Transcripts For CNBC Closing Bell 20141209

Energy actually is the Leadership Group with oil touching that fiveyear low and then getting a little bit of a bounce and energy names with it. Lets talk about the markets. Joining us now is dani hughes and kenny pulcari, diane gartnick and our own rick santelli. Dani, what do you make of todays move . It occurred to me months now we have one story of the stock market. Its great. Commodity and bond market tells us theres manager to worry about. What does today tell you about where we come down on the question . We dont know. We have seen the market fall off dramatically today and come back dramatically, as well. The underlying issue of oil and oil prices is big one and you see the dichotomy, as well. Consumers are benefitting and you see housing prices rising, as well, so they have a lot of juice in that and then the job recovery, as well. But then you see Oil Producers getting hit very hard and the concern about the price of oil and domestic Oil Producers and how to make money going forward. Thats the big dichotomy we see. Can the rally in the stock market keep going if oil doesnt stabilize . No. I think if the oil doesnt stabilize and continues to be nervousness around it, its in the overall market and stays and actually oil will stabilize in here and then the market finds the footing and move higher again. Why would you think it would . I dont know. In my gut i dont see oil going to 40 a barrel. I bet you didnt see it going to 63. It was a level where most people thought it would find stability and it does feel like its going there. Dennis gartner and the guys from morgan and the analysts, in my gut i dont see that and so i think it might churn here for a while in the low 60s. Thats okay and stabilize higher but the truth is what is really changing this conversation from a month ago . We knew what was happening in asia, oil, japan, europe. So why all of a sudden is everybody starting to panic thinking, like, oh my god, this is new information . We have millions of barrel of oversupply on a daily basis an we dont know why and if china is a huge problem and leads to a slowdown in overall growth or is it its an importer. Diane, people think its both. Yeah. One of the thing that is really important is thinking about the price of oil and positive impact for consumer. People talking about the wonderful impact for households and equally positive is corporate earnings. One thing that spooked the markets is very strong u. S. Dollar and how that was going to drag on earnings. Lo and behold, one of the largest inputs to corporate earnings everywhere is energy. And with the Energy Sector being so low and Energy Prices that major input coming down, thats got to offset some of the really negative impact of the high dollar and ends up being great for next quarters earnings. Exactly the point. Right . So whys everyone getting nervous . Listen. We saw china off 5. 5 . China was up 32 for the year. 5 move in china is putsing perspective. Right . I think another issue, too, two types of Oil Producers. Rich and poor countries and when the poor countries cant make money, theres geoplitd call problems all over the place and i think instability is a person, as well. Well, okay. Okay. That might be true. I would add just india and china are also beneficiaries, as well. So from the Global Market, its emerging markets, its beneficial, as well, to those countries. And now the core question. The bond market and the Commodity Markets, put oil aside, are saying something about growth or theyre not . Sure. It is saying something about growth. Its saying that theres deflation in the marketplace. If you look at europe and the pmis and the inflation data out of europe its not good so when youre looking at the global kind of landscape of Economic Activity i think what you are seeing is oil is reflecting that and the strong dollars reflecting that and what we have here is an opportunity for sectors like the airlines to outperform, sectors like the autos to outperform and pick battles. Right now, i agree with kenny. Oil should stabilize here and going back to 80 in a month . I dont think so. Why are the airlines hammered today . Because i think tranports are hit because i think theyre stocks from 27 looking at american airlines, from 27 to 47 in 2 months. And thats profits. And i also think its one of those days where the mindset is accentuate the negative and people are jumping on board. Jeoverseas and so much carna . Yes. They got nervous. Lets take the money out of the let me regroup. Thats why i think its going to stabilize and then find its way higher again. Maybe, rick, people are facing the realization the fed language changes sooner rather than later and changing rates and throws it all off track. I dont know if it throws it all off track and anybody that doesnt think low Interest Rates dont fuel a lot of the positive Investor Confidence in many of the markets and indeed some of the financial inflation with regard to things like equities, were going to find out. Ill tell you what. Today was one of the first sessions, near dollar futures, not the Foreign Exchange side of it, really saw some very large blocks of selling and when theyre selling in that part of the shortterm structure of the curve, that is always something nervous about potential changes in the overnight rate. Are they going to handicap or give you the day . I dont think so. Its important. Remember, everybody, two thirds of our economy is consumption driven and stronger dollar helps two thirds of the economy. Big boys always lose on deflation. Whether you have a lot of debt out there, owning real estate, whatever it is. Two thirds of the economy much of the middle class is going to benefit from a lot of whats going on with energy. You mentioned the big block trades. Were seeing all kinds of Warning Signals from different regulators, very concerned about the bond market and whether or not there is enough liquidity out there and that when a massive selloff if and when it occurs it is painful because you just will see a lot of gapping down. Are you seeing evidence of that . Hearing concern about this . No. See, this is the flattening yield curve story that we all need to reckon with. I think the futures and short rate vs a much more difficult time than the longer end and even in a fed tightening mode is preoccupied with International Flavors of relative trades overseas. This is a wild yield curve ride in my opinion. Dani, i want the know, partly plays into the yield curve story, as well, about the financials. Okay . Everybody says i cant find a person who says dont buy the financials, yet you have more reason today to be worried of owning a financial stock. You have the citibank charge. You have bank of america ceo talking about trading revenue weak. You have new fed regulations that banks raise more capital and if they wont cooperate, maybe they will or wont, Energy Stocks may not cooperate, where will you go . Financials usually lead us up. Dont forget, too, they make money on Interest Rates and not making money there at all. Where do you go . People are chasing yield right now and i think you see trouble, too, with Investment Managers and Hedge Fund Managers that if they have done well they have to take their profits right now at the end of the year and if they havent done well like a lot of Hedge Fund Managers havent, thats why we see the sloshing around looking for that short term. Diane, bottom line this for us today. What did you do today . Theres important to da that to focus on with yields. Now that we know that the fed is going to be raising rates in 2015, were finally on the cusp. Right . All of the companies have been holding tremendous amounts of cash on their Balance Sheet waiting to see when rates are going to raise so that they can begin to invest one quarter prior to rates going up. I think over the next few months well see an awful lot of new business formation, lots of capital finally going into place where were going to see some investment and property plant and equipment longterm asset that is are cash to be deployed into working. I think thats really whats important this time around. Not yesterdays financials but instead focusing on the manufacturing of 2015. Thats the space we should keep an eye on. All right. Thank you. Thanks so much for joining us. All right. 41 minutes before the bell. The Dow Jones Industrial average lower by about 82 points. And the s p is lower by a little more than nearly 5. Up next, todays initial selloff sparked by the fed fears and our Steve Liesman and former head of the miami branch tell us what theyre hearing. Billionaire mark cuban speaking with melissa lee and scott and me exclusively. A lot to talk about, drones, Artificial Intelligence, maybe turning on humans. We have heard that from a number of guests. Does he think netflix will kill cable any time soon . I am never getting married. Never. Psssssh. Guaranteed. You picked a beautiful ring. Thank you. Were never having kids. Mmmmmm. Breathe. I love it here. We are never moving to the suburbs. We are never getting one of those. We are never having another kid. Im pregnant. I am never letting go. For all the nevers in life, state farm is there. E financial noise financial noise financial noise financial noise all right. Welcome back. Theres the market picture with 45 minutes to go. The dow well off the lows of the day, still down 80. Energys getting a bit of a bid. Helping things out. You can see the technology is, as well, tech selling off bigtime yesterday, michelle. Certainly into the close. Huge swings, i know. Tesla, twitter. Down multiple days. Maybe stabilization there and enabling the markets. A lot of commentary of how theyre a huge part of the s p 500 more than historically and is there a reversion to the mean at some point . One of the guests in the Closing Bell Exchange suggesting taking profits is not a bad thing. Right . Exactly. Youll obviously take them from the stocks that outperformed the rest of the crowd. So maybe thats all this is over the last two days as we have been obsessing over the oil prices. Yeah. Also we had a lot of jitters in the stock market because there was a report that the Federal Reserve may change some lack wage and lead investors to believe the move to raise rates could come