Transcripts For CNBC Squawk Box 20141222 : vimarsana.com

Quarter gdp, personal income and spending, new home sales and consumer sentiment. On wednesday, weekly jobless claims will get here a day early because of the holiday. A big part of the story on the markets and the economy, oil with the latest lumberg survey showing gas prices dropping to the lowest level since may of 2009. The National Average for a gallon of regular unleaded is at 2. 47. And andrew, welcome back. Thank you, becky. It sounds like Nothing Happened last week. It was kind of boring . What happened to the market in cuba . And russia. And then the whole i dont know, i feel like a lot happened. Anyway, well tell you what is going on in corporate news. The price over a new hepatitis c drug expressing its largest plan is now going to be offered for treatment with patients that have the most common form of the virus. Starting in january it will exclude drugs from gilead and Johnson Johnson. Meg terrell is going to join us with that story next half hour. And ocwens executive chairman is going to step down. The firm is accused of hurting hundreds of thousands of borrowers by sending backdated letters about foreclosures. And ceasars palace is trying to buy their affiliate of wsj. It would file for chapter 11 bankruptcy protection by midjanuary to cut the mounting debt. Joe, i dont know if you follow this, but paul singer at elliott manager was hoping to file by last week friday. He had all the cvs protection to pay off in a big way. I think theyll make a small portion of that back. All right. Usually they only have it for a little while and then, you know, then they get a better name. It sounds like its native american or something. It is just spelled backwords. How about jeritol spelled backwards . It means nothing. A number of headlines on oil this morning, which is opecs secretary general hoping to see a recovery in the price of crude by the second half of next year. Saudi arabias minister of oil says he calls the lack of nonopec producers cooperating. He hopes it will help Energy Demand arguing the arab states will escape most of the damage. They are urging all producers not to raise output next year saying this will quickly steady prices. Oil prices this morning as you can see look high to me, almost at 58 a share. Wait a second, now the uae is trying to get all the world to be part of opec saying everybody opec and everybody else including the United States will all agree not to raise output . This is interesting to watch. I dont know whether i did they do it to put fracking out of business or did they slowly lose control as more came online here . And then they were like, whoa. And we need a bigger cartel. I hope its a seat change. Its sort of a splintered cartel. Yeah. Lets hope it stays that way. If you want it to be an effective cartel, get the United States involved, too. How did they stay involved so long . Opec, really its been most of my adult life we have been talking about opec. Since 1975 kind of. Kind of. I was just going to college. So yeah, but it had they had their hands around our neck for a long time and it feels good. Its a Long National nightmare. It would be nice to break it for a bit. For that part of the world not to have such a huge influence on our future. Lets check on the broader markets this morning. It was a great week for the markets last week with the dow up 3 and the s p up by 2. 4 . Its a pretty volatile week with things starting off with a rough start at the beginning of the week with concerns on the rouble and oil. You can see this morning the green arrows, that trend continues with the dow futures indicating up another 80 point this is morning and the s p futures up ten points by the nasdaq up by 20. Youre watching whats happening in europe this morning, also green arrow there is with the biggest gainer the cac in france. Strong gapes from the ftse and germany dax as well. At one point shanghai was up 1 . Hang seng is up by 1. 25 . The nikkei was up just slightly. The tenyear note back here in the United States looks at this point like it is yielding 2. 174 . So that is below 2. 1 . And if you check out the currency market, the rouble is there at the bottom. The rouble seems to have stabilized in a big way trading at 56 to the dollar. The dollar is up against the yen at 119. 8. Euro trading at 1. 2264. And when the market is up most of the year, this is what you usually expect. And that is people that havent matched it, which is a lot of Money Managers that cannot match the indices. And they are charging 2 and 20. And then they try to get into the winners toward the end of the year. And then then the winners go away. And for the next year, everything the air comes out right away. But do you expect january 5th this will be it says here it deepened the fear of the early 2015 slump. You have seen it happen before, but its usually after a really good year and then the next january might be hard, but we need january to be good for 2015. Lets see what the people think. Three days before santa comes but hes spreading the joy on the dow adding 3 last week. They lost 4 the week before. Lindsay is a chief economist and tom manning is chief Investment Officer of bp wealth management. So lindsay, does this usually indicate that we opened soft in 2015 when everybody chases the market at the end of the year . Well, i certainly think the fed is sending a favorable message. You remember last week on the one hand they reiterated their commitment to accommodation. But on the other hand they suggested that the u. S. Economy is on slightly firmer footing turning the corner to 2015. Still boosting the optimism suggesting the later markets specifically were eating through some of the outstanding slack that has been plaguing the u. S. Recovery for quite some time. So a very favorable outlook presented to the markets, something they continue to boost with expectations. I guess since you are chief economist, the first words out of your mouth were the fed again. So the fed is really still. Thats the first thing you talk about, not only prices or other favorable factors. Its still the fed even though they just said well be patient. I think it is. Now, certainly oil prices play into Monetary Policy as chair yellen noted we still have a net importer of oil. So she does suspect Lower Oil Prices will continue to boost Economic Growth here in the u. S. On net. But the number one story driving the market at this time is the fact that Monetary Policy will remain accommodative well into 2015. As we assure ourselves that the u. S. Economy is on Strong Enough footing to withstand eventual higher rates. Just like opec. A cartel, i could i wish they would just i almost feel the same way of the fed at this point. The fed has been in our lives for six the same categories. The cartel, they dont know what they are doing controlling our lives and think it is all about them, but its not. Its about the private sector, tom. Im ready to take the training wheels off. Did we have the fed 50 years ago in every part of our life . Well, i would have to agree that the fed right now is anything the only thing everyone is thinking about is the juice behind the market. They will continue to be the juice behind the market. I do think, though, however going into the new year that the resiliency of the market is going to be tested. We havent had the type of pullback that one might have expected in a normal market environment. Largely because of the fed. I do think that sometime in the early part of next year were going to get that correction that everyone has been waiting for, more than just a few percent. But the year, as we progress, well wind up with higher returns. But that First Quarter i was a little concerned about. Well, will the fed if there is a correction, do you expect them not to every time we get any type of market turmoil it seems like they think the illness is on them to talk the market up or to say were not going to get out that quickly. I mean, if we had a real problem economic wise and marketwise, they would do another round of qe if they could. They still think it is all on them, dont they . They are still involved but i think that 2015 is the year that not only do they take the foot off the brake, but they actually excuse me, take the foot off the gas but put the foot on the brake to a certain extent. Once they do the first rate increase, eventually well get back to what is more normal. I think so. We could eventually get back to go ahead, lindsay. What . I was going to say eventually well get back to a state of normalcy but the question is how long. Now again, going back to last weeks fed statement and press conference, janet yellen was clear they are not reverting back to the 25basis point increase that we saw in the early 2000s. It is likely after the first rate increase we could wait two, maybe three meetings. So the progression back to 3. 5 to 4 fed funds rate could take years. I just want to know, if youre convinced of this, does that mean you just dont you wouldnt put any money in the market right now . Youre just waiting for the correction . Or if you think the end of 2015 will be so much higher, you dont really care . Youve got to think about the longterm. I think if youre waiting for that correction in the First Quarter, if it doesnt happen, then youre obviously going to be weighing for quite a period of time to be able to put the money to, with. We do think that 2015 will be a year of higher returns. Im just a little concerned here in the First Quarter. If you have money and are sitting on the sidelines, you may want to take it with a slow approach lasting until the end of the year. There should be softness to get the dollars in the market. If things selloff. Are you looking for 5 to 10 quarter when you tell people to jump in . I actually think well see a 10 number here at some point. Its been quite some time since thats happened. You have noticed here in the last few months the market has gotten skittish and we have come here near 10 . I think we hit it intraday in october. I think we may see that for more than a couple of days but eventually the market is going to start to move higher once again. Thank you, lindsay and tom. Appreciate it. A big piece in the journal day, the whole reason for the saudi and opec decision to try to hurt our tail. That guy just said we had nothing to do with it. He just suspected all along. It is not very nice to say. I just said she could do it. Cuomo is smart because new york never has to worry about losing jobs because they wont add any from friday, right . Thats what he was thinking. Thinking ahead. Actually, he was like, you know, totally washed his hands of the home issue that we i missed it. Did you really . I didnt read the note. I heard about cuba daily. Thats immediately what i thought of was cuba. Why . Another place to get a 0. 001 rate for vacation i dont know if ive been to cuba. This time now that youre back you can tell the viewers that the eastern rivera of mexico is where it was. Now what would you tell people . Well, we dont want people we dont want to get mobbed. We have a lot going on with two storms threatening to disrupt Holiday Travel this week. Carson is joining us from the Weather Channel here. We need to play that d. C. Top. There we go. Good morning, guys. Were betting now. I got a comment from the producer about my button being unbuttoned. Stylistically, we are okay. Who said that . Thats a great question. Someone told me in my ear. I just get heckled by different voices and dont know who they are. That Guy Department know what he was talking about. It was a woman. That explains it then. Because this is a mans style. Okay. I was like, i dont want to touch that one. Im going to do some weather and we can make fun of me on the backside again. Well talk about whats going on here. We have a storm system here. We have two storms coming together. It will be really messy across the east in the next couple of days. Not the Winter Wonderland stuff, but a rainmaker with a dip in the jet stream with a lot of moisture up the eastern seaboard. This is an inside runner with the storm to the west with warm air on the side of it. Showers today getting into washington, getting into new york by later tonight. Tomorrow this first impulse is again rain. Its the mountains of new england. The only place that sees any snow. Look at this Christmas Eve forecast. Not only rain, very windy and maybe some thunderstorms. Then Christmas Day showers in new york, rain in boston and through new england and a little bit of snow here terrain driven into parts of west virginia. In addition to it being rainy, it will be very windy on Christmas Eve day and through Christmas Eve itself. New york city, washington, d. C. , down in to raleigh, up to boston, winds of 30plus miles an hour. It looks like through southern new england we could see winds up to 40 to 50 miles an hour. So its going to be a nasty, nasty day. Of course, a big travel day there so we are concerned about the travel delays. We could only predict of course what the weather is impacted to do with travel. We could have other issues with the volume of what happens on wednesday. I do think well see delays in new york, philly, d. C. And cincinnati. I wish i had better news for you. Anyone would take snow instead of the rain but thats what weve got. Oh, grinch. Have you ever worn a vest before . I feel like youre