Go irish. Good monday morning. The band is back together. Awfully nice to have david back. Im back. We have jim cramer, and david fabe, as they say in france. The single best week for stocks in over a year last week. Europe has lost a little ground this morning despite Investor Confidence numbers coming in at an 18month high. The s p starts the week at fiveyear highs. Even as the lines are drawn in the battle over spending cuts and the debt ceiling. And then there is earning season. Kicks off tomorrow with alcoa. Banks in the spotlight this morning, bank of america settling with fannie mae with mortgages it underwrote during the housing boom. Citi submitting to the feds. Revising up, gdp forecast to 81, saying investing in the mass market stocks is the way to go. Potential cuts at the Magic Kingdom reports disneys got internal costcutting review under way. The question of the day, can the new year rally continue. Last week the s p jumped 4. 6 to a new fiveyear high. Not only is wall street looking ahead to earnings season, beginning with alcoa tomorrow, but paying close attention to the battle over the debt ceiling and spending cuts. The big debate over whether more revenue increases should be on the table. The tax issue is finished, over, completed. Thats behind us. Now the question is, what are we going to do about the biggest problem confronting our country and our future. And thats our spending addiction. Mitch mcconnells going to draw that line in the sand. Its going to be a recipe for more gridlock. We have to take a balanced approach to longterm deficit reduction. And away we go again. Jim, you said last week, you expect a seesaw quarter courtesy of these guys. Its so funny to hear the democrats say, its time to think about taxes. Thats kind of what they won on. Senator mcconnell, i know that over a decade, i have felt opposition to he used to come on cramer. He was always, lets say volatile. How could he not be right now the entitlements are the issue. This is the United States of america. And someones got to rein it in. No one wants to, because boy, once you do that, ive got a Biotech Company on tonight that wants to charge 300,000 for a new drug. Medicare says fine. Big story in the times over the weekend about insurance premiums going up double digits. Youve had time to reflect on what we saw last year and what we may see this quarter this year. Of course, we come in and the first thing were talking about is washington, d. C. , again. One would hope we could move away from it, but its hard to imagine we can. Even the most optimistic amongst us would like to feel that. I think everybody wil throw their hands up and admit the dysfunction is complete and total. One wonders what that will do to sentiment. Theres still a lot of money to be made, despite it. Youve got the redskins, that represents the capital, or congress. Then you have the state of washington, where theres hope. Where theres amazon. Yes. Upgraded. I just feel very strongly that we could get bogged down in washington. We dont want to get too caught up. The references back to the summer of 2011 are very apropos, particularly in this situation, talking about the debt ceiling and spending cuts. That was exactly the issue that caused the downgrading of the United States of america. That is at issue. The very same things that provoked that downgrade are on the table right now. And so its hard for investors to forget the reaction to markets that we saw. It may not happen, but it does hearken back to that period. Right. Its funny, there are a lot of questions still in terms of spending cuts. You have no idea how it spreads across the economy, whether you are a professor at a university expecting a 4 million grant from nasa for physics research. I have spoken to one of these people. And not sure whether youre going to get it. To, of course, the enormous expenditures to defense, that are still out there and question marks. Granted, we do have a little more structure to the tax policy in this country for now, but we may be entering a debate of further tax reform dealing with deductions and the like and the spending cuts that many believe are also key to putting us on firm fiscal footing. Right. Earnings at the top. There is a question, jim, whether or not were going from the relief of having the debt having the fiscal cliff issue resolved to the reality of what alcoa and wells fargo starting this week will say about 4q. I think were at a curious juncture where we have been a beacon in this country. You say, listen, the United States is going to be okay. But china could be a problem, europe could be a problem. But we know chinas improving. I think well be the problem in terms of washington. Alcoa got a lot of different divisions, whether it be architecture, construction, whether they be cans, natural gas. Obviously auto. They are a great read. I know david makes fun of me when i talk about the great east german who was taken over alcoa. But his Conference Calls are road maps. Theyre road maps for whats going to go on. Im looking for him to say europe has stabilized, which he didnt say last time. Chinas coming back. He spends an enormous time in china. And unfortunately the United States is not doing that well because of washington. So that will be key. The markets are very strong. The back drop to earnings this season are that theyre very strong. Look at the various indices of closing at record highs, mid cap index, Small Cap Index and most importantly for dow theorists out there, the dow transports were up 6 last week, closing at the highest levels since july of 2011. Yeah, so this is a very strong the Market Action has been quite good, after we saw the big twoday rally last year. We held in there. Thats the bottom line. We held in there. But washington, unfortunately, taketh away. All the companies i was looking at their charts this weekend, all costs down. Emphasis on raw costs down. Emphasis on the overall cost of doing business, whether it be steel companies, energy costs are down. Southwest air, i never recommend airlines anywhere, but you see them going up. Raw costs being down, natural gas staying low. Really nice offset to what washington can