keep on fighting until the end ♪ so good morning. i'm becky quick along with joe kernen and andrew ross sorkin. among our top stories this morning, it is official. janet yellen has been confirmed as the next chair of the federal reserve. the senate voting 56-26 last night to approve her. democrats were joined by -- to sit in between them. we continue to watch the markets and various historical indicators. right now, we are down three for three for the first three trading days of 2013. the s&p 500 closing lower every session, making it the worst start to the year in almost a deca decade. the futures this morning, after all of that, at least at this point look like they are up sharply. dow futures up by about 78 points above fair value. the s&p 500 futures up by better than 7.5 points and the nasdaq up by just over 13 points. then, whether on wall street or main street, there is the story that everybody is talking about this morning, and that is the weather. meteorologists are calling it a polar vortex from the north

pole. almost 2,000 cancellations have been made for today for the flights. jet blue is hoping to get back in the air after shutting down completely in new york and boston yesterday. the airline says operations will begin to ramp up again at 10:00 eastern time this morning. it expects to be fully operational by 3:00 this afternoon. in the meantime, amtrak says it plans to operate on a reduced schedule throughout the northeast corridor today. it is cold out there if you haven't been out already. we will have the latest from the weather channel in about 15 minutes. >> thank you, becky. in corporate news this morning, chilly news, actually. sources say executives will be spared in jp morgan's madoff deal. while the bank is expected to pay about $2 billion to settle that criminal and regulatory investigations in dealings with bernie madoff, no individuals at the bank will be implicated.

that deal could be announced as soon as today. some boeing machinists planning to contest a crucial vote on their latest labor contract. the move could extend a long running drama over which state will get to work on boeing's new 777xjet. union leaders argued there would be a need to take a reason to say we don't need to do that and say no formal request for such an action has yet been made. of course, on the other side, boeing quietly threatening that that is the possibility. and take a look at shares of sonic today. you're going to want to watch them because the driving restaurant chain posting quarterly earnings in line with estimates. its four-year forecast roughly announcing consensus and the company announced it will buy back stock in 2014. have you ever had a burger at sonic, joe? >> i'm not sure. >> i've had the cherry lime-ade.

they have one out here in new jersey, as well. >> how about steak and shake? those are in the midwest. there's a place in new york that you can't even get. >> big jack's. >> so you think you're entitled to -- i mean, you walked from your door -- the door man opened it and you walked to the curb and get in a car that -- >> a car that was already warm. >> you don't get in a freezing cold car and have to warm it up and sit on that -- >> no, no, he comes around and holds the door open like this. and then i -- with the common man like everybody else. >> you're not the common folk like us. >> i will admit, i have -- i have a remote starter. you don't have a remote starter for yours? >> no. but i had trouble getting my door to even open. >> i did, too. >> how far is the curb from the door man, sorkin? >> about -- >> so -- >> but you identify with us somehow on this? >> it's challenging to identify

with you, joe. >> when it drops you off here, does he pull a euey and get -- >> i have him come right up so i can just -- actually, the doors clink when i open them to the building. >> i was dreading waking up this morning. i was dreading going out there. >> you have got to go on the deblasio staff. i mean -- >> deblasio shovels his own walkway. >> as you know, i don't wear a coat because you go from -- did you ever see -- the guys in new york never wear a coat, you understand why they never wear a coat. >> those who ride in a limo and identify with the common folk -- it's my favorite thing. i didn't see any of this. i thought florida state would win. auburn must have -- i didn't think they were really as good, but they must have been because they had to come back to win.

the sports story of the morning. it says here as i predicted. i always thought florida state was good, but obviously it could have been either team. won the bcs championship. what an ending. so sad that they do it at night and we couldn't see this. i follow the college football the entire time and then it's on too late. florida state was down four points with more than a minute to play. and heisman trophy winning quarterback jameis winston led the seminoles 80 yards for the game-winning score. i have an idea for the bengals. maybe draft jameis when he comes out. anyway, the go ahead touchdown was scored with just 13 seconds to play. or we could get teddy what's his name from louisville. i think he's coming out. i'm ready to get a new quarterback. you've got your thing on, your davos -- god, i got one just like that, i think. >> what? >> your davos flannel.

while you're going from car to car and the door man to the -- so the driver opens your car door, but the door man opens your -- do you know how to open a door at this point? >> i try not to let jeeves open the door for me. >> you're a common man. you're a man of the people. >> stay in the vehicle, joe. >> you are a man of the people. that's nice. in washington, did you see this? i never look closely at this. >> i know you've got one. >> here is yellen. she was confirmed yesterday. she's carrying a magic wand to make the economy, right? and she's riding on a dove. >> dove. >> and then it looks like the elephant is kicking the donkey's [ expletive ] there sort of. >> what? >> doesn't it kind of look like the elephant is winning? >> the elephant is bigger, i'll give him that. it's a standoff. they're head to head. >> but they don't alternate who

is winning. you think it's a standoff? >> i think they set it up like that. >> but she's riding the lord of the rings. she's on the back of a dove. anyway, you know what? this market will be up 78 today. >> you still think over the next few days we could erase the losses? >> i don't know whether that's going to happen. i'm willing to give the s&p a pass because it did so well. >> the last two weeks of the year -- >> these are future things to look at. it's like a football indicator. >> right. >> so if we don't make it -- >> if we don't make it, that indicator is definitely wrong. if we do make it, the indicator is right. >> exactly. in washington news, a test vote on extending jobless benefits for the long-term unemployment. the measure was delayed yesterday after more than a dozen lawmakers were unable to return to the washington because of the weather. president obama is expected to speak on the topic from the white house east room a little

bit before noon east coast time. and then in other political news, i'll tell you, i watched this guy yesterday and i was going, i like you, governor. new york governor andrew cuomo says he would back proposals to cut taxes in the state by $2 billion over the next few years. cuomo -- >> i don't think he's play along. >> the democrats up for re-election. there are parts of northern new york that have zero taxation. what a concept. maybe you'll bring some businesses back to new york instead of having everyone exit. he says he's trying to change the state's image. apparently someone indicated to him that businesses from time to time to hire people and give them jobs and then these people become mroit employed and then they're able to pay taxes. i wish he would fire up an

e-mail to the white house and say someone just informed me. anyway, a tax commission suggested changes including a two-year freeze on property tax. you guys are way overtaxed. >> yep. >> an increase in the state threshold. lowering corporate taxes and phasing out a surcharge on utilities. this is your democratic governor. >> there's more to do, but keep going. proposals call to cut the corporate tax from 6.5% to 7.1%. and the elimination of taxes for manufacturing firms, as i just said, they're in upstate new york. >> you know what i want him to do? to create new start-up -- nobody wants to start up a new company in new york if you're just like a one-person firm because it costs $4,000. you have to buy an ad in one of these newspapers like the law journal or something to announce that you've created your new company. so nobody wants to -- if you're a one person -- >> why -- >> because they wanted to make it public back in the old days.

>> you can put it on the internet for free. >> exactly. so now they incorporate in new jersey or in delaware or whatever. but we have friends to tried to start new companies in new york and they say you never incorporate in new york for these silly reasons. but these will take care of some of the bigger issues. >> because the way that i watched it last night, they were back to back stories about the universal preschool. and he once again -- i like the way he says it. he's going to ask rich folks to pay a little bit more. ask. that's how you're doing it? you're asking? you're not asking, my friend. >> whoa. >> we're going to ask. can you say no? if you ask and you can say no? and he's using the folks, the obama folks the way he always does. we'll see. i hope. i just -- >> you know, you elected him. i just really want to see what happens there. he's a tall man. >> he's a very tall man.

>> 6'6". >> he has a nice presence. i live in the city and i'm very hopeful. i have to be hopeful. one way or the other. >> i don't know. that first press conference, man. he was ready to talk for six hours. not very much of it was about the weather. >> i was concerned about the strip tease. >> i saw that part. >> i didn't really -- >> he asked how many layers he had on and he literally starts doing -- he thought it was funny, it was not that funny, unfortunately. >> not. you didn't think it was funny? >> no. and you know my sense of humor. >> whoa. wow. listen to this. in global news, two goodyear bosses are being held captive by workers in northern france. the plant's director and human resources chief spent the night inside a factory there that the company wants to close. goodyear has tried to shelter the plant for years now. it is said to be a.m. an emblem

of france's issues. ross westgate is joining us now. what can you tell us about the market there? >> good morning, electricky. we'll talk more about that goodyear story, as well. right now, stocks even stevens decliners versus vnsers. although we're up, when you break that down and look at the indices, it's a slightly different picture. the ftse has been flat since the start of the year. it was flat last year, up about 0.3%. now, the german and french markets, up about 0.6% at the moment. the red inflation tipping down to 0.8% on the year. the core number coming in at 0.7%. now ecb has a records rate around 2%. but if that continues, they may well be forced to take more action and ease policy more than they extend ltros. but this inflation rate is

getting lower may caught them to come up with more action. so we'll have to see what happens with that. but it's certainly worth looking at. take a look at how the sectors break down today, insurance and banks ticking higher this morning. household goods, technology, retail down slightly. but, you know, we haven't got any major moves in either direction. and back to this goodyear story, goodyear executives tried to close this plant in amiens. it's north of paris. these are the pictures we're currently rolling at the moment. goodyear is saying we're not going to talk about the plant and whether we can give better payoff to workers until you release the two executives that have been put in a room there. meanwhile, the unions are saying we're not going to release them until you start talking. so there is a stand yaoff. there are representatives from the french government there. but at the moment, no police

intervention. they're trying to keep things rather peaceful and not antagonistic. but this may go on for a while. boss napping has happened before in paris. but not for a while. it is an amazing thing. >> all right. >> back to you guys. >> thank you, ross, for -- >> it's a crazy story. >> it is. what was i going to talk to ross about? what's the temperature for you this morning? is it metric or something? can you tell us in fahrenheit? what's the temperature over there? >> fahrenheit in the uk today, it's probably mid 50s. >> so the polar vortex hasn't reached you. all right. is it raining? >> no. it has been raining a lot. what we have got is we've got the jet streams. we have been affected. the jet streams have been piling in, so we've had a lot of rain dumped in the uk in the last three weeks. >> how could you tell? it rains there all the time, right?

basically? >> when you -- when it rains a lot, joe, you get to measure the intensity. you know the difference between light rain and heavy rain. >> okay. thanks, ross. we'll see you. coming up, we're going to dive into the world of reality tv with a business twist. the co-host of shark tank, kevin o'leary will join us. >> you go in the water, sharks in the water. our shark.

well, if you think you have what it takes to be a business entrepreneur, our next guest, kevin o'leary, chairman of the ee leery funds of the hit show shark tank. he's author of the book "men, women and money." it's good to see you, kevin. we've been watching you. do you know me? do you know who we are? have you ever seen "squawk box" before? >> you know, joe, i hate to admit this, but i've been

watching you for 25 years. brutal. >> no one has told me that. i was taking a shot. it would have been horrible if you said, well, i've been watching this morning and you're pretty good. that know that's fan tastic. there's something tangible about being able to take a business show mainstream. it's been tried many different ways, success in some, not so much in the other. what is the secret for how you did it? >> you know, it's grown geometrically in the last few years. what are you watching when you watch shark tank? you're watching the pursuit of freedom and that is the core and essence of america. particularly in the last five years when we've gone to this turmoil and financial markets, people are concerned about money, they find a sweet smart in going back and remember whag made this country great in the first place.

