Transcripts For CNBC Squawk On The Street 20131209

The jobs number. The nikkei is now up 50 for the year. That is the best since 1972. Our road map begins with momentum from fridays jobs numbers. Markets looking to extend their momentums today after the dow and the s p turn in their first jump since a month ago. American Airlines Begins trading today after they blocked the merger of american and us airways. Mcdonalds samestores sales. If you are attempting to travel for business, were going to get you updated on the fallout from the big Cross Country winter storm as it moves out of the northeast. First up, stocks hoping to continue their upward momentum from fridays jobs. A 198point jump in the dow sent the blue chips up above 16,000. They saw their weekly winning streaks snapped at 8. We came within. 75 of a point on the s p of making it nine straight weeks up in a row. We havent done it since 04. Missed it by that much. Lack of bad news. We saw friday the beginning of what a lot of people are thinking, wait a second. Maybe the transition to a new economy, where the Federal Reserve is not playing that much of a role, can happen. Thats what bernanke told us what could happen. It would be amazing as a swan song if it does happen speaking of the fed, front page of the business sentence, the first sentence of ben apple balms fed piece. Federal reserve officials are in no hurry to retreat. Were in a weird moment here. When i looked at the pan aklee of knees, not a lot of bad. Not a lot of land mines. We had this conversation and promptly went down for a few days. True but the difference might be that the news flow is very positive this morning. It is indicative of the year. Sisco buys a company, u. S. Air. No one is thinking they will do that. Here is a stock thats been stuck at 33. The other one is stuck, period. Then, we have gilead and this is like apple with china mobile. This is the moment in time that people think, thats new. They create reasons to buy stocks. I was on the phone with somebody who was very big in p. C. S. This has really accelerated. P. C. S . Yes. Thats the reasoning behind the intel upgrade. Western digital, take a look at where that stock has been. My kr micron for a while. The banks are challenged because it looks like jpmorgan is trying to hire really smart people that may have influence in the United States, no. China. I forgot how it is done. Are they supposed to people that have just fell off the turnip truck . Welleducated people that are in the communist party or people who cant do well and fail. A fair point. What a story in the times over the weekend. Duff a problem with the linear relationship between those hires and business . Im still stuck upon the idea that when i got into business on wall street, it is kind of like when you apply to college. I remember when i applied to college, i said, you mean to tell me that 50 of the people that get in, their parents went here. Thats outrageous. Well, you know, what are you going to do, sue them . Apparently, you can. Here we are talking about jpmorgan and yet another potential problem. Your point broadly, the jobs picture looks a little brighter. We are having persistently low inflation, which is worry some in its own right. Go by clorox, the drugs. Another camp said, go by parker hannafin. The world is accelerated. Both want to put money to work. Give me gilead. Give me sysco, the right sysco. I think that inga is going to pull one out. Bet against mcinner any, y, it mistake. U. S. Air, more planes we bought because the Balance Sheets of the airlines are so slow. Speaking of airlines, lets move to the news from this morning. We have been awaiting us airways and American Airlines will clothes their merger today. American will emerge from bankruptcy. The deal was denied by the supreme court. The Company Begins trading this morning as American Airlines listing on the nad dabbing under the dicker symbol aal. Doug parker talking about what it means. We have to provide a return to our investors. The last 10, 11 years are improving that airlines that cant do that are allowed to grow and expand. We expect to produce a profit that will provide a nice return for our investors. Thats what they expect and thats what we plan to deliver. Anybody who is in the equity of the failed American Airlines has seen an incredible return. Anybody who has bought the debt has seen a great return. 72 is being owned by the debt holders of american. You have an equity or recovery value on your equity here. An important thing to keep in mind, you are going to be delivering equity to an awful lot of debt holders who typically dont own equity and will be sellers of that and some workers. So look out. There has been a little bit of concern about a lot of selling pressure here in the early days as you get the equity. You are a debt holder and you sell it, because thats not what you do for a living. Aside from all the integration risks that you see carriers struggle with again and again. I want to buy this. It is buyable because the company is good. I was so reassured that doug parker said the race wont go up, david. Even though there is tremendous con s consolidatio consolidation. Isnt it great . They are going to consolidate themselves. He will tell you if he is going to move rates up sharply. I said to myself, you know what, it is so good for the consumer. He told us that. Irreparable injury is what the critics said about the deal. We are trying to get this thing to go to the supreme court. It has been said that this year, it hasnt been the Silicon Valley stock purchase that was the big winner. It was buying an airline in severe distress that made you the most money. So many dreams came true. I buy fannie mae. It made money, riteaid, an unbelievable story. Sprint, an amazing story. Sirius satellite, you are not supposed to make money this way. In the singlepriced stocks. Fannie and freddie you will see. Distressed hedge funds that bought the debt of American Airlines. That was a smart move. 1 billion in synergy is what they are sticking with for 2013. You think they dont just go up because of the Yellen Bernanke conspiracy. I think it has gone up because of fundamentals. American got 72 of the combined company delivered to its holders. This debt equity and otherwise. Well see at carls point. You and i at airlines and continental, not the easiest at all. The story this morning about the guy that woke up in houston on a united jet, woke up in the plane, locked in the plane and had to call his girlfriend to say, get the airline to get me out of here. He was not the pilot. He was not the pilot. It wasnt the pilot. They never got him. Not in the terminal. Those cost so much money. In the meantime, mcdonalds is out with its same story sales figures for november. 5 led by 1. 9 in europe. In the states, down. 8. Hurt by what mcdonalds is calling ongoing competitive activity. Sales in the Asian Pacific also down. That persistent weakness in the states is making some wonder if this is no the a macro issue, if this is a perception, a share issue. When i pull up the wendys ceo, inventiveness, trying to come up with new things all the time, keeping the menu fresh, i dont feel that with mcdonalds. I know you visited the l laboratory. There is a lot of design reinvention. The biggest complaint keeps coming back to the menu. They are under severe pressure when it comes to the discussion over a living wage, a minimum wage. Their competitors, whether it is a pretzel hamburger at wendys or a doritos taco at taco bell, they have not made noise with new products. And there was a trickle about the down fall of diet soda. People arent buying soda with the same lackrity. I stopped. I have never been a big soda drinker. So i cant connect it to that. As for fast food, what about burger king . It is okay. I like wendys more. You do . I see a turn in jack in the box over qudoba. I see panera doing a bit of a turn around. Doing very well. Del frisco coming up. A little steak for breakfast. Never hurt. The thing about mcdonalds, in the long run, it has been correlated with employment. You have a job to go to, you might stop and get a cup of coffee. If employment doesnt improve, you would hope at least that begins to show up in some. Starbucks when they are doing plus seven or plus eight, they had some card. It went like that. The formulas that are really strong are working very, very well. Darton not working. There, you have a challenge to management. The ones that are working are percolating higher. The Restaurant Group has been very good away from mcdonalds. A brief mention of sysco, the food company. A huge 65 billion in sales is what they are going to have. They are paying about ten times u. S. Foods trailing adjusted ebitda, 820 million before synergies. Take a look at that move. It is not a merger monday. We have seen so few deals. So often, it seems this is the reaction from investors. They will end up owning, kohlberg, kkr, they will end up owning 13 of the combined income. We should dissting wish sysco or crisco if you want to call them something equally as pejorative. This company has done nothing. They step up to the plate. Look what happens. There have been very few deals. When you get a deal, it is spectacular. They are moving more toward organic food, doing a lot of the right things, stock goes higher. They are making up almost the entire Purchase Price in the accretion to the overall value. You should become an investment banker. This also is a way to get an exit, although i dont know, for the private equity firms so far. If they could just raise prices by. 1 . It is very easy to see this deal. Oh, a sysco truck, how did we get by that . Or a u. S. Food truck. Maybe this leads to fewer trucks at the togo rack. If you have to repaint a lot of the trucks, that could be extra cost. Otherwise, i am raise sysco right now. Well get an update on this crazy weather heading toward the northeast. Former amr chairman and ceo, donald carty will offer his input on the merger from the newest airline. A lot more squawk on the street in a moment. [ male announcer ] this store knows how to handle a saturday crowd. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. What a game at lincoln financial field yesterday, 8 inches of snow as the eagles do fly and beat detroit. Thats my picture. This was the picture that jim was tweeted from his seat yesterday. I cant see sean. You dont have to worry about it. Thats First Quarter activity. The nfl stops for nothing. Sean mccoy, 217 yards rushing, breaking a Team Franchise record, a record set in 49. One of the great things was his interview after. He said, i want to thank steve for putting that number up but records are made to be broken. He is a fabulous guy. It is fun to play in snow like that. The eagles have the fewest soft tissue injuries of any team. They had no one on injury. They have strength and conditioning. Navy seal. Never talk about plan. I saw mccoy in the summer. The practice ends and he is not quitting. He says, no, i want more practice. The punishing his body has taken. They got rid of andy reids taco tuesday and fast food friday. They were doing snow angels. Sorry, brent sellic, you got denied that touchdown. Speaking of the snow, the east coast is getting slammed by this snowy icy mix. A travel nightmare. More than 1,000 flights within, into or out of the u. S. Have been canceled today, according to flight aware. Mike seidel is in leesburg, virginia, with the latest on the storm. Good morning to you, mike. Reporter good morning, carl. Out here, we are dealing with subfreezing temperatures, right near freezing. A lot of work to try to clean the ice off. Thats too bad. It looked like it was going to be a good live shot. The snow is coming this way. I think we are going to start getting some snow in the city here midmorning tomorrow. I saw total flights canceled, 2800 canceled as of sunday evening. Three deaths in dallas over the past few days. It has been rough. It was towering on i95 yesterday. It was closed at one point, just so many accidents. People were just. I know we have that here tonight. That was no way you could use cars. You need an atv. With the market, cramer is here to help you get off to a fast start. We will get his mad dash after the break. One more look that futures. We have three on today. 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The spread between what you are getting in the United States, west texas and overseas, valero natural, that Deutsche Bank upgreats them. People have been talking about this trade for weeks and weeks. Thats a big move. Whats behind that move and why suddenly is everybody getting upward here . Then, cushing got bad again. They cant export enough. The prices are plunging because there is such a bottleneck. I think the bottleneck will be alleviated. I think they recognize you are not early in the move. The big stocks like eog that have been down and down, i would rather bet on them. Than the refiners led by valero . It is too late. They are all upgrading now. It has been such a obvious trade. The quarter is going to be fantastic. This was down five. The great days are over. Well, thats not what you expect of an executive to say . No. He said the free money. The free money days are over. Memo to ceos all over the country. If you mimic mark papa and tell the truth, your stock gets hit. Free money, that may be true. Get it now while you still can. Take the free money. Thats what i have learned. Lets go from there to there. This is very interesting. We talked about sysco. Whitewave is the company thats the best milk. They make the best almond milk, the most popular. They make soy, moving into some more organics. This is the opposite of the diet soda move. Greg ingel is doing this one, a huge Peyton Manning fan. He wanted me to wear a Peyton Manning jersey on there. I was trying to say the nfl prohibits it. I just didnt want to wear it. Why would you . Just to please everybody. Anybody in jersey had a 7 and a 9 combined, it turned out to be false. You like this story. I love hain and i love whitewave. These are dealers to the whole foods, fairways, sprouts, fresh markets. Safeway and kroger. Natural foods is a big theme. This is fresh. I switched from soy to almond. I think almond is too sweet. Im switching back to soy. Do you use real milk . Yes. Are you out of your mind . Cow milk. Plantbased, man, plantbased, p. B. The opening bell is a few minutes away. We have a lot more sidewalk on t squawk on the street coming back after this. [ male announcer ] what if a Small Company became big business overnight . Like, really big. Then expanded . Or their new product tanked . Or not . What if they embrace new technology instead . Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From Td Ameritrade. You are watching cnbc squawk on the street. The opening bell set to ring within the minute or so. A lot going on as we talk about some of the things that are going right, some of the disappearing reasons to be bearish. Last week, it seemed like 1800 was going to be the battleground. We may clear some of that. The only reason why you might want to be bearish, it does feel so bullish there might be something lurking. You have to be careful between now and christmas. A lot of the lions shares come in the latter half of the month. You will see what it looks like here today. The nikkei, up 50 . Here at the exchange, Security Company celebrating their spinoff from ingersollrand. This is a really amazing time. When you break up, what happens . Good things. You shrink to grow. Ingersollrand shrunk to grow. Celebrating the merger of m amr and us airways grew. It is a big win for them. They have a big loss tonight coming. Dallas. The cowboys. Cowboys versus the bears. I like the bears tonight. At home against dallas. Very focused. He is very focused on his eagles. Lets just talk about monday night football. When you spend the day in the blizzard, i dont know what it has done to you. We were pumped, very pumped. David, i know you are going to look closer at sysco. Syy. It is the deal of the morning. Some morning, we dont have many others to talk about. 3. 5 billion in equity. Is what they are paying, about ten times the trailing 12month ebitda. They are also taking on 4. 7 billion of syscos debt. They can refinance that. We will talk more about it in a few moments. That and well couple that with a discussion of logic. Acti activism has replaced mna. Share holders love it. They are talking about 600 million in cost synergy over time, over three to four years. Wow, that is incredible. Thats all i can say. It has added well more in market cap than what they are paying in equity for the company. Extraordinary move. Kraft gets this upgrade over Morgan Stanley. They see some good things coming out of productivity and restructuring. Everything they do is lucky. They worked. Should they have worked as well. Some of these stocks have done so well in that Consumer Products group. It has people do this. The economy is never going to do better. They bought kraft, because it is staples. I no longer buy velveeta. Thats because these are milkbased products and apparently you are all about p. B. Velveeta is not milkbased. Cockroaches and velveeta are both alive. I didnt choose a real cheese product. Cheese whiz. You get that in cheesesteak. Velveeta is remarkable product. It has been able to withstand pretty much anything. You are going to like this one, jim. Teen retailer, Abercrombie Fitch has struck a new employment agreement with ceo, michael jeffries. I am going to buy a lot of stuff and return it immediately, ruin their quarter. It takes effect when the current one expires in february. Amore simplified performancebased structure. Jeffries has come under fire for comments made about the customers and hanlg fund and cage capital which called for his rest resignation. The wall of shame meant nothing to this company. Maybe he is making the performance based on i havent seen the employment agreement. Dont come into our store unless you are gorgeous. You like that kind of thing . Maybe it paves the way. That group is challenged. And you want to see this man i want good for everyone, dalai lama and me. When i think of the dalai lama, i think of you. China thinks of the dalai lama and me. They are not too crazy about the little guy. I find him a man of peace. Want to do a quick apple check, story. I am not sure where it was originally sourced. The idea china mobile will start taking their preorders on thursday, the Worlds Largest wireless service. 700 million subs and apple is up, i think, almost a percentage. It did get thrown back. There are a lot of chartists saying the stock has a lot of work to do at these levels. It was a website that takes orders. I continue to think it is an apple holiday season. There is resistance here. It has been straight up and consolidating. Carl icahn was no longer agitating. I think people felt not agitated. I say not agitated. He made a big deal of money. He did come way down. It is not binding for a 50 billion buyback that would commence an end with the fiscal year that ends in september of 2014. I am hoping he says, you know what, guys, the stock has gone up so much, dont use your cash. He kind of says, you know what, we have won. Use your cash wisely. Stock comes in, buy if. Dont just pay up. For a company that generates 50 billion or perhaps more in free cash each year, you can just keep doing that. True. That really affecting your overall cash pile. It has been a winner. I still think it is inexpensive. Lets go back to mna and stocks. We mentioned sysco. We are talking about the Food Distribution company, doing a deal for u. S. Foods. It is 3 billion in stock they are parting with. Half billion in cash. 8. 2 when you include that. One would assume they will refinance at a lower rate. U. S. Food shareholders will include kkr and clayton dulere. Nice way for them to exit over time by selling then sysco shares. By the way, what a benefit. Look at that. Adding more in market cap than it will be paying in equity for the deal itself. Annual s annual s annual senorgy, 6 million. You get 65 billion in annual revenues. These are tiny margins. They see combined cash flows of 2 billion. There is another example of a deal being richly rewarded by shareholders. We see so little mna. Why is that . One reason may be activism. We talk so often about activism as a gentle trigger for mna. What i hear more often is activism can be acting as a break on merger and acquisition activity. It would open them up to criticism when they do a deal that is not wellliked. The timeline on their potential job could be even shorter. They dont get the chance to make the big money. In some ways, it is acting on a break. Some would say this morning, hologic, there is a company that did a lot of deals. Bad ones. Carl icahn came in and buys 12. 5 of the company and says, hey, you guys stink. Make something happen. They had a ceo search underway. They appointed a new ceo. Icahn had nothing to do with that. He spoke with steven mcmillan. A lot of people are very high on. He spoke with him over the weekend. He did get two board seats. He comes away with a new ceo. He had nothing to do with that. He is well thought of. For a company that did deals that were not generally looked upon favorably by the shareholder base. Stocks suffered. They got rid of one ceo and brought in another old ceo who had a short tenure. They brought in this guy, two director positions, icahn. He hasnt been fighting on everything. You dont need to fight all the time. He is a lover, not a fighter, on these deals. I think hologic is the primary example of a company that overpaid and overpaid. It used to have the best technology in the world. It was an investor of business and daily stocks. I didnt know it had taken this long for them to change. They used to be in this equipment. Overall, very little m a and perhaps part because of fears of ceos like carl icahn saying, you have done terrible deals, get out. We have two examples. Thanks, david. The dow, not too much change. The s p at 1808. Lets get to pisani on the floor. The major indices are not moving but some of the higher sectors, gold miners, biotechs, housing stocks on the up side. Financials are doing well ahead of the goldman sax conference. That starts tomorrow. Over the weekend, everybody is talking about the theme for 2014. It is about evenly divided. Some are going to say how the fed managing the Interest Rate scenario. A lot of other people were into the camp of a slow, gradual, global, synchronous explosion. Here are the factors. Three points, four points people are bringing out over the weekend. The Global Manufacturing numbers are clearly getting better. The baltic dry index, at a twoyear high. Did you see over the weekend, the World Trade Organization did something. They actually agreed to a procedure to smooth customs procedures. Thats apparently the biggest thing they have ever done. They have been around for almost 20 years. There is talk they might have a pacific rim deal trade going in the next couple of months. Congress is near a budget deal. Thats going to soften the effects of a sequester. Wage inflation, still nowhere to be found. The yield curve escaping. Thats been helping the banks. More money is flowing into equities. We dont have a great rotation but maybe it is a minirotation thats going on. I think these are modestly positive signs for the Global Economy. Speaking of the banks, goldman sax is about to start one of the big financial conferences of the year, the Financial Services conference. Tomorrow and wednesday. Tomorrow morning, well hear from wells fargo, Morgan Stanley, bank of america, pnc and suntrust. Thats just in the morning. They are likely to provide guidance and some indication of what they think their business is going to be like in 2014. Those will likely be stock movers. On mcdonalds, their same store sales in the u. S. , a disappointment. Japan was a little bit better. Europe was a little bit better. The key takeaway, very low expectations for mcdonalds. Maybe a good entry point. Look at mcdonalds, it hasnt done anything, not nothing but it is up 8 or 9 . Dramatically underperformed all of its competitors. Wendys up 80 , chipotle, burger king and even yum brands, with all the problems they have had in china. Never great to argue relative evaluation as the primary reason to get in but at this point, that seems to be the main argument. David, back to you. Now, lets get back to rick santelli. Well, Interest Rates arent up today but they are close to their highest levels due to the good report on friday due to employment. If you look at a twoday chart, you could see the boundaries. We had a spike up to the. 292 area. That is something you want to watch. Maybe it is more important on the retrace, on the bottom. 292 is on the significant level. Thats when the market has started to flex its muscles. You could clearly see we are hovering at the highest levels since midseptember but close to extending that. If we look at fives to tens on a wider frame, the curve has stopped steepening a bit. This spread is at 136. Its high was 143. It is still very close. You want to pay close attention. Dollar yen. If there is one country who is really, really trying to weaken the currency, we will see how it works out. Look at it first. The dollar, open the chart up longterm. You can see we are hovering very, very close if we break out to these may 17th levels to the highest dollar versus yen in five years. The pound, the king of europe at this point. That currency versus the dollar is getting very close to 164. As you see on the daily. Open that chart up. We are not far away from levels december 3rd. Just a little anybonib stickingn that chart. We have supply this week in the form of threes, tens and 30s. It is always that same old argument. Are higher rates going to give us the same crowd. We will see starting tomorrow. Carl, back to you. Rick, thank you very much. Facebook said to be considering something new. We are talking about the company adding a sympathize button. Whats that all about. Stick around to find out. Also ahead, the car dealership responsible for selling the first tesla model s purchased with bitcoin. Squawk on the street will be right back. The world is changing faster than ever, creating new opportunities for those who stand ready to seize them. In a time when the biggest risk is playing it safe, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, our flexible, collaborative approach helps forwardlooking companies not only run better, but run different. To give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because now more than ever, the future belongs to those who challenge the present. Yep. Got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. So i knit until it was full. Youd be crazy not to. Is that nana . [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. Where does the United States get most of its energy . Is it africa . The middle east . Canada . Or the u. S. . The answer is. The u. S. Most of Americas Energy comes from right here at home. Take the energy quiz. Energy lives here. Take the energy quiz. Stick with innovation. Stick with power. Stick with technology. Get the new flexcare platinum from Philips Sonicare and save now. Philips sonicare. Welcome back to squawk on the street. Im sharon epperson. Natural gas, the best performing commodity today, a surge to a sixmonth high on the