Last night she said oh i feel so down when i feel left out so i, i turned around this for sure good monday morning. Welcome to squawk alley. Carl is off today. With me, john fort, holding down the fort at post nine. Joining us also, the cofounder of aol ventures, now president at confide. A lot to get to in the tech sector. The markets are making up some of the losses from friday. We had steep declines on what was the second highest volume day of the year, the dow fell more than 350 points. Crude hovering around 34 a barrel which continue to be one of the leading stories in the market. Bob is on the floor with more. As we are counting down, bob, to the end of the trading year. Yes, and were up, and we should be up. The fed has made its decision. Options exploration is over. Were in a new oil contract. This is the seasonally strong period. Particularly the time when you pick up the beaten up stocks this year for possibly gains next year. The problem is this lower for longer theme is really weighing on the markets. So what you want to do is look at the most beaten up sectors recently and see if theres any interest, any buying interest. Lets look here. The transports in the russell 2,000 are dramatically oversold in the last few weeks. Its encouraging in the big indices, those are the ones that are leading right now. The other beatenup area, industrials, materials, energy. Industrials are leading. Materials in the mid. Thats encouraging. And energy is lagging because oil cant get traction. Theres the big problem. No traction in any of the commodities at all. Although copper has been up last couple of days. Extremely oversold sectors where you would see some sort of bounce or anticipate them. Were not getting them today. Thats exploration production, service, even the steel group. All of these dramatically oversold. Not just in the last two weeks, but all year. Nothing really moving in these particular groups at all. Kind of disappointing at this point. Thats because that seasonable by the beaten up themes is being discarded in favor of the lower for longer idea. That is Commodity Prices will remain. They dont have to drop anymore, theyll just be lower into 2016 and the first half of the year. Take a look at energy stocks. All right, its nice chevron and exxon are not down on the day when oils down a little bit. Outside of that, with oil down, if you look at the usually exploration of production names, your pioneers and your conchos and your continental resources, theyre all down about 3 . So, is it encouraging that the biggest names are up fractionally . I guess so. Outside of that, its pretty grim in the energy space. Similar story for materials. Theres some fractional moves to the upside. Joy global got an upgrade. Technically its a industrial, its a mining stock. Minor moves in southern copper. U. S. Steels had a horrible year. I would call this slightly on the encouraging side at this point. Remember, most of the material names are down 20 to 30 on the year. Well see if this holds up. We need 2 to 3 days of a trend before we can say people are picking on the carcasses of these beaten up groups. And then you realize just how far weve come. Bob on the floor for us. Apple shares are up slightly today. 60 minutes doing a deep dive on the company last night. Including a rare interview with ceo tim cook. They talked about the iphone, the apple watch. Charlie rose asked about whether a car was in the works. They took an inside look at johnny ives secretive divine lab. Some interesting comments came on political issues, namely taxes. Heres what tim cook had to say. This is a tax code, charlie, that was made for the industrial average, not the digital age. Its backwards. Its awful for america. It should have been fixed many years ago. Its past time to get it done. But heres what they concluded. Apple is engaged in a sophisticated scheme to pay little or no corporate taxes on 74 billion in revenues held overseas. That is total political crap. Theres no truth behind it. Apple pays every tax dollar we owe. Its a familiar line for tim cook. He said as much on capitol hill during hearings on this very issue. The tax code he says, john, written for the industry age. Hes not the only ceo thats critical of it. Yes, hes clearly very defensive about this. He came out very strong. I agree. This is a criticism thats been levied against most major companies. Certainly a lot of tech company, amazon, microsoft, et cetera. I think hes right. We need to make sure our code is not only relevant but also current. And that theres this natural tension where a ceo has a fiduciary responsibility to ensure the revenues and the profits are recognized in as tax efficient way as possible. For fiscal 2014, apples fiscal year ends before the holiday quarter, to be fair in comparing this, i went back a year. Apple paid about 14 billion. Thats more than microsoft, intel and google put together, okay. For the next fiscal year, which ended a couple months ago, they paid 5 billion more than that. So throw in facebook and a couple of other companies. Thats because apple is making stuff, not Just Software and services. Tim cook is absolutely right. The tax code was made for the industrial era. Regardless whether you think they should be paying for taxes, they should be forced for some odd reason to bring back taxes on things they sold overseas. They have employees overseas. More employees overseas as Many Companies have in the u. S. Why should they . Just in terms of the tax dollars theyve paid, its astronomical compared to others. They are a Bigger Company too. Twothirds of the business is done overseas so this is somewhat reasonable. He said also later in the piece, i want to bring that money back to the u. S. But ill get hit by 40 if i do. Its because theyre making hardware and not just selling software. Compared to the others, theyre just over 6 billion. But 6 billion compared to 13 billion, 19 billion, i mean, its out of whack. An interesting dialogue about encryption. The interview did take place before the paris attacks. Before this debate really took on a new life. But he was asked about encryption