Transcripts For CNBC Squawk On The Street 20121119

To 2 here as we await a big week in europe as well. We start with the markets. New optimism about the cliff. President obama in myanmar saying hes confident the fiscal situation will be dealt with hours after he hit the phones calling top ceos. Lowes shares on better than expected earnings. The results renewing hopes this morning about the housing recovery. International pressure mounts for israel and gaza to agree to a ceasefire after a weekend of air strikes leave a dozen dead and hundreds injured. Brent continues to climb with gold going higher. The president and congress will strike a deal to restore the fiscal cliff. Over the weekend in asia, the president said hes confident we can get the fiscal situation confident and reached out to ceos including tim cook, Warren Buffett and jamie dimon. After top house and Senate Leaders say fridays meeting was constructive. We see headlines that may bring news to other companies. Intel ceo Paul Otellini to retire. During this period where a lot of companies moved toward mobile, was not pioneer mobile. Arm holdings to go a bunch of shares. This may be a positive viewed as positive for intel. They will conduct a search or process to choose otellinis successor. Will consider internal and external candidates. Hes been at the company for 40 years. Only the fifth ceo in 50 years. A company has had long service from those in its ceo position. Again, he will step down at the annual meeting taking place in may at which point well learn who his successor will be giving them six months or so to figure that out. They managed to destroy. Thats what they did. In the end they are in a hewlett packard, dell based system. If you go to what jobs said over and over before he passed away. This is not a company i can make a deal with. I cant work with them. Rather work with samsung. To your point of maybe this doesnt make a difference, weve seen the stock decline. Its at a place in the tech world where it is crucial to many systems but it is not want you when it comes to tablet and mobile. Its not in the sweet spot. It doesnt have competitors nipping at its heels, you see shares are halted right now. Thats what i have. Huge yield. Fabulous Balance Sheet. Perhaps the Seminole Company in terms of changing the power of a pc to be equal to a main frame but at the same time linked with microsoft in a product that is what does a Management Change mean . How does a management shift compete against a secular change in your Business Model . I think what they have to do is do something theyve never done which is go to apple and say, listen, well pay to do it. Take samsung out. Does your gut tell you that hes being forced out . Boy, its not the intel way. This has been just the worst period ive ever seen for the stock. I knew andy grove had the ability to talk to important for some point in my career. The intel of old is the company that was always on the cutting edge. This intel has tried and failed to do communications work. They do have cell phones. They are sold in countries that are not competitive with a lot of other countries. Intel is a Brilliant Company filled with brilliant engineers and makes a problem not able to crack into apple other than the mac and samsung has been able to crush them which is extraordinary. Hes been ceo for eight years. Coming in around the average tenure. Six months is indicative perhaps of an agreement that his time was up. Its hard to imagine he was forced if you want someone out, you may not want them in there for another six months. That being said, they do promote a number of people. It will be interesting to see renee james. Stacy smith has also been promoted. Stacy has been a remarkable job within the confines of a product cycle and a product that while its just fast and fabulous for networking and for when you go into a data farm its filled with intell. In the end because of the way the cell phone switched to become the device of the future, intel has been left behind. No word on whether or not otellini was a cell phone he spoke to over the weekend. He talked to jim at costco. Buffett. Dimon. Does that add to positive vibes we got from friday out of the white house . I think so. These are people who for the most part i regarded before the election as people that he wouldnt pick up the phone and call. One of the big black marks against the president versus business is that they didnt speed dial him. Wasnt on speed dial. I remember during the Clinton Administration he used to talk to these guys as a matter of course. He would speak to all of the oil companies. It was a great give and take. These are people who so far other than buffett i felt were not on the short list of people he would give a call to. I think thats fair to say. Many of them harbor hostility. Were dealing with large egos. When Valerie Jarrett was the person they sent to meet with them, many had bruised egos to a certain extent and felt like they had no ability to forge a relationship with the president during the last term. I heard that any number of times certainly from leaders in the Financial Services arena which he may have wanted to stay away from anyhow. Whether its one phone call or going to be perhaps a series of phone calls over a period of time which is going to actually create a dialogue. Costco was founded i shouldnt say founded. Its a democratic its been a long time democratic supporter. What you needed to see is him calling people who gave people to romney. Jpmorgan, we dont know. Jamie dimon for a long time was a democrat. Hes been saying for years hes barely hanging on. I have no idea who the man voted for. He didnt call me and tell me which bothers me tremendously. I would have felt like after you leave the voting booth, you give cramer a call. There are people who people are republicans that are speaking to the president. Suddenly you have paul ryan back in the mix. This is like having john back in the mix. I dont know if you remember him. There are still a lot of people, a lot of people in the Republican Party who are saying this 250,000 and more, i will go to my grave before i raise taxes for the wealthy and im not hearing any of these guys saying i used to believe in not raising taxes for the wealthy and now i believe it. David has been a critic. Problems are going to come along. In light of that, whats today all about . What are these futures all about . We live in a period of hope where you come in and the last guy you spoke is positive. The next guy senator mcconnell, i think what he says is futures you should be up, market should be down. Were not going anywhere. Go short the market. Thats not exactly what mcconnell would be saying but thats how i would read his comments. Favors lower stock prices for all. Thats a problem. It was interesting that he addresses december selling and notion that higher Capital Gains taxes, higher dividend taxes are going to increase selling. Jpmorgan is also out with a note this morning saying theres no historical evidence that Capital Gains or dividend tax changes actually prompt people to change the way they invest. Were not selling year end because of this. Jpmorgan says theres no impact whether it be increased to taxes or decrease to taxes. I will tell you one thing thats prompting companies to do. Pull up their Dividend Payments earlier. Walmart this morning approving a change in payment data thats regular dividend to december 27th. It was originally going to be january 2nd. How convenient. Walmart is pulling it in saying to people lets make sure that when we pay our dividend, you know what tax rate youre going to pay on it. So is the journal article about Companies Selling themselves fewuriously or have they not read that or because were down week after week is because of Hurricane Sandy . Its because it makes sense to sell. It makes sense to sell. The yields arent going to be after tax arent that good. If youre a rich person, 250,000 and you have taxable accounts that have stocks, do you think apple does that gentleman at jpmorgan looked at apple decided is the ipad mini . The funny thing is jpmorgan says companies arent changing the way they pay out dividends. Weve seen it with walmart and west lake chemical this morning issuing a special dividend. Weve seen it time and time again where you have to think theres something behind these special dividends because they do seem to be stronger than they have been in years past. Fourth quarter is seasonally a time for special dividends but this year it seems like were hearing about them more and more. If we were in a great bull market and theres a tremendous cost to selling stocks, is that research may hold water. The truth is were in the period where we all know were 2 million jobs if we go over the fiscal cliff. If you were to say if you look at the fiscal cliff, it may change the way people have historically invested during alrise in Capital Gains and dividend taxes. That would make more sense to me. Lets switch gears and talk about lowes adding to the upbeat mood on the market. Shares of Home Improvement retailer are going higher with 40 cents a share a nickel above estimates. Revenue and same store sales beating estimates. They are inching up same store sales. Conference call 12 minutes in but we want to hear about sandy and the impact there. People are looking for 1 . There was a creep up on same store sales 1. 5 . Talking with people this weekend about what needs to be rebuilt, i dont know if anyone realizes the profound nature of the rebuild in new jersey. They are razing entire neighborhoods. Contractors can bring one person in besides the contractor. Louisiana National Guard with rifles keeping contractors from being able to go in. No one can visit these homes. Who knows what this will mean. Chris christie funny on saturday night live. I dont think people realize theres National Guard from louisiana, state troopers from louisiana with guns, saying youre not allowed here. Who knows. Once they let those people pass and they build roads, youll see a rebuilding effort. There will not be a piece of sheet rock in the northeast. You are going to have to pull everything from all of these other areas. This is going to be, i believe, maybe next it hurricane andrew, the biggest rebuild in history and we know that since you cant even get to the homes, youre not seeing any impact yet on rebuild. Brings to mind what the fed said. Industrial production down by a full point. Deutch yoi is out saying nonfarm is up. They didnt have as many stores that were down versus irene. I want to hear about lowes. I do believe that there is going to be a concerted effort to try to get the federal government to break the rules and pay a lot of money and that new jersey is a populated state. One state cant pull gdp up after pushing it down. What we saw in 1992 in florida with andrew was that it did pull up the gdp. The rebuild did. This is a similar rebuild although there will be tremendous tension. Those of house have property down there who submitted our bills to the Insurance Companies, how much of it was water damage . Well, a lot of it. Nice to know you. Its good. I hope you dont have mold down there. If it got flooded, you should hope a tree fell on top. The Insurance Companies are telling you to read fine print. Fine print is very bad. When we come back, taking a bite out of apple in bear territory after a slight gain on friday and stock up in premarket. Is it finally the time to buy . You might remember David Shulman now with ucla forecast. He says why you should brace. Nice rallies given that dow in the past four of six weeks have been down more than 200 points. More squawk on the street is back in a minute. Take a look where we are set to open here up 112 points on the Dow Jones Industrial average. A little bit of optimism this morning as some commentary over the weekend and on friday that perhaps were closer to a resolution of the fiscal cliff. Look at shares intel halted right now on news that ceo will retire in may. We understand that intel will have a delayed open. 9 35 a. M. Eastern time is the time it is set to open right now last close here 20. 35 on shares of intel. Were watching shares of apple. Still in bear territory down more than 23 in the last two months. Perhaps the worst is over for apple. Shares are rising premarket after rising slightly from friday. Bank of america reiterated the buy rating on apple but lowered the price target. And the bullish outlook on the stock saying that the valuation remains compelling trading 6. 6 times earnings excash. You cant deny that. The sentiment has been curious. They also say that the selloff has been insanely insane. Anyone who has a big gain on apple may not be up as much now. We have 20 decline. Its a remarkable opportunity to be able to take a capital gain without having to worry about where the rates are going to be. A bounce at 505 and 506 and nice reversal. You have that intraday reversal thats what bulls have been waiting to to see if people have been washed out. I believe earnings will be good. I think as far as i can tell you would say two bad quarters . Two missed quarters versus expectations. Some say three. How much of this is just a source of funds, you know . Its widely owned. Have you met anyone that doesnt own it . Yes, i have. Really . They should rise above. I think its very important to recognize that this is a moment where if youre a tax person, if youre advising, youre an accountant advising people, youre a broker, you must get on the phone and say we dont know where the rates are. I think you should sell it and buy it back because its too important to let that gain go to be higher taxed because the stock has to go up 10 to 15 before youre right again. Thats the call you make as a responsible broker given chaos in washington. How should you go long at the beginning of a shortened trading week . Cramers mad dash is coming up next and a look at why p pinterest. S p looking to add about 14. 5 right at the open. Much more squawk on the street straight ahead. Customer erin swenson bought from us online today. So, im happy. Sales go up. Im happy. It went out today. Im happy. What if shes not home . together she wont be happy. Use ups she can get a text alert, reroute. Even reschedule her package. Its ups my choice. Are you happy . Im happy. Im happy. Im happy. Im happy. Im happy. Happy. Happy. Happy. Happy. together happy. I love logistics. Throughout our lives. One a day mens 50 is a complete multivitamin designed for mens Health Concerns as we age. It has more of 7 antioxidants to support cell health. One a day mens 50 . Monarch of marketing analysis. With the ability to improve roi through seo all by cob. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. Im going big. [ male announcer ] good choice business pro. Good choice. Go national. Go like a pro. Almost six minutes before the bell. Time for cramers mad dash. Watching a couple names we dont talk about enough. Facebook and groupon. Facebook is in a bull market. A remarkable stock. I usually dont focus on their research. This is not usually market movement. They say its showing signs of winning the mobile battle. Facebook is, i think, not necessarily taking share but seems to have a mobile alternative that can make them more money. This is mark zuckerberg. Hes deeply focused on this. Everyone knows that his sponsored Story Initiative is gaining traction. All of the different ceos notwithstanding what mark cuban said over the weekend, calling it a time waster overthinking what they are as a social network. There be many time wasters. I wasted time being an eagle season ticket holder. Groupon . This is interesting. Deutsche bank is warming up to groupon shares. David and i often joked about whether its time to warm up. Deutsche says yes. They are seeing stabilization of trends. Immediately i go and it turns out there are seven manhattan locations offering laser hair removal. If we can get out now, you have that 11 00 to 12 00. Will that remove hair permanently from right here . Is that a deal . You dont know how hard it is to keep this short. Well take cameras to that. It could grow back. I need groupon. U. P. S. Releasing shipping predictions for the holiday season. Well get those when we come right back. [ engine revs ] [ male announcer ] the mercedesbenz winter event is back, with the perfect vehicle thats just right for you, no matter which list youre on. [ santa ] ho, ho, ho, ho [ male announcer ] lease a 2013 c250 for 349 a month at your local mercedesbenz dealer. [ male announcer ] this is karen and jeremiah. They dont know it yet, but theyre gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, theyll find some retirement people who are paid on salary, not commission. Theyll get straightforward guidance and be able to focus on other things, like each other, which isnt rocket science. Its just common sense. From td ameritrade. We have breaking news in the past 30 minutes from some of the Biggest Companies in the world. Walmart moving dividend up. The head of intel stepping down next year. And who knows what the rest of the day could bring. Already have some m a action from cisco. The eighth Cloud Acquisition since february for this company. Interesting. I would not have known that they have done that. Cisco has always been active as you know in terms of smaller deals. Hasnt done that in many big ones. You have to go back to the box maker scientific atlanta they bought. Those are some of the bigger ones. They do a lot of deals. Smaller, private companies but they do a lot and they have large m a practice at cisco. They had a great quarter. It was obscured. As we await the opening bell, interesting week, short week. Claims will come wednesday instead of thursday. A lot of housing data. Bernanke speaks tomorrow. Well talk about that later perhaps. Theres opening bell. S p 500 top of the screen. A lot of green today. Executives of belgium listed companies celebrating todays belgium equity conference at nyse. As nasdaq, wheeler celebrating ipo today. So with that speaking of m a, a lot of news swirling around regarding best buy today. The company saying they are going to meet with richard schultz. A story that Minneapolis Star Tribune broke. Who knows what theyre going to talk about. Hes one of the largest shareholders. Why wouldnt you meet with him if you were the ceo . You need to talk to your owners. The question continues to be whether mr. Schultz will be able to bring in partners for this potential bid for the company and of course if in fact hes successful in doing that, what price will he pay. The stock was down sharply on friday. I think largely because of the del numbers and the sears numbers. There were other rumors around. They are still working on it. Well see if they get something together in any way that would be a real bid that could bring to the board and what that board will do with it. People i speak to say you can make a case this makes sense. Dont forget it generates free tax flow. You can get it under control. Have a smaller base and have Something Real there. You get up into the 20s, they were 25, much harder to make any sort of a case. This is not saying theyll be successful in raising a billion and a half dollars for private equity to make a run at the company. Im getting these costco and walmart in a fight to the death to sell you a 16inch screen which is normally where i would go for best buy and they are not giving it away. They are clearly willing to lose money on it. What product line at best buy is taking share and doing well . I have absolutely no idea. Is there one . I dont know. Maybe the jack. The radio shack. I bought this radio shack. You have to love this. I got one of those shields i bought at radio shack for 20 bucks. I get it home and its empty. The carton was empty. Its too repulsive to go get my 20 bucks. They sent you an empty box . I went to the store and picked it up. It was an extraordinary fiasco. I like to shop. This cut into my whole shopping temper. I dont blame you. I did go to a tesla store this weekend. 9 to 12 month wait for a tesla. Did you put your name on the list . 20 connector cord and 90,000 all in a couple hours. Couldnt get into an apple store yesterday. Couldnt speak to a salesperson. Saturdays trip i was able to get a salesperson quickly. Sunday i couldnt get in. You asked me to shop so i went both days. Im glad you did. Someone has to shop out there. Hes going to do it for me. Financials are trading sharply higher. A couple notes on a couple of them. Bank of america gets an upgrade to a buy from a hold. They say theyre cutting cash. Costs, improving capital position. There is a likelihood for higher capital returns. Ie dividends. Buybacks and citi news they are eliminate 300 sales and trading jobs by the end of the year. All of the stocks across the board are sharply higher in todays session. Morgan stanley did the regional call. Huntington, bank of america. This group has been left behind. You look at other stocks and different consumer groups and youre just shocked that they have done nothing. Theyve done nothing. Even the good ones. Layoffs are going to continue in many of these firms, many of these companies for quite some time. Listen, you have to figure out a way to get it when you have higher capital ratios and you have the transparency coming in as a result of doddfrank. Margin is getting eaten up in different ways. At the end of the day its either compensation and employment. Elizabeth warren coming to the senate is not a reason to buy the group. Shes very anticredit card. Hidden fees of credit card. Interesting capital one is the best performer. Its capital one versus Elizabeth Warren and its just a death match. One Credit Card Company and only one leaves and one senator. Shes the disease and youre the cure. Shes a mike grabber. She is a mike grabber. She would walk a mile for a camera. Do you want to talk to pisani . Lets do that. Bob, take it away. Thanks, guys. Happy monday, everybody. Markets rallying on fiscal cliff hopes. Did you see over the weekend president obama was in bangkok confident a deal could be made. Geithner sounded confident a deal could be made. Its funny. A number of guys this weekend mentioned to me the signs to buy would not come from congress. Its going to come from the irs. A number of guys have been mentioning its likely the deal looks possible or even very likely. The irs will issue a directive to everybody essentially telling everybody not to change withholding rates if we look like we have a deal. Thats exempting the top 2 of course. When you get that even if you dont have a deal, thats a detectivi directive that the thing will happen there. Keep your book light. A lot of guys play different books. 60 long, 40 short. A lot of guys a good part of their books are now in the cash side right now. The important thing is looking at some of these hedge fund returns, most returns are up 4 , 5 , 6 . Somewhere around there. The s p is up 8 . Most of them are still under performing on the year. You mentioned the impact on sandy and manufacturing. This certainly makes sense. We should see sales go through the roof and profits go through the roof. You have not seen this comment from the companies themselves. I was waiting for a comment on this last week the cfo said we dont expect any kind of Material Impact from sandy. He said this on a Conference Call late last week. I think theyre trying to downplay this in hopes of not seeming like they are profiteers from this. I find it hard to believe. I tell you where the difference is going to come. Prices for everything. Youll see dry wall, lumber, insulation, sheet rock, all go up because the capacity has been dramatically constrained by these guys. Their production and their facilities for producing these materials are down because of the housing business. They have been waiting to see some signs that were getting a real convincing ramp up in housing. Forget about sandy. Theyve been waiting to signs to see ramp up before they bring in new production facilities. They would like to see Housing Starts above 1 million before they ramp up production. They are 870,000. Well get that this week. That will be important to see how numbers are. By the way, i dont expect to see huge impact from Housing Starts from Hurricane Sandy this month because they collect data in the first two weeks of october. Its not through the end of october. Youll see it in the november numbers certainly a lot more. Thats the important thing. Guys, back to you. If they had boots on the ground they would know theres not enough supplies. They are still tearing down. When they have to build up, they have to get rid of mold. Youll see remarkable numbers in wall board. I want to be long usg. Lets shift bonds in the dollar. Go ahead, rick santelli. Thank you very much, jim. No supply this week although we do have tenyear tips on wednesday. If you look at a twoday chart you can see unlike friday which in front of a weekend a lot of things going on like the middle east, rates went down a bit. If you look at the way theyre moving up a bit, we have about an eight basis point spread which is a wider spread on intraday basis low to high than on closing yield basis which if you look at the next chart clearly you see this 160 levels a major pivot and for the most part the last week and a half we have settled very close to that area. If you look at the dollar yen, one of the big trades in foreign exchange. Monster trade. Almost a 3 move on the dollar versus the yen. You can clearly see today reverse just a bit but it doesnt diminish the magnificence of this oneway move and a lot has to do with politics with whats going on in japan. If you look at the last chart, this is fascinating. The fiscal cliff issue is a reason for many markets to move in the u. S. Its also big reason in europe and as it overlays several months going back to june with Dow Jones Industrial average, you can see that our market was impacted more by the election but both charts are highly correlated and its the fact that we are talking potential solutions to our fiscal cliff. Melissa lee, back to you. Thank you very much, rick santelli. Just a note here, were waiting for intel to begin trading again. A delayed open because of news that ceo will be retiring in may. Were awaiting that opening trade. 9 45 eastern time is our latest indication. Meantime, will we see a massive correction even if there is a fiscal cliff deal . 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Nasdaq is where we see the biggest gain in todays session. Keep in mind this index was officially in bear market territory down 11 prior to todays open. Big gain here across the board. We should note for shares of intel were still awaiting first trade on that for the day. Intel shares had been halted. Have been halted on this news that ceo is retiring effective may. So as we await that trade as we get it, well bring it to you. Meantime, got more to cover here in the markets. Markets saying a deal is in the wind. That would be rather remarkable. Deal in the wind. We minimize the defense contractor jobs loss. Those are jobs that are in republican areas. Pressure from the contractors could be great here. A deal can be made. I dont think anyone thinks a deal cant be made. The calls this weekend clearly helped. I do caution from taking too much of it to the stock market when the president isnt back and we havent heard from people on either side. Biggest intraday gain here since september 13th. A speech at 12 15 and words of r. J. Obrien we expect him to i think intel has opened for trade im being told now. News that Paul Otellini is stepping down in may. Talk about challenges the su successor is going to face . Look at microsoft. Its not like its been a standout. Look at dow. Our friends at hewlett packard. These are all part of the same complex. Intel needs to break out of that. Not enough credit for server business. Otellini a long line of good professionals. As steve jobs said you cant deal with them. Theyre too slow. Theyre too big. And you rather deal with someone in a quick fashion like samsung. A company in 45year history proved itself adept at reinventing itself when it needs to. I wouldnt sell stock on this. Intel is cheap. I would not sell the stock on this. Still has exact problems it had before and the fact that hes going to stay on for some time for there to be a transition to be well in place seems to be a good sign. Contrast trading of intel, its not a bad print but contrast it to the way the rest of the group is trading. Weve seen very sharp gains in the likes of the texas semi. Arms holding hit a 52week high and Philadelphia Semiconductor business is higher by 1. 