good morning. in the state of the union, president obama presses congress on issues including taxes, entitlements, immigration, and gun control. market milestones. the dow turning in its highest close of the year. announcing 1% of an all-time

record. and in corporate news, comcast is buying the rest of nbcuniversal from general election for $16.7 billion. it's wednesday, february 13, 2013. "squawk box" begins right now. good morning, everyone, welcome to "squawk box" on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. we are following major stories. after yesterday's close on wall street, u.s. equity futures this morning, well, you see they are fight a little bit higher. -- they are fight a little bit higher. after gains yesterday, the dow up more than 45 points yesterday. our guest host is westwood capital's len bloom. the next hour, famed investor and billionaire real estate tycoon, sam zell. top-ranked money manager don yakman. his fund have seen annual returns of 10% over the last

five years. we'll also talk about how business leaders and investors are reacting to president obama's state of the union address. among the topics high talked about last night, jobs and the economy. even mentioning some companies by name. >> jobs for ten years, manufacturers have added 500,000 jobs over the past three. caterpillar is bringing jobs back from japan. ford is bringing jobs back from mexico. and this year, apple will start making macs in america again. >> we will be speaking with the ceo of one of those companies. caterpillar's doug olberhelman at 8:00 eastern. we'll talk about where the jobs are coming back and what washington could be doing to promote more job growth. we'll talk about washington's looming debt threat with aetna boss mark bertolini. and as far corporate news, the story hits close to home. comcast securing full control of nbcuniversal in a $16.7 billion deal. the nation's largest cable

operator unveiling plans to buy out general electric's venture. comcast chairman and ceo brian roberts will join us live at 7:15 a.m. eastern. before all of that, andrew has the other top stories. an through and. >> thank you. that is a huge story. in other news, the international energy agency is now cautioning expectations that higher oil demand growth this year could be overly optimistic. the watchdog group is warning that recent signs of the recovery could be the result of one off factors and not a sustained trend of improvement. so the iea is cutting its oil demand growth forecast for the coming year by a marginal 90,000 barrels a day. also in the news, j cpenney increasing borrowing capacity under a bank credit facility by $ 00 million. up now to -- $100 million. now to $1.9 billion. the retailer expanding an option to buy more at a later date. the news said to be raising concerns among analysts as the retailer works on that

turnaround. and conditions on a disabled carnival cruise ship in the gulf of mexico, they're in dispute. the company says it's making passenger -- passengers stranded aboard as comfortable as possible with running water, working bathrooms. this contradicts accounts of some passengers who told relatives about filthy, hot conditions, and limited access to food. i saw a report yesterday that in somebody calling in from one of the boats. did not sound like everybody was too comfortable. >> i saw that. onion sandwiches that took three hours to get. >> what's wrong with onion sandwiches? >> that wasn't the bad part. the bad part was the 3,000 people and five bathrooms. >> sleeping in the hallways, couldn't stay in their cabin because the toilets were overflowing i overflowing. >> our friend tom did a report on the "today" show about. this he said one of the things they were offered was a five-day cruise at another point, hopefully at another time with power. >> any takers?

>> unclear. president obama calling on congress to pass fiscal battles. chief washington correspondent john harwood with the highlights from the state of the union. john? >> reporter: hey, joe. this was government activism that president obama offered for an age of limited resources. the biggest new initiative he offered was an increase in the minimum wage over three years from 7.25 to $9 an hour. the burden for that would be placed, of course, on employers. he offered a laundry list of proposals domestically on education, on energy, on infrastructure, but he made the point to members of congress that none of them would add to the deficit because they were all going to be paid for by offsetting spending cuts. of course, he's not reached agreement with the congress. on here's the president last night. >> nothing i'm proposed tonight should increase our deficit by a single dime. it is not a bigger government we need but a smart or government that sets priorities and invests in broad-based growth.

let's set party interests aside and work to pass a budget that replaces reckless cuts with smart savings and wise investments in our future. let's do it without the brinksmanship that stresses consumers and scares off investors. [ applause ] >> the greatest nation on earth -- the greatest nation on earth cannot keep conducting its business by drifting from one manufactured crisis to the next. [ applause ] we. >> we can't do it. >> now joe, the underlying philosophy behind what the president is trying to do, many proposals repackaged from last year's state of the union and previous ones. part of the proposals to jump-start the economy during the campaign, his judged that he campaigned on these ideas, he won the election and he's going to press them. many are not new, but he's trying to keep the pressure on

republicans to break down their resistan resistance. he had success with the debt limit. republicans moving his way on immigration. the question is going to be on the domestic spending initiatives. can he get them to go his way at the same time they're trying to do deficit reduction? not going to be easy. >> what did you pick up on some of the other provisions of the big deal that didn't get done, john? the enticements or tax reform -- entitlements or tax reform or otherwise. was there much attention paid to that? >> well, some. he alluded to getting the corporate tax rates down. this is part of the deal he left on the table for the speaker. the key point about that deal is he's not giving up the quest for additional revenue. that's where republicans so far have drone dra-- have drawn the line. he repeated again last night he's willing to entertain further cuts in medicare so long, he said, as it doesn't violate what he called the compact for a secure retirement with seniors. and it's not going to be easy to do that. it's also not going to be impossible. we'll have to see whether or not the republican party looking to its future.

we saw marco rubio as part of its future. we saw the future of the republican party get a drink of water on tv last night. the -- we're going to see whether they decide that it's in their interests to make a deal with him and move past that and start looking to future battles beyond the fiscal battles of today. >> i did notice that when they were trying to sum up what rubio said, i asked everyone yesterday, we all want to help the middle class. we're trying to figure out how to do. we know that most of the jobs need to come from the private sector. do you think that ceos or private sector-oriented people, did they feel like they got, that he put his arm around him more than previously or was it an expansion of or -- you know, sort of continuing to talk about an expansion of liberal ideas, bigger government? >> i would think they would not feel that the president put their arm around him necessarily. when you listened to the president talk about i'm going

to take executive action to implement my philosophy on climate change for example, you're going to have a lot of people -- we heard it from joe manchin, senator from west virginia, saying he was disappointed as a guy from a coal state. he's concerned about what the epa is going to do and what the obama administration is going to do. i would think the president rattled some in business by the rhetoric he had. and on your point about rubio. i thought rubio was an effective spokesman for the small government argument. saw why he was put front and center by the republican party. he's got an as operational story that is the mirror -- aspirational story that is the mirror image of the one that obama set up in 2008. he set up the contrast well. >> john, what is the chance that the minimum wage actually is increased? >> i think it is not great. but upon zero either. a senior administration official yesterday talked to me after the brieflying on the proposal. and the analysis was, look,

we're going to hear that big business doesn't mind this. you're going to hear objections from the service sector, from the restaurant industry, republicans don't like it, but every once in a while -- remember, the last time the minimum wage was raised was in 2005. during the bush administration, under pressure from democrats, you could -- you can see a sort of break in the dike at some point. and you see republicans flooding to that. again, as with immigration, this is something where it is possible that republicans would sdie it's in their interest. i think if you were laying money down tonight, you would say it's going nowhere in the house of representatives. maybe nowhere in the senate either. it's an attempt by the president to try and go on offense at least on some proposals rather than simply recycling the thanks he proposed in the past and had not gotten. >> the next election, it's going to be interesting again. at least we live in interesting times. and it -- older we get, it goes pretty quick, doesn't it?

>> it does go quick. >> the president's got 18 months to get something done. now there's only six months of the election after that 18. we'll see. >> i would be interested in one -- in your reaction to one proposal the president offered which business might like which is he said that i'm going to pursue the transpacific partnership on trade. she'd he wanted to open a new negotiation, a transatlantic partnership with the e.u. is it your feeling that people are going to look at that and say, okay, at least there's a little part of the business agenda he's pursuing by trying to get down trade barriers? >> one of the criticisms is there had been no new free trade initiatives in his first administration. you know, they acted on some that were previously proposed. yeah, obviously that would be something that -- that businesses would -- certainly want to sell to the world, this for sure. that -- >> larry kudlow was on with us last night and said we don't need a new agreement with the e.u. we've already got agreements with most of the countries involved. so we'll see how much value the marketplace puts on that.

>> okay. all right. john harwood. becky's got the next story coming up. just -- a classic. it's -- you know, i got to talk to but this. i really -- let's lets beck dee it. do you have a new view on cayman islands? i know bachus says that mr. lew paid his taxes that he was supposed to pay. this was fully within the law to do it. to have tax shelters in the caymans. i thought you didn't like those as a rule. >> i don't like them. generally speaking. is this place a house of thieves, this -- whatever the heck it is down in -- >> it is. >> it still is. >> it's not a good thing. >> it's not a good thing. >> it's not a good thing. >> i can't imagine that jack lew would -- >> becky has the story that she should probably -- >> it is going to be something that makes for a very interesting story in washington this morning. the senate banking committee's going to be grilling president obama's treasury secretary nominee, jack lew,

today. among the issues expected to be raised are a bonus he received from citigroup and, as joe was talking about, cayman island investments. lew is expected to eventually win confirmation. we're going to be speaking to veteran senate finance committee member charles grassley coming up at 8:00 eastern time. yes, the situation with cayman island accounts could make for an interesting debate today. >> max bachus back in 2008 said that this ugland house that has a lot to do with tax evasion which we know is a felony. but then yesterday -- >> we've had treasury secretaries that haven't paid their taxes before. >> that's not -- that's not a disqualifying -- >> geithner's gone -- >> it's better than average. you don't have to be perfect. >> look, you can go to the cayman islands or use turbo tax. it's complicated. >> he used turbo tax. that was the problem. >> is that what secretary geithner -- >> yeah, it was -- >> is that evasion? >> he didn't pay part of the taxes. >> he didn't pay it. then he paid it later.