and about this socalled back door into the devices. He made the point that if there is a way in, somebody, the bad guys, will find the way in. They still require a subpoena, a government warrant, to hand over the information. Cook said if the information is encrypted, it is not there to give. That was pretty interesting to hear. Yeah, and hes right. The benefit of encryption if you will is as soon as the message is sent, it gets encrypted and it looks for a unique key in the recipients phone to decrypt the message so its insuensured the message can only be decrypted by the recipient. I think hes right, the back door is not the answer. If we give the good guys the back door, the bad guys also get access to the back door. Our governments s ahas shown w the breaches we dont do a good job of protecting confidential information. He said it wasnt a tradeoff between privacy and National Security. Its a convince argument. Apple said he did say they are cooperating with the government. Inappropriate cases. Outside of whats encrypted. Theres a lot the government can figure out from peoples locations. From what theyre sharing on nonencrypted apps. I think it would be interesting to take a fuller view of what the government could be doing based on the nonencrypted information available. Ill say it again, its odd to me the tech ceos are coming out, individually talking about this, and havent had a combined cohesive message. Its one thing if tim cook said it. Its another if its tim cook and jeff bezos on down the line. Shares of disney moving today. They were falling after star wars crushed Box Office Records. Theyre down about 1 . They fell on friday as well. It did earn about 528 million in ticket sales worldwide. 248 million in north america alone. And if you put it in context, it looks all the more impressive. Avatar, which is considered the highest grossing film in history, took in just 85 million in its opening weekend. Theres an analyst quoted that says, i dont have enough adjectives in my arsenal to describe how massive this is. But investors dont seem to like it. This is three times larger than avatar, the largest gra es grossest film in history. Just huge from a star wars perspective. Some analysts are concerned about espn, which is a very large part of disney. A big issue where theyre paying increasing dollars for sports rights. And more sports rights. To try to stave off competition. At the same time, youve got them losing about 7 million paid subscribers over the past two years. Those two trends are difficult to reconcile. We dont even have china open yet. Thats going to open on january 9. This is enormous. You think about the value of this franchise. This was the hard part. Actually meeting expectations. And i predicted months ago this would be the highest grossing film of all time. If you dont adjust for inflation. I still especially believe that because the Box Office Competition in january and february looks weak. Im sorry, i didnt go back to see avatar again. I didnt go back to see Jurassic World again. Did you go back to see titanic again, thats the other one . No, i did not go back to see it again. It was a big weekend for star wars. Not least because you watched episode 4. I loved it. Im now going to watch 5 and 6 before Christmas Day when hopefully ill go see 7 with my family. But, john, its so fascinating that its not even about the movie anymore. Lets say estimates say that star wars will bring in 8 million in the box office. Merchandise, some estimates have 5 billion. Yes, this is the perfect storm, or i like to call it the perfect stormtrooper. Youve got, you know, a storied franchise thats been successful. Youve got new technologies on the distribution front that are making it more valuable. Youve got special effects, incredible social media, incredible crossmarketing, both internally at disney and externally. And, you know, i think what this also point also to is how smart bob eyinger was in 2002 when he bought lucas film for 4 billion. A lot of analysts say he overpaid. This to me looks like the instagram of studio purchases. Do you think it will be enough to overshadow weakness in espn . No, espn is a significant part of the disney stock. I think they have some real concerns there. And we need to see a real strategy. Theres concerns particularly about 2007 and 2018. I want to see what they do in 2017 to stave those off. There has been weakness around some of that certainty. Well see how it pans out. John, thank you. Coming up, more than 400,000 americans expected to get drones this christmas. If youre one of them, get ready to talk to the federal government. One of the top drone makers in the world tells us what to expect. Plus, after a record breaking weekend, how much can star wars really rake in at the box office . The president of fan dango join us. As many as 40 million troubles come january 1st. What you need to know. Back in a minute. Welcome back. Breaking news regarding bmw. The national Highway Traffic Safety Administration has fined bmw 40 million for a second violation involving safety regulations since 2012. These violations involve the mini twodoor hard top cooper. Apparently in 2014, it failed to to meet regulatory minimums for side impact crash protection. At the time, bmw said, you know what, the Weight Restrictions on there or the weight variations on there were not correct. Well fix those. Well, nhtsa went back and did a second series crash tests in july of 2015 and they failed them again. Now nhtsa has fined bmw 40 million. Thats a big fine when you look at the number of fines issued by anytinhtsa and the department o transportation. 