good morning it is 8:00 a.m. in california, 11:00 a.m. here on wall street and squa"squawk alley" is live.

welcome to "squawk alley." carl and jon both have this morning off. joining us is rekicrico's he ha itting manager and author of the fore nice to have everybody here. and let's do our top story this morning. it is shares of apple and a number of its suppliers are under pressure on reports of slowing demand josh lipton, what is the problem if there really is one >> reporter: apple investors have been counting on a waiver of iphone fans all around the world upgrading to the new iphone x, but this morning new questions about the real popularity of that device. so there are reports citing taiwan's economic daily that apple in the first quarter is going to cut its sales forecast

for the 10 to just 30 million units. ch and that is down from the initial plan of 50 million units. apple doesn't remember quarterly sales targets for the x which officially went on sale back in early november apple suppliers down this morning on the report. finisar just awarded $390 million to analysts have baeen not so bullish saying the stock gains for the x are in what this calls the late innings apple is counting on the x to give a lift to iphone shipments in 2018 as it now marches to that $1 trillion mark. apple declined comment on these reports, but others remain bulled up on the stock i just talked with gene munster and he says his work continues to suggest about 45 million in

the holiday quarter. the adoption of the x is greater than what the street is expecting, not less. they next report early next year >> what is your sense here in terms of -- and china of course figures prominently in this. >> and i think the plus size had people switching over from android. there is huge interest in china. i think what we're seeing here though, the estimate, the 50 him i don't know estimate was really high in my piven beyond for first quarter for two months of availability i think that was unusually high.

so i think the context is it was a really high expectation, they won't meet it. seems like it was slower demand versus supply issue based on the reports. that is a little interesting but again, i think it is either -- just a shortened time frame in terms of when it is available or they are waiting for the march quarter to buy into this phone. so you might see the number pick up >> why would they be waiting until the march quarter? >> i think with everything that is going on in this country and taxes and who knows what is happening -- >> you mean americans? >> i think china is different. there will always be a myriad of factors as far as when consumers are buying i think november there was a period earlier on, singles day in china which is a big day to buy gifts. but without that picking up, it will just be in the next quarter. >> were they overly optimistic with 50 million?

>> yeah, might be at peak. but apple will do double the profits this quarter than amazon has done in its entire history so it is a nice peak what i think is the bigger story, we may have seen the passing of the baton of the most influential piece of tech hardware in the history of man kind to the most influential device of the next ten years and that is the echo which supposedly sold tens of millions of devices and was the most down loaded app across ios and android this holiday season >> but barons told me $1 trillion >> $1 trillion, right? >> personal wise, it is not all that far away. i actually think it will hit it. it is less going to be sort of the iphone demand and more sort of the predict differened part r service business it is growing at about 20%, 25%. much more reliable and it will be the thing that i

think makes it more of a valuable company in my opinion because it will be something that you can't live without as opposed to something that you upgrade every year or two years. >> and certainly we're hearing the services revenue are growing faster than the hardware side of the business right now and given it is a much smaller piece of the business. but going back to the idea of samsung sort of replacing apple with the krouchb in tecrown wit, samsung doesn't have the margins apple has. even if we do see weaker sales, wouldn't it just be that the iphone x is being cannibalized of the 8 or 8 plus and if so, how does that affect margins >> there is a lot to unpack there. first off, any timing that you can take a transactional revenue base and move to a recurring revenue software business model, the market values transactional

models like waiting for an upgrade at a multiple of profits. the market values the service revenues at a multiple of revenues so you can see apple's revenue decline, but if the mix of recurring services wretch news increases dwra mats itticly as a percentage of its total revenues, it is market cap and value still go could go up >> i tooktsly agree and i think what you will see is apple trading at 15 times with services and other parts, 11, 12 times maybe? so go buy in to this, you will hit the trillion >> yeah, recurring revenue stream of course is more highly valued as it should be they have to sell a new iphone every time they bring one out. >> and i think it has been shifting over to tech. i think tech has always been kind just wading in the waters they should gist own the media business as much as they possibly can apple is making small starts

