Transcripts For CNBC Squawk On The Street 20140103

Trading day of the year. We looking like we have an up open. As for that allimportant im going to put allimportant in front of the 10year every time i say it. Europe is largely green is where we are right now in terms of the markets can the 10year go to 3. 89 . I pick that number because thats where the spanish 10year is. Unemployment, three and a half year low. Spanish bonds are trading at a three and a half year low itself because business has come back. Is that maybe a little bit of a roof . Do you think its possible that our 10year is going to go through the spanish 10year . It doesnt seem possible. So maybe we should stop fretting all the time. And i italian 10year. Before we go phracrazy, we an better shape than they are and they should have their own currency. It really is insanity were so worried about it probably is a good thing, not a bad thing, because its saying a lot of good things about our economy. Im more concerned do you know when i did something that was cardinal sin, do you know what i once broke the snow chain. I didnt know what to do. The snow chain. When youre in a suburban area, parents call and youre supposed to call people after you get the call and i didnt have it. I broke the chain talking about snow, lets get to our road map this morning. We start with what else, that weather. A massive winter storm slamming into the northeast, cancelling thousands of flights. It dumped a lot of snow in new york. In boston, commuters throughout the region. Were going to give live for a look in a moment. Stocks looking higher today. Were going to tell you what to watch for and if the selloff was a blip or maybe a sign of something bigger. And get this, at t is offering tmobile customers up to 450 per line to switch. What is behind that dramatic offer that was unveiled this morning . Were going to look into that. And of course potential consolidation amongst wireless providers. Lets give you the latest on the snowstorm wreaking havoc on the northeast. Some parts of massachusetts have been hit with up to two feet of snow, new york city remains under a winter storm warnings more than 2,300 flight have been cancelled nationwide and numerous businesses have been shut down due to the storm. You and i made it here because of the wonders of the new york city subway. Never ceases, never stops, other than the brief time during sandy when they closed it down and rig rightly so because it got flooded. Theres times square. Not much moving. Salt not working because of the frigid because of the new mayor. The salt is not working not because of bill de blasio but because its so cold that the sanitation commissioner saying its not going to help. Youre going to be seeing a lot of white stuff on the ground, even though the plows are out. I dont want to get into traffic but the l. I. E. Was closed. You have to hand it to these people, they do a remarkable job. I could hear them out all night. I guess Natural Gas Prices may go up. Its awfully cold out there. Weve got a real setback to oil and gas because of the ba bakken. Natural gas should be rise flpgflp. Theres too much methane, theres too many ane. Theres too much poly and too much ethol. We keep hearing that manufacturing is coming back. No more gmos and cheerios. Yesterday i was speaking to you if i was monsanto, id be petrified. Cheerio cheerio cheerios, the great ceo of General Mills but were going to put sugar and this would be remarkable. The food chain cannot bear the takeout of gmo. We keep showing you pictures of the weather and why not. Its a very big storm in 2014 making for a very tough commute. The subways are running. How about the Commuter Rail lanes . The rail lines are running. The Long Island Railroad is running on a weekend schedule and metro north road is running on a saturday schedule, which equates to approximately 60 of normal Weekday Service at this point. What are your expectations in terms of your ability to deliver passengers through lets call it today and tomorrow . Are things going to improve or given the cold temperatures are we going to be dealing with a more difficult situation than would typically be the case . Thats exactly right. The issue now is definitely the cold temperature, the salt thats being spread on the roads isnt doing much to clear that snow from the streets, which pose as problem actually for our buses. So customers that use our buses can anticipate delays throughout the city due to those road conditions. I would think maybe helped out by it still be sort of a holiday period. I know schools were back, at last Public Schools were, but fewer people than normal, at least on the roads and on the lines to begin with . Thats right. The mayor did close schools today and many people did heed our warnings to stay home if they could. We still have crews out clearing subway and railroad platforms clear but we ask customers to use extreme caution when when traveling and be careful when exiting stations or boarding trains. Thats good advice. In training. Everybody understand that. One big buyer or seller is going to impact stocks today. Lets get more on the first winter storm of 2014. Lets go to boston, may have gotten hit the hardest. Check in with the weather channels jim cantore. How much are we talking about out there, jim . Honestly, we probably got about 16 inches over here. Its so hard to measure because, a, theyve been cleaning it all up. B, theres been so much wind, theyve been blowing it around. Knee height here, about 16 inches here in the city. At Logan Airport were talking about pumps out 14. 6 as of 7 00 a. M. They could have easily a couple more inches. The good news is its just about over in boston. The bad news is its dog gone cold, we are looking at 16 to 20 below zero in terms of the wind chill. Its not going to melt so all they can do at the waterfront is pile this up and remove it at a later date, say lets say april. The big problems pretty much are at the airport. Were commuteless here in boston. Schools like new york city have been closed, nonessential government workers asked not to come in today. Thats pretty much everybody, lets face it, right . Logan hoping to go operational at noontime. If you look at the chart across the united states, add delays and cancellations, were about 3,700 and counting, david, a far cry from yesterdays 8,000. But we know those numbers are going to climb today. Quickly, jim, what about those cold temperatures . Going to continue through the weekend . Are we going to get any respite here . No, were going to see them again this weekend. We have a new system coming down through north dakota. I think were going to see some 60 below wind chills, guys. Its going to be brutal in north dakota and some of the coldest air of the season and some of the coldest air weve seen in decades to come into the midwest for morning lows. This is dangerous stuff even without the snow. You get trapped out in this and you are going to wish you were somewhere else. You go off the road, you dont have any blankets, any food and your cell phone is out, youre going to wish you were somewhere else. Continental clr was hurt yet because of the bakken train debacle. The worst thing they can have is cold weather. It does shut down operations. Yesterday we did see first day trading fall. It was the first day of the year of course. It was the First Time Since 2008 we saw the broader averages down, the dow coming off its biggest decline in nearly two months. It was 135 points lower. The s p and nasdaq also, worse day theyd seen in three weeks. Do i care at all . Three weeks. Three weeks. I know. Imagine that. Are you sure . All three weeks . Be still. I got to go. I have google. It was a huge up year the last couple weeks were even great. There was no profit taking. Some people wanted to lock in, some people didnt want to take tax gains last year, maybe theyre happy to take them this year. If you want to take your cue from the first day, if thats what you want to do, stop being in stocks, okay . Take your cue from the cd rates. Dunk the cd rates are unchd for the five years . Can you imagine how much the banks are taking . Theyre paying 0. 8, theyre investing double at that. The net is is terrific i dont know about terrific but getting better. Getting better. But it would be good if they started to put more money out there and actually lend. Did you think the cd rate would go from 0. 8 to 0. 87 . Yes. It was a down day. There were a lot of sellers, very thin trading. It could happen again today. There are very, very few players out there. I come back and say be careful about being too negative on bonds given the fact that the rest of the world i mean, the rest of the worlds Interest Rates are pretty darn low and theyre not nearly theyre pumped up like we are but i just dont think that were on a straight shot to 3. 65. Gold was strange yesterday. Gold went up. Dollar showing some strength. Has been against the yen. You would have taken a tax loss in gold versus everything else. Why not . It was hideous. Remember the january effect . No actually. Until you mentioned it. Things bounced back. They bounce back and of course its reasonable that they bounce. Im not panicking yet. Now if it goes three weeks and a day, you start getting into that period, thats a bear market. No. Okay, thank you. Youre right. People always say youre angry. I do like them to know when youre being sarcastic. Were about to get to a story later on about at t and i am going to be bombastic about that. Im looking forward to it. As i always do. Having red the bombastic bushkin carson book on vacation. Johnny, not a great guy. Not a great not king of the home life. Just comedy. Just comedy. Lets tell you what were going to talk about. Thousands of flights being cancelled due to the early new year storm. Coming up former Continental Airline ceo Gordon Bethune will be here. And pilots not being able to work as long essentially. Delta, up fourth in the s p. I that i there are going to be a threepeat in some of these airlines. I think they could be up for another three quarters. Is that trademarked by phil jackson . And i think were looking for a potentially higher open. We have a lot more here on squawk on the street. Eet per second. [ man 2 ] your looking great to us, eagle. 2,000 feet. Still looking very good. 1,400 feet. [ male announcer ] funny thing happens when you shoot for the moon. Ahh, thats affirmative. [ male annocer ] you get there. Youre a go for landing, over. [ male announcer ] the all new cadillac cts, the 2014 motor trend car of the year. Fifteen minutes could save you fifteen percent or more on car insurance. Yeah. Everybody knows that. Did you know there is an oldest trick in the book . What . Trick number one. Lookest over there. Ha ha. Madeest thou look. So endeth the trick. Hey. Yes. Geico. Fifteen minutes could save you. Well, you know. Welcome back. If you havent noticed it this morning, i wanted to bring you up to date on the latest on what may be a building wireless war. I think thats a fair way to put it. At t offering customers of tmobile up to 450 per line when they switch to at t, who of course they say will then benefit from the superior smartphone lineup and Award Winning customer service. Customers can turn in their current smartphone for 250, which can be used toward at t products and services. And they can receive an additional 200 credit per line when they transfer their service. This is interesting. Analysts trying to weigh in on it saying you can read it a few different ways. Did at t have a rough Third Quarter, or is it simply trying to foment more competition with tmo, which has been very competitive on price and then does it go into consolidation, tmobile cold by Deutsche Telecom. The question is whether Deutsche Telecom think it is can get it by. Doesnt this show how competitive things are and why its good for the consumer . The department of justice did the right thing. They did the wrong thing in hertz rent a car, they did the wrong thing in the airlines. I find this shocking, david, because im not kidding, anger between these two companies. I remember refereeing a couple years ago one of the ctl things, a conference. Ctia. We were there together. I remember when you did that. And they hated each other. Now theres a new cast of characters. Theyre not targeting sprint, theyre not targeting verizon. I think theyre trying to take the steam out of what may be the strongest competitor. 450 is not nothing. At t one are the more poor performing stores in the dow. This is not a reason to buy. This is a reason to sell. This will potentially worry some people. We dont know at all whether it has anything to do with losing customers to tmobile or not or whether its simply an opportunity they see to try to but under what scenario is it positive . Your Gross Margins are key. Many say tmo cant keep doing what its doing for the long term, that it will run into a wall, whether it is on spectrum as well, though its bought a lot of that recently, and that it can only play this game so long and it will need to consolidate. And thats really the lead in this, i have to tell you. I keep thinking david, in this industry, you have called it perfectly, the amount of deals that are under the surface at all times. But you never dispute them. You say that they could happen. They could. Listen, tmo and sprint absolutely could happen. I dont think theres any doubt. By the way, sprint shares have moved up, tmo has moved up dramatically on a lot of the chatter thats been out there for the last month about this potential deal. Its far from clear at this point that Deutsche Telecom is ready to engage in the substantive structure of the deal kind of talks that. But there is simply no way that sprint stock is above 10, another downgrade today, unless you think theres another transaction. Because dan hesse, fantastic ceo, would say, look, were paying a fortune. Sprint is going to be able to eventually blanket the country with coverage right now. They dont right now. By their own admission. Boy are they honest. Again, another big integration. Theyre just finishing one. Theyd have to start another one. We didnt get to talk about charlie yergen. Were going to have a fun year talking about this stuff. This will be huge deals. These will be the biggest deals again. Back to at t and whether it does try to make that phone with vodafone. Mad dash is coming up. A lot more to talk about after this. [ male announcer ] alka seltzer plus presents the cold truth. [ coughs, sneezes ] [ sniffles ] i have a big meeting when we land, but i am so stuffed up, i cant rest. [ male announcer ] truth is, nyquil cold and flu liquid gels dont unstuff your nose. They dont . [ male announcer ] nope. They dont have a decongestant. Really . [ male announcer ] really. Alka seltzer plus night fights your worst cold symptoms, plus has a fastacting decongestant to relieve your stuffy nose. [ inhales deeply ] alka seltzer plus. Oh. What a relief it is. [ male announcer ] cant find theraflu, try alka seltzer plus for fast liquid cold and flu relief. A little more than five minutes to go before the opening bell on this friday. What about the mad dash . A Company Called mannedian was acquired by fireeye. The senate was more interested in other people, investigation of chinese hacking. This is about chinese hacking. It is indeed. Mandan, they go in once youve been hacked, breached, theyre forensic investigators, they go in and investigate how it happened, and how to prevent it in the future. People were convinced this stock was overvalued. I happened to like Palo Alto Networks. If you have a solution or can you do forensic analysis, there are so many people begging not to be hacked by the chinese. For a while we were making political progress and then the nsa revelations from snowden stopped that completely. Once they know we have no leg to stand on any longer in trying to force the chinese to stop. Billion dollars. Riteaid, Comp Store Sales 2. 