Transcripts For CNBC Squawk Box 20131231

Derailed. Thats about 45 miles west of fargo. Smoke can be seen up to 20 miles away. Residents within five miles of the fire have been evacuated and urged to evacuate, rather, and residents within ten miles have been told to stay indoors. Both trains are owned by Berkshire Hathaways bnsf. No injuries so far have been reported. We should say the fire will likely raise some concerns, though, about the increasing volumes of crude that are shipped by rail. Right now, more than twothirds of the states Oil Production is shipped by rail. Were going to go to michelle with more of the top news stories. Happy new year. Its nice to ring it in with you, andrew. Its very nice to be here. Warren Buffetts Berkshire hathaway is buying philipps 66. Berkshire reported owning about 27. 1 million shares of philips 6 6 at the end of september. That stake is worth just over 2 billion. A phillips 66 filing said it would be getting 19 million of those shares in explaining for the specialty product focusing on the science of drag reduction, specializing in maximizing the flow potential of pipelines. So those two previous soers going together, right . Train derailment, lots more pressure for the Keystone Pipeline and something to make the oil move faster on the pipeline. Marvett tech jumps after kkr discloses increased stake. Its one of the top standout these year up about 09 in 2013. Hertz has adopted a poison pill after seeing unusual and substantial trading activity in its stock. Hertz says it is trying to reduce the likelihood that any person or group would gain control of hertz through open market accumulation. Joe. Fedex, new york city is suing fedex for shipping cigarettes. The big apple accusing the delivery giant of illegally delivering millions of contraband cigarettes to residents which violates a 2006 settlement. The city contends that fedex shipped rooufly 19. 5 million tons of cigarettes in nearly 10,000 shipments. Thats 55,000 cartons. The suit is seeking 52 million in civil fines and unpaid taxes from fedex. Crazy story. Shares of fedex at this hour how is the possible if you cant smoke in new york city . I dont know. I see like ray liota and other guys unloading a, you know, one of those trucks in the back and but these are illegally these are illegal cigarettes . Theyre not allowed to be here, are they . You can sell cigarettes in new york city. Just at a remarkable i guess i was wrong about that. So you can actually have it. You dont go to jail yet for having a cigarette in new york city . If he had one more term. One more term. Theres very few places that you can smoke what about Electronic Cigarettes . Pending, isnt it . No. I thought they said no, didnt they . No, i dont believe you can smoke an ecigarette in a like a bar or a public space or a restaurant. Because it looks like smoke . Its water. Its its nicotine, right . Yeah. But whats coming out is just water vapor. But the secondary smoke that they dont really care about actual the larger debate going on about ecigarettes. So the good part is its helping people smoking real cigarettes get off of them. Whats the bad part . The bad part is the potential that some people so you want to have a law that doesnt allow you to have the potential to start smoking . No, no, the bad part is there is anxiety thats going to encourage a new generation of people i understand. But you dont pass a law to make sure people dont start smoking, do you . To prohibit them from actually i think its right in the vain of the current new york city moment to do Something Like that. The thing about the shipping i think raises the whole we see this all the time, right . Geographic arbitrage, when the price of a product in one area is so much more than another that you raise taxes so high theyre going to look for ways around it. If Secondhand Smoke is hazardous to people around one its one thing. If all youre doing is not allowing it to be doing because you dont want someone to pick et up because it might lead to other that is very nanny sake. And youre paying for their health care. Well, we are now. You would say we were before. But he highlights what i think is one of the most the biggest issues when it comes to socialized medicine, which is you start to be able to tell people you cant do that because you cost me money. You infringe on freedom. But youre always costing me money. If you want to smoke, pay for it. Thats you should have your own individual responsibility to pay for it. But we weve never done that before. We could have. Let me ask you a separate question. If you were a smoker and you couldnt afford to take care of your own health care, would you just say good riddance . I mean, its a very interesting question. And i dont say it just to youve been smoking for 60 years and has been told over and over again its not good for you . You have to in a humanitarian society, you have to but youre talking about 10 of people or whatever it is going to Emergency Rooms and then the 90 are covered or 85 , whatever it was. There should be a way to cover them without taking over the entire system. Thats the only thing people say. There should be a way without what some people say will lead to the disruption of the quality of the entire system or the demand will be so high that the supply will shrink so that its going to be hard to get health care. All the things that have happened when other people try to deal with it to help pretend you basically make it tougher for the 90. But if youve been smoking all your life and you have money, whats tfoot the bill yo 1100 . But youre not going to tell a person that im sorry. Ill turn it off. You have two things. Where is your ipad . I have an iphone and a blackberry. I like redundancy of infrastructure. I think were putting that anyway, that may be a sound that turn off that cell phone. Netflix giving Ceo Reed Hastings a raise. Raised his salary by about 50 to see 6 million for 2014. Another phone number. Thats according to regulatory filings. Netflix shares have quadeled in value this year as it introduced original programming and saw growth in its subscriber base. Hastings will receive 3 million each in cash and Stock Options for the year. Netflix is ending its the value of the company has gone up so much and how much stock does he have . Hundreds of millions of dollars. Its the same story as the apple thing. Its like i only make 6 million. Meanwhile, there was a breaking bad marathon. I know. Did you dvr it . You need to. Yeah, i dvred it. Im not getting it from you at this point. And i dvred it and i saw episode one last night. The very first . No, episode one of the fifth season which was for me very unsettling because it starts out, i guess, near the end. Have you not did he lose weight for the role in the end . You caught no, no, one episode. No, were you caught up to that point . No. But he has his hair back and hes coughing between. So i figure it came back. But they dont really show it. It was the episode with the truck like this with the magnets getting the people may not have seen that. So i wont do that. I wouldnt worry about that. Its so far president obama doesnt want to know that walter white died. I know why he doesnt want to know. I saw someone retweet sdp and god forbid i say ann coulter. But someone retweeted her. They asked why did you shake the hand of a dictator . And r aoul castro said because i thought it was the right thing to do. Thats not true. No, its funny. Because you would think youre talking about why did the president no, no, i get it. I get it. Why do you think its not true . I dont think president obama is a dictator. In terms of executive orders. On a continually you know this is a joke, right . Its hyperbole. In every joke, there is a splinter of truth. But the reason why it is funny is because he is not a dictator. So thank you for explaining that because i was confused. But its funny because some people would suggest the way hes acted lately is a bit of a dictator. Its funny because its true. No, its funny because its not true. I know. Whatever. Something is happening here about a poison bill, investor carl icahn. He took a nearly 10 stake previously in netflix. They got rid of the poison pill, apparently. Did they get rid of it . I think they did. Let me see this. Yeah, they did. Lets check on the markets this morning in the last trading day of the year. The futures are suggesting we have a positive open. We had a really tight range yesterday and they looked like the same situation this morning, dow higher by nearly 9 within the s p up by 1, nasdaq up by nearly 4. The price of oil, wti is at 98. 95 per barrel. Brent is at 111. The tenyear note, 3 on the nose. Its lower by nearly 0. 25 on the price. Euro dollar, 1. 37. The pound will cost you 1. 65. The dollar is mixed and pretty flat. And the price of gold, this has been the worst year for gold in more than a decade. Lower by 1. 10. 1202 per ounce. Lets go across the pond. Its time for the Global Markets report this morning. Ross westgate is standing by in london. Good morning to you, ross. Good morning to you, andrew. We are on the last trading day, of course, of the year here. And only half the markets are trading today. A number of them closed yesterday. Already, the german, the swiss, the irish, the greek markets arent trading this morning. We have a shortened trading session today, as well. London closing up around 12 30 local time. Right now, advancers outpacing decliners 12 to 4. Volumes are very, very light. The ftse 100 up around 15 over the course of the year. Today, up 23 points. The cac 40 is currently up 0. 3 and the ibex is fairly flat. Lets show you where we have gone through the course of the year. The ftse has been an underperformer. The reason for that is because basic resources, many of which are listed in london have been underperforming. Theat thats the worst sector over the course of the year. One of the best performers has been the german market. The xetra dax up 25 . Autos have been the best performer over the course of the year, up some 38 . Tech and media doing fairly well. So the cac 40 up around 70 . The ftse mib up some 16 . Its worth pointing out the irish and greek markets up 34 and 28 . Iron coming out from the bailout to plans in athens showing signs of improvement and greece showing signs of improvement, as well. Its been a surprise how strong the euro has been this year and also against the dollar. Up 4 over the course of the year. And its worth pointing out just a short while ago, two sessions ago we hit the high for the year, as well, at 1. 3894. That was a 26month high on euro dollar. The nikkei up some 50 odd percent over the course of the year. 57 driven by the weakness in the yen. Dollar yen, up 21 over the course of the year. Thats the biggest gain since 1979 for the greenback against the japanese currency. Thats where we stand right now in europe as we dwindle our way into 2014. Happy new year to you all. Happy new year to you, roscoe. Great to see you. He got a haircut for the new year, it looks like. Yeah, it looks good. Hes always handsome, though. Youve got a thing for him. I do. I have for years, yeah. Coming up, some of the most annoying years of 2014. He does wear pants, which doesnt narrow it down that much, does it . Joe. Thats about come on. No, i have other standards. You do. Height. You have to get the checkbook out first, dont you . No. Thats a coincidence. Oh, its coincidence. It just happens every time. Why wouldnt you if you can choose . Out of that pool. Right, exactly. Find someone that fits in. I live in a financial tv in a tv town. It happens. Pope made headlines about his critical comments. Yesterday i had the chance to speak with the arch bishop of new york. Well tell you what he said next on squawk box. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. Tdd 18003452550] tlife inspires your trading. The internet of everything. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. Welcome back to squawk box. Lets get over to Michelle Caruso cabrera with todays executive edge which is at the crosssection of on religion and money. Michelle. Yes, it is. The big story on our website is whether or not the popes recent comments about the wealthy and capitalism may be making it toughtory raise money for the 180 million restoration of st. Patricks cathedral. Billionaire ken langone, hes spearheading the effort. He told us at least one potential sevenfigure donor has expressed concerns about the popes recent negative statements about the free market and suggestions that the wealthy may be insensitive to the poor. Langone tells cnbc timothy dolean, quote, told the cardinal, your eminence, this is one more hurdle i hope we dont have to deal with. You want to be careful about general illustrates. Rich people in one country dont act the same as rich people in another country. I sat down with cardinal dolean yesterday. But what the pope and the church believes about which economic model in the world is the best. Here is what he said. Look, the pope is the inheriter of a legacy of teaching. Whats the hallmark of that teaching . Its that the church always recommended what we call a middle way. So he would find pope francis saying, look, both streams of the marketplace, in other words, unfettered cutthroat capitalism on one hand are total socialism on the other. Both of those dont work. Both of those are wrong. Somewhere in the middle where we protect private property investment, private wealth, but we also insist upon the wider societys just obligations to those without, somewhere between those two is where the economy should be. So the Catholic Church is always so we get blasted from both sides. Were not economists. We are moralists. We have prophetic. We are people of the bible and we are virtue. All we know is that however you do it, the Wider Community always has to be taken care of. Joe and andrew, this all stems from this 220 page writing by the pope. Ive read through it in english and some of it in spanish. I think cardinal dolean maybe softens what some of what the pope said. You get a sense that the pope is not a supporter of the free market in its totality. Ive picked out the graph ta i think is a relevant portion of what the pope wrote. And it goes specifically to this issue. He says some people continue to defend trickle down series which is Economic Growth encouraged by a free market will inevitably succeed by bringing about gator justice and inclusiveness in this world. This opinion expresses a crude and naive trust in the goodness of those wielding economic power and in the sack ra liejed workings