tv Squawk Alley CNBC December 17, 2020 11:00am-12:00pm EST
happy thursday welcome to "squawk alley." i'm jon fortt with julia boorstin carl has the day off apple responding last night to facebook's broadside that accused apple of playing to its own self interests in making it harder for advertisers to track users online without their knowledge. apple offering a measured response saying, hey, we're just giving users a choice. julia, we're starting to see, you know, not only the contours of the arguments but perhaps the diplom diplomatic approach. april sl saying, look, you can still run the business exactly
the way did you before all we're doing is saying that users have to opt in to you following them around and, hey, if it they're fine it with, everything goes on as normal >> yes, that's right apple making this all about privacy. facebook making this about small businesses now, of course, facebook can still target ads to consumers based on all the information and has about consumers and behavior on all of the own platforms. facebook, instagram, whatsapp and et cetera. facebook can follow you when you use other apps on your phone that data about what else you do, what other web sites or apps you're using, that is valuable for targeting. so what facebook is saying is we'll be fine. we've been warning for a while that we have the ad targeting headwinds. but it you're a small business, you really need that specific data so they say they're really trying to help the small businesses for whom that narrow targeting data is so much more important. >> yeah.
julia, it strikes me that there's another digital ad giant in the room. they have a targeted ad business y are we not hearing from them perhaps because google relies on that third party data in different way. they have access to the first party dada when it comes to their advertising strategy remember, that google has the an destroyed operating system if apple makes this step and asks users to opt in, will they feel pressure to as the users opt in on the android system that could mean billions more in implications for facebook's bottom line, right, if they're being hit on both sides of that smart phone ecosystem. >> yeah. absolutely these are companies that need each other i know i love to talk about frenemi sechl fren
frenemies. they have to make sure they can access the vet popular apps: >> well, let's get to our first guest on this. perfect to talk about it our first panel, kindred ventures founder steve jang and gvb capital hans tung joins us now. good morning to both of you gentlemen. thanks for being with us >> thanks for having us. >> good morning. thanks >> hans, let me start with you where do you stand on this apple versus facebook squirmish apple using apple asking users to opt in seems obvious. what are the implications for small businesses which facebook made it about and also for developers operating in this ecosystem with this kind of business model hans are you there? >> yeah. you know, yes, as you know, i'm watching it grow over the last year or two. you look at how the smart phone
ecosystem is trying to create more revenue for itself and also for its stake holders. >> you know, apple definitely has -- is trying to improve user experience but at the same time, you also see them working hard to keep their 30% tick rate on apps being downloaded from its app store in the famous battle between them and epic goes on. and obviously, facebook has self interest to join the force with epic to fight apple as a result. and luke at how facebook is really trying to get the s & bs and any kind of user behavior change does impact on the bottom line it is what it is and it's almost feel like calling the kettle black in the
situation. so we both have issues that need improved but, for sure, if apple and google tighten and make it harder for user to see these ads, it will affect facebook bottom line, for sure. >> right and by them tightening up the rules, as you say, bring up a really important point puts the focus on some of the antitrust issues that have received a lot more scrutiny this year. so, steve, i wonder, do you think this is all a distraction, perhaps, facebook, of course, facing these new regulations over its market power. do you think it has an argument against apple? or do you think it's trying to shift focus from what's going on in terms of that antitrust scrutiny >> i don't think this is just a pr strategy. i think that this is an issue for facebook if you look at facebook's monthly active user base, it's been declining two million quarter over quarter that means the advertising reach is lessening
it's our belief in the venture market and starter market that facebook has a company, as a platform peaked. if you look at some of their properties, there are really three properties that are really important to look at facebook.com and the mobile apps, instagram which is the growing product within their portfolio and then whatsapp which is monetized instagram is 37% of the revenue and ma use if they're not able to have an opt out frictionless data sharing between those apps on ios on apple devices, that's a revenue issue. you'll have a much harder time personalizing and targeting their users. and, you know this is a slippery slope for them i think this is one and number, two they've been -- the last couple years they've been seen as a privacy transgressor and
april sl app apple is a protector small businesses do need to be helped i think this is the wrong way. >> i love that point, steve. yeah i love that point. and hans, i goont back to you with it. because whether it's the pot calling the kettle black i want to throw out another cliche here, it's apples and arrang oranges when you're looking at the facebook antitrust issue versus the apple one i mean, facebook needs user data, not only for advertising, but in order to make their commerce strategy work which they seem to be leaning into but at the same time, they should be able to make this work with people opting in. right? so, i mean, regardless of yes, apple has a lot of power and they want the businesses on the app store to pay side issue
