good morning. it is 8:00 a.m. in amazon headquarters in seattle, washington. 11:00 a.m. here on wall street. "squawk alley" is live. good monday morning. joining me for the hour is david here at post nine, thanks for stinging around. >> happy to be here. >> also joining us, the managing

editor. kicking it off today with amazon. a record holiday season with more than 3 million prime members joining during just the third week of december. the company also saying nearly 70% of its customers shopped using a mobile device. we know amazon's numbers would be big. the fact it's now saying 1% of the u.s. population signed up for prime in one week. >> yeah, big, big number. shortened time frame. i think there's a lot of consumers are seeing the advantage of signing up for the service so they can get free delivery or quicker delivery especially in time for the holidays. they've also been doing a lot more marketing around prime. that this thing exists and this is the benefits. >> do we know if these are actual paying subscribers or people using the free trial? >> they'll use the free -- look, there's going to be a big churn on that for sure. big free trial moment. there's a good chance the bulk of them will stay on after the 30 days or the first trial month

so it's a big thing. >> amazon tells us as they always do, broadly speaking, tens of million also worldwide. >> at least 20 million, but they said that a year ago, the same exact figure. >> they can keep doing it up to 99 million i guess. >> until they get to that, yeah, at least 100 million. >> do we have what we feel is an accurate idea. i know many analysts come up with their own estimates. >> i think a bunch of estimates out there, the one i like a lot, about 50 million to 60 million. that's a sizable amount worldwide. i think, you know, the reason for that, the reason why they're pushing that is, you know, some analysts have found that prime members shop twice as much as nonprime members. the idea is to drive sales. gross valium. that's the most important thing for amazon. they just want everyone to buy everything, do everything on amazon. >> amazon's not just a portal. it also has its own devices. the kindle paper white was one of the top items sold with

same-day prime shipping. fire tablet. it also has the popularity of that. what can we glean from the language? >> if you're going to buy as a prime-service member, they were pushing these amazon devices. we can get that to you the same day. they want to sell their own stuff. you need that last-minute item, not bad. it's a little bit lumy. i don't know how much consumers wanted that item or if it was convenience. not a bad item but it may not necessarily have been the desired item for a lot of consumers. >> i think also interesting, of course, there's a lot in this press release they always put out that's completely useless except it's fun to read. the fact that 70% of their users are using a mobile device. the dominant transaction platform is a mobile device. >> one of the things to look at, there's a lot of people browsing on their mobile devices but not necessarily buying. that part of the transaction.

there's more friction on a mobile site because i'm not sure i should enter my information this way. the better that amazon and retailers get at finishing the transaction on mobile, the better their sales will be. right now it's a lot of browsing and then on the computer to finish. they haven't figured out the end to end. >> although it is changing considerably in terms of the percentages used. >> percentages -- >> alibaba also gives us the same information and those percentages are increasing. >> a great example in the sense that in asia and china particularly there are a lot of consumers completing transactions on mobiles. a lot of them don't have desk tops. they're mobile natives i guess you could call them. >> whether mobile and digital buying results in more returns because it's less of a tactile experience. amazon shares are up. interesting to follow. another breaking weekend for "star wars." with more on those numbers, let's send it out to julia

borsten in los angeles. >> leading the total box office to another record, the biggest christmas movie going weekend ever with $300 million in the u.s. also the second biggest u.s. box office open ever, only after last weekend when "star wars: the force awakens" debuted. the film has hit $1 billion in global box office and a record 12 days as of yesterday. it hasn't even opened yet in the second biggest movie going market which is china. "star wars" alternatives also performed well this past weekend. paramount comedy "daddy's home" starring will ferrell and mark wahlberg grossing $39 million at the u.s. box office. "joy" grossing $17 million, that's the one with jennifer lawrence. sony's "concussion" about a doctor taking on the nfl did not have such a strong debut, grossing only $11 million.

but paramount's expanded out of limited release with $16 million at the box office so far. it really is "star wars: the force awakens" that gets the most credit for driving the u.s. box office up 7% year to date over last year to a new dollar record of $11 billion for the first time ever. that's what's expected for the tot total 2015. we want know by exactly how much until we have the average ticket price for 2015 which we'll get some time next month. >> record weekend for "star wars." record weekend for a christmas holiday. >> people are going back to the theaters. not necessarily in droves. but they're willing to do it. disney, nice numbers for them, but it's going to be lumpy for them next year, right. it's always been the case with studio product, right.

