tv Street Signs CNBC December 26, 2013 2:00pm-3:01pm EST
we'll point out supervalu, pulte group and nice job for jc penney. some of the other retailers are stronger in today's session as well. that does it for "power lunch." i'm sara eisen. "street signs" begins right now. hello, everyone, i'm mandy drury, and welcome to "street signs." are you missing a gift this yis mass? well, you might be pointing the finger at fedex or u.p.s. back from the dead, no, we're not talking about zombies. we're talking steel. and is 2014 the year to buy dollars? well, one guest says it is america's turn to shine. and talking of shining, i'm joined today by tyler mathisen who is standing in for brian sullivan. >> mandy, thank you for having me. great to be with you. double duty. back to back. let's play two as they say,
doubleheader. let's check out the markets since monday. it's the first one after christmas, get that. we're pushing further into record territory for the s&p and the dow. there you see the dow industrials up 117 points at 16475. nasdaq with a very nice gain, getting up there close, almost to 40% for the year at 4168. and the s&p 500 at 1842, almost 9 points higher. for the dow, it's the sixth straight day of gains it's up about 3.7% over that six-day win streak, its best since march of 2 2012. meantime, mary thompson at the new york stock exchange and rick santelli at the cme. mary, you first. >> the dow also hitting a record in 20% of 2013's trading session. it looks like it's going to add to that number today again as it moves to the highs of the day. let's look at some of the dow leaders that we have today. exxon mobil, of course, up in response to the gains we're seeing in oil prices. home depot, 3m and ge.
basically we're seeing a broad-based rally but specifically a risk-on rally. utilities have been the outlier as we've seen a pickup in treasury yields today. of course, the focus has been on retail today. mastercard command said holiday spending up 2.3%, and in particular, jewelry sales were strong. you can see details, signet and tiffany. and again, the luxury segment of the retailing industry was not quite as strong according to mastercard in the holiday session. also, we want to note that 3-d printers, these were rumored to be a lot of people's christmas presents. they've been very strong over the last week. and they have been extending those gains in today's session. lastly, we want to mention the home builders because they were very strong at the start of today's session. good numbers on jobless claims. but keep in mind when the yield on the ten-year hit 3%, they started to lose ground. as can you see, they've pulled back in today's session. mandy, the dow is up 817 points.
back to you. >> and since you mentioned the that about the ten-year treasury hitting 3% today, let's get separate over to rick santelli at the cme. this really was an important threshold that investors were watching for. >> i think it's a big psychological event to be sure. but remember, this psychological event already occurred on september 5th as you look at the intraday chart. then the september 5th chart. we didn't close with a 3% handle then, and we're now at 299, up 1 basis point since tuesday's settlement of 298. but what traders are really going to be paying most attention to is after the secretariat run for stocks, increases its furloughs in front of the 2013 finish line, what will the landscape look like for stocks with a more proactive market in 2014? only time will tell. >> indeed it will. u.p.s. and fedex feeling the heat today. 'twas the day after christmas when all through the house, not a package was delivered because
everyone used a mouse. the shippers are rushing to deliver packages guaranteed for delivery by christmas that have still not reached their destinations. well, diana olick is outside a u.p.s. store in washington. diana, what's the feeling down there? >> reporter: mandy, it's certainly a black eye for brown. online sales surged far more than expected. and u.p.s. found itself unable to handle it. they put out a statement just about an hour ago saying u.p.s. apologizes to both shipping and receiving customers who may have delays. now, the company had predicted 7.75 million packages would enter its system over the holidays. they handle about 45% of all u.s. packages. but what they did not know was that online sales would jump 37% last weekend as consumer sales fell at the malls. so the trucks are rolling again today. and u.p.s. beefed up staff last night saying they will get packages delivered today. but their cfo told our steve liesman they would not have to beef up their staff last
weekend. of course, he said that two weeks ago. >> we continue to become more efficient and use technology on the ground for routing and scheduling. so we can, you know, meet increased demand with pretty much fixed amount of resources. >> reporter: as for the retailers, amazon placed the blame squarely on the carriers, saying amazon fulfillment centers processed and tendered customer orders to delivery carriers on time for holiday delivery. we are reviewing the performance of the delivery carriers now. the u.s. postal service also put out a statement saying that the package surge volume exceeded expectations. fedex also experienced some delays and apologized earlier this week but put out a statement today saying everything was going just fine. back to you. >> well, talking of just fine, diana, when you look at the stocks, it's interesting because u.p.s. is only down very slightly. fedex is up about 0.75%. clearly not damaging stocks