dressing for us now . Maybe thats me being too lets not flatter ourselves. But the vest is something that i wore when i first got here, but i think i was coming in too hot with it and it was too much, and i put it on the sideline and now im now i feel like youre stepping out for me even if youre not. See, i thought he was dressing for me. See, we are all the selfcentered me, me, me. You were here last week. Was he wearing the splendor last week. You screwed me up a couple times last week. I dont know if i was on, was i . We had a couple yes, we had busy newsdays bnews days. Even if you claim you werent dressing for us, you are. Boxers or briefs, kid . That was not me asking. Dont answer that, boxers or briefs . Combo. Sony might release the interview. quts and Michelle Carusocabrera is back to share pictures and stories with us. And what the companies in the u. S. Are doing to help protect themselves of a security breach. Squawk box will be right back. Welcome back. This week we are looking ahead to the playbook playing our predictions for media companies, but before we do that, well see how she fared in her picks for this year. Julia predicted that the cable industry would see consolidation in 2014 and ding, ding, ding, she was right on that count. Comcast going after Time Warner Cable and at t making that bid for directv. She was also predicting more convergence in tech and media. Right again with hbo announcing an overthetop service and amazon extending their original content. And julia also said the film starring superheroes would dominate the box office with not much more of anything else. Well give you a ring for that, 3 for 3. Franchising to eight of the top ten spots at the Domestic Box Office in 2014. So what is julia predicting for 2015 . Heres a look. Old media will give itself a new look in 2015 as it embraces Digital Content and delivery. First for tv, that means more streaming options and more cordcutting. In addition to hbo, shotime and cbs launching overthetop services, look for amc to jump on the bandwagon. Easy access to streaming video will send cable subscribers plummeting putting pressure on broadcasters to pay more for sports and live events to keep customers. Then the death of the 30second spot. As we move from traditional tv to streaming, marketers look to grow the roi from ad investments from taking 30second spots across platforms while native advertising, subtle content will become more prevalent making it harder to tell when marketers sponsor video. And third, get ready for more m a as media giants buy startups to bolster their presence. Following in the footsteps of disneys maker studios, they will embrace youtube stars to better compete. And look for more consolidation among cable channels as everyone from stars to amc look for more leverage to negotiate with distributors. And there we have the playbook. So this is the question, this is a little more negative than your 2014 predictions. Your 2014 predictions had a positive i thitinge to them. The nba madness, the idea of what happens to the 30second commercial and the broadcasters it depends where you are sitting. If you are on youtube or the dimmal side. But so far, so far in media everybody is warm meaning nobody has lost as a result of the new form factors. The question is when that begins. We have seen a shift. Its all about the shift and i think what is happening is the media conglomerates become more digital so they will not lose. Well see negativity in the Fourth Quarter. Even in the Third Quarter as we see the rise of digital viewing really start to eat into tv ratings and also tv ad revenue. Thats starting to have an impact now. And i think my negative prediction for next year is i think the introduction of the new streaming services, like a standalone hbo service, cbs already has one and a showtime service, those will start to eat into the cable subscribers. Are we always going to be trading in analog dollars for digital pennies or dimes . Not necessarily. I think thats why you have like an acquisition of disneys maker studios. You have all the media giants going more towards dimmal. Bob egger said we know advertising is shifting more away from broadcast to digital because part of that shift is for themselves. One of the reasons cbs launched the own Digital Streaming Service is to charge for that and bring ads in with it. Stay with us. Well bring in david here, digital pennies or nickels or whatever it is, it seems to me everyone is moving digitally, and thats a good thing, but it is a lower margin business generally speaking. I thought julias theme attics were interesting but i see something far less dramatic than i think she describes. What really stuck in my mind is the term cable subscribers plummeting. So i think cbs offering a 5. 99 product for cbs all access or hbo product for we dont know what it will be but probably priced similarly at the retail level to what it is on cable, we dont see those things driving the plummeting of cable subscriptions. If anything, on standalone basis, they show the value of the bundle at 60 or 70. I think what happens this year, though, is this is the year the cord gets more options. While we dont see a plummeting, we might actually start to see some cordcutting. The advertising question, im sorry, the advertising is a different question if you want to talk about that. Sorry. David, you cover all sorts of stocks, who is the big winner in all of that and who are the losers if there are some . Well, to me content, theres one constant in all of this. Content is absolutely king. And so and i think to me, the winner is the guy who owns the most content and is the clearest play on content. The clearest single pure play. And in big cap, close to that on tv, which is what the Digital Services what. Marginal in theatrical, thats cbs. Thats how we look at that. We also think that if you look to an unbundled word, if you start busting the bundle apart, theres only one structurally undercompensated area and thats the broadcast networks. So we think cbs has a lot of upside for that. And the loser just now . I think the losers are going to be the more document drama oriented, less scripted cable guys. You know, the scripts, the discoveries, we see them less showing up on amazon and netflix. Getting a little more marginalized. The stocks have ive watched those and wondered what happened to those stocks. Even discovery, that was the darling and suddenly it is off i dont know how many percent. And listening to it, im not an early adaptor, i admit that, but in my early experience, i dont know how it could get better. I know how to use netflix and the universal remote to go to the apps on the big 75inch screen. So i can go that, but Everything Else i have on just regular i wouldnt change anything. Im not going over the what is it called . Im not doing that. I have everything i need. Youre not going anywhere. I have nine of them. But the people have never thats what david just said, the never the cordnevers. David pointed this out. It is remarkable we have not seen a dramatic drop in cable subscriptions considering all the other options, but next year is when we could start to see that because of the proliferation of new options and because the cordnevers are starting to be a bigger piece of the pie. Before we let either of you go, we have to talk about sony for a second. Just tell what you say you think is happening with this movie the interview. The question is about the distribution of it. The cfo of sony said we want to get this out there. Theres a report they are definitely putting it on crackle, which is sonys video streaming service. My sources tell me nothing is definitively decided. Crackle is an option. Its very convenient that sony has a streaming video platform. But it seems they would like to get another company on board. And netflix and itunes and amazon. They wouldnt put it that way, but it certainly would help spread the risk and also maybe one would be a vod platform to sell it. Netflix or somebody, if they want to touch this, given nobody wanted to support it last week. They all give me the equivalent of no comment. Netflix says we are approached by the studios about an interesting up innovative situation. What about our Parent Company comcast . No one is partnering with them but sony would like someone else on board. David, is there any financial ramification longterm on hollywood and broadway . Im glad you asked this question. Thats 40 million movie. It is not like avatar and how are you going to release it . The reality is compression in windows across the board. Marketing budgets are now starting to being agnostic between windows and sin that in releases and dvd releases. So i dont think this is a i think it will be interesting to see what happens, but i dont think there are huge financial ramifications. Its about whether amy pasqal keeps her job. I think it is about whether hollywood is willing to take risks and take on some of the things or start subcensoring. That would be my guess. I think it is likely sony could distribute this for free and give it away. They are going to take a loss on the movie no matter what, but this is far beyond the amount of money sony is losing on this film. The president says he wishes they would have called him first. So is he going to intervene now and do it on video on demand . Sony said they did have a conversation about it. So theres a lot of back and forth there. And david said there was silence for no weeks. Nobody would help us while they were attacking us. The president s comments could inspire another company to get on board as well. Well see. David, julia, thank you. Coming up, how the nations largest pharmacy benefit manager could be fuelling a drug price war. Plus, a historic change as u. S. And cuban relations begin to thaw. Well have a report on the story firsthand. Well be joined with details of michelle carusa cabreras travels and whether she brought us all cigars or one for bill clinton when squawk box comes right back. Stay with us. Act i. Scene 3. Open port twentytwoohoneseven on the firewall for customer db access. Install version twopointthree of db connector and ensure verbose flag is set in case of problems. clapping sound isnt the cloud supposed to make business easier . Get the one that can connect to the systems that you already have. Today theres a new way to work. And its made with ibm. Express scripps is making an exclusive hepatitis c deal shunning gilead and Johnson Johnson. The biotech reporter is joining us with more. Is this a new way of doing business . It hasnt been done in the past. Express scripps is calling this up precedented with controversy over the drug that is cost 84,000 and 94,500 for the first week of treatment. So this drug was 1,000 a day. And because they are easier to take and cue more hepatitis patients, a lot more patients came aboard to get treated. So gilead brought in 8 billion for this year in the market. Express scripps is the biggest pharmaceutical manufacturer in the United States, this new drug just got approved on friday and they have a significant discount to get a deal on the formulary. Many will be able to get this drug that is covered and express drugs is covering this from johnson and johnson in this formulary. This is a really new thing and express scripps is the loudest voice here against the price of these drugs. But the question, is will this start to happen more and hepatitis c is one of the main drugs in the price wars, but are they going after Rheumatoid Arthritis now and diabetes and cancer drugs. What happens to the development . Does it put a freeze on development because companies are afraid they wont be reimbursed for the hard work put into drugs . Of course what we heard from gilead it is helping to bring 8 in revenue and people say is that too much. But down the road, the potential things that could have cost a lot of money are a lot of payments down upfront. How do you read it, a good or bad move or well wait to see what happens . I think people think its bad for the biotech. Theres a question on whether drugmakers will start to compete against one another. Its always the insurance policy Company Versus the drugmakers. Now its the drugmaker against o one. Hepatitis c, there are so Many Companies vying for a position there. Because its a treatable condition. There are so many manyto drugs. Its a really good question to the point we have made. This regiment is four to six pills a day and take them at different times with meals. Express scripps takes you when to take the bill. When i watch the nightly news, and one of the reasons i dont like to watch it that much is because i have to listen to the theres a commercial where a woman takes four pills a day and her friend says, you only have to take two. And then shes like, really . It can be kind of difficult to remember when to take them. Then its the effectiveness of the cure if you dont take them properly. Will you come back to do a segment on the commercials . I had a pushback on how much time to spend on all the side effects. God almighty, unbelievable. I watch a lot of the news with my father. Its up comfortable. Youre probably going to want to the side effects they have to list are not only caused by the drugs. There are things people get in a Clinical Trial whether or not they are caused by a drug. You get a headache and it is put in there. We need to hear it. Thank you. When