gloves to keep my hands clean. the cow didn't like that so much. took the gloves off. >> thought you might have been doing something else with the -- i don't know. latex gloves, i don't let people get near me either. >> good hygiene. >> thank you. that does it for us today. >> very moving piece. >> time for "squawk on the street." ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim faber. premarket is lower after the dow failed to crack 18,000 friday by just nine points. a bunch of cross currents today, pharma m&a, weak mcdonald's sales in focus, oil is below 65, a new five-year low as morgan stanley cuts its target for brent to 70, down from 9 pa. ten-year hugging 2.3 after the

jobs number friday. markets slipping after weak overnight data. present hitting new five-year low. the dow as we said within nine points of 18,000 and retreating today. merck buying cubist more than $18 billion and cash. comments late in the hour. mcdonald's delivers another weak number. sales missed the street, down 2.2% worldwide. more than that in the united states. we'll get to all of that later on. but first up, dow and s&p, each posting a seven-week winning streak since late november of last year. blue chips within 48 point of the 18,000 mark. futures falling on disappointing chinese trade data. japan's economy shrank more than initially estimated in q3. crude falling to that new five-year low. morgan stanley cut its forecast, oversupply to peak in the second quarter next year. but in their words, guys likely to get worse before it gets better. >> once again, i mean, here's --

here we go. they're weak, thoi this is our strength. when europe's down, by midmorning the money comes here we have the stronger currency, that's the pattern. people take the cue from europe and sell our stocks too. it's just been a major misdirection play over and over and over again. not unlike russell will on in what he did to the philadelphia eagles. >> took 2:12 to get to -- >> i was going to the top. i wanted to work it in after commentary that could be of value. >> with every passing day we adjust to the new landscape of lower prices you have to think of another layer. whether positive or negative. we all know there are many positives. there are also potential negatives, whether geopolitics, which will play out over a longer term or balance sheet of

certain companies that took on a great deal of debt and may not be able to meet interest payments if the prices stay here or go lower. >> you can see the cash flow of the companies. it's very evident. or ebitda. you can see the budgets, they have to cut back or else go broke. they can't cut back so fast. you have equipment, you're out there, i've have carezo on tonight, it's a company spending more than its able to, maybe they have to cut back. i have enbridge taking advantage. the pipe and they can send gas -- oil wherever they want. so it's not the end of the world for those companies but boy, chuck bunch said something on thursday, friday, he's the ceo of ppg. he said europe will do better with -- >> lower oil prices, absolutely. >> yes. >> it impacts import numbers

from china, lower than we anticipated. part of the fact due to the dollar decline in oil. >> depends on your situation in oil. bp reports they're cutting jobs because of the low price. >> right. >> usa today, other companies hiring because of fuel is cheaper. goldman taking love to a buy. >> that's the best performer. but it wasn't that great a call but there are other airlines down because of a load factor. you have raw cost that's fabulous, that i think is going to offset the dollar for internationals, hopefully for domestics it's just huge. >> right. some people say until you get to the dollar strength, i'm reading it here, one of notes, massive obstacle to crude stabilizing. until that changes oil prices are going to have a tough time rallying. >> i think since when do we think that the american consumer done benefit? numbers get better and better for what they have. and now that just means that maybe we revert to the same

stocks going higher and higher. when we see earnings, it's terrific if they -- if you're willing to accept ex-currency. >> speaking of, i think we'll get to mcdonald's, i know because there it is, right in that press release. >> right. >> seven to ten cents on currency alone. by the way, mcdonald's dit record 2.2% drop in global comps for november. negative top line performance expected to pressure margins in q4. u.s. down 4.6, citing strong competitive activity and working to enhance marketing, trying to simplify it's menu to get momentum back in the u.s. 4.6 is the worst comp in 11 1/2 years. europe down two. >> yeah. terrible. >> people running out of the words. >> yeah. wonder if mr. thompson doesn't have to go yadic. >> all of the rage. >> united technology spent more

time yachting. terrible numbers. they're shaking up some things. don thompson faced wthd a secular problem. the food is not rviewed as healthy and organic. the journal pointed out, it's very, very difficult. it's going to get more difficult for mr. thompson to justify -- i mean, these are horrendous numbers. these are horrendous numbers. >> all that said, it's been hard to knock this stock out of nine handle. >> exactly. i think there's always activists, a great balance sheet, flexiblibility. these numbers are so -- i mean it's rare you see these big double digit declines other than if you having that the people don't want. >> right. right. >> in the release they cited negative top line performance expected significantly pressure company operated in franchise margins. seven to ten cents from supplier issue in china and u.s. dollars

strength against all foreign currencies. >> is burger king healthier? does wendy has a soy burger? does burger king have some tofu thing i don't know about? >> goldman resumes coverage of names, starbucks 95 target. >> i saw pictures that howard schultz was posting. quite a seattle weekend. i don't want to -- >> ouch. >> but there is this roasterry, starbucks, new products, innovation, starbucks. starbucks is on a major roll. they ain't talking the price of coffee. talking about willie wonka and chocolate factory meets roastery, the winery, higher numbers, bye, bye, bye. >> goldman sell on panera, sell on yum, which has analyst day on thursday. >> yum has flexibility to do things. i love that taco bell add, the guy gives a smooch to the dad, though the dad should have his hair cut. things happening underneath in the group. if taco bell and pizza hut can

take advantage of lower oil and not be offset by china, you'll see that that down grade is not going to work. my charitable trust buying panera, to me that piece, price target, panera, 2.0. every time you have a 2.0 replacing 1.0, they do better i shout a short sided downgrade. >> back to mcdonald's and carl's point you can't shake the stock despite what seeing with -- >> what are you hearing? >> not hearing much of anything. 3. 5% yield. these thing dozen give. we both heard -- constantly hear activist may be there but i'm not sure what the play book would be. we've said many times, these activists typically now, especially larger ones, don't like to target companies -- >> not to mention that yield, attractive the 3.6, less attractive if the ten year keeps going the way it keeps going.

>> this is one where -- where you see those numbers -- i think mr. thompson's terrific and i think the hand of what mcdonald's sells is bad -- but burger king doing as well, wendy's doing quite well -- i think a change at the top greeted positively. >> whoo. >> i know. >> i think it's early. >> tough. >> early. >> what numbers do you have to see to make you feel -- >> i don't know. >> they're not in the playoffs. playoffs? no. i mean they can even win the game. practice? >> new york sports fan, that's not a word i'm familiar with. >> playoffs? >> yes. >> i don't -- >> i don't understand what it means. >> you need a glossary. >> regular season, i know, regular season over before it's actually over, i know that, too. >> look, i want mr. thompson to turn the company around. these numbers are going the wrong direction. and i think that something has to give. but i do believe that the yield will help again.

