Transcripts For CNBC Squawk Box 20151231 : comparemela.com

be celebrating at 11:00 a.m. eastern which we are about 18 hours away right here in new york city. good morning, everybody. welcome to squawk box here on cnbc. i'm becky quick with joe kernen and andrew ross sorkin. the dow tracking to close out 2015 down about 1%. the s&p is just near break even levels. we're three or four points above break even. that would be looking at the nasdaq and looking to finish 6 or 7% higher at this level. let's take a look at the quick u.s. equity futures. where we go this year, break even on the futures this morning too. the dow futures are up by 7 points. >> not to rain on the new year's eve parade but news just out that authorities in belgium now detained six people as part of their investigation into a new year's eve terror plot yesterday. here's where it gets more complicated. they called off the new year's eve fireworks display citing fears of a militant attack. they wouldn't be able to guarentee that every attendee could be checked so they cancelled the celebration as a precaution. also the city of paris cancelled parts of its new year's eve celebration and shortened the amount of time that the light show will be taking place to avoid having large groups gathered for too long. already starting to see the effects in real time in real terms. >> and the firework there is too. >> and they're conceding that they cannot guarentee that everyone will be checked. i can tell you that everyone will be checked in times square. >> there's 14 entrances to get into times square and everybody has to go through metal detectors and all kinds of detections. >> they said it will be the safest place on the planet tonight and i said take it back. meanwhile, have you -- i finally wrote. i don't write a lot of checks because i don't control the money. >> in your household you mean. >> right. but i finally got 2015 instead of 2014. >> just figured that out. >> are we going to 2016? >> yes, sir. >> i just finally didn't have to cross out and then you have to initial it because it was -- these are -- things are happening too quickly. slow it down. >> so when you write out uncle sam, that's what happens? >> uncle sam too fast. >> did you see the piece in new york times, did you see the journal today? >> they do pay a lot. >> in real dollar terms they do. >> 2% of overall. >> but the capital gains rate they have all moved their -- the top 400 have moved their money into capital gains and dividend stuff obviously to not pay ordinary income but since capital gains tax have gone up to 23 or 24%. they're paying -- >> 22.9%. >> not 16. but it was just funny. but it wasn't on a same day when there's dualing op-eds. they said you're full of crap. this is the actual situation. i love them. i'm sorry but i love them. >> what was the times story. >> still paying half, joe, of what you're paying. >> half of what you're paying. half the rate that you're paying, joe. >> still 400 people -- >> are paying half the rate that you're paying. >> 2% of the entire bill. they're not carrying their fair share. there's different ways of looking at it. >> what does that say about distributions in the country? >> so if someone -- >> what does that say about income distribution in the country. >> i don't know. what does it say? it's ameritocracy. that's the way things work. it's not money passed down between dukes and dutchess. >> they earn 1.3%. >> in large part they made it from the efforts in entrepreneurial system. >> the key numbers i took away from that is they make 1.3 to 1.6 of all income and pay 2% of all taxes. was that the mix? >> yeah and a lot of the people, in fact started with not a lot and got to a point where they have generated all of this wealth for shareholders. paying 80 million a year. >> so should they pay a lower rate than you? >> i'm all for great entrepreneurs. i want everyone to be successful. i'm not taking anything away from the individual -- >> they pay a lower rate than me because it's not ordinary income. >> greatness of what they're doing and this is not a they didn't build it argument but we live in a great country. if you come to this country and you're born in this country your chances and opportunity are so much greater and don't you think that everybody should then should be paying a fair and equal amount. the fact that you're paying double what somebody who is getting paid billions of dollars more than you. >> why? because it's ordinary income with me. >> correct. >> so if you want to have a discussion about capital gains and what -- this is the same thing. this is the same argument we have five years ago and we came to the same conclusion. you want to have the optimum capital gains rate to ingender investment and to make things where capital is treated differently than ordinary income have the discussion about capital gains because these people aren't crewing you based on lower rates of lower income. they're crewing you based on moving their assets into capital gains and income which is you're allowed to do. so change capital gains. >> this is the reason we do not have argument. >> then trying have the lowest tax possible. it's about the rules and the question is what should the rules be. >> but be careful what you do with capital gains because if you want to tax it at ordinary income you may not have the same type of economic growth. so you can't have both. >> once you're making several hundred -- how many yachts can you ski behind? at some point it's several hundred million dollars in annual income there's a point at which you'll take the rest of it and invest it into somebody else. >> they are all signed off and they generally -- it's not a futile system. so they didn't get it passed down from generations where there's idiot sons and grand sons of rich people. >> some of them are. >> but the other piece of it is the estate tax. that's a very interesting that you raise only because right now used to be literally the estate tax is $5 million, it's $11 million and a number of those people in that article have lobbied heavily to get rid of the estate tax which puts you back into the futile issue you're talking about. >> this is another thing nuisanced beyond belief because people that have that much money aren't going to pay estate taxes anyway because they set up trust funds. and people don't want to get rid of the estate tax but has a huge business based on second to die insurance as well. you never know why people are advocating things. i don't know if you should pay taxes your entire life all the way through on all of your income and you finally get there and then they take it when you die. all of a sudden there's a death tax so that your heirs have to sell everything that you've done. they have to sell it just to pay their taxes? is that the way it should work too? if in the bill of rights there a certain thing about private property and property rights. >> but to the extent that you have a futile issue, what do you do about it? >> it's not a futile issue. it's ameritocracy's. >> to the apologies to the walton family and the people with walton in their name, you believe that these people. god bless them -- i'm not pointing them out because there's something wrong with them in particular, that's how it. >> in a free society there's things that happen and we set up the government for specific reasons. >> if you ultimately want roads and bridges and all of the infrastructure that is allowed and education, all the things that made this country great that have given everybody these opportunities to some degree. >> pay your fair share. >> you have to pay for it. >> but there was a better argument for that in 2012 than now. the tax rates you have seen rise now over that period of time. going from 16.7% to 22.9% in the tax rates that they're paying over that time shows you have seen it swing. >> you better make sure that you don't kill the goose that lays the golden egg. because that's what most of these remembdies end up doing. >> it's also why we have not seen tax reform. these are valid questions and issues on both sides. >> why 0% interest rates for 7 years still can't get us out at this point. it's not dynamic enough. in terms of regulation and taxes and everything. >> your friend larry over here doesn't want to raise interest rates. thinks the economy is lousy. >> why? and we finally heard andrew when he was younger used to be more honest. >> it's not true. we have to find the video tape on that. i cannot believe it's said. >> when he went on larry's show the first time said i want to let you know i'm an upper west side liberal. >> totally untrue because the first time i was on his show i was on an episode about vivendi's acquisition and i can't fathom that we got into a conversation about politics. this was in 2003. >> in 2003 i was a hardcore republican. the world has changed. >> he said you said it. >> all right. >> we have to talk about cosby. >> how about cosby. he had to put up 100 grand. how much money does he have? 100 million probably. don't you think? easily. another one not paying his fair share. >> okay. >> among other things. allegedly. >> first ten minutes of the show have gone by. >> it's thursday before new year's. >> last day of the year. >> let's tell you about the big corporate stories at this hour. bill ackman with the finally weekly report of the year. down 19.7% year to date as of tuesday. also shares of chimerix showing signs of life. .72 closing 5.3% stake in the small cap of bio tech on monday. that company tumbled 80% after the company announced it had that failed drug trial. >> if there's a merger of cells. so this company is chimerix. >> happy new year everybody. uber crossing a milestone -- >> stop, stop! andrew, go ahead. >> let me tell you about uber and then you can continue on your way. >> going to mess this up. >> uber is causing a milestone company announcing the billionth uber ride was in london on new year's eve. it was a short trip inside a blue honda that cost $8 which is surprising. uber giving that passenger free uber trips for a year. and the driver gets a free vacation. this is valuable. to any city where uber operates. >> oh, me. >> tell us about bill. >> he is at home today. everybody saw the -- it was almost a perp walk. released on bail. did you see his mug shot too? >> yeah. >> i often wonder what kind of expression. i thought he nailed the expression. he wasn't smiling. he didn't look like he was ready to kill someone. but he's wearing one of those ugly sweaters too. >> always known for that. >> right. it's after his arrest yesterday on a sexual assault charge. he was fingerprinted and had his mug shot taken at the police precinct in pennsylvania after his arraignment. he was charged with aggravated indecent assault. montgomery county prosecutors said in 2004 cosby gave pills and wine to a former temple university employee before sexually assaulting her. he is released on a million dollars bail but only had to put up 100 grand. cosby did not have to enter a plea. he denied all the allegations. they say he said and then there's like 54 she saids after the he said. one for every one of the women. hit the statute of limitations was going to run out in a matter of days or weeks because it was 2004 and it's 15 years or no, it's 12 years. >> money angle, a business angle to this story is some lawyers yesterday saying if he were to be convicted those actors and producers that got residuals on the show that have been cutoff from those residuals because the show has been cancelled could have a claim against him. >> it hurt their future -- >> unclear whether a judge would actually take the case. it's a difficult case to bring. >> lisa bonet gets residuals. there's a whole series of producers. it's interesting. >> it is interesting. it's like seinfeld and all the money they still get. i did one thing and the checks keep rolling in. $3, $4, but it never ends. >> damages. >> damages. >> on fx. >> yes. but yeah. there's nowhere in the country that cosby -- >> i believe the last network that had cosby on was tv land and they cancelled it. >> and in the middle of getting a new show. >> big program from nbc. >> let's get back to the markets. as we showed you the futures haven't budged all that much. the s&p which is the most interesting of the stories this year because alt this point the s&p is points above the break even level for the entire year. up fractionally this morning. up by less than a point. the dow is negative at this point. the nasdaq in positive territory is up slightly too. take a look at wti. it's up by about 12 cents right now. crude oil is down by 3.4% to 36.60. that was part of the problem toward the end of the day. >> yeah. >> at the real end of the trading session. >> yeah. >> not at the metaphorical end of the day. >> the overused but keep in mind that we're counting down to the final trading day. >> as all eyes are on that. >> i hear that constantly on another network. and also looking ahead to what's on the horizon for 2016, joining us is the chief investment strategy. covering the economic angle is mark, senior economist at wells fargo and we'll have a lot of guys today on talking about 2016 almost across the board most people are thinking more of the same. i'll start with you mark -- why do they do this? because we have two marks. but one of the things that you're saying is maybe we haven't fully taken into account manufacturing which could be even more of a head wind next year. you're worried about that. >> well, that's the one concern i have right at the on set. if the year gets off to a slow start like the last couple of years it's likely going to be due to some additional slowing in manufacturing and all of it is forward looking data on the manufacturing sector and still pointing to further deceleration. they look horrible and we really haven't had much growth or any growth in industrial