before the detroit auto show. it's wednesday, january 8th, 2014 and "squawk box" begins right now. good morning, everyone. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. it is an important day ahead on the economic front. we've got 8:15 eastern time, the december adp employment report out. but payrolls are seen rising by 200,000. today's release comes ahead of friday's government nonfarm payroll report. so the markets will be watching it closely trying to figure out if this gives us a good indication of what to expect on friday. notable today, the fed will be releasing minutes from last month's fomc meeting. as joe mentioned, stocks reboungd from a three-session losing streak yesterday. the s&p turned in its first positive close of the new year and it was a biggie. we are about halfway back from those losses we've seen from the first three trading sessions.

however, this morning, futures are indicated lower once again. dow futures down by about 20 points below fair value, nasdaq down by 5.5 points. keep an eye on treasuries today. there is an auction of $21 billion in reopened ten-year notes at 1:00 p.m. eastern time. traders note that the sale comes after a recommendively weak three-year note auction. hsbc says the dream run in u.s. stocks is set to end. in a report today, the bank says that the fed cutting asset purchases and the market setting to cut rates will present a turn for equities. hsbc is forecasting it will rise just 4% this year to 1900. >> we have got corporate news this morning. the parent company of chuck e. cheese is reportedly looking for buyers. also this morning, facebook

buying a start up that builds performance analysis and monitoring tools for the mobile android applications, apps witness as they're known. the india based company is called little ilab. reports suggest the price is also tiny, less than $15 million. micron technology posted better-than-expected earnings and revenue. that happened after the close yesterday. results were helped by strong sales as it recently acquired a memory business and a recovery in its memory chip business. we're going to talk to the company's ceo at 7:40 eastern time. joe, i think you have the most interesting tech news of the morning. >> more interesting that alipida? >> i believe so. >> elpida? >> i've never heard of it. who cares. anyway, alan mulally ending the speculation that he could be heading for the west coast. by that, we're talking about microsoft. the ford ceo says he's staying

at the automaker at least through the end of this year. okay. that means, i guess, he also added he's not going to become microsoft's next leader. the tech giant is reportedly close to naming a new chief executive. and we continue to watch the weather. >> before you go to the weather, can i ask one question? do we believe that he took himself out? do we believe that he was just not chosen and he was -- >> both, right? could be a little bit of both. >> i was trying to read the tea leaves and i haven't done enough reporting around to see what the answer is. but have you guys seen anything to suggest one way or the other? >> people have been waiting for a long time. there's been an awful lot of speculation. if anything, this has taken a long time to clarify. >> it's taken too long. anyway, we'll find out. >> it is cold. it was single digits against this morning. we're watching the weather. record cold temperatures in the midwest and the plains are now putting the wheat crop at risk. meteorologists are worried about winter kill damage to some of

the dormant wheat along the ohio river valley. snow cover usually protect dormant wheat when temperatures drop below zero, but without significant snow cover, damage can prevent that crop from reaching its full year and the potential of that next summer. analysts say frigid temperatures slowed livestock and grains to the heartland. and it just -- it's funny because it's almost like you can view the economy almost like molasses. as it gets colder, it gets thicker. and the whole thing sort of moves. you wouldn't think that cold temperatures could do something to gdp, but people don't leave, people don't go shop. it's like it gums up the works. the airline industry, all the planes being -- jet fuel starts getting, like, actually starts getting thicker. there's a lot of problems. >> yeah. i didn't even think about the

winter whooit wheat situation. because i was thinking, oh, it's a good thing this is happening now because it's not freezing crops in atlanta. >> you're a firm girl, among all the other -- >> my grandfather owned a farm. >> oklahoma. >> no, indiana. but he was a cattle farmer, not a wheat farmer. >> he grew cattle. >> raised cattle. he took them to the stockyards and -- >> hopefully the cows are okay. >> we needed 22 s&p points to get where to where we closed on december 31st. we got 11. >> if you look at futures this morning -- >> no, i don't think it's going to happen. and hsbc, no flies on them. apparently the fed could be a headwind since they're no longer going to be as accommodative. someone told someone at hsbc, you know, the fed did taper and you're going to taper next year. that might -- but then again, all they said. they said 1900.

that's all anyone said. ear come that come in are not saying the run for stocks is over. they're just saying 1900. these people are saying the run is over, but it's still -- everybody covers their butt on what they think is exactly -- >> exactly what is the statistical wives tail? the first five days, you're going to have a -- >> they say the first five days is an indicator of january which is an indicator of the whole year. >> so it's an up or down year for the whole -- do we know what the percentages are on that? >> it's like 80% if it's up in the first five days. >> 90% if it's down in the fifty five days. >> no, but it's really good if it's up. i'm willing to -- if it's six days or seven days. >> government work. >> good enough for government work. we went up so much after we -- >> this is an indicator and it doesn't tell us what we want. >> santa claus was late this year. and then came with a vengeance. and so when they came --

>> and if you look at the last week and a half of the year, you would expect it to be a tougher time picking up because of the gains we saw so late in the year. >> we kind of are wasting breath talking to people about their predictions and talking about our predictions. we probably should let it happen. it's going to happen in this anyway. so we'll know in due time. in the meantime, let's talk about the weather impact. joe mentioned there are so many industries that are impacted. oil prices this morning are a little higher, 93.78. but this has been after some significant slides. among the catalysts being cited by analysts today, expectations for another drop in u.s. crude inventories and worries about libyan supplies. 93.76 is well below where we had been up until a week ago. in our on energy news, the eia predict tess pace of energy

growth will be slow next year. the government forecasts say that this will allow opec to pump more crude for the first time in three years. why don't we check on the broader markets. we showed you what was happening with the futures. but if you take a look at the dollar, its up against the euro and the yen. trading right now at 1.3586. gold prices this morning are down by about 4.50. >> where is the ten-year? did you ask them to take that out? >> no. >> you don't want to look at the ten-year now that it's 2795%? >> let's take a look at the ten-year. >> but that's over. >> that is not over. >> i was trying to figure out why it's going down. >> my new bet is all these clowns that come in and are just so sure at 3.5%, 4%, they're the same ones that said it for five years. there's no guarantee. >> i was asking some questions yesterday trying to figure out why if we're going down -- >> i mean, and when you think -- >> they were saying insurance companies are looking at the

long end and are locking in some rates. >> good good old days when we were at 7% and 8%, you would get 100 point moves. that's something to talk about. 2.87% and the.93%? not a different. >> the trading range -- >> think about that. 2.87% versus 2.93%. it's pennies. and pennies don't buy anything any more. but we'll watch. when we get down to 2.87%, any bowing that i was doing -- >> are you going to take it all back? >> i may. which would be turning like that. you don't want to see up my nose right now. >> i can hear. >> and off camera, i'm making all these sounds, too. >> they should keep you down in the makeup room with cora. >> they should. right now, it's time for the

global markets report. ross westgate is standing by in london. i hope you're feeling better than some of the people around the table here. >>ly, becky. good to see you. good morning, everybody. european equities just about down on the low point for the session. it's been fairly flat to start electives this morning. just weighted to the downside, around about 5 to 4 decliners outpacing advantagers on the dow jones stocks 600. the ftse 100 was up some 24 points yesterday. first meaningful move of the year. today, it's down 27. so absolutely flat in 2014. the xetra dax and the cac 40 both down 0.2%. we had the latest snapshot of unemployment that has maintained this record high rate in the eurozone of 12.1% now. despite the fact that investors have coming on, no impact in the unemployment rate. in italy, it ticked higher today, 12.7%. the youth jobless rate, now 47%

in italy. and with forms flirting with the flat line, there's still concern very much about the economies with italy and france which together contribute around 40% of the eurozone economy. jack lew, treasury secretary, is landing as well today in germany. he says there needs to be more to -- demand. there is one stock work looking at today. air france klm reported an increase in passenger traffic. investors like the news. the stock is currently up 7%. that's the stand out to look at. that's where we stand right now in europe. back to you. >> ross, thank you. we'll check in with you again soon. >> a little bit more news this morning. yahoo!'s ceo marissa mayer

delivering a key note speech at the consumer electronics show in vegas. jon fortt joins us now with the highlights from vegas. >> good morning. you can always expect a good presentation from marissa mayer. she had a number of things to say both about the strategy and specifically about product. they kicked things off talking about yahoo!'s latest acquisition. interesting start up on android home screen launcher, basically takes over your home screen. shows you different apps during the day based on things that you want to do. take a listen to how she opened it up. >> future of search is knowledge. and we are investing to be part of this future. we're incredibly excited to kick things off today by announcing that we have acquired ava. as we look tow foorch of mobile, we believe home screens should be smarter and more personalized. >> did you hear her say mobile

there? we're putting content front and center but wanted to make the point that yahoo! is moving away from desktop to mobile. >> mobile is all about growth. today, total worldwide smartphones are up 27% year over year. while tablet usage is up 78% year over year. by 2017, we expect to see 3.8 billion devices connected to the internet. that is nearly 2 billion more than we see today. . >> lots and lots of numbers. but what it comes down so to is yahoo! is investing in putting content on mobile so hopefully eventually we know money is important. they have made a number of our ad network announcement which hopefully might goose some revenue in the near term. back to you.

>> john, thank you. now, katie couric was there. who else was on stage with her? >> david poge came out. she had some announcements around food also. it was a big yahoo! shindig. they wanted to show all the different aspects of -- >> did you feel there was a singular strategy? >> did i feel there was a -- >> singular strategy. meaning one of the things that -- >> singular strategy. >> the thing that occurs to me about yahoo! is they're trying to do so many things all the time and it's unclear to me how it comes together. >> i think that's still unclear at this point. they clearly want to grow in mobile. they brought out the kid who told us a while ago to great effect. he's only 17 and they bought his start-up. clearly, she's throwing a bunch of stuff out there.

not looking for one off, loor fog things that come back to again and againen to hopefully something something going by tend of the year. >> it's only 6:14. we can't go to break. obviously they've built in some time here. real quickly, i want to compliment your paper. the gates story. here's gates, washington post lead story. gates sharply critical over obama in memoir. they thought that was important enough to put there. without street journal thought it was important enough to put here. gates faults obama administration. "saus today" thought it was important enough to put here. and then, let's see, "new york times" we got pregnant and forced to stay on -- jpmorgan --

saudis, you've got every story but this. but i page 12, they call him a bipartisan critic. i was watching the news last night and the first thing they said was republican roberts gates. that sort of diminished it. he's thought of as someone who wouldn't do it on a partisan basis, gates, right? >> why would you want a again ache story that every other insurance has, why would you put that on the front page? >> don't you think -- they call it all the news that's fit to print, don't they? i just thought if everybody else put it there, it seems like a pretty big deal. the stuff he says about biden is funny. >> he was critical of a lot of people. >> he was. he said about biden, on four decades, he's been on the wrong side of every feern policy decision. biden voted against the '91 iraq

move, voted for the other iraq move, voted against the surge, wanted to split iraq up into three different areas. >> i liked jonah. >> i read the bob woodward extortion. then at the end of the book he said by the way, i think every decision president obama has made have been the right one. >> and he breaks the news that their opinions about the surge had to do -- they both admitted it was due to political -- she said she took that position because she was up against obama in iowa. none of this should surprise anyone about, you know, what goes on in washington. >> and the truth is, some of the stuff he started talking about where he said he was ready to

quit when he was being flogged by congressmen, he said it was like going up against the inquisition and fighting a war there, too. when you watch the haefrearingsu understand that. >> wore when you watch senator homewood. oh, you're out of homeland, now back in. but he's a classic politician, isn't he? he's going to be in charge of the cia. is he supposed to be a republican or democrat? >> i don't know. i don't know. but the show is so lost to me, i don't -- >> killed some guy with a bobble. that was kind of gory. anyway, coming up, getting googlers to work by any means necessary. how about a boat ride across the bay? that's coming up in today's executive edge. first, though, let's get the

national forecast from alex wallace. >> good morning, guys. good news for us. the worst of the cold is overwith. we saul over 55 record temperatures. got down to 6 degrees. you don't see that very often. there's the arctic air mass starting to retreat. you get a chance toot least thaw out a tad out there for you. a lot of areas stuck in teens and conditions. by the time we get to friday, you'll see some 30s out there and the south has been been immune from the cold. we'll see some warmer numbers, 40s and 50s. good news on the way. more "squawk box" on the way, as well.

welcome back on, everybody. right now, it's time for the executive edge. "the wall street journal" has a piece on how amazon uses current employees to screen new hires. the workers who must sign off on would-be amazon editions are call barmakers. this is something they do on top of that full-time job. they can veto any candidate, even if their expertise is in an area that has nothing to do with perspective employees. this is almost like a secret

society way of getting into this. you have to pass the test with the current employees. jeff bezos looks at this as a way of protecting the culture. >> and it is a culture that you want to protect at this point. is there a wedge there between valuation and whether the company ever, you know, makes that kind of profit? >> right. >> my favorite story, it's not really an amazon story is what zappos says when you get hired, on your way to getting hired. they take you out to vegas, put you on a bus from the hotel to the headquarters and then you go on the bus on the way back. what you don't know is that the driver of the bus actually also fills out a form about how you treated the driver because oftentimes the most interesting information is when you get back on the bus and you say that was a long day of interviews and it sucked or if you treat them well or badly and that apparently has as big of an impact if not more than the actual interviews that you're in.

