tv Squawk Box CNBC December 23, 2014 6:00am-9:01am EST
at this point, it's mostly just rain and cheaper natural gas. it's tuesday, december 23rd, and "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. sony scanseled this week's scheduled release of the movie "the interview." we'll have that four in just a bit. but first, here are the big stories on our plates. we have november durable goods coming at 8:30 eastern time. also worth watching, consumer sentiment, personal income and spending and the richmond fed survey. the russian government and is central bank putt-putting pressure on large exporters to
sell dollars. there had been a lot of people calling for that. it turns out it is actually happening. pay attention to greece. stocks falling as the second round of a approximateliat volley takes place. antonas samaras failing to get enough votes from parliament in greece. the analysts say early elections could derail and some of the reforms and raise the risk of another economic setback. andrew, back over to you. >> thank you, becky. some stocks to watch this morning, chesapeake energy failing in a deal to sell southwestern energy. that company okaying a stock buyback plan of $1 million. >> the company says its small to medium sized business continues
to show growth. vanda pharmaceuticals, those shares surging after the company agrees to sell with novartis. and then there's confidential resources, feeling the impact of its own oil prices. the producer announcing plans to decrease its capital budgets to $4.6 billion from 5.2 billion by the end of next year. other corporate news close to home, the s.e.c. pausing its review of the comcast/time warner cable deal until january 12th. stopping with the clock on that, the agency citing delays in getting documents from time warner cable. the s.e.c. must decide on whether that merger is in the public industry and full disclosure, comcast is the parent company of nbc universal. they do believe the transition will close in early 2015.
>> this pushes it up by i think late march. so that is -- there's three months in a rt yeaher, right? wool see. let's check on the markets this morning. new highs yesterday just under 18,000. were indicated to add to those gains again today. there are the futures. let's take a quick look at whether we will do 18,000 today. that doesn't -- fair value is down slightly. i was just looking, fair value for -- >> no, that is what i wanted to see, as well. we closed yesterday just surround it, right? >> yeah. >> 17,950 something on the dow. so that was a little bit weird. in europe, we'll take a quick look. europe probably is going to be -- should be higher.
i also want to look at the asian markets. germany, france and ftse and even greece is down, but the other two are up based on the moves that we saw yesterday. japan was closed today and then -- let's take a quick look at oil which has stabilized in the mid to phi 50s. $56, the big story is the natural gas. ix makes accepts, though, that all occasions have been formed against the energy complex. if it's not oil, we thought natural guys might come up a little bit. >> we have boone pickens here today to discuss what he thinks is going to happen in 2015. >> he will still set in his ways that oil is going right back up, or is it? >> no. by tend of next year, he thinks oil will come back up. >> check the dollar out quickly. because it's getting better, cheaper and easier to go to
europe at this point. 1.22. the ruble, which to get to 80, that's above 70. >> back down to 54. but you still aren't feeling very flush. if you live there and are paid in rubles. finally, take a quick look at gold which has done nothing. a year and a half or so. >> north korea is back online this morning after a massive internet outage there. the timing of the problem is raising questions about who might be behind it. the obama administration is not admitting or denying that it was involved. the internet is always sketchy in north korea. not much people have access to it, but it was notably down for mon than nine hours on monday. this comes in the wake of the sony attack. north korea denies it, but says that they are targeting the white house and the pentagon at this point. for the white house blaming
them. new york's tree house theater announcing that it will put on a free reading of the film script on december 27th. the theater says the goal is to offer an opportunity to people who want to, quote, come together in the name of free speech. now, are they going to hold to the script, they're going to have comedians coming in and reading it. >> i think i can wait. that's difficult, you know? okay. way to go. stand up for free speech. this movie is bad, anyway. >> apparently they're trying to get some big time actors to do it. there are big time actors who do some of these readings. >> great. now it's almost like br performing here. it's now elevated to -- >> it could be in defiance -- >> gather to watch this. >> it's probably a camping crappy. it's not that funny even if you're watching the actual
product. okay, good. it's going to be a reading of the -- like i said, it's not king here. >> i never asked you, what did you make of facebook shutting down in russia? did you see this? that facebook shut down some of these protester pages with the vladimir putin debate? >> i didn't think anything about it. >> no. >> did you think anything about it? >> i missed it. >> yesterday, facebook literally shut down the pages of opposition to putin and there's a big debate about whether -- >> facebook caved? >> that facebook was caving and there's a poll debate going on in russia right now about the role of facebook. and there's a debate, i think, going on in the united states about the same -- >> google has not done that because, of course, parents came from russia and they've been adamant about not caving to anything like that. >> facebook hit a new high. let's tell but some other stock, the security news, we're learning more about the data breach at jpmorgan, the "new york times" reporting the incident earlier this year could
have been avoided if the bank installed what they say are simple security fixes. jpmorgan reportedly didn't use a double authentication scheme known as two factor authentication. >> $230 billion. >> facebook pap new high, 230 billion. >> 8145. >> it may not be as important. 230 billion is pretty incredible. isn't it? ge now. 258, almost worth as much as ge. >> that's kind of phenomenal. let's talk about the dow and the s&p. they both are sitting at record levels. it's hard to believe that last week traders feared we would fall below 17,000. where do we go from here to finish the year and what is in store for 2015? joining us now is jim dunnigan.
it has 130 billion in assets under management. right here on set with us is ed campbell, principal and portfolio manager at q&a. ed, what do you think about this? we have seen things all over the map. do you think santa is here for the rest of this year or not? >> i think, yes, santa arrived last wednesday and i think he's going to stick around for the remaining trading sessions that we have had for the year. i think having survived two pullbacks this quarter and put in reshaped bottoms, market participant res going to need to run up the score over the next few days. >> they've chosen the averages at the end of the year, you have people who are putting money in, buying more of the winners. coming january 1st when the clock resets, what do you think happens? >> good morning, becky, and thank you. i do believe in santa claus, but you're right, we squeezed a lot of juice out of this lemon in the last couple of weeks.
we could be merely easily see what we saw in the beginning of 2014. we haven't seen much tax selling at the end of this year, so we'll see some portfolio reallocations early in 2015. so we could get off to a slow start, but i think the bias is selling to the upside. we'll continue to see some good news, but the news has to stay big for this level. >> no, no, it's not by any stretch. 12%, i'll take it. we've zooed squeezed a lot of juice out of this, let's put it that way. >> you're making me nervous with the lemon song from -- maybe you didn't try that. we weren't allowed to play that when i was in high school, jim. >> just making lemonade. >> exactly. >> that's the first comparison i've heard on that one. >> really? listen to it sometime. but not around your children.
so this is not like -- this is not like inflation with lemons. you put together that ridiculous index, right, of things that go on with the -- did we just have you talking about the dancing ladies dancing? >> personal that's the pnc christmas price index. >> it's like the cpi. it hasn't gone up if you exclude -- >> gold. >> if you exclude anything you actually use. >> labor. >> gone. very popular this time of year. >> yes, it is. yes, it is. >> jim, what are you telling people for next year as they try and get ready? january, you may see some turn around, but you think this is still a productive market. i think the bias is still to the upside. you would be telling people to invest anytime you see a dip or not even bother to wait for a dip? >> i think patience is a virtue here. there's opportunities. there's going to be opportunities developing in the energy sector. i think there's going to be
opportunities in energy. you see what happens with crude and opportunities outside the borders of the united states. so europe, emerging markets, i think it's those opportunities where i would see recommending to investors to take some positions. investors, i'm not making any knee jerk reactions here. but tlm be opportunities for investors in the early part of '15. >> ed, how about you? >> we think the market is going to put in another good year in 2015. we're forecasting about a 10% return. i think some of the differences that we're going to see is that we're going to see a change in sector leadership where in 2014 you saw some of the consensus sectors outperform. i think we're going to see more of a cyclical move next year. so we like tech and we like financials in particular. >> jim, we just mentioned energy. what do you think about energy? >> i think we want to be patient on energy.
the valuations are start to go look interesting, but i wouldn't pull the trigger on that just yet. >> are you looking at 20115 as a year where there aren't too many places to invest besides just equities? >> no. i think we're going to see the international markets play catch up. if we look at europe and japan, we're seeing '14, '15 p/e ratios there. so i think the u.s. is going to grow rapidly next year and that should pull the global train and keep it on the track. so i'm not expecting a lot in terms of growth out of europe and japan, but i think it will improve on the margin and you could see equity markets do well there. i think the key for u.s.-based investors is you're going to have to hedge the currency because the u.s. dollar is likely to strengthen next year. >> jim, your thoughts on international markets? >> i think as opportunities develop, we're continue to look to see what the ecb does with quantitative easing. and if that continues, likely it shows up in the early part of
2015. prospects continue to improve for europe. so i think that's an opportunity, as well as japan and the emerging markets. so we'll have to see what the -- how the fed reacts to continued growth in the united states. we think that rate increases in july of next year. but there will be opportunities to take some positions in international as those process expectses improve. >> jim, thank you for joining us today and, ed b thank you for coming in. >> you too. >> happy holidays. coming up, the play book for oil in 2015. predicting crude could end this year with a five handle on it. the experts way to guess. stick around to find out. plus, santa isn't the only one trying to get to town. millions of americans plan to travel this week and now holiday storms could pose a big challenge. we have a live report from chicago when "squawk box" returns.
wow, with the shirt across from me. >> you're wearing the same shirt. >> yeah. wow. >> are we wearing the same shirt? >> yeah. i have vertigo. you can't wear this shirt without the jacket. >> how are you this morning? >> how about the tie? >> okay. >> just a little bit of a -- >> i appreciate that. >> a run for his money. >> carson from the weather channel, he's tracking a few storms that could cause some trouble. >> it's not going to happen. just a little on the back side, light rain showers.
this has a blow torch coming in. and all this stuff combined. and on the backside as we head into christmas, a little bit of colder air. but all the precip will be falling into the warm air. today, showers in boston, a bit of a break in towards washington, d.c. by tomorrow, this things fills in. it's raining heavily at times. we see from new york up to boston all the way down the eastern seaboard. christmas day itself, i'd say probably a few showers in the morning in new york. clearing out by 10:00 or 11:00 a.m. boston, unfortunately, a wash into northern new england. it was raining all day for christmas. not only the rain, but also the wind. take a look at the midwest here. winds, high. chicago, they'll be seeing snow. detroit, as well.