heating demand incurred from the icy wintry weather we are seeing in new york across much of the northeast and the country. We are looking at a mixed picture in oil prices. Both are lower but crude proved more significantly. We had german production numbers that were lackluster. Also, we are seeing the premium of brent to wti come in significantly from where it was a week and a half ago or so. When you look at the commitment of traders reports, it does look like people are trimming their net long positions in wti, though we have seen gains in recent days. Still below the moving average. Gold prices are Holding Steady here, around 1,235 an ounce. The market will be watching that very carefully. They are anticipating what will be done at the fomc meeting next week. Facebook is reportedly toying with the idea of adding a sympathize button as an alternative for users tagging their statuses with negative emotions. Give them a hand. What other buttons should facebook be considering . Tweet us as squawkstreet. Well get your responses later in the morning. It does bring to mind the moment where you want to tell someone, i saw your post, i feel for you but putting a like on that is awkward. Another example of this company trying to react to what the users want. It is a very fine company. This is a button. Like just didnt fit a lot of scenarios. Sympathize does. Maybe you could be something on the negative side. We are going to find out whats going on. Alliance data, a lot of people wrote this company off. Very exciting times right now. It is going to get more exciting when dallas takes the field. When we come back, a lot at steak for the banks. One day for regulators vote. We will talk to harvey pitt in a moment. [ engine revs ] mccooey [ santa ] ho, ho, ho, ho [ male announcer ] get the allnew 2014 cla250 starting at just 29,900. You can fill that box and pay one flat rate. I didnt know the coal thing was real. Its very real. David rivera. Rivera, david. [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. The day building a play set begins with a surprise twinge of back pain. And a choice. Take up to 4 advil in a day or 2 aleve for all day relief. [ male announcer ] thats handy. [ male announcer ] 1. 21 gigawatts. Today, thats easy. Ge is revolutionizing power. Supercharging turbines with advanced hardware and innovative software. Using data predictively to help power entire cities. So the turbines of today. Will power us all. Into the future. Back to squawk on the street. An alltime closing high for s p the merger between us airways and American Airlines officially closes today making the new American Airlines the Largest Airline in the world. The moment banks are worries about. Tomorrow, regular ltors will vo to approve the volcker rule. Harvey pitt is here to tell us what that means for the banks. The market stocks are looking to extend fridays gains. Lets bring it chad and dan. Good monday morning. Good morning. Dan what do you think about where we are and where we may be headed . The bias still has to be to the up side. The fed meeting is a bit of a nearterm hiccup. The secular outlook for stocks over the next 1218 months, you still have to think is to the upside. The threats that are being detailed are no different than what we have seen over the last 18 months. Friday marked the beginning of a sentiment shift where people finally said the taper will be a good thing. It was sort of a slip camp on that before friday. Now, coming into today, thomas from jpmorgan saying this is a good thing. Stocks will rocket before this happens. Do you share that view . As the economy starts to say, we are in this selfsustaining recovery. We do believe that market multiples are fairly valued at this point. You have to start to see the economy increase in regard to the growth trajectory as well as on the earnings side. Earnings have not been as robust as everyone expects them to be. We would be mod estly biased towards equities and stay more bearish on bonds at this point. A lot of the bullish arguments for next year center around top line growth coming back. Are you in that camp . To some degree, i am. As long as you brought that up, i want to jump off something that was brought up, the market multiple. It seems to be the biggest boon of contention among bullish and bearish clients. The point that was made about how the s p is a fair value is an entirely valid one. We have to remember that an average multiple by definition means that some of the time you are above it and some of the times you are below it. It doesnt mean you trade at average multiples. I think we are in a period of time where the multiples are expanding and im not sure just because we achieved fair value, that means the multiple expansion has to stop. Where i think i may differ with dan is that the Federal Reserve has been extremely accommodative. It has really pushed multiple expansion with lack of economic improvement as well as earnings growth. When you look at Revenue Growth as well, it has been lackluster. As the bed pivots towards more of a less accommodative role, the multiples are going to be tougher to come by. You are not going to get that huge expansion. Are you going to get it on the earnings . Im not so sure you are. Operating margins, historic highs. You are not going to get it from leverage. What we really need to see happening to get this market to the next level where we are in a bull market, you are going to need improvement within the income data and more important, you are going to need credit growth. That doesnt mean we are going into hebea bear market. That doesnt necessarily mean it has to be that terrible. Fair market range, between 14 market multiple and a 17 market multiple. You are not in a bubble territory by any means. When you think about the one place in equities where money has been coming out of in the next few months, you probably have a take on this. Your income funds, utilities, some of the high dividends payers, thats a cycle we are not going to see. We have to remember that higher Interest Rates have made utilities and the socalled bond equivalent equities less attractive than is the case. Lets not pretend that the yield on the tenyear is 5 . It is 2. 8, 2. 9 . That still suggests that equities are modestly less attractive. It is not significantly less attractive. Dan, the times today says the fed is in no hurry to taper. Are you at the zero percent chance of a taper at this december meeting. No. There is definitely a chance that they taper. I think what i tweeted the other day, a really i thought it was interesting. We are five years into this recovery. The fed has always been inclined to do more rather than less. Market participants have consistently assumed the fed was ready to do, rather than more. When you havent achieved the sustainability the fed is working for. There would be a surprise. Thats one thing they have tried. I completely agree with dan on that. I this i thnk that perhaps a ta comes in march. The Federal Reserve could be there longer than census. We expect they will continue to do quantitative easing. The other big talker this morning is the possibility of a budget deal being reached without a crisis, without a shutdown at hand. Maybe this year, the holidays can bring that out in a little bipartisan spirit. We have Congress Moving closer to that elusive deal that would prevent another long fight over the debt ceiling and funding the government. We have john harwood live in washington with the latest. John . Kayla, this is snaking along very, very slowly. It is not a big deal. I have been calling this a deal in baby steps. What it does is it would, if it is struck, theyre still negotiating over small points. If its struck, it will reduce the likelihood of a shutdown and another debt crisis in january. But it wouldnt have much deficit reduction. It would not go after any of the hot button items like Social Security or medicare, which need to be dealt with over the longrun. It wouldnt close any tax loopholes. Those things have proven too partisan for these budget negotiators to tackle. Yesterday, in the nfl, the kicker for the Denver Broncos made a 64yard field goal. Record for the nfl. This is more like a 6yard field goal. They havent kicked it yet. I do think they will before Congress Goes home. It is a minimum achievement for people to cheer about. John, it is interesting when you talk about some of the little sticking points here. One is the benefits for the longterm unemployed. That is making up a record percentage of the people in this country who are unemployed. Do you get the sense that congress is looking at the jobs report and saying, hey, maybe we shouldnt move the needle on that right now . I think that is difficult in part, because when you look at the size of this deal, we are only talking about 90 billion over two years of lifting the sequester caps and replacing them. It is more of a reshuffle. The unemployment extension would cost 25 billion. That is a very large chunk of change to add on to that pretty small deal. I think the unemployment report contributes to that being sidelined. Democrats are indicating they are not going to fight to the last stand on that issue. I do think that is likely not to be settled in the budget deal. That doesnt mean it might not happen in january. I dont think it is going to happen as part of this deal. Our john harwood in washington covering those budget talks for us. Now, boarding, the Worlds Largest airline. The merger between us airways and American Airlines officially closing today creating the brand new American Airlines. Well get more after a short break. [ bell ringing, applause ] five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From Td Ameritrade. Welcome back to squawk on the street. Kraft foods looking pretty tasty after Morgan Stanley upgrades the stock. They raised their target to 60 a share saying kraft is its preferred value play in u. S. Food. Carl, back over to you. Thanks so much. The new American Airlines is ready for takeoff. The merger between American Airlines and us airways closed today making the new American Airlines the largest in the world. Phil lebeau is live at the dallasft. Worth airport. Reporter good morning, carl. How big will it be . It is the Worlds Largest. When you take a look at all the mergers that have played out over the last five years, you have three major carriers, a fourth if you include southwest with american being the largest by seat miles followed by united and then delta. The new American Airlines will operate 6700 daily flights flying to more than 50 different couldnt tris. Very strong in latinamerican as well as to europe. Not as strong to asia. This is a Global Network this airline will run. It also has a new Ticker Symbol, aal. They rang the opening bell for the nasdaq which is where the new American Airlines ticker will be traded at. Earlier today, on squawk box, we had a chance to talk about doug parker, the american ceo. We asked him about the pressure he is now facing to be profitable in this environment. We have to provide a return for our investors. We know that. The last 10, 11 years have proven that airlines that cant do that are allowed to grow and expand and do all the things we want to do. We expect to produce a profit that will provide a nice return from our investors. Thats what they expect from us. Thats what we plan to deliver. A lot of investors have been cashing in on the airlines. Take a look at the airlines index. It has performed very well in this environment with moderate jet fuel prices and improving economy and the consolidation game that for the time being seemed to have played out. A lot of investors are saying, is this as good as it gets when it comes to the airline stocks. Doug parker says, no, we can still produce. There is still room to go with these Airline Companies in terms of profitability. Carl, you have to wonder, how much room is there to run for these airlines stocks. The best sector of 2013 so far at least, unbelievable run, phil. When parker says that the impact on consumers is not going to be too painful, do you buy that. Yes and no. The industry is moving in the direction of planes that are going to be more filled. As a result, you have got smaller planes flying to these midsize cities. You have got tighter capacity, which means it is going to be costing you more to book a flight and think about this from the frequent flyer standpoint. United, delta, and american will each have about 90 million frequent fliers. You think you are catching in miles any time soon for a free seat. It is going to be tougher and tougher. We are already seeing that develop within each programs. A consumer, you are not going to see a huge jack up in prices but it is not going to be the most consumer friendly environment. Hard to believe there would be no impact as all. Phil, thanks so much. We look forward to hear a lot more. What a difference a year makes in 2012, best buy was one of the worst performing stocks of the year. You know this year has been different sitting on triple digit gains. Which losers could turn into big winners in 2014. Well pose that question in a few minutes. [ male announcer ] heres a question for you where does the United States get most of its energy . Is it africa . The middle east . Canada . Or the u. S. . The answer is. The u. S. Most of Americas Energy comes from right here at home. Take the energy quiz. Energy lives here. Youre talking to the guy who hasnt approved a new stapler purchase in three years. But then i saw the new windows tablet, with a real keyboard, usb port, and full office. Its a tablet that works for work. Plus, its got apps and games, for after hours, of course. Compared to an ipad way more value. These tablets are such a steal; i couldnt find a reason not to buy them. Honestly, i wanna see you be brave [ male announcer ] how could a luminous protein in jellyfish, impact Life Expectancy in the u. S. , real estate in hong kong, and the optics industry in germany . At t. Rowe price, we understand the connections of a complex, Global Economy. Its just one reason over 70 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Welcome back to squawk on the streets. Stocks and Interest Rates continue to rise. It is a relationship that many traders are watching closely. How has that played out during other big market moments in the past . Dominic is back. There are two key pricing indexes. Bond prices move inversely the yield or Interest Rates. Simply put, when bond prices rise, Interest Rates fall and vice versa. The other is a basic point of view here. The prices of bonds basically move in opposite directions of stocks. Think of it like saying when folks want to buy stocks, they sell bonds to help pay for them. That being said, stocks and rates move in tandem in a very normal and general basic sense. Over the longer term, you can see this relationship play out in the charts. We have highlighted four time periods of interest to demonstrate this concept. Back in 98 to 99, in the tail end of one of the most bullish runs, yields went from 4. 