11:00 here on wall street, and squawk alley is live. ♪ >> ajts woo tang clan to kick off the morning. carl is off today, but how lovely, we have simon hobbs for the hour. >> lovely. lovely to be here. >> also joining us is business insider founder and editor in chief henry. henry great to have you. >> great to be here. >> first up, big news from

apple. josh lipton has the story in san francisco. >> well, it is a big new title for jeff williams. he is now going to be apple's chief operating officer. >> he is also in charge of apple wash. some might think there's a succession plan in place since this was tim cook's old job. apple now grooming jeff williams as the next ceo. sources of the company telling me this is not the intention of this promotion. this is simply a recognition, they say, of jeff's contributions. tim cook, by the way, in a statement saying williams is hands down the best operations executive he has worked with. other big changes to mention here, phil schillor will remain apple's head of marketing, but he picks p a new responsibility

as well. he is now going to lead the company's app store. that, of course, has become a significant business for apple helping to fuel the company's record $5 billion in services revenue last quarter. natural question then is what that means for eddie cue, apple's media head. the company telling me he will remain in charge of apple's content. that means apple music, apple pay, and apple tv. one final note here, johnny will join apple's executive team as vp's. he may not be a household name, but is he the man in charge of hardware. that's batteries, displays, chip sets. opening the apple product, and you are looking at johnny's hand where i work. john, back to you. >> all right. thank you, swrosh. a few interesting things i think in this announcement. one hiroki asai is retiring from apple. he had been in charge of a lot of the advertising and marketing communication. he is a young guy. i don't think he is quite 50 yet, so one of the things that apple is fighting here is its

own success. i mean, once these folks near the top at the top of apple get these millions upon millions of dollars, they don't have to work anymore, so you want to keep them happy. you saw the issue with bob mansfield. he was running chips at one point. he decided to move on and do other things. apple kept him around for a while. it's interesting. i asked apple does phil schiller keep his perview over beats electronics. they're not exactly pumping out new headphones all the time. turns out he just gets the app store. not books or other evening wroe system things. i don't have the answer yet for whether swref williams is getting paid more as part of this. his job responsibilities actually don't seem to be changing. this is a title change. i believe tim cook fwot paid more when he was coo, so you would expect that jeff williams will also. >> i believe he was probably compensated fairly well in his previous role, but it does beg the point, john, keep them happy, keep them interested,

henry, and build an executive bench, as apple says. this is not a clear line of succession. there are many executives that could take this role, but it's a conversation we're now having about the u.s. economy's largest company. >> the company's comments to josh are confusing. coo is de facto the number two at the company. in a normal structure, everybody will report in to him. he has now been taken out a very focused operational role to presumably having everybody coming into him, unless they have some strange structure where actually a lot of folks report to tim and jeff only has control over operations. as a vote of confidence, this is clearly the number two. you wouldn't do this if that weren't your -- >> johnny didn't report to tim even when steve jobs was in charge and tim had that title. there have always been some kind of -- >> steve jobs, that's a difference. steve jobs broke the structure. >> when steve got sick, tim was in a position. he was named interim ceo of the

company when steve was out, he was coo before that. this is something that -- obviously, jeff is number two. >> we assume behind the scenes they're looking at where the company is going to be three or five years down the line. is this a nod to having to grow other revenue streams like. >> it's time to anoint somebody. there are lots of different things going on in the company. he may be spread thin himself. swref has really singled himself out with the apple watch, but more importantly just in the logistics of producing 75 million iphone orders. everybody was blown away by that.