today. however, will the backing lash over these delivery issues translate into problems for shareholders down the road? jon fortt is with us. diana, you're still there as well. let's bring in john barnes from rbc capital markets. john, in coming days or maybe weeks when we find out how much this might cost these companies to make good on these delivery issues, might it be a problem for the stocks or not? >> i don't think so. ultimately, it looks like from an investor perspective, this is actually good news. everybody's talking about how pack building as were much higher than expectations. and so, you know, i think from that perspective, the quarter ought to be in pretty good shape because their volume assumptions were more conservative. they staffed more conservative volume sumsassumptions. they were unprepared for this last-minute surge. they got hit with winter weather. it's an outdoor sport that they play in. i think all those things are explainable. i think the most important aspect is the fact that they're
all talking about all three networks, fedex, u.p.s. and the postal service are all saying volumes were much better than expected. i think that's a good thing. >> here's my concern, maybe a bit of pushback. i think fedex was supposed to invoke a hike starting on the 6th of january. when you consider that and consider the fact that online makes up so much of the increased volume, doesn't amazon now have ammunition to push back against any price hikes and to maybe get in some more delivery guarantees from these guys so if they screw this up again, their margins will suffer? >> yeah, sure. i think longer term, anytime you have a black eye like this, the shipping community is going to come to you, and they're going to try to extract, you know, some pound of flesh. but i still think that when you look at the numbers, you're still going to find that there was probably better than 98% on-time delivery out of the three networks. all of these packages are still going to be delivered by the end of the year. yeah, sure. amazon's going to have some opportunity to sit down and have those conversations.
but i think ultimately, you know, again, you're talking about volumes that were much better than expected. i still think that the networks probably handled a fair amount of it in a very timely fashion. i don't think it's going to be a near-term ramification. if there's going to be any pushback, it will be this time of year from now when the carriers have to come out and say, hey, we're going to have to staff at a different level, and therefore we might feel some margin squeeze a year from now. >> john barnes, that was going to be my question. the good side is that you have increased volumes, but it certainly is going to mean that they're going to have to invest in either more people, more planes, more trucks, more technology so that they get ahead of the volume next year and aren't playing catch-up this year. this feels to me like a one-day story. maybe a two-day story of anger and consumer unrest and so forth. but for the stock -- and you can see right there, look at that stock. it's flat today. nobody's taking it out on the market for them. they're going to have to invest. >> yeah, i don't disagree with
that. the primary investment's going to come in the form of people. keep in mind, if you go back and look, fedex and u.p.s., you know, two months ago were talking about how many extra people that they were going to have on site, you know, how many additional part-timers they were going to hire. you see a surge in e-commerce like this, and you see that pop in the numbers. keep in mind that e-commerce is still a small portion of the total retail sales during the holiday season. everybody's trying to figure out what that growth rate's going to be. they're all trying to staff according to their best predictions. okay, they got overwhelmed this time. they make better predictions next time. you probably have to add more part-time people. i don't think it means you'll see a massive increase in investment and infrastructure planes and that kind of thing. i still think that the networks are fairly efficient. i think where they probably fell down, they just need, you know, more bodies to handle the business. >> certainly defending the stocks or companies at this stage, but i do see that you've got a sell rating on fedex, john. what is that down to? >> basically, my concern on
fedex has been street expectations about the cost reduction initiatives at the company. it looks like a big number. you're talking well over $1 billion of cost savings that are built into the numbers. we've had two quarters in a row here to start their fiscal year where they came in light of expectations. the back end is just very, very back end loaded in terms of the earnings expectations. our concern just continues to be that those numbers are going to be difficult to achieve in a, you know, slow-volume environment. keep in mind, yeah, we've seen good volumes in these last couple holiday weeks. coming in and out of this, we're still talking about a sub-3% gdp environment. i think these networks will still be, you know, pressured a little bit as a result of just lack of volume. >> okay. to reiterate, you've got a sell on fedex and a buy on u.p.s. john, very interesting discussion. thank you very much for joining us and thanks to diana as well. all right. fedex and u.p.s. also bombarded by a firestorm on twitter. #upsfail and #fedexfail.