sooner than many anticipated. Joining us now is steve lies mans with dorothy weaver, ceo of Collins Capital and former chairman of the Federal Reserve bank in miami, a branch of the atlanta fed. Dorothy, welcome. Steve, good to talk to you, as well. Is this going to happen to change the language . They could. The nuance of saying considerable time and lets be patient is pretty minimal. What theyre trying to do is obviously keep their options open while giving sufficient guidance that theyre not going to spook the markets. Steve, so this is coming from these reports about dudley when he refuses to say rates low for a considerable time and instead saying the fed must be patient. Whats the difference when it comes to when they might actually raise rates . You know, i think think of it like a bicycle with training wheels and without. You take the wheels off, you lose a guarantee that youre not going to tip over and the way to think about that is considerable time was around you were pretty sure you had a sixmonth window. What it will do is create some possibility that they could move earlier. Just to be clear, this news is effectively more than a week old and you could say its older than that. I think its pretty baked in, this expectation that considerable time going this meeting and discussion about it leaving in an earlier meeting. Stan fisher talked about this last week, the vice chairman of the Federal Reserve and baked in and doesnt change the reality of living without that essentially a soft guarantee from the fed. And what this does is if the economy improves, i think we need one more jobs report like the one we had. A good one way the decline of the Unemployment Rate and with evidence that the decline in oil prices is not spilling over into a generalized decline in the price level or into the core inflation numbers. Then i think its possible the fed can move earlier. Dorothy, do you think steve says maybe baked in to the market at this point. Do you think investors are willing to accept the fact that the fed is going to take this language out, is going to eventually raise rates and how much do you think members of the fed even care about what the Market Reaction initially is going to be . I think the fed does care about the Market Reaction and the market, though, i think was said is pretty well baked in, not a question of if but only a question of when. So i think the market has already begun to position itself with that in mind. The wild card in this is not really even what we have been looking at historically from the feds point of view. Our unemployment and our inflation. Its really now turning to focusing on the global. And the situation and the growth expectations and europe and china and japan. And its concern over those and now youre getting the bifurcation of we have quit qe and now an economy between what were doing and the rest of the worlds doing, so we cant just look at our numbers. Were going to have to continue to look over our shoulder and see how that is going to have any sort of contagion in slowing down growth in our markets. Steve, you and i have talked about that very point, right . The u. S. Economy better and the fed raising rates and supposed to be focused on whats happening here and not necessarily worried about the impact overseas but at the same time, its intuitive, right . The whole world is slowing down, the f theres potential crises in emerging markets with the strong dollar, that can cause feedback right back to the u. S. Economy, right . Do you agree with dorothy. They could stay on hold for longer than people expect because of whats happening overseas . I think to an extent. Folks at home, it is michelles sympathy for the central bank that is have failed to insulate themselves from what they know is coming that really is the discussion that we have. And i argue that these guys have had a long time to prepare for this. I agree. I dont have any sympathy for them either. I know. Just having fun here. But i think that only to an extent. I think it is extraordinary that the usda that has been as strong as its been given whats happening overseas and the end of the day with pretty much still the largest economy, of course, depends on how you mshl it. We remain the price maker, not necessarily the price taker and the great hope is essentially strong u. S. Growth helps out other countries rather than the weakness overseas dragging us down. Im surprised so far through the fall we have not really seen that weakness wash up on our shoerls and i expect it to stay that way given the way the data is going. Either one of you want to comment on this . Jeffly gunlak saying the 10year yield crossing from reuters could fall to 1 . Wow. Dorr chi, what do you think of that . No. We certainly saw a very dramatic and quick dip just on sort of fear at one moment in time and so the market is skittish and it could move quickly. The questions going to be what is the triggering point . Whens the catalyst . How quickly does it bounce back . Dorothy, steve both, maybe, steve, you take this. If hes right and the 10year gets close to 1 , thats going to suggest that you have got some major issues perhaps here in the United States. Thats going to keep the fed on hold. Thats exactly the right way to think about it. One cannot have a conversation about a yield on a 10year or price on a stock in a vacuum. If we get to that point there a es a whole series of events likely happening. You likely have and likely bad. Core inflation number is falling precipitously and stock prices way down. I want to point you to an extraordinary speech of new york fed president dudley gave not too long ago and he said, look, part of the speed with which we move and how far we move is going to be dictated by how markets react. The fed wants to bring the markets along with it. Theyre going to try to avoid in this next step in policy normalization and try to avoid another taper tantrum. All right. Dorothy, last word here . What should we thinking about the most talking about the fed . I think the most important thing is that the fed is really in a delicate balancing act right now because certainly were seeing employment numbers come in strong ler. Growth not been dramatically impacted by the slowdown globally and the inflation is not climbing. One inflation they really want to see, though, is wage inflation. Oil prices will go up and down. Food prices go up and down. Theyre really looking to see wages beginning to go. They have just been going nowhere for so many years and i think thats one of the big keys that theyre looking to see before they do anything too dramatic. Steve, would you be shocked if the fed did not raise Interest Rates next year . I ask you that a day after i read a few notes that were being passed around on the street. I believe it was Morgan Stanley said maybe its going to happen much later than people expect and what dorothys suggesting. Goldman sachs saying whats going on with the dollar and crude oil and inflation that maybe its going to come later than expected and that could mean bigger things for equities. Would you be shocked if they didnt raise rates . I would be. I dont think thats going to happen. I dont think the economy will have those kind of outcomes or print weak gdp numbers. Look, i think what you want to do, scott, take your cue from where you think the leadership of the fed wants to be. And i think they want to get back or begin a normalization process. I think janet yellen is preparing the markets for this and personally ready to do it and i dont think she wants to rush to do it and set the train in motion and i think its going to happen and i think the preponderance of the evidence has to be why they shouldnt do it rather than why they should because i think that thats the train that they want to get on and make happen here. Dorothy, i get the impression that janet yellen is somebody that just doesnt want to raise rates. When you look at historically the reasons why they havent changed the language is, remember, there was the real estate situation. And then there was, well, its not just the unemployment figures. Theres a dashboard of unemployment numbers that we need to look at. It feels like they want to do and she in particular want to do Everything Possible not to raise rates too soon. So what do you think . Is it possible that next year they dont actually move . Its possible. I would agree, though, that we are on a course that of we will be raising rates. She will be thoughtful, deliberate. She is in no hurry. If theres bumps along the road, she will take her time and assess exactly the implications of any bumps. But as far as will we reverse course . It would take a very dramatic change. Hey, scott . I want to add a quick thing. Just because they have raised rates once or twice doesnt mean its an automatic course, right . You can see the fed getting to them. 1 fed funds rate and be stimulative for an economy running, say, for example, 2. 