Transcripts For CNBC Squawk Box 20130128

Good monday morning, everybody. Great to have you back on set. Thank you. I brought you something. You did . I did. Some chocolates. Swits chocolates, fantastic. Thats what youre supposed to do. Right . It is. So are you going to eat any this morning . So how would you sum up what is going on . Overoptimism, i thought. Well talk about that today. But there was sort of an ar three or four years of complete dourness, a real sense that the world was ready to take off in a great way. And youre right, you are seeing this play out in the markets right now. Weve been watching that. In fact, that is our top story this morning. Recent games are irrational you just said were ahead of ourselves or something . No. Its still remarkably optimistic there. Youre with these bratty billionaires that throw all this money around. Thats why it felt no, no, they were optimistic in ways they havent been. You said one guy spent 1. 35 million getting ready for the party and he flew john legend in who watches ow squawk box. John wedging was, by the way, remarkable. Did you know he used to work at bcg . No. Yeah. A wall street consultant who turns into a musician. So, anyway a long time ago. And all the hookers that you spoke to were also cnbc viewers or something . No, they were not. They were yes, they were cnbc viewers. Youre sure . How did you know . What is i dont see how this whole thing played out and where you got its a much longer story that probably needs to be explained not at the top of the show. Were you embarrassed when they said and you said, oh, im so sorry . All right. Go ahead. He is right but but theres optimism im married with chirp. Thats the whole point. Thats why i dont even understand how this happened. Like he was talking about, all this optimism is fueling whats happening in the markets. By the way, this is the best pace for january that weve seen in 24 years. You have to go back to 1989 and thats when the dow was actually up by 8 . The dow is within 268 points of its alltime cloesz closing high of 4,164. Thats just about 2 away at this point. The s p 500 having its best january since 1997. Its up for the last eight sessions. Crossed over at 1500 and stayed there for the first time since, i dont know, back to about 2007, as well. Its now just 62 points from its alltime high. And we have a huge lineup of guests and strategists over the next three hours including carl wineberg, jeff klein to know, Rebecca Patterson, Robert Caplin and j. P. Morans chief strategist tom lee. Were going to talk through this, is this for real and can things keep coming . Economists are finding that 50 of the corporate forecasters now believe gdp will grow at 2. 1 or better over the next four quarters. Thats up from 26 back in october. Theyre optimistic about the job market. About a third say their firms or industries are going to increase hiring in the next six months while 27 say hiring levels will stay the same. A conversation i had with Christine Legarde suggested 2 groith in the u. S. Is too low and shes estimating much higher. For the whole year. Where was she . She was at a dinner. We hosted a dinner together at the new york stock exchange. But thats the amazing part about it. Christine, i dont know if i mentioned it. Yeah, its amazing. You know, i called her do you call her madam or christine . I started with madam. You didnt offer her money, did you . Announcer this squadward moment has been brought to you by joe kernen. No. No. Whats going on with apple this morning, joseph . This, in my view, is fitting things to be if the market really is fundamentally ready to go higher, exxon should be the largest market cap and apple has fallen behind exxon mobil. In the market cap, were calling it the market cap challenge. Apple shares have tumbled to another 52week low and we will hear from exxon mobil this friday. The apple market cap, 413 billion as of that close and exxon with 418 billion. Thats what i love about trying to figure things out, the entire way from 700 to where apple is now. Analysts said its cheap, cheap, cheap, cheap. So it doesnt matter if its cheap. 460, we were still talking about it last week. Its ten times earning else and Everybody Knows and theres nothing wrong and this doesnt make sense that its dropping. When its that overloved, all these things youve seen it in the past. What is your number . For where apple finally goes . Settles out, if its not settled out already. You know, at 250, i said this cant go i know. Thats why i want to know. I guess it could go back there. People have been telling me on a pe or revenue basis, it was cheap at 700 and theres no reason it cant go to 1 trillion. But ive seen other stocks try to go to 1 trillion. Cisco, for one. The question is whether apple is the new dell. There were a bunch of new dells. Theyre in the past, there are all of these companies that were eventually when i say the new dell, meaning it went up, but then no, you worried that its just going to fall down. It doesnt even have to be technology. Nothing grows but the sky. The tree keeps going up. You obviously havent seen jack and the bean stalk. Thats coming out. Did you see it . I havent seen it yet. I just watched the preview, but it does keep growing. Were going to make a movie out of every fairytale. Is it a universal film . I dont know. But its the guy from the hurt locker. Hes running around with all these special guests. Wooerve talking about the dow and trying to figure out if individual investors have been trying to get off the sidelines. Joining us for this hour is kevin kerone. Guys, thank you very much for coming in today. It really is the time when main street is tarting to Pay Attention to this, usa today is taking a look at this. Are investors coming back . What do you think . Well, they have been in the last week. As some of the concerns about the fiscal cliff rolled off, investors did pull money back into the stock market. At the same time, when you look at what is happening to sentiment, if you look, for example, at the American Association of individual investors, they put out a survey of individual investors and their confidence is very, very high right now. So youve had a shortterm move into secretaries. If you look at the individuals over the last few years, theyre tentative coming back. Its a nice ficht step, but we need to see this continue for quite a while longer. We talked about Investor Sentiment and how that sometimes is something you want to watch out for. When investors feel really good, theres never a bell at the top, but that seems to be when things fall apart. Is this that moment . Tactically speaking, it looks like weve gotten too much too fast. But, again, i think in the terms of the last three or four years, it would be a bigger danger sign than right now when, in fact, ive been trying to make the case that the macro dooms day monsters are in the cage right now. So its understandable. So i also feel that its interesting that were all already jumping on the sentiment things so aggressively on both sides. So the bullish case is sentiment is going to be the tailwind that gets people back excited about public equities and public equities has been there. But there are a lot of people who have been sitting on the sidelines for quite a long time and probably a little psychology as you Start Talking about numbers coming upandup and up. A lot of people last week talked about missing the train. Yeah. And by the way, you have the New York Times story on saturday. You have this piece on the cover of usa today. You have the wall street journal. These are those moments that people say, look, its on the front page and then they say, i have to call my broker on monday morning. I look back and the times makes the case that maybe this is a short dinger time. The headline was small investor loses faith in the market. Since then, the market is up 42 . Its not so much directionally important to me. It tells you that if were now on a peace time footing and not a wartime footing, its a good thing. You can come out of the budgeter. But i dont think its as much of an investment tell one way or the other. We put, i dont know, 60 billion or 70 billion in the last quarter of last year. Now were seeing a fraction of it slosh back into the markets. To me, its not as big a deal one way or another, the fact that maybe in the early way the public is excited again. Theres a lot of talk in washington at this point that, yes, we have pushed off any sort of huge problem with the sequester thats going to get pushed up to may if not august because the treasury could take up special spending again. But there is talk at this point that both sides are kind of setting in and you could see sequestration be the solution at the end of this, that theres not a better solution that come august, you do see sequestration. What does that do at that point . Well, yeah. I think youre going to contract the budget deficit, but not a lot. If you look at what has happened, you could have had a more significant sequestration kick in january 1st. But at the 11th hour, everybody backed off that so you didnt get that outcome. At the same time, theyve pushed off the debt ceiling for a few months. So the body language out of washington has been more constellatory. So when you get to this point where you think about what the deficit might look like this year, i dont think youre going to be looking at a balanced budget so soon. You cant sustain trillion dollar deficiter year after year after year doubling the debt so many years and still think that the market is going to accept that over time. They know the market needs to move away from this, but its going to away longer process. Kevin and mike will be with us for the rest of the hour. And its time for the Global Markets report. Kelly evans is standing by in london. I could string up a lot of thing to talk to you about, kelly. Youre very close to davos. I dont know. We i dont really feel like ive missed anything, really. But youre still close. You could have jetted over there easily and joined in with, you know, john legend and charlie thero this e, Andrew Ross Sorkin. I was hoping maybe some of those people would use it as an excuse to come through london. Ross westgate has been away at davos covering the event. Hell be back tomorrow. Ive been holding down the ship in the meantime. I think you get more out of it if youre there, but if you missed it, youre kind of like, yeah, life goes on. Were down by 0. 04 . Whats interesting is the extend to which people are talking about the rally over here, driven by the same kind of positive mood fundamentals if you want to call it that thats underpinning the rally for u. S. Equities. You can take a look at the major indexes, but were not seeing too much move. The dax, a little lower. But the ftse higher. So you can see theres not a ton of conviction here in these markets. Part of it is that were getting so much data out of the u. S. Weve got jobs report friday. The fed meets tomorrow. We learned on friday, the European Central bank is seeing people repay their crisis loans from last year. That does push up the value of the euro and to some degree make Monetary Policy tighter over here. We can quickly look at the bond space. Italy did go to auction as we continue to see reasonable demand for peripheral debt. The paper is selling off a little bit, but still 4. 17 . Investors showed up to bid on the twoyear zero coupon and the fiveyear inflankz flagz linked bond. Italy and spain continue to front load. Forex, though, telling you more of this story, which is that interestingly fluff, were seeing kind of a risk off attitu attitude. The same has been the case for loony, which now people are starting to talk about in parity with the u. S. Dollar. The dollar yen, down about 0. 3 to 90. 62. The euro dollar, 1. 3446. So even though its difficult, the u. S. Dollar, guys, has been performing a little better over the last couple of weeks helped by renewed growth prospects. Its one reason why a lot of people are focused on the see kweter, that chatter over the weekend about it happening could put more pressure on the greenback. Back to you guys. Kelly, thanks so much. Next time, you should fly over. What happened to ross exactly . He could have driven there, basically. But hes much closer than appeared rue. Yes, he is. Well, ross, you know, as far as i know, there could be some sort of hangover movie like situation going on there. Hes not here today. I hope hes here tomorrow. He may be locked in a freezer somewhere or stuck in an elevator. With mohammed elerian. He probably doesnt have private jets to fly around on, either. Did you really fly commercial . Sfwh we sold the cnbc europe private jet. Just felt it was a little bit too much. Swiss air. I was on swiss air. Dont look at me. Its swiss air. Dont look at me. You sound like he was on a plane with liesman on the way out. Swiss air is not sorkin air. When the press got word of it, they said you know who is on that plane . Andrew ross sorkin just like that party, remember . There was security waiting for us when we got off the plane. Kelly, hope to see you here at home or back next year. Were going to go globetrotting for potential rally killers. Well see how the market is setting up for the day. Welcome back, everybody. Take a look at u. S. Equity thats morning. Youre coming off some huge numbers for this first month of january. This is the best january back from 1989. So the dow is on track for that. At this point, up about 6 for the month of january. 8 with its gains back 24 years ago. Lets take a look at the National Forecast with the weather channels eric fisher. Eric, why dont you tell us how things are shaping up around the country this morning. Icy out there in the northeast this morning, not a storm that you write to your grandkids about later on in life. But enough that its going to make some issues here. A lot of this not reaching the ground just yet, but it will start to pick up west of philly in the suburbs, even in washington, d. C. This morning all dealing with some ice. Its all running into some cold air. You live in this part of the country, you know all about that. The last eight days has been frigid. In d. C. , just enough warm air here. Just an issue for the next couple of days in the capital. Well see that pick up, starts to mix in this afternoon and later on tonight, it gets warm enough where all the ice melts. So the evening commute will be in better shape. The evening xhoout commute will be a problem in boston. Snow picks up after lunchtime today and continues into the overnight here. Again, not a huge event, just enough to make it difficult. Total snow, 1 to 3 inches for most areas here. A little better if youre a skier, out ear in vermont, new hampshire, new york, it will stay all snow. The other big stover, the Severe Weather starts to break out by tomorrow morning starting in eastern texas and oklahoma. This is going to head eastward. A lot of wind energy for this system. A lot of wind damage will be our main concern. Weve got the cold, the snow, the record warmth and severe. Its more like late march than january. Eric, thank you. Wow, we were just talking about this gentleman. Ive heard of him. The name is familiar. But i cant place a face. House committee paul ryan, how do we know him . He was a nobody that came on squawk and became Vice President and now its squawk who . I go on network now. He was on all the time. Every day. Now he wont hes coming on soon if you shut up. I love him. Please, paul, i guess im just hurt. Anyway, he says that the automatic spending cuts postponed as part of the fiscal cliff deal will go into effect as scheduled in march. A former Vice President ial candidate says the sequester, which would cut 1. 