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tv   Worldwide Exchange  CNBC  December 27, 2013 5:00am-6:01am EST

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i like to say there is a bull market somewhere. i'm jim cramer and i'll see you next time. welcome to "worldwide exchange." i'm carolin roth. here are your headlines this morning. the global rally continues. european equities trade higher with the dax hitting a new high after another record close on wall street. abe nomics in full flow, japanese inflation runs at a five-year high while factory outputs decline for another straight month. u.s. retailers are hoping for many happy returns from the holiday shopping season. the head of the national retail
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federation tells cnbc we expect sales to hit the group's .9% forecast. good morning, everyone. well, if you celebrated christmas, hope you had a fantastic break. for me, usually these breaks are way too short. let me tell you how u.s. futures are shaping up this morning. we're looking mixed as far as the dow, the nasdaq and the s&p 500 are concerned. the dow hit another record high in yesterday's trading session. it was up for the sixth straight session and hitting record highs on a nominal basis for the sixth day in a row, as well. the s&p 500 also ending at another record high. the dow up about 0.75% and the s&p 500 rising around 0.5%. remember, jobless claims falling by more than expected yesterday at a one-month low. we have a rally in retail related stocks after we got a data about the retail shopping
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season. that was better than speexpecte. i want to show you how european markets are doing this morning. they are back online after they were closed for the christmas holiday for about two or three days each. the xetra dax, hitting another record high, up around 0.8%. so this year-end christmas rally certainly continuing. in corporate related news, daimler saying its truck business will top last year's sales numbers. the cac 40 and the ftse mib also seeing some nice gains, around 0.9% for the french market. in terms of the asian trading session, well, we saw some choppy trading, the s&p/asx 200 down marginally. the shanghai composite up around 1.4%. the pboc injected liquidity into the markets this week and that led to the steep decline in terms of the seven-day repo rate. so the fears about the credit crunch, which we had last we're specifically, they continue to
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abate and the nikkei 225 up marginally, maybe some profit taking on the back. most of the yen against the dollar or dollar/yen rather briefly touching that 105 level. in terms of the bond markets, some interesting moves that we saw this morning in terms of the ten-year treasury briefly touching that 3% level just a few minutes ago, but back below that level now, 2.99% is where we're trading right now. a lot of people said we shouldn't be too surprised if we see that 3% level. the first time we've seen this hit since the month of september this week because we're seeing so little trading volume, so volatility is probably going to be higher. ten-year bunch tracking u.s. treasuries lower on the yield at 1.93%. and last but not least in the forex markets, cable hitting the highest level since august 2011 this morning, 1.6486 is where we're trading at.
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and dollar/yen, back below that 105 level at 104.83 up by a little bit. japanese consumer inflation topping 1% in november for the first time in five years coming in higher than forecast at 1.2%. meanwhile, factory output rose for a third straight month. retail sales jump and job availability hit a six-year high, this all adding to growth signs japan's recovery is gathering momentum. so how prime minister shinzo abe's goals looks back at the highs and lows of abe nomics. >> the nikkei 225 advances here is anything to go by, abe nomics has been a roaring success with year-to-date gains of over 50%. the index surging past the 16,000 level on tuesday for the first time in six years. but it's worth to take a look back at some of abe's bold moves since taking office. in january, it was a big bang. the bank of japan under the
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stewardship of the previous governor raised the inflation target to 2%. by the end of fep february, a changing of the guard at the boj. abe nominated kuroda as the head of the central bank, fueling speculation of further monetary stimulus. and increased fate between member countries. but a pledge to inject 1$1.4 trillion into the economy in less than two years stunned the markets as the boj aimed to double its monetary base by tend of 2014 with kuroda's term just beginning. in may, though, weak chinese data and the first mention of the federal reserve drawing back quantitative easing sent the nikkei 225 plunging more than 7%, its biggest one-day loss in two years. and by the summer, expectations fizzled when abe-nomics has unveiled reform which
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disappointed many hoping for details. but by july, the political climate improved with abe's push for economic recovery, the liberal democratic party coalition cemented power in japan's upper house election. by october, japan took a long awaited decision to raise its sales tax by three percentage points. that's the first increase since 1997 and was accompanied by a $5 trillion yen stimulus plan. november marked the first year of abe-nomics, and while japan's health dramatically improved, the economy faced challenges. that was affected in the third quarter where growth was revised lower. tpp talks hit a road block after japan failed to make concessions for the u.s. but on the bright side, the nikkei has surged over 50% this year, making it one of the best performing equity markets globally. back to you. >> joining me now for the full hour of "worldwide exchange" is jeffrey view, strategist at fbx.
