r, right? >> no. >> you don't? >> you've got to keep updateing the piece. that's the only difference. >> i feel younger. >> remember when your hair grew back from the rogaine? and now you're neglecting it again, right? i think it's macho. >> after he said all these nice things. >> all right fellows. great seeing you again. be sure you join us tomorrow. right now it's time for "squawk on the street." ♪ this is how we do it this is how we do it ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla, with jim cramer. hope you had a restful weekend because the week is packed. earnings season begins tonight with alcoa. tiffany's ingwarning. a $5 billion pharma deal. goldman cuts its forecast for 2015. more on that in a moment. ten-year yield is back to 195 on a very busy week for new supply.

several big names set to report earnings this week including the likes of jp morgan alcoa, and city. why it could lead stocks higher. plus a rough day for tiffany. why disappointing holiday sales are weighing big-time on that luxury brand. and merger monday has two very big deals in the pharma sector. what big names are teaming up. first up though after a volatile week for stocks, the markets are bracing for the beginning of earnings season. alcoa set to report after the bell tonight. oil continues to fall after seven straight weeks in declines. goldman slashing its three-month forecast for brent from 80 to 42 and wti from 70 down to 41. the firm says it needs to stay near 40 for most of the year. half of this year before it would keep capital sidelined. actually they've got a great count showing that it's actually falling faster than it has in almost every other oil bear market. >> well, it has to but at the same time when we keep seeing these production growth numbers that are out of these independents, we know that there is going to be a lot of oil

coming in. a lot of oil coming in from the gulf. there's a huge glut in gasoline. we're trying to send the gasoline anywhere we can. that's part of the problem. by the way, last week it got very cold. huge glut in natural gas itself. natural gas didn't even spike on the polar vortex. that just shows you we are well-supplied. i agree with the goldman call but he was to bullish to begin with. the interesting thing is they downgrade slumberjay. i've been saying -- i said to david last week and you were not here that until we see all downgrades, you're not going to get a bottom in the stocks. i thought that goldman made some good points in terms of where it can bottom. but the idea that it's going to come back next year forget about it. >> what about the idea of capitulation and we've got these guys coming lower and lower. isn't that a sign that we're getting closer? >> slumberjay traded july of

2013. >> you pointed out to me six, eight months ago you had a lo of these stocks. >> these were way too high. when morgan stanley put out a note about the super cycle of sand august 27th they put out a slumberjay, this is it get onboard. you cannot keep these stocks where they are on the buy list if you're using a commodity price of $40. >> even as they cut, they actually up chesapeake to a buy. >> i mean, come on guys. get negative on everything. >> in "usa today," saying we're not going to say 100 again and

saying he totally agreed with the saudis' decision not to cut because those 2 million barrels would have been made by somebody else. >> keystone here venezuela is no place to put their oil. then what happens? the amazing thing was that last week, nordic american tanker, the largest tanker company, raised their dividend rather substantially. there are a lot of hedge funds betting the things will be better. well, hedge funds have been wrong so many times. maybe this is just another bad call. >> one of them is going to be -- i'm not sure which. being long on the dollar or being short oil. something's going to work out again. >> yes. >> as it always does. >> it's the velocity of declining oil that is freaking people out. you have people selling almost everything other than health care. there's so much good news in health care. >> we'll get to that in a moment. tiffany cutting its outlook for the full year this morning, ending january 31st. the ceo calling sales for the holiday season disappointing, including weakness in japan, 1% drop in u.s. comps. different story for lululemon,

raising their guidance for the current quarter, citing improving trends and what it calls strong holiday results. weird that tiffany would see the most weakness in the u.s. people are saying maybe the strong dollar is hurting tourism here. >> that would be something. really really bummed out by that minus 1%. u.s. has been very strong. everyone expected japan minus six. really incredible was that euro was plus-4. so they were having strength where no one else was seeing strength. the high end has been terrific in this country, so perhaps there's some execution issues. tourism could be hurt. but we're just not seeing enough tourism to be hurt for me not to question the execution. what happened? there were a bunch of operators last week five below, terrible execution. bed bath not that great execution. so we're seeing some of these companies just not doing well because they're just not selling right. macy's wasn't as bad as we think. they're doing a lot of restructuring. jp penney-- jcpenney, the high point.

>> lulu now they're raising. >> my travel trust likes lulu. the onlyists got so bearish on it was almost hard to believe that they conn make the number. this was quite a big upside for lulu. and finally they beat numbers. i think that 6% to 7% comp was quite strong. 71% earnings could be some raw cost declines there, too. they had to go a lot of people got negative lulu just like they got too positive oil. >> you've been a fan of burlington coat. raising guidance. >> yeah burlington coat, that also tells me do not be short deckers. because why? because ugg i think is having a very good christmas because

things are cold and they even got lucky on brady, their spokesperson. >> but still, i find tiffany a bit of a conundrum. listen, the stock has done quite well over the last year and a half or two years. but they have executed well. i have a hard time understanding exactly why they're seeing the weakness they're seeing. particularly given the divisions we talked about where the high end has oftentimes performed so much better than the middle to low end. >> i think conundrum is the right word. i like the idea that it could be tourism, just because i need some -- i need some reason. i mean this company has done it right, right, right. and then suddenly, they blow it. i don't know, doesn't make sense to me. >> anecdotally, given i start my day at the nyc surrounded by tourists, then goii go to "30 rock," surrounded by tourists. i guess i'm not asking them if they're going to tiffany. but it doesn't appear -- at least according to my eye, my well-trained eye -- >> that's sometimes better than

facts. >> don't let them get in the way. >> i know. i see a lot of other guys get in the way. >> i do my quick tourist updates every day. take a look ask them how they're doing, enjoying new york. >> this was very bad. and i think it's going to make people shutter at the highest end, although we know restoration hardware just reported a terrific quarter. i think those who buy jewelry at tiffany would be inclined to go to restoration hardware. doing quite well. >> yes. meantime, what a remarkable weekend in france. a million and a half people marching throughout the city. france ramping up security measures after last week's attacks. we're live from paris with an update this morning. good morning, hadley. >> reporter: good morning, carl. in france today, we are on a high terror alert for a sixth consecutive day. 3.7 million people marching yesterday across the country. we have 10,000 security personnel right now securing sensitive areas.

we also have something like 5,000 security personnel, we're told they're protecting jewish schools in france. you have to also remember that there were 50 world leaders here just yesterday linking arms walking together in support of what's happened here in france. we saw millions of people on the streets arm in arm. it was so clustered here that it was very difficult to move it took hours to get in and out of this area. representing the united states was u.s. attorney general eric holder. he did not attend the rally, but he was here meeting with counterterror officials. he announced the white house will hold a security summit on february 18th. we also know that secretary of state john kerry is planning to arrive on friday so we can expect to hear a bit more about those new security measures as the week progresses. carl? >> thank you for that. the secretary of state in pakistan talking to the leadership there. when we come back pharma taking center stage. also ahead, john lechleiter

looking to overcome patent operations. a live interview on a very big day for pharma. a lot of conferences today. take another look at futures. good action after the dow. was either up or down triple digits every day last week. first full calendar week since the summer of 2013. a lot more "squad on the street" from post nine in a moment. t say thank you enough. you have made my life special by being apart of it. (everyone) cheers! glad you made it buddy. thanks for inviting me. thanks again my friends. for everything for all your help. through all life's milestones our trusted advisors are with you every step of the way. congratulations! thanks for helping me plan for my retirement. you should come celebrate with us. i'd be honored. plan for your goals with advisors you know and trust. so you can celebrate today and feel confident about tomorrow. chase. so you can. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate

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drug maker shire announcing its biggest acquisition, buying nps pharmaceuticals. $5.2 billion in cash. also swiss pharma giant roche, for more than a billion dollars, and we've also got amerisource bergen for $2.5 billion. all cash tender for that company. so we're busy this morning with health care and health care-related. nps announced yesterday. shire was going to be the biggest deals of 2014 until they said no we're not going to do it, after treasury changed its rules on inversions. they backed away.

that deal continues, of the big inversion deals that were announced back in '14. but shire saying okay we're going to start acquiring again. left at the altar, perhaps, the likes of assailics. but, you know a nice-sized deal. the premium, not that large to the stock price recently but the unaffected stock price quite high because there was speculation about this. >> right. i have dr. francois nader on tonight. he's been a frequent guest on "mad money." he has this short bowl syndrome drug. it's the drug that nader introduced me to. it's so people can have for lack of a better term normal lives. they're not attached to some sort of device that makes it so they can't work. when i look at nader, what i think he's done is say you, health care main nance companies, we will come up with something that is cheaper than if you had to provide lifetime care, but it's going to cost the

system a lot of money, and that's what i think shire wants to do. techmyra has a merger today. bristol myers breaks up a drug trial on the kurg of lung cancer. i hate to use the word cure and lung.curing of lung cancer. i hate to use the word cure and lung. merck, same thing. there are so many deals in health care. again, part of this jp morgan health care conference. >> yes, it is. the biggest deal of last year allergen and activist. they've already gotten signed off on by the ftc. >> they raised numbers this morning. i mean this guy, this is some stock that he's gotten. brent came on "mad money" and said he was going to do what i thought was an outrageous number. he's already beaten the number. this guy's for real. i know a lot of people feel like it's just a roll-up. david pyatt, who soled allergen to him, didn't think it's a

roll-up. >> he didn't, although i will say valiant is 153.5. >> these drug companies are making so much money. what a business right now. >> how is it that you end a trial early on a pd-1 inhibiter because it met the end point? >> i've rarely seen that. >> it's up 6%. >> everybody who's in the other get out of it. we've got to give you the real drug. because the real drug is working. this is a very big market. people forget. lung cancer is the largest cancer and this is amazing. merck says -- merck has something, too. all these companies are on the verge of -- they're doing this personalized medicine. the results are getting better and better and better. we're seeing it in many different companies. you know agio the stock goes up plenty. i'm talking to a lot of companies this week because what they're doing is making it so that they're not using chemo therapy.

and chemo therapy is going to look like bloodletting in the end. they had put themselves up for sale. there was, it seems, a process. that has been confirmed. not expecting anybody to come in over the top there. they do have a date when they're going to hear from the fda on a drug. but that is -- even if they get turned down on this nat par, i believe at least -- >> delayed in october! and goldman downgraded. that was wrong. >> but it doesn't appear to be a merck situation. >> no not at all. by the way, brent saunders is on today. the activist. >> nice. >> and again, the stock will go up again. i'm just telling you. that guy is fabulous tv. told me this guy is a good guy. didn't want to sell to anybody. said saunders is a good guy. let's watch them with scott widener. >> think they put that in their

bio? >> he's the kam chancellor of drugs. i'm not kidding. he can leap over anything. meanwhile, video streamers were in the winners circle during last night's golden globe awards. amazon won globes for the first time with "transparent," that comedy drama series about a transgender father taking the award for best tv series, musical, or comedy. the show's star jeffrey tambor won for best performance in a tv comedy series. kevin spacey among the other winners of the night, taking home the golden globe for best actor in a tv drama, of course for "house of cards" on netflix. the two lead a night where streaming outshined the major networks. in fact, the four major networks, as we like to call them didn't win any. >> what a night. now, one of my favorite moments was on the red carpet. i don't know if you caught it. when george clooney had people test out casa amigos. he is selling that tequila left and right, and so am i. it's become our most popular

tequila. i know there's some big beer and wine companies that want to own that. i'm just going to play my cards right here. i was so jealous of brady until i saw clooney. these are people you must be jealous of. i know jealousy is a sin. but do these people not have everything? do they not have anything? is there anything they don't have? >> they put their legpants on one leg at a time. >> no they do it two legs. >> here's a quick piece of sound. >> i want to thank amazon jeff besos. >> to amazon my new best friend. >> i want to thank netflix for their incredible support of this series. ted. all of you guys have done an incredible job. >> it is a new world. there's no doubt about that when you don't see any of the networks getting those nods, so to speak. and netflix and amazon of course in the stream world. and how competitive it is right

now. but how much great programming there is out there, and how much is being spent, by the way, by all of these networks, if you will for that content. >> hard to do your job, right? when netflix comes out, that's the day when we can binge. when they do "house of cards." i don't know, life stops, you just sit there and watch tv. and if it's football weekend -- >> kind of like we binged on football. >> i do. i binged on football. >> yeah. i watched more tv this weekend than i've watched in a long time. >> made a lot of enemies. meanwhile, how "the affair" beat "game of thrones" is another clip -- >> i don't watch that porn show. >> hollywood foreign press, and dominic west and the actress who won, brits. >> these guys were all british. dominic west where is his accent? how does he do it so perfectly? amazing. love that guy.

>> english actor. >> they talked about it for james bond. >> i hope. when we come back cramer's mad dash. we'll count down to the opening bell. take one more look at futures. busy week shaping up as earnings season begins tonight with alcoa. back in just a minute.

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woah oh, we're spiking things, robbie. for all the confidence you need. that's better! td ameritrade. you got this. all right, time for a "mad dash" on this monday. want to start off with the first letter in the alphabet or at least the first name we usually talk about in earnings season. >> alcoa. this is a tough one.

raises it to a buy today. with street high numbers, that is not good news if you're alcoa, because now they've raised the bar so much that i don't know if they can do it. the company has done everything it can to be much more proprietary, so price of movement doesn't matter as much. they actually benefit from a strong dollar. but i hate to see an upgrade on the day. what that says is wow, it must be really great. raises the bar. they've done a miraculous job. look how the stock has done. >> so let's say i've been listening to you for some time and you've been very bullish on this company for a while. i say all right, i'm going to listen to cramer, i'm going to buy the stock in the $12, $15 range. and i'm up this much. maybe time to say okay, don't be greedy? >> by this time next year alcoa is going to look very different. no you hold on. even though i do like the company. if this recommendation hadn't occurred, i might have said listen, you're okay. but i don't want to trade alcoa. it's just not worth it. because if the stock comes down

people say oh cramer you moron. but i want you to buy if it goes down. they'll say that anyway. >> they've called me a lot of things in my time. but they haven't called me late to dinner. south western, this is very bad. they have a bridge loan. they're issuing a huge number of shares. this had been a takeout name 20 million shares to be able to get the balance sheet back. >> a big deal to acquire a lot of properties from chesapeake. >> what's happened is that this is the beginning of companies trying to cure their balance sheet, and if they cure their balance sheet while you're in it, you're going to be very upset. this thing right here everyone was talking about who's going to buy them who's going to buy them. the answer is nobody! >> nobody's buying them. and of course it does put a spotlight on the needs of many energy companies. not the big majors not the well capitalized ones with a lot of cash in their balance sheets but plenty of others and that 18% that we know the junk bond market is made up of of energy-related bonds.

that's got to be a concern with wti here below 50. >> gdp. i mean there's a bunch. i don't want to pick on anyone in particular but there are so many. laredo. there's so many that need to either have oil go higher or maybe do what southwest did. and by the way, the airlines aren't up either because of american. so it's not like you're winning on oil, and losing on airlines. >> a lot to talk about. >> there is. and a lot more to talk about. "squawk on the street" is coming back right after this.

