good morning and welcome to "squawk box" here on cnbc. i'm andrew ross sorkin along with joe kernen, who is laughing already. michelle caruso cabrera. becky quick is enjoying a day off on this christmas eve day. nymex trading ends at 4:30 eastern with gold trading finishing an hour later and electronic nymex trading connects at 5:15 eastern time. there is a lot to get in before the data front. november november durable goods is hitting the tape at 8:30 eastern time. the headline number there expected to rise by 2%. coming at 10:00 a.m., last month's new home sales and the richmond fed survey. the dow transports the s&p 500 and the russell 2,000 closing at record highs yesterday. the nasdaq ending the day at its highest level in more than two

years. companies are showering cash on shareholders. s&p 500 companies bought back more than $128 billion of their own shares in the third quarter. that's the highest level since the fourth quarter back in 2007. if you combine buybackes and dividends, you get a total of $207 billion. that's just in the third quarter. take a look at the futures right now and see how markets are setting themselves up for the morning. we have some green arrows again. the dow looking like it would open up about 30 points higher, nasdaq looking like it would open higher. we have more on the markets in just a few minutes. but before we do that, michelle caruso cabrera has some of the morning headlines. >> i love the shirt, andrew. >> thank you. >> it's terrific. >> i will take that. in corporate news, disney is reducing bob iger's pay. disney's strong results didn't outperform iger's target by the

same extraordinary amount in 2012. in other company news, the company has named jack dorsey a co-founder. shares of disney are up this year more than 47%. in deal news, carl likely is reportedly buying johnson & johnson's ortho clinical diagnostics unit. blackstone backed hotel chain la quinta controversially allows firms to submit documents confidentially. blackstone took la quinta private in 2006. >> how do we do that disney story? he didn't tell you what he made, did you? >> no. >> all we know is that his pay was cut. how do we do that story without saying he made $35 million? >> he made 35dz million. >> the pay was cut, though. >> do you think the lead should be $35 million?

>> i think you should say his pay was cut, but i think you need to put in he made $35 million. i was going to step out today. i said i don't care what sorkin does, i'm going to blow him way with my shirt sli tie combo. there's no way you could do any more than that thp there's no way he could exceed this. there's no way he can go over the top and then, i mean, you crushed me. you crushed me. >> the holiday spirit, the holiday season. >> is that a tartan plaid? >> it's a tartan plaid. identities a holiday shirt. >> is it big enough to be a table clothe? >> napkins. >> and he does, you know, drip food on them. >> this is bold. you have striebs and a pattern tie. >> people do that all the time, though. >> i know. but it can look very wrong. >> i'm not bragging on me

because, like i say one crush me. is it a day where the jacket stays on? are you worried? >> it does stay on and i'll tell you why. >> i'm worried. >> because it becomes a little too much. >> no. >> and we also need -- >> it's a lot of red. >> it will be great. >> you see, i'm not -- i don't know fashion in today's world. i don't know social media. i need people to write in, to tweet about whether -- oh, here we go. for you, i'll take the coat off, but i don't think it should remain off. >> why not? >> you can tweet in, should he leave the coast on or off. that's a tie you can leave on without the shirt and be a chipp chippendale -- >> you see, i think that looks better. >> it looks like you're back in college. >> it's christmassy. >> this deadline, 24 hours isn't that long, but it does like insurers are going -- they don't know what to do at this point.

>> every day, there's new tables, revenues they thought they were going to get. don't you feel bad for them? >> yeah, right, people have said that, that the insurance companies that -- >> you don't like your bargains? i'm so sorry. >> in washington news, the deadline to sign up for obama care has been extended until midnight tonight. the last minute move by the white house came early yesterday after it reported record traffic on the healthcare.gov website. i'm trying to figure out -- and i don't know whether we'll get a number net-net. >> i can't imagine you made up all the people that are canceled.

>> we could essentially be going into '14 with fewer people covered than before. >> we would be contrary to the whole point of the act. >> as an enabler, we're not blaming you. >> and i've said that before. to me, though, the answer is they have waited another year to actually figure it out and see if they could get it organized. >> the true progressive would think that the 15% that didn't have it or whatever, i don't know what the real number is to basically almost lower the quality for the 85 just to get the 15 covered is okay. and that is part of a huge -- the tradeoff that you would make.

>> that's right. >> and a guy who really is -- i mean, redistribution is what is happening in a lot of different areas. to take 20% of the economy, this is a redistribution. i'm not saying it's good or bad. i'm really nod. >> it's bad. >> i just say it. then i let her say it. >> the worst thing is that the empathy that these things spring on the front end, they never connect the dots. >> can i ask you a question? >> this is a pope. >> oh, the capitalism story. the pope is wrong about inequality. so on christmas eve, michelle caruso cabrera -- >> no, the pope has a specific role to play and he's the keep

the poor front and center in the world's minds. >> he has basically said, look, you've done that. but there's still a lot of work to do. he's not going to ever be a -- he's not going to be a free enterpri enterprise. >> especially no the from argentina. >> on capitalism, is it for the poor? >> i've been reading a lot about that. >> i think he doesn't acknowledge, for example, that half a million people have emerged from poverty in the last ten years. he sees it as a negative as

opposed to a positive. and you can get to very high places in the government with that viewpoint. the american bankers association has launched a legal challenge to a provision of the volcker rule. the group says that the provision is, among other things, in its words, arbitrary, ka prashus, an abuse of discretion or otherwise not in accordance with the law. and they finish that off with a big -- >> how do you spell that? >> lpph. >> i would put a th in the middle of that. but one other on this, this group has lots of constituents. so they have the eight or nine big banks that care about the volcker rule. then they have all these smaller

banks, the community banks who are quite thrilled about this. >> they lived it. >> right. and they think it would actually ultimately help them. and so you have this group. it's supposed to be representing all of its constituents. >> that is good. >> i agree. is that j. crew? >> it is j. crew. >> you could be on some hip -- >> it's not if. he's going to be on talking dead. >> really? >> yes. >> congratulations. >> well, thank you. >> that's exciting. >> i have a three-hour show every day on tv, but thank you. >> sth a great network,

obviously. but you can be anywhere that's not here, which is exciting. >> we've seen people in the last couple of weeks become pervasive in mass culture, too. i'm not sure i want to get there. >> you want to be the iac lady or the lululemon person? she was in the news -- >> yeah, for 30 seconds. >> the twitter world allows everyone to be jimmy the greek. >> for 20 seconds. nobody is going to remember her. >> no. >> but a show about talking dead. >> it's a show about the walking dead. >> i wouldn't have fired her, anyway. she's known for 20 seconds. >> yeah. >> is it -- the duck dynasty guy, there are people, like i said yesterday, lenny bruce, in

his day and age it was thought you need to be able to say things. i thought more about the duck dynasty issue. to me, it's different than the iac -- >> well, she's just a loose cannon. >> the duck dynasty guys, i don't want to clak they're rock stars, but rock stars have said things that have been bizarre for years. and nobody has taken their stuff off the shelves so quickly. sometimes they have, actually. >> i think -- >> i saw an under armour commercial that still had the guy. >> right. do you think walmart is going to pull some of their stuff? >> it depends on how the sales are. >> i'm not sure what a&e is going to do at this point if the rest of the family walks. because they'll go somewhere else, probably, you would think. that is strange. we'll see whether this t suit necessary new york, if they're taking a stand when it comes to the all mighty dollar. >> for advertisers pulling

their -- >> i don't think that was ever it. >> some advertisers, they got a lot of -- when cracker barrel pulled the shelves, they got thousands of e-mails saying put it back on. so, you know, i don't know how it's goshg to work out. there will be a federal judge who wrote a scathing opinion article questioning the lack of high level financial crisis prosecution. what's this guy's name? rascoff? >> raycoff. he's defending his remarks speaking to our scott cohen. he says he was offering his views as a citizen, not as a judge, but he is making no apologies, arguing in his words judges have to be neutral, but they don't have to be -- >> colorful. >> in an opinion article, rakoff wrote if it's a result of intentional fraud, then the failure to prosecute those

responsible -- but he started with the caveat and making big betts and being stupid and losing your [ expletive ] is not fraud. it's being stupid. >> the problem is he starts with the overall thesis that he's taking the financial crisis at its word saying they used the phrase fraud 137 times suggesting if a government submission like that could have fraud, they don't have the proof to go after the cup. his view is go after the individual, if you can't get the individual, then go go after the company. and that makes a lot of sense to me except for the fact that -- >> and that's what you're thinking he said. >> no, that's what he did say specifically. he starts with the promise that

there has to be fraud and then to have the opinion that there was fraud seems to be -- >> he's the nuance with john kerry. but hold on. maybe. >> but it's interesting. do you think a judge should be allowed to pan a -- now, i give him credit for talking to scott cohen on the record because most judges don't talk to anybody. >> the minute you write an opinion piece, then it's like making a statement and taking the bet. you can't do both, right? >> knowing the legal profession and the judiciary as in general, you would never see him say that about, well, the government's role in the crisis or congress or the enablers of fannie and freddie. so you know the piece that's going to be written is going to be -- you know, the way lawyers and -- judges are in general activist judges going so far left that -- >> what i thaw it reminded me of is when a lot of journalists admitted there isn't very much

journalism in the world, the way he said i'm supposed to be neutral, but -- the so he's not, he's not neutral. >> they grudgingly submitted it. so we're pretty close. we're like 49 sl/51. >> two professions that claim to be unbiasedace, yet we know that they are. >> i'm worried about andrew and the two of us the. >> why? >> because we're going to gang up. >> no. it's going to be nice sflp he's in princeton. >> he wouldn't like your shirt. >> he might not -- he actually, actually. he might think it's like a lumberjack. >> yeah. i'm a lumberjack and i'm okay. >> i wasn't really going for the lumberjack look. >> nobody can do lumberjack like you. thank you. >> what was that alaska tv show? >> twin peaks? >> no, no, the other one where he was a doctor, they got stuck

up there or something. >> global news, china's central bank has pumped $4.8 billion into the financial system. its first marketwide injection in three weeks. policymakers are trying to put an end to the cash crunch that has rattled the economy. if you're wondering if you should be concerned, here is why dennis gartman is worried. >> the liquidity crunch is very serious. usually these things solve themselves in a very benign manner. but if you have to be concerned about something, be concerned about the fact that short-term rates in china have risen several hundred basis points. it happened. it's happened in the past. it's going to happen again. >> that is a good point. it could happen in the summer. everybody was terrified back then. we saw u.s. markets fall sharply and now everybody seems fairly relax.. a lot of people believe it's end of the year covering for capital. >> northern exposure. >> trying to come up with the name. >> moose in the opening.

