yeah. >> okay. i'm hoping it's eight and a half. thank you very much. also no doubt we will hit in news, massachusetts will investigate the third avenue fund that closed down, those headlines just starting to creep out. look forward to the show tonight, melissa. >> thanks. "closing bell" starts right now. hi, everybody, happy monday and welcome to the "closing bell." i'm kelly evans at the new york stock exchange. >> we're itching to get going here. i'm bill griffeth. this week is expected to be one of the most important for investors for congress, for, you know, everybody out there. the fed as we know could be raising rates on wednesday, but the first time in nine years since december of 2006. >> we're bringing in some of the biggest names on the street to break down the potential impact on your investments. marco catta, jeremy kingless. david rosenberg, jim booeng cold all joining us over the next you few hours.

action in the energy complex today, oil rebounding from this morning's losses, natural gas taking a bit news on news that the winter weather won't be cooling off anytime soon, we have an energy trader to help navigate the moves in this space. >> meantime, new problems in the high yield market, another fund liquidating this morning. that of course puts pressure on etfs to track high yield. we have the man behind black rock's high yield etf, ticker symbol hyg, mark weed man will give us that should be very instructive. >> crude prices rebounding today after dipping below $35 a barrel for the first time since february 2009. wti did settle today up 2%. >> which brings us to anthony grazanti from grc energy. there are those who felt maybe we put in a short term bottom this morning with that 34 and

change and then that bounce. what do you think? >> definitely short term, bill. we lost 20% last week, gained 2% today. i'm not really ready to call it a bottom quite yet. >> kind of a dangerous thing to do these days. >> in the short term it could and then as the fed -- if the fed raises rates you are going to get a stronger dollar and that could put some pressure on the market on wednesday. >> what's the relationship between moves in oil and natural gas. warm weather has been a factor in the latter but they are still expected, right? >> they are connected. here is the difference between them. with the crude oil it's a supply situation, we're really well oversupplied, with natural gas as you mentioned at the top of the show it's the weather and the demand situation. there's no demand for it right now and natural gas at $188 is the equivalent of crude oil at $20 a barrel. we are at the bottom levels of this right now and i don't even know how companies are holding on at this point with it being $188. >> do you want to see what a bottom looks like there? any guesses? >> a bottom there?

it could be $175, it to be $150. those are numbers that are being thrown around on the trading floor all day today. >> on wti, where do we go? i've heard as low as 20. >> bill, i think that -- i'm not so involved -- or not to thinking that we will hit that 20 handle on this. i think what's going to happen is that because of the problems in the bond marked you're going to see the hedging capabilities of some of these oil companies starting to away. they're not going to have the financing for hedging. what that's going to do is that's going to put production immediately. that could start to really take place in the first half of 2016. >> anthony, when it comes to the stress we're seeing in the junk part of the credit market, who is the tail and who is the dog? is it energy that is hurting that space or separate issues in that space that are -- that are just happening? >> i think it's the price of energy that's hurting that space. i mean, i don't think anybody thought that oil prices would be trading below a $35 handle at this time of the year.

i think most players thought that we would have some sort of bounce back at this point. >> because it raises the question about as we watch these prices fall, as we watch some funds panic and investors are wondering should they be panicking about this, what would you say to them? how suggest is it -- obviously if oil falls this way, so unprecedented and unexpected we're seeing the fallout, but can the market overall digest this? what concerns do you have? >> i would say if a trader has a position on right now and they have held it all this long you have to keep holding it at this point because, you know, the down side could only be $2 or $3 lower from here and then we start to lose that production that i was talking about. this situation is very serious for the oil market. a lot have been able to hold on because they have been able to sell features beyond what they are producing and that hedge has kept them afloat. if those hedges starting to away that's it, there's going to be -- i saw a report from john around that half the energy

companies could be out of business by this time next year. you know, it's a situation with the supply will definitely change if that starts to happen. >> last quick question, this is my favorite chart of the day, a weather map from the researchers, this is the forecast as the country on christmas day. all you need to see is just the temperature gauges are still going to be higher, much higher, than normal in parts of the northeast where natural gas and other fuels are used to a great degree. when you traders see a chart like this, a longer-term chart, does it mean that prices have to go much lower or what do you think is going to happen here? >> it does, bi. in the short term it does. we be i see a chart like that and weather pattern like that i'm looking for rallies to sell at least for the next two or three weeks. in january when this contract goes off the board we start looking at it from a different way. if the weather patterns don't change you have to sell rallies. >> anthony, always good to see you.

thanks. >> let's get to the other big and somewhat related story of the day, pain in that high yield bond market. >> third avenue ceo departed abruptly after that firm announced it was liquidating its junk bond mutual fund over time and now the company is under investigation by a massachusetts regularity. seema mody is at third avenue headquarters in midtown, mpt, in new york city. she has the latest. >> we are outside new york headquarters of third avenue, just a half hour back a massachusetts regularity is investigating third avenue. cnbc can confirm that the sec is right now inside the building valuing the fund's efforts to ensure it provides an orderly process that best protects investors. third avenue is liquidating its high yield funds and is parting ways if its it chief executive who had been with the firm for 24 years. the abrupt closure of a $789 million focus credit fund comes

after a deteriorating performance down over 30% in 2015, elevating boarder concerns around the health of the high yield market, it's also drawn attention to some of the publicly traded asset management firms that have exposure to this part of the market where dell and reed, among others down 5% or more. that's the latest. >> joining our "closing bell" exchange as we begin what could be a momentous week ken mory, kenny polcari is over at post 9 and rick santelli joins us and, yes, as we stand here talking about all these headwinds, the slide in energy, the fed probably getting ready to raise rates this week, the stress in high yield, the dow is down a whopping 2 points, kenny polcari. what's the stock market to do with all of this? >> listen, i think the stock market it feels very nervous. we saw it was much weaker earlier, we broke the s&p 2,000,

traded down to 1993 which is not really any support, there is really no support between here and 1975, but the market just kind of -- it's trying too figure out what the next shoe to drop it, what's going to happen next. this high yield story is not a pretty story by any sense, the market is very nervous about that, you can feel it, the market is hedging its bet, what is janet going to do on wednesday in light of all this new data that's come out over the next couple of days. >> ken, it has you pretty bearish on things, doesn't it? >> it absolutely does. >> tell us just how much. what are you most worried about here? >> what i'm really worried about is what's the market's perception going, to be what's janet going to do? if janet chooses not to raise rates that's going to send a negati negative. we've broken all the technical supports, the next change where there seems to be a lot of action is between 1950 and 1975, between here and there -- >> ken, how about you?

>> i can't disagree with very much that's been said, in fact, all i can do is add to it. i think what we have here is another problem that hasn't been talked a lot about, but you have a lot of people that were searching for yield because of these low interest rates for all these years and they've gone into these high yield funds that have been essentially feeding off of that and creating more risk by going and investing in risky ventures that maybe this these interest rates not been this low they would not have. we have that risk as well, a lot of money, been chasing yields that ballooned this. by the way, it's not just in the high yield market that i'm concerned about, this is a global problem. the same thing happened in emerging countries, they've borrowed trillions of dollars at these low interest rates from us that we've lent to them at high rates, this is the gigantic global debt problem, not just a high yield bond market. >> rick, would you moderate that at all? >> no, i think everything everybody said is spot on. the only thing i might veer off

on and might surprise some listeners/viewers is i think the volatility is real, i think it's almost necessary. when loose policy has created a bigger move in risk to make up for the low interest rates that were caused by design, the reversal of such policy is going to have the opposite effect. risk premiums are going to continue to be volatile, however, having said all of that, i have yet in all the years i've been watching markets have yet to see any issue we have talked about so much and been in front of so much actually melt down. i think shining a light in these areas and some of the issues of the fed no matter what you think the policy, it's been well telegraphed. i guess in the end what we're really talking about is trimming potential profits or potential investment returns over the next several years when they start to snug up versus any kind of huge medium term systemic type risk.

