begins right now. good morning, everybody. welcome to southbound. i'm becky quick along with joe kernen and andrew ross sorkin. we have an exclusive interview with lee cooperman. our guest host today is former citigroup chairman dick parsons. mark mobius and thomas per easy, those two will be joining us during the 8:00 a.m. hour. this morning, we start with the markets. the dow closing at six-week lows. futures at this hour are indicated higher. dow futures up by about 100 points. the s&p futures are up by just over 9. yesterday, it looks like things were starting out strong. they gave that back by tend of the session. this is a pretty momentous move.

among the key market drivers, we have the fed. policymakers will gather in washington at the start of a two-day meeting. a decision on rates is expected by tomorrow afternoon, but more important than rates, we have the question of what to do about taper. will it be cut even further? there are a number of other economic reports to watch today. at 8:30 eastern time, we get december durable goods. they're expected to rise by 1.6%. at 9:00 p.m. eastern time, we have the s&p case-shiller home index. an hour later, january consumer confidence and the richmond fed survey. in earnings central today, the beat continues. we have dupont, pfizer and ford. those are among the names expected to post results before the open. dupont just crossing the wires and we'll have those numbers in just a moment. this afternoon, we'll hear from at&t, yahoo! and amgen. >> becky, great you have to back. we have global market news for you, which is really what may be driving all of this. china shares eeking out gains

finally after the country's central bank injected more cash and that trust firm we've been talking about, they agreed to a deal that averted a possible default for the wealth management product. you can see what's going on right over there. in india, the central bank raised its key interest rate for the third time in four months. the chief policymaker said inflation is the top priority despite an increasingly worrisome slowdown in economic growth. then there's turkey's central bank holding an emergency meeting today. investors will be watching closely for signs of whether emerging markets can -- the crisis. policymakers said they are under political pressure to keep rates low for the sake of growth despite, of course, the inflationary effects. and ukraine's prime minister submitting his resignation today. in a statement, the outgoing minister says he hopes this helps move towards a peaceful settlement.

joe, you have dupont numbers? >> i do. the departed estimate is 59 cents. the revenue that the company reported was fourth quarter revenue is different than sales. so now i see it's actually above, $7.84 billion for revenue. sales, 7$7.7 billion. so the guidance for next year is 420 to 445. and i don't know whether the company is giving us guidance or where wall street is at this point, but that would be nicely above the 384 the company earned in the current period. you would hope that it would earn more next year. you see 2014 sales of 37 billion. and that compares to about 36. 35.8 in the current period also. the company is authorizing a $5 billion buyback.

>> 2 billion of that is expected to -- in 2014. >> yeah. do all that at once. volume in the fourth quarter was up 9% in the period. so, you know, as you can see exactly didn't do the rise that we saw in sales. 60.50 now, trading above. so that should help a little bit after what we saw yesterday, which was, in fact, it didn't just start strong, it started okay and at one point it was down well over 100. and then it was all the way back up over 40 or 50 at like 3:00. and i was watching all day long. it was all over. and it was like -- like yesterday morning, we said well, at least it's up. it's not a horrible monday after that friday, which was horrific. but a lot of times it's better to have it start out down and it gave us that, too. it started out up 20 or 30 or 40. tesla is at much lower levels.

and then closed down 40. so i don't know what we say at this point with a 100 point gain. >> maybe some fear, maybe the vix rising a little bit. >> we've got liesman coming on later. liesman yesterday was saying this has nothing to do with the fed or tapering. but -- and then we were saying, are the emerging markets and the problems there enough to come back and hurt us in terms of our economy here? but now i'm not -- maybe it doesn't have to do that because our domestic -- but what if all of this action we saw for the last two years was qe? what if it really is built on trust? what if this is the negative consequences that everyone warned about from all the extraordinary action? what if not being able to get out, because now they're probably questioning. >> whether they do terrible tapering this month, you mean? >> they're questioning -- it wouldn't take much for them. if they saw some type of economic weakness -- >> i think it's more likely that they do nothing.

>> if they do nothing -- bad news is bad news. >> they never said it was going to away steady drum beat. >> they're supposed to be up by the end of the year. >> you can't get out by the end of the year on a road show. >> but this is bernanke's last meeting, too. does he give yellen more room if he says we're going to hold steady and let mer make the next decision ned of her being the one that has to say in march, i'm going to be the one who pauses and everybody looks at it and says this is yellen, the one who is never going to change anything? if it's bernanke and it's less, he thinks, i got things started and i can now sit out. >> i think if you do that, you're going to send everyone into a complete -- 2014 is the year of good news. that is bad news. >> we'd better get good news this year. >> but since i'm an optimist for everything -- >> it's going to be better. >> we'll wait and see

additional -- we're worried about emerging markets. we're concerned that part of it is this taper. do they add pressure to this today if they continue to taper? do they say we're going to wait a month and see what the jobs -- >> that's like saying make me chase, just not right now. i want to get off hair row yip, b heroine, but let me do one more month. >> it's not like the -- >> foreign homeland, they gave him something that he didn't -- that it was even worse, but you get off even faster. here is the other thing i was thinking, becky. i'm not sure it's ever been proven that greenspan was so accommodated that it inflated the housing bubble, but a lot of people say that. >> especially after 9/11, they were pretty accommodative. >> they were, but was it 10, 12 -- you see, i'm not sure that's true. but if it is true, if the fed can really print too much, the

most recent action about the fed, this is like green span on steroids. if it's not housing that it went to, where is the bubble that we don't know about? >> emerging markets would be easy. >> equities, u.s. equities. >> we've been looking at these multi nationals saying that it was the growth in china and all these other things helping these stocks. so if those markets drop, is it going to impact the earnings that we look at for these stocks that have been waiting away? >> people are in a bad mood, too. for the state of the union, people are like, man, this is -- i said you could do all my interviews because i wanted to talk to meanus. i traded. it was like the babe card. >> you didn't just ask me. >> no, i said look, i don't care about these -- i said here, i can show you what i typed. i said -- >> i said there's changes in this. why didn't joe ask me because -- >> i said make sure nobody knows. >> oh, no, nobody told me.

why don't you just say, becky, i want that interview? you wouldn't have had to trade me anything for that. >> no, no, dick parsons is your kind of guy. you want to awl talk all your corporate -- it's the horse trading that goes on. >> cooperman i would like. >> no, i want r cooperman. >> no, the labor secretary -- no, take my wife, please. i traded you the labor secretary for -- i want mobius. >> you got mobius. >> i do. >> while you guys send e-mails back and forth, we're going to go across the pond. ross westgate is standing by in london. good morning to you, ross. >> andrew, very good morning to you. we are firmer this morning. the dow jones stoxx 600 advancers outpacing decliners bay ratio around about 7/2. the ftse 100 yesterday was down 113 points. we had a bit of a move higher this morning, up 27. 0.4% higher.

gdp, we have the first numbers of gdp for the uk came in as expected, up 0.7% quarter on quarter. the annual rate of growth, 2.8%. that's about the best we've seen since 2007 for the year as a hole. it was 0.3% in 2014 and that's better than anybody was expecting this time last year. there was still plenty of room for a bit of catchup. it's another amount of huge reaction. the xetra dax up 0.7%. cac 40 up 0.8% as well as the ftse mib. they had a zero coupon bond earlier today. the notable thing about that was it's the lowest money they pay for that bond since they launched into the euro. so funding costs continue to decline fop eurozone cubs

posting financial crisis. dollar/turkish lira, 2.2674. the central bank governor came out and said, look, we've had to raise our inflation forecast to 6.6% from 5.3%. they have got a meeting scheduled midnight tonight in anchorage time. the reason it's so late, there's one policymaker who is flying back to make it where they're expecting to raise the overnight rate 225 basis points to 10%, try and take some pressure off the lira and try to reign in a bit of inflation that comes because of it. we also saw an emergency rate hike, a surprising rate hike today for the indian central bank, as well. so these emerging market central banks have their work cut out. back to you. >> thank you, ross. we're watching shares of apple this morning. it's probably going to be the

one to watch. the titan reported better than expected first quarter earnings, but here is the bad news. weaker iphone sales and revenue guidance missing in a big way, keeping that stock under pressure. you're seeing it had some serious action in the markets when that announcement came out. joining us now, the breakdown, the numbers for us, neal zaraba, technology analyst at william blair and company. good morning to you. >> good morning. >> like the numbers are better, but not really because i can't -- i mean, did you expect -- where were you expecting the iphone sales to be? >> well, you know, i was slightly blow the street, but it did come out of a surprise to me. i think a couple of things that are going on. first thing is that there was some heightened expectations coming out of some of the new product cycles, a little bit coming out of china. but, andrew, when you step back and look at the story, i feel that is a good buying opportunity. so me, there's three key points.

the next 12 months, we've got product cycles. we've got china. china is big. china can buy higher products. and china mobile is going to be launching on apple. along with that, management with certain entries, whether it's mobile payments, whether there's something else, your guess is as good as mine. so at eight times cash, i think the next 12 months is set up well. that's one thing. >> what is the other thing? >> the second thing is that growth margins stabilization. i see the hand set industry who, in their aspiration to gain share start cutting down pricing. and it shows up on their profitability. do we want a 20% unit growth at 15% to 20% decline or do we want something less but at, you know, stable pressure? i think that is where we're going, quality over quantity. >> we've had heard some say mobile comes. you do not believe it is a

mistake not to have a lower price hand set that works in places like asia? >> so there's a difference between lower price hand sets that the user can get, whether it's by a subsidy, whether it is by certain costs versus having a focus on the lower end market. and i think apple is doing the right thing of not going after that low end of the market because once you go down that slippery road, there is no turning back. and look what we're seeing some of that with samsung. we've seen with many, many companies over the past decade in the hand set industry. >> why are you so confident that there's going to be some remarkable innovation that's going to come out of this company? you know, we -- frankly, i want it more than anybody, but we have not seen it. >> that's the key thing, andrew. and there is a certain amount of frustration, even from analysts like me who love apple, who are waiting, who are getting

impatient. there are concerns that tim cook after coming on has not come out with any break through revolutionary product. but when you step back and look at this company, think about what this company does. it owns a customer. it owns a customer experience between our homes and offices. it owns a hardware, it owns the software. i think the next five years are going to be many transformal technologies, changing our lifestyle. whether it's mobile payment, whether it's health care, remote monitoring. >> and using apple owns that. >> absolutely, yes. >> i think they're in a better position than even google. >> okay. let's hope that's the case. thank you for joining us this morning. appreciate it. >> thank you. still to come this morning, president obama is facing more skepticism from the american public. we'll have the results of the latest nbc/"wall street journal" poll ahead of the state of the union address. and we all ran into super model petra nimicova.

we're going to find out why she traded the runway for the mountains and some of her charitable foundation, the work that it's been doing. "squawk box" will be back in just a few minutes.

it is sotu day. you can see it in the tv, sotu, sotu, state of the union. president obama is going to

deliver that address at 9:00 p.m. tonight eastern. but before that, we have the results of the latest nbc news "wall street journal" poll. let's get you to cnbc's chief washington correspondent john harwood with the details. you guys know that it was coming today, too, same day as the state of the union. that's weird timing, isn't it? >> well, that was our plan. i wanted to figure out where the president stood and it's not a very pretty picture from his point of view. when you look az at his job approval rating, 43%. near an all-time low. 51% disapprove. that makes him the third year president to be under water in the third year of polling. one of the reasons is that there is so much dissatisfaction over the economy. if you ask people, how do you feel about the nation's economy? 28% say they're satisfied. 711% say they're not. that is driving a lot of bad mood, even as the signs that the

economy is strengthening or all around us. and the one bit of encouraging news for the president is that on the issue of income inequality, this is something the president has been emphasizing. there is some recent activity to that agenda on the part of the american people. when you ask should the government do more on that issue? you have a plurality of 37% saying, yes, government should do more. 21% say less. so it is not an overwhelming response to that issue, but it is some and we know that the president is going to take a series of actions to try to move the needle on that, including ordering federal contractors to pay some workers the minimum wage by executive order. this is one of the ways the president is going to bypass congress. >> you know, john, one of the things that i thought was interesting is also what the full number showed about the popularity of obamacare, it wag something that i think was pretty evenly split the last time you took a poll. this time, that shifted pretty cart mat dramatically.