>> sounds like a mistake if it was related to turbo text. something got lost in the computer. >> do you want someone running the irs -- >> not like he set up his own private partnership in the cayman islands. he happened to invest in partnerships when he was at citi, and they happened to be based there. >> in romney's case he set them up down there? >> no, he didn't. i was not making -- i never made the cayman islands argument to you ever. >> oh! about romney? >> i never did. go back and check the tapes. never. >> i don't think he ever did. >> i think -- >> i don't think he did. >> in general, just the whole perception. now al gore's got more money, a lot more money than romney, as you know. you think that's in the cayman islands? >> he's not filthy rich. no, that's somewhere safe, the lea -- the middle east. >> as the ocean washes across the country, it's safe, probably in gold. in the markets, the futures

are fight slightly higher. yesterday the dow was up by 47 point. the s&p up by two. as patty dawn points out, the nasdaq has been the big issue. it was actually down yesterday by five points. it has not closed above the 3,200 level that so many had been watching closely. some say in order to see the s&p 500 and the dow break out to new highs, you're going to have to see technology lead the way. we'll get clues on this tonight when we hear from cisco. the tech sector yesterday was negative. it was down by 0.4%. again, we'll continue to watch this. cisco out with earnings after the bell today. if you want to look at oil prices, you'll see that they were up at 11 cents, up by nine cents to 97.62. the ten-year note at this point is yielding 2.01%. above 2%. we do have a ten-year note auction at 1:00 p.m. we also have retail sales and import prices out at 1:30 p.m. eastern. look at the dollar, you'll see in fact the dollar is down against the euro. it's up against the yen. euro at 1.3479.

and gold prices this morning slightly weaker. down by $3.60 to $1,646 an ounce. andrew? >> okay. time for the global markets report. we'll see what kelly evans is thinking about this morning. kelly? >> hi, andrew. always news. i'll get to the currency wars piece in a bit. over here, there was focus on italy. the country was going to raise at auction three or four different kinds of paper upon one being a 30-year bond for the first time in two years. it went off reasonably well. 5.08%, i think, the level there. we can show you the reaction in the ten-year space across the sovereigns for the most part, if i can bring it up for you. working -- not working? no. all right. we'll skip that for now. who needs elements anyway? basically you're seeing across spain and italy flows into those out of the bund yield and out of the gilt yield which was about -- up above 2.1%. becky, consistent with what we're seeing across the u.s. european equity markets for the

most part are mixed. and it's forex, guys, again, where the real focus is. so absent any weakness in the italian auctions which we didn't see which might have put pressure on the euro. instead the euro continues to rally against the dollar. and it's actually the g-20 meeting this weekend in russia that's the focus for a lot of investors. it's the yen in particular. we had the g-7 come out and create a little confusion in the market. first with the statement that seemed sort of tacitly say it was okay for japan and some countries to have been talking down their currency to the effect that they did. then turning around yesterday and trying to say, look, they meant for the statement, the statement out of the g-7, to come across as signaling concern about the excessive moves in the yen. then a canadian official struck much of the same note when asked by press later that evening. the did give up significant ground on that strength -- strengthened, i should say. the nikkei took a hit. now the focus turns to the g-20. could be more volatility heading into. that the reason, by the way, that i'm here at this camera is because we're carrying mervyn

king's inflation report. on the back of that, he talked about seeing higher inflation rates in the u.k. sterling at a six hoof month low against the dollar. back to you. >> thank you for that. let's talk a little about the markets. the context of the state of the union, the dow closing at 146 points from its record high set back in october of 2007. our guest host this hour, len blum, managing partner at westwood capital. good morning. perspective from the markets on last night's speech. does it matter? >> you know -- >> how do people read it? what happens today? >> i don't think it's going to have a big impact on the market. historically state of the union addresses have, you know, since the '30s have moved the market by maybe 15 basis points the da. unless there's something meaningful, the markets don't respond. i mean, you probably remember when clinton gave the state of the union in 1998. he said the economy's very strong. this is a strong statement. the market was up a point the next day.

but this was really nothing in there that is new news or is market-moving news. if you kind of go through the topics he's covered in the sectors they would affect, the minimum wage, you would think maybe walmart or mcdonald's might trade down because of the news. i think everyone expects that the republicans will block it. they'll discuss it, it -- you know, it was just kind of thrown out there. >> to me that may be the bigger issue. we've been living in this -- the past couple of months have been, feels goldilocks, right? despite we've had some things come off here and there. but a little goldilocks. that's in part, i think, a function of the fact that we haven't been talking about politics. if feels like politics is off the table. the question is, when you hear a speech like that, do you think to yourself, washington has more gridlock than ever, that people are going to come together, i mean, then -- and i put that only in the perspective of people like jamie dimon say if we ever get a grand bargain, boy, we off to the races. you hear things like that, you don't think we're going to the races quickly. >> i didn't get that feeling.

you do get the feeling of gridlock. you do get the feeling of you're hearing obama talk about things that you know have no way of happening. and a lot of the things he's talking about are policy and not necessarily proposals. for example, it appears that he's embraced the energy revolution that we're going to become energy dependent, and he wants to drill. there's no specific moves to move specific stocks. you can't really see specific news that i think is going to move the gun stocks. i mean, it's -- these are things we already know about. >> what about utilities? based on the idea that you may see tougher regulations coming down? >> it's the same as it was. >> we knew these things. >> we heard the inauguration. and this was no worse -- no worse than that, but no real olive branches that maybe some people were hoping for. >> it was less con tranterrible. i -- confrontational. i expected him to go out a

little bit more than he did, you know, right before december 31 where he's coming out against the tax -- >> we've got to slip in a break. anything to be said about the fact that this was no banker bashing? i saw ben white making something of that this morning in "morning money." there wasn't a lot of talk about wall street where historically he has. is that an olive branch in a backwards way? i don't know. i saw some people trying to make something of it. >> stop hitting your head against the wall. you feel like, wow, it feels good. >> right. i think it's what joe said. if there's an olive branch it probably needs to be extended the other way. wall street alienated obama in this last election cycle. they weren't as supportive of the party as you normally see. i think it's old news. i think it's done. everyone knows about the financial crisis. everyone knows about wall street's role in it. >> right. you're going to be sticking with us for the hour. stay where you are. thank you for that. we'll keep the conversation going. when we come back, shares of

general election and comcast trading higher this morning after the news that the cable giant is buying the rest of nbcuniversal for $16.7 billion. we'll talk to an analyst who covers the space right after this. and then in the next hour, a "squawk" newsmaker. comcast chairman and ceo brian roberts will join us. hello! how sharp is your business security? can it help protect your people and property, while keeping out threats to your operations?

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splash. comcast buying general electric's nbcuniversal for $16.7 billion. joining us with reaction is is senior analyst and managing director with hudson square research. and today, i hate the phrase -- todd, i hate the phrase win-win, but general electric's and comcast stock trading higher s. this a situation where both get something great out of the deal? >> i think that the price comcast is paying is a reasonable price. i think it is good for both companies. i certainly don't want to comment on general electric's stock price. i think for comcast, it's nice to clean up the ownership of this business and the price seems to be a fair price. >> comcast is saying the reason they're doing it is because they have a lot of faith in the future for these assets, what do you see happening with nbcuniversal, with television in general, with cable television? particular? >> yeah, we think it ae's a goo

strategy for a cable provider like comcast to have bought into the production business, one just for diversification. if we get the two sides, distribution and content are butting heads here. and you know, there's always going to be a winner and loser in the battle. in this case, you know, comcast owns some of each at this point. and we think that's a pretty good diversification strategy. >> watching comcast shores, the stock has been on a tear over the last couple of years. yesterday up another 7% on this news. what else do you wanted to hear from the company? >> you know, the -- everybody's talking about the deal this morning. the fourth quarter numbers that they reported last night, as well, were pretty good. the broadband growth was especially strong. the business services segment continues to impress us here. we liked the numbers we saw there. one thing we didn't like and would like to hear more explanation of is -- i'm not

sure everyone has seen this, it was buried on one slide in their prn presentation for their conference call that starts this morning, they're increasing -- they're giving capex guidance for the first time for 2013 of up 10% for the cable business. i think most people were expecting the big investments in the cable network were behind us. and so i'd like it hear more on that. >> your concern on that level is -- is what? i mean, people wonder what they're going to do with all the free cash flow. they did increase their dividend. >> they d. and they decreased their stock peaba buyback -- stk buyback, doing $3 million. they are returning cash to shareholders but will be investing more in the network. we would like to hear more about what that extra money will be going toward. >> and todd, quickly, given the gains in the stock, what do you tell investigators now? >> you know, i think that given the current price, it's right for the stock. we think it's fairly valued.

we have a whole rating, a neutral rating on it. don't see anything here that would change that. >> todd, thank you very much. appreciate your time. >> no problem. also, a programming note. don't miss comcast chairman and ceo brian roberts coming up at 7:15 eastern. also coming up, the state of the union and reaction from washington and wall street. this morning, we'll talk to congressmen from both sides of the aisle.