2 million in domestic and defense spending over the next two years will happen since democrats havent offered alternatives to gop proposals. But ryan says no one is tuking about allowing an actual government shutdown. We are more than happy to keep spending at those levels going on into the future while we debate how to balance the budget, how to grow the economy. Thats the kind of debate the country desevens. By the way, if we keep going down this path, we will have a debt crisis. Its not an if question, its a when question. I remember him, alternativest young congressman from wisconsin that used to come on squawk box. Still fighting budget balthsds. If hes going to go on somewhere, at least he went on with david. Congress must pass a stopgap spending bill by march 27th to keep the u. S. Government running. And dont do that with your sneezes. What was that . I held it in. Thats like ive been trying to hold it in because you were talking. No, no, its going to come out. Thats bad for you. Something inside is going to pop or something. Like an anneurism. Its bad to be repressed like that. Let it out. Thats his whole life. Oh. Let it out. Michelle caruso ka brar ray. Youre like a guest on the show, but thank you for being kind. Its the greatest feeling in the world. Let it out. Yeah, others have anyway, more trouble in egypt, a state of emergency has been declared in egyptian cities where dozens of people have been killed over the last few days. The violence was sparked by a Court Conviction and a death sentence for 21 defendants involved in a mass soccer riot that left 74 dead back in february 2012. So what could trip us the pulls at this point . Thats one of the big question were asking this morning and Michelle Caruso cabrera is here to tell us. Storm clouds could be hiding overseas. What are some of the International Hurdles relative to the rally . Complacency about europe. You saw the great headlines about how the banks are going to pay back some of the rtos early. We have data in germany which suggests maybe they could go into recession, as well. Spain is only getting worse. So something could still go wrong there. Did japan just saturday a currency war . This aggressive move by the Japanese Central bank. Some people roll their eyes and say night is going to get them out of 20 years of deflation. Others say this is a change. When you make the changes they are on mafs scale, you wind up with decline. The euro is getting stronger and stronger and stronger. That makes it harder for europe to get out of their recession. And then the third point that a lot of on people bring up is the chinese transition. We spend a lot of time talking about the National Data in china, about whether or not they are weakening at the national level. So far, the data seems to have improved lately. But thats really on one small part of the story. Theres a new government. They just came inta power and theyre going after some big vested interest. Theyre going to start to crackdown on some of the monopolies or duopolys or whatever you want to call them. They started to crackdown on corruption. They just busted another ten guys over the weekend. Theyve published editorials. Theyre trying to shake things loose there in a way that they havent well, i you know, i dont know how we got back to that again. The mistresses on tape . Yeah. Its the only kind to have, apparently. Were talking about possible pit falls. Pit falls because i think china is facing look, the low hanging fruit for the last 20 years was there, right . Theyve gotten now to be a middle income country. To get from a middle income to a high income country is difficult. Theyre going to have to do things to shake things looks in a way that we cannot anticipate. Mike, you talked about how those monsters got put back into the cage. When you hear what michelle is talking about, how big of a concern is this . Im always less concerned about the identifiable ones that are out there. To be honest with you, i think the china thing to me is most relevant because it could disturb this agreed upon consensus. We have this Global Growth going. When the dow transports are up 20 in ten weeks, this is not some kind of hopes and dreams for a new technology. That tells you that were not positioned to absorb even a stutter step in growth. And so, you know, you see the u. S. Economic surprise index, the data coming in not so great. Ott im not very concerned about it, but i think its one of those things that wouldnt be absorbed if china stopped printing better than expected purchasing numbers. Michelle, one topic you didnt address that im surprised you didnt talk about but was talked about a lot last week, iran. Whats the potential that that is our big stumbling block in all this . I thought about putting it on a list. Weve been living with it for so long and who the heck knows what i think about the russian invasion of afghanistan, which 20 years later ultimately was extremely significant to the United States. This is one of those, yeah, we can identify it, but at what point does it what do you mooep need . You need a disruption in oil or an atom bottom explosion for it to be something that affects the bottom line economy. If you get your shale gas between now and then, you might not have to worry about it. Weve got a super bowl of data that ends with the jobs report on friday. Plus, the First Federal meeting of 2013. We have a monday morning strategy session for those looking for an edge. And right now as we head to a break, take a look at fridays winners and losers. [ male announcer ] you are a business pro. Omnipotent of opportunity. You know how to mix business. With business. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above. And still pay the midsize price. I could get used to this. [ male announcer ] yes, you could business pro. Yes, you could. Go national. Go like a pro. Yes, you could. 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If you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a 30tablet free trial. Good morning and welcome back to squawk box here on cnbc. Im joe kernen along with becky quick and Andrew Ross Sorkin. And the headlines this morning, the market entering this new week on a positive roll, the s p 500 has been up for eight straight sessions. Thats the longest winning streak in eight straight years. The dow is up 11 out of 12. Much more on the market just ahead. Its a bus is he week, though, on the Economic Calendar. Well see whether that helps or not highlighted by a twoday meeting of Federal Reserve policymakers tuesday and wednesday. Theyre going to issue their newest policy Statement Wednesday around 2 15 eastern. And dow component caterpillar highlights todays list of corporate earnings. Caterpillars expected hit Fourth Quarter profits, 1. 69. Revenue indicated at about 16. 1 billion and it should be about 7 30 when caterpillar reports. Then were going to talk to doug oberhelm. Which is very exciting. But why dont we check on how the markets are faring this morning before that news. Right now, youll see if futures are indicated a little lower. Dow futures down by less than 17 points. S p futures off by 1. 25 points. As joe was mentioning, there are a lot of records weve been talking about. The dow is off 6 for january. 1989 it gained 8 . At this point, the dow is only about 260 points away from its alltime closing high. The s p on friday closed above 600 for the first times since back to 2007. Weve been watching a lot of things and how theyve played out this morning. You can take a look at where things stand in europe. One of the things weve been talking about this morning is apple and exxon. Exxon took back its title as the most valuable company in the world. Has a market cap of 418 billion at the close on friday versus apples market cap for 413 billion. A lot of things have been changing. People watch that, they watch the transports, people have been setting new highs the last eight session necessary a row. If you see what happened overnight in asia, the hang seng and the shanghai were slightly higher. Actually, the shanghai was up by 2. 4 . The nikkei was down about 1 for the day. Oil prices this morning are unchanged, 95. 88. The tenyear note is yeeding, 1. 936 . That yield is starting to creep back higher. The dollar this morning is stronger against the euro at 1. 3445. Its down against the pound. Gold prices have been giving back this morning, as well. 1,654. 30 an ounce for gold. Now lets get some monday morning outlooks for our guest, carl weineberg is here. Kevin coronis. He rolls the r and does the whole absolutely. Because of leslie. But you dont really shes before your time, really. She was young and beautiful and french and all these big movies look like carey grant. E. G. Thats fine. Are we ahead of ourselves . Are we in the right place . How are you assessing this socalled bull market were in. The u. S. Side, great. Great . Weve got the growth with room to move . We were talking about using the phrase has the train left the station or are people getting on the train at the same time . Where is the train sfp. Maybe a bit of a setback because the data will be mixed. Well see a softer number in gdp than we would like to see. Were going to see the claims number dm dip down, so a little set back there. But overall, i think the u. S. Economy continues to chug along and you cant say that any place else in the world. Europe is going to run into a brick wall when they start reporting gdp and industrial numbers. Thats not going to hit us . Well, no. Were growing despite the fiscal drag thats been in the economy for a year and continues to move along. Europe is stuck with no real income growth, no credit growth. There are still problems listed on the financial side. I think were going to see the u. S. Outperform europe and i think the u. S. Is going to benefit from leaving europe long before the euro is over. Now, i know youre an economist and not lessnecessari stock buy, per se. Might be ill go to you, mike, on this. Were living right now at about 15. Lower 13 on a forwardlooking forward basis. So what is the top . How close are we to the top . Are you asking me . Mike. Ill go to mike first. I dont think the actually pe number is going to tell you. On a tlal basis, we were 17ish. But to me, the components of the earnings are more stable right now. The earnings arent all coming from one place. In 2012, it was challenging. Valuation is not the reason i think why this ends or is it really the excuse its so cheap it has to go higher from here. What do you think is the reason . Rate of change. Things are Getting Better and volatility has been strangled t to ground. And, look, i think were in the overshoot phase. Rovts are related in the market. We havent reflected it, the possibility for more people getting optimistic. Deals i think have to be a big component of this market. And that was something we heard out there in davos, lots of fuel making for the first time in a long time. Another thing you heard in davos is everything is great in europe and, therefore, we should buy stocks because the earnings part is going the keep on going. That worried me, though. It worried me, also. I think thats our core view. Europe is going to underperform peoples estimates. The top line wont be there. Why is that the not going to ultimately impact us . On the u. S. Side . On the u. S. Side. Were growing at 2 to 3 on the u. S. Side and europe is contracting probably 2 to 3 . Were looking at an economy here thats expanding, that can produce the catch up to the correction from the financial crisis. Are you worried about the debt ceiling return, this conversation returning not three months from now, because thats not what its going to happen. Its probably only about a month and a half away and what that ultimately does. Is whats happening in washington or whats happened in washington, is that actually impacting the markets and impacting the economy or have we made too much of it . Well, you know, i think at this point looking forward, its going to be less rather than more. The republican tactics have changed. And that reflects the fact that when we put forward a projection of our debt to gdp ratio in the u. S. , its almost flat going out the next decade. Thats a core measure of stability. I know ryan wants to see the debt drop to the euro. But stabilizing the debt relative to our income is sustainability. And i think were pretty much there in the u. S. Were nowhere near that in europe. So in the u. S. , its fiscal policy as usual minus 1 for government spending. But in the new year, just as we saw in the last year from public policy, but were not going to see were going to see bigger squeezing going on in europe. Carl, were going to leave tlit. These gentlemen are sticking around. Thank you for this great perspective this morning. If you have comments or questions about anything that you see here on squawk, email us squawk cnbc. Com. Still ahead, a major blow to president obama. This was pretty interesting on friday. His nlrb recess appointments ruled unconstitutional and also puts cord ray, the cpcf Consumer Protection board. Anything that either agency does now could be challenged. For 300 different rulings that theyve made at this point . And how much is twitter really worth . Another key investor is stepping in that story. Theyre stepping in something. And check out the s p 500 index having its best january since 1997. Well be right back. And who is going to host the u. S. Open in 2020 . Its a secret. Im not going to gist away. It was out like nine hours ago. Anyway, well talk about that, too. [ male announcer ] it was designed to escape the ordinary. It feels like it can escape gravity. The 2013 cclass coupe. Starting at 37,800. Starting at 37,800. train horn vo wherever our trains go, the economy comes to life. Norfolk southern. One line, infinite possibilities. Oh, just diagramming this accident with my state farm pocket agent app. You can also get a quote and pay your premium with this thing. I thought state farm didnt have all those apps . Where did you hear that . The internet. And you believed it . Yeah. They cant put anything on the internet that isnt true. Where did you hear that . [ both ] the internet. Oh look. Here comes my date. I met him on the internet. Hes a french model. Uh, bonjour. [ male announcer ] state farm. More mobile than ever. Get to a better state. Welcome back, everybody. U. S. Equity futures are indicated just a little lower this morning. Dow futures pulling back by about 17 points. We have some news to get to this morning, though. Caterpillar shares are one to watch this morning after they come out with earnings a little later. We will be speak, doug oberholman, the chair and ceo of caterpillar in the 8 00 hour. And blackrock is now buying an 80 million stake in twitter, snapping up shares directly from employees looking to kap cash in on their stock and options. The deal valuing more than 9 billion. Thats up from a reported 8. 