stroo we're going to talk to a shareholder later on. the shares on this announcement today are down slightly, but, of course, the overall market is taking a little bit of a breather after a rally yesterday following that historic rate hike that has yields off the zero bounce for the first time in seven years. senior economics correspondent steve liesman is back from washington, and he joins us now from new york. steve, the day after, what's your read on this? >> markets are puzzling today over the critical question. what's the fed looking for in order to hike next? in her answer to my question, yellen explained some of the reasoning behind yesterday's historic hike? >> we recognized that policy is accommodative, and if we do not begin to slightly reduce the amount of accommodation it would overshoot our employment and

inflation objectives. >> pointing out the policy acts with long layings, and they want to remove but not -- they don't want to remove it. they want to reduce the amount of ago addition in the economy. >> yellen also said rate hikes are not going to be mechanical. she said that means they won't be every meeting or even every other meeting. best guess is to think about a funds rate that ends the year somewhere between the current market forecast of 1% and the median forecast from the fed itself of 1.4%. back to you, guys. >> the guessing game begins yet again, steve. great reporting on this topic

for months and months and more to come. henry, yesterday's hike was well signalled. that's why we didn't have volatility in the market. what do you think we should be watching now as we could be waiting multiple meetings before we get the next hike? >> first of all, let's hope that the fed is right and janet yellen is right and we don't start doing this, the economy is going to get out of control. it would be great if we saw the economy actually really heat up here. it would actually be great if inflation ticked up a little bit because of that. you don't want it wildly out of control, but we've been stuck in this laggard economy for seven years. if things really are starting to get going, that's great. if the fed is in a position where they can keep raising out six months or so, we should be happy. >> you still come back to that central problem that they are forecasting on their dots, which is what the individual members of the fed believe will be the trajectory of interest rates. they're still forecasting on their dots full rate rises, and the market believes it's going to be two. how do you resolve that? how is that resolved?

>> i think it's the same thick the fed is doing. you get new data every day that are going to change that. >> they take their view. will it be less hawkish as they go through? >> she will continue to be flexible is the sense that i get. she communicated this perfectly. it's justifiable given the information we have now. the economy gets stronger. i do think, though, nobody likes bad news. hate to be the bearer of bad news. historically rising interest rate environments don't tend to be good for size. you can argue about, well -- >> you are trying to slow the economy. >> it's a no brainer. we're trying to slow down the economy. >> she said it is a myth that expansions die of old age. that is going out on a limb there. >> that is great. again, going back to the real

economy if we are seeing real pressure on the labor side certainly from a stock perspective, you might say, oh, it's bad. costs are going up. those costs are wages to people in this economy. >> moving to a different type of rate hike. one that's coming to pandora. it's jumping on a favorable ruling on the rates it pays royalties to artists. the royalty board out with the rate of 2016 through 2002, and although they did rise, pandora ceo mcandrews called it a balanced rate. sound exchange, a nonprofit that helps collect digital royalties calls it deeply disappointing. the stock was up with 20% after

hours yesterday after some volatility. today it's up about 12%. john, it raised the rate by about 20%, but it's still not as high as the musicians and the music industry want it. >> you're going to see a shift away from this idea that music is free all the time. if you want to build a business, you want people paying for something. pandora has put itself in an interesting position now having additional businesses in downloads. they hedge their bets there. i think the next couple of years

as far as the structure of how companies like pandora go forward is going to be pretty interesting. >> it's a variable that's been solved for now, but do we do this all over again in 2020? >> pandora has been having this problem for years where they're always threatened to be killed or wounded by royalty change. you put your finger on it. that's always an issue. the other issue is listener hours aren't growing that much. >> financials are good. they're growing nicely. the usage is not, and that is ultimately a real problem. >> you don't see it as a window where they reset the rates, and now there are increases of the consumer price index. there's no cap on the revenue figure. you don't see that as somebody who runs technology companies, okay, we've got five years. go! >> the bigger pandora gets, the stronger it gets.

ultimately there's huge value to artists being played on pandora. the whole thing on radio, you want your artist played. people get to know the music and go out and buy it. the bigger pandora gets, actually the more leverage they have to say, look, you want to charge so much, then keep your music off pandora. it's terrible for you. listener hours, i would expect that if they had a product that people were nuts bshgs and it was so viral, you would see a lot more usage grow. it's single digit percentage. >> we have breaking news on star wars coming from julia borstein. what do we know? >> well, we're just getting the latest from star wars. >> the force awakens in 12 international markets placing number one in each market with an estimated 14.1 million in overall box office. >> i'm just going to put it in context here. this is the biggest single industry day of all time in norway and weeden.