98 . A quarter of the people didnt like it. I think this company is a buy right here. I love the whole drugstore complex. All right. We have a lot more stocks to watch, including riteaid right after this. Welcome back. How is everything . 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A Research Tool on thinkorswim. From td ameritrade. Up are watching cnbc squawk on the street, live from the financial capital, bell set to ring in under a minute. What is the key to this market . Key to the market is General Electric. Really . Now youre really taking me back. This is the heart and soul of the market, which is the industrial companies. I think General Electric is at the beginning of a big ramp because theyre becoming an energy company. If they are right, there will be repeal, if they are wrong, well have another good quarter. About 10 seconds early on that bell. I was going to say amazon but because the weather is so skewed in favor of amazon, its almost impossible for amazon to miss. When you have cold weather, its too cold to go shopping. But those choppers, rain, sleet or hail, the choppers land at your house to have a great bunch of hype in 60 minutes. A we have a lot of green its been 33 minutes since weve had an up open. How long has this bull market lasted after the bear market that lasted for three weeks. Look at this. Its back, its back. Who makes these things . Let me tell people who rank the opening bell, the institute for education. And over on the nasdaq, jamba juice. What did at t . Did they do around with the contracts . At t can come after these people, theres no penalty if they leave. A free fire zone lets go over to fill lebeau. He has auto figures out. Reporter a little below expectations, sales just under 1 , compared with estimates of 5 . Overall sales for ford increasing 10 for the year. For the Third Straight year, the fseries is the best selling vehicle in the u. S. For the month of december, sales an increase 1. 8 below estimate. Ford is a little soft for december, chrysler came in a little below estimates for december. I think well see sales that are up but not up as many as people were predicting initially. That explains a lot. The latest on ford there. Fords been stalled. Its been throw back. It almost like theres a stel kufrt and. I mentioned 18 because this very week in january two years ago, ford was at 2011 ford was at 18. Think about that. How many stocks are really below where they were a couple years ago . I just love that illusion of a steel curtain. Puts me back to mean joe green. When cocacola was king. Yeah. Here, kid, have some kiowa. Very exciting for you. I cant believe these cities havent sold out out. Bengals not selling out. Indianapolis. I put in for playoff tickets the moment that we won a home game. So youre going fob there. I have no doubt of that wouldnt miss it for the world. You mentioned before we went to wireless, at t down everyone so slightly. Tmobile down about 2. 5, almost 3 . They got a few things out there. Theyve also been talking at tmobile about something called uncarrier 4. 0, which now, this is according to sources because i dont believe theyve rolled this out yet, but something where they would a 350 credit by trading in to customers who traded in their current smartphone. I also want to point out that john leggier, who is ceo and tweets and a tieless ceo. Usually wearing a pink shirt, less than a week until ces, who is counting down with me, at t. So hes willing to go head to head dpsh. Combative fella. Everybody kind of wrote that company off. Its been just huming under him as the stock has, too. You told me when hes come in to be shaur i. Y you. They felt the carriers would take more control from apple. Im telling you thats completely wrong. Twitter clawing its way back to 70, we should point out. Cult stock, cult stock. Another 2 after. I believe it was up after the downturn in the broader market. Cult alert. Cult alert. I like tesla, like solar city, like amazon. Its a cult. It a cult of buyers. Whats wrong with that . Nothing. Im just saying theres no parameter i can come up with with why it should be valued there. I dont think its sign it and buy it. I dont think its the great the sock puppet, whatever. Its not that. It can make money. I love going down that road. But we shouldnt do it. We have a lot of new viewers. We have people who werent even around during the dotcom boom bust. Theyre willing to buy things again. They dont know pain, the pan that that was his forecast. Remember what it was . It was pain forecast calls for pain. Sprint shares down about 3 again. If they were to do a tmobile sprint deal. Very interesting to see whats going on there. You mentioned ge right at the opening bell. It is up 7 cents. Honeywell, utx, also both higher. This is your theme it seems to me in the early part of this year. Tlnd theres some china service. The signs out of europe are so positive, david. Many of our that 20 is kicking in. Europe is surprisingly strong. No one wants to hear about it because people remember what it was like in november of 2011. It takes a long time for people to believe when youve been through not just what weve been through here but over there as well. And france still is in bad shape. We really believe spain is starting to turn around . I think spain is definitely turning around. I think austerity worked in ireland. Go to ireland. Its a manufacturing powerhouse. And because of the tracks regime, its becoming a pharmaceutical power house. Hower house in that people have mailboxes there. True, its a mail drop. Ive been to ireland many, many times. The last time i was there it was so depressed, just a couple years ago. I just think when i hear the stories and a lot of people are very akin to ireland who watch our show, you got to realize that this was a very tough pill to swallow and it seems to be working. Tax aversions, by the way, an important story that we did see in 2013. That means changing your tax jurisdiction. And we saw some interesting ones, remember, as well. It wasnt just buying an irish company, it was buying a Canadian Company but they all ended up in ireland. Well continue to watch that in 2014 because doubtful well ever get Corporate Tax reform. One of my Favorite Companies bought e lon and the stock flew up 30 points because the pricetoearnings ratio did reflect the fact that the earnings per share were regarded as real that were captured back from taxation. Facebook im watching this morning, jim, up about 1. 3 . Well, Merrill Lynch wrote a note theyre basically calling it a cash machine. Seems like its an atm. Take up the price target. Facebook is real. Im not saying twitters not. Im saying facebook is dramatically cheaper than twitter. You hear it all the time that, well, the key demographic is not using as much as they could be. Theyre going to instagram, which of course is owned by facebook. When you look where the advertisers are, thats the money. Advertisers love facebook. That is used for the Distribution Platform for some other things also. Why are people so skeptical . Is it because facebook did so poorly after they came public . The last couple of conference calls, theyre masterful. I dont know that there are that many people skeptical. Advisers are always desperate when you have any Pizza Company tell you its how they get customers, dominos i ordered dominoss when i was in mexico and it came like that but it was the old recipe, i swear i think it was the old recipe because i detickected a little of that hint of card board. Lets get to bob pisani. Italian food in general. All ten sectors of the s p open to the up side, transports particularly strong, crude at a onemonth low. Nobody pays attention to first days of trading necessarily. There are two january barometers that everybody looks at. One is the first five trading days. If thats up, the rest of the year up, about an 80 accuracy level. Thats pretty darn good. But the biggest one is the january barometer. That has about an 88 equity level. Uls where dont like seeing korea down. Hong kong has only been open one day, so not sure what to make of that. Here in the u. S. A lot of talk about earnings. Earnings are coming up, folks. Thursday starts with alcoa. So heres the big problems for earnings and revenues. Heres 2013, earnings up 5. 4 percent, these are projections right now. And heres the gap, revenues again up 1. 4 . People are making their numbers on earnings by cost cutting, not by revenue gain. 2014 is the issue will revenue, personal incomes are rising, unemployment is droming. The hope is this will finally make a difference and the revenue numbers that have been lagging will finally catch up with the earning numbers. Alcoa will be thursday. Which by the way, had an amazing run in december. You see the final end of that chart there ep almost 10 . As for Interest Rates, nobody believes the fed is going to raise shortterm Interest Rates, at least not many people ive efrd talked to believe. The question is the longer term rates. And most people i know have Interest Rates, the 10year around 3 , 4 . Dan weiner, who writings over at the independent adviser for van guard investors, he notes that the tenyear away from the current fed funds rate, which is 0. 400 . Finally, guy, up grades and down grades, a number of companies on the upgad and down grades list. Lets head to the bond pits and join Rick Santelli over at the cme group in chicago. Good morning, rick. Good morning, dave. Being in chicago were looking at real barometers. Not so much of a chill today in the treasury complex. We actually see it warming up a bit, volume picking up. Yesterday yields moving down, stocks moving down. Today yields moving up a bit, stocks are moving up a bit. If you look at the 30year same picture, lets tack a look at the step back and what you see is that these rates certainly look like they want to visit 4. 5 . These times are anything but normal. You got to watch for some of these fat tail old its the european currencies that that are waerk the pound, the euro. Thats over in its own little world. Each of the successive days going lower. Looks like the dollar is going to make a comeback. He did a much more accurate view. The pound is strong and you could see it on that chart. Now, lets look at the next currency of importance and lets look at that said dollar yen. Of course its doing better today. Look at a twoday chart. The dollar is scaling down two days in a row. Open that up and you can see the dollar is strong even though its weakened in the big picture. And look at a twoday clart of the euro versus the dollar. Definitely scaling down. When you open that chart up to six years, it really doesnt look like the euro has the same horse power behind it as the pound does against the dollar or as the dollar does against the yen. Theres your most advanced economies. Pay closest attention to those. David, back to you. Thank you very much, Rick Santelli. Coming up, the economic recovery in las vegas has been tepid. Like the legend of the phoenix [ male announcer ] this is the story of the little room over the pizza place on Chestnut Street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i95. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment this magic moment so ally bank has a that wont trap me in a rate. Thats correct. Cause im really nervous about getting trapped. Whys that . Uh, mark . Go get help i have my reasons. Look, you dont have to feel trapped with our raise your rate cd. If our rate on this cd goes up, yours can too. Oh that sounds nice. Dont feel trapped with the ally raise your rate cd. Ally bank. Your money needs an ally. Its too cold for you here and now so let me hold im Jackie Deangelis reporting from the nymex, seeing a little bit more selling pressure in the Energy Complex today. West texas intermediate after a 3 drop yesterday. The death cross technical move adding to the selling pressure. Were going to get the department of energys weekly report on crude inventories. Traders are expecting a bill out at 11 00 a. M. Well watch that closely. And were also watching nat gas prices pretty much flat today. Well get that weekly inventory report at 10 30 a. M. And well have it for you. Back to you, david. Lets stay in the energy sector. A federal regulator out with a safety alert saying crude oil produced in the bakken region of our country may be more flammable than traditional heavy crude. Jim, about 700,000 barrels a day of bakken crude is carried by rail. Theres a lot of animal farm in these stories. Its more flammable because its better. Even versus nigeria, versus north sea. This is the best crude in the world. And everyone knows that. Second, the reason why you dont have them on a lot of rails is because pipelines are safer. All oil from the great standard oil started moving oil from ohio, now the utica shale, was by train. But people thought it was too dangerous so we put pipelines in. Welcome to a backwards universe where we have favored trains because of worries about pipelines. The Train Companies argue look at our longterm safety records. The Earnings Call by Union Pacific is always highlighted by their safety record. Burlington is also another one owned by berkshire hathaway. Im not against tanks. I think it should be double hold. Equivalent of double hold. Lets not lose sight of something that Audrey Mcclendon told me a long time ago over at dinner with the 21, kind of a fun time. He said, jim, any time we extract things from the ground that are meant to burn, it can be dangerous. Does this add any debate to the keystone xl . Not that it needs anymore. Yes. Its so political. People have to understand. If were in an energyfree situation, which would be absolutely fantastic. Remember steve jobs wanted cars to run on water, then it would be tremendous. We have to get this to where it can come out of the ground to where it can be refined or else its useless. Theres a subrow of factors people dont want to talk, its almost like a quasi religion. Many want oil and gasoline to be dramatically higher because then well use less of it. You, in favor of that, youre right because then we have to import it. Where do we import from . Venezuela, nigeria, saudi arabia, libya. Hey, you know what . I prefer north dakota to all those places. Heres another oddity. What was it . It was a train of oil hitting a train of pou beans. Do you know that north dakota is the largest producer of saffron, Sunflower Oil . Thats been the Biggest Issue on north dakota. Its the farmers versusle oil guys hp. Thats a while ago. Clint will be there. Its the oil men versus the soil oil men. We have a lot more coming up on squawk on the street. Coming up, are you snowed in today . Well week have someone who will help you defrost. Jim cramer and his six stocks in 60 seconds will warm you right up when squawk on the street returns. If you have moderate to severe rheumatoid arthritis, like me, and youre talking to your rheumatologist about trying or adding a biologic. This is humira, adalimumab. This is humira working to help relieve my pain. This is humira helping me through the twists and turns. This is humira helping to protect my joints from further damage. 