differentiatation. what jcpenney has to do is get back on track and show it can provide those. >> happy friday the 13th, everybody. >> it's fine, it's good. >> "squawk on the street" begins right now. good morning and welcome to "squawk on the street." i'm david faber with jim cramer. we're live from the new york stock exchange. carl quintanilla has a well-earned day off. take a look at the futures here. we'll see if we can actually end up on this friday the 13th. turn to -- my colleague makes a face. you can't see it. turn to the 10-year now. where we been? right around the 2.8 mark, there we are, 2.857.

let's call it down ever so slightly and let's go to europe, of course, where the market has been open for quite some time today. you can see it has largely been a positive day for most of the markets overseas, at least in the european area. as for our road map right here, back in new york city it starts with the major indices looking to pull up and out of what has been the biggest weekly declines we've seen since august. you can scratch one name off of the candidates. qualcomm's promoting chief operating officer steve mollenkopf to ceo. and sam's club will have a new service called pantry. and on "mad money" last night, retailers saying customers are feeling a little bit better. let's try to avoid what would be a fourth consecutive day of losses.

the dow and s&p closed at one-month lows yesterday, though still about 2% from record closing highs. we got to start with the market. people don't know all the faces you were just making. >> you know, friday the 13th, retail not doing that well. okay, look, five-year treasury keeping up, interesting competition to stock, never want to see that. obviously there's tons of people that said the fed meeting next week, i'm going to sell stocks until that meeting. i don't want to be that long ahead of the fed meeting and we've got this big lock-in going on with a lot of funds, 2:00, 3:00. we got to get less long. we don't want to have as much exposure because it's just ban good year. so those are all prosaic reasons. >> i talk to people who say there's no reason to sell, it's

not like last year, like a tax reason where capital gains were going down. >> we didn't see the deal coming. the republican leadership saying, hey, listen tea party, you screwed it up enough and obama care has given up such an open, we don't need to disrupt the economy anymore. consequently, a lot of people fed that the fed had too continue its easy policy because there's going to be another government shutdown. well, i think that now people are worried that this is going to be the meeting where they say, hey, listen, it was really terrific but you don't have to worry about fighting the fed anymore because we're not as bullish about buying bonds. they're bullish about the economy. we in a transition mode toward a sales around earnings driven market and not to panic but there's lots of people who just don't want to be long into that meeting. >> we don't have too much left in this year. interesting side note here, jim. investors retreated from u.s.

stock mutual funds. i mentioned it only because the most cash pulled -- or the quickest pace since 2011, but the money is going into etfs. that's a congratulate dynamic that has been gone for quite some time, may be contributing to volumes -- >> going into the triple x financial index, playing -- etf move. you criticize etfs. that's look criticizing the green movement, it's criticizing nafta. i think the etfs are a lazy way to play some trend they don't really know about. otherwise you have to pick up an annual. with etfs you can be stupid. >> apparently a lot of people like to be stupid then. >> is there a law against being stupid? all these banks when they get in trouble, what happens? hey, listen, we were just stupid. we weren't criminals. hey, look, we were really dumb, not idiots. >> good.

how is your bonus? big bonuses. remember, we were only stupid, we weren't crooks. >> that's why we have the volcker rule now. let's move on to one name, microsoft. one name being floated about to succeed steve ballmer can be taken off the list. steve mollenkopf will become the ceo of qualcomm on march 4th and will succeed mark jacobs. i hope i'm pronouncing his name properly. jacob is not an old guy. he's irwin's son. >> he's younger than i am. >> maybe the idea that perhaps he would leave was enough to get them to -- >> his name was floated yesterday. you know what, i'm going to float somebody's name today who is like high up in a company and he's going to make ceo tomorrow. >> would you do that for me? maybe you can float my name or something else. >> it is kind of amazing that

this parlor game has gone on for so long. >> no idea if those reports were accurate or not. qualcomm is going to have a new leader and he's not going to be part of the jacobs family. >> shocker. qualcomm is an anointed knock. it continues to go higher. people are looking for a high-growth semiconductor. they don't see it with microchips or broadcom. etf with semis -- >> people forget this is an enormous company. it's $123 billion market value. >> it's gigantic! >> that ain't small. >> it's a love company. don't forget, arm holdings today up very, very big on talk that google is going to shift away from intel. apparently a very large part of -- intel is not a mosaic for

many companies. i do think we have to be very careful of intel, if they do lose this business to arm holdings, arm holdings is a very valued company, like qualcomm. that's another loved company. people are showing arm holdings love. >> they are. if reading the release, i stumbled on this. remember sherry lancing? she's the providing director of qualcomm's board of directors. >> paramount? >> i got to believe it's the same one. it's spelled the same. if it isn't, i'm wrong. as for microsoft and the top job there, i can give you one person kind of close to what's going on at least indicates there's a hope they can get something in the next few weeks. >> i hope so. this so opera is starting to really bug me. >> clearly mull lally remains a candidate but it's getting stale, if you will. >> you would think it mollenkopf

is going to stay at qualcomm, we revert to the endless talk about mulally but that usually drives ford down and ford is up. so i must conclude -- >> we will see. but again, the sense is there's still some unspexpected candidas that would be less likely. mulally may be getting stale. he's seen as a bridge to internal people who would take over eventually. or you get certainly somewhat unexpected. >> i don't care so much. i'm not saying it's wrong. i'm just saying this is one of those successions. >> this is one of the most important companies in technology. it's still incredibly powerful, generating enormous amounts of free cashes has a market value of $320 billion. >> it's very unusual to have a well-owned, widely owned company have a transition where they didn't name a ceo. >> absolutely true. we hardly see that.

especially in this way where there really seems to be this collective decision. >> it's kind of nutty. and the fact that microsoft is going up during this period. let's contrast this, by the way, with lululemon. here difficult transition, stock does nothing but go up. >> i know. but think about a company of this size and importance that has not had a successor in mind. there are sometimes when you're dealing with tragedy, whether it's mcdonald's, for example, that went through a series of unfortunate events with its ceos, but to think about a company of this size where it's sort a wide open -- >> you're right. and christine day retires from lululemon and everyone loves her, steve retires from microsoft and no one really likes her. so the directions do make sense. but i think you're right. it is a fascinating game because there's a lot of people who probably want this job but isn't it interesting that no one is taking it?

it isn't like al mulally comes out and says what an opportunity. >> it isn't. well, we'll see. and perhaps we'll know something early next year. let's move on to amazon, another name we love to talk about here. it's set to come up with a new plan for taking on costco and sam's club. this is according to "usa today." the online retailer apparently working on a new business called pantry in an effort to expand further into the consumer packaged goods market. the service will launch sometime next year with about 2,000 products found in the center of the store, canned goods, cleaning supplies, beverages. is it a surprise that amazon would be looking more aggressively at different skews? of course not. >> no. they look at something that is bought by people and try to figure out to who get it to your house in a better, cheaper

fashion. >> and the third party vendor, we forget how much that has expanded as well. it's third party in the sense of it's not amazon selling the stuff. they're supportive of that third party that is the seller to you -- >> they know whow to do it. >> yeah. >> i think that costco is a company that must be thinking how come we have to play by the rules? why are we if we report a plus 2 comp our stock goes down big, right? amazon doesn't report comps and the stock goes down every day. they must be so jealous. some companies are jealous of amazon. i myself am jealous in terms of the familial love called twitter. i crave that at home. i just don't get that. unrequited versus the love for twitt twitter. >> really? how about a dog. have you thought about a dog?

>> i had a cat. it was named don julio. i know. >> don julio. that explains a lot. that really does. >> what does macy ceo terry lundgren say about the holiday shopping season you may ask? well, we're going to tell you because he had a lot of things to tell cramer last night. shares of adobe systems, by the way, are on a cloud rising sharply on the company's quarter live results. we'll have an interview with adobe's ceo. more "squawk on the street" live from the nyc right after this. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action. tdd#: 1-800-345-2550 we have intuitive platforms tdd#: 1-800-345-2550 to help you discover what's trending. tdd#: 1-800-345-2550 and seasoned market experts to help sharpen your instincts.

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we are here at the nyse. it does look like a high-end spa. they're also passing around some breakfast, thanks to hilton, which went public yesterday and is ringing the opening bell today. >> we're one big branding opportunity, aren't we? remember when the late -- used to say i was wearing stp, i was a branding operation? that's the way things are here now if you're down here. i'm not saying for or against but you have to understand this is a show piece, too. >> the branding is an important part of the going public process. >> something you want to talk about. that's what it is in a lot of ways. >> that's in part why you do it.

>> that's why there are various packages you can get. you can go ala carte. >> people should understand there's a price to be paid. >> absolutely. bring some of those over to us. they look pretty good. some food. let's talk a little macy's. last night the company in an upbeat mood this holiday season. on "mad money," terry lundgren they expect to continue taking share from the competition and department store chains feeling better this season. take a listen. >> in many cases, you know, this time of year customers are coming in to buy gifts for themselves. while they're here they're buying for themselves, the beauty category is part of the whole business and that's indicative of how the consumer is feeling. they're feeling a little better. at least they are for macy's and

bloomingdale's, feeling a little better than they were a year ago. >> he's giving this holiday season. i think terry lundgren would give the holiday season maybe a b-plus. not perfect. the area people are spending are high-margin areas. perfume. we have iff on tonight. iff, the outfit in a makes a lot of these perfumes, luggage doing well, high-end men's doing well, coors, twomey. stuff that is expensive is selling well, the shoes department selling well. i saw the jones i wanted to ask you about later on. people have to recognize he was being bullish. so was frank drake at home depot being bullish. i always ask are you worried about taper? well, taper, i'm a businessman, do you mind? i'm a businessman, trying to make money for my shareholders, not taper. it's kind of an interesting

thing. i'm so steeped in the weeds of these ceos, i'm trying to get in their heads and they're not thinking taper, they're thinking business. >> unemployment is connected into that and housing -- >> they kept the housewares divisions. macy made the decision to never drop back from housewares. they didn't have enough product in the southeast, by the way to meet the demand. >> you have said for some time this is a company that is executing very well. that is reflected in the stock price. you still like it -- >> oh, yeah. terry lundgren is taking shares from sears, from jcpenney. yes, yes and yes. it's just a very well-run company, much better than it used to be. they just started their outlet. they only have a couple. that could be blazing, too. i just think this company is firing on all cylinders. great cfo, too. >> did you hear the end of "squawk on the street"?

he went on the board of jcpenney. talking about a turn around there? >> he was saying turn around. look, i always want to wish a company that has 110,000 employees well. i have to tell you, macy's used this weakness that was created by ron johnson to really go after jcpenney. even more, sears. they're very head to head. and macy's was very competitive. and by the way, terry lundgren is a fair competitor but he is not collegial. he laughed at that when i said you're collegial against these guys. no, i'm not collegial. people have to understand the ceos of this country don't regard it as being any given sunday. they don't want to just beat whoever they're playing. they want the team knocked out of the playoffs. >> they do. i can remember having a conversation with thompson over at mcdonald's recently. i don't want market share. i want market. >> yes. i love the spirit. we don't talk enough about what these guys are trying to do and

if you're with jim mcinerney from boeing, it's kind of like harvard, army, navy. he said, no. airbus, i don't like them, i want them to lose and i do my best every day to make them lose. mcnerney is one of the great executives in the world. he's doing lot to save costs. >> competition is very good. i wish we had it in the power companies. conedison, are you listening? please turn on my gas. one more time before we get to the opening bell, we'll look at the futures. more "squawk on the street" after this. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work.