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u.s. equity futures up, pretty solid session yesterday. we didn't earmark know it was going to be. backup 50 points. we're only 1% of the way from a new high for the dow jones. our guest host this hour, westwood capital's len blum. in the next hour, famed noftor and billionaire real state tycoon sam zell. after the state of the union, he'll have comments i'm sure. plus, top-ranked money manager don yacthman, funds seeing 10% over the past five years. we'll also talk about how business leaders and investors are reacting to president obama's state of the union. among the topics that he talked about, jobs and the economy. even mentioning some companies by name. >> after shedding jobs for ten years, our manufacturers have added 500,000 jobs over the past three. caterpillar is bringing jobs back from japan. ford is bringing jobs back from

mexico. and this year, apple will start making macs in america again. >> we're going to be speaking with the ceo of caterpillar, doug oberhelman at 8:00 a.m. eastern. and we'll talk about washington's looming debt threat with aetna got mark bertolini. john delaney, senior minority while and member of the financial services committee joins us. he will be with us in a minute. first we'll start with representative scat garrett, also a -- scott garrett, also a member of the financial services committee. what did -- last night, the things that you did like and the things you didn't like, scott? >> yeah. well, so, i -- i think the president hit on all the right notes if you will, at least of what his polling would tell him, what the american public would want to hear. for example, he wants to reach across the aisle and be bipartisan. but on the other hand, he said he threatened the republicans, if we don't do what he says, he's going to do it anyway. he said that he wants to make government smarter, not bigger on the one hand, which the

public wants to hear. on the other hand, he talked about raising taxes on the economy and making government spend more money. so he touched on all the right notes. he talked about streamlining and making it more efficient on the one hand. but then on the other hand, you know, of course, he's continuing to push with his 2,000-page dodd-frank, 400 regulations coming out on it. he hits the right notes, but his reality never measures up to what his rhetoric is about. >> congressman delaney, one thing that is bipartisan, i think, and we've been talking about hammering this again and again, is that we want growth, both sides want growth. and i would even say it's bipartisan that we really want growth in the private sector. to add jobs. nobody -- even you guys, the government can do good things, but you don't necessarily want to really grow it as quickly as the private sector. is that right? did you hear things that will accomplish that in the end last night? >> well, i think for the economy to grow, we have to be more competitive as a country. so i think the president touched on several things that will make the country more competitive. he touched on immigration,

obviously, which there seems to be very broad support finally for comprehensive immigration reform. that will help the country grow. he talked a lot about education and how there's a very significant correlation between someone's ability to get a job and having a good education and work force training and investing in early childhood education. and all those investments have to do with competitiveness and growth. he talked about energy policy, keeping energy prices low. and you know, two of the most important numbers for an economy to grow are the cost of money and cost of energy. i think his emphasis on energy was also an important message. i think with regard to overall competitiveness, i heard very good things in his speech. >> if you were a small business owner or even a -- a person, ceo, large business owner, you felt like he extended an olive

branch to your efforts in the sflek. >> yeah -- the private sector? >> yeah, i ran a business before coming here, people care about two things, they care about competitiveness, their own competitiveness and the country's overall competitiveness. they care about the fiscal trajectory of the country. i think he clearly made strong points on the overall competitiveness, and as it relates to the fiscal traject y trajectory, i don't think we were able to get into many details in the speech. but the president talked about why that's important. >> more so than in the first term, congressman? i know you've heard businesses complaining about uncertainty and complaining about that the private sector hasn't been embraced. you say it's different -- he has taxed to where he is now more on -- positive about the private sector? you saw that? >> you know, he touched on public/private partnerships. i thought that was positive. i thought the speech was positive about the private sector. look, the private sector creates jobs, government doesn't create

jobs, what government does is level the playing field, make it fair, and make certain investments that only government can make. i think if you analyzed the president's speech against that backdrop if you will, i think it was very much pro-growth and in that regard a pro-business address. >> scott, what are all of these guys complaining about that come on cnbc all the time about uncertainty, higher taxes, too much regulation? why are corporate cash balances so sydney why aren't they hire -- so high? why aren't they hiring? why is growth at 8% and we're growing at .2% two years after recovery supposedly started? >> i think people need a community organizer to run the organizations because he knows how to run a business better than they do. look, this country is less competitive today than when he came in. we have less people working than when he came into office. the fiscal trajectory for the country is in a worse position than when he came into office. he has done nothing in actuality

to try to fix the situation. i'll give him the credit, he talks the right talks, says the right things. this is not the first time that he says that he is going to pivot now and look to jobs and the economy. he said that in every state of the union that he's given since i've been here, since he's been in office. but we know what the reality is. he just doesn't get it done for the economy. >> what will get through the house, congressman garrett? and -- >> sure. a number of things. i mean, on the area that i do, i chair the capital markets subcommittee. we'll do a lot to try to get through the house, to try to provide uncertainty, to peel back what was done on dodd-frank so there is certainty -- >> in the things he proposed last night, what can he do with executive orders and what does he need you for? >> with this administration he probably think he can do just about anything with executive orders. we have seen already that the courts have struck down a number of actions such as the nlrb decision of recent. hopefully the cfrpb, as well,

hopefully strike that down. he will try do as much as he possibly can whether it's constitution or otherwise with executive orders. we'll call him on that. but we'll -- look, we'll extend that proverbial bipartisan hand across the aisle if he will actually work with us. if he actually will give us a plan on immigration, on making government more streamlined, on the fiscal situation. he just never comes to the table to us with anything detailed other than the rhetoric. you know, cbo once said they cannot score a speech. i'll be going to budget later on. they can't score all the talking points. >> congressman delaney, how far down the list of priorities to make us competitive was a different type of corporate tax system that might make us more competitive? did you hear much about that? does it seem like something that you're going to see the president actually try to do over the next couple of months? >> well, i thought he -- the first, i don't know, quarter of his speech, he talked about corporate tax reform. we clearly need comprehensive

tax reform. i think we have 300 items of tax in this country, 200 items of deduction. it's not a sensible system. i do think as it relates to competitiveness, the problem this country has is not that businesses aren't doing well. businesses on a relative basis are actually doing very well right now. the problem is that we don't have enough americans working. the reason we don't have enough americans working is because the economy has fundamentally changed. the effects of globalization and technology have profoundly affected the work force and the face of skrobs in this country. what we -- jobs in this country. what we have to do to broaden the employment opportunities for more americans, we've to see make sure the country can compete. the things we need to do to compete is we need a more educated work force. the president talked about that. we need to change our immigration policies. the president talked about that. and we need a national energy policy. the president talked about that. we also need to invest in our infrastructure which the president discussed. and to do all these things, we need to put the country on a

better fiscal trajectory. and the president also talked about that. so these are the kind of things. regulations are not affecting business in my judgment at this point. i mean, we talk a lot about dodd frank. but we have to remember on the heels of the financial crisis, 19 of the 20 largest financial institutions in this country either failed or needed government support in one form or another. that's normally the context of financial reform. we're dealing with that now. i don't believe that dodd frank is affecting anything in this economy now. >> congressman, thank you. >> with k we say that's the takeaway from the -- can we say that that's the takeaway from the other side of the ail? regulations not affecting business? unbelievable. >> i think that extesteny said don't have a spending problem, we have a pay-for problem. there are differences on the way that people think we should -- >> a paper problem. >> that means we just need to --

a pay-for problem. >> that means we just need to pay for what we're spending. >> you have less to pay for. that solves the pay-for problem. or you could have more money. a couple ways to interpret that. >> a couple ways to skin a cat -- >> you don't want to skin a cat. >> you don't want to say that. now that we've heard from washington -- i don't have a cat. >> skin a roach or rock -- >> we were talking about the fragility in the economy. >> can we talk about it after the break? >> sure. what to investors make of last night's state of the union? we'll get the perspective after the break. what's next?

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welcome back, everybody. john brady joins us from the cme. and john, we were talking a little earlier this morning about what's been happening with technology. while we've watched the s&p and the dow hitting these new highs, technology's been holding things back a little bit. we'll be getting more earnings out tonight, cisco is after the bell. do you expect to see technology follow suit or start to hamper the other averages? >> at some point, becky, technology's going to be a buy. you have to remember that in calendar year 2012, technology stocks got overstretched and overvalued. and i think this consolidation trade with the downside buys is most likely going to last through the spring or so. valuations aren't to a point yet on a comparative basis as other sectors of the stock market. for investors it start pouring money -- to start pouring money back into technology. i think a consolidation trade

will continue into spring in which hopefully valuations will suggest a move into the sector makes sense. >> apple's been a big part of the nasdaq and makes up a big percentage of the nasdaq s. that part of the issue? you need to see stabilization there? >> sure. facebook, too, along with apple. there's been a consolidation trade there. you continue to have mixed signals coming from the media as regards apple. what will they do with their cash, will there be a dividend, and really tim cook's comment yesterday from san francisco from the goldman conference suggesting the hiring and expansion of technology people is a bullish signal for apple. right here, right now, i would suggest the stock probably still has to consolidate more until that new product comes to line. >> so john, quickly, what do you think happens with the s&p and the dow? do they kind of wait out while we see technology here, or can they move higher on their own? >> well, i think the present sort of -- the president sort of subtly hit on it last night.

that is ma manufacturing and domestic industrial production will grind higher. it will be a slow slog, but it certainly is positive for some of the larger cap names in the dow jones industrials. so as we expect technology to perhaps sideways trade and consolidate, the manufacturing sector of the economy should continue to do well. which will, of course, favor the dow and the s&p. >> john, thank you. always great talking to you. >> thanks. up next, a friend of president obama and "squawk box," real estate entrepreneur don peebls joins us with his thoughts on last night's state of the union. and then in the next hour, famed investor sam zell. also, comcast chairman and ceo brian roberts and financial analyst don yachtman. stay tuned. great, everybody made it.

we all work remotely so this is a big deal, our first full team gathering! i wanted to call on a few people. ashley, ashley marshall... here. since we're often all on the move, ashley suggested we use fedex office to hold packages for us. great job. [ applause ] thank you. and on a protocol note, i'd like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh i'm sorry guys. ah sometimes the caps lock gets stuck on my keyboard. hey do you wanna get a drink later? [ male announcer ] hold packages at any fedex office location.