our queen of the tweets, seema mody, is tracking it for us. >> disgruntled customers voicing their discontent on social media. "i gave u.p.s. two weeks to delivery daughter's christmas presents. thanks for ruining my christmas, u.p.s." u.p.s. social sentiment measured on a scale from negative 100 to positive 100 collapsed on christmas day from negative 28 -- excuse me, from 28 to negative 41. the fall fueled by a 40% volume spike over the previous day lifting u.p.s. social mentions to a level four times higher than just ten days before christmas. now fedex thus far hasn't been dinged at all according to this data. social sentiment remaining flat through christmas day without a material uptick in volume. we might not see a lot of movement in stock, but social
sentiment, that's a metric to watch. >> everyone wants to have a little outrage and have their voice, don't they? i wonder if this will speed up the argument to keep on testing those delivery drones. u.p.s. and fedex woes are turning their attention to brick and mortar retailers. coast to coast they're flooded today with shoppers. many are armed with gift cards and many armed with returns. julia boorstin is at the grove in los angeles. what are you seeing, julia? >> reporter: well, mandy, it's no surprise that this mall is so packed. about 80% of shoppers said they plan to shop those after-christmas holiday -- post-holiday sales to take advantage of what are some of the deepest discounts we've seen in years. in fact, these discounts are so deep that some analysts say that consumers may never want to pay full price again. the big question is whether these discounts, many over 50% off, will be enough to boost the tepid 2.3% retail sales growth over last year for that crucial november 1st to december 24th period.
many consumers already got started on their post-holiday sales yesterday. christmas day online sales were up 16.5% over last year. driven by the highest ever mobile purchases which grew 40% of last year. now approaching 29% of all those online sales. today while consumers continue to hunt for deals online, consumers are expected to continue hunting for online deals. online purchases are expected to comprise 14% of the total holiday season sales. but people are also coming into malls and going to stores, many to return gifts and cash in gift cards. holiday shoppers are expected to spend an average of $163 on gift cards. that's up 4% from last year. for nearly $30 billion in total gift card sales. that's according to the national retail federation. but since those cards aren't booked as revenue until they're redeemed, retailers hope they'll spend early, and they'll also spend more than the value of the card.
they'll also hope that customers will make additional purchases when they come in to return their gifts. $60 billion in returns are expected this year. and this year more of those returns will be mailed back. fedex says it expects to ship 28% more returns this january than last year. but remember, with even 50 and 70% off, that's great for consumers. but retailers are going do have to sell a lot more to make up for those discounts. back over to you. >> all right, julia boorstin from -- look at that nice, people out there in shorts and everything shopping in l.a. so who are the big retail winners and losers? joining us, cnbc contributor jan n niffen and jon fortt will have a little rodeo of a conversation here. let me start by asking you who do you think the big winners were this holiday season? amazon clearly did very well, but who else? >> i think the anchors won. if you were an anchor store like a macy's or even a penney's or kohl's, not the end-line guys.
macy's won big. gifts were bigger this year than last year. they were really good online. they made a lot of noise. they were open a lot of hours. i think they probably won the game. >> the return of the full-line department store. >> horrifying to think about it, isn't it? for the first time in a very long time, it's better to be a department store than an end-line guy. for one thing, denim sales are probably down 20% when we see the numbers. if you're one of those guys inside the mall selling denim, you're kind of toast. if you've got a broad line assortment, 500,000 skus in a store like macy's and you've been very promotional but planned promotion, and remember, department stores get help from the vendors. the guys inside the mall, they don't. >> and what about your findings, bill, in terms of traffic and various things like sales volume as tracked by experian. what are the winners and losers? >> the big winner has to be amazon this year. when we looked at traffic from amazon.com from u.s. consumers this year, up about 30% last
week compared to the previous week. astounding growth in terms of online visits. i think that's got to be one of the winners. the losers this holiday are the ones that haven't realized how to differentiate their consumers. at experian marketing, we looked at what consumers are looking for, what causes them to pull the trigger and make that purchase. and we found that almost half of u.s. consumers aren't really that interested in deals. yet we see these stores offering 30% to 70% off the entire store. so for those consumers that aren't incented by deals, those retailers have been leaving money on the table. >> yeah, i mean, they're crazy deals. and certainly at the expense of margins in many cases. bu bill, what i think is interesting in your list here, and just a moment ago jan said macy's was one of the big winners. i see that kohl's jumped over macy's for the fifth spot. >> that's right. and we look to week-over-week data and also data going back to
the previous year last week, kohl's up 13% over the previous year. i think what we can attribute kohl's' jump to is consumer confidence. at experian, we measure expectation. we don't just look at one number for all u.s. consumers. we look at a very granular measures. so if you look at those consumers that earn between $75,000 and $100,000 per year, probably a sweet spot for kohl's. they're actually showing pre-recession levels of increase in confidence going back to, like, 2007. and i think that bodes well for a lot of retailers that play to that specific income segment. >> very quickly, bill and jan, i want to ask you about target. how much do you think target was hurt by that security breach? was it a paper cut? was it rounding error? was it a deep flesh wound? what? >> that number you saw on kohl's came from target. my guess is kohl's picked that up. target dropped it. they dropped the confidence of the consumer. is it a wound?
