Skip to main content

tv   Squawk on the Street  CNBC  December 31, 2014 9:00am-11:01am EST

9:00 am
year. >> for everyone. and to our viewers. >> to our wonderful viewers. becky, who's unfortunately not with us. we're looking forward to a fantastic new year. thank you, everybody. cheers. >> cheers. >> drink up. >> you're not allowed to drink up over there. >> you can smell it. >> okay. join us next year of course. "squawk on the street" begins right now. ♪ happy new year to the guys on "squawk" and to you. good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla. david and jim are off today. we close out the month of december, the fourth quarter, and 2014 today. barring a crazy session, the s&p will post about a 12.5% gain after the worst decline in two weeks yesterday. oil hit a new low for the year
9:01 am
almost creeping down to $52 on west texas. the ten year steady at 2.18. our road map begins with the last trading day of the year. full day. no half day for the markets on this new year's eve. better than expected weekly jobless claims number helping futures point slightly higher this morning as investors look to end 2014 with a bang. >> sony hack sent the company back to the stone age. forced to revert back to note pads. >> and why ipads could make a comeback in 2015. >> first up, stocks are edging higher a little bit. brent crude hitting new lows this morning. jobless claims up to 298. all major indices solidly in the green. nasdaq up 14.4. russell up about four. we'll talk about sort of the annual performers. the best s&p stock, southwest airlines. worst s&p, transocean. ibm has the dubious distinction
9:02 am
of being the worst dow component two years running. that's not happened since 1995 when it was bethlehem steel, believe it or not. >> i guess the other ones on the dow are the oil companies? >> chevron, ge exxon, and verizon. >> was a gainer but it did sort of one of the worst. utilities had a strong year. hard to believe. that group up almost 30%. who would have expected those slow-growing, boring utility names to be among the best? we'll be watching that today. in yesterday's session, they were actually the worst performers down 2%. i'm going to also be watching gold, which had a pretty good day yesterday, contrary to its flat year and down 30% almost last year. >> i think the utilities is really interesting. for the big surprise this year is what happened to interest rates and therefore stocks that behaved like bombs. your utilities are up 26%, 27%. your real estate investment trust up 32% to 33% once you've
9:03 am
added in the dividends. those are the stocks that rocketed ahead. as indeed you've got a return. what am i reading in "the journal yts journal" here? a capital gain overall with a dividend of 7%. that's surely the standout for the session or for the year. let's get to analysis. paul christopher joins uses from wells fargo. jennifer veil is head of fixed income at bank wealth management. welcome to the show. >> thank you. >> thank you. >> let me first of all talk about these bond-like stocks that have been the clear outperformers this year. massive performance. what happens to those in the new year? because a lot of things happened this year that made a lot of hedge fund managers lose a lot of money, the unexpected. what happens in 2015? >> they were rather flat to lower, actually. we think that next year the long end of the curve could be on the flatter side. so those stocks might not do quite as well as they did this year.
9:04 am
but they could hold in better than many people think. >> jennifer let's just highlight where we went on the ten year. that -- i mean sarah yesterday had a chart of the dollar. many people would say it is the ten-year yield, which went from about 3% this time last year right the way down to 2.2 against most big bets in the market. what happens next year? >> yeah exactly. so at the end of the year this year, we're looking at almost an 80-basis point decline in the ten-year yield. next year we also believe that the ten year is going to struggle to reach that 3% level again. so that tells us that our expectation for the fed to begin to lift interest rates at a modifies, slower pace than middle of the year will probably still allow utilities to perform well, given that we expect that long end of the curve to remain fairly anchored given the flank of the global interest in the u.s. domestic bond market.
9:05 am
>> you know paul in about 55 minutes' time we're going to watch new year in japan. they're engaged clearly in massive qe. you have the european central bank it would appear about to embark in massive qe. what do we focus on next year? >> in terms of equityiesequities, you should focus on the growth we think will accelerate for the u.s. in this country next year. as jennifer said w the long end of the curve anchored and the fed maybe likely to pause further until maybe the latter half of the year it's really i think, still a good environment for equities. we should be looking first at the u.s. >> jennifer do we really know what's going to happen? the big test for next year it seems to me when it comes to the equity market is the first federal reserve interest rate hike since 2006. could that spoil the party? >> well it probably will spoil the party briefly. historically, if you look at the equity market reaction to a fed beginning the path of
9:06 am
normalizing policy there is a negative reaction initially. but within six months they've recouped the losses they incurred from a fed frankly moving towards a more normalized policy environment. >> you know paul i suspect we will talk about the federal reserve in greater proportion than it actually affects the market over the next six months or so. what about the consensus that tech is going to do well next year? some people would say financials, health care is the other standout for this year 24%, 25% rise. what works best next year? >> we like all of the cyclicals for next year and would prefer growth over value next year. it's really, we think, going to be a continuation of this good environment with low and even falling inflation. the fed on hold for a long period of time. and when it does move we think those moves will be mostly token and will not really do much to the market outside of a little bit of volatility around the timing of it. but it should be a very good year for cyclicals overall. >> jennifer there's a lot of
9:07 am
discussion about greece today. "the washington post" says the odds of them leaving the eurozone have never been higher because in a perverse way, they can afford it more than they could before. and the germans might be less afraid of letting it happen than they were before. is that a danger? are we going to be talking about the dissolution of the union? >> frankly, it's still in germany's best interest to keep greece in the union. a lot of the noise we're hearing now, i'm not convinced there's going to be a shift in political leadership. i think it's certainly going to create some fear. at the end of the day, you know we haven't had the euro crisis fear for a while now. i guess we got a little complacent as it relates to the eurozone. >> ecb probably had something to do with that. paul, just back to our markets for a moment given these valuations, given the fact that by historical valuations stocks are starting to look expensive.
9:08 am
2015 earnings growth is set to be about 7.2%. is that enough to keep the market going with these kind of valuations? >> well, yeah we think earnings could be closer to 8% next year. that's very decent growth but until now, the retail investor really hasn't bought into this rally. there's still an awful lot of caution out there. and with inflation still very tame, the fed likely to be on hold until at least the second half of the year we think it'll be a good year for some multiple expansion. >> okay. so let's do a quick cost-benefit analysis, paul. by how much do you think the s&p could rise next year, and what are the chances, one out of ten, for a major correction? >> we think the s&p could pick up another 10% to 12% next year. the odds of a correction really it depends mostly we think, on what happens overseas. there are a number of trouble spots. greece will be an ongoing source of volatility next year. i would say the odds of a correction are fairly low. i'd put them under 50%.
9:09 am
>> good to talk to you both. thank you. happy new year. >> more bodies and debris pulled from the sea off the coast of indonesia after the crash of airasia flight 8501. katy tur has the latest. >> reporter: another tough day here in surabaya indonesia. they found even more wreckage, even more bodies. unfortunately, no survivors. still, relatives say they're holding out hope for a miracle. but officials say it is not looking good. they said earlier today that sonar images confirmed the bulk of the wreckage underneath the water in the java sea. the ceo of airasia came out and said that was not true. they do not have those sonar images and do not have confirmation they've found the flight. everybody is working very hard to get to this point. they're trying to find it as quickly as they can. weather has certainly been a factor. it was bad out there on the water today. it's raining here right now.
9:10 am
and they're expecting the weather to only be bad again for the next few days. as for the charity flight we were talking about yesterday for those families to fly over the island so they could say a prayer for their lost loved ones in the last known location of that flight, well that has been canceled. officials say they just believe it's going to be too hard for the loved ones involved. carl, back to you. >> katy tur in indonesia. thank you. when we come back ibm one trading day away from becoming the worst performer on the dow two years in a row. later, ted leonsis, the owner of the washington capitals and wizards going to talk tech and valuations. one more look at premarket on this final day of 2014. there's a shot at times square in new york city as well. revelers already lining up for the calendar to hit 2015 in just under 15 hours' time. more "squawk on the street" live from post nine in a minute.