what happened to him? >> you were clearly not worried about the chinese cash crunch. >> yeah. was there a crunch? >> there is a crunch, for sure. >> of actual cash. >> yes. >> she said it. >> we've been watching it for more than a week, but the u.s. markets seem to not care at all, even though they cared very much in the summertime. >> the end of the year, it's not unheard of at the end of the year. you would see libor rates rise dramatically because people have to hit certain capital rates. but it's the young central bank. >> we are so far from a cash crunch in this country with 85,000. >> 2009. >> oh, like that. >> yeah. they haven't necessarily put enough in the system towards the end of the year. >> and it's the government that needs to put it into the system, too. >> that's where it would come

from. time for the global markets report. carolin roth standing by in london. carolin. >> good morning to you, michelle. no surprise, volumes, we're almost done before the christmas holiday. many of the markets, the german, scandinavian, italian and swiss markets are already closed. we've got a couple markets still open and we're seeing some green on the charts. but these markets, the uk, cash, ibex &, they're closing within the next two hours. year-to-date, the german market is the best performer, up 24%. the uk market, only seeing gains around 13%. let's talk about retailers. we saw those awful numbers for your retail season over there in the u.s. well, this side of the bond, it's not looking much better. we were hoping for this mad rush into the stores yesterday because it was one of the slowest christmass for the uk retailers to begin with. but then yesterday, they rushed

this monday simply didn't steelerize because we had a big storm in the uk yesterday, very heavy rain, heavy winds, so we didn't see many people flocking to the stores. if you did venture out to the stores, we were treated with some nice discounts, more than 30%, 40%. this is pretty bad for margins and a much needed boost to volumes is materializing. i want to show you some of the retailer super market chains. tesco up 0.3%. marks & expenser not dining too bad, either. happy hop days, merry christmas to you guys. retail news this morning, target says that the justice department now investigating the security breach at that retailer. target says it's teaming up with the secret service in its own investigation. the retailer says the secret service has asked the company not to share many of the details ooh that probe. yesterday target held a conference call with state attorneys generals to talk about

it. we should note that chase is now easing restrictions. it had placed on customers who used their debit cards at target stores during that breach over that weekend. i complained about it a little bit yesterday. chase restricted withdraws by affected customers to no more than $100 a day in cash and $300 in purchases. that's what it said over the weekend. yesterday chase announced it was raising those limits to $250 a day in cash and $1,000 a day on purchases. we should say that many retailers have been staying open around the clock, including toys r us. sara joins us now from one of the company stores in new jersey. making her premier debut. did you realize this, joe? >> i thought she was on with us. >> i wasn't here that week. >> this is my first time. live from new jersey. >> is it your debut? am i wrong? >> debut on "squawk box." >> you were on later in the day spp she was on later in the day.

i remember seeing you. >> yes. i was on "squawk on the street." it's good to be on. good so be on here. thank you very much. and i can tell you that this whole 24-hour phenomenon is something kind of new this year. and there are people taking advantage of it. we had a crew here at 3:00 a.m. and they said about 20 people inside the toys r us behind me, it's something new this year specifically. kohl's is sharing the parking lot here. it's doing the 234-hour thing. it's been open since friday at 6:00 a.m. not alone. macy's has been doing this for a few years and this year, as well. it's been open since friday. toys r us, over 72 hours behind me. why this year? it has to do with the retail headaches that they're seeing. for one, the consumer has been sluggish, disappointing numbers from brick & mortar. just last night, shopper track released new numbers, down 20% traffic in brick and mortar. the season is six days shorter

between thanksgiving and christmastime, so they have to squeeze more profits out of less time. online is hugely popular. everybody is getting used to the 24 hour buy what you want when you want. so these retailers have to compete. the problem is, the whole strategy may not work. >> i don't think extended hours generally boost sales. i think it extends it over the season. i think if they didn't do it -- if they did it last year and they didn't do it this year, then it almost takes away. so once you start, you almost can't stop. >> once you start, you can't stop so i've been asking what's next, are they going to be open on christmas? probably not. that's maybe held sacred. but i am told you can expect next year thanksgiving shopping full blast. 12:00 p.m., 4:00 p.m., stores opening. so it's getting earlier and earlier, guides. >> something to look forward to. >> maybe.

>> she thought that she made the big time at cnbc. you've been there before, right, sara? this is big. this is all around, right? squawk, tecacus. >> maybe it's because i'm a newby. it's 34 degrees. yesterday it was 55 degrees. >> i thought you were going to be in times square. did i get that wrong? >> no. we heard there were a lot of people coming into the 24 hours stores. people are enjoying it because it's fully staffed, so they're getting better service if they come now. >> it's a really good tv shot. you've got toys r us there. anyway -- >> thank you for playing along. >> we'll see you soon. >> live for the parking lot. coming up, what senator rand paul and seinfeld have in common. really, more what rand paul has in common with george's father. what's his face, our buddy's dad

in real life, right? ben stiller's dad in real life. first, do you know the castanza's father, airing of the grievances. it's going be great. the san francisco 49ers beating the atlanta falcons last night in the final regular season game at candlestick. san francisco clenching an nfc playoff berth with the win.

welcome back to "squawk box" on this christmas eve morning. we're going to start with this. kentucky senator rand paul celebrating the faux holiday tradition of seinfeld. among his tweets, paul wrote this. in washington, bipartisan deal is a synonym for increasing our debt. he wrote minor grievance, i can never remember when to move my car from d.c. street cleaning. as for his fed grievances, the senator tweeted fed policies make you poorer and hurt the poor and middle class the most. ridiculous monetary policies increase the cost of goods. in response to some on your tweet webs there will be no feats of strength and i have to plans to end festivus by

wrestling with senator reed. and minutes later, in a small festivus miracle, corey did tweet hem, you me and feats of strength, senate noor, name the time. >> i don't know if he really knew about this. i think one of his hipper staff members told him about this. and frank costanza, when he did it, it was airing grievances about your family sitting around the table after you had been worshipping the -- >> that would be drinking. >> you know why they celebrate festivus is it's the holiday for the rest of us. he created his own. and then it ended with his wrestling with his son, george, and george would run and no, i don't want to wrestle. >> and wrestling on the senate

floor. >> rand doesn't come through as a -- >> as a seinfeld watcher. >> once it got into syndication, the quote/unquote fly overstates, and they're not flyover states, but -- >> oh, you are treading -- >> once it got into syndication, the rubes finally tuned in, is that what you're saying. >> that's pretty much where i'm going. >> i saw it live and i wasn't back here on the center of the world. i watched it live. i don't think you did. >> i was 6. >> how did you forget -- i don't want to know what you did in college, then. >> for me, seinfeld was a high school -- >> you've got bad eyes and you forgot everything. so what you were doing in college, i don't even want to know. this next one that you're going to talk about here, i know you're going to turn this into something really dirty, this last one. >> this next story? >> no, the last one.

>> that story will get dirty. >> people use hotels for other reasons -- >> hold your horses. we'll get there in a second the. i have another story to get to, "new york times" reporting that steven cohen warned a friend, get this, about a possible federal investigation into insider trading at the s.e.c. this all happened, by the way, years ago. a former employee approached cohen in the summer of 2009 seeking a job with the hedge fund. cohen said to call this friend of another fund, told him to be careful about talking to the former trader, phone calls that others were becoming aware of this investigation even as authorities were trying to keep et a secret. and the point is, if in 2009, he knew this was happening, there were a lot sorts of ideas that the fact that the people calling had been working for the government. so one of the reasons why they may not have the evidence or the evidence may not be a as strong, if you think he has any guilt at

all, part of it is they sort of knew about it. >> i'm worried about that cash crunch in china still. actually, people are saying it might be a bigger -- andrew loves the s.e.c. stuff. >> there is an implication here, first of all, i think insider trading should be legal. but now you can't even say to somebody, by the way, i think there might be an investigation? come on. >> injury absolutely allowed to do it. the implication to me of the piece is that, to the extent that the government has struggled to find evidence of wrongdoing, and i'm not -- i don't want to suggest for a second that there was wrongdoing, but if there was, and you have to take that leap that there was, that one of the reasons they've struggled to find it was because sac was aware that they were being investigated at the time and,

therefore, were more careful in cover onning their tracks. >> and that cannot surprise you at all, though. because the minute you start throwing the rod and you start trying to find stuff, people start talking and think about how wide they went with this. they were going to learn early. the minute you start writing a story, you call one source, the other calls another source. everybody starts to know before your story even comes out. it's the same thing with an investigation. they shouldn't be surprised at all that cohen knew. >> now our final story, joe, unless you have something -- you have something you want to say to mr. cohen? >> no. it's christmas and people that travel before they go somewhere, they take an hour in a hotel to clean up, maybe shower. i know where you're going to go with this. >> let me go through the story outline details and then we can discuss. finally, we have this story joe was talking about, it's a by the hour hotel stays.

no, there is a family program. hotel res reportedly finding an opportunity in what they're calling microstays, that's the phrase. properties are targeting travelers who want to pass time before a flight, that's what they say, prepare for a meeting or freshen up between events. >> absolutely. >> do you remember a movie called up in the air with mr. clooney? >> hmmm. >> you're traveling, might be sitting next to a traveler -- >> you're right, he does go there. you've never landed in europe and you don't want to shower and take a 20-minute nap? >> when i was single, i wished this happened to me. >> it's no fun spending a lot of time in a crowded airport, either. number two, there's been times where we've gone to the correspondence dinner where we're going tom coback that night, but you go down, you have to get into a tux and then we

pay for the whole -- >> did all three of you get one together? >> we were going to, but -- >> i was open to that. but not -- yeah. >> saving the company money, i like it. >> but we had i tell for the whole night. so it was open from -- >> they could have double booked it. >> do we know on microstays whether they charge a premium? so you could stay for 23 hours, get it -- >> i think it depends. >> per rata per hour, they must -- >> and these places are too nice for what you're thinking, andrew. you're thinking motel where you can drive the car up to where the door is, and you go in there, it's noon, you stay for an hour, you byob, you're in there for an hour and pay $20 to the hotel. and then you leave. that's under motel. this sa microstay at a hotel.

>> i think eliot spitzer got the room for the night. i don't know. >> he's a big spender, as we know. >> he's on the front page again of both tabloids. >> he is, big time. >> yesterday and -- why don't we -- we're going to talk about that story when we return. and a little bit more. in the meantime coming up, we've got a volatile year for the energy market. plus fracking and the boom in production here at home. the outlook for 2014, coming up when "squawk box" returns. it's as simple as this.

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all this week, we're looking ahead to 2014 for ideas to help you make money. jackie deang his has some predictions for the energy sector. i'm excited. are these your predictions? >> these are my predictions. we sort of got it out there, talking about looking ahead what will impact the energy sector, as well. >> well, you made a package for us. >> i made a package. >> let's check it out.

