pilots and the whole community who still believe truly opening space and making it accessible and safe is of vital importance to all our futures. >> check out the futures. things have taken a turn for the worse. dow futures are down by over 120. s&p 500 off by 15. check it out with "squawk on the street". we'll see you tomorrow. ♪ welcome to "squawk on the street". we are live from the new york stock exchange. carl is off today. it's our first day of 2015 in terms of reporting on these markets. let's give you a look at those markets. in fact we're looking down as you can see. crude oil, yeah it's still going down. in fact i think we hit a new low this morning. a new recent low on wti. you can see it dropping below 51

bucks a barrel. $50.65. lowest since may 1, 2009. last time if you're keeping track below 50 april 29 2009 when we hit $49.12. how about the ten year note yield. i was on vacation didn't look at it every day, yeah 2.091. wow. wow to both of those things. let's get to our road map this morning which you can probably guess where it starts. the markets, crude, and euro all under pressure this morning. global uncertainty is back in this new year. chrysler reports a 20% jump in monthly sales. we're going to explain why that may not be good enough for gm. we will be hearing from them in the next hour. and starbucks downgraded. koeg coke upgraded. the roeneason behind both coming up.

crude fall to go a new 5 1/2 year low. you also have the euro falling to a 9 year low on political uncertainty in greece. and expectations that the ecb will deliver quantitative easing later this month. jim, baby. we're back. no shortage ever things to discuss . discuss. not a lot of corporate news. but we'll be focused as we were on the increasing strength of the dollar and particularly the loss of strength in the euro and oil finding a bottom somewhere, i guess. >> look this is another year at least in the first quarter where you'll want to be domestic. we had weak numbers year over year because of storms. you don't have to stray overseas. utilities were the strongest group in the market last year. what does that say? interest rates went down. you wanted to buy then. increase in power because our country is getting stronger.

and mopnday on that lists. we take our cue from last year and tip it.on that lists. we take our cue from last year and tip it. futures are a reaction to greece, a euro that is weak. yes, it is bad news if you're caterpillar. what does it have to do with bob evans farms which is a very interesting upgrade today. what does it have to do with "elle" brands. these are the names that will become ascended. and you have to learn them. i saw a duke downgrade today. i understand that. but you want to focus american. it's tougher to be in international unless you have a real thesis that international will not drag things down and the strong dollar. like 3 m, talib has managed to overcome -- >> and we will wait and see how investors react to what we expect will be currency losses

so to speak. excluding the dollar we would have earned such. but i don't know whether we will see a market reaction to it in the market or not. >> if we live in north dakota, it will be tough times. maybe north dakota state surprise the nca. if you live in texas, you're still relieved that your new ghuf is governor is christie, bull you'll but you'll be hurt. if you live in alaska, you'll be hurt. and there are like 47 others like when hi was ed aawaii was admitted to the union. let's say we come in and there is another tax cut on top of the previous tax cut. you'd normally be worried about a budget deficit, but, no, wind

fall a fall, wind fall. >> a tax increase could be on the table. which makes a lot of accepts given we haven't raised it since 1993. >> senator corker i know he's pushing this. he reminds me of he's like senator senator -- the man who would have liked to be president, cantor. he plays well on tv but senator corker ain't going to win on this. the country doesn't want -- by the way, also the republicans -- >> i know i get e-mails both sides. but -- >> nobody happens in washington. >> we need spending on infrastructure and it will only help the country in the longer term? >> i think the deficit will fall to 2% of gdp because they will do absolutely nothing. i notice that they're pushing keystone. >> that will be the first thing out of the box. >> i got good news for you here.

they figured out a way to get around keystone. they send it to the northeast of canada where the big refineries that hadn't been used for a long time will go 1424/7. they use trains. hardesty is a big jam up where all the oil comes from. and i don't care about the pipeline canadians have solved that issue. >> you believe they have solved that issue. >> they solved that issue. >> doesn't appear to be the number one thing on the agenda. >> do we want oil to be at 47 instead of -- it doesn't matter. yes, we have refineries that were built to handle heavy crude. go use the honeywell chemicals. they can use heavy to make it light if you care about the issue environmentally. i think that the important issue is that oil is still plunging because of demand in europe, demand in the new moao china.

and i look at the demand side of the u.s. about tickedit picked up 1%. we drive more than you think. and miles per gallon per car are pretty good. >> standards have raised dramatically. >> sorry to be so positive. i mean on a day when dallas won, it's not easy. >> i know. and you've already made reference to the governor christie's being in jerry jones' box. >> ford downgraded the day after the lions which are owned by ford? it's a bad day for ford. >> we did get chrysler. before we get to chrysler i want predictions. you're willing for go ing foring to go there. coming in on last year if i had told you oil was going to -- there are always the things that we don't expect. you and i have talked about the incredible advances this technology that have allowed us to become a huge producer of oil, but we did not necessarily

say, oh, and crude will fall in half over the course of the year. we also did not discuss the fact that the dollar perhaps would soar in value. two things that occurred that i would argue at the beginning of the year we might not have said this is going to happen. so all bets are always off. >> ten year goes below 2. i think the dow which is harder to do a about thes ss ss ss bottoms up. and money is coming here. remember, that -- >> negative five year. negative rate this is germanys in germany typhoon years out. >> germany is absurd. down year for chevron. >> give me that thing that we'll be talking about in nine months.

>> i think the euro will go to parity. >> really? >> yeah. i just think that -- money is fleeing europe all year. i think this european comeback story -- >> so qe begins soon? >> structural reforms. >> concerns about deflation real imagined? >> i think it will be a cost decade for europe. and japan by the way is terrible. china, now we're starting to come to grips with the mccow numbers. the united states is the only country on earth that actually will have accelerating goet which iss growth which is really amazing. >> chrysler 20% was the jump in u.s. sales for december helped by demand for jeeps, suvs, pickup trucks. but sales still missed analyst forecasts. ford and gm are expected to release their sales figures later this hour. citi downgraded ford to neutral saying it now expects gm will command a premium by the end of

this year. >> i didn't know how much kyle bass did for veterans. i was tough on him on gm. i should have been easier on him after reading american sunshine are niner while i was away. >> i met chris kyle at kyle's ranch a number of times. you can be tough on people for their stock picks. >> i should have said while he's been maybe the number one businessman for veterans, he has -- the gm call may be right. i understand -- i don't like to look at what people have. do you still own gm? >> yes, but the bid was a disaster in 2014. that was my own work. it needed interest rates for be higher for pension. and frankly, gm, you look at the united states and it was great. headline risk was bad. but gm is a big company. it's 00 you are it's europe, maybe china comes back a little bit. remember why did carmax do so

