterday, where something like 30 something percent of people said they were conservative, maybe 33%, maybe 35% of people.

27 or 29% of people identified themselves as liberals. more than 30% of the people who were coming out of those exit polls identified themselves as moderates. and that was the question, is where those moderates were going to fall. i guess that answered a big part of question. >> reporter: joe, you know it, this state is so much a microcosm for the country, and it is polarized. but there's a lot going on on both sides. it's no great surprise that there was that big moderate center that could be pulled either way. and we don't know when exactly they broke. but i'm telling you that we were talking to student and we were talking to some of the other folks here in columbus. they were enthused to a degree that i frankly wasn't expecting given all that was talked about with the youth vote and so on. they were fired up. so the obama campaign clearly

peaked at the right time. >> social issues becoming more and more important, especially to college kids. how many college kids care whether gay people get married? don't get me started. >> they do care. >> that's what i mean. or women's issues. want everyone to be equally free. anyway, scott cohn, thank you. talking about four years from now. chris christie. i'm giving you that. socially, you're not going to have any problem with him, right? >> chris christie or rubio? >> i think paul ryan, by the way, off the table. >> you might be right. where has he been on this show? >> he hasn't been on this show. he hasn't been on both shows. >> they got him and then they didn't want him almost. or they started playing the

rope-a-dope. >> gosh, i agree with everything you said. but i never heard benghazi either. what about that rope-a-dope strategy? coast. you're ahead by a point. you can rest. stupid. >> we're going to continue to talk about this all morning long because we're looking back at what happened, trying to figure out where we head from here and how we start to deal with the fiscal cliff, which is the next looming issue. i think brian williams said it best when he said the president has been re-elected and now there are lots of problems that we need to be dealing with. if you have any comments or questions about anything you see here, e-mail us. when we come back, we'll head to the trading pits in chicago and ask how the folks there expect the election results to impact today's session. we have chuck gabriel on the sectors you should be playing. take a look at the futures. they are up across the board. dow futures up by about 19 points. s&p futures up by just over four points.

gridlock in washington is traditionally welcomed on wall street. but we've had a lot of it. is that true this time around? joining us live from washington is chuck gabriel of capital alpha partners and jeff killburg of treasury curve joins us. we usually, chuck, don't have a fiscal cliff staring us in the face, where if we do nothing it happens. so this is a different kind of gridlock. >> yeah, absolutely, joe. i feel your pain, by the way. i've been listening to you this morning. >> well, i look at you, and i've told you you look kind of like mitt romney. so i'm kind of unhappy with you today for kind of playing it safe. it wasn't you, but to me you

look like him. where were you in that third debate? >> one of the questions is where was he in the third debate. >> that's what i'm saying. >> probably missed an opportunity. >> we begged his campaign from day one to come on the business channel of record and refute the bain capital stuff and got nowhere. got nowhere to try and get him on to talk about that stuff. so you make your bed and sometimes you sleep in it. but what do you expect to happen? >> well, i think the markets might -- it's interesting, i think the market reaction might be quite positive just because the europeans are clearly voting with relief that this means the u.s. isn't going to go down the austerity route. and it looks as though that qe-4 will be fine as early as the end of the fourth quarter. but we do have to deal with the fiscal cliff. the democrats had a big night, particularly in the senate. they'll view this as a mandate of sorts. what i call a straddle, the notion of actually talking past each other.

the house plup republicans hadd night, too. two out of three americans don't want to raise taxes. the odds of actually allowing the tax relief to lapse and having to reconstitute it on the other side have certainly increased. >> but when patty murray said all right, we'll take you right over the fiscal cliff. you're riding in the back. we'll drive. i don't believe that threat. i still -- do you really believe that they'll do that? but that the house republicans are in a much weaker position probably at this point. >> they're in a much weaker position. i'm with you. i still don't think they're going to go there. i think we'll have suspense about that for several days now. that's going to somewhat cloud what senior otherwise a really positive backdrop if you're into the printing presses. and that's where we're heading, no question. >> we've got two minutes for the interview. jeff, any thoughts quickly? and then we're going to have to go. >> well, joe, i think you hit the nail on the head here. earlier, we were talking about

this race to debate. underinvested in the market. so we'll see -- it's been a long, long time back to september since we talked about mario draghi. but the leader of the ecb as well as bernanke, we'll see that printing press continue. i think you have to be invested. risk-on. >> thanks, jeff. thanks, chuck. two big guest hosts coming up at the top of the hour.

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tonight, you voted for action, not politics as usual. >> "squawk box" breaks down the election results and what it means for your investments. >> and we know in our hearts that for the united states of america, the best is yet to come. >> from early market indicators to overseas reaction, "squawk box" is the place to be when it comes to your money and your

vote. >> good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. and we have a winner. >> i am looking forward the reaching out and working with leaders of both parties to meet the challenges we can only solve together, reducing our deficit, reforming our tax code, fixing our immigration system, freeing ourselves from foreign oil. we've got more work to do. >> we'll have reaction and your money covered all morning long as the markets get ready to digest the results. in studio with is us is tony fratto and he is now managing director at hamilton place

strategies. also jared bernstein. coming up at 6:30 eastern, we'll add a little bit of international flare with goldman sachs asset manager jim o'neill. at 7:00 eastern, we have david walker on the election results and the fiscal cliff. and at 7:30 eastern, we have business legend, author, and cnbc author larry bossety on what businesses large and small will need to know as a result of the presidential election. >> we're going to get straight to chicago right now where phil lebeau is standing by. he's at president obama's headquarters. phil? >> and they are starting to break down the stage here at the mccormick place just a few hours after president obama went onstage and gave a victory speech celebrating his re-election. during his speech, it lasted about 12 to 15 minutes, he sent out some themes for his second term. not real specific ones, but in broad terms, he talked about the economy, deficit, and working closely with republicans. in other words, he basically said we have some work to do.

>> in the coming weeks and months, i am looking forward to reaching out and working with leaders of both parties, to meet the challenges we can only solve together. reducing our deficit, reforming our tax code, fixing our immigration system, freeing ourselves from foreign oil. we've got more work to do. >> so when will president obama get back to work? well, he spent the night in chicago. he goes back to the white house with his family later this afternoon. guys, when i was listening to his speech and afterwards watching the reaction of the crowd, it was interesting, this was far different than four years ago. when that speech was more about hope and really changing the country, this one was much more of a hey, it was a rough campaign. now we've got to get to work, especially ending the partisanship in washington. joe, back to you. >> phil, thank you for that report.

do you feel that there was more compromise on the table? that's what we'll be talking about a lot this morning. >> i did. not a huge amount of compromise, but i did think there was that extension of an olive branch. i think that we're a long ways from these guys sitting down and saying okay, let's really get some things going here. >> so wall street now turns its focus to the fiscal cliff. joining us now, our guest host for the hour, tony fratto, managing director at hamilton place strategies. the former assistant treasury secretary under george w. bush jared bernstein. both are cnbc contributors. jared, we were talking off

camera and i was referring to how he's going to work on both sides of the aisle. i said, is that true? will he be able to do that? would he alienate his base to -- >> no. >> and then i ask you, would he be willing to extend all the bush tax cuts. so no. i'll compromise -- >> that's not compromise if it's give it all -- what do the republicans compromise? >> for a few months. >> temporary. >> that sounds to me like the can kick. >> but the house won't go for it. they've still got the house. >> that's the problem. there's a new house starting next month. and it may take going over the fiscal cliff temporarily. i don't think that's a good outcome. but i do still think it's a possible one. to kind of get enough grown-ups in the room from the house republican side to accept compromise. typically, a newly re-elected president gets consideration in their regard and they're able to do stuff that they weren't able

to do before. we are talking about the top 2% of households, they agree on 98%. i'm talking about the expiration of the high end bush tax cuts. i think republicans will have to give something for it. >> democrats have to give something, what would that be? >> yeah. >> they're going to try to put entitlements on the table. >> but this is just for the fiscal cliff we're talking about here. we're not talking about the fiscal abyss. just trying to get a deal to make sure we don't go over the fiscal cliff. i told you this before. you say the momentum's going up. 2010, 2011 was slower gdp than 2010. 2012 will be slower than 2011. >> so just to get facts, i went back after we had our last discussion and i looked at the growth and gdp over the last few months -- >> you should have known at the time. >> i did know at the time. here's what i said. and then i went and checked the numbers and they were correct. >> you're supposed to know these things. >> that's exactly how it panned out. gdp is growing about 0.6% faster

than last year. >> don't you think they'll decide what to do with the whole abyss in a year? >> i think you have to because you have to change the subject a little bit. i was thinking, the new president's get some accommodation. i was thinking back to 2005, the accommodation that we might have gotten from democrats. i don't remember any accommodations when we ran for -- when we won re-election. there was no great accommodation. >> there was no fiscal cliff either. >> there were lots of issues. >> not that big. >> like social security reform that we did not get any help from. >> so you're patty murray. we'll take you guys right over the fiscal cliff and see how it feels. >> the way to think about the fiscal cliff is more of a slope. just going over the fiscal cliff and reversing yourself pretty quickly, the fiscal bungee jump, wouldn't necessarily be -- i don't think it's a good thing, but that's not recessionary.

if you don't think after last night that there has to be some compromise, some coming to the table, some shifting of positions that have thus far been gridlocked -- >> what if it's the same exact debate that we've been having since 1981, which is what do we do on marginal tax rates. >> this election was supposed to decide something. while we do know that this came down to a pretty close race on a lot of levels, president obama won, so what does he get? >> he did win. i was listening to president obama's speech last night, and it was -- it talked about this campaign as though there was something uplift manager this campaign and educational. it was not an uplifting campaign and it was not an adult debate that we all hoped for. we hoped that we would have this debate on what's the best way to collect revenues. >> what does le get for winning? >> he gets the seat at the table. the same seat at the table. house republicans won. >> nothing's changed. i just don't think that's right.

>> they did, in fact, win. and they did run on policies. i've been telling people this for a number of months all across the world, the house republicans are not going to vote for an increase in marginal tax rates. they're not going to do it. this is what they believe in. this is their economic policy. they don't want to see higher tax rates. and they believe it's bad for the economy. it's not just about some paper. >> and they take responsibility for going over the cliff for that? >> everyone's going to have to take responsibility for going over the cliff. >> or are we just at the same position? >> i think we need to find an opportunity to change how we talk about how we collect revenue. >> if it's tax reform -- if it's tax reform, we can do it. if it is simply the president won and so we're going to raise the rates on 250 and above, that's not going to get anywhere. >> if you push this out nine months, you get away from the election. all of a sudden you're starting to think about 2014, the whole game changes all over again. so if you're the democrats, you're saying you've got to do

something. this goes to your argument that you think you actually push it right over. >> right. i think that if you go over the cliff -- and i am not especially do -- endorsing that. you do have this tricky baseline. a lot of people can say we're cutting taxes relative to the new laws that are in place. i don't like that either. but that is a way for the grover nordqvist of the world to leave with this. >> tony, what do you think of that? >> i actually do think i'm going to see us go over the cliff. yeah, unless there is real agreement that we can put some confining structure down the road. but here's the problem. the problem is that structure that we look for, it's called a budget resolution, right? and we're going to go another two years now without a budget resolution because democrats are not going to produce one in the senate. >> here's the thing about that.

people kind of -- and i actually think ken conrad used to make a very good point about this. people down play we're getting deep into the weds here for 6:00 a.m. but people down play the budget control act as if it's not actually a budget. not only is the budget control act the budget that's running the government. the budget control act, along with some other agreements they made, have actually cut spending. cut government spending. on the books. this is done. this is not proposed. $1.5 trillion over ten years. here's the thing that the president brings to the table. i won last night. my side won. we gained some senate seats. we have cut spending. i don't care whether you're bowles simpson or whatever plan. >> but you're going to cut more spending, too. >> we're going to bring new spending cuts to the table. >> even if we do bowles simpson, jared would be okay with bowles simpson, as long as we get up to

39.6. bring me back home one time, even if it's for a month. >> i don't know what the great feel is. >> you think we're going to do major tax reform? >> yes, within a year. >> in the lame duck? >> no, within a year. >> you want to kick the can -- >> with that promise. >> this congress doesn't do well on stuff that they said they're going to do. >> start rising. >> so me, that means compromise. and i've yet to hear -- >> i don't know what compromise looks like. >> both of you say you're going over the cliff. if you do, who has the better hand? >> in my view, the person who has the better hand is a newly re-elected president who's saying i am bringing to the table spending cuts -- post-cliff. >> we've got a leadership argument saying you just got voted in. you're supposed to fix it.

