Transcripts For CNBC Closing Bell 20140109

Lee, new jersey, where it all went wrong for new Jersey Governor Chris Christie. We have a live report from ft. Lee where that towns mayor is not very happy that the new jersey governor is making that those of you in iowa, why do you care . This is a man who is considered the front runner for the Republican National nomination for president in 2016. Is it all blowing up on him now . Were going to talk about that coming up. Ben white will join us. I want to hear what he has to say. And a scandal in the courtroom world. Alcoa hit with fines for corrupt payments totaling more than 100 million to a middle eastern country. Alcoa ceo cKlaus Kleinfeld will be here to join us. Also a ford executive knows when ford drivers are breaking the law because they track their owners with a gps. They know where theyre going, when theyre going and how fast theyre going. Ford says it does not share that data, but wouldnt Car Insurance Companies Like to know Something Like that . And wouldnt they pay dearly for that kind of information . So what other companies are tracking you . Do you know that . We have a special report on that very, very important story. And thats such an important question. Of course, the Insurance Companies have an interest, but how many people today who own a car realize that information is being tracked, that they know a lot about what youre up to. An important issue. Speaking of markets, the dow is up about 20 points at this hour. 12 points lower on the nasdaq. The s p 500 is off by about a point. Small declines across all three indexes. Here we go. Lets talk about todays Market Action in our Closing Bell Exchange today, Katy Stockton is back from btig. Its hank smith. Ben pace from deutsch bank Wealth Management. Jim lowell from Adviser Investments and our own rick santelli. Rick, youre a hired hand like kelly and i. The rest of you, youre bullish. Everybody is bullish on the panel today. Ka katy, does that worry you here . Sentiment is the Biggest Issue confronting the market from a technical standpoint. If you look at the Retail Investor sentiment polls, they show that investors are too bullish or overly bullish. I would say that their money probably isnt where their mouth is yet. The market still obviously exhibits positive momentum. Thats okay when momentum is as strong as it is. Katy, we should remember as well a lot of people would prefer to see this market pull back and continue higher, almost unchecked. Your colleague pointing out in the minutes from the federal reserves meeting yesterday, they talk about how theyre concerned about these markets, if they appear to be overheated. Perhaps in that weird way, this is good news. Well, the market does look like its in store for more of a pull back in my work. We did see an extreme shortterm overbought reading the last week of last year. I think thats already being worked off through this consolidaco consolidation phase. Thats really healthy from a longer term perspective. I dont expect the loss of shortterm momentum to be impactful over the intermediate term. Hank smith, youve been considering this a secular bull market, longterm trend here. You only think were in the middle innings of this game, right . Oh, absolutely. I think katy had it spot on. Forget about what people are saying to surveys and look at what theyre doing with their money, and the fact is this market is still underowned by institutions and underowned by individuals. And guess what . Fundamentals are starting to improve. The economy is starting to reaccelerate a little bit. Youre going to see corporate profits accelerate from this kind of midsingle digit level weve had in the last few quarters going into 2014. Valuations are reasonable. Theres no reason not to be bullish right now. You know, jim lowell, you say for the doomsayers, their tank of credibility is running on empty here. What do you mean by that . Well, we certainly have seen years and years of people forecasting not just the demise of the u. S. Economy and market but the u. S. Itself. The reality is that every year since the great recession, weve seen measurable improvement, both on lines of economic improvement but also clearly in terms of what weve been able to draw from the market in terms of absolute gains. Going ahead, i may be a little bit less optimistic about seeing accelerated Earnings Growth, but i think theres plenty of room for equities here, especially largecap multinational equities to continue to gain ground. I also in particular think were seeing a tentative turn around inside the eurozone. Thats an area were certainly focusing. You know, ben pace, weve had five good years going back to march of 09 when we hit that major bottom. Last year was just a spectacular year, the best weve had in about 18 years. The law of averages would suggest that we are due for a down year at some point. Why not this year . It could be this year. Its just that it the alternatives continue building to not be that good. 0 cash, bond market yields that are going up, which could mean anemic returns. Last year was a price earnings multiple expansion driven market. Markets up 30 when earnings were only up 5 to 6. I think this year youre going to have to see earnings follow through. You think they will . Gdp growth is going to be better in 2014 than it was in 2013. Margins should stay generally the same. Youre going to see continued share buy backs because corporations have to use that cash. I think youre going to see from 5 to 6 Earnings Growth to 8 to 9 Earnings Growth through 2014. If the markets could just match that, even if multiples dont expand, thats still great relative returns compared to cash and bonds. Rick santelli, for those folks that sat out this rally on the way up maybe hate it even now. Do you think they start to look around and say i have to dance while the musics playing . You know, i remember mr. Prince making that comment. I would ask all our guests, is it investor bullishness i need to Pay Attention to or corporate and institutional buy backs which was demonstrated it was huge last year. I think thats going to correlate very high lly with fe activity. If you look at the following chart, whether its the twos to tens, five to tens, you can see it in these twoday charts of all the maturities. The curve is flattening. Its been close to ten basis points on twos to tens. The reason i bring it up, because that movement seems to correlate with weaker stock prices because thats the treasury market in essence not only questioning taper, its questioning zero Interest Rate policy. Very quickly, globally, all you investo investors, on the screen right now, rating agencies may be weighing in on germany, portugal, the efss. I have all those times and what theyre looking at on the screen right now. Something you want to pay close attention to. Yeah, and we should point out the efsf has to do with the eurozone recovery. Jim, to that point, do these events matter . We remember 2011, 2010 when the European Crisis was spilling over here and causing all of these selloffs. Its different today. I mean, the european story, as you mentioned, is one that people believe in, they care about. What happens, though, if we get activity either on the ratings side or if france, you know, continues, for example, to underperform and that calls into question the viability of europes recovery . Well, i certainly expect to see france to continue to underperform, as i would expect any socialist economy to lag a capitalist driven one. But that said, i dont think were going to see anything like an acrosstheboard downgrade. We just saw a very good postbailout bond auction inside of ireland. That bodes well, i think, not just for ireland but likely for other members gaining strength inside of the zone. In fact, if we do see downgrades across the board, i would view that most likely as a buying opportunity, not a sell. Katy, lets bring it back home. Youre the chart watcher. What levels are you watching carefully right now . Whats your scenario for the near term here for this market . The latest break out for the s p 500 targeted about 1935. So thats a pretty impressive up move. That would be with an intermediate term horizon, maybe two to three months out. Very bullish for the first quarter, of course. On the downside, the initial support for the s p 500 is around 1800. Of course, that level holds some psychological significance. My sense is a pull back could take us a bit lower than that. I wouldnt view it as a breakdown. Where we would get certain about a pull back is if it is generating break downes on the individual stock level. Well know that if we start to see 50day moving averaging taking out things like that. So to me, as long as the breadth and momentum are preventing those kinds of breakdowns, i would generally be buying weakness and looking for oversold buy signals. There are indicators that can help you get back into the market. Thanks, gang. Nice to see you. Thanks, guys. Have a good day. So for a, its been an interesting day for the markets. Dominic chu, any stocks helping find direction here today . There are some big names and big stories out there, bill. Were going to begin with Intercept Pharmaceuticals up about 270 today. Thats not a mistake here. This after it said one of its Liver Disease drugs showed positive results in a mid stage trial. The company has a 5 billion market cap. Also, airlines moving higher as Oil Prices Continue to fall. In addition, United Continental said passenger revenue per available seat increased in december. It also expects Fourth Quarter traffic to increase by nearly 3 . Ford gaining ground after increasing its quarter cannily dividend by 25 . On the downside, theres family dollar, the discount retailer, reporting a weaker than expected quarterly profit and pretty much gave a lukewarm outlook for its current quarter. Were going to ends with another big name we talk about all the time. Its twitter. Continues its fall. Began coverage of the stock with an underperformed rating and a 32 price target. This over concerns about spending requirements. The stock is down some 60 this week alone. It is, again, about 20 off the highs that we saw earlier this past couple of months, bill. Its a mirror image of what we saw going into the end of the year. Thanks very much. Those 5 , 7 gaps up. Now were giving them all back. Something of a bell weather suddenly. Dare we call twitter a bell weather of this market. This market is a little lower today. Still kind of a waitandsee feel. Maybe theyre waiting for that jobs number to come out tomorrow morning, which well have live for you at 8 30 a. M. Eastern time. Right now the dow is down 17 points. Yeah, just about 30 hours to go, maybe, until that report. Not that were counting. But as the Housing Market heats up, should you be moving into the stocks of Home Furnishing retailers and appliance makers . Thats next. Also, alcoa shares are down today after paying nearly 400 million for bribing a middle eastern country to get business. But the ceo will be here exclusively to react to that, explain the situation. Plus, alcoa has earnings coming up at the top of the hour just after the bell rings. So stay tuned for the beginning of the earnings parade as it gets underway. Youre watching cnbc, first in business worldwide. I need proof of insurance. Thats my geico Digital Insurance id card gots all my pertinents on it and such. Works for me. Turn to the camera. Ah, actually i think my eyes might ha. Next Digital Insurance id cards. Just a tap away on the geico app. Could save you fifteen percent or more on Car Insurance. Everybody knows that. Well, did you know that when a tree falls in the forest and no ones around, it does make a sound . Ohhh. Ugh. Geico. Little help here. Everything looking good. Velocity 1,200 feet per second. [ man 2 ] your looking great to us, eagle. 