reports that alte steel is facing trouble in new york city. want to thank walter isaacson for being here today. >> happy holidays. >> merry christmas. >> i will see you -- >> monday. >> next week. >> no. >> whoa. >> we'll see you after the new year. >> bye, everybody. "squawk on the street" is next. ♪ good thursday morning. welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. futures are up. though off of the highs of the morning. pretty good news for a holiday shortened week including nike and micron. got a warning from bed bath, celgene in the news. europe with good news. back home, durable goods

unchanged. cap x a disappointment. our road map begins with nike. the company showing strong numbers out of china. >> one retailer not having a good day, bed bath & beyond sending out warning signs. the stock taking a hit after it cut its third quarter profit forecast. >> and beatles fans doing twisting and shouting today. the band is coming to a streaming service near you. we'll get the impact on the music streaming business. first nike shares rising in the pre-market. revenue just shy of expectations. future the for delivery from december through april exceeding forecasts including a 34% jump in greater china, 14% increase in north america. that's constant currency, jim. their order book growing at levels it hasn't done in 20 years. >> this is a technology company. i urge people to look at this conference call to understand what we do best. this is about -- i will quote

them. digital does more -- it does more than just add the usual capabilities. this is about it defines how the consumer will experience the nike brand. they're basically doing one for one. with the digital world they can figure out what you want. they are using flex to save money and make the goods. the jordan 30th anniversary has paid off big in china. with the exception of brazil, talking about rio in the second half being okay, there is not a single area of this -- of the world that these guys are not blowing it away. this is so impressive. these numbers are three, four times what everyone else is doing. >> gross margins higher. asps higher. the 20% futures growth is up from 17 in the prior quarter. as good as it is, it's getting better. >> exactly right. accelerating revenue growth and running. running and basketball are amazing. they also use the cash. why? they're using the cash to

reinvest because of so many opportunities, trying to strike the balance between the short and long-term. i think they're the best of that of any manufacturer in the world today. the balance between short and long-term. in other words, they're not -- sometimes you hear, listen, if we sacrifice the long-term, we won't do well. we have to see short-term results. this company has the balance. tim cook is on the board of this company. it's a wonder of what we do i've been out in oregon. it's nike state. my hat's off to them. this is the best conference call next to starbucks this year. >> really? >> yes. >> it gets one of those awards. >> it's kind of like "cats." it ran for a long time. >> yes. i'm aware it had a long run. >> yes. >> when it comes to broader retail, nike and under armour stand out. apple certainly. then amazon. then everything else -- almost everything else is terrible. >> that's such a good analysis,

it's incredible. i search for anyone who can do anything like these numbers. these numbers are secular growing numbers. in other words, they're taking share from everyone else. addidas is having a good year. under armour is coming on with shoes. this is one of these companies that has figured out what you want, like amazon, and delivers it. and charges a pretty good amount for it. they're a great american manufacturer. by the way, they give credit immediately to flex. they talk about how flex is accelerating manufacturing, that's the old flextronics, contract manufacturer. i had flex on a bunch of times. they talk about how nike is at level of precision that no other manufacturer can match. extraordinary. unfortunately, as you just said no one is matching it. >> no. there aren't -- it's hard to say broad brush, but we know retail has been a very tough year.

interesting year. a year really where we have seen seismic shifts in some ways given amazon's dominance, if i can use that word. >> nike has great direct to consumer. futures orders which is how we do in the future, up 14%. western europe, futures orders plus 25%. >> a six-month chart of nike, stock up 23%. under armour down 6%. what's going on? >> under armour has a parallel component. i can't emphasize enough this weather hurt no matter how great someone is. under armour took a cfo from pet smart. announced yesterday. kevin plank is indestructible. he's a fabulous business man but he has weather against him. nike has no weather related issues. by the way, nike creates -- they have some of these things like the fly knit.

sounds like tech. they started the brand four years ago, billion dollar brand. that salesforce.com has not been able to grow like that. i urge people to recognize if you want to hear how a company dominates, go on that conference call. it's methodical what they tick down. it's interesting brazil is so horrible. it's the only place. it's one of these things where they said it's not all great. brazil down 5. everything else great. communist china, man, the jets are on for consumers. communist chinese have decided no more buildings, no more coal no more steel, no more iron. jordan. jordan. jordan. >> i heard you the first time. >> and the second time. >> sports possessed countries, turkey and mexico. you know what brand they like? jordan. 30 years ago. >> maybe they could sell some shoes in brazil for the olympics. >> that's what they talk about.

they talk about rio -- >> we all know brazil is having a rough go of it. >> yeah. geez, that was a great country. the digital technology and tailoring every interaction to the specific needs, once again, shows you like apple. they have the products you want. i know apple is suddenly passe. i think that's probably not true. they can do a lot of different things. what nike has done is integrate technology and find out what you want like amazon. there was a mentalist on this morning on squawk. don't know if you saw it? >> i didn't. >> the difference between the meant list and amazon. i was on the other day buying sam and libby shoes. it said people who liked this ordered this. i had done everything they said. it's frightening. they are in my head. >> they are in my head. >> i think they're in a mole or -- >> constantly improving those algorithms. >> you think if you have a

crown, amazon puts that stuff in for you. i had a crown put in for $2,000. it's amazon. i'm convinced i'm one of those people -- they used to send us to -- >> yes. wander around muttering to yourself, saying things like jordan and jordan again. >> the manchurian anchor. >> yes. i'm on amazon the other night saying i have to buy this new book about the period between world war i and world war ii. that was being piped up in my head. and it popped up like that. you like oil futures, you like the s&p. b bezsos is working on that. >> oil up 2%. wti and brent in parody. on the economic front, personal income and spending up 0.3. durables roughly flat last month but better than the 0.6 decline we had been expecting.

a lot of chatter about the early china indicators showing early stabilization. >> i know. there's bhp going up. they round up the usual suspects, bhp, rio, freeport. valet will be up. this trade has fooled people so many times. let's get the oil inventories at 10:30 and see if there's a reversal. >> how could there possibly be any real hope anymore? >> david, in the first amendment, i don't know if you looked at what the founding fathers said, you're allowed to be as stupid as you want. it's part of the corollary in the first amendment. >> it's a corollary, i know it's not there. >> it's sub text. hamilton was all about being stupid. >> congress shall make no law against people being stupid. >> the commerce clause, they tried to put in something about being stupid. they failed. it's all about the right to reach for the wrong stocks at any given moment like valet,

like bhp. the china -- the baltic straight index has indicated they're not importing anything. what they want, they want sneakers, coffee. they used to like fried chicken. not as into fried chicken. they don't like pizza. a limited number of things they like. they like bad air. >> meanwhile, there's a piece on bloomberg this morning on people buying put options on crude at 30, at 25, at 20, at 15. would you be interested in that? >> look, i -- i have to tell you, crude has befuddled so many people, including me. i had a chartist on. david always watches the chartists -- which is not true. carly garner talking about the euro. the correlation between the euro and oil is extraordinary. if you think the euro will stay strong, the oil has bottomed. i think the saudis decided where is it wants to go. our new exporting is the reason