4 billion back in late 2011. Twitter reportedly sought investors for a tinder offer last summer in the wake of facebooks botched ipo, but didnt complete the deal until recently and maybe thats a good thing given that the Facebook Stock has come back and what that ultimately might mean for the future of twitter. In a blow to president obama, the d. C. District u. S. Court of appeals ruled unanimously that the president s nlrb appoints for 2012 were unconstitutional. Peter ferrarah at the conservative and libertarian think tank, the Heartland Institute joins us now peter. I read the papers on saturday because i needed to see the oped from the wall street journal and i needed to see the oped from the New York Times. The wall street journal said basically its about time that the executive power was that the president has exerted has at least been challenged. The New York Times said it was a victory for republican chicanery. The court said in order to make a recess appointment, the senate needs to be in recess. This is the first time in history a president has tried to make a recession appointment when the senate knot in recession. And the senate at the time was in control of the issue. Its a simple and straightforward decision. It was undoubtedly going to turn out that way and we all knew it. Weve all known that for a long time. Peter, explain what the senate does. What is a normal recession . Because they werent really totally in session, right . They were doing a little bit of like it almost looks like business just to be able to say that they happen still in session, right . Thats what the chicanery part of the in, times was alluding to. But didnt the ruling go even further and they said some things that would have affected even some 40 some bush appointments or even some clinton appointments, as well . Yes. The ruling restricted the president s recess appointment power. It says if you read what the constitution says, he could only fill a vacancy with the recession appointment if the vacancy occurred during the recession. And then the appointment needs to be made during the recess. Its a straightforward application of the words of the constitution and that chicanery is so grossly inapplicable unless the president s own Democratic Senate majority leader was engaged somehow in chicanery in saying that the senate was in session, this same thing happens with the session every year. The session starts on january 3rd. The president made the appointments on january 4th. Only the senate has the authority to say when its in session and it explicitly started the session on january 3rd, not january 4th. So anything the nlb has been deciding on is maybe questionable at this point and there are some people say these guys need to resign immediately. I dont know whether thats possible. But also, theyve taken it tocordrays appointment. Hes got a lot of stuff on his plate with the cbsb. Could some people ignore those rulings . Yes, the ruling does apply to cordray who was appointed on january 4th. But theres a bigger problem with cordray and the Consumer Protection board. I believe it is the Consumer Financial protection board is even more egregious than the board that was at issue in the Free Enterprise fund case. It sets its own budget. Its not subject to congressional authoration or control. It sets its own revenue. Its not subject to conal authorization control and its not subject to executive branch of control. Its an independent agency under an independent agency which is exactly what the Supreme Court held was unconstitutional in the case. So the whole board is unconstitutional. Maybe they at worse, maybe the republicans will say well okay them, but we want you to change some stuff about the cps. It will probably go to the Supreme Court and who knows what will happen at this point. Thank you, peter. Thank you. When we come back, when prince alalli is Holding Court, what is he watching . Well tell you right after this. By the way, are you looking for gold . Its down about 2. 30 today. 1654 at the last pick. Squawk box will be right back after this. All stations come over to mission a for a final go. No go call. This is for real this time. We are on step seven point two one two. We have entered our two minute hold. Cabin venting has been inhibited. Copy that. Sys two, verify and lock. Command is locked. Flight computer state has entered auto idyll. Three, two, one. The falcon 9 has launched. Preparing for nose cone separation. Standing by for capture. The most Innovative Software on the planet. Dragon is captured. Is connecting todays leading companies to places beyond it. Siemens. Wers. Twins. I didnt see them coming. I have obligations. Cute obligations, but obligations. I need to rethink the core of my portfolio. What i really need is sleep. Introducing the ishares core, Building Blocks for the heart of your portfolio. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. When prince al ali bin talal is Holding Court the only thing he has on tv is squawk box. There you are. Theres a press release that went out. The chairman of Kingdom Holding company receiving in his office the egyptian ambassador to saudi arabia who was accompanied by the first secretary of the embassy, and i mean it just that could be anybody. It could be anybody. Its not with those jowls. But if you look at the high rise, looks like a pretty prince type place. It does. And we know that hes a friend of the show. Its cute. Because people sent it off to us and said you might want to forward it to joe, because thats whats on. All the time. Publicity shot. Its on a lot of the time. We need to have him come back. We do. Its been awhile. Lets get the final word for today from our guest hosts. Guys, people are waking up this morning after all this talk about the market at new highs. Its made its way to nightly news and usa today and investors are going to be tuning in today wondering should i buy or not. Mike, what would you tell them . Ive been, ill admit, two weeks saying we were ripe for a pullback in many respects. Im not that concerned about it. Mostly because everything thats happened in this stock market, even though it seems like a new high is a big deal has been presided by the credit markets, underpinned by the fact that financial conditions in general are very strong. Until the junk bond market which has been ragingly strong and nobody talks about, until that cracks i dont really see a big downside. It makes some sense for this market to pull back. But thats a great thing to look at. The junk market its not even a high yield market anymore because its trading below 6 . All right, kevin, what do you say when somebody calls you up today and says, do i buy into this or not . I think you got to take a step back because its not about two weeks. This all has happened within the last two weeks where weve seen this explosion of interest in the equity market again. You have to a longer time horizon. What weve thought is that were going to see 1550 by the end of the year, we got a big down payment on that in the first month of the year. But its the bigger trends that really matter. Weve seen 5 million private sector jobs but do i buy today or not . Youre talking longer term. Youre talking higher from here. Oh, yes. You do. And we have been and we are overweight equities. So we are seeing improving ftdals. We see good valuation. Our recommendation coming into the year was to focus on equity, be overweight should have listened three weeks ago, right . All right, kevin thank you very much. Mike, thank you. We really appreciate it. Coming up, caterpillar getting ready to report. Were going to have the numbers first. Plus the bulls on. We have a slew of strategists and reporters ready to take the pulse of the individual investor. As we head to a break lets check out the futures. train horn vo wherever our trains go, the economy comes to life. Norfolk southern. One line, infinite possibilities. [ construction sounds ] [ watch ticking ] [ engine revs ] come in. Got the coffee. That was fast. Were outta here. [ engine revs ] riding the market rally. The s p, logging its longest winning streak since november of 2004. The markets overall feeling like its 1989. All over again. Where do you live . In the city. Do you have a house . Apartment. Own or rent . Rent. What do you do for a living . Lots of things. Wheres your office . I dont have one. How come . I dont need one. Wheres your wife . Dont have one. How come . Its a long story. Well tell you how to cash in on the markets latest move. In studio to share their latest investment ideas, Jeffrey Kleintop of Lpl Financial and Rebecca Patterson of bessemer trust. Plus special reports oers and losers of this rally. Plus the secret lives of the superrich. Why are you wearing a tux . Its after 6 00. What am i, a farmer . Were going to go inside the minds of the mega rich home buyers and the broker behind some of the big apples biggest deals. I have a very important question. What are you asking for this . As the second hour of squawk box starts right now. Good morning, everyone. Welcome back to squawk box on cnbc. Im becky quick along with joe kernen and Andrew Ross Sorkin. Weve been watching the futures this morning and they are indicated just a little bit lower. Right now those dow futures down by about 16 points. S p futures off by just one point. Nasdaq is down by less than a point. But there are plenty of superlatives to talk about when it comes to the markets this morning. The dow is up in 11 of the last 12 sessions. Its now less than 2 away from the alltime high that was set back in october of 2007. And its on track for its best january gain since 1989. The s p 500 closing above the 1500 mark friday for the first time in more than five years. Its eightsession winning streak is the longest since november of 2004. And its now less than 4 away from its alltime high, which was also set back in october of 2007. A notable absentee from the stock market rally is apple. That stock closing friday under 440 a share. That set a 52week low. Apples market cap also fell below exxon mobiles market cap with this drop on friday. Back in september, apple set an alltime high of about 705 a share. Now, exxon is back as the most valuable company in the world based on market capitalization. And some news from capitol hill. House Budget Committee chairman paul ryan says the automatic spending cuts postponed as part of the fiscal cliff deal will go into effect as scheduled in march. The former Vice President ial candidate says that the sequester would cut 1. 2 trillion in domestic and defense spending over ten years. And its going to happen since democrats havent offered alternatives to gop proposals. Ryan, though, says no one is talking about allowing the government shutdown. We are more than happy to keep spending at those levels going on into the future while we debate how to balance the budget, how to rule the economy. How to create economic opportunity. Thats the kind of debate the country reserves. Because, by the way, if we keep going down this path, we will have a debt crisis. Its not an if question, its a when question. Congressmen have also passed a stopgap spending bill by march 27th to keep the u. S. Government running. U. S. Stocks meanwhile are on a great roll with the dow taking aim at 14,000 on friday Goldman Sachs Ceo Lloyd Blankfein joined squawk box from davos and talked about the dont fight the federally. The market has gone up without with people being underinvested. There will be a turn. The turn in Interest Rates, and equities wont necessarily happen when the fed changes Interest Rate policy. It will happen when the market decides that the fed will have to change Interest Rate policy which is going to happen a lot sooner happen a lot sooner . It will happen sooner than the official does he want to come on here . He had a lot of fun with us. Is he going to come in studio . One of these days were going to bring him across the bridge. One of these days . I told him teterboro. People dont realize how personable he is. It was a great interview because it showed a little bit about who he really is. Hes relaxed. Thats why my first question was, i think the beard sort of signifies how relaxed he is. There it is. Kleintop does not have a beard. Lpl financial chief Market Strategist and Rebecca Patterson, chief investment officer, great to see both of you. And rebecca i would normally start with you but i think of you as a global currency sort of big picture person and because the talk of the day, jeff, is about the dow im going to start with you. I thought it was fitting that as we get close to a new high that exxon has retaken the lead. That fundamentally seems like it like the market makes more sense to me. Like exxon has a bigger market cap than apple. Back to the old days. Seems whenever weve been on the cusp of a big pullback its been exxon thats been the big name in the s p. I think what do you mean on the cusp 6 a pullback . We could be. Lloyd just talked about how this is a dont fight the federally. It has. Not just this year, look back on the last five years. This is all about dont fight the fed. Weve got a meeting on wednesday with the fed. The last statement they released was pretty upbeat. Talked about improving manufacturing, a lot of different things. They could cite improving to beless claims. Positive tone in the first paragraph of that statement from wednesday could send markets lower thinking were close to the end of not the end of qe3, but the markets rally when the fed starts taking back they give it a little pickup initially but it signifies that the reason that theyre pulling back is the economys picking back globally. The other thing is, because investors we talk about again and again got hit by, you know, the tech bubble in 99. The the nifty 50 sort of of the, you know, the cocacola 50 times earnings, the walmart 50 times earnings, then follow that by the financial crisis that people are still risk averse. So you coming in and saying, adding to another brick in the wall of worry, the wall of worry is going to be around for awhile with people like you and with individual investors not feeling comfortable. Which could allow this market to go much further than people think. You may be providing the bricks to the wall of worry. We havent seen the individual investors come back to this market yet. No. Thats right. Thats the next move. But positive. It doesnt look like were on the cusp of that happening any time soon. Thats good. I think it happens right now. Youre saying we need that to really get going. Im saying when they finally get there, that the smart money i will see a big pullback here but definitely a pause if not a consolidation in this rally weve seen when you say a pullback, whats a pullback in your mind . 5 . Why is it more likely that ive heard people saying that the most worst feeling right now, i think cash talking about is the train leaving the station and im not on bard and thats even a scarier thingtsh we got on board. We just made a decision last week to add incrementally to equities and it was a really hard thing to do because it has risen so much. Weve basically been neutral equities for the last seven months. But we had more of our equity exposure outside the u. S. And that equity exposure outperformed the u. S. Which allowed us to keep up. But we thought if this train does leave the station and we saw for the last four weeks more money going into stocks and bonds and mutual funds in the u. S. , thats something new. If that does happen, we want to make sure we participate. But im in the u. S. . No globally. I still want to be focused more outside the u. S. Than in the u. S. If we get a pullback i still have enough dry powder youre not Wishful Thinking . Are you not inasmuch as youd like to be in, so youd like it to pull back a little to get people to do a little shopping here. Weve been aggressively positioned in the sectors that were in, but were a little bit underweight the stock market. So maybe a little bit behind here, we kept up with the market so far because of those aggressive twists to the investment, but certainly, i think were due for a pullback. Right though isnt the worry then that the train will not have left the station, investors who are waking up this morning thinking i should be in the market, theyre going to see the pullback and go, this whole game is not for me anymore. It depends what causes the pullback, how deep it is. If its a normal consolidation, we go down 2 , 3 , i would expect people are going to jump in. If we have some shock the news out of egypt and the middle east is not terribly encouraging, if japan and china we wake up tomorrow morning and actually have military action, okay, Something Like that we have a bigger pullback fed policy statement that suggests yeah walking away is not you know, then youre not fighting the fed by the way. We dont have a press conference this week. We dont have a lot of incremental news from last meeting in december. I mean i agree. I think theres a tipping point. Last week stocks went up even though bond yields went up. But there is a tipping point. If bond yields, tenyear breaks 2 for example. Im just throwing that out there. I havent done any math to back this. If you got a big enough move in yields, that spooked people, this could hurt the recovery. Remember if you gdp was only running at 1 to 2 and they didnt Start Operation twist for awhile. Yields got to 3. 