even on the eastern seaboard, winds 15 to 20 miles per hour combined with low ceilings probably going to be enough to cause some travel problems tomorrow. in, flsh new york city, today, showers. plain rain troughs christmas, christmas eve. i wouldn't be shocked if we see a morning showers. we should clear that out by the afternoon. if there is a silver lining into all of this. it's that temperatures look nice, well above average. if you want snow for christmas, west. salt lake city, denver, going to see some snow. dealing with rain, unfortunately. >> i've been asking you for snow out west, not here. all you're doing is really what i asked. do you remember in the old day, like we see -- >> or like if you wear -- >> like really old -- >> when they didn't have collars, you could see the --
like in certain -- >> it's an english spread collar. >> i'm outdoors your -- i'm more spread than you are right now. so i'm even -- >> that collar is good for some guys. it makes them look more muscular. we're a bit close to the camera. >> i don't want any part of this spread part. you guys can have that yourself. >> you see how i does that? anyway -- thank you. it's a big travel day ahead with many saying low gas prices are encouraging them to hit the road. and nbc's jennifer portman joins us from chicago, flying and driving, i guess, is pretty busy, jennifer. >> really busy in the next couple of days. i think a word to thewise would be the sooner you can get to the airport or get in your car, the better. some weather is moving in that could delay americans between
now and christmas eve. 98.6 million americans plan to travel 50 miles or more acco according to the auto club. that's one in three people traveling for the holidays. these are not not so frequent flyers, the people traveling with kits kidz and strollers and all that slow-moving traffic through those tsa lines. so do yourself a favor, check ahead with your airline before you leave for the airport. make sure your flight is auto time. you can expect delays in the market couple of days. most on the east coast in boston, new york, washington, atlanta and minneapolis. tomorrow, weather is moving into charlotte, cleveland, worsening here in chicago. and in detroit, as well. mostly train today, snow tomorrow here in chicago. and mainly the road trippers might have it right because gas prices are so low, it might be easier to drive there. just get in your car and drive
there. be extra careful because aaa expects to be rescuing 1.1 million people with bed batteries, flat tires. >> i feel like, you know, such such -- so you know 98.6 million because we're that predictable as a specieses. not 98.7, not 98.5. what if some people change their minds? we know how many are going break down. 1.9 million. it's weird, isn't it? 98.6. that's a weird number. i think i heard that last week. >> that's what i said, temperature readings. >> very weird. >> i think if some people change their minds, it wouldn't be 98.6. i think that's an estimate. >> i think it is, too. >> like chinese gdp or something. >> temperatures are the exact
same. >> do find that strange? i do. that is weird, though. but if you took it out to a lot of decimal places, it might not be ta weird. that is where shgd be. . we are looking ahead to the play book on how to cash in for 2015. jackie is laying out her predictions for the energy sector. jackie predicts that moving crude by rail would be a very big deal this year, and she was right on that count with oil sprimpts by rail raising through the first ten months of the year. they also predicted easing sanctions in iran would not have a substantial impact on i'll and production prices and we will say she is half right there. iran's overall exports are still limited, but they have both seen
increases in iranian oil. jackie predicted exxon mobil shares would continue to rise, though at its slower pace than its competitors. sorry, jackie, no dice there. what is jackie predicting for 2015? here is a look at her view. >> energy prices begin a wild rise in 2014, increased north american supply coupled with waning demand. push prices of domestic and international crude significantly under $100 a barrel. here are significant predictions for 2015. oil prices will bottom around $50. with the u.s. producing more than 9 million barrels of crude per day and oh pekt handing out 30 million, prices will continue to decline in 2015 and producers will sacrifice margins to hold on to market share. low oil prices will take time to trickle into the economy, but
they will give markets a boost. second, opec will lose influence. opec will be forced to cut production to help stabilize the markets. saudi arabia have more pricing. but as more supply comes out of the u.s., opec's influence on the globe xhkts will diminish. in an environment where prices move lower, exxon, chef ron and hess will continue to feel pain. after oil bottoms and begin toes rebound, energy stocks will see love again. >> let's take a closer look now at the energy sector. john, you just listened to those three predictions. you want to gives your reaction? >> as usual, quality work by jackie.
i think the outlooks are fair. i will take umbrage. i think the low prices are going to be lower than that. given the low on the chart is 35, i think prices are going to fall to that area to give us a nice bottom on the charts on a technical basis. i think down into the 40s at least, maybe down into the 90s. >> i hate to play the timing game, but how early do you think that will happen? >> the demand period will enter late february .march. so that is when we'll have the flash demand. i think that's when the greatest amount of pressure, nobody cutting, everybody trying to hold their ground. all combining to produce this. >> where do you think it pends in 2015? >> i think a nice rebound will likely occur. you will see a supply response from the fracking industry, just on economics because it's good
business. and i think some opec members might join in on that if they start to see a response. so i think around 50 to 60 by year-end. >> i would argue they love their mojo. what was the question, whether the united states should join opec? what do you think has to happen for them to get their power back or is their power gone forever? >> they have the capacity to break the back of saudis. more than they are right now, then you would have i think even lower prices move quickly. i think what they're doing right now is to try to break the back of many in the oil industry for them to recapture their place. this is like a shock and awe by them right now to give it to their competitors. they are 40% in the market as a collector. right now, it's a different dynamic than what we're used to. >> did it really work? i think trying to play the long
game. prices come back up, you're looking at $80, $90, let's say $100 now. it siems like you can kill these roaches and they're gone, right? >> thairt. we've got through these boomes and busts a number of times over the last 20 years. >> i just wonder if technology allows us to get to the point where you can move through those cycles much more quickly than we used to. >> also, what kind of dodge does this do to others? does brazil pull back from deep border drilling? there can be longer lasting impacts on drilling and other producers. >> predictions? >> we'll be bloef $2 here come spring, as well. maybe as low at $1.50 on the nymex giving how much is coming out of the ground.
>> we're just swimming in it. >> how much did you pay for those panels on your proof at your apartment buildings in there? >> my solar panels? >> yeah. >> and the windmill? that's priceless. can you have a write-down on personal -- >> yeah. personal items. >> man, oh, man. >> you know i'd like to. >> you've talked to the kondo lobby, haven't you? this is bad news for those things. >> we're seen those price necessary local markets. >> you know, joe, what this is going to drive, though, is -- you know, i'm surprised nobody has done -- this disrupter series, the utility industry is going to get transformed by this. we're going to move away from the electrical plants to
distribute nrg. the natural gas feeds that and it's the hydrogen fuel cells will finally catch on. neighborhoods will have their own little plan. >> but it's natural gas. >> looks looking that way. >> natural gas has come down so much. they have been competitive. >> john, when will you jump into the energy business right now? all of a sudden, they were tilting their position. >> i think it's a little early yesterday. we've talked about waiting for the recovery. there will be some pain, but we're definitely getting there. some of the big mart smartphone is trying to figure out a way to pile in, too. i think we're reefing the point, but we're not there yet.
>> you could get a lot of carb. wasn't natural gas something like $12 or $8? >> it is so weird. >> six years ago, it was double digits pricing. >> but it's been down for several years. >> but just six, it was double digits. >> incredible. you're running out. >> american ingenuity. >> that's what happens. >> the markets have to figure out a way to get it out of the ground, absolutely. >> shake, shake, shake it. thank you. when we come back this morning, the political play book for 2015. when does jeb bush throw his hat into the ring? how about rick perry? and for the democrats, is it hillary or someone else? often enough, but thank you.ts
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over three million tires. and during the big tire event, get up to $140 in mail-in rebates on four select tires. ♪ good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. check this out. a unique holiday greeting from carl likely's david rubenstein.
♪ takes a lot of brains to do what we do ♪ ♪ looking for a way to make some dough for you ♪ ♪ energy, commodity, we do it all ♪ ♪ pick up the phone and give us a call ♪ ♪ carlyle group is the place to be ♪ ♪ we're global, we're mobile, we're aim to go please ♪ ♪ lps, lps, silver lps yes knows he's bad. he's doing it intentionally. >> he looks so comfortable doing it. >> i like the guy behind him with the reaction. that's good. it's because of the beats investment. >> that is the best. >> that's why. i remember that now. >> execute. >> and that has been -- >> did you think those? ♪ energy, commodity, we do it all ♪ >> i should also say that was dan aeillo -- >> that is right there?
>> yes. who is the cofounder of carlisle. >>gy the guys credit. that is good. >> kind of fun, right? they don't have an 800 number, though, for people to call. >> i like it. it was good. >> west coast port employers are seeking federal mediation and dock worker talks. the two sides are said to be far from a deal after seven months of operations. >> a baggage handler for the air line is among those who were charged. and nicaragua is starting work on a $50 billion shipping canal. the infrastructure project is backed by china. that aim toes recitalize the economy of the second poorest country in the americas. it was a year of winners and losers on capitol hill, and the republican party came out swinging after the midterms.
to look ahead to 2015, former pennsylvania governor ed rendell and former white house political director under president george w. bush sara fagin. we've had a couple of people say that the budget deal, that the president didn't work about as much as base. we saw that one other time when his base got really angry with that, when he was only able to race raids on the upper -- whatever it was and locked in the bush tax cuts for anyone else. is that a sign that a attaattac right snipe read on toe lpoliti that everybody he's doing is tacking left. >> last friday, the epa put out another own yurs regulation on the coal industry.
i think he's going to continue to use executive action the put his agenda. having said that, there is some sign that he's serious about corporate tax reform. in this last fight, david camp and harry reid will close to having extenders. the white house got involved and stopped that because they wanted to build momentum for corporate tax reform. >> okay. but for six years, he sort of has said that he's open to it. but i've never seen anything of his people or his administration really get behind it. why now? >> i think he's start to go think seriously about his legacy. and other than health care, which has certainly split the country, he doesn't have many
big domestic achievements. and this is one where there's a lot of hunger among republicans to get this done where he could have a pretty signature achievement. i think the proof will be in the details and does he push for a revenue increase or does he allow it to go forward in a revenue neutral manner. >> and and is there a way where he could do it where it wouldn't be written by his base that his legacy as helping corporations? if that is how he wrote it down on a list, he helped corporations, he doesn't want that as part of his legacy. >> there would have to be some sort of a deal. i think sara is right. for example, he takes some of that revenue and use it to fund an infrastructure bill, which everyone knows how to be funded. nobody has the cuts to raid their hands and vote for any sort of revenue increase.