>> i think the president comes out today. i think the president comes out today and starts talking about the fiscal cliff, so that when you get to that point, i've been working on that -- >> you should come out today talking about simpson bowles. >> should start talking about new solutions. >> that was his commission. he was up for re-election. maybe it wasn't the greatest time to do system of those things. he should start talking about right now. simpson bowles. the fiscal cliff, that's something we've got to fix. >> do you know that in simpson bowles, they tax investment income as regular income? >> fine. >> as long as you're having an all-in debate with all of the components. >> just please get me back there. >> not necessarily, but it doesn't mean that you come to the table and you don't compromise. >> they don't go up, jared. they don't go up. they go down. >> closing the loopholes. >> of course they go up.

they raise revenue. >> rise above. not rise rates. >> they raise revenue and cut spending. >> they've got to do both. they have to clean up the tax code. they're not revenue neutral. >> they're going to be with us for the rest of hour. ♪ [ female announcer ] today, it's not just about who lives in the white house, it's about who lives in the yellow house, the green, and the apartment house, too. today we not only honor the oval office, but we honor the cubicle, and the home office as well. because today it's about all of us. and no matter who you are, you're the commander-in-chief of your own life. ♪

welcome back to this post-election edition of "squawk box." let's take a look at some stocks that may be moving today.

health insure wellpoint at $2.09 per share. they are crediting better expense management as well as an improvement in core operating performance. news corporation earned 33 cents per share for its fiscal first quarter. that's six cents above estimates. estimates were boosted by a 16% increase. mcgraw hill is in exclusive discussions to sell its educational group. the price expected to be less than $2.5 billion compared to the $3 billion to $4 billion they hoped to fetch. >> time for the global markets report. ross westgate is standing by in london. we had an election, ross, but sorkin saw sky fall, your new jake bond -- >> awesome movie. the first five-minute opening was out of this world. i saw it on imax, which really

changes the experience. >> do you have a sty? you can't put your contacts in? >> a little bit of an eye issue. >> he looks smart. even though there's no rims. you look like ben franklin. >> a little bit more intelligent, i need it. >> i see green behind you. >> yeah. a risk tone to the market sentiment post the election result. around about six to three. we hit the session high about half an hour or so ago. we got a clear cut result. relief on that. and it means there's no change to fed policy. that also boosting risk assets as well. when you take a look at bond yields, stocks up half a percent.

when you take a look at bond yields, they're lower across the board. normally it would mean bund yields slightly higher, but they're not. the recession doing slightly well. spanish yields, 5.6%. also lower on the day. besides the election, there was also a very important greek parliamentary vote tonight on the austerity, which they need to pass to get the budget cuts. that's being something of a hurdle. maybe this also indicates that they think that vote will be passed. there are strikes today in greece, which no one is talking about. but, of course, you've got risk assets. you've got the dollar a little bit weaker today. gold price slightly higher. basically, the initial reaction is we know what the status quo means. we don't know what it mean for the fiscal cliff discussions. but over here in europe, i think most people, certainly from a foreign policy stance would probably prefer the obama presidency to remain. and that's noticeable when you take a look at brent and nymex

have also come down a little bit today. initial reakts reactions here, can deal with that. >> hey ross, the general assumption is from just about everybody here, if we go over the fiscal cliff, would mean it's going to put the united states back in a recession. is there same sort of consensus that if we go over the fiscal cliff and the u.s. goes back into the recession, does that translate into really bad news for europe as well? >> it ain't good news. if you look at the pmis that we had out again yesterday, the final pmis, they were weaker from the flash in both germany and france. we've seen real we canneakness those countries. if you see the u.s. back in recession, they're already suffering from very poor weak demand in eurozone. that will obviously have a negative impact on that. here's one house, lombard

research. they said this before the election. they were reckoning whoever won the presidency, you would see half of the fiscal cliff occurring, so 2%, 2.5% of gdp tightened whoever won. and that's a pretty consensus view. >> both tony and jared have told us that they think we're going over the fiscal cliff. i guess it's just a question of how long we stay in it. the fiscal bungee jump. >> it's a matter of how long. he made a good point, which is that there is fiscal contraction baked into the cake already. it's already ongoing. obviously the recovery act has faded. it's $120 billion next year of fiscal contraction. >> i've been presuming it's going to go away. i mean, the payroll takts will go -- tax will go away and certainly now are baked in.

>> replacing the payroll tax holiday with something like it. that's not necessarily totally off the table. >> let's bring in a market reaction to this as well. ben is standing by. how are the markets baking in any assumptions on this? >> right now, as your other analysts are saying, it seems to be status quo for the most part. becky, you know, i've been really focused on the dollar. especially over the last year. and i think the focus is going to continue to be there right now, whether or not we see strength and confidence in seeing a second term president, or whether we see weakness and concerns about existing financial policy. eurocurrency still holding below that 1.30 level.

until we get to year highs, or below this key level of 1,400 in the s&p, i really think it's a bit of a sideways chop again, status quo. >> so we're waiting to see what happens with the fiscal cliff and this is the next part of the uncertainty that need to be tackled? >> i completely agree. i think that unfortunately, while we do have -- and a lot of traders were talking about this. we were going to get some sort of answers last night or into today. but unfortunately, there's still a lot of questions, if you will. there's enormous amount of uncertainty out there. while we are seeing jobs start to -- well, it looks like getting better, we are seeing things slowly continue to get better. for the most part, the market has really enjoyed that. we see these areas of value continuing to be established higher. we're just off year highs for the most part, but recent, we've been seeing a little bit of profit taking. we watched apple come off from 700 to the 580 level.

>> some people are calling that something else. >> i actually think it's year end activity for the most part. certainly it has the potential to build to something more than that. if kind of forced to, on the record for saying i expect to see apple at 400 before a thousand at this point. i was saying that when we topped out at 700 on the day they released the iphone 5. at this point, i still feel like it's a little bit of profit taking. that tends to happen towards the enof october and that's all that we've seen at this point. anything more could build energy. it's my opinion that the market has energy to the downside. we've seen a slight increase in the volatility index, working our way back up closer toward that 20 level than we are toward that 12 level. and that's where i think the energy is right now, the downside. but certainly potential considering existing financial policy to just see continued strength grind to the upside and low interest rates. >> ben, thank you very much. >> my pleasure. thank you. coming up, goldman sachs's

asset management chairman jim o'neill will join us to talk about how america can resolve its looming fiscal issues. as "squawk" rolls on, we have a huge lineup. roger altman, david walker, wilbur ross will be joining us. don peebles. take a look at yesterday it's winners and losers. and we do not mean the election. >> america's best days are yet to come. you ain't seen nothing yet. >> people are wondering whether their president is a crook. well i'm not a crook. copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad

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good morning, and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. if i buy dinner -- >> martin sorrel sent me an e-mail saying you owe him two dinners. >> you owe me something. >> you'll get nothing! >> i like what you sent back to martin. >> oh. has he tried the new turkey bacon melt at subway. he said no, but i have tried the four seasons. he's a guest host. i can expense this.

the futures are higher this morning. big gain yesterday. up 12 points. i was trying to understand why oil -- >> went way up yesterday. >> would be down. went up yesterday on the dollar. gold was up. it's not doing much today. 87 is still too expensexpensive. we will have more on last night's election to jim o'neill, who will bring us his perspective from over in europe. >> heard a little bit from ross about how europeans are viewing this. he's been mentioned as somebody who's going to have a big role potentially. >> europe is like one big blue state. i mean, europe loves this election result, as far as i can tell. it's the only thing they agree on. >> israel, not so much. >> if you were in europe, misery loves company. >> there will be nothing left, but we'll give you everything. join us. join us so we don't feel so bad about ourselves. >> did you read the op ed in the

journal this morning? >> i got in at ten until. >> about givers and takers. they said this was not an election that was ultimately about givers and takers. >> it was about social issues. >> but the givers and takers thing i thought was probably the most remarkable line given that it was "the wall street journal." >> so they're backtracking off of that? >> on that piece. the republic will survive piece? >> yeah, the republic will survive piece. i have yet to start paying attention to "the wall street journal" editorial page and i'm not going to start now. >> right now, let's go to hampton pearson joining us from mitt romney's headquarters in boston. hampton, what can you tell us? >> well, becky, it is a proverbial morning after, and as we all watched the battle for the electoral college unfold last night, what was really fascinating was it seemed that the romney campaign really didn't have an answer for the

obama strategy that almost had them, in effect, are upping the table in a lot of those key battleground states. so we saw mitt romney come here to this hall, thousands of supporters waiting to hear what he and paul ryan had to say. mitt romney basically at times congratulating the president, but also almost even apologizing to the supporters for not quite getting across the finish line, but at the same time, going out of his way to acknowledge that the american people had spoken. >> the nation, as you know, is at a critical point. at a time like this, we can't risk partisan bickering and political posturing. our leaders have to reach across the aisle to do the people's work. >> and so we're all waiting to see if that call for bipartisanship will take hold. the most poignant pictures, of course, mitt romney, his wife, paul ryan, their wives, basically walking away from the presidential campaign stage. quite a moment here in the hall.

and this is one of those cases, as always, where the pictures tell the story, and really, there's not a whole lot more to add to all of that. andrew, back over to you. >> thanks, hampton. we will see you very soon again. as we've been talking about all morning, we do have a winner for the white house, but now the attention turns to the fiscal cliff. joining us now from london is jim o'neill, the rock star from goldman sachs asset management. good to see you this morning. >> good morning. how are you guys? >> give us your analysis in terms of what the election impact will have on the fiscal cliff and how you're thinking about the economy here and the global economy at large. >> well, you know, away from the issue, better the devil now. just saw you guys having some fun at europe's expence fce --

expense. it's interesting having been in the states the past three weeks. quite a lot of business people there obviously pounding the table for romney. but the republicans had some pretty aggressive things to say about the fed and currency policy, and one of the reasons the markets have reacted today is that risk is now gone. particularly, 24 hours in d.c., slightly worried that obama victory would mean dealing with a fiscal cliff would be tougher than others, but one would hope looking from overseas that somehow your congress, for what it's worth, it doesn't look to me as if the republicans could take a great deal away from the electorate having a mandate for the aggressiveness of their views. these guys have got to somehow come up with a compromise, because away from that, if you could take washington as a status quo, the rest of the u.s. economy appears to be going ever so slowly in the right

direction. >> what are investors baking into the cake? i mean, there's a sense here -- we were talking during the commercial break -- that really investors believe that we are not going to go over the fiscal cliff. is that the right way to think about that? >> i think that was definitely the case three weeks back, and one of our senior managers has had a great line for it. i've sort of bought into until my own visit to d.c. it's a bit like the y2k thing. unfortunately, as you guys know, i'm generally someone who sees the glass more half full than empty. i'm not so sure. but it depends on how sensible your political figures are going to be after the emotion of this election. >> i think we can go over the fiscal cliff, we can go over a lot easier with interest rates staying at zero the next four years. that makes it a lot easier, doesn't it? when you've got a fed that's going to be -- got a rubber

stamp to do what it's been doing, that makes everything a lot easier. plus, we're not going to make china mad. i see what you're saying there. that some of the things, some europeans could have been a little bit nervous if you followed through, getting rid of bernanke, stopping qe-3. starting a trade war with china. we can handle the fiscal cliff maybe, as long as we keep the spigots open. >> i think that's probably right, yeah. and that's partly why the markets are reacting the way they are as well. as i've said to you guys on here repeatedly the past year or so, that the whole way china is shifting, for washington to have any view about them being a big issue, is kind of -- i mean, at best it's amusing. at worst, it's quite a lot worse than that. it's just silly. >> was it right? we all want greece to be able to devalue their currency. that's what they've got to do. is it true that we just need to accept beggar thy neighbor for

all currencies? we shouldn't do austerity because it won't work so we might as well devalue our currencies globally. >> as it relates to your own central bank, the fed's job is to satisfy a twin mandate. and they shouldn't be dragged in to being excessively worried about the dollar's value against any other currency. >> well, they're not. >> not least because if they get it right, then the dollar will start to -- the dollar's reserve currency status isn't under for that. if the u.s. continues to recover and the fed's allowed to do -- despite all the risks of the fed being wrong, when the economy recovers, the fed will start to move stuff away and dollar will strengthen. so i don't think outside politicians should have so much noise about the issues. >> jim, this is jared here. suppose as part of a deal going forward that the president and democrats were able to get some fiscal policy that was actually

stimyoulative, something targeting job growth. that would help to complement the low rates from the fed and it would also be a statement kind of looking at europe that austerity really hasn't worked so well, vis-a-vis growth. do you think that would be useful? >> i'm in that camp. i think the europeans have been trying to push too much -- everybody counts fiscal policy around the world at the same time. it's kind of crazy by definition. so if for some miraculous reason congress could pull it off, that would be good for many reasons. it feels to me, the u.s. economy is two, two and a half, itching to go 3% or maybe more, so long as the congress guys can come up with a sensible framework. if it's one that gave a bit of support for jobs, it would be fantastic. >> i love that. thank you. >> jim, you've been frustrated that the european central bank hasn't done more. we keep wondering why they haven't lowered rates more over the last several times that they've met. >> listen.