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did you have a good christmas? >> yes, thank you. >> clearly ending the year with a bang, just below 105. 1.2%, core cpi, we're halfway there, aren't we? >> if you look at the overall performance of abe-nomics related asset classes, people will say it has been a success. but if you look at the structural reform, it seems like people are not making adju adjustments on it. so long as dollar/yen is higher, the nikkei is going up. at some point, though, people are going to ask questions about how you follow through and at what point does this former inflation become more pernicious. you can print your way to 3%, 10% inflation if you wanted to, but is that the road japan wants to go down upon? and we are in favor of being long dollar/yen still. we are cautious about this turning into a round, and that will be bad inflation and bad currency movements for japan. >> and it is all about wages,
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isn't it? we saw the month of november, regular wages didn't fall for the first time in 17 months. that is a very, very good indicator. but is it going to persist once we hit the consumption tax in april? >> if you look at what the boj and japanese governments are trying to tell corporates, saying you need to pass on more of your income gaines and towards underlying wages. you need to allow japanese households to feel better about their underlying asset position, they need to spend. you need consumption to start picking up. that would start to reverse longer term lines, core inflation, otherwise you'll be importing prices and at some point i think japanese household res going to say, hold on a second, we want dollar/yen higher, but not to the extent that our real income is starting to fall. that may result in some rather adverse effects in the japanese economy. >> you are skeptical, but on the other hand, you say stay long dollar/yen and there have been some wild and bold calls out there. and i believe we could see
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dollar/yen around 125 by the end of next year. do you have similar outrageous bull calls for the dollar/yen? >> we have a bull call, but it's not outraging. we're looking at 110 by the end of the year. 125 is a bold call. if we get back a few years, 124.75 is the high that dollar/yen reached before the global economy started to make a turn for the worst. if we go beyond that, 1.40, 150, then it could go hyperbolic because that outright printing money, outright coming in, the bad inflation coming in, so be cautious about that key 125 level. anywhere between now and 125, that's good. beyond 125, our trade might be making money, but we would be flashing the alarm bells. >>ene even to reach the 110 levels, wouldn't we have to see another arrow being shot, another round of quantitative easing by the boj? >> absolutely. we are looking for more qqe
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coming in around april. that will be the first anniversary of the bull decision to announce quantitative easing. that coupled with high yields, we see a more towards 3.5% towards the end of 2014. that should help things, as well. real yields starting to favor the u.s., and hopefully japanese money will flow. that doesn't solve the underlying story of wages. >> do send in your e-mails, find me on twitter. meanwhile, let's take a look at today's other top stories. retailers are already tallying up results from the past few weeks. thursday, mastercard advisers said holiday sales grew 3.5% thanks to heavy spending. the ceo of the national retail federation tells cnbc he still expects sales to hit the group's 3.9% forecast despite challenges such as the shorter holiday season and bad weather.
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>> we got off to a great start on black friday weekend. consumers were out in big numbers. we came out strong. over the last few weeks, we ran into the inevitable of this shortened, truncated holiday season because we knew we had six fewer days in the season and that led to this promotional environment. we knew that's what it took to get people out into the stores. >> things should be better than we were last year, given all the positive economic data and the surge into the stock market. but he says many u.s. consumers don't feel like they've been part of the economic recovery. meanwhile, in the uk, shoppers surged stores hoping to pick up on holiday sales. spending is estimated to have hit a record 2.7 billion pounds on boxing day. that's including online sales.
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still coming up on the show, it may be the season for bargains, but delta air lines, a big give away, turned out to be a huge mistake after just $25. more on that story coming up after the break.