production for the last year. a lot of people minimize the troubles of the factory sector and said well manufacturing is a smaller part of the economy but it still accounts for the bulk of the swing in gdp from quarter to quarter. so that's one concern i have. we're with the general consensus. we're looking for 2 to 2.5% growth in 2016. that's any number one obstacle to that. >> and other people on today talk about well 2016 is going to be similar to 2015. you know, muted gains, multiples are going to be hard to expand with interest rates going up so we're stuck with whatever profit growth that we get and profit growth isn't going to be huge. wages are going up but with commodities it's hard to raise prices so that's going to hurt margins so you're stuck with what you get with profit growth which might not be a lot. they say the same as last year but we may be down in 2015. so muted gains, they're not muted gains, it's been volatile and you end up with nothing to show for it. >> you end up with even less if you think about the way the market has been joe. if you look at what lead the market of course the fang group of stocks, if you look at an etf like ntum, that's up about 9% year to date. so actually you have a group of stocks doing very well. you have the market that on a total return basis which means it's all dividend return that may end this year at a positive 2 or 2.5% or so and you look at the rest of the market. vl something like the value line index which is 1700 stocks. it's an equal weighted index and that's down 3 or 4% year to date. you're right. investors are realizing mostly an outcome much different than the s&p 500. we pencilled in 2015 gains that were positive but much less than what we have seen in 2013 and 2014. that will turn out to be accurate but the issue is we didn't anticipate even what the markets experienced in 2015. >> you don't see anything better in 2016? that's what gets me. everyone saying a similar year in 2016. how is it going to surprise us by not being similar if it were? could it be down or up 15 or 20%? >> that's the issue joe. we begin fall into the consensus expecting muted gains in 2016 expecting the markets to broaden more. >> that's the surprise. >> okay. and mark, i mean, you're obviously on the economic beat but any reason to think that suddenly we escape stall speed and get up to 2.5 or 3%? or we were unable to do it at zero% interest rates. i don't know how we do it in a rising interest rate environment. >> well, there's a couple of areas that are more positive. consumer spending should hold up relatively well. job growth has been solid. the parts of the economy slowing are capital intensive and labor intensive parts of the economy still growing. pretty good growth and gas prices are down. that looks good. housing should be better but the last couple of months have been dicey. they indicated things maybe cooling off a little bit. we still have a fairly descent gain for housing stocks because inventories are so low. >> all right. all right gentlemen. it's only natural that you always think that the situation or the environment you're in is going to continue for the next 12 months but it rarely does. probably a year ago people said oil, expect, 80, 85 maybe. that's what they would have said. they no idea that it was going to be 36 at the end of the year. anyway, mark and mark. thank you both. >> thanks, joe. >> all right. thank you. happy new year to y'all. >> happy new year. >> doesn't sound like a happy new year. it's not all about money. >> it's not all about money. >> it's about family. it's about health and love and happiness. >> exactly. >> we wish you all of that in 2016. authorities in brussels calling off the city's new year's eve fireworks display due to fears of a terrorist attack. we're joined now from london with more. >> hey, guys, well, new zealand begins to ring in 2016 one of the first countries to celebrate the new year. as you said belgium has now cancelled their fireworks display tonight along with the celebrations in paris. there will be no fireworks. we're also hearing that belgian federal prosecutors saying six people have been detained today in an investigation into a new year's attack plot in brussels. this also in addition to an arrest last night in connection with the paris attacks. and also two other arrests earlier this week that were connected to a possible attack in the belgian capital. we're also having reports of towns in italy banning fireworks for even just personal use and as i said, no fireworks tonight in paris. there's a light show only and even though paris remains in a state of emergency, people are being allowed to gather tonight. normally you're not allowed to have large gatherings of people. but it's a muted celebration under heavy surveillance. 60,000 police and soldiers will be across france and that's including 11,000 police officers and military and other support roles in paris tonight. that's 2000 more officers than the celebrations last year and we're also hearing that even in berlin around the celebration there is that bags are being banned from carrying. so real high security here in london. there will be about 3,000 police officers in central london this evening. so high security across central europe as we await the new year. >> thank you for that. coming up, puerto rico now expected to default. kelly has the details when we return. as we head to a break, a quick game of name that company. only two stocks in the s&p 500 have doubled this year. can you name them? the answer when we return. so you're a small business expert from at&t? yeah, give me a problem and i've got the solution. well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere. my drivers don't have time to fill out forms. tablets. keep it all digital. we're looking to double our deliveries. our fleet apps will find the fastest route. oh, and your boysenberry apple scones smell about done. ahh, you're good. i like to bake. get expert advice for your small business at att.com/small business. >> welcome back. before the break we asked you to name the two s&p 500 stocks that doubled in 2015. the answer is netflix up 138% and amazon up 122%. >> officials in puerto rico confirmed they are likely to default on a portion of the nearly $1 billion in debt obligations due to bond holders. kate kelly joins us with the latest. >> so andrew as you said yesterday puerto rican officials confirmed the concerns that peel had that they would again default on their debt. this time spreading the pain to a set of infrastructure bonds usually paid off by tariffs on rum sales. expected to default on payments with a smaller and second time default on roughly $1.5 million in payment from puerto rico's public financial corporation would seem further confirmation of the island's attractable debt crisis. they're due midnight on monday. given that that's the first business day that's a deadline along with the largest payment on 330 million on the general obligation bonds which is guaranteed by puerto rico's constitution and the government says he will pay that. shares of the bond insurer with significant exposure to puerto rican debt sank deeply on the news also following suit but to some parties it's garcia that has the credibility gap and not the creditors involved. the island has the means to pay off more than roughly $1 million in these january 1st obligations and the evidence of that or at least one piece of it is the payment of some $120 million so government employees last week. one fixed income analyst the plans tactful and willful and a means of racheting up pressure and little else. there's a lot of skeptism out there. >> does this go into court? is this a judge that eventually gets to decide on any of this? >> it's complex. there's 13 different bond issues due monday. there is a set of creditor negotiations going on with every single one of them. the electric utility recently reached a deal although they're still fine tuning a couple of things but everybody else is in negotiations. my sense is the creditors are prepared to sue if they need to. >> how do you decide which you get to pay and which ones you don't. >> there's constitutionally guaranteed bonds that a lot of people hold. a lot of mutual funds around the u.s. some 45% of mutual funds according to morning star. so those really have to be paid if there's any sort of revenue source and they will be in this case. although they're using a fund of backed revenue to pay some of that which is going to run out and then there's that and other bonds that don't have the same guarentees and those are some of the ones they're taking a flyer on here. you have less rights in you're not in some of the constitutional bonds but either way you're still supposed to get paid and the thing about the christmas bonus i think is a frustration from a lot of folks. the governor said yesterday he had no choice. he was legally obliged to pay the bonuses. >> but they're not bonuses. >> their christmas compensation is how he decide it but they're one off end of year payments and bonuses by many people's definition and it's wrangled people that feel like they should make good on their debts. >> thank you. >> thank you. >> coming up, security going to be tight for tonight's new year's eve celebration in times square. we're going to tell you what to expect if you're going to be partying in manhattan tonight. ♪ >> security is going to be really tight for tonight's new year's eve celebration in times square. chris has the details. >> the world's most famous crystal ball tested and ready to go. it will welcome in 2016 at the stroke of midnight tonight. they plan to take it all in. their first trip to new york. >> don't seem real. >> no, it doesn't. it hasn't sunk in yet. >> they say they're not worried about the security and the nypd says they shouldn't be. >> people should feel safe this new year's eve because we're there. you'll have one of the most well policed and safest venues in the entire world given the assets that we deploy there. >> it will be protected by 6,000 officers on foot and horseback. radiation detectors metal detectors and bomb sniffing dogs. a thousand security cams rangers will help keep an eye on it all. >> we're the best prepared city in the country. we know how to do big events. we have shown it time and time again. >> security fears didn't stop crowds from packing the crossroads of the world wednesd wednesday. >> i'm pretty sure everybody feel safe every day. >> i just come in and you don't know where to look first and everything is going on. there's so much to do here. >> happy new year. >> a party atmosphere with thousands looking out for anyone that might want to ruin it. nbc news new york. >> and we will continue to keep you updated on the security for tonight's event throughout the day. you live here. >> yeah. >> you don't even have to come into the city to go. >> i'm going out of town. >> have you ever done this? >> i've never done it. always wanted to. >> you want to. >> as a kid i always wanted to. as i have gotten older, less. >> you realize oh my gosh. >> watching the tv. >> it's a very comfortable way to do it. >> but as a kid you think i should be out there. freezing cold. when dick clark was doing it seemed like a good idea. >> bathrooms. >> i haven't thought through it. >> you haven't thought through this? >> no. >> i guess it depends. >> when we come back this morning a major strategy shift for jeb bush. florida staffers to the early primary states. gop and democratic strategists join us next with predictions for the new year. as we head to a break take a quick look at the year's best performers in the s&p 500. i take prilosec otc each morning for my frequent heartburn because you can't beat zero heartburn! ahhh the sweet taste of victory! prilosec otc. one pill each morning. 