Transcripts For CNBC Squawk On The Street 20151221

European markets following through to a certain extent largely in the green. Spain is the outlier there. Election. A little more election. 2. 18 for the tenyear yield. I hear that r word, but everybody says well hit below 2 again. If youre in other parts of the country youre talking r. Were talking recession. But we could be talking road map. Ours starts with star wars. And a rare look inside apples operations, and what ceo tim cook is calling political crap. And mark Martin Shkreli spe out after his arrest. The latest after that ongoing drama. Quite a sigh there. People may have been seeing on friday. Stocks set to open higher. Both the dow and the s p finished the last week below the 50 and 200day moving averages. Oil is a major factor. Brent crude has fallen to an 11year low. You know, when it comes to oil, jim, very simply it is a collapse in a central part of the world economy. Thats the way you have to think about it. I think we have to recognize there was a belief that oil would stay high for very long time. So therefore everyone got credit to do it. I went over the stocks this weekend, david. Just went over all the ones that are under ten. These are Major American Companies that employ a huge number of people. Put a lot of people to work and a lot of different industries, theyre not going to make it. Theyre not going to make it. No. And its natural gas. We talk about oil, not enough about natural gas. Natural gas is below almost maybe theres one or two companies that can make money. Yeah. Natural gas is were flaring a huge amount. Doesnt matter. 1. 82. 2 is the break even for almost every company in the country. The ones below ten are natural gas companies, except a handful that happen to have both. I will mention names. You have to start to. The customer talks about it. Southwestern, ancanna, ultra, sand ridge. Large companies. Freeport, chesapeake. Chesapeake doing a lot of oil. Not natural gas. They sold 5 billion to who . Southwestern energy. I visited chesapeakes uticas properties, not so hot. We sit here and say we wont talk about them, but we owe something to the viewers because their Balance Sheets are hideous. Of them are distressed. It always amazes me the ability companies do have to avoid the death clutches. They reorganize. You can reorganize, sometimes you can do that outside of bankruptcy. Any time along the way these companies had an opportunity to sell stock, they probably should have. We saw it during the financial crisis as well. Nothing says that lehman might have been saved, understood. Nonetheless, they didnt take advantage of selling equity. The same is true here. Even private companies. Dont forget, the private Companies Led by the man who formed chesapeake in its original incarnation. Do you know how many billions of dollars he raised . Harold hamm was on this morning. He came on mad money. He could come on our air all he wants and be wrong. I want to be respectful. But there are a lot of people i thought oil could hold 40. I was wrong. If someone thinks it could hold 80, theyre wrong. Then i hear this word recession. I think theres certainly plenty of people who do not believe we are going into one. No. But its part of the conversation im having with a lot of the guys who manage a lot of assets that i speak to on a dale lily basis. Retail sales. The credit markets. I argue, listen, thats junk. Largely contained to commodities and energy. Some will say its a sign. Its a sign that something worse is happening here. I dont know. All that said, it seems to be picking up currency, maybe fridays decline is in part due to these overall concerns. The two areas that were weakest when i went over companies this weekend were retail and oil. The airlines seem to have made a bottom. They really are responsive to what could be 25 oil. I didnt foresee that. If you look a lot of the next leg down started with kinder marg morgan. Rich kinder did not do a good job. He was a buyer on the way down. Bought some of harold hamms properties. This group is the most thin skinned group of executives. The pipeline or broadly speaking . Theyre all so, for the most part, arrogant. Few kept their debt down. Embridge. Theyre not. Arrogance does have go along with it. Its an old spirit of wildcatting, im getting in there. Aubrey mcclendon, who i was referring to earlier, those guys are incredible personalities who have to be bold. You would think they also would therefore not necessarily take the criticism too harshly. One of the men who was right and said oil would go dramatically lower, sharif suke fired from lng. Yes, he was. S shaneer. And sharif always said no oil company doesnt have a market, they have producer. No one pulls back. This Department Store chain story, macys, kohls, dillards, these companies are doing better than their stocks indicate. The stress is freeport and chesapeake. Okay. Less the sand ridge. Its a lot in the equities that have already suffered dramatically. All that said, give me your take on where we stand in the market as we wrap up this year and head into next. I think there are a handful of stocks that continue to do well. I think that we were hurt if oil were to its so binary. I will Say Something silly. If oil went to 40 or 38, the backs would move. They went down hard last week. Retail would go higher. Its all counter intuitive. Totally. One thing that confuses viewers, we will look back and think how stupid this is we always think the market is dumb about stocks and smart about bonds. The market is being dumb about everything. Commodities, bonds. A lot of companies are doing better than the stocks indicate but are in free fall. Thats worrisome to people. Retail stocks are reacting to recession. They need to react to employment. Its not like auto sales fell off a cliff. Carmax wasnt good. But i think the drugs and banks could be meeters next iyear. But the dollar hasnt shot through the roof. It hasnt. Its oil, oil, oil. Some people think high yield is about to be a second shoe. Our friend jim stewart says no, but there isnt enough of it to destroy our equity market. You would not think so. Not as many securitized products. Lets get to a particular name, disney. A Great Box Office history in the making for this company. Star wars the force awakens posting a record breaking Opening Weekend take, 238 million in north america. Estimates show the film grossing 517 million around the world. That would be shy of Jurassic World in june. But the film hasnt opened in china yet. That release will take place next month. An incredible success, having bought lucas film a couple years back for 4 billion in cash and stock. This franchise will be worth multiples of that. People dont understand bob igers strategy. Its not like hes saying espns subs drop, i should panic, throw my hands up and listen to rich greenfield and give up. Its not like that in the executive suite. They say i bought this thing for 4 billion, half will be made up with this release. You think 2 billion from one release . I think it could be. There will be more screens this weekend. The 2 30 shows were sold out around the country. Im talking 2 30 a. M. Yeah. Sold out. 4,000 screens, 11,000 showings, maybe its 12,000 showings next weekend. Its the most talked about movie ive seen. Hasbro up. Maybe toy sales are not that bad. Espn for a second. Greenfield was saying people dont want all espn. People dont want all stations that they have to get but theyre jammed. One of the oneses th s thethey espn. If i could drop 420 channels, i would. But i would not drop espn. Understood. But his thesis on friday, of course, we have greenfield on, he was on squawk box this morning. Probably on tomorrow. Probably on Christmas Day when the markets are closed. Hes very good at marketing. Some companies are not fond of him in part, but his thesis is not wrong. Theres a part of it malone has been talking about this, too. John malone, that is, who i think i take more seriously than mr. Greenfield. Right. Which is that disney signed up some of these deals with the cable providers, the comcasts, charters of the world, took price increases for espn but said we could be available to a smaller percentage of your subscribers than some other networks are, giving them flexibility to offer skinnier bundles that dont have espn. Fios. So maybe 80 have espn available. So maybe some falling in terms of people saying no more. There may be tens of millions of people who want espn in this country, it may not be 80 million or 100 million. Remember when golden sold cap cities, there was a time when i thought the Good Morning America franchise started going down. I said abc is finished. Finished, finished. You know what . Did it matter . Espn is huge. 40 of profits. Espn is huge. Do you think again, bob iger, there are other properties that can be bought that have amazing, amazing takeaway. If we look at the next three weeks of disney, obviously maybe the next three months, maybe it hasnt been reestablished. If we look at a longterm business of entertainment incredible. Time warner. Jim, theres a reason its up 14 this year and Everything Else has been crushed. Crushed. We have great americans at the helm of time warner. Fox down 