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tv   Squawk on the Street  CNBC  January 7, 2013 9:00am-12:00pm EST

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he's more sanguine than you are, right? >> undoubtly. i don't think this public policy uncertainty is over. i also think that the multipliers on the tax hikes are bigger than most people think. and there's going to be a bigger slowdown in the first part of the year. i do think capital spending will stabilize later. but the first half of the year is going to be -- >> i would say -- >> what doesn't kill you makes you stronger? >> how many times this morning did we hear the word uncertainty. >> i'm uncertain, yeah. >> find me a time when investors have been uncertain and there hasn't been risk. when the investors are uncertain is when there's all the opportunity. i think that's telling you, it's a billboard out there telling people there's opportunities in the market, that people are so uncertain. >> we want to thank you both for coming in today. it's been a pleasure seeing you both. >> thank you. >> we'll be watching as things get under way. that does it for us today. be sure to join us tomorrow. right now it's time for "squawk on the street."
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go irish. good monday morning. the band is back together. awfully nice to have david back. i'm back. we have jim cramer, and david fabe, as they say in france. the single best week for stocks in over a year last week. europe has lost a little ground this morning despite investor confidence numbers coming in at an 18-month high. the s&p starts the week at five-year highs. even as the lines are drawn in the battle over spending cuts and the debt ceiling. and then there is earning season. kicks off tomorrow with alcoa. >> banks in the spotlight this morning, bank of america settling with fannie mae with mortgages it underwrote during the housing boom. citi submitting to the feds.
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>> revising up, gdp forecast to 8-1, saying investing in the mass market stocks is the way to go. >> potential cuts at the magic kingdom reports disney's got internal cost-cutting review under way. >> the question of the day, can the new year rally continue. last week the s&p jumped 4.6% to a new five-year high. not only is wall street looking ahead to earnings season, beginning with alcoa tomorrow, but paying close attention to the battle over the debt ceiling and spending cuts. the big debate over whether more revenue increases should be on the table. >> the tax issue is finished, over, completed. that's behind us. now the question is, what are we going to do about the biggest problem confronting our country and our future. and that's our spending addiction. >> mitch mcconnell's going to draw that line in the sand. it's going to be a recipe for more gridlock. we have to take a balanced approach to long-term deficit
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reduction. >> and away we go again. jim, you said last week, you expect a see-saw quarter courtesy of these guys. >> it's so funny to hear the democrats say, it's time to think about taxes. that's kind of what they won on. senator mcconnell, i know that over a decade, i have felt opposition to -- he used to come on cramer. he was always, let's say volatile. how could he not be right now -- the entitlements are the issue. this is the united states of america. and someone's got to rein it in. no one wants to, because boy, once you do that, i've got a biotech company on tonight that wants to charge $300,000 for a new drug. medicare says fine. >> big story in the "times" over the weekend about insurance premiums going up double digits. you've had time to reflect on what we saw last year and what we may see this quarter this year. >> of course, we come in and the first thing we're talking about
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is washington, d.c., again. one would hope we could move away from it, but it's hard to imagine we can. even the most optimistic amongst us would like to feel that. i think everybody wil throw their hands up and admit the dysfunction is complete and total. one wonders what that will do to sentiment. >> there's still a lot of money to be made, despite it. you've got the redskins, that represents the capital, or congress. then you have the state of washington, where there's hope. where there's -- >> amazon. >> yes. upgraded. i just feel very strongly that we could get bogged down in washington. we don't want to get too caught up. >> the references back to the summer of 2011 are very apropos, particularly in this situation, talking about the debt ceiling and spending cuts.
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that was exactly the issue that caused the downgrading of the united states of america. that is at issue. the very same things that provoked that downgrade are on the table right now. and so it's hard for investors to forget the reaction to markets that we saw. it may not happen, but it does hearken back to that period. >> right. it's funny, there are a lot of questions still in terms of spending cuts. you have no idea how it spreads across the economy, whether you are a professor at a university expecting a $4 million grant from nasa for physics research. i have spoken to one of these people. and not sure whether you're going to get it. to, of course, the enormous expenditures to defense, that are still out there and question marks. granted, we do have a little more structure to the tax policy in this country for now, but we may be entering a debate of further tax reform dealing with deductions and the like and the spending cuts that many believe are also key to putting us on firm fiscal footing. >> right. >> earnings at the top.
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there is a question, jim, whether or not we're going from the relief of having the debt -- having the fiscal cliff issue resolved to the reality of what alcoa and wells fargo starting this week will say about 4-q. >> i think we're at a curious juncture where we have been a beacon in this country. you say, listen, the united states is going to be okay. but china could be a problem, europe could be a problem. but we know china's improving. i think we'll be the problem in terms of washington. alcoa got a lot of different divisions, whether it be architecture, construction, whether they be cans, natural gas. obviously auto. they are a great read. i know david makes fun of me when i talk about the great east german who was taken over alcoa. but his conference calls are road maps. they're road maps for what's going to go on. i'm looking for him to say europe has stabilized, which he didn't say last time.
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china's coming back. he spends an enormous time in china. and unfortunately the united states is not doing that well because of washington. >> so that will be key. the markets are very strong. the back drop to earnings this season are that they're very strong. look at the various indices of closing at record highs, mid cap index, small cap index and most importantly for dow theorists out there, the dow transports were up 6% last week, closing at the highest levels since july of 2011. yeah, so this is a very strong -- the market action has been quite good, after we saw the big two-day rally last year. we held in there. that's the bottom line. we held in there. >> but washington, unfortunately, taketh away. all the companies i was looking at their charts this weekend, all costs down. emphasis on raw costs down. emphasis on the overall cost of doing business, whether it be steel companies, energy costs are down.
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southwest air, i never recommend airlines anywhere, but you see them going up. raw costs being down, natural gas staying low. really nice offset to what washington can do. by the way, norfolk southern. look at the transports. southwest air. you have the federal express. this stock is breaking out. that's an asian play. norfolk southern had just been the anchor. truckers are still problematic. but if you can see coal shipments going up, because it's an incredibly cold winter in china, you'll have some surprises in transports. >> energy, in terms of the key costs, going down potentially. maybe that answers the question of some who say, hey, margins have been so high for so long, we're not going to have significant revenue growth this year if we get a 2% gdp number. can we really expect margin of improvement this year, and what kind of multiple do these earnings deserve moving through 2013. >> wells fargo talking about
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georgia gold. when you hear new housing, listen up. housing is the story, other than what phil lebeau was talking about last week. aubl automobiles. essential to the u.s. economy. >> bank of america announcing a $10 billion settlement with fannie mae over mortgage repurchases. they will pay $6.7 billion to buy loans held on fannie's books. the basil committee is relaxing liquidity for banks. banks said they could not meet the jarn 2015 deadline. wells fargo, adding citigroup to its priority stock list. another positive mention of citi today on top of a bunch of upgrades last week. a broader issue, the basel
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requirements are going to be key to these banks. they're also loosening the restrictions on what sorts of assets can be held on the books and counted toward this liquidity coverage ratio. >> it's much more favorable for the banks. and also it will not take place until 2019. although when it goms to basel, many of the requirements are not yet in force. it's a positive for the banks, no doubt about that. couple that with the new stress test, whether there will be an ability to return more capital. >> the news today from bank of america, we should point out, it's fasm. they settled with freddie mac in 2011. this does not involve the private litigation, those who brought all the private buyers of mortgage-backed securities as opposed to those held by fannie and freddie. they're paying 3.6, buying back $6.3 billion worth of mortgages. but they've still got more to go, but they're getting there.
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>> i'm trying to -- nation star going up. what a win. i think a lot of this is countrywide. you put countrywide past merrill lynch, bank of america, you take a look at bank of america starting the loan where they've been absent to some degree in trying to get a loan for, if you want to do housing, and you have a reason why this stock continues. bank of america and citi are the ones that are most behind. citi, as it becomes clear, i think people when they decided to put capital through, their capital plan didn't make it. horvath, fresh start. there has to be a reason citi is upgraded day after day. >> another one from wells fargo, putting it on the priority stock list. we'll have a discussion later about whether or not these will be the big dividend plays in 2013. the journal today looking at -- looking for permission for more
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buy-backs. >> wouldn't this be something if a fourth-quarter story, like the banks, continues to be driven. if you have the insurers, have you seen those charts? you've got premiums going up. sorry, everybody. premiums are going up for insurance. because of the catastrophe. but you also have tremendous -- new companies come into insurance, and david, this is something that's going to be a theme of 2013. that portfolio that everybody had that was so bad, because of housing that asset side coming up. >> very important. no doubt about it. on the housing front, you do wonder whether bank of america is retreating from the mortgage market, though. >> there's nobody in the servicing business. >> they will be. but at the end of the day it doesn't appear they're going to be as aggressive. >> wells, of course, this week, charitable trust named. this is the best of breed. what's going up is worst of breed. can that continue. can the regional banks that have
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been weak, can they continue. still way behind the group. this is the times, they are achanging. it's a bob dylan situation. >> is it gone with the wind or not? >> it gets back to the goldman call last week, that you sort of, i don't want to say disagreed with, but didn't quite like, to go to the worst banks, not the best banks for this very reason. we've seen this big run. they're expecting that run to continue. today bank of america and citi are poised to go at 52-week highs. >> you get into a trade situation, trying to avoid the trade, which is that you sit there and talk about capital. yes, it's possible. maybe bank of america can return to citi. it's jpmorgan that's got all the capital, wells that has all the capital. jpmorgan up about 30, wells up about 20 last year. is it a sleeping giant? >> what does that mean?
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>> is he awake? >> sleep walking? >> it is still sort of just sleeping kind of. >> is there anyone left other than jamie dimon? is there anyone else left? >> you ask me these questions that i don't know the answer to. >> i ask you because i love you. >> investors should keep in mind, and this was mentioned early this morning on "squawk box," opacity of the financial services industry. >> opacity? >> it's still there. whether it's basel or whatever it may be. london, you never can be completely certain that you're not going to get hit. >> did you see the london whale when you were in london? >> no, i did not. i saw the london eye. which i very much enjoyed. we did london bridge and a number of the other beautiful bridges. didn't see the whale. in the thames, no whale. no whale was in the thames. >> i think starbucks killed the whale. as opposed to, you know --
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>> am very nice. >> you're going all sorts of places. >> i was just doing literary illusions. you're more like macarthur. >> i like him. >> krueger was the sixth army. >> people have no idea what we're talking about. >> patton, i don't know. >> i think pete carroll. jamie is pete carroll, okay? and it may have been shanahan. >> good thing we've got a live and exclusive interview later this morning with martha stewart. also ahead, the chairman and ceo of alkermes.
