2013. "squawk box" begins right now. you are looking at a live shot from auckland, new zealand right now where they are about to celebrate in just about four seconds, three seconds, two seconds, one second, the new year. we have another 18 hours to go, though, before the bell drops here in times square. good morning to you and welcome to "squawk box" right here on cnbc. i'm andrew ross sorkin along with -- there it is. beautiful. i actually was there years and years and years ago on the top of that tower there. but, anyway, happy new year, everybody. our top story this morning, a massive oil fire in north dakota, as many as 20 train cars carrying crude exploded and caught fire after a 1112 car train carrying soybeans

derailed. that's about 45 miles west of fargo. smoke can be seen up to 20 miles away. residents within five miles of the fire have been evacuated and urged to evacuate, rather, and residents within ten miles have been told to stay indoors. both trains are owned by berkshire hathaway's bnsf. no injuries so far have been reported. we should say the fire will likely raise some concerns, though, about the increasing volumes of crude that are shipped by rail. right now, more than two-thirds of the state's oil production is shipped by rail. we're going to go to michelle with more of the top news stories. happy new year. >> it's nice to ring it in with you, andrew. >> it's very nice to be here. >> warren buffett's berkshire hathaway is buying philipps 66. berkshire reported owning about 27.1 million shares of philips 6/6 at the end of september. that stake is worth just over $2

billion. a phillips 66 filing said it would be getting 19 million of those shares in explaining for the specialty product focusing on the science of drag reduction, specializing in maximizing the flow potential of pipelines. so those two previous soers going together, right? train derailment, lots more pressure for the keystone pipeline and something to make the oil move faster on the pipeline. marvett tech jumps after kkr discloses increased stake. it's one of the top standout these year up about 09% in 2013. hertz has adopted a poison pill after seeing unusual and substantial trading activity in its stock. hertz says it is trying to reduce the likelihood that any person or group would gain control of hertz through open market accumulation. joe. >> fedex, new york city is suing

fedex for shipping cigarettes. the big apple accusing the delivery giant of illegally delivering millions of contraband cigarettes to residents which violates a 2006 settlement. the city contends that fedex shipped rooufly 19.5 million tons of cigarettes in nearly 10,000 shipments. that's 55,000 cartons. the suit is seeking $52 million in civil fines and unpaid taxes from fedex. crazy story. shares of fedex at this hour -- >> how is the possible if you can't smoke in new york city? >> i don't know. i see like ray liota and other guys unloading a, you know, one of those trucks in the back and -- >> but these are illegally -- these are illegal cigarettes? >> they're not allowed to be here, are they? >> you can sell cigarettes in new york city. just at a remarkable -- >> i guess i was wrong about that. so you can actually have it. you don't go to jail yet for

having a cigarette in new york city? >> if he had one more term. >> one more term. there's very few places that you can smoke -- >> what about electronic cigarettes? >> pending, isn't it? >> no. i thought they said no, didn't they? >> no, i don't believe you can smoke an e-cigarette in a -- like a bar or a public space or a restaurant. >> because it looks like smoke? >> it's water. it's -- >> it's nicotine, right? >> yeah. but what's coming out is just water vapor. >> but the secondary smoke that they don't really care about actual -- >> the larger debate going on about e-cigarettes. so the good part is it's helping people smoking real cigarettes get off of them. >> what's the bad part? >> the bad part is the potential that some people -- >> so you want to have a law that doesn't allow you to have the potential to start smoking? >> no, no, the bad part is there is anxiety that's going to

encourage a new generation of people -- >> i understand. but you don't pass a law to make sure people don't start smoking, do you? to prohibit them from actually -- >> i think it's right in the vain of the current new york city moment to do something like that. the thing about the shipping i think raises the whole -- we see this all the time, right? geographic arbitrage, when the price of a product in one area is so much more than another that you raise taxes so high they're going to look for ways around it. >> if second-hand smoke is hazardous to people around one it's one thing. if all you're doing is not allowing it to be doing because you don't want someone to pick et up because it might lead to other -- >> that is very nanny sake. >> and you're paying for their health care. >> well, we are now. you would say we were before. >> but he highlights what i think is one of the most -- the biggest issues when it comes to socialized medicine, which is you start to be able to tell people you can't do that because

you cost me money. you infringe on freedom. >> but you're always costing me money. if you want to smoke, pay for it. >> that's -- you should have your own individual responsibility to pay for it. >> but we -- we've never done that before. >> we could have. >> let me ask you a separate question. if you were a smoker and you couldn't afford to take care of your own health care, would you just say good riddance? i mean, it's a very interesting question. and i don't say it just to -- >> you've been smoking for 60 years and has been told over and over again it's not good for you? >> you have to -- in a humanitarian society, you have to -- but you're talking about 10% of people or whatever it is going to emergency rooms and then the 90% are covered or 85%, whatever it was. there should be a way to cover them without taking over the entire system. that's the only thing people say. there should be a way without --

what some people say will lead to the disruption of the quality of the entire system or the demand will be so high that the supply will shrink so that it's going to be hard to get health care. all the things that have happened when other people try to deal with it to help pretend you basically make it tougher for the 90. >> but if you've been smoking all your life and you have money, what's tfoot the bill yo 1100%. >> but you're not going to tell a person that -- >> i'm sorry. i'll turn it off. >> you have two things. where is your ipad? >> i have an iphone and a blackberry. i like redundancy of infrastructure. >> i think we're putting that -- >> anyway, that may be a sound that -- >> turn off that cell phone. >> netflix giving ceo reed hastings a raise. raised his salary by about 50% to see 6 million for 2014. another phone number. that's according to regulatory

filings. netflix shares have quadeled in value this year as it introduced original programming and saw growth in its subscriber base. hastings will receive $3 million each in cash and stock options for the year. netflix is ending its -- >> the value of the company has gone up so much and how much stock does he have? hundreds of millions of dollars. >> it's the same story as the apple thing. it's like i only make $6 million. meanwhile, there was a breaking bad marathon. >> i know. did you dvr it? you need to. >> yeah, i dvr'ed it. i'm not getting it from you at this point. and i dvr'ed it and i saw episode one last night. >> the very first? >> no, episode one of the fifth season which was for me very unsettling because it starts out, i guess, near the end. >> have you not -- >> did he lose weight for the role in the end? >> you caught --

>> no, no, one episode. >> no, were you caught up to that point? >> no. but he has his hair back and he's coughing between. so i figure it came back. but they don't really show it. it was the episode with the truck like this with the magnets getting the -- people may not have seen that. so i won't do that. >> i wouldn't worry about that. it's so far -- >> president obama doesn't want to know that walter white died. >> i know why he doesn't want to know. >> i saw someone retweet -- sdp and god forbid i say ann coulter. but someone retweeted her. they asked why did you shake the hand of a dictator? and r aoul castro said because i thought it was the right thing to do. >> that's not true. >> no, it's funny. because you would think you're talking about why did the president -- >> no, no, i get it. i get it. >> why do you think it's not true?

>> i don't think president obama is a dictator. >> in terms of executive orders. >> on a continually -- >> you know this is a joke, right? it's hyperbole. >> in every joke, there is a splinter of truth. >> but the reason why it is funny is because he is not a dictator. so thank you for explaining that because i was confused. >> but it's funny because some people would suggest the way he's acted lately is a bit of a dictator. >> it's funny because it's true. no, it's funny because it's not true. i know. >> whatever. >> something is happening here about a poison bill, investor carl icahn. he took a nearly 10% stake previously in netflix. they got rid of the poison pill, apparently. did they get rid of it? i think they did. let me see this. yeah, they did. let's check on the markets this morning in the last trading day of the year. the futures are suggesting we have a positive open. we had a really tight range yesterday and they looked like

the same situation this morning, dow higher by nearly 9 within the s&p up by 1, nasdaq up by nearly 4. the price of oil, wti is at $98.95 per barrel. brent is at 111. the ten-year note, 3% on the nose. it's lower by nearly 0.25% on the price. euro/dollar, 1.37. the pound will cost you 1.65. the dollar is mixed and pretty flat. and the price of gold, this has been the worst year for gold in more than a decade. lower by 1.10. 1202 per ounce. let's go across the pond. it's time for the global markets report this morning. ross westgate is standing by in london. good morning to you, ross. >> good morning to you, andrew. we are on the last trading day, of course, of the year here. and only half the markets are trading today.

a number of them closed yesterday. already, the german, the swiss, the irish, the greek markets aren't trading this morning. we have a shortened trading session today, as well. london closing up around 12:30 local time. right now, advancers outpacing decliners 12 to 4. volumes are very, very light. the ftse 100 up around 15% over the course of the year. today, up 23 points. the cac 40 is currently up 0.3% and the ibex is fairly flat. let's show you where we have gone through the course of the year. the ftse has been an underperformer. the reason for that is because basic resources, many of which are listed in london have been underperforming. theat that's the worst sector over the course of the year. one of the best performers has been the german market. the xetra dax up 25%. autos have been the best performer over the course of the year, up some 38%. tech and media doing fairly well. so the cac 40 up around 70%.

the ftse mib up some 16%. it's worth pointing out the irish and greek markets up 34% and 28%. iron coming out from the bailout to plans in athens showing signs of improvement and greece showing signs of improvement, as well. it's been a surprise how strong the euro has been this year and also against the dollar. up 4% over the course of the year. and it's worth pointing out just a short while ago, two sessions ago we hit the high for the year, as well, at 1.3894. that was a 26-month high on euro/dollar. the nikkei up some 50 odd percent over the course of the year. 57% driven by the weakness in the yen. dollar/yen, up 21% over the course of the year. that's the biggest gain since 1979 for the greenback against the japanese currency. that's where we stand right now in europe as we dwindle our way into 2014.

happy new year to you all. >> happy new year to you, roscoe. great to see you. >> he got a haircut for the new year, it looks like. >> yeah, it looks good. he's always handsome, though. >> you've got a thing for him. >> i do. i have for years, yeah. coming up, some of the most annoying years of 2014. >> he does wear pants, which doesn't narrow it down that much, does it? >> joe. >> that's about -- >> come on. no, i have other standards. >> you do. >> height. >> you have to get the checkbook out first, don't you? >> no. that's a coincidence. >> oh, it's coincidence. it just happens every time. why wouldn't you if you can choose? >> out of that pool. >> right, exactly. >> find someone that fits in. >> i live in a financial tv in a tv town. it happens. pope made headlines about his critical comments. yesterday i had the chance to