do. By the way, norfolk southern. Look at the transports. Southwest air. You have the federal express. This stock is breaking out. Thats an asian play. Norfolk southern had just been the anchor. Truckers are still problematic. But if you can see coal shipments going up, because its an incredibly cold winter in china, youll have some surprises in transports. Energy, in terms of the key costs, going down potentially. Maybe that answers the question of some who say, hey, margins have been so high for so long, were not going to have significant Revenue Growth this year if we get a 2 gdp number. Can we really expect margin of improvement this year, and what kind of multiple do these earnings deserve moving through 2013. Wells fargo talking about georgia gold. When you hear new housing, listen up. Housing is the story, other than what phil lebeau was talking about last week. Aubl automobiles. Essential to the u. S. Economy. Bank of america announcing a 10 billion settlement with fannie mae over mortgage repurchases. They will pay 6. 7 billion to buy loans held on fannies books. The Basil Committee is relaxing liquidity for banks. Banks said they could not meet the jarn 2015 deadline. Wells fargo, adding citigroup to its priority stock list. Another positive mention of citi today on top of a bunch of upgrades last week. A broader issue, the basel requirements are going to be key to these banks. Theyre also loosening the restrictions on what sorts of assets can be held on the books and counted toward this liquidity coverage ratio. Its much more favorable for the banks. And also it will not take place until 2019. Although when it goms to basel, many of the requirements are not yet in force. Its a positive for the banks, no doubt about that. Couple that with the new stress test, whether there will be an ability to return more capital. The news today from bank of america, we should point out, its fasm. They settled with freddie mac in 2011. This does not involve the private litigation, those who brought all the private buyers of mortgagebacked securities as opposed to those held by fannie and freddie. Theyre paying 3. 6, buying back 6. 3 billion worth of mortgages. But theyve still got more to go, but theyre getting there. Im trying to nation star going up. What a win. I think a lot of this is countrywide. You put countrywide past merrill lynch, bank of america, you take a look at bank of america starting the loan where theyve been absent to some degree in trying to get a loan for, if you want to do housing, and you have a reason why this stock continues. Bank of america and citi are the ones that are most behind. Citi, as it becomes clear, i think people when they decided to put capital through, their capital plan didnt make it. Horvath, fresh start. There has to be a reason citi is upgraded day after day. Another one from wells fargo, putting it on the priority stock list. Well have a discussion later about whether or not these will be the big dividend plays in 2013. The journal today looking at looking for permission for more buybacks. Wouldnt this be something if a fourthquarter story, like the banks, continues to be driven. If you have the insurers, have you seen those charts . Youve got premiums going up. Sorry, everybody. Premiums are going up for insurance. Because of the catastrophe. But you also have tremendous new Companies Come into insurance, and david, this is something thats going to be a theme of 2013. That portfolio that everybody had that was so bad, because of housing that asset side coming up. Very important. No doubt about it. On the housing front, you do wonder whether bank of america is retreating from the mortgage market, though. Theres nobody in the servicing business. They will be. But at the end of the day it doesnt appear theyre going to be as aggressive. Wells, of course, this week, Charitable Trust named. This is the best of breed. Whats going up is worst of breed. Can that continue. Can the regional banks that have been weak, can they continue. Still way behind the group. This is the times, they are achanging. Its a bob dylan situation. Is it gone with the wind or not . It gets back to the goldman call last week, that you sort of, i dont want to say disagreed with, but didnt quite like, to go to the worst banks, not the best banks for this very reason. Weve seen this big run. Theyre expecting that run to continue. Today bank of america and citi are poised to go at 52week highs. You get into a trade situation, trying to avoid the trade, which is that you sit there and talk about capital. Yes, its possible. Maybe bank of america can return to citi. Its jpmorgan thats got all the capital, wells that has all the capital. Jpmorgan up about 30, wells up about 20 last year. Is it a Sleeping Giant . What does that mean . Is he awake . Sleep walking . It is still sort of just sleeping kind of. Is there anyone left other than jamie dimon . Is there anyone else left . You ask me these questions that i dont know the answer to. I ask you because i love you. Investors should keep in mind, and this was mentioned early this morning on squawk box, opacity of the Financial Services industry. Opacity . Its still there. Whether its basel or whatever it may be. London, you never can be completely certain that youre not going to get hit. Did you see the london whale when you were in london . No, i did not. I saw the london eye. Which i very much enjoyed. We did London Bridge and a number of the other beautiful bridges. Didnt see the whale. In the thames, no whale. No whale was in the thames. I think starbucks killed the whale. As opposed to, you know am very nice. Youre going all sorts of places. I was just doing literary illusions. Youre more like macarthur. I like him. Krueger was the sixth army. People have no idea what were talking about. Patton, i dont know. I think pete carroll. Jamie is pete carroll, okay . And it may have been shanahan. Good thing weve got a live and exclusive interview later this morning with Martha Stewart. Also ahead, the chairman and ceo of alkermes. What are you doing . Nothing. Are you stealing our Daughters School supplies and taking them to work . No, i was just looking for my stapler