Transcripts For CNBC Squawk On The Street 20141224

European trading resumes on monday. Our road map begins with the market. Stocks looking for new highs a day after the dow closed above that 18,000 mark. Plus, on second thought, never mind. Sony changing course and letting select theaters show the interview after all. Now were waiting for the next big news, where you can watch it online. And uber overseas expansion taking another hit this morning. Why the ceo may not want to head to south korea any time soon. But first up, you saw it here yesterday on squawk on the street. The dow hitting 18,000 for the first time ever. Blue chips and the s p each going on to post alltime closing highs. One full quarter of the s p hit new 52week highs yesterday. 125 names, jim, although people still talking about the russells nonconfirmation, the nasdaq, which for the first time in several years is in danger of underperforming the s p. Well, you know what, it should. The run in the nasdaq is something that distinguishing this market from are the 1999 factor. Someone finally decided, listen, we ought to take profits. Then others followed along. Taking profits is integral to going higher. Parabolic moves, which i learned from my friend david darst, always produce the worst kind of markets. Stair steps always produce the best. There had been no fear whatsoever in the biotechs until this amazing bait and switch. Im calling it that to be just kind of funny, but thats what the biotech industry thought. I think it makes sense. I dont mind one bit that the market is rotating into the industrials, which have sat out. The banks. Im looking at some of the banks, and im talking about u. S. Bank, wells fargo, beginning to get a price to earnings multiple again. Remember those days . I do. When you say beginning to get a price to earnings multiple, you mean trading on that, perhaps. Meaning, yes, normalized earnings. Yesterday there was a lawsuit filed against wells fargo from a credit union. Thats fine, but this is not the i think the mark of when you began to get the bank stocks to feel like that was when tony west from the Justice Department went to pepsi co. Tony west was a guy, an ie dee log of the Elizabeth Warren variety. I think you said this guy was the greatest guy ever. If you were jamie dimon, you were saying, okay, its a bank robbery of the highest order. Though, he would never do that because thats not politics. The checks stop being written. Now you can say, you know what, i think jpmorgans inexpensable earnings and they can return capital. If you make that assumption, although there have been plenty of times you might have made that assumption over the years only to find theres a new scandal, a new investigation or something that was unexpected. I wrote that this morning. Im going to get whip sawed for saying this. You may be right. Were also dealing with you know, the tenyear moves up a little bit. Therefore, perhaps people can start to hope or wish. Although, your prediction yesterday on the ten year was not good things for the interest margins for the banks. 5 gdp basically says, if you dont have a rate hike, then theres it doesnt matter. We can go to 6. 3 like we had before the recession. We go to 6. 5, were going to pass china. Its possible. But let me ask you this. You got low gas prices. You have no inflation. You have an accelerating job market. Accelerating wages, or at least a sign of that. You have low rates. What could get better . Why not sell here . Is this as good as it gets . Thats a great question. The answer to that would be, we still have lots of companies that are below the market multiple, even as we have a lot of companies that are above. When i take a look at two of the strongest stocks yesterday, they were clorox and Kimberly Clark. We talked about it last segment. You sit there and look at the stock, it doesnt have great growth. So why should i pay 23 years worth of earnings for Kimberly Clark . I think that money should shift into Companies Like the banks, the financials. I think it should shift to the industrials. I still worry about europe. If we get europe to catch fire, emerging markets, which do well from gasoline get europe to catch fire . If low energy costs bleed into german industrial production. Thats what were waiting for. Yes, im not talking catching fire. Im not doing a hunger games thing on you. Im just saying its entirely possible. Are you going to do that . Its entirely possible. Gasoline is back to where it should have been. That will help, to carls point. Weakening euro. You think draghi may not have to do anything. Remember, only 15 of our economy is export. I just think i imagine a world you know what, guys sat here not that long ago. Jeffrey immelt. If Jeffrey Immelt and ge gets good margins and good growth, you think it will still be at 25 . No, although it depends what business is getting the good growth and the good margins. As weve seen, they do seem to run into this problem where theyre taking it out on one side and getting it on another. By the way, lets not forget when we start to see earnings coming in the next month or two, these multinationals are going to be dealing with a substantially higher dollar, which had a recent high yesterday. Thats going to hit. Now, whether the market rel acts to that, i dont know. That will hurt the drug companies. Always doing work on Housing Starts. Weve had 25 Million People added to this country from when Housing Starts were 2 million. Were at 1 million. While its as good as it gets for a lot of this, how do you rationalize having only a million houses being built when we have 25 million more people . The numbers, by the way, were bad yesterday. One idea is that a lot of them have gotten such a good fixed rate for 30 years, theyre not going to move no matter what. Thats very good. You look at home depot, you look at whirlpool. Lets take Sherwin Williams. Sherwin williams is just a bucket of gasoline that happens to be color. You think theyre going to lower their price . You think theres going to be a price war between behr and Sherwin Williams over paint . No. Its a virtual oligopoly. The Gross Margins are going to be unbelievable. I dont know if you heard phil lebeau today. Theyre not going to cut price. They may add a few planes. Theyre jamming more people in. These stocks, lets face it. They sell at six and seven times earnings. With gasoline, with jet fuel. Wait until those hedges start coming off. Talking in the next three to six months. Even when the pepsi co. Hedges come off. Celgene has had a monumental move from 67 to 110, 111. That could pause and in its place could be Companies Like hewlettpackard. I know theyre up, but are they really up long term . Its funny. There has one, i would argument, key marketmoving story this week which has been the express scripts story which hit monday which had a huge impact yesterday. I did manage to get ahold of a cup of people who invest in the sector. Yeah, will it result in perhaps fewer sales for what is a block buster knock the ball out of the park drug . Yeah, maybe. But somebody made the point to me. Take a look at the statteens. Form you lair restrictions, still they sold billions and billion of dollars. A good drug is going to sell a lot. The multiple, nine times now. Yesterday these things were down sharply. I know, david, in the end your a chartist. I joke, but when i deal with big portfolio managers, they often have that chart in their drawer. It is a 50day moving average for the biotech index. Its got to make a stand here. Look, i just talk about how when i look at the major stocks, lets talk about target and walmart. These stocks have done nothing for years. Dillards. Have you seen dillards . Two dillards mentions in one week by you. Theres a takeout spec on it. Kohls, i saw a positive note on kohls. I thought i was the only guy who went to kohls. Bed, bath, and beyond finally coming back. Best buy. It alolooks like amazon may not the winner this holiday. Its down 11 . Im talking positive. And then theres sony. Sony pictures, in fact, has done an about face, deciding to release its film the interview tomorrow. More than 200 theaters have signed on to show the controversial comedy. Sony had been criticized by president obama and many others saying the studio had given into hackers who launched a cyber attack on its computers. The ceo issued a statement saying, quote, weve never given up on releasing the interview and we are excited our movie will be in a number of theaters Christmas Day. What happens if its an awful movie . Well, maybe. At the same time, we are continue our efforts to secure more platforms and more theaters so this movie reaches the largest audience. Video on demand is also a key part of that. Apparently there was an approach to see if apple would be willing to do something. Supposedly well hear today. The v. O. D. Strategy will be announced at some point today. I think a lot of people are really shocked that north korea has held the world hostage for so long. Its a rogue country. There was a good piece yesterday about how china, how long will the prc support north korea . Well, today theyre not theyre saying theyre not convinced it is, in fact, north korea that was behind all of this. Theyre not about to start bashing pyongyang. Do you think next year will be the year that a major bank is hacked . I hope not. You mean again . I mean hacked in the sense, you know, wow, what happened to my money . The key with sony as opposed to so many of the other hack that are ongoing all the time or the chinese cyber espionage, they destroy. They destroyed a lot of the stuff on sonys computers. They did . Oh, yeah. Its going to take them i dont know how long. Whereas, typically what you will see is, in fact, they dont want to know want you to know theyre there. They want to take your stuff, steal your stuff but not have you know theyre there. To your point on financials, the armageddon scenario is destroying