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i ask congress to create hubs and make sure manufacturing is made in america. >> okay, this morning, we're asking what ceos think of the president's message last night.

don peebles is chairman and ceo of peebles corporation. don's also a supporter historically of the president. good morning to you. >> good morning. >> the conventional wisdom around the table at least so far this morning has been the sense that the rhetoric was great, but maybe hard to get much done with what he was talking about. where do you come down?

did you want him to move to the center or are you happy where w where he is? >> look, i thought that the president's speech last night was for the most part a uniting. however, i thought that the method in which he approached new revenue in terms of taxes, increasing taxes, again was spoke weekend a sense of disdain. and i find that a bit troubling. you know, look, 70% of the billionaires in this country happen to be i thought the method he approached new taxes i found that troubling. 70% of mark rubio and

-- said to marco rubio the things that he said concerning the private sector, is it fair to say that you thought those made more sense than what you heard from the president? >> i think that the president didn't spend a lot of time on the private sector. >> i think -- an 8% jobless rate. 2% growth. wouldn't you spend all your time on that? >> well, as i said before the address, i would have liked to have seen a lot of time spent on our current economy, expanding and growing our economy, and growing jobs. i thought where senator rubio really hit the -- you know, hit the ball properly was in terms of what americans are looking for. what we do and what the aspirations we have for our children is a better life. so success should be supported

and rewarded and not attacked. and just because we have differences of opinion doesn't make us bad people. and i thought that that was very well said by the senator. happens to be my senator from florida. >> right. >> don, we all want to see a streamlined government, and we've got to, you know, we've got on the one hand no one wants to raise taxes. on the other hand, no one wants to cut spending. i guess the real question from me is we've got a very weak economy, our job creation is barely keeping up with people entering the work force. and we're hoping for 2% gdp. so how do you cut spending in such a delicate, fragile economy, you know, the stock market's rallying, but it's more a result of exuberance and that we didn't fall off the fiscal cliff in december. you know, money rushing in from the sidelines. but can we as a -- as an economy in such a fragile state take more trauma, can we take more arguing and debate in washington

and, you know, a house that really does nothing except for block things? >> let's look at -- first of all, i would say this, that the financial markets in the business community and especially the entrepreneurial community like mine, we've just been asked to pay more. we've had hundreds of billions of dollars of tax increases just taking place last month. so the expectation now is that there is some spending and entitlement reform. this country cannot continue going down the path we're going down now. spending way beyond our means. and i believe that that is part of what creates the problem that we're having in our economy today. >> so you want others to do their fair share? >> yeah. well, i don't think it's a question about fair share. we're all americans, we're all trying to do our part. but we have to modernize our entitlement system. it's out of date. it is unsustainable. and we have to do something about it. and that's not a republican or democratic idea. that's an american idea. >> okay. don, we'll leave it there. thank you for coming in early this morning after the speech

last night. still think about buying pebble beach so we can call it peeble beach. >> and len blum, thank you for joining us. next, sam zell, legendary investor who is never one to mince words. we'll find out what he thinks of the economy and the markets now. plus, comcast chairman and ceo brian roberts on the cable giant's deal to buy the rest of nbcuniversal. smarter about insurance.ke you because what you don't know can hurt you. what if you didn't know that weeping willows have invasive roots? what if you didn't know that a trampoline... could affect your liability? and what if you didn't know that most cars... get broken into when the weather warms up? here, buddy. the more you know, the better you can plan for what's ahead. get smarter about your insurance. ♪ we are farmers bum - pa -dum, bum - bum - bum - bum ♪ transit fares! as in the 37 billion transit fares

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the state of the union. >> the president of the united states. >> the president putting the pressure on republicans for a deficit deal while proposing spending on infrastructure, a hike in the minimum wage, and major climate legislation. the details and market reaction ahead.

climate change. the market reaction just ahead. >> it's a comcastic day. i'm ready to party! >> the parent company of n nbcuniversal goes all in. we have ceo brian roberts who will talk to us about the media giant's plans for nbcuniversal and earnings out. >> bridging the gap between washington and wall street, business tycoon, sam zel and where he's looking to make money as the second hour of jaub "squ box" begins right now. >> good morning, everyone. welcome back to "squawk box" on cnbc. i'm becky quick with joe kernen and andrew ross sorkin. the futures are higher this morning up by 25 points and s&p futures up by 23 points. our newsmaker of the morning is comcast. we have the ceo of that company buying the rest of cnbc's

universal general electric for $16.7 billion. shares of both companies jumping on the news. ge's history with broadcast media goes back to 1919 when the company formed radio corporation of america in turn created nbc. comcast spending an extra $1.4 billion to buy nbc's real estate at "30 rock" feller plaza in nbc and cnbc in new jersey. we will be speaking to comcast ceo brian roberts in a few minutes about this deal and future of media and earnings also out this morning. we also have interesting moments from last night's state of the union. when the president spoke about bringing overseas jobs back to the united states. >> after shedding jobs for more than 10 years, our manufacturers added 500,000 jobs over the past three. caterpillar is bringing jobs back from japan. ford is bringing jobs back from mexico an this year, apple will

start making macs in america again. sno-cat ter billepillar, we hav ceo, doug oeberhelman. >> treasury secretary nominee, jack lew headed for capitol hill this morning. the senate finance committee will hold a confirmation hearing for president obama's choice to replace time geithner. he's expect to face questions but win confirmation from the full senate. mobile phone sales fell last year for the first time since 2009. research from gartner said tough economic conditions and shifting consumer preference all contributed to the pullback. we will be getting a key economic report in a little under 90 minutes from now. january retail sales expected to rise .1 and that will be at 8:30

eastern time. joe. >> the president laying out his agenda for his second term, jobs, the deficit and climb change. welcome, joe. >> good morning. we got news in the last few minutes with leaders of the european union announcing they have begun the process of setting up working groups to negotiate with the united states over that transatlantic partnership the president laid out. we'll see whether or not that generates favorable response from business. in the meantime we saw a demonstration last night of the dramatic difference in philosophy between republicans like marco rubio who believes government needs to get out of the way to foster job creation and the president thought little pushes from the government in terms of manufacturing, the proposal for manufacturing

centers can make a big difference. here's the president. >> tonight, i'm announcing the launch of three more of these manufacturing hubs where businesses will partner with the department of defense and energy to enter regions left behind by globalization into global centers of high-tech jobs. i ask this congress to help create a network of 15 of these hubs and guarantee the next revolution in manufacturing is made right here in america. >> we saw that philosophy repeated over and over in that more than an hour-long state "sf the union" address by the president on energy and energy security trust, on education, on workforce training and development. all those are the ways the president is hoping to take relatively modest investment and leverage them. republicans say that's not the way to create jobs and the argument we will be having in washington this year. >> true. how late were you up last night again?

>> pretty late, to midnight or so. these are the days you burn it at both ends. by the way, i hope you guys let brian roberts know he got a heck of a deal on the headquarters in englewood cliffs. >> this is a nice building. this is a nice building. would it be unto ward for me to ask him for a bigger office. >> you mean an office. >> downtown you think he's already planning on that? >> adding you? >> meanwhile, with becky, did you hear her? it's comcastic. what happened to we bring good things to life. imagine -- >> i'm on board, baby. >> hey, guys. >> she's our company woman. >> joe. >> yeah. >> i did a panel with jeff immelt the other day talking about job creation. i didn't realize he wasn't going to be part of the launch anymore. kind of sad. >> immelt -- >> ringing a bell?

>> yeah. the name is -- god -- it's cobwebs. i loved ge, loved working for them for 22, loved jeff immelt. we already heard from some of these guys. it was sad today. >> you heard from someone and you immediately wrote back. i immediately wrote back from shefer, our corporate. any way, thanks, john. what 49% of me are they buying? a lot of people wouldn't want -- from here on down, right? this is my best -- all right. go ahead. >> you sure that's your best half? >> maybe we should go this way. >> we have a very important gentleman at the table. >> we do. our guest host this morning is one of the biggest titans in real estate. sam zell of equity investments. why don't be pick up where john

harwood left off. what matters you most to business and your world view on things. close my eyes and all i can remember was any last speech, which was basically the same thing. >> the inauguration? >> yeah. i think that the president is well-meaning. i think the president desperately wants to succeed. obviously, there's a question as to whether the methodology will work. the history of government encouragement of business has always succeeded where it's been at the margin, not where it's the core. by definition, government is bureaucracy and you need the ability as a businessman to make rapid and quick decisions. i think that continuing to increase the government's role in our economy, i don't think is

a productive direction. >> to me, the speech last night was slightly more conciliatory than the naurgal speech was. he did lay out things like trade agreement with the eu, natural gas, in terms of balancing the budget, how you do that. probably disagreement how he gets there and talked about manufacturing and immigration. seems like a few ideas some business leaders could get on board. from the business roundtable they liked immigration and natural gas parts. obviously, there's a lot of other stuff in there they didn't lik like. >> personally, i can't believe in 2013 we're still having an immigration discussion. >> yeah. >> i think this whole matter should have been resolved years ago. i still think it should be resolved and resolved quickly. thick this who i think this whole focus protecting the border, et cetera. nobody's coming to the united

states anymore. the jobs aren't here. in reference to your comments about the president's speech last night, i think this whole direction of renaissance of manufacturing is wonderful. it's terrific. the only problem is we don't have the talented -- we don't have the bodies. so if i were betting, i would say the more the president encoura encourages domestic manufacturing the more mexico is going to benefit because mexico has the bodies, it has a lower cost structure and it has this long border and nafta. >> when you hear the president say he wants to raise minimum wage, as a businessman, how do i feel about that? >> i don't get it. there's no history that says raising the minimum wage does anything other than eliminate job jobs. >> it's one of those things on the front end -- the in tent

looks good. nobody connects the dots. >> come on. i'm sitting here today and hearing the minimum wage is going to go up. i don't believe we have any minimum wage people that work for me nuclear in tany where in. what does it mean for a me? if you're the manager of mcdonald's, you have to look at your rescheduling. if this were to go forward your labor costs went up 20%. you didn't get any benefit or reductions, up 20%. what do you do? figure out how to deal with less people. >> there is already competitive advantage of hiring workers in mexico and you just added to the competitive advantage of workers offshore. >> in the service business, no, because you need them right here. yes for manufacturing. >> you need them but you can afford fewer of them. >> i'm literally trying to play devil's advocate.

i agree with sam. >> so many things sound so go and a lot of times, i think it's the act of feeling virtuous on the front end and really not wanting to connect the dots to where it leads so often. >> that's like proposing a program and not proposing what it cost. that's been the standard. a lot of the stuff last night, all these programs he wants to do and if i were the president of the united states and i couldn't run for election again, i would, too. >> for all the talk about helping the middle class, we all want to do it. 8% unemployment and 2% subparagrasub- papar growth, we have not been helping, it's hurting. >> flip it around. if there was one thing you could have heard last night you didn't you just wish -- not a broad strategy where he will bring business into the fold, i'm not sure that was a comment.

