auto maker may not be profitable for another five years and alibaba wants to take over the retail world. reports say the company may seal a deal to link two of the fastest growing e-commerce markets, india and china. it's wednesday, january 14th 2015 and squawk box begins right now. >> live from new york where business never sleeps, this is "squawk box." >> good morning everybody. i'm becky quick. we do have some breaking news coming in right now. yemen's top al qaeda leaders claiming responsible for last week's charlie hebdo massacre. in a video this morning his organization planned and financed the attack. this is a story we'll be monitoring throughout the morning. >> we have three big business stories we're watching this morning. earnings season kicking off.

we're off to the races now. here's what's happening before the bell. quarterly results from jp morgan and wells fargo. the economy also front and center and topping today's calendar weekly mortgage applications. import and export prices. business inventory and the feds beige book plus we have a little bit of focus overseas on the ecb. top european court giving a green light to a bond buying program and that's heading out to speculation that we'll see more stimulus out of the euro zone when they meet next week. take a look at futures at this house. the dow not so great. dow looks like it would open down about 57 points down. nasdaq would open down about 11 points down and the s&p 500 would open down off about 6 points. >> check out what could be the chart of the morning. something we don't mention that frequently perhaps. maybe we should mention more copper because it is a weather for global economic activity.

prices plunging to the lower level in half a decade. prices down as much as 8% at one point this morning. the drop is worth mentioning because of the price of copper as i just said is a bell weather for global growth. you would think when commodities get weak they all kind of move together and copper would move as well. >> although we have been saying the oil price moves have been because of supply. >> yeah but in the back of our mind we have been asking questions. >> yeah, the metal is used in a variety of industries from construction to consumer goods. we'll talk about some of his comments at some point. >> frightening. jeff who by the way correctly called the decline in interest rate price. >> also i noticed where's the ten year today. i didn't look at it this morning but that low is like 186. we're getting close. we were getting close. >> definitely tested it yesterday. >> but i love simplifying things to where it's probably not exactly right. every incremental job in this

country has been fracking basically. >> shale. >> 35% of nations capital expenditures. >> all the new jobs because of the energy boom cap x goes to zero. >> may take awhile before that shows up in the line. >> but out of all the ways that we thought what will the next real problem be i don't have one person saying oil plunging the $40. >> we talked about it as the greatest thing that ever happened. >> there was probably a five or ten year bubble in oil and exploration and capital expend expenditures on oil and everybody thought we can't go wrong. we'll always make money. even general electric got cut. that stock hit a low since 2013 yesterday. general electric became 30% -- i don't know what the exact number is. >> talk about energy. there are official predictions

from the united states saying that they do expect to see production increase in this country from 9 million -- >> why would they tell that salmon colored paper that. >> i don't think they just told them. this is an important global story. if we go from 9 million to 9.6 million barrels and day and opec hangs in there with 30 million barrels a day -- >> when they put the money in to do it they can't cut back and it's 30 years that it lasts. >> right. >> when they put the money in they go hey no matter what we do we will be increasing production. >> so you're part of the camp that oil prices going down are a great thing for america. the $120 billion cost savings. >> that's going to be awesome for the world but there's a lot of people on the wrong side of that trade and that are leveraged and are going to say we can't pay the interest or the principle. >> starting to rub his hands together a little bit.

here's where you can play. >> jp morgan i'm draedeading that. >> less than an hour before the earnings come out. >> stuff in there. being the person that has to decide. it's hard work. it's hard work. >> you may get another one. >> let's take a look at stocks to watch. tesla shares were slammed. i was talking to a guy yesterday mad at me. that's what scares me when stocks get to the point where if you say anything -- >> he was mad at you for saying tesla. >> saying lower oil prices could effect tesla because people don't buy tesla to save money on gas they buy it because they love the car and it's fast. it's different than the volt. different than the gm volt. >> 100%. >> i think they sold like two last year. that may go down to one or zero.

i'm sorry. elon musk speaking in detroit. china sales were unexpectededly weak. and they may not be profitable until 2020. they hike the electric car output by 2025. >> making electric cars to the mass market is an extremely important thing so even if people are negative or say we're going to fail i don't care. i'm still going to do it. >> we'll talk more about tesla with an analyst in the next half hour. another stock we're watching alibaba buying a controlling stake in digital marking firm add china. terms weren't disclosed. in other reports alibaba is said to be in discussions with an indian internet firm to invest in an e-payment service to link india and china together and check out the shares of gamestop, the world's largest video game retailer. it's narrowing it's fourth