i don't think it's a wound. but is it going to slow them down for a while? yes. did it really hurt them for the holiday? absolutely. so for this season, it's a wound. long term, maybe it's paper cut. >> do you agree with that, bill? >> i'd have to disagree a little bit. when we look at year-over-year data, target up 2% last week compared to the previous year. it doesn't look like what happened with the compromised cards affected online traffic to target at all. >> we'll leave it there. thank you very much, jan, bill and john. still ahead, it's a battle royale for the top spot under the christmas tree. which gaming console was the holiday hero. >> did you notice how john monopolized that last conversation? >> back down a little. >> i'll let you get in a question next time. plus, nerd alert. they're talking about me. we're cracking open the history books, digging in on what a stellar year for stocks could mean for your portfolio in the next year, the new year. the numbers don't lie. "street signs" back in two.
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well, we got just three full trading days left in december, and the markets are on track to close out 2013 as a terrific year. and history says that that bodes well for the new year. dominic chu has been looking at the history books. what did you find? >> first of all, tyler, we all know there's no such thing as a crystal ball. but sometimes traders look towards history to see if it repeats itself. we went and looked at all the
years since 1950 where the s&p 500 has made a 20% or better run. there have been 17 of those occurrences going back to 1950. the interesting part is in the following year, 14 times we followed those big gains with gains of their own. you can see those three negative marks, the only times when it's actually lost money. so the interesting part about this, if you look at the overall numbers here, we said, 17 times it's happened. 14 times gains follow those strong gains for the year on average in those 14 gains, the stock market continues to go up by another 16%. that's a big move. and here's the thing. if you count all those negative years, the three of them in there, it's still a very healthy average, 11% gain. so tyler, mandy, it looks like the good times could roll if the stock market closes out with gains like this. >> okay. well, let's bring in nicole from thestreet.com and bill nichols for their view. you've been looking at the historical data as well, but
you've noticed pullbacks after you've had a year of 20-plus gains, percentagewise, and this chart goes all the way back to 1994. so it sounds like history is not on our side. >> well, i don't know. i mean, really in the last 20 years, you've had three big bull markets. '94 to march of 2000. the '02 to '07 move and then the one we're in now. in the previous two big up moves, obviously you had the dotcom bubble bursting and the selloff after that. then in '07 we had the problems with the bear market and '08 and '09. those are significant. '98, you had a 20% bull pk 'burgh the russian debt crisis. and the market was still up comfortably for the year. the reality is you have to be cautious. there will be volatility. you will see these pullbacks, but it doesn't mean this time next year you won't have, you know, the market up another 15%, 20%. >> nicole, that graphic that was there with bill was pretty vivid. and we all remember the rises. but boy, do we ever remember those fall-offs that ensued after that.
