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oil shock ripple effects. the impact of equities and currencies and a closer look at stocks that are keeping the dow from hitting 18,000. is it time to turn on the taps and lift the u.s. export ban on crude? we'll talk to a top dog on global commerce. and a shocking reversal on two insider trading convictions. the ruling that could change the rules for wall street as the second hour of "squawk box" begins right now. ♪

welcome back to "squawk box" on cnbc. i'm joe kernen along with becky quick. andrew ross sorkin is at the dealbook conference. he'll join us in the next hour and we'll hear from jack lew speaking at the conference. among the other power players attending, gm ceo mary barra, actress and entrepreneur jessica alba, a.mex ceo. we'll bring you those interviewing throughout the day. acquired a 5.1% stake in staples. the hedge fund has also boosted its holdings in office depot. its move to call for a merger of these two companies. economic data on the calendar

today will get claims. the closely watched claims numbers expected to tick up to 300,000 from 297,000 the previous week. but obviously with big jobs report from last friday, that will be a number watching very closely. and earnings out just a short time ago from lululemon. quarterly profit of 42 cents a share beat estimates by 4 cents. but lulu did see a surge in online sales. that is helping the stock this morning. take a look at this. peter thiel giving a speech at uc berkeley yesterday. you won't believe what happened next. we're going to show you the video in a couple of minutes. but he was heckled. was it him being -- i guess it was. >> well, they look at him as a sign of the man. >> nsa or something. >> although it was interesting to see the reaction from the people in the audience too. we'll show you that in a moment.

>> berkeley wouldn't -- who was it they wouldn't let speak there? >> are you thinking of rutgers with condoleezza rice? >> no, no, no, that you can understand because condi is to the right at least. but berkeley wouldn't let in somebody who is a total lefty. that was everything they believe in but not quite enough. >> was it just this last year? >> it was some college president that -- we'll do it a little later. it was a college president that i think used they thought too much force to disperse -- i don't know. >> we'll look it up. in the mentime, the dow did come close to hitting 18,000 this week. but the markets got cold feet. here is our statistics guy dom chu to take us inside this week's hiccup. >> so becky, joe, when it comes down to it, we got within nine points of hitting that market at least psychologically. but if you look at what's happened over the past week, we only lost about 2%.

it's a lot in terms of a move in one week, but still we're just about 2.5%, 3% away from record highs in the industrial. no sense of panic yet. there are a handful of stocks dragging on the dow. we've lost about 426 points since our record close last friday. and among the stocks having the most weight, chevron has taken about 39 points away. out of the 426 points we lost since those record closes, 39 of them have been at chevron. another one that's huge has been mcdonald's. also a decently weighted stock in the index. of course those sales numbers didn't help matters much here for mcdonald's. they've taken up 41 points of that 426 from the dow just since its record close. and the single worst stock in terms of point drag on the dow, we shaved nearly 50 points off that drop that we had.

50 of it came from boeing. so these stocks overall have had a huge impact. and you can't forget what's happening with oil. you can't forget what's happening -- you look since the highs we've seen. just since july, we've seen a 22% drop in chevron. so bear market territory for chevron. and exxonmobil, a huge component, third biggest stock in the s&p 500, that stock's down about 15% in that time since the end of january. or the end of july, rather. so if you look at oil and gas, chevron and exxon, they are big drags. but it is one stock in particular, boeing, that's having the most point impact in terms of the downside. over to you. >> thank you very much. >> bill maher. >> that's who. he was the commencement speaker anyway even though the students voted not to have him. >> but then there was another one that was supposed to speak, a college administrator they didn't want to come because he disseminated -- today on capitol hill

there's going to be a hearing on whether to remove the export ban on crude. our economy is apparently getting stronger. how big a role does america's new energy dominance play when it comes to trade. joining us is u.s. trade representative e. michael froman. i'd like to get your take, sir, on just the controversy that we have. we're tying this recent selloff in the stock market to lower oil prices. can you just help us? is it good or bad when this happens to the world? >> well, joe, first of all there's been a dramatic expense in oil and gas thanks to the overall energy strategy. and that's good for the united states, good for the world. it's helped draw more investment into the united states together with the low energy prices and some of the trade agreements that makes the u.s. very

attractive as a production platform of choice. a place where companies want to put their factories both to serve the u.s. market but also to export all over the world. >> you look in the past ten years and it's like so many things. and that is that sometimes we -- we're not -- they're not the right kind of exports or the right kind of imports we have with some people saying nafta was a huge success. other people saying it was a huge detriment to the country. what's your stand on what we should do from here for the last two years of the president's administration? could we get these trade deals done? is he ready to go to bat for them and are you as well? >> absolutely. we've got a very robust trade agenda. and it's really focused on three things. one is creating jobs here in the united states by opening markets abroad. our markets are already quite open. but we face barriers abroad, higher tariffs and others. so we can export more manufactured products, services

and agriculture. secondly we're focused on setting the rules of the road. and raising labor and environmental standards. making sure there's strong protection of property rights but also access to innovation. making sure by doing that we're leveling the playing field for american workers and firms and helping our competitiveness. and thirdly it's important to american leadership. because we're not the only parties out there. there are other countries whether it's china or others negotiating trade agreements, carving up markets and setting different types of rules. we want to make sure the global trading system reflects our interests and our values and that's part of what our overall trade agenda is about. >> one of the things you pointed out to our people is the hope for some bipartisan momentum after the midterms. now i look at the spending bill and it looked like it was going to happen. looks like we could snatch defeat again from the jaws of victory from this.

each party can always find something. but on trade, you even have ted cruz and the tea party agreeing basically with the president on this. can we mess this up somehow? >> well, trade has always been an area that's benefitted from and required bipartisan cooperation. and certainly we've been comforted by the messages we've heard from republican leadership including as you said senator cruz and senator paul as well as of course senator mcconnell and speaker boehner that this is an area that they are looking forward to working with the president and the executive on so we can create jobs here in the united states and take a positive step forward. >> can you weigh in quickly on -- i mean, you would like a lot more trade and you would like us to be a country that attracts capital. do you think our corporate tax rate is too high? as someone that is watching trade and in charge of

increasing it is that something you would we should do? >> it's outside my lane, per se, but certainly the president has made clear that tax reform should be on the agenda. and wants to work with republicans and democrats to see if there's a path forward for that. he was at the business round table last week. he spoke about tax reform and trade and immigration. these are all positive steps about infrastructure. these are all positive things we can do together to build on the recovery we've seen and get it going stronger in the future. >> you don't want them to trade their domicile for -- where they pay taxes. that's in the the kind of trade we want. i know we can stop it by stopping the symptom, but wouldn't it be better to cure the reason they want to move in the first place? >> well, we certainly want to make sure we're doing everything we can including through these trade agreements to make it attractive, to make things, build things, grow things in the

united states and export them from here and around the world. that helps create good jobs in the u.s., creates opportunity for american workers and farmers and small, medium sized businesses all around the country. export related jobs pay 13% to 18% more on average than non-export related jobs. opening markets create more exports, create more high-paying jobs dealing with wage issues and inequality issues. >> michael, we've had a series this week focusing on the rust belt. and we've talked about the revival there. wonder how strong you think it is and what it might need to help that recovery along the way. >> well, we're seeing some very, very good signs of that revival. companies bringing back manufacturing to the u.s., more investment coming into the u.s. the u.s. is now once again the number one destination for foreign investment. we'd like to make sure we do everything possible to promote that.

when we're done with the transpacific partnership, two of our major trade initiatives, we'll have free trade with more than 2/3 of the global economy. and when you add the skilled workforce, that makes the u.s. the production platform of choice. it makes the u.s. the place where companies from all over the world want to build things both to serve this market and to export all over the world. and that will create good jobs here. >> can you -- i'm pretty savvy in -- >> you can call me anything you like. >> can you help becky with the exporting some hydrocarbon. >> look, i follow the charlie munger school of thought. let's use up all theirs and we'll keep all of ours. >> well, as i said, we're producing a lot more oil and gas. it's good for our economy and

it's good for the world. it creates alternative sources or allows oil or gas that comes into the united states to serve other markets as well. >> i will admit i've been swayed over the geopolitical the last several years. >> that's right. and there's a lot -- we look at our trade agreements. obviously they first and foremost have to be justified on economic rounds. what they do to promote jobs here in the united states. but they're also important geopolitical or geostrategic rationales for them as well. at a time there's a lot of uncertainty on the periphery of europe, it's an important reminder of the relationship. >> you'll have to come to visit us on set when you're here. >> i'd be happy to do that. >> that's probably the crummiest ambassadorship. what about france or italy or

monte carlo or something? >> as my son says, what kind of ambassador am i? i don't have a country to go to. >> you're representing our interests. >> you're up for ambassadorship, you're like, yes, what? no, it's great. and thanks for coming on. >> good to be with you. when we come back this morning, the oil trading block telling you what to expect. then a shocking reversal on two insider trading convictions. it could mean big changes for wall street in the justice department. and jack lew live from the dealbook conference in new york. first, though, the holiday shipping wars are heating up. morgan brennan joins up from the port in louisville, kentucky. morgan? >> hey, becky. u.p.s. expects to ship 885 million packages this holiday season. well, we have the inside look on your gifts after the break. ial e

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comcast business. built for business. u.p.s. is hoping not to repeat last year's holiday rush when more than a million packages didn't make it under the tree by christmas. morgan brennan tells us about the investment and planning going into this holiday season. she's at the u.p.s. hub in louisville, kentucky. good morning again, morgan. >> hey, becky. it's quiet right now. we're between shifts.