but, you know, i think it's always a mixed bag when you have such great box office numbers. you know you're not going to repeat it. >> although it is the re-energizing of a franchise that's going to be with us for quite some time and get disney revenues with any number of sequels. might not get prequels but actual sequels to follow this one. >> potentially other vehicles for their tv properties. offshots of "star wars" franchise, whether it's abc disney or revamped abc family channel which i think they're calling free form now. whatever they can do to change it into revenue occurring, which is their tv products. >> -- "frozen" merchandise had, that anybody expected. there seems to be a "star wars" and ex-"star wars" component to this because "star wars" and "jurassic world" is lifting the overall annual box office

numbers. "new york times" points out for the first time in 35 years warner bros. does not have a movie in the top 15. there are some studios who are left out of this. >> i think it's like to get people into theaters, like the movies just have to be that much bigger now. people have to have that much more of a reason to go out. with netflix and hulu, it's just easier to stay at homes. you want people in the theaters, it has to be big. these are theater movies, these are blockbuster movies. >> an annual subscription to netflix is cheaper than one ticket at the movies. >> a lot of tv shows. 31 original series next year. that's amazing how much they're spending on content. which is really a staggering number. >> one thing to look out for in 2016, you have to look at hbo. it's a big part of the time warner inc. business. but i don't know, i think there's a good chance they want to spin that thing out or even off-load it in some way. that allows hbo to really compete against netflix in the way they need to. >> i don't think they want to.

>> i don't think they want to, but opportunities -- >> there might be some sha shareholders that prefer that. disney, by the way, is up. last week, the stock was down, despite the great success of "star wars." because of bigger concerns, more about the lack of growth at espn. >> finally today -- david, continue. >> no, i'm done. yeah. >> finally, a big piece in the sunday journal shed some light on elizabeth holm's push to perfect technology at theranos. but the piece claims data was deleted to make it look better and the company is continuing to be plagued with problems. it has backers including larry ellison and draper fisher jerveson ventures. the whole piece is a sort of he said/she said. what some big pharma companies perceive to have happened with

meetings with miss holmes and what she and the company actually said happened. there are still very big questions. >> i think as a start-up they have a higher hurdle, which is it's not just a technology whether people are going to live it or not, it's does it actually work, does it actually give you results. these could be life and death things as well. the stakes are much, much higher. the claims that they're making, you know, need to be met more succinctly. what i would look out for is where do the vcs stand on this. are they going to sort of distance themselves. are they going to write this off as, you know what, maybe this wasn't the best bet for us. >> the journal has done interesting reporting on it over time. it is certainly the accuracy is the key question here. they combated many of the allegations that were made and the reporting from former employees and the like. it's certainly worth the read for anybody interested. obviously not a public company

but most recent valuation was $9 billion on the last raise, or perhaps somewhere in that range. i'm sure they're going to keep trying as best they can. >> the data will out at some point. >> it's such a unique example of what's going on in the valley, though, because it is not an app that is trying to deliver you something. it's a company whose technology could potentially mean a life or death decision for someone. >> again, it's not just a preference from a consumer standpoint. either it works or doesn't work. it's not uber versus lift thing. it's does it give me results. unfortunately, there isn't as much, you know, third party looks at this as we'd like to know if it's going to work or not. >> the cleveland clinic will be interesting because they have committed to a certain extent to allowing them to really fully test, i believe. at some point we should hear from them. >> it's great to see you, ed lee, managing editor of re-corp.

the last trading week of the year historically has been down by about 1.5%. the nasdaq is faring the worst this morning. energy is the biggest drag today for the s&p. look at some of the movers intraday. consol down 9%. freeport down about 8.5%. they had some people moves. chairman and co-founder resigning from that company amid some pressure from activists. marathon oil down about 7%. as we continue to watch a slide in the price of oil. the shanghai composite sliding the month in a month after industrial profit data for november came in weaker than expected. six month in negative territory despite really strong growth in automobiles, really strong growth in electricity. also concerns about supply in the ipo market. you can see what happened in trade in shanghai, down 2.5%.