2,000 feet. Still looking very good. 1,400 feet. [ male announcer ] funny thing happens when you shoot for the moon. Ahh, thats affirmative. [ male announcer ] you get there. Youre a go for landing, over. [ male announcer ] the all new cadillac cts, the 2014 motor trend car of the year. Welcome back. Will the ongoing recovery in the Housing Market help Home Furnishing and appliance stocks outperform in 2014, or is bed, bath, and beyonds disappointing report a sign these stocks are in for a tough year . Which one is it . Seema mody taking a look. Bed, bath, and beyond has been able to improve with the Housing Market. That wasnt enough. Weaker sales, higher expenses. Analysts dont believe this is a negative read for all Home Furnishing stocks. Analysts seem to favor william sonoma. Its seen consistent growth in earnings over the past three quarters thanks to an uptake in sales. Theyre expected to benefit from favorable housing trends, better merchandise, and competitive planning. Experts say the strengthening Housing Market with a pick up in Consumer Spending could translate into consumers spending more on appliances. In fact, whirlpool in its recent Earnings Report noted the strong Housing Market and a demand for replacement and discretionary purchases. You know, be forewarned. If the economic and housing recoveries take a breather for whatever reason, experts say the sales of home goods and appliance makers could be impacted. Back to you. You would think so, yes. Seema, thanks. See you later. We have about 45 minutes before the closing bell now with the dow making a little bit of a comeback at this hour. Its only down a couple of points. Well take a look at the s p, which has now turned positive. The nasdaq is the lagger today, down almost nine points. Waiting for earnings from alcoa. They also paid that settlement, settling a bribely in bahrain. Will that hurt whats been a hot stock lately . Theyre sitting at 52week highs. Just off that high today. Well look at that coming up. Huge ramp in the Fourth Quarter. Well see what happens there. Speaking of scandals i am embarrassed and humiliated by the conduct of some of the people on my team. New Jersey Governor Chris Christie firing a top aide linked to a political retribution scandal. Did todays marathon News Conference that lasted about two hours save his president ial ambitions for 2016 . Will the big wall street donors keep writing checks . Well look at it coming up. And we want to know what you think about christies apology and that long News Conference. Your thoughts on that issue, well show those coming up later on the closing bell. Stay tuned. Tdd 18003452550 trading inspires your life. 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Cause im really nervous about getting trapped. Whys that . Uh, mark . Go get help i have my reasons. Look, you dont have to feel trapped with our raise your rate cd. If our rate on this cd goes up, yours can too. Oh that sounds nice. Dont feel trapped with the ally raise your rate cd. Ally bank. Your money needs an ally. Were going to show you a picture. Thats the baseball field at ft. Lee high school in ft. Lee, new jersey. Governor Chris Christie, the governor of new jersey, is expected to land his helicopter there imminently, we are told, as he begins the process of apologizing to the people of ft. Lee, new jersey, and to its mayor for the traffic jams that were apparently caused in september when a member of christies staff instructed the members of the Port Authority to block some lanes on the George Washington bridge. The whole issue comes down to the use of public funds and public facilities for political retribution or political gain. Thats really what the u. S. Attorney in that area is looking into right now. Its a whole political drama. But it does involve a rising star in the republican party, Chris Christie, considered the front runner for the president ial nomination in 2016. Does this end those chances for him, this whole scandal . Something well get into in a while. Were still waiting for the governor to show up in ft. Lee, new jersey, to begin the apol y apology. Im sure well bring those pictures to you when it happens. You bet. So theres this scandal that you heard. More on that in a minute. Another scandal we want to talk about in Corporate America here. Thats right. In fact, a scandal in the corporate world involving alcoa, which also reports earnings today. The company paying nearly 400 million to settle a bribery scandal in the middle east. Morgan brennan following the story for us and joining us now. Thats right, kelly. News of the settlement came out this morning. Alcoa paid 384 million to settle charges from the s. E. C. And doj that a subsidiary paid more than 110 to officials in bahrain. The s. E. C. Saying alcoas subsidiary used a londonbase consultant to maintain a key source of business in that country. As a result, theyll plead guilty to one count of violating antibribery provisions of the foreign corrupt practices act. This will rank as the fourth largest settlement with the s. E. C. And doj. Were talking pretty substantial. It should be noted that Parent Company alcoa was not accused of any wrongdoing with no one named in the charges. As you mentioned, all eyes already on the aluminum producer since its reporting its earnings after the bell today. The Company Issued a press release regarding this settlement saying it will record a charge of 288 million when it reports later today. Kelly . Okay. Morgan, thank you very much. So should investors be avoiding alcoa stock, or could this create a buying opportunity . It is time for a stock brawl. Oh, boy. Lets get to john from gfi group. He said he would be a buyer. Jeff from Kkm Financial says theres too much inventory in the aluminum space for this stock to go any higher. Gentlemen, good to see you both. John, make your case. Well, i think everybodys trying to tie alcoa to the price of aluminum. I think theyve changed their Business Model over the last few years as weve come out of the great recession. I think that it is more tied to defense and aerospace right now, actually, and also to the Airline Index than it is to aluminum and the price of the metal itself. We think Going Forward, today were expecting about a dime of earnings as well as were going to see the engineered products probably drive the earnings today about 170 million. Well probably see aluminum around 80 million. That should be a nice bump up. Hopefully theyll beat those. The stock still has assured interest of 111 million shares, despite the rise from 8 to 11. They pulled back a little bit this morning, but we think Going Forward as the recovery continues, as the global healing continues, people are going to still need aluminum. Planes are going to be built. We see aluminum in cars, even in the oil and gas industry. Theyre well positioned Going Forward. Jeff, what are your concerns . Does the bribery scandal weigh here as well . Well, kelly, with all due respect to john and mr. Klaus kleinfeld, but i think the stock is about to get crushed, pun intended. We have seen a 30 move in the last three months off alcoa. Yes, it is tied to the price of aluminum. 2012, the average price of the aluminum future was 2,000 a ton. Last year in 2013, it was about 1700. So no matter how diversified they are, theyre still behold on to the price of aluminum. At the end of the day, kelly, you cannot have this type of sustainable rally, 30 in three months, way too fast, way too quick. But jeff, you will acknowledge that if you look at the backlog go ahead, john. I was going to say, if you look at the backlog of the orders and who theyre selling to, theyre selling to boeing, ford. The engineer Products Division was driving the growth. The correlation has really broken down over the last two years. I think its more tied to the Airline Index as well as the aerospace index. Ill give you that, but let me hop in for one second. Youre seeing what happened to wa walmart. They had a 24 million bribery situation. This is the fourth largest ever. I think this is a glaring red stop sign. The stock was down 15 cents as earnings approach today on that news. I think that news is already priced. My point exactly. Only down 2 . I think it goes down a lot more, breaks the 20day moving average. I dont want to join the 111 million shares thats short. I still like the stock. I think were going higher. If you want to play aluminum, place keyser. To play in here after a 30 hang on one second. Why would you recommend if you dont like aluminum because of pricing story, why would you recommend alcoas peers . Im not suggesting you be in, but if you want to be in, dont go into the stock thats up 30 . Look at the stock thats been a little bit more less volatile. We should sell our winners and buy our losers. I dont think that works on wall street anymore. All right. All right, guys. A lot to think about on that one. Appreciate it. And a lot to come. Thats right. Alcoa ceo Klaus Kleinfeld will discuss the companys earnings due after the closing bell. That will be an exclusive interview here on cnbc. Always look forward to that. The dow at this hour down about ten points after starting the year off with a couple big moving sessions. A much quieter session today. Nevertheless, the s p 500 barely positive here. The nasdaq a little bit negative. Well keep a close eye on them with about 20 minutes left to go. Meanwhile, another metal meltdown. Gold prices down more than 25 over the past year. Can that precious metal rally back in 2014 . The guru of gold has thoughts on that. Hell join us coming up next. And is all the talk about Americas Energy independence a little premature . Well hear from the head of shale oil driller magnum resources. An important story. You wont want to miss it. And as we said we were waiting for governor christies helicopter to arrive at ft. Lee high school, where he begins the process of apologizing to the citizens of ft. Lee, new jersey, for the traffic tieup that lasted four days in the month of september. He learned yesterday that one of the highlevel members of his staff had ordered the Port Authority to close lanes on the George Washington bridge, one of the most highly trafficked bridges in the world, as sort of retribution for the mayor of ft. Lee not endorsing governor christie during his Reelection Campaign this past year. In the meantime, while governor christie was giving his press conference, one of his appointees at the center of this planned engineered traffic jam pleaded the fifth with regard to certain questions that he was taking. So bill, this is one of those stories that people are salivating over. And political theater all around. The governor was in the midst of a marathon News Conference earlier today in trenton, the capital of new jersey, when he was informed that the mayor of ft. Lee, when he learned the governor planned to come to ft. Lee, would rather he not come to ft. Lee. So there was some give and take and wrangling back and forth. So well wait for that arrival there. Our scott cohn is on site. Is scott ready . Yes. Was that the governor there arriving . Do you know . Reporter he should be here shortly. He, as you saw, landed