good morning, everybody. i'm becky quick along with joe kernen and andrew ross sorkin. we're going to start things off with the markets this morning. the s&p is coming off its hardest hit in two months. consumer discretionary and stocks were the biggest losers yesterday. the dow shed more than 1 % with 29 of 30 components finishing in the red. as for rates, this would be the reason you saw a lot of that sell-off. rates yesterday fell to their lowest level in about a month. today, the ten-year note is at 2.851%. yes, joe, i've been thinking about this and our bet. the bet was engineered around the taper and what the reaction would be to the taper. >> i wanted to go longer. and you said no, i'm going tout of town. >> you wanted to go longer into

the next week or something. you didn't say i want this to be for the next seven months. >> no, not seven months. it's only been two weeks. >> it has not been two weeks. >> three weeks. >> 3 1/2. >> 2.85%. i am so in the money. i couldn't have bought an option any shorter. >> you could have changed the terms of the deal after we got into the deal. you can't do that. you were right the idea that rates could go lower. >> now we have to figure out the market. >> yeah. it's concerning, though, i guess this is really the market sitting and taking a look at the jobs number that we got on friday which is well below what had been expected. and taking all this into account with are we ready for tapering and is the economy really there? >> you've got goldman. already we're going to be talking about -- let's keep in mind -- oh, god, i sound like phil. at the enof the day, 257 is where the dow is. if we build up a lot of fear,

and we're still above 15,000, that's the way these markets move when they're in a long -- when they're going to keep advancing. it's that slow, sickening decline that you don't notice. if it gets people bearish, that's that's the positive. that was an ugly day yesterday. >> it was an ugly day yesterday. europe and asia have been taking their queues from wall street. if you look at the major asian markets overnight, you'll see at least at this point the shanghai did okay, but japan's nikkei, that was down by about 3%. it was a declose to 500 points. european stocks at least in the early trading this mother are indicated lower. the biggest declines coming from germany dax, dour by 55 points. dow futures up by about 36 points above fair value. the s&p futures are up close to 4 points and the nasdaq is up just over 7 points. as for today's market tests, we have earnings season officially open for play.

jpmorgan and wells fargo are set to report quarterly results before the bell. analysts are looking for jpmorgan to post earnings on revenue of $23.7 billion. in the meantime, the consensus calls for wells fargo to earn 98 cents a share with revenue of $20.7 billion. as for the economy, we do have a few reports of note today. at 7:30 eastern time, the nfib survey of small business sentiment. then at 8:30, we get december retail sales. at 10:00, we get december business inventories. the markets will be taking queues from both earnings and the economy. >> that it is. we had a bit of a merger monday, and this is the deal to kick it all off. the soap opera begins now. charter communications taking its bid from time warner cable directly to investors. it offered to acquire its rival yesterday for a reported $132.50 a share in cash and stock. you can look at that stock, by the way, over there now trading

above that price. time warner cable's board rejected the bid as grossly inadequate. david fabers reported that charter was told they would enjoy a $160 bid share and they want cash. watch for the parent company of universal comcast, as well. google buying thermostat and smoke alarmmaker nest labs for $3.2 billion in cash. it's the second largest deal in the tech giant's history. we had the ceo of this company on a while ago. they make some really cool devices and suggest where google unlike apple and yahoo! and so many others may be going. same-store restaurants in china rose a lower than expected

1.2%. the country accounts for more than half of yum's operating profits. joe. >> actually, they didn't make that offer yesterday, i don't think. >> they did -- that offer came yesterday morning and the letter came out yesterday afternoon. >> because it said -- >> there was an additional bid that came in december. >> right. charter's latest proposal, which it made to time warner in december, was its third private offer to buy the new york based company -- >> the plans to go public with it maybe is the way to put this. the plan to go public with it happened yesterday. >> right. and charter made the offer back in december and then they came -- the board, you know, looked at it and said no and then time warner went -- or time warner went public with it yesterday and time warper said no, probably back in december, don't you think? >> i do not believe that time warner, a, publicly said -- >> no, that's not why they're going public.

it's a private offer. >> no, i just think they didn't engage completely. well, i don't think they've engaged at all, which is part of the problem if you're time warner. >> time warner says that's not correct. the offer yesterday was made in december and it was the third offer since june. >> going back and forth on this. about 20 million directv customers nationwide are without the weather channel this morning. they could look out the window. although it's much better to know what is going to happen. >> yeah. you want to know what's happening throughout the day and tomorrow morning when you get up for work. >> you have to have a leap of faith to believe everything. but this is the best of all the weather forecasters. do we own -- >> we do. >> okay. it is the best. the midnight eastern deadline for recent negotiations without an agreement. and apple has lost its bid to

launch the. the company plans too peel and it argued the monitor was aggressively trying to interview top executives, even though his mandate called for him to review the company's anti-trust policies 90 days after his appointment. apple complained about his proposel hourly fee rate of $1,100, arguing it gave him an incentive to push a broad and intrusive and lacy plan investigation, i guess. the other thing is that my real -- what i'm thinking is have you noticed how everyone is saying, well, we're at three and then we're going to 3.25 .then we're going to 3.5. it's the people that come in here and say rates are headed up. it's the same ones that said for five years it set rates have peaked and then they're going back up. they're always wrong swb so to act like they know and it's

going to be this orderly move higher. and then this other thing that worries me is the notion that the fed orchestrated this beautiful thing that warnings perfectly. what would throw a wrench in the works is if they're unable to keep tapering and if we start questioning whether they're successful. and that would mean you see rates lower and that would be like, oh, my god. more pushing on a string. the economy -- maybe the unemployment rate doesn't continue to go down. why did it come down with 73,000 jobs? because more people are out of the workforce. which is not the way you want it so work. >> the 7 4/,000, that was a different survey, too. both surveys showed some concerning trends. i would say you were right on all of this and for that i would give you a mini bow. >> that's a shih tzu bow. >> you love the bet. >> what's her name, the one from

golden globes? her name is jackie -- i thought you watched the entire thing. jacqueline said some people -- you didn't read about this yesterday? it was on the nightly news last night with brian. she said a lot of people have done good things in their life and a lot of people gave me a lot. and brian noted last night -- >> you're talking about the language. >> anyway, she -- yeah. she noted even -- even brian noted last night it slipped by the nbc sensors. the same word i just used. >> i know. but i was missing -- >> i got it. >> and then the other thing, 1900 for the s&p. we said, well, who wants that? >> some people might sign up for that. >> we're still -- okay. the s&p where it is, what is it, below 1800? we wanted 1848. there may come a time where we think, wow, 1900, we might sign

up for 1900. if the market consolidates and goes up another 50 points, maybe that would be good. you see, i'm changing -- that was an ugly day yesterday. combined with the jobs report and combined with the first seven days of the month, and combined that none of the people that used to come in saying we need a 10% correction, none of them were taking that any more. did you notice? they all stopped and they were all saying high single digits to low double digits for the year. >> now you're ready for your so%. >> i don't know. we'll see, right? >> there is good news out of washington. congressional negotiates have unveiled a spending bill aimed to prevent another government shutdown that bill boosted levels for military programs. but it did not add monies to obamacare. lawmakers now face a midnight wednesday deadline for new spending authority. they are still meeting a stopgap funding extension.

they need to that just to ensure that there's enough time for passage of the spending bill this week because it is expected it could get through by saturday. right now, it's time for the global markets report. karen cho is standing by in london. >> good morning, becky. a bunch of global m&a deals across the board. most of the major indices trading in negative territories. the financial sectors, the worst hit this morning. the german stock market, the worst performing industry here in europe. down 6.5%. on the french market, down just slightly about 0.3%. but the international press is gathering today to listen to what francois hollande is going to say about the economic strategy for france. there's been concerns that france is the -- man of europe. but they're going to be asking more about this alleged affair with actress julie gayet more than the economic environment in

france. necessarily hy nestle has basic said it left out affluent customers in its strategy and focused on those spending small changes on sweets. so sales in india were growing at about 20 odd percent per year in the past three years. third quarter last year, sales were growing just 8%. that's how much nestle has been trading in terms of its strat by. but the link today proving there is money in that premium segment. take ta look at the performance of the company so far today. 1.3% higher and this on the news that it grew market shares in all project categories. north america are proving one of the sweet spots for lindt today, sales climbing 8.6% and on foreign exchange markets, a bit of attraction in the sterling today. 1.6402. we haven't held some of the highs of the session. this on the back of inflation, hitting that 3% target that the

central bank wants. there is a feeling that interest rates will stay lower for longer. perhaps we won't be the first ones to hike here in the uk. it might be up to janet yellen, guys. >> karen, thank you very much. we'll check in with you again tomorrow. after friday's disappointing jobs report, will u.s. employment trends ton a downward slope? joining us right now with his expectations is lauschman achitan. we've been with all watching all of this. what about you? >> sure, i'm concerned. just to get this out of the way, we've made a call and we're not budging from that call. >> 2014, 24 months later now. >> you have to hold. you have to hold. >> these economic guys -- >> well, i'm a student of the business cycle.

and so i understand that there are major revisions coming. looking at the data at face value today, if you look at the half a year period from q4 2012 through q12013, you would realize gdp right now is at 0.6%. and that is only because of a freak boost in agricultural inventories that had to do with the earlier drought. knowing what the revisions are to gdp data over the last few recessions, they're on the order -- you've seen gyrations in gdp data in the revisions that come in the benchmark revisions years later, but on the order of 2 full percentages points to the order of 4 percentage points. here we are at 0.6% on face value and if you get rid of agricultural stuff, it's at 0.25%.

that is so easy to get revised away. so the epicenter of the recession was at the end of q4 20112 into q11 2013, i know that's not unusual, but what is bothersome is that right now, the consensus is, hey, we're taking off, right? we're approaching the velocity. we're going to be growing at 3% or something you were saying in 2014. we just don't see that when we're looking at the data, even the december jobs -- pretend that didn't happen. it's still not there. >> are you saying that we never got any of the good growth that we think we've gotten over this last year and a half or two years? >> no, no, some of that gdp after that may be positive. but the epi center right now looking at the data on face value is that q4 2012, q1 2013 i

think thord those will be revised down and you'll see that is the epicenter of the recession. >> so you think the epicenter has happened, we just don't realize it? >> yeah. you have jim bullard on sometimes. recently he put out a presentation talking about 2008, the last recession, and how in august of 2008, from the fed's perspective, things were pretty good. it didn't look like there was a recession. there wasn't any negative gdp and the outlook was fairly good. only now, when you look backwards, do you see the recession began in december of 2007. that's a point that i've been making for a while. >> but we knew that a lot sooner. you're talking about -- >> we knew that by 2008, that there were some serious, serious problems out there. >> when? >> i would say by the fall of 2008.