5 and jobs at 200,000. The fed could do a quarter, stop, it could come back and do a quarter and stop. I think this notion that where the market might have it wrong is a notion of automatic quarterpoint hikes the way greenspan did it. I dont think thats the case this time. Call me crazy. I just refuse to believe that the market is ready to accept it. I think that the day that considerable time language comes out of the statement the markets going to have a tant m tantrum. Im not saying a heart attack but not a happy thing for a lot of investors that expect the party to go on forever. That assumes theyre not paying attention. They can telegraph it as much as they want. You think the market doesnt react to what happens, not discounting it in the future . I just ill believe it when i see it, i suppose. Okay. I think far more interesting is your contrarian view about maybe they dont do something next year and gun wilak says 10year could go to 1 . When everybody believes something, everybodys often wrong, right . I have bigger issues with that. 10year to 1 , its a far different conversation. Thank you. You still across the street from univision, dorothy . No, no. In coral gables . Got it. All right. Nice. I used to work across the street. Thanks for asking. Beautiful. Okay. We do have about 35 minutes to go. And the dow is sort of in a Holding Pattern now and in that range. Its been in a bit of a range for a couple of hours. Down 77 points. Certainly well off the lows. Naz democracys looking pretty decent right now. Up a third of a percent. Russell 2000 with money moving into small caps, too. Thats been a point of strength throughout the day today. A lot more about the wild market swings, also first elon musk sounding the alarm on Artificial Intelligence right here on the closing bell this summer. Id like to keep an eye on whats going on with Artificial Intelligence. I think theres potentially a dangerous outcome there. Stephen hawking also giving the same warning. Two very smart guys and another smart guy coming up, mark cuban here next and find out what he thinks of Artificial Intelligence, the rise of robots. Is he as scared as stephen king would have you be . Doom and mankind, a lot more after the break. Hi. Pete and jon najarian here in new york city outside of the nasdaq, where we bring you live daily market updates. And today, we have a very special free gift for you. So many viewers email us wanting to know our secrets on how we trade options. So we put our secrets into a new book. And if youre one of the first 250 people to call in right now and just cover shipping and handling, well send you a copy for free. Look at the rate of return weve made on some of our recent options trades, versus what we would have made had we just bought the stock. Theres no comparison. To make the best returns in todays market, you have to learn how to trade options. And our book will show you how to do it for free. 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We were talking in the last segment of double lines jeffrey gunlak, the 10year yield could hit 1 . Very scary. Startling number. Yep. To throw out. Let me also say that i believe he just gave a statement to cnbc. In fact, maybe to patty martel saying the statement was made but only in the context of a hypothetical. If oil goes to 40 a barrel, then the 10year goes to 1 suggesting that if you can get oil all the way down to 40 a barrel, you have a much more to worry about the slide in crude oil that that means that something is wrong in terms of global demand. Right. If that happens, then this would happen. Not just an arbitrary throw it out. The 10year going to 1 . Okay. He previously said 2 and then at the time people thought, come on. Youre crazy. Take a look right now. 2. 1. He did speak, i want to clarify, as well. He did speak to patty martel to clarify exactly what he meant by the comment. Dom chu is tracking the movers for you. Lets talk with kahns plummeting after a Third Quarter loss. Accepting the resignation of its cfo. Negative trifecta there. Shares down on the day sharply. Spirit airlines falling after it said the load factor fell in november. Raymond james downgraded it to a market perform and removed the price target. And then lots of turbulence in the Airline Sector overall. American, delta, united, continental, southwest lower on the day. Autozone is higher after the retailer reported better than expected First Quarter results and ending with Abercrombie Fitch gaining ground on the new ceo would retire Effective Immediately and then replaced by team led by arthur martinez, executive chairman. The shares as you can see up by 8 on the day overall. Michelle, scott, interesting moves on a day when the dow bounced back off well say really 150 points off the lows. Back over to you. Certainly. Thank you. Interesting moves coming to telecom. Invest to recalls hanging up on verizon, at t and sprint as the wireless price wars heat up. Morgan brennan, big volatility today for the stocks. What is going on . This Holiday Season is a free for all for wireless carriers and pushing Telecom Stocks down almost 4 , the worst performing sector in the s p now negative for the year. Verizon falling about 4. 5 after cautioning that holiday promotions and more subscribers will quote put shortterm pressure on q4 margins. Downgrading the stock to neutral and analyst William Powers saying if verizon considered the best position is Warning Signals how competitive the wireless space has become. At t also down about 3 , 3. 5 after cfo stooefbs warned this morning that subscriber turnover, basically the churn rate, to increase for q4, as well. Sprint cutting prices to target millions of verizon and at t subscribers coming off contract this season and trading lower and tmobile, the biggest loser of the carriers today dropping about 9 today on the proposed Public Offering to raise more money for capital investment. So the challenge for them, balancing these price cuts to get new customers with investment in their networks which is needed to keep their existing ones. Back to you. Yeah. Super expebsive to build out. Thank you. We have 27 minutes before the bell. Dow jones industrial average lower by 85. What turned this market around this morning and mark cuban joins us, right, when we come back. Dont go anywhere. Who do you trust . Whose analysis is accurate . How do you make sense of it all . A simple, unbiased stock score consolidated from the opinions of independent analysts. Is that too much to ask . Nope. Equity summary score, powered by starmine, will help you execute your ideas with speed and conviction. And its only on fidelity. Com. Open an account and find more of the expertise you need to be a better investor. Welcome back. Melissa lee is in las vegas live today at the market count sul monorating a forrum. Heres some of of that Exchange Just a short time ago. Theres no point in s. E. C. Wait, wait, wait. You bought into this thing. Oh yeah. Youre supporting it, as well. Youre saying they should have turned it away but youre there as a shareholder. I think theyre worthless in the first place coming to enforcement. Oh. Seriously. Thats my perspective. I grow and like chris and i respect what hes saying. But cox. Our melissa joins us now with mark cuban himself. Take it away, melissa. Thanks, guys. That was a fiery exchange, mark. Yeah. It was fun. That case turning into one of the foremost vocal critics of the s. E. C. How did you come away from the panel feeling and theres very interesting thing that is we learned. When i came in the decision process in my mind whether or not i was going to shake his hand because he was the director of the s. E. C. When my face started but as it turned out i was misinformed by the s. E. C. Shocking, about his role. He was completely recused and there was a chinese wall. So that was a good thing and that so that was part one. Part two is i love his candor and honest, i learned a lot about the s. E. C. I learned about the role the director of enforcement which scared the hell out of me. Overall, you know, i thought it was a great session. He said the director of enforcement has all the power from the arresting officer through the executioner and that was that was crazy. That was interesting. Explain it to people, as well because he said the commissioners and commissioner in charge really dont see the enforcement cases. They just get a summary and that all the power, 100 of the discretionary power to bring cases and how theyre handled is in the hands of the director of enforcement. Sat skaerls t that skaerls tkaerl scares the. You say you have to burn the place down basically. Those are your words. Burn it down. Lot literally. Of course. I dont want anybody start from scratch. Correct. When you have an organization whose culture so upside down, so misplaced, theres such an emphasis on attorneys and working and thinking like attorneys that youre not going to accomplish your goals and all you have to do is look at the stated goals of the capital formation, trust and you can see that theyre failing miserably at the stated goals. Alibaba, the exchange we played and you essentially said at any particular time, a member of the party says, give me some information. There could be Insider Trading for which the u. S. Government, the agencies, did not have any recourse. They dont have any authority. Right. Im a shareholder. That shows you how much are you being hypocritical . No. I dont see it mattering. The mrkts the market at this point and i dont expect the s. E. C. To do a whole lot of consequence of inside trading in the first place. My point is the largestipo in the history of the stock market is a Chinese Company and its a communist country. So by definition, you know, if someone calls up someone at alibaba and says, okay, you know, im this big wig and, oh by the way, tell me whats going on in alibaba or let me tell you about the new gulag we just built in china. Theres nothing to say. Theyre not going to say it. Should the s. E. C. Have turned alibaba away . Yes. They should not have been able to list in the u. S. . No. If youre host at least the chinese operations, right . If youre just my opinion. If youre hosted and based in a communist country where the only rule of law is what the communist party says it is, how can you enforce any type of law at all . So basically saying that the u. S. Should close its borders, actual market close the borders coming to so many of the other companies to come here to list . Look. If alibaba has special exception. I forget what its called to go public and the reality is yes. Right . Im not going to say ive done research. This is the topic that just came up in the session. Right . At the same time on a common sense basis, how can you enforce any type of inside trading laws in a communist country . Put that in bucket. Or ask the question, are our Insider Trading laws back ass half wards and thats the problem and not a problem of a company in a communist country come in and realize that our Insider Trading laws are ineffective and apply them to the United States companies. Right. So even though youre alleging that the s. E. C. Should have done x, y and z, you are investing as if the s. E. C. Doesnt exist . Is that fair . Yes. With a caveat. Okay. Caveat is i take 3 or 4 of the portfolio and invest it in hedges. My perspective is that all of these things that have negatively impacted the market in a dramatic sense arent one offs. They will happen again. Not a question of if. Its a question of when. I want to be protected when they happen and i want to be able to invest when they happen so i made a big investment october 15th, you know, when in 