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welcome back to "squawk box." let's get over to michelle caruso cabrera with today's

executive edge which is at the cross-section of on religion and money. michelle. >> yes, it is. the big story on our website is whether or not the pope's recent comments about the wealthy and capitalism may be making it toughtory raise money for the $180 million restoration of st. patrick's cathedral. billionaire ken langone, he's spearheading the effort. he told us at least one potential seven-figure donor has expressed concerns about the pope's recent negative statements about the free market and suggestions that the wealthy may be insensitive to the poor. langone tells cnbc timothy dolean, quote, told the cardinal, your eminence, this is one more hurdle i hope we don't have to deal with. you want to be careful about general illustrates. rich people in one country don't act the same as rich people in another country. i sat down with cardinal dolean

yesterday. but what the pope and the church believes about which economic model in the world is the best. here is what he said. >> look, the pope is the inheriter of a legacy of teaching. what's the hallmark of that teaching? it's that the church always recommended what we call a middle way. so he would find pope francis saying, look, both streams of the marketplace, in other words, unfettered cutthroat capitalism on one hand are total socialism on the other. both of those don't work. both of those are wrong. somewhere in the middle where we protect private property investment, private wealth, but we also insist upon the wider society's just obligations to those without, somewhere between those two is where the economy should be. so the catholic church is always -- so we get blasted from

both sides. we're not economists. we are moralists. we have prophetic. we are people of the bible and we are virtue. .all we know is that however you do it, the wider community always has to be taken care of. >> joe and andrew, this all stems from this 220 page writing by the pope. i've read through it in english and some of it in spanish. i think cardinal dolean maybe softens what some of what the pope said. you get a sense that the pope is not a supporter of the free market in its totality. >> i've picked out the graph ta i think is a relevant portion of what the pope wrote. and it goes specifically to this issue. he says some people continue to defend trickle down series which is economic growth encouraged by a free market will inevitably succeed by bringing about gator justice and inclusiveness in this world. this opinion expresses a crude and naive trust in the goodness of those wielding economic power

and in the sack ra liejed workings of the prevailing economic system. meanwhile, he says the excluded are still waiting. that to me is reclear cut. >> sure. the one thing i would add is when you read the spanish language version, it doesn't say will inevitably read to more justice, it says the free markets alone won't lead to more justice. but there are sarcastic references to the market, he's critical at some points of capitalists but speculators preventing the state from doing their job. it is mostly thoughtful, but it's clear he's not an economist. >> and he can be wrong. i think it's good to emphasize that people need to give back. if you look at where a lot of if

a lphilanthropy comes from. but with that aside, the only way capitalism succeeds, i don't know of any capitalists that succeed without somehow growing employment, growing jobs. you know, whether it -- the whole idea, when you call it, it's a loaded term. unfettered -- what did he call it? unfettered cutthroat capitalism. now, we know from adam smith it's been how long? what a profit incentive does, it sets the price and allocates assets by competition. if there's true competition, then everybody has to on be on their toes when they're trying to earn a living and to do that, you end up, you know, you may not even want to help society. but by creating jobs and by being successful and by doing it well, the jobs are created. maybe it's a -- >> and he doesn't seem to give any -- >> a lot of people don't

understand that. a government, a socio -- we've seen what has happened where socialism has taken complete hold of a country. and you see what happens. the government doesn't create jobs and it doesn't create prosperity and it doesn't help the people it's designed to help. >> the argument has been made over the last, say, five years to perhaps even a decade that as profit ves increased, the actual real number of jobs has not kept pace. that is in part a function of technology, in part a function of globalization. in part a function of a lot of things. but, therefore, does that change the dynamic around the profit incentive and, therefore, what the pope -- i disagree with your premise. but in a global world, those are global companies. they've created jobs just in other parts of the world. we shouldn't be grudge formerly poor people in the world of having jobs for the first hundreds of millions of people in china and in india, as well.

>> but take the technology piece of it. >> that's always -- we would still have buggy whips, andrew. >> they've demonstrate against machines that separated whatever it was over in england, whether it was the weaving machine and it put people out of business. there's no more record companies. >> think about this. if we didn't get rid of the switchers, the telephones, we would have to employ every single american in switching telephones, right? >> we've got the two of us, michelle. >> and then there's the pope. >> but if you go back prior to the 17th century, for example, before there were property rights, before -- for 10,000 years, the average gdp per person, per capita was like $8el 00 total output. until you can come up with an idea, own it, scale it. but it was almost like pancake

batter spread around the planet. $800 a year is what gdp was, until this happened, until capitalism was able to blossom. so why do we need to talk about five years when you could see on a 10,000 year scale how it benefited all of us. we live until 80 years old now. >> i'm not catholic so i am out of my realm on this piece. i'll ask the question of michelle. do you believe what the pope has said is going to create a real problem not just for people like ken langone to raise money, but over the next 10 or 20 years that he is in his role going to ali ali alienate a large swath of people that might be considered capitalists and catholics? >> i think there's going to be an education process. the pope is from argentina.

>> michelle, what do you think the art and gold and all the history in the vatican is worth? >> that's a good question. i'm not sure they know. >> maybe landownership and -- >> the greatest landowners in the world. >> and, you know, i was raised catholic. my uncle was a priest. you know, i -- but, you know, i wouldn't get too -- if i were the catholic church, i wouldn't get too high and mighty, given some recent history. that's all i'm saying. and i'm not going to go there. but i'm catholic and there's a lot of things that -- >> you wouldn't be the first to have echoed that sentiment, joe. thank you. >> and i like all the other stuff he's doing. i do. the world has changed. women priests, you know, gay marriage, whatever. i'm behind all that. >> joe, he wants people to be more joyous. i think the funniest things he

wrote is some christians are all lent and no easteaster. >> exactly. first grade, i told you that every morning. and it was the mass -- well, you weren't there, but the priest faced the altar and did it and it was all in latin and we went every day. >> every day? >> you're like ken langone, he goes every day. >> i was an altar boy, no problemo whatsoever. the east coast, they ring in the east coast under a blanket of snow. let's get to -- >> yeah. >> but no, you think at some point -- let's get to reynolds wolf. let's get the national forecast now from the weather channel. you know, reynolds -- >> bring it, man. >> the guy down -- i hope they get rescued from that ship, i do. but he said it's old ice, but, actually, it is melted, but this is old ice that they're stuck in? did you see that, the global warming captain of the ship. >> it is fascinating.

you see how nature is a great equalizer. it doesn't depend on technology. at the end of the day, we're all at the mercy of the forecast. >> we know the guy 84 years ago, it was kind of clear sailing, right? and they were trying to replicate that and it's in the summer. but they are really stuck. >> yes. >> hopefully they're going to find -- maybe helicopters if the weather slows. but we wish them god speed in the rescue but, you know, anyway, go ahead, reynolds. >> no, no, i hear you, man. >> there's a lot of record cold coming. we know that up here, as well, right? >> yeah. there is going to be plenty of it. we're going to springboard forward in the forecast .show you what's coming for much of the northeast and the eastern seaboard. as we ease into the first weekend of 2014. what's going to happen is on your thursday, we're going to see this low developing off the carolinas. we have that cold air coming into the north. look at the time frame on thursday. but the nose, the two of thes y

entities, this is going to bring snow into parts of the northeast. for long island, could see several inches of snowfall, but potential could see around 10 inches, maybe a bit more into boston, maine into vermont, new hampshire, into upstate new york. could be cold times, a rough way to ring in the new year. airport delays, in cleveland, we could see backups later auto today. as of now, no big issues. new york city, cloudy skies, no big delays. atlanta, so far, so good. smooth sailing in terms of your air travel. guys, back to you. >> thank you, reynolds. happy new year. a year of record returns, the dow at an all-time high. the s&p 500 and fass dak both turned in stellar performances in 2013. we're going to ask david blitzer for his best predictions for 2014. and what's up with twitter? the stock getting crushed heading into the new year. is this a round of profit taking or a trend in social media? take a look at yesterday's

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andrew ross sorkin. becky will be back on thursday. the headlines this morning, one trading day left in what's been a really good year for stocks. the dow, it has had its best yearly gain since 1996. before that, it was '95. before that, it rwas '94, i think. the s&p 500 had its best year since 1997. the major averages of only close to 2 losing months this year, june and august. today, also marks the final batch of economic reports for 2013. which if there were going be any today, we would say it's the final batch, right? >> of course, because it's december 311st. today we'll get the case-shiller home prices index report. and the chicago purchasing manager's index is out at 9:45

eastern. when we'll all be so gone. and then the conference board, consumer confidence -- no, we won't. well be here researching thursday's store until probably close to the new year. >> 6:00 p.m., at least. >> yep. >> i feel lazy today. >> we will also be watching shares of twitter today. the stock has fallen 17% over the last two sessions after soaring since its initial public offering. did you see -- i wanted to argue some more with you about this, dicaprio, defending -- i figured out why it's different than mobsters with, these guys, "wolf of wall street." and this guy, he already doesn't like me because he was in here and -- >> mobsters, and they probably shouldn't be dmrglorified, eith.

but even the crime that they're involved with, gambling, this and that, they're bad, i admit that. but of late, their life is on the line. it's a dangerous business. these guys, all they did was call ul -- they prey on elderly and widows and or fans. they take their money and it's just so sniffling and small time and petty and disgusting. >> and not dangerous. >> and all they do is steal from people unbeknownst to the people. and then i will bet you all that stuff that they put on there in these cool high-rises and beautiful women and all that, that's nothing the way it was for these low lives. you know, so to take a grain of truth and to make a narrative about it, i understand that. but i don't like the whole idea -- and it's not even the glat glamourizing part. it's that these guys are not even interesting with what they do. that's my thing. mobsters, maybe we have -- that's your point that we look

at -- well, it's still a good movie. >> let me ask you this. >> it's not even a good movie. >> andrew, it's so show sick vicarious stuff, to go and do a movie in cleveland about the guy, what he did do these poor women in cleveland and with the chaines and -- >> i came away from the film and thought there was a -- >> i read dicaprio's first thing i was saying i was to -- and the heat of this inspiration -- and it's so full of crap. >> no, no, no. >> first of al, it is probably the best performance i've ever seen him do in any movie. >> playing that he died? >> he was terrific. he was unbelievable. >> do you like the guy? >> i don't know. >> who knows? >> but that's not how you judge it. i'm judging this as a film. i'm judging this as if you're going to go on a friday or

saturday night to be entertained for in this case three hours -- >> are they at the world trade center? where are they? >> sip ree anncipriani's -- >> but in the end, it's a film. >> it's like watching the small time petty crooks on "american greed." that's where they belong. >> don't denigrate "american greed." >> i'm not denigrating "american greed." that's the place for it. >> we have one hour -- >> and that's where it should be. apparently i should say i'm -- i'm an outliar on enjoying this film as much as i have. a, i thought it would win the week and it didn't. "hobbit" won the week. >> good. >> and apparently some of the polls that have come out after, they poll people and they -- the -- >> karma, baby. >> the movie has been getting a

c in part because -- but not for reasons you might think. apparently the reason it's getting the c is, a, people think it's too long. which it is. and b -- >> it's about 2 hours .45 minutes too long. >> and the debotchry some people think is so over the top that they don't believe it. people have gone with their -- we were here with kayla. she had seen it with her family. this is not a film you want to see with your mother or your father. >> this is debotchry. >> i'm sure she didn't look like that australian actress. let's get some thoughts on how the markets will fare in 2014. for the index master himself, david blitzer chairman of the s&p 500. >> he's a partier, for sure. >> he's a crazy man. >> they don't make cold calls to widows and or fans. david, good to see on you. >> good morning. >> now, i looked at how you feel and i didn't get really that excited. i'd almost rather sty in this