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disney is weighing cost-cutting measures and layoffs at a studio and other units. the media giant is targeting jobs no longer needed because of improvements in technology, as well as redundancies because of various acquisitions over the past few years. interesting because the last quarterly report from disney was
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quite good. quite a good report. >> the street didn't like it. >> record earnings, but they missed. it's interesting the timing of this. looking at the studio division, especially after they just made a big acquisition. >> geiger always seems like a nice guy. soft-spoken, terrific. actually wore a sweater vest the last time he was on. i used to think he was a sartorial genius. but i think he's tough. and i think people don't understand when there's an underperforming division, the man comes in, more with a stiletto than a meat ax. this is an important number. i think espn is on a roll, but it costs a little more to get that programming. >> and that will continue to be a focus. espn, costs there for the subscribers at home especially. we'll continue to have the debate about the bundle, will it hold together. if it were to break apart, that would be a key risk for the
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likes of disney and espn. >> espn, 9, 10 or 11. what's amazing, espn now owns a big chunk of the dial. and espn can't be tivoed. let's put it out there, tonight on espn. >> 8:00. big day. >> notre dame. alabama. fighting irish. you've got my vote. >> really? the fighting irish? all right. >> no, roll irish. >> you're going with scarborough on this. >> this is a big game. we cannot forget it is on espn, not on broadcast. >> amazing stuff. >> biggest game of the year and it's not on broadcast. >> one more interesting media story involves hbo, extending their contract with universal pictures. and we'll find out where netflix fits in all of this. because the relationships between the time warners and
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netflix and comcasts and disney changing all the time. >> an important story. last year the disney decision, much more important perhaps for netflix. a shot across the bow to some of the content providers and/or distributors. >> go over that again. i'll tell you why. that stock never looked back. what they did was pay someone. it wasn't as if someone paid them. >> it was the exclusivity of the deal. it really conferred upon netflix at least from disney status, saying, we think you are for real and will be here. >> i got that so wrong. i thought for sure that because they paid more than starz, if people would say, listen, netflix overpaid, listen, when you get them right, you can talk about it only if you got them wrong. i did not see this netflix move coming. >> not a lot of people did, jim. a brand-new trading week and cramer's "mad dash" is coming up
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next. we're finding out what is really in store for apple in 2013 and how you should be playing the stock. let's take another look at futures. it looks like it's going to be easing off the five-year highs. this is $100,000. we asked total strangers to watch it for us. thank you so much. i appreciate it. i'll be right back. they didn't take a dime. how much in fees does your bank take to watch your money? if your bank takes more money than a stranger, you need an ally. ally bank. your money needs an ally. ♪ ♪
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than i've seen literally in four months. >> that's a lot of research. >> trying to focus on something other than washington perhaps. this is a pill that makes you lose weight, and shocking numbers, how many people are taking it. 12,900 in december versus 7,700 in november. a lot of people are shorted. it looks like this may be a winner. not a loser. >> wow. speaking of research, solar city, what's going on? >> we were all critical of it. solar city, a lot of guys like it. the major firms come out. credit suisse, merrill likes it. people are saying go to solar city. it's a way to be able to get financing for solar. i want to put one on my house. >> do you trust musk-led deals? >> you know what, i trust product, and this one may be right. they're a financing company for the lower price of solar, of all
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the silicon that goes in solar. this is interesting for people who want to help produce electricity themselves. which i think is something sustainability that we want in this country. >> b of a, underarmour. >> it's getting hot right here. i'm taking off all my clothes. that's ray lewis, underarmour. a lot of people saying to me, jim, when you like underarmour, they're now at costco, there's price cutting. this is the house that ravens built. ray lewis, very controversial, when you say something good about him, there was an altercation a few years ago, but underarmour, i am doubtful this can go down too much. because it's a technology company. i couldn't resist doing my ray lewis imitation since everybody else was doing it this week. >> too bad they're going to lose to my denver broncos. >> they are going to lose. i think the broncos could be in the super bowl. what a comeback story. i love that. >> still ahead, the dollar has
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had a run over the last few days. a fed divided, inside the rift. the first opening bell of the week, just minutes away. we're back after a break.
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about a minute to go before the opening bell. you're watching cnbc "squawk on the street," live from the financial capital of the world. coming on the heels of the dow, s&p, nasdaq up about 4% or more. best week since december 2nd of 2011. not 2012. an amazing, amazing week last week. we'll be on the outlook for some movers here at the beginning, including amazon, jim. morgan stanley, price target -- >> this is the biggest fulfillment house. when you get everybody else starting to be in this business of saying, we're bricks and mortar, but we have 360, we can deliver to your house, amazon and ebay do this. amazon is really the preeminent one. when they open all these different distributions, i love the call. i like it. >> with that, there is the opening bell.
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s&p at the top of your screen at the big board. vail resorts, wouldn't it be nice to be there. they're celebrating the 50th anniversary of the flagship resort. and, direct-to-consumer retailer, eyeglasses and contact lenses. a couple of contrarian calls. >> that was a fascinating call, i thought. >> that little acronym coming up there, did you see gummy, you know, it got this gross margins, ultra bulk, manufacturing. and i've got to tell you, i'm a little -- i'm a little suspicious only because you need earnings. i was looking for an "e" in gummy. otherwise i'm a gummy bear. >> things are going to improve as more ultra books were introduced in the second half of
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this year. and that is trading at a very cheap multiple. and dividend yield is quite high in these stocks. because people are so bearish on this stock, it's time to be bullish. >> right. look, new ceo coming in. always been a great company. i'm watching dell as a play from pc to services. maybe that could be good. intel was an inexpensive stock. it was an underperformer in the dow. david, i'm going to look at you, you're going to hate this because i'm going to ask you something. >> go ahead. >> obviously linked to intel, down 44%. we like bank of america and citi. is there a way, if you look at the intel upgrade, is there a way to think because of ultra books that hewlett-packard might be able to pull out of this tail spin? >> yes, there is a way. >> how would it happen? >> you subscribe part of it. but eshall see. when it comes to hewlett-packard, there are so many moving parts. the difficulty of the
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turn-around is so widespread from an organization that we pointed out many times has well over 300,000 employees. we'll see. will there be signs of progress in 2013, jim, i think is really the key question. because then you might give investors something to at least latch onto with the hopes that 2014 will be a real key -- not that this isn't. this is the key year for hewlett-packard. if they don't show signs of progress, i would expect towards the end of this year if not sooner we'll start to hear calls of breaking the company apart. i think you have a board that will at least listen to that idea in a significant way, and a ceo that wouldn't necessarily say no. >> this is a dog of the dow. this is the mutt, this is really -- i mean, wow, aspca, one step away, you better get there before something bad happens, you know what i mean? >> not quite the same story, but another turn-around, attempted turn-around under way in silicon valley is yahoo! getting smacked
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this morning, as bernstein takes it to a market perform. price target 23. basically saying too much risk in and ipo not happening at the right number. investing in growth now. they say, we cannot recommend this stock. >> they've been so bright. i always hate to give that against someone who has been so right. alibaba and the $40 million. when i look at that downgrade, i say to myself, this stock has been a levitator. this is a show-me year for them. they've got to show some earnings momentum. >> it's not likeerns not being generous. they're putting up five multiples on 2013 at core yahoo!. which is still percentagewise a decent move from here. >> right. >> great move last year for yahoo!. that equaled to great performance for dan lowe, who has been very patient here.
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gone from what many thought would be a quick activist play to a long-term investing play. which worked out very well, especially when your entry point is around 12. >> amazon, the upgrade from morgan stanley, hitting a fresh 52-week high. other notables, bank of america and citi also hitting -- actually, amazon was an all-time high, not just 52-week high. bank of america and citi hitting a 52-week high. talking about upgrades, settlements with fannie mae. >> the disappointing stories this week is the barnes & noble nook. the nook did so poorly. it looks like kindle continues to gain momentum. jeff besso has quietly built the walmart of the line. it really does seem in terms of getting goods to you, cheaply, offering a product that people like, i'm amazed every day by amazon. >> how many companies have the
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amazons? they miss it on the online portion. we're watching shares of lowe's today because it got a downgrade today and part of that is only 1% of total sales are done online. they're missing an enormous opportunity. the analysts also don't like the change in the formats and other things. but they're just not there when it comes to online. that's a huge opportunity. >> bed, bath & beyond, i was hoping they would adopt amazon. that was a good quarter. good cash flow. amazon remains a story that when you start hearing other companies getting online, they need amazon. i still -- listen, kim cohen on last week, still a good story. the real estate investment companies have not been amazon, so to speak, because there are still a lot of new players that want to come in. amazon is just a phenomena. and so many people bet against it. and it has been a terrible bet. >> even with sales tax being paid in many jurisdictions.
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it was a concern for so long, but it doesn't seem to -- >> it was a bear. >> we should point out before we get to bob pisani, lumina shares down about 9% this morning. the chairman saying at -- roach, excuse me, which we knew had made a hostile bid afforded by lumina last year. that laroche saying they had no interest at this point in pursuing that acquisition. you may recall, those shares rallied sharply towards the end of the year on a french newspaper report that at the time i said i was completely unfamiliar with anything going on there -- >> you said, don't trust it. which was a great call. >> thanks. >> do not trust it. >> it did move the stock up a lot. a lot of that and more being taken out today on that news on i illlumina. >> i like that. one of the things that is disturbing to me is there have been so many articles in papers, local papers, best buy.
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i often find, just an observation, that the newspapers tend not to get the takeover call the way some hedge funds do. i don't find that the u.s. attorney is looking after the newspaper stock, not just because of the first amendment, but because they're wrong all the time. >> that, too. they don't usually have the best m & a contacts. >> the cartoons and comics, awesome. >> they're always right on the money. >> they had the story, i felt, that mattered the most which is that dr. james andrews may have said, not clear rg3. i think rg3 is -- when he went down, i hated the redskins from birth, and it was just -- this guy is fabulous. >> and shanahan, look, a story for a different day. the whole country felt bad when that knee buckled last night. >> let's check in with bob pisani. >> hello, melissa. happy monday, everybody.
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slightly more defensive tone to the markets today. energy stocks, material stocks, a little bit on the weak side. transports taking a little bit of a hit today. the big discussion is about earnings right now. and the question is, was q-3 the trough in earnings? remember, a big theme for the bears last year, a big theme was slowdown in earnings. 2012 started slowing down. we had 2.4 increase in q-3. now we're expecting q-4, 3.3%. that's the s&p 500. it's still growth. and it's still above what q3 was. the big point is whether or not that's going to be the bottom in q3. lower energy costs, big help for this quarter. hurting a little bit, the dollar's up, maybe 2% or 3%. they might offset each other. as always, but particularly this quarter, the banks are going to be the key. that's because they're the big earnings driver. we were expecting 20% growth
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three months ago, now we're down to about 10%. it's still double digits. i'm surprised they didn't reduce it even further. wells fargo starts off on friday, so the good news on the banks, overall, let me give you the bad news first. top line growth flattish. a lot of people delayed spending because of the fiscal cliff uncertainty. interest rates are still too low for them to make a lot of money. but that may be changing. that's the good news here. here's the biggest issue here. good news here. credit quality continuing to improve. commercial loan growth continuing to improve. isi had a report out that this morning. mortgage bank and revenue continuing to improve. the biggest problem i can see for the banks is the prices. bank index was up 6% last week, outperforming the s&p 500. last year the bank index was up 30%, twice the growth of the s&p 500. a lot of the big banks are trading at full price to book multiples. they were as low as 0.6% at one
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point. bank of america is at a new high today. that's the big issue right now that you're going to see. that's going to be the headwinds going into the earnings reports. speaking of bank of america, i know you guys have commented on this, but i just have to say, this amazing settlement with them is a real positive. they got everything behind them. here's what's really amazing for this thing. the amazing thing is they're going to fund the payments to existing reserves and roughly $2.5 billion hit to the current quarter. and they still may make a profit in the current quarter. think about this. they have enough in existing reserves to pay the entire settlement off, and maybe still make a profit in this quarter. that's why these banks, that's why investors love these reserves, because once it's behind them, you get the positive hit overall to them. think about what that means, guys. and think about the comments from people who are saying how amazing these bank profits are, that they can settle this and still come out looking relatively good. guys, back to you.