well? because people wanted to own the oil cycle so they bought autozone and car sdltmax and auto nation. p. >> is this the high? >> i'm looking at 17, 500. i think that the used market is very good too. you can sell your used car, get a new car. i think that will be another continued theme. i think the light weighting adds about a mile or two per gallon. this is the alcoa light weight and they will be first to report i think it will be a good number. but i think in general the consumer confidence is good. job growth is good. and this huge don't forget we spend too much time talking about oil going down. not enough time talking about natural gas. your oil and gas bill are both going to be -- your heating bill will be amazing year over year. and that's another tax cut. >> it is. we will get a very cold series

of days. >> and marcellus is in utica, natural gas flooding the northeast. the northeast has too much natural gas, trying to send it down to louisiana. there is no place to put ethane propane. propane is falling through the floor. this is more important than oil going down. more important from the point of view of drilling. >> understood. >> drilling budgets have to shrink. lynn cut distribution. but that will be the continue all theme including the chefvron downgrade which makes a lot of sense to me. everybody's numbers are too high. >> an interesting year to say the least. starbucks and coca-cola heading in opposite directions this morning. we'll tell you why. also ahead, inside ap audnd you had ap-audi that drives itself.

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a couple research calls on two well-known names. starbucks down graded to neutral due in part to concerns about near term comparable sales trends. morgan stanley raising coca-cola to overweight saying it expects the recent strategy changes will drive outperformance in the stock over the next 12 months. >> i have problems with both. first, starbucks you're looking at right here, this is my starbucks card. okay. now, we have numbers this morning out of starbucks. one out seven people received a starbucks holiday card this year, that is up from one out of eight last year. 2.5 million activated on christmas eve. i think the idea that stocks are played out including starbucks is a continuing theme among the analysts. i warn you that if you sell

starbucks at 80 you may have to buy back at 76. that doesn't do anything for me. coca-cola, i have a hard time seeing how they get to the 4% organic growth that they talk about in that strategy piece. i don't think coca-cola is doing anything other than if they buy green mountain or mondays sistersister monster, that's how they accelerate. give can't a chance. two changes that could occur if they don't fix this. >> i'm not even sure the support is there. they seem to be on a better track now than they were when it came to some of the discussion around comp and this guy david winter winters. >> i saw this morning they were talking about a proxy fight at pepsico. can i point out the disparity between the growths has never been bigger.

it if there a players for a proxy fight, it would be coke. coca-cola is just not doing well. i thought we saw it upgraded. natural organic remains the place to be. nothing has changed in 2015. people want to eat healthy, back of america starts hain with a buy. it's already had a big move. i agree. i think assign on that simmons is putting together a one top shop. >> at some point he'll sell won't he? >> nestle kellogg, someone has to buy them. he really is building what kraft used to be. you notice a lot of the brands kraft has, they tepd to bend to be the old fashioned part of the store. kroger is maybe one of the great retail stories of the last two years. >> when it comes to a coca-cola, should we be talking about the

strengthening dollar? >> no more than i think that actually big beneficiary of lower oil. coca-cola is a gigantic user of energy. and coca-cola does have the ability to be able to convert i think their stakes ss in green mountain or keurig into something here. green mountain a huge beneficiary of convenience stores with gasoline down. one of the reason why hershey has been holding up. keurig has new models coming out. keurig is an innovateor and coca-cola could use both. dr. pepper downgraded today. that's been the best performer of all and that is really the one that has the ones that -- doesn't hold water. just -- i swore off those drink mis-2014 and i'm going to continue to do it. >> you're looking good. >> thank you. just working out like a --

>> it gets harder and harder. >> don't say that. this is a big year for me. >> really? >> yeah. >> that's depressing. never looked better. all right. up next, it's that guy who has a big birthday coming this year first mad dash to 2015 as we count down to the opening bell. here is another look at future. we're looking for a down open, but as jim said, don't pay attention to the futures.

7 or so minutes before the opening bell on this monday. >> better late than never. morgan stanley chooses now to upgrade rejen ron. i recommended at five. and it's -- >> many you should stop right there. >> they elude to the new cholesterol drug and there much more to company there regeneron. regeneron is a powerhouse that is a developing company. and i always like to remind myself that they were trying to build a major pharmaceutical company and it's still well under the extraationvaluation of sell

gene. you could argue regeneron is cheaper.gene. you could argue regeneron is cheaper. >> morgan stanley finally getting on board is that a bad sign? >> no. but don't buy it here. wait until it comes down. wait for a swoon. we talked about warren buffett likes coca-cola. he loves wells fargo. bayer goes there buy to hold. the battle is is the macro environment so better that it can shrunk the net interest margin that will be bad if rates stay low. macro won't help it. it's time to go. again i question this. these socks are s ocks are s these socks are stocks had a decent year if financials. i don't think the quarterback will be blowout, but the stock is cheap and i think that they

have put together the great national bank. >> despite the fact there will be no benefit as there has not been for how many years now from a net interest margin gain as a result of rates goe going up. >> this was fee based and cross selling enterprise. if you try to time this -- >> even without housing being that strong? >> mortgage is not a great business line. great business lines are the lines of checking the lines of small business loans. small business formation. national banking, wells took advantage more than any other bank of the great recession to become the national bank that the founding fathers were always worried worried. they never wanted more than 10% of the country. >> they also do compete with merrill, part of bank of america, and morgan stanley, as well, on the personal wealth front. >> i think there is room for all in the country where it says great consumer confidence better job growth and gasoline going down. this is a national situation.

what are you going to do buy back at 52? let's eliminate that in 2015. let's eliminate the trade. >> at love thingf lot 6 of things we'll get rid of.

you're watching "squawk on the street". we're live from the financial capital of the world, opening bell will be ringing in about one minute. i enjoy bringing back an old theme for us. i always ask you what is the key on this market. because i usually get an interesting answer. >> i think the key to this market, you want to watch domestic restaurants. i mean i'll go so far as to say that i know jack about this. i think the key to this market are outfits like jack in the box, i alluded to bob evans farms. these groups restaurant and retail domestic i mean it is just going to be their quarter year over year it will be huge. and they are such beneficiaries in gasoline. why not. >> i hit an in-n-out burger.

it was good. there it is the opening bell for monday january 5th. schun communities and schools, a dropout prevention organization nutrisystem participating in fit week. >> resolutions are always important. >> it is this time of year. we all believe in fitness. ford and gm are out with december sales. let's head over to phil lebeau in bakersfield, california. >> we expected a big december and that's what we got from general motors sales increasing 19.3%. well ahead of estimates of an increase of 13.9%. as for ford it reported its best december sales since 2005. an increase of 1.2%.