starting your own business. that's all that matters. >> you know, i'm almost religious about it, as well. individual freedom the is number one, but economic freedom is number two. and the american dream is involved with having both. and, you know, you mentioned the last five years. admittedly, a financial crisis has something to do with it. but maybe the response to it has made it more important that you get the message out and people can see that it can still be done. >> joe, i'm worried because this was always the country where anybody in the world came to create their own freedom. and i feel we've lost some of that in terms of what we've done .how we've beaten down this purely spirit. this minimum wage debate is insane. can you imagine any way that will help? it's crazy. on top of that, new health care costs.

i see they ever day. it's not good. >> what about just your own self-image as you succeed in starting a business and you're part of the problem with income disparity? here you are, separating yourself from the rest of the pack doing exactly what you're not supposed to do in a country that we're now hearing almost on a daily basis that you sort of have to feel guilty about succeeding. >> i think what we have to do, as a society, is think back and ask ourselves, where does all of the great things we provide in america come from? it comes off the back of the taxpayer. the government doesn't create anything. it's the man and woman starting a business that pays tax that provides everything. is and if we forget that, which we have, we've vilified our financial leaders, we call them fat cats, that's completely insane. >> are you on -- >> which network are you -- how did you get earn the radar? did their executives not watch

the stuff you're spewing? what, abc? what are you right now? >> listen, i'm just telling the truth. >> i know you are, but apparently management didn't get -- the executives, the programmers didn't get a whiff of this cutthroat capitalism that you're pushing. >> joe, we have 40,000 applications on shark tank, all small businesses, all have the american dream. you should hear their stories. our leaders and politicians should talk to them. >> wait, 40,000 applications for people who want to come on .show you their ideas? >> yes. and it grows every year. there's a desire to be successful. people realize shark tank is a business. take a commodity like cup cakes. there are thousands of cupcake companies in the world. i find one in boston doing $15,000 a month in cupcake sales. one eight-minute session on shark tank, the next month they

sold 360,000 of cupcakes. last month, december, they were still clipping at 260,000. this is a multi million dollar business in cupcakes. that's a measurable evidence of the power of what shark tank can do to any small business. >> let me ask you a question. i don't know what the right answer is, but i do know this. i was reading an essay yet yesterday by a fellow talking about he was paying $2.25 an hour back in 1963. inflation adjusted today, those numbers would equate to something on the order of about $16.50. minimum wage today is not near $16.50. i want small business to succeed. i want our economy to succeed. but i do wonder whether there is a discrepancy in what you do about that. >> and if you do believe -- and this is a fundamental issue for every one of us. if you believe it's easier to leave the money in the pocket of an entrepreneur and a business or is it better to tax it?

frankly, a minimum wage is a form of taxation and put it through the meat grinder in efficiencies of government and feed it back to the economy. i argue as an entrepreneur and an investor that one-third of every dollar we accumulate through taxation is completely wasted through bridges to nowhere, the interest of politicians and -- >> i agree with you 100% on that. on that particular point, i agree with you completely. but a question remains whether more money has been made at the top, which i think is true over the past 30 years than at the bottom and what you do about that. and i don't know what the answer is. >> welcome to america. that's what we're supposed to do. you're suppose to aspire, to achieve, to become one of the 1 %. that's what drives this whole economy. i think we vilify this. ite a huge mistake. i'll tell you a story that to me is very powerful. i was in san francisco airport and a 9-year-old girl came running up to me, her mother chasing me saying what's my daughter doing going after that

old guy. and she stopped me and said i want to go on shark tank. and i said, why? she said i want to be free. at 9 years old, she figured out, she assimilated what happens through the creation of wealth and your own personal freedom. and so anything we do to try and vilify financial leaders or aspirations for wealth, i just think it's really unhealthy. and that's what's happened. >> on that score, we're 11 00% in alignment. i think the vilification of wealth in this country is wore offic. >> you can't connect the dots on where we go $16 on minimum wage -- >> i don't think we should go $16 on minimum wage. >> that's price control. >> there's a -- and the question is what do you do about it? >> it hasn't happened because of not raising the minimum wage and it's not cured by raising minimum wage. >> but i don't think we should velly phi wealth or the creation of these start-ups.

>> andrew has the president and the whole democratic party on his side. >> why isn't it the ability of the market to determine what minimum wage is? why do you or i know what that should be? don't you think if you raise the wage to $16, there would be a lot of people losing their jobs. where did this idea come from in the first place? let's examine the fundamentals of why we need a minimum wage? the market takes care of it. >> that's an argument against unions, that's an argument against -- >> yes, absolutely. >> but look, i agree that you can have a very strong market economy, but you have to have protections on the other side. >> what protections do unions provide at this point without -- >> i mean, if you stress that -- >> no one said that. but with civil service laws, you don't have workplace conditions. >> i agree. >> there's a reason that private unions have dropped to 7%. 7%.

>> let me ask you this -- >> the only place you finance is in the public sector. >> you would argue this will hurt jobs on the lower end and makes companies less competitive. >> yes. >> and they'll take it out somewhere else. >> if you look at the social unrest this causes, would you say okay, let them do this, not a massive jump on things, if you allow a slight increase, would you take the good will that that would buy you from the other side? >> i don't know what -- i don't know what the right number is. just give them a bone when you know it's not going to help? i see the outcomes that they try to orchestrate in europe. >> i don't think -- >> and i see what it's done to economic progress. >> i agree that it's not -- >> but instead of outcome, do opportunities, not outcome. >> they talk about how it's going to automate a lot of things and that could certainly hurt job creation. >> no, kevin, i need you -- >> there's already minimum wage there to allow -- >> becky, what i would want to do is i would love to bring ten entrepreneurs that we meet on

shark tank and come and tell their stories and listen to what they say. i swear to you, our own leaders aren't listening to them. these are the people that create the next -- >> what you guys are doing is fantastic work. that's why we are so excited to have it here on cnbc, too. it's something we'll get to watch every tuesday night. we need to hear more about these. >> thousands of jobs are being created. it's not going to be helped by going up $2 on minimum wage. >> i want these guys -- >> and how much of the population does -- >> i love a great entrepreneur. >> yeah, yeah, okay. >> and i'm just trying to figure out how you make the whole thing work. >> kevin, thank you. >> and i don't know -- >> kevin o'leary, thank you. "shark tank" tonight at 7:00 p.m. you'll be able to talk. anyway, tonight at 8:00 p.m. eastern on cnbc. when we come back, the big show on the markets. so far, 2014 has been a hostile environment for equities. so will that change when the markets start to get more data

points? that's coming up right after this. .find out why t-mobile aes o outspoken ceo is getting a new title, chief party crasher. that and more squawk right after this. let me just put this awa. ♪ could you teach our kids that trick? [ male announcer ] by not acting that way. it's how edward jones makes sense of investing. everything looking good. ♪ velocity 1,200 feet per second. [ man #2 ] your looking great to us, eagle. ♪ 2,000 feet. still looking very good. 1,400 feet. ♪ [ male announcer ] funny thing happens when you shoot for the moon. ahh, that's affirmative. [ male announcer ] you get there.

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geico. fifteen minutes could save you fifteen percent or more on car insurance. good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. making headlines, a slump in trading is said to be threatening wall street's biggest profit engines. "the wall street journal" has this as the biggest story. the industry proposes its 11th

trading decline in 15 quarters. executives warn that lackluster markets could lead to year over year declines. but these are the markets that they're talking about. it's almost like the equity markets, even though they're up, they've haven't really taken the baton. commodities with a ten-year super cycle which totally fizzled out. currency trading is down. so you're going to have to -- sooner or later, you're going to have to learn how to manage wealth for clients and do it in a proper way. and that's how you're going to make it. you're not going to be able to do this any more, taking your cut. >> unless there's a lot of volatility returns. the fed has tamped down a lot of the xhvolatilities which has probably helped the commodities at bay. >> thanks should get back to doing what they're supposed to do. like we had merrill lynch on.

get back to where you take clients, try to prepare for their retirement, gather assetes and try to do what's best as far as asset allocations for your client. instead of getting one every trade or whatever. the u.s. department vacancy rate falling to the fourth quarter. a sluggish job market and weak wage growth help keep growth at 0.8%. an industry reports note this is well below the level usually associated with such low vacancy rates. and high demand is putting a premium on recreational marijuana prices in colorado. that's suggested pot is selling for an average of $400 an ounce in the state, twice the $200 charge for an average ounce of medical marijuana. friends that i knew in my past -- >> friends you knew? >> friends i knew in my past, years ago, told me that they had remembered prices at $300 .$400

an ounce. that does not sound that ex object tantly expensive based on in the past. but you know that over the years -- >> prices will come down. >> a lot. but i'm not sure how i feel about this whole thing, seriously. >> does it bother you? >> what bothers me is that -- what bothers me is that, number one, i don't think it's good for your lungs, number one, because it's not even filtered. and number two, you can't just -- there's a lot of people that drink because they like getting drunk. but you don't have to be drunk to drink. >> what kind of society does -- >> friends told me that if you took a puff -- one puff or two, it wouldn't have an impact. >> not of this $400 stuff, my friend. >> it's 100 times more powerful than -- >> in my past, friends in my

past. >> exactly. >> there's a story last week saying because this is pot you have to pay taxes on, there are some that can still get drugs cheaper from their dealers and not pay taxes on it. >> that's the best argument for doing this is the whole underground you get rid of and increase your tax head. >> but i forget what it was saying, it's cheaper for me to go through -- >> do you want it to be legal or decriminalized? >> you still have all the unsavory characters involved in the business and people get rubbed out and all that kind of stuff. it would be nice to just -- i don't know. let's take a look at the markets this morning. you will see that the futures after three down days for the markets are indicated sharply higher. right now, the dow futures are up by 63 points. you can look at the s&p futures up by just over 5.5. crude oil this morning,

yesterday crude oil was down to a one-month low of 93.41. this morning, up higher at 93.84. yesterday, it was at a one-month low. the markets stumbling to their worst start in 200 5. joining us now is peter bain. also, j.j. kennahan, chief strategist. pet peter, when you see what happened for the first three trading days of the year, do you worry about it? >> no. the first three days of the year are a giant shrug. we had a strong 2013. it is already fine. i think the jobs data out of germany was wrong. a little nervousness about the services industry, reduction in growth, not shrinkage, reduction in growth, but manufacturing was good and i think we're going to see solid economic data. i think we're fine. i don't think this is an issue at all. what you said earlier, if we make it back in the next thee

days, the indicators are right and if w don't make it back, the raters are wrong. >> joe, how about on you? >> if you look at the first five days historically is what matters. historically, if we're down the first five days, we have just about a 60% chance of being down for the year. and if we're up the first five days, we have just under a 75% of probability for being up for the year. so those are kind of interesting. again, people say they may not mean stuff. but creating options in the past, i always look at probabilities. with that being said, becky, we came off a key support level on the asx. many of the traders down here, myself included, believe we can go up to 1850. we may have a chance to do it by the end of the week if the employment report is solid. with that all being said, i think this employment report will be more watched because it's the first once since we

have the official announcement that taper is going to begin, even though as we've talked about before, qe is still truly in place. it's just a small taper. but any number involving jobs or housing is now going to have an extra effect and everything is saying it's because of the taper of the fed or they need to taper more. >> peter, how about you? are you concerned about the taper or is this a situation where you think the economy is picking up steam and the fed can hand the baton off? >> the fed can hand the baton off. and i'm speculating on this one, but i've been thinking about this over the holiday. i think there was some intent behind bernanke's decision to go ahead and begin tapering before the beginning of the year. i was in london planning for a 2014 cycle and we were meeting with folks in south africa, latin america and europe. none of them were as bullish about the u.s. economy as i was and as our team was. it turned out i think we were

