outdoing chinese hackers. >> to me the big picture of fireeye is that m&a is gathering a little bit of momentum and that could be another plus for stocks this year. >> i thank you both for making it in today. and all of you at home stay warm. we'll see you back here on monday. right now it's time for "squawk on the street". a frozen friday on wall street as the northeast gets hit with a double whammy. the first major winter storm of 2014 and bitter cold temperatures. as a result, thousands of flights cancelled, snow covered roads, school closings throughout the region. welcome to "squawk on the street." i'm david faber with jim cramer live from the new york stock exchange. carl quintanilla has the day off. let's get a look at the futures as we start out on this second

trading day of the year. we looking like we have an up open. as for that all-important -- i'm going to put "all-important" in front of the 10-year every time i say it. europe is largely green is where we are right now in terms of the markets -- >> can the 10-year go to 3.89? i pick that number because that's where the spanish 10-year is. unemployment, three and a half year low. spanish bonds are trading at a three and a half year low itself because business has come back. is that maybe a little bit of a roof? do you think it's possible that our 10-year is going to go through the spanish 10-year? >> it doesn't seem possible. >> so maybe we should stop fretting all the time. >> and i italian 10-year.

>> before we go phracrazy, we an better shape than they are and they should have their own currency. it really is insanity we're so worried about -- >> it probably is a good thing, not a bad thing, because it's saying a lot of good things about our economy. >> i'm more concerned -- do you know when i did something that was cardinal sin, do you know what i once broke the snow chain. i didn't know what to do. the snow chain. when you're in a suburban area, parents call and you're supposed to call people after you get the call and i didn't have it. i broke the chain! >> talking about snow, let's get to our road map this morning. we start with what else, that weather. a massive winter storm slamming into the northeast, cancelling thousands of flights. it dumped a lot of snow in new york. in boston, commuters throughout the region. we're going to give live for a look in a moment. stocks looking higher today. we're going to tell you what to watch for and if the selloff was a blip or maybe a sign of

something bigger. and get this, at&t is offering t-mobile customers up to $450 per line to switch. what is behind that dramatic offer that was unveiled this morning? we're going to look into that. and of course potential consolidation amongst wireless providers. let's give you the latest on the snowstorm wreaking havoc on the northeast. some parts of massachusetts have been hit with up to two feet of snow, new york city remains under a winter storm warnings more than 2,300 flight have been cancelled nationwide and numerous businesses have been shut down due to the storm. you and i made it here because of the wonders of the new york city subway. never ceases, never stops, other than the brief time during sandy when they closed it down and rig rightly so because it got flooded. there's times square. not much moving. salt not working because of the

frigid -- >> because of the new mayor. >> the salt is not working not because of bill de blasio but because it's so cold that the sanitation commissioner saying it's not going to help. you're going to be seeing a lot of white stuff on the ground, even though the plows are out. i don't want to get into traffic but the l.i.e. was closed. >> you have to hand it to these people, they do a remarkable job. >> i could hear them out all night. >> i guess natural gas prices may go up. it's awfully cold out there. >> we've got a real setback to oil and gas because of the ba bakken. natural gas should be rise flpgflp.

there's too much methane, there's too many "ane." there's too much poly and too much ethol. >> we keep hearing that manufacturing is coming back. >> no more gmos and cheerios. >> yesterday i was speaking to you if i was monsanto, i'd be petrified. cheerio cheerio cheerios, the great ceo of general mills but we're going to put sugar and -- this would be remarkable. the food chain cannot bear the takeout of gmo. >> we keep showing you pictures of the weather and why not.

it's a very big storm in 2014 making for a very tough commute. the subways are running. how about the commuter rail lanes? >> the rail lines are running. the long island railroad is running on a weekend schedule and metro north road is running on a saturday schedule, which equates to approximately 60% of normal weekday service at this point. >> what are your expectations in terms of your ability to deliver passengers through let's call it today and tomorrow? are things going to improve or given the cold temperatures are we going to be dealing with a more difficult situation than would typically be the case? >> that's exactly right. the issue now is definitely the cold temperature, the salt that's being spread on the roads isn't doing much to clear that snow from the streets, which pose as problem actually for our buses. so customers that use our buses

can anticipate delays throughout the city due to those road conditions. >> i would think maybe helped out by it still be sort of a holiday period. i know schools were back, at last public schools were, but fewer people than normal, at least on the roads and on the lines to begin with? >> that's right. the mayor did close schools today and many people did heed our warnings to stay home if they could. we still have crews out clearing subway and railroad platforms clear but we ask customers to use extreme caution when when traveling and be careful when exiting stations or boarding trains. >> that's good advice. >> in training. everybody understand that. one big buyer or seller is going to impact stocks today. >> let's get more on the first winter storm of 2014.

let's go to boston, may have gotten hit the hardest. check in with the weather channel's jim cantore. how much are we talking about out there, jim? >> honestly, we probably got about 16 inches over here. it's so hard to measure because, a, they've been cleaning it all up. b, there's been so much wind, they've been blowing it around. knee height here, about 16 inches here in the city. at logan airport we're talking about pumps out 14.6 as of 7:00 a.m. they could have easily a couple more inches. the good news is it's just about over in boston. the bad news is it's dog gone cold, we are looking at 16 to 20 below zero in terms of the wind chill. it's not going to melt so all they can do at the waterfront is pile this up and remove it at a later date, say let's say april. the big problems pretty much are

at the airport. we're commuteless here in boston. schools like new york city have been closed, nonessential government workers asked not to come in today. that's pretty much everybody, let's face it, right? logan hoping to go operational at noontime. if you look at the chart across the united states, add delays and cancellations, we're about 3,700 and counting, david, a far cry from yesterday's 8,000. but we know those numbers are going to climb today. >> quickly, jim, what about those cold temperatures? going to continue through the weekend? are we going to get any respite here? >> no, we're going to see them again this weekend. we have a new system coming down through north dakota. i think we're going to see some 60 below wind chills, guys. it's going to be brutal in north dakota and some of the coldest air of the season and some of the coldest air we've seen in decades to come into the midwest for morning lows. this is dangerous stuff even without the snow. you get trapped out in this and you are going to wish you were

somewhere else. you go off the road, you don't have any blankets, any food and your cell phone is out, you're going to wish you were somewhere else. >> continental clr was hurt yet because of the bakken train debacle. the worst thing they can have is cold weather. it does shut down operations. >> yesterday we did see first day trading fall. it was the first day of the year of course. it was the first time since 2008 we saw the broader averages down, the dow coming off its biggest decline in nearly two months. it was 135 points lower. the s&p and nasdaq also, worse day they'd seen in three weeks. do i care at all? >> three weeks. three weeks. >> i know. >> imagine that. >> are you sure? all three weeks? >> be still. >> i got to go.

i have google. it was a huge up year the last couple weeks were even great. there was no profit taking. some people wanted to lock in, some people didn't want to take tax gains last year, maybe they're happy to take them this year. if you want to take your cue from the first day, if that's what you want to do, stop being in stocks, okay? take your cue from the cd rates. dunk the cd rates are unch'd for the five years? can you imagine how much the banks are taking? they're paying 0.8, they're investing double at that. the net is is terrific -- >> i don't know about terrific but getting better. >> getting better. >> but it would be good if they started to put more money out there and actually lend. >> did you think the cd rate

would go from 0.8 to 0.87? >> yes. >> it was a down day. there were a lot of sellers, very thin trading. it could happen again today. there are very, very few players out there. i come back and say be careful about being too negative on bonds given the fact that the rest of the world -- i mean, the rest of the world's interest rates are pretty darn low and they're not nearly -- they're pumped up like we are but i just don't think that we're on a straight shot to 3.65. gold was strange yesterday. gold went up. >> dollar showing some strength. has been against the yen. >> you would have taken a tax loss in gold versus everything else. why not? it was hideous. remember the january effect? >> no actually. until you mentioned it. >> things bounced back.

they bounce back and of course it's reasonable that they bounce. i'm not panicking yet. now if it goes three weeks and a day, you start getting into that period, that's a bear market. >> no. >> okay, thank you. you're right. people always say you're angry. >> i do like them to know when you're being sarcastic. >> we're about to get to a story later on about at&t and i am going to be bombastic about that. >> i'm looking forward to it. as i always do. >> having red the bombastic bushkin carson book on vacation. johnny, not a great guy. not a great -- not king of the home life. just comedy. just comedy. >> let's tell you what we're going to talk about.

thousands of flights being cancelled due to the early new year storm. coming up former continental airline ceo gordon bethune will be here. and pilots not being able to work as long essentially. >> delta, up fourth in the s&p. i that i there are going to be a three-peat in some of these airlines. i think they could be up for another three quarters. >> is that trademarked by phil jackson? and i think we're looking for a potentially higher open. we have a lot more here on "squawk on the street." ♪ ♪ eet per second. [ man #2 ] your looking great to us, eagle. ♪ 2,000 feet. still looking very good. 1,400 feet. ♪ [ male announcer ] funny thing happens when you shoot for the moon.

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♪ ♪ welcome back. if you haven't noticed it this morning, i wanted to bring you up to date on the latest on what may be a building wireless war. i think that's a fair way to put it. at&t offering customers of t-mobile up to $450 per line when they switch to at&t, who of course they say will then benefit from the superior smartphone lineup and award winning customer service. customers can turn in their

current smartphone for $250, which can be used toward at&t products and services. and they can receive an additional $200 credit per line when they transfer their service. this is interesting. analysts trying to weigh in on it saying you can read it a few different ways. did at&t have a rough third quarter, or is it simply trying to foment more competition with t-mo, which has been very competitive on price and then does it go into consolidation, t-mobile cold by deutsche telecom. the question is whether deutsche telecom think it is can get it by. doesn't this show how competitive things are and why

it's good for the consumer? >> the department of justice did the right thing. they did the wrong thing in hertz rent a car, they did the wrong thing in the airlines. i find this shocking, david, because i'm not kidding, anger between these two companies. i remember refereeing a couple years ago one of the ctl things, a conference. >> ctia. we were there together. i remember when you did that. >> and they hated each other. now there's a new cast of characters. they're not targeting sprint, they're not targeting verizon. i think they're trying to take the steam out of what may be the strongest competitor. >> 450 is not nothing. >> at&t one are the more poor performing stores in the dow.

this is not a reason to buy. this is a reason to sell. >> this will potentially worry some people. we don't know at all whether it has anything to do with losing customers to t-mobile or not or whether it's simply an opportunity they see to try to -- >> but under what scenario is it positive? your gross margins are key. >> many say t-mo can't keep doing what it's doing for the long term, that it will run into a wall, whether it is on spectrum as well, though it's bought a lot of that recently, and that it can only play this game so long and it will need to consolidate. >> and that's really the lead in this, i have to tell you. i keep thinking david, in this industry, you have called it perfectly, the amount of deals that are under the surface at all times. but you never dispute them. you say that they could happen. >> they could. listen, t-mo and sprint absolutely could happen. i don't think there's any doubt. by the way, sprint shares have

moved up, t-mo has moved up dramatically on a lot of the chatter that's been out there for the last month about this potential deal. it's far from clear at this point that deutsche telecom is ready to engage in the substantive structure of the deal kind of talks that. >> but there is simply no way that sprint stock is above 10, another downgrade today, unless you think there's another transaction. because dan hesse, fantastic ceo, would say, look, we're paying a fortune. sprint is going to be able to eventually blanket the country with coverage right now. they don't right now. by their own admission. boy are they honest. >> again, another big integration. they're just finishing one. they'd have to start another one. we didn't get to talk about

charlie yergen. we're going to have a fun year talking about this stuff. >> this will be huge deals. these will be the biggest deals again. >> back to at&t and whether it does try to make that phone with vodafone. "mad dash" is coming up. a lot more to talk about after this. [ male announcer ] alka seltzer plus presents the cold truth. [ coughs, sneezes ]

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>> a little more than five minutes to go before the opening bell on this friday. what about the "mad dash"? >> a company called mannedian was acquired by fireeye. the senate was more interested in other people, investigation of chinese hacking. this is about chinese hacking. >> it is indeed. mandan, they go in once you've been hacked, breached, they're forensic investigators, they go in and investigate how it happened, and how to prevent it in the future. >> people were convinced this stock was overvalued. i happened to like palo alto networks. if you have a solution or can you do forensic analysis, there are so many people begging not to be hacked by the chinese.