>> after lehman blew up. >> i think it was before that. >> no. actually, right before lehman blew up. in august of '08, q2 gdp was revised up and the dow rallied. >> yeah, but there were plenty of people who say that there were big problems coming. >> the fed didn't. >> look, i don't want to relitigate the recession of 2008. i have a different question. you look at what's happened over the past few years. fin vesters followed what they said, they would have made a mistake. was there anything that you look at in your models and say now -- >> it depends on which market. in bonds they wouldn't have been as bad -- >> why don't you just -- >> i don't accept the premise because typically off a bear around the session and 20% of the time you don't have a bear market around sessions. if the fed is targeting the

markets as a policy tool, then who are you to fight the fed? and if you look backwards at past recessions where the stock market has gone up during a recession, you see very simple, not exactly great ones, they're roller coasters, so 1926, '27, you have a recession, stocks go up 30%. why don't you just go back to a more normalized participation rate? instead of all this, why don't you say if we go back to a normal participation rate, wear another 12% unemployment. >> i don't need -- i would more -- >> or you usic. >> let's be even planer than that. we have a jobs report. it gives you a payrolls number and a household number. the two surveys of how jobs are doing in the economy. they've been there for a long time and we should look at them.

now, i know a lot of people don't want to accept the december jobs number. that's fine. let's pretend it never happened. look at the trend in jobs on and the prior 12 months. and what you will see is that payroll jobs, you're making 194,000 per month for the prior 12 months. on households, you're making 101,000 jobs per month for the previous 12 months. so household is selling you that you made about 1 million less jobs in the previous 12 months. and so, now -- >> while i'm young. i just had a birthday, i don't want to get another birthday before you get this out. we're getting wrapped in our ear and you're giving me an economic dissertation. >> because this isn't straightforward. you're going to need to hear this. so when you look at the data that's going to get revised, the payroll data will get revised towards the household data. the household data is is showing you a deceleration in jobs growth.

it's not what you think it is. so if the consensus is looking for acceleration here, it's already not happening. >> are we at 6.7%? >> no. because you know people dropped -- >> that's the point i'd make. >> i would make that the household survey is telling you if you look at the households ajusted to be the payrolls, you've lost jobs since the summer. this is all a cyclical comment. happening inside of a secular weakness, which is going -- >> we're below -- >> we have not made back the jobs. we're not to the peak employment of 2007 yet, right? are we a million and a half below? >> larry summers came out in november and dropped a bomb, right? he says, hey, we've got secular stagnation here. that's a point we've been making since pre-lehman that you're not going to get business as usual. and i think a lot of people are hoping that that is about to occur and i'm afraid in the forward-looking indicators, in the coincidence data on jobs, it's not there. it's just not there. >> and the fed is stepping back

and not going to be artificially juicing things and this economic trend continues, you think the markets will fall lower? >> you know, i don't know because i don't know the -- i don't know that the fed will be able to pull back as much as they want to. they might have to quote/unquote taper, but they might do something else. following the recession, you had two years -- >> going back to andrew's point, you made no recommendations about investing in stocks two years ago? you didn't say do or don't? i mean, i would have not invested in stocks based on your forecast. >> you had neal tescari on here and said, area, they're targeting the market. if someone like that is targeting the market in 2012, who am i to argue? >> he doesn't even manage any more. >> i'm not talking about his performance as a manager. i'm talking about -- >> barging the stock market -- >> what did you do with your own

money? >> i managed riskings. so i mean, it sounds like a cliche, but you would be defensively long. >> you were defensively long honor in this period? >> it doesn't mean anything other than you try to participate and we're watching for the down turn. and if you're a business manager, they don't have demand. why do you think that prices are so inflation? why are prices so low? why does walmart, which sells a tv for $150 last year sell it for -- >> one word answer. when can we judge when you're right or wrong? >> when the data gets revised. benchmark revisions come in every year. >> we're two years later, so i'm just trying to figure out when we can -- >> you can check it right now. look at the household data. look at the jobs data. you have somebody out there, are they getting a raise? >> ask them. >> thank you. thank you for coming in. we look forward to having you back and figure out what's going on. in the meantime, mandatory

timeoff apparently trying to a tracked towns to the financial service industry. but first, let's get the national forecast now from the weather channel's alex wilson. >> hey, guys. we have to talk about rain along at this-95 corridor. we have form action towards north florida. heavy showers. savannah and charleston beginning to move offshore. you've got more on the way up towards philly and new york. same story there. rain going to cause some slowdowns for that morning commute, even around boston. we are talking about wet weather today. today, best chance of rain along that 95 corridor. showers, even a wintry mix back into interior parts of the northeast. by tonight, it's wintry mix for northern sections in new england, close to the coast, still going to be dealing with the wet weather. and in the south, could see a bit of a wintry mix tonight. into parts of central alabama, closer to the atlanta area tomorrow morning. we'll be back after the break. mine was earned orbiting the moon in 1971.

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welcome back, everybody. right now, it's time for the executive edge. another bank is telling junior bankers to stay home on saturdays. bank of america and goldman sachs are taking similar steps.

global bonuses and stiff competition, gentlemen, is banking not necessarily a place where the younger people want to go these days? >> i don't think we're putting in context what happened over the summer. and people, you know, what happens over the summer is this young man in london and bank of america passed away. you can't really say what causes -- >> and that's what i'm going to say. you can't say whether it is connected, but there is a view that it could have been connected and that that undo itself is making people nervous. i think this has more to do with this in terms of policy. >> shorts and, you know, it's kind of -- >> but remember when people could wear shorts and no ties and they wore -- that whole dress down situation. >> if i go a memo, don't come in on saturdays, i'm going to be okay. it's good. you'll live with it when it comes here? >> yeah. i'm going to live by what management dictates. that's good for me, good for

them, good for everybody. >> yeah. you're a company man. >> what about a europe -- what about 30 hours a week? >> did you see what james of morgan stanley said? >> no. >> he said he wasn't necessarily on board with this policy just yet because what he was worried about was that some yum young people were going to lose opportunities because of this. if they have this real mandate that says you can't work, maybe a deal is not live. >> they say when a deal is live, you should be in. >> when something comes up, all of a sudden you -- i know a lot of people who can't schedule anything on a saturday or sunday. their whole life, this is what it is. so maybe this is a good thing. i don't know. where are you on this? >> there are times. what i did was not investment banking. it was telling. stock brockers are -- well, you saw the movie, what you think all stockbrokers do.

>> it's not what i think all stockbrokers do. >> especially in the 80s. you got a manufacturer's directory or dunn and bradstreet. you were working. >> this can't be good for the economics of the business. the whole economics of the business is that we have a senior guy. >> if you have a deal you're working on, then you're loud to -- >> it seems to me this is a pendulum. my guess is that this is not a one-way direction. >> i would say your bosses still want you to bust your [ expletive ]. >> yes. pretty much. the white house releasing age and gender breakdowns for more than 2 million americans who enroll ld in obamacare by tend of december. 33% were adults age 955 to 64. young adults age 18 to 34 made up 24%. experts say that the younger demographic should be making up closer to 40% to help control premiumes and that spells not

only political trouble, but just trouble with what you do with pricing and how rates are going to rise from here. >> i'm not sure there's much to say. >> the most worrisome thing is when it stays like this, the administration says it's going to get better, whether it doesn't, there's too big to fail with health insurers. it's going to be more expensive. whatever it costs, we're going to pay for it. so we probably should hope that it -- you know, that young people do sign up. >> i agree. there's big trouble times to come. >> but if you're a person opposed to hollande one way or the other, you hope that -- >> i don't think it's going to cave under its own weight. >> it probably should, though. if you let it happen, it would. but they won't let it happen. >> when "squawk box" returns, taxing times are on the way for corporate america. would reforming the codes for -- clothing economy?

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welcome, everybody. yesterday you saw the major averages closing at their lowest levels in three weeks. stop it, joe. right now, you can see dow futures are up by about 40 points above fair value. >> people are going to think that -- and it almost blew up. during the commercial break, we had a bit of an event. >> that was unbelievable. i've never heard these things make any sound. >> no. maybe if you're lucky it will happen again live and scare us. oh, quick -- >> no, that was the audio guys having fun. let's talk about taxes our next topic is one of the most important on the agenda for corporate america. it is tax reform. jeffrey joins us now, the vice chairman of u.s. practice at kpmg. good morning to you. >> thank you. >> what is the chance in 2014 we get any type of tax reform that changes the game for the way you do business?

>> andrew, probably very small. honestly, it's -- corporate tax appointment has been talked about for quite a while now, but it doesn't seem to be the agenda item that this administration would like to go after. so i think with so many other things on the agenda down in washington, i think that the likelihood before more congressional elections in november, the likelihood to get any type of tax reform is probably pretty small. >> right now, if you were a u.s. company and you wanted to find a country to do business in that will lower your tax rate, what is the easiest way to do this? >> there's really no easy way to do that. i think it really depends on where your business operation res going and what you're looking at doing in terms of expansion and things like that. >> if i come to you and i say i'm a manufacturing company and i say, look, give me sort of five countries, five choices that are going to be economically -- i mean, one of the arguments is people don't want to do business in the united states because they say the taxes are too high.

tell me where else i'm going. the obvious ones will be ireland and singapore and other places. >> sure. there's certainly holding companies areas you can go to set up your operations in. there's areas like the uk which has a favorable tax regime in a number of different areas that you could base your operations out of. >> it depends on where you're selling this stuff, too, right? >> sure. all around the world. >> put something over there if you're selling it over there. put something over there if you're selling it over there. if you're selling it here, does it make sense to go over there and bring it back here? >> normally you would set up your operations for things you're selling here to -- >> wait until shale gets going. then we'll be doing it here again, right? >> yep. >> was going on globally, though? we're having this conversation in this country globally, but this conversation is happening in other countries, as well. >> yeah. and it's a great question. because the big conversation that's going on globally is the transparency and morality debate. you know, we see you, we feel you every day. you're a big company, you're doing business in our country and other countries.

but when we look in the fiscal coughers, there's not a lot of tax revenue in there. so what's going on globally around that issue is for companies to be more transparent about where their tax obligat n obligations are and if they're paying their fair share. >> if not the united states for tax reform, what do you say to your clients, this country used to be attractive, but we think over the next two years, it may get worse. >> we've seen some proposed changed in ireland, some proposed changes in swit zerlan. and saying, you know, maybe there's ways to bring it altogether. the oecb tries to put programs out to harmonize tax systems around the world. they have some tax proposals out there that would bring -- >> do you think that's ever going to happen? >> they put an action plan out. i think as countries start to take their own measures and

maybe take things on their own agenda, i think you'll see more activities like that in the u.s. because the u.s. doesn't want to get left behind as the rest of the world moves around doing things that will harmonize the system doing better. >> i hope you're right .makes it easier for everybody. >> thank you for having me. thank you. when we come back, pizza hut trying something out to take on the competition. >> i miss pizza hut. >> but look how long it's been. we're going to talk about it next. there must be reasons that they didn't do it before now. yet being a new yorker, you'll see what i'm talking about. >> it's a good piece. talk about it after. also, rts shark tank tuesday here on cnbc. surviving the hostile environment is one thing. thrive sg another. we will meet two entrepreneurs who are getting a taste of success. >> from cincinnati. >> just like joe. as we head to the break, check tout price of crude oil. this is interesting because crude oil prices were under pressure again yesterday. it settled the day below $92.