but in the next couple hours this place is going to be hopping. this is u.p.s.'s global sorting hub. the average daily volume, 1.6 million packages. but this time of year, that can triple with nearly 7,000 packages being processed per second here proving across 155 miles of conveyer belts in a facility 90 football fields big. now, impressive numbers, but last year this wasn't enough to help prevent the delivery debacle we saw at christmas when packages -- not all packages made it in time for christmas. that's why u.p.s. has plowed $665 million in capital and operational expenditures into their network this year. looking at some of those investments, automation upgrades at this and other facilities, detailed forecasting tools, more gps services. and room for more customer trailers to increase capacity. that's on top of more workers,

more operating days, and temporary sorting hubs. how's it working so far? ship matrix says the accuracy rate of on-time deliveries for u.p.s. and fedex increased the week of cyber monday versus last year. and that's a really good early indicator that all these investments are paying off. but keep in mind u.p.s. is expecting another late surge in online shopping this year as projecting its busiest day of the season will be december 22nd and weather can affect a lot in that time period. so we're going to be talking more about whether and u.p.s. >> i was one of those people that ordered things that didn't make it in time last holiday season. while it's frustrating, you can also understand -- i kind of blamed myself for ordering too late. i blamed myself for allowing things like the weather to get in the way. if you can control the weather, then you can win, right? >> certainly. and, you know, mother nature

is -- no one can control mother nature, but it's interesting what they're doing here to bypass some of those issues and some of the potential snowstorms and ice that can come in and really change how packages get delivered. you know, for consumers out there, don't wait until the last minute to order. >> yes. that is the best lesson of all. >> i say that for myself as well. >> i know. i ordered heavy all around black friday. that's when i figured i should get most of my stuff in to get shipped. anyway, thank you. we will see you later this morning. all right. coming up, the video we promised you early of peter thiel's speech at uc berkeley interrupted. that's coming up after a quick break. take a deeeeep breath in... and... exhale... aflac! and a gentle wavelike motion... ahhh-ahhhhhh. liberate your spine...

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talking about that peter thiel gave at uc berkeley was interrupted by protesters. about 20 minutes into the event which was hosted by the berkeley forum, protesters started banging on the doors. thiel continued with the q & a. then the doors crashed open and protesters took over the stage. they held signs about ferguson and the nsa. they chanted no nsa, no police state. and black lives matter. then the crowd booed the protesters and countered with their own chant peter thiel matters. >> they were also chanting go home, go home. there was a long back and forth. this comes after many nights of protests that they've seen in berkeley where things have gotten a little out of control at times. some windows broken. but this one actually spilled into the conference hall. >> peter thiel is a lightning rod for a lot of different

groups. hard core libertarian, openly gay, and he will donate campaign contributions to a candidate based on his libertarian views even if some of those counter to the social views. he's fascinating, great genius. obviously a big "lord of the rings" fan. >> the protection, right? >> no. >> oh. >> it's like a crystal -- looks like a big bowling ball. >> that's where you see the eye right? >> saron can see you and will see into your soul. and find out where you are. don't look into it. merriam -- >> almost didn't come back. >> or pippen. one of them looked into it. >> the one always getting in trouble. when we come back this morning, the sharp drop in oil causing ripple effects in currencies and equities.

calling it a black swan event. we'll look at how far oil could fall right after this. right now as we head to a break, look at the equity futures. looking a little bit better right now. dow futures up 40 points above fair value. s&p up by four, the nasdaq by four. in this accident... because there was no accident. volvo's most advanced accident avoidance systems ever. the future of safety, from the company that has always brought you the future of safety. give the gift of volvo this season and we'll give you your first month's payment on us.

welcome back to "squawk box." in the headlines at this hour, we are about 60 minutes away from two key economic reports which could factor into which way the market trades today. we're going to get november retail sales. those are expected to post a .4% rise. we'll also get initial jobless claims. which will be interesting after last friday. tough times in the teen apparel business. wet seal says it may file for bankruptcy protection if efforts to raise new funds are unsuccessful. that would follow chapter 11 filings in recent weeks from two of its competitors deb stores

and delia's. >> it looks like an asterisk. >> that's why it went bankrupt. too confusing. >> it's a teen retailer. teens draw smiley faces over their "i's." >> recently hot topic is big. >> they go in and out. sometimes it's goth. and lending club is going to start today for the online lending market place. wall street's biggest deal maker has surpassed $1 trillion in mergers an acquisitions this year. crossing that milestone for the first time since the crisis. big deals goldman worked on was cubist pharma and allergan and directv. data shows jpmorgan ranked second with $771 billion in deals. and morgan stanley is third.

lloyd blankstein will be speaking around u9z 30. of course you can see that live on "squak on the street" or stream it live on cnbc.com. how is oil impacting the equity markets? and the price of crude settling at just under $61. that is its lowest level since july of 2009. wall street guru calls the oil price drop a black swan event. an unpredictable move the markets have been waiting for. will stocks push the decline. kathy is managing director at bk asset management. and scott is the president and cio of nation shares. thank you all for being here today. i want to start with you and talk about oil prices. this is a black swan event. anybody who tells you where oil

prices are headed from here are just making it up. what do you think? >> well, it's certainly extremely difficult in a market like the current one to know where the bottom is going to be. i think we're seeing a lot of trading and expectation. a lot of supply and demand growth being weaker. a big oversupply being billed. we certainly see by the second half of next year, that's starting to rebalance. demand growth picking up and accelerating and some of the expensive supply growth slowing down. u.s. shale, some other sources. although it's not clear at the moment potentially an opec coming in somewhere next year. so low price in the first half of the year, but i think they'll start to pick up in the second half of next year. >> we've been looking at this largely as a supply issue. just being able to find more and more oil in places like the united states. we had an analyst who joined us earlier, though, and this was someone who in september was calling for oil prices to fall to $60. so he saw this well before it

was happening. wti was up in the 90s. he thinks you're looking at this because of a slowdown in china. one he expects to continue over the next several years. he wouldn't be surprised to see $60 oil for several years to come. would that surprise you, richard? >> that would surprise me. we've had a very weak year. although there are signs. and the longer we have a period of low prices, the more you'll stimulate growth. china isn't going to be the main center of demand growth. it's rebalancing. but there are other asian economies throughout the world and other prices will unlock that demand growth. it will just take a bit of time to emerge. i think the other side is if we did keep that $60 oil, there's a lot of supplies that aren't going to be viable. you're not going to see the same rate of new projects being added, supplies coming on to

replace declines and deal with the natural decline rate. so the market won't, i think, long-term be able to remain balanced at prices there. i think it has to be higher than that. but that doesn't preclude a period of low prices before that adjustment. >> kathy, let's talk about the dollar. dollar's been stronger across the board. yesterday up another 1.5% against the yen. what's happening here? how do you see this playing out? >> i think the strength of the dollar is also playing a big role in the weakness of oil prices. you have the supply issue, demand issue, and rising dollar issue. next week we have the federal reserve meeting again. there's a good chance after the number at 5.8% unemployment with average week ly wages rising. i think we'll see a further dollar rally which is going to push oil probably below $60 a barrel. i think there's a lot of factors at play right now. >> yeah. that idea that we're going to be raising rates and getting rid of

that language sooner rather than later. what does that mean? i know it means a stronger dollar, but how does it rise against the euro. >> we do have a recovering dollar yen today. we do see a broad based dollar strength especially after that disappointing ecb auction. at this stage, i think we're still looking for further dollar/yen strength. even if we didn't get a fallback here down to 117.50 is a good opportunity. as for the euro, we're up marginally if we have a rally up to 1.26. good levels to sell the euro. because last time the ecb had an abysmal auction, we saw a slide in the two weeks that followed. we could see further weakness here. >> scott, when you start talking about the low oil prices that's largely seen as a positive for the stock market. but are there things you worry about in terms of cap x spending or other issues? >> those are great questions. when you hear somebody talk

about a black swan event, equity investors get into a defensive crouch. me winning the lottery would also be a black swan event. i don't know that i'd complain about that. complaining about that because it puts you in a higher tax bracket doesn't make sense. i think the equity markets started leaning in the wrong direction because of what happened in shanghai in that the chinese, tightening up credit. but the composite was up when they did that. if they hadn't tightened up to rein in speculation, thooed be begging them to do it. i think what we saw what happened in crude oil given what shanghai had done everyone set the sale button when they shouldn't have. >> he does not think that's going to impact stocks. in fact, he thinks stocks will go higher from here. we hear black swan and everybody thinks that means the markets are about to jump off the cliff. not the case.

not what he was really laying out. >> no. and i understand that. i'm just saying that we just hear those words and everybody starts to worry. they really get fearful. and there's no reason to. i mean, of the ten biggest names in the s&p, one of the biggest ten is an oil company. and you understand why they took it on the chin. because if your biggest asset is the oil you have in the ground and all that oil is now worth 5% less than it was the day before, then you're in tough shape. but the other nine companies are going to do well with lower energy prices. >> i'm not even sure why it's profound to call it a black swan. it's in hindsight. at 90, it was stuck. and we had isis and iraq and all these things happening. >> ebola. >> and tchs absoluit was absolu. it looked heavy. the only thing that's black swannish about it is all the people who didn't know what they were talking about had no idea

it was going to drop. >> caught people off guard. >> tell me it's a black swan before it happens next time, laslo. you know? >> nature of a black swan is you don't see it coming. >> i know. but it just happened. so we had a guy on who did see it coming. let's talk about him. and i'm not saying i knew it was going to 60, but nothing surprises me about the oil markets because it was rigged by opec and fast money traders. not you fast money trader, scott. but other hedge funds and guys like that. it was a lot of financial money in oil when they were making money in the stock market wasn't doing much. i don't know what the inherent value is. >> we also misunderstood what opec said. opec said they expect lowest demand for their oil in 15 years. part of that is because we're pumping so much out of the bakken. wouldn't it be rich with irony if we started exporting oil and joined opec. >> we had some of the big

experts asking and saying what about the fracking thing. they said no that's a one off or, no that's not going to be material to supply. they had all these reasons. they get so stuck when oil's up there at a hundred for five years that they can't even imagine -- so what good are they? doesn't make you much of an analyst, does it? >> or it means you don't have much imagination. >> right. okay. >> thank you, folks. coming up, a court overturning two insider trading convictions and it could have big implications -- >> is there a fly over here again? >> it's not a fly. it's a gross gnat thing. something dead around here? anyway, details next. and then later treasury secretary jack lew speaking at the dealbook conference in new york. our own andrew ross sorkin is hosting and they will join us in the next hour. (trader vo) i search.

