>> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. we've got three trading days left in the year so we're going to start things off with the markets this morning. as joe was just mentioning, the dow is now on its strongest six-day winning streak since 2010. it's up 4% during the last session. that's amazing. but the blue chips index is up nearly 20%. it is on pace to have its best year since 1996. the dow is on track for five years of consecutive gains up 87% during that period. that would make it the best increase since 2000. and the transports, the s&p and the russell 2000 closing at another set of record highs. the nasdaq ended at its highest level in 13 years. as you might expect, the volume was light. by the way, if you are worried about the nay sayers calling for correction, listen to these statistics.

since 1950, there have been 17 other instances when the s&p is up nearly 20% on the year. the index finished positive the following year 82% of the time. positive the following year, the s&p finished with a gain of at least 7%, 86% of the time. given the rally, it's not surprising that stocks mutual funds are set to see their first annual inflows since 2005. but not everyone is convinced or confidence in this run up. investorers forward more than $21 billion into money market funds on fears of a potential pullback for stocks. those came as investors pulled funds from the previous week. >> now, we are watching the ten-year. now, the bet was on the ten-year. i don't know if we want to do the bowing now or how we want to work this. >> you said they weren't going to taper. >> i'm out of this. i lost. i'm not even trying. >> listen, here is the deal. and even on that friday --

>> i forgot about the bet. but on the friday when it was supposed to end and it was the close of that day, it was less than two basis points higher. so i will give you a -- they call this a shih tzu bow. >> a baby bow. >> they left out the tzu on curb your enthusiasm. it's a shih tzu bow. i'm going like 2%. >> you know what? you can keep the bow. but you did say part of the bet would be everything the winner said all day you would agree. >> whenever she's finished saying anything -- >> not for you, but i'll do it for her. more importantly than your 11.8 basis point victory was that i was just saying the ten-year would be -- because i thought that the market was ready for the taper. >> i did say that day you were right on that. >> but the market, it was 300 points that day and almost

everyone universally said there's nothing left. and like yesterday we came in and the futures were called up 85 after they were up the day before. and it's one of these periods where people will say the real players aren't there, it doesn't matter, and they come up with all the excuses, but it doesn't matter because the market is where it is. some people got out and they definitely didn't put new money in. >> and more people have been. and the other thing that i was thinking about today with this twitter situation, and i saw my man, my cab driver guy, adam, i saw him and we were outside our cars today at where i was get something coffee and stuff. he was talking all about twitter and tesla and all these bubbles and asking whether -- >> we want talk more with twitter in a minute. >> facebook isn't a way that people get excited about the stock market. you go in, you guy it, you get screwed, it goes down, it takes another year to get back. >> facebook has done well, too. >> it has, but when it came out,

the way that ipo was handled wouldn't get anyone excited. this is the kind of thing where you don't get in on the ipo. you get in and you buy on the state day it starts trait trading. that's when you start getting excited. >> it tripled. >> but the normal people that were -- that bought on the open and, like, 40 or whatever, even there. now they're saying, wow, you can make money in this stock market. >> my only concern is i'm not sure that they're still coming. meaning, this whole idea that there's this group of people waiting and -- >> worried there's a whole generation of people that -- >> but it takes years. after the '70s, '74 was the nifty 50 and '82 we're sitting at 800 and it took all this time to get back. now it's gone from 800 to 10,000. it's ebb and flow. like the american dream. where was i yesterday -- oh, i was at the wall last night and i was sitting around thinking, andrew, look at all these

people. they're all doing something because they're at the mall. then if you go across the country, there's jobs here in strip malls, there are things going on in this country where if we get to 3%, 3.5%, we're going to feel really good again. >> growth will help everything. i agree with you. >> we could get a 5 print next year. >> the five-year on twitter? >> on the gdp. the ten year is going to get -- inflation is, no one thinks the ten year is going to get that crazy. but the twitter thing, it gets people excited. >> for when on the gdp? >> 1.25 next year. >> but the twitter being this interesting takes us from the third year to the middle of the six, though. >> this is getting to where you're start to go watch. this really is getting --

>> i say that we're still in the third, but there might be a correction in the fourth. >> 10%. but this is definitely not something people were thinking. remember we were saying, well, if we can hang on to these gains. >> 4% in the last -- >> that's 4% of the last three sessions. >> the news on currencies, take a look at the dollar. that's the first time in five years. also, we should say the nikkei eeking out a small gain today, as well, logging it highest close now in six years. the benchmark index is now on track for its best annual performance since 1972. >> but it has to get to 39,000. that makes even our nasdaq look -- >> we still have a way to go in the nasdaq. >> what was that doing at 39,000?

>> they were going to take over bebl beach. >> that's when you knew. that was the top. it was like, wow, and they paid a billion dollars for it. corporate news, the nation's biggest shippers are still dealing with the fallout from christmas delivery delays. look at all these packages. what happened? we can't deliver all these. is it christmas or something? where did all this come from? we weren't prepared for this. >> there is a lot more online shopping. i did most of mine online. but gain of 9%, they said. >> i'm going to be asking for my credit back on amazon, i think today. i was going to go on and chat and try to do it. >> wow, what happens to our industry? why today? >> the issues could encouragee commerce companies to spread shipping costs across the country to lower risk, u.p.s.'s all outstanding packages will be

delivered by today. i swear, honey, i swaifr swear i ordered this in time for you. i'm sorry you had nothing on christmas. and fedex appeared to have more limited problems. where is mine? where is mine? yesterday, the one that -- yeah, that's what he said yesterday. >> i was reading this article trying to find your package. >> don't you have one of those tracking numbers? >> i have the tracking number, i do and i'm trying to find where it is. >> amazon is dealing with customer anger after the shipping holdup. you see, i think it's u.p.s. again. shipping holdup. the retailer is defending itself and pointing figures arguing that it's processed orders in time.

amazon says it had limited number of new customers for its prime service to run up through christmas. that service provides free shipping and other services in return for a fee. >> you know what i was thinking? this is a point for the post office. if they could jump on this, the u.s. postal service could jump in because the only way you can get additional infrastructure is to rely on existing infrastructure. they've got the infrastructure. if they use it, they could -- what do you think? >> absolutely. >> so true, the point you're making right now. >> very smart. very thoughtful. >> waiting for the punch line on that. i forgot about the bet. i have to think of some crazy things to say. >> you do. are you going to like this, really? >> for three hours. >> might drive me a little crazy. let's talk about other

consumer news, on too. delta says it's ownering extremely cheap fares offered by mistake. yesterday morning, some customers found incredibly low fares on the company's website. some round trip cross-country flights were just 25dz. delta says the problem has been resolved and it will honor any fares purchased at that indirection price. >> i saw this on twitter yesterday and i immediately went on. >> did you? >> yes. joe knows we were talking on -- we weren't all going on vacations together, but i had all these crazy plans, could get to bali, so it went on and it seemed to be dmeft can flights. >> but did you find domestic flights that were that low? >> i didn't even try. i tried all the international stuff. but it was trending on twit perpendicular that's how i found it, actually. talk about a $40 billionel valuation of twitter, that has value to me. >> it's hard to do something that you haven't done. >> oh, on my trip. right. >> we're talking about scouring

for madagascar or something or, you know, tasmania or where you haven't been. i can't believe you haven't been to bali. >> i'm working on antarctica. >> it's double the amount of ice that was there last year. >> don't worry that that ice isn't going to be there, because it's record ice. antarctica? >> it's on my list of things to do. why not? >> because it's cold and there's nothing there. you can see penguins at the zoo. they're the same kind. >> knock yourself out. >> let's not plan that one together. >> okay. >> first you can go up with branson in and sandra bullock. >> you would do that? >> space? >> after the 00th or 500th

flight i would. >> your worried about the composites on a dream liner and you're going to do this? you said you wouldn't -- by the way, cessna bought beachcraft. so those are his -- he's got the low end and then he has the cessnas. >> i don't think -- >> i don't know. that's pretty weird. we had the guy right here. thanks for telling us. >> earnest. >> i can't believe that he didn't spill the beans right here. >> yp why didn't he tell us that he was going to buy beachcraft. >> i'm still rattled by you agreeing with me. >> you do seem to be rattled. this is going to get almost -- it's self-fulfilling now. it is going to bother you. okay. i'll stop. >> thank you. >> you're welcome.

right now, it's time for the global markets report. >> yes, it is. yep. >> carolin roth is standing by in london. >> good morning to you, becky. good morning to you. the year-end rally and europe continues. we're tracking asia and wall street higher. most of the markets were closed for the last two or three days. and we're back online with a bang. the stoxx 600 is up by 0.6%. the xetra dax in germany hitting new record highs, 9,560 points is where we're trading. no specific news here, but keep in mind, germany, of course, is the powerhouse of germany. consumer morale for december hitting a 6.5 year high. meanwhile, in the uk, shoppers standing in line for hours early thursday morning. they're hoping to pick up bargains on the first day of post christmas sales after retailers slashed prices throughout the holiday season.

that includes online sales. not so bad for the uk, either. back over to you guys. coming up, we're going to ta buck why the wlthy execs want to get divorced. carolin is in london. plus, the top ten most prioritied tv shows for 2013. >> always good to watch it live. >> you can dvr it if you like it, as well. tens of thousands of customers in the northeast and the northwest who spent christmas in the dark, they're likely to be waiting until the weekend for power. this is not a good story. alex wallace joins us live from the weather channel with the latest the. >> good morning to you. we're tracking a bit of a warm-up across a lot of these areas that have been dealing with ice up and down the east coast. but that sets the stage for this next storm system as it tracks from the southeast into the northeast to bring rain because

it's going to be too warm for the 90 corridor. as we head into tomorrow, the weekend, the rain spreads across the rest of the south into the carolinas for sunday as well as the mid-atlantic and northeast. looks like a bit of a soggy one for d.c. sunday into sunday night. we're dealing with that rain. mentioning it's just going to be rain in those spots. you have to head into the interior to run into some of that snow. that's because we have colder air coming in there. in fact, a very view as we get into next week and begin to ring in that new year, much colder air mass as we head from the great lakes to the northeast. >> announcer: before you hit the road, here is is your traveler's check. sflooit flight delays have declined since the bureau of transportation extra activities. but many late arrivals were not reported last year. just how many? find out next. usiness pro. seeker of the sublime. you can separate runway ridiculousness...

