Transcripts For CNBC Squawk On The Street 20130107

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 tell us the price you want to pay, and we give you a range of options to choose from. Careful, though that kind of power can go to your head. That explains a lot. Yo, buddy i got this. Gimme one, gimme one, gimme one the power of the name your price tool. Only from progressive. Scroll. Tap. Pinch. And zoom. In your car. Introducing the allnew cadillac xts with cue. Dont worry. We havent forgotten, you still like things to push. [ engine revs ] the allnew cadillac xts has arrived, and its bringing the future forward. [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. About a minute to go before the opening bell. Youre watching cnbc squawk on the street, live from the Financial Capital of the world. Coming on the heels of the dow, s p, nasdaq up about 4 or more. Best week since december 2nd of 2011. Not 2012. An amazing, amazing week last week. Well be on the outlook for some movers here at the beginning, including amazon, jim. Morgan stanley, price target this is the biggest fulfillment house. When you get everybody else starting to be in this business of saying, were bricks and mortar, but we have 360, we can deliver to your house, amazon and ebay do this. Amazon is really the preeminent one. When they open all these different distributions, i love the call. I like it. With that, there is the opening bell. S p at the top of your screen at the big board. Vail resorts, wouldnt it be nice to be there. Theyre celebrating the 50th anniversary of the flagship resort. And coastal. Com, directtoconsumer retailer, eyeglasses and contact lenses. A couple of contrarian calls. That was a fascinating call, i thought. That little acronym coming up there, did you see gummy, you know, it got this Gross Margins, ultra bulk, manufacturing. And ive got to tell you, im a little im a little suspicious only because you need earnings. I was looking for an e in gummy. Otherwise im a gummy bear. Things are going to improve as more ultra books were introduced in the second half of this year. And that is trading at a very cheap multiple. And dividend yield is quite high in these stocks. Because people are so bearish on this stock, its time to be bullish. Right. Look, new ceo coming in. Always been a great company. Im watching dell as a play from pc to services. Maybe that could be good. Intel was an inexpensive stock. It was an underperformer in the dow. David, im going to look at you, youre going to hate this because im going to ask you something. Go ahead. Obviously linked to intel, down 44 . We like bank of america and citi. Is there a way, if you look at the intel upgrade, is there a way to think because of ultra books that hewlettpackard might be able to pull out of this tail spin . Yes, there is a way. How would it happen . You subscribe part of it. But eshall see. When it comes to hewlettpackard, there are so many moving parts. The difficulty of the turnaround is so widespread from an organization that we pointed out many times has well over 300,000 employees. Well see. Will there be signs of progress in 2013, jim, i think is really the key question. Because then you might give investors something to at least latch onto with the hopes that 2014 will be a real key not that this isnt. This is the key year for hewlettpackard. If they dont show signs of progress, i would expect towards the end of this year if not sooner well start to hear calls of breaking the company apart. I think you have a board that will at least listen to that idea in a significant way, and a ceo that wouldnt necessarily say no. This is a dog of the dow. This is the mutt, this is really i mean, wow, aspca, one step away, you better get there before something bad happens, you know what i mean . Not quite the same story, but another turnaround, attempted turnaround under way in Silicon Valley is yahoo getting smacked this morning, as bernstein takes it to a market perform. Price target 23. Basically saying too much risk in and ipo not happening at the right number. Investing in growth now. They say, we cannot recommend this stock. Theyve been so bright. I always hate to give that against someone who has been so right. Alibaba and the 40 million. When i look at that downgrade, i say to myself, this stock has been a levitator. This is a showme year for them. Theyve got to show some earnings momentum. Its not likeerns not being generous. Theyre putting up five multiples on 2013 at core yahoo . Which is still percentagewise a decent move from here. Right. Great move last year for yahoo . That equaled to great performance for dan lowe, who has been very patient here. Gone from what many thought would be a quick activist play to a longterm investing play. Which worked out very well, especially when your entry point is around 12. Amazon, the upgrade from Morgan Stanley, hitting a fresh 52week high. Other notables, bank of america and citi also hitting actually, amazon was an alltime high, not just 52week high. Bank of america and citi hitting a 52week high. Talking about upgrades, settlements with fannie mae. The disappointing stories this week is the barnes noble nook. The nook did so poorly. It looks like kindle continues to gain momentum. Jeff besso has quietly built the walmart of the line. It really does seem in terms of getting goods to you, cheaply, offering a product that people like, im amazed every day by amazon. How Many Companies have the amazons . They miss it on the online portion. Were watching shares of lowes today because it got a downgrade today and part of that is only 1 of total sales are done online. Theyre missing an enormous opportunity. The analysts also dont like the change in the formats and other things. But theyre just not there when it comes to online. Thats a huge opportunity. Bed, bath beyond, i was hoping they would adopt amazon. That was a good quarter. Good cash flow. Amazon remains a story that when you start hearing other Companies Getting online, they need amazon. I still listen, kim cohen on last week, still a good story. The Real Estate Investment companies have not been amazon, so to speak, because there are still a lot of new players that want to come in. Amazon is just a phenomena. And so many people bet against it. And it has been a terrible bet. Even with sales tax being paid in many jurisdictions. It was a concern for so long, but it doesnt seem to it was a bear. We should point out before we get to bob pisani, lumina shares down about 9 this morning. The chairman saying at roach, excuse me, which we knew had made a hostile bid afforded by lumina last year. That laroche saying they had no interest at this point in pursuing that acquisition. You may recall, those shares rallied sharply towards the end of the year on a french newspaper report that at the time i said i was completely unfamiliar with anything going on there you said, dont trust it. Which was a great call. Thanks. Do not trust it. It did move the stock up a lot. A lot of that and more being taken out today on that news on i illlumina. I like that. One of the things that is disturbing to me is there have been so many articles in papers, local papers, best buy. I often find, just an observation, that the newspapers tend not to get the takeover call the way some hedge funds do. I dont find that the u. S. Attorney is looking after the newspaper stock, not just because of the first amendment, but because theyre wrong all the time. That, too. They dont usually have the best m a contacts. The cartoons and comics, awesome. Theyre always right on the money. They had the story, i felt, that mattered the most which is that dr. James andrews may have said, not clear rg3. I think rg3 is when he went down, i hated the redskins from birth, and it was just this guy is fabulous. And shanahan, look, a story for a different day. The whole country felt bad when that knee buckled last night. Lets check in with bob pisani. Hello, melissa. Happy monday, everybody. Slightly more defensive tone to the markets today. Energy stocks, material stocks, a little bit on the weak side. Transports taking a little bit of a hit today. The big discussion is about earnings right now. And the question is, was q3 the trough in earnings . Remember, a big theme for the bears last year, a big theme was slowdown in earnings. 2012 started slowing down. We had 2. 4 increase in q3. Now were expecting q4, 3. 3 . Thats the s p 500. Its still growth. And its still above what q3 was. The big point is whether or not thats going to be the bottom in q3. Lower energy costs, big help for this quarter. Hurting a little bit, the dollars up, maybe 2 or 3 . They might offset each other. As always, but particularly this quarter, the banks are going to be the key. Thats because theyre the big earnings driver. We were expecting 20 growth three months ago, now were down to about 10 . Its still double digits. Im surprised they didnt reduce it even further. Wells fargo starts off on friday, so the good news on the banks, overall, let me give you the bad news first. Top line growth flattish. A lot of people delayed spending because of the fiscal cliff uncertainty. Interest rates are still too low for them to make a lot of money. But that may be changing. Thats the good news here. Heres the Biggest Issue here. Good news here. Credit quality continuing to improve. Commercial loan growth continuing to improve. Isi had a report out that this morning. Mortgage bank and revenue continuing to improve. The biggest problem i can see for the banks is the prices. Bank index was up 6 last week, outperforming the s p 500. Last year the bank index was up 30 , twice the growth of the s p 500. A lot of the big banks are trading at full price to book multiples. They were as low as 0. 6 at one point. Bank of america is at a new high today. Thats the big issue right now that youre going to see. Thats going to be the headwinds going into the earnings reports. Speaking of bank of america, i know you guys have commented on this, but i just have to say, this amazing settlement with them is a real positive. They got everything behind them. Heres whats really amazing for this thing. The amazing thing is theyre going to fund the payments to existing reserves and roughly 2. 5 billion hit to the current quarter. And they still may make a profit in the current quarter. Think about this. They have enough in existing reserves to pay the entire settlement off, and maybe still make a profit in this quarter. Thats why these banks, thats why investors love these reserves, because once its behind them, you get the positive hit overall to them. Think about what that means, guys. And think about the comments from people who are saying how amazing these bank profits are, that they can settle this and still come out looking relatively good. Guys, back to you. Rick santelli, now that weve raised taxes, i guess its time to raise taxes and not cut spending . I tell you what, i think we definitely need to be raising our awareness on exactly how much debt we are tagging future generations, hopefully discussion will turn that direction. One thing we know, theres been a slight direction turn in the treasury complex. Twoday chart of tens will reveal were hovering with close to 198, close to 2 . Here we at 190. The 30year is very little different. If you open the chart up on the tenyear to may 1st, youll see were comeping back to 10s and 30s to early may, at least on a closing basis. Whats noteworthy is obviously the twoyear note deal is just a couple of points higher. Whether its 30s to 10s, or 10s to 2s, 30s to 2s, all steepening. Why does that matter . That helps banks continue to fund at very low rates on the shortest part of the curve, the Federal Reserve programs. If we look at the Foreign Exchange markets, we only need to look at two charts. The first chart is the euro yen. This comes back to the highest levels since the summer of 2011. When you include the dollar yen in that chart, you have to go back an extra year. Were comping to the summer of 2010. In either case, the dynamic is the same. I keep harping on it, and it continues to be the best trade that the fx traders are dealing with for the last three or four months. That is, long anything against the yen. Carl, back to you. Thanks a lot, rick. Talk to you in a little while. Lets check out the latest moves in metals. Good morning, carl. Lets start with the slide in gold futures down a dollar may not seem like so much. When you look at the fact that gold is below 16. 