if you use the loop hope money, you might knock off two birds with one stone. the infrastructure bill and tax reform. >> governor, you have in the past -- i'm not sure, do they take your calls at the obama white house any more? seriously, do they? >> no, i'm not an adviser, let's put it that way. >> no, i know. i didn't know what you were going to say there. i'm not in favor -- what do you -- you've watched how the president has moved since the election, a lot of unilateral moves. the latest was cuba. have you been surprised at the way he's moved since then or you could have predicted this? >> no, i think it was for the -- but i also think that his strong affirmative movement on executive action persuasion that he's not going to meet
republicans halfway and do some comp miegzs. so if there's a good immigration bill, it may not have to have immediate citizenship. but if there's a good immigration bill, i think the president will not only sign it, but original democrats to go for it. i think it's possible. i think even the advocacy community could agree to the shaping of a bill that doesn't make citizenship immediate. you could not off immigration reform, infrastructure, tax reform, and an energy bill. i think an energy bill, we don't need renewables if you can guarantee there's enough oil and natural gas in the ground to take care of our grandkids. but we could have a nice bill if you would agree to the keystone pipeline in return for some climate change things. there's the framework for four very separate and distinct
extremely important pieces of legislation. and i think it's in the republicans' interest because they have to show they control both houses and it's in his interests for the reasons sara said. >> maybe he's holding out for that with the keystone. maybe you're right. >> i wouldn't give the keystone away. i would use it as a bargaining tool for the things that i'd want. >> it sure didn't sound like he was supporting the keystone. >> yeah. he seems like he's digging in. but then again, maybe he's using it and saying, if you do this, i'll give you that. we did cuba, we did immigration. the republics had -- you think that that wave that swept in 2014, you think it wouldn't necessarily wear itself out in two years, by 2016. but we've seen the republicans before. they have a way of squandering
political capital. and i'm just wondering at this point, the president's approval rating, 47% on gallop. i think he'll do well with hispanics, democrats will, he's bolstered that constituency. maybe it's his legacy, but he also seems to be helping democrats. and i just wonder how should the republicans respond to this? >> well, i think a couple of things. first of all, republicans have an opportunity and they have to prove that they can govern. you're right, both parties have squandered big opportunities in the last decade. but republics, if they can come together and pass some type of immigration reform, if they can work with the president to pass some type of corporate tax reform, it will republic theically as we moch into the 2016 election. whether it's jeb bush or chris christy or some other candidate,
congress has to help that person by proving that the republican party can govern. and the republican party's support among the country is low and it's still lower than democratic support. and that is a challenge for our party right now. >> all right. and, governor, you've offered to head up the ted cruz 2016 campaign. i have volunteered for the elizabeth warren -- i'll do the elizabeth warren. you go ahead and do ted cruz. can we work together on that? >> jeb for america. >> all right. governor rendell, thank you, sara. thank you. happy holidays, merry christmas, happy and healthy new year. we'll see you. coming up when we return, google unveiling its self-driving car prototype. next hour, we'll look at how your money is going to be treated abroad in 2015. later, boone pickens is our
♪ welcome back to "squawk box." we are in the chairs. we don't -- we haven't sat in the chairs for a long time. >> i didn't know that was part of it. >> i miss that. i was so focused on -- >> maybe we're bringing them back for the -- >> there it is. >> i like it. >> -- new york thing where we sit over near the window. we were all slumping. but maybe if we get some good chairs. >> have so sit up straight. >> anyway, real quick, just a couple things i was looking at. big story i saw. google now with this new autonomous car. this one has no steering wheel at all. >> but it does have headlights, right? >> it does. it looks like a little golf cart. it can only go 25 miles an hour. they're going to put it on the streets in san francisco, i believe, in early 2015.
>> oh, man. >> and right now they're putting them on racetracks and stuff. would you sit in that car? >> sure. i can't wait. north korea is laughing their butts off over there. >> for the hack to end all hacks. >> wait until they're all on the road and suddenly it's like bumper cars. maybe you'll survive because it's only 25 miles an hour. it worries me. it's scares me. i like the stuff you have now where you're driving but it can maybe put the brakes on if you're going to hit something. >> it starts dinging if you're about a turn into a lane where there's a car. >> there is a joy to driving. there is a joy to driving. well, not really in manhattan. but in certain places there is a joy that i will miss. i wonder if some day we're going to be yeah, well, we used to drive our own cars. and grand kids will go what, papa? >> that's going to be in like three years. >> yes. plus me talking like that is only three years too.
i don't like the looks of those cars either. >> they're telling me we're going to run out of time. >> all right. you knew this was would happen. been a bengals fan my whole life until i swore them off for good. when you finally capitulate. but this is the longest playoff drought in nfl history. no post-season victory since 1990, andrew. that's 24 years. >> what is their record since you swore them off? >> they're doing better. but let me do this first. they're 10-20 on monday nights. when i get a chance to watch in primetime, 18-41. 18-41. they always disappoint. always. carson palmer gets his knee broken on the first play. it's always something. now, i didn't watch last night. i was watching "sound of music" if you can believe that. >> excellent. i love that.
>> i got tears in my eyes. i'm getting old. i'm like an old softy. the bengals called. they don't want you on the bandwagon. >> maybe i'm just acting. >> and it's good. they said keep it up. >> pittsburgh/cincinnati for the afc north is on nbc i think sunday night. >> what time? >> when we come back this morning we'll have more of the top stories including why north korea went dark overnight. stick around. we'll be right back.
two shopping days until christmas. consumers are scrambling and so are the nation's retailers as they try to save what should be their most wonderful time of the year. interesting timing. breaking overnight, internet pages were restored after a ten-hour average. the second hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin. our guest host this hour from bank of america merrill lynch global research. that's neat. that's good. i'm glad you're here. you're here for an hour. >> great to be here. >> today's top story, a santa claus rally. the s&p 500 closing at its 50th
new high of the year yesterday. it's like there's been one almost every week. >> you're good. >> the most such finishes since 1995 which was also five years after the bengals last won a playoff game. and do more math and find the index finished at a record 20% of the time at a record 20% of the time in 2014. which is pretty amazing. for anyone we sort of make fun of as apermable for the last years. futures at this hour. there we go. indicated up 39, almost 40 points on the dow. up almost four on the s&p. and over ten on the nasdaq. making headlines at this hour, u.s. officials say that washington was not involved in an outage of several hours for internet service in north korea. the country's internet service has now been restored. there was some speculation that it was retribution for the sony hack attack.
but not the case. also a flood of economic data coming today. durable goods, gdp, consumer sentiment, and new home sales. we get all of that out this morning. and alstom after the power unit admitted to privacy charges. in other corporate news, the fcc is pausing its review of comcast time warner cable's deal until january 12th. the agency is citing delays in getting documents from time warner cable. now the fcc must decide whether the merger is in the public interest. comcast is the parent company of nbc universal. right now let's check out the stocks on the move this morning. chesapeake energy closing a deal to sell west virginia and pennsylvania assets to southwest energy for nearly $5 billion. the company also approving a stock buyback plan of up to a
billion dollars in stock. steelcase says its small to medium size project business shows strength. and a small market cap stock getting a boost this morning, vanda pharma. they regain u.s. and canadian rights to an anti-psychotic drug. there are few so-called misfit stocks not enjoying this record-breaking march. our favorite north pole elf dominic chu is here. i'm just reading, dom. >> i know you are. >> i'm here with the sad details. and i'm thinking about i just saw that movie again, "elf." you would be funny in that role. >> did it make you happy? that's the really thing. 'tis the season to be happy. >> i'm trying. i'm trying. you make me happy. >> thank you very much. here's something that will make you more happy. we put this nice animation here showing you basically our misfit
stocks and the land of them. if you can find rudolph tweet me and let me know where you saw him there. the dogs of the dow, the philosophy of investing in the companies in the dow that have the highest dividend yield. we refined it. all have a decent dividend yield but some have been beaten down much more than others here. boeing for instance, is down 6% to date. but still carries a dividend yield of nearly 3%. one of those dogs investors are looking at. you go past boeing, exxonmobil, the oil routes cut them down. 8% year to date. they have a 3% dividend yield. another big one to watch is general electric. down 8% year to date. and it's got a 3.5% dividend yield. and then another couple of them to round out the bottom five here. chevron down 10% year to date. it's got a nearly 4% dividend yield. and this, the most misfit of all of them. this year has been big blue,
ibm, a rough year down 14% just so far year to date. still carries a dividend yield around 3%. when it comes to misfit stocks, oftentimes the ones that lead next year, not always, are the ones that underperformed in some of these blue chip companies may be the beneficiary of gain ifs investors think they've reached a value point. >> isn't that kind of the silver lining on the cloud? the stock's down 14%, but look at the yield. >> look at the dividend yield. you never know. the dogs of the dow are one of those philosophies that's been around for awhile. people think if you invest in those, then maybe those yields get bought up by everybody and forces them down a bit. >> was there really rudolph in that animation? >> you didn't see it, but i guarantee it it was there. >> i have a guess. is it right behind your shoulder. show me one more time. >> here. i'll show you one more time. >> all right. >> did you see it? >> can you do it and slow it
down? >> i mean, if i slow it down, you're definitely going to see it. let's do it one more time, guys. >> okay. >> oh. right there. right near the box. >> you saw it that time. >> i still didn't see it. >> i'm going to show you after the show is over. >> can you pause it, guys? >> dom, thank you. >> you're welcome. for more on the markets, we're joined by phil orlando, chief equity strategist at federated. and our guest host. she says we're pretty much done with the market gains for the year. it is the 23rd. you really want to go out on a limb there? >> i do. >> what about for next year? >> so for next year i think the market could grind a little bit higher.