25 . The only other names i point out time and time again is netflix. What happens if disney decides to buy time warner. Thats not going to happen. Lets say disney all right. Lets say look, in my defense im not going to be on the defense of its a great provider. Thats why it has a 180 million market value. When he bought lucas film, i many people came on and said he paid way too much. They said the same thing about pixar, i did totally wrong. Maybe he has something up the sleeve. Do you remember last year bcs was on espn. Yeah. Do you ever watch espn . Its gripping tv. Its great. I watch it during the day. Its expensive. I shouldnt have said that. If youre its it runs a good amount of money a month. Geez, snow white is expensive. I was never a fan of the dwarfs any way. I do like dopey. How about sleepy . Not when we come back, tim cook had some harsh words for apples critics. And a look at futures this morning after that big down day on friday, were poised for a higher open. We have more squawk on the street coming right at you. Here at the Td Ameritrade trader group, they work all the time. Sup jj . Working hard . Working 24 7 on mobile trader, rated 1 trading app in the app store. It lets you trade stocks, options, futures. Even advanced orders. And it offers more charts than a lot of the other competitors do in desktop. You work so late. I guess you dont see your family very much . I see them all the time. Did you finish your derivative pricing model, honey . For all the confidence you need. Td ameritrade. You got this. I love working in the salinas area becauseriselda zendejas. I always wanted to do something where i could help people around me. So being a construction supervisor for pg e gives me the opportunity to give a little bit back to my community. I have three boys. Theyre what keep me going every day. Our friends, families live in the area. And it is important for all of us that we keep our community safe. Together, were building a better california. Apples tim cook speaking out against critics who say his company is avoiding taxes on overseas profits calling such accusations political crap. His comments airing last night on 60 minutes where he had a bone to pick with the u. S. Corporate tax code. We pay more taxes in this country than anyone. They know that, and you should because of how much money you make. I dont deny that. We happily pay it. You also have more money overseas than any other american company. We do. As i said before, twothirds of our business is over there. So why dont you bring that home. Id love to. Why dont you. Because it would cost me 40 to bring it home. Thats not a reasonable thing to do. This is a tax code, charlie, made for the industrial age, not the digital age. Its backwards. Its awful for america. It should have been fixed many years ago. You recall that mr. Cook appeared in front of the senate in may of 2013, carl levins committee, which always does a good job coming up talking about this very subject in terms of how they created these irish subsidiaries. Soon after being created, a company where they put their intellectual property and root foreign sales through there and not pay taxes on those sales. As mr. Cook pointed out almost twothirds of their sales are foreign. China being an important part of that overall, jim. Cook said similar things in front of congress. Theres plenty of people who agree with him that this needs to be fixed. We talked so often about inversions here, a different subject but part of the overall tapestry, its unclear that congress will ever be able do anything since they want to link Corporate Tax reform and overall tax reform. Thats dead on arrival. One thing i did take seriously when i was at law school is taxes. The Corporate Tax class was the keystone of harvard law. The main thing you learned was tax avoidance is everybodys not just allowed, its a duty. Youre supposed to try to avoid. Theres a confusion between the words avoid and evade. Avoid is patriotic, youre allowed to figure out the code. Evade, you go to jail. Hes avoiding taxes, which youre allowed to do. The government says if we dont get you, you get away with it. The system we have, he pointed out, made a comparison between industrial and digital economy. The Corporate Tax is idiotic. Its why we have seen so many corporates change their domicile, which we talked about for years now, and has been a big issue over the last year or so. It will continue to be an issue but it doesnt appear that congress will be able do something specifically about it you wonder how much money would be brought back. The republican candidates, some of them talking about a tax holiday of some kind. Others believe you could have created an Infrastructure Bank by taxing some portion of it and done a big thing for the country. Its all just words. Senator schumer has probably the most articulate view on this. A view that almost everybody in congress would agree to, a nice package of Infrastructure Bank, bring the money back. If the president were to get behind schumer t would get done. It would get done with paul ryan who seems to be i will use a word people hate, hes reasonable. He got that package through with solar. Solar is moving stocks big. That was a concession to democrats. He makes deals. Schumer and ryan can get this done. Im glad that tim cook came out and said it. Interesting piece on apple. For us who know the company well, seeing trying to get him on the watch. Rose didnt simply say is it a failure . No, nor did cook necessarily say there wouldnt be more idrations. But thats apples style. Is this dick tracy . Yeah, but i need this to be skywalker if this could make me hans solo, i would pay anything. You would be in raiders of the lost ark. Those are disney characters. Those are two of the most iconic psychotic . No, iconic. That could be Martin Shkreli, who well have information on coming up after this. How else do you think he gets around so fast . Take the reins this holiday and get the mercedesbenz youve always wanted during the winter event. Hurry, offers end january 4th some of these experimentsere notmay not work. Il. But a few might shape the future. Like turning algae into biofuel. New technology for capturing co2 emissions. And cars twice as efficient as the average car today. Ideas exxonmobil scientists are working on to make energy go further. No matter how many tries it takes. Energy lives here. I watch for the perfect moment. A the one nobody else sees. And when i find it i go for it. announcer at scottrade, we share your passion for trading. Thats why we give you the edge, with innovative charting and trading features, plus, powerful mobile apps so youre always connected, wherever you are. Because at scottrade, our passion is to power yours. We dont have much time for a mad dash. Five minutes to the opening bel bell. Alphabet upped to outperform. You would have thought amazon would come out today and do that. Thats a natural. Ruth poratt comes in, cfo, formerly of morgan stanley, changes the coloration of it. I think thats going to matter. What it did was say, listen, well return capital. Well organize in a way that you wont that selfdriving car, which will be huge. It will be huge. Change the world. It will change the world. The self driving car is not part of the surge they wiped out everyone in surge. When will we see through . The serve driving car . No, when we start to see wan what i think next quarter. Sometimes Companies Come in and crush other companies. Rarely do you have a company like microsoft that makes a comeback. When we trash yahoo every day, maybe we should be praising alphabet every day. They have a better search engine. Thats where the money is amazon, i ordered something today. I think its at my place. It will be there. They knew i would order. Thats an algorithm that predicted i would buy those speakers. Unlike alphabet and facebook. Were you on the amazon stock this weekend, people who hate oil may also want to sell the s p. We have the opening bell coming up after this. Did we just, start looking for a house . Oh did you see that listing on zillow i sent you. You see that bathroom . Did we just decide to buy house . I think so. Yay find your way home. Zillow. Youre watching cnbcs squawk on the street. The opening bell will ring in about 30 seconds. Should be a fairly quiet week, one would imagine, in terms of news flow. I think we have to watch redemptions. This might be an opportunity for hedge funds that are hurting to blow up again. They are down near the wire. The hedge funds will look at this and say ill get out. Theyre worrying about First Quarter redemptions. I dont think redemptions were as bad as many feared. Really . But i think guys are worrying about the First Quarter of next year. There is the opening bell. Looking back at the s p realtime exchange. At the big board, nyc ties. Over at the nasdaq, the National Investor institute, new yorks chapter celebrating the organizations 45th anniversary. Here we go after what was a significant down day on friday, no doubt about that one. Oils down. Oils down. Obviously i think its iran now. I think iran, saudis pumping forever. Iran people want to stop iran. They dont want to give them money, they dont want to give isis money. So saudi arabia does whatever is necessary to starve isis. Saudis are motivated politically. They have big cash reserves or they couldnt get away with this. Theyve been selling public debt, the saudis. They have quite a lot of expenses. Waging a war in yemen. Doing a lot of different things. Pumping oil. At some point do they start to worry about their own financial wherewithal . They should. But they seem to have the reserves to make it happen. It is interesting to see when you see that smog in china remember, chinese gasoline contributes onethird of the smog. Thats because they dont use the clean gasoline we do. They use dirty gasoline. Theyre cutting back on use. Up 10 year over year. Thats the only country that started using more theyre still adding automobile at a rapid clip, though less rapid than it had been, but billiuilding off a bi base. Tdid you see emersons order . I didnt. Emersons orders were down gigantically. Double digit decline. Its the kind of company that should be doing well here. Theyre not. The stock is reacting positively. Up 1. 