the problems in russia -- russia is the u.s.'s 28th largest trading partner. there's not a direct impact with the ruble. so i think the u.s. economy is doing well. the fed will start raising rates around mid year. they'll go slow. >> thank you. >> thanks. >> all right. make sure you join us tomorrow. "squawk on the street" is next. ♪ good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber at the new york stock exchange. cramer is going to join us in a few minutes. green on the screen after yesterday's failed rally. day two of russia's attempts to stabilize the ruble, which has, in fact, strengthened just slightly from yesterday's lows. oil has settled back below 55. ten year is below 2.10. cpi does come in cool, the biggest drop in six years. fed statement just five hours from now. our road map begins with the

markets and futures rising ahead of today's fed decision. cpi just out. as we said, the biggest drop for consumer prices in six years. >> fedex is out with disappointing earnings. the stock is losing ground in the premarket. >> more leaked sony e-mails as the new york premiere of "the interview" is canceled. theaters cancel runs altogether. >> and an exclusive interview with the chairman and ceo of general electric, jeffrey immelt, as general electric wraps up its investor meeting from yesterday. >> all right. futures pointing higher this morning. oil prices falling. all ahead of the fed statement due out this afternoon as policymakers wrap up their two-day meeting. joining us this morning, wells fargo senior adviser scott wren and eric la salle. scott, how are you feeling? there was some general chatter yesterday that it felt a limit bottomish and hedge funds were

beginning to come off the short energy trades and do a little more buying. what are you seeing where you are? >> i think, carl, it probably is a little bottomish. i'm not a two-week kind of guy. you know, i'm looking for this market to finish. our year-end target is 2050 to 2100. i think the market is going to end a little higher. >> why is that? the season? >> that's where fair value is. anything can happen over a couple weeks. i don't think the market has a whole lot of downside here over the course of the next couple weeks. people are starting to come around to, okay, fourth quarter, there's going to be some negative impact for these energy companies. as you work your way through 2015, these lower energy prices are probably going to be good for the economy and net/net it's going to be a positive effect. i think the market's coming around to that way of thinking. >> eric, maybe good for us,

certainly not good for putin. has a very important press conference tomorrow on the economy. a lot of discussion about whether or not he has hours or days to fix the situation with the ruble as they begin to put some of their reserves to work. what do you think is going to happen in the next week or two? >> it's obviously very messy. russia is december tin for recession, unavoidably. frankly, they were before oil prices dropped. it's an awful economic situation for them. i think perhaps the central bank is doing enough at this point in time. there's nothing like a 6.5% rate hike to get you to a more stable situation. the ruble seems to be demonstrating that. i don't think we're in necessarily for significant further free fall on the market side. i think their economy is still in free fall. that's not something they can easily address at this point. >> a quick interruption here. geopolitical news regarding cuba. for that, we go to michelle ka rue so-cabrera. >> appears to be dramatic events unfolding when it comes to cuba. we are waiting potentially for a statement from the white house

later. we know that alan gross, who's been in prison for five years in cuba, the obama administration has told the associated press that he was put on a plane, sent back to the united states. a development worker there. the situation there had been quite contentious. but there are reports that there's a potential policy change toward cuba and reuters citing state tv in cuba says that president raul castro is going to make an important announcement at noon regarding u.s. relations. the embargo against cuba was imposed in 1962. if dramatic changes are announced today, it would be an incredible change, carl. we don't know what they are. but certainly we could be looking at something akin to the situation with iran and the attempts to cool or improve the relationship with iran. we should also point out that cuba is in a very tough position because of the situation with the price of oil. remember, they get 100,000 barrels per day free. i mean, there's some supposed relationship with venezuela, but it's heavily discounted.

they're heavily reliant on that oil from venezuela. you can be sure they are incredibly concerned about what is happening with the situation in venezuela and whether or not they're going to continue to receive that oil. that may be pushing them to try to come to a deal with the united states. there are a lot of hurdles within u.s. law about actually improving things dramatically because they're going to have to pay back certain debts to u.s. investors, that's written into u.s. law right now, before we can make dramatic changes. back to you. >> wow. michelle, you seem to be intimating the embargo may be lifted. i don't want to put words in your mouth, and i know you're not saying that, but is that a real possibility? >> absolutely it's a possibility. today, no? but at some point it was definitely going to occur. one, because exiles in florida were no longer supportive of the embargo. so it's not the political issue that it was for so long when it

came to u.s. elections and winning florida necessarily. so whether or not it could be today, i don't know. remember, to remove the embargo actually takes an act of congress. but there's a lot of things that obama could do executively in order to change the situation for sure. >> the president is going to make a statement in the cabinet room at 12:01 eastern time. but certainly could be looking at a big thaw in cuban-u.s. relations. michelle, i know you'll have more in a little bit. thank you so much. back to scott and eric. eric, that peak your interest? >> it does. i mean, it's more i think of a political, cultural type of event than one that has a big impact on the market. but absolutely it's relevant. >> eric, let me follow up on not just russia but some of these other economies that are getting pressured. conceivably cuba amongst them. small, though, that economy may be. but brazil or mexico. and this risk of potential con tod

todayon as well. how big of a problem conceivably could this be? >> i think some of that con today on. one of the softening impacts is just that oil probably has overshot at this point. we shouldn't assume 55 or $60 barrels are the price going forward. but it is a hit to them. where i think there's been an overreaction is the contagion elsewhere. you look at some of those fragile five economies, like the indias of the world, that benefit from lower oil. i think markets are being a little ham handed in their treatment of those countries. maybe we'll see some reversal there. >> scott, just a remarkable -- i mean, this cuba news puts into some relief what russia is going through, what iran's going through. i mean, obviously there are concerns when you have dislocations like this in this short period of time. but the people who have had antagonistic relations with this

country, we sort of had them over a barrel to some point. >> that would be a shocking outcome to me, carl. that's kind of coming out of the left field for me. i have to process that for a little bit. i'd love to see that embargo lifted. >> you think that feeds into sentiment at all? >> you know, i think it might just a little bit. you know, i think the market is -- you know, you talk about these emerging market countries. they've issued debt in u.s. dollars. currencies are getting hit. oil is going down. the market's worried about not only high-yield, u.s. debt issued by these oil companies, but also these emerging countries that have debt issued in u.s. dollars or other currencies than their own. those are some of the overall concerns. there's a laundry list of concerns out there, carl. but that, i think, sentimentwise, that's interesting. i don't think it would have a lot of play.

>> all right. thanks, guys. >> the ruble is regaining a bit of ground one day after it tumbled to a record low. the russian finance ministry announcing to sell its excess holdings and calling the ruble extremely undervalued. jeff is in moscow and brings us the latest. >> reporter: yeah, it's fascinating. over the last couple hours, we've seen russian government working very hard to pull together significant actors. the ceos of major energy companies and mining businesses. the idea here is that they want to get these businesses that have significant foreign currency holdings to work in coalition with the government to send a message to the currency markets that we will sell foreign currency to try and restabilize the russian ruble. we've seen the finance ministry come to the table and say they'll spend up to $7 billion to make that happen. the central bank, we know, has

put a couple billion on the table. it does seem to be having some effect. we have some stability now in the russian currency. the big issue -- well, let's say there are two. one will be what happens with janet yellen and the fed. there are lots of companies that have foreign currency denominated debt and they want to know there's still going to be plenty of dollars around in the world going forward to try and help service their debt. and the second big thing we're waiting for, of course, is this four-hour press conference involving president putin. that'll take place tomorrow. he hasn't spoken about the state of the economy or the ruble recently, and we're looking forward to him making some remarks about that. and of course he may also talk about ukraine. john kerry interestingly making some comments that he thought there could be some room for progress, particularly for president putin is prepared to deescalate on this story. if that led to the removal of

sanctions, that would give the russians access again to dollar capital markets. something that would definitely help on this ruble story. carl, let me send it to you. >> jeff, thank you so much. we're glad you're there to keep us updated on the story from moscow. thanks very much. meantime, back in this country, fedex reporting quarterly profit of 2.14 a share. that is a miss. company says higher volumes were offset by a rise in aircraft maintenance costs. they still say they're on track to meet 8.50 to 9. that took some people by surprise today. >> it did. it's a strongly performing stock. i could almost channel jim and say every time this thing goes down, you want to potentially buy it because eneve that bli, it seems to gain ground after either a missed quarter or sometimes a warning. that being said, the criticisms

of the company to the extent there are is it's more of an airplane company than a package delivery company. they could be more efficient. but the stock is going to be down this morning, at least in the early going. >> we always look at some of the volume numbers. express, revenue a little light. volume up seven. revenue per package on express, which is their largest business, was a tad negative. ground volume up five. revenue up eight. margins hanging in there. we'll see what kind of impact that has on the broader market. of course, everybody trying to get as many clues as they can to how the thanksgiving holiday went. in fact, fedex is on that november quarter. >> they are. of course, the busiest time of the year by far for both fedex, u.p.s. and the u.s. postal service. >> when we come back, we're going to talk live and excleesively with ge's chairman and ceo jeff immelt. we'll hear what he has to say about low oil prices. also ahead, taking the pulse of the housing market with pulte. take one more look at the

futures. fed meeting and press conference this afternoon. six years to the date that the fed went to near zero interest rates. back in a minute.