>> he's had tremendous fallout from the failure of the website. you now see 14 points under water. was it a good idea or a bad idea. three years ago, january 2011 months after the bill had been passed, you had a 39/39 split. so there's clearly been some erosion for the president and he has to hope that the operation of the federal exchanges are going to turn that around. >> when it comes to the question of income and equality and the way that that poll -- the popularitywise, what can we expect to see in the president' speech tonight? >> well, the president is advocating a series of things to try and lift the long run of economic prospects for american workers, including things like universal early childhood education. he proposed that last year. congress ignored it. congress is likely to ignore it this year. that's the kind of step.

but signing an executive order telling federal contractors to pay the minimum wage is something that will have an effect on significant numbers of people. it's going to make republicans in congress upset. there's going to be a fight over that issue and over the minimum wage more broadly. the president wants them to raise it for the entire country. i think it's possible that something could happen on that score, but the president is going to tell the country tonight we can't wait for congress, i'm going to go ahead and make this happen on the part of federal contractors. >> john, you saw some of the -- i think it was in the "new york times," maybe it was the weekend journal, that some of the democrats and the states that aren't quite as blue are saying, you know what? how about emphasizing lean on the opportunity ideas because you talk too much about the disparity and people start thinking redistribution. here you are again, redistribution. so i just wonder if his tone

tonight might not be as confrontational or devising with republicans about this. because we all want people to have opportunity to close that gap. but even larry summers in davos said no one has ever done well by bringing -- by making -- >> it's not about inequality unto itself. >> or the outcome. >> the question would be what the republicans propose in exchange for that. it was bounced around over the week ynd things like an income tax. >> what is he proposing? >> a higher minimum wamg. >> that's not going to help. >> but the question comes back to what do the republicans encounter? >> it's mostly -- it's 2.5% and the 1.5% that we're talking about, some of them are -- you know, they're young people, they might be just a job during school. we need much bigger answers to this than just the wedge issue of income disparity, which we've seen in the past sometimes.

>> so how does he take it? >> well, i think the president is going to be in a mood that will strike joe as intha confrontational. in other words -- >> again? is it ever not that mood, john? will it ever not be ta mood where we're altogether in this instead of, you know, us versus them every single sotu? >> well -- >> how is that working for him at this point? >> he's not in a strong position. he needs to reassure people that he can get things done, that he can lead the country. so you're going to hear some themes along those lines. but look, the president is -- by this point, having been frustrated since republicans took over the house is not in a mood to sort of sit back and have a prolonged negotiation on stuff that isn't likely to materialize. i think his point of view at this point is, yes, if we can get something done, for example, on immigration and there's some promising signs there, i'll

pursue that. and he's going to try -- i think he will not dedivisive of confrontational on that because that's something where he has a opportunity to make or break. but on other opportunities, he's going to try and push. >> i heard from a lot of people that it's not going to floi in congress to say you have a higher minimum wage. if the republicans were to come up with a proposal like raising the earned income tax credit or something -- >> that is better. >> they've raised the earned income tax credit. and, in fact, republicans lately have been push to go cut it back on the argument that it's been abused. but i do think it is possible, given how positively the american public feels about a minimum wage increase, that that could be something that republicans are looking to diminish their own negative -- >> john -- >> cooperate with him. >> "new york times," they went over some of these states where the senate seats are up. and they're the states where the

president's approval ratings are the lowest. >> no question. >> for the "new york times," it was no one is saying the senate is going to go, but basically, the "new york times" -- >> kite go. >> that's not out of the question at all. so he may not like not having the house, as you just said, but he may end up in both houses of congress. >> certainly that could happen. but remember, joe, when you have a midterm election, turnout is relatively low and the biggest task is to get your own base out for the election. how do you do that? you do that by fighting. >> oh, geez. i don't think the country -- i don't know. i'm tired of it. >> thank you. thanks, john harwood. >> did you have more inspect. >> i did have something to say, but we have to go to a commercial, unfortunately. when we come back from commercial, i will say what i have to say. >> you can say it to me and to becky. >> i'd rather say it to our viewing public. you can watch the state of the

union tonight anywhere, but especially here on cnbc. coming up, what i have to say after the break and then the results of -- >> they're coming back. >> whoa! >> honey, hurry up, get out of the bathroom. >> we've got the results of the latest fed survey as ben bernanke -- his final meeting as chairman. and then at 7:00 eastern, check this out, we have leon cooperman. plus dick parsons is today's guest host and later, mark mobius is going to tell us why he's staying cool, he says, during this emerging market mini panic. we're back in a moment. 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.

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good morning and welcome back to "squawk box." we are on cnbc and i'm joe kernen along with becky quick and andrew ross sorkin. making headlines, andrew, what did you want to -- >> i don't even remember any more. >> these people are -- b. >> it all came back. >> probably not. >> i wanted to talk about -- not -- the long-term unemployment and this idea that the president is going to talk about. that's a tough one. >> helping push the companies to -- >> because those people always felt that. >> yes. but there is a pleasing in this. if you have been unemployed for a year or two or longer and you go to a company and the company sees that, i imagine people consider that to be a sign because they think if you were

so hot to trot -- >> that's not always true. you get caught and you were fired at the wrong time in an industry that's really hit hard, it's fairley easy and the number of people who have been out of work for over six months and in some cases even longer, through no fault of your own. >> it's very easy to say these companies are not going to discriminate against those people, anyway. >> you know the night he didn't call me in davos where i sat home alone? >> you said you didn't want to go anywhere. >> you know where he was. he was at this big party and he said there was so much caviar. so you saw this jon stewart thing about how people go over there to worry about income inequality and they sit around stuffing their face with caviar. caviar communists, that's where that expression comes from. you are a caviar communist, limousine liberal, here jet liberal, right?

that's a good name that -- and they were russian, too. >> here we are -- they're real communists. >> maybe it's cheap over there because they've got so much fish laying -- oh, anyway, dow component dupont reporting better than expected quarterly earnings. the company is rising a new $5 million share buyback. among the other stories that we're watching, apple sliding following the company's quarterly results. among the reasons, lower than expected iphone sales during the holidays and a weak revenue forecast. and you add in renewed fears about chinese demand. the market is back to -- >> 7%, which is crazy. they beat expectations by like 43% on the bottom line pt sxels sales of china doubled. >> what did they earn, like $15 a share. that's $60. you can't annualize it, but it's still a $500 stock. if you annualize that, everybody will still tell you it's cheap.

>> it could be higher, no question. >> well, now, wait a minute. the stock is low in terms of valuation. we don't know where the stock should be. we have no idea. >> the stock is right where it should be. tin know vacation question i think still lingers. that's what this is all about. and it's not just the new iphone. i think that's not going to be enough. you're going to have to go up to something else, for sure. >> all right. shares taking a beating in extended trading. the hard disk drivemakers earnings missed estimates. >> you just need to be very/you know, sloppy disks, you would say plucking the chicken. these are things that anchors -- >> you're braver than i am. >> i'm brave, right? because if you have the slightest bit of -- saying plucking the chicken and saying sloppy disk, hard disk drives.

you wouldn't dare. >> no, i wouldn't. >> the fomc is set to begin a two-day meeting. this morning, we are reviewing the results of our january cnbc fed survey looking at what the markets expect from the central bank this week and for the remainder of the year. steve liesman joins us right now with more. steve. >> we're over here, joe. okay. all right. >> this is what the 6:00 hour is rig like, right? this is what the house looks like before company comes over and then you clean it up for the 7:00 and the 8:00. 45 economists, strategists and fund managers, 87% looking for a taper in january. answering the question you guys were debating earlier, only 11% say no, no taper. how much taper they're looking for, an average of 9.9 billion. one guy expected 5 billion. and the taper split, 48% being mortgage backed securities. 52%, treasuries. so an even split. looking further at the amount of qe that's expected this year, in

2014, you can see it ramped up in the fall and has now come back down. usually it's on that 467 billion. that's the amount expected in 2014. 460 billion. i think we have a box on that. here it is right over here. that's the amount you would get if you tapered by $10 billion at each meeting. so the amount of qe at 467 is tuned to the idea that the fed tapers by $10 billion at each meeting, which gives you $460 billion. moving on to the next screen here, there is some amount expected in 2015. 94 billion. but i will tell you that we had a flaw in our survey. we didn't put a negative number in there. this as it's pointed out that he expects the balance sheet to decline in 2015. moving on, will the fed taper at each meeting? 72% saying yes. and what about the pace of taper? 28% said no on that. average amount, 10.7 billion expected.

one guy expects $20 billion. should the fed taper faster? 29% slower, 19% at the current pace. 50%. so pretty broad agreement with the pace of taper to 30% saying faster, 20% saying they should do it slower. we have more stuff coming up later at 8:30. we'll look at whether or not the markets expect any more dovish or hawkish fed this year. joe. >> steve, stay with us, please. because -- >> don't go anywhere. >> i also am going to reference you in this. >> what did i do now? >> i'm going to tread lightly with ian shepherdson, a macroeconomics. and economists can't be right all the time. you're never in doubt, but steve told you they were going to taper. he told you, he told us. i believed him. not only did you not believe him for when they did taper, you didn't think they were going to taper in march. you thought they were going to wait until june. so should we listen to you about anything at this point? >> probably not, no.

i definitely got that one wrong, but you know, you can't win them all. >> i'm not a smart man, but it's like a box of chocolates. it seemed clear to me they were going to do it. how come it wasn't clear to you? >> i think what happens was the hawks got ahead of steam when core inflation stopped falling in the latter part of last year. deflation risks disappeared. and they also seem to -- the argument that what matters is the cumulative improvement in the labor market. so rather than waiting for payroll growth to accelerate, which is what i think the doves initially wanted, they seemed to settle on the idea that cumulative improvement is enough. so payrolls didn't need to take up more speed and that was enough to sur suede them from tapering. now they've started. they're not going to stop. they're going to stop at 10 billion a meeting. >> in the past, you never let your political or your -- i mean, i know you were a fan of all this accommodation and maybe you probably even wanted another fiscal stimulus of some type.

