inflation right now. >> does it matter to you, taper or not today? >> i don't think so. i think what more matters is what's going on in washington with congress and getting the budget deficit solved and we've got some bipartisan stuff going on finally. >> guys, thank you very much. we appreciate it. make sure you join us tomorrow. right now it's time for "squawk on the street" ♪ i'm winning, i'm winning, i'm winning ♪ >> some lucky people singing that song, at least two winning mega million lottery tickets, one in california, the other in georgia. you tweeted pictures of your last night. >> i had 20 bucks in that. that was one of the worst returns i've ever gotten. >> futures are steady on this fed day. plenty to watch in the meantime,

earnings from fedex, lennar, 2014 guidance as well. and then europe responding to the strongest german business confidence in 20 months. the biggest decline in u.k. unemployment in 13 years. our road map begins with anticipation waiting to see if today's fed announcement will include the "t" word, taper. >> quarterly results from fedex missed estimates but the company boosting full-year guidance. >> analyd going public, amc. >> after the fed wraps up its two-day meeting this afternoon, investors will learn whether policy makers will wind down on the economic data. complete coverage of the fed

announcement and the chairman's news conference on cnbc this afternoon, begins at 2:00 p.m. eastern time. jim, are you ready? >> yeah. there is -- if you're the fed, you got to tough job. i am getting so many people sending me, jim, tell the fed -- i mean, tell the fed. okay, fed. what do you want me to tell them? it's the holiday time, don't ruin our year? that is not exactly what bernanke is focused on or yellen. there was a great discussion in the show before us basically rick coming out and people cheering about free markets. my take is that they have to say something about the strength of the economy no matter what. maybe not they're not going to buy fewer bonds but the strength. economy is kind of overwhelming here. >> others say they have to at least give some lip service to what's happened in congress over the past couple of weeks. >> david's looking askance at

me. >> overwhelming. >> well, i'm looking at housing, autos, i'm looking at retail -- >> for months we've been talking about those. that doesn't translate to overwhelming. >> i think it's not as weak as it was six months ago. how about that? >> okay, i like that better. >> you thought i was giving the hyper-bowl, yes, the hyperbole. >> at certain points they have to say things are getting better. if there's going to be gridlock in washington, they could add a caveat, but they lost the caveat. >> though the debt ceiling remains. but aren't we at the point where whether it's the bond market or the stock market, given we've been talking about taper now for, oh, a very long time, everybody's ready? i know they may not be, i

realize, but shouldn't they be ready at this point? aren't stocks reflective of -- >> do we go now 4% because they mentioned they're going to buy fewer bonds? i think that's ludicrous. maybe somebody blasted futures and people at home have to recognize there's always someone out there who doesn't get the member memo. >> you said yesterday you don't like the vix. people are expecting things to start to get a little jittery. >> it is thin. it is the holiday season. you know what, it doesn't feel like the holiday season at all. the news overload today is typical of what i would expect in the first week of january. >> you got that right. >> i got up really, really early to check whether i won the mega millions, that was very disappointing to start. the rest of the day general mills, fedex, did you go over

the 3m, honeywell, did you see that yesterday? no, guys, give as yus a break! stop saying things. >> by the way, if you won that mega millions, you'd still be here. >> i put in that i bought a ticket, this is the problem with twitter, within ten minutes i had people saying i had no right to buy a ticket because if i win, someone else is going to lose, that i'm overpaid. people said you call yourself a capitalist, you know the lottery is regressive. in the end i was like i'm going to take the ticket back, i can't take it anymore! >> fedex reported second quarter earnings, 1.57 a share. they did miss wall street estimates saying express shipping revenue edged lower in the run-up to the holiday season but fedex also boosting full-year earnings guidance in part to account for share

buybacks we've had recently. we call it a package delivery company. so who owns stock but are frustrated with it call it an airplane company. they don't lease them, they own them. when you compare them to ups for what they use planes for versus ground, there is some frustration amongst their shareholders they could be more efficient, though with capital they seem to be becoming more efficient. >> what makes people happy? a stock that goes from 85 to 138, that's not good enough for people? what do people want? do they want avon? merck? give me a break. this company is delivering. 7% to 13%, goes up to 8% to 14% and cyber monday is not included in these figures? >> they did point out the quarter was very tough to forecast, late holiday, contracts recently renewed that made this a tough number to estimate. >> can't they go after companies

that are losers? >> nobody's really going after them. it's not like they have an activist in the ranks. there are some -- it's been -- we've talked about this. >> you ever hear a xanax? it's a franchise that could be unique to these head fund managers that are jittery about something like fedex. go take a xanax. >> i believe the stock prices reflect well, but you can always do more. >> you'd rather see up than down. >> yes, but we're a change company. the numbers for amazon -- by the way, you get free shipping today for a lot of guys. >> yes. >> there's the urgency is not as important given the fact that amazon has a warehouse next to your house. you don't need to do the expensive because amazon has put up -- >> it's still going to get there in two days. >> yes! i think that's important. the logistics of the country are

now betting in your favor that you don't need to pay up. how about that? changed concept. >> you mentioned guidance from a giant like fedex and then we're getting guidance out of ford. the company forecasting next year to be a solid one but pretax profit expected to be lower than 2013. ford is lowering the premarket. let's go to phil lebeau for more color on these comments this morning. good morning, phil. >> reporter: the ceo is laying out the outlook for 2014 and beyond. three things weighing on ford stocks. you talk about the auto division, 2014 will be a solid year but not as strong. look for lower operating margins, pretax margins will be lower. how much lower they're not saying. they're bringing in about $8.5 billion this year. i expect it will be in the 8.2 to 8.3 range.

that's conjecture at this point. but most importantly, their guidance beyond 2014, the company says that its global automotive operating target for operating margin of 8% to 9% is now at risk because of europe and because of latin america and that has a lot of people saying, okay, when can we expect those operating margins to get up there in that 8% to 9% range? if you're taking it off the table beyond 2014, will it come back on the table at later date? bob shane is briefing reporters but that's an indication of why people are a little down on the shares of ford this morning. back to you. >> thanks a lot. i know you went over this with the guys on squawk. what was your take? >> you got to hope this is underpromise and maybe overdeliver. i think ford has been the great conundrum of the stock, reported good news, good news, good news, can't get over 16 and it was over 18 in 2011.

maybe we thought it was mull al going to microsoft. no. general motors is not going to say this. general motors got better numbers than ford. i think gm has a better story to tell than ford now. i did not expect that to be the case. >> bottom of the screen, we're getting official news based on reports out last night regarding william morris. >> yes, buying ing. that company has been on the block for some time. teddy force man having passed away some time ago and they've been selling all the underlying assets there. it's interesting for a couple of reasons. the purchase is far less than might have been anticipated when this auction began some time back. but it will create a very large company in all areas, including sports and sports management and sporting events, but again,

img's numbers not quite as strong as many as it anticipated when this began. it ratcheted down the overall purchase price and there were a number of potential competing buyers here. you had cbc capital partners and a group aligned with peter ternman. and ari manuel and his partners making the play. >> and the time framing emanuel's career arc, one that is headed toward king eventually overtime. >> i think people know this business from entourage and people would think how is it possible that one business isn't as good as we thought? is it loss of clients? people of negotiating fees? >> it is all of those things and it's loss of clients, it's not big ticket guys. they were always known for sports. mark mccormick. >> show me the money. >> yeah. they lost traction in terms of

sports clients and came in lower than expected in terms of ebidta with events they put together sporting-wise. it's been a harder road for them. >> i have to disclose i'm a client. >> ari manuel. how could you not mention that? it's an important relationship. these people play major roles. >> i am not a client but i'm not going to mess with him either so -- >> ari? >> yeah. >> calls me once a year. >> that's nice. >> ari's on the phone. >> and it's not lloyd doing the dialing, right? >> no. >> they have literally rolled out the red carpet on the trading floor. we're going to talk with the ceo about the business. and we'll talk with country pop star lee ann rhymes who shot her latest video entirely on an iphone. we'll ask her if she'll consider the beyonce way of selling

recordings. take another look at future's big day with guidance out of fedex and ford. a lot more with "squawk on the street" in a moment. bny mellon combines investment management & investment servicing, giving us unique insights which help us attract the industry's brightest minds who create powerful strategies for a country's investments which are used to build new schools to build more bright minds. invested in the world. bny mellon. a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments.

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big day for housing, of course. we got some mortgage apps at 7:00 a.m. and then here's lennar, beats by 70 cents.

new orders up 13, jim. by unit. 34 by dollar amount. you're impressed. >> yeah. i thought toll was good and on the conference call they said some negative things and gave up some gains. not telling people to pile into lennar but what you're looking for from stewart miller is a lot and he gave you more. the home building business, people wrote it off with taper, taper, taper, but this is a business that is doing well. he said it's secular demand and it's household demand dictating these numbers. >> do you believe that rates truly don't have an impact? we've had zillow on the desk who says it's really about the price, the ask that drives buyers' decisions. it's not about the mortgage. >> our viewers have felt i consider the mortgage to be very

important and i want to pause. the price of used homes has stopped going up. it looks like -- there's a kind of a stasis. maybe they care more about the velocity of the rates going up than they care about where they are because in the end rents are higher and in the end there is over and over again you hear about this household formation and we just have too many living -- the greatest number of people, frank blake comes on "mad money" and goes, look, jim, it's all about the inlaws. >> because people have an aspiration to leave the basement of the home they grew up in. >> especially because it's moldy because of various storms. >> it's a good thing. the economy gets better, more jobs are being created, rates got up but you have more people who can afford -- >> and it's about affordability. the numbers have plateaued so

it's not getting more and more expensive and people catch up. i think what the fed hated was the instant jump. anything gradual that people could handle and it's reverberated from here to indonesia add malaysia and mongolia. >> what's up with mongolia? that's two days in a row? >> because mickey drexler is coming on the show tomorrow and they make cashmere in mongolia. >> did it hurt your feelings? >> desperately. mickey, not happy about that. not that we don't support our shows. we're very happy you're coming on but what happened to us? >> you are dead to me. >> could it be because sorkin claims he owns a suit he bought -- because i bought two suits there. >> and i raise him a documentary. >> a great documentary.