>> for a while we were making political progress and then the nsa revelations from snowden stopped that completely. once they know we have no leg to stand on any longer in trying to force the chinese to stop. >> billion dollars. >> rite-aid, comp store sales 2.98%. a quarter of the people didn't like it. i think this company is a buy right here. i love the whole drugstore complex. >> all right. we have a lot more stocks to watch, including rite-aid right after this. welcome back. how is everything?

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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. up are watching cnbc "squawk on the street," live from the financial capital, bell set to ring in under a minute. what is the key to this market? >> key to the market is general electric. >> really? now you're really taking me back. >> this is the heart and soul of the market, which is the industrial companies.

i think general electric is at the beginning of a big ramp because they're becoming an energy company. if they are right, there will be repeal, if they are wrong, we'll have another good quarter. >> about 10 seconds early on that bell. >> i was going to say amazon but because the weather is so skewed in favor of amazon, it's almost impossible for amazon to miss. when you have cold weather, it's too cold to go shopping. but those choppers, rain, sleet or hail, the choppers land at your house to have a great bunch of hype in 60 minutes. >> a we have a lot of green -- >> it's been 33 minutes since we've had an up open. how long has this bull market

lasted after the bear market that lasted for three weeks. look at this. it's back, it's back. who makes these things? >> let me tell people who rank the opening bell, the institute for education. and over on the nasdaq, jamba juice. >> what did at&t? did they do around with the contracts? at&t can come after these people, there's no penalty if they leave. a free fire zone! >> let's go over to fill lebeau. he has auto figures out. >> reporter: a little below

expectations, sales just under 1%, compared with estimates of 5%. overall sales for ford increasing 10% for the year. for the third straight year, the f-series is the best selling vehicle in the u.s. for the month of december, sales an increase 1.8% below estimate. ford is a little soft for december, chrysler came in a little below estimates for december. i think we'll see sales that are up but not up as many as people were predicting initially. >> that explains a lot. >> the latest on ford there. >> ford's been stalled. it's been throw back. it almost like there's a stel kufrt and. i mentioned 18 because this very week in january two years ago, ford was at -- 2011 ford was at

18. think about that. how many stocks are really below where they were a couple years ago? >> i just love that illusion of a steel curtain. puts me back to mean joe green. >> when coca-cola was king. >> yeah. >> here, kid, have some kiowa. >> very exciting for you. >> i can't believe these cities haven't sold out out. bengals not selling out. indianapolis. i put in for playoff tickets the moment that we won a home game. >> so you're going fob there. i have no doubt of that! >> wouldn't miss it for the world. >> you mentioned before we went to wireless, at&t down everyone so slightly. t-mobile down about 2.5, almost 3%. they got a few things out there. they've also been talking at t-mobile about something called uncarrier 4.0, which -- now,

this is according to sources because i don't believe they've rolled this out yet, but something where they would -- a $350 credit by trading in -- to customers who traded in their current smartphone. i also want to point out that john leggier, who is ceo and tweets -- >> and a tieless ceo. >> usually wearing a pink shirt, less than a week until ces, who is counting down with me, at&t. so he's willing to go head to head dpsh. >> combative fella. everybody kind of wrote that company off. it's been just huming under him as the stock has, too. you told me when he's come in to be shaur i. y

you. >> they felt the carriers would take more control from apple. i'm telling you that's completely wrong. >> twitter clawing its way back to 70, we should point out. >> cult stock, cult stock. >> another 2% after. i believe it was up after the downturn in the broader market. >> cult alert. cult alert. i like tesla, like solar city, like amazon. it's a cult. it a cult of buyers. >> what's wrong with that? >> nothing. i'm just saying there's no parameter i can come up with with why it should be valued there. i don't think it's sign it and buy it. i don't think it's the great -- the sock puppet, whatever. it's not that. it can make money. >> i love going down that road. but we shouldn't do it. we have a lot of new viewers. we have people who weren't even around during the dot-com

boom/bust. >> they're willing to buy things again. they don't know pain, the pan that that was his forecast. remember what it was? it was pain! >> forecast calls for pain. sprint shares down about 3% again. if they were to do a t-mobile sprint deal. very interesting to see what's going on there. you mentioned ge right at the opening bell. it is up 7 cents. honeywell, utx, also both higher. this is your theme it seems to me in the early part of this year. >> tlnd there's some china service. >> the signs out of europe are so positive, david. many of our -- that 20% is

kicking in. europe is surprisingly strong. no one wants to hear about it because people remember what it was like in november of 2011. >> it takes a long time for people to believe when you've been through not just what we've been through here but over there as well. >> and france still is in bad shape. >> we really believe spain is starting to turn around? >> i think spain is definitely turning around. i think austerity worked in ireland. go to ireland. it's a manufacturing powerhouse. and because of the tracks regime, it's becoming a pharmaceutical power house. >> hower house in that people have mailboxes there. >> true, it's a mail drop. i've been to ireland many, many times. the last time i was there it was so depressed, just a couple years ago. i just think when i hear the stories and a lot of people are very akin to ireland who watch our show, you got to realize

that this was a very tough pill to swallow and it seems to be working. >> tax aversions, by the way, an important story that we did see in 2013. that means changing your tax jurisdiction. and we saw some interesting ones, remember, as well. it wasn't just buying an irish company, it was buying a canadian company but they all ended up in ireland. we'll continue to watch that in 2014 because doubtful we'll ever get corporate tax reform. >> one of my favorite companies bought e lon and the stock flew up 30 points because the price-to-earnings ratio did reflect the fact that the earnings per share were regarded as real that were captured back from taxation. >> facebook i'm watching this morning, jim, up about 1.3%. >> well, merrill lynch wrote a note -- they're basically calling it a cash machine. seems like it's an atm. take up the price target. facebook is real. i'm not saying twitter's not. i'm saying facebook is

dramatically cheaper than twitter. >> you hear it all the time that, well, the key demographic is not using as much as they could be. they're going to instagram, which of course is owned by facebook. >> when you look where the advertisers are, that's the money. advertisers love facebook. >> that is used for the distribution platform for some other things also. >> why are people so skeptical? is it because facebook did so poorly after they came public? the last couple of conference calls, they're masterful. >> i don't know that there are that many people skeptical. advisers are always desperate -- when you have any pizza company tell you it's how they get

customers, domino's -- i ordered dominos's when i was in mexico and it came like that but it was the old recipe, i swear! i think it was the old recipe because i detickected a little of that hint of card board. >> let's get to bob pisani. >> italian food in general. >> all ten sectors of the s&p open to the up side, transports particularly strong, crude at a one-month low. nobody pays attention to first days of trading necessarily. there are two january barometers that everybody looks at. one is the first five trading days. if that's up, the rest of the year up, about an 80% accuracy level. that's pretty darn good. but the biggest one is the january barometer.

that has about an 88% equity level. uls where don't like seeing korea down. hong kong has only been open one day, so not sure what to make of that. here in the u.s. a lot of talk about earnings. earnings are coming up, folks. thursday starts with alcoa. so here's the big problems for earnings and revenues. here's 2013, earnings up 5.4 percent, these are projections right now. and here's the gap, revenues again up 1.4%. people are making their numbers on earnings by cost cutting, not by revenue gain. 2014 is the issue will revenue,

personal incomes are rising, unemployment is droming. the hope is this will finally make a difference and the revenue numbers that have been lagging will finally catch up with the earning numbers. alcoa will be thursday. which by the way, had an amazing run in december. you see the final end of that chart there ep almost 10%. as for interest rates, nobody believes the fed is going to raise short-term interest rates, at least not many people i've efrd talked to believe. the question is the longer term rates. and most people i know have interest rates, the 10-year around 3%, 4%. dan weiner, who writings over at the independent adviser for van guard investors, he notes that the ten-year away from the current fed funds rate, which is 0.400%.

finally, guy, up grades and down grades, a number of companies on the upgad and down grades list. >> let's head to the bond pits and join rick santelli over at the cme group in chicago. good morning, rick. >> good morning, dave. being in chicago we're looking at real barometers. not so much of a chill today in the treasury complex. we actually see it warming up a bit, volume picking up. yesterday yields moving down, stocks moving down. today yields moving up a bit, stocks are moving up a bit. if you look at the 30-year same picture, let's tack a look at the step back and what you see is that these rates certainly look like they want to visit 4.5%. these times are anything but normal. you got to watch for some of

these fat tail old it's the european currencies that that are waerk the pound, the euro. that's over in its own little world. each of the successive days going lower. looks like the dollar is going to make a comeback. he did a much more accurate view. the pound is strong and you could see it on that chart. now, let's look at the next currency of importance and let's look at that said dollar yen. of course it's doing better today. look at a two-day chart. the dollar is scaling down two days in a row. open that up and you can see the dollar is strong even though it's weakened in the big picture. and look at a two-day clart of the euro versus the dollar. definitely scaling down. when you open that chart up to six years, it really doesn't

look like the euro has the same horse power behind it as the pound does against the dollar or as the dollar does against the yen. there's your most advanced economies. pay closest attention to those. david, back to you. >> thank you very much, rick santelli. coming up, the economic recovery in las vegas has been tepid. >> ♪ like the legend of the phoenix ♪ [ male announcer ] this is the story of the little room