quarter sales forecast after december comps rose 4.4%. we cannot convince you. >> i don't have games in my home except for our games on the ipad. so i would think it's blockbuster. >> brick and mortar i'm a brick and mortar. >> prediction in five years, five or ten years every online retailer will also have brick and mortar stores. >> right but you need to feel the fabric or whether it fits you know. >> with games you don't. >> when's the last time you went to a music store. do you remember buying music at a store anymore. >> i know. when's the last time you went to a photo -- >> there you go. games are more in that category. they haven't figured out a way -- do you have people testing the games at the store? >> you're returning -- i guess you could do that. >> trade them in. >> you can trade them in

probably. >> i think it's just a matter of how quickly broadband speeds catch up. there's so much data. >> a huge chunk of it. >> maybe over a 10 or 20 year period. maybe in the immediate term get back some cash and it will be great. >> all right. >> i hope they do great. how about that. >> just keep us updated. i've never waiververed. >> what about now? still short. >> 45. bottom it between here and 0. we'll make a bottom. >> let's get a check on the markets this morning. the futures are under a little pressure here. the dow futures are down by 60 points. s&p off by 6.5 and nasdaq down by 11.5. that's not to say anything about where you'll see the rest of the day if you take yesterday's action as any example. yesterday the dow was up by about 300 points after the open but gave it all back and more at one point it was down 425 points

from its session high. all of those folks predicting volatility have been right. we're seeing it just about every trading day of this new year. if you want to check out what's happening in europe this morning at least at this point europe is also looking at red arrows. the biggest decliner is the ftse down by 1.3% and the dax is off by .3 of a%. korea's market was slightly higher. japan was closed since we're not showing the nikkei there. also oil prices crude oil yesterday hit a nearly six year low of $44.20. that was as the uae said that it would not cut output. it's sticking with all the opec tough talk about what they're going to be doing. this morning wti is down by .10. it did swing after hitting the nearly six year low.

settled down by the end of the day and then turned positive and evening trade. let's look at the note here in the united states. the yield at this point is 1.879%. testing those levels again from the shock lows that we hit in october and then all the way back to may. >> you were there. >> yeah right there. >> and then finally let's take a look at currency and then gold currency you'll see this morning that the dollar is up against the euro. euro at 11748. this is on the idea that we're going to see big moves from the ecb later this month. that court clearing that decision to allow them to go ahead with what they were doing. that was seen as the one potential road block. look at what's happening with gold and you can see at least right now gold prices down by about $6. 1,000, $1,228 $1,228. >> this has been a great buy if

you got in a month ago. >> let's tell you about the world bank. they're cutting their 2015 forecast for the global economy blaming stagnation in europe. lots of speculation ahead of next week's big meeting. sema joins us now from london with more. >> hey, andrew yeah a busy day here in europe. some news that markets are moving on right now top judges in europe today said a potential bond buying scheme by the ecb is legal and necessary. basically clearing the way for the european central bank to launch sovereign bond buying at that next governing council meeting on january 22nd, next thushz thursday. the euro has fallen to a level not seen since 1999. currently trading at or around 117. european markets trading down across the board but there's still a lot of concern that mario draghi will receive push

back from policy makers plus whether full blown quantitative easing is enough to revive the euro ifs the central bank only decided to buy aaa rated sovereign bonds. a lot of speculation ahead of the meeting next week. guys back to you. >> thank you very much. we have been telling you about oil prices. they don't seem to start slipping and sliding away. they have been dragging stocks down in the process. the dow having it's biggest reversal in six years rising close to 300 points before finishing slightly lower. joining us is a partner and also cnbc contributor. covering equities today we have the chief investment strategist and joseph who is principle and investment strategist at bessemer trust. welcome to all of you. thank you for being here. let's start talking oil. we were looking yesterday at 44 and change. now what. >> we're going to go lower it looks like. we broke long-term support.

that's the line drawn off the 2006 lows. i think on the financial crisis low is 33. i think i talked to you about the last time i was here. we have to go at least to clean this chart up and move up and where we can go from there. >> 33 at at least potentially lower than that. >> yeah despite the recount cuts we have been seeing we had more riggs in service this december than last. as you saw from the eia report yesterday from the government the production is still going to increase for awhile. not decrease despite the big cut so there's more supply coming. >> i don't think that $100 oil is reflecting supply and demand but is $33 oil a true reflection of supply and demand at this point? >> we're getting into a territory starting to represent something of an overshoot and this commodity sell off is starting to worry me. you reference the fallen copper prices. they're down by 15%. live cattle was down.