today it's up about 12 cents, $91.92.

welcome back. i think it's a good idea for becky. we're going to lead every half hour with the ten-year. ten-year note today is 2.854%. it has been amazingly under control. you know, i'd like to say, wow, that's great, but i don't really think it's great. >> no. it's a reflection of the jobs picture and the economy and -- >> underlying economy. oil is not -- oil will tell us something, too. and that was another thing. >> at an eight-month low right

now. >> and everybody at the beginning of the year, oh, it's stuck between 190 and 110. really? with shale? with all of this stuff that you do per btus? i don't know. >> this is the biggest news of the morning. i want to be clear. >> andrew, the other day you dissed me on my burrito story. it was the biggest story of the week. pizza hut now is going to start offering pizza by the slice. i knew you would like this. it's in two test locations this week. there's a lot of places where you can't get -- why can't they do that? other places seem to be just fine making whole pizzas, leave it there, put i tell in the oven for a while and give it to them. they have not done this. >> you can get your personal pan pizza for five bucks. >> but you have to wait for that to be made. a slight will cost between $2 and $3.

takes three to four minutes to heat up. >> the new york city way. >> how many famous rays are there? >> 30. >> what was that movie, the guy is moving to new york. number one, oh, yeah, number one don't pick the gum that you see on the subway railing is not free candy. don't crew it. and there are more than 42 rays and there's only one that's the -- >> i'll take you to famous rays. >> i think i've been there. >> which one? >> exactly. everybody else does it at the new york style pizzas. one test location is in new york, nebraska. the other is in pawtucket, rhode island. these are two places they don't care whether it works or not. >> no, this is why. they're going to be spinner pies. >> there's all kinds of ones. >> i think of it as a deeper dish -- >> uno's. >> what going to do with the

slices. >> that's amazing that that is brefkts. coming up, getting in the shark tale and living to tell about it. meet tom and chee. all of the great food innovations come from cincinnati. i'm talking about chili, skyline, they specialize in grilled cheese sandwiches and tomato soup. they have made it into the new jersey. they're going intooth squawk tank naked, next. tomorrow on "squawk box," rahm emanuel and steve forbes joining forces to reinvent america. they both join "squawk box" at 8:00 a.m. eastern. conquer the morning, conquer the day. 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.

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any excuse to show a clip from "jaws." it is "shark tank" tuesday on cnbc. catch it at 8:00 p.m. and midnight eastern time. tomorrow, "shark tank's" co-host, kevin o'leary will be our special guest. 8:40 eastern time tomorrow. let's get over to joe with a couple of "shark tank" survivors. >> i look forward to o'leary. he blew me away last time.

treat us on capitalism and entrepreneurialship. tom and chee mastered the art of the classic comfort, grilled cheese and tomato soup. their success is spilling into the east coast. they're here now after landing a deal with barbara corcoran. the company opened its first location on the east coast in freehold, new jersey. joining us to kick up their signature specialty is grilled cheese and doughnut. corey ward and trew quackenbush, the founders of tom and chee. if i was wasted, i would want to eat all this stuff right now. >> we're working on a deal in colorado right now. >> honestly? >> a grilled cheese doughnut. >> sorkin, a grilled cheese doughnut. >> i'm sitting here, i'm having trouble. >> it's a warm cheese danish, a little sweet, little salty.

>> you start fountain square is a place in cincinnati right in the center of downtown. you started how, with a -- >> 2009 in a ten by ten tent. we sold grilled cheese, the grilled cheese doughnut and hot chocolate. >> how did you get on "shark tank"? how did that work. >> from the time we started the tent i was e-mailing them. some e-mails were very much about we're two families from the midwest trying to achieve the american dream, the next e-mail would be hard numbers. these are our sales. this is what we're doing, this is how we're growing. >> you're kicking butt but you're running out of money. you get on "shark tank" when? last year? >> in may, yes. >> what happened? you go on, they look at this, they're considering other things but they say this has potential. is that how it works. >> one point we had four of the five sharks in on the deal. >> who put in money.

>> at the end of the day, we did a deal with barbara and mark and kind of going through the due diligence we ended up walking away with a deal with barbara. >> you opened up new places? how many now? >> this is our ninth location. we just opened in freehold. before that we opened in lancing, michigan and next month atlanta. >> who thought of tomato soup and grilled cheese? >> it was interesting. corey and his wife came over for a cookout. we were talking about downtown and not many low-cost options when you're on the square watching music. we started bouncing ideas around from meatballs to pierogis to whatever. grilled cheese came up. i've been in the business a long time, executable, simple and everybody has a connection to it. we just went forward. >> cincinnati, big german heritage, they have octoberfest but they have the skyline chili, the gold star chili, a certain kind of chili. they have the montgomery inn boathouse ribs. it's an innovative place for

food, isn't it. >> it's a great food town. one thing i came from seattle before i got to cincinnati. and that's one of the things i found there, everybody is adventurous. people want to try new things and they get behind any new startup in cincinnati. >> you guys are going to be moguls, you think? is this going to work? >> most definitely. that's the plan. we've sold 27 territories so far. 150 locations right now. >> that's going to happen. >> in the next five years. >> you're doing a franchise model. >> correct. >> we're always looking for things to do. my wife thinks she wants to have i affranchise. how much will it cost me. >> the licensing fee is $35,000. >> you have to have the money -- >> you have to build a restaurant a after that. >> and hire employees and do everything else. andrew -- >> i need to get in on this. >> you should just come over. the tomato soup does not look like campbell's. >> it's all made from scratch.

>> you do gazpacho in the summer. >> yes. >> i'm dying. >> try a grilled cheese doughnut. >> this is it? >> yes, the grilled cheese doughnut. >> you have some with ham on it, too? >> the barbara blue, we call it. we made that for barbara cochran, our investor. it's brie cheese, ham and a blueberry compote on top. >> this is awesome. >> it's a little sweet and -- >> it's not overwhelming. >> no. it's not overwhelming. >> you really are going to colorado? >> oh, yes. >> you have to do that. >> as we mentioned, i love when cincinnati companies are doing well. "shark tank" is unbelievable, tuesday night, it willing on at 8:00 p.m. again, becky. i mean, it works. crazy. >> thanks. >> smells really good. you are going to bring some over. >> andrew obviously enjoying

himself. when we come back, though, the official start of earnings season, dow component jp morgan about to report results. we'll have them after the break. and david rubenstein will be our guest host. he'll talk to us about why the private equity join the has been so busy in europe. more "squawk box" right after this. ♪ ♪ stacy's mom has got it goin' on ♪ ♪ stacy's mom has got it goin' on ♪ ♪ stacy's mom has got it goin' on ♪ [ male announcer ] the beautifully practical and practically beautiful cadillac srx. lease this 2014 cadillac srx for around $319 a month with premuim care maintenance included. ♪

good morning. welcome back to "squawk box" on cnbc. jp morgan just out with earnings. >> the headline number they're flashing, 1.30, a nickel below

expectations, 5.28 billion dollars worth of net income on 24.1 billion. that looks above. i think people are looking for 23.673. so that's a little bit above. it says that the fourth quarter, there may have been some legal expenses. stop the presses. there may have been legal expenses in the fourth quarter. that's not a headline, obviously. it's 27 cents a share. analysts probably knew about that. i don't think that excuses the 5 cents miss that the company reported. >> they say that's an adjustment, too. they have significant items disclosed in the fourth quarter. adjusting for that it would have been 1.40. >> if they say that, then they are going to great lengths to say that. actually the fourth quarter was cut by 32 cents a share or 1.2 billion after tax, up from other

items. this is where you need to know which things analysts put into their numbers and which things they didn't put into your numbers so you can do an apples to apples comparison on whether it's above or below expectation. >> this is significant, jamie diamond, making comments about this. we're pleased to have made progress on our control regulatory and litigation agendas and put significant issues behind thus quarter. we reached several important resolutions. global rmbs, madoff, it was in the best interest of our company and shareholders for us to accept responsibility, resolve issues and move forward. this will allow us to focus on where we are -- what we are here for, serving our clients and communities around the world. it sounds like this is them saying, okay, we have dealt with the issues that were outstanding that we needed to deal with and from this point we can move out of the shadows. >> the stock market has been strong. you look at jp morgan, it hasn't been this high in i don't know how long. this may be an all-time high of where it was trading at 58.

i don't remember it being above there. >> 59.47. >> given all the headlines, you have to see through the headlines in a way to get to the stock price. if you look through this by the way, corporate investment bank number one, global investment banking fees, syndicated loans, just about every category you can be in jp morgan is number one or number two. >> even look at june of 2012, which was when they were starting to, i guess, i'm not going to say get shaken down but that's when regulators say this is right. there's mortgage stuff here we're going to get money on. and it's gone straight up from 32 all the way up to $58 or so in the middle of doing all that. and people, they criticized jamie dimon, why are you rolling

over? >> some of the issues you didn't get total closure even with the settlement. >> we haven't properly introduced him, we will in a second. j david rubenstein is here. >> what have you made of what has happened over the last several months, as a client, a member of the citizenry as opposed to a shareholder, which you may be. i don't know. >> jp morgan have done a great job for clients like us. the fact that they could pay $23 billion in fines and levees and still be as strong as they are shows how good the company really is. it's not going to affect our ability to work with them. >> were they involved in $23 billion worth of bad behavior? >> that's in the eye of the beholder. $23 billion -- >> $23 billion worth of bad behavior, the mortgage language

left out. >> i'm not an expert in what they paid the fines for but there's no doubt that when they have as much money as they have, regulators ask for it. if the regulators thought that $23 billion would put them into a financially precarious situation, they wouldn't ask for that much. jp morgue has the money, they can afford to pay it and not adversely affect the company. 23 billion would break most companies but won't adversely affect jp morgan. >> are there times when the government didn't have to back people out because jp morgan was there to backstop it? >> maybe they are looking for things they weren't focused on before. jp morgan is as strong a bank as we have in the united states. we have strong financial institutions that can overcome this. >> if they were looking for a big thank you from uncle sam, this is a how do you do. thank you, sir, may i have another? >> they are able to move forward and not have to address these

problems forever. >> do you think it was a shakedown? >> i'm not going to use that word. i would say there's no doubt that government regulators want to get money where there is money. if jp morgan didn't have the money they wouldn't be able to get this kind of money. jp morgan had the money, they could afford to pay it. it's not going to adversely affect the operations in the future. >> it's a great reminder to be successful. >> and do well, because the government will come after you. >> when you go after somebody in such a strong way and you put them out of business, it's not a good thing for the country. if you put jp morgan or equivalent business out of business, that's not good business. >> is there any way they could do it where they didn't indemnify them for the bad behavior of the companies they acquired? did they get enough buying those troubled companies for making up for taking on all their liabili liabilities?

