our economic performance is strong and with the the dollar will do well. >> strosstein is watching and he's mad at me for not saying not the eagles now. it's the band, ralph. i was talking about the dude who says not the i was talking aboue band. >> thanks for being here. make sure you join us tomorrow. "squawk on the street" begins right now. ♪ i'll be bringing in a brand new year, brand new year ♪ so listen, dear, won't you meet me here ♪ >> good morning and happy new year, everybody. i'm david faber with jim cramer, author of the new book "get rich carefully ". i have no idea how he had time to write a book. carl quintanilla is off today. let's take a look at futures ahead of first trading session of 2014.

right around that 3% on the 10-year yield. a little bit over 3%, that of course continues to be the key in so many ways. let's take a look at how we traded in europe so far today. as you can see, sort of a mixed bag, let's call it, a lot of red on the continent. as for our road map here in the united states, 2013, any way you say it, a fantastic year for stocks, dow and s&p, brand new all-time highs. what does the new year have in store? we're going to take a closer look. plus an american institution no longer. fiat has officially signed an agreement to acquire the remaining stake of chrysler it doesn't already own. and a long legal fight over. martha stewart and macy's that started over a dispute over rights for home products.

>> and blizzard-like conditions, winds could be hitting 45 miles an hour, the subway is the way to go in new york city. >> does it ever go down, other than the horrible storm? it is the rocket and it does work. >> it is the rocket. talking about rockets, jim, it was in fact a very happy old year for the markets, the dow up 26.5%. that was the best year for the blue chips since '95. the s&p of course where money managers compare themselves, best performance in 16 years. it was up more than 29%. the nasdaq, get this, 38%. that's a 13-year high. yes, it was march 10th, 2000 that we hit the all-time high. one wonders whether we're going to see it again. futures moving lower this morning, pmi showing slower momentum in manufacturing activity. the last five years, the first trading day of the year we've seen the s&p move at least 1% or

more one way or the other. most often up except for i believe it was 2008 when we moved down substantially. we do typically see a lot of activity on day one of trading. >> a lot of people made sales, take losses but there weren't a lot of losses last year so maybe that doesn't happen this year. one thing i really want to make a point of this. we come in and it was chinese pmi, we're trading off of that or italian bonds. forget about it. it didn't work. the people who sold those things, look at this italian bond yield now. look at spain. the people who sell off of the chinese pmi, that's a nice, quaint thought, something that happened beginning in 2007 and really ended in 2013. so anybody who traded off those things, stop trading, start investing. it doesn't work. >> it didn't pay to worry very much in 2013. i find myself, though, i'm a worrier. that's what i do, that's what i'm paid to do, to be concerned about certain things or try to understand what those things are that could cause problems.

>> it's why you're a great partner and carl is a great partner. we have to balance each other out because otherwise i was thinking before we started, you have to understand we talk, i said, david, beginning of last year there's going to be a lot of m&a this year. the articles would say there were but it just was the dollar amount. you said be careful, this is the kind of thing we could bring to the party. there were not a lot of deals. there were a lot of ipos but a lot of share buyback. the net issuance was still not that great. that was a year where the supply last year was not in keeping with demand of the stock. >> in terms of corporate buyback, 702 billion, up 60% of earlier authorizations. that was the story of the year i would say. if your top line is not moving as fast, your bottom line will, using cheap markets to finance

buybacks because it can be accretive to cash flow amazingly enough. >> yes. >> there don't seem to be that many things other than interest rates to worry about. i hate to hear that come out of my mouth. >> that's one of the things that always looked bad in 2008. how many times did we say nasdaq overheated and nasdaq is up. >> i look at twitter, though. last week watching what's going on, it makes me feel like we used to talk every morning back then, of course you were running a hedge fund and i was sitting on the "squawk box" desk, it did feel a little bubbly. >> that was an interesting short squeeze that then burst on one particular day. i think the interesting story of the first quarter will be the interesting story of the first quarter. there are not enough quality industrials or shares of industrials around. so you look at the 3m, my quintessential.

united technologies, allegedly preannounces, no, not at all. we do not have enough quality industrials. look at boeing. that's because they bought back a lot of stock because we do not believe -- many skeptics don't believe if the ten-year goes to 3 there's anything to buy. the industrials, tremendous resilience. the banks. how about this bank of america upgrade today. that could be a way to go. i think industrials and financials continue to do well. once employment started getting better, the eli lillys of the world were stopped in their tracks. the way that you saw an alcoa, norfolk southern, union pacific, union pacific preannounces and finishes at 116. a coal company goes to 77 and then rallies.

fedex preannounced and you called it the teflon stock. and speaking of teflon, dupont, 64. industrials. >> that's where we need to be focused in the first quarter certainly, the industrials. overall the market is still, many would say, it's 14.5, 15 times numbers. we're still in a low interest rate, low-inflation environment and you could argue for a higher multiple. those are arguing we might get to 16, 17, 18 times and still be okay with it. >> if we get to that. i've done a lot of calculation in preparation for tonight's "mad money." that would produce a 15% to 17% increase in the dow if we got that multiple expansion. but one of the things that happened at the end of the year that shocked me, you begin to get an exxon, almost like a small cap run, it's incredible to see that. don't forget the whole complex of mobile and social and yelp

goes to 62. watch yelp. it's an important barometer. yelp is not the key to this market, ala lumber liquidators. >> lumber liquidators was the key to the market. >> two quarters ago the stock goes from 79 to 72. why? the fed is going to tighten and mortgage rates will go higher. and rates do go higher and home depot goes from 72 to 82 because it's well managed and well executed and housing is still doing well. >> let's talk about all the oweowe -- autos. fiat -- $3.7 billion in cash is one part of the price and they're committed to giving the trust an addition $700 million

over four years. it means no chrysler initial public offering, as was their right to ask for and push for. instead they end up with the deal for .35 billion overall and giving something sergio wanted, which was no ipo. now it's italian owned. it had been already controlled, now it's fully owned. they've been doing pretty well. >> italy manufacturing has been way up. ireland, by the way, with unemployment coming down, italy unemployment coming down. you speak to so many in m&a. look at fiat today. let's say they're buying the rest of chrysler. david, how many times did we sit here in 2013 and i say to you holy -- verizon just spent $120 billion and its stock is higher? fiat, they go buy the rest of chrysler and the stock is having the big move. it is the way of 2013, it will

be the way of 2014. >> and in this case perhaps they're paying a bit less than people anticipated, there's some relief there won't be a public offering, i would assume. what characterized the little m&a, the stock could go up enormously yet it wasn't enough to convince those to do the deal in front of them. i try to keep in touch with as many people in the m&a world as i can and they do seem to be getting reed for a busier year, without a doubt. >> look at a sprint. i cannot blame anybody from downgrading. this stock went to 10, david! hertz, even though they were absolutely decimated by the previous quarter, now they're starting to do reconstruction.

danettes has had a monster move since they took out a competitor and i think the airlines are going to have a better year this year. >> really? airlines a better year? you're talking about in part coming back to the deal itself with us air. >> i know that herb greenberg was a contributor. talking about the united air continental ceo. the stocks been a rocket. any ceo that gives you a stock that's a rocket, that's not a bad guy in my view, that's a good one. but the industry is so fundamentally changed because the root structures, they've gotten out on the bad routes, raising the prices for the good ones, the government identified the monopoly and the most shocking deal of all was the justice department caving on the u.s. air deal. caved! >> we were surprised, frankly, that they came when they did because it was so late in the

game and then of course they agreed to a settlement that many say left the deal largely unscathed. >> unions win, boeings win, shareholders win. >> consumer -- >> what am i paying for my bags now? >> what do we care about them? there's 310 million of them. it was an outrage. it was an outrage. but the justice department in the end, like this justice department throughout the run of obama, the most positive anti-trust department i have ever seen for business. which is having because aren't they always squawking about inequality. >> the big deal that was stopped in the last few years of at&t/t-mobile. a key question we've discussed, t-mobile and sprint. will we see justice a know way, guy, we can't let four go to three in wireless. >> i think three you have competition.

verizon stock does a buy, that stock goes up. sprint, tremendous rally. at&t been a real lagger here. they need to do something, too. you've talked about the idea they could do a cross border. >> he's made no secret of that, that being randall stephenson, get behind the idea that we might do something in europe, that might be vodafone. we'll see. >> a note about t-mobile today. david, if we see a sprint, if this is what it's about, if it's about t-mobile/sprint, you get a downgrade. you know what is another feature of 2013? these downgrades on valuation have left so many analysts behind. >> i know, but i -- you know but that's the scary thing when they start downgrading a valuation and everyone sits there and goes, ah, ah, you're old news man, i disagree with up. >> if there's a transformation, i'm going to pay a lot more for

ingersoll rand than i used to, no, i don't want that. i mean, hey, amazon? love amazon. became an amazon prime member during vacation. couldn't resist. and i bought the kindle fire! that thing is on fire! >> coming up, we got the northeast bracing for a storm that has turned chicago into the snowy city and resulted in hundreds of flight cancellations. we'll have the latest forecast just a few minutes from now. >> also ahead, former pay pal ceo bill harris, find out what he thinks about the future for bitcoin. let's give you another look at futures trading. a lot more from "squawk on the street" from post 9 right after this. that's correct. cause i'm really nervous about getting trapped. why's that?

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ah, yes, you feel like you know me better now? >> one of the great joys of coming to work is working with

you. one of the reasons why i think that is is that you're always relaxed and calm and perhaps it is that workout. and swimming. you manage to get the angst out? because i get bored stiff. what do you think about when you're swimming? >> i swim against the clock so i'm always pushing myself in the swimming. so i do a workout of 2,500 to 3,000 yards and a lot of it is against the clock, especially the ims with the butterflies and things like that. >> do you put it all out of your mind? >> everything goes out of your mind except for just swimming. and afterwards you feel good. >> as i sent you an e-mail this weekend, happy new year, i love coming to work. i love it, i love it. >> as do i. for many years to come by the way. >> i'm waiting for you to say that out loud and thanks you for saying that. >> the weather channel's mike

seidel is in boston. i'm trying to figure out what i'm going to be doing the next 24 hours. what can i expect as i watch you in that snow hitting you hard up there. >> good to book a room in new jersey and new york city. though it's not doing a lot around new york city, the worst will hit there tonight and friday morning. we have blizzard warnings for long island, winter storm warning for the city, wind gusts nearly 40 miles per hour will cause whiteout conditions. in boston we've already got an inch or two of snow. we're getting an ocean effect. the cold air over the relatively warm water, it's 19. as that storm cranks up, it's going to bring up colder air and temperatures will be down around 10 to 12 degrees in the northeast corridor. wind chills tomorrow morning, 15 below zero, snowfall over night, 1 to 2 inches an hour.

somebody is easily going to get a foot of snow, like on the south shore. schools there closed tomorrow. headaches at the airports are mounting. over 200 flights cancelled out of newark and we'll see those numbers sky rocket. the snow will wind down by mid-morning friday. and the cold air by central park if it gets to 3, that will be the coldest and in boston we're forecasting 3 below zero. so a big storm. not the blockbuster last february 9th and 10th. the difference is that it's so cold, the snow so powdery, it's going to just blow around. out here at the hotel, they don't wait for an inch or two to fall, they're going to snow bush

it all day, all night. i can't wait to see these guys out here tonight, it's going to be like raking leaves on a gusty, windy day. back to you and cramer in the studio. >> there's a man by the name of eric weisman, the ceo of vf corp. this is unbelievable for him. it will be clear skies saturday, people will be freezing. wow! what a quarter he's going to have and i love that 4 for 1 stock split, you buy vf corp right now! >> i like that you can make a stock peacekeepick out of every. >> i love the 4-for-1 split, congratulations, eric weisman, you planned it well.