after trying to stage some buying yesterday, oil is back below 55 today. jackie deangelis is with us. >> good morning. we're lower on both sides of the atlantic this morning. looking at prices at 55.08 right

now, off of session lows today. intraday low was 54.21. yesterday's intraday low, 53.60. sentiment right now according to the traders is downward. we did get a bearish api report last night on weekly inventories. we're waiting for that d.o.e. number at 10:30. that's what traders are watching right now. as long as there's no change in the supply/demand equation, we're expecting these prices to go down. of course, the opec daily basket price, 55.91. that's a bit of a leading indicator. meantime, gas prices continue to fall. according to aaa, $2.51 today, down 71 cents from last year. substantial move there. of course, it's a fed day. we're going to be watching the fed, what it says and what impact that has on the dollar. guys, back to you. >> all right. thanks very much, jackie. let's now head to the bond pits. rick santelli is at the cme group in chicago. >> thanks, david. i don't know if study is the

word, but it definitely applies in front of the statement in the press conference last of 2014. we do see rates steady, albeit at low levels. look at a one day. maybe more important is a two day. the one day you can see we're holding, but here's something important. on the two day, we're building above yesterday's low. that's not a condition we've had much in the past week or two. if you look at a year to date, you know, it's somewhat mind boggling considering, you know, we're close to a 31% return, total return on a 30-year bond. nobody liked being long. we're approaching 100 basis points lower than where we finished 2013. i think that's amazing. if we look at the fives to tens spread, i think that this is key -- or 5s to 30s. either one. because of the flattening. both of those go back to january 2009. i suspect any fed action is going to continue to exaggerate that flattening situation. two-day bunds very revealing on

the consolidation. we have a double bottom at 57 basis points, the historic low yield. if you go back to november 3rd on tens versus bunds, you can see that magic 150 is still a good calibration. a two-day of ten year jgbs shows, yes, they are hovering at a 35 basis point low. the euro versus the dollar, it's a little lower today, but it has been holding considering all the central bank cross currents. back to you, carl. >> all right, rick. thanks a lot. when we come back, a closer look inside fedex's earning miss. we'll find out what one analyst thinks we should do with the stock right now, which is down about 4% premarket. also ahead, an exclusive with ge's jeff immelt. dow is down. back in a minute.

fedex shares are falling in the premarket after the delivery giant reported an earnings miss. profits up less than expected despite lower fuel prices. the company did reaffirm its outlook for 2015. let's bring in art hatfield with raymond james to get more. what stood out to you from the report this morning, art? >> well, actually, i think we were the one outlier on the street where the company beat our estimates. we were at 2.08 on the quarter. the thing that jumps out with reaction, i think a lot of my peers were a little too aggressive on the impact from fuel from the quarter. while it's somewhat of a straightforward calculation, the application of how it flows through the company's business is not so simple. so i think some of the estimates were a little bit ahead based on

that. as a result, you're getting a little bit of a negative reaction this morning before the market opens. >> any expectation that the less-than-expected savings from fuel is going to continue? i mean, they did reaffirm their outlook. >> they did. and i think the biggest takeaway here is that more importantly than just fuel is that the company's on target with regard to their cost reduction program. we saw significant improvement in margin at the express unit. really, that's the unit that provides the most operating leverage. so i think because of that and because they're on pace with that program, the company felt comfortable reaffirming its guidance for the full year. >> yeah, and any sense of the current environment in terms of -- especially given this time of year, which is typically the busiest for this company? >> well, as we look at the quarter specifically overall, volumes were ahead of our expectations. so i think the demand environment is pretty good.

revenue was a little bit light, but that was driven by lower fuel surcharge. so i think overall directionally, they got to feel pretty good about what they're seeing from their customers and on the cost side the stuff that they can truly control. they're doing a pretty good job. as a result, we should see good numbers for the rest of the year. >> all right. arthur, we'll leave it there. thanks for joining us. >> thank you. >> arthur hatfield with raymond james. >> seven minutes before the bell. let's bring in art cashin. morning to you. >> morning. >> five different stories of the day. what's going to be the key one? >> well, i think it will be the fed and what comes out in the press conference. i'll be interested to see if the press asks her, did they discuss oil, did they discuss several of these things? in my commentary i put out this morning, i piggy backed on john, who did some work where a good

deal of the increase in employment that we've gotten came from shale, the oil boom. that's provided almost all of the gains we've seen, either directly or indirectly. it'll be interesting to see how the fed discussion goes. >> we'll be curious to see if she gets the question or whether she entertains it and how she answers it. not just in terms of employment but on the other side of the equation as well, whether it be inflation or lack thereof. and the credit markets too. can you really administer another bhiping to the emerging markets by starting to raise rates here and have the dollar get even stronger? >> and particularly with them under stress with what's going on in russia. i think this could be a really animated fomc meeting. we won't know that until after. away from that, my usual point, the seasonals are screaming for a rally.

they've been frustrated by both oil and what's going on in russia. >> this cpi number is amazing. isn't that a weird day on which to remove language like considerable period? >> yes, it would appear to be. world events and the statistics we're getting, kind of leaning against the fomc. >> would you expect them to keep it? >> i think there's at least a 50% shot they do keep it in. i think the big benefit is she's got the press conference. she may feel she can clarify things after and see where they're going to go. >> of all the things to watch, whether it be the russian ruble or the price of oil or the ten year or, i don't know, the intraday on the s&p, what am i watching? >> a couple things. yesterday's low on the s&p was at the 150-day moving average. we're running out of moving averages here. if we get weakness in oil and start to roll over, you want to

hold that. if you don't, then we switch metaphors and begin to think going through 17,000 in the dow. could be a problem. as i say, the seasonals are screaming for a rally. let's hope the fed and the oil market cooperate. the oil is going to be the key. >> all right, art. we'll see you, i'm sure, later this morning. opening bell just about four minutes away. stay tuned. of course, a live and exclusive interview with ge's jeff immelt in just a minute. female announcer: sleep train's interest free for 3 event! ends sunday. it's your last chance to get three years interest-free financing on beautyrest black, stearns & foster, serta icomfort, even tempur-pedic. plus, get free delivery, and sleep train's 100-day low price guarantee.