9:11 am
you can bring back a lot of things from a trip around the world. but you can't always bring back customer data. because many customers don't like it when their data moves around. can i go now? if you're going to do business globally you need a cloud that can keep your data where it needs to be. today, there's a new way to work and it's made with ibm.
9:12 am
9:13 am
some new details from sony on how executives reacted to the hack of its e-mail and data. this from "the wall street journal." the company used a phone tree to communicate, manually cutting checks to pay employees with an old machine and dug up some old blackberries for employees to use. we actually talked to the blackberry ceo about the hack earlier in the month. here's what he said. >> it's proven that blackberry devices and the server that manage those devices are a lot more secure than any other
9:14 am
solutions out there commercially available. so, you know, at least it will help. i don't know whether it will completely prevent it. >> john chen in effort to turn around blackberry. but this interview with sony was pretty interesting. showed the back story. said that if the servers continue to operate as scheduled in a few weeks, sony will be fully operational. i think i said within eight weeks. >> although amazing to me the journal says that investigators can't rule out that the hackers don't still exist on the systems. that this all happened after sony moved the supervision of their security in house as opposed to outsourcing it. a lot of color. a lot of amazing color as to what they've gone through. >> the ceo is saying it took him a while to realize they hadn't just stolen the data, they'd erased it, rendering the entire computer system unusable. what i really hope is this isn't the point we look back in the diary and go i wish we'd upped our game and prevented other institutions having their data
9:15 am
wiped. of course, the big one would be if one of the banks had its data wiped. it's still astounding to me that this is possible or actually what went on behind closed doors when they -- actually the decision to release the film for them to go through the process of saying we're not going to release it then the president criticizes them and says i wish you'd spoken to me. then google and microsoft say they'll put it online. that's an interesting story. it didn't appear that ultimately this country had bended to a terrorist threat. >> but the upshot is people got to see the movie. we got to see the movie. it wasn't a total loss for sony. sure, it cost $44 million to make, but so far they've reaped about $18 million. >> i think it's the money, it's the principle. >> it's both. >> i see a report that south korea may be attempting to drop copies of "the interview" over north korea. >> other reports they're going to try to get copies into north korea via balloons.
9:16 am
the story is the gift that keeps on giving. >> and there's this weird theory that perhaps it was a disgruntled sony employee. although, the fbi said there was no evidence to that fact. still, it's not 100% clear what is happening. >> and they still have data. the amount of information they could still disclose is unbelievable. meantime, apple may reverse its ipad woes in 2015. that's according to a new report from abi. tablet sales for apple, amazon, google all expected to finish the year lower than they were in 2013. 2015 will show improvement based on more enterprise users, differentiated products among other factors. it would be the first annual decline for an ipad ever since that device was introduced. >> also what was interesting about that report is they cited the market share. when it comes to the systems, the android-powered tablets are gaining share. 54% of branded tablets run on android. that's in comparison to ios,
9:17 am
which is 41%. interesting also that you mention the ones that posted lower sales. there were a few companies that posted higher sales of tablets. samsung, microsoft, for instance. and lenovo and dell. >> the elephant in the room is whether the ipads next year will catch on with corporations and this deal they've got with ibm to presumably -- so you're going to have products come out. i think already some people are beginning to see some of those applications with the simplicity that apple has but with the deep knowledge of legacy systems and how corporations work that ibm can bring to the table. i think that potentially is a game changer for them. you were talking about ibm being a bad performer so far this year. i would just point out that ibm's market cap at the moment is roughly equal to three times the free cash flow that apple has. just saying. potentially. >> well, this report did expect a rebound, right? to your point on business sales, 16% for tablets overall. >> it's almost like a new
9:18 am
category if you can take it into corporations. that's the prospect the ibm deal holds out. >> is it phablets that were killing tablets? the idea that the six-plus was such a hot seller. bigger screens, why use a tablet? >> as far as the stock goes, apple is going to close out the year up some 40%. even though it got close to 120, somewhere around thanksgiving, 119.40 was the high. it's not going to close the year out on an absolute high note. >> you want to show you're holding it. >> when we come back art cashin is going to give us his take on the year that was. a lot more "squawk on the street" from the nyse straight ahead. gage shouldn't be a problem your credit is in pretty good shape. >>pretty good? i know i have a 798 fico score thanks to the tools and help on experian.com. kaboom...
9:19 am
well, i just have a few other questions. >>chuck, the only other question you need to ask is, "what else can you do for me?" i'll just take a water... get your credit swagger on. become a member of experian credit tracker and find out your fico score powered by experian. fico scores are used in 90% of credit decisions.
9:20 am
9:21 am
the cdc is declaring a flu epidemic. warning residents to exercise caution in public spaces is and use good basic sanitary habits. in the past years, the flu has hit states on the west coast hardest. because of mutations, it's not covered by the flu vaccine, even though it may miss the dominant flu strain this year, experts are continuing to urge people to get a flu shot which seems a bit strange. i guess that's what they do. >> we're about eight minutes before the bell on this wednesday. let's bring in art cashin fresh off an exciting day yesterday. good morning to you. >> good morning. >> your new year's poem has
9:22 am
already gone viral. you paid tribute to everyone all those we've lost during the course of the year. but the most important stands that 2014 was okay not really a wow, until a santa claus rally took us through 18-thou. >> that's right. it was a rather uneven year. it was a good year. we had that ebola scare in october. several downdrafts. but the santa claus rally did come through. we'd like to close above 18,000. that'll make it a good year. hopefully 2015 will also be. >> does it feel like a good setup for '15? >> i think it does. i'm a little concerned about the middle of january, but the beginning looks okay. unless oil spirals out of control and/or geopolitics pops up. >> you even point out kim kardashian's assets. impressive, pop culture included. seriously, one thing you pointed
9:23 am
out this entire year to us is the low yields on u.s. treasuries, which has been one of the stories of the year. does that dynamic change in the new year? >> well we'll have to wait and see. you know initial claims were up. not substantially, but they were up. there's some concern that the drop in oil prices may lead to increases in unemployment in some of the shale areas. doesn't look like this has popped up much so far. the downside to oil is both relative to unemployment and to capital expenditures in the oil industry. and that could be a drag on the economy. so as much as it's going to favor the consumer, there is a downside to lower oil. >> why call this economy roar ahead with animal spirits next year? if they launch more qe around the world and push those interest rates lower and lower, surely at some point people are going to forget a lot of the pessimism and the economy could rock, could it not? >> but it's the animal spirits that we're lacking.
9:24 am
the rates are low. they're phenomenally low. there's money theoretically available. >> do you not think animal spirits will at some point be alive to a greater extent? >> i think it's going to take a while. i think people were so emotionally bruised by the great recession that they're having a very tough time getting back in the game. that's why people are so risk averse that things have started slowly. >> it also goes back to it the rinehart. so much damage from such a deep great recession takes years and years and years to recover, not to mention there's still a lot of pain being felt overseas in some of these economies like europe and china, which remain question marks. >> absolutely. >> i think what's going to be an interesting story, maybe you agree, the way -- the percentage of gdp has split between corporate profits and labor has never been this far apart since world war ii. will we see wages start to bubble? will the average joe start getting aget ing a piece of what obviously the wealthy in this country have
9:25 am
been enjoying for the last couple years? >> i don't see that happening immediately. perhaps in the middle of next year you might begin to see wages moving up. so far again, with the lack of animal spirits, it's really not popping up. >> but the flip side of what carl is saying is the corporations have never been as strong or as profitable. however much we might find that a controversial state, that's why the stock market does so well and why the stock market will continue to do well despite the inequality surely. >> well, it's certainly an important support and will continue to be. my only concern is we're up here with record profit margins. corporations are being run highly efficiently. i'm not so sure how you can substantially improve on that. so we'll see. but i'm optimistic for 2015. >> art, your tie has corks on it. enjoy tonight. >> it has corks on it and it has -- >> and the champagne bottle. >> right. >> we'll see you next year.