>> we have more "squawk on the street" coming up right after this.

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ask your gastroenterologist about humira today. remission is possible. ♪ ♪ all right, we have about five and a half minutes before the opening bell for the new year, man. i can't believe it, 2014. i wrote a couple checks yesterday. i was like, whoa, how did it happen. >> it is incredible. >> they keep going by -- >> as you get older. when you get younger, they took

forever. >> percentage of your life. >> we have a typical beginning of the year big splash. wells fargo going buy to hold apple. what's interesting about this downgrade is it's filled with positive, new watch coming out, holidays strong, they had a great quarter. but this is something that you talk about a lot. leverage swings back to operators might be coming. they're talking about the operators being able to grasp more of the gross margin. >> so verizon and at&t -- i mean, they pay so much to apple for those phones and then of course we don't pay nearly as much. >> but dan hesse from sprint has always been the outlier who has paid up. i don't like this call is what i'm saying. why? because they talk about dividend increases and share repurchase. this is a buy. >> for a stock that's trading at what -- what's the multiple on apple? single digits or double digits?

>> pe they're saying 12. one of the things that's difficult that a lot of people got apple confused and they upgraded and downgraded wrong. stay close to the facts. i think they had a great christmas. >> they did at my house. holy -- >> i know. also kindle. it was an apple and amazon christmas. that's a lot of purchasing that want necessarily at walmart and maybe that's why -- piper said that target may have had a better quarter. i've stayed away from those stocks. >> we're going to stay away from that until after opening bell. "squawk on the street" coming back right after this. >> announcer: order jim cramer's there's nothing likejim cramer's being your own boss!

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then expanded? ♪ or their new product tanked? ♪ or not? what if they embrace new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade. you are watching cnbc's "squawk on the street" and as always we're live from the financial capital of the world. the opening bell set to ring in about 30 seconds here to open trading for this new year. as i said earlier, jim, we always have fairly big moves. we'll see if that proves the case today one way or the other. typically of the last five years, four have been up at least 1%, we've seen at least a 1% gain in the s&p, including '09, which was before we saw

lows we hadn't seen in a long time. >> but it would be interesting if we saw our market be the -- in other words, you come in chinese pmi. i want to be very clear. there's been a lot of misinformation. it's been going down. so china, i just want to emphasize if you're trading off of china, you shouldn't be that bullish. if you're trading off of america, you should be. >> you just heard those opening bells. we're looking at the realtime exchange back at hq, new jersey there. here at the big board celebrating its centennial verse is booz allen hamilton and at the nasdaq, nutrisystem. do you have any resolutions? >> two things. no more diet tricks.

i'm sorry, i'm sorry. they send me three cookies every day, the cafeteria and they're fabulous. they're done! i should have told them personally. i can't have them anymore. i make them out to be 800 calories. >> i see you loading up in the cafeteria with an incredibly healthy lunch. >> salad is okay. >> i went -- they now print the calories for the popcorn. holy cow, i switched from the large to the small. the large is a thousand calories. enough! >> i'm about getting rich carefully. they're about getting rich by ripping off the customer. entertaining. i don't know. you know my favorite was "margin call." that was the way it really was. >> that was a very good depiction of wall street. >> this is mostly a lot about

sex. it kind of like "game of throwns" meets wall street. >> i'll have to check that out. >> talk about checking things out, let's get moving. we didn't get to the banks. there was an upgrade -- >> it's citi. why do you like bank of america? it's done nothing for ages. and there's a article i read about citi is below book. there's a jamie dimon interview in the "washington post." usb downgrade today. that's got to be wrong. when you see this yield curve and that ten-year over 3%, numbers will go higher, not lower than they report. i don't think the downgrading -- >> there's also a start we'll see a little more velocity of money, so to speak. in other words, the banks not

sitting on quite as much, whether at the fed or in general and starting to lend more. not necessarily lowering standards but perhaps a little bit to allow for more lending. >> you go over america, you do not see cranes. that's going to change. that's the big story of 2014. commercial construction. that using real money, big loans and puts many more people to work than the housing market. watch the commercial construction market. that's going to be the big, big strength of 2014 for the banks. >> you think so? >> yes, i do. >> cnbs market has come back to live. >> one of the few lines memorable from "the wolf of wall street," this figure says the real problem is the cdos. interesting. >> even back then. that was before they were using of course home loans and cdos. cdos started with other

asset-backed securities that were perhaps a lot more stable than we learned -- >> well put. you're always a diplomat. >> taking a look at shares of twitter, which we like to talk about, 65.49, up about 3%. had a rebound as well -- i believe on -- you lose track here, tuesday was our last day of trading. >> i've had major attacks on jim cramer@twitter. in the old days i'm come up and say holy cow, the stock of the day is x. i'm not playing that game anymore. you know why? because that game ends so badly. it's a cult, david. i like tweeting. let me buy the stock. it did work for amazon and continues to work for amazon and it's the only one that it worked for when you look at the survivors. >> it is amazing.

amazon, i think the stock fell almost to single digits in '01. that was when the bust came in enormity. there were a lot of critics out there and many were wrong. >> and a lot of wise guys. i watched some video. i'll leave the name out because i'm not going to give it publicity but it was a full court press to sell the stock at 40. and that kind of thing did trigger some very difficult to short, new ipo. but very difficult to short. the institutions were betting against twitter. they didn't understand that the individuals are back on particular names. when they saw facebook make a move, people immediately extrapolated to twitter and it remained a juggernaut without any valuation parameters. the realist artists were worth more than the expressionists and

then what came is a discussion about expressionism and postmodern expressionism became worth more than rembrandts. but people want me to say it's tulips, david, and it's not tulips. >> no. you can say by 2016, you get a $100 stock, it wouldn't be the worst turn. there's a lot of risk in that. >> i went out to salesforce and to dream force flp's a lot of companies you could buy that would make it so twitter became more of a force in social, mobile and the cloud, which are the trilogy that moves all tech higher. >> we didn't talk about macy's and martha stewart and the settlement there. there has been a long time in

coming. they're still having a dispute with jcpenney, let's not forget, fo another retailer we talked a lot about in 2013. >> terry lundgren came on "mad money" right in the heart of christmas time and said this is a great -- not good -- a great holiday season. macy's is on a roll, charitable trust owns it. terry lundgren has done a remarkable job. the department store, i think it's making a ruseturn. >> really? come on. >> they do a lot of omni channel -- >> the department stores or macy's doing a good job executing? >> no, i think macy's is the right price point, they've got a pretty good internet. they've been able to harness the internet. i think macy's has been able to

figure out how to have clout. the stock has done well, the company health insurance done well but because the group itself has been such a dog, people don't recognize that macy's doing well. urban outfitters upgraded today. they're well behind the market. >> i'm looking at retail, i'm seeing walmart up, target is slightly up after the breach and negative publicity coming from that. >> do you think that stuff matters in the long term? >> to investors? no, i don't think it matters. overall i think it's something we should all be aware of. it's only going to increase in frequency. >> i don't know. i was overseas over vacation. i had my bank card and they denied it. so i called my bank and i said, come on, man, you know what's going on with the banks and the hacking, i just want my card to

work. but the extreme measures you have to take your card to work -- the ease in which you can give someone a card and expect it to be swiped and fine, over. >> let's look at netflix and tesla. when you think of two of the highest flyers in 2013, how do you approach those stocks in a new year? does it matter at all that the calendar has changed? >> there is a new netflix pricing, i'm trying to get my arms around that, how that will affect. these are both cult stocks and a cult stock look twitter means if we opine on it in a positive way, we're only opining on the momentum. we all know unless netflix has been taken over -- it's very hard to value. i don't want to get into the eyeball situation, david. meaning that, wow, a lot of people watching netflix, therefore it goes higher. i do like netflix. and oh, tesla. ooh and ah times earnings? how do you do that?

you divide the number of shares into ooh and ah and you great very high ooh/ah price to earnings ratio. >> tesla 18.4 billion in market value. >> and ford sells as many cars in a day as tesla does in a year. but tesla -- been behind the wheel of tesla and the first thing i said was i have to buy shares in tesla, i can't own stock individually. but this stock is that cult. it's the big worry for 2014. excellent "usa today" piece talking about is the bubble the worry? the bubble in some nasdaq stocks is worrisome for you and for me because we've seen it all before. >> here's a man who has seen it all before, happy new year, mr. pisani. bob? >> happy up in year. we're starting on the down side

intra day here. we're starting weak, sitting near the lows of the day. there are some people talking about tax-related reasons for this. several traders saying with why book profits for taxes now when you can book them until april 2015 and nobody has a lot of losses to pair them off a bit. take a look at some of the sectors. we had emerging markets week. we saw the chinese pmi was a little weaker than expected so emerging markets are weak. but these are domestic industries, home construction weak, that had a good close to the fourth quarter. looks as though it's finally making some money, gold miners. this stock was down 50% -- this sector down 50%. it finally bounced a little bit. gold is up 1%, near a one-month high. maybe we'll finally see the end of some of the selling we've seen in gold. that might be the reason we got a little bit of a bounce. as for where we are today, you couldn't technically ask for a

much better market. the a.d. line has been strong, sentiment is bullish. heavens, we've got a great deal with some of these sentiment indicators right now. washington is a lot less of a worry with the budget deal and janet yellen and lower deficit projections all a tail wind for the stock market. the eurozone is tougher to figure out. we had a big run-up in stock prices in the eurozone at the end of the year and that makes me nervous about it. they had six straight quarterly declines and that's why everybody piled into european stocks. now there's a real valuation issue in europe. everyone greens that the chi is improving but this is a really tough call as far as i can see. i've had people on both sides of that issue. it's a tough call as well as on the emerging markets. we had things happen last year to degrees that people did not anticipate. essentially the valuation was the major story last year affecting emerging markets, then

the taper story killed the emerging markets and china really got clobbered, all of the emerging markets. can you get minimal growth in year in the emerging markets but when you get this kind of intervention going on on three sides, it's no wonder we had a major problem last year with emerging markets. the only thing i would say about emerging markets is right now if you look at the valuations, the pe levels are literally half of the pe levels in the united states. that's still not necessarily a compelling reason to buy but on a valuation basis, emerging markets are cheap right now. back to you. >> that's a good point. taper and -- >> and they got hit hard. a lot of them did not come back. >> they sure did. also china was bad. remember china, major market that was terrible. >> major market. major economy. second only to our own. let's head to the bond pits and