5 to 6. 5 . During that same time, the s p went higher by 44 . The internet bubble burst and stocks plummet and a decline in Treasury Bonds down to 3. 5 . As we approached the last record high tore for stocks and subsequent drop, the same relationship between stock prices and yields. Fast forward to today. The s p is up 13 since april. Yields have gone from 1. 7 to all the way to nearly 3 . That has some traders wondering if stocks have more room to run to the up side if the nor mality of that relationship holds. The bigger or substantive issue lies in whether or not this signals that markets are getting back to normal. Are traders and investors returning to a normal pricing dynamic for stocks and bonds. It was during the financial crisis when Interest Rates and stock prices difficue verge. When that comes, investors and traders are prepped for it. They are starting to price in some of the more normal dynamics we are seen in years past. That did color some of the narrative. Our dominic chew. As he says, stocks are edging slightly high are. He has said the tenyear is the northstar in your words. That continues to be the case . If it gets above 2. 9, i think we are going to see some pressure. If it gets past 3 , i think you would see some outright selling. Interestingly, on friday, it spiked up to 2. 93 . Stocks he stocks hesitated but it came back. There was a inflationary guide that indicated inflation was dropping somewhat. That probably put the fed back on hold. Im going to be very watchful. Wall street folk lore says that big moves on payroll day tend to sis pa dissipate over the next three days. Today, we do get a lot of fed speak, sort of the last burst before the big policy meeting in december. Wa are y what are you listening for today . We have three fed president s and four speeches. One is going to speak twice. Given the lineup we have, it will be slightly hawkish. Even there, what you want to do is interpret against that background. How will fisher respond . Does it look like it is going to come close enough . I think they are going to have to walk very delicately. They know the markets were considering perhaps a move in december. I think you may hear them soften that down. Walk us out toward next year march probably. That will be good for the market, i think. The band of resistance you see continues to be 1811. 1811 to 1814 in the s p. If they breakthrough that, you could get some algo rhythmic followup buying. Shorts are betting it wont go through there. If it goes through there, they will be forced to cover their shorts. Keeping a close eye on that number. See you later. A big thing on everyones minds as well as the markets. I know, carl. I was in the carl driving from baltimore to new york city. After dumping snow on a lot of the east coast, that nasty winter storm is lingering. Bringing fog and freezing rain to a lot of monday morning commuters. Still, the Weather Channels jim cantore is live in andover, massachusetts, with more. What are you seeing out there . Guess what. We have another system thats going to impact the same areas tomorrow, which, when i did nightly news with lester hold on saturday night, that system wasnt on the radar. This kind of a pattern that we are in is developing these systems almost out of nowhere here. We are having to deal with them. Like you said yesterday, in earnest. That was an absolute, overachieving system. Nobody predicted that kind of intense snowfall to come down. We saw many, many pay the price in terms of the weather. Here we are in andover, massachusetts, 25 miles or so north of downtown boston. This is the northern fringe of the whole event. We are not seeing a huge impact. We have to remember, the snow removal equipment is far greater than baltimore and washington and dallas, texas. When you look at the Flight Cancellations today, of the 1300, 700 or more are canceled in dallas forth worth. The delays continue and the really big problems continue in the dallas ft. Worth area. It is starting to show some signs with snow in northern texas. Dallas isnt going to get anything out of this. What we are going to see is snow break out in West Virginia and virginia tomorrow morning, philadelphia, baltimore. All these areas will be in it for the morning rushhour. We are talking about anywhere from two to possibly six inches of snow. Something that wasnt on the radar on saturday is now very much on the radar and potentially a big impact event for the northeast. The airports and travelers and those trying to get out to do some christmas shopping, this weather has really hampered people to get out to the malls. Back to you. Something we watch closely. Jim cantore. The future of Financial Regulation is now. The volker rule, a key piece of frank set to be approved by a whole host of regulators tomorrow. Harvey pitt is here to break down what it means for the regulators and the economy when we come right back. [ male announcer ] the mercedesbenz winter event is back, with the perfect vehicle thats just right for you, no matter which list youre on. [ santa ] ho, ho, ho, ho [ male announcer ] get the allnew 2014 cla250 starting at just 29,900. You can fill that box and pay one flat rate. I didnt know the coal thing was real. Its very real. 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I am not an Indiana Jones viewer. I cant comment. Stay out of the light. Someone back in the control room knows what that means. The refrigerator to avoid a nuclear explosion. Thats one of the weaker Indiana Jones films. Meanwhile, the new American Airlines is ready for takeoff. The merger between american air and us airways closed today making the new american the Largest Airline in the world. What does this mean for the Airline Industry . On the cnbc news line is robert mcadoo. We just had jim cantore from the Weather Channel on who said of the 1300 flights that have been canceled so far today because of weather, 700 are out of dallasft. Worth on a day, very big news day for a company thats going to be head quartered there. Do you think thats fortuitous . Does that affect the situation . Say that again. Roughly half of the flights have been canceled because of this horrible winter storm across the country are in dallasft. Worth as american is set to get off the ground on its first day as this pro form ma company. Do you think that will set it off on a bad foot . No, no, we have bad weather every year. This is something we just have to deal with. Not a big deal. What is it like to integrate what is going to become one of the Largest Airlines in the world . Over 100,000 employees, thousands of routes . It is sort of like turning a cruise ship but where does it start . Well, first thing you have to do is get all the employees pulling on the same end of the rope. I think this particular Management Team has done looks like they have done a very good job of getting that started. Thats one of the things that typically gets in the way. The other things people have to worry about is the i. D. Sit. Si where you try to bring the marketing side together. The thing that goes more slowly and which we have never had any particular big problems with is the slower part of getting the actual operation of the airplanes integrated into one entity. The faa takes that one very slowly and makes sure that that one always does go right. Thats the one where safety is involved and thats the one that always goes well. We have never had a problem there. The employees are the first things that have to get happen by about the whole thing. Thats probably the thing that looks best about this merger. I know the employees have been talking about the executives for the last several months that this has been on the table. How does this ultimately reflect on the consumer side . Will prices go up . There has been some disparity in terms of whether that will actually happen. Whats your take on this . I dont think i think what youre going to see is the same thing we have been seeing the last four or five years, which is, yes, the average price of tickets across the board on all airlines may go up a little bit but it is not because somebody takes a 300 ticket and decides to raise it to 330. It means there will be a little bit more discipline and less likelihood there will be surplus seats floating around which get thrown in at 59 and 89 at the last minute. The average price may go up a little bit. I dont think the consumer will really notice anything that they havent been seeing all along. We have cut capacity systemwise for all the Airlines Offer the last five or six years and it has driven the average price up with that. Finally, bob, people think about the root structure of american and how they ruled and how u. S. Air ruled in this part of the country. Where is the sweet spot for the new carrier . I think the real sweet spot is that american has really been hamstrung in terms of its ability to take people out of the eastern onethird of the country to europe. They have had so few slots and so few domestic flights into kennedy airport. They havent had an ability to feed their urieuropean operatio out of the eastern onethird. You have a philadelphia hub thats a fullblown hub that has 50 or 60 cities that feed american that american has never been able to feed into kennedy, out of buffalo, rochester, louisville, all kinds of city will have the ability to fly the new American Airlines to europe and the new American Airlines will have a gathering system under the American Airlines name that didnt exist in the past. Thanks so much, bob mcadoo, from imperial capital. Certainly, a story we will continue following. Carl, i wanted to point out, you mentioned miami. This is in the New York Times today. A fullpage ad on the back of the a section. Congratulations to the new American Airlines. We are so proud you call miami home. A powerful hub, for obvious reasons the big story on wall street, moving on a little bit. Is the party over for wall street . A toughened version of the volcker rule is expected to be approved tomorrow. Joining us to discuss this is harvey pitt, ceo of calorama partners. Thank you for being with us on a big day. We have been talking about the volcker rule for three years. A lot has been telegraphed ahead of time. This has been aimed to keep banks trading for their own accounts to put customers on the hook for any losses they could sustain. Are there any surprises when this gets rolled out tomorrow . There are several. First, the reason it has taken so long, there are five agencies, each required to adopt their own version of the volcker rule. They had to agree and thats always a hard thing to do. Then, i think this charted some very New Territory and has led to a great deal of complexity. Third, the initial rule proposal raised more questions than it responded to. As to the new features, i think we are going to see more restriction on hedging portfolios. We are going to see greater restrictions on what constitutes proprietary trading, which is not clear and it has been rumored that there will be a ceo certification requirement, something akin to what i did at the sec in 2002. Mike mayo, one of the more aggressive analysts says he has been doing financial stuff for 80 hours a week for 25 years. In his words, i cant tell you where proprietary trading begins and ends. Do you have a handle on what it means . Is it just a matter of you know it when you see it . Im sorry. If i know what proprietary trading is by definition. Well, it is intended to mean trading by banks solely for their own benefit and not as part of the normal process of serving their customers. Thats a very simple statement of a very complex concept. Harvey, there are two steps to this process. The first is implementation. I know the companies are looking forward to having a rule and being able to put it in place. The other side is enforcement. Ultimately, who will this be left to, to enforce. Will it be the ceo, will it be the fed . How will this work and how do you eventually enforce it . Thats the best word. The first place where there will be enforcement will be internally within the banks. Thats why the volcker rule is, itself, the embodiment of the lawyers relief act of 2013. People are going to need guidance on what they can and cannot do then, because ceos will be required to certify or at least it is rumored they will be, they are not going to put their names on the line unless they have had a lot of assurances that the programs each bank sets up are in compliance with the act. Once that happens shall the regulators will take over. There will be all sorts of inspections and examineses. Each of the five agencies does regular, routine examinations and inspections. Out of those examinations will come potential enforcement cases. As we mentioned, the new American Airlines began trading on the nasdaq about an hour ago. Whether we came back. We will talk about one of the men that helped that happen for the exchange when squawk on the street continues. Mine was earned orbiting the moon in 1971. Afghanistan in 2009. On the u. S. S. Saratoga in 1982. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation because it offers a superior level of protection and because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you open an account. Ya know, with new fedex one rate you can fill that box and pay one flat rate. How naughty was he . Oh boy. [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. If every u. S. Home replaced one light bulb with a compact fluorescent bulb, the energy saved could light how many homes . 1 million . 2 million . 3 million . The answer is. 3 million homes. By 2030, investments in Energy Efficiency could help americans save 300 billion each year. Take the energy quiz. Energy lives here. Take the energy quiz. Stick with innovation. Stick with power. Stick with technology. Get the new flexcare platinum from Philips Sonicare and save now. Philips sonicare. U. S. Air and americans Parent Company closed their merger today. Bob mccooey is the Senior Vice President at the nasdaq. He joins us from dallas. Good to have you. Good morning. Good morning. Nice to be with you. Nice win here. A big name, a hallmark name. Talk to us about what went into bringing this to the exchange. We asked tom horton and doug parker to review their lis thing in conjunction with the announcer of the merger. They did this and took us up on the opportunity and allowed us to compete for their business and show the longterm value of being part of the nasdaq family. We are honored they listed with us today. The stock is acting well. It was amazing to be here with hundreds of employees, the energy among the new american really terrific this morning. That Value Proposition you have mentioned has been popular with a lot of the household name companies, kraft, mayrriott, money graha moneygrah mon moneygram. What do you tell these companies . We do the same pitch to talk to anybody about the value we have at thaz dabbing. It is about combining our world leadership in corporate solutions, those businesses that help a company be the best Public Company they can be. That was reinforced by our acquisitions of thomas reuters, ri and pr multimedia assets earlier this year combined with some very unique visibility opportunities we talk about, our Global Leadership in technology and trading and we combine that with lower fees and we think we have come up with a very, very compelling proposition for companies that are looking to ipo on us. 121 companies so far this year or companies that will be willing to go through a review like american did in conjunction with their listing. Bob, we make no bones about the pierce competitive war between the nysc and you guys. We are broadcasting from their floor. We try to talk about you guys as often as we can. How would you characterize the new issue for you, the new transfer issue since facebook . Are you happy with where your pitch is right now . I think were always trying to make sure that we can have the opportunity, carl, to talk to companies. We talk to them on the ipo side three or four years before they are ready to do an ipo and talk to them and get them to understand what the benefits of a nasdaq listing would be in being part of our family. At the same time, we talk to companies that are listed on our competitors exchange and try to help them to understand where the world is today. American airlines listed on the New York Stock Exchange long before nasdaq existed. The opportunity for us to have this inflex point of reviewing that lifting and having them come to us based upon the outcome of that review is very gratifying. We are honored to have them listed. A lot of marquee names looking to go public, chrysler, ali baba, hilton. A lot of coverage about how some of these Companies May be leaning towards the New York Stock Exchange. What would you say to a company that is on the fence about where to list . I would say, talk to american and kraft about their experiences. Talk to the 121 companies that chose us this year more than have chosen our competitors. Think about what are the longterm benefits of being listed with your exchange, what are the partnerships we can create between our two companies. One of our key acquisitions this year was thomson reuters, rrpr and multimedia businesses. Those are services we are able to provide. We think they are very valuable. We are excited to be able to talk to Prospective Companies about coming to the nasdaq. Finally, bob, for all the success you have had this year, how much does it sting when a twitter does come to the nysc or do you not think about that . Carl, it is one listing. They are a great company. We wish them well. In the end, we move beyond that. We are really focused on two things. One is talking to other companies about the nasdaq Value Proposition and the longterm benefits and two is we have 2650 companies that are listed with us. I spend most of my time on the road talking to those Companies Making sure we can keep them up on the initiatives that nasdaq is doing, what we are doing in washington, d. C. And in terms of market structure, the value we create for them each and every day as part of the nasdaq family. Bob, congratulations. Stay out of the cold in dallas, man. The weather down there has been crazy. Bob mccooey joining us from the nasdaq and aal, the new Ticker Symbol for American Airlines American Airlines, one company back from the dead being bought after its bankruptcy filing. One years stock loser turning into one of the next years biggest winners. What stocks could repeat that trend in 2014. Seema mody is back at h. Q. She has the answer on that. Seema. We are talking it the dog to darling trend when some of the biggest losers of one year become the best performing stocks of next year. Bank of america and Morgan Stanley were down double digits. Thanks to recovery in the housing market, bank stocks went well. The bestperforming s p stocks gaining 110 while Morgan Stanley gross about 18 . Hewlettpackard, pitney bowes and cliff naturals were the worst performing in the s p. Pitney bowes best buy became the darling of this year. Currently, two of the best performing stocks. Cliff natural continues to bark like a dog, one of the worst on the s p this year. Peabody, Newmont Mining made the list of some of the worst stocks. I got whether they will be the daryleings of next year. Ubs points out that steel demand is still recovering slowly from the financial crisis. Steel producers are facing a buildup in inventory. For peabody energy, the bulls say they did come off a strong earnings but the bears are arguing it came from cutting costs. Cool demand is slower than usual. That could ramp up as the Global Economy improves. Lastly, tara data did post Revenue Growth in the u. S. As well as in new york. Analysts write that the lack of growth in emerging markets is a concern. Analyst casting some doubt on if this dog to darling trend will continue. Back to you. Seema, thank you so much. Imagine being able to buy a tesla model s with a bitcoin. That happens in california. We are going to talk about the general manager of the dealership behind that sale when we come back. Terone. There, i said it. See, i knew testosterone could affect sex drive, but not energy or even my mood. Thats when i talked with my doctor. He gave me some blood tests. Showed it was low t. Thats it. It was a number. [ male announcer ] today, men with low t have androgel 1. 62 testosterone gel. The 1 prescribed topical testosterone replacement therapy increases testosterone when used daily. Women and children should avoid contact with application sites. 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You can fill that box and pay one flat rate. How naughty was he . Oh boy. [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. Ask me what its like to get your best nights sleep every night. [announcer] why not talk to someone whos sleeping on the most highly recommended bed in america . Ask me about my tempurpedic. Ask me how fast i fall asleep. Ask me about staying asleep. [announcer] tempurpedic owners are more satisfied than owners of any traditional mattress brand. Tempurpedic. The most highly recommended bed in america. Now sleep cooler with extra cooling comfort on our bestselling tempurbreeze beds. Visit tempurpedic. Com to learn more, and find a retailer near you. Welcome back to squawk on the street. Monday, im not a big monday person but were going to plow through anyway. Listen, i love technicals, i always have. Well look at big picture targets for the tenyear. Big picture doesnt mean well go to the rate im going to show you a minute in a Straight Line but it good to have a target. Numbers 21, 34, 5, 89, you know the drill. You know how to get the important numbers. Take any two, 34, 55, divide it out, you get one of the very important retracement levels. If you skip one, 34 divided by 89, you get the next one. But when you go the other way and this is key lets take 55 divided by 34, what you get is the golden mean, ill round off. Roughly 1. 62. Why is that important . July of 2012 we hit the low yield on tens. Where was that low yield . 1. 38. Lets take 1. 62 times 1. 38, what you end up with on this is, 223 basis points and the trick i like to do is, this is to see where your target is. Take july low 138, golden mean expansion of the range, and what you end up getting is 361, which in my opinion would be your wide target. Lets switch gears. Lets take another wide view. Ive been talking a while about italian banks and lending and credit, and the bank of italy released new information that really paints this picture. If you look at nonfinancial firms in households, lending to that group down for october, 3. 7 . Thats the biggest drop on record. If you look at just the financials, it was down close to 5 , i think the exact number 4. 9. Whether youre in the u. S. , japan, whether in europe, in this case, or the uk, the big deal about how all of these Central Banks have dealt with postcrisis issues is through blah, blah, blah, blah, blah, and bazookas that are imaginary. In the end if the time you buy through the blah blah blah blahs isnt utilized properly you end up like we are in italy. If the loanable funds, the capital that moved into these households and businesses, continues to drop, their longest recession on not on record, i believe in the last 20 years, most likely extend. Its the ka nair ray in the coal mine. When you buy vous time through verbalization, if you dont make good use, theres chapter two. Chapter twos the big deal for the early 2014. Back to you. Thanks so much. Rick santelli. Tweet time. Facebook toying with idea of adding a simple these button for users tagging statuses with negative emotions. Squawk on the treat. Given the hand, what other button should facebook be considering . Well get some of your answers next. Announcer where can an investor be a name and not a number . Scottrade. Ron im never alone with scottrade. I can always call or stop by my local office. Theyre nearby and ready to help. So when i have questions, i can talk to someone who knows exactly how i trade. Because i dont trade like everybody. I trade like me. Thats why im with scottrade. Announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. [ male announcer ] if we could see energy. What would we see . The billions of gallons of fuel that get us to work. Wed see all the electricity flowing through the devices that connect us and teach us. Wed see that almost 100 of medical plastics are made from oil and natural gas. And an industry that supports almost 10 million american jobs. Life takes energy. And no one applies more technology to produce American Energy and refine it more efficiently than exxonmobil. Because using energy responsibly has never been more important. Energy lives here. Squawk on the tweet, facebook reportedly toying with the idea of adding a sympathize button as alternative for users tagging statuses with negative emotions. It brings us to the squawk on the tweet. Help facebook out. What other buttons should they be considering in in addition to sympathize . Bill writes, awkward button for those creepy family holiday pics. John writes, yeah, your kids havent gotten any less cute since yesterday button. And diver writes, too much information. Robert writes facebook should add a monetize button. I think theyve been working on that one for i while. Users have been asking for this dislike button or a hate button or insert negative sentiment here for years now because there is stuff that comes up on your feed and you think i dont like that but i want to let you know im reading it and weighing it. Or tweet something about a relative who has passed away, its awkward to like that. But you want people to know theyve seen it shows you how complex communication has gotten on social platforms over the past of years. Ive had people writing in full posts, if you dont like my kids, unfriend me. Facebook, cramer mentioned t earlier, a big winner for his charitable trust, gotten in high teens, low 20s, got out of it for google. Watching jpmorgan, its up in the green with the rest of the market and the rest of the financials space after were getting positive sentiment on this idea of taper. But it was down in the premark because there was a lot of coverage over the weekend about this probe to its china hiring practices and a connection actually between one specific deal and one specific higher. Larry thinking the whole thing go as way. Interesting to watch shares today. Here what happens you missed earlier on. Welcome to squawk on the street. Heres whats happened so far. Were making our economy the opportunity economy where you know, if you want to build a business, you want to get a job, you come here. Which outs are cost me more, which will cost me less. Nothing about the transaction will affect prices. Supply unchanged. As long as demand stays the same, nothing should happen to prices. I was reassured doug said the ra rates wont go up, tremendous kol solization. Theyre going to restrain themselves. Its not going to cost more. Hes going to tell you if hes going to move rates up, stick it right in the eye. This companys done nothing. They step up and look what happens. Moving more toward organic food, doing the right things. Stock goes higher. People are going to need guide on exactly what they can and cannot do. Then, because ceos will be required to certifier or at least its rumored, theyre not going to put their names on the lean. The squawk on the street countdown to christmas is in full swing. Ho, ho, ho good monday morning. Live here at post 9 of the New York Stock Exchange, a check on the markets. S p managing to climb here. 1808 is where we stand. Art cashin this morning saying might see a band of resistance around 1811 to 1814. Dow of course gaining 8 points 1027. Sysco surging, acquiring u. S. Foods, 3. 