Guess whos here. Thats jim cantore. This is jim cantore, mr. Weather man himself. Hes got the whole thing, thank you. You did very well. Thank you very much. So did you. He told me it was going to be very hard to make snow balls in this weather, right . I did. Andrew too dry. Andrew, we cant wait to see you back here. Have a safe trip back. That does it for us. Squawk on the street starts right now. Appreciate it. Good friday morning. Welcome to squawk on the street. Im melissa lee, with jim cramer and Carl Quintanilla and david faber. How are we poised to start the friday morning session. Right at the open, the s p 500 looking to add to fiveyear highs at this point. Looking at about six points. As for europe, gdp figures in the uk nearing a tripledip recession. Capping off a big week for the nikkei, up almost 3 for the week. Our road map this morning, dow taking aim at a new record high on track for the best january since 1997. The s p also poised for its longest winning streak since november 5th, 2004, as it sits at fiveyear highs. Microsoft confirming unspectacular launch for windows 8 and declines in office software. Will microsoft go the way of the dying pc. Starbucks shares get a jolt this morning on earns. Samsung posted record profits but show signs that maybe the smartphone slowdown is not an apple problem. Apple slightly higher after closing down 12 yesterday. Futures moving higher as the dow looks at a march toward record territory. Posted gains for the tenth time in the last 11 sessions. Also, the s p 500 surpassing the 1,500 mark for the First Time Since december 2007, but closed below that level with a slight gain on the session. Certainly it seems like its all positive. The dow transports confirming this move higher. It was pointed out in a note a couple of days ago that thats the buy signal here on the dow. Yesterdays market action, jim, was that concerning that it couldnt hold 1,500 . Im not going to be concerned about where they nailed it at the close. The earnings per share have just been stellar. Not just the bottom one. The outlines been great. Procter gamble this morning, and i was on the starbucks call. Theyre firing on every single cylinder, delivering on all promises, 3m, big dow stocks, theyre talking about the big turn in asia. Asia turn, asia turn, asia turn. Im hearing it in every single call. China back. Europe. Ive not heard anyone say stabilizing europe. Theres many good things that are happening. And yet you cant fight it. You cant fight this tape. It hasnt been uniform, though, of course, right . Dupont, off the top of my head. The outlook is not Crystal Clear go. They looked at the december month. There are people who are critical of me saying, parker was much better. Coleman did say big second half turn. With big business in asia there. Theyve got housing business. So yes, holman did not deliver that much. But it wasnt as bad. Now, carl, it is quintessentially a bearish argument that they have some saying, this companies all guided down and beat. At the same time, autos coming back, chinas coming back, europes coming back. We may have to say, things arent that bad. I know everyones reluctant to do that. Investors havent been that reluctant to believe thats possible. Although i think theres this debate amongst longterm investors with, okay, i remember days we went two years without a major shock, so to speak. But that has not been the case over the last series of years. Seems the First Quarter gets our hopes and dreams going, only to be thats a very good point. Only to crumble on the rocks of the but draghi had a press conference this morning at 4 30 that was about as fab house as i have heard a central banker speak. Europes going up. I said, look, theyre going to get it together in the second half. He said the second half is going to be good. If you believe were not going to have any shocks this year, you clearly would want to buy this market. The stock market is not expensive. Its not expensive. Microsoft is the same price. Ten years, yeah. Heres the front of the usa today money section today, all the arguments why investors are getting back in. Wilshire has recovered its losses, coincidentally. Vix is down, flows going in the right direction. Are you telling the retail are you telling mom and pop nows the time . I dont think they should ever have left. I still think theres movement. Starbucks is where it was before the big swoon with china, wasnt going to do that well, and its come back. Starbucks isnt that expensive. Procter gamble, theyre finally getting it together. That stock has done nothing. 3m has really done not that much. Cisco this morning announces the sale of wingsis. They wanted to be in the home market. Not done that much. The theres a lot of stocks that have not done that much. Not google, but a number of the other ones you mentioned have not had significant top line growth for some time. Its just that i think things are better. Should people come in now . I wish they had come in earlier, but i dont think that Interest Rates afford you a great opportunity. I. The people talking about a bond, real bond crash as a possibility. The breakout continues. What would happen there, if we saw 94, 240 basis point increase. Could you imagine . That would be all those concerns weve had about Duration Risk would come to pass. At ts got a good yield. Verizon, not that bad. Kimberly reported a terrific quarter. Theres just a lot to like. What can i tell you, a lot it like. Versus apple being this tremendous source of funds for a lot of other stocks. Microsoft seeing its shares fall in the premarket. The Software Giant reported Quarterly Earnings that beat forecast, but revenues shy of what analysts had been expecting with the windows 8 getting off to an unspen tactacular start. This was one usually around 930. I dont want to have a jolt, or a monster beverage. I dont think you should ever be allowed to have one of those. That Conference Call i mean, you had to someone everything you could. I always wanted to say, give me some of that. Now, there is a very funny situation. Theres this Internet Explorer ad, and the ad is about the 90s. It said, you grew up, so did we. No, they didnt. Theyre stuck in the 90s. Good luck to you. Speaking of which, bill gates in davos with Maria Bartiromo had an Interesting Exchange here. Take a listen. Got a lot of good people working for him. You know, tech leaders, those are hard jobs. Microsoft has not had an easy time recently. Would you ever return to the ceo office . Im engaged as a chairman on a parttime basis. But my fulltime work for the rest of my life will be the foundation work. Not an outright no, i guess. Well hmm. I dont know. Look, intel has the same problems. I always do that. People say, jim, why dont you just come out and say bomber hasnt done a good job. Jim, why dont you just come out and say bomber hasnt done a good job. You like the man, but not the stock, is that safe to say . Thats it. Great guy. He pulled out this phone. I had never seen anything like it. It had a microsoft operating system. He has compromising pictures of you from college, is that it . We used to play cards a lot. I beat the heck out of him. He always had a shoe box full of coins. Thats what he told carl. Thats fine. Thats called revisionist history. One interesting thing as we dissect that report today, david will be discussing what their strategy is regarding dell. No comment on that on the Conference Call, by the way. Listen, this is all dell is all still moving forward. You know, as our reporter said earlier this week, in the not too distant future. A few things to quickly point out on dell that may have missed in my reporting from a week or so ago. Dell has been going through a process for quite some time to enhance shareholder value. It started last summer when they engaged with banks that start to explore, should we split the company, is there a possibility there. Are there any strategics that would be out there that might be interested. Then they ended up with this plan to pursue the leverage buyout. So when we do see an announcement as we still likely are to with this leverage buyout, and others say theres a conflicted process that we dont like, that perhaps well start with the price, theyre going to present a lot of what theyve already done. The special committee will have already presented what theyve already considered, and why that price is the best that they can do. Thats at least something to keep in mind. Jim, microsoft makes some sort of investment in some sort of way in dell. Props up the pc business, props up the potential end user and customer core windows 8. Does that make you more or less bullish on microsoft . I need an earnings momentum. They have the new statistic the number of minutes that people are on skype. Skypes free. Its not charging so its not a lot of money. Windows 8, didnt hear anything at all. With the consumers coming in and starting to buy it, even if we watch football games, its endless saturation bombing of windows 8 ads. The popup stores as well, where consumers can actually go in and try . This is an ambitious endeavor. Consumers dont want to wait anymore. The next catalyst could be office 2013, but theyre moving to a subscription based model. That introduces a whole other level of risk into the Business Model. Wet dont know how thats going to pan out in terms of subscription sales. I think the stock is kind of like Sherwin Williams, its just a Sherwin Williams has been red hot, by the way. That was no sleight to Sherwin Williams. You were talking more about the paint drying. More of an analogy than Sherwin Williams. Greenburg said its not going there. He had critical comments. But i believe microsoft is another stock thats just its like your parents stock. Microsoft wishes it were Sherwin Williams. Sherwin williams is a kids stock, i guess. Honestly, listen to that Conference Call. Everyone knows i have a hard time sleeping. Ive taken zzz, the overthecounter i have found it. Im going to put that microsoft Conference Call next to every time i cant sleep, im going to pick that up. They have the sound machines with the ocean noise, the microsoft call. The microsoft Conference Call. But that is it. I know that mcdonald has been heightening the zzz product, their sleep products. Microsoft ought to add another line of business. It would do well. Lunesoft. Quickly touch on starbucks. Those shares are rising premarket. Posting a 13 jump in quarterly profits. Revenues beat forecasts. Global samestore sales jumped 6 helped by strength in the u. S. And china asia pacific region. I think it was a real relief because of what we heard from the other companies doing business in that part of the world. So much to like in that Conference Call. China, twoyear constant. Threeyear comps, mid60s. Moving into an incredible number of cities. At the same time theyre doing the operating margin expanding. Youve got a crimping operating market. Four cities theyre kicking butt in, st. Petersburg, moscow, beijing and ho chi minh city. Theyd probably be drinking a skim latte they would. I could see lenin getting off the finland station and going right into a starbucks. Give that little latte mustache on his goatee. I think that was obviously theyve got the tea maybe theyll have corner stores, talking about that, holiday gifts. One out of ten americans got one of these things. One out of ten. Thats starting to be walmartlike. This may be the age of starbucks. I get it from the guy outside. For 1. 25 snds. 1. 50. Inflation. I love paying 5. 04. Howard, of course, talking shouting out to a lot of the association. He came on and said europe is going to tirn. Europe is turning. Yep. I just think even the steel card sold out. I know. Within days. Within days. It was a good quarter. Meantime, one day after a 12 drop in its stock, apple has concerns about smartphones slowdown. David niederauer here from davos. Whats the game plan now. Take one more look at futures as we close out this incredible week. More upside implied at the open. Squawk on the street is back in a minute. With fidelitys new options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. [ male announcer ] when we built the cadillac ats from the ground up to be the worlds best sport sedan. People noticed. The allnew cadillac ats 2013 north american car of the year. For a limited time, take advantage of this exceptional offer on the allnew cadillac ats. Smart carmakers in the spotlight this morning. Sam sum said earnings rose 26 to a record high. As profits in the Mobile Division more than doubled. The company says it is keeping Capital Spending for the current year at 2012 levels as the Smartphone Market slows. Concerns about demand is one of the issues pressure apple, after yesterdays 12 drop. Shares are research in motion continue to climb ahead of the companys blackberry 10 launch scheduled for wednesday. R. I. M. Soaring by a whopping 170 in the past six months. We highlight samsung in trade here, because they saw what apple saw in the quarter that got us all concerned about apple. That is, the declines in margins, sequential declines in revenue growth. Too many smartphones. Exactly. Samsung, i thought they had good numbers. Maybe we just have now, look, theyve got great stats in apple telling you not everybody has a smartphone. Obviously tablets can replace notebooks, ultrabooks. Maybe were just at one of those moments where kind of you have one, you dont need a new one. Right. Hastings did tell you the next generation uses their tablet. They do movies. I like to watch movies on my cell phone, but its not its extremely disconcerting if i think each company has reached peak penetration of whatever market they have, when steven did his big announcement of apple a few months ago, there were concerns component orders were slowing down. He highlighted the fact that google and microsoft, when they reached their pe peak, that coincided with peak penetration in their markets. After that pe started to decline. Look, when walmart put a score in all 50 states, that was a peak in wal mrt. Limited, the same thing. Thats what you have to watch for. Obviously, if they had said on their Conference Call, weve got this new wij it that youve got to have, i think the discussion would be different. They did not give us the new wijity. They did not give us an acquisition. They gave us no reason to think that, well, you i wasnt even focused on saturation if they had given us something. I wouldnt be as focused on saturation if they said, listen, were building the best. Yes, theyre building the best. Thats not good enough. Not for this market. Where were going from growth to valuable. By the way, amazon. Com yesterday, new 52week high. So talk about source of funds. You know, this one is one that is benefiting from apples decline. Amazons doing quite well. Amazon is de facto, place to buy a pc, the number one pc being sold is when we come back, a shortened trading week coming to an end. How to finish off on a profitable note. The mad dash is next. Microsoft analyst rick sherlin, should the tech giant be involved in this potential buyout of dell. Take one more look at futures. [ wind howls ] [ dog barks ] [ male announcer ] something powerful is coming. See it on february 3rd. At a dry cleaner, we replaced people with a machine. What . Customers didnt like it. So why do banks do it . Hello . Hello . if your bank doesnt let you talk to a real person 24 7, you need an ally. Hello . Ally bank. Your money needs an ally. Gamble. A Company Either growing share in 50 of their business or more. The ceo came in. No longer am i critical, i am a huge believer in this man. We talked for a long time. He said, listen, watch what i do. What did he do . He beat earnings handily. 