5 . Intel is a lagger. Intel will consider external candidates as well. Doesnt mean they will not promote from within. This is a company thats typically promoting. Always promoting from within from its founding. Interesting to note in the press release they are going to consider external candidates which would be a big cultural shift in some ways should that actually occur. People felt they should have bought arm holdings. Middle east tensions having an impact on energy markets. Lets go to the nimax. Oil prices with a risk on day in the Energy Complex today. As you mention tensions in the middle east are a big issue. Its not so much the conflict that were seeing in israel and gaza but you have the surrounding areas that are Oil Producers and postarab spring its a timber box that people are concerned could be ignited by conflict that were seeing and theres no sign that conflict is easing up. Impact on oil prices reflecting that geopolitical premium and its winter so well see demand increases in the u. S. And china as well. Wti up about 2 . Same thing that were seeing in brent. Brent prices driving the heating oil and gas price higher. Were seeing a dip this morning in natural gas of course the e geopolitical issue not a big issue there. Traders talking about the fiscal cliff this morning hoping to see some sort of a compromise. Back over to you. Thanks for that. If you think planning your black friday will give you an advantage this year, watch out. It turns out people are already starting to line up for black friday deals like these folks outside some best buy locations. Some in tents. That brings to us this mornings squawk on the tweet. Complete the following sentence. Instead of camping out best buy days in advance, people would be better off blank. Tweet us. We have responses throughout the morning. Something tells me they will be quite sharp. You are missing the point. Best buy has terrific geek squad is very good. Best buy mobile has been terrific. Tremendous amount of size. A lot of firepower. I have been notably negative because i think that it would be bad but there are people that like to shop there you need the product and theyve got it. Good point. They generate a lot of key cash flow. Thats the key at a price. Everything is worth it. Depends on what the price is. Were not talking about a 26 deal anymore. Unless you want to pay 100 premium. The New York Post says the number is 90. Im not sure who they are talking to. Thats what they published today. 19, 18 well see. Its the battle of the Home Improvement retailers. Lowes steps up to the plate better than expected numbers this morning. Is it a better bet than arch rival home depot . First coming up, how many stocks can you talk about and how fast can you do it . See if you can do it better than cramer. Six stocks in 60 seconds when squawk on the street returns. Theyve been committed to putting clients first. Helping generations through tough times. Good times. Never taking a bailout. There when you need them. Helping millions of americans over the centuries. The strength of a Global Financial leader. The heart of a onetoone relationship. Together for your future. Or that printing in color had to cost a fortune. Nobody said an allinone had to be bulky. Or that you had to print from your desk. At least, nobody said it to us. Introducing the business smart inkjet allinone series from brother. Easy to use. Its the ultimate combination of speed, small size, and lowcost printing. Three words dad, etrade financial consultants. Theyll hook you up with a solid plan. Wa wa wait a minute; bobby . Bobby what are you doing man . Im speed dating [ male announcer ] get investing advice for your family at etrade. Six stocks in 60 seconds. People have been killing these hotel stocks basically betting there will be a recession. I know you said things about pet smart in the last couple weeks. The best quarter in terms of surprises. When i saw it wasnt able to go higher after that, i was shocked. Upgrade at dean foods. Commodity worries have passed. An upgrade. Emerging markets talking about china expansion. One of the attempts to get Technology Going here. Marathon this time. Important to talk about israel and gaza. This company has unique american assets. Oil and gas will be great here. A final upgrade. This is my Favorite International company. They are moving it everywhere. India, china, people drinking whisky like mad. Big deal with india in the past couple of weeks. I met with my friend Johnny Walker black over the weekend. How is johnny doing . It was at a wedding. He is always there. Hes a great guy. He should meet by buddy jim beam. Whats on mad tonight . Well talk about fiscal cliff saying, listen, heres what happens if we solve it. I think this rally today is about solving it. And im going to present the world view that is going to be just unbelievable if we get this thing solved which would make a lot of stocks go up dramatically including apple where we would finally get a sense that maybe its not worth selling because the Capital Gains tax may not rise that much. On friday night intraday was 505. This morning were creeping up to 548, 550 here. I tried to get into the apple store yesterday. Apple does have products you want. Do they have itv . You dont need it because stock is down 20 . I think that apple is a clarity stock. Thats the big issue that im using for fiscal cliff. We get clarity, you may say i dont want to pay taxes this year. Im already paying enough. Im not going to take that tax gain this year. Cnbc has built model portfolios. One is built on the idea if we go over the cliff. One is built on the idea that we avoid it. Are there obvious stocks that lead both of those models . Lockheed martin. 100 stock tomorrow if we get a cliff. Lockheed martin, great yields. You would realize maybe after tax of the yield wouldnt be so bad. Thats my favorite pro resolution cliff stock. Especially with new management. This is the one. This is the one. We are going to talk Bernanke Speech tomorrow. Some believe hell lay groundwork for qe4 after minutes last couple weeks showing the Board Committee was ready to do something if jobs dont improve. Bernanke will say washington, i cant help you unless you help yourself. T this is a guy in a sweet spot to say ive given im giving her all shes got, scotty, moment. We need this. We need to live long. Right now we need to prosper. Taking a hit, captain. Thats good. Well talk about ben. Great job today on the today show as well. When we come back, get ready for a double dose of breaking news on housing. Existing home sales and some Home Building sentiment at the top of the hour. [ engine revs ] [ male announcer ] the mercedesbenz winter event is back, with the perfect vehicle thats just right for you, no matter which list youre on. [ santa ] ho, ho, ho, ho [ male announcer ] lease a 2013 c250 for 349 a month at your local mercedesbenz dealer. [ female announcer ] today, its not just about who lives in the white house, its about who lives in the yellow house, the green, and the apartment house, too. Today we not only honor the oval office, but we honor the cubicle, and the home office as well. Because today its about all of us. And no matter who you are, youre the commanderinchief of your own life. Thor gets great rewards for his Small Business your boa [ garth ] thors Small Business earns double miles on every purchase, every day ahh, the new fabrics. Put it on my spark card. Ow. [ garth ] why settle for less . The spiked heels are working. Wait [ garth ] great businesses deserve great rewards. [ male announcer ] the spark Business Card from capital one. Choose unlimited rewards with double miles or 2 cash back on every purchase, every day whats in your wallet . [ cheers and applause ] welcome back to squawk on the street. Im diana olick. Breaking news from the National Association of realtors. A double dose of news this morning. Existing home sales for october and home Builder Sentiment from november. Were just waiting to hit that 10 00 mark. Existing home sales rose 2. 1 to a seasonally adjusted annual rate of 9. 7 million homes. Sales still up 10. 9 year over year. This marks the 16th straight month of year over year sales gains. Median home price 178,628 up 11. 1 year over year. Its median price so its about mix of home selling. Homes over 500,000 have seen 40 gains in sales from a year ago. Inventories at 1. 24 million. Now to the home Builder Sentiment number up five points. A big jump to 46. Thats the highest reading since may of 2006 for the home Builder Sentiment number from National Association of Home Builders. 50 is the line between positive and negative. A big jump and the segment that current sales jumped eight points. Thats the highest level in six years. Also sales expectations jumped two points so sales expectations in the positive. Big news for the Home Builders seeing much more confidence. Back to the existing home sales numbers, the only region that saw a drop month to month was 1. 7 in the northeast. Gains everywhere else. 4. 4 jump month to month in the west. Thats because you are seeing foreclosures, investors out there getting in there quickly. Investors made up 20 . Thats higher in october of existing buyers. Distressed sales making up 24 . All cash. Still onethird of the market at 29 . Short sales 12 . Foreclosures, 12 . Equal there. A slightly higher than expected number due to downward revisions in september and that home Builder Sentiment number is a big one. Market adding to gains on those numbers. Thank you for that. A lot more data to come later in the week with Housing Starts tomorrow. Want to get to our road map for the next hour. President obama in myanmar saying hes confident the fiscal situation here will be dealt with. Markets reacting today with large gains across the board. Biggest number since september. How much longer can the optimism last . Morgan stanleys chief u. S. Strategist adam parker here to give us his take. Big news out of intel. The ceo announcing hell step down in may. Shares just opening for trade moments ago. Well get analyst perspective on what it means for the stock in the shortterm. From tech to Home Improvement trade. Lowes reporting solid quarter. In battle of Home Improvement retailers, who comes out on top . U. S. P. Releasing shipping projections for the holiday season. Well sit down with the companys president of u. S. Operations. We certainly have a nice rally on our hands as carl mentioned. All three major averages up more than a percent today as continued signs of optimist signal a deal could be reach before the new year. Adam parker, good to see you. Good to see you. Good morning. Is this what were seeing . Were seeing the markets reaction to a deal being baked in . I dont know about that. I think theyre talking and they want to signal theyre talking but im not sure theyre doing anything other than kick the can down the road. Well have to see. Its positive if you get more belief that repatriation of foreign cash would occur if you get more progress on tax reform. There are positives that could occur. I wouldnt say its solved by any stretch. What do you make of the notion, adam, that the selling that we have seen is fueled by uncertainty surrounding Capital Gains and dividend taxes. Are you a believer that people have been selling in order to lock in gains . That could be part of it. I would suggest to you its also corporate earnings. I mean, weve seen basically no Earnings Growth in the s p 500 at all during the october, november earning season. Think about that. The entire s p is not growing profits at all. Year over year. Thats an earnings recession without an economic one. Corporate earnings are partially responsible for the pullback weve seen over the last few weeks. In terms of your overall view of the markets, lets say that fiscal cliff uncertainty was removed. You would have that dismal earnings picture. Where do you stand . You know, when you say its removed, i feel like i got to duck a couple unicorns flying around. Its written in the law 500 basis points fiscal cliff next year. The bold case would be to remove 350 basis points. So the bull case is a big headwind. If the economy is only growing 1. 5 in the u. S. Right now plus or minus, i have a 1. 5 remainor from the fiscal cliff, i may have no Economic Growth in the first half of next year. There are things improving. So our Economics Team at Morgan Stanley is keeping the gdp forecast around flat year over year 2013 versus 2012. The same growth rate. Thats not bullish by any historic perspective. How do you characterize what weve seen right now in terms of the pullback . Oppenheimer Technical Analyst came out with a note saying that any bounce that well see is a rental. Its a rental bounce. Shortterm bounce we see within a broader pullback in the market that has been about average when you take a look at the past 12 corrections that weve seen since the bull market began. Is that what were in right now just sort of an average run of the mill pullback . I dont know. Im not a technician because half of that stuff is predicated on momentum continuing and half predicated on momentum reversing and knowing when to apply what is where i dont see it will pick up in the Fourth Quarter or first quarter. It can improve after the april earning season. I dont see corporates really signaling they are optimistic about things recovering very much. I want to keep conservative in the portfolio recommendations until we get more clarity on fundamentals improving. So what does at that mean in terms of where youre recommending investors put their money especially if you have this dismal outlook for the economy where we wont see growth for the first half of next year. Economic forecast is growth will be the same next year as it is this year not improving is its not no growth to be clear. The two sectors overweight are technology and health care. They are two sectors that have the most cash on the Balance Sheet and therefore could benefit from tax reform or certainly any grand bargain that included things like repatriation of cash. To me the sectors trade at discounts to the market and in some cases grow faster and have better Balance Sheets. I want exposure to that sort of quality in an uncertain time. When you talk about the trough to corporate earnings next year, assuming its not a first or Second Quarter phenomenon, is that contingent on any development regarding the fiscal cliff talks between now and year end . Its a good question. Between now and year end not really. I think it has to be that they made some resolution by the middle of february otherwise i think it would be more negative. We take a pretty wholistic view of earnings. A farame work for the markets. We look at the data predicting earnings in the past. Things like manufacturing data or the unemployment data or consumer confidence. When we look at that analysis, it tells us earnings for s p should be around 99 for 2013. The street is at 114. I think the problem is earnings still have to come down a lot. The question is how does the market act when they come down. Do people view it as healthy reset for future beating or worry that it will fall off a cliff so to speak . When you talk year end 1,167. Are you envisioning a situation in which all of the promises of a deal by christmas time begin to quickly fade and investors almost panic sell into the last week of the year . I dont know about that, carl. We set the target january 1st of 12. We say whats view of 2013 earnings and how will people feel about it on december 31st of 2012. Whats the next meaningful move in the market . We think its down. The frame work for thinking about the market is take a view of earnings and take a view of what makes the multiple. That ratio move up or down. If i told you on january 1st of 2012, ten months ago, no Earnings Growth for s p and the most extreme tenyear yield in the history of the United States, we thought the market would trend down a few percent from where we were at the beginning of the year. Turns out we were right about the earnings and not right about the multiple. Its because of things that have driven it. The market isnt going to get down to my target. I dont think its helpful to revise that. What is helpful is whats the next meaningful mood . This certainty grows and makes the market tend lower. Im not positive ill get better Economic News out of europe either. Youre right on those two. Well see if you make it three out of three. Always good to have you. Great to talk to you. Have a good day. You too. Adam parker at Morgan Stanley. The looming fiscal cliff and more. Well find out whats catching the attention of oil traders on this shortened holiday trading week. Heres a name you might remember. I do. David shulman. Hes here to tell us why a massive correction is headed our way. Were back in two. I always wait until the last minute. Can i still ship a gift in time for christmas . Yeah, sure you can. Great. Wheres your gift . Uh. Whew. [ male announcer ] break from the holiday stress. Ship Fedex Express by december 22nd for christmas delivery. [ male announcer ] tis the season to discover the kid in all of us. Enjoy Free Shipping and great values on your Holiday Shopping from l. L. Bean. For over 60,000 california foster children, the holidays can be an especially difficult time. Everythings different now. Sometimes i feel all alone. Christmas used to be my favorite. I just dont expect anything. What if santa cant find me . To help, sleep train is holding a secret santa toy drive. Bring your gift to any sleep train, and help keep the spirit of the holidays alive. Not everyone can be a foster parent, but anyone can help a foster child. Israel is ready for a Ground Invasion but the country prefers a diplomatic solution. Oil is moving higher this morning. Joining us live from gaza now is ayman. Good afternoon. The sun is setting and they have been for every night over the past six 9nights palestinians brace themselves for a violent night. Its during the coming hours that theres an intensification of israeli targets throughout the gaza strip. Yesterday on sunday there was an incident that many describe here as a massacre. One that targeted the home of a Senior Member of hamas military according to the israelis but inside that residential house were families. 