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you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell in about 50 seconds. cramer has joined us onset, having done a little business earlier this morning. good to have you, jim. >> thank you. >> we talked about cpi, talked about fedex. haven't gotten to a bunch of other names, including general mills and joy global. although bookings were down, not the disaster we're used to. >> it's funny you say that. that's exactly how to put it. it was not an unmitigated disaster. doesn't make me want to the buy it. does make me say, okay, they live to play another day.

they're involved in all the industries that we don't like. but they're not dead yet. >> we're going to keep our eye on that and a bunch of other things. of course, jeff immelt coming up in a few moments. there is the s&p at the top of your screen. down here at the big board, on deck capital, an online platform for small business lending, celebrating its ipo. we'll talk with the ceo when the stock begins trading later this morning. warren resources, an independent energy company, doing the honors over there. what was your take on fedex, jim? higher aircraft maintenance? >> the western ports hurt their business. this is the second company that has said that. we heard it. this is an undercovered story. the slowdown in the western ports at the absolute worst time. so i'm not going to pronounce this thing as something you should sell. i like the fact they're sticking

with their guidance. i think fedex is probably okay here. obviously the rest of the world is a little nutty. when you go over their quarter, there wasn't anything i felt was really, really standing out as being worse so much to the downside. >> and they did maintain their guidance for the year. darden was the best performer. a lot of companies we're used to coming in and smelling up the place. didn't really do that this time. >> general mills is a giant taker of all the things that we know are being produced. it's good for them. annie's is a start for them. darden. i remember when clarence came on "mad money" and said the thing that most helps uses is gasoline going down. well, there you go. there's a revamp going on. that's not bad. >> obviously you've got an entire new board. a management team still taking shape there from last i checked

with jeffrey smith, the man who ran the proxy fight that got rid of everybody. >> and red lobster, which was a huge drag on management's time. >> it went to a private equity firm. >> this was exactly what you should want from activism. they come in, suggest you get bad of the really bad division. the okay division gets management's focus. the other divisions aren't that bad. next thing you know you have a high-yielding restaurant play that does well when gasoline goes down. >> well, regardless of whether it was this management team to come or the one that left the building. >> better to be lucky than good. >> absolutely. on some plays, we've seen it the reverse. maybe they did things that were correct or favored by majority of shareholders, yet energy prices -- think hess, iron ore.

think any of these things. >> chicken is still sticky. i think chicken comes down. danny meyer setting the table, he said, you're missing the point. red lobster and olive garden, they are just fuel themselves for humans. not for a minute did they confuse that with food. >> by the way, first time in a year plus that olive garden comps have been in the green. >> isn't that fabulous? everyone's always said to me, i can't get into olive garden. why aren't they making money? why aren't they doing better? i think the answer is they were undermanaged. this is really a terrific thing. i know the revamps are good looking. i like it. >> goldman cuts verizon today to neutral. price target goes to 48. stock's down 10% for the month. they're blaming -- >> you got a price war going on. it's kind of as simple as that.

clearly it's never as simple as we might say it is, but that's where it starts. we know the competition that's going on. we know what verizon said just last week in terms of its subscriber base, in terms of the repricing that everybody else is doing that they've gotten sucked into to a certain extent, even though a lot of their metrics are quite strong. >> it was very intimidating watching john ledger come on, brian sullivan speaking to him yesterday. saying, listen, whatever phone plan you have, i'll cut your bill dramatically. when you hear that, he's a great process hetizer for his company. i say verizon is a great operator. what's it got, 1.50 downside? >> 4.83% yield. t has a 5.7% yield. >> with that differential in yield -- although, we've learned from the oils if you have a declining business, the yield

doesn't support you. >> jim, we're starting to get some headlines out of dow jones on this cuba news. according to dow jones, obama to overhaul cuba policy. this is citing a government official. to begin discussions with cuba on normalizing relations. u.s. to lift many travel and money transfer restrictions. the vatican played a key role in some of these negotiations. again, quoting a government official. the u.s. government to return three convicted cuban spies. of course, the president is going to speak at noon eastern time. what do you make of all this? >> do we keep guantanamo? priceline, remember, the hotels that have done well, they're german. the traffic has been german. some canadian. >> some spain. >> i don't want to necessarily buy priceline, but that's a country that will be a new vacation place that's been run by germans. kind of interesting. >> they already have a lot of hotels there. they're owned by canadians or germans or any others. it's just that we haven't been

going. everybody else has been going. >> it's the first time i've seen capitalism blooming in the world in like the last eight months. we've been talking about latin america basically switching dramatically towards socialism. maybe they're going toward capitalism. >> this is a big deal. normalizing relations. >> unbelievable. >> it is a big deal. i've wanted to go for so long. so afraid it would be high profile. i think a lot of people like that. it's going to be a vacation destination. you know, if you hit up cuba, you don't get anything. >> let's get to bob quick here. make sure we have plenty of time for jeff immelt in a moment. >> i think the important thing is we're ending the year on a real big bang here. this is on deck, which is alternative lending here. looks like the indications are 23 to 26 here. we're talking small business lending. the price talk was 16 to 18. this alternative lending was very hot. remember what happened last week with lending club. that was very successful.

this is a little bit different than them. they're a lending platform for small businesses. lending club was for peer to peer. unlike lending club, they also lend using their own money. this is a hot topic right now. any kind of these alternative lenders. so 23 to 26. we also are going to have a big ipo pricing on friday. i'm not willing to declare the end of the year yet, but juno therapeutics. i think this is the highest market cap biotech ever pricing on friday. we're going to go out of the year with a big bang. this has been the biggest year for ipos since 2000. we're getting close to a record in terms of dollar amounts. after juno, i'll give you a quick summary for the year. let's move on, talk about the markets. a little more stability overall. put up some of the oil stocks, you'll see generally much more

stable today. in terms of the sectors, materials, consumer discretionary, financials on the upside. we're generally seeing industrials down today. i think that's because of the effect of fedex and u.p.s. i don't think the earnings miss is as nearly as important as reaffirming their 2015 guidance. this is a company that's just off an historic high for fedex. the important thing here, people are buying into this company based on online shopping and some global growth. it's up 20% this year. that's a big mover here. ge expecting their 2015 earnings to come in below wall street estimates. jeff immelt will be here in a few moments. i'm sure we're going to discuss that big decline in oil. obviously affecting their overall earnings. right now, guys, 23 to 26 on on deck capital. that's going to be a big gainer today. dow up 73 points. >> thank you. i just want to point out, i do remember the cuba, that basin fund. i always heard that was a way to

play cuba. they did a rights offering recently. c.u.b.a. is a real company. we've been waiting for this to happen. don't jump to conclusions. >> c.u.b.a. was ready. >> clearly. >> 10% pop there. let's get to michelle. >> you're going to have jeff immelt on. great coincidence and timing. remember, one of the key things to getting the embargo eliminated, the act of congress, cuba has to pay back reparation for businesses they seized. there's a building, i have been to it, in havana, the general electric store where they sold stuff back in the late '50s. when fidel castro came to power and started seizing all kinds of american businesses, the jpmorgan building down there, et cetera, ge's got a building there. in theory, they have a claim that they could get paid back on when it comes to if, indeed, the embargo finally ends, guys. >> michelle, some questions

about how much power the president has from an executive point of view versus what congress has to do. >> so the travel restrictions that we expect that you mentioned he's going to announce, that's easy for him to do. that's executive order. we've seen that under carter, under bush. that can be done. remember, we estimate there were already 100,000 americans going there every year, mostly exiles or people-to-people visits. when it comes to getting rid of the embargo completely, there are so many hurdles because they were baked in by congress. cuba is going to have to settle this pile of $5 billion worth of debts from the businesses that they seized. that wasn't the value back then, but when you add in the rise in inflation over time, that's what it's estimated to be worth at in the point. they're going to have to come to some kind of deal. by the way, there are several hedge funds in london, they all own a pile of defaulted cuban debt as well. they've probably paid roughly 8 cents on the dollar for.

they're thinking it could settle for around 30 cents on the dollar. they'll have to settle on that before there's a real re-entry into the capital markets, which they desperately need. >> michelle, we'll be coming back to you a lot this morning. thank you so much for that. when we come back, our exclusive interview with ge's jeff immelt with the dow up 78 points. back in a minute. liday season is here, which means it's time for the volkswagen sign-then-drive event. for practically just your signature, you could drive home for the holidays in a german-engineered volkswagen. like the sporty, advanced new jetta... and the 2015 motor trend car of the year all-new golf. if you're wishing for a new volkswagen this season... just about all you need is a finely tuned... pen. get zero due at signing, zero down, zero deposit, and zero first month's payment on select new volkswagen models.