at the high school. Is he going to get a red carpet treatment from the mayor . Reporter well, its interesting. You know, in the last few minutes, theyve set up a whole bunch of barricades. Heres the governor coming to ft. Lee to apologize for blocking traffic, and he has to make sure he doesnt block a lot of traffic as he comes here to apologize. But theyve definitely theyve definitely made some room. There was a lot of feverish advanced work going on ahead of this. And it looks like now that there will be a summit of sorts here at the burrow hall of ft. Lee with the governor apologizing to the mayor who originally said dont come, hold off. It appears now that he had a change of heart. Theyre going to at least temporarily, i would think, bury the hatchet. But this investigation is going to go on with a whole lot of questions about how it is that this happened without the governors knowledge, as he claimed for about two hours down in trenton this morning. I think we want to get a commercial break out of the way. Well come back after hes landed and get more of this story. We want to get some give and take on what has been a brewing political scandal in the northeast here. As mentioned, ben white will join us as well to share his thoughtings on that coming up. Stay with us. Wn the paper co. Wn the paper co. Its a stationery and gifts store. Anything we purchase for the paper cottage goes on our ink card. So you can manage your business expenses and access them online instantly with the Game Changing app from ink. We didnt get into business to spend time managing receipts, thats why we have ink. We like being in business because we like being creative, we like interacting with people. So you have time to focus on the things you love. Ink from chase. So you can. Make it happen with fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Aflac got em. Yeah, hes clean, boss. Now listen to me, duck. I have an associate that met with, uh, an unfortunate accident. While hes been incapacitated, somebodys been paying him cash. Now, is this your doing . Aflac . Now, if i met with some such accident, would aflac pay me . Nice. This is your stop. [ male announcer ] find out what aflac can do for you and your family. Aflac . [ male announcer ]. At aflac. Com. All that glitters was not gold last year. Thats for sure. Down 30 after what had been a decadelong bull market. So far it hasnt moved much this year as well. But can it make a comeback in 2014 . And what is gold even trading on . Lets ask Dennis Gartman and greg epps, cnbc contributor from the economist. Great to have both of you with us. Dennis, well start with you. Where do you think gold goes from here . It depends on whether we want to talk about gold in dollars or gold in yen or gold in euros. Lets talk in dollars. In dollars, probably sideways, probably in the a great, good deal of excitement. If it goes anywhere, the time for being short of gold has probably passed us. The time for being long of gold is probably not yet upon us. If you made me do something in gold, id buy it, but youd have to hold a gun to my head. Then youd have to be patient for it to move is what youre saying. I think youd have to be very patient for it to move. Greg, i know you claim this is your claim. Youre not burdened by a lot of the insights of the movement of gold. We know the fed wants to reflate the economy or at least raise Inflation Expectations. You would think that would mean higher gold prices down the road. Yeah, but look at what theyre fighting against. They wouldnt be talking about trying to reflate if they werent worried inflation was going too low. If to the extent you think gold is an inflation play, its easy to explain why its down so much. Around the world n europe, where the European Central bank this morning upped their commitment to keeping rates low precisely because theyre worried about inflation as low as it is. If youre looking at the inflation rate, you worry less about Central Banks reflating and worry more about their inability to do much to get it higher. You know, greg, the time when gold really got hit and other commodities last year, was around the time Inflation Expectations were collapsing. In other words, people were suddenly going, you know what, we may have a real deflation problem presenting us. Thats when we saw gold take it on the chin. I wonder, is it different now . People f anything, are starting to think, well, maybe there will be some success in getting a little bit more inflation in the months o r years ahead. Well, i think whats really changed is that the thought of tapering has gone from just, you know, a twinkle in the eyes of bears out there to an actual reality. The fact that weve now got tapering in place has caused a repricing in most asset markets. The long bond has gone from 2 to 3 . Gold is down 25 . I think it would take it would require incremental news at the margin that the fed was either going to unwind tapering at a faster pace or stop it altogether to stop those realities. Dennis, does it trade on Inflation Expectations . Its alternated between being a risk asset at times to being an inflation hedge. So what moves gold these days . You know, bill, i think that gold has moved more by political circumstances, by problems in libya, by circumstances in the middle east. There are too many tools one can use to make bets predicated upon inflation or deflation. I think gold has lost its allure. Gold is nothing more than another currency and it trades as a cross relative to euros. It trades as a cross relative to yen. It trades as a cross relative to the kay canadian dollar. Id be curious if dennis has any thoughts on the following. If you worry that much about governments inflating the current current currency, do you turn to bitcoin . Ill let other people wiser than i or younger than i trade it. I can make no sense of bitcoin whatsoever. Does that mean it ultimately collapses . I think ultimately bitcoin goes to zero. There are just going to be other people who can come out and create another sort of bitcoin. Whats to stop anybody from doing that . But as weve been told, the market is going to remain illogical far longer than you or i can remain solvent. Other people can trade it. I shall leave it alone. Everybody read your history. Thank you, both. Always good to see you. Thank you. 25 minutes left in the trading session. The dow is down 21 points. Kind of a sideways market day. Not a lot of conviction either way. I think theyre waiting not only for the earnings from alcoa tonight but the jobs number tomorrow. Yeah, exactly. That alcoa report coming up in just about half an hours time. I am stunned by the abject stupidity that was shown here regardless of what the facts ultimately uncover. Just a very small slice of that marathon News Conference with new Jersey Governor Chris Christie a few hours ago. You saw most of it live here on cnbc. The socalled bridgegate scandal. When we come back, well get the latest from ft. Lee where the governor is expected to land there any minute now to meet with the mayor. And we want to know what you think about christies apology and the News Conference. Well read your tweets on this coming up later. Tweet us cnbcclosingbell. And after the bell, another misdeed under the microscope. Matthew martoma on trial. Eyeopening developments on this one. Thats all ahead on the closing bell. Keep it right here. If you have, we have a personalized legal solution thats right for you. With easy stepbystep guidance, were here to help you turn your dream into a reality. Start your Business Today with legalzoom. Getting the right nutrition isnt always easy. First, i want a way to help minimize my blood sugar spikes. Then, a way to support heart health. 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Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. Lets see. Blind sided, heartbroken, humiliated. Thats how new Jersey Governor Chris Christie described himself in the wake of his socalled bridgegate scandal during that marathon News Conference in trenton, new jersey, this morning. Yes, were showing you the high school where the governors helicopter is expected to land as he heads to ft. Lee, where perhaps he will meet with the mayor and apologize. For more on the governors public apology, were joined by scott cohn from ft. Lee, new jersey, where the governor is making a visit. The mayor isnt too thrilled but is expected. Reporter yes, his trip is getting ever closer to the evening rush hour, which is potentially an issue. Suffice it to say, there hasnt been this much Media Presence in ft. Lee since cnbc was located here. There are a lot of people here. As you can gather from the scene around me, theres a fair amount of advanced work that goes on in trying to not only get the governor here and do sort of a Media Opportunity here, but in the midst of whats become a national story, a fire storm over a rising political star whose aides now almost clearly closed some entrances to the worlds busiest bridge, the George Washington bridge, to exert some political influence, a vendetta against the mayor of ft. Lee, new jersey. So the governor, for about two hours this morning, at the State Capitol in trenton, said he was sorry. Lets listen to a little bit of what he said. I come out here today to apologize to the people of new jersey. I apologize to the people of ft. Lee. And i apologize to the members of the state legislature. I am embarrassed and humiliated by the conduct of some of the people on my team. Reporter he insisted he did not know in advance that this was going to happen and said he was going to come here to ft. Lee to personally apologize to the residents here and to the mayor, who originally said he didnt want the governor to come today but then had a change of heart. Heres some of what the mayor had to say. I would ask the governor ft. Lee can be granted one request. One request through all of this. We would ask that he delay his visit here today. We have some other lives that we need to resume also. Again, not disrespectful in any way. Its not designed to be. I am not shunning the governor. Its just that i just think theres so much more thats going on here. Reporter well, eventually the mayor had a change of heart, and thats led to where we are now. But theres been this whole issue of the governor trying to make a clean breast of it. His appointee at the Port Authority that runs the bridge that took the order to create some traffic problems in ft. Lee took the fifth today. Do you swear or affirm that the testimony youre about to give to be true, correct im sorry the best of your information, knowledge, and belief. I do. Thank you. You may be seated. Reporte reporter that is david wildstein, the Port Authority official who gave the order to close those entrances that the bridge. Were waiting for the governor, guys. Quite a scene here. All right, scott. Stick around. We want to talk about this. Lets bring in ayman javers, our correspondent in washington. We have ben white, reporter for politico. I saw your tweet. You didnt know there was a mayor of ft. Lee. Do now. Ayman, put this in perspecti perspective. There are going to be people in iowa saying, why in the world do we care about Chris Christie . This is a National Star on the rising political stage right now. Absolutely. We just saw some potentially damaging comments here on capitol hill from senator li lindsey graham, who said he thinks Chris Christie is too slick and he thinks voters in the south will not necessarily appreciate what