Transcripts For CNBC Squawk On The Street 20141223

Set to open in the green as the u. S. Economy grows at its fastest rate in over a decade. Is dow 18,000 on the way . And walgreens shares higher in the premarket. And new details on the massive recall that is scalding shares of Keurig Green Mountain this morning, literally. But first up, mountains aiming for uncharted territory one day after the dow and s p hit some recordclosing highs, the blue chips are within 41 points of 18,000. A full point would take the s p to a new allday intraday high. Futures extending their gains on data showing the that Third Quarter gdp up 5 . And then theres Hedge Fund Manager david tepper, expressing some optimism about the stock market, writing to stock saying, quote, this year rhymes with 1998, russia goes bad. Easing coming from europe. Sets up 1999 i mean 2015. Although you can read that two different ways. Right, 1999 was parabolic for the nasdaq comp, fantastic for the s p. Obviously, 1999 is followed by 2000. He very specifically didnt mention 2000. Its a little bit opaque. But obviously, if next years 1999, you have to be 180 long. And thats no what im trying to advise people to do. Listen, tepper has had a very strong, longterm track record, trying to divine his intention from an email, i think, is a little bit of a fools game. I would prefer dialogue. Hes a great guest to have on. And a great guy. A charitable guy. Be nice to explore that a little more. I dont want to jump to conclusions to s as to whether saying next year will be a great year. Youve got to be careful, then it leads to the next year, in 2000, was a big down year and the s p fell. While the musics playing, jim, got to dance. Look, i think that what matters the to me is that the market right now is not that overvalued is versus treasuries. And youre 16, 17 s p is pretty good. And get to 29, 30 s p, and you have what you had in 2000. Remember, 2000 5 gdp print deserve . No more than what were getting. I mean, i think you have to recognize that we have a lot of stocks that are pretty fairly valued. Weve got some that can go up a lot. I would like to see more data. And he was talking about russia collapsing, david. That would not be necessarily positive. I dont want to base my whole outlook on an email. I agree with david that a little conversation would help. Obviously, if next years 1999, then were going to have a remarkable year, and youll have to sell the last day of december. Meantime, the gdp number driven largely by Consumer Spending. Some good capex numbers in there. The last one was 3. 9, going to 5. When you start revising jobs numbers up higher, youre missing the datas missing the momentum, the argument goes. Yes, well, remember what dave cody said from honeywell. He said, we have been stymied here, absolutely stymied here because of higher gasoline and higher oil. And that thats going away. And when you get oil down to a level that is really good for the u. S. Economy, and for the emerging markets, then youre going to end up having a very good economy. And we have it now. I mean, gasoline has fallen dramatically. Its really good for discretionary spending. The actual percentage of jobs that were presented by oil and gas, not that big a multiplier, because really limited to a couple of spaces. Its just positive pip mean, its okay. Its positive. Sorry to be so its positive . Today. And if i start to hear some real backups again in the high yield market, that are drifting not just out of energy, more broadly, or emerging markets are starting to have a great deal of tumult again, we have an incredibly strong dollar. Can i can go down so many different roads, it does appear theres skri schizophrenia to our market, where oil prices are seen both ways. What happens if emerging markets mature . What happens if they come back . Now youre talking. Now youre talking germany. Now youre talking japan. Two economies we need to come back. I think they can come back from oil stays low. Those economies arent like ours, where theres these giant consumer economies with suddenly a lot more money. But i do think that we are continually underestimating the power of lower oil. Its a remarkable, remarkable thing to have this oil collapse the way it did. A few moments ago on squawk, you look at a gdp number like this, the immediate complications are for the fed. Highest since april of 2011. A fiveyear auction later on today. You think the fed regrets not having changed the language more dramatically last week . I think the feds not in charge. Whats the fed going to do . The fed going to take they want to cause an inverted yield curve . The 2 is difficult. I mean, when you have other than greece, bonds over europe, selling, you know, giving you very small return, i dont know. I mean, if the fed took the i think the fed should sell all its bonds. 4 trillion in bonds, sold. Why not get out of them . I havent heard a reason why yellin isnt selling the bonds . Why hold them until maturity . Why not provide them to the world who wants them. And you think they could effectively dispose of 4 trillion in bonds . Absolutely. You do . Yeah. Thats a lot of money. Were still talking a lot of money. I want the yield curve to change. I dont think they can sell them at this price, but it would be terrific to raise the 30year. Why not . Lets cool things off a little. You once said, they know nothing, in regards to the fed, and that was on the downside, youre not saying they know nothing now on the upside. This day is such its very strong. Maybe the Affordable Care act slows down things a bit. I dont think theyre going to slow them that down. This is a very robust number. If you believe that oil bounces right back, Boone Pickens did bounce back right, youre going to say, wow, what i did was react to that momentary low. But i think that the fed has this great weapon, which is to sell its bonds, give a little inflection in the yield curve, that will help banks, and its not doing it. Listen, its an idea listen, i told ben bernanke one day he would have to buy a lot of bonds, and he was like well, lets just say, there were meetings where i spoke to people in the fed, suggesting, you know, one day he may have to buy a lot of bonds. It was like, young man. Like, young man i wish i were a young man. We all wish you were a young man, then i would be a young man too. But they listen to you. Im not sure, 4 trillion is a lot of bonds. Its a good opportunity. Sell 2 trillion. Maybe. When it comes to oil, which still seems to dictate to a certain extent where this market goes. We have Boone Pickens saying were going back up. And weve got the Saudi Oil Minister telling anybody wholl listen that 20 is a possibility, or at least, they will continue to keep production where it is, even if it goes as low as 20. Theres going to be too much demand look, it could happen. 99, we had a tremendous plummet and it came right back. Some things can be turned off very quickly, other things cant be turned off. Its very definitely to turn off continental resources. Look, still going to have 16 growth. Its very difficult. People are underestimating the gulf of mexico, which is about to produce 500,000 more barrels president next year. Where are we going to put that . Where we going to put all this nat gas . The term megablood is not an exaggeration. As for boone, he said it will go back because the production cuts youre talking about will take place in the next six months. Hell take rig count down 500. Whats interesting is that boone has emphasized demand, and if the demand he has said demand is week. I dont know whether its so selffulfilling that you get demand coming back. When i spoke to boone, he was adamant, look, demand is the issue. Well, i dont see demand coming back. So how do i read continental resources, one of the biggest shale plays out there. Harold ham, the pioneer, decreasing 50 to 34 by the end of the First Quarter 2015. And average approximately 31 operating rigs for full 2015, also cutting its capex dramatically again from what was 4. 2 to 2. 7 for 2015. He has fabulous properties and he has expensive properties. So what he will do is shift the rigs to where he has these low costs. He will not go after the high costs. I know hes trying to develop scoop in oklahoma. Maybe he has to pack down from that. Whenever you try to speak about what harolds going to do, harold will call you, and advise you that you dont know what hes going to do. So i kind of want to avoid that call. Meanwhile, theyre completing more wells. To your point about supply, theyre completing more wells while theyre taking down rig count. You can drill where theres a lot of oil and drill where you hope theres a lot of oil. And right now, a lot of the guys are switching to where theres a lot of oil. Remember, these shale guys do, a lot of them deplete in half quickly during the first year. So youve got to recognize, that boone could be right two years from now. I think boone is i think hes shotgunning it. A little early. Chesapeake today announcing a big buyback. Closed its shale asset sail to southwestern for about 5 billion. Sold to you, chesapeake sold to you can you imagine the mutual funds right now, saying 1 billion buyback. Call him on the phone. I have like 500,000 shares i want to lose right now. Sold to you chesapeake is a natural gas company. Where are we going to put natural gas . Well, actually, southwestern is is really a natural gas company. Theyre the one that parted with the 5 billion to buy the assets from chesapeake. Im on twitter this morning, i have to believe you cant believe everything you read on twitter, because you cant believe everything my thing could be by north korea, for all i know. Theres a woman who is talking to me on twitter basically saying, look, we have huge we have 51 wells on my land and canadas just walked away from. And canada was drilling. She then gives me the counties. Ill look it up. It does look like there is a lot of drilling there. And canadas a stretch player. So there are stretch players. Chesapeake,ic, would have been better to conservative the fun. Southwest, i dont know but theyre taking in five and parting with 1 billion in terms of a buyback, and that happens over time. Its not as though theyre so you cant drill them . You cant drill them like you want to . Theyre taking in 5 billion from the sale of this property, which closed to southwestern. So by the way, gas prices, now 2. 