if there was one thing i were sitting there waiting with baited bret thath what would it? >> hoping he didn't say it and i wish he would say it? >> sure. >> i was hoping the president of the united states would get up there and say, we have all kinds of climate goals and recognize the fact we can't go 200 miles an hour into a box canyon like eliminating coal and then the lights go out. it's the balance. that's what was missing in the speech last night. that's what was missing in the inauguration. we don't have a president who says, i'm going to move over here and move everybody here. instead, it's i'm over here and i'm going to try and pull everybody here. the result is the kind of chaos that we're dealing with. >> sam is going to be our guest host the next two hours. we have a lot to talk about with

hi him. >> deere called up -- looks like it could trade a new high. 95.60 this is high and looks $95.40, up $6 a share. >> a couple more than yesterday. >> and the company is reporting results that are taken by the market. i guess it's really mo more -- first quarter net $1.65 and guidance also. second quarter equipment sales up 4% and fiscal year up 6%. first quarter sales above expectations at $7.42 billion versus $6.72 is what the view was and $1.65 above expectations. >> the company is saying the near term outlook is covered by uncertainty and fiscal economic and trade issues. even with raising guidance, they do say the broader scale does matter. >> sure. >> we'll talk more about this. it looks like deere is up about

$2. we have a jam-packed news time for you and comcast taking full control of universal in a deal announced after the bell yesterday. comcast ceo brian roberts will join us after this. later this morning, talk about a smart trade, don yactmam buying stock at $4 a share and now in the $14 range after the company is going to be taken private. what's he buying now? stick around.

comcast going all in buying the remain iing 25% of universa it didn't own. also raising its dividend and reporting fourth quarter results. let's look at the shares of comcast and general electric, both doing very well on the news. we are joined now by chairman and ceo brian roberts who joins us from new york. i initially felt like sally fields. you like us after all this. good morning. >> we absolutely like you. >> we will get to the results in just a second. the results got lost, i think, a little in this news. you couldn't help but notice the price tag and everything else. we have a pretty good idea how it's being received in the market. you saw the stock price.

i think both companies are pleased, yet comcast, you are still doubling down, mr. roberts, on media assets, still have -- none of us know how it will play out and have an uncertain future. i would imagine doing this early, you're even more confident you and steve burke know how to successfully steer the company through this, is that correct? >> we certainly hope we put together a great management team and feel that way. you're right. we didn't have to do this now. we chose to do it. if actions speak louder than words, we're bullish on the businesses we're buying. we know these businesses three years since we signed a deal, two years since we closed it and we see early signs of turnaround and payoff for investments we're making whether theme parks or cable networks or broadcast business or film business. we know a lot more today than we did two years ago.

we are bullish and optimistic and felt we would have paid more later in all likelihood. even though there's no perfect certainty for any business, there's no better businesses in the media business than have a diversified portfolio as nbcuniversal does, have the cable networks as the heart and soul of your cash flow growing in the number one network with usa and cnbc. yeah. we like it a lot. >> as far as results go, we will look at them broadly. there's one thing i noticed. some have said broadband is needed to off-set challenges in the traditional cable business in terms of customers. buried in the release was that excludeing sandy, comcast would have actually added subscribers for the first time in six years and it was the ninth quarter you had improving customer results. that's significant. is that stemming the decline in

the cable business? >> the key point, i think, is the ninth quarter in a row of improvements in our video loss to the point this quarter we would have actually stemmed the tide, as you call it. i think that's right. that is buried in a very busy day, neil schmidt and the team at comcast cable maybe get lost with all the nbcuniversal news but we had an outstanding quarter in cable. broadband has been the engine of growth and continued to have a great quarter with 331 net new customers better -- 331,000 net new customers better than the earlier fourth quarter. we're not sure we're there yet for the complete going positive. a lot depends on housing growth. we're not necessarily saying this is the end but our products have gotten better, our service

has gotten better and every quarter, we're chipping away at it. there's a real positive direction, improved volume, added channels, give you tv everywhere, a better user interface with our x 1 platform and a lot of innovation and service happening with comcast cable and the ex-finty brand seems to be taking hold in a lot of markets something new is available and seeing improved results quarter after quarter. >> we spoke to an analyst and said those broadband numbers jumped out at him and was impressed with and raised concerns for guidance of cap x spending of 10% was more than he was expecting and hoping to hear more on the conference call today to give insight what's going on there. >> we have really a couple good things. the total capital for all of comcast is sort of affected by nbc and by cable. let's talk about nbc for a second. typically, there's not a lot of

capital in content. that's still the case. with the theme park business being something we discovered with a whole new life, growth in cash flow, in a number of visitors, the spend per visitor, we opened the transformer's ride in california. we're bringing that very very successful ride to orlando in 2013. we have said we will make major investments with the harry potter franchise so successful in orlando, elsewhere in the universal theme park. that's capital that is for growth opportunities. at cable, same story. the maintenance capital, the cost of boxes continue to decline. as we want to increase the speeds of broadband and distance ourselves from our competitors we continue to think that's a great investment. we've also found new businesses such as the home security

business, business services was up 32% for the year in revenues. we decided to try to accelerate the investments in fiber to small and medium sized businesses we call that metro e. as we talk through this morning and mike will take investors through how that capital is allocated. it's a pretty small number the 10%, takes us back to 2011 number in terms of percentage of revenue. it's not a staerl chanmaterial our opinion and born out of as much new opportunity as maintaining that we've got and improving our service and products. >> i want to go back to content and look in your crystal ball two or three years out, maybe five years out talking about content being dis in ter mediated, the cable bundle.

what does it look like in three or four years from now and how do you make money off it? >> my crystal ball is we should try to be in a position whatever happens our shareholders and customers can be well served. because nobody has a crystal ball and that's what makes it exciting and attracts a lot of smart people that work in this field. okay. let's look at it. if content one way or the other, that's what people really want. having more content for our company that's the best and most original and a place where artists want to come and work and they know we will distribute it in creative ways, that's job one. at the same time, if broadband continues to grow as it is and people want to consume it differently and want to use wireless devices, as we clearly all do. we're now the fastest in-home wifi, goals and claims and want to improve our broadband speeds.

if there's other ways to acquire that content or other things you want to do, you come to comcast. if you want the best experience on a television, come to comcast. the strategy is to make sure we have the best products, the best network and the best content and if all that content isn't hours and sometimes consuming it through our bundles, that's okay because we have more content. >> now, we have nbc sports channel, so maybe you have different views on this. seems to be a louder and louder conversation whether sports channels like espn and others should be on a premium tier. some people argue it would create the equivalent of a tax rebate to 75% of the country. would you support that? >> i think it is a conversation that is going to be had and we have to be a constructive participant. you think about the last question that was asked and our question, i think our company

and what makes it unique is we're uniquely positioned, if you will, with being in content and distribution, as we figure out what's fair and good for consumers. i'm not milking on any one channel. in our -- not picking on any one channel. in our case, we have competing needs within the company. it's time we're part of that i do i do -- dialogue and find solut n solutiosolutio solutions and today i don't have the answer but we would very much be willing to be part of that conversation and we're sympathetic to the fact costs are rising and not everybody wants that to happen yet we have to create more value to justify those cost increases. that's this strategy we've been employing. >> some of the comcast competitors pointed out the advantages, a lot a combined comcast and nbcu would have and

some advantages addressed in the way the deal was finally put together. we are seeing improved results from both of the separate companies. what areas are you actually seeing a benefit, hopefully, those guys were right and there were things to worry about. are there areas you're seeing the two companies being together and you're seeing 2 plus 2 equals 6, something like that? >> i think there was a theory that 2 plus 2 equalled 2 or 3. the first thing we tried to spell is that that clearly is not the case. we have a really good management team, i think, at universal and neil schmidt and the team at comcast cable. the first exercise was to say, can we manage a content company? i hope this action yesterday and our results the first couple of years show we have made a good transition, willing to invest and recognize it's not one size fits all management styles.

secondly, there's a lot of things we've done totally fair and consistent with the promises we made to the government and to our competitors. we just signed a deal with fox yesterday or the day before yesterday and a deal with disney before that and deal with viacom as comcast cable and we've broken new ground with those companies in terms of how we will distribute the content on the platform and new devices we think is good for both. if you look at symphony, and results, whether local broadcast stations working with movies we come out with, promoting new shows or taking something like the olympics, was maybe the single best example of the whole company working together, we had the best olympics in nbc's recent history and maybe the best television event ever and it was on more platforms and

more available. comcast cable had something like 15 million on demand olympic sessions during the olympics. we would never have done things quite like that had we not been one company. the there's many benefits. at the same time, it's only been two years and we're not satisfied we figured it all out and delight we're now 100% one company and make it's easier for the conversations as we go forward. >> i saw the leverage was clear at nbc in primetime. it tripled the net income. now, we've seen without sunday night football it's going to be tougher. are you confident that's on the right track now? >> i think bob greenblat and steve have both said we were surprised to the positive and delight with the fall. we should be realistic this is a multi-year initiative.

it doesn't change, one show at time. we're not surprised at all with without the biggest show we have, sunday night football and "the voice" not being on the air and not having the same results we had in the fall. as you know, comcast an goes back to the culture my dad started, we're thinking long term, we want to make long term investments. we try not to sell things and try to grow the value for shareholders. over 10 years and 20 years, we've had a great return to our shareholders and to the services. i think we're bullish. the biggest thing that changed for broadcast is retransmission fees. we have begun successfully and you will see each quarter improve and get retransmission f fees not the same as when we

bought the company. >> you had a heck of a week. 25 under, making the cut at pebble. and you put it on the line. you had a great week, congratulations. i don't know if any knew that. is that okay i brought that up? >> i don't know what you're talking about. any way, congratulations, thanks fo giving us so much time this morning. >> you're welcome. energy cautions expectations of higher oil demand growth this year could be overly optimistic, warning signs of recovery could be the result of one off factor and not trend of improvement. the iea is cutting the oil foreca forecast. and conditions on the disabled carnival cruise ship in the gulf

of mexico are in dispute and says it's making the passengers stranded aboard as comfortable as possible with running water and bathrooms, and some passengers talking to relatives said it's filthy. hot conditions, limited access to food, a couple folks calling into radio and tv shows yesterday and steers ve-- stori different. >> probably not so eager to take a free cruise. >> i don't want a ticket. >> you wouldn't have gone on a cruise in the first place. >> i've never been on a cruise before. maybe i have to try one. i always wanted to do alaska. >> they do have sailboats with like 60 people on. there's five or six staff members for each -- >> you're talking about a private cruise. >> they do have an ultimat ultimate .0001% cruise. >> private cruise. that's the way i'd like to go.