>> i think in the future when you have problems like this, an organization like jp morgan is asked to take over for the federal government, they will probably get indemnification. you can't have subsequent regulators coming along saying that. life is unfair as we all know. this was probably not the fairest case of the government regulating a financial institution. no doubt jp morgan would not have bought, i believe, bear stearns had they known this was going to happen later on. >> let's talk about the broader economy. the market in the first eight trading days of this year is looking at things differently than last year. part of that was because of the jobs number we got last friday. where do you think things stand right now? >> after seven years of recession, we're finally emerging from it and having the growth we should have. people are thinking we'll have close to 3% growth. a couple months ago, people thought 3.5%.

we'd say somewhere close to 3%. the jobs numbers were not good and people were concerned about it. it's one number in the scope of many different numbers that you should consider. i don't think people are all of a sudden saying the u.s. economy will be in trouble for 2014. i think the job numbers could have been better. i think we should look for more indicators before we look at the economy. the u.s. economy is doing well compared to almost every other economy in the world. i think it's the safest place to invest. i think we are dramatically increasing our investments here. >> you didn't mean seven years of recession. >> seven years after recession. >> okay. >> normally you have a recession and two or three years after recession you're back above where you were. this was so deep, it's taken us six or seven years to get back to where we should have been. >> you're buying now? some people think as goldman sachs would say, we're overvalued. >> in certain sectors there may be overvalue. generally we believe this is the single best place in the world

in which to invest and we are looking for investments here. we think china is attractive, too. some people are upset about the fact that china's growth might not be 10% or 9% a year. we think china is a good place to invest. we think europe has been overlooked. it's the biggest economy in the world but it's been overlooked a bit. the united states is not overbought in my view. >> are there particular areas, regions, particular sectors that are most attractive? >> we are attracted to carbon related energy. . we think the energy revolution is for real and it will go on for quite some time in the united states and spread to other places of the world. we think financial services, has not been adequately invested in by firms like us. and health care. when i worked in the white house in the 1970s, health care was 3% of the gdp in the united states. it's now 18%. a large area. baby boomers are retiring and will spend money on health care. >> i like the idea of europe as

an emerging market. should we assume it's going to emerge and what gives you confidence? are they taking steps for their structural issues that will allow them to eventually emerge? >> the gdp of europe -- of eu is bigger than the united states. it's a gigantic economy. they have 500 million people. they're not going to disappear from the face of the earth. >> only 300 million are working. >> i don't think that's the case. they obviously have higher youth unemployment than we have in the united states and clearly southern europe is not as strong as northern europe. i wouldn't discount 500 million people, what they're going to do or an $18 trillion plus economy. there are pockets of problems in southern europe, portugal, italy, spain. but northern europe is doing reasonably well. remember, just a couple years ago, people thought the iuorio would go out of business. now the euro is going to be around and europe is coming back. three or four years from now, people will say why were people able to sell things to carlisle at such a cheap price?

people were nervous. things bought in the last couple of years will look attractive in two to three years from now. >> when you say there are other indicators we should be watching, we watch the ten-year note, the yield, the 2.85% surprised a lot of people. what happened? >> i think some people are still wondering what's going to happen with tapering, what are the effects of it. people don't know what the impact will be. my own view is that janet yellen will continue and the fed will continue largely the policies in place. i don't think things will change dramatically. >> meaning a taper. >> there will be a gradual tapering. the fed recognizes it's probably the only game in town. they have the greatest ability to affect the u.s. economy in washington. congress will not do much more than pass this appropriations bill and congress probably won't do anything significant for the economy this year. the fed has the capability of adjusting things and doing thing. people believe and i believe the fed will not do anything that

will harm the economy. i don't think they'll taper at such a large rate that it will slow down the growth we've had. >> do you think they'll come up with another tool? people have speculated if they don't think qe as effective as it was they'll come up with a new tool, some other way of supporting the economy. >> i don't know. the fed feels they've got a bigger responsibility than maybe the fed did 10 or 15 years ago to deal with growth. the fed wasn't set up to deal with growth. it was set up to deal with interest rates. the congress has abdicated its role as generator of jobs in the united states or economic growth. >> god help us if congress is the generator of jobs. hopefully we never get to that point. >> congress has to get out of the way for the private sector to create jobs you mean? >> congress can have a big impact on the private sector. congress isn't doing things to stimulate the economy. i think the best thing they can do is pass the stimulation bill.

we haven't had these for quite some time. finally having an appropriations bill even though it's four months into the year is still a good thing. >> david rubenstein is the co-founder and co-ceo of the carlye group. >> didn't you invent beats? you and dr. dre invented it. >> i did meet with dr. dre when we were looking at the investment in it and he's a very interesting person. and -- >> you rap per se. >> did you know who dr. dre was before you went in the meeting. >> i was well briefed. i can't say i listened to a lot of his records but i'm familiar with what he's done. >> do you walk the streets waring your beats. >> i have a hip hop instructor who's teaching me how to get better in that area. >> will you do rhyming later with some of your forecasts?

>> at the kennedy center, at the honors we had snoop dogg come. he was quite unusual. he did a great job. i'm now very involved in understanding this part of the music. >> do you refer to them as head phones or cans? >> head phones. i guess i'm a little old. >> do you have a pair. >> i'd like to see you -- >> he's going to be listening to beethoven on them later. >> there they are. >> look at that. >> do you have a pair? >> i don't. >> we have many pairs. yes. >> there you go. >> those are different. >> those are the executive version. >> wait, wait, wait. >> private equity special version. >> the noise cancelling ones. >> as we mentioned, earnings season has officially started. take a look at shares of jp morgan right now, the banking giants reporting moments ago. we'll talk to the analysts about those results within we come

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save time, save money, and never overpay. visit truecar.com welcome back to "squawk box." jp morgan chase releasing fourth quarter earnings moments ago. we have marty mosby from guggenheim partners. what's your takeaway in terms of

a headline for us. >> the takeaway really is looking at the fact that core profitability still running in the 135, 140 range which is what you've been seeing the last couple quarters, that puts the profitability still squarely 3% to 4% above cost of equity. the profitability is still intact as it has been throughout the year. they're dealing with the sett settleme settlement. there's legal expenses. there's offsetting gains so that noise pretty much gets washed out as you kind of go through the numbers in what they're reporting today. >> to the extent there's anything that gives you anxiety it would be what? >> no, there's not anything in the sense that they're bulling their capital. if you're able to take these settlements and still improve capital ratios on their estimate tier one common, they went from 9.3 to 9.5 this quarter.

they're continuing to build that capital stock even though they're going through and settling issues outstanding. if you look at mortgage banking you saw a bounce on the mortgage banking revenues. you're seeing some of the surprise on the revenue side. if you looked at their profitability, while revenues are down in mortgage banking from last year, the actual profitability is higher because the lower expenses and credit losses. so you're seeing some offsets to the refi that we were looking for in that business. >> what do you think about the investment banking business? >> in general we're starting to see some pickup there. it was up 12% from what we saw in the prior quarter which is a positive sign for the money center banks, especially jp morgan and goldman sachs. they're looking for that investment banking business, kind of starting to perk up as the economy starts to show momentum. >> marty, what's your price target on the stock? >> $68. what we're looking for is as these settlements really resolve some of the uncertainty and the pressure on the stock price, you

should be able to trade at about another 10% to 15% premium to tangible book value given the core profitability of the company. it's all about resolving these issues, building capital as you're doing that, because you're paying for it with your earnings each quarter and starting to clear the clouds off. as that happens, you can see them priced back to above $60, which is what we think is a relative price for core profitability today. >> really quickly, what was the number you were expecting? there were a lot of moving pieces in this one. 130 was the headline number but if you strip out adjustments it was 140. where should we be looking? >> the 140 if you take out the unusual items, the items it hit were gains on the positive side and, you know, increases in recapture of allowance as the quality continues to get better. those are things that typically jp morgan is pushing against the legal expenses and the other

thing that came through was the dvas. the legal expenses like you all were talking about earlier were talked about but the madoff settlement came very late. >> sure. >> that's where that probably incorporated into the core number that the street was looking at. you know, in that 135. >> fair to say that both revenue and earnings were a little better than the street had been expecting? >> i think that is fair to say, yes. >> in terms of headline risk, how confident are you that all of the legal issues are behind us or embedded in the numbers already? >> i don't think you can say -- the word you just said all is not going to be. when you're forecasting and looking at the reserves you have to build it in a sense of what you know the losses are today. so there are things they still have to reconcile and resolve as we saw with this last piece, there were increased reserves as they settled the madoff case. there's things you'll see. when you want to look at it, if you want to say the majority or bigger issues they have to deal

with, they've been successful at being able to put those aside and now they have other things to work forward with with the regulators. but in general, they've handled a big piece of what they had to deal with in the fourth quarter. >> okay. thank you for joining us this morning. appreciate it. >> i don't understand why the stock is off marginally in the premarket. >> it's right off a high and off 10 cents, 15 cents. >> okay. >> leave it there. >> they've had earnings power of 1.35 to 1.40 in recent quarters. >> it's a money machine. >> apple has a lot of money for regulators. i'm just saying. they are so ready to pony up a little. we could find that. they've probably done something wrong, haven't they? >> they already went after them for the taxes. >> let's go. gravy train. big huge amount of money for regulators. in an interview with becky earlier this week, target ceo promised to make significant

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now the answer to today's aflac trivia question. what is the estimated total cost of the sochi olympics? the answer, $51 billion, making it the costliest olympics to date. >> aflac. >> a number of retail ceos gathering in new york last night, among the topics that were discussed, data security, cnbc caught up with a number of industry leaders. >> certainly the consumer needs to be protected and feel safe when they're giving their information and making purchases. so whatever we need to do to do that, we have to. >> i think that this is probably the beginning of it. but i know smart people are

doing a lot of things to prevent it. i think we'll all be carrying chips someday anyway. may as well do it now rather than wait. >> retailers are using old technology, and the thieves are using new technology. we have to get ahead of them. it's very important. so i think a lot of companies, i know a lot of companies are going to be focusing on that. >> i think the federal government needs to get involved. that's how big it is. this whole thing with cyber, you don't know where this thing is going and it's going to be -- it's a major issue for not just retailers but for banks, everyone institution, manufacturers. >> during the 8:00 a.m. hour we'll be talking to one of the largest suppliers of credit cards with embedded security chips known as emv cards. up next, we'll find out how the small business world feels about the economy right now. plus, a disappointing start to the year for equities, down nearly 2% since the beginning of the year. is this part of the pull back