24 hours. zero heartburn. welcome back to squawk box this morning. as 2015 draws to a close cnbc breaking out the 2016 play book looking at new ways to think and invest in the year ahead. we're focussing on the 2016 presidential election. here's john harwood. >> a few of us that cover national politics can say we haven't been surprised by the 2015 phase of the 2016 presidential campaign. when bernie sanders entered the democratic nomination race, who expected him to be leading former secretary of state and first lady hillary clinton in new hampshire by the end of the year. when donald trump entered the republican race, who expected him to be dominating the republican field pretty much everywhere. when all the candidates began laying out their plans for spurring economic growth who expected that national security would be the dominant issue on the eve of the iowa caucuses so here are three predictions about 2016. whether she wins or loses in new hampshire hillary clinton will be the democratic nominee. bernie sanders is going to have a tough time finding places to challenge her beyond new hampshire. donald trump will not be the republican nominee. once we get past the first couple of states and the field consolidates that's when donald trump will be vulnerable and the american economy, middle class wages, not national security, will be the focus of the 2016 campaign by the time we get to election day. now of course that hasn't happened yet and on the eve of the iowa caucuses which occur february 1st guys we do have an interesting foreign policy divergence opened up in the republican field. ted cruz saying we should not have a heavy footprint in the syrian civil war. we should learn our lessons from the iraq war and people like jeb bush and marco rubio are in for a much more aggressive approach. >> john thank you for that. for more on the race to the white house let's bring in ceo and co-founder and sarah fagan, ddc advocacy partner and chief political strategist. you look forward to this year and i think the only place to start with the conversation to some degree is donald trump which is to say what do we think is going to happen when it comes to iowa and where do we think we'll land. >> steve. >> john's observation about trump not being the nominee is one most would share but when you look at the field and the way you're dominating the field it's difficult kultd to see at this point how he doesn't become the nominee. it may be true that he can't win a one-on-one against another republican but as long as there's 8 or 10 candidates in this field it's difficult for him to lose. >> let me do it this way. if he were to win the nomination, how does he do against hilary? >> i don't think he fairs well. the very things that make him great for the media are the things that would destroy a presidential campaign and thoughtful republicans agree with that. there's not a single establishment republican i know that thinks donald trump should be the nominee or would be a very credible one but we can toss it to sarah for that if you like. >> well i think it's unlikely. you and i probably agree more on that than we disagree. i think it's unlikely he will be the republican nominee however if you think about the economy and look at consumer economy and look at whether it's in the recession or not and donald trump is the republican nominee it's hard to imagine how he would lose to hillary clinton. at no point since the measures has been tracked is republican or democrat in the office won or lost based on where consumer confidence is. if consumer confidence is going up the party in power wins. >> you need 48 or so to have someone in that extends, that extends the legacy of what people are not that pleased with. >> that's right. >> it's hard to imagine whoever the republican nominees would lose. he's had a way about puffing his numbers up to about 48% as you get close to an election year. so i suspect he will do that and i think -- if you think about the long republican race which this has been very long and i suspect it will continue to be long and we will not have a nominee until at least late april or may or longer, if that happens it will be hard to defeat hillary clinton unless we're in a major recession. >> can we talk about jeb bush for a second? obviously there's been a shuffle here with his campaign. does he have a chance? is there anyway for him to fight back at this point? >> i think there is a lane for him to fight back and win and it goes through new hampshire. if you think about, you know, you mentioned donald trump has just dominated this year. he has. but marco rubio, chris christie, jeb bush, they're pretty much bunched up together in new hampshire. there's about five points spread between them which isn't much. depending upon what happens in iowa i would expect to see new hampshire, the deck shuffle so to speak and he could potentially come out of that but really the fight right now is donald trump and does he finish second or third in iowa which would shake things up if he finished 3rd and who is that establishment mainstay? and that's pretty unclear right now. >> steve, who is the strongest competitor for hilary? who do you think hilary should be most afraid of? >> if i were the hilary campaign i would be most afraid of marco rubio. who notwithstanding the trouble he's having getting lift if he's able to get the nomination he presents the starkest contract. because there's a generational change and political point of view that's much different than hillary clintons and it's a lot easier for him to make it about the future versus past than it would be for any other republican. i think marco rubio though is the target right now for people like jeb bush and chris christie and the others who frankly need the votes that he might otherwise have in order to save their own campaigns. i think sarah is right about jeb bush. if you look at the republican field he's a person who is right now the most qualified to be president of the united states but he has got, you know, he has it stuff and he has to do well in new hampshire to get out. john mccain wasn't doing exactly -- this time four or eight years ago he wasn't dazzling everybody and he ended up with the nomination. it can happen but it's difficult. >> sarah i want to change topics before you go which is this. so far we're talking about the election. i want to understand about washington for the next year. are we going to be in gridlock? is there any chance that anything meaningful happens on either side? tax reform? there's so many issues but nobody is holding their breath that any of them are really going to be tackled. >> i don't think that you'll see too many major reforms happen. i do think an important test for speaker ryan is he has layed down the gauntlet and said we're going to do these individual spending bills. these 12 bills separately. we're going to stop the business of this bill at the end of the year. if he can achieve that he will go a long way in helping restoring a normal order to congress and making it a functioning body again. >> okay. we're going to leave the conversation there. we appreciate both perspectives. steve and sarah, thank you, happy new year. >> happy new year. >> coming up, shares of twitter down nearly 40% but with social ad spending set to soar could the blue bird take flight? once again? we'll talk to an executive at the largest private digital ad agency. that comes up next. ♪ today, we're seeing new technologies make healthcare more personal with patient-centric, digital innovations; from self-monitoring devices that can interpret personal data and enable targeted care, to cloud platforms that invite providers to collaborate with the patients they serve. that's why over 90% of the top 25 global pharmaceutical companies are turning to cognizant. our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way clinical research sites collaborate with pharmaceutical companies, and enhancing patient engagement with innovative platforms and solutions. our population's growing healthcare needs present growing opportunities for our clients: to advance the future of medicine with digital, and improve the quality of lives. ♪ >> welcome back, the digital age of advertising arrived and here to stay. with social ad spending set to rise and soar over the next few years. in fact, estimates digital ad sales surpass all spending on television by the end of 2017. craig dempster has the trends to watch, the global digital agency leader at merkel, the private ad agency, whose clients include twitter and facebook, and thanks for coming in today. great to see you. >> great to be here. >> digital is taking over. we know major corporations like procter & gamble spend half ad spend on social and look to push more dollars there all the time. why is that? >> the social platforms are data driven platforms now. you know, the big story is about data, and really direct marketing and sale has really hit the internet. as you look at the social platforms with locked in users and ability to pin point audience and target the audience and deliver an experience that is specific to an individual, you know, that's why these big brands are moving their dollars to the digital markets. >> do you think it works? do you think it's more effective than traditional advertising? >> absolutely does. we have a lot of clients, obviously, you know, executing advertising on facebook today, pouring more and more dollars in there, the advertising dollars, you know, cpms are up there because of the performance associated with it. i mean, the best thing about digital markets is that it's very measurable. it's very targeted. yeah. i believe so. >> it's targeted. this is what we talked about yesterday, andrew, right? it's targeted, but does not induce anyone to do anything. click throughs are like 1%. i've never done it. i'm ir traited when it does not get rid of it quick enough. now it's about building a brand. if i see a name down there on the lower right hand side, that does not build a brand. i need a video. i'm not going to click on that. the guy decided, you know what it is? we know search. search actually works for digital advertising. does the offset, sure, it's targeted, but does anyone monetize? do you see results? i'm worried it's, like, the emperor with no clothes. >> it's like direct marketing was in the direct mail days, right? yeah, you throw mail in the garbage. >> still do. >> and still do. there's enough to pay off in terms of the amount of people who -- >> building brands, is there anything better than super bowl ad or where you aggregate that? >> building brand awareness at the top of the marketing funnel is still, you know, television. >> it is. >> it's -- this will replace television. or exceed television. >> exceeds it, but in a more targeted way trying to solicit responses more than building brand. >> we talk about how facebook and google are at the top of the pyramid, those two, and everywhere else. twitter is also among those. is that the case, though? >> i think so. you know, for twitter, it's a little bit like being, you know, mickelson in the tiger woods era. you are compared to facebook all the time or compared to google all the time, it's difficult. you know, i don't think, you know, there's any demise ahead for twitter. they have 300 million monthly active users on twitter. you know, i think bringing back jack dorsey was a good move for them, and they need more direct advertisers. >> snapchat, are you bullish on that? does that make sense to you? >> it's early there. revenues there are $70 million this year or something like that. they predict an ipo in 2016, but the teens and millennials, a great platform for that. there's a new platform called discover, bringing in espn content. >> do ads disappear in six seconds too? >> no. >> craig, thank you for coming in and happy new year. >> yes. happy new year to you as well. when we return, u.s. stocks, nasdaq higher, s&p flat, and dow lower year to date. next, how global markets perform and how to impact your portfolio in the new year. back in just a little bit. so you're a small business expert from at&t? yeah, give me a problem and i've got the solution. well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere. my drivers don't have time to fill out forms. tablets. keep it all digital. we're looking to double our deliveries. our fleet apps will find the fastest route. oh, and your boysenberry apple scones smell about done. ahh, you're good. i like to bake. get expert advice for your small business at att.com/small business. while you're watching this, i'm hacking your company. grabbing your data. stealing your customers' secrets. there's an army of us. relentlessly unpicking your patchwork of security. think you'll spot us? ♪ you haven't so far. the next wave of the internet requires the next wave of security. we're ready. are you? the final countdown, wall street about to close the books on 2015, are the bulls ready for a new year? >> merge or die. dramatic slide in crude, nat gas, and energy companies finding a lifeline. will the m&a binge be a story of 2016? >> diamonds in the rough. the industry says good riddance to 2015 after a slump this sales, can diamonds get their best friends back in the new year as the second hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york city, this is "squawk box." ♪ welcome back to "squawk box," last day of 2015, i'm andrew with becky and joe, whole group together for the last day of the year. the guest host this hour is ed, portfolio manager at qma. we are 17 hours from the new year, and right now, that's a live shot of times square a few blocks from our studio. we're nearly 1 million people and 6,000 police officers will line the streets to usher in 2016. meantime, though, bad news across the pond. authorities in belgium detained six people into a new year's eve terrorist plot. officials call off the city's fireworks display citing fears of attack. the mayor said they could not guarantee everyone could be checked, and paris cancelled part of the new year's celebration and shortened the time that a light show is going to be taking place to avoid having larger groups gathered for too long. meantime, becky at the other top stories of the morning. >> thank you. flood waters rising to levels not seen since 1993, 20 dies, 14 in missouri alone. thousands of people evacuated, and the national guard has been sent in for rescue, recovery, and security tasks across the state. turning tots markets this morning, the u.s. futures at least at this hour are relatively flat. dow futures down slightly, s&p down slightly, and nasdaq up by two and a half points. crude oil, a top market story of 2015, and you can see right now, it's sitting just at 36.59 after a steep decline yesterday which put pressure on stocks towards the end of the trading session. look what happened with the dollar, it's up against the euro. trading at 108.88. the dollar is down against the yen at 120.39. persing square out with the weekly report of the year. hedge fund down by 19.7% year to date as of tuesday. >> who was it said the slow down in china, biggest business story of the year? oil? i think? it's down. affected everything else. >> but slow down in china is related. >> related, but it's more supply than demand, but demand's weak. that's a story. china's a couple billion people, whatever, but oil just -- it's affected everything. it's affected -- >> one of the stories worrying me this week, saudi arabia's budget for next year with all kinds of cuts, potential for raising taxes at some point, the sales tax they've never had, and maybe coming in with an income tax never had, but raising the price of gasoline, only a dollar right now a gallon there, but that's a big increase, and not what the people of saudi arabia are used to. what's that mean politically? >> did you hear the prediction of oil going back to 90? >> no. 2030. >> that was opec. >> that was from someone who might know