Shiller and auto sales. The nikkei closed up 56 . The best performance in 41 years. This final shortened trading week, all the major indices coming off big gains last week. As we look back on this great year for the equity markets, did 2003 end up stealing gains from 2014. Well take a closer look. But this year was not a good one for gold. The precious metal having its worst year in more than three decades breaking a 12year winning streak. Google and apple are expanding their fight for tech supremacy to a new front behind the wheel of your car. I want to welcome dan joining us for the entire hour. The reason we did play fish at the top of the show. It is great to have you this morning. You have actually written a lot over the weekend about the rally that we are seeing and whether or not it is pulling forward some momentum from 2014. This is one of the biggest concerns that Market Participants have now, the end of year rally has been stronger than normal. As such, you are borrowing from 2014. All i did this weekend was take a look at other strong quarters going back 20, 30 years. There doesnt appear to be any meaningful correlation between strength in the Fourth Quarter and what happens next year. The real indices is valuation. You believe the economics are game changing. We have changed our perception of growth coming into the year . No doubt about that. Next year, assuming we dont have an earthquake in japan or another arab spring or oil strike, there is no doubt growth will be better next year than we have seen in a few years. We expect gdp to be somewhere around 2. 7. Strength is always at the end of the year. Gdp should be printing up in the 3s. Third quarter and Fourth Quarter growth, while not perfect was also quite robust. It seems the acceleration is happening. A few conversations i have had with people over the last few days, there seems to be this emerging playbook that i wonder if it will be proved incorrect. Part of the next year will be pretty good. We dont worry about rates. They wont rise too much. We are going to have to start to worry. We may see a strong First Quarter followed by weakness. I dont know whether that will, in fact, prove the case. Because people are believing that will be the case, it will prove not to be. What about rates . They are very, very low. They may be just going to very low. Listen, again, the strongest period for the market from a seasonal standpoint is the winter and the winter for the end and the beginning of the year, strongest six months of the market. It is always safe to assume end of year strength persists into the beginning of the new year. Then, you have a spring swoon. Something we have seen the last couple of years. The issue you on rates, as rates drift higher. We should be so lucky they do over the course of the year, there is going to be a level that proves problematic for the economy and the stock market. Im not sure it is 3 or 3. 5. I would remind our rviewers, th year on the tenyear was routinely 3. 5 , as high as 4 . Growth rates were stronger at the beginning than they were with lower yield. Im not one of the people that fears higher yields. Growth in the previous expansion was pretty good when the tenyear was yielding 4, 4. 5 . Im not so sure things are so different we cant handle that. The degree of the speed at which we achieve the higher yields is more important than the yields themselves. For Equity Investors, that might become more attractive. If you look at barclay, goldman and citi, suggesting the stock market could rise 3 next year, you have to wonder what the conversation is behind closed doors that they come out with that sort of benchmark, surely. I feel very strongly from a valuation perspective, a Forward Return perspective, stocks are not nearly as attractive entering 2014 as they were entering 2012 or 2013. There is little doubt about that at this time. The issue becomes from a rotation standpoint, a positioning standpoint, does a higher tenyear draw investors away from lets say the utilities or the telecoms. I own at t. Full disclosure. The stock is basically flat on the year. 5. 4 . Im just taking a look at the numbers here. In 2005 and 2006, when yields were going higher, when the stock market was going higher, the utility sector outperformed the s p 500 in both years. I dont know the types of investors that we have shoved into the Utility Space and the Telecom Space are as mobile as perhaps people think. They might be stickier. In which case, the yield on at t at 5. 5 is fine, even though the return is flat, because it is a bondlike investor and my mom or grandmother are happy getting 5. 5 with flat capital return because it is a safe stock. A 3 tenyear is not as threatening as we would like it to be. As they now know. We are going to get someday ta at the top. If we are going to get these back to back gdp gains as long as they might be, do you think ism might be the king for the week . It is the oldest and the Gold Standard so to speak indicator with respect to the stock market. We have data going back into the 40s. The Manufacturing Sector is not what it was. It is still one of the key indicators. The levels at which they are printdi prin printing upwards, 55, 56, 57. You are seeing people take up their gdp forecast. I want to move on to apple. Apple is recommending that shareholders vote against carl icahns 50 million buyback poe posele. Proposal. That was announced last april. If you recall, mr. Icahn is taking a sizeable dollar position. 