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♪ so crazy right now, most incredibly, is she a girl ♪ there you have it. that's the music that we always change into from the good music. i don't like your "mad dash" music. >> i don't either but i don't run the place. >> restoration hardware. >> the co-ceo is one of the great operators. he will be missed and that's why the stock is down. not because of higher inventory. they explained that. >> this is the guy who helped you change the merchandising of the store? >> yeah. he's a great guy. >> and focus on the higher end. >> and he's one of the faces of restoration hardware. that's what's causing the weakness. >> let's move to adobe. >> after the close, this is why

you don't trade after hours. after the close, they reported a headline number that was totally unimportant. stock went down to 52, 53, traded as low as 51. then they revealed on the conference call how many people have switched over to their cloud product, far more than expected and that's how you got that spike. people have to be a little more cognizant that the conference calls tell you more. >> let's take 20 seconds and explain what the cloud conversion is. >> we maybe know adobe is having all these different products. if you pay for subscription product, you get everything adobe has. there's a terrific video on the web site that will take you two minutes to watch. you will never have a question given. >> that business doing very well? >> far better than expected. you get a much more consistent stream of revenue. adobe is a charitable trust name

of mine. i thought can people really be -- people hate it when i say this -- stupid? if you just waited for the call, in the first paragraph of the call you knew it was a great call. you knew it! you just had to wait for the first bit of talk by the management, which will be on tv morning and you will hear what i heard. they're giddy, david. they're giddy about the strength of their business. >> jon fortt will join us with adobe's ceo. >> and keep an eye on andadarko. we'll get to that. and we'll get to the opening bell in less than four minutes from now. "squawk on the street" back after this.

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became big business overnight? ♪ like, really big... then expanded? ♪ or their new product tanked? ♪ or not? what if they embrace new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade. all right, you're watching "squawk on the street" live from the financial capital of the world where the opening bell is set to ring in a minute and a half. we got a pretty big crowd here of course. hilton went public yesterday, $20 a share, had a very nice debut. very nice up about 8.5% or so.

>> this is just regarded as one of the great success stories. this is a kind of a kansas city chiefs, win two games, come back and next year they're in the playoffs. this is that kind of thing. >> when you look at the irr of hilton for blackstone, it not going to set any records by far. but when you consider this was a 2007 vintage lbo done at one of the highest prices we'd seen in that industry, taking on enormous amounts of debt right before the u.s. economy went into a deep recession and here they are talking about an irr at all, and they are, you have to consider in that context a big, big win for blackstone. >> and this is whether you started talking about basically saying these deals, someone is going to regret these deals but it wasn't the bankers. they didn't hear you. great call. >> they kind of new. you had bridge equity and all sorts of crazy things going on,

which we don't quite have now but you got to keep an eye open. when you see them and question people about them, they always say don't worry about it, it's always the same story. don't worry. maybe. we're not really that worried. >> big cheers here. a lot of robes, some food. not bad. >> it's the 12th man. i feel like i'm in seattle. it's the 12th man going. >> it is -- it's very loud, very exciting. as you see all those brands up on the podium as well. of course the hilton, which just rang that opening bell. looking at the s&p realtime exchange, a lot more green than red on that board. >> we need that. that's been not the case for a while. the sellers have come in like hea heat-seeking missiles. please be careful. >> "a christmas story", the musical, playing at madison square garden, did the honors in

ringing that opening bell. we're 2% off our highs but it feels worse than that. >> you come in and you're like slow bleed but, yes, i think there's also people who have been lulled. at jim cramer on twitter, people say i can't believe you put me on pioneer natural at 181 and it's now at 178 and a series of things. how could you recommend ibm at 179? it's at 178. come on, people, it doesn't go up every day. it just doesn't work like that. thank you. >> you're welcome. i'm trying to look at what anadarko is doing. it's down over 11.5%. >> oh, the judicial system is insane, david! >> this is a complicated one. i thought we might keep it for faber report. let's just get to it if we can. sorry to my producer jamie, who may be producing all the elements for that. you're talking about a 166 page

decision, saying that anadarko is liable for the actions of kerr-mcgee in damages for tronox spinoff. this was highly unexpected. the couple of people i was able to speak to this morning, when you look at the analyst reports as well as you take a look here at this timeline, jim, they're saying, whoa, this was way out of line, this was not what was expected, ignored other cases, he's saying it's fraudulent conveyance, relying on this idea that in '07 there was an irrational market because of course you did have this sent into the public markets and it was received. he's saying it was an irrational market in '07, ignored the circuit court decision. the point is you're going to get

an appeal but a lot of apc investors are taking aback by the decision. >> $5 billion credit line, they have $3 billion in the till. this is obviously if it gets to these prices, they have to do some asset selling. they've been exploring, sold some properties. they're also caught up in mckondo. this is a great company and has fabulous prospects. the stock was at 92 just a few weeks ago. i got to tell you, david, the judicial system, if they could possibly owe this much because, again, intentional fraud? it's dazzling. it's horrible. >> goes back to fraudulent conveyance. it's very complex and complicated. far be it for us to have the time and ability to go through it all. but the shareholders are going to need to do it to a certain extent. this was highly unexpected and a couple of people i did speak to this morning, one lawyer in particular also saying he's not relying on a lot of -- he's

going against the circuit court decisions here and perhaps the underlying -- >> i'm afraid to recommend it frankly because the court system, once you get caught up in that law -- i'm more inclined to buy it than sell it. it's a gigantic hit per share. i think you would do it with calls so you're stopped out. i expected the hit to be $3 to $5 a share and it's suddenly $10 to $20 a share. that's a giant amount to a company spending a lot of money drilling. >> regardless what they may end up paying and what may happen on appeal, kerr-mcgee. they bought kerr-mcgee's. it was kerr-mcgee's oil and gas business and spinoff that led to tronox and liabilities. takes me back to halliburton and dresser.

dick cheney made that great decision. >> if you're buying tronox, you must know something nobody else knows. >> it's going to the government. okay, i don't believe we have a release out at this time. >> i think morris goldfarb who was on my show the other day, giii, was on "mad money." some of these companies have become private equity footballs. and then remember the restoration hardware gentleman, he goes to lucky brand, which is another one of these brands which gets bought by private equity. why, david, are they so drawn to brands, brands, brands? >> that's a good question.

they're typically drawn to companies that have sustainable free cash flow. i don't have the answer. >> they seem to love these companies. >> well, look, we got one right here, hilton, right? you know, private to public. we'll see if it comes back again. dollar general, by the way. other, aramark yesterday. >> but that's one that does have a steady -- though you question whether it's gdp related. but aramark is steady and was a great growth business at one point. they know how to run a cafeteria. there's nothing that's steady cash flow about a retail situation. >> i did want to mention dollar general, in part because it was a company that went private in '07 back when hilton did but went public back in november of '09. remember how long it takes firms that go public to exit.

it was november '09, we're talking over four years by which they were selling out that investment. they got it back to the public markets quickly. but in a case like hilton where blackstone owns 75% of the equity, remember hca, bain and large -- i think they're almost entirely out, i believe. it takes a long time to exit the position for the private equity firm. >> qualcomm, if you go back to 2007, we still didn't seem what was coming, we're flush. people weren't shopping at dollar general. they were shopping at a higher level, shopping at target. then the economy goes in the tank and people start shopping at target general. this is a big multiple call. suddenly they got the multiple because the economy is bad. they weren't even in california. so this was just a well-timed deal. really well timed.

>> something else to keep in mind when you do see private equity exit is they can have a breaking effect, if you will, on the ability of the company to do deals. for example, hca i know was thinking about a couple of things but its private equity owners, this is a little while back, were reluctant to see that. but once the exit is done, perhaps the board is freed up and the management team is freed up to be a bit more aggressive. private equity is focused on getting their eggs, they want out. >> and their stocks have been terrific. >> blackstone, alternative assets. the real estate business with blackstone is more important than anything. >> they're kings, they're kings! >> and oligarchs. >> and oligarchs. they should go buy the nets. >> a lot of them have bought other teams, the devils, sixers, you name it.

>> it must drive obama crazy that we have oligarchs in this country and they're in private equity, though the crafts never fought the carry -- they never fought the two-tiered nature. >> oh, it will only be a few billion a year. >> the democrats love hedge funds. >> twitter is up almost 2%. >> twitter is never having to say you're sorry, i love you just the way you are, don't go changing, the public loves twitter. it's just incredible. but believe me, they're only going steady, the public and twitter. when they get engaged, david, it goes to 65! someone goes, jim, you're endorsing twitter? i said twitter has become like netflix. it can't do any wrong! it's like amazon! >> wow. >> amazon says they're going to deliver by helicopter, goes up 10, says they're going to

deliver food, goes up 10. this is where i find the public is so smitten by twitter. and then there's of course the pricing. you get price target increases, david, because the stock goes up. i'm changing my price target because the stock is going through my price target. that's value added, huh? >> there's a lot of haters on twitter. gets so nasty. >> i always favored them because then they think i didn't read them. >> man, i'm kind of reluctant to go back on it. let's go over to bob pisani. he's on the floor with more of what's moving this morning. >> the ipo market continues on and on. yesterday the biggest day yesterday, hilton, aramark. i have 3.58 billion raised yesterday over bull market, most of that at the new york stock exchange. it keeps rolling on here. here's nimble stores. we talked about the high performance flash storage. it's all replacing the old disc

space storage. it was 16 to 18. now it's 18 to 20. indications now are 27 to 29. a few days able we were 16 to 18, now we're 27 to 29 on nimble. and a couple of other ones, chennier energy and fid et company, a live insurance company. we're ending with a real bang overall, the ipo market on fire. 27 to 29 on anymorele. let's targ -- on nimble. everybody wants the market to go down but for different reasons.

the buy on the dip crowd believes revenues will be doing better. the bull crowd thinks that's going to change in 2014. the top of the market crowd thinks the market will have huge problems with the taper, whether it's december, january, march, doesn't matter. they believe they're going to have huge problems and 2014 will be a disappointment. which is it? we're only 2% from historic highs. even the crowd that wants it to drop 5%, they want to buy it cheaper because they think it's going to be better next year. the trend is still clearly up and there's no eindication of which way the market is going to go. my bet is bernanke may give a strong signal that one is imminent and that may cause stocks to wobble. and finally, stock mutual funds, that's the biggest one we saw all year. finally, a lot of people have

been asking me about cisco and whether that's the canary in the coal mine. it might be due to the blowback on china and the snowden effect because of concerns about the espionage. but other telecommunication companies, juniper and alcatel seem to be doing all right. i think there might be a product cycle issue as well here and some of the other companies like juniper are in a stronger up cycle right now. so i'm not entirely convinced this is some kind of gigantic canary in the coal mine. we're still waiting for nimble to open. i'll be on that.