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welcome back to "squawk box" this morning. in the headlines, we're watching shares of dow component jpmorgan chase this morning. revenue topped street estimates. the bank reported quarterly profit of $1.30 per share on a gap basis, $1.40 per share if certain items are excluded. the expectation was 1.35. the next notable earnings report coming at the top of the hour when we'll be hearing from wells far fargo. they're expected to report 98 cents per share on revenue of $27 billion. analysts are thinking that the overall retail sales were unchanged compared to a rise of 0.7% the month before. we will see what happens when we

get those numbers. joe? the nfiv is out with the latest small business optimism index. steve liesman joins us now with a guest. no report. >> i have the numbers, joe. >> what about dunkleburg? >> we'll bring dunkleburg in. i'll give you the report first. >> you do have a report? >> no. i'm going to ad lib it, up 1.4. >> up is good. >> it's a niz. what is the story with nfib? >> yellow levels. >> the level remains below -- >> prerecession. >> it's a positive report. let me bring in bill dunkleburg. i have a personal bone to pick with him. bill, bill -- >> what did i do? >> what do you mean? you don't know what you did? we're going into the jobs number, everything is looking good.

nfib comes out with the best jobs component since 2006 and i go hog wild on the jobs report. you guys say best numbers and the government says 74,000. you led me astray, bill. i feel bad about it, bill. >> i had a lot of company. everybody was up there with me. >> seriously, this is a pretty good report. it's not a bad report as they go. >> yes, it does have good pieces in it. we see that the job market numbers are staying better, plans to create new jobs didn't fade. the job openings number stayed up there, which is suggesting the unemployment rate will stay in this lower range that we're seeing it running in now. that's not bad. they really did hire people. that was not bad. the government will catch up with us. >> this has been something that's been a missing component of the recovery, which is you've had large businesses hiring and small businesses left behind. it felt a little bit, when i saw

that december report and whenever i got your regular report, the full report, that small business was catching up, the capital spending plans were doing better. i also like, bill, the unfilled job openings looked pretty good. >> yep. those all look good. that's highly correlated with the unemployment rate. i'd like to see that unfilled jobs openings number going up. that means the unemployment rate will keep going down. that will be nice. we don't have the fundamentals in place. we have 8 percentage points, more saying sales are trending down than trending up. we need more strength in the sales numbers and retail sales and so on to give these people reasons to hire more people. it is true that manufacturings are a strong sector. that's where we're doing lots of our hiring and professional services. the nonprofessional services are still trailing kind of badly. >> look at that chart. >> we'd like to see that pick up. >> before they take it down,

that's the chart that says what you just said. >> the only thing annoying about it -- >> the whole thing is annoying. what do you mean. >> the guys are never unanimous on what it is. they'll say they don't like regular but it's 14% or something. you never get anything where you can hang it on definitively say this is why they're negative. why are they negative? >> there are a number of things. it depends on what kind of business you're in and where you are. the firms in north dakota are still optimistic even though they're buried -- >> it's mostly demand. we can't settle the big argument we have about whether it's demand or an activist government? we never settle that with you, whether it's regulation and high taxes. you know, the corporate tax rate in an unfriendly business environment or whether it's demand, weakness left over from a terrible recession. you can't tell me that now, can you? >> the answer is for 20%, the

top problem is taxes. for another 20%, the top problem is regulations and red tape. they can only pick one. for only 14%, which is continuing to trend down, that's good, it's weak sales. we're down from a couple years ago 33% said weak sales. >> one in five, we can't draw conclusions on one in five, bill, can we? >> don't make the perfect the enemy of the good. if it's a problem for one in five, you should address it for one in five. >> but i want 51% to say so. >> that's never happened. >> so far, the forecast for third and fourth quarter are running much stronger than the first half, 3.5, 4%. is your survey in line with that level of gdp? >> no, it definitely is not. we might have taken hope from the huge jump in the firms that reported making capital expend tours. that's what we like to see that coming back. >> that's a nice one. >> we think that was a tax

phenomena. section 179 expired for the $500,000 expensing option went down to $25,000 on 12/31. i think a lot of people rushed to get their capital spending done ahead of the end of the year. i'm afraid that that will slow back down in the first half. so we won't get any umph from that either. inventories are terrible. they don't plan to add inventory. not good. >> could you take a step back and give us a broad overview of the state of small business right now? how are they feeling? how are they in this recovery relative to 2007? >> relative to 2007, we're still kind of below where we were in the peak in 2007. optimism has improved over the last two months. it could be the beginning of a trend. there were three months in 2013 where the index was higher, over 94. we need to get to at least 100.

that's average before we can kind of feel like we're doing well. if we really had a recovery we'd be looking at 103, 4, 5, 6, 7 for the index. we're way off the pace here. things are headed in the right direction. every year we seem to get a bump, things look good and it falls off and slows down. let's hope that doesn't happen. the election year with all the nonsense, congress's inability to do anything. there's a lot of stuff, a lot of clutter in the way of getting the economy moving. >> david, this sounds different than what you had been talking about in terms of your perception of the economy. maybe i'm wrong. maybe you still see deals out there because there are uncertainties in the economy. if the economy was firing on all cylinders it might be tough for you to find deals. >> it's never easy to find deals. last year it was a much smaller amount of global private equity deals and deals in the united states than 2007 or 2008.

we're still only 50% of the dollar volume in 2007 or 2008. it's not easy. i think it's picking up a bit. financing is readily available on attractive terms. >> maybe i'm saying it wrong. in terms of things you think are attractively priced? >> there's no doubt things are not cheap. right before the recession in 2007, 2008, the average ebitda multiple for a buyout was 9.7 times. today the average for a buyout is 9.7 times. so it's come back to where it was. it was as low as 6 or 7 a couple years after the recession. it's now exactly where it was in 2007, 2008. things are not cheap. you have to be judicious in looking for things that you can make a return. >> did health care show up at all in the survey? is obamacare part of the feelings of small business right now? >> yes, only a little bit so far, steve.

for the last two months we saw a bump up in the percent of owners who said insurance was their top business problem and i would assume that that all really resolves around trying to comply with obamacare. we'll see more of that in 2014. now the small firms will have to think about what they're going to do come 2015. they'll be looking forward either to find something they can afford or abandoning what they did offer and sending their employees over to the exchanges. >> bill, thanks for joining us this morning. there will come a day when joe will not know what the story is. >> thanks, everybody. >> thanks, bill. >> 20%. >> regulatory impact of many things that happen in washington really good adversely affect disproportionately small business rather than bigger businesses. smaller business will have problems dealing with the regulatory problems and it may take a while for them to adjust. >> also credit is not available

for those people the way it's available to you, david. >> it's not as readily available. up next, earnings season is here. what should investors be watching as companies report? at the top of the hour, wells fargo will post results. the numbers plus the reaction to wells and the jpmorgan numbers we got this morning. "squawk box" will be right back. mine was earned orbiting the moon in 1971.

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welcome back to "squawk box" this morning. the futures have picked up some steam. the dow futures are about 55 points above fair value. the s&p futures are up by over five. we'll continue to get earnings coming in over the course of the morning. we're awaiting wells fargo at the the top of the next hour. astrazeneca, 2017 revenue is likely to be broadly in line with the 2013 level. >> let's get a check of the markets now. earnings season, it's officially under way but we haven't gotten many. we're at less than 1% right now.

our ghost host is david rubenstein. he's also with us. do you get the feeling this is going to be something when we're finished when people say, wow, that's not bad, this is enough for validating where stock prices are? or will it be wow, what happened, we didn't see this coming, it was worse than expected. >> before heading into every singles earnings season there's a growing course of nerves out there. in the end if you look at the economic data we've had over the fourth quarter it wasn't that bad. i suspect earnings growth in the mid single digits and it will be similar to last quarter. >> jpmorgan is a pretty good proxy. financials will be -- they've been in a range of what they're able to earn for the past year or two. >> i think financials broadly speaking will do quite well. you have higher interest rates and steeper yield curve. improving balance sheets not only in the household sector but

also in the private sector. of course looking around at the pace of the economic growth. things are improving. you have increased household wealth, loan volume is picking up. all of these things body well for financials. >> that would body well for consumer discretionary, i would think, too. >> absolutely. >> what about caterpillar, industrials have had some trouble recently. >> as the pace of economic growth accelerates -- >> is that happening? >> there's signs of it. if you look at economic momentum the last couple of months of the year, things were improving, getting a little better. even abroad, europe, things are improving. i wouldn't want to say fantastic but improving. >> is it a rising rate environment. >> i think we're getting there. >> back to 2.85 on the ten. that's what worries me. wonder if that's a canary in the

coal mine. you saw the jobs report. >> yes. >> people are writing it off. the economy can have a little swoon at any time. maybe we've seen the best we'll see for the past six months. >> we'll continue to take two steps forward and one step back. you'll have headlines hit the fan, if you will. as a result of that you'll see yields back up. but i do think that broadly speaking you've got a treasury which is essentially put us on a path back towards normal. i think we'll continue to slow down the pace of these purchases and by some point i think we'll be done with qe. i suspect you have to look at the flow of capital. we've only begun to see this rotation from investors around the u.s. out of fixed income and into the equity markets. as that continues to follow through, you'll see interest rates higher. >> the one thing i've said for a while, the notion that the fed orchestrated this just beautifully and that they're able to exit, just how they said they would. and the economy goes to 3.5% and

the unemployment rate drops below 6% and the balance sheet, we get out and everything, does that ever happen in the real world where it's just perfect like that? >> probably not. i don't think so. >> do you think they can do it, david? and we're just all happy and it all works. >> it's what lawyers call a case of first impression. this has really never happened before, we've never had a qe problem like this or a program as big as this. nobody at the fed really knows what the impact of tapering will be. i doubt they'll be out of the program by the end of the year. i expect it will go on for quite some time. if the economy shows weakness, i suspect they'll slow down more of the tapering. the project has generally worked. it was an experiment. i think people conclude it's time to end it over a reasonable period of time. >> if you wanted to support a scenario where the bears were right about qe, it would be that the economy doesn't cooperate

and that -- like we're in a roach motel. then again, you have the participation rate. we get 70,000 jobs and we're at 6.7. if we get 0.3 and don't get any jobs, is that success? >> you can't look at one month's job numbers. you have to look at a couple months to know where the trend is. there's no doubt the bears argument is correct that we've spent money and haven't gotten as much job creation as we'd like. i think it's too early to know. we are showing growth, maybe approaching 3%. so i think the program has history will write about it, worked better than people thought it would be but wasn't perfect. >> i still don't get the conclusion. do you think the stock market will snap back from what seems to be this mini slump. >> i think so. >> literally in the next week or two in or do you think we'll be here for a while. >> i'm not one to say what's going to happen in two weeks.

directionally over the course of this year, i would view these dips as buying opportunities. i think the underlying fundamentals remain in place. you have oil prices contained. it's a good thing for the consumer. you have improving balance sheets, economic growth not looking too bad. you have a fed moving us along the path to normal. i think all of these things are supportive of risk. >> i wouldn't call it a mini slump if the stock market is down a couple days. we're only a couple days into the year. >> we're talking about this as a turn. >> i don't, we're not. >> we may be at this table. >> i don't think anyone else. >> if it were up every single day this year, you'd be saying we're in trouble because the stock market is going up. >> you had a 30% whammy from the stock market last year. >> if we did stay at 2.85 instead of 3.5, that helps. people are already saying the mortgage market is showing signs of not being as strong. that would lower oil prices and the ten-year staying under

control might be positive. what's the market's multiple right now based on 2014 earnings? >> i think right now hovering in the 15, 15.5%. >> not 17 or 18? >> if we're looking at this year's earnings. >> we have to do better. >> probably around 15, 15.5 times. the fear i think many people have, we're hovering around the average, does that mean this is it? is the party over? i think you have to recognize markets aren't necessarily stop when valuations hit average. they continue to move. there has to be some count of catalyst. >> we have certainly going into the year. i think we'll have an appropriations for the first time in a long time. the vocal rule after four years we finally know what it is more or less. while it's 1,000 pages and more complicated than paul volcker ever anticipated, at least the banks know what it is and can plan. when we come back, charter communications offering to acquire the nation's second

largest cable operator. we have those names and others in stocks to watch right after this. later, target ceo gregg steinhafel telling us the importance of chip technology. how difficult is it to switch from magnetic stripes to this technology? we have a company that works with some of the world's biggest banks. "squawk box" will be right back. where others see fads... 0 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. of the dusty basement at 1406 35th street the old dining table at 25th and hoffman. ...and the little room above the strip mall off roble avenue.

