good morning, everybody. i'm becky quick along with joe kernen and andrew ross sorkin. today's top story is the december employment report. you have polled forecasters saying the economy probably added 200,000 jobs last month on. that has been upgraded since we got those adp numbers last week. it would be a bit above the average for the last three months. the unemployment rate is seen holding steady at a five-year low of 7%. as for the markets, the s&p and nasdaq are clinging to small gains for the week at this point. that's just this week. that is not for the first ty five days that joe had been looking at with the extending option. we're going to see what happens with that. the dow is on track for its second straight weekly decline and the futures at this hour are indicated sharply higher. right now, the dow futures are up by 66 points above fair value. that's significant because a lot of times before a big jobs report, nobody really wants to move one direction or the other.

this could be an indication that the market is expecting that number to be stronger than 200,000. if you're looking to track the money trail, taking profits after stellar stock market gains in 2013. in the meantime, 1.6 billion was poured into taxable bond funds. let's take a look at the ten-year. at this point, it's yielding 2.968%. so still below 3%. that's significant, too, and something joe is watching, as well. >> andrew, over to you. >> alcoa used to be -- the dow component, we used to care so much about it. they're reporting quarterly results after the close. earnings falling two cents below estimates. the company issued an outlook for stagnant growth in the global aluminum demand. and the ceo was on closing bell yesterday afternoon. >> we continue to invest in large future opportunities. automotive being one.

right? and that is a great one that's coming up there. we continue to invest in aerospace with aluminum, lithium, new products coming out there and we continue to invest in bringing down commodity business to restructuring, reducing the footprint and building our joint venture which also brings us down on the cost, b the lowest cost on the span the way it's set up. >> and humana with enrollment, obama care will be worse than expected. the company attributes the trend to regulatory changes allowing people to remain on previously existing plans not sold on the exchanges. humana is backing its previous forecasts. >> manufacturers could not stop smartphones and tablets. lenovo held its lead over hewlett packard as the world's

biggest maker. by shipment webs dell was the largestmaker. it does not portend good things for folks only in the computer business. sears reported charter than expected declines in comp sales at its k-mart and sears store. this is for the important holiday season. the declines were worse than the drops that the retailer has seen in the third quarter. so that wouldn't be my idea, if i had sears and i wanted to try and find someone to help us. let's buy k-mart. >> it wasn't as weird of an idea. >> the s&p was up yesterday. >> yeah. the s&p was barely -- it was less than a point. >> i know. but look -- >> first week. >> this is the first week of the year. but you're just throwing out those -- >> no, i'm just telling you that it doesn't matter. it's a wholistic view of the first week of the -- >> you're going with -- >> i'm really not.

wait until we get up there and surge through -- what is it? we need 48. i think we need 48 on the s&p. don't we? we're at 38 right now. yeah. we need 1848, more than 10 points away. >> and the futures are indicated sharply higher this morning, before you even see the jobs numbers. >> bingo. bingo was his nameo. >> if you believe christie, if you believe him, and he was very sincere -- >> did you watch the press conference? >> yeah. so i'm giving him the benefit of the doubt. >> he came out pretty strong. >> why is everyone not -- >> very harshly against -- >> everybody is implying he's lying. no one is backing him. >> no, but this is the same -- we were e-mailing about the irs. when the irs thing first came out -- >> oh, please. >> we think with we knew about it and then we found out later that certain people didn't know about it and -- >> well, where are we in that investigation? what do we know?

lowy learner left and took the fifth and we don't know -- >> these guys left and took the fifth, too. >> this obama bund ler -- >> i will say he put himself way out there because he made such strong comments and said i knew nothing about this. this woman lied to me and i fired her. >> that's what i mean. he seriously threw some people under the bus. but that's fine. >> far be it from the "new york times" to ever put editorial comments. a self-serving, self-pitying display of contrition was a self-less act and a bracen attempt at a cover up. do they know that? they're calling it a what he will whale of a tale. >> morton hates hillary. >> maybe that's what it is. i don't know.

>> rendell was on yesterday. >> he made a good point. >> he's a huge hillary backer. >> i thought the same thing, he said, look, there's 65,000 employees who work here. i can't watch all of them. >> and rendell was saying, wait a minute, this is one of the top five -- >> you might say if this was an environment where it was known that you -- but then chris said the governor said, look, politics is not something you get into where you're going around and handling everyone with kid gloves. you don't have to have a bullying environment to play hardball. >> i think he made a very strong performance. if there's no more smoking guns, he made an incredibly strong performance by saying i don't know anything about this, i goat rid of the people who did. >> let's invite governor

christie on the show here. >> sure. >> hopefully he's not looking at vengeance from us, unless he can prove that he is willing to -- and we would be -- >> tighten the screws at this point. you know, the guy has to go up to ft. lee and apologize. >> no, but he can come on here. >> on his way to ft. lee. he can just stop by. >> he can swing by, as they say. >> did you see yesterday we had talk about what ken langone might think about this. he said i hope governor christie was sincere, embarrassed and unequivocally apologetic. >> it was absolutely the right move. >> they were making fun of the 107 minutes. he waited until even the obnoxious press core had no questions.

pacific sun wear did something. >> yeah. >> they finally gave up and moved. >> by the way, more to the point on langone, he says he thinks there will be no problem raising money if governor christie decide toes run. he will be a superb candidate. he was totally unaware of this, whatever you choose to call it. >> pacific sun wear is a $200 million company. >> but it's a teen name and we watch a lot of those teen names. >> not a 200 million we don't. 200 million? they should be off our list. >> the reason we're talking about this retailer, you were supposed to be talking about four or feef of them at the same time. >> they have one outlet now? >> did you want to read the

other retailers who were in there? maybe if you were looking at retail in general and this would be a hint of -- >> even sears was -- >> hit across the board. >> the biotech stock we did yesterday. gief below? >> it's a higher end quality stuff. >> you can't get a decent workout with seven minutes. you have to do eight minutes. anyway, we can expect the sales for the holiday season. >> we can work up to four minutes now. >> really? >> there's a new study, four minutes is as good as 19 or 20 minutes, just so you know.

>> i've been trying to convince people my entire life that four minutes is just unbelievable, it's fantastic, and they don't really buy that. one winner in -- >> i -- yeah. >> who is laughing in my ear? >> it's very clever. >> four minutes is great. >> it's pannelly laughing in your ear. >> in my ear, when i'm at home. trading, abercrombie and fitch. it's all this. this they raised full year earnings, but didn't they still have lower sales, but not -- not as bad as people thought? >> what was the sales number? i thought it was still there. >> was that abercrombie or american eagle? >> it was abercrombie when i saw it. anyway, i will check and find out. >> in the meantime, though, why don't we take another look at

the futures. we had mentioned before that the futures are indicated sharply higher. the s&p up by almost 7 points. oil prices, this is pretty phenomenal. oil prices yesterday closed at their lowest level in eight moss. the ten-year note, 3.966. the euro is at 1.3592. it fell sharply yesterday after some comments -- >> less than ten days of points now. >> less than ten basis points. in the third quarter, same-store sales declined 14%.

>> what about the sales? >> the turn around in the domestic business is proceeding because they narrowed the decline from the third quarter when it was down 14%. what is the high for abercrombie? obviously, 55, the low 31. so it closed at 33 the. it closed two points off its low. >> okay. >> so that makes sense. gold is up a little bit. right now, it is time for the global markets report. ross westgate is standing by in london. ross, good morning. >> hey, becky. a very good morning to you. on this jobs friday, we are weighted to the upside. a short while ago, european stocks hit their highest level of the session so far. just about 8 to 2 at the moment. advancers currently outpacing decliners on the dow jones stoxx

600. up about 0. % in that particular understandsy. the ftse yesterday was down some 30 points. this morning, take a look. you can see we're up 58, up nearly 8%, 0.8% at the moment for the uk market. it is still essentially flat for the year. one day of gains, one day of losses, that's been the apparently. xetra dax is up 0.8%. the cac 40 is up 0.65% and the ftse mib up 0.4%. industrial manufacturing came in weak. as you can see, break down the sectors for you. no sectors at the moment are in negative territory. the weak is food and beverages. household goods, insurance doing fairy well. travel and leisure picking up, as well. that's mainly due to lufthansa, the german airlines predicting fuel costs will decline and target an operating resort of around 2.3 billion euros in 2015. a big bounce for the german airlines, up 7%.

and swatch group, very well liked i'm understood in america, swatch watches up 4% today. the swiss watchmaker says it sees some dynamic growth coming through in 2014. despite continued weakness in the chinese market. otherwise, a healthy session. much will be determined by what happens on that jobs report. >> coming up, ross, thank you. if you didn't have us, i mean, you called it jobs friday. >> yeah. >> think if we had never split apart or if columbus never sailed here, you would be like, well, there's nothing going on here today in great britain. >> he knows he has a u.s. audience he's talking to right now. >> no, that's not what it is. >> we like nothing more than a 0-0 draw. >> i know. i know. >> it's a purist's game. >> but luckily we have another

country with a great economy that has a jobs report out. anyway, thank you. i love needling him. we'll be over there soon. coming up, the countdown to the jobs report is on. we'll find out what a strong number will mean for the markets today. plus, why cyber security is not just an i.t. problem any more. and michelle caruso cabrera is going to stir things up again. i don't know, regiligion and business, i don't know if that misses well. >> she's bringing some yummy stuff.

welcome back into "squawk box." alex wallace with your national forecast. tracking wet weather, icy weather moving through the mid-atlantic. subfreezing with that moisture coming in. with that, freezing rain advisories. could be slippery this morning before things start to warm up. so take it slow. if you can delay getting out this morning, that might be your best bet. snow, wintry mix, a little rain around chicago. we'll keep that going into tonight. not blockbuster snow, the general swath of about 1 to 3 inches for us across the area. a few spots seeing about 3 to 5 for us. that's the wintry side. southern plains, showers and a few rumbles of thunder. that carries east through the overnight. it will be moving up the coast for tomorrow. get ready for a bit of a wet time here on our saturday up and down the east coast, through the interior, as well. we're stalling out, but we have

to deal with a bit of rain. let's send it back to you in the studio, joe. >> it's a breakfast. it is. who doesn't like cinnamon rolls? but could new rules in europe change the flavor? well, bloomberg is no longer the mayor, but we're joined with the spicy controversisy. >> cinnamon is supposed to be good for you. >> in the european union, you are not supposed to eat above a certain level of cumarin, which is a naturallily occurring ingredient in cinnamon. >> what do you think you're not supposed to? >> they have rules that profit the food having too much cumarin in it. it's dangerous for your liver. so in denmark where they eat a lot of danish, they're call danish for a reason, right? they have discovered how way too much cinnamon in them for the rules.

so now there's a possibility that they are going to have to change the construction of the classic cinnamon swirl, which is -- >> is cinnabon do business in europe? >> are you trying to make this a stock story? >> no. i'm just curious. i have an actual question. that is if you had just one -- >> every day? >> no. if you had just one per week, own if it was load with cumarin -- is it anything in moderation? do you have to worry about an individual roll. when you speak to individual doctors they're like, you don't have to worry about this. but then -- >> i would eat ten per day if i could. >> i think that would be a problem. >> then it's another story of i will have a big mac if i want to occasionally, [ expletive ]. that's my prerogative. i would even go to say i'll smoke a cigar once every ten years if i want to. >> when we were in cypress, one of the thing the cypriots were upset about was the eu tried to

control the amount that they eat. little did i know in new york this would happen. >> i will overload on my cinnamon consumption or my cemerin. >> you don't follow everything mike said just by -- >> you know, when i go to the movies, i get a blths of water. >> do you have that popcorn? with that butter? that's something they ought to regulate. >> with your liver -- >> in very high doses, yes, it can be a problem. if you ate one cinnamon roll every day for a year? >> i think you'll be fine. >> this is like if you ate ten bags -- >> why are you bringing that up, olestra? >> in neighboring sweden, they just labeled these traditional and holiday foods and then you're exempted from the eu rules. because you're not eating them every day because if you call them traditional and holiday meals meals?