we come back, a first interview of u. S. cuba relations. And a cyber firm protecting nearly half of the fortune 500. And well have veteran predictions from bob dahl. Squawk box will be right back. That makes our lives possible. Because we do. Were exxonmobil and powering the world responsibly is our job. Because boiling an egg. Isnt as simple as just boiling an egg. Life takes energy. Energy lives here. And Michelle Carusocabrera is just returning from overseas. Things are better today than they were a year ago. Better than two years ago. Way better than 15 years ago. When you got on a plane 15 years ago, people were, i dont want to say starving, but they are thing, thin, thin, thin. They were gray. When you arrive, people are overweight and the right color. Thats an improvement. Whats happened . Exiles can travel back and forth more and bring more money and stuff. Theres much more of a consumer economy. And also there have been some tiny transformative free market reforms that they never called free market reforeims. Transportation has improved in the last year. Why is that . I said theres a special place in heaven for cubans waiting to ride the bus because it was so brutal with people jammed in there. Now theres a lot more cars, taxis and buses on the roads. A couple things happened. First of all, they started cooperatives where they said transportation is so bad, they told workers in the transportation sector, the government is not going to own the company anymore. You do want you want to do, give half the money to us and keep half the money. So now theres more incentive to get the bus back on the road. They also bought chinese buses according to People Living there. And well show you you cant do a cuba story without old cars. They have allowed people to retrofit the american cars from the 40s shaped like almonds. This guy is selling his for 3,500, he hopes. They will retrofit these for diesel to be much cheaper and easier on the black market. So they get them on the road and allow more taxi licenses to cop vert them to taxis. Then they allow the buying and selling of used cars. This is a 48 chevy. It is bolted and bonded in so many places, it is just crazy. Theres a lot more food oh, look, this car is also for sale. Its a brand new car, 2009. The long story about it, the family brought it in from spain. That knee zap from 2009, shes trying to sell for 80,000. Wow that would not be true value but scarcity value because theres so few new cars. Remember, its a 2009. How long is it going to take to see a real shift in terms of the color it is a time what wearp. The article i read over the vacation, people in cap da travel there because they claim its going to lose its time capsule. They would love for people to live without infrastructure and crumbling walls. Some people said its great to live without internet for a a life. Now i go there to i would love for all young people to go there to see what it is like. I think raul castro will say, were sticking with it. Then on saturday. Sticking with it. Looking good, working well. The markets can do things foreign diplomats and World Leaders cant. We saw this happen last week with the rouble and an aboutface. That broughttous a position that couldnt sure. The Obama Administration feels by lightning night the is there more than 1 down there . Yes, musicians and artists and athletes who for whatever reason, back in the 60s, got the exemption. They can keep their revenue. Equal outcomes, it just doesnt look that great when everyone is equal down here. When the richest people get to it seems really fair. You dont want to feel bad about yourself. Uber, theres enough to deal with today. At least its equal. I was just getting ready to look for corporate thwith that. Well talk to the firm charged with keeping nearly half the forcheck up 500 safe. Well do that right after the break. Well be back. [ male announcer ] your love for trading never stops. So open an account with schwab. And when a market move affects, say, a Cloud Computing stock youre holding, we can help you decide what to do. With tools that help you see how market activity is affecting your positions. So when the time comes to decide whether to scale in or scale out. You can make your move, wherever you are. And start working on your next big idea. And start working on your next big idea. My baby drove up in a brand new cadillac. My baby drove up in a brand new cadillac. Look here, daddy, im never coming back. Discover the new spirit of cadillac and the best offers of the season. Lease this 2015 standard collection ats for around 329 a month. Hurry in. Offer ends soon. Everyone is vulnerable. That is the clear message to Corporate America following the massive cyber attack on sony. Joining us right now is the ceo of cyber arc. The Company Helps firms fight cyber attacks. It has about 35 of the fortune 500 as clients. Some of the notable big names include southwest airlines, conagra foods. Thank you for being here today. Pleasure. Good morning. Are we that much more in peril that any of us realized . How easy is it to do Something Like this . If hackers keep at it, theyll open the door and get in. I think thats the new realization organizations are waking up to today. We heard sony was in a poor position, they did not do things to keep things safe. Are they in the minority or is that common place in Corporate America right now . I would say thats common place in Corporate America and elsewhere around the world. Organizations have been focused on security perimeter. That was the focus on the security practice. And not about what happens is when the attackers do get in. And the soft part of the enterprise has been out there for everyone. They have been soft on the inside. When you come into an organization, do you change things drastically with the Companies Using you or could this happen to companies youre protecting too . What cyberark does is we add a security layer on the inside to make sure that even if the organization was breached, they cant move around and get to the sensitive information. Its a whole new layer on the inside. My guess is it would be this is a situation where corporations really have to start investing and have to have people who are reporting directly to the ceo or board to make sure these things are being taken care of. Every hack weve heard, there were warning sign it is along the way. Whether youre looking back at target who should have known something was going on or other retailers hacked along the way. What do you really think . Are we able to do something that we make ourselves that much stronger or is this just a way of life and something we need to get used to . First of all, i agree with you. This is becoming a board level topic. And were seeing it within the top enterprises. Are we protected on the inside . What happens after were breached . There is a change. This is again after 20 years where the approach was put up a fire wall and keep the bad guys out. The boards are asking good questions. I think as a matter of looking into the future, the pendulum has swung toward the bad guys because of many years of neglect. But it doesnt mean all gloom and doom with proper verinvestm they can make this. President obama speaking over the weekend said this was cyber vandalism. How would you qualify it . Well, i think its actually similar to other attacks that and sophisticated attacks you mentioned. The difference in this one is that the intent was really to cause damage and really bring a company down to its knees. But in other attacks, if the intent is to steal credit cards, steal intellectual property, they operate the same. They move around on the inside and try to get strong access and steal information. This time around it was really to bring the organization down. And thats what smells like vandalism. All right, udi. Thank you. Pleasure to be here. Thank you. Coming up, futures pointing to another higher open. Santa clause is coming to wall street. The bulls wish list when squawk box comes right back. The dow gained 3 last week renewing hopes for a santa claus rally. Santas coming. Santa oh my god what you need to know about stocks. Oil and the dollar before the market opens. Caterpillar stock down in the last six months. The ceo on the companys performance and the slide in oil prices. And its make or break time for retailers. You disgust me. How do you live with yourself . Cool it, zippy. You sit on a throne of lies. With three shopping days left, how their shaping up. I think youre going to have a good christmas. You smell like beef and cheese. You dont smell like santa. The second hour of squawk box begins right now. Welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernen along with becky quick and andrew ross sorkin. Its crunch time for shippers. U. P. S. Expects to deliver 34 million packages today. 34. That would be an alltime record for the company. Its double the volume of a typical day. I know his kids, i ask how theyre doing. Were like, you know, we see eep other three or four times a day. Were going to talk lastminute shipping in just about ten minutes. Its a combination of more things going from the net and just maybe better economic times, more stuff being bought. I think the biggest thing is this is the holiday that ive done almost all of my shopping online. I havent been to a mall. I havent set foot in one. This is everythings coming to me. Well, its hard you know, theres a lot of people going to the malls because theres no parking spaces. I drove by a mall the other day and couldnt believe it. I thought there would be more parking as a result. No. Its rough. And amazons now shipping within an hour in new york city. Have you used that yet . No today i plan on doing it. If youre a prime customer, theyll get you the stuff in an hour. Its craziness. Lets talk about some of the top stories at this hour. The big one, gasoline prices dropping to the lowest level since may of 2009. Thats according to the latest lundberg survey. National average now for a gallon of regular unleaded stands at 2. 47. Also sony planning to release the controversial comedy of the interview. Thats what they say on a streaming service. Reporting sony hasnt made a decision yet about where to release that film. Now, meantime, north korea denying it breached sony and warning of consequences if the u. S. Takes action. And javers is going to join us with more on that story. Its a three inform day trading week, but we have plenty of data to keep us busy. Heres whats happening on the schedule. 10 00 a. M. Eastern time today, were going to get existing home sales. Tomorrow a flood of data including durable goods, the second revision of Third Quarter gdp, and new home sales. Weekly jobless claims going to come out on wednesday this week. Also u. S. Stock markets close at 1 00 p. M. Eastern time on wednesday for Christmas Eve and remain closed all day thursday. Trading resumes on friday. Then we do it all again next week. Stocks coming off a week of big gains, but will they keep momentum . Our guest host is bob dahl. Hes senior Portfolio Manager at nuvene asset management. Its been a heck of a couple of weeks. What should we think is the real market . Was it the swan dive we saw a couple weeks ago or the santa claus rally . I think what were seeing is dont expect it to be just monolithic up. Its going ton bumpy. We forgot markets are typically volatile. Yes, we did. Or like in october, should i jump out the window today . After the market goes up in five years. I think were going to have more volatility. The economy is Getting Better. You talked about energy prices. On balance, thats positive. I think the slow growth overseas is good news for the u. S. Why . Because it makes us look like a better neighborhood . Theres that. But it keeps Interest Rates low. It keeps Commodity Prices low. That more than offsets the weakness that comes because we cant export more. I think the weakness overseas a good news. When you look at oil prices, you say im balanced. You think thats great news too. But you sound a little guarded. Its clearly a negative for the oil patch which has been on fire here in the u. S. And other parts of the world. And thats all going to slow. The overwhelming positive, lower gasoline prices as you reported and the benefit to manufacturers and airlines and so on. The wild card is does the repeatty cause a financial problem . We dont know the answer to that. It happens so fast i cant believe were going to get through this without bumps along the way. Weve been talking about that this morning. Just the bumps along the way, the return of volatility. Youve got people chasing returns at the end of the year. But sometimes that can lead to a messy january. Do you worry about that too . I sure do. Last year look at last year. We had that big run at the end of the year. Some were saying we borrowed some from 2014. Maybe were doing that again. Of course last january toward the end of the month we had that nasty 7 decline from which we recovered. And i think well recover again. But i think it gets bumpier. Remember, liquidity, tons of it from everywhere was part of what kept the market being less volatile. Theres nothing like liquidity to keep things moving to the upside. Slowly but surely starting with the fed and the uk, were removing that liquidity. And thats going to create a more normal set of volatility. Havent actually removed anything yet. Were just stuck putting in, right . Well said. So less gas pedal. You think the fed is really signaling its going to move in the middle of next year . That its going to rauz rates maybe come june . I think they are. All kinds of cross with the oil price and the meetings last week. All that good stuff. But, look. We have nominal gdp in the United States approaching 5 . 