christie has done here. Graham seems a little suspicious of the culture that Chris Christie created in his office where aides would feel like they had the go ahead to do this with or without the governors knowledge. So thats kind of a damaging political assessment of where Chris Christie is going into 2016 where he has been viewed as a republican who can win in a blue state like new jersey but might have national ambitions. How hes going to win over those republican primary voters in Southern States is a very big question, especially after today, bill. Ben, you know a lot of people have liked Chris Christies style, though it has been controversial at times. The tweets that we have been asking people for, sharing their opinion, are largely supportive, which i think suggest all is going it come down to a critical issue, which is he lying . Is it possible he knew about this . Hes been adamant he knew nothing. That would be devastating and deadly to his gubernatorial second term and any hopes he has for the white house, if something comes out that he knew about this. He obviously hes a good political performer. Today he put on a good performance, saying he was sorry, he didnt know about this, hes outraged. I think thats why you see people kind of rallying to his defense a little bit. People who like him like hes forthright about this stuff. Ayman touched on it a bit, theres not a lot of love for him among fellow republicans, which is problematic for him in 2016 because hes beat up some republicans as hes made himself popular in new jersey. His whole schtick is competent governance. Im the guy who can get stuff done. I dont play political game. Yet, here we are talking about the fact that two of his senior aides, one who ran his campaign, what who was his deputy chief of staff, are conducting this naked political retribution in new jersey that really hurt a lot of people that, delayed traffic, delayed first responders, and that cuts into his, you know, get anything done, have clean administration, doesnt have that, even if he didnt know anything about it. And scott, we should point out there is a legal liability here that everybody faces because it is a crime to use public facilities or Public Resources for political purposes, right . Reporter well, yes. And we know that the u. S. Attorneys office in new jersey after getting a referral from the Inspector General for the Port Authority as launched the very early stages of an inquiry into this. Basically, as they say, to see if any federal laws were implicated. Thats a long way from anybody being criminally charged here, but it certainly has gotten the feds interested and worth noting that Chris Christie was that occupied that office, was the u. S. Attorney for new jersey before he was governor. What that means i mean, the fact we have that investigation Going Forward now, theres still stuff going on the new jersey state legislature. Theres going to be stuff in washington, hearings in washington. We have months and months of possible leaks that come out of this, documents coming out of the new jersey governors office. The fact the two people he threw under the bus, what are they going to say . Ben, just real quick, is there any possible way in which this attention ultimately helps him . No, i dont think theres any way it helps him. People who like him, like him. This is not going to renowned to his benefit. It could be he handles it well and comes through this unscathed, but it looks terrible for him right now. Not one of those things where as long as they spell the name correctly. No, not in this one. Political life is long. Yeah, it can be. We have been asking what you think about this and what you think about the apology, the News Conference from Chris Christie earlier today. A lot of tweets on this issue. Keep them coming. cnbcclosingbell is the handle. Ten minutes left before closing and alcoas earnings. Art cash walked by and said theres not a lot of conviction either way. The dow is down just aleight points. Im very excited. Ken jennings, remember him, the biggest jeopardy champion ever, who later lost to ibm super computer watson. Big changes announced for watson today, even as that division has been struggling lately. Well talk to the man behind watson and get reaction from his former foe ken jennings. The only bigger brain i know of than kelly evans. She keeps you on your toes. You wouldnt have it any other way. But your erectile dysfunction it could be a question of blood flow. 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Ask your doctor about experiencing cialis for daily use and a free 30tablet trial. It took a lot of juggling to keep it all together. K. For some lowincome families, having Broadband Internet is a faraway dream. So we created internet essentials, americas largest lowcost internet adoption program. Having the internet at home means she has to go no further than the Kitchen Table to do her homework. Now, more than one million americans have been connected at home. It makes it so much better to do homework, when youre at home. Welcome to whats next. Comcastnbcuniversal. Im happy with my purchase. Its the truth. When youre ready to buy a car, save time, save money, and never overpay. Visit truecar. Com about seven minutes left in the trading session here. The dow just turned positive moments ago. First time, i think, today. Its been a down day otherwise. Now kind of hovering near the unchanged level here with the nasdaq the lagger today, down about 8. 5 points. Joining me, oliver porsche. Here come the earnings now. Thats right. Thats going to be the big thing this quarter. I think weve had all we can take from economic news. Job reports are going to matter, but its going to be earnings. What were paying particular attention to is topline revenue. Which has been anemic. But youre seeing additional spending from companies. More importantly than what has been done, its what are they going to talk about in the Conference Calls . Whats the forwardlooking statements . Thats really what we think is going to drive markets. Well find out over the next couple weeks. Were paying particular attention to the big names, the ciscos, the apples, the ges. Thats whats going to drive markets. Weve been highlighting the facts that so Many Companies have been warning preannouncement time, companies saying you know, theyre lowering expectations right now. You think theyre playing games . I think theyre playing games. First of all, if you look at the statistical history over the last three years, theres been about the same amount of negative prewarnings or cautious statements. I think its all part of the regulatory environment. If you overpromise and underdeliver, youre potentially on the hook if youre a cfo or ceo. You want to try to surprise on the upside. But again, its going to come down to are the top line growing and whats it going to look like Going Forward. First quarter is probably going to be positive but rough for investors with a lot of volatility. All right. I keep hearing that. More volatility in 2014. I dont think weve had two consecutive up or down days yet. Thats for sure. Thank you, oliver. Always good to see you. Well take a break, come back with the closing countdown for this thursday. Then alcoa gets ready to kick off the earnings season for us. Well be talking with ceo Klaus Kleinfeld, who will break down the aluminum giants results for us and talk about that bribery settlement involving a middle east country. Youre watching cnbc, first in business worldwide. Before you settle for another ordinary mattress, isnt it time you discovered the sleep number bed . The only bed clinically proven to relieve back pain and improve sleep quality. And right now, its our lowest prices of the season. Save 300 to 800 on our newest innovations. Plus, 18month special financing on all sleep number beds. Only at a sleep number store, where queen mattresses start at just 699. 99. Sleep number. Comfort individualized. Over the pizza place on Chestnut Street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i95. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment became big business overnight . Like, really big. Then expanded . Or their new product tanked . Or not . What if they embrace new technology instead . Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From td ameritrade. About 2 1 2 minutes left. Weve been seeing this trading pattern a lot lately. Kind of a sideways move during the day. Not a lot of conviction. Not a lot of volatility, even though we keep hearing how well see more volatility in 2014. Getting back to almost the unchanged level. The dow is losing a little ground as we head toward the close. Expectations, thats what its all about. Tomorrow morning, the jobs number will be out for december. Expectations hovering around 200,000 jobs. Well have that for you at 8 30 a. M. Eastern time. But more imminently are the numbers from alcoa coming out at the top of the hour. That stock has been down today. Its down 1. 2 right now. Theyre looking for earnings of 6 cents a share on 5. 34 billion. Although, whispernumber. Com says look for 7 cents a share. You heard our bull say he could see a dime, 10 cents a share, coming from alcoa. The ceo will be joining us in a little bit to talk about that. Alcoa was a monster at the end of the quarter. 8 three months ago. Look at it now. Aluminum sales will be better in 2014. This is why we really want to hear what he has to say. There are expectations that Global Markets are going to slowly improve in 2014. Heres a guy who would know something about demand for that, particularly in areas like china. Weve been talking about how weak china has been this year. One of the real lose source far on the year. Its the emerging market. Etfs down about 6 . Steel stocks are down. Coal stocks are down. This is all on concerns about china. And today weve got another loser so far this year. Thats some of the retail names. My point today, 50 off sales, and they still couldnt get people in stores here. Thats really a disappointment. Weve been talking about the fact the internet is really finally starting to notably eat into sales in some of the stores. We have some winners. Pharmaceuticals have been winners. Biotechs are up 7 so far this year. And weve seen a couple of other things. Big banks also are winners so far this year. Very good. Thanks, bob. See you later. Thatll do it, first hour. Now things will get interesting. We get the earnings from alcoa, Klaus Kleinfeld talking with kelly about that. And the settlement on bribery charges in bahrain. All coming up on the second hour of the closing bell with kelly evans and company. Ill see you tomorrow. And welcome to the closing bell. Im kelly evans on this thursday, where were unofficially kicking off earnings season in just moments. But first, lets begin with a look at how we finished. A seesaw day on wall street. Across the major indexes, the dow and thats nasdaq in the red while the s p is trying to eke out a slight positive. Wont be enough on whats been a down start to the year. The nasdaq giving up almost ten points today. S p 500 just ever so slightly positive. Lets get straight to it with todays panel. Joining me now, michelle carusocabrera, mike santoli, and Chris Johnson from the jk investment group. Joining us for more on todays market as well, fast money contributor brian kelly. Thank you so much for being here. Michael, what did we learn today . I think we came into the year with pentup selling. We couldnt get any real, forceful buying. It