122 versus 111. Organic sales better than expected. 3 to 4 , and all he did on his quarter is beat himself up and say were not done, were not done, were not done. A fabulous Conference Call. Mcdonalds back. This could go meaningful higher. This stock is poised, is poised to be maybe the best stock in the dow. Mr. Mcdonald came off the wall of shame. A couple comp trollers were bad. There was open revolt in the Conference Call. He answered his critics. This army ranger answered his critics. I asked him once, i said, maybe youre not tough enough. He said, what do you want me to do, choke you with your bare hands . I said, no, i was thinking more about layoffs or something. I like this guy. He means business. And this was a breakout quarter for him. Congratulatio congratulations, mr. Mcdonald, du a good job. Its no longer old mcdonald had a farm, its new mcdonald has a hot stock. Well talk more about p g in a moment. Bright Horizon Family Services testing the ipo waters. Well bring you the firms opening trade followed by the ceo. A live interview with Duncan Niederauer as he rings the opening bell from davos. Were back in a moment. [ indistinct shouting ] [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. Take a look live picture as the nyse at davos getting ready to ring the opening bell. You see Maria Bartiromo right in the center of that picture. Well go out to them when that bell does ring in about a minutes time. Were watching very big news in the currency markets. I want to highlight this, because its something that has been off on the equity markets. Positive comments, relinch aunc the euro. I remember when euro was in the last debt gross. Wrong. Great britain, uk, still eurozone. A lot of commotion down here. We look at the live feed from davos, switzerland. Theyre not happy. [ bell ringing ] at the nasdaq, starz celebrating its spinoff from liberty media. Theres speculation about starz. But when i talked to a number of people who run various media companies, it might have been considered as buyers of that. Theyre saying, not me, check with that guy, and he said, not me, check with that other guy. Well see if theres a potential acquirer of starz. Netflix yesterday in the Conference Call, hastings was saying the great cable channels need us. You cant just jump in. Before breaking bad you need a stream. Netflix stepped in where starz has stepped out. S p gainers for the year, netflix number one. Is that true . Up almost 59 . Number two. Best buy, number three dell, if you can believe that. Name me three stocks that have come back from the dead. That would be dell, best buy and netflix. You just dazzle me. Thank you. R. I. M. , speaking of back from the debt, up 2. 6 in todays session. We mentioned them because they moved the stock. But there were reports that they were interested in potentially buying part of r. I. M. , or some sort of involvement. It moved the stock. It continues to move the stock today. Hard to imagine it would happen or not. If its deemed a National Champion in canada, theyre not going to sell another company to a chinese company. It is a great point. When you sell fertilizer to the chinese, will they but remember, they said thats it, were done. That was in that particular area. Right. That being a key Natural Resource controlled by that company. Fertilizer, they also have a cartel there. They had to have the cartel weigh in. Slappy happy in that fertilizer business. Dont come after me. Theres no hotel room. Thats true, theyre already after you. Mary jo, by the way, i was recruited by her and her husband at one point. Really . About the only people who wanted to hire me. No, i went to goldman. It all could have been very different. Instead of wearing zania, i was wearing that kmart suit. I got rejected by giuliani. Ive always been up front about that. He said, youve got to be top of your class. I was not top of my class. Goldman is taken to a neutral over at citi. Citi says valuation, nearing fair value on their equity targets. Goldman in return raising their price target. Oh, these guys, look, ive got to tell you. The two downgrades at goldman, look, if were back in the old era, as opposed to the new era were in, its going to earn a lot of money. Its got a very leveraged situation. You wont want to get off the horse here. I think everyones still playing by the old rules. Theyre like, whew, stocks up. Look at r. I. M. How many people were like, oh, thank you, its back at 12. This is a different market. Its a different kind of market. People have to stick with these stocks that are inexpensive. You dont be able to get back on. Thats true. Theres a lot of questions, when i know Hedge Fund Managers were taking risk off and drawing down a little bit and wondering whether that is in fact the right move and youre correct, and theres a lot more momentum to come, and perhaps multiple expansion in the future. Goldman traded at 200 bucks. Some Portfolio Manager will say its better now than it was at 200 bucks. The company has a lot of business to come on. Saying this morning that the m a business could come back. It could. It would be huge for them. Theyre saying positive things, all those guys weve had, whether its gorman or moynahan or blankfeen. They all seem to have picked up on that theme. Thanks, guys. Appreciate that. Lets get to Mary Thompson on the board on the floor watching with more. We have gains across the board in early trade. The nasdaq shrugging off the aftereffects of apples decline yesterday. Right now, up just about seven points. The dow and s p continue their march higher. Both on track for their fourth straight weekly gain. Nasdaq on track for a decline, first weekly decline in 2013. A lot of people wondering, do we go higher from here. One trader said, you know what, he said a number of these managers may be behind as far as performance goes in january. He said there is so much money, to echo what you were saying, on the sidelines. He thinks were going to continue higher from here. Were not only seeing multiyear highs here in the u. S. The dow within striking distance of the alltime high. But around the world were seeing a global rally as well. Today we have Strong Business Confidence in germany, now at a fiveyear high. The stock market there. In japan, two and a halfyear high as the yen continues to weaken. You heard melissa talking about the strength of the euro earlier. That could be a sign about optimism about the global economy, in large part because one strategist told me it appears japan, or the yen is a reserve currency, the attractiveness there is starting to diminish as people become more optimistic about risk asset. Great horizons a great child care Company Based in watertown, massachusetts. The company was priced at 22 a share. But right now the indication is 25 to 27. 10. 1 million shares being very well received by the Investment Community today. A couple of the stocks well be watching today. The earnings parade continues. Halliburton opening at a 52week high after it came in with earnings of 63 cents a share. Its International Operations helping to offset the weakness in the north american operations. The company also actually said weakness in north america could continue this year continue through 2013. But obviously investors like the news on the results. Hasbro had a weak Fourth Quarter. The earnings revenue came in below expectations. The Company Plans to cut 10 of the work force as a result of the disappointing earnings. There you can see its stock under pressure today. Lastly, you heard jim talking about Procter Gamble today. Kimberly coming out with earnings 2 cents ahead of expectations. Its stock is higher as well. Melissa, carl, everyone, back to you. Thank you, mary. Procter doing good. Sharon . Were looking at a little uptick the oil market. The weakness of the dollar is helping that. A lot of traders are also, despite all of the news that weve gotten about the seaway pipeline over the course of the week, they think the little glitches there will be shortlived. Thats another reason weve seen a rebound after the selloff we saw in the middle of the week. Were also watching whats happening with crude supplies overall. They usually build this time of year. Citigroup said theyre bearish oil because of what theyre seeing on the inventory side. Were also looking at whats happening with gold, because gold is showing further weakness. The strength in equities is taking some of the momentum out of the Precious Metals market. We also have options expiration on monday, that could lead to some traders readjusting their portfolios ahead of that happening. David, back to you. Thanks very much, sharon. The s p sitting right at 1500. One name we havent mentioned, a decent part of that index, is at t. The company having reported earnings after the bell yesterday. And they werent particularly good, to more or less wrap it up for you in many ways. That being said, the stock itself is actually up. Up about 1 this morning. Very similar reaction to what were not great numbers we saw earlier this week from verizon. The problem, both carriers in part is margins. In part resulting from the Enormous Growth in the iphone. You make look at that apple quarter and say, what are you talking about. At the end of the day they certainly did, with 8. 6 million iphone sales, you know the story here. Remember, its the subsidies. Man, they are paying through the nose for that, arent they. So you had perhaps what were wireline results that were expected. Wireless also had decelerating growth in average revenue per user. That was also Something Else being looked at. What happened at at t, the company is talking about significant, or high singledigit increases earnings per share this year, because it increased its buyback enormously. Analysts were expecting that they bought back perhaps 2 billion worth of stock in the Fourth Quarter. They ended up buying back almost 4 billion worth of stock in the Fourth Quarter. So youve got free cash flow, but what happens in the second half of the year and what happens to the stock prices as a result of the buyback perhaps slowing significantly. Again, way above what people anticipated. Dont they have to put more money in the business . They have a huge capital. They not that long ago, late last year announced the huge increase in Capital Spending. And they still have money left over . Theyre getting jammed with upgraded costs and subsidies. It will be interesting to watch the second half of the year. For both these carriers. Again, both verizon and at t. They jawbone about having to fight back on subsidies, but its not clear they will be able to do that. Then youve got sprint who is going to be competing. He wants to get speed here in new york at his hotel room. If you knew nothing other than the subsidies, you would buy apple. And verizon. You would say, look thats still the peoples choice. They were selling a lot of iphone 4s than iphone 5s. People were not upgrading. But they were moving to that spot. And a lot of minis. A lot of ipads activated. Again, look, apple is clearly now a cold stock. You can understand why the company, apple, is saying, listen, were good. Given the choice, people are still choosing the iphone. They are. Maybe not the iteration that not the latest one. Okay. It raises eyebrows. Yes. It does. We are still, by the way, on ipo watch, waiting for bright Horizon Family Services to open trading. Priced at 22. After that happens, stick around for the interview with the ceo. Speaking of ceos, its Duncan Niederauer live from the World Economic forum in davos. Thats straight ahead. Look at this mornings early movers for a friday here on wall street. [ female announcer ] what if the next big thing, isnt a thing at all . Its lots of things. All waking up. Connecting to the global phenomenon we call the internet of everything. Its going to be amazing. And exciting. And maybe, most remarkably, not that far away. Were going to wake the world up. And watch, with eyes wide, as it gets to work. Cisco. Tomorrow starts here. We all work remotely so this is a big deal, our first full Team Gathering i wanted to call on a few people. Ashley, ashley marshall. Here. Since were often all on the move, ashley suggested we use fedex office to hold packages for us. Great job. [ applause ] thank you. And on a protocol note, id like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh im sorry guys. Ah sometimes the caps lock gets stuck on my keyboard. Hey do you wanna get a drink later . [ male announcer ] hold packages at any fedex office location. Earlier we showed you nyse Duncan Niederauer ringing the opening bell in davos, switzerland. Maria bartiromo is with duncan in davos now for an interview. Maria . Hi there, melissa. Thanks very much. Im with Duncan Niederauer right here in davos. Thanks for joining us. Always nice to be here with the best. This is absolutely spectacular here in davos. Let me ask you about this market. Once again we opened stronger. 