>> we have to move on to bitcoin. go ahead, scott. >> second largest kept budget, amazon, $2 billion behind netflix and also shifted to a recurring revenue model. 62% of american households paying -- >> you have amazon on the brain this morning >> all the time. >> maybe he thinks amazon gets to the trillion before apple >> you never though. let's move on to bitcoin we continue to track the price it did rebound after a wild week last week. morgan stanley suggesting that the true value of the currency could be zero. this as israeli regulators unveiled plans to ban trading on the national stock change. scott, did you get a lot of

questions from relatives because i did. >> yeah, everybody wants to know what do i do, do i buy, do i not buy. i stand by my original thesis. bitcoin is a chaos proxy between -- as we went into christmas, lack of chaos, peace on earth, we saw bitcoin tumble. we're back monday morning, you have representatives of the controlling party in your last hour saying that the department of justice and fbi come off the rails and needed to be purged and what do you know bitcoin is soaring again it should be called trump coin and as our nation becomes more and more chaotic and the fabric of our society comes apart, bitcoin continues to rocket up >> morgan stanley says if nobody accepts the technology for payment, then the value is zero 37. >> i think that is part of it, but at the same time, it won't be used as currency. it's way too volatile. and i agree with scott, it is a

hedge against chaos, sort of geopolitical risk. it is a hedge against the u.s. dollar if you think about it but what we're seeing in the up and down is what it is worth against the dollar not necessarily by itself. >> i think trump coin maybe i understand, but 2017 was a year with no volatility granted we've talked about north korean geo on political concerns, but -- >> there was volatility on the world stage of what is happening. what is going on in the world. what will happen with north korea and the middle east. so i think that -- and also i think capital controls in china did play a factor. you can't trade your chinese currency for u.s. dollars. bitcoin is easier to trade >> and there are barely any online merchants who accept bitcoin. it's actually gone down from 5 to 3 but everybody wants to talk about the power of decentralized applications are you a buyer or a believer i

should say in that trend as a part of bitcoin overall? >> that is the narrative boit quoin is speculative, that the block chain is the innovation and that icos are a fraud. what you will probably see and you have seen it over the last month, an incredible acceleration in ethereum because there is underlying intrinsic value there. but what you have with bitcoin is the perfect speculative i don't even want to call it an asset or on vehicle because there is no underlying metrics that show that it is under or overvalued so it can go to $40,000 and people can come on on your show and say that it is you been under or overvalued and both sound very intelligent >> or not fending depending on point of view. >> block chain technology, people keep bringing it up, a ledger based is system where you are sort of proving that this coin or this unit belongs to this person is a nice idea

at the same time, i think the fumt allege issndamental sure, incentive to continue to maintain the ledger. they are not mining bitcoin. what are you giving them in exchange that hasn't really been solved beyond what we're seeing here with bitcoin so that is a big question mark for me going forward >> guys, thank you both for joining us maybe we'll see them again soon. when we cokcome back, bulls were out in full force retail stocks leading the s&p, dow, nasdaq we'll speak with mark cohen and himself former office ceo. and maybe the hype afternoon the iphone x may not translate and later, how one company is e k wnn its users cracdo o thporch pirates. you traded options.ht i'm not really a wall street guy.

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retail is looking pretty strong after what was mostly a sour year for retailers. new data showing holiday sales up about 5%. so where are the bright spots, where are americans spending money? mark cohen is here with us and

also president and ceo of the committee for economic development and former ceo of office depot welcome to you both. mark, the numbers are good a lot of the retail names have done well. so we learned it is a good holiday season what now >> it's a tale of two cities best of times for some who did well and not going to be a very happy ending for those who were doing poorly even if they had a strong finish. >> steve, do you agree >> i think if you look at the top three winners in retail, amazon, amazon and amazon. it is driving all the growth your 5% number is mostly online retail close to 20% by the time the season is finished and ironically, a lot of that is happening through mobile a third of the purchases now where through mobile devices and

half the website visits are through mobile devices but remember, now mobile, internet, e-commerce, only 10% so you still have 90% of purchases happening the old fashioned way in bricks and mort mortar >> we've talked about the decline of brick are and mortar retail as a result of the trends that we discussed so often is that continuing should we just look at this as a one off, the strong consumer contributing to what will be a good holiday season for everybody rarmgs of whether it is online or off >> brick and mortar is getting a tremendous share, but not all brick and mortar is doing poorly example, costco. most of costco's business is brick and mortar and their business is just fine. they will have had another outstanding year, another outstanding holiday. i think the mall is the story of brick and mortar, the aaas, the