something other than a stupid analyst. i was not talking about you. stocks, the dow is tracking to close out 2015 down 1%. i think it's funny the s&p could go either way after 364, you know, days of the year, we still don't know. it's been that flat. the s&p's at break even levels. it will close up marginally if it were to be in the positive today, but if it's down three, four points, it's down for the year, and the nasdaq looking to finish nearly 7% higher, and for a global perspective, we have a look at the international markets. that had to fair better? no? >> absolutely. there's a number of markets, joe, outperforming the u.s. in 2015. markets in asia closed for the year. china, yes, a big story of the year, but despite the roller coaster ride in the summer, surprising the valuation of the currency in august and lingering growth concerns, shanghai still closing up 10% for the year. it was also winning year for japan, extending a depreciation in the currency, a boom for exports, japan closing up 9%. another story for india, widely seen as the last standing break, a strong economic story, but that was not enough to encourage investors this time around. india closing down by 5% in 2015 with focus on prime minister modi and reforms into the new year. another loser is indonesia, given the heavy exposure to china. it closed down 12%. a little different story if you look at europe, thanks to ecb's quantitative euro, weaker energy prices, europe had a good year. the german dax, despite the concern about the volkswagen scandal and exposure to china, dax up 2015, and italy benefits from qe, but the labor market reforms up 13%. ireland, check this out, guys, up 31%, it's the fastest growing economy in europe right now. 7% gdp. ireland up 31% in the stock market, and the u.k., under performer, if you will, given heavy exposure to the mining industry. the ftse down 5%. focus on the referendum coming up next year. guys, back to you. >> thank you very much. more on the markets, larry glazer, managing partner and managing partner, and, gentlemen, welcome to both of you. ed, starting off talking about your predictions for 2016. 2015 has been disappointing. >> frankly, in consensus. 2016 will be a tough year too. i can think of scenarios where it might be a good year, but i think most likely outcome is it's a relatively weaker earnings growth again as we had in 2015 and eke out positive returns, but they are not terribly exciting. >> why? oil the big reason? >> well, i think, actually, earnings overall, if you take out the effective stock buybacks, earnings will be flat, earnings per share, but overall earnings down close to 10%. earnings growth, of course, mostly due to energy and commodities this year. >> on the oil and gas companies. >> correct. >> and also the stronger dollar for internationals? >> right. as you go in 2016, you still have some of that effect. you also have the fact that wages are rising, margins show signs of weakness, so the consensus expectation for earnings for the s&p next year is about 8%, but if you look back at the long history of earnings expectations, they tend to be too optimistic. put in a reasonable discount, again, you get a period this year where we have pretty close to zero earnings growth. maybe we get lucky, 5% if productivity, fed weakens, raises once or twice. there's scenarios for a decent year, but the likely case is a weak positive year. >> what about if energy prices -- say are up 20%, is that a positive or negative impact on earnings? >> a frustration this year for a lot of people, both in the market and economists, was that ordinarily we'd think the price of oil being lower should be a net benefit for the economy. it really has not turned out to be as big as expected. i think it's really hard to make the case that higher oil prices, although it might help s&p earnings a little bit, are going to be good for the economy overall. we're still a big net importer of oil. although it's nice to stop the bleeding in the places in the oil producers, hurt a lot this year because of the low prices, i don't think for the economy as a whole overall higher oil prices is a thing in itself. >> how do you sum up the economy now heading into 2016? >> sure. 2015 was an incredibly frustrating year for investors and unsatisfying. major market averages went literally nowhere with volatility and broad in asset classes not having return. it was as unsatisfying as the chinese food dinner and hungry an hour later asking, did i just eat? that's the year we had. 2016 will be a different year. it will be the year of the underdog, the year where the force triumphs over the evil empire. look, you have the cs, china, commodity, currency, crude, and contraryians and catalyst. not more of the same. in 2016, there's not megagrowth names because the market is so narrow. a handful of names driving all the major market averages. instead, you see things either broaden out or roll over. broadening out, i mean things like small cap value below the radar screen. we have a high burden, compliance is brutal on companies. cut costs to the bone. look at the small banks in the country, printing on both sides of the paper and reuse every paper clip. that's the potential catalyst. cut costs, rising interest rate environment, pay dividends, those are areas that do well next year despite a frustrating economy. if you look at what did poorly this year, look at an area like commodities and energy. i don't think most strategists live in the real world recognizing the amount of selling pressure at the end of the year, hitting commodities, mlp, gold at the end of the year, emerging markets. >> picking up in price coming in 2016? >> i think that's selling pressure will abate as the year end tax law selling gives way, and that gives us the traditional january effect and balance. i think, becky, a lot is related to currency. look, a lot of things happen, a lot of surprises. the dollar is not an island. you don't get a diverge of policy forever. if the dollar rolls over, weakness in the dollar, that's going to be good for oil commodities, gold, it's going to be good for emerging market currencies as well. so i think there's a lot of potential catalysts. what did well this year is not likely to do well next year. i think that's the important story. not looking at the major market averages. >> okay. >> there's a lot going on. >> rather than makie inine ininr the full year, but in january you expect a rebound from the losses. ed, do you agree with that, just the idea that some of the selling pressure abates? >> historically, there's been a january bounce, especially for small cap stocks, i think you really need to see better fundamentals, and the better fundamentals, so far, really don't look all that strong. i think we'll be okay next year. it just is hard to get enthusiastic about overall returns unless you get a little bit better traction on earnings. >> the fed story, you think, ed, already baked into this entire scenario? >> yes. markets are good at incorporating expectations. there's a gap. four hikes next year, fed fund fuchs say two. i think it's two. it might be one. i think that the economy's a little weaker than maybe some people think. also, i think that interest rates that market clearing interest rate is not much higher than it is today. i think you see, it could be the surprise next year and could be one of the catalysts we have is a better year than most expect that if the fed raises once or twice, you might see a little weaker dollar and greater traction on fundamentals. >> larry, what's the call in the targets for the full year? >> sure. well, first, depends on which stock market you are talking about. >> the dow, nasdaq, s&p. >> sure. >> u.s. stocks. >> talk about the dow for a second. some of the dogs of the dow names, high dividend value names did not have traction this yearment expect those to do better. they are, in many cases, dividend paying names. ratings are not going up fast enough to what retirees need. stocks are left behind in part because of the strong dollar for corporate earnings. that will normalize, beneficial if the big value names. i'd expect to see u.s. investors gravitate to the international markets, so that's an opportunity, and, potentially, some easing and improving in the credit markets. becky, what's important to recognize is there's a lot of surprises next year. the presidential election is the least of which could have a major impact on the financial markets. you can have a much tighter presidential election than most people think, and that could surprise and shock many of the financial markets next year. >> larry, thank you for joining us today, ed's sticking around the rest of the hour, but happy new year. all right. coming up, new year, new pay. minimum wage hikes kicks in for ten states. check out the high stakes of higher pay next, and once a shining business, now showing major flaws. find out what it will take to get the diamond industry -- i want to talk about diamond stones. the diamond industry sparkling again. security tight in times square tonight, update on the new year's eve preparations next on "squawk box." welcome back to "squawk box" on new year eve's day. what's going on? calling it nothing's happening. kind of nothing's happening. >> flip the boards. >> what's going on with crude, 36.53 crude right now. nearly a million people jam the streets in times square, and security will be tight. nbc joining us now from times square with more on the preparations for the big night, chris? >> reporter: yeah, good morning, guys. you know, as you mentioned, they are expecting about a million people to come and watch the festivities to ring in 2016 here in times square. they should start filing in in the next several hours. already, we are seeing street closures and police lining up barricades and things of that nature. they will be joined here by 6,000 police officers including 500 officers from that newly formed counterterrorism unit equipped with body armor and long give uuns watching 14 acce points the public uses to get into the times square area. they want to ensure if anyone breaches an access point, they will be ready. also out here today, you got a thousand cameras watching things, bomb sniffing dogs, radiation detectors, everything you can imagine police anticipate a possible terrorist attack might entail. the mayor and governor say this should be the safest place to be in the united states tonight as they have the area covered as a million people line the streets waiting for the big crystal ball to drop around midnight tonight. guys? >> all right. yeah. we'll be watching. hoping for a fun night for everyone. all the networks covered. we have a great -- carson daly? >> yes. >> just got married. >> he did. congratulations. >> married someone named siri. probably a different person? >> one in the same. >> that guy, river phoenix's brother was in love with. used to be leif, changed the name to joaquin. >> i didn't know that. >> yes. >> he was in "parenthood," the problem with the dirty movies. >> from the original? >> yes. >> oh, my gosh! that was him? >> yes. he was leif back then. >> sorry. >> "sons of anarchy" friend. from corporations to cities, the trend is raises, and it's not slowing in 2016 with hikes kicking in today and tomorrow across the country. cnbc's kate roger has more on who agrees whatever they played jack was not enough. >> we are two big fans, for sure. love the show. this year, a slew of states ring in the new year with higher rages. on new year's day, ten states, alaska, arkansas, california, connecticut, hawaii, massachusetts, nebraska, rhode island, and vermont implement wage increases. of the group, massachusetts and california the highest at $10. those in new york and west virginia, the raises kick in today, and hikes are implemented in the 2015 legislative session. they do not include cost of living expenses. the minimum wage is $7.25, and washington, d.c. has the highest wage at $10.50 an hour. this is not a new hike. 29 states and washington, d.c. have wages at the federal floor. los angeles and san francisco, seattle, and chicago moved independently to hike pay for workers beyond that federal minimum over the course of several years, and, of course, wage hikes at big corporations from walmart to target and mcdonalds took place in 2015 and add pressure, of course, to main street businesses not already paying above the federal minimum to shift policies in order to keep up. >> all right. see what, you know, 15 would be tough. someday, that's what everyone's shooting for. >> absolutely. there's at least 16 ballot and potential legislation measures in 2016 to hike to $15 an hour, new york state could be the first state in the country to have a $15 minimum, having a huge impact on smaller businesses. >> what economists call a natural experiment. different places have different minimum wages and measure how it hurt or helped. >> every side has a different -- >> data from ieeither side, but that's one of the things -- >> $15 makes more sense in new york city than upstate where you deal with very different standard of live costs, cost of living. >> absolutely. that's why the governor cuomo introduced fast food wage. in new york city, you have to get to $15 earlier in 2018 if you're in other franchises across the state, you have until 2021. that's why they did it on a sliding scale, but it's an experiment. data soon enough on whether or not it's working. >> right. all right. thank you. >> thank you. when we come back, turbulence forcing an air canada jet to land before its destination. that story next. right now, though, heading to break, the winners and losers of the dow . "squawk box" will be right back. welcome back to "squawk box," an air canada jet en route from shanghai to toronto stopped at calgary international airport diverted after pmgs were injured by turbulence. crews on hand