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oh that sounds nice. don't feel trapped with the ally raise your rate cd. ally bank. your money needs an ally. ♪ it's too cold for you here and now so let me hold ♪ >> i'm jackie deangelis reporting from the nymex, seeing a little bit more selling pressure in the energy complex today. west texas intermediate after a $3 drop yesterday.

the death cross technical move adding to the selling pressure. we're going to get the department of energy's weekly report on crude inventories. traders are expecting a bill out at 11:00 a.m. we'll watch that closely. and we're also watching nat gas prices pretty much flat today. we'll get that weekly inventory report at 10:30 a.m. and we'll have it for you. back to you, david. >> let's stay in the energy sector. a federal regulator out with a safety alert saying crude oil produced in the bakken region of our country may be more flammable than traditional heavy crude. jim, about 700,000 barrels a day of bakken crude is carried by rail. >> there's a lot of animal farm in these stories.

it's more flammable because it's better. even versus nigeria, versus north sea. this is the best crude in the world. and everyone knows that. second, the reason why you don't have them on a lot of rails is because pipelines are safer. all oil from the great standard oil started moving oil from ohio, now the utica shale, was by train. but people thought it was too dangerous so we put pipelines in. welcome to a backwards universe where we have favored trains because of worries about pipelines. the train companies argue look at our long-term safety records. the earnings call by union pacific is always highlighted by their safety record. >> burlington is also another one owned by berkshire hathaway. >> i'm not against tanks.

i think it should be double hold. equivalent of double hold. let's not lose sight of something that audrey mcclendon told me a long time ago over at dinner with the 21, kind of a fun time. he said, jim, any time we extract things from the ground that are meant to burn, it can be dangerous. >> does this add any debate to the keystone xl? not that it needs anymore. >> yes. it's so political. people have to understand. if we're in an energy-free situation, which would be absolutely fantastic. remember steve jobs wanted cars to run on water, then it would be tremendous. we have to get this to where it can come out of the ground to where it can be refined or else it's useless. there's a subrow of factors people don't want to talk, it's almost like a quasi religion. many want oil and gasoline to be dramatically higher because then

we'll use less of it. you, in favor of that, you're right because then we have to import it. where do we import from? venezuela, nigeria, saudi arabia, libya. hey, you know what? i prefer north dakota to all those places. here's another oddity. what was it? it was a train of oil hitting a train of pou beans. do you know that north dakota is the largest producer of saffron, sunflower oil? that's been the biggest issue on north dakota. it's the farmers versusle oil guys hp. >> that's a while ago. >> clint will be there. it's the oil men versus the soil oil men. >> we have a lot more coming up on "squawk on the street."

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it's that time, "six in 60." >> yahoo!. >> i think it's going to be up, aliba alibaba. >> how about this? >> many countries are against both sodas and tobacco. people didn't think though areas would crack down. >> we're going to talk j & j. >> you know how much i think of al al alex gorsski. >> goldman sachs? >> i agree with the goldman call. >> micron. >> one of the top performers in the s&p. is the run over? watch tonight.

i haven't decided. >> and sirius? >> it's reported there's up side to the acquisition. >> what are we're talking about on "mad money"? >> the game plan for next week, we have earnings. bob pisani made a great point. when did the alcoa run start? when deutsche bank took it to a sell. maybe there's some defrocking it needs to be done there and it wasn't be about my favorite ceo, who is -- >> clause kleinfeld. >> he's got that wedding dress business in brooklyn, right? a different kleinfeld. aluminum wedding dresses. for a guy like me that may be handy, you can recycle them.

>> good morning to you, david. the big digout continue. the former ceo of continental, gordon bethune will join us. >> and getting fit for 2014. the ceo of fly wheel will join us live. remember, it's not fitness, it's live. i needed a new laptop for my pre-med classes, something that runs office and has a keyboard. but i wanted a tablet for me, for stuff like twitter and xbox, so my downtime can be more like uptime. that's why i got a windows 2 in 1 which does both -- works as a laptop and a tablet. so i can manage my crazy life, and also have a life. [ beep ] gotta go. ♪ there's nothing like being your own boss! and my customers are really liking your flat rate shipping. fedex one rate. really makes my life easier. maybe a promotion is in order.

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♪ it's too cold for you here >> and our road map starts with the beg dig out and the blizzard. nearly two feet of snow getting dumped on parts of the northeast in the first big winter snowstorm of the season. we'll talk about the effects on the airlines, roads and of course the rails. >> and dallas fed president richard fisher speaking in just a few moments. later been bernanke will speak. we'll tell you what to expect. >> and a cyber security deal. fireeye buying mandian.

>> chris sin chrissin -- kristi is live in new york. >> probably upwards inches or so on the road. that's not for lack of trying. there's been plows going by for hours and hour and hours. it's such light and powdery, fluffy snow because it's so cold, that they get it off that it goes right back on. and the salt they had, they've been putting it down but it's so cold that that doesn't work either. i'm going to move up here. we have a plow about to come by here. the l.i.e. is now open again. that was closed for most of the

night. and then j.f.k. airport i believe is going to be opening up or has just reopened now. so they should maybe begin to see flights going in and out given. kind of a brutal day. a lot of people in this area being urged to stay home. i talked to one tow truck driver, some more colorful language than i'll use, if you get stuck, you are on your own. it's advised for people to stay home today. >> and it's very cold, right, kristen? it's set to remain that way. >> it's gotten up to 12 degrees here. feels more like minus 8. we have some brutally cold temperatures. and the winds whipping here right now. so the feels-like temperature a lot lower than the actual temperature. it is bitter cold out here. >> all right. stay warm. use hand warmers is my advice. thanks for joining us live in.

>> on the cnbc newsline is gordon bethune and a cnbc contributor. welcome to the program. >> good morning, simon. >> as a former senior insider of the industry, what do you make what you see around you at the moment? >> well, you know, normal snowstorm will cancel a couple hundred flights. i think more than 2,000 were cancelled yesterday. those people are still stuck. they didn't go where they want to go and there's no seats today, i think more than 680 flights have been cancelled today. that will abate. but you still have that tertiary acc controller can't get to the airport, employees can't get to the airport, nor can some passengers. it's still rolling through the infrastructure. it will take a week to clear out. >> the latest i have is that 3,263 flights have cancelled. there's a lot of anger out there. let's just listen to some people who have had a tough 24 hours.

>> it's -- the anger i understand but who are you going to get angry at? this isn't like you're stuck at the pass. you may be delayed a couple of days of getting to where you want to go. but winter is like this everywhere. >> let me play this tape of some people and how they've been reacting, gordon. have a listen. >> 4:04 on the tarmac. we just went done and got our luggage. there are people done there who have been waiting an hour and a half for luggage. >> the airlines is keeping me captive on a plane for four hours. >> why not have a plane to anticipate after seeing 30 to 40 planes line up like that. it's ridiculous. >> talk about the decision you make between being pro active and cancelling in advance and being reactive.

>> p. >> so when this guy says -- do they cancel enough planes in advance? >> you want to fly and collect the money, but if they're going to close the airport, that's the way it is. it's a lack of sophistication of air travelers who need to know you may not get out of your driveway. it's a staggering amount of logistics to get people moving across the country. >> chicago, boston, new york, newark, these are some of the nation's biggest hubs for the airlines. how much more disruptive does that make it for these companies in. >> that's true, sarah. because it affects the person that's going from west palm beach to chicago on to maybe quebec.

if you can't through chicago that is correct backs them up all the way down to distribution. so they do have an immense effect on the system for hours and hours afterwards. >> storms come and go but there is a change that will be with us for some time, namely on the rules for pilots and how long they can work. are the airlines ready for that? should passengers expect future delays because of these new work rules? >> i don't think it will be delays, david. i think it will be a debate on what's appropriate and if they do change it, well, that will change the staffing that airlines are required to have. obviously if you require more staff, that's more cost. that i am obey the rules, whatever i turn out to be. >> let me get a comment on one of the major airline stories of 2013. and that was the course the meshlger of usair ways and american, which ultimately they

were pushed past the djts o.j. and now we have what sparts will be? >> well, i think it's going to be a better system. we'll have four big airlines but they're stable, they're not going in and out of business and in and out of bankruptcy. and they'll have pricing that is not predatory they. >> good news for consumers? some fear they might be gouged. >> i think it's good news for consumers because if you buy a ticket on an airline, at least it's not going to go bankrupt on you or quit flying. when you have certainty in the system and you have good players that create jobs and pay their pension plan, i think that's good for our country. >> happy new year, gordon. nice to see you again.

gordon bethune, former ceo and chairman of continental. >> and the american economic association, and steve liesman is there with a look at what we can expect. did all the important economists and fed presidents make it there with the storm? >> i know a couple who haven't been able to make it so far, specific because of what's happened in boston. a lot of those academics commonwealth down from boston. they're expecting a 11,000 plus participants here and they're going to deliver some 500 papers. here's just the agenda here. but one rock stare here is going to be sneaking in one is supposed to be his last major

speech as chairman. do we get a little snippet of that letter that bern key would leave to his successor, the fed vice marm p chairman right now who is supposed to abe proved by the senate now on monday. other speakers include ben bernanke, jeremy stein and rosen grand from boston, plosser from philly, bill dudley from new york, along with a person who could be a future fed member, stan fischer. one of the things we're going to be listening a lot for over the course of the weekend is the fed's and government's policies in response to the financial crisis are under scrutiny here. there are a lot of papers prepared for this conference to look at whether or not this stuff they did actually worked and should be part of the play, he was also the president of the

national bureau of economic research, which dates recession in the u.s. economy. >> i think we're beginning to see some real seens of traction both in, we're starring to see improvements on the fiscal side, adjustment levels are down under 4% of gdp and there's a real sense of optimism, i think, in some sectors. >> other things that will be studied here inequality, climate change, health care costs and of course job growth. but the big thing the speech by fed chairman ben bernanke at 2:30. we'll have full coverage on "street signs." back to you. >> some of the fed presidents start to speak at 10:15. we'll watch out for headlines. >> general motors out with very weak december sales numbers today. for more on that, we'll go to phil lebeau, who is live with gm's vice president of sales.

