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.m.

eastern time. and in europe some markets have already closed early. the nikkei did hit 15,000 briefly for the first time in six years. our road map begins with holiday cheer for the market. it might sound like a broken record but once again stocks set to open at fresh highs. >> today is another important day for retail. some stores are staying open for as much as 100 hours straight to try to take advantage of the late rush. but with new data showing a drop in sales, will those extra hours be enough to boost holiday totals? >> and what was the most important story for your money? it's not over yet but we've got that answer for you. >> and we're joined by dennis berman, business editor and columnist at "the wall street journal." >> the bulls are in a pretty

jolly move this christmas eve, nasdaq closing at its highest level in more than 13 years, all three major averages posting their strongest four-day winning streaks in over two months. for more on this record market rally, let's bring in paul hickey, co-founder of spoke investment. guys, good morning. good to have both of you. >> good morning. >> hi, carl. >> you can't deny it's been great but we are, in your view, getting into the territory in which we would potentially overshoot. >> i think so, carl. i mean, i don't think necessarily valuations are egregiously rich at this juncture. we trading at about 15 times what consensus estimates are for earnings in 2014. unless we see economic activity pick up substantially, we we have as a base line forecast it will, if equity prices continue to power higher, particularly at the pace you had mentioned we've seen in the last couple of

weeks, we're clearly in overshoot territory. i worry that makes us vulnerable to a corrective phase, which would be natural and welcome but nonetheless, we're overdue. >> can that happen, paul, in an environment where gdp does have a forehandle, where these durables this morning come in well? the mortgage apps aside, which were a bit of a miss, can the data keep track with what the market's suggesting? >> i think to mark's point, we can't keep going at this pace forever and ever. but the valuations, we've gotten a little bit above average on valuations so far this year. but in bull markets you don't see bull markets peak at average levels. they start off overshooting to the down side cheaplyle have you'd and overshoot to the up side. the way we're set up now, we would expect to see a very good year again in 2014 provided things stay the way they are but a year is a long time. so we take things one step at a time.

>> what do you mean provided things stay as they, paul? the most obvious thing to say is the market is full of optimism about the economy, a solid ground there, and yet the bull market as yet has not sold off to a level that the rates rise to slow down that economy and to cause concern. would that be the cutting edge of your concern? >> well two, things that we're watching that aren't of big concern yet but if they keep up would be concerning to us are jobless claims in the last two weeks have really spiked higher. that's been a great realtime tracker and correlated very well with the market. so seasonal distortions have been attributed to that. so we want to see how that smooths out. but also while we've been seeing a real flattening of the yen between the 10 and 5-year treasuries, if you look back over the last several years, that has been certainly that led to short-term market pullback.

so every time we've seen a narrowing -- a big narrowing like we're starting to see now in that curve, it's been a little bit negative for the market. so that's something we want to keep. >> positive earnings from corporate america, do you think we'll get that next year? >> i do. i think we're in the midst of the synchronized growth, accelerating, 85% of the world's gdp is not only boasting growth but is picking up. it's not a stretch to see we have better earnings in 2014 meaning upper single digits, maybe double digits if i could get that ambitious. as a consequence, that is going to be the driver for equity valuations and prices next year, not multiple expansions, which was predominant in 2013. >> the cover of "usa today" this

morning at least. this is on the cover, above the fold. santa claus rally is real. i wonder the optics, retail participation, investor sentiment. how will that alter the market in 2014? >> that's a good point. you have instances where it's gotten overbullish. and they've only been above 50% a few times in the past five years. when ever we see a single-digit pullback in the market, that sentiment does really turn on a dime. >> so you view this as a real rally. the median over the last hundred years is somewhere around 14.5. there's enough organic real growth and not government-created growth to

sustain something in 2014? >> well, certainly from our -- i'm sorry, go ahead. >> okay. >> i would say certainly it will allow for risk assets to perform reasonably well on the back of actual economic underpinnings that are more fundmentally found and not induced. and like in japan as carl had noted hit 16,000 today because i think there we can see not only the fiscal and economic reforms getting some traction but the growth being encountered in those areas will bode well for equity prices. on balance, that's where i think again investors will be rewarded even more so than u.s. equities. though u.s. equities will be

better than bonds and cash in 2014. >> mark, paul, had a wonderful holiday, guys. >> thank you. you the same, carl. >> it's not what retailers want to hear. shopper track says retail brick and mortar traffic decreased 21% from where we were a year ago. bad weather prevented many from getting to the stores. target saw traffic fall 5% last weekend. this as the retailer deals with fallout from a massive credit card and debit card data breach. at a time, dennis, when consumer sentiment came in strong yesterday. >> that 20% number doesn't seem right. >> it's scary. >> it's such a huge drop. >> what we've learned is there are so many gimmicks the retailers are putting forward. black friday really became a

week of sales. we've seen so many promotions online but when it comes down to it, the wallet for this part of the consumer spend is really -- people are willing to spend more than on some of the retail buys. >> even in the bubble that is manhattan, there are an awful lot of restaurants near me downtown that are closing down at the moment. it's totally anecdotal but it does indicate the way people spend is changing dramatically. electronics clearly spring to mind. >> the spend to electronics as opposed to clothing and other nondurable goods, it's really picked pup. >> maybe we've reached the fulcrum where traffic is no longer a proxy for actual sales. you can't judge a book by it's cover.

>> even the com-score sales are down. that's online. >> but not down 22%. >> i find that number hard to believe, 22%. but no doubt, right? we all know more shopping is going to online. it's a relatively small percentage, 6% overall. >> it's okay if you think they're holding their margins. it doesn't look like they're holding their margins where volume is down. if you said volume is down because we're keeping our prices up where we're making decent profits, that's not the impression you get. they're cutting cost as deflation -- >> and yet look at macy's stock, as one sector of the retailers, it's been doing incredibly well. we've seen jcpenney has its problems, sear his its own problem. i think you can draw kind of a shrug which it's not terrible,

it's not great, it's somewhere in the middle, which doesn't necessarily make for great tv. >> retailers are trying to lure some of you procrastinators. how big a boost will chain stores get from the last-minute holiday rush? we'll talk about that. plus facebook and twitter shareholders, man, do you have reasons to smile this year. did you see the action on twitter yesterday? unbelievable. we'll look at whether they can continue to rally. one more look at futures on this christmas eve, an abbreviated treasures. traders will sing "wait till the sun shines, nellie" at 11:00. we'll be back in a minute. of unsurpassed craftsmanship and some of the best offers of the year at the lexus december to remember sales event. this is the pursuit of perfection. at the lexus december to remember sales event. [ bagpipes and drums playing over ]

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♪ oh, where is santa claus, i look for him because it's christmas eve ♪ >> welcome back to "squawk on the street" on this christmas eve. retailers are pulling out all the stops on this final shopping day before christmas, somewhere in the middle of a marathon staying open for more than a hundred hours in an effort to lure those last-minute shoppers but will the move pay off? sarah, what are you seeing? >> reporter: well, kayla, these crazy shopping hours are a whole new strategy for the big retailers and believe it or not, we were here at 3:00 a.m. and people do come out in the dark,

straight to this toys "r" us behind me and they don't leave empty handed. turns out that toys "r" us is not alone. it has been open for several days, select macy stores have been open since friday and kohl's has always been open since friday. the question for analysts and everyone really is is it going to pay off? >> there will always be that one-off person that has free time at 3:00 in the morning but in general i don't really think it's helping retail. it's adding labor hours and potentially hurting margins. >> another analyst agreed. they're not convinced it's going to move the needle on this holiday shopping season. the problem is retailers are dealing with a number of headaches in particular this year. number one, the consumer is pretty sluggish, traffic down 20% in the last week versus last year. there's another quirk this year

and that is six-day shorter retail holiday season between thanksgiving and christmas. the retailers will have to figure out a way to squeeze the same number of profits out of less time. and online, double-digit growth online. brick and mortar has to compete with that 24/7 shopping model. >> if you're an employee of toys "r" us and your employer says we're going to be open, do you welcome the wage? >> i talked to some employees, they were happy, they were wearing their santa claus hat and i think this is their marathon. the lines are starting to form. will it be enough to add enthusiasm to what so far seems like a lack luster season for brick and mortar sales?

>> luckily there is a lyight at the end of the tunnel for them. >> for the latest in the last-minute shopping. let's bring in our guest analysts. should we worry for the retailers here? >> yeah, i think it's a fair point that was just made, the notion between sales and profits now. we have the shorter holiday period to sandwich the same level of sales. when you think about from the profit perspective, you can see promotions rampant across the mall. that's across the line. >> can you talk about margins? these are highly sophisticated retail teams. the fact there's six days left for shopping, they've seen that for a long time. >> you have price and you have time. so you're pulling your price,

you're rolling out promotions and you can go earlier and extend it. we've seen headlines that black friday used to be a three-hour period. it's starting earlier and going later. you want to get the market share. when i'm looking at that, you look at a gap out there talking about we went earlier, we opened up earlier and we have more promotions than we had last year, that should drive that market share dollar and then you get the holiday sales piece. you look at the teen retailers, the promotions are there, you're not seeing those dollars flow through as much. the holiday winners will be a sales line winner. i don't know that anyone will say i'm really ecstatic at the price at which i told my goods. >> ed, what are you telling clients? >> i would tell you we believe the high end continues to be very resilient. we look at a high end like tiffany where they don't discount and sales trends have been very, very strong.

the teen space you're seeing rampant discounting, you're seeing a teen really focused on their tablet and new game system and, frankly, they're not making that clothing purchase. >> we saw one of the most interesting ipos of the year was zulily, a retail company with clothes for kids. tear a they're a $10 billion company, which is rather shocking. are they benefiting more than the rest of the not have. >> the consumers need a reason to shot. one of the reasons that zulily is so compelling is people feel they need to make that purchase or the item will go away. >> can you do that with bricks and mortar? >> i think nordstrom rack is a great example of a retailer where if you don't see it there at this moment, you don't purchase it there, it may not be there later on. that's where nordstrom rack and

t.j. max have been very successful in that market. >> how do you feel where inventory is being put to local brick and mortar stores and sent out via online channels. is that effective or not? >> the sales levels have gone from 10% to 15% across my universe. you have the ability to categorize where your inventory sits. you can improve your mark down levels. any given store is never going to be as effective as a d.c. -- >> d.c. distribution center. >> sorry. the people working in the stores have to learn how to ship out and you think about the fulliliment that companies like amazon or dedicated e-commerce will have, it's never going to

be as strong. >> what games do you like at the moment? >> i think gap could be a winner and signet jewelers is going to be a holiday winner. >> guys, have a great holiday. simeon and ed. >> coming up, what to expect from today's trading session. take a look at futures. the dow is up five of the past six christmas eves. we'll see what this brings when "squawk on the street" comes back. ♪ ♪ e and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me.