check what's going on. rick santelli, take it away. >> happy new year and a happy snowy mid year to many in central u.s. including right here at the center of the storm. yields spiked up coming into our time zone. look at the intra days at 5s, 10s, 30s. 5s had their test. 5s backed away. 10s getting up to 305, 30s getting up to 3.97. but they did back away. weakness in equity seemed to have pulled the buying back in a bit on treasury. look at a november 1st chart to 10s. this is so telling. we all think about where it was in may. it was much lower in nmay. we had a 40 basis point run on

the 10-year. that is a wallop of a move. and look at an intra day of the euro versus the dollar. a lot of handles melting away. we can see the currencies are moving in favor of whatever position was winning at the end of last year, you go other the wear. pound verse dous dollar, sheddi handles, too. but look at the dollar versusened. we want to pay attention to that, too. now back to you. >> we go to jackie deangelis from the nymex. jackie. not sure jackie's hearing that. the energy complex was under

some pressure this morning. >> oil did go to 100. there's a lot of stories about the nation exporting oil. there is still a tremendous imbalance. be careful about this train wreck that happened in the bakken. if i was the president and i was so inclined to be against fossil fuels -- i don't want to happen because they create a lot of jobs but these accidents are going to be starting. >> your coverage of the informing complex has been nothing short of stupendous. >> a big part of my book. >> those who say natural gas, it's that first year, you deplete a lot that first year and uch get -- and we're not digging as many wells as we have been. prices are going to be moving up and we're going to be starting exporting. >> charif says we flair more natural gas than we use. that's is something the epa should be looking at. >> that's coming from the bakken and places we're doing the oil

apparently. >> maybe jeff bezos goes up there. you go up there, and it used to be the lights from cities. no, it's the flairs that glare from near mars. >> cara switcher and walt mossmer are launching a new company, swisher and mossberg's holding company is revere digital. it is signing a separate content partnership with nbc news group to partner on technology coverage. the partnership takes effect today. both swisher and mossberg will be appearing on cnbc later this morning on "squawk on the street." >> exciting people. >> we're right back after this. ♪ [ male announcer ] this is the story

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. >> i will never let anyone outwork me. >> and you never do let anyone outwork you. i don't know when you had time to write a book. i guess you were doing it between 3:00 and 4:00 in the morning. >> i went to see that movie that, wolf thing. i care tremendously about what i learned in the last five years. there's a good "usa today" review that talk about, well, now he's wearing a suit. we have to be a little more conservative. and we don't want people to lose money. with the twitters, eventually

you will if it keeps going high. we have banks and ceos, oil, wellness, frugality, biotech, the holy trilogy of cloud, you have to have mobile, all of these social -- you have to understand i want people to invest but i spend a lot of time on supply and demand about how a stock goes from nine to ten. in the inn i've been serving bagels for the most part. i try to make poached eggs. >> you don't carry the bags anymore? >> i ask the guy is the bag heavy? he says yeah. i say you carry, darn it. i've never gotten a tip.

i carried a guy's bag up three flights, i have my hand out and he says "what exactly are you waiting for?" >> if you go to the inn, tip the guy who carries your bags up. it may be jim. so i c an reach ally bank 24/7, but there are no branches? 24/7. i'm sorry, i'm just really reluctant to try new things. really? what's wrong with trying new things? look! mommy's new vacuum! (cat screech) you feel that in your muscles? i do... drink water. it's a long story. well, not having branches let's us give you great rates and service.

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time for "six in 60."

monster beverage, you're not cringing any diet. >> this is ridiculous. the stocks are doing well, even as you hear negative things about health care. morgan stanley says undervalued. >> goldman. >> they're saying sell out there. finally the chinese orders are coming through. >> we're talking about the old dress ban herrn here. >> if you like value, this is value. david jaffrey is smart. >> and buy new apparel. >> i like the last quarter, i agree with this. >> we're talking health care. >> how many things can they say about this? they also talk about ventis. i think it's well run. they're talking about too much supply of senior housing. >> and duke.

>> they have a place that used to input natural gas. duke has been one of my favorite utilities forever. very well run and very shareholder friendly. i'm going to reveal where the dow is going to go, going bottoms up. going to hit each stock. give you my view. >> that would be 30 stocks. >> you bet! i got my nephew, my head writer. we've been cooking on this one for all week and i'm ready to go. can't wait to be back. congratulations again for you siding with our great network and being my partner. >> i've been here 20 years plus, 21, 22, 23 plus, it's been great. we have ism data and market reaction when we come back after this break. see, the only thing i can think of is that you can't get any... bars. ah, that's better.

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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. humira can lower your ability to fight infections, including tuberculosis. serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. blood, liver and nervous system problems, serious allergic reactions, and new or worsening heart failure have occurred. before starting humira , your doctor should test you for tb. ask your doctor if you live in or have been to a region where certain fungal infections are common. tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever,

fatigue, cough, or sores. you should not start humira if you have any kind of infection. ask your doctor if humira can work for you. this is humira at work. . welcome back to "squawk on the street." happy new year and happy december ism. 57.0. that is pretty close, maybe a little stronger than expectations. last month 57.3. that still remains the high water mark going back to april of 2011. we have new orders we like to pay attention to at 62.2, just a

smidge better than 63.6 our last look. and employment moved from 56.5 to 56.9. november construction spending was up 1%. that's about 30% better than expectation. and our last look, well, october came up 0.8, now up 0.9. so today's numbers, the first of the year are better than expected. back to you, david. i'm sorry, simon. >> happy new year to you. the dow is now down 82 points. for more reaction, we also have weekly jobless claims, steve liesman is with us. >> reporter: it looks like it's all pretty good data. the ism data is very strong. rick mentioned some of the indicators here. i just had them up and now i lost them. the new orders numbers were strong, that's a big number,

64.2. the one decline we had was in inventories. that's kind of expected. we had a big buildup in expectation, there was some expectation of a decline. the back log came down a little bit but exports are good. all these numbers are good, simon. that's a good sign to start the year off and get that final data for manufacturing in december. the data that came in toward the end of the year prompted economists to rethink 2013 and the new thinking is it's a tale of two economic halves. the full year is estimated or forecast to still come in at 2%. that averaged 0.6% in the first half and a very strong 3.4% in the second half. it was the consumer that powered the second half. some of the theories for why that is, low summer energy prices, a reduced savings rate and a wealth effect from a

higher stock market along with increasing confidence. all these question marks continue for 2014. will housing maintain recent gains with higher interest rate and will income and employment keep putting enough money in americans' wallets to power the high growth levels? so far the street looking for 2.6% in this quarter. that's about -- around the average of 3% growth overall for 2014. so the dismal scientists are pretty optimist being right now. what we have, for example, guys, goldman is right around 3% for this quarter after a 2.4 in the last quarter. it deutsche bank and joe looking for 33-8 in the first half. >> the markets opening lower on the first trading day of 2014. let's bring in our panel.

jim, you've nailed your bullish calls with 2013. is this an ominous signal that we're starting 2014 on a down note? we haven't seen this since 2008. >> it's probably due to have a negative day. i think the biggest thing in the room is what steve was talking about, constant, chronic positive economic momentum. not only here in the united states but globally. most of the reports from all over the globe have been consistently positive and that just keeps driving equities higher. my feeling is that will continue in the first several months of the year and maybe we'll have a correction later in the year when the good news on growth becomes a concern about overheated growth later in the year. i expect it to continue for a while. >> the stream of good news could propel stocks.

sounds like the read is positive 2014 but nowhere near the gains we saw last year, the 26% rise in the s&p, the almost 30% rise we've seen in some of the major indices. do you agree with that? >> i do. if you look over the last 18 months, majority gains have been driven by multiple expansion. at this point you're going to need to see earnings come through and become stronger. i do expect for the first half of the year, the gains will mimic the mix we've seen since 2013. as we approach the middle of the year, i expect important inflexion points where underperformers will start to revert. >> why do you think that will happen? what underperformers in particular are you thinking of? >> there are three would i focus on. first we've seen massive underperformance in equity income or high-dividend yielding stocks because of fast economic growth and fear of higher rates. as we get into the middle of the year, i would expect valuations

to become compelling. the second is the metals and mining, which has outperformed in four years and i would expect that to start to improve and finally the high-end consumer, which has been responsible for a lot of consumer discretionary gains i would expect to face difficult comps and start to underperform. >> jim, let me come back to some of the language you used at the beginning of the interview. constant chronic better data and risk in the second half of the year, concern you may get overheated growth. what does that mean for a federal reserve? if that's what you think the underlying state of the economy is going to do, how the hell do they withdraw and communicate that to the markets without upsetting the whole apple cart? >> well, i think that's going to be the problem this year, simon. right now the fed is selling a story and everyone is buying the idea that we're in this nice controlled, methodical tapering that will be slow paced and

linear. i think that controlled taper will turn into more of a panicked taper, how can they get out quickly? i think we're creating a cocktail of fierce. we have a new fed chairman coming in wildly perceived as dovish, we've got a weak dollar, commodity prices that are already going up, industrial prices in particular have been rising the last couple months. baltic freight rate index has climbed, the resource market is getting tighter, the fact utilization rate will go over 830%. if wages climb just a little bit, i think the kicker could be if money velocity turns up, then all of a sudden it's going to be a panic to how fast the fed can get out. i think that's what we're going to face later this year. i kind of flat market this year, maybe goes up to 2000 and back to correct where the year is at. >> it sounds a little scary, by

that panic taper, we go from a calm taper to more volatility in this market. if so, where do you want to be industry-wise? >> you've had a tremendous amount of debt issuance and huge flowns into the bond funds. if you get simultaneously withdraw of liquidity from the fed and reduction of outflows from the bond funds, you could see the real rates rise quite substantially by about 100, 150 basis points. if that were to happen, historically equities have done reasonably well but it's going to be very dependent where the distress is. i do think some of the resource related stocks could be a pretty good area. >> both optimistic, maybe not about the gains we had last year. vadim and jim, thank you for joining us. >> sergio has struck a deal to

buy chrysler. phil lebeau, it's been a deal for an awfully long time coming. >> sergio didn't want the ipo that was potentially going to be happening. instead fiat gets the rest of chrysler, paying $3.6 billion, half coming from fiat, the other half coming from chrysler. in addition, the trust will get $700 million from chrysler over the next four years, first enstallment coming in january. and the deal that would have included an ipo later this year, that's done. that is not going to happen at all. that's done. the veba deal does give complete ownership of chrysler to fiat. this is what sergio marchionne has been wanting. he needs to drive greater efficiencies and have the scale

that he needs to become a truly global auto maker. and also for them think about what this means potentially for the alpha romeo brand. that i am also bring the alpha potentially to the u.s. as soon as later this year. but not everybody is crazy about this drael. citi put out a note noting the group debt will rise to about $10 billion euros, about $14 billion upon completion of this transaction leaving it the most indebted original equipment manufacturer in europe. we continue to have concerns about the sustainability of this heavy debt burden. shares of fiat are up today. the stock in italy up almost 15%, simon, as a lot of people are looking at this as sergio marchionne finally getting the

deal he needed to get that cash flow and complete ownership into fiat. back to you. >> let's be honest, he's paying less in the market that many thought he would have to pay and there's no capital increase either. so they're saddled with that $14 billion of debt. that's a real issue going forward for them, isn't it? >> but he does have the potential down the road. if he wants to do an ipo to bring in more cash, he could do that. there are those options that are there in the future. in terms of the price, yes, it's more than what he wanted to pay but less than what the veba trust wanted. it's between that $9 billion and $12 billion valuation of the entire company. most people are looking at this and saying generally speaking, he's coming away with a pretty good deal here. >> phil lebeau joining us live from chicago. >> coming up, put being defense and national security on the radar. we'll talk with the ceo of

consulting firm booz allen, who rang this morning's opening bell here at the big board.