>> i do believe cisco is losing share to juniper, to lucent european companies, the china don't mind them. the fact is cisco's a challenged company right now and other people are taking share. i think that's okay to say. it's not necessarily wrong. at one point nortell was taking share and fell apart. >> nortel fell apart, that's putting it mildly. there was fraud, there was competition from wahway, concerns about espionage. let's go to the bond pit and check in with rick santelli. mr. santelli. >> if we look at a chart of the 10-year, a little volatility on the ppi data, which was very benign. the long and short of it is we're down a couple of beeps on

a 10 versus yesterday, basically unchanged on the week. but if you look at the middle part of the curve around the five-year, it's unchanged on the day and up several basis points on the week. as you look at a longer term chart of 10s, you can clearly see a defined direction. if you look at the spread over a couple days, it's easing off a bit. if you looked at 5s and 30s, you'd see the same thing. that ladder is hovering over a month tight in terms of the tightening for flattening of the yield curve, something to pay ai tensi -- attention to. the street is enamored with selling on the long side. but maybe it's more. maybe not only did the long end potentially put a little taper intensity in the fed's outlook, but maybe this is now giving us a comment about what may be behind the tapering at some point. yeah, don't say it too loud. maybe like raising short rates.

now foreign exchange epicenter of activity year end here and one i talked about outside of the british pound has been the dollar yen. we are certainly off our best levels but the best levels were just a whisker away from 104. open the chart up not for one year, not for three years, you have to open it up for more than five years because we have not seen this 104 area in 62 months. five years two months, there you go. david, back to you. >> thanks, rick. rick santelli. coming up, we have bank of america's 2014 outlook. savita will tell us why she's calling for a year end s&p target of 2000. we're back after this. over the next 40 years

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from the nymex. crude prices under pressure this morning. three main reasons for that. first off, we're seeing a little bit of a stronger dollar today. but also worries about that december fed taper and profit taking after the spike we saw earlier this week. west texas intermediate under 97 a barrel, brent trading at 108 at this time. a storm heading to the east coast on top of the frigid temperatures is keeping the gas levels up. nat gas hitting a seven-month high yesterday. david faber, back to you. >> thank you very much. >> a big happy birthday to fed chairman ben bernanke. he's turning 60 today. >> that's a big birthday. >> and his last birthday as the man who runs the federal reserve. which brings us to our squawk on

tweet, what message would you write in his birthday card? >> how about thank you for saving the western financial system. >> can you go that route. >> i think he's done a fabulous job. i listen all day to our network. i've never heard anyone else say a great word about him. i think it's a travesty. >> there is a famous rant you went on when he didn't seem to be paying attention to what was going on in the credit markets and you were right. this was the man that said subprime was contained. that was not right. >> but better late than never. he reversed course and he did so in a way that i thought was with great humility. it not easy to admit that you're wrong. he said some things at one point, he said one day you're going to have to buy billions in bonds and mortgage -- he was like jim -- or young man. he's a year older than me. i don't regret his work, i think

he's done a great job. i know there's lot of people politically who think he's done a bad things. there's a lot of people think he'll never be able to extricate. i think he'll be as right as he's been the last few years as opposed to as wrong as he was before the crash. it was a crash. >> it was. it was. there are always going to be some who wondered if we just let it go how quickly we would have rebuilt with a new -- >> why do we need atm machines? that would have been the greatest thing for the rich people in the world. that's not the way it should be played. >> here's what's coming up next on "squawk on the street." coming up, come on in! the water is, well, freezing. but don't let that scare you. jim cramer will keep you toasty warm with six stocks in 60 seconds when "squawk on the street" returns. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities.

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there's repricing going on. csx, michael ward, it a good buy. trulia. >> it's been a disaster as of late. it's defended by deutsche bank. be careful. this group got overvalued. >> a lot of competition? >> yes. >> ad t. >> it's been a horrendous performer. >> and utx. >> a lot of people today. >> what's coming on "mad money."

>> oracle. and this company is a great company. >> there are a lot of oracle killers out there. >> oracle is a gloliath and thee are a lot of davids. >> simon, what do we have coming up? >> we'll take a good look at coke. is the glass half full or half empty? hour two of "squawk on the street." you've got to be in it to win it. you need a permit... to be this awesome. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the

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could help americans save $300 billion each year. take the energy quiz. energy lives here. all right. welcome back to "squawk on the street." our road map this hour starts with what else? the markets. stocks remain flat after posting the biggest weekly declines since august. so where is the market as we approach the end of the year? >> and adobe is counting on the cloud.

companies's earnings came in below estimates and but a rallying from his creative cloud. >> and soda sales losing some of their zz? spending on soft drinks fell, and things look especially bad on diet soda. >> also ahead in the next 60 minutes, how does $400 million sound to you? that's what you could win at today's mega millions lotto draw, the second biggest price in that lottery's history. >> as most equity strategists pull out, bullish years are generally followed by a year that's a bit less bullish, but appreciable gains it occur. bank of america and merrill lynch says the s&p is heading to

2,000 in 2014, an 11% in current levels. savita subramanian joins for her first cnbc interview. why 2000 in 2014? >> i think that where we're sitting right now is the sweet spot for equities. you've got sort of a rising interest rate environment, low contained inflation and the beginnings of what looked like an economic recovery. that's actually been a pretty good spot for equities historically. so we think that 2014 could be quite a good year for the equity market. >> it would seen given what are we up, 26 or so on the s&p, really an 11% up year following a 26% up year? >> i think we're going to get it. the one thing we always go back to is there's really no historical relationship between what happens in one year and what happens in the next year. i think it's more about valuations, earnings growth, the potential for corporations to

start spending again, creating economic activity. and i city think pockets of the equity market are incredibly cheap. it might not feel like it but they are. >> let's go there first. what's incredibly cheap in your opinion? >> here's my thesis. we've seen multiple expansion over the last few years but it's either been in yield plays and defensives like staples and utilities or in these more secular growth-driven areas like biotech. if you look at kind of classical -- classic cyclical sectors like industrials, technology, you know, even energy stocks, they have seen little to no multiple expansion over the last few years. it's all been earnings growth. i think there's a catch up to be made in some of these more cyclical areas of the market that could actually benefit from what we think is going to be an improving economic recovery. we think that we're going to --

[ no audio ] . >> oh. >> generally benefits industrials, energy, technology stocks. >> what is the shape of the recovery. monday is the fifth anniversary of when the fed said it was going to drive interest rates to zero and it would embark on qe. we've kind of come up for a long, long time. you and i both know that economies work in cycles. so does this recovery continue forever or is there at some point when we start talking about a deceleration and possibly the prospect for a recession and the need for the fed to have made enough room for the fed to start cutting rates? >> i think that -- you're absolutely right. so we work in economic cycles and what we've been in is a five-year hyper easy money kind of early cycle type of market. and our call is that we just kind of morph from this early cycle, you know, very consumptions and financials driven market into more of a mid

cycle market. that's why our returns forecast for the next couple of years are less than what we've seen over the last couple of years but still positive. >> but that's not what i'm asking you. when does the economy start turning down? when does it slow down? >> it's hard to say. there's been wiggles. what we're in right now feels like a mid-cycle slow down. so the economy recovered coming out of the credit crisis, then tapered off a little bit but now it feels like we're getting some strength again. europe's coming back online, out of a recession, back into expanding growth. so i think that where we are right now is coming out of it. what i see as a mid-cycle slowdown in a long-term, early cycle driven market. if you look at what's worked over the last five years, it's been your classic early cycle, easy money plays. it's been financials, it's been consumption, housing and now that we're getting to an environment where the fed is going to say we're going to start to withdraw liquidity

because the economy is giving us green light, we could move into more of a mid-cycle mark where we see industrials, texts, a lot of the laggers over the last few years could actually take the reins. i agree with you. we've been in what feels like a very long bull market but the truth of the matter is that we've just been in a protracted, easy money type of environment. >> savita, we'll leave it there. of course to be continued. >> thanks. >> savita subramanian, head of equities and bank of america merrill lynch. >> we'apple up almost 20%. evercore raising its price target. good morning. >> thanks very much. >> why the upgrade? >> i think apple's multiple can keep recovering. i think the stock had gotten too

low and we're looking for it to get back to around the highs it had been, and $700. >> rob, what changed here? there's not been that much new newswise over the past few months when everybody knew they were going to come out with some new ipads, et cetera. why should be we show surprised apple is doing well over holiday season. >> i don't know that we're surprised. i think people were concerned about the momentum, i think the iphone 5 is showing good uptake. it's new product cycle is showing that apple is still really popular. >> talk to me about 2014. samsung has made a big deal saying they want the unit crown in tablets. a lot of commoditization out

there. how is that going to play out in 2014? >> that's been their m.o. apple peels off the highest sort of margin, the most profitable part of the market. they don't go after the low end, high-volume commodity i think android continues to outpace apple from a volume standpoint. i expect apple to dominate the most profitable parts of the market. >> what judgment are you coming to on carl icahn and his role in the apple story now? >> i would agree with the fact that obviously apple has a lot more cash than they need to stay on their balance sheet. they've gotten a little more aggressive in terms of buying back stock. we can see them do more. it's just pointing out the fact they have a lot more cash than they certainly need. and the cash keeps building, even as they are buying back stock and paying a dividend.

>> if he gets substantial chases to move the needle, how would in a be reflected in the stock price do you think? >> i think people -- investors do like to see companies buying back more stock and they like to see a bigger dividend. so anything along those lines obviously helps. but i'm not sure i'd hang my hat on that as being what really moves the stock. i think what moves apple stock, not to sound corny, are popular product cycles and that's what we're seeing now with the iphone and the ipad. >> this is my one opportunity to ask you about beyonce because she falls into your coverage area. >> perfect. >> because she just released her new album "by surprise" mastered on itunes. do these sorts of releases have any kind of meaningful impact for apple, the fact that it popped so big and she released it there? what does it say about apple's

place in the marketplace? >> that's exactly my area of expertise. itunes is a hugely important property that apple has. they have almost 600 million itunes users, all with credit cards. i mean, there's a lot of untapped opportunity there in itunes. i think that plays into that. >> i guess you liked it so had you to put a raise on it. >> good to see you, rob. rob chira joining us. >> what do you think about the fact she announced it on instagram? >> it's kind of a steve jobs style of announcement, isn't it? a little element of surprise, using social media. i've seen a lot of traffic beyonce fans saying this is how you do it. there was a tumbler out there, things beyonce is doing instead of putting out a new album. now i guess that's over. >> big in the favor household, no doubt. >> just keep running the video.

i like that. >> shares of adobe rallying this morning, despite a disappointing outlook. so what went right for adobe in the fourth quarter? we'll ask the company's ceo. we'll have an exclusive interview in just a moment. to hs and protect financial futures. to help communities recover and rebuild. for companies going from garage to global. on the ground, in the air, even into space. we repaid every dollar america lent us. and gave america back a profit. we're here to keep our promises. to help you realize a better tomorrow. from the families of aig, happy holidays.

