Transcripts For CNBC Squawk Box 20091228 : vimarsana.com

topic, what was the top story, would you say? she looks like she could just start talking there. do you want to know the conan thing where you move the mouth and you do the talking? a survey by freddie mac predicts that the average rate on a 30-year fixed rate mortgage could hit 6% by the end of to 10. freddie mac s deputy chief economist says this is because private buyers will demand a hire rate of return on securities than did the fed. lenders may have to raise the rate in order to make that happen. mortgage rates hit an all-time low earlier this month. but then last week, rates climbed above 5% for the first time since the end of october. i like that quietly the obama administration has raised the caps on what we bail out freddie and fannie for. did you see that? yes. $200 billion apete piece. yes. but they re paying the executives of fannie and freddie half of what their predecessors got, but still a fair chunk of change. $200 billion apiece. that is really bad, the way it turned out. and they re guaranteeing so many mortgages that are, i guess, not working out so well. but those are those make the aig numbers look small. it would be larger than the aig bailout. that implicit guarantee of freddie and fannie, just was never you know, it really has come home to roost. but those 200 billion dollar numbers drove it home to me when i looked at that. there might as well not be a limit. the cap is that far away. another holiday shortened trading week and a quiet one for the economy, as you probably can guess. just a couple reports due out in the week ahead. wednesday, weekly mortgage apps and thursday, jobless claims. starting today with two-year notes, $44 billion, a piece in the journal this morning, joe, about given how what yields have done over the past few sessions will people be demanding a little more return, which they did. you would think it s going to be much higher. did you get a chance to look at baron eps? yeah, a little bit. i like that quiz. i didn t take the quiz. i m not going to take it. it s too hard. did you try? no, no, too many decisions. just one of his and he puts his answers down, too. but a 10-year over what was it over, six or over 5.5% was one of the in 2010? yeah, in 2010, which would be a huge surprise and a huge move. but there were some other good ones. the ceo is gone by the end of the year, which the dow component does the best, which does the worst. you get two points extra. where is gold headed, where are the markets headed. that doesn t stop likes like ableson from trashing guys who made those calls look bad. i m sure he doesn t even talk to her, either. we ll talk to doug cass later today. we talk tocass. cass is in here everyone he s our guest host later today. maybe. yeah. let s check on the markets this morning. it will be a busy monday. let s say it is. let s just say it s going to be busy. futures here are all in the positive. the nikkei is up to a four-month high. japan s factory output up four months straight. europe is doing pretty good, as well, and we ll start on the positive side here in the u.s. the 10-year note, talking about interest rates in this country, getting up to 3.844%. that s much higher. the you are row is coming off its worst week against the dollar since january. with a relatively stable dollar this morning, gold adding 78.50 to $1,112 back above $1,1100. and the u.s. is boosting airline precautions following a nigerian man s attempt to blow up a transatlantic flight on christmas. remember, that s why we take off our shoes now, brian moore, because of the shoe bomber. where is there is a will there is a way. absolutely, joe. we had to take off our shoes after the shoe bomber. now we have a guy smuggling the bomb in his pants to the airport. so we re seeing a dramatic uptick in security, people being patted down, all kinds of unpredictable security at airports all around the country. the only thing you can count on is a long line at whatever airport you re going to go to. u.s. officials have a lot of investigating and a lot of explaining to do in this case. we re finding out this morning that british authorities banned this suspect from entering their country, but u.s. officials say they put mar on a watch list but not a no-fly list pep became radicalized, that he disappeared, that he reported to u.s. authorities and that they re hoping there be some sort of investigation that would bring him home. now they say they are plain happy that he did not kill in my opinion. yeah. i like brian, i m going to talk to carl about this, too. the system worked, she says. that s assuming that a dutch traveling will dive over five seats in the center i ll and grab the guy. is that part of the system that we have in place right now? did the system work? he boarded in amsterdam, right? the system did not work. he was on a list. a list of 500,000 people. do you agree with napolitano, the system worked? what is she talking about? were it s not my job to agree or disagree. what the heck does where did that statement cofrom? if it is guy got through security with a bomb in his pants, clearly the system broke down. we appreciate it, brian. thanks for joining us here this morning. stop defending people. i m not defending anybody. i m just saying, the guy did not board in the u.s. that does change the equation. it does. he had to, what, switch planes in amsterdam and go through security there, right? yes. but we re going tighten security now out of all of africa, i guess. but it s the transatlantic flights are the ones that seem to be the big problem. and for a while, there were worries that he was not the only one on a plane at that time. but this petn the powder. yeah. there s no way that you can what we have to exposedly rely on is almost profiling or looking at suspicious not profiling, but the you know, where people buy in cash, pay cash, that he had a round trip ticket. but he bought cash. he paid cash and that raised eyebrows. but it s tough to do it with the psychological trying to figure it out if people are acting suspiciously. and you know the sheer number of people who get on a plane acting suspicious. it s unbelievable. well, the system worked. as long as you re reassured. i m reassured. thank you for that. i m just glad there s no war on terror any more. what happened? i don t know. i m not really sure. i guess there never was one. okay. let s i m moving on. let s get overseas. chloe cho is in singapore and first we re heading to zurich with carolin schober. good morning, carl. hope you have a wonderful christmas weekend. here in europe, markets are continuing this happen their christmas rally. this is happening at low volumes. traders say most of this week s market moves will be kriven by window dressing before the year-end. the cac and the dax higher by 3.4%. in the uk, the ftse is closed for a banking holiday. however, we have some positive news out for the uk. data shows that the number of people out shopping on a boxing day in the uk, so the equivalent to your black friday after thanksgiving, that number increased by 18.5% from last year. let s hope they also spend more. now let s get an update on the asian trading session with chloe in singapore. thank you very much, carolin. hope you had a wonderful holiday, as well. there is plenty of the post christmas cheer. the nikkei is hovering at highs for the year. we had some better than expected tacktory output coming out from japan. what got a lot of investors happy in that market was that a survey conducted on manufacturers stating that they expect industrial output to rise by 3.4% in december. and another 1.3% in january. that seemed to give a lot of reason to cheer that perhaps japan may avert that much fear about double dip in the coming year. that is why you have the nikkei rallying as much as it did at 1.3%. a lot of the exporters also in part getting help from the stable dollar yen rates at 91 for quite some time now. the south korean kos pit put in a small gain. this is one of the better performing markets in the asian pacific enjoying a positive of 50% or so. the big news coming out of this region would be that samsung t&c, samsung industrials, these companies won a $40 billion uae nuclear power project. this is the biggest contract, biggest energy contract coming out of the middle east. so certainly a lot of cheer coming in the space of contractors and chip builders in south korea. the greater china region, the hang seng managed to turn tail towards the end of the trading day and that s in part baht because of this much awaited government auction. that disappointed by all estimates. so a lot of the property plays in ang sang dragging that index lower by 0.2%. the shanghai composite, we did get some reassuring comments from premier wen jiabao over the weekend in an interview saying that stimulus days do remember that china kick started that two-year stimulus package in late 2008, and this means by all calculations that china will continue to put the stimulus measures in place by the end of 2010. so we had a lot of brokerages rallying. but on the other hand, we have to know that premier wen did talk about risks of inflationary pressures going into the new year. he also talked about taming price treasurers, especially in the real estate sector but investors seem to be looking beyond that. and it looks like they re undergoing drilling downstairs and i ve got to wrap it up by now. so let me send it back to you guys. wait. are you telling me that there s construction going on and that was for real? welcome to asia. can you believe i mean, normally we get along really well with these people and we time it well, but i think they ve calmed down. i thought we did that to wrap you, chloe. i thought, we ll show her. but that s nothing else works. that sounded like our audio guy. whew-ee, chloe, you were going to go for ten minutes, i think. joe and i were going to go and get some coffee. nobody was wrapping me. obviously, our neighbors decided they had enough of me and my asian market. wow. that is great. that s a root canal going. now we know what to do. chloe, thank you. chloe cho in singapore this morning. markets here are getting ready for another holiday shortened trading week. let s get ready for our monday morning strategy session and see what we should be watching. paul schatz from heritage council joins us. good morning to you. good morning. hard to top that one, carl. yeah, i know. before we talk 2010, let s talk the last week of the year. the week before christmas is positive. i think the week after is sometimes twice as strong. do you expect any action this week at all? i think it s going to be a muted week. the last week of the year is usually very strong when you have september/october correction, which we didn t really have this year. i like in this period to 03 where the last week of 03 was up roughly 1%. i think if we re lucky, we ll be up somewhere between 1.25% and 0.75%. so is your strategy for 2010 going to be significant lly different than yours for 09 was? not significantly different, no. i thought volatility in 09 was going to continue to go down. i think volatility for the first five to eight months of 2010 is going to continue to trend lower. i think the peak of the market we re going to see by july 4th, somewhere between 11,500 and 12,000 on the dow. but i see that as being auto significant peak. i don t see this year, the second half as being the savior like it was this year. really? so you think the gains will be front and loaded for 200? absolutely. yeah. i still do not believe our economy can stand on its own two feet if it wasn t for all this free and easy money being thrown into the system by the government. the government is making the wrong mistakes, as they usually do. so are you looking for the government to telegraph that that is coming to an end or are you waiting until they actually do pull the trigger? well, first of all, let s spraid separate it out. i think the fed is starting to tell you that this is not going to go on forever. but clearly it s going to happen for the first quarter. the first quarter, there should be free and easy money. i think the treasury will start retrenching quietly. i don t think they re going to ring the bell and say hey, folks, the economy, you better sink or swim on your own. i think it will be slow and gradual. but in my opinion, stimulus doesn t work. you can t find any time in history when stimulus really turned an economy around forever. i think they re going to raise taxes by letting the bush tax cuts expire and that s never good for an economy that s teetering. so what is your money in next year? i think at leave the for the first five to eight months, equity markets will serve you best. and i think you have to be broad based sectorwise. in technology, we like semi conductors. i like oil services. utility sess probably the most unloved sector in all of the markets. every interview i hear, and everything i read, everyone hates utilities. so i would be bros broad based. but you will transition at some point into what? we ll become more defensive. i think treasury bonds will be a surprise of 2010 in the second half of the year. i think the dollar will be a surprise second half 2010. so there are two ideas right there. interesting. a lot of people come on the second half and say things are getting going. here you see the opposite story. absolutely. i m taking the joe kernen route. i like this barry napp guy. he says the first half of the year people will be worried about them taking away the punch bowl and when they start doing it, then we ll go up. how much more does he think we ll go up in the first half sfp. we won t go up at all. it s the opposite of what everyone else says. similar to 2004, the stocks spent the first half of 2004 anticipating the end of the easiest monetary policy in decades. once it starts, then they go sharply positive. it was actually almost the first ten months of 04. then the last two months of 04, we went up 10%. i totally don t agree at all. that s what makes markets, right? yes, it is. what are the highs for next year? 11,500, 12,000. that s like kissing your sister. there s no reason to be in this thing, then? if you can make 5% to 10% in the first eight months, that s not good? after ten years of nothing, i want something, right? joe, is that like making only 18 pars in 18 holes instead of not making any birdies? the day i do that, i ll let you know. we ll pop the champagne. any mine hole score is a good 18 hole score. thank you, guys. happy holidays. you, too. coming up, hugo chavez threatens to nationalize the auto industry. so? las vegas goes upscale. a busy monday morning as squawk box continues. (announcer) some people just know how to build things well. give you and your loved ones an expertly engineered mercedes benz at the winter event going on now. but hurry - the offer ends january 4th. it all starts with havinglocks more hotels to choose from.. that s why i book with expedia. so i can find someplace familiar. or somewhere more distinctive. nice! then i can compare dates to find out when i can save the most cash. done and done. we should do this more often. more choices, more savings. where you book matters. expedia. dot com welcome back for a busy monday morning. actually, not so busy in between christmas and new year s. venezuela s hugo chavez is threatening to nationalize parts of the auto industry. he specifically mentioned toyota, fiat and gm. the journal reports chavez threatened to ex appropriate toyota s plant if the company doesn t produce more cars designed for rural areas. and transfer new technologies and manufacturing