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how many flights delays were not reported last year? nearly 178,000. according to an inspector general's study. right now, it's time for the executive edge. "the washington post" reports that hospice firms are draining millions of dollars from

medicare. hospice is designed to provide care for the terminally ill. but the number of hospice survivors has risen dramatically. medicare pays hospice about $150 a day for a patient for receiving care no matter what they end up doing. so healthier patients who need less care end up with more profits. some of these companies are looking for healthy patients so bank savings. >> it's more than an allegation. >> the numbers are bad. >> and my mom -- it can be great. what i learned it really was, i don't think she went in until she had about seven or eight days. and then it mainly is a drug regimen which allows you to die peacefully without worrying about it. it kwas quite touching that when you -- you can tell your breath is starting to not -- you can't really breathe, you need the adivan or whatever you get. but i'm reading this. this kind of makes me sick to my

stomach. it's a $17 billion for-profit industry, 15 billion gets paid by medicare, so no one is watching the -- and and in some cases you had 50% of the people walking out alive. >> 78% left alive from one down -- >> after the hospice, the one hospice. >> hospice is supposed to mean you have six months or less. >> and usually they don't do it until two weeks. >> so here is the question. if the goal is to make it cheaper for the last part of life, that's what hospice traditionally was supposed to do, actually, the question is how do you create -- this is horrible to say -- an intensive system that works -- we're talking about health care and witness stand we always say we want to pay for outcomes. the problem is in this case you pay for an uk that would be bad. >> if you want to call it something else, call it something else. if you're trooe treating people that are going to be released later -- >> if i told you i was going to

only pay you if the -- if the patient dies -- >> not that you want them to die. the outcome in your case would be a peaceful death with dignity. >> before we throw out the entire idea of hospice, it's not only important, it is a way of saving money for some serious situations. he thinks for hospice at etna, you don't have to say that you're going to die within six months. he thinks it's a bad idea. i've learned that from some issues he went through with his son. he said it's saving etna money to allow them to go through hospice. but i think part of the problem is if you look at how they charge for these things, if you go back and realize that it takes two physicians to say you have to go into hospice, but it's the hospice doctors who get to decide if you're going to stay in hospice. that's a bad way of setting up

the payment plans for those. their point is, if it's a for profit situation, they have an incentive to keep those patients in hospice, too. >>. >> they note it's 63% of the patients -- and you see some of the tactics that they teach the people at hospice to bring these people into the hospice and they're very a aggressive. they were telling them to say things. they were training some people to say we have to make this decision. the idea of putting pressure on people. >> my mother refused a feeding tube. if you refuse a feeding tube and

you can't eat, then you have two weeks and it's peaceful and that's what i think of as hospice. and it's all under -- you know, 95% of it is paid for by medicare where no one is watching, basically. so i didn't realize this. >> this is a very good piece of information. >> but, again, just the idea that hospice alone is driving up costs, again, bertolini's point is hospice saves money. if you're somebody who is in the hospital, and your choice res to be in the hospital or not, if you can go home and have hospice care at home, what does -- >> normally you think that -- >> normally, it's in the hospital. -- normally, you think the end is year. that should be called something else. >> no. his point is that it's not

necessarily for just the -- etna, again, has removed that continue that you have to say you're going to die within six months. but they want to make sure people are comfortable with it. >> death is a very difficult thing for any of us to talk about. counting on the singulairty to download it on to some hardware to get some new organs made out of plastic. print them on a 3d printer. give me a large, yeah. this is a tough one to talk about. especially in thinking about watching it happen. i've learned, it was morphine and ativan.

it was something i'd glad i was able to witness. >> london is quickly becoming a popular place for the big business of divorce, especially among the wealthy. that's because if you are a member of the international jet set, but you earn less than your partner, you could secure a more generous position there. >> it's not that the wealthy want to go to london, it's that -- >> people who are married to the wealthy. >> people who are married want to get to london because you can get a better deal than if you are in france, germany or anywhere else. this is a very dangerous character. we're all married here at the table. what is your view on this? >> i think it's sucky. >> you thinkite all 50/50? becky, what do you think? >> you know what?

it is dangerous to add to this one. >> the first one is drs. >> yeah. >> and euthanasia we can't really talk about, either. but there are certain countries where that basically is not talked about, but there are things similar to when you get to that point and you're given all these drugs, the then you bring in all the connotations. >> let's talk about something simple. 2013 was a big year for prioritying television shows. rankings released this week show that the most prioritied show was game of thrones, followed by the big bang theory and dexter. the theory on this being, look, it's not just ratings that tell you who or what are watching things, but who is stealing. the shows being stolen must be the most popular shows, too. it's nerd shows, too, because

those are the most popular. >> i need to get into it. people say it's awesome. >> you didn't watch walking dead, either. t the. >> i just finished homeland, by the way, too. >> i'm having trouble getting through it. i know a lot about carrie and her problems right now. >> there's a good point. it sort of goes slow and then it becomes great and then i think it slows down for me at least. >> jump the shark a little this year. i think everybody agrees with that. >> i think that's the prevailing view. >> a different show runner? i didn't know what a show runner was until after the walking dead. >> i don't know. >> makes a big difference, who is steering -- >> a lot of the writers are different on homeland. >> remember "lost" lost its way.

and then "desperate housewives" they say there were a couple of great seasons and it has to do with the show runner, doesn't it? >> by the way, you'll be unable to know that i got tickets tomorrow for the wolf of wall street. >> knock yourself out. >> this is my point. i never made it clearly. i was a -- there were bucket shops out in california. these people call up and steel money from poor elderly people and they never had any pretense of investing it. that's what this was. and to glorify that and make it interesting, if you want a bunch of coke and a bunch of sex, that's fine. but it has nothing to do with wall street. i would say even madoff probably started off trying to make people and maybe lost his way. insider trading, remember, the original wall street, remember how they sort of crossed gray

areas and they didn't want to get to where they were but they turned into criminals. this guy was an organized crime scum bag from the very beginning. his parents go to the premier and they say we're proud of our son? >> no. i saw the picture in the "wall street journal" i guess it was yesterday. and it was a picture of he and his guy -- jordan whatever his name was and see wife. and i thought, you have to be kidding me. joe is right. >> now, i will not see it. i don't care if it's because it's dicaprio and -- >> i don't understand. did you not see good fellows? >> i knew what i was getting into. i knew that it was about really -- >> this is about corruption and horrible -- >> but the book the guy belwrot the book after admitting to

being guilty of all these charges. he's at the movie premier and he's standing there doing these things. >> this is the glorification of -- maybe we shouldn't -- we have this connotation. >> i'm happy to criticize and be critical of this guy. >> andrew -- >> or the fact that actors are moving him or whatever they are. but the idea that i wouldn't see a film -- >> andrew, suddenly we all like poly walnuts and we like christopher and we knew all about their lives. and that was probably wrong to glorify what these people actually do and what they're involved with, that's probably wrong. but at least you knew this was organized crime. >> but i watching five soaps of breaking because. >> the difference is, it wouldn't boar me this is the story itself, but think of too

big to fail, how important that was and how tied up you were in that whole thing. >> the guy had a special needs son and he had terminal lung cancer. >> right. >> these guys have no excuse. and the guys in boston, and i knew some of these guys, in their eyes, you could see these guys were sociopaths. and i just -- i don't know. i'm not interested in this guy. and i think scorsezi got snuckered. it's not something you make a movie about. >> i'm okay with looking at this steer and looking at the bigger thing, he profits from all of it. >> the naive people see it and say wall street, there you go. there you go, there's wall street. and they had nothing to do. these bucket shops were in boston, miami, l.a. >> i'm going to help you. because i know about the economics and the way books and movies works, don't buy his book. that's how he's going to get rich. the film is not going to make

him money, by the way. that's not where he's going to profit from. he will make marginal money on the film. but his gamble from a profiting perspective is strictly the book. but if it's a great entertaining film psh. >> it's great because people have this interest in watching with hookers and -- >> it's a movie. >> but using this vehicle to do it again -- >> although i did want to say jonah hill. >> i love jonah hill. >> i know. but it worried me. when i saw him at the movie premier with his wife and saw the pictures, i thought, wow, joe was right. >> there's wall street. that was what they're like on wall street. >> i'll be doing my review on monday. >> guys used to sell aluminum siding, but these are just bucket shops -- >> i hear what you're saying. >> a person who has no money left. when you're there watching,

that's fine. and you're going to watch the mob, people kill each other? >> at least i know what i'm watching. these guys aren't white collar. these guys were worse than mobsters. when we come back, we're going to talk about why extended unemployment benefits could run out tomorrow for unemployment americans. first, as we head to break, take a look at yesterday's winners & losers. mine was earned orbiting the moon in 1971.

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welcome back to "squawk box." unemployment benefits for millions of americans could expire tomorrow. congress is unlikely to extend them into 2014. cutting benefits would like lie lower the unemployment rate because many workers looking for work would stop looking for work. others might take lower paying jobs they once rejected. >> is andy saying that we shouldn't do it? >> that's the argument. >> what would happen. >> i can't imagine. anyway, back to the markets joining us is lou brien, kevin gidess, raymond james fixed income capital markets. we're winding down. lou, it was a couple of years ago, we had a great december. we did nothing, the very first trading day in january we started down and i think we gave

back about 10%. the first week matters in january and the first month matters. can they continue right into next year unabated? >> good question. you know, i think that there has been -- there has been an acceleration over the last few days. i think part of it is because of the fed. i think the fed became easier with their policy at the meeting last week, not more -- not stricter, not more hawkish and as a result, i do think that the same sort of factor that the fed was for the markets this year, i think that the fed, anyway, not knowing other things that are going to go on, i think the fed is going to be there for the markets this year in that psychological way that the fed is buying. i mean, the fed extended out the time that qe was going to go. remember last june we were looking at qe ending by the middle of 2014 and at a time when it was likely that the unemployment rate was going to be 7%. now we're at 7% on the unemployment rate and the fed is going to be there with qe in some capacity.

if things go as he thinks, bernanke said until the end of the year and the 6.5% threshold for unemployment that was going to start to get the feds thinking about the fed funds rate. now it will be well past that level before they start to think about it and other factors aside from the unemployment rate including importantly inflation and its low level are going to play into that -- >> that's what the fed wanted us to think. that was their -- that was their plan, right? we were going to try and -- >> well, i guess. >> we were going to get everyone to take their eye off the qe and we're going to try and convince them with language and by staying at zero that we're -- and you bought it. you say they're easier than they were before they announced the taper. >> i think they are easier and both because of the taper being extended out for the year, i think it's more of the psychological fact that the fed is there with the qe than the amounts of qe that are going on

and the forward guidance. i think we have to get used to the forward guidance. i think yell sn going to be much move of a proopponent for that. saying that, can this acceleration continue into the new year? i'm not sure. will the fed be that same factor for the markets that it was this year, yeah, i think it will. >> what do you think, same thing? >> yeah, a little different slant than lou. but i think for those economistes and interest rate guys like me, we've predicted eight of the last three increases in rates as we approach the end of the year and start the new year. this has been the chatter for about foois five or six years especially. right now, we're at a situation where the fed acted preemptively in my opinion. but probably correctly in reducing or tapering right now. so as we go into the new year, everyone has got momentum towards higher rates. at least in the first half of the year. and so we're likely to see that with the fed being the difference between where we've seen the last few years. so, you know, interest rates are on the way up.