different fight. doesn't it just make sense for people to know if i'm being followed around the web by the like button? >> yeah. i think on this specific point, apple definitely has the edge. if users don't want something, they have to take it as a default. they should opt in if they want something. having said that though, can you argue another cliche that necessity is the modern invention. this move will force, especially google doing something similar, they force facebook to spend more time figuring out how to sell services or goods on this platform by focusing more efforts on the facebook marketplace facebook always made money of revenue. but over time, you can see experimenting with e- commerce services and with nor pressure, you force them to innovate more. >> a question for you on what
hans said, you were crucial in the crafting of spotify's strategy and spotify, of course, has taken aim atapple. how does that influence your approach to this space does it change the types of companies twuyou want to invest? >> he would invest broadly across many industries i would say roughly a third of them have to really contemplate what it means to work on both google android separating systems and apple ios operating systems. the toll that's that you're pawing for that is around content. and it does not touch commerce what's interesting here is with facebook's fight against apple
here, apple has been, you know, in the web world facebook and companies like it and even startups are relatively free to operate around privacy, personalization and targeting rules that are sort of self regulated within the web industry on the platforms, on the mobile platforms, you're sort of dealing with a landlord which dictates the rent. and if you don't like it, you can opt out as a developer or as a publisher. i think it's a real -- i think this issue is an issue of the long term. i think epic fortnight, the very public battle with apple does not -- it puts a spotlight right on apple's system. and android, is you know, google android is right behind that >> hans, quick last question for you. in response to something you said that i thought was really interesting nlt you said the new rules can force facebook to innovate more.
i wonder on the flip side, don't they rely on that consumer, that user data to create new projects does that hurt their ability for expansion and future, you know, ambitions? >> with facebook, i mean, they can get -- they can definitely advertise better with more user information. it's not just on content that people post and look at. they do what they purchase, what service they use and et cetera so there are a lot more ways that one can get that user behavior data. you look at how amazon has grown. the advertising revenue, it does so by knowing what users are looking at or what they're buying they get better service as well. the more users tra transact, the
better it is. >> a scary bottom line they'll find different ways to get our user data. want to thank you both for being with us this morning thank you. >> thank you >> and the ftc's top antitrust enforcer joins us at the bottom of the hour as big tech's regulatory risks ramp up it's a beg show of "squawk alley. it's going to continue right after this break erybody's probl. and that's why we created rapunzl. the rapunzl app was designed for high school and college students to simulate stock portfolios. they're able to buy and sell stocks in real time. thanks to nasdaq's cloud data solution. if somebody tells you just download this app and you could potentially win a scholarship, and you're learning, it's like, yeah. information is key. having access to information at your fingertips on your mobile phone, on your desktop, or here on the screens, it really allows us to showcase what's happening out there. and so we pitched the idea of: why don't we host an
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our next guest is continuing an expansion during the pandemic announcing that it will add telehealth and mail delivery to the subscription service the ceo of good rx doug hersh joins us now doug, good to see you. i want to get a sense of the environment, how it is shifting and how you're adapting. we talk to you not long ago after amazon announced the formal move into pharmacy. your stock took a hit. it's up nicely today and they have since recovered almost all of that loss. how are these partnerships and additions to your subscription business going to provide a mote competitively? >> sure. our goal from the beginning has been to provide americans with convenient and affordable health care and with the good rx gold announcement, we're making it more convenient and affordable we have doctor visits on the app for $10, starts at $10, then, of
cours course, you can get medicine delivered to your house. so now for less than the average insurance co-pay, a consumer can get the care they need delivered directly to their home and really easy and especially during the pandemic, it's important to have solutions like that >> doug, tell me a little bit more about this good rx gold program. what do you think the ideal customer is for this how big is that addressable market and how much is the appeal going to be about the access to telehemth atel telehealth and more about access to the core service? >> we've been around for a decade we have a lot of expertise we saved americans $25 billion on prescriptions millions of people use us every month. we're trying find the pain points we bought a company called hey doctor we're integrating them, making sure we can do it in an affordable and easy way. over 150 conditions of telehealth with the pandemic, we have this incredible opportunity to
