In. You just think you might get better prices in the next month . Markets are going to be pulling back here, a rally driven by the fed. Theyre not going to materialize as well. I think well get the pullback. You want to buy industrials, the transports, emerging markets here, get your list ready, rotate out of bonds into stocks. Maybe 5 cheaper . Thats what im thinking. I think you can get a better value here. Expectations are double digits. Thank you very much. That does it for us today. Right now its time for squawk on the street. Good monday morning. Welcome to squawk on the street. Im carl quintanilla, with melissa lee, david faber and jim cramer. The dow less than 2 from an alltime high. Europes been getting a lift from some good data today. Today u. S. December durable goods. Shanghai, the best day in two weeks, as industrial profits over there hit a sevenmonth high. We kick off the week with something for everyone. Fed meeting, jobs numbers, apple, amazon, facebook, boeing, ford. As Mainstream Media discovers the equity rally, is this classic sell indicator . Guidance for 2013 that you can drive a truck through. Carl ichan ups his stakes in transocean and demands a dividend. Whos the bully now. Is the bookstore going away for good. Barnes noble could shut as many as a third of its stores over the next decade, even as amazon stock hits another 52week high. The dow up about 104 points away from 14,000. The dow also on track for its best january since 89. Meantime, the s p closing above the 1,500 mark friday for the first time in more than five years. Its eightsession winning streak is now the best since 2004. Seeing the tenyear treasury yield rise above 2 in april. Over the weekend, guys, the New York Times puts on the front pages the words, americans are falling in love with stocks again. Jim, what does it all mean . Well, i think theres been a lot of stock bought in the last few years, a lot of dividends have been paid. And upped. I think weve been focused, many people focus on the top line not being that good. And should have been more focused on the bottom line. Ive got to tell you, i think the top line is about to be good. I think youll start seeing the numbers really come through. We are so lean, our companies are so lean, theres been so much firing, so much supply chain help, i believe in the move. Really exhibit a is caterpillar. Usa today, getting made fun of in some circles, but front page, the words rational exuberance in the words of some money managers. Exactly what jims saying. The market does not yet understand how efficient these American Companies are. This has been a love affair, of course, that has taken some bad turns in the past. And peoples memories are not that short. But on the flip side of this, of course, is this incredible bull market in bonds that weve been following for, i dont know how many years. Depends where you want to date it from. As we enter another year here, early in this year, were once again hearing these cries, thats a theme for the markets. What that has enabled Corporate America to do, whether its simply take a company that might be on the precipice of bankruptcy and make it fairly healthy. That has been a theme here as well. I wonder where that goes if we see this continued increase in the yields in the bonds. A couple of things are happening that are virtuous, although fact wous. You look at when i go in, i look at the share count of almost every company. Every share count is down dramatically in the last five years. Today, sales force. Com files a proxy for four for one split. We know that doesnt do anything substantive. And yet, boom, the stock is up big. So were beginning to see thats irrational, but its the first one i mean, how many splits have there been. I like the rational, which is, frankly, that caterpillar reports a good number. And says, listen, this could really get good. And aig is 50 undervalued. I think thats a rigorous call. Then theres the lack of rigor. I think its different this time, because we do have leadership across sectors. Its not just the large caps leading the way. Take a look at the small caps, the russells, mid cap index, transports, at alltime highs in todays session. Correlation has also come in. The correlation was at 39. 2 last month actually, 32. 4. Down from 47 in june. Which means that stocks overall are moving together. Theyre moving individually. So you have room for individual stock stories. People can get in this market. Can invest in the good stories. And they wont necessarily be battered or lifted along with all the votes out there. I agree. Look, this morning, a company i found chronically undervalued, hess. Ive been saying it goes up, like conoco, what we saw, frankly, with marathon. And then, bingo, it happens. Just like that. Its been a long time in waiting to a certain extent. Hess is an interesting story. A stock well be watching at the opening today. It is looking up rather sharply. Weve also got the presence of activist in the form of elliott management. They take no prisoners. Paul singer is willing to put argentina into bankruptcy, whatever it takes to get his money. But theres been a lot of talk in activist circles for years going after hess, that they acted already in part because elliott is seeking support. Unlocking value, very thing. Procter gamble last week, great quarter. Very big. Kimberly, really good quarter. Transocean, i mean, the number of fronts that are going positive here is somewhat overwhelming. Lets talk about caterpillar. Thats the big one were watching today. The heavy equipment maker operating profits of 1. 