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>> rick santelli, now that we've raised taxes, i guess it's time to raise taxes and not cut spending? >> i tell you what, i think we definitely need to be raising our awareness on exactly how much debt we are tagging future generations, hopefully discussion will turn that direction. one thing we know, there's been a slight direction turn in the treasury complex. two-day chart of tens will reveal we're hovering with close to 198, close to 2%. here we at 190. the 30-year is very little different. if you open the chart up on the ten-year to may 1st, you'll see we're comeping back to 10s and 30s to early may, at least on a closing basis. what's noteworthy is obviously the two-year note deal is just a couple of points higher. whether it's 30s to 10s, or 10s to 2s, 30s to 2s, all
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steepening. why does that matter? that helps banks continue to fund at very low rates on the shortest part of the curve, the federal reserve programs. if we look at the foreign exchange markets, we only need to look at two charts. the first chart is the euro/yen. this comes back to the highest levels since the summer of 2011. when you include the dollar/yen in that chart, you have to go back an extra year. we're comping to the summer of 2010. in either case, the dynamic is the same. i keep harping on it, and it continues to be the best trade that the fx traders are dealing with for the last three or four months. that is, long anything against the yen. carl, back to you. >> thanks a lot, rick. talk to you in a little while. let's check out the latest moves in metals. >> good morning, carl. let's start with the slide in gold futures down a dollar may not seem like so much. when you look at the fact that gold is below $16.50 an ounce, a key technical level there, that is the reason why many traders say there's more bullish
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momentum in the gold market. add to that the fact that the latest report said the bullish bets for gold are at the lowest levels we've seen since august. a lot of investors are on the sidelines waiting to see what happens with the next round of budget talks. and not wanting to buy until they see some resolution there. the down side risk according to barclays is to 1620 an ounce. industrial commodities, weakness there as well. oil following copper lower. perhaps profit taking after what we saw somewhat last week. we're also looking at natural gas, though, bucking the trend once again, since friday's extending its gains there. we saw the biggest withdrawal from natural gas in storage for the season in friday's report from the energy department. but longer term forecasts for the weather, much of the country is actually above normal for this time of year. so that is something that may continue to put pressure on natural gas. carl, back to you. >> sharon, thank you for that. when we come back, the goldilocks economy and the three
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currencies. we'll find out which of the bears best represents the u.s. dollar. a little bit later on, martha stewart joins us live to discuss the macy's trial and the future of the company she founded. as we go to break, look at this morning's movers. at the top of the list. at optionsxpress we're all about options trading.
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with the dow down about 69 points here, we see most of the components in the red, except for intel. that's of note because it got an upgrade today from lazard's citing gross margins bottoming out as well as low valuation and high dividend yields. we're also watching, not on the dow, but we're watching shares of apple, down once again today. barclays taking down the price target on apple. down from 800. and this follows a spate of bad news coming out about apple last week. a lot of analysts questioning the iphone 5. it caused the stock to take a
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breather, if you can call it that, on friday. let's -- >> no, that note you mentioned from deutsche bank this morning, a number of people also flagging that from friday. you pointed out the value chain movements, quarter over quarter decreases. >> possibly as much as a 30% decrease in iphone 5. a note out of japan, a lot of u.s. investors aren't familiar with the work of the japanese team of deutsche bank. later on friday, back in the part of what the u.s./japanese team has said, essentially there might be some shortfalls in the estimates. >> terrific little company, by the way, finally got up and running, that's doing a lot of apple business, so maybe the
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supply chain could be mixed because jay bill's got it. it's a battleground. the battlegrounds distract you from pretty easy money. let me give you an example. facebook is easier money than apple. because you keep hearing they've figured out how to monetize. that stock keeps going higher. >> the move today up 1.5%. some people said to me there could be a rotation going on right now, out of apple, and into other higher data, higher moving names like facebook. so we'll see if that continues. especially because a lot of the reason why apple shares sold off last year, the end of last year people were saying it's tax selling. hello, it's 2013 now, so what else is pressuring the stock lower at this point. you've got to wonder whether or not there's a change in the story here. >> apple's an inexpensive stock. facebook has momentum. i point out facebook, ever since mark zuckerberg got on the conference call and say, we screwed up. we got it wrong. we're not going to get it wrong
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again. that was a break-through. that's when you had to get long. i'm a believer in the guy. >> well, disney we mentioned the story to you, creativity hard at work. company said to be working on a magical electronic bracelet that could allow visitors to snap up souvenirs with a simple tap of the wrist. this kind of technology could also cost disney employees their job. they're exploring cutbacks in jobs no longer needed because of improvement in technology. what's the creative way disney can cut down on costs other than cutting jobs. we'll get your responses throughout the morning. >> well, i don't know. disney is so well run. the way i would cut costs is have fewer bad movies. which is obviously in the eye of the beholder. i suspect bob iger is a guy sitting there and trying to figure out what you ket by bringing in "star wars"
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merchandising and get people in faster, not wait in lines. maybe they shop more, buy more "star wars" merchandise. >> when we come back this morning, reservations at the federal reserve. we'll go inside the rift over the exit strategy. plus this. coming up, hey, papda, what the heck are you doing? it's cold outside. get inside and let cramer warm you up, with six stocks in 60 seconds when "squawk on the street" returns. what are you doing?
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let's get a look at what's coming up at 10:00. simon is here. >> in the next hour, "squawk on the street," tv personality martha stewart will be with us exclusively on cnbc. we'll also get into tech with david faber. is the long-term downtrend of the dollar doing good? >> six stocks in 60 seconds, give or take a few. >> hess is really important.
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number one break-up play. they separate refining and marketing from oil. $65 instantly. >> at morgan stanley, upgrading pbh. >> this was a tremendous acquisition, house of brands, calvin klein, i like this call. one day we'll cut back the subsidies for farmers. everyone wants to upgrade every single year. it tends to be a great sale after they do it. >> wells downgrades inger sol. >> ingersoll-rand, europe turning around. i don't like this call at all. >> walgreens, we were looking for news. the fourth biggest gainer on the s&p. >> analysts meeting. they've got this big acquisition. flu season, flu season is huge this year. and by the way, that's how walgreens and perigo gets their numbers. >> did you get your flu shot? >> i got the shot, and then i
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got the flu from one of our on-air personalities. hi no voice and i'm back and bigger than ever now. like gandhi 2. >> this time it's personal, that kind of thing. what's on mad tonight? >> we're going to do a -- we could make some news. there are a couple of companies, jpmorgan health care conference, that are going to be talking later this week. we've got them ahead of that. interesting diagnostic company. np npsi -- nps, they saved the system money but charge so much. we've got to look at this, carl. >> breaks news tonight perhaps. >> i certainly have the confidence. >> jim, see you tonight. 6:00 and 11:00 eastern time. martha stewart with the good things her namesake company is doing. also ahead, the chairman and ceo of drug maker alkermes with a pipeline update. later on, looking for a dividend play, should you count on the
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banks. that, and a lot more is coming up after the break. [ male announcer ] how do you trade? with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade. ♪ ♪ ♪ [ male announcer ] some day, your life will flash before your eyes. ♪ make it worth watching. ♪ the new 2013 lexus ls.
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welcome back to "squawk on the street." let's get the road map of the next hour. we start with the markets. s&p kicking off the week at five-year highs. even as fiscal cliff 2.0 looms in the near future. so, how much higher can we go? jpmorgan's lee is weighing in. >> will the big banks be the key earnings drivers this quarter and what will they do with all that cash on hand? >> looking to add new recipes to your book. perhaps decorating in the new year. who better than to sit down and speak with than martha stewart. she'll join us live in an exclusive interview. but first, bank of america announcing a settlement with fannie mae over mortgage repurchases. it will buy back $10 billion in loans from fannie mae. actually, i thought it was -- you know what, let's get the actual lowdown here from kayla. she's more on the overall
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settlement itself and the numbers. >> several positive headlines for bank of america this morning. no doubt that fannie mae settlement is the biggest for investors who feared the price tag could be much bigger. as it stands, $10.3 billion is what bank of america owes fannie mae. the $3.6 billion cash payment basically reimburses fannie mae for losses it already suffered. b of a was among some 14 banks that were part of a $10 billion settlement with the occ for wrongful foreclosures. a good portion of that settlement is roughly $1 billion. bank of america is getting rid of $300 billion in mortgage servicing rates, continuing to chip away at that portfolio of delinquent and, therefore, expensive loans. the big question is what, if any, these impacts will have on the bank's ability to return capital. investors want to bump on the 1 cents dividend, but the question is whether they'll get that. i'm hearing there will probably be very little change. the ceo said repeatedly that the
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bank needs predictable recurring earnings. today's fannie mae settlement will cost the bank an additional $2.7 billion, it had it earmarked. and today's litigation will cost 21 cents a share in the fourth quarter. that's after a similar settlement wiped out all of the third-quarter profits. there are still cases lingering that could be very costly for b of a. that's definitely one we're watching. >> our viewers can be forgiven for not being able to keep track of it all. i know freddie mac -- the gses were off the table. they settled with freddie mac in 2011. but there was talk of a settlement, but that hasn't happened as of yet, correct? >> that is currently $8.5 billion settlement that has gone back to a judge. they're trying to figure out whether the ruling that was made was actually something that both sides can agree on. we're still waiting for a ruling there. $8.5 billion is what the
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previous settlement was. now, there's a question over whether it could be more than that, whether the judge will let that settlement go through. but if it is more than that, and if they do need to go back to the drawing board, that could be a long and winding road and the bank could end up reserving more for that. we don't think that will be something that's a big lingering question mark. that's something that the bank has already reserved for on the private side, david. >> got it. all right. kayla, thank you. >> the s&p rallying to levels we haven't seen since the financial crisis. with the new highs, how much longer can we hold. tom lee over at jpmorgan, he joins us this morning from new york. happy new year. >> happy new year to you all. >> i want to walk people through what you got right in 2012. if you didn't nail the s&p for year end, you came awfully close. >> thanks. yeah, we did. >> year end was what, 1450? >> we started the year at 1430. post-election we kind of raised the numbers twice towards 1450.