50 an ounce, a key technical level there, that is the reason why many traders say theres more bullish momentum in the gold market. Add to that the fact that the latest report said the bullish bets for gold are at the lowest levels weve seen since august. A lot of investors are on the sidelines waiting to see what happens with the next round of budget talks. And not wanting to buy until they see some resolution there. The down side risk according to barclays is to 1620 an ounce. Industrial commodities, weakness there as well. Oil following copper lower. Perhaps profit taking after what we saw somewhat last week. Were also looking at natural gas, though, bucking the trend once again, since fridays extending its gains there. We saw the biggest withdrawal from natural gas in storage for the season in fridays report from the energy department. But longer term forecasts for the weather, much of the country is actually above normal for this time of year. So that is something that may continue to put pressure on natural gas. Carl, back to you. Sharon, thank you for that. When we come back, the goldilocks economy and the three currencies. Well find out which of the bears best represents the u. S. Dollar. A little bit later on, Martha Stewart joins us live to discuss the macys trial and the future of the company she founded. As we go to break, look at this mornings movers. Amazon. Com at the top of the list. At optionsxpress were all about options trading. We create easytouse, powerful Trading Tools for all. Look at these streaming charts theyre totally customizable and they let you visualize what might happen next. Thats genius we knew you needed a platform that could really help you elevate your trading. So we built it. Chances of making this . Its a lot easier to find out if a trade is potentially profitable. Just use our trade probability calculator and there it is. For all the reasons you trade options from income to Risk Management to diversification youll have the tools to get it done. Strategies. Chains. Positions. We put em all on one screen could we make placing a trade any easier . Mmmm. Could we . Around here, options are everything. Yes mom, ill place a long call to you tomorrow. I promise. Open an account today and get a free 13month eibd™ subscription when you call 18882800154 now. Optionsxpress by charles schwab. Ive always kept my eye on her. But with so much health care noise, i didnt always watch out for myself. With unitedhealthcare, i get personalized information and rewards for addressing my health risks. But shes still going to give me a heart attack. Thats health in numbers. Unitedhealthcare. With the dow down about 69 points here, we see most of the components in the red, except for intel. Thats of note because it got an upgrade today from lazards citing Gross Margins bottoming out as well as low valuation and high dividend yields. Were also watching, not on the dow, but were watching shares of apple, down once again today. Barclays taking down the price target on apple. Down from 800. And this follows a spate of bad news coming out about apple last week. A lot of analysts questioning the iphone 5. It caused the stock to take a breather, if you can call it that, on friday. Lets no, that note you mentioned from Deutsche Bank this morning, a number of people also flagging that from friday. You pointed out the value chain movements, quarter over quarter decreases. Possibly as much as a 30 decrease in iphone 5. A note out of japan, a lot of u. S. Investors arent familiar with the work of the Japanese Team of Deutsche Bank. Later on friday, back in the part of what the u. S. Japanese Team has said, essentially there might be some shortfalls in the estimates. Terrific little company, by the way, finally got up and running, thats doing a lot of apple business, so maybe the supply chain could be mixed because jay bills got it. Its a battleground. The battlegrounds distract you from pretty easy money. Let me give you an example. Facebook is easier money than apple. Because you keep hearing theyve figured out how to monetize. That stock keeps going higher. The move today up 1. 5 . Some people said to me there could be a rotation going on right now, out of apple, and into other higher data, higher moving names like facebook. So well see if that continues. Especially because a lot of the reason why apple shares sold off last year, the end of last year people were saying its tax selling. Hello, its 2013 now, so what else is pressuring the stock lower at this point. Youve got to wonder whether or not theres a change in the story here. Apples an inexpensive stock. Facebook has momentum. I point out facebook, ever since Mark Zuckerberg got on the Conference Call and say, we screwed up. We got it wrong. Were not going to get it wrong again. That was a breakthrough. Thats when you had to get long. Im a believer in the guy. Well, disney we mentioned the story to you, creativity hard at work. Company said to be working on a magical electronic bracelet that could allow visitors to snap up souvenirs with a simple tap of the wrist. This kind of technology could also cost disney employees their job. Theyre exploring cutbacks in jobs no longer needed because of improvement in technology. Whats the creative way disney can cut down on costs other than cutting jobs. Well get your responses throughout the morning. Well, i dont know. Disney is so well run. The way i would cut costs is have fewer bad movies. Which is obviously in the eye of the beholder. I suspect bob iger is a guy sitting there and trying to figure out what you ket by bringing in star wars merchandising and get people in faster, not wait in lines. Maybe they shop more, buy more star wars merchandise. When we come back this morning, reservations at the Federal Reserve. Well go inside the rift over the exit strategy. Plus this. Coming up, hey, papda, what the heck are you doing . Its cold outside. Get inside and let cramer warm you up, with six stocks in 60 seconds when squawk on the street returns. 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. Lets get a look at whats coming up at 10 00. Simon is here. In the next hour, squawk on the street, tv personality Martha Stewart will be with us exclusively on cnbc. Well also get into tech with david faber. Is the longterm downtrend of the dollar doing good . Six stocks in 60 seconds, give or take a few. Hess is really important. Number one breakup play. They separate refining and marketing from oil. 65 instantly. At Morgan Stanley, upgrading pbh. This was a tremendous acquisition, house of brands, calvin klein, i like this call. One day well cut back the subsidies for farmers. Everyone wants to upgrade every single year. It tends to be a great sale after they do it. Wells downgrades inger sol. Ingersollrand, europe turning around. I dont like this call at all. Walgreens, we were looking for news. The fourth biggest gainer on the s p. Analysts meeting. Theyve got this big acquisition. Flu season, flu season is huge this year. And by the way, thats how walgreens and perigo gets their numbers. Did you get your flu shot . I got the shot, and then i got the flu from one of our onair personalities. Hi no voice and im back and bigger than ever now. Like gandhi 2. This time its personal, that kind of thing. Whats on mad tonight . Were going to do a we could make some news. There are a couple of companies, Jpmorgan Health care conference, that are going to be talking later this week. Weve got them ahead of that. Interesting diagnostic company. Np npsi nps, they saved the system money but charge so much. Weve got to look at this, carl. Breaks news tonight perhaps. I certainly have the confidence. Jim, see you tonight. 6 00 and 11 00 eastern time. Martha stewart with the good things her Namesake Company is doing. Also ahead, the chairman and ceo of drug maker alkermes with a pipeline update. Later on, looking for a dividend play, should you count on the banks. That, and a lot more is coming up after the break. [ male announcer ] how do you trade . With scottrader streaming quotes, any way you want. Fully customize it for your trading process from thought to trade, on every screen. And all in real time. Which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. Try our easytouse scottrader streaming quotes. Its another reason more investors are saying. [ all ] im with scottrade. [ 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 ] how do you turn an entrepreneurs dream. Into a scooter that talks to the cloud . Or turn 30million artifacts. Into a hightech masterpiece . Whatever your business challenge, dell has the technology and services to help you solve it. Welcome back to squawk on the street. Lets get the road map of the next hour. We start with the markets. S p kicking off the week at fiveyear highs. Even as fiscal cliff 2. 0 looms in the near future. So, how much higher can we go . Jpmorgans lee is weighing in. Will the big banks be the key earnings drivers this quarter and what will they do with all that cash on hand . Looking to add new recipes to your book. Perhaps decorating in the new year. Who better than to sit down and speak with than Martha Stewart. Shell join us live in an exclusive interview. But first, bank of america announcing a settlement with fannie mae over mortgage repurchases. It will buy back 10 billion in loans from fannie mae. Actually, i thought it was you know what, lets get the actual lowdown here from kayla. Shes more on the overall settlement itself and the numbers. Several positive headlines for bank of america this morning. No doubt that fannie mae settlement is the biggest for investors who feared the price tag could be much bigger. As it stands, 10. 3 billion is what bank of america owes fannie mae. The 3. 6 billion cash payment basically reimburses fannie mae for losses it already suffered. B of a was among some 14 banks that were part of a 10 billion settlement with the occ for wrongful foreclosures. A good portion of that settlement is roughly 1 billion. Bank of america is getting rid of 300 billion in Mortgage Servicing rates, continuing to chip away at that portfolio of delinquent and, therefore, expensive loans. The big question is what, if any, these impacts will have on the banks ability to return capital. Investors want to bump on the 1 cents dividend, but the question is whether theyll get that. Im hearing there will probably be very little change. The ceo said repeatedly that the bank needs predictable recurring earnings. Todays fannie mae settlement will cost the bank an additional 2. 7 billion, it had it earmarked. And todays litigation will cost 21 cents a share in the fourth quarter. Thats after a similar settlement wiped out all of the thirdquarter profits. There are still cases lingering that could be very costly for b of a. Thats definitely one were watching. Our viewers can be forgiven for not being able to keep track of it all. I know freddie mac the gses were off the table. They settled with freddie mac in 2011. But there was talk of a settlement, but that hasnt happened as of yet, correct . That is currently 8. 5 billion settlement that has gone back to a judge. Theyre trying to figure out whether the ruling that was made was actually something that both sides can agree on. Were still waiting for a ruling there. 8. 5 billion is what the previous settlement was. Now, theres a question over whether it could be more than that, whether the judge will let that settlement go through. But if it is more than that, and if they do need to go back to the drawing board, that could be a long and winding road and the bank could end up reserving more for that. We dont think that will be something thats a big lingering question mark. Thats something that the bank has already reserved for on the private side, david. Got it. All right. Kayla, thank you. The s p rallying to levels we havent seen since the financial crisis. With the new highs, how much longer can we hold. Tom lee over at jpmorgan, he joins us this morning from new york. Happy new year. Happy new year to you all. I want to walk people through what you got right in 2012. If you didnt nail the s p for year end, you came awfully close. Thanks. Yeah, we did. Year end was what, 1450 . We started the year at 1430. Postelection we kind of raised the numbers twice towards 1450. With that in mind, you see year end going to 1580. Thats right. Were going to have a roundabout journey, the middle of the year you think looks treacherous. Walk us through that. We think the first halfs going to be pretty tricky. You know, we can see the u. S. Economy strengthening, china improving and investors under way. So we think its proper for the market to be rallying towards 1500. But i think were going to get a speed bump that takes us down to 1350ish, which means were down yeartodate, before we see the market really see the second half strengthening and getting us to 1580. Tom, do you thich the first part of the year will be tricky because of what is happening in washington is this lets say we had, you know, reached a grand par gain of some sorts at the end of last year. Would you say its also tricky still . Yeah. I think because, you know, i mean, washingtons definitely one part of that calculus. I think theres a lot of brinksmanship that will come with the second cliff. I think well still deal with spillover from the weakness we saw in the fourth quarter, hurting q1 earnings. Corporate confidence i dont think is