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this this morning, european equities trade higher following on the session from asia and another record close on wall street. u.s. retailers are hoping the holidays here continue as the post christmas shopping season begins. abe-nomics arrows continue to hit the markets. factory output is wide in other straight months. now, here is a cool story for you. delta air lines is owning up to its mistake. the carrier says it will honor the really cheap fares that some passengers bought by accident on thursday. a round trip between cincinnati and minneapolis was sold for $25. another in cincinnati and salt lake city went for $48. both usually sell for more than $400. u.s. fwoft rules aimed at truth in advertising require airlines to honor any mistaking fares. what we would like to know is if
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you could get a deeply discounted flight to a destination of your choice, what would it be? if you want to join the conversation here on "worldwide exchange," get in touch with us by e-mail,, @cnbcwex or direct to me @carolincnbc. personally i would want to go anywhere. when you flew into london, i saw thailand, hawaii, all those amazing places. i really want to go anywhere, whether it's discounted or not. what about you, jeffrey? >> i've always had a soft spot for patagonia. it's beautiful down there and i have an argentine colleague and he keeps telling me how wonderful argentina is. >> check it out and see if you can get one of those discounted airfares. probably not. still to come on the show, the yen continues to steal the spotlight, hitting a five-year low against the dollar and the euro. we'll find out what the 2014
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trade could be coming up after the break. and we'll leave but a view of the heat map of how the european markets are trading right know. we'll be back. [ male announcer ] this store knows how to handle a saturday crowd. ♪ [ male announcer ] the parking lot helps by letting us know who's coming. the carts keep everyone on the right track. the power tools introduce themselves. all the bits and bulbs keep themselves stocked. and the doors even handle the checkout
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capgemini. the group bounced back in the third quarter thanks to strong growth in asia pacific and latin america. ross spoke to the ceo and began by asking him where growth could come from in 2014. >> we started to 13 with the thyme tiny revenue decline. we were nearly flat in the second quarter and now we start to grow. so in europe is falling the trend. it's not at all a very good market nor a goommy one, but things are progressively awakening. >> what is going to be key for you? is a macro environment going to be stronger as far as you're concerned? how does it fooel feed in? the first point is if i look at the consensus, the consensus shows a growth of 3%. a growth of 3% is probably a growth in terms of number of people of more than 8 to 10 with
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some price inflation coming in from the increased calls to india. so on the one hand, we have more and more people in the market and even more and more service. on the other hand, it will lead to probably a stagnation of on shore with europe and u.s. resources and an increase of offshore resources india, poland and latin america. so that is the demand that is it is driven by cost pressure, and some growth initiative really think the digital channel management is today the big driver, the big mobilization. geographical, i would expect we end on a positive note in the uk and in france, surprisingly, and the u.s., of course. i would probably think things should get better in germany and
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northern europe. >> yao assessment in france is interesting. if you look at the activity data, it's been getting worse for france. france might be well back in recession. what is your assessment of the economy and what needs to be done? >> the first point is the market was surprising. we have shown in france a growth of 3.7% in the third quarter. we are number one in france and we are probably winning market share. probably thanks to a good segment position we have very little exposure to the state activities of less than 10%. we are big in financial sector. we are powerful in some good sector. so it's -- i don't see the french market really. we are growing in france. now about france, there are a
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lot of comments, but i will say two things. today, what is required first some tax stability. i don't dream of tax relief, but we need to stop seeing the invention of new tax regime every other week. and the second point where all corporate leaders are aligned and just the weight of public spending in the gdp is just wide. and i think it's probably removing or limiting the space for the private sector and the private investor. >> that was the ceo of capgemini. let me show you what u.s. futures are doing this morning, the s&p taking fair value into account. it's modestly lower and the dow jones is up by 10 points and the nasdaq could rise by almost two points. keep in mind, as the dow is on track for the longest winning streak since march, it is also on track for the best yearly performance in 2003 is expected to see gains of around 25 to 26% this year. let's get back to jeffrey, fx
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strategist at ubs who has kindly agreed to be our guest host on this quiet friday. now, everything in the market is fairly quiet. but there is one story in the fx markets which has been making headlines over the last couple of days and that's the turkish here ra. with that political uncertainty that's playing out in turkey, do you see a floor for the currency right now? >> we have to look at turkey's fundamentals. turkey's investment ratios, gdp is far too high, really, just stands alone out there even among some current account in emerging markets. so next year, we have the taper, we have the cost of credit rising across emerging markets. they are under pressure to rebalance in the first place and now with the political mess going on, they probably won't
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have any space to do anything at all. it's up to the central bank. this could get nasty quickly. >> so what could the central bank be doing? that's been very ineffective. it has been damaging to the currency. should it really be raising rates given that the growth outlook isn't that great, either? >> well, raising rates probably will be marginally more effective in that intervention. because the actual size of on turkey is reserved smaller than purported and we know the account of fx deposits. overall, raising rates, if you look at it in a tapering environment, yes, the tapering has started, but the cost of carry, him being short, em currencies against the dollar right now is still quite high. so that might just be enough, especially at this time of the year where people are still swearing to just tell the short, okay, you might want to think this through. but heading into next year, the fiscal turmoil remains and if we have a disruptive run up to the election where dollar turkey could go.