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>> with that in mind, you see year end going to 1580. >> that's right. >> we're going to have a round-about journey, the middle of the year you think looks treacherous. walk us through that. >> we think the first half's going to be pretty tricky. you know, we can see the u.s. economy strengthening, china improving and investors under way. so we think it's proper for the market to be rallying towards 1500. but i think we're going to get a speed bump that takes us down to 1350-ish, which means we're down year-to-date, before we see the market really see the second half strengthening and getting us to 1580. >> tom, do you thich the first part of the year will be tricky because of what is happening in washington is this let's say we had, you know, reached a grand par gain of some sorts at the end of last year. would you say it's also tricky still? >> yeah. i think because, you know, i mean, washington's definitely one part of that calculus. i think there's a lot of
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brinksmanship that will come with the second cliff. i think we'll still deal with spillover from the weakness we saw in the fourth quarter, hurting q1 earnings. corporate confidence i don't think is rebounding as quickly as investor confidence. i think what we may be concerned about as people see sell-off in bonds, that could be a negative reaction for stocks. i still want to be long in buying dips right now. but at some point we have to start thinking about protecting capital. >> what is the mechanism that gets to this 8% gain you're targeting by the end of the year, if earnings are beginning to flatten out? ardini is suggesting we're making about 10 cents of profit for the s&p 500. that's higher than we had before the crash of 2008. if you're going to get profit growth from here, you'll have to get revenue growth. we're not sure that's necessarily going to happen, are we is this. >> well, that's exactly right. in order for profits to grow
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from here, it has to be top line driven. remember, peak profits never come from cost cutting, it comes from top line. capital goods are rising in the u.s. i think one story that will surprise people this year, we think a construction recovery is finally taking root in the u.s. durable goods spending in the u.s. is at a 50-year low. >> but is that wide enough to take the s&p 500 up 8% overall? >> yes. in fact, what we have to keep in mind, durable goods spending is running 28% of gdp, when it gets to 25% of gdp or so, that may be $25 of incremental s&p earnings. it's a huge kicker for s&p profit growth. it means profit margins hit new all-time highs. >> tom, you point out basic materials, generally in your words, the best performing sector in the fifth year of the bull market, which is clearly what we're going into. why is that? and is that surprising to you? does that come later in the cycle than you otherwise suspect? >> it is puzzling.
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we tend to think of basic materials as an early cycle play, something you buy at the end of a bear market. but actually, as you get extended into an expansion, and then you get sort of a, you know, the durable goods recovery we're sort of seeing, that actually has a huge impact on basic materials profit growth. think about china expanding, u.s. isms coming back and core capital goods, that's all really good for chemicals, steel, aluminum, and that's why basic materials tends to do pretty well. right now, in 2013, they're actually the fastest in terms of eps growth in 2013. >> we'll talk about the dollar in the next section of the program. when the dollar was weakening, the stock market gained. if the dollar is going to strengthen substantially now, moving forward, possibly because of the feds, what does that do to stocks? presumably that depresses them? >> yeah. if the dollar strengthens because of the fed, solely because of the fed, i think that's negative. if the dollar strengthened because u.s. growth is
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accelerating relative to the rest of the world, i actually think that's supportive for equities. that argues for a rerate of u.s. stocks. it really depends actually. >> tom, congratulations on last year. good luck getting there this year. >> thank you. see you soon. >> tom lee over at jpmorgan. >> we'll talk about the greenback, strong start to 2012. where will it go during the course of the year. find out after the break. plus, we're getting up close and personal with none other than martha stewart. she'll join us live from, where else, but the women's wear daily ceo summit right here in new york city. we're back in two. ♪
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is it just right to keep the feds' easy money flowing or not. time to look at the u.s. dollar. nick, great to see you. >> good morning. >> what is your forecast for the dollar considering some of the fed minutes last week indicating that perhaps we could end as early as sometime this year? >> we still think the dollar's going to weaken against the commodity and emerging currency. very hawkish minutes. as you noted, payrolls report was rather stinging. it's a different story against the major currencies. we see the euro weaker over the course of the year.
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>> you do, so i guess you also believe that perhaps the ecb could signal it is prepared to start cutting rates? >> i think so. i mean, we saw in the december ecb meeting, for example, discussion of a rate cut, downgrade to the forecast. i don't think they'll cut this week, at this week's meeting. i think probably what we need to see is a bit of a relapse in some of those confidence surveys, if we got that from europe. i think we'll probably see the ecb ease further. >> what is the bigger picture here? we have a structural decline in the dollar for the last ten years, that's quite clear. do you think that the dollar goes substantially higher, say the dollar index, particularly if deutsche bank is suggesting we get 3% on the ten-year yield by the end of the year? >> sure. i do think we go substantially higher. when you look at the dollar
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index, it is dominated by the major currencies. down 120 to 124, we see the yen continuing to weaken. i don't think we'll see the yields quite as high as that, but we see a meaningful gain in the u.s. dollar against the major currencies. >> in terms of your outlook for the dollar, does it factor in the fact that we're going to get a new treasury secretary, and who that might be? >> it doesn't specifically affect that. but certainly, i think we're going to have a good january in terms of positive sentiment, and weakness in the dollar against those commodities in those currencies. certainly i think the departure of the treasury secretary and all the budget negotiations, that's a bit of a perfect storm and i do believe that will be a much tougher february for markets than it might actually help the dollar during february. >> but you are bearish on the u.s. dollar against which currencies? >> immediately for january, bearish on the dollar against
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the canadian dollar. and also mixed with the peso. >> all right. nick, great to see you. thanks for your time. >> thank you. >> the fed minutes last week throwing a little cold water on the markets. albeit perhaps not the greenback. the divisions that we now believe we have on the federal reserve. therefore, the outlook for qe is steve liesman. who we should note, of course, was hobnobbing with a lot of economists last week. >> simon, thanks. what i've been able to figure out is there are actually two separate fault lines that have developed over at the fed over how much quantitative easing to do this year. the first one is the easy one. some officials seeing the economy meeting the labor market before others. and look at this chart of the fed unemployment rate forecast for 2013. it shows those divisions really not that extreme. pretty solid majority. 16 of 19 members.
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they see the unemployment remain above 7.4% this year. that's probably enough to just fight qe for the full year. the more complicated split is among those who are worried about growth in the balance sheet and the fallout from trying to adjust it once the economy picks up. let's take a look at what the minutes said. a few members of the fed are in favor of asset purchases to the end of 2013. a few others, they would like to see considerable policy accommodation, but no specific time frame or total on the amount. it's this several others that is the sort of new information, we don't know how many that is. is it three, is it four, is it five. they think it's appropriate to slow, or to stop purchases well before the end of 2013, and they cite concerns about financial stability and the size of the balance sheet. so now let's look at what we think their concerns are. big balance sheet could lead to inflation. the fed could be forced to show securities at a loss. interest rates rise, the
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principal goes down, or make large payments to banks, interest rates on reserve in order to keep the excess reserves in check. that may ultimately cut the payments to the treasury. they've been sending $70 billion or $80 billion a year over to the treasury. on the other side, those who are not concerned about the balance sheet unwind, they worry the fed could now be forced into making decisions on qe based on essentially noneconomic reasons. hear's the other side of that debate. the big balance sheets have not so far caused inflation. the monitorists have been wrong about just the size of the balance sheet leading to inflation. it means that the fed can essentially reduce the balance sheet through natural runoff. the securities will expire. and the fed can quarantine excess reserves by paying interest on reserves to the banks. the fed's likely going to purchase assets through at least the middle of the year. the meeting at the end of january and comments between now and then will be critical for
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setting market expectations. there's fear the debate is taking away from the guidance that has linked to outcomes on labor, not the calendar date, not the size of the balance sheet. carl? >> steve, a lot to cover there. we'll get back to you in a little bit. steve liesman joining us from headquarters today. let's go to brian sullivan. >> take a look at vivus. really good prescription data on the obesity drug kasimia. they had about 12,500 prescriptions in december, up more than 60% from the previous month. investors relieved to see this kind of prescription data. you also had bank of america add that to their u.s. one buy point. up double-digit percentages. >> cramer's got his eye on it, that's for sure. a company that had positive
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results on two new drugs. what else is in the pipeline. we'll find out that, and more, after the break. woman: we're helping joplin, missouri, come back from a devastating tornado. man: and now we're helping the east coast recover from hurricane sandy. we're a leading global insurance company, based right here in america. we've repaid every dollar america lent us. everything, plus a profit of more than $22 billion. for the american people. thank you, america. helping people recover and rebuild -- that's what we do. now let's bring on tomorrow.
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more than 20 commercial products on the market, but it is the company's pipeline that is in focus. announcing positive developments for two key treatments, that, of course, part of the jpmorgan health care conference. the chairman and ceo richard pops joins us from that health care conference in san francisco. mr. pops, happy to have you this morning. it may seem strange to viewers to start a conversation with a biotech ceo about the criminal justice system. but i would actually like to do that. there's been talk of rates of incarceration in in country, because we put in jail so many nonviolent drug offenders. you have a drug that aids in weaning people off of opioids. >> good morning. we're here in san francisco getting ready to present to a whole bunch of investors at the jpmorgan conference. one of the things we're going to be talking about is the rising use of vivitrol in the criminal
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justice system. 21 states have pilot programs, either with prisoners leaving prison, going into parole and probation, or avoiding parole and probation and incarceration by the use of vivitrol. i think this problem with nonviolent offenders which translates usually into drug addicts is a huge opportunity for our company, and also for the nation to get these costs under control while managing the patient correctly. >> how confident do you feel about the real progress made in this arena? >> it's the only drug of its kind that's an antagonist. it's not an addictive drug itself. other drugs like methadone actually keep people physically dependent on opioids. vivitrol is a once-a-month injection. i'm actually guardedly optimistic over time we'll be building more usage of this in
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the criminal justice system, and in other large systems where people are treating large numbers of addicts. >> you're going to be presenting at the jpmorgan conference, fairly early in the morning there obviously. >> yes. >> something you did announce on the 3rd was positive results from a phase one study of what you're calling alks 3831. my understanding is, that when you take anti-psychotic medicines, you can have a wake associated with it. phase one is very early. but at least tell us why you're feeling perhaps positive about what you're seeing from the early results. >> we're positive because we've been proceeding very carefully in the development of this medicine. like you said, patients with schizophrenia have a number of treatment options. the most efficacious drugs often have a large amount of weight gain over it. not a small amount. sometimes patients can gain 20, 30, 40, 50 pounds if they're taking some of the most efficacious medicines. a giant drug around the world,
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an eli lily drug, it's been off the pad. but they're coming up with a form of xyprexa that doesn't cause the weight gain. that's what we've been working on in our labs. we've been doing work pre-clinically all the way now through completing a study in the 106 healthy volunteers to demonstrate that the mechanism is working. we're now going into an expanded study with patients with schizophrenia, to see if our dosage form can reduce the weight gain. >> at what point would you expect to see in potential results from those phase 2 studies? >> we'll start that study in the first half of this year. so i would expect to get data early next year from that next big study. >> you mention you're going to be presenting. what is it you're going to be focusing on with investors? i wonder, jpmorgan is a big investment bank. they like to invite clients like you in part because they do capital raising for companies like yours.
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are you in a position where you will not need any new capital as we head into 2013? >> you're right, it's a remarkable position for a biotech company to be in. most of the companies in this building will be interested in raising more money. we completed about a $1 billion merger last year that you guys covered quite well. we now have about a half a billion dollar revenue company. so we can fund our own research. that's actually one of the key things in biotech. the science is so good, that if you have the capital, and the staying power, over time you tend to win. and so when capital is available, biotech innovation continues to expand. in our case because we have these recurring cash flows and strong financial base, we think we can keep growing. so for us today, we'll be talking about two things about the company. the commercial portfolio, the approved products already that are driving our growth. and this pipeline that you're referring to, of our medicines with schizophrenia, addiction and depression. >> well, good luck today.