a little below what the street was expecting. it was expecting an increase of just over # 3%. so ford up 1.2% and general motors sales increasing 19.3%. back to you. >> wow. remember there were really bad headline risks last year. didn't really hurt the sales, but we'll be looking at year over year and realize ken feinberg really added his gravitas to the situation. >> gm up fractionally. ford down about 2%. >> ford is problematic. they had a bad -- stock was bad last year. and i think that it may be a stalled year again for ford. by the way a lot of the international american companies, the companies that do so much business overseas, a company like caterpillar, very challenged today. interesting downgrade on caterpillar. started the years last year at 90, went to 110 and then circle back to 90. here it is underneath where it was. mostly because the piece that i

read the downgrade is literally about how related it is to oil and gas. and that's not wrong. it does have huge exposure to it that sector. the oil and gas that we were looking at think about the gigantic tar sands projects. they just use so much heavy equipment. >> biggest you've ever seen when you go up and take a look. >> did you go? >> i've seen the pictures. >> i'm really torn as an environmentalist and a guy who thinks i'm an associate with neal young. i wish they didn't do that. but it's kind of been done. >> it is. that's why people are opposed to the keystone pipeline. >> times yousometimes you just have to say they won. do you want to send to china where they won't clean it or do you want to send to the refineries where the honeywell after the great russell buy and

i say fine. >> which one are you saying fine to? >> i'm saying it's already here. just go approve it. it's done. >> earlier in the show you said not to. >> it doesn't they'd to be of a proved in on the to get our oil here is what i'm saying. >> so we don't need it, but just do it. >> i like the jobs. if you're looking for a job, you'll take a one time. >> right. although at this point at least, back to your sorry in terms of focusing domestically. jobless claims at recent lows. >> oh, geez. just got a note on restoration harbor. it's classic. what i see is a company like restoration, it's downgraded. that's wrong. sorry, guys. wrong direction there. restoration hardware is a classic american growth story that you want to buy right here because of how literally they import a lot of stuff, strong dollar, they sell it. remember, they import a lot from italy. and you're getting a comparable

story will plus 22 comps. who doesn't want 22 comps? >> most companies would kill for 22. >> look at olive garden. and we have big declines in raw costs. meat peaked. yes, i'm saying chipotle can be good. yes, another one that can be a key. >> darden of course still waiting to get together a full management team. >> you don't even need a management team that thing is so on fire. i'm not kidding. i still can't get into ol live garden. you go to fiarino's, i can get this there, but i know the guy. >> even when clarence otis was running it so i'm not sure -- guys from star board having had their nominees all elected about. >> you can throw darts at that group because of the year over year comparison. decline in raw --

>> is it just that easy? i come in i say these are the stocks to buy? >> the markets have -- i'm saying that is the key. if you want to know the year over year comparisons. and yes the market is down. a lot of people trying to lock in. any year you have the plus 20% transports, plus 20% utilities, and when you have gigantic gains in tech you have good gains in finance, people will try to lock if n.. i'm urging people to not panic except the fact that there will be selling and pick among the rubble. >> all right. i'm going to start a new egg smtuew segment. who is the first on go? >> coca-cola hates to have any -- don thompson it's make or break for him. he either turns around sales or

they will say we're a xwlat american growth company and we can't tolerate mid single digit declines. so that is one to watch. and i know that the strong dollar will hurt them. but thompson is on the hot seat more than any of these other people that you just mentioned. >> the time for being kind is over. >> i made a resolution that i would no longer suggest that cosilo will be booted. i made a resolution i'd be much kinder. he can stay. if it's right that they can monetize. >> what did rob peck say. >> he said monthly average will be pretty good. remember he was right when it came but, he was right to say sell it when did he. i think he's right to buy it. no one is even talking about the mod modernization of video. it's hard to run clip of the nfl. you get fined.

but facebook and the thfl,nfl, i think the facebook call for bank of america, numbers are too low. they will monetize it. these companies could have a big year social media, even though they certainly does not have a great end of year. and i think that facebook whats "up". but you want to an buyer, into the seller. a lot of these downgrades, are you really going to sell humana this morning? don't forget they had a manning anying where affordable care act. i think those stocks are good. here is another example. sf

if general motors would buy hain you would -- >> but likelihood is they're not going to do that. >> i'd rather see them buy white wave k4 i thinkwhich i think is coming on strong with horizon brand. and he's a huge brokennco fan. ravens are beasts. and flacco is great playoff -- >> he gets it done. >> and they have won in new england. and by the way if we're talking sports stuart scott passed away. he's an inspiration to many of us. and i have to mention boo-yah started with him. a great man. >> a lot of great tributes. >> people should go -- i'm not supposed to turn people to espn but very touching very smart. what a guy. >> before we get to bob pisani

back to our macro themes again oil of course being the key. and i'm watching where it continues to be -- >> i don't understand how exxon bounced off the 86 level. it's headed back to 86. downgraded chevron. this is the beginning. a lot of people held on hoping you wouldn't have to downgrade. there is no way. you have on downgrade these. you can't have a huge down year and have all the analysts like this so much. >> and broader markets down rather sharply this morning. concerns perhaps yet again about greece believe it or not. >> i think this is first day black for a back for a lot of people. >> nobody seems to be taking it quite up to the level they did a number of years ago. >> one of the reasons, greece is a reason for more quantitative ease. but without structural change in europe, europe is not the place to be. >> like calvin coolidge in a

pant suit saying no no no. >> larry kudlow would tell you calvin did a pretty good job with the economy. >> sorry, i meant hoover. >> calvin did a pretty good job. >> herbert hoover, calvin coolidge coolidge, i don't know why i -- i meant angela merkel of course is what i was referring to. and that funny line you have about she's -- >> theseshe's in a pant suit. >> meaning they will not allow for any meaningful -- >> rates are so low, it doesn't matter. but there is not that much trade that messes itakes it a huge win for them about that they will be buying oil in dollars. they won't get the benefit

that -- >> 0.1% inflation. >> can you imagine that? we're going to get a right wing government in some country in europe that is going to change people's minds. and germany should forget the worry about deflation and worry about the right -- the right wing could surface. i see swedencracking down on immigration. they should be worried more about social unrest. >> let's goe get to bob pisani now on the floor. >> good morning. it's about oil, the weak euro, about the strong dollar. take a quick look at europe. degrees oug downgreece down 5% italy, spain. you see weakness in the greek market. greek debt yields also raising. germany might permit a greek exit from the you'reeuro.

so there a some interest in investing in europe, but not so much in the europe. one of the wisdom tree where they hedge out currency exposure it's down, but a fairly good run over the last year. up about 1% on the year. that's pretty good. if you look at the van guard etf for europe that's down about 10%. so look at the outperformance here. orange line on the top is the hedge index hedging out the euro and the one on the bottom, europe without the hedge. so you can see the outperformance. this is the same trick wisdom tree did with sdchlt xdxj. you think see that this year. meantime, the weakness in the euro and strength in the dollar that's bad for emerging markets obviously. the eem if you put that again, we're still up close to a 52 week low. not quite in that one.