>> supposedly, but they do. >> you see how crucial this is in terms of -- i don't know. is this better than that? are they the same? >> i think this one has more cinnamon. the copenhagen bakery in long island. >> this is the winner. >> i thought that was good. >> kra croissant. >> say that again. you have a beautiful mouth. >> the head of the danish baker's association said they are up in arms. she said if they don't change the rules, it could be, quote, the end of the cinnamon roll as we know it. she said you have to acknowledge that in order for a cinnamon roll to taste like cinnamon, we have to use more than the very small amounts allowed. >> how much is allowed? >> between 5 and 50 milligrams, depending on the classification. >> and how much do these contain? >> these are -- so on they were

going with the smaller classification because they didn't go with the holiday cart decision, so these have way more than five, probably more like 15. >> so in urm, they take progressivism to a whole new level. how about in davos, are they buying a carbon footprint? >> they will. >> what is it going to be like over there, andrew? >> it will be a challenge for you. >> and no one has a job. but they've got all this stuff all figured out, right? they have 1.5% gdp is maximum for the entire continent. >> do you think they'll change the rules? >> on the cinnamon? no, i don't think so. you have to go to brussels. the monument that they have to bureaucrats are unbelievable. shiny building after shiny building filled with people who make rules. >> in this part of the world, is the guy where you're buying the plane ticket still have a cigarette with the ash -- they're still smoking in banks, but they don't have any cuma did

i n? >> the attrition blogs are like, wait a minute, what about the butter and the sugar? >> for breakfast. >> okay. >> what is over here? >> this has raisins. >> oh, i want to go here. thank you. would you like some ? >> i do, yeah. it was an effort to get these, by the way. >> i want the middle tlip. >> i'm not eating it right now. >> you're not eating it right now? >> people shouldn't eat on camera. >> i would, but i don't want to cut the -- i don't mind eating on tv. >> some people are famous for eating on tv. >> no one is fired for doing this? >> no. . >> thank you for breakfast, michelle. >> you're welcome. we'll see you in a little bit.

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you know, if i'm going to worry about any liver, it's going to be from, you know, scotch, right? or something like that. cinnamon rolls? good morning, welcome back to "squawk box" here on -- >> do you feel okay? >> yeah. i had something on my lip. >> your first one didn't have enough cinnamon, right? >> i ate an entire one and a sliver of the next one. >> you ate that whole first one? >> yes. >> alka-seltzer. >> i'm joe kernen along with becky quick and andrew ross sorkin. >> but, boy, the cinnamon is going right to my liver. i don't know what to do about it. >> don't you normally worry about moon shine or maker's marking on whatever. we are now about two hours from the employment jobs report. polls say the economy likely added about 200,000 jobs. and more than that likely. i would think at this point -- i wouldn't guarantee you that the market trades up, because the ten-year will move higher. if it's 250 or 260, you figure we go above three.

and the market does get squeezy. but that would be slightly below november 203. that's when we hit if we hit 200. >> are you still looking for a goldie locks number? >> i don't know. i want the full on number at this point. the fed, i want them out. give me -- would you complain about 300? >> no. >> there's no way to complaint about 300. let's do 350. >> greg is going to be joining us later today. he said you could have concerns that it's a super hot number. >> really? >> no, just -- i guess it wasn't his concerns. he was jift just pointing out that you could see a scenario. >> we want more. not only do we want under seven, we want under six just to get everything percolating. the gdp, you can add it into the gdp, right? >> if you believe the six is real. >> who are you, me? now you're questioning whether a really seven -- if you add the people back in, we're at 12. >> but the participation rate is

going to be very important this time, too. are those people now coming back into the market or are they really gone for good? a bit of corporate news for you this morning, wall street contained nearly $50 billion to settle suits. "new york times" coming up with that with a confidential analysis. the banks and their lawyers said to be using jpmorgan's record $13 billion settlement to try to figure out how much each other firm might have to pay to move beyond the litigation that has followed them since the financial crisis. in other financial news, "the wall street journal" reporting the department of justice plans additional enforcement actions against banks that did not have enough safeguards against money laundering. it's being argued banks still have a lot to do. there is a chemical spill along the west virginia river. the chemical is used in the coal industry. yesterday's spill triggering a tap water ban for up to 300,000

people, shutting down schools, bars and restaurants. the school occurred just upriver from the nation's largest water treatment plan. a state of emergency was declared for nine counties. this is a big story. we have been telling you about the futures this morning. they are above fair value. dow futures up by about 63 points. s&p up just over 7. in europe, they're following along what we've been seeing here, green arrows with the dax in germany up by almost 1% and lower gains for the ft. sdpts for the cac in france. and asia overnight, markets there saw some mixed results. this is not much movement at all. the nikkei up by 0.2%. declines for both the kospi and the shanghai composite. and oil prices have been the ones people have been watching so closely. this morning, up by over 1%. but yesterday, oil prices closed at the lowest level in eight months. up by 97 cents today, but that gets to 92.63 for wti. ten-year note is still yielding

below 2% at 3.97% now. and the dollar is stronger this morning. in fact, right now, the euro is at 1.3599. dollar/yen is showing 104.99. and gold prices have been slightly higher this morning. you'll see right now they're up by about $3. 1,232.50 an ounce. the employment report for december is due at 8:30 eastern time. that's less than two hours away. joining us right now is kevin couplins, the u.s. economist at ubs. david joy is chief market strategist at meriprice financial in boston. kevin, what are you expecting to see on this jobs report? >> sure. we're looking for a pretty -- we expect a pretty solid report, albeit not as strong as the latest three-month trend of 200 or so thousand. >> so you didn't upgrade your

specations? >> no, we did not. you saw consumer assessments of the labor market improving. you saw the ism, employment indexes showing further strength. the adp data in december are a little bit more suspect than they typically are in any given month. there does seem to be some bookkeeping issues that have biassed up those numbers in past decembers. adp has reworked its numbers in october 2012. so the bias there may not be as big as it had been in earlier years. but we still expect a little bit off the payroll number. >> didn't you say they worked in a taper the last time you were on? >> didn't think they would taper in december. >> didn't trust the economic back then. you didn't call the taper saying they were going to be weak? >> i have to admit -- >> how do you miss that when we told you they were going to

taper? >> it was a -- >> it was a done deal. >> believe me, you don't want to be one of the sheep in that survey. liesman fold you they were going to taper. >> we are expecting them to finish up the program probably sometimes in the last quarter of this year. it's probably a little bit ahead of what the market expects. >> why are you futures higher this morning? is that because it expects the numbers to maybe come in better than 300,000? >> not necessarily. i think what the market is saying that even if we get 190 or there above the operating environment is clearly getting better and that means probably good things for corporate earnings. but i would say if the number is a hot number, 200 or higher, it might be a mixed basket because it gets us closer to the threshold of on 6.5% that starts the fed's clock ticking when the first rate hike might come on.

i think there is a sweet spot here where the market is going to like it. higher than that, maybe not so much. lower than that, maybe not so much. >> really? even if it's 215 or something? you really think just above 200,000, the market could start to panic a little? >> no. but i think what it does is it raises your an ten that na. so you have to ask yourself, how quickly can we get to 6.5% on the unemployment rate? if it's a 215 number, you might bring that forward to let's say the july or august time frame. that certainly then brings into play a rate hike in the first half of 2015. the market seems to think that's a possibly. if you start to get unemployment numbers, all of a sudden the market will -- >> i don't believe that. hot is one thing. chasing inflation is another. we're underemployed at this point. the quicker we get to 6.5% and

6%, the better for everybody. why would 235 be too hot thinking sometime down the road we might raise rates? >> i agree, that's only one part of the equation. inflation is the other important part. inflation is not only not a problem, it's maybe a problem that it's too low right now. i don't think you -- you can't divorce the two. >> i can't imagine the economy could be too hot which would cause people to say, wow, i'm uncomfortable. >> you got an amazing number at 300,000 or 400,000? >> i want that. >> you would think the markets would rock. >> and i don't think it would necessarily get the fed to start considering rate hikes. it would increase tamt of stim use husba stimulus. >> but my point then is you'd say the market is underpriced. if you're getting -- >> i think it would be positive for stocks if the employment situation is improving and we're getting 300,000 jobs per month, i think the stock market -- >> then hallelujah. david, i don't understand this.

>> wait a second, with we're not on the same -- >> we are. >> what i'm saying is that you -- >> look, we don't have to get actual inflation. if you get inflation expectations start to go increase, and the market starts to worry that that becomes a problem, then i think the market will begin to take notes. i'm not saying this is going to happen as a result of one month's number. but it may get us a little bit closer to that point in time where the market starts to pay attention. >> okay. >> all right. so past this number, what is the next big event for the market? we've been waiting for this jobs number for a while. >> well, in my view, it's clearly the monthly unemployment numbers and the pce numbers, but also inflation expectations and the futures market. those are the things that i would be watching right in here. >> kevin, we're going to have a new head of the fed.

when does the market shape her up? >> it's certainly continuity from what we've seen from bernanke. we'll have an fomc meeting later this month. i think that will be the next event date in the u.s. do they continue to taper at a gradual glide path that bernanke laid out in december or if we get a strong number do they rev that up a little bit. or if we get a weak number, do they decide to pause? he kind of gave a glide path of a steady $10 on billion a month outlook. but if you look at the fomc minutes that we got two days ago, it suggested that policymakers rpt on a predetermined course just yet. so there was a little bit of a difference of tone there in the minutes versus what bernanke had said in december. >> david, can i ask you quickly about the industrials? we've had a lot of guests who have come on and said they think the industrials are a place you should be putting your money in the first half of this year. yesterday, though, we had a hij hedge fund manager who suggested that the industrials, at least in the united states, he thinks, are fairly priced at this point.

he would be looking at industrials in other areas, in asia, for instance. what about you? >> well, b in my view, i think it's mostly a u.s. phenomenon on the industries, as well. and it dpendz depends on the strength in the construction industry. and housing in particular. it also depends on what happens in congress, whether we get knit sort of infrastructure spending, hay spending, water spending. but i think clearly it's a u.s. phenomenon. there isn't enough strength overseas to suggest that sales in the industry space are going to be all that robust overseas. >> david and kevin, guys, thank you very much for coming in. we appreciate it. coming up, the very real cyber war that's being wage it right now against corporate america. and prohibition is coming to an end, yeah, on hbo. that story when "squawk box" returns.