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let's look at some stocks to watch this morning. jpmorgan we've been talking about, 1.30. is including some ims, maybe a back amount. you get somewhere around 1.40 which would be a nickel ahead of expectations. revenue did beat and ceo jamie dimon said the company is making progress on its control regulatory and litigation agendas. and that is a current quote you're seeing there. after all was said and done and all the analysis, it's a penny ahead of where it closed yesterday. time warner cable rejected a merger proposal. this was like a bear hug. charter came out and said we did this, we're taking it public now. they've done it a couple of times. what does time warner want, 1.60. >> 160 and 100 bucks in company. >> 132.50 in cash and stock, they want 160.

we were talking about john malone. >> he's back. >> he's within influential for 30 years in the industry. probably something will get done when a company is saying we need more and they give a specific number, you can probably guess something will be done. >> if you can save "x" amount of dollars and do the same thing, it may happen. >> it's a dance. something will happen in this company. >> time warner cable is not the most well run operation in town if i can say that allowed. >> is that your cable provider. >> they are but i'm not even saying that as a customer. they lost 500,000 customers in the last quarter. that's crazy. >> it sounds like it's about your own service. >> some of it is knowing the industry.

>> you'll have an analyst on later that would be pleased to say the same thing. >> did you get blocked out of the girl's premiere or something? was something not on your set. >> nope. >> that would infuriate you if you couldn't watch girls. >> i was able to view that as well. >> you have the dvds as well. >> i don't own the dvds. >> i know what to get you for your birthday. pfizer has three interested in buy iing its branded generic business. coming up, quarterly results from wells fargo. we'll get the numbers and market reaction in the next hour. we'll be right back with wells fargo's numbers and maybe girls from hbo. welcome back. how is everything?

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earnings central. wells fargo ready to report. the numbers and street reaction just seconds away. >> the cable wars are heating up.

>> i feel good about this. >> a closer look at what charters bid for time warner cable could mean for more consolidation in the industry. protecting your plastic, the target breach calling into question the credit card security. we have one company with the knowledge to make a difference. ♪ ♪ live it love it >> all righty then. welcome back to "squawk box" here on cnbc, first in business worldwide, i'm joe kernen along with becky quick and andrew ross sorkin, in studio, sharing his thoughts on the market, the economy and more with saved rubenstein, co-founder of the carlye group. the thing about david, we have a parade of people who just talk. they tell people what they should do but then they really don't have to say anything or do anything. >> he's got his money.

>> you are the opposite. i dare say exact opposite. >> i think in this -- >> your money is where your mouth is. >> in this day and age, people like david, schwartzman, black and others are probably more powerful than any of the bankers. >> the wells fargo numbers are in. >> the anchors of this show, that's where the power is. >> thank you for that. let's talk about wells fargo. the numbers are just in. the company came in with earnings of $1 a share, street was looking for 98 cents. it looks like revenue came in just about in line with expectations. the company making some comments, just looking through at this point. looks like the commercial and industrial -- i don't know. it's a jumbled mess at the top of this. i haven't gotten into the release yet. >> you're never good at the jumble. >> i beat you yesterday. >> i put the wrong letter down. >> you're not very good at the jumble. >> just looking through this. it does look like the stock is

indicated potentially just below where it came out, the same thing we saw with jpmorgan, trading after its earnings came out today. >> 963 million in net chargeoffs, which has been trending lower, i think. right? wells, if there's any bank that will be affected by mortgages, it's going to be wells. >> they originate about a third of all mortgages in this country. >> total loans $825.8 billion. you know what an efficiency ratio is? 58.5, up 30 basis points, net interest income, $10.8 billion. >> if you talk about, from the time of the great recession today, which bank in the united states advanced itself the most? obviously jpmorgan was always strong and it's still strong. wells through the wachovia acquisition probably did more toen hato toen -- to enhance their standing.

i think the wachovia acquisition made that bank stronger than it ever was. >> 20.692. they did 20.67. >> right. within a very close point. i would call that roughly in line. >> right. >> the company also making some comments, the chairman and ceo john stump saying that strong earnings power on capital levels and improving economic outlook are the major reasons they look ahead to 2014 with optimism. that's key. they're still looking at improving economic outlook as well. >> they're saying the credit performance continues to be strong. that means they take care of nonperforming assets decline. is that what you said before. >> we talk to an analyst in a couple minutes. they made $5.61 billion. they made more money than jpmorgan. 5.3 billion, 5.61 here. >> wachovia, while they had problems, no doubt, ultimately that really enhanced wells'

position. by contrast, the acquisition that bank of america made in the mortgage area really turned out to be one of the worst acquisitions in the history of finance. it's still hurting them. they'reple coming bought but it was a bad acquisition. >> wachovia, one of their big mistakes was golden west, though that probably wasn't as bad as some of the other. >> countrywide turned out to be the most expensive acquisition. it probably will cost bank of america 60 billion plus while they thought it would cost them 6 billion. >> the mortgage banking, you mentioned andrew, this is one of the biggest mortgage originators in the country. during the fourth quarter residential mortgage original nations was $50 billion, down from $80 billion in the third quarter. they said noninterest income from mortgage banking was $1.6 billion, down $38 billion from

the third quarter, too. >> okay. >> these are examples of banks that have strong ceos. the ceo of wells, jpmorgan are two of the best bank ceos in the country. when you have good leadership at the top, it really can help. >> before we go on to jpmorgan, is there a reservoir of good executives that can succeed some of these guys? there's been an argument made over the past year around jamie dimon, around other banks, that there's somehow no bench. i wonder that. >> charles seagal said cemeteries are filled with indispensable people. the truth is, there will be somebody to succeed me and do a better job than i've done. there will always be good people coming along. organizations like jpmorgan and wells to get good people. somebody will rise up. jamie is an unusually talented

banking executive. >> jpmorgan posted a quarterly profit of 1.30 per share on a gap basis, 1.40 per share if certain things were excluded. revenues topping estimates and dialling into the "squawk" news line is paul miller of fbr capital markets, head of the financial institutional research group. paul, what's your take on the report this morning? should we be happy? >> it's okay. i view it as ho-hum. the issue is with all the banks that have been beat up because of higher rates, lower loan growth. they are left with liquidity. it was up slightly but nothing to really get excited about in my book. >> do you cover wells fargo as well. >> do i cover wells fargo. i'm looking at the numbers. i haven't gone through it with a fine tooth comb. wells fargo is one of our favorite picks. it has a high evaluation.

it's just a basic clean bread and butter bank that continues to meet their expectations. >> invariably with jpmorgan there's been a legal cloud that's hung over things. how satisfied are you that they've taken all the reserves they're going to need to take? >> you know, there's probably more coming. but the issue is these guys make 23 to 25 billion a quarter on top line revenue. they'll be able to earn through that. i don't think you'll see this company get beat up because of it. i do -- i am getting concerned about the amount of reserve releases from their asset quality portfolios. they're down to 1.8% reserves to total loans. i don't -- i wouldn't be comfortable with them getting much lower than that. if we do run into an economic type of hiccup, they'll have to reload on those reserves again. >> this stock is trading at about $58 a share. what's your target? >> we're at $55. we think given the volatility

and the trading portfolios, ten times earnings is a good valuation for this company. >> we'll a little bit overheated. real quick, for wells fargo, what's your target. >> it's closer to $50. >> it's 45 now. okay. very good. paul, appreciate your time this morning. >> you're welcome. bye. one of the problems when you have these large litigation reserves it's a target for prosecutors. >> the second you say you have $23 billion -- was that a strategic mistake. >> the accountants require you to do that. you have no choice. once you do that, government regulators say they have $23 billion, they can afford it, why not take it. >> the willie sutton school. >> if they had a litigation reserve of a billion, that's all they could afford, fines probably would have been lower. >> i have no money saved.

>> do you think they had to go public with that number? >> generally the accountants require you to do something that's close to what your lawyers think you might have to pay. and there's no real ben knit in having a lower number. you generally are benefiting by having a higher number. >> the higher the number, the more they ask. >> how much did you make on that book. >> not 23 million. >> nothing. >> you're talking about -- >> if you have it, they come after it. if anyone is watching the three of us on this show, seriously, 500,000 copies. >> i'm an llc that protects me. >> you do? what country is that based? that's a chaayman islands thing >> there's a new one. >> coats. that's the island -- i took all the money over there. >> okay. >> david and i are --

>> just manhattan, isn't that good enough? >> there's the tax issue and de blasio. >> david is being quiet about having serious dough. >> you don't have any either. >> i'm giving mine all away. >> it's in the washington monument right now. >> did you think about leaving the scaffold up? >> people like the scaffolding more than they liked it without the scaffolding. we'll take to make a way that the lighting which was very good when the scaffolding was up, when the scaffolding is completely down. the people that did the lighting for the statue of liberty might be providing the lighter later on for the washington monument, making it much more attractive without the scaffolding than it had been before. >> look at the eiffel tower. >> we could have neon signs on the washington monument. that would play down the debt. >> i'll be on "squawk box." >> right. some of the other headlines, charter communications is taking

its bid for time warner cable directly to investors. offered to acquire its larger rifle for share and cash and stock. time warner's board rejected that bid. david faber reports that they would accept a $160 share bid. charter communications ceo tom rutledge will join "squawk on the street," coming up at 9:00 eastern. yum brands say their same-store sales in china was weaker than expected. the country accounts for more than half of yum's operating profit. a $1.1 trillion spending bill has been unveiled. that would fund federal agencies through the rest of the fiscal year and avoid sequester cuts. it would give workers a 1% raise. when we come back, reaction to quarterly wells fargo

results. we'll get december retail sales and import/export prices as well. "squawk" will be right back.