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and at the conference, mr. pops. appreciate your time. >> thank you very much. >> richard pops, chairman and ceo of alkermes. >> we want to take a check on shares of netflix, trading above $100 a share for the first time in eight months. april 23rd to be exact. take a look at this, up 5%. this comes on the heels of a deal with time warner to carry previous seasons of some of the popular shows that are produced by time warner tv. so that another content deal in the quiver of netflix. >> we should point out, not the disney deal which was an exclusive distribution. >> yes. >> but important, no doubt about it, to have access to their customers to time warner produced programming. these are win-win, many said, because the content providers themselves are seeing a new revenue source with things that they thit might simply sit in the dust bin. >> well put. could the financials become the next big dividend payers in the new year. plus, domestic diva martha
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stewart will join us in an exclusive cnbc interview on the retail interview and her partnership with both jcpenney and macy's. back in two. so we have ongoing s and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's another reason more investors are saying... ll ] i'm with scottrade. ii had[ designer ]eeling enough of just covering upg... my moderate to severe plaque psoriasis. i decided enough is enough. ♪ [ spa lady ] i started enbrel. it's clinically proven to provide clearer skin. [ rv guy ] enbrel may not work for everyone -- and may not clear you completely, but for many, it gets skin clearer fast, within 2 months,
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amazon shares at an all new high. morgan stanley upgrading to an overweight with a price target of $325 a share.
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airline stocks, including delta, southwest and u.s. airways hitting a 52-week high today. the vix is up 3% this morning above the 14 mark. >> what will the banks do with cash in 2013. the chairman of the financial services regulatory practices. jason goldberg also joins us from barclays. gentlemen, good morning. today is an important deadline date. the 19 biggest banks have to basically come through with their plans to the federal reserve for what cash they can return during the course of 2013. how would you summarize the position in which those 19 now find themselves perhaps as opposed to last year? >> well, the 19 for the most part are submitting their capital plans. so what they intend to do with their capital, or how much they would like to pay in dividends throughout the next year, also the results of their company
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tesht. then it goes into a black box and the regulators come back with their own stress test. i think it will be after today, it will be a wait-and-see game, very nervous wait-and-see game for the banks. >> jason, what do you say to the investors about what is likely to occur? given the strong run-up we've already had in the banks? >> we think the results will be very positive. 2012 was positive, as a lot of banks raised dividends. 2013, we think the vast majority of banks raised their dividends come late march, early april. and we think the majority on the share repurchase programs. we think more banks will return more capital in 2013, which is a positive for shareholders. >> but have we seen that reflected in the stock given the runs we've seen in the likes of citior bank of america over the last month or so? >> beginning of 2012, investors said, we think it's baked in. when the results came out in mid-march, the group took another leg higher.
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clearly the group kind of has run the back part of last year on positive singles, when the fed came out with the construct, it maybe was a little easier, certainly with the scenarios than the 2012 stress test was. but still, when we think these banks come out with higher dividend yields and buy back more stock which provide some support, which think it will be a positive. >> today is an excellent day to have you on, given what you do for a living. the surprise yesterday, that the regulators, the world regulators have decided to substantially water down the capital requirements moving forward. an extension for four years moving forward. a much bigger pool of assets, of course, so those banks can count as being core capital moving forward. were you surprised by what came out of basel and does it affect this process of handing back cash this year? >> i wasn't surprised by what came out of basel. the biggest issue that the u.s. banks in particular, the french bags as well had with the basel
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iii rules has been around the lcr, the liquidity coverage ratio. i think what you saw was basel iii and the rules themselves were at risk to some degree, as each of the countries were starting to look inward as opposed to more globally. i think this is a way to kind of save basel iii going forward. i think particularly for the u.s. banks, they're well capitalized, well twice before the crisis. have a lot of liquidity. i think this provides the wiggle room to make basel iii make more sense to the u.s. banks. >> jason, last time round, as far as the federal reserve process was concerned, you had two banks that had their requests rejected, both citi and third bank. now it would appear in a very different cell. citi's new ceo, much more watered-down plan that would definitely get through. no great shakes there. but the third appears to be very aggressive in the type of language they're using in the run-up to this how they will
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boost their dividend and the degree to which they want to have buybacks. >> i think there's a difference. last year citigroup and sun trust got denied to return capital because their stress capital ratios fell below the 5% that the fed required. fifth third screened well. their issue relied somewhere else. they never fully disclosed it. but probably around policies and procedures. we think they fixed those in 2012. when all is said in 2012, they did get their doc buyback. we think they have the capacity to build on that in 2013. >> of the stocks you cover, jason, what is likely to pop the most in 2013 do you think? >> with respect to dividends and buyback, we think the names that we most active return earnings is jpmorgan, u.s. bank corp and state street. >> guys, we'll leave it there. thank you very much. jason goldberg there from barclays and dave ryan from
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price water house. a mover here in the market flash. >> tso, the refiner, often in the shadow of the bigger xet tore va lero, a shining example today, but not in a good way. the worst performing stock in the s&p 500 right now. they amended their credit agreement. now they can extract up to $4 billion if they need to. they just amended a deal, didn't use the money, but still that is floating out there. also got a downgrade for the research firm howard wild as well. that stock down 4.5%. tesoro the worst performer in the s&p today. back to you. >> brian, thanks a lot for that. an exclusive interview with the one and only martha stewart. what has she got cooking up her sleeve for the new year. about farmr because what you don't know can hurt you. what if you didn't know that boxes by the curb... make you a target for thieves?
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all-time high in today's session. a price target of 325, saying the global order fulfillment network is an underappreciated strategic asset for the company. lifting their forecast for $166 billion up from $145 billion. bullish there out of morgan stanley. intel getting an interesting upgrade from lazard to a buy rating. price target $26 a share. the firm saying that gross margins will bottom in the first quarter, and demand will improve in the following quarters because of the introduction and penetration of ultra books on the market. interestingly, too, we're seeing a nice move higher in hewlett-packard. perhaps a lelrelated part of th sentiment here. >> next on the program, nothing short of a goddess of domesticity. hear what martha stewart has to say about her business, the consumer, and her partnerships with retailer giants like macy's
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and jcpenney. plus, is it a bird, is it a plane? no, it's a pigami. one of the most expensive and highly anticipated cars out. more on that when we return. [ male announcer ] staples is the number-one office superstore ink retailer in america. now get $6 back in staples rewards for every ink cartridge you recycle when you spend $50 on hp ink. staples. that was easy.
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more than a dozen americans have paid more than $1 million for this much-hyped supercar. the pagani. there may be one small problem, cnbc's robert frank has more. >> thanks, carl. good morning. well, some brand names are known only to the super rich and pagani is one of them. the cars are worshipped by car oh fis y fis yo nado. they've already sold more than 100. it means god of the wind in ancient inca dialect. the first delivery scheduled for july. that is if the car is legal. right now, the wira is not approved by the transportation department for u.s. roads. now, pagani said it's just a
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formality. but pagani's last car was never street legal in the u.s. it didn't have passenger side air bags. another safety feature. pagani said it couldn't afford to do the crash test on the zanda, it has done the crash testing on. huayra. a $6 million car crash we're looking at. who is buying it? the company won't say, but jay leno drove the same car i did down in miami and he said, quote, it's unbelievable, like a dream come true. we'll see, carl, whether that dream becomes a reality this summer. >> that hurts. that just hurts so much, that video right there. >> $6 million crash. >> robert, how does it compare to the italian sports car? >> i think it's a $1 million, you know, $1.2 million. i have to say, i drove the bagati, the pagani a little less. the pagani interior is amazing. it looks like a jet interior if
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it was made by a jeweler. every little piece is gorgeous. bagati seems more like a production car. but look, we're talking between a $1.6 million car and $2.2 million car. they're both way out of my league. but really nice to drive. >> thanks so much, robert. >> thank you. >> robert frank joining us back at headquarters. rick santelli is in chicago. good morning, rick. >> good morning, carl. 13 months ago, december 2011, i did a white board, and i took eight zeros off the national debt clock. that's become kind of popular. there's a quick view of it. i'd like to update that with current debt clock readings. once again, sufficient tax revenues, $2.4 trillion, remember, trillion is 12 places. federal budget, $3.5 trillion. national debt, $16.4 trillion. recent cuts, this is questionable. because not counting moore's,
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i'm not so sure. that's still the same number that was on the original board. of course, we took away the eight zeros. let's do that. we're taking away the eight zeros in every case. i'll tell you why we're going through this exercise again. basically, what that leaves us with here is, and we'll get rid of all the non-descripts, about 24,500 on the family income, about 35,000 on the debt of the -- or excuse me, the budget of the family. around 10,000 in new debt. the current debt is about 164,000. and we're only cutting about $385. but let's go to recent reads, okay? the recent read is we have 52,000 per citizen. a little over 1 million per taxpayer on underfunded liabilities. and that comes out to about 3 million per citizen on underfunded licts. so i think in essence our politicians have created a new program. you want to know what i call
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that program? i call that program all kids left behind. all kids left behind. are we proud of that? because that's exactly what we've done. all kids left behind. let's frame it. let's say it a lot of times, because when we're saddling a baby not born yet with $52,000 in debt, about $3 million in underfunded liabilities in the future, they don't stand a chance. now, i know we're going to be hearing all these issues questioning recent cuts, future cuts, we're not doing the revolutionary war again, we're not doing the civil war again, but we don't count those, it's called baseline politics. but remember, what it really does come down to is all kids left behind. because what is debt? what is debt really? it's future liabilities. we're going to have to create tax revenues on. because once we caught magic
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threshold, currently $16.4 trillion on its way to somewhere between 19 and $22 trillion, that is going to be a weight that can only be addressed by taxing the little babies that many mothers burp every morning, and it's not right. back to you. >> thank you, rick santelli. martha stewart on the future of the company she founded. her next business venture and much more. she's joining us right after this. ♪ ♪ [ male announcer ] don't just reject convention. drown it out. introducing the all-new 2013 lexus ls f sport. an entirely new pursuit. nothing.
