Transcripts For CNBC Closing Bell 20131230

Its 30 below normal, but we continue to inch ever higher toward 17,000 on the dow. I think for me, the story is really about what an historic year and historic rally this has been for stocks since the 2009 lowin lows. The world looks better where we created 3 or for 4 trillion, the fifth best rally in terms of a bull market. If it keeps going next year, it will keep getting more impressive. Thats very different from what people had anticipated. Were going to keep an eye on that as we move into 2014. We have people expecting some corrections coming up very soon. Yes, they are. Its also, by the way, a time to focus on the housing sector in particular. Even as were talking about what a great year its been for the market, take a look at this bar chart. Its the 30year rate for the last 12 months. If you notice the trend, its clearly upward. What happens if this continues into 2014. Will Housing Markets stay hot. If not, what will that mean to the overall market . Thats one example right there of how different the world is from a year ago at this time. Another twist in the jpmorgan china hiring practices controversy. This one doesnt exactly have a nickname for it, but its the socalled son and daughter scand scandal. Internal emails coming to light, one lamenting jpmorgan lost business to a competitor to someone that hired someones daughter . Does that vindicate jpmorgan or put more banks in line of fire . Well have more coming up on the closing bell. Take a look across the major indexes right now. Even though the big moves arent seen today, again, were capping off an historic year. The dow is up about 19 points. Its just below 16,500. Its only about 30, 35 points off its alltime intraday highs. Heres a look at the nasdaq. Meanwhile, its adding about a point today. 4157. Apple tends to move that one around a lot independent of the others. S p 500, fractionally lower, 1841. 1844 is the intraday high so were not far from record levels here. Its all in kelly evans diary. Lets talk about it all on our closing bell exchange. Brian jacobs, doug sadler from river front investment group, David Sieberg and rick santelli. Happy monday, everybody. David, you agree with art cashin who said on cnbc this morning, he could see a 3 to 5 correction in the near term early in the new year, but you would not exactly rush in to buy that dip, would you . No. Actually, i wouldnt rush in to buy it, but id be selectively buying really good highquality stocks on that dip. I think next year 2014 will be a completely different year. I dont think youll be able to just go out there and buy an index or buy a sector and make money. I think youre going to have to be very, very stockspecific. Its going to be a market of stocks, not a stock market. Whats changed . Correlation being where it is, all time low, people will be hyperfocused on companies that are creating value. I think next year will be a year where hedge funds will perform very well. I think volatility in an environment like that will spike up as well. Look, weve seen an incredible year. Kelly mentioned 3. 5 trillion in the market. Thats 3. 5 trillion in the s p 500 alone. Of wealth thats been created. So, thats a tremendous amount of money. And i think with the economy improving, showing signs of improvement, you know, we got the tapering semi behind us right now, corporate Balance Sheets are clean, i think the market is grinding back 3 to 5 but it should be bought. What do you sum up whats happening in the market . Are you buying equity still in 2014 . Oh, sure. I think that actually at these levels, things are pretty close to fair value. Meaning longer term you should expect to earn 7 to 9 total return if youre just buying at todays level. Now, if there is a pullback, 3 to 5 , would i be buying . Of course id be buying because i think prices right now are relatively fair. Weve been going through a 4 1 2 year correction to normal. Weve just recently returned to normal. So, all the talk about needing an inevitable correction, things to go down 10 , youll probably be waiting quite a while for that sort of thing because were at normal levels here. The fed is still being very accommodative, Profit Margins are very high. I think 2014 is going to be a very good year for people who are willing to take on risk with their portfolios. Doug sadler, you think 2014 is the year of Earnings Growth. How much Earnings Growth do you think . Well, i think u. S. In general you can expect somewhere between 5 and 7 . I think youll get it. I think we have one of those years where youre going to get typical 5 to 7 growth. I dont think youll see margins come in, which is what people will expect. I dont think that will happen. I dont think youll see multiple expansion. Thats what we had this year. We had the s p 500 go from 13. 5 times to almost 16 times earnings. In other words, price goes up but earnings didnt follow it commensurate . Exactly. Its like a rising tide. Everybodys boat gets lifted. Next year is a year where i think its going to be about Earnings Growth, which means Earnings Growth isnt universally disseminated amongst all stocks. It happens on a stock by symptom basis. We have to be clear. I think we have to talk specifically are we talking about earnings generally or earnings by share . I guess it comes back to if earnings per share are much more achievable than economywide . Its earnings ber share. I dont have a problem with buybacks. I think if companies can buy them back at a reasonable price, thats fine. When the market gets expensive, thats when we have to worry about buybacks. Were not there yet. Earnings growth, 5 to 7 . We like the cyclical industries, industrials, were still avoiding, telecoms, Consumer Staples right now. Rick santelli, whats the feature in your market right now . Obviously, a quiet week. Holiday in the middle of the week. What about fixed income and other areas there . You know, i thought todays pending home sales, not necessarily my first tier data set, but when you look at when the best month over month numbers occurred, it was in may. When you look at how the aggregate level really has fallen towards close to december last year, all of this points to what what the charts show you. That is, the world changed in any ways in may. We saw Interest Rates on all major mature tis were lower in the beginning of may end of april than they were at the end of last year. So, the historic run, that normalization is going to be at the epicenter of everything for 2014. When i hear everybody discuss 3. 5 trillion in equity wealth, i cant help but think of 4 trillion on the feds balance sheet. I dont know how it will all turn out, but i know a lot of highly educated men at the Federal Reserve wouldnt have bolted on and welded on the training wheels if it wasnt for a good reason. Im curious about the action in twitter and what, if anything, we might learn from it. If you think back to a net state, yeah, it happened in a day. It went public 28 bucks, 1995 went up to 70s. Twitter saw the same phenomenon play out over a sixweek time. Is that a good sign and more whats go to happen in 2014 or will we look back and shake our head . We dont own stocks like that. To me, you cant stay on top of the mountain very long. When Companies Get multiples, valuations that assume theyll be on the top of the mountain for 20, 30 years. I think its ridiculous and wont happen. I can look at campbells soup, kraft food, theyre producing the same food as 100 years ago and thats why they have the multices they have. This technology that lives and dies year by year. David sieberg, you said youd sele selectively buy on a dip. Whats an area wheres the risk in 2014 . Lets put it this way. Im not buying campbells soup, im promising you that, but why not . I think the internet names are going to continue to go higher. I think this pullback were seeing is a buying opportunity. You would buy twitter . I probably would start to dabble as i see a little more weakness. I think theyre going to come in a little more. I think on that weakness you look for names like a facebook, like a yelp, where theyre showing longterm these names are going to be really good longterm bets. I also like the semis for a trade in the First Quarter. I think that the broadcoms and qualcomms will perform well First Quarter into the second quarter. Again, i like tech growth. I like facebook. I like yelp. I like the internet names. Were seeing a pull back and i think its going to be a buying opportunity. All those code writers, women as well, they need to eat something and soup is usually a good thing for them to eat. Why are you hating on campbells, david . I agree. Im just saying from a standpoint of growth, i really like the growthy names. I like the names that are much more just busting your chops. Dont worry about it. I know you are. What do you do with a twitter sneer do you buy it . Do you think well look at it on an amazon, google, when it looked expensive at the time, only to go on a tear . I cant comment on individual stocks but its a good example of how you cant get away from the risk. Thats why you want a broadly diversified portfolio. You dont want to make oneoff bets here and there because then youre exposing yourself to brian, are you guys taking a name like that and trying to not get exposure to it . Do you chuck those things from your portfolio because you worry about them . I dont know if i would necessarily chuck volatility from my portfolio in general. As long as its fairly priced and can thats the key thing. Doug mentioned that before. You want to Pay Attention to whether or not the earnings will be there in the long term in order to support the current price. If in individual cases, thats not the case, then that shouldnt be part of anybodys portfolio. I cant comment on twitter specifically, though. We got it, though. We got the implications very well. Thank you, gentlemen. Happy new year. Great to see you guys. Thank you. Happy new year. Coming up, two suicide bombings on consecutive days killing people in volograd, 400 miles northeast of sochi where the olympicsings will be held in six weeks. Jim joins us from moscow. Reporter investigators are operating under the strong suspicion the latest tax were works of islamic insurgents from north caucuses region. They found links between the most recent attacks that the group or cell carry out, both the train and trolley bus bombings. Explosives and components, for example, shrapnel used to maximize carnage, were similar as well. Investigators are linking those two bombings to a Public Appeal made some muonths ago by cheche to disrupt sochi games. We ask, why volgograd, whats important for militantings striking that town . Its a major city. Its only 400 miles from the olympic venue. And its certainly the proximity to sochi, happening so close to the games. Thats been sending out a frightening message, really, that the militants can strike anywhere and at will. And u. S. Security officials were saying theyre in contact with russian security, saying theyre willing to offer more help if need be to try to work closely to coordinate security for the olympics. Its the deadliest terrorist attack in two years in russia, a major transit hub. Very clear what theyre after. 