why brent is now below west texas. >> yeah. >> people of arbitrage figured it out. we have plenty of export. if you want some, we can drive it to your house. >> there's still demand in the world, just a lot more supply. >> if isis continues to deliver a lot of oil. you can destroy isis easier with the saudi method. >> the saudis also busy blowing things up as well. >> the yemen war. if you look at the numbers of defense countries, the saudis order more military equipment more than anyone other than the united states. more than israel. >> we talk about the market implications of oil. the geopolitical implications. we will see what 2016 brings and the impact it has on so many economies. russia a key one. >> shell cutting back 2 billion. shell -- shell completely

believes my first amendment corollary. >> they got some support for the bg deal. one shareholder came out in support. there's still some question about that shareholder vote. i know you're talking about that 55 billion euros or pounds. huge deal. >> we have to talk about the ete. >> the timing just off a bit on the bg deal. >> the oil companies other than exxon have not distinguished themselves. i used to be critical of exxon. what you want now is a bank that produces oil. some of these companies, the break even is so lower -- canada will pump more oil this year than last year. based on what? because they cut the cost. there's baker hughes who got a new adherent there. >> value act yesterday got brought forward contracts. >> what does that mean? >> for 7.7%. but they can't vote that, i don't think. >> they must think the deal -- >> they're a big believers at

value act in that deal and the power of the combination between baker hughes and halliburton. >> do they think energy transfer can buy williams with stock and not cash? >> that's an interesting question you bring up. let's discuss it during the break. we'll huddle, come back and talk to the viewers. >> i think we periscope during the break. >> nice. >> sometimes it just comes up during the show. >> while they discuss, when we take a break and come back, the beatles with an early christmas gift for the band's fans, and for apple, amazon and google. we'll get to this warning from bed bath, chipotle and celgene. the market looking healthy. announcer: it's time to make room

for the new mattress models! during sleep train's huge year end clearance sale... get beautyrest, posturepedic, even tempur-pedic mattress sets at low clearance prices! save even more on floor samples, demonstrators, and closeout inventory! plus, same-day delivery, set-up and removal of your old set. why wait for the new models? sleep train's year end clearance sale is on now! superior service, best selection, lowest price-- guaranteed! ♪ your ticket to a better night's sleep ♪

. the beetles are making their music available for streaming worldwide beginning on christmas eve, 12:01 a.m. in your local time zone. the band's songs will stream across nine services including apple music, google play, amazon prime and spotify. as for pandora, the radio service already has beatles tunes, but with some restrictions. as we say with adele, taylor swift, this is one of the groups that can move the needle for this group.

>> amazing. this is like the jordan franchise. some things have staying power. i think this is why would want to buy a company that does streaming, lvlt has been -- lvlt has been a winner. >> level three has been a winner. >> level three a winner because they are an additional provider of bandwidth. that company was hanging on for dear life and is terrific. i'm impressed by them. in terms of moving the needle, these kinds of events move the needle for lvlt. do they move it for parent company comcast? >> i don't think so. >> no? too big. >> i don't think so. >> lvlt is the direct play if you want to make money on this. whenever you see the -- there was a complaint this morning about t mobile slowing things down. >> slowing youtube down. youtube not a part of that

service they're offering their customers in terms of not having it count against their data, and the charge is that they're slowing a number of other providers. youtube the biggest of all of them. music takes up a lot less bandwidth than video. it's not like -- they're not streaming video of the beatles. >> how serious is that charge? t mobile yesterday went above where it was when they reported the so-called bad quarter. john ledger, i think, is motivated to get that stock higher or they will be bought. >> by who? who will buy them? comcast? >> thank you for saying that. >> you're welcome. >> i didn't have to say it. >> i can see you -- by the way, that is pure speculation. >> yeah. >> a lot of that going on with comcast this week. >> yeah. >> part of the reason why you hear that there are people within t-mobile talk about that. >> what comes around goes

around. a new thesis being provided by some out there in the industry that you need to have everything covered again. the quad play. maybe it's even five. >> it's t-mobile. there's no one i speak to, you have better contacts on this, this is the rumor. but rumors are not -- i only report it because i'm getting from t-mobile. >> we will see. our parent company has proven to be quiztive through the years. there are quiet periods. the time warner cable deal did not happen. we will be active again in some fashion. mr. roberts like to make it happen. >> make it broader. it's a cable company. people fear -- t-mobile, people say if our stock does not go up, some cable company will buy us. >> did you read the story in the "journal" about sprint? they have their work cut out for them in 2016 in sprint. nobody is talking about sprint

and t-mobile getting backs together. >> so i like t-mobile even more. i think t-mobile there are multiple ways to win. i did not think that last quarter was nearly as bad as people think. i think john ledger is a great operator. i know a lot of people are saying, jim, if you had t-mobile you would know they drop calls. what do i know? i have verizon. >> the cultural challenges in meshing those two companies, knowing how ledger runs his operation. >> that would be -- short of ibm buying t-mobile. >> you never know. >> put a tie on! get that white shirt, put a tie on! >> ledger has been great. the germans own his company. they control t-mobile. deutsche tel. >> when i went to berlin, i wore a tie and jacket to stand out as

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♪ >> i haven't seen the nutcracker in a couple of years. you used to take your daughter. >> i knew someone who was in it, actually. my cousin. >> they're ringing the opening bell today what do we have on

mad dash? >> nike put on a clinic about how to run a company, how to run a quarter. micron put on a clinic about how not do it. micron reminds me of the sixers. golden state is nike. micron lowered business very big. >> 76ers, 1-29. >> we won a game. >> these guys are the sixers. they lost 29 or 30 games. that's harsh. >> they talk about lower, lower, lower. lower longer. they talk about how the earnings have to come down. it was one of those where the analysts were like could they be looking for something positive to say? yet they did. a lot of analysts stuck by this and said this is the level. they said this is the level here. this is the level here. this is the level here. >> what turns this thing, jim. >> big pc demand. >> okay. >> big cell phone demand. acceleration of cell phones. pcs. if pcs were to grow 10%, you

want to be a big buyer of this. >> that doesn't seem likely. >> you! you! you! >> off a smaller base perhaps. >> also cell phones. >> dan weisler who runs hp inc. will tell you there's 400 million that have to be replaced at some time. >> qualcomm is not doing that well either. this was a disappointing quarter. they bought the rest of a company that they thought would help. it was a miserable call. that's okay. the 76ers have a 2018 plan. i'm putting in a 2018 plan for micron like the sixers. >> first draft choice -- if they raise the salary cap -- >> sixers, i don't get it. i don't get it. >> nothing to get. owned by hedge fund guys. they must have done some sort of high frequency trading of

players. >> he's a good guy. not the other one. i don't know. opening bell after this. announcer: it's time to make room for the new mattress models! during sleep train's huge year end clearance sale... get beautyrest, posturepedic, even tempur-pedic mattress sets at low clearance prices! save even more on floor samples, demonstrators, and closeout inventory! plus, same-day delivery, set-up and removal of your old set. why wait for the new models? sleep train's year end clearance sale is on now! superior service, best selection, lowest price-- guaranteed! ♪ your ticket to a better night's sleep ♪