you're watching cnbc's "squawk on the street." the opening bell in a little bit less than a minute. busy morning after two weeks down. oil down for seven weeks. earnings season beginning tonight. only 2% from the intraday highs but we're going to have to get used to more chop perhaps after last week? >> it's going to take a lot of tech down, including maybe western digital. may not be right, because this is about flash. and then you've got the bristol

myers merck thing going. at the same time you've got the alcoa. you're ramping. and there's also a lot of activism that's moving stocks. so there's just almost too much. >> getting in front of alcoa tonight, with a target of 48. there's the s&p at the top of your screen. the big board this morning, str holdings holding group celebrating a solar strategic partnership at the nasdaq evine live a digital commerce company doing some of the honors. aol gets an upgrade. almost the 15th anniversary of the time warner aol. >> 15 years. >> 15 years on saturday. >> about 13 years since its complete and utter failure as a deal. didn't take that long, of course, for the biggest deal of all time to be the biggest bust of all time. but that's long long ago. time warner now is a movie

studio, hbo, and a bunch of cable networks and aol is on its own. time warner cable is now not going to be on its own for long if the regulators agree to allow comcast to acquire it. but things do change. >> time warner great american. >> all right. he's got that going for him. >> a lot of other things, too. i did want to take a look at shares of mwiv. i mentioned it briefly. mwi-veterinary supply, jim, is up 8%. amerisource bergen buying it. distribution of veterinary medicines for amerisource. >> they are going up against henry shine. a company you introduced me to. the vet market is very strong. pretty much had it to themselves. abc is a great company, too.

>> representing about a 17% premium over the stocks. average over the last three months. it wasn't that large a premium over the last trade. >> techmyra with a nice merger. with encore merge, that's big. bristol myers broke up that trial on lung cancer. the amount of news is just incredible. meg tyrell has that interview. >> yes, she does. tiffany is not dragging down a lot of retailers with it, for some reason. >> lulu is just as impressive on the upside as tiffany is on the downside. i remain convinced this is a good moment for retail. i paid $1.99 this weekend for gas. >> did you really? >> yes i did. i promly bought wiper fluid.

it was right outside the holland tunnel. i didn't put the premium in. i don't really -- i don't know maybe it should matter, but the wiper fluid. can you imagine that? get some money for wiper fluid. i felt rich. i would have gone to dunkin' donuts donuts, too. >> that's what it took to make you feel rich, huh? buying gas at $1.99 a gallon? me, the presence of my family and friends makes me feel rich. >> speaking of which, we talk about gas prices and the ancillary effects. jack in the box, another record high today. mcdonald's over the week this new ad by the way that they ran during the golden globes. here's a quick look. ♪ i woke up to the sound of knives and i found you

with your head hot like the fourth of july ♪ ♪ >> obviously touting their ties to the community in a new advertising strategic shift. dividend yield 363? >> i felt like crying all the way to chipotle. but i loved the second ad, too, which is basically, we have no apologies. we're not like a burger, you're never going to see like the tofu in our burger. you're not going to read about that they're like natural organic. it is a good campaign. it got you to focus on mcdonald's, which they haven't in a long time. >> here's what he said about the current ceo don thompson. >> i have great confidence in the leadership of the company, and in don thompson. and they've suffered substantial

headwinds, as you know, over the last couple of years. and this is a cyclical business and i'm sure that they will move forward with the appropriate strategies to recover in the market. >> my travel trust owns it because we believe that either thompson will -- they will change. obviously skinner saying forget that. >> we asked him why does he have confidence in them? well, i picked them. >> that was very affirmative. but i look at wendy's doing so well. nelson pelts, by the way, in wendy's. jack in the box. you mentioned that. they also don't sell tofu burgers. so the vegetarian dish that chipotle has. man, you don't even know it's vegetarian. tastes better than meat. >> no kidding? i've never had a tofu burger. >> did want to mention some news on emc this morning. the stock is down a bit but they added two directors to

their board expanding the board. you may recall elliot. they had something to do with this. elliot management, it says in the release, worked collaboratively with emc to identify and review candidates. those two candidates by the way, are -- >> donald from american air. >> as well a guy named jose alameda, who is currently president and ceo of covivian. >> he's just a fantastic executive. but one's a drug guy and the other is an airline guy. when i look at emc, yes, they have vm ware and i know someone might want to break it up. >> they were talking to hewlett-packard for a number of time. >> these guys are very qualified.

emc has been stuck for a very long time. at within point, they were viewed as being the heir apparent to ibm. ibm can't get out of its own way. it's worrisome. >> quick turn to autos. phil lebeaus of the detroit auto show will hear from toyota in a moment. rolling out the new chevy volt. and the bolt a couple years from now. tesla is down 2%. i wonder if you think there's a feeling that the big three are starting to go after them. >> i think that gm -- i think has got the right cars. by the way, volkswagen, people don't talk about volkswagen. >> car of the year. >> i think that the jetta -- we just have to keep it in front of us that volkswagen is doing very well. but general motors has what a lot of people are think are gas guzzlers. when gasoline's this cheap, you fill up. you don't even -- it's like the

old days. so gm's got the right cars. it seems like no headline risk for what happened. >> good morning, bob. >> good morning, guys. we've got some gains in health care, but on the parts of the market including energy stocks and weighing on the market. let's take a look at the sector leaders. as i mentioned, health care leading. consumer staples, consumer discretionary also on the upside as we started but they have turned negative just in the last few minutes. energy stocks down 2.4%. i want to talk about tiffany here. i think what's happened there, it's very interesting. they did report flat global holiday sales for a gain of around 4%. that's really disappointing here. tiffany's is down rather noticeably. i just want to show everybody what's going on here. the america segment down 1% but

of greater concern was just lowering the overall numbers. asia pacific up 6%. that was a little bit worse than expected. japan down 8%. that was about in line with expectations. we're dealing with about 21 times forward earnings. that was before this number came out. if we have to reduce this multiple because of these revisions, say bring it down to 18. in the 80s very easily. that's assuming a 6% gain in revenues. they were talking about revenues low to mid single digit gains for 2015 and that's why this stock is down so much. because of the 2015 guidance overall. low to mid single digits not what people were expecting. we were expecting high single digit numbers on earnings as well as the revenue numbers. you saw the other luxury players

moving not that much. i wouldn't say there's broad impact on the retail markets. more specific to tiffany's. the bottom line is they've been reducing capacity and investing a lot more in the automotive business all year. that paid off. this stock was up almost 50% in 2014. moving to the upside here. natural gas is confounding all expectations. we're seeing multi-year lows in natural gas. i mentioned last week that our partners point out that when you start a cold snap usually natural gas moves to the upside. look at this stat here. nat gas is up that's where we're at right now in a gold spell. obviously, that's not happening. so we're sort of going against historical trends right now. by the way, speaking of kenshow,

we've got some move to the downside in all of the natural gas stocks today. guys, back to you. >> thank you very much. we are getting towards the end, jim. listen closely to the battle over family dollar. in fact, this morning we got a press release from family dollar, an accompanying letter and press release from dollar tree. that are significant and certain worthy of some time here. so let me do that. key in family dollar's release -- and by the way, on the 22nd of this month, so not very far from now, family dollar shareholders are beginning to have an opportunity to vote on dollar tree's deal. it appears we are headed for a vote at dollar tree's urging as is its right to hold that vote without adjournment on its current deal for the company. back to the release from this morning, in which for the first time we got very specific

numbers from family dollar about what it is being told from the ftc about what it would have to divest were a deal acquired by dollar general. remember dollar general has a higher economic bid out there, but family dollar has rejected it out of hand because of its concern that it would never be able to close said bid due to how many stores it would need to divest if it were to acquire family dollar therefore the idea being that dollar general would actually abandon its bid and leave those shareholders completely in the lurch. the ftc staff informed family dollar and dollar general on january 10th that its most recent economic analysis indicates that 5,850 stores are presumptively problematic, including 2,965 dollar general stores and 2,885 family dollar stores leading family dollar to say listen if we view that

presumptively problematic, we can say around 3,500 to 4,000 is probably a number that's fair to assume would be really problematic. that's the range. it's not final, but it's based on the most current specific indication received from the ftc staff today, as the number that will ultimately be required by the ftc to permit dollar general to proceed. dollar general said we're willing to go to 1,500. we think only 700 would need to be divested. i have tried to get dollar general the morning, to get some sort of a response from them on this. haven't done so. if you take a look at family dollar's stock price, which i should probably do on my own right now, it is down a bit. adjusting for the fact that dollar tree is saying to shareholders, all right, here you go. gut check time. we're going to give you the vote on the 22nd. that other bid is not really a bid. there's nothing really there. we're at 76.85.