given what mario draghi let the ecb to do, that in itself, very conservative standards has been incredibly aggressive. it's still fighting obviously a lot of battles in conservative parts of europe related to that. so by their own disappointing standards, the ecb has done a lot. what the problem is now is back to the usual political nonsense here that spain and germany are sort of playing games about who calls the shots, or who -- the opposite, actually. who sort of jumps first, because neither of them wants to go forward to get the formal support on it. it's back to really german policies. it looks to me even though merkel is back, doesn't want the spanish to apply because you'll have to go to german parliaments to get more verbal support. it's the usual european political nonsense. >> it's kind of fallen all of our radar screen, but what's the next step with europe? does it come roaring back and

kind of grab the markets again? >> it feels to me like there's a risk that is going to come back on the agenda the next few weeks. but let me quickly add, as i'm fond of saying, china creates another greece every three months, another spain every year. it's amazing how much attention your election is getting everywhere. these guys have got their own huge changeover starting tomorrow. and that is way more important for the world, including europe, than anything going on in greece or spain. >> just give us a quick outlook on equities broadly. there were a number of investors who took their money, put it on the sideline the past couple weeks, waiting for this outcome. and now we have outcome. what happens? >> well, i have been in the bullish camp for most of the year. i'm a little bit nervous about things coming into this election, and still today on the u.s. side, because the fiscal cliff issue is now the big issue, and we can't use the election as an excuse anymore.

so that makes me a little bit cautious by my normal standards. but around the world, valuations are still very cheap. i know that you guys have probably spent more time focusing on this, but the last place in the world we talk about was japan. looks to me that the japanese authorities are trying to push the boj into a bigger monetary easing, which could have consequences positively for equities around the world, and i'm assuming that the chinese are beginning to have seven at the top instead of nine and it's going to give an impression of greater reform, which is probably good for china-related themes as well. so i think the background is generally still constructive, and with the fed being allowed to be the fed, that's good as well. but we need to see some decent -- have some decent hope about the fiscal cliff now, i think. >> jim o'neill, we appreciate your time this morning. >> my pleasure.

thanks for having me on, guys. >> jared, do you still know people where you can tell them that you can advise them on things, or are you just a tv guy now? >> i can talk to them. i can't guarantee they'll listen to me. >> for me, would you? if we do your thing -- if we do another $800 billion, let's do infrastructure. can we build some -- you know, if the airports or the train stations or the roads -- >> you know, we were talking about that last night. >> can we actually spend something and it's lasting and we actually have something on it? >> i think it's a great idea. i heard peter orzite speak, he's a democrat but also a banking now. he said there's two things that don't make sense to me, a ten-year bond yield that the government can borrow at below 2%, and jfk. that was his way of putting it. that was before sandy. >> we don't need to build high-speed rail. >> i understand.

>> really? we don't need to have solar energy next year powering all our cars. >> wait a second. i think there's a clean energy agenda over the longer term. but near term, if we're going -- >> it's not about jobs. >> i was with peter, we were in tokyo for the world bank meetings. peter has this great story. and it is about spending now and taking care -- >> this is the larry summers idea. >> jim liked it, too. >> it's not going to happen. >> it's not going to happen. you guys are really bumming me out. >> it's just not. >> i've even let you build a few things. >> the president only won this thing a few hours ago. >> we're going to have net fiscal contraction starting in 2013. that is where we are. >> net fiscal contraction. >> you're with bush in four years? i don't know. let me think about that. >> i'm a bush republican. as long as there's a bush

republican running. >> i already threw christie out there. require want to get on the record, on the table, that i disagree with the idea that there can be no jobs measures for 2013. i think that's wrong. i think that part of the deal is something in the near term. maybe it's infrastructure. maybe it's an extension of the payroll tax holiday in some way, shape, or form. >> that's not a jobs initiative. >> talking about 2014 and 2016 already. >> tell your old boss not to run. you've got to talk him out of that. anyway, comments, questions. still ahead, the balance of p r power and the balancing act, along with the fiscal cliff. david walker, texas ranger, and roger altman will be joining us at the top of the hour. more on "squawk box" next.

welcome back, everybody. we've been watching the equity futures this morning. so far, it looks like they are still in positive territory. nasdaq, just one point above fair value. that's down from what we had seen a little earlier this morning. still a lot of questions about what all of this means for the markets. when we come back, we're going to break down the balance of power in congress. elizabeth warren capturing a senate seat for the democrats in massachusetts. we'll talk about that and whether there are any other surprises that could ripple through capitol hill. "squawk" will be right back. nino trade in hong kong.

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welcome back, everybody, we go from the white house to capitol hill. the balance of power stays in the same in congress. eamon javers joins us with the story. $6 million later, and hey, nothing changed. >> well, locok, if viewers went to bed last night with republicans in house of the congress, it's exactly the same. a lot of money, a lot of noise,

and basically we had a status quo election in the house of representatives and in the senate. you look at the margin. the democrats in the house, they needed 25 seats to pick up in the house. they didn't get anywhere near there. you see the projections 197 democrats, 238 republicans. in the senate, republicans were looking for a pick up of four seats, they needed three if mitt romney had won, they didn't get that, they got the opposite. right now as we sit here now, it's a democrat plus two in the united states senate. and you guys, we were talking earlier today, this morning about the action among republicans to what happened in the white house and in the senate. and i wanted to whip through a couple of major republicans and what they have said since the election last night and see if you can read the tea leaves with where we're going. starting with house speaker john boehner. he said the american people want solutions, and tonight they've responded by renewing our majority. boehner also said the elections were a mandate to take quote

steps together to help the economy. >> painting it with a very rosy outlook. >> i don't know what that means. >> look at this question of renewing our majority, boehner is putting a point down. hey, we're here, still in control in the house and we've got this majority. we have to be dealt with. look at mitch mcdonnell. voters have not endorsed the quote failures and successes of the president's first term, but rather given him more time to finish the job. and john cornyn said republicans have a period of reflection and recalibration ahead while some will want to blame one wing of the party over the other, the reality is candidates from all corners of our gop lost. so a variety of opinions. >> you don't think -- aren't there -- isn't there an argument to be made that things are different? when you think about the senate and how that sort of balance of power. the idea of using a simple majority to get rid of the filibuster. that can change a lot of things if they did it. >> that would be a sea change in

the senate, back to the way the senate ran about a generation ago. but individual senators love the filibuster, right. try to take that away, that might be tricky. >> intrade was high as 60% at one point. that was a mess too. plenty of blame to go around. the senate was, look at what happened. can't even keep lugar's seat. >> thank you to everybody for a great hour. really appreciate it. coming up, we've got another dynamic duo making their way to the "squawk" set as i speak. david walker, texas ranger and roger altman, they'll be our guest hosts for the next hour. you can walk. come on, guys. and at 8:00 a.m. eastern, bill gross will be our special guest. bob...

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we remain more than a collection of red states and blue states, we are and forever will be the united states of america. "squawk box" breaks down the election results and what it means for your investments. >> i return to the white house more determined and more inspired than ever about the work there is to do and the future that lies ahead. >> from early market indicators. >> you've had this very slow, steady grinding improvement in the measures. >> to overseas reaction. >> we have seen a significant rally overnight on the news of president obama's reelection. >> "squawk box" is the place to be when it comes to your money and your vote. >> good morning, everybody.

welcome back to "squawk box" here on cnbc. i'm becky quick, and we have a huge lineup for the next hour. roger altman and david walker are our guest hosts for this hour. also, investor wilbur ross on the next four years and morgan stanley chief u.s. economist vincent rinehart, and jeremy seagal. a lot of things to talk about. before we get to that, let's take a look at the markets. they have been indicated higher this morning through most of the morning. actually the nasdaq futures just turned lower and the s&p futures and dow futures right at the flat line at this point. we had seen bigger gains earlier this morning. a lot of questions about what happens. it seemed the market had baked in a win for president obama at this point. we'll see how this plays out through the course of the morning. overseas in asia. overnight, you can take a look

right now and see where things stand. last night, we saw the korea kospi up by about nine points. both traded slightly lower and in hang seng, the market up by about .7%. and europe this morning, we've seen mostly green arrows, at least through most of the morning. the ftse up higher, about 18 points, cac by 17 point in times and germany, the dax up by 30 points. big news of the morning, barack obama winning a second term as president. he outlined the challenges for the next four years. >> and in the coming weeks and months, i am looking forward to reaching out and working with leaders of both parties to meet the challenges we can only solve together. reducing our deficit, reforming our tax code, fixing our immigration system, freeing ourselves from foreign oil. we've got more work to do. >> john harwood's back at the table to talk to us about the president's path to victory.

john, little postmortem here. >> andrew, look, going into election day, all of the numbers told us that president obama was narrowly ahead. both nationally and in the swing states, and the question was, were the numbers right? well, the numbers proved to be right. the polls were accurate. barack obama carried nearly all the swing states, he lost only north carolina among the ones that have been decided so far. and that left mitt romney to come out at his headquarters in boston and tell the republican faithful who were shocked and disappointed that he'd given everything he had. >> paul and i have left everything on the field. we have given our all to this campaign. i so wish -- i so wish that i had been able to fulfill your hopes to lead the country in a different direction. but the nation chose another leader and so ann and i join with you to earnestly pray for

him and for this great nation. >> and so president obama in his acceptance speech or his victory speech after a victory that was more narrow than the one he won four years ago returned to the theme on which he burst on to the national stage in 2004 saying we're not red america, blue america, we're one united states of america. >> i believe we can seize this future together because we are not as divided as our politics suggest. we're not as cynical as the pundits believe. we are greater than the sum of our individual ambitions. and we remain more than a collection of red states and blue states. we are and forever will be the united states of america. >> did you hear that line, joe? that was for you. not as cynical -- >> you know, though, the big questions that come out of that, though, we are one united states of america, there are some still deep political divides.