does that ever cloud your judgment in terms -- i mean, you wanted the qe so much that you didn't want it to end so you don't even forecast that it's going to end? >> no, no, definitely not. i didn't want qe3 to start. i thought it was a mistake partnership wasn't very clear that it was going to generate any great benefits. but once they started it, it seemed pretty clear they would do it for some time. so the turn of minds that they had in the middle of last year when they started talking about tapering, seemed quite odd having invested so much into doing it. but anyway, what seemed to happen is the doves seem to be happy now that payrolls have -- at a reasonable pace. now i think it actually will get better. >> and, you happen, there are times when people talk about the risk of whenever they talk about a recession, it's always like, oh, i'm at a 30% chance now. if you assign any probability that this ends really badly, this entire, you know, three or four-year period where the fed

looked like we orchestrated a free lunch. it looked like it worked. everyone says, wow, they're really skillful. bernanke is a genius, he's a student of the depression. it's going to work. we avoided all that pain and we brought the unemployment rate down with this. now we're going to get out. is there any way that we're now here and we can't get out and something really bad happens? >> yeah. i've got to say, it's more stories for next year than this year is the idea that we get a real fast pick up in wage increases in a pick up in rent which is by far the biggest in the cpi. i just wondered this time of year, where did that pick up in inflation come from? if that happens, i think the fed's ability to hold the yield curve interest rates and short-term interest rates down as low as they want for as long as they want could be compromised nastily. so what i'm watching over the course of this year is what happens to the wage numbers. the course of history tells you that is what they care about more than anything. once the economy starts moving, they start worrying about wages.

>> i was more scared of us going back into a slow period where they're unable to get out. i didn't know that it would be on the overheating side. do you ever think about these things? i mean, are you -- >> all the time. all the time. and, you know, people say that, you know, they've never orchestrated. they ran a -- that's right. they've never done qe. they've never had a $4 trillion balance sheet and they've never brought it back down to normal. joe, i think that's what a strlt bank is designed to do. the theoretical process, the idea of going up to the moon was a theoretical until we actually did it. >> and we got the moon rocks. what did we get out of that? >> the and we only got the moon rocks. but we showed that we could come up and back down. but the theoretical idea was when we hit the zero level down, the fed could buy@assetes and they bought assets. and whether or not they -- how

effective it was, qe2 is 1, qe2, which was more effective? but i don't see it as a free lunch as an impossible kind of thing that could work. >> after tworld war two, the fed and the treasury cut a deal and the fed signed all the treasury's debt and they did it and it worked out and it was no problem and that sounds a lot like qe. >> it takes time to get out of it. >> the s&p futures is the way to go. >> my point to ian is whether or not the fed -- this was an interesting question. he wages some scope to rise and that will be a real if he had test for the federal reserve because markets will be spooked by rising wages, only spooked about inflation. but the output gap idea, which is that we have lagged blind in our production suggests maybe the fed should give it some scope to run rather than

clamping down on the economy at that point. >> absolutely. there will. it's a question of degree. wage growth is now running at about 2% and arrive to 3% wouldn't scare anybody and it should be welcomed. the problem is if it stabilizes at 4%, it would be okay. but if they thought it was going to accelerate further, that would be a problem. 4% wage growth has scared them in the past. >> we should be so lucky to have that problem. >> ian, i'm trying to figure out how you end up being right about the taper, in other words, they did the wrong thing by not waiting until june. that's probably what's going to happen. anyway, thank you. >> thank you, joe. >> it's early, i know. >> coming up, we have a big "squawk box" exclusive. is value investor lee cooperman losing any sleep after a five-day losing streak for equities? he's going to tell us what he is holding in his valuations for right thou. and then a super model is going to join us. >> what did we do for this? >> i don't know. i saw her right before. in fact, there was a tweet.

anyway, we're going to have her and more. quick look at the weather. nice day, beautiful tomorrow. tomorrow is full of promise. we can come back tomorrrow. and we promise to keep it that way. driven to preserve the environment, csx moves a ton of freight nearly 450 miles on one gallon of fuel. what a day. can't wait til tomorrow.

welcome back, everybody. we are keeping an eye on u.s. equity futures. right now, dow futures up by 95 points. but given all the volatility that we've seen lightly, it's anyone's guess as to where this ends up. when we return, a super model's crusade. petra survived the 2004 tsunami. now we will hear about hurry foundation's latest project right after this. i always say be the man with the plan

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welcome back, everybody. supermodel petra nemsova is on a quest to rebuild schools through her happy hearts fund. we talked to her in davos about her latest project. >> we announced that haiti is

open for business. we can report what's changed in haiti and we did a panel, the ceo of heinekin, digicell and others. there are success stories. it's growing. there are so much result from a business standpoint. we are excited. 4.3% of growth. there has been actually even in other sectors lots of great changes. now believe it or not, haiti is the safest country in the caribbean. >> wow. >> with seven casualties for 100,000 people, more than in any other caribbean country. it's good to report on and exciting to be back. >> you know this firsthand. you live there and see it firsthand. >> i lived there for one year now. i see the progress. almost every day when i'm there. and it's really exciting.

>> it was obviously a horrible experience for you but it was life-defining. were you this charitable, this philanthropically minded before? it's who you are now in large part because of that experience, no? >> five years prior to the tsunami, i into you that my goal in life would be to help children, especially through education, but the tsunami was the catalyst when actually everything materialized and my focus became -- the beginning it was like 80%, 90%, then it became 60% of my time focus on charity work with happy hearts. definitely changed my life a lot. you know, after being on a palm tree and holding on and hearing children screaming for help and after half an hour, not being able to hear them anymore, knowing that that means they cannot hold on, at that time i was trapped with debris and i

didn't have a choice to go and help them. after i recovered, i had a choice. i had a choice to help. today i have a choice. we all have a choice. and having a choice is incredibly powerful. >> if you want to check out our foundation, go to happyheartsfund.org. but she was remembering back, what had happened ten years ago and just describing why this was so important to her, it was pretty moving to hear what had happened and how she wants to be able to make sure she can help children now. >> unless -- i mean, when i saw the movie which -- it trivializes what happened. she said it was really -- >> she said she was proud of them for not changing it or hollywoodizing it. >> she was up in a palm tree and the worst thing, like in the movie, she was hearing the cries for help. >> the whole play was in tears in the end. >> eventually the cries for help go away. >> just stopped. >> yes. >> it was a heavy movie. >> it was filmed at the same

hotel where she was. >> right. coming up, are investors underexposed to risk? lee cooperman thinks so and he also says there's plenty of stocks out there to buy still, right now. he'll join us next. and making his way to the set, today's guest host, former citigroup chairman dick parsons. >> he's described as restauranteur. >> what are those guys that help you with your wine? >> a sommelier. >> yes. >> he's ready to talk cable. >> what about cable? it's going to happen, isn't it? [ tires screech ]

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lee cooperman of omega advisers tell us why investors are underexposed to risk in a "squawk" exclusive. today's guest house ran a media power house and was chairman of a banking giant. dick parsons talks cable deals, the market, bitcoin and more. the great divide, how the nation will tackle the growing issue of inequality. the second hour of "squawk box" begins right now. good morning and welcome to "squawk box" on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. our guest host for the remainor of the show is richard parsons, former chairman of citigroup, senior adviser at providence

equity partners. >> sommelier. >> what's the name of the restaurant. >> two. >> two restaurants. >> one is minton's. >> that's huge, re-opening. >> and one is called cecil. >> that just opened. >> both just opened. >> good review, i saw. >> decent. >> a strong review from "the times." >> strong review, right? >> yes. >> don't undersell. >> you need to be invited. >> do you? that's the question. you're invited. >> can i get a reservation? or is it such a hot ticket it's impossible. >> i'll take the three of you. >> can i get a table near a waiter? ask the mater d, i'd like a table near a waiter. >> you get paid for this. >> what do those guys do, nonexecutive chairman. >> hey, hey, earnings are out. >> let's get to phil lebeau. >> fourth quarter earnings beat

from ford coming in with 31 cents per share is the earnings for the fourth quarter versus the estimate on the street, 29 cents. 35.6 billion versus the estimate of 35.1 billion. this is among the most profitable full-year earnings in terms of pre-tax profit for ford ever, certaining $8.6 billion, 600 million more than in 201. the fourth quarter, slight improvement in operations in north america. is why the company reported northern american profit margins coming in, 9.9% for the full year and for the company, 3.1% operating margins for the fourth quarter, and 5.4% for the full year and one thing i want to know here, guys, when you look at all the areas, north american is strong, made $106 million in asia-pacific. in the past that's been an area they struggled. in europe, they lost again, 126

million in south america. we should point out, they'll be talking on their conference call about the increased risks in emerging markets and their concern particularly when it comes to south america, not enough to change guidance for 2014 but enough they're going to be talking about this and how they're going to be prepared to move quickly if things continue to go south when it comes to these emerging markets. again, guys with be they beat the street, 31 cents versus 28 cents. >> pfizer is a dow component, isn't it? my mind is mush. 30.25 to 30.50 is higher than where it closed. it closed at 29. 60. the revenue expected was 13.346. and where's the actual number? i don't see the actual revenue number on pfizer at this point. they are looking for adjusted next year of 2.20 to 2.30.

full-year revenue of 49.2 to -- 13. billion. that's the revenue number, 13.6ing with which is above the 13.346. lipitor revenue, that's something to look at. remember what happened? that was the biggest selling drug in the world? 600 million. still amazing they can do 600 million. >> in the generic world. >> lyrica, 1.26 billion for lyrica. celebrex came in at $800 million. >> our parent company also reported? >> comcast also did report. and there are -- there's some special things going on here, some adjustments. there's a higher tax rate that analysts apparently did not know about which makes the bottom line number, which is never the number you would necessarily lose on comcast, obviously. it's more of an ebitda story

anyway. >> cash flow, too. >> most of those -- >> what's that? >> free cash flow was up 7%. >> for the year. >> for the year. >> for the year, yes. out of all -- there's about ten different things that you look at for comcast in almost every area, it was above expectations. one of the things we heard, remember, after how many quarters after losing video customers in the fourth quarter they were able to add 43,000. that's something, isn't it? >> for a long time, it looked like -- >> cord cutters. >> cord cutters but it wasn't as important anyway because you're doing data, into homes you're not internet, not as much video. to be able to turn that around, that's significant. it's weird that all of a sudden malone is excited about cable again, too, right? >> i think malone has always been excited. he told me once that his biggest mistake or regret was selling tci.