records. Right. Thats what im talking about. Just no trail. That is a frightening for lending club. I mean, lending club, are they not vulnerable . Who knows . I dont know. Now, goi got to tell you i d have a sneaking suspicion it may not be the North Koreanss. If you google outrageous things sony people said, even the North Koreans have a far more a far funnier sense of humor than we think or theyve hired someone like a louis c. K. Who really, like, kind of got this zeitgeist. Sure, louis c. K. Is going through all the emails. Thats funny. Thats not funny. Bruce willis is the bank guy. Maybe they got louis c. K. Looking at the tapes. I was mistaken for louis c. K. The other day, and i was so thrilled. Youre pretty funny. Not for the first time either. Its better than being mistaken for lennons great, great grandson, which frequently happens. Or for, hey, trotski. Coming up, were going to talk to two independent Theater Owners that are planning to show the interview at their facilities. All right. When we come back, uber and its ceo under scrutiny once again. Plus, the weather. Not what many of us had been hoping for as many of us take to the roads and skies. The travel forecast coming up in a moment. Take another look at the premarket. The s p going for six up days in a row. Havent done that since june. More squawk on the street from post nine in just a minute. [ male announcer ] your love for trading never stops. So if you get a trade idea about, say, organic food stocks, schwab can help. With a trading specialist just a tap away. Whats on your mind, lisa . Id like to talk about a trade idea. Lets hear it. [ male announcer ] see how schwab can help light a way forward. So you can make your move, wherever you are. And start working on your next big idea. Aaa is projecting 98. 6 million americans will journey 50 miles or more from home this Holiday Season. Thats up 4 from a year ago. But the weather is creating challenges for many looking to travel today. Weather channels mike seidel is in tallahassee, florida, this morning. Hey, mike. Reporter hey, carl. Good morning from i10. Were about to get whacked here on the corridor here in the panhandle. A squall line, this is part of the same system which put down at least five tornados, killing four, yesterday in mississippi. Its now rolling down i10. Look at the sky here. Its getting very, very dark. Weve got some heavy rain moving in. Dallas yesterday had their wettest december day on record with 7. 44 inches of rain. Their ninth wettest day of any day. This is not the tropical season, although it feels like it. It was 73 this morning, more than 30 degrees above average. You can see the sky is darkening, rain is beginning to fall. We may have more flash flooding. We had a flash flood emergency in this town last night with all that rainfall. Another 1 to 2 inches. Thats the radar. Lets take you back to yesterday. We had the tornadoes touch down in mississippi. One in georgia, one in louisiana. The killer tornadoes in columbia and near laurel, mississippi. Four were killed. Three were in trailer parks. The town of columbia basically in the dark this morning. Power getting knocked out to most of that town of just over 6,000 residents. Now the concern is not only here, parts of georgia, south carolina, charleston, south carolina, tornado watch until 2 00 this afternoon eastern. And the east coast, its all heading that way. So far, the airports in new york have been in pretty good shape. Theyre going to get pretty ugly this afternoon and this evening. Long delays anticipated to ratchet up as this line, this cold front heads in. Wet and windy and warm. One of the warm egs Christmas Eves youll ever experience in new york city all the way to boston. This is all going to move out tonight and tomorrow morning. So all of this cloudiness, all of this storminess, carl, will be out of the way, except maybe boston and parts of maine tomorrow. It will be a sunny, relatively mild Christmas Day up and down the eastern seaboard. Today, big issues at the airports. If youre dodging the rain, you need to slow down. There will be ponding on the roadways. Well stick it out here. Its scary dark right now. It feels like tornado season, and its december. Yeah, very strange. Mike, thanks so much. Mike seidel of the Weather Channel. No coincidence, by the way, fedex and u. P. S. Trying to limit their air express. Absolutely. I lived in tallahassee for a year. It was very dark. The whole time. Was it a dark time in your life or was it just i lived next door to where ted bundy however, lets leave it on that. We will get cramers mad dash, count down to the opening bell. Take another look at the premarket on this shortened session today. Again, closing bell today is at 1 00 p. M. Eastern. Back in a minute. Are you going to catch the nutcracker this time . Whenever theres people in costumes, thats been candy crush. Come on, you got to love that. Your daughters are older now. We used to go all the time to see nutcracker. Those days have passed. They have. Still worth seeing. Right. Absolutely. Now theyre older. Now its techno. Still the same show. Its a nice thing. All right. Michael ye puts out numbers of how different prescription drugs are doing crummy numbers. Merck bought cubis. Theyre going to close this thing soon. We commented on it, of course, because the day the deal was struck, a judge said, oh, yeah, you can have a generic competitor a lot sooner to your main therapy than we thawing. Now, that being said, they did get a back this weekend from the fda, which is their next big drug. But man, what could they have paid . It boggles the mind. It does. Contrast merck with allergan. David wants to go do great things. Hes going to do great things for humanity. His brother it a great doctor. They did everything right. Of course, he was victim of activism. Merck, what can i tell you . Is there science done at merck . I dont know. I assume there is. Is there science there . Not sure whats going on there. That was the greatest sale. Its the snaple of medical. In five years from now, we can revisit this. Lets take a longer term view. Not unlike if you bought the ruble the day that they raised it to 17 . Home run. So this could be the ruble. Right now doesnt look so good. All right. Lets switch to a company thats trying to do something. Novonordisk. This is an injectable weight loss drug. Most have been a bust. I always believe that anything that doesnt involve diet and exercise will be a bust. But obesity is a real issue in the world. If you could lower it somehow with a shot, obesity, leading cause of Heart Disease and diabetes. This could be a great break, if it really works. If it works. Although, few of them really work. Biotech is where you get the breakthroughs. But novos done some good things. Well, look, stock is up 5 . Well be watching that one along with a bunch of others. Remember, its an early close today. 1 00, right . Things will stop trading here. Theyre going to start trading about four minutes from now. Were back on squawk on the street. Music. The getaway vehicle for all the confidence you need. Td ameritrade. You got this. Youre watching cnbcs squawk on the street live from the Financial Capital of the world. The opening bell in just about a minute on this Christmas Eve. We have the dancers from the nutcracker about to ring the opening bell. Of course, the s p coming off of its 51st record of the year. The most weve had in a calendar year since 95, jim, when we had 77 records. And in 1995, you would pick up the paper every day, and it would talk about the record. I was scanning the New York Times business section. No mention of it at all. Isnt that amazing . What does that say . No mention of it at all. Its something on dow 18,000. Nothing . It was more about the economy. The gdp number. The journal likes to do dow 18,000. Its marketing. I just think its rather amazing this incredible milestone is not broadcast, but that has to do to some degree with the ideas like, eh, the stock market, no longer a factor in peoples lives the way it used to be. Its amazing. Even with jobless claims today down to 280. Theres a look at the opening bell and the s p at the top of your screen. The new york city ballets production of the nutcracker, celebrating its 60th season. Over at the nasdaq, the salvation army. What amazing work those guys do on the sidewalks all season long. Doing the honors on this Christmas Eve. U. P. S. And fedex, not a lot of Corporate News today, but they are limiting the number of air express deliveries. They do not want a repeat of what they had last year. I guess you just theres nothing you can do. Its almost impossible. Do you really build your whole operation around a 48hour period . You really cant. Its just like you cant afford to do that. You cant say, listen, were going to run it peak and fire everybody the next day. But they do have a lot of parttime workers. By the way, those are great jobs for kids who have, you know, a Little College break. U. P. S. , you know how many deliveries theyre going to do in december alone . 