year than go into the new year reading what you think. you're looking kind of for a regression to the mean year, aren't you? >> i think that's about right. as you mentioned, when you rattle through the numbers, this year has been incredibly good. it's probably been one of the nicest surprises, bob, maybe since -- but it's been a fantastic surprise. and i think we may have a mean reversion. one thing that concerns me is that profits, as a share of gdp, are record highs. we've been hearing a whole lot about in new york city the tale of two cities. the 1%, all that kind of thing. i don't think there's a magical reversion by any means. but when anything gets to a record -- a record high share, you've got to wonder if it's going to track back. and that plus the people quoting next year's earnings and looking at pes, i think i saw 14.25% yesterday. that would be a wonderfully low

pe if it was on current earnings. but you're just looking at somebody's forecast more than anything else. >> you know, david, though, i could see the income disparity and what you're talking about pooem being alleviated to some extent when the underlying economy starts performing and starts coming up and justifying what we've already seen in the markets. and then that can have a positive feedback on the mblths themselves once again p. hopefully that's the way this is going to work out. the first thing that moves are the stocks and the people that own the assets benefiting from it. but then we get down to 6% and hopefully before that for unemployment. >> i'd love to see that happen. but let me just mention one thing that is sitting out there. american corporations, including a bunch of very well positioned high tech corporations are

sitting on hordes of cash. and that cash is just sitting there. if they take that money and put it to work, get out there, you'll get exactly what you described. they start investing that money, the economy will start rolling. what we're missing is that kind of investment. people forget that way back in the kennedy area we had the investment tax credit to generate investment and that gave us the 1960s economy. but why are they sitting on that cash? they're not making any interest on it. >> that might take care of itself, too, if they got a bit more confident. all of it starts -- everything starts falling into place. you get more jobs and then they feel there's more demand and the companies start using the money to satisfy the demand. that's why i say -- auld lang sy syne, i want to move into the future. >> i know you want to move -- >> i want another 30% this year

is what i'm saying. >> i'd love to have another 30%, too. but instead of these capitalists, as you put i tell when you were talking about the catholic church, instead of a capitalist sitting there, they're supposed to make betts and turn the cash into a bigger economy. that's what we're waiting for. what are they doing? they're buying back stocks because they're worried about solutions and stock options. i'd rather see them put the money to work. we just need another round of that and that's what it will take. >> you're bearish on corporate america being able to deliver on the earnings. therefore, the multiples aren't reasonable right now. if earnings go down, the multiples are high. and that's sort of what you're saying. time will tell what happens. >> what i'm really bearish on is the fact that they're not able to get out there and take a risk. you know, i think it was alfred

marshall, a british economist of 100 years ago who said mon open lists like the quiet life. i don't want to see any capitalists with the quiet life. >> and you are a guy that takes fashion risks day in and day out with the bow tie and everything else. so you know from whence you seek. >> a real risk taker. >> when are you going to do that? >> i was thinking about doing it today. maybe we'll do it in the new year, on thursday. coming up next, the future of the fed. but first, take a look at the ten-year yield. "squawk box" returns right after this.

chairman bernanke has exactly one month left at the helm of the fed. what is the fed going to look like when he's gone? with us now is greg ip, cnbc contributor. hey there, greg. >> hey, michelle, how are you? >> good. listen, i see janet yellen and policy that's ultra similar to bernanke. >> yeah, you know, thinking back about the number of transitions that the fed has had, i can't think why that would be more seamless than this one. we haven't had a situation where the incumbent was replaced by his vice chairman, a situation where the two people had been working side by side, mott the not just on the pold policy, but the communications framework around that policy. but she will be carrying out the policy in the same way, but they'll probably be talking about it in a similar way. except for the outfit and the hair, it may as well be the same guy we have up there at those

press conferences. >> she is more dovish, though, right? >> yeah. i think she is genetically a more dovish person than ben bernanke. but if you look at the fact that we're staring at unemployment still a point or two above the national rate, i inflation still above the fed anticipates target, everybody on that committee is a dove. even richard fisher or charlie blosser will not be arguing for a tighter policy now. it's going be mostly a debate which is slow the pace for quantitative easing. i think this is a year in which you have a relative degree of consensus and unanimity around that taim table which we haven't had in a while. >> did you say genetically more deafish? >> well -- >> greg, you know, the word please. they're going to say you men the women -- >> no, no, no. i mean, am i a soft honor dovish person? >> what i meant was that --

>> the x-chromesone linked trade could be on any chromosone.thin. i mean, right now given the fact the economy's still operating so far below potential and inflation is too low, i think you want people who tend towards a dovish side of the fed. . >> and there are people -- >> we could book dozens of people who think what you said was anathema. >> a lot of this stuff that happened probably wouldn't have happened. >> i don't agree. >> i know you don't. >> the rise to power become the powerful -- >> if all ceos -- >> you think we would've gone into iraq, necessarily? >> when people reach positions of power, they act like the powerful. and when women get do those

positions, i have no doubt they will act like the men we have seen. >> there's been one member of the federal open market committee who has dissented in favor of more hawkish policy. so i would sort of characterize her of being at the opposite end of janet yellen in the sense that her tendencies and preferences tend to lean towards the hawkish side whereas her colleagues might be -- that's the only point i was trying to make. where are your biases when faced with the same information your colleagues are looking at? >> i can tell you there's no way -- i know him. i know him. there's no way. >> i was just teasing him. >> i know you were. i know you were. >> greg -- >> thank you, michelle. >> great to have you on. >> thank you, michelle. i'm going to watch my words much more carefully. >> i don't like people who watch their words. i want unfettered, you know -- >> happy new year, greg. >> happy new year to you guys. coming up, the most annoying words of 2013. but something tells me that it

won't be going away for the -- probably selfie, twerk. >> is twerk really here for good? >> for sure. >> i don't know. maybe that is one thing i heard. i probably gave it away. and are you going out to buy a car today? one of the biggest shopping days of the auto sector. we'll get the numbers in the next hour. as we head to break, check out the price of crude. if you are buying a car today, don't go out and get drunk today and drive it. "squawk box" coming right back. welcome back. how is everything?

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welcome back to "squawk box." what were some of the most annoying words of 2013. a couple of them right here. selfie and twerk, they topped the list. i always think of twerk, i think of twerp. and some of the other candidates, hashtag. >> that's when you're saying anything about anything. >> which is silly. >> and mr. mom. >> 30 years ago. >> this is a movie with what's his name. >> put out by lake superior state university. >> what's annoying about selfie? >> it's annoying. >> what do you think of when you say selfie? >> oh, now maybe it's annoying. now i get it. >> anthony weiner is -- i thought selfie.

>> totally entertaining selfie. >> for a while, i thought selfie was a picture of yourself. i didn't think it was any selfie. we don't have just one guest host this morning, we have a wolf pack. they're ready with their top stories for the year to watch for the new year. we're going to unveil them next on "squawk box." if yand you're talking toevere rheuyour rheumatologistike me, about trying or adding a biologic. this is humira, adalimumab. this is humira working to help relieve my pain. this is humira helping me through the twists and turns. this is humira helping to protect my joints from further damage. doctors have been prescribing humira for over ten years. humira works by targeting and helping to block a specific source of inflammation that contributes to ra symptoms. for many adults, humira is proven to help relieve pain and stop further joint damage.

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"squawk box" wants to end 2013 with a bang. today, a guest hosting wolfpack. >> you ready to let the dogs out? >> what? >> you know, let the dogs out. who let the dogs out?

who? who? >> politico's dan white and buzzfeed's john steinberg all invade the set with their top stories for the new year. plus, predictions and prophes s prophesies, what does 2014 hold for the value of your home, media stocks, and the retail sector. all that, plus, are investors getting antisocial? 17 hours until the ball drops on time square. "squawk box" begins right now. good morning, and welcome to "squawk box." i'm not going to say welcome back. we know you've been with us. look at that, the ball must be around there, right? i think, "squawk box" on cnbc, i'm joe kernan. i'm joe kernan along with andrew ross sorkin. let's check on the markets on the final day's trade. you using pedals to raise -- did

you see that? to raise the ball or something. and each crystal is someone designed each crystal. it's like a majority or something. >> the pedaling, so it's green. >> i believe the pedaling is sort of -- i don't know. ask andrew. >> global warming. >> the futures are up again. >> what do you guys do? do you watch? >> well, you know, i like to watch. >> we know that part. >> that's from -- remember? you guys can work with me on that, right? peter sellers, chance the gardener! they're all with me! >> flowers will bloom in the spring. >> they will. and we see economists come in here all the time. >> you didn't think i was going to know that movie. >> not everyone does. that is a funny scene. because shirley maclaine. he's watching "price is right." >> and the president appoints him to the council. >> what we do.

it's a tradition to go to a movie with all the kids. so we're going to see "the hobbit." >> i'm not going to see wolf -- and then we stay up together afterwards. and we -- you know, i sort of might go, you know, slowly sleep at 10:00 and wake back up. but we're awake at 12:00, all of us together and we kiss. >> do you do that with carson daly? >> what's nbc? >> carson daly, of course. >> ryan seacrest is part of the family, though. i think he does it on abc. he does the dick clark abc version. >> five different tvs all on nbc all the time. >> excellent. except it's on cnbc. >> cnbc or bravo. >> we should do a new year's celebration one evening. >> some call it a new year's rocking eve. have they taken that? >> do you think we could do it? >> that's good, yeah. because janet can rock. janet can rock.

>> we already had greg ip saying politically incorrect. careful with this today. >> i'm not going to get in trouble. >> oh, yeah. i'll be the judge of that. >> how about the ten-year. it was right at three. which seems fitting somehow for december 31st. now it's below again. >> let's watch it. let's watch it. >> is it going to key off the economy? or off inflation? that's the question. inflation stays at zero, there's no reason for it to go up. >> no reason for it to go up. >> but if the economy gets better, inflation stays at zero, can it still stay low? >> i don't think it stays low. >> inflation. >> do you think inflation starts to come back? >> not in the first half. not in the first half at all. i think you start to see the creep in the second. >> do you want to keep talking? >> no. >> sure? >> no, no, no. >> let's talk about. here's some headlines. stocks are wrapping up -- you knew this, right? best year in two decades. >> yes. >> is that right? never heard that. >> yeah. dow had --

>> stocks went up this year? a lot? man, breaking news this morning. >> dow's had the best year since 1996. and a handful of points from chalking up the biggest yearly advance since the '90s. >> it was tremendous. >> it was. people say it led to a big tech bubble and the internet and all that stuff. but, let's try it again. >> life is full of trade-offs. >> new york city is suing fedex, accusing it of illegal deliveries of contraband cigarettes. seeking fines and unpaid taxes, stems from a partnership between fedex and a smoke shop located in the shinnecock indian reservation out in south hampton, new york. >> who knew that south hampton was -- >> the key is indian reservation, because they can sell cigarettes without taxes.