150 million buyback to be funded in the debt market. Now, changed to the proposal he is offering up over this fiscal year that will end next fall. The company saying we are already in the midst of returning a great deal of money to shareholders. Remember our huge bond deal where we borrowed 17 billion. That was the low tick, i think, if i recall. The question here is, how much will icahn fight. He is up, i believe, in the position its sechlt hitself. He is good at sort of finding a rock rolling down the hill and hitting it at the right moment. It is not clear to me that rock is rolling down the hill any longer. Many would argue that, in fact, they should be returning even more capital. What do they need all of that cash for, not that it is here in the states as they point out in their opposition to the proposal. It is overseas. That said, nonetheless, they will generate perhaps as much as 60 billion in this coming calendar year. Do they really need all that money . Their defense is we pay one of the biggest dividend payer in the world, the largest authorization in history in terms of buybacks. How much of a defense is that when you have a company that size with the market cap that size, with cash flow that size. If you look at the sixmonth chart, it is a phenomenal performance. Since we hit 390, you have a 41 gain thats come through. The situation for tim cook surely has changed somewhat. It has. In this case, it may be that icahn does not win his argument but he wins as an investor. He did get in. I dont know what his average price is. We do know he has benefited from that gain you pointed out. The key for apple seems to miwa weve talked about so often here with jim and others, which is, what are they going to come out with next year. Is it going to continue to be upgrades or something that really moves it forward in terms of a tv product. Apple in cooperation with audy rolling out services that lets you get information and entertainment. We talk about the battle for the living room. It is becoming the ultimate mobile device. Whether android becomes the car in the future. If apple does a deal with audi, do you have to have an apple phone to drive the car . These are the things that are going to drive apple. My company has a buy rating on the stock. The icahn thing is important, the stock buyback is important. They have a ton of cash parked jae overseas. What turned the stock around was forward earnings expectation, the china mobile deal. When investors were soaring on the stock, it was because earnings were coming down. As soon as that trend reversed, the stock trend reversed. It may not be an imminent boost or technological release. That will help drive sales and the stock higher. Watch google and apple battle it out is also interesting and fun to watch as they pick various points where they choose to battle, the car being one of them. Particularly they both have a robotics operation. When you get a selfdriving car, whats the embedded software that is going to operate it. It could be android operated. Google has the selfdriving car. Apple does not. Copper rising to its highest level in more than four months. What does that mean for the economy and the rest of the market . We will decipher the moves and the commodities in another few moments. The dow has had a record close 50 times this year. A lot more squawk on the street from post 9 in just a moment. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. We do . I took the trash out. I know. And thank you so much for that. I think we should get a Medicare Supplement insurance plan. Right now . [ male announcer ] whether youre new to medicare or not, you may know it only covers about 80 of your part b medical expenses. Its up to you to pay the difference. 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In particular, natural gas, which has had this phenomenal rally during the course of the yoors. The best performing commodity. Do you think it has bottomed or could it reverse back down as we saw in 2012 . I think we still have some upside with natural gas. The weather is going to be cold. Fabulous weather in chicago. The average temperature for the next seven days is going to be a whopping zero. Plenty of natural gas used. I would begin to worry about natural gas as we start to move out towards february. When it starts to warm up, we are going to see natural gas come back under some pressure. We certainly have the capacity to recall what we have drawn down. We have awfully cold weather in a lot of places and thats going to continue. Thats going to be supportive for natural gas. What do you think will work best next year . I think you have to look for commodities that have very weak fundamentals. You are going to have a problem really. You have to do things that are doing well, cocoa has very good fundamentals. That is probably the only market that does. I really dont like gold here at all. Did you mention gold, sterling. Would that be bullion . I do not like gold here. At the moment, i think gold is hanging on to the 1200 level for dear life. If we see any sort of problem come up that disrupts the tapering or anything like that, we could easily see gold bounce a little bit. I think overall, gold is going to trade below 1,000. We talk about the apparel makers all the time. It has been a while since we were talking about them in reference to rising cotton prices. You think cotton has horrible fundamentals. All you have to do is look at where global stocks are. We have three times what global stocks normally are. China has a huge stockpile. As long as you have that situation, it is going to be very hard to sustain higher prices. If you look at the weak corn and soybean prices, cotton is going to garner acres from the second crop and more here in north america. With that, you