12 people were killed including four children and four women. Its created a sense of anger among many here in the palestinians of gaza that the International Community is not exerting enough pressure to stop the assault on the people of the gaza strip. Palestinian faction says they are prepared in the event that israel launches a Ground Invasion here. They are willing to defend their territory with their lives. In egypt the focus has shifted a bit because politicians are trying to broker a ceasefire or truce between israel and palestinian factions. There are sticking points but there are signals or at least some early signs that a truce may be on the horizon that would be welcome news for people certainly in gaza and also in israel. Back to you. Thank you so much for that. Reporting through the weekend and today from gaza. Oil prices rising as fighting between israel and hamas does continue. Could this be the beginning of a bigger price pop and where should you park your money in the complex . We have the Senior Energy analyst at raymond james. Good morning to you. Thanks for having me. The conventional wisdom last week is because it doesnt directly involve iran, maybe the impact on the complex not as dire as it might be under other scenarios. Do you agree with that . There should be no impact at all from whats happening currently on the israel gaza border. None whatsoever. The reality is that the oil market is very jittery as all Financial Markets are these days. And as we saw, for example, with the egyptian revolution in 2011, which also had no impact at all on oil market fundamentals, but did push all Prices Higher for a period of time. The concern here is contagion. Will this very localized war lead to a broader regional conflict and the odds of that are just exceptionally low because egypt is not going to go to war over gaza. Syria is already having its own internal conflict and not a Major Oil Producer in any case. Iran as you mentioned frankly is, i mean, clearly would want to help hamas in this conflict. Of course its in no position to do so. For one thing, its too distant from israel. It does not border israel at any point. It wouldnt be in a position to do anything besides maybe provide some equipment through the egypt gaza border. Thats the point. We do have longer range rockets that are now beginning to endanger tel aviv which most analysts agree are being trafficked into gaza at least with minimal help from the iranians. You dont think thats going to weigh on the minds of israeli lawmakers and defense ministers . The issue in relation to iran that certainly weighs on the minds of israeli politicians is the nuclear program. What is currently happening with gaza is going to stay localized with gaza. There is no i think any possibility that this will by itself turn into a broader war between israel and iran. There may well be war between israel and iran down the road, but it wouldnt be in relation to rockets from gaza. It would be directly in relation to the nuclear program. Thats the threat to israel, not the rockets. So in terms of the increase that weve seen in the price of wti and brent and i would like to focus on brent, how much of that do you think is the middle east premium but also weve had major production disruptions out of norway. About 8 of their output at this point. Look, clearly the market is concerned as i said last year during the egyptian revolution same thing. No fundamental impact on supply but there is this fear that something will get worse. No one really knows what. There is this fear any way. I think the norwegian issue is more substantive. There have been outages in brazil that have weighed on supply. Lets remember one very important thing. The United States alone is adding more to Global Oil Supplies this year than any other country and maybe more to the point, the u. S. Is growing its oil supply more than the entire world is growing demand. By definition, that speaks to an increasingly oversupply and not undersupply, Oversupply Oil market heading into 2013 barring some type of event risk like a war between israel and iran but even that would probably have less effect on oil supply than you might think because iran is already under sanctions and has been exporting considerably less. Interesting point of view. Lets hope it stays close to the way you see the things working out. Only time will tell. Thanks so much. Thank you. Intel shares hitting a new 52week low after news broke at 9 00 a. M. Eastern that the ceo will be retiring in may. Hes held that seat since 2005. Of course given the Company Six Months time to figure out who will replace him. John joins us on the phone and hell look at who that person might be or at least give us some sense as to what we can expect. John . Its an interesting situation especially because paul wasnt facing mandatory retirement for another couple of years at least. Taking a look at the late of executives who might replace him, a couple of the more obvious ones were promoted to executive Vice President positions. Brian runs the process Technology Business thats getting the chips manufacturing if you want to continue along the track intel has been, he would be a key choice if you believe x86 will break through in mobile and theres stacy smith also the chief financial officer. If you think theyre going to go through acquisitions, he would be a key choice. And then you have a couple others. Renee james was promoted head software. If you think that software is a key piece of your future and entrepreneurial bench going in a different direction, she would be a pick. A name not in the press release is the one who runs product. A hardware engineer at heart. A chip engineer at heart. He would be a choice if you think they need Product Innovation in order to grow. Someone could argue they need all of those things but its a choice that the board has to make over the next few months. I would say interesting legacy mixed. Hes a guy whos responsible for intel Going Forward with wireless laptops. Hes been an amazing operational leader clearing up lawsuits, getting chips delivered on time, covering the natural mistakes that happen with any company over time but then intel missed that key product transition to smartphones and tablets. That also happened on his watch, guys. Back to you. Jon, you mention many internal candidates for that top job but the company has also said it will look external aext. Thats not typical of what intel has done in the past. Are those just words in a press release . I cant say either way. I havent heard either way. If they are looking externalally you have to think about a company like ibm that has a full stock of hardware and software and engineering folks. That could be key for them. Qualcomm is a possibility. Weve seen intel go to qualcomm. We havent seen any notable executives come the other way recently. All right, jon, thank you. Lowes shares jumping after the Home Improvement giant upped its guidance. Is it a better buy over home depot . You think you have seen volatility in the market over fiscal cliff fears. Wait until you hear from David Shulman and why hes calling for a massive correction in the very near future. Back in two. Or that printing in color had to cost a fortune. Nobody said an allinone had to be bulky. Or that you had to print from your desk. At least, nobody said it to us. Introducing the business smart inkjet allinone series from brother. Easy to use. Its the ultimate combination of speed, small size, and lowcost printing. The nasdaq is up by almost 1. 5 in early trading. Lets check on some of the moves within the tech heavy nasdaq. We are kicking off monday on a strong note. Tech sector posting notable gains this morning. Nasdaq up 40 points. Apple shares making big strides this morning coming after eight straight weeks of declines. Has the stock bottomed . Thats the question. Shares of apple lost 10 and over the last two months the stock has dropped about 22 . Now, aside from apple, the semis are in focus. Intel shares underperforming the pack of course with the news the ceo will retire in may. The board will consider internal and external candidates. We have our eye on cisco in an effort to secure a position in Cloud Computing space, they acknowledge an acquisition. Cisco shares gained 8 over the last week. That stock has had a commendable run over the last week. Thank you very much. It was pointed out the big move in shares of apple, bank of america, Merrill Lynch reiterating the buy rating but cutting price to 780 from 840. We have topeka saying the selloff that weve seen down about 22 from highs insanely insane to use that analysts words. Were up about 4 . I got a chance to speak to your friend on friday on options action. Hes known for being short on apple. It didnt look good for a while. It turned in his favor. He said on friday that he did expect a 50 gain in apple shortterm. He was seeing a bounce here although longer term he is still bearish and sticking to his short. Listen, its interesting. Jeffrey is an expert when it comes to fixed income. Hes making a name for himself in the equity markets with the continued call on apple. Hes a smart guy. He does see things differently than many others which afforded him a lot of clarity in the past. Meantime from apple to best buy, if you think planning your black friday will give you an advantage this year, watch out. Turns out people are already starting to line up for black friday deals like these folks outside of some best buy locations brings us to this mornings squawk on the tweet. We ask you to compete the following sentence. Instead of camping out of best buy days in advance, people would be better off well get to your responses later this morning. They kept moving the door opener earlier so you would expect lines to formerlyie earlier. There are only five people in that line in reality. Its two tents. The fact that theres any line at all on monday morning. Are there going to be significant bargains for the first do we know . Camp out, david, and let us know. That would be interesting given i never even go in a store i might as well start camping out. I do like having canopy. I like to take that with me wherever i go. Look at that guy. I dont want to know what hes about to do in there. Look at the size of that thing. All right. Why are we showing you this . Because battle of Home Improvement retailers who is coming out on top and what impact did Hurricane Sandy have on the numbers in well talk lowes versus home depot next. [ female announcer ] today, its not just about who lives in the white house, its about who lives in the yellow house, the green, and the apartment house, too. Today we not only honor the oval office, but we honor the cubicle, and the home office as well. Because today its about all of us. And no matter who you are, youre the commanderinchief of your own life. Welcome to the world leader in derivatives. Welcome to superderivatives. About an hour into trading, 7 31 on the west coast and 10 1010 1010 31 on wall street. Tyson foods the biggest gainer on s p up almost 8 . Posting better than expected Quarterly Earnings issuing fiscal 2013 Sales Guidance above forecast boosting dividend 25 to a nickel a existing home sales up more than expected according to the National Association of realtors. Shares of lowes were up sharply. The Home Improvement retailer reporting higher than expected quarterly profit. Lowes also raising fullyear same store sales forecast. We should note this lull we see in todays session is a twoweek high in lowes. Bud, always good to see you. Good morning. It seems like the stock really gained altitude on the Conference Call. What did they say that made people so bullish . They started to show theyre getting traction in some of the initiatives that weve been watching with lowes in terms of product line reviews, value improvement program, and so i think the call went very well for them. The company is starting to perform pretty well and has probably some brighter skies ahead. 