91 a share, beats wall street forecasts. Roughly in line of consensus for the current year. Caterpillar issuing a wideranging forecast. Earlier on squawk box, saying pleased about the past years results. Were celebrating a record year here. If you look at the whole 12 months over 2011, sales up 10 , profit up 15 . Near records inside. Were pretty happy with the results. Happy with the results, although there are a lot of cautious comments coming out as well. He said if it was like the past two years, hes making that point, 2013 could in fact be a tough year. Theyre saying china could continue to improve but not to the levels we saw in 2010, 2011. Europe is still a concern on the radar. Look, im watching southern copper go down. Because people are worried southern copper cant pay as good a dividend. Thats copper. We know aluminum not doing that well. Coal, these are all users of caterpillar equipment. At the same time, construction comes back. It is gigantic. I love what doug said about 2011, we saw the brakes screeched on. We dont want to get too bullish again. No one is looking today at the bearish commentary. Theyre just entirely focused on the bullish commentary. Its a rather amazing moment, guys. The journal fronts a huge story on what bears are supposed to do at this point, jim. I know. If you havent been squeezed out already on a netflix or something else, talk about look, the earnings have been very good. Intel was not great. Microsoft necessarily wasnt that great. But for everyone thats in, ive got four or five that are good. Again, come back to the buybacks. David, these buybacks were endless. Now youre starting to see when big money comes in, theres no stock. Yeah. And i think there was a couple of stories a few weeks ago that weve underestimated just how large the buybacks have been. You dont realize the share count has been brought in quite as much as it has. Thats been an underlying theme here. But what we havent really had is incredible top line. And that is one thing that we still can sort of at least wonder about as we move through this year. Yes, weve had incredible Margin Expansion as a result of productivity savings, as a result of cost savings and job cuts is a part of that. But when and if well get significant top line growth is a reflection of perhaps a greater growth in the u. S. Economy i think is still a question mark. Down europe, up 10 china. Okay. China, can be a source of top line growth. Latin america could be a source of top line growth. And when asked about china, the words for sure, the idea that china is staging a rebound. And this is despite the fact that they have terrible fraud there. Kind of overlooked it. When youre in that virtuous circle, it doesnt seem to matter what you say thats negative. People want to grasp the positive. Its a different kind of market from what weve had for multiple years. And to melissas point about correlation, its not that risk on, risk off, which we have dealt with for so long now. Every hedge fund would come in, and say, europes bad today, risk off. There are no more excuses for the Fund Managers who are underperforming the s p 500. This year could be a good year, a different kind of year from the hedge funds that have done so poorly. Theyre going to have to do actual work. Right. They will have to show performance now. Theyll have to go through these quarters which were really boring. A nice break in football this weekend, so i could sit down with the a painful break. But these guys dont do that, because its so boring. They like to be gun slingers. Its like, who shot liberty valan valance. They fell back on eric cantor versus now theres stuck with the four walls of the stock canvas. I wonder if theyll pick new careers. They dont necessarily pick the right stocks, but they do the work. Faber Capital Management no, im just kidding. Im saying there is there are individual stocks that are really doing incredibly well. Lets say you take a netflix, which is on a lot of peoples minds. That was up 100 points in, what, three weeks . What did it take to be up 100 points . They gained 2 million subs, worth 100 points. I didnt see that coming. Neither did a lot of people. Yeah. From netflix to carl icahn, investors sounding off on each other friday on fast money halftime. Challenged icahn to increase his bet on the company. Carl, do you want to bid for the company . Go ahead and bid for the company. Hey, you dont have to tell me what im free to do. All right. They just dont make moments like that on tv very often. A lot got said on friday and over the weekend about what an amazing moment that was. Thats all people were talking about. Tom and jerrys bar. Who won . The games not until this weekend. I said, no, not the game what did you tell them . I felt on the merits ackman won. But the real winner was wapner, because wapner kept his poise and kept it going, and kept trying to bring it back to what i want to know, which is carls position in herbalife. And its not clear. Although he was able to very succinctly in this case outline the short squeeze rationale. And an argument we have discussed, out there in the herbalife camp is ackman being as responsible as a fiduciary here. Taking such a large position when youve got the questions about a borrow and ability to sustain that, at what cost. And liquidity questions in terms of any redemptions that would come in. I thought that was an interesting and ackman did not i was listening very carefully for that answer. Everyone was wondering about that short squeeze. Yet your shares out there, i mean, if carl if anybody has a position out there, you take those shares off the market, dont allow them to be borrowed for the short. And that creates that short squeeze. Kate kelly said there is not a difficult borrow. You can borrow the stock. Theres 9 million owned by loeb. The Company Started buying back stock. What i found interesting about this debate. This was one of the few times in my life that really is zero versus infinity. Ackman says that this stock is going to zero. Right. And icahn said ackmans going to zero. And that ackmans investors are going to desert him. This is not about the next ten points of herbalife. This is about a Major Hedge Fund going bankrupt or a major supplement Company Going bankrupt. Thats what those guys are framing it as. In the meantime, the