not to say anything bad about the costco or -- or the walmart, age of aquarius. but when i saw that booking, i was distinctly jealous. >> i'm glad you brought that up. >> as was i. >> i was hurt. deeply hurt. >> it's my fault. i take full responsibility. >> also 'tis the season for ipos. amc, first time since '04, the movie theater chain pricing 18.4 million shares, $18 apiece, the low end of the range. amc will be listed under the ticker amc. ceo jerry lopez will join us after shares open for trading. they're serving popcorn and soda on the floor this morning and they have their new seating on the floor. >> how about some beer and food with the movie. it's become a more fun experience, allows them to raise prices. they didn't care when i said

listen, popcorn, how about a danish? they didn't have any danish here this morning. they have a compelling story to tell and they gave that great thing where you can buy some shares at the movie theater. >> that got a lot of people at jimcramer @twitter, people said why is it so hot? >> have you been a fan of imax over the years? >> yes, i think imax has done a great job. this is another one -- there's a bit of an amazon effect. i want to own imax. it's much more of a chinese play than say a coach, not as much of a yum but i think this amc story is a strong one and it could have a good yield. movie theater companies have good yield. >> they can have some cash. there are questions about the

sustainability anymore. >> the perception is cable has hurt the movies. but the movie -- >> the timeline between when it's in the movie theater and when it's available to you on demand. >> true. but the box office doesn't lie. >> i can more or less sit on my couch for 60 days and just wait. >> doesn't forget the amc cable channel with the amc movie company. two different businesses. >> and "homeland," i saw the last one. i'm giving the whole season a b minus. >> thanks. >> you're welcome. >> the judge has weighed in. >> that's it, i'm done. no more. >> you rest your case. the prosecution is not even going to call a witness here. i think amc is part of the excitement ipo. last week we had hilton. these are old names that come back. it's oldies but goody. it's throwback jersey time. you came with shrink to grow.

you got to wear your throwback jersey on the floor of the exchange. >> later this hour -- >> hello and welcome to "squawk on the street." if you know the name of the anchor you'd like to see, press one for carl quintanilla. press two for david faber. press three for jim cramer. and for our first-on interview with the amc ceo, press nine as in post 9. that's later on "squawk on the street." ♪ like they helped millions of others. by listening. planning. working one on one. that's what ameriprise financial does. that's what they can do with you. that's how ameriprise puts more within reach.

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tell me, tell me ♪ we got a "mad dash" here. it's hump day again. let's talk jabil. >> this was a first class disaster. you listen to the conference call and you say what happened to jabil? undercurrent is either cisco or apple must be doing badly because those are big clients. citigroup does the leap and says it's apple. there is an apple phone that is not doing that well, which is the c, the small class. but jpmorgan reaffirms apple and raised its price target saying next year is going to be great for apple. i don't want to sell apple in this. i want to sell cisco. >> it's kind of a quick conclusion to come to.

what about high precision? >> jabil is not allowed to reveal who is the problem. so you can draw any conclusion you want but you shouldn't. >> right. >> and they're not going to tell you. but i think those who sell apple think they know something. i think tim cook when he got out of the white house yesterday someone should have said, hey, jabil -- i still think apple is going to have a very big 2014. i am worried about cisco. cisco and jabil have a long-term relationship. >> we have the ipo of amc coming here. s they're about to storm us!

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became big business overnight? ♪ like, really big... then expanded? ♪ or their new product tanked? ♪ or not? what if they embrace new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade. you're watching cnbc "squawk on the street." it is fed day, awaiting the decision at 2:00 p.m. eastern time and bernanke's press conference at 2:30, likely the

last one. i continue to await yellen's conference. >> a lot of people say come on, man, don't do anything! if he does anything, it will be like an espn press conference. [ opening bell ringing ] >> amc theaters celebrating its ipo today. over at the nasdaq, conatus pharmaceuticals, focusing on developing treatment for liver disease. >> i am blown away by how the group, more and more companies -- by the way, the big guys have stalled. regen regeneron peaked a year ago. i think in the next week it's going to be a good place to be but this group has been one of the groups that led the year and

it stopped moving up as people went to more cyclical stocks because people think the economy is getting better. those aren't bad companies. >> one thing that stopped going up is general mills' earnings. 83 cents misses 87. flat volume globally. domestic volume down, too. they do reaffirm guidance but they say that it's going to be a greater headwind than they thought. >> when i was at whole foods, a big section of the supermarket that includes general mills is doing quite poorly. but isn't it interesting that the companies that sell similar to breakfast foods are doing fabulously. i think this a secular trend. i think that cereal is something that people say -- the next generation doesn't eat cereal the same way we do. worldwide there's this organic and natural is hurting general mills. ken, terrific ceo, may disagree.

when i talk about whole foods about what people sell for breakfast, it's on fire there. >> it is citing ingredient costs. >> it's possible. john faraci was on squawk this morning and card board is a big part, the little bags, these are far more important than the actual stuff that's in the cereal and i think it's a sense overall that the millennials don't like processed foods. it's a big story for 2014. millennials don't like processed foods. >> jabil, ford, general mills, the losers we've covered. apple we have not covered. the journal suggested the 18th would be the day around the time china mobile will nons a deal. china mobil comes out and says there's no deal yet, we're still talking. >> i read that and i i was like

is this one of those upon further reviews? it was a fumble? i thought this was a done deal. that is a better reason for apple to sell off than i think the jabil reason. can i come back and say i think 2014 is going to be a big year, they do have the right phones, they're going to have the new introduction of another phone and all the extrapolation of the problems of apple misses the point, which is that business is better there. >> we do have a deal on va valassis. trading above the price of the deal. have not been able to speak to others in terms of whether there

was an auctioneer or whether there's expectations of a higher price and also talking about electing to conduct a tender for their 6 5/8 notes due in 2021. the buyer is harlen clark holdings. they are buying this total takeout price, including debt, $1.84 billion. they are going to take on perhaps some new debt in financing to complete the acquisition. a decent premium. interesting to note it's trading above bid price. not quite sure why. i haven't really had a chance to make call. >> milk carton have valassis. my first job was when i got my working papers was inserting the sunday inserts in the paper for -- >> this was before selling beer at ballparks. >> hey, ice cold. i got ice cream here, vanilla

and chocolate. >> no, this was my first job. saturday night, you insert them -- this is a job nobody wants whatsoever. i always ask the bosses, does anyone really read these things? does anybody use the coupons? coupons are incredibly powerful. >> jcpenney realizes that. >> and bed bath and beyond realizes that. this is an industry people thought would go away with the groupons of the world, people love their coupons, except for the people behind the people with the coupons in line. >> there is some dividend being paid by valassis. there it is. hence 31 cents, hence not trading above bid price. missed that paragraph. >> ford is now down almost 5% on that color about 2014. let's get to phil lebeau see if

he has any additional thoughts. >> ford will earn about $8.5 billion this year. we've dug into their forecast for next year. that are expecting to earn pretax profit for the entire company between $7 billion and $8 billion. you're looking at a hit of between $1 billion and $1.5 billion in one year for the pretext profit. a lot of people are saying what's happened? what has changed so dramatically? think about this -- they have been working on and planning to larch a new f series, which will have a fair amount of aluminum in the batter -- in the compartment as well as in the panels for that truck. they haven't been able to get it exactly right yet. they were going to unveil this at the detroit auto show. that's not happening. many are saying that's your bread and butter. if you have to push back that launch, that's your bottom line.

that's why your shares are down 5%. guys, back to you. >> jim, really quickly on that, what's more worrisome, that or the margin news on 2014? >> gees, i thought raw costs coming down but they do hedge the raw costs. cost of labor not going up. gees, they have to make their cars in mexico? move a lot of their business to mexico? my jaw's dropping on this one. >> does coincide with conservative guidance out of johnson controls as well. >> i've gone over that, it's a charitable trust name. i think that the actual commentary for what i'm getting from stephanie link, cnbc partner and co-director of the charitable trust, the story is strong aer than the headlines. at ford the story is weaker than the headlines. johnson is going to have a great year in 2014. i would not sell jci. ford, i'm going to leave here

and do work on ford because i'm surprised. i don't get that. >> let's get to pisani to see what's moving on the floor with the dow up 51. good morning, bob. >> good morning, guys. home builders doing well, aerospace doing well, energy stocks on the up side. we're waiting for amc entertainment. priced at $18. that was the low end of the price talk, 18 to 20. you must think that must be disappointing. sometimes it's better to do that because you get a better pop at the open. probably somewhere around $19 is a likely opening price. hilton priced right in the middle of the range. everyone said maybe that was a little disappointing but hilton had a terrific run on the first day. pricing at the low end doesn't necessarily mean some indication of a disappointing open overall. elsewhere, on terms of the market, look at what some of the bulls are arcing the last couple of days. their argument is forget about when the fed is going to taper. the fed put is still going to be very much alive.

the economic news is improving. i want to show you that the bulls are arguing the fed is going to make it very clear if the data works if they're going to continue to aggressively taper. if it gets better, the lower the taper. if it gets worse, they can do it again. the argument is the fed putt, there's an underpinning to the market that the fed putt will still be there in 2014. i don't think that. i think taper will go in one way. their argument is they could go backward if things get worse. let me move on and talk about lennar. jim each made some very interesting observations on it. they did beat and orders were up 13%. from what i could see, that was a limb below consensus and a disappointment. average selling was up 18%. looks like they beat on lower costs, not on dramatically higher demand. i think this is part of the housing conundrum we've been seeing. look at these contradictions.

single-family housiing starts fr november were terrific. housing sentiments yesterday were terrific. but mortgage applications did you look at them today? lowest levels of 2013. so we're getting some unusual numbers that are contradicting themselves in housing. look at some of these home builders, a is down, holton's done, polte is down. and on fedex, a lot of people asking me what happened. overnight, international priority volumes, looks down about 5%. that's a disappointment. ground shipment is up about 8%. that's good but lower than last quarter. my point here is fedex had a fantastic year. it's got to be up close on the year. it's one of the best performance

in the transports. we're starting to see a little disappointment in the second half of the year. right now it looks like somewhere around $19 for them. back to you. >> thanks very much. let's head over to the bond pits now. rick santelli joins us from the cme group in chicago. rick. >> thanks, david. we're going to quickly go through the intra day charts and two-day charts of 2s, 5s, 10s, 30s. why? couple of reasons. first of all, the first chart, 2s, we're up three, four basis points overnight in a two-year note and now 35 basis points just dipping down to 34. why is that interesting? it's a cautionary word. very difficult to use percentages when you look at interest rate percent because that's over a 10% move and i don't think it accurately reflects the dynamics. but if you continue to look at the rest of the yield curve, it is very important that it seems to be -- we have to go, breaking news. >> i apologize. we do have looking over at post

5, looks like amc is now open for trade. $19.18 after pricing at 18. about 18 million shares. interesting. we'll talk to the ceo in a few moments about the business and the open. >> not expensive here. >> some of the opens lately, jim, as a trend have been modest, the kind of thing underwriters tend to like. >> hilton. i like these sales that don't go to a huge premium. it means people got in. >> and they're going to stay in. and that's probably better. you build a shareholder base from day one. you got all these flippers and you have to reassemble. >> i think the deals are good for people, the company get its money, individual feel they got a good price. you can argue twitter felt it didn't get enough but it worked. all these deals have been the kind of things if you're watching at home you say i like

to stay at the hilton, go to the movies, you can be in it. >> hilton private in '07. what do you tell people who say, ah, everybody's coming back, this is their exit just as retail is being encouraged to get in? >> i think this is the end of the free money period from the fed. business is pretty good. there always is an exit strategy when you do these deals. i always come back to dollar general. when dollar general came public, people said it's the beginning of the end, this is it. what a great stock that's been. i've been saying -- i got a new book coming out, i don't want to promote the book but you need to be less cynical. these private equity firms is done a good job. >> in dollar general and hca -- dollar general the private completely out and hca mostly out. they have come back quickly and done well.

the big argument of private equity is we do all these things to make them do better but do they really? >> when we come back, it's got all the excitement of a movie premiere and more. amc entertainment just began trade. we'll talk to the ceo larry lopez here in a moment. stick with innovation. stick with power. stick with technology. get the new flexcare platinum from philips sonicare and save now. philips sonicare. (announcer) at scottrade, our cexactly how they want.t with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office,

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amc entertainment just opened for trade. as you can see, 19.59 the latest check. gerry lopez is the president and ceo of amc entertainment, and he joins us this morning. with the red tie. you know how to decorate a room. >> thank you. we try. >> this is the collision between lee wood, kansas and china some would say?

