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our guest host mark oelsen, federal reserve governor. did you folks everyone joy yourselves today? >> we did. got a lot done. >> we got some good stuff done. good guests on. we will stay low for a while. when we do exit t. will not be the end of the world. >> we will exit carefully, i think, and san franciscostrateg like the way larry described it. i think the fed will keep watching. the first role of the fed was lender of last resort. so providing liquidity was the first thing they did. they got a monetary policy that was developed later. so i think that's a core role, and i think that's appreciated. >> it's been great having zblu great being here. >> two hours goes fast.

>> it does. it goes really fast. >> ask good questions. >> yeah, yeah. >> we got some things settled off-camera, too, what goes on really behind closed doors at the fed. they're just like us. >> mark, thank you very much. >> my pleasure. >> make sure you join us tomorrow. "squawk on the street's" coming up next. live from the financial capital of the world, this is it, "squawk on the street." good morning, everybody. i just realized my tie wasn't straight. i'm mark haines. >> and i'm erin burnett. front and secenter this morning berkshire hathaway vote noes to issue 370 million shares to help buy cad burry. why does that no vote matter? not just because warren buffett is control of berkshire but it's the biggest shareholder with 9.4 shares outstanding. >> there's a big deal of data.

we will, of course, bring all of it to you. auto sales' numbers for december pending home sales, factory orders, all of those out in less than an hour. they could be market-movers. and we're on it like white on rice. >> and weekly retail numbers jumped 1 1/2%, 2 1/2%, mark, if you compare it to the same time a year ago. this according to goldman sachs and international council of shopping centers. some might say that's good news because while the economic outlook may be better now, not as many people have jobs this year as did a year ago. >> pictures right now are pretty flat. we're down .10. fair value is flat. dow is down 6. we need 7 to get to fair value. nasdaq, a little below fair value. it looks like a very very, quiet open right now. >> and oil -- just as you were speaking, mark, it was down about 4 cents. it's now now back up again 2 cents. 81.53.

by the way, we have been struck in the range of 60 to 80 and now second day of holding above it. the gold trade and we are up 1 1/2 there. that puts us at 1,119.80 an ounce. mark? >> let us hit the markets. we start with cool breeze at the big board. bob? >> the important thing the mark trend remains intact. uptrend remains intact after what happened yesterday. there's an absence of selling pressure. that's certainly good news. this kraft and cadbury and nestle thing is complicated. cadbury saying go pound sound. it's a derivative offer. kraft selling the frozen pizza business to nestles for $3.7 billion so they can raise cash for the deal. nestles looks like they're out of the running for cadbury and you heard berth shire hathaway no to the proposal to ray 270 million more shares to get the money. very complicated. tenet health care is up 9%. they were upgraded or added to the conviction by goldman sachs.

they are talking about higher marriageens in 2010. radio shack up 6%. goldman talking positively about them and their wireless revenues in 2010. utilities had a great run recently but robert bayer downgraded a whole group of them. the yields have moved down. very good news from continental airlines, the load factor, amount of passengers they are moving around increased notably in december. trader talk.cnbc.com. how are we looking at the nasdaq? >> slightly lower, bob. we have two big names with potentially very big news. we'll start with apple. more and more information is leaking out with the tablet computer being launched later in the month. they are doing what they do best. make great products and generating buzz. this tablet computer might have a 10 to 11-inch screen, multicolor touch screen, very dynamic. we'll see what we learn as we lead up to maybe this launch later in the month. launching today is the nexus one, the mobile handset from google. it's going to be interesting to monitor if carriers pick it up and subsidize the price.

right now retail price will be very high. morgan stanley chiming in on the sector actually with overweights on palm, research in motion and qualcomm. right now palm up 3.1%. research in motion up 1.4% and qualcomm also up 1.4%. i just want to chime in on tethteth teva pharmaceuticals. very positive this morning. let's go to sharon epperson. >> we touched nearly $82 a barrel overnight. $81.99 was the point. we will be looking to see if we get that $82 push today and whether we close above that level. that will be key. the cold weather here in the u.s. and europe should keep prices well supported but keep in mind we're also trading very technically. if you look at what happened to oil prices in the last week or so, the latest commitment of traders report from the tftc pointing out there have been a lot of large speculators adding long positions and there has been the trend in the past month are 0 so as we have seen oil prices continue to rally from

$70 to $80 a barrel. at the same time, the ce group reporting its energy volume increased by 20% in the month of december as we saw prices rise. meanwhile looshgs, looking at gold prices. they are up about a dollar. gold prices over the past month, up 111% for metals overall according to the cme group. rick santelli in chicago. >> good morning. one action $16 billion and then thursday the treasury will tell us how many threes, tens and 30s will sell next week. many suspect, even though it hasn't correlated in a huge fashion, you're going to start to see a much more correlated heartbeat with one supply showing up and once interest rates play their spike. right now we don't have coupon supply this week and indeed interest rates have moderated a bit, moderated overnight, moderated a bit yesterday but yesterday it was driven largely by short maturities resteepening the curve a bit f you look at

canada, they will be issuing a global issuance in euro. so euro denominated debt and in many cities, including chicago, whose ratings aren't anything to brag about, are going to be push ago lot of muni issuance through. cities need a lot of money and investors seem to have deep pockets. maybe 2010 will be remembered for muni issuance. let's go back to mark haines. >> and i will just take it for a quick moment to give the update, rick, on what we saw in asia. on the back of the big surge we saw here yesterday, asian stocks ended higher, 2.1% in hong kong, china. sang high added over 1%. and in japan, tokyo, nikkei ended up just a little bit, .3% and in australia, index up a full percent. in india, bombay sensex was higher by 1%. in europe, ftse is a little mixed and cac. not my moves are insignificant but the dax is lower at this

moment. auto sales figures trickling out today. phil lebeau is live in chicago. phil, are we going to see real optimism here or not yet? >> i think it's too early to see optimism. i think these will be better numbers than we saw in november but overall keep nipd we're going to look at 2009 that, whew, this was real ugly. december numbers, you will probably see an increase coming from ford, slight declines expected from gm and chrysler. speaking of gm, the sales for gm expected to be strong due to the saturn and pontiac dealer incentives. remember, they're trying to push out those brands as quickly as possible. that's the reason gm's market share could top 20% for all 20609. the downside for gm, chevy is expected to slip to number three in terms of brand sales in the u.s. ford is going to be moving up to number two in brand sales. the ford f-series, expected to be the best-selling vehicle of 2009. its market share up a full percentage point at 16.9%. we will see if they can hit 17%. when you look at overall sales, look at this trend over the last five years. really falls off a cliff between

2009 and 2008. we should point out between most of the industry sales will be between 11.5 and 12 for 2010. one more thing, check out the blog behind the wheel.cnbc.com. mark, we have news from new delhi, india, where ra tan tata, the chairman of tata says you can see the $2,500 nano in the u.s. within three years. something for you to look forward to. >> i guess you can buy like two of them, one for each pocket. all right, thank you, phil lebeau. time to get the word on the street. senior vp of strategic initiatives joins us at catone and company. bernie, interesting year end and year beginning. drop 100-plus on new year's eve. we come back on monday. we get it all back. where are we headed? >> less hope we're headed hiker. i think over the next few weeks we're probably going to see an

upward move, 5% to 10% is the rally over the first quarter. i think a lot of traders closed positions and locked in their profits and starting to put their bets back down again. there's always retail money that comes racing in after the play and chases it a little bit. i think we're going to see some of that but i am a little worried what's going to come after of that. >> the bias at least to the upside for a while? >> at least the short term. but a month or two out, people will be looking on the other side of the divide. what will happen when the stimulus money is drawn? how will the states be able to pay these bills? state spending is 12% of gdp. they're in a crisis and there's no political will to fix any of those problems so i think it's going to be a problem. >> so we can't just relax and -- >> i would like to get on board and go for the ride like we did last year after the march part. look for a pullback for a good portion of last year that never came, the late part. but i think we will get a modest rally followed by some kind of a pullback as people get a little nervous. >> thank you, bernie mcsherry. coming up next -- what do we got? it's on the next page. here we go. in two minutes, in fact, the

fabulous flying faber report. big news on the kraft bid for cadbury. berkshire hathaway making its voice heard. and showing its fairs. and is hogan meddling? the jobs outlook for the chief u.s. economist. jpmorgan has friday's big, crucial number. we'll be right back. they loved the presentation! judy, great job on the printing! i'm amanda. tom. james. nice job on our brochures and letterhead. louis, keep up the good work with our shipments. it's -- it's peter. great job, everybody! that's a closet. you know what, guys? take the afternoon off! we can't. that is why i hired you. world's proudest boss. [ male announcer ] we understand. you can never have too much help. fedex office.