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>> what about other emerging currencies, the indian rupee, the indonesian rupiah, has the tapering moved? >> we believe it has for now. but the next phase is what will happen on the rebalancing side. so tapering has been priced in, but markets are giving the rupee, the rupee has the benefit of the doubt right now hoping for structural reforms to come through. and in india in particular counting on perhaps -- to come in and launch reforms to -- not just to buy time, but to change the overall picture. but will markets have the patience? u.s. shields get a bit out of hand, we move relatively quickly in the ten-year. i don't think we'll have enough time to wait for the indian elections and people will demand action now. but we think that overall em fx will give you negative output for 2014. >> what about the outliers? he told me tapering is actually
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good for us because we depend so heavily on the u.s. economy. it depends so heavy loy what's happening in the u.s. >> absolutely agree. i am long next versus japanese yep. so if you think dollar/yen is going to do well, then go long. >> thank you so much for that. we'll talk more about other currencies later in the show. the u.s. dollar, we have touched on that. and still to come on the show, with u.s. markets on a roll, can investors expect equities to continue to outperform bonds in the new year? we have goldman sachs after the break. ♪ [ male announcer ] how could a luminous protein in jellyfish, impact life expectancy in the u.s., real estate in hong kong, and the optics industry in germany? at t. rowe price, we understand the connections
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welcome to "worldwide exchange." european equities trading higher with the dax hitting a new record high. abe-nom onics in full flow. japanese inflation runs at a five-year high while factory output rises for another straight month, signs that shinzo abe's efforts to reflat the economy are working. u.s. retailers are hoping for many happy returns for the holiday season. the head of the national retail
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federation expects sales to hit the 3.9% forecast. >> you're watching "worldwide exchange," bringing you business news from around the globe. and if you're just tuning in, thank you so much for joining us on the show. here is how markets are faring ahead of the u.s. open. u.s. futures looking mixed this morning in the s&p, taking fair value into account. the dow jones seen up by 10 points and the nax dak up by around 2 points. the s&p heading for the befrt annual gains up almost 29% this year. talk about a year-end santa rally here. european market seeing similar holiday cheer. the ftse 100 back online after two days of closure on the back of a christmas holiday, up by around 0.5%. the xetra dax up by 0. 7%, sitting at 9,157 points on the
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cac 40 seeing nice gains, that's up 0.9%. it's officially now law of the land. president obama assigned the u.s. by partisan deal on thursday while on vacation in hawaii. the agreement, passed by the senate last week, sets federal spending levels for the next few years and some of the sequester budget cuts. the president assigned the appropriations bill which gives the pentagon a $597 billion budget for fiscal 2014. some 1.3 million americans are set to lose their unemployment benefits on saturday. that's what federal long-term benefits and when funds run out for a program created during the recession to supplement state benefits. another 1.9 billion people could lose their benefits in 2014. some in congress are propose ago three-month stengdz tension as s seek to increase the costs.
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jeffrey, let's talk about the dollar. the dollar is higher against the yen. up some 20% this year. but against other currencies, notably, sterling, the euro, it hasn't been making as much head way as some people are expected given the back drop of tapering. when is the dollar bull run going to start? >> i think two things to happen while people need convinced that the u.s. is well on its way to trend growth. equities need to rally further, maintain the pace for another two or three years or so. we need to see especially in europe, other central banks start to anchor their own currency somewhat. we saw in the recent boe minutes, sterling could be a drag on the uk economy somewhat. so more comments like that would help the dollar. but looking at the broader picture, unless the fed rapidly accelerates the tapering story and moves forward its interest rate outlook, probably we'll have to rely on central banks to lower their own currencies rather than push the dollar higher. >> you mentioned boes there.