>> that's the shortcut when you go a back way. >> yeah, you go past it on the left. >> i don't know where south hampton is, so -- >> oh, right. >> please. >> that's because you fly in your helicopter. >> he's always getting flights, goes right over it. >> how do you know if you're flying in a chopper. >> and apple is also on the receiving end of a legal complaint. a lawyer who was appointed to monitor apple's compliance with an electronic book price settlement. remember that. says in court that apple was obstructing his work. apple's complaining his work is interfering with some of the other operations. >> tim cook is a busy guy. he's got a lot of people to deal with. residents in north dakota are being urged to evacuate as a precaution following the derailment of a train carrying crude oil. the derailment resulted in a series of explosions which sent

flames and black smoke into the sky. no one was hurt in the derailment and subsequent explosions. authorities still don't know exactly why the train derailed. we're going to talk about the keystone pipeline at this point? >> not again? >> what about next year? is next year the year? that would be a good prediction. you think it will be, don't you? >> it probably will. that's a good chip that democrats can use to get something else they want. i don't know if it's the debt limit or something else. i don't think they're that opposed to keystone. >> did mention that. >> it's a possibility. >> all right. we're going to be watching shares of netflix today. the shares have quadrupled this year. revealing it's increased the salary of reed hastings by 50% in 2014. the plan was adopted a year ago after investor carl icahn took a nearly 10% stake. he now holds about 4.5% of netflix. >> what do they have besides

house of cards? >> orange is the new black. >> orange is the new black. >> it's amazing. >> it's good. >> you're up to date on this? >> i'm not at the end yet. i've watched three or four. >> the question is when does the next season start? >> it's worth it? >> yeah. it's really good. >> the eyes, i was freaked out by the eyes. that's a big part of it, right? >> she had a few appearances and disappeared for a little while. i think there was a lot of popularity for her. >> was that the major character i saw? the fair-haired lady she was talking to? she was flipped out. she was like, wow. who was she playing? who was she supposed to be? >> i can't remember if the real person's -- it's based on a real person's life. lionsgate makes "orange is the new black." >> and "arrested development." and some others. "house of cards," apparently only one more season.

>> i've never watched it. >> the model for these shows is so different that they're only picking up one or two seasons at a shot. but notice, i don't know if you -- i resubscribed to netflix simply to get "house of cards." and by the way, have not canceled the subscriptions. >> it's like hbo and showtime. >> it's not an either/or thing with amazon. i do netflix and amazon. >> amazon you get for free because you're a prime person already. >> i'm not a prime person. >> have you tried watching alpha house? >> i did. the whole series. i watched it because joe was making fun of it. i watched it. >> you're a -- no, it's like a bunch of left wing guys. >> no, start-up guys. >> oh, that's right. >> there was another one. >> there was like a john goodman washington one. i didn't like that one. >> i like john goodman. >> amc, building of the railroad. >> it is amazing -- it's kind of

like a golden age. >> it is a golden age of television. there's so much great television. >> a six-part series about gold mining. >> we're all tv junkies now. >> i'm always looking for more. >> downtown abbey starts soon. i can't wait. >> i'm going to miss matthew. >> we have not properly introduced our round table. >> we have three guest hosts today. >> our guest hosts this morning. >> do they need an introduction? >> they are so known to the audience. anyway. let's go to this. i want to know whether you think there is a bubble. you know, when you look at the stock on netflix, look at what's happened with tesla and twitter the past two days. and then you think about 2014, where are we? >> we are at -- i don't think we're in a bubble.

i think this is kind of natural. i think there's a bubble in bubbles. we're all bubble paranoid, we can't enjoy a rally. i don't think we're in a bubble. i think 2014 will be interesting. we'll see the fed pulling its liquidity. >> do you think an entire generation. there's been an argument made post financial crisis, an entire generation of investors is just never coming back. >> right. >> and so this whole run-up in anticipation of the dumb money coming it's just not coming. >> you're preinterview. you say we've had the best year since the '90s and all anyone's talking is why it's going to end in tears and that's true. >> that's a good sign. >> it's a good sign. and a good sign for this year. i think there's still some ways to go. even baron's has gone bullish. >> that's scary.

>> but you see this whole trend. i think there's plenty of room to run, a lot of great stocks that haven't appreciated. there's a lot of money. ton of money on the sidelines. that whole generation, we're going to have to get back in. >> once they get jobs. >> no, i think it's people like my generation, internet 1.0. >> you're not talking about the -- >> no. >> when i look at the tech and media stocks, i lived through the first tech bubble. this is the first time i feel like i can look back at another era. >> wasn't it fun? >> it was so much more money and such bad companies that didn't have real revenues and profits. for the most part, these are companies that are transformative. this is all changing dramatically right now and there's not that many ways to invest in it. and i think luckily there'll be a whole crop of ipos in the next year where people can diversify more and pick more of these companies. >> and i think when you talk about a bubble and what could bring the stock market down, you have to talk about washington to a degree. there's not a lot on the horizon.

in terms of like something that's going to blow it up, it's not going to happen from d.c. >> okay. you're up here, right? >> they do have trains that go down to washington. >> but i think it's better for you to be outside. it's a clearer perspective in the window. >> you're out in omaha, you can -- >> i'm jersey. >> are you jersey? >> yeah. absolutely. real america. >> you can golf together. >> i don't golf, but you could teach me. >> no. wow. we've got much more, they are sticking around for the rest of the program. joe? okay. coming up, predictions for residential real estate. will media stocks continue to climb in 2014? plus, why today may be the best day of the year to buy a car. this intrigued me. "squawk box" coming right back. [ male announcer ] this store knows how to handle a saturday crowd.

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savvy shoppers know that the week after christmas is one of the best times of the year for discounts on clothes and electronics. did you know that it's also one of the best times to buy a car? best times of the year. mary thompson joins us live with that story from audi lynn brook on long island. all right. >> reporter: that's right. sunrise -- i like audi, too.

we're out here on the sunrise highway out here on long island. u.s. auto dealers are looking to close out a banner year with a bang. offering consumers some great new year's eve deals in order to ensure that 2013 is, indeed, the best year for auto sales in the last six. here's steven canon. >> the market's going to be hot. the biggest month in the history of our company. december is always big. and we're going to take advantage of that. >> now, december's typically a busy month for high-end automakers like mercedes. spending bonus money and the company's offering deals as they jockey for the title of top-selling luxury brand. but kelly bluebook analyst says other dealers are getting in the holiday spirit, too, helped by an extra dose of incentives from automakers like honda. >> every single unit they sell beyond their december 2012

total, they're providing a cash incentive. >> now, the goal of the automakers boost sales to clear out the 2013 models. with dealers carrying an 80-day supply of vehicles, there's still plenty of product for buyers to choose from while financing remains favorable with low loan rates, high cash incentives and good lease options. among the deals kelly blue book spotted, cash rebates ranging from $25,000 to $5,000 on popular models. like the cadillac ats and the top-selling vehicle, the ford f-150. now, these new year's eve deals should be good through january 2nd. that's when the auto dealers close the books on 2013, which, again, is expected to be the best year for u.s. auto sales or vehicle sales in the last six. 15.6 million units expected to be sold. back to you. >> wow. all right, mary. on another subject, mary. >> yes?

>> was it satisfying beating rutgers? i mean, was there -- that's the way -- >> reporter: you get to it somewhere. >> the year ends, you beat rutgers. you know what i think you've done, you're back to just brady, right? you're watching him on a wide screen and watching every -- huh? >> reporter: two things, joe. first of all, i've never abandoned stop watching brady, that's always a consistent part of my sundays. but second of all, i guess you could say that beating rutgers is a heck of a lot better than losing to rutgers. >> yes. >> reporter: because i'm sure i would never hear the end of it if that were the case. >> that's true. that's true. >> so we are happy. yes. >> i feel for you, though. how do you recruit? why do you think florida and alabama -- why do you think they have great players? it's easy to recruit, right? >> reporter: prettier girls on campus? i don't know. warmer weather? >> yeah. warmer weather.

>> reporter: warmer weather, easier academic standards? >> how do we explain? stanford's nice. thanks for playing along, mary. she went to notre dame. >> i knew that, yes. >> you did? >> yes. what's up with twitter? the stock getting crushed into the new year. is it a round of profit taking or what's trending in social media? we'll have an open house with some predictions when "squawk box" returns. 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. to help secure retirements and protect financial futures. to help communities recover and rebuild.

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shares of twitter extending their losses. the stock is down 17% over the last two sessions. is the honeymoon over? let's get more on twitter's latest moves. where the stock might go in 2014. joining us now the head of crt capital group. neil, good to see you. what's your explanation? >> well, thanks for having me. i think there's a few things happening. one is, it's been a roller coaster over the past two weeks for twitter. we saw a lot of institutions trying to get into the stock ahead of the year end. and we probably saw some short covering, as well. i think over the past -- over the past two days, i think what's happened is, you know, there's been some profit taking. and we'll probably see more

volatility in the stock as people come in to work, you know, after the beginning of the year and maybe kind of readjust their portfolios. >> you have a buy in the stock. are you nervous about the action in the next two days? >> no, our valuation supports a $65 price target. we think twitter is one of the key platform companies on the web. and when we think about platform companies, we think about facebook, google, amazon and twitter as well as linked in. so, you know, we think that twitter is probably one of those companies that we think will have a long runway for growth. and we think it can actually grow into this type of valuation. >> but on a relative basis, it's so much more expensive, don't you think? you look at the revenue on the 14 or 15 numbers. even with the raised revenue estimates, it's basically twice the price of linkedin or facebook. do you think you can love the company but not love the price here? >> yeah. i think, you know, the way we think about twitter is it has -- the valuation multiple is very rich at this point.

we think upside might be less, you know, there's probably some limit to the upside on the valuation perspective. but, you know, there is this -- there's very high growth at twitter right now. and this is the fastest growing internet company of all the internet companies. >> i think you double the revenue next year. you say they do 2 billion instead of 1.1 billion and it's kind of in line and they're not going to do 2 billion next year. i said this all along. i think it's a phenomenal company. they're not going to suddenly one day do $4 billion instead of $2 billion. it's an ad business, right? i just don't see why everyone keeps these buy ratings on. i don't see why everyone keeps raising the price. >> this is going to be -- i see twitter as the netflix of 2014. it's going to be this battle between the long and shorts. they're going to fight over it all year. there are going to be believers in people like joe. >> carl icahn, we hope.

and you're going to have this tug of war all year. on the weight of that revenue, whe are where guys like neil get scared. >> how do you double revenue and not screw up the user experience? i think the ads can be intrusive. and if your goal is to double revenue and you've got this price you've got to live up to. >> it's a salesforce productivity thing. it's covering the accounts one by one, going to the fortune 500 brands. i think you can be a believer and think something's expensive. there are a lot of things i like. >> do you really have a model. or do you go, and start with the 40 billion and work backwards and try to figure out something? is it a model or a climate model? what kind of model is this? >> no, you know, we actually do have a real working model. >> how does it work? there's no way to get around the price of revenue number, is there? >> there's a couple ways we look at it. one is from a price to revenue perspective. another is really from an ebitda perspective.

and the unique thing about twitter with all of these platform companies is, you know, there's massive network effects. and with the network effects comes scale and ultimately with scale comes profitability. i think that twitter could hit 30, 40, 50% operating margins overtime. we've seen that with facebook and google. there's growth. >> that's the music. that's a hint from the control room we've got to go. thanks for getting up early out there in san fran. >> thank you. will the new year mean higher home prices? we'll get predictions for residential real estate all around the country. "squawk box" coming right back. ♪

