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tv   Squawk Box  CNBC  January 28, 2013 6:00am-9:00am EST

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. good morning. the dow is on pace for its best january since st. 89 as it closes in on an all-time high. is the small investor really ready to get back in the game? a state of emergency declared in egypt as dozens were killed in protests and exxon mobil retakes the market cap lead from apple as those shares hit a 52-week low. it's monday, january 28th, 2013 and "squawk box" begins right now.
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>> good monday morning, everybody. great to have you back on set. >> thank you. i brought you something. >> you did? >> i did. some chocolates. >> swits chocolates, fantastic. >> that's what you're supposed to do. right? >> it is. >> so are you going to eat any this morning? >> so how would you sum up what is going on? >> overoptimism, i thought. we'll talk about that today. but there was sort of an -- ar three or four years of complete dourness, a real sense that the world was ready to take off in a great way. >> and you're right, you are seeing this play out in the markets right now. we've been watching that. in fact, that is our top story
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this morning. >> recent games are irrational -- you just said we're ahead of ourselves or something? >> no. it's still remarkably optimistic there. >> you're with these bratty billionaires that throw all this money around. that's why it felt -- >> no, no, they were optimistic in ways they haven't been. >> you said one guy spent $1.35 million getting ready for the party and he flew john legend in who watches ow "squawk box." >> john wedging was, by the way, remarkable. did you know he used to work at bcg? >> no. >> yeah. a wall street consultant who turns into a musician. so, anyway -- >> a long time ago. >> and all the hookers that you spoke to were also cnbc viewers or something? >> no, they were not.
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they were -- yes, they were cnbc viewers. >> you're sure? how did you know? what is -- i don't see how this whole thing played out and where you got -- >> it's a much longer story that probably needs to be explained not at the top of the show. >> were you embarrassed when they said -- and you said, oh, i'm so sorry? all right. go ahead. >> he is right but but there's optimism -- >> i'm married with chirp. >> that's the whole point. that's why i don't even understand how this happened. >> like he was talking about, all this optimism is fueling what's happening in the markets. by the way, this is the best pace for january that we've seen in 24 years. you have to go back to 1989 and that's when the dow was actually up by 8%. the dow is within 268 points of its all-time cloesz closing high of 4,164.
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that's just about 2% away at this point. the s&p 500 having its best january since 1997. it's up for the last eight sessions. crossed over at 1500 and stayed there for the first time since, i don't know, back to about 2007, as well. it's now just 62 points from its all-time high. and we have a huge lineup of guests and strategists over the next three hours including carl wineberg, jeff klein to know, rebecca patterson, robert caplin and j.p. moran's chief strategist tom lee. we're going to talk through this, is this for real and can things keep coming? >> economists are finding that 50% of the corporate forecasters now believe gdp will grow at 2.1% or better over the next four quarters. that's up from 26 back in
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october. they're optimistic about the job market. about a third say their firms or industries are going to increase hiring in the next six months while 27% say hiring levels will stay the same. a conversation i had with christine legarde suggested 2% groith in the u.s. is too low and she's estimating much higher. >> for the whole year. >> where was she? >> she was at a dinner. we hosted a dinner together at the new york stock exchange. but that's the amazing part about it. >> christine, i don't know if i mentioned it. yeah, it's amazing. >> you know, i called her -- do you call her madam or christine? i started with madam. >> you didn't offer her money, did you? >> announcer: this squad-ward
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moment has been brought to you by joe kernen. >> no. no. >> what's going on with apple this morning, joseph? >> this, in my view, is fitting things to be -- if the market really is fundamentally ready to go higher, exxon should be the largest market cap and apple has fallen behind exxon mobil. in the market cap, we're calling it the market cap challenge. apple shares have tumbled to another 52-week low and we will hear from exxon mobil this friday. the apple market cap, 413 billion as of that close and exxon with 418 billion. that's what i love about trying to figure things out, the entire way from 700 to where apple is now. analysts said it's cheap, cheap, cheap, cheap. so it doesn't matter if it's cheap. >> 460, we were still talking about it last week. >> it's ten times earning else and everybody knows and there's
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nothing wrong and this doesn't make sense that it's dropping. when it's that overloved, all these things -- you've seen it in the past. >> what is your number? >> for where apple finally goes? >> settles out, if it's not settled out already. >> you know, at 250, i said this can't go -- >> i know. that's why i want to know. >> i guess it could go back there. people have been telling me on a pe or revenue basis, it was cheap at 700 and there's no reason it can't go to $1 trillion. but i've seen other stocks try to go to $1 trillion. cisco, for one. >> the question is whether apple is the new dell. >> there were a bunch of new dells. they're -- in the past, there are all of these companies that were eventually -- >> when i say the new dell, meaning it went up, but then no, you worried that it's just going to fall down. >> it doesn't even have to be technology. nothing grows but the sky. the tree keeps going up. >> you obviously haven't seen
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jack and the bean stalk. >> that's coming out. did you see it? >> i haven't seen it yet. i just watched the preview, but it does keep growing. >> we're going to make a movie out of every fairytale. is it a universal film? >> i don't know. >> but it's the guy from the hurt locker.. he's running around with all these special guests. >> wooerve talking about the dow and trying to figure out if individual investors have been trying to get off the sidelines. joining us for this hour is kevin kerone. guys, thank you very much for coming in today. it really is the time when main street is tarting to pay attention to this, "usa today" is taking a look at this. are investors coming back? what do you think? >> well, they have been in the last week. as some of the concerns about the fiscal cliff rolled off,
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investors did pull money back into the stock market. at the same time, when you look at what is happening to sentiment, if you look, for example, at the american association of individual investors, they put out a survey of individual investors and their confidence is very, very high right now. so you've had a short-term move into secretaries. if you look at the individuals over the last few years, they're tentative coming back. it's a nice ficht step, but we need to see this continue for quite a while longer. >> we talked about investor sentiment and how that sometimes is something you want to watch out for. when investors feel really good, there's never a bell at the top, but that seems to be when things fall apart. is this that moment? >> tactically speaking, it looks like we've gotten too much too fast. but, again, i think in the terms of the last three or four years, it would be a bigger danger sign
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than right now when, in fact, i've been trying to make the case that the macro dooms day monsters are in the cage right now. so it's understandable. so i also feel that it's interesting that we're all already jumping on the sentiment things so aggressively on both sides. so the bullish case is sentiment is going to be the tailwind that gets people back excited about public equities and public equities has been there. >> but there are a lot of people who have been sitting on the sidelines for quite a long time and probably a little psychology as you start talking about numbers coming up-and-up and up. >> a lot of people last week talked about missing the train. >> yeah. >> and by the way, you have the "new york times" story on saturday. you have this piece on the cover of usa today. you have "the wall street journal." these are those moments that people say, look, it's on the front page and then they say, i have to call my broker on monday morning.
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>> i look back and the times makes the case that maybe this is a short dinger time. the headline was small investor loses faith in the market. since then, the market is up 42%. it's not so much directionally important to me. it tells you that if we're now on a peace time footing and not a wartime footing, it's a good thing. you can come out of the budgeter. but i don't think it's as much of an investment tell one way or the other. we put, i don't know, 60 billion or $70 billion in the last quarter of last year. now we're seeing a fraction of it slosh back into the markets. to me, it's not as big a deal one way or another, the fact that maybe in the early way the public is excited again. >> there's a lot of talk in washington at this point that, yes, we have pushed off any sort of huge problem with the sequester that's going to get pushed up to may if not august because the treasury could take up special spending again. but there is talk at this point
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that both sides are kind of setting in and you could see sequestration be the solution at the end of this, that there's not a better solution that come august, you do see sequestration. what does that do at that point? >> well, yeah. i think you're going to contract the budget deficit, but not a lot. if you look at what has happened, you could have had a more significant sequestration kick in january 1st. but at the 11th hour, everybody backed off that so you didn't get that outcome. at the same time, they've pushed off the debt ceiling for a few months. so the body language out of washington has been more constellatory. so when you get to this point where you think about what the deficit might look like this year, i don't think you're going to be looking at a balanced budget so soon. you can't sustain trillion dollar deficiter year after year after year doubling the debt so many years and still think that the market is going to accept that over time. they know the market needs to move away from this, but it's going to away longer process.
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>> kevin and mike will be with us for the rest of the hour. >> and it's time for the global markets report. kelly evans is standing by in london. i could string up a lot of thing to talk to you about, kelly. you're very close to davos. i don't know. we -- i don't really feel like i've missed anything, really. but you're still close. you could have jetted over there easily and joined in with, you know, john legend and charlie thero this e, andrew ross sorkin. >> i was hoping maybe some of those people would use it as an excuse to come through london. ross westgate has been away at davos covering the event. he'll be back tomorrow. i've been holding down the ship in the meantime. i think you get more out of it if you're there, but if you missed it, you're kind of like, yeah, life goes on. we're down by 0.04%.
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what's interesting is the extend to which people are talking about the rally over here, driven by the same kind of positive mood fundamentals if you want to call it that that's underpinning the rally for u.s. equities. you can take a look at the major indexes, but we're not seeing too much move. the dax, a little lower. but the ftse higher. so you can see there's not a ton of conviction here in these markets. part of it is that we're getting so much data out of the u.s. we've got jobs report friday. the fed meets tomorrow. we learned on friday, the european central bank is seeing people repay their crisis loans from last year. that does push up the value of the euro and to some degree make monetary policy tighter over here. we can quickly look at the bond space. italy did go to auction as we continue to see reasonable demand for peripheral debt. the paper is selling off a little bit, but still 4.17%.
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investors showed up to bid on the two-year zero coupon and the five-year inflankz flagz linked bond. italy and spain continue to front load. forex, though, telling you more of this story, which is that interestingly fluff, we're seeing kind of a risk off attitu attitude. the same has been the case for loony, which now people are starting to talk about in parity with the u.s. dollar. the dollar/yen, down about 0.3% to 90.62. the euro/dollar, 1.3446. so even though it's difficult, the u.s. dollar, guys, has been performing a little better over the last couple of weeks helped by renewed growth prospects. it's one reason why a lot of people are focused on the see kweter, that chatter over the weekend about it happening could put more pressure on the
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greenback. back to you guys. >> kelly, thanks so much. next time, you should fly over. >> what happened to ross exactly? he could have driven there, basically. but he's much closer than appeared rue. >> yes, he is. well, ross, you know, as far as i know, there could be some sort of hangover movie like situation going on there. he's not here today. i hope he's here tomorrow. >> he may be locked in a freezer somewhere or stuck in an elevator. >> with mohammed el-erian. >> he probably doesn't have private jets to fly around on, either. did you really fly commercial? sfwh we sold the cnbc europe private jet. just felt it was a little bit too much. >> swiss air. i was on swiss air. don't look at me. it's swiss air. >> don't look at me. you sound like -- >> he was on a plane with liesman on the way out. >> swiss air is not sorkin air.
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>> when the press got word of it, they said you know who is on that plane? andrew ross sorkin just like that party, remember? >> there was security waiting for us when we got off the plane. kelly, hope to see you here at home or back next year. we're going to go globe-trotting for potential rally killers. we'll see how the market is setting up for the day.
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welcome back, everybody. take a look at u.s. equity that's morning. you're coming off some huge numbers for this first month of january. this is the best january back from 1989. so the dow is on track for that. at this point, up about 6% for the month of january. 8% with its gains back 24 years ago. let's take a look at the national forecast with the weather channel's eric fisher. eric, why don't you tell us how things are shaping up around the country this morning. >> icy out there in the northeast this morning, not a storm that you write to your grandkids about later on in life. but enough that it's going to make some issues here. a lot of this not reaching the ground just yet, but it will start to pick up west of philly in the suburbs, even in washington, d.c. this morning all dealing with some ice.
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it's all running into some cold air. you live in this part of the country, you know all about that. the last eight days has been frigid. in d.c., just enough warm air here. just an issue for the next couple of days in the capital. we'll see that pick up, starts to mix in this afternoon and later on tonight, it gets warm enough where all the ice melts. so the evening commute will be in better shape. the evening xhoout commute will be a problem in boston. snow picks up after lunchtime today and continues into the overnight here. again, not a huge event, just enough to make it difficult. total snow, 1 to 3 inches for most areas here. a little better if you're a skier, out ear in vermont, new hampshire, new york, it will stay all snow. the other big stover, the severe weather starts to break out by tomorrow morning starting in eastern texas and oklahoma. this is going to head eastward.