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welcome back to "squawk box," everybody. after a rough day for the market yesterday, things have picked up

a little bit. the dow futures up by about 68 points above fair value. s&p up by about eight. some headlines this morning, some new recalls related to the faulty takata air bags. mostly from japan and europe. nissan also announcing a recall of 152,000 cars worldwide related to the takata air bags. federal appeals court dealing a blow to the crackdown or insider trading. overturning two convictions in a case that could have big repercussions on wall street. kelly has left the schneiderman campaign and is back with -- >> you had to go there. >> i was going to do it off camera. >> what the heck, you know? >> for people that don't know, this guy -- they took your picture and they -- >> they took a live shot i did in front of jpmorgan about a settlement in which they played a role and they put it in an ad.

i was embarrassed. people thought i was campaigning for him and i had to be mocked by you. it gave you another piece of material. >> i'm sorry. >> joe, the appellate court decision yesterday is a landmark decision in white collar crime where inside er trading. the classic insider trading from an insider directly to another party in violation of a fiduciary duty and clear personal benefit. more recent cases are involved as downstream more often in these cases. people three, four five times removed maybe from the source who may not have known him or her and providing benefits. the cases against todd newman and anthony chasen who were

sentenced in 2013 after their convictions to raise broader legal questions, the circuit court. as mixed the that's five years that number is more than likely ticking down now. in those cases they were using a lot of circumstantial evidence in some cases. appellate judges said far clearer knowledge of fiduciary obligations and the personal benefit that resulted was needed. as a result they are vacated and likely a third trader will be also. >> really? >> so a lot of implications here, guys. this is something we were waiting on since late april. >> this was the sac stuff. >> this is part of the s.a.c. web. anthony chasen worked at s.a.c. before global which was involved in the cases. the other appellant from yesterday didn't work at s.a.c. but many, many people currently formerly with s.a.c. included

people like this man michael steinburg. he's been convicted. it looks that will be overturned in the coming weeks and months. >> so does steve want a redo? >> his firm not commenting on this per se. what we know is that he has a civil case that was filed by the s.e.c. over failure to connect the activities. thap is on hold until february 28th and remains so. we could see a settlement. and here's the x-factor. i'm hoping to hear more from andrew on this later. the s.e.c. is affected by this. and they could write new rules around it. enforcement action could be affected. this could be a benefit to cohen. >> joining us now is the lawyer who represented anthony chasen in the case. greg morvillo. i guess in your view you would

say this is just overreach? >> i don't think i would say it's a prosecutorial overreach. i think i would say what happened was the judge made a mistake when he charged the jury. he didn't give the law as we believed that it should be given. and in accordance with what the law actually was at the time. >> does anyone that can argue nuance know what an actual insider trading event is? >> i would be very surprised. i always thought that people had a misunderstanding of what insider trading is. it is not illegal to trade on material non-public information. it's only illegal to trade on it when there is a breach of fiduciary duty to the shareholders of the public company. >> so that's already the way it's phrased in the law. >> correct. >> so the action of insider trading -- this is key --

>> well, the judge in this case judge sullivan saw -- looked at one case and he interpreted the law there not to require the knowledge of personal benefit by the tippee. s.e.c. versus dirks which is a supreme court case from some 30 years ago specifically says that you do need to know the personal benefit that's given to the iper. >> and dirks became the corner stone of your appeal, right? >> yes. >> and one the circuit agreed with ultimately. >> yes. >> because in that case you want sort of a classic case with a clear personal benefit such as money that you're receiving exchange for information. or a job. not so much we were friends from church. we got career advice. if you tell me this, then i'll get you a job or i'll try. >> correct. there needs to be a quid pro quo between the tipper and the

tippee. they have to have some meaning behind what they're doing. it can't just be a benefit. because we're talking about whether we're going to prison or not. in that situation, it should be a defined ability to know whether something improper, something fraudulent happened. >> one of the issues here and you're raising this about how a reasonable judge should be able to interpret this. there's a lot of murkiness on the case law, right? one of the issues that came up in the opinion yesterday is this very fact that judge sullivan who handled these cases as well as the michael steinberg case has been one who is willing to look to circumstantial evidence as insider trading cases. in his courtroom we've seen a number of convictions. whereas other judges disagree. there was a footnote in yesterday's opinion talking about how the steinberg case which followed your clients

wound up in his courtroom and whether or not the prosecutors used certain tactics to do that. what's going on on the bench in regards to this issue? and do we need to see new rule making around it? >> i don't know we need to see new rule making because that wasn't sullivan's decision. he didn't assign the case to himself. >> no but the jury instruction he gave was key. >> it was. but i think he read the law and applied the law the way he believed it should be applied. we disagreed. and then we took an appeal from the decision. and that's the way the system is supposed to work. >> a lot of people who aren't lawyers think the law should be written clearer. but then again we wouldn't need so many lawyers. we've got one every four people or something. but can't you write a letter law? can't you help here, kate?

>> that's one thing to ask mary white about today. >> write it so we understand when you're breaking the law. that doesn't seem like a lot to add. >> i don't know we're going to see it on insider trading. congress can't even agree on a budget. >> the actual thing is quid pro quo clarice. >> i have one final question for greg. >> well, i've been wrapped ten times. >> all right. go ahead. >> she's going to do it anyway. >> how much impact are we going to see? how many other cases are out there that could be affected? >> i don't know how many there are. certainly i don't know what's in the pipeline. but of the 85 cases that have been brought, only a few of them are going tok impacted by this because of all the other people who went to trial. they all got the jury charge that we requested of this judge and that the second circuit said is the appropriate charge.

everybody else got the charge other than mr. chiasson and steinberg. i'm not sure what the far reaching will be, but it requires the personal benefit to convict the downstream tippee. >> and this could end up at the supreme court. >> when martha called and said he can't come to the phone, he's signing stock, she should be vacated too. but you can't make up for being there. >> greg knows something about that case. >> huh? >> greg knows about that case. >> i do. i was on the trial team for martha stewart. familiar with that case. she was not convicted of insider trading. >> that's right. that was, like, not a stellar event in the jurisprudence of the country. in my viewpoint, anyway. thank you. when we come back, joe has your list of stocks to watch before the opening bell. then the restaurant known for its burgers and provocative ads,

the ceo will join us. stick around.

one quick stock to watch this morning. sienna reported better than expected revenue. the network maker -- equipment maker, however, was hurt by a drop in margins sending it to an unexpected quarterly loss. as a result, stock's down about 3% at 16 and change. when we come back, top

bankers, business leaders, and government officials gathering at 1 world trade center this morning. it's hosted by our andrew ross sorkin. he'll join us there next. and we'll hear from jack lew in the next hour. stick around. "squawk box" will be right back.

oil shock. markets look to bounce back after crude inspired triple digit slide. meanwhile jack avalon gives us his take on oil prices and its effect on markets around the globe. the burger goes all natural. the ceo of cke, the owner of carl's jr. will talk about its latest creation, the slowdown in fast food, and what lower oil prices could mean for the industry. and a special event for cnbc today. we are the exclusive broadcaster for today's dealbook conference in new york. in this hour, treasury secretary jack lew. the final hour of "squawk box" begins right now.

welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen with becky quick. andrew is in new york for the dealbook conference. we'll talk to him shortly. and california now dealing with the pineapple express, but it's much more serious than that movie. it's one of the strongest storms in terms of wind and rain to hit the west coast since 2009. i do have a tell you a story after this. it's a bad situation. mudslides, flooding from torrential rain over the past few days. californians are bracing for even more. the system was dubbed the pineapple express. it's delivering is steady stream of moisture from hawaii to the west coast. three to six inches of rain expected in northern california and some areas could see as much as nine inches. but i was watching some news last night, i don't know where it was, and the guy was out there. and really just -- this is just unprecedented. and at the end he said we have

not seen a storm of this magnitude in as much as a half a decade. i'm like, i had to think about it for a second. he meant five years. and i just saw, we said 2009. but he hit it so hard breathlessly in this storm, this adverse weather. we haven't seen this -- >> when you said half a decade, i thought 50 years or so. >> that's what i thought. i went wait a second a decade is ten. so anyway. just shows you where we are in the world. >> let me tell you about some of our headlines this morning too. retail sales set to be released in about 30 minutes. expecting a rise of 3.4%. we will also get initial weekly jobless claims. first time in seven days. >> first time in at least a quarter of a month. >> that we'll be getting those numbers. >> uh-huh. >> google is shutting down its google news service in spain

allowing publishers to charge search engines that display their content. and higher rates for russia to 10.5%. the ruble which had already touched all-time lows. this is not half a decade. it's all-time lows. it further extended those lows on the news. mcdonald's is slimming down. planning to dropping eight items to get out of ids supersize me. you'll get one quarter pounder option instead of four. mcdonald's the ceo said the company failed to keep up with consumers' changing diets. he wouldn't reveal which items are getting the boot. >> wait is second. i thought it was you could personalize it and get it any way you want it. now one option from four? i am confused. >> i'm hearing conflicting things. i don't know. i don't know. we're going to be talking about a different fast food company