2008 when everything was going to hell, i dove in and made my biggest investments when, you know, i did invest a lot in currencies when the yen hit 85. I took all my debt and converted it over and im a big believer in Warren Buffetts approach. The s hits the fan you dive in. I know theres no chance that the s. E. C. Stops the next thing from happening. All right. Speaking of going in when things are cheap or when there seems to be opportunity, oil. Are you interested . Youre from texas . Im from texas. Oil, oil stocks . Do you see opportunity there . Im still starting to do my work in terms of mpls because i dont think the flow of oil will reduce and in terms of wipe lines and the like. I think theyre being impacted more than the based off of price when they shouldnt do and im doing work there with the advisers. Looking . Im looking. In terms of price of oil, its a technologically driven environment right now and starting to see the impacts now. I want to go back to the anchor desk at the stock exchange. Got a question . Yeah. Mark, its good to talk to you. Two things, number one, if you were so against alibaba going public here, why did you just make a statement with your feet and walk . Why did you invest in the company . And if people, you know, watch that and say, cubans a hypocrite saying, no, they shouldnt have been able to list here and bought the stock. Is that a fair im a hypocrite. Absolutely im a hypocrite. I think the s. E. C. Doesnt matter. Right . They do their best and halfass backwards in enforcement they wont stop the next thing and i dont give them much in the way of consideration and my preference is they shouldnt be allowed based off of what i know and its one more stock to trade or invest in depending on your perspective. Do you still own shares of netflix and do you have the same level of conviction today that you did more than a month ago when we first learned that you bought the stock . Yes. Lets be clear. Since that investment, the stock is down Something Like 9 . Yeah. Okay. Im going to the way i look at things, theres the word of investor. Right . Investors buy and hold stock even through ups and downs. I know we forgot what the term means in this market. People talk about trading in and out. 9 one way or the other doesnt make or break or change a thesis. I still think netflix will grow, disruptive. I like to own Disruptive Companies and could go down another 10 . Ill buy if it goes down 30 , ill buy more. I dont worry about the fluctuations and the thesis didnt change. What are you buying . Nothing. Hey, mark. Hi, michelle. Hey, full disclosure to our viewers in my book i have an entire chapter about why the s. E. C. Should not exist in particular because every time they fail they just say i knew i liked you. They said they wished they had more money and staff and could have stopped madoff. It is worse than that. I agree. I agree. You know im right. More prosperity, Less Government if you want to go amazon. For a second, you are in technology. We had elon musk on saying he feerls the rise of the machines, the merging of robotics and humans and stephen talking ab it this recently. Are you afraid of Artificial Intelligence . Five, ten, 20 years, no. Beyond that, i dont know. You know . I dont fear it right now. But theres always that possibility. You know . As processor and cpus are more powerful and logic in places we dont expect it, theres always a chance that i robot could happen but i dont think its going to be in the realistically in the next ten, 15, 20 years. You are a tech guy. You have an app. And born out of this s. E. C. Brushup. Essentially for viewers out there not familiar, the message goes away in not cyber dust. 30 seconds after youve read it, the message disappears and never touches a hard drive in the servers or the device and not recaptures. Snap chat and sort of a same thing and for photos, they hired a banker of credit swiss. It looks like theyre look preparing for an ipo. Thats great. Are you looking at that company in terms of valuation . No. We are in two different markets and might have started off in the same way but snap chat is crayons on pictures for kids and a great market and looking at what theyre doing, theyre trying to take on facebook. They really want to take on facebook in terms of a way for kids to communicate with their peers. Whether or not theyll be able to do it is a whole other question and its a smart guy and cyber dust, were for Real Communications and privacy based Communications Going public . No, no, no. No casino. No. Up for sale . Not for sale. We keep on growing. Interested, mark . Not taking the call . The value of privacy is worth more than the money because you know in a scenario the reason i created it, the s. E. C. Came in. Those of us through depositions, whatever you say is taken out of context. With cyber dust, theres nothing thats discoverable. When its gone, its gone like a face to face conversation. That is worth more to me as a business person than i wont say any amount of money but in the foreseeable future. Mark . Yes . Should goodell have a job . Im sorry. I didnt hear what you said. Should Roger Goodell have his job still . Yeah. Look, im a Roger Goodell fan. He works for the owners and roger is really good at taking the bull. You can argue about the tactics but his job is to take bullets for the owners and thats what hes done. I think when you look at what the future of the nfl is its not about Roger Goodell but the owners want and really we have no idea. Okay. A quick fire round, mark. Okay. Go ahead, scott. Real quick before we go. Again, putting your sports owner hat on. I mean, what do you make of lebron and some of these other athletes over the last several days with the i cant breathe tshirts to make a statement on the eric garner case and apeerls theyre willing to make these kind of statements more so than they have maybe in the last 50 years. You know what . Let me just put my hat on as a citizen of the United States. I love nonviolent protests. Thats something thats value to believe the democracy and we cannot get enough of it. We have rules in the nba in terms of oncourt apparel that, you know, got to try to finagle and adam silver is great in handling it so far. Our guys, whoever it is, you know, the oncourt, thats fine because they know the cameras there but the bigger picture, any one of our guys that wants to stand up and give their opinion and speak in a nonviolent manner and protest, anything, not just this but anything, thats what makes this country great and im all for it. Were out of time. Thank you so much. We appreciate it. Thank you. Back the you guys. I love when we have guests so frank about everything. No politics. A definition of when you say somebodys unplugged yep. Its great. Cuban. Unplugged, cuban. Nine minutes before the bell. The Dow Jones Industrial average lower been 55. S p lower by 1. 5. Nasdaq higher by 24. Coming up, will we see a santa claus rally this year or not . Berra said its getting late early around here. Weve got pros pushing both sides of that debate. 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The only isp legally bound by full Net Neutrality rules. Nasdaq stocks leading the declines at the start of the day. Kate rogers, when a turnaround, though, huh . Absolutely, scott. Up about half a percentage point. Big tech, amazon, microsoft, apple all in the green. Amazon up over 1 . Yahoo up over 1 . Netflix also up at the end of the day near 1 , as well. Other big movers here, Oreilly Automotive and western digital. We have been watching those for you all day leading the nasdaq 100. Now in the face of all that good news, the nasdaq come pez it actually the worst performer out of the three major averages for the month of december so far. Finishing higher today, its the first twoday losing streak. After the bell, oil at 63 bucks. Great news for anyone with a car and our economy. But what about banks that lend all that money to the Oil Producers . Will they be struggling now . That wrinkle could send ripples through the market. That very important story just ahead. 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[ male announcer ] it shouldnt be this hard. With creditcards. Com, its easy to search hundreds of cards and apply online. Creditcards. Com. Welcome back from the floor of the New York Stock Exchange. Time for the closing countdown. Good to see you. Dan, to you first. Quite a move. Down 46 now. You know, the market is going higher to year end. Thats all it comes down to. We sold off this morning. Following suit with china giving Something Back after being up 20 , 25 in the last month and people focusing on europe opposed to a real fundamental issue. Terry, nothing can stop this market as dan suggests . I feel thats accurate and find out trading in a narrow range in the end of the year and seeing the dips and bars are coming in to see value out of fully priced market here and headwinds maybe next year and not so much between now and the end of the year. This drop in oil doesnt concern you . I know its great at the pump. We all know that. More money in our pockets to go shopping. Theres still money to be made in oil and seeing the Energy Complex up earlier in the day. So youre starting to see people nibble at it. You know . Crude at 60, its a benefit for the pump as you mentioned and not crippling the industry. Got to go much lower before real concerns. Stocks up between now and the end of the year, where do you want to be . Properly leveraged to those stocks that are same consensus. Dont chase something just for a sixweek trade. Good cash flow. What sectors do you like . In tech, you know, i cant speak to what we dont like and dont like and what were seeing. Starting to see people sell the underperformers, coming into year end. Seeing that in the Energy Complex. That was the weakest sector down 3. 