26 basis point improvement in margins pointing to signs of the turnaround gaining some traction at this point and im wondering if you think at this point it might be wiser to be invested in lowes versus home depot given difference in valuation and notion that the gap between them should narrow if lowes is in fact on the way to recovery. Well, given the action in the stock this morning, they are both selling at very similar valuations within a couple of basis points in terms of the forward earnings multiple and in terms of in our work which we do value analysis, they are selling reasonably at their value if not a little bit ahead. So we are neutral on both stocks. We went to a neutral last week after its terrific performance. We couldnt justify enough upside to the existing price to our corridor and we have the same issue with lowes so they are both terrific companies but the market is already granting a lot of that improvement in the stock price in our view. There is a notion out there that there will be a massive rebuilding on Superstorm Sandy and theres been so much damage that there will be massive buying of plywood and im just wondering sandy made landfall four days before the end of lowes Third Quarter. How much impact do you expect there to be in the Fourth Quarter. Did management say we will see that continued boost in sales because of sandy . The management went through a very reasoned conversation on what the Hurricane Impact has from preparation to impact to cleanup to actually rebuilding and restoring and right now were in the cleanup phase. They quantified about 30 basis points of improvement for sandy and another 30 basis points for isaac. It also was comparing against hurricane irene last year so it was about a wash when you look at it on a comparative basis. Quite frankly both home depot and lowes have done incredible jobs in our view of making to help those communities that are impacted. Everybody is, of course, very concerned about the people that were impacted by these storms. Both companies will improve on that. I think that the way you should look at it quite frankly is that this is going to be an extended impact of rebuilding and seeing that in the numbers is going to be one very hard to quantify and its going to happen over an extended period of time into 2013. I think that thats the right way to look at it. Investment impact is obviously built in a little bit on that but to quantify it would be very, very difficult. People today tried to today compare lowes 1. 8 comp versus 4. 2 that home depot put up. I wonder did they fall short relatively speaking when it comes to average ticket or total tra transactions or anything like that . The average ticket has been higher than lowes almost always in our work. And most of the comp was based on ticket improvement. I think that when you look at this, depot has outcomped lowes for almost about three years if i remember right. Its been a period of significant comping for a number of quarters. That probably turns around sometimes in the middle part of 2013. We said that we thought by the Third Quarter of 13 we might see a reversal of that because of the good work that depot has done and just the way you compare comps. All right. Well leave it there. Thanks for your time. Thank you very much. Meantime, yahoo ceo have held talks about extending collaborations with facebook. To what degree. Neither facebook or yahoo commented on the report that they are in talks for a search deal. Because both of the companies have long standing search relationships with microsoft, it does not make sense for yahoo and facebook to create a new Search Engine. Facebook coo and ceo have talked publicly about the revenue potential in search. Noting that the company is getting a billion search queries a day and isnt even trying. Yahoo signed a deal for binge to power search results in 2009. A deal tough for yahoo to get out of it. Facebook has a long standing relationship with microsoft which invested in facebook and the two also have a social search partnership. The big question now is whether a Tighter Partnership between yahoo and facebook with microsofts binge at the center could perhaps prove a real threat to googles dominance of search. Google has twothirds of all search traffic. We are likely to see facebook and yahoo look for new ways to Work Together but a new Search Engine would face a number of road blocks. David . All right. Thank you very much, jewulia boorst boorstin. Shares of one Energy Company hitting a new high. Lets send it over to Kayla Tausche at hq with a quick market flash for us. That name is cabin oil and gas. Cog. It was up 3. 5 . Now up by 82 cents. And pretty good trade for the day. Look at it this year. It tracked natural gas closely and has exposure to natural gas and recent rally is a reason why we see it up today. Back to you guys. Thank you so much. When we come back, what can brown do for your Holiday Shopping . Last year u. P. S. Delivers 480 million packages between thanksgiving and christmas. Will they beat that number this year . Well find out with the president of their u. S. Ops joins us next. [ male announcer ] this is steve. He loves risk. But whether hes climbing everest, scuba diving the Great Barrier reef with sharks, or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesnt nickel and dime him with hidden fees. So he can worry about other things, like what the market is doing and being ready, no matter what happens, which isnt rocket science. Its just common sense, from td ameritrade. Part of a whole new line of tablets from dell. Its changing the conversation. Syou know, ive helped alot ofof people save a lot of money. But today. sfx loud noise of metal object hitting the ground things have been a little strange. sfx sound of piano smashing roadrunner meep meep. Meep meep . sfx loud thud sound awhat strange place. Geico®. Fifteen minutes could save you fifteen percent or more on car insurance. The ceo of toys r us says shopping on the internet is very ungreen. The store told the Financial Times he believes that people fail to account for the Carbon Footprint particularly shipping products to consumer homes. He thinks the novelty will wear off and shoppers will begin to see the benefit that stores provide. Traffic acquisition costs are high and not that efficient. Ive been hearing that in terms of retailers talking like he is. Still have to drive to a mall. Meantime, the Worlds Largest Package Delivery company u. P. S. Announcing it will deliver an estimated 527 million packages in the weeks between thanksgiving and christmas surpassing last years total of 480 million. Good morning. Good to have you. Good morning. Thanks for having me. Beating 480 is a big deal but going to 527 sountds like you ae beating it with a mile to spare. Why so much strength . As the American Consumer is more accustomed to shopping online and you have the advent of more ipads, mobile telephones, people areaccustom ed to shopping online in their pjs. Mental image of someone in pjs shopping is sticking with me. Are we in the early days of this or have we settled with growth rates may flatten out in years to come . We should expect this will continue. Shipping patterns changed over the last five years. We really expect to have two peak shipping highlights this year. Just after black friday and cybermonday and three days after thanksgiving weekend as well as the nine days before christmas when we expect to have the highest shipping period. We just ran a story about the ceo of toys r us saying he thinks the novelty of ecommerce will wear off and shoppers will return to the store and return to the malls. What would you say to that . Are you getting any indications that consumers are in fact worried about the Carbon Footprint and notion that shipping one package with one book inside is not very environmentally friendly . We dont see any change in the current shipping patterns happening any time soon. One of the hottest items for this peak shipping season and christmas will be electronics of any kind. Particularly led by the use of mobile phones and tablets as the hottest items and as i mentioned earlier, we think that will continue moving forward. Last week your company ceo gave an interview to marketplace asked about the fiscal cliff. As head of u. S. Ops, how closely are you watching the progress of those talks and if it appears that they break down at any point between now and the end of the year, what sort of contingency plans do you have built in . Is there a plan to strip out a lot of capacity in a short period of time . Carl, thank you for that question. U. P. S. Believes that congress does need to move very quickly to get this done and we dont need to go up to the deadline. We work with over 9 million customers on a daily basis. They are telling us that theres a reluctance on their part to invest or hire more workers. Its a simple equation for u. P. S. Fewer packages shipped means less jobs for our u. P. S. Workers. We would like to see something get done very quickly. More and more sites are offering Free Shipping both ways for a certain size order. Im wondering how that impacts u. P. S. Do they get a flat rate or do they pay the same as any other person . We work with major retailers who we have set contracts with. Certainly as they ship more, were willing to work with them. Have you noticed that as a trend in terms of more and more Companies Reaching out to the likes of a u. P. S. To set up these contracts before the Holiday Shopping season . It seems like there are more offering this feature. You really dont get into renegotiation of contracts based on the time of the year. Our contracts are based on annual or three to fiveyear rates. But we do see higher shipping at this time of the year so certainly for those Larger Companies they would enjoy a better discount and a pattern of consumer expecting Free Shipping will continue but i think it bodes well for u. P. S. As we have spoken about ecommerce and more people that are shopping online and that equates to move packages for u. P. S. It equates that you have to hire more people. Weve seen 55,000 is the number you anticipate adding. Is that in process . Have most of these people been hired and are you sticking with that 55,000 person number . Were still sticking with that number. Its in process. Well hire all of the way up to ten days prior to christmas but quite frankly Technology Enabled us to be more efficiency and productive with the same number of workers year over year. As Online Shopping becomes more of an impulse and more of a habit, you order something, maybe you just order one item and the packages over time get lighter and lighter and lighter, is that a challenge for margins or have you found ways to charge for a package even though theyre not maybe as heavy as they used to be on average . You know, carl, i just spoke about our use of technology and u. P. S. As you well know invest over a billion dollars every year in our information services. It allows us to utilize technology to make sure that regardless of the size or weight o of the package, we put it in the right mode of transportation to ensure that margins are kept intact. Cant wait to see you do that 527 million times in the next few weeks. Its an exciting time for us. Thank you so much. Thank you. Coming up next, just how far could the u. S. Fall if we jumped off the fiscal cliff . Could it send the economy back into recession . Steve liesman has the answers next. First, rick santelli, what are you working on in the next big hour of squawk on the street . Well, they say, melissa lee, that imitation is the sincerest form of flattery. I dont think its a big reach to consider that the u. S. Seems to be striving to be more european in many ways. A topic for Santelli Exchange today is going to be bending it like europe. Fizzle and sizzle cycles. What have we learned . What should we expect . Top of the hour. [ male announcer ] tis the season to discover the kid in all of us. Enjoy Free Shipping and great values on your Holiday Shopping from l. L. Bean. [ male announcer ] you are a business pro. Governor of getting it done. You know how to dance. With a deadline. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. This is awesome. [ male announcer ] yes, it is, business pro. Yes, it is. Go national. Go like a pro. Want to draw your attention to the euro. Reuters is quoting some officials saying the eurozone is likely to give a tentative goahead tomorrow to disburse the 44 billion. There has been a lot of discussion. Some say infighting as to the target, 20 20. 2020, 2022. See if had can reach a shortterm agreement. Right now the euro seems to believe they will. Twoweek high here. As we have been mentioning throughout the show president obama stepped up his lobbying efforts around a fiscal cliff resolution thing weekend before leaving for asia. Making calls to jamie dimon, Warren Buffett, tim cook, several other notable luminaries in the world of business. We know jumping off the cliff or falling off the cliff would impact u. S. Gdp. But how much . Who better to ask than steve liesman. Give me the answers. How much. Im going give you two answers. I will give thank you broader answer but we are also going to take a look now at something heres not been done before. How the fiscal cliff goes down to a state level and county by county level as well. Take a look at the overall numbers. P this is the question david asked. Here is the 2013 impact. Drilled down here. Nondefense spending 40 billion comes off. Defense spending, 24 billion. Bush taxes, 42 billion for the wrelthy. That takes a drop of 503 billion. We sandt studded cant saw how exactly it spreads out but we can say where federal jobs are a big part of the economy and practical spending. Lets take a look. This is going to give u us insight into politics of solving the plif problem and economics. Heres a map thats color coded by the impact or amount of practical spending per capita by county. First of all, when you look along the east coast, you can see the huge fema funds that are out there as well as when you go down into places like florida, social security. Come over here and into the middle part of the country. You can see things like drought relief, coastal subsidies, and crop insurance. If you drill down here, georgia, you take a look at places like ft. Stewart. I dont think that active duty military person sell going to be a big part of the problem. What about the civilians attached with it, 3,000 civilians will. About 5 billion Economic Impact to libber downty in georgia which, by the way, 24 of their federal employment is federal government. Lets look now at the next at a look at federal spending as a percentage of state gdp. Maryland, washington, d. C. , big part of it is nondefense and a big part is defense. Come on down. Hawaii, 16 of their state gdp comes from the federal government. Most of that is the defense spending. All the way down to places like colorado and georgia where 6 , 7 are practical spending. One more way to look at this, guys, is on a state level. What you see here when you go to the next map, if we can go to the next fabulous, is federal jobs as a percent of the total by state. What you see is some red states like texas are red in this map and they have a lot of people. Then there is a lot of federal employees there. And even blue states like california, they show up red because they have a lot of federal employees as well. So what you find, guys, is bottom line, it is going to be hard to get democrats and republicans onboard because it ends up affecting both equally as well, guys, it is the Economic Impact places like california and high unemployment. So thats a double hit to them. Wow. Not all cliffs are created equal. Thats for sure. When we come back, tweet time. Turns out people are