>> yes. >> when he sold it. he's been looking to get back in. he's back in now and he's a player again. >> when you came on the set you seemed to indicate you did not think time warner was going to be sold, cable. >> no, i don't think -- i don't think they win this one. i think time warner will hang in there. >> time warner hangs in independently? >> yes. >> do you think -- where are you on the idea that comcast comes in and tries to buy it? >> buy parts of it. >> right now they're talking about buying parts. >> i don't think the regulators would let time warner and comcast come together. too big. >> comcast had been looking at some of the pieces for charter. >> why do you think charter will look -- they're going to make a bid because they already have. >> they made a bid. >> why do you think time warner -- >> one, it takes money. i don't know where the money comes from to do an entire time warner deal. "b," time warner has capable

management. they have a heck of a franchise. their stock is full right now. that's a tough take. >> let's -- let me mention comcast again so we're on the record here, the revenue number, 16.9, above the 16.6. the adjusted personings per share number is 6 cen6 cents quarterback which is 2 cents below the street at 68 cents. there's also another net number of 72 cents. then you go to all this other stuff. >> i don't think that's right. >> i've got an indication. >> 52.62 is the bid. 54.49. that's where it is trading. consolidated operating cash flow was up 7% to $5.6 billion. and then free cash flow consolidate, $1.4 billion. most of these, i'm told, are

above where wall street -- on a first call machine we have all the estimates, you need even more detailed -- you need an analyst. >> that's up 8.8%. remember when everyone thought the theme parks were the biggest waste? that was the original plan. >> total customer ads for video, high speed and voice, a 29% increase. high speed internet adds up 379,000. nbc had a really good period and was -- even without sunday night football, i think did really well. nbc ended the fall season number one, even if you take out "sunday night football." >> extraordinary turnaround. >> they mention the cable networks, as usual, the cable networks drove profitability. implied there is premium. >> they don't usually put it in there. >> it's a modest thing.

>> read between the lines. >> right. >> if they were to single us out, you don't want everybody else -- >> right, right, right. >> they give you leverage. >> right. >> quietly. quietly. >> let's talk more about the stock market overall. if you are less than thrilled about the start for 2014 our next guest says have no fear. hedge fund legend lee cooperman says there are plenty of opportunities out there. his mega advisers has up more than 32% last year. >> nice to see you. >> there are a lot of people that have the jitters but you're still positive on the markets, correct? >> yes, basically, i think corrections like this create adjective but they create opportunity. the correction is to be expected and is healthy. too many managers, investors were on the same side of the boat. you know, i look at an exhibit that bloomberg carries that

lists out about 21 forecasts for the market by the various leading strategists. in 20 of the 21 had the market up in 2014. only one had it down, the average expectation was 1950 for the s&p. along comes this emerging market issue, creates a 3% correction, a lot of individual stocks down closer to 10%. if you look at the emerging market issue, while not insignificant, it's not major. 75% of the world's gdp is currently stable or expanding. the u.s. economic growth is accelerating a bit. europe is turning up. japan is expanding. china's growing somewhere in the area of 6% or 7%. emerging market economies maybe account for 10% of s&p 500 earnings. if you throw in china, maybe it's close to 15. it's not an issue they could dramatically affect the big

picture. i would say, you know, i look at it as a correction in an ongoing bull market. a lot of things to worry about. i worry about them. you mentioned one this morning, i've been very concerned for a long time about income inequality, equally concerned how the politicians might want to deal with that. as i look at the issues, i have to come down on the side that the market should have another positive return year in 2014, not nearly as much as the close to 30% last year but i think we could have an 8%, 10% type of gain for the year and that would give me the opportunity to find stocks that would do better than that. i could give you a long list of things as to why. the first part i make, bull markets die from excesses, most often by discounting recessions. there does not seem to be a recession on the horizon. secondly, on your lead-in, a point i've made as far back as three years ago on your program, the fed created an environment

where there's no effective competition for equities at the present time. you're sitting on cash because you're worried, you get zero. you put it in u.s. government bonds, you get 2.7. i don't think that's an attractive risk of return. high yield is not high yield anymore. it's 5.8, 5.9%, down from 25% in november of '08. then you're left with common stocks trading at reasonable valuations, not bargains but keep in mind, you know, when you talk about bonds, bonds are homogenius. if you're dealing in aaas or aas, they work together. the stock market is heterogeneous. my job, with my team. try to find out things that are cheap relative to alternatives.

the movement out on the risk curve by individuals and institutions is not yet complete. a point i've been making. but if you go back to '08 which was transformative in people's financial net worth and their psyche, back in '08 and '09, people said i'm just going to own "t" bills. i don't want to take any risk. i took a big shellacking. then they wake up and say "t" bills are returning zero. i can't live on that. i'll buy "t" bonds and take the valuation risk. then industrial bonds are yielding 4%, 4.5%. after a while that doesn't do it for them. then they go to high yield bonds, then into structure credit. now many of the fixed income investors are looking to equities for a better rate of return. i'm not a pollyanna. i think there are a lot of

things to worry about in the market but i just don't see the conditions yet that would lead to a significant decline. i would look at this opportunity as a buying opportunity. the only things that are going to get me negative, one, if i saw a recession coming and the economic data read exactly the opposite of recession. second, valuations get that a danger zone. last time i was on the program, i said to me it's all about the multiple that you want to pay for earnings. because with earnings growing modestly, 5%, 6%, it's really the multiple that's going to determine the valuation. i think a 16 multiple is reasonable. we can put a 16 multiple, let's say the consensus estimate of $117, i'm going to stand like a statistician which i'm not. 16 times 17 is 1872. the market at the end of the year was 1848. didn't leave room for appreciation. maybe by the end of this year if

the world was looking okay going into 2015, add 6 on to that target. earnings go up 6%, put a 16 multiple in a higher number. >> do you think the 3% correction isn't that big of a deal. do you think there's more of a correction to come, that people should wait? >> i'm thinking it could be somewhere 3% to 8%. but again, the important point is it a correction or the end of the bull market? if it's a correction, it's an opportunity to establish positions or add to positions that are attractively priced. if it's the end of the bull market, that's a different story. bull markets end in anticipation of recession. like i was saying before. we don't see that. bull markets end when you get into a speculative level of valuation and people start doing silly things. we're not seeing that now. you see a little of that in the ipo market. you see maybe a netflix.

by and large stacks are rationally priced. a recession, a speculative blowup or disappointing economic growth. 1% or less which threatens the growth and earnings or alternatively, i'd say the flip side, strong economic growth. the bond markets deteriorate into a significant way and that brings the fed into play. >> here's the thing. 2013 was the tear from a strategic point of view, if you bought the dip you won every time. you thought the fed was going to come rescue you. 2014 may not be that. to buy the dip now, i just wonder if you think there still could be a larger correction coming and therefore, what do you do? >> well, i mean, look, it's all about what you own. if you ask me, i'm going to disregard the advice of arthur burns. if you give a number, don't give

a date and if you give a date, don't give a number. this year you'd be lucky if the s&p traded on 1600 on the low end. i think you could go as high as 2000. >> nobody knows arthur burns. i think you mean arthur brooks. he was not a good fed chairman, was he? >> i think he was well regarded. >> who was the one that was really bad. >> i knew him as a professor of columbia university, my alma mater. >> there was one with an "m." >> i know some of the stocks you like right now and our viewers love to hear about this, sandridge, sprint, sallie mae, citigroup, is there a common theme for these or a couple of common themes? >> cheap assets or cheap relative to their growth rate, you take an aig, the markets, we're talking before, 15, 16 times earnings.

aig is an 11 multiple, sells a significant discount to book value. returns on equity are improving which enable the market to ultimately reprice the stock closer to book value. back value is growing and the stock is 47-ish, 46-ish. mr. parsons had probably more knowledgeable of two companies we own, citibank and we own comcast as well. we mentioned sandridge. it's interesting. people wait for activists to show up in a company. an activist showed up here at tpg. they launched a proxy fight, they won. you read the material, they filed on their website. the asset value is 11 to 12. they owned it before they showed up. we thought the asset value was at least 10. it's an improving situation.

we think the underlying assets are trading around 6. they have a big analyst date coming up march 4th. we think they're going to give you a good story for the outlook over the next few years. there are a lot of things like that. the energy group, we like halliburton, aig, sallie mae, all these things have a common theme. you have underlying asset values, they're not being properly capitalized by the market. we think the asset value is substantially in excess of where the stock is trading or they have a growth rate higher than the market or some combination of fundamentals that scream to us buy me. not having a -- excuse me? >> arthur burns apparently lit the fire and g. william miller was the guy i was thinking of who poured gasoline on the fire. he was a carter. you know, it's not his fault, really. he was a carter administration guy. but arthur burns isn't historically looked at too

favorably either at least as far as this was concerned. >> i was not judging his success or lack thereof. i was judging his quote. >> have you ever owned comcast? >> he said. >> i said i've owned it for a long time. we like brian roberts. we like the business. >> i want to look at a two-year chart. look at this. there it is. we know the cable business has always been kind of a horse but looking at nbc this time, that's where you're seeing -- 11.5% increase in revenue in the fourth quarter. for the year, if you exclude super bowl and olympics, both numbers are up a lot due to higher advertising. prime time is starting to work. look at the way suddenly that this company has been managed versus what it was. that's incredible. >> lee, thank you so much. great talk to you. we hope to see you on set again soon. >> very good. thank you. nice to be with you. >> you, too. this is you, isn't it? >> could be.

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welcome back, everybody. we've been keeping an eye on the

futures this morning. after a rough week last week, this morning the futures are indicated sharply higher. dow futures are up above 90 points. the nasdaq is still getting hit, it's down by about 9.5 points below fair value. part of that is because of apple. >> coming up, an update on google glass. you'll want to hear this, when we return. time now for today's aflac trivia question. which u.s. high school had the highest standardized test scores in 2013? the answer when cnbc "squawk box" continues. ♪ yeah, he's clean, boss. now listen to me, duck. i have an associate that met with, uh, an unfortunate accident. while he's been incapacitated, somebody's been paying him cash. now, is this your doing? aflac? now, if i met with some such accident, would aflac pay me? ♪ nice. this is your stop. [ male announcer ] find out what aflac can do

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welcome back to "squawk box," everyone. i'm becky quick along with joe kernen and andrew ross sorkin. let's take a look asome of the earnings reports out this morning. ford out with numbers of 31 cents a share for the fourth quarter. revenue coming in above forecast. ford still lost money in europe in 2014 although less than the year before. that stock up by 3% this morning. nbc universal parent comcast earning 66 cents a share for the fourth quarter, excluding certain items, that was 2 cents

below estimates because of a higher than expected tax rate. revenue beat expectations and comcast raised its quarterly dividend by 15%. free cash flow is an important number to the street. that one was better than expected. that stock up by 2.9%. dupont beating systems by 4 cents, fourth quarter profit of 59 cents a share, helped by a big jump in sales by agriculture. that dow component is helping things out, too. >> one encouraging note as the poll suggests, some public support for the agenda to curb income and equality. 21% want the government less involved. >> this is something we've been talking about the state of the union address coming up. >> i don't know if i'd call that overwhelming public support. we'll see. altman is here to tell us what the true -- you know what, we

agree so much, we're going to go to liesman. you want to hear the results? it's growth. we all say growth but no one has ideas. anyway, in the state of the union, the president said to make a strident call for the nation to address the problem of income and equality. steve liesman kicks off our series of inequality, called the great divide. thanks. scary music. pessimism. >> is that it? i was hoping for across the great divide by the band. we didn't get that. let's talk about inequality. there are two views. one view, the rich earn more than the poor and the gap is widening. there's an exclude inequality story which everyone lives better and the rich/poor gap stays stable. let's look at it from income and what we're using is data from the congressional budget office which from what i can tell is the least controversial set of

data. let me tell you, this whole issue is incredibly controversial. here's the income growth of everybody else from 1979 through 2010. here's the income growth of the top 1%. you can see it's up. here are the numbers that the cbo provides. what you see is that the latest income group, 49%, the middle income by 40%, the top 10% by 64%, the top 1% up by 201%. let's look now at the controversy -- first of all, let's look at the split of incomes. here are the lowest income groups, the middle income groups and here is the share of income of the highest income group right there. but also as many people point out, here are the federal taxes they pay. the extent to which there's redistribution that's needed it's already taking place. that's a strong argument of the conservatives right now. they're paying the bulk. they are paying a lot of the income but they're paying the bulk of the federal taxes. let's move on to the issue of the debate over the consequences. the causes of this.