of the prevailing economic system. Meanwhile, he says the excluded are still waiting. That to me is reclear cut. Sure. The one thing i would add is when you read the Spanish Language version, it doesnt say will inevitably read to more justice, it says the free markets alone wont lead to more justice. But there are sarcastic references to the market, hes critical at some points of capitalists but speculators preventing the state from doing their job. It is mostly thoughtful, but its clear hes not an economist. And he can be wrong. I think its good to emphasize that people need to give back. If you look at where a lot of if a lphilanthropy comes from. But with that aside, the only way capitalism succeeds, i dont know of any capitalists that succeed without somehow growing employment, growing jobs. You know, whether it the whole idea, when you call it, its a loaded term. Unfettered what did he call it . Unfettered cutthroat capitalism. Now, we know from adam smith its been how long . What a profit incentive does, it sets the price and allocates assets by competition. If theres true competition, then everybody has to on be on their toes when theyre trying to earn a living and to do that, you end up, you know, you may not even want to help society. But by creating jobs and by being successful and by doing it well, the jobs are created. Maybe its a and he doesnt seem to give any a lot of people dont understand that. A government, a socio weve seen what has happened where socialism has taken complete hold of a country. And you see what happens. The government doesnt create jobs and it doesnt create prosperity and it doesnt help the people its designed to help. The argument has been made over the last, say, five years to perhaps even a decade that as profit ves increased, the actual real number of jobs has not kept pace. That is in part a function of technology, in part a function of globalization. In part a function of a lot of things. But, therefore, does that change the dynamic around the profit incentive and, therefore, what the pope i disagree with your premise. But in a global world, those are global companies. Theyve created jobs just in other parts of the world. We shouldnt be grudge formerly poor people in the world of having jobs for the first hundreds of millions of people in china and in india, as well. But take the technology piece of it. Thats always we would still have buggy whips, andrew. Theyve demonstrate against machines that separated whatever it was over in england, whether it was the weaving machine and it put people out of business. Theres no more record companies. Think about this. If we didnt get rid of the switchers, the telephones, we would have to employ every single american in switching telephones, right . Weve got the two of us, michelle. And then theres the pope. But if you go back prior to the 17th century, for example, before there were property rights, before for 10,000 years, the average gdp per person, per capita was like 8el 00 total output. Until you can come up with an idea, own it, scale it. But it was almost like pancake batter spread around the planet. 800 a year is what gdp was, until this happened, until capitalism was able to blossom. So why do we need to talk about five years when you could see on a 10,000 year scale how it benefited all of us. We live until 80 years old now. Im not catholic so i am out of my realm on this piece. Ill ask the question of michelle. Do you believe what the pope has said is going to create a real problem not just for people like ken langone to raise money, but over the next 10 or 20 years that he is in his role going to ali ali alienate a large swath of people that might be considered capitalists and catholics . I think theres going to be an education process. The pope is from argentina. Michelle, what do you think the art and gold and all the history in the vatican is worth . Thats a good question. Im not sure they know. Maybe landownership and the greatest landowners in the world. And, you know, i was raised catholic. My uncle was a priest. You know, i but, you know, i wouldnt get too if i were the Catholic Church, i wouldnt get too high and mighty, given some recent history. Thats all im saying. And im not going to go there. But im catholic and theres a lot of things that you wouldnt be the first to have echoed that sentiment, joe. Thank you. And i like all the other stuff hes doing. I do. The world has changed. Women priests, you know, gay marriage, whatever. Im behind all that. Joe, he wants people to be more joyous. I think the funniest things he wrote is some christians are all lent and no easteaster. Exactly. First grade, i told you that every morning. And it was the mass well, you werent there, but the priest faced the altar and did it and it was all in latin and we went every day. Every day . Youre like ken langone, he goes every day. I was an altar boy, no problemo whatsoever. The east coast, they ring in the east coast under a blanket of snow. Lets get to yeah. But no, you think at some point lets get to reynolds wolf. Lets get the National Forecast now from the weather channel. You know, reynolds bring it, man. The guy down i hope they get rescued from that ship, i do. But he said its old ice, but, actually, it is melted, but this is old ice that theyre stuck in . Did you see that, the Global Warming captain of the ship. It is fascinating. You see how nature is a great equalizer. It doesnt depend on technology. At the end of the day, were all at the mercy of the forecast. We know the guy 84 years ago, it was kind of clear sailing, right . And they were trying to replicate that and its in the summer. But they are really stuck. Yes. Hopefully theyre going to find maybe helicopters if the weather slows. But we wish them god speed in the rescue but, you know, anyway, go ahead, reynolds. No, no, i hear you, man. Theres a lot of record cold coming. We know that up here, as well, right . Yeah. There is going to be plenty of it. Were going to springboard forward in the forecast. Show you whats coming for much of the northeast and the eastern seaboard. As we ease into the first weekend of 2014. Whats going to happen is on your thursday, were going to see this low developing off the carolinas. We have that cold air coming into the north. Look at the time frame on thursday. But the nose, the two of thes y entities, this is going to bring snow into parts of the northeast. For long island, could see several inches of snowfall, but potential could see around 10 inches, maybe a bit more into boston, maine into vermont, new hampshire, into upstate new york. Could be cold times, a rough way to ring in the new year. Airport delays, in cleveland, we could see backups later auto today. As of now, no big issues. New york city, cloudy skies, no big delays. Atlanta, so far, so good. Smooth sailing in terms of your air travel. Guys, back to you. Thank you, reynolds. Happy new year. A year of record returns, the dow at an alltime high. The s p 500 and fass dak both turned in stellar performances in 2013. Were going to ask David Blitzer for his best predictions for 2014. And whats up with twitter . The stock getting crushed heading into the new year. Is this a round of profit taking or a trend in social media . 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When an alarm is received, adt calls the local authorities for help. And you can get this monitored protection, plus great local service, starting at just over 1 a day. And only adt offers a theft protection guarantee. Take it from me. The time to think about a Security System isnt after something bad happens its before. [ male announcer ] call now and get adt installed for just 49. You could save a lot more than money. Hurry, and take advantage of these savings. Adt. Always there. At bny mellon, our business is investments. Managing them, moving them, making them work. We oversee 20 of the worlds financial assets. And that gives us scale and insight no one else has. Investment management combined with investment servicing. Bringing the power of investments to peoples lives. Invested in the world. Bny mellon. Good morning. Welcome back to squawk box here on cnbc. Im joe kernen along with Michelle Caruso cabrera and Andrew Ross Sorkin. Becky will be back on thursday. The headlines this morning, one trading day left in whats been a really good year for stocks. The dow, it has had its best yearly gain since 1996. Before that, it was 95. Before that, it rwas 94, i think. The s p 500 had its best year since 1997. The major averages of only close to 2 losing months this year, june and august. Today, also marks the final batch of economic reports for 2013. Which if there were going be any today, we would say its the final batch, right . Of course, because its december 311st. Today well get the caseshiller home prices index report. And the Chicago Purchasing Managers index is out at 9 45 eastern. When well all be so gone. And then the conference board, Consumer Confidence no, we wont. Well be here researching thursdays store until probably close to the new year. 6 00 p. M. , at least. Yep. I feel lazy today. We will also be watching shares of twitter today. The stock has fallen 17 over the last two sessions after soaring since its initial public offering. Did you see i wanted to argue some more with you about this, dicaprio, defending i figured out why its different than mobsters with, these guys, wolf of wall street. And this guy, he already doesnt like me because he was in here and mobsters, and they probably shouldnt be dmrglorified, eith. But even the crime that theyre involved with, gambling, this and that, theyre bad, i admit that. But of late, their life is on the line. Its a dangerous business. These guys, all they did was call ul they prey on elderly and widows and or fans. They take their money and its just so sniffling and small time and petty and disgusting. And not dangerous. And all they do is steal from people unbeknownst to the people. And then i will bet you all that stuff that they put on there in these cool highrises and beautiful women and all that, thats nothing the way it was for these low lives. You know, so to take a grain of truth and to make a narrative about it, i understand that. But i dont like the whole idea and its not even the glat glamourizing part. Its that these guys are not even interesting with what they do. Thats my thing. Mobsters, maybe we have thats your point that we look at well, its still a good movie. Let me ask you this. Its not even a good movie. Andrew, its so show sick vicarious stuff, to go and do a movie in cleveland about the guy, what he did do these poor women in cleveland and with the chaines and i came away from the film and thought there was a i read dicaprios first thing i was saying i was to and the heat of this inspiration and its so full of crap. No, no, no. First of al, it is probably the best performance ive ever seen him do in any movie. Playing that he died . He was terrific. He was unbelievable. Do you like the guy . I dont know. Who knows . But thats not how you judge it. Im judging this as a film. Im judging this as if youre going to go on a friday or saturday night to be entertained for in this case three hours are they at the World Trade Center . Where are they . Sip ree annciprianis but in the end, its a film. Its like watching the small time petty crooks on american greed. Thats where they belong. Dont denigrate american greed. Im not denigrating american greed. Thats the place for it. We have one hour and thats where it should be. Apparently i should say im im an outliar on enjoying this film as much as i have. A, i thought it would win the week and it didnt. Hobbit won the week. Good. And apparently some of the polls that have come out after, they poll people and they the karma, baby. The movie has been getting a c in part because but not for reasons you might think. Apparently the reason its getting the c is, a, people think its too long. Which it is. And b its about 2 hours. 45 minutes too long. And the debotchry some people think is so over the top that they dont believe it. People have gone with their we were here with kayla. She had seen it with her family. This is not a film you want to see with your mother or your father. This is debotchry. Im sure she didnt look like that australian actress. Lets get some thoughts on how the markets will fare in 2014. For the index master himself, David Blitzer chairman of the s p 500. Hes a partier, for sure. Hes a crazy man. They dont make cold calls to widows and or fans. David, good to see on you. Good morning. Now, i looked at how you feel and i didnt get really that excited. Id almost rather sty in this year than go into the new year reading what you think. Youre looking kind of for a regression to the mean year, arent you . I think thats about right. As you mentioned, when you rattle through the numbers, this year has been incredibly good. Its probably been one of the nicest surprises, bob, maybe since but its been a fantastic surprise. And i think we may have a mean reversion. One thing that concerns me is that profits, as a share of gdp, are record highs. Weve been hearing a whole lot about in new york city the tale of two cities. The 1 , all that kind of thing. I dont think theres a magical reversion by any means. But when anything gets to a record a record high share, youve got to wonder if its going to track back. And that plus the people quoting next years earnings and looking at pes, i think i saw 14. 