5 to 4 . You can answer that question, right, terry . Where do you want to be . You have a couple of weeks. Hard to say. I like things oversold like the oils fantastic purchase. I kind of like the financials, too. I like Morgan Stanley and bank of america specifically because i think the Banking Sector does better coming up into the next year, spread between long and what about this language, dan, people are talking about, well, if the fed takes the considerable time language away next week maybe we will have a problem. Thats the reason for the pullback this morning and everyone is of the mind of talking about a midyear time frame. Language may change and not changing the fundamentals. Good to talk to you. Just tuning in, dow down 44, not so bad. You would be right. Considering the dow was down more than 200 points earlier. Next hour, coming up right now. Welcome to the closing bell. Heres how were finishing a volatile day on wall street. Dow jones industrial average well off of the lows down 52 points and had been down more than 200 points after we saw the big overseas selloff overnight. S p lower and another second, go positive . Maybe. Well see. Very flat right now. Nasdaq come pez it higher by 26 points, a gain of half a percent. Joining us on the panel today, Herb Greenberg and we have larry kudlow and our own kate kelly. Also with us for more on the markets is fast money trader guy adami. Yo. Why the turnaround . Comments of European Central bank. Whats that cats name . I think it got we have well fix this. Sorry. Yeah. What do you think happened today . Put your mic on next time. Exactly. Kate, what turned the markets today do you think . Theres feeling of excitement on the fed changing the language and the economic progress to make. The possibility of that. Anyway. I think energy is really down low and something well talk about more on the show, im sure and having a little bit of a relief rally perhaps here in the stock market. I think generally people are optimistic about stocks more broadly into the rest of the year and disconnected from some other trouble elsewhere. Again, the oil patch and no sign of flagging yet. These are grey thoughts. Hold those thoughts. Theyre wonderful thoughts. Are you about to disagree entirely . No. I agree with you. Im an optimistic. I think Lower Oil Prices are unambiguously good. Okay . I think the shape of the yield curve, the low inflation rate. You get higher real growth and lower inflation as a result of the drop of oil prices. The Federal Reserve will move from considerable period to patience. That may unsettle investors. Thats my point of the last hour. The fed is acknowledging the recovery. Its optimistic. Bond and commodity market telling you a bad story and contradict the stock market, theyre wrong . I think that bond rates are too low. Ive been saying that and i have been wrong. I think stocks are the place to be. Ive been saying that and ive been right. Buy the dips in the stock market. I wouldnt be buying bonds. I wouldnt be buying commodities. Outside of commodities and everything else. Not telling you we have a big problem in Global Economic growth coming the yields . No. We have a big solution. Its called Lower Oil Prices. Going to help the Global Economy with the exception of russia and iran. And venezuela. And venezuela. Three of my favorites. Three of your favorites. We talked about this earlier. I would add on half a point of gdp just to screw them. Hows that . On purpose. On purpose. I want to point out one thing here. If i was reading it correctly, i havent seen the context of jeff gunlaks comments of the 10year and he has a forecast of it going down to 1 . Only, only if oil prices go down to 40 bucks. Oh. Which seems like a possibility from where we sit today and the forecast were seeing. How sustainable is Lower Oil Price . We have seen this before. Well we have seen it before and it was good. Can i just say that . For how long . In the 80s and 90s, we created almost 50 million new jobs and the economy grew. That means tesla, thats very bearish for tesla. I agree. Weigh in here, guy. Can you hear me now . I think i can hear you. You know what . Larry says unambiguously. I get that its good. I like going to the gas station now as much as anybody else and i cant believe this is not incredibly deflationary and argue back and forth but im in the lower rate camp forever and everybody else is thinking nobrainer trade of the decade is rates higher. I still think rates go lower from here and not about getting yield but the instruments that mirror it are up 20 . Tlt probably up close to 23 this year. Thats a nice little return. So im in your camp, mcc. Bond markets telling you something and the commodity market. I just wonder. I dont have a position. I have seen three markets. Two of them telling me something else. I dont know. And telling you the stock market something, as well. Doesnt care what the bond market is telling you. The f theres an interesting report look at stocks. We were talking about the dow almost 18,000 the other day. Having this conversation in 2007. So heres the question, right. Is the energy setback a very short lived, more or less a blip on the screen . No. And the stock markets are telling us the right story, or are the stock markets discounting whens happening in the Commodity Markets and iron ore, aluminum, copper. Its a lot of things. Prices, by the way, the longterm trend of real Commodity Prices is lower. Okay . Jillian simon was right many years ago. Second point to make is were producing right now about 1. 5 Million Barrels. They expected 800,000 barrels. Thats going to continue for a couple of years. Theyre going to slow down their Oil Production and exploration and cap x. At the lower price. They wont end it. Its just a little slower. Meanwhile, thats all picked up that slack from almost every other sector in the economy. Thats why Lower Oil Prices are good. Scott, they were averaging 25 a barrel throughout the 90s. Hows our economy . Im sure that 4 per year. Its a good thing. They were just as low in the 80s and the economy grew at 4 a year. In the transition, theres some losers. I agree. Thats free market capitalism. Hold that thought. Bob pisani on the floor joining us for the interesting action considering down 223 and down 50 is how we ended. We turned around earlier in the morning and the primary catalyst and two things, one, scott, still not a lot of other places to put money in the world. Im hearing that from the traders. Second thing is a couple of things out of left field suddenly this morning. Events in greece with the no confidence vote and the actions in china with changing the rules for come lat real for trading stocks and we have 15 trading dales left in the year and historic highs essentially. May not be a lot of room to make a lot of money and there could be a lot of room to lose a lot of money and i think that putt a little bit of a scare in people. U. S. Is best place to go but we have a lot of very volatile situations in the world right now. We do. One more quick point about the bond thing. The bond market not distorted in 2007. The bond market is distorted today as a result of the activity of the fed so i dont know that what the bond market telling you yet yields go down and supposed to be the opposite. Right . Hold on. Alibaba, mark cuban last hour told us here on the closing bell that the s. E. C. Should not have allowed alibaba to go public because its located in china and there could be interference from the Chinese Government and the s. E. C. Could do zero about it. Im sympathetic to that point of view. Im not sure exactly what marks specifics were. Jack ma said he stays away from the Chinese Government. That doesnt mean they dont stay away from him. Thats correct. I accept that. And i regard the chinese as a bunch of law breaking cyber hackers throughout the world but particularly in the United States government and National Security and corporations. Now, having said that, are we going to make a choice and end all commerce with china . And my answer to that is, no, we are not going to make that choice and alibaba has a positive global affect. Well, but there is one other issue and i have done a lot of work Herb Greenberg did lots and lots of work of Chinese Companies and timber that didnt exist. There are so many stories out there. I think mark made a great point. But its not really the s. E. C. Because its a broader question and the Great Institution here and listing the xaenls in this country because it starts with the listing standards of the exchanges. So they need to bring in more oh, youre looking like youre i agreement agreeing. Finish your point. So i think theres more to it. Dont you think the standards have been raised as a result of some of the research and the reporting done by you, others and some of the issues that have been raised over the years . Dont you think the New York Stock Exchange and nasdaq are vetting companies in ways that they never had in the past . Well, vetting what is vetting . Going out and doing Serious Research on the ground or you meet the Listing Requirements . Thats what it amounts to. I think herb is right in theory but i dont think the s. E. C. Or cftc gets another budget dollar and not in this climate or in general to do anything beyond what theyre doing and as the market globalizes and good in general we see the problem in many, many forms and functions. Kate kate is right. Kate is right on many countries. Youre absolutely right. But look. We have to let bob get in. This is a National Security issue and the United States is a bunch of wussies coming to dealing with china. Ill tweet that. By the way, i wouldnt have sold the waldorf to chinese interests. The ambassador is there. All kinds of cyber hacking possibilities. Its the red army. We make the deals with them on trade and letting alibaba register and so forth. Alibaba. What do we get for it . Do we ever get anything for it regarding their hacking . We get thats not enough. I want them to stop tapping into our secrets. Thats what i want. It makes no sense at all to argue that just because the Chinese Government can influence these companies and they can and do they should be banned from being listed outside of china. If thats the case, dozens of governments from totalitarian to just mildly totalitarian would not never list down here at the New York Stock Exchange including russian stocks by the way. What about the idea that the Chinese Government or chinese investors may be on an advant e advantaged Playing Field of Material Information or theyre able to get it whether or not with jack manys assistance . That was the point exactly. They dont have it and not so much the relationship just that there could be access. Global markets is best way