♪ you're watching cnbc "squawk on the street" live from the financial capital of the world. opening bell in about a minute. the cast of the nutcracker is on the podium this morning. futures looking healthy. the last full session of the week as tomorrow is a shortened session. art cashin, jim, says the santa claus rally historically arrives on christmas eve. are you interested in playing this last week? >> when i see stocks like bp or bhp going up sh, i say maybe it the end of tax law selling. when i see companies like under armour going up because they have a new cfo, that stock on a downturn. i'm not saying bed bath & beyond will go higher. watch general mills. watch cbs. widely considered to be disappointing when they announce things, watch those stocks percolate. they're a good indicator of what's going on.

costco. too. if costco can rally the last quarter, you have a winner here. >> let's get to the opening bell. at the big board, the nutcracker celebrating the holiday season. an amazing production if you have not had the chance already. >> you went? >> yeah. >> at the nasdaq, cytosorbents, critical care. one name we have not gotten to is celgene. >> i have said it over and over again, i am a huge believer in what bob hugen is doing. he always told me over and over again, don't worry about this patent problem. the 2017 numbers is for real. people were worried about the patent issue for the big drug revlimid. this will last much longer than anticipated. a negotiated deal extending out

to the 2020s. you can put a big multiple on celgene. i never like people buying something up eight, but now the overhang is gone. bob hugen is an amazing manager. it bothers me tremendously that people had such little faith in celgene after all they had done for shareholders. does that take care of this risk of -- >> the challenge of -- >> yes. >> kyle bass will say nothing will take care of the risk. he will say he can challenge all these patents. bob hugen said that won't be an issue either. certain ceos, when they say it, they're not just making it out of whole cloth. he had tremendous conviction on this patent. the street did not, which is why you're seeing such a radical rerating of celgene. this is what happens when you have no patent cliff. stock to 130. 130 is where we fairly value the

rest of the group. >> nike by far the best dow component today. takes the yearly gain to 41%, jim. no dow component has done better this year. >> nike coming in. the worries about china, china is their best. the worries about people spending more on sneakers in an era when people are frugal. yes, they will spend more. an environment where technology is not considered key to the gross margins, the technology is helping the margin, the deal with flex. my hats off to these guys. as good as it gets. it's a beatdown when you go up against them. they're the patriots. though mark parker is not like belichick, more like andy reid, a guy, methodical. people like him. i like to analogize the nfl, we are on the verge of playoff season. >> yes. >> people watch the nfl who watch our show. >> big piece in the "washington

post" saying whoever wins the nfc east, don't underestimate they could be dangerous even though the division is seen as somewhat of a joke. >> well, the nfc east -- look, i'm -- eli manning bought a place near me at the beach. near my hometown. and i want to go up to him and say i'm your biggest fan. but i'm not. but i am thinking that he is much better quarterback than people realize. and odell -- don't know if you watched the tapes. >> yes. >> i'm not feeling that odel beckham was unmotivated. he's the best receiver in the nfl. eli manning top five quarterback. decimated by injuries. >> we should move back to cable this morning. it's worth mentioning that shares of cable vision are down.

on a "wall street journal" story. the story has been around for a couple weeks. on the deal on what altese is paying and the cable stock price is widening. on concerns that new york city would have the right and potentially would exercise it to say no, we're not going to let you buy cablevision. that remains in some dispute. those who read the contract say it's clear to them. the question is whether it will amount to anything or not. i can't remember the last time something like that has occurred. the idea is simply adding all the debt to the company, the idea they're talking about $900 million in synergies. what will that do to service when, in fact, under the state code they are supposed to prove there will be improvements from these kinds of deals. so at least some concern about the potential approval route there. most expect it will.

they will give them something and it will improve. >> been one of the few great performers of the year. >> altese itself has been a disaster over the last few months. as it suffers with an enormous debt load and that expense goes up given what's going on in the high yield market lately. it has had a tough time of it. the stock is down dramatically. i'm just looking here at atc. >> any company took down debt since the beginning of the end of the m&a boom, so to speak -- >> yeah. >> the companies that take down debt -- >> almost overnight. when valiant went south, as a stock, the whole strategy of rolling up, using the capital markets to help fund -- not to mention the pipeline companies, everything went. >> i keep -- >> shares are up over 5%. the spread is actually -- it's a cash deal.

>> all the stocks which have been hammered this year, including ag. whether it's ag, minerals, they're all flying today. this is a relief rally. we're done with the redemptions. if you're a hedge fund, you got the memo, you're gone. oil drilling stocks, service stocks flying here. and that -- 10:30 we get inventories. maybe this is like a trading places kind of thing. >> yeah. sold to you. bed bath & beyond, a new four-year low for bby after they warned for the quarter that ended november 28th. they see 1.07 to 1.10. the prior was 1.14 to 1.21 as consumers continue to shift online. >> that was miserable release they put out. just basically saying, listen, we're getting pants by the web. these are good merchants. they've been around for a long time. the world may have passed them by. amazon -- i didn't think amazon

could -- i thought harmon, one of the divisions was good. no. >> the eighth miss on either comps or eps, eighth in the past ten quarters. >> they bought back so much stock. it hasn't done anything. just nothing. >> chipotle rolling out some changes to its food prep, including delivering cheese already shredded, blanching onions in boiling water before chopping, a bunch of other moves. stock is down today. centralizing tomato chopping, cilantro chopping. >> they are claiming it will not hurt the taste. it used to be more centralized. they're going for the most safe form of food handling and i got to hand it to them. i wish they had come on when they were on "mad money" saying there will be a november -- there was one other incident. it hurt their credibility, unless they didn't know. unless the cdc knew and they didn't, which i find hard to

believe. it wasn't a new outbreak, but it would have been better to say there will be a couple more that will get reported. but they serve millions of dishes. a couple that were reported. i told you i'd go there. >> i know you did. you have been in the last 24 hours? >> no, i went to bar san miguel. >> how is your sourcing? you know where everything is coming from? >> yes, i do. unlike chipotle, we have to serve 35 meals. they serve 35 meals in 35 seconds at one store! >> you make a nice guacamole there. >> we make the best guac there is. start at 3:30. it's chunky -- >> delicious. >> thank you. >> it is delicious. >> we had some celebrities at the place lately. >> really? >> yes, we have. whose names will be confidential. >> most restaurants phone it in to page six. you'll keep it quiet? >> no reason to let anyone feel

anything but anonymous when they go to bar san miguel. >> dow up three straight days now. disney the only component in the red. oil up a buck. let's get to bob pisani this morning. >> we're getting another modest rally. it is a rally. it's the right kind of rally. the rally in the most beaten up names. tax law season is coming to a close. we pick on the carcasses of the losers that are out there. europe gapped right up, right at the open. and, of course it was material stocks, metal stocks, mining stocks, look at some european metal names. you know how bad it's been for glencore. up today. anglo american strong, all the met metals are up. if you look at the dow leaders, the same situation. big losers on the year. nike not a loser. nike here a historic high. you have to be near 135 to get to the historic high.