right. others outside the u.s. are beginning to see that. i think you'll see capital flow this direction. i think bernanke was sending a message to the administration and congress before the debt ceiling debate, guys, we're going on record, the economy is handle tapering. that leaves it to you all to screw this up by messing up the debt ceiling conversation. i think he wanted to put some pressure on them and i want he wanted to get out there before yellen connecticut firmed yesterday. >> do you think there was a message that signals people move your assetes from overseas to here? i don't think it's a signal to move to here, i think it's a signal to congress don't screw up the debt ceiling debate. what i'm hearing from my colleagues over in europe and asia is, wait a minute, you were right. your economy is a little stronger than we were giving it credit for. we need to take a look at our allocation again. we were probably underweight u.s. last year. and i think that can help our

markets this year. >> very quickly, you think this market has a little bit of room to run this year. what is your end of the year target? >> i would say, becky, right around 1900. >> okay. great. jj, thank you very much. we appreciate it. peter, thank you for coming in. >> i love that name. can we just introduce you as bain? >> you can always introduce me as bain. that gives me a concerning dennis hopper reference, as well. >> oh, yeah. don't look at me! don't look at me. >> that's right. let's be clear on that one, joe. >> i watched the hoosiers yesterday. >> love that movie. >> dennis hopper was nominated for that. >> scary, though. >> can you stick around? do you know movies and stuff? >> yeah, sure. movies, football. >> football, too? >> sure. >> coming up, how you get thrown out of a at&t -- how do you get

thrown out of an at&t party? a blockbuster meltdown, hollywood director michael bay deals with alien transformers big budget films, but we'll show you the one thing he can't deal with, right after the break. >> announcer: coming up, did this weather catch you by surprise? byron wien has even more surprises that should give investors the chills. "squawk box" is coming right back. welcome back. how is everything? there's nothing like being your own boss! and my customers are really liking your flat rate shipping. fedex one rate.

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show has always been known for unveils. last night, samsung was holding an event to showcase its new bajts. michael bay, the director of transformers and other action blockbusters, when his teleprompter didn't work properly, things unraveled rather quickly. >> what i try to do as the director, i try to -- the type is all off. sorry. but i'll just wing this. excuse me, i'm sorry. i'm sorry. >> okay. ladies and gentlemen, let's thank michael bay for joining us. >> we cut out the best part. >> what was that part? >> the best part was the moderator goes, don't worry about it, just explain to us in your own words what you're trying to do. and then it was deer in the headlights and he said how about it's a curved screen. what can this curved screen do for your movies that you usually

make. >> it's not easy. >> just talk to me about how you make movies. and just total fear. >> wind the camera. >> we take it for granted. it's in addition not easy. >> we've been doing it a little while. >> the first first time i was on, too, you were there. the first time i was on, i went -- >> there it is. this is stuck right now. >> what do you do when those don't work? >> you're leaving? he's leaving because the teleprompter is not working properly. >> okay. >> we'll pick it up for him. in other notable ceo buzz, t-mobile's ceo worked his way into a party that at&t was throwing for its developers. he told rico that he wasn't looking to make a scene. he was insisting that he wanted to see the company's act. at&t didn't agree. they asked hotel security to have him removed. he was wearing his t-mobile

shirt under a leather jacket. we'll re/code's cara fisher about it. coming up, how simple changes can improve corporate culture. wien is going to give us the information for corporate leadership. aflac! aflac! got 'em. ♪ yeah, he's clean, boss. now listen to me, duck. i have an associate that met with, uh, an unfortunate accident. while he's been incapacitated, somebody's been paying him cash. now, is this your doing? aflac? now, if i met with some such accident, would aflac pay me? ♪ nice. this is your stop. [ male announcer ] find out what aflac can do

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welcome back to "squawk

box." how can simple changes in the corner office dramatically improve corporate culture? our next guest sat down with 200 ceos to hear their strategies for successful leadership. with us now is adam bryant. he's the author of "quick & nimble," lessons from leading ceos on how to create a culture of innovation out today. good morning, adam. >> good morning, andrew. >> here's my big question for you. the big takeaway i had in the big is what you call adult conversations, the feedback mechanic six with which good executives have good conversations with underlinks and bad executives don't. >> right. >> i think this has got to be the toughest thing that goes on in management, period. nobody likes to tell the other person you're not doing the right thing. so the question is, how do you tell the other person that they're lousy without telling them they're lousy? >> i heard a great expression.

don't go over the net. when you're giving tough feedback, don't make statements that make summings about the other person's motivation. you talk about how you feel and how -- and your take on things rather than saying you're lazy, you're not smart. that's what makes the conversations difficult. i think people avoid these conversations. >> i feel like you're lazy. >> that might be telling. >> you're lazy and you're not very smart. >> you don't show up at work or you know, you're not responding to my e-mail or not doing this. >> those are simple. >> those are simple ones. tougher ones is probably somebody who is strong on some levels and has weaknesses. >> every strength at some point becomes a weakness. people go out of their way to avoid these conversations. people rationalize reasons not to have them. they'll say let's wait nine months and bring it up in their performance reviews. having these conversations is like stepping into a knife fight in a phone booth. >> you interviewed over 200 people for this book and columns.

is there one person that floored you one on a particular issue or generally. >> how do you hire, what questions do you ask? i hired tony sharazappo. on a scale of one to ten, how weird are you? >> can i answer that? >> of course. >> it's not on the one to ten ranking. >> another one he has, what is the biggest misperception that people have about you? turns out that's just a setup. the punch line is once you answer that he says what's the difference between perception and misperception. a lot of these questions are around self-awareness. >> weirdness scale, one to ten, does he want you to be weird or not weird? >> most people probably come in between four and seven. if somebody goes 12, he probably wants to drill down on that. if somebody says 1, he probably wants to ask about that, too. the question is smart. it acknowledges that everybody is a little bit weird.

>> the smart answer is 4 to 7. i'd say 5. >> the smart answer is, you have no idea. >> zappos is a weird culture. >> coaches, can they tell you anything? kansas city, the eagles, ceos can really mack a difference, which is hard to believe sometimes. >> i think leadership is huge. you get the right leader it can be a game changer. >> it really does matter. >> yes. >> which almost once you acknowledge that, then you get the ceo pay and you realize, wow, maybe some of these guys are worth some of the money they make, right? >> you want to comment on that? >> i do. one of the takeaways from the book is i think one of the most important things ceos do is create what i call a simple plan. because i think one of the biggest problems that can top all great companies is silos. you get different divisions propping up to pursuing their own agenda.

the moment ceos earn their pay is take a complicated company, say these are the three things we'll pursue this year. these are our goals, this is how we'll measure them. everybody can feel like they have a hand. they have clarity about what their work does to help those goals. >> real quick because it's practical for everybody. e-mail. your best ceos don't use it for anything complicated at all. >> they understand whenever there's anything high stakes to avoid it because the key phrase to me as stuff gets lost in translation. >> pick something up that's not there, like oh, man what is he saying there? >> you read tone. you misread it. a lot of ceos have a lot of rules about e-mail, just don't do it. if anything is high stakes, have the conversation in person. >> adam bryant, thank you, the book, "quick & nimble." >> do you see him there? is your pod at "the new york times"?

>> unfortunately, not. >> it's a football throw away. >> it's a football throw away. >> is there a cafeteria in the building? >> there is. >> that's nice. >> the building with all the bars on it, right, the capitalists out? >> yes. >> they're not welcome here. >> we're trying our best. thank you, joe. trying to keep you out. >> exactly. don't worry, i won't be down there. when we come back, we count down byron wien's top ten surprises for 2014. open to innovation. open to ambition. open to bold ideas. that's why new york has a new plan -- dozens of tax free zones all across the state. move here, expand here, or start a new business here and pay no taxes for ten years... we're new york. if there's something that creates more jobs, and grows more businesses... we're open to it.

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welcome back to "squawk box," another chilly day for investors.

are the bulls starting to get caught up in the polar vortex? blackrock's russ koesterich gives "squawk" his forecast for equities. ready for some surprises? wall street veteran byron wien is out with his top ten surprises for 2014. and "squawk" is counting them down. plus, it's "shark tank" tuesday. >> it's all about what? >> money. >> are you ready to get back in the water? "squawk box" begins right now. good morning, everybody. welcome back to "squawk box" here on cnbc. i'm beckry quick along with joe kernen and andrew ross sorkin. futures are indicated higher after three days of declines for the first trading days of the

year. the dow futures up about 66 points above fair value, s&p value up by close to 6 points above. the nasdaq is up 11 point above fair value. the ten-year is still below 3%. too late for joe's bet. >> we'll see. how many basis points away? that's eight basis points away. >> your point was accurate. i do give you credit for your point. >> yesterday i was arguing with people. we've been hearing rates are definitely going up, definitely going up. because of inflation? oh, no there won't be inflation. why are rates going up. they're going up. because the fed is going to pull all their -- >> hoping you'll sign your mortgage now. >> is that why? >> i don't know. >> we'll see. this is the slam dunk that we're going only above 3%. >> if i was signing a mortgage right now i wouldn't get an adjustable rate mortgage, though. >> i don't know. i still might get a seven-year.

i don't know. >> really? >> maybe i'd go 30. i'll be 88, although i plan on -- >> you think rates are not going up. >> i'm going to be 88. >> in seven years? >> yes. i'll be 88 when the 30-year would be up and when i'll be signing up for my next 30 years. if i'm going to do a full 60 years -- >> he almost collected the full 30 years on that. >> there was a guy at the golf club who bought new clubs when he was 93, this doctor. brand new golf clubs at 93. >> that's the right way to look at it. let's give you a lit bit of what's happening in the world with the morning headlines. there is extremely coral weather. it continues to wreak havoc with airline schedules. more than 4,400 flights were canceled yet. according to flight aware, more than 2,000 will be canceled today. jetblue is gradually assuming

their flights today. we'll have more on the cold snap from the weather channel in just a few minutes. the senate has confirmed janet yellen. she will take over for ben bernanke on february 1st, although the change is not expected to result in any dramatic shift in federal policy. also the senate has a high profile item on its agenda today. it is expected to vote on a bill to extend jobless benefits for 1.3 million americans that vote was expected to happen yesterday but harry reid had the vote delayed amid doubts about whether the bill had the 60 votes iness to stop a republican-led procedural road block. part of the problem was the bad weather, which prevented a number of key senators to make it to capitol hill for that vote. corporate news this morning, samsung posting fourth quarter profits below estimates. the reason why, a huge bonus payout. they handed out an estimated $1

billion in bonuses to mark 20 years since its chairman set it on the road to becoming a global behemoth. a case of boss snapping in europe today, two goodyear bosses are being held captive by workers in northern france. the plant's director and human resources chief spent the night inside a factory there that the company wants to close. goodyear has tried to sell or shut the plan the for five years now. the situation is said to be an enblem -- or enblematic. i remember when eddie kidnapped the boss because he didn't give bonuses. eddie takes the rv over, brings him back, gets in a lot of trouble.

our guest host for the next two hours, russ koesterich, ceo at blackrock. >> thanks for being here. >> mid-to-high single digits for the s&p. okay. we got that. that's what everybody is saying. let's talk about what you think the actual corporations are going to be able to do in the economic environment. are profit margins at a peak? will earnings per share rise at certain number that you can give us? then we can make our -- no one knows what the market is going to do. no one has any idea. all you have to do is say something at the beginning of the year that you'll have to defend at the end of the year. the easiest thing is to say mid-to-high sing the digits. >> let's start with the fundamentals. the fundamentals are you'll have a decent year for earnings. this is probably what the advantage is for the market.

unlike 2012 and 2013, you'll have a better economy. your question about margins, i think the reality is, the environment where rates stay low and wages are stay low, margins stay relatively high. you kansas 9%, 10%, 11% earnings growth. the problem next year, what happens to multiples? most of the gains you have in 2013 came because the market multiple was rising much faster than the market. that's going to be tougher to do in 2014 to me. that's the big headwind. >> although, what do you call the market multiple right now? and what are you basing it on? >> the market multiple is on trailing basis about 17. >> okay. >> us cycle lick -- cyclically adjusted number, it's 10. >> what's the historic multiple at 2% or 3% rates?