9:26 am
>> happy new year. >> the final opening bell of 2014 is just minutes away. female announcer: it's time to make room for the new mattress models! during sleep train's huge year end clearance sale, get beautyrest, posturepedic even tempur-pedic mattress sets at low clearance prices. save even more on floor samples, demonstrators, and closeout inventory. plus, free same-day delivery, set-up and removal of your old set. why wait for the new models? sleep train's year end clearance sale is on now! ...guaranteed! ♪ your ticket to a better night's sleep ♪
9:27 am
9:28 am
9:29 am
the 2015 glasses already on the heads of traders down here. you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in just about 45 seconds as we close out 2014. barring a disaster it's going to be three consecutive years of double-digit growth for the s&p and have ended the year without a four-day losing streak on the s&p. we're up 208% from the bear market low, basically tripling. the fourth quarter, with all its drama with ebola, with russia, with the ruble, with oil, is going to be the best quarter of the year. three consecutive months of gains. >> and december also is traditionally a very positive month for stocks. ending higher. >> there's the s&p at the top of your screen. the final opening bell of the
9:30 am
year down here at the big board. cast members of broadway's "on the town" to celebrate the 70th anniversary of that production. over at the nasdaq times square alliance, an organization dedicated to improving and promoting times square which is going to be busy busy busy tonight. keep our eye on some names. boots alliance is making some news, having finished that merger. >> some debate to do whether it's walgreens boots alliance or boots walgreens alliance. they should be trading over on the nasdaq. now a holding company, of course, with one of the largest pharmaceutical chains in this country. a prominent chain in boots across europe. with alliance you have the wholesale operation. they say they're now serving 180,000 pharmacies and they would hope to have a lot of buying power. still looking for a ceo after a lot of the walgreens guys did
9:31 am
the deal and did exit in this country. not, of course, a tax inversion although it wouldn't surprise me if further down the line you find the way they do their accounts falls in line with the tax inversion. walgreens boots alliance. >> we forgot how big of a story inversions were this year, actually. it was a big deal. walgreens found itself in the spotlight in some of those political back and forth, actually sided with regulators and decided not to invert. i'm just watching energy shares open at the bottom of the market. that relates to the fact that we're seeing another move lower in brent crude and in wti. new lows. >> unbelievable. big watcher of a gas its prices says we are closing the year $1.06 cheaper than we began it. the average currently about $2.26. that's $1.40 off the spring
9:32 am
highs. a lot of people talking a $2 average for 2015. >> that would be great. >> we should mention the white house has indicated yesterday it's going to further relax some of the export bans so some of the lighter distillates are able to be exported. i can't see that immediately feeding through on headline figures coming out. we'll cross there in a moment. >> interesting to see what people are painting the tape with today. what would you buy on the final day of the year if you were running a fund? kohl's, delta airlines bed, bath, and beyond. stocks with double-digit gains for the year. trok tractor supply up about a percent or so. southwest airlines the best performer of the year, up 124%. >> american airlines has been the best performer in the nasdaq 100, up more than 100%. i think it's 115%. consumer discretionary.
9:33 am
you mentioned kohl's and some of the other names. in focus and a key for the next year to see the trickle effect of those lower gas prices. you mentioned staying around $2. that should help put money in the consumers' pockets. not just that, but 21 states and washington, d.c. are hiking minimum wage starting january 1st. that should also put more money in consumer pockets. in fact, the economic policy institute says they are likely to spend it especially at the lower income level that gets the minimum wage and it should put more than $1 billion into the economy. >> although there will be jobs lost presumably. >> because of the restaurants, you mean managing costs? >> there are a lot of people who say companies can't afford it and jobs will be lost. >> perhaps. that's the glass half empty. we should note in terms of jobs we did get initial jobless claims. they came out a little higher than economists were looking
9:34 am
for. perhapsing perhaps looking for any sign it's impacting those states ohio, texas, where we would see more layoffs. didn't see a whole lot of that. in terms of job creation, 2014 was the best year in years, right? since the '90s in terms of job creation, when you look at the headline number at least. >> speaking of which, the company that specializes in building housing for oil service workers, getting a little bit of a rebound today. of course, they warned earlier in the week cutting expenses, as we are on the lookout for massive cut backs in the work force and the permean and a lot more. also, under armour signing andy murray, the u.k. tennis star, to a four-year deal worth about $23 million, 15 million pounds, as the journal says turning up the heat on adidas.
9:35 am
>> correct. under armour has been a big growth story. stock's up more than 50% this year. it overtook adidas when it comes to athletic sportswear sales in the united states. the two areas can they're focused on for growth international and womens. this andy murray deal is perhaps a big sign they're going to be aggressive when it comes to chasing after international sales. overall, reports on the sportswear business for holiday sales have been pretty positive. a note out today saying less discounts in the this space, that should bode well. >> is tennis a big category? i wouldn't have thought it was compared to nba or football or soccer. >> no one over here as big as that, but these companies are big and well rounded. it's about the advertising deals and sponsorships and putting these big players like andy murray on display with the outerwear. >> if you're able to capture that with the branding on him,
9:36 am
that's worthwhile for those four weeks. i don't know how the calculation goes. >> meantime dow is up about 35. s&p, 2083. let's get to bob for one final session on the floor. >> hello, guys. happy new year to everybody. we have a mix open here but oil has 52. that's west texas. that means, of course more pressure on the energy names. that's the weak sector here. we see the usual names. we see these all the time. they're the most volatile names in this space. all of them down 1% to 2%. i want to talk about a broader trend i see. traditionally, wall street takes off and those that are here don't pay a lot of attention. but you can see some kind of movement as people try to take advantage of people's inattention. i've seen two groups moves that haven't had a great year. bank stocks and commodity stocks. some of the big bank names have
9:37 am
had good years. wells fargo, bank of america have stellar performance, even better than the jpmorgan and citigroup. if you look at the bank etf, that's the kre, that's really flat on the year. but recently in the last couple of weeks, regional banks have suddenly started moving here. let me show you a couple of them in december here. so suntrust regions financial, pnc, huntington. these are big banks. some of them called super regionals. have been notably outperforming the big-cap names and outperforming the s&p. the s&p is only up fractionally so far this month. i think what's interesting is none of these names are particularly high priced at this point because they haven't done that well. pnc, keycorp., bb& t, it's not cheap, but it's not expensive. none of them can be said to be overpriced. i think people have started
9:38 am
picking on them in the last couple weeks at a time when nobody is paying a lot of attention. i think there's a couple things going on. obviously hopes for an improving economy. hopes for a steeper yield curve have been around for a few months that's not really materialized. that's clearly a play. one thing i think is a little bit of a concern and the reason these haven't outperformed is there's been some scrutiny in this group. there's been a big bank deal that's been delayed for a while. that's m&t bank. that deal has been around for more than a year. we've been waiting for that to close. it was again delayed. it's now delayed until the end of april. these are on regulatory scrutiny that's been going on. had this deal been approved this year as everyone anticipated, i think the bank space, the regionals bank space, would have done a much better job overall. you would have seen some outperformance. until this cloud clears up with this particular merger, and hopefully that will happen in the next few months, i don't think you're going to see a lot.