8 . Its early. Emerson in the midst of that big split. Its not really working. Whats not working . Emerson bringing out value. It hasnt happened. Just the idea of it . The orders arent up. These are the kind of Industrial America companies that people when they talk about the recession them, they look at emerson. They look at any company joy. Theres no joy in joy. No. Got upgraded today. Impressive that someone had a sell on it all the way down. Were just not seeing the pin action you would after rebound because of the redemptions and because of oil. If oil were to switch here and go up, it would be a big day. Thats all . Just beholden to this commodity . To the algorithms. To the machines. Machines running everything. We had big volume on friday it was machine volume. Were not getting the news flow i went over darden and carnivals quarter. Remarkably good. And Margin Expansion terrific. I have Constellation Brands on this evening. Margin expansion, sales fantastic. These are all overshadowed. These stocks go down one for one with oil. Carnival and darden were able to bucket on friday, but theyre the only ones. Every time i look at this market i marvel how trapped it is. Microsoft not trapped because of a terrific barrons piece. We have takeover talks going on with some tilco again. I still believe i love john ledger, it would be shocked to me if tmobile can stay at these spra prices. That will be remarkable. Also sprint will be remarkable if they can stay there. Thats a hard one, too. Do you think about the how much do you think about the illiquid high yield market . How much i do think about it . How much do you worry about it . I think the illiquid high yield is damaging to the wealthy who have been using these. When you try to build new pipelines in the united states, people are organized to stop you. A lot of pipelines that are supposed to be built wont be built, either because of demand or the environmentals are wise to them. Is that a benefit or a hindrance . The ones that are left do well, but they need the cash flow. You dont have a lot of cash flow. Model is not working anymore. Thats it. Everything has changed. Embridge and transcanada have real Balance Sheets. The other ones in the end are raising equity in order to its a Capital Market story. I want people to Pay Attention to that. Puerto rican bonds, mlps, and structure finance hit mutual funds, those were the three ways to beat the yield. Theyre all blowing up. Th they have all blown up. The alarian mlp index is up. But the klm is down over 3 , kinder morgan. Right near the 52week low. It responded positively to the 75 cut in the dividend. For a couple minutes. Fofrnlgts fofrnlg for a couple days, now revisiting lows on the year. The loss in value of kmi you took it out of terrible timing to move it to a c corp from an mlp. The group doing well, really well, are the solar stocks. Because people did not expect paul ryan would include a solar provision to sweeten the democrats. All we have seen is such rancor for so many years, we cannot believe there was an olive branch, which is why im optimistic that things can get done. I dont know if you have ever met congressman ryan. I have. Ive spoken to congressman ryan. He wants to get things done. Yeah. I think boehner may have wanted things done and wasnt able do so. There was a heavy short position in solar, people felt it will be business as usual, but solarcity has been remarkable. First solar is on fire. Right. I think its important to talk about groups making money. Counter intuitive. You would think solar would be going down. Solar is about credits, not competition with oil and natural gas. Lets get to dom chu. Sk shkreli outed another company. Its kalobios, a micro cap stock, Martin Shkreli, currently arrested and charged for allegedly perpetrating securities fraud, he has been let go, terminated by kalobios as the ceo of the company. The company said in a statement that it was announced today, december 17th, terminated as ceo of the company and resigned his position on board of directors. So Martin Shkreli who used to be ceo of kalobios terminated by the company. Kalibios, this micro cap Biotech Company has not traded since last thursday. But this is the latest development in the shkreli saga. Thanks. People watched that thing race up a few weeks ago with the short squeeze. People talk about this. They do. This is what people want to talk about. He was regarded as the great villain of world finance. Great villain of world finance. Maybe lets less than a bit. We always try to find who is at any given time. Martin shkreli . Martin shkreli in his apartment with the thing and going on no. Periscoping . No, bond villains capture peoples imagination or a gold finger. Who is his odd job . That lawyer . He gave an interview to the wall street journal. He loves interviews. He believes authorities targeted him for his much criticized drug prices and trying to find anything we could to stop him was the attitude of the government, beating the person up, trying to find the merits to make up for it i would hope the government wouldnt take that kind of approach. If youre his lawyer, if he has a lawyer, you usually dont take on the government. Thats not the strategy a lot of people employ. If he takes on the judge, you know where hes coming from. He maybe hell have a reality show when its all said and done. Hes like from kirbys fourth world. You know what i mean. I do. I do. I havent been there. I was there for a while. No fun . No. Intel getting back to the real world, up a bit. Theyll close the deal with altera on the 28th, i believe. That will raise the multiple. Been quite a chip consolidation, not talking about potato chips. Semiconductors. That lance deal, remember the lance deal . I dont. They bought diamond. Right. The foods. Theres been chip combinations everywhere. B g foods has done chip combinations. Theres just whether it be avago, b g, corvo, lance chips getting together. Yes. I may put chip dip out tonight and eat a chip. Hopefully not swallow the wafer. No. That is the semiconductor wafer. Dont do that. No. On the takeover front, you heard it earlier on squawk box, staples coming out saying the ftc would not make us an offer on what we could do here to get this thing done. Ftc did not make a counter offer. Can they make it . Theyll go to court this will be an interesting case. Wont take place until late spring. The government will regret they did this decision. Theres a company that is called amazon that orders ahead of them. They could turn these companies into dunder mifflin. I dont know if you saw the big short. No, i watched star wars 72 times. Only 72. I was hoping to boost the box office. Just kidding. Havent seen it yet. Bob piesani is on the floor. We have a rally going. We should. The fed is done. The quadruple witching is done. In a new contract with oil and in a seasonally strong part of the year. This is the time of year it should be done. We have been extremely oversold in the last few weeks. Look at some of the sectors. Simple momentum indicators like relative strength indicators, dow transports, russell 2000, energy, materials, all oversold. Energy is lagging again today. Oil down. Not surprising. Transports doing modestly well after a terrible year. Industrial and materials in the middle of the pack. Tech the leader. Several sectors extremely oversold like very strange levels on just standard momentum indicators. So exploration and production, xop down again today. Oil services down again. Steel, the most oversold sectors and even more oversold today, steel getting no bounce at all. If you look at copper. Copper had a bounce on friday. There was a lot of reports that some of the chinese smelters may be reducing production sometime next year. Those reports were out over the weekend again. Thats supporting copper. Copper sitting near a fourweek, fiveweek high. Thats one month of copper that you got. Still none of the material names are bouncing any significant way. Freeport was up preopen. Southern copper was up preopen. U. S. Steel is down right now. Freeport is now negative. That was right at the open up. No appreciable bounce