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box," everybody. we've been watching the ten-year yield. the yield is sitting at 2.854%. there's been a lot of pressure on yields particularly since we got that lousy jobs number last friday. in the headlines, the head of the uaw says he's convinced the union will be represented by volkswagen's plant in chattanooga, tennessee by june. volkswagen has called for a formal vote by employees. joe? wells fargo out with quarterly result earlier this half hour. joning us now on the squawk news line is scott siefers. the stock is down 20 cents or so. i imagine that means it was pretty much in line with what wall street was expecting, scott. any surprises of note? >> no, no, i think you're pretty much spot on. anytime a stock is up 30% in the last 12 months largely on multiple expansion you can

expect a little profit taking on a pretty much inline quarter. one thing i would say, though, simply the reported number of $1 did beat consensus by a penny. at the very least, despite anything we come up with, they can say they've generated 16 straight quarters of eps growth. that's a pretty good track record. >> this is $240 billion company now. i guess jp is 217. amazing how similar the bottom line was at 5.6 billion for one, 5.2 or so for the other. luckily, none of these banks are that big anymore after the crisis? >> right. exactly. a couple are still pretty big. wells and jpmorgan are two of them. thankfully they're turning out pretty impressive profitability. nothing to shake a stick at. >> i saw something on -- i don't know why i look at huffington post. basically it said wall street wins again in terms of allowing

bulk commodity trading for all these banks. the attitude in the country is it's not a good thing to have banks doing well or viable banking sector because it's almost a zero sum game at the expense of others. should we think of wells fargo and jpmorgan as doing -- i don't know if they're doing god's work but aren't they essential kpon ens of a capital market or a country that works this way? >> oh, yes. i don't think there's any question about that. you know, god's work or not, call it what you will. they're providing an essential service. allows people to buy homes, borrow money, grow businesses, you name it. despite the vilification of the last several years -- >> maybe they're right about that, they shouldn't be so big that they have an implied government backing that allows them to do things in a more competitive way. >> if you take a wells fargo, for example, it's probably not good to pain the it with such a broad brush.

you look at profitability overer in period of time for wells, they've done such a nice job of managing their company. it's enormous, yes, but they have the acumen it demands. >> chargeoffs are less likely so they're big reserves back. that won't last forever. >> no, it won't last forever but it's lasting for now, which is important for today. wells released about 600 million of reserves this quarter. at the very least we know it's a tough revenue environment. drawing down the reserve, in other words, providing less than they charge off in an improving credit environment, it provides a bridge until the revenue environment becomes easier. perhaps not the highest quality earnings in the world but i will take it, no doubt. >> david? >> i think he's a smart guy. he obviously knows what he's talking about. we are an investor in sandler

o'neill. if our banks shrink and we have smaller banks and maybe some people would like that politically, banks around the rest of the world are not going to shrink. the banks in asia and europe are going to be the dominant banks if we allow our banks to shrink. would people be happy in the united states if our loans and mortgages came from foreign banks? i don't think so. >> i don't know where i come down on it but ken griffin would come down on that. i remember having a conversation with him a couple months ago. he said red herring. one bank will be able to handle your mortgage. the distinction will be whether verizon when buying vodafone needs to go to ten banks or jpmorgan. that may be -- may be the issue. you might be able to find a syndicate where farms like yours become the bank. right? >> when there are problems in the banking system, do you want the decisions being made in new york, san francisco, frankfurt, london or hong kong?

i think it's better if they're made in this country. >> we have to say good-bye to scott. retail sales. is that an important number? >> the holiday season. yes. >> the government's december retail sales numbers will give us an indication of how retailers actually fared this holiday season. credit card security in question after that major breach at target. you heard about neiman marcus over the weekend. we'll talk with a technology company that makes credit cards more security. around here you don't make excuses. you make commitments. and when you can't live up to them, you own up, and make it right. some people think the kind of accountability that thrives on so many streets in this country has gone missing in the places where it's needed most. but i know you'll still find it when you know where to look.

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. welcome back to "squawk box," everyone. new jersey governor chris christie will deliver his state of the state address today. it comes as more scrutiny surrounds the governor and the bridge scandal. a judge found the company conspired to fix e-book prices. his mandate parentally called for the judge to review the company's antitrust policies 90 days after his appointment. apple also is now complaining

about apparently the way his hourly fee rate is set. it's $1,100 an hour and apple is arguing that it gives him an incentive to push a broad and what they call intrusive investigation. >> that sandy thing is old. it was settled. the white house signed off on it. the new thing is that he paid a million more because he wanted to be in it. >> 2.2 million more. >> he wasn't the first choice to be in it. they tried to get bruce to be in it and asked bon jovi. >> the question is $25 million. >> pallone. he's totally conflicted in trying to go -- >> you're going at me like i wrote the headline. >> i'm not. >> if you want more information on it, it's over $2.2 million that was paid to the ad agency that was paid. >> i saw a totally balanced report on this, how it was -- they had the same ax to grind

six months ago. >> that has been christie's office and said this was interesting timing. >> microsoft reportedly cutting its losses on windows 8 jettisoning the brand. the london times says the software giant will announce a new operating system code named threshold. the news is expected at an event in april. the paper says microsoft will eventually call the system windows 9. i don't know how much that costs. >> very clever. >> very expensive, consultants and fees. meantime, citi downgraded microsoft to neutral from buy. the analyst says there are high expectations for the new ceo whenever he or she is named and that the company will be relatively slow to implement the changes. maybe the stock, maybe they're saying it's a little bit ahead of themselves. >> pizza hut plans to offer pizza by the slice.

it will cost between $2 and $3 and take 3 to 4 minutes to heat up. one test location is in nebraska, another in rhode island. >> the 2014 and they're now thinking about rolling -- you talk about a monolith iic bureaucracy. maybe we should offer slices? >> after all this time. >> they would offer you to get in and out with the pan pizza. >> get a personal pan pizza. >> must be a reason they didn't offer slices. >> every local one does that. >> in the northeast. >> if you buy a mini pie, it's $4 to $5. the slice is $3 to $4. >> you have a $6 pizza, you sell them at $3 a slice. what's six times 3 or eight

times 3. >> deliver one slice? >> you can't deliver one slice. that's next. breaking economic sales numbers in just a moment. that's next. (vo) you are a business pro. seeker of the sublime. you can separate runway ridiculousness... from fashion that flies off the shelves. and you...rent from national. because only national lets you choose any car in the aisle... and go. and only national is ranked highest in car rental customer satisfaction by j.d. power. (natalie) ooooh, i like your style. (vo) so do we, business pro. so do we. go national. go like a pro. ♪ stacy's mom has got it goin' on ♪ ♪ stacy's mom has got it goin' on ♪ ♪ stacy's mom has got it goin' on ♪

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welcome back to "squawk box," everybody. we're a few seconds away from december retail sales and import/export prices. we have joel naroff standing by as well. steve liesman is here. >> it comes in a little better than expected. plus 0.2. last month was revised to 0.4 perfect 0.7. ex-auto, 0 the.4. last month was revised from 0.1 to 0.4. these are decent numbers. the question we have to ask ourselves, is the data all week going to be enough to provide is clarity? this is the first step and this is a decent deal. import prices came in at 0.0.

to minus 0.9 from minus 0.6. import prices lower than expected. import prices negative 1.3 from an expected negative 0.6. last month's revised to negative 1.9 from negative 1.5. the retail sales the big thing to look at here, that came in better than expected. that's a good sign. back to you, becky. >> excellent. stick around. let's talk more about this. >> the whole operation didn't fall apart. >> november was revised down by 0.3% as jim reported. december coming in better than expected. it looks like october was revised down by atenth. what's happening here is the calculation of gdp and spending in gdp, i guess i have to look at the control number. do you have a feel yet, are we still going to do a 3.5% number in the fourth quarter. >> i think what may power it, as

strange as this may sound is the services component. what we're not seeing here is spending on things like utilities. given the winter we've had so far, that may give us that number. i don't think we're quite as strong outside of utilities. i think the slowdown in vehicle sales means that durables will be up but not that strongly. so i don't have a 3.5 to 4. i'm probably 2.5 to 3% on consumer spending. >> the core number, the reason we follow this, that's the number that feeds into the gdp calculation, which is ex-autos, gas, building terms and food. the ones we're x'ing out the government gets elsewhere. i still think it feels like to me, given the guys were at 3.5 to 4% on consumption, i think they'll still be there. there's not enough change in this number, the give and take

between the two. the reason why we spend all this time on this is this upward recession to the second half of 2013, i think remains intact now. we did 4.1 in the third quarter. i still think they're going to go, you're saying 2.5, 3, i think the street will be around 4% for the fourth quarter. >> i think that's distinctly possible. and i think what we're really seeing is the fact that this economy is starting the process of shifting gears. the only thing that we have to ask ourselves is whether the consumer spending that we may get being solid in the fourth quarter is sustainable without better gains and wages. we can talk about and argue the unemployment rate but if it is coming down, we'll get those wage increases this year and that will allow us to get stronger consumer spending. >> becky, can i -- >> guys -- >> 3.5% to 4% is not sustainable. >> becky, what is your

assessment of how the retailers have reported christmas? >> you know, i think it's a mixed bag. i think there are some who have done phenomenally well and some have done phenomenally poorly. it doesn't necessarily speak to consumer strength. >> there's a conundrum out there which is that -- >> the problem i'm having, guys, we keep talking about this, we ignore the big deal. there's no clarity here. after friday's number you should have heard the trading floor after we saw the plus 74 print. it's like all the things we thought we knew have been completely pushed aside. this is a wonderful number. the reality of it is, there is lack of clarity. look at the way the markets traded yesterday. the stock market got pummeled at the same time the dollar got hit, rates went lower meaning we're taking out some of taper, but not enough to see confidence. we have to see better numbers than just this one, no? >> i think people were

looking -- there were a whole school of people that said throw out that friday jobs report. >> they didn't give good reasons to throw it out. >> sure they did. >> what were they, steve? >> the reason was that every other jobs indicator was doing well, including nfib, including the ism, including claims, including the gdp numbers were all on the positive side. it's impossible -- every single model that's out there, for what it's worth -- >> i like liesman, becky, you're a woman, how was the christmas shopping season? >> for three years i sat two cubicles away from becky at "the wall street journal" and she covered retail. >> that's your explanation. >> can i say something here? >> can i say something here? >> but steve and i have battles. >> for 15 years we've been

talking about retail. >> becky, you shop. >> joe, go ahead. >> given all the black friday sales that started before halloween, why are we necessarily worried that much anymore about december sales? i mean, we have to recognize that this season has been stretched so far at this particular point that i think december is just not that important anymore. and what we've also recognized is that the post christmas sales take on a much greater importance. that's not reflected in these numbers at all. so we've got to settle down on the retail sales on a month-to-month basis at this point. i think consumers are spending. they're just not out there being exuberant. >> joel, thank you for joining us. great job for the numbers. >> thank him? we're thanking him for the gross generalization. >> you're totally twisting it. >> she just came back from

covering target. >> why was she drawn -- >> she did target. >> okay. you always have an answer. >> this is legit. >> we've been arguing retail for 15 years, since '98. >> '99. >> '99? >> yes. >> okay. >> when was the last time you were in a retail outlet. >> over the weekend. i regularly wander the halls of home depot. guitar center, orvis, home depot or cabell laa's. >> we're at bed, both and beyond. >> looking at the satin sheets. >> duvets. >> are you sharing a room. >> we're thinking about it. >> chip tech knowledge may be the next big thing to replace magnetic strips on credit cards. how fast can the tech knowledge be implemented? we'll talk to a company who has

the experience doing just that. we're back in a moment. so ally bank really has no hidden fees on savings accounts? that's right, no hidden fees. it's just that i'm worried about, you know, "hidden things." ok, why's that? well uhhh... surprise!!! um... well, it's true. at ally there are no hidden fees. not one. that's nice. no hidden fees, no worries. ally bank. your money needs an ally.

