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in. you just think you might get better prices in the next month? >> markets are going to be pulling back here, a rally driven by the fed. they're not going to materialize as well. i think we'll get the pullback. you want to buy industrials, the transports, emerging markets here, get your list ready, rotate out of bonds into stocks. >> maybe 5% cheaper? >> that's what i'm thinking. i think you can get a better value here. expectations are double digits. >> thank you very much. that does it for us today. right now it's time for "squawk on the street." good monday morning. welcome to "squawk on the street." i'm carl quintanilla, with melissa lee, david faber and jim cramer. the dow less than 2% from an all-time high. europe's been getting a lift from some good data today. today u.s. december durable

goods. shanghai, the best day in two weeks, as industrial profits over there hit a seven-month high. we kick off the week with something for everyone. fed meeting, jobs numbers, apple, amazon, facebook, boeing, ford. as mainstream media discovers the equity rally, is this classic sell indicator? guidance for 2013 that you can drive a truck through. >> carl ichan ups his stakes in transocean and demands a dividend. who's the bully now. >> is the bookstore going away for good. barnes & noble could shut as many as a third of its stores over the next decade, even as amazon stock hits another 52-week high. the dow up about 104 points away from 14,000. the dow also on track for its best january since '89.

meantime, the s&p closing above the 1,500 mark friday for the first time in more than five years. its eight-session winning streak is now the best since 2004. seeing the ten-year treasury yield rise above 2% in april. over the weekend, guys, "the new york times" puts on the front pages the words, americans are falling in love with stocks again. jim, what does it all mean? >> well, i think there's been a lot of stock bought in the last few years, a lot of dividends have been paid. and upped. i think we've been focused, many people focus on the top line not being that good. and should have been more focused on the bottom line. i've got to tell you, i think the top line is about to be good. i think you'll start seeing the numbers really come through. we are so lean, our companies are so lean, there's been so much firing, so much supply chain help, i believe in the move. really exhibit a is caterpillar. >> "usa today," getting made fun of in some circles, but front page, the words rational

exuberance in the words of some money managers. exactly what jim's saying. the market does not yet understand how efficient these american companies are. >> this has been a love affair, of course, that has taken some bad turns in the past. and people's memories are not that short. but on the flip side of this, of course, is this incredible bull market in bonds that we've been following for, i don't know how many years. depends where you want to date it from. as we enter another year here, early in this year, we're once again hearing these cries, that's a theme for the markets. what that has enabled corporate america to do, whether it's simply take a company that might be on the precipice of bankruptcy and make it fairly healthy. that has been a theme here as well. i wonder where that goes if we see this continued increase in the yields in the bonds. >> a couple of things are happening that are virtuous, although fact wous.

you look at -- when i go in, i look at the share count of almost every company. every share count is down dramatically in the last five years. today, sales force.com files a proxy for four for one split. we know that doesn't do anything substantive. and yet, boom, the stock is up big. so we're beginning to see that's irrational, but it's the first one -- i mean, how many splits have there been. i like the rational, which is, frankly, that caterpillar reports a good number. and says, listen, this could really get good. and aig is 50% undervalued. i think that's a rigorous call. then there's the lack of rigor. >> i think it's different this time, because we do have leadership across sectors. it's not just the large caps leading the way. take a look at the small caps, the russells, mid cap index, transports, at all-time highs in today's session. correlation has also come in.

the correlation was at 39.2 last month -- actually, 32.4. down from 47 in june. which means that stocks overall are moving together. they're moving individually. so you have room for individual stock stories. people can get in this market. can invest in the good stories. and they won't necessarily be battered or lifted along with all the votes out there. >> i agree. look, this morning, a company i found chronically undervalued, hess. i've been saying it goes up, like conoco, what we saw, frankly, with marathon. and then, bingo, it happens. just like that. >> it's been a long time in waiting to a certain extent. hess is an interesting story. a stock we'll be watching at the opening today. it is looking up rather sharply. we've also got the presence of activist in the form of elliott management. they take no prisoners. paul singer is willing to put argentina into bankruptcy, whatever it takes to get his money. but there's been a lot of talk in activist circles for years

going after hess, that they acted already in part because elliott is seeking support. >> unlocking value, very thing. procter & gamble last week, great quarter. very big. kimberly, really good quarter. transocean, i mean, the number of fronts that are going positive here is somewhat overwhelming. >> let's talk about caterpillar. that's the big one we're watching today. the heavy equipment maker operating profits of $1.91 a share, beats wall street forecasts. roughly in line of consensus for the current year. caterpillar issuing a wide-ranging forecast. earlier on "squawk box," saying pleased about the past year's results. >> we're celebrating a record year here. if you look at the whole 12 months over 2011, sales up 10%, profit up 15%. near records inside. we're pretty happy with the results. >> happy with the results, although there are a lot of

cautious comments coming out as well. he said if it was like the past two years, he's making that point, 2013 could in fact be a tough year. they're saying china could continue to improve but not to the levels we saw in 2010, 2011. europe is still a concern on the radar. >> look, i'm watching southern copper go down. because people are worried southern copper can't pay as good a dividend. that's copper. we know aluminum not doing that well. coal, these are all users of caterpillar equipment. at the same time, construction comes back. it is gigantic. i love what doug said about 2011, we saw the brakes screeched on. we don't want to get too bullish again. no one is looking today at the bearish commentary. they're just entirely focused on the bullish commentary. it's a rather amazing moment, guys. >> the journal fronts a huge story on what bears are supposed to do at this point, jim. >> i know. >> if you haven't been squeezed out already on a netflix or

something else, talk about -- >> look, the earnings have been very good. intel was not great. microsoft necessarily wasn't that great. but for everyone that's in, i've got four or five that are good. again, come back to the buybacks. david, these buybacks were endless. now you're starting to see when big money comes in, there's no stock. >> yeah. and i think there was a couple of stories a few weeks ago that we've underestimated just how large the buybacks have been. you don't realize the share count has been brought in quite as much as it has. that's been an underlying theme here. but what we haven't really had is incredible top line. and that is one thing that we still can sort of at least wonder about as we move through this year. yes, we've had incredible margin expansion as a result of productivity savings, as a result of cost savings and job cuts is a part of that. but when and if we'll get significant top line growth is a reflection of perhaps a greater growth in the u.s. economy i think is still a question mark.

>> down europe, up 10% china. okay. china, can be a source of top line growth. latin america could be a source of top line growth. >> and when asked about china, the words for sure, the idea that china is staging a rebound. >> and this is despite the fact that they have terrible fraud there. kind of overlooked it. when you're in that virtuous circle, it doesn't seem to matter what you say that's negative. people want to grasp the positive. it's a different kind of market from what we've had for multiple years. >> and to melissa's point about correlation, it's not that risk on, risk off, which we have dealt with for so long now. every hedge fund would come in, and say, europe's bad today, risk off. >> there are no more excuses for the fund managers who are underperforming the s&p 500. this year could be a good year, a different kind of year from the hedge funds that have done so poorly. >> they're going to have to do actual work. >> right. they will have to show

performance now. >> they'll have to go through these quarters which were really boring. a nice break in football this weekend, so i could sit down with the -- >> a painful break. >> but these guys don't do that, because it's so boring. they like to be gun slingers. it's like, who shot liberty valan valance. they fell back on eric cantor versus -- now there's stuck with the four walls of the stock canvas. i wonder if they'll pick new careers. >> they don't necessarily pick the right stocks, but they do the work. >> faber capital management -- >> no, i'm just kidding. i'm saying there is -- there are individual stocks that are really doing incredibly well. let's say you take a netflix, which is on a lot of people's minds. that was up 100 points in, what, three weeks? what did it take to be up 100 points? they gained 2 million subs,

worth 100 points. i didn't see that coming. >> neither did a lot of people. >> yeah. from netflix to carl icahn, investors sounding off on each other friday on "fast money" halftime. challenged icahn to increase his bet on the company. >> carl, do you want to bid for the company? go ahead and bid for the company. >> hey, you don't have to tell me what i'm free to do. >> all right. >> they just don't make moments like that on tv very often. a lot got said on friday and over the weekend about what an amazing moment that was. >> that's all people were talking about. tom and jerry's bar. who won? the game's not until this weekend. i said, no, not the game -- >> what did you tell them? >> i felt on the merits ackman won. but the real winner was wapner,

because wapner kept his poise and kept it going, and kept trying to bring it back to what i want to know, which is carl's position in herbalife. and it's not clear. >> although he was able to very succinctly in this case outline the short squeeze rationale. and an argument we have discussed, out there in the herbalife camp is ackman being as responsible as a fiduciary here. taking such a large position when you've got the questions about a borrow and ability to sustain that, at what cost. and liquidity questions in terms of any redemptions that would come in. i thought that was an interesting -- >> and ackman did not -- i was listening very carefully for that answer. everyone was wondering about that short squeeze. yet your shares out there, i mean, if carl -- if anybody has a position out there, you take those shares off the market, don't allow them to be borrowed for the short. and that creates that short

squeeze. >> kate kelly said there is not a difficult borrow. you can borrow the stock. there's 9 million owned by loeb. the company started buying back stock. what i found interesting about this debate. this was one of the few times in my life that really is zero versus infinity. ackman says that this stock is going to zero. >> right. >> and icahn said ackman's going to zero. and that ackman's investors are going to desert him. this is not about the next ten points of herbalife. this is about a major hedge fund going bankrupt or a major supplement company going bankrupt. that's what those guys are framing it as. in the meantime, the stock does nothing. loeb might be buying nothing. what does it mean it does nothing? >> it doesn't mean it's not going to do something. >> mexican standoff. >> herbalife was centered on

that argument on friday. >> a long storied history between them. >> how many parallels between that conversation and michael douglas and wall street, i can buy in ten times over. it was amazing. it was amazing. >> icahn, he's been doing this a lot longer. he's 30 years older than ackman. he's the better investor on track record, no doubt. and he's got cahonas that go on forever. what can i tell you. >> was he off his game, though? everybody thought he was rude. >> that's carl. >> that was so typical of carl. very typical of carl. >> i thought that -- >> he curses on the air when he's just on himself. >> that's the way it goes with him. he's one tough dude, period. >> okay. >> it will be interesting to see how it alters his perception on the street and beyond, from this point forward. we just don't know the answer to that yet. speaking of showdowns, amazon versus barnes & noble.