commodities are weak. you all talk about oil, but have you looked at copper? down almost 2% today. zinc down. alum aluminum weak. commodity groups are weak. big energy with west texas below 51. 2% declines in all the big energy names. chevron, schlumberger and halliburton. i struggle to explain how important the decline in energy estimates for 2015 are in figuring out year all s&p numbers. on december 1st, analysts were expecting the s&p to have profit gains of almost 10% for 2015. today they're expecting 6.6%. that's more than a 3 percentage points drop in one month. that is it a very large decline. one of the largest i've ever sign. and i've been doing this a long

time. so i asked s&p capital take out energy from this stipt and without energy numbers are up only 8%. this gives you an idea how huge the declines have been in energy.this gives you an idea how huge the declines have been in energy.only 8%. this gives you an idea how huge the declines have been in energy. defensive plays are doing a bit better today. consumer staples the only group on the up side of the s&p sectors today. also yeedield names doing well. at&t and verizon are trading up 5.5% and 4.7%. and just for laugh sake i put in the ten year treasury at 2.09%. and it's not surprising that on a day like today those kinds of yield names are one of the only ones trading to the up side. back to you. let's head down to the bond

pits. rick santelli joins us from the cme group in chicago. >> well, it is a frigid chicago and it seems though rates have are headed south for the winter as they all moderate. and keep in mind this is a very similar start to the year as was 2014. you establish the high yield for the year, first trading day, look at an intra day and two day chart of ten notice we're just a few basis points under 2.5 on friday. the first trading day of the year. and now we're all the way down to 207, 208. if you open the chart up, other than one day, i believe it was16th of december we settle at 2.06. lowest yields since may of 2013. if you look at 24 hour chart of the bund it flirted with that 48 49 basis point level for a second session. but still hovering there. if you open up the spread, just since november on the difference in basis points between r 10s

and boone, you can see that it's down about 10 basis points from 1 1 1.67. if you think 1.50 is the premium home base for 2015 as it was for the second half of 2014 look for these yields to come down more or at least a contraction. if we look at foreign exchanges, let's look at euro versus the dollar. since march of 2006, you can see there is a lot of important areas righter around the current lows and these are the lowest levels since march of '06. but open the chart up up a few more years to the beginning of 2000 and you can see what a pivotal area we're sitting on with respect to the last major support in the euro before you hit another sell wave according to traders. david, back to you. well, from the euro one big story to crude sliding behind 51 the other big story.

jackie deangelis husbandas more. >> traders saying be on the lookout for a 4 handle in wti. down about $2 on the session right now. more than 3% move at $50.84. brent not long ago just taking out the $54 level and more than 4% move there. a couple of reasons that we're watching. first would be the strength in the dollar. dollar index over 91 and many people saying we could see that strengthen all the way up to 100. so continue to watch for that trend. but also trouble in the eurozone making people wonder about demand this year. you also have russia pumping more oil than it's ever pumped in 2014. and in iraq, december exports, highest since 1980. so all of these signs not really good for the supply/demand balance. something has to give here in the first half of the year to change the decline. all signs right now fundamentally pointing lower, but traders saying don't expect to not see -- or you could expect to see, rather, slight

pops here and there, buying of the dip action. but again, they do positionthink oil is going into the $40 range. retail gas prices continue to decline. $2.20 the national average for a gavel regular according to aaa. down another nine cents from a week ago. and of course you mentioned this before but we are talking about that consumer tax, raising the tax on gasoline. we haven't seen that since the 1990s. so that could be an interesting caveat there. back to you. well coming up investor roger mcla any on apple and the aem watch.

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the market lower at least

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other side effects include dry mouth and constipation. nothing can reverse copd. spiriva helps me breathe better. sfx: blowing sound. does breathing with copd... ...weigh you down? don't wait ask your doctor about spiriva handihaler. time for stock trading with jim. >> if the market weren't down

soed aboutso badly, you'd be looking at the good isis. basically saying look we'll do a combined autoimmune deal and this is a gigantic milestone series of pavements for a drug no one was even talking about. it's a gastrointestinal tract autoimmune disorder. including something able to make it so that blood doesn't clot too much. i think it will be maybe the biggest drug of 2016. and he'll be on tonight talking about this collaboration with jansen. and this company has more things going for it it feels like regeneron when it was at 200. this company is on fire. it is doing so much good stuff. isis and i can't wait to speak to him tonight. we'll talk about this huge deal about gi tract.

he's never spoken to me about that. this is huge. >> who else have you got coming up? not that that not enough. >> john chambers from consumer electronics, yes from that -- i used to go to that conference and i got to tell you the internet of things will be the dominant theme and john chambers is the dominant internet player. so i can't wait to speak to john. his stock is one of the best performers in 2014 in the dow. it could repeat. he has a lot of gdp exposure, but he has the right products. that stock a huge performer last year. >> yes, it was. chambers on "mad money". i will be watching. >> thank you very much. isn't it good to be back? >> great to be back into it. simon hobbs is also back. >> we're down 185 points on the gou. clearly oil is front and center. what happens if you get a four

handle on west texas crude is this we'll talk about that. also we'll have a good romp through the retail stocks and harry smith will be here on his new documentary tonight on cnbc marijuana country. he will explain to us why now colorado one year into legalization is the black market supplier for 40 other states. hour two of "squawk on the street". well, a mortgage shouldn't be a problem your credit is in pretty good shape. >>pretty good? i know i have a 798 fico score thanks to the tools and help on experian.com. kaboom... well, i just have a few other questions. >>chuck, the only other question you need to ask is, "what else can you do for me?" i'll just take a water... get your credit swagger on. become a member of experian credit tracker and find out your fico score powered by experian. fico scores are used in 90% of credit

decisions.