stock does nothing. Loeb might be buying nothing. What does it mean it does nothing . It doesnt mean its not going to do something. Mexican standoff. Herbalife was centered on that argument on friday. A long storied history between them. How many parallels between that conversation and Michael Douglas and wall street, i can buy in ten times over. It was amazing. It was amazing. Icahn, hes been doing this a lot longer. Hes 30 years older than ackman. Hes the better investor on track record, no doubt. And hes got cahonas that go on forever. What can i tell you. Was he off his game, though . Everybody thought he was rude. Thats carl. That was so typical of carl. Very typical of carl. I thought that he curses on the air when hes just on himself. Thats the way it goes with him. Hes one tough dude, period. Okay. It will be interesting to see how it alters his perception on the street and beyond, from this point forward. We just dont know the answer to that yet. Speaking of showdowns, amazon versus barnes noble. The latest chapter in the battle between book sellers. First, taking the pulse of the economy with honeywells ceo david cody, a live and exclusive interview at 9 40 a. M. Eastern time. One more look at futures as the market tries to build on the s p. The highest level since november of 2007. Lets go. [ male announcer ] introducing the allnew cadillac xts. Another big night on the town, eh . And the return of life lived large. Two book sellers in the story this morning. Amazon starting the week at new alltime highs. The companys road map to dominate ecommerce over the next decade. Barnes nobles retail chief telling the wall street journal the Company Plans to shut down as many as a third of its stores over the next ten years. Barnes noble still has a Good Business model, even with fewer stores here. Really a tale of two retailers, one benefiting at the expense of another. Theres a downgrade today of bed, bath beyond. This is that continual theme. Its just so much easier to buy it at amazon. Amazon gets more and more sophisticated. Its difficult to compete with a system who shows you everyone that bought the book you just bought, bought these books, versus going to barnes noble where theres a very nice person whos trying to help you find a book. Books just dont work. Stores dont work. They used to be temples of learning, places you could meet people. Now i just think theyre too expensive as a real estate. Disappointment for barnes noble during the christmas period. Where the nook, you wonder how many platforms can there be. Now there are real questions about, well, maybe there isnt room. Theres interesting that amazon has the netflix feel to it. I was going over some of the in a good or bad way . If you look at the metrics of amazon, youre talking about a company that people are very comfortable paying 155 times 2013 earnings. Netflix paying 234 times 2013, 55 times 2014. And apple, yelp, 9. 9 for 2013. And 8. 6 for 2013. Meantime, people are upgrading sony. People want the beta, they want the upside. When you think about makes you want to be a value investor. Its hard not to say, this momentum trade is going to end at some point. Look, netflix should have ended it a long time ago, but it didnt. People still love the product. Amazon is a loved product. Its very rare we get these situations. I love the product so much, i want to own the sok. Another stock went to 700. People love the stock so much. They did, except what was the high multiple . What was its highest . Let me ask you, why are some stocks not constrained . Because they have no earnings. Well, netflix has earnings. That is the quandary. Yeah, it is. Especially when you look at amazon, alltime high. And apple, here we are, sitting at 436 in the premarket session. A lot of people feel, if amazon wanted to show real earnings tomorrow, they could be selling at 14 times earnings. If netflix decided they didnt want to go overseas, they could be these are companies theyre doing exactly exactly what you always heard the Japanese Companies were doing in the 80s. Theyre not looking short term. Theyre not sacrificing on the short term. That worked out real well for the japanese. Well theyre just Getting Started over there. Lets talk about asia. All right. Thats good. That was a good five years. The next 30, 25, not so good. Theres only two stocks that fit the sales force. When we come back, jims going to help you make some money on this monday. Hear what he has to say in his mad dash. One more look at futures as we kick off a heck of a trading week. Squawk on the street is coming right back. [ male announcer ] to hold a patent that has changed the modern world. Would define you as an innovator. To hold more than one patent of this caliber. Would define you as a true leader. To hold over 80,000. Well, that would make you. The creators of the 2013 mercedesbenz eclass. Quite possibly the most advanced luxury sedan ever. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz financial services. With fidelitys new options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. 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At the same time people are excited about cat, theyre also excited about procter. Procter gamble has been an underperforming for some time. It would not be a stretch to see this company go to 80, 85, that they finally get it together and get a little top line. They are getting some top line. The bottom line has been trimmed. They fired a lot of people, theyve really organized. Supply chain is down. The raw costs are stabilizing. Mcdonalds doing a good job. I see this throughout the dow, pfizer breaking up. Youll get an Animal Health business this week going public. Johnson johnson, stock did not stop. You have at t and verizon, they werent so bad. I guess what im saying is, the dow is leading. It lagged last year. Its leading this year. Big story in the times over the weekend how apple is not the market bellwether. Its actually ibm. W