585 million. In december. Did you know they collect those hats from the parttime workers . Those great u. P. S. Hats, which not unlike the hat you wore when you were imitating the chinese communists, when you wore that famous oh, my gosh. You remember that . That was the con rail annual meeting. Remember that . Thats etched in my brain. Wow. Well, you were still at the hedge fund. You were just watching on tv. I looked like deputy dog. Exactly. U. P. S. , this is a famous thing. I urge people to recognize thats where you can get hired. People are not done selling oil names. Neighbors, noble, murphy, hess. Rig has the distinction of being the worst s p name of the year, down 62 and in the red once again. Its funny you mention rig. If you go back to the cataclysmic decline in oil in 200 remember the 2007, 2008. Rig never got anywhere near this. People are trying to cancel the rigs. By the way, the gulf of mexico is going to add between 300,000 and 500,000 barrels a day within the next 12 months because all those wells that were spun after the macondo the moratorium was lifted, are coming in. Remember, these are long live wells. This it you have stuff is just keep spewing. The gulf of mexico is finally back. And thats now its like these rigs, its like everyone hopes they take charges and scrap them. Theres way too many rigs. Theyre going to be used for offshore parties by rich people, is my prediction. Billionaire Hedge Fund Managers are going to take these down with helicopters, and theyre going to be the new nightclubs for the rich. Really . Yes. And that will be very exclusive. Nobody is going to be able to crash your party there. Well, they were using the tankers. If the price that theyre charging when they were down to 10,000, how can you not have a party in one of our tankers rather than a nightclub in new york . I did mention i said, i thought the smell would turn people off. What did he say . He said you get used to it. Coming from the guy who has drunk fracking fluid, right . Fracking fluid is not bad. Compare that to a mcflurry. Im telling you, given that menu of mcdonalds, would it hurt it to have some fracking fluid . It might be an upgrade. That is rough. Lowfat flakiracking fluid, right . Im still working on the whole party on the tanker. People use the intrepid for parties. Im telling you, a great solid transocean rig, say 20 miles off the coast of gulf of mexico, is that not the Perfect Place for a Billionaire Hedge Fund manager to just really take it down . I think we get the image. People are buying a little celgene. Starting to make a stand. This is the level that all the different biotech etfs old. I said last night, put half a position on. Put a half a position on. If it doesnt hold, then it goes to the 200 day. Thats an 11 decline, but i would still put it on. Did want to mention, directv and disney, yesterday they announced a new multiyear who . Disney and directv. I was just thinking about disney. Yes, you were. I was thinking about it even before that. But they announced this yesterday. Stocks are not really moving too much. Both are up a bit. Be up it is one of those very broad distribution agreements that weve been seeing. Also offers directv customers, you know, access to a lot of disney content across platforms. We are seeing more of that in these agreements. Now, unlike the deal that disney did with dish a while back, where there is an opportunity for dish to create some sort of overthetop programming bundle, if you will, that doesnt appear what directv is focused on. Of course, direct is in the midst of getting bought by at t. But its always worth mentioning. Youre talking everything. Theyre adding fusion long horn network. Huh . Yeah, the long horn network. Espn goal line. Espn buzzer beater, espn 3. This is where i always have to go. S. E. C. Network and a lot of other stuff. You know what . I saw a deal this morning with facebook and the nfl. I dont think people at home recognize that even you use the likeness of the nfl on tv, and youre not sanctioned to do it, even if youre a network that has it, they crush you. But this facebook nfl deal is also very important. Because facebook look, ive been waiting for facebook and google to really make a push on video where they can make money. This was a very important deal. Interesting. Did you see the share that the seahawks game got in seattle . Just the share of houses using televisions. 60. Unthinkable in television. The greatest player playing right now. Also a great guy. Does a huge amount of charity work and doesnt talk about it, but i will. Absolutely. Wanted to mention arcp, a name weve had a number of times. Thats the gold standard. American Realty Capital properties. Thats a joke. Triple net lease that has had to, put it mildly a good of tumult. The board is basically in control here. They did put out an update on their business priorities. Theyre in the midst of trying to figure out working through accounting issues at the company, which is why the stock went from 18 to 8. They want more time to get that done. Theyve gotten it from their lenders in terms of getting a bit more time. They also are trying to figure out what to do with coal. Theyre keeping that right now. But theyre trying to determine what the best end for that is. They had originally planned to sell that. It had been in a deal to do so. They also tell us on the dividend remember, they were paying a monthly dividend. Which is why a lot of people really love that. Now theyre saying were going to go quarterly most likely but also pay it at a similar rate as that paid by their peer group. So we get some update there is. We have to wait and see when they actually appoint a new ceo. Theyre trying to at least give the sense that the board is in control. Theyve gone through the properties. They feel comfortable with the Actual Properties there and that everything is copacetic. I didnt mean to when i said the focus of business is to do business. Arcp was the largest read. The other reads, by the way you know, when youre with a Real Estate Investment trust ceo, theyre very proud of their group. They were not proud of what arcp has done to the group. They have cherished their reputation, so this is regarded as a stain. Im sure they want to put this thing behind them. Without a doubt. But it will still take time. Maybe more stories before we get there. Biotech again bouncing. That 50day average is holding. I know this group is very chart sensitive. As silly as that may sound, it does trade as an etf. The etf has held this level multiple times. Its where the buyers come in, and theyre coming in. One big reason the nasdaq is actually keeping pace with the Broader Market today. Well keep our eye on that. Bob is on the floor today. A lot of modest gains this morning. Weakness in energy, as you noted. The oil down 2 . West texas. Its really stabilized. We were as low as 54. Its been 56, 57. Stabilizing around there is certainly a good sign. Modest decline in the usual names. Were used to these 1 , 2 , and even 3 up and down moves in these stocks. The key story is just stabilizing in the mid50s for oil will do a lot at this point. Lets talk about holiday sales. National retail federation, i think this is a good year, not a great year. Theyve got 4. 1 as the estimate. Last year was 3. 1. Just talked to ken perkins at Retail Metrics. He thinks its going to be between 3 and 4 . Hes also calling it a good, not a great year. Ken noted to me in Retail Metrics that Super Saturday looked very strong to him. He noted what several people have said throughout the last couple of months that, the big trend is to buy online and pick up in the store. Piper jaffray had a note out talking about that, saying theyre focusing on stocks with high ecommerce penetration and the buy online pick up store capabilities. They specifically mentioned three companies doing a real good job on that buy online, pick up in the store. Nordstrom, kohls, and williams s sonoma. A lot of high praise for Williams Sonoma for that instore pickup capability. Piper said 20 of their responds say they plan to spend more next year. Traffic mostly in line with expectations at a number of places. We did not hear a lot of discussions about promotions. Not as many mass promotions as we heard last year. Although, nomura had a note out saying aeropostale, Abercrombie Fitch were more promotional this year. You can buy Retail Stocks in an etf. There it is. Thats the main one. This is a basket of all the big retailers. Market cap weighted. Thats at an historic high. Its only been around a few years. The Consumer Discretionary sector doing fine, and its bounced in the last few days. Thats certainly a very good sign. I wouldnt call it a blowout year but a decent year. A number of retailers have had decent moves up, where you tend to see selling pressure in the last seven or eight days of the year. Zumiez, gap, kohls, and nordstrom all have had decent decembers. Guys, merry christmas. Ill see you next week. All right, bob. Enjoy your time off. Bond markets will close at 2 00 p. M. Eastern time today. Rick is at the cme. Good morning, carl. Indeed, theres so much going on in treasuries, adjustments, but the big story continues to be europe. Lets start at the short end of the curve with a twoyear note. As we approach the threequarters of 1 mark, we havent been at these levels since april of 2011. Lets keep that date of april 2011 and look at five year. Granted, we were just at higher yields as recently as the third week in september for fives. But i want you to get the co complexion of how close many of these markets are to breaking out with respect to yield. Lets look at a twoday ten. It was a wild ride the last couple of days. Ten years are currently, if they should close here, around 2. 29, it would be the highest yield close since the 5th of december. Remember, those 20 sessions that we had where the closes were all grouped in between 2. 30 and 2. 38, not only will that be important today, next week, its going to be a huge area to Pay Attention to on which side of it we trade in the first couple of weeks of the year. Remember, it was last january, the first day of trading we established the high yields low price for the year on the long end. Now, if we look at whats going on in bunds to tens, thats the blowout of blowout trades. 1. 50 was the norm, the premium for our better economy. Look at a twoday chart. This spread widens 1. 