koerng the morning, conquer the day. go to squawk.cnbc.com.

and we have a quick programming note for you on monday. a squawk exclusive. an interview with target's chairman and ceogregg steinhafel. this will be the first time that he's talking since the issue of all those debit cards. 40 million americans credit/debit cards being hacked. that information out there. we'll talk to him about that, what that did to his business. >> right. >> because that came right in the middle of christmas shopping season. >> the incident itself and more importantly, christmas season and whether or not it -- and then everything else that everyone whas wanted to talk to target about for the last couple of years. >> i want to know how they've tracked and it whaef do know they've done. i want to understand sort of, you know, if there's been speculation, was it an inside job, how did this happen? >> but has the retail world watching closely, too, because we had someone who was sitting here on our set that day when the whole news came out who was on the board of another retailer who said, oh, boy, we have to go

back and -- >> target is great place, though. penelope was headed to target because it was pajama day at school. so we needed something that fit because everybody is growing so quickly. >> i'm a big -- >> headed to target. headed to target. no thought of anywhere else. >> my card was one of those that got compromised too. >> have you ever been to a target? >> i have been to a target. >> you have been to a walmart, too, right? >> maybe near 34th street. is there -- i believe there is one. but i have not been to the one in the city, but i have definitely been to one, yes. hbo says the drama will end after a fifth season that will come this fall. the show has won five emmy awards. terry winter says the decision to enthings came after a great deal of discussion with hbo and his creative team. he says he looks forward to bringing the series to a

powerful and exciting conclusion. i don't know what that means for -- someone has to get it. >> but you know certain people are going to get it because they're historical figures. so al capone is probably not going to get it and a bunch of -- >> is that a historical picture, too? >> i'm behind. >> what? >> i'm behind on this program. >> yeah. you don't -- yeah. the last season, i don't know, i was doing other things for had some of the episodes that i missed. but i sort of got the gist of what happened. bloody. but a lot of on those people are still around. so i don't know, you know, how i finally figured that out. but his nephew got into some trouble. >> well, by the way, i just have -- it's very good. >> that's weird that you're watching that. >> no. i went to the premier and saw the first two episodes of girls

this season. >> it was a big step for you to even admit that to me because you're opening yourself up. >> what's the name of it? >> call girl. >> have you seen a single football or basketball game? you go to girls? to each his own, but don't tell me -- >> we're going to go to a break now because when we come back, we were talking about target before. excuse me. we're now going to talk about the very real problem of cyber security. thank you. >> it's -- >> it's not just an i.t. issue any more. we're going to get into the middle of on cyber war with peter singer. he's going to tell us what everybody needs to know after the break. rage. hewlett packard, and disney both started in garages. mattel started in a garage. ♪ the ramones started in a garage. my point? you never know what kind of greatness can come out of an american garage. introducing the 2014 motor trend car of the year.

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welcome back to "squawk box" this morning. cyberattacks, target and snapchat two of the recent victims. peter singer, here to talk to us about it. he's the author of "cybersecurity and cyberwar: what everyone needs to know." in the book you say 97% of fortune 500 companies have been attacked and you think the other 3 have been attacked. >> or just don't know it or willing to admit to it. this is a massive issue when you're talking about cyberattacks out there. we have to disentangle what we mean from signer atacks.

we have the nuisance style to defacing of the websites, getting into your services or stealing information. >> tell us what we don't know. some companies have come out and told us about horrible things. target obviously had to. are there any examples of things that haven't been revealed to the public yet inside a company? you talked to different people that would really make you anxious in a different way than we already are about this issue. >> the thing that makes me anxious rather than the scary stories of some attack of everything from defense companies losing designs of their jet fighters to small furniture companies losing that kind of i.p. theft, to me there's two big worries here when we think of the industrial side. one is just a massive scale of intellectual property theft that's going on. mostly emanating from china by one measure it's as much as $1 trillion of value being lost. the other is, frankly, how underequiped business executives are to deal with this issue. there's one study that found that 70% of business execs have

made some kind of sign security decision for their company, not ctos but teches in general, though no management program teaches this. >> who should be responsible for protecting corporate america? let's put it in that context. because we have police. that's what police do. who should be -- i mean, who should be the front line for the cyberattacks that are taking place in the business world? >> it's much like the internet itself. we're all players in it. so you can't hand it over to one actor or another. unfortunately because of the way the narrative on this topic has too much shifted towards cyber-9/11, cyber-pearl harbor. there's over 500,000 news

articles on these things. >> do you worry about one of those things happening? >> let me put it this way. there's real threats, there's real weapons. but squirrels have taken down the power grid more times than the zero times that hackers have versus the very real, like i talked about, very real massive campaign intellectual -- i wrote a book. there's danger there. we have to balance our threats and responses to it. when you're talking about who should be dealing with this, i think it's a great illustration if you look at how the financial sector has dealt with it versus, say, the power grid. >> right. >> on the other hand -- >> financial sector has put the money in and the power grid has not. >> it's because they see the incentives but also because there's certain regulatory standard that there aren't in the other spaces. the other part of this is, the military role. look, if two banks were shifting cash between them, using a van

and a bunch protesters stood in the street and blocked it for a couple of hours, no one would say where was the army in this? change that van to zeros and ones and digital cash and we say oh, my goodness, where was the nsa in cybercommand? it's all our responsibility. >> those squirrels. >> peter, thank you for coming in. the book is called "sign security and sign warfare, what everyone needs to know." >> snapchat, could they have used that in trenton? >> snapchat? >> co >> could the deputy chief of staff -- >> the one we had. >> confide. >> they should have. >> this morning on the front page, the irs investigator being on obama fund-raiser would be on the cover of "the new york post" instead of this, right, if they had confide? >> do you know about it? does it work? >> send me an e-mail whether it

works or none over confide. when we return, what you need to know about the jobs report before it's released at 8:00 eastern time. our guest host is bill george, he's bringing friends with him, including toby cosgrove, indra nooyi and jean-pierre rosso. fifteen minutes could save you fifteen percent or more on car insurance. everybody knows that parker. well, did you know auctioneers make bad grocery store clerks?

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welcome to "squawk box" on this special jobs friday. will the market see another strong number from the government. steve liesman lines up the expectations. toby cosgrove explains the cleveland clinic way. and squawk in davos, becky, joe and andrew will be there.

the u.s. chairman of the world economic forum sets the agenda. conquer the morning, conquer the day. "squawk box" begins right now. ♪ all around the world ♪ you've got to spread the word ♪ ♪ tell them what you've heard ♪ gonna make a better day good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. our guest host, former chairman and ceo of medtronic, currently a professor of management practice at harvard business school. bill george. thanks for being here. >> thanks for having me back. >> i want it tell you about a few headlines. we are wait for the december jobs report. ahead of that, the futures are indicated higher. dow up, the nasdaq up by 20 and the s&p is up by 7.

the yielding below 3% to 2.968%. retail stocks are in the spotlight as the holiday season result continue to come in. gap's overall december sales fell short of estimates. the company does expect the quarter's earnings to come in at the high end of its guidance. sears is predicting a fourth quarter loss. abercrombie is raising its full-year forecast. abercrombie up by 15%, gap shares up by 2.7%. sears down by 15%. outgoing fed chairman ben bernanke is upbeat about prospects for the u.s. economy. according to democrat -- he did warn lawmakers they needed to make tough long-term decisions on budget issues and health care costs. we're watching shares of alcoa this morning, reportingly quarterly profit of 4 cents a

share, 2 cents below what the street was expecting. alcoa and rival aluminummakers have been dealing with stubbornly low aluminum prices. new jersey governor chris christie holding a news conference saying he was blind sided, betrayed, embarrassed, saddened after e-mails linked top staffers to a plot to close bridge lanes to the gwb as a political pay back. >> i believe that all of the people who were affected by this conduct deserve this apology and that's why i'm giving it to them. i also need to apologize to them for my failure as the governor of this state, to understand the true nature of this problem sooner than i did. >> there it is. >> yes. >> yes is going to be whether --

he's throwing some people under the bus. >> he's throwing them under the bus so big time i think he's telling them the truth. >> it's not throwing them under the bus if it's the truth. >> for his sake i hope he's right. my question is if somebody emerges and tries to throw him under the bus. i hope that doesn't happen. >> wow, this woman better not have anything on him. >> people have said, people have been around a long time looking at political animals. he is -- did you watch him yesterday? if he does -- if he's telling the truth, this is all -- he's so skilled as a politician. i watch him, it's like he hasn't lost a step watching him yesterday, his frankness and his every man sort of persona. >> he didn't back down from his -- >> he's an amazing politician. >> it didn't change who he was yesterday with that. you would have thought there would be a kinder, gentler chris christie trying to explain this. he stuck to who he is. >> you know what? >> what? >> people who hate him have a

reason to hate him. a lot of the reason has to do with backing hillary or hating the republican party in general. >> if you disagree with him on topics, he pushes back pretty forcefully. >> and he should. he's every liberal's nightmare. so i mean, liberals will hate him. he's a huge target. i'm not saying that in a negative way. >> i'm not so sure about that. i think he's closer to the center. i think actually more people in the democratic party like him -- >> obviously. he won by 22 points in a blue state. people who want hillary to take on the obama legacy, he's a huge threat. that's what i'm saying. >> does the bully label stick or not. >> i think there will be two questions. >> don't look for a fair treatment in something like this. >> don't say that. i don't think that's fair either. >> do i think it's fair. you're allowed to have your opinion, i'll have mine. i don't think this is fair,

either. >> "the daily news." >> that's why it says "daily news." the big story of the morning, 90 minutes away from the release of the december jobs report. steve liesman joins us with a preview that i think is going to be surprising, right? you're going to surprise us? >> yes, i'm going to get there in a second. first i want to walk you through why people are optimistic, tell you what the street is saying and i'll show you this model that i use every now and then, for example, when the government shut down to come up with a number. the three-month average of adp up 224. they've raised the dow jones forecast from 191 to 200. almost single handedly the adp was responsible. both employment indicators of the ism were up, the nfib, a big surprise report. they send us their jobs part of the survey early, best number since 2006. that's small business coming along into the job hiring party. gdp has been up. it's been revised up.

that's been pretty high. the challenger, we reported yesterday at 7:30, the lower total cuts since 1997. a kind of '97 market. deutsche bank, the next couple of releases will take on more significant and because they could influence the early stages of the qe tapering process. pantheon, ian shepardson, says the nfib survey point to upside risk payrolls and morgan stanley. that points to perhaps some lower numbers. and hfe says no matter what happens in this thing, don't extrapolate if payrolls disappoint. that's because of what i showed you earlier. there's other numbers out there. this is a simple model, folks, not the highfalutin economics on wall street. what i do, i take the average, the adp number, the three-month average, put it into this thing

and say where does it usually come up with payrolls? this is for the private sector, 224, claims 345. it's a big number. claim have been pretty good. gdp 217, ism 292. i take the prior three months, throw that in there and my average 254. >> this is steve soup. >> it's soup. i could adjust this on fudge factors. i don't have a strong fudge factor this month. what this tells you is, this -- thinking is in all the models. they weighed them differently and they do things differently. bottom line, this is why people have strong feelings about this number today. there's not really anything that goes against it. >> what's the number you got? >> 254. >> 254. >> a straight average. >> it's a big number. >> do you have any view -- we were talking in the last hour -- >> you're not going to ask me about christie, are you? >> no, no.