20%ed a vach ed ed ed advance . chevron, exxon, caterpillar up modestly. in the energy sector you could put up the biggest losers in the exploration of production space, they're up today. range, devon. we put up these names every day this year for months on end. down 1% 2% every day. southwest energy, consol, they're all big gainers in the energy space. it helps that oil is stabilizing. picking on the caucuses here. same with materials. you know about freeport, alcoa, what a disaster mosaic has been all year. and you can see all those up nicely. freeport the biggest loser of the year, down more than 50% on the year. same thing with steel stocks. we may get a bit of news on the steel stocks. there are some reports that the import tariffs for chinese steel may be increased by the u.s. department of commerce. that may be helping steel

stocks. it's not helping u.s. steel. allegheny tech, ak steel, cliffs natural on the upside. we're getting the rally we would expect this time of year in the material and commodity names. as for the year of 2015, some interesting statistics from rich capetto. we had fairly good volume this year in the stock market. 7 billion shares. that's everything. nyse, nasdaq, 7 billion shares is that a little? a lot? 9% higher than last year. the highest since 2011. we have seen declining volume for a long time. this is one of those years where it went up nicely. a lot of volatility in july and august helped. speaking of volatility. the average volatility for the vix, 16.7. elevated more in the last few days. back down where the average has been. that's up 18% year over year.

more volume and more volatility this year has been the main story. as for 2016, a lot of the themes that were factors in volatility in 2016 seem to be continuing to be issues. we have uncertainty around the timing and pace of the fed rate hikes. the china stimulus is a big issue. that's a big topic in the last several days. the chinese communist party met and talked about much heavier stimulus measures in their budget for 2016. commodity fluctuations. outside of those three issues that are still going on, we have geopolitical risk. i would also throw in the presidential election. i wouldn't normally, but given the huge battle around the republican party that may well be some kind of impact on 2016. we'll talk more about that next week when we do a full-year review. right now the dow up 120 points. carl? >> bob, thank you very much. let's get to the bond pits as well and check in with rick santelli at the cme. busy morning already, rick.

>> absolutely. time sure is jumping as we get closer to year-end. rates certainly are not jumping, but definitely lifting their feet off the ground a bit. near one-week high yields should we close especially from the mid part of the curve, fives out to the long end. now, let's look at tens. intraday, you see right after the data came out today at 8:30 eastern, it popped up a bit. that's amazing. first of all, income and spending already out. we had a goose egg in terms of durable goods. even though that was better than expected. nonseasonably adjusted durable goods, every category pressured lower. either we're setting the barlow or data is not the driving force and maybe a combination of both. if you look at the area we're starting to approach as we get now over 2.25, anything with a 2.3, lots of resistance. look from august and see how those tops line up. pay attention to that level.

especially if we close above 2.27, 2.28. now let's look at the spreads. let's talk about the path of rates. one thing i can tell you, the short end may remain firm, the long end may concentrate on global economics. that may mean nor flattening. 30 minus tens, you can see on the 20-year chart, even at the end it is coming down. there is a lot of room for flattening, for the differences to get smaller. so watch that. fives to tens, same scenario. the reason i bring it up is because especially as you get away from the long end, those two pockets of spread trades will give you much insight as to the dynamics of the short end with the fed, the long end, the economy. the final charts, the dollar index. i picked tax time, there's so much talk about tax selling, maybe it's over. the interesting thing about this chart is we all know that there was a bit of a failure above 100 on the sustained basis in the dollar index.

let's not forget 98 has boatload of support, as you can see. we mentioned oil futures up. bertha is at the nymex for us today. >> we hit a one-week high after the inventories came out from the american petroleum institute yesterday saying that last week saw a surprise withdrawal of 3.6 million barrels of oil. the expectation is that today's inventory number will see another build between 2 million and 3 million barrels. last week 4 million barrels. we see this shifting premium dynamic between wti, nymex crude and brent. since the shale boom brent has been higher, not to mention the issue in the middle east with the arab spring. we're returning what used to be the norm, where now we have wti just a few pennies higher than

brent crude. what's interesting is how this could play into the inventory numbers. api said despite that big withdrawal we did see a build at cushing of 1.5 million barrels. as brent becomes cheaper that makes it more attractive to the refiners on the gulf coast to use brent crude rather than bring in wti nymex crude from the cushing hub. opec says long-term they see prices doubling from here, but not until 2020. we'll have those inventory numbers coming up around 10:30 eastern. >> we will see you then. walt mossberg later this morning on the top tech trends of 2015, including which company he says seemed to come out of a coma this year. dow is on track for its ninth consecutive triple digit move. back in a moment.

♪ the big short hits theaters today. it following michael lewis' best selling book about the 2008 financial crisis. we caught up with a few of the stars at the red carpet premiere. >> i think it's really -- you can understand it now. i think what surprises us is that it's still going on now. it's going on in different forms, but the same mentality. the same greed is good. the rating agencies are absolutely worthless. it needs to be looked at. it could happen again. >> seem like a dry subject matter, but it's actually funny and entertaining. and riveting. it's all true. most everything that happens in this movie is really not -- not

embellished. the movie calls itself out when it is. so you can watch it thinking, wow, this all happened. this is all real. it's a little jarring in that way. so far the film grabbed four golden globe comedy nominations. the "journal" calls it the second best movie of the year. in a lot of interviews, carrel is asked to define things. >> better than margin call? >> no. but i give them credit for trying to talk about collateralized debt in a picture. it's not clear that most people will want to watch this movie. >> the wife has no desire to see it at all. none. >> it was good. >> the wife is like you are kidding me?

she would rather see "star wars" seven times to help greenfield be wrong. >> high marks for giving it a shot. she personally wants to prove greenfield wrong. >> rich greenfield? >> i will pay $1,000 a ticket. i will make iger right and greenfield wrong. she is trying to right the situation. >> he wasn't talking about "star wars." >> also taking down 4 million subscriptions of espn. >> that will help. >> that will cost you $28 million a month. >> think about what it will do for the quarter disney the only dow name in the red. stop trading with jim in a moment. ♪ the lexus december to remember sales event is here.