and my. This thing. I save money by using fedex ground and buy my own supplies. Thats a great idea. Im going to go. We got clients in today. [ male announcer ] save on ground shipping at fedex office. Disney is weighing costcutting measures and layoffs at a studio and other units. The media giant is targeting jobs no longer needed because of improvements in technology, as well as redundancies because of various acquisitions over the past few years. Interesting because the last Quarterly Report from disney was quite good. Quite a good report. The street didnt like it. Record earnings, but they missed. Its interesting the timing of this. Looking at the studio division, especially after they just made a big acquisition. Geiger always seems like a nice guy. Softspoken, terrific. Actually wore a sweater vest the last time he was on. I used to think he was a sartorial genius. But i think hes tough. And i think people dont understand when theres an underperforming division, the man comes in, more with a stiletto than a meat ax. This is an important number. I think espn is on a roll, but it costs a little more to get that programming. And that will continue to be a focus. Espn, costs there for the subscribers at home especially. Well continue to have the debate about the bundle, will it hold together. If it were to break apart, that would be a key risk for the likes of disney and espn. Espn, 9, 10 or 11. Whats amazing, espn now owns a big chunk of the dial. And espn cant be tivoed. Lets put it out there, tonight on espn. 8 00. Big day. Notre dame. Alabama. Fighting irish. Youve got my vote. Really . The fighting irish . All right. No, roll irish. Youre going with scarborough on this. This is a big game. We cannot forget it is on espn, not on broadcast. Amazing stuff. Biggest game of the year and its not on broadcast. One more interesting media story involves hbo, extending their contract with universal pictures. And well find out where netflix fits in all of this. Because the relationships between the time warners and netflix and comcasts and disney changing all the time. An important story. Last year the disney decision, much more important perhaps for netflix. A shot across the bow to some of the content providers and or distributors. Go over that again. Ill tell you why. That stock never looked back. What they did was pay someone. It wasnt as if someone paid them. It was the exclusivity of the deal. It really conferred upon netflix at least from disney status, saying, we think you are for real and will be here. I got that so wrong. I thought for sure that because they paid more than starz, if people would say, listen, netflix overpaid, listen, when you get them right, you can talk about it only if you got them wrong. I did not see this netflix move coming. Not a lot of people did, jim. A brandnew trading week and cramers mad dash is coming up next. Were finding out what is really in store for apple in 2013 and how you should be playing the stock. Lets take another look at futures. It looks like its going to be easing off the fiveyear highs. This is 100,000. We asked total strangers to watch it for us. Thank you so much. I appreciate it. Ill be right back. They didnt take a dime. How much in fees does your bank take to watch your money . If your bank takes more money than a stranger, you need an ally. Ally bank. Your money needs an ally. [ male announcer ] some day, your life will flash before your eyes. Make it worth watching. The new 2013 lexus ls. An entirely new pursuit. [ male announcer ] alkaseltzer plus presents the cold truth. I have a cold, and i took nyquil, but im still stubbed up. [ male announcer ] truth is, nyquil doesnt unstuff your nose. What . [ male announcer ] it doesnt have a decongestant. No way. [ male announcer ] sorry. Alkaseltzer plus fights your worst cold symptoms plus has a fast acting decongestant to relieve your stuffy nose. [ sighs ] thanks [ male announcer ] youre welcome. Thats the cold truth [ male announcer ] alkaseltzer plus. Oh what a relief it is [ male announcer ] to learn more about the cold truth and save 1 visit alkaseltzer on facebook. Time for the mad dash. Every morning jim writes up a memo of things hes watching. This is a book. Theres more Research Today than ive seen literally in four months. Thats a lot of research. Trying to focus on something other than washington perhaps. This is a pill that makes you lose weight, and shocking numbers, how many people are taking it. 12,900 in december versus 7,700 in november. A lot of people are shorted. It looks like this may be a winner. Not a loser. Wow. Speaking of research, solar city, whats going on . We were all critical of it. Solar city, a lot of guys like it. The major firms come out. Credit suisse, merrill likes it. People are saying go to solar city. Its a way to be able to get financing for solar. I want to put one on my house. Do you trust muskled deals . You know what, i trust product, and this one may be right. Theyre a Financing Company for the lower price of solar, of all the silicon that goes in solar. This is interesting for people who want to help produce electricity themselves. Which i think is something sustainability that we want in this country. B of a, underarmour. Its getting hot right here. Im taking off all my clothes. Thats ray lewis, underarmour. A lot of people saying to me, jim, when you like underarmour, theyre now at costco, theres price cutting. This is the house that ravens built. Ray lewis, very controversial, when you Say Something good about him, there was an altercation a few years ago, but underarmour, i am doubtful this can go down too much. Because its a technology company. I couldnt resist doing my ray lewis imitation since everybody else was doing it this week. Too bad theyre going to lose to my denver broncos. They are going to lose. I think the broncos could be in the super bowl. What a comeback story. I love that. Still ahead, the dollar has had a run over the last few days. A fed divided, inside the rift. The first opening bell of the week, just minutes away. Were back after a break. Are you flo . Yes. Is this the thing you gave my husband . Well, yeah, yes. The name your price tool. You