short term volatility, trimming returns, that's what i see. >> i was just going to say, rick, consistent with what you're saying, it's like what they used to say about economists or probably still do, they've called nine out of the last nine recessions. >> kenny, before we let you go, tradition suggests that the market tends to rally into a fed meeting on wednesday. are you guessing that that's going to happen this time? >> it doesn't feel like it's going to rally into the fed meeting on wednesday at all, quite honestly, it feels like it may just hold itself here, it may rally after the fact. if she raises rates which is what the market is expecting i think then you actually may get a little bit of relief in the market and it won't feel so nervous. i think the market is actually starting to speculate that she doesn't and if she doesn't that i think is going to send a much worse message. >> thank you, gentlemen. have a good week, rest up before wednesday. >> 50 minutes to go here in the session as bill mentioned where the dow missed all this. is managing to stay higher by a

point, the s&p lower by a point, the small caps down by almost 1% but the nasdaq is down just 4. >> when we come back the man in charge of the world's biggest provider of exchange traded funds, black rock will weigh in on the potential for more black eyes in the high yield bond market. rbc's ceo speaks exclusively. finds out how he plans to lead the canadian bank giant through the collapse in oil prices. that's coming up ahead. announcer: sunday's your last chance to save big

during sleep train's triple choice sale. for a limited time, you can choose up to 48 months interest-free financing on a huge selection of tempur-pedic models, or choose to save $300

on beautyrest and posturepedic mattress sets. you can even choose $300 in free gifts with sleep train's most popular stearns & foster mattresses. the triple choice sale ends sunday at sleep train. ♪ sleep train [train horn] ♪ your ticket to a better night's sleep ♪ welcome back. what would a monday be without a big merger to tell you about, this time it's newell rubbermaid buying jarden for $13 million. the company that makes sharpees with the one behind yankee candles, although many other brands behind this deal. the combined company will go by the name of newell brands. jarden going by the wayside here. >> our dominic chu is taking a closer look at what exactly is in these etfs that many retail investors use to invest in high yield. >> what's interesting about this whole discussion right now is this idea that if you are an

investor and want to invest in high yield or junk bonds typically you do your financial advisors, pick bonds and allocate them to your portfolios or buy the etfs. hyg, this is the i shares i box high yield corporate, it's a smoutful, the ticker is hyg, you will often hear it referred to in that way. the reason why it's important it's the biggest exchange traded fund that tracks that high yield or junk bond part of the market, it's got $15 billion in assets and again, it tracks an index of these overall bonds, not specific parts of the bonds curve itself. here is the interesting part, if you take a look at some of the big issuers, where the most heavily weighted holdings are going to be, hca, hospital cooperation of america, it's the most heavily weighted issuer, about 2.5% of the total holdings are of those types of bonds, t-mobile, 2.2% weighting, allied financial 1.7% and frontier

communications 1.6%. so, bill, kelly, when it comes to high yield these particular etfs are used by many investors as a proxy or a way to gain access to this high yields market. what's important for some of these trades is that we did not see a huge sign of stress in the marketplace despite the fact we've seen record volumes over the course of the past week in that particular fund. it's going to be something that the industry points to as a victory, it's also going to be a point of contention going forward as people scrutinize the etf model when it comes to investing in these types of perhaps illiquid securities. back over to you. >> i suspect both of those things are about to happen right now, the hyg did trade at a record volume last week totaling $9.8 billion. >> amid fears over a lack of liquidity in the high yield bond space hyg traded a volume of $5.3 building on friday alone.

>> and the important thing mark wiedman runs i shares, he supervises the hyg. we're here for some answers. obviously we've been talking about liquidity in the bond market all year, there's been concerns about liquidity in high yield. what are your telling your investors now? are there any problems with liquidity in the bond market? >> absolutely there are problems with liquidity in the bond market but that's been through for 30 or 40 years. what the hyg and other fixed income etfs do they allow buyers and sellers like your viewers to directly trade with each other as if it was a stock and that's revolutionary because what that means is that when people want to move quickly, institutions or retail they don't need to sell through the underlying bond market, they can meet directly on the exchange. on friday $4.3 billion of trades happened just like that. >> explain to our viewers how did the pricing of the bonds actually occur. you can trade these instruments without trading the underlying

bonds but somebody has got to tries these bonds when there are redemptions or creations of the shares. >> imagine that a bunch of retail investors sell off their own holdings and some market maker buys in those positions what that market maker is going to do is say, hey, is that worth more or less than the bonds inside of hyg. if that low shares are worth more than the underlying bonds they hand us the shares, we hand back them the bonds and they pocket the profit. >> i want to get back to this liquidity question. we have this fund, third avenue fund last week that basically halted itself, tried to liquidate itself. is this a symptom an underlying problem in the high yield market or was this fund somewhat different in some way? >> block rock were finding that trading in high yield actually moved pretty well on friday, friday was a $9 billion in the underlying cash bond market that's on the higher end of normal. things are actually moving pretty quickly. we think that that particular case is more about a very extreme distress debt fund, not to say there weren't problems in

bonds but we are not seeing it. >> his fund was different than the funds that you're running. >> wengs. our high yield fund is managed with much more liquidity, much high i didn't remember credit rating than you would have seen in the fund that's been mentioning. >> dom was mentioning your underlying holdings here, energy is a very large part of the holdings, 11 or 12%, telecom as well. are there particular sectors that are extremely illiquid now? >> right now it's about 12% or so of energy and another 3.5% of metals. those are both sectors that are under price pressure. we've seen a significant repricing in there with very, very wide yields on the underlying bonds. that's what's really been driving up the price -- driving down the price of hyg and the spread up. liquidity, yeah, a little bit more challenge but overall the boarder high yield market we're seeing to be relatively healthy given that there is a fair bit of money wanting to no of in one direction. >> just to be clear when somebody buys in the etf that's

made of stocks they are actually owning the stock? for the most part for the plain vanilla -- >> they are owning the stock directly to the fund, yeah. >> what happens, though, when it's bonds? i don't understand how that works and can you explain it to our viewers? >> an etf is just a bundle of securities that we've put up on the exchange. that's all it is. whether it's stocks or bonds. >> the bonds don't trade like stocks. >> no, they don't that's the magic. the reason why people are so interested if you are a high yield buyer or seller today and using hyg is that you get the ability to trade -- >> i understand the appeal but i'm saying i don't understand -- and it's important right now if people are going to say, okay, if i give you $100 of my money am i actually able to make a claim on $100 worth of the underlying or what? how does that work? >> when you buy hyg or any other etf you are buying direct holdings just like a mutual fund of the underlying bonds or stocks. it's exactly the same as buying the high yield mutual funds, the only difference this one trades around this room. >> there were some reports, for example, people who were trying

to get in and out of these instruments on thursday and friday, some hedge funds even were saying, okay, i was looking for somebody to bid me 65 cents on the dollar, i didn't get a bid until 55 cents on the dollar so i said forget about it. what is your experience in redemptions that you would need, i guess, to do in order to meet the demand even though it wasn't super high but there was still high demand for clients who wanted their money. >> the point is the bid ask can get very wide. >> absolutely. if you look at how hyg traded, it traded super tight on friday. that's why it traded 4.3 billion. if you're trying to sell an individual bond of course that's going to be tougher on a day like friday, but if you just want to move high yield hyg and cred dit derivatives are two great ways institutional i remember investors can use money. >> we will continue the tutorial here. i assume you can short shares of hyg. >> you absolutely can. >> i imagine there are going to be those who couldn't get out of some of the bond funds, maybe they were going to come to you as a hedge rather than just as a proxy for the bonds.

>> it's a great way. if you have a long position that was left liquid, you could short that using hyg which would be a much more liquid vehicle and actually perhaps even pocket a little securities lending revenue, too. >> we're going to see what the results are. i'd say basically when you see big selling pressure you're going to see some shorts, you're also going to see some people who are inn located their inventory. >> for the bonds that you're doing, the high yield, you're seeing fairly good liquidity, sometimes the bid ask is very wide. is there something that keeps you up at night? something that concerns you about the way bonds might trade? is there anything we should be knowing about as investors and the people watching as investors. >> when it comes to the etf i think they will continue to perform very well. if it comes to the high yield market the question is is it signaling stg to us that the equity market doesn't know. that's the big question. is it an energy issue or is it a boarder issue? so far it looks like the equity market is saying, no, that's actually not what's happening but that is the thing that i would say is the big question.