and the slowdown with cke restaurants ceo andrew puzder. company owns carl's jr. and hardee's. they're creating an all natural burger. >> organic beef or something? >> i think it is. i'm a fan overall because they make a western bacon cheeseburger i used to get. >> all the times in california, i never went to a carl's. and i think i'm missing out on something. >> you are. it had had an onion ring on it and barbecue sauce. >> that sounds pretty good. we are less than 90 minutes away from the opening bell on wall street. we are seeing a bit of a bounce back after yesterday's tumble. dow futures up about 62 points above fair value. and the nasdaq up to about ten. if you check out the markets in europe at this hour, early trading there. things have been a little bit mixed. you could see the ca c is down

by .4%. and greece, check that out, that is down by another 5%. another massive decline for that market. >> not an uncooked onion ring. a deep fried. as long as you get it. few stocks on the move this morning. office depot and staples both on the rise. starboard has taken stakes in both and reports say it may push for a merger between those two companies. and fiat and chrysler post a share offering -- public offering at $11 a share as it raises funds to cut debt. 1 world trade center is buzzing with a who's who of finance. they are all there for today's big dealbook conference which is being hosted by our very own andrew ross sorkin, creator and editor of dealbook. andrew, obviously you have a huge morning ahead. we miss you here, but we are really looking forward to this lineup. what's on the agenda today?

>> thank you. we do have a huge day. coming up on "squawk box" in a little bit, we'll be a talking to jack lew. plus oil front and center and what it means politically. we will talk to him. along with inversions, by the way, some burger king news this morning raising some questions about the tax issues there. later in the day we will have mary jo white head of the s.e.c. she has not talked about the insider trading decision that came out yesterday from the appellate court and what that means for future prosecutions. then as the day progresses, we've got lloyd blankfine. we're going to have him weigh in. mary barra of gm headquarters. she's been in and out of headlines throughout the year. and then we'll be talking to

hedge manager ray dalio about what's going on in the markets and of course culture. and later in the afternoon, we're going to have a rare interview with ken chanault. perhaps we'll talk more about the future of payments, apple pay, and what all of that means. and then at the very end we have a special treat. we're going to talk to adam silver, the commissioner to the nba who also hasn't had a quiet year in his job. including an op-ed he put out in "the times" just a month ago calling for the potential of gambling on potential sports teams. we'll do that all throughout the day and bring it to you on cnbc as well. >> so you're perfectly content to bury the lead, andrew? >> what's that? >> don't you have jessica alba

on? interviewing her? >> we do. >> i'm interviewing all those people. >> you don't think she knows. pilar is watching so you can't mention jessica alba. >> actually pilar may be coming this afternoon. but we are thrilled to have jessica alba here. she is the cofounder of the honest company. you often think of her as an actress but she has a company with a $1 billion valuation. >> she's always been considered in pop culture as like an attractive person. how attractive is she now with that company? think about that. right? >> say no more. say no more, joe. >> you know, the lighting is good down there. he looks young. >> i wish you could see a view of this whole thing. i don't think i'll be able to focus on the interviews. >> because of jessica alba. >> that too, but -- >> i can see behind you.

>> you can see the statue of liberty. it's a very special thing for us. should be a fun day. >> what a head trip for you. i mean, it's his thing. and treasury secretary is there. just don't -- just keep it in perspective. all right? you still put your pants on is it one leg at a time? >> one leg at a time. >> you still have to come back and sit next to joe tomorrow. >> i feel like we're sitting next to each other right now. all in the family. >> andrew, we're really excited about this and we will see you in just a little bit. >> thank you. >> adam silver, ken chanault. let's talk markets this morning. jack avalon, it's great to see you. >> nice seeing you. >> okay so we got a lot of things going on. oil prices keep dropping. we don't know where the bottom

is for that. you've got the dollar that keeps strengthening. whap is next for the stock market and what do you expect to see between now and the end of the year? >> we're seeing oil prices lowest in half a decade. and now we're seeing saudi arabia slowing. the one thing a lot of investors are overlooking is the cheap alternative of natural gas. if you look at it denominated in barrels, if you will on a btu equivalent basis, you can buy at roughly $24 a barrel. keep in mind natural gas and crude traded parity for years until roughly 2008. i'm not suggesting oil is going to get back to be 24 bucks, but i will say natural gas will keep oil tethered. we've got costs that should

boost u.s. economic growth. we are still a net beneficiary. that's a huge positive. i think the biggest head wind facing our u.s. markets is valuation. now we have to really adjust for expectations and fundamentals. >> joe's been asking that question the last couple days. are we really expecting a santa claus rally? we get it every year but because of the gains in mid-october, did we get the santa claus rally early this year? >> we could have. i was actually pretty bullish for december thinking that with 85% of active managers underperforming this year, they would look for any opportunity to try to get in, to try to claw some of that shortfall back. we'll see. we have futures up a little bit today.

given the separation some of these managers probably have looking at 1231 coming up. >> i've had a lot of people over the last six weeks or so who have pointed to that idea that managers have to find a way to try and claw their way back to the top so by the end of the year they can clock in and show a better performance. at least a less lousy performance versus the s&p 500. that clock resets on january 1st. what happens at that point? how much has this been responsible for buying on those dips? >> well, i do worry about the first quarter. i think as i've kind of been concerned that valuations are ahead of fundamentals, i think we could be setting ourselves up for disappointment in the first quarter. the good news is the economy is very strong. i'm not expecting recessions. recessions are built on unwind

ing overdoing to the upside. the fed is scratching his head wondering why people aren't taking on debt. i'm not worried about a recession here, i'm not worried about global slowing impacting us much. i think we could see a reset. with the market as much ahead as it is, it could be significant. enough fortous perhaps raise of cash, take a deep breath and look to redeploy potentially overseas. >> all right. jack, thanks for joining us. >> thank you. coming up, carl's jr. is looking to clean up its image a little. well, not its advertising image but its burgers. rolling out an all natural burger which makes me think what was in the burgers all along. imagine those commercials. the coe of cke joins us next. and then in the next half hour we'll have jack lew. cnbc is the exclusive broadcaster of dealbook. we had an in there. and check out some of the names we're going to hear from team.

look at that. lew, blankfein, barra, alba. here's a look at the futures right now. at least a bit of rebound from the big selloff yet. act i. scene 3. open port twenty-two-oh-one-seven on the firewall for customer db access. install version two-point-three of db connector and ensure verbose flag is set in case of problems. (clapping sound) isn't the cloud supposed to make business easier? get the one that can connect to the systems that you already have. today there's a new way to work.

carl's jr. looking to cash in on the healthy eating trend with a natural burger rolling out. it's grass fed, the cows are sung to every night with a lullaby. it's a first from a major fast food chain. they say it's what consumers are looking for. i get that, i guess. andy puzder is the ceo of cke. you've got to go with consumer tastes go. can i still get my old totally non-natural western bacon cheeseburger please? >> you absolutely can. this burger isn't replacing anything already on the menu. this is in addition to try and meet those millennial tastes you were mentioning. >> even if you knew some of it

was sort of just like -- you know, i don't like pesticides. but there are certain advantages when you go into one of these places where it's all organic, a whole foods or something, and you're being sold a bill of goods. it's almost political correctness. to go where consumers want to go, you're just giving them what they want. that's why you're doing it. >> exactly. our job, my job as ceo isn't to tell people what to eat. it's to figure what they want to eat and serve it to them. in our research we saw a lot of demand for what millennials are seeing a clean product. it's all those things you said. grass fed, free range, no hormones, no steroids, no antibiotics. that's important to these consumers. and we wanted to make sure there's a demand out there for that that we met that demand. that's what this burger is about. plus it's absolutely delicious. it's a really, really decadently good burger. >> where's your nearest carl's

jr. i'm in new jersey. it's a long way, isn't it? >> in the southwest and in the east and actually we're now moving up the east coast. we have hardee's. they're basically the same but have a different historic line. we did it at carl's first. the closest is probably in denver or oklahoma. it'd be quite a ride. >> still have those -- they have zucchini that's french fries. you still got that? >> fried zucchini. absolutely. >> is it good for you still when you fry it? >> well, sure, it is. >> she's sitting right here. here's a millennial that you're talking about. talk about some of the other trends because we have seen some troubling things, i mean, from some of your competitors maybe specific to mcdonald's. but how's business overall?