2200 is our target for year end. which is, you know, a decent percentage point away. i think this year we've seen the market run a little bit ahead of itself. here's why. you look at valuations, the market's not as cheap as it was a couple years ago. you look at sentiment. everyone is more bullish than bearish. where two years ago nobody wanted to touch the market. i feel a couple of things have changed. there's a sense the stock market is the only place to be. what about oil? what about gold? they're actually super cheap relative to equities today. >> the reasons to be in the market are just clubbing people over the head. that's what i've noticed. in other words, everybody knows the u.s. economy is finally getting a little bit better with unemployment under 6%. and everybody knows oil going down is a plus for consumers. everybody knows the interest rates are likely to stay low for
awhile. which means that people rain shower know that and they've already acted on their intentions. >> i'm not bearish, but i think that, you know, lower oil prices is not necessarily great for the market. it actually shaves off a couple of dollars of earnings. if oil stays where it is today, earnings could actually be -- >> but what you lose on the east side you could gain on the multiple side. because it affects everything positive. >> you could. i think we're at the point where, you know, the market continues to move higher but we're mid-cycle. not early cycle. mid-cycle is so so for returns. >> but we have people saying this continues to be the most unbelieved and sort of hated market in a long time. and i will say we get down 4%, 5% people are ready to say this is it. we're going for a big correction.
they've still got one foot out the door which is bullish. >> if we turn the clock back a week, last wednesday things were ugly. we looked at stocks, they appeared to be oversold to us and there were two catalysts we saw on the horizon. one was the fed meeting and that worked. the second catalyst is today. we're going to get three data points today that we think are going to be surprising to the market. the first of which is the final third quarter gdp revision which is ordinarily a non-event. we believe it's going to go up from 3.9 to 4.4. personal income spending we think are going to be up .5%. that's a big number. perhaps the biggest number is going to be cap good shipments which feeds directly into the fourth quarter gdp number. we think that number is going to be up. >> let me ask you this. what's your expectation for the end of next year? it may not be all the different from what savita's saying either. >> sure.
my boss was in the round table with savita two weeks ago. he had the high number on the street for us at 2350. we get there $130 in earnings. 8% increase in earnings. we think the multiple expands to 18 next year. that gets us a total return number of about 14%. >> that's a pretty decent return. >> not 30% like we saw a couple years ago. >> but something you don't want to mississip out on. >> we're going to see a good fourth quarter rally. we've gotten that. we think you've got to be in it to win it at this point. >> unless it's going down, there's no reason to be in cash. that's the thing. that's the one thing i do come back to. like it's the only game in town. >> i agree. i think that the s&p is probably better than most other equity market indices. but it's not as cheap. so two years ago the stock market was cheaper than other asset class around. bonds, gold, oil, everything
looks expensive relative to stocks. today that's not the case. i think, you know, i agree. i think stocks are going to do well, but i just don't think we get the astronomical gains that we've seen. >> you can find a wall of worry in emerging markets in japan. we say there's nowhere else to go. it doesn't have to be domestic stocks. it seems like maybe this is the time to pick some of the hated areas over there. although emerging markets with oil and the dollar it makes you worry there could be some event that is actually negative for those. but they're cheaper than our markets now. >> i agree with sa vvita. at 18 times earnings, we're pretty high. but because of the benign nature of inflation and the low interest rates, we can justify an 18 multiple. right now u.s. market appears to be the most attractive market to
us. but you're right. as we look at the next big move, that's going to come out of europe. it's going to come out of japan, out of emerging markets. but there's a quid pro quo here. we need to see the sort of bold policy response needed in order to get those economies and those earnings and markets going. now, i don't know that we're there yet. we may be there later next year and we're watching that. that's certainly one of the things we're paying a lot of attention to. the next big trade might be next summer, rotating some money out of the u.s. into the emerging markets. depending upon some of the issues and policy responses we see coming out of those countries. >> okay. thank you. and thank you, savita. >> merry christmas to you. >> you too. so we haven't heard from david tepper. it'd be nice to hear his take because he's yanking my chain about the bengals.
he initiated this. >> because of the steelers. is he inviting you on board? >> he has offered me two tickets to go watch the game with the steelers. he's sending me two tickets. don't you think i should ask him for the 2015 forecast? >> yes. tell him if that's the case, you will root for the bengals and and help the steelers. >> could he be productive here? i would need four tickets anyway. >> check out his tie. >> that's santa isn't it? >> yes. what i didn't know is he wears one every day from thanksgiving on. a different santa tie. i'm impressed. >> it's not -- it's not good looking. it's ugly. >> do you have attractive ones? >> i have some nicer ones. >> but since you were going on tv you felt you should go with this one. >> i was sticking to the different tie every day thing. >> bottom of the barrel.
>> exactly. i should have saved a good one for today. >> man, if you're going to go, go proud. i like it. go loud. >> thank you. coming up, procrastinators listen up. kate rogers is at the mall with a report on last-minute shopping. i am one of those. plus we'll talk to retail analysts about this season's winners and lose pers.
♪ if you haven't started shopping, don't waste another minute. you may be behind, but the good news is there are more deals now to be had. and kate rogers is at the newport center mall in jersey city, new jersey, taking stock of the shoppers out there. it's open? it is, isn't it? >> it is open, joe. it hoopened at 7:00 a.m. earlier than usual. not too many people yet but we're expecting a big crowd as the day unfolds. renewed in the stock market with low gas prices that continue to fall are the perfect final push to get these shoppers in stores. what we're seeing is traditional retailers pulling out all the shops to get consumers in and spending. macy's and kohl's are staying
open as late as midnight here. and they're offering this after christmas sales already. but the question is how much will shoppers actually spend? a survey in nielsen finds 40% of americans say they have extra cash in their wallets thanks to gas prices that continue to fall. and after paying their bills, they say they're going to spend them on holiday gifts. but analysts also said invent y inventories this year are actually low. so if you missed the boat on hot technology, anything from the movie "frozen" this year, you're too late. >> thank you. we'll check in later in the day. in the meantime, let's talk retail winners and losers of the holiday season with anthony chicumba from bbnt capital markets. the retailers should have a lot of things going for them this year with the improved economy and lower gas prices. who is really positioned to take advantage of that?
>> there are two retailers, are going to be winners. one is best buy. you have product cycle you did not have last year. gopro cameras, video games. and best buy has the highest market share in the consumer electronics industry. in addition, they've made a lot of improvements to their in-store experiences as well as their online experience. the other winner is dollar tree. we think that falling gas prices is absolutely positively going to impact them. they have a huge seasonal business. even though the economy ea's gon better, they continue to be cautious. so that dollar price point they have, something that's going to be attractive. >> i know you're cautious on two names. bed bath & beyond and radio shack, is that correct? >> that is correct. unlike best buy, there's not a lot of product cycle in home goods. unlike years past you don't have
a hot product like keurig. >> i was like what's the hot products to get me into the bed bath & beyond. >> a keurig and sodastream. they're so far behind now online and more and more consumers are shopping online. radio shack, this is the final hoorah for them. we think they're probably going to file for bankruptcy after the holidays. you know, a lot of the hot product categories of consumer electronics like ultra hd tvs, like video games, they do not participate. and consumers are savvy. they know radio shack is in trouble now. that makes them wary shopping there in case they have to return products after the holidays. >> so do you see spending lower or higher this season compared to seasons past? how do you see it playing out? >> we think spending will be higher this year. you have a lot of tail winds, some of which you've been talking about. lower gas prices, improving
employment, higher consumer confidence. one thing i look at is consumer credit how that is rising. we think that holiday spending will be higher. the other thing you have to remember is last holiday selling season was not great for a lot of retailers. you had a lot of different things that went wrong for them. six fewer shopping days between thanksgiving and christmas. the polar vortex which impacted so many cities. and you don't have any of those things happening this year. we actually picked up a shopping day and this winter it's been unseasonably mild. >> good point. i do wonder, though, about the margins. it has seemed to be incredibly promotional. >> that's just the new normal. it's always going to be very promotional. was it not last year or the year before? >> but very promotional that they planned in because the markdowns are stuff they can hand handle? >> they're going to work with the manufacturers to get good prices from the manufacturers to protect their gross margins. >> thank you for joining us.
>> thanks for having me. coming up when we return, we have new info on how one of the biggest data breaches could have been avoided. but before we do this, we have this for becky. dom chu asked you to find rudolph. >> oh, there he is! i need the freeze frame to see him. there he is now. >> "squawk box" returns in just a moment. take on the challenge of trading options and futures...
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sad news from the world of music. the raspy voice joe cocker has died. my favorite was "delta lady." but i can remember the first time i saw this guy. i loved his music, but i couldn't understand what he was doing on stage. do you remember? >> he really got himself into it. >> he was a blue collar guy too. i think he had a normal job doing something. >> his brother got him into it with his band originally. >> great voice. i hate when, you know -- we don't appreciate them until they're gone. he was only 70.
his career lasted 40 years. he performed at woodstock in 1979. he passed away after a hard fought battle with small cell leukemia. he was only 70. >> i didn't know he was sick. >> it's been awhile since he had a big hit. he had that other big hit with the duet. >> just an iconic recognizable voice. we'll be right back. when we come back, we have details on jpmorgan's data breach and what may have caused it.
welcome back to "squawk box," everybody. this is cnbc, first in business worldwide. among our top stories this morning, this year' jpmorgan chase data breach could have been prevented with a simple fix according to "the new york times." the bank neglected to update one of its servers to the password protection. also federal agents busting an alleged gun running operation from atlanta to new york in
passenger carryon leg gage on delta planes. a bag handler was among those charged. and representative grimm failed to report wages as former owner of a fast food business. he is expected to plead guilty to one charge of assisting in the preparation of a false tax return. >> he's been on the show more than a few times too. >> he has. a real-life grinch caught in the act. will be going without their christmas bonuses this season. the thief managed to get into the business after the owners closed the door on saturday and used hammers and drills to crack the store's safe and stole thousands in cash that was set aside for holiday bonuses. police are using surveillance video. >> is that the guy? they got a pretty good shot of the guy. >> in lieu of the money, they're going to get a jelly of the
month club. yeah then he went -- >> i thought you couldn't get a safe open like that. >> he went and conducted it and brought him back. >> boss said everything's okay. >> in his rv i think he kid knapped him. >> he did. i watched it last week. >> it's a bit nippily in here, did you see that part? >> i did. >> we're going to somehow transition to emerging markets. can we do that? we had a question this morning -- >> it's a bit nippily there as well. >> it's time to bet on stocks in the emerging markets. made that call last week. and they're up nearly 5% since then. joining us now is that man who made the call. jeff dennison.