starting to line up for black friday deals like these folks outside some best buy locations. We are going to ask you on to complete the following sentence instead of camping outside best buy days in slaadvance, people would be better off doing what . Get your answers after a short break. Bob, these projections. Theyre. Optimistic. Productivity up, costs down, time to market reduced. Those are good things. Upstairs, they will see fantasy. Not fantasy. Logistics. Ups came in, analyzed our supply chain, inventory systems. Ups . Ups. Not fantasy . Who would have thought . I did. We did, bob. We did. Got it. People are already lining up outside best buy. Getting ready in advance for black friday. Request this morning involves instead of camping outside, people would be better off doing what . Exercise those thanksgiving calories off. We havent evenen those yet. They should teach the rest of us how to buy those deals without going to work. Too much time. We were just doesing that. We got a wheat from best buy themselves. We have some inline at best buy surprises and fun planned. Can shop our black friday online. Are you going to do it . They have pun surprises plan. Yes, that will be the last day of my life that i would be on that line. At 11 00, whats coming up at 5 00 . We are going talk muni bonds. If we go over the fiscal cliff they lose their tax exempt status. Which stocks do you buy if there is a deal . Traders are going to give you their Shopping List we will see you tonight. Headed to best buy. Right away. Zblents meantime, let me know what you want me to pick you up . Here is what you missed if you are just joining us welcome to hour three of squawk on the street. Heres whats happening so far. My feeling is that when there is a deal, we are going to see a how point rally in one day. Over a period of days in the dow. I think the next four weeks will determine the next four years. Our r people going to start working together and in a bipartisan way. That was the real mandate of the election. Paul otellini to retire in may. 250,000 and more, i will go to my grave before i raise taxes for the wealthy. And i im not hearing any of these guys coming out and saying used to really believe in that, not raising taxes for the wealthy. Now i believe it. How many of this, though, just a source of funds you know, i mean, most widely owned or certainly heavy percentage ownership in so many portfolios. Yes, i have. There is the opening bell. Entire s p and not growing its profits at all. Year over year or sequentially. Thats an earnings recession without an economic one. I think corporate earnings are personings partially responsible for the pullback we have even the last few weeks. Good morning. Holiday shortened week at the new york stock exchange. Lets get a check on the markets. Rally mode. Dow is 161 points. The s p adding 21. Back to 1380. Nasdaq, of course, having been laggard for much of the past couple of weeks. It is up about 45. Bank of america, biggest gain other the dow. Stock get an upgrade to buy from hold. Price target of 11. And intel announcing its ceo will retire in may. Paul otellini. The board will consider internal and external candidates for his replacement. Road map this morning markets, as we said on the rise thanks in large part. More optimism about the fiscal cliff. Then one of wall streets legendary market strategists comes out of retirement to warn investors that were only halfway through a correction. David shulman, former chief skits strategist are join us live. Apple bounce back after falling into correction territory. We will talk to one analyst that says investors should buy apple now if they want the take advantage of the gains that he sees coming. Creating american jobs with beer and ice cream. It sounds strange but it is being done. We are bogey to tell you how. We will start with the markets. All three indices in rally mode. Dow, s p, up more than 1 . Joining us this morning, chief investment strategist at bmo Capital Markets. Michael is the chief u. S. Economist at jpmorgan bank. Good monday morning now good morning. Brian, whats today about . Is this about the good vibes we got provide . The eu and imp coming to terms on greece . Is it what bernanke may or may not say in new york tomorrow . Or a combination of all these things . Sure looks to us like it is a combination of all those things plus calmer heads prevailed. We are in one of the situations with investors where you fire, ready aim, reek active to any negative news that comes on. People jumped to con including was respect to the fiscal cliff situation. Nobody really missouri exactly what is going to happen. But what we do know is that something is going to happen before the end of the year. I think what we have seen the last couple of weeks in terms of an overreaction from invest wrors created another buying opportunity. We are still very bullish near term and longer term with respect to u. S. Equities. When you Say Something is going to happen, what do you mean by that . Well, you think about the three legs of the of the stool of the u. S. Economy. Two out of the three have done the right things the last ten years. Meaning cut costs, building new revenue, rebuilding Balance Sheets. Now the job of the government to do that. We think it is going to happen. Why . Because it has to happen. Because fiscal cliff happens on a mereterm basis. Go over the cliff, runs into recession. Everyone knows whats happening. Now is the time for everybody to get together and play mice in the sandbox. And bipartisan effort to get things done finally. You obviously have confidence in congress. Thats a good thing to hear. Not everybody shares the sentiment. Michael, meantime, we are coming off of a week philly fed disappointing, industrial production, claims noisy. Sit being offset completely by what housing said today . I think you are right that the data is going to remain noisy for a few weeks still. I think seeing through the sandy noise will be difficult. I think what you are referring to on the fiscal cliff, we have been viewing a deal it is a most likely outcome. I think what we heard last week from the leaders coming out of the meeting is that a deal remains on track. So theres still a lot of details that are unknown as brian said, you know, no one really missouri whats going to happen. We will get some deal. There are deals that you can get that have a lot of fiscal drag. There are some deals that dont have as much fiscal drag. We feel like we are moving on the right path towards getting a deal. We dont know what that will look like. We mentioned this Bernanke Speech tomorrow. 12 15 p. M. In new york. The economic club. After the minutes we got last time, michael, do you expect him to lay a platform for some additional accommodation given that so much of the committee seemed to be in favor of doing more and if employment does not improve . I think lit leave the door open to that. Throughout the tenure bernanke has not been one to front running the committee, not two weeks ahead of the meeting. We expect the door to be left open. He may talk a little bit more about some of these changes and strategy towards talking about the thresholds. Im not sure he will give us a silver platter. All right. Finally, brian, in terms of sector exposure, if one follows your view that congress staffed with rational actors and get in a primary Work Agreement by year end what do you buy first . What is at the top of the list . Let me tell you, carl, our basis is really common sense. Sometimes common sense doesnt apply to politicians. Lets be honest with that. When you look at analysis and where the economy is, where the Business Cycle is, we clearly believe that technology and industrials and Energy Stocks in particular the next three to five years will lay the foundation for the next great bull market as we transition finally out of bonds and into stocks and think those three areas in particular in the u. S. Economy will benefit. All right. We do have the tenyear back above six. Baby steps. We will talk to you later. Thanks. Lets go to Capital Markets. Gary kaminski is at hq. Talking markets today. Whats on your mind . Good morning. Very short term i think this week we will see higher equity markets. You mentioned the Bernanke Speech. I pointed that out two weeks ago. There was a lot of hope and praying that he was going to say qe forever again. We will technically oversaw technicalities. Probably into thanksgiving. No major selloff expected. I will Say Something. I think those folks at the wall street journal must be listening to this phone line. They must have tapped in here above . How. If you saw the front page of the journal today, headline story investment falls on of a cliff. As you know from two weeks ago were we together postnine i told from you the consumer standpoint the real question is how we are going to avoid a recession early 2013. And this piece basically echoes exactly the conversation is have i have had with people, sit on public boards, and you can basically go back to the old Peter Lynch Mets Dolly of companies. Dont get too scientific. You can dumb it down and ask anybody you know that works at a company or sits on a public board what is happening now. The answer is simple. They are looking at new initiative dollars as it relates to the 2013 budgets and they are cutting the 20 , 30 . You know when thats happening whether it is because of the plif or in spite of the fiscal cliff, real question as it relates to equities, maybe not this week but certainly starting next week, it is going to be will we be in a recession in the early part of 2013. If you have the insight in that then have you tin sight into equities. Let me throw it back to you and say i believe that unless the budgets are being cut as a result of the fiscal cliff, therefore, resolution means the budgets will be reinstated and if you are cutting the new initiative dollars, the spending just wont be there. Wall street journal echos what i have been saying the last couple of weeks. People say the level of specificity, people are going to demand on the cut side. May be more definitely more than they have given us so far. Even off the record. Even though some of the back ground reports, thats for sure. Listen. Again, if you just use the methodolo methodology, viewer here, investment in the market, ask anybody you know, middle management in a company, ask them when they are being told from their senior people they report to. They are being told find ways to cut the budget of 2013. Dont make it more complicated than that. It is almost impossible to see wont be in a recession early next year. Gary, see you in a few moments spend it back to kayla who is back at headquarters with a mash it flash. Check out shares of tyson foods. Up about 9 today. Missed revenues, beat on the bottom line. Tyson was hurt by drought related costs. Fiscal 2013 will be equally or more challenging. Tysons has been able to raise prices to a point they can deal with it effectively, profit rose profit nearly doubled this quarter compared to the same quarter last year. Thats helping food stocks across the board. Pact that tyson can deal with that problem. Thanks so much for that. Lets get to the cme group. Rick santelli at the Santelli Exchange on a monday. Good morning. Good morning. I have to stop watching movies late at night because it gives me so many different ideas for the Santelli Exchange. I think today it is very appropriate. Bending it like europe. I think we are definitely trying to get this soccer ball, curve around some very important facts. I think that as we look at the stories of the day, it is so fascinating. We see that eurozone, again, seems to be in a mode to give greece whatever it demands. 44 billion euros. Most of the stores stay it may happen relatively soon. Lets look at the news of the day regarding spain. Close to 11 in terms of bad loans. Thats big number. And it is the biggest number going all the way back to early 60s since Record Keeping has been taken down on that country on their bad loans. And if we look at the Unemployment Rate getting very close to 26 , that doesnt matter. Okay. Reform avoidance. How many stories have we seen about greece or spain or the eurozone proper . Doing the fundamental labor reforms that make a big difference or tax reform . They have huge underground economy. It seems like in all these instances, and even health care, how many comparisons do we see in health care . They are not accurate comparisons. We look to canada. We talk about canada. They have, what, 34 Million People . We have 330 Million People. You look towards uk. They always talk about their health care. They have 60 Million People. These are just small bits of what our 1 6 of the economy will look like. In the end, red tape, over market blues. I think that whether it is in this country or it is in europe, the common denominator is what makes markets move seems to be words. Listen, intellectuals, we have a boat load of intellectuals on cnbc of smart people. I have learned something today. Yes. On this monday, november 19, i learned that intellectuals are gullible people. Thats what i have learned. Whether it is in europe, whether it is spain, whether it is greece or whether it is the u. S. In a lame duck session we all do want to rise above and everybody hears that roar shack the way they want it, vicinity heard anything that leads me to think that we are ever going to get to the proper conversation. Lets not talk about 80 billion. Lets talk about trillions and trillions. Lets get off the tax issues and talk about reform issues. It let them see cake, not eat cake. We are bogey to have that discussion a lot more about what exactly are the tough choices and whether or not they are being made. Rick santelli in chicago. Intels ceo Paul Otellini announcing his retirement. He will step down in may. We will find out how the Company Plans to proceed and how it can affect the stock which is not moving a lot today. After double digit losses, alltime high in september, apples trying to make a comeback. We will talk to the analyst who says investors should buy stock now if they want to make a profit. Lot more squawk on the street after the break. [ male announcer ] its that time of year again. Time for citi price rewind. Because your daughter really wants that pink castle thing. And you really dont want to pay more than you have to. Only citi price rewind automatically searches for the lowest price. And if it finds one, you get refunded the difference. Just use your citi card and register your purchase online. Have a super sparkly day ok. [ male announcer ] now all you need is a magic carriage. Citi price rewind. Buy now. Save later. Intels ceo Paul Otellini announcing he will step down in may. The company will look internally and externally for his replacement. Good morning. Shares of intel off the lows since the news Paul Otellini will leave in may. He has been with the firm 40 years. It was noted during otellinis tenure intel generated 107 billion in cash from operations and made 23. 