i believe they've got hefty -- a great balance sheet. terrible number. >> let's move on to a pretty big deal this morning. it's one big one we've got, so to speak. merck, agreeing to buy cubist pharmaceuticals, $8.4 billion in cash, additional $1.1 billion in debt. deal, 37% premium to closing price that cubist had friday. both companies expect to close transaction in the first quarter of 2015. jim, it's -- it's about antibiotics, one cubist is their biggest -- >> cubist 90%. >> 90%. there was a first question on the conference call, i will say this, was about his hess paira, it says teva won't produce until 2019. there's a court case that could be soon, could be sooner if it

goes against them. some people think they're taking risk here at merck given that big number for a company that's about right now one product. >> well, my charitable trust owns merck. i have looked into this issue a lot. cubist on twice, i don't want to personalize things but when my dad fell ill, he basically, the doctors said, he's got the bug, okay. and we have nothing. and i said, how can you have nothing? you have nothing? you can't give him a pill? you have nothing? and they said, listen, you're in the hospital, you get sick, you die. i was like, you have got to be kidding me. that's what cubist, when they've been on the show, twice, they said there's nothing. everybody stopped developing product but we're there. i think before we write this acquisition off, remember there's nothing. and they're the only guys that are working on it. lab maybe they have something. i keep thinking when gilead bought pharma set, what a silly

idea. they had something. maybe cubist has something. you get sick in the hospital, you're uaw die, if you're older. >> but 30% of the people who get sick in the hospital who are elderly die, okay? that's the medicare figures because they get superbugs. and these superbugs resistant to whatever they have. >> horrible. you say -- >> need more research, without a doubt. >> you speak to the head person of this thing for the hospital university of pennsylvania they say, it was like we don't have anything. 2014? >> whether that justifies paying $8.4 billion for a company that has one drug, largely all of its sales that would be facing generic competition if a court case goes against it sooner than it thinks. >> three trials, two drug candidates have potential blockbuster -- from the company obviously. >> right. >> i think merck must have a feel -- unless merck is like

hey, burn cash. >> it's their second biggest acquisition ever. >> right. >> adds to what has been a record year in health care m&a. >> within merck is a better alzheimer's drug than biogen but they don't talk about. merck is not a professional company. if cubist does have what they are intimating, i think this is a drug that will be given to everybody who -- at icu who is going to to get -- this is what happens in icu. it what happens. >> merck identified the hospital acute care segment as a key priority area where it believes it can have the greatest impact. interesting here, they say have the greatest value of the customers, that's society, don't see that often. >> it's incredible. you've good to get out as fast as possible but you can because you're not ready, particularly elderly. i remember discussing with doctor, 30% chance of death. why? they get sick in the hospital. well, we just give them the drug. no, we don't have any drugs.

what is it like, the civil war scene in "gone with the wind" burning atlanta? like the hospital beds, people are dying. this is a terrible thing. cubist is the only one who seems to be involved. maybe they got something. i'm hopeful i'm talk with them, wow, this would be great if you have one of the drugs in the pipe. i'm believing that mr. bonnie, serious guy, so i think that merck maybe they're doing it blindly or maybe they know cubist is testing. >> meg tirrell is all over it. she'll talk to celgene. >> she didn't go to sleep last night. e-mailing her at 4:00 a.m. eye-opening report why the ceo of utx abruptly retired. talking travel, marriott brings something new to the u.s. arne sorenson on the company's growth strategy. with the dow and s&p up seven straight weeks. more "squawk on the street" from post nine in a moment.

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♪ retired as ceo of utx after company directors expressed concern his was too disengaged

from the operation. he mad a trip to check on construction of his yacht two weeks before his departure from utx. hence your allusion to yachting. >> two numbers here, different foot amount of his boat his kept upgrading. it's interesting, only 12 member of the board of united technologies. this last boat could fit 16 to 20. he's not just -- this wasn't just all about the board and the opportunity to get away for the board. >> right there right? >> the journal story, based on reporting from three reporters cited in the story, makes it seem as though, i mean, listen we commented many times on date in question how it was handled. >> yeah. spent more time with his family, it with his boat. >> he was feired. the journal story makes it seem as though confronted by a direct, you seem to be spending a lot of time out of the office.

he said, right, i'm going to retire. >> right. decided today, i'm going to retire. >> i have a 17-foot boston whaler, you can argue that my bald head with ionizer spending too much time on my 17-foot boston whaler. i come back and say, you've got to be kidding me! big analyst meeting coming up, charitable trust own it, worst performer of the major conglomerates and he's on a boat? a boat? i mean, not practice. a boat. i keep thinking about sports. it's too absurd. it's too absurd. >> right. >> a boat. he's on a boat? >> other guys have big boats. he's not ceo anymore. >> can you do it any other time? >> there's a previous ceo of united technologies who had a boat. >> yeah. >> george david. i think the problem is the boat. united technology, the ceo, he must not have a boat and he can't buy a boat.

okay? that's in with the yachts and boats and the ships. if you have one, make it be like a submarine, do it with general dynamics or something. >> hate to be the compliance officer on that one there. >> they have to ask the guy. one point, when they have the surge detector, dow you have a yacht? if he says yes, that is it, out of the search. george david. >> that's a no go. >> saying no to the yacht. >> yacht owner or plan to own a yacht? >> right. you've -- a ding dinghy, canoe, canoe. >> sunfish? >> how about you can use a dock if -- how about fly-fishing? what's the matter -- >> people can get obsessed with that. >> fly-fishing? >> you can do that locally. >> say again. >> you can do it locally maybe. united technologies. this is not like, you know,

private company. but he wasn't compensated on the way out, was he? come on! sorry. they did finally reveal, because it was a little upsetting. i thought it might be, truly, maybe something involved with the operations. but it was the operations of the yacht. i feel better. >> it's woefully underperformed the index for the year. >> yes. it's been horrendous. horrendous. in every other -- all of the major international companies have done quite well. headwinds, what i didn't realize, look, where's ellison? there's a guy who knows how to yacht. he's a yachtsman. his stock's done okay. >> it has. he knows how to yacht and run a company. >> he does. though he's not ceo anymore. >> no, no. that's true. he spent more time yachting. >> cramer's "mad dash" as we look at opening bell. more "squawk on the street" straight ahead. people with type 2 diabetes

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get every month free. ♪ all right time for "mad dash" on a monday, six minutes before the opening bell. >> new yorker that jerry gruben, doctor, told everyone who wanted to, at $40, that agio had a new formulation, in the mid-40s. formulation to be able to target particularly cancer cells subject to mutation and results,

this weekend, extraordinary, people just buzzing and buzzing. you think they would be late in the game but it's not and let's add celgene. celgene has the formulations they own 15% of agios. you know what happens? he's on scott wapner's show. >> i've heard that. >> a double-barrel thing. i want to point out, celgene has strikes in four companies that presented at ash. all four were blow aways. celgene dominates ash. was through their different stakes. this is a novel way to be able to do drug development. you let the hard stuff be done by these ipo companies you take a stake and reap the benefits by being able to co-market the real -- celgene, by the way, right here when we were worried about patent. >> yeah. >> guess what? that was not something we should have worried about.

bob has done a remarkable job with the strategy. hats off to the guys. stocks going higher. >> remember next time they take a stake in something. >> yes, that's when you buy. when you buy. bluebird, amazing. amazing. >> opening bell just a few minutes away. lots more "squawk on the street" coming right back. [ male announcer ] your love for trading never stops.