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the last time i spoke to you, you liked the interest rate differenti differentials. if it hits 76, 77 maybe, at what point is the boe going to come in? >> one, it is a source of the unofficial line in the sand. trading around 83, 84 right now. that goes to 85 and we think that record will start to tighten up somewhat. markets will respond accordingly. but second, the relationship between strength of the pound and the uk exports and uk inflation has never been that solid. i think it will take a closer look at it this year. if there are signs that it's contributing to inflation surprising to the downside beyond their expectations, then they will act for more aggressively, as well. i think they'll be fine with it for now because they don't know what the implications are. >> so what you're saying is even
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if the pound weakens, it never really held exports pay, did it? so what is the impact to go to be on pound/strlg strength considerably? >> if it actually does result in strength in push chasing power in the uk, then it is positive. i think the boe would welcome that. of course, we always have an issue how the uk is going to finance the current account deficit, the worst in the european union right now so long as the overseas property flows and the money buying london properties, that continues to fund it. it is quite astounding to be honest. so that could offset that. but, again, looking at the inflation angle, that's the boe's contact for now. i think the boe will stond. now i think there are early signs of it. >> is the boe -- at what point will it strengthen?
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at what point will the boe have to do it? >> i think the boe is sort of behind the curve or lacking, the best way to describe it, in terms of anchoring its credibility. when the fed sets out its bar charts, its plots and for expectations of the fed funds target rates in the next few years, markets believe to anchor it straightaway. the boe has given much discretion. maybe next year we'll see more in communications. >> but you also have to wonder at what point the market is going to challenge the fed's new forward guidance, lower for longer. but we already see the belly of the curve, yields are rising and two-year yields are rising, as well. at what point is the fed going to push back? >> i think two things. going back to the earlier story about unemployment benefits starting to expire, if that isn't offset and if that doesn't start to impact growth, the fed starts to push back. secondly, watch for the key phrase tightening and financial
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decisions that we saw in september of the fomc where they thought would taper. if that shows up again, i think markets will taper. >> what's your call for cable? >> sub-160, maybe towards 155 as the uk steams ahead. i like sterling all the way. >> thanks so much for that. with the u.s. closing and another rally high, is the rally set to continue? ross asked peter goldman from goldman sachs his thoughts. >> our feeling is that the long-term positive story for equities continues, that the drivers change. last year was very much about the kind of hope phase with most of the gains being driven by multiple expansions. as we go into next year, we believe that you'll get slower gains driven by fundamental profits and dividend growth. >> where is that profit coming from? how is that being generated? we only have a very anemic recovery in europe. in the first quarter, 0.1%. it looked like france is going into recession if you believe the latest set of pmis.
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>> well, i think there are a couple of things here. first of all, the corporate sector in europe has exposure to different parts of the world. so if you look at sales weighted gdp, it's picking up and that should generate better top line growth, moderate, but positive for the aggregate corporate sector. margins have been cyclely depressed in europe whereas they've hit record highs in the u.s. and in the context of coming out of recession, we would expect some rise in margins to drive earnings, as well. >> this margin story is an interesting one. in the u.s., you could argue we've had big benefits on margins that are now waning. you know, the ability not to pay too much tax, the fact that labor has been very cheap and, of course, cost of borrowing has been very cheap. if you're looking at in the u.s., we've had the bet of all three of those things and it's certainly going to get harder. is it different in europe? >> yeah. let me be clear. the u.s. market over the last couple of years has outperformed
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europe, largely because profits have gone to record high. so some margins. margins are now plateauing in the u.s. at a very high level. we expect european margins, which have been cyclely depressed because of the recession to start recovering in line with some moderate recovery in growth, but also because you've had quite a lot of cost savings across the corporate sector, particularly vis-a-vis the labor market in the last year or two, which will start to feed through. >> okay. so you -- is goldman weighting u.s. equities over the u.s. as a whole? >> yes. when we look at our global views for next year, we expect higher returns outside of the u.s. in fact, stronger returns indeed in japan. than in europe. but stronger returns outside the u.s. than in the u.s. not because the u.s. economy knot recovering, but because the market has priced in more of that recovery than we've seen
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elsewhere. >> much of what happened will depend on the banks and also how they get the quality reviews and whether they themselves can contribute to an economic recovery. >> well, we are -- it is a weighted edition in european banks. we do think that there are a balance of risks here. obviously, the ongoing relatively modest growth in europe will prevent very strong lending growth. on the other hand, you have got above provisioning cycle coming through, you've got lower cost of capital because of the asset quality review and moves towards more european banking integration in terms of supervised -- overall supervisor. >>. and coming up on the show, did u.s. retailers get everything they wanted for christmas this year? we hear from the national retail federation, coming up next. ♪ i wanna spread a little love this year ♪
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bny mellon turns insights like these into powerful investment strategies. for a university endowment. it funds a marine biologist... who studies the peruvian anchovy. invested in the world. bny mellon. good good morning, everyone. u.s. retailers are hoping the holiday cheer continues as the post shopping christmas season begins and abe nomics arrows continue to hit the mark as japan's factory output rises for
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another straight month. the post christmas shopping season is barely under way, but there are some early returns on all the action that takes place on the weeks heading up to the holidays. hampton pierce is in washington with the story and the numbers look better than we expected, don't they? >> hi, carolyn. it could be a bit of surprise. we have the head of the national retail federation telling cnbc he still expects holiday sales to increase 3.9%. matthew shay says that should be achievable, despite several challenges, such as bad weather, shipping issues and six fewer shopping days this season. >> we got off to a great start on the holiday weekend. we exceeded the estimates in terms of traffic. we beat last year on every day of the weekend. so we came out very strong.