39 is the average according to aaa. Down for 88 straight days. Thats the longest decline on record, ever. And theyre talking about another 10 to 15 cents by new years. Definitely this is whats causing such good sales for the holiday. Its just this again, i come back to like the president should be on air saying, listen, weve got this gigantic tax cut. But the problem is the bill m mckiven problem. He argues hes one of the Climate Change true but i dont disagree with him on Climate Change. But i know that the fossil fuel, were in a natural gas, its supposed to be a bridge fuel. No one who makes natural gas in this country should ever say its anything but bridge fuel. We all want to be electric, we all want our cars to go we dont want it to run on fossil fuels. And thats important or our kids. I dont want fossil fuels. But in the interim, were going to burn fossil fuels. And i hope were burning less, but we still burn a lot of coil. Periodically, you read that coal is not as bad as natural gas. You know, thats just kind of a how stupid of a story is that . But we want to get off of coal, get off of oil, and get off of nat gas. No ones saying that we dont. I used to make fun of them i used to call them the black lung, no rainbow coalish. And then these natural gas guys come on and they say, listen, were from coal states, the governors want us to use coal, how dare you call us the black lung no rainbow coalition. And i said, youve wrecked all our trees, what are you . But when i meet all these ceos, they clearly dont want to be fossil fuel guys. They would like everything to run on what steve jobs wanted cars to run on. Water one of my favorite tweets of the season is, mark dow wrote, if youre bad this christmas, you get gold in your stocking, as opposed to coal, at 11. 75. You know whos going to be rich . What cso is going to be rich if thats the true . Who will be the richest cos in the world, chief selling officer . Costalo. I thought you were on a holiday hiatus. I didnt know where we were going onning that one. He just said if youre not i know, if you get coal, you get gold. He cant help himself. I know, i know. Well, i didnt hit it yesterday. Come on carl gave me a little what happened to the spirit of giving, man. Look, i said he was the chief selling officer. Im not trying to get him removed from being the chief selling officer. When we come back, a setback for Keurig Green Mountain. The company hit with its first major recall. Well till you in, take another look at the futures here. Were waiting to see if dow 18,000 aps once again and well get to walgreens earnings as well, when we come back from the nyse. Theres confidence. Then theres trusting your vehicle maintenance to ford service confidence. Our expertise, technology, and high quality parts means your peace of mind. Its no wonder last year we sold over three million tires. And during the big tire event, get up to 140 in mailin rebates on four select tires. 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The results coming less that be a week after walgreens shareholders vote on the companys plan to buy what it doesnt already own of alliance boots. That expected on the 29th of this month, that vote. And of course, were also dealing with the departure of greg lawson, which will take place in the nottodistant future. One of the largest single individual shareholders of this combination, being that he was a boots guy, will be taking over as interim ceo. A lot of change at walgreens. Good quarter. When i read this, i talked to greg last week, and i had green on the show numerous times. It did seem curious that gregs out. I mean, this is a fantastic quarter. The baskets up 4 . To me, this is when you give greg lawson a raise. I dont know, there are activists involved. Activists like to go after the strong companies. But greg lawson did an amazing job. Anyone goes to our cvs i mean, to our walgreens, knows the they compete directly with cvs in a very highlevel fashion. And im just surprised that hes out. But this is a Big International deal and he completed it. He said he wanted to turn the company into a health company, he wanted to make it so the stores were better, he wanted to become international, and hes completed all the things he wanted to do. Thats what he told me. Well, passina is a very strongminded gentleman. Hes in his early 70s, but he is viewed as very aggressive. It will be, obviously, important to see who the company chooses to be his successor for the longer term at walgreens. But dont you find it amazing, heres a guy that did a fabulous job, lawson i would like more insight. I should have had it by now. Hard to get ahold of people this time of year to a certain extent to understand exactly what took place in that board room. I think boards are looking more carefully at this thing. I dont know what role passina played and lawson, perhaps, somewhat abrupt departure. I think the cfo also had an abrupt departure. The cfo had some issues, without a doubt. But this company has righted itself, certainly. I have a lot of ceos who deserve to see the door more than greg lawson. How many in five seven comps do you get in retail . Remarkable numbers. There are a lot of numbers that are not nearly as good. But take a look at the changes at walmart and target, those seem to be merited. Target in particular. There was kind of an issue with target and the previous ceo versus Brian Cornell whos really trying to turn it around. You know the bestperforming retail stock since black friday . Staples, kroger. Worst, amazon, gamestop, priceline, tiffanys, macys. Amazon down 11 since black friday. Krogers been a horse that no one really talks about. Staples is special because of the whats kroger other than a remarkable store . I mean, i guess that ceo will be out any minute, right . Maybe activists take over kroger and want it to be 110. Krogers amazing. When you meet with the natural and organic food people, they say, listen, kroger saw it coming. When you meet with the people who do private label, they say, kroger saw it coming. Krogers the least Promotional Company i know. You never hear about the guys who run kroger. All you see is the stock if you look at the chart of kroger, it is one of the great slopes up. Its a remarkable. I know, walmarts going to eat their lunch, walmarts going to crush them. Not so much. I think that stock the problem is, krogers in that great area, that area between like new york and san francisco. I mean, i know, david, you probably havent visited lately, but theres a big part of the country that krogers in. Kroger, the 11th performi 1t bestperforming name this year, right behind monster beverage. Well count down to cramers mad dash ahead of the opening bell. Take one more look at the free market. Not only has the dow and s p recovered their losses for december, but only with ebola, russia, oil, q4 is now the strongest quarter of the year. Were back in a minute. All right. Weve got about five minutes, 5 1 2 to the opening bell on this tuesday. Want to talk a little gilead from yesterday. A really big decline and today Deutsche Bank lowers its gilead price from 1. 42 to 1. 45. The stock is up gigantically and everyone kind of felt, theres no way there could be a price war in this thing. A price war is going to mean that margins are lower. It means that we see beak. When the multiple kept shrinking, that was our sign that maybe something was wrong with gilead. I remain on the sidelines of gilead. I think the stock can come in and youll get a better price. We still have yet to deal with an express grips coming on tv and saying, listen, were back in charge. The Drug Companies dont have it, were in charge. Obviously big pharmacy benefit manager. This is a change is it a watershed moment . Do we see express scripps do this with other companies, with other big Drug Companies key drugs . I think addv, do they come and say, we want to try to replace that or do a deal there because the price is too high . This is a fabulous thing for the united healths of the world. Its a fabulous thing. It is a way to be able to remember, we thought that the u. S. Government would start causing competition to the veterans ministry. Under the prescription drug, they were unable to cause complication. Suddenly, express scripps is in there and im saying, lets wait on gilead. I think youll get a lower price and then you can take action. Its just beginning to dawn on people that we could be in a new world. I was shocked that express scripps made that deal. But i think addvs fine, but this is gilead, david. Gilead. Well be watching gilead look with a lot of other stocks. The opening bell coming up right after this. 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Tdd 18003452550 or visit schwab. Com trading. Tdd 18003452550 schwab trading services. Tdd 18003452550 your goto for trading knowhow. Tdd 18003452550 youre watching cnbc squawk on the street, live from the Financial Capital of the world. The opening bell the just about 45 seconds. If youre just joining us this morning, a barn burner of a number on final Third Quarter gdp. 5 . Thats well above the estimate of 4. 3, up from the prior quarters 3. 