i agree inflation numbers are the key to inflation markets. we had jeff on the other day. there's some guy at raymond james that picked stocks up 66% last year. you can't get those stocks for next year unless you're a raymond james client. we've not been able to book this guy. how do we do this? is this guy actually exist? can we get him on? can we get some actual stock picks from you guys or do i want to get a raymond james account?

andrew, you said you would get us these stocks, remember? >> you've got me, joe, even with a raymond james account, i'm not allowed to participate as an employee. >> do you remember when we had him on the other day? >> we'll try and get the list. >> he doesn't have it, either. >> he can't get it, either. >> well, i said that. i have to make that my project this weekend. >> david who? david henwood. does he exist? have we called him? what did he do? did they pretent he wasn't there? >> hello? >> oh, no, no mr. hemwood here. we'll get the list. because it's 44%. that's 50% above what even the

market did. are we going to see wolfs of wall street? >> ice age. >> ace age is better, more realistic, anyway, probably closer to reality. >> i saw it yesterday. >> really? >> i'll tell you a story on the break yesterday. >> i saw it alone without any family. what did you think? >> i read the book, too. the book and the movie are very closely tied. the book and the movie -- >> we lived it. i remember those guys. i remember they do -- >> i do, too. >> they do the pools. >> did you love it? did you hate it? what did you think? >> no, look, it's debatchry. it's everything that was bad about our business in that time. and as joe mentioned earlier. >> i can name names of companies that existed all around the country and they all did the same thing. and it -- >> oh, yeah. >> it's called pump and dump. it's called pump and dump and the four people that get caught

up in it, they're retired, don't have a lot of money and these guys don't give it another second thought. >> it mostly spends time with the crazy actions. >> exactly. >> anyway, so it's a weird vicarious way of getting your kicks. gentlemen, thank you. >> all right. when we come back, all week we've been profiling the most influential people in the world of business and finance. the story of pahara and his power right after this. . you know, ronny... folks who save hundreds of dollars by switching to geico sure are happy. and how happy are they jimmy? i'd say happier than a bodybuilder directing traffic. he does look happy. get happy. get geico. fifteen minutes could save you fifteen percent or more on car insurance.

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welcome back to "squawk box" this morning. we're wrapping up 2013 with a look at some of the year's most influential people. skoet conbrings us this profile of pre pbharara.

>> today we announce three law enforcement actions. >> the financial world listens. pre bharara is the de facto sheriff of wall street. he's been busy tackling shady transactions. dubious deals -- >> misrepresentations about income -- >> -- and insider trading. >> the scope of illegal trading was deep and it was wide. >> the crackdown on insider trading has completely changed the way information flows on wall street. in that critical phone call, there's no telling any more whether a federal agent is listening in. >> 77 people convicted since 2009. and in 2013, the probe peaked with the sac capital, the hedge funds billionaire owner steven cohen still in the government's sights. >> bharara is not just looking

at insider trading. he charged two traders and he's part of a force investigating financial crisis. >> but some say not aggressive enough. in a stinging opinion piece for the new york review of books, u.s. district judge jed reykoff says the failure to prosecute individuals could be one of the most agreeshus failures of the justice system in many years. former prosecutor reed brosney says the lack of wall street perp walks is not for lack of trying. >> federal prosecutors want to find him. >> besides, bharara is not through with traul street yet. >> i don't think anyone is too big to indict. not too big to jail. >> maybe he's out to do more in

the new year. scott cohen, cnbc new york. still to come, we've got some political predictions. the stories washington street cared most about in 2014. but before we head to break, paul ryan's wish for the new year. debt reduction, get comprehensive tax reform for lower taxes. ♪ [ male announcer ] the parking lot helps by letting us know who's coming. the carts keep everyone on the right track. the power tools introduce themselves. all the bits and bulbs keep themselves stocked. and the doors even handle the checkout so we can work on that thing that's stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. so everyone goes home happy. [ female announcer ] today, cisco is connecting (voseeker of the sublime.ro. you can separate runway ridiculousness... from fashion that flies off the shelves.

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welcome back welcome back to "squawk box," everyone. aaron rodgers has been cleared to return from a collarbone injury this weekend. >> pretty amazing. >> still don't know who's going to be starting for dallas. >> right. i don't know whether they're, you know playing with us or whether it's really possible. jerry jones says he's in, he's out. >> he didn't practice yesterday. >> yeah, but the packers were a different team. but i guess we shouldn't be surprised. you look at brady or peyton when they're not in. >> the captain, right? >> not just the captain, the rainmaker. things don't work without -- >> the playbook is built around these guys. >> look at the jets. good, bad, it's amazing how important that is. >> it is. let's talk about pop culture news, as well. britney spears is beginning a two-year residence at planet hollywood in vegas. she ran through nearly two dozen songs using a 100-foot stage,

some 60 video projectors and lots of costume changes, too. >> weren't you pulling for her, sort of? >> you've got to. >> i still have visions of the bald britney. >> i think doing this for two years straight is long. celine dion did it. >> they should have done this years ago. >> but for two years? >> it's easier than -- >> living on the road. the rough life. >> once a day. >> set your family up, just go to work and come back. >> it's a lot of money, andrew. >> how much? >> i forget, but it's a ton. >> $100 million. good for her. good for her. still to come on "squawk box" this morning, the state of the american consumer. and why a healthy spender is more important than ever for wall street and for washington. we'll be welcoming our guest host for the day at retail industry insider and a beltway communications guru. first, though, as we head to a break, wishes for 2014.

my wish for 2014 is the fed begins to consider the negative impact of keeping rates so low for so long and that the federal government works on tax burdens of corporations in the regulatory environment. my wish for 2014 is all the troops overseas get home safely and anyone that's missed the bull market over the last 2 1/2 years has the chance to participate in the next leg of this bull market. [ male announcer ] for every late night,

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afghanistan in 2009. on the u.s.s. saratoga in 1982. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation because it offers a superior level of protection and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy. get an auto insurance quote. usaa. we know what it means to serve.

nifty fifty. nifty fifty. the bulls keeping the rally alive as the dow turns in its 50th record high close of the year. >> taking it all in stride. >> nobody knows if the stock is going to go up, down, sideways

or in circles. >> the ten-year yield near levels we haven't seen since september. but unlike the past, stocks are shrugging it off. 'tis the season for predictions and new year's resolutions. we're going to talk about the outlook for politics, jobs and the markets as the second hour of "squawk box" begins right now. ♪ good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernan and andrew ross sorkin. wall street continues to rewrite the record books with three trading days left in 2013. the dow and s&p 500 closed at all-time highs once again yesterday. the dow now has the best yearly percentage gain since the year 1996. the s&p 500 since 1997, the nasdaq, by the way, has been up for each of the past 12 fridays.

the futures this morning are indicated slightly higher. dow futures up by about 16 points, nasdaq by 3 1/2, and s&p 500 futures up fractionally. the size of the u.p.s. air fleet ma have been to blame for the problem with the deliveries. retailers relied on hafly over the last week u.p.s. has a much smaller jet for the fleet than the rival fedex. also textron is buying beach craft, the maker of cessna planes. beechcraft exited bankruptcy earlier this year. and a number of travelers received a late christmas gift from delta yesterday. travelers found incredibly low fares on the website, we're talking about $25 to go across the country. the website says it'll honor the fares they offered by mistake. some round trip cross-country flights $25.

might be one for $19 i had seen on twitter. delta says the problem had been resolved and as i mentioned the last hour, i tried to get one of these rates, but they didn't seem to have them for international flights and we were going for family vacation. >> there was an airline that used to be able to buy tickets like that on the airplane. >> tony fratto who has not been properly introduced, but he will be. britney spears beginning that two-year residency in las vegas today at planet hollywood. and we were talking about whether this would work and how much she might be making to do all of this. well, according to forbes, she'll be making about $300,000 a concert. that's actually a little bit less than what celine dion pulls in per concert. she makes closer to $500,000. apparently britney's on the hook for 100 concerts over the next two years. you can do the math. >> let's take the pulse of the consumer.

i like the "k," can i say it? >> no, it's kniffen. >> what good is if you don't use it? >> who's the other guy i do that with? barry knapp. and tony fratto who has an extra "t." is a managing director -- it would be easier, right? >> but that flattens the "a." >> yours is more legit, i think. managing director at hamilton play strategies, also a cnbc contributor. since we're talking consumer, can you tell us about the consumer? because i figure he knows more. >> we do. we actually constructed a consumer sentiment index. so we look at consumer sentiment, we rolled it out earlier this month. and so we're tracking it like michigan survey. we're able to do lots of cross

analysis on it looking at things like brands and movie openings and we're seeing relatively happy consumer. we're discussing in the green room a little bit earlier that it's a probably good christmas season based on what we're seeing from the consumer. >> the consumer has come around. and we saw some good numbers. what was it? it was a number a couple weeks ago that was much better than people thought. >> we had a number on consumer confidence. by the same tone, the world has said it might be 2.4% christmas, might be a 3% christmas, the highest number i saw. i've got it at 4% right now. i think we had a pretty good finish. i think the big boxes did really well if you were macy's or penney's or kohl's. you did really well. if you were inside the mall, it was pretty tough. but outside the mall, walmart, target and the other big players. they did really well. and they started early on discounts. so it was deep, but it didn't get deeper. deep discounting started before black friday, it ran right through the holiday, but the

numbers didn't change. it was about 40% to 45% off in most of the locations right through yesterday. >> why do you think that is? the idea that the big boxes and department stores did better? that's a changing trend? >> i think part of it's mix. i think if you had denim to sell, you got hurt. i'm sure that department stores got hurt on the denim. so they have a broader mix they can play with. i also think that the department stores were very loud. they talked to the consumer with a big voice. i think it made a big difference. they also were open more hours than anybody else. they got market share. they just pushed a lot harder. >> they had a ton of discounts they probably planned. none of that was surprise discounts like some of the smaller stores. >> it's great to have planned discounts because you get a lot of help from your fellows. fellows like pvh, vf, because the suppliers play with you in your department store. if you're inside the mall, you

don't get any of that help. as long as you can run planned promotions, it all works for you. i think, yes, it was more promotion promotional, a shorter holiday season. there were some negatives. on the other hand, we cleared our outerwear last year at 80% off. this year it was cold, it was snowy, whether boots, scarves, hats, all the stuff that didn't sell last year went out the door early. >> what's the margin on those products? >> well, you want to run -- >> people always say those products have much higher margin than the rest. >> you want to run those out the door if you're a department store at about 50%. so, yeah, that's a big difference. and last year, we ran them out at about 20%, which wasn't so good. so, yeah, makes a big difference now, of course, you can't make a living if you're a department store on just weather goods. but if you can sell your outerwear and boots at a good deal -- >> it's a great time to be a consumer, though? >> right. >> you can get what you want at whatever price, you know, you can find your price, find your quality, source it anywhere.