>> goes without saying. >> a few other headlines, mortgage applications fell by 6.4% last week. the news comes as average mortgage rates rose for the fourth week in a row. jcpenney is increasing its borrowing capacity $100 million and expanded an option to borrow more later. the retailer says it will help during the ongoing transformation and some analysts say they're concerned about their increaseing profile and concerned about the cash runoff. shares down 13% at $19.27. coming up, much more. and donald yachtman with the latest greatest investment ideas. the president taking a step to fight the new digital war and a look at futures as we need a break.

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welcome back to "squawk," the president signing an executive order to help cyber-industries from cybe cyber-attacks. andrew. >> that executive order comes on the heels of a new national intelligence estimate reported earlier in the week that reported cyber-espionage is a critical threat to the nation's economy and national security. listen to the president speaking last night. >> now, congress must act as well. by passing legislation to give

our government a greater capacity to secure our networks and deter attacks. >> not everybody is going to be pleased with this new executive order. the u.s. chamber of commerce told us yesterday they believe executive action is unnecessary and oppose the expansion or creation of new regulatory regimes. this is a classic issue that comes down to cooperation between the private sector and government. whenever you do that there are questions just how far the government should be able to reach into private security networks. the government will argue the information being stolen out of these private information net b works is crucial to national security and they have a role here. there will be a natural tension as the government roles out this cybe cybe cyber-protection. >> thank you. coming up next, top rank ed don yacht man. his funds have seen an annual

return of 10%. we'll find out what's happening with him after the break.

welcome back to "squawk" this morning. let's look at slow but steady

large plays.yacktman, president of yacktman asset management and seen annual returns of 10% over the past five years. good morning to you. >> good morning. >> i want to talk about what's working in your portfolio and i also want to raise an issue, dell, that is in your portfolio, a big company. there's a big company mark over their deal in the news right now. are you a supporter of that transaction? >> we think the price is inadequate. >> inadequate. you would be voting against the deal? >> at this price. >> there seems to be a bit of negotiations going on between investors and the board at dell right now. do you have a sense there's a significant premium still to be paid at this point? >> be think -- we think it should be a lot higher than where it is. some large investors have gone

on record where they think it is. >> we would like you to go on record, if you could. >> i will just say higher. the price is very inadequate. >> let's go to another stock in the news, blackberry. you apparently nibbled at the stock? >> blackberry, both of these are cases of where we have a small holding as a percentage of our stock because they're really like going after wildcat oil wells we call dumpstering when they're beaten up. we bought a lot of rimm and added to our position when it was on the backside around 7 area last year. by the end of the year we had less than we had at the end of june because the stock had run u up. >> let's go to one or two stocks that have been working and been a winner and you expect to

continue to be so. >> what we do is first protect and second grow our clients' assets. we do that by trying to put the most of our capital in the best risk adjusted forward returns. with the market having gone up, the valuations are up, too. i still have to look at the end of the year, we have a very low turnover rate. at the end of the year, the biggest were proctor and gamble and news corp. and pepsi-co. >> you're sticking with those? >> we don't talk about what we're doing in the current quarter. you can tell over what we do over a period of years those are very large holdings. >> we have to leave it there this morning. there's a lot of news. we appreciate your time this morning and we'll come back and talk about how all this works out. thanks. >> thanks. when we come back, more from our guest host, investing icon,

sam zell. we've been keeping an eye on futures and they have picked up. dow up by 22 points and s&p up by three. as we head to a break, the president speaking about busy a -- business and the state of the union. >> let's set party interests aside and work to pass a budget that replaces reckless cuts with smart savings and wise investments in our future. let's do it without the brinksmanship that scares consumers and scares off investors. the greatest nation on earth cannot keep conducting its business by drifting from one manufactured crisis to the next. we can't do it. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air.

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welcome back, everybody. we have sam zell, a real estate expert and people always want to know what you're doing and seeing. why don't you talk about what you're seeing first in the housing market and then commercial real estate? >> in the housing market, i think that a significant amount of the ebulence that we're reading about everyday is the press selling a story, just like they sold a story two years ago that money was ever going to live in a house again. there was a headline yesterday,

88% of the markets are improved. that's an interesting statistic for a headline, but is it relevant? 1% here, a quarter of a percent. you have this giant cheering section saying if we cheer loud enough the housing scenario will impro improve. the answer is, maybe. i think getting a morning is comparely difficult. part of the reason it is difficult we now have standards we never had before and certainly not -- >> in the last few years. >> four or five years. there's been a lot of discussion and various players buying single family houses, as some kind of terrific investment opportunity. my own view on that is i haven't been able to understand t the -- how you can operate and create scale in that situation.

consequently, an individual investor can go bauy 25 houses and monitor them. i don't know how anybody can monitor thousands of houses. if this is going to be a quote-unquote scale opportunity, we'll see what happens. i think everybody has ignored the fact that there's still 3 to 4 million houses in purgatory, not for sale, not foreclosed, maybe occupied, not occupied. you have to address that, too, before you have a really strongly recovering single family market. >> is it fair to say things have stabilized and we've seen the bottom? >> i think so. i think so. that's positive. i think the other thing is for some reason everybody has assumed that as single family

housing is improving, the rental housing market is going to suffer. i don't think there's any evidence at all to potentially suggest that. i think in many ways our society has changed. the need or desire to quote own a home is nowhere near as prevalent today as it was five or six years ago. i think overall, if i were -- in full disclosure, i'm the chairman of the board of the largest apartment company in the united states. our enthusiasm, our performance, we couldn't be more happy with where it's going. despite the fact that there is new construction, most of it is in easily accessed markets that historically have been much more volatile. i think the housing situation in the united states is certainly better.

i'm not a big bull on the single family market. i continue to be a big bull on apartments. >> we had one guest recently who said he thought the housing market at this point as being artificially subsidized by low interest rates. >> absolutely. >> and worries about what happens when that turns around? >> what about the whole economy and houses and what about every business outfit being quote-unquote affected. what i think you need to understand is the distinction is that housing is getting very cheap money. if you're an investment grade company, you're getting cheap money, in both cases below the inflation rate. if you're 500, $750 million company in the midwest, manufacturers something, your cost of capital starts at 1 thousand over and clears at 1500. you talk to the guys running those businesses, you tell them about all this cheap money, they

don't necessarily relate to it. as far as the rest of the real estate market is concerned, in '07, we went into this very highly over-leverage d. the solution in an awful lot of situations was pretend and extend. we'll close our eyes and extend to 12 or 13 and then everything will be fine. if you go look at those projections, the key to them was that rates were supposed to be significantly higher today than five years ago. in fact, not the case at all. occupancy is a little better, not a lot better. rates haven't gone up. this perception that we solved the commercial real estate problem i don't think is at all the case and think we have three or four more years of unscrambling to do. >> thanks. coming up, the ceo of caterpillar digs into last night's state "state of the uni

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caterpillar. president obama delivering his annual report to congress and the american people.

>> we can say we renewed confidence the state of our union is strong. >> we have a huge lineup, one more hour with sam zell. you need the ability as a businessman to make rapid and quick decisions. titans of health care weigh in. the ceos of aetna and caterpillar joining us live. >> and senator grassley on the propos proposals and nomination of secretary treasurer jack lew. welcome back to "squawk box" on cnbc first in business worldwide. i'm joe kernen, along with becky quick and andrew ross sorkin. and we have sam zell, chairman, and we have a huge lineup and

reaction to president obama's state of the union last night including doug oberhelman and mark ber to lto -- ber totolini senator grassley. >> tu.s. equity futures at this hour, 24 points. we might have a green hour on the dow. nasdaq looks like it will be up 10 points and s&p 500 up almost four points. overseas in asia. markets still closed for the lunar new year. a little bit of mixed picture, nikkei off 1% and in australia, close to more than 1% in korea and fly over quickly to europe and take a quick look as we flip that screen around. it's flipping. there it is. we do have green arrows marginally up across the board.

president obama's nomination for treasury secretary heads to the hill. >> good morning. we will hear from jack lew later this morning and will testify before the senate finance committee on his confirmation. we've gotten experts from jack lew's prepared remarks. he talks about working across the aisle, gorging bipartisan consensus is not an abstract idea for me the fundamental thread that spans my professional life. he touches on his political background one area lawmakers want to know in terms of jack lew, what he did when he was at citi. the only reference to citi, during my time at citi, i was part of the senior management plan to bring organizational change and one of the remarks is a hot button issues we're sure to hear about today, lew's own

personal investment in the cayman islands, and something the president criticized in the past and lew had such an investment in such a fund and lawmakers will ask him about it. he doesn't say anything in these prepared remarks and be prepared, lew should be for that issue. >> thank you for that. we are joined by a senator who will be questioning jack lew, charles grassley. also, president obama's state of the union. it's a little different this time around, senator. no one is saying jack lew broke the law or didn't pay his taxes either. the kind of things people might have said on the other side of the aisle from governor romney, the kind of things they should have said then they'll probably being saying now. it's a little bit different situation when it affects jack lew rather than when it was governor romney. >> yes.