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a lot of wind energy for this system. a lot of wind damage will be our main concern. we've got the cold, the snow, the record warmth and severe. it's more like late march than january. >> eric, thank you. wow, we were just talking about this gentleman. i've heard of him. the name is familiar. but i can't place a face. house committee paul ryan, how do we know him? he was a nobody that came on squawk and became vice president and now it's squawk who? i go on network now. he was on all the time. >> every day .now he won't -- >> he's coming on soon if you shut up. i love him. please, paul, i guess i'm just hurt. anyway, he says that the automatic spending cuts postponed as part of the fiscal cliff deal will go into effect as scheduled in march. a former vice presidential candidate says the sequester,
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which would cut $1.2 million in domestic and defense spending over the next two years will happen since democrats haven't offered alternatives to gop proposals. but ryan says no one is tuking about allowing an actual government shutdown. >> we are more than happy to keep spending at those levels going on into the future while we debate how to balance the budget, how to grow the economy. that's the kind of debate the country desevens. by the way, if we keep going down this path, we will have a debt crisis. it's not an if question, it's a when question. >> i remember him, alternativest young congressman from wisconsin that used to come on "squawk box." >> still fighting budget balthsds. >> if he's going to go on somewhere, at least he went on with david. congress must pass a stopgap spending bill by march 27th to keep the u.s. government running. and don't do that with your sneezes. >> what was that? i held it in. >> that's like -- >> i've been trying to hold it in because you were talking. >> no, no, it's going to come
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out. that's bad for you. something inside is going to pop or something. like an anneurism. it's bad to be repressed like that. let it out. >> that's his whole life. >> oh. >> let it out. >> michelle caruso ka brar ray. you're like a guest on the show, but thank you for being kind. >> it's the greatest feeling in the world. let it out. >> yeah, others have -- anyway, more trouble in egypt, a state of emergency has been declared in egyptian cities where dozens of people have been killed over the last few days. the violence was sparked by a court conviction and a death sentence for 21 defendants involved in a mass soccer riot that left 74 dead back in february 2012. so what could trip us the pulls at this point? that's one of the big question
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we're asking this morning and michelle caruso cabrera is here to tell us. storm clouds could be hiding overseas. >> what are some of the international hurdles relative to the rally? complacency about europe. you saw the great headlines about how the banks are going to pay back some of the rtos early. we have data in germany which suggests maybe they could go into recession, as well. spain is only getting worse. so something could still go wrong there. did japan just saturday a currency war? this aggressive move by the japanese central bank. some people roll their eyes and say night is going to get them out of 20 years of deflation. others say this is a change. when you make the changes they are on mafs scale, you wind up
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with decline. the euro is getting stronger and stronger and stronger. that makes it harder for europe to get out of their recession. and then the third point that a lot of on people bring up is the chinese transition. we spend a lot of time talking about the national data in china, about whether or not they are weakening at the national level. so far, the data seems to have improved lately. but that's really on one small part of the story. there's a new government. they just came inta power and they're going after some big vested interest. they're going to start to crackdown on some of the monopolies or duopolys or whatever you want to call them. they started to crackdown on corruption. they just busted another ten guys over the weekend. they've published editorials. they're trying to shake things loose there in a way that they haven't -- >> well, i -- you know, i don't know how we got back to that
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again. >> the mistresses on tape? >> yeah. >> it's the only kind to have, apparently. >> we're talking about possible pit falls. >> pit falls because i think china is facing -- look, the low hanging fruit for the last 20 years was there, right? they've gotten now to be a middle income country. to get from a middle income to a high income country is difficult. they're going to have to do things to shake things looks in a way that we cannot anticipate. >> mike, you talked about how those monsters got put back into the cage. when you hear what michelle is talking about, how big of a concern is this? >> i'm always less concerned about the identifiable ones that are out there. to be honest with you, i think the china thing to me is most relevant because it could disturb this agreed upon consensus. we have this global growth going. when the dow transports are up 20% in ten weeks, this is not some kind of hopes and dreams
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for a new technology. that tells you that we're not positioned to absorb even a stutter step in growth. and so, you know, you see the u.s. economic surprise index, the data coming in not so great. ott i'm not very concerned about it, but i think it's one of those things that wouldn't be absorbed if china stopped printing better than expected purchasing numbers. >> michelle, one topic you didn't address that i'm surprised you didn't talk about but was talked about a lot last week, iran. what's the potential that that is our big stumbling block in all this? >> i thought about putting it on a list. we've been living with it for so long and who the heck knows what -- i think about the russian invasion of afghanistan, which 20 years later ultimately was extremely significant to the united states. this is one of those, yeah, we can identify it, but at what point does it -- what do you mooep need? you need a disruption in oil or an atom bottom explosion for it to be something that affects the
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bottom line economy. >> if you get your shale gas between now and then, you might not have to worry about it. >> we've got a super bowl of data that ends with the jobs report on friday. plus, the first federal meeting of 2013. we have a monday morning strategy session for those looking for an edge. and right now as we head to a break, take a look at friday's winners and losers. [ male announcer ] you are a business pro. omnipotent of opportunity. you know how to mix business... with business. and from national. because only national lets you choose any car in the aisle. and go. you can even take a full-size or above. and still pay the mid-size price. i could get used to this.
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good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. and the headlines this morning, the market entering this new week on a positive roll, the s&p 500 has been up for eight straight sessions. that's the longest winning streak in eight straight years. the dow is up 11 out of 12. much more on the market just ahead. it's a bus is he week, though, on the economic calendar. we'll see whether that helps or not highlighted by a two-day meeting of federal reserve policymakers tuesday and wednesday. they're going to issue their newest policy statement wednesday around 2:15 eastern. and dow component caterpillar highlights today's list of corporate earnings. caterpillar's expected hit fourth quarter profits, $1.69. revenue indicated at about $16.1 billion and it should be about
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7:30 when caterpillar reports. then we're going to talk to doug oberhelm. >> which is very exciting. but why don't we check on how the markets are faring this morning before that news. right now, you'll see if futures are indicated a little lower. dow futures down by less than 17 points. s&p futures off by 1.25 points. as joe was mentioning, there are a lot of records we've been talking about. the dow is off 6% for january. 1989 it gained 8%. at this point, the dow is only about 260 points away from its all-time closing high. the s&p on friday closed above 600 for the first times since back to 2007. we've been watching a lot of things and how they've played out this morning. you can take a look at where things stand in europe. one of the things we've been talking about this morning is apple and exxon. exxon took back its title as the most valuable company in the
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world. has a market cap of $418 billion at the close on friday versus apple's market cap for $413 billion. a lot of things have been changing. people watch that, they watch the transports, people have been setting new highs the last eight session necessary a row. if you see what happened overnight in asia, the hang seng and the shanghai were slightly higher. actually, the shanghai was up by 2.4%. the nikkei was down about 1% for the day. oil prices this morning are unchanged, $95.88. the ten-year note is yeeding, 1.936%. that yield is starting to creep back higher. the dollar this morning is stronger against the euro at 1.3445. it's down against the pound. gold prices have been giving back this morning, as well. 1,654.30 an ounce for gold. now let's get some monday morning outlooks for our guest,
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carl weineberg is here. kevin coronis. he rolls the r and does the whole -- >> absolutely. because of leslie. but you don't really -- she's before your time, really. she was young and beautiful and french and all these big movies look like carey grant. >> e.g. >> that's fine. >> are we ahead of ourselves? are we in the right place? how are you assessing this so-called bull market we're in. >> the u.s. side, great. >> great? >> we've got the growth -- >> with room to move? we were talking about using the phrase has the train left the station or are people getting on the train at the same time? where is the train sfp. >> maybe a bit of a setback because the data will be mixed.
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we'll see a softer number in gdp than we would like to see. we're going to see the claims number dm dip down, so a little set back there. but overall, i think the u.s. economy continues to chug along and you can't say that any place else in the world. europe is going to run into a brick wall when they start reporting gdp and industrial numbers. >> that's not going to hit us? >> well, no. we're growing despite the fiscal drag that's been in the economy for a year and continues to move along. europe is stuck with no real income growth, no credit growth. there are still problems listed on the financial side. i think we're going to see the u.s. outperform europe and i think the u.s. is going to benefit from leaving europe long before the euro is over. >> now, i know you're an economist and not lessnecessari stock buy, per se. might be i'll go to you, mike, on this. we're living right now at about
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15. >> lower 13 on a forward-looking forward basis. >> so what is the top? how close are we to the top? are you asking me? >> mike. i'll go to mike first. >> i don't think the actually pe number is going to tell you. on a tlal basis, we were 17ish. but to me, the components of the earnings are more stable right now. the earnings aren't all coming from one place. in 2012, it was challenging. valuation is not the reason i think why this ends or is it really the excuse it's so cheap it has to go higher from here. >> what do you think is the reason? >> rate of change. things are getting better and volatility has been strangled t to ground. and, look, i think we're in the overshoot phase. rovts are related in the market. we haven't reflected it, the possibility for more people getting optimistic. deals i think have to be a big component of this market.
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>> and that was something we heard out there in davos, lots of fuel making for the first time in a long time. >> another thing you heard in davos is everything is great in europe and, therefore, we should buy stocks because the earnings part is going the keep on going. >> that worried me, though. >> it worried me, also. i think that's our core view. europe is going to underperform people's estimates. the top line won't be there. >> why is that the not going to ultimately impact us? >> on the u.s. side? >> on the u.s. side. >> we're growing at 2% to 3% on the u.s. side and europe is contracting probably 2% to 3%. we're looking at an economy here that's expanding, that can produce the catch up to the correction from the financial crisis. >> are you worried about the debt ceiling return, this conversation returning not three months from now, because that's not what it's going to happen. it's probably only about a month and a half away and what that ultimately does. is what's happening in washington or what's happened in
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washington, is that actually impacting the markets and impacting the economy or have we made too much of it? >> well, you know, i think at this point looking forward, it's going to be less rather than more. the republican tactics have changed. and that reflects the fact that when we put forward a projection of our debt to gdp ratio in the u.s., it's almost flat going out the next decade. that's a core measure of stability. i know ryan wants to see the debt drop to the euro. but stabilizing the debt relative to our income is sustainability. and i think we're pretty much there in the u.s. we're nowhere near that in europe. so in the u.s., it's fiscal policy as usual minus 1% for government spending. but in the new year, just as we saw in the last year from public policy, but we're not going to see -- we're going to see bigger squeezing going on in europe. >> carl, we're going to leave tlit. these gentlemen are sticking around. thank you for this great perspective this morning. >> if you have comments or questions about anything that you see here on squawk, e-mail us still ahead, a major blow to
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president obama. this was pretty interesting on friday. his nlrb recess appointments ruled unconstitutional and also puts cord ray, the cpcf -- >> consumer protection board. >> anything that either agency does now could be challenged. >> for 300 different rulings that they've made at this point? >> and how much is twitter really worth? another key investor is stepping in that story. they're stepping in something. and check out the s&p 500 index having its best january since 1997. we'll be right back. and who is going to host the u.s. open in 2020? >> it's a secret. i'm not going to gist away. >> it was out like nine hours ago. anyway, we'll talk about that, too. ♪
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welcome back, everybody. u.s. equity futures are indicated just a little lower this morning. dow futures pulling back by about 17 points. we have some news to get to this morning, though. caterpillar shares are one to watch this morning after they come out with earnings a little later. we will be speak, doug oberholman, the chair and ceo of caterpillar in the 8:00 hour. >> and blackrock is now buying an $80 million stake in twitter, snapping up shares directly from employees looking to kap cash in on their stock and options. the deal valuing more than $9 billion. that's up from a reported $8.4 billion back in late 2011. twitter reportedly sought investors for a tinder offer
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last summer in the wake of facebook's botched ipo, but didn't complete the deal until recently and maybe that's a good thing given that the facebook stock has come back and what that ultimately might mean for the future of twitter. in a blow to president obama, the d.c. district u.s. court of appeals ruled unanimously that the president's nlrb appoints for 2012 were unconstitutional. peter ferrarah at the conservative and libertarian think tank, the heartland institute joins us now peter. i read the papers on saturday because i needed to see the op-ed from the "wall street journal" and i needed to see the op-ed from the "new york times." "the wall street journal" said basically it's about time that the executive power was -- that the president has exerted has at least been challenged. the "new york times" said it was a victory for republican chicanery. >> the court said in order to
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make a recess appointment, the senate needs to be in recess. this is the first time in history a president has tried to make a recession appointment when the senate knot in recession. and the senate at the time was in control of the issue. it's a simple and straightforward decision. it was undoubtedly going to turn out that way and we all knew it. we've all known that for a long time. >> peter, explain what the senate does. what is a normal recession? because they weren't really totally in session, right? they were doing a little bit of like -- it almost looks like business just to be able to say that they happen still in session, right? that's what the chicanery part of the in, times was alluding to. but didn't the ruling go even further and they said some things that would have affected even some 40 some bush appointments or even some
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clinton appointments, as well? >> yes. the ruling restricted the president's recess appointment power. it says if you read what the constitution says, he could only fill a vacancy with the recession appointment if the vacancy occurred during the recession. and then the appointment needs to be made during the recess. it's a straightforward application of the words of the constitution and that chicanery is so grossly inapplicable unless the president's own democratic senate majority leader was engaged somehow in chicanery in saying that the senate was in session, this same thing happens with the session every year. the session starts on january 3rd. the president made the appointments on january 4th. only the senate has the authority to say when it's in session and it explicitly started the session on january
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3rd, not january 4th. >> so anything the nlb has been deciding on is maybe questionable at this point and there are some people say these guys need to resign immediately. i don't know whether that's possible. but also, they've taken it tocordray's appointment. he's got a lot of stuff on his plate with the cbsb. could some people ignore those rulings? >> yes, the ruling does apply to cordray who was appointed on january 4th. but there's a bigger problem with cordray and the consumer protection board. i believe it is the consumer financial protection board is even more egregious than the
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board that was at issue in the free enterprise fund case. it sets its own budget. it's not subject to congressional authoration or control. it sets its own revenue. it's not subject to conal authorization control and it's not subject to executive branch of control. it's an independent agency under an independent agency which is exactly what the supreme court held was unconstitutional in the case. so the whole board is unconstitutional. >> maybe they -- at worse, maybe the republicans will say we'll okay them, but we want you to change some stuff about the cps. it will probably go to the supreme court and who knows what will happen at this point. thank you, peter. >> thank you. when we come back, when prince alalli is holding court, what is he watching? we'll tell you right after this. by the way, are you looking for gold? it's down about $2.30 today.