provide care directly in the home when patients are concerned about leaving the house. and with mail, it's just a nice next compliment. hey, you have a condition. here's prescription. it will show up in your house in a few days again, for less than $10, we want to make health care affordable for everyone regardless of your insurance status >> doug, i know you've already fielded a lot of questions over the last few weeks and months about amazon increasingly moving into the health care space but i have to ask you both the latest developments and that is reports that it's looking to offer primary care for large employers through mobile app i just wonder if you think that companies should be a little bit weary of handing over yet more data to amazon it's already has the cloud business, the e-commerce business and now data and health care do you think that businesses should be a little bit worried about this >> especially in health care consumers should be concerned about the data and make sure it is being used privately. we focus on good rx and making
sure we do right by the consumer with what we have a very secure service, easy to use we try to always build trust for consumers and making sthure that we're providing a safe, secure environment. i'm really excited about the service. i think it's going to be a major win for consumers in a really tough year the average person saves $3,000 with good rx gold and we're excited to roll it out we think consumers will trust us >> all right doug hersh, ceo of good rx it seems like everything we've talked about today comes back to data one way or another. >> the new oil, right? several firms out with their top tech picks for 2021 including morgan stanley who calls microsoft a good buy rating overweight. w. a price target of $249. read the reasons why on cnbc.com we're back in a few minutes.
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welcome back earlier this morning i sat down with the chief technology officer of amazon who joined me to talk about eight predictions for the coming year. one of his predictions is that pictures, video, andaudio are going to speak louder than words because of ai. the cloud and ai are going to allow stores to watch how customers navigate physical spaces, the same way they with now watch how we navigate web sites and apps and that will help them make the experience more efficient take a listen. >> we would like to have a focus group that needs to do that for you. actually center the dat yachlt what is wrong with the bigger change that's we've been seeing in the past years because now we generate more data and maybe that's from register all the way to your security card transaction, there is all these data streams that need to come together where you can make predictions about. for example, the simple one.
you know, quite a few stores have many security cameras out to check out lines the cash register. you know immediately and whether you need to open a fwhun there doesn't need to be someone that calls someone else. you may slightly, you know, make determinations about demographics and things like that and, you know, the high school next door goes out and then you have a bunch of high school kids come in and they have a very different behavior maybe than the elderly people that may be shopping with three, eight, and nine in the morning. of. >> and julia, we started off talking about the importance of data in tdigital context. this fight between facebook and apple. but now we have physical spaces becoming digitizeded and he is saying that is going to be perhaps just as important. >> absolutely. what i think is so interesting, jon, we talk about physical
spaces being digitized and thent other ways that amazon is collecting data on us and our homes. take with alexa. obviously, amazon is a leader in the audio space. but if you think about the different ways of communicating, this idea that it's going to be more about images and audio than it will be about text and the way i type things into my phone or many i had laptop, i think that audio has been at the forefront. we've seen so much growth in the podcast and music space this year i think amazon is really going to figure out how to make money from that as they listen to us and figure out what we want to buy and do through our alexas. the. >> yeah. platform approach for sure another theme that amazon sees in 2021 is a race of small businesses toward the cloud especially in markets like southeast asia and in subsa herian africa where the focus for startups is less about being a unicorn and more about just multiple sustainable digitally
driven businesses. take a listen. >> the focus here definitely in the u.s. on unicorns and companies in southeast asia are clearly not focused on being a unicorn. they're focused on building a sustainable business that they can run for a longer period of time and to have a very different idea about how to use technology not build it themselves. >> and that whole not building it themselves fits in with this trend we've been seeing with shopify and commerce and stripe. so many companies that are looking to provide that platform like experience. we just talked to shift a couple days ago to smaerl businesses so that they can compete with the bigger ones. >> the side ecosystem you're seeing a lot of big companies grow out of. reminder, the digital transformation we've seen sped up this year, it's far from over you're going to be having a lot
more players come on to the cloud, create new things interesting that when it comes to subsaharan africa, nb hfacebk has competition there. they're making a lot of strides in upping the market share outside of north america could see more competition from our cloud players when you get into the regions >> yeah. and lots of growth to be had around the world and so many companies need to retool coming out of this pandemic so that they are ready now he had eight predictions we just gave you a peek after two of them. you can hear all of them, watch my full interview amazon's cto, subscribe to fortknox on you tube i'll post it after this show and follow me on linked in you get a lot of good stuff from forttknox as well.