reminds me a little bit of the beginning of december when everyone came in saying a seasonal slam dunk, were always up in december when youre up for the year. I feel like we have to just adjust. Right now, nothing too alarming to be honest. Just a sideways slog. A sideways slog. Gary, what do you think . Brian, im sorry. Brian, brian, brian. What do you think . I think the market is really trying to reprice whats going on here. We came in saying we were all greedy about how good the economy is going to be this things are looking much better. Now that things are looking more fearful, it could be stronger than expected, which means a faster pace of taper. Look whats going on in the emerging markets. Brazil just got absolutely crushed. China has been down. People are concerned about that right now. I think thats going to keep them people on the sidelines until you start to see that momentum slide up again. And Chris Johnson, heres an interesting one. The price of oil, at least the u. S. Standard, has fallen by almost 10 in just the last couple of weeks. Today that was great news for the airlines who have been having a problem with cancellations and weather over the last couple of days. But we saw some big moves in these components. Do you think this is a lasting trend to keep an eye on for the year . The Companies Directly linked with it. Keep in mind, earnings now for the energy sector, thats onest in terms of expectations. It was actually just took the place of the lowest. Materials was the lowest. I think were seeing improvements year. Expectations on the earnings front, very low right now. I think thats going to help them, even though we have those declining oil prices. What do you think about alcoa . How important for the market . You know, i think theyre very important. Materials, again, i mentioned, those were some low expectations. I think this is one of those opportunity spots for the market. When you look at technology retail, consumer discretion, some of those areas that have been high flyers, i think well see selling there. Look at these basic material companies. Its going to be a showme state type of situation. Michelle, the pressure on retailers, at least, is pretty clear. It seems one headline after the other, especially the guys who dont have an online presence. Forget about it. Absolutely. Were discovering thats the first weigh station for people before theyre going to go in and buy. We saw that with the numbers reported earlier. The other thing i would raise is when you talk about the decline in the price of oil, the tenyear yield not going above 3 very sharply, considering the Employment Data weve gotten. Is the market telling us theyre worried that the economy still isnt Strong Enough, hasnt reached enough velocity, even with the taper on. Or the question of whether its baked in. Theres a lot of people on the sidelines. You have a jobs report tomorrow where expectations have been building just in the last 48 hours. We saw, if you look at dow jones consensus estimates of economists, go from 191,000 jobs created in december to 200. Stronger, private sector report. Better numbers on initial jobless numbers tomorrow. When you have five losses for stocks and six trading days of the year, youre sort of waiting for a direction to see where it will go. My original point, if oil is falling, the tenyear yield isnt rising, is the market telling you the economy still isnt Strong Enough yet in light of the taper . And we got the numbers from alcoa. Well get to this more in just a second. The early headline here appears to be a 4 cent xitems earnings per share. Thats short of the estimate, which was 6 cents, and in fact had come down in the last couple of trading sessions. Shares appear to be taking it negatively. At least in the moments just after that number hitting. Their revenue did beat about 5. 6 billion, versus 5. 34 billion. Down almost 2 . Mike, 4 cents. We heard people talking at least 6 when they were liking alcoa here. Definitely dangerous to extrapolate much of anything for the earnings season. For alcoa, it was sort of a missed opportunity because people did have it teed up to do better here. I think its in part because the stock had outperformed toward the end of the year. A lot of what i call the dirty industrials started to get money rotating into them out of the clean industrials, the big multinationals that everybody loves. And alcoa in particular, an interesting one because its got this challenge, of course, of the aluminum price being weak by historical standards, but it was starting to show it was divorcing from that a little bit and that its ends markets were important. This is what we need to talk about. Aerospace, autos, to what extent is this quarter reflective of that . And what about the bribery charges in bahrain . Those are all big questions. The other thing i would highlight is now were finally talking about tapering, for real, this is the first earnings season where maybe earnings finally regain the place that they used to have, right. Earnings didnt matter for so long because it was all about the fed. Now i think you start to see outsized reactions from the market to Earnings Reports in a way we havent seen in a very long time. And maybe economic reports. Its going to be an interesting 24 hours, people. Buckle up. Brian kelly, well let you get ready for fast money. Thank you so much for flying in. We want to bring in mad moneys jim cramer for his take on whats happening in this market, whats happening at alcoa. Jim, great to see you. Thank you so much. What do you want to start off with here . Do you want to talk about alcoa or the backdrop . Lets talk about the backdrop for a moment. There are some signs of which well have to deal with alcoa in the same light. Theres weakness in china. Its just pronounced and really starting to bother me. We obvious some of the retailers we saw today were pretty good at execution. Im concerned that things have cooled a little bit. Thats not what anyone else is thinking. I think most people worry that the market is overheating. Im not seeing that. Jim, how quickly have we turned from the possible speedup scare to a slowdown scare . I look at copper, kelly. Seems to be going down every day. I like at freight. How much it costs to ship goods by the day. Thats been very, very weak. When oil goes down this much, i know we want to say its positive because oil is a tax on the american people, but that shouldnt be happening like this. But jim, the airlines were loving it today. This is an important market. I cant quite connect the dots. Why would they responding positively if this is a demand worry . Thats what im saying. I like to connect the dots. You and i were connecting the dots. Suddenly im having trouble connecting the dots. The airlines, its an old goply now. They can seem to do no wrong. I liked when there were fewer clouds. We had bluer skies coming into the year. I see clouds now. Thats all. But ironically, economic reports have been good this year. Do you think this is an outside the u. S. Story, or is this a u. S. Story . I think the outside the u. S. Story is very crucial here because you know that with that chinese stock market, the worst of the major ones we follow, with the baltic dry freight down, with the possibility and well talk with Klaus Kleinfeld of a commodities downturn after what we thought was going to be a spike, we know the u. S. Is really the driver. We know that. If were going to get the whole world going that helps those International Stocks out and if we lose the beth bad baths and family dollars, i cant be as s sanguine as i was going into the first quarter. This is interesting. Jim, stay right there. Alcoa releasing earnings a moment ago. 4 cents a little shy of what the street was expecting. Joining us in an exclusive, alcoa ceo Klaus Kleinfeld. Thank you for being here. We really appreciate it. Hello, kelly. Held l hello, jim. We toptd begin with the news this morning. Settling bribery charges in bahrain, paying nearly 400 million in fines for reportedly overcharging a company over the years. What is going on with that . Well, look, we welcome that we have been able to reach a settlement on this legacy legal matter and put this thing behind us. We have been able to negotiate it in such a way that it puts less of a Financial Stress on the company. Its getting paid over four years. Thats good. We can put this behind us. We can clear the path here. And we can focus on what really matters, and that is the change, the transformation that were undergoing in the company. What youre seeing reflected in the earnings is that we are building up our value. We are growing it. It now makes up 57 of our revenues and 80 of our segment profits. Thats what were going after. At the same time, you see that if you look at the whole year, profitability is up by 36 , excludeing special items, although weve been facing head winds on the metal side. 4 down. Thats whats going on if you want to see the headlines. Before we get to the fundamenta fundamentals, before alcoa, you were at siemens. Is this much more endemic in the corporate world than we realize . Well, look, i think lets focus on what we have been doing here. We are very welcoming that we could settle this matter. As i said, this has been a legacy, legal matter. It came to our attention with allegations in 2008. Its been a contractual agreement going on for a long time. We put outside firms behind it, cooperated with the institutions. This is also what you see in the statements from the s. E. C. And doj. For us, we welcome the resolution, and were moving forward to concentrate on those things that really matter, transforming the company, and coming down on the cost curve. And its working. Can you tell us what affect that charge, that settlement had on earnings . In other words, you guys beat the street handily when it came to revenue in the quarter. Earnings piece of it was shy. Does that reflect this particular settlement, or was there Something Else going on there . Well, if you take all of this out, the operational side, what we see is we have record performance on our downstream business. In the Fourth Quarter as well as in the whole year. We see that our upstream business, which has been under a real stress through a falling metal price, 4 over the course of the whole year, has been holding up relatively nicely and has had nine consecutive quarters of improvement over improvement. We see in the quarter 1 billion of productivity. Weve come down four days again on the capital which generated 240 million in cash alone. Those things only happen if you have a broadbased movement inside of the company. Everybody of the 60,000 alcoans really working it. We have a system in which we track it. Currently we have about 12,000 ideas and actions in that system for 2014. Its growing all the time. Last year for the last year to get to the 1. 1 billion of productivity, roughly 17,000 actions. Is is what really matters, and this is whats reflected in the improvements that weve been able to make. 36 improvement on the profitability as well as against the 4 drop of the metal price. For a key metric, should we be looking at Free Cash Flow in that earnings per share . Also, the amount of money you have in the bank, which is really the way i like to measure a company, which seems to be pretty darn strong. Thats right, jim. You have looked at alcoa for a long time. Frankly, we have been focusing very strongly in the downturn on cash. When you look at our cash performance and the balance sheet, you do see its been the lowest net since 2006. We have 1. 