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♪ your ticket to a better night's sleep ♪ welcome back to "squawk on the street." u.s. steel saying the chock has room to run, it raised estimates to 2.05 from $1.65.

the stock has been on a roll over the last three month, up 40%. looks like more up side to come. back to you. >> thank you very much. booz allen hamilton is celebrating its 100th anniversary today. it's been at the center of controversy this year as it was the business where nsa leaker edward snowden worked. ralph shrader joins us here. tough year. >> edward snowden doesn't represent us. he was just an aberration. >> how do you feel about the way your management team has responded to a major international event and a lot of questions that were asked?

>> i think we're prepared for that. we're very resilient, we have a very veteran, strong management team that's learned how to work our way through. one. things we use as our mantra is "we're ready for what's next." >> the "new york times" had an editorial yesterday in which they said edward snowden should be granted clemency. how do you feel about that? >> i think it's up to others to have that debate. the whole discussion and issue around privacy is an issue that's a healthy debate in the country and i'm willing to hear the debate play out. i think others need to make the decision about what's the best approach to him. >> have you seen any material impact on the bottom line due to the negative press? >> interestingly on the bottom line, no. our clients in the defense department and intelligence agencies are very understanding about how it works and plays out. our business mass been quite

strong throughout and we've had no measurable impact. >> i can think of something that might have a measurable impact, which would be the sequester. to what extent can you measure what -- what impact have defense cuts meant or will mean for your company? >> you're talking about a very important issue there. the budget status has been something that has been a challenge, i think, for everybody in our industry. and the biggest challenge actually has been the uncertainty. clients don't know exactly what they're going to have to spend, they don't know what their budgets are going to be, they don't know how things are actually going to play out. hopefully the little sense of sanity we saw prior to the holidays perhaps will give us a boost and we'll be able to move on with some planning. once that's done and firms are able to work with our clients and have our understanding of what the budget situation will be --

>> have you seen that at all or is it too little -- >> i don't think we've seen any measurable change from what's happened just recently. what we saw, though, is each time we get approval on some funding resolution and things go forward, there's a little morning certainty on what happens and the clients have a little more comfort on what they want to do. no long-term plan can go take place. one this evening interesting about our firm, we have a very collaborative culture and organization. we're able to move resources around and do thing. plus before all of this took place, we had a pretty good indication that the political situation in washington was not going to be favorable for the budget so we did preparation and planning in advance. >> do you change the direction of the business? today snapcat and skype have both got problems with people breaking into their business. i see you put out a press release saying that cyber attacks will be the new normal

for financials. that seems to say come on, guys, we're your guys. >> we've worked with the united states government, solving the problems they have to bear. we've seen a lot of response and a lot of interest from the private sector in having our services. >> is it always going to be piecemeal or can we all do it together? >> i think that's dependent on policy that's passed in washington. one issue is anti-trust issues and collaboration issues, what's the partnership between public and private. how that get worked out will define how comprehensive a solution we can develop. >> is there enough investment from the private sector and the government toward this? >> i think there is a lot of investment. how it's being used is a different question. as simon just mentioned, a lot of this is piecemeal. we can put things together and do things collectively, we could achieve a lot more. >> my only question on edward snowden is didn't he not have a

college degree? how do you hire somebody who didn't finish high school? >> he had the equivalent of a degree from a university in england. so we checked all that out before he was hired by us. he actually holds the equivalent of a masters degree from an institute in england. >> that answers that question. thank you. >> just before we let you go, i see you relinquished the position of president recently. is that -- are you on your way out slowly and gently? >> well, i thif one is always on his way out from the day you step in. you have to look at that. but we have a very strong chief operating officer. i held the title of chairman, chief executive officer and president. i don't really use the title president, i think it more portrayed by him and he's up to that task.

>> thank you, the ceo of booz allen hamilton. >> and cities are bracing for the weather that is coming our way, after the break. and the dusty basement at 1406 35th street. it is the story of the old dining room table at 25th and hoffman avenue. the southbound bus barreling down i-95. ...and the second floor above the strip mall at roble and el camino. ♪ this magic moment it is the story of where every great idea begins. ♪ so different and so new where those with endless vision and an equal amount of audaciousness believed they had the power to do more. time and time again. ♪ and then, it happened at dell, we're honored to be part of some of the world's great stories. stories that began much the same way ours did. in a little dorm room -- # 2713.

♪ this magic moment ♪ we are the thinkers. the job jugglers. the up all-nighters. and the ones who turn ideas into action. we've made our passions our life's work. we strive for the moments where we can say, "i did it!" ♪ we are entrepreneurs who started it all... with a signature. legalzoom has helped start over 1 million businesses,

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conquer the morning, conquer the day. that was part of our new promo here. >> it was moving. >> i like the shot of you at the statue. >> i like the shot of you having a moment. >> i immigrated. can we have a look at david again? have you seen the butterfly stroke? and the only man i know who has

tinted goggles in the swimming pool. >> they're not tinted. my goggles are not tinted. >> always on the phone. look at this. wow! one for the ladies. they're tinted! >> trying to do a lot of strokes if i can. >> he's going back to watch the video to critique his style. >> i hear the outtakes are now on sale on ebay for a small sum. >> very small, what that would be. >> now that we mentioned it, they'll be climbing in price. >> i did finally get in the pool. but i enjoyed yours as well. i guess we're going to be seeing them a lot. >> i'm enjoying them. i'm getting a whole new side of my new colleagues. >> let's move on to the weather. residents from everywhere from chicago in the tristate region to new england is bracing for a storm threatening to dump as much as a foot and a half of

snow. mike seidel is in boston where it's already snowing and you look frigid. mike, what's the latest? >> i'm okay but thanks for your concern. i've got a lot of layers on and the hand warmers in my toes. the wind chill is still in the single numbers. we have these guys with the brushes and snow brushes. they're trying to keep every single flake off the sidewalks. i've never seen anything like this before, this kind of snow removal. usually they'll wait for a couple of inches to fall. we've got a couple of inches on the ground. the real brunt of the storm is going to be later this evening through tomorrow morning around sunrise. new york city is not going to get much of anything today. it's all going to fall there tonight and tomorrow morning. we're looking at 10 to 15 inches in boston but it's very dry, just like confectionary sugar. when it comes off the atlantic,

it's going to swirl around. that's why you have blizzard warnings on the south shore, the cape and long island, winds could be sustained of over 45 miles an hour for at least three hours. boston's logan is going to really restrict take-offs and landings after 8:00 tonight. they want to keep the action at a minimum so they can keep ahead of what's going to be a snowfall rate of 1 to 2 inches. newark has cancelled already 200 flights in and out. all those numbers are going to go up as we go through this afternoon and tomorrow. the worst in the weather for the northeast in the big cities on new york and boston will be 9:00, 10:00 tonight until about 10:00 tomorrow morning. and then after that, the coldest air in ten years in new york city as we go down to about 3 or 4 degrees in central park on saturday morning. back to you. >> hey, we had a good summer. at some point, mike, you have to

just let it happen. mike seidel there watching a very cold weather front headed our way. straight ahead on the program, following months of rumors, kara swisher and walt mossberg have found a home and have effectively become part of the cnbc news family. we'll talk to them about what lies ahead live after this break. so i c

an reach ally bank 24/7, but there are no branches? 24/7. i'm sorry, i'm just really reluctant to try new things. really? what's wrong with trying new things? look! mommy's new vacuum! (cat screech) you feel that in your muscles? i do... drink water. it's a long story. well, not having branches let's us give you great rates and service. i'd like that. a new way to bank. a better way to save. bank. your money needs an ally.

first trading day of 2014 and we are 60 minutes into trade. here are the stories we're squawking about at 7:30 on the west coast, 10:30 down here on wall street. the ism manufacturing index down to 57 even, nearly at a two and a half year high. urban outfitters up nearly 3.5%. jeffreys is upgrading from buy to hold. and the average rate on the 30-year fixed mortgage edged higher for a third consecutive week last week, up to 4.53% according to freddie mac, david. >> cara swisher and walt mossberg are launching code.net.

their holding company is revere digital. and it will partner on technology coverage and that partnership we're happy to say takes effect beginning today. hence cara swisher and walt mossberg join us here. congratulations to you both. thanks for being here. >> thank you. >> part of the family now i guess. what changes for you guys? what's different about recode versus all things d? >> i think the biggest difference is we are now an independent company which has raised money in the traditional startup fashion so that we can do expansion. previously we were a very successful and profitable product, but 100% owned by a large media company, dow jones and company. that's the big structural change. >> but in general we're still

going to be breaking news and doing the same kind of fair, accurate and kind of sassy journalism that we're known for. that's not going to change hugely. we're trying to break news almost constantly and give analysis to readers that is accurate and fair. >> kara, you've created strong brands around both of yourselves, you've created a company, you were able to break off and create a good deal of equity for yourself and now you have partners in old media so to speak. well, we're new media, too. is that the model? are you guys setting what we'll start to see a model for those who can actually do it? >> it's not old or new media anymore. we have to stop making those designations. consumers love media. they just like it in different formats. we don't think television is over or even newspapers are over. we just feel like you have to be more dynamic and a little more entrepreneurial, though i don't think we call ourselves

entrepreneurs. >> why not? we can call ourselves entrepreneurs. >> i do think also there have been a few other examples, nate silver from the "new york times" comes to mind where journalists who have been able to build a following find that there is some economic value to that that allows them to operate in a nontraditional way. and so i do think there's a little bit of a trend there. >> there is. >> obviously it's not going to happen with every working journalist. no matter how good they are, you have to have that following. >> it's jon fortt jumping in here. congratulations on the launch. questions about the model going forward. you see jessica lessen also launching the information. it seems like she's trying to make money off of subscriptions. correct me where i'm wrong but it seems like over time you guys have made the lion's share of

your profits in the conference business, though of course your content also on a day-to-day basis draws quite a few eyeballs. what you have learned about how to really make journalism work, make money in the digital era and how might that evolve going forward? >> well, one, first of all, we're doing good journalism. because people want great content. i think that's what we start with, the idea that content is the most important thing and great content. jessica is doing a subscription thing, which is great. we've done conferences and the web site with advertising and sponsorships. there's all kinds of way does this. i don't differentiate the web site from the conferences. we provide news in lots of difference ways. a lot of times they like to split them up and act like there's some weird difference. but it's all part of the same thing. we put the videos from the conferences on the web site and talk about it. >> right from the beginning, we started with the conferences before we had the web site and we sold them as live journalism.