>> one final quick thing, mark. when we look at, for example, pressure on tenant healthcare, when you have to sell your most liquid bonds is it possible they are in areas which aren't necessarily energy. if you hold nearly 1,000 bonds in hyg, so if we start to see pressure in equities across some names that might be common to your portfolio does that mean you're looking to sell the bonds that you can as opposed to the ones that may necessarily be responsible for the underlying can earn. >> part of the way that the etf works is we don't hand you cash, we hand you -- if you are exiting the fund, a market maker we hand you the bonds, we will give you a mix of liquid and less liquid bonds. the profile of the funds is the same as it expands or shrinks. >> like i said, i knew this would be very instructive. mark, good to see you. thank you. bob bob, as always, pleasure. we have a news alert on chesapeake energy, dominic chu back for that now as well. >> the reason why, i mean, to carry on this discussion here energy, oil and gas companies overall are a focus for these high yield funds, especially one

like chesapeake energy right now because it is a company now that has said according to dow jones reports citing sources it is working with bankers at ever core on options to cut its debt load currently and also the report goes on to say that options at chesapeake could follow include a debt exchange or a swap of some kind or as well as asset sales and again chesapeake energy has been hurt by the decline of course in natural gas prices given the warm winters and the entire commodity complex. what we're talking about right now is, again, dow jones reports citing sources familiar that chesapeake energy is working with bankers at ever core to explore it's options to lessen it's debt burden. chesapeake energy a focus for investors given what's happening with high yield in the energy market. >> it all ties together, doesn't it? >> all right, dom, thank you very much. >> we have 35 minutes left in the trading session here. boi, the major averages really

aren't telling all the story today. the dow is up just 11 points, the s&p down a third, the nasdaq down 1%. >> mark ocato will explain why he thinks a top is forming in the market right now. >> the head of one of canada's largest banks, he will be ringing the closing bell today and he will give us his take on the current oil collapse and how it could affect his business and the canadian economy.

welcome back. crude oil rebounding this afternoon after dipping below $35 a barrel for the first time since 2009. the commodity concerning for banks in canada where thousands of oil fans jobs have already been lost. >> joining us dave mckay, he is here to celebrate being listed on the new york stock exchange for 20 years and you will be ringing the closing bell to commemorate that. congratulations. >> we're very excited. >> everybody is talking about oil right now, in canada especially 10% of your gdp and cost a lot of jobs there, it's got to be front and center for you right now as well. >> certainly it impacts the al ber at that economy and suss scat want economy but we're seeing quite a bit of strength

in ontario, quebec, british columbia and next near gdp outside of albert at that we expect it to be 2.5% and nationally around 2%. exports to the u.s. marketplace, more canadians shop at home and stay at home in their travels, less travel to united states. definitely weakness in albert at that and continued weakness next year, but the rest of the economy is quite robust. >> still going over some of the fallout that we're seeing, the oil price, by the way, in a lot of parts of canada we're reading today is well below $30 or whatever that features price is. debt to income ratio for the country hitting a record in the third quarter, some concerns about the real estate market which has had quite a run, major job cuts, unemployment between 2008 levels, people are concerned about mental health now for a lot of folks. your own shares are down about 25% this year so far. is it going to get a lot worse before it gets better? >> i think we do expect to see

further weakness in the al ber at that, saskatchewan economies especially as it feeds into job loss and the retail portfolios. if you look at our q4 numbers our credit book is very strong. our impaired loans declined year over year. consumer still healthy nationally, we expect weakness in al ber at that, but our credit portfolio is strong. when you look at how we stress this and look at our gas portfolio we separate the wholesale portfolio from the resale portfolios and we go through every single name in that portfolio, we look at lower oil prices, $30. >> how low? $30. wow. >> and we stress the cash flows, look at where we are in the overall capitalization of the organization and for the most part our positions are senior secured positions within that debt strength ur. >> you're stressed to 35, though, right? >> we've stressed to 35 and announced those results in the

marketplace which keeps us largely within our overall cyclical appetite. >> i never thought i would say these words again, but prime minister trudeau has said he will increase government spending to try to shore up the those problems that are occurring in the oil patch in your country. >> yes. >> how much will that help? >> well, infrastructure investment helps create jobs. >> it creates deficits at the same time. >> they are challenged to look at both sides of the budget deficit that they are saying they en harted a worse fiscal position than they expected, raising personal tax toss help pay for some of that. there's different mechanisms the government has but certainly they are reviewing their spending patterns. they made the commitment to invest in infrastructure. so i think it's good for the economy broadly across canada in the long-term. >> finally you are here now for 20 years, you guys have just acquired city national that's a lot of west coast exposure that might be more insulated from some of the trends we have just

been discussing. are you seeing imminent consumer strength in the u.s. or is it still patchy? >> a strong u.s. economy despite some of the market selloff on the high yield side it seems to be generally limited to noninvestment grade oil and gas, a little broader weakness, but generally it's supported by a strong u.s. economy with strong employment growth. we don't think the announced reductions in the oil and gas industry are meaningful, there's only 180,000 jobs in the oil and gas industry in america. we're seeing strong job creation, seeing consumer spending, broad based strength that we are very excited about and we are investing in the u.s. marketplace, adding jobs and we're very excited about the future. >> dave, thanks for being here. >> we need to get you upstairs so you can ring that bell today. >> thank you very much. time for a cnbc news update let's get over to sharon epperson. >> dow jones is reporting the homeland security department is working on a new system to

investigate social media accounts of certain visa applicants. sites will be vetted before that person can enter the country. if you're still without health insurance for next year you have one nor day to sign up through the federal exchange healthcare.g healthcare.gov. those who register will have insurance beginning on january 1st. want to be an astronaut? nasa is hanging up a help wanted sign. the space agency opened its astronaut application today and will be accepting applications through february. keep in mind it's a tough job to land. only 8 out of over 6,000 applicants were picked for nasa's last astronaut class in 2013. and michelle obama took some time to spread holiday cheer at a washington, d.c. children's hospital in afternoon. the first lady took a tour and spent time with the patients and with their families. and that's the cnbc news update at this hour. >> i applied for the journalist in space program years ago. >> did you? >> which they later suspended.

i'm a huge astronomy fan. >> you should put in your application, bill. >> no, not now. john glen did it at a certain age, but not bill griffeth. >> i'm not brave enough. i don't want to go anywhere near space. >> that time has come and gone. thanks, sharon. >> see you later. >> 25 minutes to go. the dow is edging higher, it's now up 30 points. we were much lower in the early part of the day before oil turned around, but the s&p is now up about a point, the nasdaq down nearly a point. >> a trader will tell us what he's watching coming into the close. >> highland capital chief investment officer will tell us why he sees a top forming in the market right now. that's why i have the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy for my studio. ♪ and that unlimited 2% cash back from spark means thousands

of dollars each year going back into my business... that's huge for my bottom line. what's in your wallet? turned around, but the s&p is come on in pop pop.

happy birthday. i just had a heart attack... and now i have a choice. for her. for them. and him. a choice to take brilinta. a prescription for people who've been hospitalized for a heart attack. i take brilinta with a baby aspirin ...no more than 100 mg. as it affects how well it works. it's such an important thing to do to help protect against another heart attack. brilinta worked better than plavix. and even reduced the chances of dying from another one. don't stop taking brilinta without talking to doctor. since stopping it too soon increases your risk of clots in your stent, heart attack, stroke, and even death.

brilinta may cause bruising or bleeding more easily or serious, sometimes fatal bleeding. don't take brilinta if you have bleeding, like stomach ulcers. a history of bleeding in the brain, or severe liver problems. tell your doctor about bleeding, new or unexpected shortness of breath, any planned surgery and all medicines you take. i will take brilinta today. tomorrow. and every day for as long as my doctor tells me. don't miss a day of brilinta. welcome back. less than 30 minutes to go on the floor. i'm joined by peter costa from empire execution. now the dow is up 50 points but the transports are having a really tough go of it and what do you think happens from here? >> going into the close we will probably stay up. today will be like the first day we are not in 100 point move. i mean, basically from the bottom to the top we are, but i don't think we are going to close up 100 or down 100. it might be the first day this

month that we have that. even though it seems like a fairly volatile day compared to other days this month this really wasn't. >> do you get any calls from friends, families, are you personally worried about happening in the credit market. >> i'm worried about everything that's happening everywhere. >> all the time? >> when i go home i don't worry anymore. it's not only what's going on in the credit markets, you have oil still off the bottoms here, we have a quadruple witch coming up on friday and the fed announcement on wednesday. as far as investors are concerned this is going to be a very -- it's going to be a nail whiter. >> that vix still up 23. all right. i have to tell you we've already started the conversation here, but we will start over again. our next guest says that the market is building a top an inn vindest should consider reducing exposure to large multi-national equities. mark ocada is back with us,

joining us exclusively. good to see. >> you great to see you. >> tell us the story of what you see going on in the markets right now. >> there's a lot going on, obviously. >> yeah. >> but if we kind of cut through things, i'm always thinking what's the big signal versus the noise and there is a lot of noise, it's a very noisy last couple weeks. a lot of signals, too. the big thing i'm looking at at is the real economy versus the markets. the markets are telling a whole different story than i think what is really happening with the economy. if you look at the goldman sachs financial conditions index and you add in the positive effect of oil, you see this giant divergence between main street and wall street. certainly things are getting tiert on wall street, but main street is seeing this wonderful economy. i was talking to a guy this weekend, really smart small business owner up in new jersey, he said he's saving $100,000 a year, which is is e. meaningful to him, on lower gas. >> when you hear carl icahn say,