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The day building a play set begins with a surprise twinge of back pain. And a choice. Take up to 4 advil in a day or 2 aleve for all day relief. [ male announcer ] thats handy. Its that time, six in 60. Yahoo . I think its going to be up, aliba alibaba. How about this . Many countries are against both sodas and tobacco. People didnt think though areas would crack down. Were going to talk j j. You know how much i think of al al alex gorsski. Goldman sachs . I agree with the goldman call. Micron. One of the top performers in the s p. Is the run over . Watch tonight. I havent decided. And sirius . Its reported theres up side to the acquisition. What are were talking about on mad money . The game plan for next week, we have earnings. Bob pisani made a great point. When did the alcoa run start . When Deutsche Bank took it to a sell. Maybe theres some defrocking it needs to be done there and it wasnt be about my favorite ceo, who is clause kleinfeld. Hes got that Wedding Dress business in brooklyn, right . A different kleinfeld. Aluminum Wedding Dresses. For a guy like me that may be handy, you can recycle them. Good morning to you, david. The big digout continue. The former ceo of continental, Gordon Bethune will join us. And getting fit for 2014. The ceo of fly wheel will join us live. Remember, its not fitness, its live. I needed a new laptop for my premed classes, something that runs office and has a keyboard. But i wanted a tablet for me, for stuff like twitter and xbox, so my downtime can be more like uptime. Thats why i got a windows 2 in 1 which does both works as a laptop and a tablet. So i can manage my crazy life, and also have a life. [ beep ] gotta go. Theres nothing like being your own boss and my customers are really liking your flat rate shipping. Fedex one rate. Really makes my life easier. Maybe a promotion is in order. Good news. I got a new title. And a raise . Management couldnt make that happen. 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Its too cold for you here and our road map starts with the beg dig out and the blizzard. Nearly two feet of snow getting dumped on parts of the northeast in the first big winter snowstorm of the season. Well talk about the effects on the airlines, roads and of course the rails. And dallas fed president Richard Fisher speaking in just a few moments. Later been bernanke will speak. Well tell you what to expect. And a Cyber Security deal. Fireeye buying mandian. Chris sin chrissin kristi is live in new york. Probably upwards inches or so on the road. Thats not for lack of trying. Theres been plows going by for hours and hour and hours. Its such light and powdery, fluffy snow because its so cold, that they get it off that it goes right back on. And the salt they had, theyve been putting it down but its so cold that that doesnt work either. Im going to move up here. We have a plow about to come by here. The l. I. E. Is now open again. That was closed for most of the night. And then j. F. K. Airport i believe is going to be opening up or has just reopened now. So they should maybe begin to see flights going in and out given. Kind of a brutal day. A lot of people in this area being urged to stay home. I talked to one tow truck driver, some more colorful language than ill use, if you get stuck, you are on your own. Its advised for people to stay home today. And its very cold, right, kristen . Its set to remain that way. Its gotten up to 12 degrees here. Feels more like minus 8. We have some brutally cold temperatures. And the winds whipping here right now. So the feelslike temperature a lot lower than the actual temperature. It is bitter cold out here. All right. Stay warm. Use hand warmers is my advice. Thanks for joining us live in. On the Cnbc Newsline is Gordon Bethune and a cnbc contributor. Welcome to the program. Good morning, simon. As a former senior insider of the industry, what do you make what you see around you at the moment . Well, you know, normal snowstorm will cancel a couple hundred flights. I think more than 2,000 were cancelled yesterday. Those people are still stuck. They didnt go where they want to go and theres no seats today, i think more than 680 flights have been cancelled today. That will abate. But you still have that tertiary acc controller cant get to the airport, employees cant get to the airport, nor can some passengers. Its still rolling through the infrastructure. It will take a week to clear out. The latest i have is that 3,263 flights have cancelled. Theres a lot of anger out there. Lets just listen to some people who have had a tough 24 hours. Its the anger i understand but who are you going to get angry at . This isnt like youre stuck at the pass. You may be delayed a couple of days of getting to where you want to go. But winter is like this everywhere. Let me play this tape of some people and how theyve been reacting, gordon. Have a listen. 4 04 on the tarmac. We just went done and got our luggage. There are people done there who have been waiting an hour and a half for luggage. The airlines is keeping me captive on a plane for four hours. Why not have a plane to anticipate after seeing 30 to 40 planes line up like that. Its ridiculous. Talk about the decision you make between being pro active and cancelling in advance and being reactive. P. So when this guy says do they cancel enough planes in advance . You want to fly and collect the money, but if theyre going to close the airport, thats the way it is. Its a lack of sophistication of air travelers who need to know you may not get out of your driveway. Its a Staggering Amount of logistics to get people moving across the country. Chicago, boston, new york, newark, these are some of the nations biggest hubs for the airlines. How much more disruptive does that make it for these companies in. Thats true, sarah. Because it affects the person thats going from West Palm Beach to chicago on to maybe quebec. If you cant through chicago that is correct backs them up all the way down to distribution. So they do have an immense effect on the system for hours and hours afterwards. Storms come and go but there is a change that will be with us for some time, namely on the rules for pilots and how long they can work. Are the Airlines Ready for that . Should passengers expect future delays because of these new work rules . I dont think it will be delays, david. I think it will be a debate on whats appropriate and if they do change it, well, that will change the staffing that airlines are required to have. Obviously if you require more staff, thats more cost. That i am obey the rules, whatever i turn out to be. Let me get a comment on one of the Major Airline stories of 2013. And that was the course the meshlger of usair ways and american, which ultimately they were pushed past the djts o. J. And now we have what sparts will be . Well, i think its going to be a better system. Well have four big airlines but theyre stable, theyre not going in and out of business and in and out of bankruptcy. And theyll have pricing that is not predatory they. Good news for consumers . Some fear they might be gouged. I think its good news for consumers because if you buy a ticket on an airline, at least its not going to go bankrupt on you or quit flying. When you have certainty in the system and you have good players that create jobs and pay their pension plan, i think thats good for our country. Happy new year, gordon. Nice to see you again. Gordon bethune, former ceo and chairman of continental. And the American Economic association, and Steve Liesman is there with a look at what we can expect. Did all the important economists and fed president s make it there with the storm . I know a couple who havent been able to make it so far, specific because of whats happened in boston. A lot of those academics commonwealth down from boston. Theyre expecting a 11,000 plus participants here and theyre going to deliver some 500 papers. Heres just the agenda here. But one rock stare here is going to be sneaking in one is supposed to be his last major speech as chairman. Do we get a little snippet of that letter that bern key would leave to his successor, the fed vice marm p chairman right now who is supposed to abe proved by the senate now on monday. Other speakers include ben bernanke, jeremy stein and rosen grand from boston, plosser from philly, bill dudley from new york, along with a person who could be a future fed member, stan fischer. One of the things were going to be listening a lot for over the course of the weekend is the feds and governments policies in response to the financial crisis are under scrutiny here. There are a lot of papers prepared for this conference to look at whether or not this stuff they did actually worked and should be part of the play, he was also the president of the National Bureau of Economic Research, which dates recession in the u. S. Economy. I think were beginning to see some real seens of traction both in, were starring to see improvements on the fiscal side, adjustment levels are down under 4 of gdp and theres a real sense of optimism, i think, in some sectors. Other things that will be studied here inequality, climate change, Health Care Costs and of course job growth. But the big thing the speech by fed chairman ben bernanke at 2 30. Well have full coverage on street signs. Back to you. Some of the fed president s start to speak at 10 15. Well watch out for headlines. General motors out with very weak december Sales Numbers today. For more on that, well go to phil lebeau, who is live with gms Vice President of sales. We just received numbers also from toyota and like weve seen from the other automakers, the month of december not a strong one for toyota. Stales dropping 1. 7 compared to the estimate from edmonds of an increase of 3. 6 . Toyota down 1. 7 versus estimate of 3. 6 . General motors, sales drop are 36. 3 versus expectation of an increase of 0. 8 . When you look at the industry, sales are coming in weaker than expected. Do you blame the weather, payback for strong sales at the end of november . Whats the reason here . Phil, i think its a combination of both. Theres no question the swaet that swept across the northwest and into the northeast had an impact. But november was a very strong month and there was a little pack back there as well. Youre forecasting Monthly Sales at 16. 6 million. Do you look at this and say you cant really take one month and extrapolate out beyond that . Exactly, phil. You got to take a look at it from a quarterly basis or even an annual basis. When we first went into the year, we thought it was going to be in the 15 to 15. 5 million unit range and its going to come in about 15. 9 million units. So thats good. I think it speaks to the strength of the industry, the strength of the economy. And in our case, you know, from a retail standpoint we exceeded industry and gained retail share across all four of our brands. And thats what matters really to us. Kurt, one last question. The chevy volt, sales for the year down 1. 6 . Is this basically a niche vehicle where youre going to have sales in the 25,000 range annually at most . Well, phil, the volt continues to be a strong product for us. If you look, you know, at the west coast and particularly the state of california, it is a core vehicle for us in that market. It continues to do well. The nice thing is that that 2,500 units that we did in december, its all 100 retail business. And if you look at our retail business, it was up about 3 for the calendar year. So given the fact that fuel prices have been pretty stable, were pretty happy with up 3 . Kurt mcneil, vp of u. S. Sales on a day when gm and all automakers reporting weaker than expected december sales. Well have the Monthly Sales pace a little bit later on today. Simon back to you. Phil lebeau live in chicago. We are up 51 on the dow. Thats a sigh of relief for people because yesterday we kicked off the new year in negative territory. So what is the outlook for 2014 . And more on the aftermath of the blizzard. Right now squawk on the street will be right back. At 315 Chestnut Street. The modest first floor bedroom in tallinn, estonia and the dusty basement at 1406 35th street. It is the story of the old dining room table at 25th and hoffman avenue. The southbound bus barreling down i95. And the second floor above the strip mall at roble and el camino. This magic moment it is the story of where every great idea begins. So different and so new where those with endless vision and an equal amount of audaciousness believed they had the power to do more. At dell, were honored to be part of some of the worlds great stories. Stories that began much the same way ours did. In a little dorm room 2713. This magic moment female announcer get beautyrest, posturepedic, female announcer even tempurpedic mattress sets, at low clearance prices. Save even more on floor samples, demonstrators and closeout inventory. The year end Clearance Sale is on now at sleep train. Your ticket to a better nights sleep welcome back to squawk on the street. Theres a lot going right for rite aid investors this morning. Shares are surging after one of americas biggest drugstore chains reported december samestores sales 2. 