techniques to its local unit. two more vegas casino resources are preparing to open new hotel towers. one at a planet hollywood resort, the other at the hard rock. executives say they re aiming to please high-end guests. and ferraro is said to be examining possible bids for cadbury. a company spokesperson says t nothing has change from a month ago. let s check in with our friend, scott williams at the weather channel. scott, nice day yesterday, but we heard that cold is on the way. yeah, you are certainly right, carl. we will continue to monitor the leftover holiday blizzard moving into the northeast and new england throughout the day today. looking at the radar around new york city, most of this not making it to the ground. if we do, we ll see a few sprinkles early this morning. but most of the snowfall confined into upstate new york and along i-81. watching out for lake-effect snow, as well, around buffalo and erie. even the motor city is seeing snowfall early this morning. now, the overall forecast today across the northeast will continue to find rainfall in boston. lower 40s around new york city. there s the lake-effect snow as we move into the erie area today. around boston, buffalo, the motor city into new york s laguardia watching for volume and seattle, minor delays expected. meanwhile, ae was move into detroit, right now you have the snow falling, so likely to see this green light go into the yellow or red light category as the morning progresses. new york s laguardia, we will see wind picking up as the day progresses there, as well. one more stop as we focus in on some of the activity that we are expecting to see, quiet continues for some due to weather, but certainly you ll want to call ahead and check with your carrier due to increased security as well. as we go back over to to our titan source, you can see what will happen in the northeast as we move into your tuesday here. expecting more lake-effect snow fall, and that could be heavy at times around the syracuse area. back to you. scott, thank you. it s very snowy so far, isn t it? it snowed before winter. yeah. it s going to be cold, too. did you see manning on the sidelines yesterday, like a caged animal? when he got pulled in the third quarter? they lost. they re not going to be undefeated. for the first time in like 23 games. should they have done it that way? is it better to save him or do you go for the he was mad. i know. i mean, they re going to be in the playoffs. can you believe how good peyton manning is? did you see how that team looked without him playing? for that one game, not a wise decision. wouldn t you rather have him healthy? let me ask you this, do you play carson palmer next week against the jets inspect. yes. the bengals have clenched. they ve won the division. do you try and knock the giants out? let him rest. i don t know. that s what happened to manning. let him rest. i m making things up because i m going to tell you this morning s top stories, which i just went over, which is peyton manning and the jets. plus, the picture from the futures pits. also, dana talessy will be here on shopping, retail and returning. small business owners have a lot of questions. can paperless billing get me paid faster? 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i lost 22 pounds, and i ve kept it off for three years. get back in the game in 2010. order now and you can get two weeks of meals free, plus the all-new nutrisystem jumpstart kit, our secrets to ultimate weight loss. hey, you guys. boomer. well, thanks to you guys, i did go all the way. whoop, 50 pounds lighter. so, coach, how is the squad looking? best ever. you know, i have a real hall-of-famer at the helm. l.t.?! why not, danny boy? i lost 35 pounds on nutrisystem. l.t. and cheerleaders: pizzas, pastas, burgers, meat! come on, guy food is all you ll eat! four out of five men say nutrisystem satisfies their hunger. start your year off right. order now and you can get two weeks of meals free, plus the all-new nutrisystem jumpstart kit. call or click today. good morning. welcome back to squawk box here on cnbc. i m joe kernen along with carl quintanilla and becky is off today, along with a lot of people, a lot of businesses aren t doing anything this week. people shut down production at places. do you know in japan, most companies i think today or tomorrow is the last day of the year. they don t do anything. i don t think we ll see a lot of people it s kind of a good week to work, though, because we may not, you know, put in a full day. no. although we have. by 9:00, we ll put in a full day. you get a lot done. not a lot of distractions. but it might not get much fuller than the 9:00 a.m. time for pups. that s right. let s get right to the market. ira harris is standing by at the cme. ghost town. no one are you the only one there, ira. i m the short straw today, voe. i m the only one here. i think volatility. when it s such a skeleton staff, anything can happen, ira. stay tuned. joe, i m an old timer. i ve seen things in this period that would make your eyes roll. but you know, some people find opportunity. last week we saw the australian dollar have quite a move on this day up as there was a lack of liquidity. so we do see some moves. i think old time traders maybe take opportunities to advance into the new year with prices that they otherwise would not have seen. that s an interesting point. so you remember it was the monday after christmas the australian dollar made a move and then it continued into the new year, into 09. yeah. they tried to correct it the following couple days, but it does give you an opportunity to number one, put on some positions ahead of the year as we started to see some changes in the macro picture. what is this year s australian dollar then, yra inspect. i don t know. it looks like the debt markets look heavy, joe. and the debt markets that came out thursday was that the treasury removed the caps on the fannie and freddie, which is interesting. and it will be interesting to see the way it plays out in the debt markets. the mortgage backed security buying is supposed to roll off at the end of march 2010. by removing the caps, it looks like the treasury is expecting fannie and freddie to pick up a lot of the flack that the fed is going to leave. that s interesting. we were talking about that earlier and trying to figure it out. just from the numbers, were the caps at 200 billion? yeah, they were. and each, correct. but you know, it would roll off on december 31st, so it was interesting that the fed before as i like to say that, they were dotting the caps of fannie and freddie. quietly did that, yeah. i wouldn t say that that health care vote was quiet, but it was on christmas eve. but a lot of things being done at strange times. some people said this was kind of quiet. you re looking at that as a way for the fed to continue buying those securities, not as a negative hash inger for what s happening in the mortgage markets as losses mount for fannie and freddie. it s not if fed, it will be treasury that s allowing more risk to be brought on to those books because i think some people have called the fed balance sheet into question. so it s interesting when that did take place. it makes one roll their eyes. it is the season for all things retail. gift cards, spending, sales and more sales. dana telsey joins us from new york to talk all about that. good mortgage. happy holidays, joe and carl. same to you. so this mastercard data has come out with a 3.6% number. that sounds pretty good, given where expectations are, right? that a good number. you have to adjust that for the extra day between thanksgiving and christmas. adjusted, it s still around 1% which is a pretty good number. a survey came out last night saying there was an average increase of just around low single digits in the malls. all in all, it s adding up. it will be a profitable christmas. the fact that it s full price will be a good thing. what surprise is are you seeing that you did not account for in your forecast? or did you nail it? our forecast was flat to up 0.5%. it hasn t changed. so far, it feels as if it may come in just a touch better than that. but with the markdowns this last week, this last week is 15% of holiday sales. obviously, fewer promotions. i mean, we talked a lot about leading into the season how they had a year to prepare, right, inventory wise? exactly. and it sounds like they had the game plan strategically in line, and the execution was pretty good, too. it was very good. if you went into the stores this weekend, they were trafficked. there was a lot of people in there. if you looked at the markdowns, you had markdowns. there wasn t as much inventory this year as last year and they ought brawl in new merchandise. so you had a balance of full price and markdowns. does it feel like the post christmas environment is going to be good, as well? it will be pretty solid. if these economic numbers continue to stabilize, we should get consumers continuing to feel secure for a year. and then we have online. given the weather and everything, there was a huge migration. i heard this morning that the kindle may be the most gifted item in the history of amazon. i ve heard the same thing. certainly the snowstorms last week helped online gain share. i was at banana republic over the weekend and the lines were long not because people just just buying, but they were buying and signing up for the banana credit card to get the discount. is that common? are we seeing consumers trying to leverage up when it comes to spending at stores? i think it depends which stores. best buy was having $197 laptop computer. i think they re spending where they re getting the deals. and finally, just for obviously we re a stock channel, dana. where does this leave the stocks of the retailers as we go into the new year? they ve had such a run up. i think luxury goods and jewelry win necessary 2010. i think that plays into tiffany. i think on the apparel side and on the footwear side where we ve seen some good strength, j. crew, urban outfitters even the gap should have had a good season. department stores will restock. joe got uggs for christmas. i knew you would get them, joe. are they comfortable? they are, dana. they re not the high ones. they make loafers. exactly. they ve got fur inside but i still wear socks because i don t like the way my ankles feel if i don t wear socks. it will take time to get used to it. ill will the 25 degrees tonight. do you wear socks or not? you re not supposed to wear socks. how do i keep my ankles feel basically, after your feet get warm, it will make your ankles feel warm. do you know how quickly i can ruin those uggs because of my gross, sweaty feet? you ll get a new present for father s day or next christmas. so get a new pair. they were under $100 from what i m told. or there s hose or knee highs, you can do that, too. and they were full price because ugg is the isn t discounting. you are unbelievable. she really is. and when we see mall shops, wherever they are, i expect you to be walking behind them bringing your elves with you. and i ll say hello to you. like there she is checking out the mall of america. dana, thank you. she does. she does a lot of the on the ground. you know, she s fought reading papers. no. if you have comments or questions about anything you see here on squawk, e-mail us squawk@cnbc.com. our retail conversations are just getting started this morning. up next, key data from mastercard on holiday spending. squawk box will be right back. 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[ tires screech ] bringing you the first and only wireless 4g network, as well as the most impressive lineup of phones. sprint. the now network. deaf, hard-of-hearing and people with speech disabilities access www.sprintrelay.com. because we believe in the strength of american businesses. ge capital understands what small businesses need to grow and create jobs. today, over 300,000 businesses rely on ge capital for the critical financing they need to help get our economy back on track. the american renewal is happening. right now. i hired him to speak. a lot of fortune 500 companies use him. but-i m your only employee. we re going to start using fedex to ship globally- that means billions of potential customers. we re gonna be huge. good morning! you know business is a lot like football. i just don t understand. i m sorry dick butkus (announcer) we understand. your business could use a pep talk. visit fedex.com/peptalk time for a check on the news outside the world of business. monica novotny near is here with a roundup of headlines. good to see you guys. in the wake of that attempted terror atock on a plane christmas day, law enforcement officials are cracking down on any unusual on planes. a six patient spend what was considered a suspicious amount of time in the bathroom. the man accused of friday s attack, 23 yield mu ar farouk adbulmutallab has been transferred from a hospital to a prison. an ee coli outbreak has affected south dakota, michigan, washington state. workers outfitted the sphere for this year with 88 new crystal triangles. guys, they say it s good for any kind of weather. if there are harsh winds or snow, it will be just fine. monica, you were alex has been in for you recently. you were out last week, apparently. well, you know, the holidays, spent a lot time at home with the kids, the husband. and yet here we are, carl. we were here last week and here we are again. we did something wrong there. thank you, monica. bye-bye. shoppers opening their wallets a bid wider during this year s holiday season. figures from mastercard show a 376% gain of a year ago. first on cnbc to discuss the numbers, mastercard adviser s vice president michael mcnamara. all fine and good, mike. give me the strong points that we can use to say this has definitely been better and the caveats, why you can t use mastercard necessarily to paint a brush for the entire industry. sure. well, overall, first, in terms of the spending post results, spending are our estimates for total retail sales. we utilize aggregate information but we also take other cash and card into account. in terms of the season overall, the overall number up about 3.6%. that s a positive, but that includes food .some health care, drugstore, those types of good. when you isolate on the individual holiday sectors, generally, stable. positive, but not necessarily a stellar season. i ve heard people say that wall greens, their numbers with h1n1. was h1n1 in these numbers, too, the vaccine? i mean, to some extent, but in terms of the overall retail figure, when you start isolating on the holiday sectors, you re looking at department stores, apparel, electronics swb all generally flat or electronics. but also super markets, food and things like that. yeah. so those are the caveats. what was it last year, the apples to apples comparison? overall last year, the number was down about 2.3% minority holiday season. however, again, when you look at some of the holiday related sectors, apparel, electronics, jewelry, luxury, all down double digits. the luxury sector was down over 20% last year. last year. and what was it this year? this year wibt was up about 0.8%. so relatively flat, slightly positive. again, it s a healthier numbers, though. as dana was saying earlier, the inventory situation, the pricing indicators that we have shows that the emergency discounting didn t show up this year the same way it was last year. so that should be a healthier story than last year. does it all match up with what we know about employment in the country at this appointment? these are mostly i mean, where are the real weaknesses? weaknesses, in terms of some of the mall-based traffic that we saw, the department store number was down year over year. that was a bit of weakness. the strength areas, e-commerce was up in the mid double digits. electronics was up about 6%. men s apparel and footwear, a lot of people had to buy boots because of all the snow. there s people that don t have jobs that are trying to give their families something. and then there s the people that are worried about whether they re going to have a job and i just wonder if it shifted since we ve seen sort of a the decline or the increase in joblessness has started to slow, anyway. i mean, it s not positive yet, but probably more people aren t worried about losing their jobs immediately, right? yeah. i think the momentum in the payroll numbers, that has improved i think it s a good thing. honestly, if you go back a year ago, the one was in a free fall state in terms of spending a year ago. this year, the word is more about stabilization. you know, people have been deliberate in their spending, we think. and when you look at some of the sales numbers, again, you re looking at a table environment now that hopefully you can build a recovery on. all right. you know, also as dana was mentioning, you are going to have to replenish the inventories. we should have a positive ripple effect, as well. when we come back this morning, our guest host is doug cass. all week on squawk, we ll do it again in 2010. strategies and outlooks for investing and success in some of the most outperforming sectors. at&t covers 97% of all americans. that s over 300 million people. i ve collected a few postcards of all the places that at&t has coverage. spokane, washington. boston, mass. san francisco. tulsa, oklahoma. dated a girl from there. warren, michigan. didn t work out. bozeman, montana. daytona beach, florida. madison, wisconsin. big college town. i think we get the picture. [ male announcer ] if you want coverage, we ve got it. at&t. this holiday, get a touchscreen samsung solstice free after mail-in rebate. host: could switching to geico 15% or more on car insurance? host: does charlie daniels play a mean fiddle? fiddle music charlie:hat s how you do it son. vo: geico. 