biggest industry opening day of all time, and several of these markets, including belgium, finland, norway, switzerland, and it was the biggest opening day of all time. >> it was more than double the opening day of avengers and over double the opening day of jurassic world. >> it was the biggest opening of all time, biggest opening weekend of all time here in the wraits. there's going to be a lot of attention on whether or not star wars the force awakens can beat that record set by jurassic world in june swh every and whether it comes in in the top three of movies for all time. certainly numbers we're going to continue to watch over the course of the day today and tomorrow. john. >> crucially do we know anything about the buzz of people coming out of the theater? the reviewers liked it, but do we know if people -- are they

saying they're going to see it again and tell their friends, et cetera? >> i haven't seen anything out of the theaters that have opened in europe so far, but on rotten tomatoes, the film has a 95% critics score, which is incredibly strong. in terms of the viewer score, people who want to see it, it's 99%. >> we haven't started getting those word of mouth reviews from the u.s. theaters yet. >> julia borstein covering star wars. is this your shocked face? record opening? >> have i tickets. everything. so excited. >> for no spoilers, though. >> no spoilers. i have been avoiding them studiously, but i was so happy to see some people it's good.

you're going to enjoy it. that was very good news. >> have a great weekend. great to have you, as always. henry joining us on squawk alley. >> more on apple's management changes. we'll hear from a long-time apple shareholder next. plus, embattled pharmacy martin arrested this morning. a live report and fbi news conference in brooklyn coming up. forget fang stocks. why 2016 is the year of the -- mark mahaney has his tech bits for 2016. you're making me hungry.

>> then there were four. apple adding a new name as it names swref williams coo. before we was named to the post, he was effectively -- many people would say that he was the coo effectively anyway. certainly he led the launch of the apple watch. ross gerber is president and coo of gerber kawasaki and an apple shareholder. ross, have you met this guy? >> i actually haven't met him. a lot of tim cook's style is really behind the scenes low key, and this guy fits right in the mold of tim cook. zoo think this is about succession, and you think jim williams will take kim cook's job one day? >> i think it's definitely in order. all companies are required to

have a strong succession plan anyway. i think tim and him have a very unique relationship and personality. i think it's a long grooming process. >> this is not about succession planning and probably part of the reason why they're saying that, they've got a lot of strong executives who could be ceos or have been ceos and sthe don't want to flim reply that those folks probably are going to be second fiddle. >> there's speculation that tim cook is his way out. >> tim cook is not on his way out. >> he has years ahead of him. you have angela arons in there. people were speculate about her being a ceo candidate before she started working there. i don't think we should do athat. the mack app store being one. they have this app store for the mack. that was supposed to echo the success of the iphone. it has not done that arguably.

a number of prominent developers are saying we're going to pull our apps off of the mack app store because it's too limiting the way that's implemented. we'll have to see if this structure helps them fix that. >> each division is acting as its own company. i'm very xooetd comfortable with the structure of apple and its management structure. flo what would you say to those deeply concerned about the rises in the stock? we're almost down 20%. we almost entered bear market territory amid this huge debate as to whether iphone sales will actually fall year on year. i don't know why people have to look at, you know, over the last year it's about even.

it's up a little bit. over the last five years it's up 145%. not including dividends. over two of those years it didn't even go up. we're bullish on apple, but the whole i phones sales things is completely wrong. it's absolutely wrong. okay? smartphone sales are going to increase 10% globally next year. apple's hair is continuing to grow in markets like china and india, so at least the iphone sales up anywhere from 10%, which would just keep them equal to the market to as high as 15% next year. i think these analysts are just running their numbers with basic calculations, and they're not really thinking about markets like india and china.