6 basis points. Unheard of. If you open the chart to 20 years, you wont find it any wider than 170 basis points. You have to go back to the late 80s where it traded over 200. In terms of the Foreign Exchange markets, whether its the yen or this picture of the euro going back to the summer of 2012, its been a dismal year for those with dismal economieeconomies. But are they complaining about it . Not really. A lot of these are export economies. Even though the dollar is at the highest level since 06, the chart is a good one. Well continue to monitor some of these lofty levels, especially right around 100 in the dollar index. Dont think well make the 120s you see on that longterm chart. Charl, back to you. All right, rick. See you soon. Rick santelli. We got pressure all across the energy complex. Jackie deangelis. Were looking at Oil Prices Lower today after what traders are calling a dead cat bounce yesterday to upside. Were seeing wti at 55. 65. Just two pennies under that. A very key technical level to doumpbsi the downside. A big build in inventorienvento. At the same time, rick is talking about that dollar index potentially going higher. And traders are talking about that as well. When fresh money comes into this market in the new year and the dollar strengthens, we do think, traders think, that these oil prices are going to go down. To bobs point, not necessarily going to stabilize here at this 55 level. I want to point out that brent is trading over 60 and that gas prices ahead of the report today down as well. A lot of this energy news still good for the consumer. Back to you. Thank you very much. When we come back, well talk with two independent Theater Owners who have decided to show sonys film the interview, which opens in limited release tomorrow. In the meantime, dow is is up 37 points. S p 2083. New highs at this level. Back in a minute. You can bring back a lot of things from a trip around the world. 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As 2014 draws to a close, cnbcs breaking out the 2015 playbook, looking at ways you can make money in the coming year. This hour its the financials. Heres kayla. The news for banks this year, youre boring, get used to it. Animal spirits quiet in the face of rigid regulation with Tech Companies encroaching on their turf. Banks are just trying to protect their core business model, taking deposits and lending money. But 2015 will bring some challenges. First, vocal shareholders. Investors in bank stocks have waited perhaps too patiently for rates to rise and business to improve. Banks are seeing scant return on assets and investors scant returns on their investments. Regulations are only making it costlier to be a bank with doubts now surfacing on whether bigger is, in fact, better. Expect backlash and more activism on buy backs, dividends, governance, and whether to just break up. Second, midcap mergers. Slowly but surely, banks of a certain size are tiptoeing toward deals again. The sweet spot for consolidation, banks with less than 50 billion in assets. Analysts are watching comerica, ast to be ya, and first niagra financial. Third, Silicon Valley goes to washington. Wall street admits its losing ground on technology but says no real threat exists without a government green light. Look for players like paypal, google, and apple to explore a move in that direction. Looking at some of the onemonth changes in some of these names, jim, jpmorgan up 2 , 3 . U. S. Bancorp, 3 . Wells, 3. Good moves. These are a sign of fed going to raise rates, economy getting a little stronger. I really do believe that. And the end of the persecution. And prosecution. I guess if youre against the Justice Department. The former ceo was bold enough to come on our program and say some things about the Justice Department. Hes a serious banker. Hard to get executives to do much media in general because of the compliance. And hes a hero. People hate the banks. Theres nothing you can do about it. I found the whole notion of some of the prices that the Justice Department 17 billion, 13 billion. I couldnt find any rigorous backup of why they asked for these numbers. Then he said on air, why didnt they just put the bad guys in jail . Everybody skated. They took a pass on the bad guys. Potentially difficult to actually convict. Well, you know what . They went after Insider Trading guys. Some of the words that were used like when you go to law school, theres certain code words that say amateur, you know, reaching, and they used a rot of the code words. All that said, wells fargo is up 22 this year. I think thats fine. Yeah. When we come back, well get stop trading with jim. Dow is is up 45. Dont go away. Or trading never. So open an account with schwab. And when a market move affects, say, a Cloud Computing stock youre holding, we can help you decide what to do. With tools that help you see how market activity is affecting your positions. So when the time comes to decide whether to scale in or scale out. You can make your move, wherever you are. And start working on your next big idea. Time for cramer and stop trading. The utility average remains very strong. I think the answering for why these are, even those Interest Rates are going up, is because they actually have earnings momentum. There are more industries being built, more power being used. And this is a highly unusual thing to see this group go up while Interest Rates go up. It has to do with business getting better, with Industries Using more power, small business, big business. Something to watch because usually at this point in the cycle, this should be the worst performing group, and its among youre not say thing that rates are not a structural head wind to these stocks. Im saying typically you should sell these stocks. But the actual earnings are going to come through, and theyre going to shock you this i think that wisconsin i mean, you know what . Its just a highly unusual moment. This is 5 gdp translating everywhere, including the power companies. Be aware how strong that means the economy really is. Its kind of a great anomaly that a lot of my friends who cover oil cant believe. A lot of my friends who cover the economy cannot believe this group is the strongest. Its because they have earnings momentum. And surprising to see the ten year back to 2. 28. Almost at 2. 3 this morning. And you should be selling utilities left and right, but no one wants to because the numbers are going to be good. Isnt that something . Never think of that. Nice way to close out the year on some of these. It sure is. Dominion saying, hey, listen, business is great. Its a utility. Business is great. This is a good sign. I know a lot of people on twitter were saying, oh, cramer, the fed this, the fed that. Whats the matter were making money . I like how you put it too. No bank teller has ever told you, you cant deposit. Right. I had a bank teller the other day who said, listen, this is yellens money, go to another bank. Another guy said, this is from bernanke, you should just put it in your mattress. No, no. No. No. No. Theyll take your money. Enjoy the rest of the week. Thank you. You too. Jim cramer. Merry christmas. When we come back, two independent Theater Owners tell us why they decided to show the interview from sony in a minute. I have the worst cold with this runny nose. I better take something. Dayquill cold and flu doesnt treat your runny nose. Seriously . Alkaseltzer plus cold and cough fights your worst cold symptoms plus your runny nose. Oh, what a relief it is. Thanks. [ male announcer ] fedex® has solutions to enable Global Commerce that can help your company grow steadily and quickly. Great job. mandarin cut it out. See you tomorrow. What are you doing . The dishes are clean. I just gotta scrape the rest of the food off them. Ew. Dish issues . Cascade platinum powers through your toughest messes better than the competition the first time. Cascade. Now thats clean. My baby drove up in a brand 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 ats for around 329 a month. Hurry in. Offer ends soon. Good morning. Welcome back to squawk on the street. Im Carl Quintanilla at post nine of the New York Stock Exchange. Simon hobbs is off today. Take a look at the markets. A day after we hit 18,000 on the dow for the first time, got some new intraday highs for the industrials. Jobless claims came in at a sevenweek low. Just about 15 points from s p 2100. With that, our road map starts with stocks, drifting higher a day after both the s p and the dow closed at record levels. We are seeing some buying in biotech after that big selloff yesterday. There are just a few more hours left to finish off your holiday shopping, and it is crunch time for both fedex and u. P. S. But will your packages arrive on time . Were going to get to a report card coming up. And finally, sony says the movie will be seen. A Theater Owner who has agreed to show the now controversial movie the interview at his theater will be joining us live in just a couple minutes. Well ask him why he decided to go ahead with the screening. And a reminder, its a shortened trading day today. Both the New York Stock Exchange and nasdaq will close at 1 00 p. M. Eastern. The bond market will close at 2 00 p. M. Eastern. But lets start with the stock market. Dow, 18,000 and rising even farther than that, setting a new record high. As you can see, it is up about 43 points on the shortened trading day of stocks. So where do we go from here, both for the dow, s p and the nasdaq . Joining us, david katz and dan greenhouse here at post nine. Dan, the santa claus rally didnt disappoint. I know youre not a big fan of the round number 18,000. But it is a milestone. And we gained it from 17,000 in just six months. So what does that tell you . Where do we go from here . Well, listen. Youre right. The round number Means Nothing. It Means Nothing more than 17,999 and the time it takes us to go from 17 to 18 is also relative. Its a smaller move than the move from 16 to 17. That said, it does reinforce the idea that the market is moving higher. If youre going to move higher, youre going to pass 18. Youre going to pass 1825 and eventually get to 19. I think the general theme is that stocks are pushing higher. And what is going to drive it . Is it the patient fed . If you look at whats happened since last wednesday, a stunning rally. 