>> we've really seen a positive uptick in business since june. i think for us we've had a couple of really good products. a couple of really great adds. and i think we've seen -- but i also think oil prices are contributing. consumers with more cash in their pockets. but since june we've seen a positive trend in our sales. >> the head winds that you would identify right now are what? i mean, how are you handling health care issues or part-time issues or employment issues? wage issues? >> minimum wage. >> i think everybody's gone to more part-time employees. economically that's just something you need to do to remain competitive. i'd say the biggest challenge has been commodity costs. commodity costs are way up. oil offsets that, but as you

guys know, we're selling hamburgers and beef prices are way up. the strengthening of the dollar and the slowing of the economies international may help because of the struggling dollar and with we canner economies there's less worldwide demand for our agricultural products. so that generally helps commodity cost in the united states. you may see an improvement in that trend. we're seeing fewer people sign up than we had projected were going to sign up for health care coverage under obamacare so it may not be as impactful as we thought it might be at one point. we're going to have to wait and see. i guess the signup period is over. we did see fewer people than we were anticipating. >> do you know why that is? have people found health care elsewhere? was it too expensive for them? what happened? >> well, you know, i haven't looked into it, so i don't know

for sure why it is. but i had an article in "the wall street journal" a year and a half ago that i said i didn't think young people were going to sign up for this because you could pay the penalty. it would be much lower than the cost of insurance and it's a tax issue to begin with. if you're not paying taxes, that's not a big issue. i didn't think young people were going to sign up because of the cost of the insurance. and we offer a very reasonable insurance -- health insurance to our employees. it isn't obamacare compliant, but everybody has access to an inexpensive health insurance plan. i think a lot of people may be opting for that alternative because it's less expensive. >> why is it not obamacare compliant? what's missing? >> you'd probably need to get an insurance expert, but it probably doesn't cover pregnancy for 14-year-old boys. a lot of the things obamacare covers are really unnecessary

and you have to cover them. so these young people who don't -- when you're young, you think you're going to li forever. you don't want to incur that insurance cost. i think they're opting for this less expensive alternative. and the penalty. they have to pay their tax penalty. >> are you yourself a member of the mile high club? in other words, have you eating one of your burgers on a plane? have you done that? >> i've certainly eating the mile high cheeseburger. that's really such a good burger. barb in the ad was good. not on a plane yet. but everywhere else i've eaten it. >> all right. >> not on a plane. >> all right. we'll have you back and talk because there are some things about how to run a fast food place, minimum wage, and guys that become managers and suddenly they're regional. i don't know how to do it. but there's a lot of questions we'd like to talk to you at length about it at some point if we could. >> come back any time you want.

just let me know. >> send me one of those western burgers. when we come back this morning, treasury secretary jack lew will be live from the dealbook conference. he'll be speaking to andrew in a couple minutes. cnbc is the exclusive broadcaster of today's events at 1 world trade center. follow all the action all day long right here or you can watch it streaming live online on cnbc.com. meantime, check out oil prices. are lower oil prices helping? wow. check that out. $60.48 within striking distance of a five handle. we'll get reaction at the bottom of the hour. and find out what jack lew thinks about the latest numbers in just a few minutes.

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coming up, key economic data points set to be released including november retail sales. expected to post its fastest pickup in three months. and we'll find out if cheaper gas prices are helping consumers. that is next.

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breaking news. november retail sales headline numbers stronger than expected. up .7%. we were looking up .4%. and we have a juicy revision last month originally released at .3%. now .5%. let's get more granular looks. if you take out autos, does the number improve in no. but it's way better than we expected. the control group up .6% compared to .5% last time. this is solid numbers. granted i'd like to see ones in front of all these numbers, but

it is better than expected by a fairly wide margin. jobless claims dropped 3,000 from 297,000 and i'm sure we're going to start to get into a whole bunch of seasonalties in this area. and 2.514 million on continuing claims which is a bit of a jump from last month's slightly revised 2.37. interest ratings hovering very close to that very important, technically significant, wild ride october 15 when we settled at 214. why do i keep looking at that? because that was a settlement 28 basis points above the intra-day low on capitulation day, in my opinion. we continue to monitor what's going on in china and countries trying to deal with issues whether it's russia raising rates or china trying to get it all right. or europe doing somewhat exactly what the rest of the world is doing with regard to qe and the states being stopped. looking forward to it in europe.

corporates and their quality improving on what's accepted in china, probably goes the other way. should corporates become buys and the ecb. there's a lot of cross signals including the interpretation of energy. careful who you ask. anybody who does a lot of driving, middle class, i think they're going to like it. back to you. >> yeah, rick. but was that friday after the 300 i asked for resistance and it was like 260 or something. what was it on the 10-year? >> 230 to 238. that zone was huge then above us clear sailing. >> right. i didn't want support. i was asking you for resistance. once again it makes -- you know, all i can figure is this is -- is it deflationary oil? so is that what's causing this? >> you know what? i think when it comes to deflation, inflation, the dynamics, is it good, is it bad? i know there was a time in history where deflation should have been the dragon, that central banks should get their swords out.

but nowadays much is things involved in healing. so it makes little sense. >> how do you explain it? seven on retail sales. and all of a sudden we're going to new look. then again you look at europe. they're lower than they were at yields in countries that aren't as solvent as us. >> yeah. so let's keep it simple. we've talked a million times. all of that. what does it really mean in english? it means that our economy whether it's good or bad five years after a recession, it is what it is and it's better than europe. how can we quantify it? i have an easy way. minus 150 basis points and that's how you do it. if you do it, you continue to see how influential the low rates in europe are if you hold that spread at 150. it just keeps pressuring us down. not to mention the notion that we're creating a lot of jobs. but, you know, the quality of jobs is harder to get at and

it's a topic many refuse to talk about. no. we're just looking at the markets and digging. you and i have always had a shovel when it comes to the markets. >> we need a shovel around here, rick. that's for sure. anyway, steve leisman joins us now with more. i wasn't talking about you, steve. >> i didn't think you were. >> necessarily. >> if you were, i wouldn't really care. so you've heard, joe, of guns into butter. how about gasoline into sweaters. this is what this report is showing us today. >> ugly sweaters? >> it's a good question as to what kind of sweaters people bought. the data does not talk about the quality of sweaters. it does say the gasoline stations sales fell. that is lighter than they expected. they were looking for a 2%, 3% decline. maybe they're selling more hostess apple pies rather than gasoline. i don't know. right now that 0.8% follows

that. clothing sales up 1.2%. department stores up 1% as well. miscellaneous stores which is the internet number was down 1.7% in november. i find that number curious. but here's the bottom line. the bottom line is that 0.6% core which is autos, gas, building materials, and food services. that number feeds into the gdp calculation. that's up more than expected. so what's happening here? the third quarter number is now revised up above 4% according to our rapid update. probably headed to 4.5%. we're running 2.7 on the fourth quarter. we're going to be above 3% with this number today in addition to the jobless claims being down which doesn't feed into gdp, per se, but it's a good number in terms of where jobs are confirms the strong jobs number we had. so this foreign weakness is a puzzle as to why it's not showing up here.

it's certainly showing up in terms of prices. those import prices down 2.3% year on year. so it looks like at the moment we're getting the best of what's happening overseas. but not the worst of it in terms of dragging down u.s. growth. >> not yet. >> there's a possibility on the upside that the u.s. could drag up the rest of the world to an extent, but i don't think it's crazy to think we're going to do four and a half the the second quarter, four and a half in the third quarter. and then something above three. so that big dropoff that everybody was expecting, we'll see what the consumption numbers are, but i think you're talking about a consumption number that could be in the 2.5%, 3% range all by itself. so it's pretty optimistic with the data so far. of course i talked about those isms at the beginning of the month where sullivan said that made it closer to 5% growth. he wasn't taking that on face value. but certainly argued for stronger fourth quarter growth. rather than the weaker numbers that were out there. i'm interested in how the market

takes it. i think this is good news. am i missing something here? >> no. and even if you were importing could be based on supply. it could be all good. >> i have to get totally reasonable. >> let's ask jim iuorio what he thinks of this. jim, look, good news out there. question is how much of this is already baked into the market and what's coming next? >> well, i don't think it was. you know, the s&p is up about five handles since that number printed. i think that they really like about it is the retail sales numbers were arguably good. the market wants to know that things are getting better and not going too well where we can thank the fed getting up bigger than it is.

to be counterbalanced for the consumer. the difference is the layoffs are months away. and the immediacy of the consumer having more money is being felt right now. but i think right now we just have all the good part of it. i think on balance it's more good than it is bad. these numbers bear it out. >> it should be out there anyway discounting everything you just said no. >> no. but i think the market feels if we can get good traction right now, by the time we feel the so downside of it, it could combat that. it's a fairly valid viewpoint too. >> okay. jim, thank you. >> thank you. up next, jack lew joins andrew ross sorkin at the dealbook conference taking place in new york today. "squawk box" will be right back. e

financial noise financial noise financial noise financial noise

you are looking at a live shot from the 63rd floor of 1 world trade center. that's where andrew is. he's going to be speaking to jack lew in a couple of minutes. welcome back to "squawk box." let's check out stocks on the move this morning. restoration hardware beating on both the top and bottom lines. in reaction to a surge in sales growth last quarter. conso energy is spinning off into two companies.

walgreens shares rising this morning. ceo greg wassen is leaving. if you think a christmas tree is just for decoration, think again. the folks at ever corps say sales tell us about the economy. they put together a christmas tree survey polling across america. the theory is consumers buy more wreaths, garland, and a larger tree when times are good. how is 2014 shaping up? sales are up 10% year over year. and shoppers are looking for taller trees. i have been seeing some ads where they brag they have exactly replicated those actual trees. and you can, you know, put it away every year. >> do you have a live tree? >> we always get a live tree. >> we do do. >> i'm wondering at what age do you go for the --

>> my parents have gone for the -- >> there's an age. i paid attention to commercials. >> this year was so frustrating. it fell over. yeah. >> okay. >> let's get to "the new york times" dealbook conference that's getting underway at the 1 world trade center. and b rrew is about to start hi conversation with jack lew. >> -- you guys get to look this way but you look that way and think about the ground that we're on and the impact that it's had, it is something to behold. we are thrilled to have you all here today and we will get into what the agenda is going to look like for the rest of the day in a little bit. but i want to thank the treasury secretary for joining us on this this morning's very newsy environment to talk about all things going on here in the united states and perhaps just as importantly around the world. thank you for being here. >> thanks for having me. it is great to be here.