5 billion in cash and stock creating a company with 65 billion in revenue. Shares up over 30 at the open now up 13 . American airlines group, carrier formed by us airways amr merger, rising on its first day as a combined company. More on the merger creating the worlds biggest airline. Don carty will join us live. How the deal might reshape the landscape. Discover communications making a big bet on contents. Later, david faber sits down live from the Communications Conference in new york. A tesla model s sold with a twist. Paid with bit coin. Well talk to the general manager of the car dealership behind the sale. S p trading above its a alltime closing high. We havent seen a correction and thats worrying for our next guest. Jerry schwartz, hes here with is 2014 outlook. We did see a span of some down days over the last couple of weeks. But i take it its not enough for you at this point. Well, we havent seen a 10 correction in 18 months. A lot of people are starting to say, when is that correction coming . Its hard to know when it will come. I believe the market is being supported by strongfuls. I i dont know when youll see that. I see the markets supported by underlying fundamentals today. Is the worry on the correction enough to keep you from telling clients to put money at work in this market. Its so hard to know when it will come. I certainly would say if it did come, i use that as a buying opportunity. A lot of people are waiting for this great rotation from bonds to equities. Maybe you know the fact that everybodys waiting for this correct that you may not see one, it could be a surprise that you continue to see the market grinding higher throughout 2014. Japan, obviously, a big story overnight. 50 yeartodate. You have an etf that does look at hedged equity funds there. Whats your take on what theyve done this year . Im a believer in abenomics. You have a lot of supportive forces, theyre going to be the most Aggressive Central Bank in the world, just as were starting to talk about taper in the u. S. , whether its later this month or next year, theyre starting to talk about ramping up their asset purchases. All of this monetary easing is helping support a weaker currency. Seeinging the yen go down to 103 this morning. Weakening yen is supportive for their equities given the strong exporter nation of japan. Talk about the great rotation in the u. S. , there should be a bigger rotation in japan given they had the lowest bond yields in the world with60 basis points in treasuries. Talk bay third of the s p 500 stocks. Over 90 of japanese stocks have a yield in treasury. You think they reach inflation targets about what the knee kaninknee nikkei and yen d theyll do whatever it takes to get the 2 inflation. They set out two years to achieve that and people dont think their current stances will achieve it and theyre getting closer to 1 . I think they may be doing more overtime. I take them at their word theyll do whatever it takes to achieve 2 target. Your take on europe. You believe the earnings psych until europe is getting under way but it seems at least today we have spotty data out of europe. Where would you put your money there . Europes coming out of the recessionary environment and starting to see positive gdp growth. If youre looking to invest in a local recovery in europe. Its the opposite of whats happening in japan. A weak yen is helping exporters, strong euro helping the strong exporters in europe. Dfe is a european small cap etf that gets you access to the local european recovery story. Thank you for your time this morning. Watching shares of mcdonalds as well, the Worlds Largest fast food company, global samestore sales up a half percent in november. Europe restaurants making up for the u. S. Senior restaurant analyst at jeffreys, good morning to you. Peter, what happens it going to take . Zero in on the u. S. Persistent weakness here, why is it happening . Is it going to reverse . Well, you know, i think the good news for mcdonalds they do more traffic and volume than many competitors, 2. 7 million per restaurant, average volume about 1300 transactions per day per restaurant compared to chipotle at 550. Bad news, theyre struggling to get incremental traffic. In the month of october, closed the gap versus the industry down 180 basis points worse versus 310 in the month of october. But we dont see that reversing soon. There is no breakthrough product. Economys improving but not enough i think to warrant a push for mcdonalds. Andy, europe, the bright spot, no secret in terms of this months report. But of course, mcdonald has a large promotional strategy in europe, buy one big mac get one free. Do they have to introduce that strategy to other regions . Well, theyve been working on a variety of value messages over in europe. Some countries have certainly responded. The french business, in particular, has been the one thats changed the tone of the overall european business, having been positive now for four months in a row. The uk and russia have been solid, even throughout the economic challenges in europe. The real question is, can they get germany going and the german consumer does tend to really be conservative and kind of hurnger down in some of these challenges. If they can get germany going, europe may continue to look better in 2014. But i dont think thats a forgone conclusion yet. We keep talking about the lack of inflation in this country. Thats certainly one thing that they could use to get a bit of pricing power. I wonder if, with all of the pressure theyre getting over the wages they pay employees but the pressure to maintain a dollar menu or some price discipline, what happens to margins in 2014 . I would say they do have some price in their comp now, over 2 , maybe call it 2. 5 . They will see Wage Inflation as everybody else will. They may get relief on the commodity side. Seeing commodities up marriagely for next year. So, you could get help there. But i think, you know, on i goer to it basis, they have to raise menu prices. Theyre hoping food at home index sees more inflation than theyre seeing this year and that will allow them the opportunity to take more menu price. If they take 2. 5 , 3 , they can offset the majority of the Wage Inflation theyll see next year. 95. 70 here, we know what a laggard its been relative to the dow this year. Wheres your target . Were in the low 90s on our target price. We continue to think the stock is sort of fairly to fully valued here. We would expect another below trend growth year for earnings next year, maybe 5 earnings growth, as there will be some margin pressures, in our view. G a costs significantly higher next year. It will take some comp improvement. We think the stocks fairly to fully valued around a market multiple now. Peter, andy, appreciate your insight as we watch the comps month after month. Guys, thanks. Weve got our eye on top tech companies, teaming up in hopes the government will reform practices and laws regulating surveillance of individuals. It comes on the heels of leaked documents that show surveillance of users through online games datinging back to 2008. This has been going on for five year . Yeah. One of the interesting things about this call for surveillance reform is whos not signed on. No apple, no amazon on other big names in the Digital Economy on here. So thats interesting. But also here, over the months theres been a shift in attention. Everybody was concerned about china, right, google versus china, microsoft had issues. But theres this broader conversation. File like they dont want to point their fingers directly at u. S. Government because thats uncouth but people in Silicon Valley ticked off about the nsa surveillance, whats happening as far as tapping data at the source. I mean the methods that have been used to get this information, theyre unhappy about it, looking for change. The defense, though, during the beginning of the nsa surveillance leak back in june, we started hearing the beginning of this, you could actually thwart certain attacks by connecting some people and their communications and the best defense i heard you cant find a needle in a haystack without a haystack but what can you find when looking at someones gaming youre trying to connect a bunch of different data points you, might find something interesting. If youre able to connect this gamer who is having a conversation with that gamer, maybe what theyre talking about isnt the game because these games have communications capables. A lot of time people have been using back channels like that talking about something they dont want eavesdropped upon. The broader issue for business, American Companies are concerned that the world wont trust them and theyre looking for growth in emerging markets. When any large American Company now has this suspicion cast upon them because of what the u. S. Government is doing, not a good thing. Like a scarlet letter, difficult to get off. You mentioned amazon and apple not participating in this campaign so far, why . I dont know why. I dont know why. Im going to be asking questions about that. Certainly theyve come forward at times saying we dont like whats going on. We want more transparency from the u. S. Government and others about the kinds of requests theyre making. To be more specific and transparent about those requests, they didnt sign on to this particular letter, though. Interesting how theyre coordinating on immigration issues, too . Yeah. Well see where this leads, if they get any traction. More intense lobbying of sorts, make their messages known, wants known out of Silicon Valley. Fierce rivals banning together on these issues, which is an interesting tentativeness. Absolutely . After bankruptcy, merger with us airways, well talk about whats at stake for carriers and consumer with former amr ceo donald carty. Rick santelli. Yes, well use numbers, quantify its been 15 months, september 2012, since qe3 introduced. Has it lived up to the hype . Well look. Results, well they dont surprise me. They dont surprise jim bianco. Will they surprise you . D u get the toaster cozy . Yep. Got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. So i knit until it was full. Youd be crazy not to. Is that nana . [ male announcer ] fedex one rate. Simple, flat rate shipping th the reliability of fedex. [ male announcer ] fedex one rate. So i can reach ally bank 24 7, but there ar24 7. Branches . Im sorry, im just really reluctant to try new things. Really . Whats wrong with trying new things . Look mommys new vacuum cat screech you feel that in your muscles . I do. Drink water. Its a long story. Well, not having branches lets us give you great rates and service. Id like that. A new way to bank. A better way to save. Ally bank. Your money needs an ally. Ask me what its like to get your best nights sleep every night. [announcer] why not talk to someone whos sleeping on the most highly recommended bed in america . Ask me about my tempurpedic. Ask me how fast i fall asleep. Ask me about staying asleep. [announcer] tempurpedic owners are more satisfied than owners of any traditional mattress brand. Tempurpedic. The most highly recommended bed in america. Now sleep cooler with extra cooling comfort on our bestselling tempurbreeze beds. Visit tempurpedic. Com to learn more, and find a retailer near you. Welcome back to squawk on the street on monday morning. Take a look at utility sector, biggest loser among the main s p sect sectors. Dominic chu with more on that. Thats right. Utilities are the standout underperformers today as stocks try bill on fridays gains. Out of 31 s 1 stocks, 27, 28 ofm are down on the day. Losses are being led by Companies Like agl resources, a natural gas distributor, also diversified utility provider coned. Dominion resources, on the downside. Relative outperformer, though, in the trade, edison international, a Global Electric Power Company up. 7 today. Thank you. Merger between American Airlines and us airways closed today. The Largest Airline in the world. Will the