in stocks that are down 20 and 30 . Joy global up fractionally to market perform. They decreased the price to 10 from 14, even though they raised the stock to a market perform. Not a strong upgrade for that stock. Shanghai at the highest levels in a month. In shanghai, a lot of talk about more stimulus measures, just not for the economy but even for the property sector. And that is stimulating shanghai right now. Meantime, look at a couple other things, its interesting to see that we got overall the numbers are doing fairly well. Germany is up as well. France is up as well. Of course in spain, that ruling, the Popular Party there losing the majority. So well have we may have a center Left Coalition if the existing government holds. We could have a socialist coalition, leftist coalition. The whole thing is unstable. Thats why spain is down. We could even have new elections in two months. A bit of instability. Its interesting that the Office Depot Staples traded to the upside. All the stocks traded down, both of them, earlier in the month when it looked like the deal was in trouble and there was a sued to block the deal. They didnt even negotiate. They made an offer to sell commercial contracts to get the deal done. They didnt counter offer the fdc. General electric and electrolux also not going through. Some deals did go through. At t did get directv, as i recall. And the intel deal. We have Halliburton Baker hughes floating out there. Thats been delayed to next year. Tough year for m a. Disney up today after great numbers for the star wars franchise. Up 16 . Now its flat. It was up nicely at the open. Star wars did well. Disney up 16 this year, guys. Maybe nike did better, maybe home depot. At least for today, definitely disneys day. Back to you. Certainly at the box office, though as you pointed out, stock is has all the media stocks have traded off. Thank you. The medias still up, but not up as much as ten minutes ago. The airlines are up, which makes sense. Theyll have good quarters. Its important. Theyre not big cap capacity editions like i thought like some thought. Should we go to someone else. Lets go to washington, d. C. We have breaking news on the race for the white house. Yeah, good morning. Senator Lindsey Graham is suspending his campaign for the republican president ial nomination. He made the announcement in a Youtube Video directed to his supporters just a little while ago. In the video he says he ran in this race in order to spotlight the anti im sorry, he ran in this race to focus on World Affairs and get away from isolationism in the republican party. He never got out of the zero to 1 range in polling. Never made it on to the main stage in the president ial debates. This is a campaign that might be most remembered for that moment in which donald trump gave out Lindsey Grahams phone number in public forcing Lindsey Graham to cancel his cell phone and release an ad of his own in which he said he was smashing his cell phone and giving that up, and poking fun at donald trump. Lindsey graham not making any progress, and announcing today hes suspending his campaign. All right. Nice fella, Lindsey Graham. Yeah. Didnt get any momentum. How are the nice people in media doing . Not well. Stocks are hanging in there. Let the hedge funds liquidate and then come back. They have to sell. Its the way the game works. They did badly, then they lose until they reconfigure. Right. Somehow they always manage to raise more money. Coming up, kbws ceo Thomas Michaud with his take on the financial sector. Well be right back. Lets look at oil prices. Jackie deangelis joins us. Wti seeing more pressure this morning. A 2 decline. Trading around 34. This is the january contract that will expire today. February is what everybody is watching if you compare that to brent which hit an 11year low today, the spread tight. Showing that premium for brent crude right now not in the cards. This has all been good news for gas prices and consumers, we hit 2 at the close of last week. We are under that level for the National Average now. They say cheaper gas has saved americans more than 115 billion this year. Thats about 550 per licensed driver. So more americans are expected to take advantage of the low prices and hit the road, especially as weather temperatures are more mild as well. Theyre saying that about 91 million americans will drive 50 miles or more this holiday season. David . Thank you very much, jackie. Jim, theyre saving more money but theyre not spending it on apparel. Very little pick up in the driving. You hear those numbers, but the Convenience Store companies i deal with in that business, not a lot of pick up. Thats one thing thats so compounding. The visas of the world. Charlie sharf has been putting out numbers saying consumers are saving. Theyre saving it, but where . Cd rates are not going up by the fed. We should one day focus on the fact that you can get more on the rates, but the banks cant. Stop trading with jim. Squawk on the street coming right back. Ou ask for . Ou 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. With tmobile and the incredible iphone 6s you can reach more people in more places than before. Whether youre at home in the basement on the open road or pulling the late shift at work. Youre more connected now because tmobile doubled its lte coverage in the past year. And our extended range lte goes two times farther than before and is four times better in buildings. Get iphone 6s for zero upfront and just five bucks a month. They are. Do i look smarter . Yeah, a little. Youre making money now, are you investing . Well, ive been doing some research. Let me introduce you to our broker. How much does he charge . I dont know. Okay. Uh, do you get your fees back if youre not happy . dad laughs wow, youre laughing. Thats not the way the world works. Well, the worlds changing. Are you asking enough questions about the way your wealth is managed . Wealth management, at charles schwab. Its gotten squarer. Over the years. Brighter. Bigger. Its gotten thinner. Even curvier. But whats next . For all binge watchers. Movie geeks. Sports freaks. X1 from xfinity will change the way you experience tv. All right. Its that time. Time for a stop trading on this monday. Where are we stopping . Pacific crest says it is a fitbit christmas, basically. Thats the case at my house where everybody uses it. Its not an apple watch christmas . Women. Thats the missing thing. Too many men on wall street to dont understand women and wellness. This will lower insurance costs for companies. I dont wear a fitbit, i wear an apple watch. My wife would never walk out of the house without it. My daughters. Daughter love it people have to recognize whats happened here is that they have a lot of intellectual property and are well under the price. And there are a lot of companies that are is it a different product category . When you hear tim cook saying were not just thinking about the next iteration, but even the next one. Doesnt one of those iterations f those things hang around hurt that . I think the two companies are different. Fitbit is about trying to give Major Companies give it to their employees and get a break with cigna or anthem. This is a way to lower the insurance pool. Cant wear it in the pool. They have to fix that. My wife has gone through one of them in the shower. What is the deal here . What are you wearing that in the shower for . You wearing that and nothing else . Too much information. Maybe. Hold off on that. She doesnt know i have a show. Its fine. She does not know i have a show. I have free rein on this. Theres a show you have tonight thats on. What is on that show. I have henry schein on. Its a triopoly. Constellation, raising growth margin. And beef prices are coming down. The restaurants will do better. Chicken prices coming down. Look at buffalo wild wings, darden. David, star wars, a lot of people saw it while we were on. While we were talking. Around the world. A lot. My wife, listen, the show is worth watching. I know youre jammed. You should put it on periodically. She didnt see that. Youll see him back here tomorrow morning. Coming up, drone registration rules going into effect. Well talk to a former faa official about what that means. Good morning. Welcome back to squawk on the street. Im david faber, along with sara eisen and simon hobbs. Live from post nine at new york stock exchange. Carl has the day off. Lets look at the markets. Were in positive territory on the broad averages. Wti for january, this is the last day to see that. I think it starts trading, the new contract, tomorrow. I thought it flipped i thought it flipped any time. Thats not true, simon, you know many things. Perhaps not this one. It is down 1. 