and how do you bridge that? how do you find om compromise? because i felt pretty good about things this morning that maybe we'd see compromise, and then over the last couple of hours of talking, i've been less optimistic about things. what does compromise look like? >> compromise looks like the democrats and the republicans -- if we're talking about fiscal issues, which is the things we're concerned about foremost, it's democrats stepping up and saying, yes, we're willing to cut the entitlement programs that are our legacy to the country, that are monuments to the democratic party, medicare and social security, and for republicans, it's to give up the opposition to tax increases in any form, and if both sides come together as simpson and bowles did in their commission and say, yes, democrats, we'll cut entitlements, yes, republicans, we're going to raise taxes, we're going to get a deal. i think that will happen. the question, the holdout is the house republicans really. >> john, i know it was a close election, but one of the things

i wonder, especially as we think about moving forward, was it a false narrative for the past month or two or three that it was going to be as close as it was and potentially romney was going to win? >> no, i don't think it was false. there were fundamental conditions in place that made barack obama vulnerable incumbent. the economy is weak. it's getting better, but it's still weak. we have a very closely divided country. i've always thought that obama should be considered the favorite to win reelection because the economy was improving, because people like him personally, and the republican party has got some problems in broadening its appeal beyond the core supporters that it's held on to pretty consistently. so, no, i don't think it was false. i would guess -- >> there was a lot of focus on different polls, though? >> yes, the one thing i thought was a little bit false was the idea that after that first debate there was a momentum

shift that was durable for romney's -- in romney's direction. i think what romney was able to do in the first debate with that strong performance was to bring back a lot of republican leaning independents and soft republicans he was going to get anyway. he did impress some people, made some headway, but it was not like a huge head of steam that was likely to carry on through. but many in the republican party convinced themselves it was a wave that was building and he was headed for a big victory, wasn't going to happen. >> i don't know about -- with simpson/bowles, and i am a little bit cynical. we'll see how the president does, maybe just tack a little bit more -- he doesn't need to satisfy his base quite as much at this point, we'll see what happens with the fiscal cliff. but for simpson/bowles, i think it's equal opportunity sort of shirker of doing it. i don't think it's just the house. republicans, we just had jared on. jared will not go for that 28%

marginal rate. they want to raise -- >> you mean on individual income. >> yeah, on individual income. and i'm not convinced a lot of the base now that they won is going to give up enough on entitlements to where -- >> well, look, the first step in a negotiation is both sides agreeing in principle that they're going to go to the place they need to for a compromise. >> right, but i could see -- >> republicans haven't done it on revenue. president obama in his -- president obama and john boehner got close in their negotiation -- >> right. >> and they were talking about entitlements -- >> but i don't think it'll be -- wasn't it 3 to 1, i see 2 to 1, 1 1/2 to 1, now that they're going to be emboldened, i don't know if that deal will be on the table. >> i do think president obama wants to get a deal. i don't think the negotiation ended in the summer of 2011. i think there's more to go. and i think if he gets a little

sign from republicans that the negotiation will accelerate. >> john harwood, thank you for that. i think we'll see you a little later again. >> by the way, john, we know that we heard romney saying he gave his all in the campaign, i know you did too. i saw your air mattress upstairs. >> i didn't want to go anywhere near that. change the sheets on that. >> he had a nice pillow. >> anyway -- >> that pillow's going back to the essex house, by the way. >> we are rising above the partisan rhetoric to find a solution for fiscal cliff and other things. and we're wearing these rise above buttons. david walker walked in here and he was like -- he loves this slogan and didn't have it -- you can't have it. i don't know if we've actually trademarked it. but he's ceo of the comeback america initiative. and you would love a rise above slogan, but why didn't you think about it? >> i'm a positive guy. >> you are. but -- >> keeping america great, you know. >> all right. all right. we also have roger altman,

former deputy treasury secretary. i've already been throwing his hat in the ring. just on your resume, deputy secretary of the treasury, wouldn't you like a former treasury secretary some day on the resume, roger, if that? >> i was really disappointed when the red sox did not turn to me and i haven't gotten over it. i haven't gotten over it. >> but will there be -- there's another four years to go, a lot of people are going to leave because they've already put in four years. is your phone rings? did you tell your wife to stay off the phone in case it rings? do you have call waiting? >> my kids are calling me for the same reasons they always do. bank of dad. >> the next four years, no change there, do you think? >> i don't think so. >> really? >> i really don't think so. >> all right. so back to you. you just heard this conversation about simpson/bowles, do you think that it's -- they share equally in not wanting to do

this? who do you think will be the impediment. >> i think there's a problem on both sides. first, let's recognize and get real. $6 billion was spent on all these campaigns. >> campaigns. >> and yet it's a status quo election. >> yes. >> democrats control the senate, republicans control the house, and president obama's been reelected. congratulations to all the winners and their campaigns and the pollsters, so what you've got to say is how are you going to get it done? we know we've got to do something that puts everything on the table and involves spending reduction, social insurance reforms. how are you going to get it done? in my view, you have to have extraordinary presidential leadership, the president has to employ a unity approach, use the bully pulpit. we need a public education engagement campaign outside the beltway like clinton did in 1998 for social security, and a private negotiation by the president and his key people inside the beltway. the people know we're in trouble, they're prepared for tough choices, they're willing to put everything on the table.

they need leadership. >> is the president capable of that, roger? >> oh, i think so. i think so. >> is boehner capable? >> well, we're going to see. the president's used the word messy to describe how this is likely to play out. i think that's inevitable. but he's also indicated that he is prepared to go further on reductions in mandatory spending. he said that. for example, in his interview on morning joe a week or so ago. >> i'm not familiar with that. >> and the core question, of course, is revenue. and you saw a whole series of the nation's leading ceos in the context of the campaign to fix the debt come out and say, yes, it has to be a balanced approach, include new revenue. they'd like that to be established through sweeping reform of individual tax -- of the individual tax system. >> and corporate. >> and corporate taxes, and that takes quite a while.

>> would the democrats go along with that? >> i think we may see serious tax reform, but i don't think it could be done on a basis that addresses the fiscal cliff. 1986, the last time we had really sweeping tax reform, it took four years to do. it was introduced in '82. by the way, that one did not raise revenue. and some of the great masters of legislation. that was an easier, a simpler time. >> who blinks? who blinks on whether we let the 250 and above expire and keep everything else in? the house is going to insist that doesn't happen. the president is going to say i did it once, i'm not doing it again. i'm not doing it again. and we're going over a cliff. who is going to blink? >> well, we could be doing something else this morning if we knew that answer. >> neither side -- >> i don't know the answer to that. here's part of the problem, joe, if they go over the cliff, then the question is how easy is it going to be to unscramble that

egg even if they can reach agreement right after that? and here's the point, it takes 60 votes in the senate unless they change the rules. all right. you can't use budget reconciliation, which is simple majority unless it reduces the deficit. if you go over the cliff and you've raised taxes and you've cut spending, if you want to unscramble that egg, you know, how are you going to do it? you either have to change the rules or have 60 votes. >> how do you change the rules? >> well, the senate can change its rules. it can change the filibuster requirement, for example, you can have filibuster reform. that's the issue. can it be filibustered or not? >> do you think the democrats are willing to do that? because that is in their power. >> well, it is, okay, but we'll see. we clearly need filibuster reform. there's no question about that. you need to require people to come to the well and keep the floor. you know, you won't have as many threats of filibuster -- >> i'd like to point out that one of the really interesting and historically unusual aspects

of this campaign and there were many unusual things, but one of them was that the incumbent president campaigned explicitly, openly, clearly on an agenda which included the higher earners in this country paying a higher share of their taxes. out front, clear. rarely see that. rarely see that. . and of course, he won a pretty clear victory. >> you see how he won. you know the coalition he put together, roger, and with immigration that helped with hispanics, and gay marriage, and all helped to cobblestone together that coalition. also, in exit polls you saw, most people said i want less government than more government. if social issues won, you can't necessarily -- >> 2/3 of people said they wanted less taxes. >> well, the narrow victory -- >> joe, i don't know -- i don't know precisely how it's going to play out. as i said, i don't think anyone does and you agreed with that. but we are going to have to figure out a solution whereby we achieve some greater measure of

revenue. we're at -- >> broaden the base, though. you can tax those people above 250,000 at 100% and it still won't do it, though. >> let's talk about what a representative group of voters in ohio and virginia told us on our tour. representative group of voters. 85% said it's going to take a combination of spending reductions and tax increases. we've got broad-based support for comprehensive tax reform that would broaden the base, lower rates and accomplish three objectives. have more people pay some income tax under a more progressive tax system, increase the effective tax rate of the wealthy through comprehensive tax reform and generate more revenue. >> maybe that's the key, to make it more progressive. >> it's got to be more progressive. you can't have 46.4% paying nothing. >> but -- >> he's raising taxes, though -- >> maybe that answers some of the concerns. if you continue to have people paying more and more in the tax rate. maybe that answers some of the concerns. >> well, the tax system today is

a lot less progressive than it was 20 years ago, 40 years ago, 60 years ago and so forth. and after all -- >> is that true? i don't know if that's true. >> oh, yes, it is. look at the top rate. >> effective tax rate. >> but it's capital gains and dividends. if you can raise that back to a higher level. >> look, we all saw in the '90s what the clinton era tax rates were as far as the top rate, as far as capital gains rates and dividend rates was concerned. extraordinary economic expansion, 23 million jobs so forth and so on. and so the argument that, oh, if we went back to those rates, it's just a fallacious argument. i don't disagree with the politics of this, they're very, very difficult. i wish i knew how to solve them. but i don't think the economic arguments are supported by history. >> we are going to continue this conversation both roger and david are staying with us for the rest of the hour. also still to come this morning, how to invest in the second

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welcome back to "squawk box." a live look at the white house there. the election dominating the headlines. but a few other stories to watch this morning. greek lawmakers vote today on a $17.3 billion package on spending cuts and tax hikes. approval is necessary for greece to receive a new round of international aid. and mortgage applications fell 5% last week according to new figures from the mortgage bankers association. superstorm sandy had a significant impact on application volume in the east which fell 6% in new jersey but 50% in new york and nearly 40% in connecticut. you would thought it would be worse. and munich re is raises forecast for the year.

they are expected to be hit with large payouts for the damage last week. munich re doesn't know how much the storm will cost, but it will be somewhere in the mid three-digit euro range. coming up, we're going to ask wilbur ross how last night's investing changed his outlook. and don peebles, what he expects president obama to tackle in his second term. "squawk box" is coming right back. which u.s. president was featured on the now defunct $500 bill? and major medical? major medical, boyyy, yeah! [ beatboxing ] berr, der berrp... ♪ i help pay the doctor ♪ ain't that enough for you? ♪ there's things major medical doesn't do. aflac! pays cash so we don't have to fret. [ together ] ♪ something families should get ♪ ♪ like a safety net ♪ help with food, gas and rent, so cover your back, with... ♪ a-a-a-a-a-a-a-aflac!