>> when it comes to transportation of domestic crude supply in 2014, all eyes will be on the rail. ihs estimating by the end of next year, rail capacity could grow up enough to handle 7 had us thour,000 barrels of crude a day. compared to 150,000 barrels today, the keystone partnership line would move about 730,000 barrels. the recent deal stuck between iran and the international community will ease sanctions on the country and bring some of its oil back on to the market. this is only the first step in a lengthier process that will include more negotiations and overcoming technical challenge toes restarting production. bottom line, iranian oil will not have an impact on oil production and prices. and keep an eye on dow component exxon mobil, its stock has risen more than 10% year-to-date. the company continues to buy back stocks to the tune of $3

the billion a quarter. hence for management, about a peak in capital expenditure res a bit of a red flag. look for exxon stocks to continue its rise, but not necessarily outperform the competition. >> wow. i want your predictions now. you talk to people. can you give me some of your? >> i don't really like to put it out there and make a definitive statement. that's as much as i'm willing to say. but those were some bold things to say, saying iran has no impact in items of opec's capacity. saying keystone is a big deal because you have so much more capacity now to balance it out. >> i guess it's relevant in terms of de facto, but it's totally relevant in terms of the whole -- >> well, it's a huge political hot button. right now we're waiting on a couple of reports about the impact that keystone is going to have on the environment. once we get that report from the office of the inspector general -- >> it has like six reports on

what it's going to do for the environment. >> and then the state department is going to look at it and ultimately secretary kerry has to decide. it's been a tough decision for him. >> he's the guy? >> he's the guy. >> he was for it before he was against it, i think or was he against it before he was for it? >> i don't remember. >> thank you, jackie. we'll have you back next year and see how it went. >> anytime. coming up, a holiday shortened week for the markets, but no shortage of cheer. the bulls. we're going to talk stocks, bonds, currencies and commodities when we return. (vo) you are a business pro.

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welcome back. you can now buy victoria's secret lingerie with bitcoins, which is an app that replaces physical gift cards. victoria's secret just signed on to be one of the retailers. you can use the after gift regift -- >> slow down. you're rushing through this story. we can put the video on endless loop. >> we've done that. >> you should two back and start over. i wasn't even -- >> you weren't paying attention. >> i'm lost. >> oh, you've said that before, which is -- that's a horrible thing to say to someone. >> what are you suggesting? >> don't worry about that. that's a terrible answer. >> that's not -- >> very charlie sheen. >> yes. you pay him to leave, not -- >> i didn't say anything like this. >> don't worry about talking. just -- >> you know what they call a vo,

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welcome back to "squawk box." joining us now, moody's chief financial markets economist and kevin cummings at ubs. and you really didn't think they were going to taper? seriously? >> well, it certainly was on the table for december move after the stronger than expected november employment report. >> did you not think they would? >> i -- if you look at the survey, it was pretty much spread across the board between

december, january and march about 33% each if you look at any of the -- >> of what -- in your brain? i'm talking about you. >> i thought it was on the table but i was surprised by the timing. we knew it was going to happen, but the december move was a little bit surprising. >> did you think they were going to taper the previous time? >> we thought they were going to announce tapering in september. >> why on earth did you not think they would do it in december then? that's why i wonder about you guys. what goes into your thinking. >> showing some signs of slowing in september, october, a lot of uncertainty. >> things got better and we got a deal with congress. we did now. >> it was obvious. >> leading up to september, there was some concerns, the employment reports were softer than expected. >> anyway. what about -- you think we're going to be above 3% or at 3% for 2014. that's above consensus. >> i thinks that right. if you look at the blue chip survey consensus around 2.5%, at

3% for next year. >> this is gdp, not the ten-year yield. >> that's right. ten-year yields probably going to start creeping higher, as well. 3.25% by the end of next year. right now around 2.90. better than expected growth leading to higher treasury yields. >> i don't remember whether we asked you. did you think they were going to taper? >> i didn't think they were going to taper in december. but i thought it was a matter of it was going to happen eventually. >> if economists were -- why don't you guys start doing the opposite thing. make it another -- opposite day. you don't want to overlook the fact, though, the market had been pricing in some sort of tapering beginning back in the spring of 2013. you know, back in mid may. so it's not a -- it wasn't a total surprise for the market and for all we know, financial markets have mostly priced in the taper. and oddly enough, you've had the vix index go down, volatility

was supposed to go higher following the tapering announcement. equities are doing just great. it's hard to believe for the year-to-date, the market value of common stock is higher by more than $4 trillion. that's one heck of a wealth effect. >> it is. and i saw, we talk about these guys still denying, we had fed guys, that there's been any effect on income inequality based on qe. you got the stock market. everybody who owns that is richer. and then you've got all the wall street dudes that deal in the stock -- you see their bonuses are going up because of the stock market. and they're already pretty well off, aren't they? does that not increase? >> create more inequality? i guess it does. >> we're happy for new york. >> but, you know, to me the fact that steve leaiesman comes out the other side of this debate. >> well, steve's own personal opinions are different than the reporting. don't think he's right on his

personal opinions or you'll really be messed up. where are you for gdp next year? >> 2.6%, a little bit less to my colleague here. >> we're hearing people 2 to 2.25%. we heard lacker say we can go through a five to ten-year period, we've already had five he said we could go another five based on prugtivity, things just not that positive for the outlook. you think we get -- >> well, have some pent-up demand there among consumers for housing, for automobiles. that still has to be exhausted. i think we'll do better on that front. investment spending will come back after a relatively weak 2013. i mean, in real terms, business investment spending is up by 2.5% if that, which is for economic recovery on the low side. >> and so when do we get -- 3.25 -- by when? >> for the ten-year treasury yield. that could happen sooner rather than later. and i think what's going to happen is when the ten-year

treasury goes to 3.25%, that's going to cool off housing activity by enough so the ten-year treasury recedes. i wouldn't be shocked if it's not much higher than it is today one year from now. incomes are going to do better. we're not going to get any tax hikes. i hope not in 2014. >> if you look yesterday, we had personal income and spending. consumption in the fourth quarter of this year could have a forforehandle on it. in october and november, consumption is rising around 4% analyzed rate. you're already starting to see gdp growth. people are going to start marking up the fourth quarter numbers. if you look at a consensus survey, we've got two, three for the fourth quarter. it makes up about 60% of the overall economy. so you're already starting to see better data. and it's all because of the data market. the labor market starts picking up -- >> that's the music. >> that sounds good while -- it

was like a good backdrop. >> like a fairy tale. >> perfect for economy. >> you were tough. it's christmas eve. >> no, we had guys in the -- before it happened. guys who had been predicting the taper last time and didn't predict it this time. okay. whatever. it's your job. >> anyway, coming up this morning's top stories including why edward snowden says mission accomplished. [ male announcer ] for every late night, every weekend worked, every idea sold...

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the morning before christmas and "squawk box" was rocking. >> we've been making our list and checking it twice, stocking

stuffers for all the good little bulls, even the bears out there. >> find out who has been naughty and who's been nice. >> i'm good with water for now, though. thank you. >> it's his first day on wall street. give him time. >> as the second hour of "squawk box" begins right now. ♪ good morning. welcome to "squawk box" on cnbc. i'm michelle caruso-cabrera along with joe kernan and andrew ross sorkin. becky is off today. the new york stock exchange will ring the "closing bell" at 1:00 p.m. eastern time that's three hours earlier than usual. it's hard to do the math at this hour. the nasdaq closes at the same time, 1:00 p.m. consumers have, however, until midnight tonight to sign up for health care coverage that would begin january 1st. the government extended the

original deadline by 24 hours as the healthcare.gov website deals with increasing traffic following the well-publicized technical glitches. reaffirmed the five-star safety rating for the tesla model s. the nhtsa, however, is still investigating a series of recent model "s" fires. >> why reiterate the five-star rating. >> if you don't know about the other thing. >> it's a government agency. >> maybe. i don't know. in other news, edward snowden says he accomplished what he set out to do. snowden making the comments in an interview with the "washington post" ellier this year, snowden revealed extensive details of global electronic surveillance by the spy agency. he is living temporarily in asylum in russia -- where does he want to go? rio or something? >> the layout is top of the fold, huge photo.

>> yeah. >> living in russia. >> he may think he already won, but it's not over yet. meaning, this story's going to go on for -- on and on and on. >> what about living in russia, jason? >> i'm just saying, you know. how can you say you really won? you're in moscow in december. >> no, he clearly started this effort. >> i know. >> it was snide, i think. >> i'm being snarky. we have a little bit of other news this morning. a federal judge who wrote that scathing opinion article questioning the lack of high-level financial crisis prosecutions, he's now defending his remarks. u.s. district judge speaking to our own scott cohen. says the following, he said he was offering his view as a citizen, not as a judge. but he's making no apologies arguing, quote, judges have to be neutral but they don't have to be eunuchs. so i don't know, i don't know if judges should be out and about giving their opinions.

>> it's complete malarky saying it's a private opinion. >> and he's been an activist judge. >> yeah. i believe this but i don't really -- say it. you believe it, say it. >> i don't remember anyone ever positing judges should be eun h eunuc eunuchs. have you ever heard that? >> call that a straw man in the business. >> yeah, maybe that's called a straw man. okay, judge, we got it. got your point here. >> or no point. >> you do not have to be a eunuch. i'm with him on that. he does not have to be. >> but if we ever have to appear before this judge, boy do we love, judge rakoff. >> why would we ever have to appear? what are you doing while you're not here? >> he doesn't do drug cases or anything, right? >> what? >> vice? >> excuse me. i'm just saying, it's like doing an irs story.

where you have to do a little bit of a wink so the auditor -- can you get audit insurance? >> yes. >> if you appear before a judge, you do want a eunuch, you're saying? >> i would like this particular eunuch, no less. sorry to go on a tangent, you can buy audit insurance? >> yeah, from the person who does your audits. you pay an extra fee and they agree to do the audit for free. from your account. >> i don't know if my account offers that service. >> i'll give you the name later. >> all right. and then you can say about the irs anything you want. >> wow. >> a california judge has barred the city of san jose. >> can i expense it? >> that's a great question, andrew. i hadn't thought of that. >> journalistic issue. i want to be able to be critical of the irs and protect myself. >> you and i are going to get along just fine. >> this is touching. all right. a judge has imposed barred the

city of san jose to approve pension cuts on municipal workings. implications for cash-strapped local governments across the united states. the judge ruled the city is entitled to cut workers pay to save money. but she argues vested pension benefits are protected by state law and therefore offlimits. the dow and s&p closing at all-time highs. chief investment strategist, and also with us. he's chief financial economist at bank of tokyo mitsubishi. jason, one thing that really sort of struck me yesterday was almost 4,200 on the nasdaq, never thought we'd get to 5,000 again. the first time we hit it in hindsight, almost a metaphor or the poster child for the exuberance. it wasn't backed up by numbers back then. do you think at 4,200 that t the -- that the underpinnings of these major tech leaders, does

it warrant 4,200 now? >> i think certainly on the major -- >> more than before. >> much more than before. and you have to remember, that was 13 1/2 years ago, it was a long time ago. >> at 6%, it should be -- at 6% or 7%, it should be -- >> right. so you also have to remember, joe, you do remember, it was only at 5,000 for a very short period of time. nasdaq, i believe, was up close to 75% in the fourth quarter of 1999 alone. that was because the fed was dumping money in anticipation of y2k. >> you need a whole new word for what the fed was doing back then compared to what it just finished doing. they weren't dumping money. >> in that quarter. absolutely true. >> we learned how to dump money in the last three. >> really know how to do it now. but i really -- and that's a whole other issue. but i think the fundamental underpinnings are much better, especially given where inflation and long-term interest rates are. >> but what you said was it was

fed induced last time with dumping that amount of money. and here we are again after -- it's been dumping on steroids. and that's not a coincidence that the nasdaq gets back to where it is at the end of the same type of fed pumping? >> it's not a coincidence, although the valuations are much more. >> it is a coincidence, but the valuations are -- >> much more reasonable. i'm not particularly worried. i think there's something else that's going to get us this time. it's not going to be valuation. it may be a back up in interest rates. >> it's not pets.com and things like that. it's google and it's apple. >> even apple. look at apple. apple is trading at 10 or 11 times earnings, it's got $130 billion in cash. it's a very different dynamic than what you saw -- >> it's not a sock puppet. >> right. it's not a sock puppet. there's something there. so, you know, it doesn't mean necessarily next year's going to be a great year for stocks, but certainly i'm not expecting the -- what you had after the --