>> how many observations do you have? >> what do you mean? >> there haven't been that many instances in the past -- >> 17, what's the average multiple. >> the average if you go back to 1954 is 16.5. now you have an environment on stocks, trailing, they're moderate. >> at the end of bull runs what are multiples typically. >> in 200044. >> average. 17 is not expensive. >> 17 is not expensive. >> especially on trailing. >> which is why stocks can probably go higher. it's giving you a flash -- >> you said 9% or 10% in profit growth. i think that would be a given if you stay at 17. if you get 18 or 19 you could be up 20%. >> right. which is why i get to high single digits. >> 20 is double digits. >> i don't think you'll get the extra multiple expansion or 20% profit growth. part of the problem is you'll have to deal with the earnings this year and you're probably not going to get that big tail

wind from multiples going from 17 to 19. possible, less likely. >> what inning are we in? are we in a bull market. >> we're in a bull market. >> what inning are we in? >> call it the 6th, 7th. >> in the 8th and 9th innings, multiples should be above 20. >> depends on the market. in 2007, multiples peaked at 18.5. >> which year. >> 2007. >> what happened in 2007, did something come and stand in our way? some black swan. >> market peaked in october of 2007. >> i think that, if you look at the stages, you know, the denial stages and then being more comfortable and then getting a little bit excited and public starts getting in and then you start to the final stages where everybody thinks you just buy and hold and you always will make money you end up with a higher multiple than 17. >> i think you'll get a higher multiple, whether or not you'll

get to 20, 25, that's a stretch. what gets left out some of the time, you have slower growth. if i have an environment where growth is, let's call 2.5, 2.75, the multiple in that environment will be lower than back in the late 90s when you're printing 3.5, 4, 4.5% growth. >> what are you guying, s&p, large caps, small caps. >> buy large caps. >> why? >> one, they're cheaper. you have less good news discounted into the earnings estimates. the other thing that worries me about small caps, small caps have historically been the big beneficiary when monetary conditions are loosening. when that starts to change, typically what happens is the large and the mega caps remain resilient in terms of evaluation. small to midcap tend to get a haircut as you have less monetary liquidity. >> all right. and you just farm out individual names to all your minions or do

you like stocks. >> generally i don't call them minions. >> they do on "despicable me." which is a universal studios picture. >> as far as sequels go, sorkin? phenomenal. >> billion dollars, right? >> phenomenal, phenomenal. what do you call your minion, the little people. >> the people making the money? portfolio managers. >> the people that pick the stocks. did they give you some names. >> i'd focus on the sectors. >> what's your favorite sector. >> we like energy. we like technology. i'd be cautious on the more defensive sectors, probably also you're hearing from other people. the problem is people look to places like utilities and staples with the notion being, all right, we might get volatility. depends where i get the volatility. if it's happening because rates are going up, those are the worst places to hide. >> all right. >> okay. are those penguin cuff links?

>> those are penguin cuff links, thank you for noticing. >> why? >> who doesn't love penguins, birds with tuxedos. who doesn't love that. when we come back, are you ready for a fee surprises in 2014. byron wien has put together a list. we'll couldn't the them down. plus, it's "shark tank" tuesdays on cnbc. that's tonight at 8:00 p.m. eastern time. tdd#: 1-800-345-2550 trading inspires your life.

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welcome back, everybody. checking the futures this morning, you will see after a rough start to the year, it does look like the futures are indicated higher this morning. dow futures are up by about 70 points above fair value. s&p are up and nasdaq is up by 12.5 points. oil prices are rising after five straight declines. you can see right now crude oil prices are up by about 55 cents to 93.98. gold prices are trying to extend gains for a sixth straight session. traders note the funds are rebalance weightings of gold at the start of the year, right now, 1,238.09 an ounce. bankruptcy filings dropped

by 24% last year. the american bankruptcy institute reports that bankruptcy by individuals and businesses combined fell by 13%. for the last 29 years our guest has been announcing his top ten surprise predictions for the year ahead. joining us right now for the hour with his top ten surprises for 2014 is byron wien. he is vice chairman of blackstone advisory partners. thank you so much for coming in today. >> always a pleasure to be here, becky. >> great to have you here. we should start off with taking a look at 2013. 2012 was a good year for predictions. 2013, not quite as strong. >> that's very generous of you, i would say. >> let's take a look at, your biggest thing i think was looking at the direction of stocks for last year. you thought corporate profits would be trimmed somewhat. >> i think my view on the economy wasn't too far off. >> right. >> i thought the economy would grow at a feeble rate. it grew at 2%.

picked up momentum at the end of the year. we'll talk more about that. i think profits would actually suffer. if you look at net income, it did suffer. net income was up about 1%. but because of share buybacks, profits were up about 4% for the s&p. >> let's talk about what you think for this year, though. you do think this is the year that the economy really kind of takes off. >> it was picking up momentum at year end. you saw that in durable goods, over a millioning starts in november at an annual rate. you have higher level of consumer confidence. i'm optimistic that you'll have better earnings and as you were talking earlier in the show, i think the price earnings ratio can actually rise. one of the things that didn't happen and probably won't happen again this year, is that profit margins didn't come down.

they're peaking but they could stay flat. >> that translates into what when it comes to the market? you think this is a dickensian market. >> that means the best of times, the worst of times. i think it is vulnerable to a short-term correction at the beginning of the year. the market will really pick up speed later on in the year when some of the negatives clarify. >> some of the negatives such as? >> affordable care act gets better. the computer glitches are resolved. more young people sign up. the general political environment in washington improves. >> byron -- >> i into yknew that would arou, joe. >> your earlier comment about being in the snow is what aro e aroused me.

let's not get into that. my real question has to do with whether we're way ahead on the s&p. we're at 1,826. we're 22 points away, which is unlikely in two days but not impossible. some ways we can do that. byron, you were expecting last year and, as you said, you were much more right on about the economy itself than the market. a lot of people say it's because of fed. but even though you see the economy improving this year, at 1850 versus you thought we'd be at 1,400. are we 450 points above fair value? >> no. >> do we need to go back there -- do we need your forecast? >> we don't need to go back. >> do we need to go back to 1600 or 1700? >> i said we could have a 10% correction. >> that wouldn't get us anywhere near where you wanted us to be

last year. >> you're argument on the correction is that we'll see it in first six months. by the end of the year we're back to where. >> up 20% from december 31st, 2013. this will be a 20% year. >> 20% year with a 10% sort of -- okay. so if you're an investor, you do what right now? >> if you're an investor? >> cash out, wait for the 10% correction to show. >> if you're an investor you don't do that. if you're a trader that's what you do. >> good answer. >> if you're a trader you would be liquid now and wait for the dip. you rarely have a time when investors are as optimistic as they are right now wihere the market doesn't have a pullback. >> think about what may drive that pullback. do you think it will come from too much or too little growth? is the pullback going to happen because the bond market overshoots or we get a patch of disappointing economic numbers? >> i think the ten-year will surprise you. that was one of my ten

surprises. i think everybody will say the ten-year will go to 3.25 or 3.5. i think the ten years can go to 4%. i wouldn't be surprised. look, the normal, if you look back over the ten-year yield over 50 years, it's 6%. you know, we're playing with the house money here. >> it could more than double and still not be -- >> right. if you look at the way the market performs, as long as interest rates stay below -- or the ten-year stays below 4%, multiples can actually expand. last year the ten-year started the year at 172 and ended at 303. and during that time, the market was up a total return 32%. >> which you hadn't gotten negative. because you were so right for so long. there was a guy in the '80s, i don't remember, one of the big sayers in the '80s. he had been bullish. it hit him when he was looking around, wow, this market is too

expensive. he came back and put up -- it doubled from there. you should have never gone bearish last year, because you were on a roll. being bullish. now calling 1400 last year for the end of the year and we're at 1850, that's a total -- then 1900 in gold, totally wrong on gold. >> yes. >> we were sympatico. >> i've been doing this for 29 years. >> you can't always be right. >> i've had good years and bad years. fortunately i've had a lot more good years than bad years but i have had bad years. last year was a bad year. >> ron barron, he looks at earnings, the multiple on 2014 is 14.7. >> that's -- yes, 12-month trend. >> he says fixed income guys are always too bearish. >> all right. i'm global macro. i don't know where that puts me.

>> i don't know if that's bearish, bullish. >> we're going to have more of those surprises. byron is with us for the rest of the hour. we'll talk about what this means for the dollar and other surprises when we come back. coming up, we'll also talk about cold as ice. he was spending some time out there. i won't say what he was doing outside. plunging temperatures forcing flight cancellations across the country. we'll get an update on weather when we come back. aflac! aflac! got 'em. ♪ yeah, he's clean, boss.

now listen to me, duck. i have an associate that met with, uh, an unfortunate accident. while he's been incapacitated, somebody's been paying him cash. now, is this your doing? aflac? now, if i met with some such accident, would aflac pay me? ♪ nice. this is your stop. [ male announcer ] find out what aflac can do for you and your family... aflac? [ male announcer ] ...at aflac.com. there's nothing like being your own boss! and my customers are really liking your flat rate shipping. fedex one rate. really makes my life easier. maybe a promotion is in order. good news. i got a new title. and a raise? management couldn't make that happen. [ male announcer ] introducing fedex one rate. simple, flat rate shipping with the reliability of fedex.