2013 has been on fire. What do you make of this . In terms of all this money moving into stock. I think its more than just 13 being a lucky number. If you look at 2012, as you and i were just talking about before we came on, it was a quiet 15 plus move in the equity market that a lot of people didnt participate in because they were in shortterm fixed instruments. It looks like january will be the first month of the inflows into the Equity Mutual Funds for a while. I heard from one big money manager here yesterday for the first time this week, they see people moving into equities. That hasnt happened for a while. Maybe this is the beginning. If thats the case, it should be sustainable. We talked so much about the last year about all the people sitting on the corporate Balance Sheets. Rates have been at rock bottom levels. At the same time volume has not been impressive. Money moving into stocks, yet volume is uneventful. Volume over time is always tied to confidence, right . As you know, firsthand, given your viewership, people still arent confident. This may be a sign theyre starting to get confident as they move in. We havent seen the uptick in volume that would normally accompany the increase in the Equity Mutual Fund flows, et cetera. Its nice to see the s p up 5 on the year already, give or take, but we havent seen the volume follow through. I personally think volume is tied to confidence. It will only come with meaningful comprehensive solutions out of washington. That really has been critical. Lets stay on washington for a moment. President obama nominating Mary Jo White as the s. E. C. Chairman. Whats your take on her . I dont know mary jo personally. But i know her by reputation. Her reputation is outstanding. Shes going to come in at a very important time. There are lots of issues that have to be dead with immediately. Weve enjoyed a close working relationship with chris cox and mary shapiro. The regulation has gotten harder for Financial Services. Whats your take on the regulatory environment. It seems the Financial Services over the last couple of decades has been riding a wave of positives. Deregulation, globalization. Going forward economies are looking inward and regulation is only getting tougher. A lot of those customers youre talking about are our biggest customers, a lot of those Financial Institutions. As long as they are going to be facing a head wind like that, you see a cut on volume, too. They have fewer strategies theyre carrying out because of all the capital charges. What i heard yesterday that i think is the Biggest Issue is not the breadth of the regulation, thats to be expected after a crisis, the problem is the lack of consistency across different jurisdictions. We all run International Companies now. If you start to have the different regimes in different markets, its almost impossible to run a business that way. I think thats what we have to struggle through still. Thats going to be a head wind for a while, im afraid. Youve got a lot of regulators in europe, in the u. S. , and theyre all wanting different things. Its not converging. You could argue its getting wider at a moment we need it to converge. Thats only going to happen if the big Financial Institutions and the regulators can work hand in glove. Ive seen signs this week thats possible. But the followthrough remains to be seen. Youre doing a deal with i. C. E. Lets talk about whether or not youll see resistance here. Youve been down this road before. Are you expecting any barriers in terms of lawmakers saying theres too much overlap . Or you dont see a lot of overlap . Thank you for reminding me ive been down this road before. I was sitting right in this chair. But you werent sitting in that chair next to me last year, as i recall. Were starting another one here this year. I think this one, the earlier actions weve gotten this week from both the u. S. And europe are that this seems like well have a smoother path to approval. But you never want to assume that in the process. Well continue to work hard. We think this one is less complex. I. C. E. Has a lot of commodity products, energy. So theyve got the energy and commodity futures, weve got the Interest Rate futures. They dont have an equity business or commercial technology business. There is almost no overlap. So it seems this should be pretty routine, but its a long process that we have to go through. Are you going to sell 9 listings business . No. The nyse brand stays, the i. C. E. Brand stays. We intend to sell off the four continental exchanges in europe after the closing the deal. That will be a 2014 event. Thats also been very positively received by the regulators. You think this deal closes this year . End of q3, hopefully q4 as well. Duncan niederauer. Thank you. Keep an eye on Bright Horizons Family Solutions. Opens at 27. 75. Now going public. Strong start. The ceo of the Child Care Services provider will join us at post 9 in a bit. 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We cant stand losing, thats why we have six in sixty. Caterpillar, the actual machines arent selling that well. Very weak. Upgrade of auto desk. When dell when goldman went from sell to buy, dell, that was the signal something was going on. They go from sell to conviction. I have to find out whats going on. Mccormack . It turns out the spices people didnt buy, this was starting this one. Thats supposed to be the last thing you cut back on. Talk about vanilla. Barclays. I think people are feeling the stock has had a run. I dont think so. I think it goes higher. Just saying what is proprietary. Absolutely nothing. Weve got coats. Whats kors going to say . Goldman says kors is good. I think thats a good call. Lets talk about the broader market. Earlier on you were saying, if you were negative on the stock, now that youre back to your high water mark, maybe you want to get out. Netflix, i like netflix. I like the product. But the stock, if you bought it two weeks ago, you know, at 90, you have to take a little off the table. Theres nothing wrong with ringing the register and letting the rest run. I do like the idea of looking at caterpillar, kcaterpillar repors on monday of next week. Maybe you pick it up here. Theres nothing wrong with being price sensitive. If you bought facebook in the 30s and road it to the teens and back you got lucky. If you rode facebook. I think facebook will have a decent quarter. What were seeing is, tonight ive got warehouser, this is the best example. Heres a company that reported an amazing quarter, and the stocks down. Buy it now. Thats profit taking, carl. Thats your opportunity. Wait for the profit takers. If i were interested in facebook, i would wait for the profit takers. This was at 29 last week. Somebodys excited about the Conference Call. Youre going to get your chance. The market is giving you chances to get in. What else is coming up tonight . Tj rodgers, dr. Rodgers, down to ten. They make touch screens for not apple. And a lot of products not in great demand. Thats interesting to me. Dan fulton went to my high school. So, therefore, hes a genius. Rest up for the weekend. Next weeks busy, too. You bet. 6 00 and 11 00 tonight. [ engine revving ] [ male announcer ] every car we build must make adrenaline pump and pulses quicken. To help you not just to stay alive. But feel alive. The new c class is no exception. Its a mercedesbenz through and through. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz Financial Services. Stop stop stop come back here humans we are beautifully imperfect creatures living in an imperfect world. Thats why Liberty Mutual insurance has your back with great ideas like our optional better car replacement. If your car is totaled, we give you the money to buy one a model year newer. Call. And ask one of our Insurance Experts about it today. Hello . we believe our customers do their best out there in the world, and we do everything we can to be there for them when they need us. [car alarm blaring] call now and also ask about our 24 7 support and service. Call. And lock in your rate for 12 months today. Liberty mutual insurance. Responsibility. Whats your policy . Welcome to squawk on the street. We have breaking data in the form of new home sales. The number came out at 369. Were expecting 385. A little bit of a disappointment. But the last time it was revised up to 393. So all in all, its probably a wash. The actual numbers were bad. Back to you, carl. Jim, thank you very much for that. Lets bring in diana olick for more on what the Sales Numbers might mean. Actually, a big disappointment. Were looking at contracts signed in december. This is different from the existing home sales number i always like to point out. These are people in december signing contracts for new homes. We did see a drop unexpectedly of 7. 3 . Prices up, how much exactly . 13. 8 year over year. This is the new Pricing Power that the Home Builders are getting because were seeing the existing home prices jump up so high. Its all about supply and demand. You have new Home Supplies at 4. 9month, which is higher than it was last month. Still pretty low. The builders are getting this new Pricing Power, which theyre starting to see on their bottom line. The pricing number is a good sign for the builders. Again, going forward, the competition is still with rentals. Were going to talk about that coming up on power lunch. A lot of Home Builders looking into building multifamily apartments. The monthtomonth number, a disappoint, but i like the prices. Thank you very much, diana olick in washington. The dow, the best january since 1994, up by 31 points. The s p 500 just hovering around that 1500 mark. 1,499 right now. Nasdaq higher by about 17 points. Microsoft analyst Rick Sherlund is here on the set. Should the tech giant be involved in the potential buyout of dell. Market approaching new alltime highs. Blowout Second Quarter from p g. A tale of two techs, research in motion up more than 133 in the last three months. While apples down nearly 25 in the same time frame. What do the charts have to say . Well check the technicals later on. We have to get back to microsoft here, trading higher after secondquarter results narrowly beat on the top line. A buy rating on microsoft at 32 price target on the stock. Reversal in the shares this morning, rick. Im wondering what your take was. In the afterhours session they were trading lower. Now up by nearly 2 . Nobody likes it. But it keeps kind of drifting higher. So i think a lot of bad news is conventional wisdom. And second half, you start sh t shift shipping a lot more products. I have to apologize to people that im recommending it, which is a good sign that probably a lot of bad news is out on the stock. Take your Research Note and you hit your recommendation on the stock, i would read it. For the most part i would think maybe your hold rating is on the stock, it almost sounds like youre apologizing in here. Slow adoptions of windows 8, off to a very slow and disappointing start. Many consumers do not care about Office Capabilities which is supposedly the next catalyst of 2013. What do you see in the second half . I think thats why you would keep a buy on the stock, if you think six months from now, things are going to start to look a little better. Intel is going to be the big help with their new haswell processor, so a lot of the interesting form factors of touch theyre kind of tablets and ultrabooks combined. They havent even shipped yet. I think once you get more devices out there, windows will probably resonate better in a market that consumers dont really need office. As they start to buy these for their employees, sales people that runs the new version of office, i think thats when the stock starts to gain a little more traction. In terms of the windows 8 numbers specifically, there were concerns going into the quarter that perhaps some of those sales of windows 8 were actually discounted upgrades from windows 7. Is there evidence theyre not reaping the full revenue potential from windows 8 so far . Yeah, i think those numbers are kind of soft numbers. You dont know how many are 15 upgrades and how many are shipments with new machines. I think in general, my conclusion is, its off to a slow start. Is it your impression theyre about to cut prices . There were comments made by the cfo that the Financial Times has written up today as a big hint that price cuts are on the way. The journal had that same conclusion. I listened to the call and i didnt really pick that up. Perhaps they had subsequent conversations. Theyve got room to reduce prices if theyd like to. Apple is actually a price umbrella for microsoft. What you worry about more is android commodityizing the targets. Theyve got plenty of room to make a good margin and pay this tax to microsoft for the operating system. Im not so concerned about apple as much as just the whole market getting commoditized. On the consumer side, i think thats a tough market for microsoft. If you dont need office, you really dont need to pay a premium for your products. They can afford to cut price on their hardware. Microsofts hair wear shipments are material on the market. Theyre there to show good design. Its important that their partners you could say theyre out of touch. You mentioned office. I see now theres a suggestion that actually when the new office suite comes out, it will be licensed. You will pay a Monthly Subscription in order to have microsoft office. That doesnt seem to be where the bulk of the market is at the moment. Thats not what consumers are doing, generally in their lives, is it . Actually, simon, 20 of offices consumer, you know, 80 is enterprise, and 60 