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we're just a few minutes before the bell on this abbreviated trading day. art, we saw durable goods so good today, some people calling it a christmas miracle. what will that do for the market today? >> it going to probably help. we're gearing up for the santa claus holiday. it's got the yield on the 10-year inching up again. it's up above 2.95. that may get the market's attention. probably not with the holiday spirit but if it gets above 2.975, then i think it might put some pressure on equities. >> santa claus rally, average of 1.6% to the up side in most years since 1969. what do you think we'll see between now and then? we have some specials of economic data, we have some

retailers that are going to be coming out with holiday season numbers. what are you looking for? >> well, i think we're going to have a pretty upbeat mood for the market, we have skeleton crews around but i think that will favor the historic santa claus rally kind of thing. the grinch that might steal christmas but more likely that will steal part of the new year is mortgage applications. and they, as rates have been inching up, they have been moving down. and the last numbers i looked at, the refis were as bad as they've been since lehman was falling apart. >> doesn't it seem bernanke has done a pretty good job of directing the market that there's going to be some things out of the fed buying bag and rates inch up, isn't that what he's been communicating all along and it's a normal process? >> he's been trying to restrain

that with this idea that we're anchored at zero. he's having some success but the success is growing limited. i wouldn't want to call him the bond vigilante. we have some inching up even the short-term rates here. that's going to be a problem for him and for yellen. >> when you think ahead to next year, the rise in rates, what are you most thinking about? >> success. we have created billions of dollars, which is lying fallow in the fed's vault in the name of the various banks. if they begin lending and we begin spending -- >> develvelocity. >> velocity in the money supply will get the fed in a minor panic and they may accelerate themselves that will be disruptive to the market. >> all right. >> and one last point for the viewers, cashin's annual christmas poem, this year's

version is on the cnbc web site. watch it before you have anything to eat. >> we'll hear your singing tones at 11. >> yes, nellie will be there. >> for those who can't see, those are beautiful ornaments. >> opening bell just minutes away. i[ male announcer ] once, there was a man

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[ opening bell ringing ] >> and there's the opening bell. over at the nasdaq, the salvation army this morning, of course a group you know well if you have walked a sidewalk in this country in the past few weeks. of course we're coming into the open with a record high on the dow and s&p. 73 point gain for the dow yesterday. the nikkei if you missed it overnight in japan did cross the 16,000 threshold for the first time in six years before giving a little bit back. retail is going to be the name of the game once again as we watch, among other names, target, which is now starting to meet with states attorneys

general, another consultant coming in and it was down about five over this past weekend as they continue to pay the price for that breach. >> holiday nightmare for target, no doubt about it. when the attorneys general met with the company, one of the reports said target wasn't able to share information about the cause of the breach. you don't know whether that's because they don't know or they can't say. that's really unsettling this time of year. >> that chart has not fallen -- for all the headlines and bad news, it's still flat for the week overall, that's a remarkable result. >> we've seen so many breaches with big headlines and it slowly fades away and gets back to business. >> the tjx cost -- >> $256 million when you weigh all the lawsuits that came afterwards.

>> but totally manageable in a sense. people forget. >> the state attorneys general adding so much value by the process by wanting to meet with the company. >> but presumably we'll go to chip and pin where you put your smartcard in and you have to enter a pin number then there and. that's a lot of hardware somebody is going to have to pay for. >> it should be net positive for the retailers who presumably will limit their fraud. >> that's true. >> elle brand up on the s&p. and bitcoin? >> yes. >> he hasn't heard anything, he's not saying anything. >> retail performing relatively

well here, ralph lauren, the gap and others close to the top of the list. >> and also mentioned earlier that gap will be a winner. >> and la quinta has filed confidentially for an ipo. if you're filing confidentially, you have less than $1 billion in revenue. hilton raised about $2.7 billion since its ipo. >> blackstone announced it's going to sell out its 50% share of the broadgate center in london in the financial district. so blackstone is clearly setting itself up for exits now or down the line. because in the case of hilton, it's a majority locked in at the moment. it's a question of releasing stock it wishes to. >> the deals that were struck in the 2006 and 2007 time frame,

blackstone went public right before the crash happened. the stock is up almost 100% this year. it doing quite well largely because of its real estate portfolio -- >> that's the irony of private equity in a bull market. the s&p up 28%, the best since 1997. these firms are selling everything at the top. they're not buying anything, not spending the money they're sitting on. >> refinancing has been key as well. they've made a lot of money by -- >> one of the great non-stories of 2013 is the success as it were survival of one of the worst lbos of all time. it's been quite a ballet dance, if you will. >> oh, well done. >> see what you did there. >> the viewer has little idea what you're referring to.

>> there are pirouettes and spins and turns behind us. >> watch tesla getting up above average today. we're still awaiting conclusions from nhtsa regarding those fires. and today in "usa today," a 20, maybe 30-inch story citing an analyst i've never heard of about why apple should buy tesla. >> potentially an icar. they're saying the report came out in october. but it is a giant headline "apple should buy tesla" analyst says. >> apple i'm going to predict will not buy tesla. >> well done, dennis. >> you heard it here first. >> i think there's something interesting in that idea, which is apple going to move deeper into other things? we've seen so much attention by the car makers about getting electronics into the car. it's an interesting idea without

buying tesla. >> my idea would be health and wellness, that would be my assumption as to where they go. >> owe a new fit bit for the -- >> they're saying you can monitor your health at the time moment. the question is what do do you with that? how can we change your behavior or change your environment with that? what is the next bounce of the ball in that form of technology. >> before we get to bob, you can't ignore twitter today. this is another 4% move. 66.65 the latest print. dennis, clearly people are going to want to show they own this at year end. >> you spend a lot of time on twitter. how does it feel to you as a user? does it feel effective? >> it's always effect effective. it feels free. that's the thing. but i'm beginning to see more sponsored tweets. i imagine that's going to be the story for 2014.

>> i actually haven't even noticed it. so perhaps that's as effective as can you get. >> what was implied in the question, though. you have in theed it? >> i have in theed it the functionality has gotten better and the number of tweets has improved. i think 2014 the question is is it truly effective for our business, if you're sitting there and doling out dollars for your ad budget, of course you're going to give some to twitter. that person spending that money wants to know what am i truly getting for it. >> jack dorsey, one of the co-founders of twitter getting named to the disney board. he'll stand for reelection in march. his perspective on mobile payments is really more what they're after. i just went to disney world a few months ago with our kids. there's a new wrist band they're testing out in a pilot program, lets you pay with a single wrist band in the entire park.

>> do you spend more money when you're using that? >> of course. of course. you don't need to worry, you just flash your wrist and it's taken care of. igriss pay as well cut 50% because a lot 49 increase was enough. >> he's had some incredible runs over the last few years. i think it was 36 million last year? >> it was 34. >> 40% of shareholders voted -- nonbinding vote but voted down his pay package. >> it is a huge salary but a lot of people own a lot of money in those other media companies. >> eigert is always up there.

>> they are unwinding ceo packages because of shareholder pressure. >> let's go to bob pisani on the floor. any ballerinas there? >> they were just here. they come every year. the guy with the tin soldier guy, he freaks me out a little but all the others are darling. you take a look at what happened over in asia, nikkei, six-year high. japan, the money is going into there like crazy. you see china drop like 5% in the last two weeks on concerns on the money supply issue over there. it's stabilized the last couple of days. london is going to close early. germany is closed, switzerland is closed, italy is closed. just about all of europe is closed. we're going to close here at 1:00 p.m. at the new york stock exchange. you're talking about dilemma and retail sales, we've seen

spending ii ion autos and applis but not a whole lot else. from the point of view from the broad investor, it hasn't mattered this year. if you look at the spider xrt, the etf that owns most of the retail stores is up 40% this year. if you want to own autos broadly, the carz is up 32%. from the point of view of the investor, it hasn't really mattered. we keep talking about all these gains in the s&p. there hasn't been any discussion about what's going on in the bond funds. just look at these numbers and tell me whether there's been a great rotation or not. long-term treasuries down 15%. this is not including dividends. the tips are down 10%. even munis are down 6%.

everyone that came out and said sell high yield, they've been wrong. most of the big high yield funs, the hyg, put up the one-year on that, they're all basically flat on the year. and remember they're returning about 6% right now. so on the whole, dividend adjusted, the high yield funds are in the black so far this year. about this great rotation debate, i think we've settled this. we're clear i seeing rotations out of bond funds and into stock funds. look at the out flows we've seeing, look at asset undermanagement. treasuries have seen 6%. so their assets under management in the funds down. gold and silver have had huge outflows from their particular funds. now look at the areas where we've seen inflows, where assets under management have increased notably. japan. huge increase in japan.

a huge success earlier this year. european has had inflows into all of their funds this year. high yield continues to have in flows and u.s. equity what modest inflows. so we are seeing outflows out of bond funds but not out of high yield bond funds and we are seeing inflows into stock funds but it's mainly into japan and urn into u.s.-only equity so far. very important distinction and very interesting rotation going on. buys back to you. >> let head over to the nasdaq. sheila, good morning. >> reporter: good morning. santa claus making a visit to the nasdaq yet again. the index is opening at a fresh 13-year high. the biggest winner on the index is tesla. after it got its safety affirmation concerned with that five-star rating. apple is a stock everyone is

talking about. it's one of the reasons we saw the nasdaq push high they are week. today it is taking a little bit of a breather. i want to quickly mention amazon, facebook and google, three stocks that have recently hit all-time highs, a lot of talk about how it's pushing higher. facebook taking a bit of a breather. >> and i want to mention a satellite technology company, calamp corp did come out and report earnings, it beat and could be what to expect in upcoming earnings. >> thank you, sheila. a lot of upbeat data this morning. for that we want to shift to bonds and the dollar and see how they're moving. rick, what are you seeing? >> what i'm saying is higher rates, definitely higher rates.