>> what? >> i don't know. it came to mind at 7:05, man, that's all i came up with. that's like the ending. >> garlicky? a lot of garlic, right? >> yeah, exactly. but at the end of the -- >> is it flaming? >> probably. that's extra. that's extra. >> you want to talk markets or just -- it's not really your domain? >> well, i mean, we're talking about stocks a little bit. i mean, there's been major news in the last two business days that people really haven't responded to yet. i heard some of your prior guests talk about the consumer as of thursday, we thought consumer spending was 1.4, now it's running 4.0, two days later. the consumer in the fourth quarter, 4%. and i think what you're finding that nobody's talking about it yet because nobody's written their news letter. it's been under reported in the press. it's very quiet time of year.

growth is really moving fast right now. so if it's 4.0, if gdp is like 3.2% in the fourth quarter now, people are talking 2.2%, i moved it up to 3.2% after the consumer. it came out of nowhere. >> who are they? and it's only november. >> someone said the market's up $4 trillion as far as the wealth effect. does that filter down to the average consumer through mutual funds or pension plans? >> i think we ask the economic data, we ask too much of it. here we had a period, payroll holiday for two years, 2011, 2012, we didn't see effect on consumer spending. we got rid of it -- it expired at the beginning of 2013. no impact. and now in the final three, four months of the year, spending's taking off not just services

come back. the fed chairman said we really want consumers to spend more up. there's a problem with services, maybe, now services are through the roof. >> the id you go up? did you take the gdp numbers up based on this? this is a big thing for you. >> well, i moved it to 2.7 this year. >> what about next year? >> i think it's fair to put it 2.9. i got burned saying it was above 3.0. i'm a little gun shy there. >> you don't think this is a one-shot deal? you think this is going to continue? >> it's going to be lasting. car sales won't go that much more. they're 16.3. they might go to 17. we're not going to get the same lift from autos, certainly. but yeah, we've achieved escape velocity. i hate using that because people on the west coast use that a lot. obviously we've been expanding five years.

>> a lot of things go on sale they can't move. >> right. >> i was told looks like pajamas. that was one of the -- >> table cloth. it does scream christmas, though, it does. >> it's the holiday season, you know. >> he was talking about escape velocity. >> yeah. >> which is a weird segue to the next picture. two astronauts, we got the pictures? two nasa astronauts are performing the second in the series of three space walks on the international space station. these are live pictures, folks, this is not the movie with george clooney. >> having seen "gravity," i have to say, don't bring that up. >> trying to remove a cooling pump module. last week's valve malfunction cut the cooling capabilities in half. managers have been forced to shut down noncritical missions on the iss. >> and they haven't had any problem with the weird water

thing that happened last time. you know, the water was in the suit and had to have a snorkel in there in case it happened. actually have a hose if they needed to breathe. >> it's like being under water in space. >> yeah, they tried to fix whatever caused that. one thing this does show you, andrew, there's -- if there's a particle of dust going by, it's a problem. and all that debris that was -- that was so stupid, so fake. >> in the movie? >> yeah. that was just ridiculous, trying to dodge things coming at you going 24,000 miles -- >> it was a good movie, though. >> it was okay. you guys -- you suspend a lot of disbelief. >> you have to. >> the movie. we have a movie segment coming up, by the way. >> cars is okay. anyway. >> the final day for christmas shopping. and if you're a procrastinator,

many say they are here for you staying open around the clock. are the shoppers spending, though? we'll have a live report from toys r us next.

welcome back to "squawk box." the consumer is the story of the day on this christmas eve morning. and now from toys r us, staying there around the clock. it's a little bit lighter out. the lighting is better.

the parking lot still looks good. what's going on out there, sara? >> reporter: it's lighter, not warmer. not black friday anymore, but christmas eve. this idea of 24-hour shopping. the toys r us behind me has been literally open since saturday. and if you think that's a long time in time square, the toys r us has been open since december 1st, around the clock. so we're here in the parking lot monitoring the traffic and i'm happy to report that at all hours of the night, 3:00 a.m., 4:00 a.m., 5:00 a.m., there have been people in the stores. wonder if there's as many people as there are employees. but definitely 20 to 30 people at 3:00 a.m. this morning. so part of the reason they're doing this this year, especially, is because of the growing threat of online retailers. 24 hours, you can shop online. and that's a big part of the story. this retail season. i've got brand new numbers for you when it comes to the online traffic we're seeing crazy growth online. 40% sales rise for last weekend.

the weekend before christmas, double digits, 40% when it comes to online shopping. 20% of that, actually, is coming from mobile. that's been explosive, as well. people shopping on their phones. it sounds great, these kind of growth numbers, but you should keep in mind, it's not enough to save the holiday retail season. it's still a very small chunk of sales, 10% is the number for you, 10% of department stores and other store sales are actually coming from online. great growth online is where the future is. but not enough to make up from some pretty lousy numbers we're getting when it comes to the brick and mortar on the ground sales. that's why it's important we're here. >> if only -- when you say 20, 30 people in the store, was that overnight for the entirety of it? >> no, that was 3:00 a.m. which is impressive. >> given, though, you suggested that there were more employees in the store than actually

customers, you know, when they actually do the math on this tomorrow, will they say this actually worked out? >> you have to wonder, the problem is they're dealing with a lot of problems this season, not just the sluggish consumer but six days shorter. they have to find the time. i taulked to analysts, i said i this going to hurt the margins and analysts say it's not that significant in terms of cost in the long run it's more significant they spread out the sales and try to have the time. people want to shop in the middle of the night. especially millennials. >> sara, thank you for joining us from toys r us this morning. we'll be checking with you throughout the day. coming up, 'tis the season for family and friends and the big screen. hollywood hoping to find itself on santa's nice list this year.

brings us a list of likely winners and losers coming up next. we're going to the movies on christmas tomorrow at 1:30. going to see frozen. among the films opening tomorrow, we're back in a moment. >> you show me a pay stub of $70,000, i quit my job right now and work for you. 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. tdd#: 1-800-345-2550 so you can take charge tdd#: 1-800-345-2550 of your trading.

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welcome back to "squawk box," the holiday blockbuster movie season in full swing as oscar buzz starts early for some of this year's biggest releases. joining us now rbc capital markets broadcast and media analyst. we were during the break discussing all the movies we were supposed to see. i was going to take the kids to see "frozen." i didn't know it was rated "g." pg, it is? my little guys can't see that. >> plus they're boys. it's working. what's amazing to me about that movie is the string of movies out of the disney studio as opposed to pixar or marvel that hadn't really worked. this movie's working and working globally. i think it's a big win for disney's kind of core studio. >> and you said you're surprised because it's a girl movie. because girls will go see a boy

movie but boys won't see a girl movie. >> it's a princess-y thing. it has a kind of princess girl feel to it. >> also a princess feel. >> yes. >> tomorrow, as well. three hours. >> yeah. >> the theaters can't like that. >> i don't think the theaters will love it. look, the reality is, this isn't so much a christmas season movie as, i think, trying to squeeze it in for oscar season. and which is really the theme of the next week. i think you have that with "american hustle," you have it with "wolf of wall street." and the big of it hit during thanksgiving and you're tailing off. "hunger games," which was the event of the season, even the "hobbit" will drop off a fair amount. this feels like nichy, you know, oscar-y, "anchorman" kind of smaller movies. >> is that going to win or lose,

ultimately? given all of the promotion, i think it would be huge, but it seems disappointing. >> what works? right. we like things that are culturally neutral. they tend not to be the comedies, action, blow-up movies. i think this movie's probably a little softer than we expected, but it was never going to be like a global box office. >> right now on the corporate side. the guys that make these movies who invest in these films, who has the best record? who do you say these guys, they know what they're doing? and who doesn't? >> well, i think we've written extensively about this. and i think from a -- this is a really boring way to look at the movie business. but from a margin stability, lack of volatility perspective, the fox guys run the absolute most kind of stable, efficient, least swing for the fences, more singles doubles -- >> controlling costs. >> give me a couple of examples

of films they did this year so we understand what you mean. >> you probably couldn't name a lot of the big fox movies. alvin and the chipmunks, that's like a big fox franchise. i think in terms of the pipeline who has a big fat pipeline, big fat hits which are going to work. it's disney right now. and more so a function of the acquisitions. the marvel acquisition was a massive game changer. and thor was a big movie to see. two three years ago, anybody thought of it as a big franchise? >> what's your take on sony? and i ask given the fact that dan lobe has been out trying to push them to spin that unit off. >> here's my thought. again, the research we've done on the studio business. you know what the most revealing

element of the studio business is? if you have a successful television business, it is a far bigger driver of stability and lack of volatility over time than the movie business. sony actually has a pretty good tv business embedded in it. i think there's some legitimacy for a drive to greater efficiency. therest a great studio there. i do think they're probably going to do some restructuring to make it more efficient. >> you want to say nice things about our friend ron myer? >> you know, "despicable me." >> he knows where to go. >> huge story -- >> biggest ever. >> so like i think we'd probably like to see a little bit more consistency of that -- it's all about pipeline, all about investment franchise. you want to take -- if you sit where i sit and talk to investors all day about investing in the media business. media stocks have been on fire for the last couple of years. and why is it?

because we don't invest in content risk. you know, we try and invest in certainty. >> and that does make for like really boring movies over time, right? i mean, don't you want somebody swinging for the fences occasionally so you get something nobody thought would be phenomenal but turns out to be -- >> not with your money. >> but look at a stock like lionsgate where you have nowhere you have the "hunger games" franchise. it's going to do $800 million in box office, this movie, and there's two more left. and what does the stock do? the stock's probably off 20% since the opening. because what's next? we happen to think it's probably divergent. but the investor says what's next. i want to know what's next. you look at the big franchises and see what's next. >> final question for you. bob iger less in his stocking yesterday. nothing to sneeze at. is that the right number? >> oh, boy.

i'd be -- i think pretty much everyone at this table would be plenty happy. >> let me put it differently. a lot of media executives make more in the media business than just about any other industry these days, still. >> yep. >> does that make sense? >> well, what i would say. does it make sense. the best i can tell you is i look at stock performance for the group and look at the way the companies have been managed. i look at allocation of capital, alignment of interests with shareholders. they've really done a phenomenal job executing. i think the absolute numbers are staggering. but, you know, you're all in the media business. so hopefully you're participating in this. >> actors, athletes, they all make more. >> it's true. >> than wall street guys. >> does that make sense? it's the market. >> thank you for joining us. happy holidays. thank you for the movie advice on the "frozen" bit. predictions 2013, stocks turning an impressive return this year, leading the most

bullish investors to wonder if the trend can continue. the stories likely to drive the next 12 months of trading when we return. when we head to the break, bill gross' wishes for 2014. my 2014 wish is that investment in the united states picks up. in the private sector and the public sector whether it's infrastructure or whether it's investment in technology, it's investment that is lacking. we basically as an economy -- we don't save enough of our seed corn, don't save enough nuts in the wintertime. we need to invest money in order to grow going forward on a long-term basis. bny mellon combines investment management & investment servicing,

giving us unique insights which help us attract the industry's brightest minds who create powerful strategies for a country's investments which are used to build new schools to build more bright minds. invested in the world. bny mellon. you'd do that for me? really? yeah, i'd like that. who are you talking to? uh, it's jake from state farm. sounds like a really good deal. jake from state farm at three in the morning. who is this? it's jake from state farm. what are you wearing, jake from state farm? [ jake ] uh... khakis. she sounds hideous.