230 best malls will continue to be sought out by customers but the other 1100 are increasingly in trouble. many of them going to close as their anchor tenants fades away and some of their specialty store tenants do as well so this shift which is going to continue for the foreseeable future clearly has winners and losers and most of the losers of the note are the legacy brick and mortar players >> walmart has been considered a winner this year having had perhaps a significant change in strategy is it your sense that they are moving in the right direct as themarket seems to think in terms of really becoming a key competitor in both brick and mortar, but more importantly online particularly to amazon? >> i think they are doing the best they have coadeveloped a great

business but remember, if it was just that and brick and mortar side was declining, they wouldn't be doing as well. so brick and mortar side is also growing. so even with that tremendous growth rate on -commerce, it i only going to be about 3% of their volume so again, it comes back to bricks and mortar. and this is the last week of the season it will be a huge week and you still have all the basics facing us with inventory clearing and so fort these are be some of the best values of the entire season. i think that you will see a huge finish to the year and that will be on both the e-commerce side and the bricks and mortar side >> and walmart potential lly a winner and you mentioned costco. but there are losers here. sears, some other names that have had bankruptcy talk afternoaround them, could we see that happen in 2018? >> i think the bankruptcy trend

will expand. the store closures are just getting started i think. there were 7,000 or so last year or in 2017 and the number could be considerably higher in the next year. the department store genre is toast. >> even macy's >> macy's doesn't have a strategy >> our last guest said they were the only winner. >> she's a big fan of their $16 billion real estate portfolio. in the greenroom we tuesdayled about who is actually on the buying side of that conversation >> which is a good point to make it is not realizable until you find a buyer >> exactly at the end of the day, macy's has no strategy and the big question is whether their new ceo will be able to adopt one that is viable for the future. and i'm not sure that will happen >> will we spend 2018 continuing

to talk about amazon's dominance? >> it would seem because right now they have 44% share of all e-commerce, projected to xwloe ovprojec ed to grow over 50%. so they are growing at the fastest rates of everyone. if you look at i haevery other sector, everybody is up 1k3e79 sporting goods but it comes back to in order to win, in order to survive as mark is saying in the bricks and mortar space, you have to have an e-commerce strategy, but you have to do the right thing inside of thebrick and mortar box as well. and this is what you see winners continue to do both and have a bi-mobile strategy. >> are you going to buy macy's >> macy's, that is a tough one because they are in the middle everybody who is sitting in the middle is getting squeezed from the high end, from the low end and this is where you see walmart doing great. >> thank you both.

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apple is lower on reports that the demand could be below expectations managing partner with gdb capital and also co-founder of consumer intelligence research partners guys, thanks to you both should we be concerned that perhaps the demand is not there for the x that had been thought originally >> i think based on the reports that we have seen, there definitely is a lot of concern about how x would do

some of the forecasts out of taiwan where the suppliers were based is that the forecast could be as slow as 30 million units this quarter versus the original 50 million units but looking at china, early indication of this second largest market for iphone is doing surprisingly well in the first weeks of sales so could be some side in prices, but overall the sentiment is down good mike, do you agree? >> well, we don't track china as much as we track u.s. consumer behavior but based on our initial look which was 30 days after the launch of the x, it was not as breath taking as folks may have expected our data suggested about 30% of the phones that were sold in that 30 day period were iphone x. and there is not a whole lot of

basis for comparison it was a very unusual launch for apple considering that they announced two other models at the same time and now they have eight models available, greatest number that they have ever had available to customers so the comparisons are a little tricky but it clearly did not quite meet the hype and expectations at least based on percent of share or market share of the total phone. so we were i suppose a little disappointed at that as well >> and we discussed this in one of our previous blocks and this idea that maybe 50 million iphone x was a little high to begin with certainly it just launched back in november. we have reports that there were issue on the supply side as the phone was launching. could we see potentially bigger growth in the next quarter or

coming into 2018 >> it is possible. i think iphone did a smart thing of skipping iphone 9 for now and calling it iphone x implying that it is a special item for the 10th anniversary of iphone launch and the face i.d. feature is getting positive responses the running joke is that the user is sharing on we chat and seeing the face i.d. is not working perfectly. i had a photo of my favorite star in front of my x and it unlocked so people are entertained by this feature, but overall speaking that if iphone doesn't have more breakthrough features and designs, it will be harder in the market.