9. First 4 plus backtoback gdp quarters since the end of 2010. Im sorry, 2003. And with 18k in sight, jim. This is what was supposed to happen two years ago. You were supposed to bounce like this. Some people say it was because oil was high, other people say it was because of things that happened in washington. We have no sequester this year. Weve got some gasoline. Maybe this is just maybe its what to do. Theres the s p at the top of your screen. And down here at the big board, ringing the bell, pure funds, an ise cybersecurity etf over at the nasdaq submitry surgical. A good moment to point out that the s p has not fallen four days in a row, all year long, and the last time that happened never. It has never happened. Look, its a great market. I think whats really fabulous, again, is that you pick up the paper and the markets not mentioned. Not mentioned. Yesterday, the paper, the lead stories about the market were about the problems with techs. It is a remarkable market without champions. Because everyones been so burned, everyones afraid to say what a great market, because the moment you say its a great market and the market goes down, you will be ridiculed everywhere. It just doesnt make sense to say its terrific. This is not like saying, you know what, i really think the patriots are terrific. Its about saying this markets great and having it decline and watching on youtube, you forever saying its terrific. Its just easy to say its good. Now, you have been cautious. Everybody was cautious around ebola, something we didnt understand. You didnt like oil going to 60. Look, i dont want to look, its a really good market, but i also know that i dont want russia to collapse. I dont want want the high yield market to collapse, but were being marked up to the end of the year, and i want to see what januarys going to look like. But its really look, gasoline is lower than i thought it would go. Take a look at your screen. The dow now officially topping 18,000 intraday. Its taken about six months to get to 18 from 17. Interestingly, the dow first crossed 180 back in 1927. 1,800 in 1986. And now, of course, 18,000. Theres a lot thats good. And you know, you go over the charts. A lot of groups in the industrial starting to do better. The defense stocks are doing great. The Health Stocks are doing great, insurance. Typically when oil goes down like this, the utilities have been a leader. Tech stocks are starting to come back, particularly old tech. But theres a lot of paying more for the same earnings. A lot of multiple expansion, which is not necessarily terrific, but, look, i say enjoy it while it lasts, but it is getting a little parabolic out there. Stocks that have added the most to it, visa, goldman, and 3m, followed by home depot. 3m is incredible. Home depot is amazing. Home depot is a play on discretionary spending. 3m is the brilliance of developing a lot of new products. Visas charlie scharf, a hardcharging guy. I dont want to get in front of charlie. Charlie is a remarkable executive. There are some fantastic executives. You know, now, of course, home depots transitioning, but these are some great executives that have done a fantastic job. These are positive point impacts and negative point impacts, since 17,000 in july. Negative points, caterpillar, chevron, and ibm. Ibm and caterpillar run by really nice people. There you go. And youll leave it at that. Thats the new cramer for the Holiday Season there. Look, im no grinch. Im know potter. I think an executive is doing ive got to turn a new page. Ive got to get less angry as i get older. Ive got to be more loving. I feel the love. Yeah, feel the love. Keurig Green Mountain is not feeling it, down 3 . This is their first major recall. 7. 2 million of the socalled mini plus machines being recalled for what theyre calling a burn risk. Gmcr will have some trouble getting out of the gate, even on a good day like this. What a great opportunity for cocacola to step up and buy them and also step up and buy monster. This would be a great opportunity to get growth, if keurigs really done. Anyone whos burned, its terrible. When i was using my keurig this morning, i said, i just love this device. I used to throw away a lot of coffee. Mine does not spew hot water. My soda stream spewed cold water and spewed ginger ale all over the place and everything was really sticky. But mine does not do this, obviously, its a recall and recalls are bad, but i think cocacola wants to buy keurig. Think theyre paying too much if they were to do so . Knob wing they need the growth and keurigs a great company. Theyve come up with a device thats a better mousetrap. I think its theyre going to do cold keurigs. Thats really terrific. I remember when i said i liked keurig and David Einhorn made vicious fun of me at a David Einhorns a nice guy. He is . David, the spirit, you havent caught it yet. Just saying. A nice man. Ridiculed me, furiously, nice. New century, thats a good one. I am looking at, to our conversation in the mad dash at cellgene, down over 2 . Gilead actually not being able to host a gain. It is down. Amgen down. Celgenes got a drug thats really great. The fact is, look, addv is a drug that cures you. This is not a maintenance drug, it is a cure. So does gilead. One has a different regimen that the other. Express scripps has decided that adv is as good and youll get stuck with advs drug and its going to save the system money. It will cost you a lot money. Im sure if youre an investor and saw yesterdays news, youre going to be focused on trying to make sure you understand where that opportunity may lie yet again for the pharmacy benefit. And you want to pay a lower multiple for that stock. Now, i like isis pharma very much. Isis has nothing against it right now. Why should i pay less for isis . I just think its case by case. But it just so happened that everyone knew that there were a series of Companies Working on cures. Abbvie, a lot of people felt like, listen, you have to take it twice a day, its just not as good. I dont know a soul who felt that express scripps was going to cut a deal with abbvie right after they got approval. This was a onetwo punch, instant it shocked people. Do you think broadly, jim, broad market stuff, january will be a month of pain, a month of tears . I kind of do. I think that youll have a lot of companies that youll get tired to of seeing that the currencys not that good. Youll get tired of paying the same amount, paying more for the same amount you say the currencys not so good. Are you talking about the impact of a higher dollar on many multinationals. Against that is, retails really on fire. Im watching retailers that ive really kind of given up on. Like a dillard. Im watching ross stores doing really great. But lowes corp. If gasoline stays down, youll love the retail. Interesting, because theres been some analysis lately that retail at yearend has typically not been such a good trade. You think gas prices change . I just think they have. Theres just more spending money. We are a nation of spenders. Thats why our consumer economy is 70 . You have to be a little more bullish about the rth, about target, about walmart, suimply because a major tax has been crushed. The tax of oil. I think oil, we forget. How did oil not come down . We had all of this decline in europe and in china and in latin america. And oil stayed up there. Were seeing the real price for oil. And that is great for walmart. Look, has walmart changed that much . But you have more money when you go to walmart. Do you think walmarts changed, under mcmillen . It hasnt been that long. I think it takes longer to truly transform a company. Again, i think these things take a long time. Leadership can be applied right away, but the actual changes that come from that take time. But when you have more money in a Holiday Season, i think you spend it. I dont think people save, i think they spend. Especially when saving is such a bummer. In this country, thats basically how a lot of people feel. It is such a bummer. Because you dont get anything. You get nothing. You know, im getting i dont even know what im getting on my cash balance. I know i check it every day and im not being hacked. And every day im not being hacked. You mentioned that, this times piece today doing some forensics on the jpmorgan hack does not make them look very good. No twofactor authentication . On this one particular part of the network or this server they havent gotten to. I feel like every day i have the money in the account is a good thing. Just a good thing. Well, its a day we havent mentioned the sony hack, so thats got to be a good thing. Were going to get to that. Any new oneones . How about the fact that George Clooney is coming out the hero . How about that sonys unchanged since halloween because of the yen . Do you think we should be jealous of George Clooney. He has the number one selling tequila you mention this every third day. Hes trying to get him to come to san miguel to bring tequila. That would be the greatest day if he came. Im sure its going to happen. Were hanging on to 18,000 by a thread, first intraday high for the dow since december 5th. Lets get to bob on the floor. Modestly on the plus side. I think the problem is, weve got an issue with q4 economic numbers. Q3, fantastic. But the q4 numbers arent looking so great. Those durable goods numbers this morning were a bit of a disappointment for november. We may see estimates coming down for the fourth quarter. But take a look at is sectors, were up. Thats because oils a little bit, and energy is helping to lead the way, financials, industrials, consumer staples, all the right names are leading. But we did get some news out there, chesapeake, a 1 billion stock buyback. They just finished one of their 5 billion asset sale, i should say. Continental, i think, is the big story. You know, continental is a real wakeup call to everyone who says, oh, capex expenditures take a long time to go through. Huh . Look at this cut they have in the Capital Expenditures. This is a staggering number, 2. 7 billion. Previously, we were around 1. 