9:39 am
finally, the key point on commodity stocks terrible performers all year. many of them down 20% to 30%. a little signs of life recently. look what's happened to some of these. people trying to bet maybe the global economy will at least stabilize in 2015. guys, happy new year. look forward to being with you in 2015. >> happy new year to you bob. morgan brennan joins us from the nasdaq market site. >> good morning. happy new year. you're right. it's certainly bustling out here already today. taking a look at the nasdaq we are modestly higher today, up about 12 points. looking at the nasdaq composite for the year, we're on track to end the year more than 14% higher. that will mark three straight years of gains for the nasdaq composite. taking a look at the nasdaq 100, that's done even better. it's up 19.5% for 2014. and this reflects the rotation that we have seen happening here all year from the high beta
9:40 am
more smaller cap stocks to larger cap, safe-haven names that have become the drivers of growth for these indices this year. you can see that with the russell 2000. that reflects the shift. we've seen those small cap names underperforming the broader market all year. the russell 2000 is set to close only about 4% higher. back to the nasdaq take a look at the most heavily weighted names in the nasdaq 100. apple, intel microsoft, facebook. all of those big tech names are up big they're up by double-digit percentages this year. they account for the lion's share of the gains we've seen in the 100. also, gilliad sciences up despite the recent weaknesses. also, biotechs are up. guys, back to you. >> morgan just for the record i spoke to nasdaq yesterday because i was interested in what weighting technology has now within the composite. apparently it's 45% of the
9:41 am
nasdaq. so although it is the dominant force, the dominant sector it isn't actually the majority of the weighting, which i thought was quite interesting. when dom was running through the big gainers for last year, a lot of them are not technology on the nasdaq. >> yeah, it's certainly an interesting point. that is the case of the composite. when you look at the nasdaq 100, it's named like gilliad sciences, which is biotech, but apple, intel, microsoft, also google, those tend to be the biggest names for the 100 specifically. >> for sure. okay. morgan thank you very much. >> when we come back ibm, the worst performer on the dow for the second year running. more on what ibm can do and is doing to turn the business around. eric jackson of ironfire capital has been putting the pressure on yahoo! meanwhile. we'll get his predictions on tech when we come back.
9:42 am
9:43 am
why do i take metamucil everyday? because it helps me skip the bad stuff. i'm good. that's what i like to call the meta effect. 4-in-1 multi-health metamucil now clinically proven to help you feel less hungry between meals. experience the meta effect with our new multi-health wellness line. ♪ ♪ i love my meta health bars. because when nutritious tastes this delicious i don't miss the other stuff.
9:44 am
new meta health bars help promote heart health. experience the meta effect with our new multi-health wellness line. ♪ ♪ dow was down 55 yesterday. the biggest drop in two weeks. getting some back this morning. got some breaking news out of
9:45 am
chicago this morning. let's go to jim. >> hey, carl. happy new year. 58.3 from an expected 60. so a little bit disappointing. remember this number last month was a little disappointing as well. it's continuing that trend. the stock market came in a ill lit -- little bit under pressure. ten-year yield right now, 2.18 which is where it was before the number. this number is not a big enough deal to take the focus right now off of crude. that's what it seems like all the markets are looking at. i believe if that starts to cascade lower, that could send some shivers into some other markets. this number again is a little disappointing. the number this morning was as well with the claims number. back to you, carl. >> i'll take it jim. next up, pending home sales. jim mentioned oil prices. that's a big story today. heading lower ahead of inventory data. jackie deangelis for us this morning. >> good morning. remarkable selling pressure in
9:46 am
the pits today as we go into new year's eve. wti at 52.64. brent prices near $56. seeing a lot more selling as we head into 2015 here. two things to add to this in addition to the regular supply/demand story everyone is worried about. some china numbers trickling into the marketplace yesterday about the factory sector shrinking. that has people worried about demand going into next year. also, that inventory data. we get the api data out the night before. we saw a build, and people are expecting the department of energy to report the same thing. this is very significant. it is the first december since 2005 that we could potentially see a build in crude inventoryies in december. that's really sort of upsetting a trend that we haven't seen in many years. but again, people are going to be watching these numbers very closely. we do think we're going to stay over 50 but see more pressure in january in terms of the wti price. this brent price is really on a roll here. but probably staying over 55 today. back over to you. >> we'll find out.
9:47 am
thank you, jackie. ibm is the worst performer on the dow for the second straight year. our josh lipton is in san jose with how they might be able to turn around in 2015. >> well, ibm's ceo says that ibm has to reinvent itself as it has in the past but will investors wait around to see if this transformation actually works? ibm shares tanked this year down some 15%. that means ibm is the worst performer in the dow. unfortunately fibm bulls, that disappointing performance is nothing new. one criticism of big blue that you'll hear from analysts who cover the company is that it initially missed just how disruptive cloud technology would be to its traditional businesses. they're now looking to change course at ibm by growing the
9:48 am
cloud business organically as well as making acquisitions. ibm's cloud business is scaling quickly, though at $4 million, it's still a relatively small part of their total revenue. so what's the bull case for ibm? cantor's bryan white is telling his clients to buy ibm. he says the stock isn't expensive, trading at about ten times forward earnings. also, the number of analysts on wall street rating ibm a byeuy is now at a 20-year low. and he thinks an investor could even get involved and shake up the company. ibm certainly an iconic global brand, which has reinvented itself in the past. the question now is whether the ceo can execute another transformation at big blue or she does risk disappointing her shareholders again in 2015. carl back to you. >> you mentioned you might get a shareholder, josh. the market cap is $158 billion. it's tiny from where it was.
9:49 am
if you were an activist what would you want? what are the valuable bits here? i mean we were talking earlier about the deal that they've done with apple to try and generate apps for apple products, to try and energize sales. presumably that cannot be their main business moving forward. >> right. i think what ibm's clear strategy is now trying to skate toward those faster growing areas. that's what has the bulls excite about this company as they move towards cloud, towards big data analytics. the question is can they grow those businesses fast enough to offset some of the other more traditional, slower growing lines there, simon. >> all right, josh. thank you very much. josh lipton out in san jose talking big blue this morning. when we come back the 2015 playbook in consumer names with the dow up about 26 points. "squawk on the street" will be right back.
9:50 am
9:51 am
female announcer: get beautyrest, posturepedic even tempur-pedic mattress sets at low clearance prices. save even more on floor samples, demonstrators, and closeout inventory. the year end clearance sale is on now at sleep train. ♪ your ticket to a better night's sleep ♪
9:52 am
on this final trading day of the year we're breaking out the 2015 playbook. looking at how you can make
9:53 am
money in the coming year. this morning, we're taking you inside what consumer staples, food beverages, and household products companies are going to do in the new year. take a look. growth was hard to come by for consumer companies this year but their stocks held up relatively well thanks to m&a, cheap gas prices and their overall defensive appeal. here's what's in store for 2015. finally a recovery for the low to middle-income consumer. from walmart to mcdonald's, the two-speed recovery has hurt consumers at the low end of the spectrum. thanks to early signs of rising wages and cuts in gas bills, that recovery should pan out. more pain abroad. between the stronger u.s. dollar, set to get even stronger a recession in japan, slowing china, and deteriorating economies in hot spots like russia and venezuela, those highly exposed multinationals
9:54 am
think avon colgate, coke pepsi, and mcdonald's, will have headaches from their overseas businesses. as the big boring consumer names search for growth, general mills buying annie's, that was just the beginning. old school food and beverage giants just cannot keep up with those younger, organic, and healthy rivals. there will be more mergers acquisitions splits, and even spins spinoffs as a result. many are expecting warren buffett and 3g to swoop back in for a sequel to heinz. that remains the big question what does warren buffett do with his cash? if you talk to analysts in this sector of consumer staples, they say there are a lot of ripe candidates, not just for buyouts, but for activists because that top line sales growth has been hard to come by. still, the group consumer staples is relatively expensive because it has been popular
9:55 am
along with others like utilities and telecom. it will be interesting to see whether that rally can continue. these companies are really going to to start putting up growth if they're going to be good stocks. >> saw a list of m&a, cramer's wish list for next year. white wave was one. >> they've been doing deals of their own, bulking up themselves, buying other smaller, organic brands. but i agree. that was one of them. the other one on the list was annie's. that was scooped up by general mills. >> and will coke finally make the move with green mountain? >> you mean go all in buy it out? >> yeah. >> there's speculation. also monster beverage. for now, coke is just doing these big bets getting a piece of the company, working on projects and collaborations. but coke is going to be a tough one. they have been struggling with the secular decline in soda drinking, which only got worse in 2014. >> my question would be whether they can reverse the decline in the toilet roll. i don't know if that's something you haven't looked at.