>> we've been private. the last 14 months or so under the chinese loan ownership alloo us take our ideas and accelerate them into the u.s. market. it's been helpful. we think the company is positioned just right. we're having a great year. the entire industry having a great year. >> congratulations. >> thank you. >> a lot of people talk the talk. tell people what you did for customers. >> we gave our amc stocks members, who are our most loyal of the loyals the opportunity to participate in the ipo at the same price an institutional investor had. . we thought it was the right thing to do for our customers. with the stock price last night at 18. we we thought it would have a good chance of opening the way that

it did. we hope we earned the loyalty of our members. that's what it's all about. >> the other way to do that is to improve the experience to have the chairs that can lie back. >> you've been in one? >> my family has. you're spending a lot of money to do that, $375 million and another $245 million planned? >> $275 over the last 12 months. we think it's going to settle at around 245 on an annual basis going forward. not all of it is going to go into that but a vast majority of it. >> what are you thinking on the expected return? >> every location is a little different. we're seeing north of 30% in cash returns. depends on the location and depends on the specifics of what we do but very healthy. importantly we're driving the productivity of the existing asset base. not just adding more theaters

but making the theaters already in the communities a little better. we find that resonates with our guest, people like it, they come more often and when they come, they spend more money. makes for a good business model. we think we got at least another four, five years left of executing against this plan. >> people wonder if dynamic prices is coming to the business the way spielberg suggests where you may pay $25 to see the new ironman, you may pay $7 to see the new art house film. >> we're already on the path there. today you can see a movie in 2-d, 3-d, imax. each one of those experiences will have a different pricing in the same building. the ultimate that spielberg and others have talked about with movies being priced differently, that's not here yet. it may happen in the future. our business is a revenue sure

with the studios. it will have to be something we very carefully discuss and see how we best bring it about. it not the only idea in play, it's one of the ideas in play. >> at this price you have a 6.6, big discount to regal and cinemark. they're 7.9. will you have a similar dividend policy and yield to those partners? >> we will. we opened with a $75 million difficult depend flow, at the high end of dividend yield for comps. our story is not just about the better experience for the customer, it's about returning capital to the investors from day one. the business is very cash flow positive. we think we can do both things at the same time. >> you mentioned all the ways you can see a movie. another way is to wait 90 days and watch it from the couch on your big screen. i think that will only continue

as a trend. i wonder how do you combat that as a industry over the long haul here, get people to come in continually when they know they don't have to wait very long to have a somewhat similar experience? >> the heavy user, the people who enjoy movies the most enjoy them in a theater, enjoy them at home, enjoy them in their ipad and enjoy them in their phone, which i don't understand because the screen is too small. the movie theater is part of the u.s. fabric. as long as the 17-year-olds want to date, i like our chances. >> as long as there's love. >> we do work on that. >> is there a limit, before we let you go, as to how many previews one can sit through before the feature begins? >> 15 minutes or so. six, seven is about right. a little less than that people will ask us, a little more than

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let's get "six in 60" with jim. you've been talking cvs all morning. >> great company, great industry. >> red arrows from micron. >> the big story has been over and over again that there's no new fab, no new factories coming in. now we're hearing about a factory. >> this is a construction equipment story. it remains one of great plays on nonresidential construction in 2014. >> mark west. >> we see the articles on natural gas. these guys have the pipeline to the northeast but they keep doing equities guys, you need to stop it. >> merrill cuts numbers on amc. >> wow, this is the great day. >> and then merrill on avon. >> i felt this was a give up on

sherry mccoy saying listen, wait till next year. this is the opposite of herbalife. >> what's coming up on "mad"? >> we have stocking stuffers. i think you should be able to buy your kid just one share, two shares. it's really resonating with people as i go around town. people say that's what i want to buy my kids. >> when we come back, we'll talk about obama care and talk about the fed decision at 2:00 when we come right back. my customers can shop around. but it doesn't usually work that way with health care. with unitedhealthcare, i get information on quality rated doctors, treatment options and cost estimates, so we can make better health decisions. that's health in numbers. unitedhealthcare.

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♪ no time left for you, on my way to better things ♪ >> welcome back to "squawk on the street." in just a few hours we'll find out if a taper is in the cards during bernanke's last meeting as chairman. we'll tell you what to expect. >> plus bitcoin tumbling overnight at china said it would stop taking deposits in the chinese currency. >> obamacare getting tech support from microsoft. the white house hiring the

former head of microsoft office to oversee healthcare.gov. >> and the executive director of cigar aficionado will be here. >> the fed decision of course the last one for chairman ben bernanke. i think he has another one. i think he quits at the end of january. second to last one. at 2:00 p.m. eastern. what should we expect from the fed this afternoon? what will the fallout be for you as an investors? steve liesman is in washington. so we're finally there? >> reporter: we are. the penultimate meeting for bernanke but the last press conference he'll conduct. a robust debate is out there among fed watchers with many believing today is not the day for the taper but it's coming soon. there are some big investment

houses that are on the not taper track. cnbc service shows just 20% of the market expect the taper today but 55 expect it in january, 52 expect it in february. it is the uncertainty that it itself offered as a reason for the fed not moving today. that is because wall street doesn't expect it today, the fed won't do it because the central bank does not want to surprise markets. here's the case against tapering, wall street not being ready, inflation too low and really not enough positive data. now on "squawk box" this morning, they said the street not being ready is not a good reason to hold off. >> why does the fed care about surprising the market? they told us back in september -- we didn't say we were going in september and the market was prime for it and ten-year yields are back where they were going into the meeting. the difference is this time the short end has the message that a

taper doesn't mean a tightening is coming in a few weeks' time. >> that's going to be very important for the fed. here's the case in favor of the taper. there is confidence in the outlook, the three tests of the fed has been met. reduced fiscal uncertainty and less financial restraint. many officials called not tapering in september a close call and given the better economic data, a ing unemployment rate to 7%, what was a close call in september should be a slam dunk in december. so september many committee members also said they expect to begin reducing the program by year end. so there are reasons on both sides but maybe most important it s this -- if we don't get it today, we'll get it soon enough and the market seems to have more or less priced that in. what does the fed gain in economic terms by waiting? i'm not sure it's very much, guys. carl? >> steve, you've made your call that you think one is probably more likely than before and some

people wonder whose whispering in liesman's ear? is he trying to get the market primed? >> they can wonder that. there's other more important this evenings. they should be looking at their portfolios. just doing my reporting. you look at the three tests. those were the ones bernanke gave us and there are others who have run the same call. >> busy day for you in washington, d.c., steve liesman. let get some insight from -- $300 billion in aum. do you think it would be a surprise? we've talked about this until we're blue in the face. >> i think the fed should taper, the economy is strong enough. and they've gone through the program of diminishing returns and i'd argue is now in minimum

returns. people are rolling cds and bonds have less income than they would have done. to me that's a source of negativity coming out of the asset purchase program. we got enough monetary base so they don't need to do it anymore. i believe they should taper. i think it's about a 50/50 chance they will. >> mark, where are you? >> well, 50/50 is the easy call because they either will or they won't. in either case, it should not come as a surprise. the signals have been sent, the economy is picking up in a number of ways. it is still a slack economy but it shouldn't be a surprise. but it is important at some point relatively soon that it's the inflexion point that's key. it isn't even important how much of a taper it is, it's the inflexion point that's really key so that the market can adjust to that psychology. >> so where do you think the market will go from here? >> you guys are the market watchers. i'll defer that to you.

but i think if that's the decision within the fed and i think the fed is much less concerned about what the market is going to do than it is with the impact on the overall economy. >> that is a very important point. jim, let me come back to you. i don't know if you agree with this goldman note that came out overnight. it said the fed has a problem, they want to offset the tapering note with something else but they can't work out with what to do. they are so bad at communicating with the market and getting the market to do what they want to do, that they may have to taper for far longer than is actually necessary. >> i agree with mark, though that, the fed will be much more worried about the real economy than it is about markets. and if the fed tapers at this point, the market reaction will depend on how much is tapered and -- >> i have to disagree. >> but don't you think the psychology is key? we haven't been to an inflexion

point in five years and we need to get here soon. >> the point i want to make is they do care about the market, they care desperately. there's why they signalled there would be a taper in the summer and walked them back in september when they said actually, you're not understanding what we're saying here well enough. we'll leave it for now. >> the reason the fed should taper now is the economy is doing quite well. the private sector is growing 3.5% or a bit more. the underlying economy growing at 2.5%. that may not be outstanding but given the overhang of debt and inflation rate tendencies, that's a good result. it's well entrenched because of the well known, positive actions for the u.s. >> that's a very fundamental, academic view of the markets but that does not mean the markets could react very badly and

therefore there is a put. >> that may be right. if they taper more than expected without throwing a bone to the market in positive terse, you might get 5% back in u.s. equities. if that happens, it's a buying opportunity. but if the fed is somewhat inseptember in their kicks, that's what could happen. >> you conduct monetary policy to impact the underlying economy. so the reaction of the market, if the reaction of the market is at that there as a bid of a prize -- do you think if e-the-don't move today, the next minutes we would be hawkish enough that the markets would be be spoobd, in any regard? >> i think what we will see, carl, if they don't move today, you'll see more forward guidance and i think there will be a

greater discussion os to what the two sides are thinking about. >> jim, there may be a depreciation -- are we fulling understanding what cheap money has meant, for stock buybacks, for refinancings, for all the ways it's crept into the ability for stocks to move higher? >> i still believe that the key reason that stocks have moved higher is the improvement in the fundamentals of the private sector. it's cheap energy, improvement in housing, productivity. those factors have been driving a pretty good u.s. equity market this year. i think there is the capacity for taper and a strong equity market to co-exist next year but avoid the bonds. long duration bonds are really dangerous. >> you've phrased the question as if cheap money is over. as a matter of fact -- >> i didn't mean it was over. >> on the other hand it's when

they're going to raise traits. and the fed has promised their rates are going to stay down through all of 2014. >> guys, have a good one. we'll see what happens at 2:00. >> thank you. >> let have a look at where we are on fedex shares now that we're substantially into trading. actually flat overall. a fascinating earning statement from federal express overnight. though it isn't all bad on the outlook, though that might be due to the share buybacks. we'll dig deep near fedex after the break. announcer: where can an investor be a name and not a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: ranked highest in investor satisfaction with self-directed services by j.d. power and associates.