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♪ welcome back to "squawk box" and the headlines this morning. mortgage applications fell to a record low. applications fell 6.3% last week as mortgage rates fell.

s&p 500 companies bought back more than $128 billion of their own shares during the third quarter. s&p dow jones indices which compiled the figures said that's the highest level since the fourth quarter of 2007. and we're just about an hour away from the first economic report of this shortened trading day. november durable goods will be out at 8:30 eastern. they're expected to rise by 2%. later this morning, we'll get november new home sales. and those are seen falling .9%, back in october, the jump was more than 25%. all right. now, let's get your holiday forecast from the weather channel's julie martin. julie? >> well, it will be a white christmas for many in the midwest. and, in fact, a white christmas eve, as well. we've got a little bit of snow coming across the great lakes region here in the midwest. not a whole lot, though, to speak of. so more coming later for you. that's for sure. we have winter weather advisories up in the dakotas all

the way in through minneapolis. we could see a few inches of snow on the ground. careful if you are traveling out there. light snow in general, that's what we're expecting tonight in through tomorrow morning. could see a couple of inches, though, in places like minneapolis over toward chicago, could be a white christmas for you come tomorrow morning. also, looking at a white christmas in places like detroit and cleveland as we approach the holidays. so how much snow? well, the bulk of it, the highest totals will be on the east side of lake michigan in michigan. so 5 to 8 inches where you see the purple here. but generally 1 to 3 as we look at the areas in blue. that includes most of wisconsin and even the city of chicago over toward cleveland. so, yeah, looking at a white christmas for millions here in the midwest. >> we're telling you what you need to know to make money in the new year. bob pisani will give us his predictions on the market. but first, let's see how we did in 2013.

here's what he had to say. he said there would be slow growth in the u.s. predicting back then 0% to 2% gdp in 2013. this was we'll say half right. gdp surged to 4.1% in the third quarter. next, he said autos and housing would continue to be the bright spot for the u.s. economy. on this one, he was completely right. house prices rose 12% this year, auto sales soared past 15 million. and finally, bob predicted the big trade in bonds and stocks would finally reverse. right again. it was the first year in five there have been inflows into stock funds. 2 out of 3 isn't bad. let's see what lies ahead from bob in 2014. >> the guiding principle of my 2014 predictions is try not to be boring. at least they're a little more interesting than the fed begins to taper. first, the fed will increase its

bond buying program next year after its initial attempt at tapering falters. after the fed begins a modest tapering in early 2014, the stock market drops 10% and the economy begins to sputter. the new fed chairman janet yellen has almost no honeymoon. she must confront the prospects that the economy may slip into another recession. the fed reverses the decision, moves to increase the bond buying program, $100 billion a month. richard fisher who has become a member of the federal open market committee in 2014 resigns from his post in the middle of the year saying that the fed is acting irresponsibly by refusing to accelerate the tapering of its bond-buying program. finally, microsoft buys yahoo at a 30% premium and names marisa mayer as the new ceo. this is a different world than 2008 when they tried to buy yahoo last. they need a wow candidate to replace ballmer, the company that needs somebody to change

microsoft culture and focused on the consumer. for cnbc, i'm bob pisani. >> thanks, bob. and make sure you tune in throughout the week for more predictions and on the web you can see all this, predictions.cnbc.com. coming up, volatility in context. we're going to talk to william lloyd from velocity shares about volatility in 2013 and his expectations for the vix in the new year, as well.

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checking the futures this morning, they do suggest a positive open. remember, it's going to be a holiday shortened day. dow jones would open higher by about 18 points. our next guest says just because the vix is well below the long-term average doesn't mean it's cheap to be long volatility. here now with more is will lloyd managing director at velocity shares. good to have you here. >> good morning. >> you during the break highlighted a very big birthday that we missed. >> yes. >> what happened last friday? >> the vix futures index on which all these exchange traded base turns 8 years old on friday. >> whoo, gosh, wish i had my birthday hat on. >> and in eight years lost 99% of the value. >> great. so it actually hasn't been

volatile, it's gone down. >> well, what we say, it spikes and bleeds. so you get these moments where it spikes up and bleeds down. and it's been doing a lot of bleeding for the last couple of years. >> when i think about the vix, i think, you know what, you buy when it's cheap and sell when it's expensive. every time it's down, you buy it because at some point it goes up. somebody gets scared about a credit squeeze and then you sell it. >> we talk about the vix as if you can buy it, but we can't actually buy the vix. and those don't mean revert. and so what happens is -- to give you an example, today, if you wanted to say i wanted to get long volatility, it would cost you roughly 7% per month. >> that's a lot. >> so i say -- >> is zero interest rate environment, that's pretty expensive. >> that's very expensive. the long-term average of the vix is 20. and you say, oh, that's cheap.

the problem is, you can't buy it there. >> what do you attribute that? you're taking a look at this. 0% interest rates, obviously got to be something that is contributing, the fed's buying 75% of the net new issuance of treasuries. is there something structural in the market that you think is causing this to decline? >> well, again, the underlying futures index is based on the shape of the futures curve. people think -- >> the options, i understand. but clearly this has been something that's been a trend for quite some time. and so what do you attribute it to? >> it was interesting last week when the fed decided to announce the taper. you saw vix fall from 16 to 13 in a day. and that's on the taper news. well, if you flash back to june -- >> the first time -- >> the first time talking about tapering, you saw the vix spike up. that was one of the two times this year vix has gone above its long-term average. >> what's the long-term average.

>> 20. >> 20? >> still? >> when i looked -- you said sell when it's high, buy -- then you never sold it in the last two or three years it's never been high. >> do you think it's possible that it has something to do with the growth in the hedge fund business or the growth in the fact there's a lot of people more actively hedging more active than the markets now? do you think that's possible? that's compressing the implied volatility the underlying options? >> you would think that would cause the shape of the futures trend also to fall if people were doing less hedging. and this cost of 7% a month, it's because of the shape of the futures growth. a month out, two months out or three months out are actually buying those futures because they want to hedge their risk. >> but this is similar to the uso. like if you think, oh, i'll just buy the uso and then i will own oil and oil goes from 80 to 200, you could still lose money because of the shape of the futures curve is getting you.

you really have to understand. >> right. >> all of those issues if you're going to get into this. do you have a recommendation for a trade in 2014? >> volatility is a day-to-day trade. if it goes from 16 to 13 on a fed taper announcement most people expected, you really can't take a long-term perspective and say this is where i think it's going to be. it's more recognizing where the value is. we sponsored a conference last year, and we asked all these hedge funds, what do you think is going to happen to volatility? >> it will fluctuate. >> you can't get an answer. some people will say, i don't know. joe, you had a guest on last week that said it's the punch out of nowhere that knocks you out. >> right. >> the one you don't expect. >> i don't like those. and i want the nasdaq to set a new high, i don't want the vix to set a new high. >> historically? >> yeah. >> about 80. >> 89.50. >> and that was when? 2009? >> when andrew was doing research for his book. >> "too big to fail." >> please don't set a new high.

i'm thinking some horrible, horrible situation. >> it's hard to imagine what it would be today that would cause that to happen again. >> black swan that we don't want to -- 20's fine. it's a good high. doesn't even show it there. it's a good high. >> well, thanks for coming in. >> that must be a monthly close or something. >> yeah because, it doesn't hit 89.50 there. >> thank you. >> thank you very much. >> see you later. >> now i'm scared thinking about -- >> why? >> something in the 80s. >> that was a moment. >> probably once in a lifetime. >> we think we've got this whole society, this civilized society, think we've got it wrapped, the government will be there and we'll always have food, water, you know -- i don't know. i hope so. for everybody's sake. >> okay. >> coming up. >> and there's 9 million people looking for water or something bad. >> i hope all at the same time.

>> holidays. >> in high-rises. stock picks to start the new year right. we're going to talk about it after the break. the what's working series with saira malik. up next on "squawk box," don't start your day without knowing the names that will make you money. joe has your list of stocks to watch right after the break. top of my wish list for 2014 is that we have no more federal shutdowns because i think it really causes a significant problem with consumer confidence. secondly, i'd like to see unemployment go below 7%, possibly down to 6.5% because i think that's a good goal for next year. and obviously i'd like to see a very peaceful world because we live in a world where world

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you don't have any opinion. so we don't really do it or not do it. carl hated the animal orchestra but used to love running it. the biggest fan is a friend of yours. >> i pretend to like it. >> he will -- if he's anywhere in the civilized world, he will send an e-mail that says thank you for the animal orchestra. the nyse filed a plan with regulators to offer firms the trade on the exchange, a kill switch that could cut off trading if preset levels are breached. risk controls have been in focus following a couple of high-profile trading snafus. and the "f" in snafu stands for fouled. all fouled up. but in the army it got -- >> reappropriated. >> yeah. including the august 2012 glitch at night capital.

and the u.s. units of -- >> i'm not going to even try. >> why? >> because if i say -- >> hyundai. >> if i say hyundai -- >> he pronounces every vowel in hyundai and comes out -- you don't even know what it is by the time he's done with it. >> i happened to host "squawk box" asia from hong kong. >> uh-huh. >> where i asked the question because it was local. i mean, i was in the right region. >> they say hyundai? >> no, i think they say hy-yun-day. i'm just telling you. well, the u.s. units of hyundai and kia have reached agreement to pay a total of $395 million for lawsuits filed by owners. last fall, the two companies conceded they overstated fuel economy by at least a mile per gallon.