the latest chapter in the battle between book sellers. first, taking the pulse of the economy with honeywell's ceo david cody, a live and exclusive interview at 9:40 a.m. eastern time. one more look at futures as the market tries to build on the s&p. the highest level since november of 2007. ♪ let's go. ♪ ♪ ♪ [ male announcer ] introducing the all-new cadillac xts... another big night on the town, eh? ...and the return of life lived large. ♪

two book sellers in the story this morning. amazon starting the week at new all-time highs. the company's road map to dominate ecommerce over the next decade. barnes & noble's retail chief telling the "wall street journal" the company plans to shut down as many as a third of its stores over the next ten years. barnes & noble still has a good business model, even with fewer stores here. really a tale of two retailers, one benefiting at the expense of another. >> there's a downgrade today of bed, bath & beyond. this is that continual theme. it's just so much easier to buy it at amazon. amazon gets more and more sophisticated. it's difficult to compete with a system who shows you everyone that bought the book you just bought, bought these books, versus going to barnes & noble where there's a very nice person who's trying to help you find a book. books just don't work.

stores don't work. they used to be temples of learning, places you could meet people. now i just think they're too expensive as a real estate. >> disappointment for barnes & noble during the christmas period. where the nook, you wonder how many platforms can there be. now there are real questions about, well, maybe there isn't room. >> there's interesting that amazon has the netflix feel to it. i was going over some of the -- >> in a good or bad way? >> if you look at the metrics of amazon, you're talking about a company that people are very comfortable paying 155 times 2013 earnings. netflix paying 234 times 2013, 55 times 2014. and apple, yelp, 9.9 for 2013. and 8.6 for 2013. meantime, people are upgrading sony. >> people want the beta, they want the upside. when you think about -- >> makes you want to be a value investor. it's hard not to say, this

momentum trade is going to end at some point. >> look, netflix should have ended it a long time ago, but it didn't. people still love the product. amazon is a loved product. it's very rare we get these situations. i love the product so much, i want to own the sok. another stock went to 700. >> people love the stock so much. >> they did, except -- what was the high multiple? what was its highest? >> let me ask you, why are some stocks not constrained? >> because they have no earnings. >> well, netflix has earnings. that is the quandary. >> yeah, it is. especially when you look at amazon, all-time high. and apple, here we are, sitting at 436 in the pre-market session. >> a lot of people feel, if amazon wanted to show real earnings tomorrow, they could be selling at 14 times earnings. if netflix decided they didn't want to go overseas, they could be -- these are companies -- they're doing exactly exactly

what you always heard the japanese companies were doing in the '80s. they're not looking short term. they're not sacrificing on the short term. >> that worked out real well for the japanese. >> well -- >> they're just getting started over there. >> let's talk about asia. >> all right. that's good. that was a good five years. the next 30, 25, not so good. >> there's only two stocks that fit the sales force. >> when we come back, jim's going to help you make some money on this monday. hear what he has to say in his "mad dash." one more look at futures as we kick off a heck of a trading week. "squawk on the street" is coming right back. ♪ [ male announcer ] to hold a patent that has changed the modern world... would define you as an innovator. to hold more than one patent of this caliber...

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every morning you wake up, you need some ideas to make money. "mad dash" is where you come for that. a lot of discussion last week for the lumbering giants of the dow. >> what's really incredible, carl, when you look at the broad nature of this rally, it's not just done by the materials. it's not just done by the soft drinks, consumer products. at the same time people are excited about cat, they're also excited about procter. procter & gamble has been an underperforming for some time. it would not be a stretch to see this company go to 80, 85, that

they finally get it together and get a little top line. they are getting some top line. the bottom line has been trimmed. they fired a lot of people, they've really organized. supply chain is down. the raw costs are stabilizing. mcdonald's doing a good job. i see this throughout the dow, pfizer breaking up. you'll get an animal health business this week going public. johnson & johnson, stock did not stop. you have at&t and verizon, they weren't so bad. i guess what i'm saying is, the dow is leading. it lagged last year. it's leading this year. >> big story in the "times" over the weekend how apple is not the market bellwether. it's actually ibm. >> wasn't that something. ibm, i was on that call last week and i have to tell you, it earns $20, which seems not a stretch in 2015. are you paying too much for that stock? no, it's inexpensive. >> speaking of earnings, the pfizer is coming later in the week. it's going to be a big one. after being dethroned by exxon

mobil, how far do apple shares have to go before jim cook is on the hot seat. later this hour, a fast start to the year for honeywell. an exclusive with ceo david cote. [ man ] i've been out there most of my life.

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all on thinkorswim from td ameritrade. ♪ you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell set to ring in about a minute's time. the super bowl is coming up on sunday. but before that, super bowl of earnings, everything from amazon, ford, boeing, facebook, viacom, u.p.s., yahoo! tonight. >> i think there's a turn going on there. i think myers has done a really good job. the brand was never really damaged. facebook doing a lot of right things. it's funny, facebook is the opposite of apple right now. you come in quietly, everybody's raising price target.

apparently they have a very good moment in business right now. very good moment. >> let's take a look at the opening bell here. s&p 500 at the top of your screen. the cnbc realtime exchange. at the big board, economy and finance ringing the bell this morning to celebrate at the nyse. over at the nasdaq, pernix therapeuti therapeutics. >> facebook is trading higher. now that the market has opened, up 1%. out wednesday night with earnings. coming out and saying it believes it will close a strong fourth quarter. strength in mobile business from google. sort of the tone in the sector is a little upbeat here. they're saying they expect revenues growth 34% year on year, $1.5 billion. they're expecting mobile revenues to be up 75-plus percent sequentially. that would be a blowout number.

the question is, can we get back to the ipo price. analysts believe 33 will be sort of resistance. if we can get through there, 38 might be the next stop along the way. >> people want a mobile strategy. google truly delivered. people like what google has to say. they have a mobile strategy. one thing that's happened is when a company reports it is not initially liked, accenture, okay? and actually, three, accenture, schlumberger and -- all three were incredibly disappointing to people. all three are at or above where they disappointed. so you take schlumberger, it was at 71, 72. it went to 68. it's now at 79. that's rather extraordinarily. the stock is back to where it was. and accenture was like, wow, what happened to accenture. the answer is, what an opportunity to buy. the stock's back at the 52-week

high. there's a forgiveness element which says, people at home, don't freak out when stocks get hit. some of them have been able to get new adherence. >> is it a rational exuberance? >> look at caterpillar, i didn't see much that i liked in caterpillar. but it's up three. >> boeing, regarding that stock today, how the battery is taking a smaller share of the story. >> boeing's story is bad. housing, everything housing that i've seen. it's just nonstop. georgia gold up today. pvc piping. raw costs, again, microcosm of america, raw costs, natural gas down. we're flaring more natural gas than ever before. so you get all these different bull markets at once. we're going to hear from dave

here. aerospace, bull market. ford and gm, people saying, listen, they may not be that great because of currency. >> we're going to get kay schiller, speaking of housing, tomorrow. and how he's saying, i'm not sure that there is a solid recovery. in other words, i'm not going to predict what prices will do next. interesting. even though they've had a pretty good run here. >> when we talk about housing, we talk about being up, what, 20%, 25% over last year in terms of new homes, we're coming off a historic bottom. it's still not huge numbers in and of themselves. >> i spoke to dan fulton on friday, the warehouser ceo. fabulous ceo. china, needs our lumber. japan, finally rebuilding from fukushima have tremendous radiation period. we haven't started the sandy rebuild yet. the united states, he's talking about inland empire, which had

been the single worst hit area in america, bidding wars for houses. he is saying wi is going to be an upyear. analysts downgrade it. this is why i say there's another current of skepticism. largest lumber company, that stock's not stopping here. >> i had to laugh when trim tabs gave their inflow numbers for january. $55 billion into mutual funds and etfs. they said the previous record was february of 2000. their words right before the tech bubble popped. that's the skepticism you were talking about. >> investing in irony is a popular thing. they say, i remember, in 1989, we had just come from 1987, and we got back to these levels. i said, well, that's ridiculous. everyone's going to be -- once they get back to the '87 level, they'll sell. the market doubled. then it doubled again. investing in irony is difficult.

what you do is invest in earnings, invest in companies, invest in profits. and the profits are pretty good. >> a lot better than they were in march of 2000. >> we mentioned earlier, i wanted to take another look. this is a company you know fairly well, jim. the company saying it's going to pursue the sale of the terminal market. that is having the shares up rather sharply. $21 billion market cap company. not a small company, hess. but at the same time it tells us it got approached just on friday, it says, from elliott associates, the large new york-based hedge fund, that is active in certain situations, notifying to buy additional shares, perhaps as much as $800 million worth, and considering nominating candidates to hess' board. this has been something that's been the site of activists for some time. unclear whether these two are related. friday they came along. monday they announced it, that is hess. there was reluctance on the part

of some activists, because hess is connected to circles in new york, and thought of as a very nice guy, too. they do announce the stock is up. your reaction to the actual news itself. >> this is one of those problems that we have in this country. where we have refinery capacity in the east that is designed to be able to incorporate and take imports from algeria, from nigeria, from the clean oil, okay? and they're selling it at the price we pay at the pump. hess has refinery capacity that is not able to take advantage of the lower priced crude. by the way, they're the original eighter. they have this tremendous mismatch where they have this refinery capacity, high costs, not making a lot of money. and this is has kept them back. and they are a major, major explorer, major producer of

energy. and now you're seeing how much that's worth, which is a lot more than been kept back by refineries. very smart move. i congratulate them. the stock is going much higher, in my opinion. >> bob is here with more on what is moving this morning. >> hey, guys. happy monday. good to be back. i was in san francisco for a week visiting family and friends who were working there. the dotcomers have moved back into san francisco after moving out for a few years. they're moving into areas like the mission. they're pushing back some of the old impoverished section of san francisco. that city is experiencing a renaissance. i spent a whole week there. a lot of optimism in san francisco right now. the s&p obviously over 1,500, first time since 2007. record inflows into stocks, mutual funds in january. records, we've been waiting how long for that? china shanghai index, up 2.4% this morning. now we're at a seven-month high in chinese stocks. european banks, remember last

week talking about repaying their ecb loans early. there's reports over the weekend spain may end finally its ban on short selling in stocks. remember, they did that for most of last year. they're going to possibly end that as soon as this friday here. the big question now everybody was talking about over the weekend, how much expansion will there really be in the global economy this year. the durable goods number this morning, over the weekend a big chinese think tank came out with their estimates for chinese gdp growth, 8.4% at least. now we're north of 8%. once again we're probably 7.5%, 7.6% in 2012. so the numbers are slowly expanding here. and of course, you know what's going to happen, top line growth for these companies will drop immediately to the bottom line, because they're so lean and mean, these global corporate companies. you can argue now for a multiple expansion potentially. well, you get the point. the big trade for 2013 could be short bonds, long stocks, long copper, for example.