let's look at the whole curve and why is this important? because the hammer and the sale. feds anchoring those short rates to the wall and they're promising to use bigger nails and make it mang there longer. but a small issues, the market isn't buying it. they're joining me in a three-month yield. look at 5s. look at 10s. let's open this all the way to 2011 because we're a whisker away from visiting that as our latest comp. let's look at the 30z. they're much cooperating as much. much of the steepening was angorred to tango anchored to the 30s. that's because all rates are participating tonight. let's look at the bund overseas. year to date, can you see same pattern is kind of an

intermediate part of the curve. if you look at the gilt, that's 10-year. theirs is a whisker under 3%, ours is a whisker under dollar yen, i like to talk about the nikkei. in the 8 0z, i was buying puts on it. in five days we'll celebrate the anniversary of their all-time high, 1989 december 29th. you know what that number was? 16,000. look at all the developmented and their historic highs. the dollaren tins to comp back about 62 months. back to you, buddy. >> rick, thanks a lot. >> coming up, we'll get the investing edge on energy

straight ahead. plus, as you know, netflix has been on a roll and is now hoping to get a turbo charge with a christmas eve debut of its first dreamworks animated show. will netflix's first ever original series for kid pay off? "squawk on the street" will be back in a minute. ♪ ♪ 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. where does the united states get most of its energy? is it africa? the middle east? canada? or the u.s.?

the answer is... the u.s. ♪ most of america's energy comes from right here at home. take the energy quiz. energy lives here.

you might be busy with some last-minute shopping on christmas eve. others are busy with last-minute repairs to the international space station for example. two engineers are wrapping up to repair part of the cooling system. this is the second space walk in history. it came after some of those lines shut down. a six-man crew had to take down a lot of the nonessential equipment, including their experiments. can you imagine doing this 260 miles above the earth? >> "gravity" movie of the year. i loved it. >> we'll keep you posted as to how the space walk goes today. >> let's look at the commodities. hey, sharon. >> happy holidays to everyone.

some not so happy news to drivers. glass prices climb to the highest level sense september 9th this morning and that means prices at the pump are rising, too. $3.26 is the national average, up about 4 cents in the past week and a penny higher than christmas eve 2012. oil prices are also on the move but we are getting relief in the natural gas market. after climbing to the highest price since yesterday, we're seeing natural gas prices pulling back here but only fractionally lower. back to you. >> thank you, share. all next week we'll inevitably be looking ahead with ideas that can make you money. jackie deangelis.

>> reporter: in 2014, all eyes will be on the rails. ihs estimating by the end of next year, rail capacity could be enough to handle 700,000 barrel of crude, compared to 150,000 barrels today. rail transportation makes a decision on the keystone pipeline irrelevant. >> the recent deal struck between iran will ease sanctions and bring oil back on to the market. this is the first step to a lengthier process that will include more negotiations and overcoming technical challenges to overcome production. >> and keep an eye on dow component exxon mobil. it's stock has risen over 10% to date. it continues to buy back stock to the tune of $3 billion a

quarter. look for exxon's stock to continue its rise but not necessarily outperform the competition. >> and, jackie, aside from exxon, we we know has had an amazing couple of weeks here, what other stocks are people talking about for 2014? >> goldman sachs calling exxon a buy. they say the company will capitalize on greater projections and they're saying this is an inflexion point for some of the super majors. that said, keep an eye on some of the other big companies well, analysts saying they like chevron for similar reasons. also the services stocks, halliburton's last investor day focusing on opportunities in deep water and also mature fields. that is the key here. those companies that can be more efficient about getting oil out of the mature fields, they are going to do very well. also the energy sector not as sensitive to higher yields, so that's an important this evening to consider as well. kayla. >> thank you, jackie.

when we come back, hear what dennis berman thinks is a top business story 2013. keep it here on "squawk on the street." announcer: where can an investor

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having a nice off-camera debate about the best business stories of the year with dennis berman of "the wall street journal" who joins us here at post 9. i thank you for that. >> sure. >> most important business story, maybe not the most exciting story but the most important is the rise of natural gas as it's permeating different parts of our economy. we're seeing it time and time again, talk to ceos at the wall street journal, they come in and say, hey, natural gas is reordering how we think about our manufacturing and cost structure, we're bringing more things on shore. president obama and congress talk about how they're going to change the economy. they're not really doing anything. it's the real world, natural gas coming in to different ways we did not expect. low rates certainly help. one of those things that bernanke doesn't get a lot of credit for, the ancillary effects of low rates. >> sure. >> i would go with like the

polarization of wealth, long-term unemployed, things we're not going to know how they affected us for three to five more years. >> that's a good point. >> i would go to media, tech, netflix and monetization that really came into their fore this year. >> i would say the breakdown in jcpenney, chase and blackberry. >> oh, i hope jamie isn't watching. >> coming up on the program, we'll bring you breaking news on new home sales, plus market reaction and staples co-found are and ceo will also join us live as we head into the holidays. just waiting to be found. tdd#: 1-888-648-6021 at schwab, we're here to help tdd#: 1-888-648-6021 bring what inspires you tdd#: 1-888-646021 out there... in here. tdd#: 1-888-648-6021 out there, tdd#: 1-888-648-6021 there are stocks on the move. tdd#: 1-888-648-6021 in here, streetsmart edge has tdd#: 1-888-648-6021 chart pattern recognition tdd#: 1-888-648-6021 which shows you which ones are bullish or bearish.

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welcome back. new home sales for november down 2.1% at 464,000. that's of course seasonally adjusted annualized clip. just to give you some stats here, that 464,000 now becomes the best number -- yes, the best

number going back all the way to, well, let me rephrase. 444 ends up going to 474, which is the best number since july of '08. so this number, even though it's down 2%, would have been without the revision and i'm sure diana olick will give us all the details as another wild revision in the rear view mirror makes comping questionable. diana? >> reporter: rick wilde is putting it mildly. we were looking for a downward revision. october home sales were up 25% from september. so we thought it's got to be revised down. now we're seeing the 444,000 from october was revised up to 474. you have a 2% drop now. it doesn't matter because of this huge revision from before. so we're seeing some very robust home sales. remember, new home sales numbers are based on signed contracts, not closings. so these are folks in november who went out, signed the

contract on the home. we know cancellations are still high but this is still a very solid number. we're seeing 4.3 month supply of new homes for sale. that's low compared to we had a 4.9 month supply in october. the lower that gets, the higher the builders are going to push prices. up 10% we're hearing year over year for november home prices. the builders have been pushing prices very high and some have said that's going to back off on the sales because we can't see prices gain quite so fast when we're not seeing income growth as much as we're seeing new home price growth. in existing home sales market, we've seen those prices start to ease up, those price gains. again, these are very strong numbers for the builders. back to you. >> it does explain some of what we have in mortgage gaps. durables were out today, far exceeding expectation. steve liesman has more on that

back at hq. steve, a clean beat? >> i think so. it's possible there's some tax-related end of year stuff, but not in the bulk of the report, which is what's happened with aircraft. this is another report suggesting stronger growth in the fourth quarter like you just heard regarding housing and better than economist himself originally expected. 3.5%, blowing out the expectation. ex-transportation is still up, biz investment up 4.5%, that's strong and shipments up 1.8. gdp is shaping up to suggest real growth in the neighborhood of 3% in the fourth quarter, that's john ryding of roq. aircraft up 19.8%, autos up 3%,

machinery 3% computers up 1.7% and the back log is 1%. and investment will continue to be a modest positive contributor to growth according to steve richard. and this is changing the whole idea of a fourth quarter slofdoslo slowdown. here are the gdp numbers. some numbers were even at or below 1%. looking hard to be that low, even if there's a reversal of the inventory build in the third quarter. in the economy is strong, it looks like business spending will help as well. we only have two months of data for the quarter so december could yet be weaker. so far it's looking like the second half acceleration that some have predicted. that provides good momentum

going into the new year. kayla? >> from your experience, how do we area what you're telling about this strong data, better than expected, driven by the consumer and all the anecdotal stuff coming from the shopping season at the moment that floor traffic is done 22%. how do we square those things? >> that's a really good question, simon. our all-america survey looked for a decline in holiday spending. it could be it's happening in areas that are not traditional holiday spending. services have come back pretty strongly and autos have come back pretty strongly. that could be one aspect the other thing is the surveys not picking up what's happening with the consumer yesterday. we had pretty strong wage growth yesterday in personal spending area and we've been looking for the wealth effect that's been created in stocks and house

bei -- housing, perhaps we're seeing it right now. >> robert pavlec and robert join us. robert, we saw a blockbuster number on durable goods, new home sales don't look so bad. what do you make of all of this? >> you really walk away with the sense that the economy is improving are here domestically and globally. there's one of the reasons you're seeing the stock market improve, especially year end. you look to 2014, i think you'll see the trends continue but i think there's a point at which we reach that the investor is going to try to start to lock in a little bit profits. profits that they may have delayed in 2013. i'm not saying you're going to see a major selloff, but i think

for the average viewer at home the retail investor, you really want to have a little bit of cash on the sidelines and make the most of it should the market give you those opportunities. i do think that the market does provide a good return next year but i don't think it's going to be the straight up 30% we got in 2013. >> steven, what do you think the culprit is on consumer spending? we saw a good number for november but retailers seem to be taking a pause when it comes to the holiday season. it seems consumers don't have the money to buy those small ticket items. how do you square this? >> there are two things going on. one is financial engineering with how low the level of rates are, especially in the 2 to 10-year sector. gm moved to try to get out of its bankruptcy and fiat moves to complete its deal with the

united auto workers on chrysler. in addition to that, you've had a lot of retailers who were caught with inventory in the third quarter who have been going out of their way to push that inventory out the door. that goes right back into what you're seeing in terms of earnings where earnings are aren't doing particularly well. margins are what's being squeezed and that's what came through from ford in their announcement of 2004. it's their margins causing them problems in 2014. they've had a heavy discount to keep up with gm and chrysler. >> we're looking at the 10-year yie yield. is there a number at 2.97%. >> once you get to the 3% level, we stalled out last time at the

3.10 level bush it, but it's th year levels that are important because that's where the consumer spending is created. as we see the push up into the curve and i think it will continue to say you nope what, the fed is going to taper by $10 billion at each meeting, i'm not sure that they will but the markets will continue to push up those front end rates and that will damage the ability to have financial engineering stimulate this economy going forward into 2014. i think the first half of 2014 will be weaker than the second half of 2013. >> robert, the takeaway that most people will have from watching the television time and time given, reading the newspapers, is that there's an awful lot of people that seem very positive about next year. it's not going to be as good as this year in terms of stock market action but still almost

to a man or woman they seem positive. as an experienced player here, robert, what do you have make of that? do you go with it or do you say usually that leads to a fault? >> you don't want to be a member of a club that wants you as a member. you have to understand that everybody being so positive, i think it's a reflection of being sort of fat, dumb and stupid. we all didn't become experts and geniuses overnight in 2013. there's a reason why the market rose up in 2013. the bottom line is it was really the only place continue to vest. for 2014, i think you have to be optimistic but cautiously so. you know, the economy is improving. interest rates are going to go up, just as steven said. they're going to probably push rates up to maybe 3.5, 37b9 7 5rks maybe even a little bit higher. the market is going to get a little bit nervous about that but the economy is improving and that should help the bottom line for many kms and help take the

stock prices higher. >> gentlemen, unfortunately we have to leave it there. thanks so much for being with us and happy holidays to you both. >>mer riff christmas. >> today is the last shopping day before christmas. if you're worried about retailers being open throughout christmas eve for your shopping, don't worry, retailers are all in this evening. but will it help their bottom line? the ceo of staples, robert stemberg, will help us with his insight. we'll be right back. ♪ santa claus is coming to town ♪ bny mellon turns insights like these into powerful investment strategies. for a university endowment. it funds a marine biologist... who studies the peruvian anchovy.