9 better than last year. Shares of rite aid have been on a tear, gaining about 290 just over the past year alone, sara. Back over to you. Thanks for highlighting that, dominic chu. And the dow is getting back in the positive territory after starting the year in the red. Mike, well start with you. Today weve got a few heavy hitters from the Federal Reserve speaking. Do you think theyll give the markets anything to trade off of today . I would be surprised. Bernanke is speaking at 2 30 but when he has spoken at this conference in the past, hes talking to economists. It probably will be perhaps a little technical, maybe a bit of a retrospective on his years at the fed rather than giving guidance on what to expect next. Plus hes an outgoing chairman. I dont think he wants to set the agenda for the successor, front run or her tenure like that. Were also on the brink of another earning season and weve got economic reports coming. What will you be watching to take this market forward . Hey, sarah. First i would remember that going back to 1929 the first trading day after a yearly advance in excess of 20 , it was a coin toss. 50 of the time we fell. So you shouldnt read too much into the first day trading. Im going to be looking for First Quarter earnings coming in similarly to what we saw in the Third Quarter, up about 5. 7 , eight of the ten sector in the s p likely to show yearoveryear increases, with energy and utilities likely to be the only decliners at this point. Im going to listen closely also for guidance for 2014. We started 2013 thinking wed see low doubledigit, low teen increases, we ended up with something less than 6 . I want to see if we have a similar reduction in earnings forecast. Im glad you brought up historical patterns here. We have the january barometer, the january effect that relates to taxes. Does any of that matter . I believe if does. Being a student of history, my feeling is you look to history as a guide. Obviously its never gospel. But you dont look to one day alone. Interesting thing is that 2013 was only the sixth time since 1929 that we closed at an alltime high. And in the prior five times, the market rose in the subsequent year by 8. 5 and also rose in four of five times. So with that very, very limited observation grouping, what you can say is, hey, theres still a good chance we have a good year, not a great year. Sam, i think the bigger issue is do you think that a large number of in particular Retail Investors are going to sell in order to book their profits and Capital Gains in tax year 2014 . Is that something were going to witness over the next month or so . Simon, i think that probably happened yesterday. You had a lot of individual investors who on december 31st rebalanced their 401 k s. It wasnt a big loss if thats all were going to get on that dynamic. Mike, before we let you go, how sensitive are we now to the employment p employment report we get next friday. What is the music around that . Good news good news or good news bad news . Your view . I think good news is good news. Im not sure how sensitive were going to be in terms of either markets or expectations for fed policy. When bernanke spoke in december, he gave the sense that barring any big surprise they would be tapering at about a 10 billion a meeting pace. How much signal we should take from those comments i think well have to wait for next week to get a better sense. I think we need a pretty big surprise and the employment report, you know, plus or i think next week were probably looking for around 200,000 the consensus is. I think you need plus or minus 100,000 for people getting away from thinking the late january meeting wont be another taper. And as you know, were going into 2014 with some momentum here for the economy. Is this going to stick or is it going to spulter out like weve seen so many times during this recovery . Right. We think it will stick. We actually just revised up our tracking of gdp from 2 to 2. 5 . And were looking for that to continue into 2014. Weve had a couple of times in the cycle where weve had things look nice in the winter and peter out in the spring. We think thats been kind of fluky and not related to seasonality. Weep think the fundamentals look quite a bit better this year than last year. Fiscal policy will be less of a head wind for the private sector than it was last year. That should be good news. Stan and mike, thanks for joining us. My pleasure. Up next, the monster deal thats uniting two of the most respected executives in the industry. More on that coming up on cnbc. The job jugglers. The up allnighters. And the ones who turn ideas into action. Weve made our passions our lifes work. We strive for the moments where we can say, i did it we are entrepreneurs who started it all. With a signature. Legalzoom has helped start over 1 million businesses, turning dreamers into business owners. And were here to help start yours. Turning dreamers into business owners. You wouldnt have it she any other way. Our toes. 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If you have any sudden decrease or loss in hearing or vision, or any allergic reactions like rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about experiencing cialis for daily use and a free 30tablet trial. Big news in the Cyber Security world, fireeye is buying mandiant for about 1 billion. Hackers have made headlines attacking target, snapcat and now fireeye buying mandiant for about 1 billion in cash and stock. This brings together two really big names in the Cyber Security industry. Fireeye knows whether your company has been hand. Mandiant can tell you who hacked you, how long ago they hacked you and the damage that has been done. Fireeye ceo dave dewalt was on ceo this morning talking about the deal and the broader Cyber Security threats that are out there. Just yesterday we saw the Syrian Electronic Army bringing down obviously skype. Were seeing a lot of infrastructure type attacks like that, twitter, the Associated Press and some are very successful, sometimes theyre not. But theres a lot of very egregious activities happening in the world right now. This deal creates a Security Platform that pose as rifle to Palo Alto Networks sim and technical and intel. Dan ives expects to see a lot of consolidation in this space. He talks about proofpoint, for theinet, imperva and Palo Alto Networks. This new changed everything, fireeye sending a message. The company sees itself as a consolidator that will change the Cyber Security paradigm. Clearly theres more of a need for security like this one. Josh lipton, thank you for that merger story. Still ahead, this storm all across the northeast causing headaches. Well talk to an amtrak person about how theyre being affected. Well be right back. Snow, snow, want to wash my hands and face ask your gastroenterologist about humira adalimumab. Humira has been proven to work for adults who have tried other medications but still experience the symptoms of moderate to severe crohns disease. In clinical studies, the majority of patients on humira saw significant symptom relief, and many achieved remission. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. Blood, liver and nervous system problems, serious allergic reactions, and new or worsening Heart Failure have occurred. Before starting humira, your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Ask your gastroenterologist about humira today. Remission is possible. I would not say im into it. But lets see where this goes. [ buzzer ] do you like to travel . Im all about free travel, babe. Thats what i do. [ buzzer ] balance transfers you up for that . Well unh. Too soon . [ female announcer ] fortunately, theres an easier way, with creditcards. Com. Compare hundreds of cards from every major bank and find the one thats right for you. Creditcards. Com. Its simple. Search, compare, and apply. [ ice rattles ] welcome back to squawk on the street. Im Jackie Deangelis. The department of energy releasing Natural Gas Storage report. The number coming in, a draw of 97 billion cubic feet, a little bit less of a draw than expected. Can you see that reflected in the price, nat gas prices dropping a bit. We were expecting to see a draw down of 116 billion cubic feet. Last year at this time we saw a draw down of 126 billion cubic feet. Can you see this number is a little bit less than expected. Tim evans at city saying he expects the draws to continue and will add support for natural gas price. Keep in mind we have very cold weather outside and storms across the country. Traders are expecting these prices to rebound. Theyre telling me that 5 in the short term is not unlikely. Simon, back to you. Thank you very much. Meanwhile the big digout from thing about storm continues. Thousands of flights cancelled, roads snarled in notably boston and new york. Sarah, over to you. Reporter in just the last few minutes, the snow has stopped. Were actual litsch seeing a little bit of sun out and the roads are back open. The long island expressway, which was closed for eight hours overnight opened this morning about 8 00 a. M. Officials are saying if you can avoid driving for the next little bit, please do so. J. F. K. Also reopening this morning. Flights again once moving. Theres a lot of back log. We had all those delayed and cancelled flights. Meanwhile, people are trying to big themselves out from the storm. Here on long island, some areas received nearly a foot of snow. Classes are cancelled, state employees stays home today. Still a lot of cleanup to go with the storm. Sarah, back to you. Thanks very much for the update. Stay warm. Glad the snow has finally stopped. Now on to how the snowstorm is impacting mass transportation, on the Cnbc Newsline, amtrak spokesman christina leeds. We made decision to operate a modified snow schedule today on friday, january 3rd. Youll see reduced frequency particularly in the new england area. Right now were operating the modified schedule and seeing few dela delays. What are you seeing about traffic . Are people using the trains or staying home . The decision to go to the reduced schedule is based on demand as well. What does a modified schedule mean . Do you still go to as many destinations but with less frequency . Its basically going to be like a holiday schedule. Well running just over 75 of what we had planned for today. So if youre planning on taking a noon train, if you were already booked on that noon train, our reservation specialist has already contacted you and maybe you got moved to a 12 30 train. And i see in new york last night the nta was putting its Rolling Stock into tunnels overnight, the express tunnels in order to protect them from the weather. Do you do a similar sort of thing . A big part of the storm is the preparation that we put into it. We operate a Severe Weather command center out of our National Operation center and what we do is we bring team members from all of the various departments together. That way we can be prepared to respond to whatever the storm brings us. That includes having the appropriate staffing and diesel fueling and we can respond to whatever the storm brings us. For those folks who have amtrak trips planned, what should people do about their schedule . We have a train tracker right online. We have a variety of smartphone apps or call 1800usarail. Thank you, christina leeds. If youre a tmobile customer, at t is offering tmobile customers up to 450 to switch services. It konls after john legere teased an announcement that theyre likely to make after next weeks conference. Is it normal to have this kind of specific this does not seem normal. Its kind of unprecedented. I talked to someone at at t just a few minutes ago about this. Its interesting because john legere will probably bring out similar guns against at t and the rest of the other big carriers. A lot of people expect hes going to offer a bounty for people to switch from those carriers. This is a water shed moment in wireless. Will he be unveiling Consumer Electronics to drag people from at t to tmobile . I expect hell have announcements about new phones on tmobile. There are rumors out there about that, maybe sony will have something. But really this is more about the way that the wireless market has changed. It used to be the carriers had the lions share of the power. They could tell everybody in the market, hey, we want a special version of that razor, we want a special version of that droid. Now samsung and apple have so much sway in the market that they can say were going to give the same phone to everybody. You guys just have to deal with it. And, by the way, pay us for these loyal, valuable customers. Now the carriers are saying, okay, all the valuable customers have smartphones already, we need to compete to keep those customers and steal them from other carriers. I signed one of my friends up to at t the other day. There are also two reasons why at t is different. First of all, there is no contract. So you can tmobile. Sorry, with tmobile there is no contract. Can you actually take them more ea easy. Theyre low hanging fruit. And tmobile is the target of takeover speculation for a number of angles. From sprint specifically. At t has no contract plans. They would like people to switch to those. 200 of those 450 offered, if you switch to tmobile and go to a nocontract plan. In other words, they dont have to subsidize you. Theyll give you 200 up front not to have to subsidize you. Its all very confusing. Verizon wireless customers still have the twoyear locked in contracts, dont they . Everybodys switching for an option not to be subsidized but you have to pay more money up front the markets changing. Coming up, boston is one of the hardest hit areas by the storm, two feet of snow. Well talk to Boston City Council president to see how theyre doing when we return. Squawk on the street will be right back. In a garage. My point . You never know what kind of greatness can come out of an american garage. Introducing the 2014 motor trend car of the year. The all new cadillac cts. Aint garages great . [ coughs ] ive got a big date, but my sinuses are acting up. Its time for advil cold and sinus. 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Go get help i have my reasons. Look, you dont have to feel trapped with our raise your rate cd. If our rate on this cd goes up, yours can too. Oh that sounds nice. Dont feel trapped with the ally raise your rate cd. Ally bank. Your money needs an ally. Welcome back to squawk on the street. Shares of Delta Airlines are flying higher after the Company Reported better december traffic and passenger revenue numbers than the same time last year. Shares of Delta Airlines have had a real tail wind gaining nearly 130 over the course of the past year. Sara, they are still flying high in todays trading. Dominic chu, thanks. Lets go over to chicago, cme group, Rick Santelli with the santelli exchange. Whats on your mind this morning . Cars and broken windows are on my mind. That famous french economist that put forth the notion that breaking windows may have a near term effect but it really isnt a good thing. I think today watching the president of the National Bureau of Economic Research on our air commenting on that old cash for Clunkers Program that was signed into law an enacted and put into place in the summer of 2009 really got me thinking. And one of the things james potter said, cash for clunkers did manage to get more people purchasing new cars. Okay, i dont have a problem with that. But much independent research has been done since and heres another vision of how that all worked out. The program increased new vehicle sales by about. 