and despite some of the disruptions on the holiday season, you can get it when you want it, too. >> do the disruptions change anything for next year? >> i don't think so. >> one other thing, becky, it was great to be an online player. the department stores are much better online than the specialty guys. when we get to next year, we don't have the short season, we get one more day between thanksgiving and christmas. it will be a normal-looking year. i think the consumer unless tony tells me otherwise will be healthier. and if the consumer's a little healthier and gas prices don't go crazy, nobody thinks they will. and we don't see somebody increase people's social security tax by 2% which we saw this year. it's all going to work. and i don't see anything that doesn't make me believe that the back end of this year's going to have a little healthier consumer than the back end of this past year did. so i'm optimistic on next christmas already. >> yeah. look, i think it's a good sign. we're seeing with some job growth.

not as much traction on wage growth as we want to see. and i think we need to see. you mentioned the payroll tax holiday. you were talking earlier about the expiration of some of the unemployment benefits. that's going to have some impact. overall, i think we're seeing final demand. if you think about it, we're always looking for clues in the economy. we look for what will job growth tell us about the future and, you know, lots of what's happening with commodities and other price signals. i always start with the consumer and what is happening with final demand. are they out buying things? and i think what we're seeing is they've done pretty well in brick and mortar stores and blew it out online exceeding everyone's expectations. and that's a good sign for a healthy consumer. >> tony, how much of that is because washington seems to have found some way to reach agreements? did you see a huge dropoff in all of the things you're tracking right now the last time washington went off the cliff? >> we saw that and the bounceback. we saw much quicker bounceback this time than we did during the last -- during -- fiscal cliff

and that period. so much quicker bounce back. and maybe it's the time of year, or maybe it really is. we really are seeing a little bit more traction, more healthy outlook from consumers. the levels are still below what we think about when we think about a really healthy economy. so levels of consumer confidence and consumer feelings are still low. so there's still catch-up there. catch-up to go. credit's not the problem it was before. it's not obviously wide open like it had been before the crisis. there's still room there for the consumer to get to more confidence and healthy feelings about the future. so that's a good sign. that actually means there's room to grow in 2014. >> we went through some great times, '80s and '90s. we went through years. clinton and bush, too.

we had immigration problems then. we had entitlement. we hadn't done reforms and entitlement. we had a stupid corporate taxation. that doesn't mean we can't -- >> those are important things to take care of. immigration reform, entitlement reform. impacts on the economy -- >> should allow the economy to do what it does. >> just a ll bit more predictability, right? just a little bit of predictability, i think makes people feel better. the other thing we were doing at those times were opening up a lot of markets, too. i think trade is going to be a huge issue in 2014. the administration's going to be asking congress for trade promotion authority, fast track authority. >> pro business stuff will be -- they're going to try to do it or try to block it. >> it's a good second term issue for this administration, i

think. but they are working on two really big trade deals. one is the tpp, the transfer pacific partnership. really important and the transatlantic trade and investment partnership. a little bit of a slower track. and we have action on doha. not the ambitious one we were hoping for, but the partnership is pretty big and i think it's going to be contentious also. we have not been talking about trade a lot in this country for a long time. and 2014, we'll be talking about trade a lot. and these are going to be pretty big contentious deals. >> you'd like all these things to be solved? >> stability. we like stability. >> two years, it's like, oh, two years of a budget. that was great, right? it was just like we did that all the time before, didn't we? >> we love tax reform. but it won't happen. >> no. >> just stability. just give us the rules. let us know what they are. you know, for the last 20 years of my career, we basically saw

deflation in pricing of everything we sold right across the board. we live with that no problem as long as you have stability in the rules and you know how to deal with it. you just need to know these are the rules, i have to live with them. would i like the rules to be better? yes. do i think we have great rules now? no. >> do you know obamacare can't get worse for business people planning, right? that can't -- if this unravels even worse, is that uncertainty? or do we have the uncertainty already from aca? >> when you're a low-wage, high-head count business, obamacare's pretty scary, right? when i was running a business, we had 100,000 people in the program. i ran the medical care program. we spent a lot of money on that program. about 60,000 people had medical care in the program. and when you start changing things like that where the cost structure changes, you have to get it some place else in the business. retailers are planning right now

for 2015, they were planning for 2014, how am i going to deal with this? am i going to change the plans, cost some place else? get rid of my plan? they're going to have to go through all those analysis. that'll be a pretty tough planning year for most of retail, merely because they have to figure it out. the costs are going to be higher for almost anybody with low-wage, high-end count groups. and that's retailing, restaurants, anybody that does the service industry. >> so that will continue to be a head wind. but i'm trying to think -- we're not going to do anything. and i'm figuring, can we still get to 3%, 3.5% with obamacare if we don't do anything with these other big issues? >> i don't think obamacare's that big of a deal from the view of the economy. i don't think they like what they're seeing because the costs will go up, there'll be some automation, do some scheduling changes. things will happen, but i don't

think it's going to keep the economy from upending. >> it'll stay and we'll fix it? obamacare? it'll stay? >> it'll be tinkering along the way. >> it's not going to just implode when they don't get any young -- >> one part of this is an insurance system. you need to have everybody in, right. now, the way they're doing it is really difficult for a lot of people to deal with and it's going to be massive change for a lot of them. they're going to be buying things they don't want. we do that when we buy autoinsurance, right? we know we're all subsidizing each other. but compelling people to do it, that's what makes it really difficult for them. so politically they have a huge problem and it's going to take a while to work through that. and that's multiyear. >> yeah. doesn't go away very quickly. >> no. >> tony will be here for the

rest of the show. when we come back, president obama signing the budget agreement into law yesterday. but don't be fooled, there's still another debt ceiling fight coming into the new year. the washington stories wall street have to watch in 2014.

let's look at the futures. we have had let's look at the futures. we have had a string of sessions of positive gains. and here we are again. even though the fair value is down 14, we're up six. indicating another positive open. why not? the remaining days, we might as well trade up. i did some work, becky. and i figured out if you take 13 basis points -- actually, not 13 is what you got from me, it was about a 4% move in the yield. which i guess it's statistically significant. i went back and said, what if it's 12 basis points on a

normalized yield curve, then you're down at like 1% move. i'm not sure i'd be bowing at all at that point. >> we've got to keep agreeing and bowing the whole day. for a week. >> i kind of agree. with you -- >> you don't have to agree with me. >> well, i can't because you said you didn't think there'd be a taper. >> i'm not asking for you to agree with me. that's a club i don't want to be part of. >> i know that. we need to agree to disagree. the enemy of my enemy. >> he's my friend. >> it's not a universal movie? >> it is not. wouldn't it be fantastic? over and over again. let's talk about what's going on in washington. because the budget crisis, government shutdown and the rollout of obamacare of course dominating the headlines in 2013, what will the political landscape look like in 2014? chuck gabriel's the managing

director at capital alpha partners this morning. tony's here, as well. let's go through the big issues. what do we think -- let's go through what happens. chuck, where do you come out? >> very sanguine, andrew. i think leader mcconnell in the senate really said it very eloquently when he said there's no education in the second kick of the mule. and republicans have, you know, have taken a big hippocratic oath. and meanwhile, i'm sure you've noticed, we've taken to suspending rather than extending debt ceilings anyway. so there could be a week or two where even democrats seem open to the idea of removing the individual mandate because obamacare's problems continue. you're really not going to have a suspension of the debt ceiling in say march. >> what are the chances we get tax reform? any chance in 2014? >> i think all of my clients would love to see it and i think they'd hate to hear me say this.

it's something close to zero. it is not -- there's not a high likelihood because you have a hard time finding enough winners across the political spectrum to get tax reform done. it's really hard to know. >> chuck, you in the same place? >> i'd totally agree. i'd also say that tax reform can be a mixed bag. if you're in the housing sector, muni bond sector, if you're an insurance company. you know, that's something we can wait on for a couple of years. >> let me throw a more controversial one out there. i don't know if it's controversial, i thought something would happen and the president's talked about it. both sides have talked about this for a long time, immigration reform. where does that actually stand in 2014? >> let me go first. you know, we -- that's one of the best calls we had last year. it really is a nonstarter. largely because house republicans are looking at re-election and sort of carefully crafted red state republican districts. and this doesn't buy them anything. there was some optimism after we saw the ryan/murray budget deal

cut. and speaker boehner has brought on a staffer that's very conversant on the subject. republicans are insisting that you first have an enforcement mechanism in place and have another congressional vote that certifies that before you can start the really good stuff that the democrats care about. and that's a nonstarter. it's very, very unlikely. >> tony, tell me something better than that. >> better on immigration reform? >> no? not going to happen? >> i think it's really important for the country. i'm a first generation italian-american. i want to see it get done. i think it's important economically. but it's broken down in process in trust between the house and senate. >> who's at fault? who are you going to blame for not getting this done? is this the republican problem. >> i think there are too many people who misunderstand how important economic immigration is to the country. there are really good economic reasons to do it and people

misunderstood that. i think it's actually our fault for not doing a better job of educating across the country of benefits for immigration of the country. >> thank you. tony's going to be sticking around. happy holidays to you. when we come back, a cruise ship trapped in ice off the antarctic coast hopes to be rescued today. this is where you want to go? >> pretty much. >> we have that story when we come back. mine was earned orbiting the moon in 1971.

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a cruise ship has been trapped in ice off the antarctic coast. 22 crew members and 52 tourists. it's on a special research voyage on the 100th anniversary of famed australian explorer douglas mossen. hmm, not that famed since i don't think i've heard of him. the ice breaker ship is expected to arrive today. >> did you ever read about shackleton? >> one of the best reads. >> yeah. >> one of the best reads. >> that would keep me off of a boat like this. >> that book is -- >> nasa announced that the sea ice -- i don't know whether they knew there'd be ice here.

but the sea ice in the antarctic has extended over 19.74 million square miles. the highest measurement of ice there since 1979. more than 30-year records. >> you do that for me. thank you. coming up -- i can't explain it, it has -- it's definitely because things are getting warmer. that's all i know. coming up, how delta's dealing with the extremely low fares it offered by mistake this week. a live report. you're going to keep your fare. there's no way, right? you've already got one. bny mellon combines investment management & investment servicing,

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welcome back into "squawk box." three trading sessions left for 2013 in what's been the best year for the dow and s&p 500 since the 1990s. all coming off record closes in yesterday's session. and the nasdaq has been up for the past 12 fridays now closed at its highest since september of 2000. i can't believe this.

textron is buying beechcraft for $4.4 billion. it's currently controlled by several hedge funds, including center ridge partners and the unit of bain capital. the maker of cessna planes and helicopters, now you have them in one place. and i will go on one of the propeller planes. >> turbo props. >> i think i'm okay with that. >> i saw pictures of them. and also, general motors is recalling nearly 1.5 million cars sold in china. this is due to an issue, apparently with a bracket that secures the fuel pump. it's one of the biggest recalls ever in the rapidly growing china auto market. >> what changed your mind on the turbo prop? >> i was doing a little research for turbo props. and these beechcraft planes are used for military actions and other things. >> yeah. they're -- you know jet engine is -- there is something spinning kind of like a -- it's not that much different the way that the air's being pushed. >> fast.