when the boeing 777 landed yesterday afternoon. a spokeswoman for the calgary fire department said 20 people may have suffered back and neck injuries due to turbulence. the jet was carrying 300 passengers and 19 crew members. do you keep the seat belt on? >> yes. well, they never say you don't have to, you can move around, but in the seat, i keep it on. >> right. >> yeah? >> some people take it off. do you take it off? >> i leave it on even in the flat beds. you hit turbulence. you could hit the ceiling. that never happened, but there are people -- >> clearly. >> i leave it on all the time. >> all the time. >> may be the lesson from the experience is to leave it on all the time. meantime, bill cosby at home today released on bail after being arrested yesterday on sexual assault charge. fingerprinted with the mug shot taken in pennsylvania after arraignment. the comedian has been charged with aggravated indecent assault. prosecutors said in 2004, the 78-year-old gave pills and wine to a former temple employee before sexually assaulting her. he was released on $1 million bail, passport taken, and next hearing is january 14. he did not enter a plea at the arraignment and denied all allegations sexual abuse claims, should say -- could go to prison for up to ten years. the minimum for this traditionally is at least two years, 78 years old, of course, a trial for a year or two. >> all the scuttlebutt, it's tough -- there's a high bar to get a conviction probably, and it was a long time ago, and i don't think you can bring in the other 53 women. >> i don't think you can. >> can you bring in the previous depositio depositions? >> where he says quaaludes? >> yes. >> in particular, if you were convicted when the comes to the sentencing issue, that's when it's complicated because a judge is going to -- >> might take that into consideration. >> all the others, even if they are not supposed to. >> and his age. when we come back, they say diamonds are forever, but the industry can't wait for the year to end. what does it take for diamonds to get luster back in the new year? "squawk box" will be right back. welcome back, at&t the latest wireless carrier to drop the two-year contract starting on january 8, customers only get new smart phones and flip phones by paying full price or installments over time. now, verizon and sprint made similar moves back in august. t-mobile dropped the two-year contract two years ago. also, shares of, joseph, say it. >> you're on your own. you're on your own. i told you. >> chimerix, showing signs of life. disclosing a 5.3% stake. they tumbled 80% after announcing a fail eed drug tria. bush's headquarters redeployed to early primary states like new hampshire, iowa, and nevada, shifting away from tv ads, cancelling $3 million in tv reservation and moving to voter contact and, quote, field efforts. >> amazing how much -- how many ads i've seen from jeb bush about donald trump. >> yes. >> and if you don't like trump, they are good as. >> right. >> they show all the comments from the past, and jeb looks great and everything, and the needle has not moved. for trump, higher, and bush -- just weird. i wouldn't be advertising. something else has to happen, it's not pro-jeb commercials. >> new hampshire will be important. >> three guys trying to finish second or third. christie, rubio, and jeb. where's carson? >> i get e-mails from him. >> i do from all the guys. they know me? they say joe, and i get them, oh, you know, ted thinks -- >> i got one from ted. >> i did too! ted's mad at me. must be a mistake. i asked, and you've not sent anything. well, i just -- i'm just seeing this now, ted. let me take a look. >> it's still active campaign season. you can't donate to anybody. >> michelle messages me every day too. they must not watch. i probably am not going to. >> i get none of the e-mails. i mean -- >> seriously? >> obviously, barack. >> those are personal e-mails. those are actually talking points. >> the others -- >> you and jay-z, you talk to him, right? >> yeah, every day, absolutely. >> speaking of the president, president obama and comedian jerry seinfeld going for a ride in the season premier of comedians and cars getting coffee. the episode aired last night on crackle. he pulled up to the white house in a 1963 corvette, however, he and the president were not really allowed to drive too far. the secret service kept them locked up on the white house grounds. seinfeld, this season, drives around with steve harvey, jim carrey, and steven colbert. weakness clouting demand for diamonds. we have more. morgan, good morning. >> reporter: good morning, becky, and happy new year to you guys. so when the clock strikes midnight tonight, there's one sector that will not be sad to say good-bye to 2015, and that is diamonds. as we've seen this year, sparklers had a tough year. retail sales likely to have come in flat to increase at the most 2% this year, a slow down from the 4% growth we saw in 2014. the wholesale market faired worse. the report group says prices for diamonds down 15% this year and polished stones fell 8%. why are we seeing weakness? well, peter, who buys and sells millions of dollars worth of diamonds wholesale each year says this is really a weak global demand story. >> there's been an oversupply of diamonds and the reason for that is that as an industry, we lost three of the biggest consumers. that's china, russia, and india. what has happened is they were consuming, and now they are net sellers. >> reporter: diamonds are priced in dollars. he says the stronger greenback is partly to blame, especially in places like russia where the currency plunged this year. there's sales in the middle east, but between anglo-american, its russian rival, the two miners control two-thirds of the world's diamond supply. experts say both companies are making steep production cuts, withholding supply. that's something that should stabilize diamond prices coming into next year into 2016. the wild card, guys, is china, and whether demand recovers there. something the diamond industry watches closely starting with the chinese new year, a second pique season behind christmas for diamond sales. with all this said, i have to say it's very likely we're going to see a lot of these bobbles given tonight. new year's is still one of the most popular holidays for people to get engaged. over to you. >> oh, to get engaged. oh, okay, not just to give gifts and stuff. >> you missed the ball. >> oh, oh. >> where's my gift? >> like valentine's day, anniversary, christmas, birthday, all within three months, and, like, i run out of things, morgan. i do! does your husband know what he's doing yet? he's new at this. >> reporter: yeah, he's -- yeah, he's got -- he's got a good system down. i can't complain. he's been doing a good job, but, yeah, i mean, in general, the diamonds, jewelry or engagements, december is the high season for that, but, yes, you see a lot of it on valentine's day too. save throughout the rest of the year. >> yes. anniversaries. >> reporter: happy new year's guys. >> you too. thanks, morgan. currency levels headed into 2016, the stronger dollar and diverging central bank path are on investors' minds. kathy, a managing director of fx strategy at bk asset management, and cnbc contributor, and i don't think par is happening, is it? aren't things in the euro or no? do we see -- >> everyone should just forget about parody. that's a headline grabbing target. they talked about it in 2015, it never happened. big names are still calling for it in 2016, but i don't think it happens. with that in mind, euro's headed lower. there's a yield chart between the two year spread in the euro zone, german, and u.s. seals, screaming for a lower euro. there's a lot of risks in 2016 that the euro faces. one of the ones people are interested in is the euro performs terribly in the election year. we looked at ten election years in the u.s., looking at the last election years, and euro-dollar fell eight out of the ten years, one pretty much unchanged performance where it increased. i think this year could be another weak year for the euro. we talk about the risk that the eurozone faces between russia, isis, slower growth, and add to the fact we have more hawks in the bird cage. we could see 105 tested, but parody is a farfetched target. >> bounced off three or four times. ed thinks the clearing rate for rates is not much higher than we are now. if the markets believed ed, that that would be bearish for the dollar. >> i think the key for this year is what does the fed do? going back to look at this year, of course, the dollar piqued in march, and moving sideways to a weaker sense. the expectation that the fed of not going to be as aggressive as people thought in the spring, that's changed the dynamics. as we go into this year, the fed raises, but how many times do they raise? if you look on a purchase power parody basis, allowing the short term forecasting tool, i grant you, but long term, the dollar looks expensive. i think a lot of -- really, this year in currencies comes down to what does the fed do? i think they will be less aggressive than the market. >> i hate to say it, but purchasing power of parody is something that the market does not pay attention to. even on a one-year, two-year basis, i do not consider short term, but i agree with you that the fed may not be as aggressive as the market expects, but i think -- there's rate hikes that are more front loaded than back loaded. i look for u.s. dollar strength in the first half of the year, and then they feel pain of the rate hikes, and when they do, they slow down in the second half of the year. that's why i think it's only about three to four cents away from current levels is not a farfetched target. that could happen, could still be at 110 by year end. there's a two-phase movements in 2016. >> scared me. normally, we don't try to factor in terrorist activities, and if that happens, all bets are off, but there's a chance europe is more prepared and more vulnerable than we are. >> absolutely. >> if you're a currency trader, no way you can ignore that, and that could hurt the euro, couldn't it? if it was happening more frequently? they are thwarting attacks every day in major cities over there. refugee, and what would that do -- the economy weak because people do not go out, and it hurts the euro the same day it happens, too, right? >> that's right. the world we live in right now, and it's a risk that euro-dollar traders cannot ignore. i hate to say it, but isis is embedding terrorists in refugees, and as a result, there's a chance that we could, if the governments are successful, see another terrorist attack in 2016. i think one way or the other, between the broad perspective of eurozone growth as well as all the other risks, and realistic geopolitical risks and possible show downs, we could see the euro feel shocks lower in 2016. >> previously, most of these things had been one off, and it's never has been a way to go, but it's going to be the new normal. people always buy the metal detectors, and it goes back down, and seems to get back to normal. i hope that happens again. this time, it seems like it might be, you know, the guys are embedded in places in iraq. i mean, we're going to have to root them out before this, you know, before this end, right? >> right. i think that is realistic risk in the year. >> all right. something to think about. all right. what do you do? you sit on your hands. thank you. ed is with us for another 18 minutes or so. are you here until 9:00? >> 8:00. >> that's a countdown, the minutes. >> the final countdown. >> merge or die, how slumping crude and nat gas prices force energy companies to find a lifeline before it's too late. securing times square, no easy task on a normal day, and former nypd whigser, bernie kerik joining us with the challenges of keeping a million people safe on new year's eve. more "squawk" just ahead. welcome back to "squawk box," everyone. watching futures this morning, and right now, things are slightly lower. this is the last trading day of the year. at this point, the dow is in negative territory for 2015, and nasdaq is positive, and s&p could go either way. with the losses in the future, that basically puts it at break even. the way the futures go, the way that the s&p goes today determines how the s&p goes for all of 2015. talking mergers. megadeals took energy sectors by storm this year. there's shell's purchase of bg group for $70 billion. what's it look like in 2016 for energy companies staying afloat? we have the possible conso consolidations on the horizon and what it all means. the jones day partner and chair of global editing practices. good morning. >> morning. >> energy is big, but we talked in the break, coal was the driver of it. are we going to see a lot more transactions from companies that are in trouble in 2016? >> well, 2015 was a cornucopia of transactions, but investment grade things. i think we'll see some of that, but, obviously, some digestion. you nknow, i mean, there's not another $50 million deal when you're in the process of doing one, especially the aggressiveness of the government right now. next year, we add to a lot of shotgun weddings, a lot of merge to survive kind of things, and, particularly, but not limited to the oil patch. >> right. has so far the feeling been to wait? meaning things will be worse, and, therefore, the shotgun weddings, stuff will be available in a fire-sale like way? is that going on? >> yeah. obviously, when prices first went down, people filed into debt on the bond market, on the bond side, loan to own strategy with prices in the 50s. now the price is stuck in the mid-30s, and there's goldman and others saying, the 20s, you know, we'll see. one of the things about the oil market particularly is really pretty hard to predict. don't forget that before lehman went down, wti was at 147. >> when