25 yesterday. That would be a wonderfully low pe if it was on current earnings. But youre just looking at somebodys forecast more than anything else. You know, david, though, i could see the income disparity and what youre talking about pooem being alleviated to some extent when the underlying economy starts performing and starts coming up and justifying what weve already seen in the markets. And then that can have a positive feedback on the mblths themselves once again p. Hopefully thats the way this is going to work out. The first thing that moves are the stocks and the people that own the assets benefiting from it. But then we get down to 6 and hopefully before that for unemployment. Id love to see that happen. But let me just mention one thing that is sitting out there. American corporations, including a bunch of very well positioned high tech corporations are sitting on hordes of cash. And that cash is just sitting there. If they take that money and put it to work, get out there, youll get exactly what you described. They start investing that money, the economy will start rolling. What were missing is that kind of investment. People forget that way back in the kennedy area we had the investment tax credit to generate investment and that gave us the 1960s economy. But why are they sitting on that cash . Theyre not making any interest on it. That might take care of itself, too, if they got a bit more confident. All of it starts everything starts falling into place. You get more jobs and then they feel theres more demand and the Companies Start using the money to satisfy the demand. Thats why i say auld lang sy syne, i want to move into the future. I know you want to move i want another 30 this year is what im saying. Id love to have another 30 , too. But instead of these capitalists, as you put i tell when you were talking about the Catholic Church, instead of a capitalist sitting there, theyre supposed to make betts and turn the cash into a bigger economy. Thats what were waiting for. What are they doing . Theyre buying back stocks because theyre worried about solutions and Stock Options. Id rather see them put the money to work. We just need another round of that and thats what it will take. Youre bearish on Corporate America being able to deliver on the earnings. Therefore, the multiples arent reasonable right now. If earnings go down, the multiples are high. And thats sort of what youre saying. Time will tell what happens. What im really bearish on is the fact that theyre not able to get out there and take a risk. You know, i think it was alfred marshall, a british economist of 100 years ago who said mon open lists like the quiet life. I dont want to see any capitalists with the quiet life. And you are a guy that takes fashion risks day in and day out with the bow tie and everything else. So you know from whence you seek. A real risk taker. When are you going to do that . I was thinking about doing it today. Maybe well do it in the new year, on thursday. Coming up next, the future of the fed. But first, take a look at the tenyear yield. Squawk box returns right after this. Chairman bernanke has exactly one month left at the helm of the fed. What is the fed going to look like when hes gone . With us now is greg ip, cnbc contributor. Hey there, greg. Hey, michelle, how are you . Good. Listen, i see janet yellen and policy thats ultra similar to bernanke. Yeah, you know, thinking back about the number of transitions that the fed has had, i cant think why that would be more seamless than this one. We havent had a situation where the incumbent was replaced by his vice chairman, a situation where the two people had been working side by side, mott the not just on the pold policy, but the Communications Framework around that policy. But she will be carrying out the policy in the same way, but theyll probably be talking about it in a similar way. Except for the outfit and the hair, it may as well be the same guy we have up there at those press conferences. She is more dovish, though, right . Yeah. I think she is genetically a more dovish person than ben bernanke. But if you look at the fact that were staring at unemployment still a point or two above the national rate, i inflation still above the fed anticipates target, everybody on that committee is a dove. Even Richard Fisher or Charlie Blosser will not be arguing for a tighter policy now. Its going be mostly a debate which is slow the pace for quantitative easing. I think this is a year in which you have a relative degree of consensus and unanimity around that taim table which we havent had in a while. Did you say genetically more deafish . Well greg, you know, the word please. Theyre going to say you men the women no, no, no. I mean, am i a soft honor dovish person . What i meant was that the xchromesone linked trade could be on any chromosone. Thin. I mean, right now given the fact the economys still operating so far below potential and inflation is too low, i think you want people who tend towards a dovish side of the fed. And there are people we could book dozens of people who think what you said was anathema. A lot of this stuff that happened probably wouldnt have happened. I dont agree. I know you dont. The rise to power become the powerful if all ceos you think we wouldve gone into iraq, necessarily . When people reach positions of power, they act like the powerful. And when women get do those positions, i have no doubt they will act like the men we have seen. Theres been one member of the federal open Market Committee who has dissented in favor of more hawkish policy. So i would sort of characterize her of being at the opposite end of janet yellen in the sense that her tendencies and preferences tend to lean towards the hawkish side whereas her colleagues might be thats the only point i was trying to make. Where are your biases when faced with the same information your colleagues are looking at . I can tell you theres no way i know him. I know him. Theres no way. I was just teasing him. I know you were. I know you were. Greg thank you, michelle. Great to have you on. Thank you, michelle. Im going to watch my words much more carefully. I dont like people who watch their words. I want unfettered, you know happy new year, greg. Happy new year to you guys. Coming up, the most annoying words of 2013. But something tells me that it wont be going away for the probably selfie, twerk. Is twerk really here for good . For sure. I dont know. Maybe that is one thing i heard. I probably gave it away. And are you going out to buy a car today . One of the biggest shopping days of the auto sector. Well get the numbers in the next hour. As we head to break, check out the price of crude. If you are buying a car today, dont go out and get drunk today and drive it. Squawk box coming right back. Welcome back. How is everything . Theres nothing like being your own boss and my customers are really liking your flat rate shipping. Fedex one rate. Really makes my life easier. Maybe a promotion is in order. Good news. I got a new title. And a raise . Management couldnt make that happen. [ male announcer ] introducing fedex one rate. 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Welcome back to squawk box. What were some of the most annoying words of 2013. A couple of them right here. Selfie and twerk, they topped the list. I always think of twerk, i think of twerp. And some of the other candidates, hashtag. Thats when youre saying anything about anything. Which is silly. And mr. Mom. 30 years ago. This is a movie with whats his name. Put out by Lake Superior state university. Whats annoying about selfie . Its annoying. What do you think of when you say selfie . Oh, now maybe its annoying. Now i get it. Anthony weiner is i thought selfie. Totally entertaining selfie. For a while, i thought selfie was a picture of yourself. I didnt think it was any selfie. We dont have just one guest host this morning, we have a wolf pack. Theyre ready with their top stories for the year to watch for the new year. Were going to unveil them next on squawk box. If yand youre talking toevere rheuyour rheumatologistike me, about trying or adding a biologic. This is humira, adalimumab. This is humira working to help relieve my pain. This is humira helping me through the twists and turns. This is humira helping to protect my joints from further damage. Doctors have been prescribing humira for over ten years. Humira works by targeting and helping to block a specific source of inflammation that contributes to ra symptoms. For many adults, humira is proven to help relieve pain and stop further joint damage. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. Blood, liver and nervous system problems, serious allergic reactions, and new or worsening Heart Failure have occurred. Before starting humira , your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Ask your doctor if humira can work for you. This is humira at work. The energy in one gallon of gas is also enough to keep your smartphone running for how long . 30 days . 300 days . 3,000 days . The answer is. 3,000 days. Because of gasolines high energy density, your car doesnt have to carry as much fuel compared to other energy sources. Take the energy quiz. Energy lives here. [ male announcer ] this december, experience the gift of exacting precision and some of the best offers of the year at the lexus december to remember sales event. This is the pursuit of perfection. Squawk box wants to end 2013 with a bang. Today, a guest hosting wolfpack. You ready to let the dogs out . What . You know, let the dogs out. Who let the dogs out . Who . Who . Politicos dan white and buzzfeeds John Steinberg all invade the set with their top stories for the new year. Plus, predictions and prophes s prophesies, what does 2014 hold for the value of your home, media stocks, and the retail sector. All that, plus, are investors getting antisocial . 17 hours until the ball drops on time square. Squawk box begins right now. Good morning, and welcome to squawk box. Im not going to say welcome back. We know youve been with us. Look at that, the ball must be around there, right . I think, squawk box on cnbc, im joe kernan. Im joe kernan along with Andrew Ross Sorkin. Lets check on the markets on the final days trade. You using pedals to raise did you see that . To raise the ball or something. And each crystal is someone designed each crystal. Its like a majority or something. The pedaling, so its green. I believe the pedaling is sort of i dont know. Ask andrew. Global warming. The futures are up again. What do you guys do . Do you watch . Well, you know, i like to watch. We know that part. Thats from remember . You guys can work with me on that, right . Peter sellers, chance the gardener theyre all with me flowers will bloom in the spring. They will. And we see economists come in here all the time. You didnt think i was going to know that movie. Not everyone does. That is a funny scene. Because shirley maclaine. Hes watching price is right. And the president appoints him to the council. What we do. Its a tradition to go to a movie with all the kids. So were going to see the hobbit. Im not going to see wolf and then we stay up together afterwards. And we you know, i sort of might go, you know, slowly sleep at 10 00 and wake back up. But were awake at 12 00, all of us together and we kiss. Do you do that with carson daly . Whats nbc . Carson daly, of course. Ryan seacrest is part of the family, though. I think he does it on abc. He does the dick clark abc version. Five different tvs all on nbc all the time. Excellent. Except its on cnbc. Cnbc or bravo. We should do a new years celebration one evening. Some call it a new years rocking eve. Have they taken that . Do you think we could do it . Thats good, yeah. Because janet can rock. Janet can rock. We already had greg ip saying politically incorrect. Careful with this today. Im not going to get in trouble. Oh, yeah. Ill be the judge of that. How about the tenyear. It was right at three. Which seems fitting somehow for december 31st. Now its below again. Lets watch it. Lets watch it. Is it going to key off the economy . Or off inflation . Thats the question. Inflation stays at zero, theres no reason for it to go up. No reason for it to go up. But if the economy gets better, inflation stays at zero, can it still stay low . I dont think it stays low. Inflation. Do you think inflation starts to come back . Not in the first half. Not in the first half at all. I think you start to see the creep in the second. Do you want to keep talking . No. Sure . No, no, no. Lets talk about. Heres some headlines. Stocks are wrapping up you knew this, right . Best year in two decades. Yes. Is that right . Never heard that. Yeah. Dow had stocks went up this year . A lot . Man, breaking news this morning. Dows had the best year since 1996. And a handful of points from chalking up the biggest yearly advance since the 90s. It was tremendous. It was. People say it led to a big tech bubble and the internet and all that stuff. But, lets try it again. Life is full of tradeoffs. New york city is suing fedex, accusing it of illegal deliveries of contraband cigarettes. Seeking fines and unpaid taxes, stems from a partnership between fedex and a smoke shop located in the Shinnecock Indian reservation out in South Hampton, new york. Who knew that South Hampton was the key is indian reservation, because they can sell cigarettes without taxes. Thats the shortcut when you go a back way. Yeah, you go past it on the left. I dont know where South Hampton is, so oh, right. Please. Thats because you fly in your helicopter. Hes always getting flights, goes right over it. How do you know if youre flying in a chopper. And apple is also on the receiving end of a legal complaint. A lawyer who was appointed to monitor apples compliance with an electronic book price settlement. Remember that. Says in court that apple was obstructing his work. Apples complaining his work is interfering with some of the other operations. Tim cook is a busy guy. Hes got a lot of people to deal with. Residents in north dakota are being urged to evacuate as a precaution following the derailment of a train carrying crude oil. The derailment resulted in a series of explosions which sent flames and black smoke into the sky. No one was hurt in the derailment and subsequent explosions. Authorities still dont know exactly why the train derailed. Were going to talk about the Keystone Pipeline at this point . Not again . What about next year . Is next year the year . That would be a good prediction. You think it will be, dont you . It probably will. Thats a good chip that democrats can use to get Something Else they want. I dont know if its the debt limit or Something Else. I dont think theyre that opposed to keystone. Did mention that. Its a possibility. All right. Were going to be watching shares of netflix today. The shares have quadrupled this year. Revealing its increased the salary of Reed Hastings by 50 in 2014. The plan was adopted a year ago after investor carl icahn took a nearly 10 stake. He now holds about 4. 