9:56 am
>> i haven't looked at that. >> when we come back tom lee of fund strike global advisers on his market outlook for 2015. guess what? he's bullish. plus, ted leonsis, owner of the capital capitals and wizards. we'll talk about valuation and a lot more later on this morning. ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ the evolution of luxury continues. the next generation 2015 escalade.
9:57 am
9:58 am
9:59 am
good wednesday morning. happy new year to you. we take you live to tokyo, where they are about to ring in 2015. you're looking at a live shot of that city as it counts down to the start of the new year. revelers are going to release those balloons in front of tokyo tower. meantime, we are about 14 hours away from our own celebration here on the east coast of the u.s. what a year japan has had. what a year -- you're not going to take away that shot are you? ten seconds before the big moment. >> the countdown is just beginning. >> 7% gain on the stock market. >> unbelievable nikkei performance. five, four three, two -- i
10:00 am
assume this is not on a delay. maybe a slight delay. >> four five six-second delay on the satellites? >> there it is. >> happy new year tokyo. >> that was worth waiting for. we're going to have our shot here in just about 14 hours. >> love it. >> in the meantime diana olick has been patiently waiting. >> pending home sales up just barely in november 0.8% from a down wardley revised october. a little bit better than expected. pending home sales are an indicator of future home sales in the next one to two months.
10:01 am
these are signed contracts from november. pending home sales still up 4.1% from a year ago. that's the third straight annual gain and biggest annual jump we've seen since august of 2013. the realtors are saying those high rents we've been talking about so much are beginning to push more buyers into the market. regionally, pending home sales were up 1.4% month to month in the northeast. down 0.4% in the midwest. up 1.3% in the south. and up 0.4% in the west. november saw some of the lowest mortgage rates we've seen all year. it really didn't bump the numbers up that much. essentially flat on the november reading. but hey, a gain is better than nothing, right? more online of course. simon? >> quick question for you, diana. i was reading an article on cnbc.com that used quantitative tools that hedge funds use. the last time gdp was above 2% and the ten-year treasury yield was below it2.5%, home builders
10:02 am
outperform on that kind of environment. does that mean that 2015 is a good setup for home builders, which have lagged this year? >> well certainly looks like it might be. i read that article as well. very interesting. we have to look though to historical data but this has been a completely unique housing recovery because we came off a completely unique housing crash. the home builders are still building at very very low levels. they're concentrating on higher-end product. we could see them definitely do better in 2015. the question is, does the overall housing market do better in 2015? most analysts we talked to say they expect it to kind of move sideways. but the builders got to put up more houses because the demand is there. >> okay. diana, thank you very much. happy new year diana olick, covering housing from d.c. okay. the big question s how low can you go? both west texas and brent moving
10:03 am
sharply lower. jackie deangelis is watching. i can't believe it. west texas crude now, 52.72. it just keeps going. >> it's been a wild morning. that's exactly right. especially on a vacation week a holiday week when volumes are low, you wouldn't expect to see this kind of selling pressure, but it does show you the kind of momentum that crude oil has as we're going into the new year. that's pretty significant. of course, we're going to get that d.o.e. inventory data at 10:30. i want to take a moment to talk about something else they're discussing. they're talking about saudi arabia as well. obviously the world's largest exporter. a lot of eyes on saudi and opec with these prices declining, saying it's not going to cut production. very interesting news overnight with king abdullah being admitted to the hospital for tests. he's 91 years old, reportedly. the talk the last ten years since he's been in power has been what's the succession plan for him? he did name a successor in 2012. it's his half brother, who's 13
10:04 am
years younger but quite old himself as well. now people are saying what's the succession plan for the succession plan? middle eastern relations obviously very important for the crude price. i lived in bahrain in 2010. we had the fifth fleet there. obviously the gcc countries and saudi have always done very well with the united states. what's being talked about on the sidelines here is if saudi is pushing the oil price down because they're worried the u.s. has been soft on iran because of the nuclear issues and they're trying to put pressure there. this is a very tense situation. a lot of people are watching it closely and wondering what will happen. back to you. >> thanks for pointing that out. very interesting. we'll continue to follow it. so how do those fresh new lows on energy affect the broader market? joining us now, tom lee of fund strated a advisers. any discernible link here with energy? is it a good sign in your view that the stock market has been
10:05 am
able to rally in the face of new lows for crude and brent? >> definitely good news. when oil first fell there was confusion. but i think the market is making the right conclusion which is the drop in oil is a boom for consumers. especially for developing countries. very good for the stock market. >> we addressed this a bit yesterday. why haven't we seen a more noticeable impact on consumer companies, whether staples or discretionary? in terms of their results and commentary about the overall environment, why aren't they seeing a bigger boost from oil? >> i think investors are staying away from consumer cyclical stocks for a reason. one, i think they generally aren't embracing the good news that's taking place. there's been a lot of jobs growth. i think there is a consumer credit cycle coming. i think the second issue is that consumer stocks have led for, you know, six years. all the sudden we're pretty weak in 2014. i think investors are just thinking there's new leadership
10:06 am
coming. i think we should be contrarian and actually by consumer cyclical stocks next year. >> tom, you're saying for the overall market something very important. i know you're a bull, but you're saying that next year is going to be better than this year. at the moment we're looking at total returns on the s&p, including dividends of 14.9% for this year. you think we'll do 4% better than that a 19% return next year? how do you justify that? >> well, you know we're getting into the realm of where investors really have to start embracing the ability of the market to rerate. in other words, i think one thing i keep reading about is people saying, oh well the pe's at long-term average and therefore the market can only go up by earnings. if you look at bull markets historically, as you move and mature? in a bull market, pe expansion is what really takes root. it's about 1 1/2 turns a year. if you think earnings growth is going to be 9% you're going to get almost an equal benefit from
10:07 am
pe expansion. almost every bull market since 1900 has demonstrated this. i think we're going to be surprised. it's going to be an uncomfortable bull market, but i think investors will need to get used to that. >> people thinking about 10% the other day, tom, thinking about what energy has done thinking about what housing appears to be doing. aren't there some echoes of not only the late '90s but even things that led us into the financial crisis? >> i mean i heard his commentary. i think what we should think about is investment spending is still at 50-year lows. capital stock age, like the age of equipment, is at 30-year highs. consumers have record wealth but record low leverage. i think we're really looking at a boom time that could be taking place. maybe closer to the early '90s, not the late '90s. as you look back, you know, in the early '90s, it was six, seven years of consecutive double-digit gains for the market. you know significant pe expansion. it was very good -- >> tom. >> yes? >> let's just focus on what you're saying here.