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it's their talents behind the scenes that has helped her create a business empire. like any empire, it's not without its challenges. joining us from the women's ceo summit is courtney reagan. good morning. >> good morning to you, carl. we have martha stewart, the founder of martha stewart living with us right now. earlier this morning, you were in the presentation by jc pen thee, ron johnson, ceo. some interesting comments. i understand you have a shop that will be coming, but we have some legal battles with macy's. where do you stand right now? >> it was announced last week about a nonjury trial that will
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be taking place with macy's. it makes me very unhappy. i don't like to have any arguments with our partners. but otherwise, our business has been very good at macy's, robust. good christmas sales. home depot, a fabulous christmas sales, especially in the holiday items that we designed and sell at the home depot. petsmart, too, our pets product special strong. >> with the jcpenney shop, are you able to move forward with the design at this point or do we have to wait for the macy's -- >> oh, we have an extensive line of products coming to ja c penny starting in march and launching in may. we're very excited about our business with jcpenney, as we are with all our partners. we have been very actively designing and doing great, great stuff. >> and you have and you have many partners. you just mentioned home depot,
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petsmart, michael's. >> my crafts and is joanne fabrics. >> certainly. and there are some that think you're spreading yourself too thin in your brand. how do you respond to that? >> well, i don't think ralph lauren would ever say he's spreading himself too thin. we have a very wonderful brand standing for good quality, fine production, in many different product lines that really center around the home. and for in and around the home. and we will continue to design in all these areas. we're very excited about it. >> and january is a pretty big month wore home furnishing and sales. how does martha stewart play into that? >> well, you would have to look at the sales at macy's and at the home depot for home repair, home building. home design, to know how we're doing. and right now, i really can't comment on some of the things that are happening, but it's -- it's exciting to be able to be
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in all of these retail outlets the. we're in more than 8,000 different outlets all over the country. >> and how closely do you follow what's happening in the home building market? that has to have some correlation with the sales. >> well, we have a wip with kb homes. and i'm happy to say there are some good signs there. people are starting to build again, start to go look at investing in their homes. and it's essential for the whole economy that this happen. >> normally, the puckett that are very interested in your products are into facebook and twitter and pintrest. how are you connecting with them? >> we're the most pinned magazine on pintrest right now. our photos in the home area are the most pinned on pintrest. now, again, it's all relative, really. i mean, i have almost 3 misdemeanor followers on
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twitter. i was at this conference today for the women's wear daily. i was tweeting did you know during the conference. the response is phenomenal. it's a really interesting, immediate response. social media is here to stay, i am sure of this. that said, there's a lot of other things to do in a day than tweet and instagram. >> that's true. now, when we think about your magazine, as well, that's a media that many critique as a dying media. how do you critique those? >> more media was started last year than died. there was a talk that the digital magazines would completely obliterate the printed magazine. people have ipads and other forms of reading, but really and truly, the digital magazines have not been the explosive growth that a lot of people
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thought it would be. so i think the printed word is still here. people still like the look and feel of pages. they like to tear out pages. i don't like them to tear out martha stewart. i like them to keep the whole magazine. but it is new media and we are still trying to figure it out. i think it will take some time before we know exactly what's happening. advertisers, too, are having a difficult time wondering where is the best place to advertise? and the pages of the magazine still are very sturdy and good places to advertise. >> and last but not least, we heard lessons from mickey dressler and ron johnson. what are martha stewart's lessons? >> i very much agree with both of those gentlemen. they are genius retailers, extremely creative people and they put the stress on creativity in business is extremely important in my company.
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i think the creative input is just as important pretty much as anything else. and that they also stress editing, simplicity, the customer is very important. to me, it's always -- when i design a product, does the customer need it and does the customer want it? if the product can pass those two tests, you know you're going to have a good product the. >> that's wonderful. thank you so much, martha stewart, for joining us. carl, back to you. >> courtney, thank you so much. courtney reagan joining us in new york city. time for "squawk on the street" this morning. according to reuters, disney has begun exploring cutbacks in jobs no longer needed because of improvements in technology. brings us back to this morning on "squawk on the street." what is a creative way that disney can cut down on costs other than cutting jobs? put a moratorium on pinocchio's nose jobs. it's getting ridiculous.
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allegra to sneezy, cut reimbursements to doc and get sneezy off his you know what. >> creative. >> paula writes make disney a moderately happy place rather than the happiest place on earth. >> i swear that all of us will belly laugh at something. that was a good one. a good one. >> what's coming up on task tonight? >> a big lineup, the president and ceo of mobility to see who is winning the smartphone wars. ralph will join us from vegas. a read of the consumer from dvr. the ceo is there. it is a recent deal. and doug kass's top three predictions for 2013. also, look at what he got right and wrong in 2012. >> there are more of those, right? he's going to give you the top three. >> right. there are 15, but we're going to do the best ones, the shocking ones. >> always good to hear from doug. good to have you back, carol. welcome back. >> thank you, carl. >> good to have me back.
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>> we left you hanging there, didn't we? >> we all go our separate ways in the holidays. it's it's been to be back together. see you in 30, simon. if you're just joining us, here is what you missed this morning. display welcome to hour three of "squawk on the street." here is what's happened so far. >> it's not a coincidence that the market is at a five-year high. >> i bet nobody out there knows that the u.s. economy is now growing faster than average. that's why the stock market is up. >> i'm just shocked, dismayed that we did not have a grand bargain that included the debt ceiling. >> this is united states and medicare. someone has to reign it in. they've got a biotech company that wants to charge 3dz 00 for a new drug.
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>> new here, i didn't mean that. >> people have no idea what we're talking about. >> and with that, there is the opening bell. >> the science is so good, that if you have the capital and the staying power, over time, we tend to win. and so when capital is available, biotech innovation tends to expand. >> good monday morning. we have some breaking news on the banks. diana olick is in washington with the details. >> good morning. ten banks will pay a collective $8.5 billion to borrowers to settle foreclosure abuses. it's all part of a deal with the federal reserve and the office of controller of the currency. thendz a very view process that began in 2011 after the so-called robo signing scandal
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came to light. banks were required to do an independent review of foreclosures from 2009 and 2010, but they were taking too long and cost too much. this settlement puts an end to those reviews. the banks will make $3.5 billion in direct payments to eligible borrowers and 5.2 billion in other assistance such as loan modifications and forgiveness of deficiency judgment. this settlement affects some 3.8 million borrowers. eligible borrowers could receive somewhere from a few hundred dollars to several thundershowers depending on the foreclosure. the banks included are aurora, bank of america, citibank, chase, metlife, pnc, sovereign, sun trust and wells fargo. four other banks, allied, hsbc and one west were in the talks but did not sign on to this deal. together, they service close to 500,000 loans. conversations with them will continue. now, the occ is not giving details yet as to which banks
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pay what. the deal is separate from the $11.6 billion settlement announced just this morning between fannie mae and bank of america. back to you guys. >> i didn't think it was possible to have more news on the banks today, diana, but you gave us a little bit more. thank you so much for that, diana olick in washington. quick check of the markets today. alcoa tomorrow. dow currently down 49 points. s&p down a little more than 6. netflix meantime spiking more than 5% after announcing a licensing agreement with warner brothers. barclay's reducing its price target from 800 to 740. expectation res low and it's important for apple to integrate more features into ios 7. as we said, markets pulling back a little bit today. their best week in over a year last week. we'll find out if this is a sign of weakness or if investors should take their money off the sidelines and buy. amazon is at all-time highs.
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is there more up side that comes? we'll talk about a couple of calls out today. if history repeats could be, the 40 stocks that can make you money this year. we're going to name some names and find out if apple's are focused in mobile. first, looking at amazon, a 3.5% gain. an upgrade from morgan stanley and mcquarry, as well, increasing its price target. the quarry senior internet analyst joins us now with more on that. ben, good to see you this morning. >> thank you. >> morgan stanley's note is essentially about sales projections from 2015-'16. is your call today based on anything closer term? >> my kal is much more about amazon services and what's going so happen in that business as well as in the near term. we think that's a business that's going to continue to
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drive up side the numbers and adds value to the stock. >> they keep talking about that unit being a tenth of its eventual side. is that realistic? how much of a contributor is this going to be in the long-term? >> that's an extraordinary business. you've had other folks at the company talk about this business being as large if not bigger than the retail business. that's a striking statement considering your retail business is well over $50 billion and today aws is just over a $2 billion business. we think this is growing well north of 57% and it could accelerate in the years to come. >> talk about the contributions of web services versus their core business. >> this is one of the interesting points about this business. it's a hundred percent growth margin business. as that business grows, it will drive growth margins much higher than they are today. >> is it a mostly domestic
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business? the morgan call, sorry to talk about it too much, but that's mostly an international call. >> i can't comment about what they're saying, but when we're talking about aws, we're talking about a business that is mostly domestic, that has global implications. today this is a business that really is about small businesses and start-up mostly in the u.s. we think over time, you're going to see larger businesses and merging markets. a lot of drivers that can bring this business higher and higher in the years to come. >> a lot of people may be on vacation when netflix had an out age on christmas each. they ended up blaming amazon web services. how much risk is involved in it failing or not supplying enough backstop redundancies to where clients have a service fail because of amazon? >> listen, you are going to have failures. it's a growing business. but the fact is, this is a much more secure infrastructure than trying to do it yourself. netflix, as disappointed as they are, they still continue to be
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among the biggest proponents of amazon cloud. >> we had a discussion this morning about amazon and how so many people had concerns about the tax issues facing them as morsi made them charge a sales tax. that clearly has not be a deterrent to buyers. >> in general, if you look at the stock throughout its history, there have always been detractors and it's always continued to grow past that. what we think is so impressive about this country and impressive about the stocks are the sustainable advantages that it has. >> and you're right about the skepticism out there. clearly in the past year, those skeptics have been proven wrong. thank you very much. >> thank you. as we said earlier, markets tipping today after last week's stellar performance. we want to bring in art cashin. happy new year to you, sir. >> happy new year to you. >> talk about last week.
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was that all relief related to the fiscal cliff and what happens now that we move into some more empirical data in the form of earnings? >> well, i think earnings season will be important. but as i discussed with bob sa sanny last week, the feeling here among the old fogies like me was that a good chunk of the fuel was new money for a new year. there were a couple things that worked out to underscore that. wednesday on the market on closes, there was over $1.5 billion to buy on balance. thursday, it dropped to 800. friday, it was 400. again, the old fogies believed that new money for a new quarter, a new month, a new year tends to come in in a three-day cycle. the most up front and then slows down. now until the very old, old days, it was a little bit the reverse because they had to have committee meetings and it will be the third day when you saw the most. that's when bios go up. it's reversed now because everything is electronic.
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so the feeling is that that push is now gone. we're going to see if the market can stand on tone. that's why i said last week starting monday we wouldn't have that fuel. so far all we're doing is consolidating. they're not selling. >> what about that question, if the market can stand on its own? what's your view? >> well, i think it deserves a pause, that that rally got the market so heavily overbought, it was somewhat amazing. the fall in the vix, that kind of fall in the vix is almost unprecedented. it's only happened about five times since the vix is around. and every time it has happened, we go into a kind of corrective phase, volatility re-enters the market and things tend to pull back, not always immediately, but there is a noticeable pullback. >> i'm not sure you want to talk about the bond market, but people are beginning to ask questions at 19. this is reversible, this is the
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point where bonds fall off. >> i know everybody is watching the 1-9 and they're watching the bond funds. i think you'll know if the public believes this is changing if you saw a sudden rush for mortgage apps for refinancing. that would mean the public says, uh-oh, this is turning. i have to lock this in. >> that will make wednesdays a lot more interesting. >> it certainly will. >> finally, cramer's point has been for the quarter, you should expect more seesaw action courtesy of the people in washington. is that a reasonable view? >> i think so. there's the theory of the trillion dollar platinum coin, there's the theory that the fed should look at its balance sheet and tear up half the treasury
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that they have and then, of course, there's the knows to kno nose to nose aspect is the feeling the president could invoke the constitution. the feeling is congress could challenge that, but it would take a motion on part of both houses. and you can't get both house toes agree what time it is, so it might not work out. so, yeah, volatility lies out there, finally, carl, if we can get through tomorrow and have a record of up for the first five days, there's a 75% to 80% chance according to the stock trader's almanac that that means an up day for the year. >> and you're not an old foeggy. you're a young foeggy. >> thank you. you're only as young as you feel, but i'm about 101. >> art, we'll see you later. thank you. brin sullivan is back at hq. >> who can follow up on art cashin, right? singular guy. interesting story here, lifted
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to an upgrade to an outperform at rbburied. that stock has performed at 3.63.6 3.6%. baird saying smartphones could damage harmon's business. a lot of people are swapping things out and using their smartphone for everything. harmon stock up 3.6% over the past year. it is up nearly 22%, carl. >> very nice. they make some good car stereos, too, as you know, brian. >> absolutely. >> apple, google or facebook, which one could bring you high sides for 2013? and rick santelli has something coming up a little later. >> absolutely. if we're borrowing 35 or 40 cents for every dollar we spent, tax revenues are satisfying 60% to 75% of every dollar. so when you hear people talking
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about doing challenge the full face and credit of u.s. treasuries with regard to debt ceiling, are they being real? whenever i have questions like this, i always go to the man. larry kudlow will be our guest in 20 minutes. you'll want to see this one. [ male announcer ] how do you make 70,000 trades a second... ♪ reach one customer at a time? ♪ or help doctors turn billions of bytes of shared information... ♪ into a fifth anniversary of remission? ♪ whatever your business challenge, dell has the technology and services to help you solve it.