we'll see. still a little bit early. but the signs are good. i know people have read caterpillar a number of different ways. here's how i saw it. cautious. inventory reductions continues through the first half of 2013 they said. sales in q-1, lower year over year. capital expenditures overall lower in 2013. what about that $7, $9 guidance? they explain it right here. it's all back-end loaded. they say if like the last two years growth and confidence decline in the second half, 2013 could be a tough year. if we don't make the second half numbers, we don't have it. the only good news about a $7 to $9 guidance is they're not going to lower the guidance over all. it's going to stay there. they keep it all throughout the year. by the way, the consensus is $8.54. so $7 to $9, most of those estimates, jim, is on the lower side. still, the stock to the up side. back to you. >> bob, i feel the same way. like geez, there wasn't a lot there for the bulls.

it didn't matter, the bulls won it. extraordinary times. let's hit the bonds and dollars. rick? >> thanks, jim. of course, with the big run in stocks, you are seeing a rise in rates. is it commensurate or not? many don't think so. it doesn't diminish the fact we have historic marks today. interday of five-year, up three basis points. if you look at ten-year, the big news is it traded over 2%. hovering up four basis points at 199. open the chart up. these are virtually nine-month highs on the ten-year. and there are similar comps on the long end. if you look at the foreign exchange market, it's a big day, but in so many different ways. the pound in particular, let's start out at the pound side. let's look at the euro versus the pound. as you see on this chart, pound's getting hit pretty hard. this is a 13-month low on the pound. let's switch around some of these controls trades. look how fascinating this is.

let's not pare that losing pound to the pound/yen. pound/yen is at 31-month highs. if we look at the euro/yen, it's at 21-month highs. if we look at the dollar/yen, it's a 31-month high. even though the pound is having a tough time against the eurozone, everybody's having a party against the yen. these cross trades have been one of the biggest surprises to many for 2013 thus far. and it hasn't taken long. the other thing, of course, durables today is one of the reasons we're up several basis points, again, along with stocks. but if you look at the proxy for capital spending, up only .2% for the month of december. that was a little disappointing and maybe one of the more important components of today's durable series. jim, back to you. >> thank you, rick. let's check out the latest news in energy. sharon? >> the fact that hess is exiting the refining business is a huge news for the oil industry, for the energy industry.

it's also going to have a big impact for drivers along the east coast. wholesale gasoline prices up about 2% today. a lot of that has to do about this news from hess, as well as the fact, of course, that it's trying to divest of its terminals. we talk about the gasoline that's produced at this port refinery in new jersey. it's about 50,000 barrels per day. but we talk about the percentage that it makes up of the gas produced on the east coast, it's about 7.5%. a significant amount. analysts are saying we could see a 5 cents to 10 cents jump in pump prices along the northeastern coast as a result of the closure of this refinery at the end of february. also keep your eye on natural gas. natural gas is sliding, continues to slide below the 330 level, and a lot of it has to do on the weather forecasts. david, at least it's going to get a little bit warmer. >> i felt it this morning when i walked to the subway. didn't even have to wear a hat. you know what, the proxy detailing all of the discussions and a lot of other things that went on between the nyse and

i.c.e., over their combination that was announced in late december, came out this morning. always worth the read. particularly when you read the background section. if you have any interest in the drama between mergers and acquisitions. it can be informative in terms of the back and forth. some would say the choreography that takes place, where the expectations are and all the things that need to be negotiated. within that discussion, there is a couple of interesting things that i wanted to point to. one in particular that i think is worth noting this morning. and that is, the presence of a so-called company "a" that engaged in what would seem to be significant discussions with the nyse about a transaction. company "a," not i.c.e., but in fact, i am told, berkshire hathaway. it had what i'm told were significant discussions with the new york stock exchange about a potential deal. now, the price on that never

approached what the deal with i.c.e. was. take a look at some of the language. november 28th, 2012, indicative proposal with a value lower than the i.c.e. proposal. moreover, company "a's" indicative proposal was subject to the completion of due diligence, which company "a" could not commit to a time frame for. in addition it would have required the nyse derivatives business obtain a sale price for that business that met a minimum specified by company "a." finally, wineberg, the bank that was advising the nyse throughout all of this, continued in november to work with company "a" to refine its analysis. but company "a" did not improve its offer which remained below the i.c.e. offer. the board authorized discussions with i.c.e. nonetheless, we heard a lot when this deal was announced about the cme. it doesn't appear there were any significant discussions that took place there. certainly not about a full-blown acquisition. the only other significant discussions that did take place were between the new york stock

exchange and berkshire hathaway. didn't happen. >> i had no idea. incredible. the stock didn't pop. they kept a closed lid. >> they did. again, if berkshire had done it, they basically would have taken the nyse private without the european derivatives. >> like the way they bought newspapers, a great institution, they don't want to -- buffett likes to preserve great american institutions. >> a great brand. >> that's a great story. coming up next, a "squawk on the street" exclusive. dave cote joins us live. you want to hear what he has to say about the profits, the economy and the debt standoff in washington. early movers for a monday on wall street, waste management up 6%. ♪ you know my heart burns for you... ♪

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citigroup and jefferys raising prices for honeywell this mortgage. reporting great earnings fourth quarter to beat wall street's estimates on friday. shares are up more than 18% over the last year.

here now for cnbc exclusive is dave cote. honeywell international chairman and ceo. welcome to "squawk on the street." how have you been? >> not too bad, thank you. how are you? >> real good, david. one reason i'm real good is in your conference call, your ceo said, the first time i've heard this from a major american company, we saw some stabilization in europe. the first person, your company is the first person, first company that says anything good about europe. >> well, it's coming off of a pretty low threshold at this point. but yeah, we've seen some slight improvement in orders trends, short cycle orders trends, not just in europe, but the u.s. while we're encouraged by what we're seeing, at the end of the day we're not ready to bet on it yet and say this is a for ow sure. so we continue to be cautious and make sure this is real before we're going all in. >> but you're willing to make the bet on china being up 10%,

right? >> yeah. that, i do think china, at least for us, will continue to be very good. the overall economy, i still think is probably more like a 6% or 7% increase. but we tend to do a lot better than the gdp growth. >> now, dave, nowhere in the comps call, a real addressing of boeing's problems. i know you have your bases covered. how do you feel about the possibility that the battery will take a little bit longer, given the respect you have for boeing? >> i positioned that very well, jim, that's exactly what i would say, is i have a lot of respect for boeing. i know they'll sort this out. jim's a good guy. he'll be right on top of it and sort out the whole thing. in terms of impact on us, not that big really. as you know, i've oftentimes said i'm a big believer in company and the diversity of opportunity. not just for aerospace, but for everything we do. so there's never any one thing that takes off and makes us. but by the same token, there's never one thing that doesn't go right that hurts us. and i would fit this into that

category. the overall impact on us in any one year would be minimal. so not a big deal for us. but we're certainly rooting for boeing to sort this out. >> dave, give us some color on how strong you think this housing recovery is. certainly within your results, your sales of hvac, 10% of your sales come from residential construction. at the same time we're getting all the great data points, over the weekend it was said maybe it's not that strong. it's up, but not that strong. >> just a correction first. 10% is not correct. i know that got published the other day. >> okay. >> if you look at the overall new housing industry, in the u.s., it's probably 2% to 3% of our sales. definitely less than 5% overall. that being said, housing recovering is a good phenomenon, not just for honeywell, but i think for the country. and i'm a believer that we are

going to continue an inexorable rise here to get up to 1.2 million units a year again. which is probably where it should have been all along. when we were in that 1.8, 1.9 range, that was crazy. and created the problem that we had. we had to correct that by going back down to $500,000, $600,000 a year for a while. i think we'll slowly build to that 1.1, 1.2 range, which is probably where it should be. >> is this a multi-year process? >> i believe so. it's about 875, i think, was the last number. i think that will continue to slowly work its way up. so take two or three years to get there. who knows. i could be wrong. macro economics like markets are not something that i've got a supreme track record on forecasting. we try to stay conservative in our sales estimates, because you just never know. >> mr. cote, david faber here. in terms of forecasting, i'd love to get your take on where

we stand these days, given you were such an important player in it, in the big talk about a grand bargain. sequestration, where you see things going. it doesn't appear we've made great progress, it would at least seem to an outsider. >> yeah. well, i would say if macro economics and markets are tough to forecast what government is going to do, puts itself in a whole new category. i would say they have a proclivity for doing nothing. and if you look at it that way, and say, okay, that's kind of what their leaning is going to be, i would say there's a good chance we could have the sequester actually ku lly occur. i'm not one of the guys who becomes paralyzed by the idea that the sequester will happen. it's about $100 billion a year on about a $3.5 trillion spend. so at 3% reduction overall, even though, yeah, you could say it's not done thoughtfully and proactively, it's not, it's using a hatchet rather than a scalpel, but right now they show no propensity for being able to

do something like this thoughtfully and proactively. so i'm not that hung up about it. and i'd say if it happens, it happens. whether it's trillion dollar in debt reduction which happens, which is a good thing, i just don't think a 3% spend reduction is a killer when it comes to what happens to the economy. in fact, i think it could be offset by a feeling that we're actually starting to deal with our debt. >> pretty optimistic dave cote. thank you. chairman and ceo of honeywell. always good to talk to you. >> thank you. >> "six in sixty" with cramer is coming up next.

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"six in sixty" with jim op a monday. halliburton. >> north america is going to get better. hope springs eternal this spring. >> barclays. >> they said they make the number. >> what's up with waste management? >> they're saying credit suisse say it could convert to a trust. the company is doing well, not great. maybe this is the start of something big. >> joseph a. banks.