♪ you're as cold as ice ♪ you're willing to sacrifice our love ♪ plunging temperatures across the nation this morning. let's get to julie martin in atlanta with more on the big freeze. you can't be in atlanta dressed like that. >> you know, i've never had to break out this kind of gear to be in atlanta. usually more places like minnesota or wisconsin. this morning, it is definitely necessary, joe, here. we are at 6 degrees. it has not been this cold since 1996 in the city of atlanta. and the wind chill is minus 9. so definitely needing the layers today, needing to bundle up, as you can imagine, a lot of businesses are closed. school is out for the kids here

in the metro area and in the suburbs where we are going to be dealing with temperatures not getting much over 20 degrees throughout the day today. and really not going to get above freezing here in atlanta until thursday of this week. so the city of atlanta opening an emergency shelter as a result of all of this and people here just kind of shaking their heads at this bitter cold. back to you guys. >> wow! julie, thank you. we thought it was cold here but we're used to dealing with colder weather. that must come as a super shock to people there. >> yes, absolutely. >> all right. get inside. stay warm. we'll talk to you again soon. thank you, julie. more when we come back more surprises from byron wien as he mixes politics into the mix. hollywood director michael bayh steals the show after a teleprompter malfunction. we'll get a preview from

rico's cara swisher a little later in the program. my watch! [ male announcer ] it pays to double check, with state farm. over the pizza place on chestnut street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i-95. ♪ this magic moment it is the story of where every great idea begins. and of those who believed they had the power to do more. dell is honored to be part of some of the world's great stories. that began much the same way ours did. in a little dorm room -- 2713. ♪ this magic moment ♪

about the most track-tested is ever... but the truth is... we don't have to. the experts have spoken. now it's your move. ♪

welcome back to "squawk box," everyone. in our headlines this morning, investors are more focused on tomorrow's fomc minutes and friday's december jobs report. they will have one economic report to consider today. we'll get the trade deficit for november at 8:30 eastern time. it's expected to come in at $40 billion. that is down slightly from october. some boeing machinists plan to contest the recent vote that approved a new eight-year labor contract. that pact was narrowly approved, a 49-51% vote. those workers have indicated they may seek a recouldn't the or new vote. even though the contract assures that boeing 777-x will be built in washington state, it also replaces worker pension plans with a defined contribution plan. and jp morgan chase officials won't be penalize as part of a settlement being negotiated with the government. our scott cohn reports that

no individuals will be implicated in the expected $2 billion settlement which could be announced as soon as today. it's time for more economic and political predictions for 2014 from byron wien, the vice chairman of blackstone advisory partners. i want to get to number three. the strength of the u.s. economy relative to europe and japan will allow the dollar to strength strengthen. >> right. >> how solid are you on that. >> very solid. >> that's going to happen because. >> because the u.s. economy will grow at better than 3%. >> that's not a surprise. that's not one where you can say i wanted to go against the grain. i think than consensus. >> 2.5 to 3 is definitely consensus 3 plus -- >> he's say exceeding. >> he says 1.25 against the

euro. >> i want par. that should be at par. >> it probably should be. >> a couple other ones, shinzo abe keeps printing money like crazy and the nikkei rises in a major way. >> right. but then there is a correction. because they are increasing the sales tax from 5% to 8%. there is a peaking in the work force and the population is aging. i think japan could have a serious correction later in the year. >> that's the only place people are getting older. >> people are getting older everywhe everywhere. people are getting older in china. >> the make-up, the demographics. >> yes. >> talking about china, you say, this is number five, you say the growth rate in china will go down to 6%. >> right. i don't think -- i haven't seen that number from anything. >> that would be a surprise. >> yes. >> let me ask you about this one. emerging market investing treacherous except for mexico and south korea. what happens in 2014. >> mexico, first of all the u.s. will do better. that's good for mexico. mexico has a sound manufacturing base.

and mexico has a number of reforms being implemented. i think people are not paying enough attention to mexico. they focus on the bricks. they don't focus on mexico. >> i agree with that. >> good-looking ceos make better ceos and good-looking leaders make better leaders. >> you must be bullish on america. >> he's an attractive man. i'll give you that. >> yes. >> you don't think hillary will run? >> those are in the -- >> let's get to those. >> i want to talk about that, too, with you. >> you say hillary is not running. that would be a surprise. >> i'd be stunned. >> no way. >> why do you think that? >> what forces her handed? >> what forces her hand is the frustration of being president of the united states. >> fish has to swim. birds have to fly. hillary has to run. >> it would be a surprise. >> birds got to fly.

>> anything in the also run category you're iffy on? >> exactly. >> i like the rand paul thing, too. or the ted cruz thing. i'll tell you why. go ahead. >> you like that? >> i like that you're saying that. i'll tell you why. >> you say ted cruz becomes a front-runner for president in 2016. >> right. >> you're saying it in a way where you think these crazy tea partiers are out of their minds. you hated sarah palin. i don't know if you saw george will on one of the talk shows on sun, there's nothing better fon american conservatism -- he's talking about de blasio, et cetera, et cetera. i could see where this country gets pushed so far right that ted cruz could almost be viable. i don't think it will happen. that's the point i want to make to you. he could actually be viable

giving what we'll experience in the next year or so. >> he's a smart guy. >> harvard educated. harvard and another ivy league school, i think. >> he went to princeton. >> princeton and harvard. >> you feel the devil comes that way, right? he comes up through the ranks? this is oman one or two for you. >> i think they need somebody with star quality, somebody who can appeal to the whole nation by being flexible. he's been a tea party person up to now. he could become closer to the center, and that could make him a more viable candidate. >> there are people in the republican party that say, look, we can't run a conservative candidate. it will never work. we need to run a moderate. who did they run last time? romney. before that? mccain. who moderates, both got smoked.

>> he's suggesting cruz becomes more moderate. >> becomes more moderate. >> yes, but still he's way out there. >> your political -- that's your wish list is that cruz runs. >> it isn't my wish list. >> he doesn't have a chance and hillary will be a shoo-in for you. >> he's not going to run either. >> he's nudging her. >> two other of the also rants. you say bitcoin is a failure. is that a surprise? >> proven out this year? i think it has some life in it. >> certainly does. based on the current trajectory, looks like bitcoin has staying power. if it collapses, and that's the verbal i use, that would be a surprise. >> that's an amazing point you make. gold, there's a reason, a store of value. what the hell is the store value in a bitcoin? even with the dollar -- >> i have conviction about that one. but i don't feel i know enough

about it. i might have to go around the country and the world really and defend these things. i didn't really -- >> bitcoin you feel -- >> yes, i didn't feel -- >> one other. cuba. you say president obama will start some kind of relationship with cuba in a much more meaningful way in the next year? >> right. >> what will inspire that to happen? >> it's long overdue. we've been hanging out there, denying cuba recognition and, you know, enough time has passed, i think. and it would make sense for cuba and it would make sense for us. >> okay. byron is going to stick around. i think we have three or four more to get through for the surprises. for the auto industry. it would be good if we opened up cuba, right? we have 11-year-old cars in this country, average year. what's the average american car in cuba? it's like a '52 ford. >> not a lot of american cars

left to cuba. >> if we do open up to cuba, we'll sell a few. they love buicks in china. what does your guy drive. >> i don't have a guy. >> now that's a surprise from byron wien. >> i don't have a guy. >> that's a surprise. >> did he jump in a cab with you at one point? >> i'll tell you something -- >> you did. you glommed on to me because i had a car. i think i stuck you with it. i stuck morgan stanley with it. >> it was worse than that. you said to the driver, this guy is rich. be sure to get a big tip. >> that's right. i did. >> i gave the biggest tip i had ever given a driver. >> pape money? >> paper money. it was before bitcoin. more surprises from byron coming up, including commodities, predecks and where interest rates will end the

year. you owe us for your muffin, too. those things are expensive. up next, a recap of a very interesting interview we had with "shark tank's" michael o'leary. plus marissa mayer ready to kick things off at ces. we'll talk tech trends, announcements and more. we'll be right back. [ male announcer ] the new new york is open.

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"shark tank" is on tonight. >> we have 0,000 applications on "shark tank," all small businesses, all have the american dream. you should hear their stories. our leaders and politicians should talk to them. you're supposed to aspire to achieve to become one of the 1%.

that's what drives this whole economy. i think we vilified this whole thing. it's a huge mistake. >> yes, this -- i think we ran a couple of these episodes on new years or something. didn't we? >> yes, they did well. >> they did incredibly well. >> yes. >> especially -- see, i think this is the answer. i think this is the answer. this is the answer. innovation and excitement and entrepreneurialship. and creating jobs, not, you know, working around the edges with $2 here and there on 6% of the work force which might even push some people out. this is what's exciting. this is what we've always done. >> not buying shares back. >> right. >> private sector jobs. then those people pay taxes and we can do the things we want to. 4% growth solves everything, income disparity, it solves income inequality, entitlement issues. >> easier said than done.

>> we'll grow 5% a year. sound good? how do you get there? we're getting there without doing it. >> we have 5% growth? i'll take the under. >> we could get 3 to 4. >> 3 to 4 is you're going back -- >> what would you do to get there? >> 3 to 4 wouldn't solve the problem. >> what would you do to get there. >> you have to recognize part of what's been slowing the growth, you pointed out demographics, you pointed out the country is getting older. long term your growth rates -- >> are you talking immigration? what are you talking about? >> immigration, having people work longer, having a faster growth in the work force is the easiest thing you can do. >> what about making -- >> you have secular forces working against you. for example -- >> you do. >> all the capital spending or virtually all the capital spending that has been done has been done to buy labor-saving equipment. >> we had a guest this week that said this is the year that

capital spending really kicks back in, the industrial kms will do a lot of these things, technology companies doing these things. that will create job growth. >> i agree. that's part of my feeling that the economy will grow faster than the consensus expects. >> some of the capital spending, look what's happening in energy. this is not creating millions of jobs because it isn't that labor intensive. growth would have been a lot worse the last five years if you haven't had the shale gas revolution. >> right. you need an industrial base to start spending money on capital equipment. >> you think they are? >> i think they will. i think it will be better than it's been the last five years. >> where do you think labor will be by the end of the year, unemployment rate? >> 6. >> because of job participation or it falls further. >> the participating rate i hope will start to go up. as more jobs are created, more

people come back on the work force. >> it's not just baby boomer? >> right. >> it's at a 40-year low. >> there are a lot of young people getting out of school, people where you went to school have trouble getting jobs. >> it's popular now to add those people back in and put out a 12% number on real unemployment. that's what people do. >> i think that's fair. >> really? >> yes. >> 12 -- >> you would be at 9.5, 10% if the participation rate was at -- >> or 12. >> 12 is a stretch. >> unemployment an issue. >> big issue. >> we'll talk more about this in a moment. catch the premiere of "shark tank" right here on cnbc tonight at 8:00. coming up at the top the hour, markets looking ahead to the december jobs report. we'll preview the numbers and what they'll signal to the

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time now for the final four top ten surprising predictions for 2014. byron wien has those. do you remember those? >> i do. >> commodities. >> commodities do what. >> agricultural commodities come back. you know, i've felt for a couple years that the weather patterns are going to be rerattic and it will lead to crop -- >> that will be different now? >> erratic, so there would be more -- >> did you ever hear the expression someone changes like the weather? that's been around for 4 billion years, i think, erratic weather patterns are the way things work. that's why it's called crazy weather. what else you got. >> plus the increasing demand from the developing world. >> yes. >> gmos. i mean, for years we did breeding to get seeds the way we wanted them to have certain

characteristic along with livestock. now we can do it in a much more ra rationale way, now the left doesn't like gmos. with using less land to grow more stuff to feed the world. where are you on that as a renaissance man? >> renaissance man. i think there will be more crop failures and more demand as diets improve in the developing world. >> okay. >> as a result, one of the indications is there's less correlation in commodities and so i think, you know, that's one that is a clear contrarian view. there is nobody positive on agricultural commodities out there. >> how about -- where were you last year on oil? didn't you think oil was going to go down. >> right. >> now you think it's going to

go up. >> right. >> 110? >> right. >> here or -- >> west texas. >> west texas goes to 110 because of better global -- >> because global demand is increasing and most people think the price will come down. >> because of frac'ing. >> no, three things, frac'ing, iraq and iran. i don't think iraq and iran will produce a lot more. i think fracing 'ing is runningo trouble. >> you're losing production out of the middle east right now, libya, south sudan, north africa, nigerian. you have a great renaissance in the u.s. but losing it in the rest of the world. >> thank you, because joe is tiring me out. >> now we go to the affordable care act. you get some sleep last night. >> yes. >> the computer access problems are significantly diminished, younger people start signing up.