10:08 am
you believe the multiple will expand. you believe people will be willing to pay more for a given income stream on every stock, or on the average stock. that surely requires that people are more confident in three months' time than they are now, more confident in six months' time and so on through the rest of the year. do you see that confidence growing? because a lot of people would argue people will be less confident potentially in six months' time if we've already put, you're suggesting 10%, on the market. >> it's a good point, but think about this. visibility is what gives people a willingness to pay more for a given stream of earnings, as you mentioned. today what we have is a plethora of head winds. we have lower oil, europe china. we got a lot of uncertainty. as that uncertainty diminishes and we start to see the benefit of the jobs growth, i think housing is going to really strengthen next year. we got the benefit of lower oil. i think companies with good balance sheets and better visibility will start to be a bit more aggressive. that's going to allow investors to say, look, you know what the
10:09 am
market, even though it's at, you know, 16 times, i think we can start to think about 16 times next year and then also boost the multiple. >> i know you like technology tom, so i wanted to ask you about these valuations we're seeing. not necessarily in public stocks but private ones. you know the latest air b&b got a 10 million valuation. those are numbers we haven't seen since the '90s. does it have any implications for tech stocks that do trade publicly? >> i mean, kind of going backwards, it's without question technology stocks are really attractive place to be the next three to five years. they're going to rerate. they're traded at discount to staples. that doesn't make sense to me. technology is a really interesting sector because it's absorbing other industries. the growth in social media and the googles of the world is really because they've taken over media space into technology. i think the ability of that
10:10 am
sector to redefine its revenue and produce earnings with very little capital means the sector valuation should go up. >> tom, your bullishness drives some viewers absolutely crazy, but you've been on the right side, at least so far. happy new year. see you in 2015. >> yeah, happy new year to everyone. thanks. >> meantime indonesian rescue teams say they may have found the wreckage of the airasia jet that crashed on sunday. bad weather is slowing down recovery efforts. nbc's katy tur is in indonesia. >> reporter: another tough day here in surabaya indonesia. it's nighttime now. day four of the search is in the books. they found even more wreckage, even more bodies. unfortunately, no survivors. still relatives say they are holding out hope for a miracle, and they're not going to give up on it until they know for sure that nobody on board survived. but officials say it is not looking good. they said earlier today there was reports earlier today that sonar images confirmed the bum eded the bulk of the wreckage underneath the
10:11 am
sea. the ceo came out and said that is not true they do not have those sonar images or confirmation they've found the flight. he said everybody is working very hard to get though this point. they're trying to find it as quickly as they can. weather has certainly been a factor. it was bad out there today. it's raining here now. they're expecting the weather to only be bad again for the next few days. as for the charity flight we were talking about yesterday for those families to fly over the islands so they can say a prayer for their lost loved ones in the last known location of that flight, well that has been canceled. officials say they just believe it's going to be too hard for the loved ones involved. carl, back to you. >> nbc's katy tur in indonesia today. let's head over to dom for a market flash. >> if your new year's celebration involved takeout or delivery, this is for you. shares of grubhub are up today. analysts put a $43 price target on the stock saying the company could become a possible
10:12 am
acquisition target. back over to you. >> thank you very much. up next on the program, expedia seeing gains of more than 20% so far this year, but taking a sharp drop lower this week. we'll discuss what's ahead for those and other travel agents. plus u.p.s. and fedex pulled out all the stops to make sure there were no delivery holdups this year. we'll ask if they spent too much money to pull it off. these are live pictures of north korea ringing in the new year. "squawk on the street" will be right back. about that. but your erectile dysfunction - that could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved
10:13 am
to treat ed and symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision or any allergic reactions like rash, hives, swelling of the lips tongue or throat or difficulty breathing or swallowing, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use and a free 30-tablet trial.
10:14 am
bulldog: the red tags mean save up to 40% on clearance mattresses. get up to 48 months interest-free financing on tempur-pedic. pup: i found a red tag! [laughter] bulldog: mattress discounters' year end clearance sale ends soon! first class. priority mail. certified.
10:15 am
international. and the mail man picks it up. i don't leave the shop anymore. [ male announcer ] get a 4 week trial plus $100 in extras including postage and a digital scale. go to stamps.com/tv and never go to the post office again. a 22-year-old name is getting sued by united airlines and orbitz. why? the company he founded is skiplag.com. according to the claim, it allows consumers to exploit pricing inefficiencies through hidden city fares or buying a connecting flight but not flying to the final destination. united and orbitz argue booking flights with clear intent to not fly the full duration is against the rules. i did not know that. >> whose rules? >> exactly. what rules? can they force you to fly the final leg? >> it's for a judge to decide i guess. i just went to the website. if you go on it there's a little banner on top that says please support our legal fund because united and orbitz
10:16 am
recently sued us saying we need to remove the results and they're getting in the way of saving you the consumer money. is it innovation or illegal? we'll find out. >> very similar argument to uber in many senses. the travel battle continues for expedia as some analysts think the company could miss its fourth quarter consensus. joining us more to discuss is a travel industry analyst from atmosphere research group. you've probably seen these reports that came out from two houses yesterday. two analysts suggesting that expedia because of the patents within the travel industry may have difficulty moving forward. what's your analysis? >> i believe expedia is in a good place. as some have noted, these current earnings and forecasts don't anticipate the integration of what if. there's some possible slowness in air, but airline travel accounts for only 8% of expedia's business. they're growing in hotels.
10:17 am
i think they're in a good place, and we'll continue to be a leader. >> what is what if? >> what if is an australian based online travel company with extensive presence in the asia-pacific region. that will help expedia grow not only in the hotel area, but other parts of its business in that region. >> you know, henry, if i look at how the stocks have performed this year -- and i know you're not a stock guy, but yourl be aware of the cycle in the business and what they've achieved. actually priceline for this year is flat. trip adviser is down 9%. expedia has done well up 23. orbitz has done reasonably well up 16. do you think that momentum is now over for the industry overall, for building those very big capitalizations, market caps and value as we saw in particular with priceline? >> no because if you think about it online travel is around 40%, 45% of the total travel spend. it's a $1 trillion industry. there's enormous upside growth
10:18 am
not only in the u.s. but also internationally. companies like expedia, priceline, orbitz, and others are coming into this space. it's not going to be entirely smooth sailing. amazon is planning to enter the hotel space. and will pose competition. but there's plenty of upside growth in online travel. >> i'm curious as to your opinion about the airlines themselves. southwest airlines as we've been saying best performer on s&p so far this year. in general, they've had a pretty terrific year. jet fuel is going their way in terms of prices. what's the scope for them raising prices even more next year? and are they going to continue to be a good investment? >> well, i think that the airline industry from the u.s. side will continue to be very very strong. as you noted, jet fuel is going down. demand remains strong. capacity growth will be limited. so i think that airlines will be better. and while we don't like those fees, the revenue they're generates from ancillary products like extra leg room
10:19 am
seats and checked bags and so on continues to grow. that's high margin revenue. so i'm very optimistic for the airlines as a whole at least from the u.s. >> let me come back to the central premise that you had there, henry, the world travel market is increasing and therefore underpenetrated by online travel agencies and therefore there's a lot of money to be made. the growth market is china. chinese traveling elsewhere around the world is already the biggest travel market and it is expected to grow. i see estimates of three or four fold over the next five years. do you think these guys are -- i know priceline has made efforts. you see the cruiseline industry making efforts to get a slice of that. do you think they can really grab it in an alibaba sense, or do you think they're going to miss out on a major dynamic? >> i think that's probably challenge number one frankly, for the ceos at companies like expedia and priceline group. you know to have a strong
10:20 am
presence in china is critically important. expedia, of course has a stake in elong. as you noted, there are very strong players in china, and china is going to be a very intense, competitive battle. i think that will definitely be an area for focus. >> come on henry. do you think they'll manage to do it? do you think they'll be able to grab it in an alibaba sense? >> it's going to be an uphill battle for them. it will not be easy. expedia is trying. not sure if they're going doing a good enough job. >> good to meet you. thank you for your analysis. >> u.p.s. and fedex pulling out all the stops to make this holiday shipping season a successful one. looks like it worked, but at what cost? morgan brennan has more details on how much they spent. morgan? >> thanks. that's right.
10:21 am
we got data today indicating both u.p.s. and fedex were able to deliver the vast majority of those last-minute express shipments. that means they avoided a repeat of last year when both of the parcel carriers missed their guaranteed christmas deadlines on millions of packages because of a combination of bad weather coupled with a spike in last-minute online shopping. so according to tracking software developer ship matrix, u.p.s. and fedex both drastically improved their on-time performances for those last-minute packages delivered on christmas eve. taking a look at those numbers, u.p.s. got more than 97% of its express orders out within the promised time frame. that's compared to 83% in 2013. fedex, nearly 98% versus 90% last year. and taking time commitments out of the equation the performance was higher. it was 99% for each of those companies. so of course what made all of this possible hundreds of millions of dollars worth of
10:22 am
network upgrades more automation, more workers, more operating days more aircraft and delivery trucks. all things that we personally went and visited their hubs and saw for ourselves. also, of course, holding to the caps on how many last-minute shipments these companies were willing to take from retailers early last week. so analysts had for the most part given all of that spending expected a strong performance for the carriers this christmas. the question now, of course will be how much did all of these capital and operational expenditures affect the bottom line. as some experts are suggesting to me was all that spending over and above what was actually needed for the season? but of course we're not going to get all those answers until we get the fourth quarter earnings from both companies. u.p.s. in february. fedex in march. looking at both of those stocks both trading higher today. they're both on track for gains for 2014. u.p.s. up 7% for the year. fedex up about 22%.