zero sum is one issue here, that the wealthy are gaining at the expense of the poor. and that the wealth at the top 1% is not linked to the economics of their wealth. in other words, for example, ceos would work for much less than they're being paid or their pay is not equal to their economic output. those are closely related issues. now we're in the center here. this is where there's the most agreement is the consequence -- the causes of globalization, the ideas, if you have a good idea, it profits globally. if you have low skills, you compete globally. essentially, robert frank will talk about this later, two different processes going on at the top and the bottom that lead to inequality. the rich profiting more from innovation and the low not doing as well because of the competition. returns to education have risen in that world. a lack of unionization means there's less bargaining power on the part of low skilled workers. there's also a social component to the causes of inequality, the gains of the wealthy are passed on to the children increasingly

and one-parent families lock in poverty. what's interesting about this, if you take a broad view, the center, the globalization issue is probably where there's the most consensus. even on the right and the left, both sides agree to some of what's going on on either side. robert rice says the social issues, talking about one-parent families is something that needs to be done. the people tend to agree on the consequences here. richard wilkes says social problems are higher with inequality. there's a host of things out there. we don't know if it's causation, we just know it's correlation. this say huge yigs that needs to be discussed. i think there's general agreement, guys, that nobody believes we can or should strive for a perfectly equal society but whether or not we've gotten out of balance is really what's in question.

joe? >> having come back from davos when we talk about income inequality in the united states, it pales in comparison. if you want to take a global look at income inequality, 40% number on the low end, is that inflation adjusted? >> yes. they would adjust it for that. either way, if both sides are not inflation adjusted, it doesn't matter. >> right. but the standard of living. >> that's the absolute argument. aei did a consumption study which is interesting if you look at what is being consumed by the poor versus what's being consumed by the wealthy, there's less inequality. >> the housing bubble, the 1% owns stuff, assets other than housing. when the housing bubble burst, all the people that just own their house, they look poorer on a relative basis than the people that had a bunch of money in the stock market.

>> the fed's role in inequality is another issue. >> welcome roger altman who is here as well. chairman and founder of evercorps partners. >> do you think the conversation should be about what i call the inequality of opportunity, meaning trying to rise up or does it have to come on both sides, up and down? top and bottom? >> i think one of the things that's being missed in this entire debate is that we need higher growth in this country. >> right. >> even though we're turning the corner to some degree for 2014, i myself think we'll see about 3% growth, which is a substantial step up. it's not nearly high enough to address the biggest single problem of all, which is the median household income in the

united states is 7% below the precise -- precise is peak. i happen to think the president is largely right about inequality but the steps that would accelerate growth are the same as the steps that would diminish inequality. >> i don't disagree with you. i think growth should be the answer to everything, however, there's an argument to be made that growth on its own will benefit both the bottom and lift them up but will benefit the top and to the extent you talk about social unrest and just the fact that there's a chasm between everybody, that doesn't change the game. i'm not saying you should -- i don't want to go necessarily after the top but in a bill de blasio world, that's part of the party that you say. >> i think there's an opportunity to have a more positive agenda. as i said, you've got incomes falling and you have a third of american families earning $40,000 a year or less and among

many other things they don't have enough purchasing power. in an economy where two-thirds of gdp is represented -- >> do you think the president gets that. >> tonight i think you'll see a focus largely on inequality. >> is he going to talk about it in the context of growth or in the context of top down? >> redistribution. i haven't seen the speech. largely the second. largely the degree to which -- >> redistribution part. >> where we have too much inequality of income in the country. >> there's a perception that growth requires trickle down to spread it evenly and most people at this point -- >> i don't think that's true. >> the most important thing we can do in this country -- >> grow at 4.5%. >> that's right. but to raise incomes. the answer if you look at those simple charts on lifetime earnings is improve education. the good news is -- >> right and left agree on that. >> the single most important thing you can do. >> improving it in different ways. >> not really. >> it's good news.

since 2000, high school and college completion rates are moving up after three or four decades of stagnation. >> i get this, you have to jump in. >> jump in. >> you need to do the same thing whether you're focused on growth or focused on closing the inequality gap. what are those things in your judgment? >> improve education outcomes. we do in fact need a big initiative and get past the politics and set up an authority which would be self-financing, paid for by user fees. we do need an infrastructure agenda which would improve productivity among other things. as i said, you've got a third of the american -- a third of americans earning 40,000 a year or less. within that, half of them earn 20,000 a year or less. first of all, that's too low for a country this rich and second of all, they don't have enough purchasing power and it's slowing growth. there's a lot of research going on as to whether inequality retards growth.

>> there is. unequal places grow slow. we said that. >> the third thing would be a short term agenda starting with expanding the earned income tax credit and not, for example, cutting food stamps. bad idea. >> the research also shows it doesn't matter how you get there. when you look at two countries that have very low inequality, sweden and japan, they both get there through very, very different means. one is redistribution, one is not. the important point that researchers make you have to get there and that will reduce some of the social consequences that seem to be correlated -- >> even larry summer said, it makes no sense to narrow the gap by making anyone poor. >> right. >> is that true or not? >> because he said that, doesn't maic it so. >> if that side set it. >> i think the thing that's been missing, nobody focuses if you do it through income redistribution or a growth agenda. what do you do with the money? do you take the money --

>> that is key. >> do you take the money and put it into extended sick care or extended, you know, unemployment? >> there's a notion that rich people don't spend any of it. give some of it to poor people who will spend it. >> things that aren't productive or do you put it in education and infrastructure? >> i'm talking to republicans who do not oppose the notion of redistribution, that is a progressive tax system. but where the opposition is exactly what you're talking about. what you spend the money on. >> i heard a stunning statistic over the weekend that the top performers in terms of high school education and the bottom quartile of income get the same access to college as the bottom quartile performers and the top quartile of income. if that tells you that in this country, it is much more about how much money you make and where you come from than it is about your abilities, i don't know what does. >> this notion of the social aspect of inequality is most

interesting. more and more of the wealthy are able to pass along these opportunities to their children. >> that's the education problem. >> and robert frank will have a whole series of stories, including on the issue of mobility. it hasn't gotten worse but it ain't great in this country. that's something that's worth talking about. >> the answer to your question, education and early childhood education. the research is unambiguous on that. if you look at, i'm sure you have, the differences between the children of affluent families and how much education they're getting both at home and in school versus how much education of less affluent families, poor families with be you see the difference. the solution is early childhood education. >> the problem -- i couldn't agree more. we finished a report to the governor where that was the number one bullet headline, start sooner. start sooner. get them sooner. put more in. >> on the pre-k side. >> yes, but the problem with that all is, those things take time. >> they do.

>> education takes time. >> it does. >> rebuilding infrastructure takes time. >> it does. >> how do you get politicians who are dealing with a population, we live in a world where everything happens now. how do you get folks focused on that? >> i think that's what we'll hear tonight, too. it's not going to be what you're talking about. and do you think -- >> there will be some focus presumably on some of the short-term issues we talked about. >> the short-term stuff is not going to help. we just said it. >> and it's not even the past. >> some of the short-term measures would help. i agree with you, i don't think many of them -- although i'm not sure why the administration is not talking about the earned income tax credit. >> 2014, another way to try and game that out. >> the focus of the speech is that almost no legislation will pass this year. >> there's an extraordinary

amount of agreement by both parties, earned income tax credit, republicans are calling for that. eitc, they're together on education they're together on, strikes me if we focused on the areas where there's agreement something could -- >> the theagreement on growth. >> right. >> thank you. much more from our guest host when we come back, dick parsons. he's our guest host and the former citi chairman. and in the next hour, where is the world is mark mobius? we'll ask him what argentina and other countries want to hear from the fed. first, martin marietta materials is buying texas industries for $1.2 billion in stock. shares up on the news. more about this. "squawk box" will be right back. i always say be the man with the plan

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welcome back to "squawk box" this morning. take a look at the futures, see how it is setting up. s&p 500 up a little over 6 points. the nasdaq on the other side of the ledger looks like it will open off about 11 points. making headlines, the government and leading internet companies have agreed to a compromise on data disclosure. this is important. the deal will allow companies to reveal how often they are ordered to turn over information about their customers. national security investigations and reporting will be in general terms. companies will have to wait six months before releasing information about intelligence orders. in other news this morning, the ap reporting that the u.s. is quietly funding research to prevent anyone from spying on the nsa's surveillance of americans phone records. the government wants to develop a secure search technique to prevent phone companies or eavesdroppers from seeing who the u.s. is spying on.

what do you make of that? >> national security. this is a tough issue as you know, this is a very tough issue. there are two sides. depending on how close you are to an event, people land on one side or the other. i think we're actually in a healthy process, working through and debating and figuring out exactly where the puck should land on this one. i think it's complicated. >> when we come back, we'll talk more about the economy, the markets and the state of banking with our guest host, former citi chairman dick parsons. also, labor secretary thomas perez joins us ahead of tonight's big state of the union address. check out the futures right now. you'll see that things are looking better, at least for the dow and the s&p 500. dow futures up by 74 points, s&p 500 up by 6.5, nasdaq down by just over 10 points, largely because of what happened with apple. stick around, "squawk box" will be right back. ♪

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welcome back, everybody. let's get back to richard parsons. we've been talking a little bit this morning about what's been happening with the emerging markets. is this really because of the fed tapering? we have a fed meeting starting again today. is that your expectation, that this is all kicked off because liquidity might not be as flush as it has to this point. >> i think there's a ton of liquidity floating around the world. i think people are focusing on risk in a somewhat different way. it came out of 2013 with a sense

of euphoria. i think the emerging markets just sort of what's going on in the emerging markets is causing people to say, let's pull back a little bit. i tend to agree with lee. i think that -- who spoke earlier, because i think you'll see the equity markets at least here expand this year and grow again. i think it's just a pull back. i think there's a lot of, lot of liquidity in the world. >> there's two schools of thought. we had summers on. i keep channeling summers. >> you and larry are tight. >> his notion is that demand has been so weak. he thinks we need to do stuff here, make some not necessarily ill advised investments but do the infrastructure. do everything we need to do. it's so cheap to borrow. they have sopped up the liquidity in the emerging markets. >> people thought there was great opportunity there. we're finding they use the big word, infrastructure.

they're doing some things i am personally in the african market, trying to find opportunities and they're just not ready to take that liquidity. that's what people are finding out, you can provide opportunity. but they don't have the infrastructure to deal with it. where's that liquidity. >> maybe we don't either. >> i think that liquidity will come here. >> do you think we have a demand problem? should we do something big fiscally infrastructure wise? >> i think we should do something big infrastructure wise for a different reason. i don't think we have a demand problem. i think we have a crumbling infrastructure problem and ultimately that's what your economy is based on. that's what government can do. >> it's hard to see it pay off. >> that's what summer said, rebuild kennedy when you have low interest rates. >> that's what gon governments can do. governments can provide system for educating people. governments can provide an infrastructure for talented and

entrepreneurial people to come in and build businesses on top of. government cannot itself build sustainable jobs. >> i love the guy's idea of building natural gas filling stations all over the country. >> that will happen when it needs to happen, the private sector, right? >> but will it have to be a public/private. it's a checken/egg. if the government can help, you may get there quicker. labor secretary thomas perez, he'll talk about income and equality. former wells fargo chairman and ceo, dick kovacevich, he never holds back, on what he would like to hear from the president tonight. "squawk box" coming back after this. ves. 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.