welcome back. adobe systems rising but the company reported a weaker outlook than expected. doesn't seem to matter much

because the stock is up nearly 10% this morning. joining fours a cnbc exclusive is shantanu narayen. good morning, shantanu. >> good morning, jon. >> we talked about how the machines got it wrong after hours and we saw the cloud subscription numbers and it spiked. i know the numbers shift around as you transition from more of a packaged software model to cloud. what are some investors missing here about the transition that you're going through and going pretty well it looks like? >> the transition has been going great, jon. i think it's the creative economy, design and aesthetics have never been more important, mobile devices is driving a huge amount of content creation. and as you know, we're not only just powering the create of content, but we're also powering the web infrastructure. i think with respect to our numbers right now, people have

to spend a little bit more time looking at not just the reported revenue but also the annualized recurring revenue that we are building up as we transitioned to a creative cloud business. so i think it takes a little longer than it normally did to understand the underlying health of the business, which has been stronger than ever before. >> absolutely. 44% of your revenue in the quarter was recurring up from 27% a year ago. that's a staggering shift considering that you used to be locked into the cycle where you were -- your revenue was tied so much to product releases. what's the speed of customer adoption in the cloud telling you about what some of your peers in the software industry need to do speedwise to transition to this model? >> well, jon, at the beginning of the year we thought we might have 1.25 million subscribers adopting the created cloud. we blew past that number with over 1.4 million subscribers.

i think the message is for consumers, it's a better proposition. they get access to all of adobe's products, it's always up to date and it's accessible wherever they are on whatever device they wish to do the creation on. and i think, you know, it's just the adobe employees have embraced the cloud as a much better canvas in order to do their innovation. so i think it's not just adobe but you'll find every single package software company embrace and adopt a cloud. >> every time companies give a long-range projections on growth, i get a little nervous. i know a lot of people do, especially given what's going on in the macro environment out there, emerging markets where you a you don't get a ton of revenue. what gives you the confidence to give that growth projection out a couple of years, given we've seen companies like cisco narrowing projections just this

week. >> i think it's been important for us as we go through this transition to make it really transparent to our investors as to what's happening as we move from perpetual up-front softw e software-driven company to be routable through the cloud company. what gives as you lot of confidence are two things. first, on the creative side, the subscriber adoption and the customer satisfaction that we are seeing, as well as the number of trialists who are using creative cloud, enterprise adoption of the creative cloud offering was very strong in q4. so that continues to give us a reason for optimism. and then i think a brand new business for us, the digital marketing business, which crossed a billion dollars in fiscal 2013, we just think there's so much up side because every single company has to replatform their web site to deal with mobile devices and deal with social presence. so we think that represents a

big upside opportunity for the company. >> shantanu, you guys are a big player in the software realm, you've done battle with microsoft, you've partnered with microsoft. they're looking for a new ceo. number one, have they tried to pope y poach you and any of your executives? and what do you think microsoft needs to do to get this right? >> i think microsoft is a really important player and the pc business continues to be healthy. so i think what microsoft has to continue to do is to make sure that innovation is front and center. we live in an even more rapidly evolving technology climate and i think somebody who can continue to drive product innovation at microsoft will be critical not just for microsoft but frankly for the entire software industry. >> they trying to steal you

away, shantanu? >> i'm extremely happy here at adobe. my job's not done. >> it seems to be going pretty well, particularly today. congratulations on the corner. thanks for joining us. >> thank you, jon. >> sales of diet soda have tumbled recently, a staggering 7% over the last year. so with seaales struggling, wit are its ratings expanding on some major soda companies? we'll bring you the answer on that next. hi honey, did you get the toaster cozy? yep. got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate.

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at the nyse this year with a number of companies related to this industry. the latest it nimble storage priced at 21. you can see it up about $9. 2015 sales multiples of about seven times, maybe beyond that, at this $30 level. we'll talk to the ceo of nimble storage later this hour. >> let's go over to dom chu. >> twitter hitting a fresh all-time high for the fourth consecutive day up 26% this week. r.b. capital saying they're just scratching the surface with advertisers. twtr certainly in focus, simon. >> johnny capital markets is expanding its coverage of the beverage industry and what it calls an investable moment,

coca-cola, dr. pepper snaple both with a buy rating. welcome to the program. >> thanks for having me. >> why the upbeat note? >> well, i think a couple of head winds this year. people's fear of regulatory headlines and some bad headlines in the u.s. have caused people to focus on fierce that had already been there and structural strength outside the u.s. people aren't paying enough attention to. >> a lot of people are focused on the fact that there's this crash -- it's not really a crash but the diet soda market has taken a hit here, latest figures say down 7%. there are still questions for many people about the long-term effect of sweeteners. how do you factor that into your calculation calculations? >> i think in 2014 we'll see

innovation around new kinds of sweeteners, natural sweeteners. we're expecting an announcement from pepsico. coca-cola has a product in argentina that is mid calorie and all natural. i think changes like that can help the conversation. there's a wide variety of beverages. it's caused a focus on weak u.s. volume rather than anything else. >> what do you think about the international exposure that these companies can have and what's going on in the economies there. were they so affordable that doesn't matter, the macro economy, or are they going to get hit by that going forward? >> i think that's part of it. emerging markets, developing markets have their ups and downs. the world will add 700 million new members to the middle class by 2020. that's three americas basically coming online, looking to drink cold refreshment beverages. you look at the past 58

quarters, they've had their ups and downs but they've had double the rate of real growth as developed economies. it's within the growth is in this kind of product. i know there are some head winds receipt n right now but i don't think we'll be thinking about that five years now. >> what about the idea they're going to divide the north america business into two units as part of the plan to return to a franchise model. that's a huge u-turn, isn't it? >> yeah, but they moved us in that direction with their april announcement. they don't want to be in the bottling business any more than they have to be. there's a lot of cost savings that need to take place in the united states, they need to be under the same umbrella to do those cost savings. i think eventually in the very long run we'll see that bottle are manufacturer or spun off. i think this morning's announcement is a step in that

direction. >> of the two that you have a buy on, which do you think will outperform, jonathan? >> i like both coke and dr. pepper, but i think coca-cola. the dislocation in valuation versus its history is more and i think the global opportunity is more. >> jonathan feeney there, thank you. >> thank you very much. >> if you're counting, we're just 12 days away from christmas. it's going to be a snowy weekend here in the mideast. the east coast expected to be blanketed with up to seven inches of snow, depending on where you live. with another storm be bad news for retailers? we'll have a more on that when we return. at farmers, we make you smarter about insurance.

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friday morning, good morning. we're an hour into trade here in the stories that we're squawking about. it's 7:30 on the west coast. good morning. 10:30 here on wall street. according to trimtabs, this was the worst year ever for bond funds. directv could join the course of those expanding intoline video services. the satellite tv operator is reportedly exploring the idea of an online service to price

sensitive or young people or those who have dropped their cable tv series. >> and beyonce released a surprise album at midnight. it was released on itunes, including 14 songs and 17 videos. beyonce's new album was so popular, it crashed apple's servers for a short time this morning. >> and i did get jon fortt's joke, putting a raise on it. i got it. the financial elite, those who have more than 50,000 in the stock market and over 100,000 in income seem to finally believe in the stock market rally. is that optimism good news or perhaps bad news for the market? steve liesman is back at headquarters and he always has the answers. steve. >> i wish i did on this one, david, but we are tracking a very important metric here, which is inch by inch, day by day we claw back what was lost back from the financial crisis, and this is another metric, which is the attitudes of the financial elite, as dave described, those with 50,000 in the market and 100,000 in income

and their attitude in the stock market. let go over here and take a look at the chart. can you see now 68% of what we call the financial elite. a lot of talk online. can you read about why these are financial elites. our pollsters do the wall street journal poll as well. they tell us this is a very small cross section of society. 68% say it's a good time to invest versus 19 who say it's a bad time to invest and going back to 2007, we have finally hit the levels of optimism. you can see how low they sank. there were times we did stories about this group getting below 50% in their optimism about the stock market. now you could say that's a good thing because they're finally believers. on the other hand, you could say that was just before the crash and the crisis. let's look at how others feel about it. how about if you have less than 50 in stocks? you're pretty divided, good time, bad time. that's unchanged from a year

ago. if you have no money in the stock market? forget the middle here. take a look. the exact opposite of the two. if you have no money in the stock market, you think by a pretty good plurality there that this is not a good time to invest in the stock market. more money in the marked, you're going to spend over a thousand dollars on gifts. get to know those people, folks. it's also a wealth barometer. our holiday spending charts, the actuals in blue, green is cnbc estimate and nrf estimates. looking for a bigger decline from the actual, that is led by the wealthy. even though that number was down, these indicators in our survey are up. wage gains -- sorry. 2013 compared to 2012, there's the fourth quarter, 3.3%.

inflation expectations are down. you take a look at the whole chart. the key indicators that might lead to you shop and spend more are all up, up for the year, up for the fourth quarter, but we still have the depressed housing numbers. simon, that's a puzzle. there are other surveys that back us up on this, maybe not the magnitude but certainly the direction on the sign on holiday sales. >> what was the 9% fall? people say they're going to spend 9% less this year? >> less than they actually spent last year. we take our estimate and put it against what the national retail federation says was the actual spending last year. >> thank you very much. ready or not, there are now 12 days till christmas. for many retailers and malls, it could be a frosty weekend as snowstorm electra barrels across the country. joining us now is the general

manager of the lotti outlet malls. >> thank you for having me. >> do you think the bad weather will affect your customers, your licensees' trade thkt? >> ohio is a tough community. people are used to having snow in the winter. as long as we're prepared for them and we can keep the walks and driveways clean, i know that people will be out braving the weather and shopping and spending money. >> yeah. we're trying to get a gauge on how strong things are at the moment. the retail sales figure for the company came through real strong yesterday. the biggest gain in five months. we just heard that a survey of how people think they will spend overall this season is down. where are we on this? >> in the shopping center city industry has a whole, the outlet

center, which is where i'm from, our sales are very good. they're either even or above what they were last year. so we're seeing a trend of increases at the outlet level where i'm at. people are looking for bargains. they know what they're doing when they come to the outlet shopping center. they're looking to get that sale. >> at trinity you've got your moonlight madness thing that you do to try to bring in people late, giving away $15 gift certificates to the first 500 people. do you have to do more to get people in the doors and will you have to do even more with some of this weather coming through? >> you just have to have those sales, have those discounts. you have to count on the retailers to allow to you advertise those sales for them. we work really hard to do that for our stores, and we have a great group of tenants and they are definitely letting us spread the word via social media, as

well as our web site and radio, television, you know, they always have great sales and discounts and we have seen deeper discounts this year than we've seen in previous years and that's driving traffic and sales. >> you've got underarmor in your outlet, gap, a couple of companies that have been doing well of late. what's driving sales in particular? any standouts in lodi right now? >> underarmor, fact think clearinghouse is doing phenomenal. they're amazing. people love the brand and they have phenomenal prices at the factory clearance house. it's one of the only clearance houses in the state of ohio so that is a major draw for us as lodi station outlets. and gap outlet, they're just discounting more than they normally have and people love that. >> yeah. >> you know, trinity, one of the huge stories of the year has been jcpenney and all the things that went on there with the ceo,

ron johnson, eventually getting kicked out and this very heavy discounting period where it was felt they put pressure on everybody else, destroying a lot of imagimargin in the industry. does that figure for you guys? >> i really don't think that it does, being an outlet shopping center and representing outlets. we're pushing the products that is made exclusively for their factory and outlet stores and then we have the overruns and that doesn't affect us. >> trinity, we'll leave it there. have a great christmas. >> thank you, you, too. >> let's send it over to dominic chu for a market flash. >> a food and drug administration panel has recommended that one its new diabetes drug gets approval. the drug developed by bristol

myers squib was rejected because of safety concerns. those shares at least on the more from the upside. >> you don't hear about astrazeneca that often. >> nimble stores open for trading today on the nyse. it was priced at 21. it is now trading at over $30 a share, at least seven times 2015 shales. twitter puts that to shame, doesn't it, multiple to sales. we'll talk to the ceo when "squawk on the street" returns. mine was earned orbiting the moon in 1971. afghanistan in 2009. on the u.s.s. saratoga in 1982. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation because it offers a superior level of protection and because usaa's commitment to serve