welcome back. goings on in that battle for cadbury. where by the way, there is still only one bidder. yesterday we told you nestle wasn't interested. take a look, though, today at cadbury's share price. it is down as much as 5% in the early going. you see the bid asked there is not going to help you very much. but if you were to look at the trading in the uk, that's where it's already done. the ads here in the states, most likely going to be down a similar amount. about 5% right now. again, we'll update you. there it is. now it is coming right in line, the bid ask. there you get the sense of why? we'll get to this later. nestle's saying it's not involved. and then also some other goings on involving warren buffett and,

of course, decision by kraft to try to increase the cash portion of its deal. not the overall value, just substitute cash for stock. let's get to that. kraft sells its pizza business to nestle for $3.7 billion. a good deal for them. and one, by the way, i'm told that they have deliberated in selling to them for quite some time. in fact, the talks predated, originally predated any bid that kraft made for cadbury. so this has been around for a while. but what it does is it gives them cash, and they're going to use that cash after taxes and after deleveraging to make sure they keep an investment grade rating to increase the cash portion, a cash portion of their bid by 60-p, 60 pence per cadbury share or 240 for the ads. but it doesn't mean they're overall increasing the bid. what it does is it replaces what it would have issued in new cash shares with cash.

why? cadbury shareholders want more cash and as we'll get to in a minute, cadbury cash holders don't want them throwing out as much stock as they are. now the key is it remains essentially unvalued than could change. let's go over the time line. kraft has 46 days from the beginning of its offer to increase that offer. that would be january 19th. so that is the key date here, two weeks from today is when kraft really will be put to the test as to whether it's going to increase that bid. as for hershey, remember hershey? i've reported a lot on this. nothing yet. time's running out there, too. january 23rd is the deadline there. if they were to bid, of course, this whole thing starts all over again. by the way, kraft shareholder have until february 2nd to vote their shares in favor of a bid. that gets us to warren buffett and what's been going on with the stock price. buffett out this morning saying, hey, berkshire voted no on whether you want to issue -- there's a proxy out, 370 million

shares for this potential cadbury bid. now, they had to put that proxy out but it doesn't mean they're going to issue 370 million shares. he's voting no as of now. that could change, by the way. the actual vote -- final vote is now tallied up until february 2nd. and you can change your vote between now and then. he go that's way. that may help kraft shares. he's saying they're too cheap. don't issue them. that could help the stock go up, which mean fewer of the shares need to be done. if everybody follows suit, of course, in that vote, then kraft would not be in a good position. what does this say about the latest proposal from kraft to increase on the cash portion? it says what you might expect. they call it tinkering. they say, hey, it remains unchanged and they use that great word derisory, with less than half of the consideration in cash. finally, let's end on nestle. i told you yesterday nestle wasn't going to bid. apparently all of that speculation about the money they'll take in from the sail of alcon to novartis, which won't be done for six months, caused

the uk takeover commission to say, nestle, are you interested or not? nestle comes out and says, we're not. we don't intend to make, parm r participate or have anything to do with a formal offer for cadbury. thank you, nestle, for making that clear for those of us who knew it but perhaps for those of you who didn't. mark, back to you. >> thank you, david. one more check of the futures here for you. retail closed flat on the s&p. the dow is still trading but it is flat. nasdaq slightly below fair value. it looks like we maybe will wonder lower at the open. final premarket analysis straight ahead. later, art hogan in our house, taking the train down from boston, mark, to introduce the new etf for heavy metal fans. we'll be talking about that. i'm still enjoying that comment from cadbury about kraft, referring to their offer as

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all right. as we count down to the opening bell, here's a check on the futures once again. we're shifting a little bit lower here as we get closer to the bell. but no big deal. slight negative bias at the open. >> and so let's get the buzz from beyond the big board as we get you ready. andrew keane is an independent trader at the ceoe. he trades with citi, jpmorgan, bank of america and goldman sachs. so what do you see for the financials today, andrew?

>> the financials are a little lower. they're not down that much. jpmorgan is flat, ge is flat as well. it's interesting to watch the volatility. we saw the vix hit 20. even went under 20. went to about 19, 20. i'm watching the volatility. goldman sachs, they report earnings later this mon on january 22nd. should be interesting to see what the volatility does going into earnings and what the volatility does after earnings. >> outside the financials, which obviously are important just because of their sheer weight in the overall market, what group really sticks out in terms of the likely to be a lot of activity today? >> well, the thing i'm always watching is gold and the dollar. they have an inverse relationship on each other. whenever gold rallies, the market rallies, which means we will keep interest rates low probably the next year than affects financials. basically, when gold goes up, financials go up. when gold goes down, the financials will go down. i'm watching gold really tight and i'm watching the dollar to see where my financial stocks are going to go. >> are you worried at all about what we have seen with crude oil? sure, you can blame cold

weather. you can blame belarus. i don't know what you want to blame. but it's broken out of range and near $82 a barrel z that raise any red flags or concerns for you? >> i mean, oil is in a different sector. it's part aof the commodity interest. i also watch some of my other stocks but that's outside of how financials trade. >> we have new home sales coming at the top of the hour. not feeding into volatility at this point? >> no. i mean, that's s&p 500 have been in pretty tight range probably last five to six weeks. our big number is friday when we have unemployment. i'm not looking at the auto sales so much but for unemployment friday. i think it's going to be a big number. >> thank you so much, andrew. appreciate it. all right. final countdown to the opening bell is coming up just on the other side of the commercial break. don't go away. woo. >> we'll be back.

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all right, you're watching cnbc's "squawk on the street." we are live from the financial capital of the world. the opening bell is going to ring in three -- no, four minutes. here are the headlines. weekly retail numbers show a post-christmas rally, up 1.5%. 2.5% year over year. berkshire hathaway votes now on the kraft bid for cadbury. berkshire is kraft's biggest shareholder, earning 9.4%. again, the futures indicate a slightly lower open. so on that note, let's get more premarket instant analysis. we have john brady to do that. he is with the cme group and senior vp with mf global. what's on your radar today, john? >> remember, we're probably see a little continuation of yesterday's trade, probably see a little consolidation of the trade in equities but the bond market is behaving quite firmly and strongly this morning here following an overnight release of an article by steven becknerf

market news. suggesting they continue to buy mortgage-backed securities, which helps underwrite some of the risk assets that market constituents are concerned about as we go into 2010. bonds are firmer. volatility's lower in bond space and mortgage back space. and we think that will help underwrite stocks in the early part of this week. >> early part of this week, i'm starting to see some people weigh in on a big point of conversation. last year's treasury stank. this year some people are saying we might see a rebound. what do you think? >> well, it's conceivable. certainly it's out there and the potential is there for that. however, i would suggest there's been a rather impressive shift, specifically from retail accounts and mutual funds out of money markets and into fixed incomes. specifically bonds. so we think the bond remains relatively benign. we think the fed remains on hold. the fact risk does pick up during the coming year, that investors both on the retail side and investor side will

continue to see treasuries as a safe haven. that's not to argue they're cheap here at 375 or 365 yield but let's pull back closer to 4% or, so we can see continued institutional interest in owning treasury there's. >> john, a large number of people i've talked to have -- i think maybe even the majority of them, are saying the same thing. short term, they're enthusiastic about 2010, but they all see storm clouds gathering on the horizon. some kind of reckoning that has to come because of the stimulus or because of the feds' liquidity injection, which has to be withdrawn. do you share that long-term dread? >> there are storm clouds out there for sure, mark. but the fact of the matter is the fed remains on hold and will continue to underwrite risk addicts and -- risk assets and continue to provide liquidity in the markets as needed. now, we would also want to keep in mind and specifically going back to erin's point regarding the incredible supply coming to the treasury market, if in fact

risk picks up, if the vix index makes a sudden and strong move to the upside, treasuries will continue to be seen as a safe-haven trade to investors. when risk increases, it's not so much the return on capital as is the return of capital. so, of course, investors could take a sort of a hit in terms of the premium paid within treasuries but they'll still get the majority of their money back. we saw what investors will look for if in fact the storm clouds turn into an ugly tempestt. >> john, thank you. john brady, with mf global. as we're getting ready for the bell. we're about 20 seconds away. mark, it just -- it's interesting in terms of the crude oil trade and how high we're going to go here too. i know we're sitting here between 81 and 82 but obviously we have been stuck between the range of 60 to 80 for a while. >> yeah. >> whether the weather gets a little warmer from this unprecedented long arctic flow in the east z oil drop back down? or have we broken a key level that becomes hard to drop through again? could become rather important.