merger work . Don carty former amr chairman and ceo, now chairman of virgin america. Cfo and vice chairman at dell. Its been too long. Good to have you back. Good to be with you, carl. Are you surprised this got done . Well i think there was a time a month or so ago, there was some doubt. But i always felt it should get done and felt in the end wisdom would prevail and it did get done. Seemed like a reversal from early rhetoric justice was putting out there. Who should be afraid now that its happened . I dont think anybody should be afraid. Some commentary youve heard is probably true. The airline sti. Industrys goi to be healthier. It great for american and its employees and customers and investors. But i do think there will be some tightening in capacity. I do think the consequence of that will be slightly higher average fares as fewer discount seats are available. I think on balance, its good for the consumer and business as well because it provides for a really viable Airline Industry going forward. Don, when the Justice Department sued to block this, just a few months ago, everyone was saying this is the end of airline consolidation, last deal that could have possibly happened, will not happen. Now of course its gone through. First day of trading. And this morning on squawk box doug parker said hes not sure this is the end of consolidation. Do you think were at the end of the line . I think the big transactions have occurred. Is it possible that one or two of the other smaller carriers get caught up and further consolidation . It wouldnt surprise me greatly. I think the important structural change has already happened. Domestically at least. I think as time goes by, well see more changes internationally. Don, your insight on boeing, a head lean here, eads is going to cut 5800 jobs, according to union representatives. We used to talk about them as airbus and boeing like the pepsi and coke. Surprised how asymmetric that battle has become . Im not. I think the battle ebbs and flows depending on what product and what position is in at the time. I think youre going it see periods where airbus will look very strong. And youll see periods when boeing looks very strong. Don, youve got experience as an executive at dell as well. That is another company in a serious transformation now. Employees have until december 20th to figure out whether theyre going to accept these buyout packages to leave as the company tries to right size, give us your take on the future of dell. Well, i think, as everyone has said, the transformation is an exciting prospect for michael and then investors. On the other hand, its a challenging job. You dont transform these companies easily. On the other hand, i believe michael has a great vision of what this Company Needs to become. I think the acquisitions theyve done to date have been thoughtful and selective and have created a great base for dell going forward. So as now an observer of dell, after being on the board for over 20 years, im excited for michael and the team. You foe we keep hearing enterprise, theres stabilization in terms of pc demand among corporations, are you hearing that, too . And. I am hearing that. I think that those that have suggested the death of the pc are premature, corporations need this technology, need pc in their business. Well be buying a null of pcs for many years to come. Now, is there a segment of that business thats been displaced by mobile devices . Sure, there is. I think were seeing stablization in the base enterprise area. Love how we talk about the death of a pc from a desk that has four pcs on it right now. Exactly. Its great to see you. Please come on again more often. Love to. Joining us from dallas. Four pcs here, thousands more at our headquarters. Were just one of Many Companies doing that apr. A stroke of genius or insanity . Somebody bought a tesla with a bit coin. Thats next on squawk on the street. With fidelitys options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens, and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. [ male announcer ] 1. 21 gigawatts. Today, thats easy. Ge is revolutionizing power. Supercharging turbines with advanced hardware and innovative software. Using data predictively to help power entire cities. So the turbines of today. Will power us all. Into the future. Is caused by people looking fore traffic parking. Yre. Thats remarkable that so much energy is, is wasted. Streetline has looked at the problem of parking, which has not been looked at for the last 30, 40 years, we wanted to rethink that whole industry, so we go and put out these sensors in each parking spot and then theres a mesh network that takes this information sends it over the internet so you can go find exactly where those open parking spots are. The collaboration with citi was important for providing us the necessary financing; allow this small startup to go provide a service to municipalities. Citi has been an incredible source of advice, how to engage with municipalities, how to structure deals, and as we think about internationally, citi is there every step of the way. So the end result is you reduce congestion, you reduce pollution and you provide a service to merchants, and that certainly is huge. Electronic currency, meet electric vehicle. Upscale car dealership in california announced it sold this tesla car use the crypto currency bit coin as legal tender. The dealership is run by the general manager at lamb bore deanny newport beach. Were interested this. As of right now, just a random smattering of retailers and vendors that are accepting bit coin. What made you decide to get on board . Thank you very much, and good morning to everybody. Pleasure being here. We we just had the opportunity to receive a call from a gentleman from all the way from florida and we did your Due Diligence. We tried to accommodate our customers, our requests. This was a bit odd. We looked into it. Ive been reading, reading the paper, european papers, even about this currency. So we did our Due Diligence and we find out that actually we would have been receiving u. S. Dollar and that for us was very good. Due diligence on the currency itself, Due Diligence on the person using it, how did that process work . Well, Due Diligence on the currency, what does it mean to us, somebody buying with mutual currency. By using a Little Program that bitcoin uses, which is actually bitbay, we would have received u. S. Dollars. So for us, that was very good. Its like if you come into the dealership and want to buy a lamb boorghini using gold bars wouldnt accept it. You go out, exchange it, come back to us. Thats how it worked. Technically you never held the bitcoins yourself just the person completed the transaction, you ended up with dollars. If this had involved you Holding Bitcoin for any amount of time, would you have done this deal . I dont think so. I dont know. We accept only u. S. Dollars. I dont accept euros or foreign currency. I would not venture out with bitcoins. Pietro, what stage did it become clear to you or your employee that would be the currency of choice . Is he there on the lot . By the way, id like to use bitcoin to pay for this . Well, actually, it was. He was the transaction on the phone, constantly on the phone. Was not present. He bought the car sight unseen. Within a description of the car he said also mentioned, can i pay in bitcoins . We said, let us come back to you. That was it. Very simple. Of course, its a big sale. You wouldnt want to miss out on a big sale. It is interesting that you were willing to accept doing the transaction on your behalf when you just said that if someone came to you with gold bars you would say exchange the gold bars for dollars and come back to us. You didnt say exchange your bitcoins and come back to us. The transaction and our bank account we received wire in u. S. Dollar. You can say that i didnt want bitcoins and i never touched bitcoins. Thats how it could happen for us. One last question. Have you seen impact on your tesla business since the fires became a story, so to speak . Were a lamborghini dealership, and tesla was just a preowned, were not a tesla dealer. Didnt change much that side of the business. We will keep selling lamborghinis and exgottic cars. Tesla is an interesting product. And when we have it, we sell them. Have you seen anyone else asking to buy with a bitcoin or was this a oneoff thing. No, i received a few calls they seen advertising and promotion and they say, im flying over from another side of the country, id like to see a lamborghi lamborghini, can i pay in bitcoins . If it works in the same way i receive dollars, it will be happening again. Interesting trend. Thank you for being with us. By the way, i dont know if you saw over the weekend in New York Times an interview with john waters, the director asked about gift cards and christmas. The rudest possible gift is a gift card. The only gift card is a bitcoin. You have to be a hacker to know about it. I won a bitcoin gift certificate. You can use it to buy hitmen or drugs. I dont know. If the person at least knows what store you like shopping in, they give you a gift card, its better than nothing. Better than getting a nome or a snow globe. But you have visa, amex, its as good as cash. I count turn that down. Bells are about to ring in europe. A few moments left in the trading day. Well get the close and the impact here in the states. Le an] for every late night, every weekend worked, every idea sold. You deserve a cadillac, the Fastest Growing fullline luxury brand in the United States. Including the all new 2014 cadillac cts, motor trends 2014 car of the year. Now during our seasons best event, get the best offers of the season on our Award Winning products, like the 2014 ats and srx. Impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u. S. . At t. Rowe price, we understand the connections of a complex, Global Economy. Its just one reason over 70 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Count you down to the close. Actually uk and europe have closed, largely in the green. Unexpected decline in german Industrial Production for october. Take a look at major european markets. Of course, after blockbuster overnight in asia. Weve mentioned the nikkei up better than 2 , bringing yeartodate gains to 50 , thats the best for the nikkei since 1972. Unbelievable. Unbelievable, especially considering seeing deceleration in gdp. Markets still on a tear. We want to bring in bob pisani with a look at whats moving at big board. Important thing here, kayla, it looks like a tight trading range. Thats very unusual. But bonds are very much under control. If you look at overall market, it still keeps advancing even when you get mixed days. Look at the nasdaq. Quietly, slowly, another new high. Essentially a 13year high. Look at 10year chart. A 13year high for the nasdaq. Not in new highs but key groups like networkers keep advancing a few points every day. Airline are having a great day. American u. S. Air deal done. Aal, new stock symbol, dont see that every day, nice move for the airlines. 11year high, index for the airlines, 11year high that we just hit a short while ago. Select stocks keep moving forward. The same with home builders. Home builders topped out in may. Were off maybe 10 since then. But its stable for the last couple of months in the home builders. Emerging markets, tremendous change in direction this year. 25 swings. But now theyve stabilized in the last several weeks. India closed at an historic high today. Thats had a lot of problems earlier in the year. One group that i am very concerned about right now is the energy group. Remember how big the expiration and production stomachs were in the year . They cant seem to get a lift anymore. Theyve been in distribution for a number of days here. A cold snap, a big storm, and stocks are selling off today. Heres the sector you want to watch, etf, its the xop. This owns all the stocks essentially. Im putting up a threemonth high because it topped out in october. Essentially its been under distribution since then. The big guys are selling more than theyre buying. And thats been a problem now. Again, on a day like today, you think with natural gas up, given the cold snap weve had in the northeast, nat gas up 2 , these stocks will get a lift normally. They arent. Thats a worrying sign for everybody who piled into them earlier in the year. Bob, thanks so much. For more on the markets, chicago, check in with rick santelli. Rick . Hi, karl. Of course my guest, thanks for taking time, jim bianco. For all practical purposes a solid report on jobs on friday. But as we try to discuss what it all means, i would like to remind viewers and listeners that its been 15 months since september 12 that qe3 began. Whether or not living up to the notion that it is helped or not, really doesnt bear out that fact if you look at the facts. Lets throw up the chart. Jim, the charts up there. Tell us what it means. September 2012, fed said we need to do qe, 85 billion a month, because the economys weak. And its in a problem. If you look where the economy is now, relative to september 2012, its not better. Gdp is lower. The payroll job growth is the same as it was then. Inflation is lower. And while the Unemployment Rate is lower, most, if not all, because of the participation rate. If the fed is driving on data, datas not bert than when it was started and its not better indoin june or july. Your notion is, are they going to taper . No. Okay. At least not december. Not next week, not january. You won a coupy doll. Many in september, including myself, were thinking, why would they buck what the market had done in the fixed income, rising rates they should have gone with it. You, using the same argument youre using now, in september, one of the Lone Soldiers that said its not going to happen. You continue to think that way. But youve also heard some things about our future potential future fed chairperson, janet yellen, expound. The fed ajournumps december. If they take up her nomination this week and she passes, bernanke feels there shouldnt be two chairman in the same meeting. He would resign in the week, she would run the next meeting and press conference, if she passes this week. We might have a different fed chairman next week. Say all of that is real im not saying it is, came out of jims mouth, not mine say thats real, my guess, everybodys going to jump to the conclusion, that means theyre doing that because she wants to begin the taper process. Your answer to that is . No, its her meeting, her fed, and shes more of a believer in qe and it makes the taper next week and in january less likely, if shes running meeting right away. Just the facts, maam. Thanks, jim bianco. Thank you very much, rickson. Discovery communications ceo david zazslav. [ male announcer ] heres a question for you if every u. S. Home replaced one light bulb with a compact fluorescent bulb, the energy saved could light how many homes . 