in china we use all kinds of apps, that is the defatal operating system for the smartphone so harder and hander for on consumers now. >> mike, what do you see in terms of how market share even if the u.s. is for samsung they are running all these ads trying to sort of say look, we're more innovative, we have the features that you want and we've had them before. and to the point hans was making, increasingingly the services you use, the itunes library doesn't matter anymore you can use spotify on an android or iphone. so what do you see in terms of those trends >> samsung continues to be the strongest among the an sgroid manufactu android manufacturers. and despite what other folks say, loyalty to a given operating system has solidified and switching at least in the u.s. between ios and android is increasingly rare. loyalty remains according to our

figures somewhere in the 90% range. so apple and sachl sumsung and v to attraction people to learning a new operating system and that may affect some of what happened with the iphone x at least in the u.s. in an increasingly solid environment where apple has this installed base, we estimate it at about a little more than 140 million units. apple will have to start to try to monetize and exploit that >> so they are not getting the switchers. >> exactly there is some, but not nearly the rate it used to be and that may be affecting some of what we're seeing with the x.

ourp vi our view on the x and the into construction again was a little tricky announcing three phones but pointing out that the x, a $1,000 phone, would be available 30 or 45 days later, that was problematic. so our view is that consumers sort of waited, they wanted to see what a $1,000 phone looked like be and then decided to by the $700 phone which is why the 8 and 8 plus continue to grab meaningful share >> all right degrees, we have to leave it there. apple down about 2.5% this morning. thanks to you both let's get back to hq and contessa brewer. >> here is what is happening u.s. regulator reportedly wants to scale back offshore drilling safety measures put in place after the 2010 deepwater horizon oil spill. the "wall street journal" reports the change would reduce the role of government as continue mton martin is more than 5,000 vehicles due to

problems with powertrains and battery cables and uber is selling its subprime auto leasing business to start up car marketplace fair.com no word here on financial terms. and a merge proposal going viral, the couple had rockefeller ice rink to themselves, but just as he proposed, she fell flat on her butt they just laughed it off because really, this will become even more memorable than your standard center of the rink proposal plus nobody would have cared if she didn't fall. that is the update for this hour >> brutal and true thanks, contessa straight ahead, forget the seven seas today's pirates are more interested in that package left on your doorstep how one company is helping

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santa delighting amazon, the company announcing its biggest ever holiday season with the echo becoming the top selling product across all categories. though of course in true amazon fashion, a little light on some of the details and specifics in terms of sales numbers

joining us now is ceo of boom rang commerce and also lead tech analyst at rbc thanks for joining us. i saw a stat here from ihs market that said online shopping typically accounts for roughly 10% of u.s. spending but that expects it will account for nearly one-fifth of holiday he sales and much of that whether go to amazon do you agree >> i agree i think this holiday season we saw a tremendous amount of price wars happening and the selection that amazon had, both were pretty significantly up in the game and a lot of the share should have goon to amazon. >> and i want to dig into that a little bit more, but first mark, the echo dot and fire tv stick, top selling products according to this new release.

your oechwn research has shown t there is a lot of potential for a lekts a. what do you think the financial impact could be? >> well, one just as a reminder, they put that same headline in the press release last year. they have always put a lot of these clues and little bhits of riddles in their press releases. they are fun to read, but occasionally you get good data points so what they are telling you is that alexa is selling like pan kak cakes. we had estimated around 40 million and we could be low by 25%. it could be closer to 50 million. price points are coming down and people are using them for incremental purchases. in other words, they also put a data point in that said millions of prime members are using alexa to order more products this is customer retention, a customer sachingtisfaction tool seems to be doing well and our headline pitch is we

think the entire ecosystem can generate $10 billion plus for revenue by 20. >> do you think amazon gets to a trillion dollar market cap next year >> no. i think that is extremely unlikely there is a scenario under which amazon gets to a trillion market cap, but i think that is three to five years from now and it would require things like sustain 20% retail growth across all of amazon for five years, it would require almost on 30% cloud or aws growth for five years. and you would have to have margins rides materi s rise prey from here. in-a i think that is three to five years out, not next year >> and boomerang helps companies get their prices right in terms of price discounting, what have you seen i know some analysts said there has been price discounting particularly for the more traditional retailers.

has that been your experience? >> it was absolutely true. what we saw was price cars significantly amped up in this holiday season and the one set of retailers that really got it dead wrong was specialty retailers. retailers such as toys "r" us and they wanted to attraction customers using store experience but in reality, in today's world, you are attracting customers from online first and really the journey starts online so a lot of the specialty retailers had a really dead wrong. but on the other hand multibrand retailers such as walmart, target, best buy and amazon, the price war was fierce and initially we thought it would be a two horse race, but very surprised in a pleasant way that target really amped up and came up as a surprising element in