6 billion. Thats a Capital Expenditure cut. Thats an enormous number. And the recount, the First Quarter 2015 at the end, prior numbers were for 50 rigs out there. Now theyre talking about 34. Everyone who said, this is going to take a while, well, the bottom line is, the supply side is going to be very quickly adjusting to the lower price of oil. All this is very good news, Companies Like continental are going to be wellpositioned when oil recovers, and im sure it will eventually recover to some extent. And theyre going to be better positioned for that. Meantime, i keep getting questions, a good time to buy or not . Part of the problems is looking at p e ratios is a tough way. Put up some of these names, these shale plays. Their numbers are pretty low. Chesapeakes at 13 times. Denburry at 13, i think its more important to look at Capital Expenditures and oil is a better way, whether or not you should buy these stocks, but certainly theyre starting to attract them on a 2015 basis. Meantime, david tepper was on our air this morning, on squawk box, talking about valuations in 2015. And he went back to 1999 and 98, the year rhymes with 1998, russia goes bad, easing coming from europe, setting up 1999, i mean 2015, he is saying there. And of course, hes talking about the fact that russian defaulted in 1998 on its debt. Meantime, he says, remember, 1999, s p went to a 30 p e. Next year p e is like 16. Its not going to get that high, but be aware that the conditions are high for overvaluation. And finally, you were talking about the sony hack. We should note, opening the ringing bell here, the only etf that actually has cyberhacking, thats hack, only a month old, and that etf has gone through the roof, just in the last few days on that discussions on sony. Guys, back to you. Thank you very much, bob. Meantime, were watching fixed income as well. Lets get to the bond pits. Rick santelli at the cme. Hi, rick. Hi, carl. Obviously, it was the onetwo punch. The first punch was a very strong five handle on gdp, but the other punch was a very weak diagnosis of what were looking at in the first quartourth quar. First quarter, minus 2. 1. Second quarter, 4. 6. Third quarter, we just saw the final revision, 5 . Everybody handicapping the fourth quarter, around 2. 5 . What does that average out to . Exactly 2. 5 . So lets put that out there. Lets look at the last time we saw a twoyear note hovering at 73 basis points, april of 2011. But be careful. Yes, thats accurate, but thats the new guy. The old guy is gone. Thats what we auctioned into a new guy yesterday, the old guys becomes off. So you can see why things on the comps are going to be a little peculiar. The same will be true tomorrow when we have the 5s today. If we look at the fiveyear, speaking of which, we have that auction. Last time we were up here was just recently. So if you see the chart from october of this year, it gives you a good sense of how the curves are kind of flattening some more, especially with the twoyear and fiveyear are doing. If you look at a tenyear intraday, you can see it definitely responded to the strongerthanexpected gdp, unlike our counterpart, boons went from 58 to 60 basis points. So you know, disengaging to some extent. Lets open it up to december on our tenyear to give you kind of a glimpse of where weve been. We do see that we came close to 2 on an intraday basis closed higher. We continue to monitor the mid to teens. If we look at what is going on, i referenced the boone yields. Knowing that the boone yields didnt move up as high as ours, the spread widened, close to 160 basis points. Which is really getting to a very historic area. We go all the way back to summer of 99, you see it wider. But if we start to get much higher, well be setting Historic Records on that spread. Why do i go into it . Thats going to draw our tenyear down or theirs up. We want to monitor that. Foreign exchange, after today, the dollar was just on fire, or you can say that fire currencies were being doused. Either way, works out the same. The last time the euro was at these levels was august of 2012. Dollar yen now flirting a couple of sessions in a row, back over that 120 mark. So were comping back to june, the summer to have 2007. Carl, back to you. Rick, thank you very much. R Rick Santelli. When we come back, the dow surpassing 18,000 for the first time. The s p with a new alltime high. Squawk on the street will be right back. Act i. Scene 3. Open port twentytwoohoneseven on the firewall for customer db access. Install version twopointthree of db connector and ensure verbose flag is set in case of problems. clapping sound isnt the cloud supposed to make business easier . Get the one that can connect to the systems that you already have. Today theres a new way to work. And its made with ibm. But what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Take a look at the dow, as we are above 18,000 for the first time in the dows history. Against some data we gave you a while back, 1927, it crosses 180. 1986, it crosses 1,800. And now this. That motion components in the green led by microsoft and counterinto counterintootively, cart pillar. Nike coming right back after what i felt was a good quarter and people were too negative about it. And proctor doesnt seem to put anymore, every day they seem to sell another division that was underperforming. They are really dismantling the negatives. Theyre shrinking to grow. How profound. And theres just a lot of good feeling, except for in the drug group, where i think people are trying to reassess whether the express scripps is just going to determine the prices. Best i would not have guessed this. Best dow component this year . Intel. Intel . i would not have 45 . Brian kresanich has done a lot of work. Amd has been kind of left behind. Remember, hewlettpackards been terrific. Brian is a fabulous guy. Hes an engineer by trade. He is nonpromotional. Its a return to the engineers. When intel was run by the brightest people in the country. And worst . Theres like three names you could guess for worst dow component. Oil . I would have thought chevron or exxon, its ibm. Well, ibm is kind of the opposite of brian. Yeah. But remember, im in the dont get me going. They would take issue with that, as you well know. I said that theyre nice. Who would take issue with being nice . Nobody, but they would take with issue that theyre not a forefront get cramer on the phone. Research and development, they spent an awful lot of it at ibm. People there are just like its just such a nice place got a lot of people. We will get stock trading with jim in a moment, well get some breaking news on consumer senting. 18,014, hanging in. Squawk on the stree squawk on the street will be right back. Can it tell the Flight Attendant to please not wake me this time . At cognizant, we see opportunities for every company. To meet the new digital demands of their customers. Can it process my Insurance Claim . Like, right now . Can it download a track while im sampling it . Can my keys find me . With the power of digital, analytics and automation, now every little thing can provide even greater value. Ok, so can it tell the doctor how long i have to wear this thing . The answer is yes, it can. So, the question your customers are really asking is, can your business deliver . Some say buy gold. Others say buy soybeans. I say, buy comcast business internet. Unlike internet providers that slow down when traffic picks up, you get speed you can rely on. Its a safe bet. Like a goldplated soybean. Reliably fast internet starts at 69. 95 a month. Comcast business. Built for business. Time for cramer and stop trading. I think im trying to get the prototype stock that people like right here. What is the stock that people like . Tom faulk has done a remarkable job at kimberlyclark. It yields 2. 85. Thats a safe yield. There we got the edge on the tenyear. Its a gigantic maker of huggies. Okay, whats in a diaper . Okay well, you may think a diapers cloth, but a lot of it is oilbased. What do you need when you make kleenex . You need a lot of energy. They got rid of a health care division, i like it very much, this is what people are buying. Bmo pointed that out today. And i want to say, if you want to get involved, youre paying 21 times earnings for a very consistent company, that seems expensive, but kimberlyclark is this real. It is a rally based on what Dustin Hoffman talked should have gone into in the graduate, plastics. Plastics and a yield, too. And a 2. 85 yield. Mr. Faulk terrific. A great story. Thats what people want. And i give it to you. I give you kleenex. I give you huggies. I give you scot paper. What do you give me . Consumer sentiment. Which Rick Santelli has right now. Rick . All right. Once again, we have an extreme day going on. Final december read. Remember, 93. 8 was the midmonth read. That was powerful. The final read, just as powerful, about. 93. 6. 93. 6. Why is this important . Because now as the final read, i can comp this all the way back to the best number since january of 2007. We still have richmond fed new home sales, personal income, and spending, all coming up at the top of the hour. Back to you. All right. Thanks very much, rick. Jim, what is happening tonight . We have via sat. This is a company thats terrific. You can watch netflix on a plane because of a good thing. Movies on a plane. Better than snakes on a plane. Better than snake on a plane. A lot of stocks that go up. Again, all of this stuff is kind of happy days. I dont want to say it. Be careful careful. We want to say, kind of happy days. Relative to the rest of the world . Yes. And remember, to all the executives ive been tough on, i know youre all nice. Well see you tonight, jim, 6 p. M. Eastern time. Well get some more breaking Economic News at top of the hour. Income and spending, some new home sales. With the dow at 18,019. Well be right back. Nose. But for me, it starts with the opening bell. And the rush i get, lasts way more than an hour. announcer at scottrade, we share your passion for trading. Thats why weve built powerful technology to alert you to your next opportunity. Because at scottrade, our passion is to power yours. Good morning. Welcome back to squasquawk on stree street. Im carl quintanilla. Take a look at the markets, 18,021, the first intraday high for the dow since december 5th 37 of course, this puts us above 18k officially. On the back of that, a who were of a q3, final gdp number of 5 . The first backtoback fourplus numbers since the second half of 2003. Lets get to our road map. The dow, topping 18,000 at the open, propelling the dow, visa, goldman sachs, 3m, but what could derail the rally . And what on earth is happening with nat gas . The 9 drop that we got, the worst in ten months and the lowest close in nearly two years. Just two days left for all you lastminute shoppers, so how is mobile disrupting this Holiday Season . Well speak to the cofounder of comscore exclusively this hour. More breaking economic data. Well get to Rick Santelli for that. Rick . Yes, lets start out with the freshest data, december, richmond fed, comes out at 7, as expected. Now lets go to november, new home sales, were expecting 465. 