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♪ this land is your land ♪ this land is my land ♪ from california ♪ to the new york island >> welcome back to "squawk box," here on cnbc. first in business worldwide. the cabinet secretary. >> i know. i'm excited. >> okay. i'm joe kernen along with becky quick and andrew ross sorkin, our guest host this morning is dick parsons. former chairman of citigroup and senior adviser of providence -- read between the lines. providence equity partners. andrew? >> we have corporate news to bring you this morning. dupont reported better than expected quarterly earnings. the company is authorizing a new $5 billion share buy back. fellow dow component pfizer posting earnings of 56 cents a share, a 4 cents beat. revenues topping expectations and then there's ford, ford earnings beating the street. the automaker posting record

2013 north american profits. and a smaller loss in europe. shares of cnbc parent comcast getting a big boost in early trading. earnings were below estimates on a higher than expected tax rate. but revenues topping consensus. the company raising its dividend and stock buy-back program. nice going. >> i don't care. go back two years. it was a $20 stock. you supposedly know how to run a media company, right? >> supposedly. >> look at nbc. that was never coming back. burke is like something's happening, isn't it? >> the combination of brian roberts and steve burke. >> i men the brian roberts, too. >> tough to beat. brian was my favorite competitor when i was at time warner. he's a terrific guy, a terrific young man and thoughtful guy. he knows what he doesn't know, which is the beginning of wisdom as they say. bringing steve burke in and putting steve in charge of the nbc thing was a master stroke.

i think you'll do well for a while. >> go on. go on. >> no. don't. stop. >> i'm the guy not on payroll. >> the nbc thing kind of snuck up on us. >> it did. a year ago -- >> it started with "the voice" and "sunday night football." >> "black list" is awesome. i finished the last season last night. >> they may try to buy the thursday night package from the nfl which could be a game changer if they get that. >> all these stocks making for some interesting moves in the markets. take a look at where the futures stand right now. after a rough last week, the end of last week and beginning of this week, the futures at least at this point are indicated higher. the dow futures are up by 66 points right now. that is off their highs of the morning. up by 100 points earlier an as you saw with the volatility, things can change quickly. right now at least, dow futures up by 70 points, the nasdaq futures still under pressure, largely because of apple and the

disappointment there with people looking at the numbers for the iphone sales. asia overnight, the nikkei actually ended barely changed which is something to say. a lot of times after we see big moves here, you see bigger moves there. the hang seng was down slightly. in europe, modest advances. france right now is the biggest gainer up by half a percentage point. the president of the united states is set to deliver his state of the union address tonight. joining us to tell us what he's expecting to hear is thomas perez, the secretary of the department of labor, and mr. secretary, thank you very much for being here today. >> pleasure to be with all of you. the guests that we have around the table is you'll be hearing about income inequality tonight. is that the headline for you. >> i think you'll lear about a year of action that the president intends to take, which is designed so grow jobs, expand tune for everyone and grow the

economy. the year of action will be about a number of contexts, including working with congress to pass immigration reform, working with congress to pass an increase in the minimum wage. he's not simply going to rely on congress to get these results, because that's what the people -- the american people want. they want results. so he won't hesitate to take executive action to move forward to create jobs, to create fair wages, to ensure that people are able to punch that ticket to the middle class. you saw this morning, the president announcing that he intends to issue an executive order to increase the minimum wage for federal contractors. that's a down payment on this issue. nobody who works a full-time job should live in poverty. a big part of this better bargain with the middle class is making sure we reward work. if you're a federal contractor, whether a janitor in a building, whether you're serving our people in the military as a contractor, we want to make sure that you're getting 10.10.

this is a down payment to illustrate the president is about action and results this year. >> mr. secretary, no argument you don't want to see people who are working full time not having a living wage, not being able to get by. but there are disagreements from the two sides of the aisle on how you get there. we've heard from republicans but also democrats like roger altman who think rather than raise the minimum wage, the better way to get there is boost the earn income tax credit. that's a better way of making sure people do have a living wage. will that keep the president from being able to get anything else he wants to get accompli accomplished that he needs to get through? >> it's interesting. we talk about the minimum wage. congress has a long bipartisan history of raising the minimum wage. it was raised under the administration of george w. bush. one of my predecessors, elizabeth dole, called her role in increasing the minimum wage one of the proudest moments as

labor secretary. i watch with great interest in recent days. the conservative party in the uk coming out in favor of an increase in the minimum wage there. there's really historic bipartisan consensus. because as people like dick parsons know, if you want to grow this economy, it's about consumpti consumption, putting money in people's pockets. the bottom line is we've seen remarkable productivity growth of over 90% since 1979. but wages have only grown something like 3.2%. and so that's not fair. that's why increasing the minimum wage puts money in people's pockets. they spend more. businesses grow. the economy expands. and that's why this issue is so important to the american people. but it's not the only issue. the president, we're talk about how we make sure people have the necessary skills to succeed. that's what we do at the department of labor, is make sure that we have the training

in place so that these advance manufacturing jobs that are coming back to america, we have the ability to compete for them. i'm excited about the future. i think there's a lot we can do and this will indeed be a year of action. >> mr. secretary, can you talk more about where you just ended up? in other words, you know, training work forces and educating folks, because the jobs that are minimum wage jobs, you know, eventually, you know, always kind of fall out of the cue, they fall to the bottom, the economy and everything, races by them. we need to get people who have higher level skills to compete. >> sure. >> so are we going to hear about that tonight? >> sure. dick, i think that's a really important point. you look at the data. something like 50% to 70% of future jobs are what economists call middle skill jobs. you need more than a high school degree but not necessarily a four-year degree. that's why we have spent so much time investing in community

college systems, in building partnerships between businesses, community colleges, labor unions and workers. so that they can -- first of all, we can understand what the demand needs are of employers. i've spoken to manufacturers. they're bullish about america. there's a lot of reasons why they want to grow their businesses here, including but not limited to the cost of energy, including but not limited to the fact that we have a great employee pool. but we need to make sure that those advance manufacturing jobs, that people have those skills to compete. that's why we've been working hard to work and develop industry credentials. just like you have someone who's microsoft certified. you know what that means. we're working in the advanced manufacturing sector to create these credentials that are designed by the industry and with the help of the industry so that people can come out whether it's through apprenticeship or whether it's through some other training program with that ticket to the middle class.

i really believedicati educatio the great equalizer. the department of labor, we helped over a million people get a job. we're kind of like match.com for workers. part of that work is making sure we watch people to the training programs that employers need so they can grow their work force. >> mr. secretary, we talked about this in the last hour with roger altman. in terms of framing up the issue, are we going to hear the president talk about the issue of inequality in the context of growth and the inequality of tune or are we going to talk about it as both trying to raise up the bottom and push down the top? ultimately if we try to push that gap together, if you think that's what creates the potential for social unrest, how does the president approach the issue? >> well, first of all, stay tuned for tonight. the president will talk about the issue of opportunity. and the president doesn't talk about opportunity of outcomes.

we're not a society that guarantees the same outcome for people. what we are saying is that if you work hard, play by the rules, get the education that you so need to compete in this economy, we should reward that hard work with a fair wage. that there should be ladders of opportunity, that your lot in life shouldn't depend on your zip code. >> what about the redistribution side of it all? >> again, the president is really talking about -- there's really four pillars in my mind to a solid middle class and a vibrant economy. there's education. and that starts in pre-k and it's life long, including making sure that we have the skills to succeed and when there's a need to upskill, to keep pace with the growing economy that you're able to do that. secondly, that we reward work with a fair wage. there's too many people who are working a full-time job and living in poverty. that's why the president will address the issue of wage fairness.

thirdly, is the issue of making sure that if you work hard and play by the rules that you can have retirement security. that's something that's on a lot of people's mind. finally, the issue of health security. people are one accident away from a catastrophe. as a result of the affordable care act now, we've seen over 10 million people now getting access to health care for the first time. we're making sure that, you know, people with pre-existing conditions aren't left out of that loop. that's a key pillar to self-efficiency. >> in fairness, obamacare, it's worth noting most of the people that signed up could have already gotten access elsewhere, is that not correct? >> actually, that's not correct. let's go through the data. there's 3.1 million people now who are on their parent's plan. as a direct result of the affordable care act. there's now 6 million people who signed up on medicaid and as the experts have said, many of them were unaware that they were

eligible but now as the result of the existence of the affordable care act they've become sensitized. that's 9 million. there are 3 million more on the exchanges. we're making progress. i remember the ronald reagan album talking about medicare, talking about how medicare would lead to socialized medicine. i think he was on the wrong side of history. i think in the affordable air act, there are a lot of folks that will be on the wrong side of this history. this is a remarkable development. >> mr. secretary, going back to andrew's question about top down. >> sure. >> the four things you listed, sort of stronger and more educational foundation, what you call wage fairness, income security in old age, health care, all of those are costing items. they all cost something. where's the money going to come from? >> well, again, you know, let's talk about wage fairness for a

moment. we did a regulation recently in the department of labor to correct a glaring loophole in the wage and hour laws which resulted in almost 2 million home health workers not even being elle visible for minimum wage and overtime protections. i bring this up because here's the data on this group of people. 1.9 million home health workers, 90% are women. 50% are minority and over 40% are on food stamps or some other form of federal assistance. when you have wage fairness, when people are rewarded for hard work with a fair wage, one byproduct of that is that you're lifting people out of poverty, they're no longer eligible for a number of the benefit programs, whether it's food stamps or something else. and as a result, you're saving money. the current business model that we have, where we've allowed the minimum wage to reach its purchasing power that was in place during the truman

administration, is having the impact of having a lot of people have to get these federal benefits. i think one way -- one effect of having wage fairness is that you have less take-up of these programs. in the health care setting, you know, you look at the data in the aftermath of the affordable care act and you see that the inflation in health care cost is at its lowest levels in 40, 50 years. the affordable care act is playing a very important role in bending that health care care cost curve. i talked to a lot of employers that is a huge deal for them. because if they're spending less on health care, they're able to pour it into r & d or help raise their wages of their employees. these are not either/or situations. when you invest in education, that's the great equalizer. that's what my parents always told me. >> secretary perez, thank you for joining us. >> pleasure to be with you. >> thank you. watch the president's state of the union tonight right here on cnbc, starting at 9:00 p.m.

eastern time. coming up next, mark mobius, spanning the globe, looking for investment opportunities. we'll catch up with him right after the break. as we head to the break, take a look at shares of american airlines group in its first report after the merger of american and u.s. airways, the company earning 59 cents per share for the fourth quarter, 4 cents above estimates. "squawk box" coming right back after this. [ male announcer ] once, there was a man who found a magic seashell. it told him what was happening on the trading floor in real time. ♪ the shell brought him great fame. ♪ but then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their trading platform.