3 real and almost 2 inflation. Thats not consistent with shortterm Interest Rates. We got to zero because we had an emergency. The emergencys passed. And so the fed has to find a path to normalization. Yes, theyd like inflation to be closer to. It seems to me the fed will move. They are awfully nervous and slow paced how theyre doing this. We need leadership on the fed. Janet yellen has to step up here. Theyre at a turning point. You have discontinuities and disagreements. When should we move . How should we move . Weve got to get going. I thought janet yellen was one of the more dovish ones . In some sense thats right. And therein lies one of the issues as well. We cant let the fed fall behind the curve. If you watched the monthly wage numbers youll know were beginning to see a little bit of wage inflation. I think well see more next year. Not enough to be concerned, but enough to say its not zero real wage gains anymore. Its starting to come in. The job markets picking up. Unemployments moved down. Time for the fed to get going in my opinion. Trying to figure who it would be. I guess if it had been a financial firm, they would have already got margin calls. We would have heard about oil. Most likely, joe. But some of these things take a bit longer. Im sure theres a bot of Small Companies were going to hear about. Thats like a quarterly thing when they go. Talking about emerging markets or countries that cant pay the bills. And theres going to be some of them too. I would agree. Thats going to cause some bumps in the night. We saw the ruble. Thats where we saw all of the stress sort of manifested because russia is so dependent on oil. Then even emerging market, i was worried about currency there. It doesnt seem its systemic at this point. We may see the ruble get hit again. Im not convinced were out of the woods there. Its an interesting crisis because were i feel bad for opec and i feel bad for russia. I dont feel bad for either. You know what i mean . Its like, make it hurt even more. Yes. Thats part of the saudis message. Having been the swing producer every time in the past theyre saying timeout. Were not lining other peoples pockets by shoring up the price. Were going to take care of ourselves. And theyre sending a message to the u. S. Too. You can produce more, but not so fast. Can i do caurocodile tears without sounding like clinton . I dont. No. I need a new hes gone. I need a new guy to field. That sounds better than being whiney. Yeah. Sounds a little more manly. Really . Yeah. That was manly . Yeah. Relatively speaking. Im thinking in terms of a 3yearold, what they would sound like. Yeah, a 3yearold which is what im really more like. All right. So, you know, so many good things. And oil is a good thing overall. Overall when the dust settles this is good news for the u. S. How long does it have to last before its really good news or before we figure that out and it reflects in the stock market . I think once we get past the concerns we were talking about. Is there a financial disruption . If we get past that, i think good news will filter in. Youll see it in Fourth Quarter earnings to some degree. Theres not chance if Oil Prices Jump back up, the good stuff never comes to fruition. If we go back to 100. Bob, thank you for agreeing to spend the morning with us. Well have more from bob. Hell be our guest host the rest of the show. Tim cook finally sent me a christmas card. You finally got one from him. Just now . Well, it was in my have you . I got one too. Yeah. I did. But i opened it, i was expecting a note or something, like a long note. This is what i got. Doesnt say anything. You got one too. Did he just send it without writing anything in there . I think you got a note. Oh all the best, tim. Youre my favorite i think it says right there. No, it doesnt say that. Have you gotten one . I dont know. I might be out of luck. I havent checked my mailbox. We should fess up. I actually wrote that myself. Just to drive him a little crazy. That way i would have felt bad too if i opened it. We should have waited. He would have been oh, yeah. You would have switched to samsung. You would have got a new phone probably. Up next thank you, though, tim. Its nice. He didnt send out 10,000 of these, did he . Maybe. Maybe. Have you sent yours yet . You know what . Thats right. No. I havent. Mine are in the mail. Like that check. Its the final countdown to christmas. Details on how Super Saturday went for retailers. And what lastminute shoppers are bingeing on with just three days to go. Plus the ceo of caterpillar. Squawk box will be right back. Welcome back to squawk box, everybody. Looks like were in positive territory once again. Look at the dow futures ahead of the mornings open. Last week the dow finished up 3 for the week. The s p up by 2. 4 . This morning dow up 70 points above fair value. Big question this morning. Is it too little too late for some customers . We usually see you across the way in a little box somewhere. Talking about boxes, whos the winners and losers given weve got three days now until christmas . Sure. Ill start out by saying the expectations were so low heading into the holiday season, people thought the consumer wasnt going to come out and shop apparel. And while retailers did plan conservatively were aggressive with the promotions and are seeing more traffic than expected. As far as the winners, shockingly enough, American Eagle outfitters. People thought it was a lost cause. Absolutely which is why were saying shockingly enough we think they are the winner. Cargo shorts are back . Actually joggers. Lime hammer pants. Those are the trend this year. You know what i noticed about American Eagle . They have a good website. I ordered some stuff off of there too nep retailers who have not done well with the web are probably suffering. Absolutely. The website and also the mobile as well. Everythings online right now on the phone for the kids. And a lot of my retailers have ramped up aggressively. Does that mean theyre is any of the other teen guys winning . Is abercrombie anywhere . Abercrombie has a lot going on elsewhere that people care about than whats given in the stores. Abercrombie has a lot more 70 off on top of the already reduced price points. Theyre struggling a bit more, but longer term we do think they make it through. But as far as whats going on right now in the mall for holiday, we think eagle has the most traffic, the conversion they have in their inventory is well controlled. And they sell what product is working and were able to get it back in quickly. Tj maxx . The checks have been coming back favorably on them. Maybe youve seen theyre doing the the campaign this year. Theres also a Treasure Hunt experience going on there that we talked about online. But this gets the customer back into the store to see whats going on there. Okay. We dont like to be so negative, but who are the losers . We dont like to use the term losers, but well see those who are potentially struggling a little bit more, for example, gap north america continues to have problems. A gap north america meaning gap the gap stores themselves, is it bananas the problem . Old navy . All of them. Old navy is rocking. They did phenomenal last month. Its really core gap stores is struggling. So does it ever come back . What has to happen . Why has it feels like a decadelong its one good quarter and one bad quarter, right . Not really. In the public consciousness gap and banana has been on a steady march wards and the pe reflects that. Right. I think part of the issue is that gap is no ones First Destination when they come to the mall. So you walk by, you see 40 off, 50 off, maybe that entices the customer to come to the store. But at one time gap was the place you wanted to be. I dont know that they resonate with a particular core Customer Base anymore. I think theyre going too broad and the product wasnt there from a color palate perspective and fashion perspective. Color palate. What was wrong with it . Very dark. And are the mc hammer pants called that . Joggers. So if we were to put this on our christmas list for our wife to get us how do people does someone say, listen, weve got to plan a new season for things people dont have. Who comes up with the original decision to put such a ridiculous style back into fashion . Who would come up with that . And then how does it spread to where other people go, yeah, thats a good idea. People want those. Who wants these . Holy cow. Im looking at some of them. I havent gotten one yet. Would you put it on your list . Im in your camp. I wont. Double breasted suits are back too. People put it on the runway. You see it in a creative approach and then the retailers in the mall try to get it appropriate. Is that snem. There are even pleather ones for you guys. It looks like the room there appeals to me there. It looks like theyre roomy. Theyre low hangers. I dont like you know. While joe continues to look at that, were going to get to kate rogers. She joins us with a report on lastminute shopping including maybe whats going on with joggers. This weekend on Super Saturday, shoppers were getting it done the old school way. Theyre going to stores rather than shopping online as the clock ticks away to complete their shopping list. Analysts we spoke with saw increased traffic at stores. Still feeling the sting from last years delivery debacles. Saturday was actually the number one sales day of the year for retailers. Raking in as much as 10 billion in sales alone. Which are ranked number four and number ten shopping days of the year when it comes to those sales. Now, if that forecast is right, itll be the first time in a decade that Super Saturday will outpace black fridays estimates 9. 1 billion in sales. Black friday has become less of a oneday event. Its sharing sales with thanksgiving day promotions which bring in an estimated 3. 2 billion in sales. And if youre wondering whos shopping in these last few days, were hearing its mostly men who are procrastinators. Theyre just Getting Started on their list making this the home stretch. Time for general Stocking Stuffer gifts. Those will be the most popular in the days leading up to christmas. Wait a second, guys. Have you finished your shopping yet . Finished is the wrong word. Started . Thats todays project. Theres a lot of things that need to get done today. Its only monday. Thank you, kate. And thank you, pam. Maybe well spend some you going to buy some joggers . What do you think . I want even if im going to do it they dont look like mc hammer, tighter. It doesnt hang as low but the bottoms of the pants are tighter. I want the i dream of jeanie. You should start the trend. Thank you. Im not going to be a slave to fashion. Im sorry, andrew. You got a double breasted i saw that one suit you wore here that day. That thing it was a beautiful suit. When we come back this morning, the winner at the Weekend Box Office. Heres a hint for you, more bad news for sony as annie came in a distant third place. And then doug oberhelman. Stick around. Squawk box will be right back. Your 16yearold daughter studied day and night for her drivers test. Secretly inside, you hoped she wouldnt pass. The thought of your baby girl driving around all by herself was. You just werent ready. But she did pass. cause shes your baby girl. And now youre proud. A bundle of nerves proud. But proud. Get a discount when you add a newlylicensed teen to your Liberty Mutual insurance policy. Call to learn about our whole range of life event discounts. Newlywed discount. New College Graduate and retiree discounts. You could even get a discount when you add a car. Call Liberty Mutual for a free quote today at see Car Insurance in a whole new light. Liberty mutual insurance. Welcome back to squawk box, everybody. The final installment of the hobbit series took the top spot at the box office over the weekend. Topping 90 million since its opening last winednesday. Coming in second, the final chapter in the night at the museum series. And sonys annie remake brought in 16. 3 million. Coming up, the Energy Effect on construction. The ceo of dow caterpillar will join us next. Take a look as the dow is up above fair value. Welcome back to squawk box, everybody. In our headlines this morning, taiwan says that uber is violating the law by operating without a license. It is investigating possibility of blocking access to the companys mobile app. Gasoline prices dropping another 20 cents in the last two weeks to the lowest levels since 2009. The lundberg survey puts the average at 2. 