Midland, texas. Battered and bruise but ready to break out. Our market monitor has a list out of favor stocks he says may be ready to turn. All that and more tonight on nightly Business Report for friday, december 19th. Good evening, everyone. Make it three in a row. Stocks rally for the Third Straight day closing out with the biggest weekly gain since october. Investors are feeling confident ever since Federal Reserve policy makers say theyre holding off on raising Interest Rates and that confidence fuels more buying an wall street today. The s p 500 rose 3. 5 this week and is just five points away from breaking through its alltime record high. For today, the dow rose 26 points. The nasdaq gained 17 and s p added 9 points. For the week, the dow was up 3 . The nasdaq rose almost 2. 5 and just mentioned, the s p moved higher by nearly 3. 5 the markets were a huge story this week but today from hollywood to fbi headquarters to the white house, the story everybody was talking about was the big hack attack on and threats to sony. Today in a Year End Press e companys movie studio, a said quote, made a mistake by shelving the film the interview following threats from hackers. The fbi said north korea is directly responsible. So did sony make the right decision . Will the satirical film ever be shown everywhere and how will Law Enforcement react . Julia boorstin has the latest from los angeles. Reporter president obama saying sony made a mistake in cancelling a Theatrical Release of the interview. I wish they had spoken to me first. I would have told them do not get into a pattern in which youre intimidated by these kind of criminal attacks. Reporter but in an interview with cnn, Sony Pictures Michael Lynton responding saying the president is mistacken, he was in touch with senior white house officials and the studio very much wants the American Public to see the film. Quote, we have not caved or given in, we have persevered and not backed down. We had every desire to have the American Public see this movie. The issue now is they dont own theaters and have no way to get the movie out. While they consider digital distribution options, not a single distributor has said theyll distribute it. The president said hes sthik to the concerns and the damage with threats against employees and the president is weighing a response. They caused a lot of damage. And we will respond. We will respond proportionally and well respond in a place and time and manner that we choose. Reporter the back and forth between the president and lynton come as sources tell me sony execs received an email reporting to be from the hackers saying theyll back off if sony does not let off including dvd or piracies. The authenticity of who sent the message is not verified but reads, quote, its very wise that you made the decision to cancel the interview. It will be useful for you since we have private and sensitive data. Well share unless you make additional trouble. Sounds like sony is willing to test the threat if he can get a distributor on board. For nightly Business Report, im Julia Boorstin in los angeles. The reputation of Sony Pictures has taken a real beating since that hacking in november and not just for pulling the interview out of veeters. Theres the release of damaging emails, closely held movie scripts and personal data of thousands of employees to cost the Company Hundreds of millions of dollars. Since the attack, shares at sony corp. Down 1 . How will sonys decision to give in what mr. Lynton sees it that way to the threat affect other u. S. Corporations . Lets find out from jp yagers, a professor of management from the new york universitys stern school of business. Professor, welcome. Good to have you here. I want to get to mr. Lyntons point about whether it was really the theaters who caved, not he and his company that did, but let me begin by asking you, how big or bad a precedent is this withdrawal of the movie in terms of other creative endeavors, whether a book publisher who pulls a manuscript because iran doesnt like it or a music publisher that doesnt publish a song because the lyrics affect a group or another . I think its significant in the effect that these products become a political argument for a terror group or Foreign Government or ethnic group who disagrees with a certain idea and the extent these Creative Companies back down and kind of cave to these wishes. This is going to have an effect on the creative side of the business in the sense that if im a producer, actor or writer, engaging in one of these politically sensitive subjects is risky to me because if my movie doesnt get out, i dont get paid for having produced a movie in the first place. Youre talking about the censorship type of issues for these Creative Companies. What about the businesses not at all in this hollywood space . What impact could the sony moves make on their products and businesses . Its interesting. This has been an issue thats happened around kind of politics and terrorism in oil and gas and Natural Resource industries for a while. But a number of other industries have not been affected in this way and the idea that a product, a service, an offering that a company made, may want to put out to the public, could become an object of kind of political rank or terror attack or Something Like that. Maybe something the companies havent considered as much and will now have to think about as they make investments along these