rebounding as quickly as Investor Confidence. I think what we may be concerned about as people see selloff in bonds, that could be a negative reaction for stocks. I still want to be long in buying dips right now. But at some point we have to start thinking about protecting capital. What is the mechanism that gets to this 8 gain youre targeting by the end of the year, if earnings are beginning to flatten out . Ardini is suggesting were making about 10 cents of profit for the s p 500. Thats higher than we had before the crash of 2008. If youre going to get Profit Growth from here, youll have to get Revenue Growth. Were not sure thats necessarily going to happen, are we is this. Well, thats exactly right. In order for profits to grow from here, it has to be top line driven. Remember, peak profits never come from cost cutting, it comes from top line. Capital goods are rising in the u. S. I think one story that will surprise people this year, we think a construction recovery is finally taking root in the u. S. Durable goods spending in the u. S. Is at a 50year low. But is that wide enough to take the s p 500 up 8 overall . Yes. In fact, what we have to keep in mind, durable goods spending is running 28 of gdp, when it gets to 25 of gdp or so, that may be 25 of incremental s p earnings. Its a huge kicker for s p Profit Growth. It means Profit Margins hit new alltime highs. Tom, you point out basic materials, generally in your words, the best performing sector in the fifth year of the bull market, which is clearly what were going into. Why is that . And is that surprising to you . Does that come later in the cycle than you otherwise suspect . It is puzzling. We tend to think of basic materials as an early cycle play, something you buy at the end of a bear market. But actually, as you get extended into an expansion, and then you get sort of a, you know, the durable goods recovery were sort of seeing, that actually has a huge impact on basic materials Profit Growth. Think about china expanding, u. S. Isms coming back and core capital goods, thats all really good for chemicals, steel, aluminum, and thats why basic materials tends to do pretty well. Right now, in 2013, theyre actually the fastest in terms of eps growth in 2013. Well talk about the dollar in the next section of the program. When the dollar was weakening, the stock market gained. If the dollar is going to strengthen substantially now, moving forward, possibly because of the feds, what does that do to stocks . Presumably that depresses them . Yeah. If the dollar strengthens because of the fed, solely because of the fed, i think thats negative. If the dollar strengthened because u. S. Growth is accelerating relative to the rest of the world, i actually think thats supportive for equities. That argues for a rerate of u. S. Stocks. It really depends actually. Tom, congratulations on last year. Good luck getting there this year. Thank you. See you soon. Tom lee over at jpmorgan. Well talk about the greenback, strong start to 2012. Where will it go during the course of the year. Find out after the break. Plus, were getting up close and personal with none other than Martha Stewart. Shell join us live from, where else, but the womens wear daily ceo summit right here in new york city. Were back in two. [ cows moo ] [ sizzling ] more rain. [ thunder rumbles ] [ male announcer ] when the world moves. Futures move first. Learn futures from experienced pros with dedicated chats and daily live webinars. And trade with papermoney to testdrive the market. All on thinkorswim. From td ameritrade. Is it just right to keep the feds easy money flowing or not. Time to look at the u. S. Dollar. Nick, great to see you. Good morning. What is your forecast for the dollar considering some of the fed minutes last week indicating that perhaps we could end as early as sometime this year . We still think the dollars going to weaken against the commodity and emerging currency. Very hawkish minutes. As you noted, payrolls report was rather stinging. Its a different story against the major currencies. We see the euro weaker over the course of the year. You do, so i guess you also believe that perhaps the ecb could signal it is prepared to start cutting rates . I think so. I mean, we saw in the december ecb meeting, for example, discussion of a rate cut, downgrade to the forecast. I dont think theyll cut this week, at this weeks meeting. I think probably what we need to see is a bit of a relapse in some of those confidence surveys, if we got that from europe. I think well probably see the ecb ease further. What is the Bigger Picture here . We have a structural decline in the dollar for the last ten years, thats quite clear. Do you think that the dollar goes substantially higher, say the dollar index, particularly if Deutsche Bank is suggesting we get 3 on the tenyear yield by the end of the year . Sure. I do think we go substantially higher. When you look at the dollar index, it is dominated by the major currencies. Down 120 to 124, we see the yen continuing to weaken. I dont think well see the yields quite as high as that, but we see a meaningful gain in the u. S. Dollar against the major currencies. In terms of your outlook for the dollar, does it factor in the fact that were going to get a new treasury secretary, and who that might be . It doesnt specifically affect that. But certainly, i think were going to have a good january in terms of positive sentiment, and weakness in the dollar against those commodities in those currencies. Certainly i think the departure of the treasury secretary and all the budget negotiations, thats a bit of a perfect storm and i do believe that will be a much tougher february for markets than it might actually help the dollar during february. But you are bearish on the u. S. Dollar against which currencies . Immediately for january, bearish on the dollar against the canadian dollar. And also mixed with the peso. All right. Nick, great to see you. Thanks for your time. Thank you. The fed minutes last week throwing a little cold water on the markets. Albeit perhaps not the greenback. The divisions that we now believe we have on the Federal Reserve. Therefore, the outlook for qe is steve liesman. Who we should note, of course, was hobnobbing with a lot of economists last week. Simon, thanks. What ive been able to figure out is there are actually two separate fault lines that have developed over at the fed over how much quantitative easing to do this year. The first one is the easy one. Some officials seeing the economy meeting the labor market before others. And look at this chart of the fed Unemployment Rate forecast for 2013. It shows those divisions really not that extreme. Pretty solid majority. 16 of 19 members. They see the unemployment remain above 7. 4 this year. Thats probably enough to just fight qe for the full year. The more complicated split is among those who are worried about growth in the Balance Sheet and the fallout from trying to adjust it once the economy picks up. Lets take a look at what the minutes said. A few members of the fed are in favor of asset purchases to the end of 2013. A few others, they would like to see considerable policy accommodation, but no specific time frame or total on the amount. Its this several others that is the sort of new information, we dont know how many that is. Is it three, is it four, is it five. They think its appropriate to slow, or to stop purchases well before the end of 2013, and they cite concerns about Financial Stability and the size of the Balance Sheet. So now lets look at what we think their concerns are. Big Balance Sheet could lead to inflation. The fed could be forced to show securities at a loss. Interest rates rise, the principal goes down, or make large payments to banks, Interest Rates on reserve in order to keep the excess reserves in check. That may ultimately cut the payments to the treasury. Theyve been sending 70 billion or 80 billion a year over to the treasury. On the other side, those who are not concerned about the Balance Sheet unwind, they worry the fed could now be forced into making decisions on qe based on essentially noneconomic reasons. Hears the other side of that debate. The big Balance Sheets have not so far caused inflation. The monitorists have been wrong about just the size of the Balance Sheet leading to inflation. It means that the fed can essentially reduce the Balance Sheet through natural runoff. The securities will expire. And the fed can quarantine excess reserves by paying interest on reserves to the banks. The feds likely going to purchase assets through at least the middle of the year. The meeting at the end of january and comments between now and then will be critical for setting market expectations. Theres fear the debate is taking away from the guidance that has linked to outcomes on labor, not the calendar date, not the size of the Balance Sheet. Carl . Steve, a lot to cover there. Well get back to you in a little bit. Steve liesman joining us from headquarters today. Lets go to brian sullivan. Take a look at vivus. Really good prescription data on the obesity drug kasimia. They had about 12,500 prescriptions in december, up more than 60 from the previous month. Investors relieved to see this kind of prescription data. You also had bank of america add that to their u. S. One buy point. Up doubledigit percentages. Cramers got his eye on it, thats for sure. A company that had positive results on two new drugs. What else is in the pipeline. Well find out that, and more, after the break. Woman were helping joplin, missouri, come back from a devastating tornado. Man and now were helping the east coast recover from hurricane sandy. Were a leading Global Insurance company, based right here in america. Weve repaid every dollar america lent us. Everything, plus a profit of more than 22 billion. For the american people. Thank you, america. Helping people recover and rebuild thats what we do. Now lets bring on tomorrow. Maybe you want to incorporate a business. Or protect your family with a will or living trust. And youd like the help of an attorney. At legalzoom a legal plan attorney is available in most states with every personalized document to answer questions. Get started at legalzoom. Com today. And now youre protected. Get started at legalzoom. Com today. We replaced people with a machine. R, what . Customers didnt like it. So why do banks do it . Hello . Hello . if your bank doesnt let you talk to a real person 24 7, you need an ally. Hello . Ally bank. Your money needs an ally. 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. More than 20 commercial products on the market, but it is the companys pipeline that is in focus. Announcing positive developments for two key treatments, that, of course, part of the Jpmorgan Health care conference. The chairman and ceo richard pops joins us from that Health Care Conference in San Francisco. Mr. Pops, happy to have you this morning. It may seem strange to viewers to start a conversation with a biotech ceo about the criminal justice system. But i would actually like to do that. Theres been talk of rates of incarceration in in country, because we put in jail so many nonviolent drug offenders. You have a drug that aids in weaning people off of opioids. Good morning. Were here in San Francisco getting ready to present to a whole bunch of investors at the jpmorgan conference. One of the things were going to be talking about is the rising use of vivitrol in the criminal justice system. 