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welcome back to "squawk on the street." check out johnson controls, the largest maker of u.s. auto parts is losing ground after forecasting 2014 earnings that were below analyst forecasts. the company saying it aims to rebalance its businesses to earn higher valuations and reduce its dependence on the overall automotive sector. >> thank you very. fedex is holding firm after reporting second quarter results that felt short of estimates. donald bratton is managing director at avondale partners. he's has a $140 price target. good morning. >> good morning, simon, how are you? >> i'm concerned about the bulk of the business. >> what's interesting is they're

blaming the timing of cyber monday, which indeed is a headwind but then last year we had superstorm sandy blow through as well. it's not always just apples to oranges, if you will. when you look at what's happening in the asian air freight, pacific air freight, european and transatlantic, we're seeing much stronger results than were shown by fedex in this period. >> but we expected that. didn't you expect margin improvement? and how much on the earnings per share front is affected by the stock buyback, which obviously improves the situation? >> it helps the guidance and that's one of the main reasons why we saw a one percentage point increase in their guidance. it really didn't help this quarter at all because of the weighted value of the shares. >> so for an investor at home, which is a better vet now. upo outperforming recently. which do you prefer, donald?

>> i actually prefer the light asset plays right now, whether i'm going and looking at expediters. right now what i'm looking at -- look at what's happened with fedex. indeed the restructuring has helped. we saw a 12% reduction in maintenance cost and 8% reduction in fuel consumption. those are both really good numbers but they're only growing earnings at 10% and the stock is up 55% year to date. >> double the index average. donald, the pricing narrative that we've been through all year long, right, the move away from express and into ground, is that going to reverse or is that a secular change that's going to be with us no matter how much the economy improves? >> most everyone believes it's a long-term secular change. i'm outside the consensus on this. i think it's episodic. what happens is when you have something that you can't sell unless you can get it delivered quickly, you'll pay for the shipping. when you want something immediately, you'll pay for the

shipping. i think we're seeing episodic so people have downshifted the next hot product, the next ipad, whatever it is, you'll see a return to that. we're actually if you look at the transpacific data, we're beginning to see a little bit of a return to it. >> a year from now do we think the express numbers are markedly better than this quarter's? >> they should be. and to their credit, they've said all along this a multi-year process. yes, we'll get $1.6 billion of costs out of their system but this is a two, three-plus year process in which this happens. you don't just flip a switch and completely renew your fleet, completely change the way you move things and completely change your workforce. >> donald broughton there, thank you. >> thank you. >> they're calling it a bitcoin bust. the price falling dramatically. what's behind the big drop? our mary thompson is back at hq

with the answer. some have called it a crash this morning, mary. >> reporter: the digital currency taking another hit. reportedly third-party payment processors in the country say they've been told not to work with bitcoin exchanges. as a result, the largest bitcoin exchange says it can no longer accept deposits. now, the news shaking up the bitcoin community as the chinese exchange is the busiest in terms in volume. the value of the digital currency took another leg down, falling below $500, meaning it's just about 50% below its all-time high of brain plenty.

with just over 12 million in circulation now, the supply will hit sits limit of 21 million by 2040. it drawn a big following here in the u.s. and big name tech investors while officials show it could show promise as a transmitter of funds. certainly the volatility that we're seeing today provides critics a reason to argue against it, from ever becoming a replacement for government-backed currencies like the dollar. >> well, you have to feel sorry for anybody who accepted payment in bitcoin this morning, haven't you? >> that's right. they're down quite a bit, unless they moved to convert it the moment they received the bitcoin. even if you talk about bitcoin advocates, they'll say this is a very early stage investment and if could take a while and it's a great deal of risk in buying the digital currency.

>> thank you very much. >> sharis amc one you should bu? or are the other movie theaters a better bet moving into christmas? asional have constipation,

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>> the nation's second largest movie theater chain amc entertainment has gone public again this morning. for the first time trading here since 2004. the buzz about films like "the wolf of wall street" and "anchorman 2" hitting theaters soon. is the newly public theater chain a hot ticket for you for your portfolio? chad bynum is with me here. >> thanks for having me. >> a lot of people thought china's richest man was crazy when he paid what he paid for this a year ago. has he made money out of this? >> he has made money so far. there's the notion that the movie industry is dying. he kind of took an opportunity to get in at fairly low valuation levels and what we're seeing today is really a result

of his foresight and healthy industry -- >> more than restructuring the debt? >> yes. >> is that where i make money? if i look at regal up over 30%, some of these other chains have had a great year. as you look at the movies that are going to be released, "anchor man 2," justin bieber," and others -- >> more product is better. the studios are putting out more product. so companies like regal, cinemark and amc are benefiting from that. as long as you have a breadth of

product out there, consumers will see what they want to see. >> do you cover the snores do you have a buy? >> i have a buy on cinemark. >> why? >> because of of the industry fundamentals. our favorite pick in the space is kind of a small cap place, ckec, carm. that was a stock that was a dollar per share 20 years ago. >> thank you so much. what a move for ford today. this is the worst day for ford in about two years. what's going on with the company this morning? phil lebeau is live in chicago with the answer. hey, phil. >> reporter: when you take a look at what ford is issuing as a profit warning, the stock expected to drop. they're making $8.5 billion this

year, expected to make between $7 billion and 8 billion last year. that's the guidance that has spooked investors. a note from buckingham points out a couple of interesting things. when you look at their north american pretext profit imaginin, it's going to be lower than guide as opinion they're saying because of deer tear yags due to pressure and lower f-ear cease production in 2014. what you have is a stock that is getting whacked today. they out of force and gf. then when you look at the mid-decade profit margin or target operating profit margin

for the ou devision. >> thank you for that. coming soon, a new sports and entertainment powerhouse. this morning silver lake capital and talent agency williams morris to b morris. >> it backed by its private equity partner silver lake, img worldwide creating a giant away from the slower than traditional movie business. this brings together martin scorsese, quentin tarantino, lady gaga, rihanna.

they will look to leverage img's big names and relationships across its entertainment and advertising business. but perhaps even more important, img ook brings w me global reach, a major events business, including p and fashion week, a licensing provision but plus lucrative college and sports right. eand patrick witsel will be combined h combin combin combined -- the scale of the combined company should yield more negotiating leverage across its deals. one down side of the deal, sources tell me that img has more than $7 hoon million in

debt. -- $700 million in debt. simon, over to you. >> big numbers and big personalities. thank you. >> healthcare.gov is calling for tech support. it's hiring the if you remembfo the microsoft office kurt delbene. what kind of pressure will he be under? we'll ask him in just a moment. [ male announcer ] for every late night, every weekend worked, every idea sold... ♪ ...you deserve a cadillac, the fastest growing full-line luxury brand in the united states. including the all new 2014 cadillac cts, motor trend's 2014 car of the year.

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. i'm sharon epperson with breaking news from the energy department about weekly oil supplies. they fell in the past week by 2.9 million barrels according to information from the energy administration. that's a little greater than numbers from the american petroleum institute. up 1.3 million barrels and distillate down 2.1 million barrels. of course there is a lot of wait and see from the fed. that is really what is driving the action in commodities, including oil in this session. we are at least seeing a little bit of relief at the gas pump,

even though we have seen this increase in supply. that's a good thing because that means we'll see lower prices at the pump. $3.22 a gallon, down 4 cents in the past week, carl. a little bit of good news. back to you. >> exxon, a stock that had a heck of a week already has added to the gains, as well the housing names. when we got the incredible out since this morning. >> despite the gradual rise in the 30-year mortgage. >> lennar, by the way, 73 vents with an 11% beat. revenu revenues, but unit up 34% by dollar amount. there does appear to be pent-up demand for people who have been renting and are looking to get

into their first home. >> it's not been a great summer with the rising rates. >> that's despite some of the downbeat guidance, like a ford and fedex. let's go over to dominic chu for a quick market flash. >> check out micron. it's getting whacked in very heavy trading on reports a south korean company plans to build a new factory in that country to make dram chips. it going to invest about $3.8 billion there. more competition leading to the micron share decline. back to you. >> we'll get more on a frontier communications deal when we come back. (announcer) scottrade knows our clients trade