the mandate stretch as cross amazon.com and aws, julia. >> yeah. it's fascinating she just said that data is the new oil. and amazon is always been on the cutting edge of figuring out which data is going to be the most valuable oil to fuel their growth as we had he had to break, take a look at a few of the on line retail names hitting new highs today. including chewy, spotify, etsy and stitch fix am continue to watch the nes more "squawk alley" after the break. ♪
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here is your cnbc news update at this hour. russia has been banned from using its name, flag, and anthem at the next two olympic games. this due to doping violations. the ban also applies to any world championships over the next two years including the 2022 world cup in michigan, six men have been indicted for planning to kidnap governor gretchen whitmer. one of the men told to kill police if necessary. the massive snowstorm that hit the northeast killed at least four people. two of them died in a pennsylvania highway crash that involved as many had as 60 vehicles it took crews most of the night to clear that scene as you can see there. and a correction from the last hour. david bernheart who tested positive for covid-19 is the secretary of the interior, not
the agriculture secretary. we want to make that correction there. that's our cnbc news update for this hour. jon fortt, over to you >> all right thank you. >> meanwhile, the ftc this week has ordered nine tech companies to share information about how they collect and use data. it's the latest evidence of a growing anti-trust and recollect torre pressure on big tech joining us now for more on the antitrust outlook, the ftc's bureau of competition director i ian connor they asked amazon, facebook and others to explain how they use personal data and that comes this week as there's this dust up between facebook and apple about exactly that what do you think about the argument that end users ought to have the option to opt in to having their activity tracked across the web >> this is an issue that we're
studying and that is the goal of the book that just came out for the study that came out the beginning of this week is to assess how much tracking there is by the data companies that collect so much on users. and whether further action needs to be taken on either the competition or the consumer protection side. >> well, i mean, regardless of how much fracking there, is we know there's a lot with the ad networks, to what degree does a user opt in to that tracking interest the ftc >> so one of the things that we're looking at is we look at a number of different platforms is how people -- how basically the services are financed and how they make money. so they're going to -- we're going to look at and you see this in some of our recent efforts to understand how these companies operate and collect data and then use that data.
we need that information in order to ascertain whether there are quality degradations or effectively price increases through the amount of data that is collected through the companies. so we can assess it both from a competition standpoint which is what i supervise and then also from the consumer protection standpoint which is the other mission of the federal trade commission >> so, ian, once you have that information, how do you determine if that hurts the user i think most people on the apps and use the big tech companies don't are problems with it because they can't see a lot of what is going on in the background >> yeah. and there are two aspects to this the first is was it actually a choice did the consumers make a choice to give over that data was it a knowing acceptance that was going to be used and then the second thing which comes in much more on the competition standpoint is how is that data either a barrier to
entry for other companies or is it used or abused in order to make sure that competitors either can't get access to necessary data or are closed from certain markets because they don't have similar data set? so we're looking at it from user standpoint and from a competition standpoint >> in terms of the impact on the consumer, what do you mach of facebook's argument that taking away ad targeting would mean that companies shift more to subscription models or have more paid add ones and that would ultimately disadvantage the consumer and you'd have people that can't afford to pay things, just get fewer services? >> we have a number of services with a ad supported model and paid supported model you can look at the streaming service that's have this users do in many cases already have the choice to pay for a nonad service. so i think from a competition
standpoint, we're in favor of consumer choice. so giving consumers the option to have a non-ad base service is an attractive choice to many consumers because they're already making that choice in other products. i'm curious because they're relevant to the news space publishers have talked a lot about how they suffered from the dominance of those tech giants >> the news sits in our sister agency the justice department's antitrust division but overall, one of the things that we're trying to ascertain is whether the platforms are illegally using the market power
that they have to maintain the monopolies and to snuff out competition. just because you build a big product that attracts users because not necessarily mean that you have committed an antitrust violation. it's how you use the market power and how you got that market power in the first place that is the perview of the antitrust laws >> let's talk about how they got that market power. i ask if the agency has the appropriate tools they need to assess the acquisitions at the time at the time, they didn't have the means of sort of speculating and making regulatory decisions about future outcomes. should it? is there a way can you do that under the current structure? >> so when we challenge a merger before it's consummated, we're crystal ball gazing, trying to
predict what the effect is going to be on the markets about it with dough have the power to go back and challenge transactions that have been consummated. we do want to fairly regular basis. even before the recent complaint we filed a consume may consumma. where we looked at mergers and anticipate that they're going to be problematic as we try to predict that future, we seek an injunction but in certain cases, we do see the market develop in a way we did not expect and that we still have the power to go back and challenge mergers where the market did not develop and we do see a merger may be anti-competitive >> ian, i want to go back to the way you were addressing that dpe tigs issue a little earlier. facebook is trying to make this a matter of small businesses need targeted advertising in order to compete in the marketplace.