15 minutes could save you 15% or more on car insurance. lose weight and jumpstart your year. any guy any age can do this. introducing the all-new jumpstart kit from nutrisystem. i m dan marino, and i lost 22 pounds with nutrisystem. that s me 32 pounds ago. i feel like i m 10 years younger. order now and get the jumpstart kit, specially designed to put you on the fast track to awesome weight loss. i did go.all.the.way! i lost 50 pounds with nutrisystem for men. nutrisystem is based on the proven science of the glycemic index that helps you feel fuller longer. for about $12 a day, you ll get 28 days of fantastic meals. fifty years old and back to my playing weight. order now and you can get two weeks of meals free, plus, the all-new jumpstart kit, our secrets to put you on the fast track to ultimate weight loss, based on more than 35 years of proven science. jumpstart your weight loss with nutrisystem. order now and jumpstart your year. call or click now. welcome back. we are in the chairs. many mondays i m not in a great mood, but i had you are in a good mood. i m in a really good mood. for a monday. for a monday. the reason is barons, don t like to read it but i got to, it s homework. and the enemy, i have to read the new york times, the op-ed pages. krugman and bob herbert, and david brooks oh, the forecast timnew york conservative. he wears a bow tie. he shows up, oh, there s the conservative. hey, david, you re a conservative and he spews liberal but this weekend is different. frank rich, i mean, okay, he s gone. tom friedman, out. public editor off today. all those guys out. maureen dowd, out. not only was she out but she brings in her brother, who his name is kevin dowd. i don t know if he s adopted or maureen dowd, kevin dowd, you know, if i ran the world, he would be he would have her slot. what do we know about him, other than he writes every year. he writes every year and maureen makes fun of, oh, no, kevin s back. what s red and not green at christmas? oh, he s going to spew these right wing he s a character, so ridiculous. you know, you can laugh at him. here s some stuff he said to bill clinton. you did too much work on northern ireland for the noble committee. next time do nothing and you might get one. that works. that works. so he s sort of saying positive things about bill. to harry and nancy. the twilight zone once had an episode where the town got the exact opposite of what it wanted. good job and farewell, harry. that might happy. we ll see. al franken, 250 years of senate tradition trashed, stewart smally would have done better. chris dodd, the only thing lower than your polls is your mortgage interest rate. ouch. finally to the democratic senators. go last next time. the bribes are much bigger. i mean, those are yeah, that s good. you know, they put it on the back page. on christmas. no one really sees it. this is the times attempt to show there may be a middle of the country that yeah. it s a great read. if you like maureen dowd even you were yelling at me. i knew you were going to read it. you sawal vin and the chipmunks, the squeakuel, it was the best box office weekend ever. with sherlock holmes. avatar. down 2%. sherlock holmes, number two. alvin number three. they say when christmas falls on a friday, sales tend to skyrocket. i think year over year, the weekend is up 37%. a lot of people went to the movies over christmas break. also, the other story, paul volcker, engaged. oh, come on. engaged to be married, according to fortune . he s 81, right? chairman of the economic advisory board, former federal reserve chairman. married to his long-time assistant, the former fed boss proposed on thanksgiving day. the two traveled to germany to visit her relatives and now they re vacationing in tushrks d caic caicos. he s 82, fiancee younger by maybe 15 to 20 years. people aren t exactly sure how old she he. you can do the math. something divide by two plus 15 i think it s is it twice your age minus seven, is that what it is? i can t remember. which is what s appropriate. i think he s in the safety zone. he is, okay. congratulations. yes, congratulations. that s nice. getting it done, 82. when we come back, getting top stories, plus the market man of the morning, our guest host doug cass. never one to mince words. we ll have fun when squawk continues. these are the building blocks of a perfect girls weekend. it all starts with having more hotels to choose from. that s why i book with expedia. so i can find someplace familiar. or somewhere more distinctive. nice! then i can compare dates to find out when i can save the most cash. done and done. we should do this more often. more choices, more savings. where you book matters. expedia. dot com because with national, i roll past the counter. and choose any car in the aisle. choosing your own car? now, that s a good call. go national. go like a pro. the final countdown it s the final countdown the 2009 trading year about to go into the history books. we break out the crystal ball this week and look where you can make money in 2010. what kind of surprises will the new year hold? surprise! where is the dollar going? will gold keep it s shine? is warren buffett going to pack it in? who knows what would have happened. our guest host doug cass breaking out his list for 2010. squawk box begins right now. morning and welcome to squawk box here on cnbc. i m joe kernen along with carl quintanilla. becky is smart and she s out this week. good week to take she prepares because you need to take this week, like you need to take next year s week right now. they don t like it when the two of us are off at once, so there can only be one at a time, and she got it. she got it. she probably has 2010 s week after christmas off. here is this morning s rundown. back to business on wall street for at least a couple of days. we re looking ahead to 2010 with an outlook for oil and natural gas. plus, he called the subprime meltdown back in 20 # 07 with the economy recovery he s ready to give us his credit and banking outlook for 2010. he always has a bunch of tough love. that s why i don t you know, i don t look forward to it because he ll tell us the stuff we re dolg doing wrong, professor of finance, joe mason. we re still doing a lot of things wrong. and are you bullish on gold? we will ask our trading block about the latest moves in the dollar and whether investing in gold is the right move for right now. first, though, carl has a look at this morning s top headlines. thank you, joe. retailers turning in a positive ho holiday shopping season. mastercard reports sales were up 3.6%. result fueled by a 15.5% surge in online purchases. last year retailers posted a drop in sales, turning in their worst holiday performance in years. a survey by fannie mae predicts the average rate on a 30-year fixed could hit 6% by the end of 2010. and a consortium of south korean firms winning a deal worth $40 billion to build nuclear power plant in the united emirates. new security restrictions at airports across the country today following that botched attempt by a my gee yaer man to blow up an airliner on christmas day. fliers will likely face longer lines at check points and tougher rules restricting movement on the airplane during flight. in fact, some now, jose, you may not use the lavatory in the last hour of a flight. i saw that. which is sometimes and not get out of your seat at all in the last hour. took me an extra two hours in security in palm beach. dug caoug cass is here. that s awful. palm beach is awful anyway. they have the huge line to get through security. it s a labyrinth. it really is. glad you made it. it s not weather-related either. think if it s weather and yeah, it will be nasty. quick check on the markets at two minutes past the hour. futures looking okay. green arrows in asia, green arrows in europe. 18 points above fair value. oil, a four-week high. saudi king abdullah says oil prices will rise reasonably more, back to the yir they thought was fair value, almost $80 at $78.37. d ten-year note, now to 3.84% with a lot of treasury supply on the way this week. dollar relatively stable. euro having the worst month against the dollar since january. and gold is adding a few bucks back. back above $1100 an ounce. sorry. our guest host for the next two hours, that was him weighing in, doug cass first the jack hammer yeah. founder and president of sea breeze partners. you got your own little thing here, thinkpad. i m turning off the volume. is it a notebook? yes, it is. a desktop/laptop. welcome. you know, byron weem, people know about his surprises. you do surprises, too. he won t do things that are consensus. a lot of your stuff is just predictions here. they aren t necessarily earth-shattering. i want to go over 20 of them quickly if we can. first one is corporate profits and gdp up in the first quarter. that probably is kind of consensus. i say corporate profits more than double. the surprise is corporate profit more than double in the first quarter yet the market is nonplus and makes no progress. the stock market makes no progress. maybe that s in some of these things. what about the gdp, up also? up over 4.5%. that s a big winner. what about the fourth quarter? in line, consensus. what that? 3 now or something? 3.5% or something. that will be revised lower. no positive job numbers in the first quarter? modest gains in jobs. i look at in fact, that s it s the reverse of what i said, what happened in my surprise list in 09 when i said housing and the economy would recover much quicker than people expected. and the s&p would rise by 20%. you expect the dollar to explode higher. i think rates real rates are going to ratchet higher. and we re starting to see it. and it s you know, one of those due bills from a nation that s whose deficit is growing in a spectacular fashion. that s the dollar, the higher rates, not a big rebound in the economy or jobs? that s correct. it s purely higher interest rates, which is the not a great way to get a strong dollar. no, no. that causes gold to topple to where? i think gold is going to break $900. it s one of the most crowded trades. if you draw the charts, that s where it goes. i mean, it looks like a i don t know but if you paid $1200 an ounce a month ago that s what i mean. it goes it s got this nice base at 800, 900, goes up like this and draw it back down to where it came from it s down below $900. i don t know message doug, not us. banks tighten sooner. jason trainer brings it up as a risk to the ee equal lib reyum. i think we ll follow china. we read in the journal over the weekend, so i suspect a surprise will be a much earlier increase in fed funds than generally expected. israel finally gets fed up with iran and attacks? yes. i think that will cause a correction is something no one is thinking about. when i distill all the possible uncertainties, geopolitical is uppermost in my mind. we began to see a problem christmas and potentially a problem two days ago. and of all the high odds which have a real lower odds probability, in my eye, is continued is substantial mid east tensions. it s weird because, you know, you could almost can t you let this thing play out? couldn t israel let things play out in iran the way they re going right now? they re not going that great sure, but it wouldn t be fun making a surprise list. yeah, exactly. you ve got a dark sense of fun. i mean, that regime, this has been as tenuos it s been since the revolution. right. your buddy, john wants to go over now to legitimize the he s the only guy that still recognizes sorry. all right. let s go to next. stocks drop by 10% in the first half of next year. yeah. i think that if we look at the consensus forecast, they re really clustered, whether it s corporate profits, expectations for the s&p to be up 10% or 15%. gdp, interest rates are generally expected, yield on ten-year is expected to range 4%, 4.5%, so i m saying that we get a decline and the the first surprise is that corporate profits double more than double in the first quarter. and then you have an event which hurts the market and then we get nothing for the rest of the year. for even the second half? second, just total boredom which no one expects. maybe. that s some people say as the fed starts tightening that stocks start finally they worry about the eventual tightening and then they go up when it happens. the bond market is doing it for the fed right now. we ve seen a 40 basis increase. goldman sachs goes private. yes, with warren buffett assisting. how much a share? it moves back to the level he bought the stock and received the warrants at $115 a share. that would hurt their ability to to finance and lever things. it would allow them to pay themselves without scrutiny? that s the only reason? my issue of investment brokers getting out of control and leveraging up, and i know it sounds insane, but is for the authorities, the treasury, to force these companies to go private. because i can guarantee you in private forum that these these miscues never w have been perpetrated in the first place. second half gdp is flat? yes. flat means zero? zero. in other words, double dip. almost back to all right. rate senses ive tocks outperform, like utilities and commodities and metals underperform? yes, consistent with lowering growth expectations. and treasury yields fall? yep, treasury yields, i m saying, peak in the first quarter, 4%, 4.25, not much now and drop down coincident with