>> krip, top picks for 2016 and why he says fang is out and binge wroe is in. markets lossed in europe in just about seven minutes. the dow is down around 200 points. lots of action coming up today. all that is next. ader 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.

the major averages here in the u.s. near the lows of the session. dow down 177 points or 1%. s&p 500 down 1.25%. nasdaq down about 1% as well. we did see the philly fed index this morning go negative for the third month in the last four, but it was really the breakdown in the price of oil. wti down 2%. below $35 a barrel. even as brent remains unchanged. for that we bring in simon hobbs to look at the close in europe and in the u.k., which is approaching in a moment's time. >> it's a much stronger close, as you can see, because europe is catching the tail wind of where heed's session here when we rallied after the fed. up from the beginning of the

session today, and then making gains through. the figures that you just saw from where we're trading now here has brought us off the highs. germany up over 3%. just coming back town. it's still wit a sizable rally for the record the swrermans survey of sentiment, dipped. partly because of what is happening in germany. partly because of the paris tashgs, but it is still very strong heading towards we're end. let's look at where we have the strength in this rally. a lot of the insurers and the asset managers have been doing well. as can you see, these guys are still linked to the south african makeup, if you like. here continuing to rally after you get that third finance minister confirmed. the others are higher. the banks are also higher. perhaps inevitably. though many are off her highs. standard chart did a real outperformer with the az wra focus. interestingly, a lot of the automotives have done well today on the session as well. whether that's a bet about the divergence between the fed and the ecb and whether youro might trade. certainly volkswagen, daimler, and porsche are all in positive

territory. now to the politics of europe. assembled in brussels for the year-end. leaders summit. the 28 heads of the european wrun. there you see prime minister david cameron, this is where the rubber meets the road for him. with angel wra merkel, they are now going to discuss changing the treaties so the britain stays within the european wrun. he has promised britain that it can have a referendum on leaving that block. he says he wants treat where i change. not least to be able to ban migrant workers from the u.k. for four wreerz. it's a real third rail issue. >> a top vc on his investments in fin tech and how the fed's rate hike will affect his industry. plus, coming up later today on closing bell, you won't want to miss this. an interview with short seller

swrim chanos here on cnbc.

surprise!!!!! we heard you got a job as a developer! its official, i work for ge!! what? wow... yeah! okay... guys, i'll be writing a new language for machines so planes, trains, even hospitals can work better. oh! sorry, i was trying to put it away... got it on the cake. so you're going to work on a train? not on a train...on "trains"! you're not gonna develop stuff anymore? no i am... do you know what ge is? come 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. >> good morning. i'm sue herrera. federal prosecutors will bring criminal charges against the friend and former neighbor of san bernardino shooter syed rizwan farook. enrique mart ez bought the three assault rifles three years ago, and they were used in the shootings. a french court has ordered

christine lagarde to face trial over her role in a pay-out of some $434 million to businessman bernard. she says she will appeal that decision. the french finance minister says she should be able to continue her duties. a man firing randomly from his pickup truck killed two people in separate shootings on an oklahoma interstate. the suspected shooter surrendered without incident and is being held in a local county jail. the 2015 wildfire season is now the costliest on record. according to the u.s. forest service more than 1.7 billion dollars was spent battling blazes on nearly ten million acres. mostly in the west and also alaska. that's $40 million more than the previous record which was set back in 2002. that is your cnbc news update this hour. back to sidewalk alley. john, down to you. >> thanks, sue. >> martin sherelli at his apartment in new york. our meg terrell is in brooklyn

where the fbi and u.s. attorney are going to hold a news conference in the next few minutes. >> as we wait for the news conference to begin at 12:00 we do have new video of mr mr. shrkeli. he is wearing a hoody leaving fbi headquarters after being processed. we know that he was arrested this morning from his residents in manhattan by the fbi. at 12:00 p.m. there will be a press conference where the u.s. toern for the eastern district of new york plans to unseal the indictment against both skrelli and his lawyer kevin grebold. he will be arraigned here at 2:00 p.m. here in brooklyn. of course, at noon we will be rolling on that press conference and bringing you all the news from here in brooklyn. back to you. >> meg, just to be clear, he is not being charged for the allegations that he was hiking the price of life-saving drugs here, is he? it's on unrelated charges. it's not necessarily for the reason that is we believe that