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traffic. but there is very little seller traffic. especially on the low end, as banks are slow to put foreclosures up for sale to all those hungry investors. you can see it in the regional breakdown, index down 5.4% in the northeast, up 9% in the northwest. down 4% in the south and down 8.2% out west. the west is the only region seeing a year over year decline in december signed contracts. of course, that's where the most distressed markets had been and where there are now bidding wars among investors. supply is still constrained by nearly 11 million underwater borrowers who can't sell, and 2 million nor in a near equity position. a feeling among potential sellers that they don't want to list at the bottom of the market. there's more on the blog realty check.cnbc.com. >> thank you very much, diana olick. not too much of a reaction here to the pending home sales numbers. but the dow is down by just a

fraction. the s&p 500 giving up right now the 1,500 mark. 1,499 is where we are. down a quarter of a percent. apple shares are higher by 1.7%, despite the downgrade that came out this morning from behr, cutting that stock to neutral saying estimates are too high. they must come down. >> it is the market rally that everybody's talking about. the dow less than 2% from all-time highs. s&p flirting once again with 1,500. does the rally have legs, and just how much more room is there to run. we'll check the charts for the next levels. caterpillar beats on earnings with revenues roughly in line, but the machinery maker remains very cautious on the economy. so what's the global thought? noticeably absent from the shares of apple, closing below $4.40 on friday. new 52-week low, but coming back a little bit low today. how much lower can the tech titan go with jim cook at the

helm. striking within distance of the dow. potentially, record levels for u.s. indices. kayla tausche is at hq with more on the rally on the street. >> the dow is having its best month since 1989, up better than 6%. 28 out of 30 dow components are in the green in january. that's compared to 25 out of 30 components rising in the 2007 rally. of course, some of those components have changed in the last five years. the index traded aig, citi, general motors, honeywell and altrea for bank of america. chevron, cisco, united health and travelers. leading the way in january, hewlett-packard up nearly 20%. that's on the back of rumors about a dell buyout, followed by home de bo, united technology and disney, travelers. all besides hewlett-packard up more than 9%. on the down side, though, verizon posting the worst performance, down by about 1.4%. boeing down for the month because of the dreamliner saga.

those are the only two names in the red in january. some interesting differences, while the dow itself had gained 11.5rs in the first ten months of 2007, now the index is up 7% for the last ten months leading up to this rally. analysts say there still could be room to run there. in those time periods, caterpillar and home depot were two names you should be watching. home depot the biggest laggard then. biggest gainer now, caterpillar surged 34%, then down greater than 10% in the most recent ten-month period. there's a little bit more caution coming from caterpillar today. valuation is one of the key data points to watch. the current value just above 13 times earnings, around the rally in 2007. the group was valued at 17 times earnings. though the earnings were a little bit lower. melissa? >> thank you very much, kayla tausche. what are the technicals saying as we move forward?

chief market technician at mkm partners. the s&p 500 most notably closing above 1,500 for the first time in many years on friday. what do we see here in the s&p and where are the resistance areas you're watching? >> last week was a big de, b not because of the 1,500 for me. the breakout of the former resistance was at 1475, based on the september high roughly. that breakout tar get is 1550 with an intermediate time. 1550 gets us within range of the 2000, 2007 highs which i widen that to that 1575. and that, of course, is final re sis taps on the charts. so ultimately i think we test that final resistance, and exceed it based on what we've already seen in some of the other indices. >> what sort of time frame can we expect? a lot of investors are out there, they're taking a look at fiscal cliff 2.0 and worried the markets will still be rocky. >> headwinds from the technical

standpoint, the momentum has really overruled the overbought conditions. to me, i think we could get to that resistance level over the next several weeks even, at which time i think we would see a more significant correction than we've seen so far this year. >> when you say a final resistance of 1550, 1575, that's where you see the markets topping out? that is ultimately where we'll fail as a level? >> i think ultimately we will exceed that final resistance and reach all-time high. i say it in part because of what's going on in the russell 2000 index. it's a small cap index and it's already broken out to an all-time new high. it shows the breadth behind the market rally, or market participation in the up move and is able to exceed that former resistance which was around 850 for the russell 2000. that was a bullish long-term development. >> the russell, small cap, and mid cap, and transports hitting not just 52-week highs, but all-time highs.

>> that's positive for the overall markets. >> one more stock that you brought. sort of walk us through where you see some opportunity in the market. >> on the long side, i want to stay on the same side of that positive momentum. that would be compelling to me from a technical standpoint. we've seen it break out from a longer term triangle formation. that targets, believe it or not, 95, with intermediate to long-term enterprise. an example of a breakout in the broader market. >> there's also a stat that was sent to us by our markets team saying about 79% of the s&p 500 is overbought right now. how does that factor into your analysis of the overall markets and where you see the final resistance of 1550 to 1575? >> the 60% right now on the weekly charts of overbought conditions, based on the s&p 500, it's an overextended reading. that does become concerning, but can also be sustained for some

time for several weeks, for example. and to me when you get that consolidation, or fraction, you can leave it very quickly as well. >> not a huge issue in terms of -- >> not a long-term issue. >> katy, thanks for stopping by. katy stockton, over at mkm. simon? >> thank you, melissa. as the stock market has rallied, bonds have sold off. therefore, the yield on the ten-year treasury note has risen. and today it broke through 2% for the first time since april. in part, that's because we're also seeing arguably an economic improvement. durable goods figures out today. good morning to you, thank you for joining us oncnbc. >> good morning. >> it's a big move we've had on, say, the ten-year yield. late thursday we were at 1.85%. we're now basically at 2%. how concerned are you about the degree to which bonds could sell off from here? >> well, we were actually waiting for a move similar to

this. for quite some time. it was really the treasury -- the treasury move is based on the government getting out of the way. so the resolution of the debt ceiling crisis in particular, i think was a big moment for the market. we are targeting 2.25% on the ten-year over the next couple of months. as you mentioned, economic momentum is getting a little better. really, the underlying trend of things is not so bad for the economy. and if you do get, as your previous guest noted, another move up of 3%, 4%, 5% in equities, then that could easily be the impetus to get treasury yields even higher than they are today. >> the big question, and we should talk about it, is the losses that people could suffer moving forward. but for the moment, if we take a historical perspective, we're still at very low interest rates, aren't we. 4%, 5% would be a normal rate. i assume this is not necessarily at the moment at this level a problem in slowing the economy. >> no, we're not panicked.

in fact, we think that treasury yields will probably find a plateau somewhere around that 2.25% and end the year somewhere about where they are today. treasury yields, at least at the moment, are heavily influenced by supply and demand factors. you still don't have a lot of net supply of other fixed-income assets. you no longer have a large net increase of things like nonagency mortgages. you have a lot of growth supply of corporates, but net supply is very, very low. so you don't have a lot of other investment options today. and you still have strong demand for fixed-income product which ultimately means there's demand for treasuries. >> you see, i ra, you've made m feel a lot better. there is a lot of doom and gloom out there. investors have put $1 trillion t's not forget that. that has withbeen the growth ar. if you take the yeeds up to the

ten-year to the more normal 4%, that would equate to a 16% sell-off in bonds. but you're saying we're not going to get there. it won't be that bad. >> that's right. they're just describing the price yields relationship in bonds, which we call duration. ultimately we do think you could have a little bit of losses in bonds. but ultimately, that will stop for some period of time. and you'll wind up having a flattish market. but that doesn't mean that we think bonds for the year are a great investment. at least not treasuries. we'd stay in riskier assets like corporates and mortgages rather than being in treasury for most of the year. >> i guess that's because the fed's still buying on mortgages. >> that's a big part of it. >> not junk bonds, i assume. >> well, we don't mind junk bonds. >> really? >> the challenge overall -- spreads are very tight, but fundamentals are also very strong. i think ultimately the risk in corporates, and things like investment grade corporates,

ends up being staying away from the time bomb. things like leverage buyouts, or management buyouts that leverage up companies quite a lot, you know, a long time ago i wrote a report calling the lbo the guillotine of credit quality. it really is. when you have good quality companies that have high credit ratings, and the next thing you know they're going to lever themselves up several times, that tends to be very bad for those corporates. but in a kind of a -- having a broad bailsed portfolio of corporate bonds, we think will outperform treasuries this year, just on technicals. >> ira, good to see you. have a great week. ira jersey there joining us from credit suisse. sales and machinery for caterpillar slid over 7%. what does it say about the global economy as a whole. tired of fighting the battle of dry winter skin? well, your prayers have been answered by jeans brand wrangler and their new moisturizing jeans. and yes, we do have a pair ready

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caterpillar trading higher after its fourth quarter beat. the ceo joined "squawk box" a

little earlier on. >> a year ago, beginning in 2012, things looked pretty good. we thought 2012 would economically, in the u.s., would be pretty strong. we thought china might be recovering. what happened mid year, fiscal cliff. uncertain election. we sputtered out the end of 2012. >> analyst over at jpmorgan, welcome back. good to see you again. >> thanks. >> market wants to accentuate the positive here. given the wide range of guidance, do people think it will be more like 9 and not so much 7? >> i think what investors are doing is looking through 2013 and looking into 2014 and 2015. you know, there are some challenges for caterpillar. i think on the call, one of the things we're going to have to understand is, when do those mining numbers start to increase again. when do those mining companies start to increase their spending on mining equipment. is it a '13, '14, or '15 event.

those are key things we'll be looking for on the call. >> how much clarity do you think you'll get on the call which apparently it is difficult to get them to say anything definitive even about the second half of this year? >> well, i think 2012 is a good lesson learned, as doug said there in the snippet that you just showed. everybody came into 2012 pretty bullish, and then things fizz willed out. i think we're going into '13 with things being rather tepid. the expectation is things will stay tepid through the year but nobody really knows. >> you say it's a messy quarter. obviously the china accounting stuff feeds that theory. how messy, and how much blame do you place on the company for not seeing what was going on at era? >> well, that's a difficult one to answer. i mean, it's another question that we'll be asked on the conference call. our understanding is they used external auditors. so maybe this is just one of these things that occurs. but writing off 84% of your

purchase price within the year of purchase is pretty significant. and investors need to understand what happened there. >> yeah. you've got a neutral rating, at least for now. price target of 98, not far above where the stock sits. what's it going to take to get you more excited about this name? >> you know, that's a great question. it is a macro call. if 2015, cat can earn $12 to $18 like they have said, you know, then you have to say, where are we in the cycle, and how do we value caterpillar. if we think 2015 is going to be the peak of the next cycle, caterpillar looks pretty fairly valued that the point. we're off to the races and starting a new cycle, then i think investors will be a little more forgiving and give something more toward a 15-month. we have to sit back and say where do we think we are in the cycle. >> in terms of the clarity we might or might not get on the call from the mining sector, when you look at that sector,

what are you looking at in terms of triggers for them to spend money? is it the price of metals? i'm curious, you know, how you handicap that. >> yeah, no, a lot of it is dependent on the price of metals. what we saw last year was mining companies had pretty significant cap x spending plans. as the year progressed, they cut those spending plans. so i think that's part of the question for doug on the call is, you know, what is he looking at, to give him confidence that mining spending is going to be up in 2014, versus 2013. obviously mining commodity prices is a chief driver, and those are driven by macro growth. i think the key question is 2.5%, is it enough. >> finally, ann, one of the stories that people seem to have a fair degree of confidence in is housing here in the states. to what degree is that a lever to move this name? >> indeed it is. right now, caterpillar has excess inventory at its dealers in the u.s.

again, partially driven by exuberance this time last year. but as we get through that, we would expect that any housing cycle will then be followed by nonresidential cycle. these tend to be multi-year cycles. so that could offset some of the delay in terms of mining spending. but mining is more profitable for caterpillar than construction equipment. >> so no doubt mining in china beats housing in the u.s., that much we know, right? >> i think that's fair to say, yes. >> ann, always good to see you. thanks again. >> thanks. >> over at jpmorgan talking caterpillar. >> just within the trading session, now down by 3.7%, it had been trading higher earlier in the morning. r.i.m. is a stock that virtually doubled in the last three months. this morning, the company came out with a list of studio partners in which people can access movies on the blackberry 10. right now, r.i.m. taking a breather ahead of the blackberry launch later this week. the secret lives of the

rich. the inside scoop on how developers in the big apple are now changing the way that they build in order to take it to the life of luxury asian style. no go call. this is for real this time. we are on step seven point two one two. we have entered our two minute hold. cabin venting has been inhibited. copy that. sys two, verify and lock. command is locked. flight computer state has entered auto idyll. three, two, one. the falcon 9 has launched. preparing for nose cone separation. standing by for capture. the most innovative software on the planet...