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over the last few weeks, we ran into the inevitable of this truncated holiday season because we knew we had six fewer days in the season. and that led to this incredibly propossessional environment. we knew that's what it took to get people out into the stores. >> on temperatures, mastercard advisers spending pulse that heavy spending in the final days sent total holiday sales up 3.5% between november 1st and christmas eve. spending pulse tracks payments but doesn't give dollar figures on sales. come score says online spending led the uptick between november 2nd and sunday. online shopping accounts for about 10% of retail sales in the fourth quarter. but shippers were caught off guard by the late spike. u.p.s. and fedex weren't able to deliver packages by christmas eve due a combination of winter storms and overloaded systems. u.p.s. and amazon are offering refund toes customers who didn't
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get their orders on time. amazon will give them a $20 gift card while u.p.s. will pay for shipping costs. carolin, back to you. >> thank you so much for that. 2.3% growth last week, that is the highest growth number in three years. not so shap shabby after all. moving up, delta air lines says it will honor really cheap fares that some passengers bought by accident on thursday. a round trip between cincinnati and minneapolis was sold for 25 bucks. another between cincinnati and salt lake city went for $48. those usually sell for more than $400. new u.s. government rules aimed at truth in advertising require airline toes honor any mistaken farers. so what we would like to know from you is if you could get a deeply discounted flight to a destination of your choice, what would it be? west haven, connecticut, paradise. well, if he considers that
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paradise, that's fantastic for him. jeff tweets, philadelphia/honolulu for $130 in february. amazing mistake fare. lucky guy. jeff and i were talking about this earlier. i said i just want to go away, i want to go to where the sun is shining. lou louis tweeted in and said the town of avila at castilla leon, spain. if you want to get in touch with us,,@krns we can see or direct to me@@carolincnbc. godiva is buying flipz, the maker of chocolate covered pretzels. the deal comes as chocolate consumption has risen for the first time in five years in 2013. and speaking of indulgences, the
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television hits here downton abby, suggest jeeves is just as likely to be female as male. up next, another day, another record high for the u.s. market. the winning ways, will they continue into the new year? we have some insight from the floor of the cme. that's coming up. mine was earned orbiting the moon in 1971. afghanistan in 2009. on the u.s.s. saratoga in 1982. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation because it offers a superior level of protection and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy. get an auto insurance quote. usaa. we know what it means to serve.
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just by talking to a helmet. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. wiggle your toes. [ driver ] and it got his okay on treatment from miles away. it even pulled strings with the stoplights. my ambulance talks with smoke alarms and pilots and stadiums. but, of course, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything. so everything works like never before.
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welcome back to the show. the xetra dax and germany hitting another record high after it was closed for three days. 9,558 is where it's sitting at
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for the year. it is up by a whooping 26%. the cac 40, the ftse mib seeing modern gains as these markets are back online after christmas. i also want to show you what u.s. futures are doing this morning. mixed with the dow, the nasdaq and the s&p 500 are taking fair value into account. the s&p is set to open. the nasdaq could gain some 2 points at the start of the trading session. we saw another record high for the dow and the s&p in yesterday's trading session. retailers rallying on the back of better than expected holiday shopping dey data and initial jobless claims falling more than expected. let's talk to todd horwitz. todd, good morning to you. we're seeing a continued rally in the u.s. markets. this is all about window dressing or basic fundamentals? >> good morning, carolyn.