48 billion games, the biggest price tag weve seen by a multiple for any of these olympics. A lot is at stake there. A lot is at stake. Were going to take a break. 47 minutes left in the trading session today. Generally higher for the major averages, although the nasdaq no, the s p 500 and nasdaq is turning lower but dow is up 11. 5 points now. Coming up next, it wasnt just the stock market soaring in 2013. Housing made a big comeback as well. But with Interest Rates on the rise, will 2014 be the year that its true strength is proven . Another year, another stalemate in washington, but could that actually be a good thing for the markets in 2014 . 2013 was marked by inaction in d. C. , yet the market did reach these record highs. Well look at both sides and whether tension on capitol hill will keep adding fuel to the market fire. Thats coming up. Youre watching cnbc, first in business worldwide. The ocean gets warmer. The peruvian anchovy harvest suffers. It raises the price of fishmeal, cattle feed and beef. Bny mellon turns insights like these into powerful investment strategies. For a university endowment. It funds a marine biologist. Who studies the peruvian anchovy. Invested in the world. Bny mellon. The energy in one gallon of gas is also enough to keep your smartphone running for how long . 30 days . 300 days . 3,000 days . The answer is. 3,000 days. Because of gasolines high energy density, your car doesnt have to carry as much fuel compared to other energy sources. Take the energy quiz. Energy lives here. The u. S. Housing market made a big rebound with prices rising 12. 5 through october but could rising interest stop the recovery . Rates on a 30year fixed mortgage are up almost a full percent since january. If that trend continues through 2014, we could be up over 5 a year from now, of course. Could that derail the housing recovery . Joining us, susan waechter, Wharton School of business, and fred licht, welcome to you both. Pleasure to be here. Nice to see you. Fred, these headwind were talking about, the tapering, which will keep rates going up and these new Mortgage Lender regulations coming through dodd frank, will it be a tougher year next year or a better year, do you think, overall . Well, theres an answer to that question, bill. I think well be pretty steady. I think it will be pretty much like we are right now. Were going to see a little bit higher fixed rates, but i think were going to see a resurgence in the 101, 105 a. R. M. S. Well have a little problem because Flood Insurance rule law that came out. Thats going to be a nightmare in some places. Fha lowered maximum loan amounts in some places. I think the good news is, if theres employment, people will want to buy. Weve been making a beautiful recovery without the use of fraudulent loans like we had in the last middecade. Thats why, susan, i wonder if its not weakness but strength in the Housing Market had that will have people almost worried this year and last year and they say basically home prices have held up as well as they did in 2013 surprised us. The wall street journal has a story about how many me metropolitan areas have prices at record highs again. And i think its going to be a great year. Rates are still at historic lows. I think people will see that signal of rates going up and say, this is a good year to buy. Rates are still low. Housing is still affordable. The end result of that is were going to see another strong year in housing prices Going Forward. You think it will be tougher to get a mortgage. Its already been tough through this recovery. For various reasons that lenders have had, whether its the higher capitalization rules or, you know, regulations or whatever it is. We have more regulations coming. Why do you think it will be tougher to get a mortgage next year . Regulations coming down, as of january 10th, we have a whole new set of regulations added to all the barriers that are already there. Its hard out there to get a mortgage. But if youve got very good credit and also if you buy a house, which is beneath the fha limits, youre in. And, of course if you have the cash to buy put down, you dont need fha, dont need fannie or freddie, youre in then, too. Prices are relatively low, relative to rents. That psychology is going to be powerful itself. If people feel like rates are going to continue to rise, isnt that enough to overcome some of the headwinds youre talking about . What some of the problems are is that the credit score minimums are going up. So, the people who are sneaking in at the 590 Credit Scores on fha mortgages, thats over. Because you have to have 640. Well see people fixing their credit. It may take them a year or two until they can buy a house. That slows down firsttime buyers, those moving up, et cetera, et cetera. The flip side of it all is can we figure a way to get lower down payment jumbo loans in places like los angeles, because the prices are nuts there still. Youre still cutting out a lot of people. And rents keep going higher. Eventually rents go higher, makes sense to get a mortgage, et cetera, et cetera. Hopefully, everything will get better and mortgages will be easier to get and well be fine. If im there for 2015, it will be super. I was going to say, i think you just made the case well, go ahead. Im not as im not as optimistic as fred is that were going to solve the mortgage regulation by 2015. I think thats a far longer story. I think that 2015 well see yet another set of difficulty getting mortgages. Nonetheless rates are for now, 2014, pointing to a very good year. One of the things that fuels home buying is jobs. Job growth is Getting Better but its not where the fed wants it to be, even though theyre going to start tapering. Fred, youre already nodding. Wouldnt that be a hindrance to some degree for next year . At least put a cap on potential growth . Well, i think whats going to happen is, youre going to see different areas of the country that arent going to add jobs, certain areas that are. Thats what its all about. Youre also seeing a movement away from the exburbs and back towards the cities. I think with that, thats where the jobs are, thats where people will move to. Its all about the jobs. I agree with fred. Yeah, its all about the jobs. Im not a professor like susan is, but its all about the jobs. Shes 100 right. Well, we dont have long to wait for that december jobs report. Comes out just after the new year. So, guys, we know we have to watch it ever more closely. Thanks. Happy new year. Thanks. Happy new year. About 40 minutes left to go until the close. Dow still positive. Helped by strength in disney, for example. Meanwhile, nasdaq and s p are showing small declines. When we come back, forget tiny automobiles known as smart cars. Apple and google are battling to make your car an actual smart car. Both expected to announce incar entertainment and Information Systems at one of the tech industrys biggest trade shows as more players get into that automotive space, does that spell doom for satellite radio, or can it weather the storm . Its a bull versus bear showdown on sirius Xm Satellite Radio after the break. After the bell, we regularly hear from wall street players on the show. Today were taking it to main street. Were going to sit down with real life Retail Investors who are making decisions about what to do with their money in 2014. Fascinating lens into the behavior and psychology. [ male announcer ] this december, experience the gift of unsurpassed craftsmanship and some of the best offers of the year at the lexus december to remember sales event. This is the pursuit of perfection. Ttdd 18003452550r can take you in many directions. Searching for trade ideas that spark your curiosity tdd 18003452550 you read this. Watch that. Tdd 18003452550 you look for whats next. Tdd 18003452550 at schwab, we can help turn inspiration into action tdd 18003452550 boost your trading iq with the help of tdd 18003452550 our live online workshops tdd 18003452550 like identifying market trends. Tdd 18003452550 now, earn 300 commissionfree online trades. Call 18886282419 or go to schwab. 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Seema mody joins us with that. Lets begin with the best performing stocks on the s p 500 because disney is topping the list. Guggenheim upgraded walt disney from buy to neutral. Highlighting pixar and star wars films and products. Among the losers, pioneer natural resources, harman, best buy and facebook down 2 . Social media in general feeling the pain today. Global equities writing, when it comes to twitter, the negatives outweigh the positives, especially fake twitter accounts and the proliferation of twitter spam. Pandora, thats also one of the losers in the down 4. 