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developers in the big apple are changing the way they design high-end properties as they cater to asian buyers, in the world of the super rich things like feng shui can make or kill a mega sale. >> this is the best view i've seen of the park, hands down. >> there is no better views. >> we're on the 18th floor. 18 being the best feng shui numbers. >> they look how energy flows through a certain building. things like feng shui can make or break a deal. >> robert frank joins us now,

he's got the inside scoop on this trend in high-end real estate. this has gone on for years in hong kong, where they have entire holes in buildings to allow the wind to go through. it's finally caught up here in manhattan. >> that's right. manhattan has always been sort of what we call the global market. but it's never really been global until the past three to four years, when we've seen tons of money from asia, russia, latin america, come into new york. and these buildings have to cater to this buyer. with feng shui or with numerology, we see the eighth floor becoming very big. 157, that sky tower, put the whole 88th floor reserved for a major russian buyer, which they've sold. 432 park, which is going to be the tallest building in new york, is not getting any asian buyers, because the number 4 sounds like the word for debt. but the russians like that building. so we see them literally changing the landscape of manhattan real estate. >> in terms of feng shui, how do they change the development?

do they change the development? >> a lot of these buildings now are hiring feng shui masters to come in. the buyers usually bring their feng shui masters. by the way, a feng shui master is now getting up to $5,000 just to name a child. and up to $20,000 or more to look at your apartment. >> 20,000 snds. >> $20,000 or more. they're bringing their feng shui masters with them before they buy the property. >> is it easy to train as a feng shui master? i hear mbas are not paying. >> it's more art than science. it takes years. and there's a lot of mystery, sort of shrouding the whole occupation. but these guys are getting a big premium in hong kong and china right now. the real estate developers in notice are taking notice. they have to. >> robert, we've seen booms in the past. japanese buying, the late '80s. are the developers at all concerned, perhaps, that should things slow down -- in russia you've got the olive gardens.

but there's only so many of them. do they worry about that demand not being there after they've catered to it? >> they don't. one of the big reasons, it's not just one country right now. it's latin america, brazil, russia, the middle east, in asia, talking about china, singapore, indonesia. so the global diversity, and the fact that it's all cash, and the number of millionaires being created in these countries is like nothing we've ever seen. and they want stable hard assets, and real estate in new york is relatively a good value. and we have a very stable economy in government relative to the rest of the world. >> london as well. >> absolutely. >> exactly the same thing. >> that address you were looking at in the tape, where was that? >> that's $95 million, and that does not include the $60,000 a month in maintenance. it is definitely the best view i've seen of the park. really nice. >> amazing. if you want more real estate porn, you can get more tonight

in the secret lives of the super rich mega homes 9:00 p.m. eastern and pacific time right here on krerks nbc tonight. robert, always fun. >> thank you for having me. lets-go to brian shactman. >> two items on hess, up about 5% on strong volume, number one. elliott associates planning to up their stake in, and also hess wants to sell off its terminal and refinery business. it's 28 million barrels of storage capacity. not only will they get money from the sale, but they also according to what they have said will get $1 billion in operating capital to put somewhere else. a net positive in both stories. back to you. the stock under pressure, will shareholders start to blame tim cook for the fall. wall street legend stops by to talk about the s&p's winning streak and also thoughts on icahn/ackman.

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the rise of apple shares over the past few years have been meteoric. but they've been on a prolonged slide since it reached $700 in september. does this indicate a crisis in leadership, and is it time for tim cook to go as ceo. joining us now from what we like to call of the two management experts. dean and professor of management practice, at yale. and sidney finkelstein.

welcome, both of you to the program. >> i don't hear anything. >> is that sidney or jeffrey? >> let's go to sidney first. the slowdown at apple isn't really tim cook's fault. but it is his problem to solve. what does he do? >> look, it is his problem to solve. i think he's in exactly the right track. this incredible overreaction people have had because of the stock market kind of wiping out all these billions of dollars in value, i get that. but what he has to really focus on now moving forward, and he's already started to do with the townhall that he had on friday is, let's get people motivated, make sure everyone understands we're in the game, we're a major player. he loves to remind you there's no other company that's made as much money other than an oil company as apple has in a quarter. then you have to start thinking about what's the next wave, the next set of products that are going to come out and are we

going to be talking about incremental improvements that are important. for example, a bigger screen for the iphone, or finally we get to see what the apple tv looks like. >> let me pick up specifically the point you suggested, it was an overreaction from the market. and i heard that from retail investors over the weekend, who are in many indications doubling down, having lost an awful lot of money on margin. this is a serious issue for a lot of people. baird has cut its price target by $105, to 465, because it believes even now wall street estimates have to come down and despite the valuation apple stock could fall from here. is that still an overreaction in your view? >> well, here's the thing. when the price was in the 700s, it was completely ridiculous. there's no company that keeps on growing endlessly and have a stock that keeps going up. there are no examples like that in the history of business. it was overvalued at that time. irrational exuberance, if you

want. now it's come down to a level where it's actually conservative. so i'm not a stock market analyst, but i'm going to tell you that i still think it's a great company. and i'd be surprised if it kept on going in this downfall. >> sidney, i'm curious, you know, in every life span of every company, doesn't it reach a point where it's no longer a growth company and maybe it's a value company? have we reached that point with apple where the shareholder base is in transition, and the expectations of the company are now being re-racked, so to speak, and re-set to a lower bar? >> yeah, you know, the question really is, is apple going to become another microsoft. really big, still powerful, still making a lot of money, but maybe not having that -- those huge spikes with the creation of these blockbuster products. and you know, nobody can know that for sure. but it's a company that hasn't stopped looking for those blockbuster products. they've got deep, deep talent.

steve jobs was a genius and he's gone, but there's a lot of other talent that's there. so is this the case this will become a value stock or value company? i don't think they're ready to go to that level. i think they still have higher aspirations. >> what about the image of the company, sidney? you know, we've seen blackberry, for example, it would appear rise from the ashes over the last few weeks. certainly with the stock price movement in advance of blackberry 10. conversely, you have everybody and his dog piling in to kick ap putt at the moment. an article saying is samsung the new call. the advertising campaign was five or six years old saying, android is outselling apple, which we've known for an awfully long time. as ceo, as head of the pr, marketing director, how do you stop that sort of comment dead in its tracks? is it about offering bigger dividends or something more profound? >> well, you know, one of the

things i like tim cook has been saying is, we're not about maximizing market share, which maybe sounds like a crazy idea, we're about maximizing customer experience. and we want customers to love our products. that's what got them in the winner's circle in the first place. that's the only thing that enables any mobile phone company, any technology company to keep on going at this tremendous pace. >> sidney -- >> i think you have to -- >> i'm sorry. i didn't mean to interrupt you. i just want to bring in jeffrey. we had a problem with the camera at yale. and now he's now joining us on the phone. jeffrey, what is your view? what should tim cook do here to reinvigorate apple? >> well, you know, i hate to put you to all this trouble, just to bring you the lack of drama. but i completely agree with sid on this one. it's so easy to take the negative cast on this, simon. and follow the herd-like instincts. they marginally missed expectations. as we can all see, on a shorter

quarter, 13-week versus a 14-week quarter where they already had some product backlog, some supply backlog. you can see they probably would have crossed the analysts' expectations. this is strictly an expectations game. but cook's leadership style, i agree with sid, there's a lot of virtue behind it. it is different than steve jobs'. we get caught in this trap of creating a diety of jobs. we forget, you know, the ten other apple products that were incredible failures. jobs wasn't somebody who was a magician. and you remember, in the biography of jobs, in 2010, jobs was quite defensive and called it a smear. he thought motorola and google were trying to undermine him. and he used some pretty rough language. he said, you know, the f bomb,

this is not worth fighting. he said there was only 1% of customers and all this and that, is, you know, the fact that they had some problems with the maps, and the iphone 5. any innovative company has setbacks like this, simon. >> jeff, one question, though. you teach management. so when you have young kids learning business management at yale, do you tell them that when they run a business one day, they should have a third of their market cap in cash? is that a smart way to run a business? >> you know, when you are in this volatile of a business, it's unusual. it's an extraordinary amount of cash. yes, there certainly is a lot of speculation about there being some sort of dividend opportunity. but there also could be amazing opportunities for acquisitions. you know, you have a non-visionary ceo, people love to draw the parallels to edison and steve jobs. does anybody watching this show have any idea of who folded i son, who built the company,

gerald ran the company for 20 years. but he transformed it by acquisitions, by using some of the cash. he wasn't tinkering as an inventor. sometimes different leaders of style like that could use a cash reserve to let them glide through innovations that fail, and those that succeed, and also to find sonl some new business opportunities. it's a lot of capital, a lot of cash outside the u.s. >> jeff, they don't ring a bell when a company transitions from being a great growth company to one that is perhaps not going to grow as fast. we can all look back and say something was overvalued, as the other professor just did. but it's much harder to know within a company to understand when that transition is taking place. you clearly don't think that's happening here. >> i don't think it's happened yet. i think we have some anomalous missed expectations that were awfully close. it was a soaring expectations , n underlying performance game. here we have the jen use of the

team held together, and bob mansfield coming back in is a huge endorsement, operations chief now going into technologies. you have a team that knows how to -- these are the people who created this stuff. not jobs. jobs was one of the world's greatest consumer advocates. he was a technology advocate. he wasn't the scientist. as most of edison's great inventions, he knew how to promote him. but he was not the man tinkering in the lab in menlo park, he just knew how to brand them. we have the geniuses still there. i think there's quite a bit more to come. >> you know, jeffrey -- when the music starts, you know that you're basically being -- we're all being kicked off the stage. we have to take a quick break. good to see you both. twins. i didn't see them coming.