that was the idea, real journalism on stage. and so kara is exactly right, we see it as all one thing. in terms of how you can monetize these things, you're right, the conferences have been a more lucrative thing for most people, but we have some ideas as do others, i think, about ways to boost the monetization of web sites and we're going to get a chance with this new company to try out some of these ideas. >> it's simon. good morning. >> good morning. >> good morning. >> the next conference you have the google founder, which we may be doing with you. do you think you've reached a point where the ideas coming through from the likes of elon musk and google are sort of like the things you used to read in

marvel comics to the point in technology journalism may begin to rival entertainment journalism in its popularity? >> i already think that there's a sort of merger. you can see it occasionally on our site. we cover tech and media. i do think there's a certain overlap between tech and entertainment journalism. you're absolutely right about the ideas. sergei brynn, one of the founders of google, has been focused very much on cutting edge, way out there things, driverless cars and other stuff like that. and elon musk, who was a terrific speaker for us at the final conference we did in the all things d franchise last year, you know, he wants to go to mars. >> he wants to live there. he wants to die there. >> he wants to die on mars. >> one of the things that's

important to think about it tech impacts everything. we've done a good job in explaining tech, walt especially, very early on. tech just just affect techies. whether you're a parent, a politician, everyone is impacted by technology and smart people who are explaining this to you, it's a very valuable place to be i think in society right now. >> i would just add one other thing. we are adding a few reporters in our starting phase here and one of them is somebody who is going to be dedicated to covering sort of the real bleeding edge on tech and health and more the merger of tech and science. so that's one of our first changes in our new company. >> very quickly, guys, it's sara here. i'm wondering who your biggest competition is right now. there's obviously a growing interest in technology news. as a result it's becoming more of a crowded field. >> well, we've been doing this,

i hate to say this, but we're a 12-year startup. we've been doing this for 12 years, competing with even "the wall street journal," with the same corporate parent, we've been competing with them. >> and other traditional sources like the "new york times," plus all of the tech blogs, there are hundreds of them out there, there are some very good ones that we respect. and as you guys know, yahoo! is starting a tech vertical. you mentioned jessica lessens's new site. we expect a lot of competition but it's not a new thing for us. >> and we love it. >> we thrive on it. we're happy for it. >> you certainly do temperatu. this is jon fortt again. you had your pick of partners. sort of interesting that you would end up with a former tech

ceo. why nbc? >> we wanted to partner with a great news organization. that was our number one goal was to find a partner. and there were several of them that was just very interested in quality journalism. that was the most important thing for both walt and i. and with terry, we talked to a lot of different media investors and terry was the one we felt sort of met our needs in terms of being smart and savvy, especially about hollywood and entertainment. if you go back and look at the pieces i wrote about him at yahoo! they weren't very nice, i'm not sure why he invested. >> i did a very tough interview with terry when he was chairman of yahoo! at one of our conferences. but terry is a very smart guy and we respect him a lot. as far as nbc, i want to say one other thing. even though they're a minority partner, i think that's a key thing. nbc, unlike in this deal at least, unlike most big media

companies, right from the get-go understood that this was a different kind of deal and that we really wanted to have a company that was our company with smart minority investors and they -- they really got what we were trying to do. >> and they're embracing innovation. everybody has to start rethinking news and how we deliver it. and that was one thing that was important. it's very hard for big media companies to understand they have to inject innovation into their process. that's what we're trying to do here and help in some way. >> we look forward to the beginning of and continuation of our partnership, kara swisher and walt mossberg. >> coming up, colorado up in smoke. we'll take you live to a denver marijuana vendor who received the very first recreational

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down 71 on the dow. let's send it over to dominic chu. >> a lot of movement in the retail sector. jeffreys has upgraded american eagle and chicos and urban outfitters to a buy rating from a previous hold saying they've done well in a competitive environment but cut abercrombie finch and aeropostale. >> first the smart watch and now smart socks? soon your socks will be just as smart as your phone. wearable technology.

how does it all work? we'll show you. we'll be right back.

welcome back to "squawk on the street," the first rendition of "santelli exchange" for 2014. of course i'm very happy to be

here. hopefully everybody from tv and radio land will learn a lot from cnbc this year. this morning i had an interesting discussion with steve liesman, rising rates, historic highs, what does it mean for 2014? it's a question of sustainable, durability and rating in terms of what interest rates may do. it was last quarter of 2011 with the top rating of 4.9. the first quarter of 2012 wasn't bad at 3.7. second quarter was 1.2, third quarter was 2.8 and we finished off the year at 0.1. yup, 0.1. here's the point i'm making. that's gdp in the quarter four of 2011. but at that time the interest rate coming into the fourth quarter was 1.75 and ended up at

1.87. the dow jones at that time came in a bit under 11,000 and finished a bit over 12,000. you get where i'm going with this. if we're going to try to look back, we need to be cognizant of the issue of how much, if you look at how interest rates develop, they were moving down. ultimately, a little below 1.40 on the 10-year that i referenced here. so i'm not saying that the economy and the stock market can't deal with higher rates. what i'm saying is, is that just to sustainability, the constant liquidity that was provided, made questionable gdp activity after that very strong quarter. so we need to be very cognizant of that. but the good news -- and there's always good news, and we saw today -- when stocks were down close to triple digits in the dow, interest rates moved down 4, 5 basis points on the long end. that may be the saving grace. and it's the one stone i don't think the fed ever looked under,

because must of the self-adjustment, in the weak economy the fed was trying to fix, might have happened automatically and not resulted in a $4 trillion balance sheet issue that is the constant question marks for 2014 to answer. back to you, simon. >> thank you very much, rick. two to three-hour-long lines, and up to 85% of customers from out of town at some locations. you're looking at pictures of what one marijuana vendor saw yesterday when recreational pot, of course, went on sale for the first time in colorado. here to tell us more about how it went down, we're bringing back aaron phillips, co-founder of strain wise, a marijuana vendor in colorado, who received the first license to sell pot for recreational use, and i remember when you proudly showed us, erin, on the television, how did it go yesterday? >> yesterday was fantastic. it was a great showing from everyone. we had a great time.

>> what sort of volumes did you do? were you surprised at how much you sold? >> you know, not necessarily. since we've never done anything like this before, we based all of our projections on our biggest day of sales previous to this, which was 4/20, and we did about three times what we normally do on 4/20. we saw about three time the amount of customers. the exciting thing for us was the number of tourists you saw. >> i'm sure people flocking to the state. for those stuck in new york, not lucky enough to be there, what was it like, take us through the experience of shopping for recreational mot. -- pot. >> it was very exciting. we had lines forming between 6:00 a.m. and 8:00 a.m. we had a two to three-hour wait at some locations. people were just very excited to actually get in, and it was an

interesting experience, because once they got in the door, they were like a kid in the candy store. >> yeah. >> people were taking pictures. they were jumping up and down. it was exciting. >> and any particular brand of notes? any hot sellers? >> you know, obviously, flower was a big seller. everybody wanted to get their pot. however, we did have caviar sticks, which if you're not familiar with that, that's a very popular item. it's marijuana that has been soaked in hash oil and rolled in keef, put into a joint. indisposable, proloaded hash oil bake cartridges. >> you know, erin, there are still some concerned about what's going on. i see the colorado center for dependency says that they're seeing really a big jump in addiction problems anyway, and that this is just throwing fire on the situation. what would you say to those concerns? because they are real for many people.

>> they definitely are real, and i think anytime that you have something new that happens in any industry there's going to be all types of different concerns. i think initially people are just going to be so excited about it that you have the other side of the coin that wants to come out and voice their concerns, as well. and they're valid. their big concern, at least from what i understand, is the dependency in young adults and children. we can't service anyone under the age of 21. so i think people need to just really use it responsibly. >> okay. erin, thank you for joining us. erin phillips joining us there, one of the vendors in colorado of recreational cannabis. thank you for joining us. up next on the show, the importance of social video. why twitter, yahoo! amazon and even google are becoming more and more dependent on video content. we'll be right back. [ male anno] this is the story of the little room

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expect online video advertising to increase to 8.1 billion by 2016. today, he increased the price targets for twitter, yahoo! aol, google and amazon. we're talking about ken senna from evercore behind the calls. welcome. >> thank you very much. >> what's getting you excited about online video right now? >> i think you can look to the consumer of online video, but, also, from behind it, you have trends happening around programmatic, which tends to be a buzz word. but i think the advent of online video is allowing for a lot of data to be captured and allowing for targeting to occur that just wasn't possible before. and i think that's going -- that's going to create changes that will happen within advertising, not just in terms of media buying but also, i think, in the creative process. and that'll be for both branded and for performance marketers. >> what's interesting, you raised the price target on a whole bunch of the names. does that mean it lifts all boats? or are certain companies, like we hear a lot about facebook's new video ads, distinguishing

themselves and doing it better? >> no, i think so. there is an effect of lifting all boats here. because programmatic will apply, i think, to all of the publishers. and i think we'll even benefit premium publishers, where in the past it was less clear. on the user side, companies with access or control over the feeds stand to benefit, and i think also companies with strong content relationships. in that respect, we think twitter is well positioned. also, i think facebook is, as well. but with facebook, i believe that, you know, over the last several quarters or so, we've been talking a lot about the improvements there, what they've done around programmatic and the video opportunities. so we didn't increase our estimates and target on facebook today, but we certainly view them to be a part of the same trend. >> ken, i mean, the trend, of course, has been this, right? in terms of time spent versus actual advertising dollars, it's always lagged on the video front in terms of online or mobile, hasn't it? >> right. and i think now you're starting to see this year being the first year where time spent on mobile,

or online just in aggregate has now surpassed television viewing time. and i think when you start to think about the data and the types of data that are possible to use in targeting the ads, it will affect video advertising and you're going to see changes both within television and a lot of the dollars will start to move to online. >> well, it sounds like a whole new genre -- social video. ken senna is bullish on the idea. thank you for joining us. >> my pleasure, thank you. if you're just joining us, happy new year. welcome to the first year of trading in 2014. here's what you might have missed if you're just tuning in. >> announcer: welcome to "squawk on the street." here's what's happened so far -- >> this is a story that's finally come to an end. macy's and martha stewart living, they have finally resolved that ongoing breach of contract dispute. terms of the settlement weren't disclosed and they say will not be disclosed. >> -- every meeting by an equal amount, and if you say what's

the mood around the table, i think it's pretty happy fmoc, a relaxed fmoc. >> there were not a lot of deals, but holy cow, a lot of ipos, but a lot of share buyback. the net issuance was still not that great. that was in year last year where the supply was not in keeping with the demand of stock. [ bell sounds ] >> i do expect for the first half of the year a lot of the performance gains will mimic the mix we've seen during the 2013. however, as we approach the middle of the year, i do expect important inflection points where a lot of the underperformers will start to reverse. >> edward snowden was, you know, a 10-week interval in 100-year history of our firm, and i think our firm is much stronger than that. he doesn't represent us, he was just an aberration. >> i think the biggest difference is that we are now, you know, an independent comp y

company, which has raised money in the traditional start-up fashion, so that we can do expansion. ♪ good morning. we are live here at post 9 at the new york stock exchange. let's get a check on the markets. first trading day of 2014, and we're starting on a down note with the dow jones industrials average down 95, almost 100 points. s&p and nasdaq also falling. in fact, we haven't seen the first day of trading of the year down since back in 2008. shares of bank of america are rallying this morning. citi upgraded the bank to a buy, saying it's no longer impacted by legacy issues. big deal. meantime, jeffries upgrading and downgrading some of the retailers this morning, based on how companies handled a difficult environment. jeffries upgraded american eagle and urban outfitters to buy, cutting abercrombie & fitch and aeropostale to hold. okay, here we go.