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lot of news surrounding cuba this morning. it's beginning to make its way into various sectors of the economy, both here and there. michelle caruso-cabrera has more. >> u.s. debit and credit cards are going to be allowed in cuba as a result of this thawing in relations. also, the u.s. is going to allow the export of telecommunications equipment to cuba. up until now, it had only been food and medicine. cuba is going to greatly expand citizens' access to the internet as well. once again, debit and credit cards being allowed -- if you have traveled to cuba in the past, as an american, you've had to bring piles and piles of cash because none of your credit cards would work. this is a huge, huge change.

also, the export of telecommunications equipment. they desperately need improvements to their infrastructure there and ability to communicate. that's going to be an opportunity for businesses to get in there as well as they try to expand the internet. >> michelle, we're getting word from nbc news, a senior department of defense official that alan gross will be chartered to dallas today. as of now, there are no plans to land at andrews air force base. we know he's essentially on his way home. >> yeah, an absolute similar bomb of what's happening here. there had been a lot of movements behind the scenes to get him freed. the fact it's happening is part of this incredible moment between cuba and the united states. to get rid of the embargo completely, they're going to

have to get congress to move on it. but there's so many things that can happen in the meantime when it comes to credit kashdcards, ability to travel there. clearly not just its symbolic move, but very important to alan gross and his family as well. >> michelle, thank you very much. a lot more still to come this morning. in the meantime, general electric hosted its investor meeting yesterday. they provided 2015 guidance of 170 to 180, cited the fall in oil prices could hurt its oil and gas units next year. joining us exclusively this morning is jeffrey immelt, the chairman and ceo of ge. these cuba headlines remind me of what you said yesterday. watchers of cnbc, you know there's a lot going on in the world. >> who would have thought when you woke up this morning you'd be talking about cuba? >> what do you make of this? >> i just got here, so i don't know that much about it. i think we live in a time of volatility. both geopolitical and economic. good leaders know how to shift

throughout that way. >> they're a nuclear power country. they've always been way ahead. there's this possibility. you go in there and do what you do best, which is refurbish. >> we're in 175 countries as we sit here today. we'll sell more gas turbines in algeria this year than in the united states. if you told me that when i became ceo, i would have said that's not possible. everyone is a customer out there. >> cuba, perhaps, being brought to the negotiating table because of lower oil prices, which is something you were getting a lot of questions about yesterday in terms of the way you change the complex of the portfolio to focus in part on that. you sounded rosier than we would anticipate, jeff. it's got to be a bit worse than perhaps you're even painting it as a result of this tumultuous oil market. >> you know, david, if there's

one thing you can say about me as a ceo and ge as a company, is i've been through cycles. the first time i televised from this seat was september 20th of 2001. running the biggest aviation business in the world, and we managed our way through that cycle. i look at oil and gas the same way. we've modeled the business at $60 a barrel. i like the business a lot. we're going to go through a cycle in the short term. but look, this was a business before thanksgiving that needed better execution around the big projects. all the ceos in the industry were looking at the supply chain and saying the costs have to come down, we have to do a better job of lowering the break even costs. so we've been on this path for more than a year. i look at the cycle as an opportunity. we like the business long term. we think we've hedged the upside and downside appropriately. >> we know, jeff, that emerging markets are under pressure.

what is your exposure to russia? what is your exposure to brazil? what's your exposure to countries that may not be able to pay and companies that may not be able to pay for drilling? >> you know, jim, our exposure to russia is about 1% of the company. it's very small. we'd like russia to be in better shape. i like russia in the long term. we today, tomorrow, we're going to book a 2.6 gig watt order from an emerging market for electricity. the needs are still there. we're in 170 countries. you know, if gas prices go down, the u.s. gets better, china gets better, india gets better, that's all good for ge. i personally think some of these countries are going to have a hard time. iraq is going to have a hard time. libya is going to have a hard time. venezuela is going to have a hard tile. saudi has 5 billion in reserves. i think the saudis are going to be just fine. i think what happens, guys, you

sit here every day, you know, these big things just get traded so hard in the short term. you look through it. i do a ton of business in china. china's not that bad. we see decent growth in china right now. so the incremental buyer of everything in the world is really u.s. economy, the chinese economy. >> can we afford to have china not that bad, jeff? >> 7%, david, people ought to watch what the government says in china. the government wants to slow it down a little bit. that's what they've done. 7% is what they're pegged at. today it's more of a micro story than a macro story. it doesn't feel like a recession me. it doesn't even feel like a slowdown. in the end, that's what underpins the price of oil over time. you have a supply issue, really

traded by north america and the saudis. you have a demand issue created by europe. those two are going to equalize at some point. this is a high-tech infrastructure business we like being in. >> there's a big school of ge critics, right, who argue the company went into the financial crisis as a bank, sold nbc for a song, going into an energy crisis as an energy company. are those strategic stumbles, or is that the nature of being a conglomerate? >> i would say in some ways this is the strength of the company. so we're going to give guidance that's up, let's say, 10 to 20 cents next year, so it's very strong. a 10% plus growth next year, even with tougher oil and gas. we run these businesses through the cycles for the long term. i just think that's the nature of the business. you're not going to have all the businesses at the peak of the cycle all the time. but i think if you look at us getting out of gen worth, out of insurance, out of plastics, if

you look at the divestitures we've done, we've done smart divestitures. if you look at the industrial business we've done, there's no finer industrial company in the world. you're a multibusiness company, you're going to go through cycles. but we can have -- you know, the oil and gas business compensated for the turbine business over the last four or five years. now that does better and oil and gas -- and we compensate for each other and still grow eps. >> with 10% eps growth, can you give us the return that jim mcnurney just gave us at boeing? you know these guys very well. up 20%, dividend boost. people love income. >> $40 billion over the next year or so in dividends and buyback. 40 billion. another ten plus a year in

dividends. you name the company that's giving investors back 40 billion. you name the guy that's giving back 40 billion. right here. >> jeff, there are frustrated investors, of course. you mentioned -- >> financial services used to trade at a 50 times earnings. it's completely repositioned. on the industrial side, there's nobody on earth, nobody, none of our competitors. if you look at our competitors in the business we're in, we're doing extremely well right now. our customers buy our store. our position with customers has never been better. our narrow body share is high 70s right now. >> but to your point of the benefit of a conglomerate, one area may be down a bit but another will be up, others might say, well, you know, i'd rather take the ups and the downs with the purer play. they come back to this idea, which i know you have heard. i can't imagine how many times.

split it up. >> i even let go of you guys, as hard as it was to do. >> and for us. >> if you look at the businesses we're in, david, health care, power, aviation, transportation, we have higher margin rates than our competitors. we have better returns than our competitors. we have better growth rates. if you look at the portfolio today of a pure play infrastructure company, we're tough to beat. we've got a huge value creating opportunity for investors as well. look, i've done this for 13 years. there's plenty of critics to go around. i get that. i think it's up to us to prove why a multibusiness company deserves to be -- the burden is on us to prove the value. but i love our market shares and love the way the company is positioned. >> you mentioned 13 years with the company this past summer. we went through the headlines

that there was some sort of timeline on how long ceos serve at ge. >> i thought what jim said that day, i couldn't agree with more, which is nobody at ge is given anything, including me. so there's no timeline for any of this. we work at the will of the board. we got to earn it and prove it every day. i'll do this job as long as it's appropriate and when the board decides it's time for somebody else. if i don't perform, i should be out. >> does the flow of capital out of emerging markets into the united states, which we clearly see happening on our screen every day, does that help you or hurt you? >> we're more leveraged to the united states than any other market. we're a 130-year-old american company. we've globalized the company. when one door closes, another one opens. i'd much rather have our position today as an american company. we'll benefit from every ounce of u.s. growth. we feel great about the u.s.