we're above the collar. the downside is much more significant given the number that family dollar put up the terrible earnings number that the company put up. it's time for you to put up or shut up. one would expect that iss may actually change. at this point, i'm not hearing any plan on the part of dollar tree to try and increase its consideration. they feel as though given their timing the fact that they're going to have fewer than 300 stores to divest that they can close this thing by late february early march. and that they're the only game in town, given this huge number from the ftc. they're just going to say hey, here it is take it or leave it. and family dollar's stock price is adjusting to reflect that. i have yet to hear from them. we'll see what if anything they have to say. >> that's extraordinary. 5,000 stores? maybe if they close every store, they can buy it. that's ridiculous. >> huge number. >> that's great reporting. >> let's get to the bond pits. rick santelli joins us from the cme group in chicago. >> good morning. the treasury complex is

virtually unchanged. but it seems, though the momentum is for lower yields. a couple of things jump out at you. that big-time volatility we had around 8:30 eastern, when they had the employment data come out on friday. it seems as though that 197 was somewhat the top of the reins. that seems to have worked. today, traders paying close attention to it. remember, we had the minutes last week. let's go back to the last meeting. the second day of two-day meeting. let's look at how some of the treasuries have moved. if you look at tens we've shed 30 basis points. if you look at twos we've shed 15 basis points. so of course if we do tens minus twos the yield curve spread. at 138 it's pretty accurate. it shed about 28 basis points. but it's really quite aggressive with regard to the notion of what the fed's going to do and what investors think they're going to do and when they're going to do it. so at least for now, we didn't see anything challenged on maybe less tightening, and that's still ongoing even after the

jobs report. let's switch gears to foreign exchange. the euroversus dollar briefly, for the second time under 118. you can see how significant most of these levels are, right around this 118 area. last chart, this is december 7th, the dollar/yen. even though 120 has virtually held in a quasi-sort of way, we're not seeing any major selloffs in the dollar. back to you. >> thanks so much rick santelli. what a day it's already been at the detroit auto show. our phil lebeau is there. phil? >> carl, lots of talk about electric vehicles and hybrids. and gas is at $2.13 a gallon. we'll see what the folks at toyota think about the prospect for continued sales of the prius given the low gas prices, when "squawk on the street" returns. i am never getting married. never.

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[container door opening] ♪ what makes it an suv is what you can get into it. ♪ [container door closing] what makes it an nx is what you can get out of it. ♪ introducing the first-ever lexus nx turbo and hybrid. once you go beyond utility there's no going back. the detroit auto show is under way. phil lebeau is there with the ceo of north america's division. good morning, phil. >> good morning, guys. i'm bringing in jim lintz.

a day where a lot of talk is about what's happening with electric vehicles. gas as low as it is. you guys are sitting in an interesting spot with the prius. >> we're still confident with prius. it's met the sales plans for the year. typically prius has about a six-year model cycle. the last one introduced in 2009. while we don't have any announcements to make i think the next generation will be fine. >> but you are feeling the pressure. it's harder to sell a hybrid with gas at this price. does it get to the point where you say we've got to juice it a little bit more in terms of the incentives? >> well what's interesting is we actually sold 311,000 hybrids last year. that was our highest hybrid sales volume overall. the pressure is coming off of everything in the prius. it's proving across the other 11 models. we also have hybrids in. they were down industry-wise about 5%. >> and you expect this year to be plateauing? >> i think it will be pretty close to the same.

once we have a next generation prius, with almost 1.7 million customers that are very loyal to that product, i think they're waiting for the next generation. so regardless of fuel price, i think we're going to be in good shape. >> let's shift gears and talk about the tacoma. you're introducing a new version of that. that mid sized pickup market has gotten more attention. so when you look at that market right now, are those people who are coming out of full size and looking for something smaller, or are you bringing people out of suvs and crossovers? >> they're very different buyers. it's much more of lifestyle buyer. they still want truck capables. we see very little cross shop between full-size and compact. >> capacity in north america. do you need to add more? >> we're getting close to the top. last year we built just shy of two million. that's with quite a bit of overtime. so we've got to really evaluate beginning forward what we need

to do. >> do you add more within the next five years? >> i think we have to take a hard look at it. we've added about $2 billion of investment. new plant in mississippi. we've also expanded kacapacity in our unit plans, transmissions and engines. so once we exhaust all of that we're going to have to look real hard at japan. >> a lot of people talking about the 2017 review of cafe standards. do we need to take that 54.5 target and push it to 2030 in your opinion? >> i think we need to take a look at what the assumptions were at the time everyone agreed to it which made sense at the time. and in light of today's fuel prices and forecasting what they're going to be in the future, i think we just need to take a very -- >> do they make sense? >> we have to make a fact-driven analysis of what that's going to be. >> jim lentz, the head of toyota in north america. reviewing the cafe standards and whether or not 54.5 miles per gallon by 2025 should be pushed

out or brought down that's getting a lot of attention here in detroit, especially with gas at 2:13 a gallon national average. back to you. >> all right, phil thanks a lot. more from phil and detroit a little bit later on. a very rapid descent in stocks. oil threatens to fall below 146. back in a minute. hi. jon and pete najarian here. the popularity of options trading has skyrocketed. but we still hear from viewers every day who don't know how to profit from them. so we wrote an entire book

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time for cramer and stock trading. >> we know oil's going down, because oil. what we didn't expect was that san disk would preannounce. this is a flash memory. and it really was a little bit -- let's say frightening to people. it mentioned that retail was weak. now maybe people will come up with new ways to do flash. maybe if you have an iphone you don't need the certain kind of flash. but that's what's causing all the pressure. it just doesn't matter. sandisk, micron. they're all rolling over. might be some problems in flash. wow, are there problems in flash. >> what's on "mad" tonight? got klaus.

>> we have klaus. we have one of these companies in neurology. everyone felt that this thing was going single digits. he called me, he said jim this thing's for real. well, it sure was. >> those are good gets. we'll see you tonight, jim. "mad money," 6:00 p.m. when we come back john lechleiter with the dow down 145. don't go away.