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today there's a new way to work. and it's made with ibm. you're watching cnbc's "squawk on the street." opening bell in a minute's time. busy week. retail earnings on the way, costco later in the week, autozone, lululemon, ppi and keep our eye on 18,000 watch on the dow. this close, jim, friday. nine points. >> can it continue to go up after? i think it will be a very good number. autozone historically traded down instantly after it reports. seems people think it's dispinting and then goes up as they do their amazing buyback. bought back an amazing gigantic stock. buy on weakness. it was a winner. >> financials with a breakout friday? >> yeah. cold weather, downgrade of usb. wells fargo, bernstein

downgrades wells fargo. >> keep our eye on those. talk technical levels on tesla later this half hour. opening bell. there's the s&p at the top of your screen. down here at the big board. rogers communication, based in canada, doing honors at nasdaq caceis, europing banking group dedicated to corporate clients. >> interesting. this one, again, i want to warn people, they see the market down, a lot of it is down on oil, and people rethink, wait a second, did we take down the right stocks on oil? should we be buying airlines again? airlines are gad. should we look at southwest? next thing you know the market turns. >> mcdonald's, by a wide margin, woft loser on the s&p, down 3%. you missed it, global comps came in below expectations, down 2. 2. street looking for down 1.9.

united states down 4.6. lowering guidance for the quarter on weak dollar and china supply issues. >> yep. see caterpillar, monthly china excavator sales down 20% november, weakest year-to-date. negative pieces out there. again, i just say, these are companies that are worldwide. mcdonald's is challenged, i'm not -- i notice panera downgrade having its way with the stock. goldman's making a lot of noise on restaurants. i felt it surprising because, while i candidly love starbucks, potbelly polled -- ever been to potbelly -- any place says you'll get fat -- isn't that like the potbelly, does that make you feel like wow. >> i'm going to go there. >> a couple doors down here. >> i know. it's crowded. not a selling point, potbelly. try to avoid that. six-pack, there a six-pack? >> no.

good idea. >> that's my place. >> launch that next so bar san miguel. >> i may have to do that. >> six-pack weekend. >> tiequilatequila's low on cal >> dunkin', i don't know. sell on yum. i fine these analysts downgrades have so far proven to be not that grade in general given where averages are. >> yes, yes. >> market carries everything higher. >> on the flip side, ebay does get upgrade over steeple to buy. >> i thought a lot there. >> giant in e-commerce, not amazon but ebay. >> get some paypal. >> the important thing going on, some believe paypal will be challenged significantly in term of competent significance, whether a part of ebay or not. >> a lot there. i still think the best way to play the whole thing is to be in -- you need to have new readers at the cash register

because of what's going on with a different kind of swipe as, geez, i don't know if you've been hit by -- i don't want to mention companies in particular but but click on link at discount and look exactly like the real companies and it's -- don't click on the link. >> i see. >> i don't want to -- i don't want any company to think i'm picking on them. be careful. links look like they're from the retailers are when you get the -- >> you don't click on any links you get, period. >> no. i -- >> oh, 50 bucks, here it comes. no, it's not the company. it looks just like the company. >> talking about breaches and cyberespionage, back to china for a second here. export number at 4.7% was well below what at least the street was looking for. imports down 6.7%. they're buying less iron or --

>> geez. >> the economy's slowing there. and real estate is still the key concern in many ways for them. don't know how much more they can try to lower rates or stabilize things. you know, interesting to watch china. obviously it's demand for oil has played prominently in what's going on. >> you think alibaba, slow decline in alibaba could be related? consumption's good in china. >> it's not bad but it isn't where they wanted it to be. trying to change that. it's almost reversed, right? we're 67, maybe more percent of our economy's consumption. they're about 33. >> take a look at action. >> haven't gone up that much. >> look at action of home depot. they don't have europe. north american company. the stock, it's like tepid and it starts going higher. why? they're the beneficiary, u.s. company that benefits from the lower gasoline. you to be selective. that's one of the reasons kos toe's domestic. i like that, too. >> deal yus, filing for chapter

11. >> yes. >> keep our eye on whatever news radioshack should have in coming weeks. >> what can i say? >> not much to say. >> last time i was there, they said, why are you you here? >> really. >> woman on the phone a long time, waiting for her to get off the phone. why are you here? i'm here to buy something. you know, reverse -- some company, how you get that negative sale, that reverse sales, supposed to make you want to do something. i was turned off. >> when somebody tells you to ago away? >> yeah, turned off. >> tesla has broken 200-day moving average. >> regarded as gasoline play. >> take you back to july levels. the counterargument is, if you're in the market for $90,000 tesla, you're not worried about the price of gas. >> i know. i think that -- look it's a cult stock. surprised that anyone links it to gasoline. you'ren in environmentalist if

you buy tesla, it's a cool car. auto sales run for regular guys. terrific. >> right. i've asked that question and gotten the answer, it's not about gas prices if you're buying tesla. it's about other things. >> but investors are regarding it as a -- like the solar plays which have been killed. killed. people just say, listen, oil's back, bigger than ever, let me go buy -- we know that figures from the major car companies show gaz guzzlers, they don't guzzle as much as they used to. >> no, standards are higher. people go out based on short-term movement, make a long-term decision buying an automobile on gas prices? >> empirical numbers, they do. numbers from gas stations say they do, too. the size of the fill-up, it's indicating that people are spending money on cars and trucks that use more gasoline. they just do. >> merck showing no signs of

giving anything up. flat on the day on the largest acquisition today, $8.4 billion. i think we have meg tirrell in san fran. >> right now? >> right now. >> kidding me. >> right now. >> holy cow. >> there she is. meg, take it away. >> reporter: guys, that's right. i smoke with merck's ceo fken frazier about the deal with cubist. he's known the company for a long time. both companies, some of the few focused on the hospital acute care setting on antibiotics, so important now, the threat of superbugs. we talked about the company's potential future business development opportunities. he said this doesn't change their strategy right now. they say their balance sheet and cash flow will be strong after the acquisition closes after 2015 first quarter. still looking at opportunities of all sizes.

frazier reiterated they're not interested in industrial consolidation type deals, deals done on cost cutting and synergies. looking to bring in good science, revenue, and that's what they're doing with cubist. of course getting cube bisson and another antibiotic expected to be approved this month, which could be did $1.5 billion over the next few years. again, merck ceo ken frazier saying they're looking at all opportunities in business development. back to you guys. >> interesting. >> meg, see you later on this morning and this afternoon. meg tirrell out in san francisco. dow's down 32. a lot of that is mcdonald's this morning. mary thompson on the floor. carl, as you mentioned, dow off 32, off the lows, dow's down 58 points. what we're seeing today strength in some of the more defensive plays, utilities higher, reits high, strength in the drug area as well today.

overall tonight's weak because of the disappointing data we received from overseas larger than expected contraction in the japanese economy slowing imports in china as well as disappointing numbers on german industrial production. let's take a quick check of the dow components that we're watching today approach disappointing numbers out of mcdonald's. united technology detailing why the company's former ceo left. but keep in mind, there's an important meeting thursday when the new ceo, greg hayes, speaks to investors, that happens thursday 5:00 p.m. eastern. merck slightly weaker on the news of the cubist acquisition. watching energy. nymex crude below $65 a barrel. energy stocks weaker. we aren't seeing a corresponding uptick in transports. airlines coming out with news. american airlines investing $2 billion in planes and clubs. delta going through fur

differentiation in seatings for customers. a price impact on those tickets. retailers watching this group as well, a lot of companies reporting earnings this week, including autozone, reports tomorrow. radioshack on thursday. best buy weaker. you can see walmart weaker as well. all stocks benefiting from the decline we've seen in gas prices which are at a four-year low now. financials will be in the news this week. tomorrow the federal reserve holding a meeting to take a look at its risk based capital surcharge. questions as to how it will be applied and calculated. so this could have impact on the group which right now, according to the "wall street journal," telling big customers because of the regulatory regime, don't put your deposits with us, too it's expensive for us. credit suisse, because of change is in regulation, looking at getting out of the prime brokerage business, wants to reduce risk in investment bank. banks are weaker today with semiconductors and overall markets. again, dow improving. down 58 points.