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its pricing at $21. let's welcome the ceo. nice to have you here. >> thank you very much. it's a pleasure to be here. >> i'd like to start o off with what flash optimized hybrid platforms are and why concei conceivably you're interrupting the market? >> many of ours customers are storing -- we're delivering data much, much faster to applications, while also significantly lowering the cost of storing all that information. sometimes less than half of the cost of incumbent systems, if you will. >> some are estimating you can continue to grow your sales from

2013 through 2015 at a 50% rate? >> we've indeed when we look back, we've seen very rapid growth. that's different by a rapid pace of acquiring customers. as we think about the future, over several years we're competing in a $40 billion storage market, tens of thousands of customers and the platform we've built allows us to expand over time to capture more and more customers and market share in our industry. >> a couple years ago we saw a rush on storage companies, hp and del were competing. how did that shine a light on your business, and what kind of pressure did that put on you when they seem to be really amping, 3par doing well for hp right knew. >> one of the challenges that other competitors have is flash is so different from disc drives that short of redoing all of

their product, it becomes really hard for them to do what we do. that's what's really allowing us to win against giants, such as those in our industry. >> are you actually hosting? >> we sell storage systems as well as hosting service providers. >> what do you see is the future of the company? i mean, do you remain independent? why have you not been bought by a bigger player yet? >> our own perspective is whether we think about the size of the market we're addressing and the breadth of the platform we've built, we have several years of growth ahead of us. to get acquired at this stage would be short changing the opportunity in front of us. >> you have been approached by people? >> we've tended not to want to have any conversations that are along those lines. i won't comment specifically on whether we've been approached. >> microsoft is growing into quite a player in the cloud space. they're behind amazon. but it's one of the major growth areas for them enterprisewise.

>> indeed. wh >> what do you think they need to do ceo-wise, to maintain the momentum? >> i won't comment specifically on what microsoft needs to do with its leadership. the comment i would make in embracing cloud, it's a very smart play. they are a big partner of ours. much of our product interacts with microsoft products. to that extent i would say they seem to be doing the right things in how to drive growth ahead. >> you raised over $60 million today. what are you going to do with the money? >> for us the biggest driver of this was two-fold. the first one indeed was capital as we continue to expand at a very rapid pace, we're planning to go international, we're adding sales team. so that is one major goal.

a second goal is to indeed declare the fact that we think we have a long-term future ahead of us as an independent company rather than seek acquisition. both of them are key milestones today. >> i assume you plan on being public for a long time. >> dinindeed we do. >> will your partners stay with us? >> no, they have not sold as part of the ipo, they will stay with us. >> thank you for coming on. >> thank you. >> we'll talk to kara swisher in a moment. out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.

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welcome back to "squawk on the street." friday, the last trading day of the week. but as we get close to year end, there's a couple of big issues, of course, that investors and all of our viewers and listeners on cnbc are paying very close attention to. and among the most important issues on that list, in my opinion, are the generalized notions of the ongoing stabilization of europe. but the issue with stabilization is that it was very important in the rearview mirror to stabilize

some of the toxic issues affecting the banks of southern europe. and in large part, it was accomplished through a variety of creative lending procedures. so what we end up with, to simplify, is you take a central bank, whether in the two biggest ones i want to concentrate on, let's say italy and spain, so you take the central bank of italy, and what they have done is they have created credit for the lower banks to basically go into their auctions and buy their paper. and that's key, because like our quantitative easing, you remember how high some of the rates in southern european economies, how high they went. stagg staggering. and it couldn't go on. really, much of the stabilization could be found in this dynamic. after stabilizing and buying the bonds, what they would do is, they would end up at the ecb, kind of the way we have excess reserves at the fed. and at the ecb, they are now collateral for the ecb to lend

back to these banks. but here's the issue. the issue is that the positions that countries like spain and italy and to some degree france now have in their own paper is making some ecb officials a little bit nervous. not only for the exposure but for the potential that if there's an issue regarding the collateral, or ultimate haircuts really is the nervousness, that, of course, you'll see a contraction. well, what we already see -- and there's been boatloads of articles -- is that the italian banks aren't lending to the financial and nonfinancial customers as the same pace they were, so there's this contraction going on. why is any of this important? because my opinion, one of the key issues in 2014, is going to be the condition of europe post-stabilization, and my feeling is it's going to be like the long good-bye. if you don't lend to customers, your economy doesn't grow. something to ponder as you adjust your strategy to move in

2014. back to the gang. >> all right, thank you, rick santelli. well, today could be a lucky friday the 13th. even if the odds are 1 in 259 million. we're going to explain that in a moment. plus, a big happy birthday to fred chairman ben bernanke. turning 60 today. this will be the final birthday he celebrates as the fed chairman, which brings us to this morning's "squawk on the tweet." if you had a message for mr. bernanke, what would it be for his birthday card? tweet us @squawkstreet, and we'll air the responses throughout the morning. >> and this is his favorite song. ♪ [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. so i knit until it was full. you'd be crazy not to. is that nana? [ male announcer ] fedex one rate. simple, flat rate shipping with the reliability of fedex. [ male announcer ] fedex one rate. is caused by people looking fore traffic parking.y that's remarkable that so much energy is, is wasted.

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you'd be crazy not to. is that nana? [ male announcer ] fedex one rate. simple, flat rate shipping with the reliability of fedex. get ready. tonight's jackpot is the second biggest ever in mega millions history, and fifth-largest in lottery history. how much could you take home? morgan brennan is live in new jersey. she has the answer. morgan? >> hi, thanks. so, yes, that number is climbing to an estimated $400 million jackpot. that breaks down to $216 million lump sum before taxes, and a $145 million chunk of change

after uncle sam takes his cut. that nine-figure fortune is the result of the mega millions lottery changing up its format in october. hiking the odds of hitting the jackpot from 1 in 176 million to 1 in 259 million. to put that astronomical number in perspective, you have a better chance of being struck dead by a falling coconut than of winning tonight's mega millions grand sum. indeed, since the mega millions upped its odds, no one has won the jackpot. it has rolled over 20 times. now, as we've seen with past lotteries, when the jackpot's this rich, expect a last-minute wave of hopeful ticket buyers to throw their dollars down, as well. in fact, the new jersey lottery commission is jumping on a call in the next hour to see if all of the buyers will result in an even bigger jackpot. now, i'm feeling a little lucky myself. i'm even looking to push the odds a bit, so i'm going to buy my ticket today here at eagle liquors in passaic. what do i mean by that? this store sold a winning

powerball ticket worth an estimated $338 million. if you're feeling lucky, go check out cnbc.com where we've laid out a financial plan. if you're the lucky jackpot winner tonight. back to you, simon. >> oh, that's good. thank you. why would you buy your lottery ticket there? the chances of it being won in the same place must be zero, practically. >> yeah, i mean, you have a better chance of being struck by lightni lightning. 1 in 10 million odds on that, but i'll try it anyway. >> she knows all of the odds. i didn't know they made odds of getting hit by a falling coconut. >> she's standing under the coke n -- coconut tree. >> wow, oddsmakers, falling coconuts. all right. >> morgan, thank you very much. we'll see what happens later. let's get to it, then. time for "squawk on the tweet." ben bernanke turning the big six-oh today. his last birthday as head of the

fed. this morning, we're asking you what message would you write him in ben bernanke's birthday card? >> hope you have a very liquid. elliott tweets, because it's your birthday, i will have janet clean up the mess your party has made. i think he means janet yellen, though frankly, arguably, that could take years. >> yes, it could. couldn't help looking at twitter, up another 3.5%, well above $57 a share. and the move just in the last few weeks has been extraordinary, trading at -- they're talking $1.1 billion in sales for fiscal year that ends december '14. you can figure out the multiple at home, should you own $30 billion market value. >> more than 50 times, and they're treating twitter about a month or so after its ipo the opposite of how facebook was treated. now, are people kind of erring to far in the other direction is

something that investors need to ask. >> as jim cramer said, not about facebook, but twitter. just a lot of love there. unrequited, perhaps, but unquestioned no doubt, at least at this point. we'll see what earnings look like, of course, when we get the first quarter reported from the company, not that long from now. >> it will take a lot of retweets to justify the evaluation. >> indeed. >> guys, thank you for the hour. have a great weekend. good job. if you're just tuning in, this is what you might have missed so far on "squawk on the street." >> announcer: welcome to "squawk on the street." here's what's happened so far. >> qualcomm is announcing a new succession plan that including steve melonkoff being promoted. >> remember all of the banks when they get in trouble, what happens? hey, listen, we were just stupid, that's not krcriminal. i like, we were really dumb,

idiots, but we're not criminals. how was your bonus? big bonuses. >> there's hope they can get something in the next few weeks. >> clearly mulally remains a candidate, although there is a sense that his candidacy is getting a bit stale. [ bell sounds ] >> you've got love sort of a -- and the beginnings of what looked like an economic recovery, has actually been a pretty good spot for equities historically. >> we just think that so much upside. because every single company has to re-platform their website to deal with mobile devices and social presence, and we think that represents a big upside opportunity for the company. >> announcer: the "squawk on the street" countdown to christmas is in full swing. ho ho ho! ♪ you better not pout you better not cry ♪