♪ surprise. welcome back to "squawk on the street." isle carl quintanilla with sarah eisen, simon hawks, david faber. dow is down a very quick 139 points, as oil took a very fast trip to the downside. now almost to the $46 a barrel. on top of that tiffany warning today the stock falling sharply today as they lower their annual forecast after a decline in holiday sales. a lot more in just a moment. >> but first, let's get to our road map this morning. warren buffett and 3g capital have worked together on big deals before so what could be

their next target? we are naming names for you. plus one of the biggest names in retail gives us his reaction to the holiday season. the ceo of caruso affiliated will join us live. we will be speaking with ford's ceo mark field in a first on cnbc interview. coming up later on, an interview with the ceo of eli lilly, john lechleiter. we'll talk about some patent expirations live in just a few moments. the dow down 149 points. goldman slashes its three-month forecast to $41 a barrel. goldman saying west texas crude will need to stay near $40 a barrel for most of the first half of the year before shale investment in this country is cut and the market attempts to rebalance supply and demand. joining us now is bob dole and bill stone of pnc asset management. bill, the ferocity and speed of

this is quite astounding. >> yeah and i think that's what's probably scaring the markets as much as anything. i think we all worry about what cracks does it uncover, and with the speed, you know that may, in fact -- there may be a few things that happen. and are we missing something with the global demand falling faster than we think it is. >> you're raising some questions there. what are the answers to them? >> you know i don't think that it's -- i think a lot of it is the supply side. i don't know why it took so long to kind of hit everyone's radar. i don't know, at least the market's radar that we were producing so much oil here in the united states. so i think it's perhaps -- i think we'll overdo it here on the downside for oil. but in the end it will end up being a net positive. >> yeah let me pick up that point with you, bob. we have -- the u.s. equity strategy for goldman's, actually speaking today at a conference

in london. on that broader question he says it absolutely will lead to higher margins. it will lead to higher earnings. take a listen to what he said a few months ago in london exclusively with cnbc. >> lower oil prices lower profits for u.s. energy companies. no surprise there. it is a positive relatively specifically for the consumer. almost like a tax cut. lower the gasoline prices lead to more consumer discretionary spending. it's also important for industrial companies, such as the air transport companies. or the logistics companies. >> that's a static analysis of what's beginning on. and actually, can the companies hang on to these higher margins, or do they have to cut their prices? do we go into general deflation with all that that means? >> i don't think we'll go there. i think the central banks of the world have done lots, especially here in the u.s. to make sure that doesn't happen. look, there's no question this is negative for anybody that produces oil or related to it.

but the positives far overwhelm that. my view is the problem is the timing. the negatives hit quickly, and the positives take more time. that's what the market is struggling with along with will there be a credit problem somewhere else. >> so as we enter this quarter, this is the smallest quarter on quarter earnings growth that i think the market is expected for six years? >> correct. and a lot of that is because of oil. non-oil parts of the s&p 500 earnings will be good but there's a nick coming from the dollar as well. that's why you have to focus your u.s. investments on companies that get most of their business from the u.s., where earnings are still going up nicely. >> so what do you like given the dollar hit outweighing the benefit from oil? >> it's hard to thread the needle. health care, although there are some dollar hits there, but it is mostly domestic sector. selected technology. you've got to again, pick and choose. technology can get there without price increases. that's what health care and technology have in common.

in the defensive sector sort of a pair trade, long telecomm short utilities. >> you don't think investors need to take advantage of those high income dividend paying utilities? >> what do you think, bill? >> it's similar in terms we like health care a lot. another spot to think about was a more domestic focus, the financial sector. we remain having some -- in particular some allocations. they have been phenomenal again so far this year. i think it's the play on one. while we think rates will go up probably as much as you might otherwise think. and secondarily, such a domestic focus. >> obviously the market may make some room for that.

are you alarmed that treasury yields are now so low and flattening at the long end, which to many people is a red siren that deflation is on the way? or can the united states continue on its own the big ship sailing with growth and with prices rising? >> i guess both. i'm obviously concerned in the sense that i'm still shocked at how low our rates are here today. i think it is the global world. look at the u.s. and you say our core inflation we're going to get more readings this week is likely to be 1.8% year over year. so no deflation here. even in europe, the core prices that will get the final numbers this week don't look that bad in the sense that it's more their headline. so i think we're all right there, and i guess in the end, the low rates should end up being another boost to the u.s. economy. >> and you're nodding furiously. we should mention that the

employment report on friday was great, except for the fact that wages were falling. >> correct. so i think that's one month, look at the prior two months and i think we can't do it yet, but look at subsequent months. i think there will be three inflation rates, at least this year, and therefore conversation will be very confusing. headline inflation, thank you oil, will fall. core inflation, relatively flat. the employment cost index, wage inflation. i think starts up. so when you talk about inflation, we have to be real clear which one are we talking about. they'll all be very different this year. >> and still an optimist. >> yes, sir. >> good to see you. >> thank you. >> bob dole joining us there, and bill stone. thank you beth have a good week. france is ramping up security measures after last week's attacks in paris. hadley gamble is there with us live for an update. hadley good morning. >> reporter: good morning. it is a heightened terror alert for the sixth day here in france. and we have new information for you on the woman that french

authorities say was involved in last week's shooting. state-run media has just released some video purporting to show the woman passing through the istanbul airport. you can see her wearing a whitehead scarf. apparently according to turkish authorities, she was entering the country on january 2nd and now they believe she wasn't even in france during the attacks of last week. you have to also remember that france on this heightened state of terror alert has brought out 10,000 security personnel. they've deployed them across the country to what they call sensitive areas. they're also making a big priority jewish schools as well. they're very, very worried about the threat to jewish businesses, jawish ish jewish schools. also attorney general eric holder here yesterday. he was talking to counterterror officials, talking to justice officials as well. they were talking about the security situation. they've decided this is a global threat that requires a global response. he announced that the white house is beginning to be holding a security summit that's

beginning to be on february 18th, and we're going to hear more about this from john kerry, who is expected to arrive on friday. now, a bit of a bright note. the website of "charlie hebdo" is saying they're going to publish an issue on wednesday, as usual. so a bit of a bright note out of paris. back to you. >> hadley gamble in paris for us this morning. we mentioned that tiffany warning at the top of the hour. not the only big one this morning. dominic has more. >> this morning, sandisk shares very much a focus. the stock is plummeting down by about 10%, 11%. after the company said fourth quarter sales would come in below its prior forecast due in part to weaker than expected sales of its retail products, and also flash memory products. it also set adjusted gross margins, profit margins were going to be about 45%. also lower than its prior forecast. those shares, you can see down by 10%. also rival micron falling in sympathy down by about 4% 5%

as well. when we come back eli lilly ceo john lechleiter tells us how he plans to overcome these patent expirations. he's going to join us live for a first on cnbc interview when "squawk on the street" comes right back. i've been called a control freak... i like to think of myself as more of a control... enthusiast. mmm, a perfect 177-degrees. and that's why this road warrior rents from national. i can bypass the counter and go straight to my car. and i don't have to talk to any humans, unless i want to. and i don't.