as you look at the numbers, as you look at history, what do you think's going to happen in 2014? >> i do think we are going to see a good year following a great year. i'd be surprised to see the gains we did get this year. i think what's really important, it's going to be ever a stock picker's market. we have a lot of the overhangs that confronted us in the past. we have more certainty over a tempered tapering. we have fund meaamentals in foc. that's going to be key. >> so it's not a year you expect a rising tide will lift all boats. >> i think so. i think it will be a good year for those focused on fundamentals, strong company management teams and i think that's what investors are focused on. >> if it's a stock picker's market, which stocks are you picking? >> a lot to choose from, but three that i want to highlight, first of all, we have vf corp. in apparel, i really like this name, in particular because it focuses on innovation. we have outdoor action. we have north face, timberland,
vans, all strong brands that will continue to do well. and i also like also in consumer, starwood hotels. if you want to plan employment, will have increasing spend both from leisure travelers but also from more companies spending on corporate travel. so i like that name as well. >> and i see you're watching the financials, bill, for next year. bill? >> yeah, i think it will be interesting to see what the financials do in the upcoming year. i think with this run, you've had a couple of groups that have really outperformed, media stocks. the financials have been kind of in the middle of the pack. you look at citibank, bank of america, they're nowhere near previous highs. i think there's still more room to run. >> i think bill was taking notes on nicole's stock picks. what kid does not have a vf jacket, a north face jacket, a down coat? if you live in this part of the country, i'll guarantee you there's a north face item in your closet. you, nicole, had on that list e eaton. >> yeah, if you believe in global growth, which i do, you
want exposure to industrials. eaton, in particular, is well positioned because it has early cycle, which is residential, auto, truck. we also have middle. so midsize data centers. and we also have late cycle which is really important because we haven't really seen that come into play yet. so nonresidential construction. sandy cutler has cut costs from this company, it's well positioned for 2014. a really good name. >> great. thank you both very much for joining us. bill and nicole, 2014, here we come. >> thank you. up next, we're going to take out our crystal ball, even though dominic chu said there's no such thing. we're going to reveal the nontech stalwart sector that has been melting up in 2013. is girding up for 2014? >> i think there is such a thing as a crystal ball. with whether it works or not is a totally different thing. and blackberrys are making a comeback, but it's probably not what you're thinking. more "street signs" right after this break. ♪ i wanna spread a little love this year ♪
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industrials, per se, but steel in particular. i thought we left steel back with the department stores we were just talking about. >> yeah. you know, steel got -- it was one of the industries hit hardest in the economic downturn. it has yet to recover. 2014 might be the year we're starting to see some -- >> why? >> -- more positive signs. a few reasons, strong auto sales. that's a big demand for steel there. we're seeing housing rebound. we're seeing construction start to come back. one of the big questions next year will be whether nonresidential construction can come back because that's such a big piece of the market for steel. likely that will happen. another reason we've seen the durable goods orders starting to tick up. all of these positive for steel. the question moving forward will be whether prices can rise with that demand. >> what's been happening with steel stocks, and what will they do next year? >> steel stocks, we've seen some interesting movement in the last six months. some of the big ones, united states steel corporation, that is up about 5% week to date. they're trending down, trading down a little bit today, but in
general, up about 5% week to date. we've seen a rally there, up about 68% in the last six months. another one that's -- >> that's an incredible comeback. >> it's pretty strong. another one that's been even higher has been ak steel. >> just in the last couple of months. >> 164%. yeah. >> yeah. so we're seeing some strong numbers there. we're seeing a lot of analysts upgrade, goldman sachs last month, morgan stanley. a couple weeks ago we saw cowan & company upgrade u.s. steel. so -- and we're also seeing some surprise earnings numbers come out. some surprise profits, albeit modest. i think it's got everybody starting to look at steel in 2014. >> thanks very much. >> thank you. >> woman of steel. >> woman of steel! >> woman of steel! on deck, we're digging in on the big stock movers. your holiday edition it next. plus, best buy is on a tear, but is the stock even a good buy, let alone a best buy? we'll talk technicals and fundamentals when "street signs"
lots of green on the screen. the dow is still holding up by triple digits. let's get to "street talk" and take a look at eagle rock energy partners which ty just got an upgrade to outperform at wells fargo, though it's not really doing a huge amount for the stock which is down nearly 3%. >> it's down a little bit today. the analysts over at wells fargo say they don't believe the current share price is fully reflected in the regency energy partners acquisition. they see room for that one to run. >> it really has not done very well, down 27% over the past year. directv, they've just announced their addition of weather nation. >> never heard of weather nation. never heard of it. >> something to do with the weather, i believe. >> yeah, i gather that their contract with the weather channel, which is owned by our parent, comcast, is about to expire. and this new deal with weather nation, i guess, gives them a