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this is all about still free money, cheap money. there's -- the problem is there's no place to really take money. so where you go is you go with the equity markets. that is where the money goes. even though we had a slight taper, we're still putting in $7 billion a month. >> my colleague in the u.s., dominick suh, he came out with some interesting stats. he said historically, if you've had a really good year like this one with returns of plus 20%, it pays to stay in the markets. what do you want to do? do you want to stick around and help more gains? >> you know what? i believe that we are in a bubble. i think this is a legalized ponzi scheme of free money that continues to push the markets higher. so what i'm saying and what i'm telling my people is i'm not
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bringing any new money to this market. whatever money i have in the market, i'm going to let work and i will use stops to get out if the market decides that it's time to correct. but i am certainly not going to get in front of this train, as well, and try to stop it. but what we see here is a market very similar to the internet bubble in the 90s, similar to the cheap money in the '87 crash. so at some point, we're going to have some correction here. at some point we're going to have some profit taking. now, the question will be will that be an opportunity to step in and buy here? this has been the most hated rally in wall street history because nobody believes in it. just now after the rally is the mom and pop, the retail trader starting to get involved. usually that's a sign of a little concern for professional traders. when we start to see the money flow, it means it's a little bit of a problem. the other thing i am seeing is a lot of money is now shifting from the higher names, the
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higher risk names into toilet paper and toothpaste. >> but is this rally looks so precarious, so dangerous to you, at what point do you want to get out, todd? >> well, you know, what i always used to get out is i use stops to get out of my position. so i participated with some of my long-term accounts into this market and i will use stops just to get out. i'm not going to try to predict the absolute top of the market. that's a fool's game, trying to pick tops and bottoms is a fool's game. i'm just going to be very cautious, nor am i going to -- i'm not going to bring any new money into this market right here. i will let the money work. as i start to get a correction, my positions will get maxed out and i'll be sitting in cash. >> i want to get back to jeff who has joined me around the desk in the studio. you're an fx guy, not an equities guy. but if we believe the fx is going to get higher next year,
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which currencies do you want to be long? >> you want to look at currencies which behave like stocks. this year, it's been scandinavian currencies, specifically norway, sweden, we saw how they got hit when the tapering is on the cards or for new zealand, actually. australia, less so because that's more correlated to chinese cycles. so if you think chinese stock are going to take a hit. i would say four currency is, norway, sweden and sterling. >> okay. todd, i want to come back to you. we saw the ten-year treasury yields hitting 10.33% this morning. briefly, at what point will this be choking off the rally in the equity markets? do we have to hit 357%, 3.7% first? >> that's -- somewhere here, the higher rates are going to start to of course a. the truth of the matter is higher rates would benefit the
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average joe. when we look at the overall economy, 5% of the investors control 82% of the stocks. so the big public has not really participated because banks have not provided liquidity or they are not loaning money to the average joe. so higher interest rates increases the spread in which the banks can make which now brings the small business and the average joe back into the market to be able to borrow money. solo initially the shock would be we're going to see serious selling if we get 3.1%, 3.2%, 3.5% as you said, that would create an initial round of selling. but in the big scheme, that would be a help to main street versus wall street. >> todd, thank you so much for your thoughts this morning, especially the term legalized ponzi scheme. that was memorable. todd horwitz, that's it for today's show. i'm carolin roth. thank you for watching "worldwide exchange."
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ross westgate is back on monday. have a fantastic weekend.
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good morning. ta global market rally to end this year on stocks. it seems like it goes up every day. the dow turning in its 50th record high close of 2013. and if you're wondering if this trend can continue, the stats continue to be on the bull side. it's friday, december 27th, and "squawk box" begins right now.
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>> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. we've got three trading days left in the year so we're going to start things off with the markets this morning. as joe was just mentioning, the dow is now on its strongest six-day winning streak since 2010. it's up 4% during the last session. that's amazing. but the blue chips index is up nearly 20%. it is on pace to have its best year since 1996. the dow is on track for five years of consecutive gains up 87% during that period. that would make it the best increase since 2000. and the transports, the s&p and the russell 2000 closing at another set of record highs. the nasdaq ended at its highest level in 13 years. as you might expect, the volume was light. by the way, if you are worried about the nay sayers calling for correction, listen to these


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