10:23 am
back to you. >> our resident shipping expert here. morgan brennan at the nasdaq. thank you. when we come back, minimum wage going up in several states starting tomorrow. could have big implications for small businesses and some fast food franchises. nasdaq has gone positive again for december. back in a minute.
10:24 am
10:25 am
10:26 am
we are cutting some of our losses on oil. currently at $53.32 for west texas. still, crude heading for its biggest slump in six years since 2008. that has been a major story, of course, of the year. lower on gasoline. also slightly lower on gold which staged a recovery yesterday. want to quickly mention where we are on walgreens boots alliance
10:27 am
which trades for the first time as a holding company with those three separate parts. i wanted to just clarify that the new company is domiciled in the u.s. and headquartered in deerfield, illinois. though, still run by the new swiss management, the part they took over, the boots alliance part coming in albeit as a temporary ceo. >> straight ahead on the show the tech outlook for 2015. will the apple watch be a hit? those questions and more after the break.
10:28 am
10:29 am
10:30 am
welcome back to "squawk on the street." i'm jackie deangelis. the department of energy out with its inventory number for last week. we got a drawdown of 1.8 million barrels barrels. this conflicts with what we saw from the api last night. traders saying they're not really reading into this number because there's a lot of gamesmanship that goes into the ends of the year with crude storage as a result of tax purposes and tax shifting. the fact we have a drawdown here doesn't necessarily mean we're seeing more demand here. it could mean we're moving crude offshore so it doesn't show up on books. but we are watching prices. 53.61 right now. we are rebounding off of session lows. brent is staying in the same range. 57.38, guys. back to you. >> thank you very muff.
10:31 am
be it the apple watch or alibaba, 2014 was a big year for tech. as the year closes out, what does the outlook for 2015? who better to ask than eric jackson? joins us this morning from toronto. one quick note eric is long both yahoo! and alibaba. good morning to you. we know you're long yahoo! and have been for a while from that amazing carlson piece in the "new york times" magazine that basically leads with your efforts to get a turn around going over there. what kind of grade would you give it so far? >> geez you know obviously you can't argue with the price. $51 is a heck of a lot higher than it was at $15 when marissa mayer came in. but i think, you know, not to be greedy but i think yahoo! shareholders want a lot more from marissa mayer. i think there's a good chance that if she makes the right moves in this coming year this is a stock that could go to $80 a share, which would be shockingly high to a lot of people who bailed out of the stock earlier on. but all the possibilities are
10:32 am
there. if she spins off the asian stakes that she has in a tax-free way if she shows marginal improvement in the yahoo! core business you could go from an implied value of negative 7 billion for the core business today to something like $15 billion, which is more appropriate. so it's all right there for the taking. i think she can be the hero if she makes the right moves. >> so we're going to throw a lot of names at you. one that investors are wondering about is samsung. what happens to samsung next year? they're getting hit on the high end. competition from apple. and hit on the low end, competition from some of the chinese producers. >> yeah i think they're really stuck in the middle. i think they're really facing a difficult road again in 2015. as was 2014 for them. and really trying to figure out what is their place and whether they're going to stay in the middle, go high end, go low end, try to do it all, and i don't think they've come up with the
10:33 am
answer yet. i think the other company that is facing a really challenging 2015 coming up is actually google. you know, a couple years ago, we thought that both facebook and google were going to face difficulties in struggling with this secular change to mobile from desk top. facebook obviously made the leap with all the the app install adds. i think there are real question marks facing google in their business. i'm hearing chatter there's hiring freezes in effect at google. and i think a lot more questions will arise in 2015 about how really google is going to position itself in the world of mobile as the year goes on. >> eric what about apple? what do you see inside apple as you look at it now? with all the activity that we had this year with the beats acquisition and so on. you suggested to one of our researchers that you think apple be make another big acquisition and will surprise a lot of people. what sort of acquisition do you think it would be?
10:34 am
>> i think it's going to be significantly bigger than $3 billion. so it's going so shock some of the apple purists who have forever said this is a company that only makes a couple hundred million dollar acquisitions, it's not in their dna to go out there and do stuff. i think they've got so much cash, even after they've returned 100 billion already to shareholders through buy backs and dividends, that they really need to and will start to think about how they could use that cash to really supplement their business and fill in a lot of holes. >> so what sort of business would it be? i mean, i mentioned earlier on the program, ibm has a market cap equal to three years free cash flow for apple, but they wouldn't buy ibm, would they because that's too complicated? >> something like spotify would fit right into what they're already doing with beats and with trying to kind of resurrect kind of the next version of itunes and wouldn't be that expensive. i could see them doing something like that.
10:35 am
it might end up being more than what they paid for beats. i think a more transformational acquisition and one i've been banging the drum on for is tesla. they're going to be heading down the road of doing more and more in the car. they're already extending their software to cars. i think it would make sense, and i think it's something that's perfectly kind of reasonable to expect steve jobs would want to go into actually designing the full-fledged car, the way tesla has, bringing elon musk into the fold. i think a lot of investors would be excited if they made a move like that this year. >> eric fred wilson a well-known investor, says the social media aspect of the internet is essentially over because all of these platforms are essentially mature. not a whole lot of innovation. what does that mean for a facebook or more specifically a twitter in 2015? >> well i think there's always chances for renewal and new surprises. in some ways you look at a
10:36 am
snapchat now, is that social messaging, social networking? it really is something different. i think in 2014 we came to look at it in a much different way, and it's really matured. i think it has a lot of potential to grow from here. so i think that there's going to be lots of opportunity for new companies to come out and maybe they get mischaracterized as, oh, this is just another pass at social networking. i think facebook and twitter also have a lot of opportunity to continue to grow. facebook's done a great job of sort of defensively acquiring these other companies that might usurp their position like whatsapp and instagram. all the talk of twitter needing to facebook themselves i think they need to continue being twitter. i think dick costolo stays on as ceo there. i think there's no one else who can do a better job. i think they'll look to do
10:37 am
acquisitions to supplement their core business. i would look for them to make a move into the messaging space. >> interesting. eric, just finally, it's going to be hard to top alibaba in terms of ipos. certainly size. but what are you looking for next year? uber? so many exciting companies. which is going to be the ipo of 2015? >> i think it's going to be uber. i think it comingses out at something like an $80 billion valuation. gopro, we heard the chant. we're not a camera company, we're a media company. as uber comes along, we're going to hear more and more we're not a taxi company, we're a logistics company. people are going to get excited about the market they face. i think air b&b should have a mega 2015 ipo. watch for those two this year. >> eric, good advice. good insight. you've got a pretty good record so far. happy new year to you. >> thanks guys.
10:38 am
>> a wave of states are raising their minimum wage levels lifting the pay of more than 3 million workers. kate rogers has more on the implications back at hq. >> good morning. that's right. the new year will bring higher wages to some 3 million workers across the country. that's thanks to annual cost of living increases to the minimum wage, ballot initiatives passed during midterm elections, and action taken by state legislatures. the current federal minimum wage is at $7.25 an hour. after these hikes kick in it will be around $7.75 an hour. some of the notable states include massachusetts, which will have among the highest minimum wage increases at $9 in 2015. also, washington state, they'll have the highest rate in the nation as of the new year at $9.47 an hour. now, states with hikes on the way, thanks to those ballot measures and midterm votes include arkansas, connecticut, hawaii, maryland massachusetts,
10:39 am
nebraska, rhode island south dakota, vermont, and west virginia. new yorkers, they'll get their increase today december 31st. now, small businesses will feel these increases, critics argue, but so too, will the nation's 770,000 franchise store fronts employing 18 million people across the country. franchises, especially those in the fast food industry have been caught in the cross hairs of the national minimum wage fight thank you fight. the top five biggest franchises in the country likely to feel this pinch, subway mcdonald's, kfc, burger king 7-eleven. all franchises will be impacted in some way and that 85% of their membership believe changes will have a, quote, negative impact on their franchises. back over to you. >> thanks very much. that national average going above the federal minimum wage. up next on "squawk on the street," what's ahead for hedge funds and managers like bill
10:40 am
ackman in the new year. we break out the hedge funds playbook for 2015 when "squawk on the street" returns.