quote, the high yields market is a keg of dynamite that sooner or later blow up and the catalyst is the weakness in the energy response what is your response. >> i think it's fairly inflammatory, i'm guessing he's short. what sparked this story on the third avenue point, right, this fund has about 5% of normal high yield in it, the rest is tress? special situations. obviously they haven't measured the liquidity properly. >> with the fed raises rates that won't help those guys and the energy price going lower doesn't help those guys. >> exactly. >> are we at the beginning of a new phase of defaults and major stress in the high yield -- >> great question and i think that certainly in parts of the market, the energy space, materials and mining, we see these stories, they are happening already, it's been priced in. these bonds trade very, very

low. but common about the whole high yield market is just not true, if you look at the actual valuation in the marketplace, if you look at maturity walls, interest coverage, the market is actually fairly healthy. >> would you be a buyer of this market right now? >> i think you should. what is really going on? this is not just about energy to your point, that's a great question. this is about a boarder marked. what is it doing? it's pricing on a much wider liquidity risk. a much higher liquidity risk. that is coming through the market, sure, that is actually what's going on, but there are parts of the market that are very high quality. take bank loans. bank loans are below investment grade for their floating rate, you are secured you don't have a maturity wall you only have one-third the energy exposure that high yield has. guess where that's trading, over 7%. default costs historically over cycles is somewhere over 100

basis points. you're getting paid 6%, those are good buys. >> is that how you would approach assets right now or would you look at some of the beaten down parts of the energy and junk bond space and say i'm going to ride this out and see value there? >> i think it's a beat of both, i'm bearish still on the energy space, we are not playing that yet but there are certainly lots of parts of the distressed space that are getting pushed down by some of those guys that are dislocated but higher quality parts that i'm watching, too. the bottom line as traders and as investors these are the great opportunities, but you've got to be patient, right. you want to be leaking money into this market over time, calling the bottom when you have a liquidity dislocation as we all know is a very difficult thing to do. >> right. >> usually this is where the smart money makes most of its money. >> we were talking during the break the transports are now down 20% and their peak of last year at a time -- puts them in bear market territory -- at a time when energy is now at its

lowest point in seven years. something is amiss here. >> yeah, and to your point i think -- i think the transports really are maybe something to watch, to keep a close eye on here as a signal. i've been fairly bearish on the stock market for a while because we are in the credit markets, we see what's been happening. this is finally starting to take hold across the equity markets. it feels a little early to me, though. so i think we should watch that. i do believe that the market was building a top, didn't make any sense to me what happened with the stock market after the fed didn't lift rates in september, i'm glad to see them going on this week, we will see where next years is. i don't think we will see much return. my call really is to get out of the beta and try to find things that you're long in volatility. >> this from the best dressed guy in the market. mark okada. always good to see.

>> you great to see you guys. >> about 15 minutes to go here. the dow now moderating its gains only up about 19 points, we're watching the s&p to see if it can stay in positive territory, the vix is lower but still up around 23 and the nasdaq down about 4 points. >> up next, why gopro shares are swooping lower today. we have a live report from the nasdaq coming up. also coming up jeremy siegel tells us whether recent troubles in the high yield bond market could delay an interest rate hike. mark is shaking his head. stay tuned. here at td ameritrade, they work hard. wow, that was random. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement.

there's no way to predict that. for all the confidence you need. td ameritrade. you got this.

investors hitting the brakes on gopro and apple under pressure as well today. >> let's get out to bertha coombs who joins us from the nasdaq. >> morgan stanley today talking about both tech companies and not terribly favorably. apple right now a part of the reason that nasdaq is dragging quite a bit, morgan stanley is cutting its price target on apple from $152 to $143 a share. they still see some gains, but they see lower iphone sales here in the december quarter than they originally had thought. still it's price target you take

a look at apple still implies 30% upside until next year. apple on pace for its worst year since 2008 after having hit that all time high back on april 28th. gopro definitely hit a sell over at morgan stanley. they cut their rating on the stock, cut their price target as well. gopro today hitting an all time low since going public back in 2014, about 28% below it's ipo price. morgan stanley basically says they think there's going to be a lot of inventory there and they see delays on some of their new product launches. stuff day for gopro. back to you. >> thank you, bertha. heading to the close we have ten minutes left. it's later than it's ever been and the dow is down 66 -- no, it's up 66 points. >> up. >> i thought i saw a minus sign. >> it's whip sawing around here. >> the number hasn't been big, we're up 16 and up 19. up next ken stowe val taking

closer work at how financial stocks could perform if the fed hikes rates this week. your boss? yourself? your family? our financial advisors are free to realize a plan to fit your family's unique needs. we'll listen. we'll talk. we'll plan. baird.

it's gotten squarer. over the years. brighter. bigger. it's gotten thinner.

even curvier. but what's next? for all binge watchers. movie geeks. sports freaks. x1 from xfinity will change the way you experience tv. in case you hadn't heard the fed is expected to raise rates on wednesday. the folks at s&p capital iq crunched some numbers for us and found out in the past 50 years

the financial sector has been one of the worst post rate hike performers with a negative return of 7% over a six-month period, but this time might be different according to our next guest, joining us now is sam stovall of s&p kwal iq. the first thing your father ever taught me was never say it's different this time. >> that's right. eric oja who is our bank analyst, if it doesn't come true i will blame him. >> well done. >> it otherwise i will take the credit with him now. >> first of all, why would they sell off, is it just sell on the news kind of a thing? >> it's mainly because of the yield durv itself. when rates are rising traditionally you find a narrowing of the difference between the ten year yield and three month treasury because as rates rise then the threat of inflation becomes lessened and so you don't need a higher ten year note. this time around basically the fed is not trying to restrain, they're trying to recalibrate and so we don't think that you

are going to end up with that negative correlation that we normally get with a rising fed funds environment. >> that all assumes that the consensus on this dovish hike actually bears out. >> that's true. first off we have to see if wednesday afternoon we get the hike, second our feeling is that with the implementation note chairperson yellen is going to tell us that they're going to be modest hikes, they're going to be well-based and after she has taken the pulse of the stock market and the economy. so by the end of next year we think fed funds rate will be at 1.25%, but that still represents a negative real rate environment which would still be stimulative in our view. >> here we sit with highs of the day right now we were just showing that chart and wouldn't you know art cashin was saying that the buys was neutral, there was no buy or sell influence going into the sell, we are up 88 points right now. what we typically get is a rally going into the fed meeting before wednesday, right? >> i think this time what's

going to happen is investors will feel pretty optimistic that now we have lifted the veil of uncertainty. i think that that could actually be ringing the bell for the end of year rally that now once this fed rate hike that's been long anticipated is on the table and already spoken for, i think investors will start to he can to us on something else. >> ringing a sleigh bell as it were. >> ho, ho, ho. >> we will see. thanks, sam. sam stoi valve s&p. we will come down with the closing countdown as we continue to set highs. >> jeremy siegel explains why he thinks the current high yield bond market yields are different. this time it's different from the credit crisis leading up to the great recession. you're watching cnbc, first in business worldwide.

when you do business everywhere, the challenges of keeping everyone working together can quickly become the only thing you think about.