>> we just received numbers also from toyota and like we've seen from the other automakers, the month of december not a strong one for toyota. stales dropping 1.7% compared to the estimate from edmonds of an increase of 3.6%. toyota down 1.7% versus estimate of 3.6%. general motors, sales drop are 36.3% versus expectation of an increase of 0.8%. when you look at the industry, sales are coming in weaker than expected. do you blame the weather, payback for strong sales at the end of november? what's the reason here? >> phil, i think it's a combination of both. there's no question the swaet

that swept across the northwest and into the northeast had an impact. but november was a very strong month and there was a little pack back there as well. >> you're forecasting monthly sales at 16.6 million. do you look at this and say you can't really take one month and extrapolate out beyond that? >> exactly, phil. you got to take a look at it from a quarterly basis or even an annual basis. when we first went into the year, we thought it was going to be in the 15 to 15.5 million unit range and it's going to come in about 15.9 million units. so that's good. i think it speaks to the strength of the industry, the strength of the economy. and in our case, you know, from a retail standpoint we exceeded industry and gained retail share across all four of our brands.

and that's what matters really to us. >> kurt, one last question. the chevy volt, sales for the year down 1.6%. is this basically a niche vehicle where you're going to have sales in the 25,000 range annually at most? >> well, phil, the volt continues to be a strong product for us. if you look, you know, at the west coast and particularly the state of california, it is a core vehicle for us in that market. it continues to do well. the nice thing is that that 2,500 units that we did in december, it's all 100% retail business. and if you look at our retail business, it was up about 3% for the calendar year. so given the fact that fuel prices have been pretty stable, we're pretty happy with up 3%. >> kurt mcneil, vp of u.s. sales

on a day when gm and all automakers reporting weaker than expected december sales. we'll have the monthly sales pace a little bit later on today. simon back to you. >> phil lebeau live in chicago. >> we are up 51 on the dow. that's a sigh of relief for people because yesterday we kicked off the new year in negative territory. so what is the outlook for 2014? and more on the aftermath of the blizzard. right now "squawk on the street" will be right back. 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.

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welcome back to "squawk on the street." there's a lot going right for rite aid investors this morning. shares are surging after one of america's biggest drugstore chains reported december same-stores sales 2.9% better than last year. shares of rite aid have been on a tear, gaining about 290% just over the past year alone, sara. back over to you. >> thanks for highlighting that, dominic chu. >> and the dow is getting back in the positive territory after starting the year in the red. mike, we'll start with you. today we've got a few heavy hitters from the federal reserve speaking. do you think they'll give the markets anything to trade off of today? >> i would be surprised. bernanke is speaking at 2:30 but when he has spoken at this conference in the past, he's talking to economists. it probably will be perhaps a

little technical, maybe a bit of a retrospective on his years at the fed rather than giving guidance on what to expect next. plus he's an outgoing chairman. i don't think he wants to set the agenda for the successor, front run or her tenure like that. >> we're also on the brink of another earning season and we've got economic reports coming. what will you be watching to take this market forward? >> hey, sarah. first i would remember that going back to 1929 the first trading day after a yearly advance in excess of 20%, it was a coin toss. 50% of the time we fell. so you shouldn't read too much into the first day trading. i'm going to be looking for first quarter earnings coming in similarly to what we saw in the third quarter, up about 5.7%, eight of the ten sector in the s&p likely to show year-over-year increases, with

energy and utilities likely to be the only decliners at this point. i'm going to listen closely also for guidance for 2014. we started 2013 thinking we'd see low double-digit, low teen increases, we ended up with something less than 6%. i want to see if we have a similar reduction in earnings forecast. >> i'm glad you brought up historical patterns here. we have the january barometer, the january effect that relates to taxes. does any of that matter? >> i believe if does. being a student of history, my feeling is you look to history as a guide. obviously it's never gospel. but you don't look to one day alone. interesting thing is that 2013 was only the sixth time since 1929 that we closed at an all-time high. and in the prior five times, the market rose in the subsequent year by 8.5% and also rose in four of five times.

so with that very, very limited observation grouping, what you can say is, hey, there's still a good chance we have a good year, not a great year. >> sam, i think the bigger issue is do you think that a large number of in particular retail investors are going to sell in order to book their profits and capital gains in tax year 2014? is that something we're going to witness over the next month or so? >> simon, i think that probably happened yesterday. you had a lot of individual investors who on december 31st rebalanced their 401(k)s. >> it wasn't a big loss if that's all we're going to get on that dynamic. mike, before we let you go, how sensitive are we now to the employment p employment report we get next friday. what is the music around that? good news/good news or good news/bad news? your view? >> i think good news is good news. i'm not sure how sensitive we're going to be in terms of either markets or expectations for fed

policy. when bernanke spoke in december, he gave the sense that barring any big surprise they would be tapering at about a $10 billion a meeting pace. how much signal we should take from those comments i think we'll have to wait for next week to get a better sense. i think we need a pretty big surprise and the employment report, you know, plus or -- i think next week we're probably looking for around 200,000 the consensus is. i think you need plus or minus 100,000 for people getting away from thinking the late january meeting won't be another taper. >> and as you know, we're going into 2014 with some momentum here for the economy. is this going to stick or is it going to spulter out like we've seen so many times during this recovery? >> right. we think it will stick. we actually just revised up our tracking of gdp from 2 to 2.5%. and we're looking for that to

continue into 2014. we've had a couple of times in the cycle where we've had things look nice in the winter and peter out in the spring. we think that's been kind of fluky and not related to seasonality. weep think the fundamentals look quite a bit better this year than last year. fiscal policy will be less of a head wind for the private sector than it was last year. >> that should be good news. >> stan and mike, thanks for joining us. >> my pleasure. >> up next, the monster deal that's uniting two of the most respected executives in the industry. more on that coming up on cnbc. . 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...

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swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. ask your doctor about experiencing cialis for daily use and a free 30-tablet trial. big news in the cyber security world, fireeye is buying mandiant for about $1 billion. >> hackers have made headlines attacking target, snapcat and

now fireeye buying mandiant for about $1 billion in cash and stock. this brings together two really big names in the cyber security industry. fireeye knows whether your company has been hand. mandiant can tell you who hacked you, how long ago they hacked you and the damage that has been done. fireeye ceo dave dewalt was on ceo this morning talking about the deal and the broader cyber security threats that are out there. >> just yesterday we saw the syrian electronic army bringing down obviously skype. we're seeing a lot of infrastructure type attacks like that, twitter, the associated press and some are very successful, sometimes they're not. but there's a lot of very egregious activities happening in the world right now. >> this deal creates a security platform that pose as rifle to

palo alto networks sim and technical and intel. dan ives expects to see a lot of consolidation in this space. he talks about proofpoint, for theinet, imperva and palo alto networks. this new changed everything, fireeye sending a message. the company sees itself as a consolidator that will change the cyber security paradigm. >> clearly there's more of a need for security like this one. josh lipton, thank you for that merger story. >> still ahead, this storm all across the northeast causing headaches. we'll talk to an amtrak person about how they're being affected. we'll be right back.

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welcome back to "squawk on the street." i'm jackie deangelis. the department of energy releasing natural gas storage report. the number coming in, a draw of 97 billion cubic feet, a little bit less of a draw than expected. can you see that reflected in the price, nat gas prices dropping a bit. we were expecting to see a draw down of 116 billion cubic feet.

last year at this time we saw a draw down of 126 billion cubic feet. can you see this number is a little bit less than expected. tim evans at city saying he expects the draws to continue and will add support for natural gas price. keep in mind we have very cold weather outside and storms across the country. traders are expecting these prices to rebound. they're telling me that $5 in the short term is not unlikely. simon, back to you. >> thank you very much. meanwhile the big digout from thing about storm continues. thousands of flights cancelled, roads snarled in notably boston and new york. sarah, over to you. >> reporter: in just the last few minutes, the snow has stopped. we're actual litsch seeing a little bit of sun out and the roads are back open. the long island expressway,

which was closed for eight hours overnight opened this morning about 8:00 a.m. officials are saying if you can avoid driving for the next little bit, please do so. j.f.k. also reopening this morning. flights again once moving. there's a lot of back log. we had all those delayed and cancelled flights. meanwhile, people are trying to big themselves out from the storm. here on long island, some areas received nearly a foot of snow. classes are cancelled, state employees stays home today. still a lot of clean-up to go with the storm. sarah, back to you. >> thanks very much for the update. stay warm. glad the snow has finally stopped. now on to how the snowstorm is impacting mass transportation, on the cnbc newsline, amtrak spokesman christina leeds.

>> we made decision to operate a modified snow schedule today on friday, january 3rd. you'll see reduced frequency particularly in the new england area. right now we're operating the modified schedule and seeing few dela delays. >> what are you seeing about traffic? are people using the trains or staying home? >> the decision to go to the reduced schedule is based on demand as well. >> what does a modified schedule mean? do you still go to as many destinations but with less frequency? >> it's basically going to be like a holiday schedule. we'll running just over 75% of what we had planned for today. so if you're planning on taking a noon train, if you were already booked on that noon

train, our reservation specialist has already contacted you and maybe you got moved to a 12:30 train. >> and i see in new york last night the nta was putting its rolling stock into tunnels overnight, the express tunnels in order to protect them from the weather. do you do a similar sort of thing? >> a big part of the storm is the preparation that we put into it. we operate a severe weather command center out of our national operation center and what we do is we bring team members from all of the various departments together. that way we can be prepared to respond to whatever the storm brings us. that includes having the appropriate staffing and diesel fueling and we can respond to whatever the storm brings us. >> for those folks who have

amtrak trips planned, what should people do about their schedule? >> we have a train tracker right online. we have a variety of smartphone apps or call 1-800-usa-rail. >> thank you, christina leeds. >> if you're a t-mobile customer, at&t is offering t-mobile customers up to $450 to switch services. it konls after john legere teased an announcement that they're likely to make after next week's conference. >> is it normal to have this kind of specific -- >> this does not seem normal. it's kind of unprecedented. i talked to someone at at&t just a few minutes ago about this.

it's interesting because john legere will probably bring out similar guns against at&t and the rest of the other big carriers. a lot of people expect he's going to offer a bounty for people to switch from those carriers. this is a water shed moment in wireless. >> will he be unveiling consumer electronics to drag people from at&t to t-mobile? >> i expect he'll have announcements about new phones on t-mobile. there are rumors out there about that, maybe sony will have something. but really this is more about the way that the wireless market has changed. it used to be the carriers had the lions share of the power. they could tell everybody in the market, hey, we want a special version of that razor, we want a special version of that droid. now samsung and apple have so much sway in the market that they can say we're going to give the same phone to everybody. you guys just have to deal with it. and, by the way, pay us for these loyal, valuable customers.

now the carriers are saying, okay, all the valuable customers have smartphones already, we need to compete to keep those customers and steal them from other carriers. >> i signed one of my friends up to at&t the other day. there are also two reasons why at&t is different. first of all, there is no contract. so you can -- >> t-mobile. >> sorry, with t-mobile there is no contract. can you actually take them more ea easy. they're low hanging fruit. and t-mobile is the target of takeover speculation for a number of angles. >> from sprint specifically. >> at&t has no contract plans. they would like people to switch to those. 200 of those $450 offered, if you switch to t-mobile and go to a no-contract plan. in other words, they don't have to subsidize you. they'll give you $200 up front not to have to subsidize you. >> it's all very confusing. verizon wireless customers still have the two-year locked in

contracts, don't they? >> everybody's switching for an option not to be subsidized but you have to pay more money up front the market's changing. >> coming up, boston is one of the hardest hit areas by the storm, two feet of snow. we'll talk to boston city council president to see how they're doing when we return. "squawk on the street" will be right back. in a garage. my point? you never know what kind of greatness can come out of an american garage. introducing the 2014 motor trend car of the year. the all new cadillac cts. ain't garages great? [ coughs ] i've got a big date, but my sinuses are acting up. it's time for advil cold and sinus. [ male announcer ] truth is that won't relieve all your symptoms.