little bit of negotiating leverage as they go to renegotiate with the weather channel. so they'll have an alternative. they'll have more room for negotiations and so that's the story on that one. >> indeed. not a huge amount of movement in the stock today. gogo inc. this stock moving higher. it seems to be a bit of follow-through from last week's announcement of a partnership with aeromexico. >> they seem to have the space there in those in-cabin access to the internet while you're doing it -- while you're flying. the two companies have agreed that it would be gogo and aeromexico on terms and conditions for in-flight wireless entertainment services for at least 75% of aeromexico's aircraft. gogo expects the service to be available in the second half of next year. that's why that stock is performing as it is today. >> and it has performed very well. a gain of 55%. all eyes are on internet retailers like amazon and ebay after that surge in online shopping this holiday season, very quietly under the radar an
older retailer has been rallying as well. we are talking about, yes, shares of electronic retailer best buy. they're up around 2% today. but they have quadrupled in 2013, making it clearly one of the best performing stocks of the year. we ask, is it too late to get in? let's start talking numbers on the technicals. katie stockton on the fundamentals. joe with meridian equity partners. joe, best buy up more than 240% this year. would you buy it still? >> i would not be an investor here, true to my profession. it's still quite sensitive to headline risk both for its own, you know, its own headlines as well as the industry and the consumer at large in the recovery story that's going on. we're pretty much past you know, the big season right now for the types of things they sell. and if you took note from thanksgiving through now, most of their inventories in store were running really low if not
sold out. they're obviously angled more towards keeping inventories low and sending things online which now they're competing against the amazons and ebays and it's not going to work out i think in the long run. they've painted themselves into a corner. it's going to be interesting to see how they juggle that quarter to quarter. >> katie, what do the charts tell you? >> the chart does stand out. we've actually seen best buy lose momentum as most stocks have gained momentum since about november. so despite the impressive gains for the year, the stock is actually deteriorating on its chart. there's some support on the chart around 39.75. it's very important that that level holds in order to preserve the intermediate term up trend. if it does break, the next support on the chart is around 36.25. and, of course, that would be pretty significant downside risk from current levels. so watching this loss of momentum, seeing if it generates a breakdown, obviously the long-term trend is still very much higher. but i think short term, you just want to stay on the sidelines here. >> okay.
looks like it's run out a bit of puff at least temporarily. thank you very much, katie and joe. be sure to check out the online edition of "talking numbers." that is in partnership with yahoo! finance. coming up on "street signs," the xbox 1 may be the hottest gift of the year. santa brought one for my son. we were disappointed to find out you can't play the old games. will console sales be a christmas miracle for microsoft shareholders? we'll dig in. will the dollar dominate in the new year? our next guest will make the case why the buck is best. first, bill and kelly, what's coming up? >> wait a minute, tyler, are you still on the air? >> i'm here! you can't get me out of here! >> he might come and do "closing bell." >> i'll be sitting there at 3:15. >> three in a row. >> the chopper's waiting. >> more than half. the latest survey of more than individual investors, more than half think that stocks will keep rallying over the next six months, but is that kind of bullishness actually a cause for
concern? we'll look at that coming up. meanwhile, find out whether underperforming alternative investments think commodities will be able to rebound next year? be an investment class you want to be exposed to? also, how will the credit card breach at target and late christmas deliveries affect the retail industry? we're going to hear from the head of the national retail federation joining us coming up on "closing bell." >> keep it right here. we'll see you soon. tdd#: 1-888-648-6021 there are trading opportunities tdd#: 1-888-648-6021 just waiting to be found. tdd#: 1-888-648-6021 at schwab, we're here to help tdd#: 1-888-648-6021 bring what inspires you tdd#: 1-888-648-6021 out there... in here. tdd#: 1-888-648-6021 out there, tdd#: 1-888-648-6021 there are stocks on the move. tdd#: 1-888-648-6021 in here, streetsmart edge has tdd#: 1-888-648-6021 chart pattern recognition tdd#: 1-888-648-6021 which shows you which ones are bullish or bearish. tdd#: 1-888-648-6021 now, earn 300 commission-free online trades. tdd#: 1-888-648-6021 call 1-888-648-6021 tdd#: 1-888-648-6021 or go to schwab.com/trading to learn how. tdd#: 1-888-648-6021 our trading specialists can
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two geopolitical stories causing fluctuation today. the turkish lira lower after the turkish prime minister erdogan replaced half his government. the political instability is making investors nervous. and take a look at the dollar versus the yen. the japanese prime minister abe visited a shrine, and that angered china and south korea. the buck hitting a five-year high today against the japanese currency. and it is up about 21% so far this year, mandy. that high just one bullish sign for the dollar. will 2014, though, be a breakout year for the greenback? let's bring in sara eisen, kathy