to drag them fourth sbeer the 21st century and to allow global capitalism and not excludeing them and ashares completely independent of the rest of the world created a lot of weird distortions with Chinese Companies at valuations that trade in china that didnt make sense when the Chinese Companies in hong kong, traded outside and the Global Market exposed to them and criticize them if they the numbers were wrong or the Chinese Government influencing them. Let it be known. Why should we exclude them . Its a done deal and wont chop off commerce with china. But im sympathetic to what cuban is saying. Hers the point. Except for today, shanghai market is on a hell of a run. Yes, it is. One of the worst performers for a couple of years. And china is changing its economic policies. Theyre not only liberalizing their Market Structure but theyre easing. Todays collateral change was a tightener. Theyre dropping reserve requirement. They want the chinese economy to stay at 7 . It is still a pretty good play and stops out commodity deflation if their play is successful. Very good point, that last one and turn things global. Thank you. Thats why i want to put it in because you would say its a good point. Mark cuban himself said he was a hypocrite. He said he doesnt want the Company Listed and he bought shares of the company. Of course. He is an opportunist. He just wants it to be an even Playing Field and fair. He is right about that on the playing feed. He is right about the even Playing Field. As i said, our policies of china didnt mean to interrupt. Theyre just so wussy. What do you really think . Theres a lot more. Thank you, everybody. Stick around. Catch guy and the rest of the crew, thanks so much. See you in 45 minutes or so. Later theyre talking amazon taking on e bbay with the new make an offer opportunity. Well, december im sorry. Yeah. December is historically the best month of the year for stock gains and the market is ice cold including todays decline. Will the santa claus rally happen . Thats next. Tell us right now if you think it will come true. Cnbc. Com vote. Polls are open. Theres a difference when you trade with fidelity. One you wont find anywhere else. Onesecond trade execution. Guaranteed. Did you see it . In one second, he made a trade, we looked for the best price, and the trade went through. Do the other guys guarantee that . Didnt think so. Open an account and find more of the expertise you need to be a better investor. Ham, tur ri, candy canes and stocks, the Holiday Season is known to bring the gift of market returns oftentimes referred to as the santa claus rally. What kris kringle have to do with the stock market . Traders believe that more often than not stock prices rise between Christmas Day and knock years day. It is not clear what fuels the rally, maybe getting the annual bonus check or everyones full of holiday cheer. These days, the term santa claus rally referred to any kind of bullish stock move in the final two months of the year. According to analysts, over the last century, the month of december has brought an average gain of around 1. 3 and been positive 73 of the time. No other month even comes close to this kind of consistency for higher rrns. Theres no guarantee on what happens in the future but wall street hopes that santa leaves gifts and not coal for investor stockings. So what happened to that rally . Because no sign of it so far this year. Tell us if you think its about to come. Cnbc. Com vote and take the live poll right now. Joining us now, jeff and charlie. Guys, jeff, is it going to show up . Its looks like its going to show up as dom was explaining is the he didnt have it all quite right. Its not anecdotally on page 112 i believe so check that. But, you know, the first point point taken. Will it happen or not . Yes. But the important point is if it doesnt, thats the first warning sign for 2015. Right. Theres a followon, right . Whats the next corollary . Besides the january barometer, its usually professionals on the street in the last period of the year and everyone else is on vacation and a bullish buying bias picking up the stocks sold off on tax selling so when that santa claus does not and our saying is if he fails to call, bears may come to broad and wall. It happens in 2000, 2008 and two other times, 94 and 2004. If you dont gate bullish bias and sevenday trading period its a warning for 2015. Charlie, why wouldnt santa claus show up . I mean, seems like the market wants to go up. May have a little glip here and there. By and large it wants to go higher. You almost never want to bet against the santa claus rally but investors should take note of differences. One of the main reasons for the rally is a drop of volatility after the holidays and into the new year and causes an increase of risk appetite, investors bid up stocks. Theres a few factors at play today that might lead to an increase in volatility. First, in the credit markets, you are seeing credit spreads widen over a few weeks, wider year to date and wider over the past year and seeing credit spreads wider over the prior year, volatility in stocks tends to rise. Also, you have the yield curve flattening. Year to date lows Long Duration treasuries outperforming interimmediate terms. What does this mean for stocks . It means higher volatility on average. Lastly, within the stock market is defensive behavior. You have utilities and health care leading higher. Our research has shown utilities outperform and leads to higher volatility and thats what we have today and theres no guarantee, only probabilities and suggest the probability of no santa claus rally is higher today. Herb, do you believe in santa claus . I believe in history and i believe that the markets gains usually occur and it is what it is. Were below the two thirds of the people think it will happen and where sentiment overall is in the market. Right. But as we know, whatever sentiment is, 18,000. What do you believe in . By the way, just because people sentiment says its going to happen doesnt mean it will. Do you believe in historical determinism . Or do you believe in Creative Intelligence . It is not a class in yale. All ill say is oil is going down and profits are going up. The yield curve is important but its still very positive. And the inflation signals are very low. So oil going down and profits going up. Make me bullish. I dont know whether its santa claus time or new years time or whatever. This rally has not run its course. Kate, we got interrupted. I dont know how much more i have to add but i have a trader in particular accurate about the calls as to what was going to happen and telling me to rip between now and the end of the year notwithstanding oil prices. Who knows about early 2015 . Feels like the fundamentals especially on the energy side come together in the first and Second Quarter to where we may see a broader effect on the stock markets. Maybe. But at the same time people seem pretty bullish on the leg down earlier this fall. It is it in terms of givebacks. Whats the page . 112. Thanks so much. Thanks, jeff, charlie. All right, dom chu. Oh. Two thirds believe theres a santa claus rally. The rest of you are scrooges. Stop it. One historical determinant. Dom chu, you have a market flash . I do. I mean, i hope i can gifts and not coal in my stocking. Broadcom raising Fourth Quarter gings to the upper end of the guided range and increasing the Quarterly Dividend by 17 to 14 cents a share. Its also announcing a billion dollar stock buyback program. As a result, you see the shares up by nearly a percent in the afterhour trades and two companies with earnings after the bell. Krispy kreme doughnuts and moving lower in the after hours and you can see there down by 5 . A different story for korn ferry, in staffinging and executive search and shares up by nearly 2 . Interesting moves in the afterhours for those stocks. Certainly. Thank you. Tech stocks had a great run . Havent chip stocks had a great run . They have. Less than 5 away from 5,000. The nasdaq selloff . I mean, just i just think theyre good cyclical signs that the economy is improving and outside of energy and commodities i see eight other sectors to buy and means basically i would buy the whole index. Hold that thought, larry. Well ask a question you will love to answer. The eyepopping jobs report last friday, is it an anomaly or new normal . Ian shepherdson thinks the u. S. Will bust out. Hes here next. Later, consumers are loving the plunge in oil prices but its also fueling a lot of concerns in the banking industry. Wait until you hear why. Right now youre gonna ask for my credit card so you can charge me on the down low two weeks later look, credit karma are you talking to websites again . This website says free credit scores. Oh. Credit karma yeah, its really free. Look, you dont even have to put in your credit card information. What . credit karma. Really free credit scores. Really. Free. Credit k, i love you . Having a perfectly nice day, when out of nowhere a pickup truck slams into your brand new car. One second it wasnt there and the next second. Boom youve had your first accident. Now you have to make your first claim. So you talk to your Insurance Company and. Boom youre blindsided for a second time. They wont give you enough money to replace your brand new car. Dont those people know youre already shaken up . Liberty mutuals new car replacement will pay for the entire value of your car plus depreciation. Call and for drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch to Liberty Mutual insurance and you could save up to 423 dollars. Call Liberty Mutual for a free quote today at see Car Insurance in a whole new light. Liberty mutual insurance. Breaking news on yum brands. Dom chu with details. Yum brands is currently down about 3. 5 in the after hour trade and 83,000 shares worth of volume. The company is saying that it now estimates growth in earnings per share for 2014 in the mid single digit range and analysts on average were expecting a 9 growth number so theyre guiding below some analyst estimates for full year 2014 Profit Growth and continue to say that China Division sales significant in the particular downgrade of the estimate and talked about adverse publicity for supplier of chicken in china and estimate the fullyear same store sales negative working with that assumption thats how they arrived at their new mid single digit earnings per share growth for 2014 full year. Thats below some estimates, one of the reasons why that stock is perhaps lower minus 3. 