5 billion in Dividend Payments. Board of directors will consider internal and external candidates for the job. Bernstein analyst says chip makers makes an external higher, less likely especially given challenges now threatening intels semi sector dominance. Thats some analyst reaction for you. Of course, it will be interesting to see who intel picks especially during a time we have seen more than one management shakeup in the broader technology space. Indeed. This is a big one now. Given the number of ceos they have had the past 30, 40 years. Thanks. He has been a giant on wall street for years. David shulman, former chief equities strategist for solomon, is here to tell us why we are only halfway through a correction. Thats coming up next. Can i help you . I heard you guys can ship ground for less than the ups store. Thats right. 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[ rodger ] at scottrade, seven dollar trades are just the start. Our teams have the information you want when you need it. Its another reason more investors are saying. [ all ] im with scottrade. Markets ral twlg morning. Will the rally last . Our Capital Market senator Gary Kaminski joined there is an interesting story with this. I did a piece talking about what straig strategists are doing versus what they are saying. He said i completely agree with you and see the same scenario you see. Oldtimers like myself know david was responsible for one of the great equity calls ever when he called the japan market top, 20plus years ago now. Lot of people think whats happening here in the United States, bernanke, qe infinity, setting ourselves up for a japanlike skwat market. Five years into a 20year slide. Is that something you have a thought on . There are a lot of similarities especially with qe and slow economy. There are also a lot of differences. Main difference with the japan was facing demographic collapse and we are not facing a dem zbrafic collapse. Japan was going through an unusual structural adjustment where hit to switch from export to consumer oriented economy. China has to do that now also. The we have a smaller structural adjustment to do compared to japan. I dont think we are japan. In terms of the u. S. Equity markets, you reached out to me and do think we have much more of a correction here ahead. Tell us where do you think these equity markets go . What are the driving factors behind that . The fact we have an up market today, where do you see the rest of the year . I think as i think we are about halfway through. I thought that friday. Up today. Maybe a little bit more to go. You know, 1250 is as good a number as only, golden call. Thats hard to really quarrel with 1250, 1230, somewhere around there. The thing is that going to take a long time to resolve this fiscal cliff. It is not going to happen this week or the week after. Probably i go down to Christmas Eve and the fact is the president may have to Call Congress back into the special session p they decide to decide to adjourn. The other thing is we are doing have a substantial increase in capital taxation. Both in dividends and Capital Gains. And stock market is beginning to price that in. P you go back in history, the previous times we raised Capital Gains taxes we had poor decembers, and my guess is december will have some problems as we price in the increase in capital taxation. Are you somebody that believes in individual investors are, in fact, selling . They have been selling the last couple of weeks because of Capital Gains . Do you buy into that . Individuals as well as hedge funds. They are taxed you know, flow through mediums, i think people are selling. Lets talk about a recession. Lets say we your scenario at we get resolution to the fiscal cliff. I dont know if you heard what i talked about at the top of the hour, can we avoid a recession here in this country . Early 2013. I think if we solve the fiscal cliff issue, late in december, very, very early in january, i think we will miss a recession. That said is Fourth Quarter growth is probably between zero and 1. First quarter growth is probably below 2 . We are going to get fz cal contraction coming out of whatever deal they come up with. We have slow going. If you want to call the economy 1 to 2 in the first half thats probably where we are going to be. I dont think we have a recession. 1250 on the s p. Lets say i cant short stock, lets say im not a hedge fund. What do i do with my money right now to protect my wealth through the remainder of this year . The thing is that if you have big gains and you are not comfortable with the stocks, probably would make sense to sell some of those because chances are you will be taxed higher on it next year. You sit in cash . Idea of cash being the negative arbitrage associated with cash. What do i do . Do i put the money in cash and forget about it n. I think opportunity for one month, it does not matter. No real opportunity for one month. You dont see any any scenario where we can have the equity markets between now and year end . No. If you get a deal much quicker, the equity markets higher. I dont think thats going to happen. The other thing is that i think if we got a deal, it isnt clear to me how much we will rally. The people of putting way too much into the solving the cliff problems. I think we may get a rally. Still have to deal with flat corporate earnings next year. Before we go back, i mentioned you called me after i mentioned about what strategists were saying as opposed to what you were doing. What do you make of the strategist on wall street today . You were a i think we called a you a legendary strategist. Somebody put that in the prompter. You were a strategist who actually had skin in the game and you advised clients back in the Salomon Brothers days what to do. We hear strategists all day talking about how attractive equities are. What do you make of what the viewers are hearing . I think most strategists are naturally bullish and will be upbeat, i think the real issue is if you go back to 2007, the real beginnings of the financial crisis happened in august. Right. The market made a new high in november. People tend to for goods get that. Then went straight down and a lot of happy talk between august and move time period before we really fell off a cliff. I dont think thats going to happen now but i think it is have you the certainly have risk in the system. Okay. Great. Thanks very much for joining us. Carl, i guess some sobering but maybe some straightinyour face from somebody that calls it like he sees it. Few moments left in europes trading day. A quick break. When we come back, we will get the close on that. Some of the details surrounding the headlines pivoting important meeting. Or that printing in color had to cost a fortune. Nobody said an allinone had to be bulky. Or that you had to print from your desk. At least, nobody said it to us. Introducing the business smart inkjet allinone series from brother. Easy to use. Its the ultimate combination of speed, small size, and lowcost printing. If we want to improve our schools. What should we invest in . Maybe New Buildings . What about updated equipment . They can help, but recent research shows. Nothing transforms schools like investing in advanced teacher education. Lets build a strong foundation. Lets invest in our teachers so they can inspire our students. Lets solve this. Minute away from markets close something the uk and across Continental Europe rallying today on open tichlism not only about talks regarding the fiscal cliff here in the u. S. But also some headlines that suggest that the eu and imf might reach an Agreement Regarding the next bailout payment to greece. Maybe some agreement down the road regarding the target for their fiscal situation. Here is a look at the major european markets. London, ftse, dax, italy, spain, looking at gains between 2 and 3 . They have been on a tear most of the day. Euro also getting a lift. Reuters as we said reporting that tomorrow, European Finance ministers are likely to give tentative approval for emergency loans to greece, totaling 44 billion euros and aid would be contingent on greece showing it as fully committed to reforms aimed at reducing the countrys debt. We will see how europe trades tomorrow. For the meantime we are left with the afternoon session. With that we turn it to rick is an tell write who was in chicago. Tell you what, it is a fascinating day and for all the reasons that you just depicted, carl. Whats going on with greece looks as though they are going to receive their 44 billion in euros. We continue to see that there is a lot of deterioration in their economy. We see continued deterioration in the spanish economy although always seems to look at the bright side. There is nothing wrong with that. Are we getting close to the bailout request . When i look at the nonperforming loan ratios, when i look at their Unemployment Rate, when i look at the General Dynamics of all their economies, their stock markets year to date, outside of germany, one has to get a little nervous. Thats why my guest today is mark grant with this southwest securities and im always interested to hear what he has to say. Mark, are you there . Mark . Im right here good. Great. Listen, mark, lets keep this simple. Im in a very cynical mood today. I was read something of your research. Guess what. You are in a cynical mood as well. Does greece deserve this payment and have they really done what they promised to do to get it . Or is this once again putting wall pain over termites in europe . No. Rick, i totally agree with you. Wallpaper over term mights is a good expression. In the first place, greece couldnt pay back its benefit spit olive oil into the mediterranean. The only reason that europe keeps egging them along is because they dont want to see a collapse of the entire euro region. One of the interesting questions is going to get who is going to fend this. Austria, netherlands, and also finland and said month more money for greece. So tomorrow while they talk about this twoyear extension, it will be very interesting to see who is going to put up the money. Now lets get to brass tacks. Lets rye to highlight some quantitative points. Half the greeks in your opinion done reforms that we have seen requested along this multiyear trip. If, yes, give me concrete examples and if not, i would like to hear those as well. Basically, rick, they have not lived up to what they have promised to do. They were supposed to have the sale of state assets, they havent done it. But it has been encouraged by the europeans that have helped them bury this. For instance, when you look at the debt to gdp ratio, you are looking at a number right around 460 . Thats just counting what they actually owe. In other words, the guaranteed bank bonds, guaranteed corporate state debt, 90 billion in derivatives, europe doesnt want to count this but it is there and then you have the issue of the imf and what miss lagard will do tomorrow because she says she is not going along this twoyear extension and they have to hit the 120 number by 2020. It is going to be a very interesting meeting to see if they get down to brass tacks, what they are really going to do. Now, do you think spain has learned something from the greek ordeal . In other words, i see their Unemployment Rate approaching 26 . I talk eed before how the nonperforming loans reaching close to 11 , historic high since Record Keeping on this topic. How can this possibly work out well . When is the bailout coming . And can we draw any con clungss between greek, spain and the lame duck session and the rise above we are hoping for out of d. C. . To answer your first question, spain will be force flood a bailout. It is just a question of time. I think that what they are worrying about is they deal in whats called dynamic provision and which allows them to move around the reserves and it is really a way of playing funny money with the books. Spain is going to be forced into it. It is going to be about 350 billion to 400 billion if you include the regional issues and bank issues over there p. It is a question of when it will happen. Spain is trying everything it can to put it off and to have them just give them money for nothing. Mark, we are going to have to leave it there. I always appreciate when you are on. In terms of the topic of what we can learn in the u. S. And in terms of dealing with our own issues and the sizzle versus the steak, i think we have lot of time to bring it back before it is solved. Back to you. Thank a lot. Lets bring in bob pisani with a look at whats happening. Broader market. Some individual sectors adding on to prior gains, too. Yeah. Amazing what you can get with a little bit of hope on the fiscal cliff and a little bit of hope on what is going on in greece. I want to point out one sector thats been making a comeback the last three, four trading sessions and thats insurance stocks. I know. Sandy and all that made a mess. It is a disaster. We are up again today. This is the Third Straight day these insurance stocks have been up. Put up allstate. This is one of the companies thats most exposed to the Hurricane Sandy. And, of course, we went from 42 down to 38 as we got a day or two after Hurricane Sandy. You can see in the last few days, we are back up here. We have gone from 38 and now knocking on the door of 40. The key component here none of the big guys have put out their actual loss estimates yet. You about the indications are that they are going to be manageable and, in fact, there are other addon effects that are occurring here. Put up the whats been going on since wednesday with these companies. Look at ait, allstate travelers, commercial insurers that have the most exposure. Thats a mice bounce. In some cases beating the bounce in the overall stock market here. Take a look at what has been going on here. I talked to a friend of mine this morning who trades these insurance stocks there is a lot of estimates floating around. Even assume a very high estimate of 20 to 25 billion, high estimates floating around, look what happens. Of the 20 to 25 billion, commercial lines of insurance, allstates and chicago cubs will pay out 13 billion to 15 billion. Reinsurance kicks in after that, though. They pay the remainder of perhaps 7 billion to 10 billion. What else is going to happen, here is why people are more optimistic the losses. Higher rates are definitely coming and the demand for more insurance. One of the major problems thats now occurring is uninsured or underinsurance. You go down to the store and you have a house that is destroyed, 300,000 to rebuild it you may get 150,000 to 200,000 because you didnt have enough flood insurance. That will be a midge or problem. People are going to be demanding more insurance and trying to rebuild and the Insurance Companies are going to give it to them at a higher price. More