economy. we're extremely well positioned in other places as well. >> if oil were to go back to 100, would we be able to raise numbers or cut numbers for ge? >> oh, we'd make more money. but again, oil lower -- look, if airlines make more money, they buy more stuff. we like it when our customers earn more money. if you look at our commercial spares, order rate, it's the highest today than it's been in our history. that's because the airlines are flying it more h fe, feeling be about their bottom line. >> we don't need to upgrade because we're not burning as much fuel. >> from our standpoint, the more usage, the more money we make. it's a mix thing. >> when you mention many of the parts of the company at this point as an infrastructure company, you didn't mention financial services. but it's still an important component. >> sure. >> and will it be in the future? are you done with -- >> i think we're going to make it smaller in the immediate future, but we still have to go

through the regulatory process with the federal reserve. there's just more we're going to know as time goes on vis-a-vis where that all goes. >> you bought $13 billion worth of oil and gas assets while oil was going up. there's bleeding in that market. are you ready to buy some of these that are capitulating, the oil service names that are doing so poorly. is this an opportunity, so to speak -- >> here's what i tell you first off. my experience of going through cycles is there's going to be market share -- you know, when i call on an integrated oil company ceo today, there's more of an inclination to do business with ge in volatile times than there is when oil is $120 a barrel. post 9/11 in the aviation business, we picked up ten points of market share. my expectation in volatility, that organically we're going to be -- you know, we're going to go to a low-cost position. we're going to have the low-cost

position versus any of our competitors in this space. if we see stuff, never say never. >> i like what you said yesterday. i could almost sing a song about the crises i've seen. >> country western song. >> jeff, before we conclude, to this point of all the ups and downs you've seen, nonetheless, people tweet long-term holders in ge are frustrated. >> i think the company has gone through a vast amount of change in the last ten years. we are much better positioned today looking forward than we were ten years ago looking forward. much better. so i would just say to investors, our earnings growth is going to be equal or better than our industrial peers. you're going to get a good dividend payback. you got optionalty of cash. 40 billion we're giving back to investors. i think the best days of ge are ahead. i'm proud of the team.

i'm completely dedicated to generating returns for our investors. i'm extremely focused on what's going to happen next. that's where i sit. >> it's good seeing you. please come back soon. jeff immelt, ge. when we come back, we'll continue to follow developments in cuba and russia. dow is up almost 100 points. a lot more "squawk on the street," back in a minute.

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comcast business. built for business. good wednesday morning. welcome back to "squawk on the street." i'm carl quintanilla with simon hobbs, david faber at the new york stock exchange. what a morning. take a look at the markets here. dow is up almost 100 points as we get word that the u.s. is going to begin working at normalizing relations with cuba. fed statement this afternoon. cpi came in cool. russia trying to stabilize the ruble for a second day. of course, the big news is about cuba. michelle caruso-cabrera has the latest on that. >> potential watershed moment in the relationship between the u.s. and cuba. we're expecting the president to announce later today a change in the policy toward cuba, a different attitude for sure. and we've already started to see leaks coming out of the administration as to what this change in policy is going to be

related to. they said they're actually going to allow individuals to travel back and forth. there will now be tourism allowed to cuba. they're going to begin discussions on normalizing relations and potentially having an embassy there. they're going to allow credit cards to be used there. if you've travelled to cuba, you know you must bring piles and piles of cash to pay your bills. you haven't been able to use credit cards there. cuba is going to allow more use of the internet. and the united states is going to allow the export of telecom equipment to make that possible. up until now, it's only been food and also things like vaccines and biotech stuff, like pharmaceutica pharmaceuticals. so this is potentially a dramatic shift. we're waiting to hear from president obama later today. also, raul castro, the current leader of cuba, is expected to speak at the same time in cuba as well about this thawing of relations. remember, though, an actual wholesale lifting of the embargo cannot be done by the president alone. certainly through executive

orde orders he's able to make substantial changes. the ability to allow credit card use and to allow travel to and from cuba. we know the agricultural community has been extremely interested in being able to sell to cuba. they've been able to sell, but they want to be able to extend credit. they want to be able to do more. the way american businesses have told us in the past, the way they think of cuba, thiit's so close. think of it as a 51st state with 12 million people, a market we don't have access to that we should. there's going to be a lot of interest in this from the business community in the united states for sure. >> by any standard, michelle, historic announcement. the implications for business we've only begun to scratch the surface. a programming note. stay tuned at noon today. a cnbc special report around the president's expected statement on cuba. >> very busy day here on cnbc. looking ahead to the fed statement at 2:00 this afternoon. our senior economics reporter steve leesman says that today could also be historical for

monetary policy in this country. steve? >> that's right, simon. this is going to be the most important of janet yellen's meetings so far as she chooses whether to cut that umbilical cord to markets and do away with the guidance which the fed would stay at zero interest rates for a considerable time. this would be no less than a change in the regime that has governed fed policy for more than two years since qe-3 was launched. the thinking is it doesn't come until mid-2015. it would be the first step towards the first rate hike in eight years. what would stop the fed? how about inflation numbers coming in this morning, at least on the headline basis. less than expected. minus 0.3%. the core, however, coming in at expectations, up 0.1%. that's food and energy. gas falling 6.6. apparel, new cars and a variety of other nonenergy related items

also fell. that could give the fed pause as this is a time of global volatili volatility. the fed is likely to see the lower oil prices as a positive for now. but it will have some concern that these prices will keep it from hitting that 2% inflation target. now, 2% of respondents to our cnbc survey think the considerable time phrase will be removed from the statement today. the survey also shows wall street sees the fed on track for that first rate hike coming in july 2015. here's the risk for yellen. launching this new regime today could add to market volatility and uncertainty at a time when the fed would prefer to be a source of stability. simon? >> okay, steve. thank you very much. russia is clearly key in their thinking or at least emerging markets. with the russian economy on brink, president obama is about to sign a bill into law that could further ramp up sanctions against moscow.

putin's finance ministry is today again physically intervening on the foreign exchange markets, buying the russian ruble in an attempt to halt its 50% plunge, dragged down of course by a dramatic fall in the price of oil. for many investors and indeed for the fed, the question is how far this russian rout will extend to other emerging markets. charles was deeply engaged in the 1999 crisis. more recently, he was chief debt negotiator in the greek crisis, leading the institute of international finance. charles is now working in private equity as chairman of the americas for the partners group. good morning. >> good morning. good to be with you. >> how serious is the situation in russia? >> it's quite serious. what is now shaping up to be a currency crisis could turn into a broader economic and financial crisis. >> at 4:00 a.m. new york time this morning, vladimir putin will hold his annual news conference. state media has a hollywood

style trailer that it's running that we've been able to get hold of, which would seem to indicate it could be something of a blockbuster event. what should investors look for from putin in the morning? >> i think, simon, they should being look to see whether there's any signs of moderation in putin's approach toward the ukraine, whether there's any hint of a desire to re-establish a stronger dialogue. i've just come back from europe. the sense in europe is rather clear. the desire of a dialogue is not there. i think the combination of the collapse of oil prices, the capital flight out of russia, and now another round of sanctions. although although, i will say the sanctions give obama some room for maneuver. the combination of those forces have put the russian economy on brink. i think putin will need to find a way to signal even if it's a modest signal, an openness to dialogue. >> kerry suggested there have been constructive moves. none of us could figure out what he meant.