slowing growth. that s 11. we have nine to go. you want to you ll do those later. we ve got some regarding buffett, tiger woods, the yankees tiger woods and buffett start dating. that s not that s not on the list, joe. oh, okay. you re right. oh, those aren t those aren t related. yeah, that would be weird, right? yes, very weird. it s a great list. thank you. got any comment or questions, we would love to hear from you this morning. our address is squawk@cnbc.com. when we come back, he called the subprime woes in 07 and he joins us for his outlook for the housing and credit markets in 2010. drilling for answers to the nation s energy problems, oil and natural gas will be our focus when squawk box continues. time now for today s aflac trivia question. on this day in 1832, what u.s. vice president resigned from office? christmas. yeah, how will you pay for things like food.electricity? dental bills. gazooks. you need a back-up plan ho, ho, ho. that s why we have aflac! so i ll have cash to help pay bills! great.but what if you re still not better by christmas? hmm. afllaaccccccccc!!!!!!! (santa): aflac. we ve got you under our wing. rudolph s better. but now blitzen s sick! now the answer to today s aflac trivia question. on this day in 1832, what u.s. vice president resigned from office? the answer, john c. calhoun. squawk stories, all right, let s check the futures. that s kind of a story. the futures this morning indicated up about 17 points or so. we had a record-breaking weekend at the movie box office. avatar did another $75 million. wasn t down at all. i saw alvin and the chipmunks, the squeakuel. i like this david cross guy. jason leigh, must not have wanted to be in a movie very much because he was in the first five minute and he was gone for the whole movie and ed took over from there. so i felt gypped that jason leigh wasn t in it. the original only made $44 million. and it did $70 million in the first five days. the girls, they do all the the chippettes. hip-hop chipmunks. right. we know there s no such thing as female chipmunks singing. males have been around for a long time. you had to disspend the belief that females is there a character dave? no, dave gets hurt at the very beginning. he s in the hospital at the very entire. the guy who plays ed on nbc is the star of the movie. and he kind of jolts his way through the really? yeah. who s your favorite? i like the little chubby one. theodore. i think that s theodore. i identify with him. i m not sure why. yeah, but it was a big cass, stay out of it. our next guest says there is a growing conflict between law makers and the banking industry on how to solve the industry s problems. joe mason is professor of finance at louisiana state, senior fellow at wharton school and from empress llc. what are you planning to say for this banking committee? we seem to have congress pursue pet projects, open bank assistance, modifications, consumer financial protection agency, but those really don t get at the heart of what caused the crisis, they re not the heart of the recovery. while congress did theirs in this way, we have the industry going off, really undertaking what we call restructuring the securitizations that failed, providing ne ining new pretoe c now putting in place servicing requirements that allow servicers to better modify loans. really making very important changes to the lending paradigm, the servicing paradigm that can make sure this kind of crisis doesn t happen again. of course, that s all happening from the private sector. congress and regulators aren t involved in that. nonetheless, the industry s moving forward as you hope. that sounds pretty positive. it would be even more positive if some of the public policy did its part, right? well, that s the point. congress could help here. it s kind of lead, follow or get out of the way here. congress is not leading or following but they re not getting out of the way either. things like restraining consumer choice and consumer financial protection will hinder economic growth. brow-beating bankers on the hill isn t going to help. congress want bankers to lend more but be safe. they re pushing at all these conflicting goals. it s just creating problems for the financial services industry. it s going to impede growth in 2010. are you saying that congress should let these banks solve this problem on their own? are we willing to give them that much rope, given what they ve put us through over the past two years? well, i d put the issue slightly differently. i ve testified on capitol hill now, i think, nine or ten times on these topics, recommending each time congress go down this path of taking their place in this reform cycle. congress has been unwilling to go down this path. unwilling to step in and provide these kind of protocalls that could help the industry. instead, they keep playing with populous measures that can buy votes. if that s what they want to do, fine. then the industry will recover because we know markets are everywhere and always present. markets do work. and the industry will provide these reforms if congress doesn t. joe, doug cass, sea breeze, good morning. good morning. don t the regulatory authorities understand that we re building a large back an ever-larger backlog of phantom housing inventory? because the servicers want to continue service. they don t want to force foreclosure because they force foreclosure, they lose their fee basis. i agree whole-heartedly. and by throwing a couple thousand dollars per loan at the servicers for modification for kicking the can down the road is going to exacerbate the problem, not solve the problem. do you think, when we talk about the legislation, now that health care is coming to a close, people are turning their attention full attention to that, how much bite do you expect the law eventually to have? the new laws proposed legislation coming through senate and house right now, i expect really very little. there are a couple of threat points in the legislation that are extremely important, however. one is open bank assistance. something that was ruled out by the fdic many years ago after the thrift crisis, which some in congress want to bring back. another is the treatment of hedge funds in the systematic risk assessments where small hedge funds have to pay in much smaller than the typical size of financial institution that s targeted there. these and several other points are threatening to cost the industry significantly again. point to impede economic growth, not stimulus in 2010 at a time when the fdic is burning off about $3.5 trillion in failed bank assets compared to, for instance, a thrift crisis total of about $800 billion. we re in for a long haul here. finally on compensation, have the rules changed enough here to where the reward for taking risk has set limits, healthy limits? you know, that s another problem with the legislation. the compensation issue is specious, quite honestly. it throws out banks out of their samples because they re too different. we really don t know a lot about changes in corporate governance and how those affect banks. moreover, the rating industry reform are omitting a significant potential reform for corporate governance ratings, which right now are holding up corporations across the country to meet these corporate governance ratings models that are, in fact, more meaningless than the credit rating models that we saw blow up early in the crisis. so we re imbedding some other per verse dynamics in the system by pursuing corporate governance. many on the hill want to get away from the type of provisions in the current bill. they don t know where to go next. we ll see where that wind up. joe, good to see you. thanks again. joe mason. coming up, a weather forecast heading into the new year. plus, pricing pressure, could be a recurring theme for natural gas in 2010. we ll have a preview next. take a look at the price of crude oil. it s almost back to $80. don t look now. squawk box coming back. hungry. they find them at td ameritrade. trading s all about strategy. and strategy. is all about information. so i start my trading day. with td ameritrade s morning perspective. that s interesting. or, look at this. i can mine their weekly webcast for ideas. this is what i need. of course, ideas are just the start. so now i can drill down. heat mapping. heat mapping shows me where the money s moving. 2,500 stocks. one quick glance. cold. cold. hot! right there. look at this pattern matcher. pattern matcher spots technical patterns, automatically. wow, look at that. look at that head and shoulders right there. it s like pattern radar. pattern x-ray vision. plus, this amazing gadget. called the telephone. i can call td ameritrade anytime and talk trades, strategies. anything. that s where the action is. td ameritrade. built by traders for traders. announcer: trade commission free for 30 days plus get $100 cash, when you open an account. it all starts with havinglocks more hotels to choose from.. that s why i book with expedia. so i can find someplace familiar. or somewhere more distinctive. nice! then i can compare dates to find out when i can save the most cash. done and done. we should do this more often. more choices, more savings. where you book matters. expedia. dot com now to this morning s travel forecast across the united states. let s check in with scott williams, weather channel. good morning again, scott. well, good morning there, joe. as we continue to find active weather in the northeast and also around the great lakes, that could cause some concern here at some of the hubs. we ll continue to watch the active radar. take a look at the snow flying along the i-90 corridor, and zooming in closer here, some snow will be heavy at times around the syracuse area, binghamton. most of what you see around new york city not making it to the ground. if we see anything falling it will be light in nature. meanwhile, around the motor city, also cleveland, you re seeing some snowfall. look for 1 to maybe 3 inches before all is said and done. certainly today on some of the roadways around the midwest, the south plains, not expecting the travel trouble that we saw over the weekend with that holiday blizzard. now, let s fast forward as we go in time here because we will watch for another system. that could have implications, especially as we move into the northeast and england toward the latter part of the week. your new year s eve looking interesting, especially as we watch an area of low pressure tracking along the gulf stream here. also, we ll be watching for some cold air already in place. that could set the stage for a wintry mix as far south, as i the tennessee river valley into the middle part of the week. watching this area of low pressure move up the coast here, so new year s eve, new year s day could get interesting for the major cities. we ll be watching the track, watching the amount of moisture and cold air. maybe a few flakes flying in times square. when we come back next on squawk, your tools of the trade for 2010, look ahead to oil, gold and currencies. national car rental? that s my choice. because with national, i roll past the counter. and choose any car in the aisle. choosing your own car? now, that s a good call. go national. go like a pro. squawk on a monday. let s get a check on the markets this morning at 7:30 eastern time. futures hanging on to some mild gains after some green arrows around the rest of the planet. meantime, holiday shoppers spent 3.6% more this year compared to last year s holiday season. that s according to some figures from mastercard s spending pulse unit. that gain follows the worst in decades. john mackey giving up chairman title of whole foods. he s hold both title since the grocery store began in 1988. a judge denied another request by aalleged ponzi schemer allen stanford and his attorneys to release him on bail. airline security being beefed up following that attempt to blow up a transatlantic flight on christmas day. investigators trying to figure out how the perpetrator was able to board with explosives. kevin tibbles joins us with more. i understand you ve been doing some traveling yourself over the past 24 hours. what has that been like? reporter: hey, carl. i was coming back to the united states from a trip to canada with my family. what a difference a couple of days make. these international flight, as they re called, but once you went through security in the normal process, everyone was patted down prior to getting on the plane. everyone s hand luggage was opened up and gone through by a security there. then once you goth got onto the plane, carl, everything had to go into the bins over top. nothing was allowed into the seats or underneath the seats in front of you. and for the last hour of the flight, you essentially had to stay in your seat. you couldn t get up. everyone seems to be taking this very seriously. and, obviously, after what happened on christmas day, friday, they have good reason to, carl. because in a post-9/11 world, you know, you never know what is going to be taking place. interestingly enough here in detroit yesterday, many security officials are saying it was like deja vu all over again. they had a flight, the same airline, northwest, the same flight, the same destination, detroit and the same city of origin, amsterdam, when a man locked himself in the lavatory and essentially stayed in there for over an hour. they couldn t get him to come out. of course, this last hour of the flight is when everyone is supposed to be in their seats. when the plane landed, it was escorted to a secure part of the airport, passengers were taken to a secure area, the luggage was all searched. with they eventually got this fellow, who was a nigerian businessman, out of the lavatory, he was interviewed by the fbi and it turns out, carl, that he was genuinely sick in that wash room and that was the reason he was staying in there. again, in a post-9/11 world, you can t take any chances and that s what happened yesterday. yeah, there are going to be some false alarms in the future i m sure, too, kevin. the debate among some today, we ve heard from some officials like janet napolitano saying the system worked, but a lot will involve working with international agencies. this man boarded in amsterdam. is there a feeling that the u.s. could have done more to prevent him from getting on the plane with those materials? reporter: well, there are all sorts of questions. i think you re absolutely right. you know, this man s own father tipped off the u.s. authorities that his son was going through some sort of difficulty. and his father was concerned. he was put on a list, but according to the u.s. officials, there are several layers to this list. and he was only on the bottom rung. we are also understanding that he got onto this flight and he didn t have any luggage. well, that usually or at least perhaps should raise some sort of yellow or red flag, getting on a flight to go from amsterdam to the united states, you ve got no luggage, what s that all about? a lot of people are starting to ask questions today about why he was allowed to get on that plane and start heading over here. his lawyer will be in court today representing him. he has been released from the hospital in ann arbor, where he was being treated for those injuries sustained in the fire. but he has now been moved to a federal facility in milan, michigan, about 50 miles from here. appreciate the update. flying in this country continues to be interesting. kevin tibbles in ann arbor. janet napolitano was on the today show this morning and clarified her statement saying, in this instance, her quote is, our