now down 24. >> thank you. mary thompson. let's get to the bond pits and check in with rick santelli at cme. >> carl, a lot going on. intraday, remember, we were back in the mid 230s before rolling into our time zone and our equity opening. we're pretty much unchanged. two-day it jumps out at you. when you get into that well-worn range that started in october for 20 sessions between 230, 2.38 hard to get through that. volatile mid osh-october sessio. hard to get traction, say many traders, at least on the short side with their positions what happen seems to be going on. look at intraday bund. bund yields moving lower. we're unchanged. they're lower. good data. premium for spread between bunds and tens at a fresh 15.5 year high close to 160 level.

very important. many say it's pulling our yields back down a bit on the relative value trade. we'll have to continue to monitor that. when it comes to foreign exchange. we know the story, china data, could have been better on export. japanese data weak on gdp side. but what happens when what you trade for happens? short yen against dollar, today dollar losing ground. everything has to take a breather once in a while. look how far it's come since november 1st, dollar/yen from 113 to 121. holy cow. carl, back to you. >> rick santelli. oil prices on the slide after morgan stanley cuts its forecast for brent next year. good morning to you. look at pricing right now. 64.44 where we're trading on wti. not at that low we saw last week of 63.72. a steep drop this morning.

also watching brent prices 67.30. below a five-year low for brent. you mentions the report from morgan stanley taking 2015 forecast on brent down to 70, a $14 cut. making traders nervous. a saudi stuff we heard last week trickling into the marketplace and over the weekend bp announced it will be making job cuts. they did say on lower oil companies. companies forecasting them to go lower as well. nat gas, a stealth mover to the downside 3.67, combined with the fact gas prices down 18 cents in 2 weeks according to lundberg. good news for consumers. back to you. >> thanks very much. keeping it in the realm of oil and gas, news from the u.s. supreme court rejecting bp's challenge to the gulf of mexico spill. a lot of context for you. they've been, jim, fighting for a long time on various fronts

involving not just what they've spent obviously but what may still have to come. >> yeah. >> in terms of penalties. >> i think bp felt, once they had made a deal with the justice department, a lot of things would go their way. nothing's gone their way since then. they've been losing in court. it's surprise, they've done a terrific ad campaign who's putting in for these different payments. but bp -- >> businesses that suffered no losses collecting a lot of money. >> but different kind of justice down there. justice that basically more free wheeling. bp not regards as being friendly -- not sympathetic. peep aren't simple threat to bp. >> this report and the ft they're considering job cuts withcrude oil below 65 the large effort of the oil companies, the biggest network of people dependent in the united states

of of all of the oil companies, that's a statement. we know bp has been adamant they are a good citizen and they keep losing. i go back to the deal they had with, wow -- they feel they dope say listen we good snookers but the epa went after them. they've had little luck. this -- the region -- i thought the supreme court might go with them. >> a food giant in the middle of the water wars. ceo tim brown on his high end h20 strategy when "squawk on the street" comes right back. dow down 19. (vo) watching. waiting.

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jim cramer, to richard sherman you did offer blanket coverage. congratulations on the win. you are a joy to watch and an inspiration to your team! talk about being gracious loser. >> richard came back and said, thank you very much. next time i have to come down and see you. >> you said welcome to philly. >> look, i love the eagles obviously. season ticket holder, iterrific. he's an inspiration. i love chip kelly. i think we can beat them, but sometimes people in the game you truly respect. the game gets a lot of negative heat but guy like sherman inspiration. compton comes back, does well at stanford. cheering marshawn lynch, the moment he scores touchdown. you have to have respect for the other team.

>> sanchez, 96 yards passing. >> hope that changes. chip i think can come back from anything. respect the champs. the champs you can transcend your on love for your team -- i'm just a huge fan of the eagles -- and sherman is a joy to watch. pete carroll's a tough guy. he took down one point i saw him screaming at russell wilson he held the ball too long. these guys are exacting, tough team to play. but, yes, i did tweet to richard sherman and he did tweet back. i think he's an inspiration to a lot of people. >> see how you guys do against dallas next week. >> i don't have anyone -- dallas i would bother to tweet. >> sony, playstation network and online store taken off-line, still investigating the root cause of the issue. north korea also denied direct involvement in the hack as retaliation for "the interview"

comedy about a plot to assassinate the company's leader. a quote might be i righteous deed of supporters and sympathizers of the country. discussion about -- >> i continue to believe this is a potentially seminal event in the escalation of cyberattacks on u.s. corporations or in this case a japanese company but sony pictures, u.s.-based operations. >> right. >> you hope that every board of directors is watching this closely, because you could be next. there's no doubt about than many companies may be next, still there's a kill tur culture of s ses when a company is breached that has to be open new defense secretary, by the way, still to be confirmed, focused on these issues as well, which is a very good thing. >> palo alto the leader, i felt the stock had gotten overvalued. last quarter terrific. fire eye a takeout.

but the bad guys are always one step ahead of the posse. it's kind of -- you're right. >> think what they've done, released -- social security numbers of employees, salaries, the movies themselves. intellectual property that conceivably lost. something else. >> scary. >> i think we have -- home depot up big since we mad thad the ha. i don't think we'll be yawning a year from now. >> no. stop trading with jim in a minute. dow's down 19 points. here's some news you may find surprising.

we're for an open internet for all. we're for creating more innovation and competition. we're for net neutrality protection. now, here's some news you may find even more surprising. we're comcast. the only isp legally bound by full net neutrality rules.

time for cramer and stop trading. >> when a bernstein downgrades a wells fargo wow think the stock will get killed. it's not. goldman sachs up again, visa up, master card. proven to be teflon. people do not want to flee financials, they want to buy financials. i'm think it's amazing change. obviously people feel that the economy's getting better. there's also story in the paper

how they did declare we're starting to charge for your cash. there a sense the group will do well until year end. groups that are domestic, lowe's and home depot. not going down big on the downgrade. says something. the xlf is up. what does that tell you? that's where money's going. >> last 1,000 points on the dow, led by visa, goldman and others. >> yeah. >> home depot and the like. >> ones trying to get into year end. defense stocks, the stocks that are retail, restaurant, financial. they're all doing great. >> all right. what's on "mad" tonight? >> we have carezo, the stock 52-week low. enbridge, huge move. al monaco. michael kaufmann, we know that meg is out there covering any company that has an absolutely

interesting formation against blood cancers and they've got an interesting formulation. that ash conference moving the stocks like i've never seen, amazing. >> celgene, vertex, gilead. >> great places to be here. >> 6:00 p.m. eastern time. let's get to simon. >> yes, can the new technology that mcdonald's is trailing in california save its sales? we'll look at that. marriott's ceo will join us exclusively as they unveil a new urban chic hotel with no mini bar. the price of oil continues to slide. what it means for the stocks and better, still, for the economy. here's a question for you: when electricity is generated with natural gas instead of today's most used source, how much are co2 emissions reduced? up to 30%? 45%? 60%? the answer is... up to 60% less. and that's a big reason why the u.s.