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welcome back to "squawk on the street." i'm sharon epperson in the gold pit, where gold prices are actually pretty flat right now. options ex per rations at the end of the day today. that kept gold in a tight range, between 1660 and 1650 an ounce. when you look at where gold was on friday, up about 20 bucks from the highs of the session. the selling that we're seeing in the gold market has a lot to do with the caution the traders are experiencing here ahead of the flmc meeting on wednesday. that's likely going to give more direction on where gold prices are headed in the short run. when you look at equities and the strength in the equities market over the last several weeks, that's another reason traders say they don't want to be in gold right now. equities are doing well and they want to be in the equity market. we've seen gold prices sell off a bit in that way. we've also seen gold sell off in terms, not just in dollar terms, but in euro terms, in terms of

the pound. where gold has actually shown some strength over the last couple of weeks has been gold priced in yen. that continues to hold up relatively well. elsewhere, we're seeing weakness in the gold market. and a flat trading session today as we have the options expiration. >> thank you very much, sharon epperson. the rally seemingly won't stop. art cashman is director of floor operations for ubs. where do we stand in this rally? >> we're a little overbought. by normal standards, slightly long in the tooth in the short run. but this is not like most other rallies. i think this is a chain reaction. we started back with buying delayed, looking at the fiscal cliff. as that got resolved, some of it came in. you had the combination of year-end money, that built up. and then japan decided that they were going to be aggressive in easing. that makes it almost a global event now. so i think all these things have

kind of built one on the other to keep a bit under the market. now the big question is, are we actually starting to see a rotation out of bonds into stocks. which will be a key factor. >> the flows certainly point in that direction. are you a believer in that and does that provide the incremental buyer to the market? is that retail money coming back in or institution alimony on the sidelines? >> it doesn't have to be retail money coming back in. you've got the dilemma of things like pension funds, particularly state and local pension funds. they can't meet their bogey. with interest rates at zero, they have to go in and take something. they are going to stay out of bonds, it's going to be probably into stocks. that would be something that could give the rally a really long life. >> you're great at measuring sentiment as well. "usa today," front page, "new york times," does it say anything to you in terms of sort of a historical connection you might make for it? >> clearly it's a warning sign.

i mean, i've lived through decades of things like the death of equity, just when they were at the bottom and moving up. so you get a little nervous as an old fogey when you see the story of wall street making front page news in main street. but i don't know that that's significant at the top. i think it's short term cautionary and let's see where we're going. >> don't we have to expand earnings -- i understand the weight of the argument. do you need to look for earnings expansion? that must be difficult at the moment. i appreciate that the earnings season is quite good. but you're not getting the top line growth around the world. we're still growth challenged. you may find out in the spring things are turning around. but it's just a promise, more than anything else. >> one would think logically that's what happens. but there's not all that much logic in the stock market continually. sometimes things can move well before earnings begin to move. now, what i'm concerned about is

that in this earnings round, they keep missing on the revenue side, and making it on the earnings side. congratulations to management. that means they're doing very well at having less money to make earnings out of, and doing it. but if they keep missing on the revenue side, that raises some questions about the general economy. it may not be as perky as it looks by the earnings. >> you had some thoughts on icahn/ackman on friday. you said it might temper some confidence on the retail investor. >> not unlike a car chase, and about as meaningful, i think. the idea was that, you know, those of us who are in the business full-time got a chuckle out of it. names that we know, slapping at each other. however, mom and pop sitting at home, still somewhat bruised from the flash crash and everything that's gone by, looking at four more voices on

the tv screen saying, is this game really that much on the up and up? should i be worried. that was my primary concern. >> david raises a good point, though. you must have this internal metric in your head. the evening news calls you, and where that leads you, right? that's all in your head. how does that feel right now? >> well, we're tiptoeing in that direction, okay? we have had times when i've been on more -- i've been on al jazeera. so we're not quite up to that. >> don't knock it. a big american network. >> i know that. >> always good to see you. >> don't forget to tweet us this morning after friday's big showdown on cnbc. what do carl icahn and bill akman do now for an encore? [ male announcer ] you are a business pro.

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welcome back to "squawk on the street." today's segment i'm calling abdication of principles. it sounds high and mighty. it's pretty easy.

you will see where i'm going with this. we had recess appointments thrown out as unconstitutional. there's been a lot of stories written about it in the "new york times," "wall street journal," stories go one direction one paper and one direction in the other. whenever i see a story like this health care and justice roberts or recess appointments, i go to the constitution. we look at article 2 section 2 of the constitution, we put it on the screen and look at the appropriate topic. the presidential have power to fill up all vacancies that may happen during the voefs the senate by granting commissions that will expire at the end of the next session. it seems to me that's not at all what occurred know ruling is correct. the interpretation of this is many presidents before have done it. if i heard that before, a boat load of the crisis, things the

government has done and things changed regarding deficit and spending and baseline. it's a very rotten excuse. i remember an investigation into this industry several decades ago, trading after the bell was routinely done for decades, maybe close to 50 years. all of a sudden, people were caught and it didn't matter. it's not a defense it's always been done that way. this goes so much farther whether president clinton during impeachment giving his definition of the word "is," what we find is our tradition in this country have made a great rule of law is predicated on a constant culture by getting around the in tent whether section 2 article 2 of the constitution, that's the government. whether it's business, pre-credit crisis and bundling of derivatives. when the private sector does these things, it's horrible. where did they learn it from?

any government. the government. isn't it time they stop making their own rules because that's not why people elected them and go by the constitution versus get around it because everybody including our kids get around things and it really isn't the lesson government should be teaching. back to you. >> rick, thank you. one analyst just downgraded shares in apple. his thoughts ahead. [ wind howls ] [ dog barks ] ♪ ♪

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let's get the "squawk on the street" for a monday. we had a showdown friday between bill akman and carl icahn. take a listen. >> i appreciate, bill, that you called me a great investor. i thank you for that. unfortunately, i can't say the same for you. >> you should here fave vr indicate that line. >> what do due for a come back? boxing match?

"dancing with the stars," spend quality time with oprah and a couch, jumping optional. people will be talking about it a very long time. what's coming up tonight? >> yahoo!. we will be reporting the comments. and is the trading weakening and we have the governor saying weakening hurting us and the great bond rotation. big show. >> see you then. if you're just tuning in this morning, here's what you missed ea earlier on. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> we're thinking, you know, it could be a pretty good year. we have that same political question in this country that will drive a lot of uncertainty if they start screaming at each other again. we chose a pretty wide range top and bottom. >> our companies are so lean,

tone so much firing, i believe in the move and really exhibit a is caterpillar, not a great number and it is flying. >> when you're in that circle, it doesn't matter what you seem to say is negative. people want to grasp for positive a different kind of market we had for multiple years. >> while we're encouraged by what we're seeing, at the end of the day, we're not ready to bet on it yet, and say, okay, this is a for sure. we will continue to be cautious and make sure this is real before we're going all in. >> the treasury move is based on the government getting out of the way. the resolution of the debt ceiling crisis in particular was a big moment for the market. >> we have to start thinking about what's the next wave and next set of products that will come out and are we going to start talking about incremental

improvements important like a bigger screen for iphone and finally get to see what that apple tv looks like. >> good monday morning, we're live at the new york stock exchange to check on the markets. the dow trying to get above the flatline, down 8 1/2 points, s&p up 2 1/2. and nad up 5 1/2. chip poti one of the biggest gainers, putting a price tag of 388 on the price expecting catering and home builders, low inventory and pulte and beazer and lennar falling. >> twitter is a multi-billion dollar company more than many

thought. how dade they come up with that. and will yahoo!'s streaming p e pages pay off with revenue. is apple losing its cool? samsung galaxy is taking over as the best selling phone in the country. and the ban torah of the art world accessible to a plugged in generation and the ceo tells us what he has planned for the future. more for twitter and multi-billion valuation and allowing its company to sell stock to blackrock. >> good morning, carl. twitter's stock sale gives the company a whole nuvew valuation north of $9 billion up from 2011. it's based on investment from blackrock buying $80 million worth of shares from twitter

employees giving it a percentage of the company. it's not raising funds, allowing employees who have not been able to sell shares on the secondary market to option it and generate cash. why is twitter worth so much? it's projected to hit $11 billion in 2014 and in september 200 million active users, up 14% in march. and it reduces pressure to go public and retain long-time employees and allowing the company to keep tight control over its valuation and long term financials and value to shareholders. once it hits 2,000 shareholders, regulation is that it releases financial data and comparing to facebook that did allow employees to sell shares on secondary markets to facebook's

ballooning valuation at 1 whun$ million apt its ipo. twitter selected blackrock for the quote philosophy and clout the investment firm brings. >> interesting beginning to a potential new chapter. thank you, julia boorstin in los angeles. one of the biggest contributors to revenue for yahoo! and they could make changes. >> hi. the single biggest chunk of yahoo!'s revenue is display advertis advertis advertising. they were able to pull in $11 million leaving out acquisition. and melissa trying to streamline pages and mail and sometimes dip in advertising if people click on fewer ads.

she's introducing an iphone ad. will they introduce software for the mobile transition or has melissa meyer already figured that out. and helping the stock last quarter. actually seeing more upside to search to improve mod everyonization. we'll see if she was able to do that. yahoo! is not giving guidance right now. analysts will try to predict the future with end lines and clues. they have to be careful. yahoo! spiked 30% a year ago based on hope and not much revenue growth yet. the most important thing is whether meyer can get investors to trust her. >> it used to kick off earnings season and succeeded that position coming somewhere in the middle. we'll see what happens. meanwhile, shares of apple downgraded to neutral. will is behind that call.