1,000 points almost in the dow. I got to be honest, im in the minority here. I found nothing that the fed did worthy of the type of rally that manifested itself. Maybe its just a fact that i follow this more closely than most, but they didnt do anything that i found particularly surprising. And the idea they would be qu e quote unquote patient shouldnt catch anybody by surprise. David, you hear the Federal Reserve on hold, that gdp number was solid. So is the Economic Data, jobless claims today. Not to mention earnings. Do you see all of these factors propelling the same reasons that weve seen 2014 rally into 2015 . We think so. Seasonally, you have a lot of good things for december. Thats whats been driving this stock market upup, with better news in the absence of negative news. We think next year is going to be another good year for stocks. Back to that 9 to 11 type return with a lot of volatilitv. We think youll have that type of environment next year. Get ready to buy on the weakness. I think 7 , dan, was the worst selloff we saw for the dow this year. We face some scary threats. Ebola, isis, what was happening with ukraine. Is that fortunately, u. S. Companies dont sell that much to isis, so its not that big of a deal. Its a sentiment deal. We saw selloffs. There were a number of catalysts. Sure. Theres no doubt certainly of late volatility has accelerated. You saw that not just in october. We had a selloff thereafter. As a general theme, the smoothness, if you will, of 2012, 2013, and early 2014 has given way to a more normalized environment in which selloffs will be more common than is otherwise the case. I dont think thats a bad thing necessarily, and it doesnt procollude markets from pushing higher, but it is a change from what weve seen. Do you think were going back to the boom days it of 90s . Low inflation, job markets picking up, gas price as a huge tail wind. In response to davids argument about next year being 1999, for some time now, the better part of 12 months, sort of casually in conversations we would debate if this is a bubble. Then is it 95 or 99 . Thats not a new observation. The idea that somehow we were in a bubble and if it was, where are you in that context . I know that next year is 1999. David is obviously a more accomplished investor than i. I think the way that i view things along those lines is some of the things that were present in the late 1990s are simply not there now. Yes, valuations are excessive in some areas of the market. Yes, theres frothiness in tech. You look at sort of the valuations that are being put on instagram and the like. But as a general rule in the market, you dont have that type of enthusiasm that you had in the late 1990s by any means. That doesnt mean the market cant go down. David, thats a good point. Retail participation, Household Debt not really what it was back then, right . No, we think that the valuations of the market right now in aggregate are about 15 1 2 times next years earnings. Thats pretty reasonable and in line with historic averages. We think stock prices are okay here. There are definitely areas that are richly priced now. We would be wary of those. Some of the new Media Technology stocks are selling at 30 or 40 times plus earnings. We would be very wary of those. I know jim cramer spoke a little bit ago about utilities having good fundamentals going forward. Were wary of that group. While they might be good, theyre at the high end of their valuation over the last 10 or 15 years. Flip side is groups like the banks or financials or financials and energy are selling at the lower end of their valuation. If i could just add real quick before we jump in here, valuation means absolutely nothing in terms of immediate returns. Because something is cheap doesnt mean it cant become more cheap. It tells you what you should expect over a one to threeyear time horizon. How many people have come on the show and talked about the shiler pe for the broad market being in a bubble . I mean, new hampshihenry is on every day. Hes been talking about bubble in stocks. We have to be careful about how we discuss valuations. Finally, every year we come into a new year saying this is going to be the year that you got to short the long bond or short the ten year. And every year its wrong. Every single i mean, its government to be six years in a row now. Is this the year where rates actually go up . I will say two quick things. First, not everybody was in that camp for a while. I was in that i wasnt sure yields should move higher. David rosenberg had a prominent or public bet with jim grant about whether the ten year would go up and down. I think last year i was wrong. I thought yields would drift a little higher. Obviously next year i think yields will drift higher again. Its hard for me to believe with the economy doing what its doing, with job growth doing what its doing, and with the Unemployment Rate getting to where it is, with the fed tightening next year, i find it hard to believe. But others are not tightening. Others are easing further. Thats whats driving buying. Theres more going on here than simply i want to make a point that doesnt get discussed on television at all. Wow. Im all ears. Were not going to break news, but theres something going on. When you look at the ten year, everyone says, why is it doing what its doing . The fed is holding it down. The example being used is a beach ball being held under water. The back half of the curve is telling you something is going to go wrong in the next, call it, three to five to ten years. We know rates are going to go up next year, however marginally and modestly it might be. But what the curve is telling you is not that something is wrong with the economy or the feds holding it down but that further out theres a limit to what can actually happen. I think its a really, really important point that doesnt get discussed nearly enough. Thank you, dan. We covered that. Well leave it on that less than optimistic note. Happy holidays to you both, david and dan, for coming on. It is crunch time for fedex and u. P. S. Will lastminute surges disrupt deliveries arriving on time . Morgan brennan is here. Fedex and u. P. S. Still need to deliver ten of millions express packages today. So far this season, theyve been doing a better job. On monday, u. P. S. And fedex both got 98 of their shipments out on time compared to about 90 last year. Thats according to data from ship matrix. One of the ways theyre doing this, theyre invoking limits on certain retailers. Heading into the holidays, both companies warned theyd turn down lastminute orders that exceeded agreed upon limits. That seems to be happening with some air express deliveries right now. Thats on top of network upgrades, more workers, more aircraft, more trucks. In some cases even rented uhaul trucks. Even so, did we get we did get reports last night that some fedex packages were stranded in memphis. I reached out to fedex. A Company Spokeswoman says operations are, however, running smoothly, given the high volume and that weather is not having an impact yet. Getting a similar statement this morning from u. P. S. As well. But theres another name to watch today. That is the u. S. Post sal service. Its been handling the lions share of amazon shipments. Monday set a record for the postal service. 28 million packages delivered. That was 10 higher than last year, and its five days later than its projected busiest day. For all of these carriers, u. P. S. , fedex, and the usps, its all going to come down to tonight. That wild card is going to be the weather, which is affecting so much of the country right now. Carl, back to you. Another story were watching today. Morgan, thank you so much. When we come back, the interview set to hit the big screen tomorrow. One of the independent theaters showing the film is going to tell us what they expect. And as the year winds down, who will we dub the new king of hedge funds . Were going to break down their performance and their rankings in a moment. You dont need to think about the energy that makes our lives possible. Because we do. Were exxonmobil and powering the world responsibly is our job. Because boiling an egg. Isnt as simple as just boiling an egg. Life takes energy. Energy lives here. Female announcer even tempurpedic mattress sets at low clearance prices. Save even more on floor samples, demonstrators, and closeout inventory. The year end Clearance Sale is on now at sleep train. Your ticket to a better nights sleep a deadly tornado landing in mississippi and the state is bracing for more bad weather. Keith carson with us from the Weather Channel from columbia, mississippi. Keith . Reporter good morning, sarah. Yeah, you know, were getting a better look at the damage this morning. We arrived early. It was still dark. This scene obviously was a little bit more remote. What youre seeing off the bat is sheet metal here tossed around. If you look up here, youll see that sheet metal wrapped around other structures. On our drive here this morning, we saw all kinds of roofs, metal, wrapped around trees, which is usually a sign of a relatively strong tornado. Clearly theyre getting to work very quickly here. This is a town, columbia, of about 6,000 or 7,000 people, somewhere in the middle there. Almost all of them did not have power this morning. The power crews doing the best they can to bulldoze this debris, get some power poles back up, and get people up and running. One of the things we look at when we talk about a storm system is what kind of debris does it toss around. We have obviously boards here, but we also have cinder blocks. That really struck me when i got here this morning that it was able to knock over a structure made out of cinder blocks. That says something about the strength of the system. Unfortunately, it was Strong Enough to claim several lives here yesterday afternoon and into the evening. About 50 people were injured. Again, the size of this town is such that there