this war as well so overall i think that we saw that the price wars definitely amped up quite a bit and this would cause a heavy amount of degradation and margins, but top line would have grown for all. >> and we've heard a lot this morning not just from but other guests as well about the power of alexa i know you've recently increased your target in terms of an installed base but aren't they going to face increased pressure from some of their competitors to try to get their own devices into the home? >> yes, and there is a very good product out there google home and they have iteration two and we're waiting for the apemho epe pod to come out. so who can get 100 million of these devices installed is the race for amazon, the game is not just the echo devices, but the alexa voice enablement that installed into a large number of devices. and if you go to amazon right now and type in voice enabled alexa items, you will see things

like sonos, light bulbs. all these are wins and so the more that it can get its alexa technology embodied in a variety of things including cars, that is the long term win. that will create new revenue opportunities. but the winner of the voice wars if you will, that is two to three years out from being determined amazon has pole position, didn't guarantee victory. >> we'll have to leave it there. thank you for joining us and happy new year from amazon to u.p.s retailers and postal services alike are busy delivering holiday packages, but what happens when they are stolen right off your front step? ceo of next storage which is a private social network for neighborhoods. welcome to you >> thank you so much for having me >> so people use your social network to talk about porch pirates. >> it is one of the use cases that neighbors come together to discuss particularly this time

of year. we all know that e-commerce is booming, but one of the side effects is we have packages coming to our homes this greater volume than ever before. sometimes those packages get nabbed and there is no better way to find out where they went than to ask your neighbors because they may have seen something or in some cases their packages may have been stolen as well >> and again these are surveys from you but they say anywhere from 20% to 40% of neighbors say they have had packages stolen how do you think people will ultimately combat this >> well, i think we just need to come together to communicate and talk about what we see in these neighborhoods. typically what you have happening is that a thief comes into a neighborhood, follows a delivery van in many cases, and then as soon as the package is left, the thief knows that no one is home and goes and grabs the package. what the thief doesn't know is that other neighbors may be watching there may also be surveillance

gu devices that are capturing what is going on. so once that neighbor comes home, realizes that the package is gone, they can share the information on a network like nextdoor and other neighbors can comment on what they saw that is how the information is used to ultimately apprehend the criminals. >> we've had this conversation ourselves about is it worth installing one of these systems. but you hear that the cameras are unreliable and you hear that -- any number of different things can happen. and by the way the hacking, major issue. every time they roll out one of these things like amazonkey, the next day you have all these stories about how hackable they are and then people can get into your home. so what else should people do? >> women, the technology is getting better and better, but let's not forget that the good old fashioned way of shriimply asking your neighbors for help is still the tried and true solution you don't need a camera to find out what happened. you just need a network like

nextdoor which enables you to ask your neighbors if they saw anything chances are someone was there and they know if there is someone in the neighborhood that doesn't belong so even without a home video camera, you can get a long way by asking your neighbors for help >> and certainly over 500% increase in posts about stolen or missing packages during the holiday months but you've also had a busy year just in terms of some of the catastrophes we've seen take place this year. there has been a lot of activity on nextdoor in houston as well in the last couple months. how much is business and membership growing >> we've grown 100% year over year and we're quite large already with tense of millions of neighbors and almost 90% of american neighborhoods using the service. there are so many ways that our neighbors can help us. we often talk about the bad cases like helping with a stolen

package or in times of natural disaster like hurricanes or hail storms or the tragic fires in california but neighbors are there to help you. your local community can get stronger and safer if people work together whethers for straightforward things like helping you find a baby-sitter or in times of crisis. >> i love my neighbors and i love that we can just ask them to -- but do i have to get online to do that? i don't want to have to check another app just to talk about did someone take a package >> it is just an icebreaker. just an easier way for you to communicate with your neighbors no matter where you are. ultimately the best way is to get out of your house, walk across the street and knock on a front door, but most of us are not in our neighbor hoods at home during the day. and so we need a way to keep our neighborhood in our pockets. >> fair point. thank you very much. >> thanks for having me. when we come back, a big warning if you are planning to hit the malls to return gifts today. we'll have those details coming

up but first, rick santelli, what have you got for us? >> well, as i look up, i see 246 in tens which is close to unchanged, but i think the key is think small i think think small is going to reap big profits we'll talk about that after e eak.th you can't predict the market. but through good times and bad... ...at t. rowe price... ...we've helped our investors stay confident for over 75 years. call us or your advisor.