of enterprises are on subscription already. So there is a pretty significant migration to subscription thats well along. So the actual transaction revenue is now a pretty small part of the total. Its wise even in retail, even to the consumer on the street. Very small part of the business. Maybe 10 of office, 5 to 10 is actually retail. Is there interest in dell because they want the pc to live, or they want a piece of what dell will be, different . Carl, ive seen this a number of times with microsoft. Theyre kind of strategic investments. Its not necessarily intended for a direct return. But they nurtured their ecosystem, helped their partners. Theyve done it with yahoo nokia and others. If dell needs favors, they need 2 million, 3 million. If it makes dell a stronger partner, the concern i would have is, does it alienate the other hardware vendors in another way. Microsoft has a challenge with those vendors. You definitely dont want to encourage them to carry the android. Because thats not good for microsoft. That would be the beneficiary of a revolt of any kind . Correct. Would you want microsoft to use some of its cash to make this investment . I understand your arguments, but at the end of the day as a shareholder, is that what i want microsoft to be doing . Microsoft generates that much cash in a month or two, so its not important to me as an investor, if they park 2 billion or 3 billion in dell stock for a while and help out a partner. Hopefully theyll get some strategic benefit of keeping dell viable as an important partner of theirs. Rick, on the larger issue of the 66 billion in cash that continues to grow, is there any expectation of a significant capital return . I know we have these conversations every few years. Right. Or is that simply off the table . If they have 68 billion, 61 billion of that is offshore. If they wanted to bring it back, they have to pay an additional 20 tax right now. Unless the tax laws are changed through repatriation, i think that cash is just going to sit there offshore. Or do another skype deal where they use that cash . You could use it, particularly for offshore acquisitions. But for the most part i think its not able to benefit shareholders. Its just sitting there offshore in mostly government bonds offshore. They could bring it back. I think what would be most likely would be a much more aggressive share repurchase. They wont do a onetime dividend like they did years ago. Your sneaky long is up 1. 5 , rick. Thanks for stopping by. Thank you. Rick sherlund. What do family ties and initial Public Offering have in common . Well find out when the ceo of Bright Horizons joins us next. Say farewell to secretary geithner. Well talk about his legacy and the challenges for his successor, jack lew. [ male announcer ] dont just reject convention. Drown it out. Introducing the allnew 2013 lexus ls f sport. An entirely new pursuit. [ male announcer ] how do you turn an entrepreneurs dream. Into a scooter that talks to the cloud . Or turn 30million artifacts. Into a hightech masterpiece . Whatever your business challenge, dell has the technology and services to help you solve it. Barrow island has got rare kangaroos. Chevron has been developing energy here for decades. We need to protect their environment. We have a strict quarantine system to protect the integrity of the environment. Forty years on, its still a classa nature reserve. Its our job to look after them. Its my job to look after it. Good morning. Welcome back to squawk on the street. Look at shares of halliburton, popping higher after releasing the Fourth Quarter earnings report. Revenue higher than expectations as well. Comments on the outlook contributing to gains today. The company saying it sees 2013 eastern hemisphere margins averaging in the upper teens. That forecast better than expectations. The stock popping more than 4 . Thank you very much, jackie. In the last 30 minutes, Bright Horizons Family Solutions surged on the big board debut at the nyse. Bfam is the ticker. Currently trading, up 6. 25. Joining us on a first cnbc interview, david lissy. Good morning. Congratulations. Good morning, simon. Good to be here. You had a twoweek road show. How difficult a sale was this to people . Were pleased with where we are. We come back to investors that did well with the company over many years. Wee rekindled those relationships. Obviously the mission we do is critical. But to have the story so well received once again in the markets has been gratifying. How has the story changed since you went private . What did bain do to you in the four, five years that you now reemerge as a Different Company . I think weve worked with bain for a long time. They put the initial venture money into the company 26 years ago. We went private with the same people who supported our growth. We emerged having grown at a top line and earnings in every single year. I think theres nothing that tests the resilience of a Business Model more than going through the two toughest years in the companys history. Today we reemerge with a broader suite of solutions for our clients and broader footprint now having expanded the company out of the United States. Its a capital efficient model. In other words, you dont go out and spend loads of money on the real estate, for instance, to start off your centers. You actually dont have to put that much money in. Well, the model, you know, it starts with the fact that employers have a stake in these issues. By the third Party Sponsor providing the capital, we get two important outcomes. We get a very capital efficient business, longterm contracts, revenue stream, predictable earnings stream. Secondly, we get a better outcome for the parents and families we serve because we invest more money in teacher salaries, better ratios of teacherstochildren, everything i wanted when i as a parent used the centers. And what many families out there want for their children. Theres a lot discussed about how bain leveraged the company, the Balance Sheet issues that still remain about debt. How aggressively will you be be paying that back . We emerged just re we r Interest Rates in half from when we went private. Were down under five turns, and expect to quickly delever further from there. You never know how youll behave when youre in the market. But i think through our growth and model we have a more rational capital structure. We think having a few turns of debt on the Balance Sheet makes sense. Youll use the proceeds from the ipo to pay down the debt, right . Were happy, of course, i dont know if were happy, were happy to get rid of those notes and have a consolidated term loan on the cost of money that is far less four or five times turns the leverages. Do you see it going down substantially as a result of the cash flow youre getting from the business . Well quickly be under four turns just on the growth plan in this coming year. We think 3, 3 1 2 turns of the leverage is the best way to return value to our shareholders, given the cost of money that were at today. I think were comfortable at that level. And the main focus, the clients are the blue chip companies. Once they become aware of the margins, do you think that theyre sustainable over time . I think some of the contracts are returning you 25 . Now, if i was a businessman sitting across you at the table, and you were looking after my children, i would say, i need a better deal from you on our next contract. Remember, i think were offering a High Value Service at the highest level of quality. And ultimately i think what our clients and the parents care most about is the level of quality of service with such an intensely important thing to them. And so ultimately i think, you know, our ability to earn a fair margin is do you think 25 is a fair margin . Thats in a competitive environment. Our margins are more like 16 . Youre talking about Gross Margins in businesses, we have overhead associated with that. Were not earning 25 margins on the contracted business we have with our employers. After overhead, and ultimately i think were earning a fair margin in the high teens, midteens. Which i think is fair, given the quality weve been able to bains going to start controlling the company after the ipo. But i assume theyll continue to sell down. Have they articulated at all their plan in reducing that stake over time . I cant speak for bain. But you know how these things work. Theyll own a good deal of the company. They havent sold any shares. We havent sold any shares as management in this ipo. And my expectation is, over time, well provide some liquidity to the market. As they figure out the right value. But i think they really support the business. The go private period was pretty much about growth and not about cost takeout. As i said, we were one of the few companies i think that grew, and grew our margins during the two most difficult times. I think hopefully as things get better, weve got an even better runway. Big debut, david, congratulations. Thank you. You must be very, very patient. Absolutely. As have i. As you know so well, carl. Take a look at the two sharts. R. I. M. Up over 130 in the last three months. Apples down 26 . Apple was the worst s per for the year. Unbelievable. Two very different techs. Well check the charts for the next level to watch when we come right back. Remotely so this is a big deal, our first full Team Gathering i wanted to call on a few people. Ashley, ashley marshall. Here. Since were often all on the move, ashley suggested we use fedex office to hold packages for us. Great job. [ applause ] thank you. And on a protocol note, id like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh im sorry guys. Ah sometimes the caps lock gets stuck on my keyboard. Hey do you wanna get a drink later . [ male announcer ] hold packages at any fedex office location. [ male announcer ] to hold a patent that has changed the modern world. Would define you as an innovator. To hold more than one patent of this caliber. Would define you as a true leader. To hold over 80,000. Well, that would make you. The creators of the 2013 mercedesbenz eclass. Quite possibly the most advanced luxury sedan ever. See your authorized mercedesbenz dealer for exceptional offers mercedesbenz Financial Services. Lets get back to the markets as they approach the alltime highs. Sectors leading the way higher, we look at the financials. For stocks, life could not be more different than any sector other than the banks. Lets go back five years, january 2007. Thats when most of the banks hit their highs. Now, the problems for the banks, as we know, started earlier, financials starting trending down, just 20 that year. Midyear, blackstone went public and investors started to lose confidence in the financials, so much so that bear stearns went in a straight downward direction, hitting an alltime high on january 12th, but losing almost 100 of its value before it got scooped up by jpmorgan. Many of the Sectors Companies are now extinct. If you look back at what remains and what the financials have done, theyve been leading recent rallies. But the sector has fared the worst since those october highs. Still down 51 from that peak. Faring the best, credit cards, visa up 182 , since october 9th of 07. Mastercard leading the entire sector, up 221 . Even though the banks have been the market darlings in the last year, overall to the huge drops fell toward the bottom of the barely. Citigroup, bank of america. Look at aig. Even though weve been talking a lot about it, the insurance giant flying high, over 1,000 per share before the 182 billion bailout. A little more humbling. Thanks for that, kayla tausche. The s p continues to flirt with 1,500 this morning. Warren meyers is with dme securities. He joins us here at post 9. Warren, good to have you. Good to be here. Thank you. This will be eight straight for the s p. Yes. We havent done that since 04. When is the breather coming, and when it comes, do you buy back. I think were close to the breather now. 1,500 has been a target. Were on the verge. We havent gotten through on the futures. But were right there. A lot of important data coming out next week. I think this is time for a quick breather. I think 1 , 2 pullback only. Weve had a strong momentum. That momentum is still underlying this market, giving it a nice base. I would expect a small pullback, and i would jump on that if you have the opportunity. What propels us higher . Do you buy into the notion theres a lot of cash sitting on the sidelines. I think as of late there are people out there saying, no, there hasnt been a lot of cash sitting on the sidelines. Youve got to look to see whos been in the marketplace. Youve had professionals obviously in this marketplace, but the vast majority of the individual investors havent been in this. If theres any sentiment change to get the group in, that could be an inflow of money back in the market. Does that explain some of these january flows . Do you think those are for real . Yeah, we had so many months of straight outflows, and we finally turned the tide there, it seems. Not that theyre gangbusters going inflows in the equity market, but weve seen the trend change a little bit. I think thats the beginning of the trend. Warren, im sorry to say this, but one of the reasons the upset markets are doing what theyre doing, is the banks are pumping reportedly today were we gining to see them withdrawing. The ecb is having money paid back. The president of Goldman Sachs today in davos has warned of substantial losses on assets, on fixed income assets as we move forward, as Interest Rates spike. What happens during that debate . I mean, how do people protect themselves . Does it cause the equity market to wobble, if you get sudden moves in assets . Be it farmland in the midwest or treasuries . I look at it this way. I think the Central Banks around the world are telling you that you want to be and need to be in risk assets right now. I dont see that changing tomorrow or next week. Theres going to be a trend to change that way down the road, but every indication ive seeing is risk assets the place to be for the short term and medium turn. There will be a little bounce, but the place you have to be is in the equity market. On this binary view that the Central Banks keep doing what theyre doing, they have to talk about exit strategy. Some people will react to that. Is that going to start tomorrow . No. Look what the fed has said. 2014, 2015, some of the fed bankers saying you wont see much reaction until 2015 or later. Youve got a little ways that i think you would be getting out a little too soon if you followed your strategy right now. Is there a big macro risk . People saying germany will go negative soon. Everythings cyclical. Weve been ahead of the curve. The damage was done here first. Were starting to come out of it very nicely. Slowly, but nicely. I think youll see europe follow in that same pattern. Maybe a year, year and a half behind us. Yes, they have potential for negative numbers, but that will rectify itself relatively soon. Well look back at this conversation and im sure you will. Thanks, warren. Thank you. Still ahead on the program, well check what the charts are saying on apples recent downturn. And research in motions big rally. Were checking the technicals next on cnbc. With fidelitys new options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Exactly one hour into trading. 