you're more bullish than colleagues at your firm. why is that? >> we certainly expected emer emerging markets to go higher this year. we simply made the call a week ago that things were getting oversold. we thought it was a good medium term buying opportunity. i don't think we're going to have huge gains next year. we're already calling for something like high single digit gains in emerging markets next year. so better year than this year. not stellar gains by any means. i think everything got oversold a week ago. >> we always talk about emerging markets as this broad swath of countries. if you were to break it down, are there certain places where there's going to be serious growth we should be focusing on? and are there places we should be running for the hills? >> you're dead right in assuming there's decent growth in certain parts of emerging markets and others obviously at the moment. our basic thesis is lower oil
prices are good for markets as well. particularly in asia. we feel it's going to grow pretty strongly next year. not as much as we saw in the last economic cycle, but decent growth. and so we would be overweight in asia going into 2015. that's probably where some of the best growth stories are. latin america is struggling in terms of growth. we think mexico will improve partly because of the u.s. economy. and in emerging europe, middle east, and africa there are challenges on the growth front with the possibility of turkey. >> where do you put india in all of this? >> we include as far as our asia basket, if you like. we look at india as essentially the poster child right now of structural reform within the emerging markets. growth fell very sharply to 4.5% from 9% about three years ago. it's begun to pick up gradually
with the new government putting a whole series of reforms in place over time. we expect growth to return to about 6.5% in 2016. so that is one of the best places to be in our view as far as equity investment is concerned in the emerging markets. >> you know, geoff, reform is a big part of the emerging market story. how do you think in particular with the government crackdown in lavish gift giving, does that change the consumption trends within china? >> i don't really think it does. i think china is going to be a very, very good long-term story for consumer spending. i think everybody knows what they're trying to do is rebalance the economy away from this huge investment to gdp ratio towards consumer spending over time. so that is beginning to happen. consumer spending a growing decently. and a low that may well control the government and within the
party, i think for the country at large, well over a billion people. i think consumer spending over the next five to ten years is going to be one of the best story within the emerging markets. i think we should look at the chinese economy as a whole really rather than down to that particular focus. >> okay. geoff, we are going to leave it there. thank you for joining us this morning. >> thank you. >> appreciate it. coming up this morning, boone pickens will join us. we'll get what he expects from the oil and natural gas markets in the new year. but first much has been made of teaching women how to succeed in the work place. our next guest wrote a popular article how to better educate men and demystify women. she will join us after the break. (vo) rush hour around here
welcome back to "squawk box" this morning. look at the futures, see how the market is setting itself up for this day. dow jones looks like it would open up higher again. as we go on a run, dow up about 44 points. nasdaq open 12 points higher. and the s&p up about four points. our next guest thinks women don't need any more advice on how to navigate the work place but men do. even the most well intentioned
male managers can be clueless when it comes to dealing with women. joanne joins us right now. she's a rm toer deputy managing editor of "the wall street journal." you've come to this after years and years of working with men many publications that are mostly men. >> that's right. and you hit the key point here which is i'm not talking here about misogynists. i'm talking about really good guys. but the fact is that even know after all of these years of having women as colleagues, men in many cases are misunderstanding women in the workplace. we've got this flood of information, books, conferences, networking groups for women that boil down to essentially how to successfully work with men. >> in a man's world. >> right. and so these books are great, but the fact is that we're all talking to ourselves. women are talking to ourselves. and my point is men need to be
part of the conversation. and so what i set out to do was actually to talk to men. i wanted to talk to executives about what are the things that frustrate you about women? i wanted to demystify women for the guys. >> i will say this kicked off a contentious conversation around the office. and part of it is you explained some of your frustrations with working with some of the well-intentioned guys. what drove you crazy as a manager or someone who was working for a man? >> right. it works both ways. whether you're working for a guy or whether you're the boss of men. there are issues all around. a lot of these things is miscommunication issues. in terms of communicating within a meeting. and i'm speaking generally, obviously. everyone is an individual. but if you speak generally, women are much more likely in a meeting -- men are more likely in a meeting to speak very
declaratively. so if there's a news meeting when you're talking about what should we talk about on "squawk box," men in a meeting are likely to say we need to write about gas prices or talk about gas prices. this is the story. women are more likely to sort of raise their hand and say hey has anybody noticed that gas prices are going down, what do we know about that? women are more likely to pose it as a question a than a statement. >> i've caught it in my own situations too. i know i'm not as declarative sometimes. i know that's a problem. i think it's from the way we're brought up. we're brought up to be polite and not ruffle feathers. >> that's right. it stems back to childhood. it's not the guys are trying to squish the women, but oftentimes the men don't hear the woman's point of view or a man will make the point later and he gets the credit for the idea. >> what becomes the answer? because oftentimes when women are quote, unquote assertive then they're criticized for being too assertive, if you
will. >> that is correct. so my point is that in the same way that women -- that we need to understand men in a meeting, they need to understand us. so i talk to men who are really working on this issue and one executive i spoke to said that he makes a point in a meeting -- hez goes back to the woman. he says you're the one that made the point. elaborate on that. it's going both ways. >> one of the other things i noticed you said was that when you were a manager you were surprised the men were constantly asking for raises, promotions, bigger offices and women didn't do that. >> women didn't do that. i didn't do that. i had no idea this was going on, right? and part of it is there's actually a recent study that shows men are four times more likely to ask for a raise than women. and when women do ask, they ask for 30% less than men. >> wow.
>> and it's a big reason why we have the wage gap. and the thing is that, you know, these books lean in, wonderful, all these books tell us this. we know this. we know we're supposed to do it, but we don't. again, this is something that the executives i spoke with said they now encourage women to at least negotiate when they're getting a promotion. >> that's back to training women to act differently though. >> this is training men. well, men are proactively doing this. the other related thing is promotions where women don't put their hands up for promotions. as one executive said if i've got an opening and it's got five criteria and a woman has four of them, she'll sit on her hands. but the man with one of them is raising his hand like pick me, pick me. and as he said, he now makes it a point to go and find the women in the organization who are
qualified and say you have to put your hand up. it doesn't mean you're going to get the job, but you need to be in the pool of people who put their hand up. again, it's just a matter of sort of understanding, you know, getting qualified women. this is one of the issues of getting qualified women into the management pipeline. >> why do the managers who say they are proactive about it, why do they do it? >> well, okay. the bottom line here is business case. so this is not about being pc at all. it's simply about when you have more women, all the research shows when you have more women in senior leadership, the financial results improve. sales, return on sales, return of investment, pretty much every financial metric improves when you have more women and senior leadership positions and on boards. >> do you think that's because of better risk controls? or is it -- it seems like men, testosterone is associated with risk taking and maybe women kind of tamp that down a little more. is there any sort of causation
there that you see? >> with everything that i've read and the people i've spoken to say really it's just the diversity of opinion. and particularly when you have more than one woman -- if you have one woman in the room which i think all of the women around this table have been the one woman in the room at times, when you have one woman in the room she is less likely to speak up. if you have more women in the room she is more likely to say you know what, can we rethink this? can we revisit? and you have a diversity of opinion which is good for everyone. >> well, joanne, thank you very coming in today. great talking to you. >> great to be here. thank you. coming up, our guest host's predictions for 2015. what savita says will be the survival of the fittest for well-known stocks and why some consumer companies should be worried. then at the top of the hour, we've got legendary oil man boone pickens on the drop in crude prices and his expectations for the new year. as we head to a break, take a
store sales for the quarter. meanwhile, chesapeake energy announced a $1 billion stock buyback. this follows the completion of a $5 billion asset sale. and one small cap stock to talk about. vanda pharmaceuticals striking a deal with novartis. vanda gaining the rights to the schizophrenia treatment. in u.s. and canada. all right. talk to savita one more time. there are some pockets of worry. our guest host says the consumer stocks for one -- so you worry about those or you like those? >> i worry about them. because i think there's this big sort of playbook trade right now where everyone is buying consumer stocks. everyone is buying consumer discretionary. it makes sense. but that drives a very small subset of consumer stocks. more like the low income kind of low price point stocks. so i agree with the guest -- your guest that mentioned dollar
tree. those are the stocks that are going to benefit. walmart is a big beneficiary of lower oil prices. but that's actually consumer staples stock, not discretionary. so i feel like there is this whole knee jerk trade right now to buy the discretionary sector because "a," it did so badly most of this year. "b," we're used to leading -- everybody loves the retailers because they've done well the past five years. but i worry this isn't going to play out the way everyone is expecting. >> tiffany and coach and niemann marcus, they've already had that. >> i think the wealth effect is done. they do well when high end consumers are doing well. their home price acceleration is appreciating. it's now at 5%. that's a big drop from last year. so it kind of feels like we're done, but i still think there's a big bid on the sector. if you look at fund managers and active managers, they are more
overweight consumer discretionary stocks than any other sector of the market. and i think that's going to hurt next year. that's where i worry that we might not see that leadership continue. >> even if oil prices stay low? >> even if oil prices stay low. i think the way you play it is you buy staples. you buy the walmarts. maybe you buy a few discretionary stocks like the dollar generals, the lower price point retailers. but the whole sector doing well, i just don't see that happening next year. you've got consumers that aren't seeing wage growth yet. everything is on sale. i feel like that's kind of a warning sign. that's not a great scenario for consumption trends. they're really trying to lure consumers aggressively. i see that as a negative. >> this is a top down economy. the way we've seen the market snapback going into the close of the year, are you worried about january? are you worried that some comes
out of this? >> oddly enough, january is usually a strong month for stocks. in particular really low quality junkie stocks tend to do well. >> that's for the tax law side. but a lot of them have done well. if we've had a lot of gains that maybe are just people adding. >> there could be that year-end rally trade. i think next year is going to be a volatile year. i'm terrible at calling a month-by-month performance, but i think we're going to see volatility. we'll see a good year for stocks. i think stocks are still going to be one of the better places to be but it's not going to be as easy as the last couple of years. so big ugly companies that nobody owns like the dogs of the dow, i think that's going to be a good strategy nest year. the ges, the microsofts, the companies nobody really cares about. those could take the market the
next leg higher. >> i know you're definitely not going to be day-to-day or week to week. but let me get some ideas here. that everybody right now thinks -- almost the consensus is that between now and january 1st, everybody needs theed winners. it's just we're on a steady march upwards. >> right. >> when everybody thinks one thing, it's always the opposite. is there any chance this whole thing that's happened the past week which doesn't make a lot of sense -- the. >> volatility we had last week -- >> we could have a down year next year. >> yeah. 2200 is our target for next year. 2000 is our target for this year. i think we could see a little softness in the week to come. who's to say, but everyone's betting on something so maybe it doesn't happen. >> so other than the u.s., would you -- i made the case earlier there are other parts of the world that haven't had the same
move. >> europe and there. >> could you do that? >> i think you have a long time horizon. >> merrill or is that your thing or not? >> at merrill i cover u.s. i got the luxury of covering a great market. >> the future fund, spread your risk. >> exactly. globally diversify. which is why i like big cap companies in the u.s. basically big global plays their not just u.s. economy bets. >> well, savita, thank you. you're very declarative throughout the entire hour. which i felt was excellent. >> you actually asked a lot of questions. it's like a whole role reversal here. >> you're right. and i listened and paid attention. >> that's right. >> thank you. >> thank you. when we come back this morning, bold market predictions
for 2015. and we will check bob pisani's track record for his predictions for the year. plus why david rubenstein is rapping in his holiday video. check it out. "squawk box" will be right back. ♪ pick up the phone and give us a call ♪ up next on "squawk box," the crude oil plot thickens. we'll talk with our good friend boone pickens. then at 8:30 e con data to see. we'll get durable good and real gdp. it's two days until christmas, but there's plenty to do. "squawk box" will be back when this quick break is through.