david. >> more boots on the ground for fedex and u.p.s. but fedex issuing an apology for missing shipment deadlines. we're going to get the latest impact on both of those stocks. fit bit could be the big winner this holiday season. and daily fantasy sport site it is, now illegal in illinois. the state representative will join us to state his case.

a last-minute surge in online deliveries left many fedex customers unhappy this weekend. morgan brennan is in new york to explain. >> basically it's called the ghost of christmas past. as we saw most dramatically in 2013 when nearly 2 million packages didn't make their deadlines. a bigger than expected last-minute spike in e-commerce demand really caused service snarls for the shipping companies. according to ship matrimatrix, started strong. as the week went on, service for overnight one-day shipping fell dramatically. 79.5% for u.p.s. on wednesday before starting to recover on christmas eve. those are really low numbers according to ship matrix. we're seeing fedex seems to have had the tougher time. it experienced delays on christmas eve or coming into christmas eve that caused the company to unexpectedly run operations on christmas day, something it has had to do in

the past but was not planning on doing this year. and also add additional operations on saturday as well. for its part, u.p.s. says all its planned packages were delivered by 8 p.m. on christmas eve. it did not have workers out on christmas day. analysts say early readings show the volumes from certain retailers and e-tailers were much larger than the forecasts that were shared with the shipping companies who use those forecasts to plan for peak season, peak shipping season. but there's something that's particularly going to be in focus where fedex is concerned. and speaking of peak, we are really just getting started in the second part of the peak shipping season. we're now coming into e-commerce, e-returns, all those gift cards being used for consumers. between now and next wednesday, it's going to see 5 million return deliveries and that would represent a 15% increase other last year. david.

>> all right, thanks very much, morgan brennan. don't miss our interview with the u.p.s. ceo david abney. that's tomorrow. on "squawk on the street." the weather that resulted in some of those shipping delays resulted in deadly tornadoes and storms hitting texas, missouri and new mexico. it's now being followed by a blizzard. mike sidle from the weather channel has latest. >> the snow has ended and the wind is backing off eastern new mexico and here in western texas. but the memory lingerings. interstates are still shut down. i-40 between now and the oklahoma line and also from here, westbound to new mexico, they're expected to reopen later on this morning. also, i-27 between here and lubbock has been closed because of snow and drifting. lubbock, texas, picked up 11 inches of snow on sunday. that's their highest calendar day total in the month of december. it's now their snowiest day on record. they typically only average a little over 8 inches of snow in an entire winter.

as far as new mexico goes, they're digging out up to 2 feet of snow and 8 foot snowdrifts. this entire system is moving east. more tornado watches expected. one is up. we've had tornado warnings through the morning hours. keep in mind if you're in mississippi, alabama, through georgia there could be severe weather in your backyard throughout this afternoon and this evening. back in the midwest, we've had plenty of flooding. we're talking about dangerous flash flooding ongoing all the way from dallas into parts of the midwest. so far, we've had 11 deaths due to flooding. back on saturday, we had 11 tornado deaths in the dallas-ft. worth area. the death toll right now standing at 24. heads up if you're flying today. the biggest impact will be certainly at a major hub, o'hare in chicago, so far, they've already canceled nearly 300 flights and many flights being delayed as a storm comes in primarily with snow and sleet.

i'm weather channel meteorologist mike seidel in amarillo, texas. >> when we come back, the countdown to the european close. and then we dig into the holiday sales numbers. i'm here at the td ameritrade trader offices.

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from times square to the rest of the world. let's brita ae's bring in simone count down the close to continental europe. >> the margins are very thin in europe. the uk is closed for boxing it a. just to clear up any problems with that, boxing day is traditionally the day in which wealthy people give gifts to

their staff that are departing to their families for christmas and it's called a christmas box, that's where it comes from. slightly lower as it comes across the indices that are open with the exception of zurich. that's partly because oil is down. you see the oil majors. kind of an odd mixture of oil services. small engineering systems in norway. so royal dutch with your biggest plays there. we've also had some comeback on the largest steel company in europe. last week, it rose strongly. today, some profit taking on that. albeit with a 10% gain overall. the degree to which the chinese will cut back or be forced to cut back some of the steel dumping through the course of the year. we'll see where that plays. sorry, on tuesday, we'll see where that plays. in the meantime, let's check where we are for the month so far. the important thing is there's no santa claus rally on either