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a sight for sore eyes.
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>> good morning. happy new year. fortunately or unfortunately i get about a thousand year-end reviews. one stood out this career. one is the asset manager firm. it's up to 20 plus years now, outperformed the s&p more than two to one of 28% last career, mark ten years significant value over the s&p. and so let's talk about some of the names on the 2013 forgotten 40 list. let's start out with gold foods. why is that on the list and tell us why you like it. >> sure. thanks for having me, first. gold is on there for two reasons. one, when we look at a company, it's a figure that makes you stop over a descending value over a reasonable period of time. david murdoch who we believe over time he or his heirs cover
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this. this could spin off or sell. when they announce they're going to sell one of their business segments and they're going to realize $1.6 billion worth which in effect will eliminate totally their total indebtedness. so you can have a debt free company that is in the fresh vegetable and fruit business and dole which does pineapples and a number of other fruits. it has a 34% market share. so you can have a debt free company with a significant amount of cash flow. we have another catalyst we look for. it owns 120,000 acres of land which is worth about $500 million. when you take the photo and you mark all the assets to the market to come up with an intrinsic value of $20 a share, around 1.5, which is below the stated value.
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>> so the price target today. a stock that was up 100% last year, on the list again, despite last year, why bank of america now? >> it was interesting. one of the things we did back in 2000, we wrote a negative piece on shorting the merchant home builders. we reversed that condition in 2009. in the 2010, 2011 forgotten 40, a great number of home building related stocks were in there and they significantly increased in value. banks of america has tremendous potential earnings power. it's a stock that we think could more than double in price again over the next few years. they will be paying out significant amounts of earnings in the former dividend. >> that's your favorite launch cap fm? >> probably. jpmorgan is probably up there, too. >> let's talk about madison square garden. that was a big performer last
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year. i obviously know what's happening with the knicks. thank god for that. ranger fans, hockey is back. why do you see msg potentially doubling again? >> well, the stock has more than doubled since the last time, but the intrinsic value has increased dramatically. madison square guard sn not only the world's graeftest arena, it's the knicks, the rangers, owns valuable air rights. it owns real estate. you come up with a value significantly higher. >> is there a catalyst in 2013 that you know of? are you close with the company? do you see them doing anything in loss this year. >> well, the construction of the new arena or the refush yirping of the arena will be finished in 2013. you'll see a significant amount of cash flow, m&a from the business. they will not have any use for that money. >> so now they can start paying out dividends, start
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repurchasing stocks. they can use the play book that they used with cablevision where they could buy back a lot of stocks. >> fed fast, we know about that. thank you, mark. we know what you can do in terms of capitalization. if you want to check out the whole list of mark's forgotten 40, check out our twitter handle. this is a whole list that has added value versus the s&p for many, many years. >> great stuff, dpaer. gary k. back at headquarters. brian sullivan has news for us. sgliets just coming out of the jpmorgan health care conference. this is brand new information. the stock is down a little bit. it's all over the place because if you read the headlines, you think that the guidance is good because they said their main drug sales are going to be over $1 billion. here is the problem. they were expected to be over $1 billion. so it looks like revlimid maybe
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guided to the lighter side. the company guidance is 550 to 560. the facts at consensus right now is 558. so celgene, while it leaves its open to possibly beat, also now leaving 8 cents to the down side on the full year against consensus and maybe a little light on the revlimid side. that's why the stock is actually down about .6%. so celgene coming out and leaving downside value. possible for the full year. >> still ahead, people are electric cars might be forced to shell out more money for simply choosing to go green. a look at the states doing the taxing and what that means for car owners in the long run.
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here to break it down for us
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is will power. he joins us this morning from dallas. will, good morning. good to see you again. >> good morning. happy new year. good to be here. >> let's walk through a few of these key themes. i'll name the theme. you give me the stocks within that play. we'll begin with wireless com. >> i'll tell you what, that's a group we're responsible for. we continue to like apple. that's our top pick. the more things change, the more they stay the same. we like apple on the weakness. the stock has been beaten up over the last couple of months. but demand remains very good. even the supply sides that our teams have come up with suggest the numbers have been good. >> yep. you've got a couple other smaller names in there, as well, right? >> well, i do. so within my basket of coverage, for recommending apple, among the carrier res like vodaphone as a way to play the trends, verizon wireless, cheaper valuationwidewise than either
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at&t or ver riceon. we have midcaps, newstar, a nice growth at a reasonable price name. good visibility. synchorisis. >> eric schmidt is heading to north korea. you have google as a took pick on your internet page. why? >> as you look at the broader bear tech franchise, i'm not personally responsible for google. they've continued to like that as a way to play mobile platforms, really. if you look at the mobile platform world and cloud generally, apple and google have been top. if i had to pick between the two, i like apple. our internet team has labeled google as their top pick. >> semi conductors, some of the names you like within chip webs micron and a couple of others. >> that's right. as you look at our semi conduct ur team, they laid out windows 8
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as one of the key cast lists among the six key trends we're watching for 2013 as a key driver. i think for them, micron is one of the beneficiaries or those moving forward to 2013. >> big ipo of last year, tnaw. do you want to walk me through that? >> well, yeah. so our networking team has been positive on that name. i can they view that as their top pick. i'm not as close to that, but i think from a firm standpoint, that's a name that our networking team is very positive on. it's a way to capitalize in part on the next generation data centers. you can move the software to find out if that works for them, etcetera. >> finally, a new names in software, as well. inik, btns. >> and those are names that our software team woshgdz out. those are plays on big data, which has been a big theme for some time as well as the public cloud opportunities. so those are names that we think
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at the firm our best positions for 2012. >> interesting. >> excuse me. 2013. >> i've made that name a few times, had to rewrite a few checks here .there. >> that's right. >> will, good to talk to you again, will power joining frus dallas. just a few days left in the trading day in europe. we'll get the close and the details in about 2:30. from capi, thor gets great rewards for his small business! your boa! [ garth ] thor's small business earns double miles on every purchase, every day! ahh, the new fabrics. put it on my spark card. ow. [ garth ] why settle for less? the spiked heels are working. wait! [ garth ] great businesses deserve great rewards. [ male announcer ] the spark business card from capital one. choose unlimited rewards with double miles or 2% cash back on every purchase, every day! what's in your wallet? [ cheers and applause ] i have a cold, and i took nyquil, but i'm still "stubbed" up. [ male announcer ] truth is,
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european markets are closing now. >> it's a negative close, as you can see there on the first day of the week for europe. and the fact that wall street, of course, is opened now is currently down 55 on the dow has taken it further into negative territory. but the big news for a lot of people in europe has to be about the banking sector. the banking sector in europe and this is a huge understatement is much less well capitalized than here in the united states. but when the regulators said over the weekend that they would delay the capital ratios, that they would extend them by four years and expand the foot of instruments so people could -- capit capital, that's hugely important for shareholders short-term because the banks don't have to scramble around to try and shore themselves up to the degree that they might have to have done. a lot of people are still very concerned about the state of european banking. there are definitely some piece
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out there and the critics would argue the banking union is a complete farce. it is ultimately the safety net money to only come through ultimately when they've done all the deals for new debts, not for the debts of the banks sitting on. so we have a huge way to go with the banking system in europe inevitably today with this short-term relief that you have because of the rules you have to bounce, barclay's, koich ya bank also doing well. but it is inevitably the weaker banks, banks of ireland that have bounced more because their relief will be greater. over in italy, the banks have bounced and indeed this one today have -- which the wto is saying which is suggesting that actually won't be state aid in order to recapitalize. that's the level at which the discussion is. the government still has to come in. so you can see there's a reaction there that we had on the banks. apart from the banking system, the other thing that we have to watch for during the course of the year is where the real money will return into fixed assets
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and into the bond markets. those that are in the space are drawn in because the performance has been so strong. will that be sustained through year? interestingly, as we look at how spain is going to finance itself looking out, initially they're at a two-year level which is very defensive. why aren't they attempting to issue ten-year debt. a few things to watch out for, banking and the return of real money possibly or perhaps the exit of real money from the periphery of europe. back to you, carl. >> simon, thank you for that, simon hobbs. share sayron epperson is live at the nymex. >> still below that 1650 level. a key factor for traders in 2013 may be favoring silver over gold. the london market association, one of their top forecasters now says that the gold run is over. he says industrial commodities
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are doing better. he sees gold prices averaging $600 an ounce in 2013. that, of course, below the 2012 average of 1668 or so. we're keeping our eye on copper, as well. it is lower today, but keep in mind, as well, shanghai inventories are down last week. there may be a bit of a hangover from there. we see a turn around in some of the energy markets, particularly in the refined fuels. the latest news we're hearing about the port arthur refinery is that crude different lagz unit that was back up and running, part of the expansion to about 600 barrels per day, it's now having problems once again. so that is another factor you're watching. as well, carl, natural gas extending its rally from friday. >> sharon epperson over t nymex, thank you for that. >> the big story is going to be the banks. now, remember, that bank of america deal widely considered to be pretty good, by and large, for bank of america. he's putting some things behind
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them. i think the important thing is, banks aren't up. now, this is a very important question because normally bank stocks tend to move up going into earnings season and as the numbers come out, they tend to move down a little bit. that is not happening today even though bank of america basically is unchanged. some of the other banks, remember, wells fargo, a little unusual this time of year. wells fargo is going to kick off earnings season on friday. usually it's jpmorgan that does it. so slightly different situation. but just take a look at the bank index. and he'll see what i mean here. look at what's been happening january, february, march. there is april. and if you see here, right after earnings came out, stocks moved to the downside. july, small, but stocks moved down here. same situation in the beginning of october. we saw slight moves down, but now here we are at essentially new highs on the bank index. numbers came out.own the week
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this all may be a little bit of noise right now, but it's got some people's attention here. so here is the bank right now. top line growth is only going to be flat to slightly up. many delays spending on the fiscal cliff uncertainties. the net interest margin, the differences they can make between lending out and borrowing is going to be flat to down. and that's going to be the major problems. but there's still some good news here in the bank earnings situation overall. we're going to see credit quality continuing to generally do well. commercial loan growth is improving. mortgage banks still strong. i think the big issue is the top line growth. when is the consumer going to start spending a little bit more? that's what's holding things up. the bigger issue is dividend payers. we haven't talked about that in a while. they're still out there. cash payments greatly are up 18% last year. the s&p 500 dividend yield, 2.3%. here is something that shocked me when i looked at it.