21 states have pilot programs, either with prisoners leaving prison, going into parole and probation, or avoiding parole and probation and incarceration by the use of vivitrol. I think this problem with nonviolent offenders which translates usually into drug addicts is a huge opportunity for our company, and also for the nation to get these costs under control while managing the patient correctly. How confident do you feel about the Real Progress made in this arena . Its the only drug of its kind thats an antagonist. Its not an addictive drug itself. Other drugs like methadone actually keep people physically dependent on opioids. Vivitrol is a onceamonth injection. Im actually guardedly optimistic over time well be building more usage of this in the criminal justice system, and in other large systems where people are treating large numbers of addicts. Youre going to be presenting at the jpmorgan conference, fairly early in the morning there obviously. Yes. Something you did announce on the 3rd was positive results from a phase one study of what youre calling alks 3831. My understanding is, that when you take antipsychotic medicines, you can have a wake associated with it. Phase one is very early. But at least tell us why youre feeling perhaps positive about what youre seeing from the early results. Were positive because weve been proceeding very carefully in the development of this medicine. Like you said, patients with schizophrenia have a number of treatment options. The most efficacious drugs often have a large amount of weight gain over it. Not a small amount. Sometimes patients can gain 20, 30, 40, 50 pounds if theyre taking some of the most efficacious medicines. A giant drug around the world, an eli lily drug, its been off the pad. But theyre coming up with a form of xyprexa that doesnt cause the weight gain. Thats what weve been working on in our labs. Weve been doing work preclinically all the way now through completing a study in the 106 Healthy Volunteers to demonstrate that the mechanism is working. Were now going into an expanded study with patients with schizophrenia, to see if our dosage form can reduce the weight gain. At what point would you expect to see in potential results from those phase 2 studies . Well start that study in the first half of this year. So i would expect to get data early next year from that next big study. You mention youre going to be presenting. What is it youre going to be focusing on with investors . I wonder, jpmorgan is a big investment bank. They like to invite clients like you in part because they do Capital Raising for Companies Like yours. Are you in a position where you will not need any new capital as we head into 2013 . Youre right, its a remarkable position for a Biotech Company to be in. Most of the companies in this building will be interested in raising more money. We completed about a 1 billion merger last year that you guys covered quite well. We now have about a half a billion dollar revenue company. So we can fund our own research. Thats actually one of the key things in biotech. The science is so good, that if you have the capital, and the staying power, over time you tend to win. And so when capital is available, biotech innovation continues to expand. In our case because we have these recurring cash flows and Strong Financial base, we think we can keep growing. So for us today, well be talking about two things about the company. The commercial portfolio, the approved products already that are driving our growth. And this pipeline that youre referring to, of our medicines with schizophrenia, addiction and depression. Well, good luck today. And at the conference, mr. Pops. Appreciate your time. Thank you very much. Richard pops, chairman and ceo of alkermes. We want to take a check on shares of netflix, trading above 100 a share for the first time in eight months. April 23rd to be exact. Take a look at this, up 5 . This comes on the heels of a deal with time warner to carry previous seasons of some of the popular shows that are produced by time warner tv. So that another content deal in the quiver of netflix. We should point out, not the disney deal which was an exclusive distribution. Yes. But important, no doubt about it, to have access to their customers to time warner produced programming. These are winwin, many said, because the content providers themselves are seeing a new Revenue Source with things that they thit might simply sit in the dust bin. Well put. Could the financials become the next big dividend payers in the new year. Plus, domestic diva Martha Stewart will join us in an exclusive cnbc interview on the retail interview and her partnership with both jcpenney and macys. Back in two. So we have ongoing s and interactive learning, plus, inbranch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. Our teams have the information you want when you need it. Its another reason more investors are saying. Ll ] im with scottrade. Ii had[ designer ]eeling enough of just covering upg. My moderate to severe plaque psoriasis. 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If youve had enough, ask your dermatologist about enbrel. Amazon shares at an all new high. Morgan stanley upgrading to an overweight with a price target of 325 a share. Airline stocks, including delta, southwest and u. S. Airways hitting a 52week high today. The vix is up 3 this morning above the 14 mark. What will the banks do with cash in 2013. The chairman of the Financial Services regulatory practices. Jason goldberg also joins us from barclays. Gentlemen, good morning. Today is an important deadline date. The 19 biggest banks have to basically come through with their plans to the Federal Reserve for what cash they can return during the course of 2013. How would you summarize the position in which those 19 now find themselves perhaps as opposed to last year . Well, the 19 for the most part are submitting their capital plans. So what they intend to do with their capital, or how much they would like to pay in dividends throughout the next year, also the results of their company tesht. Then it goes into a black box and the regulators come back with their own stress test. I think it will be after today, it will be a waitandsee game, very nervous waitandsee game for the banks. Jason, what do you say to the investors about what is likely to occur . Given the strong runup weve already had in the banks . We think the results will be very positive. 2012 was positive, as a lot of banks raised dividends. 2013, we think the vast majority of banks raised their dividends come late march, early april. And we think the majority on the Share Repurchase programs. We think more banks will return more capital in 2013, which is a positive for shareholders. But have we seen that reflected in the stock given the runs weve seen in the likes of citior bank of america over the last month or so . Beginning of 2012, investors said, we think its baked in. When the results came out in midmarch, the group took another leg higher. Clearly the group kind of has run the back part of last year on positive singles, when the fed came out with the construct, it maybe was a little easier, certainly with the scenarios than the 2012 stress test was. But still, when we think these banks come out with higher dividend yields and buy back more stock which provide some support, which think it will be a positive. Today is an excellent day to have you on, given what you do for a living. The surprise yesterday, that the regulators, the world regulators have decided to substantially water down the Capital Requirements moving forward. An extension for four years moving forward. A much bigger pool of assets, of course, so those banks can count as being core capital moving forward. Were you surprised by what came out of basel and does it affect this process of handing back cash this year . I wasnt surprised by what came out of basel. The Biggest Issue that the u. S. Banks in particular, the french bags as well had with the basel iii rules has been around the lcr, the liquidity coverage ratio. I think what you saw was basel iii and the rules themselves were at risk to some degree, as each of the countries were starting to look inward as opposed to more globally. I think this is a way to kind of save basel iii going forward. I think particularly for the u. S. Banks, theyre well capitalized, well twice before the crisis. Have a lot of liquidity. I think this provides the wiggle room to make basel iii make more sense to the u. S. Banks. Jason, last time round, as far as the Federal Reserve process was concerned, you had two banks that had their requests rejected, both citi and third bank. Now it would appear in a very different cell. Citis new ceo, much more watereddown plan that would definitely get through. No great shakes there. But the third appears to be very aggressive in the type of language theyre using in the runup to this how they will boost their dividend and the degree to which they want to have buybacks. I think theres a difference. Last year citigroup and sun trust got denied to return capital because their stress capital ratios fell below the 5 that the fed required. Fifth third screened well. Their issue relied somewhere else. They never fully disclosed it. But probably around policies and procedures. We think they fixed those in 2012. When all is said in 2012, they did get their doc buyback. We think they have the capacity to build on that in 2013. Of the stocks you cover, jason, what is likely to pop the most in 2013 do you think . With respect to dividends and buyback, we think the names that we most active return earnings is jpmorgan, u. S. Bank corp and state street. Guys, well leave it there. Thank you very much. Jason goldberg there from barclays and dave ryan from price water house. A mover here in the market flash. Tso, the refiner, often in the shadow of the bigger xet tore va lero, a shining example today, but not in a good way. The worst performing stock in the s p 500 right now. They amended their credit agreement. Now they can extract up to 4 billion if they need to. They just amended a deal, didnt use the money, but still that is floating out there. Also got a downgrade for the Research Firm howard wild as well. That stock down 4. 5 . Tesoro the worst performer in the s p today. Back to you. Brian, thanks a lot for that. An exclusive interview with the one and only Martha Stewart. What has she got cooking up her sleeve for the new year. About insurance. At farmr because what you dont know can hurt you. What if you didnt know that boxes by the curb. Make you a target for thieves . Or that dog bites account for a third of all home liability claims . What if you didnt know that one in seven drivers is uninsured . And that grease fires have to be smothered . 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Intel getting an interesting upgrade from lazard to a buy rating. Price target 26 a share. The firm saying that Gross Margins will bottom in the first quarter, and demand will improve in the following quarters because of the introduction and penetration of ultra books on the market. Interestingly, too, were seeing a nice move higher in hewlettpackard. Perhaps a lelrelated part of th sentiment here. Next on the program, nothing short of a goddess of domesticity. Hear what Martha Stewart has to say about her business, the consumer, and her partnerships with retailer giants like macys and jcpenney. Plus, is it a bird, is it a plane . No, its a pigami. One of the most expensive and highly anticipated cars out. More on that when we return. [ male announcer ] staples is the numberone Office Superstore ink retailer in america. Now get 6 back in staples rewards for every ink cartridge you recycle when you spend 50 on hp ink. Staples. That was easy. More than a dozen americans have paid more than 1 million for this muchhyped supercar. The pagani. There may be one small problem, cnbcs robert frank has more. Thanks, carl. Good morning. Well, some brand names are known only to the super rich and pagani is one of them. The cars are worshipped by car oh fis y fis yo nado. Theyve already sold more than 100. It means god of the wind in ancient inca dialect. The first delivery scheduled for july. That is if the car is legal. Right now, the wira is not approved by the Transportation Department for u. S. Roads. Now, pagani said its just a formality. But paganis last car was never street legal in the u. S. It didnt have passenger side air bags. Another safety feature. Pagani said it couldnt afford to do the crash test on the zanda, it has done the crash testing on. Huayra. A 6 million car crash were looking at. Who is buying it . The company wont say, but jay leno drove the same car i did down in miami and he said, quote, its unbelievable, like a dream come true. Well see, carl, whether that dream becomes a reality this summer. That hurts. That just hurts so much, that video right there. 6 million crash. Robert, how does it compare to the italian sports car . I think its a 1 million, you know, 1. 2 million. I have to say, i drove the bagati, the pagani a little less. The pagani interior is amazing. It looks like a jet interior if it was made by a jeweler. Every little piece is gorgeous. Bagati seems more like a production car. But look, were talking between a 1. 6 million car and 2. 2 million car. Theyre both way out of my league. But really nice to drive. Thanks so much, robert. Thank you. Robert frank joining us back at headquarters. Rick santelli is in chicago. Good morning, rick. Good morning, carl. 13 months ago, december 2011, i did a white board, and i took eight zeros off the National Debt clock. Thats become kind of popular. Theres a quick view of it. Id like to update that with current debt clock readings. Once again, sufficient tax revenues, 2. 4 trillion, remember, trillion is 12 places. Federal budget, 3. 5 trillion. National debt, 16. 