84 . And we have been trading off of oil. Thats been certainly, sara, the most important thing weve been walking in terms of direction of the markets. Lets get to the road map for the hour. Star wars destroying Box Office Records this weekend. Thats not giving much of a boost to disney stock. Will there be more of an effect in the long run. And anals ceo speaking out last night slamming the tax code. And if theres a drone on your list, you better register it. Well talk about that in a bit. Were up 103 points on the dow. Its a triple digit rally. A welcomed break for many in the market after we fell heavily thursday and friday in the wake of the feds rate rise. The s p down over 3 in just those two sessions at the end of last week. Joining us now is steven wood, chief investment strategist with russell investments. Where do we go from here, do you think . A lot of chop. Weve seen volatility leading out of the Third Quarter into the fed decision. I think the fed decision is creating some uncertainty. We think that the pace of future Interest Rates will be moderate. Bordering on glacial. I think volatility is likely to continue into the year. Yeah. Looking into 2016, were not looking as our best Case Scenario as a recession in the u. S. Europe is looking better. I think from an economic macro perspective, it will be steady as she goes with no real big change. What do you think the markets will do next year . Were thinking mid Single Digits. Mid Single Digits makes sense. Nominal gdp, a dividend kicker on the s p 500 or the russell 1,000 makes sense. Not great shakes for us. We think it will be more global looking at europe first, japan second. It will be global and active. You know, thats the very unusual thing about this year. How many people are so downbeat on expectations for next year. Its unusual to have so many people with low expectations. Picking up on volatility. I wonder if that means the way in which you make money in 2016 fundamentally changes. Theres a post out today saying the lack of perceived liquidity injections from fed means the bounce in liquidity is violent and therefore the game changes. Theres a Tipping Point in an asset class and then youre overtrading or overmoving and picking up bargains in that environment, if youd like, on an oscillating basis what dobas. What do you think . You and i have been talking about this, like it or not, you get the fed you have, not the one you want. The instability and opportunities to harvest risk and hedge risk is coming from the Federal Reserve, European Central bank and to a lesser degree the bank of japan. We believe this needs tos to b global multi asset strategy. The fed has been clear. Theyre taking away riskfree safe haven. In a lowyear world, where does one identify risk . Hedge it or take advantage of it . We think that begins in equity space in europe, which you and i have been talking about for a large number of months. Japan is also in that conversation as well. So, just looking only at the u. S. , we think thats a good starting point but not the only opportunity. It sounds like youre saying well have another year dominated by central bank disappointments, expectations and potentially surprises. This is a central bankers world. We know that mario draghi in europe, dr. Yellen in the united states, theyre driving the agenda. I think theyll drive the messaging. And that is going to be, i think, something that investors need to take into consideration. Fundamentally, when you look from a strategic perspective, go back to that asset allocation, that make sense. Its that discipline that gets you through the volatile bouts. Within that, you have to be tactical in the sense that understand where valuations are working against you. We think thats to a large degree the united states. Its been that way for a while. Where the cycle and sentiment as well as valuation over the medium term with be harvested and increasingly that will be europe. Theyre beginning their qe in europe. So, a very proactive, aggressive quantitative easing liquidity is taking place in europe. Thats unlikely to abate any time soon. The elephant in the room is the energy sector, down 25 now for as an s p sector. Thats one reason why the market is struggling at times. Is that a coiled spring that at some point is going to bounce back and people will make an awful lot of money . Do the shorts get knocked out and it becomes a win . I think to some degree it will. Commodity prices tend to be sticky, long cycles. So oil prices aside, there will be a continued volatility in energy which creates some opportunity. You got to be very, very careful, do your research and homework on debt and equity side. This is deal by deal, Balance Sheet by Balance Sheet, income statement by income statement. Two larger issues, some of the pressure within high yield space is being dominated by energy. You need to understand that. When one does their research. But also from an inflation perspective. The commodity complex being this low this long is taking away the inflation pressure on the fed. So the fed is not going to be forced to anything it doesnt want to do before it wants to do that. I would take their stated schedule as how theyre likely to move. Four rate rises is apparently what theyre after. If we dont see you before the holidays, have a great one. You as well. Up next, star wars shattering Box Office Records over the weekend. Taking in 517 million in global ticket sales. Its the biggest Domestic Opening in hollywoods history. What does it mean for disney stock which is under pressure and one of the few dow stocks thats lower today . Squawk on the street will be right back. vo rush hour around here starts at 6 30 a. M. On the nose. But for me, it starts with the opening bell. And the rush i get, lasts way more than an hour. announcer at scottrade, we share your passion for trading. Thats why weve built powerful technology to alert you to your next opportunity. Because at scottrade, our passion is to power yours. Who helped make slea difference last yearose for thousands of local foster kids. Thank you for helping foster kids. Thank you for the school supplies. Thank you for the new shoes. Thank you, secret santa. And thank you for donating money. Announcer your generosity proves that while not everyone can be a foster parent, anyone can help a foster child. Thank you. Thank you. Gracias por su ayuda. [baby coos] thank you. The rally is building on this monday morning with the dow up 123. Lets send it out to dom chu. Check out shares of tiffanys starting this christmas week here. You can see here up by about 3 . The jewelry maker getting an upgrade to buy over at jeffries which says now is a rare time to get a high Quality Company at a discount price. Its a nice end of the year bump for the stock which is down about 30 so far this year. Maybe, simon, some bargain hunters on the analysts side at tiffanys from jeffries. Lots of places in retail where you can do that at moment, particularly with coat sales being so bad. Coming up on the program, if a drone is on your christmas list this year, you better get ready to register it. The new rules from the faa kick in today. And theres already confusion among some consumers. Well talk to a former faa acting administrator about that and this after the break. Here at Td Ameritrade, they work hard. Wow, that was random. Random . No its all about understanding patterns like the mail guy at 3 12 every day or jerry, getting dumped every third tuesday. This happens every third tuesday. We have Pattern Recognition Technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. Theres no way to predict that. For all the confidence you need. Td ameritrade. You got this. Disneys force awakens with the newest star wars movie, smashing Box Office Records. The film generated more than 500 million in its Opening Weekend globally. The launch of the first Star Wars Film in decades comes amid growth concerns for espn. Is disney doing enough to keep investors happy . Joining us on the phone is ma barton crockett. I have to admit being somewhat surprised given the Box Office Numbers and the stock being down this morning. Are you . I think the stock had pressure on friday with another firm downgrading it. Its maybe given up some of that right now. I think that the buy side and the sell side struggled to understand the profitability thats coming from these movies. And, you know, i think as we see the whole the force awakens through the holidays, people looking at the model and think what the next star wars will be, two star wars movie in the next fiscal year that there will be a northward bias for the studio segment, which i think will be helpful. I think the debate around espn is interesting. The data points since august have been incrementally better. The ad market in the Fourth Quarter was healthy. The pace of people dropping pay tv prescriptions and going to skinny bundles is not accelerating. It is at a steady level that you can still see mid single digit style affiliate growth. Cue make an argument certainly that that trend is not done. It remains to be seen whether theyll go from 92 million, stay flat or go down significantly. Specifically to the movie what are your projections . How much money is disney going to make off of this film and if you want to extrapolate for the other two you were talking about. I think that when all is said and done, this movie will be somewhere north of 2 billion of global box office. How far north well learn over the holiday period. That can drive profits from this movie certainly in the mid 1 billion range. If you look at the rogue one movie, Star Wars Episode 8 in fiscal 17, profits for those movies will be a meaningful percentage of this i dont think anyone has that in their models, but you see a nice northward bias for your studio outlooks. It does cut both ways, doesnt it, barton . Its not just the sequels to this film, its the spinoffs, rogue one. I think theres a hans solo prequel. So you have this huge ecosystem, the merchandise, the theme parks. So the question become force that entire ecosystem of projected projects, have you done enough to get on board the Younger Generation and people in china to make the whole thing sing . The bet here is massive, isnt it . The bet is massive. The early indications are that its working, right . Seeing a movie thats setting records, thats driving hugely favorable audience scores, rate critical reception. Its going to be reflected in Merchandise Sales that are robust and that will over the next couple of years be important futures of the theme parks. So the half of disney thats not tv is on a tremendous cycle. The part that is tv i dont think is trending as badly as people feared. To get back to the tv point, a huge Sticking Point in the cord cutting thesis will be sports viewership. 