that's where at&t can help. at&t has the tools and the network you need, to make working as one easier than ever. virtually anywhere. leaving you free to focus on what matters most. okay. just inside the two minute mark as we head toward the close, mary thompson is with me for the countdown. we are at the highs of the session right now, the dow is now up 100 plus points and much of that rally happening late this afternoon as we head toward the close now at 17,372. one thing i want to point out, we were talking about one market that is not participating, the transports. for this year look at the transports are down 18%, they are down 20% from their all time high of november last year, but that's happened as oil has

fallen by 32%, mary thompson. something is wrong with that relationship right now. >> that's right. some people say, listen, to suggest that the economy is a little bit weaker, the action in the transports, today was an interesting session. of course, energy is one of the reasons we are higher, but if you look at the broader markets, the, you know, down volume is outpacing up volume on the exchange. >> relatively heavy today, too. >> also we saw the s&p 500 bounce off a technical level 1993, 94, broke a little below that and then came back after that, but certainly the recovery in crude today helping the market move higher, but again, there is some concerns about the brett, market brett because this is not broad based in any sense. >> we are getting a rally ahead of a fed meeting which is what we typically get. >> that's true. friday's expiration which everyone mentioned historically a large week. the high yield area, hyg, the etfs continue -- e tended its

losses from friday, again, another 52 week low for that. >> thanks, mary. so as we go deeper into the week gets closer to that fed meeting, rbc is ringing the bell, and dire street industries at the nasdaq. stay tuned for hour number two of the "closing bell" with kelly evans. thank you, bill. welcome to the "closing bell," everybody, i'm kelly evans. the dow going out with a gain, look at this, of 108 points here, this after in the last hour at one point it was up over 19, we're keeping an eye on the vix, a little lower on the day but still around 25. the small caps had a tougher session today. the dow finishes up.6% and it was below 2000 earlier and the nasdaq composite putting in a gain of 18. joining today's panel we have cnbc contributor ee land moy

from the "washington post" and kayla tausche and guy adami. welcome. so, guy, this just tracking reit bound in oil prices? >> i think that's a lot to do with it. you mentioned, i think, mary was just mentioning technical levels in the s&p. 2020 in the s&p is a level we talked about last week on your show and i think that's what you're going to see the rest of the month. i think the s&p is going to vacillate on the other side of 2020. i wouldn't be surprised if we went up and filled this gap up around 2050 or so. the rest of the month on light volume you will see the s&p tried either side of the level we closed at today. >> kayla, everyone has been zoeg in on what's happening in credit markets. what have we learned today? if anything friday was the date of a lot of real tress str across these names, asset managers under pressures, investors trying to figure out should i pull my money out of some of these funds. >> it's a little different than the way that we felt in 2011 when there were more broad

sovereign worries across some of these asset managers. we saw a lot of money managers at that time coming out, putting out statements, getting on the record about exactly what they held, exactly what their exposure was. it doesn't feel like we have the same response from the money managers across the board that they feel the need to address this at this point. there's going to be a lot of digging as there already is into the makeup of some of these portfolios on the credit side. third avenue of course was skewing into ccc type districts, a lot of people will be saying we're in bb or bbb. there is a lot of discovery that still has to happen. >> we were asking last hour about the catalyst. a lot of it does seem to be energy and the drop in oil prices which is why we keep watching. even though it moved back higher we are still talking about 35 bucks a barrel. it's interesting to go back and look at the federal reserve stress test for banks for 2015 they were testing a situation where oil would spike $210 a barrel. i wonder how they are evaluating

the fallout now. >> where the bottom is, i think it's a central question for the fed going forward as they try to determine what is a gradual pace of fed hikes mean. the oil would stabilize where it has been -- this was before blackout but oil stabilize where it was. he said if oil stabilizes we can hit 2% inflation in 2016. we are not certain that that's actually going to happen. that's fundamental belief that sort of oil will just bottom out here and that was it. that's going to be a big question going forward and will make a difference in terms of how fast they can -- >> guy, we know retail investors have been eager to play energy all the way down for the most part. looking at all the money that's gone into high yield, for example, according to goldman $100 billion in high yield mutual funds in the '09 to 2012 period for a total outstanding debt $1.2 trillion. we're beginning to see the pressure and you unwind of some of that. how much further and deeper do

you think it goes? >> i wish i could tell you. i thought that -- i clearly have thought this was going to be a problem, now it's manifesting itself, now you can't pick up the newspaper without reading the two words high yield. i can't tell you how it's going to end or when it's going to end but i do think it gets worse before it gets better, but that doesn't mean the s&p can't find strong footing, you know, if we get -- the fed comes out, i think they're going to hike, i also think they're going to say we'll see you a year from now that might be enough to get this s&p to trade higher for the rest of the year. but i do think that this -- what we're talking about, this high yield we're talking about now we will be talking about this still in the spring of next year. it does not go away that quickly. this is a problem i think that will continue to fester and it will come to a head a.m. so the point early next year. >> we've been talking about interest rates being lower for longer and now that phrase has been applied to the energy market. oil prices will be lower for longer, these companies are taking down their expectations. i'm wondering from the buy side

what you think the catalyst will be in the future. is this a situation where reversing the ban on crude exports could have a meaningful effect on the price of oil? is there anything in the wings that could affect this situation? >> i think that is a great point, i think you just make, it's never the because you see coming. so the answer to that question it's probably going to be some unforeseen circumstances that in retrospect we say, that was pretty obvious. i will also say this, you know, we talk about the geopolitical risk in oil and when we talk about that we assume that that means the price has to go higher by definition. my push back would be in something i mentioned with you guys last week, the move down could be geopolitical in nature that we just don't see the fact that maybe the geopolitical risks out there are actually knocking the price of oil down for any reason of reasons not least of which it helps to weaken powers that we might have some issues with and it clearly helps to diminish the potential power of any of these terrorist

groups that we may be fighting. so although we don't -- it doesn't make sense conceptually i think a lot of the move down that we're seeing is geopolitical in nature as well. >> hang on for just a minute, everybody. we have that developing story on third avenue's junk bond lick wags to get to. seema mody is outside the company's head quarters in new york and has the details. >> massachusetts top securities regularity william gavin has sent a spaen to third avenue seeking for details on the decision to close down the funds. they are looking at whether third avenue investors had early awareness of the junk bond fund liquidation. this is a move that has drawn jute knee from many investors, this following news last week that third avenue's high yield fund is closing down and liquidating. that's the latest. back to you. >> and we will see who else follows suit. thank you for now. >> let's bring in jeremy siegel now, he is a finance professor at the university of pennsylvania wharton school. with a lot of concerns about oil prices and how that factors into

markets here what would you say to people who have these concerns? >> well, we all know we are less than 48 hours away from the fed decision, which i'm almost certain is going to be a rate hike, but i think it's going to be a rate hike that's going be going to be wrapped in a dovish christmas present that i think could encourage the market. everyone is worried with the nervousness in the high yield, oh, my goodness, the fed is bumping up, what's going to happen and i think once they turn around and see that the fed -- i'm not saying it's going to be one and done, people are talking that might be it, but i think it's going to be one and wait a long, long time to see what the impact is going to be on the economy and the market and i think the stocks could rally quite nicely off such a package. >> what about what's happening in credit markets, do you think they recover after we get over this move or do you think that there is more pain to go and how

does that reverb rate back into the stock market, do you think? >> i can we're much less difficult than we were in 1911 with the sovereign debt crisis, we were talking about government bonds all throughout europe and certainly the general lehman credit crisis that affected all mortgage-backed securities and as many -- as spoken about today, the big, big difference is back in 2008, you know, the investment banks, lehman, bear stearns and then citi all held huge quantities of these financial instruments. >> right. >> right now almost all these credits were gotten directly from investors. banks had very little risk appetite, there's very, very little bank financing of these credits. those of us with a few gray hairs, remember cotton illinois, national bank, 1994, went under because it financed a lot of the

oil wells in louisiana and texas. that really did not happen now. so i don't expect this could be a big tremor and i think some of the relief rally we got today is we turned and and said maybe third avenue is going to be the only one, we are not seeing the high yields of vanguard and some of those big mutual funds really suffer those pressures. my feeling is that we're going to be waiting for wednesday, hopefully the fed will wrap it the increase in a dovish package and we may see a good last two weeks of this year. >> guy, what question do you have for in professor? >> my push back would be, professor, one of the things that i've said is some of the unintended consequences of our federal reserve is it's allowed other central banks to act in kind and i don't think they have the qualifications nor really the balance sheet to be doing so. do you think that could potentially be a problem? >> do you mean other central banks -- >> globally.

in other words, what you see in japan, what you're seeing to a certain extent in europe, what you're seeing effectively what's going on in china. have we sort of opened the door for other central banks to act, my words not yours but i will use them as recklessly as we have? >> well, honestly, i don't think we reacted recklessly. i think draghi looked over his shoulders and the other europeans and said the best recovery in the world is in the united states co incited with ben bernanke and they said, listen, how about trying it. you know, i actually have supported ben bernanke, i think they're going to take care of their balance sheet, i think there is going to be normalization of rates, there is an incredible demand for liquidity around the world which the federal reserve, the central banks are providing. in a way, you know, i don't see that we reacted recklessly and i

see -- >> professor, this is not my show -- >> i'm more optimistic there. >> my bush back would be there, what has recovered other than the stock market? is our economy so much -- is it so -- >> unemployment down from 10 to 5%, 6 million jobs created in the last two years. i think that's pretty good. >> and my push back would be at what cost has that transpired and are they the meaningful jobs that we need? we can have this conversation i'm sure we could go on for hours and hours. >> we could set up a debate at one point. >> i'm sorry, kel, go ahead. >> before we let you go, professor siegel, do you have a prediction for what you think the s&p does next year? >> i think we're going to get a 10% increase next year because i think we're going -- i mean, the earnings decline this year was oil and the dollar and hopefully that's not going to repeat next year. we get oil back to 40 to 50, the

dollar stays approximately stable, with he could have an 8 to 10% bounce back in earnings and i think with interest rates not rising much we can get that 8, 10, even 12% bounce back in the s&p. >> all right. well, a dovish hike gift -- a rate hike gift wrapped in dovish language. thanks for joining us, professor siegel. >> guy adami, thank you. >> sorry i come an deerd your show. i apologize. >> it's an important discussion. we have to have it. much more coming up with guy and the "fast money" crew asking dennis gartman why he's getting out of stocks. that's top of next hour. the sec putting the squeeze on leveraged etfs how that could impact your investments straight ahead. apple shares under pressure after a wall street firm warned of iphone sales. you're watching cnbc first in business worldwide.