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♪ i'm dreaming of a white christmas ♪ >> it may just be on the east coast tonight. it is the final shopping day before christmas. some retailers are staying open for more than a hundred hours to accommodate late shoppers. will the move pay off? sarah is outside a kohl's in jersey. where are you? >> reporter: i'm in secaucus, new jersey in the cold. around-the-clock shopping is the trendyears. kohl's has been open since

friday. macy's has been doing. toys "r" us in times square has literally been open since december 1st. that's more than 500 hours. the ceo of toys "r" us was on cnbc earlier today talking about the strategy and he was asked if it pays off if you have only have 20, 30 people in the store in the middle of the night? >> the shoulder times from 2 a.m. to 3 to 5 a.m., these are really busy hours so they are profitable. >> reporter: there you heard it. he says they're already starting to work. a lot of this is in response to the growth inline shopping, especially this season. so far the numbers are just explosive when it comes to growth. new numbers out recently from last weekend, the weekend before christmas, show that online shopping was up 40% from the weekend before. the caveat there to the

explosive growth is that as of the third quarter online shopping on made up 6% of total retail sales. that's why, carl, it's so important to be in here in the brick and mortar malls tracking the shopping today. >> as you are today. >> reporter: as i am. >> the latest data in shopper track shows a decline compared to last year. is the consumer feeling blue this holiday season? let's get insight from tom stemberg, the co-founder and ceo from staples. he joins us from boston today. tom consideration you hear me? >> i can hear you now again. >> just making sure. tom, sounds like you think even with the shortened calendar, there's just no way around it, business stinks this year. >> last week was pretty ugly all around but it emphasized there's real divergence in results.

you look at the automobile sector, you still get good numbers. if you look at the the home improvement companies, they're doing quite well. we've had companies like david's tea, which had its all-time record day yesterday breaking its all-time record saturday and running double digit comps. and you also look at the weather. the difference -- jay mclaughlin is one of the companies in our portfolio. in florida they're up double digits. in the northeast they're flat. that makes sense because you've lost three different weekends to snowstorms here in the northeast, and that is not good for business. >> yeah. do these longer hours -- i mean, the question was posed this morning on our air, tom, but when you're open for a hundred hours in a row, does it work? and if it does work, why didn't retailers always do this? >> well, frankly, there's two reasons. number one is the incremental

sales at night, you have people in the store stocking anyway. if you try doing the same thing in march, it's probably not going to work. when you start going into thanksgiving day and paying people double time or more and frankly abusing their lives, i'm not sure that's quite as smart. >> you co-founded staples and you were ceo -- if wh you look at a company like target with the massive breach, what do you think as a former ceo? >> first of all, as one who shops target from time to time, i've been overwhelmed by how good their systems are. their front end operates better than any front end in real tailing and frankly every retailer in america is vulnerable no matter how hard they try.

it's a terrible problem and it's desperately looking for good solutions. >> how often do these attempted attacks happen? because when i talk to bank executives they say, listen, our web site goes down, that means that's one attempt out of 100,000 that people are trying to take the system down unsuccessfully on a given day. how often is this attempted? >> it happens a lot. even smaller companies like those, the private companies we invest in, spends quite a bit of money trying to fight these kind of security breaches. in a wireless world, it's quite difficult to fully impede all of them. >> let me take you back to the broader question of how bad the season may or may not be this year. as you look around the retail industry, do you see large amounts of overcapacity. if you do see it, where is it geographically? and are other retailers able to

take that overcapacity out or are they locked in because of leases and because the ship turns so slowly? >> the reality is overcapacity comes in too forms. one form is too many stores and the second form is stores are too large. take my old company statements or its competitors. staples had 40% of its sales are online. as online grows, you may need as many stores for convenience. so in their case the challenge is to down side, and i'm sure i just think there's too much capacity out there and too many retailers are pacically selling the same thing at similar prices. ultimately that's not going to be sustainable. >> it's been said. sadly we didn't take enough out of them during the recession to some degree, especially in

apparel, tom. it's great having your insight. have a great holiday. >> thanks again. >> meanwhile, as netflix wraps up a red hot year, the stock market up 300%. it's hoping to get a tush oaf charge on christmas eve by debuting its first dreamworks animated show. will the party pay off? that's up next on "squawk on the street." >> announcer: the cnbc realtime exchange market snapshot is sponsored by interactive brokers.

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twas the night before christmas and all three wall street, a host of movers and shakers, it says, are hoping that santa will grant them their biggest holidays wishes. >> that's not a rhyme! >> dominic chu has answers back at hq. >> i'm not a poet so i'm going to leave it here.

how about this. all i want for christmas among some of the biggest leaders in world politics and business, maybe they could get their wish. we went through a few of them. the first one we came up with president obama. all he wants for christmas is for health care to work. 630,000 enrolled. he wants more. the stock market has doubled -- more than doubled during obama's ten years as president but approval rates are sitting at his lows for his presidency. something we'll look out for. then there's jamie dimon, ceo of jpmorgan. all he wants is a -- the stock is up 32% year to date. he just wants a bit of a vacation from all those lawsuits. then there's apple ceo, tim

cook. all he wants for christmas is for carl icahn to lose his phone number for at least a little while, give him a little while. apple has $147 billion in cash and investments, they have a buyback and pay a dividend. that stock is up about 7% year to date. and for bitcoin investors, all they want is a bit of a break and to stay under the radar of regulators. a lot concerns about central banks and regulatory scrutiny all over the world. so, kayla, all i want for christmas, perhaps, is just a little bit -- a little bit more market, market sentiment to turn bullish next year. back to you. >> i think there are a lot of people on the floor that agree with you. >> the animation dreamworks on

net flex debuts today "turbo fast." >> netflix has the global exclusive rights. the film here in the u.s. grossed $280 million overseas and comes just in time for the holiday stretch with kids tuning in at home. unlike netflix's other originals, they are not hitting all at once. offering five episodes today, netflix will premiere new shows through the end of the year. with kids' content, the option to binge is less important than with adult concepts.

all of the content is based on characters with an established audience. neither companies did closed terms of the deal. but analysts say this deal provides incremental revenue for the animation studio and all this at a relatively low cost compared to adult shows like "house of cards." even if "house of cards" doesn't drive subscriptions, they say netflix is well positioned this holiday season thanks to a surge in mobile device gifts. when they power on the devices, they'll see netflix as a highly ranked app. if they're aren't already subscribers, they may sign up. >> straight ahead, if you think christmas is a big deal for retailers here in the u.s., just wait until you hear what it means for retailers around the world. find out why the christmas

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holiday shopping season over there in the united states. the retailers are really up against it this year. we've had some very unseasonably warm weather and during autumn, which has really dampened down sales of apparel and then at this crucial, crucial big weekend for retail, we've had unbelievable weather in terms of gael force winds and retailers are looking over their shoulders saying how we going to sell this stuff? >> you're looking at people in this country saying you got halloween, you got thanksgiving, you can resell, it might be tough this year but not as bad as it is in other countries. is that what you're saying, brian? >> certainly in terms of the

reliance on christmas. some retailers get half of their sales and a good 90% if not more of their profitability generated in a six-week period, the second half of november all wait through to christmas, right up to today. a lot of retailers were hoping it was going to be a very, very big day for them. lots of similar pressures on both sides of the atlantic, online soaking up a huge amount of traffic and also the actual retail sales themselves and heavy, heavy discounting as well. people like gap, for example, even in the u.k. up to 75% in the run-up to christmas. this concentration on a very small period of time compared to the u.s. is putting a lot of retailers under enormous pressure. >> people here in the states continue to be impressed with at least the macro progress the u.k. is making, drops in unemployment. does that tend to translate into confidence in spending faster or slow are than other countries on the continent?