4 billion of Free Cash Flow there. So this is all very, very good. On top of it, we did not forget about our future. We continue to invest in large future opportunities. Automotive being one, right. Thats a great one thats coming up there. We continue to invest in aerospace with aluminum lithium, new products coming out there. And we continue to invest in bringing down our commodity business on the cost curve through restructuring, reducing the footprint and building our saudi joint venture, which also brings us down on the cost because its the lowest cost on this planet the way its set up. Lots going on, klaus. Thanks so much for being here with us to walk us through it. We appreciate your time. Jim, appreciate it as well. Youre inviting klaus back on your show at 6 00. Is that right . For the drill down. Klaus, thank you for saying i know the company. Were going to know about the different divisions later on and figure out what the world looks like. Its great insight. Such an important issue. Thank you to you both. In the meantime, gap shares are rallying in afterhours trade. We have an update. Kelly, real quick here. Basically were getting gap stamstore sales for december. Thats big holiday season. For gap, november and december, theyre giving us a combined holiday sales number growth up 1 . Thats all of gap. Net sales growth, up 2 . Probably more important and what the street is paying attention to is the company is comfortable delivering in the high end of the eps range that they previously gave, although it is short of the streets consensus. Thats probably what investors are happy to hear about. So maybe one retailer that has a little bit of good news for us today. Kelly, back to you. Yes, it has been a not crowded field. Thats for sure. Thank you. All the makings of a juicy whitecollar crime novel. Generating more than 270 million in profit. The latest on the Insider Trading trial of former Portfolio Manager Matthew Martoma is up next. Well go live to the courthouse. Later i am who i am, but im not a bully. We want your feedback. New Jersey Governor Chris Christies apology over the bridge scandal. Tweet us cnbcclosingbell. Youre watching cnbc, first in business worldwide. A good deal or not. Looking at truecar. Com. Theres no buyers remorse. Save time, save money, and never overpay. Visit truecar. Com welcome back. So much happening today. New Jersey Governor Chris Christie has landed in ft. Lee, new jersey, expected to apologize to the mayor over the bridgegate scandal. Lets get out to our scott cohn, whos on the scene in ft. Lee. What can you tell us . Reporter the governor is inside. Has been for about ten minutes meeting with the mayor of ft. Lee. Presumably conveying his apologies. He arrived here, as i said, about ten minutes ago, looking very grim faced. They have blocked off a little bit of traffic in downtown ft. Lee, but not so much as to cause yet another disruption here. We expect hell come out shortly. Dont expect hes going to add to his twohour News Conference from this morning, but he felt it was important to come here and apologize personally. Hes doing just that. All right, scott. Well keep an eye on it. Now, jury selection nearly complete in the first big Insider Trading trial of the year. Prosecutors allege former Hedge Fund Manager Matthew Martoma netted the profit from inside information. He maintains his innocence. Kate kelly is here with the latest. What a story. It really is. Picking jurors in this case was very slow going, but they have a panel of 12. Interestingly, its a welleducated, middleaged mix of both race and gender. Among them, an accountant, insurance underwriter and nyu film professor. Those jurors will gather tomorrow to hear opening arguments in the case, which is said by prosecutors to be the largest Insider Trading instance ever in dollar terms. Martoma, whos 39, stands accused of three separate counts in the trading of two pharmaceutical stocks during the summer of 2008 when he allegedly received advanced access to nonpublic information about a drug trial that sunk those stocks. His former trader at s. A. C. Capital and the doctor who allegedly tipped him off to the trials results are both expected to take the stand in this case. Described as an intelligent and disciplined money manager who had a deep knowledge of those drug stocks that he traded, martoma would not fesly appear to be the classic getrichquick type. Hes refuse ed to cooperate wit the government. Hes going ahead and facing charges of up to 45 years in jail. And today there was another bomb shell. Word that martoma was expelled from Harvard Law School for faking a transcript. Lawyers say that probably wont be introduced as evidence to the jury, unless martoma takes the stand. Thats whats unusual about this case. This would connect directly back to steven cohen. There was a crucial 20minute phone call before these trades at issue were made. Ostensibly, cohen gave permission to make the trades. We dont know what questions he asked, if any, about the nature of how martoma had his hunch or why he was motivated to do this. Hes said in a deposition reportedly that he does not recall. So really, its martoma and cohen who know about it and not many else. After that fivecount guilty verdict against michael steinberg, you have to wonder how martoma thinks his chances are right now. Very true. His wife rosemary has been there every day. He hasnt had extended family in the court. His wife has faithfully been by his side. She was very involved in choosing the jury. She was giving advice and making selections. Thats very veinteresting. More people across the country after watching that frontline documentary will know whats going on in all of this. Kate, thank you very much. Sears now under a lot of pressure at this hour. Theres more breaking news in the retail space. Courtney reagan brings us up to speed. Im not done with retail yet today. Take a look at shares of sears. Really falling after hours. The Company Providing an update for the quarter. Quarter to date, Comparable Store sales for the total company down 7. 4 . Again, thats quarter to date. The company now guiding for the quarter a loss between 2. 01 and 2. 98. Only two analysts have estimates out for this, but thats much, much worse than what those who analysts were forecasting. The fullyear guidance for Sears Holdings is now a loss of 7. 64 to 8. 61. That is the range the company is providing at this time in their update. Kelly . And the shares, courtney, are responding with a 15 move lower after hours. Thank you so much for the details on that one. The latest after the bell movers coming up next. Plus, Magnum Hunter Resources on a tear as the Energy Producer today, surging and nearly doubling levels from a year ago. The ceo will speak with me exclusively about whats heating up that stock. So much happening. Dont touch that remote. Ay a lot about the most tracktested is ever. But the truth is. We dont have to. The experts have spoken. Now its your move. Now its your move. So i can reach ally bank 24 7, but there ar24 7. Branches . Im sorry, im just really reluctant to try new things. Really . Whats wrong with trying new things . Look mommys new vacuum cat screech you feel that in your muscles . I do. Drink water. Its a long story. Well, not having branches lets us give you great rates and service. Id like that. A new way to bank. A better way to save. Ally bank. Your money needs an ally. [ male announcer ] with nearly 7 million investors. Oh hey, neill, how are you . [ male announcer ]. Youd expect us to have a highly skilled call center. Kevin, neill holleys on line one. Ok, great. [ male announcer ] and we do. Its how edward jones makes sense of investing. Isnt it time you discovered the sleep number bed . The only bed clinically proven to relieve back pain and improve sleep quality. And right now, its our lowest prices of the season. Save 300 to 800 on our newest innovations. Plus, 18month special financing on all sleep number beds. Only at a sleep number store, where queen mattresses start at just 699. 99. Sleep number. Comfort individualized. Afghanistan, in 2009. On the u. S. S. Saratoga in 1982. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection. And because usaas 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. Welcome back. Tons of action after the closing bell today on wall street. Dominic chu, round this up for us. What are the movers and shakers . Courtney just told you whats happening with sears. Theres others out there. Lets start with alcoa. Shares down 3 , 4 after trading. They missed expectations of 6 cents a share. Sales came in better. Alcoa does see global aluminum demand growing 7 . Then theres price smart, heading lower in the after hours session. Earnings fell short of expectations on sales that were in line. Gap stores also posting solid gains here. It reported that Comp Store Sales in the november and december Holiday Shopping season grew by 1 . Gap also reaffirms its fullyear Profit Guidance and felt comfortable delivering results at the high end of its prior forecast between 257 to 2. 65 a share. Well cap it off with one of the bigger upside movers in energy in the regular session today. Shares of oil and gas, Magnum Hunter Resources, bucking the trend higher by around 5 . The company is focused on developing assets in the u. S. And canada and has a big focus in shale plays. That move today higher despite the drop in crude oil prices. Back over to you. All right. Thank you. On that note, speaking of which, that was just today. Magnum hunter stock actually up almost 100 in the last six months while oil has seen a loss of about 12 . Investors pretty thrilled with the disconnect, but why is it happening . In a cnbc exclusive, im now joined by gary evans, no relation. Hes the chairman and ceo at Magnum Hunter Resources. Thank you so much for being here. Well, thank you for having me. What have you done to decouple your share price from the oil price . And frankly, some of the pressure natural gas has been under lately as well. Well, you know, natural gas actually with this cold weather weve had over the last 60 days is up about a buck in mcf. Our company today is about 45 oil, 55 natural gas. But were big believers in a couple plays that are very active up in appalachia, being the marcellus and utica. I think we built a large acreage position thats turning out to be in the heart of the play. Thats what got our investors excited about the company. What crude oil price are you ph. Modeling to make those work . What happens if oil falls below 90 a barrel . Most of our crude oil comes out of the balkan. We have about 7,000 barrels a day. It works pretty well down to about 75, 80 a barrel. We do a lot of commodity hedging, which locks in those prices. Were pretty well locked in 2014 at about 93 a barrel. So im not too worried about it this year. Were actually in the beginning of divesting some of those assets. Im very bullish on our Gas Properties over in the marcellus and utica. Im curious as well why youre diversifying away from the balkan towards the marcellus and utica more broadly. It all boils down to rate of return. My job is deploy capital in those properties that generate the highest rate of return. Up in the appalachia bassibasin were getting on some properties over 100 ir in drilling a well. Typical returns are 30 , 40 . Thats very good for most companies. If youve got a large position like we do, then you can concentrate in an area