>> all right. >> if the number comes in really, really hot -- the good news, bad news as pengt. i say good news is good news. >> i think i said good news was bad news. >> i gloomed on to joe's view of the world. yes. first time ever. >> we had that reporter on comparing yellen to bernanke. to me the only man yellen should be compared to is owe ddisus. he said strap me to the pole. don't untie me. that's fed policy. it's to precommit to keep rates low even when they hear the siren call of inflation and raise rates. i think that a precommiter, the board -- those on the board who want to keep rates low are going to welcome a high number. >> right. >> this will give the fed an opportunity to show its ability to stay tied to the mast in the

event of higher numbers. >> why would you immediately in a labor market this slack, especially participation and everything else, why would you assume that any monthly number could raise fears of inflation down the road? >> that's the story, joe. just so you understand, from your side, i would argue, that there are a lot of people who don't sub descriscribe to the o gap model, the idea that slack in the economy means low inflation -- >> but price -- >> it doesn't -- people argue to the death about this at the economic meeting. >> it hasn't been devaluing the dollar because of it. >> you have to separate the number between the corporate number and the government number. the good news is, there's an underlying robustness in the corporate sector. as the government pulls back, everyone has been bemoaning ed krugman and everyone else. >> i think there's been a robustness in buying capital --

labor saving capital and putting machines in place. i have not seen the robustness in hiring. i forget, i think it was darr gary kaminski a long time ago said we would begin to hire when wall street rewarded companies for hiring people. it seems like stocks are going up when companies announce layoffs. when the opposite happens -- someone from minneapolis was out there yesterday saying he doesn't understand why we're tapering. he thinks we should be increasing the amount of quantitative easing. >> just coming -- bill george, just as an american, i'll take 400,000 jobs. give me 800. is there any number that would be too high for you right now? >> no. >> no. >> no. by the way, joe, we have a global labor market it's no longer cost push inflation. we have a global labor market. corporations, yes, they're going to go, find and seek the markets. that's what they're doing right now. but i think in the '14 a lot of

investors will be looking for femme who are growing. you should know how to grow. it's not about cutting back. >> we want sustainability. >> if you don't -- a lot of them will. >> then get out of this country. get out of this country. you promise you'll read this? >> yes. >> 16 pages. >> i'm in the middle of a robust debate. i want to bring robert gordon on who's forecasting a future of low growth in america because of unchanged innovation in america. >> no, no, no, he's so wrong. >> robert is a smart guy. >> let's talk about innovation. >> and we have the other side. we have an e-mail thing going. >> it's not going to depend on someone's brain. it's going to be machines. >> they have to come up with the next innovation. >> innovation creates jobs. >> it's a big debate. >> we have to take a break. >> "squawk" takes on the big stories. we have bill george with us for the morning.

he brought friends with him, toby cosgrove, he'll have lessons on how to heal the naj's health care system. later we talk davos with the chairman of the world economic forum usa, plus, pepsico chairman indra nooyi. 8:00 a.m. hour. and on monday, an interview with target chairman and ceo, greg steinhafel. that's coming up at 6:00 a.m. eastern time on monday. we'll be right back. you read this. watch that. 000 tdd# 1-800-345-2550 you look for what's next. tdd# 1-800-345-2550 at schwab, we can help turn inspiration into action tdd# 1-800-345-2550 boost your trading iq with the help of tdd# 1-800-345-2550 our live online workshops tdd# 1-800-345-2550 like identifying market trends. tdd# 1-800-345-2550 now, earn 300 commission-free online trades. call 1-888-628-2419 or go to schwab.com/trading to learn how.

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welcome back to "squawk box." take a look at the futures. boy could these futures change. at the moment given that we'll get the jobs number in a little over an hour, dow looks like it would open 67 points higher and the nasdaq up 20 points and the s&p up 7 points. "the wall street journal" reporting that health management is under investigation for giving kickbacks to doctors. the paper citing that the court case has been unsealed. that's how that piece of information was revealed. our next guest says the quality of care in america is some of the best in the world. dr. toby cosgrove is ceo of the

cleveland clinic and author of "the cleveland clinic way." it's great to see you here today. thanks for being with us. >> thanks very much, becky. nice to see you. >> let's talk about the rollout. we know all of the headlines and things that have come through. what have you seen at the cleveland clinic? do you have new people coming in, newly insured people or has there been a change in your business. >> we can't detect a noticeable change in the number of people coming. it's way to early to tell. i don't think a week or two makes a season. >> i know it's early on. there had been early headlines suggested that people were still using emergency rooms as sometimes their primary place for care. is that concerning to you? does that surprise you? >> we looked at our numbers and we really didn't see much of a difference in trend around cleveland area nor in florida. so we really can't tell but i wouldn't be surprised that people do continue to do this. it's going to take a long time

before we see the effects of this law moving people in different directions. >> tobey, our guest host is bill george who is here as well. i know you're good friends with him. bill, you've been looking at what's been happening with this. what questions do you have? >> my questions have to do with lifestyle. we want insurance for all americans. the real concern is that lifestyle accounts for more than 50% of health care costs. you've been outspoken on subjects which a lot of politicians are not. tell us what you think needs to be done to deal with the issues like obesity, diet, nutrition, lack of exercise in america. because i see the health declining of people. that means we put more people into the hospital and folks need more disease care than health care. >> obesity accounts for 10% of the health care costs in the united states. we'll have to have all sectors

of society including education, health care, government, all involved, including the food industry. and beginning to understand how we educate people and have appropriate food and exercise so we can halt this tremendous epidemic, which is going to consume us and may well shorten life span for people in the united states. it's an economic factor. it's a social factor and it's a longevity factor. >> we have indra nooyi who's joining us in the next hour, toby. we've been looking at what some of the food companies have been doing. what would you say about those efforts? they've been trying to cut back on the calories. is it helping? is it enough? >> i think it's a step in the right direction. the food industry is huge. indra has tried to take a lead in this. this is a big industry. not only do we have to change the food we eat and have a lot of people in the industry do it,

we have to educate people about what they can eat appropriately and what exercise needs to be associated with that. >> toby, he's your guest, right? >> yes. >> whenever you come on, you are a backer of obamacare. i think you say the law is not perfect but it's a big step in a long process to come. are you a backer of obamacare, bill george? >> no. >> i see a total disconnect. i look at what you say, toby, about the good things that can happen, then i read cke restaurant, the guy said it's easier for his franchisees to open a restaurant in siberia than the united states now. you're getting a pay back for what you're involved with, cleveland clinic, health care, you're seeing a few positive things from obamacare. do you take into account at all what it's going to the entire jobs picture in the united states. >> i'm concerned about the job picture. >> that's nice. >> one of the biggest factors in job growth since 2000 has been

the health care industry. and we're going to see less money in the health care industry and that is going to involve cutting back on jobs and every ceo that i talked with around the country is reducing the number of ftes. >> maybe that's a better way to go about it. don't you talk to him about this? >> yes. my concern is incentives. you guys provide, you, mayo, the best health care in the world. no one can compete with the top u.s. institutions but are the incentives there? the incentives for doing procedures, giving more tests, having more office visits in i'm concerned about consumer incentives. every medtronics program we had is based on this. with obamacare, i know they're at the back of the bill but i'm concerned that the changes will overwhelm it and people won't

have the incentive to stay healthy. >> senator wideman and senator portman, they bring those incentives into the medicare population for people keeping well, a financial incentive. i hope this gets added on to the bill. i think it would be a major positive step. >> toby, i want to go back to food for one second. maybe bill can go into this, too. because we'll have indra on. do you think there are enough market incentives to push the food companies to do what you want them to do or do you think it needs to be regulated? >> i don't think there's enough incentive right now to do that. i think it will take more time. i think the pressure has got to come from the populous, not from the government. >> that's not the answer i wanted. >> sorry. >> no. i'm kidding. i'm being a little bit of a devil. i can't get you going. i can't get you to tell him he's wrong. >> i want him to keep speaking

out. the president won't speak out on this. he speaks out. >> yesterday we had dinakar singh. he said hospitals will be the ones to benefit. he likes the hospitals because of obamacare. >> i think we knew we had to change because the health care in the united states was too expensive. this was not a perfect law by any stretch of the imagination. >> right. >> there are problems that will crop up unintended consequences. >> we'll see. >> my concern is that are we going to be able to change rapidly enough to correct those errors? >> we have to run. i apologize. thank you, toby. >> pleasure. >> appreciate it. coming up, we have our team ready for the jobs report. greg ip is going to be with us, mr. hassett will be with us, goolsbee and zandi will be with

us as well. we're coming right back. how much has michael jordan relisted his highland park, illinois estate for? the answer when cnbc's "squawk box" continues. now listen to me, duck. i have an associate that met with, uh, an unfortunate accident. while he's been incapacitated, somebody's been paying him cash. now, is this your doing? aflac? now, if i met with some such accident, would aflac pay me? ♪ nice. this is your stop. [ male announcer ] find out what aflac can do for you and your family... aflac? [ male announcer ] ...at aflac.com.

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how much has michael jordan relisted his highland park, illinois estate for? the answer, $16 million, down from $29 million. >> aflac. >> it's so interesting. nobody wants michael jordan's house. >> you would have to live in highland park, illinois. that's the only drawback from the house. we've an hour away from the release of the jobs report. i lost my job about, probably about six or seven months ago. i'm a year short of qualifying for my retirement. they had some cutbacks. i was the most skilled technician and also the highest paid. for my unemployment to end now, i wouldn't have money to go on an interview. my retirement is going away as a result of this. i do have a husband, thank god, or i would be homeless.

tell republicans: restore unemployment benefits now.

welcome back to "squawk box," everybody. in our headlines this morning, we are about an hour away from the december jobs report. economists are expecting 200,000 new nonfarm jobs with the unemployment rate holding steady at 7%. estimates for nonfarm jobs have been rising in recent days in light of the other updata economic reports we're getting, not the least of which would be

the adp report on wednesday. private equity firm apollo global says it raised $17.5 billion for its newest global fund, the most any private equity fund raise ed since the 2008 global financial crisis. and no doubt investor are wishing they bought this stock two days ago. take a look at shares of intercept pharmaceuticals. up sharply once again after nearly quadrupling yesterday. the company reported upbeat results for its drug to treat liver disease caused by fat buildup. >> 19 million shares. >> markups were so strong, they gave that -- they took everybody off the placebo, gave them the drug so they could go right away. this could become the first approved treatment for this chronic treatment. >> it's sorosis of the liver not

related to alcohol. >> $7 billion already? >> $7 billion. >> it would be unethical not to give the people on the placebo the actual drug. >> this is not some small -- it's small cap but for biotech it's huge. >> they continue to produce them, pharma is buying them up. pfizer, everyone. >> one of the last places we see this kind of innovation. >> it's great. they take the risk. you never know until the last minute. it's exciting. it's great. >> phenomenal. >> great sector. >> it's not the most common disease, obviously. when you think of cirrhosis, you normally think -- >> i don't know.