it could prove to be the biggest market story of 2014. boone pickens joins us on the drop in the price of oil and his expectations for the energy markets in the new year. bold predictions for the markets in 2015. what you need to know to prepare your portfolio. star wars, terminator, mad max, jurassic park. in hollywood, 2015 is the year when all that's old becomes new again. but will it be enough to bring back people to the theaters?
>> just went and made a new dinosaur? probably not a good idea. >> the third hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin. our top story this morning, the markets major u.s. indexes closing at new highs yesterday. that was the 50th time this year that the s&p settled at a record high. and we're indicated up again today. as you can see with u.s. equity futures. it's the last big day-to-day of the year. and we'll get the third estimate of third quarter gdp. also november durable goods at 8:30 a.m. eastern. then later this morning, consumer sentiment for december.
new home sales as well and personal income and spending data. okay. among the other stories we're watching at this hour, north korea back online after going dark in a complete internet outage for hours. ranges from technical glitches to a hack. and we're watching greece. stocks there falling as athens moves to early elections. of failing to gain enough votes from parliament. also lawmakers will vote again next week for the final time. early elections could derail some reforms to raise the risk of another economic setback. the energy markets giving investors a look at 2015. crude is down 40%. natural gas is falling fast too. it's down nearly 30% for the year. check it out. it's dropped to new lows
yesterday. plus aaa reported that gas prices have fallen for 88 days in a row. the longest streak on record. joining us now is boone pickens. it's great to see you this morning. thank you for joining us. >> sure. >> i know you've been through some things like this in the past. it's probably not a huge surprise to see it again, but i wonder what you think happened this time around. >> this time around? too much oil. but the thing that has not been focused on is demand is down. and the demand for the world is another 300,000 barrels this year. and half of that is what we got. and the over-supply of oil has come from the united states. so it's, all that is very interesting. but i know you have some questions for me. >> the demand being down in china, the demand being down in europe, we know that's part of what's happening here. how much do you think the mix
is? how much of it is over-supply? how much is ovlower demand? >> i would give lower demand credit for what's happened. but what you're going to have happen is just watch the rig count. and you have 1500 rigs running on oil already you have dropped 75 rigs in the last three weeks. if you go back to 1981, i know it's a long tile ago, but 1981 we had 425 rigs operating in the united states. and that was cut in half in about 12 months. and we in 1998 all dropped to $10. and you cut rigs in half again. a thousand down to 500. then 2001, recession. 2008, recession. and they all, they were cut about 40%, 50%. so you're going to have the same
thing now. >> so you think it'll be a quick dropoff. they're going to spend less money in terms of dropping rigs next year. how long do you think it will take before oil prices come down? >> well, i saw continental cut their cap x 40%. harold hamm, and he's a smart guy. he sees what he has to do. why don't buck it? just go ahead, accept it and all. and so how long? 12 to 18 months, i think. now, i'm talking about brent which is $5, $6 above west texas intermediate. i think it'll be back up $90 to $100 a barrel in 12, 18 months. the world got along just fine on $100 oil. and when you look at opec which i want to comment about that, but you look at opec and they
have told us now three or four times in the last week we are not going to cut production. we are not going to adjust supply. and they're making it real clear. are they trying to test the u.s. producer? >> i don't know. maybe so. but opec is not a cartel anymore. and you shouldn't identify them as a cartel. it's a trade association. when you look at -- you've got venezuela that's broke. so is nigeria. they cannot stand this price for oil. they're going in the tank. who is it that has everything to say about it? it's saudi arabia. because the saudis have the flexibility. i don't think they can produce much more oil than 10 million barrels a day. now, they pound on their chest and say they can do it. the other 2.5 million barrels a
day. they've been to 10 million i think maybe three times. and it was not kept at that level very long. so i think they're doing all they can do. listen, the world needed us. the world needed the u.s. addition to oil production. if you go back to 2005 when i said peak oil is here. if you look at 2005, stretch it out for opec, it's flat. i mean, we did peak in 2005. now, where would we be today without the united states? you'd be looking at 150, $175 oil. so what's going to happen -- >> boone, peak oil wasn't for just the saudis. that was a horrible call. we're not at peak oil. that was a world -- peak oil meant for the world that we found all the reserves we're going to find and that, you know, it's down hill from there. and anybody who believes in that looks like a -- you know, like they had no idea what was
happening now. supply and demand. >> you need to go back and look at what happened to oil production without the united states. >> i know. but we're talking about the bet that the population was going to exceed our ability to satisfy what everyone needed. and that peak oil had -- and that didn't happen. >> well, that's all good [ muted ] and all. but in 2005 you peaked. go back at look at it. >> a temporary peak? a temporary peak doesn't count for peak oil? >> no, no. wait a minute. you got to look at it. if it hadn't been for the united states shale boom that -- >> i know. but it's oil, isn't it? oil is oil. we got more. >> okay, if you're telling me i missed on the shale -- >> you know what peak oil is. and a lot of people have made a career on peak oil and made all
kinds of determinations about what we need to do and how we're going to run out. >> i know it. >> if the markets worked, let the free market work and find ways to find more stuff, right? >> yeah. i'm the expert, you guys. not you. you're sitting there giving me -- >> if you thought peak oil was hitting $95. >> what'd you say about $95. >> he said 2005. >> no, i said 2005. but if you look at 2005, you're finished as far as the rest of the world. what saved you was the shale. it was american industry save the world one more time. that's it. >> go ahead. >> all right. move on. i'm ready. >> let me ask you though. if we're looking at the cycles like you're describing, maybe 12 to 18 months before low prices
make a lot of people cap wells and get down to low supplies -- >> wait, wait, wait. get the lingo right, becky. we're not capping wells. that's not what -- >> harold hamm told me the same thing. that we won't cap. that's not the way we're going about it. but let's just -- >> no. you'll lay down the drilling rigs. >> right. >> what do you mean lay down? you'll stop drilling. >> can you switch it back on when oil prices go back up? >> don't use the word turn it back on. you'll start back drilling. >> okay. so start back drilling. can you start back drilling really quick? >> no. no, you didn't hear me. you're going to cut 500 rigs out of there is what you're going to do. you're going to come down from 1500 rigs to 500. you probably can get that accomplished in six to nine months. >> boone, and how many of the guy who is own the rigs might
either have to file for bankruptcy or as you were saying producer will be challenged over the next 18 months because they are so over extended assuming that the price wasn't going to be where it is? >> oh, don't -- let's don't go off scale. the industry has suffered tough times before. these guys, you'll get some that are over leveraged that will consolidate. there'll be some -- and same way with some drilling companies. they'll consolidate also. but this is not an event that we haven't witnessed before. >> no, that's my point though. what i wonder is do these swings speed up in terms of how quickly oil prices will go up or come back down? are we just speeding up the pendulum swing and making it move faster? does technology make it faster for producers to step up production or tamp it down more quickly than we have seen in the past? >> well, go back and look at
your times where it's dropped off. just look at your rig count. study it for 15 minutes and what you'll see is you're going to pull back. those pullbacks are about 40% of the rigs. all right. so i said a third of them. 1500 down to 1000. 30%, 40% go down and you're working with a decline curve you haven't seen on those other shutdowns. >> boone -- >> this is more severe. so what will happen as the price of oil is down, you've got the cheapest oil in the world in the united states right now. i mean, we have just given our economy a trillion-dollar equivalent tax boost. okay? >> can you forecast -- i mean nobody knows more about natural gas either. i go back all the way to when i owned mesa with you. can you tell me the 10-year forward average price of natural gas? is it just worth -- is that all
it's worth is $2 or does it go back up to more historic levels? >> well, i keep telling you look at the rig count. when you got -- when the price collapsed from $13 down to under $2 five years ago on natural gas, what happened? rig count went from 1400 down to 400. okay? you quit drilling. decline sets in. and demand will go up with cheap natural gas or oil. so demand will come up, price down. and -- excuse me. rig count is down. demand goes up. price is low. you go back to drilling, you can bring her right back up. it's unbelievable the resources that the united states has. and the capability to go in, get those resources fast.
so is what's going to happen to the natural gas price. listen, it's down now. you lost 60, 80 cents off of it which is huge. that's 25%, 30% off your natural gas price in the last three months. >> well, we should still do your plan is what i'm saying with all the trucks and then the demand goes down even more then we can keep prices low around the world. i mean, we should still do it. you ought to be yelling about that. not yelling at me and becky. >> okay! i'm yelling about that! all right. okay, listen to -- let me have a chance to respond. okay? >> go ahead. >> you're sitting here. now you're going to go to heavy duty trucks. what's going to happen, you're going to have probably the railroads will go to it too. and it's been slower than i thought would happen. but it is still cheaper than it was ten years ago, the comparison of diesel to natural gas. so yes, it's going to happen.