4 trillion. Recent cuts, this is questionable. Because not counting moores, im not so sure. Thats still the same number that was on the original board. Of course, we took away the eight zeros. Lets do that. Were taking away the eight zeros in every case. Ill tell you why were going through this exercise again. Basically, what that leaves us with here is, and well get rid of all the nondescripts, about 24,500 on the family income, about 35,000 on the debt of the or excuse me, the budget of the family. Around 10,000 in new debt. The current debt is about 164,000. And were only cutting about 385. But lets go to recent reads, okay . The recent read is we have 52,000 per citizen. A little over 1 million per taxpayer on underfunded liabilities. And that comes out to about 3 million per citizen on underfunded licts. So i think in essence our politicians have created a new program. You want to know what i call that program . I call that program all kids left behind. All kids left behind. Are we proud of that . Because thats exactly what weve done. All kids left behind. Lets frame it. Lets say it a lot of times, because when were saddling a baby not born yet with 52,000 in debt, about 3 million in underfunded liabilities in the future, they dont stand a chance. Now, i know were going to be hearing all these issues questioning recent cuts, future cuts, were not doing the revolutionary war again, were not doing the civil war again, but we dont count those, its called baseline politics. But remember, what it really does come down to is all kids left behind. Because what is debt . What is debt really . Its future liabilities. Were going to have to create tax revenues on. Because once we caught magic threshold, currently 16. 4 trillion on its way to somewhere between 19 and 22 trillion, that is going to be a weight that can only be addressed by taxing the little babies that many mothers burp every morning, and its not right. Back to you. Thank you, Rick Santelli. Martha stewart on the future of the company she founded. Her next Business Venture and much more. Shes joining us right after this. [ male announcer ] dont just reject convention. Drown it out. Introducing the allnew 2013 lexus ls f sport. An entirely new pursuit. 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. [ male announcer ] save on ground shipping we replaced people with a machine. R, what . Customers didnt like it. So why do banks do it . Hello . Hello . if your bank doesnt let you talk to a real person 24 7, you need an ally. Hello . Ally bank. Your money needs an ally. Woman were helping joplin, missouri, come back from a devastating tornado. Man and now were helping the east coast recover from hurricane sandy. Were a leading Global Insurance company, based right here in america. Weve repaid every dollar america lent us. Everything, plus a profit of more than 22 billion. For the american people. Thank you, america. Helping people recover and rebuild thats what we do. Now lets bring on tomorrow. At legalzoom, weve created a better place to handle your legal needs. Maybe you have questions about incorporating a business youd like to start. Or questions about protecting your family with a will or living trust. And youd like to find the right attorney to help guide you along, answer any questions and offer advice. With an a rating from the Better Business bureau legalzoom helps you get personalized and affordable legal protection. In most states, a legal plan attorney is available with every personalized document to answer any questions. Get started at legalzoom. Com today. And now youre protected. Its their talents behind the scenes that has helped her create a business empire. Like any empire, its not without its challenges. Joining us from the womens ceo summit is courtney reagan. Good morning. Good morning to you, carl. We have Martha Stewart, the founder of Martha Stewart living with us right now. Earlier this morning, you were in the presentation by jc pen thee, ron johnson, ceo. Some interesting comments. I understand you have a shop that will be coming, but we have some legal battles with macys. Where do you stand right now . It was announced last week about a nonjury trial that will be taking place with macys. It makes me very unhappy. I dont like to have any arguments with our partners. But otherwise, our business has been very good at macys, robust. Good christmas sales. Home depot, a fabulous christmas sales, especially in the holiday items that we designed and sell at the home depot. Petsmart, too, our pets product special strong. With the jcpenney shop, are you able to move forward with the design at this point or do we have to wait for the macys oh, we have an extensive line of products coming to ja c penny starting in march and launching in may. Were very excited about our business with jcpenney, as we are with all our partners. We have been very actively designing and doing great, great stuff. And you have and you have many partners. You just mentioned home depot, petsmart, michaels. My crafts and is joanne fabrics. Certainly. And there are some that think youre spreading yourself too thin in your brand. How do you respond to that . Well, i dont think ralph lauren would ever say hes spreading himself too thin. We have a very wonderful brand standing for good quality, fine production, in many different product lines that really center around the home. And for in and around the home. And we will continue to design in all these areas. Were very excited about it. And january is a pretty big month wore Home Furnishing and sales. How does Martha Stewart play into that . Well, you would have to look at the sales at macys and at the home depot for home repair, Home Building. Home design, to know how were doing. And right now, i really cant comment on some of the things that are happening, but its its exciting to be able to be in all of these retail outlets the. Were in more than 8,000 different outlets all over the country. And how closely do you follow whats happening in the Home Building market . That has to have some correlation with the sales. Well, we have a wip with kb homes. And im happy to say there are some good signs there. People are starting to build again, start to go look at investing in their homes. And its essential for the whole economy that this happen. Normally, the puckett that are very interested in your products are into facebook and twitter and pintrest. How are you connecting with them . Were the most pinned magazine on pintrest right now. Our photos in the home area are the most pinned on pintrest. Now, again, its all relative, really. I mean, i have almost 3 misdemeanor followers on twitter. I was at this Conference Today for the womens wear daily. I was tweeting did you know during the conference. The response is phenomenal. Its a really interesting, immediate response. Social media is here to stay, i am sure of this. That said, theres a lot of other things to do in a day than tweet and instagram. Thats true. Now, when we think about your magazine, as well, thats a media that many critique as a dying media. How do you critique those . More media was started last year than died. There was a talk that the digital magazines would completely obliterate the printed magazine. People have ipads and other forms of reading, but really and truly, the digital magazines have not been the explosive growth that a lot of people thought it would be. So i think the printed word is still here. People still like the look and feel of pages. They like to tear out pages. I dont like them to tear out Martha Stewart. I like them to keep the whole magazine. But it is new media and we are still trying to figure it out. I think it will take some time before we know exactly whats happening. Advertisers, too, are having a difficult time wondering where is the best place to advertise . And the pages of the magazine still are very sturdy and good places to advertise. And last but not least, we heard lessons from Mickey Dressler and ron johnson. What are Martha Stewarts lessons . I very much agree with both of those gentlemen. They are genius retailers, extremely creative people and they put the stress on creativity in business is extremely important in my company. I think the creative input is just as important pretty much as anything else. And that they also stress editing, simplicity, the customer is very important. To me, its always when i design a product, does the customer need it and does the customer want it . If the product can pass those two tests, you know youre going to have a good product the. Thats wonderful. Thank you so much, Martha Stewart, for joining us. Carl, back to you. Courtney, thank you so much. Courtney reagan joining us in new york city. Time for squawk on the street this morning. According to reuters, disney has begun exploring cutbacks in jobs no longer needed because of improvements in technology. Brings us back to this morning on squawk on the street. What is a creative way that disney can cut down on costs other than cutting jobs . Put a moratorium on pinocchios nose jobs. Its getting ridiculous. Allegra to sneezy, cut reimbursements to doc and get sneezy off his you know what. Creative. Paula writes make disney a moderately happy place rather than the happiest place on earth. I swear that all of us will belly laugh at something. That was a good one. A good one. Whats coming up on task tonight . A big lineup, the president and ceo of mobility to see who is winning the smartphone wars. Ralph will join us from vegas. A read of the consumer from dvr. The ceo is there. It is a recent deal. And doug kasss top three predictions for 2013. Also, look at what he got right and wrong in 2012. There are more of those, right . Hes going to give you the top three. Right. There are 15, but were going to do the best ones, the shocking ones. Always good to hear from doug. Good to have you back, carol. Welcome back. Thank you, carl. Good to have me back. We left you hanging there, didnt we . We all go our separate ways in the holidays. Its its been to be back together. See you in 30, simon. If youre just joining us, here is what you missed this morning. Display welcome to hour three of squawk on the street. Here is whats happened so far. Its not a coincidence that the market is at a fiveyear high. I bet nobody out there knows that the u. S. Economy is now growing faster than average. Thats why the stock market is up. Im just shocked, dismayed that we did not have a grand bargain that included the debt ceiling. This is United States and medicare. Someone has to reign it in. Theyve got a Biotech Company that wants to charge 3dz 00 for a new drug. New here, i didnt mean that. People have no idea what were talking about. And with that, there is the opening bell. The science is so good, that if you have the capital and the staying power, over time, we tend to win. And so when capital is available, biotech innovation tends to expand. Good monday morning. We have some breaking news on the banks. Diana olick is in washington with the details. Good morning. Ten banks will pay a collective 8. 5 billion to borrowers to settle foreclosure abuses. Its all part of a deal with the Federal Reserve and the office of controller of the currency. Thendz a very view process that began in 2011 after the socalled robo signing scandal came to light. Banks were required to do an independent review of foreclosures from 2009 and 2010, but they were taking too long and cost too much. This settlement puts an end to those reviews. The banks will make 3. 5 billion in direct payments to eligible borrowers and 5. 2 billion in other assistance such as Loan Modifications and forgiveness of deficiency judgment. This settlement affects some 3. 8 million borrowers. Eligible borrowers could receive somewhere from a few hundred dollars to several thundershowers depending on the foreclosure. The banks included are aurora, bank of america, citibank, chase, metlife, pnc, sovereign, sun trust and wells fargo. Four other banks, allied, hsbc and one west were in the talks but did not sign on to this deal. Together, they Service Close to 500,000 loans. Conversations with them will continue. Now, the occ is not giving details yet as to which banks pay what. The deal is separate from the 11. 6 billion settlement announced just this morning between fannie mae and bank of america. Back to you guys. I didnt think it was possible to have more news on the banks today, diana, but you gave us a little bit more. Thank you so much for that, diana olick in washington. Quick check of the markets today. Alcoa tomorrow. Dow currently down 49 points. S p down a little more than 6. Netflix meantime spiking more than 5 after announcing a Licensing Agreement with warner brothers. Barclays reducing its price target from 800 to 740. Expectation res low and its important for apple to integrate more features into ios 7. As we said, markets pulling back a little bit today. Their best week in over a year last week. Well find out if this is a sign of weakness or if investors should take their money off the sidelines and buy. Amazon is at alltime highs. Is there more up side that comes . Well talk about a couple of calls out today. If history repeats could be, the 40 stocks that can make you money this year. Were going to name some names and find out if apples are focused in mobile. First, looking at amazon, a 3. 