4 . Google and apple trading in negative territory. The two heavy weights compete in the smartphone and tablet space. Competition is about to heat up because both are said to be developing incar entertainment. More detail may unfold next week at consumer electronic show. Yes, thats upon us next week in las vegas. If apple and google are getting involved in the in car. What driving the car . What about singing along to madeup songs . Did you do that . As a matter of fact, we did. Did you do it this weekend . I can see the evans family doing holiday entertainment thing like christmas vacation. Does that spem the end for doom for satellite radio, for example . Is this the end of sirius Xm Satellite Radio . Rick thinks this stock has more room to run. When it comes to satellite radio, theyre the only game in town. Lou begs to differ saying its nothing but a proxy for the automobile market. Guys, welcome. It almost perfectly mirrors the automotive sales. Why pay premium premium to own automotive when you can do it on the cheap with names like ford. I think this is yet again another example of an overpriced stock in the market were hoping can grow into that valuation. And i think thats a terrible approach to the market. You disagree. But yet a company yet to meet lofty expectations when sirius and xm were created, sflit. Well, i mean, it does have 25. 6 million subscribers. Obviously, its doing something right. To lose point about buying ford instead of sirius xm, ford is only making money when it sells the car the first time. The sirius is making money off used cars when factory installed stereos hit the market. Free cash flow, nearly 1 billion Free Cash Flow the company is generating this year. This isnt a Company Almost bankrupt trading for a nickel five years ago. The problem is, though, were talking about major, you know, wellfinanced, new competitors in this space. Its kind of deliciously ironic that its stock ticker is siri, is it not . Well, the thing is the thing about sirius xm is that even though weve had this revolution of connected cars, sirius xm has grown. Its mutually exclusive. Pandora has gone from zero to 72 million listeners. A lot of people connect their phones through bluetooth, can stream phones for free. People can afford the content once apple and google get into this game, once wireless is ubiquitous in cars, its game over for cirrus. Who would you put up in a fight, apple google or cirrus . Its not even a close matchup. The saving grace for cirrus is hoping apple or google wants to buy them for their subscriber base. Thats it. Lou, all youve proven is that apple and google are great plat forms. Thats what content people build their con tetent on. Unlike satellite and Cable Television company that people flip out if amc cuts out walking dead or Something Like that, sirius increased their revenue average rate. Does that deserve a premium multiple in this market . At this stage of a bull market, you cant justify paying up to own a company that might grow strongly. Have you to buy undervalued names. And sirius right now do you not like the concept or just not like the execution of the managers over the years . I think they dont have any chance at executing against the competition thats coming into the market. I really think this is an industry thats changing. No matter how much sirius just really branches out into telematics and stuff. Those services arent going to make up for the fact you have serious players coming into this market that have much more experience and deeper pockets to dominate. Thank you, guys. Something well be talking about, im sure, next month when we do get an anaunsment from either google or apple. Thank you, rick and lou. Happy new year. Were approaching 30 minutes left to go to close. Second last trading session of the year. Looks like the dow will hang in there and make it a positive one. The s p 500 is a little lower on the day. Nasdaq as well. When we come back, you usually see headlines that pit washington against wall street. But has the lack of action on capitol hill lately been a boon for investors this year . And what policy issues will have the biggest impact on the markets in 2014, from the fed tapering to obamacare, Midterm Elections, well cover it all. Geopolitical oil he sent Lockheed Martin soaring. Can it push higher next year . Jane wells joins us with predictions for that mega sector. [ chainsaw whirring ] humans sometimes life trips us up. Sometimes we trip ourselves up. And although the mistakes may seem to just keep coming at you, so do the solutions. Like multipolicy discounts from Liberty Mutual insurance. Save up to 10 just for combining your auto and home insurance. Call Liberty Mutual insurance at. [ thump ] to speak with an Insurance Expert and ask about all the personalized savings available for when you get married, move into a new house, or add a car to your policy. Personalized coverage and savings. All the things humans need to make our world a little less imperfect. Call. And ask about all the ways you could save. Liberty mutual insurance. Responsibility. Whats your policy . D. C. Doing nothing is good for the markets. Its good for business. I dont you know, people say when Congress Goes out of town, they go home. Oh, god, theyre not working. I dont want them to work. Id rather see them at home. The past year, where they didnt do a whole lot by d. C. Standards, i think that is a positive. But, brian, i asked because it seemed like every time we were selling off, whether it was late 2011 or this time around, it had a lot to do during the fall, increased volatility and stock market underperformance with Government Shutdown, worries about fiscal uncertainty in washington. It was only when those were resolved we moved to sizably higher. Agree generally. If you go back to 2011, first of all you have to remember the debt crisis, debt ceiling crisis was happening simultaneously with the european sovereign crisis. I think that drove the markets higher. As time has gone on, i think wall street and the Investment Community has become more and more immune to washington. They kind of factor it in and brush it off, recognizing that at the end there will be a resolution of whatever crisis is going on. If you look at the standoff in the fall, the Market Reaction was asymmetrical. On days there was good headlines out of washington, the market went higher than in the opposite when there was bad news. I think the market has decided washington isnt serious when we get into these crisis situations. We say theres a dlebt ceiling they have to deal with at the beginning of the First Quarter, is that a speed bump for the markets again . 2013, part of washington was terrible for the markets, tax hike, sequester. I think in 2014, my single biggest concern, youre right, is the debt ceiling. You think they would be smart enough to avoid that. I think republicans would focus on health care rather than debt ceiling crisis but republicans want to get something to raise that debt ceiling. Paul ryan is talking about getting the keystone pipeline. Democrats wont go for that. I think its less of a risk but i think you could get some headline risks out of the debt ceiling. Jimmy, by the way, what happens if, in fact, congress is able to do Something Big in terms of one of the items either on the president s agenda or Something Else when it comes to Corporate Tax reform . I mean, ive heard an extotally people shifting income into 2014, if something happens to that front . I would love to say, were going to get Big Corporation tax cuts, imgreg, i dont think any of that stuff will happen in 2014. I think thats going nowhere. I think thats maybe a 2015. I think the whole year will focus, really, on obamacare and what happens with the Affordable Care act. Republicans want to focus on that and set themselves up for the midterm. Its going to be a year of do nothing. Do nothing good or bad. Next year is divisible by two meaning we have Midterm Elections when typically you dont get a lot of bad stuff coming out of washington. Going into the election, everybody is going to try to position and posture themselves for the reelection campaigns. So, i think jimmy was spot on with republicans wanting to avoid a messy standoff on the debt ceiling. Its tough. Hes absolutely right, to see a lot of positive coming out on Corporate Tax reform and other issues. But it is that that hope at the end that you can maybe attract some more voters going into the fall. But i think at the end, its tough to see the two sides coming together until we get through the Midterm Elections to really get the big things done. If theres one thing im really looking forward to seeing, it seems a little wonky, gaos report on subsidy, its coming out in the spring. Probably say i think its going to give mother momentum. You got wonkish stuff, come sit next to us. We welcome that on this program. Happy new year. Happy new year. See you later. Heading toward the close, we got 20 minutes left 20 minutes left. Thats it. Time flies. It has gone by so quickly. Up 13 points on the dow right now. Coming up, Global Defense names pushing defense names higher. Jane wells bringings us names for 2014. Black monday and nfl with several head coacheses axed today, as anticipated. Hours after the regular season ended. We want to know which companies had such a bad earnings season that they should axe their ceos . Tweet us your thoughts on that and let us know what you think. And it feels like your lifeate revolves around your symptoms, ask your gastroenterologist about humira adalimumab. Humira has been proven to work for adults who have tried other medications but still experience the symptoms of moderate to severe crohns disease. In clinical studies, the majority of patients on humira saw significant symptom relief, and many achieved remission. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. Blood, liver and nervous system problems, serious allergic reactions, and new or worsening Heart Failure have occurred. Before starting humira, your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Ask your gastroenterologist about humira today. Remission is possible. At bny mellon, our business is investments. Managing them, moving them, making them work. We oversee 20 of the worlds financial assets. And that gives us scale and insight no one else has. Investment management combined with investment servicing. Bringing the power of investments to peoples lives. Invested in the world. Bny mellon. As we look back and look ahead. In 2013 we saw a shrinking Defense Industry overall. Were wondering how its going to do in 2014. Jane wells who follows that industry joins us with her predictions. First were going to look back, check how jane wells did with her score card for 2013 predictions. She predicted the f35 would be fine. Thats true. Most expensive flight in pentagon is still taking flight. Janes second prediction that cash will be king spent on broad. This also correct. We saw it this year with Lockheed Martin, united technology, boeing, who all spent big abroad. Finally, jane predicted we would see a drone war here at home. A little early about this one here. We didnt see it take off but at announcement from amazon im going to overrule that. I think we give her a ding. Absolutely. These shooes at least 2 for 3. Lets see what jane has to say for 2014 and the Defense Industry. Reporter how times have changed. Back in the cold war days of the f14, few disputed the need for defense spending. In 2013 the Defense Industry was battletested by sequestration and even a Government Shutdown though sales were helped by a boost in international interests. In 2014, though, things will be tougher, even with the new budget deal, there will still be cuts. While Lockheed Martin continues to work on programs like the f35, it has been slashing its workforce in other areas. Its not alone. This is one reason Goldman Sachs predicts defense will. Navy over army. Good timing for lockheeds combat ship. Expensive and glitchy, but the navy plans to buy 52. Finally, a yifky guess. We could see funding for nasa start to turn around. There could be new funding for projects beyond low earth orbit. Good news for players like spacex and new ones like boeing, rocadine and Lockheed Martin. Why . China just sent the first rover to the moon and congress may not like looking up at night knowing america could lose the space race. I wonder how they say sputnik in chinese . Probably sputnik. Jane joins us from l. A. First of all, great job on the predictions this year. Ding. Look, how much are International Sales here by the way as well becoming part of the equation . More and more all the time. In fact, International Sales are now 20 of lockheeds overall revenue, 15 for raytheon. Swedish Research Says u. S. Export defense products, sales have gained 25 the last four years. The only thing s can you only do it when the pentagon allows to you sell certain things to certain people at a certain time. So, there is a limit to it. So, youre picking navy over army in football, is that what i understood to you say . Well, you know, when im married to a navy, my sons going to be a marine, its really no contest at our house. But i was being unbiased and dispassionate in that prediction. As you always are as a journalist. Down the middle there. Great to see you, jane. Thank you, jane. See you later. Heading toward the close. About 13 minutes left on the trading session here. Were going to finish with an alltime high on the dow. Dow looks like it will finish in the positive, close to alltime high. Strength in disney one reason for that. Nasdaq is higher. Apple down 1 . Social media names are lagging a little bit. A little tax maneuvering going on in the last minute. Coming up, holiday shopping. The season may be over but fallout from credit card Security Breach at target, is target handling it right or underestimateding the longterm effects of the mess . Thats coming up. Nine minutes left. According to kelly evans market diary, we need to be at 16,495, to be at alltime high. Were there. Nasdaq and s p are moving lower. Quincy crosby from Prudential Financial is with me, so is oliver from barry gold financial services. Good to see you. Good to see you. Youre keeping an eye on the tenyear note. 3 yield. Is that a line in the sand for you . Three or a little more. It absolutely is. If it starts moving quickly and higher, you know it will cause volatility in the markets and that could give us the selloff. At some point theres going to be a catalyst for a selloff. That could be it. What do you see happening here . What are you watching . I mean, obviously were watching the vel ogsocity of th yield increases. Its not whether it goes to 3. 1 or 3. 2 , but a jump in that would precipitate a pullback in the markets. Would you buy on the dip if it does . We are right now, yes. Assuming continues dont change. We see Fourth Quarter earnings being pretty solid, Fourth Quarter gdp being pretty solid. We see an uptrend in the market. We expect much more volatility goes into 2014 but much more of an uptrend. Do you agree . Buying on the dip . Wed be careful. We need to see a nice pull back. It hasnt been natural or normal. I think a deep pullback would be comforting for most investors. It would tell us the market is normalizing and then we move forward. Even if we get better than expected earnings for the Fourth Quarter . I mean, that 3 yield on the tenyear, that could be a catalyst, youre right. What else could get in the markets way here . If we see top line Revenue Growth doesnt start to pick up. You know, in the olden days before quantitative easing, that would give us a reason to pull back, recalculate and wait. Liquidity has trumped everything. At some point its not. Youre right. Revenue growth has not been there these last few quarters. Earnings growth has been. Companies have become leaner in that stage, so people should understand when a Company Becomes more efficient, thats something thats much more longer lasting than just a one quarter, two quarter deal. Were looking for a little multiple, were seeing stronger Revenue Growth. Thats key. I think in 2014 investors should expect a bifurcation of returns. Its not going to be a broad market rally where a tide lifts all ships. Lets making meaningful to investors. Small cap pharmaceutical, cyclical stop stocks. For january we like technolo technology. Its a good period for technology but we like industrials. They have not done as well as the insta small cap but big cap industrial, as long as global movers up, they should have a nice move as well with dividends. Start to play catchup at that point. Good to see you. Happy new year. Well come back with the closing countdown where it looks like well have an alltime high for the dow. After the bell, National Football league, more than just a game. Just ask the five head coaches who were fired today. But we want to tell we want you to tell us, now, if Corporate America should take a page out of the nfls play book and fire ceos the day after a poor earnings season. Tweet us your thoughts on that, maybe who you think had such a bad year and should be shown the door as well. Well share your responses coming up later in the closing bell. Huh, fifteen minutes could save you fifteen percent or more on car insurance. Yeah. Everybody knows that. Did you know there is an oldest trick in the book . What . Trick number one. Lookest over there. Ha ha. Madeest thou look. So endeth the trick. Hey. Yes. Geico. Fifteen minutes could save you. Well, you know. [ bell ringing, applause ] five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. Coming up with final two minutes. Were seeing buying coming into the market for the major blue chip averages. The dow is going to finish, looks like near the high of the day. Up 22 points. This will put us in record territory going into the final trading session for the year. Let me show you the tenyear and how its doing here. Its been pretty quiet. Thats what everybodys watching as quency crosby was pointing out. A bit of a pullback today, away from the mythical 3 level everybodys watching and expecting to go above in the new year as the fed begins the tapering process here. Were at 2. 97 today. The other thing everybody has been watching, the stock Everybody Loves to hate or hates to love, twitter down another 5 today. Were just coming off that peak we set earlier in the session. We were almost unchanged but now down to 60. 40. Look whos back from vacation, bob pisani. Feeling well rested, indeed. Everybody should take a little vacation. Yes, they should. Vote for that. Heres the important thing about today. 3 on the tenyear, still not hurting the stock market overall. So, its either were all on holiday and it doesnt matter and it will matter more in january or rising Interest Rates, slowly rising rates, are not necessarily going to destroy the stock market. Slowly rising rates. Because the economy is doing better. 4 is the new line in the sand i hear from a lot of people. Thats when things are going to fall apart. Used to be 3 . Maybe if we get better economic numbers throughout the year, we could get the 4 . In a few months and its not going to kill us. Earnings start next week. That will be key as well. I think well focus on fundamentals more in 2014 than in 2013. The vix is up 9 . I asked, why is that up . I got a bunch of emails. I dont think much is going on. Theres very few sellers volatility. I think its just rising a little bit. I wouldnt be surprised if it rose a little tomorrow. If the markets dont do anything, comes back down in the beginning of january. Very good. Thanks, bob. See you later. That will do it for the first hour as we go out with the peak of the day on the dow, up about 25 points, at an all new time high. The second hour of closing bell with kelly evans and company. See you tomorrow. And welcome to the closing bell. Im kelly evans. What a day its been for markets. Never short a quiet market. Thats the statement that goes around. Today feels like testament for that. Dow pushing for best annual gain since 1995 as it adds 25 point. Just one trading day left to go in what will be a recordbreaking 2013. It appears to have cracked that 16,500 mark at the end there. The dow up about 25 points. S p 500 a little lower today. Less than a point. So 1,841 no, 1842 is closing high so almost snuck that one in. Nasdaq is a little weaker today. Apple was weighing on the index to some extent. On that note, joining me is michael kroften, mandy drury, dominic chu and josh lipton. Mr. Krocrofton, what stands out you . Its been a market thats defied all reason and logic this year. The fed