were only 49 beds in the hospital nearby. So they had to run that on a generator and get as many people as they could to other parts of the state to care for them. So carl, unfortunately a really tough situation, especially now on Christmas Eve day. Just incredible weather. Keith, thank you for that. Keith carson joining us from the Weather Channel. Meantime, sony allowing the release of the interview, as you probably know, tomorrow. Cleveland cinemas is one of the theaters that will be playing the film starting tomorrow in both cleveland and pittsburgh. David huffman is marketing director at cleveland cinemas, which owns those theaters. He joins us on the news line this morning. Thanks for joining us. Sure. Thanks, carl. How are sales going . Very, very well. You know, at least in cleveland and pittsburgh, the two theaters we have showing the film, in each of those markets, theyre the only theaters playing it, so if you want to see the film, you know, people are having to come to our locations. Usually obviously the films are playing in a lot more theaters. This time the audience is being concentrated just to us, which means were going to have a lot of soldout shows tomorrow most likely. Were getting ready to meet the audience demand for the film. How do you prep for Something Like this . Its not like any other showing i imagine youve ever done. Is security going to be tight . Will the movie experience be much different than what were used to . Well, i mean, i think that, you know, at both of these theaters, we always have security. Were always concerned about the safety of our patrons every day. This one obviously has a little more attention to it. You know, our security teams have met with the city police in pittsburgh and cleveland just to kind of go over to see if they think theres any additional precautions that need to be taken. From a consumer standpoint, its just going to be coming to the movie. We always have a policy where we get to inspect bags and things like that. Anything suspicious, were going to be extra mindful of and pay more attention to whats going on in the auditoriums. But i think for the regular movie goers, theyre not going to feel any different than seeing any other movie. David, how did it come about, the decision that you would actually screen this movie . And why . Why are you doing it when some of the major Theater Companies are not . Well, were a smaller company, and we have a little bit more, you know since were not one of the big players, digging in our heels sometimes doesnt carry as much weight as some of them. A lot of the reason why i think some of them ultimately decide not to play it was just two days notice. Sony just decided yesterday we could play the film. Thats really short notice to kind of change around your bookings. We were lucky that at our theater in pittsburgh and our theater here in cleveland, tour city cinemas and south side works cinema, that we could we actually had a screen available that was just going to be kind of extra shows of the hobbit and some other films that were just extra showings to meet demand over the holidays. We had a screen that was kind of available to us if we needed to add Something Else on. We had space to play the interview. Other chains, theyre pretty committed far in advance to what theyre going to be playing. When sony pulled the film last week, they had to make other arrangements. We had that same situation at some other locations where we wanted to play the film but didnt have space. Some have said this is a great thing for independent theaters, which have taken it on the chin because of the big chains. Are you screening it because of the box office potential, or are you trying to make some broader statement . Theres a theater in vermont that is offering free popcorn if you bring a copy of the constitution. Anything like that . Well, were doing you know, we never shy away from a film because of its content. One of our anchor theaters is the art house theater. We play controversial films there all the time. You know, we had this film booked originally a week ago sony pulled it. Us playing the film isnt changing our plans, its just going back to our original plan. Were also doing a similar promotion tomorrow where if you wear patriots red, white, and blue or something with an american flag, youll get a free popcorn. I was just going to say, do you think that people, americans, should see this movie as a free speech responsibility to express their support for freedom of speech and freedom of expression . Well, i think that theres going to be some people that do buy a ticket for the film that otherwise wouldnt have, and that might be their motivation. Inultima i think ultimately, its an rrated comedy. If youre not normally a fan of rrated comedies, youre not going to buy a ticket just to make a statement. Its not for little kids, not for your grandma. Im personally looking forward to seeing the film. Nobodys talking about whether its any good or not. Finally, has it altered the way you think of sony as a distributor . No, because this has got an lot of national attention, but its not that uncommon in our industry for a films release strategy to change very last minute. Weve had many distributors every distributor has changed their plans on us last minute. This one has just gotten a lot more national attention. Obviously, the film itself is a unique case. The actual core issue of a studio changing its release strategy happens more times than you could ever possibly imagine. Yeah. Well, be ready for some local tv coverage tomorrow, david. Everyones going to be watching. Thanks for coming to the phone. Sure. Thank you very much. David huffman, jrf management. As the year comes to an end, which Hedge Fund Managers had the top returns this year . Kate kelly back at hq to name some names for us. Good morning. It was a mixed year for Hedge Fund Managers even though we seem to be ending on a good note here with a powerful santa claus rally in stocks at least. Some of the top losers were funds focused on russia, where the benchmark fell 44 amid International Sanctions and a currency crisis. The fund feeling the post pain appears to be long only russian prosperity fund. Down about 44 . There are also prominent u. S. Fund managers on that hard luck list. Paulson and company. Their Advantage Plus Fund with an, um in the low billion dollars. Down about 22 through november 30th according to recent hedge fund reports. On an investment mix that spans their strategies from gold to merger arbitrage. Thats a conglomerate. Saba capital offshore fund, thats a credit focused fund, down close to 10 through the same period of time. Another disappointment for wynne steen, who also had a tough year last year. On the upside, lower profile funds actually won big. Merchant rose about 45 for this year. Thats their best ever performance by accurately calling both the natural gas spikes of the First Quarter this year amid the polar vortex and the bearish indicators in crude later this year, particularly into the opec meeting. Bill ackmans pershing square. Thanks to a great call on allergan rose 35 through middecember. And the swissbased tulip trend fund. Trades futures and other forward contracts rose more than 27 through middecember. Its worth noting that those two offshore funds have either limited or no availability to u. S. Investors. All right, kate kelly. Very interesting stuff as always. Happy holidays. Good to see you. Same to you. When we come back, check out this yeartodate chart. This is twitter versus facebook. As you can see, facebook has been on a tear this year. Twitter has not. What is the 2015 playbook for social media stocks . Well talk about that in a minute. Tdd 18003452550 [ male announcer ] your love for trading never stops, tdd 18003452550 even on the go. Tdd 18003452550 open a schwab account, and you could earn tdd 18003452550 300 commissionfree online trades. Tdd 18003452550 so when a market move affects one of your positions, tdd 18003452550 schwab can help you decide what to do. Tdd 18003452550 with tools like free livestreaming cnbc tv tdd 18003452550 that give you the latest Financial News and trends. Tdd 18003452550 and bubble charts and price charts that let you see exactly tdd 18003452550 how market activity is affecting your positions. Tdd 18003452550 so when the time comes to decide whether to scale in tdd 18003452550 or scale out you can make your move, tdd 18003452550 wherever you are. Tdd 18003452550 and start working on your next big idea. Tdd 18003452550 open a schwab account and you could earn tdd 18003452550 300 commissionfree online trades. Tdd 18003452550 tdd 18003452550 call 18777292379. Tdd 18003452550 or visit schwab. Com trading. Tdd 18003452550 schwab trading services. Tdd 18003452550 your goto for trading knowhow. Tdd 18003452550 keep an eye on energy there. Were watching that closely. Meantime this week, were looking ahead to the new year, giving investors a playbaook on how to cash in, in 2015. Julia boorstin it here with her predicks. With madison avenue on board, social media will grow up in 2015. First, facebook will keep growing by adding to its family of apps with more launches than acquisitions. If other social apps are taking off, facebook will snap them up. Expect the social giant to launch more apps that it developed in house. Facebook will compete with youtube for more original content to increase video views and with twitter as it makes a play to be the realtime social network of choice. Second, twitder will shift strategy. Under fire for slowing growth, twitter will focus less on growing its user base and more on its expertise with mobile, providing everything from login technology to ads. Third t get ready for the rise of the rest. As snapchat, pinterest, and instagram get serious about making money. They have dedicated users. Now theyll roll out a range of ways to make money from ads, commerce, even subscription fees. The big question for