47 a gallon. And ocwen financials chairman will step down. This is part of a legal settlement with new yorks financial regulator. The firm has been accused of hurting hundreds of thousands of borrowers by sending back dated letters about Loan Modifications and foreclosures. And check this out. An implosion in texas this weekend. The west end of the texas a m football stadium brought down as part of a massive renovation project. Never gets old looking at images like that. Its a twoyear, 450 million overhaul. Construction expected to be done by the start of the 2015 season. Theres already a new video score board, the largest in college football. Watching the scores go by this morning, it wasnt rutgers but i thought of rutgers. It was the virginia basketball game. 7627. And that reminded you of rutgers and not californolorado year . So now youve got that ready. Im ready to play. Okay, never mind. But harvard was good the last couple of years. Arent you in a bowl . Yes, we are. Toilet bowl . No. Its the quick lanes bowling. They have changed the names all of these bowls. The blue bonnet bowl is no longer the blue bonnet bowl. The peach bowl is no longer the peach bowl. Theyve sold the bowls. What did the bowl used to be . Does anybody know . Be careful. Maybe i should have kept that to myself. The year was 1929, will be forever remembered as the stock market crash andi beginning of the great depression. But it was also the year the caterpillar started training at the new york stock exchange. Caterpillar is going to be ringing the opening bell today. Good to see you, doug. Saw you at the round table meeting a couple of weeks ago. We talked then, too, about whats on everybodys mind and that is oil. We need to revisit that again. Youre not necessarily big in necessarily exploring. We were thinking if its Just Transition and other things, maybe your operations wouldnt be that affected. Do you have a better idea how its going to affect caterpillar . We are here at the stock exchange. 85 years of trading. Whenever i walk in, its a thrill. This is a big thrill for us. Certainly were watching oil. Theres no question theres going to be an impact on us. Were seeing some of that in the early days. I think most of our customers are kind of talking, get through the holidays, see what happens to oil price before they make major decisions. Well have an impact. And it wont be like weve seen in mining and some of our big cycles in the past. But well see it in 2015, no question. I would think eventually it might you might not be able to directly connect the dots. But eventually it might help your business like it helps all businesses that have input cost. Theres energy you have to pay for, too, right . Thats right. And every one of our machines uses a Diesel Engine in the world. This giant Stimulus Program weve been blessed with will work its way through. In the mean tuyl well see the impact of that. I find it interesting when the people talk about Interest Rates at 2 ten years and 2 gasoline, 55 oil and its bad for the economy, i think for the economy overall its going to be great. Some of us in the meantime are going to have to adjust, go through a transition. And after that i hope it really helps stimulate the World Economy which really drives growth and drives our business. Sometimes Commodity Prices seem to head the same way. I wonder if youre you see the Australian Dollar when commodities are weak. Youve still got the mining business. That has recovered a little or at least its been bouncing off the bottom. Could this put more pressure on that again . The mining business is definitely bouncing off the bottom. Were seeing a few signs here and there of replacement cycles starting, we havent seen a commodity price in the metals really drop much more. But we are keeping on eye on that for 2015. Well see how it goes again. Economic growth drives everything. Thats been the root cause of a lot of the lack of growth for many of us. Doug, the other side of the Oil Price Decline is the dollar rise. What does that do for you or to you . Weve worked hard over a long period of time to really balance our cash flow. So the bottom line, were somewhat new to top line. It will affect us with less sales when we convert into dollars. But with our philosophy of trying to produce where we sell trying to make the amount of machines and the three currency zones, the eurozone, the dollar zone over the last many decades, were kind of in a balanced position. But we will have some impacts on the top line. No question. Doug, can you just quickly comment . Can you feel china . Can you tell from your order rates whats happening there . What is your latest take on that . China is definitely for our industry has been slow. Certainly as they work through reforms, as they work through transition. In the meantime, weve worked hard to fill out our business model, make sure our dealers are there taking care of our customers. I like our positioning. Were doing okay, but the markets not what it once was. Its still a huge market. Weve got to be there to engage our chinese competitors. But in the meantime, well see cycles up and down like everywhere else. Chinas turning into a somewhat with developed developing country. Weve talk sed so many times about bringing the money back overseas and tying that to infrastructure here. We talk about it a lot. And i know that, you know, at the round table the president came and talked to you. January will mark a new maybe starting point. The president , you know, alienated some of his base again by just getting that i dont know what it was, derivative issue in the budget. Do you think that might be a sign that there will be some give with either corporate taxes or could we tie something bringing back some of the money to infrastructure . That would help. That would help you. It would. And everyones talking the right things and saying the right words about tax reform. Solving some big problems in 2015. Im optimistic. Yet weve got to see somebody bring it home. Theres a lot of ideas on how to use some of that cash to fund infrastructure. Theres a lot of other ideas, but weve got to have somebody taking a lead and making Big Decisions out there. If that happens in january, that could help us all in 2015. Well see. We know how sad our infrastructure is in this country. Weve talked about that many times, joe. Youre right. Weve talked in the past about the dollar swings and how that can really impact some of the big multinationals. I know its something youve been working hard to make sure that caterpillar is less impacted by that by making sure you set up plants in the places where you sell the machinery and the equipment. I just wonder what does a stronger dollar mean to you at this point . Well, for example, use the yen for example. We have lots of plants in japan. We export from japan to the United States, to china, to asia. Thats obviously right now a nice tail wind for us. Weve worked hard to make sure in the yen zone we try to be somewhat balanced. In the eurozone its the same way. We see giant moves like were seeing in dollar strengthening right now, our top line will be impacted. Because of our cost structure and where we put our plants and the fact we can use yen in japan, we can use euros in europe it does impact us. Its something you have to work on over a long period of time. You dont have any plants in russia, do you . We do have two small plants in russia. I was kind of looking back at 1929 when our guys cake out here for some reason in late 1929 and did their big ipo. Which we were into. Five years of the company at that time. What do you do when the ruble crashes like it just crashed . Were suspending sales in russia because it doesnt make sense when the ruble has wild swings. For the most part theyre spent on the local economy. It wont have a big impact on us with the exploding economy. What do you spend on r d . I guess fuel efficiency would be something you spend money on, right . Weve got some cool things coming. I was just in our text center and grounds not too long ago. A lot of it is around technology. How do we use machines more efficiently. Some of the machines coming out today and those three or four years from now, were looking at 5 to 25 fuel economy in which we tie systems, hydraulics, the engine, and the track together to work efficiently. And then let the owner use that to get 24 7 productivity out of it. Weve got no operator running in australia running a complete mine site. Dumping, loading, all the things it does with an operate. Hightechnology. Would you say if someone wanted to do something anywhere in the world theyd say i want the best to buy, would they think caterpillar or think some other they would, yeah . You bet theyd think caterpillar. Thats one of the reasons im here. Because my predecessors have been doing this and really investing in the company for 85 years. Were going to keep doing it for 85 more. I think cuba might need some infrastructure. Oh, yeah. Yeah, im excited about the opportunity in cuba. I think the announcement last week was long overdue, frankly. Not just for business reasons but for other reasons. And i think we could see cuba down the road in a few years, maybe like puerto rico. Theres a lot of cubans in the United States that would like to see that. Its a big opportunity. And its between us and latin america. I think we could look at it that way down the road. All right, doug. Congrats again on the 85 years trading on the new york stock exchange. And good to see you. Good to see you, joe, as always. Thank you very much. We appreciate it. See ya. Thank you. Have a good holiday. You too. Joe, i looked it up. I told you quick lanes took over. You know the bowl they took over for . Little caesars pizza bowl. Nice. I have not been to a Little Caesars in a long time. I like any pizza. But tell me again. The quick lanes bowling bowl. Its quick lanes the oil change company. But my family owns quick lanes bowling in indiana so i associate it that way. So its not a bowling that was really. I thought that was i felt bad. So its an oil lube, oil change company. By the way, how many bowl games has colorado been to . We won a national championship, but you remember what happened when we beat michigan . We got five downs oun one do you remember that . Yeah we got five downs to win. Thats how we won. Official screwed it up. By the way, rutgers has been to this will be its ninth bowl game since the last time colorado went to a bowl game. So the toilet bowl probably looks good to you. Theres a a lot of bowls, becky. And you havent been to any of them. But you did beat some of the teams that werent youre 16 in the big ten. No. I think we won more than that. How many did we win . 35. Not bad. I have a Christmas Present for you, actually. Oh, no. Now im scared. When we come back, time for the trading block. I am here tomorrow. Oh, boy. Cant wait to see this. Wti down almost 50 since peaking back in july. Plus why shars of oes of one bi company are soaring. Squawk box will be right back. Theres confidence. Then theres trusting your vehicle maintenance to ford service confidence. Our expertise, technology, and high quality parts means your peace of mind. Its no wonder last year we sold over three million tires. And during the big tire event, get up to 140 in mailin rebates on four select tires. In our trading block this morning, we are talking oil and currencies. King dollar keeps roaring ahead. The u. S. Dollar index hitting its highest level since march of 2009. Joining us right now on currencies with kathy lee and micha michael khoohen. I think that in the new year we would very much seen a further extension. Interesting, the last two weeks of the year nobody anticipates a big change in currencies. But we took a look at how the dollar performed in the last two years. And the green back actually climbed a fresh year against the euro at this time. So a lot of the moves that previous happened could continue. Why do you think that is . Is it the late fed meeting . Are currency traders seeing something that stock trader arent . I think in general what it is is the thin liquidity allows for exacerbation of existing moves. I think because we have a confidence about policy in this case that we could see a further push higher in the dollar. Particularly against the euro because they were closer to the euro than the yen. Dominating with more of the same prices for oil. If oil is spriesed in dollars for them, it causes them to purchase that oil. It will lead to weakness further on. It also has an implications. If theyre earning those revenues in dollars then they have an incentive or can weather this storm. Because their dollar of oil produced is worth more. Did you see the front page of the wall street journal today suggesting this wasnt the saudis being nice and playing u. S. Allies. This was them trying to crush the frackers here in the United States. That sound like the truth to you . Its a bit of a bunch of things. Theres geopolitics involved, certainly, but i dont think that its the primary motive. I think the primary motive thats involved behind the saudi decision is to preserve the market share in the longterm. And they convinced the gulf that some of their gulf allies to go along with this that theyre willing to endure some shortterm pain for longterm gain of market share. Which means you think oil is where for the First Six Months of next year . Our view is that oil stays pressured for the next six months. We have a forecast of about 58 per barrel for wti during the first half of the year. We dont see much potential for strength as we move through the first half of the year. Partly because the fundamentals are weak, the demand for opec crude is about a mall and a half barrels a day less than the course over the next six months than the market needs. And theyve stated very affirmatively that theyre going to continue to produce. Also you have producer