was in. If you fought the fed, you got shot. The market itself, however, is setting itself up to really leverage any movement in the economy to the upside. Corporate management has taken a lot of time, put a lot of effort into cleaning up their Balance Sheets let me put it this way. This has been a year where weve seen almost 30 gains on major indexes. Not unprecedented but rare. What happens next . The more it goes, the more correction. The longer a correction, the more likely it could be a crash. If this market doesnt take a pause some time very, very soon, were going to have something worse than a correction. When we think of a trigger for that pause or major consolidation . I wish i knew. If i knew higher rates . Mikehum bug. I think the market could keep going for the First Quarter. Nothing is going to stop it. Money will keep coming in. Beware of the ides of march. Once you have the money coming in, you may get a 10 move in that First Quarter, people will get scared and the historical pattern, the last couple of years, the economy looks better, stock market looks better, credit spread is narrow, and its spring and things seem to swoon. Maybe thats oversimplifying. We talk about the idea the Dow Jones Industrial average has had that many runs of five years of positive gains but when it does, its only been i say only 84 cumulative over the last five years. Other runs weve seen have gone into like the 120, 140, 200plus percent gains in terms of at least five years in a row of upyears for the dow. That means theres a precedent at least for upper you know, more upside markets, not just whats happening right now. Mandy, who thought we would be back here, right . The world let me tell you what the world to me felt like march 2009. It felt like gravity. Do you know what i moon . It felt like, oh, this is the correction from the bubble and boom cycle and now here we find ourselves. But you fast forward four years, almost five years, and now it feels like, well, no, actually, were the equilibrium is up here and what does that tell us about what worries me, you know when things are going really, really well, theres bias, people think, oh, things are great, Retail Sector piles in and the danger is they pile in at or near the top. Theres incredibly bullish sentiment out there, wouldnt you say at this stage . Retail always comes in at the top of the market. Theyve been somewhat absent. Youve seen some flows coming this way as retail comes in. First quarter, retail jumps in. One day during the crash years theyve been burnt twice. It took them a long time to come back to the market. If they start to come back to the market, we start toe see big headlines on the front of usa today saying, you know, historic gains in 2013 for the stock market. That worries me. Kelly, heres something thats interesting. I want to bring this to your attention. Weve been talking about it for so much. One of the biggest buyers of stock are companies, corporate buybacks are in the billions and billions. Theyre not going to stop any time soon. So, if theyre there to prop up the market, maybe that means that you still have some legs for the upside. Well, theyve actually done a lot to prop up the market so far. Corporate buybacks and the fed is the market story for 2013. And those buybacks have had a really good effect on the future because these companies have leveraged themselves to economic expansion. They say, were going to blow out the numbers if the economy turns and then theyll take it to the next level. The question is, is the fed going to be able to handle the market to the economy . The economic i want to get josh lipton in here. Josh, especially when you see the move, the action today in a name like twitter, down Something Like 5 after gaining 20 , 22 last week, whats that tell you . Whats going on here . Its interesting you stalk about twitter. Certainly analysts on our network say, in some sense thats as speculative as it gets. They point out the Company Makes no money and hasnt given us an Earnings Report to look over. I think to mr. Croftons point, and weve had a lot of analysts on cnbc, we had art cashin, the legend, on this morning, paul hickey has talked about this. There is some concern on the run youve had. Paul was talking to his clients, he would not be aggressively buying here because of the run. He thinks the technicals of a market thats overextended. Brian kelly fast money trader joining us. What do you think about the action in twitter today . Last week right before christmas you had me on, asking me about it and i said, if you wake up today, thinking about buying twitter, i said, dont do it. Todays that day. Buy it today. So, youre comfortable buying it here absolutely. Even though it only gave up 5 . This morning would be better, but if youre just listening to me now, tomorrow morning is not a bad time to do it. I ask this because some people will say, wait a minute, maybe this 5 is the beginning of a much steeper drop and wait for people until its hated enough to get back in. I wonder if one day is enough. Its two days really. We had the big drop friday and then this morning. I would use 54 for my stop out. This is more for a trade than anything else. If you have 54 as a stop out point, its not a bad place to get in here. Its a great risk reward. Manna lot of people say itsd to value a stock like that. Would you agree with that . I agree with that. One reason i like twitter is because its free. I dont know how anything thats free could have a revenue value to justify its its called advertising. Theres too much advertising. Everybody is trying to get the same ad dollars and then it will be spread thin. Advertisers monetize human attention so whatever were using is the most human thing out there, or at least has a value to it. If you and i use twitter, too much, perhaps, isnt is that how they isnt that why its so valuable . Im not sure. I think twitters ad model is yet to be proven and the market is way ahead of the proof. Im not sure id buy twitter any time soon. From an an ekt doelgts point of view, one thing twitter has going for it, youve probably seen headlines that teens no longer think fasth book cebook you have to ask yourself, what is the contender to take the crown . The Instagram Story is so interesting. Facebook bought for 1 billion last april. Based on twitter, if you use the same methodology, i remember oppenheimer on this note, 16 billion conservatively its worth. People are shifting more towards instagram, you have to say thats a win for facebook longer term . Maybe that saves them from being on the chopping block . Possibly. With regards to that, maybe josh can weigh in as well because i know hes been following that stock and techs quite a lot, but one of the interesting things i saw when you talk about the possible contenders, twitter was mentioned. Which nearly struck me as kind of interesting because i cant see instantaneously what the appeal would be to a teen for twitter. But i can see what the appeal would be, josh, for snapchat. No question, snapxhat is where its at. I have a coup of teenagers and snapchat is where its at. Mark zuckerberg agreed with you, kelly. I mean, facebook was reportedly put down 3 billion for snapchat. That was one reason, by the way, here in the valley you have a lot of talk about whether youre entering another dotcom bubble when you hear headlines like that. Different views youll get about josh, what were talking about with snapchat, for people that arent familiar, it makes it easy to send pictures to people. If we move more away from text, video content model, snapchat makes it easy and, by the way, it makes it easy to erase its got an expiration date. We all know in the technological world, everything still sticks around. You think its gone, but its still out there, folks. I wonder if its less about the erasability and more just the ease of use. If you look i remember cramer talking about this as well, jim saying he and his daughters snap chat and they do it because its fun. They like to send funny pictures with a little text message on them. And its instant gratification. Kids love it. What do you think, josh . Also, kelly, to your point i know friends and family use snapchat. All kinds of reason you would use that service. Maybe people get nervous about the fact that you do leave all these digital tracks everywhere. Were reminded about that all the time, in the papers every day. Maybe the comfort with snapchat is you believe that isnt the case here. Brian, i remember because i theres a great book, brad stones book on amazon thats out right now and its funny to go back and remember and think through how skeptical people were of amazons valuation, of its Business Model at the time, saying how is this Company Possibly worth more than sears . Sometimes high valuations are justified when you talk about innovation and reshaping the way we use things and order things. Maybe thats the case with some of these highflying names today. I think so it is in a certain sense. Have you to be careful with ones snapchat not public, its hard to value. The fact their content disappears in ten seconds, thats not sustainable. Its all about where the eyeballs are, where people are congress gating, if theres a different functionality to the communication. Twitter has it. Linkedin has it. Facebook with instagram has if. Thats really the winners in this game. Brian, last question because we have to go. I wanted to ask briefly about the weakness in the energy space today. What do you think is driving that . You know, i think its we had a tremendous run in both gasoline and heating oil. And weve seen tremendous demand. You also saw a little bit warmer temperatures, so thats helped out a little bit. I think its a temporary type of thing. You know, to me, id be im long. Id be a buyer of oil for the rest of 2014. Brian kelly, thank you for joining us, sir. The panel stays with me. Stick around and catch brian and the rest of the fast money crew coming up at 5 p. M. Much more on head on this program, on your markets and money on this final day of 2013. Up next, more than stocks doubles in percentages, well go through the 100 club. Coming