welcome back. high yield etf worries have been front and center. now plans the sec could deal another blow to lempld etfs.

regulators are looking to limit the amount of derivatives funds could use to deliver bigger than the markets they track. joining us with his take is simian high man head of investment strategies. are you worried that these products will now go away? >> it was 420 pages that the sec put out on friday. you have to take a few minutes to look at it. most importantly if you read it the sec put a 1250% limit on the exposure that a fund to get from derivatives. we're highly confident we will be able to operate the two times and minus two times etf under the framework of the current proposal. >> which goes back to the existence of these products in the first place. last year larry fink had said leveraged etfs could blow up, he is not sure why they are even allowed in the first place. with all the concerns about market stability why use derivatives to amplify moves which now in retrospect look

like they might have been amplifying market moves throughout periods of volatility for everybody. >> these funds have been around for over 20 years and you the auspices of the sec and they have been great tools for investors to both manage risk and enhance returns and, in fact, with regards to their impact on the market they are a rather small portion of the overall capital markets but perhaps that is importantly various studies including by the federal reserve governors themselves have shown that there's really no impact on market volatility. >> kayla. >> i'm wondering about this proposed rule. the fact that there is a proposed cap of 1.5 times assets, why would that be bad? why wouldn't that be prudent to implement and why hasn't it been implemented prior to this? >> again, we are looking at this and evaluating the proposal and reading through all the details but the most important take away for us is that that 1.5 times or 150% cap is on the exposure from

derivatives and that gives us plenty of opportunity to run our 2 x and minus 2 x funds within the context of those rules. >> if goes back to the discussion we're having about some of these high yield bond funds with more of the plain vanilla stock etfs if i own that i own the underlying stocks, but with some of thieves products it's not clear, you know, what my claim actually is and so how do you -- how do you actually work these products and how much capital to you hold against them in case there was a sudden call by the investor base for a return of their capital? >> one of the nice things about these products is their transparency. it's very easy to know exactly what you own, the holdings are published on our site every day, in fact, one of their core principles that daily rebalance is designed to make sure that you know every morning exactly what these funds are going to deliver. >> still it's a question of, i guess, the -- could you return 100 cents on the dollar to everybody if everybody drew their money out of one of these

funds right now? >> there are other rules within the sec proposal that speak to liquidity and a whole host of things. we've been looking at the derivative aspect but of course we will be looking at the rest of the proposal as well to make sure that we can run our funds in compliance with all the other 420 odd pages they have proposed. >> some of the other suggestions that the sec has put together in to the proposals is that you guys need to have a binge stress test, there is a living will situation that you guys might have to comply with. how do you feel about those proposed regulations. >> again, some of those i think that you've mentioned are beyond the scope of the derivatives proposal, but we spend a lot of time looking at it again, we looked specifically at the derivative aspect initially and of course we would have to spend a lot more time looking at some of the other details that go beyond just the derivatives aspect of the proposal as well. >> do you think that these products should change names because leverage is such a dirty word after the financial crisis it was leverage that got the

banks in trouble, consumers are focused on deleveraging, should we be rebranding these if they are not dangerous? >> we are not afraid of the word leverage but i think it's really important for investors as the mantra goes to know what they own and why they own it. it can be a great tool to manage risk and enhance returns in a properly constructed portfolio, be a great way to meet a very wide variety of investment objectives. >> when carl icahn -- this goes back to the high yield market but it's a keg of dynamite that sooner or later will blow up. on the high yield piece of this you've got concerns? can you guarantee the people in these instruments will be able to get all their money back in case there is any kind of panic? >> the liquidity of a leveraged etfs is. same as any etfs in that asset classes. there are no enhanced liquidity issues with leveraged etfs and they are an important tool. you may have seen that over the past few weeks that the 1 x

inversed junk bonds -- ticker sjb has had inflows, people are looking to use these tools to manage risk. they are an important tool kit for a wide variety of environments. >> we will leave it there for the time being. thanks for joining us on "closing bell." we have a news alert on boeing to get to. dominic chu, what's happening? >> it's about stock buy backs and deaf dinds. like many of our news alerts in the after hours are about. boeing has announced they are going to boost their quarter earl dividend to 1 be $09 a share, they have also said they are going to authorize a new $14 billion share repurchase program. this new $14 billion share repurchase program replaces the old program that was reauthorized in december of last year. it did have $5.25 billion left on that old program. a renewed stock buy pack program to replace the old one, they did also say that they bought back about $6.75 billion worth of

their own stock in 2015. their share repurchase program is done for the year. they expect to resume again back in january. still big dividend boost, big stock buy back program for boeing. and they have been one of the worst performers on the dow today. morgan stanley the latest wall street firm to warn about weakening. iphone sales, how worried should investors be as we watch apple shares? >>. could trouble in the junk bond space throw a wrench into the fed's plans to raise rates this week? .

welcome back. let's start with dominic chu and a quick earnings alert. >> so we have payments processing company vera phone systems marginally higher. 40 shares of trading volume. earnings per share beats 49 cents per share, they report that is correct the estimates were for 48 cen per share, revenues a slight beat, $514 million, analysts were looking for $513 million. however, they did offer weaker first quarter current quarter guidance some analysts were anticipating, but on balance the shares just about flat right now in the after hours trade. we should point out that this may have been priced in just a little bit going into this number, the shares were down already about 29% entering this number on a year to date basis. ver iphone relatively flat but still a slight earnings beat and revenue beat, a q 1 outlook that falls shy of some analysts estimate and on balance the

shares are flat in the after hours session. apple shares falling today after morgan stanley cut its 2016 iphone unit forecast by 12%. joining us now is brian blair who sees this as a big problem not only for apple but its suppliers as well. and gene munster who is still bullish on apple with a 179 price target. brian, i'm looking here you think there could be a 40% sequential drop for apple in q 1 that could hurt them and their suppliers. >> that's right. what morgan stanley did today they trimmed their numbers for the december quarter pretty close to consensus which is about $75 million but the meaningful thing they did was they cut their march quarter number by almost 20%. this he took their number from the 60s, low 60s down to the low 50s. what's interesting is that the supply chain is signaling about $45 million units of production during that period. they may still end up being high. either way what's happening is we are seeing a major analyst from a major firm trim their

numbers for the march quarter lower than anybody would have guessed six months ago and a lot of suppliers will be impacted by this. >> and the argument, gene, is that people just aren't really opting for the 6s, they can get the 6 a little cheaper so that upgrade cycle isn't quite there. would you agree with that piece of this or do you thk that actually this could turn out to be much stronger than morgan and others are saying? >> i think we're missing the point by even talking about the december and march quarter and even the june quarter. maybe an easy perspective for the bull to take here but it really doesn't matter about those quarters. what matters is apple has a small market share to date, global smartphone market share 17%, going into a full upgrade cycle, they're changing how they're selling phones, selling them on subscription, this isn't going to impact the march quarter. if people accelerate the speed they will be buying phones that could have a several year positive tailwind that will have an impact to the multiple.

are people going to want to continue to buy iphones, all our surveys suggest who cares about the next couple quarters, investors are talking to us about what the next cycle looks like. >> what's more important is what happens near term because it's the best indicator of what's going to happen 12 months from now. the why apple stock is only up 1% is because people are concerned about iphone growth. we are seeing it slow in china, a little saturated and slowing in the u.s. so gene might be right looking out 12 months from now, but the near term absolutely matters and you can see that reflected in apple stock price not only today but during this calendar year. >> gene, it's so interesting, though, to see analysts across the street do their own channel checks, go through the supply chain and come out with different take a ways on exactly how strong or weak this iphone cycle will be. if a tools errand to do these checks? how imperfect is the information you're getting? >> you have to do it.