essentially setting up facebook and google as essential partners for small business and pressures of small business in this space. is that an interesting argument to you that targeted advertising has some essential role in digital commerce and therefore needs to be protected from an opt in >> the way in which small businesses can compete in this marketplace that is dominated by a much larger platform is something that we're going to look at and try to figure out how -- how targeted advertising, how user data that is collected that then allows that targeted advertising affects competition. the competition focus is to provide as many choices as possible to consumers. and so if there are beneficial pro competitive aspects to business operations, we're going to try to preserve that. that doesn't mean we'll turn a
blind eye to anti-competitive conduct that may also have some pro competitive side benefits. they could also provide the same benefits to those small businesses and other competitors. >> yeah. really interesting finally, we got an incoming biden administration biden himself is vocal and was on the campaign trail about facebook and data related issues how do you expect the administration to affect the work of the ftc? i would expect them to continue the vigorous enforce mement tha you've seen. this year we filed eight merger challenges we filed two monopoly cases and that doesn't include a number of other transaction that's either band on in the face of opposition or where we settled out of those
that is high level of activity and i expect to continue on into the new administration the federal trade commission is already a bipartisan commission with currently three republicans and two democrats. and so because we change over so infrequently, each commissioner has a seven year term. i would not expect a significant change in the vigor of enforcement going forward. it may go up but it certainly will remain at the same level that you've seen over the past year to three years. >> all right the pressure stays on. ian connor, the ftc's bureau of competition director thank you. >> thanks very much. >> meanwhile, wall street still likes big tech ever core's big pick next year, apple with an outperform rating and price target of $135 keep in mind, the stock is already up 75% this year alone the reasons why, that's on
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welcome back cybersecurity threats continue to loom over the tech industry but most tech executives believe their companies are better protected against cyber threats than they were a year ago. this according to the latest cnbc technology executive council survey half of respondents said the greatest cyber threat facing the company is state sponsored cyber
warfare. we've seen a bit of that lately. individual hackers and employee mistakes tied as the second greatest risk. to better protect against cyber threats, near aly third of tech executives set the incoming biden administration's first technology priority should be to define a national cybersecurity protocol restoring access to h 1 b visas for high skilled workers and stopping the spread of disinformation on social media is second and third most priorities for the incoming president according to our members. overall, the executives surveyed by cnbc are optimistic about the impact that the incoming president and his administration could have on their companies over the next four years nearly two-thirds of respondents said that president-elect joe biden will have a positive or very positive impact less than 10% said the biden white house would likely have a negative impact on their business if you want full coverage of the latest cnbc technology executive council survey, head to
dur this pandemic, the company double delivery sales this year. joining us now is the ceo of panera bread thank you for joining us i want to start off on this massive growth and delivery. you're taking kind of unusual approach to delivery tell us about your hybrid model. >> yeah. so panera is emerging stronger through the pandemic as you mentioned, we're more off premise than before. 40 40% to now 85% off premise i think on the off premise, the biggest driver is delivery our delivery business is growing by more than 100%. and as you mentioned, we have a unique -- very versatile delivery model we have the combination of a fully owned delivery
infrastructure with 8,000 of our own delivery drivers on the one hand and on the other hand, we have partnerships with third party companies. and also hybrid models in the model as well. it's a very flexible delivery model. it is helping us drive this growth that we're seeing >> now with all of this news about the vaccine and this hope. >> i think the requirement for off premise access is here to stay it may not be to quite the same extent as it is right now. it certainly is going to be much higher
and we will expand it will drive the growth side and so on. and also strengthen the digital access to enable that group. i believe delivery growth so i believe delivery, convenience, off premise here to stay >> there was a good piece in the journal that questions whether door dash, grub hub and uber eats will be as appealing when perhaps some of the commission caps go away how much commission are you paying now and is there a point where you say forget it, you're out, and perhaps you'll build out your own delivery fleet in. >> we already have our own delivery fleet we actually find that the third