system did not work in this instance. sort of backtracking from her comments over the weekend. that s probably more accurate than the system did work. it didn t work, is probably a better a better way to phrase it for our homeland security i don t get the hour, the last hour. i think as, you know, the crew is the plane is but if you go in maybe the concern was they re going to take control of the pilot right and hit a building. but if you re blowing up the airliner, you ve got three if you re up there, you go in with 65 minutes left, you blow it up. i don t understand how the last hour yesterday i had an experience. i used to drive harness horses and i got into a bad accident and i have interior fixation in my left leg. i have titanium pin. as you go through it, they pat me down and three cops descend on me. i was there for 20 minutes. you re kidding? no, no. and i also saw an example of profiling right before me. which was interesting. yeah. all right, time for our monday morning trading block at the cme group watching futures is matt of la salle futures. on the dollar and gold, boris of gxt forex and peter inbeutel. productivity is what we re working with here peter. and our guest host, doug cass is here as well. you can comment on any or all. matt, do you think that what we ve seen, the slow drift upward to new highs, does the new year change anything there this morning? i think it s going to. you know, we re seeing the kind of typical santa claus rally, very little volume. i expect we ll see the same thing throughout this week. i expect more and more you ve heard more talk about the reemergence of the bond market vigilantes. i think people will be watching the auction very slows cloesly this week and i can see getting the market into trouble in q1. we re going to see a nice grind higher this week but as people reposition and re-evaluate in q1 i think we re going to see that fairly stiff correction that s been talked about for months. i think we ll see the s&p back down around 1,000. all the way back down to 1,000. when would that happen? i suspect right now we re trading at the 50% retracement from the s&p high to the low of march. it s going to draw a lot more people into this market. i wouldn t be surprised for the first, you know, six, eight weeks of q1 to see the market work it s way higher. once everybody s sucked in, that s when it s going to turn. that s going to be like 15% by then or 20% by then. fairly sizeable, yeah. that would be a big correction if that were to happen. will there be a cause or one thing is yields continue to work higher. a lot of people who were in the market in 08, during the precipitous fall, i think a lot will be happy at that point to cash their chips in and get out. and i think once the government starts pulling stimulus, you know, this economy is not as strong at this point as people think. and i think without all these stimulus measures, it s going to be a very slow grind going guard and people a forward and people will recognize that. boris, dollar surges, gold collapses, is that accurate, doug, what do you think? no pip took a look at the gold charts going all the way back about five, six years. the interesting thing about gold rally, every time you have a major leg up, the retracement is sometimes 60% to 70% of the leg up. we could have a retracement in gold down to 900 and it will still remain in what i think is a secular bull market. we have not seen the parabolic bubble movement in gold i think we ll see next year. i don t think gold is going to collapse. i think it may correct a little bit and shake people out, which is classic of a standard bull market. it makes it very hard to hold longs in that position. the dollar? the dollar i still i think strengthens a little more as we go forward. there s a danger of financing, as matt was saying, that auctions are a big stumbling block to the dollar. . if we see auctions not get financed as we ve seen if rates go up, why wouldn t the dollar get stronger? well, rates go up for the wrong reason. rates go up because everybody is afraid of credit risk, then nobody wants to own dollar. if rates go up for the right reason you don t care why rates go up. stronger dollar results from it, right? that s correct. so that s a disagreement there. i doane h i don t know how you re going to work it out. i don t think the dollar gets much weaker from this point on but i don t think we ll have a super strong rally just yet. there s a lot of open questions. matt is right. the big trade next year could be the disappointing trade. i think we might have 2.5% growth and that could create a lot of basically war of attrition, very slow markets moving up and back where we don t have much directionality. peter, what happened in the last two weeks as we go back to 80 on crude? well, you know, it s a funny thing. we re using very, very selective, relative events so that if we get a little bit of an increase in demand, the market goes up. the dollar was rallying and then the market did nothing and then the minute it dropped a little bit, then the market rallied. the bottom line is, is that the bulls are much stronger, much better organized, and they re pushing this higher. and when we see things like dollar strength or we see poor demand or we see an increase in inventories, we re not getting the move on the downside that is commensurate with the moves on the upside from a weak dollar or drop in inventories or an increase in demand. so if we have a global if we have global growth muted, as some people are saying, does that mean that oil just does not come back down? well, at this point it looks like it s going to have a hard time breaking through that $70. i will maintain, and i know you and i kind of agree on this, that prices belong a lot lower, $55, $60. but $70 seems to be very strong. we have investors who are using oil in ways they ve never done before. every time we get near $70 they go, oh, what a deal, i ve got to own oil. at some point i think they get out. and we have we ve got the big risk appetite right now. at some point i think we get the risk regurgitation but it doesn t appear it s likely to happen in 2009 or necessarily early in 2010. if we don t see a selloff in january or february, we then get that very, very strong seasonal in the spring where surprises tend to go higher. so basically if the bears are going to make hay, they ve got to do it in the next 10 or 12 weeks. okay. doug, i thought you wanted to say something. yeah. it seems to me we could be setting up for a perfect environment for higher crude prices. on one hand we have better than expected economic growth, oil demand will outstrip supply and fundamentally push crude prices higher. on the other hand, lower than ken census growth keeps interest rates and dollar at normally low levels, improving crude s position as an inflation or dollar hedge. okay. we re going to end it there, then. doug s going to stay with us. we ll say good-bye to matt and peter and boris. no natasha today, boris. were you here for happy new year. yeah. who was the that tash thanat? i m trying to remember. happy new year. good, thank you. that was nice to get that in. i ll be saying that all week long. she was pretty good. on nat gas or oil or she was on the block before. so we went to break and came back. but he had noticed she had been there. and thought it was a really, you know, tired, lame thing for me to say. he hears all the time. that s not new. exactly. when we come back this morning, natural gas prices remaining relatively flat. more of the same for 2010? we ll get an outlook. because we believe in the strength of american businesses. ge capital understands what small businesses need to grow and create jobs. today, over 300,000 businesses rely on ge capital for the critical financing they need to help get our economy back on track. the american renewal is happening. right now. st: could switching to geico 15% or more on car insurance?e you host: did the waltons take way too long to say goodnight? mom: g night john boy. g night mary ellen. mary ellen: g night mama. g night erin. elizabeth: g night john boy. jim bob: g night grandpa. elizabeth: g night ben. jim bob: night. elizabeth: g night jim bob. jim bob: g night everybody, grandpa: g night everybody. jim bob: g night daddy. vo: geico. 15 minutes could save you 15% or more. wow, coach, you really are back in the game. i took your advice, dan, and i lost 32 pounds on nutrisystem, and i feel great. so what are your numbers? i lost 22 pounds, and i ve kept it off for three years. get back in the game in 2010. order now and you can get two weeks of meals free, plus the all-new nutrisystem jumpstart kit, our secrets to ultimate weight loss. hey, you guys. boomer. well, thanks to you guys, i did go all the way. whoop, 50 pounds lighter. so, coach, how is the squad looking? best ever. you know, i have a real hall-of-famer at the helm. l.t.?! why not, danny boy? i lost 35 pounds on nutrisystem. l.t. and cheerleaders: pizzas, pastas, burgers, meat! come on, guy food is all you ll eat! four out of five men say nutrisystem satisfies their hunger. start your year off right. order now and you can get two weeks of meals free, plus the all-new nutrisystem jumpstart kit. call or click today. four trading days left for 2009. a look at what crude is doing this morning. futures are positive as well after the dow posted its best week since november at highs, obviously, for 2009 as well. making headlines today, adviser to china s central bank says there s no reason for the yuan do deappreciate against any currency. most other countries consider the chinese currency to be undervalued giving exporters an unfair advantage. toyota is telling sparts suppliers it will raise the 2010 global output 17% year over year, bringing production to about 7.5 million vehicles. natural gas prices up over 16% in december. our next guest has two companies he says are poised to ride the rally into the new year. nick pope, energy exploration analyst for dallman rose and company. good to see you. before we get to the names, i wonder if anyone in the industry saw the exxon xto thing coming, realizing nat gas would be a superstar. it s certainly helped the group out a lot. the group has been on fire since that deal was announced, but, you know, i think more than just the commodity price, i think what exxon was targeting was a lot of the technology and expertise in what s been going on in the u.s. in these unconventional plays. there is some support for, you know, what they re seeing in the commodity, but i think, you know, even more specifically than that, there s a lot of resources and a lot of plays in the u.s. that the majors and integrated haven t been a part of so there s a technology they wanted to capture along with they see a lot of global natural gas prices. you have a couple picks, one is xce. a smaller name. it missed a lot of the unconventional and shale plays that lit off this group over the last five years. and just happened that some of the plays are it are in found unconventional resources below it and going from a low growth type company to a higher growth company based on a new play in oklahoma. it s actually it s one that, looking at 2010, it s really changing its growth profile a lot. it s beginning to look a lot more attractive than it has before. doubling for the year. how long ago did you find this stock? well, it s i ve been following it for a while. i launched coverage on it about a month ago. it s one that i ve been tracking. i followed as a more conventional name at previous firms. it s one that the story s just changing a lot right now. and it s it does have some oil exposure so it s benefitted a lot with the group. the group has had a huge move this year. so, i missed a big part of the move but i think there s a lot of upside left in it because it moved with the group but a lot of change is still in the stock. my question is on natural gas prices. we see the spike in december. it seems u.s. production is declining slower than expected but prices have rallied by 16% this month. squ the question is, if the forward curve continues to move up, what will the affect be on recount and on hedging? well, i mean, it s you know, it s definitely it s moved up a lot. i think the group, you know, the np companies themselves appreciate where the commodity is and see where the futures market is. i think there will be a lot more hedging out there. i do think the rig count could continue to move up with where the strip is. you look at longer term trends with commodities related to the rig count and i think there s a lot of room left for rigs to be added. we ve seen a huge move in rig count over the l.a.x. six, eight months and improvement in the rig count. i think that will continue to occur. but i do get a little concerned that the natural gas market going into 2010, it feels like we re getting towards the top end of the range. there s a lot of supply that has the ability to come on between $6 and $7. finally, your single favorite stock is swn, southwestern energy. that s had a huge move. it s up over 20%. it s a name that, you know, i think it s really in the vanguard of these new resources that we ve opened up in the u.s., these shale plays. you know, its primary play is the shale in arkansas and it s really driven that one resource play to just provide a huge amount of growth for the company. you know, it just provided a lot of data on what they re expecting in 2010. its growth profile is as strong as any in the group. i think what they re doing in terms of really turning these resource plays into a manufacturing process is something that, you know, they re really at the forefront of and doing as well as anyone out there. and so i think, you know, you look at it, it s a company with huge growth, organic growth. it s doing it with cash flow. a fantastic company. everyone s paying attention now, that s for sure. all it took was for exxon to weigh in. nick, thank you for your time. coming up you know, a single favorite, does he have a double favorite, do you think? what about a triple favorite? that would be like double secret probation. that was much more secret than single secret probation, do you remember? when you say it s my favorite stock, when you say my single favorite, people are like, whoa, hold the phone. why not make it a double favorite because you like it twice as much, or triple? what s your problem? i m thinking about dean wurmer. favorite college, i know. joe the gramarian. i think we should make it fresh new high. jason trener is coming from straight gas? strategis research. he will join guest host doug cass. your company is named after a drink. carol, when you replaced casual friday with nordic tuesday, was it really for fun, or to save money on heat? why? don t you think nordic tuesday is fun? oh no, it s fun. you know, if you are trying to cut costs, fedex can help. we ve got express options, fast ground and freight service you can save money and keep the heat on. great idea. that is a great idea. well, if nordic tuesday wasn t so much fun. (announcer) we understand. you need to save money. fedex but when you look a little closer. their story begins to fall apart. see, at&t let s you talk on the phone while you surf the web. [ clattering ] verizon.doesn t. at&t has the most popular smartphones and the nation s fastest 3g network. verizon.doesn t. [ clattering ] glad that s cleared up. oh, boy. [ male announcer ] at&t. a better 3g experience. this holiday, get a touchscreen samsung solstice free after mail-in rebate. becky watching, listening. really? she e-mails me, never e-mails me. i think you re on there. i thought you were on there. oh, i