on some vehicles. that doesn't sound that bad. hyundai. >> yeah? >> if you pronounce the "y," makes it more difficult. let's get back to our guest host. perfect. perfect. thank you -- >> i can send these -- he'll send you one. or i'll send. >> do you like it? here's the point. i'm very interested in what you see here. i made the point. the trends that were responsible and i'm sort of divorcing the fed -- i'm saying there were some positive underlying

fundamentals that caused the market to go higher. those usually don't reverse in a 12-month period. it's not totally out of the ordinary to think after 12 years of no gains in the s&p, it's not crazy to think we can't go up again next year, is it? >> no. >> but are you like in the 8%, 10%. >> unfortunately. >> you're in the 8% to 10%. >> and in strategist school, they teach you, if you don't know, just say ten. usually the profits are up 7%. >> that's a safe call. how would the consensus be wrong? up 25 or down 20? >> i think it's more likely up 25. if i'm wrong on the consensus call, i think it's going to be up more than down. and that's because this year -- >> i'm just saying it's going to be up. >> i think so. and listen, after -- going to have 30% total return this year. the big question to me, though, is really, when you saw the

statistic on share buybacks. the big thing missing, the dog that hasn't barked in this cycle has been capital spending. and that's worrisome. if you're finding that companies are being far more rewarded for financial engineering than they are for investing in their own businesses. that can work for a while. but eventually in order to get growth, you need investment. and that's the one thing i would say longer term that worries me the most. companies have a lot of cash. 0% interest rates, you can do deals, buy back stocks all sorts of things to make your share price go up. what really drives the economy is capital spending. and that's the thing that worries me most as we get into next year. and i do think the regulatory environment, there's no question has chilled. >> and a little pause. >> coming up at the top of the hour, a retail update from an industry expert. former toys r us ceo gerald storch joining us to talk about

the winners and losers of the season. and republican strategist kellyanne conway and keith boykin joining us to talk health care, the debt ceiling and expectations for 2014. we're back in a moment. s overni? ♪ 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. ♪ [ male announcer ] the parking lot helps by letting us know who's coming. the carts keep everyone on the right track. the power tools introduce themselves.

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it's the day before christmas, we're not on vacation. joe, andrew and michelle are here for the duration. we'll cover the markets, bond yields and the stocks, it's a holiday special right here on "squawk box." we'll start off with shopping, online and in stores. jerry storch will here to discuss retail wars. then we'll move on to companies you should invest in. saira malik is here with a stock position. we brought in two experts. you're not seeing double, they'll tackle the debt threat, the season is nearing. but we'll keep them civil, no snaring and sneering. you have no need to worry. durable goods for november are out at 8:30, for business news, data and market solutions, stick with us on "squawk box," accept

no substitutions. by the end of the show, we may all fall apart, but it's time for this christmas eve "squawk box" to start. >> i think that was very well done. why are you looking at me? >> because you said you're going to cry. >> i thought it was very well done. >> it was well done. >> it wasn't sad. >> i know, but it was so -- it was so joyous and emotionally -- >> cute. >> it was good. >> the fire is behind you, andrew. looks good with that shirt. all the fires. we have fires, see? >> oh, my goodness. >> we've been doing that the entire show -- >> it's flame retardant, though. >> my pajamas are flame retardant. >> that thing is going to -- that's like polyester. >> i know you plan on burning it after the show. >> welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernan along with andrew ross sorkin.

becky quick is off today. she's got the, you know, the vacation thing at the beginning of the year. >> the minute you're allowed to ask, she does it within -- >> within a minute. got it all printed out. you know girls, they're very good at that. chief investment strategist at strategus partners. let's start with the check on u.s. equity futures. remember, it is a shortened trading day today. right now the dow woeld open higher by 19 points, the nasdaq higher by 2 1/2. the nyc and the nasdaq close at 1:00 p.m. eastern time. nymex gold floor trading ends at 12:30 eastern time. oil finishing an hour later. electronic trading concludes at 5:15 eastern. first, though, before that, we'll get economic data. november durable goods, we'll

hit the tape at 8:30 a.m. eastern time. headline numbers expected to rise by 2%. some ugly numbers for retailers to tell you about. shopper track is reporting a third straight week of double digit declines for brick and mortar stores. traffic for the week that ended december 22nd was down 21.2% year-over-year. holy smokes, but you've got to assume some of that's online, right? i don't go to the store anymore. >> no? >> amazon prime. >> really? >> yep. done. >> especially if you're in the city. >> it's a city thing, right? don't want to have to carry it a block. >> you'll have the drones. >> the drone is not coming to new york city. i promise. the moment one drone lands on somebody's head, this whole game is over. >> put an eye out with one of those -- >> excuse me? >> you can put an eye out with one of those things. didn't your mother used to tell you that? you can put an eye out. a three-year pay freeze for federal civilian employees is over. president obama signed an

executive order setting pay rates for 2014 included a 1% pay raise for civilian and military employees. the order had to be signed before january 1st to give federal agencies time to update their pay systems. military employees have seen regular annual pay increases. and bitcoin backers now have a sexy outlook for their digital currency. you can now buy victoria's secret lingerie with bitcoin. >> you are talking very slowly for a reason? >> slow down. >> you want me to now? >> couple pauses. >> i personally am offended a little bit by people -- >> what are you referring to? >> no, to talk slowly -- >> i want the viewer to be able to hear you properly and understand what you're saying. >> you feel comfortable object objectifying the population? if you feel fine, that's fine with me, but i'm not going to be

part of it. now signed up as a participating retailer. >> you want to repeat that stho story? >> no, i do not. you are out on a limb, my friend you normally don't venture out upon, except the one time with the women's prisons you did it. >> what? >> he did it one time. and normally he does not -- i don't worry about him, but now i'm worried. >> you talked about women's prisons. >> it's a long story. we can talk about it during the break. >> we got a list of the top ten women's prison movies that someone sent in. i'll send it to you. >> okay. we'll come back to that victoria's secret story in a just a little bit. in the meantime, joe, we might, actually. shoppers are wrapping up -- anyone get the -- they're wrapping up holiday to do lists. and joining us with an inside look at the make or break -- >> what am i doing? >> thank god you're not still -- our good friend jerry storch.

he isn't the ceo anymore, but the former ceo of toys r us, current ceo of storch advisers. >> good morning. >> good morning. >> the question that we had earlier, sara was out in the parking lot, and i asked the question, does it make economic sense to keep these stores open when you only have 20 to 30 people coming through the door at that hour? >> this time of year, it does. when she says 30 people, that's per hour, that's a lot more than 30 people over the course of the night. plus, that's the lowest hour. from midnight to 2:00 a.m. or from 5:00 a.m. on are actually quite busy. and prepare for these stores that are setting up for all night to an average day in february, these are busy hours. they are profitable. >> so your assessment on where this holiday season stands, what are we now? 12, 15 hours before, the game sort of ends. >> very disappointing.

the traffic at bricks and mortar stores is off sharply. i think the shopper track guys do a good job. their number is among most reliable in my book. so when they say it's off double digits in terms of traffic, it is. that's very bad. the sales aren't off as badly. what that suggests is the consumer is using the internet to preshop or window shop and then make these strategic trips to the stores. but they're buying less. and they're making sure that they got it at an incredible deal. >> is there any chance this gets made up in the next couple of days post christmas with all of the returns and more importantly gift cards? >> great question. well, no one knows about sales for sure. anyone who says they do, they're lying. but everyone thinks sales are running negative. it's a very short season, you know, overall traffic is way down, internet growth is substantial as you pointed out earlier. but it's not nearly enough to offset. >> to offset. >> the bricks and mortar are 90% of all sales. even though the internet could be up 20%.

>> what's the lesson then? as a ceo who is going to -- holiday season 2014, you do what differently? >> well, before i get there, the real problem is not sales, it's margins this year. because that's the real problem. because you can make up a little bit of shortfall if you're running a high margin. but because of the high promotional environment, the window shopping on the internet. and your point, high sales. december 26th, a huge day. but it's huge clearance prices. so margins mr. be whwould be whd watch. getting out there early in retail. >> that means it's a race to the bottom. >> we didn't learn that lesson this time, they were early and didn't help. >> if you establish a relationship with your customers, they're going to win. the pie is not growing. everyone saw the consumer sales numbers and said, oh, look, the consumer's back. i don't know what kind of parts, car parts. they weren't buying christmas cards. >> why would you show them loyalty when they said they

would do all the investigation online and go for the cheapest price. >> you have to give them a reason. products you can't get anywhere else, service you can't get anywhere else. one of my favorite mechanisms is the personal shopper. someone who calls you up, works with you personally. we see stylists that are a junior form -- >> you're talking about higher end -- >> no, more and more at mid-priced stores. target's been testing it. that's not true. and so what you try to do is add these services that give you a value-added reason to do it. over time, though, it's going to take a while. we are at a turning point. amazon, keep in mind, doesn't keep any money by and large to what they sell online. even the best retailers and no one's as good as amazon is. they're not making money on ecommerce. either amazon has to start making money, right, in which case the retailers can compete. >> shareholders aren't demanding it yet. >> can you talk about employment.

if this christmas season ends up as disappointing as it might be, what is your expectation for employment? >> well, huge seasonal employment. tens of thousands of people, each company are being hired. the employment numbers are very poor. everyone talks about the unemployment rate. but employment has gone nowhere, which is part of the overhang along with the tax increases early in the year. consumer polls are terrible when you see what they say about shopping. so the consumer's in a bad place, now we get to next year and retail employment will be down if sales are down. >> will some capacity be taken out. >> it's inevitable, there are way too many. we know there's too much bricks and mortar out there. these companies have to consolidate like any industry that's going through a tough time. >> who are the losers or even some of the match-ups? >> well, i don't know. i always thought a number of these retailers should get together, consolidate. >> like? >> oh, i don't want to make stuff up. totally speculative. >> it's the end of the year. >> put a, you know, a sporting good store -- >> dick sporting goods?

>> put them in the same place, like a toy store for guys. >> when you put a taco bell and kfc in the same place. >> it's like when you put a bucks inside the target store. it's an stunt to utilize the real estate more efficiently. and the better real estate will be worth even more. it'll be like doctors offices and insurance companies. >> who do you admire? as a ceo right now in the retail space. who do you see -- that guy, they figured it out? >> well, everyone loves jeff bezos. >> but he isn't making a dollar. >> what i love is his unbelievable optimism. when i first met him, i did the deal when target went on to amazon. and i said you can't do this, you can't sell everything, you'll lose your shirt. and they'd just lost their shirt trying to sell toys themselves. and i said how are you going to do this? we'll find a way. he still hasn't made any money selling anything, but his company is turning what a 1400 p/e and that's because the "e"

isn't quite negative yet. and he keeps growing and growing and growing. you've got to admire the guy. >> thank you. happy holidays. >> thank you. kentucky senator rand paul airing his grievances for festivus. what chapped his hide in 2013, including too many people wearing ties on tv. and then we're going to continue our what's working series with stock picks for 2014 as we head to break. check out the "squawk box" market indicator. ♪ i wanna spread a little love this year ♪ [ male announcer ] this december, experience the gift of true artistry and some of the best offers of the year at the lexus december to remember sales event. this is the pursuit of perfection.