welcome back to "squawk." we're in the cnbc newsroom. i want to show you a quick snapshot of the revenues for the quarter because this was a big focus, the underlying businesses aren't doing that well this

quarter. people are waiting for the economy to recover. that's why the company had to sell a bunch of assets to bolster the bottom line going forward in light of litigation expenses in the quarter. that was one of the main focuses of this conference call. cfo said we are reserves alined to the issues as we know them. of course these can change and these expenses are lumpy and unpredictable. they should normalize though she did not say when. the other issue was the capital return, whether this will have implications for the company's ability to buy back stock and issue dividend. it has $1.5 billion in stock it could buy back. it didn't do that. lake said at minimum, the bank will at least be able to buy back enough stock to cover employee compensation, though she wouldn't go further in saying what they're submitting to the fed this time around. the other question was for ceo

jamie dimon. at the end a reporter piped up and asked in the wake of this litigation, have you considered resigning? he said no, no and it's up to the board. he did make a few comments on the economy. he said he's not as worried about rising rates as some of his peers are. >> it sounded like you said the company is explaining a bad quarter. the stock is up 30 cents after an all-time high. were there things they had to explain in this quarter or was it a good quarter? >> joe, it was a fairly good quarter when you look at asset management they had net flow, a lot their net income on the investment bank was down 57%. they released reserves on the credit card side and the real estate side. there are questions on is the economy strong enough to do

that. there was a lot of reserve release that supplemented this quarter, the sale of the visa stock, the sale of chase manhattan in downtown new york city provided a boost to the bottom line. they're trying to offset some of the legal expenses. there's not enough underlying growth to bolster some of the businesses. the one big thing people are excited about, though, is that the margin is starting to tick up, 2.2%. it's not great but still better than the trend which is going straight down for the last 13 quarters. >> kayla tauche with the jpmorgan news this morning. charter sent a letter to its rival proposing an acquisition for a price reported to be $132.50 a share in cash and stock. media analyst richard greenfield joins us on the "squawk" news line. give us perspective. you say this deal is going to happen but at what price? >> i don't know whether this deal will happen.

i think there's the chance you get new bidders. comcast could come out of the woodwork. they could certainly finance this transaction ate hi a highe level than charter. it wants to stay within the $132 bid, gets them somewhere around five times leverage. they may use their currently pending acquisition which liberty is pursue. comcast could come in and do this at a substantially higher value. time warner's cable result are getting better. when you look at the fundamental performance it's going to warn the a higher bid than $132 by a wide margin. >> in the past hour we were talking about this company and i said this company has been undermanaged. maybe that's a euphemism for worse than that. am i wrong? >> look, the results certainly in 2013 leave a lot to be

desired. i mean, i think that's being kind. the reality is, that you can't really see a loot of the management changes that were put into place. they went to war with cvs. we can debate the long-term benefits or problems that that created. but that has obscured the underlying trends that you're seeing. i think it's been going down substantially. they worked hard on getting retention under control. i think when you see those efforts, which without the problems created by cnbc, where you had that large drop of subscribers, what you'll see as you work through the first couple quarters of '13 you'll see the numbers getting better. >> i want to talk about comcast, parent company of this network. your sense they try to buy the whole thing or wait for charter to buy and come in behind them and purchase some of the assets that actually make sense for the

portfolio? >> they could certainly help charter do a deal at a higher price or simply buy the whole thing. look, for comcast they have 22 million-ish subscribers, adding another 11 million subs. there is no 30% cap. there used to be a 30% cap. that doesn't exist. they could sell off a few million subscribers after the fact to charter or somebody else. the real question is, is having new york and l.a. something that is really important to brian robertson's team. it would seem like the assets would be important. now that they're in play and you're starting this process with john malone launching the first grenade, why wouldn't brian roberts want to swoop in and take advantage of it? he has a balance sheet that very much could handle this and it would be -- i think a very, very attractive deal for comcast. >> rich, we have to go. what price does this ultimately trade at? >> we've said even before time warner laid out the 160, we

think this thing should trade to $160 over the course of the next year. >> stock at 134.26. we're going to talk about another subject in an exclusive interview that becky had, target ceo gregg steinhafel said he sat down and said for now, the time for banks and retailers to embrace a more modern security technology is now. >> there's a better way and it's called emv technology. >> is that the chip. >> that's the chip technology that's pervasive and it's a well established standard globally throughout the world. we think it's time for america to make that commitment to get to that standard. >> is 2015 that time horizon realistic? joining us now is martin ferenczi, ceo of oberthur

technologies. when are we going to see this? >> it has been already happening. our company has delivered to major financial institutions in the u.s. chip cards in the millions for use overseas, because as you may know, overseas cards are not always accepted. >> why have the u.s. banks and retailers been so reluctant to install this technology? how much does it cost. >> the cards themselves cost a multiple of the mag stripe cards. >> two, three, four times? what are we talking about. >> between four to five times. >> and then the installation of what i imagine is the reader, how much more is that than the current readers. >> at this point in time, the differential is relatively limited. the difficulty for the readers -- on the readers standpoint is that some of the merchants need to replace existing readers. >> i assume the reason nobody has done this thus far, the cost of leakage from fraud and

similar things and attacks like target, they felt that the losses weren't big enough. now they think the losses are big enough? >> you are absolutely correct. the issue is overall the security levels and securities based on different levels led to limited fraud. however, the world has moved to chip technology. so by definition, if the u.s. is not with chip technology it becomes the weakest link and the criminals focus on this geography. >> isn't there another technology that will come along sooner than later that's going to be better than this chip? this chip technology has been around for over a decade. >> you're absolutely correct. however, i've been in security for the past 25 years. and it is proven that chip technology substantially reduces the level of fraud at the point of sale. therefore, we believe that security is layered security but chip technology is a very, very significant layer. >> okay. thank you for your time.

we will be watching a number of companies. >> is leakage different than shrinkage? they're both sort of similar. >> leakage, shrinkage. >> shrinkage is retail. both of them are horrific, obviously. they have terrible terrible sou >> leakage is a lien? >> no, i'm thinking shrinkage is much better. >> jim cramer chimes in with time warner's bid. i need proof of insurance. that's my geico digital insurance id card - gots all my pertinents on it and such.

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let's get down to the new york stock exchange jim cramer joins us now. big earners today wells fargo and jpmorgan, they both made over $5 billion. i'm happy and cheering and i think it's a good thing. is there something wrong with me? >> no. i think it is very hard to decipher these quarters. in the end all people seem to care about is the net interest margin, how little they pay you on their deposit and how much they can invest on it because of the yield curve. i think there's much more to it than that. i think some of the companies are doing incredibly well. jpmorgan let's take that, they had such a decline in mortgages and yet it doesn't matter, people like the risk-free trade they can do off their deposits is very strong. these banks are okay here. >> the world is a better place if the banks are well

capitalized. can i at least say that? >> yes. let's put it this way, if you care about the stock market. if we're just about hanging rich people, i got to tell you, there's a very bad hang rich people's number. earnings per hanging, not good. >> but, i mean, we want people to be able to buy houses and get business loans and expand businesses and get credit, right? >> not if they make money. i mean, don't get it wrong. i do believe there should be some clawback of bonuses. i'm there on that. but the whole notion of companies making money, joe, it's such a throwback. >> we get thrown back, it's, like, i've seen this movie before. i think there will be a lot of sequels and the longer we live, they're not only sequels, they'll do a reset. spider-man is a new one, they can do three or four more sequels with that. it will never go away. the market, when do we worry when we're going for our first 10% break of more than a couple years? >> i keep coming back to the

employment number on friday. geez, it was a bad number. we were all stung with that. becky knows retail sales. >> she shops a lot. >> holy cow, lululemon, bed bath & yod, mag nola, l-brands, if it sells, it's not selling. >> i would like to say you do have a body for lululemon. am i allowed to say it in a positive way? >> lululemon in summit, i got joined by some very attractive other people there. >> you can wear it. thanks, jim. >> you're welcome. >> we'll see you in a couple minutes. when we come back we'll talk private equity with david rubenstein.

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let's get back to our guest host david rubenstein who has the last word for us. real quick, i want to talk about private equity and the transformation of private equity to become a much larger asset gath gatherer, if you will, and some people say the new bank. >> they were very small, they managed a few people. when kkr did the rjr deal in 1989 they only had seven professionals in the firm and they were relatively small. today there are seven firms that

have $770 billion under management and they are doing a pretty good job for their investors. >> the government is looking at blackrock and pimco and say they need to be considered systemically important institutions. do they think they'll turn their eye to the larger assets gathers? >> i never know what congress will do or the regulators but we don't manage trillions of doctors. block roc ak and pimco have trillions of dollars. >> what's the vintage look like? >> it's been very good for private equity firms. last year the alternative management firms, up about 68% for the year. a pretty good returns for the investors. >> is it good private equity in your view? >> we dominate the global world. private equity, venture capital, we dominate the world. our companies probably employ

750 to 800,000 people. >> wow. real quick, banks, i don't know if you saw, they are cutting out saturdays for the young people. are you making your kids work on saturdays? >> i don't make our kids work or not work any time. if you love what you're doing, it's not work. >> i'll see you there. >> thanks, david. that does it for us today. right now it's time for "squawk on the street." ♪ i'm going to knock you out ♪ i'm going to knock you out i'm going to knock you out ♪ good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york exchange. what a morning we have in store for you the ceo of charter will speak to faber on the bid for time warner. big bank earnings and decent retail sales. ten-year yield huddles around 2.85 and europe's largely in the red as the nikkei fell 3% overnight after our bruising here yeer