only have 40 seconds. two stocks to do. one of the in that baron s, you know, the quiz, the andrew berry, which stock is going to be down the most. apple was one of them. i might have picked apple. look at that thing. that s an all-time high, or at least on thursday. what will that do in 2010? i don t know. estimates were raised by thomas wisele after iphone and h&r block was mentioned positively at ubs. jackson hewitt and in pacific capital decision to needy. i was hurt. you re right there. when we come back, health care winners that could emerge after the overhaul plan passes through congress. the author of aviation and security will tell us what may change after that failed christmas day attempt to set off an explosive aboard the northwest jet. with fidelity, you can take your trading around the world, because now you can trade u.s. and foreign stocks online, in 12 markets, 24 hours a day, all from the same account, and settle in u.s. dollars or the local currency. plus, we ll guide you with international research and realtime quotes, so you can diversify your portfolio, wherever whenever. and we ll be on call around the clock, while you trade around the globe. fidelity investments. turn here. the chevy malibu and toyota camry received 5 star crash safety ratings. but only malibu has onstar. big deal. i ll just use my phone. let s say we crashed. whoops, your phone s gone. onstar automatic crash response can call to see if you re ok. if you don t answer, they can automatically send help. i think i ll ride with you. now during the chevy red tag event, get an 09 malibu with 0 percent apr for 72 months. see red and save green. now at your local chevy dealer. it all starts with havinglocks more hotels to choose from.. that s why i book with expedia. so i can find someplace familiar. or somewhere more distinctive. nice! then i can compare dates to find out when i can save the most cash. done and done. we should do this more often. more choices, more savings. where you book matters. expedia. dot com it s good to be rewarded for your purchases. happily, membership rewards points from american express can be used for over a million things you want. and experiences you ll never forget. and because points don t expire you can keep them to use whenever you like. can your card say that? wrapping up retail here s santa! hey, little girl, what would you like for christmas? oh, you have been a very naughty girl, i see. not so fast. swe swre returns and gift cards to ring up. find out why it may be too early to call the winners and losers. isn t that cute? you look like a de ranged easter bunny. cashing in on america s health care crisis. we ll get some stock picks from sectors that have not been a target of the overhaul plan. and big questions for airline safety. a foiled terror plot raising the alert level at airports around the world. a security expert will tell us if the right measures are being used to keep the skies safe. squawk box begins right now. welcome back to squawk box here on cnbc. first in business worldwide. i m joe kernen along with carl quintanilla. becky quick is off this week. she ll be back on monday. we ll full force back again on monday, right? i think we re the 4 #th of january, yes, becky is back. the new year and we ll be ready. we re going to kick yes. but today we are ready, too. our guest host, doug cass, president and founder of seabreeze partners. he ll have more surprises for us in 2010 over the next hour. the road that you re based on is seabreeze avenue, right? that s correct. it had nothing to do with your predilection for vodka and cranberry i ve never had a seabreeze in my lich. is that cranberry cranberry, vodka, lime juice. with a twist. no grapefruit? let s check the futures. we re up about 20 points on the dow. nine plus 11 is 20. so look for at least at the opening, you could see a trade higher. making headlines this morning, a lot of stuff outside the world of business, but this is a business story, that s retailers, did pretty well. positive holiday shopping season. we re talking about mastercard and one of its units called spending pulse, and that unit reports sales were up 3.6%. the results were fueled by 15.5% surge in online purchases. oil hitting a four-week high. traders say the colder weather across the united states, surprising everyone, in fact, in january. signs of a it s still december, but it s supposed to be cold. signs of an economic recovery are helping boost the outlook for fuel demand. another holiday-shortened trading week. we have $120 billion in treasury auctions this week and that will start today with $44 billion in two-year notes. pete? the man accused of friday s failed attack on a plane bound for detroit has been transferred from a hospital to a federal prison. nbc s pete williams has more on that story from washington. good morning to you. reporter: good morning. the administration has assigned the department of homeland security to review exactly how this man, abdulmutallab, was able to get exmros s iplosiovess plane on christmas day. they re looking at two issues. one is the screening procedures themselves. could existing screening technologies had been able to detect this explosive that was concealed in his clothes. that s one thing they re looking into. and the second is the watch list issue, carl. he was in a big database that is this sort of building block database from which the actual no-fly list is derived. there is a policy question to be asked about whether someone in that entry level should be issued more intense screening when they go to a airport. we learned more about why the united kingdom declined him to come back into the country, refused him a visa earlier this year. we re told it had nothing to do with security issues and that, in fact, the british government now says it was because he was applying to a bogus school to try to get into the country and they were concerned that people were using educational pretexts to try to get in to get jobs. that s why he was denied entry into the uk, not because they had more advanced information than the u.s. did about his potential for terrorism, carl. pete, where did he get the vees that to come in? did he get it at the embassy in amsterdam? where did that happen? i don t care what rung you re on, whether it s a no-fly rung, why do you get a visa if you re on that list? reporter: two things are out of sequence. he got the visa from the state department from nigeria in 2008. the information that came from his father, that he thought his son was becoming radicalized and that he might even be willing to undertake a suicide mission, that was given to the united states last month, after he had already been issued his visa. now, question, should that information have gone into the state department system for flagging people when they try to actually enter the country using an already-issued visa? that s another question the administration is looking at. but this sort of entry-level system, called tide, it s the basic system into which all rumor, unverified information goes. from that federal agencies, the fbi, the state department, others, use that as the building block to derive their own no-fly or their own watch lists. and that s what the administration is now looking at, is whether the right sort of filters are applied in deriving these actual watch lists. bottom line, though, pete, would you expect there to be some kind of expansion in the no-fly list? reporter: i don t know. i think it s possible. i think that, though, the government seems to be at this point looking more at actual screening technology as the potential answer here rather than the no-fly list. although, you could well ask yourself, you know, they re telling us there s about 500,000 names in this sort of entry-level database. it s not a watch list. it s simply the sort of vacuum cleaner bag full of stuff that the government gathers. so the question is, maybe even if you just get to first base there, should that trigger what they call secondary screening at the airport, where you go through the screeners and they pull you aside for a more comprehensive check? probably 95% of the names on that list are not of u.s. citizens. of course, they re not all flying at the same time. may well be the government who says, anybody who makes it to first base will be subject to secondary screening. i wouldn t be surprised if that happens. pete, appreciate the insight, joining from us washington. want to talk about the future of airline security with our next guest, andrew thomas, editor and chief of the journal of transportation security, author of aviation insecurity and a professor at the university of akron. good to have you with us this morning. good morning. i guess this debate will bubble up for a while, the idea of whether we try to screen more aggressively or target those who may or may not want to get on an airplane or both, right? for sure. we ve we ve been eight years post-9/11, 16 years from the first world trade center attacks. and every time we get one of these incidents, whether they happen or happen on christmas or thwarted, the call goes out for more technology, more technology-based screening. but at the end it leaves us with a big hole in our system because we re not recognizing human solutions to a human threat, helped by technology, not the other way around, that s going to make this stuff better. why do we why do you think there is such an intent to target airlines given the additional measures that have been put in place since 9/11? why are they not spreading their strategy of terror more widespread against retail outlets and bridges and roads? why airlines? well, from their point of view, the bad guys, al qaeda and their cohorts, of aation is the most sexy, glamorous target. has been since the late 60s of those from islamic bent. the fact we re talking about, it it s been the dominant story now, you know, since the weekend, reveals that aviation is still the premiere terrorist target in the world. and it s not going to change. there s no reason to believe these guys will stop, especially given the fact there s been no substantive improvements from a government policy perspective with regards to aviation security post-9/11. the two biggest changes, primarily have come from passengers. that is, as we saw on christmas day, the passengers are not going to stand by and allow this stuff to take place. that doesn t have anything to do with government action. that s really the terrorists themselves motivating passengers to get involved. you don t think screening is more effective than it was on september 10th? government accountability office reports dhs s own reports show testing is about the same, quality of screening is about the same as it was before 9/11. interesting. is there anything the airlines should be expected to do on their own? i mean, at some point will they have to take the ball instead of leaving it up to tsa? no, tsa is driving the train. it s their job. airports are stakeholders in a system driven exclusively by tsa. an drushgs appreciate the insight on that as well. that s a big story this morning for all of us. andrew thomas joining us from the university of akron. appreciate your time. happy new year. the major stock averages are up, obviously, since march lows led by this 80% plus gain in the nasdaq. here to talk about that is jason treanor, chief investment strategist for strategis, with our guest host doug cass. hi, doug. jason, have you heard any of doug s surprises for 2010? i saw him last week. you know, i tend to agree with i tend to agree with a lot of them substantively, i do. jason, why do you think what do you think the tipping point will be on the yield on the ten-year u.s. note? i think it s to make you more concerned about equities? doug, as you know, it s almost become cliche in our shop, the bullish until the bull comes due until you this this tsunami, only 50% of the fiscal package has been spent so a lot will be spent in 2010. eventually, longer term interest rates or higher taxes are going to be, as you put, the tipping point that could make you go the other way. i think it s going to be somewhere in the 4.25 to 4.50 range. i think is when you re going to start to when you start to do kind of discounted cash flow analysis on the earnings. start to say, gee, this market is not as cheap as i thought it was. that could happen sooner than you think. that may happen sooner, i believe, than the fed actually raises interest rates. jason, does the market feel better before they hear from the fed that rates may be tightening or after? we ve heard debates on both sides of that. i think what s going to happen is the fed s going to get more concerned about how generous they ve been about liquidity, at the same time the economy s going to seem to be improving. and i think at the margin, generally speaking, the improvement part wins out. it s only when the fed actually starts to move aggressively, and then generally they re almost always late, is when you really start to have problems. that s why i m pretty bullish on the first half of the first of next year. i don t think there s going to be a lot to stand in front of this. the other thing that s been interesting, carl, is that there s been virtually no retail participation. believe it or not, if you look at mutual fund inflows, there s been net redemptions this year. they ve all been going to bonds. all been going into bonds. i think there s the sense that bonds are risk-free, which scares me about the retail investor, is they re assuming, i want something with no risk, let me buy a bond fund. i think they re going to find out there s principle risk in bonds and i think they re also going to probably see the market continue stock market continue to melt higher. unfortunately, they may jump in at just the wrong moment. what happened to the little guy getting left holding the bag, being the last 1999-2000. yeah. why doesn t that happen this time, doug? it s one of the conditions that have changed. i have a quick question for jason. i sent you my surprise list last week. when i look for something that no one expects in an environment where everyone s expectations are clustered rather closely together, i come up with mid east tensions. when you think about surprises and factors that could set upset the market s ee quul lib reyum, what do you think. that has to be one. in a round table i used l-3 as one of my stock picks for almost precisely that reason. i think defense stocks, which have had a strong correlation with energy stocks over the last couple years, i think are a decent place to be defensive. i think that s a good place to think about factors. the other thing i m watching, doug, believe it or not i m watching a lot of food commodity prices, things like rice and pork. and the reason being is that it seems to me that china is hell-bent on getting 9%, 10% gdp growth come hell or high water. and eventually, you know, they can do that because they can just spend money to do it. eventually, that could result in significantly higher commodity price inflation and that s what could break, i think, this kind of stable equalibreum. you right you re bullish until an auction doesn t go right, the ten-year breaks out, real anxiety over taxes, holiday sales come in below expectations, that appears not to have happened this season, mortgage rates go above 6% or you see real protectionism. which comes first? i think it s going to be a bad auction or higher long-term interest rates. you know, i have very little confidence or very little hope that our policymakers are going to try to do the right thing and maybe stop spending or try to increase taxes