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of speed, small size, and low-cost printing. now the answer to today's aflac trivia question. which u.s. president was featured on the now-defunct $500 bill? the answer, william mckinley. >> aflac. >> that's too bad. i don't know, was he on anything else? i don't think he is. do you feel bad? do you feel bad for president mckinley or have any comments or questions for anything you see. if you ever use a $500 -- that's

just a normal dinner at that chinese place for you. >> what about the $2 bill? that's defunct too. >> higher. higher. >> that's your $10 million bill you got with -- you know, i use -- i tipped the driver at night, he had no idea. >> you definitely brought the law, my friend. >> i could have been giving him this as a present. e-mail us at squawk@cnbc.com. >> it's like the mr. president coin. >> coming up, rising above the partisan politics to tackle the fiscal cliff. don peebles will join us on the challenges. don't mess with me. on the challenges that the president faces before the end of the year. don's going to be interesting because he doesn't want to raise taxes either. so we'll see how we're going to break this fiscal cliff problem. and we'll break down the election's impact on the markets with vince rinehart and jeremy

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welcome back to "squawk box" this morning, the race in the battleground state of florida

lived up to its billing. that presidential contest is still too close to call. but mary thompson is there. and maybe she's not going to call it for us, but can give us more information on where we are. mary? >> reporter: no, i'm not going to call it, andrew. might not be until this afternoon or possibly 9 to 12 days from now before we know the outcome of the florida vote here. the vote count was called off late last night. miami-dade, which is one of the most populous counties here in florida said it would continue the vote count today. hanging in the balance, 29 electoral votes. but, again, at this point may make little difference. this is where we stand as far as the vote count goes with president obama showing a slight lead over governor romney according to the florida division of elections. now, even if the final results are submitted today, if there is a margin of victory of less than .5%, here in florida, that triggers an automatic vote recount. that has to be completed either

after nine days after the secretary of state declares a vote recount or 12 days after the election. so all of this additional waiting comes after a number of floridians waited in line, some up to six hours yesterday, the reason for this, some of the scanning process that you have to put the ballots through this optical scanner and the length of the ballots, which were up to 11 pages in some cases. now, going into election day, the polls show governor romney had a slight lead here in the sunshine state, but it appears the president may have won the state for the second time. and here's some of the keys to the apparent obama victory. rehad a very strong showing in the i-4 corridor, which is the middle of the state. let's say tampa to orlando. and further east, this was critical because the south typically goes democratic, the north typically goes republican. he was also strong with noncuban hispanics according to exit polls, the youth vote, and surprisingly, the independent vote according to exit polls because that earlier was polling in favor of mr. romney. now, here in florida with the

foreclosure rate the highest in the country and the unemployment rate of 8.7% above the normal average, it was the economy that was the key issue. and with the people that we spoke to throughout the day yesterday, whether or not they favored obama or romney, they really felt their candidate put forth the best proposal to get the economy moving again and to help this state. it appears that mr. obama may have been more persuasive. >> you look like you're keeping it together. you were at the bar all night. is that what happened here? >> you picked the bar and we still don't -- you were there, i'm going to be here until we know and we still don't know. that was genius. >> i know, well, i had to go home and take a shower so i could look presentable for you today. you know, but i tell you that bar was going strong when we left. we left at about 1:00 or so. >> i can see your breath. there's no one around you either. you must reek of alcohol. >> reporter: that is not true. i would never drink on the job, joe. you know that. >> i know, i know. >> mary thompson, take a ride on

space mountain for us today. one of our squawk regulars was in boston with governor romney last night. wilbur ross joins us now. good morning to you, wilbur. >> good morning, everybody. >> i want to talk to you about the investment implications of this election. but before i do that, i want to talk about the relationship wall street has had with president obama, the private equity industry has had with president obama, and to the extent you believe there's a possibility of trying to mend that fence. does that happen? can that happen at this point? >> well, i think it could very well happen. first term for a president is mostly about politics. i think second term logically should be about the history books. and i think given the fact that congress is relatively unchan d unchanged, the real question will be if president obama wishes to start reaching across the aisle and working on a consensus basis. i'm optimistic that he will be looking toward the history

books. >> you've campaigned and supported people who have been quite aggressive in some of the things they've said, though, about the president. when it comes to issues like carried interest, do you have any hope, wish that's going to be on the table or off the table, rather? >> oh, i think it would be hard, frankly, for carried interest not to be on the table. it'd be very surprising to me if we could have both. not a big increase in the upper tax bracket and carried interest survive in its present form. there have been a number of proposals gradually to phase it out and bring it up to other high rates over a several-year period. i wouldn't be surprised if something like that happened. >> give us your investment outlook. what happens now? we have the fiscal cliff that's waiting out there. but you're the -- we call you the vulture investor. what do you go by now?

>> well, i think what we're trying to figure out is what will be the initial moves that the president makes? will he reach across? will he start discussions with speaker boehner? because since things are not changing, leadership presumably in both houses of the congress will be the same. so there's no reason for the president and the congress not to be beginning to interact constructively, even during the so-called lame duck period. i think that'll be the big test. >> wilbur ross in boston, thank you for joining us this morning. >> all right. we want to point out, we've been watching the futures, and early this morning, it was looking like the futures were pretty sharply higher. we have seen a sharp change over the last 20 minutes or so. you can see right now the dow futures down by about 66 points below fair value. you can look at this as a lot of different things. people worried about the fiscal cliff, people worried about what happens next. and if you look at some of the

stocks this morning in the early trade, jpmorgan, citigroup, morgan stanley, goldman sachs, the banks you might expect to come under a little bit of pressure because of more regulation that might come under them. lockheed martin, jim cramer told us thad be a strong stock play if romney won. lockheed martin is indicated lower. but if you want to find out what's happening, take a look at europe. more than anything, there are some comments that very recently in the last 10 or 15 minutes came from mario draghi, he said some things of concern. economic activity in the euro area is expected to remain weak. this may be the key. he also says the data suggests that economic slowdown has reached germany. and germany to this point has been very strong and holding on. we did see the european markets turn into the red after trading higher earlier. but again, these questions about europe and the euro zone. we talked with jim o'neill of goldman sachs this morning and he said he wouldn't be surprised to see it come back in the next few weeks, sure enough it's

happening this morning. >> barack obama clinched victory last night. for more on the challenges the president faces in the second term, more so on our follow-up of yesterday's conversation, we're joined by don peebles. where were you yesterday? >> i was in new york working. >> oh, you were working. >> yes. >> all right. okay. don't get defensive. you're working hard. but we did talk taxes with you yesterday. >> we did. >> and you're a big booster of the president, but you don't think he should raise taxes on any particular group at this point. how do we -- do you think it's possible to solve the fiscal cliff with the president by getting him to extend all of the bush tax cuts? >> i think that something close to that. i think carried interest, for example. it's almost indefensible to tax carried interest. >> thad be enough for him? >> well, i think it's a big step. and i think something along those lines, it's a big step if we end up the year here. >> and that would impact you, right? real estate partnership? >> actually, no, it doesn't.

i'm a dealer in real estate. and so, for example, i paid taxes at the ordinary income level for real estate development projects that we do. but my private equity investors who are sitting behind their desk in new york while i'm out in the trenches working pay at a lower rate. i don't know why anyone really wants to argue that. the fact it's gone on so long with the benefit for everybody. >> we're just trying to figure out who blinks, don. and i think that the house republicans have less probably to stand on in terms of principle at this point. it was a rebuke yesterday, but i don't know if they're going to just rubber stamp some -- let some expire, let other ones stay in force. and then the president has given that speech that says i'm going to compromise. how often do you speak to him? >> not -- >> okay. do you think it's possible that he does what he did last time and says i'm going to give you one more year, the economy's still weak, i'll give you one

more year on these tax cuts because i'm not going to raise them on anyone, but i want something done over the next year in terms of all of this other stuff. do you think he'll do that? >> i think he could. i think he very well will. look, he comes into office for a second term with a whole different set of circumstances. >> wouldn't have to be reelected. and the entire republican party's not trying to prevent him from being reelected. >> right. and the economy is growing. >> not like anyone would like it to. >> now, but it's a six-point turn around. >> will you talk to roger? roger won't -- he wants that 39.6, no matter what. tell you what -- go right to the president. >> he knows more about the economy than i'll ever learn. look at what -- >> i know, i know. but i can't get him to budge on that. >> go ahead. >> well, i think we need to avoid the fiscal cliff, and that means extending a lot of things, there's no question. but we need a bridge to be able to get a grand bargain, and we need a down payment.

and the real question is, what should that down payment be? you talk about, you know, getting rid of carried interests, the special tax treatment there, i think indefensible quite frankly. one of the things that roger and i were talking about earlier, what can be done to try to limit the deductions for the higher income? >> that's a good one. >> after all, i'm middle income, and the only deductions i get because of amt are charitable contributions and interest on a primary residence up to a limit. why not the same thing for the wealthy? >> you're talking -- >> but i'm not talking about raising the tax rates, talking about leaving the tax rates there but deal on the deductions side. >> be careful with that, though. >> yeah. >> many of the deductions result in job creation. and many small businesses responsible for creating the vast majority of the jobs pay taxes at the individual level. >> i understand that. >> so we've got to be very careful with taking away deductions. that can't be in a let's make a deal kind of environment.

>> be careful about raising the top rate. >> above the line, it won't affect them. >> keep in mind, though, simpson/bowles, which we all know is popular in the business and financial communities centers around profound reform of expenditures or deductions and very much limiting the size of the basic deductions. mortgage interest, state and local taxes. >> but it's -- >> that will work. >> very profound reform of tax expenditures. >> all right. >> i think the country needs that. i think that's an important approach. let's not be under any misunderstandings of what it is. >> you've got to raise revenue somehow. >> i agree. and i think the point of reducing or eliminating some of the deductions and capping them, i think is a good way to go. the question is, is there going to be enough time to get that done and get something, you know, comprehensive before the year's out. >> when you hear everyone saying that only 2% of small businesses

pay as individuals and top rate. when you hear it, do you chafe a little when you hear it doesn't matter for small businesses because there's so few? >> yeah, because that's how i pay at the individual level because all of our llc -- >> but it's 54% of the revenue. >> exactly. and that's a very significant impact. >> so when you hear your colleague and the people you support saying that, do you call them and say i wish you'd stop saying that? >> i do. i've done it in many places where i disagree with the position of raising taxes, i do, but i think we have to have tax reform and a simpler system and some clarity. >> in the next 20 seconds. >> will you have coffee with him -- >> i'm a certified public accountant, but i think it's an outrage that the vast majority of individuals who are not wealthy cannot prepare their own tax form by hand. it's an outrage. >> i agree. >> it's too complicated. but roger's right, last time it took four years to get a

comprehensive tax plan passed. >> we're more productive today. >> let's hope. >> thanks, mr. peebles, for being here. coming up, more from our guest hosts david walker and roger altman. a look at the market response to the reelection of president obama and the expectations with the economy in his second term. vince rinehart is going to join us and jeremy siegel. that's coming up next. and then at the top of the hour, two new guest hosts ken duberstein and john podesta. [ male announcer ] what can you experience in a seat? inspiration. great power. iconic design. exhilarating performance. [ race announcer ] audi once again has created le mans history! [ male announcer ] and once in a great while... all of the above. take your seat in the incomparable audi a8.

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which isn't rocket science. it's just common sense, from td ameritrade. welcome back, everyone. we've been talking about how the federal reserve might change in president obama's second term and how we could actually boost economic growth. joining us right now to talk about this is vincent rinehart, jeremy siegel is a professor at the university of pennsylvania. vince, why don't we start talking about what this means. we do know that the fed could potentially change under president obama because in 2014,

many people expect that chairman ben bernanke would step down. what happens now under the scenario? what do you think is the most likely case? >> i think it is most likely that chairman bernanke steps down. there's been too many articles over the last month suggesting that with no pushback from official quarters. so i think we should be thinking there'll be a new chairman in place on february 1st, 2014. but the main message is fed reserve like the supreme court pays attention to the elections and they got an implied vote from american people about policy interventionism and the resource slack versus inflation. in some sense it validates the more accommodative stance the fed reserve took starting in september. >> let's also bring in jeremy siegel. professor, we have also been trying to get a feel for what all of this is going to mean for the fiscal cliff how or what a compromise would look like. we did hear from the president

who said he would be working with the other party. but clearly, a win for the president means he has the upper hand in this at this point. what does compromise look like as far as you're concerned? >> well, i think, you know, joe is right in saying, you know, who is going to blink first? i mean, the fiscal cliff is overriding as importance to the market, any extension of the tax cuts i think would be a huge rally in equities. they're very worried about the cliff. my feeling is obama would take a -- he would extend almost all of them, he wants a little bit of an increase on that top rate. i don't even think he would go all the way, he would accept something in between and say i come in compromise, i presented this to the republicans, now the republicans can stand fast and say, no, we're not going for any tax increase. given the election, given what

we remembered, what was it 15 years ago when gingrich tried to close down the government thought that was going to be a political win. the people turned against that. they're at big risk in standing absolutely firm. so if there's a little bit of give. if there's a little bit of give, we'll have a year's extension of virtually all of them pending congress coming together for comprehensive tax reform. it won't be completed in one year, in fact, if it's really comprehensive, it'll be phased in, i think over a number of years, but if they see progress on that front going forward, i can see the current rates basically being extended. >> vincent, that's what we've been trying to get our arms around today, compromise. does it look like the compromise that came between boehner and the president back in the summer of 2011, or do you follow through with the campaign promises and have to have a higher rate on people making $250,000 and above? >> the problem is the american people in their wisdom decided

on a divided government and there were two sets of campaign promises. one by the president and the other by the majority in the house. that's the real problem. this will have to be a two-part solution. one is a patch to get us past december 31st so we don't roll over the fiscal cliff and then a plan. the patch probably extends just about everything, the issue will be as professor siegel said, what do you do at the top rate? do you have a higher cutoff? the high-end of the bush tax rates apply to $1 million and above. those sorts of things are possible. they've got to start talking. >> yeah. >> it was four months between the last time president obama and speaker boehner had a phone call. at that rate, we go over the fiscal cliff. >> wow. jeremy, very quickly. capital gains and the dividend tax increases. you expect those get put on hold

or those rise in some way in this patch situation? >> oh, i mean, that's a good question. much more interested in getting at least some rise in that top income tax rate. i think he'd be willing to extend the 15% on dividends and capital gains. remember, however, we do have that 3.8% medicare surcharge for higher income people on that. so he's going to get that as part of it. i think he wants just a little increase if the republicans can go for that, i think the market would respond positively pending comprehensive tax reform. >> jeremy, vincent, thank you both for joining us. >> i have a little clever jingle. i'm going to step out and read this as i rise above the partisanship. the election is over, the talking is done, your side lost, my side won. so let's get together, let

bitterness pass, i'll hug your elephant, you kiss my ass. coming up -- i will look at -- donkey. >> donkeys are cute. >> look at the ballots settled yesterday, including the legalization of medicinal and recreational marijuana use. and at the top of the hour, two chiefs of staff will be our guest hosts. at optionsxpress we're all about options trading. we create easy to use, powerful trading tools for all. look at these streaming charts! they're totally customizable and they let you visualize what might happen next. that's genius! strategies, chains, positions. we put 'em all on one screen! could we make placing a trade any easier? mmmm...could we? open an account today