welcome back to "squawk on the street". i'm david faber. we're live from post nine. carl quintanilla has the day off. let's give you a a look at the markets and oil. they are linked it would seem. we have fairly broad selloff on the s&p, down over 1%. wti dropping below 51. that's been part of the story this morning along with the strength of dollar versus the euro. let's give you a look at oil. do we have that for you? right at the bottom, $50.83. >> let's get to the road map. yes yes, oil threatening to fall

below $50 a barrel. >> and which retailers were the biggest winners and losers. >> and why today is a crucial day for the big banks. and tune in tonight for the premiere of the cnbc documentary marijuana country, the cannabis boom. we're taking you inside the booming business. that is tonight at 9:00 p.m. right here on cnbc. later we'll get you you a sneak peek. >> for so many oil is front and center hitting fresh 5 1/2 year lows. $50.65ed about so that could we soon be looking at a four handle on the price of a barrel of oil and what does it mean? david kelly and breyian reynolds joining us. thank you for joining us. brian, let me kick off with you. you say here that it's very

important for people to understand where we've been on oil and the fact that the fall has been triggered by the removal of financial speculation on a very large scale. can you talk us through what you mean by that and what the inch employer indications of florida now are as we seek to find a bottom some. >> i've been on this network a number of times talking about the commodity bubble. wall street subprimed commodities. in other words, they wrap them in the same type of structure that they wrap mortgages in the last cycle and that they rapped fiberoptics for world camom before that. when these deals explode, the commodity that has been securitized plunges. they hide the assets. and all of a sudden the deals come unraveled. wall street structured the equivalent of $22 trillion worth of commodities through otc commodity derivatives and now they're unwinding. and the thing to keep in mind is this is a permanent decline for

probably 5 to 10 years. the fed thinks it's transitory. they think it will come right back up. they're wrong. is this this is a permanent decline. >> i think they might be talking about the inflation effects being transitory. but let's leave that. the important conclusion from the argument that you make in your view is that you have a lot of people here who are talking about a reebound in the price of oil and that may not happen. >> in december, people poured money into the energy etf, the xle. it was one of the most popular sector etfs last year. it's happened time and time again and that's why stocks are selling off because people to the sent they want to be in stocks, they want to be in energy stocks and that was and is a mistake. >> i'm not sure if you read the interview jeffrey gave but he

says nobody really knows where the price of oil will stop falling. and the reason for that when you have a market as he puts it that showed extraordinary stability for five years for twhaefr reason we could discuss that, trading consistency at $90 a barrel or before, if it yubdtit undergoes a catastrophic crash, prices stay done a lot longer than people think is possible. would you agree, david? >> no i wouldn't. i think i agree with jeffrey about the price being very stable. we had four years where the applies was essentially $100 a warl or more. now you have a sudden shift down it $50 a barrel. i think investors did have a lot to do with that, changes in investor behavior. but the world production and consumption of oil is now geared to $100 a barrel more or less. if you push prices -- cut prices in half, you get a short term demand effect but those effects grow over time. in the long run, you replace your prius with an suv. we've seen this over and over

again. this is why commodity cycles are so extreme. but a plungelike this almost sets you up for a rise. so i think two years there now oil prices somewhere in the $80 to $100 barrel a range. a positive for the which i right now economy right now, but going forward, i think it will add to inflation. >> you don't think there are any deflationary fears on the u.s. economy right now? crb index, is back to 2009 lows. p there is something rotten in the global economy. >> no there isn't. if you look at globe at ph hchltpm michlt numbers, not great, but not a disaster. japan will probably glow fast this year. maybe china a little slower. but it's pretty balanced. commodity prices are driven by

investor behavior. they're not selling you as much. lower oil prices are clear a positive for the u.s. economy, for the chinese economy and european economy. this stimulates economic growth. and i don't think that is a reason for investors to be scared of the stock market. >> brian, what ultimately does it mean what does it mean if it keeps pushing the yield on the ten year lower and lower along with this flood of money that is coming in from abroad? where does that leave us by the end of the year on stocks? >> i agree the drop in oil prices is beneficial for the economy. probably beneficial for the stock market over time. but when with havee have these plunges, people want to sell stocks. it's a good strategy as long as you avoid energy. ball street banks charter ships to hold oel, they bought hotel

california warehouses where you can check in but not out. and then they wrap those commodity this is to packages. leverage packages. and history of structured finance, whether housing, fiberoptic, when the deals implode, so does the price of the commodity. so i think if you just avoid the energy sector i think you'll be okay this year. >> david, how sdw thedoes the nine year low for the euro factor into what is going on for today and the rest of the years? clearly the moves starting to get extreme. couldn't that be a headwind is this. >> not really. where is the -- the u.s. has more demand that be it can use because we're heading toward full employment. where does the global economy need demand. it needs demand in europe in china. and for the euro to be falling, that helps you're me aneuropean exports. from the u.s. peckrspective, we

need europe to recover. >> ever the optimist. thank you both for joining us. it is a big day for big banks. they have to submit their requests for the fed for dividends and share buy backs this year. kayla tausche with what is on the line for the banks. we can remember a couple of instances where they got sent back. >> shareholders never like to see that especially with so few banks being able to increase their buy backs and dividends. since the financial crisis. but in that reason it is the most crucial deadline for wall street banks and their share shoulders. 31 global financial institutions all with more than $50 billion in assets must submit these hefty documents proving they can weather extreme economic depression in order to hike those dividends and buy backs. and then the fed gets the final say on whether those firms meet its guidelines. but you a few banks on the hot

seat. doifrp bank is deutsche bank is going through the process for the first time. bank of america was forced to skroop scrap a $5 billion buy back. citigroup failing all together. had to spekd the entirety of the past year trying to fix the problem. jeff hart met with management and said the management feels it's confident with what it believes is far better information and communication with regulators this year over last year. investors, though, believe citigroup's proposal will be modest because it wants to clear the bar. guggenheim estimates jpmorgan may have to lower its expectations, but goldman sachs will she improving or high sustained high capital return. but of course we won't know

until march. the process has been criticized as opaque but we do know many of the hypothetical scenarios. unemployment hitting 10% here in the u.s., ten year kreelds in the u.s. at 1% the dow below 9,000, and gdp contracting in a signing gel quarter by 6%. the big wild card is the move in oil prices. analysts are wondering whether the fed will now use oil prices in part of its calculus. they outlined a scenario where brent prices rise to $110 a barrel. so that is obviously the opposite direction. i just got word from a source that only the six biggest banks who will undergo the global market shock will be tested for oil prices moving in the other direction. so coming lower. and interesting to see the fed not testing all of the banks for lower oil prices.