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welcome back to "squawk box." in the headlines this morning, we're going to get the latest reading on home prices in about 90 minutes. the october case shiller report is expected to show a 13.8% increase in the prices in the nation's largest markets. that's compared to a year earlier. dallas fed president richard fisher says his votes on fed policy in 2014 will reflect concerns that qe is stoking potential inflation. he says he's worried that the fed has, quote, painted itself

into a corner with quantitative easing that will be very hard to exit. fisher was not a voting member of the fomc this year but will be one in 2014. latvia becomes the 18th eu nation to adopt the euro tonight at midnight, whatever their midnight is. as its currency, the euro will be latvia's fourth different currency in two decades after the russian rubel. you remember, they were former soviet. >> all right. 2013 was a strong year for real estate. mortgage rates stayed low. the housing recovery in full swing. diana olick joins us with her predictions. first of all, let's check the score card to see how she did in 2013. she predicted home prices will continue to rise about 5% to 7%. we will say she got this half right as prices rose, but it was more than 12%.

next, she predicted that apartment rents would stay elevated and vacancies low despite the improvement in the housing market. she got that right. and renter nation is in full swing as younger americans can't get the credit or don't have the desire to buy homes. finally, she predicted that as home prices continue to rise, more borrowers will come out from underwater. also as home prices rose. renovations took a big leap in 2013. >> i want to go to equity land. is it next to disneyland? >> yeah. and your next contract. let's see what lies ahead for 2014 in real estate. >> reporter: as sales return, home prices will continue to rise. but the gains will ease. those 12% price jumps we saw in 2013 were driven largely by investors on the low end of the market.

as foreclosures ebb, which they will and distressed sales become a smaller part of the mix, the prices will moderate. but still low inventories will keep those prices in the positive in most markets. and mortgage rates will also rise. the days of the 3.5% 30-year fixed are over. rates are already up well over a full percentage point from a year ago. and as the federal reserve begins the much anticipated exit from the bond buying business, rates will have to go higher. investors will not leave the rental market. some have predicted with higher home prices, these private equity, large institutional investors will sell at a profit and leave. but they say they're settling in for the long haul. now that they've got economies of scale and figured out the management. also, rents for single family homes are rising as they are for multifamily apartment buildings. that's because supply is still tight amid very high demand. diana olick, cnbc, washington. >> and tune in throughout the

day. for more predictions watch them all on the web at predictions.cnbc.com. for more on the outlook for real estate, we are joined by the author of the upcoming book, "next generation real estate." what does it mean? renting or owning? >> means both. the new american dream could be actually renting. and having an opportunity to travel and go on vacation, change jobs every couple of years. not being tied down to a mortgage. it could be the freedom to do what you need to do. >> not everyone -- it doesn't make sense for everyone to own a home. but if you can, if you have enough income to write off the mortgages, makes sense. >> especially if you plan to be in the same house for five to seven years. you shouldn't do it for two to three years unless you're a professional flipper. and you want to take a new job, you want to travel, you should rent. it's a great option for a lot of people these days. >> now, mortgage rates. i'm old enough to remember 15%.

>> sure. >> for me, i always look at it on an absolute level. but people don't do that. do they actually make a decision not to do something because it's up a point to 4 1/2? >> look what happened when the rates went up almost .5%. the market slowed down. my parents bought the first house in the '80s. it was 12%, 14%. people don't have that sort of life experience. rates are still so low. >> when are they not so low? >> when are they not so low? a lot of inventory hits the market. >> what's the number that gets people to say this is -- >> oh, 7%. i bought my first place in 2003 and it was 6.25%, i think it was. and it didn't stop me. i bought the house, needed a place to live and was committed to the area for seven to ten years. >> that could be the end of next year. people aren't going to not buy because of 5% interest rates. >> i just bought a house and i bought it with the fear that rates were going to go up significantly, and they went up

a little bit, so i got in and got 4%. shouldn't we be seeing that activity as people fear the rate increase. >> yeah, that was 2013. >> that's done? >> i think we'll still see a healthy appreciation next year. >> per year. what about per year for the next three to four years? >> i think it's a nice, healthy boost year-to-year. it's a longer term kind of healthy outlook. >> do we feel like the banks are back in the game? the tough part was getting that mortgage, right? that's what's keeping people out of the buying situation. are the banks back in the game in an interesting way? when is it worth the bank's time? >> i think they're absolutely back. it's hard to get loans, they're stricter. folks getting loans in 2006 aren't getting loans anymore. got to have good verifiable credit. they lost those and they need more business. i think we're going to see them easing some of the lending standards. they're not going to start to giving out loans to people who don't qualify. >> mariachi bands. >> wouldn't that accelerate

closings if people could go into it knowing they have the flexibility to see what rate they could get? why aren't more sellers offering contingencies? >> you see it regularly. it's regular to have a mortgage loan contingency. >> in new york city? it's all cash. the minute you say you want a mortgage, they're not going to sell it to you. >> my dad and wife are both brokers and people are continually concerned about the mortgage rates and can't get mortgage contingencies so they're forced to walk away. >> earlier this year, you didn't see them, and people were doing all cash. but you're seeing people a lot more flexible. a more even year next year. sellers aren't going to be as tough on buyers. >> what's -- do people keep building? is there really a shortage? or people kept building? >> i think there is a shortage. and people are buying plots of land, putting in plans and making plans for the next five to ten years. >> you could have predicted this is happening what you would think after the housing run-up

and then the bubble burst and then it's like going according to plan? >> i think if you look at the housing recovery like a marathon, we sprinted out of the gate in january of this past ye year. now they're taking a breath, pulling back and saying it won't be as exciting the next year, you won't see 25% increase, but we'll see a nice, steady kind of stream of activity. >> here's a different question. would you get a 30-year mortgage in this environment knowing where interest rates may ultimately go? would you ever get a five-year or seven-year arm? >> why would you ever get a 30-year? >> it depends. if you're a family and you want to be in this house for at least ten years, put your kids through school, why would you not get a 30-year fix? >> i got a 30-year fixed because interest rates were never going to be lower, i thought. >> life changes and you may decide to stay in that home and you may want to refinance.

you think you're going to be out in two to three years -- >> you've got to be a fed worrier to get a 30-year. you've got to think they're going to do it. >> yes, i am a fed worrier. >> you rush into a sale and that's the problem. when that clock starts to tick on you. >> yeah. >> i have a 30-year fixed. >> you have a 30-year fixed? >> maybe i made a mistake. but it hasn't been a mistake -- it hasn't been a mistake over the past ten years. it could be a mistake in the next ten years. >> it actually was, right? because you would have paid a lot less if you'd gotten an arm. >> what i'm saying is the mistake for me to do the 30-year fixed. 100% when i did it. >> i still think, i don't know. >> you don't think there's bubbles starting to form. i had a friend in miami saying they're offering these tours of new developments via crane. you can look at stuff being built.

how is that not a bubble developing? >> i think they'll be small little bubbles. my parents bought their home, they didn't look at the market for 20 years. now we're focused on the blips and dips. the big picture is going to be a better trajectory. in the long haul, it's a good long-term investment. >> all right. >> las vegas, they're up 20%, still. that's not sustainable. >> you said my book, you didn't say the name. >> "next generation real estate." >> will you work with him a little bit? >> you've got to say it ten times. >> "next generation real estate." >> thank you. all right. coming up, disney up better than 20% in 2013. coming up next, we'll take a look at the winners and losers in media of this year and a look ahead at expectations in the new year. first, though, "squawk" sports news, we'll tell you about tim tebow's next gig coming up. welcome back. how is everything?

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is it africa? the middle east? canada? or the u.s.? the answer is... the u.s. ♪ most of america's energy comes from right here at home. take the energy quiz. energy lives here. in "squawk" sports news, you probably have heard by now that tim tebow has a new gig. an analyst for the new sec network which is operated by espn. he will be part of sec nation, a

pregame show that will travel to a different campus each week after that channel launches in august of 2014. espn says the deal will not preclude tebow from pursuing playing opportunities in the nfl. he didn't play in the nfl in 2013 after the patriots cut him back in august. in a statement he said he'd continue to pursue his dream of playing quarterback in the nfl. but he'd be a good guy to have analyzing the sec. and who doesn't -- i mean -- >> it'd be good if he did the securities and exchange commission. >> is that what you guys are thinking of? >> what is that investigations 24 hours a day, seven days a week. >> i used to think that until alabama and just -- you watch. where is there a conference that matches up? it's like the -- >> and america knows the sec has a football conference, they don't know the securities and exchange commission. we know that. >> where do you pick a team. what conference to beat the sec? is there one?

>> used to be, i thought -- >> oh, there's more than one? >> there's more than one. >> what are they? acc? >> they used to be. florida state? >> how many innings in a football game? there are innings in a baseball game. that much i know. >> you almost got her. >> i was trying to make sure that i knew. >> i follow the least sports of anyone at this table. >> your mind is so full of digital stuff. >> data points that are crazy. >> it's like a different language. >> i wish i knew more of the macro stuff. i hear you guys talking about this stuff, i think i should spend less digital and more macro. >> yeah. >> we're going to do a little micro. walt disney company has ranked one of the best performers in the dow and s&p 500 after raising the price target. could this stock continue to climb in 2014? joining us now with his outlook on the media sector, the senior

media analyst. good morning. >> thank you. >> disney, where do you think this thing goes? >> i think it's relatively fairly valued here. i mean, you definitely have to have a secular perspective on the parks, advertising at espn. i think the issue is how much of a premium you're willing to pay for very firm backbone of businesses. i think it's a higher quality earnings stream. at this valuation relative to certain other media names. >> we keep talking about netflix all morning. where do you stand there? >> my instincts would be it's fully valued here. people talking about netflix, you look at the valuation on hbo, right now, i think it's a little bit out of sync. i think people are always willing to pay more for growth

and glamour. but particularly in the international markets like europe and germany where there isn't as much of a pricing umbrella attacking a cable or satellite video bouquet, they have a much more difficult, you know, challenge on the business model than state side. >> okay. what's your take on -- you said hbo. i'll raise the issue, time warner and whether you think hbo will have to sell themselves separately. they're starting to do this in some markets so they will not be part of the larger cable package. and what does that mean? >> i think there's a decent prospect of that in some international markets, you know, particularly the nordic countries. i think there's really a nice eco system with the cable and satellite companies domestically, though, in terms of bundling and selling the product. i think hbo go is a phenomenal product. but i think first and foremost regard the cable and satellite companies as their principal partners. the ceo has pointed out that incremental the numbers are tiny

on that business domestically. but i think when you look at that as a global template and a lot of markets, it makes a lot of sense. >> how much of the de-bundling in general do you see this year? cbs up this year, lionsgate up 99%, netflix up 300%. you see all the consumption now. web consumption, mobile and desk top is 40% of all media consumption time right now. it seems they have to debundle and deal with the fact they're going to lose some of those affiliate fees or that may cause controversy. how do you think this plays out in a macro way or sector way? >> well, i think a lot of resistance to debundling. maybe directv doing something over the top for kids nickelodeon content. but i think the business works well for the content. unless washington and john mccain really force something.

but that looks extremely unlikely. i think the key is enforcing the value to the consumer. >> when is the day that netflix or google or somebody like that buys the rights to sports. the question is when. >> next year or the year after. why would google not bid for one of the nights. why not the thursday night game? netflix has the cash to do it. when consumers desperately want something as much as they want to get all of their content over the web, no matter how good it is for the cable companies and the content companies, you can't fight consumers. we've seen historically, you can't fight consumers. >> sports is one of them, premium content is another one. and that's the only game to be in. >> thank you for your thought. >> yes. >> netflix game has always been serial programming. i think google's much more likely to do that at some point.