>> i like the idea of having a hidden camera to see how you treat other people. that would be a great thing to say. >> it's kind of like invasive, though, isn't it? >> yeah, but this is like if you're bringing people into their culture, and their thought is, look, we're really good is a big part of why we're so good is our people. the people who work here. we want to make sure we continue to have great capital. for amazon, now they have about 110,000 employees. this is not something they do for the distribution center workers and some of the bigger things. >> you draw the line at, like, going into a person's house and putting some cameras up and -- >> i draw the line of putting up cameras in the bathroom. that freaks me out. >> and it gets out -- >> good to get out the -- >> yeah. i mean, you have to draw the line somewhere. i don't know. but yesterday hearing how these people in a position to hire, they ask questions like on a

scale of 1 to 10 how weird are you. that is just kind of -- you're trying to set -- >> i've never been a fan of if you were a tree what kind of a tree questions would you be? i think that's weird, too. >> you use that on the ten most interesting people. you know what i read? is justin bieber going to be the vanilla ice of our generation? >> he's already bigger than vanilla ice ever was. >> i don't know. i remember vanilla ice. >> i remember vanilla ice, too. justin bieber has been out there for, what, four or five years? >> that was positive yesterday. who was bigger, vanilla ice or mc hammer? >> mc hammer, was he -- he's a religious man now, isn't he? >> i think both are religious men and venture capitalists, if i recall. >> we had him on. >> we need a costume for my son to be in this place as a king.

we are shopping for some mc hammer pants. >> i thought you were going to say you were going to shave his eyebrows and give him the vanilla ice look. >> no. we're not going to -- i know whose eyebrows i would like to -- not shave, but just thin them down. >> we'll work on that. we're talking about the need for shuttles in silicone valley. now google has hired a catamaran to transport workers. they kicked off a program this week ferrying over 100 employees. seems like a good way to miss the traffic on 101. >> don't they do all sorts other or things? the special google busses. >> yeah, but that made people mad in the city and there were protests saying we don't want all these people making these high tech salaries forcing the rest of us out. plus they were mad those buses were used the public bus stops and they said the public buses

were getting slowed down from it. >> how about the flying drones that could take you from your house and deposit you in the morning. >> drones, did you see how they're using drones? everything that the cia does involves droeps. but they're up high. you don't know they're there, right? >> this is true. >> we can follow everything that's happening. >> you know what i started watching on demand? >> what's that? >> "black list." >> look at you kissing up. >> i'm paying 3 bucks an episode because i didn't start soon enough. >> you know what's great? spater. >> it's not just me. the kids are addicted, too. >> the kids? >> yeah. >> wow. >> it's pretty good. >> there's some horrific murders. >> i thought it was supposed to be pretty grisley. >> i got the first 25 minutes of downtown abby. >> i have a lot of catching up to do.

one series at a time. >> mary, it's going to be hard for her when you love someone that much. anyway, go ahead. >> when we come back, bond bubble or bond fizz? what will 2014 hold for treasury yields? and families across america are cranking up the thermostat. what does this mean for energy demand, especially for natural gas? steven shirk will join us in the next half however. right now before we head to break, take a look at yesterday's winners and losers. [ male announcer ] this is the story

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good morning. welcome back to "squawk box" on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. federal probe is the first known wide range examination of mortgage bond sales by banks. the investigation is being conducted by the s.e.c. and the special inspector general for t.a.r.p. the banks being investigated reportedly include barclay's, citi, deutsche bank, jpmorgan, morgan stanley, rbs and ubs and some subpoenas have been sent but the investigation is still in its early stages. >> and investment banks working in london are facing a major overhaul of their pay structure. that's because the recent bonus ves exceeded new eu rolls. the restrictions curb payouts to

be made this time next year. top banks paid up to more than five times fixed ral eed salary bonuses. now caps levels at the fixed pay or double if the bank's shareholders approval. watson is overperforming. plans for the super computer to bring in $1 billion annually by the year in 2018 and hopes for it to bring in 10 billion annually within a decade. but the ceo told executives that the computer's total revenue had yet to crack $100 million. the journal says a major announcement is coming this week. watson is reportedly not learning how to solve real life problems as it was able to answer jeopardy questions. as we mentioned, futures are below fare valir value this mor. a gain of 114 points for the dow

yesterday which gets us back to about halfway of the losses that we've seen for the first three trading session. s&p futures are down by just over 2.5 points this morning. if you take a look at what's been happening in europe, you'll see red arrows there, as well. the ftse down 0.5% and the cac in france and the dax in germany down by 0.2%. in asia yo overnight, the markets there at least for the nikkei was up close to 2%. some red arrows for the shanghai composite. oil prices have climbed just barely this morning, up by 8 cents to 93.75. this comes after three sessions with sharp declines for oil prices since the beginning of the year. as we mentioned earlier today, the ten-year note is yielding 2.3%. 2.957.%. we have seen it pushing to get back around 3% or just below that. we'll see what happens. the dollar at this point is stronger against the euro or the

yen. yen is at 104.733. and gold prices at this hour are down by about $4. 1,225.60 an ounce. coming up, no one saw it coming and it could impact the super bowl. plus, can you tell us how much the polar vortex will disrupt the nation's energy supplies? but first, take a look at currencies. "squawk box" will be back right after this. i always say be the man with the plan

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welcome back to "squawk box." let's take a look at u.s. equity futures. we have some red arrows. i don't know if we believe the statistical tale about the first five day of the years, we have a lot of ground to make up. the nasdaq would open off about a points, the s&p would open off 3 points and the dow would open off 18 points. wellpoint is looking at selling its online contact lens business. it wasn't to focus on its core business. the deal to sell glasses.com will happen with exotica group. all the terms of that were not disclosed. a cheesy prop problem to talk about this morning, kraft is warning of a possible vel tee ta shortage. it is possible consumers will not be able to find some vel vitae on store shelves. this is not going to go over

well in my house. we are in a time of high seasonal demand of the high food stuff. i don't know why that would be. >> the football, serum bowl? i don't know. >> it was a bad year. set for bonds next year, our next guest says he doesn't see a bond bubble, more like a bond fizz. when we say bonds, i mean, the bonds we're talking about with you aren't even the bonds that people think about when we say bonds. >> that's right. the bonds we focus on have a lot of credit or default risk. last year was a rel ofly bad year for interest rate bonds, treasuries and interest rate sensitive products were down last year. and the best performing area of all of bonds were junk bonds or high yield bonds. >> they could move conversely,

even. >> absolutely. >> they probably do. because as the economy gets better and other interest rates start going up, the default risk goes down so they can actually move in the inverse fashion. >> that's exactly right. and what people are looking at in 2014 is what do you do with your bond part of your portfolio? and the problem is that yields are very low in the interest rate sensitive part and i think high yield bonds will be the best performing in 2014 because you're right, the economy is getting better, default rates are low. junk bonds have the lowest duration or the lowest interest rate sensitivity. >> but i think at this point people think the move is being made. >> no. junk as we sit here and start 2014 is some of the lowest absolute yields ever. but the spread that you get over treasuries is still okay. >> it's hard to buy them here.

>> almost all bonds are not a great long-term investment, i don't think, right now. but if you have to be in bonds, this is probably not a terrible place to be next year. >> and you could make the case you should be in bonds. for anybody that has a portfolio of assets, you should have at least a percentage in bonds. >> absolutely. >> what's the smallest you should have, 10%? >> in bonds in general. yeah. i think the smallest probably is 10% to -- you should probably have between 10% and 30% over time. you need some store in value in case there's a big meltdown. and people do need income in this environment. >> are you looking at the super bonds, too? >> not really. we more look at stressed mutual bonds, puerto rico or some of these type of things. >> what about those situations right now? >> that is a pretty tough situation. we haven't done anything in puerto rico as of yet. they don't really yield as much as -- we prefer to find something that has real junk.

but it is something to follow and that could have a spillover effect on the rest of the municipal market. >> can i ask you about treasuries? >> sure. >> even though -- do you know anything or -- >> a little bit. >> what's the treasury? what is the ten-year going to key on? is it going to be the economy or is it going to be inflation? >> it's going to be on short-term interest rates. >> so the fed can control the ten-year, then? >> to some extent. i think the key thing right now is that the fed has said we're going to keep short rates low probably until the middle of 2015. and if the short rates are at zero, how high can the ten-year bond go? >> i think right around 3%. if you look at -- if you look at historically between two years and ten years or five years and ten years, people look back on it historically, we're relatively wide right now. >> three points is the biggest spread you'll see. >> we could go to 2 1/2.

although they're already pricing in some stuff. >> that's right. i think the ten year is going to bounce around 3%. >> back to 2.87%? >> it could. >> 2.87% specifically. >> if you go anywhere, a short test. >> 2.873 was -- your your window. >> and when they started tapering, i didn't think it was a slam dunk. >> but everybody is saying that this year. everybody is saying it's -- every mortgage guy says it's going to go next 3 1/2, next 4. but this linear move based on -- and i don't think they know because that's what they've been saying for four years. >> no. i think the general consensus is -- >> it's fooled bill gross. >> that's the bond market. he's a lot better than treasuries than i am or what we do. but, you know, the way we look at these bond markets is, i think the key is short rates. if the fed does not raise short-term interest rates, i

don't see how the ten-year goes to 4 with fed funds at zero. it can go anywhere at any time obviously in the short-term. but our kind of view is that the treasuries will kind of stay in a trading range. and the excitement is going to be probably in a year, year and a half from now if the fed starts raising shortly. >> is there any way that the fed can lose control of the short end of the curve? what would that look like? >> i can't conceive of that. >> i can't believe that they are in charge. is it we're all based -- our entire economy globally is based on what the fed thinks short rates should be? they have that much power? that's too much power. >> well, it's -- that's an open question. but yeah, no, i think as long as the fed keeps short-term rates low -- >> they are capable if they make mistakes of building up dislocations globally that could have huge consequences. i guess that's what rand paul and his father probably are thinking about, right?