36 million applying at approximately 45 of the spending went to consumers who would have purchased a new vehicle anyway. Our results suggest no gain in sales beyond 2009 and hence no meaningful stimulus to the economy. But i think its worse than that, okay . I understand that those were trying times, but to put a rubber stamp or seal of approval on this from the nber, to me it goes to show why so Much Research just lacks a bit of common sense. And ill tell you why. Thanks to the people at the National Automobile dealers association, you can see on the screen that one of main effects that we should scone trait concs that used cars prices were moving higher and that was the cause of it. What did the program do . It continued to, in my opinion, hurt the people we dont want to hurt, that these programs were put in place to help because rich people, wealthy, arent buying used cars. Uf know w you know who you buying used cars. Draw your own conclusions. Anybody have a hammer out there . Irony of the day, think about this. You have 52 scientists and journalists on that russian flag vessel where they were just recently rescued, they were on the vessel to study climate change, Global Warming and melting ice. They get stuck in the ice, get rescued by the chinese who pollute the most and the australians come in to save the day using helicopters that use gas in a country known for promoting fossil fuel. Think of the irony there back to you. Thank you very much, Rick Santelli. Those of you making new years resolutions to work out more, listen up. The international spinning sensation that tracks everything from your heart rate to how many calories youve burned, fly wheel will be on the show right after the break. [woman] ask me what its like to get your best nights sleep every night. [announcer] why not talk to someone whos sleeping on the most highly recommended bed in america . [woman] ask me about my tempurpedic. [man] ask me how fast i fall asleep. [woman] ask me about staying asleep. [announcer] tempurpedic owners are more satisfied than owners of any traditional mattress brand. Tempurpedic. The most highly recommended bed in america. Save up to 300 on select mattresses during the tempurpedic model closeout event. Find a store at tempurpedic. Com. By this stage the turkey has been eaten, holiday cookies passed around and now its time to face up to 2014. While many may put getting into shape on top of their new years resolution, our next guest offers a work out many line up for year round. Jay is the cofounder of fly wheel sports. For people dont know what fly wheel is, explain what it is. Fly wheel is a boutique Indoor Cycling studio. We have 25 locations across the country, one in dubai, and it is a highenergy, intense, fun workout that integrates a really, really great experience from an unbelievable instructor with some propriety technology that allows you to track your progress and if you want to, compete with people in the classroom. Talk me through that. Electronics that monitor your health are the cutting edge of technology in consumer electron, for many people, as we will see probably in vegas next week. Absolutely. When we started fly wheel four years ago, we thought there was an opportunity to involve boutique fitness that didnt create overwhelming technological influence. So the fly wheel method has a monitor on the bike that tracks your progress opinion it tells you how fast youre going and create as points total based on how fast youre going and the resistance. You take that and it takes it back to your own page on the internet so can you track your progress over time. But also, if you want to, you can compete with other people in the classroom. So two or, on some scoreboards the front of the room, it will show the people who have opted in to the challenge, and where they place against the other people. Its very social. Ive done well, for a competitive person. For a competitive person like me. Ive done it. I think its a little exhausting. You go there, and everybody is biking with their buddies. Youve really created kind of a community with this whole thing. Absolutely. We call it social fitness. And everything we do is meant to create an experience not just in the classroom, but beyond it. So from the fact that you have to book your bikes for the week coming on sunday prior, so youre creating a schedule around your fitness versus trying to fit it in, to having wideopen public spaces and this competitive fun environment but the only question i have, how do you make sure it doesnt become one of the fitness fads . You know, weve gone through so many whats cool when it comes to working out, the mega gyms, for instance. How do you make sure this isnt a fleeting moment thats popular right now . Theres a few things this give us comfort. The first is Indoor Cycling or spinning has been around for a very, very long time and been very popular. The second is the integration of technology as simon was saying into a workout routine is something that is here to stay. I think its very interesting that you describe it as a social activity, whereas my interpretation is that electronics are taking us to an individualistic view of fitness. I dont know if you are aware, but equinox, one of the main competitor, able to launch level 4, and thats a holistic approach using genomics or loads and loads of tests continuously, a highsession rate, and they will put you in touch with a nutritionist, kind of bring outside help in in a very individual way. And i think if you look at what google and apple are trying to do, it will probably be kind of the same. Youre very different from that. Absolutely. One of the Guiding Principles is that the technology should enhance, but it shouldnt overwhelm. And only about half of the people who come in to flywheel opt into the competition. Right. For the other people, they use it however they like. Some dont use it at all, and others use it to track their progress, to create a spoke fitness program. But we never want the technology to be the focal point of the experience. In essence, this is a communitybased, fun, personalitydriven experience. Before we let you go, what is the aim of the business . How fast are you growing . What is your end game as ceo . Are you looking for an exit . Are you looking to be bought . Are you looking to partner . We love it. Weve grown rapidly over four years. We want to keep growing. Well open 12 studios this coming year. Cruise ships, as well . Yes. Which is more successful . The first one in new york, 21st street, and also very, very successful in places like atlanta, seattle, chicago. Good to see you. Thank you very much. Jay from flywheel. Thank you. The girl may be on fire, but the relationship has burned out. Were talking about alicia keys and blackberry parting ways. More on that next. Being your ow and my customers are really liking your flat rate shipping. Fedex one rate. Really makes my life easier. Maybe a promotion is in order. Good news. I got a new title. And a raise . Management couldnt make that happen. [ male announcer ] introducing fedex one rate. Simple, flat rate shipping with the reliability of fedex. We are the thinkers. The job jugglers. The up allnighters. And the ones who turn ideas into action. Weve made our passions our lifes work. We strive for the moments where we can say, i did it we are entrepreneurs who started it all. With a signature. Legalzoom has helped start over 1 million businesses, turning dreamers into business owners. And were here to help start yours. Turning dreamers into business owners. So you can see like right here i can just. You know, check my policy here, add a car, ah speak to customer service, check on a claim. You know, all with the ah, tap of my geico app. Oh, thats so cool. Well, i would disagree with you but, ah, that would make me a liar. No dude, youre on the jumbotron whoa. Ah. Yeah, pretty much walked into that one. Geico anywhere anytime. Just a tap away on the geico app. Perhaps the short lived is a pop song, grammy winner alicia keys is losing her role as creative director, after the Company Launched its long delayed blackberry 10 devices. Alicia keys was hired by then ceo tore son hines. I wonder what she did as creative director . She did a number of public appearances. Someone quipped, this girl just got fired. Yeah, funny. Its a popular job, lady gaga, the creative director distinction at polaroid. Its basically just a posterchild. Its highprofile releases. I want to draw your attention to one stock in the news. General mills, of course, the cereal maker, announcing that it is no longer going to be using gmos in cheerios. The popular breakfast cereal. Ive been working the phones on this story, talked to General Mills about this, and i asked, does this mean youll start doing this with other products . And they say, no. Cheerios is sort of a specific example here. They say because mostly the oats go into the cheerios, which dont usually come from genetically modified ingredients, it was easier to do. They say its perfectly safe to have gmos in food, theyre maintaining that position, so dont look for other cereals to have it. Still, if you are a Consumer Group and youve been pushing against gmos, saying theyre unhealthy, they cause diseases, this could be held as a big victory. Watching the stock there. Its pretty flat, 49. 38, but interesting to note here. I want to read to you a statement that i got from General Mills on this question. The formula for original cheerios has not changed. Theyre making clear. We did make changes in sourcing in our plants, for example, to separate cane sugar from beet sugar, but cheerios remaining the greattasting, wholesomely good cereal, a family favorite. Would he have a family man here, david faber. Honeynut. When you think about whole foods, asking for labelling on all gmos, talking about chipotle, asking its suppliers to give it nongmo related items. Yeah. There will be a this is you know, jim cramer and i have talked about, he said, keep an eye on monsanto, very much involved health and fitness in the food chain will be started in europe. Absolutely, no question. Absolutely, no question. Maintains its still safe, for your children. The question is, will Consumer Groups grow loader . Or will people just not buy it, which is what General Mills is worried about. You dont have to be an advocate, you just choose not to. I like honey nut cheerios, as well. So do i. If youre just joining us, good morning, friday morning on cnbc. The big digout across the northeast. Heres what youve missed if youre just tuning in. Announcer welcome to squawk on the street. Heres whats happened so far. This is sort of a perfect combination. You know, we see fireeye and manneden complementary, Network Security products coming together, Service Security components coming from mandian. Its like being sucker punched in cyberspace. You need the products and the people with the expertise behind the products to respond to the complex attacks that were dealing with. If you want to take your queue from the first day, okay, if thats what you want to do, stop being in stocks, all right . Take the queue from the cd rate, which, by the way, the cd rates are unchd for the five year. Notice theyre not targeting sprint. Theyre not targeting verizon. Right. I think theyre trying to take the steam out of what may be the hottest player right now. Yeah. Well, when they hate each other, its good for consumers, and in this case, it may very well be. 450 bucks is not nothin. [ bell sounds ] i think its a lack of sophistication of travelers. You should know if youre flying in the middle of a snowstorm, youre probably not going to be on time. You may not even get out of your driveway. From a retail standpoint, we exceeded industry and gained retail share across all four of our brands, and thats what matters really to us. The second day of the trading year and david faber is already breaking news. Over to you. Thank you very much, simon. You may recall earlier, shares of hertz on tuesday up after the Company Installed a poison pill that activates at 10 if any one buyer reaches that threshold, or 15 for a group. At the time as i reported, i had said that hertz was aware of an activist in its shares. However, at that point, i was not able to pinpoint the specific activist in question. There was some speculation. Cnbc reporting some other name, as well as investors who do dabble in activism, who focus on it, who might have owned the shares. I can tell you the activist in question that hertz has been reacting to, according to people close to the situation, is none other than that man right there, carl icahn. My trading sources tell me hes amassed as much as what may be a 30 million, 40 million share position in hertz. Now, that is on swap. I want to make this clear to people. It would mean he doesnt need to necessarily file when he passed 5 . He does this often. In fact, you may recall when i first reported his ownership in dell sometime back, it was also done initially on swap. That can change, but its a derivative transaction that allows him to buy without having or have that economic consequence of his ownership without having to file that ownership. But hertz sources familiar with the situation tell me is aware of mr. Icahns ownership. What is not completely clear at this point is his reaction to that enormous move up in the stock when the company put the poison pill in, and whether, in fact, that has motivated him in some way to perhaps reduce his position or not move forward with what might be an activist campaign. What would be the key to that campaign . Well, as i reported on tuesday, it would be focused on getting the company to spin off and separate out its Equipment Leasing business. Thats a capitalintensive business, that a number of hertz investors believe would be better off shoring from the company, would create value in so doing, and then also allow the company to lever up its Balance Sheet to buy back a significant amount of stock, not just with the proceeds of any split of Equipment Leasing, but also because it would be able to leverage its Balance Sheet more, given the exit from the capital intensive business. So we will see what occurs from here, but wanted to try and at least get a little more meat on the bones, so to speak, in a story we watched this week. Look at the stock. Up sharply on tuesday and again today. Again, mr. Icahn is the activist in