i think that would be the most likely outside -- >> google nfl game. >> youtube. the youtube nfl game. >> matt, thank you so much. happy new year. appreciate it. coming up, pope francis made headlines with the critical commen comments. more on that next. it's as simple as this. at bny mellon, our business is investments. managing them, moving them, making them work. we oversee 20% of the world's financial assets. and that gives us scale and insight no one else has. investment management combined with investment servicing. bringing the power of investments to people's lives. invested in the world. bny mellon. but with less energy, moodiness, and a low sex drive, i had to do something. i saw my doctor. a blood test showed it was low testosterone, not age. we talked about axiron the only underarm low t treatment

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pope francis made some headlines earlier this month with his comments on wealth and

capitalism. and michelle caruso-cabrera. it's like i'm introing you. >> i'm right here. >> we talked about this earlier. >> in the 6:00 a.m. hour. we'll talk about it again. the recent comments about capitalism may make it tougher for the wealthy and capitalists in new york city. billionaire ken langone, he's spearheading the efforts and told cnbc that at least one potential seven-figure donor has expressed concerns about the free markets and suggestions that the wealthy may be insensitive to the poor. langone tells cnbc, quote, i've told the cardinal your eminence, this is one more hurdle i hope we don't have to deal with. you have to be careful about generalities. rich people in one country don't act as those in another country. i sat down with the cardinal to hear his response to langone's message. >> i said that would be a

misunderstanding of the holy father's message. the pope loves poor people, he also loves rich people. he loves people, all right. and he's not into the condemning game for anybody. his famous renowned statement, now who am i to judge? i said, ken, thanks for bringing it to my attention. we've got to correct to make sure this gentleman who is the only one i've heard understands the holy father's message properly. and then i think he's going to say, oh, okay, if that's the case, count me in for st. patrick's cathedral. >> i think a lot of people read the holy message 220 pages long and i think cardinal dolan softened a lot of what the pope had to say about. >> ken langone is saying the pope shouldn't be talking about the disparity of wealth and the poor being left behind in our society? the pope is not going to say what ken langone has to say about this. this is like people saying to barack obama, you shouldn't be talking about fat cats on wall street. there are fat cats on wall street. >> what do they expect the pope to say?

go on twitter? the pope has to set a pole. just like previous popes. >> this pope is concerned about the poor, right? does he want to make a choice about which economic model historically has shown is better for the poor. >> he did, he was negative on free markets. very negative. >> i think when you look at -- when you look at the world, capitalism has won. we don't need to worry anymore. >> i think we do. >> no. >> i think it's overstating the case. >> there'll be distribution. if you'd set two poles, redistribution versus trickle down, trickle down is all that you have. it is a negative term, but it's all you have. redistribution doesn't work. you redistribute a smaller -- >> he says people will assume that economic growth encouraged by a free market will inevitably bring about greater justice and inclusiveness in the world.

this opinion which has never been confirmed by the facts expresses a crude and naive trust in the goodness of those economic powers. he's effectively saying this doesn't work. >> the issue might be timing, right? the issue is we're at a particular time in history where these poles are wider than -- >> since -- >> in the middle class now. because of the expansion of the free market. >> this is a guy worrying about a seven figure donor. is this where the seven-figure donor should be -- >> coming up -- grabbed the patid 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.

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it is the final day, final trading session and final hour of "squawk box" this year. we'll bid a fond farewell to 2013 with the dow on pace for the best year since 1996. time now to look ahead to 2014. we'll tell you what to expect from the markets, retailers, and the battle shaping up in washington. and a float in the rose bowl parade will set you back about $500,000. jane wells takes a look at the

money behind the iconic sporting event. happy new year, sydney, australia. 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 andrew ross sorkin and michelle caruso-cabrera. i have no idea what's going on in sydney right now. but becky quick is off today. we have a trio of guest hosts this morning. >> that's beautiful. isn't this the opera house? dying to go to the opera house. have you seen an opera there? >> i have not seen an opera there. i actually kayaked in that, in there. >> okay.

>> politico's ben white is here. john steinberg. and more from them throughout the hour. >> too much sympathy for ken langone. >> they're too capitalistic down there. too capitalistic. but first, a round-up of your headlines. >> let's give them to you. we are monitoring a massive oil fire in north dakota. as many as 20 train cars carrying crude exploded and caught fire after colliding with a cargo train outside the small town of casselltown, north dakota, about 40 miles west of fargo. smoke can be seen, apparently, up to 20 miles away. residents within five miles of the fire have been urged to evacuate. residents within ten miles have been told to stay indoors. both trains are owned by berkshire hathaway's bnsf. no injuries, though, have been reported. also, some poison pill news.

hertz adopting a shareholder rights after seeing unusual and substantial trading activity in its stock. trying to reduce the likelihood that any person or group could gain control of hertz through open market accumulation. there's probably going to be pressure on -- it's funny because the stock is going up, but you think should it go up or go down? really maybe -- >> they think it's in play. >> it's in play, so it goes up. and similar story. netflix says it has abandoned on the other side the poison pill. two years ahead of schedule. it was adopted years ago after carl icahn took a 10% stake in netfl netflix. and netflix also giving reed hastings a raise. the streaming video service raised his salary by 50% to $6 million. doesn't really sound like a lot of on a relative basis to what's going on with that company.

for 2014, netflix shares have quadrupled in value this year as it introduced original programming and saw a growth in the subscriber base. he's made his money through the stock. >> no, no, no -- i would just give him -- >> what's the point of having a salary, right? it's a rounding error. >> $6 million. >> $3 million, each in cash and stock options for the year. remember, mayor bloomberg only takes $1 a year for his role as a public servant. >> for telling everybody how to live their lives every second. >> he's got $20 million. >> capitalists, yep. $20 billion. they said he spent $680 million over -- >> maybe he could talk to the pope? >> i think the pope -- have you been to the vatican? >> years ago. >> as you walk along east masterpiece -- >> yep. >> and art. all the way to the sistine chapel. each chalice, each

gold-plated -- man, you could raise, how many billions do you think you could raise? >> a lot. >> you could raise a lot. one painting $60 million, $70 million. >> you could make -- i mean, if the pope -- if the pope -- >> monetize the assets. >> the detroit art museum, right? >> if the pope really wants to put his money where his mouth is. >> i'm telling you, it's probably $100 billion. >> not be available -- >> you're missing his point. you're missing his point. >> all of the catholic. >> if you spend $100 billion on the poor. why does the pope -- why does the catholic church need it? >> he drives a ford focus. >> so all of the faithful can come and -- >> all of the faithful will be able to see it. >> at dan loeb's house? >> who are you going to sell it to? >> the church has had a lot of money for a lot of years.

>> and i think the pope has also talked about that. he's living in less splendor than previous popes. it's not simply that he believes that the free market capitalist system should have some safeguards in it to protect the poor. >> that's kind of not what he said. but anyway. >> i think that's what he said. >> go read tit, 320 pages. >> bitter party of one. >> holy smokes. >> have you read the 220 pages? >> i have not. >> when you walk away, you're going to see, this is a man who does not believe that the free markets have done good for the world. >> well, okay. >> check on the markets. one trading day left in a bullish year for stocks. the dow best yearly gain since 1996 and posted yet another record closing high on monday. the s&p 500 has had the best year since 1997. the major averages only with two losing months this year.

dow would open higher by 24 points, s&p by nearly three and nasdaq by nearly seven. >> one more trading day left in 2013. what are the prospects for stocks in the new year? let's get more now. joining us now is allison dean, senior adviser. and a cnbc contributor. i have two ways of looking at things, allison. i can remember, you know, for years thinking, wow, that stock's at a new low. wow, what a buy. and then it always kept hitting new -- more new lows until -- and finally hit a new low at zero where stocks hit new highs, a lot of times, aren't the things that are positive about whatever caused the market to be up 25%, 30% this year. it's hard to call when those things reverse, isn't it? is there a reason to think it's going to reverse in 2014? or will maybe we have another good year? >> yeah. it's hard. the only thing that worries me is there isn't anything you can worry about. sort of the old climbing the wall of worry is the best environment for a market.

but it's hard to see much changing. if anything, it's easy to see things improving. the one risk being markets could overreact to the taper or the fed doesn't get that right. but even that based on everything we've read about janet yellen, my sense is they'll be very gradual about that, as well. it feels as if more of the same, if anything, there's greater potential on the earnings front for positive surprises. >> most people would say, and the old idea there's a wedge, the fed put a wedge between the underlying economy and the stock market so that it's above where it would be purely on economic fundamentals. but as the economy catches up a little, maybe the underpinnings become better. and then it moves, i don't know, what do earnings go up? 5%, 6%, maybe multiples expand a little bit. you could do double digits based on not a great year. >> that's my sense is you could see top line growth picking up, a multiple enhancer. it could be greater than 5%, 6%,

top line trends improving and markets not deteriorating. and that could get you into a 10%, 15% type of market. i hate to predict again, but i don't think we're expecting as much on the negative front this year. >> and sentiment, as well. i'm hearing it's gotten really bullish. but i don't know just as far as the individual investor goes, it's hard to shake off what happened five years ago. there's a lot of people that still say the stock market's just not for me. and by the time something like this is over, you know, they're buying twitter by the end of it. >> i know. it is a concern, but my sense is if this is a multiyear prolonged improvement, the trend seems to be global, we're a year ahead of other parts of the world, that could be something that could bring investors in early enough not to top tick the overall markets. i think it's not just the damage caused by 2008, the damage

happened in an environment where the demographics are such which people are sort of their time horizon isn't as far away so they're very worried about losing their savings. >> what about worrying about a messy exit that rates go up too quick, by the fed, rates go up too quickly, huge losses on their balance sheet, which got way too big. it's how much bigger than it was? five, six times bigger than it was? is there a number where that becomes a real problem? something bad happen? >> you know, i don't know it specifically, but i would imagine if we saw interest rates getting up into the 6%, 7%, that could be ugly. >> can they get out of this cleanly and without some type of, you know, comeuppance for all of us? >> if they did it right. >> really? >> and the federal reserve and economists aren't known for necessarily managing markets perfectly. so i think that's the big overhang as far as risk is. will they handle taper well

enough? without causing much damage to the bond markets and overall markets and their balance sheet. >> because they've gotten a lot of cover globally from the slow growth. inflation has, that's what everybody talks about. that's what the big risk was. and it looks like that's been written off. i just wonder if there's something else. some bubble that forms somewhere else that could dislocate everything if that were to burst. i don't know where it is, some think it is an asset, that it is in the stock market. >> i don't think it's in the stock market. i don't see the valuations. >> of course, art is pretty scary. cars, we talk about all these things. i like the balloon dog. but how much was that? 60 or so? you know the balloon. >> well, i'm not convinced the contraction the art market will have enormous global ripple effect on. >> yeah. there's one on steve kohn's --

>> and then when you've got a roth going, you put it next to the norman rockwell. >> i understand he was a good painter. >> in athens. >> all right. allison, thank you. we appreciate it. time will tell. we need a good first week of january and so goes the first month. >> that's what they say, right? 85% in the first couple of days there. coming up, a few stock stories to watch in today's trading. plus, we'll tell you why new york city is suing fedex. and then predictions for 2014, we'll talk to a retail analyst about consumer expectations and two political strategists about the battle shaping up in washington for the new year. we're back in a moment. being your own boss! there's e and my customers are really liking your flat rate shipping. fedex one rate. really makes my life easier. maybe a promotion is in order. good news. i got a new title. and a raise? management couldn't make that happen.