>> i think that's -- >> i hope they're right, right? >> yeah. >> it should be at two or three and they're keeping them at zero, i hope they're right about that. >> no, i agree with you. and the ten-year does get influenced by inflation. the economy. >> no, i think it does in some sense. but i think, again, as long as the fed has short-term rates very low, it keeps a lid on where those bonds are. in money markets, there's over $2 trillion worth of money markets. and if the yield curve gets out of walk, some of that money or some short-term money will go into the longer end of the curve and moderate where treasuries will trade. one of your earlier points, i think the fact that short rates are so low has caused a lot of money to go out of investment grade bonds. >> down the risk curve. >> down the risk curve into levered loans. there's been a huge inflow in terms of -- >> so that could be bad if there were too many of those. >> yeah. >> if the stock market is way ahead of itself, it could be a

bas bad thing. but in your view, the fed at this point, the manipulation of short rates hasn't been that. >> okay. thank you. >> no, thank you. when we come back, the big fill. another day of frigid conditions across the country and that, of course, means more demand for natural gas. we're going to find out how supplies are holding up as americans try to stay warm. and micron technologies is one of the stocks of the day after a stronger than expected report. we have the ceo mark durcan will be joining us in the next hour. [ crash, alarm blaring ]

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let's check on crude prices, says get a read on how much these brutally cold conditions have been fueling energy demand. joining us is steven, the editor of "the shork report." steven, it's great to see you. >> it's great to be here. thank you. >> explain to me why oil prices fell so rapidly in such quick succession. we were down around $93 for wti all of a sudden. what happened? >> right. well, we had beginning in december a very sharp run-up in price. and this was driven primarily by news that trans-canada will begin shipping barrels of crude

oil directly from alberta down into the houston area. so what we saw over the course of december was prices higher. that is priced for inland, canadian and u.s. crudes regressed towards the global price of oil. since then we've had a number of factors that have come in to help put the ease on price. first and foremost, it's the situation in libya. >> stephen, hold on a second, though. i mean, that price dropped really sharply in about three days. that wasn't due to demand and supply. what happened? >> well, right now the biggest driver would be essentially the rebalancing of commodity index funds. that is to say that we've seen a tremendous outflow of funds coming out of the market in december, and we undoubtedly had, again, the rebalance and sort of the shifting of positions held by these funds was primarily the biggest driver. >> did that come as a surprise to you? because when we talked to you

right before christmas, you were looking for prices to push up above $100. >> yes. and in fact, we did. we got up to $175 about a week after i was on. now we've come back down, and prices are now in that $95 to $90 range. this has been the base that markets have found a home for in the past three years. and this has been the launching pad. as we look forward now into the gasoline blending season, i am looking for prices now to hold in this area in that, say, $95 area. >> so the cold weather, let's talk about that for a second. i mean, i still don't understand the big jumps and the big drops other than to say that this is a rebalancing. there's some weird moves that happened from hedge funds. do you think that that was an aberration, though, from what we should be expecting? >> no. i mean, at this time, we're in an area where we do have a significant amount of drivers, especially with this cold. now, the cold impacts the viscosity or the flow of oil

through pipelines. and so we've had the two big drivers now with regard to the cold in the past two days. we've had a number of refinery outages stemming from illinois up to the canadian maritimes. now, those refineries have shut down. they need to go back into the market, now that they've got their supply commitments, and they've been buying up a lot of product, gasoline and diesel fuel, and that's been helping to support oil prices at this point. >> where would we be if it wasn't for that? when you're still talking about oil in the $93 a barrel range, where would we be without those issues? >> right now, again, we've been in this home now for the past three years. i don't think that we are in a precarious situation. when we net back where crude oil prices are relative to where that translates into the retail price of gasoline, we're looking at that is the consumer at very comfortable prices than where we've been for the past three and four years. so that bodes well for the consumer going through the end of this winter and as we

transition into the summer gasoline blending season. >> all right. let's talk again about the cold and how this is impacting the viscosity of oil moving through the pipelines. you said this is something we should look to as a concern for the bakken, but i thought most of that was coming out by rail. >> it's coming out by rail, but we also have a significant amount that is being shipped down, the heavy bitumen in alber alberta, and that is very heavy. you have to keep it heated. when you have well below subzero-degree temperatures, you are going to impact production. you're also going to impact production via freeze-offs with a lot of snow, a lot of ice on the ground, it's difficult to get a lot of oil. it's difficult to get natural gas out of the market right now. and therefore, that is causing concern and is helping to support price at these levels. >> where will we be next week or so because of the weather? >> right now, again, i think we're going to find that base there, and i'm looking for prices to start moving higher,

back towards into that upper $95 to $100 range. this is the range that's effectively where we've been, in that $105, $90 range. i think i was on a few weeks ago, and this is certainly the range i expect prices to yo-yo in between for the remainder of this year, and that is low 90s, slightly above $100. you get above $105, up towards that $110 for u.s. crude, and you really begin to impact the elasticity of demand on the consumer level. >> stephen, thank you. >> thank you, becky. we are sticking with the deep freeze. next, how the airlines are trying to work around the polar vortex. we're going to get a review on how they're handling the plunge in temperatures. and then all things washington and wall street with former omb director peter ors g orszag. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads...

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welcome back to "squawk box." the polar vortex freezing everything in its path. the airline industry is getting frostbit. how can the majors work around mother nature? gearing up for the first round of jobs data. citigroup's global banking vice chairman peter orszag talks growth, job creation and whether washington can get its act together. earnings central clyollides with "squawk." a first on cnbc interview. stay warm and avoid the polar vortex. watch "squawk box" beginning right now. ♪ ice ice baby ♪ ice ice baby ♪ all right stop collaborate and listen ♪ ♪ ice is back with my brand-new invention ♪

good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. the futures this morning are looking a little more -- they're looking a little more tempered today. you see those dow futures are down by 25 points below fair value. the s&p futures are off by just over 3.5 and the nasdaq down by 7 points. the ten-year is still yielding below 3%, 2.953%. and in our headlines this morning, a key economic report is a little over an hour away. the adp report on private sector employment coming out at 8:15 eastern time. looking for 200,000 new private sector jobs, compared with 215,000 in november. also the minutes from the most recent fomc meeting, the one which the fed pulled the trigger on tapering its bond-buying program. other news, alan mulally is staying put. the ford ceo told the associated

press that he'll remain through the end of the and is not going to microsoft. that ends speculation that he'd be replacing steven ballmer. sprint is upping the ante. the mobile phone provider is offering what's called a framily plan for friends and family. if up to ten members of family and friends sign up together for a plan, they can get discounts of nearly 50%. the so-called polar vortex causing cancellations and delays for airlines across the country. phil lebeau joins us now with more. phil, do you know -- i mean, in general, i understand these delays. what temperature does jet fuel start to not work right? do you know? someone was talking about that yesterday. do you have any idea? >> reporter: i've been told by people at both boeing as well as airbus and also in the aviation industry, you really have to get a little bit colder than this before you start to see some impact in terms of how the jet fuel works. the big issue has been the fact

that you've had lines freezing. the pump trucks. that's been the issue. you can't have crews out there for very long. >> and the wings on every plane, if they sit for 15 minutes on the runway, then they've got to be de-iced again, right? >> reporter: yeah, that's the issue. and frankly, the airlines would rather deal with this extreme cold than freezing rain. they'll take over freezing rain as unpleasant as this is. when you look at what we've seen over the last six days starting with the storm that hit the upper midwest and then the polar vortex that put the deep freeze on everybody, the biggest impact so far amongst the airlines in terms of who's really been taking a shot here has been jetblue. now, yesterday i was on a conference call with the company's coo, and he came out and said, look. we think that we've got a pretty normal schedule as of wednesday. they've reopened their flights out of the three new york airports as well as the hub in boston. more than 1,800 flights were canceled by jetblue. and the company did confirm

yesterday that implementing the new pilot rest/work rules, that did have a factor or play a role in the determination to cancel a number of flights late monday and on tuesday. when you look at the industry overall, we've seen more than 12,000 flights canceled. and when you look at the cost of the airlines and the consumers, moss flight, which is a consulting firm out of washington, is now calculating that at $1.4 billion. now, we still haven't seen any estimates from analysts in terms of what the impact will be on airline earnings. so as we take a look at the airline index, we haven't seen a lot of impact in terms of investors moving away from airline shares, but that could change as we start to get some estimates in terms of how much of a hit this will be to the bottom line in the first quarter. >> phil, explain exactly -- you were talking about pilot rules in terms of how long they can work and the new rules. what are they exactly in terms of trying to understand what's happening here? >> reporter: well, the big issue here comes down to they have to

have eight consecutive hours of rest. and the determination is how many hours can you fly, can you wait for the implementation of somebody saying, okay, i'm over the limit in terms of how many hours i can fly today, and therefore, i can no longer fly. in the past, andrew, what you had was a situation where you could probably fudge a little bit, if pilots were truly tired and fatigued, they would say, i can't do it. but in a lot of cases, you had pilots who would be waiting. their flight would be delayed, and they'd ultimately fly. would they go over the limit in terms of how many -- how long their work day can be? yeah, probably. but it was not a huge issue in the industry, or wasn't perceived to be until you had the crash up in buffalo and then you had some ramp incursions due to pilot fatigue. that's when the new rules went into effect. >> okay. >> phil, how many airlines are involved -- are some of them more involved than others? how do we split up the 1.2

billion? who's got the most, do you think? >> reporter: i think obviously you've got to go with the big four taking the biggest hit here. >> that would be -- >> caller: united, american, delta and southwest. >> 250 apiece. >> reporter: jetblue, they're in the northeast, so they'll take a big hit. >> i think that's finally material. they'd have to say this is material at this point. >> reporter: keep in mind, that $1.4 billion, that is the impact to both airlines and customers. >> okay, yeah. >> reporter: according to moss flight. what we haven't seen is the estimate in terms of purely bottom-line impact on the airlines. >> that's probably revenue, too. i don't know. it's hard to figure out at this point whether it's pennies per share or not. >> reporter: right. and i think we'll probably get that over the next couple of days. and the interesting thing, guys, will this matter to investors? because they have looked at airline stocks and said we're still optimistic on these guys. >> plus it's the ultimate one-time item. it's a charge. all right, phil, thank you. >> reporter: all right, guys. joining us now on how the airline industry is handling the cold snap, michael boyd,

chairman of the boyd group, our expert on all things airlines. michael, we've been talking about this $1.2 billion number. "a," is that right? and we just talked about it as a one-time number. to the extent that you think airlines look at a situation like this and think it's going to happen again, do they have to start factoring this in in a different way? >> i think what jetblue did was the right thing. if you can't operate, you shut it down and inconvenience less people. but they tried to anticipate this. i think the $1.2 billion is probably an accurate number. as phil just said, it includes everything. i want to make light of it, but this is not going to be as big a hit to the airline industry overall for the year as it might look today. >> of the airlines, if you were going to list one, two, three, who do you think takes the biggest hit, and who doesn't take a hit? >> jetblue obviously will because that's where they're focused, right in the northeast. washington, boston and new york. >> but i'm thinking about american as well, even though their hub is in dallas, they do

a lot of business in the northeast as well, no? >> oh, no, absolutely. >> delta. >> they've got a hub -- delta, you've got delta with an operation at ken da and laguardia, american, the same thing. and united has a huge hub at newark. they'll get affected, but those airlines also have a huge system worldwide. jetblue does not. so they'll get hit but not as badly as, say, jetblue on a percentage basis. >> are the airlines not -- should the airlines be prepared for something like this? do we say, this is a one-off situation, and it happens, you know, hardly ever, or do you think the airlines say to themselves, we need to actually change the way we operate so that we can actually operate in colder weather? >> no, not really. i mean, we've done work up in alaska. they're ready for it. but here, for example, that battery that worked perfectly fine over the last three months in the ground start unit, suddenly at ten below goes under and there aren't that many batteries on the shelf to replace it. you can't really prepare for this because it really is a one-off. and when it does happen, it's

like the coo of jetblue said, sometimes you've got to let the weather win. >> they did shut things down. you say that is the right decision. how about all the communications around that decision, though? >> that's another issue. when you do that, that's a very good point to keep people advised of it. no matter what happens, can you send a reporter out to laguardia airport and find that one, two, whatever people who are ticked off, of course they're ticked off. but the reality is that jetblue probably inconvenienced thousands fewer by doing what they did. but there are people inconvenienced. and hey, guess what? when you buy a ticket, you're betting on physics. and sometimes the physics of weather do get you. >> okay. michael boyd, thank you for joining us this morning. >> thank you. >> stay warm if you can. >> i will. >> don't go on a plane, i guess. i don't know. coming up, earnings season is heating up. the ceo of micron technology, mark durcan will talk to us after a very positive report. but first, our guest host is on his way to the set. former omb director and citigroup global banking vice

chairman peter orszag. yes, a man from the administration now a banker. man. all right. we're going to spark the unemployment benefits debate next. get a leg up on the trading day with the morning squawk newsletter. go to our show page, squawk.cnbc.com, and sign up now. "morning squawk" is a snapshot of the day's top stories, guests and some fun water-cooler stories that we'll be squawking about all morning long. sign up and get "morning squawk" delivered in your inbox every weekday. "squawk box" on cnbc, profit from it. ♪ 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.