5 of netflix. What do they have besides house of cards . Orange is the new black. Orange is the new black. Its amazing. Its good. Youre up to date on this . Im not at the end yet. Ive watched three or four. The question is when does the next season start . Its worth it . Yeah. Its really good. The eyes, i was freaked out by the eyes. Thats a big part of it, right . She had a few appearances and disappeared for a little while. I think there was a lot of popularity for her. Was that the major character i saw . The fairhaired lady she was talking to . She was flipped out. She was like, wow. Who was she playing . Who was she supposed to be . I cant remember if the real persons its based on a real persons life. Lionsgate makes orange is the new black. And arrested development. And some others. House of cards, apparently only one more season. Ive never watched it. The model for these shows is so different that theyre only picking up one or two seasons at a shot. But notice, i dont know if you i resubscribed to netflix simply to get house of cards. And by the way, have not canceled the subscriptions. Its like hbo and showtime. Its not an either or thing with amazon. I do netflix and amazon. Amazon you get for free because youre a prime person already. Im not a prime person. Have you tried watching alpha house . I did. The whole series. I watched it because joe was making fun of it. I watched it. Youre a no, its like a bunch of left wing guys. No, startup guys. Oh, thats right. There was another one. There was like a john goodman washington one. I didnt like that one. I like john goodman. Amc, building of the railroad. It is amazing its kind of like a golden age. It is a golden age of television. Theres so much great television. A sixpart series about gold mining. Were all tv junkies now. Im always looking for more. Downtown abbey starts soon. I cant wait. Im going to miss matthew. We have not properly introduced our round table. We have three guest hosts today. Our guest hosts this morning. Do they need an introduction . They are so known to the audience. Anyway. Lets go to this. I want to know whether you think there is a bubble. You know, when you look at the stock on netflix, look at whats happened with tesla and twitter the past two days. And then you think about 2014, where are we . We are at i dont think were in a bubble. I think this is kind of natural. I think theres a bubble in bubbles. Were all bubble paranoid, we cant enjoy a rally. I dont think were in a bubble. I think 2014 will be interesting. Well see the fed pulling its liquidity. Do you think an entire generation. Theres been an argument made post financial crisis, an entire generation of investors is just never coming back. Right. And so this whole runup in anticipation of the dumb money coming its just not coming. Youre preinterview. You say weve had the best year since the 90s and all anyones talking is why its going to end in tears and thats true. Thats a good sign. Its a good sign. And a good sign for this year. I think theres still some ways to go. Even barons has gone bullish. Thats scary. But you see this whole trend. I think theres plenty of room to run, a lot of great stocks that havent appreciated. Theres a lot of money. Ton of money on the sidelines. That whole generation, were going to have to get back in. Once they get jobs. No, i think its people like my generation, internet 1. 0. Youre not talking about the no. When i look at the tech and media stocks, i lived through the first tech bubble. This is the first time i feel like i can look back at another era. Wasnt it fun . It was so much more money and such Bad Companies that didnt have real revenues and profits. For the most part, these are companies that are transformative. This is all changing dramatically right now and theres not that many ways to invest in it. And i think luckily therell be a whole crop of ipos in the next year where people can diversify more and pick more of these companies. And i think when you talk about a bubble and what could bring the stock market down, you have to talk about washington to a degree. Theres not a lot on the horizon. In terms of like something thats going to blow it up, its not going to happen from d. C. Okay. Youre up here, right . They do have trains that go down to washington. But i think its better for you to be outside. Its a clearer perspective in the window. Youre out in omaha, you can im jersey. Are you jersey . Yeah. Absolutely. Real america. You can golf together. I dont golf, but you could teach me. No. Wow. Weve got much more, they are sticking around for the rest of the program. Joe . Okay. Coming up, predictions for Residential Real Estate. Will media stocks continue to climb in 2014 . Plus, why today may be the best day of the year to buy a car. This intrigued me. Squawk box coming right back. [ male announcer ] this store knows how to handle a saturday crowd. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. Savvy shoppers know that the week after christmas is one of the best times of the year for discounts on clothes and electronics. Did you know that its also one of the best times to buy a car . Best times of the year. Mary thompson joins us live with that story from audi lynn brook on long island. All right. Reporter thats right. Sunrise i like audi, too. Were out here on the sunrise highway out here on long island. U. S. Auto dealers are looking to close out a banner year with a bang. Offering consumers some great new years eve deals in order to ensure that 2013 is, indeed, the best year for auto sales in the last six. Heres steven canon. The markets going to be hot. The biggest month in the history of our company. December is always big. And were going to take advantage of that. Now, decembers typically a busy month for highend automakers like mercedes. Spending bonus money and the companys offering deals as they jockey for the title of topselling luxury brand. But kelly bluebook analyst says other dealers are getting in the holiday spirit, too, helped by an extra dose of incentives from automakers like honda. Every single unit they sell beyond their december 2012 total, theyre providing a cash incentive. Now, the goal of the automakers boost sales to clear out the 2013 models. With dealers carrying an 80day supply of vehicles, theres still plenty of product for buyers to choose from while financing remains favorable with low loan rates, high Cash Incentives and good lease options. Among the deals kelly blue book spotted, cash rebates ranging from 25,000 to 5,000 on popular models. Like the cadillac ats and the topselling vehicle, the ford f150. Now, these new years eve deals should be good through january 2nd. Thats when the auto dealers close the books on 2013, which, again, is expected to be the best year for u. S. Auto sales or vehicle sales in the last six. 15. 6 Million Units expected to be sold. Back to you. Wow. All right, mary. On another subject, mary. Yes . Was it satisfying beating rutgers . I mean, was there thats the way reporter you get to it somewhere. The year ends, you beat rutgers. You know what i think youve done, youre back to just brady, right . Youre watching him on a wide screen and watching every huh . Reporter two things, joe. First of all, ive never abandoned stop watching brady, thats always a consistent part of my sundays. But second of all, i guess you could say that beating rutgers is a heck of a lot better than losing to rutgers. Yes. Reporter because im sure i would never hear the end of it if that were the case. Thats true. Thats true. So we are happy. Yes. I feel for you, though. How do you recruit . Why do you think florida and alabama why do you think they have great players . Its easy to recruit, right . Reporter prettier girls on campus . I dont know. Warmer weather . Yeah. Warmer weather. Reporter warmer weather, easier academic standards . How do we explain . Stanfords nice. Thanks for playing along, mary. She went to notre dame. I knew that, yes. You did . Yes. Whats up with twitter . The stock getting crushed into the new year. Is it a round of profit taking or whats trending in social media . Well have an open house with some predictions when squawk box returns. It raises the price of fishmeal, cattle feed and beef. Bny mellon turns insights like these into powerful investment strategies. For a university endowment. It funds a marine biologist. Who studies the peruvian anchovy. Invested in the world. Bny mellon. To help secure retirements and protect financial futures. To help communities recover and rebuild. For Companies Going from garage to global. On the ground, in the air, even into space. We repaid every dollar america lent us. And gave america back a profit. Were here to keep our promises. To help you realize a better tomorrow. From the families of aig, happy holidays. Shares of twitter extending their losses. The stock is down 17 over the last two sessions. Is the honeymoon over . Lets get more on twitters latest moves. Where the stock might go in 2014. Joining us now the head of crt capital group. Neil, good to see you. Whats your explanation . Well, thanks for having me. I think theres a few things happening. One is, its been a roller coaster over the past two weeks for twitter. We saw a lot of institutions trying to get into the stock ahead of the year end. And we probably saw some short covering, as well. I think over the past over the past two days, i think whats happened is, you know, theres been some profit taking. And well probably see more volatility in the stock as people come in to work, you know, after the beginning of the year and maybe kind of readjust their portfolios. You have a buy in the stock. Are you nervous about the action in the next two days . No, our valuation supports a 65 price target. We think twitter is one of the key Platform Companies on the web. And when we think about Platform Companies, we think about facebook, google, amazon and twitter as well as linked in. So, you know, we think that twitter is probably one of those companies that we think will have a long runway for growth. And we think it can actually grow into this type of valuation. But on a relative basis, its so much more expensive, dont you think . You look at the revenue on the 14 or 15 numbers. Even with the raised revenue estimates, its basically twice the price of linkedin or facebook. Do you think you can love the company but not love the price here . Yeah. I think, you know, the way we think about twitter is it has the valuation multiple is very rich at this point. We think upside might be less, you know, theres probably some limit to the upside on the valuation perspective. But, you know, there is this theres very high growth at twitter right now. And this is the Fastest Growing Internet Company of all the internet companies. I think you double the revenue next year. You say they do 2 billion instead of 1. 1 billion and its kind of in line and theyre not going to do 2 billion next year. I said this all along. I think its a phenomenal company. Theyre not going to suddenly one day do 4 billion instead of 2 billion. Its an ad business, right . I just dont see why everyone keeps these buy ratings on. I dont see why everyone keeps raising the price. This is going to be i see twitter as the netflix of 2014. Its going to be this battle between the long and shorts. Theyre going to fight over it all year. There are going to be believers in people like joe. Carl icahn, we hope. And youre going to have this tug of war all year. On the weight of that revenue, whe are where guys like neil get scared. How do you double revenue and not screw up the User Experience . I think the ads can be intrusive. And if your goal is to double revenue and youve got this price youve got to live up to. Its a salesforce productivity thing. Its covering the accounts one by one, going to the fortune 500 brands. I think you can be a believer and think somethings expensive. There are a lot of things i like. Do you really have a model. Or do you go, and start with the 40 billion and work backwards and try to figure out something . Is it a model or a climate model . What kind of model is this . No, you know, we actually do have a real working model. How does it work . Theres no way to get around the price of revenue number, is there . Theres a couple ways we look at it. One is from a price to revenue perspective. Another is really from an ebitda perspective. And the unique thing about twitter with all of these Platform Companies is, you know, theres Massive Network effects. And with the Network Effects comes scale and ultimately with scale comes profitability. I think that twitter could hit 30, 40, 50 operating margins overtime. Weve seen that with facebook and google. Theres growth. Thats the music. Thats a hint from the control room weve got to go. Thanks for getting up early out there in san fran. Thank you. Will the new year mean higher home prices . Well get predictions for Residential Real Estate all around the country. Squawk box coming right back. [ bell ringing, applause ] five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. Welcome back to squawk box. In the headlines this morning, were going to get the latest reading on home prices in about 90 minutes. The october case shiller report is expected to show a 13. 8 increase in the prices in the nations largest markets. Thats compared to a year earlier. Dallas fed president Richard Fisher says his votes on fed policy in 2014 will reflect concerns that qe is stoking potential inflation. He says hes worried that the fed has, quote, painted itself into a corner with quantitative easing that will be very hard to exit. Fisher was not a Voting Member of the fomc this year but will be one in 2014. Latvia becomes the 18th eu nation to adopt the euro tonight at midnight, whatever their midnight is. As its currency, the euro will be latvias fourth different currency in two decades after the russian rubel. You remember, they were former soviet. All right. 2013 was a strong year for real estate. Mortgage rates stayed low. The housing recovery in full swing. Diana olick joins us with her predictions. First of all, lets check the score card to see how she did in 2013. She predicted home prices will continue to rise about 5 to 7 . We will say she got this half right as prices rose, but it was more than 12 . Next, she predicted that apartment rents would stay elevated and vacancies low despite the improvement in the housing market. She got that right. And renter nation is in full swing as younger americans cant get the credit or dont have the desire to buy homes. Finally, she predicted that as home prices continue to rise, more borrowers will come out from underwater. Also as home prices rose. Renovations took a big leap in 2013. I want to go to equity land. Is it next to disneyland . Yeah. And your next contract. Lets see what lies ahead for 2014 in real estate. Reporter as sales return, home prices will continue to rise. But the gains will ease. Those 12 price jumps we saw in 2013 were driven largely by investors on the low end of the market. As foreclosures ebb, which they will and distressed sales become a smaller part of the mix, the prices will moderate. But still low inventories will keep those prices in the positive in most markets. And Mortgage Rates will also rise. The days of the 3. 