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it's time for cramer and stop trading. >> we've been talking about the bounce stocks. one i want you to keep an eye on is cummins, they got a buyback, missed the quarter, probably the highest quality balance sheet of the companies that have come down a lot during this period. if that one can rally for several days, you are believing that china is turning or there is a bottom in what has been no bottom to these kind of overall engineering manufacturing industrial companies. this is where i worry about the

recession. if cummins is doing poorly in indiana, the heartland will do poorly. cmi will tell the tale of the tape. >> what is on "mad money" tonight. >> talking about two companies that have done unbelievably well and not getting enough highlighting. i will do a preview of 2016, particularly biotech. the most fascinating area to our viewers. they can't get enough of it. we listen to our viewers, we'll give it to them. >> celgene up sharply. >> that's why it's important. what's happened is celgene kept the lid on the group because pa te patent issues hurt the group. >> we'll see you tonight. >> great stuff. >> "mad money," 6:00 p.m. >> my wife just emailed me. she just took down another million espn -- trying to break out the bundle. >> awesome. >> she wants espn 4, women's lacrosse. >> when we come back, breaking new observe new home sales and

consumer sentiment.

good wednesday morning. i'm carl quintanilla, with sara eisen, david faber, simon hobbs. dow on track for a third consecutive gain. ninth consecutive triple digit move as we get some relief in oil, up about $1 here. some good economic data. new home sales and consumer sentiment. rick santelli has got that. rick? >> well, it's a miss on new home sales, following a big miss on existing home sales yesterday. this is november, folks. we're expecting the number north of 500,000, that's 500,000 seasonally adjusted units. we ended up 490,000. it doesn't end there. 495 last look, now downgraded to 470. if we look at 490, how does that stack up? that would be the weakest since september at 447. but considering what we have

with 470, it changes things. what's fascinating is the high water mark was february, 545,000. best since february of '08. definitely a small fraction of ten years ago when it was 1.3 million. let's go to university of michigan sentiment, 92.6 december final read. sequentially comparing it to 91.8, the mid read. we throw that away. 92.6 is not too bad. the best read we've had since july. the strongest read? the very first read of the year, 98.1. the best since january of 2004 when it was well over 103. so, michigan may be the best data point at least today that was released normally. income and spending are a bit better than expected. durable goods soft. the aftermath, rates are moving on light volume to the upside. and the equity market, ho, ho, ho. simon, back to you.

>> i just realized you would make a great auction near, rick. it struck me with the figures again and again. let's bring in steve liesman. what does this mean? is the economy slowing? static or accelerating? >> i'm trying to figure something out here. the new home sales numbers, which i thought could get a bump from the unseasonable weather. it did come in better than the prior month. it looks like there was a 28% fall in the northeast. i'm trying to figure out was there some reason we had some adjustments going on because of some tax stuff that happened in the summer. i thought that worked its way through the system. we had another problem with existing home sales, with documents. that was a thing from out west. there's a big question as to whether or not there's some problem in the northeast, something that changed the data. it's not a good number. you want to see that number working its way back up. you want to see how hold formation, kids moving out of their parents houses, starting

homes. that's not happening. new york sometimes story talked about that. one thing we did get, rick talked abotalk ed about it, good data for november. income up 0.3%. wage and salary data up a half percent. personal spending equaled personal income. the savings rate high at 5.5%. retailers need to know, consumers have the money. the question is will they be motivated to part with it this spending season? we have that savings rate higher than it had been earlier this century. we got another drop in business investment. the durable goods number coming in unchanged. we had two decent months the prior months. we had a good number in the third quarter, sorry, in october of 9.9%. now you can see that number has upped a bit. 0.41% when it comes to business investment for new orders.

something we want to watch. sara, manufacturing has been challenged. the strong dollar, weak oversees economies have all challenged manufacturing. we'll see if the rest of the economy can hum along in 2016 while manufacturing remains challenged. sara? >> steve, i want to come back on the housing data, and whether there's a problem in the northeast. i mentioned i sold my apartment earlier, about six months ago. and it was really soft at that time. i keep hearing antidotally that there is softness in the manhattan sales. i don't know whether manhattan is separate from the northeast, very often it's an island on its own with its own rules. there is definitely something going on. that's what you hear from people. >> it's interesting, simon. i think the sale of your apartment is going to be separate from the new home sales data i don't believe they're building a whole lot of homes in manhattan, not single family homes, perhaps there is some construction going on. this is something that has do with the northeast. i don't know if it's new york or

something specific to that i don't think you have a crash in the new home sale market in the northeast. we'll have to look at that. >> i didn't say crash, softness was the word i used. >> softness is fine. 30% decline would be a crash. >> steve, thank you very much. >> sure. >> for rounding out the data for us. nike turning lower, giving back earlier gains after the company sprinted past earnings estimates again last night. strong futures orders in particular were a highlight driven by 34% rise in china. nike is already the top performing dow component year to date. it's up 37%. for more on what to do with the stock, let's bring in jay sole, analyst from morgan stanley. a number of people raised their price target on nike at 1.50. you kept yours at 1.39. do you think it's fairly valued here? >> good morning. thanks for having me. i don't think it's a signal.

nike's second quarter result was solid. we continue to rate the stock overweight. there's a big global trend towards health and wellness and more casual dress. we think nike is the best company to capitalize on it. we think nike will continue to grind higher in 2016. >> let's talk about the quarter. i mentioned the futures order being a bright spot. 20%, that's the outlook over six months globally. 34% in china. that was strong. they are getting slammed by a strong dollar. does wall street give nike a pass on this because the underlying trends are just so good and the double digit growth is there? >> that's a good question. i don't think wall street is giving nike a pass. i think nike is earning a pass because it can manage better than any other company in the industry. the china number is important. it shows nike can capitalize on the fitness craze that's going on in china the chinese government is going to try to create a $5 trillion r&b spor r

growth. >> didn't get a lot about next year in terms of the earnings call last year. i talked to ceo mark parker in october. i asked him about what's coming down the pike in terms of innovation, new products, events. here's what he said. >> the product we have in the pipeline, noinnovation is comin. i feel confident in the product. i also feel confident in how we're connecting to consumers. the brand is resonating around the world. investing a lot in servicing. really being there for the consumer, connecting the consumer not only to nike but to each other. a lot of positive opportunities for us. >> let's talk about some of those positive opportunities. how much are they in the stock and how much is it a catalyst in terms of sales and the stock to have an olympics next year and another big euro soccer

championship? >> sure. both of those events are big for the stock. when big global sporting events happen, the stock outperforms. the innovation mark parker is talking about is why. in the 2012 olympics, they introduced fly net. that's a $1 billion platform. we expect some sort of new innovation will be coming for this olympics. it's a closely guarded secret what that is. we're pretty sure it will be exciting and outstanding. >> i wanted to ask you about the chart. everyone is looking at the nick/under armour comparison. they both had good years. over the last few weeks or so, under armour stock has collapsed. some worry about cold weather impacting them. promotion promotions. if you look at these two stocks compared to the ralph lurns of world, the other competitors, they're clearly in a class of their own. what's the outlook here for under armour given that the