5 gain. An upgrade from Morgan Stanley and mcquarry, as well, increasing its price target. The quarry senior internet analyst joins us now with more on that. Ben, good to see you this morning. Thank you. Morgan stanleys note is essentially about sales projections from 201516. Is your call today based on anything closer term . My kal is much more about Amazon Services and whats going so happen in that business as well as in the near term. We think thats a business thats going to continue to drive up side the numbers and adds value to the stock. They keep talking about that unit being a tenth of its eventual side. Is that realistic . How much of a contributor is this going to be in the longterm . Thats an extraordinary business. Youve had other folks at the company talk about this business being as large if not bigger than the Retail Business. Thats a striking statement considering your Retail Business is well over 50 billion and today aws is just over a 2 billion business. We think this is growing well north of 57 and it could accelerate in the years to come. Talk about the contributions of web services versus their core business. This is one of the interesting points about this business. Its a hundred percent growth margin business. As that business grows, it will drive growth margins much higher than they are today. Is it a mostly domestic business . The morgan call, sorry to talk about it too much, but thats mostly an international call. I cant comment about what theyre saying, but when were talking about aws, were talking about a business that is mostly domestic, that has global implications. Today this is a business that really is about Small Businesses and startup mostly in the u. S. We think over time, youre going to see larger businesses and merging markets. A lot of drivers that can bring this business higher and higher in the years to come. A lot of people may be on vacation when netflix had an out age on christmas each. They ended up blaming amazon web services. How much risk is involved in it failing or not supplying enough backstop redundancies to where clients have a service fail because of amazon . Listen, you are going to have failures. Its a growing business. But the fact is, this is a much more secure infrastructure than trying to do it yourself. Netflix, as disappointed as they are, they still continue to be among the biggest proponents of amazon cloud. We had a discussion this morning about amazon and how so many people had concerns about the tax issues facing them as morsi made them charge a sales tax. That clearly has not be a deterrent to buyers. In general, if you look at the stock throughout its history, there have always been detractors and its always continued to grow past that. What we think is so impressive about this country and impressive about the stocks are the sustainable advantages that it has. And youre right about the skepticism out there. Clearly in the past year, those skeptics have been proven wrong. Thank you very much. Thank you. As we said earlier, markets tipping today after last weeks stellar performance. We want to bring in art cashin. Happy new year to you, sir. Happy new year to you. Talk about last week. Was that all relief related to the fiscal cliff and what happens now that we move into some more Empirical Data in the form of earnings . Well, i think earnings season will be important. But as i discussed with bob sa sanny last week, the feeling here among the old fogies like me was that a good chunk of the fuel was new money for a new year. There were a couple things that worked out to underscore that. Wednesday on the market on closes, there was over 1. 5 billion to buy on balance. Thursday, it dropped to 800. Friday, it was 400. Again, the old fogies believed that new money for a new quarter, a new month, a new year tends to come in in a threeday cycle. The most up front and then slows down. Now until the very old, old days, it was a little bit the reverse because they had to have Committee Meetings and it will be the third day when you saw the most. Thats when bios go up. Its reversed now because everything is electronic. So the feeling is that that push is now gone. Were going to see if the market can stand on tone. Thats why i said last week starting monday we wouldnt have that fuel. So far all were doing is consolidating. Theyre not selling. What about that question, if the market can stand on its own . Whats your view . Well, i think it deserves a pause, that that rally got the market so heavily overbought, it was somewhat amazing. The fall in the vix, that kind of fall in the vix is almost unprecedented. Its only happened about five times since the vix is around. And every time it has happened, we go into a kind of corrective phase, volatility reenters the market and things tend to pull back, not always immediately, but there is a noticeable pullback. Im not sure you want to talk about the bond market, but people are beginning to ask questions at 19. This is reversible, this is the point where bonds fall off. I know everybody is watching the 19 and theyre watching the bond funds. I think youll know if the public believes this is changing if you saw a sudden rush for Mortgage Apps for refinancing. That would mean the public says, uhoh, this is turning. I have to lock this in. That will make wednesdays a lot more interesting. It certainly will. Finally, cramers point has been for the quarter, you should expect more seesaw action courtesy of the people in washington. Is that a reasonable view . I think so. Theres the theory of the trillion dollar platinum coin, theres the theory that the fed should look at its Balance Sheet and tear up half the treasury that they have and then, of course, theres the knows to kno nose to nose aspect is the feeling the president could invoke the constitution. The feeling is congress could challenge that, but it would take a motion on part of both houses. And you cant get both house toes agree what time it is, so it might not work out. So, yeah, volatility lies out there, finally, carl, if we can get through tomorrow and have a record of up for the first five days, theres a 75 to 80 chance according to the Stock Traders almanac that that means an up day for the year. And youre not an old foeggy. Youre a young foeggy. Thank you. Youre only as young as you feel, but im about 101. Art, well see you later. Thank you. Brin sullivan is back at hq. Who can follow up on art cashin, right . Singular guy. Interesting story here, lifted to an upgrade to an outperform at rbburied. That stock has performed at 3. 63. 6 3. 6 . Baird saying smartphones could damage harmons business. A lot of people are swapping things out and using their smartphone for everything. Harmon stock up 3. 6 over the past year. It is up nearly 22 , carl. Very nice. They make some good car stereos, too, as you know, brian. Absolutely. Apple, google or facebook, which one could bring you high sides for 2013 . And Rick Santelli has something coming up a little later. Absolutely. If were borrowing 35 or 40 cents for every dollar we spent, tax revenues are satisfying 60 to 75 of every dollar. So when you hear people talking about doing challenge the full face and credit of u. S. Treasuries with regard to debt ceiling, are they being real . Whenever i have questions like this, i always go to the man. Larry kudlow will be our guest in 20 minutes. Youll want to see this one. [ male announcer ] how do you make 70,000 trades a second. Reach one customer at a time . Or help doctors turn billions of bytes of shared information. Into a fifth anniversary of remission . Whatever your business challenge, dell has the technology and services to help you solve it. A sight for sore eyes. Good morning. Happy new year. Fortunately or unfortunately i get about a thousand yearend reviews. One stood out this career. One is the asset manager firm. Its up to 20 plus years now, outperformed the s p more than two to one of 28 last career, mark ten years significant value over the s p. And so lets talk about some of the names on the 2013 forgotten 40 list. Lets start out with gold foods. Why is that on the list and tell us why you like it. Sure. Thanks for having me, first. Gold is on there for two reasons. One, when we look at a company, its a figure that makes you stop over a descending value over a reasonable period of time. David murdoch who we believe over time he or his heirs cover this. This could spin off or sell. When they announce theyre going to sell one of their Business Segments and theyre going to realize 1. 6 billion worth which in effect will eliminate totally their total indebtedness. So you can have a Debt Free Company that is in the fresh vegetable and fruit business and dole which does pineapples and a number of other fruits. It has a 34 market share. So you can have a Debt Free Company with a significant amount of cash flow. We have another catalyst we look for. It owns 120,000 acres of land which is worth about 500 million. When you take the photo and you mark all the assets to the market to come up with an Intrinsic Value of 20 a share, around 1. 5, which is below the stated value. So the price target today. A stock that was up 100 last year, on the list again, despite last year, why bank of america now . It was interesting. One of the things we did back in 2000, we wrote a negative piece on shorting the merchant home builders. We reversed that condition in 2009. In the 2010, 2011 forgotten 40, a great number of Home Building related stocks were in there and they significantly increased in value. Banks of america has tremendous potential earnings power. Its a stock that we think could more than double in price again over the next few years. They will be paying out significant amounts of earnings in the former dividend. Thats your favorite launch cap fm . Probably. Jpmorgan is probably up there, too. Lets talk about Madison Square garden. That was a big performer last year. I obviously know whats happening with the knicks. Thank god for that. Ranger fans, hockey is back. Why do you see msg potentially doubling again . Well, the stock has more than doubled since the last time, but the Intrinsic Value has increased dramatically. Madison square guard sn not only the worlds graeftest arena, its the knicks, the rangers, owns valuable air rights. It owns real estate. You come up with a value significantly higher. Is there a catalyst in 2013 that you know of . Are you close with the company . Do you see them doing anything in loss this year. Well, the construction of the new arena or the refush yirping of the arena will be finished in 2013. Youll see a significant amount of cash flow, m a from the business. They will not have any use for that money. So now they can start paying out dividends, start repurchasing stocks. They can use the play book that they used with cablevision where they could buy back a lot of stocks. Fed fast, we know about that. Thank you, mark. We know what you can do in terms of capitalization. If you want to check out the whole list of marks forgotten 40, check out our twitter handle. This is a whole list that has added value versus the s p for many, many years. Great stuff, dpaer. Gary k. Back at headquarters. Brian sullivan has news for us. Sgliets just coming out of the Jpmorgan Health care conference. This is brand new information. The stock is down a little bit. Its all over the place because if you read the headlines, you think that the guidance is good because they said their main drug sales are going to be over 1 billion. Here is the problem. They were expected to be over 1 billion. So it looks like revlimid maybe guided to the lighter side. The Company Guidance is 550 to 560. The facts at consensus right now is 558. So celgene, while it leaves its open to possibly beat, also now leaving 8 cents to the down side on the full year against consensus and maybe a little light on the revlimid side. Thats why the stock is actually down about. 6 . So celgene coming out and leaving downside value. Possible for the full year. Still ahead, people are electric cars might be forced to shell out more money for simply choosing to go green. A look at the states doing the taxing and what that means for car owners in the long run. Ive always kept my eye on her. But with so much health care noise, i didnt always watch out for myself. With unitedhealthcare, i get personalized information and rewards for addressing my health risks. But shes still going to give me a heart attack. Thats health in numbers. Unitedhealthcare. How did i know . Well, i didnt really. See, i figured low testosterone would decrease my sex drive. But when i started losing energy and became moody. Thats when i had an honest conversation with my doctor. We discussed all the symptoms. Then he gave me some blood tests. Showed it was low t. Thats it. It was a number not just me. [ male announcer ] today, men with low t have androgel 1. 