lines. Lets talk a little bit about where the responsibility lies here, apart from the fact the real responsibility lies in pyongyang somewhere but to the question of whether sony caved or was it the theater owners who really panicked . Well never know exactly but i could see the theaters have no good reason to show this movie. If they dont use the theater to show the interview they could do that and their bottom line will be affected almost not at all. Given theyr facing a risk to their business, it makes no sense for them to show the movie when theres a real risk. Sonys got a much bigger incentive to want the movie to t paid if they can distribute in some way, but theres no reason for theater owners not wanting to do it. I could see no desire to touch this right now. Real quickly, you know, people, bad people do bad things. So theres been a lot of talk. What can you do to prevent this kind of thing . I dont know if you can talk about it, but theres talk about more legislation and more proactive work by homeland security. I dont know if theres any other Cyber Security things that companies can do. So certainly, obviously, to the extent that this is the response to the cyber aspect of this attack and not simply the Terror Threats and the violent threats that came out in the emails, obviously Big Investments in stepping up investments in Cyber Security will help prevent this from happening in the future to some extent but this has become a difficult and challenging reality, right . On top of the existing Terror Threat that exists, we kind of get cyber Terror Threats and the hackers tend to stay one step ahead of the officials. Sonys lynton, mr. E. G. Ert, said hes not been able to thus far find anybody to tribute the movie. The cable company, the satellite company, the netflix, the apple tvs of the world. What do you think happened if some of them did go along with this . Could they be vulnerable . They could be. Obviously to the extent were concerned about actual violence against movie goers than by not having a physical location like a Movie Theater, a less clear threat but for a company like comcast whose got its own digital operations, if they felt the hackers might target the operations, at the very at least service attacks to shut down web sites but more significantly, to hack and steal data, to shut down service more significantly. Theres a significant threat, but its probably nowhere near as high in the Movie Theater case by comparison. Professor, thanks. Great to see as always. J. P. Egerty, New York School of business. The president at the white house said the federal Corporate Tax system needs to be simpler and more fair and the house and the senate, the president is looking forward to making, quote, real reform through congress. Talking to Speaker Boehner and leader mcconnell that they are serious about wanting to get some things done. The tax area is one area where we can get things done. There will be at the staff leve levels. The legislation on cost, bortder mergers and allowing u. S. Companies to slash their tax bills by moving their headquarters out of the country. And uncle sam is finally getting out of the auto business, the treasury is selling the last of its shares in allied financial. This is the one time auto financing arm of General Motors which acquired when alli was bailed out of the financial crisis. The 6 million shares being sold amounting to 11 of the lender is 1. 25 billion. Stocks may have had a very good week but for oil, this was the fourth in a row the prices fell. They didnt fall today. Crude shot higher this friday on a rush of buying ahead of the exploration of a four month contract for crude. Like sweet domestic crude, 5 at 15. 13 a barrel and brent rose more than 2 settled back at 61 a barrel. The recent slide in Energy Prices has already had a major impact on people and company in the booms towns that rely on abundant shale oil and gas in the texas. Could the boom times be at an end . Ryan sullivan has more from mid land, texas. Reporter with Oil Prices Falling and cut in half off summer highs, the oil industry here in texas is starting to feel a strain. No place in the state to feel it as much as the city of midland. For the past years, its been one of the Fastest Growing cities in the state with the average higher incomes in america. Increased oil prices, improvements in Drilling Technology and the controversial practice of fracking have set off a wave of investment in the far west texas town over the past few years. In every direction here, there are new companies, new construction, building after building of oil rig operators, drillers, Service Companies and Everything Else thats attached to the base and oil surge. According to texas tech university, permian boom sustained more than 4,000 jobs and 100 billion in total economic output. We asked paul ken worthy if all of this is at risk. Certainly not going to go away entirely but you can see from some of the equipment stacked in here, its going to slow down. The extent of the slowdown remains to be seen. Reporter texas has seen this movie before. In the past two or three decades, there have been a number of oil cycles in the state and those in the oil business do remain optimistic. Were only about 1 over supplies and so that will be corrected fairly quickly, i think, during 2015 and early 2016 and then well be more of a equilibrium. Reporter the bigger older players tend to have lower cost of production. Newer Companies Made 50, 60, or even 70 barrel oils to remain profitable. Investors in these companies and residents of midland agree on one thing its not how low prices go in the shortterm but how long they remain at these levels. 