to try to balance the budget. hard to get elected that way. yeah, it s hard to get elected that way in a mid-term election year. so i think you re going to wind up seeing backup in interest rate. in the absence of that, you could also see commodity market vigilantes, as opposed to bond market vigilantes. one of the things that s happening here, as you know, the fed has been very active initially in the treasury market, now they re very active in the mortgage-backed securities market. so, yeah, i think the signals you normally would get from the bond market for the administration to stop spending may not be exactly following through. but the commodity again, the commodity prices, which aren t on that list, i think, could be very, very important to watch. because that could tell you that the system is breaking down. good see you, jason. thank you. if we don t see you before the end of the year, happy new year. merry christmas, happy holidays. more surprises from doug cass. seabreeze has cranberry, grapefruit, no lime. cape cod has cranberry, no lime. says who? everybody in the world. i ve never had one. you still had joni mitchell at woodstock and you were there. she was in her hotel room writing it in new york city. yeah, she was going on dick cavitt. i mean, a lot of your facts are like excuse me, but it was a very fuzy period. apparently. apparently. holiday shopping season one much your predictions is sarah palin gets divorced? yes. that s one of your predictions? yes. are you like writing for us magazine or something? don t spoil the surprises? we re doing more? yes. holiday shopping season not over yet. find out how the next couple days could push retailers over the top. national car rental? that s my choice. because with national, i roll past the counter. and choose any car in the aisle. choosing your own car? now, that s a good call. go national. go like a pro. welcome back to squawk box. the future right now indicated up about 20 points or so. they were down nine. let s see, yeah, 21 points. making headlines, president of the european central bank says euro zone deficits must be cut. also arguing banks must provide sufficient credit to support a global economic recovery next year. 3-d extravaganza avatar taking top prize at the box office. movie earning $220 million, taking the ten-day total globally, $617 million. in the second spot guy ritchie s sherlock holmes. he seems to be doing better. family audiences, that s me, gave alvin and chipmunks the bronze prize. there it is, carl. see, this is when they first see each other. let s hear this. they re like that s alvin s squeeze. and then simon, that s simon this is they re playing foreigner. yeah. and the girl looks like and theodore and we went to avatar. anyway, theo s girlfriend was a little plump. looked like she was saving it for winter. more chipmunk to love. yeah. set a new record in north america. let s get more surprises from our guest host doug cass. we made it through 11 of them, i think. do you remember what the next one is? no. warren buffett? i do. yeah, buffett is 12th. he steps aside? my thesis is that with the burlington northern acquisition, the oracle has basically completed his canvas and there s very little left for him to do. he steps down. as you know, he s been testing out some outside managers, as his chief investment officer, and i suspect he gives the job he split his job into an operating and into an investment position. you ve been like a buffett critic for some reason for at least the last couple of years. i m not sure why. because maybe he s long and you ve been in early 2008 i shorted the stock at $145 sthou a,000 and i short. i was concerned that he was look, i worship at his altar, but worshipping a guy and having a view over the inherent value of a stock price is two different things. he would criticize there was some investment style drift, i thought. but he was bullish on the market, which usually i was concerned about his investment portfolio, which was highly skewed toward financials in 2008, and turned out to be right. american express went down to ten and wells fargo broke ten. there was a time to short and a time to long. the s&p puts that he i think there were puts that he wrote. at the worst he was down probably unrealizing he s come all the way back. he s probably even to slightly down now. no view on his stock. all right. next, insider trading charges expand. what do you mean, more galleon stuff? i think one of the little the dirty little secrets is how tight investor relation departments of major corporations are with long-only mutual funds. some of the largest funds. and i do think over a period of decades they have had not privileged information necessarily, but a privilege for them. direct conversations. this isn t sour grapes talking? no, i m long and short now, so you feel like you re getting a little more love because you re now long and short as opposed to when you were just short? no, no, not really. would this have been you know, as woody allen said, the benefit of bisexuality is it benefits your chances for saturday night dating. and ties to choose from in the closet, wear clothes shave off the beard. s.e.c. launches an assault on mutual fund expenses? yeah. my largest short position are in the asset managers, which are cost leverage plays on the capital markets. but they face two secular headwinds. the first thing is that major corporations are either reducing or eliminating totally their 401(k) contributions. and that s the life blood of the mutual fund business. secondly, i believe there s there s a sense of populism woven in in all of my surprises. i think there s i don t know if you watched andrea mitchell on meet the press yesterday, she was talking about a very angry subtext. that was one of your recent tones. and then nader came out and said, ralph agrees with me, which i said, well, you re sunk then. i think that the average american ralph has been populous for 40 years, right? yeah. 50. 50 years, since you actually worked for him, right, as a nader s raider. so i think the s.e.c. is going to attack 12b1 fees and they total about $170 billion over the last 15 years. you know, i run a hedge fund. i don t charge my limited partners for distribution or marketing. it makes absolutely no sense to me while mutual funds should receive these 12b1 fees. stuff about vick pandit tiger. and tiger, yeah. we have and sarah palin. and sarah palin, all related. it s wild. we have much more still not really. we have much more still ahead on squawk box, including the final countdown of 2009 from the trading pits of chicago. no one has mentioned tiger and sarah palin at the same time. i m wondering where you re going. i m nervous. is that causing the breakup? more retail details as consumers get ready to use all those gift cards. (announcer) we call it the american renewal. because we believe in the strength of american businesses. ge capital understands what small businesses need to grow and create jobs. today, over 300,000 businesses rely on ge capital for the critical financing they need to help get our economy back on track. the american renewal is happening. right now. i hired him to speak. a lot of fortune 500 companies use him. but-i m your only employee. we re going to start using fedex to ship globally- that means billions of potential customers. we re gonna be huge. good morning! you know business is a lot like football. i just don t understand. i m sorry dick butkus (announcer) we understand. your business could use a pep talk. visit fedex.com/peptalk bull market or bear, traders are always hungry for ideas. trading is all about strategy. and strategy. is all about information. heat mapping shows me where the money s moving. twenty five hundred stocks. one quick look. that s where the action is. plus, this amazing gadget. it s called the telephone. i can call td ameritrade anytime and talk trades, strategy. anything. td ameritrade. built by traders, for traders. this is what i need. announcer: trade commission free for 30 days, plus get 100 dollars cash, when you open an account. when we come back we ll head to the trading pits as we count down the final trading days of the year. more surprises from our guest host. these are the building blocks of a perfect girls weekend. it all starts with having more hotels to choose from. that s why i book with expedia. so i can find someplace familiar. or somewhere more distinctive. nice! then i can compare dates to find out when i can save the most cash. done and done. we should do this more often. more choices, more savings. where you book matters. expedia. dot com future getting some addition to last week s dow rally of 1.9%. one of the best weeks for the dow since november as markets are at their highs for the year. we ll add more than 20 points to the dow when we open this morning, after a good night in asia and a good morning so far in europe. headlines. saudi arabia s king says oil prices are heading toward stability and might even rise, in his words, reasonably. that s what they ve been doing at least over the past few sessions. at a four-week high on crude now. you see the year to date gain there, more than 100%. executive at china s geely says the company would barely lay a finger on volvo. last week ford said it expects to sign the deal in the first quarter and close in the second quarter of 2010. geely? geely. never got an academy award either. was that a character on saturday night live ? it was the ben affleck movie. law enforcement officials at this point are cracking down on any type of unusual activity aboard planes following what we ve been talking about all morning, and that everyone s been talking about since that attempted terror attack on christmas day. our hampton pearson is in washington this morning with more on the government s reaction. you had your own travel problems before any of this, hampton. you were on set. it s good to see you. it s apparently much worse. it s getting worse for everybody. the obama administration, among other things, ordering investigation into two areas of aviation security. how travelers are placed on watch lists and how passengers are screened. and congress is waiting in the wings with hearings next month, focusing on how was it that a 23-year-old nigerian man on a watch list boarded a flight from amsterdam to detroit with a powerful explosive hidden on his body. in a round of interviews this morning homeland security secretary janet napolitano concedes, the system failed. what i would say is that our system did not work in this instance. no one is happy or satisfied with that. extensive review is under way. but at this point, we feel that with the additional screening procedures in place, as have been described, the additional protective measures within aircraft as described, air travel is safe whileb we workbbbbbbbb while we work through this problem. this is what travellers can expect. increased security screening on all flights. no on board gps or entertainment videos, passengers on foreign flights must stay seated for the last hour with nothing visible in their laps. some analysts are concerned the extra security measures could hurt domestic business travel, especially those short trips by executives who generally, number one, pay higher fares and travel a lot more frequently than leisure passengers. what was that about what did you say about video, gps video, what else? well, you know, those on-board entertainment systems. jetblue in particular has talked about that. one thing we ve gotten used to is being able to track the course of the flight right there from your seat. oh, none of that. exactly. okay. you can still have a have the kids watch a video on their laptop. i sure do hope so. yeah. me, too. otherwise flying will be unbearable. talk about terrorists. it will be hard enough, though. all right, hampton. good to see you last week. happy new year. same to you, sir, and everybody up north. it s the final monday to make money in 09. here with a look at early training, john brady at the cme and guest host doug cass. john, how do you think we start out the beginning of the year? do you have a feeling you want to weigh in on that? i think it will be difficult to sort of fade the upmove, joe. i think you ll see continued move higher. keep in mind, you will see new money flowing in the 401(k) plans and investment vehicles early on in the year. so that will probably help push the market a little higher. the interest rate environment remains relatively benign. of course, the productivity gains we ve seen in the second half of 2009 could have an ectiexpo exprobably a bit of an upside, a drift higher in the first part of 2010. the economy s not bad. the interest rate environment is going to start being a headwind when, do you think? i think if ten-year treasuries were to get above 4.25% and stay there for a substantial period, you know, we do have a little supply this week, joe. twos, fives, sevens. there s a little concern about a lack of demand, specifically from foreign central banks showing up for this week s coupons. really, i think you have to see ten-year treasury yields march above 4.25% and stay there, bleed through to the mortgage markets, slow the housing market from what small recovery has taken place, or at least stabilization has taken place. it s it s back end long interest rates and the demand foreigners have for our debt, because it will be a rather heavy supply schedule the first part of next year. john, i wouldn t ask many people this question, but did you read that about the gdp listed equities the government could issue? i have not, joe. i m sorry. i m unfamiliar with that. it was a schiller piece. have you ever heard of that? the tril? the tril. yes, i lecture in would that make any sense to issue a tril? that s an interesting idea. now it makes more sense because everyone s worried about inflation. it s based on nominal gdp, pays a dividend from the u.s. government, the chinese might be interested in it because it wouldn t be inflation-sensitive. what you need to be a limited partner of, the u.s. hedge fund. yeah, the u.s. hedge fund, as you call it. john, commodities over the next year, is that something we all watch or is that become last year s trade? no, no, i think commodities are certainly watched, joe. of course, they are risky asset. they re certainly a dollar play. as we expect, the dollar probably trades pretty well the first couple months of next year. however, if the dollar were to roll over the second half of next year, albeit on either higher interest rate policy or, god forbid, lower economic growth, then you could probably see commodities continue to benefit from global economic nervousness. but in the short term, commod y commodities are probably a range trade with maybe a little downside trade as they trade as a synthetic dollar trade and the dollar maz more upside against the other currencies. appreciate your time this morning. you bet, joe. can t believe you it would be a like canada was the example that they used. it would pay a lower dividend than most stocks because gdps grow much quicker than dividends. so it could trade for less than it would only have to yield 1.5%, 2%. it makes sen. does it make sense to do that? sure. why not? you think they would not? it would be called a tril? doctr. schiller does. originally introduced in the 1990s. clinton s idea thought of it. the idea is coming back because we re at a point where the rest of the world is worried about inflation in our bonds and this would be a way to finance our stuff. i m getting on the the tril band wagon. you did your homework this weekend. i love it. he read the new york times. i