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welcome back to "squawk box." new york city is suing fedex for shipping cigarettes. the big apple accusing the package delivery giant of illegally delivering millions of contraband cigarettes to residences and violating a 2006 settlement. the city contends that fedex shipped 19 1/2 tons of cigarettes in 10,000 shipments, that's 55,000 cartons. the suit is seeking civil fines and unpaid taxes from fedex. they were shipping from an indian reservation out on long

island, because, remember, the taxes are lower on an indian reservation. >> i can't believe the volume of cigarett cigarettes. 10,000 packages? >> whenever you have the taxes in new york city are so, so high, so you have a huge difference in the price. so you're going to do geographic arbitrage wherever you can. right? >> amazing. hewlett-packard is increasing the number of workers it plans to lay off. according to an sec filing, hp will cut positions by the end of fiscal 2014, compared to the original estimate of 25,000. when it announced the restructuring in 2012, it said it was possible the number of job cuts could increase by that amount. we'll also be watching shares of twitter today. the stock has fallen 17% over the past two sessions after soaring since its initial public offering. all right. coming up, retail predictions for the new year, what to expect from the consumer and major retailers in 2014. don't move. this year ♪a little love [ male announcer ] this december,

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welcome back to "squawk box," 2013 was a mixed year for retailers. a good year for the high and low end, but less so for everyone else. courtney reagan with a look at what's in store for 2014. but first, let's check the scorecard, courtney, to see how she did on her 2013 predictions.

courtney said that jc penney would revert back to sales. correct. bingo. one of the last things that ron johnson finally did before he was finally fired. next, she said walmart would offer same-day delivery throughout the country. sorry. walmart execs, we should say, though, are going -- can deliver same day if consumers demand it or say they can, but right now they're not doing that because they say there's not enough demand. amazon, of course, doing it. finally, courtney predicted luxury sales would take a hit and traffic would increase at outlets. this we will say is half right. there was a strong appetite for luxury this year. tiffany stock is up nearly 60% year-to-date. and sales at outlets were up 13% to 15% compared to 2011. now let's see what's in store for retail in 2014, courtney. >> teen retail is ripe for reckoni reckoning.

look for shareholders to push teen retailers like aeropostal and abercrombie & fitch to explore alternatives. the cash flow, solid balance sheets and the deterioration make the group a key category for activist investors in 2014. most of 2014's retail growth will come from online sales, which means mall traffic will continue to decline. retailers may be able to protect some sales by offering an attractive online option. but mall operators, particularly those who have lower quality malls in their portfolios will take the hit. it could be a scary year for those invested in low-quality malls. traditional malls will continue to suffer in 2014. but outlet malls will see traffic and sales pick up. as a result, retailers will let their leases expire in traditional malls while pursuing space at the country's outlet

centers. but with full line, not discount format stores. >> courtney know joins us with a little bit more. courtney? >> teen retailers have been struggling this year. that's one of my predictions that we'll see activist investors jump in there and figure out what they can do to unlock value. >> abercrombie's going to be in trouble. >> i think the problem with abercrombie, it's a brand problem. it used to resinate, now it doesn't. they need to get in there and change things up. i cannot believe they resigned jeffries. i don't know what the board is thinking. in order to make that work, they have to change -- >> wow. >> nice. >> i think that's what has to be done. >> you would fire him immediately. >> yeah. definitely. >> for the airplanes? >> no, because i don't think he understands his consumer. and i think what he thinks they want, they don't and it's not working. >> he was the guy -- he was the man that made this company. when did he start? >> things can work for a while in retail until they don't. and that's the problem.

when i walk into an abercrombie, it looks exactly like it did when i was in high school. >> which was two years ago. >> i wish! i wish! a lot has changed since then and i don't think they understand. the kids don't want to big logos. the jeans are really expensive. and even the teens we talk to understand that. they know they're not going to pay that much. >> it's like the movie business. if you hit it with the cargo shorts, that's why a retailer like czar is so amazing. they can fabricate it in a week. >> they have the shortest product cycles, like six weeks and so it's really amazing. and that's not something that gap can do, not something abercrombie can do. >> the practically naked models that stand when you walk right in. >> i would never go in there -- >> it gets us talking about it, i suppose. but it doesn't really sell any clothes. >> well, it's a different time. no one wants to go to a store anymore. no one wants to take their kids to a store with half naked models in it. >> he has his models that work for him on the airplane.

and they wear gloves and they have to wear -- >> yeah. >> polo shirts with their collar -- >> and the abercrombie with the perfume. >> oh, the smell -- have you ever walked past an abercrombie? >> are we going to talk about jc penney next year? >> i think it depends on what happens with mike ulman, because we all think he's temporary, the board says they are continuing to look for a replacement ceo, but they haven't given us anymore. i think if we get a replacement, then we'll talk about it. >> it's constant on cnbc relevant to the mine share. >> you're right. >> and i didn't put it in my predictions this year because i was kind of like -- >> done with jcp. >> i need a break. >> temporary and interim ceos has to be the worst idea ever. just choose a ceo. >> well, as of right now, he's the ceo. the board has come out and

publicly said we are looking for a new ceo, but they have not given us a time frame. >> also, why would you do that to all of the employees. how can you get anything done when you say the person is temporary, right? >> they did bring him back. that was the thing, they had to stop the bleeding from johnson. and he was a stopgap. >> that's what he's done. >> by the way, i was going to say final question and i'll have one. where's ron johnson? what's going to happen to him? >> we don't know. >> is he done? out of the biz forever? >> you can reinvent yourself over and over again. >> i don't think he has to be done. >> you are done, though, courtney, thank you. >> stay here. you can stay, we're joined by tom forte. good morning to you. >> good morning. thanks for having me on. >> a couple of stocks that you do like this year. one is coach, which surprised me, just looking through the list. >> yeah. so if you look at our top picks in the retail space, you have coach and urban outfitters.

a new ceo, new creative director. we think that'll lead to improving trends. they're moving forward with their efforts in china and expanding men's efforts to broaden the assortment. i think you could see a rebound year for coach in 2014. >> do you put urban outfitters in the category of abercrombie and that whole world? >> no, i think it's a little more differentiated from abercrombie or aeropostal or american eagle. the trend is right, and we think there's an opportunity for them to improve core urban outfitters as the year progresses. so i think that, you know, there's a lot of differences between what's going on urban outfitters. >> that's a play on anthropology, right? >> yeah. it's a play on anthropology. it's very strong there and the trend's right. if you look at their inventory's in good shape and very well positioned. >> how about the michael kors

juggernaut? what does that feel like? i was shopping with my wife and her mother last week, and they're both kind of bears on michael kors as the product. is that going to continue to evolve? has it hit a ceiling? >> no, i think they're going to continue to do well. they're one of the reasons that they've struggled. but they're doing a lot of things right in that category. and i think there's an opportunity in there, as well. >> why do you think the coach turn around happens this year? the idea of buying winners as opposed to buying things that are low. the company's gone sideways basically for years. goldman says that 2014, a lost year, rebuilding year. why do you think -- won't it be dead money? >> no, i think you have to look at -- i'm with you on the thought that sometimes stocks under pressure are made under pressure and often times buying a stock in a 52-week high is a better strategy. but if you look at coach, they have a new catalyst and a new creative director. and you're going to see the

product come in in the second half of 2014. if you outperform against those low expectations, the stock can do really well. >> thank you for this. happy new year. >> you too. coming up, the dow and s&p are on track to finish at all-time highs. up next, a look at today's trading from the future pits in chicago. honestly, as much as i love this job, i plan to do a lot more. i needed a new laptop for my pre-med classes,

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welcome back to "squawk box." take a look at stocks to watch in today's trading. car rental giant hertz has now adopted a shareholder rights plan otherwise known as a poison pill. putting into effect what it sees after seeing unusual and substantial activity in the company shares. those shares higher now on the chance they're in play yet. who knows. also, phillips 66 selling one of the units to warren buffett and berkshire hathaway. the value of that deal about $1.4 billion. the unit makes chemicals that increase the flow of products through energy pipelines. and marvell technology, taken a

6.8% stake in the chip maker and says it may speak with management about reorganizing that business or exploring strategic options. >> marvell. >> the other is marvel -- >> the comic. >> marvell. >> rick santelli joining us from the cme in chicago. we've been transfixed on the ten-year yield. is it a three or 2.99, rick? all morning. >> well, tell you what. could it possibly be a very interesting shortened session in the fixed income markets, close early, equities, of course, are all open normal hours. we're dabbling with 3% outside our time zone. currently 3% right on the head is the highest yield close since july '11. i think as we get into the final hours of the year, i wouldn't at all be surprised to see this thing tick up a little bit in yield down a bit in price. and i think it is rather

significant that at a year where three extremes occurred, we're closing on historically high fed balance sheet, historically high stock market, and the highest yields in a ten-year going back to july '11. i think those three things are fascinating when put together. i think we should pull the first one out because the other two would give me hope during normal times that we're going to start rocking and rolling. but i'm just not sure. i think there's too many forces at work here that make the normal economic relationships a bit like roger marist's asterisk in my opinion. >> you're catholic, right? >> yes, oh, yes. >> oh, boy. we've been talking -- michelle talked to cardinal dolan, we've been talking about the pope. she read a thing. i was giving him the benefit of the doubt.

because popes always need to talk about the poor. that's what the catholic church should do, obviously. they need representation, obviously. but if you read between the lines, he really does seem to be saying that the free markets have been a net negative for the world over time. i mean, have you read some of those comments? we'll read one to you. >> no, actually, i've read much of those translated pages by that very famous speech. i guess i would say this. being a person who never wades into anything controversial. i would say that he's a holy man in his actions at a time where most people just repeat words is so refreshing that he walks the walk and, you know, doesn't say green is blue, green is blue, and in the social media world we live in you convince 2/3 of the people green is blue. he walks the walk. but i think history will dictate that at least a portion of his interpretation, especially considering he's from latin america, that the free market system has created and taken

more people out of poverty and given more people a chance than any other form of government, at least up until this point in recorded history. but, i'm casting no -- >> and as a guy who had something to do with the founding of the tea party, the guest to my left, the worst would be to call someone tea party. >> it's not the worst i could come up with. >> it's pretty bad. >> people use it. >> it's a weird thing to use, isn't it? what is it? what are they implying it stands for? i thought it was just limited government, individual freedom. >> are you asking rick that or me that? >> i don't know. >> it's used as shut down government over obamacare, don't

raise the debt ceiling because you want to see another round of spending cuts. >> you say all that like it's a bad thing. >> we've cut a lot of deficit. >> all right, rick, doing things we do not consider reasonable, i guess is what we should take away from that. >> the fact we're having this discussion at all is a good thing because i think that if some of the fiscal conservatives didn't maybe err on the far end of the teeter totter to bring balance into our society, we wouldn't be having the discussion. remember, just because you swap a crown for a microphone doesn't mean that rulers or leaders have a vision. you know, today there was a great op-ed in the "wall street journal" that talked about exactly this issue. you know, when i look around the environment i work in, i see people of every type. and i see them in roles of every type. and i think we live in a world in a country right now, i think, that has the most opportunity

and to see so many people talk about and try to raise these frictions in between various groups. i think it's terrible. and i think it's one of the down sides of social media. it was supposed to be the information age. it's come out to be kind of the subversive information age. and i think it's tragic. if he's using that, woe be to him. >> i never used it, and i think talking about reducing deficits and debt is a good thing. if the tea party brought that to the table -- >> not if it's really troublesome, though. >> not if you're shutting down the government or threatening to default on the debt. you don't have to do that. >> and you didn't have to default on the debt to reduce the size of the government or reduce the budget. you never had to, ever. that was complete and total mythology. >> it was threatened by the republican party and the tea party. how is that mythology? >> no, it was threatened by jack lew. >> you said raise the debt limit.