5 30year fixed are over. Rates are already up well over a full percentage point from a year ago. And as the Federal Reserve begins the much anticipated exit from the bond buying business, rates will have to go higher. Investors will not leave the rental market. Some have predicted with higher home prices, these private equity, large Institutional Investors will sell at a profit and leave. But they say theyre settling in for the long haul. Now that theyve got economies of scale and figured out the management. Also, rents for Single Family homes are rising as they are for multifamily apartment buildings. Thats because supply is still tight amid very high demand. Diana olick, cnbc, washington. And tune in throughout the day. For more predictions watch them all on the web at predictions. Cnbc. Com. For more on the outlook for real estate, we are joined by the author of the upcoming book, next generation real estate. What does it mean . Renting or owning . Means both. The new American Dream could be actually renting. And having an opportunity to travel and go on vacation, change jobs every couple of years. Not being tied down to a mortgage. It could be the freedom to do what you need to do. Not everyone it doesnt make sense for everyone to own a home. But if you can, if you have enough income to write off the mortgages, makes sense. Especially if you plan to be in the same house for five to seven years. You shouldnt do it for two to three years unless youre a professional flipper. And you want to take a new job, you want to travel, you should rent. Its a great option for a lot of people these days. Now, Mortgage Rates. Im old enough to remember 15 . Sure. For me, i always look at it on an absolute level. But people dont do that. Do they actually make a decision not to do something because its up a point to 4 1 2 . Look what happened when the rates went up almost. 5 . The market slowed down. My parents bought the first house in the 80s. It was 12 , 14 . People dont have that sort of life experience. Rates are still so low. When are they not so low . When are they not so low . A lot of inventory hits the market. Whats the number that gets people to say this is oh, 7 . I bought my first place in 2003 and it was 6. 25 , i think it was. And it didnt stop me. I bought the house, needed a place to live and was committed to the area for seven to ten years. That could be the end of next year. People arent going to not buy because of 5 Interest Rates. I just bought a house and i bought it with the fear that rates were going to go up significantly, and they went up a little bit, so i got in and got 4 . Shouldnt we be seeing that activity as people fear the rate increase. Yeah, that was 2013. Thats done . I think well still see a healthy appreciation next year. Per year. What about per year for the next three to four years . I think its a nice, healthy boost yeartoyear. Its a longer term kind of healthy outlook. Do we feel like the banks are back in the game . The tough part was getting that mortgage, right . Thats whats keeping people out of the buying situation. Are the banks back in the game in an interesting way . When is it worth the banks time . I think theyre absolutely back. Its hard to get loans, theyre stricter. Folks getting loans in 2006 arent getting loans anymore. Got to have good verifiable credit. They lost those and they need more business. I think were going to see them easing some of the lending standards. Theyre not going to start to giving out loans to people who dont qualify. Mariachi bands. Wouldnt that accelerate closings if people could go into it knowing they have the flexibility to see what rate they could get . Why arent more sellers offering contingencies . You see it regularly. Its regular to have a Mortgage Loan contingency. In new york city . Its all cash. The minute you say you want a mortgage, theyre not going to sell it to you. My dad and wife are both brokers and people are continually concerned about the Mortgage Rates and cant get mortgage contingencies so theyre forced to walk away. Earlier this year, you didnt see them, and people were doing all cash. But youre seeing people a lot more flexible. A more even year next year. Sellers arent going to be as tough on buyers. Whats do people keep building . Is there really a shortage . Or people kept building . I think there is a shortage. And people are buying plots of land, putting in plans and making plans for the next five to ten years. You could have predicted this is happening what you would think after the housing runup and then the bubble burst and then its like going according to plan . I think if you look at the housing recovery like a marathon, we sprinted out of the gate in january of this past ye year. Now theyre taking a breath, pulling back and saying it wont be as exciting the next year, you wont see 25 increase, but well see a nice, steady kind of stream of activity. Heres a different question. Would you get a 30year mortgage in this environment knowing where Interest Rates may ultimately go . Would you ever get a fiveyear or sevenyear arm . Why would you ever get a 30year . It depends. If youre a family and you want to be in this house for at least ten years, put your kids through school, why would you not get a 30year fix . I got a 30year fixed because Interest Rates were never going to be lower, i thought. Life changes and you may decide to stay in that home and you may want to refinance. You think youre going to be out in two to three years youve got to be a fed worrier to get a 30year. Youve got to think theyre going to do it. Yes, i am a fed worrier. You rush into a sale and thats the problem. When that clock starts to tick on you. Yeah. I have a 30year fixed. You have a 30year fixed . Maybe i made a mistake. But it hasnt been a mistake it hasnt been a mistake over the past ten years. It could be a mistake in the next ten years. It actually was, right . Because you would have paid a lot less if youd gotten an arm. What im saying is the mistake for me to do the 30year fixed. 100 when i did it. I still think, i dont know. You dont think theres bubbles starting to form. I had a friend in miami saying theyre offering these tours of new developments via crane. You can look at stuff being built. How is that not a bubble developing . I think theyll be small little bubbles. My parents bought their home, they didnt look at the market for 20 years. Now were focused on the blips and dips. The big picture is going to be a better trajectory. In the long haul, its a good longterm investment. All right. Las vegas, theyre up 20 , still. Thats not sustainable. You said my book, you didnt say the name. Next generation real estate. Will you work with him a little bit . Youve got to say it ten times. Next generation real estate. Thank you. All right. Coming up, disney up better than 20 in 2013. Coming up next, well take a look at the winners and losers in media of this year and a look ahead at expectations in the new year. First, though, squawk sports news, well tell you about tim tebows next gig coming up. Welcome back. How is everything . Theres nothing like being your own boss and my customers are really liking your flat rate shipping. Fedex one rate. Really makes my life easier. Maybe a promotion is in order. Good news. I got a new title. And a raise . Management couldnt make that happen. [ male announcer ] introducing fedex one rate. Simple, flat rate shipping with the reliability of fedex. Where does the United States get most of its energy . Is it africa . The middle east . Canada . Or the u. S. . The answer is. The u. S. Most of Americas Energy comes from right here at home. Take the energy quiz. Energy lives here. In squawk sports news, you probably have heard by now that tim tebow has a new gig. An analyst for the new sec network which is operated by espn. He will be part of sec nation, a pregame show that will travel to a different campus each week after that channel launches in august of 2014. Espn says the deal will not preclude tebow from pursuing playing opportunities in the nfl. He didnt play in the nfl in 2013 after the patriots cut him back in august. In a statement he said hed continue to pursue his dream of playing quarterback in the nfl. But hed be a good guy to have analyzing the sec. And who doesnt i mean itd be good if he did the securities and exchange commission. Is that what you guys are thinking of . What is that investigations 24 hours a day, seven days a week. I used to think that until alabama and just you watch. Where is there a conference that matches up . Its like the and america knows the sec has a football conference, they dont know the securities and exchange commission. We know that. Where do you pick a team. What conference to beat the sec . Is there one . Used to be, i thought oh, theres more than one . Theres more than one. What are they . Acc . They used to be. Florida state . How many innings in a Football Game . There are innings in a baseball game. That much i know. You almost got her. I was trying to make sure that i knew. I follow the least sports of anyone at this table. Your mind is so full of digital stuff. Data points that are crazy. Its like a different language. I wish i knew more of the macro stuff. I hear you guys talking about this stuff, i think i should spend less digital and more macro. Yeah. Were going to do a little micro. Walt Disney Company has ranked one of the best performers in the dow and s p 500 after raising the price target. Could this stock continue to climb in 2014 . Joining us now with his outlook on the media sector, the senior media analyst. Good morning. Thank you. Disney, where do you think this thing goes . I think its relatively fairly valued here. I mean, you definitely have to have a secular perspective on the parks, advertising at espn. I think the issue is how much of a premium youre willing to pay for very firm backbone of businesses. I think its a Higher Quality earnings stream. At this valuation relative to certain other media names. We keep talking about netflix all morning. Where do you stand there . My instincts would be its fully valued here. People talking about netflix, you look at the valuation on hbo, right now, i think its a little bit out of sync. I think people are always willing to pay more for growth and glamour. But particularly in the International Markets like europe and germany where there isnt as much of a pricing umbrella attacking a cable or satellite video bouquet, they have a much more difficult, you know, challenge on the Business Model than state side. Okay. Whats your take on you said hbo. Ill raise the issue, time warner and whether you think hbo will have to sell themselves separately. Theyre starting to do this in some markets so they will not be part of the larger cable package. And what does that mean . I think theres a decent prospect of that in some International Markets, you know, particularly the nordic countries. I think theres really a nice eco system with the cable and Satellite Companies domestically, though, in terms of bundling and selling the product. I think hbo go is a phenomenal product. But i think first and foremost regard the cable and Satellite Companies as their principal partners. The ceo has pointed out that incremental the numbers are tiny on that business domestically. But i think when you look at that as a global template and a lot of markets, it makes a lot of sense. How much of the debundling in general do you see this year . Cbs up this year, lionsgate up 99 , netflix up 300 . You see all the consumption now. Web consumption, mobile and desk top is 40 of all Media Consumption time right now. It seems they have to debundle and deal with the fact theyre going to lose some of those affiliate fees or that may cause controversy. How do you think this plays out in a macro way or sector way . Well, i think a lot of resistance to debundling. Maybe directv doing something over the top for kids nickelodeon content. But i think the business works well for the content. Unless washington and john mccain really force something. But that looks extremely unlikely. I think the key is enforcing the value to the consumer. When is the day that netflix or google or somebody like that buys the rights to sports. The question is when. Next year or the year after. Why would google not bid for one of the nights. Why not the thursday night game . Netflix has the cash to do it. When consumers desperately want something as much as they want to get all of their content over the web, no matter how good it is for the Cable Companies and the content companies, you cant fight consumers. Weve seen historically, you cant fight consumers. Sports is one of them, premium content is another one. And thats the only game to be in. Thank you for your thought. Yes. Netflix game has always been serial programming. I think googles much more likely to do that at some point. I think that would be the most likely outside google nfl game. Youtube. The youtube nfl game. Matt, thank you so much. Happy new year. Appreciate it. Coming up, pope francis made headlines with the critical commen comments. More on that next. Its as simple as this. At bny mellon, our business is investments. Managing them, moving them, making them work. We oversee 20 of the worlds financial assets. And that gives us scale and insight no one else has. Investment management combined with investment servicing. Bringing the power of investments to peoples lives. Invested in the world. Bny mellon. But with less energy, moodiness, and a low sex drive, i had to do something. I saw my doctor. A blood test showed it was low testosterone, not age. We talked about axiron the only underarm low t treatment that can restore t levels to normal in about two weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. Women, especially those who are or who may become pregnant, and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these symptoms to your doctor. Tell your doctor about all medical conditions and medications. Serious side effects could include increased risk of prostate cancer, worsening prostate symptoms, decreased sperm count, ankle, feet or body swelling, enlarged or painful breasts, problems breathing while sleeping and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. Ask your doctor about axiron. Pope francis made some headlines earlier this month with his comments on wealth and capitalism. And Michelle Carusocabrera. Its like im introing you. Im right here. We talked about this earlier. In the 6 00 a. M. Hour. Well talk about it again. The