limit down yesterday. beans are about to break $10 so there's starting to be worry. iron ore and coal have been decimated so there's more of a concern on the demand side than previously to this point. >> joe what do you think about that -- >> oh, well -- >> not you. >> you don't care. >> can they go lower, yes, zero probably unlikely. oil prices are unsustainably low and at the end of this year you'll probably see oil prices higher than at these levels. this is creating a ton of volatility in the equity markets but we look at this as a net positive for an oil importing consumption driven economy like here in the united states and we're trying to capitalize on it. >> even though we pointed out this morning some of the concerns that this is a job creating mechanism. 35% of the nation's capital

expenditure is in the sector. >> it's going to have an impact on jobs especially those related to the energy sector and you have to look at certain regional economies like texas and north dakota but if you ask yourself what drives u.s. economic growth you have roughly 2-thirds of it coming from consumption and a lot of the spending number versus been encouraging. we're now seeing estimates for fourth quarter gdp come in with a handle. stronger economic growth in the first quarter as well. despite value lagss in equity markets at these levels this is really going to be -- >> how long does it take it to shake down where we understand and appreciate how many people lost jobs and what the true impact of this will be? what quarter do we figure that piece of it out? >> it's going to take time. not only is there the direct impact from oil prices falling off, we're seeing it in the energy sector but there's the second derivative and third derivative and that's part of the reason you're seeing this volatility pick up in the market. everybody is trying to wrap their minds around it and this is where you see a clear

differentiation between those focused on the near term trading activity and trying to make a quick buck and those looking to invest for the long-term. >> let me ask you one thing that john just mentioned when you look at all the different commodities coming down copper beans, cattle does that worry you about the demand calls for this? do you think that this is out of whack or do you think that things look good in the united states but other places in the world are having a rougher go at it and it's going to catch us at some point. >> you have to look at the global markets. that's a sign of deflation but i think the stock market is having bargain sale right now. i think the global economic story is sustainable. the u.s. economic story is intact. and if you look at right now the fear is that corporate earnings. so i looked at corporate earnings and i understand why energy sector went from 8% to minus 20%. but for the life of me i don't understand why consumer discretionary got cut in half from 10% to 5%.

it should have been doubled to 20%. so i think this is really overdone and i think there's fear out there and an opportunity for investors. >> do you think we'll get more clarity starting earning season now and hearing from these communities. >> it's the most important barometer right now and i expect that earnings will come down from september 30th it was 9% and now it's 0.5%. >> s&p earnings. >> s&p earnings for 4th quarter 2014 and i've never seen it ratcheted down that magnitude at that pace ever and i think it's overdone and it's an opportunity for investors. >> joe do you agree with that? we do want to hear what you have to say. >> not now. it's deja vu all over again. every quarter we start off and everybody is worried about

earnings season and ultimately we see companies walk over these consensusments consensus estimates. you'll probably see eps growth with a majority of companies feeding estimates. >> you could be looking at the yield going down as far as 1% for u.s. treasuries. he's saying why not chase what's happening in europe what's happening in japan. you're looking at potentially oil falling to $40. he's laying out scary scenarios. if those things come true do you still stand by what you think of stocks? >> i do. if you look at what's happening in the bond market with interest rates we talk about treasuries and we continue to see them come lower and lower. a lot has to do with expectations on what they're going to do next week. a lot has to do with inflation expectations. think about what oil price versus been doing to inflation. as oil prices begin to turn around at some point this year i think it's going to happen. oil prices will probably rise. what happens to inflation

expectations and what then starts to happen to yields. >> you never want to sell in front of an ecb action. that's really just next week. january 22nd. i think it's going to be a blockbuster. there in the corner right now they have to. it has to be a big maybe half a trillion euro. any time the ecb has done monetary stimulus the markets have taken off. i wouldn't be a seller before that meeting. i think it's going to be very positive for the markets. >> gentlemen i want to thank you all for coming in today. >> thank you. >> okay. when we come back another michael lewis best seller is now headed for the big screen. it's not big -- well guess what it is. plus a taylor swift fan's dream coming true. first as we head to a break here's a look back at this day in history.

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if you have a furry friend in your home or a couple take note, today is national dress up your pets day. >> otherwise known as torture your dog. >> that's a famous famous animal right there. that's carl -- he swears it's a dog. but he has a little treadmill for it and feeds it hamster pellets and stuff. >> we're not putting him in the dog category. >> i think lucky is getting up there in the years. >> how old is lucky now? >> he's getting up there. >> times seven. what do you think? >> we need to appreciate lucky. >> he has to be 7 or 8 years old at this point. >> he's older than that.