80 of households over the next year will watch espn. Those people will have a difficult time cutting the cord. The set up is youve seen the worst and it could level out. I think that certainly the half of disney thats not tv, you have to be happy. I dont know if investors agree. It feels every time theres a warning signal on espn subscriber growth, it picks up steam with the selloff. How much does espn overshadow the potential windfall from star wars . You can break that down further as to how much each one spills into the operating revenue and profit of this company . I think that the breakdown of segment profits is pretty well known. Close to half of disney is driven by tv, close to half driven by the other stuff. So the other stuff is going great. Tv stuff is going okay. For investors, the stock has been a very good performer relative to peers and the bottom market. Today and yesterday theres debate about what investors are thinking. I dont think the story will be told in two days, it will be told as we see the final numbers for these movies and going into next year. Were watching closely. Appreciate you joining us. Barton crockett. Theyre on the holiday hot list, hundreds of thousands of drones being gifted this holiday season. Before they take to the skies, owners need to get grounded and register the drones or face potentially stiff penalties. Mary thompson joins us with a change on the rules. Shes at a Drone Academy in new jersey. Take it away, mary. Simon, you know the faa is forecasting that 800,000 recreational drones are going to be sold in the Fourth Quarter. Thats half of all the recreational drones expected to be sold in 2015. The thought of those first time fliers has regulators more than nervous about trouble in the skies. Starting today the faa is requiring hobbyist or Recreational Flyers with drones weighing more than a half pound who have never flown outside before that they register the drones before testing them out. The reason for the registration . The faa seeing it as a chance to educate users on how to fly drones safely and within the laws of the land, keeping it below 400 feet in the air and five miles below airports. The Registration Fee is being waved until january 20th. Paper registration is available for all drones and operators. Online for only u. S. Citizens. Drone operators over 13, and drones weighing a half pound up to 55 pounds. Not registration will cost you 27 stush 27,500 in penalties, and 250,000 in criminal penalties. Some people say maybe its a tool, maybe its a toy. Toy are the big things during christmas a bit of confusion there among consumers. Coming up at 11 10, well have more on this phenomenon and how the Drone Academy is preparing for the post christmas rush of new students. Thats coming up at 11 10. Did you say only u. S. Citizens are able to register drones . Theyre only able to register online. Permanent residents can register on paper. Permanent residents and u. S. Citizens can register under the new rules. You are off limits. I can do it on paper form. Watch out there, a lot of drones flying near your head. Scary. Buzzing. Thank you. So the question is is the faa playing catch up with the budding consumer drone business and are the new rules the best to keep our skies safe . Joining us on the phone, barry valentine, Senior Adviser with the Aviation Consulting firm the wix group it seems a small step in what is needed, a bigger, more comprehensive plan to regulate the drones. Would you agree . I would agree. Its a first step, a needed first step given the reported increase in the number of airspace violations and incidents involving manned aircraft in the air. This is an industry thats grown very dramatically. I think much faster than anyone anticipated. So its been a challenge for the faa. But they are moving forward in the right direction. The other question i have, as mary laid out the rules here for registering, how does it prevent the drones from crashing into planes and helicopters . Isnt that the worry . We hear constant reports of these nearcollisions. That is the worry and the reason for having to have an i. D. Number on the drone is so that if if there was an accident, one would at least be able to identify the person involved with the drone that may have caused the accident. Its the same as having registration numbers on aircraft or other vehicles. Its a form of identification. Also in cases where people just do something inadvertently or are not staying within the parameters that we mentioned. Its an opportunity to reach them and educate them about the proper way to fly the drones. Barry, do you really think people are going to be bothered to register . Does the faa, having set up the system, have the ability to police it in practice . Could it fall into disarray and be something that a lot of particularly younger people dont bother with and it becomes totally ineffective. I think there are two groups out there that would be involved in the registration. The model airplane people who have been flying radio controlled model airplanes for decades are part of what the group thats going to have to register. Theyre a group of people who have behaved responsibly for decades in the operation of their craft. So those people who are buying, for example, the quad copters, buying them as toys, well have to wait and see what the numbers look like when the registration goes forward. Theres no way to know who owns them, so well have to rely on responsibility Good Behavior of citizens to do it. The point here surely is that the people that are least likely to be responsible in the flying of the drones and getting into difficulty are the least likely to register. That remains to be seen. Thats one of the things wed all be concerned about. Well have to see how this whole registration process unfolds, given the sheer numbers you mentioned in the story. Barry, you were at the faa. Should this be the responsibility of the faa . If you talk to and listen to jeff bezos at amazon, theyre behind when it comes to commercial drone registration, consumer drone regulation. Should the Drone Organization have its own body tracking this with registration, gps, with purchases . In order to have this objective met, that objective is aviation safety, do any degree that we do get compliance to the extent that people do participate and register, it educates them as to how to operate. A lot of people, if theyre not aviation people or model aircraft people would not have known what the restrictions are on model airplanes, theyre virtually the same for flying this sized drone. This process is an educational process to try to make people aware of the rules and hope that most of them will follow them. If most of them do, that certainly reduces the probability of there being an incident or accident. Any move forward that reduces that possibility is worth it. Is a good one. They just have to move faster. Barry, thank you. Barry valentine. Stating ahead on the program, tim cook speaking out about better skills from workers in china and what he sees as the failure of the u. S. Tax code. Well have more on that plus how you should be playing the stock now when we come back. Oh remotes, youve had it tough. Watching tvs get sharper, bigger, smugger. And you . Rubbery buttons. Enter the x1 voice remote. Now when someone says. Show me funny movies. Watch discovery. Record this. Voila. Remotes, come out from the cushions, you are back. The x1 voice remote is here. Im sharon epperson, here is your cnbc new s update. A woman swerved her car into a busy sidewalk two or three times last night and mowed down people on a busy las vegas strip. Fifas sep bladder and mi michael plateni have been suspended from all fefa activities for eight years. Belgian police raided a home in brussels yesterday and made two arrests in connection with a probe into last months paris attacks. The raid lasts five hours at a home close to a popular tourist area. And an embarrassing snafu at the Miss Universe contest last night. Host steve harvey crowning the wrong winner. The real winner was miss philippines. Thats your news update for this hour. That video never