we're going to try to hold an obama nominee to a standard that president obama set. you laid it out correctly, that president obama, in the campaign, made a very very big deal out of the unethical immoral business of investing in the cayman islands. so you would expect -- you wouldn't expect him then to appoint somebody that did exactly the same thing that ends up making the president look hypocritical by nominating such a person who did exactly the same thing that they criticized governor romney for. >> being hypocritical in washington, that's certainly not very unique, i don't think, senator, right? i guess it's politics, the political season. i understand fully what you're saying, but you don't really have anything, right? no one is saying he even was a

tax evader, just he did some of the same things that raised eyebrows during the election. >> unlike four years ago, we had several nominees from this administration that didn't pay their taxes. some paid their taxes and others withdrew their name. there's no charges against lew for that reason. but i think we do have a responsibility to bring out that what's good for the goose is good for the gander. i think it's important to bring out inconsistencies and in a sense immorality of the position the president took with governor romney. >> senator, i don't know if we're splitting hairs here. this is from someone familiar with jack's investment i was e-mailing earlier this morning. they are trying to make a distinction between jack's investment and romney's investment. i'm curious what your view is. this person writes, romney was the sole shareholder and ceo of bain, the general partner in a

number of limited partnerships and romneys investments were a control interest in so-called blocker corps not transparent for u.s. tax purposes. by contrast all the income lew had was on a passive basis and fully transparent to the government. is that a distinction without a difference? does it matter? >> the only thing i can comment on that, whatever i can remember from the last campaign and the years that romney put his taxes out for public inspection, and then the president to come on -- comment on, that had to be after he left the management of bain capital opposed to running it at that particular time. >> this is something, as you said, you want to point out the pip pock cra hypocrisy, you figure jack lew

will be easily confirmed? >> you know what, to answer your question, i will be better prepared to answer it 24 hours from now because the purpose of the hearing is to determine his qualifications to be secretary of the treasurer. >> it's rich in irony and pretty highly compensated from those nasty bankers. >> that is an issue coming up. how come he got almost a million dollars of bonus a few days before citi group got a -- were part of a 3$321 billion guarante from the fdic. >> all right. senator, we'll be watching with interest, and should be, like i said, should be interesting to watch. thank you. >> thank you, andrew. >> and joe. >> and becky, and sam. >> president obama spent a fair amount of last night's state "sf the union" address focusing on

jobs. he actually singled out a few companies he says are bringing jobs back to america. >> after shedding jobs for more than 10 years, our manufacturers have added about 500,000 jobs over the past three. caterpillar is bringing jobs back from japan. ford is bringing jobs back from mexico and this year, apple will start making macs in america again. >> join us on the phone is caterpillar chairman and ceo doug oberhelman. i was listening to the speech last night, jumped right out when he talked about caterpillar. were you surprised to hear that mentioned? >> i was a little surprised and happy to hear it. we have brought jobs into the u.s. as the u.s. economy has grown and we needed to match some of our job base here with our market here and also had jobs outside the u.s. the key to all this is growth. that's really what we need desperately here and around the world. 2.5% worldwide growth rate maybe some what lower than that in the

united states is the core and root of our problem right now. >> what do you think is happening in washington right now that will either help or hinder growth if that's the most important thing. >> we have to get the debt thing, the fiscal thing, we have to get that off the front page. that is holding back. it's going to be rising in rhetoric next month and beyond. we have to get past that and deal with it. we desperately need long term entitlement reform. while the deficit has come down a little bit the next couple of years, debt will continue to grow. not so bad when interest rates are as low as they are, 1, 2%, what happens when they go up and they will and we see interest service eating into other government programs. we have to get ahold of it, get it off the front page and back to work. >> i was a little surprised to hear cat terpillar called out

because you're bringing jobs back. you talked about after the last earnings report, it's difficult to see because of what's happening in washington around the world, you don't have the same visibility you had in the past. >> deere said farming looks great, raised their guidance but also said all these things affect the near term and short term visibility. is that a message you think washington gets? >> boy, you like to think they would, yeah. i think individually they do. we talked about it, the uncertainty and clouds. i think on that same show, becky, we talked about the third year in a row the beginning of the year looks pretty good and get to the middle of the year, things come off the skids. if we're set up on that this year, three years in a row, not a pretty end to this year. i do think we have seen since the election some movement on a few things. immigration is one of them i am all for as chair of national

association of manufacturers, deep comprehensive immigration reform has to happen. looks like there's a chance to get that done, a wonderful win for all of us. >> the president said maybe we could see some sort of tax overhaul particularly of the corporate tax code? i would take it you're in favor of that, too, doug? >> definitely. everybody knows we talked about it the tax code here is 30 years old, a mess, not easy. clear it out, lower the rate, broaden the base and watch the revenues flow. where he've all said that for some time. i wouldn't stop there. we have the pull through entities, chapter s and those that pull through personal rates that need reform as well. if we really want growth, really want business to come back and employ people and add more jobs we have to get some of these things cleared off the deck. a great opportunity to do it this year. >> do you have any views on

minimum wage views? do you have people paid minimum wage at the company? >> we really don't. our suppliers have that. that would be an issue for them. let's grow the economy and add all kinds of jobs and we don't have to worry about minimum wage, we need growth. >> sam zell is on the set, too, what doug has been talking about. >> his situation is similar to ours. we don't have minimum wage employees. what we're really talking about is making the job market even more difficult for those that don't have the education or competence, whether it's flipping hamburgers or working as a janitor, whatever, bottom line is those people, raising quote the minimum wage doesn't necessarily put any more dollars in the business and doesn't necessarily cover anything and adding to inflation and adding to making it more difficult for

people to get hired. >> yeah. you know, we have to find a way to get the unemployment rate down. fed talks about a 6 1/2% rate. that's still high historically. we have to find a way to get people back to work the best minimum wage increase there is. >> the pret emphasized a lot not only with companies like yours is this idea of revolution in manufacturing. is that something you think welcome continue and will be something that creates a lot of jobs in america? >> i sure hope so. that was part of the speech, again, as chair of the manufacturers, i'm really thrilled about. take caterpillar. we have added 18,000 people in the united states in the last 10 years. as far as i'm concerned, i'd like to add another 18,000 people in a lot shorter time than that in the next 15 years. emphasis on manufacturing is outstanding. we talked to the administration

before. as chair of nam, we're willing to get there and tax reform and immigration in reform lead to making a climate more appealing for manufacturing here in the united states. >> isn't the real issue training? you can talk about manufacturing renaissance. that's really terrific. if you need to go find somebody who knows how to read plans, it's hard to find. >> yeah. >> i don't understand, you will have a manufacturing renaissance run by robots? >> yeah. >> what does that do for employment? >> the stem programs are something we chase here all the time. that's, i think, one of the reasons immigration is so important. we have to get that under control. absolutely, we've got lots of pieces that add into a manufacturing -- i won't use manufacturing renaissance because we have so many basics to build before we get there. having the president talk about it, i think, is outstanding. >> thank you for thank you

call-in this morning. >> thanks. coming up, much more from sam zell and comcast making news announcing a 20% dividend increase and $2 billion stock buyback. the company announcing plans to buy the 49% of nbc jurns univer from ge for $7.6 billion. here's what ceo brian roberts told us in the last hour. >> even though there's no perfect center for any business, no better business in needia business to have a diversified portfolio and cable networks the heart and soul of your cash flow and growing number one network with usa and cnbc. yeah. we like it a lot. last night, we heard from the president. >> i ask this congress to help create a network of 15 of these and guarantee the next revolution in manufacturing is

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welcome back, everybody. the futures are indicated higher this morning. after the market closed up, dow up this morning and futures up another 20 points and subpoena subpoena over three and nasdaq indicated up by about nine points. take a look at shares of deere. that company reporting revenue much higher than analysts expected and raised its full year guidance and as a result that stock had been indicated up a couple dollars higher. what happened there? that stock was up about $2 earlier this morning. >> it's not anymore. >> you wonder whether it's -- >> the one thing i saw in the company talking about guidance earlier, they have conference calls and earlier things, they did say the near term out look has been very difficult to get ahold of because of the issues happening in washington with the debt and deficit. the same thing we heard from

doug oeb berhelmanoberhelman. and now, it's unchanged. >> let's get back to sam zell from equity group investments. we've talked a lot about the economy and interest rates and where things are going. i want you to put yourself in the shoes of ben bernanke. if you were ben bernanke, what would you do right now? >> go to a deserted island where nobody can find me when the results of qe-3 comes through. >> what would you consider the options now? if you were on the board and go to the meeting and say, ben, this is what we need to do, what would you tell him? >> stop. >> stop cold turkey. just think every one of these purchases, every one of these steps is leading to ultimately the question of exit. how's the fed going to get out of all this stuff and at what

cost? in the meantime, thick we'i thi creating the underpinning of a significantly inflationary environment. >> do you think, sam, the training wheels, if they came o off, if the fed training wheels would come off we would continue along the same way, there's any positive effects from the fed action right now? >> i'm not sure i understand what you mean by the training wheels. >> we had an economy that went into a deep recession. we came out and we needed help nor a while. there's a lot of people that thought we had enough help, the big stimulus package and compare action by the fed. last year, it seemed like the economy is getting some traction and a lot of people are surprised when the fed even ramped up their efforts. do you know something we don't snknow in the economy? isn't an economy supposed to finally exist on itself? they seem to think that it couldn't. do you think it could?

>> i don't think there's any question it could. it has for 200 years. >> at 8% unemployment, that's not grow iing -- i guess they think as long as there's people that need jobs, we will stay in there. >> two years, three years ago mortgage rates were 7% and now they're 3. have you seen any wild charging to buy houses? no. i don't know that lowering the cost of capital is necessarily the determining factor. if interest rates were 3% instead of 2%, would that change buyers? i don't know. the more question is what are we doing to inhibit goat in othrowr parts of the economy. >> are we doing something, a, people say we're not, we're just recovering from the crisis. in the next three years in this administration will the economy

get back to 3 to 4%? is that possible in spite of what people see as anti-business tendencies from this administration? >> it's hard for me to believe we will get back to that kind of growth rate as long as washington continues to have a negative bias towards the business community. in the end, the business community basically is the job creator. if you mall liumou malign the b community, it ain't going to work. coming up, more reaction from president obama's state of the union, this time from aetna mark better to linnrtolini. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air.