obama's approval rating rises and in the november elections, the democrats not only retain control of the senate but even gain seats in the house. i think this is one of your outlying surprises, i think. >> yes. >> the glitches notwithstanding. >> i'm surprised your voice didn't crack when reading that. >> the glitches notwithstanding, i think is the tip of the iceberg. i think a lot of people do. people will start using their health care now and there may be companies that have never even heard their name when they try and pay for something at this point. you've also got -- are we net positive yet on the number of people who have signed up versus the people who have lost policies? do you know at this point? >> i don't know the answer. >> you seen some of the -- i don't know, maybe it's conservative rhetoric that you have to drive past two or three hospitals now in some cases or certain doctors aren't covered. haven't you seen the underlying problems other than the computer glitches. >> what's the surprise, joe? >> that's what i mean. how is this going to be

better -- recover and be better than expected? just fixing the computer is not going to do it. >> no. i think younger people are going to -- >> why? >> why are they going to sign up? >> yes. >> they're going to realize they are going to need health care. that they're going to become believers in the universal health care concept. >> you've seen polls say 78% are not going to sign up. >> yes. what i'm saying there will be a turnaround before the end of the year. when it becomes more accessible, easier to sign up, when some of the cost problems and the supplemental expense problems where you're given aid if you can't afford it, those become clearer, clarified, i think you'll see more people sign up. i know it's a contrary view. what i'm saying is we're in the nader of it now. >> you think this is the nader? >> i do. >> one thing where i would agree with you, the costs of the program will be greater than the government says. >> will it be the biggest entitlement ever? >> it won't be the biggest

entitlement ever. >> as baby boomers get older, we've had some -- the medicare growth has slowed recently but there's a piece in the paper today that says don't look for '14 to slow anymore, because as people get older they'll utilize medicare more because the baby boomers will be 65 and using medicare at this point. we may have seen the last year of a slowdown in health care increases. >> i don't think that's the case. >> you think it will continue to come under -- a lot of people say it was the recession. other people say it's the aca. >> i think, first of all, we're continuing to make technological improvements in the whole health care system. >> right. >> that's been one of the big surprises in the last few years that health care is a percentage of gdp has declined from 18 to 14. >> right. >> i think that's going to flatten out at worst. >> all right. we should do -- check back on how these are going once in a

while. we shouldn't do it once a year. what are you doing in three months? if we get a muffin you will come. >> corn muffin no less. >> when we haven't had corn muffins you should see what happens to the staff. >> three months from now -- >> they can't sit down for weeks after that. all right. okay. >> thank you, byron. >> thank you. >> thank you for the surprises. we'll see if they turn out to be surprises 0 are not. coming up, wells fargo senior economist mark vitner. plus, delicious food combined with clicking glasses and a who's who crowd at michael's in new york every day where joe occasionally likes to go. >> we have been there together. >> we have been together. we'll speak with the owner, michael mccarty, about the restaurant business when "squawk" returns. she keeps you on your toes.

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a look at why investors are cautious ahead of the jobs report. >> what to expect from ces, the global electronics trade show ready to kick off in las vegas. tech titans come together to talk innovation, products and business. a preview of the show and a sneak peek at possible announcements. >> we've got a table at one of new york's hottest restaurants, the owner of michael's new york

serves up his outlook for the restaurant business and tells us what he's hearing around the table from customers as the final hour of "squawk box" begins right now. ♪ a bottle of white ♪ a bottle of red ♪ perhaps a bottle of rose instead ♪ >> welcome back. "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with becky qui quick. we're here with russ koesterich. the s&p indicated up 638. we figure we need about 20, 22 between today and tomorrow to be up for the year. if you care about that five-day indicator. >> which we've already decided we don't care about it. >> no. unless it goes our way we don't care about it. >> there you go.

in the headlines, the senate confirmed janet yellen has the next chairman of the federal reserve. the senate voting 56-26 to approve her. democrats were joned by 11 republican senators. she'll be preceding ben bernanke when his second four-year term expires at the end of this month. the senate will hold a test vote on extending jobless benefits to the long-term unemployed. that measure was delayed yesterday after more than a dozen lawmakers were unable to return to washington because of bad weather. president obama is also expected to speak on the topic from the white house east room a little bit before noon eastern today. and manhattan u.s. attorney pret could make an announcement today. no individuals will be implicated. >> this makes me nuts. >> what. >> either an individual did something wrong or they didn't.

end of discussion. >> guess you weren't here. >> go after the guy who has the problem or not. but it can't be that you can hold these institutions up -- >> whoa, whoa, whoa, did you miss the entire reign of eliot spitzer as attorney general? >> i lived through it, i saw it. so what. it's just another example. >> why forgo the money? >> what are you saying. >> if you can shake people down, why not do it? >> because it's wrong. >> oh! >> because it's wrong. i'm going to sit on my high moralistic -- >> okay. look at how many settlements there have been. how many have gone to conclusion? how many? zero. >> very few. >> how much money has been raised. >> billions and billions and billions. >> that's the problem. go after the individual or change the law so you can go after the individual. where are you on this? >> this is one of the reasons bank stocks are cheap by historical standards.

they don't know what the liability will be. whether that goes on you'll have a discount. record cold hitting as many as 187 million americans. meteorologists are calling it a polar vortex. joe, do you buy into the whole polar vortex thing? >> that's weather. yes. that's what's happening. not hard to understand. >> flight aware -- >> i don't know how global warming caused it. >> the polar vortex did. >> flight aware reporting almost 2,000 cancellations already today, jetblue is hoping to get back in the air after shutting down completely in new york and in boston yesterday. the airline says operations will begin to ramp up again. that's going to happen at 10:00 eastern time this morning. it expects to be fully operational. it says by 3:00 this afternoon. meantime, if you're traveling the eastern corridor, amtrak says it plans to operate its trains on a reduced schedule throughout the northeast corridor today.

we'll have the latest forecast from the weather chan until just a couple minutes. the "squawk" sports story of the morning, a memorable ending, florida state was down 4 points with more than a minute to play and jameis winston led the seminoles 80 yards for the game-winning score. the go-ahead touchdown was scored with 13 seconds to play. i really would have liked to have seen this. they do replay it. i know what happens. >> now you know what happened. >> the final 34-31. we're transitioning. it's march mads in. >> getting ready for march madness. >> there are undefeated teams still around. about five or six of them, arizona, wichita state, i think, although i didn't check yesterday. there's five or six that are still -- syracuse. >> i'll look it up. we'll check it out. in the meantime, we are uncotting down to friday and the december jobs report.

joining us right now to talk more about it is mark vitner, senior economist at wells fargo securities and our guest home, russ koesterich. mark, welcome to the table. what number are you talking about the jobs report. >> our model came out between 2 and 3, i think it will be somewhere around that range, 300, 210. the ism, nonmanufacturing survey showed strength. the consumer confidence index noted improvement in the both the present situation and expectations with regard to employment conditions. so it looks like we had solid momentum in december. >> what about the unemployment rate? byron wien was here with us for the last hour and he was suggesting of the surprises for the year, we could be looking at 6% sometime this year. >> that's very possible.

we fell 0.8 percentage point over the last year. we could fall that much this year easily. it would take us down to close to 6%. we're expecting the unemployment rate to fall to 6.9% in december. and jobless claims have been very low for the most part. t there's been volatility but they've been exceptionally low. here in north carolina where we've been without the emergency unemployment benefits for quite some time, the unemployment rate has fallen 1.5 percentage points since the program expired back in july. >> yet you have plenty of areas of the country, russ, where you're looking at higher than average unemployment. that's what brings us to this debate today about the unemployment rate. the unemployment benefits being extended. what do you think should happen? >> this is an interesting question, going back to something mark just said. we've seen this drop in north carolina in the unemployment rate, which you've seen a pretty precipitous drop in the participation rate. you may see the unemployment rate drop but if that's

happening because people that have been unemployed for a long term drop out of the labor force, is that necessarily getting the fed to where they want to go. >> that's a good question. mark? >> that's not what's happened, though. it is a story that's being told out there. the labor force has declined over the last year. but since the law has been changed, the thing that has changed is employment has gone up. and both were declining in the first half of the year. both declined in the second half of the year, labor force and employment. -- i'll start that again. the labor force declined all throughout the year, employment declined in the first half of the year but it's increased since the law changed. since we've had so many people who have been unemployed for long periods of time they've exhausted their savings. once the emergency unemployment benefits ended, many of them have taken part-time jobs they would have past over in the past. >> can i ask you a slightly different question? we focus on the unemployment rate and job creation.

it seems to me one of the ingredients that has been missing over the last three, four years is earnings growth. will we see that push earnings growth ahead of the 2% rate in hourly earnings that's defined the last few years? >> it should be a little better in to 14, manly because construction is coming back and manufacturing looks better, too. we still have significant underemployment. and i was at the meeting in philadelphia and larry summers was talking about how far away the economy is from potential. that's the way out there kind of concept. what that means is even though we have a low unemployment rate, we have a lot of people underemployed, so there's slack in the labor force. >> looking at north carolina's law, looking what happened. your point is people have been taking part-time jobs that people would have passed over before. is this a temporary stop gap? are they going to rely on more

social services because a part-time job is not going to cut it. >> i don't know how to answer that in one specific way. there certainly are positives to it in that when you're working you're earning income and producing output as opposed to just receiving unemployment benefits where you're spending money. both ways you're getting about the same. the maximum unemployment benefit is about $300 a week. if you're working a part-time job, you're probably earning 240, 250. it's a pretty close call from an economic standpoint, from a social benefits standpoint it's difficult for folks that have been out of work and are now significantly underemployed. >> mark, i'm sorry. i'm asking because i'm trying to get my head around all of this. what do you think congress should vote on this? >> well, i think that given that the long-term unemployment rate is as high as it's been, there's probably a very strong case for extending emergency unemployment benefits.

i think that the net result of that will be that the unemployment rate will not drop as much. will not drop as rapidly as it did in north carolina. that doesn't really address the problem, though. emergency unemployment benefits are like a band-aid or cold medicine. they don't cure anything. the real challenge is getting more money for training programs so that we can retrain workers and get them re-employed. recessions result because -- are caused because assets are misallocated. we allocated way too many assets to the housing sector. after the recession you see the investment pull back and workers need to re-orient themselves into parts of the economy that are growing again. extended unemployment benefits slow that process down, but as a person, it's understandable that you want to help somebody who is really struggling. we just have to strike that balance. historically with long-term

unemployment as high as it is, we've extended -- we've had those emergency benefits. >> mark, thanks a lot. it's great talking to you. more from russ throughout the show as well. he's our guest host. >> all right. i guess we'll talk weather. arizona, syracuse, ohio state, wisconsin and wichita state, five of them. two of them play today, michigan state plays ohio state. that's big. and then baylor is ranked higher than iowa state and they play today. up next, the vortex is here, a blast of arctic air, pushing as far south as atlanta, creating a 140 degree temperature change. and then the crystal ball on markets. "squawk box" will be right back. mine was earned orbiting the moon in 1971.

afghanistan, in 2009. on the u.s.s. saratoga in 1982.