>> it's faster but it is doing the same thing, basically. anyway, delta says it'll honor extremely cheap fares offered by mistake. kerry sanders joins us with more. we were just discussing if you bought one and knew it was too cheap. should you say, are you sure about this? or grab it and say, you owe me. delta's got to do it, right? >> absolutely. it's a glitch. delta says they're going to honor the purchases. whenever you're at the grocery store and catch one of these mistakes, it seems to be in favor of a grocery store, this has been a turn about where it turned out to be in favor of the consumer. delta says they're going to honor all the tickets. it happened around 9:30 eastern time yesterday and caught up with it about noontime which is a long time when you consider people on twitter real quickly with the deals they were getting. jfk to puerto rico, usually $308

sold for $77. jfk to vegas usually $741 sold for $81. and this is my favorite, amy chi in indianapolis. listen to this, she looked online, wants to go to honolulu, saw a ticket for $70, was about to buy it and looked over at first class, it was $88. that usual price is $3,396. she tells me, i feel like i committed grand larceny. now, this has happened before, about three months ago with united. but that window of opportunity for that glitch was about 15 minutes. so this was a lot longer, but, guys, delta says they're going to take a bath, but they're going to honor all of the tickets here. and i'm a little suspicious. i asked them whether this was one of the stealth marketing campaigns and they said absolutely not. this was an unplanned, costly mistake. >> do we know how big of a bath they'd take on this? >> they will not reveal how many

tickets they sold. i did ask that question. >> wow, you have to imagine there were a lot of people looking around, too. if they're on vacation right now. maybe off work. i would think it would be a higher number than usual of people already online looking at some of these things, kerry. >> reporter: and you didn't have to be on the delta website. you could have been on one of price line. you could have been on a lot of different websites. they were all linked in together. it was really quite widespread here. >> good for them for honoring it. >> they're doing the right thing. >> kerry, thank you very much. it's great talking to you again. right now, it's time for a read on employment. staffing service expre employment professionals out with seven job market predictions in 2014. joining us now is bob funk. the chairman and ceo of express employment professionals, also the former chairman of the federal reserve in kansas city. i know you have a lot of thoughts about what to expect in 2014. maybe the most important one is that you don't think the unemployment rate is going to change very drastically next year.

>> we don't think the employment will change that much because of the uncertainty that's out there in business and, of course, the lack of skilled workers and semiskilled workers. . we think it'll be difficult for business to expand. and the optimism is not there in relationship to where we're going with obamacare and the tax structure and what the government might do to our employees and to our companies. companies, you know, are entrepreneurs and they're looking for the bottom line and don't know exactly where their bottom line is going to be this coming year. and so we don't think it'll help that much as far as the unemployment is concerned. >> we have been talking to people this morning who point out that the consumer looks like it's ending the year in pretty decent shape. consumer confidence has been pretty strong. is that a situation that you think could turn that whole situation -- that could turn the whole jobs picture around. if consumers feel good and they start spending, that creates a lot more demand. that's what companies respond

to, right? >> well, that could happen, it doesn't seem to be happening. we are in the small and medium markets and small cities across america out here on main street. and we're not seeing that expand that rapidly. and that's why it'll -- unless we're able to get the skilled and highly skilled individuals to come into the market. we also have a challenge, of course, with the younger people looking for work and the more mature individuals looking for work, as well, and the labor force participation rate is the lowest since 1978. and so we're concerned that the people out there are not look g looking. and of course, they're going on to the social benefit programs, which curtail, of course good employees coming out looking for jobs. >> one of the things we've been talking about this morning is

this idea that 1.3 million americans are going to lose their jobless benefits tomorrow. is that something you think will change the picture drastically? >> it's a real factor. also, if there's a rise in the minimum wage, that hurts our country, of course, because it's real. economics are really simple. around the world, wherever the labor costs are reasonable, that's where the jobs are going to go. whether it's china, north vietnam, eastern european countries. wherever the labor cost is low, we will lose jobs out of america. and that is a concern that we have in the past in my 48 years experience in the employment business, every time the minimum wage goes up somewhere, we lose a lot of jobs. and that is real concerning for us. >> you deal in temporary workers and you think temporary workers are going to hit record levels this year or next year, why do you think that is? >> well, the uncertainty out in the marketplace, most companies will not hire permanent

individuals when they don't know what their social costs are going to be or tax rate is going to be. so consequently they'll usually hire temporaries in advance of hiring them permanently. our position, of course, is we're trying to find permanent jobs for people through the temporary process. and in the past, that's worked most of the time. our employees will go to work permanently, if they're good employees. the companies will hire them permanently. right now the companies are holding off hiring permanent individuals. we're up about 125%. so it's a great recession. so companies are using the temporary concept that's try before you buy, of course, before they put them on permanently because they don't know what their overhead costs are going to be on each individual. >> bob, that's a fairly pessimistic outlook for 2014. the federal reserve is beginning this tapering process next month. it's going to start pulling back quantitative easing. what do they see you don't?

>> well, i think if you read bernanke's article back on the 10th of this month, he said the unemployment numbers are misleading. and often misleading. and we find that to be true, as well. and they'll ease it back. they're very conservative in their approach usually. at least when i was on the board they were. just to make sure the economy doesn't collapse. >> you think they're doing the right thing at this point. it's based on their read on the economy which you think is fairly accurate, too? >> i think it's fairly accurate. and i think they'll use very -- they'll use caution, of course, in what they do and move it down slowly if they're going to move it down at all. but we'll see the next quarter comes along whether the jobs and the unemployment goes down. but we can't rely on the numbers, of course, because we don't know how accurate those are. >> all right. bob, thank you very much for joining us. we'll talk to you in the new

year, as well. >> thank you very much. >> yeah. >> what's that? that cruise ship was researching global warming stuck in the ice. it's summer down there, too, apparently. still stuck there. 30-year highs for the amount of ice. they'll get it out. they'll be all right and they'll be able to continue -- have you ever seen where the big global warming meetings get canceled on snow. i like when that happens. it's just weird. the irony. anyway, energy price fluctuations. >> i thought it was climate change. >> i'm sorry. yeah, because of the build-up of carbon. not carbon dioxide. >> i'm not getting into the carbon debate. >> change, any change, basically. back in medieval times they had reasons for this stuff, too, but they didn't know it was coming. energy price fluctuations will have dramatic impacts. up next, predictions for oil and

natural gas prices in the new year. >> my wish for 2014 is we see a real turn around in job creation. >> more opportunities for people to get work. >> job creation. >> to see more people gainfully employed. >> unemployment below 7%. >> better jobs. >> unemployment dropped. >> more people are employed. >> the unemployment rate drifting lower. >> let's get back to work, america. [ male announcer ] for every late night, every weekend worked, every idea sold... ♪ ...you deserve a cadillac, the fastest growing full-line luxury brand in the united states. including the all new 2014 cadillac cts, motor trend's 2014 car of the year. get the best offers of the season on our award winning products. like a 2014 ats and srx. hurry in, offers end january 2nd. the energy in one gallon of gas

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welcome back to welcome back to "squawk box." a mixed bag in the energy complex this year. nat gas supplies have surged in the u.s. while retail gasoline prices have fallen. sharon epperson will look at commodities in the new year. let's check out the score card to see how she did back in 2013. sharon said that robust u.s. oil production would keep a lid on prices. this proved very true as u.s. petroleum supplies have had a far greater reach in 2014 than

in past years. more crude oil also moving around the u.s. on trucks, barges and trains than at any point since 1981. next, sharon predicted that the end of the bear market for natural gas was near, and she was right. we saw an increase demand set the stage for a 15% rise in natural gas prices from january to late november this year. and finally, let's talk about this one, she called for an end to $4 gasoline in 2013. this was also correct. supply and demand fundamentals not only helped keep the national average from topping the mark this year but taken prices to the lowest level since early 2011. sharon nailed it. let's see what she's got to say for commodities in 2014. >> get ready to fill up for less in 2014 as gas prices fall to a four-year low. refineries are increasing production causing supplies to swell and demand remains rather

muted. we usually have a price surge in the spring that's when the east and west coast can see pump prices near the $4 a gallon mark. prices should be below $3 a gallon in the middle of the country for much of the year. prices at the pump depend in part of oil futures at the nymex. and even if they reach the triple digit mark, they probably won't stay there for long. the ongoing boom in domestic oil production will continue. and as we have more output, we'll likely hear more calls for exporting more crude oil. right now, you can only export it to canada. but while that debate continues, supplies will likely outstrip demand dampening oil prices. but truckers beware. even if oil price gains are muted, we could see higher diesel fuel prices. may take diesel prices significantly higher in the early part of the year offsetting the declines in gasoline. but then, prices should fall or at least steady a bit.

sharon epperson, cnbc business news. >> and make sure you tune in throughout the day today. for more predictions, you can watch them all also on the web predictions.cnbc.com is the address. let's bring in the president of oil outlooks and opinions. going to be a similar year to last year, would you say, carl? what dynamics could change? >> well, i don't know if it's going to be so similar. what could change and it's a macro picture here. the economy. this last couple weeks or last month or so, we've seen this job creation just continue with over 200,000 nonfarm payrolls. it's coincided with gasoline demand seeing an unseasonal spike. i think if that continues, we can see this gasoline demand really pick up and see record levels come summer. as far as crude oil goes, everything will be geopolitical and will go up next year. the difference is, we won't go up as fast, as high as we have

in past years. i would say over 100 next year for wti, maybe 104. but, you know, it's not going to be too much. >> when do, you know, when does the oil boom or -- not the oil boom, but the energy boom have an effect on oil? i'm talking about natural gas? when does that start the cheap alternatives to crude? how long does that take to start turning that into a competing energy source? >> well, you know what it is, it's really not so much about the commodity as it is the technology. i mean, you know, it's going to be hard to kind of switch over a lot of cars or a lot of things that are running on fuel to natural gas. and as long as it's cheaper to make crude oil and gasoline and diesel and what have you and more expensive to actually make the technology to change all this around and people to turn that around, too, it's going to take some time. i think, like i said, prices for oil will go up not drastically.