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welcome back to "squawk box." some interesting ballot initiatives were decided in yesterday's election. rocky mountain high. among them, legalization of marijuana, michelle caruso-cabrera joins us. they keep playing something in my ear. i don't know what that's supposed to indicate. >> i think from a bong. >> oh, i saw that movie. funny-looking thing. >> so in the theme of victories this morning, let's talk about the legalization of pot. so two states out of three that were voting on the legalization

of pot gave it a big thumbs up. colorado said, yes, to the legalization of pot. going to regulate it like alcohol. you'll have to show i.d., could be stopped for duis. >> was that unanimous. >> we can bring up the board. washington state was absolutely a yes, oregon was a no. can we bring up colorado? >> not quite. >> recreational use. >> yeah, so 54%. yeah, the legalization of pot. this is what this is. let's show you what the vote was in oregon and washington state and we'll move on really quickly to medical marijuana. washington 55%, yes, oregon was the no. >> what is this going to do to the pizza guy? >> it's going to drive his business through the roof. >> huge. >> medical marijuana approved in massachusetts by a pretty decent margin by really good margin, in fact. montana actually imposed more restrictions on medical marijuana so that yes vote is for more restrictions, arkansas was a flat no. we had a big debate on what we

should call this, cheech and chong rejoice, dude, where's my pot, she wanted the politics of pot, but cheech and chong rejoice. >> that's a good one. i'm working with you. i'm trying to figure out -- andrew, i'm following your thinking now. you were thinking the pizza guy would -- they used to deliver it. >> exactly. >> my thing is you'll deliver more pizza because of the munchies. >> the pizza guy delivers the pot, i never knew that. >> apparently -- >> i never bought pot. >> those direct flights to amsterdam will no longer be needed. >> by the way, we also want to thank roger altman and david walker for joining us this hour. still to come this morning, we'll kick off the next hour with another dynamic duo of guest hosts. ken duberstein and john podesta, they will be joining us to talk about the challenges that are facing president obama's second term.

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i was downstairs making coffee, and we heard it. it just came crashing through the roof, out of nowhere. what is it? it's our ira. any idea what coulda caused this? maybe. i just sorta threw a little money here, a little money there. and i loaded up on something my dentist told me was hot. yeah. ♪ the results are in, and we're rising above to put america first. >> we know in our hearts is that for the united states of america, the best is yet to come.

>> reaction from both sides of the aisle and what this means for your money. >> reducing our deficit, reforming our tax code. we've got more work to do. >> and the impact for investors. pimco founder bill gross on what's next for wall street. >> plus, the future of the health care industry for the next four years and beyond. the third hour of "squawk box" begins right now. >> good morning. and welcome back to "squawk box" on cnbc, i'm joe kernan along with becky quick and andrew ross sorkin. another big lineup. bill gross, to focus on the markets and the economy with the election over, the looming fiscal cliff now taking center stage followed by the fiscal abyss in that order. that's at 8:15 a.m. eastern time.

and we have a special extended interview with aetna chairman and ceo mark bertolini. he will talk about the future of health care in america now that the election is over. and john roberts left it in the voters' hands and the voters, we will have obama care in all likelihood now. and i would like at the hospital stocks today among others to see how those move. even though the overall market is now indicated lower. but there will be pockets. >> -- people were expecting it, but now how much room there is -- >> are you going to check the coal stocks when they open today? >> no, i was kind of looking at -- >> gun stocks go up either way. coal, i don't think so. >> let's get a check at the overall markets right now. joe was just talking about the futures. we had been looking at the futures, the dow futures indicated up by 50% this morning, but that has turned around. you can see right now those dow futures down by about 73 points, s&p futures down by about eight

points. the banks are indicated weaker, jpmorgan, citigroup, bank of america, goldman sachs, also lockheed martin is indicated lower. if you were expecting a big increase in the defense budget, you're not going to get it. mario draghi came out around 7:20 this morning, and that's really when we saw the turn in the futures. came out and started talking about how economic activity in the euro area is expected to remain weak. and this may be the key. he also said that the data suggests that the economic slowdown has reached germany. that's a big issue because germany had been hanging into this point. and that's when we saw the futures really turn around. you saw europe trade lower at that point too. crude oil is indicated lower, exxon mobil, but crude oil down about 1.20. yeah, down by about $1.20 after big gains yesterday. $87.50 is where wti is. gold prices have been indicated higher. right now, gold up by about

$7.70, $1,772 an ounce. president obama giving his victory speech hours ago, about six hours ago he ended it. phil lebeau camped out at obama campaign headquarters in chicago. >> and as they tear down the stage here at mccormick place, there's a debate about whether or not in his victory speech last night president obama really started going far enough in extending a hand across the aisle to the republican party. in his speech, he did make reference to the number of problems that are facing the administration, really facing the country, cutting the deficit, reforming the tax code, a number of other issues and he'd like to work with governor mitt romney. he says if you look at what's going on in new jersey, it is proof that everyone can come together to solve problems. >> i see it on the shores of new jersey and new york where leaders from every party and level of government has swept aside their differences to help a community rebuild from the wreckage of a terrible storm.

>> president obama will be heading back to the white house this afternoon. he stayed here in chicago last night. there are no public appearances planned for today, but guys, you have to imagine that at this point, he's going to sit down with his team. and at some point, you wonder when we'll see him come out and say, okay, here's at least a tentative agenda in terms of beyond the fiscal cliff. what are we going to address, first of all, with the second term of the obama administration. that's the story here at mccormick place. it's been a busy, busy 24 hours here. back to you. >> thanks, phil. we've been ushering in dueling guest hosts all morning long and now we're joined by two former oval office insiders. kevin duberstein, and chairman and ceo of his own firm, and john podesta, former white house chief of staff for president clinton. he's chairman for the center of american progress. and we are rising above the partisan rhetoric to find a

solution for the fiscal cliff. in recognition of commitment for our crucial problem, we're wearing these rise above buttons, and they are also available for the low, low price of $4.99 -- no, i don't know. >> no. >> why aren't we? why aren't we? >> such a bargain. >> is anything you see on tv not really something that -- all of us are. we're talking about the price, right? let me start, john, before we get to ken. we already had roger altman, and he's been singing your praises about if anybody knows how hard tax reform is, it is you. and the reason that we're talking about this is in the context of some temporary fix for the fiscal cliff as a prelude to major reform and that we could do something like that and roger's point was, yeah, you can promise to do that, but in the meantime, we need to raise some revenue somewhere, and it takes so long to do this. took four years that you can't expect -- so we're going to

need -- he wants to let rates go up on 250 and above. he thinks that's the only way. is it possible to get a bridge to simpson/bowles? >> well, you know, the gang of eight, so-called gang of eight in a sense working on that. i'm a little bit more skeptical about it. i think we can have tax reform, roger said, you know, it could take year, four years, et cetera. i think it can happen early in 2013. when it will not happen is in the lame duck session. and it seems to me the most likely outcome of the lame duck would be for the republicans to agree to let the top two rates expire, to let the people making over $250,000 -- >> wishful thinking you're saying because they probably won't do it. >> the senate's passed that bill, sits over in the house. i think obama would have to match that with some more restrai restraint, particularly in the entitlement area in the lame duck and they could work on tax reform in early 2013. if they don't do that, i think the alternative scenario is the tax rates do go back up and

there's a lot of pressure in the early part of the year to bring them back down -- >> they go up for everybody, we go over the cliff. so, ken, do you think the house is sufficiently weakened just from the rebuke overall from the gop yesterday where they finally do something with entitlement, something from the other side? >> no, i don't think the republican party in the house and probably in the senate will go along with raising the upper income tax level. >> you think the president will blink? >> i think what the lame duck session will prove is we're going to kick the can down the field. >> how? >> remember, congresses usually only do two things well. nothing and overreact. >> yeah. so how will they do it? >> and the answer is to do a small down payment on spending, and maybe some tax loopholes. >> deductions and alike. >> deductions and alike. and kick the can down the field six months or a year.

i would expect the republicans to ask for a year extension. in order to do tax reform and entitlement reform. >> doesn't it change the political dynamic? if they can get this thing to the fall of 2013, all of a sudden we're into the election for 2014, and if you're a democrat, you have no leverage anymore. >> and the answer is, they can ask for a year, and i think the compromise is six months. >> we haven't made any other progress, how is that any different than what we've been dealing with since the summer? we keep saying, oh, this is the realtime, this is the realtime. >> in a campaign where people complained about the lack of clarity, about the second term agenda, the one thing that the president was absolutely clear about was that he was not going to sign an extension of the upper income tax -- >> that's because he needed his base, john, who knows what he'll do now. >> i think when you make hard promises. i worked for a guy when he made a hard promise -- >> well, a lot of things -- >> some of the tea party guys

made hard promises too. this goes to how you rise above it. >> well, i think one other scenario is that, you know, along the line that ken's describing is you could get a small deal in which you pass the amt, you take care of the so-called sgr, you push off the sequester -- >> what's the sgr. >> that's the doctor payment medicare, which is a big number, it's $40 billion. and you take those -- the tax cuts that are -- the corporate tax cuts that are expiring and need to be extended. and you package that together, democrats and republicans could agree to that. you see the rates then go up on january 1 and then they start working on tax reform. i don't see the president signing a bill based on what kent's describing. in which he's going to kick the can. he did that in 2011. i don't think he's going to do it again. >> john, he made a couple of promises. one is that he's not going to raise income taxes on people who

are below a certain limit too. >> it was a very simple statement that he can make, which is go to the house and don't raise taxes on the middle class, pass this bill and we'll work -- >> you hear people saying it will hurt job creation because 2%. the biggest small businesses that employ all these people and all this revenue will be affected. >> 97% -- >> but 54% of the revenue is affected. you know these numbers. we're going back and forth. why raise it on anyone for a year? >> we're kind of back to where we were two weeks ago. the argument was put to the american people -- >> that wasn't necessarily the argument -- there's a lot in this argument, gay marriage, it wasn't you favor raising taxes on 250 and above -- >> he ran his campaign based on what he can do for the economy and he lost.