but the country needs an energy plan. and thank you for mentioning the pickens plan. because that's an energy plan for america. but everything has been so cheap, nobody focuses on it. and so here you are. but again, i can tell you. opec is -- sure. the saudis are powerful. they are big and all, but the rest of the crowd, i mean, it's a trade association is what it is. that's the way they explain things. it's not like a cartel. >> all these viewers think you're feisty. did this guy ask whether oklahoma state lost last night? what the hell happened to you? they didn't even play, did they? >> sure we played. we beat ou in the last game of the season. champions of oklahoma. >> no, basketball. >> i'm still into football season. i can't -- listen, at my age, i
can only focus on energy and football until football is over well. then i'll switch over to basketball. >> hey, boone. we're out of time today, but next time you're in new york will you come and visit us? we're moving into the city. we've got a new set there and we'd love to have you in person with us. >> well, thanks. i'd love to, but once again i think you're going to be up to $90 to $100 a barrel on brent, the global price for oil in 12 to 18 months. >> it's going to be more expensive for you to get to us then. >> what? i'm going to be rich again if i'm right. >> well, i wouldn't bet against you, boone. so thank you for joining us today and we'll talk to you soon. merry christmas. >> good. thank you, same to you. >> okay. happy holidays. when we come back, the 2015 playbook for the markets. what you need to know to make money next year. then david tepper's christmas gift to show.
we'll tell you about that. and later data. and then find out if the movie biz can turn things around in 2015. and jim cramer. "squawk box" returns with all of that in just a minute. 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.
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welcome back to "squawk box." this week we're looking into the new year. getting the playbook on 2015. in a minute bob pisani will lay out his thoughts on the market. but let's see how he faired this year. bob was bold saying the fed would increase its bond buying. strike one. with the fed ending that program in october. he also predicted dallas fed head would resign. sorry, bob. that was wrong again. and then finally bob said microsoft will buy yahoo! and name marissa mayer its new ceo. strike three. so there you have it. >> why don't we just cancel next year's -- >> well, we're going to give you -- >> all right. okay. >> we're going to play along here and give you bob's 2015 predictions and find out whether they're just as bold. here they are.
>> russia will be an even bigger problem next year though europe will surprise and google gets serious in its fight with apple. here are three predictions for 2015. boring, they're not. first russia defaults on its debt. the russian ruble has hit new lows against the dollar. oil has dropped 40%. crude oil and petroleum products are half of russia's export revenues. how will they pay for imports? they will default on their debt. second, the european stock market outperforms the u.s. stock market. no recession next year in core europe. the eurozone is stuck in a long-term slow and no growth environment. but the core countries will not sink into a recession. the euro will remain weak boosting trade. after a year when expectations rain shower constantly revised downward, european corporate earnings will begin turning around. deflation will remain an issue.
third, google buys paypal. paypal is scheduled to be spun off from ebay some time in 2015. it won't happen. google will buy paypal and combine it with google wallet. >> all right. famed hedge fund manager david tepper as you know for a long time -- was it five years ago when he first said as long as either the economy recovers or the fed will make sure that it recovers. so we've checked back with him again and again and we talked about how well people that have been bullish for a long time have been. okay. here we go. so here's his latest. i'm going to read it. i've gotten clarity on it just now so we can have it. but here's what he says about 2015. he goes, and this is a christmas
present. this year rimes with 1998. russia goes bad this year. easing coming from europe. it sets up a 1999. and then he said i mean 2015. now, for some additional analysis, he went on. we looked at the nasdaq. it was up 80% in 1999 and i think the dow was up. >> dow did well too. >> when we talk about '99, we talk about it as the peaking of the tech bubble and the pe sort of expansion. coke was at 50 times earnings and ge. and it was kind of a -- you think of it as a bubble year. but it makes you think at least about how well you do at the beginning. i said what are you saying. he said worldwide money was made too easy. now he's sounding a bit -- then and now. even though given where u.s. fundamentals were which is things are going well and we're
still at zero. he goes, that was the same at '98 and you know what happened in 1999. it's not exactly the same, but it rhymes. in other words, be aware of the possibility for some sort of overvaluation of the markets in 2015. they are fair value right now. they get more overvalued and that puts it in the top. >> but he's not making a bearish call yet. >> that's what i can't figure out. >> sounds like he's saying money is easy, too easy for where fundamentals are. things are better. it was like that in '98. had a big run-up in 1999, things got overheated. >> then fell off the cliff. >> he says they are fair value now. you have to be aware of the possibility of some sort of overvaluation next year. >> if he's right, the question is do you take your money out of the market now? or do you run and watch this run and then you have to know when to get out if he's right? and he's been right repeatedly.
>> past performance doesn't guarantee future performance. people have said this year wasn't -- so who knows. but we appreciate him. he says he's going to send me tickets -- >> it's been there for a long time before. >> he wants me to stay off the bengals bandwagon. >> because your disloyalty has served them well this year. gdp and durable goods at 8:30 eastern. (trader vo) i search.
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we are just a few seconds away from double goods and gdp. rick santelli is standing by. >> litny today. durable goods is not a good beginning. down .7. we were looking for up 3%. let's look at the xs. transportation down .4. if we look at the proxy for investing by business capital spending, capital goods orders. x aircraft. it's unchanged. and last time went from down 1.3 to down 1.9. not a good direction. it doubled down from a .4 loss to now minus .9.
let's look at what's going on with regard to durable -- excuse me. gdp. we originally saw 3.5% then it moved to 3.9%. now the good news! not $4.3%. the new handle, 5.0% nap is amazing. do you have to go back a full time where you've had two four or five handles together like that. you'd have to go back to '03. so that's definitely a surprise. now let's look at some of the internals to that. well, it was 3.2% stronger than expected. the pricing index, 1.4%. and if you look at q over q, also .4%. durable goods not so good.
gdp much better. what are we going to be looking at today? that will be significant because of the weakness in the third quarter. but no matter how you slice it, i hear a message. the message is 0% rate policy needs to end. back to you. >> we've been talking about it all morning, rick. we can add david tepper to the list of people who are at least raising some concern about how is given for fundamentals. if you came down from mars and looked at unemployment gdp, look at everything say where would you say fed funds would be. you'd say 3% or 4%. not 0. >> it's this world we live in. it's this all of none world we
live in. you hear the chorus going how can we tighten? we have issues with sustainability in the past. where you had pops in gdp. but we didn't sustain them. but we see that there's a sustainable growth here. could it be better? yes. but it's about matching them appropriately before the window closes. may come back to haunt us in larger ways. it's not only about exports. those intersections are small. it's about some of the other systemic issues. it's the cost of labor issues. at the end of the day, we can talk about words like inflation and deflation. at the end of the day with 1.3 billion chinese and then add in all the asians and look at those huge numbers that are willing to be a labor force for cheap, if that's going to be exported in the form of lower prices, it's
not what you call it. it's how you help it stop. and i don't think current policy from the old days that those remedies are going to work. and that's the discussion we should be having. >> and it's nice to get back up to a level where you could cut again if you needed to. >> exactly! you need a little insurance. i mean, the government mandates we have all forms of insurance. what about our central bankers? >> yeah. need dry powder for the next time. if we stay here forever, it's like what do you do next time? we threw everything we had at it last time. we're throwing it out at 5% gdp. all right. rick santelli, thank you. merry christmas. >> are you in tomorrow, joe? are you in tomorrow? >> i may not be in tomorrow, rick. >> all right. so to all of those not in, happy holidays, happy hanukkah, merry christmas, and let's hope that
in 2015 we'll be looking at a bigger bounce in the economy and maybe interest rates more appropriately labeled so we can stop some of the malinvestment. >> rick are you in tomorrow? >> absolutely. >> all right. i'll save my holiday sentiments for you then. i'll be here tomorrow. >> i want to watch the rangers in person tonight. >> good for you. i've given up on most of the chicago sports but we do have our blackhawks. >> you do. we're going to take it to washington tonight. it's a metaphor for me, rick. >> or you're going to get spanked by washington which is also a metaphor. >> we all have. when we come back this morning, hollywood going back to the future next year. hoping to revive the box office after a lackluster 2014. will old favorites like luke sky walker bring moviegoers back to
and trading features, plus powerful mobile apps so you're always connected, wherever you are. because at scottrade, our passion is to power yours. welcome back to "squawk box," everybody. we've been watching the futures this morning. and right now check this out. they're indicating an open above 18,000. dow futures up by another 87.5 points. remember yesterday the dow
closed at -- i'm digging here. digging, digging. >> 17,950-something. >> with this extra points, that would put it above 18,000 making jeremy siegel right at his prediction. but here we are right at the end of the year. andrew? box office ticket sales expected to total $10.5 billion in 2014. that's a 4% drop from last year. movie makers are ending a rough year with a black eye. the sony pictures hack of course and the question will be will 2015 bring tears or much-needed joy? bringing us this news now is brent lang. and also our own julia boorstin. welcome, guys. what do we expect? this has been a pretty lousy year. >> terrible year. >> terrible. 4% doesn't sound terrible, terrible, but in an up market it's pretty terrible. >> yeah.
very weak. not good news on a lot of fronts. you know, from nielsen, this indication that 12 to 24-year-olds down about 15% in their movie going habits. that's a big problem for the business. >> do you think that's a real trend or was that a one off because of the offerings in the theaters? >> right now they say it's product driven. it's the product that's behind this. if it's systemic that's a huge threat. and you have the fact is there's a cap on expendable in k. you know, everybody has these huge expensive phones, all these other ways we're spending money. people could be cutting movies. >> do you think it's that or just lousy movies? >> there were othcircumstances s year. like the sony. and then big movies like the
fast and furious movie being moved out of this year. there were couple big movies delayed that would have given a big boost. i think the trend with the 18 to 24-year-olds is potentially problematic. i think they'll still come out for the really big films. i think next year there are going to be a lot of them including the new star wars film. i think that one is going to be huge. i think if some of these really deliver, we're going to see a bunch of big franchise films and perhaps some new brands or even second films in franchises. you know, reviving a number of things in the theater. >> when you say second brand, sort of new -- who would be the new franchise? >> i think tomorrowland is a film that has a lot of potential. george clooney. it's a big disney title. the big problem when i look at this slate and it does look huge. you have jerry lopez telling the amc chief telling "the new york times" he thinks the box office is going to be at $11 billion.
it looks massive. but the problem is where are these new franchises? it's a lot of deja vu all over again. it's rebooting not original ideas. the fact is at some point people are not going to want more of the same. that's a problem for hollywood. >> but i think there are some inspiring things here. one of which is women at the box office. for years hollywood made movies for young men with the idea that they would be able to bring their dates and women didn't go on their own. this year we've seen the success of "lucy" a female-driven action movie. and "the hunger games" franchise was massive. i think hollywood is learning from that and make more movies targeting women. and i think those could do very well. the other thing to keep in mind here is we're talking about the domestic box office. those declines, those are at the domestic box office. overseas the numbers continue to climb. and that's where hollywood is really going to see the big profits moving forward. >> that's why we keep seeing all these action flicks, right?