>> employment is one of the biggest drivers of consumer sentiment. i think job security or job insecurity is one of those big influences on regardless of that kind of sentiment side of things, there is actually money being taken out of people's pockets. gas prices up, electricity prices up and the cost of transportation here, incredible inflation in train fare, for example. their ability to do anything about that in terms of discretionary spending is under pressure, which is forcing retailers into lots of discounting and trying to keep prices as low as possible. >> thank you for joining us. i wish you well. i understand the bad weather has cancelled a lot of trains out of london tonight so i hope you get home safely. >> call it the white house's christmas gift for all the people trying to sign up for the

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share of cracker barrel heading higher after the restaurant's biggest shareholder said he's considering a bid to take over the company. he's been pressing for changes at cracker barrel for over two years. he hold as nearly 20% stake in the chain so, carl, those shares ones to watch on this christmas eve, carl. back to you. >> that's a pretty interesting story, dom. thanks a lot. >> december has been a good month for the social stocks. if you're not in, is it finally time to buy into the social hype? dow's up 41. back in a minute. ♪ outside the snow is falling

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welcome back. today marks the first of many federal deadlines for the affordable care act. but it comes after the obama administration allowed a 24-hour extension to yesterday's cutoff for people looking to get coverage by january 1st. will last-second changes bury the struggling program? for that we have kay bailey hutchison, a cnbc contributor and former governor ed rendell and a cnbc contributor. guys, thank you for joining us on this holiday. senator, we'll start with you. this is in effect a delay, as many republicans are calling it, to the signups, largely because of a bottle neck on the web site. do you think adding an extra 24 hours will have any effect on the figures? >> well, it may have some effect and it may help some of the people who are trying to get on and have been put off. honestly, kayla, there's so much more that is troublesome about this rollout and about the coverage that people are going to be getting once they are

enrolled. and i think that's really becoming the bigger issue. >> obviously the rollout's gotten a lot of press. it took up the majority of the real estate at the president's year-end press conference on friday but largely the core of the law remains unchanged, senator. this is law, as it is right now, open enrollment happens until march. what are you expecting to change between now and then? >> well, i think the president and his administration should be more realistic. in stead of these piecemeal delays, you know, every week or two there's some delay in some small part of this act, i think they ought to get realistic and say, look, this didn't work, we admit it didn't work, let's start over. maybe not everything over but let's do something that people can count on, that they know there is a credibility here that they -- once they get in, it's

going to work. and delaying one little piece for 24 hours or one little piece for a year or one little piece for nine months is not the way to handle it. i think the rollout's been bad and i think the recovery from the rollout has been just as bad. >> governor, let's be very clear what happened here. there was an 850,000 surge i understand by mid-afternoon yesterday. a decision was made at the white house to extend the deadline. there was no official announcement i read in the press, none of the insurers i told i read in the press. they were intending to close their office early for christmas and now they're leaving people on for today. either the white house has no idea how the private sector works, they've got to get this up and running by january 1st, one week for thursday or the white house simply is scrambling for every possible p.r. pitch that they can pull out of the fire at this stage. which is, it sir, in your view? >> well, i think it's a little

bit of both. they didn't consult with the health care companies, if that's true, that's a mistake. i also think that this massive media attention we have on everything politic has caused them to worry about playing the numbers game so they wanted to extend it 24 hours because there was tremendous demand and that tremendous demand is a good thing. leave asaid what senator hutchison, who i have great respect for said, we should want americans who don't have health care to be able to sign up for health care. that's often a life saving thing. if there were 850,000 yesterday and by extending it another day and we can double that number, that's a great thing. again, could that have been put back until after christmas and working with the health care companies, that might have made more sense. but look, in the end this act will be judged by how it does in the next year or two, how many new people is signs up, how many people have better coverage

because it includes prescription drugs and includes hospitalization, how many people are subsidized in their coverage at the exchange. those are the things that will tell the tale as to whether this is a success or not. and i agree with you. the white house shouldn't be so fanatical about the number game, how many people are we going to report sign up today as opposed to tomorrow. let's just hope the thing works. we're the only developed nation in the world that doesn't guarantee health insurance for its citizens. >> senator, i noticed over the weekend it's finally been disclosed that the president himself enrolled in a bronze program for about 400 a month, even though he doesn't need it, he gets his health care through the military. you may be calling for him to refresh but that may be in the offing, do you think? >> they say that's for show. i think the numbers game is important because i think what is going to be judged here is

the end result, what people have lost and how many people have lost the quality of their care and the care that they liked and could count on versus the ones who are helped. and there will be some good news stories for sure. >> but senator, senator -- >> but for 1 million people to have signed up when they expected 3 million by this time and then you think of all the things and the people who have been put off, their policies have been cancelled, they're desperate right now. i mean, i think it's a -- was this the kind of approach that we should have had to try to help cover those who didn't have coverage? >> senator, but to the point that the governor makes here, he who laughs last often lasts longest. and you may have a small number of people that lose their policies, but the game here surely is a year down the line if there are millions of people who have got cleheaper deals on

their health insurance, deals they're pleased at and they credit that to the dems and credit that to obamacare, that's a nightmare for the gop ahead the the mid terms, isn't it? >> simon, what you need to look at is not one year from now talking about who laughs last. let's look at three or four years out and look at the number of people who have lost the coverage, the quality coverage, the kinds of coverage they've had, versus those who have been helped. right now over 60% of the people who signed up are over 45, the younger people are not signing up, they're the health eel ones. that's what this administration was counting on when they put this forward. and i think the costs are going to go up and people are not going to have the quality care and those are going to be the larger numbers. >> senator, no doubt this is not the last chapter of this story. governor, you're considered something of a turn around expert. they're bringing in a microsoft

executive to turn around the web site. what needs to happen overall to turn around the -- the reputation of this rollout at this point in time? >> well, it has to work. and the senator made some good points. if in fact health care driven u enough young people have come into the program, then that's a real problem. it's a real problem for the administration, but it's also a problem for the country. i mean, we play these political games and we lose sight of what it's like to have your 5-year-old daughter get leukemia and you don't have health care coverage, and that may be a death sent ens for her. this is very real. it's interesting, in the states where the governors have accepted the exchanges, it's working a whole lot better than where the federal government has done it. and it was almost all democratic governors who accepted the exchanges. in the states that accepted the medicaid exchanges, including governor christie, republican from new jersey, that's been

successful. the governors in those states who turned down the medication expansion are going to have to answer to their people why their people are still uncovered, when across the border they are covered. >> certainly, we'll get more data on january 1st when that coverage starts. and we'll get more deadlines throughout 2014 but -- >> i like how we have the eagles and cowboys represented here ahead of this weekend. >> that's true. >> i don't know if you notice my tie, this isn't a christmas tie. it's got donkeys on it, and it's a noble beast and much smarter than the elephant. >> oh, come on, the elephant is the long-range memory. >> we thought we had a showdown on health care. >> merry christmas. >> merry christmas, governor. >> merry christmas, thank you to both of you. let's get to the cme and check in with rick santelli and get the christmas eve "santelli exchange." >> i tell you what, carl, i love keeping it real -- time. after listening to the governor, i looked up, and i can't help but notice, it's christmas eve,

december 24th, because exactly -- exactly four years ago, what, around midnight, is when they passed the affordable care act. and if we recall all the deals and all the lack of bipartisan support, how messy and horrible it was, i think that we all ought to have a moment of silence to ponder that. let's get to something less messy, let's talk about what happens with the yield curve after the fed. this has been the absolute number one story on this trading floor where interest rate futures are king, because the notion of whether this is mostly liquidation or a new slant on where interest rates will be, despite fed promises to keep short rates low for longer is a huge dynamic. huge. and all you need to do is look at the two-year. now, comping back to 3 1/2 months like all the the other maturities, or the five-year,

the way it's muscling its way over 1.70, close to 1.75, and you'll understand this is a huge issue to stay on top of for 2014. the steepeners were the big success for 2013. if you managed to get out about three weeks ago. all right. let's talk about strong durable goods real quickly. it was a huge number, no doubt about it, and nobody wants the economy to do better for longer than i do. but we need to acknowledge what every e-mail i've gotten since 8:30 eastern has been, and that is just like dividend pulling forward last year due to all of the uncertainty about things like taxes, we have two tax credits set to expire at the end of this year -- r&d and depreciation, and many believe that pushed the durable goods number up. hey, we have a lot of great reporters at cnbc, don't we? jackie deangelis, one of my favorites, said something that i really found interesting. let's put it up on the screen. ihs, energy group, estimating by

the end of next year, rail capacity could be enough to handle 700,000 barrels of cued, compared to 150,000 today. they make the decision on the keystone pipeline irrelevant. no, it doesn't. you know what it makes irrelevant, the fact that many politicians are trying to keep energy from bubbling into the economy. it's the greatest story of my life, and i'll tell you what, it's a great story for free market capitalism as well. merry christmas to everybody that tunes in every day, and those that don't, you don't know what you're missing. carl, back to you. >> oh, i'll pick it up. amen to that, thank you very much, rick santelli. up next, do you need a last-minute gift idea? running through some of the hottest tech gadgets, right after this break. this year ♪little love [ male announcer ] this december, experience the gift of exacting precision 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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[ male announcer ] this december, experience the gift of exacting precision and some of the best offers of the year at the lexus december to remember sales event. this is the pursuit of perfection. ♪ nothing like some christmas music to put you in the mood there. how about shares of interdigital up around 5% in today's trade after the wireless tech company agreed to settle patent claims,

agreeing to binding arbitration. the process is expected to yield some kind of licensing agreement between the two companies. this comes on the heels of the u.s. international trade commission's finding that nokia and zte did not infringe on interdij at that time pate-- interdigital patents. we're looking at some of this year's hottest gadgets. josh lipton has more on that. we know the internet is open and the stores are open. so what have you got? >> yeah, carl, these are the toys we think sean techie in your life is going to appreciate. let's start with the action theme, the gopro hero 3. this is billed at the lightest and smallest go-pro. it's wearable, water proof, and can mount it just about anywhere. the starting price on this one is 200 bucks. up next, the tech toy that we think could get you maybe the weirdest stares on the airplane. this is sony's wearable display.

the idea says sony is you slip onto wearable head mount and you create your own personal movie theater or private game room. sony says it simulates a 750-inch screen that looks like it's 65 feet away, so big size and clarity. also surround sound, 3-d option, the sony web store is selling it for about $1,000. and the parrot a.r. drone. this is your own drone, or quadricopter that you control with your smartphone. and as you fly, video is recorded and sent directly to the mobile device, using this built-in hdmi camera, and i found one for 300 bucks. and maybe launching a kick-starter campaign. this is your very own personal submarine. it can dive to 1,000 feet. the sub is powered by battery packs and can hit speeds up to 3 knots.

training is included, which seems smart. the price on this one, $2 million on hammicer schlemmer. >> i'm guessing that doesn't include the fuel and all of that. >> some of the things that you can find in that catalog, it's a treat. >> josh, thanks a lot. we'll see you in a little bit, kayla. simon will talk europe. will we do the european close? >> yeah, a quick roundup. >> okay. >> just for the complete wrap-up. >> if you are just joining us, here's what you missed earlier on. >> announcer: welcome to "squawk on the street." here's what's happened so far. >> the consumer using the internet to preshop or window shop and then make the strategic trips to the stores. >> right. >> but they're buying less, and they're making sure they got it at an incredible deal. >> november durable goods, expecting a lot better number than we had in october, and the survey says, we're correct.