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a pulse of frigid air gripping much of the nation. cold temps expected to last through tomorrow. the weather channel's julie martin joins us now with more. that's where the zombie apocalypse was, too, atlanta, on

"walking dead." now it's cold. there's a lot going on down there. >> there's too much going on down here. i haven't had to break out this hat or my big moon boots until i worked in boston a few years ago for a winter blast. we're here in atlanta, 6 degrees, wind chill of minus 9. it has not been this cold since 1996. school is out for the kids. the city is opening emergency shelters. it's not just here but throughout the deep south. in fact, the freezing line extends all the way in through tampa, florida. a lot of the citrus and strawberry crops should be protected down there. temperatures here in the south have dropped anywhere from 20 to 40 degrees overnight. in the east, also as much as 50 degrees in just a matter of a day. we're dealing with maybe up to 3 feet of lake-effect snow in upstate new york. so this winter grip still holding on for another couple of days. the good news is, by about

thursday, friday of this week, we will see temperatures start to rebound and finally here in atlanta, at least, we'll get above freezing by thursday. joe? >> by thursday. wow. okay. then nobody knows after that, right? this is probably a one-shot deal you would think. hopefully. >> we hope so. yes. >> i wish the atlanta weather would move north. >> we'd like to see temperatures from the south. >> south carolina. >> instead of the north dropping down on us. >> south carolina in new jersey. >> some of the cold temperatures go all the way down to the gulf coast. >> they do. >> you're talking about cold, cold weather. >> unprecedented. see you, julie. thank you. stay warm. still to come, we have breaking economic numbers. international trade data is just ahead. up next, though, we gaze into the "squawk box" crystal ball and get business predictions for 2014. reuters breaking news global editor will join us, right after the break.

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welcome back to "squawk box." time now to peer into the crystal ball and see what the future holds. reuters breakingviews is releasing its annual predictions for 2014. good morning, rob. >> good morning, andrew. >> let's go through some of these. we had byron wien on, he had big surprises for the year.

ten. two of yours match up with him. i'm not going there fast. your number one is there are six people who pack the power to surprise in 2014. who are those people. >> people with incredibly low expectations, right? if you think about it, someone like john boehner. there's not a whole lot a world expects of the u.s. house of representatives or u.s. congress, right? i think 30% of people think the guy should be house speaker. that means 70% don't. i think it would be amazing to us if we were able to get something done if the u.s. congress were able to do something beyond a tiny little deal that paul ryan got with patty murray, that would be an upside surprise. >> you think he does -- do you have an idea of what he does? >> no. this is midterm election year. nobody ever does anything. something more on the budget would be extraordinary or even this, let's say he could quell party radicals and actually not hold the debt ceiling hostage, move through, let the u.s.

economy power through. would be a start. >> let's go to number two. you say wall street in for another lousy year when it comes to mergers and acquisitions and when it comes to wells fargo and jp morgan why? >> we had 2.5 trillion of m & a last year. we had the same number the year before and the year before that. there's thompson, reuters and freeman came out with a poll saying it will be another great year. investment bankers saying 2014 will be another awesome year. we've had interesting examples of great deals, people buying things and stock going up a lot. our view, that's not going to be the case. for a whole bunch of reasons. but that doesn't mean it's going to be lousy. 2.5 trillion of m & a is still pretty good. we'll see a lot of good deals, hopefully. that's the idea. maybe we'll see in 2014 more of the same and the same has been good in the sense that we haven't seen a lot of daft deals.

wells fargo, these guys are the biggest bank no one talks about on wall street. after they bought wachovia, they had about a billion or so of underwriting and advisory fees. last year they had about 2 billion. they have about 5% of underwriting market share. that's half of what jp morgan, goldman sachs own other folks have. they have the most to shoot for. they have a loan to deposit ratio of 80%. as you know, you can't tie lending to fees but ask jamie diamond, anywhere else out there, how did they get their market share up? they used their balance sheet in innovative ways to make sure they got the fees. >> i want to go back to john boehner, this is russ koesterich of blackrock. on the budget side, i think we've seen all we're going to see. what about immigration reform?

the boehner could surprise the economy, the market, by pushing through something this year which at this point most people do not expect. >> absolutely. he'd have to override the sort of extremists in his party, he'd have to do a bipartisan deal. that's all possible. there's so much to shoot for, actually. immigration is one example. >> you have six people. why doesn't obama have the power to surprise by overcoming the extremists in his own heart and party and -- he's not one of the six people that can do something great? >> of course he is. >> we can't expect our president to rise above and do something great. >> what can he do without congress, though? he has to get congress on board. you could argue -- >> why can't he do corporate tax reform? why can't he do things that would be amenable to do. >> he should do all those things. >> whatever he suggests don't l doesn't have to be the antithesis of the radicals in the other party. >> who has the lower approval

rating? it's actually congress. >> pretty close. >> it's pretty close, definitely but who has the lowest expectations? >> who has the capacity to lead and to bring people together in the country? >> hopefully john boehner has that capacity. >> that's what the president is supposed to do. he hasn't shown it yet either. >> both of them haven't shown it. >> he hasn't shown it yet either. the president is the one with the bully pulpit. >> dill marusaf, expectations are extremely low. the world cup will be a raging success, infrastructure. also on this list we have kim jong-un. expectations cowl be any lower for the leader of north korea. >> i want to go to what i think is the most intriguing prediction. activists target general electric in 2014. >> again, everyone is saying activism, activism is going to keep going. we had it on the "time" magazine cover. activism is going to keep going. let's go down the list.

microsoft last year was targeted, and that happened. apple was targeted. still being targeted by carl icahn and others. who is on that list? a big, big, big companies who have been immuned to it. we looked at general electric, you said this is interesting. you have probably for the first time in many years that i've been covering general electric, the most robust -- the best strategy, really focused on global infrastructure but you have a lump, this $350 billion balance sheet called ge capital. they whittled it down by a third since the height. >> you want them to spend it off. >> there's a lot of opportunity. you talk to people out there, they're examining it. there's a question of degree. how much further can you go in terms of whittling down that balance sheet? and there's still a lot of room to go. at the same time you have jeff who i think has gotten the strategy, the ceo, he's gotten

the strategy right. when you look at the playbook of activists, they look at management. you've had management since 2001. the stock is half of where it was. the earnings are -- bps this year, not that much bigger than '01. >> thank you for the predictions. hopefully we can check back, see where they land. >> see you next year. >> appreciate it. >> bye. up next, breaking economic data. international trade figures for november and marissa mayer of yahoo!. stay with us. and it feels like your lifeate revolves around your symptoms, ask your gastroenterologist about humira adalimumab.

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welcome back to "squawk box," every. we are just a few seconds away from international trade numbers. jim is standing by. take it away. >> the number comes in at negative 34.3 billion. that's a pretty big number. this number is complicated because the markets sometimes have a difficult time interpreting it. on balance we want it trend closer to 0 like it is, then we can convince ourselves that overseas economies are getting better. we know domestically things are getting better. the stock market should like that. the ten-year is 2.95. it's gone up a hair from there. this is interesting. it's not employment data. we're getting a lot of employment data this week. the market will key on that more than this starting with the adp tomorrow.

>> all right, jim, thank you, standing by. stay with us. we'll bring in some other guests, too, steve liesman is here and our guest host, russ koesterich. you were stunned by the numbers as well. >> we were looking for 40, we got 34. looks like they revised down a little bit october. what i'm looking for right now is the inflation adjusted number which the number that would feed into gdp. let's assume for the moment that the inflation against numbers -- >> lower oil prices? >> i'm trying to figure out the reasons for it. if you want to talk to jim for a little bit, you're welcome to. i'll look at the numbers a little bit. the key we're looking for, this is another that will flatter fourth quarter gdp. whether or not it's for the right or wrong reasons, i'll get to that in a second, the key is we had a strong third quarter number. the consensus would be that the third quarter would be in the

dumps. slowly from a 1.2% number, even some down below 1, we have slowly climbed back up to 2.5. so the second half of 2013 is looking like a 3% half. i don't know what byron wien was saying earlier. >> exports were part of this. increases in capital goods supplies and automobiles. exports to china were the highest on record. >> wow. >> if you think about what happened in q3, that was ab inventory buildup. what you're seeing on the export numbers, manufacturing, some of this is end-user demand. it's not just a function of inventory building up. >> petroleum fell 15 billion, nonpetroleum fell 37 billion. this is total trade in goods here. exports were up a little bit and imports were down. the question becomes, this is probably part of the inventory workoff in the fourth quarter. what you're going to get here in lower imports you probably are going to take away later here

when we get the inventory numbers. what comes into the ports ends up on the shelves. we couldn't the them, if they come in less than expected it's a negative. we follow both of those numbers. but for the moment, without any further analysis from some of the economists out there about how this factors in to their tracking forecast, this is going to be a number that's going to, i think, perhaps will certainly push the fourth quarter data up towards 3%. so 3 and 4 is 7 divided by 2 is 3.5. that's what you'll have. think about the dickensian economy. the key question, is that momentum real? most important, does it continue into this quarter? i think that's the value play in

the stock market right now. >> what does it mean for unemployment? we'll be getting those numbers on friday. >> what i liked about, i've said this all along, becky, what i liked about the revision upward in gdp is it made the stock market make more sense and it made the jobs number make more sense. it suggested to us it was less than hot air underneath the market, less than just pure accounting stuff inside the jobs numbers. but i will tell you that i'm getting a couple reports now, i don't know, jim, if you're hearing this stuff. the cold weather is going to play a factor in the friday numbers. >> sure. >> there's a goldman sachs report out there. >> here's what i worry about, too. we've had a slew of pretty good employment data. the market is becoming used to this. market position can be the biggest factor going into these things. it's almost like a stock that's sometimes priced for perfection going into earnings. we're pricing in a rosie outlook for employment data. to me it leaves us exposed potentially for a punch tomorrow or friday. if it's because of the cold, so be it. either way we're starting to convince ourselves that things are gaining traction.