question, that hertz was reacting to. Ive called mr. Icahn. He has not returned calls at this point. Unclear whether he would comment regardless. On his ownership stake there. And his continued ownership, 30 to 40 million shares, again, is what im hearing from a number of different trading sources, is likely to be the overall size, but importantly, thats not all Common Shares owned by him, hence the lack of a filing. In laymans terms, can you say what hertz management is effectively saying in the poison pill and whether that is likely to satisfy icahn . Is it the sort of thing, he will say, okay, i will wait for a year . Well, in the pill, when they put it out this is, of course, what created a great deal of speculation, as you know, simon, they talked about specifically activity in their stock price at that time that they had noted. And they didnt give us a sense as to what moves theyre going to make with regard to something a number of investors have spoken to the company about, this split of Equipment Leasing. Its unclear to me, again, what icahns next move will be. So he may not be satisfied with what what hes got . Absolutely not. The company, itself, would not make that move if they didnt think it was certainly a strong potential for him to bring a fight. The less stock he owns, the less potent he might be in any proxy fight that could take place, although there are many investors, simon, believes the company is moving in that direction anyway, under the ceo, and would eventually do the splitoff, and therefore, wonder why not just move down that road immediately. Theres been a lot of optimism. The stock popping on the report of carl icahns stake, but its been outperforming the s p 500, and the whole landscape has changed and positioned hertz pretty well . They bought dollarthrifty, a huge amount of consolidation going on, some would say too much. There were various safeguards in place, ensuring competition would flourish, and those have fallen to the wayside. Its a controversial industry. At the same time, suffering from a lack of demand in airports, and that is what may come back and this did cause a bit of weakness, i believe, late in the year. And some issues with the fleet costs, as well. Yeah. Good to have the travel and Leisure Editor with me, as well. Yeah. The capital structure side hertz is number two in terms of Car Rental Companies in no, to enterprise is number one. Privately held, number one. Thank you, david. Youre welcome, simon. Look at the pop. The stock is up, which, again, mr. Icahn may have a pretty significant gain on his hands. That is something well look for the twitter feed. Well update people as we get more. The first major winter storm of the year has delivered a significant amount of snow to say the least really across the midwe midwest, the great lakes and the northeast. One of the hardesthit cities is boston. On the cnbc news line now is Boston City Council president steven murphy. Mr. Murphy, welcome to the program. Thank you for joining us. What is the present situation . The present situation is really a bit of good news. It was a light powdery snow. The temperature is 8 degrees, the wind chill is minus 15, which is cold. But the city of boston and the state of massachusetts ordered a parking ban in place yesterday and got parked cars off of street so that our 300 pieces of public works snowremoval equipment could get out and do the job. Schools are closed, which is helpful, and state offices are closed. Municipal offices have just essential personnel only. So there arent a lot of people out on the streets impeding the plowing thats going on. It is, though, as you said i mean, it is exceptionally cold at the moment. What problems does that pose for the digout . Well, the frostbite for people that are out digging is a potential, especially elderly folks and children shouldnt be out today. Or pets for that matter. This is the coldest snap of weather weve had here in boston since 2008. So it is bitterly cold. Heavy, heavy winds coming out of the northeast right now. Stevphen, i was reading your biography, youve made a reputation of yourself when it comes to Public Finance and economics. Any sense of what this sort of pearlization of paralysis of boston costs a city like this, such a huge city . Well, we budget 15 million per year into our snowremoval budget, our snowremoval account. Some years we go beyond that, some years were lucky enough to stay within it, or under it. An undertaking such as this, weve been out for about 24 hours now overnight, it costs between 3 million and 4 million to clear the streets here in boston. And when do you think you will be fully clear . What is the expectation on that . Obviously, it has to come in phases and priorities. Can you give us an idea of what people might be able to expect . Late this afternoon, early evening, i would think. You know, the crews got a good head start on it, and they stayed with it through the night. And it was a light, powdery snow, so its a little bit easier to move around and clear than some of our past blizzards. The one last february was a 24inch, heavy, wet snow that took a little bit longer to clear. And just before we let you go, we discuss obviously, very often, the state of recovery, jobs and growth on this network. How would you sum up what youre seeing in the Business Community in boston . Well, the governor of the commonwealth asked the businesses to remain closed today to aid the emergency workers, clear the streets, and for the most part, people have heeded his warning. And if thats what youre asking, and i believe thats what youre asking actually, i was asking i was excuse me, i didnt explain myself very well. I was asking more broadly the state of the economic recovery in boston, the optimism, the job growth, where you think we are now as we come into the new year. Well, boston has exceeded the nation, or kind of led the nation in the economic category because of the fact that were home to medical area and a lot of a lot of biotech firms are here in boston. And we have a great tourism industry, which take as hit when we have a blizzard like this. Sure. Hey, its were doing well. Its good to talk to you, sir. Thank you for joining us there. Council member stephen murphy, the president of the city council in boston. Thank you. The other big story, of course, this week, snapchat leak, which resulted in over 4. 5 million user names and phone numbers being posted on the internet. Today, snapchat says it will release an updated version of the app that will actually allow users to opt out of the find friends feature that was exploited by hackers on new years eve. Jon fortt joins us with more. Boy, theyve got a mess to clean up, dont they . They do. And its interesting, snapchats Ceo Evan Spiegel was on the today show this morning, kind of trying to explain what was going on here, again, reassure users. Not totally sure he struck the completely right tone. It was interesting how he talked about it. Didnt seem to acknowledge that the hackers and security researchers had brought this to snapchats attention earlier, didnt really address whether they could have fixed it if they had paid more attention. Its also interesting, it reminds me of an incident at facebook in midaugust, actually, Palestinian Security researcher was trying to tell facebook theres a bug where someone random can actually post to anyones wall. And facebook ignored him until he posted to Mark Zuckerbergs wall, and then they immediately responded and fixed the bug that day. Theres a move out there where hackers are finding the vulnerabilities, trying to talk to companies and having trouble, until they do something very visible. The company should just hire they are hiring hackers. Can we listen to the snapchat ceo on the today show. Listen to this, guys. I believe at the time we thought we had done enough, but i think in a business like this, in a business thats moving so quickly, if you spend your time looking backwards, youre just going to kill yourself. Am i right in saying he didnt actually apologize . No, he didnt, actually. And i personally, as a user, not of snapchat but of technology, think hes exactly wrong in that assessment. If theyd been looking backwards to begin with, they might have caught the bug. The problem was they were too busy focused forwards on maybe how to monetize or grow the app itself. Maybe a little looking backyards would be a good idea. What we were saying 24 hours ago that they are young, energetic, and going places, and theres too much to play for. And theyve done very well. So thats typical of this, but theyre in rarefied company now. Theyve got to strike that balance between looking backward and defending themselves and looking forward and growing. And not apologizing, you know. Jon fortt, good to have you here. After day one, stocks being down, stocks are picking up where they left off in 2013. The dow up 64 points as we speak. Well into the green. Which direction are we headed in 2014 . More on that in a moment. And speaking of stocks, Rick Santelli, youre watching the markets today. Oh, absolutely. Every day the markets are not only fun, they can be profitable. But you need to have a good strategy. So were going to talk to richard farr about his strategy and direction for gdp in 2014, what may help or hurt gdp, and maybe population and how that figures in to job growth. All at the bottom of the hour. Of the little room over the pizza place at 315 Chestnut Street. The modest first floor bedroom in tallinn, estonia and the dusty basement at 1406 35th street. It is the story of the old dining room table at 25th and hoffman avenue. The southbound bus barreling down i95. And the second floor above the strip mall at roble and el camino. This magic moment it is the story of where every great idea begins. So different and so new where those with endless vision and an equal amount of audaciousness believed they had the power to do more. Time and time again. And then, it happened at dell, were honored to be part of some of the worlds great stories. Stories that began much the same way ours did. In a little dorm room 2713. This magic moment this magic moment during sleep trains huge year efor a limited time,dels save hundreds on tempurpedic mattresses. Get the most highlyrecommended bed in america at closeout prices. Plus, get interestfree financing and free sameday delivery. Why wait for the new models . Sleep trains year end clearance is on now. Superior service, best selection, lowest price, guaranteed. Sleep train your ticket to a better nights sleep to get your best nights sleep [woman] aevery night. Ts like [announcer] why not talk to someone whos sleeping on the most highly recommended bed in america . [woman] ask me about my tempurpedic. [man] ask me how fast i fall asleep. [woman] ask me about staying asleep. [announcer] tempurpedic owners are more satisfied than owners of any traditional mattress brand. Tempurpedic. The most highly recommended bed in america. Save up to 300 on select mattresses during the tempurpedic model closeout event. Find a store at tempurpedic. Com. Looking at stocks, the dow and the sp s p are bouncing back this morning following thursdays losses. Weve got some fed speakers happening at the annual American Economic association conference. How it will impaktd the markets in 2014 . Lets bring in jack with cio with nemo private bank and brian with first trust buyers. Brian, looking to you in terms of the fed speak today, any surprising that could move the needle here on stocks and whats pretty quiet friday trading day . You know, i suppose people could get worried about whether tapering is going to pick up or not. But i think its pretty understood that the feds going to taper. I expect 10 billion a month until theyre done with this round of qe, and then the question will become but this isnt a question until later in the year, how do they unwind the quantitative easing that theyve done . And if i look back over this past year, from may to december, we had all of the fears about tapering, the market kept making new high after new high after new high, finishing on a high, even after tapering. So i think 2014 is going to be the same. Theres going to be a lot of talk about what the feds doing, but the market is focused on profits and the economy, and both of those look pretty strong for 2014. Well, jack, as brian alluded to, a strong finish for the markets in 2013. Will it be able to sustain itself . Is there enough good news for this year . First of all, before i get started, sarah, i wanted to let you know, i now know why my bloomberg has been flickering for the last couple of days. But what i look forward to 2014, i do see, you know, relatively decent market. I do think brian is right. I think its all predicated on revenues and earnings, and weve got Profit Margins that, you know, cyclical highs. So the question is, will the will the multiples p e multiples, price to sales multiples, maintain themselves . Will revenues and earnings, that tailwind, offset the headwind we see from Interest Rates moving from perhaps 3 where they are now on the 10year to 3. 5 sometime by midyear . And i do believe they will. I think that will ultimately end up with roughly a 7. 5 return in the s p this year. Brian, can i take issue with what you said when you made your statement about how the market reacts to tapering . Sure. I would argue that 180 degrees around the other way. Whenever we thought that they were about to taper, the market really was in some difficulty and chiefly, of course, coming out of the summer when ben bernanke indicated that he might taper by labor day. Yes, we have a rally at the end of the year, because theyve laid out a taper. But what theyve laid out is a slow taper. Theres no taper now. Its still 85 billion, and theyre saying, well reduce it gradually over the course of the next year. And thats partly why the market has rallied. If they start accelerating that, and that is the fear, do you not think this market is going to fall . Can you really say that a taper, a fast taper, is fully factored in here . You know, simon, youre right. That on a daily basis, or even a weekly basis, when theres some kind of fear about tapering or an accelerating of tapering hit the market, people sold. Theres a kneejerk reaction to all of this stuff. But when you look at the year as a whole, all of the talk, all of the fear, the actual tapering itself, through it all, the stock market kept going higher and higher, and one of the key one of the key things is that Interest Rates went higher. We started this year with a 10year about last year, with the 10year about 1. 