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$1654 at the last pick. "squawk box" will be right back after this. all stations come over to mission a for a final go. no go call. this is for real this time. we are on step seven point two one two. we have entered our two minute hold.
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when prince al ali bin talal is holding court the only thing he has on tv is "squawk box." >> there you are. >> there's a press release that went out. the chairman of kingdom holding company receiving in his office the egyptian ambassador to saudi
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arabia who was accompanied by the first secretary of the embassy, and i mean it just -- >> that could be anybody. >> it could be anybody. >> it's -- not with those jowls. but if you look at the high rise, looks like a pretty prince type place. >> it does. >> and we know that he's a friend of the show. >> it's cute. because people sent it off to us and said you might want to forward it to joe, because that's what's on. >> all the time. >> publicity shot. >> it's on a lot of the time. we need to have him come back. >> we do. it's been awhile. >> let's get the final word for today from our guest hosts. guys, people are waking up this morning after all this talk about the market at new highs. it's made its way to "nightly news" and "usa today" and investors are going to be tuning in today wondering should i buy or not. mike, what would you tell them? >> i've been, i'll admit, two weeks saying we were ripe for a pullback in many respects. i'm not that concerned about it.
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mostly because everything that's happened in this stock market, even though it seems like a new high is a big deal has been presided by the credit markets, underpinned by the fact that financial conditions in general are very strong. until the junk bond market which has been ragingly strong and nobody talks about, until that cracks i don't really see a big downside. it makes some sense for this market to pull back. >> but that's a great thing to look at. the junk market -- >> it's not even a high yield market anymore because it's trading below 6%. >> all right, kevin, what do you say when somebody calls you up today and says, do i buy into this or not? >> i think you got to take a step back because it's not about two weeks. this all has happened within the last two weeks where we've seen this explosion of interest in the equity market again. you have to a longer time horizon. what we've thought is that we're going to see 1550 by the end of the year, we got a big down payment on that in the first month of the year. but it's the bigger trends that really matter. we've seen 5 million private sector jobs -- >> but do i buy today or not? you're talking longer term. you're talking higher from here.
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>> oh, yes. you do. and we have been and we are overweight equities. so we are seeing improving ftdals. we see good valuation. our recommendation coming into the year was to focus on equity, be overweight -- >> should have listened three weeks ago, right? all right, kevin thank you very much. mike, thank you. we really appreciate it. >> coming up, caterpillar getting ready to report. we're going to have the numbers first. plus the bulls on. we have a slew of strategists and reporters ready to take the pulse of the individual investor. as we head to a break let's check out the futures. ♪ (train horn)
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vo: wherever our trains go, the economy comes to life. norfolk southern. one line, infinite possibilities.
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riding the market rally. the s&p, logging its longest winning streak since november of 2004. the markets overall feeling like it's 1989. all over again. >> where do you live? >> in the city. >> do you have a house? >> apartment. >> own or rent? >> rent. >> what do you do for a living? >> lots of things. >> where's your office? >> i don't have one. >> how come? >> i don't need one. >> where's your wife? >> don't have one. >> how come? >> it's a long story. >> we'll tell you how to cash in on the market's latest move. >> in studio to share their latest investment ideas, jeffrey kleintop of lpl financial and rebecca patterson of bessemer trust. plus special reports oers and losers of this rally. >> plus the secret lives of the superrich. >> why are you wearing a tux? >> it's after 6:00. what am i, a farmer? >> we're going to go inside the minds of the mega rich home buyers and the broker behind some of the big apple's biggest deals. >> i have a very important question. what are you asking for this?
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>> as the second hour of "squawk box" starts right now. good morning, everyone. welcome back to "squawk box" on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. we've been watching the futures this morning and they are indicated just a little bit lower. right now those dow futures down by about 16 points. s&p futures off by just one point. nasdaq is down by less than a point. but there are plenty of superlatives to talk about when it comes to the markets this morning. the dow is up in 11 of the last 12 sessions. it's now less than 2% away from the all-time high that was set back in october of 2007. and it's on track for its best january gain since 1989. the s&p 500 closing above the 1500 mark friday for the first time in more than five years. its eight-session winning streak is the longest since november of 2004. and it's now less than 4% away
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from its all-time high, which was also set back in october of 2007. a notable absentee from the stock market rally is apple. that stock closing friday under $440 a share. that set a 52-week low. apple's market cap also fell below exxon mobile's market cap with this drop on friday. back in september, apple set an all-time high of about $705 a share. now, exxon is back as the most valuable company in the world based on market capitalization. >> and some news from capitol hill. house budget committee chairman paul ryan says the automatic spending cuts postponed as part of the fiscal cliff deal will go into effect as scheduled in march. the former vice presidential candidate says that the sequester would cut $1.2 trillion in domestic and defense spending over ten years. and it's going to happen since democrats haven't offered alternatives to gop proposals. ryan, though, says no one is talking about allowing the government shutdown. >> we are more than happy to keep spending at those levels
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going on into the future while we debate how to balance the budget, how to rule the economy. how to create economic opportunity. that's the kind of debate the country reserves. because, by the way, if we keep going down this path, we will have a debt crisis. it's not an if question, it's a when question. >> congressmen have also passed a stopgap spending bill by march 27th to keep the u.s. government running. u.s. stocks meanwhile are on a great roll with the dow taking aim at 14,000 on friday goldman sachs ceo lloyd blankfein joined "squawk box" from davos and talked about the don't fight the federally. >> the market has gone up without -- with people being underinvested. there will be a turn. the turn in interest rates, and equities won't necessarily happen when the fed changes interest rate policy. it will happen when the market decides that the fed will have to change interest rate policy which is going to happen a lot sooner -- >> happen a lot sooner? >> it will happen sooner than the official -- >> does he want to come on here?
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>> he had a lot of fun with us. >> is he going to come in studio? >> one of these days we're going to bring him across the bridge. >> one of these days? >> i told him -- teterboro. >> people don't realize how personable he is. it was a great interview because it showed a little bit about who he really is. >> he's relaxed. that's why my first question was, i think the beard sort of signifies how relaxed he is. >> there it is. kleintop does not have a beard. lpl financial chief market strategist and rebecca patterson, chief investment officer, great to see both of you. and rebecca i would normally start with you but i think of you as a global currency sort of big picture person and because the talk of the day, jeff, is about the dow i'm going to start with you. i thought it was fitting that as we get close to a new high that exxon has retaken the lead.
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that fundamentally seems like it -- like the market makes more sense to me. like exxon has a bigger market cap than apple. >> back to the old days. seems whenever we've been on the cusp of a big pullback it's been exxon that's been the big name in the s&p. i think -- >> what do you mean on the cusp 6 a pullback? >> we could be. lloyd just talked about how this is a don't fight the federally. it has. not just this year, look back on the last five years. this is all about don't fight the fed. we've got a meeting on wednesday with the fed. the last statement they released was pretty upbeat. talked about improving manufacturing, a lot of different things. they could cite improving to beless claims. positive tone in the first paragraph of that statement from wednesday could send markets lower thinking we're close to the end of not the end of qe-3, but -- >> the markets rally when the fed starts taking back -- they give it a little pickup initially but it signifies that the reason that they're pulling back is the economy's picking back globally. the other thing is, because
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investors we talk about again and again got hit by, you know, the tech bubble in '99. the -- the nifty 50 sort of of the, you know, the coca-cola 50 times earnings, the walmart 50 times earnings, then follow that by the financial crisis that people are still risk averse. so you coming in and saying, adding to another brick in the wall of worry, the wall of worry is going to be around for awhile with people like you and with individual investors not feeling comfortable. which could allow this market to go much further than people think. you may be providing the bricks to the wall of worry. >> we haven't seen the individual investors come back to this market yet. >> no. >> that's right. that's the next move. but positive. it doesn't look like we're on the cusp of that happening any time soon. >> that's good. >> i think it happens right now. >> you're saying we need that to really get going. i'm saying when they finally get there, that the -- smart money -- >> i will see a big pullback here but definitely a pause if not a consolidation in this
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rally we've seen -- >> when you say a pullback, what's a pullback in your mind? >> 5%. >> why is it more likely that i've heard people saying that the most worst feeling right now, i think cash talking about is the train leaving the station and i'm not on bard and that's even a scarier thing-tsh >> we got on board. we just made a decision last week to add incrementally to equities and it was a really hard thing to do because it has risen so much. we've basically been neutral equities for the last seven months. but we had more of our equity exposure outside the u.s. and that equity exposure outperformed the u.s. which allowed us to keep up. but we thought if this train does leave the station and we saw for the last four weeks more money going into stocks and bonds and mutual funds in the u.s., that's something new. if that does happen, we want to make sure we participate. but i'm -- >> in the u.s.? >> no globally. i still want to be focused more outside the u.s. than in the u.s. if we get a pullback i still have enough dry powder -- >> you're not wishful thinking? are you not inasmuch as you'd
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like to be in, so you'd like it to pull back a little to get people -- >> to do a little shopping here. we've been aggressively positioned in the sectors that we're in, but we're a little bit underweight the stock market. so maybe a little bit behind here, we kept up with the market so far because of those aggressive twists to the investment, but certainly, i think we're due for a pullback. >> -- right though isn't the worry then that the train will not have left the station, investors who are waking up this morning thinking i should be in the market, they're going to see the pullback and go, this whole game is not for me anymore. >> it depends what causes the pullback, how deep it is. if it's a normal consolidation, we go down 2%, 3%, i would expect people are going to jump in. if we have some shock the news out of egypt and the middle east is not terribly encouraging, if japan and china we wake up tomorrow morning and actually have military action, okay, something like that we have a bigger pullback -- >> -- fed policy statement that suggests -- >> yeah -- >> walking away is not -- you know, then you're not fighting the fed by the way.