40 million. Back to you. The hits keep coming for automakers. If you own a drone, today is the day you must register it with the faa. This comes as drones are expected to be one of the hottest gifts this holiday season. What if you or your child dont actually know how to operate one . There are schools for that. Mary thompson joins us from one in new jersey. Hey, mary. Hey there, john. Im here at the new jersey Drone Academy. Behind me, what you see is a former drive range that the Drone Academy is going to turn into a netted facility this spring where people who are 14 and older can come and learn how to fly zones. Now, thats timely, given the faa is expecting that 800,000 drones will be sold in the fourth quarter. Making it one of the hottest gifts this holiday season. Its a trend thats worrying regulators. Who starting today require you register your drones. But its accelerating to the owner who opened this academy this spring when he taught 71 students. Thats the number he expects to explode in the postchristmas rush. Im expecting probably next year, before june, probably, up to 500 students. Barns opened the Academy Following a trip to m. I. T. With his son. It convinced him more needed to be done on education. Since he opened the academys doors in april, the classes, teaching Drone Operators how to build, program and safely fly drones, have been booked up. He charges 250 per student for four twohour classes, plus a 25 rental fee for drones the students assemble during their time at the academy. The drone range goes beyond hobbyists. Barns is also working with local First Responders to train them how to operate drones. Hes also working with the Jersey City School systems in order to get students out of the classroom, into the fields, to teach them how to get drones up in the air. Back to you. All right, thanks. Literally into the fields. Yes. Well have plenty more on drones coming up. The second biggest drone maker in the world is going to break down the new regulations later on this hour. Up next, tough times for twitter after the stock setting an alltime closing low on friday. Its down again today. Well take a closer look. So whats your news . I got a job ill be programming at ge. Oh i got a job too, at zazzies. friends gasp the app where you put fruit hats on animals . I love that guys, ill be writing code that helps machines communicate. interrupting i just zazzied you. phone vibrates look at it friends giggle i can do dogs, hamsters, guinea pigs. You name it. Im going to transform the way the world works. proudly i programmed that hat. And i can do casaba melons. Ill be helping turbines power cities. I put a turbine on a cat. friends ooh and ahh i can make hospitals run more efficiently. This isnt a competition ahh. Steve, other than making me move stuff, ces. What are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place that lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim . For all the confidence you need. Td ameritrade. You got this. Take a look at shares of twitter falling after an all time low friday. That stock still below the price of 26 a share. Twitter down nearly 40 year to date. Down a whopping 58 from its most recent 52week high. Alltime closing high happened almost two years ago, when the stock closed above 73 a share. This is a go prolike trajectory. Go pro was above 90 at one point. A bit worse slope on that one than this one. Twitter having a rough time with user growth and investors dont seem willing to give it a longterm bid until they figure it out. The one difference between twitter and go pro is go pro has long been a very popular short. Twitter, people have been reticent to short it because they think that perhaps there will be a product. There will be some sort of bottle of lightning the company will release so they dont feel that conviction. Although it does have about 12 to short the stock. Doesnt seem to have been that lightning in a bottle quite yet. Trying to trick people into collecting on it. Well see. We want to draw your attention to the market. Theyve been sliding since the open. Still in positive territory. The dow is up by about 59 points. We only have about seven trades days left in the year. Simon is here with more on what were watching. The big news in europe is obviously the aftermath of the spanish election. Actually, at the beginning of trade, say 4 hours, 4, 5 hours ago, the rest of europe was higher. There was no contagion from spain to rest of europe. The market in general has fallen. Spain itself, as you can see, is down the best part of 3 . The big news out of the election is its basically too close to call and that the risk is you get a chronic political uncertainty. Basically there are two breakout parties. The liberals on the right didnt get enough votes to form the coalition we thought they would with Prime Minister rehos party. Now everybodys scrambling around. Presumably he will be asked to form some sort of government which will be relatively unstable. If they can get anything through a minority environment where spain still has a huge public debt burden, unemployment at 20 . Thats a problem further down the road. Particularly if the ecb were to ever stop buying the debt to suppress the yield. You see the way in which the yield shot up. Weve come back down from there. Immediate mark down right across the board of spanish blue chips. The banks certainly are lower. A lot of energy stocks. Remember those, the power, the utilities. They are also marked down. Some are off their lows. Interesting today a number of the mining stocks did well. City, raised its price target. And you kind of saw some Short Covering it appears across the sector. Again, that has readied itself back to the mean, if you like. Finally, lets look at some of the other movers today. Having done the deal with apple, talking about 1 billion of intellectual property revenue coming through. Itv, according to a report, might be bought by comcast, our parent company. It has moved the stock, as you can see. Volkswagen is off its earlier highs. Here in california, theyre giving a little bit of an extension on one of the deadlines. The ceo is talking about rotating Senior Management through various departments. So its more or less possible to hide defects moving forward. Relatively quiet, apart from spain, which is a real headache for many people. Interestingly, it hasnt taken the market more broadly with it. We will see. Simon, thank you. Up next, a rare interview with ceo tim cook. A look inside johnny ives secretive divine lab. But what if you could see more of what you wanted to know . With fidelitys new active