5 on the tenyear. Thats a shocking environment for stocks. Stocks fell 10 to 15 . But still weve had people say that we can still do 4 . That thats just normal. Thats just normalized over time. Longterm yield. There would be some trepidation initially but thats not going to be something that would Health Environment were going to get a lousy gdp number. But that should be backward looking. Hopefully the market knows this is in the past, this isnt now. I think all the sentiments this week we have them from every country i think except Japan Business sentiment surveys coming out. Thats a much more forward looking indicator. Were going to be watching that and housing. Those are going to drive things as well as talking about earnings. We have 20 of the week. Thats going to be a lot of the earnings season. Now is when stocks usually begin to slide after a 4 rally in the two weeks before and al alcoa we could be hitting a rough patch as well. Youve got a big lump money and youre like youre yeah, exactly. Crazy like a fox. Yeah. The minute we get 5 youre in. Yeah we looked at some good opportunities. Im worried about europe, too. I know you added to international. But i think core europe is on the path of slowing in the next several quarters. Ill take care side of that. So 5 , youre waiting for a 5 pullback before you put more in or do you see 2 or 3 and start to see okay . I think there are areas you can shop. I think industrials. When youre in consolidated trading range you want to buy whats working for the home builders, transports. Transports are working. Would you buy more there . Yeah. Absolutely. Pointing out the transports are up 20 in the last ten weeks which i knew they were hitting new highs. I didnt realize it was that much that quickly. Thats china and fracking and a lot of other things that arent tied to the environment around the fed and around earnings. Keep in mind i know global big picture girl joe but china is doing better, weve got industrial profits out last night four months in a row theyve been improving. Europe were not going to get any reform this year because theyre on pause until jrmnys election but i think no news is good news for europe. If they can just be off the radar screen for a couple months, better china, stable but vulnerable europe i think all of that at the margin does help the u. S. And maybe can contribute to a further rally. Before the individual investor gets in, used to be at 20,000 on the dow, i mean, we keep forgetting 800. 1,000, 2,000, 3,000, remember what it did in 1982 . Thats because earnings were driving this isnt an earnings rally. This is a multiple ten or eleven and theres no alternative investment. Were above 13. How do you get to historical averages without any kind of earnings we havent made any headway in 12 years. Maybe 15 is the outside of time that you can sit there and spin your wheels as earnings keep going up and the multiple keeps contracting. 15 is about as long as it goes before so maybe were a little bit early. A great start for 2014 and 2015. Oh, you just cant wait until it pulls back a little. I can read you like a book kleintop. A lot more from these guys throughout the show. When we return on squawk were going to have more on the market rally and why its a far cry from the one in 2007. Kayla tausche has a preview. Good morning, andrew. The peak in 2007 was a result of the fiveyear bull market. Gold less than half of what it is now. The yield on the ten year was near 5 . Well tell you why this rally is more sustainable than that one. After the break. Lets go. [ male announcer ] introducing the allnew cadillac xts. Another big night on the town, eh . And the return of life lived large. Welcome back to squawk. Checking the futures right now you can see weve got some red arrows, at least on the dow. Nasdaq virtually a little down. S p 500 off by a point. Dow jones off by almost 16 points as we open up right about now. Dow obviously heading towards 14,000 at least it looks like it is. But is this rally sustainable . Kayla tausche joins us right now with more on that. Kayla, a lot of questions about that this morning. A lot of questions but investors are saying this slower, more measured pace, makes it a little bit more sustainable, especially coupled with economic fundamentals that you guys have been talking about all morning. If you take a look at what weve seen in the last ten months, both the dow and s p up less than 10 . Whereas in 2007, 13 dow components were up more than 20 apiece, even if you take a look at the chart it does look a little bit similar. Well break down the dow a little bit later in the show as well. That swelling in 07 the pinnacle of what had been a fiveyear bull run for stocks beginning in 2002. Money had been pouring into equity markets. Not into the safe haven trades like weve seen in the last years here. Take a look at what type of economy we were looking at back then. The tenyear was at 4. 65 . Corporate Balance Sheets looked about as good as they do now, 1. 5 trillion. Unemployment 4. 7 , but was just starting to rise at that time and gold the ultimate safe haven trade, 743 an ounce. Now, the tenyear of course below 2 . Unemployment 7. 8 , and gold is more than doubled in that time as investors have actually been avoiding stocks which is exactly the opposite story line of 2007. Thats why people say that theres still room to run. Howard silverblat at s p capital iq notes s p is cheaper 15. 2 times earnings currently versus 17. 1 times then. The tide is starting to turn, too, according to the latest data from lipper we had the third consecutive week of inflows into the equity market 3. 66 billion dollars in the most recent week that they measured over the weekend set a record 55 billion dollars flowed into the equity market in january. Thats an alltime record and of course january now because of that movement is on pace to be a record january since 1989. Investors are coming back in. We saw it ticking off almost january 1st as people started putting money back in. Got the resolution to the fiscal cliff. What happens next . What happened the last time we saw an inflow of money into the mutual funds, 2011 and stocks fell. Prior to that it was april 2010, stocks fell. That kind of signals more of a contrarian indicating that one that suggested that the rally had durrant. That was a spring swoon both years. I think you have to watch that carefully. I expect that data and the size of the rally weve had but you look at things like high yield. High yield junk bond yields today 6. 4 . Thats down substantially from the alltime low and so if we get signs that the economy is at least slowly improving, despite the fiscal tightening, the feds still got a tailwind for us, at some point people are going to rotate out of high grade bonds and slowly high yield bonds because the valuations are so rich there. Its not that equities are cheap its that these other assets have gotten ridiculously expensive. And people have been poring their money into high yield and into those Asset Classes and out of equities. Last year we saw steady outflow, 200 billion out of equities. So there has to be some natural correction there coming back in to them. That was the point earlier, too, he said that would be one of the first warning since if you see the high yield market start to move. It was astonishing. I forgot 4. 65 is where the ten year was. Looking at it today, maybe it will get back to 2 at one point. 4. 65 we were saying it cant possibly go any lower. You got to get out there. On the day if you look at the reports from the day of that peak on october 9th, there was some fear, because the yields had fallen, to 4. 65 they were too low. At the time. Which is a little bit ironic when you think about it now. The markets never do what you expect. Yes. But thats the right thing to talk about. I think rebeccas right. This is about what bonds do, not about what stocks do that drive money into the stock market. Maybe we start to see losses on high quality bonds. I think the barclays was negative year to date so we continue to see that. Investors tend to think about risk not as missing their longterm goals, but about losing some money. If they start to lose the money in bonds where theyve been going through for so long that might push them into stocks. Kayla, thank you very much. Well see you a little later. Coming up, caterpillar earnings just straight ahead. Well go through the numbers and find out what it is saying about the global economy. In the next hour were going to speak to ceo Doug Oberhelman. Former vice chairman of Goldman Sachs Robert Kaplan joins Jeffrey Kleintop and Rebecca Patterson. Then did president obama violate the constitution . Let me count the ways. No, senator mike johanns talks about fridays federal court ruling against the president and his nlrb appointments. The white house strongly disagrees. Jay carneys like no problem. That story and much more on the markets this morning. At 1 45, the aflac duck was brought in with multiple lacerations to the wing and a fractured beak. Surgery was successful, but he will be in a cast until it is fully healed, possibly several months. So, if the duck isnt able to work, how will he pay for his Living Expenses . Aflac. Like his rent and car payments . Aflac. What about gas and groceries . Aflac. Cell phone . Aflac, but i doubt hell be using his phone for quite a while cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a getwell card at getwellduck. Com. Executor of efficiency. You can spot an amateur from a mile away. While going shoeless and metalfree in seconds. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. Now this. Will work. [ male announcer ] just like you, business pro. Just like you. Go national. Go like a pro. [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. You got comments, questions about anything you see on squawk, shoot us an email, squawk cnbc. Com is the address. You can also follow us from twitter squawkcnbc. Futures at this hour, see whats going on ahead of the markets. Dow looks like it will open off ten points. Nasdaq will be up about a point and a half. And the s p 500, lets call it unch for now. Couple green arrows and a couple of red arrows, as well. But lets call it unch as well. Up next, earth moving earnings from caterpillar. And later, dont miss our first on cnbc interview with ceo Doug Oberhelman. Its just ahead right here on squawk box. Welcome back to squawk, youre looking at a live shot of washington, d. C. Investors waiting to see if u. S. Stocks can continue their recent rally. The s p 500 is riding an eightsession winning streak. Its longest since november of 2004. The dow now within 2 of its alltime high. Much more to come on the markets as the show rolls on. A busy Economic Calendar for this week highlighted by a meeting of the Federal Reserve policymakers coming tuesday and wednesday. One economic report set for today with the National Association of realtors issuing pending home sales for december coming at 10 00 a. M. Eastern time. And the investigation into Boeings Dreamliner issues focusing on a different manufacturer, this one of the jets monitoring systems. That comes off a probe into the company that makes batteries for the jet found no evidence that it was the source of the 787 problems. Remember we had lots of conversations just a week ago about how the batteries could be the issue. Remember famously that picture we showed on squawk, 11 pounds lighter and so discolored. People thought it had to be the battery. Now thats off the table. The Monitoring Companies now on the table. And lets see if we can get to the bottom of this thing one way or the other. Caterpillar earnings that are expected any moment now. Our guest host today, Jeff Kleintop, Rebecca Patterson. Guys, were looking at all the things that have been coming in with the earnings season. Jeff you were making the point that you get to that point in earnings season where you start to see a little bit of a pullback. The good news has already come into it . Yeah, you know, look, we started the Fourth Quarter with expectations of 10 earnings growth. Now its maybe just two or three. That hasnt improved over the course of the early reporters. Two weeks after alcoa reports we usually start to get the turn in the earnings season where theres no good news and we start to price in the bad news. And thats kind of what were on the cusp of right now. We hear from a lot of Industrial Companies this week. We heard from get some surprises maybe move things once again . Equitable spending. Well get durable goods orders, as well. Well hear what the state of business spending is this week. Thats really important as we look for the rest of the year. Rebecca. I think durable goods, always a very volatile report so you get nervous about reading too much into one month but i think looking at the orders, the leading indicator part of durable goods will be particularly important this morning, to get a sense of that business activity. It looks like during the break we just had some news that volvo, or a report anyway, suggesting that volvo is buying a stake in a chinese company, building up its heavy truck business. Ged. Know, stuff like that makes you know, if we can continue to see these global m a transactions thats been going on, that tends to be cyclically correla correlated. An dwru in davos you started hearing about deals being back on the forefront. I saw two people i wasnt supposed to see to the. Who . I cant say. I really shouldnt. No, no. And i said, whats going on . They said shhh, ixnay on the and i said i would be what did you say . This back to the hooker story . No, were not back to the hooker story. Well, who were these two people they were dealmakers . Dealmakers. And it just all right. Just seemed like there was a lot of action going on there. I should also tell you you know who else was there, your old friend joe he actually asked about you, michael bell. No kidding. He doesnt look anything like that. I said michael you want to come on squawk, you should come on over, theyre in the middle of this deal so he couldnt make that happen. Exactly. Hopefully well have him on when and if the deal ever some of the deals that were hearing about, they all tend to at least lately revolve around china and theres certainly some news around, you know, Home Construction as well here in the u. S. , thats working. Caterpillar is tied into both of those themes. Well have to hear what they have to say. Caterpillar is reporting and i dont know whats in this bummer of 1. 04 which would be well below 1. 69. Revenue numbers okay. 16. 08 billion versus 16. 12, an estimate. I like it when they give heres whats in that number. The Fourth Quarter was negative impacted previous to the announced goodwill impairment charge. 78 cents a share. 1 04 and 87 would be for 2013 the company is looking for 7 to 9. The estimate is 8. 54. You could drive a truck through that. Also, for fiscal 2013 sales, also a big difference. 