♪ you better be good i'm tellin' you why ♪ ♪ santa claus is coming to town ♪ good morning at post 9, heading into the christmas season at the new york stock exchange. let's look at where we are on the markets. we've broken the three-day losing streak, relatively flat. adobe up over 10%. and twitter has doubled its ipo price of $26 a share. and on its second day of trading since returning to the public market, shares of hilton worldwide continue to gain. remember, they were priced at 20, almost now, kelly, at 22. >> all right. now, here's what's on the roadmap for this hour. we'll have a live interview with agriculture secretary tom vilsack, whose department is taking steps to combat a disease that's taking a toll on citrus crops. >> debate over an fcc call to

allow cell phones on planes. plus the fallout regarding yahoo! mail and user outrage over the service's problems, all things d cara swisher will join us to discuss it all. and amazon.com working on a wholesale business called pantry. it will launch 2,000 products like cereal, paper rolls or cleaning supplies. so could this mean amazon will be in competition with bulk-buying companies like costco and sam's club? jon fortt has more on all of it. what do you make of it, jon? >> it's interesting, given that amazon, we know, is looking into its own products, doing sort of the no-brand approach. you could see how that would fit in very well with bulk buying. sam's club and costco both do that really well. so they're clearly setting up their move into more consumer packaged goods. they've done that. they've also done some logistics things with p&g. they've moved to sunday

delivery, which you have to think would be key, people getting their things in before the week starts. the other retailers better get ready. >> here's what i don't understand, because can you already go on amazon and order food items and have them delivered to you. is this about getting them on the same day? is this about price point? what is the real game changer for pantry relative to what you can already do as a consumer? >> i think the consumer proposition remains to be seen, because they're already doing some bulk buying. if you buy cereal from amazon, for example, you don't buy it by the single box. they'll ship multiple boxes to you. but one of amazon's biggest costs is slipping. they spend $5 billion, $6 billion a year on shipping alone. if they can get you to buy a lot of stuff in one big box, that certainly helps their margins, helps with reordering, particularly if they deliver a good experience. >> so it's about putting it in one box, to some extent, instead of ordering a couple of different items, and we know how it is when you get shipments from amazon, you may get things at different bits, depending on

how you want to pay for it. >> it's one big box. they don't want you ordering one roll of toilet paper, right? they want you ordering a whole bunch of thing, maybe some are lower margin, some are higher, but give you incentive to get it to you all at once. >> there is some profit in there? >> not all zero margin like the kindle. some are quite profitable, and they're milking those to move into areas like this. >> running a consumer charitable trust for consumers, is how wall steen put it at "closing bell" yesterday. the major averages are trying to avoid a four-day losing streak. we've just gone down into negative territory. let's bring in elliott, the ceo and co-founder of hightower, and also with us is david katz, the cio of matrix advisors. david, what do you think is going on here? we are -- the fomc meeting, tuesday/wednesday, so now wednesday is very much in our sights as to whether or not they're going to start this tapering on quantitative easing.

where are you on the market? what are you telling clients? >> you've just had a great six or seven weeks, so it's perfectly natural for the markets to take some sort of breather. you're getting that breather last week and this week. we think after this breather, the market is going to trade up for the balance of the year, so we expect stocks to end the year higher than they are today. in terms of 2014, after a great 2013, we think regress to the mean. 9%, 11%. we like stocks here. we'll be buying any weakness, we expect more volatility next year. >> elliott, your primary financial is to talk, i believe, to the millennials, those in their 20s and 30s, that's what you found your business on as a financial advisor, correct in. >> it's part of our business model, and certainly part of where we're going. but our initial part of the business was focused on very wealthy individuals that were largely clients of the wall street firms, and now we've turned our attention to focusing on the needs of the millennials, as well. >> what are you telling them? >> we're telling people that

these are sort of the typical emotional reactions to markets moving up and down. we've had a very positive year. we've had very good indications of confidence coming back, not only into the markets but into the way people are thinking about investing and innovating. and so, from our perspective, it's not whether we think about tomorrow, friday, next week, it's been successful, confidence-inspiring year, and we want to be sure it continues next year. >> why do people keep pulling money out of the market? if you look at the fund flow data on the equities or bond side, it's going into money market mutual funds, to the tune of $30 billion just this quarter. people don't seem to feel comfortable with getting in at these levels and -- >> yeah, you've hit on exactly what's happening. inside the markets, you have sort of a tension between people having a restored confidence, they didn't have from a few years ago, and at the same time, you get that a little bit of confidence, you start to worry, are we getting back into being overconfident? well, maybe we should pull

something out. it has to do a lot -- i think with the sort of sentiment and confidence that people have as they start to get more comfortable being confident. and what we tell people is, you have to look at the markets over a long period of time. you can't react day by day, week by week. but things are more confident today than they were this time last year and two years ago and three years ago, and that's very comfo comforting, i think, to sort of our views and how we think about managing money. >> david, would you agree with that? >> well, basically, we think that you want to take that longer approach. but in the next few months, we think that markets can trade higher. it's perfectly reasonable for people to take money off. everybody's been taught in the last few years, after good times, the market will have a pullback, so they're pulling the money out now. we actually think the environment is very good. the budget deal that took place this week is a significant positive for the economy, and a positive for the stock market. >> let me ask you, david, a question, that i asked in the first hour of the program, and i don't think i got a proper answer to it. monday's the fifth-year

anniversary of the fred going to zero and talking about qe. we have basically come up on a straight line with the markets through then. at what point does the cycle kick back in? at what point do we talk about, david, a slowing economy, the prospect of recession, and the fed having to have enough room to cut rates again? when does that happen? >> hopefully, sometime in the future. we really think that 2014 is going to be a year that the fed tapers, but they're not going to -- >> i'm sorry, david, you can't tell people to buy a market if we could be talking about a slowdown in 18 months' time. >> oh, absolutely -- we think that you can. we think that the first part of rising interest rates, when rates go from 0 to 2.5%, 3%, and the economy is getting better, stocks can trade higher, so we're feeling comfortable. you don't want to be looking for the next bear market. we think the last 10 year, pretty poor by historical standards, will be followed by a better 10 years.

we wouldn't be looking for disasters, butten joy the modest prosperity for the moment. >> what is the biggest hurdle getting people in the younger demographic involved in this market? is it disposable income? or is it just the idea of buying in at these levels? >> i think it's a confidence in predictabili predictability, or sort of the absence of things that cause people to run away. i think today, for the first time in a long time, we have long periods of time -- by long, i mean more than a couple of months or a year -- where people are comfortable engaging with the markets. >> okay. >> i think, simon, to your point, you can't ignore the sort of fundamental macro picture of what's happening in the marketplace. >> but the point i'm making, i can see that now. >> yes. >> the market can see that now. that's priced into the market, surely. >> we hope. >> therefore, we're looking for the next -- we're looking for the next -- >> you're looking -- here's the way i look at it, and again, not as a market expect, but a ceo and businessman who looks at where we want to spend money and where we want to hire and invest in the business. if you take a look at the confidence and investing into

innovation, the confidence of new ideas, the confidence into where the u.s. economy can go, once people begin to feel comfortable taking more risk, that's confidence inspiring, and that, i think, is reasons for people to get back into the market. >> elliott, thank you for coming in. david, thank you, as well. >> thank you. >> okay, let's send it over to dom chu, down now flat for the session for a "market flash." >> well, simon, honeywell is spiking up to session highs right now. its board has just authorized the company to buy back $5 billion of its stock and had completed most of the $3 billion buyback that it started back in 2011. so this will replace that, but its commitment to shareholder value, they're claiming that in the statement they made about this $5 billion share buyback, kelly. back over to you. >> all right. thank you very much, dom. yet another big-ticket buyback. florida oranges have been going green, but that's no laughing matter. the fda is pouring hundreds of millions of dollars tracking the disease turning citrus crops green, and tom vilsack will join

us to talk about the issue next. first, rick santelli keeping an eye on the markets here. rick? >> we're keeping an eye on markets, and we're also keeping an eye on how many people in this country end up leaving their lives. is it through choice or is it through royalty? royalty? i don't see any crowns anywhere when i look at congress. well, maybe not true. there's an article in "investors business daily" called america's royalty on its coast decides how the rest of us live, and that's written by victor davis hanson, and he's going to be our guest in 10 minutes. second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades

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[woman]don't touch my side! welcome back. the $3 billion annual citrus crop is under attack. citrus greening disease has devastated millions of acres of crop, even leading to a citrus quarantine for all of florida and georgia. now, the usda is entering the battle declaring an emergency respon response, and joining us now is tom vilsack, the u.s. secretary of agriculture. thank you for being here. >> thank you very much. >> we hear from time to time about citrus greening. how serious is the situation? >> it's extraordinarily serious. we're seeing a significant reduction, about a 9% reduction, billions of dollars of loss, thousands of jobs are being impact pd and affected. that's why we've already invested nearly $250 million in an effort to try to contain and solve this problem, and we announced this week a framework

that's designed to better coordinate our response. >> and do you know -- is this, like, fighting a wildfire, where you kind of just have to get your arms around it? what happens to the trees affected? how do you keep it from spreading? how do you rekov fehr you are one of the people growing the crops next year? >> that's one of the serious issues, first and foremost we have to quarantine, making sure we stop the spread of this. we have citrus, obviously, in texas, arizona, california that are concerned about this. secondly, we've got a survey extensively, that's why the framework is important. we're working with state ag committees and councils, the private sector, putting together an effort within the federal family to make sure we can identify where this is a problem and to deal with it, and also do the recertasearch that will giv the solution. >> i would love to know what the leading theories are, where this comes from and what can be done to keep it from spreading from coming back year after year f m from, you know for the farmers involved.

how do they make the decision whether to stick with this or not? >> the focus has been on the vector, and we have some strategies that could potentially impact the onset of this. but frankly, we don't have a solution yet. once greening occurs, it results in citrus basically dropping off the trees prematurely, affecting and impacting value. we're very aggressively promoting research in this area to figure out precisely what's causing this. >> and, mr. secretary, what about the private sector? i imagine some of the chemicals companies, some of the fertilizer companies, i don't know where the answer comes from, but to what extent are you able to marshal their intellectual resources to combat this? >> well, it does involve coordinating our research efforts. everyone's involved in this. the reason why we put the framework together was to make sure we weren't basically duplicating research that we could work off of one another's research. it is the private sector. it's the state ag committees and departments, and it's the federal government working in concert. that's what this framework does. one of the key concerns is, and

it's tied to the farm bill, our ability to do all of this is somewhat connected to our ability to have the resources and the programs that requires a reauthorization of the farm bill. that's why that's so important to this effort, as well. >> and we hear this morning there's been an agreement of a one-month extension on the farm bill, and i imagine that's just a small step in the direction you're ultimately hoping to see. >> elle wiwell, the house passe extension, but i'm not sure the senate will. we need the congress to complete its work. we're dealing with multiple millions of dollars of opportunity here to solve a problem that's central to this industry. this is an extraordinarily important industry to florida, to georgia, and to the entire southern part of the country. >> i'm just curious, if the supply shortage is acute, if that's pushing up prices and at least on net offsetting what the individual harm or loss is for farmers with the others who might be making more, and blunting the impact at least financially speaking, to say some of the states involved? >> well, i can just tell you

georgia -- or florida, for example, you're looking at essentially $4.5 billion in losses over the last five years. 8,200 jobs a year impacted by this. so it's obviously having a significant impact on the economy. and if it continues to spread, obviously that impact is going -- is going to multiply. it also affects exports. we've lost nearly $1 billion of export opportunities, as well. so this is jobs, it's farm income, it's a serious problem, and it requires a coordinated response, and that's what we intend on doing. >> and just a final question, sir, as we see another winter storm bearing across the country. the size, the severity of these storms, the extent to which they're changing, if they are, in fact, how does that complicate efforts for you as crops, both to grow and prosper, generally speaking cycle after cycle here? >> well, let's look at citrus. california's deeply concerned, because of cold weather that may impact their citrus production. we are putting together a series of climate-change hubs to really

focus on our regional agricultural interests, to see how the intense weather pattern will impact and affect agriculture into the future. and we're going to try to come up with strategies to mitigate and adapt to the changing climate. all of that depends on research. that depends on congress getting us the tools through the farm bill to continue this important research. >> and what -- early, you know, into this effort, what have you learned that has surprised you most about the changing patterns? >> well, it's probably reflected itself most acutely in the forests. a lot of the wildfires we've experienced have been a result of diseased trees that are directly related to a changing climate. we have around 45 million acres of diseased trees in the western part of the united states directly linked to a changing climate, warmer temperatures, basically involving the pine bark beetle. it survives the winter instead of dying and the result is we have huge forest fires. >> all right, tom vilsack is the

secretary of agriculture, thank you for your time. >> thank you. let's get back to the markets, a "market flash" with dom chu. >> thanks, simon. checking electronics arts. piper jaffray is citing better-than-expected "battlefield 4" sales, and 33%est sales were for next-generation gaming platforms like the xbox one or playstation 4. they have an overweight rating on the stock and $33 price target. the shares, you can see, up 5%, 6%, simon. back over to you. >> thank you very much, dom. yahoo! mail is a consumer disaster, according to cara swisher from all things d. we'll hear from her in just a few. und here, you stand behind what you say. around here you don't make excuses. you make commitments. and when you can't live up to them, you own up, and make it right. some people think the kind of accountability that thrives on so many streets in this country has gone missing in the places where it's needed most.