up, did wall street give main street a good reason to cheer this year . Well check in with Retail Investors from around the country next. Youre watching cnbc, first in business worldwide. Welcome back. How is everything . Theres nothing like being your own boss and my customers are really liking your flat rate shipping. Fedex one rate. Really makes my life easier. Maybe a promotion is in order. Good news. I got a new title. And a raise . Management couldnt make that happen. [ male announcer ] introducing fedex one rate. Simple, flat rate shipping with the reliability of fedex. Welcome back. 2013 is looking to be one for the record books. Theres a lot of stocks in particular that had historic runs. Sheila breaking down some names at the nasdaq. Were talking about stocks that have gained 100, 200, even 300 in 2013. So, we screened those about 100, found 30 names with market cap over 1 billion to make the cut. A lot of tech names on the list like yahoo and facebook, both gaining more than 100 this year. Buy crow tech was also a big outperformer with names like gilead and krechlt lgene. There were a few surprises like deckers, owners of uggs. Investors liking the company. Even a Printing Company like r. R. Donnelley and pitney bowes. We found eight names to make the 200 . Netflix, tesla, micron technologies. We do have a bricks and mortar retailer that made the cut. Best buy up a whopping 240 in 2013. What does this all mean for 2014 . Can this outperformance continue . Well, its kind of a mixed picture right now. If you take a look at the average analyst price targets on the list, about half the names have already reached their target or slightly above it. Some outliars, Delta Airlines is one of them. If analysts are right, it could perhaps see 20 pop in the stock in the new year. Perhaps still good news ahead, even for members of the 100 club. Sheila, i think you should be wearing crocs today in honor of that move. Thanks, sheila, over at the nasdaq. This great stock market has restored faith for some individual investors. We gathered a couple of them to discuss how they played the market this year and what plans they have for 2014. Joining me now is wayne smaulz, an engineer at health and Human Services department, and kenny sacon. Thank you for being here. Thank you. Wayne, first to you. Were you invested in the stock market this year . Do you plan on increasing your exposure come 2014 . Yes. Ive maintained a long position in sirius xm, but Going Forward into 2014, power shares, qqq, or some other etf might be the safe route to play, low risk and higher maximum potential for profit. Wayne, do you so, when youre talking about these investments, is this something you do separate, from say, having a 401 k plan . Yes. The vast majority of my trades were through the 2009 to 2012 period is when they traded sirius xm as well as apple, mic, semiconductor. But as the markets rose and s p became more attractive place to put my money and i let it essentially stay there throughout the course of 2013 and it proved to be a good move. Kenny, do you as well have both a 401 k , sort of retirement account, with investments in the stock market and money you separately invest in the market . I just invested in the market. No 401 k for me yet. Is that because you have a pension plan or something . No. Im 24 years old. I started investing at the age of 17. So, i just havent thought about 401 k yet. Kenny, tut, tut, tut, tut. You know, the 401 k is so important. You know that as much as anyone. The i do. I do. That is something i will consider in the near future. Okay. So right now you have money that you that youve earned, that you have on the side, and thats what you invest in the market. Give us an example here. Are they all equity names . All stock market names . What are you thinking about coming 2014 . Yeah. Some of my Major Holdings this year have been apple, tiffany, lululemon and verizon. 2014 ill be on the lookout for any value. The stock market is up close to 29 this year for the s p. Im just looking at if any of the companies that i own pull back so i could add more holdings. Whats interesting to me about both of you guys is you invest in kind of a couple specific equity names. Im not hearing a lot about, for example, fixed income etfs or commodity plays or things that might be outside of the stock market but youre able to invest in them because of those fund structures. Wayne, why not . Why stick with just a couple of those individual names here . Well, i think its smart to go with firms that youre familiar with and with industries that you have some knowledge of. The 401 k aspect is something that ive participated in for many years. My funds were tied into the s p 500 for over ten years. I feel that just sustained route is important. Also just sticking with firms like apple, sirius, the firms youre familiar with and you know the supply chain of. I wonder, wayne, if the value of your retirement account has increased this year . Are you changing the way its allocated at all . I have enjoyed a 30 return on my retirement built this year. And i know whoa all know it is s p performed extraordinary last year so i mroebl will take some funds and move it into powershares, qqq or some other shares, or twitter or tesla in the upcoming year. Wayne, do you have any advice for kenny . 401 k , run, dont walk to get into it. Were just giving you a hard time, kenny. Im sure the investments you have, look, if you do well in this market, as weve seen this year, can reward you. Up 60 in 2013 . Im up about 69 , last i checked. Wow. Then what happens, last question, when you look into 2014, how do you figure out where there still might be some opportunity . Why not be more defensive having had that kind of year . Well, i think theres still a lot of value to be found in this market even with the runup. Apple is trading at 12 times next year allegation earnings. Lululemon pulled back due to pr blunder and yoga pants but its a fast company, right grower at the right time because the health craze is not going anywhere soon and i think it will shoot quickly back up to 70. Such an interesting snapshot of the kinds of decisions people are making across the country. Thank you for joining me, sharing some of those details. Thank you. Happy new year. We have a news alert on fedex. Seema mody joining us with all the details. According to reuters, new york city is suing fedex for illegally delivering untaxed cigarettes to peoples homes. They say fedex delivered 15. 9 tons of cigarettes to City Residents over a sevenyear period. The city is seeking 52 million in unpaid fines. Youre seeing shares unchanged. Thats an interesting one, seema. A new page in the jpmorgan hiring mess. In china, internal emails emerging, details why banks started to hire sons and daughters of influential chinese families. Those details could mean trouble for other banks as well. Our panel weighing in on that next. Its black monday in the nfl. Five head coaches axed a day just hours after the regular season ended. We want to know which company had such a bad season they should axe their ceo. [ male announcer ] heres a question for you where does the United States get most of its energy . Is it africa . The middle east . Canada . Or the u. S. . The answer is. The u. S. Most of Americas Energy comes from right here at home. Take the energy quiz. Energy lives here. Take the energy quiz. Humans even when we cross our ts and dot our is, we still run into problems. Thats why Liberty Mutual insurance offers accident forgiveness with our auto policies. If you qualify, your rates wont go up due to your first accident. Because making mistakes is only human, and so are we. We also offer new car replacement, so if you total your new car, we give you the money for a new one. Call Liberty Mutual insurance at. And ask us all about our auto features, like guaranteed repairs, where if you get into an accident and use one of our certified repair shops, your repairs are guaranteed for life. So call. To talk with an Insurance Expert about everything that comes standard with our base auto policy. And if you switch, you could save up to 423. Liberty mutual insurance. Responsibility. Whats your policy . Jpmorgans troubles with the fed continues, including the socalled sons and daughters scandal in china. Now, emails emerging 37 one jp exec wroegt in 2009, we wrote, we lost a deal to db, meaning Deutsche Bank, today because they got chairmans daughter work for them this summer. Our own kate kelly following this story today. Kate, i guess the question is, whats the impact immediately about these emails for jpmorgan . Well, i think this email today was kind of interesting. We knew there were multiple banks that were under skrut fli. In fact, its a reasonably long group, jpmorgan, Credit Suisse, Goldman Sachs and Deutsche Banks as well. Who knows who the source is . Somebody has leaked this email kind of implicating Deutsche Bank in a bigger way. We have vague details on the actual deal theyre alluding to. What deal, what chairmans daughter. Clearly, its suggestive of the idea this was an industry practice that jpmorgan was perhaps copycatting on. The s. E. C. Is taking the lead on this. They referred it to the department of justice. There could be a criminal element. We just dont know at this point what shape the investigation will take. But it doesnt look good. Theres a lot of specificity emerging. Isnt the point kind of that it makes jpmorgan look better because theyre basically saying, other people were doing it, so we were doing it, too . In that sense, absolutely. But what youre seeing is i think theres a great deal of email evidence suggesting this was a widely discussed practice, this was a notion of quid pro quo, specifically hiring certain sons and daughters in the expectation of specific deals and probably much more to come. Michael, you hear this story and you think what . I think that there goes jpmorgan again. The government is always out to get them. I dont know if theres anything wrong here. Perhaps there is, perhaps there isnt. A lot of company doing it. General counsel told them, this is probably okay. Sure, theyre probably