50, 60, 70 range, more pressure on the permian. From midland texas, nightly Business Report, im brian sullivan. Still ahead, opening up relations with cuba and potential economic changes could alter the way of life in havana. Good news today about jobs, Unemployment Rates fell in 41 states in november. Held steady in six others and rose in three, reflecting widespread gains across a whole country. The lowest Unemployment Rate was in north dakota, thanks to the Shale Oil Boom which has a rate of 2. 7 . The highest jobless rate is mississippi, 7. 3 . The biggest gains last month came in california, florida, and texas. An increase in jobs and a boost to the economy may be in store for the people of cuba now that the u. S. Will normalize relations with the island nation. So how else might like change for cubas people . Michelle carusocabrera has more from havana. Reporter every day, hundreds of people line up in havana to apply for permission to go to the United States and some for family, some for better opportunities. Others frustrated by the stagnant economy. Its complicated for me to work here because the only opportunities are here in havana. Reporter she said more people would want to stay if the changes improve life on the island including allowing u. S. Residents to send more money to family remaining in cuba and easing travel restrictions between the two countries. 200 people traveled last year from special licenses issued by the treasury, families, religious groups and educational tours. This group of u. S. Tours was in cuba the day of the historic announcement. Every person we spoke to, the waiter said, oh, they light up. Theyre so happy. Were all fist bumping. They want to hug and smiles from ear to ear. Reporter also under the changes, Payment Terms will be easier for the cuban government. Which fought from the u. S. Last year more than 3 billion worth of food and medicine. Both are exempt from the embargo. Desperately needed Telecom Equipment will be needed to import but with these changes, cuba one of the most isolated countries in the world. This is one of the most mysterious institutions in cuba, the central bank. We know little about it because cuba doesnt belong to any of the Major International like the ims or world bank so they dont have to report the reserves or any statistics to anyone. One of the Big Questions is, how much do they have in reserve . Reporter cuba was a Founding Member of the International Monetary fund. But abandoned it in the 60s at the behest of then leader fidel castro who sees all businesses and turned the island into a communist country where everyone works for the government. The current regime by raul is undoing a small part of the communist model but a long way from prosperity and freedom. This is still a regime that represses its people. And as i said when i made the announcement, i dont anticipate overnight changes. Reporter hence why cubans line up to leave still. Nightly Business Report, michelle carusocabrera, havana, cuba. Kar max surged today. Thats where we begin the focus. The nations largest used sale top estimates, car max said easier availability of credit and more dealership traffic help to rev up sales. Up to 67. 32. Shares of finish line went the other way after lowering earnings outlook for the year and say it would cut spending. The Sports Apparel margin for the forecast because the company had to use discounts to drive sales of items like shoes for running and basketball. The Stock Plunged 19 to 23. 35. You wont believe what city Group Believes instagram is worth. They value at 35 billion. Just about two years ago, facebook bought the company for about 700 million. According to city, instagram is now worth about 49 times what facebook paid for. Just like my investment. Shares of facebook popped almost 2 to 79. 88. Investors bought up shares of juneau they airapeuticstherapeu. Raising more than 260 million. Shares soared closing at 35. Thats a move of more than 45 . The cyber attack on a retailer the tell you about. Staple said hackers may have compromised more than a million customer cars by installing malware at more than a hundred storese volatile after hours, before shares down to 17. 55. Market monitor tonight said stocks rise by as much as 10 in the new year but it will be a rocky road. Managing director at douglas. Sarah, nice to have you with us. So youre talking about the s p 500 gaining 200 points in the new year. Whats going to drive that . So i think youve got a few positive factors. One weve seen in the last month is oil coming down to the 50s. Our view is that oil will probably stay in the 60 to 80 a range. One of the biggest cuts weve seen, considering its consumer driven. That along with a better Economic News in terms of employment and earnings. Well move the market ahead. You said you have three things you want to tell us about. All of them basically in the technology space. I would call them really blue chip tech stocks starting with kwal come. Why do you like it and whats your price target . Kwaul come is the Value Technology stock, out of favor telecom stock. We like it for multiple reasons. One is it controls the 3g licensing all over the world. Today, youve got an