do you have any idea? >> no, it's been very murky to date. i think that the situation is likely to continue to deteriorate economically and financially unless there are clear indications of a desire to work together. >> let's say he does say something constructive tomorrow. do flows rush back in because everything now is at such a discount? >> you may get some of that effect, but i don't think it's going to lead to a fundamental turnaround. actually, what russia needs, although there's not any desire on their part to consider it an imf program. i think also remember that the sanctions legislation also authorizes the president to send arms to the ukraine. we're talking about much more than just economic sanctions. >> charles, the big question for many people watching, because people have been so -- portfolio managers are so extended around the world in the search for yields, is they may become forced sellers. what is your judgment as to how

far the russian rout will extend? >> well, i think the russian rout has the potential to spill over into key emerging marketings such as brazil, even into turkey. i think this is the broader concern that i have today. and the conjunction of a potentially new paradigm as steve put it by the federal reserve, which also comes at a crucial time in terms of how they signal their intentions. the fed's recent statements have not indicated an extraordinarily high awareness of global market developments in their thinking. their framework is traditionally so domestic. >> they said, we set monetary policy for this country. you're arguing they should keep rates lower for longer. >> because of the potentially negative feedback effects on the u.s. economy as well, simon. i think what we're talking about is a potentially dynamic and difficult set of developments in

a broader set of emerging markets, which is going to feed back on the u.s. recovery. to date, the recovery has been pretty impressive, and one is tempted to ask, can the u.s. go it alone in 2015? the answer has got to be no. >> what turns us around? is it simply oil bottoming and starting to move up, or can there be something else? >> i think oil bottoming could be a particularly crucial sign. i also think that a signal from the fed today that they are on a continued course of watching the recovery and no hint of hawkish behavior could also be a positive sign in emerging markets. i think as well, we've got to look to some of the broader developments in europe. the elections that are under way in greece today are an important signal for the future of the eurozone. so the markets have to be focused on a number of key issues. >> people are spinning theories on social media that, for

example, the president and the saudis colluded to drive prices lower, flush out all actors with hostile relations with the u.s. is that remotely possible? >> no. as someone who spent 15 years in the treasury department, i can tell you that's not going to happen. i think the reality is the saudis have their agenda. the u.s. has their agenda. both of those agendas have put pressure, obviously tremendous pressure on the russian economy. they've also put pressure on the u.s. shale development. i think that this is part of the strategy of the saudis, to see what they can flush out in terms of new potential investments. my company is investing in the midstream of the energy market partners group. we're quite excited about the prospec prospects, even at these low oil rates, delivering gas in parts of mexico and other emerging markets at attractive prices. so there is a positive.

right now the market seems to have shifted dramatically from a very positive view to a very negative view. i actually still think this is going to be a net positive for the global economy. we just to get through some of the turbulence. >> always good to see you, charles. >> pleasure being with you. >> show you what on deck is doing today. the one big ipo that we are having. price, 10 million shares at $20 apiece. opens at $26.50. a nice 30% gain there. let's get to dominic chu and get a market flash. >> good morning. not as big of a pop, but still one nonetheless. netflix is moving higher at dish network announced it's going to be the first major pay tv provider to integrate the netflix application into its set top box. this gives customers the ability to instantly stream netflix movies and tv shows straight from their hopper device. netflix shares there spiking up by about 3%.

meanwhile, dish network as well up by about a percent, carl, on the day. back over to you. >> all right, dom. thank you. when we come back, the ceo of pulte homes will join us live for an exclusive interview, talk about what he sees is the biggest trend in housing next year. why he's betting on baby boomers. back in a minute.

where's the housing market headed next year? homes being built at a pace not

seen since 2008. diana olick is in atlanta with the c kerks o of pulte. >> hey, carl. where is it headed? we're about to find out. we're at sun city peach tree, about an hour outside atlanta. one of 50 active adult communities under pulte's dell web brand. there are 800 homes in the ground already here. the plan is for over 3,000. joining us today for an exclusive look at pulte's 2015 strategy is the ceo richard dugas. thank you for joining us today. active adult, it's a big bet. even in recovery, we talk about downsizing, baby boomers wanting to live in the city, near their grandchildren. after everything that's happened, maybe not wanting to buy another home. why are you so sure this is where the money is? >> we've really seen a resurgence in the active adult market. it typically comes back a little slower than the rest of the market. but over the past year, for the first three quarters of this year, our sales comps for active adult, specifically for dell web, are up.

we're up 23% in q-3 over the prior year. they're feeling better about their finances and the ability to sell their existing home given the housing market has improved. >> now, you told me last year you're moving away from that entry-level product, that the millennials are still not buying. but a lot of these homes are very low priced. why not open up communities like this one to the younger first-time home buyers? >> well, the first-time home buyers are looking for differences in communities versus these active adult buyers. in fact, they're still held back by a little bit of issue with mortgage credit. with everything we've seen from fha lately, the putback rules more clear, we're hopeful the first-time buyer comes back. but this community is very targeted. >> we have to talk about mortgage rates. it's fed day. we're seeing mortgage rates today lower than they were in may of 2013, before we even talked about taper. and yet, we're seeing mortgage applications for home buyers down again.

is credit still too tight? what are you hearing from pulte financial? >> we have projected that the housing market was going to be on a slow, steady recovery. ever since it started rebounding three or four years ago, and frankly we've been more right than not. i know many would like to see the market boom. we think there are a few impediments, including kred. job growth, while it's not robust, it's good. we expect the market to continue to improve but on a slow and steady pace. >> do you expect your buyers here are going to be able to get the credit? these are retirees. they don't have income. they can't document employment. that's tough for some of them. >> here's a great number for you. 43% of our active adult buyers pay cash. the rest of them take a conservative mortgage. rates are not a factor for them. it's more about their equity and nest egg, which has grown beautifully over the past few years, which is why we're seeing this category really do well right now. >> so what about your other categories? the entry level. did you just abandon the millennials for now? >> we have been investing primarily in move-up product as well as active adult and not

investing much in the entry level category. we're studying that category. we're watching to see what happens with credit availability, job growth. for now, we're putting most of our money into the move-up sector. >> okay. we have to talk about oil prices. obviously on the one hand, it's going to help you in your construction costs, your transportation, possibly even more material costs. but you also have a very large footprint in texas, in the houston area. are you concerned? are you starting to see pullback there? >> i'm not concerned. as a matter of fact, for most americans, it's a huge tax break. if you think about the consumer confidence impact, one of the things that drives housing is how people feel. when they have more money in their pocket, they feel better. we'll have to watch and see what's happening. but i'm not very concerned at this stage. >> there was a report out today, though that, the expectation is for a drop of almost 100,000 in housing starts just due to the price of oil. do you agree with that? >> i'm not sure if that's a good number or not, but i'll tell you this. we're very diversified around the country. certainly we have a presence in texas, but we're one of the most diversified builders with big

holdings in the southeast, midwest, west coast. i think whatever impact we may see, and again i'm not commenting on demand from oil, i do think you'll see offset frankly by buyers elsewhere feeling better about their prospects. >> well, coming back to active adult, putting so many homes in an area like this one, is there concern about home appreciation? sure, you have this largest subset of baby boomers, but the generations behind it are smaller. what happens 20 years from now when some of these folks want to sell? >> well, a lot of what you do in a large community like this, and this particular community has 3400 homesites. what you do is your plan your development in phases. we change product type and change amenities quite often through these communities to adjust to changing buyer needs. as an example, some of the new product features that we're putting in new homes today, like fixed stairs over the attic to allow storage. raised dish washers. things like that we can adjust over time. >> okay. thank you so much, richard dugas, ceo of pulte homes. back to you, simon.

>> thank you. up next on the program, online lender on deck has made its debut here at the new york stock exchange, trading sharply higher right now. it's backed by the liking of google ventures and tiger global. the ceo will joins after this break. liday season is here, which means it's time for the volkswagen sign-then-drive event. for practically just your signature, you could drive home for the holidays in a german-engineered volkswagen. like the sporty, advanced new jetta... and the 2015 motor trend car of the year all-new golf. if you're wishing for a new volkswagen this season... just about all you need is a finely tuned...