premiums and at a higher prays will be helping the Insurance Companies out. Allstate, i want to show you something here. Losses for allstate. We dont know. We are waiting for it. But maybe it is a billion, maybe it is 2 billion. They made 700 million in profit in the last quarter. Obviously the current quarters profits are out the window. We dont know what they are going to be like. This will be a loss. The important thing sing they will be able to cover it quickly. Thats why we are up on the Insurance Companies. Let me show thank you other side here of the banks and financial stocks have had a very, very tough time of it. It is a very simple point here. They are up today. First time in a while. Baings bank stocks put them up on the outer loop side. Most of the people that trade the bank stocks right now say low Interest Rate environment and no growth or low growth environmentment in 2013. Reason they are not particularly optimistic. Today these stocks are bouncing back. Carl, they have been beaten up badly in the last couple of months. Thanks, bob. Bob pisani. Send it back to Head Quarters and kayla. She has the market flash. Watching diamond food. The stock tlaubled for the last year a half. Down another 11 today on a downgrade from jefferies. Jefferies saying there is a 33 more downside for this company to go. Last week it restated earnings for the last two years. Wipe out about 56 million in profit. They had problem was their accounting and with the payme payments. Meantime, tensions rising in the middle east. Senior official close to Binyamin Netanyahu is ready for Ground Invasion in the gaza strip but prefers diplomatic solution to that conflict. Reporter hello there. In fact, it is nighttime in g. Gaza. The attention is shifting south of where we are. Focusing more on cairo, egypt. Thats where intense negotiations are taking place as we understand it. Egypt is trying to mediate a truce between palestinian factions and israel. Hamas made clear it feels it is in the drivers seat here. It says it will not lay down its arms or stop firing rockets until israel blocks on the territory. It is securing guarantees from israel lit not target hamas or any other palestinian leaders as it did on wednesday p when it killed Senior Member of hamas military wing. The israelis say that it is in the drivers seat. It would not stop its aerial assault and not stop possible Ground Invasion unless hamas halts all rocket fire into southern israel. Obviously you can imagine difficult road ahead. Right now egypt is meeting with other key players in the region. Including the Prime Minister of turkey, u. N. Secretary general moon as well as the Prime Minister. Intense negotiations to avert a ground war in the coming day. Entire world watching. Thank you very much. When we come back, one analyst says the recent selloff in apple is insanely insane. He is going to rationally explain why next. Later, what do beer, bicycle and Vegan Ice Cream have in common . Lot more than you might think. We will explain why it is all about investing in this country. 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Do not take celebrex if youve had an asthma attack, hives, or other allergies to aspirin, nsaids or sulfonamides. Get help right away if you have swelling of the face or throat, or trouble breathing. Tell your doctor your medical history and find an Arthritis Treatment for you. Visit celebrex. Com and ask your doctor about celebrex. For a body in motion. Coming up the top of the hour, names to buy now as stocks soar on a fiscal cliff deal. Is apple a generation alibi . Are traders and top analyst go headtohead over americas most valuable company. And we are tracking the oil trade as tensions escalate in the middle east. We will see you at the top of the hour in 15 minutes or so. Scott, thanks so much. Meantime, as scott said, apple coming back after its recent selloff. Many investors still very cautious. One analyst says throw that caution to the wind. Buy now. Brian white is a Senior Analyst at to pea can a Capital Markets. Buy on apple and price target you may be familiar with. 1,100. Welcome back. Put out a note this morning calling the selloff insanely insane. And we are go back a few years before you see a multiweek selloff like the kind it had. Exactly. We are really in the strongest quarter of the year for apple. December quarter is usually up 15 quarter on quarter. We are down 21 quarter to date. In october, general there strongest month of the year. Up 10 . We fell 11 . If you look at the valuation here, you look at the cash balance, look at the product portfolio, this is insanely insane. It does not make any zblens you would probably agree that a lot of the selling has been fired by concerns that dont revolve around apples performance in and of itself. Exact. I fairly or unfairly . Great gains. Whats wrong with taking them now before you are victim to change of tax policy . Exactly right. I think it is one of the reasons that you have seen the selloff. But lets take a look and compare apple to the s p 500. And really get a gut check here on whats going on. I mean, this stock traded as of this morning at 7. 6 times cash. S p was 12 1 2 times. If you look at the growth rate of apple, 92 a year versus 7 for the s p. This is madness. Yeah. At a time where corporate profits are beginning to now people worry about profits recession. Not apples problem. At least in the nearterm future. Exactly. I just remember 08, 09, apple grew 40 in 08. 20 in 09. Most companies in tech saw 30 declines. If you are worried about a recession, apple is a bet are way to play it. Especially with this valuation. Do you think friday was the low for a while . I think it i think it was. 505 train day. Exactly. I will give you an anecdotal story. Last week we put out a note on apple. I got a ping back from a friend in china. Far flung place in china telling me to be aware everyone is shorting apple. When it is out to people in china that they should be short apple, it is over. The bottom is in. Thats the way i feel. Brief bit on the dividend. Pays about 2 . Right . Little less 2 . You think it will go 3 to 4 . Thats reasonable at this prays. 16 to 21 dividend. 1060 it currently has. Look at intel and payout ratio, you would have over 4 dividend on apple. Are there signals thats imminent or coming in the next few quarters, months . Yeah. The exact rate we dont know. But i think i would be shocked if we dont see different dends continue to rise over the next six to 12 months for sure. Finally, any lingering concerns on your part regarding supply, whether it is with an iphone . All sorts of chatter today about the iphone 5s coming in the middle of next year. Are they still able to deliver on promises they make . So, you know, swreenl changed numbers for december quarter on iphone 5. We have 39 million. But i will say apple stores are starting to get shipment and we talked about it briefly when i had ipad mini came out. That was at any time case month or three weeks ago. Starting to prove for sure. I think whats going to happen is there will be a penitentiaryup demand for iphone mini and iphone 5 for sure. Thanks for coming in. Your report got a lot of play today. Brian white from topeka capital. How is beer fueling more than happy hour in the United States . Jane wells is live in l. A. Pedaling her way to the answer. As usual im working really hard. Going nowhere fast. Up next, it is a new world. New jobs, new economy, new lending. Were sam adams thinks this is a good investment. Hey dont worry. Etrades got a killer investing dashboard. Everything is on one page. Im watching you. Oh yeah . Well im watching you, watching him. [ male announcer ] try the etrade 360 investing dashboard. Jim cooperated get finance when he started making sam adams beer 30 years ago so now he is providing millions of opinioning in other beverage and food startups that cannot get traditional help. Jane wells is live at one of the startups pedaling a bike im told you have been on for almost 20 minutes. 25 minutes, carl. This isnt going to last much longer. I scream, you scream, we all scream for jobs. Cant get a traditional job anymore, you create one. Cant get a traditional loan, you find creative lenders. Right now we are going to make vanilla. Edward has an unusual dream. All right. Lock and load. Reporter he wants to sell ice cream. Organic ice cream. With vegan options. Ready to ride. Reporter churn it sustainably on a bike. Sound crazy . The banks thought so. But jim cook didnt. First of all, he has a great product. Second of all, hes got a lot of passion for what he does and real commitment. Reporter nearly 30 years ago cook founded Boston Beer Company maker of sam adams. Nobody would lend me money when i started sam adams. Reporter now he is trying to help other food and beverage startups. His samuel adams brewing the American Dream fund has provided over 200 loans, averaging 8,000 apiece. Claiming to creator saved 1300 jobs. I received 15,000 loan. And im going to be paying it over the next five years. Reporter Interest Rates average 8 . And cook says the default rate sunday 5 . The fund teams with local Economic Developers to find the right startups. We have 250,000 entrepreneurs here in l. A. It has been said lay slay a Small Business capital of the country. And it is. Check email. Edward is using his loan to open a storefront with plans to hire up to eight people. In an economy where traditional jobs and loans seem harder to come by, jim cook wants to support promising people scooping out a new path. While you have your ups and downs, you know, if you really loved what you do, you never work a day in your life. All right. Now 8. 5 is higher than you would get with a government backed business loan. But this is higher risk. It is also cheaper than starting a business on your credit card which is a a lot of the smart new startups do. Providing more than just money. Providing consulting. I have been build my quads. I made this, carl. This is really churned by me. How does it taste . Peppermint. Mmm. Good . Wow. Back to you. And guiltfree after 20 minutes on 25 minutes on the bike. Jane, as always, thanks so much. This will even out. Jane wells in los angeles. Art cash will drop by in a moment and weigh in on had mornings market. The dow up almost 154. Back in a moment. N you take a c. At the best schools in the world. You see they all have something very interesting in common. They have teachers. With a deeper knowledge of their subjects. As a result, their students achieve at a higher level. Lets develop more stars in education. Lets invest in our teachers. So they can inspire our students. Lets solve this. Sven gets great rewards for his Small Business how does this thing work . Oh, i like it [ garth ] svens Small Business earns 2 cash back on every purchase, every day woohoo so thats ten security gators, right . Put them on my spark card why settle for less . Testing hot tar. Great businesses deserve great rewards [ male announcer ] the spark Business Card from capital one. Choose unlimited rewards with 2 cash back or double miles on every purchase, every day whats in your wallet . Heres your invoice. Ive been a superintendent for 30 some years at many different park Service Units across the United States. The only time ive ever had a break is when i was on maternity leave. I have retired from doing this one thing that i loved. Now, im going to be able to have the time to explore something different. Its like another chapter. We have a very quick, very early triple digit move to the upside on the dow. Of course, thats been hold for most of the morning. Art joins us at post nine. Good morning to you. Good morning to you, too. We are at some important levels, key levels. Not a mistake we are at 1380 you are say. No. As wrote in my note this morning, it is key resistance in the s p at 1382, 1385. Thats right around where the 200day moving average is. Everybody made a to do about it breaking below. And now it will provide resistance because it is getting that notoriety. And they brushed up against it a couple of times this morning. Havent been able to punch through yet. I really think the market is rallying because washington is a ghost town. The president is out of the country. Congress is adjourned. They are not come back to town until almost the middle of next week. So theres going to be nobody there to be quoted saying something to break this mood. And the folks in media, the file film they will have, is that kumbaya moment where they came out of the meeting. Traders looked at that and said nothing on this side of the punch, it hurt us. As you said thats the only game film we have to look at now until everybody comes back. Similarly, across the pond, ecofin meeting tomorrow. Very similar broad brush strokes of optimism. Nothing in terms of fine print, though. No. It is very fine. On both sides of the pond, you are hearing these statements we know we must cooperate. We must get something done. And that is inspiring a little bit of a rally. Europe initially would just catch up to the friday rally. They stayed with it. My concern is no details. We are missing details on everything from payroll taxes to my other manifestation in what this package is going to be. And as garys guest said even if you get everything agreed to, there is an austerity built into this. For now, it is party time and everybody around the punch bowl. Thanksgiving is usual lay good time. Were . Yes, it is. You get people confusing the beginning of thanksgiving with nd olylylyly santa claus rally. Thanksgiving, the wednesday before has a mild upward bias historically. That the day after, although it is usually now, a half day, used to be a full day. Has an upward bias. But if you are going with history, you might want to be flat going into the weekend. Because the monday after, maybe it is the leftover turkey or something. But things dont quite work out. Tryptophan, negative effects. I mean, it is always impossible to read into the minds of congress. But there was a point made on friday when they all came out together. Last time they did not come out together. As you said in your note the cameras did not reveal one black eye in the bunch. Does that make you feel better about the process . Well, i i think that and maybe it is my natural cynicism but i think they would also were chasing. They looked at what this market has done since the election. Knowing that the fiscal cliff was an important thing. Realizing that the wrong word, for example, president s press conference. When he seemed to take somewhat of a hard line the market sold off. I think that didnt get lost on washington. They remember the talk and remember when they saw 700 points melt from the dow because of something that happened in washington. I think that they said, look, we will go before the cameras and we may be general but we will be there. If you actually go back and look at what they said, they each gave different closing dates f