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this year's largest health

care investing event kicks off today. more than 400 companies presenting at the jp morgan health care conference in san francisco. now it's continuing to outperform the rest of the s&p 500, so will drug makers continue at this pace throughout 2015? our meg tyrell is live with a very big name in the drug making sector. >> that's right. i'm joined now by eli lilly ceo dr. john lechleiter. thank you for ginning us. >> my pleasure. thank you. >> so let's start out with the broad question about the industry, because this really is sort of the sentiments for the year ahead. this has been a tremendous few years for biotech and pharma. can that momentum continue? are you optimistic about 2015? >> i'm optimistic about 2015 but then again, a few years ago when everybody wasn't so optimistic, i was. i think we're now seeing the outcomes from a lot of this great science, a lot of the new technologies that have evolved in the last several years. so i think it's quite promising for the industry not only in 2015, but in the longer term as

well. >> and talking about eli lilly specifically, you guys have gone through a period of patent expiration. what are you most excited about in your pipeline of new products that's beginning to replace that revenue? >> as you said, in the last several years, we've lost the -- essentially seen the patents expire on four of our largest products. we're sort of coming out of that period now. we've kept a steady investment that's enabled us to launch new products. we had four major regulatory approvals in 2014. three of those products are launched. two in diabetes. two new approaches to treating diabetes. and then new cancer drug which was initially approved to treat gastric cancer. >> so you mentioned those two areas, diabetes and cancer. those are some of the areas most talked about as potentially vulnerable to pricing pressure. we're seeing this play out in hepatitis c now. how are you looking at in diabetes and cancer? >> well, i believe that there's

been a modicum of pricing pressure for some time now. i think if you go back five or ten years, we're seeing much more focus on value. we're seeing payers and patients demand more for the medicines that they're buying. i think that's a trend that will continue. i don't think it's only diabetes and oncology. i think you're going to see that more broadly, but having said that, i believe that if we can continue to bring medicines to patients that really do differentiate themselves from other alternatives these will still be able to retain good pricing. >> let's talk about your pipeline. particularly your cholesterol drug i want to talk about. jeffries thinks that the street is not recognizing its potential in this drug. they say it could be a $5 billion revenue drug. it's in a class that's not the class that everybody talks about, where you see amgen really close to market. do you think that the street is underestimating the potential for that drug?

>> i think the answer to that question depends enormously on the clinical data we expect to see the completion of the phase three trial in 2016. this is an oral medicine so it's different from the pcsk-9 class which has to be injected. it's called a cetp inhibiter and it works to affect levels of good and bad cholesterol. hopefully in a way that will demonstrate improved cardio vas you lar out -- vascular outcomes. >> simon, do you have a question? >> just to pick up on the conversation you were having about the hepatitis c drugs and the way in which some of the prescription providers have obviously decided to get tougher on some of those bigger drugs and trying to press margins. at the same time today, you have shire doing a deal schwhich obviously takes it onto more boutique drugs at the periphery for which it's able to charge

hundreds of thousands of dollars because the belief is that the insurance will allow that to go through. do you think we are incentivizing drug companies away from what is most important to society and to the periphery, where the profits may be bigger for individual boutique drugs? essentially the question i'm asking you. >> simon, it's a very good question. i think certainly, the dynamics that you describe have been an important consideration, some companies have decided on more what you call boutique strategy. having said that i think when you look at the medical need broadly across cardiovascular disease, which is still the number one killer. diabetes. respiratory diseases. cancer. and then alzheimer's, where we really don't have anything that provides a real therapeutic value. i think many companies, including lily are going to stay focused on these broader

categories. we know that to be able to compete, say with lower costs generic medicines in some cases, we're going to have to continue to demonstrate that we really do bring value with data that is meaningful to patients and payers. >> i know you're asked this all the time and you've always made clear that you're not interested in a big mega merger. but there seems to be some pressure on you guys. would you be willing to do another deal along the same size and scope? >> well meg, we don't feel any pressure to do big m&a. we did complete the acquisition with the animal health business on january 1st so we're now a top three player in animal health. i think if an tim duncan comes along that complements our presence in diabetes oncology neurodegeneration, immunology, we'd certainly look at that. but i think that type of

transaction is beginning to be on the smaller side. we remain very disinterested, or uninterested in a large-scale combination. >> doctor. lechleiter, thank you so much for joining us. >> you bet. my pleasure. >> carl we want to tell viewers that we've got bob hugen coming up. we'll be talking with him right after. >> we'll have a lot more from san francisco a little bit later. but when we come back warren buffett and 3g capital have worked together before on burger king and tim horton's deal, on heinz. so which company could the duo target next? we're discussing it after the break. i know i have an 810 fico score, thanks to the tools and help on experian.com. and your big idea is hot dogs shaped like hamburgers? nope. hamburgers shaped like hot dogs. that's not really in our wheelhouse... you don't put it in a wheelhouse. you put it in your mouth. get your credit swagger on. become a member of experian credit tracker and find out your fico score powered

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after setting its sights on the likes of heinz, a new report likes pepsi co and coca-cola among the firms that 3g capital could target next. i know you coordinated with the food team on this as well. speculation is heating up. is there any indication that a deal with 3g buying a u.s. consumer company could be coming

soon? >> there was a report coming out that they raised about $5 billion basically in a matter of seconds. took them about a week to do this. that's what the fear is all about. that's what the thought process is about. >> a lot of these companies that you list in your report, and yes, we are just speculating here, are huge. pepsi co would be at least worth $140 billion. >> i think the $5 billion is just a starting point. these guys seem to have an endless pool of funds to pull from. when you have buffett telling the world that they're the best operators in the world. you do have an tim duncanopportunity to pull in much more. >> at 140 plus a premium, let's call it 180 billion. even if they were to bring in another 30 billion in equity you're still talking about an amount of financing that we've never really seen. be more realistic for me if you will, about what you might see from 3g. given first of all they don't go hostile either and they would want a partner. what would make more sense in

terms of size? >> so very fair. i think pepsi and coca-cola is a little bit of a stretch for them to do, but not impossible. >> you really think that's not impossible? i have to argue that i think it is. >> i think -- look i think every successful deal that we think is the best deal ever, there's always one that tops it. >> do you understand the amount of debt financing you'd have to raise? and the amount of equity capital to put up against it. i can't get there on the numbers for those. >> look, i think it's tough. i think if they can raise much more capital they could do it. this is not a $5 billion capital, if they do more than that. your point, in terms of the practicality. we listed a bunch of other companies. campbell's comes up. kellogg's comes up. those are smaller -- >> it's still enormous. >> it is. i think these guys can certainly do it. they have an endless pool almost. they raise $5 billion in a week. >> it's interesting because of the international exposure. some things specifically that warren buffett and 3g have talked about wanting. is that why it's on your list?

>> i think it's part of it. i think they think about how these guys operate. what do they do? they go in and why consumer companies are so important is they want to have volatility being very limited. they go in and cut baunch ofa bunch of costs. so if you have emerging market exposure, if you have outside the u.s. exposure if you have consumer exposure, you don't have a lot of volatility on your top line so you're really trying to cut the cost base. >> the other common factor here is that all these companies are challenged when it comes to growth, when it comes to collecting with millennials. look at campbell's. look at the decline in cereal consumption. >> i think the world of consumers is struggling from a top line perspective. it has to be more about the bottom line. these guys do it so well but they really have to be a part of this. >> if you had to choose one, who is the most likely candidate? >> i think right now in terms of order, we'd probably say mondoleeze. >> i want to come back to 3g.

they get lauded for their ability to cut costs but does there come a point at which it's too much? we've watched times -- i know the margins are up there and certainly it's gone quite well. but i've heard so many of these stories through the years. these guys do it better. they do it better. and eventually they don't do it much better. >> i think that's fair. i think there are limits to this stuff. i would say heinz, 700 basis points in the past year almost. avi with 16 points. this is kind of a spectra over the consumer world. all consumer ceos are asking -- part of the reason we wrote this report -- what do these guys do? i'm going to 3g myself before i get 3g'd. it's become a verb. nobody knows where they're beginning to strike, so they're acting a little bit differently. >> is that what coke is doing? are they 3g'g themselves? >> to an extent. they'll say we're not going as

far. >> come on coke is nowhere near that. come on. whole different order away from what 3g would do. >> you're right. we've been talking something more like a $4 billion cost cutting plan. if 3g were in there, it would be double. there would be more risks on the top line perspective for sure but coke still has to be going entity for a long time. >> thanks for joining us. a couple analyst at sanford and bernstein. tiffany shares a tumbling after disappointing holiday sales figures. what should you do now with the stock at 91.70? let's have a look at these markets. the lows on the dow, currently down 95 points as oil slips again.