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if you're going to do business globally, you need a cloud that can keep your data where it needs to be. today, there's a new way to work and it's made with ibm. welcome back. we're watching shares of the herzfeld caribbean fund. these shares are soaring today on news of a thaw in relations possibly between the u.s. and cuba. the fund invests in countries in the caribbean basin, which includes cuba. right now those shares you can see are trading up by about 23%. in a programming note, if you

got interest here, you want to tune in. thomas herzfeld will be live on "fast money halftime report" beginning at 12:00 noon eastern here on cnbc. simon, it'll be interesting to see his views on what's going to happen in caribbean tourism and business. >> absolutely. other big name stocks moving on the news on cuba. let's get to bob. >> immediately, simon, people down here on the floor said, gee, how do you invest in cuba? the answer is it's not very easy. there's not a lot of obvious investment choices. the first thing to come up would be cruise lines. they could be a potential beneficiary. indeed, we see some above average trend moves in carnival corp. and royal caribbean. a number of other people have asked me about the hotel business. they have some very nice hotels already in cuba. i don't see a lot of movements in hotels. intercontinental is up a little bit. wyndham is up a little. there may be more specific plays, but you have to go into central america. look at copa holdings.

that trade is down. that's a panama airline company. they do passenger service in central america. so take a look at various cuban plays. cpa would be one, for example. coca-cola femsa, kof, it's a mexican bottler there. they have influence in the caribbean as well as in cuba. mastec is a construction company in florida with ties to cuba. that's up almost 5%. that seems pretty clearly related to this news today. and then you might want to look at the banks in central america. one that comes to mind here that's trading here in the united states is bancolombia. that's a big colombian bank that would do better if business improved with cuba. dom was mentioning herzfeld caribbean. that's a closed-end fund here. carl, i did interview fidel castro in 1996 in havana. from what i can see, things haven't changed much there. i think people need to

appreciate how even a very small change in policy could lead to a significant improvement or a significant business in the amount of money going there and make a real difference in the lives of people down there. carl, back to you. >> gdp in that country, we were just talking about carnival cruise line near a three-year high. pennies away from that figure. first on cnbc, fresh from the opening bell, ceo and chairman of on deck capital. pretty nice open over at post five, i believe. there's a look at the stock today. up 33%. welcome back. >> thanks for having us. we're thrilled to be here. very excited. >> some chatter about lending club having set the stage for you. their successful ipo the other day may be one reason why you're doing so well. >> it's a signature moment for financial technology. public market investors have had no real way to invest in the disruption that's happening in banking. we think that both the lending club ipo and the on deck ipo

representing consumer and small business, the leaders in those respective markets. >> although, your business models are different. they match lenders and borrowers. you lend out money from your own pool of capital. >> that's right. on deck has pioneered a new way of lending to small businesses that's pred kaicated on the act business' performance. because we're proving out a new score and a new way of lending, we had to put our capital up to back our loans. we've done that now over the last seven years. we're scaling up our funding facilities. there's a lot of investor confidence in the approach we've taken. >> on that subject, then, saying your proprietary credit models look deep into the health of the business. give us a sense of what you're talking about. >> sure. the standard banking system when they look at a main street business, a restaurant, a dry cleaner, retailer, they're always looking at just the personal credit score of the business owner.

that's loaded with false positives and false negatives. the on deck score uses electronic information from 100 different data sources. we collect 2,000 day to points on every application to make our loan decision. it's all predicated on the actual performance of that main street business. as such, we're able to bring capital to an entire segment of the market that's been underserved by traditional banks. >> how is the back testing of your model working? >> every version of the score gets more and more predictive. we operated this business through thick and thin, the 2008, 2009 period. we grew it nicely over the last couple years. we're very confident this approach is the way that more capital is going to flow to main street. >> average loan size, about 40 grand? >> yeah, about $44,000 in the first nine months. >> you'll go anywhere from 5 grand to a quarter million. >> that's right. the segment of the market we thought was undersefbed is really the segment of relatively small dollar loans to main street businesses. where a traditional bank might put you through a four to six-week process, we've created a system where a customer can come online and be approved for

a loan in minutes by on deck. >> within minutes. are you not worried about -- immediately a viewer might think, what about people who fib on their applications. obviously all sorts of things that got into us trouble in the first place. >> our review is very comprehensive. it helps us triangulate a lot of different information about the business owner and help us stop fraud in its tracks. we have very, very low incidents of fraud. >> what about interest rates? if they move up, if we have a rising rate environment, do you think your business is going to suffer or benefit? >> you know, sing when rates go up, usually it's indicative of a healthier economy. and small businesses, when they see a healthier economy, they invest in growth. and that's how folks use our loans. right now we think we're pretty neutral on the interest rate story. if interest rates move up a little, that's okay for our financial model. further more, it generally reflects an improvement in the underlying demand.

>> yeah. feels like maybe, maybe small business is beginning to feel the recovery in ways they didn't a year ago, two years ago. >> we completely agree. so when we looked at our business back in the recession, we looked at why business owners were taking our loans and their overall sense of optimism. we've seen a steady increase in their optimism. it's peaked right around now. >> congrats on the opening. >> thank you so much. >> hope you come back. >> we would love to. >> straight ahead on the program, fedex had been doing well this year, but it's second quarter results have some investors worried. stock down 5%. find out what you should be doing with that as an investment. and later, senator marco rubio will join "squawk alley" live on the cuba news. we'll be right back.

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you're promised one speed. but do you consistently get it? you do with comcast business. and often even more. it's reliable. just like kung pao fish. thank you, ping. reliably fast internet starts at $89.95 a month. comcast business. built for business. welcome back to "squawk on the street." i'm jackie deangelis. the department of energy out with the eia status report. the number is a draw. it's slightly under a million barrels. that's not necessarily what traders were expecting, but it was a bearish number. pushing us down about a dollar right after it came out. right now trading at 55.42. not really able to break out of that $55 range. what's interesting here, you had the api inventory report last night showing a build. estimates today of a larger draw. a five-year average at this time. that's 5.6 million barrels to the downside.

you can see the estimates and what we've seen in the past all over the place here. that tells us more about the bigger picture of oil right now. nobody really knows what to expect. that's why these estimates are all over the place. i want to talk about gasoline. we got a build of 5.3 million barrels. this tells you we've got stocks sitting on the sidelines because gas demand is down. the national average now $2.51. expect those retail gas prices to decline even further, guys. back over to you. >> jackie, thank you very much. the big news this morning, the big breaking news is in about 90 minutes' time, president obama will hold a news conference at which he's expected to detail the degree to which this country is now prepared to normalize relations with cuba. one industry that is clearly benefitting on the stock market today and could benefit hugely for the improved u.s.-cuba relations is the cruise industry. joining us now by phone is crystal cruise president and ceo edie bornstein.

carnal just pennies away from a three-year high. what's your reaction to the news that we're going to get movement on a potentially very lucrative tourism destination for your industry? >> well, i think cuba certainly would be a very iconic destination for the industry. as any good cruise line would do, you strategize and have plans in place for the inevitable. we all just thought it was a matter of time, not if but when. so it's very interesting. we'll all be listening with a keen ear to what our president has to say. on behalf of crystal, we want to be cognizant of our relations and sensitive to their needs as well. i think we'll have to see what he has to say and then we'll all plan accordingly. a cruise industry perspective, certainly cuba would be a fabulous destination if they have the infrastructure in

place. >> that said, you only have to look at the geography of where cuba is. so close to florida and the caribbean overall, which has excess capacity. you as an industry, i guess, are uniquely positioned to be able because you're sailing ships, to quite literally turn the boats around once they're somewhere to disembark and make money out of this. you can move faster than anyone. effectively, the lodging is already mobile. >> absolutely. that's the great thing about running a company where ships are the assets. you can move them around as need be. but the infrastructure has to be in place. there are a myriad of other things that have to be in place. you couldn't just change an itinerary tomorrow and say instead of key west, we're going to cuba. we need to look at it, evaluate it, and make sure it's safe. >> although, of all the things

you could promise at sea, to an average american, i guess access to cuba is one of the things they're likely to book for. it's one of the things they're likely to pay a higher price than just cruising around the caribbean. and therefore, your margins will be higher. how easily is it to build cruise terminals in general? i imagine you guys as an industry would be falling over each other to pump cash in to lay some concrete, wouldn't you? >> well, i would think as an industry as a whole, again, depending on what our government allows and how we're able to do it, certainly it's a wonderful opportunity. and you don't necessarily have to build terminals at docks. you could anchor as well. but again, the infrastructure once you get to any destination, be it cuba or anywhere else, there are so many factors that come into play from safety, security, transfers, getting to the destination, tours that are

available. so it's a tremendous opportunity for our industry, absolutely. but again, we have to wait and see. >> good to talk to you, edie. thank you for joining us on short notice. the president and coo of crystal cruises. one stock not doing so well today, fedex losing ground after posting an earnings miss. the company's profits rose less than expected due in part to rising aircraft maintenance cost. they did reaffirm their outlook for 2015. for more, let's bring in david ross. i know you've had the conference call. what additional color can you add on the story of the business at the moment? >> the business is actually trending very positively. they gained market share in their freight division again. the ground volumes are up, benefitting from the holiday season. their express volumes are also up, both domestically and internationally. from an underlying business fundamental standpoint, fedex remains well positioned.