5 in the after market session. Wow. It is amazing that issue pummeled that stock. A lot of issues. That china issue for so long. All right. Thanks, dom. Despite the weakness, stocks had a good run for the year. Combined with the jobs number that blew away expectations and our next guest thinks the u. S. Economy could be poised for a big things. Joined by ian shepherdson, chief investor. Great to talk to you. Thank you for coming on the show today. You take heart in what you saw on the jobs number for real . Oh yeah. I cant promise 321 every month. Thats maybe asking a bit much but thmaybe 275. What makes you optimistic . The big change is Small Business sector finally started hiring and strong number for november was signaled a few months ago by a real pickup in the Small Business hiring server and new numbers that are strong and telling us at least for a few months well do really well. Gdp next year for the u. S. . Picking up to 3. 5. 3. 5 . Yeah. I guess this, been down for so long that looks good. Right . Not absolutely wonderful but compared to the 2. 25 for 4 years ill take it. What should the u. S. Be growing at . Given the size of the output gap, a lot of people out of the labor force and working part time, i would like to see 4. 5 to close the gap up and probably not getting there just yet and i wouldnt be amazed to hit 4 at some point. What does that mean for when you think the fed makes the first move on rates . Not the language. Second quarter i think. This is the sting in the tail, you know. You cant brint 275 payrolls month after month and drive unemployment down to the level the fed thinks is unsustainable. You cant do that without a response. Talk of emerging market crisis with the strength in the dollar, the drop in commodities. To what degree is that a threat to your outlook for the u. S. Economy is there any potential for a feedback to here . There is some feedback an not very big and offset by the domestic strength i think. This is mostly a domestic economy. 87 of the u. S. Economy is domestic and stronger dollar is clearly hurting emerging market. Going to hurt them some more. No doubt about that and drive down the price of imported goods prices into the u. S. And another tax cut for consumers and spend it and grow strongly and what happens in the end not such a big deal. What about this comment that jeffrey gunlak made today of a continued slide in crude oil and down below 50 bucks, maybe pushes 40, not out of the question, that you can get a 1 yield on the 10year. That is not going to tell a story of a great going u. S. Economy. No. Because i think well a decoupling of oil prices and the 10year yield. The fed is not put off by aversion. They care about the tightening of the labor market and the Unemployment Rate and a nice pickup of ratings and looking past the headline inflation rate and going very low. Oil to 40, headline inflation is 0. You are not worried about the price of oil and the flattening yield curve. Thats a tax cut. A big kick for consumers. A horrible on mining and cap x. What about the decline in yields . Depends on circumstances. The market is blaise about the fed and a shock of tightening sooner and faster than people think and wake up the 10year. We have to wait for the fed to change their mind, say something, maybe actually move but if we print 275 payrolls unemployment is falling and finally wages pick up, game over. Great kofrconversation. Thank you so much. All right. The architect of obamacare calling the American People stupid was on capitol hill today and before anyone could ask him a question, he had this to say. Its never appropriate to make ones self seem more important or smarter by demeaning people. I know better. I knew better. Im embarrassed and im sorry. Falling prices, well explain why some banks could be left holding the bag if Energy Companies start defaulting on loans. New cadillac. My baby drove up in a brand new cadillac. Look here, daddy, im never coming back. Discover the new spirit of cadillac and the best offers of the season. Lease this 2015 standard collection srx for around 359 a month. The holidays can be an especially difficult time. Everythings different now. Sometimes i feel all alone. Christmas used to be my favorite. I just dont expect anything. What if santa cant find me . To help, sleep train is holding a secret santa toy drive. Bring your gift to any sleep train, and help keep the spirit of the holidays alive. Not everyone can be a foster parent. But anyone can help a foster child. Falling oil prices widely expected to give the consumer and the broader economy a boost this Holiday Season. But not everybodys cheering the drop. More reports that the crude plunge could be putting some nat gas players and banks that lent them all money at risk. Kate kelly with details. Lots of betting going on as to when the effect of 60 a barrel oil is felt in the market at large. Conoco phillips said theyll cut cap x by 20 and ive heard other companies are lining up to discuss their positions in this tough market because they dont want to wait until january to do so. Still, at least one company, the natural gas producer Cheniere Energy is forging ahead with a facility in corpus christi. With big checks of wall street to fund it. Even though the prices are typically linked to the price of crude, theyre protected from that actually by longdated supply contracts tended to natural gas instead. But tough times for the enormous junk bond market on energy and they rely to pay back the facility assuming it does get done. This could trouble other companies, too. Last four years, the sector raised a total of 550 billion in various credit financing so thats high yield Investment Grade and leveraged loans to the Energy Market since 2010 and in a bear market, theres either a big disconnect they say or a thinner tale for this crude oil setback than we think. Its been an interesting point i think. Why would the Natural Gas Companies have a problem . Nat gas price is stable. In fact, theyre picking up market share of oil because its cleaner. I dont get that problem. The problem for frackers, they cant go too much further down but they have some margin here. I think the issue there is regulatory and legal headwinds. With cheniere is liquefied and most players set the prices pegged to brent or japanese crude. We want to bring in a guest also standing by. Carl larry is an analyst. Good to have you here. What do you make of what kate said . When i hear her talking about the high yield thats out there, is this another do we see a swath of banks fail because they overlent to a huge sector thats about to take a big turn . Well, you know, the big factors is that its really a foreign problem. Not so much a u. S. Problem and when you look at other countries, that are producing and have the loans out, thats where the issue comes in. I think were still in the back burner for u. S. But i think that the problem will be with International Companies so i think thats where we see the big issue coming up soon. Is that because you see greater vulnerability in global prices . Based on what opecs trying to do, namely keep production intact, keep that 30 million a day quota to pressure u. S. Shale drillers so theres more vulnerable and a bigger leg down overseas . Looking at what the rest of the world, i mean, demands that low and theyre having a hard time finding a way back up. China could be a really good swing source for oil demand and looking at europe, you know, they dont have a lot of upside there. Refining margins are terrible. Production on the north sea on the decline. Theres a big issue with europe. Thats the one that needs to come back. Can we get back to the high yield issue . So much high yield issued to these drill earls in the United States. Larry, i think about the fact that everybody and their mother moved into high yield because it was the only place to get yield. I know people that put their grandmothers in high yield and now they have huge huge percentage of the sector. Right . Single biggest sector in terms of high yield issuances. Third biggest in the s p. On we on the verge of a moment of invest to recalls got into something they didnt know they were . Small way. Spreads widened in the junk market. Marginal Oil Producers probably overleveraged and banks who issued loans and sometimed leveraged and going to be some hurt. This is a small part of the story. This is in my opinion wall streets desperate effort to turn every piece of good news into a 2008 catastrophe. Oh my goodness small part of the story . Major players hold on a minute. Mom and pop are watching this saying a small part of the story . Invested in etf fully in at 60 , whats the leverage . You think a lot of mom and pops in hyg . Yes, yes. I do. I do. They could be. You had to get the yield somewhere. Are they in individual securities . Theyre not buying the paper, herb. But maybe through the etf market, right . They were thats what im saying. Hyg. Exactly. Talking about a small number of companies here. Theyre not the major guys. And thats why im saying this is not 2008. Theres a bifurcated issue here. One is what michelles bringing up. A wonderful question and the others the broader macro point youre likely right on and you have this other part of the story. Herb, herb, i believe in free markets. Do you really, larry . So do i, larry. I dont know. Maybe youre a historical determinant. My point is to you in capitalism there are failures. Okay . And as frederick hile taught us, sometimes the failures more important than the successes because they teach us stuff. Theres a small quantity of failures to occur but the majority of grannies are going to do okay. Can i just make a gut check here . I mean, i dont know whats going to happen, how long 60 a barrel oil might persist or 50 or getting to 40 but i think larry, you are right, it is contained for now. The question is, though, we were talking about this, how long does it go on . You will see the drillers continue to drill until they cant out of money and oil is so cheap that they cant got to go. Can i ask mr. Larry, i