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>> we don't have a press conference this week. we don't have a lot of incremental news from last meeting in december. i mean i agree. i think there's a tipping point. last week stocks went up even though bond yields went up. but there is a tipping point. if bond yields, ten-year breaks 2% for example. i'm just throwing that out there. i haven't done any math to back this. if you got a big enough move in yields, that spooked people, this could hurt the recovery. >> remember -- >> if you -- gdp was only running at 1% to 2% and they didn't start operation twist for awhile. yields got to 3.5% on the ten-year. that's a shocking environment for stocks. stocks fell 10% to 15%. >> but still we've had people say that we can still do 4%. that that's just normal. that's just normalized -- >> over time. >> long-term yield. there would be some trepidation initially but that's not going to be something that would -- >> -- health environment -- >> >> we're going to get a lousy gdp number. >> but that should be backward
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looking. hopefully the market knows this is in the past, this isn't now. i think all the sentiments this week we have them from every country i think except japan business sentiment surveys coming out. that's a much more forward looking indicator. we're going to be watching that and housing. those are going to drive things as well as talking about earnings. we have 20% of the week. that's going to be a lot -- >> -- of the earnings season. now is when stocks usually begin to slide after a 4% rally in the two weeks before and al alcoa we could be hitting a rough patch as well. >> you've got a big lump money and you're like -- >> you're -- >> yeah, exactly. >> crazy like a fox. yeah. >> the minute we get 5% you're in. >> yeah we looked at some good opportunities. i'm worried about europe, too. i know you added to international. but i think core europe is on the path of slowing in the next several quarters. >> i'll take care side of that. >> so 5%, you're waiting for a 5% pullback before you put more in or do you see 2% or 3% and start to see okay? >> i think there are areas you can shop.
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i think industrials. when you're in consolidated trading range you want to buy what's working for the home builders, transports. >> transports are working. would you buy more there? >> yeah. absolutely. >> pointing out the transports are up 20% in the last ten weeks which i knew they were hitting new highs. i didn't realize it was that much that quickly. >> that's china and fracking and a lot of other things that aren't tied to the environment around the fed and around earnings. >> keep in mind i know global big picture girl joe but china is doing better, we've got industrial profits out last night four months in a row they've been improving. europe we're not going to get any reform this year because they're on pause until jrmny's election but i think no news is good news for europe. if they can just be off the radar screen for a couple months, better china, stable but vulnerable europe i think all of that at the margin does help the u.s. and maybe can contribute to a further rally. >> before the individual investor gets in, used to be at 20,000 on the dow, i mean, we keep forgetting 800. 1,000, 2,000, 3,000, remember
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what it did in 1982? >> that's because earnings were driving -- >> this isn't an earnings rally. this is a multiple ten or eleven and there's no alternative investment. >> we're above 13. how do you get to historical averages without any kind of earnings -- >> we haven't made any headway in 12 years. maybe 15 is the outside of time that you can sit there and spin your wheels as earnings keep going up and the multiple keeps contracting. 15 is about as long as it goes before so maybe we're a little bit early. >> a great start for 2014 and 2015. >> oh, you just can't wait until it pulls back a little. i can read you like a book kleintop. >> a lot more from these guys throughout the show. when we return on "squawk" we're going to have more on the market rally and why it's a far cry from the one in 2007. kayla tausche has a preview. >> good morning, andrew. the peak in 2007 was a result of the five-year bull market. gold less than half of what it is now. the yield on the ten year was
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near 5%. we'll tell you why this rally is more sustainable than that one. after the break. ♪ let's go. ♪ ♪ ♪ [ male announcer ] introducing the all-new cadillac xts...
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welcome back to "squawk." checking the futures right now you can see we've got some red arrows, at least on the dow. nasdaq virtually a little down. s&p 500 off by a point.
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dow jones off by almost 16 points as we open up right about now. >> dow obviously heading towards 14,000 at least it looks like it is. but is this rally sustainable? kayla tausche joins us right now with more on that. kayla, a lot of questions about that this morning. >> a lot of questions but investors are saying this slower, more measured pace, makes it a little bit more sustainable, especially coupled with economic fundamentals that you guys have been talking about all morning. if you take a look at what we've seen in the last ten months, both the dow and s&p up less than 10%. whereas in 2007, 13 dow components were up more than 20% apiece, even if you take a look at the chart it does look a little bit similar. we'll break down the dow a little bit later in the show as well. that swelling in '07 the pinnacle of what had been a five-year bull run for stocks beginning in 2002. money had been pouring into equity markets. not into the safe haven trades like we've seen in the last years here. take a look at what type of economy we were looking at back then. the ten-year was at 4.65%.
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corporate balance sheets looked about as good as they do now, $1.5 trillion. unemployment 4.7%, but was just starting to rise at that time and gold the ultimate safe haven trade, $743 an ounce. now, the ten-year of course below 2%. unemployment 7.8%, and gold is more than doubled in that time as investors have actually been avoiding stocks which is exactly the opposite story line of 2007. that's why people say that there's still room to run. howard silverblat at s&p capital iq notes s&p is cheaper 15.2 times earnings currently versus 17.1 times then. the tide is starting to turn, too, according to the latest data from lipper we had the third consecutive week of inflows into the equity market 3.66 billion dollars in the most recent week that they measured over the weekend set a record 55 billion dollars flowed into the equity market in january. that's an all-time record and of course january now because of that movement is on pace to be a
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record january since 1989. >> investors are coming back in. we saw it ticking off almost january 1st as people started putting money back in. got the resolution to the fiscal cliff. what happens next? >> what happened the last time we saw an inflow of money into the mutual funds, 2011 and stocks fell. prior to that it was april 2010, stocks fell. that kind of signals more of a contrarian indicating that one that suggested that the rally had durrant. >> that was a spring swoon both years. >> i think you have to watch that carefully. i expect that data and the size of the rally we've had but you look at things like high yield. high yield junk bond yields today 6.4%. that's down substantially from the all-time low and so if we get signs that the economy is at least slowly improving, despite the fiscal tightening, the fed's still got a tailwind for us, at some point people are going to rotate out of high grade bonds and slowly high yield bonds because the valuations are so rich there. it's not that equities are cheap
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it's that these other assets have gotten ridiculously expensive. >> and people have been poring their money into high yield and into those asset classes and out of equities. last year we saw steady outflow, $200 billion out of equities. so there has to be some natural correction there coming back in to them. >> that was the point earlier, too, he said that would be one of the first warning since if you see the high yield market start to move. it was astonishing. i forgot 4.65% is where the ten year was. looking at it today, maybe it will get back to 2% at one point. >> 4.65 we were saying it can't possibly go any lower. you got to get out there. >> on the day if you look at the reports from the day of that peak on october 9th, there was some fear, because the yields had fallen, to 4.65% >> they were too low. >> at the time. which is a little bit ironic when you think about it now. >> the markets never do what you expect. >> yes. >> but that's the right thing to talk about. i think rebecca's right. this is about what bonds do, not
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about what stocks do that drive money into the stock market. maybe we start to see losses on high quality bonds. i think the barclays was negative year to date so we continue to see that. investors tend to think about risk not as missing their long-term goals, but about losing some money. if they start to lose the money in bonds where they've been going through for so long that might push them into stocks. >> kayla, thank you very much. we'll see you a little later. >> coming up, caterpillar earnings just straight ahead. we'll go through the numbers and find out what it is saying about the global economy. in the next hour we're going to speak to ceo doug oberhelman. former vice chairman of goldman sachs robert kaplan joins jeffrey kleintop and rebecca patterson. then did president obama violate the constitution? let me count the ways. no, senator mike johanns talks about friday's federal court
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ruling against the president and his nlrb appointments. the white house strongly disagrees. jay carney's like -- no problem. that story and much more on the markets this morning. at 1:45, the aflac duck was brought in with multiple lacerations to the wing and a fractured beak. surgery was successful, but he will be in a cast until it is fully healed, possibly several months. so, if the duck isn't able to work, how will he pay for his living expenses? aflac. like his rent and car payments? aflac. what about gas and groceries? aflac. cell phone? aflac, but i doubt he'll be using his phone for quite a while cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a get-well card at executor of efficiency.
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>> you got comments, questions about anything you see on "squawk," shoot us an e-mail, is the address. you can also follow us from twitter @squawkcnbc. futures at this hour, see what's going on ahead of the markets. dow looks like it will open off ten points. nasdaq will be up about a point and a half. and the s&p 500, let's call it unch for now. couple green arrows and a couple
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of red arrows, as well. but let's call it unch as well. up next, earth moving earnings from caterpillar. and later, don't miss our first on cnbc interview with ceo doug oberhelman. it's just ahead right here on "squawk box."
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welcome back to "squawk," you're looking at a live shot of washington, d.c. investors waiting to see if u.s. stocks can continue their recent rally. the s&p 500 is riding an eight-session winning streak. its longest since november of 2004. the dow now within 2% of its all-time high. much more to come on the markets as the show rolls on. a busy economic calendar for this week highlighted by a meeting of the federal reserve policymakers coming tuesday and wednesday. one economic report set for today with the national association of realtors issuing pending home sales for december coming at 10:00 a.m. eastern time.
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and the investigation into boeing's dreamliner issues focusing on a different manufacturer, this one of the jet's monitoring systems. that comes off a probe into the company that makes batteries for the jet found no evidence that it was the source of the 787 problems. remember we had lots of conversations just a week ago about how the batteries could be the issue. remember famously that picture we showed on "squawk," 11 pounds lighter and so discolored. people thought it had to be the battery. now that's off the table. the monitoring companies now on the table. and let's see if we can get to the bottom of this thing one way or the other. >> caterpillar earnings that are expected any moment now. our guest host today, jeff kleintop, rebecca patterson. guys, we're looking at all the things that have been coming in with the earnings season. jeff you were making the point that you get to that point in earnings season where you start to see a little bit of a pullback. the good news has already come into it? >> yeah, you know, look, we started the fourth quarter with expectations of 10% earnings growth. now it's maybe just two or three. that hasn't improved over the
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course of the early reporters. two weeks after alcoa reports we usually start to get the turn in the earnings season where there's no good news and we start to price in the bad news. and that's kind of what we're on the cusp of right now. we hear from a lot of industrial companies this week. we heard from -- >> get some surprises maybe move things once again? >> equitable spending. we'll get durable goods orders, as well. we'll hear what the state of business spending is this week. that's really important as we look for the rest of the year. >> rebecca. i think durable goods, always a very volatile report so you get nervous about reading too much into one month but i think looking at the orders, the leading indicator part of durable goods will be particularly important this morning, to get a sense of that business activity. it looks like during the break we just had some news that volvo, or a report anyway, suggesting that volvo is buying a stake in a chinese company, building up its heavy truck business. ged.know, stuff like that makes you know, if we can continue to see these global m&a transactions that's been going on, that tends to be cyclically
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correla correlated. >> an dwru in davos you started hearing about deals being back on the forefront. >> i saw two people i wasn't supposed to see to the. >> who? >> i can't say. i really shouldn't. no, no. and i said, what's going on? they said shhh, ixnay on the -- and i said i would be -- >> what did you say? >> this back to the hooker story? >> no, we're not back to the hooker story. >> well, who were these two people -- they were dealmakers? >> dealmakers. and it just -- >> all right. >> just seemed like there was a lot of action going on there. i should also tell you you know who else was there, your old friend joe he actually asked about you, michael bell. >> no kidding. >> he doesn't look anything like that. i said michael you want to come on "squawk," you should come on over, they're in the middle of this deal so he couldn't make that happen. >> exactly. >> hopefully we'll have him on when and if the deal ever -- >> some of the deals that we're hearing about, they all tend to at least lately revolve around china and there's certainly some news around, you know, home construction as well here in the u.s., that's working. caterpillar is tied into both of those themes.