438,000, last month, revised down from 458 to 445. Which should make it down a little less than 2 . How does 438 figure . Ill give you some statistics. You know, 459 is basically the High Water Mark for june of 2013. And the last time we were over 1 million was november of 06. Now lets look at november income and spending. Very close to expectations. Income up 4 10, spending up 6 10. Both of those originally released at up 2 10 last month for october. They both now stand at up 3 10. So pretty good. We like to see the spending, but see it fueled by income. Spending did outpace it a bit. If we look at the deflatteror, n 2 10. Im at year over year in october. Interest rates still cant get to 220, even though, of course, the dow is passing out 18,000 hats. Back to you. Thank you very much, rick. So there are two main headlines coming out this morning, one, the dow has crossed 18,000. The second big headline, in the Third Quarter, this economy grew at its fastest race in more than ten years. A gain of 5 . An upward revision to 5 at an annualized rate. Joining us now for analysis, chad morganlander, along with Deutsche Banks chief u. S. Economist and cnbc contributor, joe lavorgna. He joins us on the news line. Joe, we knew there was going to be a big bulge in medical spending in the Third Quarter. Is that what is mainly driving this revision to gdp . Yes, simon, thats right. It was mostly medical services. But as you know, the overall economy, Capital Expenditures, consumption of durable goods is doing very well. But, yes, the latest figures were Stronger Health care expenditures. And thats been a reason why growth through much of this cycle has been weak. Weve not had a whole lot of growth in Consumer Services and fortunately now, simon, that appears to be changing and this is unambiguously good for 2015. Chad, the consensus in the market is that health care and technology, which is obviously a proxy for this strong business spending, are places to be next year. Presumably, you reinforce that sentiment here . Without a doubt. We find value both within the Health Care Sector as well as within technology. I would suggest, though, within the technology sector, to stay with the oldworld technology names, the oracles of the world, ciscos of the world, and within the health care side, go with abbott or etna. Stay with the bluest of the blue chips. Joe lavorgna, not to put a dent in your optimism and be a Debbie Downer this morning, but unambiguously good even with a negative goods figure . When the consensus was calling for 3 and thats a much timelier number . Well, sarah, actually, its not. It is timelier, but its extraordinarily volatile. And the things that i look that have been telling me for the past year and a half, with the growing of about 4 , which we have, are saying, look, this economy has got tremendous legs, weve got improved household balance sheets, a healthy corporate sector, low rates. Its all really shaping up for a boom. By next quarter, well be over 4 year over year growth, very strong. Hey, joe, how much do you worry about i mean, its great its obviously fantastic for anyone who lives in this country. But the asymmetry between our growth and the rest of the world, how much do you worry about it . How much does it provide the potential for misallocation of capital over time . Well, the misallocation of capital call, that really is a fed question. So that certainly is a problem with rates where they are. If the rest of the world were doing well, wed be at 5 growth, on a trend basis, not moving up to 4. Youve got to remember, the u. S. Is a closed economy. Only 13 of our gdp is exports. And the remaining 87 , or most of it, has gotten a huge tax cut, that weve yet to feel the full effects from the lower energy costs. This is just really, really good news. I wish this economy got more respect, because postrevision, the numbers look great. Joe, you point out that next year, there are no Monetary Policy hawks on the fed at all. Lets leave that to one side at the moment. David tepper, the richest man in jersey today, is gaining a lot of attention for suggesting that basically, because of where we are with the russian crisis, i assume, because of where he thinks we are, with the Federal Reserve, that actually were setting ourselves up for 1999. Now, people should remember in 1999 that the stock market surged 19 , arguably because the fed had moved in the wrong direction three times the year before. Joe, what do you make of what teppers saying . There are some serious parallels to 98. And i agree with him on that. And if there will be hiking next year, just as they did in 99. But remember, back in 99, the s p was about 40. And thats certainly not the case now. And when the fed raised rates, they took rates to 6. 5 . Real rates were over 400 basis points. If the fed takes rates to 1 next year, real rates will still be about negative 100 basis points. So there are some similarities, but the economy and markets, they have a long way to run. This cycle is nowhere near being over yet. I think the point we mentioned here, after 1999 with a 19 gain, the stock market fell for three years. Thats when hes talking about. Hes not calling a top, but warning about overvaluation. And that instance, which took us down 25 . Look, for the whole year, we have been bullish and overweight equities. We decided to go neutral within our portfolios at this point. Forwardlooking multiples are roughly about 16. 5 times. We see gdp growth in 2015, roughly about 2. 5 . And earnings growth, perhaps around 7 . So when you come out, come out with probably a 6 , 5 total return for the year. Here in the united states. By the way, lets just face it, okay. This was a global economy, but its also a Global Financial market. And the economy overseas is doing lousy. Decelerating growth within china, as well as the emerging marks, which cant get out of their own way. And lets say, hey, look, the bonds are trading there, the sovereign bonds are telling you its deflation, not disinflation or modest inflation. So were fighting this and this will be the situation for 2015. And this all comes back to what does the Federal Reserve do in 2015 . Does this ensure that there will be an Interest Rate increase . 5 growth . 5. 8 unemployment rate. They signal they will go, go by a quarter of a percent, perhaps a half a percent. Feedback loop into the overall Financial System will be virtually nothing here in the united states. But you will see dollar strength. Already. So as a u. S. Investor, overweight u. S. Equities, stay away from overseas, because you will underperform. Chad morgan, thank you for joining us. Joe, nice to hear you as well, joe lavorgna joining us from Deutsche Bank. And the dollar is making a fresh eightyear high. People are calling 2014 the mobile holiday. But just how much is that impacting brick and Mortar Retail sales . The cofounder of com scores is with us next. One more check on the break. The dow up 88 points, past 18,000. The s p urging on top of 5 economic growth. Heres a question for you if every u. S. Household with a computer used sleep mode when they werent using it, how much could we save on electricity each year . Up to 1 billion . 3 billion . 4. 5 billion . The answer is. Up to 4. 5 billion. Using your computers builtin energysaving features can generate real household savings. Take the energy quiz round 2. Energy lives here. Female announcer during sleep trains hugeom foyear end Clearance Sale,s get beautyrest, posturepedic, even tempurpedic mattress sets at low clearance prices. Save even more on floor samples, demonstrators, and closeout inventory. Plus, free sameday delivery, setup, and removal of your old set. Why wait for the new models . Sleep trains year end Clearance Sale is on now . Guaranteed your ticket to a better nights sleep welcome back to squawk on the street. Check out the hertz. It announced prices for all hirts, dollar, and thrifty car rentals for pickup starting january 1st. This due to falling vehicle values. Its been a tough year for hertz, which is down about 20 . Remember, sarah, the biggest shareholder in hertz right now, carl icahn. Back over to you guys. Weve been following that drama all year. Comscore labeling this Holiday Season the year that mobile forever changed retail. With one in every seven dollars spent by consumers done online. Joining us now, dan fullgoni. So those who shop on mobile phones spending as much money as they would online or in stores . Maybe on a perperson basis is a little less than if they were using a desktop. But there are so many of these mobile devices now, both phones and tablets, that somewhere around, approaching 20 of all online spending is being done off these mobile devices. And i guess the fact that mobile is growing so strongly, is that coming from online users or is it coming from shoppers and therefore put more pressure on retail traffic . Its a good question. Its certainly coming from online users. But i think its whats happening which has a little downside, if the phone is used while the consumer is in the store, to check prices and then the consumer ends up buying online, i think the instore retailers are matching prices more frequently than not. And so while they might keep the sale, its possible theyre keeping it at a reduced margin. I think thats the unknown issue at the moment, as we wait for the final number. I guess the other question is, who wins . Which names are doing better on the growth in mobile and online versus so thats another good question. So the pure online retailers, like amazon and ebay, have figured out mobile early on. And apps are the key, because more than half of all the time online now is spent using an app. So if you dont have an app on the phone, and if its not being used, you could be in trouble. And whats interesting, this season, is that both walmart and target have done a pretty spectacular job developing apps that are really being used extensively. So they, i think, have figured it out, and are really copying the pure play guys. Im much more interested in your stock and your business, and what youre doing. Youre partnering with google, of course, so they can prove to their clients the sort of traction that theyve got. And the pitch battle is on for you against nielson, for crossplatform. The stock is up 64 so far this year. Youve done phenomenally well, 1. 