side of the atlantic. but it's particularly brutal in europe, which is now down 5% since the beginning of december. and that's clearly the disappointment you've got from the ecb. still, we trade on. you might have seen barons over the weekend suggesting that on an average, the big investment banks are suggesting a 12% gain on european equities next year. it's as high as 20% if you listen to what citi is saying according to barons. the fc on their survey on the front page is suggesting of the economists they surveyed in europe for the eurozone, the majority don't think you'll get more qe from the ecb during the course of the year. that presumably is important for the outlook on stocks. as far as the euro is concerned, still, it would appear that many people are calling that down to parity. although, again, the story of december on the disappointment from the ecb has been the fact you got that initial bounce, which we've hung on to. the euro at 4% against the dollar. just shy of $1.10 as you can

see. but most people think still apparently we can go back towards parity. but so many of those bets are often so wrong of course within foreign exchange. >> certainly that was the call expected for the end of this year. simon, thanks. the app store is signalling that fit bit had quite a good christmas. shares are rallying this morning more than 3%. we'll get to that story up next.

good morning, everyone. here is your cnbc news update. geneva lowering its terror threat level after being on high alert for over two weeks. after a new review following the christmas holidays. police had been searching for suspects possibly linked to the paris terror attacks. former harlem globetrotter star meadowlark lemon has died. known for both his basketball skills and also his crowd pleasing tricks. lemon spent 24 seasons with the globetrotters between the years 1950 and 1970. he was 83 years old. coast guard releasing video of a dramatic james bond-style boat chase off the coast of florida. 2:00 a.m. on christmas morning, three thieves stole a 36-foot power boat from ft. myers beach, florida, and beginning a pursuit that lasted some 20-plus hours. the coast guard finally stopped the trio just outside of cancun.

and if you've got a hover board for christmas, we hope yyou also got knee pads. videos popping up on social media show many who received the hot holiday gift are having some trouble staying on. ooh. okay. that's the news update this hour. let's get back to squawk alley. david, to you. >> yep, stayed away from those things. probably a good thing. >> i fear injury. you know, i fear injury. thank you, sue. shares of fit bit are moving higher as the fitness band seems to be enjoying a strong holiday season. josh lipton has that story for us. josh. >> well, david, check out the top apps in the app store this morning. it's clear that fit bit has a lot of fans. the most sought after free apps right now include youtube and instagram. but fit bit taking the silver, coming in at number two. that would suggest that a lot of people receive new fit bits for

the holidays and downloaded the app to activate those devices. charlie anderson of doherty and company who covers fit bit says the device actually was number one on christmas day and that is a big jump. it was number 18 last year, he says. and it's not just the app store. saying fit bit is number 10 on the google play store as well. analysts had been reporting strong sales of fit bit. the team in a recent note saying their checks suggesting that sales of fit bit have been, quote, exploding since that soft black friday. fit bit still up nearly 50% from its ipo price of 20 bucks per share. however, down about 40% from that all-time high of $52. analysts saying recent data indicates that fit bit enjoyed a strong q4. new data unveiled next week will

give investors a better idea of whether momentum can continue. for now, he's saying he rates fit bit a hold. >> all right, josh lipton, thanks. as we count down to 2016, let's look at the best and worst tech stocks of the year. our next guest determined some of most trafficked apps and networks. he is an analyst with mizzou host securities. you reiterated a survey you did in june. the habits of mobile users. you found some pretty similar findings. who's going to benefit? >> yes, we wanted to test three key things. one was communications and search. second was social. and third was mobile commerce. in terms of search, 80% of users still use google. very few people, about 8% to 9%, are going directly in app. that's similar to what we found in june. on the social side, we found that facebook, instagram, are

number one, number two. snap chat jumped to number three. twitter fell to number seven in terms of top social apps. then in terms of mobile commerce, amazon in june was 45%. where most people went to amazon to start their mobile commerce experience. when we did the survey at the end of november, 61% now are starting their mobile shopping experience on amazon. so very strong for amazon. so, again, we think google, facebook and amazon are kind of the top three as we move into 2016. >> well, that sounds very familiar, neil, because those are some of the top winners in 2015. what tells you that these players will just continue to consolidate their market share and that they'll continue to build on the gains they already saw? in some cases, triple digit percentage gains, in the case of netflix and amazon. >> yes, very strong year for those stocks. we think a few things we looked