hear you overseas and insightful. What is your point on the Herb Greenberg catastrophe scenario here . Not a catastrophe. Herbs in the catastrophe. No, im not. I think its a small piece. The thing is that we are still a net importer of crude oil. Were producing 9 Million Barrels a day and great and bringing in 6 million. I mean, it is not like were we dont have an oil glut here. We are still bringing in oil. Refiners are making so much money the past couple of years its ridiculous. People follow the herd and think think Energy Stocks are going down and theyre not. Theyre really great value right now. Thank you, carl. To be fair, they have gone down about 40 odd percent, right . Yeah. You made a great risk here. Your analysis is correct. God bless you. Are you with me here on the leg down that we have already seen in the Energy Sector . No. I was going to say theres a difference, ads well, the impac and the segment is about and whether the banks are impacted or not. Theres a difference between corporate leverage on bank Balance Sheets and consumer leverage on bank Balance Sheets. The heart of the 2007 crisis versus what were maybe seeing today and thats kind of your part, isnt it . Small, smaller. But that doesnt mean less destructive. Doesnt mean citibank wont go down for the seventh time in 20 years and we will bail them out again. Its a governmentowned bank. Michelle is exactly right. I looked at the numbers in terms of whos done debt and equity underwriting in the last couple of years and all the big universal banks, of course. Citigroup, jpmorgan, wells fargo. You have to go somewhere. Im not knocking it. Im just saying they have exposure. Let him talk. But yeah. Thanks so much. We have to go. Okay. Okay. This guy is brilliant. I want him to talk more. Carl larry, good to have you. Consultant at frost and sullivan. Im looking over here now. Okay. All right. Oops thats about the only thing mit economist gruber didnt say before congress today. Thats hill right there. A month after a video went viral and gruber one of obamacares authors said the administration took advantage of the quote stupidity of the American Voter, unquote, he appeared before congress to try to explain the remarks. Well show you exactly what he said next. One of the architects of obamacare hauled before the House Oversight and Government Reform Committee today. The controversial remarks questioning the intelligence of the American Voter and how obamacare was passed is what prompted this appearance. We have exactly what he had to say today. Reporter hi, guys. Very tough day on capitol hill for Jonathan Gruber today, the consultant got into hot water over a month for videos of comments he made over the past year in which he suggested that in part the stupidity of the American Voter was a help to those who are trying to pass obamacare. Today he came to capitol hill to apologize for those comments. Take a listen. Its never appropriate to make ones self seem more important or smarter by demeaning others. I knew better. I know better. Im embarrassed and im sorry. Reporter the members of the congress knew that apology was coming but nonetheless today they took the opportunity really to heap scorn on gruber from both sides of the aisle. Take a listen to that, too. As far as i can tell we are here today to beat up on Jonathan Gruber. For stupid. I mean, absolutely stupid comments he made. Professor gruber is often said in washington to be the definition of a gaffe. Thats when somebody accidentally tells the truth. Reporter now, guys the sub text in all of this was democrats out there arguing that grubers comments were, quote, stupid, unquote, but that he was a relatively minor figure in the overall passing of obamacare. Gruber himself minimized his role today. Republicans said that he was unintentionally brilliant for telling what they believe is a hidden truth about how obamacare was passed. Back the you guys. Yep, yep, yep. He doth protest too much. Thank you. Two things of gruber. Quick. He appeared on the kudlow report months ago and lied to me. I was talking about medicaid to balloon as a result of the employer mandate which it already has ballooned and he kept telling me i understand it and its a completely separate track and he was dead in the water wrong. Second thing to say, real quick, democrats are stupid. They backed obamacare and have suffered the greatest Midterm Election losses in history. Republicans are a little smarter by opposing obamacare with the best majority in Congress Since 1930. So lets look at it that way, too. Jed clampett said of mit phd. No need to spell those dirty words around here. Were all adults. Its a shakeup at Abercrombie Fitch. After 11 straight quarters of declines, jeffries stepped down from the teen retailer. The move sent the stock soaring and so do investors agree with Herb Greenberg its long overdue . Well get herbs take on the resignation of the person he named the single worst ceo of last year. Abercrombie fitch announcing is that Mike Jeffries is retiring, Effective Immediately. The stock up about 8 on the news. Oh, he resigned and the stock goes up. And it just so happens our own Herb Greenberg chose Mike Jeffries as his worst ceo of the year 2013. So why was he on the list to begin with . And what do you make of the departure. Well, because his performance was horrific, and on top of horrific performance, he was a Public Relations disaster, and he obviously didnt see it. And that, i think when you reach that point and you have so many different factors, and at the same time, you had an activist in there pushing for change. He was a guy that said overweight teens shouldnt shop in my store, the clothes dont fit them for a reason. He should get together for a drink with the former lululemon ceo, as well. Who doesnt think all women can wear those pants. It was the founder. What about the guy from utx that doesnt show up . Well, if it had shown up in the numbers, perhaps it would he didnt show up. Well, hes gone. The moral of this story is dont show up on herbs worst list because Clarence Otis of darden was number three. Hes out. Hes gone. An activist in that one, as well. Number two, an activist and the activist is carl icahn is still in the job. And two is paul ritchie of nuance. Its still way underperformed. And im surprised. Its not a name we often talk about. Speech recognition software. This is a significant technology, but its been a controversial company. And hes still in the job and with carls backing, i suspect watch out. The only way he will is with carls backing. I would suspect because otherwise its been a disaster. You want to shed any light on who could be on your list for 2015 . Let me tell you something, i didnt do a list this year. But p when i look at it, the one who people would push for. I usually put it out to a polling. And i can tell you now, first person top of the list, don thompson. Mcdonalds ceo. And people would put shes been there for two years. Rametti. Yeah. I would not necessarily put thompson as one of my top three, even though the company had all of these issues. I think it was an inherited issue, situation. Don thompson, well, he was the ops guy when mcdonalds was humming. Those are Old School Blue chips and herb doesnt you know what, youre asking me a question. I havent given it thought. Can i give you one . Sure. Can i give you one . Yeah, sure. Jack moll. Hes engaging. A heck of a job. Giving it back to mark cuban, arent you . Putting aside the issue of Chinese Communist government, this guy the company shouldnt be allowed to list here, but hes the best ceo. Thats right. Were listing it because of him. Hes enabling the u. S. And the approach to chinese commerce. Jacks not, its our own government under republicans and democrats. Hes a tremendous story. Hes a classic. I watched the interviews with him. I watched the interviews with him. And by the way he didnt go to an ivy league college, which i really like. Thank you, guys. All right. Next that was a big day for markets and crude. Were going to get what our panel is watching tomorrow after the break. Okay. Uh, and i knowuhi know what blood type i have. Oh, wow uh huh, yeah. 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Call and for drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch to Liberty Mutual insurance and you could save up to 423 dollars. Call Liberty Mutual for a free quote today at see Car Insurance in a whole new light. Liberty mutual insurance. All right. Time for some final thoughts. What are you guys watching . This was a fun hour, wasnt it . Yeah, it was. Fun conversations. Yeah. Larry and i are trying to solve some issues in congress. The difference between obamacare and getting rates lower. Were doing this off camera. Its a Small Businessman trying to start a business, i can tell you, i can tell you im going to get that. Im going to personally deliver to herb. Yes. A Corporate Tax cut that cuts the tax rate to 25 . At least somebody can deliver a tax cut. S corp. S and llc. Use that as a tradeoff for obamacare in congress. Republicans dont know what theyre going to do on obamacare yet. Thats why this Jonathan Gruber thing is kind of last years story. But on Corporate Tax reform, with the small pass throughs getting the lower crated 25 , i think thats bullish as hell. Its going to be announced fairly soon by paul ryan. I like it a lot. Kate, what are you watching this week . Curious about financials. Interesting commentary over Goldman Sachs today from b of a. In terms of trading, ill be curious to see if theres more color in the coming days out of some of the other banks. Good stuff, guys. Good fun. That does it for us on the closing bell. Fast money starts right now. Take it away. Fast money starts now, live from the Nasdaq Market site in new yorks time square. Melissa lee will be joining us in a little bit from las vegas where she spoke with billionaire investor mark cuban, and she actually got him to play the fast money favorite, would you rather, yahoo or google, twitter or facebook, amazon or alibaba. His picks are coming up. Our traders, steve grasso, brian kelly, karen finerman, and guy adami. Major swings in the market. First in shanghai, chinas stock market suffering the biggest loss. Greece falling 13 , and then the u. S. , it was on track for an ugly day before