we are right none. 3.5%. >> we're clearly in overshoot territory, and i worry that makes us vulnerable to a corrective phase, which would be natural and quite frankly welcomed, but nonetheless, we're overdue. >> the wallet for this part of the consumer spend is relatively static. people are more willing to put money in big durable goods spends than they are some of the basic small-retail buys. [ bell soumds ] >> and there's the opening bell. >> i do think the market does provide a good return next year, but i don't think it will be the straight up 30% that we got in 2013. >> and online grows, many stores are for convenience, and the "i've got to have now" items, but probably have to be smaller. >> announcer: and that's a wrap on this year's "countdown till christmas." until next year, happy holidays. ho ho ho! ♪ here comes santa claus down

the lane ♪ good morning. merry christmas eve. live at post 9 at the new york stock exchange with a check on the markets. nice action continuing. in fact, the dow is on track for its best five-day winning streak since march of last year. we're up 39 on the dow, another 4 on the s&p. shares of tesla are rallying this morning after its five-star safety rating for the model-s was reaffirmed by the national highway traffic safety administration. they're still awaiting nhtsa's resolution on the battery fires. check out the homebuilders today. rallying, in spite of a drop in new-home sales. it's still some of the highest levels we've seen since july 2008. holiday cheer for the markets. stocks are in the green after strong economic data earlier today. so can the record run continue? more on that in a moment. on this christmas eve, procrastinators can breathe a little easier. a ton of major retailers are

open today and tomorrow for all of the holiday shopping needs, but will those extra hours give a big boost to otherwise disappointing retail sales? plus, has social gone mainstream? facebook and twitter have been rallying lately, hitting fresh highs in trading, and they're that with jack dorsey will join disney's board, and you have to ask, is social media now part of the establishment? we've got the answer. if you're in the market for lingerie, why not use some of the spare bitcoins you've got lying around? victoria secret agreeing to a partnership that will health you use bitcoins to buy its products. we'll tell you how it works later on this hour. first up, joining me for the entire hour, dennis berman, columnist for "wall street journal," and we are getting a chance to talk at an interesting moment for the markets, the best five days in almost two years. >> it's incredible, when we look back on 2013, it's a rather remarkable year, given the core

elements aren't firing as well, certainly as we've seen in the last day, the data reports. >> that's a good point, and one we'll talk about for the next few miemts. we'll start with the markets that enjoying the record run. joining us is kevin with stifle, and david speak, senior vice president with westwood fund. good morning to both of you. >> good morning. >> good morning. >> kevin, dennis puts the year in nice perspective. corporate profits up six, but the multiple up 20%. is that going to continue into 2014? will investors be drawn to equities as an investment tool the way they were this year? >> i don't think as much, because as -- i think it was your previous guest that pointed out, the underlying fundamentals that drive this thing are really always going to be about earnings and interest rates. and earnings increase, but only a little bit. certainly not as much as the 25%-plus move in the equity markets. and interest rates, if anything, backed up. the only thing to explain this is investor psychology, and what we saw was the fact that

investors are much more comfortable with the world this year, the vix has come down a lot, and i think the contraction in the equity risk premium, or investors' appetite for risk, increasing was the main driver behind stock prices this year. so to put it in another perspective, if we get another 25% next year, the dow will be somewhere around 20,300, it's probably not reasonable, i think you get a correction between here and then. >> david, to what degree to you agree or disagree? and what's your strategy on top of that? >> well, i agree with kevin's assertion we won't see the same degree of multiple expansion. i don't think it's realistic. we need to see earnings growth, preferably driven by revenue growth, to drive the stock market higher. however, i do think the optimism that people are feeling today is warranted. given that we've got clarity from the fed on monetary policy. we've got clearly an economy that's expanding, maybe not as fast as some would like, but it is clearly expanding when you look at employment, manufacturing, inflation's tame.

and the stock market on a relative basis is still very attractive, particularly relative to bonds, and don't forget that you have a lot of people sitting in bonds today that as long-term interest rates drift higher, they're going to realize it's not the place to be, and i think we're in the early stages of that rotation from bonds to stocks. so i think that'll be a catalyst, as well. ultimately, we want to see earnings growth, and we think that will be necessary to push stocks higher. >> kevin and david, to me, the big untold story of 2013 was employment. everyone was focused on stock market, how great those equities have been returning. when you get down to it, real people getting back into real jobs and spending money, we've really not seen it at a rate we would -- we would like and expect. how does the employment situation affect your view of stocks in 2014? >> well, it's a big contributor to final demand. one of the heroes was the fact that final demand was very strong. and i think that had a lot to do with not only the job market, but also what's happening with

people's balance sheets. if you look at the degree of deleveraging on household balance sheets, it's been the most significant we've seen on record. so what we've seen is a household that's in a much better place, but as we go into 2014, you're going to have some policy issues. you've got a fed that will be looking at this unemployment rate coming down, the durable goods report coming better, and the gdp that's picking up. so you have the economy growing better, but you've got weak inflation. it's almost the opposite kind of situation that you had in the 1970s, and it does present some challenges as far as policy goes as we move through 2014. >> yeah. certainly a different set of circumstances than, say, a volcker faced back then. guys, have a great holiday. thanks, as always, for your insights. >> thank you. merry christmas. >> same to you. it's been a good few weeks for the social stocks, and that's not changing today. shares of facebook and at least twitter up almost 4%, hitting some record levels on this

growing optimism for social media advertising. if you're not already a buyer of social hype, is it time to finally get in? we'll talk about that in a moment. first, though, rick santelli, what are you watching on this christmas eve? >> yes. well, i tell you what, we are going to talk with ira harris on this holiday-shortened session this christmas eve, and the yield curve, and what else? see some of his thoughts and predictions for 1240. -- 2014. g 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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♪ [ cheers and applause ] >> -- but some predictions continuing. carl, let's hope they continue for a long, long time. merry christmas, everybody. merry christmas. guys, let's hope it continues for a long, long time. timmy mcguire, the leader down here on the floor. merry christmas to you and your family. >> thanks for all you do for us. >> let's hope it continues. merry christmas to everybody. >> -- we've still got to get through 1:00. in the meantime, we'll look at the materials sector, one of the big gainers on the s&p. dominic chu, also has a lovely

singing voice, back at hq. >> i have no idea what you're talking about, carl. well, how about this? the materials gains in the sector are being led by both u.s. steel and sealed air corporation, both stocks are up by more than 2% on the day's trade. aluminum company alcoa up by nearly 2%, along with iron ore chris natural resources, and just one of them is in the red so far today. that's seed company, monsanto, so, carl, a nice bullish day for the material stocks. >> all right. thanks a lot, dom. 2013 was a good year for tech, but what does 2014 hold? jon fortt joins us with his predictions next, but first, let's check the scorecard to see how he did in the past year. he predicted apple would tweak its iphone lineup. he was correct. we saw the 5c come out. he said samsung would press its independence from google.

and jon predicted a shake-up in the industry with barnes & noble, hp, nokia, most at risk of crumbling, not bad, hp was the only one to fight that fate. he was 3-3, essentially. let's see what 2014 has in store for his view. >> reporter: 2014 should be a big year for wearables, because we should expect apple to finally jump into the game. i mean, yes, we've been looking for something like an iwatch from apple for what seems like year, but since ipod revenue is below $300 billion, it's time for them to jump into the game. remember "reservoir dogs question" scene, where they're pointing the guns at each other, and that's the cloud, the commoditization, somebody will take a fall in 2014, and it won't be pretty. an important year of change coming from microsoft. new ceo, some new priorities,

and perhaps spinning off of some brands. if so, bing might be one of them, and expect yahoo! ceo marissa mayer to be first in line to check out that particular asset. jon fortt, cnbc. >> with twitter chairman jack dorsey on the board of disney and facebook on a tear, is this the quarter that social media firmly cemented itself as part of the establishment? we want to bring in noina fried but if you were on twitter, you knew she was on her way. >> glad to be here. >> dorsey, some have said, a strange commingling of a very new entrepreneur representing very young companies with the older media establishment. how did you see it? >> i think you're exactly right. i think in jack dorsey, you have someone who understands multiple industries, and disney has always been at the forefront of that. don't forget the early partnership with steve jobs and pixar. and so, i think companies like

disney are trying to figure out how is their world changing, and clearly, social media is one of those big sea changes. >> i know we don't talk stock prices that often with you, but how does it strike you to see twitter basically a stone's throw away from $70 now? we're talking about targets that a lot of the sell side didn't see, and people said might get there, but probably not for another year? >> it reminds me of google in the early days. there was this talk, are they overvalued, undervalued? if you look back at the first year, clearly, a big buy. and the reason was, there was a whole new industry being created. there was a market and a force that just didn't exist before. you know, we didn't talk about search advertising before google. and i think it's kind of similar with social. twitter and facebook basically have become synonymous with social. you can't have a social media strategy without twitter and facebook. and so, i think investors are saying, this is a pretty safe

bet. and i think that's one of the factors at play as these stocks have really risen since twitter's recent ipo and facebook kind of getting a renaissance. >> so, you know, what's your take on how advertisers are feeling about twitter? we were talking earlier, it seems so seamless, which might be a good thing, or bad thing depending on what your advertiser's mission is. what's your take so far? >> i think advertisers are still trying to figure out the best way to use social media, but clearly, twitter advertising is compelling. i mean, twitter is a place worth having that conversation. people are talking about brands. you know, people use it for customer service. people use it to talk about, you know, do they like their airlines, don't they like their cell phone carrier? so every industry is kind of at play there. so i think the opportunity for advertising is so clear. i think over the next few years, we'll see can twitter, can facebook find ways to make this even better? but it's already clearly having the conversation there that advertisers want to be a part

of. >> yeah. you know, we've already had facebook essentially come out and acknowledge that the news feed can only hold so much, right? we know there is some -- there is some finite inventory there. to what degree does that carry over to other names, and when do we see consumers get alienated by a series of sponsored tweets in their twitter feed? >> i think it's something they'll have to be cognizant of. it doesn't mean they won't put up with advertising. people love services they find valuable for free. do you have to watch that, you know, most of what i'm seeing is the conversation that i want to be a part of. the best advertisers are finding a way to be a part of the conversation. and i do think that over the coming years, we'll see advertisers rewarded whose ads don't feel intrusive, whose ads feel like part of the conversation that's already taking place. >> yeah. finally, having done some work on twitter, one of the big

complaints is, if you're not on it, it's because you don't understand it, or you have problems with curation, the language is arcane, the hashtags, the @ signs, can they make it easier to digest for a new interim? >> that's one of the big opportunities for twitter. the other is time-shifting. we're having a conversation about a tv show or about a sporting event, how do you make sure that the people that are involved in that conversation get to have it, even if they're dvr'ing the show or the game. that's another area. but i think making it easier for beginners is another important thing. there's no real reason we need hashtags in 2014. >> yeah. you bring so much insight, it's great to have you, as always. happy holidays. >> you, too. thanks for having me. >> and let's not forget twitter trades 205 times ebitda, and 26

times revenue. >> pretty soon, it may be an amazon life. >> amazon doesn't make anything, so it's a null set. >> yes. this is not what retailers wanted to hear on the last shopping day. shopper track says last week in-store traffic down 20% year over year. if you believe that, are there any bright spots this holiday season? we'll talk about it in "squawk" continues. ♪ [ male announcer ] for every late night,