60 to 68 billion, and heres some insight on that. That 2013 outlook you said you could drive a truck through it. They admit that in their own commentary. They say the range of that 2013 outlet reflects the level of uncertainty we see in the world today. They say theyre encouraged by recent improvements in Economic Indicators but theyre still cautious. And while we expect some improvement in the u. S. Economy, growth is expected to be relatively weak. We believe chinas economy will continue to improve, but not to the growth rates of 2010 and 2011. We also remain concerned about europe, and expect economies in that region will continue to struggle in 2013. Those are comments from dog oberhelman, who is the chairman and ceo. Hes going to be joining us in about half an hour or so to talk more about this. But, caterpillar has been one that can look far down the road. Youre not just talking about this year. They can look quite a bit further down the road. Some of that uncertainty seems to be prevalent. Its been reported on year after year after year. Each quarter you can see big fluctuations. Not just in where the actual number is, versus estimates but then the stock can open down, close up four points by the end of the day. Open up four points higher. Close down, but right now, people are trying to figure this out. Its 9595. 50. Let me tell you one more comment he makes. If the recent improvements and Economic Indicators continues, 2013 could be another record year for caterpillar. They expect the first half of 2013 will be weaker than the first half of 2012, though. They are looking for better growth in the second half. However, if, like the last two years, growth and confidence decline in the second half, 2013 could be a tough year. So either way, as we demonstrated with the inventory reductions in the Fourth Quarter, theyre prepared to excute the lever. Theyre hedging their bets. Theyre hedging their bets and giving broad guidance. Inventory reductions and production levels will continue to decline at least for 2013. You look at the backlog, 19. 6 billion at the end of the Fourth Quarter versus 23 billion at the end of the third quarter. So from 23 down to 19. 6. So theres what youre seeing here is that cat pymer doesnt have as much visibility as a lot of other companies. And its dependent on what we dont know. And thats important because for us to get that pickup in job growth in the u. S. , that we need to see the fed start to move towards exiting qe we need to have companies a lot more confident than things you can drive a truck through. Even at caterpillar. If you look at the longterm, its as high as 117 or so, and then it traded as low as down in the mid 60s back in 2011. Kind of in the middle of a recent range. Just a oneyear chart that youre looking at there. Sort of almost a wait and see picture on the chart. Were waiting to see if jobs can get momentum. Waiting to see if we can get legs to the recovery despite fiscal tightening. Caterpillar is the perfect analogy for the Macro Economy were living in today. And to break out of that spring we were talking about. Can we get through thinking were going to have a better second half of the year . Were not seeing rio tinto, other businesses tight into mining talk about the weak environment. Look at where copper prices are. Were not seeing a lot of upward momentum there. Thats key to cats business and a lot of the industrials as well. Weve got to see that begin to pick up as a leading indicator of better Earnings Results down the line. We did have the dow transport. He said its not contracting. Everything he talked about contracting. Who is on your side . Did you you know that was the meeting in davos that you that you werent yeah. I want to know what the real meaning was, andrew. Youre not going to are they two companies, ceos from two companies . No. A banker with a company . Yes. A banker with a company . Lets leave it alone. A banker with a company. You said it. I think theres a preview to come. You say it and then you just leave us high and dry. But key business. But it was a banker youre a key. And it was a banker and a company . Whispering . Joe will keep working on him. In the commercial break maybe get a little bit more out of him. A company . Media company . Industrial . Thats what i said. There. Youre pretty good at this. Ill let you keep working on him. Fortunately we have caterpill caterpillars ceo Doug Oberhelman. Hes going to join us to talk more about what he sees in the global economy, more about the Quarterly Results and thats a good thing because this certainly raises some questions what were seeing in this right now. Obviously theyre not sure where things are going but well get a lot more from doug when we come back in the next hour. Hes joining us at 8 15 a. M. Eastern time. Up next, though, we have a closer look at some winners and losers in this rally. Jackie deangelis has a preview. Jackie. Good morning, guys. Its been a good run for stocks. The dow up 6 this month. As earnings season kicking into high gear im going to walk you through some of last weeks biggest winners and losers and see if that momentum can continue. Stay with us. Welcome back, everybody. Dow futures down by about 12 points. Weve been watching shares of caterpillar this morning because it just came out with earnings. Caterpillar came in with earnings that were 1. 04 was the number, 87 was a charge that was included on this. Analysts were looking for 1. 69. Whats really important is that this company talks about their outlook for 2013. They they see somewhere between 7 and 9 in earnings a share. Street today, 54. Obviously thats a very wide range and the company is making some comments about that. They say that wide range for the 2013 outlook reflects the level of uncertainty that they see in the world today. Doug oberhelman is the chairman and ceo. He says that they are encouraged by recent improvements in Economic Indicators but remain cautious at this point. Worried about things maybe taking a turn like weve seen in the last couple of years. In 2010 and 2011, at least, we saw a downturn in the spring and if thats the situation again, then, well, all bets are off. But a lot of uncertainty there. Were going to get a chance to talk more to Doug Oberhelman about this. Hes going to join us in the next hour. The markets highs produced many winners and some notable losers, as well. What does that tell us about the bredth of the market and about what we can expect in this week and in this quarter . In general, we have assigned cnbcs Jackie Deangelis joins us now with more. Good morning, joe. Good morning. Good to see you guys. Youre definitely right. We saw some pretty remarkable individual stock moves last week in both directions. The question now is can the upside momentum can, can the downside slides be contained . Some of the strongest performers last week include netflix. A weekly gain of 71 . That was after a big earnings beat. Now substantial Short Covering in that name, analysts saying with the rally could continue all the way to 200 before the stock pauses for a breath. We also saw some money pulled out of apple and allocated elsewhere in tech. No doubt that netflix was part of that rotation. One of the recipients. Meantime Green Mountain, one that we like to talk about a lot up roughly 14 . Part of that after analysts felt that the response to starbucks was somewhat underwhelming and strong expectations coming up for the february 6th Earnings Report. Analysts feel that this Company Really focusing on its products and putting efforts to turning around. One example is launching a more affordable keurig machine to reach consumers of all levels and price points. And gncr is still managing to compete debt piet its patent expiration. Then theres ibm. A 6 gain on the week but the biggest winner on the dow after earnings Beat Estimates for the 40th straight quarter. But there were also some substantial losers as well. Apple was the one that received the most attention the stock down 12 for the week. Concerns, of course, over its latest Earnings Report just one issue there. But worries about the pipeline, the future, and also some of that product cannibalization prompting some sellers to add its name. Of course that selling pressure analysts are saying could potentially continue. And coach dropping 17 after reporting weaker than expected domestic sales. You were talking about caterpillar all morning as well, 2 drop on the week for cat. Do we know if David Einhorn is still shorting Green Mountain . Remember he was out there. He was out there. Im not 100 sure. Where he is now . Herb greenberg is the Green Mountain man. Im sure hell be well check in with him at some point. We should talk about cat pillar. The stock is a little higher. So maybe people are looking at this thinking this is a really cautious outlook. Look for a lot of action. Well talk to doug at 8 15 eastern time. Coming up in the meantime its the most expensive coop in new york city on the market right now. Cnbc just got an exclusive look inside this mega mansion. And you wont believe how much it is going for. Were going to tell you all about it when we return. Comments . Questions . Send them to squawkcnbc on twitter fl low the show and look for updoubts from andrew, becky, joe and the squawk staff. Twins. I didnt see them coming. I have obligations. Cute obligations, but obligations. I need to rethink the core of my portfolio. What i really need is sleep. Introducing the ishares core, Building Blocks for the heart of your portfolio. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. [ construction sounds ] [ watch ticking ] [ engine revs ] come in. Got the coffee. That was fast. Were outta here. [ engine revs ] executor of efficiency. You can spot an amateur from a mile away. While going shoeless and metalfree in seconds. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. Now this. Will work. [ male announcer ] just like you, business pro. Just like you. Go national. Go like a pro. There are the futures which are up a little from where they were. They were down 15, 16 on the dow. Now down 5. Caterpillar has indicated up a full dollar now at around 96. 58 or so, 55. Up 95 cents. So we are going to see Doug Oberhelman the ceo. Hes going to join us in the next hour to discuss the quarter and beyond, and why they why you could drive a caterpillar truck through the estimates that hes giving us for the next quarter in terms of how big the the low that they expect and the high in revenue and earnings per share. It has to do with the uncertainty in the global market. Well hear from him. Okay. In other news, it is new york citys most expensive coop on the market right now. A mega mansion just shy of 100 million, and cnbcs cameras were the only ones allowed inside. Lets go to the videotape. This is best view of the apartment. Because there is no better view. I am dying to show you the rest of the place. I hope you have your walking shoes. Here we go. The hallway is like a bowling alley. You want to put on tennis shoes. Really, exactly. Master bedroom suite. Now you made me fly 3,000 miles to come see this apartment. Mmhmm. I have a very important question for you. What are you asking for this . What do you think . A bargain. Im thinking 125 million. Youre close. Yeah. 95 million. Okay. Not too bad. Im pleasantly surprised now. Robert frank joins us tonight. Hes got the inside scoop of this apartment in tonights episode of the mega homes at 9 00 eastern time on cnbc. I dont know how you got inside my apartment like that. Yeah, exactly. Maybe makes sense. I mean its crazy. We got lost in there. We lost our camera crew. We lost dolly. Its 8,000 square feet. Whats amazing about this place is, first of all, the guy, the buyers representative said 95 million . Thats reasonable. Thats oh, thats not bad. Not bad. This is ultimately what do people say if im going to sell a house, its like getting ari . Its like what Goldman Sachs was in the great m a days unless goldman was on a deal, unless dolly is on a deal its not really a deal. But whats also interesting about this apartment, guess what the monthly maintenance fees are . This does include taxes, and it is a hotel. But it doesnt include your mortgage. Youre paying 95 million. And then what do you pay during the commercial break i guessed 17 grand a month. I would like to raise that 17 grand a month . To 55 grand a month. Very close. 60,000 a month in monthly maintenance fees. Now that does include twice it includes maid service and a spa and some other things. So youre paying 95 million and then youre paying 60,000 a month in maintenance. But we bring you through all kind of apartments tonight. 160 million worth of real estate in new york. Are these places back . I mean for awhile things crashed and nobody could afford these places. Are they really back . Because we still talk about how on wall street those pay packages are coming back. Thats what everyone was saying a year ago, two years ago. Two things happened. One is foreign money. I mean one of the great things about this show tonight is we bring you through with a russian buyer as hes in central park west. The russians, the chinese, the latins, especially what percentage of foreign versus u. S. . Broadly, in new york or nationwide its around 8 of all purchases last year. 82 billion the over 50 million property . In miami its over half. In new york theyre saying its between a third and a half of those 10 million plus are foreign buyers. So no one saw this coming two years ago when everyone was saying there arent enough rich people to buy these apartments anymore. So foreign money came back. But wall street money is getting very confident right now. I look at the hamptons last week. Up 98 sales volume in the Fourth Quarter. And a lot of that was goldman, morgan tanly, jpmorgan guys, buying, taking advantage of that tax issue that was coming. All of a sudden theyre selling stock that they got i think they had a lot of cash from selling assets to avoid that fiscal cliff issue. But also, some of them had deferred comp that was in 2013 that was pushed back. But what im also hearing is that they want hard assets and real estate is coming back. I mean theres just a lot of competence. And when the wealthy are finally taking risk, maybe not with their Business Capital but at least with their personal capital i think thats a really good sign. I hear that a lot because people are convinced that all the money being printed by the fed, by the bank of japan, et cetera, we dont know when, but there is a fear that this will turn to a lot of inflation at some point. How do you protect it . Real estate is one thing that should handle it. You always hear about the 10 million a year managing director at Goldman Sachs, big bank, and now is a 5 million a year banker. I know. And the Vice President right under him who used to be a 2 million or 3 million guy or girl is now in 1 million. I dont understand how this is happening. When you say the bankers are doing this, that i dont understand. Hedge funds i get. So lets look broadly. I should have said, its the world of finance. Its hedge funds, private equity and the top guys at the bank. When everyone made the mistake of doing is looking at the big wall street banks, saying wall street is dead, its never coming back. Therefore new York Real Estate chances are never coming back and they missed the private equity hedge funds. Tom hicks is putting his dallas mansion on the market for 135 million, and guess what . Hes probably going to sell it for over 100. There was a house last week that sold in Silicon Valley for rumored 117 million. So at the very top were seeing these crazy prices. This is like an how much . 