results middle of march. we don't have the exact date yet. >> got it. thanks very much. interesting. up next, the holiday shopping season finally over. so which retailers came out on top and which stocks will benefit 9 most from the past few months. financial noise financial noise financial noise

welcome back. oil prices hit fresh 5 1/2 year lows. chevron andest exxon among the biggest drags. big moves for the big oil companies. chevron down by 2.5% on the day. >> holiday season is in the books. how strong was the season for retailers and is there run over? brian levy joins us now with more. covers a lot of these big names. so with the moves today, if you look at the dollar for instance on a nine year high versus the euro, do you have to have a strategy with retail to pick domestically as opposed to the tiffanys and those exposed to macro weakness? >> there is impact from the

stronger dollar. but many of the companies we follow are really domestically centered so it's not such a big issue. >> so let's talk about some of the ronones you cover. what did you see in terms of holiday sales. >> promotions, i don't think they were as bad as last year but definitely was very competitive. one thing that will eat into margin, a lot of the shipping costs from the online sales. they are a big factor for industry growth. so you may have lower sales in store, but you can make it up online. but when you have to ship for free, that will impact your margin. >> as i look through the stocks that you cover, it's interesting that you actually have a hold on most of them. the one that sticks out as a buy is dollar tree. why is that? why are most at a hold with that one exception? >> well, the holds are based on

valuation. the fundamental backdrop right now is pretty good for the season. you have the lower gas prices, higher stock market you have improving jobs consumer confidence. so that's good. but you also have a bifurcated market, so you have the high end winning and also the low end winning. where people who are doing poorly they have to go to the lower priced value stores like a dollar tree. and that's helping them expand their growing rapidly in terms of putting out more products to sell. and also expanding the number of stores. >> when you talk about retailers, you position of the earnings season they can't have excuses. they can't blame the weather because it's been good. gas prices have been in their favor. the economy is growing. we recorded 5% last quarter. so which ones are you looking for to benefit from some of the tail independents that are out of the retailers control? this really should separate the losers from the winners, right? >> if i could put it, there's

lot of holds, some of them doing well fundamentally, there are companies like sears that we have a sell on. we have kohl's also a sell. very xefcompetitive. sears bordering on irrelevance. but the trend is negative there. so you have some going the wrong direction and others that even like a best buy or take your ket are working to turn around. >> why is target a sell there? >> target is well above our target price. so even thoughing to make the turnaround, the valuation we don't being is there. >> ones that need more of a turnaround effort, like jcpenney jcpenney, abercrombie & fitch, are any of those in vogue this year in terms of a bargain? >> well, jcpenney is one that i do follow that is challenged.

and we have a hold on that. we think there is room if at least because the valuation is chief enough that despite some challenges, that we have a hold on it. >> all right. thanks for sharing. good of you to join us. >> happy new year. up next on the program, will the fed raise interest rates? the middle of the year? and what happens when they do? fed presidents and top economists are gathering to tackle that question. let's have a quick check on the markets. down 180 on the dow. not been a great start to 2015. thanks. ♪ ♪ [ male announcer ] fedex® has solutions to enable global commerce that can help your company grow steadily and quickly. great job. (mandarin)

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fed presidents and top economists gathering today at the annual conference facing big questions about long term economic growth and the future of interest rates. steve liesman is there live. steve, always a fun time at the ada. >> yeah we miss you this year. one of the big questions here is whether or not the u.s. is in for a period of what they're calling secular stagnation.

low growth low interest rates for protracted period of time. and i'm joined by robert hall, stanford university professor. thanks for joining us. >> my pleasure. >> so let's talk about this issue of secular stagnation. it's come up a lot. what is the final determination? is it true or not some. >> well, first of all, we don't really know what the definition is. one expert on this stagnation is just a crummy economy. and i thought that was kind of on point. i was looking specifically at how much families earn and the fact that there has been stagnation in family earning power since about the year 2000. for me that's my definition. i think it's a good one. >> and we've had it for a while. but what is the outlook and why is it? it's low rowproductivity, low population growth.

and is there anything in the data to tell us this is likely to continue? >> it's not just population growth, but the fraction of the population that is either working or looking for work. that's declined by 3 percentage points which is a lot. and that's one of the two major factors. other one being productivity. >> so is your best guess now that 2% growth is probably the best forecast out there? >> it is. i'm not a forecaster. i'm very conscious of the fact that most forecasters are wrong. but that's what we've been having since the year 2000. my measure is family earning power. >> if that's one of the risks that is there right now then should we be having policies right now that address that? larry summers wants greater spending on highways and rail

ways. >> i'm somewhat skeptical. studies show that it takes about 15 years to design and execute a good infrastructure improvement. we need to pay attention to that, but that's very long term. the two things that matter are ones that are very resistant to palsy. we policy. we don't have policies that can automatically stimulate product different growth. if we did, we'd use them. the u.s. is a leader in innovation worldwide innovation. so we have a good record. but recently it's not been as good as it has been. >> u.s. seems to be do relatively better than is happening overseas. weakness in china, europe. how long can that persist? can the u.s. remain the shining city on the hill relative to other economies or does it have to come down to those levels? >> the u.s. is the best performing economy in the world.

so we got there by growing faster than other countries. but china for example is catching up even though china has been disappointing recently but it is catching up. right now there are no particular clouds on the horizon for the u.s.. >> any expectations you will be meeting to think about whether or not there a recession in the economy? >> certainly no plans at this time with growth and the employment numbers have been just outstanding for the last few months. they look like they will continue to be. so nothing that looks like a recession now. but i would have said the same thing in the beginning of 2007. at the end of 2007, we knew there was a recession. so we just wait for things to happen. >> robert hall thanks for joining us. sarah, back to you. >> thank you very much. straight ahead, the plunge in oil continues this morning. both west texas and brent

falling more than 3% hitting fresh 5 1/2 year lows. we'll talk to one analyst who says we will fall further. barbara just bought a bike. she wrote a tweet about it. you can't learn much from that. but take data from millions of tweets combine that with your company's supply chain and sales data. apply ibm analytics and expertise, and all of a sudden, you can learn which bikes to build what to make them from, where to sell them. because barbara and the world just told you how to build a better bike. there's a new way to work and it's made with ibm.

here are the stories we're watching. 7:28 othn the west coast, 10:28 on the east coast.

sford ford's and gm's sales rose. both stocks are down. boston scientific the biggest gainer up 4%. jm morgan upgraded to overweight from neutral saying it expects improved performance after the device maker lagged either peers in 2014. delta says revenue fell.iteither peers in 2014. delta says revenue fell.seither peers in 2014. delta says revenue fell.ither peers in 2014. delta says revenue fell.ther peers in 2014. delta says revenue fell.her peers in 2014. delta says revenue fell.er peers in 2014. delta says revenue fell.r peers in 2014. delta says revenue fell. peers in 2014. delta says revenue fell. >> big headline so far today, the dow down 177 points. oil continues to be the eye of the storm. plunging yet again. west texas crude just perched above $50 a barrel as we speak. jackie deapgeangelis has more. >> steep selling pressure early in the morning here. although we are coming off of session lows. still wti $50.84. down almost $2. and we still have brent crude trading under $54.

traders are saying look for the four handle maybe this week. and you have a lot of analysts saying when is the bleeding going to stop and when is a producer whether here or abroad going to blink and sort of change that supply and demand balance. and a couple of key factors going into that would be number one, the problems in the eurozone right now. a lot of people worried about greece and what could happen there, what this would due to the oil demand picture. also last year russia pumping as much oil as it's ever pumped. and iraqi december exports were the highest since 1980. so all of this is the perfect storm for oil prices to decline. traders are telling me that they're expecting to see some volatility in crude oil prices. you can see some buying on the dip in the next few days as well. don't be surprised by that. but fundamentally, they do think we're going substantially lower from here. back to you. >> bias is down. thanks. for more on oil receiptslet's bring

in chadmabry. it looks like you have a $70 a barrel for 2015. how will we get there? >> it is an interesting day in the oil markets. it really is an interesting time to be an oil and gas analyst. we're in the midst of a structural shift in the markets. ever since opec decided not to cut production here, this is a generation alal type of event. but i think if you look into the fundamentals, we are seeing an equilibrium and supply coming down. on the demand side this is a tremendous tail wind for not only the u.s. but emerges markets. europe japan, and we will see a demand upstick here in the back half of 2015. and dhi narkschina, of course.