6 billion now is the market cap. What happens next to your business . Theres some talk that you might do a deal with renttrack, which is in settop boxes. Can you talk to us about that relationship, whether youre taken over, whether theyre taken over, how you better position yourself against nielson . I really cant talk about that, that particular relationship, especially given the time were in right now, in a quiet period. So there is some sort of discussion with them . Im not saying that, im not saying that either. But we are certainly looking at the opportunities that exist to measure multiplatform behavior. That, to us, is the key for the future. So its no longer just measuring television alone. Its measuring television in conjunction with the desktop, in conjunction with the phone and the tablet. And thats what we have built. But youve got the pc and the mobile, as we just saw . The pc and the mobile and now weve added television with a combination of settop box data, which is plentiful. As well as we get data for individual on tv. The important thing to note here is i think your market cap of 1. 6 billion is very small relative to the amount of money that will shift when we get solid data, for advertisers, on those platforms. So my question is, who bulks up in the industry, and how do they do it . So, thats a good point, in that the total market for digital measurement is certainly smaller than the larger market that encompasses television, right . So if you look at ad spending online, its equivalent today of about 60 of all the money that goes into television. So televisions a bigger market. But i think as things evolve here. And et will me stress that i think that multiplatform measurement is the key, because what were finding is that if you take an ad plan and deliver it on one plafrl, versus taking exactly that same number of add impressions and spreading them, you get a bigger bang for the buck. My question to you, which ill return to one more time, briefly, is there m a here . Can you do it organically, or do you need to bulk up and take one another over . And how does that play out . I think theres a lot to be done organically, but i think in any market where its dynamic and the technology is changing, there are also m a opportunities. But from our perspective, weve really developed the technology. Just wrap it up for a minute, with the economy. We saw 3. 2 growth in Consumer Spending, in todays gdp number. Do you see that in this Holiday Shopping season . Absolutely, absolutely. The season started off with a little scare. Youll remember the nrf reported there was an 11 drop over thanksgiving, which turned out not to be the case. I think what was happening is that at that point in time, there was an acceleration of spending to online, that wasnt clearly understood. Weve seen growth rates since thanksgiving pick up. Were now seeing about a 15 growth rate off of desktops alone. And when you add on mobile, its going to push the growth rate for the season up to around 17 . So its very strong. And i think that the numbers that you referred to for offline spending, you put the two together, the consumer looks in pretty good shape at the moment. Well leave it there, thanks for the insight. Cofounder of comscore. When we come back, nat gas continuing its losses. You can thank some of these mild temperatures, pushing it sharply lower. Well go to the energy pits in just a moment. Dows up 61. This is a burrito made with chocolate, soybeans, and apricots. What kind of chef comes up with this . A chef working with ibm watson, on the cloud. Ingredients are just data. Watson turns big data into new ideas. And not just for food. Watson is working with doctors and bankers to help transform their industries. Today theres a new way to work. And its made with ibm. 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This week were looking ahead to the new year, giving investors a playbook on how to cash in 2015. Jackie laying out her predictions for the energy sector, but first lets see how she fared with her picks for this year. She predicted that moving crude by rail would be a big deal this year, and she was right, Oil Shipments by rail rising for the first ten months of the year. She also predicted easing sanctions on iran would not have a substantial impact on production and prices. Were going to give her half credit on that. Irans overall exports are still pretty limited, but japan and india have seen big increases in iranian oil in recent months. And she predicted that exxonmobil shares is would continue to rise, uhuh. Exxon down 7 on the year, one of the worstperforming stocks on the dow. What is jackie looking for in 2015 . Heres a look. Energy prices began a wild ride in 2014, increased north american supply, coupled with waning Global Demand pushed prices of domestic and international crude significantly under 100 a barrel. Here are three predictions in energy for 2015. First, oil prices will bottom around 50. With the u. S. Producing more than 9 Million Barrels of crude her day and opec putting out 30 million, prices will continue to decline in 2015 and producers will sacrifice margins to hold on to market share. Low oil prices will take some time to trickle into the economy, but they will give markets a boost. And that will spur demand, which will then help prices rebound. Second, opec will lose influence. Within the first half of the year, opec will be forced to cut production to help stabilize the market. Key member saudi arabia has more flexible on pricing than other members, like venezuela and ecuador, but as more supply comes out of the u. S. , opecs influence on the Global Market will diminish. Third, stocks said u. S. Producers will see some volatility. In an environment where prices move lower, produces like exxon, chevron, and hess will continue to feel pain. Theyll manage costs in the face of declining prices, but those efforts wont be recognized by investors. After oil bottoms and begins to rebound, Energy Stocks will be loved again. And Jackie Deangelis joins us to take a closer look at her predictions for the new year. Jackie, oil has not hit 50 yet. Are you hearing that it actually is headed that way . Hi, carl. Thats right, were bouncing around 55 with wti, bouncing around 60 on brent right now. Its a temporary stabilization of the market. But traders are saying we could potentially go lower in the new year. This is a first half, secondhalf story. We could see that 50 in the first half. And i said around 50. We could be in the 40s as well. But then we think the supply demand equation will balance off and those prices are going to come back up in the second half of the year. Plus, youve got what boone said on stock this morning, pretty interesting stuff. Jackie, great, thank you so much. For more on the energy space, lets bring in peter amoundio, joins us from the i max. Did many people see that move coming yesterday . What was up with that . In natural gas, its all about supply and weather right now. And what happened is, with supply and weather, it ended up making the market look technically very weak, like crude did in the very beginning, in its decent to the downside. You have a lot of room on weekly and monthly charts to the downside. Ed and i would expect, below these levels, you should test at least 2. 50. Are there players who have taken it on the chin in crude and now taking it on the chin in nat gas. Thats not the way you want to end your year . Maybe long etfs, thats for sure. But i think right now that you definitely have to have Bear Sentiment in both. It looks like in natural gas, this is just the beginning. And as far as crude goes, we finally had a stabilization, and i think this week, on the heels of the holiday, that it may not make it stand this week. But youre always subject to a highvolume selloff in crude, at any time, to brings us down to test around 50. 2. 50 thats quite a prediction, peter. Pretty steep fall, even from these levels. Whats going to drive it . Is it the warmer weather and the oversupply . And if it is, how oversupplied are we . What does that glut look like . Well, in crude oil no, no, no, were talking about nat gas. Because you mentioned thee 2. 50 which is a pretty sharp drop in nat gas, marcellus gas is 2. 50. Theres a glut of nat gas right now, so without weather, its going to head to the downside. But you us a have to keep in mind, this is the natural gas market. Youre going to have a lot of shorts in this market because of how it looks technically, and if at any time you do get cold, you will have a quick move to the upside. Boone pickens was on squawk box this morning, talking about house rigs would be basically shut down with a ninemonth delay. Can you give us some idea of historically where 2. 50 is . Is that a drastically ridiculously low price that would actually gouge the industry quite severely on supply, once people have had the chance to make the decisions and they feed through . I think what really needs to be looked at is production budgets. There might be a lot of fluff in them. They may turn around and start cutting whatever theyre paying to different people for services, that have to do with their production. And you have to look at their budgets, to see if theyre really true, and see if theres any fluff in them. Peter, how much is the strong dollar having an impact on all of the commodities prices right now . Its not just gnat gas and crude oil. Were seeing it in gold and silver and a lot of the commodities. Ive said it many times before, if you go back to 2008 and 2009, in 2008, you had a very weak dollar. During the housing crisis. In 2009, the dollar picked its head up. Crude oil fell all the way back to 33. And thats without north american shale and bigger demand abroad. I assume, when it comes to boone calling opec no longer a cartel, but a trade association, you agree . Absolutely. Throughout the years, with all these free and open markets that are traded, that it doesnt mean as much, and especially now with the role the u. S. Is playing in the north american shale production, they definitely dont have as much say as they used to. Yeah. Unbelievable. Just six months, what a turn of events. Peter, thanks for your time. Peter amandio. For the First Time Ever this morning, the dow broke through 18,000 and then surged substantially above it. Cometh the hour, cometh the man. Art cashin next on cnbc. [ male announcer ] your love for trading never stops. So open an account with schwab. And when a market move affects, say, a Cloud Computing stock youre holding, we can help you decide what to do. With tools that help you see how market activity is affecting your positions. So when the time comes to decide whether to scale in or scale out. You can make your move, wherever you are. And start working on your next big idea. Some say buy gold. Others say buy soybeans. I say, buy comcast business internet. Unlike internet providers that slow down when traffic picks up, you get speed you can rely on. Its a safe bet. Like a goldplated soybean. Reliably fast internet starts at 69. 