7 30 on the west coast, 10 30 on wall street. Procter gamble up more than 3 . New 52week highs. Raising guidance for the fiscal year. 3mj j hitting record highs this morning. New home sales for december coming in weaker than expected, 7. 3 from the previous month. 2012 calendar year were the best since 2009. One whistleblower on the dreamliners battery. Its starting to get more traction in part, because when you have whistleblower coming forward about a part now in the news, a lot of people saying are there others out there. The ntsb yesterday gave an update in terms of where the investigation stands, including showing the media whats going on in the ntsb lab, seeing the charred batteries from the 787 dreamliner that was the one that had to be put out in boston. Well, now they still say they do not know the exact cause of the batteries catching fire. As for those batteries and one other component, the charger, the charger for the batteries built by a Company Called secureaplane, a plant out in tucson, arizona. Back in 2006, there was a fire involving lithium ion batteries for the 787 at the secureaplane plant. A worker there warned the company about the batteries and the chargers and the possibility of fires. These lithium ion batteries, too much heat and theyll explode. It will be a nightmare. Michael leon was dismissed from the company for repeated problems on the job. Secureaplane told me yesterday the battery charger for the dreamliner was successfully tested. There was a fire in the facility in 2006 during one test. However, the current boeing 787 investigation is unrelated to the 2006 fire. Take a look at shares of boeing, it is worth noting, were showing you a chart going back to the 17th. That is when the dreamliner was grounded. And since then, shares of boeing have gone up, guys. And yesterday we heard from the ceo of united airlines, he came out and said, when this is ultimately cleared, people will flock back to this plane. Despite the fact they dont know exactly whats wrong here, you still see the customers. Thats the primary concern for boeing. Back to you. For the moment, phil, how long will it be grounded . Thats a good question. If were looking at something that goes for several months, its a different story. Maybe you have the airlines saying, okay, were not too pleased were going to have to wait this long. Keep in mind, theres only 50 of these out in service that the airlines have had to cancel flights and substitute aircraft. Its not a huge grounding in terms of numbers of aircraft being brought down. But there are many on order. Absolutely. Who in the middle east is going to go, you know what, maybe the dreamliner isnt worth it for us. If you were in line to get one in 2015, are you going to jump out of line to get one from airbus . Youre going to be in the back of the line at airbus, and that will put you back to 2019, 2020. Phil, thank you very much. Phil lebeau for the latest on the dreamliner 787. Apple in a downward spiral as research in motion surges. What are they saying about the two very Important Technology companies. Director of Technical Research is here. Good morning. Good morning. What is the damage to apple now from a technical sense . Well, apples been declining for quite some time. The damage has been done. You know, on the charts, certainly not just on the daily charts, but on the weekly charts as well. Quite frankly, we think for apple to get back on track as a stock, its a good technical trader. It would have to surge back above 500. So this gives traders on a shortterm basis a lot of leeway to play some oversold trades. Also for down side risk still yet to go. In terms of support levels, apple is trying to base out today. Our level was around 448 to 450. We hope it gains some footing. The stock is certainly oversold enough to generate some type of snapback rally. But if it cannot hold this, were looking at a 390, 395 handle for secondary support on the stock. So we think theres a significant technical damage done on the longer term charts of apple. Unless it closes above 500, and its basically dead money until then for the next 10 or so higher . Well, yeah. I mean, our bigger focus with apple is that its no longer a Market Leader. Whats really amazing to me is the resiliency of the broader markets as apple has been in this kind of freefall. Look at the small mid cap sectors breaking out to all new sector highs. The market is able to do this without the power of just one or two stocks. I think ultimately thats healthy for the markets and ultimately those markets could buoy apples stock price. But we dont think it will be the leader it once was. What about research in motion, obviously were awaiting the full return launch next week, down from a low base. Extraordinarily well recently. How is it performing from a technical perspective . Yeah, i mean, so far, its been performing great. The chart of r. I. M. Is basically the inverse of apple, as one was topping and one was in distribution for the last several months, one has been basing. R. I. M. Has been under accumulation for a long time now. The only thing we would caution against is on the shortterm basis, the r. I. M. Shares look overbought here. So you could see a pullback or fade in the stock. Quite frankly, we think that chart is bullish above 15 support. We think that could charge higher into the low to mid20s on the intermediate basis. Inverse charts there. Wed be buyers of one and fade the other basically. Underweight apple at this point. Dan, thank you very much, joining from Janney Capital markets. Thank you. Lets send it over to jackie. Good morning, melissa. Looking at the reaction to the december new home Sales Numbers. The monthly number was weak, but that yearly number was the highest weve seen since 2009. The charts of the home builder is a little erratic this morning. You can see them there. Back over to you, carl. Jackie, thanks so much for that. Starbucks earnings showing customers are as dedicated as ever. The coffee giant continues to add more selections, do the shares have even more room to run. 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The ambulance will talk to patient records will talk to doctors about saving lives. Its going to be amazing. And exciting. And maybe, most remarkably, not that far away. The next big thing . Were going to wake the world up. And watch, with eyes wide, as it gets to work. Cisco. Tomorrow starts here. [ cows moo ] [ sizzling ] more rain. [ thunder rumbles ] [ male announcer ] when the world moves. Futures move first. Learn futures from experienced pros with dedicated chats and daily live webinars. And trade with papermoney to testdrive the market. All on thinkorswim. From td ameritrade. The dow this morning at a fiveyear high. The s p 500 flirting with 1,500. Steve is managing director at webb bush securities. Steve, great to have you with us. Good morning. Ive been hearing in the marketplaces that the volatility index is so low, that people can remain confident in staying long, because they can buy cheap protection. Im wondering what your take is on these market highs here. Well, certainly thats a contributing factor. The cost of protection is very, very low. But i think the biggest factor is we essentially have zero Interest Rates, and essentially have very expansionary monetary policies virtually worldwide in developed markets. This is providing a tremendous floor underneath risk to assets and will continue to do so as long as these policies remain in place. What do you make of the components that are pushing the markets to these highs . I mean, our previous guest making a point that midcaps, smallcaps trading close to record highs. Were making this move without a big Market Leader in apple. Well, the most risky assets are doing the best. The smaller cap names, thats only natural given the impetus of this, which is very, very cheap money. I mean, youre going to continue to see this rotation out of secure or less risky assets into more risky assets, which is what the central bankers want, what theyre promoting. Thats what essentially what youre going to get. I really only see two things on the horizon that are potentially going to be problematic to the market. One would be a resurgence contagion in europe and fiscal cliff 2, so to speak. Theres going to be a battle between republicans and democrats at some point in the spring. The market will look unfavorably upon that. Those two issues aside, i think the engines going to be low Interest Rates. Theres a third one, though, a third potential problem. The asset markets will stay like this for as long as the Central Banks continue to do what theyre doing. Isnt the bigger risk that we get an inclination that theyll start drawing this monetary stance and ahead of that, in particular, fixed income, some would say could very severely be impacted . Well, youre absolutely right, simon. They start to talk about tightening, or if there is some indication that this policy is going to be removed, the fixed income markets are going to get obliterated. At these low rates, well essentially have a very negative return. I just think that, you know, i hear what youre saying. But i think eventual that eventual action on the part of central bankers is months away. Its not going to happen right away. Let me ask you about let me ask you a practical question. A lot of people watching now will have their 401 k s automatically invested by their employers in targeted funds. And a proportion, depending on their age, of that will automatically go into fixed income. Do you think i appreciate youre not a personal finance guy, but on the split between stocks and bonds, do you think people need to get hold of their 401 k s and potentially come out of targeted funds and make an explicit choice, stocks or bonds at this stage, for fear theyre in a sector that you just told me could be obliterated . Absolutely. I think anyone buying longterm fixed assets right now needs to have their head examined. Youve got the 30year yielding 3 , the 10year yielding 1. 8 . If rates start to move up, your capital is going to get obliterated. Fixed income is the wrong place to be. And i would certainly not buy any assets that are yielding less than 5 in the marketplace today. You are eventually setting yourself up for some very extreme pain. Now, that pain is probably 10, 12, 24 months away. But for the investor, youre talking about, the 401 k investor who is sort of accumulating his cash over time, probably not making a lot of changes to his portfolio, when 2015 or 2016 rolls around, theyre going to have a very rude awakening if theyve been buying fixed income assets today. How does this run at record levels play out here . Are we due for some sort of a pause at this point in order to convince you further that this is a market that is heading higher . Well, i think weve obviously had a big move in january. Were up some 5 pretty much across the board, and maybe more. Its happened very, very quickly. You would naturally think from a technical basis we would get some flattening or slight correction. Like i said, i think the two most likely stories are going to cause that. There will be rumbling in europe where the populous of peripheral europe stands up and gets tired of the austerity programs and causes issues greater than theyre causing today, or fight it out in congress between the republicans and democrats, or another debt increase in april or may. These stories bubbling up right now could cause a correction. And i think we could get something in the near term. But i think well go over that like a bump in the road. I think as long as this central banking policy stays in place, and what simon says doesnt come to fruition about taking it off the table, its off to the races with Interest Rates at 0 . Thanks for your time, steve. I want to take a check on shares of apple here. Theyre down by a little more than 1 . The level were watching is the low hitting yesterdays session at 443. 14. A few dollars above that right now. Keep in mind yesterday, closed to session lows down 12 . Hovering at the new lows hit in yesterdays session. Not good price action for the stock. Were seeing the impact on the s p 500 as it backs away a little bit from the 1,500 mark. Meantime, look at netflix here as well, soaring higher as people said all day long, with the inverse of what happened with apple. Netflix, best s p gainer. Apple, worst s p loser. Symmetry. Burning through cash, apple making loads of cash. Were going inside the numbers of starbucks to see how well sales are doing. And if those commodity cost worries are down for good. [ male announcer ] you are a business pro. Executor of efficiency. You can spot an amateur from a mile away. While going shoeless and metalfree in seconds. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. Now this. Will work. [ male announcer ] just like you, business pro. Just like you. Go national. Go like a pro. We create easy to use, powerful Trading Tools for all. Look at these streaming charts theyre totally customizable and they let you visualize what might happen next. Thats genius strategies, chains, positions. We put em all on one screen could we make placing a trade any easier . Mmmm. Could we . Open an account today and get a free 13month e ibd™ subscription when you call 18882800149 now. Optionsxpress by charles schwab. [ male announcer ] it was designed to escape the ordinary. It feels like it can escape gravity. The 2013 cclass coupe. Starting at 37,800. Starbucks trading up after reporting earnings in line with expectations. A lot of strong metrics within all of that. David palmer is Senior Analyst at ubs. Good morning. Happy friday to you. Good morning. Tough to find any hair on the quarter, at least from our standpoint. Maybe you differ. I wonder if you got color on how january is shaping up. Certainly from others, looks like we were in for more chop this month than in december. The Company Implied on their Conference Call that momentum continued into january. One of the things you can reflect back on in the quarter it was 7 same store sales. The u. S. Retail business carried the quarter. Thats fuel bid cool things they are doing in the starbucks card and loyalty. The reloads on the cards which are one out of four purchases are going through the cards, 36 growth in the reloads. Thats fuelling the way above retail type of comp growth. Its probably the secret sauce on the Core Division for the company. When youre looking at record numbers of dollars loaded onto cards, why now . Why is it catching fire now . Some of it has to do with the mobile Payment Technologies out there. On iphone you can get the automatic reload and certainly the company made a point of giving treats to those rewards for those that use the cards. So ease of use, mobile payment and certainly it dovetails with the availability of the brand for what is a convenience category. Gives you a clue as to why schultz was enthused about square which was a few months ago. Verismo. Some reports call the results underwhelming. Its not a category killer. Green mountain is higher and starbucks is higher. Could more be done on that front . The launch is definitely a slow one. They have to find ways to drive adoption. There was competitive discounting happening in the Small Appliances arena against the verismo. You are beginning to see the price per cup on kcups move down to the 50cent mark in greater degrees. It will be competitive in single serve. If there was a dark lining to the release its a wakeup call that single serve will be more competitive and less a part of the story than perhaps the street thought a few months ago. In terms of china on the Conference Call china made it clear loyalty to the brand was deepening. It looked like it was following the same trajectory as loyalty in the United States. I wonder if you can model out what that could mean if people in china are using the starbucks card and are reloading and getting treats. If we follow the same path as the u. S. Wow. Thats a great question. In china the results are in the 10 to 12 same store sales growth range in the last few quarters. Thats remarkably stable. We asked about it in the call. You know, arguably they are far more stable than anything in retail. Certainly restaurants, as we know. Yum brands are having a tough time. Some of thats chicken specific. Digging into loyalty, that might be one of the reasons they are doing so well on a multi year basis. Their stacked same store sales growth is pushing 60 over three years there. David, thats not true, of course, across the board internationally for them. One of the major risks to your buy is the International Acceptance of the Starbucks Coffee Brand Experience around the world. Four years ago, i have an apartment by the seaside and they opened a starbucks. Every saturday there would be a demonstration, an anticapitalist demonstration outside that the police had to keep at bay. In the United Kingdom there is outrage because today havent paid taxes for years. Is that localized . You have a bizarre situation that they are offering to write ten Million Pound checks this year and next year. Is that a one off or a major problem internationally for starbucks moving forward . That seems to be a p. R. Issue in the uk. The uk has been a more competitive space than what they have seen elsewhere. One thing that happened there is they had first movers in cost of coffee under whitbread making their entry into the market more difficult to begin with. One thing they are doing is trying to raise the game, do what they did in the u. S. And make espresso better and really get in touch with being the best espressobased specialty coffee retailer over there. It seems to be stabilizing things for now. Well see from here. Internationally, the story is really more asia. They are expanding rapidly and finding success. Price target 64 suggests a lot of easy money has been made. You going to elevate that or not . We wonder if we are being too conservative with the growth ratio in the 1. 1 to 1. 2 suggested by the 23 times multiple target. Right now this is a company that could do growth. We have to evaluate that as momentum continues. Maybe there is upside. Great to see you david. David palmer at ubs. Still to come, Goldman Sachs ceo Lloyd Blankfine on the fed and his beard. Stay tuned. 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Since we make radiator valves wouldnt it be better if we just let fedex help us to expand to new markets . Hmm gotta admit thats better than a few likes. I dont have the door code. Whos that . He won a contest online to be ceo for the day. How am i supposed to run a business here without an office . [ male announcer ] fast, reliable deliveries worldwide. Fedex. Our Andrew Rosssorkin sitting down with Lloyd Blankfein this morning. When asked about the fed Interest Rate policy and the impact on the market he had this to say. The market has gone up. Without with people being underinvested there will be a turn. The turn in Interest Rates into equities wont necessarily happen when the fed changes Interest Rate policy. It will happen when the market decides the fed will have to change interest policy which can happen a lot soon. A lot sooner . Sooner than the official mmhmm. You may have noticed blankfein is sporting a beard. Maybe its insulation against the cold. Maybe its something more. You had a beard this isnt a play for bernankes job or anything else . No. The beard looks handsome. Very good. Simon . I think we should all be allowed to have beards. Unfortunately, thats not the cable with a ticker way. What a week we have had. Money in motion currencies. Ta deserves an hour by itself. Facebook earnings action. If youre just joining us this is what you missed earlier. Announcer welcome to hour three of squawk on the street. Heres whats happening so far we obsess about problems, whats going in congress. Sentiment is poor in some ways but with housing stabilizing, probably going back up with cash on the side, with the blessings of the Energy Situation no nobody anticipated but happened. Low Interest Rates, the u. S. Environment is good. My ear is tuned for hearing more cuts in spending. Im not hearing it. I would be disappointed if thats all there was. Many good things are happening. You cant fight this. Things are better. Should people come in now . You wish they had come in earlier. Microsoft is like your parents stock. Sherwinwilliams. Thats a kid stock, i guess. [ bell ringing ] its the lack of consistency against different jurisdictions. We all run International Companies now. If you have different regimes in different markets its almost impossible to run a business that way. Thats what we have to struggle through. That will be a headwind for a while, im afraid. Good friday morning. We are live at post 9 of the new york stock exchange. Lets check on the market as we dance around 15 00. Just below it now on the s p. Check the dow up 30 points. S p is up eight straight. Something we have not done since fall of 2004. Starbucks a big gainer reporting First Quarter profits thanks to growth in asia. Falling after being hit with downgrades the stock taken to underperform. Buckingham palace downgrading to neutral from buy. Markets around the fiveyear highs. Can it last . Well consult the charts and see how you should play the rally. Microsoft, a disappointing Second Quarter as windows 8 fails to thrill consumers and investorses. Find out how the company can stay relevant amid fierce competition. A top enforcer at the s. E. C. , did one of the top cops do enough to regulate wall street and protect investors . Well go inside. Imagine doing your Online Shopping without a credit card or bank account. Voku is making it happen. They will tell us how they are revolutionizing the world of mobile payments. The dow and s p hitting highs not seen since 2007. The sector hurting after apples slide yesterday. Up more than 30 over the last five yearses. Jon fortt is live in san jose with more on tech in the west coast. Hey, jon. Hey, carl. Tech changed in five years. No two stocks tell the story better than apple and hp. Fiveplus years ago, october 9, 2009 hp was higher than the dot com deductible. It lost more than twothirds of the t value since then. Blame it on the shaky pc market and shift to software and high end services. Apple up more than 16 5 even given the troubles of late. Apple was driving the boat hp missed mobility. The iphone had been out just three months. That was a good time to buy the stock. That tells you why its up just 10 . The p. C. Market struggled taking down names like hp, dell and logitech. The two absolute worst performers in the i. T. Sector were nokia and research in motion who were the leaders in smartphones. Interesting that we are talking about this right at this moment by the way when people are having doubts about apple which would have been the best performer as of a month ago but is now number three. Optimistic about the worst performers. Well see what happens in the next few months as people see prap what is the future of computing and mobility look like. Well get an indication from r. I. M. On that. I know you will be there for that. See you in a little bit. Jon fortt in san jose. Look at how retail fared and what could be ahead for that sector as well. Courtney reagan is all over that. Its a consumer that led the way for the blue chip index since the october 2007 close. Two retailers in the top five. Home depot was the worst performer. It was the best up 106 . Was that fore shadowing the housing crisis . Perhaps. It is the best dow performer in the last ten months. The Worlds Largest retailer takes the fourth best spot. Walmart shares increased 50 . So far home depot and walmart are two of the ten dow components up double digits. When it comes to the bempbl mark s p 500 two of the three top components are Consumer Discretionary companies with ross stores, the retailer up the most in the bunch up 376 . 18 of 42 components have doubled in that time period. Those are Consumer Discretionary names including tjx, dhar tree, ralph lauren, fossil, amazon and limited brands. Jc penney shares have shed nearly 72 of their value. Best buy down nearly 69 . While the first month isnt over yet, best buy is up 31 . Quite a reversal. The jcp turn around isnt catching bullish moves soer if a. The past five years havent been easy for the consumer marked with high unemployment, uncertainty. The winners are the low end dollar stores, discounters, off price retailers and the very strong high end brands like ralph lauren. What a puzzling sector, especially this week with coach. Meantime the dow and s p around the fiveyear highs. What are the charts saying about where we go from here . Lou green is at dwr Trading Group and joins us from chicago. Lou, welcome back. Good to talk to you, carl. People have questions about resistance. Youre argument is we may have blown through it. Its interesting. There is a price ban between 1468 and 1474 on the s p. The way i first nosed was taking a view from 40,000 feet at the beginning of the year. Noticed the alltime high call car year close was 1999 at 1469 and a quarter. The second highest calendar year close was 2007. That was 1468. 36. Less than a point difference of the two all time highest calendar year closes. Of course the years following that the opening price for the year was close to those levels. Last year was 1474. Thats an interesting band but the yearly chart is no way to trade. Ending on wednesday of last week for five days the high of the day and almost the range of the day was within the 1468 to 1474 band. Last thursday we rallied above that and havent looked back since. I see nothing the way between here and the all time high. I have given you lots of numbers. Should we go under that it looks like a pivot level. It appears well look back potentially at january 17th as the day the gates opened. On the charts that could be true. What gives you confidence that there is room to run, that well continue to rally . Technically there is room to run. You have the fed but sometimes the world and economics can sometimes intrude on the stock market. We have rallilied a long way since the lows in 2009. But the gdp of the country has been as sluggish during any time. Now it is close to 1 . There are differences between economics and the stock market. Sometimes economics can intrude. I know you didnt bring charts on bonds specifically. Because there is discussion about whether or not investors are leaving bonds, lou, is the tenyear showing a real break out. I dont think its showing a breakout. It has been weak over the last few months. You have taken some of the safety out of the trade. Im not saying where its going in the interim. I dont think we are done with the low Interest Rates on the long end. There are factors including a lack of safe collateral, even though investors like an Insurance Company or pension fund may want to hold their nose while they do things. There arent that many Things Considered safe collateral. I dont think we have seen the low yield on the tenyear. Economics can intrude. But, no, i dont think the situation has changed enough. When it ends it probably wont be pretty. I dont think weve there yet. Yeah. It would be interesting to watch equities continue to run even as we go back and re tetest 1. 