recent comments about capitalism may make it tougher for the wealthy and capitalists in new york city. Billionaire ken langone, hes spearheading the efforts and told cnbc that at least one potential sevenfigure donor has expressed concerns about the free markets and suggestions that the wealthy may be insensitive to the poor. Langone tells cnbc, quote, ive told the cardinal your eminence, this is one more hurdle i hope we dont have to deal with. You have to be careful about generalities. Rich people in one country dont act as those in another country. I sat down with the cardinal to hear his response to langones message. I said that would be a misunderstanding of the holy fathers message. The pope loves poor people, he also loves rich people. He loves people, all right. And hes not into the condemning game for anybody. His famous renowned statement, now who am i to judge . I said, ken, thanks for bringing it to my attention. Weve got to correct to make sure this gentleman who is the only one ive heard understands the holy fathers message properly. And then i think hes going to say, oh, okay, if thats the case, count me in for st. Patricks cathedral. I think a lot of people read the holy message 220 pages long and i think Cardinal Dolan softened a lot of what the pope had to say about. Ken langone is saying the pope shouldnt be talking about the disparity of wealth and the poor being left behind in our society . The pope is not going to say what ken langone has to say about this. This is like people saying to barack obama, you shouldnt be talking about fat cats on wall street. There are fat cats on wall street. What do they expect the pope to say . Go on twitter . The pope has to set a pole. Just like previous popes. This pope is concerned about the poor, right . Does he want to make a choice about which economic model historically has shown is better for the poor. He did, he was negative on free markets. Very negative. I think when you look at when you look at the world, capitalism has won. We dont need to worry anymore. I think we do. No. I think its overstating the case. Therell be distribution. If youd set two poles, redistribution versus trickle down, trickle down is all that you have. It is a negative term, but its all you have. Redistribution doesnt work. You redistribute a smaller he says people will assume that Economic Growth encouraged by a free market will inevitably bring about greater justice and inclusiveness in the world. This opinion which has never been confirmed by the facts expresses a crude and naive trust in the goodness of those economic powers. Hes effectively saying this doesnt work. The issue might be timing, right . The issue is were at a particular time in history where these poles are wider than since in the middle class now. Because of the expansion of the free market. This is a guy worrying about a seven figure donor. Is this where the sevenfigure donor should be coming up grabbed the patid before we even picked him up. It found out the doctor we needed was at st. Annes. 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Well bid a fond farewell to 2013 with the dow on pace for the best year since 1996. Time now to look ahead to 2014. Well tell you what to expect from the markets, retailers, and the battle shaping up in washington. And a float in the Rose Bowl Parade will set you back about 500,000. Jane wells takes a look at the money behind the iconic sporting event. Happy new year, sydney, australia. The third hour of squawk box begins right now. Welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernan along with Andrew Ross Sorkin and Michelle Carusocabrera. I have no idea whats going on in sydney right now. But becky quick is off today. We have a trio of guest hosts this morning. Thats beautiful. Isnt this the opera house . Dying to go to the opera house. Have you seen an opera there . I have not seen an opera there. I actually kayaked in that, in there. Okay. Politicos ben white is here. John steinberg. And more from them throughout the hour. Too much sympathy for ken langone. Theyre too capitalistic down there. Too capitalistic. But first, a roundup of your headlines. Lets give them to you. We are monitoring a massive oil fire in north dakota. As many as 20 train cars carrying crude exploded and caught fire after colliding with a cargo train outside the small town of casselltown, north dakota, about 40 miles west of fargo. Smoke can be seen, apparently, up to 20 miles away. Residents within five miles of the fire have been urged to evacuate. Residents within ten miles have been told to stay indoors. Both trains are owned by Berkshire Hathaways bnsf. No injuries, though, have been reported. Also, some poison pill news. Hertz adopting a shareholder rights after seeing unusual and substantial trading activity in its stock. Trying to reduce the likelihood that any person or group could gain control of hertz through open market accumulation. Theres probably going to be pressure on its funny because the stock is going up, but you think should it go up or go down . Really maybe they think its in play. Its in play, so it goes up. And similar story. Netflix says it has abandoned on the other side the poison pill. Two years ahead of schedule. It was adopted years ago after carl icahn took a 10 stake in netfl netflix. And netflix also giving Reed Hastings a raise. The streaming Video Service raised his salary by 50 to 6 million. Doesnt really sound like a lot of on a relative basis to whats going on with that company. For 2014, netflix shares have quadrupled in value this year as it introduced original programming and saw a growth in the subscriber base. Hes made his money through the stock. No, no, no i would just give him whats the point of having a salary, right . Its a rounding error. 6 million. 3 million, each in cash and Stock Options for the year. Remember, mayor bloomberg only takes 1 a year for his role as a public servant. For telling everybody how to live their lives every second. Hes got 20 million. Capitalists, yep. 20 billion. They said he spent 680 million over maybe he could talk to the pope . I think the pope have you been to the vatican . Years ago. As you walk along east masterpiece yep. And art. All the way to the sistine chapel. Each chalice, each goldplated man, you could raise, how many billions do you think you could raise . A lot. You could raise a lot. One painting 60 million, 70 million. You could make i mean, if the pope if the pope monetize the assets. The detroit art museum, right . If the pope really wants to put his money where his mouth is. Im telling you, its probably 100 billion. Not be available youre missing his point. Youre missing his point. All of the catholic. If you spend 100 billion on the poor. Why does the pope why does the Catholic Church need it . He drives a ford focus. So all of the faithful can come and all of the faithful will be able to see it. At dan loebs house . Who are you going to sell it to . The church has had a lot of money for a lot of years. And i think the pope has also talked about that. Hes living in less splendor than previous popes. Its not simply that he believes that the free market capitalist system should have some safeguards in it to protect the poor. Thats kind of not what he said. But anyway. I think thats what he said. Go read tit, 320 pages. Bitter party of one. Holy smokes. Have you read the 220 pages . I have not. When you walk away, youre going to see, this is a man who does not believe that the free markets have done good for the world. Well, okay. Check on the markets. One trading day left in a bullish year for stocks. The dow best yearly gain since 1996 and posted yet another record closing high on monday. The s p 500 has had the best year since 1997. The major averages only with two losing months this year. Dow would open higher by 24 points, s p by nearly three and nasdaq by nearly seven. One more trading day left in 2013. What are the prospects for stocks in the new year . Lets get more now. Joining us now is allison dean, senior adviser. And a cnbc contributor. I have two ways of looking at things, allison. I can remember, you know, for years thinking, wow, that stocks at a new low. Wow, what a buy. And then it always kept hitting new more new lows until and finally hit a new low at zero where stocks hit new highs, a lot of times, arent the things that are positive about whatever caused the market to be up 25 , 30 this year. Its hard to call when those things reverse, isnt it . Is there a reason to think its going to reverse in 2014 . Or will maybe we have another good year . Yeah. Its hard. The only thing that worries me is there isnt anything you can worry about. Sort of the old climbing the wall of worry is the best environment for a market. But its hard to see much changing. If anything, its easy to see things improving. The one risk being markets could overreact to the taper or the fed doesnt get that right. But even that based on everything weve read about janet yellen, my sense is theyll be very gradual about that, as well. It feels as if more of the same, if anything, theres greater potential on the earnings front for positive surprises. Most people would say, and the old idea theres a wedge, the fed put a wedge between the underlying economy and the stock market so that its above where it would be purely on economic fundamentals. But as the economy catches up a little, maybe the underpinnings become better. And then it moves, i dont know, what do earnings go up . 5 , 6 , maybe multiples expand a little bit. You could do double digits based on not a great year. Thats my sense is you could see top line growth picking up, a multiple enhancer. It could be greater than 5 , 6 , top line trends improving and markets not deteriorating. And that could get you into a 10 , 15 type of market. I hate to predict again, but i dont think were expecting as much on the negative front this year. And sentiment, as well. Im hearing its gotten really bullish. But i dont know just as far as the individual investor goes, its hard to shake off what happened five years ago. Theres a lot of people that still say the stock markets just not for me. And by the time Something Like this is over, you know, theyre buying twitter by the end of it. I know. It is a concern, but my sense is if this is a multiyear prolonged improvement, the trend seems to be global, were a year ahead of other parts of the world, that could be something that could bring investors in early enough not to top tick the overall markets. I think its not just the damage caused by 2008, the damage happened in an environment where the demographics are such which people are sort of their time horizon isnt as far away so theyre very worried about losing their savings. What about worrying about a messy exit that rates go up too quick, by the fed, rates go up too quickly, huge losses on their balance sheet, which got way too big. Its how much bigger than it was . Five, six times bigger than it was . Is there a number where that becomes a real problem . Something bad happen . You know, i dont know it specifically, but i would imagine if we saw Interest Rates getting up into the 6 , 7 , that could be ugly. Can they get out of this cleanly and without some type of, you know, comeuppance for all of us . If they did it right. Really . And the Federal Reserve and economists arent known for necessarily managing markets perfectly. So i think thats the big overhang as far as risk is. Will they handle taper well enough . Without causing much damage to the bond markets and overall markets and their balance sheet. Because theyve gotten a lot of cover globally from the slow growth. Inflation has, thats what everybody talks about. Thats what the big risk was. And it looks like thats been written off. I just wonder if theres Something Else. Some bubble that forms somewhere else that could dislocate everything if that were to burst. I dont know where it is, some think it is an asset, that it is in the stock market. I dont think its in the stock market. I dont see the valuations. Of course, art is pretty scary. Cars, we talk about all these things. I like the balloon dog. But how much was that . 60 or so . You know the balloon. Well, im not convinced the contraction the art market will have enormous global Ripple Effect on. Yeah. Theres one on steve kohns and then when youve got a roth going, you put it next to the norman rockwell. I understand he was a good painter. In athens. All right. Allison, thank you. We appreciate it. Time will tell. We need a good first week of january and so goes the first month. Thats what they say, right . 85 in the first couple of days there. Coming up, a few stock stories to watch in todays trading. Plus, well tell you why new york city is suing fedex. And then predictions for 2014, well talk to a retail analyst about Consumer Expectations and two political strategists about the battle shaping up in washington for the new year. Were back in a moment. Being your own boss theres e and my customers are really liking your flat rate shipping. Fedex one rate. Really makes my life easier. Maybe a promotion is in order. Good news. I got a new title. And a raise . Management couldnt make that happen. [ male announcer ] introducing fedex one rate. Simple, flat rate shipping with the reliability of fedex. Welcome back to squawk box. New york city is suing fedex for shipping cigarettes. The big apple accusing the Package Delivery giant of illegally delivering millions of contraband cigarettes to residences and violating a 2006 settlement. The city contends that fedex shipped 19 1 2 tons of cigarettes in 10,000 shipments, thats 55,000 cartons. The suit is seeking civil fines and unpaid taxes from fedex. They were shipping from an indian reservation out on long island, because, remember, the taxes are lower on an indian reservation. I cant believe the volume of cigarett cigarettes. 