issue in china where china is contesting the licensing. We think thats a shortterm blip. Once thats resolved, we see the stock probably move the low 70s to about 85 to 90 where we think it should be. You have stra tus on your list and this is a company thats a beginning of this year trading at 130 and now around 80. Where do you see it going and why should investors put new money in this company . Stratus is our growth pick. Its volatile, in the 3d additive printing space. Theres a lot of competition coming into this area. We think stratus is the leader. Growing the 20 top line and earnings growth, high to 20 the next three years. Given what youve seen around the industry, we want to be with the leader and the Company Investing in growing its business, not just usesing financial engineering. Third choice is google. Whats your price target on it and why do you like it . Google for us is what we think, this stock should be at least 650 to 700. Its a three prong approach for google, really. Theyre the leader in search, i think that will grow as mobile keeps on growing. Secondly, theyre big in android, which we think is growing even faster. Android not just used in mobile but used today, saw the announcement in cars. Its the software driving a lot of the growth and thirdly, youtube. Its growing fast and completely we think, undervalued within google. Real quickly, 30 seconds left. These stocks you talk about, you say the markets will go up, but it will be a bumpy ride. If investors buy these now, should they just stick it out, all the way through the year or is there a point they should sell and take profits . These are companies, i think, for the next three to five years, you should own and definitely good entry points today. An opportunity in the market volatility to buy some more but at least initiate a position today and three to five years from now, we think it will be pretty comfortable with the price targets at that point. We dont usually get people thinking that far out, so thaupg so much for your forecast. Have a great weekend. Thank you so much. Coming up on the program, how a 100yearold company is able to keep the edge over new arrival and produce one of the hottest pr chrysler is expanding an already massive recall of vehicles to replace potentially deadly drivers side air bags made by japans Takata Corporation after pressure from u. S. Safety corporations, 3. 4 million various cars and suvs and trucks worldwide not just high humidity regions. Most in the u. S. From model years 2004 to 2007. A family owned business in maine is the hit of the holiday season. Can l. L. Bean keep up with this newfound band . The story from maine. Reporter l. L. Bean founded in 1912 on this booth and more than a hundred years later, this boot is hotter than ever. The production level is going up. Its the popularity of l. L. Bean boots and staff changes here and there, but other than that, were still doing, i guess, making the boost the way we were still a hundred years ago. Reporter l. L. Bean has been doing a lot of things the same way for a hundred years. Its still a private Company Based in maine making classic items, like the boots, the famous shammy shirt and those iconic tote bags along with legendary customer service. Its not a big secret. Its great product. Its quality. Super service. Wonderful online process. You honor it. You get it. Its quick. Its always of a great quality. At least orders are usually filled quickly. L. L. Bean said theres been backlogs before but never the current magnitude at the bean boot. Here at the brunswick factory, l. L. Bean is working to double capacity for the rubber bottom, adding a double shift and increasing boot makers by 55 to meet demand for roughly half a million orders expected this year. A lot fueled by college fashionistas. Theres sort of a fashion after the lumber jack look. The l. L. Bean is the one key piece to start it and get it together and the other part is l. L. Bean, about flannel shirts. People wear them tucked in, untucked. Bean boots make the look come to life. Reporter retail staying power is one of the trickiest parts of the business but l. L. Bean has successfully found its niche without attadapting to fashion trends and now trends are adapting to l. L. Bean. Nightly Business Report, brunswick, maine. Nice to see them doing well. Ive had a pair for 30 years. Tim one. That nightly business repor for tonight. Im susie gharib. Im tyler mathisen. Well see you on monday. Nightly Business Report has been funded in part thestreet. Com and action alerts plus where jim cramer and fellow Portfolio Manager stephanie link share their investment strategies, stock picks and market insights. Ig you can learn more at thestreet. Com nbr. Gwen from north korea to cuba, Christmas Present to christmas future. The last seven days put dickens to shame. We explore it all tonight on washington week. They caused a lot of damage. We will respond proportionately and we will respond in a place and time and manner that we choose. Gwen north korea threatens, sony caves. And the president weighs in. Im sympathetic that sony is a private company, worried about liability and this and that. I wish they had spoken to me first. Gwen as terrorism fears shake hollywood and the nation, the president had been to his hawaiian holiday with more than a few issues brewing. Including the prospect of normalized relations with cuba
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