you think about, though, the buyers, think big strategics jump into the space or just private equity restructuring kind of transaction? >> well, i think it's going to be both. yeah, the majors and other big oil companies curtailed budgets a lot. some have dividends a lot. part of that was just dividend percentage of their stock price out of alignment, you know? i think there's going to be a lot of big guys in the space. there's going to be a lot of loan to own people. one thing that is not changing is, despite all the dploom gloo of the end of the year perspective because we're flat out is there are oceans of capital available, just oceans of capital. not from the traditional sources. >> from hedge funds? >> hedge funds, family offices, you name it. they are looking for places -- fed can raise three or four times next year. we're still at an incredibly low yield world right now. >> so do you see the hedge funds edging out the banks as the lender? >> well, hedge funds have certainly become a major factor in the banks, and banks still love transactional finance because compared to consumer lending, things like that, huge up front fees, so it's very profitable to do big deals. you see some of, you know, mentioned the shell deal. one bank makes $30 billion bridge commitment by itself. >> but in terms of adding true leverage, given what washington's done, it's much harder for banks to commit. >> they'll do that, but will they come in at a normal lending situation? no. they are not that active. that's why the hedge funds moved in. where are they going to go? it's -- the whole tapestry of things is really changing. there's still going to be a lot of investment grade activity. look at the pipeline, we think, is it possible, 2016 could be better than 2015 in terms of number and amount? yeah. it's possible. >> so -- >> are we going to add to it, all distressed activity? >> what's the anxiety? >> ours it people, frankly. i think this is true across the professional services environment that it is involved in bankruptcies or m&a. it's, you know, it is really been a beating, particularly on the younger people. >> trying to get into the work force? >> yes, hiring them, and look at us, do i want to be that guy, and they say, oh, i'm not sure. millennials are different than the rest of us. so this is way off topic, i know, but the headlines, goldman says you can't work on the weekends, they mean it. everyone thinks that's, you know, they are suspicious of that. it's -- it's -- >> why isn't renewables and green and solar and wind, why not see the same issues we see across the board? >> you're going to. because economics are subsidized -- >> but they are subsidized, a step up. >> they do, they do, but sooner or later -- >> $36 oil, they are in worse shape. >> yeah. just even in, you know, tradition traditional, you go to the pump, you know, the margins people make on ethanol. >> how do you do wind and solar? >> well, you have to have a long term perspective. what's warren buffet say on $20 oil? it's a buying opportunity. there's some of those people, but before we get to that, there is a lot that needs to be out of the system. there's 100 billion dollars of high yield debt raised in the last five years for frackers. >> right. >> bob, thank you. appreciate it. >> you're welcome. zblrvel a major milestone for uber which you may need tonight after drinking bubbly. the business of champagne and maybe a taste test too. just over 16 hours to go before the new year. "squawk box" will be right back. ? yeah, give me a problem and i've got the solution. well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere. my drivers don't have time to fill out forms. tablets. keep it all digital. we're looking to double our deliveries. our fleet apps will find the fastest route. oh, and your boysenberry apple scones smell about done. ahh, you're good. i like to bake. get expert advice for your small business at att.com/small business. welcome back, uber crossing a milestone, announcing the billionth ride took place on new year's eve inside a hybrid that cost $8. to mark the milestone, the passenger got free uber trips for a year, that's the good news, and free vacation to any city where uber operates. guest host this morning, port folio manager at qma. ed, we talked about it earlier off camera, near where you think interest rates are with or without the fed. i wonder, 1 or 2%, whatever you call it, what kachanged about t world? i can't see it as a positive for the globe in terms of growth. something bad must be occurring for you to say that? >> well, if you look at hundreds of years of interest rate history, interest rates over the last couple years have been the lowest in human history for a sustained period of time. i think you have to say to yourself, what's different besides -- if you say climate change -- >> no. is it possible it has something to do with it? i'm sure -- >> i don't think so. >> i don't know. >> i think it's -- >> okay. go ahead. >> i think it's demographics. obviously, central banks are a big part, don't get me wrong, that's the most proximate cause why rates are low, but there's a shift, obviously, more baby boomers than ever, but some things not well understood is there's a shift in relative wealth as well as relative income into older hands, so older people are likely to buy fixed income, shed risk, and this is not just -- >> supply and demand for securities themselves? >> think of how many people are just trying to hope their wealth provides them with day-to-day income. >> seems like the interest rates in the past -- we have to go, set on inflation, and expectations, maybe there's no inflation. >> it's supply and demand. investors want to be above inflation, but if people fight for it, you can't. >> interesting. thank you. ed, happy now year. >> thanks for coming in. >> great to be here. coming up, countdown to 2016, hundreds of thousands of people will be ringing in the new year in times square with thousands of police officers on hand. we'll talk security preparations with former nypd police commissioner next. while it's 16 hours until the ball drops here, we are moments from new year's day in sydney. that's next right here on "squawk box." getting ready for the big party. >> three, two, one! >> a million people jammed into the streets surrounding times square, and bernie on the challenges facing the nearly 6,000 police officers tonight. >> break out the bubbly, big sales, celebrating early with a few high end samples. >> we end the year with style and grace. >> five, six, seven, eight. >> step, kick, step, kick, step, kick, one more. >> big finish to our 20th anniversary. the third hour of "squawk box" begins right now. ♪ >> oh. i got it. welcome back. wow, it's happening again somewhere. welcome back to "squawk box" here on cnbc, first in business worldwide. right now, ringing in the new year down under. fireworks going off in sydney, australia. apparently, i've been told that it's summer down there, which i don't believe it's new year's, and i don't believe it's summer. anyway, a run down of the next cities to celebrate at 10:00 a.m. eastern, tokyo, japan, seoul, south korea hit midnight already, and then at 11:00, beijing and hong kong. i think the cop sencept is con e confusing. don't you think we should be at the at the same time time because we're global? >> no. midnight, midnight as it rolls across. >> why is auckland first? why are they first? >> they are ahead. >> why does the day start there? it's a round thing. >> the sun. >> yeah, but why start it there? why not start -- you could have started at 12 hours -- you want to do something. you know this is an absurd conversation. >> absurd. >> we do have news to bring you, relating to the new year, not here, but across the pond. authorities in belgium detailed six people detained as part of the investigation into a new year's eve terrorist plot. brussels called off the fireworks display, citing fears of a militant attack. the city of paris also scaling back its celebration plans for tonight as well, and security in times square will be tight tonight. nbc is there, and he is joining us there now with more on what party goers can expect. >> reporter: hey, guys, good morning to you. we expect about a million people to jam into times square here, some of them thinking this is the place to be. they will stand on their feet, some of them up to 12 hours. get a good view of the ball when it comes down at the stroke of midnight tonight. you alluded to high security in place here. 6,000 police officers uniformed, jurn undercover, counterterrorism agents, bomb sniffing dogs, snipers, you name it. bringing out the works tonight to have a safe event, and city officials are confident they will will be able to stop and detect threats tonight. they don't have any credible threats against this event or city tonight. that is, indeed, good news. the weather also very good news. temperatures right now in the mid to low-40s, expecting it to stay at that temperature midnight tonight, a great day in times square. we're ready to go. the party's about to start here in earnest, and i want to wish you guys all a happy new year's for 2016, back to you. >> thank you. happy new year. let's turn to the markets. the dow tracking to close out 2015 down by 1%. the s&p is near break even levels, in fact, up by 4.5%s for the year with the s&p. the nasdaq looks to finish the year 7% higher. let's look at the u.s. equity futures at this hour. you'll see that things are relatively flat, although, the dow futures are down 40 points right now. nasdaq do8, and if things closet these levels, s&p would be down for the full year. among the top corporate stories, bill ackman's out with the final report of the year. the hedge funds down 19.7% year to date as of tuesday. one million people expected just a few blocks from this studio tonight to ring in the new year. i think it's 75-inch screen at home near a refrigerator and a bathroom, doesn't that sound, you know, within walking distance? >> warm and cozy. >> watch, bathroom. >> and not a million people. >> here talking security and hopefully new york does know what is going on. the former commissioner of the nypd, in charge of the new york police on september 11th, and we probably, out of all the countries around the world and cities, new york, if anyone, in any place, can make it safe, it's here. >> it's better prepared than anywhere in the world. look, we have the most resources. we have the best training. we've been through these types of things in the past. the -- you know, and you know what? i keep hearing numbers. 6,000 cops today in and around times square. when we have the detail back in 2000 and 2001 when i was a police commissioner, that detail was only about 3,000. it's completely doubled. we had 3,000 back then. now it's 6,000, plus the equipment they have and the resources they have today that they never had before. it puts us in a far better position to secure the event, and, you know, god forbid to respond to some catastrophe in the event something happens. >> what about outside the perimeter of times square? everybody's got to leave, right? i guess that's also -- people understand that, i'm sure, so subways, wherever there's going to be large crowds, there's -- >> wherever there's large crowds, there's going to be a presence, yuniformed presence, visual presence, and heavy nonvisual presence. you're not going to see cops in uniform. >> you think the 6,000 number includes the folks that are not in uniform? >> some, yeah. you have plain clothed anticrime guys within the crowds. there's surveillance teams. you have bomb detection, investigators, detectives. you don't see them in and around times square. >> what do you think what happened in brussels and decision in paris to scale back? >> well, look, you have to look at the credibility of the threat. you know, people have said consistently there's no credible threat here, you know, there's no specifics. i take -- i look at this very differently. there is a very credible threat against the united states of america by isis and the radical islamic movement around the world. that's credible. are there specifics? no, there's not specifics. what happened in paris, what happened in brussels, they had to come up with some credible, specific threat that caused them to stop or diminish events they had planned. if something like that happened here, we have to look at it. look, you have the incident in california, in los angeles, where they basically shut down the school system. we have this same information here that they did. we looked at it differently. we felt it was not a specific, credible threat to the city, and we went on with school and everything was fine. >> all right. talk about this next year and the environment that we're in and whether it is probably a higher risk abroad than any time in the past, and would you say compared to new york that the major cities in europe, take your pick, are not as prepared as new york? >> honestly, joe, i don't think anybody's as prepared as new york city. >> they parorobably have a lot e individuals that are -- that, you know, that grew up in that country, have maybe gone to the middle east, and have come back, and they don't know about it. do you think -- >> especially the u.k. especially france. you have open borders across europe. >> well, that combination, which that makes me think that, god forbid, but there could be one, two, there could be more next year than we're anticipating. >> i think you're going to see increasing numbers of in these types of attacks all across the globe in the years to come. you know, this is something that's happened since september 11th. when i spoke before the 9/11 commission in 2004, i said it's coming. we have to be prepared for these attacks. >> but why -- >> you mentioned u.k. i want to go back to that. u.k. at the same danger threat of france or