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tap into the full power of your fidelity green line. call today and we'll make it easy to move that old 401(k) to a fidelity rollover ira. na good morning. welcome back to "squawk on the street." i'm carl quintanilla with sar r sara eisner, simon hobbs. weakness from mcdonald's after sales miss from november. now down 13 points on the dow. s&p down about 1.5 points but

oil continues to be under pressure at the new five-year low. >> let's get to our road map this monday morning. oil prices hitting five-year low after morgan stanley cut its forecast. this is the dow backs away from 18,000. >> mcdonald's delivering weak number. sales down 2.2% around the world, down more than in in the united states. >> and merck buying cubist for $9.5 billion. what the ceo has to say about the deal. >> later, marriott president and ceo arne sorenson, live for an exclusive interview that company going after a younger, tech savvy traveler, opening its first ever u.s. ac hotel in new orleans. >> let's bring the focus back to the marketsen down 12 points on the dow. major averages mixed. the dow is down right now, but still within range of the 18,000 mark. the big picture rallies for seven consecutive weeks and gained 58 points on the dow friday in the wake of the

blowout jobs data. president and portfolio manager, welcome to the program. it's a mystery why the market hasn't rallied more strongly on what was a really good employment report on friday. >> well, it was really strong, i think. whether it's sustainable or not, we can talk about that later but it was a good report. i think the main reason when you look at market it's up in the mid teens this year. up 30% last year, up for the last six years, it's been continuing to go up. it's hitting new highs but, yeah the rate of increase has slowed down quite a bit. and corporate earnings at the top of the cycle. there's reasons for maybe that slowing down of the rate of growth. let's come back to the bigger picture. focus down on energy, because again, that is the main losing sector today. despite the fact that you appear to have a huge amount of inside buying within the shale industry.

deutsche bank, which grabbed a lot of attention when they said there could be credit problems around $60 a barrel. now saying you know what? we think we could go as low as 55 before we get into danger territory. fitch saying banks on the shale producer's side. where do you stand on this? is energy a buy here? >> i think in the long term it is. i view it as a growth industry, there's a question, a lot of the smaller u.s. produces are leveraged. it's a company-specific issue as to what they're break even point or profit point is where they cut down exploration and development. what issues does their debt become too much and go into bankruptcy or have to shut down. on the other side, could be attractive acquisition targets for bigger companies with deep pockets to develop them. it's an interesting area. it's been way oversold. but there are some reasons why you want to be careful. so, growth area but be company-specific. >> michael, any discernible correlation now between oil and

the s&p 500? and also the dollar, which has been sort reshaping the investment landscape, stronger dollar, weaker oil. how does that translate into stocks? what happened to the correlation post-crisis that was intact until recently? >> i have a lard time believing that lower energy prices is -- are bad for the xheepeconomy. it's good for consumers. helps economic development. it does put u.s. produces are in a price war in the global energy markets and, therefore, rate of growth in that industry play slow down as companies adjust to a lower cost estimate of the price of oil than maybe they thought. net-net, when you put it together, it's a boon for the economy. the stronger dollar's definitely hurting some sectors of the economy and the stock market. i mean, commodities, natural resources are getting killed now and the stronger dollar and weakening demand globally the two big reasons for that. there's positives and negatives.

but i think the u.s. is demonstrating strengthening data points in a number of areas whether job, consumer spending, et cetera. >> right. >> that is indicating better growth. >> just on that note, talk about the financials. oppenheimer named financials as top rotation idea, in particular morgan stanley, citi group, hartford in the diversified area what happen do you think of that call? >> well, we own morgan, i'd agree with that one. we like long-term prospects. i think we're in a period of transition and interest rates. when and what degree the fed moves, we don't know. what degree market interest rates are going to play a part in volatility. those are open questions. we'll have a rising rate environment some level going forward as the u.s. grows. and financial service companies, diversified plays like morgan stanley, i think, ex perts taking a lower cost to capital and translating into higher returns in a number of business

lines. we like it long term. >> you think the fed meeting in december is a risk to markets if they drop the considerable time language that everybody's been waiting for? >> maybe, or if not that meeting another one. reality is that the economy truly is growing and it's sustainable, you're going to begin to str have inflationary pressures because of the lack of velocity we've had in money to date. it's going to force the fed to move at some point although if the economy's economic growth is not sustainable, they're in a box as to how much they can move. so, if we get robust growth it gives them leeway to raise rates and raise quicker and that would be a natural state for a growth scenario. i'm not scared by it but given the rest of the world, and given the anemic growth in the u.s. over last several years i question how much they can move if they want to. and i worry more about market rates and buyer's strike in bonds than i do about fed action.

>> have a good week, michael. michael from permanent portfolio funds. shares of mcdonald's down by more than 3% this morning. the company reporting u.s. comps down 4.6 in november, citing strong competitive activity. fast food giant working to enhance marking and simplify its menu to restore sales momentum. joining us, david palmer's restaurant at rbc capital markets joins us boston. good morning. >> good morning. >> not every day you see a 3 1/3% move here. totally unexpected? >> i think there's a lot of expectation that mcdonald's was going to benefit and the industry was going to benefit from gas prices, and clearly that's not happening. it's not accelerating the industry was not dynamic going into november it slowed a little bit. what happened, mcdonald's had calendar effects that weighed on the headline number, in addition it didn't have the monopoly benefit in the u.s. number and the u.s. was the story.

down over 4%, excludeing calendar adjustments. still down over 3%. that's over 500 basis points, over 5 percentage points worst than their peer competitors. really the issue here is mcdonald's more than the industry and right now, this is a company that needs to probably reinvest in food value or do something to stimulate traffic. yeah. you mentioned that in your note. invest in food to improve credibility of their marketing message. what does that mean? a big piece about their new build a burger sort of thing they're testing out in a few stores but rolling out to 2,000 restaurants next year. what more do they need to do? >> they've eased away from their national value messaging around the dollar men u. particularly the double cheese burger, mcdouble as the hero item. that was not economic in many of their areas like new york or san francisco. that's just not going to work. becoming more local in their

marketing approach. we'll have to see if that works. but clearly, having a lack of value message is hurting. the other type of food value reinvestment is something like a chipotle, something on the ingredient side. quality of food is more important than ever, particularly to the younger millennial consumer and mcdonald's needs to do something to shore up perception on quality. >> david, i was doing some calculations here, have mcdonald's risen in line with the market rather than under perform, created 14, 15 billion of value which it didn't. for how long can don thompson stay in charge? what are investors saying to you? i hear people say his days are numbered in the same way a ceos will take credit when things go well. when things are not go well, after management changes in north america, his days could be at an end. what do you think? >> that's not clear to us what happen is here is that they've imported a lot of new talent. mike andres head of u.s. now,

steve easterburg, having a pretty good influence on the company strategically. changing and trying to become more local. yet to be seen if that works. but the major takeaway is there's a lot of change going on in management ranks, whether don's in place or not. do the new strategy, i think there's elements that need to be augmented, probably in '15. but there is significant change going on right now at mcdonald's. >> how many more quarters and how many more comp store sales weak numbers can we take here before mcdonald's has to start closing stores and something has to give and this chain is going have to shrink? >> they're spending money still to grow units, even 2% plus unit growth has to come into question, $3 billion of cap x and their capital structure, franchise mix. a lot of those questions are

going to be brought up. but no question that the number one thing is same-store sales growth, if slowing down unit growth helps them focus like early 2000s to focus on comps, that's going to be important. mother major takeaway, france a major hub mark for the europe division, did get weaker, citing plaque cr macro concerns. they're not getting any breaks either. >> the currency thing i think people understand, too. but i don't know, david, you know, investing in food, go the chipotle route will come at a cost. and when people go they want it good but quick. longer service times, let's through put, that's no picnic either. >> yeah. on na front, looking to do things like rationalizing menu, they broadened that menu to broaden the appeal that cops to a cost in terms of customer satisfaction on the speed scores. and with 70% of your business

coming through that drive-threw, unkinking that line is a key part of sales. so, you'll see rationalization in the menu, perhaps that will be a one step back before two steps forward on through put. you'll see that in '15. clearly '15 there will be action, it's unclear when the turn will be and right now starting from a further back starting point than we would have liked. >> dow would be positive now if not for mcd. thank you for your time. see you soon. >> thanks, carl. when we come back, merck buying cubist for $9.5 billion, intensifying its defense against superbugs. mig terrell got off the phone with the ceo. for over 60,000 california foster children,