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welcome back, a lots of stocks on the move today. like at cvs caremark. the company remains to disciplined capital allocation. $4 billion buyback in 2014. a new $6 billion buyback plan over an unspecified multi-year period. that takes it to $1.10 a share. it was inactive in the premarket. >> what's interesting is they say this comes from an understanding of obamacare. >> then take a look at apple. various headlines here today. china daily quoting the ceo of china mobile saying there is no deal, in fact, between china mobile and apple yet, even though the journal, jon fortt, when they wrote about that

would-be deal a couple of weeks ago said an announcement would be coming about now. >> not only that but i see china mobile subsidiary has a change up that has to do with preorders. the page looks legit to me. i checked it out multiple different ways. i can get to it from china mobile's home page. so something fishy is going ton he -- on here. they have pages up and down indicating the 5s will be on sale soon. it's been up for several hours. >> you also have jabil with a negative forecast, which does some work for the 5c for the apple and people are saying traps they're getting less work from apple and apple's demand is less. we'll see whether that speculation proves founded. >> jpmorgan did raise their

price targ the on that. cramer called the jabil thing an unmitigated disaster earlier this morning. >> what skills will kurt delbene bring to the government health care web site? welcome back. >> thanks for having me. >> if you need someone with experience guiding troubled software, this is one place to start, though others point to his wife who is a congresswoman from washington state. how well qualified is he? >> he's exceptionally qualified. bill gates made a comment in his announcement statement emphasizing his exceptional focus on execution and that's exactly what we need right now. >> it seems tailor made for a microsoft executive having to deal with legacy technology

issues, tying disparate pieces of technology together. but really do, you have a sense of how fixable if really is, even for an executive with this kind of experience? >> the great news is it appears the fixing part is moving in the direction where we've made a great deal of progress. the announcement from the administration focused on where we go from here in the future. i think what we see in kurt is a manager that can help ensure the product is better moving forward. he's going to be clearly focused through the end of march for this enrollment cycle but he's going to expand the number of enrollment options to make sure everyone has a chance to get covered, not only for this psych bull to prepa -- cycle but to prepare for 2015. >> this is a transitional movement from the surge activity led by jeff to a leader who will

make sure this carries forward through the remainder of the cycle. i'm confident this will yield a great deal of benefit to the public. >> i'm fascinated by the idea that one man can parachute in for a period of 18 months and turn around a massive public sector process like this. so we believe that the problems are all due to high-end strategy, not to do with the depth of ability perhaps within the public sector or deeper problems has to how that database is structured. we believe one man can come in and sort it all out, it's as easy as that? >> let me be clear about the problem we're trying to solve. the disparity between all the legacy systems, that level of complexity is called the data hub. and that's been working since day one. the part that isn't, that had all the trouble, really was the consumer facing e-commerce application, the buying a plan, finding the right pricing based

on your conditions, if you will. that part is really the consumer facing application. thankfully under jeff's leadership thes leadership, they did what leaders do, identify the problem and moving them. >> actually, the real -- the real problem is with the back end and settlement of systems and insurers and hospitals and everybody knowing who is insured and whose got what? >> they're been reporting those error rates on the claims. in the last week they've been demonstrating a great deal of improvement in the quality of that information flowing to the health plan. but again, i still think of that as part of the e-commerce application, fulfilling that transaction, that connecting all the government databases that were never designed to talk together, that's the heavy lift. if that was broken, i'd have been a lot more concerned. that's been working since day one. here it's largely about fulfilling that e-commerce

transaction from consumer signing up to getting enrolled in the insurance plans. thankfully it looks like the hard work is behind us on that front and now there's a relentless focus on maximizing options for folks to enroll. >> aneesh, appreciate your insight as always. >> my pleasure. thanks for having me. >> when we come back, lee ann rhymes shot her new music video completely on an iphone. she'll be here to talk about that. re a business pro. seeker of the sublime. you can separate runway ridiculousness... from fashion that flies off the shelves. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price.

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welcome back to "squawk on the street." mark olson said something today i found very fascinating. let's put it up on the screen, former fed official minneapolis, i believe. "i think the fed is much less concerned about what the market is going to do than it is with the impact on the overall economy." i know that might sound right but considering this taper going on, trying to get the mark ready, i'm not buying it!

hey, inflation, there's been a lot of talk about inflation. on an austrian web site, an inflation, a good analogy is it's like sunburn. if you're looking at the sun and not paying attention you don't think my skin feels bad but all of a sudden without any type of prevention, without putting anything on, guess what, the damage is already done! so i think when it comes to inflation down the road, there are a lot of questions and uncertainties we're just papering over. i have the great mr. taylor coming up as my guest in about 40 minutes. we're going to talk to him about the sunburn of inflation. back to you. >> hmm, there's some things rick can use for that. >> rick, we know you're not averse to using tools or bringing on gallagher to smash some water mellons but what is on your face? >> well, i'm not sure. i just think that the bright light of the knowledge of central bankers, think just got me a bit burned, that's all.

>> flew too close to the sun. rick santelli in chicago. entertaining as always. thanks. >> not a bad look for rick. >> shares of frontier communications getting a boost yesterday after the company announced it will acquire at&t's wire line operations in connecticut. the purchase price, $2 billion in cash. joining me is the company's ceo, maggie wilderotter. always good to you have, maggie. for those investors who look back on the acquisition you did a number of years ago, the mrjer, with all of those access lines with verizon and say, well that, didn't go as well as we had opened at the time why it was different? >> it was a lot more complicated

and those properties were really fixer-upper properties. they only have broad band built out to about 60% of the marketplace and that was on average. and we also had a situation where we had to do three sets of conversions to get all of those markets on to our systems. with this at&t acquisition in connecticut, we're inheriting a very well-built and well-maintained network. it has 96% broadband reach, it's uverse to 3 % of the straight and will are no systems issues after we close the transaction. >> and you're taking in 900,000 voice connections. >> yes. >> we all know those seem to be going away, the question is how quickly. what are your expectations or how do you model how quickly you'll lose the voice connections or what you can do to upgrade them to get more average revenue out of the

users? >> one of the nice things about at&t in connecticut is they have a lot of bundled offers in the marketplace, very similar to what we do in our markets. we've actually seen the decline in voice revenues and the decline in voice a lot of the customers we have have voice services combined with broadband and video, which also reduces churn. we see broadband outpacing the decline in voice revenues in our markets, as well. in addition, we see the opportunity to launch new products like our frontier secure bundles, which is identity theft protection, computer backup, computer security, and equipment insurance. and these are big-selling items for customers that have their lives and livelihoods tied to broadband. that's on average somewhere between $5 and $12 in revenue per customer lift. >> maggie, one of the reasons investors buy your stock, of

course, is because you have a strong dividend yield. but that was put into question sometime ago, when you had to cut the dividend, in part because the free cash flow characteristics of the verizon deal were not meeting what you had helped for. you're levering up, what, 3.6 turns, if i'm right. what gives you the confidence that a dividend cut will not be necessary and that the free cash flow characteristics of this deal will, in fact, be met? >> well, the great thing about this deal is it's free cash flow and free cash flow per share accretive in the first year. and it actually lowers our dividend payout ratio by 5%. so we feel very good that this transaction supports and sustains our dividend. our board was adamant that whatever deal we would do from an acquisition perspective had to to make it safer and we feel good with the revenue we're getting and the free cash flow, which is very strong. it does support our dividend today. >> and so, what do you do from

here, from an execution standpoint? you take in -- i mean, it's a large acquisition, $2 billion. we showed how many lines you're taking in. what has history shown as far as your ability to upsell, not just to keep the lines but to get more out of this? >> we have a sweet spot in our industry on our go 2 market. we look at local engagement in as being important. and people think of connecticut as north of new york, but 48% of the state is rural. that's a sweet spot for us. in addition to that, we run markets today where we have video assets just like uverse, so we have very good experience in being able to drive penetration and market share where we do business. the nice thing about this acquisition is this is our basic business. we're not buying any assets that we don't know about or know how to operate.

and we know how to convert and integrate. we're very good at that. with the verizon acquisition, we exceeded the synergies by $150 million, or 30%. so we think the synergies coming out of this deal, $125 million, plus $75 million day one of costs go away based upon at&t allocations. it's a very good deal for our shareholders, and it's prime real estate in a market where we've been headquartered for over 70 years. >> right. no, you're a longtime connecticut resident, that being frontier. appreciate your time. maggie, chairman and ceo of frontier communications. >> thanks, david. when we come back, we'll step inside the squawk humidor, and we'll bring you the number-one cigar inside this big reveal. americans take care of business.

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>>. >> the moment you've been waiting for. more than 700 cigars rated this year in "cigar aficionado," and they're ready to reveal the number-one cigar of 2014. gordon mot is teditor at large. good morning. >> good morning. >> you brought the top three. and we'll go three, two, one. >> i have one here in my pocket.

>> a davidoff nicaragua. >> that's right. a new line from davidoff, typically one of the iconic brands in the world, the white label. last year, they had the black, a nicaragua, meaning all of the tobacco is from nicaragua, even though they continue to roll it at the factory in dominican republic. >> speaking of which, that's number two. >> it is. the aging room. it's a long name. it's the f-55 concerto, i think i got most of it. it's a relatively new brand. came across the radar in 2011. making really great cigars. it's a real plus for the dominican republic to have a brand like this. >> all right. so of the 700, what do you have in the box that is number one? >> well, should i, like, take my time doing this? >> you have a flair for the dramatic, i'll say that. >> let's see if i can get it out of the bag. >> need some help? >> there we go.

a monty christo, number 2, torpedo, one of the most iconic brands in the world. one of the oldest brands from havana. >> we'd know this box anywhere, right? >> pretty much. yeah. that logo is truly one of the great brands, trademarks in the world. and this sharp, the torpedo, is slightly tapered at the end. in is a cigar that kind of stores love. it ages well. it performed throughout all our blind tastings this year, perfectly. >> i might take a couple. they are blind tasting. they strip off the branding and 700. are you all smoking 700 cigars? >> we do divide them up. i'm probably testing between 400, 500 a year. >> how long does that take you? >> i try to do two, three a day, no more than that. there is a limit to beyond which your palate -- >> or your health -- >> i don't know about that.

but -- >> you've done this 10 years, the rating, that is. only three of the years has a cuban taken number one. >> that's right. the premium hand-rolled cigar business has become a diverse industry. so nicaragua, the dominican republic. it's won the top time two times. and now cuba, third time. >> and you say it's a the golden age? >> it s a boom in the mid-'90s increased production three, four times before 1992. and what that did was they began to identify the places where tobacco grows the best around as the boom ended, they've produced better tobacco. >> there will be people around the world going, i don't understand it. why have they got cuban cigars? doesn't the united states have a trade embargo against cuba? >> we do. but we have a global audience, so we rate cigars that are

available worldwide. so this is for your global audience. now, we also are going to reveal cigars 10 through 25 on cigaraficionado.com, so information about each one of the cigars is available on the website. i hope everybody goes to check them out. >> very nice. our stage manager getting too close to that box there, brad. gordon, thank you so much. >> carl, great to be here. thank you very much. >> with "cigar aficionado." if you're just joining us, here's what you missed earlier on. >> announcer: welcome to "squawk on the street." here's what's happened so far. >> the fed has been very cautious about tapering, and so, i think it's actually quite possible today that the taper that everybody expects doesn't happen, because they want to see one more month of good data before they go there. i'm delighted we got the budget discussions out of the way. the long-term debt ceiling, we cannot go through another debate over that. >> right. >> i think people just need --

so coming back to tapering, i'd rather hear some certainty. >> do we go now to 4% at 2.01, because they mentioned they'll buy fewer bonds, i think that's ludicrous. but maybe people at home have to recognize there's someone out there who doesn't get the memo. [ bell sounds ] >> there's the bell. >> the last 14 months or so, under the chinese ownership, really enabled us to take some ideas and initiatives and accelerate the deployment of them into the u.s. market. it's been helpful. and now we think the company's positioned just right. >> if they taper more than expected, without throwing a bone to the market in positive terms, you might get a 5% setback in u.s. equities. if that happens, it's a buying opportunity. >> announcer: the "squawk on the street" countdown to christmas is in full swing. ho ho ho! ♪