95 million would that be like a million a month in a mortgage . Figure it would be a million . No. At todays rates and then is that a conforming loan . Yeah, they pay all cash. Thats the amazing thing. They probably do. Then 60 grand a month, correct me if im wrong, but the early wasnt paying that after he cut back the railroad investment, right . I think he had everybody for 60 grand. For those Downton Abbey viewers. Yeah, i mean that 60 you could run Downton Abbey on 60,000 a month. Its the asians that love this place because its the 18th floor. Which is 18 very lucky number. Thats just weird. So they like that its on the 18th floor. Its going to be an asian buyer. Is that feng shui or whatever . It is. We go into that the feng shui, the numbers. Theres an apartment 432 park avenue. Tallest building in new york, chinese wont touch it because four sounds like the number of death. 18 a month is what you get for bar mitzvahs. Right . Huh . No, no, no. Seven. Seven. No. No, no. 18 oh, no. I get a high i thought it was you have a christmas tree. Why do i talk to you about these things. The developers in new york are building around feng shui, numerology, the russians love 432 park because its going to be the tallest building. I call it putin towers because its allrussian. Going to be the tallest building in new york and almost exclusively russians buying it. So we see new york kind of reshaping and being reshaped by all this foreign money. Chinese new year coming up. Idiot. Thank you. My rabbi is not happy this morning. Robert, thank you. We will watch tonight 9 00 p. M. Secret lives its a great show. 180 i never were not even going to mention the fact that youre sitting next to your wife. No. We wont even mention that. Rebecca, why dont we talk a little bit about where you see, again, with people jumping in, people wondering if they should do this, what do you tell them if they call today . Sure, i mean i think you need to get your money to work. I dont want to be in cash. Theres a lot of cash still sitting on the sidelines and i talk to folks who still have a lot of cash every single day. Cash to me is the ultimate fair bet. You think there is nothing in the world that will do better. You like stocks more than you did a full weeks ago. I do. Im not ruling out a pullback. I think as long as we keep seeing the data slowly improving not just in the u. S. Just dont focus on the u. S. Stay focused globally because were all interlinked ka, i think we might have a pullback but we can keep going higher. Were seeing now correlations in the equity market coming down sharply and historically when thats happened, thats been a constructive signal. We saw that in 98 and 2003. At the same time im looking at high yield im looking at yield focused investments. We still like them but theyre getting so rich that i think its smart just to take a little profit off the table. Okay. Rebecca, thank you for joining us for this hour. Jeff kleintop is staying with us for the rest of the program. Still a lot to come. Okay. Youve been cheaping out on the bar mitzvah gifts, havent you . A whole its early in the morning. Its early in the morning. Think about it, now. What you got saving up. You got to more than double it up. Okay. Coming up caterpillar ceo Doug Oberhelman in a first on cnbc, what, seven dollars, Quarterly Results, the economy, and washington its an interview you couldnt afford to miss. 7 iphone store. [ male announcer ] this is karen and jeremiah. They dont know it yet, but theyre gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, theyll find some retirement people who are paid on salary, not commission. Theyll get straightforward guidance and be able to focus on other things, like each other, which isnt rocket science. Its just common sense. From td ameritrade. Riding the rally. Geronimo markets off to a good start to the year on the strength of individual investors, but can it continue or are we due for a correction . Economic data that could move markets. Durable goods for december set to hit the tape at 8 30 a. M. Eastern. And dow component caterpillar rtin its slightly below 16. 0 billion versus 16. 12 an estimate. Chairman and ceo Doug Oberhelman will join us first on cnbc, the third hour of squawk box begins right now. Welcome back to squawk box here on cnbc first in business worldwide. Im joe kernen along with becky quick and and drew ross sorkin. Our guest host Jeff Kleintop chief Market Strategist at Lpl Financial. Hes going to help us build a wall of worry. We sent rebecca packing because she was too bullish. We want to continue to build skepticism. So were keeping jeff around. Thats my job. And well be joining him in just a minute to talk about the january rally and also have u. S. Morgan jpmorgan chief u. S. Equity strategist tom lee and rob kaplan, former vice chairman of Goldman Sachs. First Andrew Ross Sorkin is back from his pilgrimage. You gave other people the stockholm syndrome. You took other hostages that turn them into socialists while theyre there, right . Or did you come back feeling more capitalistic or less capitalistic . I think of myself as a caviar economist. Yeah. Officially. A lot of caviar. I mean just pounds of it. Just unbelievable. But theyre all euro trash so they all feel guilty as theyre eating it, dont they . Its weird, right . I dont know about that. All right go ahead. The big news this morning, caterpillar reporting earnings, 1. 04 a share lower than the 1. 69 that the street had been expecting, although that number does include a onetime charge of 87 cents that was previously announced. Companys outlook for sales and revenue in 2013 is 7 to 9 per chair. Heres the important part, chairman and ceo Doug Oberhelman saying the wide range reflects the uncertain business environment. Dogs going to join us and were going to talk about what that ultimately all means. Weve also been talking markets all morning. And plenty to talk about, keep you busy here. The dow is up for 11 of the last 12 sessions. Its now just 2 away. Its under 2 away, actually, from the alltime high set back in october of 2007. And its on track for its best january gain since 1989. The s p 500 closing above the 1500 mark for the first time in over five years. The eightsession winning streak is the longest weve seen since november of 2004 and now its less than 4 away from its alltime high, which was also set back in october of 2007. A report 55 billion pouring into equity mutual funds, and etfs in january. That was before the tech bubble popped. The futures at this hour are indicated just a little weaker. Things have really turned around. Right now the s p futures up half a point the dow futures down by less than a point and the nasdaq is up by about 2. 8. This is all coming as those caterpillar numbers have come in. That stocks actually been trading higher. Thats helping the dow out this morning as well. On friday, Goldman Sachs Ceo Lloyd Blankfein joined squawk box from davos and explained his bullish outlook for equities. Sometimes the fed will be ratifying or delegating whats going on in the market but if you had two, a couple of good numbers in a row and everybody would be looking ahead, i think people would get awfully squeamish about lending money out at todays low Interest Rates and you know when growth comes back, i really should be in equity. Lets face it, you have a Central Banks around the world who are trying to penalize you for being in cash and reward for being in assets by inflatings price of assets. There has been a notable absentee from the stock market rally. Apple, the stock closing down under 440 a share setting a 52week low and apples market cap is now also below that of exxon mobile with the friday drop. For more on the journal rally, Kayla Tausche joins us to put it all into perspective. Andrew, this time around were looking squarely at the dow. The bench mark index also on pace for its best january since 1989. Up more than 6 so far this month in 1989. It was up about 8 . But even looking at the five worst performers in the dow three of them are just the names up the least. Verizon and boeing are down but the rest of them are still up. The best performers, led by hewlettpackard which is up 20 . Of course thats on the back of optimism that dell will see a buyout possibly as soon as this week. But then a broad mix of sectors for the rest of the leaders, home depot up nearly 10 this month alone. Now on october 9th, 2007 when the market peaked previously, on that day, 25 out of 30 dow components rose. That rally was led by american express, ge and caterpillar. Caterpillar is an interesting name to watch as well as home depot. Those two have seen a bit of a role reversal. In 07 cat was the leader in the ten months leading up to the rally it gained 34 just that year. And in the last ten months its actually lost 10. 3 so home depot it was the worst dow performer leading up to the 2007 peak of course that was because it saw a deal nearly fall apart to spin off its supply unit as the credit crisis started to take wind, it is, however, the best dow component over the last ten months, and thats likely because housing continues to turn a corner. We should note, though, the dow now is different from the dow then of course we see these names come in and out some of the dinosaurs have left the dow but back then, the dow had aig, citi, general motors, honeywell and altria. Now those have been replaced by bank of america, chevron, cisco, united health, and travelers. Always very representative of the market. Id be interested the to hear from Doug Oberhelman whats different from caterpillar to now. It is the biggest laggard on the dow for the last ten months. Hes been pretty bullish in previous quarters so im sort of interested in whats changed there. Kayla, thank you. For more on the bullish start to january were joined by tom lee. He is the chief u. S. Equity strategist at jpmorgan. Also Robert Kaplan, former Goldman Sachs vice chairman and Harvard Business School Professor of management prak stis. Our guest host is Jeff Kleintop. Tom i want to start with you because you have said this is the year investors really need to get involved. They really need to be in these equities market and any time theres a pullback you think they should be buying quickly. Thats right. You know, i think investors, this market didnt weve been in a bull market since 09. I think one of the big hallmarks of the rally this year is datas been good for some time. Investors have been listing numerous reasons why theyre underinvested. But today, at you know, at over 1500 we still dont find investors that overweight stocks. So i think in the short term we see market directions up. Why do you think investors are still so squeamish . Just all the things that theyve been through for 9 last 10 or 15 years . Yeah, i think theres still a lot of memories of 08. I think that we still have a taint on owning stock. I think stocks, you know, being bullish is really still considered not as smart as being bullish on bonds. And i think overall its been sort of hard to say how can earnings go up if were at 100 of s p earnings. I think theres a lot of reasons investors are sort of fighting this tape. Were looking at a chart, tom, and i can see at the four or fiveyear chart every little break where we had to have you son to say, well, what do you think . Are you going to well, what do you think, tom . And every time you never did throw in the towel. You never capitulated. You always were firm in your belief that we would go to higher highs. And im just wondering, the reason is to give you kudos, but also what do you think the ultimate level we could see is on either the dow or s p, even in the next five years . What do you think the deal objective could be . Yeah, and i think joe, i think thats the right way to look at this. I think the cycle peak in earnings is going to be closer to 150. That really follows the historical pattern of s p profit cycles. So 92, everyone looks at 100 as a peak i think its really killing the king too early. And when we look at multiples, you have to keep in mind, mid cycle s p multiples are at 17. Were at 13 or 12. 5, and triplet bonds, if you kind of invert their yield are trading almost at 11 times. If you put a 17 multiple on 150, i think the s p really sort of peaks around 2400, 2500. What are the dow it would be at similar higher. 18,000, 19,000, 20,000 dow. Okay. Thats obviously four years away. Robert how about you. Do you worry about the levels at this point . Do you think investors are missing out if theyre not involved . I agree with a lot of what tom just said. The thing youve got to remember is a big part of this story is the fed and the ecb. The central bankers have flooded the markets with liquidity. Made risk free assets hard to own. What theyve done though is buy time for the economy to heal for s p leverage. And the fundamentals arent great. Theyre decent but thats good enough. But its hard to own bonds when the feds continuing to make it very unattractive to own rich assets. What you say is very rim thissent of what we heard from Lloyd Blankfein on friday. You cant fight the fed in this situation. But with investors still on the sidelines does that mean theres still room to run with this aside from what the feds doing . There is. There is. Having said that on toms point. The earnings estimate for this year and tom and i were talking before we came on. That means the mark it right now at 1500 is almost already at 14 times and the big debate going on in the market, should the market trade at 14 times, 15 times, 16 times, this years earnings. The p e may be a little lower than were used to because weve still got a lot of tail risk. Weve still got the european issue. Weve got the u. S. Government deleveraging, and so i think the market will be higher at the end of the year. I think its gotten a little head of itself. Youre looking at pullbacks and people will jump in when those come . I actually think if youre an investor, you shouldnt worry about that as much as you should take a three to five year outlook. So will there be a pullback . Yes, i believe there will be. Will the markets be high he ter end of the year and in three years . Yes. And i think that matters more than what happens over the next three to six months. Do you gentlemen think if we got tax reform for corporations that lower do you think we could add to the possible gains . Is there anything washington can do other than get out of the way that would actually help . I think the bigger issue, while Corporate Tax reform had some attractive elements, i think the bigger issue theyve got to focus on is entitlement reform, and get that wrestled to the ground. And they may get the Corporate Tax reform in the context of of deficit reduction but i think entitlement reform right now is more critical. All right. You, too, tom . Well, i do think one of the next sort of legs thats of this bull market is going to be ceo confidence through strengthening. I think when you look at earnings, Conference Call transcripts i think youve got a pervasive cautiousness out of businesses, as well. That theyre still managing for tail risks. All right, great. Tom, robert, guys, thank you both. Well talk to you again soon. Coming up, caterpillar reporting earlier this morning. Up next were going to talk to the chairman and ceo of caterpillar Doug Oberhelman in first on cnbc. Whats his name . I just said it to you. Now you keep oberhelman. What did i say . I dont know. Anyway. I dont know. Still to come a u. S. Court of appeals ruling president obamas nlrb recess appointments unconstitutional. Senator mike johanns is going to talk to us about the appointees in question and join us at the bottom of the hour. And as we head to a break check out the squawk box market indicators. To the best vacation spot on earth. all the gulf it doesnt matter which of our great states folks visit. Mississippi, alabama, louisiana or florida, theyre gonna love it. Shaul, your alabama hospitality is incredible. Thanks, karen. Love your mississippi outdoors. I vote for your florida beaches, dawn. Bill, this louisiana seafood is delicious. Were having such a great year on the gulf, weve decided to put aside our rivalry. Now is the perfect time to visit anyone of our states. The beaches and waters couldnt be more beautiful. Take a boat ride, go fishing or just lay in the sun. Weve got coastline to explore and wildlife to photograph. And theres world class dining with our world famous seafood. So for a great vacation this year, come to the gulf. Its all fabulous but i give florida the edge. Right after mississippi. You mean alabama. Say louisiana or theres no dessert. This invitation is brought to you by bp and all of us who call the gulf home. Dow component caterpillar reporting this morning. After consulting with compsen that provides our earnings estimates apparently analysts knew about the charge but the 1. 