ultimately you can put all these together and get some sort of trend whether you feel the numbers are going up and down. a lot of different data points come out of these type of checks. so i think from our perspective we feel that iphones are going to be up slightly, which is a big difference from where brian is at at. i think ultimately you still have to do the hard work quarter to quarter. >> brian, i'm interested in what you think about china and how much that could be the x factor in terms of demand. will 2016 be the year that china's appetite for iphones finally exceeds the u.s.'s. >> the trends in china are strong for iphone. despite strong competition from other local players, apple remains a strong brand in china and it has continued to do well. i don't think it will outpace overall unit growth in the u.s. but certainly on an upward trajectory. but the over all china smartphone market is -- we are not seeing the growth in 2016 that we saw in 2015. so it is still slowing and

it's -- it is an area of concern. >> let me make one point about the china growth if i can jump in on that. the september quarter -- and this is in the rearview mirror so in some ways it doesn't matter but they grew units in china at 100%, the overall smartphone market in china grew 10%. >> and we know that your price target, gene, is 179 on the shares. brian, do you have a view as to how cloe they could go from here? >> i think after the march quarter we have to get through that period before we can see acceleration. the stock is likely to drift from here and perform up 1% on the year. i don't think it's going to go under 100 but i do think investors will remain cautious until they get a better sense for what 2016 looks like and we probably have to get through march before we get there. >> thank you both for joining us. good discussion there. time for a cnbc news update let's get over to sharon epperson. >> here is what's happening at this hour. a maryland man is being charged with providing support to a terrorist organization. federal authorities say the 30-year-old allegedly accepted

money he thought was being provided by isis in order to carry out an attack on u.s. soil. donald trump's personal doctor says the gop candidate is in, quote, astonishly excellent health. the statement was released today by the trump campaign. if elected in 2016 he would be 70 years old. one of san francisco's most iconic residences is on the market, a pink duplex on the famously curvy lombard street is for sale for just under $4 million. it features a gold leaf spiral staircase and 4,000 square feet of space and it is the most wonderful time of year for crazy christmas light displays. this pennsylvania home with 30,000 lights was designed by 17-year-old caleb listened berg. he also created an app that let's you control parts of the display from your cellphone as you drive by. that's the cnbc news update at this hour. back to you, kelly. i need his help. i have no lights, no tree.

>> sharon. >> i'm terrible. >> first of all, we have to get you some help with that. >> santa is in hibernation but he is going to wake up eventually, but right now he's asleep. >> but this kid, i mean, this house out in greenwich the light show he puts on i don't think he's doing that himself so i'm impressed with the handiwork on display here. >> i would love to see what i could do from my mobile phone as i'm passing through the house, what color lights i want to put on. pretty cool. >> thank you, sharon. >> take care. >> up next, jim bianco explains why the falling dominoes in the junk bond market could hand janet yellen a real crisis to deal with. and hoverboards were supposed to be a hot gift this holiday season but you can see from those fires there is some concerns and amazon is pulling one brand's devices. later details on the "closing bell." no matter how fast the markets change, at t. rowe price, our disciplined investment approach remains. we ask questions here. look for risks there. and search for opportunity everywhere. global markets may be uncertain.

but you can feel confident in our investment experience... ... around the world. call a t. rowe price investment specialist, or your advisor... ...and see how we can help you find global opportunity. t. rowe price. invest with confidence.

another dividend boost. this time from drug and pharmaceutical giant pfizer. pfizer says they're going to booth their quarterly dividend to 30 cents per share, it used to be 28 cents per share. pfizer joining on board its other large cap cousins. pfizer shares focused on that dividend boost. also want to call your attention

to what's happening with f 5 networks. the stock is moving marginally, however, they have announced a change in the c suite over at f 5 networks. they will be looking to replace -- they are going to replace their current ceo and what the company is saying, interestingly enough here is that john mcadam the crept care man of the carl pavano company is going to take over the president and ceo duties, he is to replace and succeed man we will rivelo who has resigned from his position for matters, quote, regarding personal conducted unrelated to the operations or financials of the company. so again, man we will rivelo who is currently the ceo and president of f 5 are stepping down for those undisclosed personal conduct issues that are not related to the company: john mcadam will take over that role of president and ceo, relinquish the chairman title so he can foes us on the executive duties. the board of directors say they will undertake a formal search

process to identify a permanent successor. a dividend boost from pfizer and changes in the executive suite over at f 5 networks grabbing headlines in the after hours. meanwhile, concerns over high yields weighing today on markets th the two biggest high yield etfs take a look under pressure again and asset managers who are exposed to the high yield market, trying to make sense of sunday failures. jim bianco and david rosenberg join us to weigh in this afternoon. great to have you both on board. are there more fund failures to come? >> usually you don't stop at three after two days when you start seeing something like this. to quote jeffrey gun lock there's never more than one dock o roach. >> there's never just one cockroach you mean. >> yes, i said it wrong. >> are we talking just about the riskiest part of the credit space, just the energy portfolio, i mean, where is risk coming from and where do you see it potentially going?

>> i think it's coming from the energy portfolio, i think if there is a story here the story is that we've got the fundamental story on energy wrong. we all thought it was going to be a huge positive for the u.s. economy because it was going to be a tax cut for the consumer. that really didn't happen and what it wound up being was a stress point for the financial markets which is now manifesting itself in a high yield market. a lot of highly indebted energy companies especially in the tracking space are under severe pressure especially in the opec meeting ten days ago when they did not turn off the spigot and that's what's crushing oil and getting a realization in high yield that the frackers are in deep trouble and we're seeing the energy bonds crumble to take the whole space down with it. >> david, how urgent a problem do you think this is and, again, jim makes the point there was not the scenario that most were worried about, it was high oil prices were supposed to be the concern, low energy prices great for consumers. why isn't that happening? >> look, the energy price shock

to the down side, kelly, has created winners and losers. the losers obviously are in the production space, in the nerm producing regions, but i guess i would take jim to task on the comment that this hasn't acted as a de facto tax cut for the consumer because in real terms consumer spending in the united states is up 3.2% on a year over year basis that's as of the third quarter. that's as good as anything we got at the peak of the credit bubble in the 2002/2007 cycle. so there is this still -- there is this narrative out there that the u.s. consumer isn't doing well. i think we just saw a retail sales number last week that was pretty good. wasn't gang busters, but it was pretty good, up 0.5% but in real terms consumer spending running over a 3% trend and it's not that bad in the overall scheme of things.

>> i want to understand a little bit your position here. you've argued that the fed -- the economy to be in a full blown financial crisis as soon as wednesday when janet yellen is scheduled to give her big press conference and announce the fed's decision over whether or not they are going to raise interest rates. how do you see this playing into what happens next? >> well, let's understand what's happening right now. the high yield market still liquid, it's liquid because of a couple of reasons, one, we have a whole new way that we trade the high yields market, i know you had the head of i shares on an hour ago to discuss that, also we have new regulations which made it more difficult. the bottom line is investors are piling up to get out of high yield funds and there is not enough liquidity to let them out. if that were to continue through tonight, tomorrow, yeah, if we were to see another round of investor redemptions and we saw another fund or two by wednesday we could be in a full blown financial crisis. maybe that takes a couple of weeks. >> is this a problem for the

fed? is this something that the fed should pay attention to, should react to as it decides not just this week whether or not to raise rates but going forward as well? >> last word, jim. >> i will answer it this way, in 2010 we had the beginning of the greek financial crisis. in 2011 true shay raised rates and said that the greek financial crisis was not a big deal. that is now the first sentence of his obituary was he raised rates into the beginning of the financial crisis in europe and most people think he made it worse. if you want to know how to translate true shay into english it might be yellen if she is not careful with this. if they raise rates and the high yield market continues to crumble that will be the first sentence of her obituary. >> dave, do you think contrary to a little bit of the alarm that jim is sounding we will look into next year and realize some of the positives that are flowing from this and be able to absorb the negatives as an economy. >> look, i think it's a classic case of follow the leverage. whenever the fed starts a tightening cycle the leverage

this time around resided outside the confines of the traditional banking sector. whether you're looking at the high yield market, the stress debt market, leveraged loans, asset backed securities, subprime auto that's where the excessive leverage was just as it was in the mortgage market in the last cycle. so these areas of the market are vulnerable no question about it. as far as the energy sectors is concerned, we need to have the supply response at some point so the fact that these energy companies in the high yield space will have their financing cut off is going to be part of the process of getting production down and finally stabilizing the oil price. i see that as a positive going into next year. >> it's a lot of stake this weekend. thank you both. jim bianca and dave rosenberg. natural gas prices getting crushed today because of the unusually warm weather all across the east coast that's going to last into christmas now. we will look at how much further those prices still could fall and we will tell you which high

profile oil ceo was ousted because of the fall in oil prices. stay tuned. i'm here at the td ameritrade trader offices. ahh... steve, other than making me move stuff, 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... what's up, tim? for all the confidence you need. td ameritrade. you got this.

welcome back. the pressure is ernl is on as natural gas is hitting 13 year lows, it was down almost another 5% today. $1.90 with unseasonally warm weather continues into the holidays, that is unusually warm weather with all that yellow. question is how might that further impact energy prices

going forward. paul hickey is here. paul, good to have you with us. >> hi, kelly. >> so much of this must be priced in, right? we had a guest last hour who said he could see it going to $1.50. what is your view? >> warm weather hasn't priced in from the strong el nino. what got the natural gas market today going was this cooler air we were supposed to see coming in this week was supposed to have a little bit more staying power. over the weekend our meteorologist was all over this and has been following this closely jacob miezel what the models started showing was whatever cold air we would see would be fleeting in the u.s. and it was going to be kept up in canada and the north pole. the cold air that some people were expecting didn't come here and now we are looking at record warmth that we saw this weekend. some forecasts 60 degrees on christmas in new york which is just unbelievable. >> kayla, i ran in shorts and a t-shirt in morning in the park.