that generates those kind of returns. Thats what will drive the share price. Are you worried about u. S. Exhausting its own resources first if some of those returns are falling the way they have and appalachia, i would guess over time, would fall to a similar rate . Ive been in this business 30 years, and the last five years its been unbelievable what this industrys been able to do for this country with the advent of horizontal drilling and fracture stimulation technology. Were able to find oil and gas hydrocarbons and shale plays we never dreamed possible just five years ago. So we truly are going to be able to make this Country Energy independent. Well be able to not only export natural gas with the l g facilities being commissioned, but this country will be in a position to export crude oil in our lifetime. You know that would make us more dependent on the Global Supply and demand structure. So that means consumers here might pay a higher price if it moves up towards the price that theyre paying for oil in other parts of the world. In reality, were dependent already on whats going on around the world. I mean, crude oil prices are dictated by opec and demand by thirdworld countries that hasnt really anything to do with the u. S. Now, natural gas is a different story. North American Natural Gas is a captive commodity here in the United States and canada. But with l g, we should be shipping this worldwide. I mean, its crazy for u. S. Companies to be selling their gas for 3, 4 at mcf and the chinese and japanese be paying 12. So the australians, theyre a good seven years ahead of us with all the facilities, and theyre able to export natural gas 6, 7 at mcf. We should be able to do the same. The beauty of finding these hydrocarbons like we have, weve been able to attract all these Chemical Companies and Fertilizer Companies back to the u. S. Because they have a good, longterm supply which drives unemployment down, which drives new business all over the country. Were seeing just anned advent an allnew coal generation being built. All this is very good for our country. Its a fascinating story. Thank you so much for sharing some of the details with us. Well be watching for certain this year as well. Gary evans joining me this afternoon. We know everyone who breaks the law. We know when youre doing it. Those are words not of an fbi agent but they came from a ford motor executive. It was directed at people who drive ford cars. They record your location and speed every time you drive. And up next, what would Car Insurance companies be willing to pay for that kind of information . Keep it right ehere. Well try to find out. Aflac aflac got em. Yeah, hes clean, boss. Now listen to me, duck. I have an associate that met with, uh, an unfortunate accident. While hes been incapacitated, somebodys been paying him cash. Now, is this your doing . Aflac . Now, if i met with some such accident, would aflac pay me . Nice. This is your stop. [ male announcer ] find out what aflac can do for you and your family. Aflac . [ male announcer ]. At aflac. Com. Female announcer its time to make room female announcer for the new mattress models during sleep trains huge year end Clearance Sale. Get beautyrest, posturepedic, even tempurpedic mattress sets, at low clearance prices. Save even more on floor samples, demonstrators and closeout inventory. Plus, free sameday delivery, set up and removal of your old set. Why wait for the new models . Sleep trains year end Clearance Sale is on now. Superior service, best selection, lowest price, guaranteed your ticket to a better nights sleep welcome back. Did you know your carmaker is watching you . Heres what a ford executive told his audience yesterday. Quote, we know everyone who breaks the law, we know when youre doing it, we have gps in your car so we know what youre doing. By the way, we dont supply that data to anyone. Most people focus on the first part of that. However, the executives saying they dont sell the data, but nothing would legally stop them from doing it in the future. Wouldnt that information be value tobl the Car Insurance industry . Brian sullivan is editor and publisher of Auto Insurance report. Brian, thanks for being here. Thank you, kelly. Pleasure to be here. Was this news to you . Absolutely. The Car Insurance business has been in an arms race to get information about drivers for over a century. This is probably the best piece of information they could ever get. Where a car is driven, when its driven, how its driven. Theyd give anything for it. What i mean is progressive, for example, already allows for a voluntary program to use a device on your car, it will track your driving. Was it news to you that a company like ford is able right now to track and actually is collecting all of this data . Absolutely not. Its not news, and it shouldnt be news to anyone. Anyone whos carrying a modern telephone i mean, if you have an iphone or android, that information is being tracked and collected. The question is not so much is it being tracked and collected, its whos using it and how. Well, let me bring the panel in on this, brian. I wonder, to you guys, does anyone here drive a ford, by the way . No. No. Chris, what about you . Does this surprise you that your car company may be tracking not a bit. So you as a driver expect theres a way in which theyre following and aware of your behavior . Sure. I mean, i think this is one of those things everybodys talked about, how the rental car agencies have done similar things. I use the progressive snapshot about nine months ago and had no problem with somebody collecting that information. It was a great deterrent for my teenage drivers when they heard that little beep once in a while. I think this is, as brian said, this has got to be an expectation of technology. Whether its social media, whether its just gps. Take for example facebook. There was news today in the wall street journal that lenders are now looking at facebook profiles to gauge credit worthiness. Think about the way he said it. What was his first line . We know when youre breaking the law. Right . What did he hone right in on, right . What all the privacy freaks are worried about. We do want to say that executive has come out since and said, quote, i definitely left the wrong impression with my comments, and i regret it. Its important to me our customers know where we stand and that we do not track them. That was freudian. He said it for a reason. Thats exactly where everybody focuses on. The ability to do exactly that. We should point out, its not just ford. The Government Accountability office has looked into this. They looked at ten different car makers. Everybody does this. You have the gps for a reason. I always wonder with the size passes that we have here in the tristate area, that tracks you. Youre tracked everywhere you go. I can already tell you in the u. K. , if you speed and go too quickly from one destination to another, you might find out a month later when you get the ticket in the mail and you didnt even know at the time that you were breaking the law. Red light cameras all over the United States are having the same impact. People are getting their picture taken as they run through a red light. I think its really important to understand that we all voluntarily choose it. We turn on our cell phones to say, please, track me so you can tell me where im going in my car and things like that. Im not sure thats the case. Certainly its changed today thanks to the Edward Snowden and the nsa and our awareness. But most people when they buy a cell phone or buy a car are not understanding that theyre giving implicit permission for their behavior to be tracked. Well, i think when people sign up for things such as a Supermarket Club card, theyre giving information about what they buy, when they buy, what time of day they buy, what kind of cookies they like. Its part of our society. Were surrendering a lot of that privacy. Whether its good or bad is another debate. But its an important debate. There will be a moment when someone takes data and uses it in a way that is not acceptable, that is a violation of rights. When that happens, then there will be an uprising. At this point, it hasnt happened. Thats the problem. You also have to remember, nobody reads the end user agreements that come up on the screen when is were either downloading an app. And thats what it comes down to. Its all in that text. We all just pass it and go to the convenience of the technology. Im waiting for ford to come out with a product that will allow the parents to track the kids when theyre driving the car. Thats where they can make some money and make people appreciate the technology all over again. But those products have already been offered. We have to go, but i think there has to be a way for people to opt out if they dont want to partake in this kind of tracking. Very hard to do. I know. Thank you, brian. Pull the fuse from your gps in your car. Yeah. But that wont even maybe thatll do it. Anyway, the retail news keeps going. Courtney reagan has more for us. What can you tell us . Another surprising one but perhaps a surprise to the upside. Take a look at after Hours Movement in shares of ab cont l abercrombie fitch. The company says because of their performances exceeding expectatio expectations, theyre raising their fullyear guidance from 1. 55 to 1. 65. Mike jeffries, the company ceo, says hes proud of what the company has done in exceeding expectations and lowering of costs. Unbelievable stuff here in the retailers after hours. A mirror image of the last one. This popping 15 , we should say, after hours. Thank you, courtney. Now, when is a super computer something more super than that . A Top Executive from ibms wattson group will answer those questions next. Why ibm thinks its billiondollar investment in the division will help its bottom line, even though so far it hasnt generated the revenue they hoped. Plus, the jeopardy winner that lost to watson, ken jennings, will take the seat here at the closing bell. Thats coming up. Life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. Theres nothing like being your own boss and my customers are really liking your flat rate shipping. Fedex one rate. Really makes my life easier. Maybe a promotion is in order. Good news. I got a new title. And a raise . Management couldnt make that happen. [ male announcer ] introducing fedex one rate. Simple, flat rate shipping with the reliability of fedex. Welcome back. Ibm making a big push in the cloud software, announcing a billiondollar investment into watson group. Will this move help make watson the next big revenue generator . Something the unit hasnt delivered on so far. Joining me now is the Senior Vice President of the ibm watson group. Welcome. Thank you for being here. Thank you, kelly. You guys are doubling down on watson, tripling, we could say. You say its not about watson being a quote unquote super computer. This is a new platform. How revolutionary do you see this being . We see this idea of watson as the next era of computing. This is the beginning of the next one. Watson is the first and most unique in the industry. So what were those two prior eras . Tabulating machines, things that counted. And programmable computers. The things youre used to using every day. Now its about machines that are effectively thinking . Theyre learning. Theyre learning. Theyre learning and have the ability for you to answer questions. So watson now, this is effectively technology or a way of