5 . It ended at 3 , and the market was higher. Thats what everybody says is their fear. But, brian, the simple fact is, that the most powerful central bank in the world has still slammed shortterm Interest Rates to zero. It is still printing 85 billion a month, and pushing that into the economy. There is no taper. There has been no letup. You can talk about expectations, but theyve got but, simon simon, there hasnt been any qe either. The Federal Reserve has boosted its Balance Sheet by over 30 a year for five years in a row. And the m2 measure of money, this is what Milton Friedman told us to watch, has only grown 6 a year. So you can talk about qe all you want and all of the money that the fed is putting in, but the money hasnt gotten to the economy. The Banking System has not multiplied it. And, therefore, my view is, is that thats not whats driven the stock market, and, therefore, when they get rid of qe, they wont hurt the stock market. Brian, hang on one second, i want to leave the taper talk aside. One thing were not talking about, but perhaps should be, according to george shoros, is china. He wrote an interesting oped, saying the major uncertainty facing the world, is not the euro, not the united states, but the future direction of china, the growth model responsible for the rapid rise has run out of steam. Jack, i want to pose that question to. Is china going to have to be a concern here for u. S. Investors . China is always a concern. And china, you know, grew its debt far in excess of its Economic Growth now for the last decade. And theyre left with a huge amount of overbuilding a lot of bad debt. I do like the fact that last month that ipo of cenda, this Public Private partnership perhaps moving some of this debt off of public rolls was a step in the right direction. I do think china can still manage this debt load, but i do believe it is a concern, and one thats not only overhanging china, but probably overhanging the emerging markets sector in general, and thats something we have to keep a close eye on this year. All right. Were paying attention, and we saw shanghai drop again, the shanghai composite index. Jack and brian, thank you so much for joining us. Thank you. Thank you. If you are a regular netflix user, youve probably seen some pretty specific recommendations on your screen as to what movies you might like. Maybe it suggests emotional independence sports movies . Or how about sentimental movies . Set in europe in the 1970s. Those are just some of the examples, but our real question is, how on earth is netflix coming up with those recommendations for you . And what does it mean for commerce moving forward . Our next guest broke down all the data, and hell explain how theyre doing it in just a moment. Aflac aflac got em. Yeah, hes clean, boss. Now listen to me, duck. I have an associate that met with, uh, an unfortunate accident. While hes been incapacitated, somebodys been paying him cash. Now, is this your doing . Aflac . Now, if i met with some such accident, would aflac pay me . Nice. This is your stop. [ male announcer ] find out what aflac can do for you and your family. Aflac . [ male announcer ]. At aflac. Com. Ive got a nice long life ahead. Big plans. So when i found out medicare doesnt pay all my medical expenses, i got a Medicare Supplement insurance plan. [ male announcer ] if youre eligible for medicare, you may know it only covers about 80 of your part b medical expenses. The rest is up to you. Call now and find out about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, it could save you in outofpocket medical costs. Call now to request your free decision guide. Ive been with my doctor for 12 years. Now i know ill be able to stick with him. [ male announcer ] youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. See why millions of people have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp. Dont wait. Call now. If youre a user of netflix, have you wondered how they make the specific recommendations about what movies you like . Are you the romantic chinese cry movie type . Or the visually striking, goofy action and adventure type . The next is doug enter, and we welcome to the program alexa, a visiting scholar at berkeley. Welcome to the program, alexis. Thank you for joining us. Thank you for having me. How are they doing it . They hired a bunch of people, oftentimes aspiring screenwriters, to go through and tag each and every movie and tv show in existence. And they tag them for all kinds of things you might imagine. How romantic they are, gory they are. Even things you wouldnt expect like the level of plot resolution that you actually find, and then they run an algorithm over the top of the data to create all of the various genres. You know, i read your article, it was great, alexis, really a Tour De Force through how netflix does this and what some of them are. 79,897 of these personalized genres, the question is, what sort of competitive advantage does it give netflix . Its really a good question. Netflix likes to say the better they can prove to their subscribers, that they know them, they know what they want to watch next, the more likely they are to stick around. So they say these types of personalized genres, as they call them, the recommendations, actually increase subscriber participation, so they have 40 Million People watching things and they want to keep the people and gain more. Alexis, so it looks like some of the categories that are favorites for people out there are romantic movies set in europe in the 80s. How much of that reflects what netflix is actually doing, versus whos using netflix . It seems like gen xers who are looking for love, googly eyed, are kind of the core net flix demographic. I think its the logic of hollywood. Hollywood likes to play on romance, they like dark things, thrillers. What netflix has done, and maybe the enduring competitive advantage Going Forward, is theyve reverse engineered the logic of how hollywood makes movies and how they make content. Now that netflix is moving into making new, original content you know, house of cards, et cetera, they know what people want by breaking down this kind of data. Theres a few other companies trying to do similar things, but netflix has been at this for seven years, and theyve got all of the viewing data that theyve accumulated over that time. So, alexis, were sitting here, knowing that some class actions have been filed against facebook because the allegation is that facebook has been manipulating what people are saying in their posts and been selling that on to other people. How commercially powerful is what netflix knows about its customers as a result of the conversation that youve been having here . Because its a type of qualitative assessment of the likes and dislikes, which arguably google, facebook and others may not have picked up as easily. Is that a fair comment . Its two types of data. One is unobjectionable, breaking down hollywood. The second category, which is netflix mining of your personal viewing habiting and what you would like in content, that part is a little bit more complicated and gets into some of the slippery territory that i think google, facebook, and basically every other company that survives on data as a business has to deal with. And i think, you know, the key question is around netflix, how much do people care if you know what kind of movies they like . And its kind of different than, you know, a facebook or a google, i think. And another interesting question that has to do with big data. Can netflix, based on what it knows, figure out what the next surprise Breakout Movie is likely to be, and could they sell that kind of data to hollywood for people to figure out when to release lowerbudget films . I mean, i think netflix would rather use it themselves. The Business Model Going Forward for netflix is to say, hey, we can make our own content. We know, instead of being a tv network that has hundreds of shows in production, we can just produce five and know that each and every one of them is going to be a huge hit. Well, it better produce it fast, i guess, because by the time its made, it might not be hot anymore. Yeah. If you look at the recent string of successes, house of cards top among them, i do think it shows that the data helps netflix deliver the content that people want to watch next. Uhh, i think orange is the new black may disagree, but well have to leave it there. Thank you. I picked one for you. Mindbending cult horror movies from the 1980s. Thats yours, simon. Probably not, but thank you. The end of the trading day in europe is up next. Spain has good news. Well be right back. Are the th. The job jugglers. The up allnighters. And the ones who turn ideas into action. Weve made our passions our lifes work. We strive for the moments where we can say, i did it we are entrepreneurs who started it all. With a signature. Legalzoom has helped start over 1 million businesses, turning dreamers into business owners. And were here to help start yo lets have a look at how western europe is shutting up on this trading session. After yesterdays losses, a rebound. Green for many of the nations. At the headline level, theres very bad news. Lending in the private sector in the euro zone plunged again in november. That means youve had a contraction on the last two months of almost 5 . Youve never really seen that before. That is a very bad omen moving forward. However, having said that, individual country level, theres the good news. Have a look at whats happening with spain, where youve had a record fall in the jobless today. They have very high jobless rates in spain, but 107,000 taken off the unseasonally adjusted levels and a surge in the bond markets. This may be an important Tipping Point to realizing europe can make it through this. The spanish bonds, as you can see, are rallying. Yield, therefore, pushed down, to a low, below 4 . If you look at italy, you will also see that that yield is below 4 . Its a different move than you would expect in a more advanced nation that doesnt have problems, but nonetheless, it is important. At the stock level today, be aware that the ceo of remiquantro has quit. Theres a major problem with drinks makers spirit makers, luxury good makers in china. He didnt crack it, and hes finally fallen on his sword. In the u. K. , in retail, a huge Success Story on the other hand. Next, a retailer, announcing today its results will be significantly ahead of expectations. Why . Because next has mastered the internet, the online sales jumping 21 on where they were last year for the next directory. And you can see other retailers in the u. K. Are also being dragged higher, sarah. Some of the goodbyes from european stocks spilling over here into the u. S. Lets bring in bob pisani with a look at the big board. A much different day than yesterday, turning out to be a little bit of an anomaly. We have crude oil near a onemonth low, and thats bringing up, of course, the airline stocks. A great day for them. Looking at the airlines, so delta is up about 4 , 3 for some of the other airline stocks. Were about 3 on the 10year. So slight creepup, but not a lot. Ratesensitive name, the telecoms, utilities are under a little pressure. Dont like what im seeing with the eem. Put up the eem, the emerging market etf, sort of the bogey everybody using for emerging markets. Were down about 4 in the last couple of days. This is the worst twoday losing streak weve seen since going back to may, and thats when all of the taper talk started. Remember, at the Federal Reserve here. Keep an eye on that one. Slightly higher rates, though, not hurting housing. Were on a tear on housing. Weve ended the year really well. The itb, which is the etf for housing, has been up seven of the last eight sessions. Nice little gain for the homebuilders today. The 3d printers, all up and down, depending on the news. All up. 3d acquired general giant studios, and make models for toys. Not only does 3d have the physical systems, but they have the software to make the models for the toys. Were near new highs on most of the major market indices, so its not surprising on individual stocks getting downgrades the last couple of days. Here are stocks downgraded today, and a lot of them on valuations. For example, micron downgraded but rbc on valuation. I would know, dram spot prices, as far as i can see, have been quietly moving to the upside. A number of the utilities were downgraded over at citi and bank of america, as well. Guys, back to you. Okay, thank you very much. For more on the markets, lets head back to chicago and Rick Santelli. Rickster . Thanks, simon. Id like to welcome richard farr. Happy new year, richard. Happy new year to you, rick. Listen, whenever i think of jobs or the unemployment rate, the first thing i think of is who are we counting as unemployed and who has dropped out, you know, Labor Force Participation issues. The second thing i think about is richard farr and his research on population growth. Can you put all of that together for me . I can. Brian westburg, on the show a few minutes ago, and talked a great point, the fed growing the Balance Sheet by 30 , but m2 money growth is growing at 6 a year, so if qe is working all that much, why is it that money growth isnt growing at a faster rate . You have to put that into context. Population growth last year according to the Census Bureau grew about 0. 65 , one of the lowest on record in the past 100 years going back to, when, rick, 1936, great depression. So money growth is growing 10 times faster than population growth, and essentially tells us that a lot of money sloshing around with very little opportunities to grow into, and thats one of the reasons why we remain below potential growth on gdp, the forecast for next year is just 1. 5 . Well, lets stick with that topic, richard. I want to go there, as well. After we had the 4 handle on the last look at the Third Quarter gdp, everybody was pretty darn excited about that. Of course, shortly, were going to learn what the Fourth Quarter growth was. So many up ticked the 2014 forecasts . Did you . And if you didnt, explain why. We did not, because of the 4. 1 gdp in the Third Quarter, 1. 7 of that was due to inventory build. So you net that out, you get a much lower gdp number. You know, a little better than 2 number. But, you know, 2. 4. But its not the greatest number exinventories. Its a healthy number, positive number. We wont take anything away from it, but it suggests to us exinventories, the economy is still growing at the roughly 2 rate, which is 180,000, 200,000 jobs a month. Whats the biggest drag in terms of your forecast for closer to 1. 