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welcome back to "squawk on the street." news here from the oil patch. we'll start with bp, moving lower after the supreme court rejected its challenge to the gulf of mexico oil spill agreement, bp shares down 2%. there's conoco phillips as crude oil plunges, the company says it plans to spend less in 2015 on capital expenditures. its budget of 13.5 billion is a 20% drop from its 2014 spending

levels, those shares down by 3%. but sara, on a day when crude oil is down 2.5% you expect a lot of the energy names to go down in sympathy. >> wti and $64 barrel reege. thank you. merck agreeing to buy cubist pharmaceuticals for $9.5 billion in all cash deal. $1.1 billion in cubist debt. meg tirrell spoke with merck's ceo about the deal, live in san francisco. industry conference. you talked about pharma valuations. >> reporter: yeah, absolutely, sar ra one things analysts are looking at now, saying the price that merck is paying for cubist indicates th indicates that it's paying a lot for its pipeline. noting potential patent challenges to the cubison. looking for more pipeline readouts and information about the pipeline assets to see whether merck overpaid here. i did speak with ken frazier on

the phone just out in. we talked about valuations in biotech. he doesn't necessarily see them as rich though we've seen this incredible run-up in the nasdaq biotech index over the last couple of years. it's a reflection of the optimism of the medical innovation, optimism in the market, that companies are bringing forward, new innovative products. this is a good example of that. one thing in the industry, cubist is seen as an acquirer of smaller antibiotic companies. it made two acquisitions last year bringing in pipeline products. will merck continue to do that? sounds like they are continuing to look at all opportunities, in the acute hospital setting, what they call this antibiotics and other things given in hospital and other areas in which they're working including cancer, the conference that we're here now, focus on cancer and presenting data on a drug. merck still looking, not looking to do big industry consolidation-type deal but will continue to buy. back to you. >> very valuable insights from

merck ceo. meg tirrell, thank you. caught up with michael boni one year ago, we asked about the possibility of an acquisition. >> we built a strong track record of being thoughtful, about what we invest in but once we invest we go hard at it and develop data that the clinical, physicians in the world need, and able to do that with enough margin so that we can continue to attract capital we need. maybe it happens, maybe it doesn't. but i can't control that. >> hint there from the cubist ceo. multibillion pharma deal. >> it's interesting, meg mentioned, seven years of worth of revenue. pipeline is key. as we pointed out, 92% of sales come from one drug, that drug is going to face generic competition, sooner rather than later depending on the outcome 0 the court case. companies willing to do that.

we've seen, when it works, it works big, of course, thinking there the pharma gil deal, one of the greatest deals where they've paid enormous numbers and paid off multiple times. >> merck's ceo doesn't think valuations are too frothy. maybe more of the same. >> we'll see. straight ahead, marriott going after a younger, more tech savvy traveler with its newest hotel opening within the hour in new orleans. president and ceo arne sorenson live for an exclusive interview. : if every driver in the u.s. kept their car's tires properly inflated, how many gallons of fuel could america save each year? up to 2 billion gallons? 4 billion? 6 billion? the answer is... up to 4 billion gallons. by keeping your tires properly inflated, you can increase your car's fuel economy and reduce its co2 emissions. take the energy quiz -- round 2. energy lives here.

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marriott out with a new hotel bran it's promising holtz owners will be edgy enough to attract tech enabled travel to their properties. this morning's launch could spell the end of the holtel min bar. joining us arne sorenson, from new orleans where he will officially open marriott's ac in 40 minutes. welcome back. >> great to be with you. >> we've had a sneak peek. we can show you what the ac

brand looks like. what is this about new mini bar. millennials like to drink. >> yes, a great bar downstairs in the ac and a market whereby folks can buy a bottle of wine or booze or beer to take up to their room. it always surprises people no know, no matter how expensive things are in the mini bar we don't make money on the mini bar. >> really? >> really. >> really? hotel owners make more by selling bottles of wine in the foyer than small bottles $8 a pop. >> better lifestyle solution. one of the things that the new travelers like is they like to hang down in the lobby. even if they're traveling alone, their bias to be alone with other people as opposes to being in their room. we think by creating that bar downstairs and that life downstairs, it will provide a more satisfying experience. >> does that mean you'll make the rooms smaller? >> no, i don't think so, not necessarily. the size of a room will depend

on the positioning of our various brands. the ac hotel will be a good sized room in new orleans. and it's a well-appointed room. but again, we think that the lobby needs to be livelier than some of hotels we've had in the past. >> right. the lifestyle concept is obviously the hot thing at the moment. hilton launched canopy, people would have been to ace hotels out of oregon and new york and palm springs. i guess the big question is, can a big brand like you, which by definition standardizes compete with the eclectic newcomers who will be able to differentiate to a greater extent? >> i think we'll do great in the space. we've opened the new edition hotel in miami beach, i was there last week, it will be the top-rated hotel in miami beach. the place was sizzling. thousands of people. the schedule was running from 7:00 in the morning until 5:30 in the morning, when the club

closed. and it was fabulous. feedback was great. the ac hotel here in new orleans, which has just been open for a month, already in the top five on tripadvisor of all 150 hotels in new orleans. in its first 30 days. >> a broader question, your stock price, regular viewers know you're up 60% so far this year, partly as a result of the stock buybacks. the bigger question is, where are we in the lodging cycle? what point is it going to turn? robin farley at ubs went neutral on your stock. she says it's late in the cycle, the valuations above historical longs, now is not the time to be buying marriott stock. what do you think about that? what will you do with your share b buybacks? >> lots of questions there. the short answer, we will continue to be purchasers of our stock. our business model produces lots of cash every year.

more cash than we need to invest in the business. that cash belongs to shareholders. if we don't have good use to grow our business, driving substantial returns, we will return it to our shareholders probably through buying back stock. as far as downgrade is concerned, let me make one point. >> sure. >> years ago somebody told me the best thing in the world is to have all of the sale side analysts recommend neutral or sell on your stock because of valuation. that's a sign the mark is valuing you richly expecting great things to coming from the company. >> let me come back to the business cycle. you don't have to return to cash to shareholders by buying stock now. you could buy when it cheaper further down the line. you wouldn't disagree the cycle's cyclical. when you see luxury slowing down, relative to the rest of the market as robin points out or big hotel owners like host saying we're now net sellers of assets because prices have risen so far, signs that something's

beginning to happen, aren't they in. >> i don't think so. i don't think so in a deep way. obviously the cycles are hard to predict. there are two real aspects. one demand side and that's the economy writ large. how is the economy doing? the economy in the united states is, i think as we speak, building strength not weakening. the other, unique to the lodging space, supply side. how many new hotels are coming into the market? we are opening fewer hotels by a significant margin than the long-term multidecade average. i think the likelihood is we will have years worth still of strong demand, growing demand, demanding exceeding supply in the lodging cycle. this should be a sustained thing for some period of time to come. >> i'll let you go. you've the official opening. arne sorenson, ceo of marriott. when we come back, oil prices falling once again, hit

five-year lows as morgan stanley says, brent could hit $70 as a base case next year. more details where oil's headed. find out which bank is the most valuable u.s. bank ever when "squawk on the street" comes right back. whoyour boss?rk for? yourself? your parents? your family? at baird, what matters most to you... matters most to us.