10,000 packages . Whenever you have the taxes in new york city are so, so high, so you have a huge difference in the price. So youre going to do geographic arbitrage wherever you can. Right . Amazing. Hewlettpackard is increasing the number of workers it plans to lay off. According to an sec filing, hp will cut positions by the end of fiscal 2014, compared to the original estimate of 25,000. When it announced the restructuring in 2012, it said it was possible the number of job cuts could increase by that amount. Well also be watching shares of twitter today. The stock has fallen 17 over the past two sessions after soaring since its initial public offering. All right. Coming up, retail predictions for the new year, what to expect from the consumer and major retailers in 2014. Dont move. This year a little love [ male announcer ] this december, experience the gift of unsurpassed craftsmanship and some of the best offers of the year at the lexus december to remember sales event. This is the pursuit of perfection. At the lexus december to remember sales event. Bny mellon combines Investment Management investment giving us unique insights which help us attract the industrys brightest minds who create powerful strategies for a countrys investments which are used to build new schools to build more bright minds. Invested in the world. Bny mellon. And it feels like your lifeate revolves around your symptoms, ask your gastroenterologist about humira adalimumab. Humira has been proven to work for adults who have tried other medications but still experience the symptoms of moderate to severe crohns disease. 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[ male announcer ] this december, experience the gift of true artistry and some of the best offers of the year at the lexus december to remember sales event. This is the pursuit of perfection. Welcome back to squawk box, 2013 was a mixed year for retailers. A good year for the high and low end, but less so for everyone else. Courtney reagan with a look at whats in store for 2014. But first, lets check the scorecard, courtney, to see how she did on her 2013 predictions. Courtney said that jc penney would revert back to sales. Correct. Bingo. One of the last things that ron johnson finally did before he was finally fired. Next, she said walmart would offer sameday delivery throughout the country. Sorry. Walmart execs, we should say, though, are going can deliver same day if consumers demand it or say they can, but right now theyre not doing that because they say theres not enough demand. Amazon, of course, doing it. Finally, courtney predicted luxury sales would take a hit and traffic would increase at outlets. This we will say is half right. There was a strong appetite for luxury this year. Tiffany stock is up nearly 60 yeartodate. And sales at outlets were up 13 to 15 compared to 2011. Now lets see whats in store for retail in 2014, courtney. Teen retail is ripe for reckoni reckoning. Look for shareholders to push teen retailers like aeropostal and Abercrombie Fitch to explore alternatives. The cash flow, solid Balance Sheets and the deterioration make the group a key category for activist investors in 2014. Most of 2014s retail growth will come from online sales, which means mall traffic will continue to decline. Retailers may be able to protect some sales by offering an attractive online option. But mall operators, particularly those who have lower quality malls in their portfolios will take the hit. It could be a scary year for those invested in lowquality malls. Traditional malls will continue to suffer in 2014. But outlet malls will see traffic and sales pick up. As a result, retailers will let their leases expire in traditional malls while pursuing space at the countrys outlet centers. But with full line, not discount format stores. Courtney know joins us with a little bit more. Courtney . Teen retailers have been struggling this year. Thats one of my predictions that well see activist investors jump in there and figure out what they can do to unlock value. Abercrombies going to be in trouble. I think the problem with abercrombie, its a brand problem. It used to resinate, now it doesnt. They need to get in there and change things up. I cannot believe they resigned jeffries. I dont know what the board is thinking. In order to make that work, they have to change wow. Nice. I think thats what has to be done. You would fire him immediately. Yeah. Definitely. For the airplanes . No, because i dont think he understands his consumer. And i think what he thinks they want, they dont and its not working. He was the guy he was the man that made this company. When did he start . Things can work for a while in retail until they dont. And thats the problem. When i walk into an abercrombie, it looks exactly like it did when i was in high school. Which was two years ago. I wish i wish a lot has changed since then and i dont think they understand. The kids dont want to big logos. The jeans are really expensive. And even the teens we talk to understand that. They know theyre not going to pay that much. Its like the movie business. If you hit it with the cargo shorts, thats why a retailer like czar is so amazing. They can fabricate it in a week. They have the shortest product cycles, like six weeks and so its really amazing. And thats not something that gap can do, not something abercrombie can do. The practically naked models that stand when you walk right in. I would never go in there it gets us talking about it, i suppose. But it doesnt really sell any clothes. Well, its a different time. No one wants to go to a store anymore. No one wants to take their kids to a store with half naked models in it. He has his models that work for him on the airplane. And they wear gloves and they have to wear yeah. Polo shirts with their collar and the abercrombie with the perfume. Oh, the smell have you ever walked past an abercrombie . Are we going to talk about jc penney next year . I think it depends on what happens with mike ulman, because we all think hes temporary, the board says they are continuing to look for a replacement ceo, but they havent given us anymore. I think if we get a replacement, then well talk about it. Its constant on cnbc relevant to the mine share. Youre right. And i didnt put it in my predictions this year because i was kind of like done with jcp. I need a break. Temporary and interim ceos has to be the worst idea ever. Just choose a ceo. Well, as of right now, hes the ceo. The board has come out and publicly said we are looking for a new ceo, but they have not given us a time frame. Also, why would you do that to all of the employees. How can you get anything done when you say the person is temporary, right . They did bring him back. That was the thing, they had to stop the bleeding from johnson. And he was a stopgap. Thats what hes done. By the way, i was going to say final question and ill have one. Wheres ron johnson . Whats going to happen to him . We dont know. Is he done . Out of the biz forever . You can reinvent yourself over and over again. I dont think he has to be done. You are done, though, courtney, thank you. Stay here. You can stay, were joined by tom forte. Good morning to you. Good morning. Thanks for having me on. A couple of stocks that you do like this year. One is coach, which surprised me, just looking through the list. Yeah. So if you look at our top picks in the retail space, you have coach and Urban Outfitters. A new ceo, new creative director. We think thatll lead to improving trends. Theyre moving forward with their efforts in china and expanding mens efforts to broaden the assortment. I think you could see a rebound year for coach in 2014. Do you put Urban Outfitters in the category of abercrombie and that whole world . No, i think its a little more differentiated from abercrombie or aeropostal or american eagle. The trend is right, and we think theres an opportunity for them to improve core Urban Outfitters as the year progresses. So i think that, you know, theres a lot of differences between whats going on Urban Outfitters. Thats a play on anthropology, right . Yeah. Its a play on anthropology. Its very strong there and the trends right. If you look at their inventorys in good shape and very well positioned. How about the michael kors juggernaut . What does that feel like . I was shopping with my wife and her mother last week, and theyre both kind of bears on michael kors as the product. Is that going to continue to evolve . Has it hit a ceiling . No, i think theyre going to continue to do well. Theyre one of the reasons that theyve struggled. But theyre doing a lot of things right in that category. And i think theres an opportunity in there, as well. Why do you think the coach turn around happens this year . The idea of buying winners as opposed to buying things that are low. The companys gone sideways basically for years. Goldman says that 2014, a lost year, rebuilding year. Why do you think wont it be dead money . No, i think you have to look at im with you on the thought that sometimes stocks under pressure are made under pressure and often times buying a stock in a 52week high is a better strategy. But if you look at coach, they have a new catalyst and a new creative director. And youre going to see the product come in in the second half of 2014. If you outperform against those low expectations, the stock can do really well. Thank you for this. Happy new year. You too. Coming up, the dow and s p are on track to finish at alltime highs. Up next, a look at todays trading from the future pits in chicago. Honestly, as much as i love this job, i plan to do a lot more. I needed a new laptop for my premed classes, something that runs office and has a keyboard. But i wanted a tablet for me, for stuff like twitter and xbox, so my downtime can be more like uptime. Thats why i got a windows 2 in 1 which does both works as a laptop and a tablet. So i can manage my crazy life, and also have a life. [ beep ] gotta go. [ male announcer ] what kind of energy is so abundant, it can help provide the power for all this . Natural gas. More than ever before, americas electricity is generated by it. Exxonmobil uses advanced visualization and Drilling Technologies to produce natural gas. Powering our lives. While reducing emissions by up to 60 . Energy lives here. Welcome back to squawk box. Take a look at stocks to watch in todays trading. Car rental giant hertz has now adopted a shareholder rights plan otherwise known as a poison pill. Putting into effect what it sees after seeing unusual and substantial activity in the company shares. Those shares higher now on the chance theyre in play yet. Who knows. Also, phillips 66 selling one of the units to Warren Buffett and berkshire hathaway. The value of that deal about 1. 4 billion. The unit makes chemicals that increase the flow of products through energy pipelines. And marvell technology, taken a 6. 8 stake in the chip maker and says it may speak with management about reorganizing that business or exploring strategic options. Marvell. The other is marvel the comic. Marvell. Rick santelli joining us from the cme in chicago. Weve been transfixed on the tenyear yield. Is it a three or 2. 99, rick . All morning. Well, tell you what. Could it possibly be a very interesting shortened session in the fixed income markets, close early, equities, of course, are all open normal hours. Were dabbling with 3 outside our time zone. Currently 3 right on the head is the highest yield close since july 11. I think as we get into the final hours of the year, i wouldnt at all be surprised to see this thing tick up a little bit in yield down a bit in price. And i think it is rather significant that at a year where three extremes occurred, were closing on historically high fed balance sheet, historically high stock market, and the highest yields in a tenyear going back to july 11. I think those three things are fascinating when put together. I think we should pull the first one out because the other two would give me hope during normal times that were going to start rocking and rolling. But im just not sure. I think theres too many forces at work here that make the normal economic relationships a bit like roger marists asterisk in my opinion. Youre catholic, right . Yes, oh, yes. Oh, boy. Weve been talking michelle talked to Cardinal Dolan, weve been talking about the pope. She read a thing. I was giving him the benefit of the doubt. Because popes always need to talk about the poor. Thats what the Catholic Church should do, obviously. They need representation, obviously. But if you read between the lines, he really does seem to be saying that the free markets have been a net negative for the world over time. I mean, have you read some of those comments . Well read one to you. No, actually, ive read much of those translated pages by that very famous speech. I guess i would say this. Being a person who never wades into anything controversial. I would say that hes a holy man in his actions at a time where most people just repeat words is so refreshing that he walks the walk and, you know, doesnt say green is blue, green is blue, and in the social media world we live in you convince 2 3 of the people green is blue. He walks the walk. But i think history will dictate that at least a portion of his interpretation, especially considering hes from latin america, that the free market system has created and taken more people out of poverty and given more people a chance than any other form of government, at least up until this point in recorded history. But, im casting no and as a guy who had something to do with the founding of the tea party, the guest to my left, the worst would be to call someone tea party. Its not the worst i could come up with. Its pretty bad. People use it. Its a weird thing to use, isnt it . What is it . What are they implying it stands for . I thought it was just limited government, individual freedom. Are you asking rick that or me that . I dont know. Its used as shut down government over obamacare, dont raise the debt ceiling because you want to see another round of spending cuts. You say all that like its a bad thing. Weve cut a lot of deficit. All right, rick, doing things we do not consider reasonable, i guess is what we should take away from that. The fact were having this discussion at all is a good thing because i think that if some of the fiscal conservatives didnt maybe err on the far end of the teeter totter to bring balance into our society, we wouldnt be having the discussion. Remember, just because you swap a crown for a microphone doesnt mean that rulers or leaders have a vision. You know, today there was a great oped in the wall street journal that talked about exactly this issue. You know, when i look around the environment i work in, i see people of every type. And i see them in roles of every type. And i think we live in a world in a country right now, i think, that has the most opportunity and to see so many people talk about and try to raise these frictions in between various groups. I think its terrible. And i think its one of the down sides of social media. It was supposed to be the information age. Its come out to be kind of the subversive information age. And i think its tragic. If hes using that, woe be to him. I never used it, and