good morning, we're live here at post 9 of the new york stock exchange on fed day. we await the decision at 2:00 p.m. eastern time, and in the meantime, the dow is up about 45 points, the s&p will probably huddle into this range here ahead of a statement, as it normally does, up 1 1/2 points. a rough morning for shares of ford. it's the worst day in two years. automaker announcing it expects lower pretax profit in 2014. ford says its mid-decade target for global operating margin is now at risk due to a severe downturn in europe and conditions in south america. meantime, lennar leading the homebuilders higher. the company posting a 32% jump in profits helped by a rise in new home orders. will fed policymakers end the year with a taper? the answer just hours away. we'll explore how to position the portfolio ahead of the fed decision. and a window into microsoft's ceo's search. rick sherrland will tell us why he's less confident mulally will

secede ballmer. >> and we'll talk with leann rhyme rimes. would she consider going the beyonce route to selling music? fed chairman ben bernanke and policymakers meeting. perhaps they should be considering the fedex numbers earnings today. the shipping giant widely regarded as one of the corporate economic bellwethers. sarah ison is back at hq with that. >> the story is not so hot when it comes to fed rex. fedex delivers in 220 countries, and employs 300,000 people and the total sales come from the united states according to oppenheimer. the read here is fedex disappointed, even though its profit rise 14%. analysts were looking for something higher.

if bernanke want as picture of the consumer, which makes up 70% of the u.s. economy and their attitudes, here it s customers keep shifting to lower-cost shipping services. they want cheaper even if it means slower delivery. for a snap shot here, even internationally, a trend, priority international, the higher cost option, dropped 5%. the u.s. number dipped as well. it's been an ongoing trend for the shipping giants and it reflects a big shift in consumer behavior. here's the fedex statement itself, the ceo, fred shith, on the economy. he says he sees a tepid growth in environment, customers want less costly international shipping services, and near-term challenges remain, we're confident we're positioning for profitable long-term growth. and like the federal reserve, fedex does discuss its own economic forecast. it actually cut u.s. and global gdp predictions for next year

by .1% each. that was from what it had previously expected from the economy. if you look at the stock, it's run up more than 50%. fedex, that is. the bullish story here, actually has little to do with a pickup in the overall economy. it's about cost-cutting, about returning cash to shareholders. so if you tie it all together, carl, about the taper, no taper question, from the fed, earnings reports suggest not back to the good ole day for the consumer both here in the united states and globally. analysts say there's nothing in this report that suggests an improved picture of the economy from the last report, three quarters ago. perhaps something for the fed to consider there. >> all right, sarah eisen, thank you so much. a confusing signal. you'd think at this day and age, people are doing the quick shipping, but not so much. let's bring in ethan harris, head of global economics with merrill lynch and michael richards with riverfront investment group. welcome. >> good morning. >> ethan, first to you.

do they taper today? do they not? does it matter? >> i don't think they'll taper today. i think there's some chance that they taper. if they do taper, they're also going to send a very dovish message here. the last thing the fed wants to do is to disrupt better financial markets. so, yeah, probably don't taper today. >> at the same time, michael jones, you could argue the market's kind of tapering anyway, the same way we saw that happen this summer. they're clearly, for all of the talk we might hear out of the fed the way the data changes, the 10-year is at 2.8,.9%. >> yeah, and we think as they taper, the 10-year will pop up closer to the trading range it saw from 2008 to 2011, before they started buying the 10-year, the trading range was 2.5% to 4%. we will probably see the upper end of that range sometime in 2014. but i think the end of your question was the really important one -- which is, does it matter if they taper in

december or january? and i would say, probably not. what's probably much more significant is, is it just the taper announcement, or do you pick up on some of the hints in the minutes from their last meeting, and do they accompany it with a cut in the interest rate paid on excess reserves. that would be credibly powerful and very bullish. >> although some say incredibly unlikely given some of the other options they have in terms of throwing a bone to the market, right, michael? >> well, you know, i would have said that prior to the minutes. it was interesting that it said a majority of the participants thought that a cut in the interest rate might be a good idea. now, you know, in fed-speak, that was a pretty powerful statement to put it in the minutes. so i agree with you, though. it is probably a long shot that they do it, but to me, that's probably the most important thing. if they add the -- a cut in interest on excess reserves, then you engage that other money-printing press, the u.s. banking system, and i think 2014

can be a really powerful year. if they simply taper, then we probably have to taper our expectations for what the stock market can do. >> ethan, how likely is a cut in the rate on reserves, do you think? what are some of the other tools -- will it be powerful enough if a fed with a yellen and fisher come out and say, we're going to keep rates super, super low until the unemployment rate hits 5%. would that do it? would that be a big -- >> yeah, i think that's the much more likely course of action. i think the fed's made it pretty clear they'd like to go the direction of forward guidance -- that is, telling the markets that we'll be low for longer in terms of interest rates. i also think regardless of what exactly they do here going forward, this is going to be a very slow, friendly fedex, that the fed is not worried about inflation. in fact, inflation is too low right now, and that means they really want to continue to provide stimulus into the economy. so if they're going to taper, it will be very slow, and they'll

guide the markets forward for a longer period of low interest rates. >> finally -- >> -- makes a good point, which is another thing they can do, since they're starting the tapering a little later than expected, will they extend the date by which they conclude their quantitative easing purchases? will it no longer be midsummer? will they announce it will be later in the year, which would, to his point, be a much more gentle taper and more market-friendly. >> finally, ethan, "the journal" tries to take stock of bernanke's legacy, and that he might be shaking his head as how slow the recovery has been. but others say, look, his admission was, in the words of one, elongate the process of healing. how do you think that will be played out when history makes its judgment? >> oh, i think bernanke's been a great fed chairman. we have to judge him by what he faced. i mean, the u.s. had the biggest financial and economic crisis in modern history, left the economy in a deeply wounded state.

lots of people were advising bernanke not to do qe, not to keep his foot on the accelerator, and he stayed the course, moved ahead, and created major healing. i mean, you look at balance sheets across the economy. banks are in better shape. corporations. households. this is the benefit of qe. it's healing balance sheets. the ultimate test, though, will we get better growth? in the next two years, it will cement his legacy -- >> although, ethan -- >> -- but i think he's done a great performance as a fed chairman. >> i wonder about this in the same way when greenspan was exiting and he was viewed so favorably at the time, and it turns out had handed bernanke a real mess, is history not going to repeat itself, or you look at ray dahlia, also quoted in the "journal" article that carl mentions, but he doesn't have anything here except to inflate prices, and what happens if that plays out again? >> if we go out in history, the

mistake greenspan made is he ignored some very obvious signs of bubbles, and it wasn't just that they're bubbles in capital market, but created distorted behavior. you with way overbuilding in housing sector, overbuilding in the tech sector in the late 1990s. nothing like that is happening now. the money the fed is injecting into the economy is going to fix balance sheeting. -- balance sheets. that is improving the healing, healing the economy, not the kind of bubble that greenspan created. >> ethan harris, michael jones, appreciate your perspective this morning. we'll see what happens. >> thank you. >> good to be with you. let's move on to the search for microsoft's new ceo, as it drags on. rick sherland says he's more confident that mulally will be headed to microsoft. on the phone line, "first on cnbc" is rick. and good to talk to you, as always. good morning. >> good morning, carl. >> is this notion now history, the idea that he goes?

>> no, it's not, but microsoft's been pursuing some so-called dark-horse candidates, some people from the silicon valley that have more of a technical background. so there was a blog posted by john thompson, the lead independent director and head of the search yesterday, and just reading between the lines, he had referenced bill gates' comments earlier that, you know, it's a technical company, and sort of to me implies that maybe the dynamics of the board are shifting from just a good general manager who can help enhance shareholder value and work with technical people, to try to fix the business. it seems to me that perhaps bill gates is digging in his heels here and saying, we want technical leadership. so they seem to be pursuing several dark-horse candidates, none of whom have connected yet. they don't seem to want the job. but it seems to me like there's developing more of a preference for somebody with technical

background, and they may end up with mulally, but i just worry that ford's board's getting impatient, from what we read in the press, they're going to press him for a decision, and i kind of worry that we're going to lose him in the process, since this is taking so long. >> well, rick, i can't help but notice the news out of ford this morning, bad news sending that stock down. has alan mulally missed his chance to make the jump if that's what he wants to do? his reputation perhaps tarnished given the poor outlook. and then, if he abandons that and moves to microsoft, it looks bad on ford. >> what i'm interested in is someone a good general manager that will be focused on enhancing shareholder value. so you could trim some costs, you could focus the business, can you do some share repurchase. and then you leverage the technical skills in the company, or you try to bring in someone like paul moritz that they tried to bring in. i had breakfast with paul last

week, who said he's not interested, so that's unfortunate. but you could leverage the internal people to try to fix the business. so the concern would be you get a good technical person that maybe isn't as focused on enhancing shareholder value. so a real tradeoff here. a lot of the technical people that you might appeal to in silicon valley haven't run a business with 130,000 employees, and executed a turnaround. so you kind of have this tradeoff of good general manager versus technical skills, and i think we felt comfortable, but mulally could accomplish both with the help of the good technology people in the company, or bring somebody in. i'm less confident the technical person can enhance shareholder value. >> yeah. >> i think it creates more uncertainty. >> so, i mean, rick, for a long time, you've had certain ideas about the stock, about the balance sheet, about what a new ceo would do, and would you argue you are net less bullish

on microsoft now that it appears mulally is less likely to go? >> you know, i think that the stock's been a good stock this year. you're at the end of the year, and i think some investors will say, you know what, it sounds like there's more uncertainty here, why do i want to wait around and see what happens? you've got, you know, if mulally or someone at the street felt really good about, came in, the stock's up, probably, 10%, 15% pretty quickly. and, you know, why do you want to wait around and see what happens? so i think end of the year is awkward timing for the stock. >> how do you come into this company as the new ceo, with steve ballmer still owning more than 4% of the shares? bill gates, still on the board. how can you even come in and manage this company with any kind of leeway, given that type of situation? even if you are technical. you have the technical guy and the sales guy still there. >> well, look, i think you're -- i think you're going to replace a ballmer and want to make some

change. i don't think that's a pleasant experience for ballmer to remain on the board when everyone's changing everything that you were doing. so i presume that steve will leave the board. bill, of course, will advocate for things he feels passionate about. so, you know, that's a good question. if you were mulally, you would have an understanding with the board before you came in that there were no sacred cows, that you would convince the board, here's the things we need to do, here's the straight strategy, and not have interference. it depends on who you bring in. if one of the internal candidates, like nadally, a bright guy, less experience in running a big company, would he be more likely to go against the board, or more likely to take direction from the board? i would like somebody to come in that would give direction to the board, so an outside candidate is like -- i think investors

would like to see. >> yeah, rick, appreciate your guidance. always good to see you. thanks again. >> thank you. >> rick sherlund, talking microsoft. a week left to go before christmas, and it could be a make-or-break period for some retailers. find out which ones we're talking about. also ahead, rick santelli in chicago waiting on the fed. rick? >> yes! and waiting with the perfect guest for an important fed date! john b. taylor. professor at stanford of economics, and general all-around super smart fed guy. look at some of the articles he's written. "the hidden cost of monetary easing." "fed policy, a drag on the economy." we'll talk to him about all of the articles and maybe about inflation, all after an early five-year note option, bottom of the hour. we're here. to help secure retirements and protect financial futures. to help communities recover and rebuild. for companies going from garage to global. on the ground, in the air, even into space.