>> this is nonalcoholic cirrhosis. >> i understand. it will destroy your liver. i think it's great. we need to support these -- nih needs to support these kind of companies. that's the key, and we're defunding the nih. that's one of the few areas of government spending i support. >> tell me your story. what was your story? >> we have close friends out in colorado. okay? they make about $60,000 a year, hard-working people. >> 60,000 each. >> combined. >> combined income 60 grand. so they had a high deductible plan, 12 grand, pay $297 a month. >> $297 a month. >> their plan got canceled december 28th. okay. the best plan they can get is 979 a month. >> 278 to 900. >> they believe in obamacare and guess what, they're not going to take insurance and save the $1,000 a month and hope they can build up enough backlog to take care of a catastrophic.

>> what's their age? >> 40 years old. 45. this is really a sad story. >> it is. >> i'm hearing this all over. everyone is getting their premiums increased. >> that's what i keep saying. the glitches, we're going to forget about that quickly. >> let me tell you what's coming, adverse selection. people like this are not going to be in the pool. any insurance company worth their salt will reprice for 2015. you'll see increases in the 30s. >> they'll blame the insurance companies for it, even though it's a market system. we'll hear that it's not obamacare's fault. >> this is a big problem. this is a big problem. >> if you keep speaking like this, you get invited to the elite progressive stuff, you're at harvard. they think, bill george, oh, yeah. they love you right now. hopefully they're not watching right now. >> i'm telling you, until you give people incentive for staying well, you're not going to get there from here. right now it's against the law

for having people stay well. no medtronic plan would qualify. we need to provide people incentives. incentives work in america, like it or not, they work. talking about instincts, we'll talk ahead of today's employment report. many u.s. manufacturers have wanted to add jobs but they can't and the reason, a little bit of incentive, they can't find the people with the skills they need. mary thompson joins us from st. paul, minnesota. good morning. >> good morning 20 you, andrew. as you said, more than 82% of u.s. manufacturers say they can't find the skilled labor they need to fill tens of thousands of jobs. this according to the manufacturing institute. j.w. hume found itself in that situation two years ago. it employs 34 artisans on factory floors where they make high-end leather goods and luggage. back then, two years ago, the company's former ceo, jen

guerrino says the company faced a labor shortage as the company began to take off. >> at one point it was strangling our growth. we had to slow down our sales plan as a result of that. >> since 1904, j.w. hume made its products here in the u.s. over the last half century, most u.s. apparel and textile firms have been sending their work overseas to cheaper labor markets. the result, two generations of workers who don't have the skills needed to be an industrial sewer. now more u.s. companies are bringing the wok back home. to train the sewers j.w.hulme needed, they reached out to dunwoody technical college. talks with regional companies found at least 90 jobs would be available in 6 to 18 months and many firms expected to replace 50% of their staff who had hit retirement age over the next

three to seven years. >> they wanted three to ten jobs each. so many different areas of sewing that are needed that i knew it was a very positive approach. >> a year ago dunwoody launched a six-month training program. this 61-year-old is one of its graduates. he now works at j.w. hulme. the dunwoody program has a 90% placement rate. the program has had to be retooled, this because of feedback that was given by the companies that support this program and are hiring and apprenticing their graduates. dunwoody is also focusing on getting the right kind of student into this program. we'll have more on that coming up on "power lunch." back to you. >> thanks, mary. the world economic forum in davos is two weeks away. "squawk box" will be live from

switzerland that week. >> i'm worried about you. you may get a rash. >> a whole body rash over there. up next, a preview of what you can expect from the world economic forum usa chairman. is this the guy behind my carbon offset? >> he might be. >> later we'll talk leadership and business with the chairman and ceo of pepsi, indra nooyi. "squawk box" will be right back. liking your flat rate shipping.y fedex one rate. really makes my life easier. maybe a promotion is in order. good news. i got a new title. and a raise? management couldn't make that happen. [ male announcer ] introducing fedex one rate. simple, flat rate shipping with the reliability of fedex.

we need security. welcome back. the irs's top cop argues that the agency is too hard on offshore tax dodgers. that's weird. look at that. it's congressional and then the "y" is on the next line. ron burgundy, what would he do? >> what would i do. >> the congressionally appointed ombudsman, she says americans are getting hurt financially by entering the program and the goal of the agency's incentives is to lure tax cheats out of the woodwork and discourage americans from hiding assets overseas but the watchdog's report finds that the average taxpayer ended up paying penalties averaging nearly four times the basic tax that was owed in the first place. >> we are now just two weeks

away from the world economic forum in davos, switzerland. joining us now with a preview of what to expect when we all arrive, this is the first year we're all going together to arrive in switzer been, jean-pierre rosso is the chairman of the world economic forum. good morning, sir. >> good morning, andrew. good morning, everyone. >> tell us, what are we going to be talking about? i get the sense that jobs globally will be the hot button issue. >> yes. i think that, number one i'm the chairman of the world economic forum usa. >> we don't want to take anything away from clive. >> we're looking forward to this meeting indeed, unemployment is at the top of the worry list. and global issues. you know, basically in davos, what you're going to have, world leaders from all parts of societies, leaders who are responsible. they are in a position of

authority. they are accountable to either voters or stockholders or employees. and what do we expect from leaders to act? our role is to catalyze that action. >> jobs is the big issue. one of the things you said during commercial break two commercials ago is innovation solves everything. if we can get innovation going, therefore, we can get jobs going and that will solve a lot of things. i said if innovation was perfected it would reduce jobs globally. >> that's like a -- >> theoretically, based, andrew, you're right. we have to change the skills mix. we have too many unskilled people that aren't going to be able to do the jobs of the future. one of the things the forum is working on, how do we get the young people of the united states get those skills. dunwoody, that's a great place that does it. they have to get the skills to

be able to do the jobs innovation creates. that's the key. >> yes. the role of education. you know, the role of education has to be significant here, because we need to educate people for the jobs that we have today, for the jobs that we'll have tomorrow. we're not doing that. that doesn't mean -- nobody does have to go to college necessarily. >> right. >> so the key is how do we restructure the education system so that it provides the right jobs, with the right skills, to be employable? and we have examples of that today. >> isn't that the key for europe? we have a great educational system. i was in spain in barcelona in march. 52% youth unemployment. >> we talk about 7% being too high here. i don't know what they do. >> isn't that the key, though. >> it's 12.5% in europe. it's 40 plus percent for the young people. go around the world, this is a huge issue, youth unemployment.

>> that leads to unrest. >> yes, that leads to unrest and extremism. >> malthusian, if you're malthusian, you've lost. it brings more scarce resources. you think about food. we aren't supposed to be able to feed the world, when the population got to this level there wasn't going to be enough acreage. we can easily do that. are jobs something there's no limit to, will you be a loser there as well with a malthusian bet about jobs? >> it's just the world is transforming so rapidly, that we just have a hard time comprehending what the impact is going to be. >> i agree. >> with all this transformation. >> we shouldn't bet against the possibility of employing -- having great opportunities, better opportunities than we have now in a better quality of life in the future. >> you don't think in the future if we actually innovate -- >> they would have said this in the 17th century, 18th century,

19th century. >> think if you thought people had to pick crops or pick whatever it was or had to -- the way we used to make fabric. god, if you put all those people making fabric out of business with machines, there's no job but every single time something else comes along. >> how are the ceos going to come together in davos and start addressing these issues instead of going to hear the world leader of turkey or -- >> they already are working on this. in the summer we had a large meeting of ceos that we called the international business ko . council. they talked about, in particular, youth unemployment. there are two levels. there's a microlevel, with what companies should do to improve employment and at the macro level, what government should do. we have examples of that, in the u.s. in particular. we have companies connecting with community colleges today and shaping the curriculum in such a way that the graduates have a job.

including their own companies. in europe, we have examples like this of new education system, of people training people young people for the jobs of today and for tomorrow. but also the government has to play a role. it has to create the environment for reform in the education system. >> let me ask one other question. it's not an education question. it's a tax question. which is how much do you think taxes play a part in this whole situation in terms of creating the right environment for business and what some people have described as the race to the bottom, countries and states competing for lower taxes ultimately? you're looking at this from up here, not -- we're the u.s. we look at it how can we compete with one other country. if you look at the entire globe, changes the way you might consider this issue. >> well, yes, but it's the same case everywhere. in other words, you know, innovation will play a role. but the question is to figure out what's going to be needed in the future and then kater to

that. >> educationally. >> education. >> yesterday, secretary treasury of the united states goes and lectures the germans about how terrible it is they are inflating their economy. you know, the germans have got the best system of all for apprentices -- in. >> in tells of trade schools. >> that's why their economy is exporting so much, they train them for the jobs. >> they did that a long time ago. >> yes. we need to do this in united states, your home country of france, spain, italy, you name it. we have to change the system to gear to the jobs of the future. >> yes. >> are the ceos concerned about that. >> yes, very much, in fact, this group of ceos decided that youth employment was what they wanted to talk about in davos. again, you do have government, you do have business. you do have civil society.

you have people who are leaders. they're in a position to act. that's what we expect. >> you're in charge. in my shower, i know i'm not going to have a door, will i have one of those things i can take off? can you get me a room with a normal shower over there, in all of europe, do you know. >> we'll give you a sleeping bag. >> europeans are really fond of hand showers, ones you move around as you say. >> that's what i got. i got what i got. i have a beautiful bude but no shower. >> we'll compete on that. we'll get our pedometer. >> he's staying at the belvedere. >> no, he's not.