and it's sort of like inflation. we like inflation, just don't like inflation too fast. if they spike up, then we'd actually look for alternative fuel. >> i think there's enough on the margin that could immediately be replaced that it would make a difference on the margin and that anyone predicting that oil goes up year after year after year that eventually they'll be predicting that. i guess i could be wrong. nothing at the margin. not necessarily transportation. but there's no use of oil or even derivatives of oil that could be used for natural gas. put it on the grid so it becomes electricity. tesla, obviously, is a prime example. if there were enough cars or went to a fleet of truckers, that would be enough, even if it's only 5% of what we use for crude, that should loosen up the demand in supply dynamics for crude. that won't happen? >> no. i mean -- you know, when it

comes down to, really. it's not so much the industry, it's the people who use the fuels. it's like, hey, you know, big macs are bad for you, but mcdonald's is one of the top grossing restaurants in the world. maybe natural gas is cheaper, a better alternative -- >> you know for a fact one big mac is bad for you? you can tell me definitively -- >> everything in moderation. >> one big mac is bad for me? all gmo foods are bad, too. can you tell me definitely that foods with no preserves are better for me? >> well, outside of new york, they're okay. >> you know what, we are living in a crazy world. maybe, you know, i hope you're wrong. maybe oil eventually some of this stuff is fungible. it's easy to predict up 10% every year. some year that's going to happen, right? >> yeah. i think you're right. technology will make it easier and more accessible. >> you're in houston, you're not

allowed to say -- you can't leave the building. you're afraid. >> that's right. >> we're seeing global demand. global demand is still -- >> as demand from china and places, india. >> skyrocket. >> but there's a reason in the middle east they hate fracking. they're like, no, we're not worried. >> right. exactly. it's fine, frac away, we're not scared. when we come back, we have thoughts on holiday retail season from our guest host. my 2014 christmas wish list is some more confidence. we deserve more and should be getting more. >> i want to see growth pick up, consumer spending pick up and wage gains increase. i think you have to have wage gains accelerate from where they

are now. it raises the price of fishmeal, cattle feed and beef. bny mellon turns insights like these into powerful investment strategies. for a university endowment. it funds a marine biologist... who studies the peruvian anchovy. invested in the world. bny mellon.

let's get let's get a final word from our guest host for this hour. jan kniffen. he's a cnbc contributor. by the way, and we're going to get it -- tony's staying, so you get a last word later. where is the j. rogers part from? >> that's my middle name. >> oh. did you know that? i didn't realize the rogers

part. anyway, doesn't matter. >> and there's been rogers all back through my family. >> okay. on retail, here's what i want to know. jc penney, which has been sort of the company we all keep watching as -- i don't know if it's a bell weather of a return story or not. we saw what happened with best buy last year and that was an amazing story. is jcp going to be in that category a year from now? >> i came on here and talked about best buy when he made his presentation and said, this guy's got it right, it'll work. they have it right at penneys, as right as they're going to get it. but, yes, it's getting better. they had a decent christmas, a good november. they're probably 85% on the product in the store right now. they'll be 90% some time in the spring. it will get gradually better. they've got the sg & a under control. they're not going to have expense problems. their gross margin will probably run 31% here in this quarter.

things are just getting marginally better. >> we've got to run, but you were right on best buy. does the stock make sense anymore, though? it has run up tremendously. >> the best buy? >> yeah. >> i'm not saying it's a buy now. but they've got it right, they're doing it right. are they a long-term winner against amazon? that's hard to say. >> their biggest competitor is walmart. >> clearly. amazon is the biggest competitor of retail and walmart's the biggest threat to amazon. >> thank you. when we come back, we have market predictions for 2014. bob doll and jim paulson will be joining us to talk about their expectations for trading in the new year. and later, it's the most wonderful time of the year. time to look back at some of the best moments and the most embarrassing blunders we made right here on "squawk" in 2013. mine was earned orbiting the moon in 1971.

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just by talking to a helmet. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's.

wiggle your toes. [ driver ] and it got his okay on treatment from miles away. it even pulled strings with the stoplights. my ambulance talks with smoke alarms and pilots and stadiums. but, of course, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything. so everything works like never before. making money in 2014 -- we're going to bring you extra predictions on the markets. >> amazon sold enough miniature flashlights this holiday season to light four college football fields in accordance with ncaa

standards. we'll bring you more sales numbers and odd ball statistics from the online retail giant. >> plus, a fan favorite. we'll take a look back at the highlights. >> you're all like, it's all over here. >> the third hour of "squawk box" begins right now. ♪ >> welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernan along with becky quick and andrew ross sorkin. and our guest host is tony fratto. we'll have more from tony just ahead. first, though, a round-up of this morning's top stories and another day when the market has indicated higher. >> check it out. the dow now on pace for its biggest yearly percentage gain since 1996. the blue chip index posting a

record close in 50 trading sessions this year. more from strategist bob doll. among the other stories, the stock stories we're watching this morning, the big one being twitter. shares have nearly tripled since the company went public, making it one of the best-performing ipos of the year. the stock was up almost 5% yesterday and now downgrading twitter this morning from neutral to underperform. the analyst argues that nothing has changed in the fundamentals to justify the sharp rise in shares over the past few weeks. one question, do we think that twitter left a lot of money on the table? >> no. >> you're okay with this? this is always the issue. facebook -- facebook made a lot of cash, though. they have it in the bag. >> the remaining shares they hold are now valued at $70 a share. >> they have less cash in the bank. that's my -- for a company that doesn't make a lot of money. anyway. also u.p.s., fedex, amazon and other online retailers, dealing

with all that customer anger after shipping hold-ups kept packages from arriving on time for christmas. amazon defending itself and pointing fingers and is reviewing the performance of the delivery carriers. i was a victim of this to some degree. >> whose present got? >> it was a present that was supposed to come for tuesday and not on christmas and it didn't or monday night. it needed to come by monday night and said estimated time was monday and it didn't show up. anyway, amazon said it has limited the number of new customers for the prime service in run-up to christmas. though it signed up more than 1 million new customers during the third week of this month. service providers free shipping and return on that annual fee. i'm a prime member, you're a prime member. we're all -- >> everybody but joe. >> joe's not a prime member. that's why his gift is still somewhere in the u.p.s. ether. >> and you won't tell me what it

is either. >> no. why? >> i'll send you the tracking number and you can sort it out yourself. >> your gift to me, you handle the tracking. i'm not tracking down my gift. >> markets continue to march higher with another record-setting close. joining us right now is bob doll, chief equity strategist. also, jim paulson who is the chief investment strategist at wells capital management in minneapolis. and, jim, we've been talking about how the market's been unbelievable. ever since the taper, it's closed higher every single day. you think this is based on fundamentals. >> i do. i think the driving force, becky is the economy. and we've had rather consistently better than expected reports, maybe more consistent than ever before in this recovery on a broad array

from everything from consumer sales to capital spending to claim numbers. and then also broadly globally more so than ever before. we've got better growth reports coming from the u.s., japan, europe, the emerging world. i think it's that -- it's the sense of acceleration of global economy and also a broadening global economy that's driving stocks higher. >> bob, you agree with that? >> i emphasize the word broadening, becky, more sectors, more parts of the economy, more geographies doing a bit better and that's causing investors to smile and buy some stocks. >> what are you buying? what's making you smile? >> i still think the lean toward the cyclical side makes all the sense in the world. the defensive stocks are great when you're uncertain, but when things are improving, you want to be in industrials and technology and consumer cyclicals, financial or two. they're the stocks, i think we'll continue to carry the day,

becky. >> what's the financial or two stock you like? >> i think in the financial sector, you've got the balance sheets every 90 days, some of the big banks, i think makes some sense in the portfolio. an insurance company or two. they're part of the cyclicals. and while i don't think the fundamentals may be as good, they're cheaper than the other cyclicals. >> are you willing to tip your hat to paulson. do you wish you've been more bullish, bob? >> of course. coming into 2013. >> maybe buy some united health care once in a while, but you never really embrace this thing with both hands like paulson. i think you should order his newsletter. >> maybe i should. we had a double-digit gain for 2013 but we had a bigger number behind the plus sign. >> let's ask this, do you see

gains like this next year? maybe not gains like this. >> we're going to remember this. careful. >> 10% or better? >> unfortunately, joe, we're going to make your day, no, i don't think we'll see gains this year. we'll see a gain in the economy and that's what the rise in the market was in 2013. >> we can replay this. >> over and over again. >> i want to -- >> play it all year, joe. it's fine. >> i want to put both of you guys on the spot, maybe not better than this year, but do you think it's going to be a strong year for the stock market double digits? >> i think it'll be a good year, i think it'll be better than cash and better than bonds and for financial part of the portfolio, that's what one has to consider. that means overweight stocks. >> wait a minute. which bonds? because if you're talking the ten-year. >> interest rates i think will drift higher and as they drift higher that's a head wind for every bond. >> it's 3%.

>> got a head wind we hadn't had for 30 years. >> better than cash or better than bonds doesn't tell us anybody. better than 10%? >> i think we'll have a better than 10% year, yes. and more volatile than this year. this is basically a docile straight up easy year despite the consternation. >> what's the story behind that? how do you say 12%, 10%. i think next year looks pretty good, too. but what's the story behind why that would be coming from where we are? >> earnings growth, the economy's good, earnings growth will improve, earnings growth has begun to accelerate. earnings growth decelerated all during 2013. every quarter was lower than the prior one, '14's likely to look the other direction. >> paulson, how much next year? >> a whole different story, i think we're flat on the year for stocks. i think we're heading up to 2,000 on the s&p this year and

coming back to where we are now. >> what? wow. >> my feeling is the real driving force under the economy here is the money supply velocity is turning up. that is the turn of the money supply. how often it turns over is accelerating for the first time in this recovery. and initially all that does is sends up better economic information and makes the stock market go nuts, which we're doing now. eventually when we find out that velocity is what's behind this, can the fed hit the $3.5 trillion fast enough? i think we have a volatile year led by cyclicals initially. and in the second half, we have a flat stock market, the bond market gets killed, bond ten-year gets repriced to 4%. >> jim, just get out of the market now? >> commodities have the best return. >> you said you should just get

out? get out while the going's good? >> no, i don't think so. i think it's going to be a difficult call. i don't think the bull's over. i think the bull's going to take a pause this year and continue on higher in 2015. if you want to try to time this, good luck. i'm going to try a little on the margin, stay a little cyclical early and stay defensive later. but it'll be tough to call. i think it's a flat market. not necessarily a big down market. i think we'll have a 10% correction during the year. i think the best markets this year is going to be commodities. maybe a double digit return. stocks are flattish and bonds get another bad year is where i'm kind of at. >> you think some of the overseas markets are going to outperform the u.s. stock market? >> i do. i do. i think you're going to do better. and a lot of that, becky, i think the dollar's going to continue to weaken this year both against developed and also emerging world currencies. and i also think the change

that's going on in growth, we're going from maybe 2 1/2 to 3. but europe and japan are going from negative to positive growth. the emerging world going from a big slowdown to respeed. i think that's going to draw more portfolio flow than the change here in the united states. >> we're going to wrap this up in a moment. but bob really quickly, give us a few specific stocks you really like? >> sure. i'll stick in the cyclical area in industrials. i think some of the aerospace defense stocks are still cheap. boeing, in the technology space, i think a collection of yesterday's technologies that are cheap, trying to figure out what they are going to be. i would own some microsoft, some oracle. >> boeing's been hitting new highs. but even -- >> it has -- i think it'll continue to move higher. airlines are being run for profitability for the first time perhaps in our lifetime.

they're updating their aged fleet in lots of places and overseas, lots of expansion. >> all right. bob, jim, thank you very much. we'll talk to you both again soon. >> happy holidays. happy new year. amazon releasing info on holiday sales including weird statistics. like customers purchased enough griddlers to place one in every mcdonald's in the world. >> that looks like a good one. and later, predictions, for activist investors. ♪ i wantthis year ♪a little love [ 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. at bny mellon, our business to is investments.event.