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business tycoon bao is dialing back on his ambitious plans to buy "the new york times." this comes just more than a week after he made his intentions public, arguing that he thinks the company is worth $1 billion. chen doesn't hold shares in "the times," nor does he plan to buy any of the common shares. he says that "the times" rebuffed a request for a meeting. "times" chairman said recently that "the times" is not for sale. >> he said it's worth what? >> a billion. >> a billion? oh, only a billion. >> right. can i just say, taking my "ti s

"times" hat off for a second, this guy is a publicity hound. that's what he does. he comes up with all sorts of random things he's buying. the whole thing is -- hey, the stock moved last week on that. >> $2.3 billion. what was that $3 billion, the guy turned down $3 billion? >> snapchat. >> snapchat's worth more than the -- i'm sorry. that's nothing to laugh at for sure. it's a sad commentary. >> it's a sad commentary. >> in the state of the newspaper. >> it's sad commentary on the state of the internet. >> are you sure? >> 100%. >> snapchat's worth more than "the new york times," andrew? >> i'm suggesting that's not true. >> oh, you are. but you don't know. i mean, it is what it is. >> i feel very confident -- >> it is what it is on any given day, isn't it? >> that's on any given day. any given day. >> i'll give that you. i think it's worth more. congress is already dealing with high-profile issues just a few days into the new year. and our guest host this hour is peter orszag, former omb

director under president obama and currently citigroup's global banking vice chairman. we were talking off camera, and i didn't realize this, but when you speak, it's the truth, basically. you just told me, right? >> there we go. i'm glad you got the talking points. >> then i'm not even going to try and argue with you on any of this stuff. >> anybody else have any questions? there we go. done. >> you should give us a lecture, not an interview, probably. you actually are happy about that we did a budget deal, finally. did you ever do a budget? >> there were budgets. but, look, this budget deal is -- it's better than not having one. but in the sense of, like, not shooting yourself in the foot. we shouldn't be too excited about it. >> that's mostly what people are saying. >> the better news, i think it's much more likely that we will have a debt limit deal without a lot of kerfuffle which means we've got 12 months of washington not creating a distraction. and i have not been very positive on u.s. economic growth over the past few years, but i am for 2014. i think the combination of

deleveraging basically being over, state and local fiscal consolidation basically being over, federal fiscal drag being smaller and less drama out of washington means we could see maybe, you know, again, it's not gangbusters growth, but 3% growth, which would be a lot better than what we've been experiencing. >> fiscal drag and the deleveraging being over and the state and local governments not needing to cut more jobs. >> exactly. >> that may be the most important point, right? >> and plus, the amount that the federal government's going to be a drag on the economy will be much smaller in 2014 than in 2013 by maybe even 100 basis points, which is a pretty big deal. >> being very familiar with the inner workings of the white house and washington, you seem to be writing off the possibility of anything really new happening in the next couple of years in terms of grand bargains. >> yes. >> so the best we can hope for is that -- >> just stay out of the way and

let this process kind of play out and, you know, have a little bit more economic recovery than we've had had. >> in -- >> i think that's -- >> just because of the players who are involved, forget it? >> deeply structurally politically polarized. the grounds for a grand bargain are very small. they're very hard to do. i just can't see it. >> you do that on the hope that somehow in two years from now, four years from now, we're going to be able to do that? >> there's also a bigger question. there's also a bigger question. >> across the board. >> a grand bargain would be advantageous or would be desirable, especially if it could combine a lot more fiscal restraint that's out 10, 20 y r years from now with more infrastructure spending today. i don't think it's going to happen. but in the meanwhile, don't forget that both the immediate and the medium and long-term fiscal outlook is actually improving really rapidly. in part because the economy is improving and in part because as we were discussing off camera, medicare cost growth has plummeted. >> what do you think about the

unemployment insurance situation? i think i know what you think, but do you think that it will get passed? >> it doesn't look so great at this point. but also, look. my own opinion is it would be beneficial. but this is $6 billion in a $15 trillion environment. at the margin, it's helpful, but it's not going to fundamentally change. >> interesting. you're saying it's okay. >> again -- >> a lot of democrats -- you saw what the president said yesterday. >> there are two things. one, from the macroeconomic perspective, it would help. for the people involve, obviously, it's a much bigger deal. for them, that should be the primary motivation. >> what you're saying -- i harken back to something i read in "the journal." >> therefore it's true. >> no 1972, you know, these are statistics. in 1972, 20% of voters had a strong ideological preference for one party. today it's 50%. >> yeah. that's the whole point. >> you know, we are going to have elections in 2014. then it could just entrench each

side further if the house were to -- if they were to gain -- republicans gain more and maybe pick up a couple senate seats. then it's just going to get worse. >> this is what's happening. the probability that you live in a county that landslides in your direction by more than 20 percentage points has more than doubled since the 1970s. it's not just gerrymandering. that's at county levels. if that's happening at the county level, it doesn't matter how you draw the congressional district. >> uh-oh. >> uh-oh. i think i'm guilty. >> oh, my god, valerie jarrett? she still has your phone number? >> yeah. that is at&t. >> at&t. that's the problem. >> conference call with plouffe. >> sorry about that. >> okay. then we're not optimistic about those things. >> and that's why i don't think you should expect any grand bargain. i don't think you should expect tax reform. it's just very difficult to legislate in that environment because your incentives for a deal are much lower. >> you said, though, that this

is a situation where the budget is taking care of itself in a lot of ways. spending is -- the situation is improving both from a revenue numbers coming in and spending numbers coming down. what about the entitlements, though? is that still a problem? >> the biggest story -- thank you -- the biggest story -- >> no, call her back. >> -- the biggest story here is that medicare spending has slowed down dramatically. in the first two months of this fiscal year, medicare spending was actually lower in nominal terms than it was in the first two months of the last fiscal year. if this trend were -- a congressional budget office which i used to run and i can guarantee you is not an agency that likes to update its forecasts very rapidly in response to incoming information, because, you know, it likes to move slowly, has knocked down the ten-year deficit numbers by $1.2 trillion because of this ongoing deceleration. and that's not even close to marking to market. so if it were to continue, basically everything we think we know about the long-term fiscal gap is wrong. it will -- >> what about social security? >> so social security, there

hasn't been as much movement. but social security was never the primary driver of our long-term fiscal gap. the fiscal gap is fundamentally a health care problem. and if that health care problem is changing, then so is the fiscal gap. >> we're going to take a break and talk about that. should i warn viewers that if they read fuhrman's piece yesterday, they don't need to watch what you say? >> no, but i do agree with what jason fuhrman said. >> if you read it yesterday. that's why i wondered. i mean, they didn't tell people to go out and with this message. you just happen to have the same -- >> oh, come on. i've been saying this two years now. >> and you speak the truth. >> and i speak the truth. >> so jason came around to the truth. >> i'm glad everyone else is coming around. >> god. >> he has been talking about this. it's not a new phenomenon. >> i like this guy. and that's a stretch for me in terms of -- >> i prappreciate that. that makes me feel warm and fuzzy. >> what a concept. too bad it didn't go the other way around, start there and then go to the administration, right?

did anyone else -- we got anyone there yet that had the private sector? >> yeah, the commerce secretary, jeff zience. >> he's tacking. we'll be back with our guest host, peter orszag. the big data point of the day. the adp employment report released at 8:15 eastern time and the numbers and instant market reaction with mark zandy. and if you're getting ready to file your taxes, we have a story you need to hear next on "squawk box." as we head to break, check out the price of gold. mine was earned orbiting the moon in 1971. afghanistan, in 2009. on the u.s.s. saratoga in 1982. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection.

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couric, david pogue. mayer rolled out new plans including new apps, sites and acquisitions and of course she talked about mobile. >> mobile is all about growth. today total worldwide smartphones are up 27% year over year. while tablet usage is up 78% year over year. by 2017, we expect to see 3.8 billion devices connected to the internet. that's nearly 2 billion more than we see today. >> shares of yahoo! up more than 108% during the last year. some of that attributed to her. some of that attributed to the increasing value of ali baba. when we come back, micron technology rolling out quarterly results. the ceo mark durcan will talk to us about the numbers. the future of chips and the next big thing in technology. first, though, changing the world.

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welcome back to "squawk box." this morning in the headlines, investors looking ahead to the december adp report. that's coming at 8:15 eastern him the economy added 200,000 private sector jobs last month. we're also going to get the minutes from the most repecent minutes from the policy meeting. mortgage applications rose 2.6% last week according to the mortgage bankers association. that was entirely due to an increase in refinancing with new home purchase applications actually edging lower. the average 30-year mortgage remained unchanged during the week. the number, 4.72%. and the parent of restaurant chain chuck e. cheese is exploring a possible sale. if you want to buy it, call the bankers. dow jones reporting that cec entertainment has considered selling the company to a private equity firm and has been working

with goldman sachs. neither goldman for cec would comment but it has put the stock higher in after-hours trading. american generosity is on the rise. in fact, 2013 saw a spike in philanthropic donations and that trend appears to be continuing in the new year. weill cornell medical college announcing a $75 million donation to be used for precision medicine and other cutting-edge approaches. joining us now on set is advertising legend edward meyer. he is the former chairman, president and ceo of gray global. also lori glemscheyer, the dean of weill cornell medical college. thank you both for being here this morning. i just want to say this is great news. we love hearing about big gifts like this, but what made you decide to give this gift to weill cornell? >> i'm happy to tell you, first of all, the gift is largely directed at cancer research. our family has not been just touched by cancer, we've been battered by it. so my wife and i have known for a long time that when we came to give a major gift, and this is

one of them, it would be in the service of cancer research. the real question was where do you give it so that it has the most effect and can be most productive in terms of improving cancer care? and we did a great deal of research, due diligence like i did in business, and came to the conclusion that weill cornell, run by lori who, by the way, is a researcher. i love that. and with a doctorate was really going to be a leader in the new paradigm of cancer research. so it was a great delight that we ended our two-year quest for where it should go to conclude that weill cornell was where it ought to be. >> lori, thank you again for coming in today. when you have a gift like this, what does it mean? what can you do? because i know that you said that this is a transformative gift. how does it work? >> well, needless to say we were delighted that twoer yoos of research ended up at weill cornell. this gift is transformative for us because it's going to allow us to expand our already

excellent cancer research enterprise and to bring targeted drugs to patients with cancer. you know, even though the incidence of cancer -- the death rate from cancer has decreased by 20% over the last decades, there are so many cancers we can't treat and don't know how to treat. we know cancer is not a single disease. it's not a one size fits all, but each patient has a unique cancer, and this gift will allow us to recruit additional brilliant scientists and really utilize big data to treat our patients with specific drugs that will cure their cancer. so we're so excited about this and so grateful to ed and sandy. >> you know, you point out that cancer is a much tougher problem than we expected. in fact, i think going back to the '70s, we keep thinking we can cure it and completely fix it. what have we learned along the way? do you think it's maybe something we can cure in the next couple decades? >> it's an amazing time for

cancer and biomedical research altogether because with the advent of human genome sequencing and new ways to image, to do molecular imaging and to handle big data, we're at a really critical and exciting point in biomedical research where i think one can actually translate discoveries that we make in the laboratory into new treatments for patients. and so the gift comes at an incredibly opportune time for us where we're really primed and ready to go. it's also a time where the government is holding back on its resources, unfortunately. so it's a little bit ironical because here we are ready to go. we have so much new technology we can use to treat this problem, and we're strapped for resources. so a gift like this means the world to us. >> weill cornell really did an astonishing thing in attracting lou cantley from harvard to come and be the leader of that cancer research. cantley is somebody we had heard of for years. but interestingly, my daughter, now an economist at oxford, was