at. one was revenue growth reaccelerated for amazon and for google. as we looked at the beginning of the year, we looked to september, we've seen really strong revenue growth, reaccelerate in both amazon and google. facebook has held on. so very strong growth for facebook. netflix, we're a little bit more cautious on. you know, we like the long-term potential. we think there's probably a better entry point. but we think as we move into '16, they will get bigger. we think the big guys will continue to get bigger in 2016. if there's a bubble to be popped or deflated, you know, that could maybe mean, you know, a resurgence in some mid cap stocks.

for now, we're making our bets on the big three, which is facebook, amazon and alphabet. >> you've been able to capitalize on those names in the past several years, neil, because in the past, they were the underdogs in their respective sectors. is there an underdog where you think investors should be looking that's not maybe as conventionally thought of? >> yeah, you know, i think linked in is one stock that's a bit mixed. i think some investors like it, some investors are a little concerned. 2016 could be a really interesting setup for linked in. you're coming off easier comps. you had a lot of noise with display advertising. i think that goes away. the stocking increase and the new mobile app experience that's very facebooky which i think could be a big driver for people to use a linked in app and i think that could drive strong growth as we move into '16 as well. >> the big wild card is ad blocking and how prevalent that

becomes on some of the mobile devices. and in some of the apps that have been utilizing it or at least advertising it to customers as a way to sort of clean up the experience. do you think that becomes more common place in 2016? >> yeah, i do think, you know, ad blocking could be a big concern, you know, from our experience, people we've talked to, i think a lot of the millennials are really downloading a lot of the ad blocking tools. that could be negative for google. i think less so negative for facebook and twitter and some of the guys that have, you know, really endemic native-type advertising. but, you know, i think this could be an issue. i don't feel like the street has focused too much on it. but i think this could be a big theme for 2016. we'll see how some of these companies really adapt to the ad blocking apps that are out there. >> neil dohshi, from mizuho.

we're going to talk to a key player in the latest developm t developments with fan duel. first, let's get to rick santelli. >> we had the dow's fed manufacturing index and it was minus 20.1. we'll take a macro look at some of the manufacturing numbers we received in late 2015. see if it gives us some insight into next year after the break.

coming up on the halftime report, with just three trading days left in the year, our experts will give you their 2016 outlook. do they see a turnaround ahead? plus, under extreme pressure this year. our guest tells us who he thinks will be the last bric standing. and beaten down names that our desk thinks is time to buy. back to you. >> thank you very much, we'll see you in just a few minutes. this week is more important than ever for retailers. here to explain is courtney reagan back at headquarters with that story. >> the holiday season isn't over for retailers. this week is quite important. it's been a solid season. the numbers so far total u.s. retail sales up 7.9% thanks to strong online sales, double digit sales growth for furniture

and strength for women's apparel. mastercard says online only sales are up 20% through christmas eve. this week is the last burst of shopper traffic in spending though before those quieter winter months set in. the day after christmas likely the third busiest day for store traffic according to shopper track. an nrf survey reveals 47% of holiday shoppers do plan to shop in stores this week. 43% plan to shop online. returns of course a big part of this week. online may be the big winner before c krs but brick and mortar stores will likely win the returns game. about a third of all online purchases are returned in general. it's even higher when it's clothing at 40%. whereas less than 5% of items bought in store are returned. both of those metrics of course do skew a bit higher during the holiday season. in store also has that conversion advantage or getting the customer to turn their trip into a store into a sale. along with impulse buying. shoppers much more likely to spend more on other items while returning an unwanted gift to a

physical store than online. lower conversion and impulse buying both weaknesses for online retail. plus, it's free to return most goods to stores. that's not always the case when it comes to online shopping. discounts are a big incentive for shoppers this week of course. many americans are making the shopping the first days after christmas as much of a tradition as shopping the days around thanksgiving to take advantage of the deals. 20% of americans plan to cash in gift cards right away according to a national retail federation survey. of course if you do that when the discounts are deep, you might get more for that gift card. now let's get to the cme group. we're joined by rick santelli with the santelli exchange. >> as i said on the tease, it's not an end of the world, it's not your top tier manufacturing index. but, at this point, every trader i bump into paid attention to it, because it is just another