95 a month. Comcast business. Built for business. Almost an hour into trading. Good morning. The dow is above 18,000. Here are the stories were watching at 7 30 on the west coast, 10 30 on wall street. A blowout figure on gdp, coming through to an annualized rate of 5 for the Third Quarter. But the university of michigans Consumer Sentiment index coming in at 93. 6 for december. Thats slightly below midmonth levels. But on a final basis, its the best reading in almost eight years. Sales of new homes fell for a second consecutive month, down 1. 6 in november, according to the commerce department. And Chesapeake Energy the the biggest gain on the s p 500, up 7 . Closing its deal to sell shale assets, to southwestern energy, for about 5 million. While the dow charges to some new record highs, who have been the biggest drags on the dow. Don chu has that. Lets take a trip to our land of misfit stocks. It is that time of the season, and if you look at whats happening with the overall markets, there are a bunch of stocks that have missed the rally as the dow has hit record highs. You can see here, already up 72 points just off its session highs. There are a handful of these names that have now been negative for the year, despite the dows record move here to this particular level, 18,000. Lets take a look at some of the names that have been dragging. Theres a big one in aerospace and defense. When we talk about dogs of the dow, oftentimes its about dividend yields. And in this case, boeing has an almost 3 yield. Boeing one of the biggest drags, but take a look at some of the other big names. The other ones like boeing, exxonmobil down 8 yeartodate, dividend yield of 3 . Then you move on to another big one as well ear, move from exxonmobil, one of the oil stocks here, to whats happening with an ibm, whats happening with other stocks again. So as you look at whats happening with the dogs of the dow, if you do look at some of these names, it is important to note here that some of the underperformers from this past year are some of the ones that oftentimes may lead comebacks. So sarah, as we talk about whats happening overall with the dow and the underperformers, remember, the ibms of the world, the boeings, the chevrons, some of these names are the ones that oftentimes investors look towards if theyre looking for value hunts. And in this case here, dividend yields may play a big part of that picture. And energy as well. Thank you, dom. Joining us, art cashin. While we see the dow above 18,000, that is the showstopper. The nasdaq, and we like your hat, too, by the way. I finally got a chance to wear it. Last time you broke it out a little too early, you jinxed it, i think. Well, we didnt put it on, though. We wait to 18,000 to put it on. Start, we have the fast dak negative and the s p is not up a whole lot. About three points. What does that tell you . Its a little troublesome. I mean, yesterday, it was the s p kind of Holding Everything back, failing to get really much above fridays highs. So you like to see real confirmation, particularly when you get to a nice round number and a celebratory mood like 18,000. And we would like to see the s p kick in and try to get to 2,100 on its own. Is it the reaction to that 5 gdp number . That surprised everybody . That was shocking. I mean, weve been debating here at this desk, could they sustain gdp above 3 for a long period of time . And, this number was a blowaway number. And showed that the consumer was getting involved again too. And whats good about it, we saw a positive reaction on wall street, with a positive economic number. Good news is good news again. Breaking away from that sort of perverse attitude around quantitative easing, that the better the numbers, the more fear there was about higher rates and losing qe. And were seeing rates, on the short end, inch up without the market being too spooked by it. So well see, but well wait and see if yellin comes across sooner than june. And see where we go. I have have been doubtful theyd do anything at all this year, but with blowout numbers like that, i dont think they can stand by too lock. Youre an avid watcher of David Teppers comments, more of them this morning, making comparisons to a year that we liked but also didnt like. What was your take on those that setup, i guess, 99 . Well, it depends, you want to do the cup half full or cup half empty. If he talks about them being susceptible to missed pricing, what youre saying is you could have a rocket shot to start with. And then youd be vulnerable after it. But in the meantime, that rocket shot can make somebody some money. So, you know, i dont think he sounded too terribly negative. Cautionary, but not negative. Can we be really simplistic about and say, dont fight the feds, so for as long as the fed is not going to raise Interest Rates or indicating that its going to raise Interest Rates, as deutsch bank points out, no hawks on the fomc voting next year, theyve all gone. So for as long as they are bullish and dovish or as long as theyre dovish, can you assume the market will rise . It makes very bit of good sense and ive been pounding the table here about seasonals, the yearend seasonals are very, very strong. Next year ends in a 5, and as silly as it sounds, years that end in a 5, middle of the decade, have a propensity to be up. The bulls have a lot of things going on their side, including the fed. Nasdaq is the only major average not up for the month. Its in the red today, on a good day, these biotechs, art, the game has really changed here in the last couple weeks of the year. I think people are looking in a new direction. And while it is not terribly frightening, it this lack of confirmation of the move in the dow is somewhat frustrating. Well keep watching it, with the seasonals working for us, were looking forward to a merry christmas. Some wanted to nitpick at the gdp number, looking at within the consumption column, a lot of it health care. Does this feel like a clean number to you . No, as i say, it was tremendously surprising and i think well see if not second thoughts on it. You wont see revisions, but youll see second thoughts on it. Does the stronger the santa claus rally get, the more momentum it gets as we get into the year end, mean its going to be a bumpier january . Im a little concerned about january. I think well get through the first week or so pretty well, but after that, midjanuary can be a little bit of a problem. Wasnt that just an argument, though, that because the selling at the beginning of december was so heavy and the falls swore great and the mutual funds didnt buy for a while, that a lot of that will be delayed action into january, particularly as there were so many corporations due to buy back their own stock . Presumably those programs now spill over. Thats in your timing turns . I think thats valid. The part about the mutual funds, however, im not so sure of. Theyve been working more in this year than early part of next year. Finally, your annual poem is out. Are you able to can you read these two out loud . You got your glasses . Just those two. I just want to get a reading from the poet. Whos actually a very good poet. Putin scooped up crimea and some parts of ukraine, but an oil plunge and sanctions are causing him pain. In europe, a song contest was won by a nun, and the song that she sang was, girls just want to have fun. Thats why we love you. Art cashin, in his cap, and writing his poems. Well look forward to your singing tomorrow. Thank you. Here on the floor of the new york stock exchange. When we come back, facebook, another alltime high and a market cap of 227 billion, bigger than chevron. Why is it on such a roll right now and should you actually be buying in . Well talk about that, with the dow up 72. Arthur, have a good christmas. Dad, i know i havent said this often enough, but thank you. Thank you mom for protecting my future. Thank you for being my hero and my dad. Military families are uniquely thankful for many things, the legacy of usaa Auto Insurance could be one of them. If youre a current or former military member or their family, get an Auto Insurance quote and see why 92 of our members plan to stay for life. Which means its timeson for the volkswagen signthendrive event. For practically just your signature, you could drive home for the holidays in a germanengineered volkswagen. Like the sporty, advanced new jetta. And the 2015 motor trend car of the year allnew golf. If youre wishing for a new volkswagen this season. Just about all you need is a finely tuned. Pen. Get zero due at signing, zero down, zero deposit, and zero first months payment on select new volkswagen models. The dow above 18,000, down all sectors but one in positive territory. One the flashing red, with considerable falls. Health care. Dom is back at hq with more. So, simon, health care, like you said, the only sector in the entire s p 500 thats not participating in the rally today. Leading the way lower, our shares of celgene, as the biotech sells off. Also alexion, regeneration, and gilead lower as well. Gilead said express scripts picked its rival, abbvies version of an important hepatitis c drug. So a lot of story lines playing