>> i tell you, what it is so cold -- >> it is so cold. >> the o.j. growers and the strawberry growers down south, they have real problems. it's not just market hysteria. >> yeah. remember the guy yesterday said prices on the shelves could go up as early as next monday 20% to 30%. >> all right. here we go at the big board, jeffries celebrating the recent launch of the jeffries trj crb global industrial metals equity index fund. that could be the longest name i have ever heard. >> really? trj -- >> crbi. we'll talk to art hogan of jeffries in a few minutes. i think he's the one who came up with that name. and at the nasdaq, seddanny foister, hoefd of "build it bigger" on the discovery channel.

>> he will be up here to defend the name. all of the markets, we are opening down just very slightly. not every name is open, though. let's check in with bob, first. hello. >> hello, erin. important thing is the up-trend remains intact at this point. very little selling pressure for the last couple of weeks and that's a real positive. here's the crowd, which just dissipated because kraft just opened to the upside. the important thing, a lot of moving parts here. craft raising, of course, its bid for the cash portion of cadbury. cadbury predictably rejected that. at the same time kraft selling its frozen pizza business in the u.s. and canada over to nestle's to try to raise cash. nestle looks like they're out of this at this point. the big thing, berkshire hathaway say no, at least for the moment, to the idea of a proposal to raise 370 million new shares for kraft to ged addictiget additional money. a lot of upgrades and downgrades. this morning, tenet health care

up rather noticeably. goldman saks is pounding the table, adding to the conviction buy list. thc tenet will be the only major health care company, hostile firm, that will see higher margins in 2010. we also have radio shack up nicely. goldman also talking about them and higher wireless sales in 2010. utilities had a great run. they are one of the best performing in the fourth quarter. higher prices in november and december but right now baird downgrade because of the results and the yield is much lower because of the utility companies. tradertalk.cnbc.com. how are we looking? >> we started the day at a 16-month high here at the nasdaq. i want to rip through a couple of stories. we focused so much on apple and google. there are some other things going on. dell initiated a buy, up 1.2%. deutsche bank adding civic yoet to t cisco to the buy list. it's down half a percent.

polycon launching a consumer video conferencing system with ibm. it's up .7 of 1%. b biogen idec, ceo mullen will be stepping down. talking about how sales talk starts to perk up. it's up 2% 3%. google, nexus one unveiled today. a lot more chatter with apple and the tablet computer we might see later in the month. up .1%. i want to check on intel. big move on the chip sector. up .4%. let's go to sharon epperson at the my next. >> oil prices are moving slightly higher now. expect to get more information tomorrow. expected to be bull ush according to analynuaalysts at jpmorgan. potential job losses up friday. and we continue it to move higher. perhaps weakness will set in by the end of the week when we get the jobs number. when we look at where oil prices have been over the past three

weeks, the rally of 15% has a lot to do with the cold temperatures we are seeing in the u.s. and that helped to lift heating oil futures as well. that's been leading this market higher. our colleagues at wsi forecast that some south central to the eastern part of the country, we're going to see below normal temperatures over the next six to ten days. the fact refiners have cut back one way so significantly is the reason we're looking at the higher heating oil prices but also higher gasoline futures and pieces at the pump. prices now $2.67 for regular unleaded gasoline, a dollar higher than it was a year ago. rick santelli in chicago. >> a lot of energy-related rally has in part something to do with the weak dollar. to that end, if you look overseas -- and this is not something new, we see that the south korean wan had a huge session. one of the biggest rallies in about a half a year. and there's continued talk that their central bank, fx, bought a

couple of yards worth a couple billion dollars. this intervention isn't red stamped or rubber stamped by any major finance minister, but it's an ongoing for the last several months issue where the fx markets really believe this type of intervention is going on. of course, that pushed the rates down and had a bunch of other effects like pushing the dollar against the yen under that very significant area of 92. it jumped over towards the end of 2009. so now it's in the mid-91 area, 91.60. we need to watch that closely. our interest rates are down as well. the curve is steep but not as steep as it was at its record levels. tens minus twos at record levels was mid-28 ozz and now mid-270s. mark, erin, back to you. >> thank you, rick santelli. quick check on the markets for you right now. as the futures indicated, we are down slightly. quarter of 1% on the dow, .15% on the nasdaq and only .08% on

the s&p. very quiet open. your cnbc edge now with fritz meyer, senior market strategist with invesco, a.i.m. and we're hoping rob smith, chief investment strategist with riverfront investment group will be able to join us in a minute. we have some technical issues here. fritz, good morning. what's 2010 going to be like? >> hi, mark. hi, erin. well, i'm optimistic on both the economy and the stock markets. i think the biggest context here on the economy, remember, is we're only a couple quarters into a recovery that i think is going to span a number of years. in other words, don't forget the depth of this contraction. and if that's the case, i think we will see $80 and $95 in earnings on the s&p over the next couple of years, and that leaves a lot of upside potential for stocks. >> for those of us who don't want to do the math, what is the potential there?

say $90 times -- what, you say 15 or so? >> yeah, right. right, right. in other words, the fundamental benchmark that i have in my mind is before we went into the economic contraction, we probably saw fundamental earnings power of $100 a share on the s&p 500. put a 16 multiple on that and 1600 on the s&p 500 is the target that i have in my mind for several years from now. now, that's going to take a couple of years to hit but that is pretty substantial upside potential, 20%, 25% per year over next couple of years is what i am thinking. i think 1300, 1350 target by the end of this year is not unreasonable. >> so you're saying 20% to a25% per year for overall stocks, right, fritz? >> right, right. that's what i have in my mind, because i think we're going to continue to see above-average economic growth, above 3%

economic growth at least for several quarters. i'm not saying this is going to be gang busters but i don't believe the new normal a. ne, a 1% to 2% growth, all of the economic data points to 4%, maybe 4 1/2% gdp growth over the next several quarters. that will taper off, i think, as next year unfolds. >> we have rod with us now. rodney, you heard fritz' point. thinks he can get 20%, 25% gain for stocks. you think we will have a good year in stocks, bad for bonds, good for commodities. how good for stocks? >> i think what fritz is doing is very interesting, which is allowing himself the luxury of a little bit more time, and he's focusing on earnings because there's been huge amount talked about the economy and the new normal and the absence of a v-shaped recovery for the economy. but we are seeing a v-shaped recovery in earnings, and the reason is because the dollar is weak and the global economy outside the u.s., many places are having a v-recovery.

so focusing on earnings is right. giving yourself a bit more time is right. i think the challenge of 2010 is all about what mark was talking about earlier with both how does the fed choose and the government choose to unwind their extraordinary measures of stimulus? our big view is they're going to continue to err on the side of withdrawing slowly, because they're more frayafraid of a do dip than they are of inflation. that keeps you in inflation trade, keeps you in stocks, keeps the 1250, 1300 target. >> thank you so much to both of you, fritz and rod. we appreciate it. >> you're welcome. all right. just around the bend, unable to reach real reform before the break, congress gets back to work on financial regulations. former fdic chair and cnbc contributor bill isaac will weigh in on take two. is there any reform in the reform bill? plus -- you just saw him ring the bell, and now art hogan