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an hour to trading. some stories we're watching, american airlines recording passenger traffic down .5 in november, from a year ago. the carrier also lowering its

current quarter forecast for passenger revenue for available seat mile. shares of southwest on the rise. goldman ups to buy from neutral, saying it expects southwest to outperform its peers as industry fundamentals remain favorable. oil, another big drop today, as crude falls below $65 a barrel, hitting new five-year low. where does the slide end? joining us, allen harry. what's the catalyst for the move? we're in a bear market here for oil. is it hedge fund positions, is it the morgan stanley note? what's the talk from the pits? >> well, it's more of the same. we've had bearish news coming out. it's more of it. so that's what's getting crude oil to go down. it's not going down much. that's why i think we're getting into a bottom area here. >> why. >> >> a floor around $60. one, we're start to use crude oil, cold weather coming in

using for heat and oil, lower prices at pump, more for unleaded gasp another thing, too, is the u.s. economy, it's starting to get better. as it gets better, it's going to have an impact on the world economies. as those start to get better, puts in a floor for crude and higher we go. >> you're talking about some of the demand drivers. what's interesting, the market has been focused on supply. more specifically, oversupply. against this idea that opec is going to have to make a move and cut, we're going to have to see some kind of supply move to bott bottom? you think it's driven by the other side, demand? >> good point. what i think is opec is going have to start talking about making cuts. quite a bit of supply of crude oil on the market. demand i'm talking about, it's going to take time for that to impact the market. therefore, crude oil, sorry, opec near term is going have to do something which is going to have to be some sort of production cuts. i think that's going to happen

in the next three to six months. >> forgive my ignorance but can you say oil has bottomed now when we know that the supply excess is going to be at its greatest not in the first quarter but the second quarter of next year? pricing now for the second quarter? i don't think so. >> well, what i'm getting to is, we have a use of crude oil coming into the market, lower prices, cold weather, and also, we have structure cost. if it costs did 60 a barrel to bring the crude oil out of the ground and crude oil's below $60, got to have shutdowns. that takes supply off the market, too. that's why i think the floor's coming in around $60. also if you're a crude oil supplier like an opec country and watching your asset keep going down, down, that's why talk of cuts come in. all of the things together put in a floor of $60, i think. >> talk about positioning. everybody's waiting for a bounce after 40% slide.

where are hedge fund and other large speculators? how does that play into price action? >> right now you see longs coming into the market. we've seen this sell-off, but people are not convinced that we can't go higher. there's a lot of belief that we go higher, that's why we're seeing hedge funds starting to get long again. >> all right. alan harry, thanks for joining us. spartan commodity partners. meantime, financials on the rise after seeing outsized gained on the back of friday's jobs number. benefits felt at one bank in particular. kayla tausche here at post 9, early with the story. >> one bank leading the way for the rise in financials again today. and that of course is wells fargo. the bank stock rising with the market cap of 285.8 billion, that is the largest ever market cap for a u.s. bank. that title previously held by

citi group in february 2001. rewind and remember, that was the height of citi's empire building, just after glass-steagall was repealed, allowing citi group to buy insurer travelers and cobble together a bunch of businesses. citi sold travelers and shed hundreds of billions in assets. stock price split after dogged by the financial crisis. wells fargo continued growing loans and deposits, multiplied after, remember, it bought wa h wachov wachovia. you can see the differential in those two stocks looking at. but one analyst saying market cap for wells may be at its peak. bernstein saying wells stock price reflects the fact it does have more consistency than peers on wall street but the headwinds of being a big bank like the regulations in effect and also low interest rates, those challenges remain. bernstein cutting wells to market perform but saying 56

price target which it's had for the last year or so, is looking fully valued at this point. wells is close to that price target. quite a run for a company deemed the sleepier, more boring cousin of the wall street banks but it's proof that in this environment, boring is really what pays off. >> better to be tied to the u.s. xheep interesti economy. interesting wells has managed to do well. >> growing credit card business, management, auto loans and investment banking loans as well. there is growth. benefitted from being bigger by having wachovia in the portfolio as i mentioned. more consistency, more simplicity at wells than some of the other banks and that's what's leading. >> higher interest rates. margin a concern quarter after quarter, including so many banks. >> wells and bank of america, stocks falling 4%, 5% because that was at the same type the

fed said they're ending qe but interest rates remain lope as soon as those go up and yields overall go up, that's going to help that business model too. >> when they do. >> when they do. >> if. >> thanks. regular viewers know when we cross over to rick santelli in chicago. before we do it, if you missed it, rick was on "meet the press" over the weekend. >> what say you on the bhee? >> it's great improvement. we've come a long way. let's not get too happy about six-year cures for two-year flus. we've been long out of the recession, people aren't cheering. we had good wage growth. that makes that legit report? >> leisure most hiring but represent the smallest percentage of the wage growth. that's the problem. >> the santelli exchange. roaring performance, rick. >> thank you, simon. listen, we're all bragging about the numbers we receive on the economy. but the real issue is, many

surveys continue to point many people don't feel as though the economy's doing that well. it really is how the pie is sliced. we'll continue to make progress. but i think we need to concentrate how to make faster progress. to that end, maybe one of the issues credit. i'd like to welcome chip dickinson. thank you for taking time this morning. >> thank you. good to see you. >> pursuant to what's going on with the consumer sector, look at areas that contribute to gdp and go through them one by one. how' how's housing? >> mortgage applications, slow growth there, the prices are going up but it's more at upper end. i'd say okay on housing. home equity loans continue to decline. >> all right. now autos phil lebeau at the moss feeric numbers of late. remind you of another sector pre

cris crisis, housing rates? >> i think you've got to look at a couple of things an autos. first, the age of the auto fleet is very old. the cars are getting more efficient, more technology, consumers have more choices. it does look like some financials beginning to stretch their standards. more on the auto finance space than the bank space, according to the new york fed. i don't think you have a bubble here but it's something to be watched. >> all right. student loans, you've written a lot on student loans, what captures my eye of course is government involvement, associated with the notion it has the highest delinquency rates. go into it more deeply. >> i think student loans are a longer-term to intermedia term risk for the economy. it's one of those things that it's not a problem until it's a problem, then it's a big one if we don't address it sooner. think about 10% of personal disposable income now, it's probably the fastest growing part of consumer credit. and it's a headwind for the younger age people.

those under 40. i think they hole over $800 billion and it's stopping them from forming households as fast as they might and stopping them from buying homes and other things. it's ac an economic headwind. it's a risk because of what it represents. >> younger people are the key to everything, key to the country's future, key to housing. can we learn anything looking at credit card usage? any clue there's as to are we going to get that segment of the population kicking in more, purchasing more, helping the economy more? >> i think they're selective and i think where they're buying things and behavior has changed. there's a lot of stories how fewer are getting driver's license or driving cars, more of a rental economy. they're changing that consumption behavior. i think they're not using credit cards as aggressively either. >> listen, chip, it's been a pleasure apr complicated topic.