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welcome back to "squawk on the street." shares of delta airlines are flying higher after the company reported better december traffic and passenger revenue numbers than the same time last year. shares of delta airlines have had a real tail wind gaining nearly 130% over the course of the past year. sara, they are still flying high in today's trading. >> dominic chu, thanks. let's go over to chicago, cme group, rick santelli with "the santelli exchange." what's on your mind this morning? >> cars and broken windows are on my mind.

that famous french economist that put forth the notion that breaking windows may have a near term effect but it really isn't a good thing. i think today watching the president of the national bureau of economic research on our air commenting on that old cash for clunkers program that was signed into law an enacted and put into place in the summer of 2009 really got me thinking. and one of the things james potter said, cash for clunkers did manage to get more people purchasing new cars. okay, i don't have a problem with that. but much independent research has been done since and here's another vision of how that all worked out. the program increased new vehicle sales by about .36 million applying at approximately 45% of the spending went to consumers who would have purchased a new vehicle anyway. our results suggest no gain in sales beyond 2009 and hence no meaningful stimulus to the

economy. but i think it's worse than that, okay? i understand that those were trying times, but to put a rubber stamp or seal of approval on this from the nber, to me it goes to show why so much research just lacks a bit of common sense. and i'll tell you why. thanks to the people at the national automobile dealers association, you can see on the screen that one of main effects that we should scone trait concs that used cars prices were moving higher and that was the cause of it. what did the program do? it continued to, in my opinion, hurt the people we don't want to hurt, that these programs were put in place to help because rich people, wealthy, aren't buying used cars. uf know w you know who you buying used cars. draw your own conclusions. anybody have a hammer out there? irony of the day, think about this. you have 52 scientists and

journalists on that russian flag vessel where they were just recently rescued, they were on the vessel to study climate change, global warming and melting ice. they get stuck in the ice, get rescued by the chinese who pollute the most and the australians come in to save the day using helicopters that use gas in a country known for promoting fossil fuel. think of the irony there! back to you. >> thank you very much, rick santelli. those of you making new year's resolutions to work out more, listen up. the international spinning sensation that tracks everything from your heart rate to how many calories you've burned, fly wheel will be on the show right after the break. [woman] ask me what it's like

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by this stage the turkey has been eaten, holiday cookies passed around and now it's time to face up to 2014. while many may put getting into shape on top of their new year's resolution, our next guest offers a work out many line up for year round. jay is the co-founder of fly wheel sports. for people don't know what fly

wheel is, explain what it is. >> fly wheel is a boutique indoor cycling studio. we have 25 locations across the country, one in dubai, and it is a high-energy, intense, fun workout that integrates a really, really great experience from an unbelievable instructor with some propriety technology that allows you to track your progress and if you want to, compete with people in the classroom. >> talk me through that. electronics that monitor your health are the cutting edge of technology in consumer electron, for many people, as we will see probably in vegas next week. >> absolutely. when we started fly wheel four years ago, we thought there was an opportunity to involve boutique fitness that didn't create overwhelming technological influence. so the fly wheel method has a monitor on the bike that tracks your progress opinion it tells you how fast you're going and create as points total based on how fast you're going and the resistance. you take that and it takes it

back to your own page on the internet so can you track your progress over time. but also, if you want to, you can compete with other people in the classroom. so two or, on some scoreboards the front of the room, it will show the people who have opted in to the challenge, and where they place against the other people. >> it's very social. i've done -- >> well, for a competitive person. >> for a competitive person like me. i've done it. i think it's a little exhausting. you go there, and everybody is biking with their buddies. you've really created kind of a community with this whole thing. >> absolutely. we call it social fitness. and everything we do is meant to create an experience not just in the classroom, but beyond it. so from the fact that you have to book your bikes for the week coming on sunday prior, so you're creating a schedule around your fitness versus trying to fit it in, to having wide-open public spaces and this competitive fun environment -- >> but the only question i have, how do you make sure it doesn't become one of the fitness fads? you know, we've gone through so many what's cool when it comes

to working out, the mega gyms, for instance. how do you make sure this isn't a fleeting moment that's popular right now? >> there's a few things this give us comfort. the first is indoor cycling or spinning has been around for a very, very long time and been very popular. the second is the integration of technology as simon was saying into a workout routine is something that is here to stay. >> i think it's very interesting that you describe it as a social activity, whereas my interpretation is that electronics are taking us to an individualistic view of fitness. i don't know if you are aware, but equinox, one of the main competitor, able to launch level 4, and that's a holistic approach using genomics or loads and loads of tests continuously, a high-session rate, and they will put you in touch with a nutritionist, kind of bring outside help in in a very individual way. and i think if you look at what google and apple are trying to do, it will probably be kind of the same. you're very different from that. >> absolutely. one of the guiding principles is

that the technology should enhance, but it shouldn't overwhelm. and only about half of the people who come in to flywheel opt into the competition. >> right. >> for the other people, they use it however they like. some don't use it at all, and others use it to track their progress, to create a spoke fitness program. but we never want the technology to be the focal point of the experience. in essence, this is a community-based, fun, personality-driven experience. >> before we let you go, what is the aim of the business? how fast are you growing? what is your end game as ceo? are you looking for an exit? are you looking to be bought? are you looking to partner? >> we love it. we've grown rapidly over four years. we want to keep growing. we'll open 12 studios this coming year. >> cruise ships, as well? >> yes. >> which is more successful? >> the first one in new york, 21st street, and also very, very successful in places like atlanta, seattle, chicago. >> good to see you. thank you very much. jay from flywheel. >> thank you. the girl may be on fire, but the relationship has burned out.

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keys is losing her role as creative director, after the company launched its long delayed blackberry 10 devices. alicia keys was hired by then ceo tore son hines. >> i wonder what she did as creative director? >> she did a number of public appearances. someone quipped, this girl just got fired. >> yeah, funny. it's a popular job, lady gaga, the creative director distinction at polaroid. it's basically just a posterchild. it's high-profile releases. i want to draw your attention to one stock in the news. general mills, of course, the cereal maker, announcing that it is no longer going to be using gmos in cheerios. the popular breakfast cereal. i've been working the phones on this story, talked to general mills about this, and i asked, does this mean you'll start doing this with other products? and they say, no. cheerios is sort of a specific example here. they say because mostly the oats

go into the cheerios, which don't usually come from genetically modified ingredients, it was easier to do. they say it's perfectly safe to have gmos in food, they're maintaining that position, so don't look for other cereals to have it. still, if you are a consumer group and you've been pushing against gmos, saying they're unhealthy, they cause diseases, this could be held as a big victory. watching the stock there. it's pretty flat, 49.38, but interesting to note here. i want to read to you a statement that i got from general mills on this question. the formula for original cheerios has not changed. they're making clear. we did make changes in sourcing in our plants, for example, to separate cane sugar from beet sugar, but cheerios remaining the great-tasting, wholesomely good cereal, a family favorite. would he have a family man here, david faber. >> -- honeynut. when you think about whole foods, asking for labelling on all gmos, talking about chipotle, asking its suppliers

to give it non-gmo related items. >> yeah. there will be a -- this is -- >> you know, jim cramer and i have talked about, he said, keep an eye on monsanto, very much involved -- >> health and fitness in the food chain will be -- >> started in europe. >> absolutely, no question. absolutely, no question. >> -- maintains it's still safe, for your children. the question is, will consumer groups grow loader? >> or will people just not buy it, which is what general mills is worried about. you don't have to be an advocate, you just choose not to. >> i like honey nut cheerios, as well. >> so do i. >> if you're just joining us, good morning, friday morning on cnbc. the big dig-out across the northeast. here's what you've missed if you're just tuning in. >> announcer: welcome to "squawk on the street." here's what's happened so far. >> this is sort of a perfect combination. you know, we see fireeye and

manneden complementary, network security products coming together, service security components coming from mandian. >> it's like being sucker punched in cyberspace. you need the products and the people with the expertise behind the products to respond to the complex attacks that we're dealing with. >> if you want to take your queue from the first day, okay, if that's what you want to do, stop being in stocks, all right? take the queue from the cd rate, which, by the way, the cd rates are unch'd for the five year. notice they're not targeting sprint. they're not targeting verizon. >> right. >> i think they're trying to take the steam out of what may be the hottest player right now. >> yeah. well, when they hate each other, it's good for consumers, and in this case, it may very well be. 450 bucks is not nothin'. [ bell sounds ] >> i think it's a lack of sophistication of travelers.

you should know if you're flying in the middle of a snowstorm, you're probably not going to be on time. you may not even get out of your driveway. from a retail standpoint, we exceeded industry and gained retail share across all four of our brands, and that's what matters really to us. ♪ the second day of the trading year and david faber is already breaking news. over to you. >> thank you very much, simon. you may recall earlier, shares of hertz on tuesday up after the company installed a poison pill that activates at 10% if any one buyer reaches that threshold, or 15% for a group. at the time as i reported, i had said that hertz was aware of an activist in its shares. however, at that point, i was not able to pinpoint the specific activist in question. there was some speculation. cnbc reporting some other name, as well as investors who do dabble in activism, who focus on

it, who might have owned the shares. i can tell you the activist in question that hertz has been reacting to, according to people close to the situation, is none other than that man right there, carl icahn. my trading sources tell me he's amassed as much as what may be a 30 million, 40 million share position in hertz. now, that is on swap. i want to make this clear to people. it would mean he doesn't need to necessarily file when he passed 5%. he does this often. in fact, you may recall when i first reported his ownership in dell sometime back, it was also done initially on swap. that can change, but it's a derivative transaction that allows him to buy without having -- or have that economic consequence of his ownership without having to file that ownership. but hertz sources familiar with the situation tell me is aware of mr. icahn's ownership. what is not completely clear at this point is his reaction to that enormous move up in the stock when the company put the

poison pill in, and whether, in fact, that has motivated him in some way to perhaps reduce his position or not move forward with what might be an activist campaign. what would be the key to that campaign? well, as i reported on tuesday, it would be focused on getting the company to spin off and separate out its equipment leasing business. that's a capital-intensive business, that a number of hertz investors believe would be better off shoring from the company, would create value in so doing, and then also allow the company to lever up its balance sheet to buy back a significant amount of stock, not just with the proceeds of any split of equipment leasing, but also because it would be able to leverage its balance sheet more, given the exit from the capital intensive business. so we will see what occurs from here, but wanted to try and at least get a little more meat on the bones, so to speak, in a story we watched this week. >> look at the stock. >> up sharply on tuesday and again today. again, mr. icahn is the activist in question, that hertz was