>> you lost hispanic vote because of immigration, won women's issues -- talk about -- >> i think romney helped obama by the positions he took on immigration, the positions he took on contraception, et cetera. >> anything that's going to happen in the lame duck session is going to require strong, presidential leadership. congress can't do it by themselves. the problem we have is that for the first four years, president obama did not fundamentally engage with the republicans -- >> you guys really don't like each other either. i'm wondering, do you think these guys -- >> the question is whether he's going to pull a bill clinton and try to figure out something by compromise. and i'm not talking about 100% my way or -- >> that's what i'm hearing. >> going to start opening up -- last night when he said i want to work with the bipartisan leadership, i think that was a mistake. what he needed to say, i'm going to work with the rank and file. i'm going to try to create a consensus in america to force action in washington rather than saying i'm just going to deal with boehner and mcconnell.

>> that's interesting. >> reid and podesta. the way reagan did it, clinton did it was to do it with the rank and file and go with the people rather than with the leadership. >> yeah. >> okay. >> i like that. all right. we have both these gentlemen sticking with us for our guest host for the rest of the show. when we come back, the election's over, but now the fiscal cliff is fast approaching. does pimco's bill gross have a solution to avoid fiscal disaster? that is right after this. plus, four more years for president obama, what does this mean for the future of health care? aetna's chairman and ceo mark bertolini will be our special guest at 8:30 eastern time. and take a look at the futures again. the weakness is extending at this point. the dow futures down by about 96 points. this is probably starting from comments that we heard from mario draghi in europe. "squawk" will be right back. ♪

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welcome back to "squawk box" this morning. take a look at futures. post election here, dow jones looks like it would open off about 101 points.

nasdaq off by 25 points, and the s&p 500 would be off ten points. big question this morning. what would the market impact of last night's election be? joining us is the bond king himself, bill gross, founder and co-chief investor of pimco. >> nice to be here. >> we've been talking about the fiscal cliff all morning. do you have a solution? >> well, i think there's hardly a solution for the fiscal cliff other than to come together and agree on some proportion of revenues and expenditures. joe talked about it an hour and a half ago earlier in the program and suggested that instead of 3-1 in terms of expenditures to revenues which was part of, it's going to be more like 1 1/2 to 2. i think that's the case, when you look at it in terms of expenditures, 24% of gdp revenue, more like a 24% to 16% type of ratio.

president obama has the bargaining chip. >> as you think about the investments that you're making. how do you handicap all this in terms of the timing, what happens. >> well, the timing on the fiscal cliff is difficult. you know, will it occur before, you know, president obama is initiated on the second term, you know, it's difficult. i think in the next six months. what we have to look forward to, though, in terms of investments is that, you know, if the fiscal cliff includes higher taxes, which is the key. president obama ran on a higher tax agenda if anything. and to the extent that marginal income taxes go from 35% to 40% and capital gains from 15% to 20%, and dividends go from 15 to who knows what. remember, dividends in 2002 were assessed at the highest marginal tax rate. so they could go high, high, and higher. you know, the point being for stocks is that if dividend and capital gains tax rates go up, then stocks are worth less, perhaps 5% to 10% less at least.

>> bill, if boehner and obama -- like, that -- they got mad at each other. and they aren't talking four months. because of $400 billion. if obama comes back and asks for 2-1 and 1 1/2-1 instead of 3-1, you're not painting an optimistic picture at all for what's going to happen here. and becky, we're talking about the europe stuff and the markets going down. i think the markets are watching the guys we have on today with this new era of compromise and all the rising above, and they're saying we're not hearing anything close to these two sides being together today, bill. >> well, we're not. i heard boehner's comments last night and it doesn't sound friendly, that's for sure. you know, perhaps additional posturing. but, you know, ultimately in the next three to six months, there's going to be a resolution in favor of higher taxes. >> but, bill, 1 1/2 to 1 or 2 to 1, you saw the house 3 to 1, and you saw people saying not even

10 to 1, how do you think you're going to get the house guys to go where they had 3 to 1 and had a deal and now going up to 1 1/2 to 2 to 1. >> that was your fear, wasn't your prediction. >> no, i was saying democrats were going to ask for that and you confirmed it. >> it's not in my prediction either, but i suggest that president obama has that larger bargaining chip now and the old 3 to 1 may be somewhat less and that we may -- >> oh, man. >> we may tilt it in the form of higher dividend rates, which is ultrama thely the danger here to the stock market. you know, dividends are sheltered in 401(k)s, pension funds, at the margin, investors pay, you know, dividend tax rates. and to the extent you raise them from 15 to 25%, that implies of equalling after tax rates of another 5% to 10% down in terms of stock prices. we've been very spoiled for the last ten years. >> can you clarify that? you did talk about -- you said a minute ago that stocks are worth less if the dividends and capital gains if those taxes go higher.

>> 5% to 10%. >> that's if they go up to 20 or 25%. that's if they're taxed at ordinary income levels. >> well, no, if dividends go from 15 to 25%, and this is a guess, becky, like i say, dividends are sheltered in a large portion of the stock market, but to the extent at the margin, if you have $1 worth of dividends and tax it, you get 85 cents back, at a 25% dividend tax rate, well, the market has to go down by, you know, 5%, 10%, perhaps even more to make that equivalent. doesn't mean that's the metric that exactly is in play here. but, you know -- >> bill -- >> stocks go down when taxes go up. >> they could go even higher than that. simpson/bowles proposes to put it back at ordinary income, just like the 1986 tax reform did. >> right, i think that's true. i had to google this. my memory's fading at 68. but at 2001 before the 2002 bush

tax cuts, dividends were taxed at the marginal tax rate, which if, you know, it goes up to 39.6%, that's where they would be taxed. i'm not suggesting that, but certainly we're looking at something higher than 15% and that's not a positive for stocks. on the other hand, it's a positive for things like municipal bonds which are tax-free and which have an advantage -- >> pimco, right. >> some of those bond rates could go up under simpson/bowles too. we are talking about a fundamental reform of the tax structure entirely. you're not talking about -- and by the way, i'm surprised that anybody would really wake up and say, whoa, dividends and capital gains taxes were going up, i thought the market had been anticipating that for months. >> it was a 50/50 type of bet. at least listening to the polls -- >> i thought with compromise you would wind up with higher rates no matter who won. >> yeah, and that was our assumption too, becky, and that's why we bought bonds and

treasuries. and i think investors should be looking out at their dividend-yielding stocks, 3%, perhaps electric utilities. other stocks that have high-dividend yields because they will be at risk if, you know, the dividend tax rate goes higher. >> thank you for joining us this morning. >> thank you, guys. coming up, another storm is about to hit the northeast. but as i said before, i'm not worried about losing my power because you haven't turned it back on yet pse & g, thanks a lot. no worries about me losing power because i don't have it. the health care agenda with aetna, plus rick santelli and steve liesman join forces here on the set to rise above the fiscal cliff. i'm worried. i have a feeling i'm rising -- i'm not rising. as we head into break, check out the price of crude.

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welcome back to "squawk box," everyone. the futures are indicated pretty sharply lower at this point, down about 88 points, s&p futures by ten points. the real turn at 7:20 when we started hearing comments from mario draghi in europe about how germany's economy is being affected, as well. in germany, france, and london, markets all turned south on that. and right now in germany, the dax down by about 41 points. this year, the weather channel will begin naming winter

storms. and the nor'easter that is expected to dump snow from maryland to maine is the first to be recognized. the weather channel has dubbed it athena, what is that? the goddess of war. it's expected to hit maryland today and move up to the hudson valley and new england by late tonight. the names chosen come from mythology, history, and fiction. the next one will be brutus and then caesar. >> athena is the goddess of wisdom and courage. >> diana is the goddess of war. >> what did they do? they spelled it wrong and left it like that. >> i can't remember if it was -- >> what happened? >> do you remember? >> i can't remember if they spelled it wrong or the weather channel got it wrong. they made up gandolf. and then nemo. >> when we return, the future of

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welcome back to "squawk box" this morning after the election of 2012, we've got more on the election and its reaction in just a moment. let's catch up on the corporate earnings reports that have crossed the wires this morning. the first of which is kraft foods group earning 79 cents a share for the third quarter, that's ten cents above estimates. it was kraft's first earnings report since the former kraft foods split into two separate companies. kraft says results were helped by stronger sales and productivity gains. and time warner earned 86 cents a share for the first quarter. revenues slightly short of consensus, the company saw growth in cable revenue, but reported declines in the film and entertainment businesses. and finally, health insurer wellpoint reported third quarter profit of $2.09 a share, that's 29 cents above estimates.

wellpoint says the bottom line was helped by better control of its expenses. >> so what does president oba obaobam obama's victory mean for the future of the nation's health care system? a lot of questions about that today. joining us right now is aetna's chairman, president, and ceo mark bertolini. you told us in the past, it didn't matter how this election went as far as it went for aetna. >> we just keep moving forward and implementing this act. i think the bigger issue we'll face is what happens with the fiscal cliff. that will have more to do with the the subsidies and the taxes associated with this bill and our ability to move forward with full implementation. i think that's where the bottom line's going to head as we go through the fiscal cliff discussions. >> are you worried based on what you've heard over the last couple of days? what you heard last night, what you maybe heard this morning when it comes to where we could or couldn't be on compromise here? >> yeah, i think, you know, what's different today? and, i think you can say the president's got a second term where he doesn't have to run for reelection. but in the end analysis what we

need is leadership. i think the chief executive has two very important powers. one is they can convene. so when i call a meeting, everybody's got to show up. and the second is, you set the agenda, including when people can leave. and so -- i think what the ceo of our nation needs to do is convene, set the agenda, and say we don't come out of the room until we've got a deal. and he has to be actively involved. i think if we get that done, we will get a solution that will work for the country. >> how long do you think they'll be locked in a room? >> i don't know, it'll be interesting. and you think about it, we just had this massive storm and we had all of this break down of partisan politics endured true bipartisan solution to help people get back on their feet. we have the similar thing here with the fiscal cliff. it is a superstorm, a financial superstorm that we need to get our head around and act in the same way as we acted with the last hurricane. >> okay. john says -- >> well, mark --

>> if you don't go up on the 250, if the house stands firm and doesn't go up on the 250, perfectly willing to let us go to 2013, get to the higher rates that will happen from the bush tax cuts expiring and come down from that level in 2013. that's what we should do, okay. >> i predicted that's what would happen. i didn't say that was the preferred -- >> here's what happens in the interim. american business putting together their operating plans for 2013. i'm locking down with my board in two weeks. and in my plan there's a lot more contingency because i don't know what the macro economic environment's going to look like. >> right. >> as long as i know what the environment looks like, i put more contingency, and i pull back on capital investment, which we've done. everything's gated and we lay off people. >> are you -- >> so jobs go out the window. and so the american people get hurt in this process. >> and the stock market will be down 5% or 10% and dividend and capital gain taxes will be up, and fewer people will be hiring because the economy will be slower.

this is not rising above. we are not rising above right now. >> that's why -- >> can i come back to one thing mark said, which is you talked about the bipartisanship on dealing with sandy and particularly the relationship with christie, a lot of health care reform done at the state level. a lot of the governors have been resi resisting, implement this bill in a way that's going to save money and deliver better results. >> he's going to have to. it's not going to get implemented otherwise. and if the states sit on their hands, which a lot of them are right now, we're not going to get much implemented. the american public's not going to like that. >> are you betting on going over the fiscal cliff when you're dealing with your board? >> i think we have -- no, i'm planning for that. that's different than betting. >> right. >> we think that the market's betting they're not going over. >> right. exactly. >> you're planning for it too. >> yes.