out in health care, specifically in biotech, but biotech was one of the top performers going into this particular session. So coming off a bit from its highs, carl. Dom, thank you very much. Lets get to the cme group and check in with Rick Santelli and get the santelli exchange. Hi, rick. Hi, carl. On a day where we had a robust final look at Third Quarter gdp, my guest, mark skousen, is just perfect to have on today. Welcome, mark. Thank you for coming. Glad to be with you. Merry christmas. Merry christmas. Listen, weve talked in the past, gdp, basically a measure of all final goods and services, represents, you know, measures twothirds of the notion of consumption within the u. S. Economy. But you think that we should move on to a better measurement in this regard called gross output. Explain to our listeners what you keep telling me in emails. Yeah, gross output is this brandnew statistic thats coming out every quarter, along with gdp, which is a measure of all stages of production. You know, gdp leaves out a huge chunk of the economy. First of ally all of the btob, businesstobusiness transactions, its a measure of production, the value of production in all stages. And the supply chain, in essence and thats left out of gdp. So that leads to this misnomer thats frequently repeated on cnbc, that Consumer Spending drives the economy, because its twothirds of gdp. But its less than 40 of gross output, when you pressure Economic Activity at all stages of production. So this is a new statistic. I consider it a great triumph in supplyside economics, because its a way of valuing the importance of business spending, which is almost double the size of Consumer Spending in the economy. Let me interrupt you there, okay . Now, my guess is that youve gone back and kind of looked at and tested how history would have treated the gross output. Are there any issues with regard to the economy, whether its the medicine applied or some of the uturns we made, we shouldnt have made, that if monitoring gross output would have been the more economic, fundamental friendly, we might have been for insightful. Can you give me some examples . Yeah, because, for example, in 2008, 2009, gross output actually declined 6 compared to only a 2 drop in nominal gdp. So its much more volatile. And in fact, in the last couple of since the recession has ended, gross output has been growing faster than gdp, which has made me more optimistic. In fact, it doesnt surprise me that gdp is up 5 , because in the last few quarters, gross output has been growing faster. And this is very traditional, as part of a recovery stage. So im quite optimistic about the economy. So, economists and pundits on cnbc should also be looking at gross output. Just google gross output and youll find out lots of data that i have written about this, that suggest that the economy is growing much faster and that business investing is a much bigger factor in economic growth. Well, ill tell you what, well have to leave it there, mark, but after looking at the weak durables that was the counterpunch to the very strong michigan and strong gdp, embedded in weak durables was weak investing. This is indeed good news. Ill monitor it and make sure that i do and i want you to come back over the quarters ahead to see which picture paints the most accurate portrait of the economy. Merry christmas, happy holidays, and back to the gang on squawk on the street. Thank you very much, rick. Up next on the program, the pulse of the night. The businessman who creates some of the most iconic bars and lounges in the country. Scottgerber will be live here at post nine to talk about whats working this Holiday Season, to keep those cash registers ringing in the runup to new years eve. Squawk on the street will be right back. As the dow sets up record highs, above 18,000, a little less action for the s p. There is your heat map for you. As you can see, much more on gainers than decliners. All of the major groups are in the green, led by energy and materials. Health care is bringing up the rear. As we look ahead to 2008, heres robert frank with his predictions for the luxury market. Reporter while 2014 was good to the rich, it may end up being a mere warmup, with soaring fortunes and spending of the wealthy in 2015. Rising stocks will help create a Record Number of american millionaires and billionaires. Reporter the number of american millionaires will likely top 10 million next year, and the worlds billionaire population will near the 2000 mark. But after years of new wealth coming from china, the middle east, and other emerging markets, in 2015, the u. S. Will dominate millionaire and billionaire production. Most new billionaires will come from tech, especially innovation in health and consumer apps. The feverish bidding for art, cars, wine, and other collectibles may cool with slowing demand from overseas. Real estate prices may soften with rising inventories. Luxury condos in new york, miami, and l. A. Will see the biggest gluts and the number of homes priced at 100 million or more will start to pile up. Spending on super cars, jewelry, the with christmas and new years eve days away. Drinking venues come. It says here hot toddies are the name of the game this year is that right. I love those. Especially with the weather cold and everybody wants to warm up a bit. Its nice to have that nice hot toddy. Is it like it used to be in the days of the bling. There is still a lot of champagne. Thats one of the things people drink for new years. And what if they want other stuff. I think people are partial to bourbons and te key lay tech la. There are not enough cashiers and the lines were extraordinary. How do you staff a bar on new years eve . How do you know whats enough bar staff . Whats too many. Must be quite difficult. It is but in reality new years eve we have a lot of pre sales more so than normal. So we are have a good gauge. As opposed to a normal night where beam are just coming in. Is there a ratio one bar minnesota per. We dont have ratios like that. Well have a serve at a table for like ten people. But we like to get our drinks out quickly. And. Reporter what i notice about new years eve booking restaurants and bars is the price goes up. Tremendously. 100, 200 in manhattan. How much of that is a profit driver for you just that single night . I think it comes down to the real estate part of it. How much can you commit to people. Obviously new years eve is a big day. Do our prices go up . You have to the make a reservation and there is a cover but a bu thats because we have limited capacity and only so much we can do to manage that business. Can rents go any higher than this . Id like to think not. But unfortunately i think they can. Rents just keep going and going. And with the prices people are paying for real estate they have to drive the rents. With us its a little different. We have the opportunity to partner with hotels and bring added value. Not just driving potentially the food and beverage revenue but the occupancy of the hotel. And if the value of that real estate is rising i imagine the hotel owners will increasingly say come on we can get money doing something else. I think what i a see is they want a bigger piece of our deal. Before what kind of added value can you bring to the hotel. Now they are saying you are bringing added value but the real estate is worth so much you need to be able to pay us more. Can you afford that. Yeah. Obviously it eats into the margins. But, you know, were in it for the longterm and we balance the things from the little less profitable and the home runs. Happy holidays. Happy holidays to you. Dow is up about 72. Lets get to dominick chu. Were watching shares of the aqua and financial. The em battled Mortgage Services firm. Executive chairman resigned, the stock dropped at 15 today. And oppenheimer concerned about the companys earnings visibility, also weighed in on this particular stock. It is currently traded down at 16 . Brings their year too date down 75 this year. Ouch. Lets send it to john forn fort a look at whats next. Facebooks near all time hies what. It might tyke to go even higher in 2015. Also the latest on the sony hack. Maybe a pretty high profile viewing coming for the interview, that movie a that has been delayed as a result. And yahoos tumblr, perhaps more value than meets the eye. Well look it into cometing up whoyour boss . Rk for . Yourself . Your parents . Your family . At baird, what matters most to you. Matters most to us. As an Employee Owned firm, our Financial Advisors have the freedom and resources to realize a plan to fit your familys unique needs. Well listen. Well talk. Well plan. Baird. You just have to win 70 of your points at net. And keep unforced errors under 10 . On the ibm cloud, the us open analyzes 41 million data points from 8 years of competition to uncover key insights. Data can help show you how to win, no matter what business youre in. Today theres a new way to work. And its made with ibm. All right we are watching a few movers here as the dow is well above 18,000. S p 500 is still green. Not as much. Mountain, forced to recall more than 6 million machines. This is one of the best performing stocks of 2015. Keurig is down. Chesapeake is one of the top gainers today. Partly because you have this 1 billion dollar share buyback. And also because they finally inked that deal to sell some shale assets. Up 6 . The biotechs down that other pharmacy managers are getting more aggressive in pricing. For those worried about healthcare costs. And. The head line for the day and for the week so far really has to be 5 economic growth. That was the revision for the Third Quarter. That means the best back to back quarterly gross for the u. S. Since 2003. You saw the reaction in the the dow, above 18,000. Only took six months to get from 17,000 to 18,000. Were kind of on track for that steady non volatile fed supported rally. And lactic acid tthere is th. Good morning, 8 00 a. M. At sony. 11 00 a. M. Here on wall street. Squawk alley is live. Welcome to squawk alley for tuesday. Joining us this morning, henry blodget. Editor, founder ceo at business insider. Kayla tausche is out. Jon fortts here. Sarah said a moment ago. Gdp