>> why has the stock not done better? an outperformance of just 15% over the last two or three months relative to the rest of the market. given that you're supposed to get a seasonal bounce anyway and given that oil prices are falling, why is the stock capped at these levels? >> well, i think the stock has prior to the past two or three months, outperformed in the past 6 to 12 months. it's getting some of those gains back together. also, there were some analysts ahead of themselves with respect to the benefit from lower fuel prices on fedex. fedex has this fuel surcharge in place to recover the additional cost of fuel as fuel prices rise. as they fluctuate over time, they're generally made even. when they decline, they're thought to benefit. this time people thought they were going to benefit more than they actually did. estimates near term are going to be coming down. i think with the recently announced gen co. acquisition and the strong outlook for the economy they have going into 2015, estimates in the out years

are still going to be very strong. >> okay. and what about -- of course, i'm not sure if you're up to speed. we have breaking news on cuba, that the president is going to speak at noon eastern to talk about normalizing relations there. is this a boom for these stocks in your view? presumably logistics is going to be a big thing for cuba moving forward. >> it is for cuba, but in the global scheme of things, it's not a really big deal for fedex or their competitors, who will be moving goods in and out of cuba. when you talk about businesses that are $40 billion, $50 billion, it's not going to move the needle too much. >> you did mention the acquisition they announced last night. a privately held distributor, which basically exposes them to e-commerce, to the returns that people make to retailers. can you just talk me through whether that moves the needle at all on the business and have we got a price yet on what they're paying? >> we haven't got a price yet from what they're paying. they did not comment on that

today on the conference call. however, you know, we think the price was in the $1.5 billion range. it's kind of our rough estimate. there's a range around that. we think it's going to be likely 2% to 3% accretive. again, these are back of the envelope calculations. gen co. is a very large 3pl in north america. they do a lot of forward logistics business involved in e-commerce solutions for customers and their overlap with fedex and focusing on the high-tech retail and consumer verticals as well as health care is going to benefit fedex by being able to offer more services to their existing customer base. is puts them on a good platform to grow their business. but again, as a needle mover, we think it's going to be a few percent accretive but not too significant. >> as briefly, what's your top pick at the moment? where can people most easily make money in your view? >> well, right now we're

cautious on the sector in general because we've had a nice run. the market has moved up. transports have generally outperformed this year. we think on the large cap side, fedex today on the dip may provide a buying opportunity for those who think that the market is going to continue to move higher next year and that the u.s. economy is on sound footing. >> good to see you, david. thank you very much. >> thank you. >> when we come back, jeff immelt, the chairman and ceo of general electric, speaking out in an exclusive interview here on post nine this morning. find out what he had to say about oil prices and the possibility of normalizing relations with cuba. be sure to tune in at noon. special coverage as the president speaks on cuba relations here on cnbc, 12:00 eastern time. we'll be right back.

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dow is up almost 100 points. take a look at energy today. another day that doesn't have as much pain as we're used to. the best performing sector on the s&p right now. dominic chu back at hq. >> carl, it's up by almost 4%. once again, investors are looking or at least trying to find some signs of a bottom in energy. it's the best performing sector in the s&p by a factor of more than two. better than materials. among the leaders today, big oil companies. the integrated giants like exxonmobil and chevron. all moving higher. so far, energy is on the rebound, but we've seen this story play out before. the question is whether they can hold these gains. remember, carl, energy is the worst performing sector in the s&p so far this quarter and this year. back over to you. >> all right, dom. thanks a lot. speaking of oil, general electric wrapping up its annual investor meeting yesterday. the chairman and ceo of ge jeff immelt sat down with us earlier on "squawk on the street." here he is talking about oil

prices. >> this was a business before thanksgiving that needed better execution around the big projects. all the coos in the industry were looking at their supply chain and saying, you know, the costs have to come down, we have to do a better job of lowering the break-even costs. so we've been on this path for more than a year. i look at the cycle as an opportunity. we like the business long term. we think we've hedged the upside and downside appropriately. >> we also asked about the news that we're getting around cuba today. >> we are in 175 countries as we sit here today. we'll sell more gas turbines in algeria this year than we will in the united states. if the you had told me that the day i became coo, i would have never said that would have been possible. so everybody's a customer out there. >> for some more on cuba this morning, joining us on the phone, former assistant secretary of state for western hemisphere affairs, ambassador roger noriega.

good to have you with us this morning. >> good morning. thanks for the opportunity. >> we've heard everything from this is a long time coming, overdue, to now rubio calling it absurd. part of a long record of coddling

>> fid fidel's brother. my question is why now? you think the president is moving on this. whether he's just sorting through those things he can into the lame duck session or whether there's something more going on. >> i think the it's to the normalize things with cuba. and also hiss instincts for making unilateral [ inaudible ] this is a regime that was coming to an end. a measure that would resuscitate cuba and make that dictatorship, restore its pr s prestige in th

region. most of the countries in latin america said that cuban should be --. and this hostage release is a pretext for moving on that front. >> we're also told that the vatican has played a key role here. more i'm sure we're learn as time goes by. to suggest it is a unilateral move surprises me. there are an often lot of the american business people who would love go get cuba. there are many people in miami and florida who would love to be compensated for assets taken from them. many people, paid a thirdless in salary than at the fall of the berlin wall. >> [inaudible]. unilateral concessions

resuscitates dictatorship is drawing its last breath. it makes no sense to do that. what we do on a normal economic relations should be reserved [inaudible] to ensure that the changes there are broad, profound and irreversible. >> speaking of leverage and knowing what we know about energy prices around the world right now, why do you think this happened now? >> as said, they are pushing, the cubanancacubans, have a ver intelligent strategy really of rallying latin america to their cause. you have a summit coming up in the springtime. they have been holding allen gross hostage for years. and this is, you know, they are using him as a bargaining chip.

it sends a signal. the moral equivalent between a man a aid worker taken hostage by that regime and people who were convicted in u.s. courts for conspireing to murder people in the united states, really is a ashame, a shameful exercise. more than absurd it's shameful. >> and obviously the spectrum of upon this o opinion is going to be wide and varied. thank you for coming to the phone. >> my pleasure. thank you. >> it is going to be a busy afternoon. not only a obama's address but also of course janet yellen's use conference and that fed decision. well a hear from bob mctier. and coming up at 11:00 an "squawk alley," senator marco rubio who's been very critical of the suggested move by obama on cuba.

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>> welcome to my special guest robert mcteer. bob, thanks for taking the time today. >> my pleasure. >> on the day of a fed meeting, last of the year. why don't you tell me two good head winds you see in the u.s. economy and two good tail winds. >> well i think the lower oil price, once things settle down will be a nice tail wind. i think momentum, the last couple of gdp reports, the last three employment reports have been much better than earlier. so i think momentum is on our side. head winds, we have a financial panic going on in the world. and it's not clear where it is going to end. or the impact of that. and some people in the markets might think a head wind would be

raising interest rates some time in the middle of the year. >> do you agree or disagree with that? >> well i don't think they would want to do it in the environment right now but it is a long time to the middle of the year so i hope they will be able to follow through and do it in a considerable time after qe. >> let me interrupt you there. we're short on time. i agree with you. the conventional wisdom is who in their right mind would raise rates whether it's geopolitical or economic but doesn't that underscore the med fimissed on opportunity when conditions changed like they have. would you agree with that? >> yeah i think so. they could have -- they could have acted a month or two ago. and not had this situation. but i think this situation will be played out one way or the other pretty soon.

and we'll be back to more normal considerations. >> all right. i'd like to throw something on the screen that you wrote that made me smile and it is really a statement about the european central banking, maybe central banking in general. super mario in the euro. that was a central bankered who promised to save the euro. -- i love that. my last question to you. is why do you think no cigar. and do you think that he's going end up making a positive difference over the next several meetings. >> he reminds mau s me of datin the 1950s. always a vague promise of things to come. and i've never seen anybody who could get so much mileage out of what he might do at the next meeting. people seem to buy it. his problem i think is the