have you heard of the new dialing procedure for for the 415 and 628 area codes? no what is it? starting february 21, 2015 if you have a 415 or 628 number you'll need to dial... 1 plus the area code plus the phone number for all calls. okay, but what if i have a 415 number, and i'm calling a 415 number? you'll still need to dial... 1 plus the area code plus the phone number. so when in doubt, dial it out!

here are the stories we're watching. amerisourcebergen hitting a new 52-week high. the drug wholesaler entering the animal health market by agreeing to acquire mwi veterinary supply for $2.5 billion. tenant health care among the biggest losers on the s&p 500 this morning, down about 6%. the hospital coming in below street forecasts. and lululemon is up almost 6%. the yoga wear retailer citing what it calls improving trends

and strong holiday results. luxury goods retailer tiffany cutting its guidance after a disappointing holiday season. are these signs of cracks in the high end? brian neighay gal joins us this morning. >> good morning. >> doesn't seem to be dragging high end retail names with it. do you agree, and if that's true, why? >> i think this is more of a tiffany issue. tiffany is a great company. a dominant brands in the u.s. and worldwide. holiday sales weakness is not necessarily new to tiffany. we've seen from the company weaker holidays in the past. i think this once again, reflective -- i don't want to say executional missteps, but challenges through the holiday selling season. >> what's happening in the americas, and do you think there's any sense to this notion that the strong dollar is actually hurting tourism here and foreign buyers going into the flagship stores are buying

less? >> i think there's some truth to that. i spent a lot of time walking stores this holiday season. but it dunn take much in terms of tiffany's to move the needle. you could have less foreign spending in the united states or in new york and other key markets. we did see weaker u.s. sales, so i think there is some truth to that. >> i'm just looking at the stock price. over the last two years, it's rung up about 70%. it's priced at the higher end of its valuation range. what do you do? do you give up on it on this funk that they're see flg theing in the u.s., especially with the strong dollar set to continue this year? >> i do not give up on it. i was talking to my clines this morning. if you're a short-term investor looking for some kind of quick bounceback in tiffany. i think the management team was smart today. there's significant tail wind. despite a weaker holiday. i think tiffany continues to

benefit significantly from lower input costs in the form of gold and silver. and we've also seen evidence -- even today's weaker report we've seen evidence that the new merchandising at tiffany's, specifically the tiffany p line is resonating with consumers. >> the thinking on differentny, at least on the sell side for a long time has been they've got to stop being the chain you go to only when you're asking someone to marry you, or on an anniversary. are you seeing any signs that the emphasis on a holiday, or an engagement is beginning to spread out? >> well i'll go back to the tiffany t line. that's a line that the company introduced just back in september. and really, that is geared much more toward the fashion oriented customer. that is a step in the direction for tiffany. >> they saw 415 to 420. estimate was 430. where were you? >> we were up within the

previous guidance. the new guidance was now below what we thought they were beginning to earn. >> brian, just a bit of context around this. isn't jewelry as a category actually doing extremely well at the moment for a lot of retailers, and tiffany is arguably the odd guy out? >> that's true. whatever data we look at is measures of spending which has been outperforming most other categories particularly in the fashion side for a while now. so that's what makes this report from tiffany today even more surprising. because you have had strength elsewhere in jewelry. >> one of the big stories of the morning. thanks for coming to the phone. the national retail federation's big show is under way here in new york. there's no shortage of innovators and industry leaders. courtney is there. she's got a first on cnbc interview for us with rick caruso founder and ceo of caruso affiliated, who's been

recognized for inventing and reinventing the traditional shopping mall experience. take it away. >> that's absolutely right, sarah. thank you for joining us rick. last year at this very conference, you made some pretty brazen comments and said unless retail really reinvents itself the malls as we know them today will be extinct. you still believe that to be true? >> i do still believe that. i think what you've seen over time is that retailers are getting much more engaged in the experience. i think the challenge that the indoor mall has is creating that experience. because people want to be able to be engaged. they want a great experience. and retailers need to express their brand in order to do that. difficult to do the way they're operated today. i do believe that brick-and-mortar is in a resurgence, and i think there is opportunities for great growth in brick-and-mortar. you see many more online retailers converting to brick-and-mortar. i think great retail is beginning to have two channels. it's going to have a great experience online, and it's going to have a great experience in the store. that's the future of retail for me. >> so what's the key, if there

is a resurgence and i'm a retailer that has a fisz callphysical location how do you grow? >> let's take a couple examples of retailers who i think are doing a great job. we saw retailers on our properties up double digits. one great example is restoration hardware. the whole experience of walking into that store, it's emersive. it's inspirational. it sort of causes you want to want to buy more product, right? that's what retail has to do. it has to engage you. i think it has to be relevant. it has to be perm. people need to know you. you have to be much more of a shopkeeper than a retailer in understanding who your customer is. when you do that success is great. we saw this year nordstrom up double digits. we have a 20% swing in growth above the indoor malls, based on what's been reported. so we're up double digits in foot traffic. the mall has reported down about 8%. so there is a path to success on

this. the right retailers are getting rewarded for it and i think there's going to be a lot of success in 2015 because you start seeing people engaging in much more differentiating their product, curating their product. >> nordstrom has always paid attention to customer service. i believe sarah has a question. >> i think i've lost my ear piece. >> good to see you. based on your conversation here about shopping centers, do you see a story of two different shopping centers? in other words, inequality is a huge problem. i know ben bernanke was there at the conference talking about the destruction of the middle class. you're in the high end. what kind of gap do you see between your kind of high end shopping centers and the lower to middle income shopping centers an cord by the traditional department centers like jcpenney and sears, which are struggling?chored by the traditional department centers like jcpenney and sears, which are struggling? >> i think we're in the people

business. we serve a wide demographic. we have every ethnicity, every demographic on our property and we're trying to serve every one of them. the difference is no matter what the demographic is no matter what the classification is, people want to have a great experience. and i think if you look historically into great retail whether years ago it was sears, whatever the case is they always had retail that connected with the consumer and connected with the guest. many of these stores have lost it. and they're in a commodity business. you have to differentiate your product. probably more difficult to do at the lower end of the product range, but it can be done. and look at it with an h & m. look at it with top shop. they've taken a market, they've differentiated it added an experience, and at top chef their sales were dramatically wonderful this year. so it can be done. >> so rick there are, according to green street advisers there are about 60 malls across this country that are on the verge of

closing even as we speak. a lot of them will seem desperate in what's happening and the environment in which they find themselves. how can they drive to a better place? i mean how do you organize that? who initiates that or is the game effectively lost for them if they're already at that stage? >> well, i think some of them are lost. i think some of these malls, they don't sort of fit the circumstances anymore. and that's what i predicted a year ago. and so some of these malls are going to have to get readapted and reused. they'll probably get torn down and maybe it becomes housing, maybe something else. i think the better malls are going to do fine. but even if you're a better mall you have to change the experience of walking into a mall. the problem is they have just become sort of this arcade or circus of retailers that doesn't differentiate anything and they become destination oriented. people go there for a certain shop and then they leave.

you can't deny the fact that retail on great streets and in great outdoor centers that engage a couple have a human experience are doing very well. and the malls need to look at that. it's up to the ownership and the developers to change that experience, and work closely with the retailers to differentiate themselves. >> just to wrap it up. if we think about the consumer, bernanke today said that consumers are probably as good as they've been since 2006 or 2007. but it took us a long time to get there. do you agree with that sentiment? >> i do agree with that sentiment. i think people today are much more confident. i think there's opportunities for them to grow their income. saying oil price is down which adds to their disposable income. i think there's just a feeling that you're doing better in the economy. but clearly, the disparity that we have in wealth needs to be addressed. there's no doubt about it. but i don't care what your economic classification is. you still have the same problems. you have a shortage of time. you want a great experience.