62 testosterone gel . The 1 prescribed topical testosterone replacement therapy, increases testosterone when used daily. Women and children should avoid contact with application sites. Discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or signs in a woman, which may include changes in body hair or a large increase in acne, possibly due to accidental exposure. Men with Breast Cancer or who have or might have prostate cancer, and women who are or may become pregnant or are breastfeeding, should not use androgel. Serious side effects include worsening of an enlarged prostate, possible increased risk of prostate cancer, lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep, and blood clots in the legs. Tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. So. What do men do when a numbers too low . Turn it up [ male announcer ] in a clinical study, over 80 of treated men had their t levels restored to normal. Talk to your doctor about all your symptoms. Get the blood tests. Change your number. Turn it up. Androgel 1. 62 . Here to break it down for us is will power. He joins us this morning from dallas. Will, good morning. Good to see you again. Good morning. Happy new year. Good to be here. Lets walk through a few of these key themes. Ill name the theme. You give me the stocks within that play. Well begin with wireless com. Ill tell you what, thats a group were responsible for. We continue to like apple. Thats our top pick. The more things change, the more they stay the same. We like apple on the weakness. The stock has been beaten up over the last couple of months. But demand remains very good. Even the supply sides that our teams have come up with suggest the numbers have been good. Yep. Youve got a couple other smaller names in there, as well, right . Well, i do. So within my basket of coverage, for recommending apple, among the carrier res like vodaphone as a way to play the trends, verizon wireless, cheaper valuationwidewise than either at t or ver riceon. We have midcaps, newstar, a nice growth at a reasonable price name. Good visibility. Synchorisis. Eric schmidt is heading to north korea. You have google as a took pick on your internet page. Why . As you look at the broader bear tech franchise, im not personally responsible for google. Theyve continued to like that as a way to play mobile platforms, really. If you look at the mobile platform world and cloud generally, apple and google have been top. If i had to pick between the two, i like apple. Our Internet Team has labeled google as their top pick. Semi conductors, some of the names you like within chip webs micron and a couple of others. Thats right. As you look at our semi conduct ur team, they laid out windows 8 as one of the key cast lists among the six key trends were watching for 2013 as a key driver. I think for them, micron is one of the beneficiaries or those moving forward to 2013. Big ipo of last year, tnaw. Do you want to walk me through that . Well, yeah. So our Networking Team has been positive on that name. I can they view that as their top pick. Im not as close to that, but i think from a firm standpoint, thats a name that our Networking Team is very positive on. Its a way to capitalize in part on the next generation data centers. You can move the software to find out if that works for them, etcetera. Finally, a new names in software, as well. Inik, btns. And those are names that our Software Team woshgdz out. Those are plays on big data, which has been a big theme for some time as well as the public cloud opportunities. So those are names that we think at the firm our best positions for 2012. Interesting. Excuse me. 2013. Ive made that name a few times, had to rewrite a few checks here. There. Thats right. Will, good to talk to you again, will power joining frus dallas. Just a few days left in the trading day in europe. Well get the close and the details in about 2 30. From capi, thor gets great rewards for his Small Business your boa [ garth ] thors Small Business earns double miles on every purchase, every day ahh, the new fabrics. Put it on my spark card. Ow. [ garth ] why settle for less . The spiked heels are working. Wait [ garth ] great businesses deserve great rewards. [ male announcer ] the spark Business Card from capital one. Choose unlimited rewards with double miles or 2 cash back on every purchase, every day whats in your wallet . [ cheers and applause ] 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. 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And the fact that wall street, of course, is opened now is currently down 55 on the dow has taken it further into negative territory. But the big news for a lot of people in europe has to be about the Banking Sector. The Banking Sector in europe and this is a huge understatement is much less well capitalized than here in the United States. But when the regulators said over the weekend that they would delay the capital ratios, that they would extend them by four years and expand the foot of instruments so people could capit capital, thats hugely important for shareholders shortterm because the banks dont have to scramble around to try and shore themselves up to the degree that they might have to have done. A lot of people are still very concerned about the state of european banking. There are definitely some piece out there and the critics would argue the Banking Union is a complete farce. It is ultimately the safety net money to only come through ultimately when theyve done all the deals for new debts, not for the debts of the banks sitting on. So we have a huge way to go with the Banking System in europe inevitably today with this shortterm relief that you have because of the rules you have to bounce, barclays, koich ya bank also doing well. But it is inevitably the weaker banks, banks of ireland that have bounced more because their relief will be greater. Over in italy, the banks have bounced and indeed this one today have which the wto is saying which is suggesting that actually wont be state aid in order to recapitalize. Thats the level at which the discussion is. The government still has to come in. So you can see theres a reaction there that we had on the banks. Apart from the Banking System, the other thing that we have to watch for during the course of the year is where the real money will return into fixed assets and into the bond markets. Those that are in the space are drawn in because the performance has been so strong. Will that be sustained through year . Interestingly, as we look at how spain is going to finance itself looking out, initially theyre at a twoyear level which is very defensive. Why arent they attempting to issue tenyear debt. A few things to watch out for, banking and the return of real money possibly or perhaps the exit of real money from the periphery of europe. Back to you, carl. Simon, thank you for that, simon hobbs. Share sayron epperson is live at the nymex. Still below that 1650 level. A key factor for traders in 2013 may be favoring silver over gold. The london market association, one of their top forecasters now says that the gold run is over. He says industrial commodities are doing better. He sees gold prices averaging 600 an ounce in 2013. That, of course, below the 2012 average of 1668 or so. Were keeping our eye on copper, as well. It is lower today, but keep in mind, as well, shanghai inventories are down last week. There may be a bit of a hangover from there. We see a turn around in some of the energy markets, particularly in the refined fuels. The latest news were hearing about the port arthur refinery is that crude different lagz unit that was back up and running, part of the expansion to about 600 barrels per day, its now having problems once again. So that is another factor youre watching. As well, carl, natural gas extending its rally from friday. Sharon epperson over t nymex, thank you for that. The big story is going to be the banks. Now, remember, that bank of america deal widely considered to be pretty good, by and large, for bank of america. Hes putting some things behind them. I think the important thing is, banks arent up. Now, this is a very important question because normally bank stocks tend to move up going into earnings season and as the numbers come out, they tend to move down a little bit. That is not happening today even though bank of america basically is unchanged. Some of the other banks, remember, wells fargo, a little unusual this time of year. Wells fargo is going to kick off earnings season on friday. Usually its jpmorgan that does it. So slightly different situation. But just take a look at the bank index. And hell see what i mean here. Look at whats been happening january, february, march. There is april. And if you see here, right after earnings came out, stocks moved to the downside. July, small, but stocks moved down here. Same situation in the beginning of october. We saw slight moves down, but now here we are at essentially new highs on the bank index. Numbers came out. Own the week this all may be a little bit of noise right now, but its got some peoples attention here. So here is the bank right now. Top line growth is only going to be flat to slightly up. Many delays spending on the fiscal cliff uncertainties. The net interest margin, the differences they can make between lending out and borrowing is going to be flat to down. And thats going to be the major problems. But theres still some good news here in the Bank Earnings situation overall. Were going to see credit quality continuing to generally do well. Commercial loan growth is improving. Mortgage banks still strong. I think the big issue is the top line growth. When is the consumer going to start spending a little bit more . Thats whats Holding Things up. The bigger issue is dividend payers. We havent talked about that in a while. Theyre still out there. Cash payments greatly are up 18 last year. The s p 500 dividend yield, 2. 3 . Here is something that shocked me when i looked at it. Pay out rates are still very low. Believe it or not, youre still not getting a lot. Theyre paying out 36 . The average is 52 . Why arent they paying out more . Why arent we getting more from the companies . Ill tell you the simple answer is they dont have to pay out more. They dont have to pay out more because theres not many alternatives for people to go out here here. Look at the 10year dividend of 1. 9 . Carl, the average dividend is 276 . So id like to see them increase the amount of money paying because they could certainly afford to do that. But theyre not because nobody is pressuring them enough. They dont have to right now. Maybe if things change, rates go up elsewhere, theyll have to change a little bit. Thats a good point. Thanks, bob. Its good to see you again, bob pisani. Phil lebeau has some breaking news. I wonder if this is going to involve bostons logan. It does, carl. This is news were seeing reflected in shares of boeing which has ticked lower since these reports came out. There was a fire this morning on a 787 dreamliner parked at Logan Airport in boston. It is our understanding according to information were getting out of boston that the fire has been put out. There were no passengers, no crew on the plane. Whats unclear is what started this fire, whether it was something electrical, the plane, if there was something else. Weve got a call into boeing to get more details. All we heard from boeing is theyre going to be looking into these reports. So theyre getting this information as quickly as were getting this information. But the important thing to keep in mind here, carl, is that this is the fourth incident regarding a dreamliner. Remember, we had the two reports from united of dream liners losing some power, some degree of power while in flight and then also a similar report regarding the first flight going over the Qatar Airways over doha. So now we have a report out of boston of a fire at Logan Airport on a 787 dreamliner, parked at a gate, no passengers, no crew on the plane at the time, but thats what were looking into at this point. Carl. Okay. With that, well probably come back at you in a few minutes. Phil lebeau joining us with that news on the boeing 787. N meantime, Rick Santelli is talkings to a very special guest. Take it away. Absolutely. And before we get to our very, very special guest, larry cut low, id like to read a couple of quotes. I hope to high heaven that these guys dont mess around with the faith and credit of the u. S. Government. We can go to the chairman of honeywell, mr. Code. You dont put the credit of the United States finances at risk. Now, remember, we pay roughly about 37 billion a month on servicing our debt, which is this year going be about 450 billion. And we still do take in anywhere between 60 to 65 of what we spent on the revenue side through things like taxes, even though 35 to 40 is borrowed. So welcome, larry kudlow. Its an honor to have you. As i went back to some of those, the secretary was very straightforward about how they could do it and still try to pay the legal obligations. Debt in the hands of the public, which is what youre worried about, its about 19 billion a month, overall about 230 billion. We take in about 250 billion in revenues. Thou, i know its uneven, but im just averaging out. These numbers will be revised. So when you look at it that way, we dont have to worry. The debt ceiling will be covered. The interest and expense on the debt will be covered with ease. But rick, here is the problem. Youre talking to someone who wants to cut spending. When you look at some of the other government obligations internally, when you look at social security, when you look at medicare, when you look at medicaid and you add that to the interest on the debt, youre really saying that 65 of monthly revenue would go to including veteran. On the debt and the internal obligations. No, and thats why i loved having you on the show. Nothing but the facts. And what you laid out does demonstrate in a clinical fashion. Im not advocating one way or the other. But there is a difference between breaching the fiduciary contracts made with our debt holders and the moral obligations weve made to pay off entitlements and veterans. But i guess my next question for you would be so the fact that a debt ceiling rate is just raising it to pay the obligations weve already vouchered for, in other words, paying bills that we already have incurred the liability on, i understand thats a democratic argument. But, larry, the democrats at every turn proactively tried to get at spending, how can you go at it . What is your solution . Is this a sequester . Yes. Let me go back to what erskine boels says. We should not fool around with the credit of the u. S. Government. I criticized the republicans and democrats on that last year. Here is the key. And i think you referred to it. The sequester, the across the board spending cuts sequester, 1. 