>> they translate. >> look at china. china is basically single handedly moving the foreign box office into positive space. it's up 2% to 3%. that's almost entirely because of china. >> is there any sleeper winners in all of this? those who are winning that we don't realize. or losers in all of this that we haven't put out on the table? >> i think disney has had a remarkable story. "guardians of the galaxy" based on a marvel property that no one i know has really thought about. they turned it into a massive hit. now that's going to back new franchise. and it shows how disney is able to mine deep into their marvel universe. >> what's the lesson behind that working and others not? >> disney, if you look at the biggest brands in movies now. there's four. marvel studios, lucas films,
pixar. they're at all disney. there was no bigger than the 88 second trailer for the next star wars film. >> and that movie's not out for a year. >> exactly. it barely had any footage. >> what is bill spend? $12 billion? >> for lucas films? i think $4.5 billion. >> will that look like one of the greatest deals of all time? >> well, if the film works and the film is good and j.j. abrams does have a great track record when it comes to reviving brands. that's going to perhaps be a very good deal for disney. >> right. you say warner brothers. >> not a good year for warner brothers. >> do they have anything to make you think next year will be better? >> next year is not looking so great. "mad max" could perform well. but this was perhaps the most consistent studio and they had some real bad films out there. "blended," "edge of tomorrow," films that didn't work. "harry potter" is off their
slate. "the hobbit" is done. they need to get into new franchises and that's why you're seeing them investing so heavily in dc comics announcing those films through 2020. >> what's your take on universal? we should say parent company. >> going to be their most profitable year because they had sort a of a quiet year at the box office. paul walker's death moved the "fast and furious" film. that took a hit in terms of their market share. next year looks more promising. that movie coming out. a minions spinoff. so they'll be in better shape next year, i think. >> that "despicable me" brand has been amazing. i'm sure the spinoffs will be profitable with the kids wanting their parents to take them. >> thanks. appreciate it. happy new year. >> you too. when we return, cramer's outlook.
and david tepper's gift to "squawk box." his thoughts on the markets. >> he's not actually here. ♪ there's confidence... then there's trusting your vehicle maintenance to ford service confidence. our expertise, technology, and high quality parts means your peace of mind. it's no wonder last year we sold over three million tires. and during the big tire event,
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david tepper's christmas gift to "squawk box," a peek at his market outlook. after wading through it all, i think i finally understand exactly what he's saying. he says this year rhymes with 1998. russia goes bad, easing coming from europe setting up 1999, oops i mean 2015. the basic point is worldwide money was made too easy for where usa fundamentals were in both late 1998 and 2014. then after that the gdp came out at 5%. now, what happened in 1999, he says it's not exactly the same. i asked him in 1999 everything went up a lot but that marked a top. he's say, no, that's not what he's saying. he's saying that the conditions are similar to where you could get the possibility for some sort of overvaluation of the markets. and i asked him whether that meant that some chickens were coming home to roost given all the easy money that didn't make sense.
he said no, that's not what he's talking about. he's just saying the conditions are ripe for overvaluation. and in '99 the s&p multiple went to a 30. so on next year, the pe is now, like, 16. it won't get to 30, but just be aware that the conditions are possible for this thing going through overvaluation from 16. >> it's very nuanced. it's not a bearish call. but he's pointing out that, look, we've come a long way -- >> but at 16, where the conditions are ripe for overvaluation and we're only at 16. it does need to go to 30 to get quite a big move for next year, which -- but when i asked him, i said, are you saying the chickens then come home to roost, i don't think he's saying it's necessarily a year for a top, but a year where the conditions are ripe for overvaluation. so cramer, to bring this back to where it started, you know, i gave up on the bengals. and naturally, they won every game since i gave up. so, they are going to play pittsburgh sunday and it's going to be the sunday night game on nbc. so tepper invited me to come
down to rejoin the bengals' b d bandwag bandwagon, which would mean -- if i rejoin, the bengals would lose, right? >> what can i say? big ben is having a big year, but i really don't trust the steeler defense. i think the bengal defense is fantastic. but in the end, who really comes out of that conference? i mean, we all know that, you know, geez, there are a couple of powerhouse teams. but you going to go against new england? >> jim, they haven't won a playoff game since 1990. i think "squawk box" started 20 years ago in 1995. so it was five years before this show started was the last time they won a post-season game. >> well, i mean, i've been a suffering eagles fan, but it's true we've won a lot. we were in the nfc championship for five years. look, cincinnati has good run game, cincinnati has good defense. i think that that matches up very well. i do think that antonio brown is
the best receiver in the nfl, other than beckham. >> i'm going to keep the bengal streak going. i think pittsburgh is going to -- i think big ben is going to win and going to win by a lot. now, what about this stuff tepper's saying. that we're in a period where we could get some overvaluation in 2015, given how easy the feds have been with a 5% gdp. >> well, look, i don't think it's the fed. i mean, i think that the rest of the world is still struggling. >> he did say worldwide. he said, worldwide easy money, doesn't match up with how strong fundamentals are. >> but you want him to take it to 4%. why not just throw us into recession. why not take it to 5%? is that the goal? if that's the goal, i mean, look, when -- the s&p was up very big that year, the nasdaq was crazy that year. >> 80%. >> yeah, just take it to 5%. take the margin rate, take the margin rate up very big.
yellin can control the margin rate. we haven't done anything with it. it was something that greenspan could have done. it is something that she's in charge. take that margin rate up very big, get it so the market doesn't overheat. there's nothing the matter with doing that. but to take the fed funds rate up to 4%, create an inverted yield. in order to be able to satisfy all the people that are short. it's like, yeah, let's just run the whole market for the shorts. let's just go and do it. >> someone else was pointing out that the nasdaq went up 400% after inappropriate easing, because of foreign conditions in late 1998. >> well, that's absolutely true. >> we're not there. >> it's a casualty of the market. honestly, if you want to throw everybody in recession and have a gigantic year for hedge funds, terrific. that's never been my style. but you know what, maybe the hedge funds, there's 317 million americans. and there's, what, like 100 hedge funds that matter? maybe 100 versus 317, i'm going with the 317. raise the margin rates.
it is up to the fed, the margin rates. that could really help. and also, let the bengals come out and everybody's happy. >> bengals -- jim, you know, they're 10-20 on monday nights. they're 18-43 in prime-time. i'm just telling you, i've seen it happen. >> maybe this is a different kind of year. >> well, it is. my point is, i capitulated after 45 years and they've been winning every game since. >> well, so mark the top. not unlike the tepper top that we saw in 2015 at the end, remember the end of 2015? we were all -- oh, shoot, it's still 2014. i got -- >> no, he's not saying a top. >> oh, okay, so it's march of 2016 is the top. that's when we get the blow-up. >> you didn't say anything about it. you just said that the markets are ripe for overvaluation. >> look, they are. they are ripe for overvaluation. and that's why you have to have them raise the margin rates. >> if we go from 16 to 25? >> that would be terrible.
>> no, that would be how much more? >> that will cause a crash in stocks in 2016. it will. that's why the margin rates have to be raised. but the fed funds rate, to take it up while the rest of the world is where it is, just doesn't make sense, doesn't make sense. >> yeah. rick says, you know, no one's saying take it up to 4%, how about 1%? >> delivering alpha consensus was 4%. you interviewed someone who really felt that 4%, if he came in from mars, he would look at the world and go to 4%. >> not saying it to raise it there. >> that was that martian moment in delivering -- >> but he wasn't saying to raise it there. he said the conditions at this point are -- if you came in, that's where you would think they would. which is to make a point that maybe the fed is behind the curve. >> i think -- >> there may be some -- are you sure that there's not certain areas where money is going, where it's going, and it doesn't really validate where it's going? >> i don't think we could even -- look, i think the rest
of the world is bringing money here. i think the dollar's great, i think our country's safe. i think that we're suffering from overvaluation, simply -- or can suffer from it, because our country is the only place i would want to invest. i understand some people are saying that europe could turn around. europe could turn around and become right-wing fascist. i think our country's a great place to invest and that's what's causing this. >> it's true. hedge funds are making a fortune with all the easy money, unlike the 317 million americans that aren't. >> well, if bengals win the super bowl, tepper will be right. how's that? >> i'll bet on that. >> bengals win the super bowl, i'm putting tepper in. >> i will take off my toupee if the bengals win the super bowl. i don't have a toupee. i just egg people on when i say that. thank you, cramer. >> absolutely. >> and you don't either. >> no. >> see you in a few minutes. >> that is true. coming up, a wrapping david irvinestein, sending out a
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video greeting card this year, to nod his firm's investment in beats electronics, which was later acquired by apple. and there he is. >> love a guy with a sense of humor. we appreciate it. that does it for us today, folks. make sure you join us tomorrow. right now it's sometime for "squawk on the street." good tuesday morning. welcome to "squawk on the stree street". time carl quintanilla with jim cramer and david faber. dow, 18,000 once again in sight. a whopping 5%, the strongest back-to-back quarters in five years. oil's up as well. and wait until you hear what boone pickens had to say about prices earlier this morning on "squawk box." ten years, right around 2.18, we are still awaiting new home sales in a bit.