91, which excludes the 87 cents, goodwill and charges compares to 1. 69 so maybe the initial movement in the stock price could have been not understanding that or maybe the outlook. Joining us now first on cnbc is Doug Oberhelman, caterpillar chairman and ceo. Been doing this so long doug, i become less interested in the last three months anyway and especially with analysts do or dont do. If they knew about it i dont know why they didnt adjust their estimates because they did know about it, right . But this is above expectations in your view, too, for where the street was . Well, good morning, joe. And were celebrating a record year here. And if you look at the whole twelve months over 2011, sales up 10 , 10 profit up 15 , all of our operational metrics were near records inside. They were pretty happy with the results regardless of some of the things that noise that were up that you mentioned. The the outlook as some people scratching their head. What we finally decided was its an uncertain world and caterpillar is definitely subject to that uncertain world more than other companies. We did notice thats backlog went from like 23 billion to 19 billion. What does that mean . Well weve come down on the backlog a bit. I want to talk about the outlook and youve mentioned it. Talked earlier about wide enough to drive a truck through. We make a lot of trucks, big ones and little ones and it was a pretty good analogy. Let me tell you why we chose a top range bottom line. Go back two years 2011. We were talking about what should be a pretty good year. What happened midyear in 2011 . Downgrade, lots of uncertainty, we sputtered out the end of 2011 with a weaker second half than any of us wanted. A year ago, beginning of 2012 things looked pretty good. We thought 2012 would economicly the u. S. Would be pretty strong. Thought china might be recovering a little bit. What happened midyear . Fiscal cliff, lots of debt situation, uncertain election we sputtered off the end of 2012. Here we are sitting today whats coming up in 2013 . Fiscal situation, debt in this country, all kinds of political speed bumps coming in this country. China recovering for sure now. Latin america looking pretty good. And noise from europe is pretty flat and muted. So were thinking, you know, it could be a pretty good year. But weve got that same political issue here in this country that will drive a lot of uncertainty if they start screaming at each other again. We chose a pretty wideranged top and bottom. When i think about it, dog, its like, it used to be that we were, you know, in a 2 world, you know, nothing great but at least were growing. But were in whats going to mess that up in terms of the fiscal issues. Now i would think, almost, that were in a 2 world, and were worrying about or were thinking maybe something could actually cause us to go to 3 if they did it. Were not looking at the possible downside of the 2 , were looking at maybe these guys could do tax reform. Maybe we could repatriate something. Maybe we could do some entitlement reform. And were not worried about china and europe as much anymore. I would think maybe the risk could be in your book, and not anticipating could even be better. Well, i agree with you completely. And ive been optimistic about the fiscal cliff. Ive been involved with fix the debt and all kinds of things trying to influence washington and make some speedway there. Maybe this will be the year they get it done. Because underlying the world growth is certainly better conditions than weve seen. Were projecting amazingly 2. 5 worldwide gdp. Thats really terrible. Great numbers on the developing world, and really poor numbers in the developed world. If we could somehow get just a half a point kick or something this year, we see 13 move up, i think smartly but again weve got that wall coming at us starting in march with sequestration and on into may with the debt ceiling. How that turns out is probably going to dictate how 2013 happens for caterpillar and maybe for the world. You really think washington and whether or not they can reach any sort of agreement, whether they can behave in a certain matter thats going to dictate what happens for caterpillar for businesses around the globe . Well, i think the level of noise from washington, if if we can if we can just find a way through that somehow to get some kind of agreement, maybe as minor as they are, but work towards a solution, its going to take a long time to get out of this fiscally for the United States, but just a few small steps would let the economy reflate and well feel better than we have the last two years in a row. I think wed be at the upper end of our forecast and wed all feel better about going after the year in 2013. Sure. Doug, real quick, i was in davos last week with many of your peers and one of the census was maybe washington doesnt matter anymore. Maybe were just going to have to live through it and overcome it and its going to rain one day, snow the next, and our business is to figure it out, and maybe there would be a little less snow if washington did a better job, but you know what . Its okay and also given that weve now pushed out some of the debt ceiling issues and theres a sense that well get over some of those things, maybe we wont get a grand bargain but life is going to continue. Do you think thats wrong . No, i dont think its wrong. Just look at us in 2012. I mean we had a record year, operationally all of our metrics were super and im happy with all of that. Think what it could have been is kind of my point. Where could it go if we had that just to a dull roll for a mute to some degree in washington wed all feel a lot better about it. I think the new state of dysfunction in politics probably around the world, certainly in washington for awhile. My hope and im always optimistic is that it could be a lot better with just a little bit of success out there. Doesnt take a whole lot. Staying on politics for another minute. The u. S. Energy renaissance could be a real positive for cat, fracking is certainly a big part of what youre doing. Could it be not so much around the debt or other fiscal issues, but washington getting together on u. S. Energy policy to create jobs and growth. Talk about what you see happening there. That would help immensely. Were really on the verge of freeing ourselves from this, you know, this middle eastern premium that ive lived with my entire life on oil prices and energy. Every time something happens somewhere in the world of supply, or whatever the price would spike we are almost to a point where we can see Energy Independence for the United States and for north america, including mexico and canada as well. Its a huge opportunity. We get around that i think wed see a lot of jobs come back here the next three to five years and theres a big upside for caterpillar, too. We dont need washington for that, either. Because its happened in spite of washington for the past four years anyway. Yeah. It hasnt been the policy to look at key stone that were still playing around with. So its almost, i think andrews right. Its almost like, you know, they can keep us, you know, no matter what they do to us we can do 12 and then if they do anything right, if theyre not total keystone cops maybe we could go to 3 or so. Yeah, i think looking at it as a half full instead of worrying about what might happen on the downside. We could worry about what might happen good on the upside. Yeah i agree with that. My point is lets try to keep pushing them so we get something and theion side risk is there. Meanwhile, lots of fairly positive things happening underneath. We need to keep those going, as well. That we are doing. Again look at 2012. A record year in almost all of our metrics. Im very proud of our team for delivering that in a year where we didnt have a lot of tail winds, lets face it. There was a lot disrupting out there. Year doing all of this based in illinois. God bless you. Thats not easy, either. Anyway playing in peoria. Were playing in peoria today, for sure. Excellent. All right. I saw some ranking where it was 50th or something, illinois. Hang in there, doug. I know that youve looked around, but youre going to stick there for now. We appreciate your time, dog. Thanks. Always good to be with all of you. Thank you. Doug oberhelman. Coming up, durable goods data for december hitting the tape at 8 30 a. M. Were going to bring you the number and the Market Reaction when we return. [ engine revving ] [ male announcer ] every car we build must make adrenaline pump and pulses quicken. To help you not just to stay alive. But feel alive. The new c class is no exception. Its a mercedesbenz through and through. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz financial services. Tdd 18003452550 hours can go by before i realize tdd 18003452550 that i havent even looked away from my screen. Tdd 18003452550 tdd 18003452550 that kind of focus. Tdd 18003452550 thats what i have when i trade. 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And only hopes to achieve them. So youll be happy to know that when it comes to your investment goals, Northern Trust uses awardwinning expertise to lead you through an interactive investment process. Adding precision to your portfolio construction by directly matching your assets and your risk preferences against your unique life goals. We call it goals driven investing. Your life has a sense of purpose. Shouldnt your investments . Expertise matters. Find it at Northern Trust. When we return we have some breaking economic numbers. We are just a few minutes away from those durable goods reports. Thathe n december and thats what were waiting on. U. S. Equity futures at this point are barely budging. Well see which way things go. You are working off an awfully long streak. S p 500 finally crossing 1500 and staying there on friday for the close. Long, long winning streak. Well see if it continues today. By the way, take a look at shares of caterpillar. That stock is trading higher. At this point its up by 2. 4 . That say big help for the dow this morning. Obligations, but obligations. I need to rethink the core of my portfolio. What i really need is sleep. Introducing the ishares core, Building Blocks for the heart of your portfolio. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Welcome back to squawk box this morning. Were just seconds away from durable goods. Rick santelli is standing by at the cme in chicago. Steve liesman in the studio. Rick . Durable goods for december are hitting the screen. But theyre hitting the screen a little bit slow in chicago. Anybody seeing the data . Nothing. Boy, oh, boy this is what happens when you have legislation that i guess prevents Public Workers from getting paid. Were not getting durable goods. Anyway, we will hold off. For some reason it is delayed. We are expecting a rise for december durable goods of roughly 1. 9 to 1. 2 . Lets take the average roughly 2 . Were going to be looking for exenergy. Still dont see it. Leslie, we see anything . Theres nothing here, either. Huh. We are at least welcoming this data with roughly ninemonth highs on most of the yield curve, i found it fascinating that were approaching 30 basis points on a twoyear note yield which has been hovering at 24, 25 basis points for months. Dont see the data. Whats going on, joe, what do you think . Who technically releases this stuff . I was going to stay a couple things. Im not going to do it anymore. Austan goolsbee was giving me a bunch of grief on friday about the pls numbers. He said because it went up from 7. 8 to 7. 9 in the last one that they werent cooking it because they let it go up. Not that it came down from 9. 2 to under 8 with the Participation Rate of 41 . Im not dabbling in that anymore. Maybe they havent quite decided on what the dural goods numbers should be yet. Im looking at i guess one observation would be while were waiting there was a holiday last week. Maybe its tomorrow. So what do you thinks think about these unbelievable highs in the equity markets . Slight rise in Interest Rates 4. 6. 4. 6. All right i am hearing 4. 6. Which is, over two times the estimates. I still dont see it on many services. I got a release right here from the actual Census Bureau up 4. 6 to 230. 7 billion. New orders for manufactured dural goods increase seven of the last eight months. You see extransportation, becky . Just digging through. Ive never read it straight off of the press release here. 1. 3 extransportation. These are very, very, very good numbers. Of course we always want good numbers. Durable goods things made to last longer than three years. This is a very volatile part of our data set points. And of course were also going to get a proxy for Capital Spending which i dont see yet, either. Thats capital goods orders increased 3. 8 extransportation. Ive never read the release before straight off of this. Capital goods, defense orders. You want that . I dont see a capital goods extransportation. But unfilled orders, defense new orders for capital goods increased 8. 7 billion or 110. 4 on a month over month i see capital orders, exaircraft is up 0. 2. Were expecting up 1 so it definitely is good. Proxy for Capital Spending id like to see it higher of course and last month was released up more than this months. It was revised up 0. 3 to 3 . Thats orders if you look at shipments which is kind of the other side of the chain, that was up 0. 3 overall these are pretty good numbers. Pushing that tenyear note yield ever closer to a potential test of 2 . We are at ninemonth high yields now gang. I guess its back to you. And what can you say . Its not the private sector putting out the data so im sure nobody will make a big fuss about it. Thank you, rick. Lets get to steve liesman, who is now happy to report now. 3 minutes 37 seconds after the i guess its the definition of good enough for government work, right . So i have new orders up 4. 6 and extrans up 1. 3. Whats interesting about these numbers, im trying to figure out where the strength is. We want to be careful. Aircraft was up new orders, 10. 1 . Defense aircraft was up am i seeing that right . 56 . That has been down. Defense aircraft a big part of it. I want to get to capital goods exaircraft is i have a Different Number guys. I better go back and check this out. Exaircraft defense was up just 0. 2 rick. Thats what ive got, as well. Thats not a great number. No, it really isnt. Capital goods new orders that made sense. Because i was very confused. Everybody said during the fess cal cliff showdown that there was a Capital Spending decline that that was at least one of the approximate reasons why i would have been very, very confused to see a 2 rise, and thats a number that were hoping this year ends up being one of the things that turns around. I dont know, jeff, if youre in to the capital goods oh, yes. Stocks right now. But they have been hit, and now theres perhaps some value there. Theres really a lot of hope it turns around. Year over year look at these numbers. They are flat year over year. You look at orders, exaircraft, literally i think is 0. 