6 one tenyear. Stranger things happened. Maybe going back below 1478 to 74 would encourage a run in the tenyear. Windows 8 not doing great things for microsoft Second Quarter. How do they stay relevant. Its Tim Geithners last day at treasury. Find out whats planned for the future and where we may see him next. Well be right back. [ male announcer ] to hold a patent that has changed the modern world. Would define you as an innovator. To hold more than one patent of this caliber. Would define you as a true leader. To hold over 80,000. Well, that would make you. The creators of the 2013 mercedesbenz eclass. Quite possibly the most advanced luxury sedan ever. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz Financial Services. Welcome back. Yum brands under pressure after reports that chicken in china contained press conservative levels of chemicals. We have heard it before. This escalating the monthlong food scare that hit yum sales. Thats the biggest market in china. We are waiting for their response. As you can see yum brand shares down 3. 5 . Carl . Thank you. Microsoft earnings may have been slightly above forecasts but the numbers showing the windows eight operating system getting off to an unspectacular start. What must they do to avoid going the way of the p. C. . Paul sloan is executive editor at cnet. Good morning, guys. Good morning. Paul, what do you think the quarter said about the long term relevance here . You know, b its a huge challenge. What it said is we still dont know how well windows eight will work with new products. We dont know about surface sales. Its not great yet. They had small distribution. Theyre branching out, working with partners. Windows phones still small market share. Its a big challenge. It says there are too many unknowns. All the optimism in the fall about the launch, look at it now. Its a huge question mark. Its a big ship to turn, isnt it . A lot of people wonder if we are doomed to be below 30 a share for a long time as we have been. We know that consumers arent terribly excited about this. Remember, this is all a consumer play. The reason microsoft has gone into tablets and touch screens is that consumerzation of i. T. Means the way they get these devices into the hands is if they are excited about them. Pick this up rather than an ipad is the message. What we know from the first two, three months is consumers said, no, nothing much i have seen yet makes me want one. The surface sales. The fact that microsoft didnt say how many surface tablets they sold in the first couple of months is a telling sign. All the signs in the stores are that people dont want them. Early push, not great. Second push, we are now going to see this spring with an Enterprise Business push on the surface and more devices. They have to make this work now in the next couple of months. Richard raises a great point. Before the initial launch people said you have to wait for stage two of this thing when it kicks into the enterprise. Still a legitimate hope for those who were long . Yeah. Certainly they have a market in the enterprise thats huge. Its a solid business on other parts of the division. As richard pointed out they need consumer adojs. The consumer and Enterprise Market merged people want iphones,en android phones at work. Apple problems arent great products. Google is there defini future for us well into mobile. Sam sung is doing incredibly well. There is not a lot of evidence that people will choose products. In fact, there is evidence to the contrary. Like richard said, we have to wait for the next chapter. They have made changes in the Corner Office but not to the top. Steve balmer has been at the top for years now. Particularly an industry changing as fast as this. The question isnt so much the product itself. Hes not the product genius or visionary. Can he build the bright team of people around him . Has he built the right team . Is he prop vieding the leadership . The one thing i will say is we cant write it off a. Too many people are writing off windows 8. You asked about the share price. There is a lot under pinning the stock. It has amazing cash flow. Its hard now to sell microsoft short. Its on the floor. If ballmer cant show the market moving and that his team is the right team to get the company moving, late this year i think there will be questions about his position. Paul, whether its the cash flow or the sheer level of cash they have on the sideline, it seems we have had this conversation forever. What do they do about it . Are you seeing signs that the story will turn in 2013 . Its unknown. Look, its early. From where i stand, yes, the company is incredibly strong in many ways. They have said their big bet is on getting the consumer and taking on am and google. Not so specifically. Obviously through phones and the tablet market. Thats a huge road ahead. You know, they talked yesterday about they had a hundred thousand downloads in the app store. What does apple have . 35 billion or something. Its such a slog. Its hard to imagine. What that means for the company overall, its too early. Im not here to speculate about ballmer, just looking through the products. Youre here to speculate, whether you like it or not. Paul, richard, have a great weekend. Thanks so much. Meantime one of the s. E. C. s top cops is leaving the agency and could be back on wall street where he started. Find out how he responds to criticism that regulators are too soft on the street. Later cutting Bank Accounts and wallets out of Online Shopping. Announcer squawk on the verge. Bringing you companies that can transform an industry. Technology, social media is driving people together and gathering in groups. Etsy is much more than a website. Its a new economy. We saw massive opportunity. We are on a case around 150 Million Dollars in our oh second full year. Its a winner take all game. Announcer innovative ideas. Changing the tech world and beyond right here on squawk on the street. Indistinct shouting] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. Its lots of things. All waking up. Connecting to the global phenomenon we call the internet of everything. Its going to be amazing. And exciting. And maybe, most remarkably, not that far away. Were going to wake the world up. And watch, with eyes wide, as it gets to work. Tomorrow starts here. [ male announcer ] dont just reject convention. Drown it out. Introducing the allnew 2013 lexus ls f sport. An entirely new pursuit. This weekend our special series crime and punishment were going inside the s. E. C. The industry has under gone an extreme make over and some say the broader financial crisis. At the heart of the transformation robert kuzami who will step down next month after four years. Scott cohen sat down for an amazing interesting interview. Amazing how the s. E. C. Has opened up. They are more confident. Robert khuzami worked for Mary Jo White at one time and like her she hes seen wall street from all sides. He was a federal prosecutor and just before heading to the s. E. C. He was a general counsel on wall street at deutsch bank. Has he been tough enough on his former colleagues . Khuzami says yes. There was misconduct. Were going after it. But there are pages of risk disclosure. Lawyers reviewed this material. In many case it is risks that later came to pass were disclosed. You used to be a wall street lawyer. Are they that smart, that good . If you buy an investment product and youre warned of a risk that something may happen and that comes to pass, the law says the person who sold it to you hasnt violated the law. Thats not to say khuzami and company havent been tough on wall street. The s. E. C. Said since he took the job in 2009 more than 150 people have been charged and 2. 6 billion dollars recovered include ago a record 550 million settlement with Goldman Sachs in a case all about disclosure in the financial crisis. As someone whos sat on both sideses of the table as general counsel on wall street and the director of enforcement here, is there truth to what people perceive that banks look at fines as a cost of doing business . In this case, no. This involves time and a expense in the investigation. Shareholders demanding activity and may sue you. Every Justice Department case is significant. A lot of people feel individual investors feel the game is rigged now. Do they have a point. Whether its rigged that its fraudulent, thats one question. If not, there needs to be Greater Transparency in order to give the public the faith that this is a level Playing Field and get them back on the market. That issue is one area he sees as unfinished business. Another is hedge funds, particularly insider trading. Its not over. That has been a huge focus already. Khuzami says there is a lot to do. Civil and criminal Authorities Say this is not over. See more on investigationsinc cnbc. Com. How do you think this will dove tail with what white may do . There is a message of a new tough cop. White is a former prosecutor and has been a defense attorney for ten years. What people say is shes going to be fair and tough. The issue is trying to get people back in the market. As you heard us talk about a there is a feeling that markets are rigged. That doesnt do well for anybody. Great stuff. Scott cohen. The bells are about to close. More details after this. [ male u turn an entrepreneurs dream. Into a scooter that talks to the cloud . Or turn 30million artifacts. Into a hightech masterpiece . Whatever your business challenge, dell has the technology and services to help you solve it. But we can still help you see your big picture. With the fidelity guided portfolio summary, you choose which accounts to track and use fidelitys analytics to spot trends, gain insights, and figure out what you want to do next. All in one place. Im Meredith Stoddard and i helped create the fidelity guided portfolio summary. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. The european markets are closing now. With it a lot of data whether its gdp in the uk or Business Sentiment in germany. Simon will run it all down. Flowing across the markets you have this optimism about equities and about where we are going with the world in 2013. Can we go back to the map . I want to show you how germany is outperforming today. This is important. Its risen three, four times as much today as the other european markets. Check the figures. Its got big stocks, the diversified chemicals that are all lifting it higher. We talk a lot about the outperformance of the German Market. As the dow looks to come back to the record close that we had in october of 2007 were not there yet, but we are getting there. Look how similar the German Market, the top 30 blue chips are to the dow. Almost exactly the same. The german and american stock market, very, very similar. If you look more broadly and compare the German Market to the other top 50 blue chips around europe, a big underperformance from the rest of them. You see down almost 30 . They havent recovered around the rest of the euro zone in the same way plartly because at the beginning of the crisis, 20 of the market cap was banks. You know whats happened there. A very important day in europe. We are now seeing for the first time the ecb announced that the banks will be able to return some of the money they took. They took a trillion euros of it. Today we learned next week the richer banks will return 137 million. Today mario draghi was speaking. He said what the ecb has been able to do is have a pos contagi contagion. The level of Economic Activity is in the process of stabilizing at very low levels. We foresee a recovery in the second part of the year. It is a situation where you have what i called once a positive contagion on the financial markets. And for the financial variables. But we dont see this being transmitted into the real economy yet. There is one problem with the money thats being returned to the ecb. Thats a danger that you create the perception of a twotier Banking Sector in europe. Those that will return cheap money to the banks and those that are weaker on the subject of weaker banks that we just mentioned. Bmps, the Third Largest bank in italy. Look for it to be bailed out over the weekend after that 1 is billion in trading losses they discovered from derivatives. You mentioned the uk. We should just note the uk contracted in the Fourth Quarter more than we thought. Britain may have a triple digit recession no. A triple recession. This is like charades. Sounds like going into recession three times. Oh. They have done the q. E. They got a floating currency but they had to go through austerity which the United States has not. Im sorry to put you on the spot to help me. Always hard to keep up with you. See you monday, simon. Mary thompson is at the big board. Whats moving . The markets keep moving higher. The dow and s p on track for a fourth straight weekly gain. The s p on track for the best winning streak if it closes with a gain today since 2004. That would be eight straight. One area that isnt participating is the Home Builders. We had new home sales for december. They were weaker than expected. I stand corrected. They have moved higher recently. The november numbers were revised and the full year sales were the best. They continue to climb. Sectors being led by consumers. There was a fiveyear high yesterday. Those continue to Gain Consumer staples. Among the consumer starts contributing to the gain today, starbucks of course reported good earnings. Tiffany had an upgrade at hsbc and auto zone. We are seeing weakness with hasbro saying it will be cutting 10 of its workforce. Other winners include a number of Companies Reporting better than expected earnings. Qlogic, tencor and halliburton. And bright horizontal was priced at 22. Climbed to 27. So a very good debut for the child care company. Carl, back to you. Thank you so much. Two Mattress Companies with reports with different results. Herb greenburg with with another sector that fascinates you. Right . It always does. When i see two companies in the same industry getting different treatment on wall street with one making up an excuse and the other not. Both really not doing particularly well and the one that appears to be doing better than the other getting smacked when the other isnt, something isnt quite right. Theres the story of tempurpedic and select comfort. Tpx talked about a challenging First Quarter, but it really didnt lay blame on anything more than product mix and weakness in europe. Yet the stock up now about 12 . 