going up to the edge. American companies they did this with private corporations, it wouldnt be an issue. Its been going on for a long period of time. It doesnt just go on in china. It goes on in europe, emerging markets. Guess what . It goes on in it is United States. I think you raise a good point about that, as to what is appropriate in terms of Business Practices in that particular country. And i think we could almost liken it to, for example, when we have, for example, a bribery scandal in certain emerging markets, whether its mexico or indonesia where its not necessarily called bribery, just greegs the wheels of business. The foreign corrupt act goes back to 1977. I was going to bring that up. Now were dealing with a worldwide economy where we have lots of competition and were the only one subject to this rule. Right, right. Were putting ourselves at a competitive disadvantage. Oh, isnt law and order such a pain . Heres something interesting. How many of us have sat through viewers included have sat through your online Work Training program where it talks about the ethics of your corporation and how you should adhere to the standards of the strictest jurisdiction that you and your company operate in. See, you were paying attention. I took i took my test. I passed my quiz. You know, we have to do a code of conduct every year. Ive alleges had to do that as part of a news organization. I would expect its even more stringent for a banking institution. But i take a little issue with your point. Who knows what the fullness of the evidence is going to show but it something suggest there was a tying intention involved to get deals in exchange for hiring certain people. Youre right the foreign corrupt practices question is the global, perhaps more impactful issue just one second. Let me get josh lipton in on this as well. Josh, your thoughts . I mean, listen, you know, im reading through the reports just like everybody else. It sounds like these db executives just felt like, this is a practice going on all over the world. Were losing deals because of it, right . Certainly authorities reportedly, as you mentioned, theyre looking at Credit Suisse and citigroup and goldman and morgan stanley. The idea, the reason to do it because you seem like everyone else is doing it, doesnt sound like a sound strategy, have you right. You could defend any kind of misbehavior by saying, well, if we i think about mortgage securitization. Everybody was doing it. Everybody had a we had to do it, too. Im just following orders. What im saying, theyre probably up to the edge. We have to give them as americans, we have to give them presumption of innocence. What is that . We have to give our National Company the presumption of innocence . Yes. Tying back to what josh lipton was saying about whether this is a successful strategy, throw up the graphic about jpmorgans place in the League Tables when it comes to chinese m a. They are now in the number three or four spot relative to even last year. Now not saying they did this quid pro quo. But whatever theyre doing, they have made some traction in this area. Has this practice actually paid off . We dont know if they did it and we dont know if theres a connection, but in general they are proving in terms and is hiring an officials child giving that official something of value . Thats the standard. They have to be able to prove theyve given the official something of value. I dont know if thats isnt the standard less about whether the official gets something of value or i mean, is it about what that official i dont know. Or jpmorgan winning business. I dont know what the definition is, but the statue says you have to give them something of value. Is giving your child a job something of value . I dont know. It is. Is our job something of value, we have to sign a code of conduct over. I get a paycheck. I get a paycheck, too. But does that give your parents something of value, that you get a paycheck . I think theres a certain for sure. Theyre not paying it. My child works for jpmorgan. Dom, last word. If youre working for the premier of china, do you need any more prestige . Theres a lot more to be flushed out. Kates all over this. Its really about the spirit of the rules created and even if that spirit was violated. Thats a big concern. I dont know. The actual question about violating the spirit versus the letter of law is even something we here in this country grapple with. Well keep an eye on jpmorgan shares, which have been rallying. Targets Security Breach compromising credit cards and the p. I. N. Numbers. Is the retail giants Retail Management being too lax about the whole thing . Bny mellon combines Investment Management investment servicing, giving us unique insights which help us attract the industrys brightest minds who create powerful strategies for a countrys investments which are used to build new schools to build more bright minds. Invested in the world. Bny mellon. Welcome back. The heat hasnt cooled against target after massive data breach. They say p. I. N. Numbers is still safe but target felt less holiday traffic from the breach. They offered 10 discount and free credit reports. Joining us is ceo of dezenhall resources. Thank you for having me. Can you grade their response to this massive Security Breach . Well, i think theyre in midsurgery so its hard to tell. There are three components here. Number one is containment, the operational aspects. How do you make what is unsafe, safe . Theyre clearly working on that. Number two is bedside manner. How do you answer the question to consumers, the two big questions, am i going to be okay and what are you doing about it . How do you persuade consumers they shouldnt just use an American Express card . How do you persuade consumers that they will be made whole if somebody made an illegal purchase . The third issue is financial benefit, financial rerates. As you just announce, theyre offering those. These three things are in the cocktail that will ultimately decide how well they do. But i think its a mistake to judge how theyre doing this early in the game, because these things by nature take a long time to resolve. I want to bring our panel in on this discussion, eric, as well. Certainly the last major Security Breach we saw, that was tj maxx, i believe, in 2006, again, a big problem for that company. But not one today you look back on and say that it had a real longlasting effect. What would have to happen for this one to be different, do you think . Well, i think that look, whenever Something Like this happens, the pundits come out and say its being mishandled. The fact is, nobody has greater incentive to get this right than target. If i had to predict, my prediction would be two years from now, maybe even a year from now, this will be a nonissue. But it comes down to fixing the problem and making people whole. The whole idea if they go on a great big apology tour, thats the ant dote to Something Like this, its not. It comes down to prayings and compensation. Can. Target shares were up half a percent. My fathers told me the safest restaurants to eat at were ones with poison restaurants because they are more likely to remedy. Maybe thats the same here with target because of this breach dom, have you had ever Food Poisoning . I have. Earlier on on street signs we had a man on that specialized in Crisis Management and we asked him a score to give ceo, he gave him a cminus because there was the target press room that put out a statement on december 20th. He did a youtube video. Essentially, we havent been seeing talk show hes not the face of it. Going on cnbc and talking to us about heres the interesting thing. We wont know until now, does target report same store sales . We wont know until their next reporting period, whether its monthly or quarterly, how much of a hit they suffered relative to competitors during the season. If they did lose traffic in sales, well turn around and say, theres so much more they should have done. If they didnt, its hard to quibble with in strategy. This could have happened to anyone. Tar get, if you talk to anyone in retail, they have the best front end of any general merchandiser in the retail world if you look at computer World Magazine today came out and said the encryption target uses would make it almost impossible for mackers to get the p. I. N. Numbers. Once theyve tested one number, the algorithm changes the pin p. I. N. You have to give management a break. Theyre trying to figure out how they are its true target uses the same encryption methods, more or less, that most retailers. I wonder if we havent focused more on jpmorgan and their response to this, immediately in the case of those, to be proactive about restricting access to customer funds and limit it from being a broader situation. Eric, your thoughts, what grade would you give target here . I would be more positive. I dont think ive ever worked on a crisis where pundits dont come out and say they get a d or an f. The problem with that is were all making judgments in this nano cycle thats short term. I think if it turns out that the damage has not been working in a major way, that people have not been bilked out of billions of dollars, theyll recover very well. Two years from now, one year from now, well talk again and theyll probably get an a. Eric, thanks. The market doesnt seem to care. The market believes this is a flash in the pan. Thats his point, i think. I think hes right. Thanks, guy. I give the guy a b. Just throw your hat in there. Coming up, our Million Dollar home competition is back. This time we should have called it the mega Million Dollar home competition. All the upcoming homes are going for 25 million. The biggest reveal is coming up next. And we want to hear from you. Nfl head coaches getting sacked for losing records today just hours after the regular season end. Should corporate ceos be taking a page out of footballs playbook . Which companies do you think they had such a bad decision that they should axe their ceos . [ male announcer ] what if a Small Company became big business overnight . Like, really big. Then expanded . Or their new product tanked . Or not . What if they embrace new technology instead . Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From td ameritrade. [ male announcer ] what kind of energy is so abundant, it can help provide the power for all this . Natural gas. More than ever before, americas electricity is generated by it. Exxonmobil uses advanced visualization and Drilling Technologies to produce natural gas. Powering our lives. While reducing emissions by up to 60 . Energy lives here. Welcome back. Our Million Dollar home competition is back today with a twist. This time we raise the stakes for showing properties with list price of at least that million. We have six mega homes across the country. Heres how it works. Two mansions go head to head. Only one moves forward. To make it interesting, were not going to tell you the locations or the price. Well reveal that after we get a look. Last round californias ocean opulence beat colorados black diamond. Now that mega mansion takes on socalled killer views. Reporter this gated mega mansion is located on more than 6. 6 acres with 13 bedrooms, 14 bathrooms and 3 pools. All with breathtaking ocean views. No details left untouched. Everything in the grand pool house is covered in sea shells, even the 11 chandeliers. Explore acres of meticulous gardens or watch a movie in your private theater. This is a true trophy beach house. Reporter this very private cliffside property is 8. 6 acres of breathtaking 360degree views of one of the most beautiful cities in the world. And this house is built to entertain. Drive up your very own street to this contemporary estate with six bedrooms, eight bathrooms, two guest apartments, a sunken living room and bar, Outdoor Sports and the ultimate party experience, a beautiful grotto where you can watch the sun set over the ocean. In is a true palace in the sky. Okay. Earlier we learned that ocean opulence is a 54 million home on californias coast. Now we have to guess the location of killer views. Dolly, have i to say it screams california. It does scream california, peaceful, gorgeous cal. Can we reveal the location or price . Lets begin with price. Ocean opulence, 54 million. Killer views, is it more than that . Im going to guess 65 million . Thats a great guess. The reason it isnt is because the house is a bit dated and needs either a complete radio do or more likely a complete teardown. A complete redo . Youll buy this property for tens of millions and sister to build it all over again . And happily so. I have to tell you, if the ask is 35 million, its probably going to trade for that. It is perched high above the hollywood hills. In probably the most ideal location possible. And it has its being marketed with the lot below, so your privacy is protected forever with a possible 25car garage area. What . I mean, it is unbelievable. Who is buying these homes . I have to tell you, the good news about california is it has lots of people to buy it. Chinese, russians, americans, movie stars, you know, you name it. And as long as theyve got the money wall street, all kinds of people are buying homes in these areas. Is it cash . I mean, is this financing . How is Something Like this even pulled off . Most are purchased in cash but they generally finance when finance rates are so low, like it is now. Doesnt make sense not to. We talked about the price, the 35 million. We talked about location, hollywood hills. Of those two properties, which is the better value . What do you think, 54 million, malibu . 35 million, possible teardown i dont even have a concept of what would be i guess you go with the cheaper one because you get the land and it wont cost you 35 million to build another home. Exactly. Thats exactly i mean, literally to the t, exactly right. You could build a magnificent home for 10 million. Figure 1,000 a square foot, 10,000 square feet, youre in 45 million and you have an irreplaceable property, permanently obstructed views, ideal locations. What about taxes like in cal . Taxes are the same everywhere in california so about 2ish percent of purchase price. Ive heard its got to change. If youre buying this property, is that something you should be worried about . No, i dont think so. I think california being a state with state income tax, i dont think theyre going to head up the property taxes that high. Unlike florida where they really hit up the property taxes because there is no state income tax. Last question. What would Something Like lets take the 54 million property, what is the monthly upkeep on Something Like that . Do you have any idea . You know, a house like that, its lots of acreage, lots to take care of on a hill, lots of gardening. I mean, i have to say its probably a good 20 grand or more a month. Wow. Not including, you know, people to take care of the house inside. This is just the outside. So, in terms of value, though, thats the way to play this market . Yep. And its going to be the trophy house for some very uber person, very soon. It is an amazing property. Tells you a lot about the state of play about real estate across the country. Look at the stock market. Thats right. Lots of money to play with. Dolly lenz all day on this mega Million Dollar home segment. Happy new year to you. The winner is killer views. Tweet milliondollarhome. We thank dolly for joining us all day with a look at those homes. It may be frosty outside but our hot list is burning up. And now my journey across the country has brought me to the lovely city of boston. Cheers. And seeing as its such a historic city, im sure theyll appreciate that geicos been saving people money for over 75 years. Oh. Dear, ive dropped my tea into the boston harbor. Huhh. I guess this partys over. Geico. Fifteen minutes could save you fifteen percent or more on car insurance. The ocean gets warmer. The peruvian anchovy harvest suffers. It raises the price of fishmeal, cattle feed and beef. Bny mellon turns insights like these into powerful investment strategies. For a university endowment. It funds a marine biologist. Who studies the peruvian anchovy. Invested in the world. Bny mellon. Welcome back. Time to check in and see which stories are heating up the website. Hi, kelly. Weve got a good news bad news horse race going on right now. Good news . Economists say the u. S. Will turn a coroner 2014. Thats a write up of the latest National Association of business survey. He took a deep dive in the numbers. Readers like the good news. But, a close second and sometimes first, jeff cox, he tends to be a little negative. Why the market could see a 17 drop in 2014. Beyond the fundamental factors, he took a look at president ial cycles. And Midterm Election years tend to be drag years. So he looked at piper jaffray, crunched some numbers and average pullback, 17 . We have got a hot third. This story hasnt had less than 1,000 readers at any given time all day since we put it up. A price here in 2014, amazon prime might be your cause. Amazon . It looks its a chicken and the egg thing. If you shop a lot on amazon do you get the prime so that the shipping is cheaper or now that the shipping is cheaper do you shop a lot more . We have had those hot three all afternoon. Apple and twitter still li t lighting up the ticker box as well. And a market flash on hertz. Hertz adopting a poison pill plan because it has seen unusual and substantial trading. Hertz says it is trying to reduce the likelihood that any person or group would gain control and to insure the board remains in best position to perfo perfo perform duties. Some Strategic Alternatives are outlined as well, expanding off airport footprint, introduction of new brands among others. You can see the stock moving afterhours up about 3 . Just want to ask michael, what do you think about the news . I think its fantastic. Its leveraged to the economy. If the economy takes off, hertz will take off. They are really well positioned to drive their earnings. And you drive that with an economic expansion. What about a poison pill . Absolutely. We have got to get it there. We ask you tweeted. The nfl has been ruthful in firing coaches. Which coes should be shown the door . We will be right back. Welcome back. Its black monday and all you football fans know what that means. Some of your favorite or least favorite nfl coaches have gotten the ex. Express five below in lululemon. I dont think that skis should be fired but they could forfeit. And then there should be a hunger games for ceos. May your earnings be ever in your favor. My goodness gracious. Thats a couple of thoughts. We already talk about companies being held to quarterly performance. Perhaps the last thing Corporate Americans could do is follow the same past. We are talking about yes, it is a business but it is a game in the end. Its very hard whin youre dealing with as many employees and payrolls. I really think i just like to say you had a bad sale quarter. Do you think things are getting more short termish . Maybe there is there could be a lesson here. You look at the nfl. These five coaches didnt make the playoffs. You dont make the playoffs, you can get clipped. A lot of times the owners dont have the backs of the coaches the way that the boards have the backs of ceos and chairman. Maybe the boards should be held to more accountnt as well. You have a business psychle and you have a football season. You blow a season, maybe you should get fired. So you have got give it back three to five years. Guys youre brutal. Thank you everyone for being here. Tomorrow is the last trading session of the year. We will see what happens its sure to be a record breaking 2013. Melissa lee speaking about performing, you guys are talking about airlines . We have got an analyst with two picks and theyre not underperformers he says that can make you money. Stay tuned. Over to you guys. Fast money starts right now. Heres tonights lineup. Walmart a dog of the dough this year but will it be an outperformer . Plus the two socks that are your best bets heading into the new year. They posted the biggest gains in the first two weeks of the new year. And finally twitter tanks again, adding to fridays 13 drop. One of our traders says now might be the time to