0. Right. It is very it is completely flat. Businesses have been sitting on their hands doing Share Buyback theyve been hiring a few people they havent been reinvesting in their business. Thats critical for growth this year. Weve got to see that happen. Minus 0. 3 year over year exaircraft. So theres two worlds out there. One is this boeing world which will be following this. But they end up being the hugest part of the biggest part of these of these capital goods orders. And then you want to look at everything else, which is the barometer of a couple of things. One is as jeff suggested, how the capital goods makers themselves are doing but a sign of confidence in the economy. Am i ordering the kind of stuff thats going to help me produce more stuff in the future. And thats something that we might follow. We didnt follow our debts over the fiscal cliff. Now weve got the debts you say quickly in my ear, i didnt hear what you said. Heres some of the tension that we found. Biggest risk, i talked to a bunch of guys on Interest Rate desks out there and they dont really. What they thought the fed was going to do in terms of more. It was the last question. Guys on the Interest Rate desk i talk to in europe that trade euro and Interest Rate futures theyre wondering is the fed going to end earlier than they think. Thats their risk and concern. 2012, it sounds like, you know, a lot of talk there about the end of the financial panic. It means in davos there was nothing aflame. Greece wasnt aflame. No concern about spain. Portugal, by the way, did a very important absolutely right. There was no flame if you think about creating the preconditions for growth at least not having the part of the world aflame is one of the things. And there was some talk, by the way, some upside potential for europe in that unit labor costs have fallen sharply in the peripheral countries. You might get a rebound. I think you got on a plane before this happened. On saturday. When he was on a panel where he said theyre too complacent that hes actually much more worried that actually all of davos was mistaken. To have the optimism that it seems to. I agree it was interesting when we got there, there was all the optimism, by friday people were questioning whether and by saturday night the general demeanor is one that kind of says is usually along those lines of we dont have glass half empty. The glass being half empty. We have to go. Wanted to say in response to jeffs comment there was a sense in europe in davos that the u. S. Is off of the fiscal edge. That there was a notion that we had been through the fiscal cliff. We had gone through the debt ceiling. And that the United States budget situation was not the clear and present danger that it had been in the past. The Neville Chamberlain moment, right . You could be right about that. You could be right. Im just saying half full or half empty at least we agree on exactly the level, right . And half if not at all. I like the idea that we can now turn from emergency measures to questions of how we create growth. There were a lot of good discussion about that and it would be nice talk to ben about that. Hes obviously not aware that were not in crisis anymore. I know weve got to go. But it would be nice to begin our conversation from here on out. How do we make growth instead of how do we put our fires . Thats a different conversation. Youll never learn that at davos. You want to have one of those arguments, rick or just were much more civil than those guys, right . Hey, civility. The highlight of monday. And friday. Thanks, guys. All he needs to do is say bull shih tzu it would been fine. Its a dog. U. S. A u. S. Court of appeals ruling unanimously that president obamas recess appointments to the nlrb were unconstitutional. Were going to talk to a senator, a republican senator, mike johanns, who is calling for the appointees still in office to resign immediately. Still ahead can the rally on the street continue . We will ask jim cramer. But we can still help you see your big picture. With the fidelity guided portfolio summary, you choose which accounts to track and use fidelitys analytics to spot trends, gain insights, and figure out what you want to do next. All in one place. Im Meredith Stoddard and i helped create the fidelity guided portfolio summary. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Welcome back to squawk box, everybody. You can see the futures have actually turned around. So after we are looking 11 out of 12 sessions higher for the dow, the futures are now up by 10 points. S p futures up by half a point and the nasdaq is up by 1. 3. The s p closed above 1500 for the first time in over five years on friday. At this point back to green arrows. We had been looking at red arrows earlier this morning. Check out shares of closing retailer joseph a. Bank, company said sales for fiscal 2012 which ends next week will be about 20 lower than the prior year. The company cited a variety of factors including the fiscal cliff and hurricane sandy. The d. C. District u. S. Court of appeals ruled that president obamas nlrb recess appointments, which were already controversial in 2012, were not only controversial but unconstitutional. Our next guest is demanding that they resign from their posts. Senator mike johanns joins us now with more on the letter that he wrote to the cfp and the nlrb calling for immediate resignation. Senator, did you get an answer . I have not gotten an answer yet. Hopefully i do and i hope they do step down. What is the likelihood that its appealed to the Supreme Court . You know, i do think theres a likelihood. Although the risk that the president has at this point is if he appeals can the decision get worse . Thats always a debate that goes on. But the end result here is its almost redundant to ask them to resign because theyre there illegally. The court side so. How do you how would it get worse . Because this court took a much broader ruling than people had anticipated. This was not just a ruling about the cftb this was a ruling on recess appointments in general which the last several president s have used again and again. The concern they have to have at this point is whether they not take the next step, which is to say that all of their actions are void. And that could very well happen. In fact, ive asked for a gao investigation of that, because if theyre there illegally, it would seem logical that the next problem that the president s going to have here is that every action taken at the cfab plus at the nlrb is going to be void because they werent there lawfully. Would they have to be challenged individually . I dont think so. I think youd literally could go after the whole total of their actions just simply because if they arent there lawfully then they cant enter lawful orders or rules. So it appears to me that you could probably have an attack against all of them in total. But while its going to be probably appealed i wonder if you have any idea how long that takes . And in the meantime, i mean cordray is only there till the end of the year anyway. And there are some people that think that maybe republicans come back now and say, look well give him a normal well vote on him and well let him become the you know well put him in this position if he changes some of the things we want changed in the charter of the pb or cpmb. Are people talking about doing that . No, you know our position was reasonable from the start we just wanted to sit down with the president or whoever and try to work out some problems with this new federal agency, and so well see. I dont know how the white house will react to this. But i wonder, when they come out with theyve got all these things theyre going to do. Hundreds of things, every single one that they try to enforce, do people go, im not going to im not going to Pay Attention to what youre saying until we get a resolution from the Supreme Court, will every one of them be undercut the, you know, the seriousness of whether they have to comply . Yeah, see, thats the challenge they have in appealing to the Supreme Court. Lets say they even get the actions stayed. Lets say though the Supreme Court agrees with what the court of appeals did then you have this problem of all this time that transpired when you were getting the Supreme Court to act which could take a year youve got all those actions that could be illegal. Senator who would you like to run the department . Richard cordray is a nice guy. It wasnt ever about him. What it was about is this is a very, very flawed system. And we just wanted somebody to sit down with us and work through the flaws that were in this new Consumer Protection bureau. Well see if the white house responds in a positive way. So far their actions on this have been very brazen. Its hard for me to imagine how they could make this appointment when we werent in recess. Thats the remarkal thing about this. I just wonder, you know, i rarely mention the New York Times. But i do need to know what theyre thinking. They called it, the Appeals Court sides with the chicanery of the republicans. And theyre calling, you know, handing, during the you know, having like sort of a skeleton staff there doing a couple of things and saying youre not in recess is just a trick tos today how the president to make appointnesses recess appointments. All due respect to the New York Times. It just suggests that they read the constitution. Its pretty clear on this. It was written so long ago, senator. I dont know. I mean, they were running around they didnt even have cars back then. You really think we got to Pay Attention to all that stuff . I sure, do. I sure do. Theyhood muskets. I sure do. Senator, im not going to disagree with the view that follow the proseed urs of the constitution but is there an argument to be made that youre holding this department hostage . No, theres not. You know, theres a way o g about this, and the constitution recognizes that way. It can be inconvenient working with congress. I was in the cabinet at one time, and it can be inconvenient, and it can be irritating. But thats the essence of our system, the checks and balances, and the advice and consent power of the United States senate is enormously important. But when you why in the cabinet the president , george bush also used this again and again. Never when not the difference was different version of it. But all of them by the court have been ruled as unconstitutional. The difference was we were in recess. You know, had the president made an appointment the day before he did, he could have at least had a colorable argument. I mean it was the most phrasen thing ive ever seen. We werent in recess. It was incredible. I dont know jay carney just reminds me of that movie how to cheat on your wife where the wife comes home and catches her husband with a girl and then she just gets dressed and leaves and the husband keeps saying no, theres no girl here. And finally the wife just gives up and says all right, forget it. I love jay carney. Hes a straight face right in the camera. Anyway, senator, thank you appreciate it. Thank you. Coming up the s p on its longest winning streak in more than eight years. Up next were going to ask jim cramer if the rally can continue. And what stocks have the most room to run. [ man ] ive been out there most of my life. You name it. Ive hooked it. But theres one. One thats always eluded me. Thought i had it in the blizzard of 93. Ha never even came close. Sometimes, i actually think its mocking me. [ engine revs ] what . quattro welcome back, everybody. Take a look, youll see the tenyear note just ticked back below. But the yield had been above 2 for a brief moment in time. Right now its at 1. 994 . All the way back to the spring, thats something to watch for the rest of this morning. Were also keeping an eye on the markets this morning. The stock markets. Jim and david join us right now from the new york stock exchange. Jim, what do you think . Theres been so many questions asked about whether this rally can continue. How are you feeling today . Something like caterpillar says, listen, not only can it continue, when caterpillar came out, i had my spread sheet about what they could do, i was very ace di pointed. It didnt matter, it frankly didnt matter. It is a little upbeat. But whats really going on here is a belief that 2013 is going to be much, not some, much better than 2012. Ive got to tell you what if they had actually done the numbers and raised guidance . I think its very bullish. David, weve also been watching this morning about exxon mobil being back as the worlds most valuable company after the trading action on friday pushed apple below it. I like it, david. The world seems to make more sense to me when exxon is worth more than apple. Theyve held that position for a lot longer than apple. Theyve got a pretty good business, exxon. They seem to do a lot of things. If you want to own a pro rata share, it seems like the world makes more sense. David, where did you go to grade school . I went to a school in Jackson Heights greens. Not in brooklyn. No. David, did you ever get beat up and go crying . No, i never cried. Why did you say brooklyn . I said queens. Didnt he say where did he grow up . Oh, it was queens. Oh, okay. I see. And that was just amazing. I know you guys were it looks like its called up today. I want now i am interested in whether someone orchestrates a short squeeze, just because hes mad at son from ten years ago. That might happen. But joe, at the same time, getting all the vitriol out of that conversation, the way to generate a lot of performance by the end of the year is saying the company is a fraud. What about that . I know. What i was amazed to see was ackman still thinks regulators are headed in there to see if this is a total ponzi scheme. He needs the government to win. He needs somebody. He needs a u. S. Attorney. He needs someone to come in and indict and say its a fraud. Otherwise whats going to happen is youre going to have 20 million shares that are short. Youve got buying low. We dont know whether icahn have a position. Did wapner bully him at all . Wapner is so sweet. I know. But for every general growth theres a jcpenney, and for every i dont know. I dont know what to believe. I still have the crappy hong kong dollar calls. What am i supposed to do with those . How is that target long . I dont know. But it was good timing. It was good timing to come out at the end of the year. Why not do it at the beginning of january if it was for honest reasons . I told you to practice up on your icahn stuff. Can you call me a moron or something . Ill work on it. You came from a tough neighborhood, joe. I was a little jush kid and got the you know what beat out of me every day. Well see you in a couple of minutes. When we come back, the chief Market Strategist gets in the last word. [ male announcer ] it was designed to escape the ordinary. It feels like it can escape gravity. The 2013 cclass coupe. Starting at 37,800. Starting at 37,800. All stations come over to mission a no go call. Go. This is for real this time. We are on step seven point two one two. We have entered our two minute hold. Cabin venting has been inhibited. Copy that. Sys two, verify and lock. Command is locked. Flight computer state has entered auto idyll. Three, two, one. The falcon 9 has launched. Preparing for nose cone separation. Standing by for capture. The most Innovative Software on the planet. 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