good morning to you. >> good morning. thanks for having me. >> you feeling a little behind the curve here? >> in all fairness, it is a bit painful. we've been defending the stock along with many others, long term opportunity, et cetera. all that said, our real concern is there's still downside to estimates. i think it will be tough for the stock to perform in the downside. >> you say you're positive on ecosystem you call unmatched, portfolio, balance sheet, cash, everything but the stock. what are the main concerns? >> i think you're right. part of what we're trying to do is separate the stock from the company. as you look at two to three months and downside to quarters, we're close to $41 in earnings and street close to $45. even the march quarter consensus estimates at the high end and the biggest is the june quarter

and we don't think the street is assuming enough of sequential decline. and where estimates could continue to fall, that will make it tough for the stock to work and i think it will remain under pressure. >> interesting. that is a bit of contrarian view. a lot of people argue the june quarter is when you see the product refresh and the stock could find more stable legs. you do not agree with that? >> possible we start to find some refresh. that could be a potential upside if it were to occur. my bet is it falls in the latter part of the summer. we just went through a major refresh cycle the last part of last year. you never know when apple tv is coming out and major new product and could throw a wrench in the equation. as we look at the product today, we're concerned consensus estimates are too high. >> you talk about demand outside the u.s. being relatively disappointing.

increasing competition. pcs are not having a very good decade. when it comes to competition, who do you think is benefitting the most? is this really a samsung story? >> it's samsung and android really, seeing developing markets, part of it is a bigger screen fephenomenon, tied to so manufacturers and samsung has been the biggest beneficiary of that trend. you look at iphone sales the last quarter looks like the u.s. and china are close to 45% of iphone shipments this last quarter bigger than where it's been. it suggests they are struggling outside of those markets. >> average selling prices, too, i heard from some carriers this quarter, people love their iphones but might not love them enough to pay more than they absolutely have to. >> this has been one of the big positives of the story some time. that strong iphone asp, average

selling price. that still hung at $640 in the quarter, which is strong. the longer term, that's clearly a risk. there's a lot of clamor among investors for a lower priced iphone and what kind of margins and esp does that bring. that could be another story off-setting some long term positives. >> you're joining us on a week blackberry 10 will make its big unveil. a discussion you have 80 million people who haven't given up on that phone quite yet. if they stuck around this long, maybe rimm does have more than a short squeeze in it. i wonder how much oxygen you think rimm is going to take out of the room. >> that's a good question. i think limited. it's under-performing on rimm. we recommended it a short. i think there's downside here. a classic case be careful what you wish for, the more successful the new blackberry 10 devices are more service

revenues of risk and their drivers. we're still more negative on rimm story than apple at neutral. >> we'll see what marketing at rimm has to say about that wednesday. good to see you again. see you next time. let's head over to brian shactman and get a quick market flash. >> petsmart, pe thtm, down 7% o show and they announced changes in the ceo and now downgrading the stock in part because of that and looking at e-commerce concerns and margin issues, that they've platt toad. the price target 55 from 72. a reversal where it's trading now, down 7%. >> wow. an interesting call. thanks. straight ahead, the commodities indicator no one is watching and everyone needs to know about and market analysis with ceo trim tabs later on. >> we had chuck beater man on

and the last time he wasn't too gung-ho specifically. he writes $55 billion in equity fund and for january, a record! and we will talk about that and the last time we had a record in 2000. that was a moment in trading. think nasdaq, think 5,000, think never again. be there. bottom of the hour. look at these streaming charts! they're totally customizable and they let you visualize what might happen next. that's genius! we knew you needed a platform that could really help you elevate your trading. so we built it. chances of making this? it's a lot easier to find out if a trade is potentially profitable. just use our trade & probability calculator and there it is. for all the reasons you trade options - from income to risk management to diversification - you'll have the tools to get it done. strategies. chains. positions. we put 'em all on one screen!

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capital markets, gary is back at headquarters. you have drawn our attention several times to important tells in the market. >> you probably remember november 6th, election day. we talked about the ceo. why did we talk about it? back then at that index what very small people look at in terms of trying to figure out the economy was making a double bottom. we will play the tape, talk about what we said that day and get back afterwards. >> the index, forever we have the next chart, that topped out april 25th. what's the point? the crb rind index leads the crb

raw index by two weeks. if you go back to 2009, you had the rind index bottom out two weeks before the crb index. >> take a look at this chart, carl. not only did it bottom in november, we broke out of a double top 541. why is this so important? if you had just forgotten about everything said that day, afffot about the election and the fed and apple, just paid attention to this index and got long equities as a result, this is a telltale of the economy, you made a lot of money. here we are now, look at the chart. it's breaking out. let's look at what is actually in the crb rind index. these type of things not speculative. you cannot hedge against them and create artificial prices,

oil, a crb. the crb rind is things like cocoa beans, copper, scrap, coin, cottonseed. you have talo, steel scrap, rubber, rosin and these are the economically sensitive crb components not manipulated by true price discovery of people buying and selling those commodities opposed to those hedging out. here you go, nice day to hedge on this and telling me the stock market is up and why it's doing so well. >> you said november 6th was the date? >> that was the date. >> i'm looking at that chart, you practically bottom ticked it. >> and the pa that brought this to my attention, rick, this was a telltale on november 6th, either break that double bottom

call but with everything happening it looked more like a bottom opposed to a double bottom. yes, it was a good call and now breaking out of the double top. for those trying to think about what does it mean about the stock market, earnings, relative performance, this is telling us the economy is on an upswing and think it has almost a 99% correlation in terms of being predetermined gdp and pay attention to the crb rind index. >> beautifully done and nice to have that time stamp to prove to people what you said. >> very good. see you at the exchange tomorrow. >> sounds good. >> when we come back everything from warm weather to the fiscal to excuses for the forecast and the ceo is here to explain why today's market is eerily similar to february of 2000 just before the tech bubble popped. squawk on the streets coming back. i'm only in my 60's...

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nice led zeppelin setup to start the day. >> rigeuters is reported investigators have said manufacturing is part of the problem for the engine failure of the f 35, a lockheed plane and the irony is the bad parts made by parker hanafin and when replaced, they will be alloweded to fly. and lockheed part but the part ter made by ph.

saying profits will be lower because of surn sandy, i saw you tweeting this at 5:00 in the morning. >> this one takes the cake from excuses standpoint. never have i seen so many excuses in one felt swoop. not just sandy, not just the fiscal but the men's clothing chain also blamed distractions created by the presidential election and unseasonably warm weather for this terrible or not so great performance. the quicker -- the kicker, they did this friday night at 8:05. friday night at 8:05 east coast time. this is the latest in the josie banks' saga. it has been trading for 52 years. it's trading well above closer to its five year highs than five year lows. the past few years, if you look at a chart, have been quite

bumpy and the stock price has been going sideways and the margins have puttered as the growth has puttered. the bigger question is this. if the company knew as far back as december and early december things weren't going so well, why did they wait until friday night to disclose this bad news? i queried cfo, dave allman and not heard back and the bigger news my friend, tyler matheson wondered and you can guess the kind of thing tyler would wonder, does this mean buy one get three free going forward. >> it might come to that. you mentioned the audit of the quarter, it reflects the results. >> you see something this big this late, you have to ask yourself, is there something the auditor saw? we don't know. given the controversy around the name, you have to look at the fourth quarter for that issue. >> good stuff, a lot of people

wondering the same thing. back at hq. zynga reporting earnings up more than 4% as people look at how much modernization is going on in the world of mobile. meantime, a few minutes left in europe's trading day, talk about some news they've had today when we come right back. but we can still help you see your big picture. with the fidelity guided portfolio summary, you choose which accounts to track and use fidelity's analytics to spot trends, gain insights, and figure out what you want to do next. all in one place. i'm meredith stoddard and i helped create the fidelity guided portfolio summary. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

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couple minutes before europe actually closes. a chance to talk about a country, simon hobbs, we don't get to a lot. >> that's right. one of the main reasons why the american stock market is rallying as strongly as it is, we keep clearing away potentially big obstacles. there was a thorn in this side of the european union some time called cypress, only about twice the size of long island sandwiched between greece, turkey, israel and egypt. had the banking sector exposed to greece, it needed to bailout. the bank iing sector is not balg out cyprus, has money laundering problems, we're not going there. the ecb said actually, this is potentially systemic of the eurozone, a member you need to sort it out. now, we find the possibility of a deal courtesy of the russians. yes, a three-way deal. in essence, cyprus is a little bit like euro's answer to

brighton beach, a magnet for russian money that may be connected to russian money or not and said they will come in with a three-way deal. not a huge issue, a 17 million euro bailout but clears another obstacle out of the way. another subject of banking, the how continues in italy, clear it's looking for new investors, change of management and bank of of italy saying it will ensure the loans keep going and the italian minister coming to the defense of the central bank saying it's done its job properly. meanwhile, in a relatively quiet day in europe, upgrades and downgrades and one standout was morgan stanley pessimistic about uk retail and home retail group in negative territory they say they believe britains will have less money to spend this year in

2013 than they did in 2012, when perhaps estimating within uk retail are about 10% above where they should be because the grind continues talking about the possibility of a triple dip recession for britain as a result of austerity concerns they have. let's got the closing out for the first day of the week. the europe markets are closing now. >> a mixed picture. "financial times" reporting, the bank of america is moveing 5$50 billion euros of deriv take to take advantage of tax breaks. that will be popular and concern they have an exceptional threat to the republic of ireland if that blew up and the big day to this week is pmi's coming out of italy and spain. always forward-looking indicator where we might be going with the

economy. could it be we have greater stability than we thought. that would be great. >> and we have numbers of our own. let's get a check on energy and commodities. good morning, sharon. >> good morning. we're looking at gasoline futures the leader, highs of the session up about 6 cents or so on the heels of hess announcing it is closing its refinery in new jersey. it prods 10,000 or i should say 50,000 barrels a day of gasol e gasoline, a small refinery compared to others but also key for the snoerk harbor area and why we're seeing an impact on the nymex crack. drivers are likely to see an increase and we could see 5-10% price jump in the new york area and along the east coast. we're watching what's happening with natural gas.