gets old. Thank you. Another day in television. Its all over facebook and twitter. I saw it on twitter. The top trending moment. Keeping an eye on the market, the dow up 118. Stocks bouncing back from last weeks losses. It looks like the new theme for the market could be lower for longer. Bob pisani has more on that story. Which surely extending to a number of factors. It has and it is. The new theme is lower for longer. This time the theme is broader than oil. Were talking about lower for longer not just in oil for example but in natural gas as well. Look at this list. In steel, copper, aluminum, other base metals. Lower for longer in Global Industrial sales n Interest Rates, and many emerging markets. How long is lower for longer . It depends on who youre talking to. Lower everything continues until at least the first half of 2016. Yuck that doesnt need Commodity Prices or Corporate Sales keep dropping. They dont have to. They have to remain at these depressed levels. Oil down 33 . Natural gas, 34 . Copper 24 . Aluminum down 17 . Even gold down 9 . You hear this everywhere in the Analyst Community today. Macquaire said the ieas most havent update suggests that the Global Oil Market is unlikely to balance nearterm and lower for longer wti appears increasingly likely. Baird had a note out saying several big Global Industrial Companies Continue to slash both operating and capital budgets to adjust to the new lower for longer demand environment and the effect of the fed not raising rates aggressively and that would make it harder for banks to raise Interest Rates. There was a note about this yesterday. The bank of america, generally speaking about most banks, lower for longer Interest Rates would cause a meaningful downdraft in consensus estimates. The bottom line is lower for longer theme is virtually everywhere. Simon, i think wall street needs to stop drinking the koolaide and start drinking the eggnog for this season. Gloomy feelings for 2016 out there right now. Im all for that, more eggnog all the way around. Ill join you. Tim cook defending apples decision to hold 180 billion of earnings offshore in an interview with 60 minutes. Indeed mr. Cook slamming the u. S. Tax code. Take a listen. We pay more taxes in this country than anyone. They know that and you should because of how much money you make. I dont deny that. We happily pay it. You also have more money overseas than any other american company. We do. As i said before, twothirds of our business is over there. So why dont you bring that home is the question. Id love to bring it home. Why dont you. Because it would cost me 40 to bring it home. Thats not a reasonable thing to do. This is a tax code, charlie, made for the industrial age, not the digital age. Its backwards. Its awful for america. It should have been fixed many years ago. Joining us now from San Francisco is the analyst from rbc Capital Markets. Mr. Cook is clearly frustrated here. Should Share Holders share that frustration, do you think . Yeah. I think you should. They have a large amount of cash trapped overseas. I think apple is in a lot of innovative things by raising debt off shore to try to bring some of the money back in terms of doing cap allocationallocati. I think a lot of that could end up back in the shareholder pockets. His frustrations are probably shared by a lot of investors. I know people who hold it for that, because they think at some point there will be a big dividend bonanza. You saw on friday congress moved to grandfathering tax breaks on reits for the gaming and lodging industry. But this bigger game of chicken continues. Near si neither side is bending here. Youre right. It will be interesting to see which way it ends up. Apple and other companies are piling up the cash overseas. Hoping for a time where they can get a repatriation break like they did a decade ago. Is it slightly disingenuous for tim cook to say we pay tax everywhere we should, and if we returned this cash we would have to pay the irs 40 . Everybody who works internationally and International Entrepreneurs know the u. S. Has tax treaties across the world. If tim cook is paying taxes in other lands, the irs will lower that tax to much lower than 40 . Isnt that slightly disingenuous . I think their statement would be these are revenues, Free Cash Flows generated outside the united states. Theres no reason to pay a u. S. Tax on top of that when the revenue is made outside the u. S. To your point, if the profits are generated in places where there were no lower taxes, thats apples good luck or good marketing, why should they have to pay taxes in the u. S. Thats the angle theyre coming up with. Im not sure which side is right on this at end of the day. The 60 minutes look at apple came back on the stock falling into bear market territory, 20 off the recent highs. The latest concerns from suppliers warning on guidance. Are these concerns justified . I know you like the stock. The more evidence we hear about the chipmakers cutting forecasts, the more concerning the Fourth Quarter is. Yeah. Absolutely. The concern is probably in the fiscal q2 for apple where you could get some issues. Part of this is just normal supply chain dynamics. Its the time of the year, where you go back and look for the last seven, eight years apple always got orders. I would say this is a bit worse than historically. I would say fundamentally, once you get past march you comparisons get easier, Gross Margins go higher, Free Cash Flow goes up and we will talk about the iphone 7 cycle again. I think this position is attractive once you get past the january quarter Earnings Call and the march guidance. If there was an announcement that iphone sales had fallen there would be a huge friction on the market. I wonder if theres a time horizon the analysts have, but they are fact based, one or two quarters ahead, and people at home who might have a longer Term Investment on the basis that they believe in the tim cook they watched last night and they are holding it two, three years beyond the horizon that you guys can look at and factor in. Yeah, absolutely right. Theres a shorter term concern which is i dont know what march will do. March could be done, so ill be apprehensive about the stock. Thats shared by more aggressive investors. Anyone that can take a view thats not of six months, to your point, you have to buy into that apple story. Buy into the fact that this ecosystem is powerful. And apple can monetize the ecosystem more attractively than any other company could. Well leave it there. Good to see you, sir. Thank you for your time. Thank you. Lets get out to phil lebeau with news on mercedes. Phil . This is a big move at mercedesbe mercedesbenz, usa. Steve cannon who has been president and ceo of mercedesbenz usa for the last four years is resigning. Hes leaving the auto business. He will join the amb group. What is the amb group . That is the Investment Management firm that is run by arthur blank, the ceo of the atlanta falcons, owner of the atlanta falcons. Steve cannon will be joining that group in an executive capacity what does that mean in terms of who will now run mercedesbenz usa . Detmeir exler, president and ceo effective january 1st. Steve cannon will act as a consultant for a month. They just moved the headquarters from new jersey down to atlanta in the last six months. Last month, when i was talking to steve cannon in the l. A. Auto show, i said you guys have to be excited about that new stadium for the falcons, it will be mercedesbenz stadium down there. He said its gorgeous. He said its incredible. Clearly he likes what he saw. Hell be joining that group. Little foreshadowing there. Whats the mercedes bmw match up in sales. Bmw took the top spot again, right . Theyre a little bit ahead of mercedes this year. Mercedes won the last couple of years, this year it will probably be bmw, both with sales well over 300,000. Ten years ago if you would have said mercedes, bmw, lexus will have sales of 300,000, 250,000, people would say come on, theres not that many luxury buyers in the u. S. Think again. Strong year for autos in general. Phil, thank you very much. Up next, an exclusive with the ceo of kbw. Plus who americas super rich are supporting for the 2016 race and why. Squawk on the street will be right back. Those new glasses . They are. Do i look smarter . Yeah, a little. Youre making money now, are you investing . Well, ive been doing some research. Let me introduce you to our broker. How much does he charge . I dont know. Okay. Uh, do you get your fees back if youre not happy . dad laughs wow, youre laughing. Thats not the way the world works. Well, the worlds changing. Are you asking enough questions about the way your wealth is managed . Wealth management, at charles schwab. Its been an interesting year for the Banking Industry with merger activity an all time high and Interest Rates having an impact in 2016. Joining us to discuss out of it is tom michaud. Good to see you again. Good morning. They were praying for an Interest Rate hike. Finally got one. How will that change the banking business in 2016 . So, the Banking Industry was not built for near zero Interest Rates. Increasing rates is good for the Banking Industry as is a