>> can you get me in at the belvedere. "squawk box" will be live from davos, bringing you great interviews, starting tuesday, january 21st, less than two weeks away. ray dalio, arne sorensen, james gorman, muhtar, lloyd blankfein, eric schmidt and larry summers will join us. >> the viewers won't know, we will. coming up next, more trans over the pope's stance on economic and equality. michelle caruso-cabrera joins us for that. the controversy, now ralph nader is weighing in. that story right after the break. monday on "squawk box," a mega lineup of newsmakers.

macy's ceo terry lundgren, randall stevenson, bmw north american chief, silver lake partners co-founder glenn hutchens, former saks ceo and a mystery guest that can't be missed. that's all monday, starting at 6:00 a.m. eastern time. conquer the morning, conquer the day. 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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right now it's time for a cnbc exclusive report, about the

pope and ken langone. theologians have penned a letter to ken langone. michelle caruso-cabrera joins us. >> billionaire ken langone who's spearheading the efforts to raise $180 million from the renovation of st. patrick's cathedral in new york told cardinal dolan in new york, head of the archdiocese that at least one potential seven figure donor was expressing concerns about donating money to the effort after the pope's negative comments about the rich. the story made international headlines. a group backed by ralph nader called time for a raise has penned a letter to langone backing the pope, criticizing langone and asking him to support a hike in the minimum wage to $11 from $7.25. the letter is signed by 26 different catholic professors. they cite this happy verse from james, chapter 5.

weep and wale, your worth has rotted, your gold and silver are corroded. they're corrosion will testify against you and eat your flesh like fire. the wages you fail to pay the workers who mode your fields are crying out against you and the cries of the harvesters have reached the ears of the lord almighty. i head a conversation with the head of the group time for raise. says philanthropy is not enough. he should be helping to make sure the structure of the economy is a fair one, his use of the words. they come down hard on langone. to be clear in the conversation i had with him back in december, he was not supercritical of the point. he was making the point to cardinal dolan when you're approaching noncatholics, ep episcopali episcopalians, jews, he's, to donate money, he met resistance

from at least one of them due to the economy. i called him again to try to talk about this but he's traveling overseas. >> moths will eat your clothes and you will be corroded. >> no good deed goes unpunished. langone is trying to do a good thing. >> yes. >> we're not going to increase the minimum wage 40%. this is crazy. a lot of people lose their jobs. you're talking about jobs for young people. >> no, no, modest hikes in the minimum wage have no impact on employment. >> 40%? >> i'm quoting the head of this group. >> what is modest, though? if you saw -- >> 40%? >> if you saw 10% increase. >> he wants to go back to the inflation adjusted minimum wage from back in the '50s and '60s. >> why are we even -- we need to do big things to deal with these problems. why 10% on 6% of the population? it's symbolic. >> we should be talking about big things. >> neither side is talking about

big things, only big things they want done. if you're looking at compromise, it may be a way of getting things you think are important. >> kid in the '60s, $2.25 an hour. that $2.25 today would be worth almost $17, $16.50. >> it's a stepping stone for better jobs. >> no question there's a tradeoff. >> thanks, guys, you see later. [ male announcer ] this is the story of the little room

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it's jobs friday. investors gearing up for the december employment report, predks and market reaction is just ahead. leadership in the spotlight. pepsi chairman and ceo indra nooyi on what it takes to run a successful company in a tough and political environment. >> i am embarrassed and humiliated by the conduct of some of the people on my team. the latest details on bridgegate is just ahead as the final hour of "squawk box" begins right now. ♪ ♪ on the road again ♪ just can't wait to get on the road again ♪ ♪ i find lovers making music with my friend ♪ welcome back to cnbc.

did willie stop smoking pot now that it's legal. >> i don't think so. >> you're not an outlaw. he moves to denver. >> does he? >> make it easy. >> he's never had trouble getting pot, i don't think. i'm joe kernen, along with andrew ross sorkin and becky quick. forecasters say the economy likely headed 200,000 jobs last month -- some of those numbers we see from adp, we wonder what you're smoking, that's for sure. futures -- that's not true. you've been right on. >> yes, he has. >> much closer. i don't want to trash joe bracken but what was he doing? no. the s&p is up 8. up 8. all we need is 11. >> all we need is 11. >> wow. >> to get above for the year. >> that's after we extended our little -- >> it's the first week of the year, andrew. >> sort of. >> what's going on, you're troubled. >> we have news out from target. i'm reading through the release

right now, trying to make sense of it. target is providing an update on data breach and their financial performance. i am just looking at this and it says that as part of their ongoing forensic investigation, it has been determined that certain guests' information, separate from the payment card data previously disclosed was also taken during that data breach. they say the theft is not a new breach but it was uncovered as they continued this investigation. >> files on their customers. >> at this time, the investigation determined that the stolen information includes names, mailing addresses, phone numbers or e-mail addresses for up to 70 million individuals. >> is there -- i give a phone number when i go to dick's sporting goods. >> that's what it sounds like it wi is, your e-mail, phone, address. the company will attempt to contacted aeffected guests. the communication will be informational including tips to guard against consumer scams.

there's commentary from gregg steinhafel, the chairman, president and chief executive officer. i know it is frustrating for our guests to learn this information was taken and we are truly sorry they're having to endure this. understanding and sharing the facts related to this incident is important to me and the entire target team. >> did you read the part, guests will have zero liability. >> it is something that concerned people. there's 310 million americans who live here. we should also mention that there's an update on the fourth quarter outlook. what's the expectation? >> it says 120. they had been at 150 to 160. they're 120 to 130. >> which can't be a surprise. >> hold on. >> you knew people were concern and stopped shopping there. people i knew said they were going there only with cash but not credit cards. >> can we raise a point? if they are saying that nobody

is going to have liability for fraudulent charges and you really understand what that means, "a," most banks if it's a credit card will protect you. >> yes. if the bank doesn't they will pick it up. their second point has been. >> here's the next point. the banks are going to sue them. that's where this is all going. >> guys, you have to give greg credit. this is every ceo's worst nightmare and greg is the most customer-oriented guy i know. i served on the board there when he was in management for 12 years. he's trying to do the right thing. i give him credit. >> all i'm suggesting the cost of this. if he's now saying that he is going to limit everybody's liability across the board, and he's saying -- >> this is what they've said from the beginning. from the beginning -- >> right. >> the banks don't cover you, they will. what happens with the banks, i don't know. >> "a" you have the possibility of banks going after you. 40 million or 50 million before? >> 40 million. >> now you're at 70. >> before we say that, though,

it's 40 million or 50 million credit cards. what they said it was an incredibly small percentage of those that have been ripped off. just because you've been exposed doesn't necessarily mean you've had charges or anything's been taken. >> if i'm an individual who's been at the store and they took my information even though i wasn't there that weekend, the actual days, and then i get a phishing scam and i can connect it back to target and even if i make the error of clicking on it and i get a virus and now expose myself all over again, guess who i'm suing? guess about the class-action lawsuits. i'm suggesting to you, look, he's doing all the right things. i don't know where the stock is right now. >> i don't know why you don't know. the 120 to 130, get this in, 124 is where analysts are. it was 150 to 160, analysts came down to 124. the stock was down at 61.5. it's back to 62 at this point. it's been bouncing up.

it was quite a bit lower than it was right there. the 120 to 130 is not a shock. >> this is important, too. they've had meaningfully weaker than expected sales since the announcement but they have shown improvement in the last several days. i wonder if this was sitting in the holiday season. they say they have a comparable sales decline down two to down 6% for the remainder of the quarter. we should also point out we'll be speaking to gregg steinhafel on monday morning with much more on this information. you make good points. >> everything you're saying is correct. the question is, if you want to play for the short term, cut these things short. he's playing the long term. he wants becky quick to come back into his stores. >> that's hugely important. my credit card is one of those. i shopped at target, my mother shopped at target. >> do you have children. >> i buy all kinds of stuff

there. i can't get out of target without spending hundreds of dollars. joe said his wife was on there. >> i bought pajamas with booties yesterday. and the butt thing. >> it is a huge issue. there are two perspectives to look at. one is the consumer perspective. how do you win back their trust. and the second is the investors' perspective. >> he may pay a price. you have to do it because your customers are all that matter. >> what was that bible quote? i didn't hear it. what was the gist of the bible quote? >> it was about fires burning and -- >> someone sent in another one. you can find anything. if anyone will not work, neither shall he eat. anyway, you can find anything in the bible. when we come back, we'll talk about leadership and have that in spotlight.

pepsico's ceo indra nooyi. she'll join us after the break. and then it's the jobs number. the government employment report will be released at 8:30 eastern time. "squawk box" will be right back. aflac!

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welcome back, everybody. let's get you back up to date. if you are just tuning in, we've had news from target. this is the first time the retailer has been reporting the numbers and how their situation has been impacted by the theft of about 40 million credit and debit cards over the holiday shopping season. the company is telling a couple of things today. first of all, they are saying they are looking at the fourth quarter and expect to earn somewhere between 120 to 130 a share. that compared with the prior guidance of 150 to 160. the street anticipated this would have a significant impact. the street was anticipating 124 a share. 120 to 130 brackets the street's expectations. they see a decline of 2% to 6%, is what they're looking for for the reamender of the quart. they're telling us there are

additional customer information that was compromised during that theft. they are now talking about their investigation determining that the stolen information includes names, mailing addresses, phone numbers or e-mail addresses for up to 70 million individuals. we will talk more about this. we do have an exclusive interview with gregg steinhafel, the chairman and ceo of target. we'll bring that to you on monday morning. in the meantime, our newsmaker of the hour is indra nooyi, the pepsico chairman and ceo. indra, we are pleased to have you here. thank you for being here. >> becky, joe, andrew, bill george, great to be with you and happy new year to all of you. >> happy new year to you. i know you wanted to come on today and talk about leadership. that's why bill brought you here today as well. tell us a little bit about your plan, what it does take, you think, to deliver corporate performance and have this well positioning the company for sustainable long-term growth. >> in today's world which is extremely volatile and complex, i think it requires enormous courage, enormous stamina and a

board that's completely aligned with the ceo but still practices great governance in they're objective but still represent the shareholders and have a great rapport and dialogue with the ceo and the company. these are not easy times, becky, because the world has gone from a four plus gdp growth to 3% gdp growth. the composition of countries in that growth has changed. you have enormous issues from a geopolitical issue, climate change issues. ceos are having to deliver performance by powering through all of these issues and do it at a time when you can no longer manage a company just for duration. you also want to manage it for level of returns. so it really requires stamina and courage to be able to navigate through all these incredibly difficult forces that are really impacting corporations and ceos today. >> i know you can't talk about your results, you're in a quiet period right now but i would like to ask you about the global economy.

we've had a lot of people who have been looking around, they look at the u.s. economy and things look to be improving have you seen that and what have you seen around the globe. >> i tell you, as i said, the gdp growth of the world has come down from the 2004 to 2006 period. as i look at 2012, going into 2014, 2013, 2014, we are seeing a gradual improvement in all the economies. we are seeing improvement in the fundamentals of the economy. the composition of it is different. we'll come to that in a second. but the underlying economy is improving. if you go down to latin america, i think mexico's doing well. brazil is slow but i think brazil will come into its own as the world cup comes in and the economy starts to stimulate itself again. the eurozone, versus last year, we're actually expecting to see a bit of an improvement this year, which is good news. the eastern european block, including russia, about a 3% gdp growth which is a good number for that block.

so we're quite happy with it. the middle east, those economies, about 5% gdp growth, pretty good. i think the china, india aspect, that part of the world, china used to have 9, 10 gdp growth, india used to have 8% gdp growth which is really what india needs to get out of chronic underemployment. i think the growth rates in those countries have come down just a bit. africa is still in the 5% to 6%. as you look around the world, this composition leads to arch overall gdp growth rate which is a point below where we'd like the global gdp growth rate to be at. companies have to figure out how to power through gdp growth, whether it's 4% or 3% or 2%. we have to have geographics scope, product scope to be able to play the portfolio game, the products option game to make sure we can't deliver results in spite of this global, you know, confusion that's going on. >> indra, good morning.