reacting to. i've called mr. icahn. he has not returned calls at this point. unclear whether he would comment regardless. on his ownership stake there. and his continued ownership, 30 to 40 million shares, again, is what i'm hearing from a number of different trading sources, is likely to be the overall size, but importantly, that's not all common shares owned by him, hence the lack of a filing. >> in layman's terms, can you say what hertz management is effectively saying in the poison pill and whether that is likely to satisfy icahn? is it the sort of thing, he will say, okay, i will wait for a year? >> well, in the pill, when they put it out -- this is, of course, what created a great deal of speculation, as you know, simon, they talked about specifically activity in their stock price at that time that they had noted. and they didn't give us a sense as to what moves they're going to make with regard to something a number of investors have spoken to the company about,

this split of equipment leasing. it's unclear to me, again, what icahn's next move will be. >> so he may not be satisfied with what what he's got? >> absolutely not. the company, itself, would not make that move if they didn't think it was certainly a strong potential for him to bring a fight. the less stock he owns, the less potent he might be in any proxy fight that could take place, although there are many investors, simon, believes the company is moving in that direction anyway, under the ceo, and would eventually do the split-off, and therefore, wonder why -- not just move down that road immediately. >> there's been a lot of optimism. the stock popping on the report of carl icahn's stake, but it's been outperforming the s&p 500, and the whole landscape has changed and positioned hertz pretty well? >> they bought dollar-thrifty, a huge amount of consolidation going on, some would say too much. there were various safeguards in

place, ensuring competition would flourish, and those have fallen to the wayside. it's a controversial industry. at the same time, suffering from a lack of demand in airports, and that is what may come back -- >> and this did cause a bit of weakness, i believe, late in the year. >> and some issues with the fleet costs, as well. >> yeah. good to have the travel and leisure editor with me, as well. >> yeah. >> the capital structure side -- >> hertz is number two in terms of car rental companies in -- >> no, to -- enterprise is number one. >> privately held, number one. >> thank you, david. >> you're welcome, simon. >> look at the pop. >> the stock is up, which, again, mr. icahn may have a pretty significant gain on his hands. that is something -- >> we'll look for the twitter feed. >> we'll update people as we get more. the first major winter storm of the year has delivered a significant amount of snow to say the least really across the midwe midwest, the great lakes and the northeast. one of the hardest-hit cities is boston. on the cnbc news line now is

boston city council president steven murphy. mr. murphy, welcome to the program. thank you for joining us. what is the present situation? >> the present situation is really a bit of good news. it was a light powdery snow. the temperature is 8 degrees, the wind chill is minus 15, which is cold. but the city of boston and the state of massachusetts ordered a parking ban in place yesterday and got parked cars off of street so that our 300 pieces of public works snow-removal equipment could get out and do the job. schools are closed, which is helpful, and state offices are closed. municipal offices have just essential personnel only. so there aren't a lot of people out on the streets impeding the plowing that's going on. >> it is, though, as you said -- i mean, it is exceptionally cold at the moment. what problems does that pose for the dig-out? >> well, the frostbite for

people that are out digging is a potential, especially elderly folks and children shouldn't be out today. or pets for that matter. this is the coldest snap of weather we've had here in boston since 2008. so it is bitterly cold. heavy, heavy winds coming out of the northeast right now. >> stevphen, i was reading your biography, you've made a reputation of yourself when it comes to public finance and economics. any sense of what this sort of pearlization of -- paralysis of boston costs a city like this, such a huge city? >> well, we budget $15 million per year into our snow-removal budget, our snow-removal account. some years we go beyond that, some years we're lucky enough to stay within it, or under it. an undertaking such as this, we've been out for about 24

hours now overnight, it costs between $3 million and $4 million to clear the streets here in boston. >> and when do you think you will be fully clear? what is the expectation on that? obviously, it has to come in phases and priorities. can you give us an idea of what people might be able to expect? >> late this afternoon, early evening, i would think. you know, the crews got a good head start on it, and they stayed with it through the night. and it was a light, powdery snow, so it's a little bit easier to move around and clear than some of our past blizzards. the one last february was a 24-inch, heavy, wet snow that took a little bit longer to clear. >> and just before we let you go, we discuss obviously, very often, the state of recovery, jobs and growth on this network. how would you sum up what you're seeing in the business community in boston? >> well, the governor of the commonwealth asked the businesses to remain closed today to aid the emergency

workers, clear the streets, and for the most part, people have heeded his warning. and if that's what you're asking, and i believe that's what you're asking -- >> actually, i was asking -- i was -- excuse me, i didn't explain myself very well. i was asking more broadly the state of the economic recovery in boston, the optimism, the job growth, where you think we are now as we come into the new year. >> well, boston has exceeded the nation, or kind of led the nation in the economic category because of the fact that we're home to medical area and a lot of -- a lot of biotech firms are here in boston. and we have a great tourism industry, which take as hit when we have a blizzard like this. >> sure. hey, it's -- >> we're doing well. >> it's good to talk to you, sir. thank you for joining us there. council member stephen murphy, the president of the city council in boston. >> thank you. the other big story, of course, this week, snapchat leak, which resulted in over

4.5 million user names and phone numbers being posted on the internet. today, snapchat says it will release an updated version of the app that will actually allow users to opt out of the find friends feature that was exploited by hackers on new year's eve. jon fortt joins us with more. boy, they've got a mess to clean up, don't they? >> they do. and it's interesting, snapchat's ceo evan spiegel was on the "today" show this morning, kind of trying to explain what was going on here, again, reassure users. not totally sure he struck the completely right tone. it was interesting how he talked about it. didn't seem to acknowledge that the hackers and security researchers had brought this to snapchat's attention earlier, didn't really address whether they could have fixed it if they had paid more attention. it's also interesting, it reminds me of an incident at facebook in mid-august, actually, palestinian security researcher was trying to tell facebook there's a bug where someone random can actually post to anyone's wall. and facebook ignored him until

he posted to mark zuckerberg's wall, and then they immediately responded and fixed the bug that day. there's a move out there where hackers are finding the vulnerabilities, trying to talk to companies and having trouble, until they do something very visible. >> the company should just hire -- they are hiring hackers. >> can we listen to the snapchat ceo on the "today" show. listen to this, guys. >> i believe at the time we thought we had done enough, but i think in a business like this, in a business that's moving so quickly, if you spend your time looking backwards, you're just going to kill yourself. >> am i right in saying he didn't actually apologize? >> no, he didn't, actually. and i personally, as a user, not of snapchat but of technology, think he's exactly wrong in that assessment. if they'd been looking backwards to begin with, they might have caught the bug. the problem was they were too busy focused forwards on maybe how to monetize or grow the app itself. maybe a little looking backyards would be a good idea. >> -- what we were saying 24

hours ago that they are young, energetic, and going places, and there's too much to play for. >> and they've done very well. so that's typical of this, but they're in rarefied company now. they've got to strike that balance between looking backward and defending themselves and looking forward and growing. >> and not apologizing, you know. jon fortt, good to have you here. after day one, stocks being down, stocks are picking up where they left off in 2013. the dow up 64 points as we speak. well into the green. which direction are we headed in 2014? more on that in a moment. and speaking of stocks, rick santelli, you're watching the markets today. >> oh, absolutely. every day the markets are not only fun, they can be profitable. but you need to have a good strategy. so we're going to talk to richard farr about his strategy and direction for gdp in 2014, what may help or hurt gdp, and maybe population and how that figures in to job growth. all at the bottom of the hour. ♪ 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 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 ♪

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[announcer] why not talk to someone who's sleeping on the most highly recommended bed in america? [woman] ask me about my tempur-pedic. [man] ask me how fast i fall asleep. [woman] ask me about staying asleep. [announcer] tempur-pedic owners are more satisfied than owners of any traditional mattress brand. tempur-pedic. the most highly recommended bed in america. save up to $300 on select mattresses during the tempur-pedic model closeout event. find a store at tempurpedic.com. looking at stocks, the dow and the sp s&p are bouncing back this morning following thursday's losses. we've got some fed speakers happening at the annual american economic association conference. how it will impaktd the markets in 2014? let's bring in jack with cio with nemo private bank and brian with first trust buyers. brian, looking to you in terms of the fed speak today, any surprising that could move the needle here on stocks and what's

pretty quiet friday trading day? >> you know, i suppose people could get worried about whether tapering is going to pick up or not. but i think it's pretty understood that the fed's going to taper. i expect $10 billion a month until they're done with this round of qe, and then the question will become -- but this isn't a question until later in the year, how do they unwind the quantitative easing that they've done? and if i look back over this past year, from may to december, we had all of the fears about tapering, the market kept making new high after new high after new high, finishing on a high, even after tapering. so i think 2014 is going to be the same. there's going to be a lot of talk about what the fed's doing, but the market is focused on profits and the economy, and both of those look pretty strong for 2014. >> well, jack, as brian alluded to, a strong finish for the markets in 2013. will it be able to sustain

itself? is there enough good news for this year? >> first of all, before i get started, sarah, i wanted to let you know, i now know why my bloomberg has been flickering for the last couple of days. but what i look forward to 2014, i do see, you know, relatively decent market. i do think brian is right. i think it's all predicated on revenues and earnings, and we've got profit margins that, you know, cyclical highs. so the question is, will the -- will the multiples -- p/e multiples, price to sales multiples, maintain themselves? will revenues and earnings, that tailwind, offset the headwind we see from interest rates moving from perhaps 3% where they are now on the 10-year to 3.5% sometime by midyear? and i do believe they will. i think that will ultimately end up with roughly a 7.5 return in the s&p this year. >> brian, can i take issue with what you said when you made your statement about how the market

reacts to tapering? >> sure. >> i would argue that 180 degrees around the other way. whenever we thought that they were about to taper, the market really was in some difficulty and chiefly, of course, coming out of the summer when ben bernanke indicated that he might taper by labor day. yes, we have a rally at the end of the year, because they've laid out a taper. but what they've laid out is a slow taper. there's no taper now. it's still $85 billion, and they're saying, we'll reduce it gradually over the course of the next year. and that's partly why the market has rallied. if they start accelerating that, and that is the fear, do you not think this market is going to fall? can you really say that a taper, a fast taper, is fully factored in here? >> you know, simon, you're right. that on a daily basis, or even a weekly basis, when there's some kind of fear about tapering or an accelerating of tapering hit the market, people sold. there's a knee-jerk reaction to all of this stuff. but when you look at the year as a whole, all of the talk, all of the fear, the actual tapering itself, through it all, the