all these social apps next year is not just whether ads will annoy people but whether privacy concerns will finally send users running. And julia is here at post nine for a closer look at some of those predictions. We have to ask you about the split between facebook and twitter this year. Unbelievable. Really a tale of two very different social networks. Mark zuckerberg continues to build on his strategy of creating family apps. Its not just facebook name. They own oculus. Theyre going to continue to launch all these different services. Theyre just going to try things out. Doesnt matter if theyre not huge hits. Theyre just going to create a portfolio, something for everyone. Does twitter have to make big changes of any kind in 2015 . I know theres been a lot of talk about the ceo getting pushed out. I think hes going to be given another quarter to prove himself. Hes introduced a whole new strategy. They really want to be the backbone for mobile apps. They own a very valuable mobile ad service. And he has a burnch of new executives in there. We have to give him some time to have his team get to work. We keep hearing that this Holiday Season mobile is really where the action was in terms of shopping and eyeballs. You mention mobile in the package as it relates to twitter capitalizing on that dominance. What are we going to see in terms of advertising . Have these companies nailed mobile ads yet . Well, i think were going to definitely see more ad dollars shift both to facebook and to twitter. I think that facebook especially has invested a lot of money in showing advertisers how well their ads work on mobile. And they have the technology to trap what youre doing on your mobile device and what youre doing in stores. So they could see julia saw an ad on her phone and went into a store and made a purchase after seeing an ad. That kind of ability to track that, which is a relatively new thing, can be incredibly powerful. And the one company to watch next year . I think facebook. Obviously not an up and comer, but its going to continue a massive rise. All right. Thank you, julia. Well see you at 11 00. Absolutely. Ill be back. See you then. Coming up, the man behind videos like this one. Jib jab ceo joins us next. trader vo i search. I research. I dig. And dig some more. Because, for me, the challenge of the search. Is almost as exciting as the thrill of the find. announcer at scottrade, we share your passion for trading. Thats why we rebuilt scottrade elite from the ground up including a proprietary momentum indicator that makes researching sectors and Industries Even easier. Because at scottrade, our passion is to power yours. Some say buy gold. Others say buy soybeans. I say, buy comcast business internet. Unlike internet providers that slow down when traffic picks up, you get speed you can rely on. Its a safe bet. Like a goldplated soybean. Reliably fast internet starts at 69. 95 a month. Comcast business. Built for business. Welcome back to squawk on the street. Im jackie deangelis. We are watching wti crude hitting fresh session lows today after the department of energy released its inventory report. We got a build of 7. 3 Million Barrels last week in crude. We got a build in gasoline of 4. 1 Million Barrels. Obviously very bearish numbers, sending crude to 55. 26 right now, down almost 2 on the session today, guys. So watch these numbers as we head into the holiday. Could see a little bit more selling pressure. Back to you. All right, jackie. Thanks so much. About an hour into trading. Some of the stories were watching this morning. Shares is of calmaine foods down 6 . The nations largest egg producer posting a Quarterly Earnings miss. Novo nordisk rising 2 , getting fda approval for its injectable obesity medication. And the 30 year now at 3. 83. Also, it is a shortened trading day today. The nyse and nasdaq will close at 1 00 p. M. Eastern time. Sony delivering an early Christmas Present to comedy fans, deciding its going to release its controversial film the interview tomorrow in more than 200 theaters. Sony pictures chairman saying in a statement, quote, weve never given up on releasing the interview, and were excited. Our movie will be in aurm in of theaters on Christmas Day. The decision coming amid spotty Internet Service in north korea. The country accused by u. S. Officials offi hacking sony pictures. George, nice to have you here. Great to be here. Quite some time ago when i did a piece on chinese cyber espionage, i talked to a number of your colleagues. Back then it seemed almost tame compared to what weve seen here. What have we learned as a result of this hack of sony . Well, its something weve seen and predicted for some time. If you think about the security landscape, we really move from Network Exploration to data exfiltration, the taking of data, to now data destruction. Weve seen this in past in limited cases, particularly in north korea. And its something i think corporations are going to really have to take seriously going forward. I want to make that point. The chinese may be in any number of networks, for example. Im just saying monitoring, siphoning things off. But they dont typically want to be found out. In this case, its very different in that they destroyed a lot of the stuff sony had on its computers. Absolutely. They really crossed the line. China has been very active in stealing data and corporate trade secrets from the u. S. And other places. They want to stay in that network and go undetected. In this case, the goal was to steal as much information as possible, destroy the data, and embarrass the sony executives by leaking that information. You think its north korea . I mean, the u. S. Seems to think it is. Anything lead you to believe otherwise . We looked at the technical indicators. We looked at the malware used. It has very similar traits to whats been used in the past. We also looked at the tactics, the techniques, and the procedures used. Its very common to the group that we track, which is the north korean government. Is this a seminal event, this hack, in terms of the advanceme advancement, if you will, using that term of cyber hacking Cyber Security . I do. I think if you look in 2010, the attacks against google, that was a seminal event. If you look at this particular event, i think its a blueprint now for how other adversaries and attackers will focus on corporations. Get in, steal data, destroy data, perhaps even extort them for financial gain beyond just political motivations. North korea has ramped up the threats. After this, we know the movie is going to be screened at certain theaters. What other capabilities do they have on the cyber front . Their capabilities are growing over time. People tend to think that north korea doesnt have sophisticated capabilities or there were other countries that were involved. The reality is that tech wasnt all that sophisticated. It was coordinated, but it actually followed a very scripted pattern weve seen in the past. So from a north korean perspective, they certainly could hit other targets that are out there. Certainly theyve in the past hit Financial Services, banks in south korea, as well as media outlets. So theres a variety of soft targets that are out there that they could be focused on. A lot of people ask, all right, so why isnt a fire eye going to the moon . In terms of share price, its down 25 this year, nowhere near where it was in the spring. Its up for the month. But do you feel the enthusiasm behind the companies that do what you do is lacking . Well, i think overall from a security perspective, its great to be in the security space. Companies like ours are creating next Gen Technology that would detect and prevent this sort of attack. When you think about a fire eye, even on their desk top, theyre still using legacy endpoint technology. It just isnt capable of keeping up with these sophisticated threats. What about what i think a lot of people fear when they look at sony and the destruction of data, what about the ability of one of these attackers from wherever they may come to destroy data in a Financial Institution . Well, absolutely. This has been one of the key concerns for the Financial Services sector for many years. Ive been involved with the Financial Services isac, which shares this kind of information. For many years, theyre concerned about a breach that could take down the trading system. If you think about the techniques that were used, again, they werent all that sophisticated. They were highly coordinated. There were a lot of mistakes that were made that allowed the target to be so soft. So sony is partially responsible for the probable it finds itself in . Most corporations dont have Adequate Security to be able to detect and prevent these sort of attacks. George, a story well be following closely. Thank you for your time. Thank you. Despite the broad rally, biotech, as you probably know by now, saw massive selling yesterday. Heres a prior day chart. Is that a buying opportunity . Were going to break down that sector. One more check on the markets. Dow is hanging in there, up about 45 points. Oil, you know, historically has been a spoiler for the broad market. And crude is down 2. Same for brent. Well watch that. Squawk on the street is back in a minute. Take a look at the Energy Sector. Under pressure, 3 declines on wti and brent krooud. Dom chu with more on that. Sarah, far and away. Worst performing sector today is energy. At the moment, 23 of the top 25 percentage losers in the large cap s p 500 are Energy Related names. Among the biggest laggers today, neighbors industries. Also noble energy. Transocean as well as ensco corporation. Also, brent crude dropping below that key mark for 60 a barrel this morning. A rough go for the Energy Sector overall. Well keep an eye on those oil prices. Back over to you guys. All right, dom. Thank you. We saw wild selling in biotech yesterday despite the dow hitting that new alltime high. More on