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brick and mortar retail sales dropped 3.1% last week compared to the same period in 2012. that's according to shoppertrak, which blamed the drop on weather. are mall operators dreaming of a green christmas? randy joins us this morning,

happy holidays. >> happy holidays to you. >> we keep getting the metrics from the various companies. you'd think there was nobody at the malls that you operate. is that true? >> boy, that's absolutely not the case. i've heard some of the stories, been listening to your show this morning. we've seen nothing but positives so far, and i'm very optimistic. maybe it's our location between milwaukee and chicago. the weather has been cooperating with us this year. we've got 200 stores in our mall, brand-new macy's, and it's been tremendous. our parking lots were nearly 95% at capacity most of the past weekend. so we're very optimistic about the numbers. >> randy, what are the customers who come to the mall interested in? what are the big sellers right now out of your 200 retailers? >> well, you know, you talked a little bit about shoppers, spends, and since the recession, shoppers have gotten savvy. they do their homework. they know what they're looking for before they come to the

mall, and we provide that for them. we have a website, the gurney mills website, a retailer showcase. before they come to the mall, they can look and see what the deals are, what the specials are, what they can take advantage of, even before they come to the center. >> randy, you have a bunch of different retailers at the mall which cover everything from toys to apparel to jewelry to electronics. i mean, if you had to put them in a spectrum of who's performing the best, who would be at the top and bottom? >> well, one thing about gurney mills, we just finished a renovation, so we added a brand-new full-priced macy's. as you mentioned, we're considered an outlet mall. but we've added a full-priced wing to our mall. so that gives us a unique diversity to our center. so with that, we have a lego, as well as value shopping, so it's really across the board. there's not one category or store that's performing. it's what we're seeing as a

center, as a whole, we're doing well, and we're pleased. >> randy, gas prices always seemingly a big impact on people's want to shop. what do you see there? prices are down. >> yeah, yeah, absolutely, that definitely helps us. it hits the pocketbook, and when prices are down, we see better sales, better traffic. we're right along the interstate, so it's easy to access. but it definitely takes a toll, but again, for natalie, prices are good right now. >> was there any impact from either the weather or the shorter calendar? and are you going to be able to hit the target you had going into black friday? >> i would say that definitely the calendar had more of an impact on us. than the weather. up here in the chicago/milwaukee area, we prepare for the weather. we're used to it. we go through it every year, so we dress for it and we prepare for it. the calendar -- the shortened calendar, the six days, made it

more of a concentrated shopping environment this year. so a lot more power shopping we saw. and the additional hours we added made it more convenient for our shoppers. >> so, randy, on tv, people love to talk about how washington is influencing the national mood. we look back at 2013, so much stress about what was happening in washington with gridlock. how did that affect you, or not, at the gurney outlet mall? >> well, i think, you know, definitely the local and the regional economy plays more of an impact for us. but the national economy, what we saw, is optimism. and i think, again, we're coming out of the recession, we're feeling very strong. people are spending a little bit more, but they're savvy. they learn from the recession. they learned that they need to stretch their dollar, and a place like gurnee has value and outlet, all under one roof, it helps a lot. >> randy, you're not done yet. you have to get through the rest of the holiday. >> you should be back on the post, in the tv studio.

>> yeah. >> tough to sell. >> merry christmas. >> thank you. and to you. at gurnee outlet mall in illinois. european market s closed earlier, but still plenty of overseas action. [ male announc] here's a question for you: the energy in one gallon of gas is also enough to keep your smartphone running for how long? 30 days? 300 days? 3,000 days? the answer is... 3,000 days. because of gasoline's high energy density, your car doesn't have to carry as much fuel compared to other energy sources. take the energy quiz. energy lives here. tdd#: 1-800-345-2550 life inspires your trading. take the energy quiz. 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

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european markets closed early this christmas eve, but still got plenty of action. simon is here to bring us up to speed. >> some didn't open at all.

germ an germany, italy, but it will be a staggered close here over the next 90 minutes, as it is in the united states. a fifth day of gain for europe, and the best run-up in 13, 14 years. looking at the chart here. once in their live, your peen stocks are outpacing just what's been happening here in the united states. one corporate story may interest you, b sky b, higher, renewed talk of possibly vodafone could use some of the proceeds from the sale of verizon wireless here. that stake, once they've obviously returned a lot of cash to shareholders, to buy rupert murdoch's operation in the u.k., and then have the triple play. as we head for the hills, spare a thought for my home country, the united kingdom, lashed by really bad storms again today. from a financial perspective, what it means is those that had to work in the city of london

found it very difficult to get in in the first place, because the trains weren't working and find that those that did get in, very difficult to get home for christmas, carl, because more trains and indeed more flights have been cancelled. >> interesting insight, about how the european shopper is buffetted by transportation costs than the american consumer. >> yes, very interesting. as far as the weather concerns, a depression over the atlantic heading their way. >> simon, enjoy the holiday. >> i will, in the sun. >> nice. see you soon. our simon hobbs. let's get a check on energy and commodities shares, at the imex. >> gold prices are hovering around $1,200 an ounce as the luster has come off clearly completely over this precious metal, breaking the 12-year bull run, down 28% year to date. we're also looking at a slight increase in oil prices right now. oil trading will continue here on the floor until 1:30 p.m.

today. and then global ending trading for all of the commodities resuming at 6:00 tomorrow for the trade day thursday, december 26th. oil prices are getting a lift because of the conflict in southern sudan. the third largest reserves of oil in africa are in that country, and we're seeing some disruption of output right now. we're also, though, watching what is happening to gasoline, because that's the biggest gainer in the commodities space. we're looking at gasoline futures, skyrocketed some 15 cents just in the past week, up about 6% during that time. so, you know what that means for prices at the pump. they're climbing a little bit as well, up 4 cents in the last week, $3.26 is the national average. there is one state where prices have been below $3 a gallon for months for the statewide average. we'll tell you what that state is and why prices there are so low, if you check out our story

on cnbc.com. carl, happy holiday. back to you. >> same to you, sharon. sharon epperson at the nymx. bob pisani has made his way to post 9. >> some things don't change. i like it that way. the crowd's smaller, but still a wonderful tradition to have. one thing that's still not changing is the stock market direction. we are creeping towards 3% on the 10-year, 2.98%, and yet, it's not affecting the stock market. we're up five straight days. we're at the highs of the session, though. five straight days, up about 3%. that's the best win streak we've had since march 2012, for a five-day period, thank you, robert hum, for pointing that out. also look at other sectors moving here. ever since a.k. steel raised guidance last week, it's been on fire. it was $5 a few days ago, now $7. a 40%, 50%, u.s. steel, dragging all of the natural resource -- the basic material stocks along with them. also same situation with the homebuilders.

dropped in the middle of the year, market leaders, then drooped in the market leaders, and now all come back toward the end of the year moving to the upside. i want to put up something i put up this morning, a debate about whether we're getting the great rotation out of stocks and into bonds, it's not so much how much money is moving around, but how much losses the bond holders are having. and these are the etfs for the funds. you can own these. they're widely owned. this does not include the dividends. 7 to 10-year, down 7%. the tips is down 9%. this is the biggest corporate bond etfs, and you can see there you have a lot of damage, short-term corporates have held up a lot better and even the munys are to the downside. we had a lot of people saying get out of the high-yield funds. but they didn't have nearly the drop that we saw. put up the hyg, one of the

largest high-yield bonds, and the bottom line is, we're basically flat on the year. the funds yield about 6% right now. so overall, on top of the yield, this is not a bad return for something where people have been looking for a yield for a very, very long time. so overall, there's a lot of debate, guys, about whether we're in this great rotation, but what we can see now is money in the second half of the year coming out of treasuries for sure, coming out of treasuries, money is going in to stock funds, but if you look at the flows, the funds are heaviest into the japanese funds and the heaviest into the european funds, and modest inflows into u.s. equity funds right now. i would say, yes, there is a modest great rotation going on. it's not a "titanic" ocean of money, but a modest rotation, but a lot of money in the international ring right now. >> yes. >> that's very interesting. i'm waiting to see some "titanic" money coming into the u.s. market. i think people are still very, very jittery. >> we'll see if that reverses in

the first half of 2014. >> i've been looking at the 10-year returns for some of the major indexes, and it's fascinating to see, even after a great year, for almost all equities this year, the 10-year returns for the dow jones industrials, only 59%. s&p, 68%, nasdaq 120%. so even then, 10 years, you would say those are not great returns over a 10-year time period. >> no, they're not. the bottom line was staying invested -- the most heartbreaking thing was to see so many people pull out at the bottom. not just on stocks, but on real estate, as well. and that's what's so heartbreaking, made so many people reluctant to come back into the market. >> yeah, on some of these, they may have no choice. >> if they have a long-term investment perspective, i don't think they're too late. >> if you're investing in munys, you put your money in munys, now is not the great time to be holding onto those. >> this may be a great year for munys, and remember, buy low, sell high. >> bob, thanks again. let's get to rick san telly

in chicago. hey, rick. >> hi, of course, we'll finish out the year -- not the year so much, but pre-christmas with ira harris. we've been talking about the yield curve and the home run for 2013 up until a month ago was the steepening curve. not necessarily true. everybody was long the five-year. i think in terms of shorts, we're more tesla owners in people that were short the five year. how has this turned out? >> as we talk about the five year, it made the least sense logically, but felt very comfortable as i call it the free parking zone, everybody was there. now the five year is under a little pressure as the fed has announced they'll begin the tapering, and people feel, hey, the five year is a worthless instrument for me, because it really is a zero yield. if you accept inflation at 1.7, the five year is at 1.7, and the ratio risk, so i think that's the place -- that's why the curve has moved so dramatically, and i think the five has been