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take out autos and gasoline, also up.2. that is about half of what we expected. if you look at it from that vantage point, these numbers are passable. passable doesn't get you to the promise land. import prices in january up .6 of 1%, lighter than we were expecting. that's month over month. fascinating-year over year! year-over-year was down 1.7%. there were subtle revision, not so subtle. look at prices month over month reduced it .1 and now down .5 and now minus 1.9. i gets to summarize, we understand import prices will become largely affected by what's going on in energy. we have seen some of that in other numbers. retail sales, i don't know, it

depends how little it takes to please. back to you. >> thank you. for more, let's get to steve liesman doing a little b more of math over there. >> there is one metric the economists follow because it's a number that feeds directionally into gdp, if you take out autos, gas and building materials. the reason you do that, the government gets those sales from other sources. what remains is something that feeds into gdp. that was a little bit light, came in at 0.1% and expectation, 0.2%. the adjustment is to the payroll tax pike is the big story. the question is, did it happen in january or as our friend at pantheon says, it is a process that will take time. he thinks it will play out over several months because people don't make adjustments to their income and spending over a single month, especially something judged to be

permanent. >> sue syou see it when? >> january, february, march, probably done with the adjustment. something people don't talk about. there was a two year tax holiday. over that time, wages grew, however small, they grew. they were still up. the actual tax bite was bigger than people remembered if they remembered it at all. this is a process -- we will probably see some decline in the savings rate over time. you do have more employment and a little bit more income growth to help off-set it. at the end of the day, this is an adjustment that regressively hits the poor and middle class more than other folks and there has to be an adjustment. >> the president's speech last night increasing -- >> the minimum wage. >> give us a quick history lesson. the economic effect of doing that on unemployment. >> it is very mixed, andrew.

you have supporters that say it helps raise incomes for the poor and you have people who say, like bill, who wrote a piece saying it's a job killer. it's hard to square the notion $9 is something that keeps up with inflation. i just did the numbers. they raised it in 2010. if i adjust that for the two years of inflation, i get $7.63. i have to go back to 1988 to find an inflation adjustment here that makes since at $9. if he wants to make up all that time, then i guess that's okay. it is a pretty big jump relative to what has been an okay essent inflation environment. you can't really have it both ways. you can't argue there isn't a lot of inflation in the economy at the same time say we need to have a massive increase in the minimum wage. don't get me wrong, i'm all for paying people more but i think

there's a lot -- business has been taxed a lot with regulation, health care and other things out there. >> some states have a much more expensive situation. 18 or 19 states, as the president said himself, have already raised the minimum wage. >> i have a friend a restaurant owner in san francisco one of the places they cranked it up. the thinks twice about expanding, has a vibrant business, owns several restaurants in town and when we go out, we both have music in common and regularly goes to the regulation is in san francisco and next time going to the suburbs. >> seems like the right thing to do. >> we should be able to do that. maybe fewer people actually have the jobs because you don't have enough to hire people. when you take about unions, how many people that aren't in unions can't get jobs because the unions -- >> you're trying to solve and

immigration problem. you raise the minimum wage. what do you do? create more incentive for illegal immigration. i'm not sure that is something that works on both sides. >> that doesn't him, though. >> lev ave it there because we have to thank rick. >> thanks to rick and steve and more on this. >> more from sam zell, chairman of equity group investments. when doug was talking, i alluded to it, too, three straight years we seemed to start out and have pretty good gdps and started referring to as a summer or fall swoon. do you have an explanation for it? >> i think, tat least from whati observe, the year starts with a lot of opty mi ttimismoptimism,

improves, everybody gets excited. then, about three months into it they're at the first crossroads. do they invest more capital to expand and take advantage of this or don't they? in the last few years the community has made the decision the risk-reward ratio of expanding your borrowing and investment in this environment you vote a no and you have a risk of the very similar thing happening this year. january, christmas, optimism, close the books on the last year, like the guy the money manager says i'm up 50% this first day because my stock went up a collar dollar or 50 cents. reality is it keeps come back to the same theme you've been talking about, certainty, confidence, commitment. until we get certainty,

confidence and commitment back into the system and inculcate the people making the decisions. it's wonderful to say we have to protect the middle class. but the middle class is not the ones who are making the decisions on expansion. the middle class are not making the decisions on hiring. therefore pillaring the decision making class only intimidates them more. >> but you're not going to get certainty until you can get both sides of the aisle to agree in washington. that's not going to happen any time soon. >> i think you're right about that. i think both sides in washington are really a problem. i think the answer is that the only way i know to get them together is in the middle, not on the extreme. what we have, as evidenced by last night again, is someone who doesn't seem to appreciate the position this country is in.

>> the best way to help the middle class would be to get the gdp growing. >> absolutely. nothing, no program, no health care program, nothing can overcome that. >> i want to help the safety net is important and people who need help with food stamps are important but you don't want to go from having to help 20 million people on food stamps to helping 50 million. you don't want to feel good about yourself for being able to help the 50, 30 million more than there were to tart with. expressing empathy and trying to help is one thing but doing things that actually result in the end they may be pro business, you may look like you're trying to help corporation, but if it helps the middle class in the end, it's much more important than all these well-intentioned things that are counterproductive. >> empathy without verification doesn't work. we talked earlier about the fact -- i just read an article

yesterday the federal government has spent last year, $2.2 billion giving free telephones to people. then the federal government, this doubled in size. they went and said, okay, no more free phones unless you verify. the number of people dropped in half. what would happen to food stamps that have tripled in the last five years if in effect you had to verify that you needed them. to the extent the people are taking things from the society that they haven't earned or don't deserve, that makes the plight of those disadvantaged even more difficult. >> sure. more from sam. we have another 20 minutes or so. last night, we heard from the president on employment and deficit and health care. up next, we get reaction from a private health care executive taking a leadership role in the fix the debt campaign. aetna ceo mark bertolini will be our special guest.

don't miss "squawk box" tomorrow, the master of manage many, jack welch.

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wealthiest seniors and bring down costs by changing the way our government fires medicare. our medical bills shouldn't be based on the number of tests ordered or days spent in the hospital. they should be based on the quality of care our seniors receive. >> that's the president talking health care on last night's state of th state of the union address. we are joined by mark better to linne lin -- mark bertolini. he is aetna's chairman. >> good morning. >> you heard what the president just said. does that shore up with what you think we should do to get health costs down. >> i think it's actually a good admission by the president health care costs are driving a major portion of our deficit and some things are appropriate changing payment and the way our entitlement programs work. those are all ideas that have been on the table a long time. what does it take to get the

words into action is the very first question i would have. >> you sound skeptical. >> we've talked about these issues and experienced them in medicare advantage and that's how we pay providers in the medicare advantage world we pay them by the outcome, by the quality of the work they do. i think the government stepping in would be a big help. how do we get the government there is a big question. >> what actually does need to happen. if the president is talking about things like that, that raises the level of attention being paid in washington. what are the steps to get us to that point? >> i think entitlement reform is a third rail for a lot of people on both sides of the aisle. what we have is a waiting game on individuals waiting on the other side of the aisle, who will break first to come up with entitlement reforms. republicans have come up with some, not any on the cost side and a lot on entitlement eligibility side. we need get to a place where

both sides agree and take the pain to make those changes. >> let's talk about it seriously, is that something you see washington addressing in the next couple of years? >> i think we have to address it. the private sector is addressing it now. having medicare pay for more than 50% of health care costs in the provider revenue model i think would be a huge help to have medicare along-side us to do that. >> what's aetna doing to take steps already? >> we already started restructuring our relationships with providers where we are now paying them actually less on a per piece basis but more when they come out with a better outcome. the result has been for us to see 43% reduction in inpatient admissions and 49% reduction in out-patient services in areas we believe the care has not been well-handled in the medicare fee for service world. it's worked very well for us.

>> is that something aetna can do because it's so big. my guess is hospitals and doctors didn't necessarily go along happily with this change. >> it's part of a partnership with them. we're sharing these savings and they're now getting paid in a fundamentally different way than getting piecework. >> it is something that is a win-win. >> it's good news. >> how long has that been taking place? >> we've been growing along with these plans three years and we have collaboration plans with 60 different systems. 17 full-blown risk deals with major systems for all lines of business, small group, individual, commercial, medicare and medicaid. we have 32 we're about to sign and 200 in the pipeline. the affordable care act has driven this change. it's an important discussion we need to have in washington and the private sector and come to an agreement and find a way to drive it. >> we talked to you late last

year. you told us if we were to go over the fiscal cliff, it would mean layoffs at your company in atlanta and because washington was so slow getting anything done and it came down to the ninth hour, that affects business plans for 2013 and beyond. if we actually hit the sequester, what does that mean for aetna? >> if we hit the sequester, we will see medicare rates get cut back and potential program interruption in medicare. the bigger issue is companies we take care of in the private sector like the defense contractors. if those companies start laying off we will start to see a dramatic reduction in our coverage universe and obviously affect how we think about employment going forward. >> at this point, are you making backup plans for those sorts of scenarios? >> we have those plans.

they've already been set. we took a fourth quarter charge in our fourth quarter warnings for reduction enforce we already started. >> this is a situation where you, too, can point back to washington and say, because all of this stuff gets pushed off, you're in a situation where you are actually seeing not just jobs not being created bu at actual layoffs coming down. >> we have restructured it in the fourth quarter and we have layoffs in the fourth quarter. >> what happens if that doesn't happen? >> it has already been taken and we moved ahead. now the question what do we do about cap x and moving forward. as sam said in the prior situation, what do we do next. we gated all our cap x expenses and employment. until we know how the future looks like we will be cautious how we release employment and cap x. >> sam and others, doug oeb

oberhelman, had the same sentiments, ceo of caterpillar. talked about how as individuals, ele elected leaders know inaction taken place is a problem. this is four years in a row they don't seem to be sitting up collectively and really paying any attention. why do you think that is? >> i think there are very hard decisions that need to be made nobody really wants to make. i think that's where the president has an opportunity now. he created the sequester. i think it's his to deal with. i think he came close to close announcing a plan last night around some parts of entitlement reform. i think if he came forward just like he did on the sequester and said, here's what i would like to see, and here's what i would like both parties to do, i think they could get there. >> mark, thank you very much for joining us this morning. we hope to see you back here in the studio again soon. >> thanks, becky. >> coming up, offering customers

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comcast, 8%, three points to a new high. shares rising on the news that the company is buying the rest of nbc universal from ge for $16.7 billion. and that's -- really? i think it was supposed to --

>> end of 2014. >> and then it could have been spread out. but as it has been poind out, ge gets cash to do other things. and maybe increase the dividend, maybe buy back some stock. maybe make, what do they call, acquisitions. and for comcast, you know, they get to participate in any additional profit enhancement. 100% that jacque box creates. >> you had thoughts about the rental market that that's not going to tank so son. >> yeah, i think that, first of all, i think the demographics and formation is very positive around housing. but i think the thought