minus 1.7 gdp in the first quarter, means 100 basis points on health care cost trends for us. it's a direct correlation. >> minus 1.7 gdp in the first quarter, translates into what? >> 1% increase in unemployment, 100 basis points of unemployment creates 100 basis points. people get their notices, which includes the c.o.b.r.a. notice and they say i'm going to get my health care before i get out of my job. and all of a sudden you see a spike in utilization. so we have to plan for that. if i don't plan for it, i don't have an electorate to decide whether or not i have a really good job, i have a board that fires me. >> yes. >> my options are sort of limited. >> you say this is a super storm. do we have to go over the fiscal cliff for everyone else to realize that? >> that's going to be my question. you were around for the last two years. now, the president was running for reelection and the republicans were trying to get him out of office, it was nasty,

ugly, what do you think the chances are he convenes the meeting and becomes a ceo and says you can't leave? what are the chances, 50/50? >> i think, first, there is a bipartisan solution sitting there, we have over 40 senators, over 100 congressmen. we've done a lot of work with ceos across the nation, 80 of us now. working on what that solution could look like. so we have all sorts of points of view we're ready to come forward to the table and we have a bipartisan solution. >> aren't they all different points of view? isn't that part of the problem? >> not with the fix the debt group. we have a very -- yeah, we have a very -- >> they did all agree to raise revenue. >> we have to raise revenue. >> yeah. >> and that's -- >> that's -- >> but you don't expect that in the lame duck session? >> well, i would argue given what we have today which is no difference in the arithmetic of politics that it would be easier to do a lame duck session with the people that are leaving. they ought to move forward with us. and the president ought to get them together and say, listen, you owe me one, help me get this

through so the new people coming in don't have the baggage in two years on the election. let's push this forward. that's what i would do. >> very good point. and can we go back to something we said a moment ago. i want to know if this is breaking news. this idea that you are laying out with your board in two weeks what your plans are for next year. and you have to plan for contingencies, and that means pulling back on capex and you said that means layoffs. if we go over the fiscal cliff, aetna is going to lay off people? >> we have a head count holding flat. assuming we don't go over the fiscal cliff. if we go over the fiscal cliff, i have to react. and so i know where i need to pull back. >> and you have conversations with other people in your industry. i assume what's happening in your board room is happening across the country. >> you saw it with the third quarter, you know, earnings results with companies saying i'm going to have to lay off 10% of my workforce in order to make my numbers work. in the end analysis, top line has to grow, if the top line doesn't grow, you've got to do

something about expenses. >> you're not talking about 10% layoffs if we go over the fiscal cliff. >> well, i'm not going to tell my employees on cnbc -- our goal is to hold head count flat. right now. >> we've talked earlier and i think it was jared bernstein brought up the idea of the fis cap bungee jump. we come right back, everyone realizes how terrible it is. if that's the case, that's not as big of a deal. you're talking about if we see a gdp drop because of prolonged exposure over the fiscal cliff. >> but right now what's holding the economy back is we're all gating our investments and holdings. we're going to hope it goes by. and when it goes by, we'll then reopen the food stores. we don't have the option of waiting any longer. >> it's the uncertainty holding you back. >> right. it's the uncertainty. whatever business school you go

to, they say what is the macroeconomic analysis that informs your business plan? what's going to has been in the global, domestic, industry, and then your company? >> and now, andrew, you keep pointing out we've got to do it right away or else the midterm's coming. this whole election stuff is broken. if we don't do it in six months, then we're worried about 2014. >> if we're doing this in the fall -- >> we've got 2014 -- people are once again worrying, so we've got six months to do this? >> no, less than that. i think less than that. >> less than that? >> i think you need an mou, some sort of memory above understanding, statement that gets done soon -- >> before christmas? is that what you're talking about? >> i'm talking soon. i'd prefer lame duck session but, you know, i run my business a little differently. >> we need more of these buttons because you need one and you need one. >> $3.99. >> i'm on this program. i'm on this program. >> going to 2013 --

>> no -- >> the mou is a framework and a time frame. >> right. here are the 10, 15 things we're going to do, here's who's going to do them by when, here are the commitments that are made, and here is the bottom line impact if it doesn't happen. we put in simpson/bowles. >> didn't we do that before? wasn't that what this whole thing was? the fiscal cliff and itself? if we can't figure out something between now and then, then we go to -- >> sequestration wasn't enough. >> neither side wants simpson/bowles deep down. hep doesn't want it and neither does -- >> the impediment to implementing mark's plan is a complete no on raising revenue. mark's for raising revenue. if the republicans agree to raise revenue, the president -- >> you've given a complete no going 28% on the marginal rate. >> would you go to 28% if it raised revenue? if we got rid of the deductions

and average effective tax rate goes up? >> well, depends on what the distribution of that is. >> no different than it is today. >> well, if it's no different than it is today. >> yep. >> i'd probably be for that. but as i think we learned when romney put his plan on the table, that's not what happens. you can't get to 28% -- >> yeah, but romney didn't endorse simpson/bowles. >> but, joe, it's not just taxes. what is obama willing -- what is obama willing to do on entitlement reform? >> i agree. >> is he -- >> he can't either probably. >> and can he deliver the house democrats. because you can't pass it just with the republican votes. >> everybody going to find religion if we do go over this fiscal cliff? >> if the president is willing to -- and i think he will be willing to find more savings in entitlements, particularly in health care, i think -- i think the house democrats will go -- >> i think it's very difficult to do that in a six-week period punctuated by thanksgiving and christmas. >> we have, i think, 34 days, working days and i don't believe congress is in session for all

of those days. >> right. they are not. >> the president has the power to convene. lock them in a room, get an mou done. >> it shows leadership, which so far the president has not been willing to do in the first four years on deficit reduction. he has not brought people together. >> come on, kenny, he sat with boehner for three months -- >> and walked away. >> he didn't walk away from it, boehner walked away from it. >> can you lock -- >> come on. >> do you agree? >> we're six hours away -- >> seven hours, 7 1/2 hours, but john, does that plan work? lock everybody in a room and don't let them out? >> you know, i think that they may try that. my sense is the president will probably say something this week about where he's willing to go with some of these issues, particularly including entitlements. and then i think he'll try to get a negotiation going. but i don't think to kent's point, i don't think he'll just

do that one-on-one with boehner because boehner couldn't deliver in the end of the day. he got his chain yanked by eric cantor and the house conservatives. >> on that friday, yeah. come on. >> absolutely. so we disagree on that. but the fundamental issue is whether or not obama can show the leadership, to bring people together. he has not developed any trust, any relationship with the house republicans and the senate republicans let alone with most democrats. >> he's the president for the next four years. >> and he better start realizing the governance requires him to start building these relationships rather than ignoring them. >> mark, i love your plan and i think they should take it to the next step. remember the declaration of independence, they locked them all in the rooms, they closed and shuttered the windows, they had the wigs, the heavy coats on, it was summertime, it was really hot and they didn't let them leave until they all

agreed. i think they should turn up the heat, lock the doors, close the windows -- >> and turn off msnbc. >> mark, thank you very much for joining us today. i hope you'll come back because we do need to talk an awful lot about this fiscal cliff. >> and we can talk about health care too the next time. >> i tried. coming up next, as a true metaphor, an allegory for rising above and coming together, santelli and liesman. together. there they are. oh, boy, can they be together without driving each other crazy? this odd couple. there's a fine line between love and hate. i don't know what these guys do when they leave the building together. anyway, they're going to -- they're going face to face a few times each year. ♪ [ female announcer ] today, it's not just about who lives in the white house, it's about who lives in the yellow house, the green, and the apartment house, too.

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we got a quick note on dow component at&t, the company has raised the quarterly dividend by a penny to 45 cents a share. just in time potentially for dividend taxes to go up. randall stevenson will be a guest on "squawk on the street" coming up at 11:40 eastern time. you don't want to miss that. >> what? my friend. oh. the results are in, and now it's time to rise above and focus on the fiscal cliff. we've been trying to rise all morning. and i've got to tell you. our efforts so far are -- i

would say mixed. we're doing our best. but our guests are not cooperating. joining us now onset, two people that we pay. so you will cooperate today. steve liesman and rick santelli. hi, guys. >> cut, but verify. >> you know, rick -- >> sink below. >> as i was looking yesterday for some port, some storm, some straw as i was slowly the vortex was sucking me into the depths, you came to me and said 2010, the feeling is still there, the outrage, all the stuff, and it was going to be manifested in turnout. >> well, you know what? it was. >> it didn't happen. >> it was manifested on both sides. when you look at an excited person voting, obviously it turned out there were excited people on both sides of the ticket. >> you know what our guests have been saying today which i've loved. i loved this. it wasn't that they were excited about standing up for gay marriage. it wasn't that they were excited about immigration and hispanic,

it wasn't that they were women excited or worried about supreme court, everybody knew that the president ran on higher taxes and they're all going, yes, raise them, baby, raise them. they were all voting on -- >> very little -- >> they're all voting on higher taxes and how good the economy is doing. >> today it's a certain percent, and a month from that that percent is going to get bigger and it's going to get bigger and bigger. and the middle class, we can protect them as much as we want, but in the end, a, higher taxes aren't going to take care of the real problem, it's a pimple on a very large hippopotamus' rear end. and i think if we can't find a way to grow the economy, we will see those tax rates continue to move lower. and the famous line of, you know, the clinton administration, we had this level of taxation. well, give me the clinton economy and if you want to have that logic, let's raise the fed funds rate, the mortgage rate because plucking one out makes so little sense. >> let's go back to all of those things. >> i'm for that. >> we knew that.

>> that's what. that's why i think the president said it's got to be balance. there's restraint on spending. we've seen that happen on the discretionary side. it has to happen on the mandatory side including in health care and we need to have more revenue. we're taxing at the lowest level since 1950. no matter what, we have a bigger government. >> the more wealthy have avoided pain and higher taxes and all of the loopholes that politicians run on but politicians also created. i think when you look at tax policy from that regard and factor in amt, i'm not sure that is the case. >> we're raising about 16% of gdp that hasn't happened since earl 1950s. >> what was highest revenue ever for funds coming into the government? >> i believe it was in the second term of clinton. >> where is the tea party four years from now. >> fiscal conservatives are still strong. evidence is that mandate from

2010 with regard to the house of representatives, that did not change. i think the fiscal conservatives are going to continue to do something that they like to do. they will vote every election cycle until they get it the way they want. >> will the house drive us over the cliff and not raise rates above 250? >> they will try to balance budgets and make sure that we spend about what we take in. do i see that dynamic disappearing? no. i'm still wearing the button. i think there's things that can be done. >> it's in my pocket. >> we'll get steve a button. >> i thought it was a gun in your pocket. >> we have some for you. they're free. >> it's the journalistic standards above wearing a button? >> or below. >> are you afraid of rick, is that why you're not saying anything? >> i wasn't asked a question. >> you can always -- that's never stopped you before. >> the best thing to do is to

let rick talk. i continue to believe -- >> put the button on. >> i continue to think about what happened here and we talked about this yesterday -- >> it's not on yet. >> i don't know how to do it. >> we'll do it during the commercial. >> you don't know how to put that button on. >> i think romney whiffed. data i looked at yesterday and i looked at exit polling data, there was a prize there for taking. it was dissatisfaction from the economy. momentum matters. it mattered in the unemployment rate and in the economy. >> you don't think it's about making the republican tent bigger whether it comes to immigration issues? >> wait. hold on. i think it was six out of ten that said the economy is the most important issue with their vote. what mattered in the economy? they thought romney was better for the economy. however, when it came down to

specific economic issues he was incapable of closing the deal. what's the message of rick santelli and the tea party and what is the message of the conservative -- >> more people thought government was doing too much instead of too little. >> why couldn't romney -- >> we have to run. we'll have more from our guest hosts dynamic duo after this. at optionsxpress we're all about options trading. we create easy-to-use, powerful trading tools for all. look at these streaming charts! they're totally customizable and they let you visualize what might happen next. that's genius! we knew you needed a platform that could really help you elevate your trading. so we built it. chances of making this? it's a lot easier to find out if a trade

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welcome back. we've been watching futures this morning. down by 91 points. you can look for a lot of weakness. many bank stocks indicated lower today. you might guess that's because of more regulation that they are expected. exxon mobil indicated weaker. when we come back, the last word on this post-election edition of "squawk." we'll be back after a quick break.

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final thoughts from our guest hosts. they have the last word. john? >> the president needs fiscal frame work in order to be successful in second term and play hard ball but i think he can get it and avoid the fiscal cliff. he has to get revenue with more spending cuts. >> the most important signal that barack obama can send to the markets and to washington is appointment of bows