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pay out rates are still very low. believe it or not, you're still not getting a lot. they're paying out 36%. the average is 52%. why aren't they paying out more? why aren't we getting more from the companies? i'll tell you the simple answer is they don't have to pay out more. they don't have to pay out more because there's not many alternatives for people to go out here here. look at the 10-year dividend of 1.9%. carl, the average dividend is 276%. so i'd like to see them increase the amount of money paying because they could certainly afford to do that. but they're not because nobody is pressuring them enough. they don't have to right now. maybe if things change, rates go up elsewhere, they'll have to change a little bit. >> that's a good point. thanks, bob. >> it's good to see you again, bob pisani. phil lebeau has some breaking news. i wonder if this is going to involve boston's logan. >> it does, carl. this is news we're seeing reflected in shares of boeing which has ticked lower since
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these reports came out. there was a fire this morning on a 787 dreamliner parked at logan airport in boston. it is our understanding according to information we're getting out of boston that the fire has been put out. there were no passengers, no crew on the plane. what's unclear is what started this fire, whether it was something electrical, the plane, if there was something else. we've got a call into boeing to get more details. all we heard from boeing is they're going to be looking into these reports. so they're getting this information as quickly as we're getting this information. but the important thing to keep in mind here, carl, is that this is the fourth incident regarding a dreamliner. remember, we had the two reports from united of dream liners losing some power, some degree of power while in flight and then also a similar report regarding the first flight going over the qatar airways over doha. so now we have a report out of boston of a fire at logan airport on a 787 dreamliner, parked at a gate, no passengers,
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no crew on the plane at the time, but that's what we're looking into at this point. carl. >> okay. with that, we'll probably come back at you in a few minutes. phil lebeau joining us with that news on the boeing 787. n meantime, rick santelli is talkings to a very special guest. take it away. >> absolutely. and before we get to our very, very special guest, larry cut low, i'd like to read a couple of quotes. i hope to high heaven that these guys don't mess around with the faith and credit of the u.s. government. we can go to the chairman of honeywell, mr. code. you don't put the credit of the united states finances at risk. now, remember, we pay roughly about 37 billion a month on servicing our debt, which is this year going be about $450 billion. and we still do take in anywhere between 60% to 65% of what we spent on the revenue side through things like taxes, even though 35% to 40% is borrowed. so welcome, larry kudlow.
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it's an honor to have you. as i went back to some of those, the secretary was very straightforward about how they could do it and still try to pay the legal obligations. >> debt in the hands of the public, which is what you're worried about, it's about $19 billion a month, overall about $230 billion. we take in about $250 billion in revenues. thou, i know it's uneven, but i'm just averaging out. these numbers will be revised. so when you look at it that way, we don't have to worry. the debt ceiling will be covered. the interest and expense on the debt will be covered with ease.
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but rick, here is the problem. you're talking to someone who wants to cut spending. when you look at some of the other government obligations internally, when you look at social security, when you look at medicare, when you look at medicaid and you add that to the interest on the debt, you're really saying that 65% of monthly revenue would go to -- including veteran. >> on the debt and the internal obligations. >> no, and that's why i loved having you on the show. nothing but the facts. and what you laid out does demonstrate in a clinical fashion. i'm not advocating one way or the other. but there is a difference between breaching the fiduciary contracts made with our debt holders and the moral obligations we've made to pay off entitlements and veterans.
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but i guess my next question for you would be -- so the fact that a debt ceiling rate is just raising it to pay the obligations we've already vouchered for, in other words, paying bills that we already have incurred the liability on, i understand that's a democratic argument. but, larry, the democrats at every turn proactively tried to get at spending, how can you go at it? what is your solution? is this a sequester? >> yes. let me go back to what erskine boels says. we should not fool around with the credit of the u.s. government. i criticized the republicans and democrats on that last year. here is the key. and i think you referred to it. the sequester, the across the board spending cuts sequester, $1.2 trillion must be enforced. that was part of the deal last year when they raised the debt ceiling a trillion. john boehner said as much.
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read the boehner interview in the journal today with my pal, steve moore. boehner said a dollar increase in debt, a dollar cut in spending. that's his second point of leverage. so, a, the sequester and, b, one for one debt and spending cuts. >> and i agree, everybody should read that op-ed today regarding mr. boehner and his comments and, larry, thank you for coming in to be a guest on the show. and make sure, viewers, you catch larry's show nightly, "the kudlow report" 8:00 eastern. electric car owners, happy with that money that you save on gasoline? well, you might have to say good-bye to some of those savings very soon. we'll find out why some states are slapping owners with fuel efficient car wes a new tax when ""squawk on the street"" comes rights back.
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you should not start enbrel if you have an infection like the flu. tell your doctor if you're prone to infections, have cuts or sores, have had hepatitis b, have been treated for heart failure, or if you have symptoms such as persistent fever, bruising, bleeding, or paleness. if you've had enough, ask your dermatologist about enbrel. welcome back. coming up on halftime with stocks near five-year highs, is the bull run over or just getting started? it's a fighting inside the fed, the real dysfunction in d.c. and the biggest threat to your money? and netflix soars above $100 a share. one trader says buy, another sell. carl, we're going to debate it at the top of the hour. >> thanks so much. starting next month, owners of electric vicks in washington
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will be hit with a new tax up to $100 a year to make up for dwindling revenues from the current gas tax. driving this issue is robert garneir. good to see you again. >> good morning, carl. how are you? >> good. i'm kind of glad i don't live in washington right now. walk me through what's driving this in that part of the country. >> well, i think it's a function of states realizing that if people are using car that's don't burn gas, they're not paying the gas tax and subsequently they're not making a contribution to the cost of maintaining our roads. so the alternative is some type of new tax that is related to the vehicle and not to its actual consumption of gas. >> where does aaa come down on this? >> well, it's inevitable. everyone ought to be paying for the use of the roadways as an organization that represents the motorist, we're more than willing to pay our fair share. so if you or i are driving electrical vehicles, then we're not buying gas and not
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contributing through the gas tax. we need to ante up our fair share and pay through some of the mechanism. i'm not sure we found the ideal mechanism at this point, but inevitably, people who drive electric cars will be contributing to the maintenance of our roads. >> is washington the canary in the coal mine? because they do it, does that mean other states automatically are going to follow suit? >> i think it's inevitable that at some point either at the federal level or at the state level, there will be the introduction of an alternative means of taxation to avoid the holiday that electric car drivers might be getting in terms of their contribution. >> i think there's two reasons people buy cars like this. one is to save money and the other is to feel you're doing something better for the planet. if these taxes are, in fact, inevitable and go national, the incentive to buy these things is going to be seriously hurt.
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>> well, i'm not sure that it will be, carl. because when you think about the cost of a gallon of gas, a fairly substantial portion of it is tax, but there's a very large portion of it is that is related to producing the gasoline. and so if you're avoiding the cost of the gas and you're only contribution as the owner of an electrical vehicle is the tax portion and if that tax bite isn't too large, it may still be advantageous from a cost perspective to own and operate an electrical vehicle. >> we've talked occasionally to former auto executives. robert lutz comes to mind who has been advocating a national gas tax for a long time, admitting the political realities about something like that. but i wonder if this got through and they've started adopting it, if we would be heading down some kind of slippery slope to where a national gas tax at large might be more of a political possibility. >> well, we have a national gas tax. it's not at a very high level. i think it's 18 cents a gallon and it's been at that level for something like 20 years.
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so we already have a national gas tax. which is supplemented in many cases by state level gas taxes. so the proposition that we might have a national tax is a bridge we've already crossed. >> yeah. i think what i'm talking about is something like an additional 50 cents a gallon, something that would make today's taxes seem a little small town. >> well, there has been consideration of a increase in the gas tax. it's been advocated by a number of groups that feel that we need to invest more in the transportation infrastructure of this country and that the gas tax is falling -- the federal gas tax is falling short in that it hasn't been adjusted for a very long period of time and its buying power is substantially less than before. some people are buying electric cars that don't consume gas. those drivers aren't contrinting through the gas tax and we need to find an alternate way for them to make a contribution.
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>> i can see another debate brewing right here. robert, thanks for your time. good to see you. you're very welcome. >> mike check, one, two, one, two. it is known as the youtube of sound and its popularity runs from washington to the city of compton. nice reference. we'll find out how soundcloud is set to auto tune to mobile world and why you should listen in. back in a moment. ♪ reach one customer at a time? ♪ or help doctors turn billions of bytes of shared information... ♪ into a fifth anniversary of remission? ♪ whatever your business challenge, dell has the technology and services to help you solve it. [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa,
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welcome back to "squawk on the street."
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i'm phil lebeau with breaking news regarding a fire on board, on boeing 787 japan dreamliner. this is video from boston's logan airport of fire crews investigating the fire. here is what we understand happened. the plane landed this morning. all the passengers and crew left the plane. the mechanic was doing a walk through of the 787 plane, noticed a light smoke condition increasing from the underbelly of the plane. he modified mass port fire. the mass port fire and boston fire are saying it appears that the fire is in a compartment or was in a part-time with batteries and other electrical components. we have called boeing, by the way, to get some comment regarding what they know about this fire. we have not heard back from boeing. but if you take a look at shares, carl, the the stock has been ticking lower ever since this fire serviced about 15 minutes ago. that's the latest regarding this dreamliner fire at boston airport. >> phil, thanks for that. what do the white house, snoop
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dogg and the economist magazine have in common? they all use sound cloud, a start-up that let's you upload and share sounds of all kinds. that means music, pop casts, even your baby's first words. alex joins us this morning from san francisco. alex, good morning to you. >> good morning. how are you? >> for those who never heard identity, tell us what sound cloud is and what it's not. people hear about a sound tool on the web and they start to get a preconceived notion of what that is. what do you to? >> sure. sure. soundcloud is the world's online audio platform. that means people come to sound cloud to share sounds that they've created. could be any kind of sound. and also people come there to discover and hear all these great sounds that are being created. and i think one of the things that we do, which is interesting, is that we really care about all the different sounds in the world. so it can be, you know,
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listening to music, share music they're creating, but it's also, you know, reading some books, people capturing their own children, and all these kind of things. and i think that's what's quite interesting for us is just the whole range of sounds that we experience as humans. we think that that should be part of the social web, as well. >> right. >> and people connect and then address with that online, as well. >> over 30 million registered users. look looking at some of the fund-raising background, you've raised a lot of on money from some pretty powerful players. from a business standpoint, monetization and what is the future for the company? >> sure. so we have a fairly simple revenue mobile in place. we have a premium accounts model that allows creators that want to get extra involved in the platform to be able to pay to upgrade their accounts where they will get more futures, more possibilities of being able to share in different ways, get
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statistics on what's happening. that's been going quite nicely for us. and we'll see how that goes in the future. at the moment, what's really interesting for us is the sound is relevant for every single person on this planet, no matter when fear creating it or consuming.. we see huge potential in building out the entire audio platform, the sound part of the internet. the sound at the moment, the engagement that's been happening. >> i wish we had more time for the sound of your voice. please come back, alex. >> alex from soundcloud. straight ahead, why america might run out of money sooner than we think. we'll be right back. ♪
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