it is emotional to look out the window in this special space. >> where i want to start the conversation is where i imagine we're all thinking the same thing. when you think about the economy and where we are today on a daily basis, we're finding out that we're seeing that oil prices are droppi inping precipitously. you can look at that as a good thing, a bad thing. when you look at it and where it is today and what it means, you think what? >> i think the fact that it's a complicated question tells you how much things have changed in this country since the 1970s when i started working on energy policy. in the 1970s there was no question but lower oil prices were good for the american economy and there was no other side to the analysis. the fact is lower oil prices are like a tax cut to the economy. in terms of the macroeconomic impact, it's net a positive. there is always the question of what will be the impact on our

production and i think that it is a great success story that we are now producing oil in the quantity that we are. my own view is that you have to look at the oil sector and split it in between things like the shale development and the more traditional deep sea kind of drilling. and the long-term projects are probably much less affected in terms of timing because they take a ten-year time horizon. and the forward prices have not moved as much as the near term prices have. i think for the shale projects, i don't expect you're going to see a reduction in production. i think you may see some stretchout of developing projects. because those projects tend to produce a lot of their oil in the first year. so they're more sensitive to what's the price of oil at the year you go into the ground. i think if you look at where we are, the independence that we've developed in the energy sector, it is a clear positive. if you look at the impact on our

economy of having energy security and supply be where it is today even ten years ago, it's made the united states is more attractive place to invest. i think we'll stay on that path. there's never going to be more shale or oil under the ground. the question of whether it's developed in year one, two, o for three is less consequential. >> is there a problem at which the price becomes too low for the united states? >> i don't think markets are going to move in a way where that becomes a relevant question. there was a time -- i remember when $30 and $40 barrel oil sounded like the end of the world. and the world got used to $100 barrel as a normal price. there's fluctuation in price and demand and supply based on decisions that are made in terms of the present and future market shares. i think you're going to see activity that over time comes

together. reflects that there's going to be a trend back towards normal. i'm not going to predict prices. but i think that for the short-term, we're seeing a u.s. economy that's growing with increasing strength. and lower energy prices are going to be a boost to consumer demand and confidence. >> the obama administration has been very aggressive in support of clean energy programs. with energy costs at these low prices, do those programs make sense anymore? >> look, they've made sense as a long-term proposition for a long time. it's always a challenge with capital intensive technologies. when energy prices make that calculation, take longer for them to pay off. i don't think we're at the point it has turned. i think we put a good number of incentives in place to encourage the development of clean fuels. we have a regulatory environment that appropriately encourages the use of clean fuels.

we have to stay focused on keeping activity in that area growing. because if you look back 30 years, it would have been a good thing if we had seen the push to renewables back in the '70s and the '80s. we have to keep moving in that direction going forward. >> okay. let's talk about the geopolitical issues related to these energy prices as well. that's something to think about. you think about a company like russia which is budgeting -- their budget relies on $100 a barrel. think about venezuela, $120 a barrel. what does that mean? >> i think you have to go country by country to get a sense of it. russia obviously is a special case in so many ways. their economy is quite dependent on oil as being the principle driver both of their budget and their economy. and right now because of their activities in ukraine, they are subject to sanctions that are appropriately putting extraordinary pressure on russia's economy. so you've got a double whammy on

the russian economy right now. you've got sanctions that are very much reducing access. and now you have energy prices coming down doubling down on the pressure. look, i hope that what this leads to is a changing of russia's position looking for a path out of it's aggressive position with regard to ukraine. and towards a diplomatic resolution. that would provide the opportunity to ease the sanctions. >> you think this gives more leverage or less? >> i think the pressure on russia's economy is quite substantial. we're seeing it daily in the movement of the ruble. we're seeing it in terms of the increasing isolation of russian businesses from world markets. what i can tell you, andrew, is what it will take for putin to change his mind about the policy direction. i think that there's a kind of perfect storm right now of pressures on russia's economy. and russia's economy wasn't

strong before sanctions. it was weakened by sanctions. and now it's weaker because of oil prices. and the sensible place for russia to go is to do the right thing and work through the ukraine issues on a diplomatic basis. and let oil markets go where they go. oil markets go where they go. that's kind of a lot to change from where we are right now. we are not seeing the movement yet. that is what i think would be the right outcome in terms of geopolitical decision-making and in terms of economic decision-making. it's not the path they've taken which is why we maintained pressure on the sanctions side with support and unity with our partners in europe and around the world. it's quite telling if you look at the remarks out of european leaders over the past couple of weeks, while europe is seeing a soft economy and more integrated with russia's economy than we are. you see no backing away in terms of the insistence these sanctions have to remain in effect while energy prices

causing great pressure on russia. it's i how strongly the issue of sovereignty and actions russia has taken are seen by leaders in europe and here, our leadership with the president and congress, as well. >> i want to stick on energies one more minute and raise the spector of a horrible word contagion. is there any prospect the price of oil going as it will could spill into our economy in a bad way? supposedly close to 20% of the high yield bond market is tied to this energy business. the question is whether people will make payments and if they can't, is there a domino effect. >> we looked in terms of countries affected and sectors of the economy that are affected. i think it's premature to be looking at any immediate contagion risk. obviously, asking the question is the prudent thing to do.

let me start with the international/national considerations. venezuela. venezuela has to make tough decisions in terms of its own budget, how it handles the reduction in revenue they get because of lower oil prices. that is their economy is going to need to reform. they need to have budgetary changes. we need to look around the region and work with our international partners. there could be spillovers to some caribbean countries propped up by oil by venezuela. that is a different question than financial system contagion. there are spillovers we need to be very much focused on. i think if you look at the u.s. economy overall, the overwhelming effect of lower energy prices is going to be to boost the economy, not to cause greater risk in it.

that doesn't mean there won't be winners and losers, but as an overall economic matter, lower energy prices are felt across every sector in the economy. the burden of higher prices is more concentrated. >> we are going to take it back, as well. that is u.s. treasury secretary jack lew with andrew at the conference at one world trade center this morning. we are the sole broadcaster. we are going to have a like look-ins and events. if you want to continue to watch, check out the live stream of the event on cnbc.com. we'll be right back.

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let's get down to the new york stock exchange. jim cramer joins us now. we were up and got confirmation of a couple of numbers, the uptick in the jobs number and futures look higher. do you think this will continue to build momentum throughout the day? >> i think steve liesman is building a case.

jack lew said this is no contagion. this conference is in charge of the market. >> jack lew laid out the case why this is positive for our country, not negative. yesterday everything shifted. >> "squawk on the street" i'm going to see the deal book conference? >> i need to hear what jack lew said. he outlined why yesterday was wrong. i thought it was encouraging. it's what you and i think which is that this is good, not bad. >> definitely. >> that story's got to be retold. >> we need the patriotic music. thanks, jim. see you in a couple of minutes. >> check out the futures. we'll be right back. location. location.

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up next we'll have more on the deal book conference on "squawk on the street."

welcome to "squawk on the street." i'm carl quintanilla with jim cramer and dave faber. oil once again giving up some early gains, threatening to fall below $60 the first time since 2009. $60.35. the ten-year around 218. >> with gas prices down, new data shows monthly retail sales were up more than expected. activists think there is still room for improvement in two particular names. we'll tell you which ones. >> goldman sachs chairman and ceo lloyd blankfein's take on all of this and a lot more from a live interview from the deal book conference in new york not too long from now.

s&p losing 1.6%. oil prices extending their losses to new multiyear lows. we've been listening to andrew sorkin talking to jack lew. specifically on oil which is lead today. >> "falling oil threatening recovery." we will look back and say this could have gone the other way if you listen to jack lew. there is to contagion to worry about. there's some discussion we had that steve liesman led. the number five came up. 5% possible gdp growth. that's the cavalry. right now it looks like the pilgrims are being circled by the bears because of decline in oil. the calvary is strong domestic growth. if you believe jack lew, you

want to be a buyer not a seller for the decline. i'll bolster this by saying exxon, chevron, statoil, they can buy all these companies that are about to fail. buy all of them. refinance the debt. your point was companies will fail. >> there is no way to shut the spigot off here. it doesn't allow it. when you have a water heater that breaks at your house. the stuff keeps cascading. there is no lever to stop it. it's going to keep coming. you need demand to come up, which is what's happening in this quarter. the problem is high yield debt not the oil in the ground. there are companies desperate for oil.

they are going to refinance the debt and do it. i don't want to begin the panic if there's $2 some billion in debt, say half fails. chevron, exxon get together with statoil, refinance it for $50 billion. bingo. >> except you've got to make sure you get the financing to buy whatever you want to buy. and refinancing also involves accessing the credit market. >> exxon is a country. >> exxon will never have a problem. it may creep into other areas. i'm talking about the credit markets. >> you're right. >> that does go to this fear that perhaps is reflected in yesterday's market action the last few days.

>> i think some of it can reverse. >> it's not where we saw everybody almost go out of business. >> not 2015, they can't stop. >> really, that long? john raymond thought three to six months. judge, too bullish. >> you think so. he was not necessarily bullish. >> every time these futures light the guys have to slam them. the financial guys are trying to catch a bottom. oil guys are desperate to show cash flow. the companies that did the hedges are the companies we

like. you are saying a bear case is on crude? >> i'm saying you can't lift. if the calvary comes, the economy gets better, you'll see equalibrium. >> yesterday on the tape indicating no willingness to do such a thing. >> are they going to antagonize all those countries? so many on the precipice, iran, venezuela, nigeria, mexico. by the way, mexico? brazil works $80 or $90 break even because they are deep water. >> venezuela, prospect of marshall law. >> and the one i didn't mention, russia. you wonder how long it will take them to say all right.