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welcome back to "squawk on the street." matt nesto here checking out some of the early movers. look at ford shares, stocks up about 2% here today. maybe most importantly, the stocks had a 4 1/2-year high. it hit 10.55 so far today. but ford having a very big run. brazil sales strong as well. two days, two upgrades to buy in for las vegas sands. that's one is good for 4 1/2%. yesterday ubs, today barclays. they take it to overweight. motorola's in a tug of war this morning and it looks like morgan stanley on the pessimistic side is winning. no, now it goes to credit suisse on the optimistic side. motorola, as i said, up and down here today.

morgan, pest mipessimistic, cre suisse, positive. let's get to david faber with the latest chair report. >> chairman of the house barney frank on cnbc this morning saying it was a mistake to limit the fed's power to regulate bank activity. >> with regard to the fed, yes, i do think that we should be curtailing the powers. we curtailed in our bill, by the way, not just their consumer powers but the biggest power, the power under section 133, which let's them give hundreds of billions out, including the money to aig. we severely restricted that. that was a bipartisan approach. but when it comes to representing lating bank activity, i think it's a mistake to take that away from the fed. >> so what reform needs to come out of washington to prevent another financial crisis like the one that we had in 2008? bill isaac, chairman of the lecg global financial services, former fdic chairman and cnbc contributor may have some answers. bill, first of all, what do you

think of what chairman frank had to say, particularly as it regards the fed? >> i think that -- i'm concerned about limitations on the fed's lending authority. i'm not sure they really have put any meaningful restraint in there and i'm not sure they thank you. i think we need the fed to step in in times of crisis and do what needs to be done. i would be very concerned about anything that really restricted that. in terms of regulation, it's time to reform this regulatory system. it simply isn't functioning properly. i am much more aligned with chairman dodd's proposal in the senate to create a single bank and bank holding company regulatory agency putting the fed and the controller of the currency in the office of supervision into a new independent agency. i think the fed should be on the board of that agency. but i think we really need a new -- a new system of

regulating. >> all right. consolidate the regulatory agencies. why? >> well, it isn't functioning. we have, for example, let's take a large company that has a holding company. the fed regulates the bank holding company. the controller of the currency regulates any national bank subsidiaries and then the fdic will regulate the state subsidiaries. we need consolidated supervision of these large companies. it's just not working. there are too many things that drop through the cracks. so i think it's very important that we get a strong, independent agency. >> what is your sense right now in terms of the senate bill versus what we saw come out of the house? >> i think the senate bill is probably going to have something like that. a strong regulatory agency that's independent. i don't like the controller of the currency being part of the treasury, for example. >> why is the controller of the currency even exist any more at this point? >> i don't think we need the controller of the currency right now. what we need is a single agency consisting of fed, the controller of the currency and the office of search

supervision, which would relate all banks, thrifts and their holding companies in one agency. and the fdic should be separate as a watchdog that can come in and correct any abuses or problems it sees developing. >> all right, bill, we have to end it there. but thanks for your thoughts this morning. >> my pleasure. good to be with you. >> bill isaac. let me send it back to you, erin. >> thank you, mr. fabs. ringing the opening bell, we're joined by art hogan. he's here celebrating the launch of the jeffries trjcrbgimerf, stands for global industry eck equitable fund. it's fun having you here. does it help having a long name or not? the names hard to remember. >> the easy part to remember is crb, they've been around the 50s. you think about the crb, you think about commodities and you then think did vie

verseification and hedging. this is an attempt to do this without playing futures market. so you're getting this on equities exposure. this is the rcb-i now, limited to industrial metals. >> these are companies and by the way, a lot are not american. f freeport mac s that may be the only one based in the u.s. >> think about where industrial metals come from? they will be located in a lot of different countries. we have a dozen different countries represented in this. gives you an fx diversification -- >> foreign currency. >> exactly. so you have exposure to that and also exposure to where all of the important industrial metals come from. so i think -- what you don't have exposure to is having to reroll the futures market every month that expires and also pay dividends. just think about the infrastructure buildup going on globally both with china, india, the united states. part of the stimulus plan. we're going to need a lot of industrial metals. >> do we really need another

etf? >> i think we do, mark. only in that you need a retail investor to be able to buy something where he doesn't have exposure to the futures market. >> is this the only one? >> no, this is the second. we're going -- this is the only one in the industrial metals, absolutely. >> industrial metals that doesn't require future exposure. >> absolutely. this is a very safe investment. these companies will profit as we industrialize. china and brazil and india and -- yeah, i think it's a very important market. you ask that question all the time. >> i do. >> i like that question. it makes sense. >> let's face it, we're up to our cheeks in etfs now. >> 28% on the new york stock exchange is etf trading. >> is it? okay. now, so people should not expect this to correlate precisely with the industrial metals prices or the crb? >> that's exactly correct. >> you bought the equity, not the metal? >> that's exactly correct. you're buying the company that's produce the metals. >> what's the historical

correlation between those stocks and underlying metal? >> very, very tight. it's very, very tight, extremely tight. both the crb-q, which is the entire index. and this is the core of the index. crb being precious metals, industrial metals, energy and ag, so the logic will follow that. you can buy the crb index and things behind it or buy industrial metals. >> buy a clump of industrial metals. art hogue aechblt thank you. in two minutes, morgan star reveals its fund managers of the creigh in thr year in three categories -- fixed income, domestic and international. with fidelity, you can take your trading around the world, because now you can trade u.s. and foreign stocks online, in 12 markets, 24 hours a day, all from the same account, and settle in u.s. dollars or the local currency. plus, we'll guide you with international research and realtime quotes, so you can diversify your portfolio,

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now to a cnbc exclusive. morningstar is about to name its fund manager of the three in three categories, fixed income, domestic and international. karen dolan is director of fund analysis at morningstar and she joins us to make those announcements. don't get nervous, karen. the drum roll comes. let's get started. who is -- who is the best fixed income manager for last -- for last year? >> good morning, erin and mark. the fixed income award goes to

the team dan fuss, kathleen gaffney, matthew egan and elaine stokes, loomis sales bond. >> why did they win. what did they do? what were their returns? what made them stand out? >> they gained 37% last year, and a lot of bond funds were up big numbers, especially high-yield bond funds but that's a pretty astounding gain for a bond fund. this team was put to the test. they are go anywhere, deep value manager. they like to buy bonds that are very, very cheap. actually, they went into some very, very cheap bonds too early in '07 and '08 and the fund was hurt in '08 as a result. however, they were right. their research paid off. they picked up a lot of great buys. dan fuss, who's actually had a very long career in bond fund management, said he saw some of the best bargains in his entire career in that period and as a result investors benefited to a great deal in '09. >> next category, domestic?

>> our domestic award goes to bruce berkowitz of the fair home fund. he has put up yet another spectacular year. 20 09, the fund gained 39%. that's really good if you take it on its own but if you consider that fund has been in the top cortile of its peer group in nine of the ten past calendar year. it's also beaten the s&p 500 in nine of the ten past calendar year. in that period we had cyclical booms, we had a financial bust, we had a broad market rally, and he has managed to outperform and shine in all of those environments. >> you know, i want to take a step back here for just a moment. is it simply in each category the fund that had the highest return for the year, or is there more to it? >> it's not. we -- the fund has to have had a spectacular year last year but our analysts cover about 2,000 funds. we dig into the portfolios. we talk to the management teams, and we want to reward more than just one great calendar year. we see a lot of that.

but we want it to be reflective of true skill. so as a result we'll look at risk adjusted returns. we'll look at the longer term and we're also consider how good of a stewart of capital are these managers? at the end of the day we want a good one year but there's more to it. >> one minute left. let's move on to the third category. >> international. >> the international fund that won is the american funds euro pacific growth team, i said fund but it's actually the team that is winning this award. it is an eight-person team at american funds. spare me having to name them all. i probably will trip over my words. but this is actually pretty remarkable because this fund is $93 billion in assets. it's the largest international fund out there. the money is run by eight different managers. so you wouldn't expect this fund to be able to outsmart all of the competition, a lot more nimble peers year after year. but this fund has done exactly that. '09 was a banner year. they have a high emerging market stake and that paid off for them in spades. >> karen, thank you very much. we appreciate it.

karen dolan, director of fund analysis for morningstar. tomorrow we will be unveiling another morningstar ceo of the year in this case, mark. moments away, breaking economic news. we have pending home sales and we have factory orders, both pretty important reads or reads on important parts of the economy. >> that's right. going into that, the market is down 39. we will see if the data will move the needle for stocks and continue yesterday's surge. grea. would you like to see our new police department? yeah, all right. this way. and here it is. completely networked. so, anything happening, suz? she's all good. oh, my gosh. is that my car? [ whirring ] [ female announcer ] the new community. see it. live it. share it. on the human network. cisco. so, at national, i go right past the counter... and you get to choose any car in the aisle. choose any car? you cannot be serious!