category is expanding but that stock has lost some steam. >> sure. you know, you're making a great point. the companies that sell athletic apparel and footwear are doing better than the companies that sell general athletic apparel and footwear. that's because of the trend to more casual dress. nike is the best one of the group. they're a big global business. this quarter is a great example of how because they're so diverse, they can offset weakness in one area with strength in another. everybody knows the weather is warm, that's made apparel sales tough for everybody, but nike was able to offset that weakness by using the lower price in oil and cotton prices to keep their full-year guidance in check. >> the story is great, when you do see weakness, when things go wrong, the converse sales down in europe or this overstocking problem they have partly because the west coast ports shut down in the summer. when things do go wrong, what

typically is it. >> the thing about the converse issue is that they're actually reorganizing that business a bit. we did a survey of western european consumers asking about their favorite athletic footwear brands and why. converse was the brand that tested the strongest after nike and addidas. even though the sales look weak in the uk last quarter, we think that's because nike is reorganizing the business. we expect strong growth in western europe going forward. when things go wrong for nike, it's a big global company. it's unrealistic to expect that everything goes perfectly all the time. but they have so many opportunities. they are always able to find ways to optimize their business and continue to deliver the earnings that make the stock go higher. >> what about the forecast for lower margins? is that something to worry about? >> the forecast for lower margin was a 3q specific thing, but they raised the gross margin outlook for 4q. so the full guidance for the year is the same. that's straight out of the nike

play book. if they say weakness in one area, they offset it in another area. >> jay, thanks for joining us. when we come back, stocks up for the third day in a row. is it the santa claus rally we've been waiting for? "squawk on the street" will be right back. i'm turning seven. what did you ask for? a princess. and a pony. you like things that begin with p. i like pink frosting too. will you have a cake? yeah. i was too sick to have one last year. the data your doctor shared shows you are healthy. are you a doctor? no. i help doctors identify cancer treatments. i want to be a doctor someday. i can help with that too. watson, i like you.

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prices continue to rebound what sect sectors should people focus on? joining us is neil dudd and david seaberg. david, walk me through some of your big narrative for '16. how are they coming together? >> we talked about it on your show. i believe next year will continue to be this sort of same theme we saw this year, buying names that work, continuing to focus on names that have great growth stories, returning cash to shareholders, and having outshined prospects versus the rest of everything else from that perspective. if you look at healthcare, healthcare now is so much negative sentiment to it. that really is setting up. we're talking about that this morning on the desk. really could be setting up as a big opportunity going into next year. more on the large cap side. you can look at possibly healthcare. some of the large cap names outperforming by 10% 15% in the

overall market. you know, also i think the really -- the focus is still on these growth internet based names will be where money gravitates to. i do see amazon as a stock that continues to work. i see the netflix of the world. as long as the story doesn't get derailed, that's a name has will continue to work. facebook and google as well. we talk about the names all the time. these are names that money will continue to flow into. the long-term growths and prospects are completely intact. >> neil, does david's micro thesis square with an environment where the market doesn't even believe the fed's own forecast? >> the market hasn't believed the fed's forecast for quite some time. you know, my sense is that in terms of ideas going into next year, i think u.s. underlying inflation is picking up. i think that's increasingly borne out in the data we've been

talking about the dollar and oil for quite some time. core inflation is basically stable all year. we learned that this morning. the idea that you will get this big pass through has not materialized. janet yellen will be proven right. you know, we've been accustomed to the fed bending to the markets year after year. i wouldn't be surprised if next year the markets do a little bit of bending to the fed's outlook. with respect to the equity markets, frankly i like the industrials here for a trade. the u.s. inventory correction is likely to come to an end early next year. the global economy appears to be stabilizing, maybe accelerating slightly. if you look at some of the latest news out of china. we've seen significant monetary stimulus put in place. and the drag from the dollar appears to be fading. you know, look for things like the ism manufacturing index to bounce next year. i think that's going to help the industrial sector. >> neil, where do you see inflation coming from? month to month it was flat in

the pc. year on year, yes, the core is rising. that's good to see or has been stable. it's still below the 2% target from the federal reserve. commodities are low across the board. where do you see it picking up? >> it's picking up in wages. happy holidays, sara. it's picking up in wages. you mentioned the headline inflation. i think it's interesting that headline inflation was basically flat month over month but accelerated year over year. that tells you something about the underlying trajectory here. but when you talk about commodities going down, remember what janet yellen told us -- all oil has to do is stabilize in order for the fed's inflation goals to be achieved. i think we're conflating relative prices and general prices. it's a big difference when oil is declining and wages are declining. it's another thing when rawages are rising and oil declines. people take the windfall, spend it elsewhere and that drives up

the prices for goods and services they spend the money on. if you look, i think just focusing on commodities conflates the issue. we're looking at services inflation which is at highest it's ever been in terms of its important in the overall inflation story. not commodities. >> david, can i ask you in particular about commodities as an equity play? as we come towards the end of the year, i don't know if it is short covering, energy stocks are higher. a lot of mining stocks rise quite substantially including this morning. energy down 23% for the year. materials down 9% for the year. do they become the comeback kid next year? >> look, i think it's too early. probably nine months too early to buy the equity in energy. i think that we are in a period right now -- i won't call the

direction or the bottom in oil. oil can go a lot lower. i think it can go lower because of the supply issues that will plague this market for a very long time. you know, i look at the -- iran, for instance. when sanctions get lifted, 500,000 barrels a day is a tremendous amount coming on. there is condensate as well you have to account for. that could be 250,000 barrels a day. the amount of supply that can be pushed on this market could be dramatic for a long period of time. what you need to see is the really low quality, you know, companies with high quality assets but struggling financially, you need to see them go to the wayside. shorting the high yield, staying short the high yield, not buying the equity at some period of time, maybe nine month down the road, you will cover your play and buy the equity outright or what have you. the best quality u.s. assets are the names to really take a look

at when things start to bottom out because the bigger guys need to come in and they're really underweight the highest quality u.s. assets, they need to come in and actually kind of pluck those. they're waiting for things to crush. the borrowing basis gets yanked out, these companies go bankrupt or really start to get pressed, that's when you know things have kind of gotten to the point where they have bottomed out. >> something we'll be on the lookout for in the next few months. neil, david, thank you very much. >> and happy poholidays. up next, this unusually warm weather might be bad for some businesses, but the golf industry is loving it courses across the country that would normally be closed are filling tee times all day. much more on that after this quick break. i sold my bike on wallapop, yes i did.

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with unusually warm weather, golf courses are seeing the benefits. joining us is jeff foster, who runs golf now, a tee time reservation service. jeff, welcome to the program. nice to see you. >> thank you. thanks for having me.