>> how many control venezuela and brazil. these are familia situations. >> one guy controls russia. powerful guy. new government data shows retail sales jumped better than expected 0.7% in november from the previous month. holiday shopping season got under way. staples is up sharply this morning after activist investors disclosed 50.1% stake in the office supply retailer. raising its stake in office depot to about 10%. this is a 13-d feeling. they are closer to almost 6% now at starboard. it is both through the stock itself and options. more importantly while they say nothing in the 13-d, the message that the markets are hearing most probably appropriately is we want you to think about getting together with office

depot. starboard was the engine, if you will, behind office depot and office max getting together. while again nothing has been said, that certainly would seem to be following through on this notion -- remember we got that note back a few months ago, talking about this as a possibility. that being staples and office depot getting together. immediately people may rush to say wait a second. you may have memories of 1996. >> 1997. >> it goes overturned in '97. i've got it ready. >> i'm a competitive guy with you. you got me. go ahead. >> i get to focus on one thing. you have to do everything. >> and start the margaritas. don't forget about that.

>> they were good. beautifully tart. all right, all right. in november 1, 2013, the deal between office max and office depot was made between the ftc and they made a very different judgment about the market that exists for office superstores. that is the difference here. in what they had to say on november 1, 2013 was that the competitive dynamics are very different now as opposed to 1997. mass merchants like walmart, target and costco and sam's club have proliferated and expanded their product offerings and sales of office supplies. the explosive growth of online commerce -- there we go. had an impact on this market. >> not to mention web-based players like amazon. >> there we have it there. that's the key. that is why you have to think about the possibility of a

staples deal pushed by activists. now it's not being. >> that would be fabulous. bricks and mortar, you just need one. you have to close every underperformance store. i wish eddie lambert did that with sears and k-mart. restoration hardware closed a store amazing to build a new store that was incredibly amazing. >> we'll get to the numbers later on. on a macrofront, retail sales were a nice beat. almost every category was positive except for gasoline. when we thought black friday was a bust. >> when you combine unemployment, which is good, with the strong dollar which

steve liesman lined up is good, you can build a pastiche which says it's back. lower energy buildings are still terrific even at these prices. i see a lot to like. against that i see bond market. it is a battle. yesterday the bonds definitely trumped the stocks. people are reassessing every minute. hedge funds are reassessing every second. >> all the time. >> you are going to be replaced by annin algorithm, you'll be

replaced by a press release and carl will be here. i was at dinner and said i'm a tricerotops. >> you had a good run though. >> yes. i had a good run. >> you're thinking dinosaurs is a failure. they were around 3 million years or more. i'll probably get corrected on that. >> they are coming back. >> a jurassic park. >> what goes around comes around. >> when we come back, goldman sachs chairman and ceo lloyd blankfein, hear what he says to say about the oil prices. lending club gearing up for its wall street debut. the big board is red today. we'll bring you the opening trade. (vo) rush hour around here starts at 6:30 a.m. - on the nose.

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wall green announcing the ceo will step down. they will search for what they call a permanent replacement. pasina, the alliance boots

controlling or large shareholder, over 7% of the combination, i've been hearing his name since we first reported on the original deal. 73 years old. people have been looking to him as somebody who would be the engine at this combination. wasson is only 66. we watched the ceo get fired as significant missteps. we watched others. i know you've been a fan. >> i think this was an old store no one wanted to go to. they reinvented it. the one i use is the old

jpmorgan residence. he's changed the store. his job is done and he did a good job. i understand when i see the stock go higher, i think it's time to let the international guy -- it's going to be an international drug store chain. >> we watch jack lew, they decided against an inversion. it will be interesting to see how this company is transformed even if he is not acting ceo, having such an important role at the company. >> i think the combination is a smart combination. we've seen domestic companies go international and fail. a domestic company that links with a successful international company, we've not seen that. i think that is the right way to

go. i was looking at walmart in china. costco said we are going to do very slow international. look at the target canada fiasco. if you take the best drug store from international and the best for domestic and put them together, maybe you do have the right plan. >> referring to stories walmart is more challenged in china today than some people realize. the largest lending firm going public today. lending club pricing 58 million shares $15 apiece. ipo valuing the company $5.4 about. lendingclub is listing as lc. last year the lendingclub ceo was asked about going public. >> i think it's in the future. it's interesting many private companies are pushed to go public. in our case it's customers that

love it. they would love to be associated with the growth of the company. >> initial range was $10 to $12. we'll talked torenaud laplanche. >> fiscal 18 ebitda. what's interesting if you're jamie dimon you are sitting, are you kidding me? because they have no credit risk. if you built wells, you are saying, go knock yourself out, guys. the public may like it because maybe they want something they may touch it. reminds me of lendingtree when it started. that is not a valuable company. >> right. although in this case they would

claim they are serving an underserved market in dollar sums below what the traditional banking industry is interested in doing. >> true. maybe you can get a loan from them. when you listen to stuart miller at lennar. >> guys are doing $30,000 loans. >> it's a micro loaner. it's an interesting idea. >> where the news out of citi and bac and jpmorgan not reassuring. >> they will not have $1.7 billion in legal bills. >> we'll get cramer's mad dash as we count down to the opening bell. we try to undo some of the damage from yesterday.

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it's a mad dash on a thursday. you want to start with housing. >> there was a lot of misinterpretation on the toll brothers conference call yesterday. people hated the call. toll brothers bought 2.9 million shares here, average 30.77. they came in and established the floor. this is six trading days. very smart buyback. bob toll was nearly as negative as people portrayed him.

i'm involved with the brooklyn housing because i'm involved supporting a very important charity there. if anyone thinks that is negative, try go to the one of those houses. they are still talking about how we have a depressed housing market. listen to the call and stop listening to analysts. and restoration hardware. watch the gary friedman conference call. watch. this was the most amazing -- it gave me goosebumps, to quote gary. restoration hardware is trying to get out of the idea of bricks and mortar saying come to our galleries. it's a 16-minute video. i urge everyone who is thinking about buy restoration hardware to visit a gallery but watch the 16-minute video. you'll know why the stock is up like this.

>> we were together last night. it was fairly late and you said you are going home to watch this. >> 4:15 i watched this. >> what is it? >> it's the small is dead, we recognize that. talk about da vinci, talk about reinvention. you want to live in their stores. you don't want to rent, you want to live in their stores. that is important. this is a company that has a $2 to $4 billion. occupancy, everybody wants a restoration hardware. the 22% comp numbers in the end is not nearly as exciting as gary laying out the vision. i wanted gary to make a major

full length motion picture after. he's the coolest man. >> most interesting man in the world? >> yeah. >> all right. >> lloyd blankfein will take the stage next to that man, andrew sorkin. lendingclub's wall street debut. we'll speak with the ceo after that opens. the world has gotten,

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you are watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell in 60 seconds as the s&p trying to avoid four days down in a row. hasn't done that all year. jim, 90% negative breadth yesterday. we know that anywhere from 1-20 days out of that is generally good. we are a retail-based economy.

we are not a capital goods based economy. there's the s&p at the top of your screen. down here at the big board. lendingclub an online marketplace connecting borrowers and investors celebrating its ipo today. we'll talk to the ceo after the first trade. momo. a social networking platform in china. this is a very important economy for the point of view from the

economy. >> how about this note. abercrombie and fitch, attractive share price. i typically don't like recommendations based on the idea of b.o. if business isn't that good they typically don't seize on the idea. >> not always. it depends. in the case of dell, business is not particularly good. he decided to move in that direction. he already owned a good deal of the equity and even more. >> best buy, they sensed a bottom. a 23 lbo would have been smart. >> but they couldn't get anything done. they didn't do it.

>> abercrombie, this is an indictment of michael jeffries saying he kept the valuation down and when he is out of the picture you have a real company going here. some people are saying that about greg wasson. my charitable trust has it. i think it's an expensive stock. >> lululemon back to the highest level. this is going back to april to find a price this high. >> trust owns that one. i was going over with stephanie this morning about it. there was some question on the margins. they talked about the strike in the west coast demand is very good. is it too soon to call bottom lulu? no. >> no. >> apple back to $112 and change. one of the talkers of the morning is that dr. dre' sold beats to apple earlier in the

year. i think he is the highest paid for the year. income for 2014 $620 million. that is well above the number two beyonce in terms of musicians at $115. >> a couple of guys a few years ago back in april of 2012, a couple of guys, 13 guys sold instagram they should have held out for $3 billion, maybe $4. >> had him on yesterday on the show. >> i have to tell you we all laughed at facebook paying $1 billion like we laughed at gilead for paying $11 billion. >> for google, what did google pay for youtube? >> we all laughed. maybe they are smarter than the average bear. >> we are still laughing at facebook paying $18 or $19

billion for what's app. >> twitter has challenge at the top. they remain overweight. >> i think when you look at facebook, sometimes you have to say they're smarter than us. they see things we don't see. it's okay. >> these are controlled

companies. they can make the decisions they want to make without the concern necessarily that anybody is going to come along and really give them the big shove. an activist can make noise but they don't have ability to do anything. >> bill gates controlled microsoft. does it not lead the longer-term better thinking? >> that is one of the key questions you will hear debated. i sat down with the ceo of a fortune 50 company complaining about activism and talking about short-term views of so many, the quarter to quarter. activists will say that's not us. then you hear companies go private, michael dell for example who has been waxing eloquent lately about the virtues of being private. >> private is a god send if you

are under the glare of the public. andrew winters, dow has been horrendous of late. >> dow chemical. >> he was being made fun of in a video that destroying the value of dow. i happen to think he deserved better. that video is dead. you can note see that video anywhere. it's like the last episode of "homeland" in terms of shocking. >> hopefully not nearly as bloody. >> "homeland" had its last episode? >> no. the last one was -- >> okay. thank you. >> golden globes out this morning. a lot of nominations, including

for claire danes. >> you can call me quinn. >> what? >> well, i call myself quinn. >> dow is up 73. let's get to pisani on the floor. >> lending club's ipo. let me show you the crowd over there. tom's there, ceo of the new york stock exchange over there. quite a big crowd. we are waiting for this to open. i'm not expecting this to open in the next several minutes. 58 million shares at $15. the price talk was 12 to 14. the price talk just a few days ago was $10 to $12. this is the biggest peer-to-peer lending company. the first one to go public. there will be another one next week. we'll talk about that in a little while. this has generated a lot of interests. we don't have an indication for it right now. i don't expect this to happen in the next 15 minutes. i do not expect it to happen in the next 15 minutes.