at harvard 30 years ago in lou cantley's lab. and when she heard we were considering -- and lou would be the man that she flew over here, met him again, re-established a connection, and said to me on the phone, dad, you've got to do this! was wonderful to hear. >> the funny thing was, the second meeting i had with you and sandy, one of you asked me, do you, by any chance, know a researcher named lou cantley? i said, i not only know him, i have just recruited cantley to head our cancer center. >> great setups and things really coming together to make this work. >> i believe that's the case. >> i want to bring joe in. obviously with your background in cancer research, i'd love to hear your thoughts. >> just thinking -- just listening about cancer in general, dean glimc hchlglimche different because it's almost your own wiring, what makes you -- the notion that we stay healthy for so long without

cancer is staggering, knowing, you know, every time a cell divides, everything has to be perfect down to a single letter. so that's the most frustrating thing that it's really sort of not a disease you catch. it's almost a breakdown in your own body's workings. what i'm most excited about, and i agree with you where we are right now, is the pace of scientific discovery. i'm counting on the singulairity, professor, which means along with kurzweil at google, i want organs not necessarily made of new tissue. i want to download my brain on hardware like keanu reeves. this is going to take some serious advances. my point is, it's exciting that just learning about every cancer and how it works is actually possible within the next 10, 15 years, hopefully. >> it sure is. it sure is. >> do you think we can hit the

singularity? can we be talking about this in 150 years? >> we're talking about precision medicine, which is the ability to sequence each patient's tumor, find the mutation that causes that cancer, and either use a drug that's already developed or develop a new drug. >> yeah. and there's so many -- >> and we'll target that individual mutation. i think this is on the horizon. it's already happened. it's already happened. >> personal immune therapy, you know, ramping up someone's own specific immune system? >> this is an incredibly exciting time for immunotherapy. and we have drugs that activate the immune system to fight off cancer. you've got to attack cancer on both fronts. you've got to attack the immune system and activate it so that it kills the cancer cells. and you also have to kill the cancer cells directly. that's happening in cancer today. we're taking both approaches. >> and the other thing you said, i know at m.i.t. now where the

cancer center where i worked, the guy they brought in, tyler, is a guy, tried to bring all these disciplines together. you're going to need engineers, mathematicians, the big data that you need to collate to put together to do this makes it a much more difficult task but one that can eventually, i mean, really solve all of this, i think. >> a uniting on this. >> very much so. and talking to lou, lou cantley, that was exactly his point. it's no longer one guy in a lab coming up with a cure. it's really a whole team of mathematicians and doctors, clinicians all working together to come up with these solutions. >> i love what you said about how you it really did due diligence, you and your family before you gave this gift because you wanted to make sure that it was used in the most effective way. but we want to thank you for coming in today and thank you for this gift. >> thank you very much. and laurie, thank you. >> thank you. thank you to sandy and ed. >> joe, we'll send it over to you.

coming up, we'll play the memory game with the ceo of micron technology. the stock was one of the s&p 500's best performers last year. check out futures at this hour. they are indicated a little bit lower, but not as bad as they had been. we need 11 s&p points to be above last year. fifteen minutes could save you fifteen percent or more on car insurance. yeah. everybody knows that. did you know there is an oldest trick in the book? what? trick number one.

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welcome back, everybody. shares of the container store are under pressure. on its first quarterly report as a public company, the retailer posted better than expected earnings, but its revenue and sales projections fell short. container store stock has been rising since its ipo priced at $18 at the end of october and nearly doubled in the first day of trading. >> we will bring in a chart since the big bang that shows the advance of how information can be organized. >> i think information has been organized. >> it's logorhythmic. and people that say we don't have enough time. digital is all new. that's only in the last 15 years. >> to me that's different than organs. organs, cancer, i think that's slower. >> it's all digital. if you wanted to find someone to cure death, who better than google? i mean, they're the ones that would do it. if you had to pick a company that's going to do it? well, google or twitter.

maybe micron. micron after trouncing estimates with its latest quarterly earnings, it was also one of the best performers in the s&p 500 in 2013. and here to break down the quarter is micron ceo mark durcan. such a tired old phrase, mark. you know, i'm embarrassed to say it, but it's not your father's micron anymore. seriously, it's not a memory commodity chipmaker? there's things that go into smartphones and servers now that are proprietary to micron? >> you know, that's exactly right. the memory industry is really evolving, and it's been an exciting ride. i've been in the industry for three years. it's been an exciting ride for the last 30 years. but the business going forward has been much more about memory systems and how do we deliver differentiated products to our customers. yes, we still sell a lot of bits to a lot of folks in all sorts of applications. but the end game for us right now is differentiating our products and wrapping more firmware and software and system

functionality into the memory because that's how we're going to keep moving electronics forward. >> how long have you been at micron, mark? >> i've been at micron since '84. so 30 years in june. >> so you know exactly what i'm talking about. i've seen micron be one of the most profitable companies in all of technology and within two years, it's like you're worried whether it's even going to earn another penny in the next quarter. what was the high on -- was it back in the '90s, how high did it finally get at one point? >> oh, you know, i don't remember the exact number, but it was in the 85, 90. >> 85 to 90. >> it visited zero a couple times almost. it's incredible. you think it's different this time? >> it really is different, yes. the dynamic in the industry, now that we have a lot less governments involved in terms of creating supply and industrial policy and we have, you know, really a much more diversified end market for our products, and

a situation where law, at least as it applies to memory products, is starting to change. it's not just about shrinking geometries. it's about employing new materials and system-level products with additional functionality. >> oh, man. >> we're not introducing, you know, 50% cheaper dye next week with twice as many bits. we're introducing memory chips that have processing capability or a new functionality associated. >> are you an engineer? you must be. are you an engineer? >> i'm a -- i'm a chemical engineer, yes. >> man! >> because what we do here is we build things. >> i'm going to dvr that last thing you said about moore's law, i'm going to tell someone that at a cocktail party. that was impressive. i used to be up nights worrying about moore's law. at this point, how many more years do you think we have? will we ever hit the wall? >> well, of course, eventually we'll hit the wall relative to

electronics. but we're going to continue to make advances. we're just going to make them in new and different ways. we're going to work on how we bring different memory technologies together in the same package and the same system. how we control those memory technologies in a seamless fashion. and we'll continue to scale for the foreseeable future. but we're doing it at a slightly slower pace, and we're adding value in different ways. >> mark, the one thing in the world of technology that hasn't kept pace with memory and the speed of chips is batteries. and the amount of power consumption that all of these things require. do you see any hope for either the battery or the ability to reduce the energy -- and you guys are doing this already -- reduce the amount of energy that both chips and memory require? >> yes. yes. when we're working hard, you know, particularly on the power consumpti consumption end of things, scaling, of course, helps. there are new technologies. just the predominance of nan flash now moving into mobile stores and enterprise stores is

saving huge amounts of power. micron is introducing new products that bring the memory either closer to the processor or start doing the processing in the memory itself. and both of those techniques are very significant ways to start conserving energy and allow us to do much more in mobile applications before our batteries do get sucked down. relative to batteries themselves, i think we're going to continue to make progress. there are lots of things we can do in the materials world that will continue to optimize that. but i don't see any huge breakthrough coming in the next year or two. >> so you've been -- did you know simplot? >> yes, i knew simplot. >> lord of the fries, the tater tycoon. j.r. simplot. he was amazing. we finally lost him a couple of years back. started micron. sold all the potatoes to mcdonald's from idaho. >> you know, that's right.

we were -- we were very fortunate in our history to have a lot of folks early on our board that really understood commodity industries and large-scale markets and how to deal with those. and that's been a big part of our success, you know, coming to today. the game going forward, of course, is different. >> not commodities anymore. >> and as you said, you know, we're adjusting to that. >> someone's favorite stock. who was it? that was on cnbc. you got a bump that day. do you remember who it was? someone loves micron for the future. it was one of their biggest names. >> oh, david einhorn. >> david einhorn, yes. it's good to have him on your side, too. he's not quite the lord of the fries. >> am i right? is it david einhorn? >> absolutely. you know, greenlight's been buying a position at micron, and we're -- you know, we're excited to have some of these new investors interested in micron. >> it's amazing. god bless you. i've written off -- people have written off micron so many times. and you look at that chart. the right-hand side of it's

amazing. i hope it continues for you, mark. good to see you today. thank you. >> thank you. we just keep punching away. all right. when we come back this morning, we'll wrap things up with this hour's guest host, peter orszag. and next hour we're going to focus on jobs. the adp employment report will be out at 8:15 eastern time. stick around. "squawk box" will be right back. still to come on "squawk box," former counsel of economic advisers chairman glenn hubbard. plus, private payrolls data will be out at 8:15. moody's analytics chief economist mark zandi joins us to break down the number and preview friday's government numbers. "squawk box" is back right after the break. it's a stationery and gifts store. anything we purchase for the paper cottage goes on our ink card. so you can manage your business expenses and access them online instantly with the game changing app from ink. we didn't get into business to spend time managing receipts, that's why we have ink. we like being in business because we like being creative,

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welcome back to "squawk box." our guest host this hour, peter orszag, former omb director under president obama and currently citigroup's global banking vice chairman. we haven't really talked about obamacare. we were talking about it during the break. and you get a nice shout-out or not nice shout-out in this editorial in "the wall street jus journal" today. >> i haven't seen it. >> oh, you haven't seen seen it. >> we can have the surprise live. >> the slowdown -- this is about -- >> i always like responding to "the wall street journal" editorial page. >> you know what i'm talking about? the jason fuhrman. >> he wrote it yesterday. fuhrman's piece was in there yesterday. >> it's right here. anyway. here's the issue. the issue is that you think that obamacare is actually going to

do great. and some of the people who are actually working on it are a little less excited. >> so here's the thing. i think you need to be clear whether you're talking about total health care spending and medicare. in total health care spending, there's a debate about how much of the slowdown is because of the economy. in medicare, there is no plausible story you can tell that the slowdown is being driven by the economy. and the medicare slowdown is dramatic. so often these discussions kind of conflate total versus medicare. again, just focusing on medicare -- >> why? why do you think that is? why has the spending slowdown been dramatic? >> first we know it's not price. it's quantity. and we know it's not very much demographics. the biggest part is intensity. that is how many services that people have. for example, readmission rates are down. >> since 2005. and the private sector was already moving. >> it's excaccelerating and the private sector has been moving this way. what's exciting about health care is not only advances in cancer research that you heard about before, but the whole structure of the payment system is changing quickly.