computing that you guys are, what, making available to all sorts of potential clients and buyers . We see three big areas. One is around industries that are going to completely be transformed. Helping make sense of medicine. When you deal with the medical information that exists, the new research coming out, gene ohmic information coming out, its all about making sense of the data, helping the doctor diagnose problems faster. Weve been working with organizations to help Start Building nextgeneration treatments for cancer. Weve had 25 of the worlds best oncologists working with us on watson over the years. Weve made tremendous progress. We had ceo Craig Thompson on stage with us earlier today talking about the progress weve made. The worlds best assistant is how one person put it when it comes to thinking about the role watson can play. This is about computers and humans working together to solve problems that neither can do alone. You mentioned health care. What about Financial Services . Dps bank out of singapore, you now have a relationship. This morning we signed a contract with dbs in singapore to work on the next generation of banking and Wealth Management. What can that do . Theres a lot of Human Capital involved in this industry, a lot of technology. Where does watson fit in . Think about the information that exists in the Wealth Management area. How do you advise clients best . You have a machine that eats information for lunch, takes this information and allows you to ask questions and advise clients in a faster way. This is a platform youre opening up. You ultimately need developers the same way they might have for apples iphone or something to come in, write code for this and make it more accessible and useful. Youd expect ibm to be in the transformation space. In order to get to the full potential, were going to open up an ecosystem. Were earmarking 100 million for investment into the ecosystem to help startups get started in cognitive computing. How big is this business going to be in five years . This is a key part of our 2015 road map. As weve started to build this, we said we were going to go from 10 billion to 20 billion. This is a key part of that. Thank you for being here. Thank you. Really appreciate it. Good luck. Thank you. Now joining me is the man who went head to head with the famous watson. He lost, though. Ken jennings was the biggest jeopardy winner of all time. Hes also author of because i said so. Well get to him in just one moment. Taking the mic right now sorry, not taking the mic, potentially making comments here. New Jersey Governor Chris Christie arriving in ft. Lee, new jersey. Were just going to watch for a moment. Did he accept your apology, governor . All right, just to reiterate, this is the cnbc camera trying to get shots of new Jersey Governor Chris Christie, whos arriving in ft. Lee, new jersey. Did you apologize to the people of ft. Lee . Of course, i did that this afternoon. Im here to apologize to the people of ft. Lee. A terrible thing. Were going to work to regain your trust. What did the mayor say . Are you talking to the residents . Governor . He didnt say a word to me. All right. Chris christie not making too many comments to press as he arrive there is. He did have a twohour press conference earlier today addressing concerns about key aides who may have used their influence with regard to the George Washington bridge, shutting it down, to score political points. Hes leaving the office of the mayor of ft. Lee, new jersey, who said dont come and then changed his mind and said he would, in fact, say hello or welcome the governors apology, which he has apparently just delivered there in ft. Lee. Thats the latest on that situation. Now we want to get to ken jennings. Hes the biggest jeopardy winner of all time. Also author of because i said so. Its great to have you here. Welcome. Thanks, kelly. Pleasure to be here. So we were just talking about the potential for watson to transform computing, to be the next big thing. Do you believe in watson . Im a big believer in watson. Nobodys seen watson first hand like me. This is going to be the future. When watson answers a questions or makes a decision, its considering billions of facts. Thats something the human brain, as we saw on jeopardy just cant do that fast. As the guy who got his butt kicked by watson, im also aware of what the human cost might be. Yeah, and you know, interestingly, ken, a lot of people are talking about that lately and saying, you know, that the machines are getting so good now theyre displacing us. Maybe a machine could do my job. It is not a good feeling to be replaceable, you know, to realize being good at jeopardy made me special, but ibm threw tens of millions of dollars at the problem and now im out of a job. By the end of the decade, this is going to be a problem that affects more than game show contestants. Lots of people who thought they were in safe automationfree jobs. Its going to be a tier of the economy thats going to be gone just as manufacturing jobs have been mechanized out of america. Do you have faith in the america is at the leading edge of this move globally. Its fascinating to watch for that reason. Do you think people will find new sources of employment . Do you think well move towards more of an incomebased society where people are investors and live off dividends or other kinds of income . You know, im investors and off dividends or kinds of income . Ive become more and more pessimistic about the idea that we can replace the pharmacists or paralegals. I feel thats a tier thats going to be gone and may not come back. We may have to shift to a whole different economy where we figure out how to make people feel useful without a 9 00 to 5 00, somehow. If were not working, what are we doing . A lot of people say this is going to be a golden age of art and literature. Im lucky im a writer. Watson doesnt have a very snappy prose style yet. My job is safe. But people in less creative jobs are going to have to find something creative or not have something to do. It makes you wonder what the source of that creativity is in the first place. And whether people will be consuming it in the same way. So many interesting things, ken, that we could talk about. I do wonder if the fact that watson can retrieve and know things for us, if were going to value learning less as a people. Why should i bother to learn my state capitals . Im going to pull out my phone and look it up. Why learn anything . Im guilty of a little bit of that myself. You didnt have that luxury on jeopardy thanks for being here. Thanks, kelly. A firsthand look at the power of watson. The temps outside have warmed up a bit. But its not generating enough heat to rival our hot list. The stories youve been diving in on are next. And we want your thoughts on Chris Christies marathon apology over the bridge scandal. [ male announcer ] this is the story of the little room over the pizza place on Chestnut Street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i95. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment we know were not the center of your life, but well do our best to help you connect to what is. We still run into problems. Thats why Liberty Mutual insurance offers accident forgiveness if you qualify, and new car replacement, standard with our auto policies. So call Liberty Mutual at. Today. And if you switch, you could save up to 423. Liberty mutual insurance. Responsibility. Whats your policy . Im happy with my purchase. Its the truth. When youre ready to buy a car, save time, save money, and never overpay. Visit truecar. Com welcome back. We got to check in and see whats heating up the website right now. Allen wastler to run through the hot list. Allen . Its the same thing thats been heating up the air waves all day. Chris christie and the bridge scandal. Our coverage. Readers have been pouring into it all day long. Whats fascinating, we have a poll. One of our unscientific polls in our story right here. Twothirds of our readers coming in seem to support the governors apology. Our tweets reflect that, too. We have two other outrage stories that are getting traffic right now. One, a write up by robert frank, looking at millionaires are now the majority in congress. So, there you go. Maybe not representing the people so much. And number three, the irs, the National Taxpayer advocate, came out with their report today on whats ailing the irs. And they say, they dont have enough money. Theyre chronically underfunded. I was just going to guess, they dont have enough resources. Allen, outrage by the irs that viewers are potentially responding to. Thank you, sir. Take care. Have a good night. We asked, you tweeted on Chris Christies apology on the bridge scandal are coming up. A little preview. [ bagpipes play ] make it happen with fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. I nethats my geico Digital Insurance id card gots all my pertinents on it and such. Works for me. Turn to the camera. Ah, actually i think my eyes might ha. Next Digital Insurance id cards. Just a tap away on the geico app. Could save you fifteen percent or more on Car Insurance. Everybody knows that. Well, did you know that when a tree falls in the forest and no ones around, it does make a sound . Ohhh. Ugh. Geico. Little help here. Welcome back. New Jersey Governor Chris Christie staging a near twohourlong Conference Today to address the George Washington bridge scandal. We asked you your thoughts. Here are the standouts. Christie did a great job showing his leadership today. He took responsibility. Acted swiftly be firings and apologized. His first five minutes of his apology was fine. The rest was repetitive and rambling. Can you see house of cards making a spinoff of chris christ christies situation in its third season. And that series imitates real life. I want to bring you back to the market. I like the stat you dropped on us. How the market reacts to jobs, friday, tomorrow. At least in the last eight months, jobs have been up in terms of the stock reaction. Well see if the stakes are high enough to get the market moving again. The market seems bored with itself right now. Where do you think the bar is with a good enough number for the market to rally . You know what . Anything better than the expectations right now. I think as michael just pointed out, everybodys looking for something to happen next. The thing i want to point out, right now when you look at Investor Sentiment and we talk a lot about it, optimism from the investors intelligence, fourtimes the bulls and bears. Last time it was at the high, i was in high school, 1987. Okay. This is an optimistic market right now. We really need to see some strides with earnings right now for the market to move higher. I dont think it will be so much about employment right now. Alcoa not exactly delivering. Thank you so much for being here in this jampacked show. Really appreciate it. Fast money is coming up in just a couple seconds. Melissa lee, what are clown grades . Clown grade or downgrade. Josh graham coined the term. Were going through todays downgrades, asking the traders if they think theyre clown grades. I love it. Fast money starts right now. At the nasdaq in new york citys times square. Consumer tugofwar. The widening gap between the highend and lowend retail plays. And brian kellys new short position that has others on the desk fired up. And digital movies jumping by 50 last year. The chair of lions gate will tell us his strategy. Lets get straight t o