>> they never -- they never ever said, no -- >> if we don't get a, b, c, and d, we are not going to raise the debt limit, which would not create a default. >> no. >> oh, come on, isn't it time we stop saying default. default, default! you know what, if you try to scare people using untrue tactics, that's even worse. >> it's not true, rick. >> a default. oh, my god, we're going to have a default. give me a break. >> i won't give you a break. facts are facts. >> do you see how much closer dan is to me. >> he's basically on top of me right now -- >> come on, people, you need to understand they're spending all your kids' money, but we may default. >> there just isn't one. all you do is panic markets -- >> no, every other country in the world that's ever come up to a debt crisis prioritizes. >> and then there's a debt

crisis. that's why they're prioritizing. >> they don't have the money. we have the money. that's the huge difference. >> did you see how i did this? >> i saw what you did. >> okay. happy new year. the battle in the political arena in 2014. this conversation won't stop. we're going to talk to strategists from each side of the aisle about obamacare, the debt threat and perhaps the pope. and would your company pay $500 million for advertising to 60 million americans? r. the peruvian anchovy harvest suffers. 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.

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implementation of obamacare will continue to be a big story in the new year. a republican strategist and steve mcmahon is a democratic strategist and co-founder of purple strategies. gentlemen, good to have you here. >> good morning. >> steve, do you think obamacare is going to dominate in 2014? >> well, i think the republicans are going to talk about obamacare in 2014. they want to make the next election a referendum on obamacare. the challenge, of course, is that the last election was a referendum on obamacare and the democrats won. now, obviously, there were problems with the rollout. if those get improved, i think it's going to be problematic for the republicans because they don't seem to have a plan "b." >> chip, your assessment on that. >> i think he's right. because of what it's doing to

the economy, how much it's going to cost. but the democrats will run on it, too. nancy pelosi said democrats are going to be proud to run on obamacare. and i hope we're seeing that by october of this year. >> do you think, chip, so far, they've been proud to run on obamacare, the folks facing reelection? >> well, i think that -- the democrats are running from it. and i think mark prior has doubled down on arkansas. he's losing by more and more as the weeks go on solely based on obamacare before we get into any issue. and i think mark prior will be the poster child for what happens when you support obamacare in an election. i think he's going down for sure in arkansas. >> but, chip, you know the predictor, and arkansas is a red state. the fact that he's a senator in the first place is remarkable. you're right about one thing, the democrats are stuck with obamacare. but here's what's going to happen i think over the course of the year, people are going to go to the doctor, and when they leave the doctor for preventive care, it's going to be free.

and increasingly, people will start to say, hmm, maybe this is a better program than what the republicans have been saying. this will be a referendum on obamacare like 2012 was. and i don't think they'll be any more successful fighting it a fourth time. >> one of our guests has a question. >> chip, it's ben white. i wondered what your thoughts were on how the republicans handle the debt limit talks in march, april, may, however hard they push on that, what they need in return. are we looking at a big fight there, or not? >> well, we've already seen a few big fights on this debt limit in the last couple of cycles. and i think what the republicans want to do, especially in the house is get a deal done early, which we haven't seen much success on. but i think there's a little bit of glimmer of hope this last budget deal was done quickly. it's not a win for either side. both sides are upset about it. but it got done and i think they're going to try to do the same thing with the debt limit so we can get on to other business pretty early this year. >> steve, one quick one for you, too. the extent to which you think the democrats are going to push a message of income inequality,

the minimum wage, other issues that seem to be part of the debate in 2014 and 2016. how much of the economic inequality is going to be part of this discussion, particularly on the minimum wage? >> i think it's going to be a big part of it. the minimum wage is one piece of it. but the problem is, the president identified it last cycle when he talked about the way to grow the economy is from the middle out. everybody who is in the middle wants to be wealthier. everybody who is at the bottom wants to join the middle. and growing the middle is -- >> does it occur to you it works in the reverse. you don't grow the middle, you grow the economy and the middle grows along with the economy. >> well, that's the -- that's the cause and effect relationship is something that we could debate. but the effect in either case is that the middle grows, the middle prospers. and what you've seen in this economy for the past 20 years really is that the very, very wealthy have done very well, and the people who are in the middle and at the bottom have not done as well.

>> under president obama. >> well under president obama and president bush and president clinton. this has been going on for a very long time. and right now, people's -- people's wages as in average dollars are the same as 1987 if you're in the middle or the bottom, and if you're a ceo -- >> chip, is the tea party dead? >> well, the tea party i don't think is dead. i think some of the principles that started the party are still very important. we need to represent less government, lower taxes, and less regulations. the best way to grow the middle class economy is to get out of the way and get these small business guys to doing what they do best instead of filling out federal paperwork. >> gentlemen, thanks for joining us this morning. we appreciate it. chip and steve. >> thank you. coming up, jane wells will join us to talk about the rose bowl indicator. how we look at ticket prices and hotel costs and exposure from

parade floats compared to previous years. big game. no "squawk box" tomorrow, the market is closed. but we'll be back thursday with a big lineup to kick off the new year. two hours with guest host neil wolan, a former treasury secretary. plus, we'll talk online gambling with the president and c.o.o. of atlantic city's borgata hotel and casino. watch "squawk box" starting at thursday 6:00 a.m. eastern. [ male announcer ] the wright brothers started in a garage.

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welcome back to "squawk box." the rose bowl is an iconic american sporting event with a lot of money behind it. pasadena, so nice compared to what we're going through here right now. jane wells joins us now with more. see, things like that grow. >> reporter: you know, joe, this is a purple cauliflower. this is the scots miracle grow float. you spend maybe $500,000 and be seen by 60 million americans tomorrow, that's a better investment than perhaps the super bowl. a three-year deal as the official sponsor rose care provider for the parade.

this company based in the midwest has grown its stock more than 40% this year. and it's trying to grow its presence in the west. and where better to do that than in this parade? and if the rose parade is an economic indicator, there are more blooms, fewer thorns this including a somewhat controversial one from sea world which went public earlier there year. tim estes says for the first time in a long time, clients are telling him, hey, we got a little bit more money. this is a week-long branding event. >> an award-winning float would be anywhere between $200,000 to $400,000. we won one last year. the investment for the business is much more than new year's day. >> the tournament of roses is striving to get people to come into the parade who have a minimum of $200,000.

because of economics and supply and demand, if you are only have so many floats that can be in the parade, you certainly want to have 50 $10 floats and not 50 $1 floats. so they're trying to put together good tv entertainment. so they've been trying to get people who have a good budget to work with. >> reporter: say $200,000 minimum for a newcomer. what would it have been five years ago? >> a hundred. >> in meantime, the city of pasadena hopes to score big, that's 200,000 tickets over two games, for traditionally the two most expensive bowl games in college football. the bcs is the most expensive priced tickets. there's credit union in lancing that's offering pay day loans to finance trips here. a local economic analysis

estimates average spending per visit will be close to $600 in close staying in hotels. tickets to both games on the secondary market have fallen off dramatically. rose bowl tickets now $644 and that's down but it's up from last year. and to see auburn in the championship game the price is $965. on stub hub right now, there's three times as many tickets left for the bcs game versus the rose bowl. there's ten times as many available on tick iq. there is a chance when all is said and done that the granddaddy of them all could end up being a bigger ticket than

the big enchiladas. the prices for hotel tickets are more expensive now than for the football game. >> you're in irwindale. that's pretty close to pasadena. you're in san gabriel valley. that's not the greatest bedroom community. a little bit industrial around irwindale, isn't it, jane? >> yeah. it's a great place to build floats. remember when they got them to kick in $10 million for the super bowl -- >> $200,000 for a float that 60 million people see? that's like the deal of the

century. >> at least 200 grand. could go up to much more than that. >> that's just to build the float. then you have to pay the entrance fee. >> then there's all the branding around it. they got a food truck going around, feeding people, stuff you grow out of your garden, they got a contest to bring people here. it's become much bigger than the float, though of course the float is the crown jewel. >> you need a buzzfeed float. >> i'm going to look into it. >> we'll get a politico one. >> and then it's colorado boulevard. that's where you want to stake out -- there's a lot of side streets where you can get close to where it is. anyway, jane, thank you. what's coming up, andrew? >> we're going to tackle some international topics with our

guest host. coming up on "squawk on the street," the latest on the implementation of obamacare. the ceo of go-health insurance is coming up in a moment. [ male announcer ] this store knows how to handle a saturday crowd. ♪ [ 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

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in honor of the last trading day of 2013, we're doing a stock of the year rather than a stock of the day. we've picked comcast, which obviously -- wait a minute a here. netflix? really? well, if we had picked best management, i guess it would have been -- >> the best place to work, best turn around, you know, all those things probably would have been comcast. in this case it's up 290% for the year. honorable mention goes to best buy, the second leading gainer. didn't tell me anything about that. you told me people used it, it was a browsing library for amazon. that's when you say the demise was greatly exaggerated. you didn't need to buy anything

else. >> you will be a contrarian indicator this year. >> he doesn't remember any of the good ones, any of the right calls. >> when you make one, i'll remember it. >> you don't remember my facebook call? >> i don't remember what people say. >> you're wearing the glasses. let's great shot of that before we get the show over. let's get the last word. so here's what we'll do. let's make a -- >> 10-second prediction each and we'll run the tape next year. >> washington gets out of the way, less problem, debt ceiling gets lifted, washington takes its foot off the neck of the u.s. economy. >> netflix at 2014, end the same way next year. >> twitter and netflix?

>> no, twitter. >> lots of ipos and profits. ♪ good-bye yellow brick road ♪ saturday night's all right for fighting ♪ >> happy new year. >> happy new year. >> join us thursday. happy new year. "squawk on the street"'s next. ♪ ♪ >> 29%, that is the s&p's gain for the year as we wrap up 2013 today. i'm carl quintanilla with simon hobbs, david faber at the new york stock exchange. cramer is off today. home prices are out. we'll talk to robert shiller about them before the opening bell. futures still holding above fair value, the dow shooting for its 52nd record of the year. it is a