it's bill. thank you so much for coming on the show. and this last point, we had toby cosgrove on earlier. he was talking about the obesity epidemic. if you back to the fall of 2006 when you became ceo, you foresaw these changes coming with market, consumer changing habits. you built that into your strategy. how is that playing out for you, what do you anticipate in the next three, four years in how you'll handle that? what pepsico doing specifically to build its growth so you can sustain growth? that is the long-term goal you have as ceo. >> that's a great question. when i became ceo in 2006, if you looked at the public projections of the soft drink category or the snacks category,

especially the savory snacks category, everybody was forecasting boom ties, 5%, 6%, 7% growth. even in the united states, people were forecasting 3% and 4% growth for the soft drink category. that's the forecasters were using mathematical models. but if you really dug underneath that and looked at the public policy debates going on, the consumer chatter going on, what hospitals were talking about, the trend was going to be different. that's what made me jump into action and say, look, we have to start transforming our portfolio for the trend that's coming that really is based on deep analytics, not a trend based on just a projection of a line. when i looked at that, i realized that pepsico, which is a big iconic american company, you know, now participating in the whole world, had to transform its portfolio. it was more fun for you products. the strategy was simple. we said let's reduce the salt,

sugar, fat in our fun for you products, dial up the zero calorie products and lean into the good for you products but make the good for you products with positive nutrition taste great so that no consumer had to make a choice between taste and health or price and health. you don't have to pay more for a good for you product. this transformation, i'd say, was an extremely difficult transformation for two simple reasons. we were taking the culture of a company that had been around for decades and asking ourselves and the company to fundamentally change how we think about our products. i had too many critics outside the company as well. everybody kept telling me i was not proud of my categories, that i had to focus more on salt, fat and sugar. there were far too many critics. fighting the outside critics was more difficult than transforming the company. today we've crossed that --

>> you year came that a couple years ago. >> i think it's fair we ask a couple of questions, though, about the critics. there is this lingering question about whether the company should be one. you talk about the power of one and whether it should be split up. is there specific data you can point to that suggests that frito-lay has helped increase the growth rate of carbonated drinks. it's hard to suggest -- hard to get there. i was hoping you might have something on that. >> it may make you thirsty. >> peanut butter and jelly. >> it's a fair question. let her answer the question. >> let me go through. joe, you're a big consumer of frito-lay products. >> cheetos. >> if you eat a bag of fritos, do you reach for a beverage. >> yes. >> i think you do. when you go to a tailgate party, do you take snacks and beverages together? absolutely. when you sit down to watch a

game, do you have snacks and beverages? yes. these two go together. they are better together whatever you say. does the growth rate help each other? absolutely. in the united states, when you think about the big holidays, going to the retailer and talking about putting the two together drives traffic, drives ticket. let me tell you another one. when retailers have a slowdown in sales, the first person they call is pepsico, because we're large, high velocity categories and they say come in and tell us what you can do to do some more lobby displays, promotions on the perimeter to we can get the traffic in and start getting the sale you up. >> right. >> i think these two categories are better together, not just in the united states, around the world. let me ask you about that, around the world. when you think of the fastest growing markets, china and mexico. you've reached bottling deals in both of those countries in 2011 which nelson peltz has publicly said you mortgaged the company's

future and you have divided the frito-lay business from them so you can't get the synergies. what do you say to that? >> i wish people would go in and see how we run those buys businesses. if you look at china, our whole business, the marketing, how we think about the products, all of that is done together. i was in china two months ago. our partner in bertschages, we worked closely together on innovation pipeline, what do we do together with foods and bertschages. the businesses work well together. the reason we franchise the the business in china, thr were ahead of us in a manufacturing and business footprint. what we are deploying is sensible strategies. at the end of the day, the products work together. in fact, china's the only country in the world where the advertising campaign for chinese new year has pepsi, tropicana and lay's in the same

commercial. and i think china is an example of better together at its best. >> right. how do you think about this, though? analysts have said this, others have said this. when you look at the total shareholder return of the company since you joined in 2006, on an annual basis 7%, consumer staple 11%, coca-cola 12%. probably a lot of that is investing in changing the mix. do you think it has anything to do with the structure at all? >> this is very important that you look at the right time frame. you pick any time frame you want for any country, you can make them look good or bad. let me go back from 1997 to 2006, the other beverage company went through a massive meltdown, went through a massive meltdown. at that point we were doing very well.

they took a gigantic reset and started coming out of it. pepsico has been a steady performer over that time. look at our ten-year returns. they're phenomenal. how do you manage a company for duration of returns, not do a boom splat. the worst thing a ceo can dow is manage the company for five years of returns, like this cartoon where the guy runs and stops, we can't do that. we have to manage this company for a steady growth in performance, not a boom splat. i don't rub scribe subscribe to approach. >> thank you for joining us and answering these questions candidly and forthrightly. i know some of them were tough. people do want to know. >> george can handle it at harvard. >> thank you for your leadership, indra. i hope at the end of the day we'll help with some of these problems due to your leadership.

still to come, the december jobs report. conquer the morning, conquer the day. latest edition of the squawk talking blog. does it talk? no, it's a talking squawk blog. it has lunks to three new cnbc ads featuring us. wow. "squawk box" will be right back. i'm ahead of cramer now. she keeps you on your toes. you wouldn't have it any other way. but your erectile dysfunction - it could be a question of blood flow. cialis tadalafil for daily use

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up next, the december jobs report. as we head to a break, take a look at the u.s. equity futures, up 76 points. the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i-95. ♪ this magic moment it is the story of where every great idea begins. and of those who believed they had the power to do more. dell is honored to be part of some of the world's great stories. that began much the same way ours did. in a little dorm room -- 2713. ♪ this magic moment ♪ ♪ this magic moment so i can reach ally bank 24/7, but there ar24/7.branches? i'm sorry, i'm just really reluctant to try new things. really? what's wrong with trying new things? look! mommy's new vacuum! (cat screech) you feel that in your muscles? i do... drink water. it's a long story. well, not having branches

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welcome back, everybody. we are just a few sec away from the employment report. we've been waiting for this number. and economists have raised their estimates. they're now looking for 200,000 jobs, up slightly, where was it, steve? 191. >> yes. people are whispering bigger numbers. >> let's get down to cnbc's hampton pierson. >> up 74,000, december nonfarm payrolls increased by just 74,000 jobs. the unemployment rate is 6.7%, average hourly earnings up 0.1%. well below the consensus forecast for 200,000 jobs. private sector job growth in the month of december, up 87,000. revisions, no change to the october numbers, an additional 38,000 jobs added to the november number. that now is 241,000 versus 203,000. it's the lowest monthly job growth since january of 2011 when we had just 69,000 jobs

added to payrolls. the unemployment rate is the lowest since october 2008 when it was 6.5%. how did we get to the 6.7% unemployment rate? a third of that decline came with an increase of 143,000 in the number of persons employed. however, two-thirds of that big drop in the unemployment rate was the result of 347,000 people basically walking away and getting out of the labor force. the labor force participation rate, 62.8%, down 0.2 from november. that labor force participation rate of 62.8% is the lowest since february of 1978. 36 years, job gains up 55,000 in december and retail trade. plus 19,000 professional services, job losses, construction down 16,000, information down 12,000. health care down 6,000. from the household survey, a

couple of items about possible weather related factors on these numbers, 1.693 million people who would normally be working full time were working part time because of the weather. another 273,000 did not work at all. back to you guys. >> hampton, can you clarify, what was the participation rate, 62.8? >> 62.8%, a new low since 36 years. >> wow. >> what was the fed thinking tapering? they're idiots. >> you were beating the charge. >> let's get back to our panel for reaction to the numbers. i think there will be a big reaction. greg ip, kevin hassett of the american enterprise institute and austan goolsbee. >> rick is here, too. >> i'll start with mr. zandi. your numbers are -- >> nice model, liesman. >> i wouldn't pay any attention at all to these numbers.

>> really? >> no, really, dead serious. they're not consistent with anything. anything. gdp, ism survey. >> how do you make sense of this then. >> next month this will be -- we'll get the benchmark revisions and they'll be revised up and away. this is not consistent with anything. >> let's go to austan goolsbee. what do you think? >> i think we have a tendency every month to way overreact. last month we got a big number, now it's revised up. everybody said we've turned the corner. this one is probably, mark is right, i think it's probably too extreme. but everybody needs to chill it down a little. we haven't fully turned the corner any more than we were down in the dumps. i think this is just a reminder that we have to get all our ducks in a row. >> do you know if they fired that guy that was making up the numbers before the election? have you heard from your sources. >> i heard that guy works at "squawk box" now.

i don't know where he is. >> he hasn't been seen. the guy used to stay home and say i think it feels like -- >> no, we've turned the corner. gdp growth in the second half the of the year is 4%. we've had average -- >> you're going to make rick mad. do you do this on purpose. >> really on purpose. i want to get him going. we were off and running with this number. >> ignore this number. it's going to go away. >> rick is like a windup toy. >> here's what i say, hey, scottie, beam us all up. we have 347,000 people vaporized. okay? if you want to not pay attention to the number, i understand. most guys on this particular know if the government can't do all the thing it professes, can't rollout health care, why do you think they'll be able to do a head count on people who have jobs? having said all that, the amount of people disappearing is significant and all of a sudden as we get closer and closer to 5.5%, 6%, the echos in the fed halls say, it's really not this

number because of all those people. they're going to pay a whole lot more attention to it. i will draw your attention to a real dynamic. we see interest rates really moving lower, under 290 on a ten-year. why is that important? because weak data has put -- in treasuries. more importantly, we haven't settled under 290 since the 20th of december just to put perspective. >> bad news is good news now. kevin hassett, what do you think? >> you want to say how disturbing is this number? it's even more disturbing than the image we saw of joe walking around in feety pajamas. the best thing to do about that image is put it out of your mind. i agree with mark, we'll wait for them to revise it. this can't be the right number. >> the one person who called this is greg ip. what were you worried about? >> i think first of all, i don't fully agree with mark that we

have to throw this number out. household employment has been running at half the rate of payroll employment for the last year. i was expecting a convergence partly from the payroll side. the fact that november was revised up suggests that the late thanksgiving had something to do with this number and the fact that construction was down suggests that it was partly weather. the underlying trend is partly weaker than 200,000. they have a lot of confidence in their forecast and that drop in the participation rate will convince more and more people that the draw decline in the unemployment is the real thing and the economy simply can't grow as fast as it has before. they should stick with the current plan. >> steve liesman, we haven't talked to you about that. >> no, you haven't. >> i thought you'd leave the set. i was bragging about your model. >> my numbers with 254. >> what did it come in at. >> 74. >> your model said -- we got the

4. >> let's talk about what the model is based on. >> why should we? >> it's based on five other indicators out there suggesting better employment growth. i'm not saying like zandi throw it out, i am throwing that you have the isms were good, the apd was good, the claims have been good. gdp has been good. okay? all of those tell me -- the hfe, jim o'sullivan this morning said don't throw out your view if this number comes in weak. now, before i get to that -- >> what does your model say the temperature will be in the year 2100? >> it's the precision of the model, joe, an overlaid climatology on it, that's future use of the model. there are a couple things that are weak. the average weekly hours ticking down to 34.4 from 34.5. wage growth was not terrific. so those are two things that undermine the idea that there's strong job growth out there.

why? you picked up a record construction hiring and this one has minus 19 is unclear to me. >> i just don't believe it. it's wrong. it's just wrong. >> i know it's wrong. >> here's a way to think about this. 240 in november. this also uses greg's ideas. 74 in december. lets average the two and come up with something that is 180 or 170 in terms of actual job growth. >> yes. we'll get these benchmark revisions next month, wholesale revisions go back three years. >> i should do some math. >> i'm very sure this will get revised away. >> a mark quick question. if the job number is so low, why did the unemployment rate go from 7% to 6.7%. >> you had decline. >> why did participation rate fall to that level? >> 347,000 people dropped out of the work force? >> why? why do you think that is. >> "a," they no longer report that they are looking for work.