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breaking news, november factory orders, they are actually up 1.1% on a month-over-month basis. pending home sales on a month-over month bases, brace yourself, down 16. that's 1-6 negative percent. that's from a slightly revised higher 9% from october. year over year, this number isn't nearly as bad, and that is 19.3, which is an increase. so like many numbers, if you look at the most recent activity, it isn't looking necessarily pretty. if you go back a year when things were much dicier, there is, obviously, improvement. now, we still have total

vehicles to look forward to and phil lebeau keeps us up to date on that. but if you want to put together factory orders, this isn't bad news. last month the total amount of factory orders was around $360 billion. it finished up the year last year around the same levels. so this increases, indeed, is a welcome sign. it fits right into some of the manufacturer pmis we experienced but it says a lot about the forward looking possibility of inventory building. we so that interest rates are moving down further and stocks are trying to bounce a bit, but not much. mark and erin, back to you. >> i'm here with bob pisani. was rick was talking we were saying, all right, you have the factory orders which obviously are positive. and pending home sales, two very different stories if you look versus a month ago versus a year ago and the market hence sort of shrugging it off. >> the bottom line is new home sales have remained anemic for

quite some time and really aren't showing a lot of effort. existing home sales are doing a little better here. there's a lot of confusion about the effects of the first-time buyer tax credit, which will be expiring in the spring. generally sales are positive and remember we have historic low interest rates even at 5.1% for a 30-year fixed rate mortgage. and we are getting better news from the airlines. airlines had a great month in december. better trends, better travel trends, better kmocommentary. we are hearing that from continental and united airlines. we are notice that the people flying are notably higher in december. but ticket prices are still lower than they were a year ago, even they they have gone up recently and oil is over $80. that's a real problem for them. now you have the jet fuel costs become a greater factor. >> did you see the new continental ceo is doing what some of the bankers have done, that is not taking any sort of money or bonus until their profitable. >> shooting -- i should say issuing -- >> shoeing, there we go.

>> any salaries for the year. >> a day of big words. >> i think that's a good sign for ceo leadership. don't think ceos normally should not take pay -- they should take pay but it's a good sign for the overall leadership. the other thing i want to point out, upgrades and downgrades. there's a bunch of sector upgrades today. big calls today. radio shack and goldman sachs and health care at goldman sachs also will positive comments. they're talking about tenet health care being one of the only companies, one of the only hospital companies that are out there that are going to have some positive news in 2010. and the important thing here is these upgrades and downgrades become very important because they really have been moving the market in the last several days. i just want to also note the utilities here. utilities had a huge run in the month of december. >> right. >> and the dividend yields have dropped noticeably. bear downgraded a whole bunch of companies because the prices have moved up so aggressively. that's a good sign. >> bob pisani, thank you. making sense of lots of pieces of different data there. let's get to brian schachtman.

we are talking about the new phone from google and apple. but morgan stanley making another call on names that caught your attention. >> let's go through google, down half a percent off really elevated levels. a couple of wins here. how is this phone going to differentiate itself from the competition? number two, is it going to hook up with a carrier and get sub sized? if it's not subsidized, it's very expensive. apple up 6%, continuing to add on to its two-week highs. of course, as a journalist t. would be difficult to deal with but they are amazing at generating buzz and i cover the iphone launch and this is similar. listen, it's got color and touch screen and also like ipod meets the kindle. just very interesting and everyone wants to see what happens. morgan stanley, initiated overweight. research in motion and palm also touched on qualcomm as well, has a price target on reach in motion of $90. that's a pretty hefty run-up when you consider it's at 66 but pushing on 90. two quarters ago it had bad earnings and took a hit from

there. palm, it's now 10.74, getting a nice pop today, up 4.1%. back to you. >> thank you so much, brian. let's talk about oil. bob pisani was saying, it's starting to basketbaecome -- it levels painful for one group suffering. sharon he everyson is at the my nymex. we're back up 70%. what do you see in terms of direction? >> we're looking at the weather and the fact we're looking at the cold temperatures. we know it's cold in new york but our colleagues at wsi say it will be cold and below-normal temperatures from south central part of the country to the eastern part of the country until january 15th. and that is causing some -- lend something support to the oil market to heating oil prices as well. and then we get the inventory report tomorrow. we are expected to see a drawdown in crude and distillate supplies. so that is also helping to lift the market. in terms of natural gas, we're not seeing that same type of boy ensy we saw yesterday. the rally we saw yesterday was probably a lot to do with short covering.

a lot of short positions in the market still but we may see fundamental factors playing in the natural gas market soon where the cold temperatures are causing some of the oil hedges to freeze in some parts of the country and that could cause problems with taking some of the storage out as well. armstrong and traditional energy pointing that out. look at metals market as well. metals, gold higher and silver higher as well but the copper situation, seeing a pullback. that chilean miner strike, there may be an offer on the table there. copper prices pulling back a little on that. mark, back to you. >> okay. we just got pending home sales and factory orders. adp tomorrow, big employment report on friday. and for nearly two years of job losses, will we finally see job creation? last month it showed job creation january 2008. steve liesman at hq with today's "daily jobs report." steve? >> mark, we're right on the cusp minus 11,000 last month and big

debate among economists right now, will jobs or won't they? will we go positive this month, unchanged or minus 10-k, which is the last forecast that i saw. i want to show you what economists are looking at what they say, hey, wait a second, maybe we will have positive jobs numbers and among those coming up in a few minutes, bruce cadman from jpmorgan. let's look at ism and jobs. what you see here is now the 50 line when it comes to the ism manufacturing employment index and what you see is when that happens, we tend ton positive on jobs. positive there and positive right here. when that happens, we tend to be positive on jobs and you can see here, we had been positive and above 50 for the last 3 months. let's also take a look now at claims. another indicator here. what i did here is not necessarily the claims number but the insured claims, which is the more way of looking at it and evening it out over time. in general as this number comes down, you see here that jobs

tend to come up. there was no level, i was looking for a level to give you where in general it happens. now, you have to go back here to 1980s to find a time here that is analogous to where we are right now. and in general, again, that remained the same. as it comes down, jobs tend to rise. another thing, the revisions have been positive. take a look here. what you find is that according to action economics, we had negative revisions going into the recession and as we come out in general, the revisions have been positive. i don't know if we have that chart f not, let's just move on to the next chart here, where we'll find after net payroll revisions what we wanted to talk about was the services jobs and where those are. guys, is that frozen in the back? there we go. there's the services jobs right there. that's really the key if we're going to have positive job growth. what we want here is we want to see this number start to seriously ramp up. a lot of data, mark, coming in the next couple of days. adp tomorrow will be watching

the ism services as it an indicator of where jobs are there. jobless claims on thursday and then the big report payroll is on friday. mark? >> thank you, steve liesman. stay with us, steve. we're going to bring in jpmorgan, chief u.s. economist, bruce kazman. on friday, bruce is expecting the jobs report to show payrolls rising. again, that has not happened since january of '08, two years ago. he's here for a first "squawk on the street" interview. good morning. thank you so much for being with us. >> good morning. >> you expect actual jobs growth? >> we're looking for a 40,000 gain. i think most of the fundamentals are pointing in that direction. i wouldn't bet the ranch on it. there's a lot of seasonal factors in december that could create different outcomes but i think the more basic point, and steve was making it is, there's a lot of indications telling us we're about to turn the corner and that we're going to see pretty decent job gains as we go through the months ahead. >> there is going to be a lot of seasonal stuff in these numbers.