hedging any time that the prices to come up, theyre going to come in and begin to hedge. Thats also going to put pressure on the price. Quickly, does that sound right with your forecast . I agree with all of that. Yet more good news for the u. S. Consumer. Michael, kathy thank you for joining us. All right. Coming up, sonys lawyers say the Company Plans to distribute the movie the interview somehow, some where, some time. Meantime tensions rising between the hackers. Eamon javers will join us with more and when i find it i go for it. announcer at scottrade, we share your passion for trading. Thats why we give you the edge, with innovative charting and trading features, plus powerful mobile apps so youre always connected, wherever you are. Because at scottrade, our passion is to power yours. Welcome back to squawk box this morning. Eamon javers joins us this morning and has an update on where things stand. Good morning, andrew. The United States has not yet said what it will do in response to the alleged north korean hacking of Sony Entertainment website. Its been an embarrassing and damaging hack for sony. The president said over the weekend that it did not amount to an act of war. Take a listen to the president. I dont think it was an act of war. I think it was an act of cyber vandalism that was very costly, very expensive. We take it very seriously. We will respond proportionately as i said. Now, for their part the North Koreans released a statement over the weekend. They are saying the u. S. Should bear in mind that it will face serious consequences in case it rejects our proposal for joint investigation and presses for what it calls countermeasures. Now, guys, the North Koreans here are denying they had anything to do with this attack. They also say that they would like a joint investigation into who exactly did this. And interestingly on the diplomatic front friday, the United States reached out to a number of countries to help develop some response to this including china and remember that it was just back in may that the United States actually indicted a number of members of the Chinese Military for hacking in the United States themselves. So align with the chinese could be an interesting turn of events here. Eamon, we were talking to Julia Boorstin about this earlier. That sony would try to release this. To call up netflix and say heres the state of play and we will protect you if you were to distribute this film . I could see that. If youre going to have some kind of industrywide effort here as been suggested by a number of people over the weekend to release this on a multiple platforms all at the same time, youre going to need somebody with what they call convening power and negotiations. The white house has to convening power. Part of the calculus here on part of the white house is in the past when north korea had provocative actions, the United States has always acted to kind of minimize it, not pay too much attention, not respond too much. Under the theory that what north korea wants is a response and an escalation and a possibility to sort of rally the populous back at home. The question here, the president has said this is a core american principle. If theyre going after seth rogan films, what happens next when they go after a documentary or news program. Thank you very much. I think weve got to get dennis rod man to go over there with a little negotiating for us. Its funny. When the film came out, i thought was dennis rod man a ploy that was sent that way. 2014 has been a recordbreaking year for the auto industry. And a look ahead to the trends for 2015. Plus after a weekend to sleep on it, how are cubans feeling about america thawing its relationship with havana. We have a live report from our Michelle Carusocabrera. Squawk box will be right back. Tdd 18003452550 [ male announcer ] your love for trading never stops, tdd 18003452550 even on the go. Tdd 18003452550 open a schwab account, and you could earn tdd 18003452550 300 commissionfree online trades. Tdd 18003452550 so when a market move affects one of your positions, tdd 18003452550 schwab can help you decide what to do. 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Our expertise, technology, and high quality parts means your peace of mind. Its no wonder last year we sold over three million tires. And during the big tire event, get up to 140 in mailin rebates on four select tires. It looks like santa has arrived. Its me buddy the s p 500 tallying its second biggest week in two years. But is this rally for real . Who the heck are you . We will check off the investor wish list. Home for the holidays. Falling oil prices and low rates. What will 2015 bring for the Housing Market . And its the busiest shipping day of the year. Meet the company that lets you schedule a package dropoff at your convenience so you can avoid this. As the final hour of squawk box begins right now. Welcome back to squawk box, everybody. This is cnbc, first in business worldwide. Im becky quick along with joe kernen and andrew ross sorkin. In studio with us, bob dahl. He is the chief asset strategist from nuveen. Weve got a couple headlines this morning. U. P. S. Expecting to deliver 34 million packages today. That would be an alltime record for the company. Its double the volume for a typical day. Fedex to deliver 23 million parcels today. Thats a lot of stuff going on. I dont know how they keep track of it all. Caesars trying to restructure the 18. 4 billion of debt that it has in its largest unit operating on friday. That unit says it will file for chapter 11 bankruptcy production by january to cut its mounting debt load. Then theres dish network pulling fox news from its lineup as a dispute. Dish settled disputes that led to the temporary block anl of some cbs stations. We are less than 90 minutes away from the opening bell. Looking to build on gains. The s p 500 posting the second best week since january way back in 2013. This morning the futures are pointing to a higher open. Europes in the green today on a rebound in crude. Prices at this point have stabilized. Right around 57, 58 a share. Saudi arabia for its part says it will not cut production to prop up the markets. An interesting piece in the journal that weve had had a couple of them, almost what do you call those things . Theyre almost postmortems on what happened. A lot of it had to do with fracking. They dont theyre not pleased that we produce 9 Million Barrels a day. No. That is probably what you could say has flooded the markets with more supply. Big reason for the dropoff has been the increased supply. Sometimes youre friends, sometimes youre frienemies. Starting in january it will exclude drugs from gilead and Johnson Johnson for that indication. Meg tirrell will join us at 8 40 eastern time. Also check out shares of achillion. And its thought to be a probable takeout target. Shortened week, trading week for investors. After the expected lower volume this week, could see a move higher as we head into the new year. Joining us now is howard ward, cio of growth equities. Our guest host is bob dahl from nuveen. While you were out, your boy letterman. Maybe he hasnt stop but colberts show ended. It stopped. And will begin again in the summer. Letterman i think is going to retire in may. Then colbert begins some time could you have a top ten list for why people should buy stocks . Have i got that right . Well, ive been doing that every year for the last few years. Somehow we missed it. So do you want to start at number one . On letterman they start at ten. Do you know all ten . Do you have them memorized . Probably not. Can i help you . I invite your help, yes. Is there any rhyme or reason to how you did them . Do you want to start at ten or one . It doesnt matter. Well, lets do it like letterman. Whats that . Oh. We made them one to ten, dude. We got to go one to ten. Lets just pretend tenth is the best. All right. Number one, u. S. Economy. Right . Yeah. I mean, were going to have the 50year next year of record gdp. Bob is nodding. When he comes up with something stupid, will you i read his list. You like them all . Yeah. All right. There you go. Just take my word for it. We heard about this. The u. S. Poised for its fifth consecutive year. So thats a favorable backdrop. What about number two . Central bank policy. Here or everywhere . Well, here you know, even if they raise the fed funds rate from zero to 25 from 25 to 50, thats still an extremely accommodating policy. So yes. And overseas, even easier. Global markets, stimulus abroad in Global Markets doing better. Thats three. Whats number four . Yeah. So chinas weakness is resulting in part of the collapse weve seen in the produce of oil and Commodity Prices that will keep inflation down. Low inflation is good for the dollar, good for profit margins, good for higher pe multiples. Youre not saying china just being a quick rower. Its a consumerdriven economy now. Not yet. Its going to take years. And because of that, thats the bullish part youre talking about. Correct. Less demand for stuff. In your view, stocks are still underowned. By whom . Sure. Both institutions and households have around and what im talking about here is households, Financial Assets invested in stocks is around 37 , 38 , 39 . Institutions, private and public Pension Funds combined around the 40 mark. Those numbers had been north of 50 . And when the previous market peaks in the trade percent was 6 or higher, much more competitive than it is today. Thats number six. Number six is relative to bonds are attractively priced. Dont mush them together or well only have eight of them. I know. Thats a no brainer. The hurdle rate to outperform bonds is very low. If your bond yield is roughly 2 . Thats the one thing that could be a head wind eventually. Its going to have to go up a lot before it becomes a problem. I agree. Goes up 25 basis points at a time, its going to be i hope to see 5 . If you remember back, greenspan was trying to raise rates in the early 2000s. He kept raising the fed funds rate. It kept going down because of foreign demand for u. S. Treasuries. That was his socalled conundrum nap could happen again. Because the german rates 30 bips. And u. S. Treasury yield is at i didnt think of that. That puts a very interesting spin on how the fed manages all of that. Wuch is another reason, good news for the u. S. Economy. If rates are so low. How do you get a 3 treasury . Very unlukly. Companies will continue to number seven. Continue to reward shareholders with buybacks and dividend increases. Thats kind of obvious. I mean you dont need to explain that. Andrew doesnt like buybacks. I like them when the companys making a lot of money. Just last week boeing the raised their dividend and buyback. It was the other one we made a big deal out, disney. All right. Market will continue to enjoy gridlock. That is a cynical, ward. Its a fact. And thats been true of recent years. These republicans better Start Playing and let the president do all the progressive things he wants to do. Dont you think . Thats what i hear on Mainstream Media all the time. When are these guys going to let him do his thing. Yes. When are they going to stop being obstructionists market will cont to theyre just meanies, all those republican guys. Mergers and acquisitions will continue. I do love those. Market continues to go up. Mergers and acquisitions will continue. Thats good. All right. Number ten. Yeah. Here we go. Wait a second. Drum roll. Wait a second. Wow. Thats boring. Estimated investment returns continue to favor stocks. See did not plan i think it should have been ten to one, maybe. We did a drum roll. Thats what we get for the drum roll . Well explain it now that we built it up. Try to make it interesting. Yeah. Rising pes came up a couple of times in the commentary. Youll remember pes went up 95, 96, 97, 98. The dollar market seems finally here. Weve had the last several years youve had expanding earnings and pes. Very likely in 2015 youre going to have expanding earnings and have another little bump in the pe. Typically when inflation is around 2 , the pe on forward earnings is around 17. Were still not quite there yet. Personally i think earnings estimates and gdp will be going higher, not lower. So well be looking at a higher figure to base that off of before too long. Howard, your mind is fried now from doing all ten of those. So im going to do your stock pix. You like names with cyclical exposure. Correct. Honeywell, boeing, financials, blackrock. And then energy like eog, pioneer, and continental resources. And i did that all from here. That was beautifully done. You might have a career here. Thank you. Because you couldnt have come up with those after you got all ten of those. My head is spinning. Im here to help. Thank you, howard. Bob is going to stay and keep nodding for the rest of the hour. You added some stuff. We appreciate it. Say hi to that guy dr. Love . Yeah. Brings us the cheap briefcases. Does he you know how frugal he is, right . Yeah. Its just unbelievable, isnt it . Yeah. For a guy who makes that much money. But, hey, you know, you should watch every penny. Good businessman. Thank you. When we come back, nissan sounding the alarm about russia saying they are facing a blood bath over the ruble. Plus reporting. Michelle is back from cuba. And we show you a new app that promises to keep your packages safe from thieves this holiday season. And jim cramer is getting ready for the day ahead. Squawk box rolls on after this short break. Thanks. [ male announcer ] fedex® has solutions to enable Global Commerce that can help your company grow steadily and quickly. Great job. mandarin cut it out. See you tomorrow. This week we are looking ahead to the new year giving investors a playbook on how to cash in. Phil lebeau lays out his predictions for the autoindustry. But lets see how the predicted this year. He predicted entry level would heat up for 2014. Unfortunately that battle never panned out. Thats strike out. That one phil got right with the incentives help boost auto sales. He also said tesla model s stays strong and all eyes would be looking to model x. He got that half right. Boost bid a big september. The release of the model x got pushed into the new year. But that just write up the calendar. I cant believe were judging everybody like this. However, lets see what phil is predicting for 2015. Record auto sales . Probably not in twpt. But should be pushed up for the First Time Since 2001. Here are the things to expect. First, cheap gas. The National Average is now well under 3 a gallon. And most analysts believe relatively cheap gas will be with us for much of next year. How low could it go . The Energy Department is predicting a National Average of 2. 