>> peter, even the cms, we've been growing at 3.8%, which is much slower. they say that's going to end. and in 2014, the cms says 6.1% because of the economy recovers and because drugs go off patent protection. things are going to -- this may be a brief pause that we're attributing to obamacare, but it may not last. >> if you focus on medicare and medicaid, i'm happy to take a bet that over the next decade we're going to still see very slow growth. >> we're all going to be on medicare because all the baby boomers will be 65. >> even though the medicare rolls are going to expand. >> did you see the results? i think it was last week. i think it was oregon where more people are showing up in emergency rooms, not less. what do you make of that? >> very good research. the team is outunderstastanding. amy finkelstein. the claim is when you insure people, it actually costs less because then they don't show up at the emergency room was never true, and it wasn't embodied in any of the estimates. what this suggests is further

doubts about that claim because even the emergency room story isn't even correct. bottom line is, look, the most important thing is when you insure people, they do consume more health care. that's the bottom line. in emergency rooms and elsewhere. >> but the whole point was we were supposed to bring down costs. >> there was always a two-pronged approach. one, that cost money, it was clear that it did, but then there were other steps taken to try to reduce costs. don't forget, at the time the conventional wisdom was this legislation fixes the coverage problem and does nothing on cost. and since then -- since then, the reality has been there's been more kerfuffles over coverage and the cost story. >> when you started with the whole health care argument, part of what the administration was saying, i think, was actually that they thought obamacare would actually help the economy. on a long-term basis. do you think that obamacare is actually helping the growth of the economy, not slowing it down? >> you speak the truth.

you told us you speak the truth. >> look, all the uncertainty and the disaster over the website, all of that's bad. there's no doubt about it. but in terms of what will help the economy if this slow growth in total cost continues, i know it's a big if, but i'm saying that is a massive game changer for the federal budget, for state and local budget. >> this guy, though, the relatively low rate of growth over the past four years is consistent what we've seen in post-recessionary periods in the past. who said that? the deputy ekt ddirector of thes statistics group. >> total health care spending, can you argue was driven by the recession. you can't argue it was driven by the recession. it doesn't make sense. >> but then when i said to you so you're the guys that are cutting the medicare benefits for all the poor seniors, then you kind of said no, that wasn't me. >> no, no. >> so you've been cutting medicare for the people that need it? >> medicare spending has slowed down -- >> i'm going to get you one way or the other. >> no, no. and the way to square that circle is there's a lot of waste

in health care. for example, who wants to get readmitted to a hospital within a month of being discharged? readmission rates are way down. and that's a good thing. >> thank you. aren't you glad you came in this morning? >> always a pleasure. >> great to see you. when we come back, more about the payroll data from dad. mark zandi will join us. plus, we replace one great thinker with another. glenn hubbard, former chair of the council of economic advisers of columbia will join us for the remainder of the show. "squawk box" will be right back. 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. you're a go for landing, over. [ male announcer ] the all new cadillac cts, the 2014 motor trend car of the year. isn't it time you discovered the

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breaking news. the adp report, private data is out in about 15 minutes. we'll have that and the market reaction just ahead. plus, guest host glenn hubbard, dean of columbia business school on the confirmation of janet yellen as the next fed chair, the economy and what the nation faces in 2014. and think of it as snapchat for professionals. the ceo of confide talks about how he's bringing disappearing messages to the business world. the final hour of "squawk box" begins right now. ♪ i'm waking up ♪ i feel it in my bones ♪ enough to make my systems blow ♪ ♪ welcome to the new age ♪ to the new age ♪ welcome to the new age welcome back to "squawk box" here on cnbc, first in business

worldwide. i'm joe kernen along with becky quick and andrew ross sorkin. we are just 15 minutes away from that adp report, the jobs data that could move the markets this morning. maybe that's what we need for our 11 points on the s&p. because it would have to turn around the futures. >> we've talked to people who are expecting decent numbers. it would have to be a really big number. >> this is the first one after the fed tapered. >> that's true. but do you want to see a really big number to see if the fed continues and ramps it up, or do you want to see something that keeps the fed on hold? >> big numbers. you know, we want to get to 4% someday. sharing his thoughts on unemployment and gdp, glenn hubbard is the columbia business school dean and former counsel of economic advisers chairman. we're glad to have him. you're on the upper west side, right? >> not so bad. >> right across the bridge. >> yep. >> it's cold, though. a lot to discuss. first becky has the headlines.

refinancing applications rising by 5% last week after falling by 9% the week before. but the mortgage bankers association says that they are still down 69% from a year ago. of course, mortgage rates are now up more than a full percentage point from where they were in january of 2013. federal regulators are reportedly investigating whether several big banks deliberately mispriced mortgage bonds in the years following the financial crisis. "the wall street journal" says that the new probe is the first known for wide-ranging examination of mortgage bond sales by banks. some subpoenas have been sent. but the investigation is still in the early stages. and the corporate buzz story of the morning, alan mulally ending the speculation that he could be headed to microsoft. the ford ceo says that he's staying at the automaker at least through this year. microsoft is close to naming an executive. >> if you thought alan was going to get the job and you liked that. >> i will say that over the last several weeks it's probably not been as highly --

>> speculated about? >> i haven't thought he was going there for several weeks. >> okay. microsoft still looking for somebody? they didn't get anyone yet? >> no, but they'll have someone very soon. >> let me know. keep me updated. you'll let me know. >> i will. promise. >> did clearwater ever merge with clearline? >> clearwire? >> yeah. i don't know. is that done? softbank? >> yeah. >> okay. all right, good. keep me updated. >> that one took a long time. >> got really bored with that. a $2 stock. hsbc says that the dream run in u.s. stocks is set to end. we may be -- did they really say that? a little overstated. in a report today, the bank says that the fed's taper, which i guess they just heard about, in the markets started to anticipate a rate rise in 2015 will present a headwind for equities. what a novel thought. hsbc forecasts the s&p 500 will rise just 4% this year. >> see, that's not that different. >> it's not that different.

in consolidating the gains we've had in the last five years, i wouldn't be ecstatic, but if we deserve to be at 1900 on the s&p, i think that's almost -- you could almost put that in the win column. dean of columbia business school, glenn hubbard. we just had peter orszag on, glen. you, in the past, have talked about how important and how helpful it would be to address some structural problems that we have in terms of taxation and regulation, things like that to get us going. he basically said just where we are now with nothing happens other than this budget deal and no debt ceiling problem, that that's enough to make us pretty optimistic. is that where you are? >> i guess it depends on your definition of optimism. that wouldn't be where i would be. what the country needs is a jolt. it needs tax reform, trade reform, regulatory reform. those aren't republican or democrat ideas. they're just growth ideas. we can limp along at 2% to 3% growth. >> is 3% limping?

that feels like that's sprinting with what we've been used to. >> we've got a big hole. 3 prosecu 3% in the long term, yeah. but we still have a big hole to fill from the financial crisis. so yeah, we could be growing faster. i'm still alarmed that we've had this big decline in labor force participation that isn't turning around. we could be doing something about that, too. >> where are we? you're someone who might know on net jobs. where are we now versus the peak employment that we had? are we down net-net on the number of jobs in this country? >> we're still modestly down. but what's really discouraging is the employment population ratio. so we are at non-american territory really a fraction of the population working. that's a question public policy could get to. it has to do with taxation of older workers. it has to do with supporting work generally. so i guess i didn't hear peter saying it, but i would disagree if the notion is this is as good as it gets. we could do a lot -- >> i don't think he's happy about it. he's just saying given the -- we

looked at another quote today that in 1972, 22% of the people were politically very ideological about things. now it's 50%. so the possibility of any progress in the next year or two is so small that we need to just be happy with what we have. which is a budget deal. >> well, i guess i would disagree two ways. one, i know it's fashionable today to talk about secular stagnation again. larry summers and others are doing that. this economy can do much better than it's doing now. and on political polarization, yes, that's true, but we could find some things that both sides could agree on. there's a whole lot more in the middle if we strip the words away that would promote growth. >> spurling was on a week and a half ago. then he was on -- i think he was on "meet the press." and he said they're going to go for this. they're going to come back with a grand bargain idea. >> i think the whole notion of -- i mean, it sounds great. what really counts is a series of incremental good steps like trade reform. if in tax reform the best place to start is corporate because both sides of the aisle agree

that's important, let's start there. let's not try to have everything. >> what about immigration? >> i think immigration reform is critical for the country. and i think this is one where both republicans and democrats have to give some ground. >> the republicans, sometimes i think they won't say yes because it's obama. >> well, you know, who knows? but immigration reform is one of the key things the country needs to do. it's our dna as a country. coming from the university sector where i want all of my non-american-born students to be able to work in this country, i don't see why that's not public policy. >> i thought the latest was that boehner was on board. are you following that? >> yeah. there is certainly -- i think a compromise is headed that direction. i think we ought to find areas where we can work together and do that. >> do you think there's a chance of corporate tax reform in a real way? >> i do. i do. >> you think you could do that and immigration together? >> i don't know that you do it together, but i think both have a pretty good chance because both sides of the aisle see a big win in it. now, the devil's going to be in the details of both of those. >> you saw the president yesterday talking about unemployment insurance. >> right.

>> what would you do? >> well, to me, the goal is not to continue people's income not working. it's to get them working again. and so i'd rather see policies that actually support work. you know, there's some good work that's come out recently on how much policy uncertainties really depress job creation. >> the question, though, is do you need to pay for it to make the unemployment insurance? you're suggesting, then, you want the unemployment insurance. >> no, i'm suggesting i'd rather see policies that actually promote job creation rather than lengthening unemployment. >> what do you tell people that aren't going to be able to make ends meet? that's the argument. you must be a cold-hearted individual if you don't. >> no, i think what you have to do is get washington focused on job creation. >> but in the meantime, the checks are cut off. >> politically if we extend unemployment insurance, we do have to pay for it. to me we'refixing the problem. >> same with minimum wage. >> i agree with that anybody that works in america full time

shouldn't be poor. but the way to get at that is through strengthening the eitc and direct supports for work. minimum wages are borne by a little bit by profits but mostly by the prices consumers pay. that seems like a crazy way to do a social policy. >> back to the unemployment, though, i mean, couldn't you do both? couldn't you pay for the unemployment while you're doing this? isn't job creation efforts, isn't that something that should have been taking place the whole time? >> yes, for years. >> not instead of but maybe the two together. >> for example, you could imagine actually rethinking our labor market policies, really having things that target in a more personal way how to get people reemployed and really supporting skill development. one thing republicans could do is advocate for that kind of policy in tandem with extension if that's going to happen. but i think both sides are just whistling past the graveyard that jobs are not being created fast enough. >> were you watching peter talk about medicare? he says the overall slowdown in

health care spending, which is a real thing that began in 2005, i guess. he says that you can argue that that was partly coming out of a recession because there's less utilization. but you can't explain how slowly medicare has been growing without giving credit to the aca. is that true? >> well, i think you have to be really careful here. there's an old saying that one robin doesn't a spring make. and short-term changes in health care spending we've learned to be a little humble about predicting the long term in either direction. to my mind, the most constructive things that are happening in health care spending have to do with changes in the market structure. so basically more consumer pay, more skin in the game that we've seen in employment. >> some of that's aca. >> some of it's aca. and for that, i say amen. that's very good. and that is slowing down spending. i think in the long term, we still have a health care problem. so the fact that we see temporary slowdowns in medicare spending, we shouldn't kid ourselves we're out of the woods on medicare. >> can i ask one more employment

question? structural question that i can't figure out what we do about it. we are getting more jobs. new jobs. that's a good thing. but there is an argument being made that the jobs that we are creating are not jobs that you'd love. they're low-paying jobs. and then we get to the wage issue. >> the disparity. >> i'm not even interested in disparity, in the inequality issue. i'm trying to figure out a lot of these jobs have become permanent instead of steppingstone jobs, and therefore structurally what do you do? >> i think it's two things. one for individuals and one for the employment market. for individuals we need a lot more support for training and education. and i don't mean going to elite universities. i mean community colleges. i mean training for specific skills. that needs a lot more support. and the employment market, why are we making manufacturers and others tie their hands behind their backs with public policies? that's where a lot of good jobs are. >> andrew went to cornell. you weren't talking about him specifically, right?

there's nothing wrong with going to an elite college, is there? >> no, absolutely. i run a piece of one. >> some say the opposite about cornell. >> cornell is the hardest to get into. >> hardest to get into. >> easiest to get into, hardest to stay in. coming up next, breaking news from adp. we're back in a moment. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action. tdd#: 1-800-345-2550 we have intuitive platforms tdd#: 1-800-345-2550 to help you discover what's trending. tdd#: 1-800-345-2550 and seasoned market experts to help sharpen your instincts. tdd#: 1-800-345-2550 so you can take charge tdd#: 1-800-345-2550 of your trading.

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welcome back. we're expecting breaking news from adp. these are the numbers on the jobs numbers and this hopefully gives us insight into what to expect friday. steve liesman is here with the be ins. >> 238,000 for the month of december. that's the adp's estimate of where the private sector, what private sector growth will be as reported. that's a big number. and it's a big number for a couple reasons. the prior month, november, revised up to 229. goods up, services strong, 170. and the nonpharf payroll estimate is 191. that may have to come up. construction was up a really strong 48,000. if i read the press release correctly, it's the biggest gain since 2006. so that kind of is undermining this weather story we've been talking about with payrolls that maybe it's undermined by colder

weather in december. it's hard to say that when the construction sector did so well. another reason we want to pay a little more attention to is government hiring has not been down, so we've been taking this 238. 20, 30, give me your number. we never knew how much. it looks like we have stabilization in government hiring. >> that is what orszag was talking about. >> mostly coming from the local level. a little less so from the state. federal still declining. bottom line is the government's being more of a zero than it is a negative. and there's the different between adp. we'll get mark zandi on. since they took over, it looks a little more stable, the difference between adp running three-month absolute average with the private sector running in the 30 to 40,000 range. now, i said quite enough, joining us from philadelphia, mark zandi, chief economist at moody's analytics. one of the better numbers you've had, mark. >> yeah. >> over 200,000 for three months running now.