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we'll have to hear what they have to say. >> caterpillar is reporting and i don't know what's in this bummer of $1.04 which would be well below $1.69. revenue numbers okay. $16.08 billion versus $16.12, an estimate. i like it when they give -- >> here's what's in that number. the fourth quarter was negative impacted previous to the announced goodwill impairment charge. 78 cents a share. 1:04 and 87 would be -- >> for 2013 the company is looking for $7 to $9. the estimate is $8.54. you could drive a truck through that. also, for fiscal 2013 sales, also a big difference. 60 to 68 billion, and -- >> here's some insight on that. that 2013 outlook you said you could drive a truck through it. they admit that in their own commentary. they say the range of that 2013 outlet reflects the level of uncertainty we see in the world today. they say they're encouraged by
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recent improvements in economic indicators but they're still cautious. and while we expect some improvement in the u.s. economy, growth is expected to be relatively weak. we believe china's economy will continue to improve, but not to the growth rates of 2010 and 2011. we also remain concerned about europe, and expect economies in that region will continue to struggle in 2013. those are comments from dog oberhelman, who is the chairman and ceo. he's going to be joining us in about half an hour or so to talk more about this. but, caterpillar has been one that can look far down the road. you're not just talking about this year. they can look quite a bit further down the road. some of that uncertainty seems to be prevalent. >> it's been reported on year after year after year. each quarter you can see big fluctuations. not just in where the actual number is, versus estimates but then the stock can open down, close up four points by the end of the day. open up four points higher. close down, but right now, people are trying to figure this
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out. it's 95-95.50. >> let me tell you one more comment he makes. if the recent improvements and economic indicators continues, 2013 could be another record year for caterpillar. they expect the first half of 2013 will be weaker than the first half of 2012, though. they are looking for better growth in the second half. however, if, like the last two years, growth and confidence decline in the second half, 2013 could be a tough year. so either way, as we demonstrated with the inventory reductions in the fourth quarter, they're prepared to excute the lever. >> they're hedging their bets. >> they're hedging their bets and giving broad guidance. >> inventory reductions and production levels will continue to decline at least for 2013. you look at the backlog, $19.6 billion at the end of the fourth quarter versus $23 billion at the end of the third quarter. so from 23 down to 19.6. so there's -- what you're seeing here is that cat pymer doesn't have as much visibility as a lot of other companies.
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and it's dependent on what we don't know. >> and that's important because for us to get that pickup in job growth in the u.s., that we need to see the fed start to move towards exiting qe we need to have companies a lot more confident than things you can drive a truck through. even at caterpillar. >> if you look at the long-term, it's as high as 117 or so, and then it traded as low as down in the mid 60s back in 2011. kind of in the middle of a recent range. just a one-year chart that you're looking at there. sort of almost a wait and see picture on the chart. >> we're waiting to see if jobs can get momentum. waiting to see if we can get legs to the recovery despite fiscal tightening. caterpillar is the perfect analogy for the macro economy we're living in today. >> and to break out of that spring we were talking about. can we get through thinking we're going to have a better second half of the year? >> we're not seeing rio tinto,
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other businesses tight into mining talk about the weak environment. look at where copper prices are. we're not seeing a lot of upward momentum there. that's key to cat's business and a lot of the industrials as well. we've got to see that begin to pick up as a leading indicator of better earnings results down the line. >> we did have the dow transport. >> he said it's not -- >> contracting. everything he talked about contracting. who is on your side? >> did you -- >> you know -- >> that was the meeting in davos that you -- >> that you weren't -- >> yeah. i want to know what the real meaning was, andrew. you're not going to -- are they two companies, ceos from two companies? >> no. >> a banker with a company? >> yes. >> a banker with a company? >> let's leave it alone. >> a banker with a company. you said it. >> i think there's a preview to come. >> you say it and then you just leave us high and dry. but -- >> key business. >> but it was a banker -- you're a key. and it was a banker and a company? whispering? >> joe will keep working on him. in the commercial break maybe get a little bit more out of
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him. >> a company? media company? industrial? >> that's what i said. there. >> you're pretty good at this. i'll let you keep working on him. fortunately we have caterpill caterpillar's ceo doug oberhelman. he's going to join us to talk more about what he sees in the global economy, more about the quarterly results and that's a good thing because this certainly raises some questions what we're seeing in this right now. obviously they're not sure where things are going but we'll get a lot more from doug when we come back in the next hour. he's joining us at 8:15 a.m. eastern time. up next, though, we have a closer look at some winners and losers in this rally. jackie deangelis has a preview. jackie. >> good morning, guys. it's been a good run for stocks. the dow up 6% this month. as earnings season kicking into high gear i'm going to walk you through some of last week's biggest winners and losers and see if that momentum can continue. stay with us.
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welcome back, everybody. dow futures down by about 12 points. we've been watching shares of caterpillar this morning because it just came out with earnings. caterpillar came in with earnings that were 1.04 was the
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number, 87 was a charge that was included on this. analysts were looking for 1.69. what's really important is that this company talks about their outlook for 2013. they they see somewhere between $7 and $9 in earnings a share. street today, 54. obviously that's a very wide range and the company is making some comments about that. they say that wide range for the 2013 outlook reflects the level of uncertainty that they see in the world today. doug oberhelman is the chairman and ceo. he says that they are encouraged by recent improvements in economic indicators but remain cautious at this point. worried about things maybe taking a turn like we've seen in the last couple of years. in 2010 and 2011, at least, we saw a downturn in the spring and if that's the situation again, then, well, all bets are off. but a lot of uncertainty there. we're going to get a chance to talk more to doug oberhelman about this. he's going to join us in the next hour. >> the markets highs produced many winners and some notable losers, as well. what does that tell us about the bredth of the market and about
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what we can expect in this week and in this quarter? in general, we have assigned cnbc's jackie deangelis joins us now with more. >> good morning, joe. >> good morning. >> good to see you guys. you're definitely right. we saw some pretty remarkable individual stock moves last week in both directions. the question now is can the upside momentum can, can the downside slides be contained? some of the strongest performers last week include netflix. a weekly gain of 71%. that was after a big earnings beat. now substantial short covering in that name, analysts saying with the rally could continue all the way to $200 before the stock pauses for a breath. we also saw some money pulled out of apple and allocated elsewhere in tech. no doubt that netflix was part of that rotation. one of the recipients. meantime green mountain, one that we like to talk about a lot up roughly 14%. part of that after analysts felt that the response to starbucks was somewhat underwhelming and strong expectations coming up for the february 6th earnings report. analysts feel that this company
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really focusing on its products and putting efforts to turning around. one example is launching a more affordable keurig machine to reach consumers of all levels and price points. and gncr is still managing to compete debt piet its patent expiration. then there's ibm. a 6% gain on the week but the biggest winner on the dow after earnings beat estimates for the 40th straight quarter. but there were also some substantial losers as well. apple was the one that received the most attention the stock down 12% for the week. concerns, of course, over its latest earnings report just one issue there. but worries about the pipeline, the future, and also some of that product cannibalization prompting some sellers to add its name. of course that selling pressure analysts are saying could potentially continue. and coach dropping 17% after reporting weaker than expected domestic sales. you were talking about caterpillar all morning as well, 2% drop on the week for cat. >> do we know if david einhorn is still shorting green mountain? remember he was out there. >> he was out there. i'm not 100% sure.
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>> where he is now? >> herb greenberg is the green mountain man. i'm sure he'll be -- >> we'll check in with him at some point. >> we should talk about cat pillar. the stock is a little higher. so maybe people are looking at this thinking this is a really cautious outlook. >> look for a lot of action. we'll talk to doug at 8:15 eastern time. coming up in the meantime it's the most expensive co-op in new york city on the market right now. cnbc just got an exclusive look inside this mega mansion. and you won't believe how much it is going for. we're going to tell you all about it when we return. >> comments? questions? send them to @squawkcnbc on twitter fl low the show and look for updoubts from andrew, becky, joe and the "squawk" staff. twins. i didn't see them coming. i have obligations. cute obligations, but obligations. i need to rethink the core of my portfolio. what i really need is sleep. introducing the ishares core,
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there are the futures which are up a little from where they were. they were down 15, 16 on the dow. now down 5. caterpillar has indicated up a full dollar now at around $96.58 or so, 55. up 95 cents. so we are going to see doug oberhelman the ceo. he's going to join us in the next hour to discuss the quarter and beyond, and why they -- why you could drive a caterpillar truck through the estimates that he's giving us for the next quarter in terms of how big the -- the low that they expect and the high in revenue and earnings per share.
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it has to do with the uncertainty in the global market. we'll hear from him. >> okay. in other news, it is new york city's most expensive co-op on the market right now. a mega mansion just shy of $100 million, and cnbc's cameras were the only ones allowed inside. let's go to the videotape. >> this is best view of the apartment. >> because there is no better view. i am dying to show you the rest of the place. i hope you have your walking shoes. here we go. >> the hallway is like a bowling alley. you want to put on tennis shoes. >> really, exactly. master bedroom suite. >> now you made me fly 3,000 miles to come see this apartment. >> mm-hmm. >> i have a very important question for you. what are you asking for this? >> what do you think? >> a bargain. >> i'm thinking $125 million. >> you're close. >> yeah.
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>> $95 million. >> okay. not too bad. >> i'm pleasantly surprised now. >> robert frank joins us tonight. he's got the inside scoop of this apartment in tonight's episode of the mega homes at 9:00 eastern time on cnbc. i don't know how you got inside my apartment like that. >> yeah, exactly. >> maybe makes sense. i mean -- it's crazy. we got lost in there. we lost our camera crew. we lost dolly. it's 8,000 square feet. what's amazing about this place is, first of all, the guy, the buyer's representative said 95 million? that's reasonable. that's -- oh, that's not bad. >> not bad. >> this is ultimately -- >> what do people say if i'm going to sell a house, it's like getting ari? >> it's like what goldman sachs was in the great m&a days unless goldman was on a deal, unless dolly is on a deal it's not really a deal.
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but what's also interesting about this apartment, guess what the monthly maintenance fees are? this does include taxes, and it is a hotel. but it doesn't include your mortgage. you're paying $95 million. and then what do you pay -- >> during the commercial break i guessed 17 grand a month. >> i would like to raise that -- >> 17 grand a month? >> to 55 grand a month. >> very close. 60,000 a month in monthly maintenance fees. now that does include twice -- it includes maid service and a spa and some other things. so you're paying $95 million and then you're paying $60,000 a month in maintenance. but we bring you through all kind of apartments tonight. $160 million worth of real estate in new york. >> are these places back? i mean for awhile things crashed and nobody could afford these places. are they really back? because we still talk about how on wall street those pay packages are coming back. >> that's what everyone was saying a year ago, two years ago. two things happened. one is foreign money. i mean one of the great things about this show tonight is we bring you through with a russian
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buyer as he's in central park west. the russians, the chinese, the latins, especially -- >> what percentage of foreign versus u.s.? >> broadly, in new york or nationwide it's around 8% of all purchases last year. $82 billion -- >> the over $50 million property? >> in miami it's over half. in new york they're saying it's between a third and a half of those $10 million plus are foreign buyers. so no one saw this coming two years ago when everyone was saying there aren't enough rich people to buy these apartments anymore. so foreign money came back. but wall street money is getting very confident right now. i look at the hamptons last week. up 98% sales volume in the fourth quarter. and a lot of that was goldman, morgan tanly, jpmorgan guys, buying, taking advantage of that tax issue that was coming. >> all of a sudden they're selling stock that they got -- >> i think they had a lot of cash from selling assets to avoid that fiscal cliff issue.
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but also, some of them had deferred comp that was in 2013 that was pushed back. but what i'm also hearing is that they want hard assets and real estate is coming back. i mean there's just a lot of competence. and when the wealthy are finally taking risk, maybe not with their business capital but at least with their personal capital i think that's a really good sign. >> i hear that a lot because people are convinced that all the money being printed by the fed, by the bank of japan, et cetera, we don't know when, but there is a fear that this will turn to a lot of inflation at some point. how do you protect it? real estate is one thing that should handle it. >> you always hear about the $10 million a year managing director at goldman sachs, big bank, and now is a $5 million a year banker. >> i know. >> and the vice president right under him who used to be a $2 million or $3 million guy or girl is now in $1 million. i don't understand how this is happening. when you say the bankers are doing this, that i don't understand. hedge funds i get. >> so let's look broadly. i should have said, it's the
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world of finance. it's hedge funds, private equity and the top guys at the bank. when everyone made the mistake of doing is looking at the big wall street banks, saying wall street is dead, it's never coming back. therefore new york real estate chances are never coming back and they missed the private equity hedge funds. >> tom hicks is putting his dallas mansion on the market for $135 million, and guess what? he's probably going to sell it for over 100. there was a house last week that sold in silicon valley for rumored $117 million. so at the very top we're seeing these crazy prices. >> this is like an -- how much? 95 million would that be like a million a month in a mortgage? figure it would be a million? >> no. at today's rates -- >> and then -- >> is that a conforming loan? >> yeah, they pay all cash. that's the amazing thing. >> they probably do. >> then 60 grand a month, correct me if i'm wrong, but the early -- wasn't paying that after he cut back the railroad investment, right?