this is a big mobile-based social networking platform that probably won't open till between 10:30 to 10:45. it's been rough in ipo land. they are trying to get through a whole lunch in the next few days here. we had tough times. we did have one postponed overnight. that's a reit that manages office properties in scandinavia. it was due to market conditions. markets are tough right now. we'll find out if it's going to go in the next couple of weeks. renaissance capitals ipo, that's the big basket of about 60 ipos. it's an etf. that is down about 4% this month. it's been having a tough time. we've got a huge amount of ipos trying to price. i count seven pricing tonight including a whole bunch of software related companies here. including some of the big names out there.

new relic which does software analytic analytics. port works which is a big enterprise data system. there are seven companies trying to get them all through the door. this is the big push right now in a difficult market conditions. we'll keep an eye on that. even though oil is down once again, we see airlines doing fairly well. stock was up small. preopen. american, love, ual moving to the up side. we had a big debate whether oil, down, good or bad for the markets. overall it's been good for the markets. oil is down 40%. energy sectors had a tough time down 24%. look at all the other sectors, health care up 14%, financials are up 8%. consumer staples, consumer discretionary all in positive

territory. oil is having collateral damage in places like the canadian banks. it's hard to argue that it's been detrimental to the u.s. stock market overall. still waiting on indications object lendingclub. back to you. >> thank you, bob pisani. we talked begin the precipitous drop in the price of oil and a good deal of tumult in the high-yield market. we are talking 300, $400 billion. it's not that things aren't getting done, but what i'm hearing, it's getting tougher to get them done.

convertible deals like the one that t-mobile did. some of the other deals that are out there in fixed income. take a look when it comes to high yields jnk. this is the marketplace high yield bond etf. look where that's gone lately. others will argue that. we had jim casey on a couple of weeks ago from jpmorgan who runs all things capital market related saying he can do large financings. you see a small deal. mid street petroleum selling stuff to other company. it's a $90 million sale of

assets. he got terminated? you can guess. the buyer could not get financing. this is starting to happen in energy. you've got the larger issue talking about leverage buyouts. there hadn't been that many big ones this year. it's been about exits talking about private equities. there is a petsmart deal out there. a big crackdown on banks' ability to lend in highly-leveraged transactions. that has taken out a lot of capacity from the banks and so you dump that into the high yield market which you are going to have to fund a lot of financing more from just bonds as opposed to loans. again, you have to keep an eye on these things. i think it's worthy of examination from people and

something i'm going to be a bit more focused on is what's going on in fixed income. is there something spreading from high yield and worries when it comes to energy beyond that? is it leading to a much tougher environment to get stuff done when you require a large financing? >> you did a deal -- >> it could be short term in nature. >> if you bought a house between 2005 and 2007 at a loan value of 130%, whoever gave you that finance is out of business. >> yes. >> the deals done from 2012 to 2014 in oil remind me of those highly-leveraged loans given in subprime. you are absolutely right to stay focused on them. those who missed the subprime, including the fed really missed major credit problems.

we are not talking cbos or all the different products that came about. we are still talking about an important market. >> yes. >> s&p reminds me uslbo deal value this year trails non-lbo deal value the first time since 2011. >> i had a chart here of a loan volume. can we put that up? we don't have it. all right. we are making it still. it takes time. i'll show it to you. you're my audience of one. yeah. we'll get it to everybody else. rick santelli in chicago. >> thanks. we have better than expected retail sales. if you look at the impact, looking at a one-day chart of 10s, we move from briefly under 2.14 where we are currently sitting at 2.19.

a move. we are still underneath yesterday's high yields. if you open that chart up to the big day in the middle of october, you can see where the market sits right now. bund deals, flirting with ongoing mid 60s yields historically significant because we've never been down there. if you respect the 150 basis point spread to 10s, you can see it as an influence stopping our rates moving more to the up side considering the data. let's switch gears. the greek ten year. it is very important to note how close the flirtation is with 10%. also remember, look at a three-year note, it's over 10%. that yield curve is getting a bit aggressive. pay attention to that. to the jgb, a breach of 40 basis

points. never done that before. if we want to look at foreign exchange, normally i would look at the euro. i think we need to look at dollar versus the chinese yuan. we are still flirting with the best levels on the greenback since the third week in july. remember, they are doing a lot of things in china whether collateral, regard to corporates, $65 billion injection. gas/brake, gas/brake. they wouldn't go through that if the growth perspective wasn't decreasing down the road, especially in 2016. last chart, let's go to that dollar/yen. we look at 120 as a pivot. doesn't mean it can go through but is an area to pause as we continue to look where the pause and consolidation will be in the energy market. back to you. >> thanks, rick santelli. when we come back, goldman

sachs chairman and ceo floyd blankfein on the markets and oil prices and more. once there was a girl who always mixed and matched. even in her laundry room. with downy unstopables for long-lasting scent. and infusions for softness. she created her own mix, match, magic. downy, wash in the wow.

normally when we say sea of red that is a bad sign but that is what lendingclub wants, that's their colors. gauge your interest in something like this day one? >> the schizophrenic nature of the market -- it's an illness, i'm just saying yesterday we felt oil was terrible. yesterday banks were bad, today banks were great. this lendingclub is attracting tremendous interest. these days are not sustainable. you can't have up/down like this. you need more smooth. what it says is that oil could be down 10, up 10. we want to slow it down.

i don't want to see this kind of yesterday was horrible, today is good. it's not sustainable. it scares me. >> you mentioned crude. everybody's gotten various targets. today it's raymond james arguing that $60 is the level which the saudis thought they could take crude. try to wipe out shale but that chip would be brief, in their words. >> whiting downgraded from sell to buy. there are many of these. sanchez is like this. these are the companies that people are worried about. freeport people are worried about. i don't want to be worried if oil bounces here. don't bottom fish, but if it goes to $50, it bounces. >> dow is up 153. daughter: do you and mom still have money with that broker?

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we take you to the deal book conference and lloyd blankfein. >> i could give you a lot of narrative that everybody thinks people think the market is higher and timid about it. we'll see what happens. even when the market goes down, everyone is waiting for it to go down 10%. it's never getting there. price action is actually not that bad. i'd say looking at the fundamentals of it, two things. there are a lot of positives to the economy. i tick through these things before from the energy situation to resurgence of housing to the most important thing is having reversed all the leverage that was in the system and kind of reset the clock in a lot of ways, both on the corporate side and consumer side.

that will play out. doesn't mean we won't have anxiety or bad days or bad months or bad quarters. the analogy i make and maybe this sounds too euphoric, when i got out of school in the late '70s, the 1980 period, we had a period of time when you had double-digit unemployment, inflation followed by money policy that led to double digit unemployment. a big malaise and terrible time in the markets and the economy for the u.s. at the moment people would have been their most desperate if you look back, the sentiment was trailing the fact that the clock had been reset and we had a 20-year positive period after that. >> we talked to the treasury secretary earlier about oil and energy prices. is there a bad side to energy

prices coming down as far as they have? >> you can make a short term or sector bad call, bad aspect to it. for example, a big percentage of investment in the united states, capital investment is in the oil sector. they withdraw that. that in the short term a negative. you can go -- look. can you make anything good out of a hurricane or natural disaster? that wipes out a lot of wealth in the country? that's thought to be stimulative short term in the market because people will spend. you can take a blessing, lower price of oil, once you think of like a tax cut and make it in the short term a negative by saying now people won't invest because they have to abandon investment projects, so short term or in this sector in energy which is a big part, you look at the dow impacts and say there is some negativity.

there is another aspect which i think is convoluted. the people want to set, want to raise inflationary expectations, want to avoid deflation. this is pronounced in europe. that is a means to an end. that is not the economy itself. that is a device for charging the economy. somehow that's become an object. the mere fact something is going to happen that is going to take prices down loses a negative. europe should be ecstatic. should be much more favored by the low energy price. u.s. is relatively balanced between importing and exporting at this point. europe is far and away an importer of oil. it's a very big boon to their economy. >> where do you stand on china? >> they don't like the fact it is deflationary. >> true. china appears to are slowing down. is it even slower? do you believe the numbers in china? >> do i believe the numbers?

i believe there are numbers. i would say i think it's very hard to gauge and i'm not sure they are measuring things the same way. i think it's a less sophisticated capital allocation system. i'm not sure they are collecting the information the way we would in as sophisticated -- >> you don't think they are manipulating the numbers? >> i don't know. how do i know? i'd say my overall view of china is that over the long term, they are going to do very well. i said this other times before. this could very well be the chinese century the way the 20th century was the american century. it may have been the american century, but every year wasn't an american year. there are a lot of problems.

we had more than one year in a row we had depression that lasted effectively ten years. was still an awfully good century. i wouldn't want to leave china with another 85 years to go in the century. >> where does that leave us? the united states? >> yeah. if this is the chinese century. >> no. >> are we going to become the brits? >> their economy is going to be bigger than our economy even though they are going to be poorer than us on a per capita basis. there's just a lot of people in china. the fact they are catching up, doesn't mean you're the most fabulous person of the year. that's pivotal. the big question is whether the u.s. is going to grow at 2.75% or 3.75% on