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welcome back to "squawk box," everyone. the futures have been indicated higher all morning long. the dow futures up by 80, s&p up by close to 7.5. home builder d.r. horton reporting first quarter profit of 36 cents a share, better than the street was expecting, a beat by 7 cents. revenue was also above estimates and new orders increased by 4%.

shares of iron ore cliffs natural jumping by 13%. casablanca capital clift takes stake in cliffs natural resources. >> remember the merger between cliffs and alpha natural. >> i don't remember. >> that was in the deal book, i'm sure. you have a staff that does that now. still to come, the former ceo of wells fargo on tonight's state of the union address. what he's expecting to hear on jobs, the market and the economy. we're coming back right after this. [ male announcer ] there is no substitute for experience.

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welcome back to "squawk box." joining us for reaction of the data and a bit more on the fed survey is steve liesman. i also want to talk to you about bernanke. >> this is it. >> the swan song, the finale. >> i want to look at whether or not the incoming board is going to be more or less hawkish or dovish and whether yellen is seen as more or less hawkish or dovish. 38% think it will be the same, 35% more hawkish, 26% more dovish. how about yellen compared to

bernanke, 51% think it will be the same, 47% more dovish. so a little bit more dovish perhaps on the chairman, a little less dovish when it comes to the board. >> do you want to grade mr. bernanke's legacy? "the wall street journal" had -- >> i go with the survey, very consistently. he's continued to score between 2.7 and 3.0 over a series of questions that we've asked over the fed survey. and the description seems to be the same, he did very well at the beginning and less well towards the end, with a little bit of -- some say incomplete. >> you say very well in the beginning. >> right. >> '08. >> not precrisis. >> '08, '09 period of time.

qe 1 and a general sense he overstayed his welcome. people criticized them, over time they tend to be viewed better. that's his view. >> on a scale of 1 to 10 did you say? >> no. >> a 3? >> no, "a," "b," "c," "d." are you not paying close enough attention. >> i can't imagine you'd say 2.9 to 3 on -- >> if you were going to give an "a," "b," "c," "d" kind of grade to mr. bernanke? >> b plus. i think he not only did well in the beginning, the period you're talking about, i think they did extraordinarily well. >> i know exactly what i'd give him. >> how do we know? we don't know! >> no, no, no. we got through the '08 crisis and bernanke played a big part in that. was really touch and go.

it really was touch and go. i was there. >> is that an up side or down side five years from now. >> it's hard to grade the last several years. joe's right. we don't know how that's all going to play out. it could play out exceedingly well. >> fingers crossed. >> or exceedingly poorly. >> do you give yourself incomplete as a parent because you don't know how the kids will turn out? or do you give yourself a good grade because you're doing the best you can. we'll measure how much each kid spends on the psychologist's couch over time? >> you didn't give him a third option, a fail. >> well intentioned. you know, well intentioned and effort doesn't sometimes count for -- >> what if the grade is done by, you made the best decision you could right now with the available information. >> the problem is that history doesn't measure you that way. ten years from now, we won't really know the answer for ten years. in ten years from now, it may

break to the upside, you may give him an a-plus. if you would have given alan greenspan his grade, he would have gotten a great grade when he walked out the door. >> do you give him an "a" for the iraq war? >> good point. no. can't do it. mission was not accomplished. >> professor parsons will stick sans ache grades other things for us. >> durable goods numbers and market reaction, next. as we head to break, take a look at u.s. equity futures at this hour. the dow looks like it will open up at 81 points higher, the nasdaq after about 12 points. back in a moment. which makes you wonder. isn't that a conflict? search "proprietary mutual funds". yikes!! then go to e*trade. we've got over 8,000 mutual funds and not one of them has our name on it. we're in the business of finding the right investments for you. e*trade. less for us, more for you. the fund's prospectus contains its investment objectives,

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welcome back to "squawk box," everybody. we are just a few seconds away from december. durable goods, we've been watching the futures in the meantime. after a rough end to last week and rough start to this weekend, the futures are indicated higher for the dow and the s&p 500 futures. s&p futures are up, by just over 8 points. the nasdaq is under pressure,

down by about 9.5 points. a lot of that because of what's been happening to shares of apple after they reported earnings last night as well. rick santelli is standing by, steve liesman is in studio. these december durable goods are important. it does matter what's happening with the government numbers. rick, take it away. >> durable goods for the month of december, down 4.3. strip out transportation, down 1.6. if you look at capital orders, okay, orders nondefense, ex aircraft, down 1.3. that's a bit disturbing. of course that gives us an indication for how business is investing. if we look at the shipment side, that's down 0.2. the unifying common denominator is negative, negative, negative, negative. this also shows revisions for november, originally released 3.5 on headline. that's now 2.6.

ex-transportation released at 1.2 is now only 1.10. the momentum we were looking at towards the end of the year, maybe we'll have to rethink and maybe the gdp potentially over 4% will most likely have a 3 handle, maybe a low 3 handle. what's the response of the marketplace? we dropped several basis points. we know that rates go up when things stabilize. i say stabilize, not fixed. i say stabilize, not corrected. once again, central banks, whether it's india or what's going on in other countries seem to have to ride to the rescue. training wheels, i think they're welded on. back to you. >> cue up the eagles, man -- ♪ on a dark desert highway we're never getting out. >> this is a stunningly bad number for a number that's extremely volatile all the time to decline this much and for the economists to be this far off is

going to be -- >> what we thought we had for november. >> plus 1.5. 3.4 was the original number for november. i'm looking for my numbers. >> 3.5, now 2.6. >> can you see if october was revised down as well. >> i can't see october. >> i have october written negative 0.7. the question becomes whether or not what we were looking for was business investment was set to make a decent contribution to gdp growth in the fourth quarter. i think it probably still does. i don't know for sure if december wipes out november. it may well. in which case we could go back to being neutral or slight negative. >> how important is this number for the fomc, the fed pemeeting today? does this change anything at all. >> there was a sense before this number and the home sales number that came out. >> was lousy, too. >> there was increasing momentum towards the end of the year. this raises the questions about whether or not there is momentum. i just got a note here from the

economists. i want to read it. the shipments were still up -- were still up at 6.5%. yes. business investment will still add to growth. hope it wol would be 7.5. the orders, becky, is more about the future. when i look quickly at these numbers, by category, computers down. communications down. transportation equipment down. motor vehicles down. i do question whether or not that's accurate. i did not hear a strong negative number -- >> steve, november's orders nondefense, ex-aircraft, originalry released at 4.5 which was a strong number in the context of the last several. now 2.6. that's orders. if you look at shipments, 2.3. down here, the nondefense ex-aircraft on the nonorder side has always been king. shipments has garnered a new audience of late. these numbers reflect the notion

that it's about sustainability. you can always pump up that tire but if the air keeps coming out, the car keeps sinking back down. that really is a key issue. >> it's not that we're inflating, it's that these guys, you know, their work is not done. we'll get stuck. all the risk of -- all this qe stuff was a bigger thy neighbor race for currencies. what if we start slowing down? >> if our own central banks words, listen to mr mr. hillsenwrath yesterday, emerging markets, it's their problem. it is. everybody will look towards home to take care of business. on a grand scale or floods of liquidity, then receding tides liquidity in emerging markets, the issue is that things aren't the way they're supposed to be after five years. and considering china seems to be where we were at in '08, my

guess is you could see another three to five years. by the time all of that's done, servicing the debt the globe is left with is just going to take the top variance out of economic growth. that's the price we pay. >> we're central banker to the world. that means that every single place that's not growing is our problem. we may be physician heal thi thyself. you can check out any time you want but you can never leave. >> there was a song. ♪ on a dark desert highway >> keep this on a loop. keep this ready. we may be using this every first friday of every month. ♪ i saw a glimmering light >> my biggest fear -- >> my biggest fear has always been that we'll slowly get down to below 6% unemployment, we'll slowly get up to 4% because of

what the fed did. what if that doesn't happen? >> are you saying what the fed is doing -- >> we can't make it a permanent program. we can't. that's what we worry about with programs, that they become permanent. i don't want it to be gasoline that the engine runs on. we're supposed to prime the pump. now it's gasoline. >> it's stopping. >> let's talk to mobius. emerging market investors will watch the outcome of the policy meeting tomorrow. joining us on the "squawk" line is mark mobius, templeton, emerging markets group executive chairman. i'm excited to have you. when we saw what happened with the argentine peso, the turkish lira, the ruble, are all those separate and distinct? or is this something that we should group together as being part of a global -- possibly something that ill with be a problem because of the taper?

are you there, mark mobius? he called in on the phone. i guesses not. >> i can pretend to be mark if you'd like. >> i don't really -- >> you want my views on emerging markets. >> he speaks all these different languages. >> my accent is off, too. >> we'll get him back here. he's calling on a phone. we have dropped calls all the time. >> is that -- what carrier is that? >> we're waiting. >> coming up next, we go to break with a little "hotel california." former wells fargo chairman dick kovacevich will join us as well. news from jcpenney, the retailer and miding its stockholder rights plan. the chain lowers the threshold for a personal group to become a, quote, acquiring person from 10% to 4.9%, the change reduces the likelihood of an ownership change occurring and part of this is a function of all the nols, the tax benefits that the

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fifteen minutes could save you... well, you know. welcome back to "squawk box." the federal reserve begins its two-day meeting today after the dismal december jobs numbers. investors of course waiting to hear the fed's latest outlook on the economy. joining us now is dick kovacevich, former chairman and ceo of wells fargo. good morning to you. we want to talk about the fed. dick, i want to hear, we have the president speaking tonight with the state of the union.

you have some ideas about this issue of inequality that he plans to talk about. how would you like to see him frame up the issue? >> i think the issue is all about growth. i don't think he'll frame it up that way. i think if we don't have our economy growing at 3% plus, then there is going to be really difficult situations, particularly on the lower income side. and when we do have growth of 3%, everyone benefits. and of course we all know that education is a key to this. but education is a 25-year issue. it's taken us 5 years to fall from being the best educated country in the world to now, you know, in the middle of the pack. so it's going to take us another 25 years to get back there if we do something about it. so education is not going to help us in the short run. we have to get our economy growing at over 3% which i think we can, if we had the right policies. we simply don't have the right policies.