and here's something we haven't said for a while -- stocks are trading to the downside, falling, after hitting all-time highs over and over again in 2013. so where are the markets headed now in the new year? we'll tell you in a moment. plus, the entire northeast is on blizzard watch. a massive storm is working its way towards the east coast, threatening to dump some very heavy snow on boston and new york. we'll go live on the ground to give you an inside look. also ahead, now that marijuana is legal, recreationally in colorado, "the denver post" is unrolling a whole new way to cover this budding business. the paper is starting what it calls its own "pot culture" website, appropriately named the cannabist. we'll go behind the green with its editor in a few minutes. who needs a smartwatch when you can have the smartbra? yes, it's one of the new products when it comes to the future of wearable technology. yes, we've got one here on the set. we'll show it to you later this

hour. no, it's not currently on the set -- >> are you going to try the smartbra, or am i, samen? >> i'll leave it up to you. we'll start with the markets, trading lower on the first day. joining us is kevin with stifle, and andrew berkley, managing director with oppenheimer & company. we make a big deal about the historical trends, but it's amazing, looking back over the last five year, we've seen gains, looking at the dow, up nicely on the first trading day. does this have a negative tone for the year? >> i think -- no, i don't think it means that much. i don't go very much by the historic numbers on the first day of january. but what i will say is that we had a very strong 2013. we had a boom case we put out there that the s&p would close at 1,850. sand, indeed, we had a boom last year with the s&p closing two points shy of that. i think it will be hard to keep up the gains going forward. we have some challenges ahead of us. for the year now, we see most of the economic data coming in strong. so we're optimistic about the

year, but there are challenges ahead. >> obviously, the economy is front and senter, so is the federal reserve. is this going to be another year where the fed is in the driver's seat when it comes to the markets taking the queues from everything, this time to janet yellen's success? >> yeah, i think the market will continue to focus on the pace of tapering essentially and what that means. our sense is the macroeconomic data continues to get better, which should support the mark s markets. one of the things that surprised me coming into this year is that analysts' expectations -- earnings expectations haven't kept up with the mac macro improvement we've seen. >> why not? >> there's been some trepidation. basically, analysts have been sitting on their hands a little bit in terms of taking the forward numbers higher. guidance has been weak. a lot of that had to be with the government shutdown earlier, what was going on in washington, the fed policy, et cetera. so the next big event is the first-quarter earnings season which kicks off in a couple of weeks and the bar is relatively low for that. so i think the market will continue to move higher on that.

>> kevin, you very defendatly tiptoed through the observations. challenges ahead. if people have been in the market for a year, you have big gains, do you book profits, do you stay fully invested? what do people do? >> i think some of that may be what you're seeing today. you are seeing some rebalancing, and i would expect to see that coming into the new year, after you've had a big gain in the equity market, and bonds down last year. if you're looking to keep a balance in the portfolio, you'll look to rebalance when you have the big moves in the markets. but overall, i think you have to watch the fundamentals, because we have had some very good gains from now, from 2009 till now. up 20% per annum for that period of time. we're probably a little bit ahead of fair value here. so i think you just play it very cautiously from here. >> well, do you think -- sorry. do you think there could be a major correction? >> i think there can be a correction, just about any year. we haven't had one for quite a while. but i think if you're looking at

companies' fundamentals, their balance sheets are sound, they're very flush with cash, and their profits are very strong. in fact, that might be part of why profit -- profit expectations haven't gone higher, because margins are very full. these are good problems to have. if you have a correction, i think it would be normal and you'd be looking to buy good companies with good value if that does come along. >> well, i wanted to jump in on the bond point. because for the first time in, what, almost a decade, people who've had their money in the bond funds actually saw a decline, saw negative returns, and also saw that with gold, first time in several decades. what does that signal to you if you're holders of gold and bond? >> you continue to rotate into equi equities. the biggest story for the first half, is rotate back into the bond proxy areas at some point that have underperformed -- staples, telecom. we're not there. the cyclicals will continue to do well for the next couple of months, but you'll see the ability to rotate into those areas again. >> all right. thanks for the tips on the first trading day. andrew, kevin, thank you for

joining us. twitter went public and facebook shares popped, and, of course, worries about a tech bubble, all of that in 2013. what could be in store for the internet media sector this year? john steinberg has some thoughts. he's, of course, the president and coo of buzz feed, and we're proud to say a cnbc contributor. happy new year. >> happy new year to you, too. i feel like ken is the guy that sings the karaoke songs that i'm about to sing. word about 5 hours, 15 minutes a day of television watching and the ad budgets have not moved. only 20%-ish of ad dollars going into the internet. so i think there's a big delta there that can close. i think the revenue estimates will come up to the earlier guests' points about the guidance being low and we'll have a lot of beats in the new year. >> you think this is the year where the ad budgets start to reallocate and pour into some of the social names? >> i think you see an

acceleration and the percentage moving to the internet and every fortune 500 marketer, this is the year they realize, why aren't we spending more on internet? >> you are not an unbiassed -- >> i know, simon, i'm absolutely not. look, i bank my career on this. i spend all my time -- i wouldn't invest my time and energy in this if i didn't think there was an opportunity. that would be foolish. >> the question is the magnitude of the opportunity. it is different, surely, i'm playing devil's advocate, sitting in front of a computer screen and watching a popup ad, to actually sitting back and watching a scripted drama and have an advert. >> the ads have been terrific. that's why we went into native advertising. the popup advertising is terrible. the video is a huge opportunity, as sena said. $4 billion in the u.s. now going into video online advertising. 60 billion in television. online video is not that much worse than television, right? i do think the stocks are expensive. i think twitter is phenomenally expensiv expensive. i think facebook and the other

stocks are fully priced at this point, and the gains will come down. everyone is bidding them up. >> if you work in television advertising -- and i don't, but i know people that do -- it's much more about relationships. >> yes. >> and the advertisers, they also want management to be kind of in a place physically at parties where they're meeting famous -- >> yes. >> -- they want to go to events, and that is not how facebook and the others operate, in fact, doing the opposite, because they have automatic bidding systems that have no glamour for the advertisers. >> 100% agree. it's not just the cocktail matters. it's the one-to-one coverage of the fortune 500 brands explaining what you can do, explaining the site. ultimately, that's dampening profitability, and you want it to dampen the profitability. they should be growing the sales forces twice as fast, due to the competitive factor you mentioned. >> talking to it from an investor's point of view, but what about the user experience? don't the companies like facebook have to be careful when they throw video ads in the news feeds and not turn people off? >> the ad loads are relatively load.

you're talking 5% at this point. i was talking to an industry -- an -- another industry person, and everybody on the inside knows you can create more inventory. you can always test the page. it's a demand issue. it's not a supply issue. >> john, let me ask you about the security issue, front and center today. >> yes. >> skype and others, it would appear, have got problems. where are we going with this? how big does this become in 2014? >> i think everybody needs to be focused on it. >> do they have enough personnel intermly doing this sort of stuff in. >> no, no one has enough personnel. >> can they buy it in? >> i think we need -- i think there's more companies that need to be invested. if you look at cloud flare, a great private company, and now union square venture, fred wilson invested in, and one of the articles i read, $1 billion private market valuation, to prevent deny of service attacks, the things you see with the syrian liberation army. it's a good investment over the next year. >> jon, i'm glad we have you on board for the year. joining us from buzz feed, and a

cnbc contributor. bundle up. a massive went storm is moving from the midwest to the northeast. it will bring blizzard-like conditions, winds up to 45 miles an hour. we'll go live on the ground in boston with the latest. first, rick santelli, you're watching the markets this morning as always. >> always. and we're going to watch it and discuss it with matt maley at the bottom of the hour. i want to ask him three things. what about what's going on with the fed, the taper, will liquid? what about the leverage? maybe the most important part, duration. how much risk is there being in long data treasuries? all at the bottom of the hour. ' in the approach phase. everything looking good. ♪ velocity 1,200 feet per second. [ man #2 ] your looking great to us, eagle. ♪ 2,000 feet. still looking very good. 1,400 feet. ♪

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i don't leave the shop anymore. [ male announcer ] get a 4 week trial plus $100 in extras including postage and a digital scale. go to stamps.com/tv and never go to the post office again. every year for the past five years, the s&p 500 and the nasdaq have gained more than 1% in the first day of trade. not in 2014. as you can see, we are negative for the first time in six years. dominic chu is back at hq with more. dom? >> well, how about for the red day, simon? you look at information technology, because that tech sector is leading the way down for the s&p 500. check out shares of analog devices, followed by cognizant technologies, xerox, texas instruments, cisco, all are down around 2%, possibly even more on this day. so overall, sarah, when you talk about a down day, it's not very comforting to see technology as one of the biggest laggards, because, of course, technology

is one of the biggest sectors, sarah, in the s&p 500. back over to you. >> all right, dominic chu, thanks for pointing that out. it is a bad day to be outside. as maeve snowstorm moving toward the east coast, bringing over a foot of snow and near-record cold temperatures. the weather channel's mike seidel is live in boston with the very latest where he is getting snowed on. mike? >> hey, good morning, sarah. it's been snowing here since 1:00 a.m. this morning. we've been out here since 5:00, and several inches on the ground. it's very powdery snow. that's the key here. once the winds start to howl this evening through friday morning, it's just going to be blown and thrown around like a whirling frenzy, and that's why we have blizzard warning for the south shore, cape, long island. nassau, suffolk counties east of new york. this is what they've been doing all morning with the spinning brushes, the bobcats. no plows. they've vowed to stay out here, and they're going to be out here until the last flake falls. it will be interesting to see what it looks like later on tonight when we get the one to

two-inch-an-hour snowfall rate. over at the airport, logan will severely restrict departures and arrivals after 8:00 so they can get the crews out there. so when we get to tomorrow morning and the snow finally ends, although we'll have the wind, they'll be in much better shape. so far, only 70 flights in and out of logan have been cancelled. new york has cancelled over 100. and la guardia, about 300. if you have any flights into the northeast, the rest of today and into midday friday check with your air carrier for a cancellation or delay. here in boston? parking bans, snow emergency kicks in at noon. schools that were supposed to open today or tomorrow have closed. here comes a plow, right down the street, simon. just for you, buddy. taking care of the snowfall here in downtown boston. temperatures by tomorrow morning down around 10. wind chills 15 below zero, and much like here, down in new york city, some of the coldest air in

a long time on saturday morning. in central park, we're going to go down to about 3 degrees, coldest in 10 years. and here in boston saturday, 3 below zero, one off the record. and the coldest in four years. next storm comes in sunday night and monday, and that's almost sure to be rain for most of the big cities. after a very cold saturday, things will really warm up into the 40s by sunday. simon, back to you on the floor of the exchange. >> mike, you know the great thing about this country is at least you can deal with the snow, and it gets cleared. it takes a while -- not all countries around the world do that. the whole country comes to a halt. mike, thank you. mike seidel out in the cold for us this thursday morning. >> thursday. a major hack attack hitting snapchat late tuesday night. over 4.5 million user names and phone numbers were stolen from snapchat and posted on the downloadable database. what does this mean for the future of that social app? we'll tell you in a moment.