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welcome back to "squawk box," the national highway safety traffic administration. the nhtsa has reaffirmed the five-star safety rating for the car, the rating applies to 2014 model year vehicles. and a bus story -- >> what was that? >> well, i'm trying to -- maybe we can get this. no, i'll show it to you in a second. a bus story from rand paul this morning. a faux holiday made famous by

"seinfeld" with the traditional airing of the grievances. paul wrote in washington, bipartisan deal is a synonym for increasing our debt. it's a shot at the deal we just did. a minor grievance. i can never remember when to move my car for d.c. street cleaning. as for his fed grievances, the senator tweeted, fed policies make you poor and hurt the poor and middle class the most. ridiculous monetary policies, increased the cost of goods. in response to some of your tweets, there will be no feats of strength. and i have no plans to end festivus by wrestling with senator reid. and one more grievance about bipartisanship @corybooker doesn't tweet me enough. and in response, he did retweet him. you me and feats of strength senate floor. name the time. that was funny he got -- and it is amazing sometimes people do answer --

>> cory booker's on twitter like every minute of the day. i don't think he sleeps. he tweets continuously. he's got a female friend that -- remember? on twitter? >> no, i was thinking is there a cory booker ghost? >> i think it's him. no, i think it's him. >> ghost tweeter. >> it reads super authentic. >> a lot of these guys have ghost tweeters, have you noticed that? >> people in high positions sometimes have people they trust, i would think. tweeting for them. >> i would think some people say there's a pothole in newark, i'll get somebody out there, you know, something like that. >> yeah. coming up, investing ideas for the new year. we'll continue our what's working series with portfolio picks from saira malik. tdd#: 1-800-345-2550 trading inspires your life.

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welcome back to "squawk box" this morning on christmas eve morning. mortgage applications fell 6.3% last week to their lowest level in 13 years. mortgage bankers association says the drop comes amid a rise in mortgage rates which followed the fed's decision to taper its bond buying program. but apparently applications have been falling since mid summer as the cost of financing a new home has increased. the average 30-year mortgage

rate. here it is at 4.64%. with the fed taper set to begin in the new year, one of the best for your portfolio in 2014. joining us now from san francisco saira malik. the firm has more than $540 billion in assets under management. good to have you here. >> well, thanks for having me. happy holidays. >> what are you thinking for 2014. what kind of gdp growth, what kind of interest rates for 2014? >> well, we expect the great revival in equities to continue in 2014. and this is because in years where you see strong rally in the stock market, that usually continues in the l following year. we expect this to be driven by corporate earnings growth. grow faster than the typical growth.

>> we like the consumer we think the consumer is king. that's because there's a wealth effect for the consumer right now for the higher stock market, higher home prices and lower gas prices. we're looking for those companies which are leveraged to the consumer. >> i see your hasbro, home depot and general motors. >> yes, we really like hasbro right here, they have a great toy business tied to a lot of blockbuster movies coming out, including captain america, the avengers and star wars, which generates huge toy sales for them. >> we had an analyst talking about the big franchises in some of the movie theaters and how important it is for them and it extends to toys. >> yeah, this is jason fr-- whi it's been a good year for a lot of active money managers, it's been tough because the market's up so much. are you expecting things, or perhaps hoping that the market's

up a little bit less so that stock picking will be a little bit easier? >> we're looking at the market being up to about 10% next year, we do think it will be more of a stock picker's market. we're focusing on those companies, which have strong free cash flow, profitability, and their own levers to pull so they can do well and grow faster in that kind of environment. another example of that would be general motors. this company is hitting on all cylinders. u.s. auto sales at some of the highest levels we've seen in years. general motors has great brands like the impala which was recently rated the number one sedan by consumer reports. this is the first time in 20 years an american car has been rated number one by consumer reports. the government's exited their stake in the company and they're paying down high-cost preferred stock which will generate strong free cash flow. >> the general idea has always been that when interest rates rise, stocks with big dividends tend to get hit. do you believe that? and are you making investment

choices based on that in the coming year? >> well, we do believe in general interest rates will be a head wind for the market, but we don't think we're in dangerous territory yet. interest rates should hopefully remain lower for a while. we're watching the ten-year rate. still remains under 3%, which makes us feel like we're not in dangerous territory yet. >> do you ever get nice notes from teachers? do teachers ever write you nice notes? thank you for the advice and everything else? >> i'm not on the client side. i don't see them personally, i would hope our clients are satisfied. >> it was originally for teachers, right? >> right. but we have a broad offering of products right now that are available across the market. >> all right. thanks so much for joining us. looks like you got up super early. >> thank you for having me. >> great to have you. >> it's been in the -- thanks, saira. it's been in the news this week. everyone was visiting -- what was the kid's name in "a

christmas story"? they were all visiting that home. >> frankie. >> ralphie. they were all visiting his home in cleveland. the home of "a christmas story." someone did a funny thing, maybe we can make it in time and look at it. >> i don't think so. >> you think they're going to put it on the air. >> now when you do that, now, of course we have to show everybody. >> i'm in, but -- >> that was the famous thing -- >> hint, it involves miley cyrus. >> it's funny. they transposed miley cyrus. she's sticking her tongue out in that ridiculous thing where she got all the publicity. and in this case, they've got all the kids around because the kid in that movie got his tongue stuck on the pole. in this case, looks like miley got her tongue stuck -- >> it's ice cold. >> it's a joke. like she was doing that. anyway. -- >> it's ice cold twerking. >> why would i think anything? coming up -- breaking economic data.

didn't you laugh, steve, when you saw it? it's funny, right? minutes away from november durable goods data. as we head to break -- >> there you go with the objectification again. take a look at u.s. equity futures. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the all-new fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. get 200 free trades when you open an account.

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welcome back to "squawk box," merry christmas on christmas eve morning here. we are less than a minute away from durable goods orders. take a look at u.s. equity futures to see how they're looking on this christmas eve morning. dow jones open up about 25 points higher, nasdaq about 3 1/2 points higher and s&p 500 up about two points, as well. rick santelli standing by at the cme in chicago. steve liesman is in the studio. on this morning. you're wearing a red tie. everybody here is ready for christmas. though i don't know what's going on with rick.

i don't know what you want me to say. >> she's wearing gray. >> i'm going to turn red if i keep listening to this evening piano music. >> i thought that was nice. >> all right, guys, durable goods number. all right. listen, november durable goods, we're expecting a lot better number than we had in october and the survey says we're correct! we are right on 3.5%, a big jump in headline durables. now, let's go through the internals. if we take out transportation, it's up double expectations, as well. up 1.2. if we look at that proxy for business and they're investing, i would be looking at capital goods orders, nondefense, x aircraft. that is up a very, very solid amount. it's up 4.5. if i look at orders instead of -- or shipments instead of orders, that's up 2.8%. it's very hard for me, gentlemen to poke any holes in this data

thus far. now, if a look at last month's, it definitely was exact mirror image opposite. we had all minus signs, but the minus signs have been altered a little bit, the original headline number has been chopped from minus 2 to minus .7. we've seen a positive number, x transportation, up .7%. it's not bad news at all. and, interest rates are going up, which in my opinion is never bad news. it's called normalization. and here we are at 2.96% and rising. we're over 1.70 on a five-year. and that 30-year, well, it's kind of sleeping, watching the walnuts and chestnuts roasting on the fire. because here it sits at .387, so the curve of the longest maturity continues to flatten. back to you. >> okay. rick, thank you for that. steve, you seem to think this is even bigger, bigger and better. >> one of the big missing

cylinders in the economy the past several quarters has been capital spending. it's been down for several months in a row, it's been perhaps a sign of lack of confidence on the part of business. they have much preferred to give back money in dividends. >> we had an economist on earlier who pointed to this and was very concerned about it. >> and do share buybacks. you're missing a big component of economic growth which is not so much the actual spending on business which ends up . up .2, .3, .4 on growth. there's a concept, supply creates its own demand. all of a sudden uh all the stuff around the factories and the jobs. if we can get this component going along with -- i know you were talking about this earlier, this big upward revision and rethink at the end of the quarter, doing 4% at the end of the year here. and you have government now at least flat lining instead of being a huge drag on growth. you don't have the tax increases happening. well, you know, my prediction,

which i'm going to run some time next week is that the stars align next year for the u.s. economy. i predicted at least .25%, 3% growth. next year, if you have europe, and tell me if you think i'm crazy here, if europe can do .5% or 1% and you can get japan doing 2% or 3%, this would be the best year for the big three economies in the world since 2005. i went back, you have to go back to 2005 to find a year in which at least one of those big three doesn't have a negative quarter. >> i think you have a big if -- >> steve, i thought you were keynesian, you're talking about a very supply side view. why don't we do things to try to -- oh, you -- oh. >> i went to -- >> oh, no, i thought you had gone -- >> i asked the guy there. i said, do you guys teach supply side economics? he goes, yeah, we teach supply

economics and demand economics. so there's both. >> no, there is both. >> there's both. >> one works far better than the other in terms of creating jobs, if you ask me. >> seems to me one of the reasons it's been weak, you've had a lot of hyper activity in washington. it's been nice in my view. i have a dear santa list for investors. one of the things i've asked for is actually less cow bell more capital spending, more keynesian types of approaches in terms of getting capital back into the united states. maybe a tax code repatriated -- >> you should air your grievance. >> this has been one of the things. >> did you see? rand paul did it. all right. can we -- can i show you? this is an actual -- >> capital spending up? was it up? >> up 2.8%. i was trying to figure out that's the best in how many quarters. but across the board, there's nice gains, communications up

3%, computer up 5%, transportation equipment up 8%. and a big number in aircraft. >> this jives with the consumer spending being a big upside surprise. maybe things are getting better. >> could be. i've been meaning to do a story for several weeks now. i never quite got around to where is the wealth effect from stocks because it seemed like there was a lot of wealth but no wealth effect in terms of spending. maybe we're seeing it now. i don't know, do you have thoughts on that? there's been a lot of wealth created in health and into the stock market. it hadn't necessarily shown up in consumer spending, maybe some of it's showing up now. >> yeah. i think the fed's approach, i think, has been to get asset prices up. so there's almost a trickle down monetary policy, if you will. housing in particular, i think, is really the way the mechanism through which they've gotten that going. i think you could say it's worked pretty well. but it's -- i think it's very imperfect, i would argue of getting the economy to grow. >> what do you think? next year?