belgium at this point? >> i say the threat levels in europe, in u.k., in france, there is -- if you go back and look at the radical outrage, you know, in the protests, there's a lot of that stuff that goes on in the u.k. a lot of it. >> i was just going to say new york, though. why -- i appreciate that we have more officers and things maybe better here to some degree, but why hasn't there been an attack here yet, and in terms of your worry about attacks, given this would be a target? >> listen, i'm always worried about an attack, but i'm very much a realist and understand that, you know, it's going to happen whether it's going to happen here or not, they are going to get in where they can. the fortunate thing for us is, we have the resources, we have the intelligence, we have things we never had before, and we also have new york city detectives that are assigned abroad that funnel information back. we have these system programs with other countries, including asia, europe, the middle east, jordan, and so we -- we're a lot better off than other countries and other cities. >> did you see the recent back and forth between bratton and kelly whether new york is less safe or whether the numbers are being jiggered? you know, there's a lot of people that think things have gotten not, you know, mayor deblasio resided over maybe some deterioration in the standard of living in new york? >> i've seen it. look. you know, obviously, i don't think ray kelly would have said it if he didn't have a real source behind it, so it's probably some precinct commander or a burrough commander giving him this information. you know, i have not heard it. i think bratton did something he obviously has to look at. these are both good guys. they have done tremendous work for this city. there's, obviously, a difference of opinion, you know, i can't say. >> let's just -- the issue seems to be how the statistics are measured. >> right. >> people dying versus -- >> supposedly it's apples to appl apples. it's not that the numbers are jiggered, but more, for example, if a bullet tears a person's clothing but does not wound the victim, it's not considered a shooting. >> clear-cut definitions that account for this stuff. there's clear-cut definitions in the fbi statistical monitoring in the capturing of data. it's clear-cut what the incidents should be and are in how they are captured. it shouldn't be that difficult. the other thing is, you can't hide dead bodies. you know, a murder is a murder. >> right. >> no matter how. >> i know. yeah. >> in this world, commissioner, there's two sides of a coin on whether civilians should have more or less arms in terms of -- do you think we should? do you think we should rely on authorities in most cases, or would it help for civilians to have access? >> you know, i'm very prosecond amendment, but i think this saying that, i think, you know, if you have mental illness, you should not have a gun. i think there should be waiting periods to buy a gun. i think we should enforce the gun laws better in many cases. i'm super pro second amendment, and, you know, let the cops and law enforcement authorities do their jobs, but, you know, i'm pro second amendment. >> right. okay. great to see you. >> thank you. happy new year. >> happy new year to you as well. >> appreciate it. when we come back this morning, the pace of new startups kicking in high gear this year. it could be a big boost for job growth in 2016. we'll have that story next. then, data that could move the markets. we've got jobless claims hitting the tape at 8:30 a.m. eastern time. later, stock up on champagne before tonight's celebration. we'll taste test the best bottles giving you recommendations. "squawk box" will be right back. welcome back to "squawk box," and futures right now mildly doing actually nothing. actually, down from where they were before. dow now down 42 points, nasdaq down 9, and s&p down five. crude prices now, wti trading at 36.31. the entrepreneurial end gin is revving up, good for the economy, up 3% in the last year. the biggest annual gain since 1988. joining us now to talk more about the rise in startups impact the labor market overall is the co-editor of the report, and thank you for being here today. >> oh, my pleasure. >> what do we read into this? how is it good for the economy? >> well, startups are new, young firms because not all are startups, some could be any establishments, are responsible for about 30% growth in jo job gain. they have been in secular decline for three decades. we are now hoping they are starting to see them maybe make contributions they need to make to affect the labor report. >> i think of a time it was not a great indicator, post-2008, when people were laid off, forced to start up their own firms. >> exactly. entrepreneurs are broken in groups, and there's transformational ones, looking for big ideas, a lot of employment, and then there's the consistent entrepreneur, who you are talking about, and the foundation that tracks this stuff found that the opportunity entrepreneurs, those who come from employment into starting their own businesses instead of from unemployment, those fell down to around 60, high 60% total startup, and now they are back in the high 80% range. >> nobody on either side of the aisle does not want to grease the skids for startups. i don't feel like we've done nearly enough, a lot of impediments not there before. hard to get money from a bank, number one, regulations, there's not money like big companies have to get around taxes and regulations. it's harder and harder in this environment. it should be a slam dunk. >> it should be. >> it's not. it's tough. >> it is tough. this is a long term problem is the cost of health insurance. there's certain studies that show that people go into comfortable founding their own businesses once they get medicaid, so -- sorry, medicare, so that, and the control, so it's not just people retiring and starting their own businesses, but that's another impediment, and, of course, after the housing collapse, a lot of small business owners will use equity from their own homes. >> banks lending to the people who want to do this? >> there are some banks, banks are lending better, but it's still tough. >> how much paperwork? no more than five years ago? >> i don't know. >> i argue less. big article in "wall street journal" about on deck, online services, that matches people to deal with it. >> i argue technology helped people get loans. we've seen it only in two years. >> 3% bounce off the bottom is not exciting. >> well, and it's like a sunny day at the end of four months. i mean, it's -- it's been a long ti time. >> this is the old -- >> yes, it is. >> who was on "squawk box" many, many times. >> yes, yes. still in touch with his widow. >> we lost him how much years ago? >> 2000. >> brilliant. >> yes. >> there's a change in the nature of the startups, because there's the gazelles, fast moving ones, moving faster than the median and lower percenti s percentiles, but that's drawing back now. >> including just ma and pa stuff? >> well, those would be inclu included, but they not usually gazelles. >> i know that. i have a start-up right now, and -- >> okay. >> and there is -- i'm scared. i'm scared of -- i don't know, accounting, all that stuff. >> i'd be scared of it too. >> and regulations. >> well, also demand. i mean, when you read the report, a lot of people are just plain worried about demand. >> i don't care if i make money. >> but that's the overall sense of the economy right now. >> what? >> that's the overall sense of the economy. if you're concerned about demand, that keeps you from hiring additional bodies. >> and minimal wage does not help at $15 either. >> we'll see what happens there. >> she's not taking that one on. >> i'm not going to. >> all right. >> coming up, thank you. coming up, new additions to the list of words that should be banned from everyday use. some problematic terms on the list like "going forward." all eyes on this, on the heels as we head to break, keep in mind, we are looking at the best and worst performing stocks in the s&p 500 this quarter. welcome back to "squawk box." bill cosby is home today, released after bail after his arrest yesterday on sexual assault charge. the comedian has been charged with aggravated indecent assault, montgomery county prosecutors said in 2004, the 78-year-old gave pills and wine to a former temple university employee before sexually assaulting her. cosby was released on $1 million bail, and passport was taken. the next court hearing coming up on january 14. cosby did not have to enter a plea at the arraignment. he's denied all allegations of sexual abuse claims. time for a list of problematic words that should be banned from everyday use, i don't know according to who, but including the word "problematic" as one of them. that's weird. lake superior university releasing annual list of words banished from the queen's english for misuse, overuse, and general uselessness. among the highlights starting an answer with the word "so" -- >> oh, i hate that. >> using presser instead of press conference. is efforting in here? the tomorremperature "walk it b okay, and using "vape," and "manspreading." >> oh, gross. >> which means, luckily there's -- no, too late. there's a ticker. that means sitting with your legs wide apart on public transportation and taking up more than one seat and sort of just letting your junk just fall where it may, which is kind of hideous for people that are also on the subway, right, andrew? >> i'm uncomfortable. >> well, then -- >> i am. >> open up a little. >> i'm happy to keep my legs crossed. >> that's why you're up comfortable. >> i am. my legs are crossed at this minute. >> they are? >> breaking economic data -- this is how uncomfortable i am, stuttering, watching jobless claims minutes away, numbers and reaction after the break. right now, take a look at u.s. equity futures, dow opening up 45 points. back in just a moment. at&t knows the best kind of holiday... is the kind where everyone gets what they wished for. make this holiday extra happy when you buy one get one free on our most popular smartphones... like the samsung galaxy s6. buy one get one free. so spread some cheer. and capture every minute of it. right now at at&t, buy one get one free on our most popular smartphones. wac back to "squawk box." jeb bush shaking up the presidential campaign. the staff at the headquarters redeployed to early primary states. the campaign's shifting money away from tv ads, cancelling $3 million in tv reservations, moving to voter contact, and, quote, field efforts. more on the story at the bottom of the hour from john harwood. minutes away from the jobless claims. you know, if you don't believe the 5% number when you talk about participation rate, jobless claims would have you think maybe things are going well. u.s. equity futures worsened, especially in the nasdaq throughout the session. they were up earlier, even though the other two were down, but now we got the dow down almost 48 points, and the s&p, that's enough to put it in the negative territory for the year, and now the nasdaq is weak on a relative basis down 11. rick santelli has the numbers, please, rick? >> and the last set of initial jobless claims jumps 20,000 to 287,000 from a notary publnrevi week look at 267,000. continuing claims a bit under 2.2 million, a bit under 2.2 million still. interest rates and temperature ye ten year notes, down overnight, now at 228. last year at 217, so, you know, we have seen slightly higher yields, much of that has been on the back of equity gains after somewhat destabilizing period we had a couple weeks ago where the eggties and the junk and high yield and investment yields tagged a bit. maybe they are issues we look towards next year to get some better handles on this, but all in all, gang, it's a pleasure working with all of you for another year and for all the viewers and listeners, at least from the pits of chicago and myself, happy, healthy, and prosperous new year. >> thank you, thank you, rick. i know that's -- >> happy new year, rick. >> us as well as yours and echo sentiments back to you and viewers. to join us more on jobs data is russell price, senior economist at ameriprize financial. you got jobless claims, showing a good labor market, 5%, a good labor market, you wage gains hard to come by, and the participation rate and notion that a lot is part-time and more want to be working more hours than they are working right now. is it just a labor market that's different than those we've seen in the past? is it good? bad? medium? >> you know, i think it's really what you said, a medium type of sentiment out there in the labor market right now. initial jobless claims probably are the best economic statistic seen over the last couple months. exceptionally low levels. in fact, they are much lower than what they were back in the late 1990s and 2000. with today's report, we should be about 30 weeks of 280,000, and the last 31 weeks, and during the late 1990s and 2000, we had 11 instances of that, and we had about 10 million more people in the work force. that's pretty remarkable. so companies are holding on to their employees pretty tightly, but are they likely to continue to higher in a fast pace, even though demand is really been easing to some degree? i think we expect the pace of job growth to ease in the months ahead as demand remains relatively tepid and dependent on the consumer. >> are there -- is it safe to say there are a lot of people that have given up and it's not just baby boomers or demographics, and that's why the participant rate is low? is it true there's jobs, good paying jobs open for people that are not trained in the right way? that's different than historically than what we've seen, so we have to view the whole labor market differently now. >> yeah. i would agree. i do think that