in the end signs of deleveraging we need to pay attention. we'll ask you back to monitor these issues, of course. thank you again. carl, back to you. >> nice work this weekend, rick santelli in chicago. dow in the neighborhood of going positive. >> carl, one stock not positive now is sony. the stock taken a hit after playstation online store was hacked this morning, leading to a two-hour outage. sony confirmed the outage really said it was investigating the cause of it last month's sony's studio hit pi a massive hack attack that shut down the network for more than a week. the stock down 3%, off session lows, still sony target of another hack, this time from online group for the playstation group. >> big business of ugly sweaters. find out who's profiting from ugly sweater parties and your friends are having this season. jane wells modeling several of those when "squawk on the street" comes back. my name's louis,

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ugly sweaters aren't just for fun anymore, they mean big bucks. jane wells live in burbank at an ugly sweater store with more of that. jane, good morning to you. >> reporter: good. this store is actually called shop ugly sweaters, pop-up store for the last three years in burbank. business up 150%. working on a custom for a man. what do you got, a moose? >> a moose. >> a moose that will hug you. man, so awesome. i am wearing six ugly sweaters now. over the next hour i'm going to reveal them in a striptease about as sexy as your

grandmother's home made holiday vest. first on ebay for $45, karen scott sweater somebody customized. who buys this stuff? >> there's a wide variety, a lot of people shopping for their office parties, some people shopping for their kids. these are men, harder to find men sweaters. a lot of times men end up wearing women's stuff. >> okay. so, some companies are trying to address the men's sweater issue. they -- they are coming out with full-on ugly sweater business suits which they won't have ready this year. only have ready for 2015. i'm going to try to get this next ugly sweater off. i think i need your help. would you mind helping me? i need your help. one underneath. ♪ >> there we go. thank you very much. that's harder than i thought.

this one came from her store, the cat theme is very big. this one was $48. guys, i'll be back in a half hour with more. being lutheran, carl, this is standard fare this time of year and i wish over the years i held on to all of the sweats are that passed through my hands because i could make a killing. back to you. >> jane, nasa last week, sweaters this week. nothing the woman can't do. >> nothing. >> excels in all. groupon sold 40,000 ugly sweaters. >> unbelievable. >> the next one. >> that's a tease. >> when you take it off. jane wells on the ugly sweater beat this morning. next, nestle waters, owns pellegrino, taking advantage of declining soda sells betting big on water. the ceo after the break here on cnbc. here's some news you may find surprising.

we're for an open internet for all. we're for creating more innovation and competition. we're for net neutrality protection. now, here's some news you may find even more surprising. we're comcast. the only isp legally bound by full net neutrality rules.

there's a new reason to be bullish on bottled water. according to the beverage marketing cooperation bottled water is set to become the number one packaged item in the united states ahead of beer, soda and juice. what will the growth drivers be and cause for concern? joining us exclusively here at post nine, tim brown, chairman and president and ceo of nestle waters north america. we should note that nestle waters controls poland spring, pel grin no, pure life, a lot of the bottled water we know. >> definitely. we're proud to have our leading position. we have've been in this positio 35 years since 1978. >> how much market share do you have? >> roughly about 35% of the market. >> so what is driving the growth in bottled water sales? we mentioned soda. are the people coming from ditching their sodas and other chloric drinks or ditching tap water? >> it's not the latter. since about 2000 since the turn

of the century, we've seen a sharp increase in per capita consumption of water in any form. bottled and tap. an that's followed the decline in per cap py ta consumption of drinks and other beverages. it's all health related. it's people watching their health, understanding they need to hydrate, balance in their life, and that's mainly driven through availability. you know, if you go back 20 years there wasn't much available in stores other than soft drinks and milk and now you can go into a convenience or grocery store and see hundreds of packaged beverages and bottled water has rid than curve. >> the growth numbers have been tremendous. soft drinks, carbonated soft drinks, are still the dominant beverage sold in the united states. do you expect bottled water to overtake that? >> we do. probably within about the next year and a half. >> wow. that's been a slow and steady trajectory driven by health trends. >> isn't -- i'm just thinking

about what the achilles heel might be here and the fact that you're transporting large amounts of water around which is environmentally unsound as far as many people are concerned. often thousands of miles, guilty as charged on pel grin no in addition to which there's the waste from the bottle. we saw the diet industry get into a lot of trouble. >> right. >> how do you keep yourself ahead of being devastated by those sorts of concerns slashing your market share? >> sure. you know, we look at those types of things as potential for waste reduction. we've reduced about 60% of the plastic out of our bottle over the last ten years. additionally, as the category grows we move our plants closer to the marketplace and so that's less road miles driven. in fact, our average bottle travels less than 200 miles from source to market just given the scale of the 29 factories around the country. >> people always say i like the taste of poland spring or --

does the chemistry differ that much from product to product and how much is intentional, is calibrated? >> in the case of poland spring that's a natural spring water out of the ground just the way it is. we don't alter it at all. >> you don't alter parts per million in any way? >> we certainly can't. to meet the fda regulation on the definition of spring water we can't change or alter the dna of that water. water is specific in its own sort of fingerprint. and it has to do with ph, the acidity level of the water and the minerals in each water. poland spring, for example, comes from maine, filtered through sand and gives it a pure and clean taste. some people think of it as a little sweet. this gets to be the more water people the more advanced their taste buds get and they can taste a difference and people that are from new york can't believe that poland spring isn't available in -- when they go to l.a. but it's not. you can only get it in 13 states in the northeast. >> seems to be a localized market and that relates to the

source. how bad is the water scarcity problem? all these companies, miller, coors, a lot of companies are doing so much on water conservation. >> i'm going to speak to that this afternoon at the beverage conference up town. water scarcity is a big issue. within 30 years we expect that there could be up to a 40% deficit in the fresh water available to feed society when we have 9 billion people on the planet. it's a dramatic concern that we all have to take part in. it's going to take both business and government to work together to work on water scarcity issues. first and foremost it's about conservati conservation. we need better systems for conserving water getting the most mile out of the water used and retreating and reusing waste water. >> it's nice of you to stop by. >> very happy to be here. >> ceo of nestle waters of north america. i prefer, simon, new york, city

tap. >> let's send it to john fortt fors what coming up. >> quite a bit coming up. hollywood is using drones even if they're not being approved commercially for everybody else quite yet. we'll get a look at how they're doing that. also, a city analyst on the one big positive thing he thinks the street is missing so far on apple and jane wells has found the ugliest sweater in the known universe and we will show it to you coming up on "squawk alley." . feels like we are just hiring people off the street. we are! we're growing so fast we need man power. at least cdw preconfigured these 2-in-1 devices with intel inside for us. it's a tablet when you want it and a laptop when you need it. just take it already! ♪

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bear market 6677 down more than 3%. >> all good for the u.s. economy though. >> good for the u.s. economy bad for some of the energy companies. we've been talking about it, it's a continuing theme of winners and losers. the s&p 500 is flat. >> time for "squawk alley." take it away. >> thanks so much. good morning. 8:00 a.m. at youtube headquarters and 11:00 a.m. on

wall street and "squawk alley" is live. ♪ welcome to "squawk alley" for a monday morning. joining us john ceo of the daily mail north america, john fortt and kayla tausche where the dow struggling to get back to the flat line after mcdonald's numbers disappoint. in tech according to the "wall street journal" google is trying to lock up some of its top stars at youtube to prevent them from jumping to the competition. apparently facebook and other startups have tried to poach some of the best