what exactly is happening in that sector. Hey, meg. Were seeing a bit of rebound today in tech. A couple things are at play that led to some of that selloff. First is the express scripts deal to exclude the hepatitis c drugs from its largest formulary plan. Were also hearing that theres fear this strategy could stretch into other therapeutic areas where there are multiple drugs competing. Areas like cholesterol, diabetes, multiple sclerosis, rheumatoid arthritis. Finally, its been a massive year for biotech. Theres been a big runup in the biotech index. Some people are saying this is just normal profit taking at the end of the year. Talking with folks, they are still optimistic about 2015. A lot are saying this is a great buying opportunity for big names. More to watch. Back to you, sarah. Sort of a mini rebound. Thanks very much for running through that. Now over to the cme group. Rick santelli with the Santelli Exchange and higher yields again today. Absolutely. Thank you, sarah. Id like to welcome my last guest of the year, at least on my scheduling. Ira harris. Weve had some interesting calls throughout the year. Lets start with the one we pay most attention to, the flattening yield curve, central banks. What do you think is going on here . I think some of it, of course d and we were on exactly a year ago, december 24th. One of the predictions, i talked about the 530 curve. That was going to be a dynamic event in 2014, which it has been. Weve dropped from 222 down to 108 this morning. Thats over a 50 move. Yeah, i know. Home run kerve trades. So the banks have broken the whole thing. You talk about signaling. There are no market signals. These are all central bank signals. Were entering almost a dangerous spot again. In europe, i was looking at the curves this morning. 210 curves are flattening almost back to the levels when draghi made his famous july of 2012. There was a flattening curve that scared him. The bund curve is through that. The french curve is through. Things are happening. We dont know really what this is. Thats the problem. Markets give you signals. The old days of flattening curve meant something. With trillions of securities on the balance sheet, the ownership of various sovereigns throughout europe, were not sure why were at these levels. We could have huge moves that make no fundamental sense because nothing is put together the way it should be from a market price discovery perspective. Correct. Thats right. Theyve broken that. As we go into the new year, were going to see some changes. Everybody is expecting an ecb move, okay. So if we look at the ecb move well, there better be one because speculators have really learned. The bell rang. The light went on. Theyre salivating in terms of what theyre doing with regard to the ecb and potential qe. Theyve gotten along in front of the bank. Absolutely. And the Swiss National bank, who in an emergency meeting a week ago, exactly on thursday, went to a negative discount rate that takes effect january 22nd of 2015, the next ecb meeting. Theyre expecting something at that meeting. While were on europe, the most important dynamic going on is the difference between tenyear note rates currently at 2. 28 and 58 is 1. 70. Thats the widest its been pretty much other than the late 80s. And this is something to reckon with. If its telling us that it believes the feds going to do something thats going to change the shape of the curve, or is it telling us something about europe. We dont know. We dont know. And i pose this question to all the listeners of cnbc. If there are head winds in europe that these curves may be signaling, okay. So that will then well have to wait for the fomc minutes from the december meeting, which are going to be critical. How much discussion took place about the headwinds from the well, listen, ill make a final prediction real quickly. I know that the fed doesnt seem preoccupied with what they say is small intersection with the european economy and ours. I think theyre underestimating it personally. Thats right. So what becomes important is and this is a question i pose. If the fed has to go to another qe, what will be the response in the equity markets . My guess will be they rally and wind up lower. Theyre thinking, why would we need it now . Exactly. Happy hanukkah, merry christmas. Happy and successful 2015. Thank you. Back to you. All right. Our best. With wh we come back, the man behind this video. Yeah, thats sarah. Thats me. Who are those people . Fabers in there. And how hes bringing christmas cheers through his viral ecard site. vo rush hour around here starts at 6 30 a. M. On the nose. But for me, it starts with the opening bell. And the rush i get, lasts way more than an hour. announcer at scottrade, we share your passion for trading. Thats why weve built powerful technology to alert you to your next opportunity. Because at scottrade, our passion is to power yours. You may our next guest from holiday e cards. Like elf yourself. Lets look at their year in review video. That was a little sample from it. The cofounders of the jib jab media. Another great video. I watched the whole thing. I thought it was quite clever. And what surprises me is you have been doing this 15 years. So you make these whacky videos and ecards. And what else . How do you describe whether jib jab is . We use technology to make things that are funny and build audiences. Personal satire, personalized ecards. Even kids apps. A whole bunch of different product wes buis we build. And all about delivering funny to people. I like how you did our faces in a video. Thank you for doing that. So its goal to make money off advertising . I know you have a subscription product where people pay 18 dollars i guess a year to create their own content. We actually do no advertises on our site. If your come to oub website and use our product and make our product you wont find banner ads. We believe in a premium product. And if people want it, we felt we didnt want to inundate them with a lot of moving advertisements. We have a producer here jillian whos 8yearold kid loves it. And convinced her mommy to pay 18 dollars a year to make her own video. Is eight your typical demographic . Oh yeah. With e we go from eight to eighty. Over the holidays over fifty Million People visit jib jab. And over the years we have over a half million faces up loaded and hundreds of the millions of movies made. So the audience is really broad and were just thrilled. And it is international. About half in the u. S. And half worldwide. What is the longterm game plan for your guys. Weve seen other company likes twitch get acquired. We know there is a lot of value in online media. Is that the plan. We think if we deliver a great product all that takes care of itself. Were just focused on building the business. We have 90 amazing employees working to build great products for people. And where we go in the future. I dont have a crystal ball. Well find out soon enough. Its already been a pretty long time. I can remember when you first came to prominence. Was it 08. O 04 was possibly the first with bush and kerry. And it was our wife and friends. And now were ninety people. So its been a good run. Do you insist on being independently owned. I imagine you have had offers to sell it for pretty good coin. Yeah we have. And were still building and still excited about the future. And you never know. Never say never. But right now there are just so many opportunities in front of us to keep building this business. And that is what were focused on, delivering laughs to people all over the world. And finally since you are in the movie content business yourself, do you have any thoughts on whats going on with sony and the interview and north korea, which has been a huge story for us . My only issue with it is that it happened after we wrote the lyrics to our year in review. There is a call out to the sony int view issue. But we werent anyone to work it into the lyrics. Already gentlemen. Thank you for making the squawk on the street video and for joining us on Christmas Eve. In the meantime, markets are in the green on this shortened trading day. Good gains with the dow up some 50 points. Oil has been volatile as inventory numbers took folks by surprise. Kayla with a look at squawk alley. I dont know if well be able to top the videos of your jib jab characters but well try. Sonys plans to release the interview tomorrow on Christmas Day. Well talk to a Theater Owner about his plans and how big a business that would be. Then well talk about uber and the company has been vocal about plans to expand into asia but that may have hit a roadblock. And finally shares of twitter stand . Stark contrast to facebook, down 40 so far this year. So could twitter turn it around . What will it have to do next year . All that and more coming up next on squawk alley. Well it looks like santa claus has indeed come to wall street. Six Straight Days of gains. Record territory here. The dow staying above 18,000. Another 52 points on this holiday shortened day. We have two more hours to close. So that does give it a the good chance to close in positive territory. And well be talk about the dollar in 2015 i think and particularly on corporate earnings. Potential to be a strong dollar. But to us a double line. Sometimes the consensus works outs. Makes sense. You are seeing a divergence in the Economic Data between the u. S. And everywhere in the world. The best performing currency in 2014. Up 13 . Where are we on the yen now . Almost 121 again. The japanese yen has had a rough year. One of the worst performers and that will be a story as well. Happy holidays to youa. And to you. Lining up behind us for the annual rendition of the when the sunshines. Take it away. All right guys. Good morning, 8 00 a. M. In culver city, california. 11 00 a. M. Here on wall street. Squawk alley is live. Welcome to squawk alley. Joining us on post nine is julia boorstin. Great to have you