>> what difference is this warm weather making out there? what are you seeing? >> we -- you know, we are a tee time company called golf now right now we're seeing the business boom in terms of the last six weeks of the year. what's been just absolutely crazy is what's happening right where you guys are in the northeast and all the way over into chicago now. typically, you know, kind of the story goes around thanksgiving, golf courses tend to send the staff home until the spring in the northeast and the upper midwest. right now they're calling them back in to let's keep the shops open and the rounds going. you talk about a great christmas gift, they're getting it now. >> it's interesting that with the online service arguably you might capture more of these people that are looking for somewhere to play or at least tee. i guess there are some golf courses that have to close because they fear the physical degradation of suddenly if the weather were to turn. this is a judgment call for many of them, for many of the groundsmen, no? >> yes, it is.

it is. some of the stories that we're hearing now, as you know, you plan on your staff going south. a lot of the staff goes south when the courses close and work at courses down where we are in florida in the arizona area. they're literally having to get the staff back together to try to keep this course open. this is -- if you're in the golf industry now, whether you're making golf balls, golf equipment or doing what we do, selling tee times, this is a great problem to have at the end of the year. >> sure. what happens in january and february? do we go through more on/off, you are going to open or not open assuming the weather remains wild, or do the golf players migrate like birds to hotter climates like florida? >> that's a great question. that's the question of the day. if you're an operator and you're in boston right now, you don't know how many more weeks of this great weather you might get. you really have to kind of play your cards and watch the weather daily to figure out how you'll

run your business. as well as if you're a golfer now and you live in the northeast, a lot of those folks migrate down here to florida or to california, arizona area. they can stay in their homestates and still get some rounds in. we know today, right now in chicago, we call it the market is open. usually it's ice and snow and everyone is playing golf in chicago. our courses now, we heard a story today, many golf courses are doing a double shotgun two groups per hole, people just trying to get the last round of golf in before that weather comes. >> i have a broader question about the golf industry in this country beyond this christmas time boost which is nice. what is happening with the popularity of golf? the "new york times" cited the national golf foundation saying 4 million fewer players of golf in this country than a decade ago. is there reason to think it will regain popularity in the new year? or have better luck appealing to young people?

>> yes. we absolutely believe that. participation has flattened or declined in some parts of the country. we believe it's on a huge rebound now. what is exciting for the first time, all the main organizations in the industry from the golf channel, pga tour, augusta national, usga, have all gotten together and really put a focus on growing the game. two of the main initiatives that we support, one is called pga junior golf leagues, to get youth out. if you folks have children, you know there's a lot of competition for youth time. we believe this program is a great program. another program introducing golfers to the game is get golf ready, for those folks trying to get out and lrn the gamearn the. we are pullish isbullish on th. if you see our commercials, we end every commercial with go

play from golf now. >> jeff, let me ask you finally about tiger woods who i think celebrates his 40th birthday next week. if he changes his tune and says i will go back into the game. is that material for you guys or has that ship essentially sailed? >> no. personally i believe, i know the folks that i work with believe that tiger has a huge impact on the game. always has. the game used to rise and fall with him. i still believe that today. if he comes back and plays in a tournament we see ratings grow, more people booking tee times. we want tiger back for sure. >> we'll let you go, jeff. i imagine you have a course to get to. jeff foster joining us. >> it's beautiful here. >> i'm sure. senior vice president of the golf channel, which is an nbc universal property. coming up, the strength of amazon prime. one analyst says by 2020, half of all u.s. households will be prime members what does that mean for the stock and how are they going to get there?

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welcome back. i'm bertha coombs at the nymex. a much bigger draw when it comes to crude stocks. inventories showing a withdrawal -- i want to make sure i get this right.

a withdrawal of nearly 5.9 million barrels of crude. a build of 1 million barrels of gasoli gasoli gasoline. what was interesting is the huge drop in imports, down 1 million barrels. we saw an increase at cushing of more than 2 million barrels. that does pressure wti and nymex. brent is lower than nymex for the first time in four years since the start of the arab spring insurgency in the middle east. that could start changing that dynamic in terms of what those producers use and refiners use down on the gulf coast. now over to sharon epperson. thanks. here's your news update at this

hour. australian police say they have arrested two more men as part of an operation that thwarted a potential attack by home grown islamic militants last year on government buildings. that brings to 13 the number of people arrested in the ongoing investigation. a man was pulled out alive 60 hours after a landslide hit in southern china. rescuers using sensors, drones and earth excavators to try to reach possible survivors, more than 70 people are still missing. smog continues to plague the chinese capital of beijing. the pollution level is expected to decrease to grade 4 today which is still hazardous for public health. the smog is expected to disperse tomorrow as a cold front moves in. and starbucks is forecasting record gift card sales for christmas eve as consumers look to pick up stocking stuffers. the coffee chain sold nearly 2.5 million gift cards last year. that's our cnbc news update for this hour. back to you, carl.

>> thank you very much. the final shopping days and shipping days for christmas are upon us, with today expected to be one of the busiest for deliveries. can the shippers keep up? morgan brennan has more on that. >> here's the good news. it's looking good. despite service issues earlier in the month around cybermonday, the parcel carriers are on track for their best peak season performance in several years. some of those data points behind me. ship matrix estimates over 60 million packages will be delivered on christmas eve with a few thousand missing that window. that's a big difference from the nearly 2.5 million delayed in 2013. all of this not without hiccups. if you call eddie bauer's customer service line, a message says that retailer has been informed by fedex that there are

some issues. >> behind in processing packages into their system throughout the country. please allow a few more day s fr your order tracking information to be updated. >> we reached out todayedy bauer and fedex for comment. we have not heard back yesterday. the biggest winner, the u.s. postal service. the la its last mile services which includes delivery for amazon, u.p.s. and fedex have had the best service rates. 99% each of the last two weeks. and package volumes have grown 15% so far this peak shipping season. now, that is better than the 10.5% forecast that the company or the governmental agency put

out a few weeks ago. with amazon up 50% compared to 2014. simon? >> thank you very much. one of the major drivers in the growth of online shopping is clearly amazon. its stock, as you are probably aware, more than doubling this year. this holiday season for every addition additional spent on e-commerce, ceo jeff bezos is capturing over 50 cents. that's driven by what is beli e believed to be one quarter of the people in the country subscribed to amazon prime and entitled to free shipping. ben joins us now on the cnbc news line. welcome to the program. it's kind of important to point out that overall amazon still has only a 3.5% share of retail in this country. but if what you're saying is correct, the degree they're capitalizing on the changes growth is absolutely astounding.