the most significant factor in bringing down the labor force participation rate has been retirement. it's baby boomers moving into retirement years. we've seen that number decline, and in some studies suggested that is the major force driving that number lower. overtime, we should see more of those discourageded workers come back intoed labor market, and, t thus, boost it up a bit, but not back to where it was previously. earlier, you mentioned 5% unemployment rate, and i think that number is flawed. i believe that the federal reserve also sees that number as flawed. last year, maybe a little over a year ago now, they started the labor market conditions index to get a better idea of just the broader scope of employment across the economy. traditionally, when we see that rate of 5%, usually the uof, including part time workers and people under employed, that number is usually somewhere at 8%. today, that's close to 10%, 9.9 to be exact. there is more slack in the labor market, and 5% unemployment rate currently indicates, and so that's going to create somewhat of a challenging pat for federal reserve in the year ahead if they continue to increase interest rates, and that number stalls or declines or decelerates as far as improvement. >> something is amiss. you got a 2% gdp, we're lucky, every year, and we got zero interest rates priming the pump, and those things, one of the things is not like the other. you get 5% unemployment, zero interest rate, you ought to have enough to give you a better read on gdp. i don't know what policymakers need to consider or do to set that right. >> no, it is very challenging today for policymakers today. there's infighting over the last couple years is deleveraging across the economy, whether consumers or cooperations, largely have been going through deleveraging process, so the 0% interest rate has been pushing on the string, going forward, however, two of the most significant drivers of economic activity over the last year have been automobiles on housing. if we start to increase interest rates and we start to ease the pace of improvement in those two sectors, that could be dangerous for the economy, particularly when we only have, as you mentioned, that we foresee for the year ahead, gdp in the range of 2-2.5%. it's particularly problematic, maybe for the housing sector, the inflation pressure we've been seeing comes from housing. owners equivalent rent, based on renter rates has been the primary driver of the core rate moving higher, and if we start to increase interest rates in that environment, it makes housing less affordable, pushing buyers into the rental market, causing things to go higher, creating a sticky situation for the federal reserve as they try to increase interest rates at this time with economic demand really soft and negatively impacted by the strong dollar as well. >> do you think more than ever in history right now, we're affected globely too, and we just can't, you know, be our own island here with the domestic economy, and influenced by the rest of the world, and i hope it doesn't mean we're stuck with the growth rates of the rest of the world, and i'm not talking china or india, but in terms of europe or, you know, 2% they had for 30 years. is that us now? >> i don't think we're quite there yet, but i think one thing, one term we talked about has been in the u.s. economy at 4%. 3% is probably the speed limit for the economy, maybe even slightly below that, say in the 2.75-3% range. it's largely based on demographics. we're an ageing society. our population growth is not what it was, and those are two important drivers of what an economy can really achieve. >> right. >> still, it's a level we can continue to see good job growth and better wage in salary gains and continue to grow. >> all right, russell. my fault. it's the millennials, walking around like this. they never -- tai donnot lookin cross the street, of course, it's 3%. that's the youth. wanted a rise from him, but anyway, russell price, thank you. they are experiencing things. >> thank you. >> experiencing their iphones basically. >> we're going to experience champagne in a moment. >> i could use a drink. >> i think you could. i could too. coming up, popping the cork on the business of new year's eve, breaking out the bubbly on the set, high end champagne chilling on ice. drinking in all the big money stats, and a little taste test, "squawk box" returns in just a moment. it's new year's eve, and most start with a bottle of bubbly. it's sold in the fourth quarter of the year, we have three champagnes, two of the bottles worth $70, and one worth $170. >> that's right. >> what's going on in business at the moment? >> which do you like the best without knowing what they cost? >> i like that. >> i like that a lot. >> i know which is which, as long as you don't move them. >> i knew that was coming. >> i may have gone like that. >> no, you're good. >> real quick, how is the business going before we get into the test? >> the champagne business is doing well, and it's just come back to where it was before the financial crisis in 2008-2009. 2009 was the low point for things, and it's back up, and it's actually doing, bubbles as a whole, including champagne, everything else, doing better than the average wine market and wine itself is doing well. i think we should do this. >> because i have not eaten a thing. starting on the left? >> important to do this with no food at all so you get the full effect. >> full effect. okay, here we go. >> so, you know, as we taste -- >> okay -- >> digging that. >> they all are good. these are all wines i tasted at food and wine throughout the course of the year and thought were terrific, so i thought it would be fun to have a little, you know, little mono fight between them. >> i know what i like, but it's probably not the 170 one. >> don't sell yourself short. >> i think i know. >> i don't know, but -- >> my guess is the middle is the expensive one. i like this one. >> i like the middle one. >> i like the rose. >> middle one is expensive. >> the middle one is 170. >> i wanted the left one. i'm cheap. >> left is 2006 grand vintage. >> beautiful. i feel better about myself. >> middle is 2006. >> not a full taste on the left. >> a little less -- >> drier. >> little drier. dom has more layers to it. >> and the bubbles. >> 11 layers i tasted. >> i know. >> i could taste it was expensive, but i liked this better. >> that was one of the points i wanted to make, that, you know, one is $170 to impress, but drink the rose. they are a masterpiece of marketing, dom. >> surprised. >> it's a wonderful champagne and ages really well for twept years if you want, but they make a lot of it, and it's seen as rare and hard to find. >> should you hold on to it? i have gifts that were -- even from our wedding. people gave us bottles of dom. >> i have some too. >> now it's probably -- >> you know, as long as it's cool, in good storage, champagne ages better than a lot of other wines. it's high acidity. >> how long? ten years later? >> i mean, i had a friend who used to work for dom, admittedly had a good supply, but did not drink it before it was 20 years old, so five, ten years, that's great. i don't know when you got married, but, you know, the champagne goes well with the marriage. >> next year's ten years. >> you're in trouble. >> yeah. i pretend i'm bogey. >> it's a good model. >> we have paris. you and me, i wore green, you wore blue. >> the red in there. >> yeah. >> and getting ready -- >> i didn't know that. >> another thing i learned today from joe. >> movies. >> culture. >> pop culture. age. they don't leave me. >> 30 years old. >> yes. about 80 years old. >> people like this are not watching "casa blanca. >> they are not. i don't know what they are doing. they are experiencing. >> i love all of them. >> i like -- i really like this one. >> that's where you are going? >> sweeter. >> i think for a morning, you know, 9:00 a.m. in the morning. >> that's the way to go. >> glad you like the others. give me that dom. >> all right. happy new year. >> it was a tough year. >> happy new year. >> happy new year to you guys. >> cheers, everybody. >> cheers. >> happy new year. >> when we come back, the travel forecast for the holiday weekend, and the futures again, you see on the last trading day of the year, things are worse this morning. the dow futures down by 72 points, and s&p down 9, putting us in negative territory for all of 2015. "squawk box" will be right back. holiday season closing, and business travel will be back in full force. nbc meteorologist grant johnson joinings now from ft. worth with the week's business travel forecast, and, grant, it could be hairy for some folks? >> yeah, it could be. but, you know, all things considered, it's a quiet end to app otherwise wild year of weather. now, starting you off with a look at radar, showing showers in the southeast. atlanta affected, perhaps, with some minor flight delays from the rain. you can see that stretches up into the carolinas and back into the gulf coast. new orleans seeing rain as the day wears on. also, the houston area in texas. the big picture here across the country, the rain will hold on today along the southeast the r will hold on today along the southeast and gulf coast. a little light snow around the great leeks, ontario and lake erie. much of the northwest looks pretty good. the same story out to the west. there could be some rain headed into the west coast by sunday. late in the weekend. for new year's day, cold. as we head through the day, it expands farther to the east taking over the northern plains. the northeast stim looking pretty good. the rain will still hold on in the southeast and the gulf coast. temperaturewise, highs will be quite cold through the upper midwest and northern rockies. a little bit on the cool side, san francisco and los angeles. pretty cold in the pacific northwest. mild down towards the gulf coast. nice and warm in florida. highs in the 80s. overall, fairly mild new year's eve as they drop the ball in time's square. new york city, high of 48. happy new year. back to you in the east. >> thank you very much. happy new year. >> check this video out. when a raccoon wants a doughnut, nothing is going to stop it. the critter breaking through a drop ceiling at a canadian cafe. looking around and snatching the tasty treat, taking a bite and going home. the video, of course, sips going viral. here it comes. you know. >> you know me, i love a good glazed doughnut. so i sympathize with the raccoon. he looks like a robber. >> a little bandit. >> they are not as nice as they look. don't try to pet one. coming up all morning, we have been looking ahead at the new year. we are going to take some time to look back at a year that marked 20 years of "squawk box." our move into the big city, new york city, which is a great studio. we love it here. we'll have the best moments. it is impossible in five minutes. a bunch of bloopers and maybe a few boners coming up next. time to take a look back at a memorable year. check out the highlights and low lights good morning, everybody. welcome to new york. >> welcome to new york. >> "squawk box." >> five, six, seven, eight. >> cheers, gentlemen. >> over here, good morning. >> move your head like that. do it. do it. >> check out this shark this morning. >> check out this chart. >> i said chart. >> malgrot. >> how did i pronounce it? >> back to business excuse me. >> hate your job, looking for something -- i thought i came pretty close. >> hey, this is mr. "t." i pity the fool that don't watch "squawk box." >> chucky, tell me when. >> oh, oh, oh. >> no sign of intelligent life but i'm going to find if i have to tear this universe another black hole. i am going to find t i have got to. >> right here, baby. >> i was so excited to spend time with mr. andrew ross orken. >> what are you doing now? that was the music. >> i feel like i should read this very fast. welcome back to "squawk box," everybody. >> this is what they have been doing the whole time you were talking. >> the same with the teleprompter. >> maybe you can go right around that. >> you want to see a really look good. how do you like that? >> you have willbeasts wondering around outside. >> as long as they stay outside, becky. we don't want them in the tent. >> andrew, about ten of those. >> also, going to use the ball. >> am i in it? >> but first, becky. kim car dkardashian's young sister, kensle jenner, to boost the bottom line. >> becky did. >> i did, right. >> a moment on the lips, a lifetime on the hips. >> i always hear, all fat, no fun. >> strap me in a chair. >> we need a question for tim cook. >> i'm sorry. i'm afraid i can't answer that. >> tell becky and andrew and joe i said hello. >> we get to bang the gavel! happy birthday, "squawk box." it has been a great 20 years. items flying off the shelves. do-do. i did say do-do ♪ love and marriage >> sort of hanging on to each other. >> "squawk box." >> say it again. >> i think we'll be together for a while. >> another 20 years. >> i would like to be on the 40th anniversary show. book me, will you? >> that was amazing. most was on the air. we want to say thank you to to our tape producer, ryan cross, also put that together. >> he takes notes of our mishaps throughout the year. >> we are going to play that 20-year stuff. >> i don't care if it is 21 years after tomorrow. we are still going to do it. >> we milked it again. didn't you like that? >> there were more of you doing the bloopers. >> the pronunciations. >> happy new year. right now, it is time for "squawk on the street." good morning and welcome to "squawk on the street." i'm sara eisen along with simon hobbs. taking a look at pressure, under pressure on the full trading day of 2015. they are indicated to open lower. this is a make or break session for the s&p 500. up

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