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i think he had everybody for 60 grand. >> for those downton abbey viewers. >> yeah, i mean that 60 you could run downton abbey on 60,000 a month. >> it's the asians that love this place because it's the 18th floor. which is 18 very lucky number. >> that's just weird. so they like that it's on the 18th floor. >> it's going to be an asian buyer. >> is that feng shui or whatever? >> it is. we go into that the feng shui, the numbers. there's an apartment 432 park avenue. tallest building in new york, chinese won't touch it because four sounds like the number of death. >> 18 a month is what you get for bar mitzvahs. right? >> huh? >> no, no, no. seven. seven. >> no. no, no. 18 -- >> oh, no. >> i get a high -- >> i thought it was -- >> you have a christmas tree. why do i talk to you about these things. >> the developers in new york are building around feng shui,
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numerology, the russians love 432 park because it's going to be the tallest building. i call it putin towers because it's all-russian. going to be the tallest building in new york and almost exclusively russians buying it. so we see new york kind of reshaping and being reshaped by all this foreign money. >> chinese new year coming up. >> -- idiot. >> thank you. >> -- >> my rabbi is not happy this morning. >> robert, thank you. we will watch tonight 9:00 p.m. secret lives -- >> it's a great show. >> 180 -- >> i never -- >> we're not even going to mention the fact that you're sitting next to your wife. >> no. >> we won't even mention that. >> rebecca, why don't we talk a little bit about where you see, again, with people jumping in, people wondering if they should do this, what do you tell them if they call today? >> sure, i mean i think you need to get your money to work. i don't want to be in cash. there's a lot of cash still sitting on the sidelines and i talk to folks who still have a lot of cash every single day. cash to me is the ultimate fair bet. you think there is nothing in the world that will do better.
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>> you like stocks more than you did a full weeks ago. >> i do. i'm not ruling out a pullback. i think as long as we keep seeing the data slowly improving not just in the u.s. just don't focus on the u.s. stay focused globally because we're all interlinked ka, i think we might have a pullback but we can keep going higher. we're seeing now correlations in the equity market coming down sharply and historically when that's happened, that's been a constructive signal. we saw that in '98 and 2003. at the same time i'm looking at high yield i'm looking at yield focused investments. we still like them but they're getting so rich that i think it's smart just to take a little profit off the table. >> okay. rebecca, thank you for joining us for this hour. jeff kleintop is staying with us for the rest of the program. still a lot to come. >> okay. you've been cheaping out on the bar mitzvah gifts, haven't you? a whole -- >> it's early in the morning. it's early in the morning. >> think about it, now. what you got -- saving up. you got to more than double it up. okay. coming up caterpillar ceo doug oberhelman in a first on cnbc,
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>> geronimo! >> markets off to a good start to the year on the strength of individual investors, but can it continue or are we due for a correction? economic data that could move markets. durable goods for december set to hit the tape at 8:30 a.m. eastern. >> and dow component caterpillar rtin>> it's slightly below 16.0 billion versus 16.12 an estimate. >> chairman and ceo doug oberhelman will join us first on cnbc, the third hour of "squawk box" begins right now. >> welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernen along with becky quick and and drew ross sorkin. our guest host jeff kleintop chief market strategist at lpl
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financial. he's going to help us build a wall of worry. we sent rebecca packing because she was too bullish. we want to continue to build skepticism. so we're keeping jeff around. >> that's my job. >> and we'll be joining him in just a minute to talk about the january rally and also have u.s. morgan -- jpmorgan chief u.s. equity strategist tom lee and rob kaplan, former vice chairman of goldman sachs. first andrew ross sorkin is back from his -- >> pilgrimage. >> you gave other people the stockholm syndrome. you took other hostages that turn them into socialists while they're there, right? or did you come back feeling more capitalistic or less capitalistic? >> i think of myself as a caviar economist. >> yeah. >> officially. >> a lot of caviar. i mean just pounds of it. just unbelievable. >> but they're all euro trash so they all feel guilty as they're eating it, don't they? it's weird, right? >> i don't know about that. >> all right go ahead. >> the big news this morning, caterpillar reporting earnings,
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$1.04 a share lower than the $1.69 that the street had been expecting, although that number does include a one-time charge of 87 cents that was previously announced. company's outlook for sales and revenue in 2013 is $7 to $9 per chair. here's the important part, chairman and ceo doug oberhelman saying the wide range reflects the uncertain business environment. dog's going to join us and we're going to talk about what that ultimately all means. >> we've also been talking markets all morning. and plenty to talk about, keep you busy here. the dow is up for 11 of the last 12 sessions. it's now just 2% away. it's under 2% away, actually, from the all-time high set back in october of 2007. and it's on track for its best january gain since 1989. the s&p 500 closing above the 1500 mark for the first time in over five years. the eight-session winning streak is the longest we've seen since november of 2004 and now it's less than 4% away from its all-time high, which was also set back in october of 2007.
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a report $55 billion pouring into equity mutual funds, and etf's in january. that was before the tech bubble popped. the futures at this hour are indicated just a little weaker. things have really turned around. right now the s&p futures up half a point the dow futures down by less than a point and the nasdaq is up by about 2.8. this is all coming as those caterpillar numbers have come in. that stock's actually been trading higher. that's helping the dow out this morning as well. on friday, goldman sachs ceo lloyd blankfein joined "squawk box" from davos and explained his bullish outlook for equities. >> sometimes the fed will be ratifying or delegating what's going on in the market but if you had two, a couple of good numbers in a row and everybody would be looking ahead, i think people would get awfully squeamish about lending money out at today's low interest rates and you know when growth comes back, i really should be in equity. let's face it, you have a central banks around the world who are trying to penalize you
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for being in cash and reward for being in assets by inflatings price of assets. >> there has been a notable absentee from the stock market rally. apple, the stock closing down under $440 a share setting a 52-week low and apple's market cap is now also below that of exxon mobile with the friday drop. for more on the journal rally, kayla tausche joins us to put it all into perspective. >> andrew, this time around we're looking squarely at the dow. the bench mark index also on pace for its best january since 1989. up more than 6% so far this month in 1989. it was up about 8%. but even looking at the five worst performers in the dow three of them are just the names up the least. verizon and boeing are down but the rest of them are still up. the best performers, led by hewlett-packard which is up 20%. of course that's on the back of optimism that dell will see a buyout possibly as soon as this week. but then a broad mix of sectors for the rest of the leaders, home depot up nearly 10% this month alone.
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now on october 9th, 2007 when the market peaked previously, on that day, 25 out of 30 dow components rose. that rally was led by american express, ge and caterpillar. caterpillar is an interesting name to watch as well as home depot. those two have seen a bit of a role reversal. in '07 cat was the leader in the ten months leading up to the rally it gained 34% just that year. and in the last ten months it's actually lost 10.3% so home depot it was the worst dow performer leading up to the 2007 peak of course that was because it saw a deal nearly fall apart to spin off its supply unit as the credit crisis started to take wind, it is, however, the best dow component over the last ten months, and that's likely because housing continues to turn a corner. we should note, though, the dow now is different from the dow then of course we see these names come in and out some of the dinosaurs have left the dow but back then, the dow had aig, citi, general motors, honeywell and altria. now those have been replaced by bank of america, chevron, cisco,
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united health, and travelers. always very representative of the market. i'd be interested the to hear from doug oberhelman what's different from caterpillar to now. it is the biggest laggard on the dow for the last ten months. he's been pretty bullish in previous quarters so i'm sort of interested in what's changed there. >> kayla, thank you. for more on the bullish start to january we're joined by tom lee. he is the chief u.s. equity strategist at jpmorgan. also robert kaplan, former goldman sachs vice chairman and harvard business school professor of management prak stis. our guest host is jeff kleintop. tom i want to start with you because you have said this is the year investors really need to get involved. they really need to be in these equities market and any time there's a pullback you think they should be buying quickly. >> that's right. you know, i think investors, this market didn't -- we've been in a bull market since '09. i think one of the big hallmarks
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of the rally this year is data's been good for some time. investors have been listing numerous reasons why they're underinvested. but today, at you know, at over 1500 we still don't find investors that overweight stocks. so i think in the short term we see market directions up. >> why do you think investors are still so squeamish? just all the things that they've been through for 9 last 10 or 15 years? >> yeah, i think there's still a lot of memories of '08. i think that we still have a taint on owning stock. i think stocks, you know, being bullish is really still considered not as smart as being bullish on bonds. and i think overall it's been sort of hard to say how can earnings go up if we're at $100 of s&p earnings. i think there's a lot of reasons investors are sort of fighting this tape. >> we're looking at a chart, tom, and i can see at the four or five-year chart every little break where we had to have you son to say, well, what do you think? are you going to -- well, what do you think, tom? and every time you never did throw in the towel. you never capitulated.
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you always were firm in your belief that we would go to higher highs. and i'm just wondering, the reason is to give you kudos, but also what do you think the ultimate level we could see is on either the dow or s&p, even in the next five years? what do you think the deal objective could be? >> yeah, and i think joe, i think that's the right way to look at this. i think the cycle peak in earnings is going to be closer to 150. that really follows the historical pattern of s&p profit cycles. so '92, everyone looks at $100 as a peak i think it's really killing the king too early. and when we look at multiples, you have to keep in mind, mid cycle s&p multiples are at 17. we're at 13 or 12.5, and triple-t bonds, if you kind of invert their yield are trading almost at 11 times. if you put a 17 multiple on 150, i think the s&p really sort of peaks around 2400, 2500. >> what are the dow -- >> it would be at similar --
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>> -- higher. >> 18,000, 19,000, 20,000 dow. >> okay. >> that's obviously four years away. >> robert how about you. do you worry about the levels at this point? do you think investors are missing out if they're not involved? >> i agree with a lot of what tom just said. the thing you've got to remember is a big part of this story is the fed and the ecb. the central bankers have flooded the markets with liquidity. made risk free assets hard to own. what they've done though is buy time for the economy to heal for s&p leverage. and the fundamentals aren't great. they're decent but that's good enough. but it's hard to own bonds when the fed's continuing to make it very unattractive to own rich assets. >> what you say is very rim thissent of what we heard from lloyd blankfein on friday. you can't fight the fed in this situation. but with investors still on the
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sidelines does that mean there's still room to run with this aside from what the fed's doing? >> there is. there is. having said that on tom's point. the earnings estimate for this year and tom and i were talking before we came on. that means the mark it right now at 1500 is almost already at 14 times and the big debate going on in the market, should the market trade at 14 times, 15 times, 16 times, this year's earnings. the p/e may be a little lower than we're used to because we've still got a lot of tail risk. we've still got the european issue. we've got the u.s. government deleveraging, and so i think the market will be higher at the end of the year. i think it's gotten a little head of itself. >> you're looking at pullbacks and people will jump in when those come? >> i actually think if you're an investor, you shouldn't worry about that as much as you should take a three to five year
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outlook. so will there be a pullback? yes, i believe there will be. will the markets be high he ter end of the year and in three years? yes. and i think that matters more than what happens over the next three to six months. >> do you gentlemen think if we got tax reform for corporations that lower -- do you think we could add to the possible gains? is there anything washington can do other than get out of the way that would actually help? >> i think the bigger issue, while corporate tax reform had some attractive elements, i think the bigger issue they've got to focus on is entitlement reform, and get that wrestled to the ground. and they may get the corporate tax reform in the context of -- of deficit reduction but i think entitlement reform right now is more critical. >> all right. you, too, tom? >> well, i do think one of the next sort of legs that's of this bull market is going to be ceo confidence through strengthening. i think when you look at earnings, conference call transcripts i think you've got a pervasive cautiousness out of
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businesses, as well. that they're still managing for tail risks. >> all right, great. tom, robert, guys, thank you both. we'll talk to you again soon. >> coming up, caterpillar reporting earlier this morning. up next we're going to talk to the chairman and ceo of caterpillar doug oberhelman in first on cnbc. >> what's his name? >> i just said it to you. now you keep -- >> oberhelman. >> what did i say? >> i don't know. anyway. >> i don't know. >> still to come a u.s. court of appeals ruling president obama's nlrb recess appointments unconstitutional. senator mike johanns is going to talk to us about the appointees in question and join us at the bottom of the hour. and as we head to a break check out the "squawk box" market indicators. to the best vacation spot on earth. (all) the gulf! it doesn't matter which of our great states folks visit. mississippi, alabama, louisiana or florida, they're gonna love it. shaul, your alabama hospitality is incredible.