the comfort zone for so long such a comfort zone. >> you think the big trade, for 2014, the first half, it will be flattening, or at some point, rates will parallel shifting higher? >> i think we'll see massive volatility in the treasury curve next year. >> just based on the fed does taper -- >> yeah, great volatility. >> predictions. you know, it's the time to start making predictions. i hear you have a couple. i think one of them's going to make me choke, but nonetheless -- >> they're only predictions. >> okay. >> the one i put out last week was that goldman sachs will take itself private again, in 2014, and get out from a lot of the regulation. they don't need the capital. they can do a tremendous bond offering, a la horizon, and get out from underneath the regulation. and they're the only ones staying live in the prop business anyway. get out from under it, go private. my second one is -- this will

kind of surprise you, but i would say that gm buys tesla, because it's such a perfect fit, imagine the high luxury vehicles, lulling people into a cadillac dealer, and get the showrooms that everybody is beating them up about, and it will depend upon what valuation. to me, tesla values are in la la land, but at a reasonable valuation, based on growth, it's -- >> all kidding aside, because tesla, i've seen them up close, i haven't driven one, but i don't think they're practical cars, so they can put those in the volt warehouse, but all kidding aside, it does make a lot of issues disappear? >> it would save gm -- tesla has the technology. why do you have to redo this technology, and they have the luxury brand. it's everything that gm needs to build upon. it's a way off prediction -- >> hey, way out. i would love to hear what phil

lebeau has to say. thanks for always taking the time. back to the "squawk on the street" gang. >> great stuff. can't wait to see if it happens, guys. enjoy. when we come back, all this week, giving you investing ideas for different sectors in 2014. what does it hold for the luxury market? keep it here. the answer is coming after a short break. the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

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you ideas to make money in the new year. robert frank joins us with his predictions in the luxury market. first, let's see how he did with the past year's predictions. robertson said the number of millionaires would inch toward 9 million. he got that almost exactly right. it went to 8.99 million. he said high-end real estate would soar with overseas demand. we did see growth from overseas and one home sold for over $100 million. finally, robert said luxury sale wuss remain wek with a slowing economy in china. that was correct for the first half of the year, but by the second half, demand by u.s. buyers, fuelled by the stock market, did help luxury grow faster. a miss, robert. let's see what's in store for luxury in 2014. >> reporter: this has been the biggest party for the wealthy since 2007. the question for 2014 is whether the music will play on or whether the party crashes. the rich request thank the stock market for the good fortunes in

2013. the number of millionaires hitting an all-time high, well above 9 million, and spending on everything from diamonds and ferraris to mansions to bacon paintings exploded, and next year will be bumpier if financial markets become more volatile. millionaire investors will play it safe, keeping a lot of cash and not adding much to the stock portfolios. the big thing for 2014 will be hard assets and collectibles. the wealthy want stores of value that they can also enjoy. expect new record prices for wine, vintage cars, jewels, and, of course, fine art. real estate will be the favorite home for rich people's money next year, especially high-end properties in the most exclusive cities like hong kong, london, san francisco, and new york. luxury spending will shift from the east to the west, as china's economy slows, but the big spending will be in cars, electronics, and health and beauty, as well as travel and experiences.

for cnbc, i'm robert frank. >> and make sure to tune in throughout the week for more predictions and on the web at predicti predictions.cnbc.com. you know, dennis, in terms of the high end, it's the degree to which the high-end investor has held up the stock market, even in the face of policy disputes out of washington all year long. >> it's been pretty incredible. looking back at 2013, and we hear they're a fan of washington, places are broken, and we hear ceos talk about how broken the place really is, and then we see equities, just such a massive rotation into the sector. people might feel that there's gridlock in washington, but if the stock market is any judge, they're looking right through it. >> right. we remember the fiscal cliff this time last year. i mean, there was real unease about what the next few weeks would look like. >> i know. >> we got through the shutdown relatively okay, and now there's this sense of nascent piece in washington, d.c.

do you think we'll be talking about it in 2014? >> obviously, we will. we have the midterm elections. but it's become a ritual without any real meaning. if you're in business, you're saying the certainty i'm looking for is really uncertainty, and i'll make my decisions based on that. here's the thing, right, where things really matter, and that is the marginal dollar of investment made by corporations. are they putting the money into r&d, capital spending? and the real answer largely, carl, is they are not. they're putting it in stock buybacks and dividends, and to me, that has a longer impact on the economy. >> we did get core cap ex out of the durables, but tax breaks expire at the end of the year. maybe they're trying to make the investments before they lose some of the advantages. we'll see if it pooled demand -- >> you've been intimately covering the politics, business side of things, so do you feel there's light at the end of the tunnel -- >> no, no, i think long term,

we're heading into an era where we will be talking about the broken promise -- whether it's pension reform, the debate in new york city, watching detroit, and as the social contract is broken or fractured, there will be more dispute, not less. i think for a period of peace, it won't last very long. >> the reformation of the illinois municipal pension plan, it's very interesting, and you have to think the standard of living in the u.s., the trajectory is actually probably down. the economy really has to grow organically. we have to see nongovernment-created spending and capital spending -- >> yeah. >> without that, with health care costs and education costs, the real value of an earned dollar is going to decline. >> one of the great challenges for the economy, certainly next year. when we come back, "squawk's" breakthrough can be described as the intersection of product testing with social media, with free stuff thrown in. we'll tell you how it works and how you can take home free products in just a moment, when we return. ♪ outside the snow is falling

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it's product testing meets social media. major brands are turning to a new form of research and marketing using start-up influencester to generate buzz for name products. joining us at post 9 is elizabeth shirley sand aidan,

and thank you for joining us. talk to us about how this started and how you managed to land some of the clients, because they're some of the biggest clients in the world. >> yeah, i think it started for a need beyond the marketplace. aidan was working at a major market research, and i was doing product testing, and i keep hearing brands wanted more feedback, more targeted sampling. aidan found a lot of the research methodologies that were kind of outdated, took a long time to get results, response rates around 10%. we thought if we could create an online community where people are spending most of their time, make it fun for people to test products. >> are you going to zero in on a million users? >> we will reach a million users by midyear 2014. currently, 500,000 members. this time last year, we had 190,000, so we basically tripled in size. >> say i'm proctor & gamble, i want to gauge how it will play,

how do i get it to you, how do you get it to the consumer? >> yeah, i think we work with a lot of brands launching new products, so a brand would come to us, or we reach out to emthis, hey, we want to reach moms who do their laundry twice a week, and maybe they have a certain kind of washer, dryer, and they want them to have kids a certain age, so then we go into our community and go -- pull out all of the data points on people, and we pick out the panel, we send them the production, and then our members run with it. they create content on their social media platforms, like they might write reviews on facebook, create a video about it, a blog, and then take a survey at the end. so our response rates are usually 75%-plus, so it's a lot of great data for the client, as well as all of the amazing content online that's searchable, so important today. >> the idea is not just getting information, but basically getting some marketing spin on top of that, a dollop of whipped cream. >> yeah, definitely. >> by reaching out to 10,000

consumers, proctor & gamble at the end connects with over 20 million consumers, because these people, where we send the products to, they have large social networks, they like to talk about products, and they generate a lot of social media activity. videos on instagram, on twitter, on facebook. so by reaching out to these influential consumers, these brands are able to amplify their message and get their message out to millions of consumers. >> we're talking about companies that have been marketing for decades. in some cases, a century or more. why were they not able to do this on their own? was it social caught them by surprise and they lack the infrastructure to do what you do? >> i think what brands buy into is the relationship with our members. we try to get to know them really well, and it's kind of a game on influencester, and i can pick out the areas, like maybe a beauty panel, fashion, in

different areas, and within that, it's fun to influence and share data about myself. you know, we're betting on people's social media influence, betting for a presence. so that's what really influenced us. the more information you share, the more you get rewarded. >> reed malcolm gladwell, it's about the few with the greater influences. fascinating. we'll watch it. thank you for coming in. >> thanks for having us. if you have bitcoins, you can buy a house, car, food, even a trip to outer space, and now that list includes lingerie. yes, victoria secret is joining the bitcoin craze. we'll tell you how this works in just a minute. ♪ santa baby [ male announcer ] this december, experience the gift of unsurpassed craftsmanship and some of the best offers of the year

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so everything works like never before. [ male announcer ] this december, experience the gift of unsurpassed craftsmanship and some of the best offers of the year at the lexus december to remember sales event. this is the pursuit of perfection. welcome back to "squawk on the street." let's take a look at what shares of the last time you saw a stock really get a hit after getting a buy and -- a buy rating at both goldman sachs and morgan stanley. that's what's happening to hart and mifflin, they got both of the initiations. remember, it went public last month, 12 bucks a share.

it's gotten up 17. goldman and morgan lead underwriters, and finally now able to cover houghton mifflin from a quiet standpoint. thanks to victoria secret, you can now add lingerie to the list of things you can buy with bitcoins. victoria secret's partnering with gift, an app that replaces traditional gift cards. it lets you buy gift cards from 200 retailers using conventional money or, of course, bitcoin. interesting development in the narrative of that virtual currency. it's hard enough for men to go in and buy lingerie in the first place using dollars. >> i know. >> but then, manipulate the app, put your bitcoin in there, get your -- >> i mean, we'll -- i wonder how many things -- how many things came along this year, dennis, whether it's bitcoin or social, and came of age to some degree, that we're not going to be talking about at the end -- >> i would agree with it, we won't be talking about this. >> really? >> even some of the social media

stuff really is just sort of flash-in-the-pan, sort of add-ons to the big things happening. i think over time, carl, we'll see twitter and facebook integrated into so much of what we do. in the same way we don't talk about online marketing, we won't be talking about social media marketing. it will just be called marketing. >> thank you for coming in. >> it was great. loved being with you. going to bill and kelly now for the "closing bell." >> thank you, carl. yes, welcome to the "closing bell." i'm kelly evans here at the new york stock exchange. santa appears with us because the rally shows no signs of slowing down. >> and for some of the social media stocks, as well. >> can we talk about twitter? >> after i tell you i'm bill griffeth. i'm happy to do that. you look at facebook and twitter, and it's up another 5%, 6%. >> there it is. 68.81. >> how long ago it was at $50 or $30? i mean, it just has been an