he is a controversial figure. >> that's right, simon. actually, the sec has put out a civil suit this morning where some of the charges here are widespread fraud lent conduct. it says with orchestrated by skrelli from october 2009 to march 2014. this is all having to do with his activities at his hedge fund, msnb capital. he found aid biotech company retro fin, and the sec is alleging that he misappropriated funds from his hedge fund, exaggerated performance of his hedge fund, and issued retrofin stock to pay back some disgruntled investors if his hedge fund. this is all having to do with his activity brz he founded the drug company where he raised the price on that life-saving medicine just this year. a lot of news coming out this morning on mr. skreli. >> we'll let you go and prepare for that news conference. in the midst of a selloff on the floor of the new york stock

exchange. >> well, a lot of this is oil. you can say there's residual affects from the fed, but this happened yesterday. we had 150 point rally. oil dropped, and we lost all of it. this is happening again today. as you saw just before prior to the open start and moving down, and we started moving down right at the open. take a look at the s&p 50000. right in line really with the pay-out for oil. stocks moved down right at the start of the day. you can see we're just off of the lows here. in terms of the sectors, not surprisingly, energy is leading for the down side. again, all of the cyclical sectors. materials, consumer discretionary are the ones that are weakest, and the ones that are down the least, of course, are the more defensive sectors. utilities, telecom, and consumer staples. this is in line with what weave been seeing in recent weeks. in terms of other parts, you want to watch oil, and you also want to watch high yield, for example. just in line with oil moving

down a good part. this is the h wr g. a good part of the high yield etf market. consists of bonds of energy stocks and we saw them moving down. we also saw high yield week. we saw oil is very much linked to how the market behaves these days. take a look at chevron. i want to show you the week for chevron. on monday when oil dropped, chevron rallied the middle of the day. pi by the middle of date on tuesday, this was $38. chevron went from $85 to $93 in that day and a half. i remark odd that several times. that was a 10% move. this is a company with $190 billion market cap that was quite extraordinary and is indicative of how stretched the market is and how very heavy the shorts are in this particular energy names. energy is the most shorted sector of the s&p. the bottom line is when oil continues to have trouble, the market has very big problems

stabilizing and, of course, obviously moves to the down side. back to you. >> all right. thanks, bob. art cashin said yesterday keep your eye on crude. it may be more powerful than even the fed. we are looking at the affects -- the after affects of the federal reserve board hiking interest rates for the first time in nearly a decade. could this lead to new financing and silicon valley's space. john, ceo of the daily mail. gentlemen, great to have you. this rate hike will be gradual. it will take place over a year or two. does that have any impact in the near term on the easy money spigot over in silicon valley? >> yeah, it's hard to offer that we're going to see a bunch of about. it might be a lot to do about nothing in the short-term. it's really focused on how do they serve the customers, and are those products and services

going to be in less demand as a result of higher interest rates? it's hard to argue that the consumer will look at their credit card bill and think, wow, i can't afford that -- the short-term, i think very little affect. you saw 16 straight increases in rates over the next four years. i think you'll see a dramatically different environment, but we're thinking much ado about nothing right now. >> although the value proposition of a couple of your largest investments, charles, lending lub and on deck is based on the fact that they were able to offer investors in their products, in their platforms. higher rates, and they can get anywhere nelles the market. does that market ship at all? >> i think it's great news for the lenders, specifically because their whole play is, you know, the 400 or 500 basis points. credit card companies will left

rates. >> i think it's a net win. a win for all respect as well. it will affect the very low he wanted, the seed end, and the mega multi-billion dollar type rounds. you've had a lot of wealthy individuals that can fire a $25,000 check to do a seed amount. basically they couldn't make anything on their -- they might go ahead and -- at the other end who needs to deploy large amounts of capital now have safe alternatives, and there's nowhere to put your money. >> all that and -- isn't the dynamic more investing in the tier over at td's, and a lot of them developed in markets where investors look for opportunities. still shake where i. >> you're absolutely right.

a quarter point is just a quarter point. >> all of that will go up. free money has gone away. >> charles, perhaps more importantly, at the end of the continuous pmping from the federal reserve into the markets, which kept them relatively benign. we've had rough periods in the markets that clearly have affected tech companies to go to market. does that figure for you further downpour the line? how does that affect -- within tech, some very capital inefficient start-ups. they drain a lot of money before they can boast any profits whatsoever. >> there's a much more intense focus now on things like unit economics, rather than spending for top line growth.