plus the birth/death thing. i mean, it's far from a pure number. >> that's right. and i think actually from our point of view, the monthly reading on claims is more table than the monthly reading on payrolls. it's moved decisively lower. it was a very cold sample week t could be distorted by that. but the ruling from the court of claims i think is very clear, we're about to generate jobs and i think we're about to generate pretty strong job growth during the coming months and quarters. >> when you look at the penny home sales today and everybody saying people are rushing in to take advantage of the first-time buyer credit, that's one example of the government stimulus in the system, we don't know how much it's been stimulating demand. i guess the question to each of you is as that goes away and other stimulus efforts go away and the fed starts to not be buying mortgage-backed securities, is there a real risk that everything falls back off a cliff, or is that just armageddon talk? >> i don't think it's a very large risk.

i think what's going to happen is the loss of stimulus is going to temper the upturn we're starting to see. i think the stimulus has done a very good job creating a spark. what we have right now is a nice feedback loop with growth having improved, financial conditions improving, confidence lifting. and it's showing up in business behavior. and i think that's what the indicators are telling us. that's going to be more dominant than the fading of drags but there is an attempt for us here, no doubt. >> the way i look at it, the government stimulus, i'm not that high on how it actually helped out the economy. i think at best it stopped a free fall in things like construction jobs. and i don't think you look at it to be the source of job growth. if this economy is going to turn around, i think what you will see is unadulterated and job growth from the private sector that is not connected to the stimulus. and that's the way it's going to happen. you may get a pop, and that would be a meaningless pop if it's one that's just from the stimulus. you want to look into certain sectors. i think the service sector is

one where you won't have a lot of -- i guess call it pollution -- from the stimulus. if the service sector turns around, that's why i ended there as the last screen. if that turns around, erin, then you will start to see real job growth in this country. >> steve, i'm not saying you are making this logical step. but let me just make continue let you and bruce jump on this one. if you're saying that the stimulus isn't necessarily creating jobs but prevented us from going off a cliff and we still have $400 billion of the stimulus money left, are you making an argument for not spending that, using it to pay down the deficit? >> you know, i'll let bruce answer but i think they should spend it because i think the risks of the downside of sliding back are higher at this point. that's what the history, i think, has shown. so i think they should spend it but i think to the extent that the private sector comes along and there's an issue of competition for workers, which doesn't exist right now, then the government ought to back off. that doesn't exist now. >> bruce? >> i would agree we want to continue with what we have got in place. what i suggest is we maintain a little patience here and not start to go further down the roadadstimulus. when we have corporate

performance, particularly having improved so dramatically, showing signs of turning. and that is going to be your engine. the worry i would have is that we end up having to pay for some of the stimulus here down the road by hurting that corporate improvement too early in the game. >> all right. here we go. that's whey wat i was going to g up. everybody we're talking to or almost everybody we're talking to is seeing storm clouds on the horizon as the stimulus money runs out or as the fed withdraws its injections of liquidity or as inflation rears its head, and it sounds like you're in that camp that expects trouble down the road here in a matter of months. >> i don't think it's a matter of months. i think this is a multi-year story where we are going to see corporate performance be quite good here, jobs begin to grow but still living with extremely high unemployment and enormously large deficits. and the temptation is going to

be to use the performance of the corporate sector to finance reduction in paying and fill holes on the budget. that is a big wild card. don't think it's going to be an issue for 2010 but it's going to be with us for awhile as we look forward. >> mark, i think one of the things bruce is saying that the policies haven't been written yet that are going to screw this up. they may yet write them but the ones have not been written yet. >> how is american business going to expand without hiring people? >> it won't. they won't. actually, what's going on right now -- >> but you said you expect this recovery to have high unemployment. >> high unemployment reflects the starting point that we're starting at a 10% unemployment rate. if two years into the recovery -- >> the numbers out of the workforce are not even counted in that 10% rate, mark. the slack in the job market is absolutely historic. and there's a very long way to go to bring down that unemployment rate. it doesn't mean we can't be hiring while that unemployment remains high. >> not to get political, but then, you know, most jobs are created by small businesses.

do we need to think about what we're doing to small businesses in terms of taxes and in terms of health care burden if we want this recovery to generate more jobs? >> i would just echo what steve said. i think what we have in place now is going to generate job growth. i think the risk is that as we move forward here, we don't generate enough jobs to solve the problem of long-term unemploy unemployed and the budget problems. the temptation is going to be for new policies to come in place that's actually going to do more damage than it's going to do good in terms of the job market. >> bruce, thanks so much, bruise kazman from jpmorgan and steve liesman. all right. even americans with jobs are not happy. a new report out from the conference board research group shows only 45% of americans, a little less than half, are satisfied with their work. that was the lowest level since the board's been studying job satisfaction, it began 22 years

ago. the top three reasons -- fewer workers find their jobs interesting. incomes haven't kept up with inflation. the soaring cost of insurance is eating at the take-home pay. here's the bright side, erin -- >> yes? >> they could be lawyers, where survey year after year after year shows two-thirds of the people in that business are not happy being lawyers. >> and whose problem is that? they're the ones who decided to go to law school. >> right, right. if it's half of everybody is unhappy, it's two-thirds of lawyers are unhappy. >> first thing -- >> also someone worse off if you look hard enough. a lot of stocks on the move this morning. second day of trading in the second decade of the century. plus -- the faber report. another fabled installation comes up in just a moment. and we'll talk about india. lots of ways to play the market there from here and potentially ways to make money even after,

frankly, that market has surged. one of the best in the world. we'll talk about it. as we go to break some of the biggest gainers on the s&p led by tenet health care and radio shack on the upgrade out of goldman sachs. what are you doing...? calling chase sapphire, seeing if we have enough points to stay longer. now? you don't have enough time... and you have to push all those buttons... no buttons, someone answers every time. yeah, right... bet you a massage... yeah, ok. hi, julie... i have a question about my points. hi, what button do i press for a massage? hello? new chase sapphire... you call. we answer. no waiting. just press right here... go to chase.com/sapphire. chase what matters.

day two of trading in 2010 and stocks are mixed. yeah, they're just slightly mixed. i'm mark haines.

street your street sweep -- "street sweep." ibm and travelers, two of the biggest losers on the dow. kraft the biggest winner. 18 companies hitting new 52-week highs and nintal airlines said he will refuse to accept his salaries or a bonus until the company makes a full year profit. couldn't ni continental lost $357 million last year and is thinking it will be profitable in 2010. let's bring your attention to some names on the move. market down 26. we were down 39 going into the week pending home sales. matt nesto has some new names for you. hello, matt. >> hello, erin, my rhetorical friend. i have a rhetorical question for you, my friend. what are you doing in 2013? citigroup has estimates all the way out to the year 2013 for merck, they are calling it nuco, this is, of course the euphemism for the combined merck,

schering-plough. they raised the price target to $45 per share. if you want to look at the report, check it out. citigroup reiterating the buy on merck. this stock has little changed today which make it's an out performer in the dow. both intrepidç and pod ash uta. they like the fertilizers but not all of them. but they like most of them. checkpoint is down this week at auriga. the two weakest stocks in the best-performing sector are charles schaub and intercontinental exchange. schaub cut the reform at r.j., and their volume growth, up 17%, incredible month, but down from 24% in november. that's a disappointment, down 3%. so let's get over to david faber for the very latest now "faber report."