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[announcer] firmness settings for the head,legs,and back... and with tempur on top,that famous tempur-pedic comfort comes any way you like it! [woman]ask me about the lumbar button. [man]she's got her side...and i've got my side. [announcer] tempur-pedic.the most highly recommended bed in america. [woman]don't touch my side! welcome back. we want to keep an eye on the health care sector. in fact, it's one of the morning's biggest gainers. there's a look at how the sector is trading, up about .5%. dominic chu has more. dom? [ audio difficulties ] >> he's a lot better when the sound's on, i just have to say that. i'm a huge dom chu fan. he's good when you can hear him. [ laughter ] we'll get to him back in a little bit. according to shoppertrak, the week leading up to christmas is when consumers open their wallets wide. the saturday before the holiday, second to black friday, in terms

of consumer spending. let's bring in barbara khan of the jay baker retailer, and good morning to both of you. good to have you. >> good morning. >> thank you. >> laura, i'll start with you. people are beginning to make lists of the kinds of things retailers are doing in the final week, right? doing a lot more social, appealing to last-minute shoppers, staying open for 87 hours in the case of toys "r" us. is it time to panic? >> of course, what we're focused on is the level of discounting, and it really is unique. especially for apparel retailers. we're seeing very deep discounts at the mall. the first week of december had awful traffic. it's a short calendar. we think some retailers are showing signs of panic. >> barbara, how about you? i mean, which -- from your standpoint, i wonder is it harder or easier to gauge how retailers are doing at the mall, because so much of it is happening online?

>> well, that is difficult to tell. there's no question i agree that it's a promotional season, a lot of discounting is happening. but a lot of shopping is going online. and the use of a mobile phone is an interesting phenomena, also, it's the gateway to purchasing. not so much purchasing being done on the phone, but a lot of exploring, and that's an interesting thing, because the phone has a smaller screen. so it kind of changes the whole shopping scenario. >> laura, i'm curious about sort of, a game theory problem, or a sign of the times, but an interesting piece the other day about the extent to rescue financing and the chase for yield is helping to give retailers a lifeline who might otherwise have had to shut stores, gone bankrupt already, and that's weighing on the whole sector, putting pressure on margins, still too many stores in this country. how do we solve that, or is it something that needs to be solved? >> that's something that's been true for the entire 10 or 15 years i've been following this group. some weaker retailers are dipping into their revolver.

it solves itself. if they have a very bad christmas, they will go away. i remember when bombay had 600 stores, no debt on the balance sheet, but went out of business a year later. >> hmm, wow. and that's actually kind of to the point about how crucial the next week or so is. you're saying there's some names here who may not be around in 2014 if they don't make it this holiday season? >> some of the small retailers, particularly in apparel, will likely cycle out. now, there are lots of new, exciting companies coming up, it's just the nature of the retail. >> laura, why is urban appearing to do so well? >> urban outfitters has much better fashion in its anthropology brand, and we think that is driving their results, but we think the diverse looks that they carry in their namesake brand help them take share against the logo, uniform-oriented companies like abercrombie, aeropostale, american eagle. >> and, barbara, they also have a strong online strategy, and i guess as you were just saying, that's so important in this

environment. you have to get online, you have to get mobile right. >> yes, you've got to do it. and some of the new fashion brands that are doing well, like michael kors or torry burch or burberry, they have interesting media strategies, which is a change in the industry. >> and blue nile, we were showing, up another 2.5%. >> you know how many engagements happening this time of year? >> quite a few. >> only a week to go. it appears the apple china mobile deal has been changed. what's the holdup? we'll explore what's at stake and what's going on? speaking of the iphone, that's what multiplatinum selling and grammy award winning artist leann rimes used to tape her new video. tdd#: 1-800-345-2550 trading inspires your life.

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welcome back to "squawk on the street." general mills is falling cheerios and progresso soups, and as a result, it said the full-year profit could come in at the low end of the forecast. the company also said that sales in the u.s. fell 1% due to lower sales volume. carl, back over to you. >> all right, thanks a lot, dom. the bells are about to sound across europe. in just under two minutes, we'll get you the close and the impact here in the states with a busy afternoon ahead after the break. [ female announcer ] thanks for financing my first car.

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welcome back to the close, for europe. it's a lot of green. >> yes, it is. in advance of the fomc this afternoon. a lot of questions about what they'll say and the effect on the euro and the british pound. that said, u.k. unemployment seems to be actually falling quite rapidly, much more rapidly. and germany continues to barrel into the year end today with very good confidence figures. we may have be a problem within u.k. retail, ubs putting out a note saying in a peril, hitting the panic button, that they may be sacrificing a lot more margin. they're off the lows. we definitely have a problem within oil services in europe. today, technip over in france became the second oil services company to warn within just 48 hours. but the big news is in brussels,

where e.u. finance ministers continue to meet to try and work out a deal for banking union. it would appear that the problem we have at the moment is what happens for the next 10 years. what they've said is after 2025, individual states recapitalizing their banks, can come back to the big $500 billion fund. that's not a problem. germany backing down there. but it's the more immediate decade that a lot of questions are still being asked about. and hopefully, kelly, a deal by tomorrow, because then you have the heads of state -- the 28 heads of state -- meeting to try and sign off on a deal. >> and very quickly, it's going to be the holiday. you know, the whole christmas period, where not much is going to get done for a couple of weeks. >> these are european diplomats. fits and starts in the best of times. >> that's true. [ laughter ] thank you very much, simon. >> pleasure. >> we want to bring you news about that whole foods may yank it over the use of the gmos.

the yogurt company, the greek yogurt, we've spoken to that company here on "squawk on the street" many a time, and a big disappointment. we'll get you more details. >> let's bring in bob pisani, a check of what's moving on the big board. up 37. >> a modest upside. but a lot of volatility expected in the next couple of days. you can see this looking at the volatility futures. the front-month are higher priced than contracts further out, and that's an indication they're anticipating the markets will be volatile in the next several days. interestingly, they don't feel that way about markets further out ub r, generally a little calmer. in terms of the bulls, highlighting it the last couple of days, it doesn't matter whether it's now, february, march when they start tapering, the fact is, there will be an implicit fed put under the market. this is an interesting argument. i'm not sure i buy it. it's been made the last several

days, noting that the fed's going to make it clear they're data dependent. if it worsens, potentially, they could adjust the taper up or down sometime next year, and the bottom line, their argument is the fed put, the implies ilt -- implicit underpinning will be there in 2014. i'm not sure i totally bring that, but they're making a strong argument. we've also got, the last ipo of the year. amc entertainment opened 19.18, and it's held up. we've had -- this was the last ipo, but a great year for ipos overall. numbers later in the day. but nyse had 30 ipos in the tech area. they never had that kind of margins before, business before. so they did very well. let's move on and talk about sectors. ford's not having a good day. the worst day in two years for ford. they guided down on their forecasts for 2014. j. build circuits and its customers are down after lowering guidance. micron tech report, rival hynx,

planning a new factory. and, carl, back to you. >> bob pisani, thank you very much, sir. we want to keep an eye on the u.s. treasury, auctioning $35 billion in five-year notes. looks like it was a little weak. rick santelli, what can you tell us? >> a little bit weak? that's the understatement of the year, kelly! it's d for dog on the grade, the messy internals. the w.i. market started getting volatile at the end, but it looked like 157.50 was the trade. where did the yield come out, 1.60, higher yield price, about you that's not where the messiness ends. the bid to cover, the weakest since '09, the auction well above at 2.64, a very light indirect bidding percentage, a 10 auction average of 46, 11 point end is close, but dealers took 62-plus percent, when they have a pocketful, usually not good news.

let's pivot and talk to professor john tailor from stanford. welcome, professor, and thank you for taking the time on this all-important fed day. >> thank you. thanks for having me. >> well, listen, i was going to talk about one of my favorite articles you wrote, i read about every couple of weeks, how the qe is a drag on the economy, but our own kelly evans, she's saying all of the sugar from the fed has caused some in the space to be zombies, to be able to find funding when they should have disappeared from the capitalist landscape, putting pressure on the whole sector. doesn't that really sum it up well, professor? your thoughts? >> it's a good way to put it. when you have these very unusual policies, or the government is involved in ways that they haven't been before, it does have these unintended consequences. i can't speak for that particular example. but that's one of the big worries of the quantitative easing, the markets aren't functioning as they're supposed to. that's one of the reasons why it has tended to be a drag on the economy.

>> a couple of years ago, you wrote another great op-ed that i remember well, i think with mr. graham, talking about, listen, the exit. they say, well, we can hold this and let it run off in terms of our position, which is almost $4 trillion, and this thursday, tomorrow, it will probably touch that 4 trillion. but you talked about, you know, should velocity pick up and inflation pick up or the perception of inflation, they're going to have to start selling that position, and you brought up some consequences of that type of action. can you give us an idea of your thoughts? >> sure. well, i think those worries have proven to be really what's actually happened. just the discussion of taper last spring, may and june, but with bernanke letting the markets roll, that's exactly the kind of thing we were worried about, the exit itself caused the turbulence, that's what you're talking about here. who knows what they'll do. 50% say they'll be starting to taper, 50% say they won't. so that's the very exit problem we're talking about, and, you know, you have long rates higher now than they were when they started qe 3.