i think talking about reducing deficits and debt is a good thing. If the tea party brought that to the table not if its really troublesome, though. Not if youre shutting down the government or threatening to default on the debt. You dont have to do that. And you didnt have to default on the debt to reduce the size of the government or reduce the budget. You never had to, ever. That was complete and total mythology. It was threatened by the Republican Party and the tea party. How is that mythology . No, it was threatened by jack lew. You said raise the debt limit. They never they never ever said, no if we dont get a, b, c, and d, we are not going to raise the debt limit, which would not create a default. No. Oh, come on, isnt it time we stop saying default. Default, default you know what, if you try to scare people using untrue tactics, thats even worse. Its not true, rick. A default. Oh, my god, were going to have a default. Give me a break. I wont give you a break. Facts are facts. Do you see how much closer dan is to me. Hes basically on top of me right now come on, people, you need to understand theyre spending all your kids money, but we may default. There just isnt one. All you do is panic markets no, every other country in the world thats ever come up to a debt crisis prioritizes. And then theres a debt crisis. Thats why theyre prioritizing. They dont have the money. We have the money. Thats the huge difference. Did you see how i did this . I saw what you did. Okay. Happy new year. The battle in the political arena in 2014. This conversation wont stop. Were going to talk to strategists from each side of the aisle about obamacare, the debt threat and perhaps the pope. And would your company pay 500 million for advertising to 60 million americans . R. The peruvian anchovy harvest suffers. It raises the price of fishmeal, cattle feed and beef. Bny mellon turns insights like these into powerful investment strategies. For a university endowment. It funds a marine biologist. Who studies the peruvian anchovy. Invested in the world. Bny mellon. To help secure retirements and protect financial futures. To help communities recover and rebuild. For Companies Going from garage to global. On the ground, in the air, even into space. We repaid every dollar america lent us. And gave america back a profit. Were here to keep our promises. To help you realize a better tomorrow. From the families of aig, happy holidays. Implementation of obamacare will continue to be a big story in the new year. A republican strategist and Steve Mcmahon is a democratic strategist and cofounder of purple strategies. Gentlemen, good to have you here. Good morning. Steve, do you think obamacare is going to dominate in 2014 . Well, i think the republicans are going to talk about obamacare in 2014. They want to make the next election a referendum on obamacare. The challenge, of course, is that the last election was a referendum on obamacare and the democrats won. Now, obviously, there were problems with the rollout. If those get improved, i think its going to be problematic for the republicans because they dont seem to have a plan b. Chip, your assessment on that. I think hes right. Because of what its doing to the economy, how much its going to cost. But the democrats will run on it, too. Nancy pelosi said democrats are going to be proud to run on obamacare. And i hope were seeing that by october of this year. Do you think, chip, so far, theyve been proud to run on obamacare, the folks facing reelection . Well, i think that the democrats are running from it. And i think mark prior has doubled down on arkansas. Hes losing by more and more as the weeks go on solely based on obamacare before we get into any issue. And i think mark prior will be the poster child for what happens when you support obamacare in an election. I think hes going down for sure in arkansas. But, chip, you know the predictor, and arkansas is a red state. The fact that hes a senator in the first place is remarkable. Youre right about one thing, the democrats are stuck with obamacare. But heres whats going to happen i think over the course of the year, people are going to go to the doctor, and when they leave the doctor for preventive care, its going to be free. And increasingly, people will start to say, hmm, maybe this is a Better Program than what the republicans have been saying. This will be a referendum on obamacare like 2012 was. And i dont think theyll be any more successful fighting it a fourth time. One of our guests has a question. Chip, its ben white. I wondered what your thoughts were on how the republicans handle the debt limit talks in march, april, may, however hard they push on that, what they need in return. Are we looking at a big fight there, or not . Well, weve already seen a few big fights on this debt limit in the last couple of cycles. And i think what the republicans want to do, especially in the house is get a deal done early, which we havent seen much success on. But i think theres a little bit of glimmer of hope this last budget deal was done quickly. Its not a win for either side. Both sides are upset about it. But it got done and i think theyre going to try to do the same thing with the debt limit so we can get on to other business pretty early this year. Steve, one quick one for you, too. The extent to which you think the democrats are going to push a message of income inequality, the minimum wage, other issues that seem to be part of the debate in 2014 and 2016. How much of the economic inequality is going to be part of this discussion, particularly on the minimum wage . I think its going to be a big part of it. The minimum wage is one piece of it. But the problem is, the president identified it last cycle when he talked about the way to grow the economy is from the middle out. Everybody who is in the middle wants to be wealthier. Everybody who is at the bottom wants to join the middle. And growing the middle is does it occur to you it works in the reverse. You dont grow the middle, you grow the economy and the middle grows along with the economy. Well, thats the thats the cause and effect relationship is something that we could debate. But the effect in either case is that the middle grows, the middle prospers. And what youve seen in this economy for the past 20 years really is that the very, very wealthy have done very well, and the people who are in the middle and at the bottom have not done as well. Under president obama. Well under president obama and president bush and president clinton. This has been going on for a very long time. And right now, peoples peoples wages as in average dollars are the same as 1987 if youre in the middle or the bottom, and if youre a ceo chip, is the tea party dead . Well, the tea party i dont think is dead. I think some of the principles that started the party are still very important. We need to represent less government, lower taxes, and less regulations. The best way to grow the middle class economy is to get out of the way and get these Small Business guys to doing what they do best instead of filling out federal paperwork. Gentlemen, thanks for joining us this morning. We appreciate it. Chip and steve. Thank you. Coming up, jane wells will join us to talk about the rose bowl indicator. How we look at ticket prices and hotel costs and exposure from parade floats compared to previous years. Big game. No squawk box tomorrow, the market is closed. But well be back thursday with a big lineup to kick off the new year. Two hours with guest host neil wolan, a former treasury secretary. Plus, well talk Online Gambling with the president and c. O. O. Of atlantic citys Borgata Hotel and casino. Watch squawk box starting at thursday 6 00 a. M. Eastern. [ male announcer ] the Wright Brothers started in a garage. Amazon started in a garage. Hewlett packard, and disney both started in garages. Mattel started in a garage. The ramones started in a garage. My point . You never know what kind of greatness can come out of an american garage. Introducing the 2014 motor trend car of the year. The all new cadillac cts. Aint garages great . Theres nothing like being your own boss and my customers are really liking your flat rate shipping. Fedex one rate. Really makes my life easier. Maybe a promotion is in order. Good news. I got a new title. And a raise . Management couldnt make that happen. [ male announcer ] introducing fedex one rate. Simple, flat rate shipping with the reliability of fedex. Welcome back to squawk box. The rose bowl is an iconic american sporting event with a lot of money behind it. Pasadena, so nice compared to what were going through here right now. Jane wells joins us now with more. See, things like that grow. Reporter you know, joe, this is a purple cauliflower. This is the scots miracle grow float. You spend maybe 500,000 and be seen by 60 million americans tomorrow, thats a better investment than perhaps the super bowl. A threeyear deal as the official sponsor rose care provider for the parade. This Company Based in the midwest has grown its stock more than 40 this year. And its trying to grow its presence in the west. And where better to do that than in this parade . And if the rose parade is an economic indicator, there are more blooms, fewer thorns this including a somewhat controversial one from sea world which went public earlier there year. Tim estes says for the first time in a long time, clients are telling him, hey, we got a little bit more money. This is a weeklong branding event. An awardwinning float would be anywhere between 200,000 to 400,000. We won one last year. The investment for the business is much more than new years day. The tournament of roses is striving to get people to come into the parade who have a minimum of 200,000. Because of economics and supply and demand, if you are only have so many floats that can be in the parade, you certainly want to have 50 10 floats and not 50 1 floats. So theyre trying to put together good tv entertainment. So theyve been trying to get people who have a good budget to work with. Reporter say 200,000 minimum for a newcomer. What would it have been five years ago . A hundred. In meantime, the city of pasadena hopes to score big, thats 200,000 tickets over two games, for traditionally the two most expensive bowl games in college football. The bcs is the most expensive priced tickets. Theres credit union in lancing thats offering pay day loans to finance trips here. A local Economic Analysis estimates average spending per visit will be close to 600 in close staying in hotels. Tickets to both games on the secondary market have fallen off dramatically. Rose bowl tickets now 644 and thats down but its up from last year. And to see auburn in the championship game the price is 965. On stub hub right now, theres three times as many tickets left for the bcs game versus the rose bowl. Theres ten times as many available on tick iq. There is a chance when all is said and done that the granddaddy of them all could end up being a bigger ticket than the big enchiladas. The prices for Hotel Tickets are more expensive now than for the Football Game. Youre in irwindale. Thats pretty close to pasadena. Youre in san gabriel valley. Thats not the greatest bedroom community. A little bit industrial around irwindale, isnt it, jane . Yeah. Its a great place to build floats. Remember when they got them to kick in 10 million for the super bowl 200,000 for a float that 60 Million People see . Thats like the deal of the century. At least 200 grand. Could go up to much more than that. Thats just to build the float. Then you have to pay the entrance fee. Then theres all the branding around it. They got a food truck going around, feeding people, stuff you grow out of your garden, they got a contest to bring people here. Its become much bigger than the float, though of course the float is the crown jewel. You need a buzzfeed float. Im going to look into it. Well get a politico one. And then its colorado boulevard. Thats where you want to stake out theres a lot of side streets where you can get close to where it is. Anyway, jane, thank you. Whats coming up, andrew . Were going to tackle some International Topics with our guest host. Coming up on squawk on the street, the latest on the implementation of obamacare. The ceo of gohealth insurance is coming up in a moment. [ male announcer ] this store knows how to handle a saturday crowd. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. [ male announcer ] heres a question for you the energy in one gallon of gas is also enough to keep your smartphone running for how long . 30 days . 300 days . 3,000 days . The answer is. 3,000 days. Because of gasolines high energy density, your car doesnt have to carry as much fuel compared to other energy sources. Take the energy quiz. Energy lives here. In honor of the last trading day of 2013, were doing a stock of the year rather than a stock of the day. Weve picked comcast, which obviously wait a minute a here. Netflix . Really . Well, if we had picked best management, i guess it would have been the best place to work, best turn around, you know, all those things probably would have been comcast. In this case its up 290 for the year. Honorable mention goes to best buy, the second leading gainer. Didnt tell me anything about that. You told me people used it, it was a browsing library for amazon. Thats when you say the demise was greatly exaggerated. You didnt need to buy anything else. You will be a contrarian indicator this year. He doesnt remember any of the good ones, any of the right calls. When you make one, ill remember it. You dont remember my facebook call . I dont remember what people say. Youre wearing the glasses. Lets great shot of that before we get the show over. Lets get the last word. So heres what well do. Lets make a 10second prediction each and well run the tape next year. Washington gets out of the way, less problem, debt ceiling gets lifted, washington takes its foot off the neck of the u. S. Economy. Netflix at 2014, end the same way next year. Twitter and netflix . No, twitter. Lots of ipos and profits. Goodbye yellow brick road saturday nights all right for fighting happy new year. Happy new year. Join us thursday. Happy new year. Squawk on the streets next. 29 , that is the s ps gain for the year as we wrap up 2013 today. Im Carl Quintanilla with simon hobbs, david faber at the new york stock exchange. Cramer is off today. Home prices are out. Well talk to Robert Shiller about them before the opening bell. Futures Still Holding above fair value, the dow shooting for its 52nd record of the year. It is a