94 a gallon. But even better and subtract gas prices admit it would wind up lower than that. Low gas prices means you can expect another big year for suvs. In 2015 suvs and crossovers will stay red hot. Partially because several new utility vehicles will hit showrooms and stir the market. At the same time fuel efficiency still attracts buyers even with low prices at the pump. And the newest suvs are Getting Better mileage than ever before. Finally the crossover to watch next year will be teslas model x. The electric crossover will falcon wing doors is set to roll out by the middle of next year. Will it be as successful as the model s . Can tesla make the transition from making one model to two. And will elon musks company attract as many highend buyers if the world is running on cheaper gas . Joining us now to look at the road ahead for autos in 2015 and what is next for your Cars Technology package, reuters managing editor paul ingrassia. We better talk about the lower gasoline prices. How is that impacting sale of these things and will what will it mean for what consume consumers are buying in 2015 . Phil had it right. Party like its 1995. Theyve changed that equation on to get an suv or a sedan. Thats what it amounts to. Is that something that the manufactures actually respond to or do they kind of figure out this is a potentially changing thing. Its a bit of both. I think their Model Development plans are already going. But they have the flexibility to add extra shifts at Assembly Plants that make bigger vehicles. One of the most this year will be the new ford fseries pickup truck which is the first all aluminum body pickup truck. But can it compete with steel body trucks . Its going to be a big one to watch. You also pointed out something i didnt realize. The big three and the uaw are up for talks. Hows that going to play out . Its going to be interesting. This market has had a remarkable recovery. The uaw will want a piece of that. And theyll want to end the twotier wage system. Hourly wages of people who have been on the job for decades. So, you know, theyre going to probably have to come to agreement in the middle there. You know, the other thing will be interesting, of course, would be weather in the wake of saving these companies and really saving the uaw whether the union will mount a serious strike threat. Whether the talks will be contentious. We dont know. Finally weve been looking at technology. Seems like every technology wants a piece of your car. You can name just about any Technology Company that wants to be there. Are the big three going to give that up, or is it going to be something they can control how this gets laid out . Its going to be a battle royale. Probably the Silicon Valley and that sort of thing. Obviously the automakers will have a voice in this. But you have three simultaneous. Hybrids, electrics, et cetera. All that stuff in your dash board. The nav system, et cetera. And Driverless Cars a few years off, but probably closer than we think. Its clear Lower Oil Prices are great in the developed world. There are more costs in the emerging world. How do you assess that . I mean, you know, russia is the big example where, of course, oil prices are going to take a horrendous toll because the ruble, the currency has been sharply down. Worth about half of what it was. The russian automarket is collapsing. So i think that countries that are really commodities dependent and theres a lot of those including russia, but a lot of them around the world, a lot in the emerging markets. Those markets will suffer because of whats happened to commodities places. I want to thank you for joining us. Merry christmas. Good to be with you. Thanks. Up next the hobbit is victorious at the Weekend Box Office and sonys other movie makes it into the top three. Details after this. Plus will plunging oil prices help housing in the new year . Predictions from a top analyst straight ahead. Squawk box will be right back. Cute little guy, huh . This guy could take down your entire company. Stay with me. On thursday a hamster video goes online. On friday it goes viral a network choking phenomenon. Why do you care . Hes on the same cloud as your business. The more hits he gets, the slower your business may get. Do you want to share your cloud with a hamster . Today theres a new way to work. And its made with ibm. Welcome back, everybody. The hobbit on top this weekend. Debuting with 56 million over the weekend and taking in 91 million since its opening on wednesday. And a distant second place, foxs night at the museum installment. The comedy took in 70 million while sony which is reeling from the cancellation of the interview amid hacking attacks unveiled its other holiday option as well. And the annie remake opened with 16 million. The north pole, the weather outside was frightful. So santa went some place delightful before his busy night this week. Old st. Nick diving on a reef in the florida keys. Scuba santas swim helped raise money for a childrens charity. Thats good. That suit is never going to be the same. Coming up next, Michelle Carusocabrera has returned from cuba. Well talk about her experience, the mood there, and the Economic Opportunities to come. Plus theres a new app out there that says it can stop this from happening to your packages this holiday season. And beyond. The man behind it is going to join ugh moments from now. After the break. Welcome back to squawk box, everybody. A number of analyst calls of note this morning. Rite aid upgraded to market perform at cowen. Credit suisse thinks that blackberries should break up. The analyst sites the inherent challenges in trying to revive the Services Business and expects the company to continue to burn cash. Little late. Finish line downgraded to neutral from buy blaming promotional comps and margin pressures. The price target cut to 25 from 32. Michelle carusocabrera is back in town after spending a few days in cuba. You still have a blackberry, i bet. I have a blackberry and iphone. Who else copped to that last yeek . You. You and someone else. I have a different provider on each of them. Exactly. My wife does the blackberry with the mini. She says i have everything i need here. You have cute purses to carry it around. So tell me. So cubas relationship with venezuela is on full display if you go to cuba. There are posters and big billboards. You know, theres no advertising in cuba. The billboards are pro communists and pro socialism. You see chavez on the right, castro on the left. We have no evidence that fidel castro is alive but no evidence that hes dead either. But they really talk about him in the past tense. Cubas relationship with two other time is in focus right now because of the decline in oil and the geopolitical situation. Its really crucial for them because theyve had to retrofit their power grid in order to be able to run off heavy oil so they can maintain the electricity. They get more than half of their oil from venezuela every day. And 50 of the oil that venezuela gives away every day goes to cuba. We know venezuela is descending into chaos. And you can be sure they have fears. Russia now, the question also now, what about the relationship with russia and how does putin feel that were reestablishing relationships with cuba . Putin was there this past summer. He forgave about 20 billion in debt from the Old Soviet Union to cuba. That was denominated in rubles. Its shifting in value at all times. The other question you have to wonder about and central bank experts have raised is we dont know what kind of reserves the central bank of cuba has, if any, and are some of them denominated in rubles which is certainly a possibility. Talk about a double whammy. Exactly. Speaking of russia, we have news this morning. Russia has had to bail out a bank called trust bank. Half a billion dollars worth of rubles. Theres a more importants a te important aspect to this. Were going to get to it. Bruce willis is their spokesperson. Thats their home page. He gets paid in rubles . I hope hes got a good enough adviser that no. I mean, weve reached out to bruce willis for comment. Well see if we get any response. The dangers of foreign endorsement deals. I wonder if he can even read whats on that website. I doubt it. Maybe he does. Who knows. But all those movies hes done with the russians always seem like the bad guys, right . The yippy kiyay you know. One of them were the russian bad guys. Good day to die hard. The fourth one. No. The first one was they were like terrorists. Remember, hans gruber. But the more recent ones were definitely russian. You guys got to go. I mean, its just so its so weird. Its just such a strange time warp place. I wish young people could go so when we hear people like Michael Moore endorse socialism. You want socialism, come down here. He could slim down down there. You said people were not a whole lot for a long time there was little to eat. Thats gotten better because of the easing of the travel restrictions. So more and more exiles go, they bring more money and products. And because now individuals there can open little restaurants, theres a lot more actually fast not quite fast food, but the equivalent. More places to eat, more food. For some reason socialists and left leaning people write it off as any type of historical lessons that can be learned i dont know why. Its amazing to me. If you want massive Government Intervention into an economy, you want say every person works for the government, this is what you get. Where you give everything up. They themselves cannot admit like its not the public and private sector. Its the state sector and the nonstate sector. Venezuela, look at the oil production. It went down. I know. I know. Mexico went down. Right. But we have to learn at every 20 or 30 years, it seems like. In the process again. But youre doing your part. Thank you. All right. Mixed year for Housing Starts so far. Prices and gains have fallen sharply. In 90 minutes well get the latest on existing home sales. Joining us now the former chief economist at fannie mae. Do you expect 2015 to improve over 2014 . Its just its been a slow grind. Kind of like the overall economy, i guess. But obviously Interest Rates arent going to get any lower. And were still i dont know. Is it regulations . Why is it still not as good as it should be . Merry christmas, joe. I think 2015 will be a better year for housing. The fed isnt going to tighten if the economy isnt growing sthonger. Or even if the fed does tighten, its not going to tighten much. What were really waiting for are millennials to form households. They havent yet. As they get older, as they start to get married, as the jobs get better theyre going to be less interested in living in their parents basements and more interested in owning a house or renting an apartment. So thats going to be one of the big shifts. What about just whether its easier to, you know, to get credit at this point . I still hear that theres a lot of people that even though they would have qualified ten years ago, theyre not qualifying right now because its more stringent. You know, ten years ago the qualifying standards were too easy. What we want to do is go back to the qualifying standards of, say, 20 years ago. Were not there. Its much tighter today. Qualifying standards are way too tight. We dont want to go back to where we were ten years ago. That was just too easy. But somehow we have to get a little easier from where we are. Were not quite there. And part of the problem is if you ease just a little bit, people complain that were going all the way back to where we were in the middle of the housing boom. I thought were talking about sales for people who are putting down less than 3 . You know, 3 is probably a risk. 5 maybe is not. But the real problem is layered risk where you let somebody put down 3 and give them a loan where they have a fairly low fico score. Maybe its not fully underwritten. As you add those risk factors, the probability default goes way up. If you just loosen one factor and maybe keep Everything Else fairly