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dow component caterpillar reporting this morning. after consulting with compsen that provides our earnings estimates apparently analysts knew about the charge but the $1.91, which excludes the 87 cents, goodwill and charges compares to $1.69 so maybe the initial movement in the stock price could have been not
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understanding that or maybe the outlook. joining us now first on cnbc is doug oberhelman, caterpillar chairman and ceo. been doing this so long doug, i become less interested in the last three months anyway and especially with analysts do or don't do. if they knew about it i don't know why they didn't adjust their estimates because they did know about it, right? but this is above expectations in your view, too, for where the street was? >> well, good morning, joe. and we're celebrating a record year here. and if you look at the whole twelve months over 2011, sales up 10%, 10% profit up 15%, all of our operational metrics were near records inside. they were pretty happy with the results regardless of some of the things that noise that were up that you mentioned. >> the -- the outlook as some people scratching their head. what we finally decided was it's an uncertain world and caterpillar is definitely subject to that uncertain world more than other companies. we did notice thats backlog went
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from like 23 billion to 19 billion. what does that mean? >> well we've come down on the backlog a bit. i want to talk about the outlook and you've mentioned it. talked earlier about wide enough to drive a truck through. we make a lot of trucks, big ones and little ones and it was a pretty good analogy. let me tell you why we chose a top range bottom line. go back two years 2011. we were talking about what should be a pretty good year. what happened midyear in 2011? downgrade, lots of uncertainty, we sputtered out the end of 2011 with a weaker second half than any of us wanted. a year ago, beginning of 2012 things looked pretty good. we thought 2012 would economicly the u.s. would be pretty strong. thought china might be recovering a little bit. what happened midyear? fiscal cliff, lots of debt situation, uncertain election we sputtered off the end of 2012. here we are sitting today what's coming up in 2013? fiscal situation, debt in this country, all kinds of political
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speed bumps coming in this country. china recovering for sure now. latin america looking pretty good. and noise from europe is pretty flat and muted. so we're thinking, you know, it could be a pretty good year. but we've got that same political issue here in this country that will drive a lot of uncertainty if they start screaming at each other again. we chose a pretty wide-ranged top and bottom. >> when i think about it, dog, it's like, it used to be that we were, you know, in a 2% world, you know, nothing great but at least we're growing. but we're in what's going to mess that up in terms of the fiscal issues. now i would think, almost, that we're in a 2% world, and we're worrying about -- or we're thinking maybe something could actually cause us to go to 3% if they did it. we're not looking at the possible downside of the 2%, we're looking at maybe these guys could do tax reform. maybe we could repatriate something. maybe we could do some entitlement reform. and we're not worried about china and europe as much anymore. i would think maybe the risk
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could be in your book, and not anticipating could even be better. >> well, i agree with you completely. and i've been optimistic about the fiscal cliff. i've been involved with fix the debt and all kinds of things trying to influence washington and make some speedway there. maybe this will be the year they get it done. because underlying the world growth is certainly better conditions than we've seen. we're projecting amazingly 2.5% worldwide gdp. that's really terrible. great numbers on the developing world, and really poor numbers in the developed world. if we could somehow get just a half a point kick or something this year, we see 13 move up, i think smartly but again we've got that wall coming at us starting in march with sequestration and on into may with the debt ceiling. how that turns out is probably going to dictate how 2013 happens for caterpillar and maybe for the world. >> you really think washington and whether or not they can
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reach any sort of agreement, whether they can behave in a certain matter that's going to dictate what happens for caterpillar for businesses around the globe? >> well, i think the level of noise from washington, if -- if we can -- if we can just find a way through that somehow to get some kind of agreement, maybe as minor as they are, but work towards a solution, it's going to take a long time to get out of this fiscally for the united states, but just a few small steps would let the economy reflate and we'll feel better than we have the last two years in a row. i think we'd be at the upper end of our forecast and we'd all feel better about going after the year in 2013. sure. >> doug, real quick, i was in davos last week with many of your peers and one of the census was maybe washington doesn't matter anymore. maybe we're just going to have to live through it and overcome it and it's going to rain one day, snow the next, and our business is to figure it out, and maybe there would be a little less snow if washington did a better job, but you know
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what? it's okay and also given that we've now pushed out some of the debt ceiling issues and there's a sense that we'll get over some of those things, maybe we won't get a grand bargain but life is going to continue. do you think that's wrong? >> no, i don't think it's wrong. just look at us in 2012. i mean we had a record year, operationally all of our metrics were super and i'm happy with all of that. think what it could have been is kind of my point. where could it go if we had that just to a dull roll for a mute to some degree in washington we'd all feel a lot better about it. i think the new state of dysfunction in politics probably around the world, certainly in washington for awhile. my hope and i'm always optimistic is that it could be a lot better with just a little bit of success out there. doesn't take a whole lot. >> staying on politics for another minute. >> the u.s. energy renaissance could be a real positive for cat, fracking is certainly a big part of what you're doing. could it be not so much around the debt or other fiscal issues, but washington getting together on u.s. energy policy to create jobs and growth. talk about what you see
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happening there. >> that would help immensely. we're really on the verge of freeing ourselves from this, you know, this middle eastern premium that i've lived with my entire life on oil prices and energy. every time something happens somewhere in the world of supply, or whatever the price would spike we are almost to a point where we can see energy independence for the united states and for north america, including mexico and canada as well. it's a huge opportunity. we get around that i think we'd see a lot of jobs come back here the next three to five years and there's a big upside for caterpillar, too. >> we don't need washington for that, either. because it's happened in spite of washington for the past four years anyway. >> yeah. >> it hasn't been the policy to look at key stone that we're still playing around with. so it's almost, i think andrew's right. it's almost like, you know, they can keep us, you know, no matter what they do to us we can do 12% and then if they do anything
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right, if they're not total keystone cops maybe we could go to 3% or so. >> yeah, i think -- >> looking at it as a half full instead of worrying about what might happen on the downside. we could worry about what might happen good on the upside. >> yeah i agree with that. my point is let's try to keep pushing them so we get something and theion side risk is there. meanwhile, lots of fairly positive things happening underneath. we need to keep those going, as well. that we are doing. again look at 2012. a record year in almost all of our metrics. i'm very proud of our team for delivering that in a year where we didn't have a lot of tail winds, let's face it. there was a lot disrupting out there. >> year doing all of this based in illinois. god bless you. that's not easy, either. anyway playing in peoria. >> we're playing in peoria today, for sure. >> excellent. all right. >> i saw some ranking where it was 50th or something, illinois. hang in there, doug. i know that you've looked around, but you're going to
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stick there for now. we appreciate your time, dog. thanks. >> always good to be with all of you. thank you. >> doug oberhelman. coming up, durable goods data for december hitting the tape at 8:30 a.m. we're going to bring you the number and the market reaction when we return. [ engine revving ] ♪ [ male announcer ] every car we build must make adrenaline pump and pulses quicken. ♪ to help you not just to stay alive... but feel alive. the new c class is no exception. it's a mercedes-benz through and through. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. tdd#: 1-800-345-2550 hours can go by before i realize tdd#: 1-800-345-2550 that i haven't even looked away from my screen. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 that kind of focus... tdd#: 1-800-345-2550 that's what i have when i trade. tdd#: 1-800-345-2550
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from those durable goods reports. thathe n december and that's what we're waiting on. u.s. equity futures at this point are barely budging. we'll see which way things go. you are working off an awfully long streak. s&p 500 finally crossing 1500 and staying there on friday for the close. long, long winning streak. we'll see if it continues today. by the way, take a look at shares of caterpillar. that stock is trading higher. at this point it's up by 2.4%. that say big help for the dow this morning. obligations, but obligations. i need to rethink the core of my portfolio. what i really need is sleep. introducing the ishares core, building blocks for the heart of your portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal.
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welcome back to "squawk box" this morning. we're just seconds away from durable goods. rick santelli is standing by at the cme in chicago. steve liesman in the studio. rick? >> durable goods for december are hitting the screen. but they're hitting the screen a little bit slow in chicago. anybody seeing the data? >> nothing. >> boy, oh, boy this is what happens when you have legislation that i guess prevents public workers from getting paid. we're not getting durable goods. anyway, we will hold off. for some reason it is delayed. we are expecting a rise for december durable goods of roughly 1.9 to 1.2%. let's take the average roughly
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2%. we're going to be looking for ex-energy. still don't see it. leslie, we see anything? >> there's nothing here, either. >> huh. >> we are at least welcoming this data with roughly nine-month highs on most of the yield curve, i found it fascinating that we're approaching 30 basis points on a two-year note yield which has been hovering at 24, 25 basis points for months. don't see the data. what's going on, joe, what do you think? >> who technically releases this stuff? >> i was going to stay a couple things. i'm not going to do it anymore. austan goolsbee was giving me a bunch of grief on friday about the pls numbers. he said because it went up from 7.8 to 7.9 in the last one that they weren't cooking it because they let it go up. not that it came down from 9.2 to under 8 with the participation rate of 41%. i'm not dabbling in that anymore. maybe they haven't quite decided on what the dural goods numbers
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should be yet. >> i'm looking at -- >> i guess one observation would be while we're waiting -- >> there was a holiday last week. maybe it's tomorrow. >> so what do you thinks think about these unbelievable highs in the equity markets? slight rise in interest rates >> 4.6. >> 4.6. all right i am hearing 4.6. which is, over two times the estimates. i still don't see it on many services. >> i got a release right here from the actual census bureau up 4.6% to 230.7 billion. new orders for manufactured dural goods increase seven of the last eight months. >> you see ex-transportation, becky? >> just digging through. i've never read it straight off of the press release here. >> 1.3 ex-transportation. these are very, very, very good numbers. of course we always want good numbers. durable goods things made to last longer than three years.
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this is a very volatile part of our data set points. and of course we're also going to get a proxy for capital spending which i don't see yet, either. that's capital goods orders >> increased 3.8% -- >> ex-transportation. >> i've never read the release before straight off of this. >> capital goods, defense orders. you want that? i don't see a capital goods ex-transportation. but unfilled orders, defense new orders for capital goods increased 8.7 billion or 110.4 -- >> on a month over month i see capital orders, ex-aircraft is up 0.2. we're expecting up 1% so it definitely is good. proxy for capital spending i'd like to see it higher of course and last month was released up more than this months. it was revised up 0.3 to 3%. that's orders if you look at shipments which is kind of the other side of the chain, that was up 0.3 overall these are
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pretty good numbers. pushing that ten-year note yield ever closer to a potential test of 2%. we are at nine-month high yields now gang. i guess it's back to you. and what can you say? it's not the private sector putting out the data so i'm sure nobody will make a big fuss about it. >> thank you, rick. let's get to steve liesman, who is now happy to report now. >> 3 minutes 37 seconds after the -- i guess it's the definition of good enough for government work, right? so i have new orders up 4.6 and ex-trans up 1.3. what's interesting about these numbers, i'm trying to figure out where the strength is. we want to be careful. aircraft was up new orders, 10.1%. defense aircraft was up am i seeing that right? 56%. that has been down. defense aircraft a big part of it.