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the private messaging app snapchat was the victim of a cyber hacking. it saw more than pictures disappearing. there were over 4.5 million user names and phone numbering posted on sites snapchatdb.info. with the breaches of privacy occurring with target and snapchat in recent weeks, what does this mean for information privacy and consumers? jon fortt is here with more. so another one bites the dust. >> yeah. and, simon, snapchat might not be blameless in this situation. there's a group, gibson security, that first alerted snapchat that it had some issues with its code. back in august. said, "hey, you guys should fixed this." and they claimed that snapchat ignored them. a couple of weeks ago, they

published snapchat's p.i., and said, they could match up people's phone numbers with their names, user names and stalk people. then, on friday, snapchat put up a blog post, basically saying, not a big deal. then, this other group comes out and actually does what gibson warned about. they blocked out the last couple of digits in the phone numbers but said, hey, we could release these under certain circumstances. it sounds kind of like a hostage negotiation, if you come after us, if you're mean to us, if you don't fix the flaws, we could make this worse for you, snapchat. they said it could have been fixed. i'm not a coder myself, do i don't know. they say with as few as ten lines of code, they could have minimized the damage here, the potential damage from user information. >> so are you saying that bei g benevolent, by saying, hey, you have a problem, just fix it. or is it malicious? >> there's a couple of ways to look at this. it's like vigilante consumer protection is probably what they

would argue. "hey, your information was vulnerable all this time, snapchat user, you just didn't know. but we put the information out there, challenged the company to do what they should have been doing, and because they aren't doing it, hey, we're putting their feet to the fire." a couple of common threads between this and the target situation. i think it's interesting. number one, bad security infrastructure. in target's case, not entirely their fault, it's the u.s. credit card system. could be a lot more secure than it is with chips in the cards. we just use the magnetic swipe. and the other common thread is the poor response. in target's case, it was all of your p.i.n. wasn't vulnerable -- well, maybe it was, maybe it's not. a mixed message to consumers. in snapchat, it's the message saying, hey, this isn't a big deal, we put measures in place to keep this from being a bad situation, when, in fact, the measures -- >> i guess we should remember the start-ups, a lot of them are kids behind them. you're treating these organizations as though they were blue chips, 50, 60 years -- >> well, hey, what was snapchat

valued at? $2 billion? they're not kids anymore. >> that's not the point, is it? they may not have built the infrastructure you would expect from a normal american business. the safeguards are not there, because, you know, they're young kids. >> but that's the price of admission in this business, right? if you're going to build a business, particularly on mobile with millions and millions of users, more important than being the hottest new thing and maybe going out there and talking to potential acquirers, just making sure the things are secure. >> maybe you should regulate it. we'll leave it there, jon. thank you. >> another security breach. part of the long legal fight is over, we're talking about martha stewart and macy's. finally agreed to a settlement that started with a dispute over rights to its home products. courtney reagan is back at headquarters. she's been following this drama for us. courtney, what's the latest? >> good morning to you, sarah. this has been going on for a long time. at least part of the battle is put to rest today, two years after it began. omni media has settled with macy's and amended its terms with jcpenney, though macy's and

jcpenney's fight, it isn't over yet. in late 2011, jcpenney announced a new partnership with martha stewart living. that spurred rival macy's to sue the domestic diva's namesake company for the breach of contract, saying the partnership violated some of the exclusive deals. later, macy's also sued jcpenney and the two cases were rolled into one trial in a new york court. so today, martha stewart living, omni media, and macy's have settled the contract claims, those the details remain confidential. they say it will not have a material impact. stewart's line will remain at macy's. in october, a new contract was renewed. jcpenney gave back its nearly 17% stake with mslo. so macy's and mslo have settled. jcpenney and mslo have amended the agreement. macy's suit against jcpenney

remains undetermined. the case wrapped up this summer but the judge has yet to render a decision. simon? >> courtney, thank you very much. >> thanks. on tuesday, a stop for vehicle and traffic violation on i-95 in southern georgia led to the arrest of 47-year-old aubrey lee price, a former bank director wanted by the fbi in connection with a multimillion-dollar investment scheme. he was featured in a recent episode of "cnbc's american greed: the fugitives." price faked his own death by disappearing off a ferry in 2012, although florida issued a death certificate, the fbi suspected that price was still alive. price is now scheduled to appear before a federal judge in brunswick, georgia, today. price is, in fact, now the third alleged criminal featured on "cnbc's american greed: the fugitives" to actually be captured. well, marijuana is now legal in colorado, and if this video

is any indication, demand was sky high. so to cover all of the green news, "the denver post" did what any self-respecting news organization would -- start a website to cover it. and the famous marijuana editor of "the denver post" will join us live in a few minutes. the bells are about to sound across europe. a few minutes left in the trading day. a mixed bag all day. we've got the close, the detail, the impact on u.s. stocks right after the break. ♪ [ male announcer ] this is the story of the little room over the pizza place at 315 chestnut street. the modest first floor bedroom in tallinn, estonia and the dusty basement at 1406 35th street. it is the story of the old dining room table at 25th and hoffman avenue. the southbound bus barreling down i-95. ...and the second floor above the strip mall at roble and el camino. ♪ this magic moment it is the story of where every great idea begins. ♪ so different and so new where those with endless vision

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the european markets are closing now. >> here you go, then, counting you out on the first day of trade for 2014 for europe, coming off the 5 1/2-year highs. the final read on the pmis showing relatively strong growth. germany, italy, ireland, the u.k. we still have a major problem with france, though that's not necessarily showing up on the closing map, as you can see. way and above any other story, fear has surged in milan on very strong volume. now that it's bought or agreed to buy the 40% of chrysler that it doesn't own from the united autoworkers union. it's paying less than many in the market expected and no capital increase. importantly. that's why fiat, and it ends up with $14 billion in debt, and that's the issue moving forward as they look to rebrand. a lot of the mining stocks have fallen today. i'm not sure if that's in response to what's happening in china with a slightly softer

pmi. you have pressure remaining on some of the oil services stocks, particularly in the nordic region and they're in negative territory. and let me mention one more, debenham, second largest department store in the united kingdom, the cfo is leaving, after the second profit warning. look at the way the stock has fallen, as we came out of the year, as they basically -- they discounted very heavily. they pressured their suppliers, and still got too much stock. interestingly, this may not be a u.k.-wide retail story. very strong figures today from rivals john lewis and house of fraser. really, it's when we get the next martin spencer figures that we'll probably know for sure. >> all right, simon, running us through the european close. now, let's bring in bob pisani with a look at what's moving here on the new york stock exchange, on the floor. bob, good to see you. >> good to see you, sarah. and we were weak at the open. the s&p futures. i don't think the problem here

was here, the ism numbers for january were strong. new orders, production, employment were strong. there was some concern over what was going on in asia. you know, european, emerging markets, have been a big issue last year. we had the chinese pmi data disappointing a little bit here, if you put up some of the -- put up the full screen here. china and south korea, particularly some of the components, the new export components were weak there. and that ties in the global trade here. if you take a look at some of the emerging markets, the shanghai was down. thailand, korea. all of those were to the downside here. and again, this all plays into that global trade issue going on. so i think that's the main reason the overall markets are weak right now. let's move on. one of the sectors that are moving up today, which i'm glad to see, is the gold stocks. finally, finally we may be seeing some bottoming in gold stocks. most of the names were cut 50% in 2014. put up newmont mining, i just want to show you, it was close to $50 a year ago, and you can see here, the slow decline. the important thing is the far

right side, they have finally started to build a base. most of the stocks in the last month or so have built bases. and a base here is, like, $22, $23, $24 in the case of newmont, and they all look like this. they're trying to pick a bottom. i have no idea whether it will. the gold stocks have at least stabilized in the last month. let's move on and look at downgrades, not predictably, you get upgrades and downgrades on the first day of the year. goldman downgraded altera, analog devices, upgraded a couple, as well. jeffries upgraded some of the retailers, including american eagle and chico's and downgrading abercrombie. you can see a company like jeffries, a strong retail following, actually can influence stocks on upgrades and downgrades. back to you. >> yeah, those were big moves. bob, thank you very much. bob pisani on the floor. chrysler is american-owned

anymore, fiat buying the stake in a deal worth over $4 billion. our own phil lebeau is in chicago with the latest on that. phil, over to you. >> simon, i think the market likes the deal. look at shares of fiat. it's the biggest one-day gain for the stock since april 2009. we know what happened there. that's when the government basically said to fiat, you'll take control of the guys when they come out of bankruptcy. the veba trust, the health care retiree trust for the uaw, it is selling its 41.5% stake of chrysler for $3.65 billion. the trust will also collect an additional $700 million from chrysler over the next four years. now that this deal is in place, veba will not be going forward with the partial ipo. that is not going to happen. why does fiat want all of chrysler, not just 60% of it? well, in the process, it'll be raising the debt to $13.8 billion. that has a few people worried.

but keep in mind from fiat's perspective, this will allow them to increase the cash flow, because they'll get the cash flow from chrysler now coming into them. and potentially, it will be able to lower costs because of the economies to scale, as it puts the programs together, both in new york america and europe. and it also gives the company the cash needed to expand the alpha romeo lineup. this is what they wanted to do in europe, and then potentially bring alpha romeos here to the u.s., as soon as perhaps later this year, if not next year. this is a big focus for sergio. look at the shares of fiat over the last five years, like all of the ooautomakers, it's moved higher. a big deal as fiat is now in position to really do the expansion that it's been planning on over the last couple of years. >> also, phil, it's been dealing with headaches in its home country, and also across europe, as well. phil lebeau, thanks for the latest. the market seemingly likes that deal. let's get ba be to the u.s.,

and over to dominic chu for a quick "market flash." >> gold stocks are getting a boost today as gold prices rally after falling 28% last year. think barrett gold, newmont mining, gold corp., anglo gold. all rising. the miners poised for a pop in the early part of 2014, sarah. back over to you. >> all right. perhaps just a bounce after gold had its first down year in decades. the legalization of marijuana in colorado leading to a lot of new job opportunities. and, yes, that includes the field of journalism. "the denver post" hired a new marijuana editor for a website aptly named the cannabist. we'll talk to him in just a moment. 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.