>> right. >> that could be some function of unemployment benefits running out. that's one of the things that are out there. >> it did in some place, like north carolina, other places. >> but also people who retire also report they're no longer part of the work force. the big debate, is it retirement or discouraged workers? and the best papers i've seen go about half and half. >> okay. what these numbers, what is the adjusted number look like. >> we're at 200 k. >> what is the unemployment rate? >> that's a better question. >> the unemployment rate -- i don't know if it's 6.7, 6.8, 6.9. we're in that range. it's going to fall significantly over the coming year. the unemployment rate is going to fall half a point. if emergency unemployment insurance expires, that will shave another quarter point.

>> what does the janet yellen fed think of these numbers this morning. >> i think they are going to worry a little bit that maybe they were too quick off the mark on tapering. >> that's what i've been saying. >> i think they'll come back more or less perhaps not as optimistic as mark said but. >>ing through the last few numbers. the payroll numbers being weak, the drop in the unemployment rate suggesting that the economy has less slack than they've been assuming. i think that also one of the interesting things that was not picked up widely from the minutes this week, from the last fed meeting, most people on the fed seem to believe there's a declining marginal benefit from quantitative easing. if they were worried about the economy, they wouldn't see reason to crank that back up again. >> i wonder if you take what bernanke is saying at face value. we don't know what yellen is saying about this. they'd lik or pivot from using qe as the main tool,

as using forward rate guidance as the main tool. when they're forced with a weak number they stay on course to taper but provide more guidance on rates down the road, so the shift becomes, this is how they react in the new regime to weaker data. >> that's probably what they would like to do. the problem with that, i agree, that's what bernanke would like to do, that merely strengthening the guidance as they did in december doesn't give you extra stimulus. that leaves them with limited tools. the guidance is as strong as it can be, what's their left to do? maybe they push the guidance out another year. probably more likely than additional qe. but at this point, i think it's probably another month or two before they deviate from their current plan. >> guys, we have to run. rick, i see you nodding your head. 20 seconds. last word? >> i think that interest rates will crawl up even though the data was weak because we can't get a good guidance system on exactly where rates should be.

the fed should consider, maybe if they did a lot less, the weak economy and the sporadic growth, even with improvement would have probably kept rates down anyway without the notion they have to deal with a $4 trillion balance sheet. >> rick, steve, mark, greg, kevin, austan and mark again, thank you so much. target, make sure you stick with "squawk on the street" after this. labor secretary tom perez will join the crew. hopefully he's still coming. we'll be right back. [ male announcer ] this man has an accomplished research and analytical group at his disposal. ♪ but even more impressive is how he puts it to work for his clients. ♪ morning. morning. thanks for meeting so early. oh, it's not a big deal at all. come on in. [ male announcer ] it's how edward jones makes sense of investing. ♪

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still to come, we have jim cramer's take on the jobs number and what it means for investors. plus, we'll ask him what he makes of target. we have a lot of new information coming out of target, including additional information that has been compromised. the company also giving guidance. we'll talk to jim about that. we have target's chairman and ceo gregg steinhafel, he'll be joining us monday. we'll have an interview with him starting at 6:00 eastern time. later, join economic committee vice chair kevin brady with reaction to today's jobs number an a preview of the employment hearing taking place today on capitol hill. "squawk box" is coming right back. 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.

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welcome back to "squawk box." a futures right now are up, they made it back to 45 points. they've been all over the map since the number came out. there were revisions, some people discounting the numbers. let's get down to the new york stock exchange. andy just said throw the numbers out. other people might be looking at the 6.7%, jim.

if we consider people retire and there are baby boomers, we don't get too excited about the participation. it's not a good number, the lowest since '78. >> the people who trade bonds, a trillion dollar market, interest rates are up, bonds down. it's good for housing. 238,000, it doesn't grow at all. i know there are screwy things seasonably. if we all know they're screwy, why were we making strong predictions? i think the number matters. i think that stocks trade off of interest rates. this is actually good for stocks as nutty as that seems. i think it says that housing can come back and housing had been very, very weak of late. >> i don't know how the market ends up. for a while i thought we'd get up to -- if we get up to 1848 i'm calling it up for the first year, jim. will you go -- for the first week. i'm not going to split hairs with only five days.

it's up for the first week. that means up for the month, that means up for the year, will you go with me on that? or do we have to go five days. >> it's a little aggressive. >> it's a stupid indicator look, we are not getting great data. we're getting mixed data. we're getting mixed data from china. we're getting mixed data from europe. we had been getting no mixed data from the united states and suddenly we've got retailers that aren't so good, and then today. everybody likes to dismiss an outlier but for the last seven years there's never been a number that you could dismiss. they all matter. and you can make up all sorts of things that say they don't, but you can't -- you can't throw them away because the bond market's not throwing it away. >> will the tiger -- or the target, the new address missions, be material, do you think? >> i think the goldman note where they actually kind of predict -- looked so silly goldman upgrades it today, but if you read the note, they say, listen, this is the last of the bad. and that's why that stock was

down a buck 70 and almost knocked down. what else do they have? when i fill out my credit application, let's see what do they have, what you make. target is a very forthcoming company and they said they had more -- if you didn't shop there before, you won't shop there again. there was a momentary drop in traffic and i like the goldman call. it's in the teeth of the negative news. >> i think the business is going to do terrifically well in the future, my question is whether uf think there will be a big onetime hit that investors will care about. >> no. i think it's already -- already baked into the cake. it happened this morning and now it's, like, people say, do you know what, this is the trough. target's such a forthcoming company, they put a real negative spin on this. look, congratulations to target, they've always been forthcoming, one of the reasons i like them. i don't like target or walmart, i like the more specialty stores but even those have been challenged right here. remember macy's delivered the best quarter. i look at the five below quarter last night. and sears is a complete

disaster. >> thanks, jim. >> sears is sell the good and keeping the bad. that's opposite what a good hedge fund manager should be doing. i'm shocked by sears. shocked. >> all right, buddy, thank you, jim. when we come back we'll talk about the state of employment and talk about it with congressman kevin brady. and don't forget the latest edition of "talking squawk." it's up and it has new cnbc ads featuring us, conquer the morning over and over. check it out. i lost my job about, probably about six or seven months ago. i'm a year short of qualifying for my retirement. they had some cutbacks. i was the most skilled technician and also the highest paid. for my unemployment to end now, i wouldn't have money to go on an interview. my retirement is going away as a result of this. i do have a husband, thank god, or i would be homeless.

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[ male announcer ] the all new cadillac cts, the 2014 motor trend car of the year. joining us now with more reaction to the december employment report representative kevin brady chairman of the joint economic committee, will also hold a hearing this morning on the jobs report. it will be tough enough for "usa today" to figure out what to say, congressman. 6.7%, 0.3 of a drop in the rate and that's so good, but how do you explain that with 73,000 and we're down to another low on the participation rate, so depending on who you are and where you sit in the aisle there's something for everyone. >> yeah, i guess with the unemployment rate you always cheer when it goes down but this for the wrong reason.

fewer people are seeking work. what tells you that it's not just demographics is the other indicator, the population ratio. the truth is there are fewer adult proportionally in the workforce today than there was when the recession ended. so, that tells us there's a more serious problem. >> we keep talking to washington beltway types, congressman, and most people think it's as good as it's going to get in terms of our long-term problems with, you know, we got a budget, we probably won't have a debt ceiling debate, but we're not going to do anything positive, anything good. so, we're going to muddle along, or are things getting better? >> well, i hope they're wrong. we've got a number of just commonsense jobs bills out in the house and over in the senate. i wish the president and senate democrats would pick them up and let's just try to find some common grounds on job creation. i don't think raising minimum wage, forcing local businesses to pay more will increase hiring. certainly don't think, you know,

mandating some type of income equality increases hiring. i think there's a lot of capital sitting on the sideline, businesses tell us that. but they're very worried about prospecting the taxes. the health care law is having an effect on many of them. and then the red tape. local businesses, the major companies of the u.s., there's got to be a reason they keep bringing these problems to us. >> what -- will immigration get done, congressman? >> you know, i think there's a chance of it. i think we start step by step, you know, securing the borders so we don't repeat the problem. a real best worker program that addresses our economy today and in the future. and i think ultimately some type of legal status, but without citizenship or welfare benefits. i think there's some common ground in that area. >> i mean, do you talk to the speaker? what's going -- you know, it's january. we're back to work. what's next? what's he going to do? >> yeah. yeah. i think the continued focus will be on job creation. no question about that. you know, he has told us this

week that immigration reform starting with securing that border will be a priority in this session. timetable, i just don't know. >> all right. >> we get the legal immigration done, the h1-b visas, because this is a problem right now. >> we'd like low skilled and high skilled visas right now. that's being held up. the opponents don't want anything to move unless the whole package does. i disagree. i think step by step you can build confidence in a healthy economy. >> you have an ally in the new secretary of commerce. she's been very strong on advocating for the legal side there. maybe we can get something done. we desperately need it. >> we need a workforce that matches our economy. we're competing against the best in the world. we need to be able to recruit from the best of the world as well. >> right on. >> congressman, thanks. appreciate it. keep it short. see you later. let's get back to our guest

host bill george for the last word. you could talk about a lot of things. you're on the board of goldman sachs and also on exxon. given that we've been talking about target all day and some of the cyber issues, earlier in the 6:00 hour we were talking about infrastructure. how much has a board member do you spend thinking about the cyber stuff now out of place like a goldman or an exen? >> a lot of time. we have regular formal meetings with the top people, we had one last month. the ceos are on the board and it's a big unknown and like i said, what they are going through is every ceo's worst worst nightmare. >> job number? >> disappointing but i'm convinced the economy will continue to gradually come back. u.s. business is positioned so well globally we'll do well, even though we are trimming infrastructure jobs, i think we'll see very strong results from u.s. businesses because they are more adept and flexible and more diverse management

teams, the companies know how to win in the global market like pepsico is like ibm like many other companies are, google, apple, you can name a lot of them. >> bill george. thanks for being here. we'll see you in the alps in davos. >> yes, sir. make sure to join us on monday, "squawk on the street" begins right now. 74,000. that is the surprisingly weak jobs number for december. the smallest gain in three years. the question is how will the market respond? good morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer and faber is on assignment. futures have come off a bit on the jobs figure. but they are largely still positive, we've got a ton of retail news to get through including more stolen information in the target data breach. the ten year yield lowest since december. and europe is positive at this hour. ,0