you want to be able to connect with your family. i think as the world becomes more complicated, there is a resurgence of neighborhoods and local shopping and feeling connected to a community. and the retailers that tap into that i believe, will be very successful. if you're singular if you're bland, if you can get lost with the mix, you're just not going to succeed. that's the problem with the indoor malls. you can walk into many indoor malls in this country, you have no idea where you are. >> thank you so much for joining us. i hope that we'll be able to continue to check in with you over time. i hope your conclusion doesn't come true and that retail does find its way. >> i think retail's going to be great. brick-and-mortar's going to be great. >> great. thank you so much. become to you, sarah. >> thank you courtney for bringing us that conversation from the national retail federation's big conference. coming up on the show after a controversial rebound, the f 150, winning truck of the year at the detroit auto show. mark fields will be joining us live first on cnbc when "squawk on the street" comes back. elity green line and you'll see just

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welcome back to "squawk on the street." check out shares of s.a.p. the business software provider. the company just reported better than expected fourth quarter preliminary results thanks to its cloud computing business strength. the stock up by about 4.5%. rival oracle is also coming off of its lows. you can see they're up by about half a percent overall on the day's trade. back over to you. >> thanks very much,dom. the f-150 beating out other brands for truck of the year. phil lebeau joins us live now from detroit with ford's ceo. phil? >> thank you simon. i am joined by mark field. and lo and behold, we're in front of the f-150, which is the north american truck of the year. as we take a look at some of the shots of the f series and what it has to bring to the table, there's so much talk about the aluminum panels and whether or not people would think it was tough enough. are you seeing any resistance from your core customers?

>> absolutely not. we're launching the vehicle now. it's shipping to dealerships. it's actually the fastest turning vehicle on our lots right now. >> how long are they on the lot right now? >> less than five days. customers are coming in, they've been waiting for it. they know this is the toughest smartest most capable f series we've ever produced. and they love the design of it. it's going right out the door. >> are you starting to say okay this concern about aluminum being weak and not being strong enough, is it time for that story line kind of to die? >> well, we're starting to see customers use the vehicle every day as they're doing jobs in the field, etc. and it's proving that they've now redefined tough. so we knew when we produced this vehicle it was going to be revolutionary. and sometimes there are skeptics along with that. but that's really bleeding away right now. >> let's show some video of what you introduced within the last couple of hours. this is -- for people who love to drive cars your performance models. a new gt. you've got new performance models. that market seems to have grown within the last five years.

>> well it's growing. we're really using our new super car to use it as a showcase for all of our innovation and technology. all the things we have done with ecoboost engine efficiency what we've done with lightweighting materials, what we've done with things like aerodynamics. and we're using the new gt to kind of showcase all of that. >> are you finding that the people who are buying this are saying yes, there's more with autonomous drive and driver assist features in cars but i want the old fashioned feel of driving a car and pushing it to the limit. >> well there's been a -- we have a spectrum of customers, and our approach as a company is have a full lineup of vehicle, serve our markets with that full lineup and everything from the joy of driving to semiautonomous vehicles to the fully autonomous vehicles that we're working on for the future. we want to be there for customers when they walk in. >> and when we're looking at the cafe standards, these are getting a lot of attention here. is it time for the industry and for america to say maybe 54.5

miles per gallon by 2025 is not going to work and we need to roll it back? >> well it's an important question to ask. because key to that is making sure that customers really appeal to -- they're attracted to this new technology. and what we're -- and they see the value for it. >> but it will cost them more. >> it will cost them more. so clearly when you look at electrified vehicles still a low level of adoption by consumers. and that's why the midterm review is so important, because we're really looking forward to sitting down with the government and looking at the feasibility of those requirements, and what is the impact on the customer on the cost on jobs. and we're really looking forward to a very healthy discussion. >> yes or no what's your gut say in terms of whether 54.5 gallons has changed? >> listen, we have that out as the requirement, we're working towards it. there's lots of challenges there. we've got everybody focused on it. but the key is making sure that we work collaborateively on the timeframe. >> mark field, ceo of the ford

motor company. we've been talking all morning about this cafe standards. it's getting a lot of attention here. but also for ford, the truck of the year. that's getting a lot of attention with the new f-series. back to you. >> thanks so much. still ahead, from a tech journalist who got an early peek at the apple watch, why he says it could be a launching pad for the next wave of tech start-ups. that's coming up on "squawk alley." we'll be right back. she inspires you. no question about that. but your erectile dysfunction - that could be a question of blood flow.

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stocks this morning fell right out of bed. while they are off the lows take a look at crude this morning. briefly below $46 for the first time since 2009. goldman cut their price target for 2015. we have more. >> it was 5% crude oil prices. but the oil companies as well are all plummeting across the board as they fall below that key $46 mark. chevron, the two biggest drags right now on the dow industrials. anadarko down as well. s&p 500 energy select sector spider is one of the weakest issues today and leading the way lower overall. you have new field exploration

and pioneer natural resources. all of them have been big drags ever since june of last year. back over to you. >> it has become a familiar story. meantime u.s. treasury stay in demand. let's get over to the santelli exchange. >> good morning. i'd like to welcome my first guest of the week charles. >> good to be with you, buddy. >> all right. let's kind of look backwards first. how did 2014 fair in the huge world of etfs? >> we saw massive inflows in december into equity etfs. we put out a cautionary note. typically the market is suffering what it's suffering now. however, over the last week we've seen over 10 billion in outflows from u.s. equity etfs which is somewhat bullish.

>> why is that? >> corrects the excesses. the other point, we track supply and demand. we track actual share count. actual share count is down 1.8%. >> so there's fewer pickings? >> yes, fewer shares. once the excess -- you know all that money went in and no new money coming everybody wanted to be fully invested before january 1, so everybody was. there was no new money. people panicked a little. they sold. now supply and demand more money chasing fewer shares should start to work again. >> let's specifically drill down on energy etfs. huge flows but a bit counter intuitive as to how it's effected the marketplace. your thoughts and numbers. >> to me it's been amazing that the commodity saw over $400

million in inflows in the first week of january. that's equal to roughly 14% of total assets. and at the same time the first week of january, before today, the commodity price of energy dropped 7%. so -- >> yeah, i think there's a lot of bottom fishing. >> well, they're catching falling knives and it's pretty dangerous. >> i think you're right on that one. commodities could be dire. they might price much higher but the whole process has to play out. with regard to what's going on with the jobs report specifically wages, in the last 36 seconds tell me if you think that was a one-off or do you think wages are something to consider on the soft side for the remainder of 2015. >> well, we track realtime macro economic data. our data including realtime wage and salary shows a sequential

decline. this is not a sustainable growing economy. interest rates are going to keep going down because the u.s. economy is not growing. in spite of free money all we have is tremendous asset inflation and a no growth economy. >> well, charles, we'll leave it on that note. i'm not sure it's a good one or a bad one. thanks again. simon, sarah back to you. >> let's send it over to jon and see what's coming on on swal. >> yeah, if you care about apple and care about the apple watch turns out the apps for that watch could have a big part. we'll talk about that. also amazon a big winner last night on the golden globes. and finally jesse jackson here to talk about diversity in tech

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we were following the breaking news out of paris. chuck from stanford actually nailed it right on. 252,000 was his guess and that was what we saw in terms of jobs created in the month of december. congratulations chuck. >> cnbc on mega millions. >> one of our most devoted twitter followers without a doubt. good morning. it's 8:00 a.m. in los angeles. 11:00 a.m. here on wall street. "squawk alley" is live. ♪