1 million . 2 million . 3 million . The answer is. 3 million homes. By 2030, investments in Energy Efficiency could help americans save 300 billion each year. Take the energy quiz. Energy lives here. Take the energy quiz. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Yep. Got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. So i knit until it was full. Youd be crazy not to. Is that nana . [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. [ male announcer ] fedex one rate. Stick with innovation. Stick with power. Stick with technology. Get the new flexcare platinum from Philips Sonicare and save now. Philips sonicare. Coming up on the halftime report, abercrombie one of the worst s p performers but the companys giving the ceo a vote of confidence in a new deal. Well find out whats going on there and if he could land on herb greenbergs worst ceo lisp Td Ameritrade says the Retail Investors more bullish now than in two years. Whatnary buying and selling. And there are only 15 trading days left in the year. Were covering all Market Action straight ahead on the half. Secessions, amaze. Jon fortt here. I missed it, carl, apple did sign on to the survey license reform note. It just amazon thats left off. Interestingly enough, apple in with microsoft, google, and the others. Wow. That club more inclusive than we thought. Next guest, taking the consignment store online by offering a platform for customer bozt to resell old clothes and giving them a cut of the profits. Ceo of thread up and jon fortt here at post 9. Good to have you. Thanks for having me. Not only was i not aware of the space, but also the competition that is within it already. How active is it . Its a huge space. Were seeing folks funded every few months a new competitor online. It validates our leadership early bringing consignment online. Jamess, interesting space, my sisterinlaw used it for her daughters who is a toddler. My concern is inventory. Youve expanded. Womens clothes in there now. From my glance, more than 130,000 womens items now. A lot more than you have for boys or girls. Is that a problem . Are you going to be able to turn that inventory over or write it off . Yeah, sure. We focus on buying at right price. We think about ourselves as arbitrage business. These arent mercedes s classes, its clothing that moves through the system at a high rate. Its about understanding your pricing and we buy at the right price, able to sell it at prices consumers love. Its predictable when items will sell. So we feel confident in the merchandising that were doing. James, this is a big business. Toward the end of the year, as people are trying to prepare tax returns when you consign your clothes you can write them off. Im wondering, seeing people taking to thred up rather than a traditional consignment store. But we see its around convenience and allowing consumers to make extra cash at the end of the year or at the beginning of the year is where esee customer wanting to live. We see huge upgrowth in the new year people are saying i need to make extra bucks and its easy to use thred up and thats why they love it. Kids clothes makes sense to young parents, john, im looking at you, because we know how quickly they outgrow clothes. What you going to do if you dont have a Family Member with whom to pass it down. Kids is where we started, our bread and butter. Clothes dont grow, kids do, the anchor of the brand. What we see with folk they come on, use the kids service and really its the mom in the home that starts buying clothes for herself. Thats where womens has been a huge success for us in growth. As family starts with kids and move to womens product. They come back more and more. One of the tricky things here, though, the return process. If you get an item that isnt as advertised, its not as good quality, you cant sell it, or if the item doesnt sell and the person wanted it back, what are some of the speed bumps in your business that youve encountered over the past few months like that . The biggest hurdle is getting people to suspend disbelief and give used goods a try. We see ourselves as the third wave of a larger industry around first it was about buying certified preowned cars and then about certified electronics. So, you know the biggest the bumps for us is getting trial. After that, customers are happy with the product and the quality and the fit and we take returns like any other retailer. The reason why our returns are lower than industry average, items are affordable that customers are happy with what they get. And especially on the kids product, kids and grow into it the hand me down economy, but were confident in the product were putting on line. Reid hastings, what does he bring to the table. A 50year, 100year company what reid brings to the table, give me advice, helping me think of building out a great team and story for the long term. I think that wisdom and that leadership is something that you know is really kind of priceless. Ill tell you, carl, i think this sort of thing works better for kids who are less active, lets say. I got a couple of boy, i can barely keep the clothes on them interest disintegrating. Please dont send us those. Dont worry. James, thanks for your time. Well be watching. Janes reinhardt. Still to come, another big interview discover communications Ceo David Zaslav on a new content initiative. Facebook toying with the idea of adding sympathize button as one alternative. The squawk on the treat, give them help, what other button should facebook be considering . Tdd 18886486021 there are Trading Opportunities tdd 18886486021 just waiting to be found. Tdd 18886486021 at schwab, were here to help tdd 18886486021 bring what inspires you tdd 18886486021 out there. In here. Tdd 18886486021 out there, tdd 18886486021 there are stocks on the move. Tdd 18886486021 in here, streetsmart edge has tdd 18886486021 chart pattern recognition tdd 18886486021 which shows you which ones are bullish or bearish. Tdd 18886486021 now, earn 300 commissionfree online trades. 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For all of those people posting pictures of their dinner, breakfast, lunch. Any and all of the above, we like to think there arent many of those people, but there are, sometimes ourselves included. Any button that tells people theyre being a jerk, that would be nice, too. Yes. Not that that ever happens on social media. Not that were jerks either. A big interview from david faber, Ceo David Zaslav live from the ubs Media Conference talking about a new content strategy, that and more. [ male announcer ] this december, experience the gift of true artistry and some of the best offers of the year at the lexus december to remember sales event. This is the pursuit of perfection. At the lexus december to remember sales event. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. 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Most of Americas Energy comes from right here at home. Take the energy quiz. Energy lives here. Ubs Media Conference under way in new york city. Ceos gathered to discuss the changing face of the industry. David faber joins us from the conference, where hes joined by a special guest. Carl, thanks very much. We are joined by david zaslav, of course, friend of yours and mine, ceo of discovery home to, well, you know, so many different programs, honey boo boo, shark week, deadliest catch. I could go on and on. Why dont you. Cake boss is a favorite in my family. I love to start with in the u. S. , we always talk international, as we should with discovery but youve been able to outpace growth in the fouser a long time. How much longer can you keep doing that, or do you fall to the growth rate that most Cable Networks see . First, i would say we have a different belief system at discovery. A different strategy, rely, than many other media companies. We have 14r channels. When i got here we had 5 market share. Other companies had 10 channels and 20 mark share. We have to invest more in content and grow flu channels. We invested in own with opera. Profitable. Top network for africanamerican women. Invested in i. D. , now a top ten network, Crime Network in the u. S. , invested in destination america, animal plant et, science. Overall strategy was, make discovery and tlc stronger but invest in a lot of new channels, velocitys another new channel. Market share has grown to 11 of viewership on cable. We grew our portfolio 4 in a mark thats flat. Year before we were up six. The year before up four. Do you think you can keep doing it . Thats the question. We think we can. This year we grew four. And we still believe, if you tell Great Stories with great characters under a strong brand, more people will watch. In the u. S. Were going continue to do that. I think we can continue to win. On tonigp of that in the u. S. Viewership has flattened out and subscribers have flattened out. The advertising mark remains strong. The ability to get cpm growth when the differential between the broadcast cpm and cable still significant, its a big helper. And in the u. S. , were getting paid more money for our content. We have netflix and amazon buying content. Ability to get higher subfees from the distributors in the u. S. Has gotten better. There may be weakness in the scatter mark, have you seen it . We havent seen it. Market remains relatively strong with good pricing. There was a bit of a slowdown last year and were feeling a little bit of a slowdown but we are feeling its seasonal. A little bit of a slowdown now . We are. We think it feels steady. Lets talk about sports and international, which combine id with euro sport a year ago you did the first deal in acquiring 20 20 , a right to take control of the end of next year. You mentioned it, including just in the presentation you gave downstairs you may move quickly to do that than is your right under the contract . We have announced were in discussions about the possibility of taking control earlier. Were just in those discussions. What would be the advantage of doing so earlier than you might otherwise . Well, we think its a great asset. Were working very effectively with tf1 in terms of taking our local sales teams and our distribution teams in the 59 countries where your sport is, were getting to know at asset better. Were in the style of whether it makes sense for both of us to do something sooner or wait until late, thats all. Why sports . Why a great asset . Well, euro sport has a fantastic brand, its in 59 countries, has between 1 and 4 channels. A lot of very good sports and theyre profitable. Its a great compliment to what we have. We have eight channels in 59 countries. Some of the countries we have 14 channels. We have local teams in every one of the countries. If we can add euro sport brand with very it would take very no incremental cost to represent them in the market, and we think together with discovery thats the number one channel for men, that we can maybe drive more value. And theyve been great to work with. Talk of this conference, to a certain extent, ceo of Time Warner Cable here earlier, consolidation, we dont know fit going to happen. As a content provider would you look favorably or worry if theres was consolidation among the distributors. You have two distributors from the sky, dish, and directv, you have two phone guys, great verizon and at t, effective, very good product and a cable distributor. There are a lot of markets like italy where its basically just rupert and a small system that berlusconi owns. In some markets you can great product. But if you dont have a competitive distribution mark you cant get significant value. In the u. S. Its competitive. The fact theres consolidation, i think in the end that would be good for the industry because it might mean there would be a quicker and more aggressive push into tv everywhere which would be good for all of us. We have to leave it there. As always, thank you. Great to see you. A brief time. Appreciate it. David zaslav. Appreciate hearing from david and david. Discovery up 32 . Scott wapner and the halftime. Thanks so much. What were following today. Abercrombie shares down 30 . Why is the Company Giving its boss a big thumbs up . Correctly called sysco surge now jon najarian on another name poised for a pop. The market whether stocks are about to embark on twoweek rally to the finish. Was fridays jobrelated jump the beginning of bigger things to come . Its halftime, lets play the action. Joe, whats in store over the