love it. you know why? frank rich was gone, maureen dowd was gone. maureen dowd s column i read it this morning. i saw it in the green room. greatest column it s always the best column. yeah, because it was her brother. her brother s kevin? yeah, kevin. it s definitely worth a read. futures this morning are pretty positive after the nikkei hit a four-month high in asia overnight. relatively stable this morning. we ll see what happens as we get closer to the opening bell. did a last-minute rush push retailers over the top? why we have to wait on returns and gift cards to make a final call on the 2009 holiday shopping season. the chevy malibu and toyota camry received 5 star crash safety ratings. but only malibu has onstar. big deal. i ll just use my phone. let s say we crashed. whoops, your phone s gone. onstar automatic crash response can call to see if you re ok. if you don t answer, they can automatically send help. i think i ll ride with you. now during the chevy red tag event, get an 09 malibu with 0 percent apr for 72 months. see red and save green. now at your local chevy dealer. the same tools the pros use, so you can be a disciplined trader. by selecting from eight advanced triggers, your order gets executed, even when you re busy. and with trailing stops to help you lock in profits and minimize risk, you can be confident in your strategy, no matter which way the market moves. find out why more and more active traders are turning to fidelity for a smarter way to trade online. trade like a pro. trade with fidelity. what s going on? we ordered a gift online and we really need to do something with it. i m just not sure what. what is it? oh just return it. returning gifts is easier than ever with priority mail flat rate boxes from the postal service. if it fits, it ships anywhere in the country for a low flat rate. plus i can pick it up for free. perfect because we have to get that outta this house. c mon, it s not that. gahh, oh yeah that s gotta go. priority mail flat rate shipping starts at $4.95 only from the postal service. a simpler way to ship and return. you know, historically the last week of the year is pretty positive, at least for the markets, especially when the week before christmas is also positive. we ll see what happens later on this week for the time being we are going to start off monday with some gains. modest ones but still 23 points above fair value. again, we ll see what happens in 45 minutes. making a couple headlines this morning, russia launching a new pacific oil terminal today. it will allow the world s largest energy producer to expand into the asian markets and divert siberian crude flows away from europe. russia getting more active in the energy space here. yeah. and they got it to sell. and they re benefitting from 80 bucks, too. yeah. more of our closest friends. more stocks to watch and our guest host will have even more surprises for the new year. first, let s check on the dollar as we head to break. squawk box will be right back. (announcer) some people just know how to build things well. give you and your loved ones an expertly engineered mercedes benz at the winter event going on now. but hurry - the offer ends january 4th. host: could switching to geico 15% or more on car insurance? host: does charlie daniels play a mean fiddle? fiddle music charlie:hat s how you do it son. vo: geico. 15 minutes could save you 15% or more on car insurance. because we believe in the strength of american businesses. ge capital understands what small businesses need to grow and create jobs. today, over 300,000 businesses rely on ge capital for the critical financing they need to help get our economy back on track. the american renewal is happening. right now. could you see, could you see a $250 price for apple? if this tablet comes out what is this? it s a big deal. thomas weisel thinks it will launch in the first quarter. they haven t even confirmed there is one in existence. but he is also checking things like demand for iphones and imacs. they raised their nongap estimate for the december quarter for revenue to 15.15 billion earnings per share 33.55. so $15 billion, $15.15 billion. is it a great short? i think appearle is a message to all short-sellers, a message i learned a long time ago, that never short valuation, period. there is absolutely no reason to. yeah. we overshoot i remember when apple overshot the downside. it was trading at $35 and they had $40 a share in cash. i make this point again and again and again. when multiples can go between five times earnings and 50 times earnings, what does that metric have to do with anything based on the greater full theory and based on momentum and what caused the stock to trade a certain way? a multiple is almost meaningless. isn t it beyond the ipod s not a multiple. the ipod s earnings, right? a tablet would be additional earnings, isn t that but you have to multiply is by something to get to the stock price, right? in a world of slower growth carl apple is unique. $3.55, that s for the quarter. you can just multiply that by four because that would be a better christmas quarter would be the best quarter. cal-maine foods, this was an eggs maker, wasn t it? when the atkins diet, it went through the roof when know everyone was eating eggs. when panera was getting crushed. above expectations. mead johnson nutrition is an attractive buyout, says citigroup. given a 65% gross margin and 27% operating margin. bristol-myers here s one that, you know, make your determination on what to do with this. resumed as an equal weight at morgan stanley. that gives you some info you can use, doesn t it? value added. yeah. and upgraded to add from neutral at capital one, schlumberger. what s going to happen to pandit? i m saying that pandit will be out i m sorry. you want to wait for these? no, we can do pandit. let s do this one. pandit will be out by when? why? he s doing a horrible job. why? why is he doing a horrible job? yeah. they re getting out from under the government. slow to react to the demise in the credit markets. my surprise is peter cohen of ramius? would replace him. wouldn t be ironic. it not go below 315. remembering the offering price? yeah. it would have been hideous if it it briefly broke. yeah, 3.14 and now back to 3.55. special place in my heart for citibank after writing that book. which one? called citibank in 1975. you wrote a book with ralph nader in 1975? it was my master s thesis at work, actually. i did not know that. and you think that s how i became friendly with him. and you think peter cohen comes back wouldn t that be ironic? yes. cohen orchestrated the e.f. hutton mess back in november. oh, well he and wile were empire builders. jeffrey lane was also back. yeah. jeff is president of a private wealth company i believe. all right. we ll get more surprises from doug. i think we got three left. after a short break. also check out gold this morning. gold down four straight weeks. it s come down some $70. that is the longest weekly losing streak for the yellow metal since april. at 1110, getting a little more than $5 back. welcome to the now network, population 49 million. right now 1.2 million people are on sprint mobile broadband. 31 are streaming a sales conference from the road. 154 are tracking shipments on a train. 33 are iming on a ferry. and 1300 are secretly checking email on a vacation. that s happening now. america s most dependable 3g network. bringing you the first and only wireless 4g network. right now get a free 3g/4g device for your laptop. sprint. the now network. deaf, hard-of-hearing and people with speech disabilities access www.sprintrelay.com was it really for fun, or to save money on heat? why? don t you think nordic tuesday is fun? oh no, it s fun. you know, if you are trying to cut costs, fedex can help. we ve got express options, fast ground and freight service you can save money and keep the heat on. great idea. that is a great idea. well, if nordic tuesday wasn t so much fun. (announcer) we understand. you need to save money. fedex it all starts with havinglocks more hotels to choose from.. that s why i book with expedia. so i can find someplace familiar. or somewhere more distinctive. nice! then i can compare dates to find out when i can save the most cash. done and done. we should do this more often. more choices, more savings. where you book matters. expedia. dot com all right. more surprises from our guest host money manager doug kass, surprises for 2010. the sec restricts short selling to naked short selling or all short selling? all short selling. i think we get a double dip in the economy, stocks start moving lower, and they panic. but you see again i m weaving in the populism again and all the policies and regulations. no, no. i think you, since you are a short seller you re trying to say they re going to do it just to raise the flags to make sure that you don t that regulators don t over react. no. i m looking at possible improbables. this is for you. why would i it s not talking my own book. more ahead. to the contrary. more hedge fund tumult emerges. how? well, i think the whole fee structure of the hedge fund business is changing. it s lowering. i think in a period of substandard returns which i think we will continue to be, the lose business, there will be a lot of price competition. again, populism. we have costly regulatory burdens. i believe the sec will mandate registration again by the end of 2010 and that will put a lot of smaller hedge funds out of business. and i think the industry will contract dramatically. i think the big get bigger and the small go to prison. go back to you think sarah palin is getting separated, which means that the right won t back her then i guess because she ll be divorced is what you re saying. right. then the republican party falls in the hands of a weak mitt romney. why is he weak? well, i just think he is. you think he s weak. it s where you sit though. so we have geo political tension. it galivanizes the electorate. all of a sudden president obama s popularity rises instead of falls. and that s what do you mean geo political? well, i talk about rising middle east tensioio in the second quarter, early summer. so we talked about this. you think securitiwise he s moved to the center more? i think he s been surprisingly hawkish, yes. you think so, too? because the right will still say that the bowing and the wanting to engage iran, all these things. there are things like that. that goes to put back again, so you think he becomes more hawkish and that he could benefit from geo political yes. rally around the flag effect. so that puts the that would be a surprise if 2010 didn t bring the back lash that people expect from the health care legislation. you don t think that happens in november? no, i think we have this as i said, i think the democrats win out, win seats. add seats in november? add seats. in november. that would be a very big surprise. that would be a very big surprise. i think it has not an ice cube s chance in hell of happening but that would be a very big surprise. thank you for making it. and how about tiger woods? what s going on with him? look, i know people who know people. you live in palm beach. have you seen rachel uchitel? have you seen her around down there? he s down there. i ve seen his boat before he went off to the bahamas, whenever he was in the palm beach marina. supposedly he wasn t i get my info from like tmz and even worse. bat boy. places like that. that he was on a different boat supposedly closer to where she was. who knows if any of this stuff is true? but the theory is he reconciles with his wife. his wife is pregnant with a third child. and the world loves a comeback player. and he will be the ultimate comeback player and probably win four majors and he ll be more popular than ever. what happened with kobe bryant. i hope he s back. remember what happened with kobe bryant. that was worse. much worse. right. well, could he get divorced and do what he wants to do as he s been doing and then start winning tournaments again? you re asking me? how do i know? because this is all your, you know, every waking thought that you ve ever had. you want to do this last one? the yankees, the new york yankees are sold. to an investor group led by? jack welch, ge s former chairman. we know that he loves the boston red sox. he loves baseball. why not? the theory is george steinbrenner is not well. yeah. and he ll have a substantial estate issues. jack is, i think he has moved here. i think he is down here now. yeah, from boston. yeah, from boston, so that would make sense. he would be a good custodian of the team i think, yes? he hates the yankees, though. doesn t he? owning the yankees? all of a sudden you love them. how do you all of a sudden love the yankees? i don t know. i can t imagine a boston red sox fan, you know, sitting there cheering standing up on his feet cheering for the yankees. against the red sox. i want some of what you re smoking. i saw my cousin sandy cofax who was a hall of famer coach the new york mets, so anything is possible. of all of doug s surprises which do you think has the best chance of actually happening? none of them. no, there are a couple early ones. gold? i don t know. i d have to think back on all of them again. i wrote that when gold was much higher. you like to be out there obviously and you re almost like jeanne dixon. she tries to say things. if one happens and you re right i was correct on about 55% last year. things that have actually happened you get wrong much less things that haven t happened yet. come on. i think dollar exploding higher, that probably stands a good chance. right? maybe. which would be a surprise. second half gdp flat? no, no. goldman going private? no, no. why don t you think that s possible? goldman going private? yeah. i think the culture is i think they can use all that money they raise as a public wouldn t it be a great solution to solve our derivative problems? you know in private firms the brokerage firms wouldn t employ that sort of leverage. thanks for having me. seven years next year. coming up next, squawk on the street. live from the financial capital of the world, this is yet another special edition of squawk on the street. good morning, everybody. i m mark haines. hello everyone. i m standing in for erin burnett. the first of the many holiday shopping season numbers are in. spending pulse which is an information service of mastercard advisors says that retailers brought in 3.6% more this year than last year. and we re also going to be following oil very closely this morning. it is up for several reasons. you can take your pick on those reasons. colder weather is certainly one of them and a failed terror attack. let s not forget that. renewed problems in yemen. a new dispute between russia and the ukraine. mark, the list does go on. we re sitting around 78.5. move to the upside. we are getting a little pop in the futures. they are up about two points. fair value is minus a quarter. so we re 2.25 above fair value but that s pretty flat on the dow. let s hit the markets. we start with mary thompson here at the big board. reporter: mark, as you said futures going to go higher on the open with all three major indices at year highs where they closed on thursday and a holiday-shortened week. we expect light volume this week as once again we have a holiday-shortened week with the markets closed on friday. here are a couple things traders are focusing in on this week. the treasury auction, $118 billion worth of notes will be sold including the two-year note sale today. also they re watching commodities as mandy pointed out. oil is moving higher today.