>> all right. the final comment, we have about 50 seconds left, it really boils down to this. you and i and many others, several years ago, thought the evil eye of inflation would be closer upon us. but we did couch it in velocity. but all of that aside, if you had to update your argument, what would you tell people concerned about the possibility that the economies of the world dig in nicely, what do you think happens with pricing pressures? >> well, i think eventually, you'll get inflation, unless the fed corrects this. the reason why it's not there now -- and i've always emphasized this, it's a double-risk thing -- it's not there now because the economy is too weak. we've had risks to quantitative easing. the downside, that's what we've gotten and the upside, inflation could come unless the fed makes the corrections and starts to do it as soon as it can, in a sensible way. >> well, thank you. listen, we have five seconds left. your percentage, on whether they taper or not, no that it's important, but what's your percentage that they do? >> i think it's about 50/50 right now. and it's going to be more than

that in january, february. >> thanks, professor. i wish i took your class when i was in college. >> thank you. >> have a wonderful holiday. back to carl, kelly, and the gang. >> you still did okay, rick. rick santelli in chicago. thanks a lot. award-winning singer leann rimes had an interesting idea for the new video, shoot it entirely on an iphone. she'll join us next, so we decided to shoot this tease on an iphone. >> okay, play. >> hi, everyone, i'm leann rimes, catch me on cnbc "squawk on the street" in just a bit. (vo) you are a business pro.

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coming up, hitters week continuing on the half with two big-time short sellers. bill flickenstein and john fichtorn, and leann rimes may have shot a whole video on a iphone, but we're talking with a tiger cub. it's straight ahead, carl, and we tried to give you the segue. >> very nice, scott. scott wapner, and the music video that scott is talking about, you're now looking at, features dancing toys, stop-motion spaceflight and animated fingers of english rock legend, and directed by a former employee of twitter turned vine expert, ian padgett, and shot completely on two iphones. it may be the most tech-forward

music video of the year. joining us this morning from los angeles is country music star leann rimes, one of the artists behind the video. leann, great to have you. good morning. >> thank you, good morning. >> this is a fascinating story for us in the business community. you could have your pick of production values, of directors, why do this this way? >> i just thought it was interesting. my co-producer of the album, spitfire, that i just worked on, daryl brown, he found ian's work on vine, actually, stumbled upon him. and we're, like, wow, a video's never done this way, he does everything on an iphone, edit on an iphone, and we thought what a fun idea, way to create something that no one's done yet. it was definitely a different way to shoot a video for me, because usually it's days to shoot a video. this was 20, 30 minutes of my time. >> leann, one of the things that i find fascinating about you as an artist, you are sort of the last mega artist to launch kind

of pre-internet era for music, back around '96, '97, came onto the scene in a huge way. tell me the new ways to create content, to distribute it, do you view this as really empowering you as an artist, or has it sort of disrupted the way you want to bring music to fans? >> wow. i think a little of both to be honest. but it's, you know, the world is changing constantly. and the tech world, especially. and there's so many more options and ways to bring music to fans, through social media, through apps, through, you know, just anything you can possibly dream up these days we have it. in a lot of ways, it's totally empowering. but when you started, like i did, 20 years ago, it's really kind of -- you have to wrap your head around it and thinking in completely different ways and that's exactly what this video was, let's think outside of the box and have some fun, and i'm so proud of it. >> what's your reaction to what

beyonce did releasing her album? >> i think it's fantastic. as an artist, i love to see kind of what goes on inside people's -- inside artists' heads, you know, when it comes to, especially when they create the song from ground up, and the album from ground up. and i think it was genius promotion. what better promotion than you can get, midnight, releasing an album on itunes? no promotion is the best promotion there. so i found it really interesting. >> but, leann, it's so fascinating, because there are marketers -- all of madison avenue in new york is quivering to hear you say that, because to some extent, it sounds like now with social media and the way you can get access and stuff, you can basically just come out, you know, throw an album and have it serve as the big promotion. you don't need the big, fancy teams. >> it is somewhat true. it really s it is making our whole industry have to -- it does scare everyone. we do have to think everyone. you know, some people will -- some people will sink and some

people will swim. you know, hopefully -- hopefully, you're on the swimming side. but, you know, i still think there's obviously going to be need for big promotion and -- with certain products and certain artists, but i think like beyonce, you already have a name, you have a name that the world knows. and it's much easier process, i think, when you have a name or you're on a show like something like "american idol" where you have a huge audience. that's when it becomes easier for an artist to kind of do something like that. >> all right. leann, you're already so active on twitter, active on vine. i have to imagine your presence on facebook, on instagram is pretty well entrenched. do you have a sense as to where the biggest payback is, which platform gives you the biggest bang for your buck when you're trying to engage with a fan? >> wow. well, for me, it's been twitter. i mean, definitely, i've been more active on that. i'm always answering my fans back. and i think a lot of fans don't kind of get that one on one engagement with a lot of artists or a lot of celebrities.

so i've kind of always in a way prided myself that i do talk to them. i think they're all, you know -- i find that that's the best for me. i think -- i actually don't have an instagram, i've had mine private. i need to go get one. but i love the way you're able to share, you know, vine and on twitter and all of the things, they kind of all are connected. but for me, it's always been twitter that's been the easiest and most effective thing for me. >> you certainly have a lot of equity having been around -- even though you're so young, you've been around for a long time. and you have a lot of experience under your belt. appreciate it very much, thank you for coming on. >> thank you. take care. >> leann rimes, and the song "gasoline and matches" video is out there, shot on an iphone. >> easy marketing is the best marketing. the line of the day. china making iphones available on the network, but it

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welcome back to "squawk on the street." gilead science is on the move. the company says it will seek u.s. approval early next year for a once-daily tablet containing two new treatments for hepatitis c. this is based on new favorable trial data, so the gilliard shares are on the move to the upside.

back to you. >> they certainly are. thank you very much, dom. courtney reports, china mobile and apple are supposed to make the relationship official today, but it hasn't materialized. there's no word on when the iphone will arrive with the wireless carrier. joining us is a tech analyst at ubs, and our own jon fortt. thank you for being here, guys. why does this always seem to be a bridesmaid but never a bride when it comes to this deal? >> the fundamental issue comes down to the fact that the negotiating around what sort of subsidies china mobile will give to apple, right? the communication last night, at least from china mobile chairman was they're still in talks with apple. it's really coming down what sort of subsidies will china mobile give, what apple wants, and our understanding is that's the holdup. >> a huge carrier, obviously, a lot of people view this as a catalyst. how much downside is there if apple doesn't have as much leverage as we think they do in this situation?

>> yes, if you at least look at the numbers that me and the rest of the street have at 6%, 7% revenue growth, from a numbers basis, really no risk, because no one has this built into the models. we all have an expectation, if it happens, you could sell 10, 15 million, sat 3 eps run rate, and the recent run-up, 5-50 levels, it's driven by the hope that the china deal happens. we still think when it happens, not if it happens. the last 25, 30 bucks run-up is driven by an expectation that a deal would get done. >> so given the sentiment in apple, how it seems to be shifting, especially over the past couple of weeks, what do you attribute that to? is that the whole ipad christmas idea, the idea that christmas is holding onto the high end of the market, or what? >> yeah, absolutely. it's a couple of things. one is the ipad has been fairly strong seller throughout the holiday season so far.

5s is doing fairly well, along with it, and a growing expectation of the china mobile deal. so it's been a factor of those three events that have helped the stock rally recently. you know, the tweets by carl icahn for capital allocation doesn't help the story either. >> yeah, that's true. they're doing well on the high end. but jay build coming out, warning falling below street estimates because the casings they make for the 5c aren't selling the way they thought they would, the 5c isn't doing that great. i mean, how important is this for apple longer term if they -- do they have to get the product right? is it about the wrong price point? how important is it that this device, they're just not able to make it work? >> yeah, absolutely, so jay build, along with china mobile, the two negative factors, and they said the demand is lackluster on the plastic casings, i.e., 5c. i think the delta, the issue,

having it for 100 differential, people are gravitate to the 5s, to maybe a bigger price delta to the 5c, to drive more demand, if you will. but i think that's a work in progress, and the answer may just be you need to have more than $100 price delta between the two product lines to drive the price of demand. >> finally, closer to the 50-day moving average than we have been since october. when do you -- when do the goals really need to defend the stock? are we anywhere near that point? >> yeah, i think in the low 500, 5 by 25, the 2014 story, especially if you get the deal behind you. >> all right. we'll leave it there. amit thank you so much for your perspective. >> today is ben bernanke's last press conference as fed chairman, and we wanted to mark that occasion with something special, a drinking game, of course. we'll explain in just a moment. [ male announcer ] how could switchgrass in argentina, change engineering in dubai,

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nondrinking/drinking game, which predicts words and phrases bernanke may use, some more likely than others. now, we know what he likes to say a lot. if you look at this word cloud by zero hedge from a few months ago, the bigger the word, the more often big ben uses it. inflation, unemployment, economic policy, blah, blah, blah. you know, stuff like this. >> in evaluating whether a modest reduction in the pace of asset purchases would be appropriate at this meeting, however, the committee concluded that the economic data do not yet provide sufficient confirmation of its baseline outlook to warrant such a reduction. >> man, i am really going to miss that. now, what else might he say? i sought suggestions from cnbc colleagues and twitter. look for analogies to driving, like cruise control and foot off the gas, and also ultrasafe and vague phrases like in the long run, and cautiously optimistic, phrases that really don't tell you anything, and if we were really drinking, which we are not! here are words requiring a shot, if said. helicopter.

bitcoin. paul giovanni, who played paul bernanke in "too big to fail." one shot, tim teebow, and an even longer shot, yellen is gellin'. if he says that, buying everyone in america a bitcoin. and we might celebrate if bernanke says froth or frothy, and perhaps the riskiest bet, the chairman will say taper and twerking in the same sentence. by the way, what's the over/under on how many times he will say taper, guys, i'm taking you over. >> just the idea of him saying the word twerking, that was my laugh of the day. can you do the end of our show every day from now on forever and ever? >> oh, i -- well -- you want me on tv? really? oh, please. >> great stuff. >> i think the answer is yes. >> jane wells, gotta wait for the press conference to see what he does says, in the meantime,

kelly, 10-year getting close to 2.9, near a three-month high. >> after the five-year auction, didn't see the demand show up, the indirects at a multiyear low, and now stocks turning slightly negative. >> we have to see what happens. let's get back to hillary clintons and scott wapner and the "halftime." >> all right, guys, thank you so much. here's what we're following. get shorty. what stocks to sell in 2014, and why the markets will fall. the best in tech, tiger cub, glen on why now is the golden age of ecommerce, but we begin with a decision that could impact your money. will the fed taper or not, and what will the outcome mean to one of the biggest bull markets in all time. let's get right down to steve liesman who is outside where today's big meeting is happin