are going to have more product coming on the market. This funds bizarre affection of cotton is probably going to come to an end. We could see cotton becoming an underperformer. Sterling, thank you very much for your time. Sterling smith joining us there from chicago. Dozens of people were killed and injured in a suicide blast on a trolley blast in russia. This is the countrys third deadly attack in four days. Jim maceda is live in moscow with the latest. Good morning. Reporter hi, carl. A state of emergency has been called in volgograd. They have issued a statement that said this mornings bomb was carried out by a mail suicide bomber. People were going to work or the marketplace at the time the bomber struck. A whole city of 1 million is terrified. There are reports out of volgograd that residents are staying inside. They are too afraid to go about their daily lives. The strong suspicion is this was the work from islamic insurgents. Police are already calling these latest attacks acts of terror. They are connecting them both to a Public Appeal that was made several months ago by doku, omarof, on the u. S. List of terrorists. He appealed to his own men to disrupt the winter olympics. Vladimir has staked a lot of money and his reputation on. He has deployed 40,000 army, police and agents are going to be surrounding sochi, making it safe. He has created a kind of ft. Knox. In fact, it is like a new country. 1500 square miles large. No vehicles will be allowed in, nor will you be allowed in either, carl, unless you have a Special Olympics passport. Security will be incredibly tight in sochi. Security experts like to point out, if there is a dramatic attack that brings the country down or the infrastructure, it wont happen in sochi. It will happen in places like moscow or st. Petersburg and soft targets like volgograd. Still, chilling news, 38 days away from opening ceremonies. Jim maceda in moscow. Two days left to trade in 2013. What should you be doing with your money . The one and only art cashin will weigh in in a moment . We are going to get data. Ok caseshiller and chicago pmi next in just a moment. Bny mellon turns insights like these into powerful investment strategies. For a university endowment. It funds a marine biologist. Who studies the peruvian anchovy. Invested in the world. Bny mellon. Lets bring in arthur cashin, director of floor operations at u. S. Financial service. Also, a poet of sort is art with his annual poem on the year. Hitting things as diverse as paula dean and hannah montana, to Esther Williams and edy gourmet. Not many can get it in one poem. Takes a heap of living and a lot of marinading to keep that together. The tenyear and the market itself as we head into next year. We were talking to dan about both. What are you looking for in this last two days of trading before the new year begins . Historically, they are spotty. Going into the new year, things could be strong. Remember, 2013. One of the strongest performances in the first couple of days. You might see people preloading iras, preloading Pension Funds and other things and jumping in in the first couple of days. We are already overextended to some degree. Why is that . The runup of the market away from some of the moving averages and a variety of other things, it has been a heck of a run. It probably is time for a rest. Given the seasonality, the conventional wisdom, i think, is that youll stay relatively strong going into around the 10th or 15th of january and then you might see a correction. What should we make of rates as we head into next year . We are right around 3 . We had this conversation and will be having it very often. Most people think, we are going from very, very low to very low. Not to paraphrase dan earlier, dont be too concerned. It hasnt played out badly in the past when we have seen higher rates as long as we get higher gdp growth. Dan and i disagree very slightly. I dont think you can compare it to other normal recoveries. This has been driven purely by low rates. The telling area will not be how the market reacts to a 3. 0, 5 , but more importantly, will it continue to weigh on mortgage applications. They have dropped down to a level now when lehman was still alive. Thats going to be a bit of a problem. Look at this week and the week that follows. Can i just double back . You mentioned the possibility of a correction in the middle of january. How big do you this i that correction will be . If we keep moving at this pace, it could be anywhere from 3 to 5 . Well see. The disaster. I dont think so. Geopolitics are beginning to heat up. We see russia. This thing in turkey cob a real incendiary event if it goes out of hand. Over the last couple of years, when you drift that far away from the 200day, it suggests you are one month or so Forward Returns are not all that attractive. You do trade laterally or correct some of that. My only point is, it has been written about on the web. Your reference to miley cyrus sperking. I didnt realize it went that fark. I referred to her in her other fashion as hannah montana. The best line on that i think was brook shields who played the mother said, where did i go so wrong . We are talking about her on squawk box. On squawk on the streets. Maybe she is doing something right. Indeed. Despite all that, i wish the viewers a very happy new year. We got the opening bell just a few minutes away. Get ready. Another big day of trading. Not many more left in 2013. Squawk on the street will be here all the time. En drive sales event is back. Which means its never been easier to get a new 2014 jetta. 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