stock market kept going higher and higher, and one of the key -- one of the key things is that interest rates went higher. we started this year with a 10-year about -- last year, with the 10-year about 1.5%. it ended at 3%, and the market was higher. that's what everybody says is their fear. >> but, brian, the simple fact is, that the most powerful central bank in the world has still slammed short-term interest rates to zero. it is still printing $85 billion a month, and pushing that into the economy. there is no taper. there has been no letup. you can talk about expectations, but they've got -- >> but, simon -- simon, there hasn't been any qe either. the federal reserve has boosted its balance sheet by over 30% a year for five years in a row. and the m-2 measure of money, this is what milton friedman told us to watch, has only grown 6% a year. so you can talk about qe all you want and all of the money that the fed is putting in, but the

money hasn't gotten to the economy. the banking system has not multiplied it. and, therefore, my view is, is that that's not what's driven the stock market, and, therefore, when they get rid of qe, they won't hurt the stock market. >> brian, hang on one second, i want to leave the taper talk aside. one thing we're not talking about, but perhaps should be, according to george shoros, is china. he wrote an interesting op-ed, saying the major uncertainty facing the world, is not the euro, not the united states, but the future direction of china, the growth model responsible for the rapid rise has run out of steam. jack, i want to pose that question to. is china going to have to be a concern here for u.s. investors? >> china is always a concern. and china, you know, grew its debt far in excess of its economic growth now for the last decade. and they're left with a huge amount of overbuilding a lot of bad debt. i do like the fact that last month that ipo of cenda, this public/private partnership perhaps moving some of this debt

off of public rolls was a step in the right direction. i do think china can still manage this debt load, but i do believe it is a concern, and one that's not only overhanging china, but probably overhanging the emerging markets sector in general, and that's something we have to keep a close eye on this year. >> all right. we're paying attention, and we saw shanghai drop again, the shanghai composite index. jack and brian, thank you so much for joining us. >> thank you. >> thank you. if you are a regular netflix user, you've probably seen some pretty specific recommendations on your screen as to what movies you might like. maybe it suggests emotional independence sports movies? or how about sentimental movies? set in europe in the 1970s. those are just some of the examples, but our real question is, how on earth is netflix coming up with those recommendations for you? and what does it mean for commerce moving forward? our next guest broke down all the data, and he'll explain how they're doing it in just a moment. aflac!

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if you're a user of netflix, have you wondered how they make the specific recommendations about what movies you like? are you the romantic chinese cry movie type? or the visually striking, goofy action and adventure type? the next is doug enter, and we welcome to the program alexa, a visiting scholar at berkeley. welcome to the program, alexis. thank you for joining us. >> thank you for having me. >> how are they doing it? >> they hired a bunch of people, oftentimes aspiring screenwriters, to go through and tag each and every movie and tv show in existence. and they tag them for all kinds of things you might imagine. how romantic they are, gory they are. even things you wouldn't expect like the level of plot resolution that you actually find, and then they run an algorithm over the top of the data to create all of the various genres.

>> you know, i read your article, it was great, alexis, really a tour de force through how netflix does this and what some of them are. 79,897 of these personalized genres, the question is, what sort of competitive advantage does it give netflix? >> it's really a good question. netflix likes to say the better they can prove to their subscribers, that they know them, they know what they want to watch next, the more likely they are to stick around. so they say these types of personalized genres, as they call them, the recommendations, actually increase subscriber participation, so they have 40 million people watching things and they want to keep the people and gain more. >> alexis, so it looks like some of the categories that are favorites for people out there are romantic movies set in europe in the '80s. how much of that reflects what netflix is actually doing, versus who's using netflix? it seems like gen xers who are looking for love, googly eyed,

are kind of the core net flix demographic. >> i think it's the logic of hollywood. hollywood likes to play on romance, they like dark things, thrillers. what netflix has done, and maybe the enduring competitive advantage going forward, is they've reverse engineered the logic of how hollywood makes movies and how they make content. now that netflix is moving into making new, original content -- you know, "house of cards," et cetera, they know what people want by breaking down this kind of data. there's a few other companies trying to do similar things, but netflix has been at this for seven years, and they've got all of the viewing data that they've accumulated over that time. >> so, alexis, we're sitting here, knowing that some class actions have been filed against facebook because the allegation is that facebook has been manipulating what people are saying in their posts and been selling that on to other people. how commercially powerful is what netflix knows about its customers as a result of the conversation that you've been having here?

because it's a type of qualitative assessment of the likes and dislikes, which arguably google, facebook and others may not have picked up as easily. is that a fair comment? >> it's two types of data. one is unobjectionable, breaking down hollywood. the second category, which is netflix mining of your personal viewing habiting and what you would like in content, that part is a little bit more complicated and gets into some of the slippery territory that i think google, facebook, and basically every other company that survives on data as a business has to deal with. and i think, you know, the key question is around netflix, how much do people care if you know what kind of movies they like? and it's kind of different than, you know, a facebook or a google, i think. >> and another interesting question that has to do with big data. can netflix, based on what it knows, figure out what the next surprise breakout movie is likely to be, and could they sell that kind of data to hollywood for people to figure out when to release lower-budget

films? >> i mean, i think netflix would rather use it themselves. the business model going forward for netflix is to say, hey, we can make our own content. we know, instead of being a tv network that has hundreds of shows in production, we can just produce five and know that each and every one of them is going to be a huge hit. >> well, it better produce it fast, i guess, because by the time it's made, it might not be hot anymore. >> yeah. if you look at the recent string of successes, "house of cards" top among them, i do think it shows that the data helps netflix deliver the content that people want to watch next. >> uhh, i think orange is the new black may disagree, but we'll have to leave it there. thank you. >> i picked one for you. mind-bending cult horror movies from the 1980s. that's yours, simon. >> probably not, but thank you. the end of the trading day in europe is up next. spain has good news. we'll be right back.

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let's have a look at how western europe is shutting up on this trading session. after yesterday's losses, a rebound. green for many of the nations. at the headline level, there's very bad news. lending in the private sector in the euro zone plunged again in november. that means you've had a contraction on the last two months of almost 5%. you've never really seen that before. that is a very bad omen moving forward. however, having said that,

individual country level, there's the good news. have a look at what's happening with spain, where you've had a record fall in the jobless today. they have very high jobless rates in spain, but 107,000 taken off the unseasonally adjusted levels and a surge in the bond markets. this may be an important tipping point to realizing europe can make it through this. the spanish bonds, as you can see, are rallying. yield, therefore, pushed down, to a low, below 4%. if you look at italy, you will also see that that yield is below 4%. it's a different move than you would expect in a more advanced nation that doesn't have problems, but nonetheless, it is important. at the stock level today, be aware that the ceo of remiquantro has quit. there's a major problem with drinks makers spirit makers, luxury good makers in china. he didn't crack it, and he's finally fallen on his sword. in the u.k., in retail, a huge success story on the other hand.

next, a retailer, announcing today its results will be significantly ahead of expectations. why? because next has mastered the internet, the online sales jumping 21% on where they were last year for the next directory. and you can see other retailers in the u.k. are also being dragged higher, sarah. >> some of the good-byes from european stocks spilling over here into the u.s. let's bring in bob pisani with a look at the big board. >> a much different day than yesterday, turning out to be a little bit of an anomaly. we have crude oil near a one-month low, and that's bringing up, of course, the airline stocks. a great day for them. looking at the airlines, so delta is up about 4%, 3% for some of the other airline stocks. we're about 3% on the 10-year. so slight creep-up, but not a lot. rate-sensitive name, the telecoms, utilities are under a little pressure. don't like what i'm seeing with the eem. put up the eem, the emerging

market etf, sort of the bogey everybody using for emerging markets. we're down about 4% in the last couple of days. this is the worst two-day losing streak we've seen since going back to may, and that's when all of the taper talk started. remember, at the federal reserve here. keep an eye on that one. slightly higher rates, though, not hurting housing. we're on a tear on housing. we've ended the year really well. the itb, which is the etf for housing, has been up seven of the last eight sessions. nice little gain for the homebuilders today. the 3-d printers, all up and down, depending on the news. all up. 3-d acquired general giant studios, and make models for toys. not only does 3-d have the physical systems, but they have the software to make the models for the toys. we're near new highs on most of the major market indices, so it's not surprising on individual stocks getting downgrades the last couple of days. here are stocks downgraded today, and a lot of them on valuations. for example, micron downgraded

but rbc on valuation. i would know, dram spot prices, as far as i can see, have been quietly moving to the upside. a number of the utilities were downgraded over at citi and bank of america, as well. guys, back to you. >> okay, thank you very much. for more on the markets, let's head back to chicago and rick santelli. rickster? >> thanks, simon. i'd like to welcome richard farr. happy new year, richard. >> happy new year to you, rick. >> listen, whenever i think of jobs or the unemployment rate, the first thing i think of is who are we counting as unemployed and who has dropped out, you know, labor force participation issues. the second thing i think about is richard farr and his research on population growth. can you put all of that together for me? >> i can. brian westburg, on the show a few minutes ago, and talked a great point, the fed growing the balance sheet by 30%, but m-2 money growth is growing at 6% a year, so if qe is working all

that much, why is it that money growth isn't growing at a faster rate? you have to put that into context. population growth last year according to the census bureau grew about 0.65%, one of the lowest on record in the past 100 years going back to, when, rick, 1936, great depression. so money growth is growing 10 times faster than population growth, and essentially tells us that a lot of money sloshing around with very little opportunities to grow into, and that's one of the reasons why we remain below potential growth on gdp, the forecast for next year is just 1.5%. >> well, let's stick with that topic, richard. i want to go there, as well. after we had the 4 handle on the last look at the third quarter gdp, everybody was pretty darn excited about that. of course, shortly, we're going to learn what the fourth quarter growth was. so many up ticked the 2014 forecasts? did you? and if you didn't, explain why. >> we did not, because of the 4.1% gdp in the third quarter,