>> yeah. and just going back to the point about accuracy, which i'm very proud of, if you look at the past 13 months over which we've been doing this, we almost nailed the bls right on the nose. you know, down on either side. >> the total. >> pardon me? >> you mean the total job creation when you add up all 13 months. >> yeah, yeah. you know, some months were a little higher than bls, some were a little lower. the net-net is pretty much zero. we're nailing it. i'm pretty happy with the accuracy of it. >> what does that tell you about what's going on? >> it's a great number. you know, to me, it signals -- i mean, i'm almost positive this is it. we're off and running. we've jumped to a new level of growth. we've been 2%ish gdp growth for most of the economic recovery. i think we're now at least 3%. in the second half of last year, 2013, it looks like we got 4% growth. q3 was 4% and our tracking

estimate is close to 4%. >> a couple things, glenn hubbard in a second. this construction number up to 48,000, it's going to be hard to make a weather case on this friday, isn't it? >> yeah. you know, december was cold. but if you go back and look at other past decembers that have been cold, you know, it doesn't seem to affect the job numbers to any significant degree. storms matter. so if you've got a blizzard blowing through the northeast, that makes a difference. but cold weather, you know, i don't think that makes a big difference. the construction sector is n now -- >> mark, did we -- >> he's very thoughtful today. >> mark, are you there? oh, maybe it was because of the cold weather. >> he froze up. >> glenn, you were going to ask mark a question. >> i think mark's right that we've shifted up in growth. i think it's probably into 2.5%

maybe by the end of the year toward 3%. i guess one question for mark and a question for all of us what is this means for the federal reserve. if we shift to a higher growth trajectory, i think it puts more pressure on the fed for normalization of monetary policy. >> and if that number is 125, 125,000 needed to bring down the unemployment rate or even lower, with some economists putting it above that, we've had a strong decline in unemployment this past year in 2013, and we get there more quickly, what you might find, glenn, i'm wondering is more fed doves relying on their participation rate as their rationale for still dovish policy. >> well, and indeed, the employment population ratio is in bad territory, but that's a structural issue. we should be careful about what monetary policy can do and what monetary policy can't do. >> i can tell you, glenn, and maybe we'll throw this to mark who i understand is back now. the debate among the fed folks that i got to talk to in

philadelphia was -- is this structural and cyclical, or was it previously cyclical? and have we reached a point where what remains to be done in the jobs market is much more structural? that's actually my opinion as to where we are now in terms of the long-term unemployment. mark, glenn's question before we lost you was what this means for the fed, but i think first, the question is what this means for the unemployment rate. >> well, you know, with this kind of job growth, 200,000 plus, the unemployment rate's going to come down at least a half point per annum. we're at 7 now. that would suggest at least 6.5 by the end of this year. you know, depending on what happens with emergency u.i., it could even be lower than that. my sense is we'll be back to unemployment which would be the 5.5% unemployment rate by no later than late 2016. you know, november 4th, 2016, might be a good date for full employment, something like that. so i think we're well on our way. with regard to the fed, i think they've got a script now.

they pretty much have argued they're going to taper qe in a consistent way, reduce it 10, 15 billion a month through the remainder of the year, and we'll be done by september, october of the year. so unless things really accelerate much more substantially or decelerate much more substantially, i think they're going to stick to that script. i don't think they'll change it. >> you just said if we extend u.i., it creates jobs? because andrew, they want you to -- msnbc, there's people saying they want you to explain your comments on msnbc yesterday that extending u.i. three months creates a quarter million jobs. >> that's not what we said. we said that 200,000 -- >> who's "we"? where were you? >> on msnbc yesterday -- >> when? >> on the alex wagner program. >> you left here and go over on msnb-c and competed? >> i needed to let my freak flag fly. >> unbridled.

how many millions of jobs? >> i didn't say millions of jobs. i said 200,000 jobs. and i believe mr. zandi has used this number himself. >> i've got to watch you like a hawk. whose show? >> alex wagner has a show called "now." the president spoke and then they came out and -- >> chris hayes? >> -- had a couple of experts discuss the issue. >> chris hayes was looking for someone more liberal than him. you are just -- >> here's the deal. here's the deal. if you emergency u.i. program is not extended, that would shave between .15 and .25 percentage points in calendar year 2014. so that translates into approximately 200,000 jobs. >> thank you. >> by the end of the year. not three months, it's for the entire year. >> but that leaves out the debate about the incentive that might be created for some to get back to work. one more comment. folks who have been paying to economic numbers should be excited by these jobs numbers but not surprised.

these numbers are telling us what we knew about the economy, the economy has been running at 3%, and glenn, it's been a better run. >> that is the market's reaction, too. we kind of knew it was coming. >> is it like going home when you go -- does it feel like -- >> it's like going to see a relative on a holiday. >> yeah. >> thanks, mark. >> but not nearly as comfortable as being home home, you know. coming up, snapchat for business? is it a good idea? or could it turn into a security fraud nightmare? we discuss with former aol exec and co-founder of the new app confide. "squawk box" will be right back. . it told him what was happening on the trading floor in real time. ♪ the shell brought him great fame. ♪ but then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their trading platform.

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welcome back to "squawk box." making headlines, monsanto's first quarter earnings beating the street. revenue also topping consensus. monsanto shares not yet trading this morning. they are up 14% in total over the last year. also, kraft are warning of a possible velveeta over the next couple weeks. we are in a time apparently of high seasonal demand for velveeta cheese. when we come back, rick santelli joins us from the pits of the cme to tell us what traders are making of the adp report. plus, deadly arctic

temperatures putting millions in a very deep freeze. find out how long it lasts. hopefully we have the answer after the break. "squawk box" will come back in just a moment. make it happen with fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.

welcome back to "squawk box." this morning let's look at stocks on the move in this

morning's trading. shares of spirits maker constellation brands, they're jumping. constellation beat estimates on both the top and bottom line and also raised its outlook for the year. also, twitter shares, they're taking a hit in premarket trading. cantor fitzgerald is cutting its rating on twitter to sell from a hold based on what it considers an excessive valuation. and forest labs are buying specialty pharmaceutical company aptalis, the price, $2.9 billion in cash. kpg paid $1.3 billion back in 2008. for more reaction to the adp report, let's get to chicago and the trading pits at the cme group. rick santelli is standing by. and rick, we were ratcheting things up here. you think we're right, 250 now, 230 to 250 and maybe 2.5% to 3% gdp? >> reporter: i think the job creation's definitely improved.

and i do think that gdp has improved. i don't think i agree with the levels on gdp. i think even though third quarter was 4.1 and we'll have to wait for the fourth quarter, i think the trade deficit does obviously mark up what expectations are. but let's not have a cause/effective issue as you pointed out with that 250,000 jobs with everybody a few moments ago. you know, the static-type comparisons, if the dollar wasn't taken from one area, moved to another, we don't know how many more jobs or how the economy would have behaved if that dollar was spent in the original earner's line of spending habits and consumption. i think when it comes to the economy, of course we're improving. we're the best economy in the world. and anybody who has any doubt of that, slow recovery but it is gaining traction. yesterday with the trade deficit, i thought that was a terrific number.

and i also think the underpinnings of why it was terrific definitely need to be highlighted. much of that, of course, was energy. and energy continues to be the orphan in the room. you know, it's the baby in the attic that everybody's forgot about, home alone, and yet it's a huge driver. and it multiplies through the economy. you know, many that aren't into carbon try to diss it and say how it's not the hundreds of thousands or millions of jobs that people or experts talk about, it's smaller. i don't think it is. i think when you look at all the great things it's doing, not the least of which is we're getting our energy from an area that is in a dangerous area that doesn't put dollars in dangerous people's hands. and i think our economy is improving. but it's the cause/effect i have an issue with. where would the economy have been if it wasn't for some of the crazy things that we've gone through? but i think it does underscore something as we get into fourth quarter anticipation of our first look at gdp, which is coming down the pike in a couple of weeks, i continue to monitor many of the issues that drive

it. and in my opinion, what you're going to continue to see is that many of these programs that have probably put a headwind on us, maybe our growth would have been a half a percent bigger. we'll never know. many of the cause/effect relationships, that smart guests you had on this morning measure don't have have this proactive aspect of being able to look at things if they were this way or weren't this way. but on the surface, i think there is a cause to celebrate. and i think that the sequester and all the budget issues of the fourth quarter get lost in that. and i really think that that's a big issue as well because it tells us that many of our leaders, that we're crying "fire" in a theater were doing it for political reasons, not economic reasons. and i think as we get into this point where we'll be looking at debt ceiling and all the crazy talk about the fault which is about interest rates, if you don't send out checks, it may not be a good scenario, but it isn't a default. and i think it puts all of this in a much better perspective. >> all right.

yeah. you know, like so many things, we don't want to talk about it because we don't want to jinx it, but so far, so good. we'll see whether 2014 becomes a year where we get close to 3%. we could sure -- it's been a long time. we think the new normal is permanent. and hopefully it's not. >> reporter: no. but, you know, it is a little early to call what the new normal will be. we have a pendulum swinging back and forth with respect to jobs and gdp. where that medium point will be is difficult, but i guarantee it's going to be better than it was a couple years ago. >> thanks, rick. see you later. >> reporter: thank you. a little news worth mentioning. jc penney commenting on holiday performance moments ago, saying that they are now reaffirming their outlook for the fourth quarter. they say they're pleased with the performance for the holiday period. they see continuing progress in their turnaround effort. they say that customers responded well to holiday season offerings which i assume means holiday season discounts. so we will see. zmoo that's interesting. it's a really short press

release. it's two paragraphs. still the stock is down about 5% on this news. i don't see what in this release is making the stock trade down. what andrew just read is everything that's in this. just that they reaffirmed the outlook for the fourth quarter of 2013 as previously set out in the company's third quarter earnings release from november 20th. >> i suspect that analysts and investors were actually expecting more, expecting more, given all the discounts and the low base that they were already at. >> yeah. in any event, stocks down -- that's about the tersest, shortest press release i've ever seen, two paragraphs. we'll continue to keep an eye on it. in the meantime, when will the record cold temperatures leave the united states? alex wallace joins us right now from the weather channel. and alex, when are things going to warmg up? >> you know what? actually, they've already warmed up. you look at the numbers here in the northeast, yes, no doubt. we're talking 20s, philly up towards boston. compared to where we were yesterday where there were a lot

of single digits and teens, a little already warmer out there for us. and we should continue to see that warmer period through the latter part of the week. this arctic air mass that's been in place, that begins to retre t retreat, and that allows warmer air to return. we'll see that from the south into the midwest as well as eventually the northeast. but that's going to set the stage for the next system. instead of wintry weather, wet conditions. we'll see that by friday here throughout the lower mississippi valley. friday night and then saturday moving into a good chunk of the southeast. we've got wet weather in atlanta. nashville. and this will also spread its way up into the northeast. so get ready for a bit of a wet weekend. but notice, i said wet weekend, not a snowy one because it will be a bit too warm for the wintry stuff. getting ready for a nice little warmer week. we could all certainly use it. back to you. >> that's only happened in the last 2 1/2 hours or so. it was seven degrees when i came in this morning. >> single digits. but not as windy. >> not as windy. >> thank you, alex. >> alex is, you no he, not like those other guys. he's sitting there in that warm

studio, you know? what's the deal, alex? is he gone? cantore's out there, you know. you're like a guy -- do what i say, not what i do. have you even been out in the cold, alex? do you know what it's like? >> i did. >> huh? >> i made it a point to get out there yesterday in atlanta. we got down into the single digits. i said i have to get out there and feel it, and i stepped right back inside because it was just too cold. >> all right. atlanta, in general, you guys don't even know what that is down there. anyway, thank you. up next, a new app that allows businesses to send messages which disappear within seconds. think of it as your off-the-record messenger, kind of like a snapchat which i guess people use. >> take pictures of each other but they disappear immediately. these are now e-mails that disappear forever. >> can't you take a quick shot and then -- >> you can't take a picture of these e-mails. >> i just read the e-mail. what if you took a camera, a video of it? >> well, we're going to talk to --