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i want to get to capital goods ex-aircraft is i have a different number guys. i better go back and check this out. ex-aircraft defense was up just 0.2 rick. >> that's what i've got, as well. >> that's not a great number. >> no, it really isn't. >> capital goods new orders -- that made sense. because i was very confused. everybody said during the fess cal cliff showdown that there was a capital spending decline that that was at least one of the approximate reasons why -- >> i would have been very, very confused to see a 2% rise, and that's a number that we're hoping this year ends up being one of the things that turns around. i don't know, jeff, if you're in to the capital goods -- >> oh, yes. >> stocks right now. but they have been hit, and now there's perhaps some value there. >> there's really a lot of hope it turns around. year over year look at these numbers. they are flat year over year. you look at orders, exaircraft, literally i think is 0.0.
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>> right. >> it is very -- >> it is completely flat. businesses have been sitting on their hands doing share buyback they've been hiring a few people they haven't been reinvesting in their business. that's critical for growth this year. we've got to see that happen. >> minus 0.3 year over year ex-aircraft. so there's two worlds out there. one is this boeing world which will be following this. but they end up being the hugest part of the biggest part of these of these capital goods orders. and then you want to look at everything else, which is the barometer of a couple of things. one is as jeff suggested, how the capital goods makers themselves are doing but a sign of confidence in the economy. am i ordering the kind of stuff that's going to help me produce more stuff in the future. and that's something that we might follow. >> we didn't follow our debts over the fiscal cliff. now we've got the debts you say quickly in my ear, i didn't hear what you said. >> here's some of the tension
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that we found. biggest risk, i talked to a bunch of guys on interest rate desks out there and they don't really. what they thought the fed was going to do in terms of more. it was the last question. guys on the interest rate desk i talk to in europe that trade euro and interest rate futures they're wondering is the fed going to end earlier than they think. that's their risk and concern. 2012, it sounds like, you know, a lot of talk there about the end of the financial panic. it means in davos there was nothing aflame. greece wasn't aflame. no concern about spain. portugal, by the way, did a very important -- >> >> absolutely right. >> there was no flame -- >> if you think about creating the preconditions for growth at least not having the part of the world aflame is one of the things. and there was some talk, by the way, some upside potential for
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europe in that unit labor costs have fallen sharply in the peripheral countries. you might get a rebound. >> i think you got on a plane before this happened. on saturday. when he was on a panel where he said they're too complacent that he's actually much more worried that actually all of davos was mistaken. to have the optimism that it seems to. >> i agree it was interesting when we got there, there was all the optimism, by friday people were questioning whether >> and by saturday night -- >> the general demeanor is one that kind of says is usually along those lines of we don't have -- >> glass half empty. >> the glass being half empty. we have to go. wanted to say in response to jeff's comment there was a sense in europe in davos that the u.s. is off of the fiscal edge. that there was a notion that we had been through the fiscal cliff. we had gone through the debt ceiling. and that the united states budget situation was not the
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clear and present danger that it had been in the past. >> the neville chamberlain moment, right? >> you could be right about that. you could be right. i'm just saying -- >> half full or half empty at least we agree on exactly the level, right? and half if not at all. >> i like the idea that we can now turn from emergency measures to questions of how we create growth. there were a lot of good discussion about that and it would be nice -- >> talk to ben about that. he's obviously not aware that we're not in crisis anymore. >> i know we've got to go. but it would be nice to begin our conversation from here on out. how do we make growth instead of how do we put our fires? that's a different conversation. >> you'll never learn that at davos. >> you want to have one of those arguments, rick or just -- we're much more civil than those guys, right? >> hey, civility. the highlight of monday. >> and friday. >> thanks, guys. >> all he needs to do is say bull shih tzu it would been fine. it's a dog. >> u.s. -- a u.s. court of
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appeals ruling unanimously that president obama's recess appointments to the nlrb were unconstitutional. we're going to talk to a senator, a republican senator, mike johanns, who is calling for the appointees still in office to resign immediately. still ahead can the rally on the street continue? we will ask jim cramer. but we can still help you see your big picture. with the fidelity guided portfolio summary, you choose which accounts to track and use fidelity's analytics to spot trends, gain insights, and figure out what you want to do next. all in one place. i'm meredith stoddard and i helped create the fidelity guided portfolio summary. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.
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welcome back to "squawk box," everybody. you can see the futures have actually turned around. so after we are looking 11 out
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of 12 sessions higher for the dow, the futures are now up by 10 points. s&p futures up by half a point and the nasdaq is up by 1.3. the s&p closed above 1500 for the first time in over five years on friday. at this point back to green arrows. we had been looking at red arrows earlier this morning. check out shares of closing retailer joseph a. bank, company said sales for fiscal 2012 which ends next week will be about 20% lower than the prior year. the company cited a variety of factors including the fiscal cliff and hurricane sandy. >> the d.c. district u.s. court of appeals ruled that president obama's nlrb recess appointments, which were already controversial in 2012, were not only controversial but unconstitutional. our next guest is demanding that they resign from their posts. senator mike johanns joins us now with more on the letter that he wrote to the cfp and the nlrb calling for immediate resignation. senator, did you get an answer? >> i have not gotten an answer
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yet. hopefully i do and i hope they do step down. >> what is the likelihood that it's appealed to the supreme court? >> you know, i do think there's a likelihood. although the risk that the president has at this point is if he appeals can the decision get worse? that's always a debate that goes on. but the end result here is it's almost redundant to ask them to resign because they're there illegally. the court side so. >> how do you -- how would it get worse? because this court took a much broader ruling than people had anticipated. this was not just a ruling about the cftb this was a ruling on recess appointments in general which the last several presidents have used again and again. >> the concern they have to have at this point is whether they not take the next step, which is to say that all of their actions are void. and that could very well happen. in fact, i've asked for a gao investigation of that, because
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if they're there illegally, it would seem logical that the next problem that the president's going to have here is that every action taken at the cfab plus at the nlrb is going to be void because they weren't there lawfully. >> would they have to be challenged individually? >> i don't think so. i think you'd literally could go after the whole total of their actions just simply because if they aren't there lawfully then they can't enter lawful orders or rules. so it appears to me that you could probably have an attack against all of them in total. >> but while it's going to be probably appealed i wonder if you have any idea how long that takes? and in the meantime, i mean cordray is only there till the end of the year anyway. and there are some people that think that maybe republicans come back now and say, look we'll give him a normal -- we'll
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vote on him and we'll let him become the -- you know we'll put him in this position if he changes some of the things we want changed in the charter of the pb or cpmb. are people talking about doing that? >> no, you know our position was reasonable from the start we just wanted to sit down with the president or whoever and try to work out some problems with this new federal agency, and so we'll see. i don't know how the white house will react to this. >> but i wonder, when they come out with -- they've got all these things they're going to do. hundreds of things, every single one that they try to enforce, do people go, i'm not going to -- i'm not going to pay attention to what you're saying until we get a resolution from the supreme court, will every one of them be undercut the, you know, the seriousness of whether they have to comply? >> yeah, see, that's the challenge they have in appealing to the supreme court. let's say they even get the actions stayed. let's say though the supreme court agrees with what the court of appeals did then you have
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this problem of all this time that transpired when you were getting the supreme court to act which could take a year you've got all those actions that could be illegal. >> senator who would you like to run the department? >> richard cordray is a nice guy. it wasn't ever about him. what it was about is this is a very, very flawed system. and we just wanted somebody to sit down with us and work through the flaws that were in this new consumer protection bureau. we'll see if the white house responds in a positive way. so far their actions on this have been very brazen. it's hard for me to imagine how they could make this appointment when we weren't in recess. that's the remarkal thing about this. >> i just wonder, you know, i rarely mention "the new york times." but i do need to know what they're thinking. they called it, the appeals
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court sides with the chicanery of the republicans. and they're calling, you know, handing, during the you know, having like sort of a skeleton staff there doing a couple of things and saying you're not in recess is just a trick tos today how the president to make appointnesses recess appointments. >> all due respect to "the new york times." it just suggests that they read the constitution. it's pretty clear on this. >> it was written so long ago, senator. i don't know. i mean, they were running around -- they didn't even have cars back then. you really think we got to pay attention to all that stuff? >> i sure, do. i sure do. >> theyhood muskets. >> i sure do. >> senator, i'm not going to disagree with the view that -- follow the pro-seed urs of the constitution but is there an argument to be made that you're holding this department hostage? >> no, there's not. you know, there's a way o g about this, and the constitution recognizes that way. it can be inconvenient working with congress. i was in the cabinet at one time, and it can be inconvenient, and it can be
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irritating. but that's the essence of our system, the checks and balances, and the advice and consent power of the united states senate is enormously important. >> but when you why in the cabinet the president, george bush also used this again and again. >> never when -- >> not -- >> the difference was -- >> different version of it. but all of them by the court have been ruled as unconstitutional. >> the difference was we were in recess. you know, had the president made an appointment the day before he did, he could have at least had a colorable argument. i mean it was the most phrasen thing i've ever seen. we weren't in recess. it was incredible. >> i don't know jay carney just reminds me of that movie how to cheat on your wife where the wife comes home and catches her husband with a girl and then she just gets dressed and leaves and the husband keeps saying no, there's no girl here. and finally the wife just gives up and says all right, forget it. i love jay carney. he's a straight face right in the camera.
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anyway, senator, thank you appreciate it. >> thank you. >> coming up the s&p on its longest winning streak in more than eight years. up next we're going to ask jim cramer if the rally can continue. and what stocks have the most room to run. [ man ] i've been out there most of my life.
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welcome back, everybody. take a look, you'll see the ten-year note just ticked back below. but the yield had been above 2% for a brief moment in time. right now it's at 1.994%. all the way back to the spring, that's something to watch for the rest of this morning. we're also keeping an eye on the markets this morning. the stock markets. jim and david join us right now from the new york stock exchange. jim, what do you think? there's been so many questions asked about whether this rally can continue. how are you feeling today? >> something like caterpillar says, listen, not only can it continue, when caterpillar came out, i had my spread sheet about what they could do, i was very ace di pointed. it didn't matter, it frankly didn't matter. it is a little upbeat. but what's really going on here is a belief that 2013 is going to be much, not some, much better than 2012. i've got to tell you what if they had actually done the
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numbers and raised guidance? i think it's very bullish. >> david, we've also been watching this morning about exxon mobil being back as the world's most valuable company after the trading action on friday pushed apple below it. >> i like it, david. the world seems to make more sense to me when exxon is worth more than apple. >> they've held that position for a lot longer than apple. >> they've got a pretty good business, exxon. they seem to do a lot of things. >> if you want to own a pro rata share, it seems like the world makes more sense. david, where did you go to grade school? >> i went to a school in jackson heights greens. >> not in brooklyn. >> no. >> david, did you ever get beat up and go crying? >> no, i never cried. >> why did you say brooklyn? i said queens. >> didn't he say -- where did he
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grow up? >> oh, it was queens. >> oh, okay. i see. and that was just amazing. i know you guys were -- it looks like it's called up today. i want -- now i am interested in whether someone orchestrates a short squeeze, just because he's mad at son from ten years ago. >> that might happen. but joe, at the same time, getting all the vitriol out of that conversation, the way to generate a lot of performance by the end of the year is saying the company is a fraud. what about that? >> i know. what i was amazed to see was ackman still thinks regulators are headed in there to see if this is a total ponzi scheme. >> he needs the government to win. he needs somebody. he needs a u.s. attorney. he needs someone to come in and indict and say it's a fraud. otherwise what's going to happen
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is you're going to have 20 million shares that are short. you've got buying low. we don't know whether icahn have a position. did wapner bully him at all? wapner is so sweet. >> i know. >> but for every general growth there's a jcpenney, and for every -- i don't know. i don't know what to believe. i still have the crappy hong kong dollar calls. what am i supposed to do with those? >> how is that target long? >> i don't know. >> but it was good timing. it was good timing to come out at the end of the year. >> why not do it at the beginning of january if it was for honest reasons? >> i told you to practice up on your icahn stuff. can you call me a moron or something? >> i'll work on it. >> you came from a tough neighborhood, joe. i was a little jush kid and got the you know what beat out of me every day. >> we'll see you in a couple of
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minutes. when we come back, the chief market strategist gets in the last word. ♪ ♪ [ male announcer ] it was designed to escape the ordinary. it feels like it can escape gravity. ♪ the 2013 c-class coupe. ♪ starting at $37,800.
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