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here is what is ahead. a massive way of outflows

hitting the american stock market what will that mean for the markets as we head into the new year plus traders listing their best big cap bets for the new year. more on apple's sudden drop, is there something to worry about here or is this a great opportunity to buy the stock at a discount we'll hitit all on halftime coming up. thanks we'll be tuning in now let's get to the cme group and rick santelli. >> you know, everybody is trying to think of what is going to be the outcome of 2018 with respect to where would the equities be, where will interest rates be, how is business and the recovery and productivity and gdp going to turn out. my thought is, you know, keep more, spend more, invest more. one of the big issues and we've talked about it for years here is the fact that we haven't spent any serious time in a ten year note yield above 3% really since 2011 it has been a long time.

so why is everything so tranquil will war to the power of the u.s. economy granted it is turned around, managed rates may have -- there are still lots of people trading on a quite day even though rates are low, many would have expected more, especially from areas like housing. certainly they have improved, but it really hasn't been a panacea for everything in my opinion, that's because there was a problem with the transmission the transmission of low rates managed by central banks through large banks really had a limited benefit for the very large, and when you consider regulations which now have reversed, you've heard the song and dance many times. i guess what i'm saying is there's going to be a lot of newbies in 2018. newbies meaning new births of smaller sized businesses there's a birth death mod they will we see every first friday of the month from the bls during the jobs report, and my opinion is that the small businesses have had low interest rates that they most likely can't interact

with is the same as very large inns tuesdays, especially if they don't have access like many small businesses don't to the capital markets so i think many of the things going on are going to affect them and obviously the biggest elephant in the room is going to be on the tax side. there's been much arguing effective rate is much lower than the real rate before donald trump, president trump signed the tax bill last week, but small businesses really can get some horsepower here, not only with the low tax rates on small businesses and the pass-throughs going to give them more money to keep, and we can debate whether they keep, it invest it or improve their businesses, but i think the birth of many new businesses is going to give much more girth and a wider benefit to all the positives that haven't really made a large impact in the u.s. economy the last several years kelly, back to you. >> sounds like a plan. thank you, rick. rick santelli of the straight ahead, why you may want to think twice before returning your unwanted gifts today so close to

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for those of you looking to return unwanted holiday gifts today, you may want to take a seat our eric chemi is back at hq with the reason why. >> reporter: that's right. a full so% of holiday sales are returned and today is usually the biggest day all year for returns, but be careful when you return that unwanted gift because you're being tracked, and you might get a one-year ban from any future returns at your favorite store that's because there's an equifax like company that rate

whether you're a problem returner it's called the retail equation. its main goal is to help stores stop fraud, like telling people who repeatedly repair it and return t.crooks trying to get cash for stolen goods and organized crime changing bar codes to change the price on expensive items. regular shoppers who do nothing wrong might get caught up if they turn something matching a pattern displayed by crooks. 25 of the top is hundred retailers use its service including best boy, victoria's secret, home depot, jc penney and nike and why you're sometimes asked for your identification card so retailers can track you. after authorizing 600 million returns the retail equation says 99% are legitimate, but it's not a perfect process, and so innocent shopsers might get falsely banned this week the good news is if that happens you can contact the company to get your return history and ask them to unblock you. back to you guys >> so if i'm just trying -- what

are the patterns that would make me stand out as somebody who is up to something nefarious? >> the number one giveaway is the frequency of returns if you're constantly doing it, but constant in their book could be anything, just depends on the person and the price of the goods. do you have a receipt or not, how long you waited since you bought it. do you come to the same store often so it's one of the machine learning computer algorithms where they have all the different factors and it's hard to pinpoint why you in particular might get busted for a particular return. >> so are they tracking you all year long, or is it really most heavily done during this time of year when the returns are heaviest >> they are tracking you all year long so it doesn't necessarily have to be during the holidays but they have a history. some people have gone back and said at the sports authority found a return in their history in 2004. it's a 12-month process, not just right now. >> hmm. >> i told you. >> got to keep it in mind. >> it's weird. there's a credit rating agency for returns?

>> sure, of course there is, why not. >> maybe they will even get hacked. >> and then they can find our return hits try. >> thank you that's it for us on "squawk alley" here. thanks for joining us so much. "the halftime report" starts right now. over to brian sullivan >> david, kelly, morgan, thank you very much. i'm brian sullivan in for scott wapner your top trade this hour a big wave of money getting out of the u.s. stock market in fact, last week saw the biggest outflow in more than two years. why? what does that moan for investors? joining us today, the only three others that are working, joy terranova, jim lebenthal, barbara durant and in boston carrie firestone and in naples, florida, michael farr of farr, miller & washington. energy and telecom are leading the market today technology the lagard.