>> i bet you didn't hate it. >> no. >> it's interesting we talk about this like it's a bad thing, bad for retailers, they can't sell as much outer wear once you get beyond the energy story of this. isn't there an argument to be made that amusement parks benefit, retailers of sporting equipment benefit. what is some of the upside from this? >> to your point it's one of those things that most people would consider good, good economic data, good weather would be good things, but in the markets for natural gas here it's a horrible thing. you know, like you said, amusement parks will see offset there, but at the holiday season when people are doing their peak shopping period last weekend no one was thinking of going out to buy, you know, christmas gifts or holiday gifts and that period, that window is closing. there is less -- about two weeks left. >> everyone's christmas gift is a warm christmas, that's what they're getting under the tree. >> i always like to take a 30,000 foot view. my question is what is the outlook for natural gas out of the agreement that was just

reached in paris over climate change, you know, we heard some people in the u.k. saying this could be the end of gas ranges for households in the future. what does this mean do you think for the u.s.? >> i think the long-term most of these are very long-term implications there from the shorter term here you have a u.s. market that is saturated with natural gas, record high inventories and demand is down. heating degree demand has been weaker than expected in pretty much every metro area across the country and it's forecast to continue to be 24% below average for at least the next week. so that's a horrible cocktail if you're long natural gas right now, but, i mean, again, prices are at multi-year lows. you may see a short bounce but the long-term trend until we see a weakening of the el nino that's going to be, i think, the longer term trend is continued weakness here. >> i'm stuck on what ylan said about the end of gas ranges in the u.k. thank you for joining us, falling hickey.

weather is taking its toll on that the gas demand, falling prices taking their toll on the c suite of one energy companies on the ouster of shaneer energy ceo. back in two.

when you're not confident your company's data is secure, the possibility of a breach can quickly become the only thing you think about. that's where at&t can help. at at&t we monitor our network traffic so we can see things others can't. mitigating risks across your business. leaving you free to focus on what matters most.

we just talked about the huge drop in natural gas that we've seen. against that backdrop, falling to 13 year lows, the board of cheniere voted to replace its ceo. >> it was a dramatic ending to a tumultuous ten year for shareef after a storybook top run-up, chenier had fallen over 40%, literally within weeks of finally exporting quitified natural gas from the gulf coast. something it was the first u.s. company to win permits to do. there were a number of factors working against souki and carl icahn with a nearly 14% stake as cheniere's largest holder may have come into play during the weekend board meeting. souki and a company spokesperson did not respond to my questions specifically about the factors there. but souki i'm told was increasingly distracted from the core business, these people

being sources familiar with the matter, spending chunks of time in vacation spots at time rather than work and had sold large chunks of his own cheniere stock in recent years creating bad optics. the price of lng plummeting alongside conventional natural gas which is at 13 of year lows, the product cheniere is selling as well as the product the price is pegged to because it's pegged to henry hub natural gas were under major duress. bill sheer taking over and the company's debt load is sure to be in focus e7 with billions in financing to play off kelly in the years to come. that's manage that is going to be dependent on the health of the market which is not so hot right now. >> or the price of liquefied natural gas. >> what they have is long-term contracts with buyers like 20-year contracts where prices are locked in. the question becomes they're tied to henry hub which arguably is better than being tied to

global lng prices at times. but henry hub is under pressure too. >> right. >> and if lng is cheaper in other venues, there may be an argument that they need to bring down their prices too. >> it's a fascinating situation. it reminds me a little bit of what happened with chesapeake a couple of years ago. you think these founders because they are the brains behind the companies, they're going to be there forever. but this is yet another data point that that's not the case. >> i'm really glad you brought that up. i think it's a great comparison. here you have this very visionary founder. i've interviewed him. jim has. many people have talked to him. very interesting guy. he literally did a 180 on the business model. they were originally drilling natural gas. it was not successful. they thought why don't we take the about natural gas in the u.s., export it to markets where they're undersupplied where they're willing to pay more such as asia or europe. it was a great idea. they managed to get through the permitting process and they're just on the verge of realizing this. at the same time their debt load is massive. they praised $20 billion for a second natural gas terminal before the first one came

online. and, you know, i guess the board felt and investors felt perhaps they were in over their skis. >> we're going to check with elon for the impact on louisiana if this doesn't come together. for now, kate, thank you so much. kate kelly tracking cheniere there. hedge fund giant jim chanos has been historically short cheniere. he'll join us to discuss the management changes and his view of the whole thing. don't miss it. they were shaping up to be one of the hottest toys for the holidays. but as more reports of hoverboards catching fire come out, one major online retailer has decided to stop selling them. those details are next. you pay your car insurance

premium like clockwork. month after month. year after year. then one night, you hydroplane into a ditch. yeah... surprise... your insurance company tells you to pay up again. why pay for insurance if you have to pay even more for using it? if you have liberty mutual deductible fund™, you could pay no deductible at all. sign up to immediately lower your deductible by $100. and keep lowering it $100 annually, until it's gone. then continue to earn that $100 every year. there's no limit to how much you can earn and this savings applies to every vehicle on your policy. call to learn more. switch to liberty mutual and you could save up to $509. call liberty mutual for a free quote today at see car insurance in a whole new light. liberty mutual insurance.

hoverboards have become one of the hottest holiday gifts this season. but you may have trouble buying one on amazon now. after recent reports of the ride catching -- of the ride toy catching fire, amazon has decided to remove some of the boards from its store. unless the manufacturers can prove they're safe to use. one of the leading makers swagway said it received an e-mail from amazon asking for safety documentation. its boards have currently been removed from amazon, but a few other makers can still be found on the site, for now, guys. >> it's not just the fires, kelly. apparently 29 people have been sent to the emergency room after falling off a hoverboard.

my reaction is you're not marty mcfly. "back to the future" is not real. put on a helmet, please. >> helmet padding if you're on a hoverboard. that's a fair point. >> we were drawing the comparison earlier today to skateboards. skateboards had their fair share of injury. but combustion was never one of the risk. >> that's true. we actually on "squawk box" on friday morning had somebody come on who has spent a lot more in terms of research and development to develop their craft and said look, the lithium-ion batteries might be coming in a lot of the boards from china not great. certain other things they have done to their hoverboard. i think it was called hover tracks makes theirs a lot safer. they've never had an issue. but most people are ordering through online, even ebay they sold one a minute on black friday. >> it's too good to be true, as this product appeared from the very beginning, it probably circumstances i still want to ride one. i guess you're not allowed in new york. >> just not on a plane. >> thank you for joining us. kayla tausche and s coming up on

"fast money." melissa, what's on tap? >> we're going to play tonight, kelly. we have the chief play officer of toys r us joining us with some of the hottest holiday gifts around. >> is it the big keyboard you can dance on? >> no or is that so 1980s? >> i'm so not going to tell you. >> i think it should be a hot item every year. and hoverboards. we'll see if they make the cut. >> thanks, kelly. "fast money" starts. right now live from the nasdaq market site overlooking new york city's times square, i'm melissa lee. the traders are pete najarian, david seeberg, dave grasso and guy adami. what the breakdown in junk bonds means for the most important fed meeting in more than nine years. and how you can protect yourself from the carnage. what is behind the retail route and whether names are worth a look right now. later, the streak takes aim at apple but is selling about to get much worse? we've got the shocking chart that has apple shareholders running for exits. but first, we start with the sell-off sweeping e