lob of a softball number in manufacturing. even nonmanufacturing service sector numbers were dipping down a bit. much lower in the 55 year than we expected. let's just take a quick glance as to some of the numbers we've seen. if you look at ism, the most recent read was 48.6. that was the weakest level since the summer of 2009. if you look at the chicago pmi, 48.7. well, the low for the year was 45.8 in february. but 6 of 11 reads this year are below 50. if you look at empire, at minus 4.59, well, doesn't sound good. but it's not even the weakest. going back in time, here's the last four numbers we received. and if you look at some of these levels, they're weakest virtually that we've seen since 2012 in terms of some of the depths. as i said on dallas, that minus 20.1, it's the second weakest number also since the summer of

2009. so you're starting to get a glimpse that we're starting to do the comps for basically right after the crisis. we know that manufacturing took a while to bump up, think autos, and i know some of these numbers are impacted, especially maybe dallas, but what's going on in the energy sector. but dallas' economy, despite the fact it's such an easy layup to put all the energy issues on the back of dallas to read into the weak numbers, that that's the epicenter. even though it's a contributing factor, dallas' economy is much more diversified than many are familiar with. there's been a lot of changes there over last 5 to 10 years. so in general 2016 is going to have an issue. manufacturing may be 12% of gdp output in terms of growth, but we know that it had a good multiplier. so i guess in the end what i'm saying is we can see the service sector maybe carry more of the

weight, even though those numbers have been a bit disappointing. when you have an economy with a two handle on gdp, when you have a global economy where the topic today is china, these are macro stories. and even though we don't talk about them every single minute, they're not going to go away overnight. these issues are going to linger. these are the canaries in the coal mine. but exactly how much of a head wind tit is, well, lately, you have to get in line. think some of the structural hurdles that may or may not change with the next political cycle. >> rick santelli, thank you. illinois says daily fantasy sports sites are illegal. democratic state representative scott drury will join us next. it's hard to find time to keep up on my shows.

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the illinois attorney general last week decided daily fantasy sports are illegal. now draft kings and fan duel have filed suits against the attorney general. illinois state representative scott drury was one of two state representatives seeking the opinion from madigan. mr. drury joins us from los angeles to discuss. i guess my first question, representative, is now that it's illegal, what happens in the state? >> well, first of all, thanks for having me on.

what's going to happen is fan duel and draft kings have brought a lawsuit seeking to enjoin or stop the attorney general from taking any further action related to her letter and that's going to play out in the courts. at the same time, the general assembly in illinois is going to be determining whether or not we should be regulating fan duel and draft kings and daily fantasy sites or whether or not we should be prohibiting it all together. >> and why did you ask for the opinion? >> a couple reasons. the gaming board decided they did not want to have the opinion, presumably because draft kings and fan duel knew there was going to be a bad opinion. the word on the street is they had gone to the gaming board and said don't seek the opinion because we don't want bad news. i don't think that's the right way to govern. i think we should know whether or not this is illegal to begin with before we start trying to pass legislation dealing with

it. >> what is the reasoning the attorney general gave for saying that these are illegal? >> well, daily fantasy, one of their big reasons for saying they are legal, they're saying they're a game of skill. in illinois, the gambling statute says it is illegal if it's a game of chance or skill in return for money. it's clear under illinois law it was illegal. the daily fantasy sites stated they thought they fell within an exception to the gambling statues. but the attorney general found the exception don't apply. >> is there anything about them that makes them question the legality, other than what we've known is traditional fantasy sports betting for over a decade? >> i think what daily fantasy did is it drew a lot of attention to itself. first there was the scandal with the insider trading or the insider betting which drew the attention of the fbi and the u.s. department of justice.