>> so the bulls buying the beaten up companies, especially small and mid caps, have to wait until the second half of the year to see a bounce? >> no i think that you will see that bounce come well before that. frankly, i think we're seeing the smart money start to really sharpen their pencils on that right now. once we do find that about the here in the first quarter of 2015 the mid and small cap beneficiaries which as you noted were the biggest laggers in 2014 are going to be the biggest beneficiaries. two of our top conviction picks are where we would be putting our money right now. when start with carrizo, some of the best assets in the u.s.. i think that play is economic down to about $50 a barrel. and that's before you price in falling cost structure that we're almost certain to see in this environment. management team has been through

the down cycles before. and in the case of pdc, again, core assets in colorado see that as economic down to 50. very strong balance sheet and very strong hedge production in to 2016 as well. so do like those names. and i'd also throw in there sanchez energy. we saw a ruling from the government last week to allow exports of condensate. that should open up that market and be a big beneficiary for that company, as well. >> let me kick the tires if i may on this idea that we'll get quite a strong rebound quickly on oil. jeffrey gun lack was suggesting in barons that if you get a market that trades consistently high for five year, when we've had a crash, priors will go down a lot harder and stay down a bit longer than people think is possible. and also of course we had within half an hour on this show we had

brian reynolds suggesting you have to understand doctorwhy we've crashed on oil. it was because a huge amount of speculation. that is gone. so that is on one off deer tearer race that won't come back. how do you respond to arguments? >> it's good point.race that won't come back. how do you respond to arguments? >> it's good point. we're focused on opportunity al proprietary research. my bottoms up analysis frankly, with the cap x cuts that we're seeing we're seeing production start to roll over in the back half of 2015 and that could sk sell rate to the extent that we continue to cut capex. again, declines into 2016. and on the demand side, a tremendous tail went and we will see a far amount of elasticity of demand that will pick up and

balance us back toward marginal cost of production which we estimate to be around $85 a barrel. i can't call the bottom here but what i can say is the longer we do fall towards 40 the harder that snap back will be towards that marginal cost of production. >> and just in terms of stock selection here you're looking for companies with lower break even costs and is that in the reenlg region you you mentioned? >> looking into 2015, it is going to be a trechlerrous ertreacherous market. some sleks is imparp difference. so where i'm going to be looking is like you said, where the lower break even cost plays are as well as where the stronger balance sheets are. both in terms of liquidity and heenlg hedge production. >> all right. a bumpy start and now the dow down 214. some of the oil names weighing on the entire market.

chad, thanks for joining us. >> a 70-year-old hedge fund founder was found shot dead inside his apartment. kate kelly has the latest. >> very sad news today on the death of tom gilbert. he was apparently in his home when he was shot during the afternoon and pronounced dead by paramedics yesterday on sunday. his passing hasn't yet been ruled either a you suicide or a homicide, but gilbert's 30-year-old son tom gilbert jr. was brought in for questioning by the nypd overnight. the younger gilbert was spotted leaving his father's apartment building during the period where the death was thought to have occurred. wayne scott was founded in 2001 by the elder tom gilbert and as well he founded a software company.

the company's head of market told me that business operations were on hold in light of gilbert's death. he said the company has no further comment and no word has been heard from the family so far in terms of a public statement. bill bert gilbert seems to have had a low profile in the hedge fund community. but everyone i've talked to seems to have been shocked and saddened of course by the news and certainly by the possibility of a family member's involvement here. >> thanks very much. with more than 1% declines on all three major in-does his cease, let's acceptedsend it over to dom chu. >> kite and am again have enterm again oig have entered into a deal. kite shares up by about 5%.

amgen is trading lower. the fda recommended approval of a novartis market drug to copy -- a copy of amg event n's blockbuster cancer drug. so you can see shares both all of them at least showing volatility in today's trading action. back to you. coming up, phil lebeau is making his way from bakersfield, california to cs in las vegas in a self already driv-driving car. we'll check in with him live mid trip to see how the pair of them are doing.

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amgen's. selloff picking up steam. we're looking at a 226 point decline for the dow. 1.36% for the s&p 500. what is causing the pickup in selling as we get through the morning? >> well, you can only suspect something. the volume in the first hour that has been larger than normal for that period of time. so that leads an old foegy suspect that we may be seeing selling in europe. they may have limited opportunities to europe to raise the kiptsdnd of money they want and therefore they come over here and add to the selling that we have. if you look he dow, it's not just the two energy stocks dragging it down. among the other leaders are people like caterpillar.dragging it down. among the other leaders are people like caterpillar.just the two energy stocks

dragging it down. among the other leaders are people like caterpillar. so things may be slowing down generally. >> cat got a downgrade from jpmorgan on the indirect exposure to energy. interestingly enough here on the s&p, the group leading us lower energy, but utilities are get shag lack shellacked. >> i think there is confusion about where things will go in europe and will we get all out qe. and to some degree the idea that greece may be allowed to exit might set back the pressure on the ecb to keep rates lower. >> can i come back to energy. the move on the session is bigger than we thought, it's a 3.5% loss. we need to bear in mind so far now 12% on the sector. a lot of the oil majors held relatively firm.

today is different. on both sides of the atlantic, you see heavy weight oil wagers being sold off perhaps indicating people believe that oil will stay lower for longer. >> i think that's a valid assumption and i think that over the new year weekend there have been a great many rumors that russia among others needing revenue might begin to sell more product at lower price to get the revenue that they need. so that will definitely mean there will be additional pressure here. probably keeping oil lower longer. >> and what about these people that keep coming on saying oh, it's all good for this economy. without question it's all good lower gas prices lower input costs for ceos and higher profit margins. is this what would you say? >> absolutely not. you've had people like ray dalio's bridge water fund put out a piece ofper in november

saying if it continue, it will work against things like employment and the capital expenditure in the oil area which has been helping the economy. so it can be a drag on the economy. >> art, back to your first supposition about the potential selling from europe. do you think that is largely because of fears about greece ors general concern about qe coming? >> i think it's a combo. i think the qe thing is becoming confused and the new idea that they might be willing to let greece step out. that is a problem. because if that happens, you're going to have demonstrations in spain, in italy, in portugal saying why are we suffering through austerity. why don't we go back to our own currency again. whether that happens or not the fear is raised and in-that's why the europeans selling is intense and it may be a factor here.