and ed. to all of you, great to have you with us. kathy, do you think 2014 will be the year to buy the buck and against which currencies? >> i think so, mandy, especially in the first half of the year, particularly the first quarter. the story here in the u.s. is really the story about how 2014 is going to be america's year to shine. over the past decade, the focus has been on asia and on china. but in 2014, we'll see a much more significant slowdown in the chinese economy. we'll see much faster growth in the u.s. so i think that that is going to come at a very good time. it's going to cause investments that have been parked in asia to be reallocated to the u.s. for new opportunities. on top of that, we've got the big unwind here in terms of tapering. and i think actions speak a lot louder than words when it comes to fed policy. and the fact that fed -- future fed chairman janet yellen voted in favor of tapering at the last meeting tells us that she may not be as dovish as many people may suspect. >> yeah, but ed, does tapering necessarily mean a stronger
dollar? >> i don't think so, not necessarily. and here's why. listen, when we started quantitative easing for the first time, december 16th, 2008, the u.s. dollar index trade weighted closed that day at 80.01. today it's stronger. the u.s. trade weight is actually a little stronger than it was five years ago. so the assumption naturally was that qe was going to make the dollar weaker. it didn't happen. and therefore we cannot assume that tapering will make the dollar stronger. >> ed, here's the difference. it's sara. the only difference right now is the federal reserve is cutting back its stimulus. but other central banks around the world, major central banks, are in the opposite mode. they're adding to quantity taifb easing. we're seeing that in japan. there's more expectations they're going to add more qe. that's why it's been so weak. in europe, no sign they're in tightening move. so when you have that big differential, that's why strategists say it's a much
clearer trend. kathy, don't you agree? >> adding to sara's point, next year is a big year where they'll raise the consumption tax. the last time they dared raise tax was in '97. we actually saw a 10% rally in dollar-yen after a 4.5% rally the year before. so i think there is still scope for dollar gains. there's also a story about what's happening around other parts of the world just like sara said. >> i will respectfully disagree with you on this point and let me make myself very clear about this. kathy, you yourself said that the u.s. was going to have a good year, 3% growth. that is a risk-off environment. that is very bad for the dollar. and it is very good for currencies like the euro. so i would respectfully disagree. i think that the dollar is going to have a weak year because look at the chart. the best year that the dollar has had in the past ten years occurred during a recession. so if you believe that economic
fwroet growth is on that the way, that means you have to believe in a weak u.s. dollar. that's where i play and stand. >> if we're looking at a stronger dollar and stronger u.s. growth, risk off would be positive dollar, negative euro. that still plays along with the positive dollar trade. i think the real opportunity here is dollar-yen. and euro-dollar would be more range boind with a lower bias because the ecb is going to keep everything steady in my opinion. >> the chart of the year -- >> listen, i disagree. i have to tell you. listen, if you have risk-off environment, we all know that the dollar is a safe haven currency. money runs to the dollar in times of trouble. that's something we're all aware of. so if you're saying that the economy is going to zrengstreng there's no way we're going into a risk-off environment. that means risk on. sell the dollar. the dollar is going to have a good year and that's where it stands. >> ed, if the u.s. is growing and that's the growth story and you're in a positive environment, then you're going to put money -- and we've seen
this already, international flows into u.s. stocks, into u.s. bonds, u.s. will be the bright spot. and that strengthens the dollar when that money comes into the united states. so i get your point, but it doesn't always historically match up that way. that a better buy, a better economy has been bearish for the u.s. dollar. >> sara, it does not always match up that way. but i will tell you this. and look at the euro. now, in europe, the ecb recently cut rates. we know that they're probably going to do it again. we know that they're probably going to be new ltros next year. we know they might go with a negative deposit rate. since we all know this, the euro should be falling. is it? no. the euro is close to a two-year high. so i have to tell you -- >> and there are reasons for that. the reason -- >> the currencies -- your argument has logical sense to it, but it doesn't jibe at all with what's happening in the market with the currencies. >> let's put you on the spot here, levels. kathy and ed, end of next year, where is the dollar-yen rate going to be and euro-dollar? cakathy
kathy? 1.05. i'm looking for a move to 1.07, maybe 1.08 in the first quarter. between these two trades, dollar-yen is still my favorite. >> ed? >> dollar-yen is a no-brainer. i think 1.07, 1.08 easy. i think 1.10 by year end. >> and euro-dollar? >> you could see 1.40 potentially. it's not that far from here. >> kathy and ed and sara as well, great discussion. who knew that currencies could be so exciting? >> they basically disagree on what the level is going to be. how did we get there after all of that? i'm just sitting back watching. all right, guys, thank you. up next, gamers, start your engines. we're battling the xbox 1 versus the ps4. which was the most coveted console under the christmas tree? and move over, lime, because there's a new fruit flavor in town. we'll explain when "street signs" returns. where does the united states get most of its energy? is it africa?