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so you think all of the big

decisions are made at the helm, well, think go. rick santelli with a look at how the coastal corridors determine effectively how the government works. over to you. >> well, thank you, simon. i like to welcome our guest victor davis hanson, i'm going to just call you victor. we really enjoyed this article in chicago. i'm not so sure my mothership on the east coast will be as enamored as i am. but whether it's food, whether it's energy, whether it's lumber, much of the middle of the country -- you know, when i fly over it -- don't see a lot of dense population, but i see a lot who gives our economy horsepower. about you how we use those resources, how they're regulated, if we can use them, doesn't seem to be decided by those in the middle of the country. can you explain exactly what you were digging into in your article, sir? >> well, i think the elite from about 50 miles from the coast inland run the country. so they adjudicate environmental policy, tax policy, financial

policy, resource management policy. but because of their influence and money and elitism, they're exempt from the ramifications of their own ideology. i get up in the middle of california once a week and drive to the coast here at stanford, and i realize if we're going to have farmland irrigated, depends on what a berkley entomologist or a fish person says about the bait fish in the delta. we have a billion forests, the acres, burned, and we could go on and on about fracking in california. but the resources are in the middle of the state, and inland all the way to new york, and the people who know how to use them are in the middle, and they're common sense people, and they haven't reached a level of nirvana, whether it's influence or income that allows them to be utopian and speculate, and they have to use their hands and

muscles, and it's a different culture. it's not the culture that determines what we read, what we watch on tv, what's on the internet, what type of rap music is a current hit or what hollywood movie is made, and that's made by the elite on the coasts who are different people. >> whether it's the east coast that you described or the pacific coast, i see where you're going with this. now, let me be the devil's advocate for the last 50 seconds or so. the house of representatives, you know, represents, you know, that's the people's house, and as the number of people either expand or contract in different districts, areas of the country, shouldn't this be adjusted via that process? what's wrong? >> well, i think it's because we have these enormous population centers, from san francisco to san diego, and from boston all the way to washington, and then they cluster in places like atlanta and seattle, and yet they have that -- so that's where half of the people of the united states are. thank god for the senate, because one of the progressives' complaint against the constitution has always been

that every state gets two senators regardless of population. but if we didn't have senators from utah or north dakota or wyoming or nebraska, we would be in a real -- a real pickle, because they do realize that there's value in between the coasts that the people on the coast don't quite appreciate. again, it's this modern idea of progressivism, once you reach a certain income, lifestyle, you can afford to dream and speculate on how wonderful things are, and the other people who haven't reached that level are sort of like h.d. wells morlox, the primitive neanderthals, and you know what's good for them. >> victor, it's been a real pleasure. i'm not sure both coasts are in agreement with us. thank you for taking the time and at least giving us an exposure to this interpretation. kelly, back to you. >> all right, thank you, rick santelli. coming up, the bells are about to sound across europe. we'll wrap up the market across the pond, and get you the

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europe is shutting down for the session and indeed for the week, and there's a slightly negative bias, as you can see. actually, house prices came through today at a record now in the united kingdom, but elsewhere, there's a lot of pessimism, not least the fact it's abundantly clear that

european central bank is not standing by to inject any additional measures into the euro zone economy at the moment. if i show you a chart of where we've been for the past month, i think this is real interesting. united states, well, slightly lower. but look at how europe has fallen away. it is the worst fortnight for europe since june, and we're now at a two-month low. some of the individual move earps today, the largest non-life insurer in the united kingdom, rsa, has issued the third profit warning in six weeks, and the ceo has quit. problems with accounting irregularities in the irish subsidiary. and persia down again today, after general motors is exiting the major stake, and that leaves it in the hands presumably of the chinese. on the upside, it's become apparent from a news conference held by the irish finance minister that ireland will exit

its bailout probably over the weekend on sunday. it that, of course, been a post per child for the bailouts for you a territory, kelly, but still a lot of questions of how ireland is as an economy. it is funded through to 2015 and its bonds trade around 4%. >> the point about the underperformance of europe interesting, because we see people piling in to the equity. so the contrarian indicator, again. and now yahoo! and the big mail fail, the latest update from the help blog says most of the affected yahoo! mail users should have access to their accounts. it also, though, says there are small number of users whose accounts have been brought online who may temporarily not see messages from before the outage. on that note, we want to bring in cara swisher, editor of "all things d," and one of her articles there saying all of it. yahoo! mail is a consumer daft, but the company's response is even worse.

cara jones us now on the cnbc news line. good morning. >> hi, how you doing? >> great. you know, look, what's interesting about this story is it really bubbled up from a lot of users who were so exasperated who were tweeting, pounding the table, please, will someone pay attention to this story? as you aptly summed up, when yahoo! finally addressed it, the address seemed underwhelming. they've got to get it right, do they not? >> absolutely. it's one of the most popular products, and putting their reputation on the line, and to have a failure like this, it's not a great thing for someone considered or put herself out as someone who's an expert in technology. it's also the one way people communicate with yahoo! is through their mail. and they were already unhappy with the redesign in october that she did to make it sort of mimic g-mail, essentially. and so, there was all kinds of distrust and ann anger over the design. and it was insult to injury. and they took to twitter.

i've been getting hundreds and hundreds of e-mails, on all of the board, and very active, i would say. >> exactly. and our jon fortt is here with us, and, jon, again, this is an issue, if yahoo! is going to be fundamentally about the performance of the core areas, these user aspects of mail and checking the sports scores and checking, you know, how the markets are doing, this is -- this is why their shares were down 2%, 3% yesterday, as this was all happening. >> absolutely. and they recently went through a painful redesign, as i believe kara mentioned, and i'm wondering how much of this might be a management issue, personnel issue, kara. we both know sasche seth was in charge of that area, as well as a number of others, and when i talked to him late last year, he seemed bullish on marissa and where the company was going, and a few weeks later, he was gone. are they not understanding how to manage this really key, old, but important product? >> no, i think the -- you know, there's a lot of changes going on at once, and there's a lot of noise around yahoo! but still the core business is suffering.

whether you -- they're lucky they have this chinese asset, that's helping the stock and it will keep the stock going up, no matter what, because it's the ali baba team doing well. can they fix the core business? and this is the core business. and that's what's really important, because that's why people come to yahoo! every day. >> kara, are you calling it? are you saying as far as marissa meyers is concerned, the -- >> no, this is a smart executive, and has done amazing things around morale, around image, around excitement around the company. but it still -- people think i'm too hard on her, but the core business, the revenues are down. the growth is not there. and that's where she's got to focus, is on growth in key areas like yahoo! mail and yahoo! content, and the stuff that's always, you know, kept people, you know, happy with yahoo!. and this is a core group of people who are not tech can is, by the way, the people who use yahoo! mail, and you can't lose

them. they're your constituency, right, like politics, right? >> yeah, jack ma was named the fte person of the year. in the few seconds left, the news at qualcomm that relates to what's happening at microsoft. >> yeah. >> one of the candidates potentially who was thought to maybe take the microsoft ceo position has been kicked upstairs to run qualcomm starting next march. where does that leave microsoft -- >> he wasn't a candidate. it was reported that he was a candidate. it doesn't mean that -- you know what i mean. >> right. >> so he was always going to be ceo. steve was always going to be ceo of qualcomm. a lot of people know that. there is a dark-horse candidate available. i named one that i thought around the correct type of person. but they're going to be naming the ceo soon, i think. i think it's going to come before christmas. but you just never know. this board is very torn on who to pick here. and it's a very -- it's gotten a little too circusy, i think, but it will come sooner than later, i suspect. >> yeah, waiting on that great

decision. kara, thank you so much for your thoughts. >> yeah. >> on both of the topics, appreciate it. >> thanks a lot. >> beyonce gave her fans a holiday surprise overnight. an entire new album, launching exclusively on apples itunes, no promotion, no warning, and so unexpected it actually crashed itunes for a short time. julia boorstin is live with more on the great surprise. take it away, julia. >> absolutely, simon. this is a totally unprecedented move. a new album without any warning, any promotion. beyonce announced to her fans in an instagram video that she's releasing this new album called "beyonce," for sale directly to consumers exclusively on itunes for $15.99. a few things make this unique, along with the 14 songs, there are 17 new videos, so beyonce is calling it a visual album, and includes collaborations with jay-z and drake. and it's only available to purchase as an entire album. this is the antithesis of the a la cart individual track model

that itunes has pushed. beyonce is still working with her label, columbia records, which is part of sony music, but by going direct to consumers, first through itunes, she's rewriting the rules on how and when and album is released. the cd and dvd go into production today for sale in about a week. at which point, beyonce fans will then be able to buy individual tracks from itunes. now, apple doesn't have any sales numbers yet, but it should be a huge win for both beyonce and itunes, based on the fact that her last studio album, "four," sold 1 million companies, and the reaction to the surprise album has been huge, without the usual promotional costs. now, artists have distributed directly to their fans for years on itunes. but this is really different, because she is the biggest artist by far to take this approach. now, the reason why this is possible is because beyonce has 8 million instagram followers, 13 million followers on twitter, and 53 million likes on

facebook. so it's the fact she has that direct relationship, the direct conversation with her fans, means she doesn't need to promote it. back over to you. >> julia, this is fascinating, though, because i wonder, in this day and age, if surprise is the new promotion. in other words, things can whip around the planet so quickly, because of social media, that to some extent, it builds its own following as it's happening, so why -- why spend all the time and effort on marketing if you can just kind of land a thing like this and have that story about what's happening serve as the promotion itself? >> reporter: and she's letting her fans promote it for her. i mean, each of her 8 million instagram fans is reacting to this. you see it all over twitter and facebook. people really love the idea that she's skipping the usual ad cycle. >> yeah. okay. be interesting to see if consumer products ceos could follow that. julia, for the moment, thank you very much. let's send it to dominic for a "market flash." >> well, when you guys think online app-driven restaurant reservations, you might think opentable. the shares are lower, and that's

on the heels for apple filing for a patent on its own restaurant system, so maybe there's a chance we'll see an irestaurant or iseat in the future. on the heels of beyonce's itunes announcement, the restaurant system could be interesting to follow along. back to you. >> wow, all right, dom. thank you very much. going to digest that one for a second. pun intended. bob pisani is here with a look at the big board. bob? >> it's predictions time. we're doing our predictions for next year. i'm working on it, so are you, and so is art cashin, and i did my look at his interview, and i asked art what the defining event of 2014 will be, and his answer, how the fed handles tapering. and he says the honeymoon around janet yellen may not last that long. >> i think what you will find from her is a very, very concerted effort to clarify

communications. i think she realizes that just a few simple words from bernanke in testimonies, spontaneously, threw us for a loop. so i think they will find that yellen is far more cautious in what's going on, and so we'll be slow to taper. while there's nothing jumping off the page, history tells me that a new fed chairman will be tested. so we'll prepare for a little adventure in the beginning of the year. >> now, i also asked him what his biggest worry was for 2014. surprisingly, he said, that the market might have a big problem if the economy does indeed pick up, notably in spending jumps. >> now, if money suddenly got velocity, if people begin to lend and spend, the fed would be very, very hard-put. if money got velocity, i would think you would see things begin to turn topsy-turvy. they would taper at the speed of sound.