>> it's grand standing, though. you would expect them to say that, appear as if they're playing hardball. you'd expect that. that's just the plan. that's how it rolls out. >> but it's not just coming out of athens. you're seeing other -- >> germany over the weekend. >> people saying, you know what, maybe if we really get our back to the wall we should let them go. that could be people trying to call their bluff. or maybe we've got an extra step. >> and the euro below 1.20. you seernl see certainly see it there. art, thanks for the added color on the trading session. the dow down 233 points at this hour. up next, it's been a year since marijuana was legalized in colorado. and business is booming. we're going inside colorado's pop industry when we come back. s "at last" sometimes, at last doesn't happen at first. ♪

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and our book will teach you how to trade options for free. so call now. [ male announcer ] call the number on your screen now for your free copy of jon and pete's new book. that's... (see the number on your screen) call now. welcome back to "squawk on the street". rick santelli here. james, thanks for taking the time. >> no problem. >> listen, james, most of the time progressives are pretty

much anti-fracking and really look towards energy as something to control versus something to imbrace. but you see it wrote a story called the progressive case for fracking maybe you can bring me up to speed on what you're considering and why progressives should be a little bit more accommodative to the fracking technology? >> sure. there are lots of legitimate environmental concerns around fracking but there are also in my opinion, an upside as well when you look at geopolitics. for example, you've seen the oil price come down everyone is seeing it continually come down. one of the reasons is fracking in the u.s. shale extraction and hydraulic drilling which has resulted in u.s. exporting more oil and gas and the price coming down on the world market. what this has done is this has undermined countries like russia iran like venezuela, and it will in the long term i

think undermine a country like carb. saudi arabia. these are oppressive regimes and something liberals should welcome. alongside the environment, legitimate environmental concerns around fracking. there are consequences that any liberal should welcome. >> james let's stay on that thread. when i look at natural gas, i see a bridge fuel. we all want to take care of the planet we're all kind of unans muss in that. i can remember a couple years ago when fracking technology was taking off, many of the progressives, i don't mine to stereotype the litmus test it's a global market it's not going to affect gasoline prices. everything boils down to that retail gas pump price, but it did. it did. i guess my next question to you is, even if the price was to go back to where it was a year ago, it really is hugely beneficial to keep as much of that money with more allied-type resource

creation, whether it's canada or u.s. oil, or mexican oil, fort final 30 seconds here i guess my question to you is how can we get the progressives to embrace this as we embark on potentially legislation in the next couple of days that is going to address keystone and maybe a gas tax here in the u.s.? >> i think it will be difficult to get them to embrace it. i personally think that i -- i don't think fracking should take place everywhere. it should be done sensibly. it's also on the other hand conservatives embracing renewable technology in the long term as well. so fracking should be seen i still think, as more of a short-term solution but liberals should get on board to some extent and not completely dismiss the technology. >> james, thanks for taking the time today. there's always two sides to all issues. >> thank you. >> simon hobbs, back to you. >> thank you very much rick. one year after colorado legalized the sale of

recreational marijuana only 60% of the pot consumed there is actually now purchased legally. that's just one finding nbc news correspondent harry smith has made in his new cnbc documentary about legal pot in colorado and he joins us now. harry, welcome back. >> good to be here. >> so -- >> as stephen colbert called me he called me the stoner icon. i've spent so much time in colorado. i've become expert in this field now. >> you were saying there are now 500 places -- >> 500 locations in colorado. one of these aspects they thought, okay we'll legalize it, take it out of the black market, but there's still a very strong and thriving black market in colorado. all you have to do is go pick up -- look at craigslist, buy it any place and it's a lot cheaper because of the taxation and everything else. >> what else have you learned? >> market forces at work. >> what else would surprise people to learn about how the marijuana industry is really developing from nothing in colorado one year later? >> the people are really

crossing their ts and dotting their is and really paying ntion and embracing technology, the ones that are really going to be out on the front of this. we met some people who have spent $3.5 million, for instance in the last year on a brand few grow facility. they use cloud technology to actually control all of the air flow temperature, humidity all of that stuff within these rooms, the plants inside just flourish. >> but are they legitimate businesses? they still have to deal in cash right? >> well what happens is a bank will come along and say okay i'll deal with you, and then two weeks later call them and say i can't anymore. that's still a giant issue even though eric holder wrote two different findings that said we're going to leave you off the hook, do whatever you need banks are okay to operate there, banks do not want to touch this business with a ten foot pole because it's still federally classified as a schedule 1 drug.

>> in the meantime colorado is supplying 40 states across the un. >> different places where pot has been confiscated trace badding to colorado. two states out there suing the state now because as the attorney general told us colorado has become a pot exporter now, not -- and especially not in any legal terms. >> like for new mexico. >> largely a western phenomena, this incredible growth you're talking about. on the east coast we're not perhaps as familiar or close to it because we don't have the same legalization. >> not up to speed. california being on the forefront with medical marijuana years ago, dispensaries all over the place, you know, if you have a hang nail you can get a script to get medical marijuana in california. quite honestly that's like de facto legalization. so here we just -- there's no place you can drive to here that you can walk into a store with or without a prescription and get it. >> medical. it's -- >> where can you go here? >> 23 states.

>> 23 states. you have colorado washington state, oregon voted last year so did alaska and the district of columbia and they're talking about this maybe being on the ballot for legalization in california in two years. >> can't wait to see it tonight. good to see you again. >> always a pleasure. >> harry smith. "marijuana country the cannibis boom" premieres on this network at 9:00 eastern on cnbc. let's send it over to kayla tausche, she has a look at what's coming up on "squawk alley." >> hey david. the market is on track for its worst start to the year since 2008. we will take another look inside the sell-off and tell you exactly what's moving. a lot of buzz around comments from a former tumblr executive saying apple has lost its functional high ground. is apple too focused on quantity over quality? we'll discuss that. finally bob pack of sun trust with his outlook of internet stocks this year. that's at "squawk alley" in a few minutes.

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good morning. i'm kelly evans in for carl quintanilla. 8:00 a.m. at apple headquarters in cupertino, 11:00 a.m. on wall street. "squawk alley" is live.

♪ ♪ . joining us this morning is jon steinberg, ceo of the daily mail north america and slava rubin quo founder of indigo go john forth on his way, all of us with us is kayla tausche. good to see everybody. begin with markets and talk about the fact we're off 200 points and the dow in the red, off triple digits and bob pisani is on the floor to tell us