>> it's hard for us to invest in what public mshgts are like in the short and long-term. we don't have a crystal ball that goes out that far. we just have to invest in fundamentally good companies. if we do and those create ebida they will be valuable. >> charles, are you advising your companies that are close to going public that maybe they should hybernate for a bit longer? what's your advice? >> the add invites is build a great business, and if you do, investors will want to invest in that business. don't think that the public markets are nir vaughna. a difficult one in this, and as long as you have cash in the bank and you have a solid birks keep on running and worry about it later. >> more on the arrest of the embattled pharmacy martin, the

news conference is expected to begin in brooklyn in 20 minutes. we'll have more on that. and, indeed, rick santelli, what are you watching now? >> well, you know, the fed has its dots. i have a couple of dots myself. only three. it's why they can be so important and such an easy way to calibrate the next moves in the fixeded income market in the yield curve. all right after the break.

>> coming up, we're following twol big stories. martin skreli arrested by the fbi on securities fraud. we'll take you live to the news conference in brooklyn. we're also expecting a statement from the president. after the fed's long awaited move, we have your playbooks just ahead. kayla, we'll see you soon. >> all right. sounds good. we'll be there. scott, thanks. now let's get to the cme group. rick santelli with the santelli exchange. >> we've all heard that expression. when it comes to the fed, i really do think that some of the people on the buy side are very happy about dots. many of the big fund managers and traders, hedgees they like the dots. the dots aren't very accurate, but the time in between them is usually enough the dots insight some volatility, and it's traded. whether they're actually right

in the macroor not, sometimes doesn't matter. yesterday's fed did something that makes everybody scratch their head a bit. there were several questions. our own steve liesman. as to why now? now, i have any own impression of why now. we're not in a crisis. zero is too low. horrible timing to raise rates, but they need to be higher and maybe there's events out there or there's ongoing issues of mal investments or credit or just mispriced risk where having some cushion or insurance or rates have been higher or starting the process here's how i will frame it. >> raising rates. what is for the most part already a slow economy. how can you trade this with the

incongrunsys there. i looked at two's, five's, ten's, and 30's. here's the closures. here's a high close for the year. scratched out the two-year and three-year. let's forget about them for a minute. highs going back because so close in line with the fed. here's settlements through the years. here's how easy it is. if it closes above 178 before it closes below 166, i look for the flat. 166 is the trigger. the distance between trading 224 and 10 and -- 324 high of the year, it really makes the negative argument a little bit better about a flattening curve.

we really want to watch. >> it might be the easiest to put on the chart and look at every morning. john fort, back to you. >> all right. thanks, rick. out with the fang and in with the bagel. there's no f in bagel. what does that mean for facebook? let's look at the top internet trends in 2016. that's next on squawk alley. [music]

no, no, no, no, people are both soft and strong... yey! which is why our products are too. angel soft.

is 2016 going to be the year

of the bagel? one tech analyst says it's going to be a good year for alibaba, amazon, alphabet, and expedia and linkedin. with us now is mark mahaney, rbc capital markets. lead tech and internet analyst. mark, what is it this mean about facebook? it was the first letter in fang. now we got a bangel. what are you xwpg tore them in 2016? >> we continue to recommend facebook shares. it's not in the top five list. it slid down just a little bit because of the relative opportunities in other stocks. google has the most identifiable catalyst in the space given this new segment reporting we're going to get in a month. facebook doesn't quite have that. there's a lot of -- we don't think that that's a major catalyst for the stock. we think messaging platforms are, but that's the 2017, 2018. we think facebook can work harder and not as well as the