11 . It was up 17 last night after the close on this. Now select comfort is down around 17 . It missed on both the top and bottom lines. But its the reason for the revenue miss that caught my attention. According to the company, the quote, voice of the customer, suggested the fiscal cliff was to blame. If it was the fiscal cliff both companies would have seen it. As for the difference in stock performance, tpx beat, select comfort didnt. Both have big short interests. The one that was less bad gets the short squeeze. Thats what the market is all about. Carl, back to you. Interesting. Somebodys hearing voices, herb. Thanks. Markets approaching alltime highs today. Art cachon is back from ubs. Happy friday. Happy friday to you. I thought the fiscal cliff would have people tossing and turning all night and you would have to buy a mattress. Very nice. You said can the herd turn into a stampede. Is that the question of the day . Maybe the week and finishing out the month. We talked about the rodney dangerfield, stealth rally. Slowly but steadily things have moved up. We have seen signs of money being diverted instead of going into bond funds where it had again and again. Coming in here. That having been said, none of the rally has turned into an outright stampede. We havent seen huge volume. We havent seen the sense of a short squeeze, a big panic. So the question is can they keep creeping up until momentum pushes them over. You point out into next week, calendar will heat up. We had a respite this week. Yes. Very big calendar. You have the fomc with one of the t twoday meetings. Everybody will harp in on that, particularly with sieps that was some broader dissension. We got the transcripts from 2007 which did not serve the fed well. It wasnt as carefully informed. At the end of the week we get the now all powerful payroll numbers. And sliced in between weve got housing data and other things. Yeah. Today is Tim Geithners last day at treasury. How are we going to think of his tenure ten years from now . I would think he was pressed into service and was straightforward about it. I will watch the next several months carefully. Mr. Geithner has basically said i have had enough. I want to get back to my family, et cetera. Would be somewhat contrary to what he said. He said, no, thats not true. Yeah, but hes an old fed guy. Having been secretary of the treasury and head of the fed, that would be like William Howard taft having been the president and chief justice of the t supreme court. You would be unique in american history. The chairmanship ends next year. Unless something changes. Poor mr. Bernanke may want to take time off, too, with his beard turning gray. For those starting to check in, they see the cover of usa today and reasons why stocks are positive. Should the interest be piqued or should flags be going off instead . I think their interest should be piqued. We are at a couple of important places we spoke about with technicians like tom demark and others saying up at the 1500 level the s p could be making a top. Conversely you have people like mr. Tepper who seems very excited. I think we are at a key Inflection Point here. Your interest should be piqued in the sense that you should be watching. You should have a plan to be ready to move if you think things are changing. I dont know that you barrel in yet. Have a great weekend. See you next week. Its been more than four years since t. A. R. P. Was enacted. Where are the architects of that bill now . We are opening up the t. A. R. P. Yearbook to find out. Imagine shopping without a bank account or credit card but buying everything you want. If that sounds farfetched well show you how a company is making it happen when squawk on the street returns. Ncy. You can spot an amateur from a mile away. While going shoeless and metalfree in seconds. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. Now this. Will work. [ male announcer ] just like you, business pro. Just like you. Go national. Go like a pro. A body at rest tends to stay at rest. While a body in motion tends to stay in motion. Staying active can actually ease arthritis symptoms. 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Nsaids, including celebrex, increase the chance of serious skin or allergic reactions or stomach and intestine problems, such as bleeding and ulcers, which can occur without warning and may cause death. Patients also taking aspirin and the elderly are at increased risk for stomach bleeding and ulcers. 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. [ construction sounds ] [ watch ticking ] [ engine revs ] come in. Got the coffee. That was fast. Were outta here. [ engine revs ] coming up on half time bill ackman fires back at carl ikon over his herbalife short. And why stocks will surge to new highs and an earth moving debate over caterpillar. Thats an hour i wont miss. Thanks, scott. Today is geithners last day on the job. John harwood is live at the white house with a look at his legacy and a preview of what he could be up to next. Talk about a parlor game in washington, john. Exactly right. Look, his legacy is going to be having served with president obama at a time when the Financial System was in crisis. They stood it up. We avoided a great depression. Now we are in recovery. Not a robust recovery. Thats something the president has been grappling with. Tim geithner has been there at his side as the longest serving member of the economic team. This is the last of geithners 460 days as treasury secretary. Hes the second longest serving. The longest was there for 13 years. Geithner spent 17 years total many the Treasury Department. He was a career Civil Servant before he was secretary. His signature is on 17 billion pieces of Federal Reserve currency. Tim geithner is also going to take pride in the fact that 93 of the t t. A. R. P. Funds dispersed originally during the financial crisis have been repaid to the treasury. Geithner got a fishing rod from colleagues in the Treasury Department this morning. He said hell take time. Hes ruled out the idea of serving as the next chairman of the Federal Reserve which people speculated on. This is a moment of transition in his life for the administration. Even as its geithners last day in treasury, it will be the first day for dennis mcdonough, the new incoming chief of staff replacing jack lou who was replacing tim geithner at treasury. The president will announce it in 20 minutes from now inside the white house. We look forward to that. As i said before on the air you made prescient calls all year lo long. Do you think geithner is headed for the fomc or not . I dont know the answer to that. I couldnt speculate. All right. I love it when you dont know, you say so, john. John harwood in washington. Tim geithner certainly not the first of treasurys bailout alums to say goodbye. With many investments turning a profit could the bailout class see a newfound resurgence of power and popularity. Kayla looks at where they are now. Two years ago we would have said it would be impossible. But things changed. We know the most prominent bailout alum is neil cashkari whos announcing he could run for office in california. On neel kashkari. Com he looks at his financial savvy. Bailout politics got much play during the 2012 campaign. Most of the crisis era alums left washington for the private sector or academia. Michelle davis ran Public Affairs for treasury. She joined the Brunswick Group and was in familiar territory when the Romney Campaign looked to her for her expertise on financial sector. Steven shafran taught at georgetown, Financial Engineering in crisis. He had a taste of politics. A council man for catchum, idaho. Kendrick wilson was a Treasury Department adviser and now is at blackrock advising larry fink. Moving on, sloan deerin stayed on at treasury until this spring when he worked for compass point. Hes now advising potential buyerses of t. A. R. P. Stakes. Jim millstein, the architect of the aig rescue started his own firm and is currently working on the big Airline Merger between American Airlines and the u. S. He and philip swegell published an oped on fixing fannie mae and freddie mac. Perhaps the only alum to land back in government, bob steel, former domestic expert at wachovia, sold to wells fargo. Hes now new york citys deputy mayor for economic development. Quite a yearbook of people, carl. Back to you. Interesting to watch where those people go in the year ahead. Thanks, kayla. Want to draw your attention to exxon and apple. Exxon reclaiming the mantle as the worlds most valuable company. 07 . That caps whats obviously been a tough week for apple. You can see the stock now at 443. 90. When we come back, the Company Helping people around the world pay for Online Shopping without a credit card or bank account. Well find out how its done when we come back. [ male announcer ] some day, your life will flash before your eyes. Make it worth watching. Introducing the 2013 lexus ls. An entirely new pursuit. We all work remotely so this is a big deal, our first full Team Gathering i wanted to call on a few people. Ashley, ashley marshall. Here. Since were often all on the move, ashley suggested we use fedex office to hold packages for us. Great job. [ applause ] thank you. And on a protocol note, id like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh im sorry guys. Ah sometimes the caps lock gets stuck on my keyboard. Hey do you wanna get a drink later . [ male announcer ] hold packages at any fedex office location. Announcer one company is allowing people to pay for things with the with device they are never without mobile phones. Boku payments are simple. There is no enrollment or app required. Bokuers enter their mobile phone number during check out and respond to a text message to confirm the payment. The charge shows up on their mobile phone bill. Boku partnered with 250 mobile carriers in 68 countries. Major kpoens are boku customers including facebook, Electronic Arts and sony entertainment. Boku is hung up on the future of payments through mobile technology. Interesting model. We are joined by a member of the executive team. John purdo, good morning to you. Some of the metrics there are amazing. 250 mobile carriers. 68 countries. Obviously there is scale but what separates you from other things we are hearing about in the mobile payment space . Its getting crowded. First of all, thanks for having me on. There are impressive numbers. 250 carriers gives us access to 3. 5 billion consume ohher around the world. There are a lot of people saying, oh, its like square, like this, the other. We have the complete package. We can undertake payments directly using the one thing Everybody Knows which is the mobile phone number. The ease of transaction, the simplicity with which we can complete transactions and the reach we have through connections. You talked about it in your earlier piece. 3. 5 billion consumers cant be wrong. Isnt there a finite number of people who dont have a credit card or Checking Account . How much room is there on the runway for people for whom a phone a mobile phone is their only method of payment. Thats the exciting thing about our company just now. There are some people who use our service because its the only way they have to pay. The majority of people who pay do have alternatives. Do you know why they pay with boku . They prefer it. When is the last time you bought something online . You muck about, enter 16 digits, geez, you have to enter the expiry date, the little cvb number. By then youve lost interest. Everybody knows the mobile phone. Enter it and people prefer to pay with boku. Its simpler. You can envision people paying for gaming. Wheres the next spot for the business to migrate to . I think youre absolutely right. We are really big in the whole social gaming space at the moment. The next spot is moving out of social game to other forms of digital content. We are getting the right price points. You will see announcements of music, into streaming video. Into software purchases. All this digital content. News indeed. Perhaps one day well get our cnbc subscriptions through boku as well which isnt easy to do. You laugh, but i think its going to happen. Believe me, i dont doubt it. Thank you for your time. Obviously something well watch and hope to have you back soon. Thanks very much. I do want to draw your attention to apple. We mentioned for a moment this morning, it had lost the man tell of the worlds most valuable company to exxon. Apple is making a fresh 52week low. We were looking at lows that werent that long term. This is a new 52week low for shares of apple which is well below 45 this morning. Squawk on the street will be back. [ female announcer ] what if the next big thing, isnt a thing at all . Its lots of things. All waking up. Connecting to the global phenomenon we call the internet of everything. Its going to be amazing. And exciting. And maybe, most remarkably, not that far away. Were going to wake the world up. And watch, with eyes wide, as it gets to work. Cisco. Tomorrow starts here. We create easytouse, powerful Trading Tools for all. Look at these streaming charts theyre totally customizable and they let you visualize what might happen next. Thats genius we knew you needed a platform that could really help you elevate your trading. 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