2 trillion must be enforced. That was part of the deal last year when they raised the debt ceiling a trillion. John boehner said as much. Read the boehner interview in the journal today with my pal, steve moore. Boehner said a dollar increase in debt, a dollar cut in spending. Thats his second point of leverage. So, a, the sequester and, b, one for one debt and spending cuts. And i agree, everybody should read that oped today regarding mr. Boehner and his comments and, larry, thank you for coming in to be a guest on the show. And make sure, viewers, you catch larrys show nightly, the kudlow report 8 00 eastern. Electric car owners, happy with that money that you save on gasoline . Well, you might have to say goodbye to some of those savings very soon. Well find out why some states are slapping owners with fuel efficient car wes a new tax when squawk on the street comes rights back. [ indistinct shouting ] [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. 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. I had[ designer ]eeling enough of just covering upng my moderate to severe plaque psoriasis. I decided enough is enough. [ spa lady ] i started enbrel. Its clinically proven to provide clearer skin. [ rv guy ] enbrel may not work for everyone and may not clear you completely, but for many, it gets skin clearer fast, within 2 months, and keeps it clearer through 6 months. [ male announcer ] enbrel may lower your ability to fight infections. Serious, sometimes fatal events, including infections, tuberculosis, lymphoma, other cancers, nervous system and blood disorders, and allergic reactions have occurred. Before starting enbrel, your doctor should test you for tuberculosis and discuss whether youve been to a region where certain fungal infections are common. You should not start enbrel if you have an infection like the flu. Tell your doctor if youre prone to infections, have cuts or sores, have had hepatitis b, have been treated for heart failure, or if you have symptoms such as persistent fever, bruising, bleeding, or paleness. If youve had enough, ask your dermatologist about enbrel. Welcome back. Coming up on halftime with stocks near fiveyear highs, is the bull run over or just Getting Started . Its a fighting inside the fed, the real dysfunction in d. C. And the biggest threat to your money . And netflix soars above 100 a share. One trader says buy, another sell. Carl, were going to debate it at the top of the hour. Thanks so much. Starting next month, owners of electric vicks in washington will be hit with a new tax up to 100 a year to make up for dwindling revenues from the current gas tax. Driving this issue is robert garneir. Good to see you again. Good morning, carl. How are you . Good. Im kind of glad i dont live in washington right now. Walk me through whats driving this in that part of the country. Well, i think its a function of states realizing that if people are using car thats dont burn gas, theyre not paying the gas tax and subsequently theyre not making a contribution to the cost of maintaining our roads. So the alternative is some type of new tax that is related to the vehicle and not to its actual consumption of gas. Where does aaa come down on this . Well, its inevitable. Everyone ought to be paying for the use of the roadways as an organization that represents the motorist, were more than willing to pay our fair share. So if you or i are driving electrical vehicles, then were not buying gas and not contributing through the gas tax. We need to ante up our fair share and pay through some of the mechanism. Im not sure we found the ideal mechanism at this point, but inevitably, people who drive electric cars will be contributing to the maintenance of our roads. Is washington the canary in the coal mine . Because they do it, does that mean other states automatically are going to follow suit . I think its inevitable that at some point either at the federal level or at the state level, there will be the introduction of an alternative means of taxation to avoid the holiday that electric car drivers might be getting in terms of their contribution. I think theres two reasons people buy cars like this. One is to save money and the other is to feel youre doing Something Better for the planet. If these taxes are, in fact, inevitable and go national, the incentive to buy these things is going to be seriously hurt. Well, im not sure that it will be, carl. Because when you think about the cost of a gallon of gas, a fairly substantial portion of it is tax, but theres a very large portion of it is that is related to producing the gasoline. And so if youre avoiding the cost of the gas and youre only contribution as the owner of an electrical vehicle is the tax portion and if that tax bite isnt too large, it may still be advantageous from a cost perspective to own and operate an electrical vehicle. Weve talked occasionally to former auto executives. Robert lutz comes to mind who has been advocating a National Gas Tax for a long time, admitting the political realities about Something Like that. But i wonder if this got through and theyve started adopting it, if we would be heading down some kind of slippery slope to where a National Gas Tax at large might be more of a political possibility. Well, we have a National Gas Tax. Its not at a very high level. I think its 18 cents a gallon and its been at that level for Something Like 20 years. So we already have a National Gas Tax. Which is supplemented in many cases by state level gas taxes. So the proposition that we might have a national tax is a bridge weve already crossed. Yeah. I think what im talking about is Something Like an additional 50 cents a gallon, something that would make todays taxes seem a little small town. Well, there has been consideration of a increase in the gas tax. Its been advocated by a number of groups that feel that we need to invest more in the transportation infrastructure of this country and that the gas tax is falling the federal gas tax is falling short in that it hasnt been adjusted for a very long period of time and its buying power is substantially less than before. Some people are buying electric cars that dont consume gas. Those drivers arent contrinting through the gas tax and we need to find an alternate way for them to make a contribution. I can see another debate brewing right here. Robert, thanks for your time. Good to see you. Youre very welcome. Mike check, one, two, one, two. It is known as the youtube of sound and its popularity runs from washington to the city of compton. Nice reference. Well find out how soundcloud is set to auto tune to mobile world and why you should listen in. Back in a moment. Reach one customer at a time . Or help doctors turn billions of bytes of shared information. Into a fifth anniversary of remission . Whatever your business challenge, dell has the technology and services to help you solve it. [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa, and the Aerospace Industry in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Welcome back to squawk on the street. Im phil lebeau with breaking news regarding a fire on board, on boeing 787 japan dreamliner. This is video from bostons Logan Airport of fire crews investigating the fire. Here is what we understand happened. The plane landed this morning. All the passengers and crew left the plane. The mechanic was doing a walk through of the 787 plane, noticed a light smoke condition increasing from the underbelly of the plane. He modified mass port fire. The mass port fire and boston fire are saying it appears that the fire is in a compartment or was in a parttime with batteries and other electrical components. We have called boeing, by the way, to get some comment regarding what they know about this fire. We have not heard back from boeing. But if you take a look at shares, carl, the the stock has been ticking lower ever since this fire serviced about 15 minutes ago. Thats the latest regarding this dreamliner fire at boston airport. Phil, thanks for that. What do the white house, snoop dogg and the economist magazine have in common . They all use sound cloud, a startup that lets you upload and share sounds of all kinds. That means music, pop casts, even your babys first words. Alex joins us this morning from San Francisco. Alex, good morning to you. Good morning. How are you . For those who never heard identity, tell us what sound cloud is and what its not. People hear about a sound tool on the web and they start to get a preconceived notion of what that is. What do you to . Sure. Sure. Soundcloud is the worlds online audio platform. That means people come to sound cloud to share sounds that theyve created. Could be any kind of sound. And also people come there to discover and hear all these great sounds that are being created. And i think one of the things that we do, which is interesting, is that we really care about all the different sounds in the world. So it can be, you know, listening to music, share music theyre creating, but its also, you know, reading some books, people capturing their own children, and all these kind of things. And i think thats whats quite interesting for us is just the whole range of sounds that we experience as humans. We think that that should be part of the social web, as well. Right. And people connect and then address with that online, as well. Over 30 million registered users. Look looking at some of the fundraising background, youve raised a lot of on money from some pretty powerful players. From a business standpoint, monetization and what is the future for the company . Sure. So we have a fairly simple revenue mobile in place. We have a premium accounts model that allows creators that want to get extra involved in the platform to be able to pay to upgrade their accounts where they will get more futures, more possibilities of being able to share in different ways, get statistics on whats happening. Thats been going quite nicely for us. And well see how that goes in the future. At the moment, whats really interesting for us is the sound is relevant for every Single Person on this planet, no matter when fear creating it or consuming. We see huge potential in building out the entire audio platform, the sound part of the internet. The sound at the moment, the engagement thats been happening. I wish we had more time for the sound of your voice. Please come back, alex. Alex from soundcloud. Straight ahead, why america might run out of money sooner than we think. Well be right back. Im making my money do more. Im consolidating my assets. Im not paying hidden fees or high commissions. Im making the most of my money. And sevendollar trades are just the start. Im with scottrade. Im with scottrade. Im with scottrade. And im loving every minute of it. [ rodger riney ] at scottrade, we give you commissionfree etfs, nofee iras and more. Come see why more investors are saying. Im with scottrade. Office superstore ink retailer in america. Now get 6 back in staples rewards for every ink cartridge you recycle when you spend 50 on hp ink. Staples. That was easy. When you spend 50 on hp ink. You know it even after all these years. But your erectile dysfunction you know,that could be a question of blood flow. 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