it's fallen off a cliff due to we're looking at warmer temperatures and a two week low for natural gas in the range of $3.10, $3.60 or so and in the center of that range. and merrill lynch says they think there will be further weakness ahead for near-term natural gas contracts because we're expecting to have 2 trillion cubic feet after the injection and winter season the highest amount of inventory on record. back to you. thank you for that. bob pisani is back after a break. nice to have you back on post 9. >> in san francisco, it's interesting to see the dotcomers moving back to the city. they had moved to the suburbs and now getting older and moving back to the city and populating parts of san francisco and to see the stock market rally

continue. i met people in san francisco, is the rally for real? will it continue going? i will highlight the broad base. you heard about the public buying stocks again. earnings are fair but likely bottomed. that earnings is likely happening. earnings are happening and china is bottoming. earnings not unreasonable. f a lot of money is repositioned. a lot of money hiding in stocks but defensive areas like headquarters. th -- health care. this augers well. this is very unusual, you get a monthly report, put up monthly numbers where you see health care, industrials, materials, all advancing 6 or 7% at the same time. look at this, so far months to day. this is very very unusual. you have a very defensive group,

health care, discretionals, financials up the same amount. why are we getting this? why is health care leading the way right now? isn't that defensive? don't you want to get in more global growth areas? the answer is what i said, the asset managers are very defensive and room to go into more aggressive areas. could a biotech is an important part of the health care sector. you could buy this btk here. it's sitting at historic high and elements of health care growth as well. let me show you this. everybody asks, is this the top? i got it last week. here's the big highs, remember we were at 1560, 1570 and 1500. remember 2000, 2007, the big drops. right when we hit these areas we

had big drops immediately after. you get up to 1560, you will see resistance. if you ask me where it would be, that would be my pick. i got a few questions last week whether the bond rally is over. i don't know. nine month lows buying treasury bonds, long term treasuries, you can buy this one. everybody wanted to know, should you sell your high yield funds? i don't give advice like that. all i will tell you, so far high yield funds continue to act like stock funds. this is a fundamental tenet investing in them. high yield funds don't go down, they go up. we're sitting near four year highs. this is a big one to invest,

jnk, they're not going down, going up. and when you get a stock rally, the high yield funds tend to do really well. >> hey, rick. >> hi, carl. i like reading chuck's pieces on trip tabs, of course, he's the founder, chairman head guy. welcome, charles. >> welcome back from vacation to you, too. >> listen, last time we talked we were cut short. we won't let that happen. we talked about the tax implications robbing the first quarter 250 to $300 billion, obviously, the run-up in equities hasn't shown the stress cracks of that coming into the sausage machine. what we did learn from you, showing the bar chart, $55 million of inflows, how do you interpreter that into the strategy we still may see a reversal in stocks or has your opinion changed? >> the chart i'm thinking, i don't have a monitor here, seven

of the last nine months record of top 10 inflows into equities were at market tops, january through april of '00 and interestingly, december of '07 was a huge inflow months. seven of the nine months, there were huge inflows. the other things going on during those seven months were companies were net sellers. january this year, companies started selling more shares than they were buying. buybacks has been the sole source of taking cash stocks higher or flow charts and now we're seeing float growth in the market and this week, looks like a $10 billion week for new offerings from companies. we're starting to see big selling by companies, very few cash takeovers, huge inflows and companies selling. what does that tell you, rick? >> i totally agree, chuck.

last tile arou-- time around we mentioned john passed away -- >> my good buddy. >> he was a sharp guy. the past two weeks, year oe year-over-year wages dropped 2.3%, it's realtime guessed i'm gue guessing a with holding information mr. lissio used to use. is that sample too small to draw any conclusionings. >> it's an increase of 4%. we will see a huge increase in gdp and after tax income in the fourth quarter mainly december, at least 100, 120 billion of extra income from 2013 recognized in december to beat the higher tax brackets, capital gains increase. so, in other words, the economy

now feels like 20% increase in take home pay has been given to the economy. it feels good. the problem with that, that income was going to be recognized this year, no longer here to be recognized. we're seeing a slowdown in income as we come forward. the best theater on tv to me wasn't to social inept types, but the fact that some of your -- the guests this morning, from companies were being like, do you see an increase in the economy? are things growing or things better? they're selling stock in aggregate, not buying stock anymore. to me, that means companies do not see what's going on as an improved economy. one more point if i can. >> yes. real quick. >> i'm sorry. >> go on. >> real estate. interest rates up on 10 years,

refi of stock. the real estate market was a big add to qe-1 last year and a negative to qe-1 this year. >> chuck, thank you. we'll look towards europe to see their employment numbers. i've always said, it's always about jobs jobs jobs. back to you. thanks, chuck. >> nice cautionary note. when we come back, has apple lost its cool. the samsung galaxy has stolen its a clout as the most sold phone in the world and the iphone drought and what that means for apple's future. [ male announcer ] where do you turn for legal matters? at legalzoom, we've created a better place to handle your legal needs. maybe you have questions about incorporating a business you'd like to start. or questions about protecting your family

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coming up at halftime, the akman icahn showdown and how the dow estimates could affect your money. and caterpillar beat and why two of our traders are divided where the stock goes next. we will debate it at the top of the hour. carl, see you in about 15. >> traders already getting popcorn popped. sure, apple redefined cool with iphone and ipad. but what's next.

with other consumers getting other devices, has apple hit the definition of writer's block. and writing for the street.com, welcome both of you. if there were a context for tweeting about this segment in advance, it would start with you. all these stories about the company losing its cool, you appear to be there silently seething about this. >> yeah. i'll be honest, carl, it's depressing. when we have this conversation, i want to go home, call it a day, lock myself in a room and pull down the shades and listen to morrissy tune. it's insane. call any ceo in the country, have them on cnbc and ask them what would you do for apple's revenue? what would you do for apple's profits? what would you do for apple's margin? what would you do for their competitive strategic position in the marketplace. every single one of them to a person would say they would kill for it. if they don't, ask them to open

their books and show you what they're doing. >> your point is apple may not have the best ideas right now but nobody has any better ideas better than those? >> that's part of the point. how will we gauge this company? against their future, that's fair and against what they're doing now and against the competitive landscape, we're gauging them too much against their future. we don't know what it is, only they do. i don't see how we can dog a company that owns mind share across the world, particularly north america, what will they do next. with the ipad mini, i came out and said, don't worry, it won't be a cheap product, price it at a premium and it will do well. it did. we have to give it the benefit of the doubt if we give amazon the baptist of the doubt. >> you're defending the company and rocco, you are more wor worrysome on apple long.

>> it's not about dogging the company. their approach is work in a black box. you don't know what apple is working on. you look at a company i cover closely google, they have no problem telling you what's in this future. working on project glass, have cars that drive themselves. it's easy to go long on google because you don't know wh-- you know what they're working on and don't know that with apple. there's that trust factor. not blaming it on steve jobs but something different there. >> does the veil of secrecy have to change? >> i don't think so. i wish they would do things more like steve jobs. tim cook was great in the conference call in one respect and said we could do a lot of things to create revenue and grab market share. that's not what apple does. i agree with drew's point, i like to hear about the future, let's see google bring stuff to

market and be successful. that's what apple does, brings great products to the market and when they come to market they dominate. google can spread itself thing and talk about future plans, bring the stuff to market and talk about revenue and profits. right now all google generates revenue from is advertising. >> drew, you would concede some of the pie in the sky google is worried for we used to worry about sg & a for those reasons. >> that's understandable. you look at google's track record, the utility they've become with search is unbelievable. maps is an example of apple coming out and stumbling, falling on its face with a product. that, you cannot argue with. their ios maps were bad and embarrassing for them. when people see that, they get a little nervous. we trust apple. then that happens, should we

trust apple? i think that's all you're seeing right now. should we? what's going on. >> rocco, final point, i know you guys aren't stock pickers necessarily, you're out there on the west coast, is this a point you think apple is cheap from a stock perspective? >> definitely it's cheap. don't buy it. the market's crazy. irrational. netflix goes up crazy over the last two weeks and apple gets a $250 haircut on what are legitimate concerns drew is bring beiing up. no. this crash is so unwarranted. it's a horrible stock for investors to own, stay away from it and buy something without anxie anxiety. >> rocco is right. it race up $11 today from when it opened, based on what? how everybody felt this weekend? what's going on? that's what i'm getting asked a lot here, what's going on with apple? i don't know. you tell me. >> interesting to hear two tech

writers talk about it in ways we cannot over here. gentlemen, good to see you both. see you next time. when we come back, do you like art by monet? if you do, you will probably like pieces by renoir. how can you discover those other artists, they're putting a lot at your fingertips while attracting investors like the ceo of pandora. we'll talk to the ceo when we come back. [ male announcer ] this is not my home. there. i said it. they don't have pictures of my kids. they don't have my yoga mat.

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ra welcome back to "squawk on the street". brian at the market desk. a whole host of gold, newmont mining and down almost 52%. back to you. everything from the clothes we wear to art can be curated online and one twice make it more accessible. and the ceo of artsy, thank you for being with us. >> thank you, carl. >> we call this the equivalent of something like a pandora for art. how does that make sense? how do you work? >> we're some what of pandora in the sense we make recommendations for you and the more you use the sight, we can make recommendations of what you might be interesting learning about you or pointing you. >> some things you learn are

what? >> there are over 1100 genes. and historic movements like pop art, abstract expressionism and visual styles, hard edge, blurry, bright colors, themes like mythology, contemplation of the past. >> the point is to get me. >> -- get no make a purchase, yes? >> maybe only 1% of users are buying, we see collecting and education part of the same thing. everyone who pis art started off learning about it because they were lucky enough to go to school within our history program or had parents and friends interested in art. we see education as a good thing in itself but creating a new generation of collectors in the future. >> there's an interesting thing in t"the times" about valuation and where they're going and based on.

we keep seeing numbers more and more crazy. the art world fools like the ate equity fund of the '80s and hedge fund of the '90s. do you trust these as they come out? >> i'm really not an expert on valuation of art, it's a product of the market. i will say as a result of more information freely accessible online, these markets get more efficient. interesting they brought up back in the '80s you want to buy or sell a certain financial security, you have be on the phone with someone and they have to be on the phone to make a sale. now that the exchanges aggregated the data you can buy it a lot more efficiently. we're essentially buying a database where all the art in the world is and demand is, what it is you are interested in and in the long run we can create an aggregate exchange. >> walk me through number of users, targets, mon tarization,

how does this business model work? >> sure. we launched it and people get addicted to it. 75 million impressions was our number as of early december. >> 75 million? >> yeah. logged in users spent 13-14 minutes per session. for every person who bounces, some spent an hour per session. people get very addictive because the genome product recommends new work and this is the first time art is accessible all-in-one place online. and for the first time people spend an hour looking at this work. >> if i'm a young artist trying to get commercial, this must be manna from heaven? >> unfortunately we get a lot of guys reaching out to us. but we only work with a fixed number of galleries. for every 20 galleries that asks to be on the platform, we only

take about one. we're really focused on quality. that can be frustrating but this is the art world and about having the best galleries and best museums. >> no one said it would be easy to make a living with art. please come back. with artsy. ahead on cnbc for friday, what does bill akman and carl khan do for an encore? ♪

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