>> thank you, matt nesto. i think we're going to start with kraft and then we'll get to alcon. can we do that? are we going to do that? you heard, i think it was mark say kraft, best performer or one of them. this buffett saying no. talked about it earlier. kraft out with a couple of statements. let's get to them. said, it takes buff e's opinion seriously. agrees kraft shares are deeply undervalued. intends to stay disciplined in the cadbury deal. take a look at kraft shares, by the way. as i made this point earlier, of course, remember kraft has come out with a proxy as it needed to do in order to get moving on a shareholder vote that ultimately will take place for its potential acquisition of cadbury. in that proxy, it said, we may issue as much -- as many as 370 million shares. kno nothing says that they're going to end up issuing that many shares. we simply don't know. but mr. buffett at least at noint say i point saying, hey, i'm voting no right now. i don't want to give the authorization for the shares. i think the shares are

undervalued. i don't want you using them all as the currency for this deal. we'll see what happens. remember, it doesn't mean that he's going to vote no whethwhen actually have to vote. that's the important part here. that vote won't take place until february 1st. february 2nd i think we'll find out. and by then we'll know what kraft's actual bid for cadbury is and how many shares it ultimately is going to issue in order to potentially get that deal completed. because we need to know that by january 19th. that is the date, two weeks from today, when we'll get kraft's final bid, if you will, for cadbury. so certainly important what buffett's got to say here. but don't forget, he can change the vote. we don't know how many shares it's ultimately going to be. as of this morning, we saw kraft is already trying to start to increase the cash portion of that deal. but they haven't increased the overall value. all right. since we're talking -- well, we're talking takeovers, let's also talk about yesterday's huge

deal, nestle selling its 52% stake inç alcon to novartis. novartis mackiking a bid for 23 of alcon shares that are owned by the public that it didn't already own, and there's a look at alcon shares. up a bit today. down yesterday. a big brouhaha over the rights of these minority shareholders as it relates to whether novartis can simply push through its offer of 2.8 shares for each alcon share because ultimately, it will own 77% of the company when it completes the nestle purchase, the purchase of the alcon shares from nestle and, therefore t. cou therefore, it could vote in faither e favor of a merger with the rest of the alcon shares. or is there a right as it relates to an independent part of the board, independent directors that they have there. take a look at what alcon had to say in responding -- or the

independent directors in responding to things said by novartis on its conference call. alcon has established certain important protections for the benefit of alcon's minority shareholders against a coercive takeover bid and is disappointed at novartis is attempting to circumvent those protections and corporate governance best practices. this coming as a result of what novartis was saying on its call, saying under swiss law we can just push this thing through. we will have 77% of the vote. we can do what we need to doxt you're only going to get 2.8 shares. under swiss corporate law, by the waugh, the mery, the board majority proval for alcon board with interested directors abstaining. board representatives from novartis and nestle puts alcon's executive board. take a look at nestle's securities over there. they have been weighing in on all of this. they said they could try to change alcon's organizational regulations. they could control 77% once they

acquire the nestle shares of alcon but that would leave novartis exposed to a lot of lawsuits. that's essentially what they're saying there. are they really going to do that? among cazenove equities, they may end up approving it but there are a number of other terms. maybe you get to 165 or 168 per alcon share. we will see. this will take time. interesting battle, though, about the rights of minorities in switzerland. you hear it all here on "the faber report." you may not have any interest in it, but you hear it. just ahead -- a trip across the globe to see if the 75% run-up in india's bombay sensex can be replicated this year. we're talking about ways for you to play it next.ç that's why i book with expedia. so i can find someplace familiar... or somewhere more distinctive... nice!

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yandindia among the emergin markets leading the pack. if you look at the sensex, which is still regarded as the benchmark there, up 75%, or over 73% if you look at today. from kiplinger magazine, she

wrote the article on india stocks. thank you for being here. we appreciate it. >> thank you for having me. >> we look at some of the markets in india so far have they come too far too fast, what makes india different from your point of view in the overall world of emerging markets? >> right, for starters you posed the question going into the commercial break over whether indian stocks can repeat their position of 2009? don't think investors should expect another 75%, 80% run in the next year by any means because we know those prices are coming off of forced selling lows. but what makes india different, i think, is the india story is really all about the consumer. private domestic consumption or the consumer accounts for about 60% of india's gdp. that's actually ahead of several major developed economies. that's better than germany. that's better than japan. and it's actually leaps and bounds ahead of china, where the consumer only accounts for about a third of gdp. >> so you're looking at it that way. another thing that seems to stick out in the example of india is, while you have foreign

brands there, yaindia's been a closed market to foreign brands. is that something positive for investors at noipt because if you buy an interidian stock, th are exposed to the consumer, versus another risk or is it a negative? >> well, i don't know about that. i know if you invest with african actively managed fund, then you have a manager who kind of worries about all of those problems for you. our favorite actively managed fund is the matthews india fund, which is run by a very capable set of stock pickers which looks for sort of high-growth companies at a rational price. they worry about valuation. they also can worry about the inflation problem, which is i think a big risk of india, investing in india right now. so they're looking for companies that have pricing power that can deal in an inflationary environment well. >> and what about these etfs? i know you have a few, wisdom tree power shares. is that a safe way to play the

market? >> yes, that's large cap oriented. td fundamentally indexed so it weighs by earnings as opposed market cap. another one is india shares which is also large cap oriented. >> thank you very much, we appreciate it, elizabeth. for moreç on indian stocks, chk out the february issue where you can see her article in "kiplinger's" which his newsstand or online at kiplingers.com. and does the market move ahead with its such that has become a verb? we'll talk about google. we're back in two minutes.

7:30 on the west coast, 10:30 on wall street. here are the headlines at this moment. pending home sales which cross within the hour plunged 16% in november from a month ago. they were up from a year ago. factory orders, though, rose 1.1%. air carriers continental and aul, parent of united, both up 10% on higher quote/unquote load factors. that means the planes are fuller in terms of passengers. jetblue, american, delta also up on that. by the way, in the face of crude, which is now just shy of $82 a barrel. "the financial times" reports the u.s. public pension system is facing a $2.3 trillion

shortfall, but better than it was months ago thanks to the gain in stocks. let's look at the dow industrials. right now the dow is down .8 of 1% but right now the nasdaq is up by .18%. and on the big board, more winners than losers. the s&p is a better indicator than the dow. and on the nasdaq, just a shade more losers than winners. >> so iphone and ipod touch users downloaded 3 billion applications from apple's app store. ceo steve jobs says, quote, we see no signs of the competition catching up any time soon. the app store has been open for just about 18 months, hitting 2 billion downloads last september. assuming that means just a few months ago, that would mean we're having sort of what we would call, mark, an exponential -- exponential growth in terms of the app usage. >> yeah. >> 10.1 million app downloads per day since september. we're taking a look at the

handheld revolution planet of the apps. it premieres thursday at 10:00 eastern, mark. >> who comes up with those names? that's pretty catchy. >> that was a good one. >> "planet of the apps." >> that's one of the best ones i think i have seen in a long time. >> give whoever came up with that a bonus. google, one of the most searched stocks on cnbc.com. the icnternet giant holding a press briefing this afternoon with the focus likely to be on its new nexus one smartphone. heath terry is internet analyst with capital internet markets. he just raised the price on the stock yesterday. good morning, çheath. thank you very much for being with us. >> good morning, mark. thanks for having me. >> why did you raise your price on the stock which must not be nameed? >> basically, the driver behind that is we're seeing strength both in the search market and in the display market as google continues to gain share, pricing on individual key words is improving, click 3 rates are improving. a lot of that is macro, but also

we continue to see google gain share with in search, and we think that's something that's going to continue through the year ahead. >> are they going to be serious contenders in the phone market, things like that? >> absolutely. i nmean, nexus one, and we're learn more about it later today, is part ever a much larger strategy. android being the big thrust for google around the mobile market. but if you look at how fast mobile volumes, both in terms of search and display advertising are growing, this is going to be a really big market. and for google to be able to pour its dominance into pc search over to mobile is going to be critical for the stock. >> do they need a partner, and do you expect that to be announced? everyone keeps saying, case, it's nice if you have this amazing phone but if you don't have a partner like a verizon or at&t, it doesn't get subsidized and you don't get people to buy it? >> they've got a lot of partners for some of their own phones. like the droid and the g-1. the nexus one is really an attempt to try to change the way

this whole thing is done in terms of the way people buy mobile phones and consume mobile services. so while they've got the partners that they need in other areas, for this, this is -- this is their attempt at really changing the game and what changes it is trying to do it at least initially without a partner. >> how does it make calls? i'm just taking a few steps back. it may sound like a silly question, but without a partner, how do you do that? >> sure. think about it the same way you would your pc. you buy your pc, you go home. you plug it in, you get internet access through your cable company, phone company. you have that choice. with this, you're buying the sophisticated handset. you decide who's got the service that you want to use. do you want to be on at&t's network? is verz verz bizon better in yo area? you really go that route. and those companies decide whether or not they want to subsidize the phone and try to tact these nexus one users to come over to their network.