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ain't garages great? welcome back to "squawk box." move over, snapchat, neathere's new messenger in town. off-the-record mobile app. i've been playing with it. it's geared towards professionals, allows you to send and receive secured text messages that disappear after you read them. joining us now is john brode,

he's a former executive at aol and co-founder and executive of confide. this is your first interview. >> nothing like cutting your teeth on "squawk box." thanks for having me. >> we're very happy to have you. if this has any of the success that snapchat has, you can come back to us with a $3 billion check that they turned down, apparently. >> i look forward to that. >> let's just explain to -- i've just been -- i've only been texting with you on this because -- >> right. >> there's nobody else to do it with yet. >> right. >> explain what this is. >> sure. so i think you said it really well, which is off-the-record mobile messaging app targeting businesses and professional people. >> let's show how it works. you sent me a message. and here is the screen that looks like nothing. >> let's pull back for a second. so it's end-to-end encrypted. the minute i sent it, it got encrypted, went across our servers, not even we could relate the message if we wanted to. it looked for a unique key that is in your phone, and that

decrypts the message. once it's decrypted, now you can see it. >> the only way for me to read it, i've got to take my finger, and i have to go -- it says "we're launching confide." >> if you go underneath. >> i can do it under? >> yeah. >> we're launching confide today. please just keep this between you and me. thanks. j.b. >> okay. >> so that is so i can't take a screen shot of it. >> that's right. >> i could film it, obviously. >> obviously, yes. much the same way you could take a tape-recorder and put it on a phone. >> the second i press reply -- >> don't do that yet. two levels of screen protection. the traditional one, which is if you just tried to take a screen shot, it would send an alert both to you and to me saying that you tried to take a screen shot. and then i'd call you and yell at you. secondly -- >> it sends you an alert. >> yes, both sides. the second thing is this wau wanding. in addition to being fun and tactile, it only lets you unveil 20 to 25 characters at a time. if you tried to take a screen

shot of that, you'd only see a very small portion of the message. >> when i press reply or close-- >> it is gone. >> forever. >> gone forever. >> it's not even on your server anywhere? >> it's gone off our servers, it is completely wiped off of your phone. >> should i do it? >> do it. >> i press close right now. >> we added a little animation. >> if i press it again, now, it shows, though, that we communicated. >> that's right. >> but it doesn't show what we communicated about. >> that's right. and actually, we have a topic that is permanent, and the message is impermanent. and we did that for context. if you wanted to reply, i would have a sense of what this thread was what we were talking about. >> in other words, don't put something in the topic line that says illicit stock tip. >> by the way, don't do that at all. >> great porn site. >> what do you expect people to be doing over this, though? that's the issue. >> so i think at a high level, there's sort of three ways that people will use this. anytime you send an e-mail that says "confidential, don't forward" is a great opportunity for confide. anytime you -- >> idiots are sending

confidential. >> anytime you say, you know what? i'll call you. let's take this off of the internet. and that's actually how confide was founded. and we'll talk about that. and the third is you know what? i don't want this on my work servers. can i get your personal e-mail? if you sort of drill down, i think things like hr and people issues, i think references on people. i think conjecture and subjectivity. when you guys invented off-the-record messaging in the offline world, we're now bringing it to the online world with efficiency. >> it also means if you have an assistant, they won't be able to look at it and sort things through for you. >> exactly. >> we were talking off camera before that there's no super-secret way to ever truly communicate because if somebody wanted to videotape it, they could. >> the other person you're doing it would have to do it. but if you trust the other person you're confiding with, then you don't have to worry about it.

the third party. so that will work pretty well. >> now, do you think that companies who are letting more and more people use their iphone will allow you to download this app because of compliance issues? >> so, look. we provide the platform. and people have to use it in a way that's legal and in a way that's appropriate for their individual circumstances. >> why do they have to use it in a way that's legal? >> for one reason, it's against our terms of service if they don't. >> what happens if you get a subpoena over something that i sent to joe? >> we cannot decrypt the message. and it immediately leaves our servers as soon as it's read. >> right. it's gone. you don't have it. >> there's nothing we can go and unearth. >> how did you come up with this idea? >> so howard luhrmann, my co-founder, current ceo and co-founder of yext, e-mailed me. and he said, while i was at aol. and he said i know you've worked with this person before. i'm thinking about hiring him. can you give me a reference? i sort of exhaled and said, you know what? i'll call you. and so i called him. i got his voice mail because

he's a busy executive. he called me back. i was on the road for a couple days. it took us six days to get in touch. and we sort of said to each other, this is crazy. there's got to be a better way. >> because whatever you were going to say about this candidate, you didn't want it in writing. >> yes. think about this. every message you communicate on the internet is archived in your digital history forever. imagine if the spoken word were like that. >> that's a really good point. >> it kind of is. >> well, for you guys. >> we've got to run, but business model, what is the revenue? >> lots of opportunities to monetize. i think the one we're most excited about in the future is premium. additional features. it's way down the future. >> you can download it right now in the app store. >> for free in the app store. getconfide.com. thanks for having me. >> thank you for coming. >> do you know edward snowden? have you ever met him? no? okay. all right. >> they might become pals over confide. >> i want to know who wrote the

code. i love people that write code. you never meet the people that write code. you didn't write any code. college students. >> that's right. >> is it a lunch of letters and gobbledygook? how does it work? >> come down to confide. we're going to show you. >> don't leave. coming up, cramer's take on the adp report and jc penney. "squawk box" will be right back. [ male announcer ] here's a question for you: is your tv powered by coal? natural gas? nuclear?

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let's get down to the new york stock exchange where get d york stock exchange where jim cramer joins us now and we were talking yesterday, ohio state out of the ranks, out of the ranks of the undefeated. you saw that. >> yes. >> by the way -- >> i thought the ohio state football team did good this year. everyone focused on the s.e.c. and the acc. >> but then, again, you saw the illinois, they barely beat a couple of pretty crappy teams. you got to go s.e.c. or pac-12 don't you think? >> well, in the end what does the nfl look at? they only look at the s.e.c. i think because the nfl is a fast game and the s.e.c. is fast and that's the way it works now if you want to get recruited. >> what happened to jcpenney? is it material what they said or -- >> i don't think so. i think yesterday the mall stores were down. i think they were down because of a little noticed note by

howard schultz saying mall traffic is down and i think a lot of that, again, is because of amazon. and i think jcpenney is a kind of a bit of delayed reaction. i think people thought they would raise guidance. i don't know why people thought that. i think bill miller the other day who has been a red hot mutual fund manager said he's looking at jcpenney and that caused the stock to go up a little more than it should have and now it is settling back to where the rest of the department stores is which is not so hot given that howard schultz is saying the mall traffic is down. >> bill miller is back? >> bill miller is back. he's a remarkable record. >> the real talent for that and, you know, when you get a black swan, you know, you can't fault someone for not seeing every -- that's why it's called a black swan, right? you don't even know it's coming. >> totally agree. i just think that people that deserted him at the bottom now regret it because he's had an unbelievable long-term record. that's not a bad thing to look at with a long-term record. i think he's a very good stock picker. >> as an old geezer in this

industry. can you believe micron again? we had the guy on. is this a different micron do you think? >> when i was on the call i was gratified to hear they are showing great pricing discipline. it's not hard to put up the towndries to make more drams, and they are are tight because of the acquisition which is brilliant and it was a very good conference call. almost everybody raises numbers dramatically. the numbers were extraordinary and i thought he was a great guest. it reminds me of the old days when the thing early '90s when the stock just went up and up and up. >> '88, i know. >> oh, man, what a run. but, look, it was $5 in october of 2012 so maybe caution should be at least thought about because if more foundries come up which, again, they were disciplined, but if more towndries were put up, micron will go down quick-. i think the piper takeaway that apple is the big micron customer is significant because apple is 52-day, 50-day, whatever, the

technicians have been down on apple. this is a positive. >> the other genius money manager that recommended it besides einhorn, do you know who the other guy was? >> no. >> regis. >> who wants to be a millionaire! >> that was his stock. micron was regis philbin's stock, too. >> regis had a hot hand because he pays close attention to our network. he does a lot of work. he's been really spot-on. >> micron was one of his a while ago. i know that for a fact. thanks, jim. >> thanks. when we come back a recap of adp's payroll data with our guest host. and make sure you watch "squawk on the street" after the program, carlos gohsn will be live with a special event taking place in california. he story of the little room 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.

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make it happen with fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. stock of the day is twitter. that music tells the whole story. this is momentous. it is down. this is another downgrade of the company. and it is cantor fitzgerald to sell from hold citing val you

uati valuation. he says he sees more downside than upside, but wait a minute his target remains $32. i think somebody sort of was on the wrong end of that for a while, don't you think? if you had a $32 target at $60 then he got it wrong. but we'll see. it has been -- i mean the val valuation just got crazy for while, didn't it? >> it did get crazy. what do you think is reasonable? >> is twitter the vanilla ice of the 2010s? i don't know. >> vanilla ice? >> snapchat might be. >> but do you foresee yourself tweeting in five years still? >> we might all be. i don't know. do -- i don't know. let's get back to glen. do you use twitter, by the way? >> i do. >> you do? >> i do. >> do you think you'll be using it five years from now? >> i think so. but who knows. >> are you buying things based on ads on twitter? >> no. >> i don't know how you monetize it. >> we haven't talked about yellin who is about to take the job. do you have a view about it one way or the other?

>> i don't think there will be much of a change. janet is a perfect choice to be fed chairman. perfectly qualified and almost ideal for this job. >> you would have not selected her for this job. >> i think the president chose from janet is by far the best qualified and she's an imminent economist. and being a appropriately humble on financial regulation. the fed's made a lot of mistakes there in the past and will she get it right? those are questions. but i think she's greatly qualified. >> humble doesn't go along with it most recently. even though bernanke seems like a humble individual, i think the entire fed thought the entire global economy was on their shoulders based on the next move. and we never thought that 20, 30 years ago that -- >> we're asking too much of the federal reserve it is not ben bernanke or janet yellen. we're asking whoever the fed chairman is to carry all the water. that's wrong. >> should there be an institution that decides where

short-term rates should be and has full power to do that? >> i think the fed as a central bank is a great institution and a helpful institution. the question is focusing on what it can really do and this notion that the fed alone is going to fix our structural problems, that's just crazy. >> maybe we should add a few more mandates, two isn't enough. >> focused mandates. >> i have a columbia business school question, actually, which is about your students. >> they tweet. >> your twins are 3. >> we're not trying to get them in just yet. i want to know whether actually given all of the vilification of the finance world whether they're still going to wall street and where you see sort of the next generation of people trying to work? >> many still go to wall street in any top business school, but the real growth area for us is entrepreneurship. for our students that means two things, some want to start their own business but for many of them they want to be part of the start-up culture, it could be finance, tech, medical devices. that's what's hot. >> that's actually really good.

>> it's great for our country, yeah. >> well, glen, thank you very much very much for coming in today. >> pleasure. >> it's been a pleasure having you here. please come back soon. >> entrepreneurship, free enterprise. isn't that where it comes from? >> yes, yes, yes. >> god bless it. thank you, again, appreciate it. that does it for us for today, make sure you join us tomorrow. right now it's time for "squawk on the street." ♪ good wednesday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer author of the new book "jim cramer's "get rich carefully" on shelves now. >> barnes & noble signing tomorrow night. >> and david faber. what a morning for business news we have earnings on tap. a beat on adp, a series of big analysts moves and, of course, the dow needs 45 points to break even for 2014. look at the ten-year, we'll get some minutes from the december fed