5 to 2 gdp than maybe some of your peers . Well, theres three factors that have pushed our model down recently. One is rising unemployment claims on a yearoveryear basis. We show that has correlation to gdp. Weve also got Rising Energy prices, gasoline prices are now up year over year, as well, and theres also population growth issues, as we just mentioned. Listen, richard, were coming up on a hard break. What about Affordable Care . Affordable care act taking a plus or minus on gdp, quickly . Its undetermined. Its probably it could be a positive for earnings, given that Companies May reduce benefits to employees. Thanks, richard. Next time, well have longer. Back to englewood and the new york stock exchange. All right, thank you, Rick Santelli. We want to catch up on the top headline of the hour of the day really, the mystery activist investor taking a stake in hertz revealed by our very own david faber. Got the name. Yeah, we do. In fact, wed been working on this since tuesday when hertz unexpectedly late monday unveiled the poison pill activated at 10 . The activist it was reacting to, according to people close to the situation, is carl icahn, of course. The most notable activist out there sitting on roughly, what is it, almost 20 billion. Of course, can take sizable stakes of the type. At the time, you may recall, we said they were reacting to an investor conceivably who could only take as much as 1 billion or more stake given the size of the company in question, and what it would mean to get to 10 . As for mr. Icahn is, my trading sources indicate hes taken between a 30 to 40 million share position in hertz. Hes done that on swap, meaning hes used derivatives to mimic that size position, but has not needed to file, because he doesnt own the common stock outright. But nonetheless, hertz is, sources close to the situation, tell me aware of mr. Icahns stake, and, therefore, moved to put in that pill at 10 . Whats unclear at this point is what mr. Icahn plans to do. A number of investors in hertz had been pushing the company to consider a spin or carveout of some kind of its Equipment Leasing business. There have been others who said, ooh, maybe you could actually merge it into uri, united rentals, which has interest in it, although the expectation is it would trade at a higher multiple and has a higher net operating loss. What the company chooses to do from here is unclear, and what mr. Icahn may do from here is unclear. Hes not returned calls for comment. There are a number of other activist shareholders weve noted who own stock in hertz, but not nearly the size of mr. Icahn. When you see a stock move like this, as it has this week, you wonder whether, in fact, some may be selling. At least, i do not believe, and my trading sources do not indicate, mr. Icahn has been a seller, but thats Something Else people need to keep in mind, given the large percentage push. The other holder is dan loeb, not really an activist. Yeah, loeb, you have to remember he gets in and out of things very quickly. For example, herbalife. I dont know what his intention is. Certainly managements attention has been brought to bear as a result of not just mr. Icahn but other potential activists who are all sort of focused on the same idea of creating value around some sort of the splitoff of can we have a look at the threemonth chart . Thats the most compelling when you look at hertz. Yes, its up 13 in a week, since you got the poison pill announcement, but its that threemonth chart thats really dramatic. There you go. Again, 32 . And an opportunity, though, to buy the stock in the mid20s after what had been sort of a not great quarter, simon, as i think you know better than i. Yes, david, great to have you back, breaking news. I love it. Thanks, simon. Not exactly a december to remember with ford with auto sales coming in well below expectations. So is this just a blip on the radar for ford, or is there more trouble on the horizon . Well talk about that in a moment. Welcome back. How is everything . 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[ male announcer ] look for the easyopen red arthritis cap. Humans even when we cross our ts and dot our is, we still run into problems. Thats why Liberty Mutual insurance offers accident forgiveness with our auto policies. If you qualify, your rates wont go up due to your first accident. Because making mistakes is only human, and so are we. We also offer new car replacement, so if you total your new car, call Liberty Mutual insurance at. And ask us all about our auto features, like guaranteed repairs, where if you get into an accident and use one of our certified repair shops, your repairs are guaranteed for life. So call. To talk with an Insurance Expert about everything that comes standard with our base auto policy. And if you switch, you could save up to 423. Liberty mutual insurance. Responsibility. Whats your policy . Its an ugly day for auto sales. Fords december sale are up, but theyve fallen short of what wall street was expecting. Phil lebeau joins us from eric merkel, fords own u. S. Analyst. Take it away, phil. Lets bring in eric now from detroit, mitch micchigan. Give me perspective in terms of what happened last month, because im hearing from some, it may have been payback for black friday, which was very strong, and others said we had storms keeping people out of showrooms. What do you blame the softer auto sales for the entire industry last month on . Well, ultimately, i think the month was very good for the overall industry in december. We estimate that it was in the low 16 million vehicle range, which is a very healthy number. Now, when you look at november, and then if you go back one month further and look at october, we always see a little bit of a lumpiness in some of the monthly number, even though they are seasonally adjusted. But when you look at, say, a sixmonth a sixmonth movings average, were in line with where the industry should be operating right now. But did storms keep people out of showrooms last month . I heard this on a number of sales calls already this morning. Well, you know, i think it may have had some impact at the very end of the month, but i think it was very negligible. I think, again, you know, a mid or low 16 million vehicle s. A. R. Is a very healthy month. Truck sales. You guys saw strong for pickup trucks, fseries once again the bestselling vehicle in the united states. Strong demand for cuvs and suvs. Modest gas prices, is that pushing people away from who particularly might have gone with a car in the past, saying, you know what, maybe well go with an suv or cuv . It depends, because when you look at truck sales, trucks are cyclical, so theyre in kind of an upward swing right now. If you look at utility vehicles, what is so hot about utility vehicles . Its the small utility vehicles, many of which are based on compact car architectures. So i dont know if its necessarily gas prices. There may be some influence there with the lower gas prices, but overall, the market is still moving towards small vehicles. Eric, were looking at a chart showing annual auto sales that are going to be probably coming in about 15. 6 million for this year, the best since 2007. When you look at 2014, how optimistic are you that we will continue to see sales growth and the consumer will continue to come into the showroom . We think when we get out to next year, we have our guidance set about 16 to 17 million vehicles, but keep in mind, as we move into next year, the rate of or this year, im sorry, as we move throughout 2014 the rate of growth is going to slow just a bit. Youre not going to see the same rate of growth that we saw in 2012, and perhaps not the same rate of growth that we saw here this last year in 2013. Eric merkel, the lead sales analyst for the ford motor company, joining us from detroit, on a day, simon and sarah, when the automakers posted what we would call chilly december auto sales, lower than many were expecting. Back to you. And the down lower than it was, thank you very much, phil. Were up now 15 points. Lets send it back to dom chu back at headquarters for a quick market flash. Thanks, simon. Shares of herbalife, hlf. Now drifting towards session lows on an announcement by the federal trade commission, ftc, holding a press conference on tuesday, january 7th, to talk about deceptive practices in the marketing of Nutritional Products and weight loss supplements. That will happen on tuesday. Herbalife shares responding in kind, down to the session lows. Also other companies, usna, and new skin, so other Multilevel Marketing Companies also to the downside on this bit of news. Again, ftc holding a press conference on tuesday to talk about a program, at least, sarah, about deceptive practices when it comes to marketing of weight loss products. Back over to you. And that news taking its toll on the stock. Thanks, dom. Coming up, what can you do to take control of your money this year . Well, todays squawk breakthrough wants to help in a few easy steps, Weight Watchers meeting personal finance. Well explain after a short break. 24 7, but there are no branches . 24 7. Im sorry, im just really reluctant to try new things. Really . Whats wrong with trying new things . Look mommys new vacuum cat screech you feel that in your muscles . I do. Drink water. Its a long story. Well, not having branches lets us give you great rates and service. Id like that. A new way to bank. A better way to save. Ally bank. Your money needs an ally. Over the pizza place on Chestnut Street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i95. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment well, if taking control of your money is one of your resolution this is year, check out advice from one of the earlier squawk breakthrough guests in a newly titled book, fiercely titled, in fact, financially fearless. Welcome back the founder and ceo and the author alexa. So congratulations. Thank you. We talked to you about a year ago. Yeah. Since then, you have grown into a fully fledged financial advisor. How is it different than a Morgan Stanley or jpmorgan . We wanted to make Financial Planning an accessible product for all of america, so you can pay about 500 a year at learnbest. Com to connect you directly to your own dedicated ix pert, and you get unlimited financial advice. Its an accessible to any consumer. Who is your market . Whats amazing is the users range from 25 to 65. And in general, they tend to make over 75,000 individually. And their Household Incomes range all the way up to 500,000 or more. Its a pretty large audience. Are you targeting women specifically . So its mostly households. So, you know, 70 of our audience coming in may be female. 30 male. But more than 60 is actually a household. Did you say that you charge them 500 a year . Yes, its a subscription model. Pay an up front fee, between 299 or 399 and then 19 a month for ongoing unlimited access to your own financial expert. If i wanted to google, churn up enough financial advice, these are not this is not tailor made advice, these are not particularly difficult financial situations youre talking to people about. So we actually give custom financial advice. Yes, you can search through google, but if youre having a baby, buying a home, we do 360 degrees of advice from basic insurance needs to basic Estate Planning needs to Asset Allocation advice. So its really a customized financial plan. If you think about it, simon, the cost is significantly lower than than the average Financial Planners but some of the people are other thanning only 70,000 a year. Which means they couldnt afford a typical Financial Planner which could be 2,000 to 5,000 a year, which if youre making 70,000, you cant necessarily afford. Whats the biggest mistake people make now when it comes to the Financial Planning . I always feel its so overwhelming. It is so overwhelming. The biggest mistake we find people make is just not getting access to an expert. They think they can go it their own, and you never know where the blind spots are. Thats one of the great things of making it affordable, people can get access to advice. When you have less money, getting access to advice is more important, because you need to know where the next dollar should go. Are you getting new questions about the Affordable Health care act . A ton of questions. Are people confused about this still . I think in general, people are confused about their money, but particularly with the new health care legislation. All right, alexa, congrats on the in you book. Thank you. Thank you for coming in. Like many other places across the country, the economic recovery in vegas has been tepid at best, and believe it or not, one of sin citys biggest problems has been getting young people back to visit. Well tell you why, next. Vegas is a luxury destination for young people across the country or it used to be. One of sin citys big problems these days is trying to figure out how to bring in the Young Gambler and to get them to spend money. Jane wells is live in vegas with more on that. Jane, over to you. Hey, simon, im thinking id like to jump a fountain in a motorcycle. Google that, kids. Slots. This is what were really talking about, accounting for about 80 of profits in gaming revenues in las vegas. Heres the problem. Slots were down in 2013 across the strip. The problem, Deutsche Bank says young gamers are not inclined to play slots, so the challenge here is to make those games more interactive, draw them in. Instead, millennials like to spend a lot of money on other things, like the clubs. But Credit Suisse letters of 2014 is the year clubs reach a saturation point in las vegas. John unwan worries about that, too. Hes trying to reinvent the club with the rose rabbit lie, aback to old vegas, dinner, and dancing. I describe it as a mashup of club babaloo, the cocoa cabana in new york and the tropic in vegas. Reporter and theyll have a programsharing thing. Cosmopolitan, owned by Deutsche Bank, which took it over when the developer defaulted, losing money, but less money. Will eventually will be sold. Who might by . Long odds, mgm resorts, maybe, because it surrounds the property. But jim mur, the ceo says, not particularly interested right now. Anything for the right price. Hes still trying to deleverage after building city center. Listen to this, quote, i would never make an acquisition thats leveraging, and that tells you more about where las vegas is now compared to five years ago. Back to you. Did i hear you say, though, going to reinvent the dinner dance . I did like a good dinner dance back in the day. Reporter oh, so fun. Its really its that old brat pack but with a modern twist. Well have to see if it works. Love it. Jane wells, live there in vegas. And that basically brings us to the end of the squawk on the Street Program for this friday, and for the week. Its been good to be with you, simon. Oh, yes, sarah, thank you so much. All right. Thats all for squawk on the street. As we hit noontime on the east coast, lets get over to the halftime report. Thanks so much. First half now in the books and here are the highlights so far. Local network, security firm, fireeye acquiring the end point mandia. Its like being sucker punched. The u. S. Economy is healing. Were beginning to see real signs of traction. Essentially, the value to picking stocks, or sectors, or industries should go up a lot