model is intersektory because it gives us access to the weekends, something we don't have with our own infrastructure we see this as actually being good for us. i think talking about door dash and uber eats, there has been some undeniably some tail winds but it's a tough business for them it's very competitive. i think the business model is hard because you have to balance the needs of customers, the careers, the restaurants, et cetera i think the companies that are going to be innovating this environment and expand the market share, perhaps expand delivery to beyond restaurants, to groceries or drugstores, et cetera, are the ones that will end up doing well. >> but i guess the question is is there a point in which those commissions become too expensive for you and you would expand your own fleet >> know noelle, i think we have
flexible range of options, fully outsourced, fully in-house and hybrid models in the middle and we have different types of models and arrangements with the third parties depending on which part of the service we're leveraging either the first mile we're leverages or the last mile so much we have a lot of flexibility and therefore are able to apply the appropriate business model to the situation at hand in a specific cafe so i think given the flexible range of options, i think we're in a good position to optimize what works best for our associates, customers and shareholders >> so put a finer point on it for us because people might not know panera was way early, way ahead when it came to these digital platforms and systems before the pandemic even hit, which is why you have this flexibility.
what's the most important strategic technology asset that you have that allows you this flexibility that perhaps other restaurants should focus on if they don't want to be at the whim of some of these othe companies? >> so that's a very important question we've been actually leading on digital infrastructure we've sent over half a billion dollars overs last four or five years to have a digital infrastructure that enables the e-commerce, convenience and access for our customers we also have a very strong loyalty program. we have 40 million loyalty members at panera, which is probably the highest in the industry and the loyalty members, the lifetime value is five time higher than nonloyal members that's a tremendous asset to have and the e-commerce digital convenience we provide to our customers through our web sites and through a mobile device was already in place and we were able to leverage that even more
and grow that from about 35% to close to 55% right now and it growing even further and the digital e-commerce, i think the strength of that platform is we are seeing that the ticket average spend of a customer is at least 50% higher when they come on our e-commerce platform i think it is what the customers need and also incremental and profitable for us. >> those are just stunning statistics around the big potential of those benefit members, the people who are really locked into the system as well as those e-commerce numbers. when you talk about e-commerce and digital, what is going on with your real estate? as you look ahead to your real estate footprint, how different does it need to look a couple years from now >> the biggest learning is that
drive-through hasets haassets hn able to buck the trend drive-through cafes which provide this off-premise convenience to customers have done much better we're going to double down on expanding drive-through assets that's one clear trend the second is i see going forward the new cafes we're going to build are going to be smaller box, smaller in terms of footprint, perhaps smaller on-premise seating for our custome customers, more off premise convenience and more digitally enabled. so smaller box, more off premise and also more drive-throughs, at least at panera. >> just fascinating stuff. more drive-throughs are the future thanks so much for joining us to talk about panera today. >> it's a real pleasure. thank you. >> and check out bitcoin this
morning. another all-time high above 23,000 rgad what's behind the latest sue on cnbc.com. we are back in just a moment at dell technologies, we started by making the cloud easier to manage. but we didn't stop there. we made a cloud flexible enough to adapt to any size business. no matter what it does, or how it changes. and we kept going. so you only pay for what you use. because at dell technologies, we stop...at nothing. ♪
let's get a check on the markets as we reach the end of the alley. all the michael jackson indices up about 0.4% for the s&p and nasdaq that maps record highs, above 3,700 and 12,700 julia, dierdre, get to have you on the alley as always. with that we'll toss to skcott wapner and "the half." the man who called this record run for stocks is back with his look ahead. he'll debate our investment committee. joining me are josh brown, jim lev leventhal. 52 record highs for the nasdaq this year, higher than