other stocks. >> i want to make you fight for bagel. if you get it, it's going to be huge. i'm going to challenge you on linkedin. i'm going to say that 17% is facebook and google. linked diagnosis in doesn't get much of it, and you can't have bagel. >> linked in is one where we've seen a positive correction in their town solutions business. we think that's locked and loaded. we think revenue growth is sustainable there. there have been two underperforming elements to linkedin. one is the advertising business, and that turned my head on -- our attention on linkedin. it's been a new mobile app that they've come out with. i hi this is a game changer for them in terms of increasing engagement. if they get this right and they get beyond display advertising, i think this is a lot of opportunity to monotize as well as facebook does. >> why did you include expeaed wra? is that partly because with the home away acquisition there's an argument that they could

effectively create a little air bnb within the business? >> i think that's absolutely their intention. >> overall ewe got the unit growth in the on-line travel space with ironically a little less european exposure than priceline. that puts it into positive camp for ebbing peaeda. well run business. that's returning a lot of cash to shareholders. we think that's reasonable for a stock like expeaed wra. >> you put program attic in there. it's very hard for an investor to get their head around. it's very hard. it's not in the list, but you have rubicon in there. what's your argument around programatic vendors? >> it's -- you have not made money to date on a programatic vendors. the way to play them in the public market has been google and facebook.

whether you can make it work in a small cap space is, you know, tvd. one factor that could help that is one of those other top ten trends, which is m&a was big this year. in 15. we think it will be big again next year. it's a natural place for consolidation. maybe that's the win, but as a broad theme, you know, we have seen a rides in programatic. we have a couple of decent assets in that small cap space. we hope they'll get writ for it. so far investors have avoided it like the plague. that could change this next year. >> each one of the companies has a big picture black swan risk hanging out in the wings. for baba it's obviously china. for alphabet, it's wrurp. for linkedin it's the employment picture. if you think that one of these is more susceptible than the others to this potential cloud raining down on them? >> okay. so if they're at risk, we should pick off a couple of these. google, playing this regulatory risk. with google there's probably --

it's out there somewhere. amazon, the big risk on amazon is what if you get into another cloud computing price war. that's a slowdown. we don't think that's -- that's the black swan risk on that name. maybe across the board there's regulatory risk. maybe it's not so much realistic type of risk. there's privacy that could come in. some of the practices of these companies. we don't hi that's there, but if you want to talk about systemic risk, regulation for businesses that become so large so quickly regulatory risks have to be there. >> mark, quickly on dropping netflix same story as facebook. limited up side? >> yes. we have seen a slowdown in the net sub-ads. that september quarter was a bit of a disappointment. december quarter isn't that great. the other thing is the big news story will be asia market laurchlgdz, and we haven't seen too many intbt companies do that well in that market. you know, it's hard to have a ton of conviction on how well they'll do in asia. they've done phenomenally well.

we've got kind of a question mark around asia. if they do well there, the stock goes up. we don't have that visibility yet. >> all right. we'll see what gets spread on that bagel in 2016. mark mahaney, rbc market analyst. >> some record numbers for star wars. already out ahead of its open in the u.s. tonight. plus, we're awaiting that news conference with the fbi and the u.s. attorney of the eastern district on the arrest of martin skreli. we'll take that live when it begins. back in a moment.

one thing we haven't mentioned is oracle down a% despite the fact that it beat earnings on the bottom line. revenue coming in light. strong dollar affected them. that's quite a move for a big company. >> investors still need to be convinced on this cloud story. the revenue didn't outperform the way the eps did and the guide on cloud didn't impress everyone. >> apple down more than 1%. disney dropping with the overall market too. despite that we got some record numbers for the europe open. thoughts on disney, john?

>> the espn and -- you got media networks at a $24 billion business. you have -- you know, two big numbers that need to overcome each other. >> may the force be with all of you. >> and you as well. have a great weekend. thanks for joenks. now we send it over to the halftime report and scott whopner. >> breaking news. we are following two developing story. the arrest of martin skreli. you can see on the left-hand side of your screen. just about 15 minutes ago he walked out in fbi custody presumably heading towards his arraignment. he is the man who has been at the center of the drug pricing controversy accused of securities fraud, dating back to his dealings at his former company and hedge fund. >> the president expected to make a statement today. thatom