>> if you want the full interview, go to cnbc.com, and type in cashin on 2014, 12 minutes of him talking about what's happening next year. we had a lot of fun across the street. i've been asked why the markets are so weak this week. i talked to charles biederman, and he had an interesting point. he said everybody is worried about the taper. he pointed out, this was an enormous week for new offerings. put this on the screen. new offerings are ipos as well as secondary. there's $15 billion in new offerings this week. that's ipos and secondaries, including hilton yesterday. this is the biggest week for the new offerings since twitter. what does it mean? a lot of new supply, a lot of new stock, including secondaries, $11 billion in secondaries, were dumped on the market this week. that's a little bit pressure. buybacks so far -- >> i'm -- we're just 2% below the record high. >> exactly. >> bob, we have to leave it there, we're tight on the time. thank you very much. some members of congress think yesterday's ruling by the

fcc could lead to anarchy in the skies. we're talking about people talking on cell phones during the flights. our next guest that will introduce a bill that will stop people from talking on the phones during flight. bill defazio will joins next on cnbc. stick with innovation. stick with power. stick with technology. get the new flexcare platinum from philips sonicare and save now. philips sonicare.

so when my moderate to severe chronic plaque psoriasis them. was also on display, i'd had it. i finally had a serious talk with my dermatologist. this time, he prescribed humira-adalimumab. humira helps to clear the surface of my skin by actually working inside my body. in clinical trials, most adults with moderate to severe plaque psoriasis saw 75% skin clearance. and the majority of people were clear or almost clear in just 4 months. humira can lower your ability to fight infections, including tuberculosis. serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer have happened. blood, liver and nervous system problems, serious allergic reactions, and new or worsening heart failure have occurred. before starting humira, your doctor should test you for tb. ask your doctor if you live in or have been to a region where certain fungal infections are common. tell your doctor if you have had tb, hepatitis b,

are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. you should not start humira if you have any kind of infection. make the most of every moment. ask your dermatologist about humira, today. clearer skin is possible. a special edition of the "halftime report" is at the top of the hour. our team getting ready behind me, will reveal the 2014 playbooks, as they battle it out for trader of the year.

they're going to have to defend their picks to the competition and you the viewers. don't miss the "playbook playoffs" at the top of the hour. simon, we'll see you in a bit. >> that looks like a hell of a lot of fun. thank you, scott. the fcc is taking an initial step to allow cell phone calls on commercial flights, a contentious issue among the flying public. only 19% of americans support the idea. congressman peter defazio is the lead democratic sponsor of a bill that would ban in-flight calls. he joins us now live from capitol hill. welcome to the network, sir. thank you for sparing the time. >> thanks, simon. >> would you accept the central point that's being made by the fcc chairman that whilst he doesn't want to have to sit next to people yapping away at 35,000 feet, they are not, as he put it, the federal courtesy commission. it is their job to rule on networks, and as far as they are concerned, calls on a jet plane are no longer a safety threat? would you a the least accept

that? >> i would accept that. i mean, there's two things going on here. this is an old ruling, you know, and that is a technical change. but they don't need to open the door to this. now we're going to have to go to another bureaucracy to stop it, which is the federal aviation administration. remember, the head of the fcc, despite the obama rule, is a former cell phone lobbyist. i don't know how he got that appointment. but anyway, they've been fighting me for years on this issue, the cell phone industry, because they figure, wow, we can charge a lot for a satellite link on top of your cell plan when you're in a plane. last thing that frequent travelers, business travelers who are the core profit folks for the industry want is to be sitting between two people yapping all the way across the country on their planes, keeping them up all night, if it's an overnight flight. >> yeah. >> flight attendants are appoplectic. this is a bad idea. electronic communication by texting, by fe-mail, you can be

connected 24/7 and be connected from the second you get on the plane, you just do it quietly by texting. >> sure. congressman, to a certain extent, our conversation may be moot, because, as you mentioned, the department of transport came out with that surprise judgment yesterday that they would overrule the fcc, and they themselves would ban it. let's just assume that it is still up for grabs. wouldn't it be more logical to allow this to go to the free market? you know, it's highly unlikely that the airlines are going to invest for the -- >> no. >> -- for the base boxes having invested in wi-fi. and then there'd be many people, many business people on certain flights and certain cabins who would really like to be able to hold conference calls for the hours that they are in the air. you know, a lot of people do things that i know -- >> they're in a private jet. they don't have to worry about it. they can be -- >> you don't have to outlaw all things that are discourteous, do you?

>> i'm afraid we do. we had smoking. i was the lead to get rid of the smoking. every player in the industry would say to me, we know it's bad, we know people hate it, i'd state there, people would applaud when the pilot said there's not enough nonsmoking seats. but they wouldn't give it up, because they said, hey, we might lose one or two or five customers to another airline, because they will have smoking. we don't need to have that same problem with the lowest common denominators in the industry with cell phones. some low-budget crummy airline would do it, and others on the route would say, we'll do it, and you would end chaos. it's not a free market issue, it's a safety, security issue for the passengers on the airplanes, the government needs to act. >> congressman, just before we let you go, you are privy being on the committees that you're on to a lot of inside information and a lot of technical briefings. can you explain to me why nobody appears to be concerned that terrorists might be able to detonate bombs by using in-flight cellar activity? why is that not on the discussion, not on the agenda?

>> i wouldn't say it's not on the agenda, but i can't say anymore about it. i served for a number of years on homeland security. there are issues there that also goes to voice for communication. we would allow under what we're proposing law enforcement, flight attendants, pilots, they could have cellar communication if necessary for security or safety issues, but nobody else. >> good to see you, sir. thank you for sparing the time. congressman peter defazio joining us from capitol hill. >> thank you. >> thank you, sir. now, it's been over a year since colorado and washington legalized marijuana, and in that time, lots of entrepreneurs have built some interesting new businesses related to the legal pot. we'll give you a closer look at one unique green company making millions, next. if everye replaced one light bulb with a compact fluorescent bulb, the energy saved could light how many homes? 1 million? 2 million? 3 million? the answer is... 3 million homes. by 2030, investments in energy efficiency

could help americans save $300 billion each year. take the energy quiz. energy lives here. [ male announcer ] this december, experience the gift of exacting precision and some of the best offers of the year [ ding! ] at the lexus december to remember sales event. this is the pursuit of perfection. you can fill that box and pay one flat rate. i didn't know the coal thing was real. it's very real... david rivera. rivera, david. [ male announcer ] fedex one rate. simple, flat rate shipping with the reliability of fedex.

welcome back. if it's friday, it's the week of wells and the off-the-grid stories, and today as colorado and washington start issuing licenses to grow and sell recreational marijuana, a variety of entrepreneurs are growing new businesses related to pot. jane wells live in los angeles with one more interesting endeavor that's making millions. jane? >> kelly, first of all, this week, members of the treasury department, bank secrecy act advisory group, met and discussed if, how, and when to allow those in the now-legal pot businesses in colorado and washington to have bank accounts. this is a huge issue as regulators in those states don't want all of the cash lying around, yet banks know any pot business is still against federal law.

the seattle times reports treasury secretary jack lew says he understands the urgency and serious challenges the legal pot industry faces. at the same time, more ancillary businesses, which can have bank accounts, because they are not dealing directly with pot, continue to grow like weeds. like weed-maps. it's the yelp of marijuana dispensaries, started five years ago by justin hartfield, a pot user with a computer science degree. putting that degree to work. revenues this year will reach $30 million, and the company has just rolled out a new daily deals feature, similar to groupon, which hartfield said will add another 6 million in revenues. he makes money from the dispensaries, they pay him, and here's what they get in return. >> our customers pay for access to the weed menu, the ability to respond to reviews, the ability to post photos, we take professional-quality pictures and video, so we offer many value-added services to our clients. >> now, hartfield's company covers dispensaries in half

dozen states. he said the fastest-growing market in 2014 could be canada. weedmaps provides user reviews like these of various strains and updates on what people are smoking right now. quote, starting my friday the 13th with sour diesel and a medicated pretzel." guys, that's one way to start the weekend. >> yeah, or one way to take the fear out of the fear. a happy birthday to ben bernanke, and his final birthday, of course, as head of the fed. this morning, squawk on the tweet, what message would you write on his birthday card? tweet us. ne rate you can fill that box and pay one flat rate. how naughty was he? oh boy... [ male announcer ] fedex one rate. simple, flat rate shipping with the reliability of fedex. wow...look at you.

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beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. let's get to it. ben bernanke celebrating the last birthday as head of the fed, 60th. >> so we're asking you what message would you write on ben bernanke's birthday card, and really, these are funny. jackie tweet, it's your birthday, ben, print yourself something nice. [ laughter ] rich tweets, happy birthday, ben, save this card as the paper will soon be worth more than our own currency. and brad tweets, why can't we taper off these birthdays, right?

that's good. >> they were pretty good. >> wednesday's the news conference, of course. markets are relatively flat overall, after three days of loses. top gainer, adobe, up over 10%. >> and with that, that wraps it up for us this week, simon. have a great weekend. >> you, too. let's hand it over to the "halftime," a very special "halftime report." ♪ >> throughout time, there have been rivalries that lived in infamy. >> hold! >> and in 2013, "halftime" has hosted some epic bouts of its own. >> you think i want to invest with you? okay, let's move on -- let's move on -- >> i wouldn't invest with you if you were the last man on earth. >> -- you're trapped in the past. >> the loudest voice in the room is the guy who has the least to say, that is you, my friend. >> announcer: today on the "halftime report," a throwdown for the ages. eight fierce traders in an epi