10:41 am
10:42 am
10:43 am
dow is up 44 points. take a look at energy today. in the red once again as oil prices fall to their lows of the year. earlier this morning, dom chu is back at hq with more on that. >> carl, perhaps it's appropriate to use our last sector to wrap up one of the biggest investing themes of the year. that's the slide in energy prices and the stocks that go with them. that trend still playing out today. among the laggards in the session, rig services like nabors. also exploration and production companies like newfield and cimarex. all down by around 2% or more today. this sector is going to be a huge focus for investors in 2015, simon, as they try to figure out whether they want to weigh in and dip their toes into those types of stocks. back over to you. >> yeah, it's been tough.
10:44 am
dom, thank you. plunging oil prices interest rates, and a lack of inflation blind sided many hedge funds. kate kelly has a look at what we can expect in 2015. >> january is vacation time for hedge funds, who for better or worse are starting with a clean slate after marking their 2014 performance. but after two active years in activism, things won't be quiet for long. here are three predictions. first, bill ackman at it again. so he didn't quite prevail in his takeover of the drug maker allergan, but he made billions of dollars when it went rogue on him, so he'll be emboldened to try it again. expect him to pair with another public company for a new corporate takeover and to hire more lawyers to make sure it passes regulatory muster. zoetis could be a target to watch. second, elliott management settles up. after years of battling argentina in court and getting nowhere, the sun sets on a
10:45 am
crucial element of the country's contract with other lenders on december 31st that made matters hard to settle. after that, it'll want to get rid of its peskiest vul cherture investor. third, hedgies take on energy. with crude at less than $60, expect someone to go after the drillers over inefficiencies and spending. and maybe to urge m&a as well. managers aren't usually a welcome sight, but with the pain they're facing in the oil patch these days the companies might even appreciate it. >> when we come back it's a tradition that's more than a century old. dropping the ball in times square to ring in the new year. this year's ball is covered in more than 2500 waterford crystal triangles, weighs nearly 12,000 pounds. we're going to be joined live here at post nine by the man responsible for designing that, after a short break.
10:46 am
10:47 am
10:48 am
10:49 am
♪ almost 13 hours until the ball drops in new york's times square. that ball will be made from 2600 88 waterford crystals. tom brennan is the master artisan for the company behind the new year's eve ball for the past 15 years. he's brought us a little piece of the ball. so it's made out of those triangles? >> so good to be here, guys. this is fantastic. this is one of the triangles taken from the times square ball about to drop this evening. we've been at the center of some of the world's greatest celebrations. none more than tonight when that ball drops and holding court is waterford crystal. >> so you have the deal. you make a new ball every single year? >> what we do is the same ball, but we change the panels. we change 288 panels. the message
10:50 am
>> it is about that inner character and determination, that human spirit to carry on. >> these are heavy. >> they are heavy. >> a couple of hundred of these gets your attention. >> they really are heavy. but what i love about the i'm waterford era. and i worked in the factory a second generation craftsman. and waterford crystal is all about the celebration and it's basically the party that everybody is invited to this very evening. >> how did you get the deal for this the past 15 years. >> we're very heavily involved. and this year is fortitude. previous year is the gift of. >> sure. this would make a great ashtray. what do you do with the old ones. >> we donate those to very specific causes. >> simon hobbs households. >> i know a guy. so maybe i can do something for there you there.
10:51 am
yeah. >> how much care? how much do you worry about there being a mishap? >> you worry about everything right to the last second. when you get in 10, 9 8 -- we're all there holding our breath. and when you get to the where the ball drops you go. whew. >> we're looking at your rehearsal. a lot goes into this. >> you can see the high fives there. the reason is everything worked in rehearsal. >> is it a hydraulic. >> it is a highydraulic lift. >> how long did it take to make the wall. >> this one here is going through a series. we only change the panels. but waterford has been associated with time square since 1999/2000. so it is special. >> this is a charity link for first time i believe is that correct. >> yes. what we did for the first panel back in 2001 we donated all the
10:52 am
panels that were removed from that to the 9/11 museum just around the corner from here. very special, very poignant. >> so we're watching new years celebrations. already watched tokyo. probably new zealand, australia. >> north korea. >> i've seen new year's eve from many aspects of the globe. but one billion people watch in this evening. 1904 was the first time square celebration but 1907 was the first ball. >> it's strange so many people would watch it. it's actually very early in the morning. even in europe it's 5xz, 6:00 a.m. >> i can remember as a kid. >> you are irish. >> yes i am. i can remember as ar kid watching this, staying up. but it is an event. and waterford crystal at the center of this and it makes me so proud to come from waterford
10:53 am
ireland and to be here. this is spectacular. >> could you tell us how much this costs to make the ball. >> that is a question we never ask ourselves. this is priceless. this is about communicating the sentiment. it is about the moment in time. not about the cost. >> all right. i'm going to be in time square a little later to do fast money. >> we'll get you pass in. >> --. >> fantastic. with we can start you out with with a triangle perhaps. >> i was only joking. >> i wasn't there. >> okay. thank you very much. >> takes us to the weather tonight. cold weather gripping much of the nation but the warm sun could cause some trouble toot upcoming winter classic. weather channel's jim can'try has more on that. >> you can see the sun just hammering at me through here. let's look from above here at nationals park. you can see the little slice of ice coming across from left side
10:54 am
to right side. and that is the problem. look at it here and say that's not to bad jim. but from this angle when you are down on the ice. you can't see anything. we've all been there with the low sun angles and whether you put the visor down or not you just can't see. and this is on black asphalt which is not ice. so imagine skating at 35 or 40 miles per hour right into somebody. or imagine trying to be a goalie trying to stop a puck moving at a hundred miles per hour. the chances are the 1:00 schedule may get moved to 3:00 simply because of the sun angle. and we think at 3:00 the sun will be below the horizon enough. so that is a huge deal being discussed by the nhl right now. either way, in you have been a part of the winter classic there's always been either weather on exciting shootout or overtime all the way to the end.
10:55 am
it's hockey at its best outside. where it was originally started and played. >> you got that right jim. we can't wait. jim cantore. in the next hour we'll be joined by the capitals. and -- you are going to be back for european close. >> wouldn't miss it for the world. >> happy new year to you sarah. >> happy new year to you. >> are you going to wear those? these are a gift for the traders down here at the floor. and you promised you would ware them. and now you have. >> good year for the bulls. >> and accelerating as we speak. dough up some 59 points. "squawk alley" continues in a few moments.
10:56 am
10:57 am
10:58 am
let's take a quick check on the markets. a 50 point rally on the dow. appropriate to see gains for all three. because that has turbinebeen the story for 2014. the persistent rally.
10:59 am
the dow up 9 and the s&p 500 up more than 12%. >> the you add in dividends this year can the gain we got today i think i'm right in saying it is in fact a 15% gain on the broader market on the s&p 500 on the price action. >> good point. >> and indeed when you add in dividends. within that as we were saying: the reits have done phenomenally well. as utilities. and telecoms actually is one of the worst sectors. slightly better than energy. >> and also the story is the u.s. u.s. asset, stocks, bonds, the u.s. dollar all in rally mode for 2014. we'll see whether the new year holds. with that happy new year. >> over to "squawk alley." happy new year. >> good morning. it is 8:00 a.m. at apple headquarters in cupertino california. 11:00 a.m. here on wall street. "squawk alley" is live.
11:00 am
the ball drops here in new york city in just a little over 12 hours from now. we've already seen tokyo and

106 Views

info Stream Only

Uploaded by TV Archive on