>> where do you put the legacy of ben bernanke? and i say that in the context of this being his last meeting and we don't know exactly what they're doing to do relative to the tapering? >> we just talked about inequality. i think the greatest increase in inequality that has occurred has been caused by the fed over the last four years. the fat cats, record stock prices are enjoying the benefits of that. the rest of americans have record low interest rates and, therefore, do not have income coming as a result of fed policy. so i think it's increased income inequality by a significant amount. it hasn't helped the economy, in fact, i think it's been detrimental to the economy. i think he did a great job in 2008 getting the markets back and from then he's try todman up late the markets. it hasn't worked and it's been a negative for the economy and for income inequality. >> this is dick parsons. >> hi, dick.

>> question. you said if we had the right agenda, if we were doing the right things policy wise, we'd be back on the growth curve. >> right. >> what is that agenda? what do you think we should be doing? >> there are some big picture things, dick, that have always worked. that is lower regulation, lower taxes. and lowering the cost of doing business. and we have done the opposite of that, but we're over that. it's been done and there is no silver bullets left but there's a number of things that, in my opinion, we could be doing today that would help us. one is our energy situation, you know, frac'ing has put a whole new picture on us but we still don't have the keystone. it's been three years. we still don't have the keystone project which would add jobs but more importantly would make north america energy independent. we would no longer be slaves to the middle east. that hasn't happened. >> someone's not going to be

watching the state of the union tonight. i have a feeling -- you're not dvr'ing, are you, dick? >> don't get me into this, joe. >> i can just tell. i don't know if you'll be glued to the set. i don't get the feeling that -- >> you might read the transcript, maybe, when it's all over. >> i'm not convinced. >> i have a question for mr. parsons and mr. kovacevich. this is a banking question. we had jamie dimon on the program from davos last week. i want to get both of your perspectives from the jp morgan settlements and what they mean or not. dick kovacevich in san francisco, where do you stand on this? >> i think much of the settlements have been related to the acquisitions that jpmorgan did. did he that at the behest of government. i think in those situations he's being unfairly punished for doing what the u.s. government wanted him to do and he expected that they would not come back to haunt him and it has. maybe it's his fault he didn't

get it in writing but most of those are related to the bear stearns and washington mutual acquisitions that were done at the behest of the u.s. government. >> would you give him a raise this year? >> well, i don't have all the details of it. i do think he shouldn't be blamed for those two situations. >> i think it's actually somewhat well profound even. to me, this falls under the pound of flesh theory. i remember when i was chairman of citibank and i would go to washington, sometimes people would have sensible suggestions. people would say to me, you don't understand, the people are very angry. what this is is playing into the anger of the people. and you know, you need a pound of flesh to satisfy that anger. what happens the next time an institution falls into disrepair or disarray? >> you said someone would be less inclined next time to help

the government out, you said. >> i'm back around the city or something like that. the government comes and says we want you to take this institution. >> no thanks. >> getting it in writing even as kovacevich suggests is not enough. i'd be passing. i think i'll pass. >> very good. thank you. we should also thank dick kovacevich in san francisco for waking up early. he's not going to be watching this evening but maybe we'll get the transcript and talk to him later this week. >> let's see if we can get a couple answers from mark mobius. you're in south africa, mark? >> that's right. i'm in capetown. >> capetown. we're having phone issues. real quickly, some of the stuff, the emerging markets, the argentine peso, the ruble in russia, the turkish lira, they all seem specific to their own countries but can we draw larger conclusions about troublesome where from liquidity being less

than it was because of the taper or is it all due to specifics in different countries. >> there is a generalization you can make. those countries that are balancing payment difficulties are the ones being targeted with the currencies. a lot of this was engendered by flow of money going into these countries, particularly the bonds. the bond market in emerging markets were very hot last year as you know. as soon as tapering talk started, then everybody got cold feet and started to exit. of course, these countries that had these flows got into trouble. i would say there's some general impact from the tapering talk. i keep on telling people that the balance sheets of these banks, central banks around the world, japan, europe and so forth are still enormous. there's no good reason why this is happening. i believe it will be temporary. >> you believe it's temporary. that's what you're saying, that -- we had blankfein said

the same thing. any serious weakness will be a buying opportunity and there will be opportunities? >> i think sooner than that. here in south africa, the rand has been punished severely. of course, the turkish lira and some other currencies are in big trouble. i think these moves can happen a lot faster and we will be able to find buying opportunities along the way. >> these countries are already doing terminal pricing on the taper. even though we're just starting, they've already discounted that the fed will be totally out at some point in the next, you know, 12 months, hopefully? >> exactly. i think that's where you're seeing the markets. people are looking at one year. the prices react way before that. >> do you think -- we've had a little bit of volatility in the u.s. markets. people have made the point that

these emerging markets can't really hurt us immediately and they're too small for us to worry about not being able to export to them or whatever, but do you think the u.s. has the same problem that these countries have, that they've gotten used to all the qe so we need to sort of lower expectations near term for how much liquidity there will be? >> there's no question that, you know, the u.s. has been affected by this tremendous liquidity, but just indirectly. the liquidity has gone to the banks and stayed there, the banks have not been lending. balance sheets of u.s. companies are very strong, generally. i believe now you'll see a pickup in capital spending in the u.s. which will impact emerging markets favorably. so i think a combination of things. another thing is a lot of the institutional investors are out of emerging markets or getting out. they'll find that they are under weight severely.

when emerging markets begin to turn, you'll see the rush back in again. >> you don't -- it doesn't sound to me like you think that the tapering is going to hurt either domestic or emerging market stock markets? >> no. not in real terms. it's only when the central banks begin to start selling the assets that they bought. that's when we'll be in trouble. but there's no sign of that at this stage. >> what if they don't? what if they just let them all run off? >> yeah, well, that's what i think will probably happen because they're so scared of, you know, of doing that, they know the impact, what the impact will be. what they need to do now is tell these banks, look, you guys, we've helped you out, you have all this cash, you're putting it in treasuries, now get out and lend it. of course, the banks are having some problems because a lot of the big corporations that they like are flush with cash. so, they're going to have to move down a few steps into the middle market i believe. >> so, you don't even think --

this is -- number one, nothing like the thai bot, nothing like something that could turn into something very serious, and at this point you really don't think most of these markets, let me throw china into it as well, none of them are so overbuilt with ill-advised investments from this liquidity that it takes years to sop up? >> no. i don't think so. there's just too much cash around, you know, you see what's happening in dubai, property boom. even here, south africa, you go shopping here and look for good investment bargains in the property market, it's not that cheap, even though the rand has come down a lot. >> wow. >> so, there's money to be made, no question about it. >> i would have to say you're really bullish. do you think the stock market in this country, i know you're an emerging markets guy, do you think we're headed higher in 2014, mark? >> yes, i believe. i think we're now seeing a

correction, a natural correction, a very strong market, there's a natural correction, i believe we're headed higher. >> in the united states. do you think we'll get the full 10% correction and will it be attributed to the taper? >> yeah, i think, you know, nowadays 10%, 15%, 20% is nothing, the kind of volatility that we have globally not only the u.s. markets is quite incredible because of the high frequency trading and other things going on. so we don't blink when we see this kind of correction. it's not a big deal. >> do you think when the fed is out, the volatility will return as the feds, all this action made our market here less volatile? is that why we haven't had a correction? >> no, i think actually the fed has created volatility. if you see the way the markets have moved. the u.s. has come up so fast it's really because of this -- the fed actions really and you're seeing that arowmund the

world. the volatility is here to stay and i think it's going to get worse. in the good sense, you know, it goes up and it goes down. volatility works both ways. >> about china, they're in a completely different place. they're, like, dealing with, like, i guess sort of a credit bubble. are they ready to reaccelerate now? a lot of people think? >> well, what's happened to china is they want to make sure that they clean the balance sheets of the bank which is now happening because they recapitalized a lot of the banks and the asset management company has raised the biggest capital raising in hong kong last year. and the past, you know, that's where the so-called [ inaudible ] in the trust could be creating problems. i don't see that as a big issue. >> mark, yeah, we -- we -- the phone problems have reemerged, but i'm going to assume that you are fairly positive or sanguine on china as well. we appreciate your time today, mark. we had to jump through hoops to

even get a phoner out of cape town. >> beautiful city. one of the great cities in the world. >> but he's pretty bullish, but he's -- he's -- really bullish now. >> yeah. >> although he said, yeah, 20% is nothing. >> he pointed to the fact that there's just a lot of money floating around the world looking for a place to go. >> i'm telling you if this market goes down 15%, they'll stop tapering. i'm almost sure. don't you think yellen would be in her first keep tapering? >> you know what, there are, you have to think globally not just u.s. there are some things that a friend of mine used to say that are bigger than all of us. i think the weight of money, the amount of liquidity in the global system, is going to trump the fed. >> tsunami. >> you think they got a -- they got -- they started so they got to finish what they started. >> they're going to finish what they started one way or the other. >> what if unemployment goes back up and we go up above 7%?

we'll be right back in here? >> no. >> we'll have to come back and answer that question when we come back. coming up former time warner cable chief and guest host dick parsons on media names that should be considered for the cnbc first 25 list. but first check out shares of abercrombie & fitch, they separated the roles of ceo and chief executive. >> [ intercom ] drivers, to your marks.

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welcome back to "squawk box," our guest host all morning has been dick parsons and before we let you go we need your help trying to figure out what to do with the cnbc first 25, so who's your top pick for the most influential in the business and economy? >> this isn't -- this isn't, you know, who's the best businessperson. >> the most transformative. >> but who's changed the world? >> yep. >> obvious first pick is jobs. but i would put bezos close to jobs in terms of the way amazon has changed the way people consume. you have to put zuckerberg in there because who doesn't facebook anymore except for me? >> me. >> but two surprises, one -- >> you put the google boys on

there, too? >> no. >> you're not? >> no. >> okay. >> how about j.k. rowling? changed the world. i mean, who can remember in the last 25 years kids reading except when the harry potter series come out? you saw young people, she reinvented and sort of reintroduced a whole generation to the art of reading and i think that's -- and i would throw in another internation internationalist lee kai zhang. he's really introduced philanthropy to asia and i think it will have more traction in that part of the world than almost anything else. >> real quick, why not google? >> why not the google guys? you know, google is basically, i mean, it's just another way of advertising. basically is, what it is. it hasn't really -- i suppose you could say it changes the way

people get access to information, my wife googles everything to tell me i'm wrong. i'm like joe and i know everything. i give her a fact and she googles and says, you're wrong. but i don't think it's been as transformational, i think it's a new technologically more sophisticated way of advertising. >> dick, thanks for joining us today. it's been a pleasure, see you soon. time for "squawk on the street." >> i hate facebook. ♪ if i had a hammer i'd hammer in the morning and i'd hammer in the evening ♪ >> sad news at pete seeger, dead at 94. good tuesday morning. faber is on assignment today. s&p and schiller at the bottom of your screen and we'll discuss it with robert shiller later on in the show. futures did suggest we get a breather from the recent selloff but durable goods were weak and took wind out of the sails and