good year? bad year? >> well, i think we haven't had all three of those developed economies firing on all cylinders because their banks aren't firing on all cylinders. i don't think it's going to be a good year for the european banking system and all their holdings. their holdings of southern european debt. i think in terms of japan, they learned from us. so i don't think that's going to turn out well. and to hear you talk about how the numbers are good and how raising taxes hasn't, you know, that hasn't come about. so obviously now think that's a negative. you know, i look at the freddies and fannies under the government's thumb, both houses and the president on hiatus. how apple or any of these big companies work if their signature product was failing and all the leaders were gone on vacation. having said all that, the economy looks like it's really improving. so the moral of the story is, it's improving despite all of

that. and i think all of those issues over time will slowly extract themselves. october/november data was good with the government shutdown. you see where i'm going here, guys. >> yeah. >> it's not due to, it's in spite of. in spite of. we all should have a merry christmas thinking about that. that it's the people in the country pulling the heavy loads that really are more responsible than everybody sprinkling the fairy dust. >> and weird things happening. you were mentioning obamacare and earlier we were talking about andrew's shirt and pajama boy. and this was an actual water cooler story. a couple of days ago, the young invincibles are who we need in health care. we need to get them to sign up. so a couple of days ago in an attempt to get the young invincibles to sign up, the obama campaign sent out -- tweeted this to all of the followers. wear pajamas, drink hot chocolate, talk about getting health insurance. and it was universally panned,

unfortunately. and people wrote in immediately -- >> it's pretty good. >> people wrote in immediately that andrew was dressed like pajama boy today. no one likes this ad, andrew. the liberals say it doesn't give anyone. and it was designed by the same people. >> i've got to get the smirk. >> the smirk. >> it was designed by the same guy that did the got milk campaign -- >> the milk mustache. >> and even people on the left said i don't think it works, there's nothing in it for me. there's nothing in it for the person to respond to. >> look at you, joe. >> you're looking good, dude. >> i like that. >> nice. >> you're looking really nice. >> i guess i can sort of -- >> you want to try the glasses on, too? >> i can sort of pull it off. >> you think the glasses help? >> no, you're younger. i'm not a younger -- >> they don't want me to sign up. they want you and the young invincibles to sign up. i didn't know what they meant by

pajama boy. apparently we have a guy in the control room wearing that shirt just by coincidence, too. i don't know who it was. but they told me they have someone -- oh, that's not -- no, no, no. >> that's similar. yours has green, his has more blue. >> yeah. >> so thank you for that. thank you for playing along. >> and you used her glasses, too. >> i did. >> there was a little bit of a resemblance there. coming up, a year of political turmoil ending on a positive note with a compromised budget deal. challenges will loom early next year. next we'll talk about the battles ahead in washington.

it has been a rocky year on capitol hill coming to a head with the government shutdown. what's in store for 2014? and how will it affect wall street? joining us now to talk about this republican strategist and founder and president of the polling company kellyanne conway and keith boykin is a former clinton white house aide. i made the joke too many times about how you're both on the same side. you worked with a republican and you worked with a republican. and then i keep remembering, clinton was not a republican, he seemed like one. >> well, he raised taxes. >> he liked the private sector. >> we all talk to the other side. >> and compared to 700,000

government jobs we cut during the obama administration. >> we have eight years of 5% unemployment. same as the bush years. >> this is why the other -- >> and we had higher taxes. that's my point. higher taxes, more government spending, more government workers hired. and we still had a robust economy. and there's this whole notion that somehow you can't create jobs when you have high taxes or when you -- not even that high, 39.6% top marginal tax rate. >> seems to be a different approach. >> well, compared to -- >> from day one. >> and when -- >> i don't think that is true. i think i think -- i worked for bill clinton. bill clinton's policies are virtually -- bill clinton's policies are virtually identical to the policies of barack obama, president obama, the only difference, really, is maybe in tone and style. he may not be as friendly and personable. >> that's important to be able to talk. >> you can't -- but he didn't -- >> palling around.

>> clinton didn't deal with the congress that was -- they were really adamantly against him. i remember newt gingrich and the group, they were much against him. but he didn't deal with a congress that is as against him as this one is. this is a congress, they passed fewer pieces of legislation than any congress in recent memory. >> when clinton was in the white house, we had a president who actually seemed to like people. so that is different. but these policies are incredibly different. and it's a matter of tone and style it's content. this president is making good on his promises to increase the role and scope and reach of government in all of our lives. there's no question. >> except we've reduced the role of government. >> they want more people beholden to the government, to think of it as a partner not opponent. and that's clear through obamacare through his attitude towards big business but small business. if you're an aspiring small business entrepreneur in the last five years, what is your

incentive to pursue that dream? who is going to write the story about all the small businesses that never started because they were too afraid under the obama administration. but all of this is why hillary clinton probably won't run and may not win. >> where did you get that from? >> because she's a little too much hillary and not enough clinton. look, bill clinton ran under the dlc, the mainstream main street democratic group that no longer exists. where are the blue dog democrats? there are 12 left, there used to be five dozen like five years ago. they're all gone, no pro life democrats. the democratic party has moved considerably to the left because of barack obama and it's an uncomfortable place. >> a pro choice, pro gay in the military -- well, he favored these things. pro health care reform, democrat who raised taxes who raised taxes. and all of those things are being vilified today. you know, president obama, his health care reform plan is actually more conservative than president clinton's proposed health care reform plan back in

1993. >> but they both failed and both lost the congress. >> well, it hasn't failed because if you look at the statistics. >> it's not a failure? america thinks it's a failure. >> the most recent poll from cnn shows that 50% of the american people either support obamacare or want something more liberal. only 43% want something more conservative. >> what about the actual number of people getting insured? >> well, if you look at the statistics in massachusetts when they tried romneycare. >> i'm talking about obamacare. >> i'm using this as a barometer. you have to have basis of comparison. in massachusetts, the vast majority of people who signed up in the very last month. and we've seen exponential growth in terms of sign-ups in the past few weeks. >> well, there's nowhere to go. anything times zero is still zero. >> isn't that obvious? >> are we going to hit the 6 million? >> i don't know. you know, i think we might be a little shy. we might -- who knows. >> a little. >> i can't predict. i'd be speculating at this

point. >> thank you. >> but i think the point is -- >> if i told you the number was 3 million, how would you feel. >> i think it has to work for the insurers and the american people. >> he did the 50% number. >> 50% what? >> i don't know. what did you say? they like this one -- >> all right. >> at the same time, same cnn poll shows 35% support the law compared to 45%. that's a new low. you can add in or want something more liberal. you guys are quick with all the different -- 35% is not a success. >> no, but you can't judge a success based on -- >> entitlement people don't even want. >> not necessarily true. they do want the elements of it. not even necessarily that. well, you're throwing so many things at me, i guess i'm not supposed to be able to respond. i just feel like -- >> you're too smart and too noble to be defending obamacare this way, though. >> that's very nice of you,

kellyanne. i'm too smart and too noble. i'm too smart and too noble to defend obamacare. >> it's not indefensible -- >> listen, no question, and we want them to get it but they're not going to get it -- >> we agree. >> they're not going to get it under obamacare. >> except for the 500,000 who have. >> what about the great idea that has great amount of credibility that president obama is repealing pieces of obamacare, just not doing it with congressional blessing. he's not doing it legally. >> are you talking about delaying different parts? >> he's delayed -- 19 different delays and waivers. you have a majority of americans saying what's the rush, get it right, iron out the details. you have a plurality of democrats questioning whether it's going to work in the current form. what is it? something this massive, let's get it right. >> or medicare or any sort of major entitlement programs. well, look -- >> bipartisan support in the congress -- >> well, let me finish the

sentence and add it to that part. if you go back and look at those programs. when they were introduced, they were very unpopular. they were not nearly as popular as they are today. it takes some time for any major program to roll out and be implemented to the point where people understand what it is. and in terms of the bipartisan support, this as i pointed out was a much more conservative proposal than president clinton's health care plan in 1994. and yet, he tried everything he could to reach out -- >> more happy music. >> i feel like i've been talking too much, but the reality is, there's a lot to say when -- >> let me see, one, two, three, four -- come on, and you still were -- definitely held your own. andrew, you were, i don't know. you're still thinking about pajama boy. >> you know. he did a very nice job. those were both good. >> and i'm too noble? >> too smart and too noble. >> i should know better. >> to defend obamacare like that.

>> he's always good. love it. next, we're going to see on msnbc going, you're too smart and too noble. he's going to use that. >> i'm using it on thursday with you. coming up -- >> i'm not too smart and too noble. >> that's the point. >> just because you say it, doesn't mean it's true. coming up, your tech outlook for 2014, the sector showing strong growth year-to-year. >> there it is, with the guy, andrew. pajama boy. . . ♪

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2013 was a good year for the technology industry. so what does 2014 hold? jon fortt joins us with his predictions for tech. how did he do with 2013? jon predicted apple would tweak its product. that was correct. finally, john predicted a shake-up in the industry with barnes & noble, hp, nokia most at risk of crumbling.

he was also right. jon was 3 for 3. let's see what 2014 has in store. >> 2014 should be a big year for wearables because we should expect apple to finally jump into the game. yes, we've been looking for certainly like a iwatch from apple for what seems like years now, but since ipod revenue is now below 3.5 billion a year, it's time for apple to jump into the game. >> remember that movie "reservoir dogs" and three men are pointing a gun and it doesn't work out so well? that's how it is, someone will take a fall and it won't be pretty. >> in terms of microsoft, new priorities and perhaps spinning

off some brands. expect marissa mayer to be first in line to check out that particular asset. >> make sure to tune in throughout the week for more predictions and also on the web on cnbc.com. >> coming up, jason's top requests for the markets in the new year. we're back in a moment. >> announcer: no "squawk box" tomorrow, we're off for the day. but don't feel too bad, the market's closed anyway. plus jobless claims data and a special on retail. and we'll pose the question heard 'round silicon valley. will the next microsoft ceo be alan mulally? we don't know yet. but we'll talk to a guest that can give us a clue. we're aig. and we're here. to help secure retirements

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let's get back to our guest host. we've been talking about his wish list. first on his list. let's cow bell. >> i got a fever.

and the only prescription is more cow bell. >> more monetary policy and more fiscal policy. >> right. this is something where i say -- one of the problems i have with ben bernanke, if i can say this, the good news is he kept us out of a depression. the bad news is monetary policy has created such a big figure leaf. the administration and congress have not done anything affirmatively to provide for growth. >> they're on opposite sides of the policy. >> i would say next year the administration and congress are not going to have that luxury because the monetary policy is not going to be as supportive of the budget -- >> we're just going to be on hold. >> this is a wish list. i'm not saying we're going to get it. >> i wish we'd do tax reform -- how many billions or trillions over? >> over a trillion dollars, 1.2

trillion. >> tax it at 15%, andrew? can we do that, please? >> it wouldn't hurt. it wouldn't hurt. >> for the holidays. a little stocking stuffer. >> and i'd like to see some sort of regulatory reform to spur growth. >> thank you. merry christmas to you and you and you and you everybody. >> and to all the viewers have a great christmas, enjoy your time off and make sure you join us on thursday. "squawk on the street" begins right now. ♪ ♪ good tuesday morning. merry christmas eve. welcome to "squawk on the street." i'm carl quintanilla with simon hobbs and kayla tausche at the new york stock exchange. cramer and david are off today. a slew of durables, a very night beat today. bond market closes at 2:00 p