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welcome back, everybody. auto trader is out with the list of the most popular new vehicles in 2013. ford's f-150 retained the top spot. meaning more people clicked on new f-150 listings than any other new vehicle on auto trader. the jeep wrangler was second. rounding out the top five, you had the ford mustang and chevy silverado. the top 20 most popular new

vehicles. among brands, ford was the winner with six models in the top 20. and amazon releasing sales statistics for the holiday season. the online retail giant said more than 1 million customers signed up for the prime service just in the third week of december. in fact, the company said it had to limit new prime membership sign-ups to ensure that service to current members wasn't affected. amazon sold about 426 items every second on monday. customers shopped using a mobile device this holiday. amazon released statistics about the most popular products. they said enough hot wheels cars wither purchased to stretch along the speedway. enough crayola markers were sold to draw a line around the world four times. and enough crystal lamps were purchased that if you stacked them one on top of each other,

the collective height would equal mt. everest. yeah. how's that for you? people buy strange things, don't they? when we come back, we'll talk about 2013. it's been the year of activist. up next, we'll talk about the lessons learned this year by board rooms and activist and what you can expect in the new year, too. we'll be right back. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the all-new fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. get 200 free trades when you open an account. where does the united states get most of its energy? is it africa? the middle east? canada?

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welcome back to welcome back to "squawk box." a number of travelers are receiving a holiday gift from delta. some customers found incredibly low fares on the company's website. and the airline says it's going to honor those extremely cheap fares it offered by mistake. some round trip cross-country flights were $25. this happened before. you remember? it was a while ago and the same thing happened. >> so in this case, i think you honor them. but my question is -- if you're in a store and you see something clearly mispriced. do you think you have an obligation to go to -- >> how is this different? >> i've given money back when they've given the wrong change. >> do you go and say, look, i think you mispriced -- >> you have to do that. >> or do you say i really think you need to honor this price. it's 50% off and i need to leave the store -- >> how is this different than with delta? if you buy something, they -- >> this seems to have been an overall problem.

i'm thinking of a lamp i bought years ago from restoration hardware. >> he's still grappling. >> from restoration hardware which had to be like 80%. it was clearly not right. it was so wrong that it was not right. >> is that what it was? >> no, i still own the lamp. but i always wondered -- >> but you didn't say anything. >> do you have restoration hardware in your apartment in new york on the upper west side? i don't think i'd admit that. >> why? >> why? >> i don't know. it's a mall, you have ethan allen furniture. >> it's different. it's different. >> still, you're not up in maine bringing back beautiful antiques. >> let's get back to the stolen lamp. >> no. so the lamp and i always wondered -- it was clearly -- one was mislabeled. >> it's a mass produced. >> and i wondered whether i should said anything.

>> i took the lamp that with us mispriced and i -- i use it every day. >> and knowing what you paid for the apartment from google, i just can't believe you're putting restoration hardware in there. >> thank you, joe. >> upper west side, andrew ross sorkin. >> you want to give my address away? >> it's easily findable. >> thank you. >> we're going to talk about activists because it has been the year of the activists. i have to become more activist, i think, this morning. complete with constant changes in the -- hold your fire, please. >> wow. >> what can management expect in terms of shake-ups? >> the square feet -- >> joining us now is buzzfeed's business reporter writing a lot about activists this year when it comes to 2014. first of all, do you have a surprise customer for us who you think will be attacked? >> if i knew, i wouldn't tell you right. but any company with a huge amount of cash which is more and more of them is a really inviting target and people don't

think it's doing well of it. >> what's the answer, then, in terms of how you react? do you say, talk to the hand, please come in under my tent so you get stuck in my tent? what's the appropriate response? >> yeah, i think a good example is what mike soft did with value add. they let them in, said you can join the board next year and then they had a ceo change and they were kind of frozen. >> wait a second, i look at that as a weird move they only owned 1% of the microsoft stock. >> you think anybody that walks in the door and screams loudly enough you should cave to? >> well, depends how credible they are. a lot of times the cash piling up, one person can speak for a lot of people. look at what happened with apple and david einhorn. they got one of the biggest

buybacks in corporate history. >> apple has not gone along. and they said, yeah, we're not doing what you want and they got icahn to back down. he said, you're right, now i want you to buy back this much instead of that much. in some ways, i think it's a problem if you reward bad behavior. >> well, they have all this money sitting around and people are going to go after it and it's their responsibility to say they're doing something with it proactively. >> this may be sensitive at this table and maybe joe and becky have views on this, too. actually who's at fault in all of this is the media. that we have become enablers of the activist. and that if they didn't have the megaphone that is either tv or websites or newspapers that nobody would listen to them. >> or twitter. >> or twitter. and by the way, twitter, you can go direct to the shareholders. so where do you put the buzz feeds of the world or cnbc or anybody else? >> well, that's absolutely the case. another great example, a year

ago when bill ackman announced h herballife. >> yeah. everybody covered it. >> he has a much better relationship with financial reporters than michael johnson does out in l.a. >> why is that the case? a lot of the bankers are my clients, the big firms are my clients also. but they can communicate directly with their shareholders also and they opt to be. if you allow space for an activist to come in, you're probably not doing your job communicating well with your shareholders, which you ought to be. >> they should look to you to help them out. hedge fund managers, especially ones that got really, really famous in the financial crisis have a much better -- a megaphone. >> it didn't work for ackman. he used the media, came a lot of places and did it and that completely backfired. carl icahn said i'm going to get him. >> the stock didn't dive down to

$25 after the presentation. >> he's lost a ton of money. >> no amount of savviness can help you out if you're out of money. >> different question. activist, force for good, force for evil? i'll ask both of you this in terms of -- are they short-termers as some of your corporate clients would like to suggest? are they helping shareholders, the companies? >> we've been on both sides of it, frankly. and in some cases, they have a real case to be made where companies are not being aggressive enough in using their cash to grow the company. that matters. growing the company for the shareholders. it's a case by case. i don't think -- >> i think of uncle carl and say to myself, carl has an amazing investing gut. in a way that is really -- >> he's really good. >> supernatural. >> and yet he doesn't know anything about the operations or as the technical skills to talk about dell or apple or any of these other companies. >> becky made a great point. apple talked to him, right?

i think they explained the business to him. explained their strategies to them and also explained that they're not going to cower to him. they know -- they do know their shareholders. their shareholders have faith in them and their brand and long-term strategy. and they were able to beat back carl icahn with knowledge and communication. >> he never said he knew what to do from -- >> he knew what to do with the financials. >> with the financial part. the money. >> that in itself is kind of depressing, right? kind of shows the economy we have where companies are accumulating this cash yet they don't see a lot of growth on the other end, they might as well give it back to the shareholders. >> sad reality, matt, thank you. happy new year. appreciate you coming in. and coming up, we are looking ahead to the new year and steve liesman will have predictions. and later, what to expect from the auto sector next. we'll talk to a senior analyst from kelly blue book about the tail winds for the auto manufacturers.

will they show us -- take a look at the ten-year yield touching 3.02, the highest level since july of 2011. (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking, i get one view of my bank and brokerage accounts with one login...

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welcome back welcome back to "squawk box." let's take a look at stocks to watch in today's trading. the big one being twitter. it has been downgraded by -- i always mispronounce this. mcquarie. they say there's nothing to justify the run-up. we're also watching 3d systems. the maker of 3d printers rose 5.2% on monday, lost 5.3% on tuesday and jumped 7% yesterday. we'll see what happens today. and tesla shares are edging higher in pre-market trading on top of a 9% gain so far this week. it's unbelievable. r.w. baird analyst is telling cnbc that demand is not an issue for tesla. but ramping up production levels

sufficiently may be the problem. joe? all this week, we're telling you what you need to know to make money in the new year. steve liesman joins us with his 2014 predictions. first, let's see how he did in 2013. steve predicted the fiscal cliff would be resolved january 8th. it was close, it was january 1st. next, he predicted at least one quarter of growth above 3% in 2013. this was right thanks to the third quarter growth. finally, steve predicted that former chief of staff jack lew would be the next treasury secretary, that proved true, as well. i don't know. and there was a 4% in there. not bad. now let's see steve east predictisteve's prediction for the new year. >> my big call for 2014 is synchronized global growth. we haven't had a year without at least one quarter of negative

growth from either japan, the u.s. and europe since 2005. 2014 could be that year with the crisis ebbing in europe, u.s. fiscal drag and japan opening up the throttle, there's a decent chance for one of the big growth years from the big three since the crisis began. global growth will keep the fed on track to end qe in 2014. it'll do all it can to get out of the program without a spike in interest rates and a sharp fall in stock markets. it's going to lean heavily on guidance that kept low through 2014 and even into 2015. inflation could be a new worry next year. it's unclear but it's logical it will be a concern for markets. that will present a challenge for the fed. if wages and commodities rise, the central bank would have to lean heavily against criticism that it's risking inflation. the fed will argue that with so much slack in the economy, especially in the labor market, it can afford to be patient on rates.

but it could be a year that fed critics pound the inflation hammer. steve liesman, cnbc. >> make sure to tune in throughout the day, today for more predictions, you can watch them all on the web at predictions.cnbc.com. let's get a check on the markets this morning. and rick santelli will join us from the cme in chicago at -- you're like the five-year more than the ten-year. although the ten-year is the one we're talking about. >> yeah, no, i think all of them are kind of fascinating. but you're right. the yield curve had been driven mostly by short to mid rates up until about 12 hours ago. the ten-year at these intraday yields, joe. you know, should we close 301, 3.02. these would be the highest yield closes since july of 2011. the 30-year if it was to close at this 3.94 area, it would be

the highest closes since august of 2011. you get the point. we have jumped over these hurdles of where these markets were trading in september. and, indeed, those low yields from may really look low. wow. it's really quite unbelievable to think we were around 62 basis points in a five-year may 2nd. we're now at 175. i think this is going to be a huge story for 2014. it isn't the fact that we cross thresholds, my opinion, it's the stickiness once you cross them and how over time that will filter in, change the discounted rates of the future, whether it's earnings. it's going to alter all the dynamics. and it is an immediate issue. it's going to take some time. i think some of the news there will be good and some of the news will be less good, but it's just a question that normalization is inevitable. even when the taper hasn't yet begun. we lose sight of that fact.

we had a lot of debates on the floor, joe, as to who won and who lost the bets. yes, it was specifically with a sharp point outlined in the last statement, but technically it doesn't begin until 2014. >> well, we'll be watching. i'm finally getting people with twitter and some of these tesla, some of these other things. they're starting to wonder about the overall environment in terms of -- you look at the art market and look at what they paid for that frarry. it's a lot of money sloshing around, where did that come from? >> yeah. i can't possibly figure out where it came from. i do know before they pay for most of this stuff, i was wondering why they had a hair dryer before they were handing it over. >> the ink's still a little wet. >> now, listen, joe, you know i hate to quickly change topics here. but whether you're lobbyists or house of representatives or the senate, why do you think it is

that we in our industry have more restrictions than those individuals in their respective roles with regard to trading the markets? doesn't that seem a bit odd to you? >> yep. been a lot of things we've talked about today that -- you put things, juxtapose things in a lot of different subject matter and it's crazy. we're living in crazy times. but the one thing about 2014, andrew, and i hope you -- we do need to do -- >> we've got to -- >> a story on this new world that we're living in where you just better -- i thought that george will, where he said the newest entitlement guaranteed every person in the country -- >> is not to be offended. >> to never be offended in a single time in your entire life. and with twitter and everything else, it's amazing what's happening. >> you and i would never talk. >> we would never talk. what would we talk about? >> that's where i am right now.

where i kind of am right now. >> that's why i'm not going to talk right now. not going to say anything. automakers posting a strong 2013. up next, talking to an analyst from kelly blue book about the expectations in the new year. and on monday, david darst with his predictions for 2014. he's the chief investment strategist at morgan stanley wealth management. a couple different lists, one, two, three, four five. we're aig. and we're here. to help secure retirements and protect financial futures. to help communities recover and rebuild. for companies going from garage to global. on the ground, in the air, even into space. we repaid every dollar america lent us. and gave america back a profit. we're here to keep our promises. to help you realize a better tomorrow. from the families of aig, happy holidays.