there's also commercials on every 10 seconds or 20 seconds encouraging people to play daily fantasy. the danger of daily fantasy and the way that it's marketing itself is that it's marketing itself to children. you see kids. i have two children that are all addicted to this already and getting involved in sports gambling and it's certainly something that needs to take a look at. and so i think that they've kind of become a victim of their own choice by promoting themselves in such a way, drawing so much attention to it and the states and the federal government are starting to look into whether or not this is something that should be allowed. >> you clearly believe it shouldn't be allowed. i'm just wondering here what is the road map then or your expectations for your challenge to it not being allowed in illinois. >> well, whether or not it should be allowed is still a debate we need to have in the general assembly in illinois. i think that we need to figure out what daily fantasies game

plan was. did they really believe that their conduct was legal. or was this similar to what the car companies did in the 70s, that they knew there was a good chance their conduct wasn't legal but they would try to make as much money as they could as a business decision. if that's what they did, then we need to decide whether or not we're going to give them any sort of benefit or reward for the conduct three engaged in. i think that's going to require hearings and testimony and find out how we got to this point. and if it turns out they were engaged in nefarious conduct, i think that's going to go a long way towards the direction we head in. >> is there a situation, representative, where fan duel and draft kings could operate their current business model or similar to the way they're operating now with illinois getting a larger percentage of tax revenue or certain structures about their businesses changing, is that what this is about? >> no, i was not looking at this -- when i asked for the

opinion, i wasn't coming at this from a standpoint of could illinois get more tax dollars from this. certainly illinois, as with any state, is looking for revenues these days. but to me the question is, is this conduct, is this business operating legally in the state illinois. i'm the vice chair of the criminal judiciary committee. the attorney general says fan duel and draft king's business model is in violation of illinois criminal law. and so we need to address that. and another reason we need to address it is because there's legislation out there right now that is trying to regulate this. but i didn't believe that we could accurately try to regulate something if we didn't know the starting point. if the general assembly and my colleagues decide this is something we want to regulate and we want to find a way to make revenue from it, that will be a collective decision of the body and the colleagues i work with. >> representative drury, we appreciate you updating us. >> thank you so much for your

time. >> scott durry, i ill state representative. scott durry, illinois state representative. meanwhile, we'll get more on that story. before we head to break, take a look at the s&p today, down about .5% or 11 points.

shares of valiant having a particularly bad day. although there have been many of them in the latter half of 2015. the stock down, as you see, a little less than 10%. this, on the news this morning that chairman and ceo michael pierson has taken an indefinite medical leave. the reason, severe pneumonia, at least according to the company. this, from his family, we believe, telling why he has been hospitalized. a group of executives at the company will take over on an interim basis to run the company while mr. pearson is unable to do so. unclear at what point they expect him to return though.

they do say interim certainly. valeant, no stranger to controversy. the activist investor. value act also a large shareholder as well. that's not been where the controversy has been. it's been related more to its strategy which has included cutting r & d at many of the companies it requires, using of course a very low tax rate to enable it to have particularly strong numbers when it does acquire companies that have higher tax rates. and also raising the prices of many of the drugs that it brings on board. at least that is some of the criticism. also extending to a unique relationship it did have for some time with a specialty pharmacy which it sold some of its products. all that said, it was only a couple of weeks ago that mr. pearson led a very long analyst meeting in which the company introduced the new model, if you will, in terms of selling drugs. direct distribution to patients through walgreens. a specific deal with walgreens at the time. all the products in walgreens

were beyond consignment. walgreens would be paid a distribution for filling fee. this in an effort to avoid the pharmacy benefit managers that are the so-called middle men for the company. the company also going on to say it does expect to post revenues of $12 billion to $12.7 billion in 2016, but certainly a stock that many have watched fall dramatically. recent rise from the lows in the 70s. but none theless, down, approaching that $100 level again today. >> a somewhat unique response from the board as well, to create an office of the ceo on an interim basis, comprising of the general counsel and a couple of vice presidents. and the board creating a committee to oversee it. certainly a lot of executives are trying to rally around the strategy that's been laid out in his absence. >> what i'm hearing in part in terms of that decision is that there's a hope of course that

getting an interim ceo alone would have been too much to do. their hope is they'll be able to dissolve this structure quickly, assuming his recovery is quick. from what i hear, the family at this point not offering that much information even to the board. they're saying they want their privacy. >> david, thanks for an update on what has certainly been a story on what is moving that stock. that does it for us on "squawk alley." let's send it over to mandy and the half. thank you very much, kayla. welcome to "the halftime report." we have steve weis, and our game plan looks like this. holiday sales. we're breaking down the winners and losers from a heavily discounted holiday season. and health care ku