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>> the hottest gift to find under the christmas tree this year may be the x-box 1 or was it the ps4 from sony. josh lipman tells us which one emerged this holiday season. what did you find? >> in the gaming wars some analysts say it looks like sony has the edge for now. i was on the phone of lewis ward. he said ps4 is beating out microsoft x-box one. through december 1st sony reported ps4 topped 2 million. ward thinks x-box sales have fallen short. he talks about two reasons. one the price point, the ps4 is hundred bucks cheaper. likely to make a difference to fence sitters. there was a real difference in the roll out. ps4 hit the shelves in 32 kwuns. x-box one launched in 13
countries. he still thinks the ps4 will continue to have that edge. the ps4 will launch in japan in february another huge potential market for sony. >> thank you very much. let's bring in daniel ives, senior analyst at fdr specializing in enter prize software and robert baird. let's talk microsoft. santa brought an x-box one for my son. this machine goes for about $500. santa told me this. and to me it is microsoft's play to control your television set. it is kind of mediating the cable box and incidental a gaming platform. >> that's what it exactly is. microsoft is having an issue trying to garner the consumer. this is the vehicle. a higher price point than ps4 and given the price point i
would call it an early success launch given where we are and they will put more and more resources into this because this is their play to get into the consumer living room. >> they want to own your living room where sony has a different objective they are aiming at the core gamer market. who do you feel is winning this war. it feels like these two devices sell out as soon as they hit the shelves. >> that's right. early indications are strong for both platforms. i would disagree about the entry comment. both consoles are selling whatever they ship into the market at this point and we're confident that both will sell around 3 million units by the end of december or perhaps more. in fact if you did find an x-box one or ps4 under the tree consider yourself lucky. >> my son felt very lucky until as i was explaining earlier, we discovered that there's no backwards compatibility from games that you had that worked
on the xbox 360 to the new ones. you got to go and buy replacement games which is a bit of an irritation. santa didn't explain this to me when he left it. and there aren't as many games ready now for the x-box one. >> well, that's right. traditionally gamers want the backwards compatiblity but they actually buy new games. there's a lot of new games for these next generation platforms in the pipeline for 2014. and i think your son will be happy with that. >> very quickly talking about 2014 do you think the entertainment division could be spun off from microsoft? >> yeah. definitely in the cards. new ceo, hopefully in january and february, even though x-box has been successful i think it's on the table. >> who would buy it? >> again, here's where does it get spun off into private
equity? is there a strategic buyer? one thing from a microsoft investor perspective it's been an overhang, a drain on margins and not good enough that a new ceo would view it as potentially strategic. >> dan, thank you. i'll have some games. we'll play them. up next why 2014 could be the year of the blackberry. don't worry, apple, it's not nearly what you think. and ah, so you can see like right here i can just... you know, check my policy here, add a car, ah speak to customer service, check on a claim...you know, all with the ah, tap of my geico app. oh, that's so cool. well, i would disagree with you but, ah, that would make me a liar. no dude, you're on the jumbotron! whoa. ah...yeah, pretty much walked into that one. geico anywhere anytime. just a tap away on the geico app. [ bagpipes and drums playing over ]
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so 2014 is the year of the blackberry. we're not talking about the phone we're talking about the fruit. blackberry is the flavor of the year. lime was this year's. >> i was just getting used to pomegranate seeds. >> "closing bell" is next. and hello and welcome to the "closing bell". i'm kelly evans at the new york stock exchange on this boxing day where the santa claus rally keeps delivering big gains. >> a lot of big boxes being packed up here on wall street with a lot of big gains. the dow and s&p, i don't know if we can show you and intradition day chart yet. slow melt upward on wall street. the dow set to post its best six day win streak since
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