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welcome back welcome back to "squawk box," everybody. we've been watching the futures this morning. and believe it or not, they are indicated higher again. take a look at these green arrows. right now, the dow futures up about 27 points. and the nasdaq up 4 1/2. after the markets closed once again at record levels yesterday for both the s&p and the dow. >> why are we checking? we're checking the ten-year again, i guess, 3.022. it's been there most of the session. but, still. 12 basis points. >> now, you were right.

your reason for -- >> you are bowing to me -- >> no, but i have given you props. the day you weren't here, i gave you a lot of props for being right about the call. >> don't give me a shih tzu bow. i don't want your bow. >> that was a full-on bow. >> he gets a really small bow from the guy and sees the guy in central park do a huge bow. >> the deep bow. you saw it. >> of course i saw it. >> can you hang around with us so i can do pop culture with you? >> that's all i do. >> pop culture from a decade ago. >> that's true. >> as long as we can reach back to the '80s. >> yeah. we can -- where's your cutoff? i can do -- >> oh, i can do 70s. >> can't you do g-1 and g-2? >> but i can do gilligan's island in black and white. >> i can do barbara billingsly.

>> tina louise. >> it's good for the demo. >> yeah. the auto industry has experienced a steady boost thanks to pent up demand and a strengthening economy. here to forecast what's in store for the next year is carl brower. i would say the one thing that every person that's bullish about next year, they all have the same story about autos. and it's been 11 years and that everybody's got these old clunkers and we're going to set new records for auto sales, which sets us up for disappointment. will we be disappointed? we're going to hit these forecasts we're getting. >> i think we're going to hit them. i think if things stay where they are, which is a growing economy and relatively stable, not even low, just stable fuel prices. as long as we aren't jumping around, and cars getting older

and older. that's the big one. people are driving 11-plus-year-old cars. which is twice what it should be or what it normally is which is around six or seven. we're at the point where there are a lot of people, they are ready for a new car, they want to treat themselves. and we've seen these spikes over the last six months, you know. you get these really nice sales, the last year up 8% now for '13. but i still think there's a dam waiting to burst of people who want a new car. we just need a little more confidence. >> people are buying trucks, too. but are people that decide to buy the new car and we remember the u.s. auto industry took its eye off the ball. because it's an emotional sort of -- it's something you want to do to feel good about. and we weren't offering them products all along. what are people that do take the plunge, what do they want now? gas mileage? do they want a cool-looking car? a fast car? trucks? >> it's all of the above. and that's what's fabulous about

the auto industry is that they've got all of the above. for years, they didn't. they had trucks and suvs. and if gas prices were stable and people felt like spending money on a nice big vehicle, they were set. now, when gas prices spike, they can still run to their local ford or chrysler or go, m dealership and buy something that's a nice small car. they've got the bases covered. and that's what's helping the whole industry grow and particularly domestics. >> is there like an indicator with kelly blue book where you can look at what the average used car sale. are they pre-owned now, carl? do we call it pre-owned? we don't call them used anymore. >> it's pre-owned. >> do you see a firming in -- do you see those prices go up 5%, 10% when new car sales are doing well? >> no, well, what happened was they got crazy hi because people weren't buying new cars. what you had was people wanting

to buy a new to them car but not spend a lot of money. they were bizing used cars to save money but get something newer than what they had. and people weren't getting rid of their existing cars. they've come down a little bit because of new car sales finally picking up. basically, they're kind of a stocks bonds thing. when one's going up, the other one's going the other direction. they're still relatively high. but they'll probably drop when people continue to buy new cars. they should be coming down. >> you should buy an suv like next time gas prices spike, right? you tried that -- >> well, what about, we haven't talked about electric cars. >> no, i bought it in 2008 when you couldn't get credit for anything. i went in and bought one in cash. >> what's the story on electric cars. >> this is like the pope talking about sex when you talk about cars, right? i mean, you don't have a car, you don't know anything about a car. >> i want to know about the resale value of electric cars which i'm told is not -- >> but electric cars i feel you

know more about. all right. go ahead. >> carl. >> ask away. >> views on resale of electric cars? >> they do really badly. there's all these extra incentives on things right now. it depends on how you look at it. because you get a bunch of money off the msrp when you buy one because of the incentives. the fact they are way off the msrp two or three years later, you're not losing that money but they appear to have terrible resale value because they're so far down msrp more so than the average car. >> but it's a good buyer's market. >> it is. they're getting better all the time. the tesla is an amazing vehicle. but they're all really good now. >> do you care what your driver picks you up in? do you advise him on -- >> absolutely. >> you do? it matters to you. >> well, we discussed either the bentley or the rolls and that's a big -- there's the ghost. we talked about using the ghost

on the weekend. >> all right. carl, thank you. i don't know whether he likes bentleys. you just like room and the climate control and stuff like that. >> right. that's pretty nice. when we come back, we're going to get the last word from our guest host tony fratto. the political battlegrounds in 2014. next week, ring in the new year with "squawk box." we have predictions from experts in nearly every sector of the economy. markets, tech, retail, health care and a lot more. get your portfolio ready for the new year. watch "squawk box" next week starting at 6:00 a.m. eastern. nouncer: where can an investor be a name and not a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me.

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l. welcome back, everybody. it's time for our guest host to get the last word. tony fratto. what concerns you when you look out at the horizon? >> the fiscal wars are over. we actually have a two-year agreement. it's unprecedented we have two years we won't have that kind of fight. we know we'll have the remnants of obamacare fight, the impact going into the 2014 elections. we see how long that lingers and how long that affects the psyche of voters. the one thing is trade. we're going to come back to the trade question that we haven't had in a long time. >> good luck to your bengals, by the way. try to beat the ravens for you. nice game last night. >> up l. welcome back, everybody. it's time for our guest host to get the last word. tony fratto. what concerns you when you look out at the horizon? >> the fiscal wars are over. we actually have a two-year agreement. it's unprecedented we have two joing . eayf1 . back at the highlights, the low lights and behind-the-scenes moments from "squawk box" in 2013. and later senator robert menendez wants companies held accountable when customer financial information is stolen. that's coming up today at 11:30 eastern. you make a great team.

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[ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation because it offers a superior level of protection and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy. get an auto insurance quote. usaa. we know what it means to serve. today is the today is the last time the three of us will be together on the set in 2013, and that manse that it's time for a look back at some of the best "squawk box" moments in 2013. >> i think one thing is clear about us, we all like each

other. >> look out. >> oh! >> geez. >> thank you guys for coming. >> i like your hair today by the way. >> you know what? i'm sick of my hair and i can just stick it up in the air. >> that's pretty good actually. >> i was just thinking of how hot i am. >> you are hot. >> i don't have a suit like that. >> where's my mark. >> representative -- blah. blah, blah. what is wrong with you? >> there you go. >> what are you talking about? >> wait, wait. >> he's moving his car because he doesn't trust me. >> oh! >> wow. $2,000 a week. >> before we get -- ♪ ooh >> you know what? now i'm the best looking person on the screen. >> i just want to tell you about the hazards of working here. >> eh! blah. i tripped through that.

>> there are a lot of birds. one popped on my head ten seconds before we came back to air. it's all about me. >> are you going to wear your birthday suit for us snod. >> -- for us today? >> oh, i did. >> rise and shine. ♪ la la la la, la la la, la >> blah. blah. ♪ galoshes >> tiger! >> this is not an augusta jacket. this is -- the "s" fell off. >> i got a wave out of tiger earlier. >> no, no, no, he was waving at me. >> he might have been. >> if you can't tell, we are excited about the holidays here on "squawk box." >> they carve pumpkins of me. it's the upper lip. >> norman, you don't want to get

killed in this thing. >> i know a bit of a story line. he's my boss right now. i don't know what i can tell you. >> they're close. it's very thin. >> gumby. >> see, there it is in all its glory. that's the tree at rockefeller center. ♪ you're a monster, mr. grinch >> i'm a monster, all right. >> who's got a bottle opener? >> you don't need one. >> oh, my gosh. >> this is good. >> why are you so half asleep all the time? >> if you play with it for a minute or two, it seems fantastic. >> what if you play with it for ten minutes or so what happens? >> there's an empty chair here. >> andrew, he's here. he made it! >> very nice. look at this team of people. >> don't act like you don't have a team every morning. can you tell me what were you thinking >> definitely going on the end

of the year reel. >> you want me to do this like andrew? >> i don't know what's wrong with me. >> i don't know what's wrong with me. >> one more time. >> we're going to talk to a leader -- i'm going to send it it back to backy -- becky -- one more time. one more time. >> the teleprompter is not my friend, as you know. >> i am just asking you -- >> you want me to wrap. i know, i got you to wrap. >> all hold hands. >> i have a better idea. let's rub tootsies. do we not like each other? >> that's it? >> i was trying to think of a squawk thing. get squawk in there somehow. >> thank you, becky. >> wow, that's not bad. >> wow, are we up for that? >> we want to give a big thanks for our tape producer. >> he has to watch us to put it

together and then he has to watch that a lot and put it together. >> there's a lot of love there. >> how did you feel? >> you carrying on? >> you guys and it the holidays and all. >> i love you guys! >> we'll see each other next week. >> you'll be here friday? >> thursday and friday. >> join us on monday. "squawk on the street" begins right now. how are we supposed to follow the squawk yearender? what a great piece of tape. >> i'm carl quintanilla with simon hobbs and david faber, cramer is off today. >> the 10-year yield hit 3.02,