>> what are the parameters of that punch, real quickly. is it under 200, is that the thing that upsets the market. >> if it's under 180 it upsets the market. if it's just a little bit bad we convince ourselves -- >> it's the weather. >> wee have some traction but we are not going to get as quickly of a taper from the fed and the market will love that. i think it has to be worse than 180 for us to really think it's significant. >> 180 to 200 is a market number. >> i will be back later this morning with exactly how this affects the gdp forecast. i'll send you an e-mail, becky. >> steve, thank you very much. >> thank you. russ will be with us for the rest of the program. joe? >> yes, yes, thank you. a number of headlines coming out of the consumer electronics show in las vegas, including one high profile failure. samsung was holding an event to showcase its latest gadgets and the company introduced michael bayh, the guy behind "transformers" and other action blockbusters.

although my son said crappy movies. the teleprompter didn't work properly and things went downhill quickly. >> as a director i try to -- the type is all off. sorry. i'll just wing this. >> tell us what you think. >> yes. >> we'll wing it right now. >> i try to take people on an emotional ride. >> the curve, how do you think it will impact how viewers experience your movies? >> excuse me. i'm sorry. i'm sorry. >> okay. ladies and gentlemen, let's thank michael bayh for joining us. >> so painful. >> i didn't want to run it. that's the first thing you wanted to run today, sorkin. we have to run it. >> it's sad. it's painful. look, we all have our problems with the teleprompter. >> that was a big crowd of people, too. the silence is deafening.

you can feel the anxiety well up inside of you. there's no reason -- a lot of directors i think as introverted artsy type guys. that doesn't mean you're a great public speaker. >> i have an easier time talking in front of a camera than i do in front of an audience. they look back at you. >> i know. have you tried looking at them like they're all naked in the room? >> a lot of times you can't see them because of the lights. >> you don't need to see them naked. you have to imagine them as naked. >> i think i'd start laughing. >> i imagine you naked, andrew. >> you do? >> yes. watch how smooth i am here. on a blog post on his website, the director said -- this is even sad -- wow, i just embarrassed myself at ces. after recapping what happened, he goes on to write, i guess live shows aren't my thing. i give him kudos for that. >> it's hard. >> let's talk about -- >> you've run it three times now. >> we've run it twice. i feel bad for the guy.

let's go out to ces. marissa mayer is there. she's set to give a keynote speech at ces. joining us now to talk about what she's seeing going on, kara swisher, co-ceo of revere digital and co-execute editor of recode. we have a sharing partnership. welcome to the family, kara. >> thank you. i'm in your family? >> we're all part of the family, maybe like a distant cousin. >> we're the crazy cousins. >> crazy cousin. >> that's fine with me. >> marissa today, what do you expect to hear from her? >> i think she'll talk a lot about advertising. it's a real weak point for yahoo!. i think she'll put on display advertising things yahoo! is trying to do around tumblr. i heard david carp will be on stage with her. you could possibly see david pogue, who she hired from "the new york times." she'll probably talk about mobile. she likes to say mobile a lot to

get the stock up. >> does this make any sense to you? does this strategy -- some people say there is no strategy, it seems like a scatter shot approach. is that right or wrong? >> i've been more critical than others have been on what they're doing. it's an incredibly difficult job she has to do to turn this company around. they are lucky they own the achinese asset in alibaba. she has time to figure it out. >> we give the credit or alibaba the credit? >> alibaba. everybody is buying in because of the alibaba valuations. they're performing beautifully. she's got to get revenue up because it's declined. it's 18 months now, which is a long time. she's doing all this product stuff and buying up all these companies. it's very noisy and hey, we're moving, something's happening. the issue is can she turn that into revenue and advertising revenue and fix the core business. i think i called it in my piece,

you want to be more than a fantastic asian investment company. that's what they are right now. >> we've been talking about michael bayh all morning, playing the video. is that the scuttlebutt? are people talking about it or are we making too much of it. >> it's an embarrassment, of course you'll make fun of it. i think it's interesting that things go around so quickly. it's a nightmare for people now if they make one wrong move in public. >> we need insurance like career insurance or something. everybody should have it. >> i guess. >> i'll start a company like that. >> i'm hoping to make a spectacular disaster on your show at some point. >> andrew will help you. >> okay. >> t-mobile ceo got kicked out of an at&t party. >> yes, that was fun. our staff ran into him. we ran right into him when he was being kicked out of the party. he wanted to see makele mo mack

apparently, he likes "thrift shop." he likes to be sassy as a number three or four contenders. he tried to crash the party and they kicked him out. >> crashed the party. >> yes. >> quick gadget question for you. there's a new iphone keyboard that i hear everybody talking about. >> yes. >> the ryan seacrest keyboard. >> yes, ryan. >> is this going to work. >> i haven't used it yet. but it's interesting. blackberry is suing him because it's like the blackberry board. it's interesting. a lot of people want a keyboard to go along with these phones. i think it will go away from keyboards to this wearable embedded stuff, which is a big theme which you have talked about. eventually everything will have sensors and we won't be staring down at our phones in this way, we'll be looking up. >> thank you, kara. >> we have big plans for her. >> thank you for joining the family. >> big plans. >> family. okay.

i'm coming for thanksgiving. it will be great. >> that's going to be one hell of a dinner. have fun at ces. coming up next, great service, delicious food and one heck of a hot spot. we're always trying to get a table. we're talking about michael's restaurant in the new york. michael mccarty is joining us next to talk about what he's hearing at tables about the state of business, coming 0 our table this morning. "squawk" comes back in just a sec. welcome back. how is everything? there's nothing like being your own boss! and my customers are really liking your flat rate shipping.

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there is lunch in new york city and then there is lunch at new york hot spot michael's new york. it's the place that power players in media do lunch. not necessarily four seasons -- >> there's a four seasons. >> what's the other place? italian. >> charlie's. >> yes, yes, yes. what's that plate? >> san piatro. >> finance guys, there's a place they go when they want to see media people. michael mccarty, proprietor of michael's restaurant. >> good to see you. >> it's good to see you as well. i don't know, how do you decide to get a restaurant that becomes -- the food is fine. it's good. >> yes. >> you know, it's totally overpriced and expensive. we got that going for us as well. but how do you decide to make it a scene? >> well, it's all part of the plan. i had my restaurant michael's in

santa monica for 35 years now. i opened 10 years later in 1989 here in new york city. >> yes. >> during the '80s anybody who was from new york that was in any business, whether it was fragrance or cosmetics or movie or tv or music or the media business as we knew it then, ate at my restaurant for ten years in l.a. when i opened up here, we were insta instantly accepted by those people. it was sensational. >> it still is sensational. andrew, this is something that i had trouble understanding. it used to be you go to like a studio 54 in l.a., there was a place called vertigo, the velvet rope. you couldn't get in. you'd go in and drink. it's kind of the same thing at lunch at michael's but no one is drinking. you're there purely for the gawking at the big named people that go there. >> yes. we sell about 50 cases of pelligrino liters a week. >> i want to know about table

assignme assignments. >> yes. >> when joe and i have been there together we've gotten a good people. when i'm without joe i'm pushed back in the garden area. >> wait a minute, the garden is highly -- >> how is it selected? >> fortunately, again, i have enough industries, the word media is huge now. as you talked about with the finance people, the finance people are there -- >> they want us in the back. >> they are in both rooms depending on what they're doing. the garden is real estate, finance, cosmetics. the front is new and old media. we have a lot of new media, we have the old media which has figured out the old media. you have a beautiful guest list like a dinner party at your house. >> how often do you know i can't put that person next to the other person. >> that happens every day. >> do you make the decisions yourself. >> we have an editing process. i have two mater d's. they do a fantastic job.

if i'm in l.a., i always call at 8:00. and we do it. >> andrew, do you know michael has a charity for upcoming chefs? >> there's an event. have you given money for his charity. >> i have not. >> have you given millington money to pass out at christmastime? >> is that why i'm sitting -- >> you have to understand. >> always follow the money. >> you're a bigger name than i am. don't be so cheap. >> was there ever a moment when you put two people and you knew it was a blowup? >> no, because really we have never -- again, my expertise from the west coast has created -- has saved those situations before they have happened. >> okay. >> is wednesday the big day? >> they all are. diane writes her column on wednesday but actually every day is wednesday. >> media bistro lunch. >> yes. >> i want to know about pricing. it used to be in you went in

there and you could not get out thereof for lunch under 200 bucks for two people. >> yes. that's with an appetizer and dessert. >> i love the exaggeration. the average was $110 for two people. >> two people? >> yes. >> now you can get out of there for under 50 or 60 bucks, no alcohol. >> yes. with this huge recession occurred we did an extensive study in 2010 when it wasn't going away, we determined where we were going to go. we determined in both l.a. and new york michael's had to re-inconvenient the itself in a new way. the menu was where it was going. doesn't matter whether you're old or young. it's a way of life as well as not only the pricing. we wanted people to come two, three times a week, not once a month. this has worked. how many expense accounts were cut in the last five years? enormous. >> you were saying that's -- >> it's a paradigm shift. we're in a new era it's great.

people are having more fun. they like to pick and choose on a few things. that's why the small plates are extremely important. the pricing is important, where it's $12 to $25. >> it creates ambience. >> you make it a riot. >> the only problem i have at my table is dillard. >> your table? >> because it's really dillar's table. >> you can only go when he's not there. >> exactly. >> barry was one of my clients in 1979 in los angeles. >> there you go. so i can't expect to -- that's number four, isn't it? >> yeah, table four. >> my favorite. >> do you know who tweets out who is there all the time? do you remember him saying why are you tweeting my name out? >> "the new york times" wrote a huge article, what is this, and they interviewed the four or five people on the tweet list and said we'd be insulted if we weren't included, but this was a long time ago. >> you don't have to go out and drink at night to have a lot of

fun. >> glad to be in your house here. >> appreciate it. when we come back jim cramer on the market's rough start in 2014. and the thoughts on last night's big bcs championship game. olympic downhill champion lindsey vonn said she'll miss the sochi games because of a knee injury, wow. she'll be having surgery shortly. >> she can commiserate with tiger on this one. [ male announcer ] the new new york is open.

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jim cramer joins us right now. we saw the trade deficit that came in. it was the lowest trade deficit in four years. caught some of the people around here around the table by surprise. how about you? >> look, this is oil. take a look at continental resources upgraded today. people don't understand the power of the buck and the eagle for the other currency. a lot of people have sold the stocks because they believed they moved up too much. that's nonsense. they are the next majors. >> the next majors and you are staying with this call. >> look, you got to go there. you got to go to utica, you got to go down to louisiana with the energy story that's being -- that ellen g. that goldman

recommended today, because it's such a powerful story and the analysts are just so far -- so away from understanding how strong this is. >> i'm not going to pretend to be a huge football fan but i know joe is and we can't get you away without asking you about that game last night. >> i'm a big florida state fan, and this was the watchiest night for me. i'm literally watching this thing on my polyiphone because that was the best technology, watching espn. >> i surprised it was that close, jim, but auburn was for real. >> what poise. what poise he has, huh? >> i thought georgia lost some games where i thought these guys aren't that good, and i like georgia, and auburn barely eked out the win over georgia. >> they were the hot team coming in. san diego, san diego, the hot team. >> thanks for bringing that up.

>> i got beat bad. >> i know you did. we're moving on to college hoops we were talking about it earlier. two big games tonight, three of the undefeated play tonight so we'll see who escapes. >> early yet. but i got to get my pool going. the "mad money" pool going. >> wichita state. >> they looked good. >> the shockers. >> the shockers. >> we'll see you in just a little bit. coming up more on the markets with russ from black rock when we return. and stick around for "squawk on the street," ron paul will join jim and the gang to talk about the future of the feds. "squawk box" returns in a moment.

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a new way to bank. a better way to save. ally bank. your money needs an ally. let's get back to our guest host for the last word. russ, if you're looking at what to expect in 2014 the biggest thing to watch? >> the biggest thing to watch what do investors do with their bond funds. we've got a pretty good scenario for 2014, improving economy, low inflation, the bond yield won't rise that much. to me the wild card is you've had $1.5 trillion going to bond funds over the last five years. so far it's come out at a very modest pace. >> do you think that will happen? >> i think it will happen more slowly. what we can expect when you go running to stocks.

instead the money probably goes to cash for a while and then over time eventually finds its way into the market. >> russ, thank you very much for coming in. >> thank you. >> been great talking to you. >> been a good day. went through a lot of stuff. >> ten year's at $2 now. make sure you join us tomorrow. "squawk on the street" starts right now. ♪ ♪ jyeah, that's the thing ♪ good tuesday morning, welcome to "squawk on the street" i'm carl quintanilla with jim cramer and david faber trying to stay warm after the game last night at the new york stock exchange. futures are higher where weather is dominating the discussion from air travel to nat gas to utilities and we'll cover it all. here's the ten year a day after janet yellen was confirmed by the senate 56-26. got some fed speak on the docket today as well. european inflation or the lack of it continuo