tight, the loss probability is still pretty low. We havent eased in any way at all. This is the issue, joe. I think you hit the nail on the head. Its less about demographics. Its less about where Interest Rates are. Its all about how stringent are these lenders and theyre very stringent. At this point, better to rent or to own just longterm, do you think . Depends on your own individual circumstances . Because its not always better to own, right . No, its not always better to own. If youre going to be moving in a few years, you think youre mobile and might be changing jobs. Its often better to rent. If youre an in area where the price of homes is very high. If you live in San Francisco where i used to live. Even though rental costs are way up, the price of owner housing is through the roof. But there are many parts of the country where i live now in columbus where owning a house is less expensive than renting. You know, youre starting a family, for example. Owning a house may be a better longterm investment for you than renting. All right, david. Thanks. Happy holidays, merry christmas. To you too. See ya. Up next, afraid of this . Take a look at whats happening here. Are you afraid of this happening to your holiday packages . If you want to make sure things arrive at one piece, theres a new app to let you do just that. We have the brains behind doormen. The clock is ticking and the men and women in brown are out in full force. That cant be right. Two days well i thought it was anyway. With two full days left, today predicted to be the busiest day of the year for u. P. S. Set to process 34 million packages in just one day. And thatll happen in the next 24 hours. Until midnight on wednesday, is that how much is left . Is that how it works . We should tell you it is the most wonderful time of the year. It is, but it can also be stressful especially if you just start buying all those gifts. Theres a surge in package thefts and misdeliveries in the season. And for all you lastminute shoppers, there is no room for error. Doorman is a San Francisco base startup that ensures you get your packages on time and exactly when you want them. With us now zander odell, hes the founder and ceo of doorman. If you dont have a doorman, he will get you one. Tell us how it works. Thanks for having me. Good morning. You sign up and we give you a new shipping address you can use on any site. Once your packages arrive, we notify you on your home. Then you can use the doorman app to schedule delivery from 6 00 p. M. Until midnight seven days a week. What im worried about with this to be honest is this is just setting up a second level of delivery, if you will. Right . Theyre going to deliver to you and then youre going to deliver it to me within a twohour window. Now i feel like im waiting for the cable guy. Well, its a twohour window when youre actually home. Then if you get the gold service, its just a onehour window. You can say i want it on wednesday from 9 00 to 10 00 p. M. , and i will be there. How much prior notice do i have to give you about when i will be there . You can get a scheduled same day as long as you get your request in by 5 00 p. M. That day. And whos bringing me this stuff . So we have our own team of drivers. Theyre all background checked, dmv checked. These are great folks for a lot of them its their second job. And theyre driving around in their own vehicles delivering packages all night. Now, you just introduced this. Walk through the fee structure. Sure. So we have a few different plans. You can either do 3. 99 per package if you just want to try the service out. For a lot of our customers that order a lot of stuff online, we have unlimited plans for 19 bucks a month or 29 bucks a month if you want onehour deliveries and unlimited package returns for all those trunk club and rent the runway purchases. So i get amazon prime right now and i have to tell you we probably have a package coming in virtually every day. Its crazy at this point. How can you make money off of me even if i pay you 30 a month and i have a package coming literally every day or every other day and 20 days, you cant i cant imagine that 2 per delivery actually makes sense. Well, the way it works is most customers dont actually want a delivery every single day. Even our gold customers. Theyre getting around 15 packages a month. But they tend to get around seven deliveries a month. And even at that many deliveries in a single month for a customer, were making money. We have go. We have breaking news but is this stuff insured . Yeah. We have standard coverage rates. Similar to fedex and u. P. S. Well, congratulations. Sounds like a cool business. Thanks very much. Thank you. We do have breaking news out of russia. Michelle carusocabrera joins us. More fallout from the sanctions. Morgan stanley and ross were supposed to be doing a deal together. Morgan stanley was to sell to the russian oil company. But both have put out statements saying they are unable to get the deal done. They are very specific saying its due to the impossibility of the deal because of regulatory clearances being refused. Im being told that it is relaid to the political situation and the change in relationship to the countries over the past year because of the situation in ukraine. More financial fallout because of what has happened in the last year or so. Back to you. All right. Okay. Up next, jim cramers wish list. Plus the chief medical officers of express scripts will join us with meg tirrell next. The futures at this hour have been strong all morning. Up 80 point oss on the dow. Well be back. Who are these clowns . Our new hires. Feels like we are just hiring people off the street. We are were growing so fast we need man power. At least cdw preconfigured these 2in1 devices with intel inside for us. Its a tablet when you want it and a laptop when you need it. Just take it already big news in the ongoing battle over drug prices. Express scripts saying they will have an exclusive option on its biggest plans. Sharing the news of gilliard down sharply down 11. Abbvie up almost 3. In dollar terms, bobbles the mind. 160 million market cap. And down 10 on 16 billion right there. Our meg tirrell is here with a special guest. Lets bring in steve miller. Thank you very joining us. Thanks for having me. So lets get right into it. We know that abbvies drug has an 83,000 list price that the company told us about on friday giving you. We never disclose drug prices but you can say, its a significant discount, big enough to allow us to recommend treating all patients with geno type one hep c. Folks argue abbvies regimen has more spills, some need to take it longer than gileads renlment what happen do you say to doctor whose need the choice to prescribe gileads drug. In the Clinical Trials the outcomes from the drugs, which never faced headtohead trials, but the studies demonstrate the outcomes are outstanding. With both drugs cure rates over 90 . Abbvies done a phenomenal job of packaging the product, convenient to take. Comes in a blister pack with morning dose, your evening dose. Compliance in trials has been really hoop. Were excited to be able to offer this product to our patients. You called this unprecedented arrangement. Do you see this as the new normal for negotiating drug prices . We have been very clear in the marketplace that the drug prices are becoming unsustainable. And abbvie was really convinced that they wanted to open up access. Were hoping that more and more pharmaceutical Companies Take that same view. Listen, this is what express scripts does for the country, we think when we find like partners leak this we can move drug prices and get more patients treated and more patients cured. Are you looking to do this in other therapeutic areas, moving into diabetes, cancers, where there are multiple drugs on the market . Yeah, we think theres great opportunities across all of the categories and we have to do something because the prices have become unsustainable. Dr. Miller, thanks for joining us. Thanks for having me. Stay tuned. I have plenty of questions about this, because it reminds me of putting ten experts in charge of what you get for, you know what kind of medication you get. Id rather have my doctor decide. Exactly. Changed it right there. Much rather have my doctor decide than someone who is only worried about negotiating a deal with a drugmaker. New york stock exchange. Gilead, jim, i know you followed that for a long time. What a story, number one, a larger market cap than some pharmaceutical companies that have been around for a hundred years. This is crazy, isnt it . I want to hold down the cost of drugs, too, but i also want to make sure theres an insensitive to develop drugs for things that where youre not going to make 10 billion, youre going to help people that need the help. Yeah. Look, i think that gilead paid a huge amount in order to get the formulation, did a lot of great work on this. Abbvie did a lot of great work, too. Abbvies drug, no one thinks is better. But you know what . They cut a deal. Express scripts is 70 of the whole group. 70 of the populous. So express scripts is more you dealt with a guy who is like the government. I mean, he just mandated this. His team mandated. Does he want to save people money . Well, yeah. But i agree with you, dont we want the best drug . If the other drugs better, id like to think that the other company, that my insurer would pay for it. But we heard an edict and the edict, gilead, youre done. I think its pretty shocking. Im sure gilead, you see its going down all morning. Megs next question, who else is at stake . This, my friend at the street. Com saying, listen, everybodys going to have to rethink pricing if express scripts is now going to be the arbiter. It is kind of its on a sleepy monday the only story. Brave, new world. I can see even if it works 9 out of 10 times where the drugs are equivalent enough to where it wouldnt make a difference. The doctor gets cut out of the equation. The doctor has no say. Its tough in health care land in terms of cost and Everything Else. The flip side of this . You want you know you want to throw your poor relatives over, you know, 75 years you want to throw them under the bus. I dont know if you have much credibility. Its not true. Yes, it is. It is not. I have spoken about it. We had zeke emmanuel, youre behind his effort to kill everyone at 75. So by the way, he wasnt even agreeing with that. I know, i know. But the other question becomes whether when you give doctors as much discretion as they have you want doctors to have discretion whether they use the discretion properly. Jim, andrews word there. We have to rethink our opinion. Thank you. Well see you in a couple of minutes. When we come back, bob dahl, 2015 investment resolution. Later on squawk on the street, a top mastercard executive talks apple pay. Stay tuned. [woman] can it make a dentist appointment when my teeth are ready . [girl] can it tell the doctor how long i have to wear this thing . [man] can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is, can your business deliver . Theres confidence. Then theres trusting your vehicle maintenance to ford service confidence. Our expertise, technology, and high quality parts means your peace of mind. Its no wonder last year we sold over three million tires. And during the big tire event, get up to 140 in mailin rebates on four select tires. Get get back to our guest host, bob dahl. Bob, for your you have a resolution for 2015 . I guess im supposed to. Did you come up with one . No, i havent. This is the least believable market of my career. Im reminded of john templeton, led me read it bull markets born on pessimism, grow on skep mifrp, die on euphoria. We move from disbelief to belief. From skepticism to optimism. Its not over but a lot of money in the rear view mirror. Does it tell you how old the bull market is or how much life is left . The first half of the bull market has more price vengeance than the second half. I dont want to get bearish. Stocks are not as cheap as they were, cant pound the table. Everything is expensive. What inning . Were in the sixth inning in time in the seventh inning in price. How than sound . Thats that could be a doubleheader. Love a doubleheader. Resolutions . What are those things, fit things, what are those . Jawbones. Arent we doing something . When the new one comes out, well get them around the table and we can all monitor our sleep and exercise. I dont want to know. Kind of got sucked into a personal trainer, like a free beginning and i feel like a im doing stuff that i want to kill this guy, seriously, when he stretches my leg and pushes it up over my head and stuff. Whoa. Im supposed to wear one of were going to get one . I dont need to spring for one myself . Thats my resolution. Ill get you one. Are you going to pass it off as as a christmas to me . Yeah. Thank you for being here. Appreciate it. Well be here tomorrow. We will be here tomorrow. Joan us. Right now time for squawk on the street. Good monday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the new york stock exchange. Kicking off a holidayshortened week after the secondbest week for stocks in almost two years. Oil down 11 in past 12 week, some arguing the worst is over, b its in the red. Te tenyear yields around 217. Housing numbers in an hour. Markets, stocks again poised to break records as s p starts