>> so, heath, bottom line, will it work? is this going to be a real success? >> we think it will. >> sounds like it. >> it's not the iphone. and i think most everyone who's refused phone so far considers it along those lines but it is a step in the right direction< and more than anything, it's putting those google applications out there for people to use and drawing more people over to smartphones and that's all google needs to really drive the volumes around mobile. >> heath, thank you so much. we appreciate it. >> thank you. who knows whether they'll be successful in doing so, but if they give the user a way to pick the provider, not be in to long-term contracts, which people hate, and make it simple to do that, then that would be -- >> did you ever see the movie "the blob"? >> "the blob"? no. but it sounds like one i would like. >> yeah. i'm talking about the original back in the '50s. steve mcqueen was in that. google's starting to remind me of "the blob." "the blob" was this mass that just kept doubling in size and

absorbing everything around it. google's starting to feel that way. coming up -- oil back above $80 a barrel. up nearly 17% since mid-december. will we see $90 before we see $70? and will financials step up and lead the bulls in 2010 after lagging in the fourth quarter? you're watching "squawk on the street" as we contemplate a giant gill at us in blob. trading's all about strategy. and strategy... is all about information. so i start my trading day... with td ameritrade's morning perspective. gill at us in. bcast for ideas. this is what i need. of course, ideas are just the start. so now i can drill down. heat mapping... heat mapping shows me where the money's moving. 2,500 stocks... one quick glance. cold... cold. hot! right there. look at this-- pattern matcher... pattern matcher spots

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welcome back to "squawk on the street." i'm mast nesto. have you yseen the airline inde here today? the nyse arca airline index is flying, pardon the pun. 13 members are trading higher, 4 at 52-week highs. the index itself is approaching a two-year high. all of this ahead of president

obama's announcement from his airline security summit coming later this afternoon. cabin, oil and gas one of the three worst performers in the s&p 500. down 22%, 3% today, cut from neutral. and hartford financial is up about 4%. pimco said the bond set aside is 40% less than feared. about $8.5 billion down from 14 billion because of the way the states abandoned the credit ratings they used to rely on. mark, backç to you. >> thank you, matt nesto. oil prices climbing higher. up about 17% since december 14th, nearing $82 a barrel. is $90 the next stop? in stamford, connecticut, kevin kerr, president of kerr trading international. in toronto, jeff ruben, author of "why your world is about to get a whole lot smaller, eh?" and former cnbc chief economist.

all right. we'll start with our canadian guest. why is the world going to get smaller? >> the world is going to get smaller because in a world of triple-digit oil prices, distance will cost money and it won't be economically viable for us to import $6 billion worth of food from china. so we're going to end up growing our own stuff. we're going to end up making our own stuff. because, as i say, distance is all of a sudden going to become a huge cost factor. >> what are we going to do, start tearing down houses because it becomes more valuable as farmland? >> well, it's all a function of prices. if food prices soar and suburban real estate prices fall, that's exactly what's going to happen. >> kevin, what do you think? >> i think he makes a good point. we have to move to a more localized world, where we are growing our food locally. all of this transporting of food from one end of the country or one end of the world is going to end because of the energy costs

which are rising. happy new year, but the story is the same. prices are rising for fuel. >> you both make those points longer term. kevin, i believe over the short term, your view is there's not enough happening in the oil market to support prices as high as they are and they're going to drop down. when and why and where? >> yeah, we've gotten a held ahead of ourselves here. there really isn't the demand that we should have to justify prices above $80 here. having said that, this cold snap here pushed prices up. beginning of the year, fund money looking for a home. the weaker dollar, which is seeming to still continue to drop. all of those things. also the concerns in iran and elsewhere, those will all help push oil back under $80. >> that doesn't like the short term, long term -- >> now you totally confused me. now, on the one hand you say that oil's going to get more expensive and we need to abandon and in fact reverse two decades of globalization. and in your next breath you tell me that demand is not what we think it is. which is it? >> well, again, there's a short-term view and long-term

view, mark. the short-term view is right now prices may have gotten ahead of themselves. longer term, though, as we see recovery, oil is going to bring them that recovery. it's going to be a huge part of it. and oil is just not going to be there. we are done with cheap oil. >> let me ask you çthis, do yo not believe in technology? because doomsayers for mill yena predicted population growing too large for the food supply, they predicted all sorts of things and yet somehow every time technology comes along and saves the day. >> this is a race between depletion and technology, and people have been having this debate for the last ten years. >> i disagree. it's also a technological factor here in terms of squeezing more output out of the same amount of energy. >> exactly. but the price mechanism is keeping score, and the price mechanism right now is telling you that technology is getting its ass kicked by depletion. >> well, it is right now. but that's like the people who

doubt climate change because of a cold week in boise. you know, i mean you've got centuries of data. >> right. >> but we're not talking one day of lows. >> and what you're talking about is right now but in fact technology is a long-term process. >> and technology has been constantly going on but what people lose sight of is depletion. we need to find 20 million barrels a day over the next 5 years just so the world in 2015 can consume the same 85 million barrels that it does today. and even if we're able to do that, we're going to replace low cost, conventional oil with high cost synthetic oil. >> we don't need to find it, right? we just need to get it out of the ground. we have reserves proven in a variety of places. >> we need the resources to be able to raise it out of the ground is the point. if you get 4 million barrels a day out of canadian or venezuela oil sands, will you need $200 a barrel to get that oil out of the ground. >> they say, though, when you make this argument to them, they say we can do it from anywhere

between $40 and $70. are they just lying? >> if that's the case, then when oil plunged to $40 a barrel in the in the recession why was it that companies like suncore couldn't raise a cent to do an expansion. why was it all of a sudden that you had $50 billion of project cancellations? i think the reason is because it doesn't make sense to spend $3 billion on a new oil sand development when the cost is double the price of oil. we wish we had more time. >> i'm not saying you're wrong. it's just that, you know, history suggests -- >> humans are -- >> straight ahead. the financials in 2010. but we're also in the showing-kids- new-worlds business. and the startup-capital- for-barbers business. and the this-won't- hurt-a-bit business. because we don't just work here. we live here. these are our families. and our neighbors. and by changing lives we're in more than the energy business

we're in the human energy business. chevron.

which financials will break out as leaders in 2010 if any? chris whalen is with institutional riskç analytics d jack is with haueris private bank. chris, will banks overall gain this year? >> well, the stock market, i think is going go up and down, but the fundamentals will remain very difficult. low interest rates to fed's purchases of assets and various other factors have been subsidizing banks during the entire year. the good news is we're going to see some of the more righteous

institutions clearly get done with the pain in 2010, but the weird part is some of the banks that looked okay this past year are not going to be okay this year, and that's going to be a tough analysis task for investors. >> so on the analysis task, let's highlight the quote, unquote righteous once. the ones that will go up. our viewers are familiar with hudson city bancorp, but they may not be so familiar with iberia bank or bank of hawaii. >> cullenfrost is another one. very well managed, very profitable. some of these banks, particularly iberia has been a buyer of failed institutions. i think you will continue to see that. remember when a bank buys a bank from the fdic they're paying pennies on the dollar. all of the bad stuff has been charged off. they typically assume deposits and they only take the assets that they want. it's a very attractive way to grow your franchise. >> jack, are you putting new money in financials? >> we still like financials, mark.

they're relatively cheap by several standards. p-e on the other hand, is full. price to book is relatively cheap. price to sales is remarkably cheap on an industry-wide basis. the industry broke out. financials broke out last august, but have since underperformed the s&p by 4.5%. we like the sector and we will stay with it, but i will say financials underperformed the market by 5%. from here we'll call that a breakdown and move on. >> do you favor big over small or vice versa? foreign over domestic or vice versa? give us some insight. >> sure. ? we still like foreign over domestic on a relative valuation basis. generally foreign large cap trade is around 20% discount to the u.s., so we would prefer a foreign exposure there, but finance overall, we'd still like

the insurers, probably over the banks just because of the more solid earnings stream, but all in all, like i said, it's a mixed bag here and we think depending on the direction over the next couple of months will determine whether we stay in or not. >> quick break. we'll be back.