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now, is this your doing? aflac? now, if i met with some such accident, would aflac pay me? ♪ nice. this is your stop. [ male announcer ] find out what aflac can do for you and your family... aflac? [ male announcer ] ...at aflac.com. coming up at the top of the hour, the 2014 playbook playoff starts today, and we'll look at who's leading on day one and find out if anyone is making a change. then, we're debating netflix. is the best s&p 500 performer still a good bet for this year? we have a bull and a bear on that one. plus digging in on the question of every investor's mind now, should i get in or is it too late? that and much more is coming up on the "halftime report." we'll see you at the top of the hour. >> okay, scott. thank you very much for that. let's mark the fact that we're in negative territory, triple digits on the first trading session of 2014. the first time that's happened in six years. let's get over to rick santelli

live in chicago. >> thank you. i'd like to welcome my first guest of 2014, matt maley. welcome, matt. thank you for taking the time on this second day of the new year. >> happy new year. >> happy new year. i want to cover three things, quite simply, the fed is number one. we all know it potentially is that wild card, their balance sheet is potentially a question mark. what are your thoughts regarding the road towards taper, how little, how near, how much it will impact the markets? >> well, you know, people are -- it's way too early to say the impact will not be that big. you know, when it comes to supply and demand, expectations aren't as impactful, so at the end of the year, as the liquidity has still been

massive, people won't sit on that as the markets rally into the end of the year, just like they don't sit on mutual fund inflows. we'll have to see until the fed actually begins tapering to see what the impact of the move will be. >> when it comes to leverage, you've pointed out many times in the news pieces, leverage works both ways, and we're all highly aware of how leverage hurt in '08. do you think that the downside of leverage with less fed liquidity is an issue that the investors will contend with as a high priority? >> absolutely. i do think that if people who are talking about, you know, the fact that 3% is really not that big a deal, still relatively low, on a long-term basis, the problem is they're not putting enough weight, massive amounts of leverage that's in both at the new york stock exchange with the margins at record levels, but it also exists in the credit markets. look at the moves we saw last summer when the bond market got clobbered. nobody expected that kind of a move. >> no, but to be fair, though,

matt, and i've talked about that at great length, but it did rebound, and it did, at least, on the surface, before the taper began, was able to sustain record highs for most of the month of december. all right. and listening to judge talking about netflix coming up, there's your leverage, and what, is it over 105 p/e ratio? my last topic may be the most sensitive, and that's a pun for you duration traders. how is duration going to be the enemy of investors when it comes to the treasury market? >> well, again, you have these highly leveraged positions in the marketplace. and as interest rates move up, mortgage rates will move higher. and people, you know, as mortgage rates were coming down for many year, people refinanced, for obvious reasons, and, therefore, the -- the mortgages were put back to the lenders. as interest rates move up, people are not going to refinance, again for obvious reasons. that means the duration of their portfolios is going -- is going to get longer, and that's going to be a big problem.

because, again, they are leveraged positions, highly leveraged, and they'll have to sell to reconfigure the portfolios to correctly to the higher -- >> well, matt, listen, we're always out of time too early, and the other thing about leverage and mortgages is in the early days of '05 to '08, most of the adjustable rate mortgages were lower than the fixed-rate, historically low levels for today, 4.6%. thank you for being with us, and back to the gang. >> thank you, rick, for the interview. the other hot story of the moment, now that colorado has taken its first hit of retail marijuana, the centennial state is sure to face high-flying changes over the next year. to report on the budding economic and cultural shift, "the denver post" has launched a new website dubbed the cannabist. let's bring in the cannabist editor ricardo baca. so we saw day one, we saw the lines, the demand was huge. what surprised you about the first day of recreational pot? >> you know, it was just interesting to see the free market take over out here. we had one dispensary start by

selling its for $25, and later the same day, we saw the eighth going for $45. >> so you're seeing already the prices move higher on the back of the demand. i'm curious about how the prices match up with, say, pot illegally sold, on the illegal market? what does that tell you? >> it's the big question right now. everybody wants to have that straightforward comparison of if you're buying granddaddy purple on the street versus in the dispensary versus in the retail pot shop, what are those differences? right now, we're seeing, you know, very basic differences in terms of retail pot being more expensive than the medical product. of course, the street value varies significantly. i have heard a number of reports from readers who said if you add the inflation and the tax, that they get it cheaper from their dealer. >> what did you say it was, purple grand -- granddaddy purple, what was the pot you

described? >> yeah. granddaddy purple. there's many different strains. hundreds of strains of the marijuana out on the market right now. it's a fascinating world, and all of them have extremely colorful name, of course. >> ricardo, you know, in many sense, it's an old industry. in another sense, it's as regulated a very new industry. i see some shops have been licking the papers on the joints, and that was decided that was unsanitary, and in the new world that couldn't be how you made them. others are talking about having great big 2,000-square-foot recreational areas where you attach, you know, kind of a communal thing to it. i mean, this is going to be a very interesting story in many different ways, isn't it? >> it's a brave new world, and it's one of the reasons why the "denver post" decided to start this new website, which explores the culture of cannabis. we call it "the cannabist." yeah, we have already been reporting on the news of medical marijuana since it was legalized

in 2000, since the dispensary boom took over in 2009, and now it's time for us to start being a part of the conversation of cultural cannabis. >> yes. >> we're talking about recipes and reviews and even a parenting column. >> it looks like -- if you look at -- if you look at what you're saying now and what you've written, you think this is the anchor for a whole community. this is like an ecosystem that will have cannabis as the -- as the main kind of running theme? >> well, it's tr and it's been an underserved community for a while now. you know, we have a great alternative, weekly paper here in colorado called "westford," and they hired their weed critic three, four years ago. he does great work. and now we're looking forward to being a more significant contributor to that conversation. >> how tough is it going to be to keep up with demand in terms of supply? is there going to be a pot shortage? >> you know, that could very well happen. we did see with one downtown store yesterday, called lodo

wellness, that they pretty immediately -- early on in the day -- brought down the quantity that each person could buy, because if you live here and you have a local state i.d., you can buy up to an ounce per day, and if you have an out-of-state i.d. or passport, you can buy a quarter ounce. and this particular shop posted a sign on its door pretty early on and said, everybody, no matter who you are, can only buy an eighth of an ounce, trying to serve the maximum amount of people possible, and i think we will -- it wouldn't surprise me if we saw a shortage of marijuana in colorado. >> they have to limit it. ricardo, very important question -- you told stephen colbert you do not smoke pot, but you do eat it. how much pot do you have to eat to be editor of the cannabist? >> there's no required amount whatsoever. in fact, i'm working on a column today about edibles. you know, with newly retail marijuana, we just want to help educate the people and edibles is a dangerous world. you know, it's not like smoking.

smoking, you get high, significantly quicker. with edibles, it really does take an hour, sometimes two to feel it. and so, it's important to measure that amount. >> all right. be careful, i guess. thanks for the tips. ricardo baca, thank you for joining us. good luck with the cannabist. got that, simon? granddaddy purple. your shade. move over smartwatch, and enter the smartbra. yes, believe it or not, the smartbra is the latest avenue in wearable technology. so how exactly does a smartbra work? we'll show you in just a moment. [ female announcer ] who are we?

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♪ okay, we're beginning to move further into negative territory, as you can see, on the first trading day of the new year. currently down 130 points on the dow, xerox down over 3. pioneer, a lot of the companies collecting at the bottom of the chart. and as we say, this hasn't happened for the first time in five years. usually we're up about 1% on the major averages. >> yeah, it looks like the last time this happened 1-2-2008. it went down almost 2%. there's wearable tech, and this truly wearable tech. technology integrated into your garments, designed to give you

greater and more accurate biometric data than the popular fitness wristbands. and that's won a bunch of former microsoft brainiacs working on, developing a pair of, for example, washable smartsocks, but are consumers ready for this new technology and all of the data that comes with it? david is one of the former microsoft executives and of ceo heat. welcome. >> thank you. it's a pleasure. >> happy new year to you. let's talk about the new socks. how do they work? >> well, the sock is very an innovative sock. it looks exactly like a normal sock but comes infused with the pressure-sensing textiles and then it connects to what we call the anklet, a piece of fancy electronics that contains an

accelerometer, and storage, as well. it snaps magnetically to the sock and it sends the data back to the smartphone application. >> this is a really quickly evolving market. fitbit came out with an app that interacts with the iphone 5s a couple of days ago. i downloaded it. it's amazing. it will act as a pedometer, my phone will now, without even a wriskband. -- wristband. how do you see the market evolving? what are the areas safe from getting integrated into the phone where you can focus and make a profit? >> well, most of the devices that are in the market right now can give you data on how far and how fast you walk and run. which is great. we think there's an opportunity to tell people how fast and how far -- how far and how hard they actually exercise, but, also, tell them how well they exercise. and even, as an example, if i go for a run, i want to know my

cadence and the landing technique, because i don't want to go back into the bad habit of heel-striking, for example. that's what we think turns data into actionable information in realtime. >> forget the smartsocks, tell us about the smartbra. [ laughter ] >> i thought you would ask. so, yeah, we actually are coming out to market with an integrated suite of garments, and those garments, including the smartbra, can communicate to your mobile application, together with your smartsocks. so if you combine the sports bra with heart rate monitoring capabilities with the smart sock, then, of course, you have heart rate monitoring, but also extremely accurate calorie count, as an example, right? so it's pretty cool what you can do. >> so it's going to be hard, i guess, to focus on the technology aspects and the comfort-in-fashion aspect. how much of this will be intellectual property that you license out to other apparel makers, and how much are you going to try to become an apparel brand yourself?

>> we have our own line of sports bra, t-shirts, and socks. those will come out in q1 of 2014. so we're just 30 days away from availability of our t-shirt and sportsbra. we're about 90 days away from availability of our smartsocks. but we really would like to become the gortex of the industry. we should really work together with the apparel industry and the fashion industry to inject sensing and computing technology into whatever we wear. we think that's -- that's what's going to happen. we think that whatever we wear, we become the computer. especially the companies, the garment is the computer. >> i'm still confused as to what data the smartbra actually transmits, but we have to leave it there. thank you very much. >> thank you for having me. we're keeping an eye on the markets here. looking at the lows, the dow down nearly 130 points, the s&p 500 also starting the new

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and we are looking at -- there we go -- triple-digit losses on the dow jones industrials average. the s&p and nasdaq, also, simon, in negative territory. when you look at some of the forecasts, the biggest forecasters out there still bullish for the year, but don't think we're kind of going to get the mega rally of 2013. >> that's it for "squawk on the street," as we hit noontime. let's knock some sense into the network and get the "halftime report." >> all right, simon, thank you so much. the first half is in the books, and here are the highlights so far. >> you just heard the opening bells, and, of course, looking at the realtime exchange at hq. more red on the board as we open trade. >> it might be the most important dynamic for the year -- weakness in equities seems to have pulled the buying back in a little bit on treasuries. >> shares of fiat, they've been up today. they haven't had a day like this in a long time. >> think splash, wells fargo, going buy the hold, apple. what's interesting about this downgrade, david, is it's filled with positives.