steeper yield curve. With this rate rise, our analysts were raising estimates because of the outlook for higher rates for next year. I guess the question is, is that already factored in, especially because the Federal Reserve came out and said it will be super slow, and well wait to see what data shows, nobody is expecting anything aggressive. Exactly. We have been looking for a rate increase for quite some time. The pace has been slower than what we were looking for. So i think the big question with Bank Earnings is how quickly is the fed going to be acting from here . We have 8 earnings per share growth for next year. We factored in one increase, which i think is probably more cautious than the rest of the market. Does it help the regional banks versus the big bull bracket. Regional banks are more spread dependent so we look for them to have a better earnings per share growth. Youve seen since the crisis the big eight, the big global sifis going in one direction but renal nall banks going another. You should have a low cost to capital. They do. The bigger banks have to have more capital because of this sifi buffer. Does nobody want our savings . Why is it why is it that the Federal Reserve can raise Interest Rates but we dont get that back on our Bank Accounts . Do you not need the cash that savers have . You know, its interesting. I think that banks competition will drive the rates that banks will pay. It wont be immediate. As loan Growth Continues to grow, loans grow, overtime the Bank Industry will have more of a need for funding. The Banking Industry has been awash in deposits and its unusual because of the Global Financial crisis. Until some of that liquidity gets used up, you wont have that competition. Its coming. The question is when. When is the wave of lending going to come. Former cfo of citi was on last week, she said the classic thing is that they would throw money and loans at people once you realized Interest Rates were rising. The fed has not given a significant signal to say thats coming to get that volume thrown at people. Caution caution is the theme out of the regulatory bodies postcrisis. So the banks have a very heavy Regulatory Burden that i think is causing them to be somewhat more cautious. That being said, dont underestimate the loan growth. Were looking for 6 , 7 , which is quite healthy that has been the reason why weve had earnings per share increases. Consolidation used to be something we saw among Financial Services companies. Since the crisis, the big guys cant do it what about regionals and what about seeing a wave there perhaps . Thats great question. Its actually been quite robust. So, if you look at the percentage of the Banking Industry thats merging, its 4 , 4. 5 of the industry, which is a pretty high bounce. The difference is its not the biggest banks in the nation that you would normally read about on the headlines and your shows, its the regional banks. Whats happening, were seeing the rise of regional champions. Banks in the southeast like south state bbanbcorp, pinnacle financial. Its good for the business. Strength or weakness . From strength. So theyre not picking up banks nobody wants because of volume. Its both. Its the winners winning more and the losers needing to sell. So youre seeing this tension in the regional banks, but youre seeing the market reward these wellrun banks. We call them the challenger banks. I think what well be talking about in five years, youll see the challenger banks having more more k market share in the industry and the biggest banks being relatively smaller. Do they run the risk of being a sifi eventually . A long way from that. If senator shelby gets his way, hopefully well get that 50 billion mark move. Moving the threshold. Over the past few years of this bull market in stocks, financials have not been in the lead. Is there a reason to think that will change next year . I think next year will be solid. Financials are the second biggest sector of the s p 500. Very hard to have a market rally, sustained rally without that group participating. Thats been the story. I think if we get 8 earnings per share growth, if credit quality stays in a contained fashion. We think credit costs are going up. 2015 was the trough. Trough, if that happens, i think that can be reasonable performance for stocks. Which is down for the year. Interestingly, what you look at, if you look at the regional banks, but the biggest banks, like you just said, the money center banks, they are down. Theyve been more like a market participant. Away from the Banking Industry, into the shadow banks, those stocks are down more than the big banks. Tom, thank you. Good to get your outlook for 2016. Question, who are americas super rich supporting for the 2016 election . Cnbcs latest millionaire survey is out and robert frank has the details on that. Millionaires making some surprising choices for president in our latest poll. Showing that the top overall chase for millionaire voters is still hillary clinton, with 34 of a very splintered field. The second choice now is marco rubio. Followed by ben carson and then donald trump third and jeb bush, rounding out the bottom at 6 . It gets really interesting when you start to look at it by party. Hillary clinton gets 76 of the democratic millionaire field. Followed by bernie sanders. Not surprising since a lot of millionaires are not going to support bernie sanders. Among republican millionaires, roubo, now the top choice with 26 . Followed by ben carson. Trump with 15 . So billionaire trump not as popular among millionaires as he is with the broader gop voter base. And jeb bush coming in last. Now, jeb had been the top pick in our spring survey. He had 37 . But jeb bush has lost twothirds of his millionaire support. A lot of that has gone to rubio. And thats important when you look at fundraising. Because jeb bush had been very successful with bundlers and donors. The largest number say the big issue for them right now is taxes and government spending. Followed by political gridlock, followed by foreign policy, terrorism. And then the economy and unemployment, not really a big concern among the wealthy right now. But that may be what you expect. The big news here is that marco rubio jumping to the top in the race with hillary. Were going to take this poll again in the spring and do a one to one matchup and see who wins there. Guys, back over to you. Robert frank there with our millionaire survey. Up next on the network, the ceo of oil giant lukoil has to say about the future of energy prices. I asked my dentist if an electric toothbrush was going to clean better than a manual . He said sure. But dont get just any one. Get one inspired by dentists. With a round brush head. Go pro with oralb. Oralbs rounded brush head cups your teeth to break up plaque and rotates to sweep it away. And oralb delivers a clinically proven superior clean versus sonicare diamondclean. My mouth feels super clean. Oralb know youre getting a superior clean. Im never going back to a manual brush. Thats why i switched from uverse to xfinity. Now i can download my dvr recordings and take them anywhere. Ready or not, here i come whispers now hideandseek time can also be catchuponmyshows time. Here i come cant find you anywhere dont settle for uverse. X1 from xfinity will change the way you experience tv. Crude oil, down a percent and a half. As Oil Prices Continue to fall, our own Morgan Brennan sat down for an exclusive interview with the ceo of russian oil giant lukoil. She join us with more. With the help of a translator, i spoke with the ceo of lukoil, which is the number two oil company in russia and accounts for 2 of global production. On day when the price has fallen to an 11year low, this is his forecast for oil in 2016. Translator so believe somewhere in between 40 and 50 per barrel is where the price will sustain during 2016 because the current process is taking place in the industry do not incentivize the development of new exploration projects. The volumes of oil output will be going down and, as a result, its price will be climbing back. But that will happen during the mean time in order to achieve dramatic changes in this situation, we require decisions from the countries which make up opec which would enable to stabilize our prize. So hes hopeful when western sanctions on iran are lifted, opec will be able to regulate production volumes to avoid, quote, undermining the oil and gas prices. Lukoil is unless discussions to reinvest in certain oil fields in there as well. They also have investment in the oil fields in the south of iraq. The ceo calls that a, quote, very stable social situation, not in an active combat zone. Not one affected by terrorist attacks. He says lukoil overall is focused on reducing investments and driving down Service Costs which have only drops 25 . The one bright spot, the devaluation of the rubble ruble. Thats down more than 18 . That has cut costs on operations and equipment produced in russia. Sara, simon. Certainly helps. Morgan, thank you very much. Coming up on the program, much more with apple. Good morning. It is 8 00 a. M. At disney headquarters in burbank, california. 11 00 a. M. Here on wall street. And squawk alley is live