talk us through it, if you would. >> if you look at the numbers we put out, we're saying they're capturing more than half of the overall e-commerce growth and 25% of the overall retail growth. if you think about the inverse of that it's extraordinary. every other company in the u.s. is fighting for half of e-commerce and 75% of retail. amazon is in a league of their own and is dominating sales. >> how do you get to the idea that in five years time half the people in the country will subscribe to amazon prime and what will that mean for the business. >> prime is the story for amazon. everything that they do, we look through and say what does this mean for prime growth. every announcement that comes out of them, we say what does this mean for prime growth. that's how the company is viewing the world. right now we can confidently state 25% of all u.s. homes are prime. if you grow that 30% in '16, 20% in '17, by 2020 you get to 50%

u.s. homes being prime. we think that's a game changer. we used to talk about what walmart might do, what google might do, in some ways it may be game over. >> just explain that to us. the power of free shipping. why are the other retailers underestimating that by implication? >> i think the main point it's not just free shipping anymore. prime expanded dramatically in terms of what it means to be a prime member. it started off with free two-day shipping, it moved into videos, apps. i have a 3-year-old at home he gets free time at home from amaz amazon, which is curated childrens shows. you will see not only prime members expand but what it means to be a prime member dramatically increase in terms of benefits. >> help us with the friction that exists between arguably amazon and the shippers, with

this huge volume that increasingly is coming in to u.p.s. and fedex and so on. there's an article on the front page of the "journal" today that gives an indication that amazon is attempting to push itself away from u.p.s. i wonder if the truth is closer to the idea that u.p.s. doesn't want to be as associated with amazon given the scale of what they're being asked to do. and the fact, of course, that two yearsretailers were dumping truck loads of unbar coded packages at u.p.s.'s door which embarrassed them because they couldn't deliver it in time. >> i don't want to comment specifically on the relationship between u.p.s. and amazon, but in terms of amazon, they look at everything in terms of how it impacts the customer. so they have built out their infrastructure so they can make sure their customers get what they ordered. so you started with the massive fulfillment centers. over the last number of years,

moved to sorting centers, now moving out with amazon now and amazon prime in terms of delivering directly to customers. we think that's going to continue to expand and come closer to the end user which is where they've been going for 15 years. >> the grand ambitions and takeover of the world by prime. i'm looking at the stock, it's up 113% so far this year. is that on prime or is that on amazon web services? >> i think over the last year a lot of it has been amazon web services. that's one of the key drivers for most institutional investors. over the course of the next year, the retail business remains underappreciated in terms of what prime growth is going to be. we think the stock continues to move higher, and it will be mostly for 2015. we think 2016 will be more focused on the retail side. >> your call is for another $100 on the stock. which is 14%, 15%. given the explosive underlying growth that you're talking about, that might seem quite

conservative or is it simply that they don't monetize that yet, so therefore shareholders won't either? >> i think it's going to take time in terms of the valuation to more normalize in terms of what overall margins will be for retail. that remains unclear when we look out to 2020 and 2025. there's a lot of unknowns in terms of what margin structure looks like. a lot of unknowns in terms of the international business, how prime can generate more sales in europe. i think right now we have a $760 price target. that's reasonable given the growth in the u.s. for prime. >> have a great holiday. >> you, too. when we come back, walt mossberg looking at tech trends from 2015. (announcer) at scottrade, we share your passion for trading. that's why we've built powerful technology to alert you to your next opportunity. because at scottrade, our passion is to power yours.

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. welcome back. all ten sectors are positive today. a sea of green on the board. on the right-hand side, consumer discretionary stocks lagging the most. it's been the year's best performing sector up 8% to this point. among the laggards, trades of disney, cablevision, hasbro down about a percent or so dragging the sector down the most, bed bath & beyond, hitting a new 52-week low after cutting third quarter guidance. so at least one retailer on this side of things for consumer discretionary showing signs of weakness. also interesting to see that nike turnaround, now down 1.4%. a warning from the inspector general from the federal reserve saying the central bank needs more protection from the cyberattack. how at risk is the fed? eamon javers has more on that important question. >> so the form of this warning is coming from the inspector

general of the federal reserve. it is a summary of a report that the inspector general put out earlier this week. they say the material in the report is so sensitive in terms of cybersecurity vulnerabilities that they don't want to release the entire report. ultimately the inspector general concluding that the fed has taken several steps to tighten up cybersecurity, but in one particular system known as the star system, there are several vulnerabilities, and the inspector general recommending six specific steps that the fed needs to take to tighten up cybersecurity on this system what is the star system? the fed gave us a couple details about this computer system saying it's used to process data for statistical reports, and that data is used to construct public reports released by the fed which include the monthly consumer credit numbers, report of ag reserves. we asked the fed for their reaction. they said we have accepted the recommendations of the office of

inspector general and are addressing all of them. this is not the first time hacking concerns have come up. in 2013 there was an incident in which the hacking group anonymous got into the fed's data and posted a bunch of information that sort of embarrassed a lot of people associated with the fed. a lot of banking information. the question here is whether there's threat to the broader fed system. it seems that's not the case. though any time you talk about cybersecurity and the fed, it's cause for concern. >> absolutely. eamon javers, you can say that again. let's get more fed talk now and go to the santelli exchange. rick santelli, good morning. good morning. you got that richlght. we will talk fed with a former dallas fed vp in jerry oh drisco driscodri o'driscoll. >> thanks for having me on.

>> the more articles i read, the more we are both in positions regarding a rules-based fed. janet yellen's pushed back on it. maybe you canlisten ers or viewers why uncertainty would be greatly diminished with a rules-based fed. >> well, the problem with forward guidance is that the fed officials are merely saying what's on their mind today. it doesn't bind them to act on what's on their mind today. it doesn't prevent them from changing what they are thinking about. for instance, they put a lot of emphases on labor market conditions, but they don't specify what statistic is it that will make them move in the future. that creates uncertainty. >> well, when we come to the uncertainty issue, another hunk of uncertainty is on the timing of the first rate increase in

almost ten years. your thoughts on why that may have created even more uncertainty than before the meetin meeting. >> well, they never specified when they would act. they strongly indicated sometime in 2015 they would. it got to be december, and if they had not had the rate hike, they would have destroyed their credibility. it's not clear why they hiked rates other than to keep their credibility because i don't think they hit -- the labor market is as strong as janet yellen suggests. and they certainly missed on inflation on the down side. >> you know, why don't we come up with a new statistic. you have constant dollar type statistics. can't we do a constant participation rate, unemployment rate to isolate it? that's an idea. in the final minute we have, what i want to drill down on is i always thought the phillips curve, that was long gone. but in your final comments, that's still the cornerstone of

much fed policy and much modeling, is it not? >> it is. even though the idea of the phillips curve was undermined by serious research in the '70s, '80s, this continues to we'll go back to hobbs, simon hobbs. >> thank you very much. listen up, everybody. finally the gift for that person in your life that has everything. a man servant. yes, a man servant on demand, no less. the start-up that's already expanded three cities. swran wells hired a man servant for herself. a full account on how it went when we come back.

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>> administration is giving an update on the airbag recall. the head of the conference call still underway so far. an eighth u.s. fatality related to the airbag has now been identified by nitsa officials. they say it occurred during an accident that happened during july in the pittsburgh area, but it has only been in recent weeks that the agency was contacted by an attorney for the family of the victim. they are now into their preliminary investigations, have determined that it is "likely related to a rupture of the air bags contributing to that fatality." the other two headlines going forward, the pace of the recalls as far as people getting automobiles in for repair has accelerated dramatically. more than 950,000 plus nationwide as of early december compared to just 400,000 for the month before. also, the officials are saying that based on test data from th