1.7 of that was due to inventory build. so you net that out, you get a much lower gdp number. you know, a little better than 2% number. but, you know, 2.4. but it's not the greatest number ex-inventories. it's a healthy number, positive number. we won't take anything away from it, but it suggests to us ex-inventories, the economy is still growing at the roughly 2% rate, which is 180,000, 200,000 jobs a month. >> what's the biggest drag in terms of your forecast for closer to 1.5% to 2% gdp than maybe some of your peers? >> well, there's three factors that have pushed our model down recently. one is rising unemployment claims on a year-over-year basis. we show that has correlation to gdp. we've also got rising energy prices, gasoline prices are now up year over year, as well, and there's also population growth issues, as we just mentioned. >> listen, richard, we're coming

up on a hard break. what about affordable care? affordable care act taking a plus or minus on gdp, quickly? >> it's undetermined. it's probably -- it could be a positive for earnings, given that companies may reduce benefits to employees. >> thanks, richard. next time, we'll have longer. back to englewood and the new york stock exchange. >> all right, thank you, rick santelli. we want to catch up on the top headline of the hour of the day really, the mystery activist investor taking a stake in hertz revealed by our very own david faber. got the name. >> yeah, we do. in fact, we'd been working on this since tuesday when hertz unexpectedly late monday unveiled the poison pill activated at 10%. the activist it was reacting to, according to people close to the situation, is carl icahn, of course. the most notable activist out there sitting on roughly, what is it, almost $20 billion. of course, can take sizable stakes of the type. at the time, you may recall, we said they were reacting to an investor conceivably who could only take as much as $1 billion or more stake given the size of

the company in question, and what it would mean to get to 10%. as for mr. icahn is, my trading sources indicate he's taken between a 30 to $40 million share position in hertz. he's done that on swap, meaning he's used derivatives to mimic that size position, but has not needed to file, because he doesn't own the common stock outright. but nonetheless, hertz is, sources close to the situation, tell me aware of mr. icahn's stake, and, therefore, moved to put in that pill at 10%. what's unclear at this point is what mr. icahn plans to do. a number of investors in hertz had been pushing the company to consider a spin or carve-out of some kind of its equipment leasing business. there have been others who said, ooh, maybe you could actually merge it into uri, united rentals, which has interest in it, although the expectation is it would trade at a higher multiple and has a higher net operating loss. what the company chooses to do from here is unclear, and what mr. icahn may do from here is unclear. he's not returned calls for

comment. there are a number of other activist shareholders we've noted who own stock in hertz, but not nearly the size of mr. icahn. when you see a stock move like this, as it has this week, you wonder whether, in fact, some may be selling. at least, i do not believe, and my trading sources do not indicate, mr. icahn has been a seller, but that's something else people need to keep in mind, given the large percentage push. >> the other holder is dan loeb, not really an activist. >> yeah, loeb, you have to remember he gets in and out of things very quickly. for example, herbalife. i don't know what his intention is. certainly management's attention has been brought to bear as a result of not just mr. icahn but other potential activists who are all sort of focused on the same idea of creating value around some sort of the split-off of -- >> can we have a look at the three-month chart? that's the most compelling when you look at hertz. yes, it's up 13% in a week, since you got the poison pill announcement, but it's that

three-month chart that's really dramatic. there you go. again, 32%. >> and an opportunity, though, to buy the stock in the mid-20s after what had been sort of a not great quarter, simon, as i think you know better than i. >> yes, david, great to have you back, breaking news. i love it. >> thanks, simon. not exactly a december to remember with ford with auto sales coming in well below expectations. so is this just a blip on the radar for ford, or is there more trouble on the horizon? we'll talk about that in a moment. welcome back. how is everything? there's nothing like being your own boss! and my customers are really liking your flat rate shipping. fedex one rate. really makes my life easier. maybe a promotion is in order. good news. i got a new title. and a raise? management couldn't make that happen. [ male announcer ] introducing fedex one rate.

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responsibility. what's your policy? >>. >> it's an ugly day for auto sales. ford's december sale are up, but they've fallen short of what wall street was expecting. phil lebeau joins us from eric merkel, ford's own u.s. analyst. take it away, phil. >> let's bring in eric now from detroit, mitch micchigan. give me perspective in terms of what happened last month, because i'm hearing from some, it may have been payback for black friday, which was very strong, and others said we had storms keeping people out of showrooms. what do you blame the softer auto sales for the entire industry last month on? >> well, ultimately, i think the month was very good for the overall industry in december. we estimate that it was in the low 16 million vehicle range, which is a very healthy number. now, when you look at november, and then if you go back one

month further and look at october, we always see a little bit of a lumpiness in some of the monthly number, even though they are seasonally adjusted. but when you look at, say, a six-month -- a six-month movings average, we're in line with where the industry should be operating right now. >> but did storms keep people out of showrooms last month? i heard this on a number of sales calls already this morning. >> well, you know, i think it may have had some impact at the very end of the month, but i think it was very negligible. i think, again, you know, a mid -- or low 16 million vehicle s.a.r. is a very healthy month. >> truck sales. you guys saw strong for pickup trucks, f-series once again the bestselling vehicle in the united states. strong demand for cuvs and suvs. modest gas prices, is that pushing people away from who particularly might have gone with a car in the past, saying, you know what, maybe we'll go with an suv or cuv? >> it depends, because when you look at truck sales, trucks are cyclical, so they're in kind of

an upward swing right now. if you look at utility vehicles, what is so hot about utility vehicles? it's the small utility vehicles, many of which are based on compact car architectures. so i don't know if it's necessarily gas prices. there may be some influence there with the lower gas prices, but overall, the market is still moving towards small vehicles. >> eric, we're looking at a chart showing annual auto sales that are going to be probably coming in about 15.6 million for this year, the best since 2007. when you look at 2014, how optimistic are you that we will continue to see sales growth and the consumer will continue to come into the showroom? >> we think when we get out to next year, we have our guidance set about 16 to 17 million vehicles, but keep in mind, as we move into next year, the rate of -- or this year, i'm sorry, as we move throughout 2014 -- the rate of growth is going to slow just a bit. you're not going to see the same rate of growth that we saw in 2012, and perhaps not the same

rate of growth that we saw here this last year in 2013. >> eric merkel, the lead sales analyst for the ford motor company, joining us from detroit, on a day, simon and sarah, when the automakers posted what we would call chilly december auto sales, lower than many were expecting. back to you. >> and the down lower than it was, thank you very much, phil. we're up now 15 points. let's send it back to dom chu back at headquarters for a quick "market flash." >> thanks, simon. shares of herbalife, hlf. now drifting towards session lows on an announcement by the federal trade commission, ftc, holding a press conference on tuesday, january 7th, to talk about deceptive practices in the marketing of nutritional products and weight loss supplements. that will happen on tuesday. herbalife shares responding in kind, down to the session lows. also other companies, usna, and new skin, so other multilevel marketing companies also to the downside on this bit of news. again, ftc holding a press conference on tuesday to talk

about a program, at least, sarah, about deceptive practices when it comes to marketing of weight loss products. back over to you. >> and that news taking its toll on the stock. thanks, dom. coming up, what can you do to take control of your money this year? well, today's "squawk breakthrough" wants to help in a few easy steps, weight watchers meeting personal finance. we'll explain after a short break. 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. ally bank. your money needs an ally. over the pizza place on chestnut street the modest first floor bedroom in tallinn, estonia

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well, if taking control of your money is one of your resolution this is year, check out advice from one of the earlier squawk breakthrough guests in a newly titled book, fiercely titled, in fact, "financially fearless." welcome back the founder and ceo and the author alexa. so congratulations. >> thank you. >> we talked to you about a year ago. >> yeah. >> since then, you have grown into a fully fledged financial advisor. how is it different than a morgan stanley or jpmorgan? >> we wanted to make financial planning an accessible product for all of america, so you can pay about $500 a year at learnbest.com to connect you directly to your own dedicated ix pert, and you get unlimited financial advice. it's an accessible to any consumer. >> who is your market? >> what's amazing is the users range from 25 to 65. and in general, they tend to make over $75,000 individually. and their household incomes range all the way up to $500,000 or more. it's a pretty large audience. >> are you targeting women specifically? >> so it's mostly households.

so, you know, 70% of our audience coming in may be female. 30% male. but more than 60% is actually a household. >> did you say that you charge them $500 a year? >> yes, it's a subscription model. pay an up front fee, between $299 or $399 and then $19 a month for ongoing unlimited access to your own financial expert. >> if i wanted to google, churn up enough financial advice, these are not -- this is not tailor made advice, these are not particularly difficult financial situations you're talking to people about. >> so we actually give custom financial advice. yes, you can search through google, but if you're having a baby, buying a home, we do 360 degrees of advice from basic insurance needs to basic estate planning needs to asset allocation advice. so it's really a customized financial plan. >> if you think about it, simon, the cost is significantly lower than -- >> than the average financial planners -- >> but some of the people are

other thanning only $70,000 a year. >> which means they couldn't afford a typical financial planner which could be $2,000 to $5,000 a year, which if you're making $70,000, you can't necessarily afford. >> what's the biggest mistake people make now when it comes to the financial planning? i always feel it's so overwhelming. >> it is so overwhelming. the biggest mistake we find people make is just not getting access to an expert. they think they can go it their own, and you never know where the blind spots are. that's one of the great things of making it affordable, people can get access to advice. when you have less money, getting access to advice is more important, because you need to know where the next dollar should go. >> are you getting new questions about the affordable health care act? >> a ton of questions. >> are people confused about this still? >> i think in general, people are confused about their money, but particularly with the new health care legislation. >> all right, alexa, congrats on the in you book. >> thank you. >> thank you for coming in. like many other places across the country, the economic recovery in vegas has been tepid at best, and believe it or not,

one of sin city's biggest problems has been getting young people back to visit. we'll tell you why, next.

vegas is a luxury destination for young people

across the country -- or it used to be. one of sin city's big problems these days is trying to figure out how to bring in the young gambler and to get them to spend money. jane wells is live in vegas with more on that. jane, over to you. >> hey, simon, i'm thinking i'd like to jump a fountain in a motorcycle. google that, kids. slots. this is what we're really talking about, accounting for about 80% of profits in gaming revenues in las vegas. here's the problem. slots were down in 2013 across the strip. the problem, deutsche bank says young gamers are not inclined to play slots, so the challenge here is to make those games more interactive, draw them in. instead, millennials like to spend a lot of money on other things, like the clubs. but credit suisse letters of 2014 is the year clubs reach a saturation point in las vegas. john unwan worries about that, too. he's trying to reinvent the club with the rose rabbit lie, aback to old vegas, dinner, and dancing.

>> i describe it as a mashup of club babaloo, the cocoa cabana in new york and the tropic in vegas. >> reporter: and they'll have a program-sharing thing. cosmopolitan, owned by deutsche bank, which took it over when the developer defaulted, losing money, but less money. will eventually will be sold. who might by? long odds, mgm resorts, maybe, because it surrounds the property. but jim mur, the ceo says, not particularly interested right now. anything for the right price. he's still trying to deleverage after building city center. listen to this, quote, i would never make an acquisition that's leveraging, and that tells you more about where las vegas is now compared to five years ago. back to you. >> did i hear you say, though, going to reinvent the dinner dance? i did like a good dinner dance back in the day.

>> reporter: oh, so fun. it's really -- it's that old brat pack but with a modern twist. we'll have to see if it works. >> love it. jane wells, live there in vegas. and that basically brings us to the end of the "squawk on the street" program for this friday, and for the week. >> it's been good to be with you, simon. >> oh, yes, sarah, thank you so much. >> all right. that's all for "squawk on the street." >> as we hit noontime on the east coast, let's get over to the "halftime report." >> thanks so much. first half now in the books and here are the highlights so far. >> local network, security firm, fireeye acquiring the end point mandia. >> it's like being sucker punched. >> the u.s. economy is healing. we're beginning to see real signs of traction. >> essentially, the value to picking stocks, or sectors, or industries should go up a lot.