>> he's losing his sight and stuff like that. >> he's a very cute puppy. >> he never was not a puppy. that's the thing. >> we'll talk movies. the big shortcoming to the big screen. reports say at a brad pitt christian bale and ryan goseling is set to star. it's chronicling the events that lead to the financial crisis. pitt will coproduce the film through his company. in other hollywood news is it on the front page of the financial times this morning. talking about it this is -- they at least thought this was big news this morning. woody allen headed to the small screen for the first time. amazon is landing the legend for a tv series. and he's had his own controversy. >> when did that hit -- yesterday i saw woody a lot on -- >> it happened yesterday in the early afternoon. >> it did? >> late morning, early

afternoon. >> that's why you saw him so much. >> no, i saw him yesterday. wondered what. >> now big news for amazon and big news for woody allen. >> taylor swift making one fan happy. sending her a check to help pay for student loans. the check was for $1,989. also taylor swift's birth year and title of her latest album. >> does she buy music or go on spotify. >> no, it's to help -- >> no the girl. >> be ware your local chipotle may not have carnitas on the menu. they stopped serving pork at one third of the restaurants after suspending a supplier that violated it's standards. it's the first time the company has stopped serving an ingredient. the spokesman says that the main demand it makes of its suppliers

is that the pigs are raised in humane conditions. >> not like a china style. >> not like they pick them out of the river and salvage what was left. >> people are eating breakfast. >> right they could be having sausage or bacon. anyway and a bit more food news this morning, pizza hut will start serving gluten free pies. dominos is already doing this. so the pies are not recommended yet because the pizza is prepared in the same kitchen as dough products so may be trace amounts of gluten still around. a lot of reasons people have gluten free. >> for diets. >> some people think it has something to do with people that deal with kids on the spectrum will try anything and they think that gluten. and depending on the specifics of your situation, there are

some issues with digestion and stuff. >> when we come back the story behind the big drop in tesla's stop. why investors are slamming the breaks after comments from elon musk and there's a new use for the phone booth in the big apple. there's still phone booths in the big apple. that story still ahead. first take a look at yesterday's s&p 500 winners and losers.

welcome to new york "squawk box." will you save me a seat when i come visit? a seat with height to it. >> good morning and welcome back to "squawk box" here on cnbc. the wishes keep pouring in for our big move to the big apple. that of course was ryan seacrest. i was watching g-1 the other day. >> god father. >> yeah and when michael gets picked up to go to -- he gets picked up at one of the restaurants that's gone now but they pass by just to show their new york city they show that radio city sign. it was the same and. >> yeah. >> that was filmed in the early

70s but when it was happening was back in the 40s. >> right after the war i think. >> yeah. so i was like wow right across the street. >> some things don't change. >> our names that go around on this blue thing, when does that stop? >> it's only when you can see it. >> 9:00. >> does it stop at 9:00. >> i'm sure. because at 5:00 i think my name is in lights. >> four other people on the street can see it. >> yeah the guy walking along looking for cigarette butts. but anyway i wouldn't pick one up. less than that. >> less than 3. >> yeah yeah. >> anyway tesla shares coming under pressure following comments from elon musk. phil would like to see his name in lights some day would join us now from chicago. we can make that happen back here phil when you visit us.

>> all you have to do is come here. >> i like that. i'll do that. i'll take advantage of that when i'm there. >> there's a capital b. >> there is a capital b. there's no x. but there is a capital b. do you want to hear about elon musk and detroit. >> sure. >> this got a lot of attention after hours and it's the reason that shares of tesla are under pressure. primarily because of comments made before and during an appearance in detroit. this appearance got a lot of attention because it's the first time musk has been there in a couple of years. the company should be profitable by 2020. that's when they expect to have full production of the third generation vehicle in 2017. model x suv is on schedule and on pace to come out this summer. fourth quarter sales in china unexpectedly declined musk after his appearance explained why.

>> china was weaker than expected. mostly i think because of misperception about the difficulty of charging which we're correcting and we're seeing now an up tick in our sales in china. they just weren't all that significant in the fourth quarter. the china situation is temporary and it will get corrected later this year. >> it's all about perceptions or misperceptions in china. china is expected to be huge for tesla. sales started last year. big growth expected. elon musk says his sales a third in asia and china. there could be a assembly plant in the future when they're trying to supply that market. in the electric vehicle space china is expected to be a huge location. none the less his comments about the fourth quarter decline put pressure on shares of tesla. they were down more than 10%

after hours. it will be interesting to see how much they're down today in trading but the other question that came up during his press conference, you'll love his answer to this. he was talking about future plant locations. said probably in chuyina and europe and maybe a second one in the united states on the east coast and a reporter said what about putting one in michigan some day. here's what he had to say. >> maybe mitch miff shouldn't stop us from selling cars here. >> elon musk said it would be a nice gesture if they didn't stop them from selling vehicles and maybe, maybe tesla might look at putting an assembly plant in michigan. i wouldn't hold your breath. not happening any time soon. back to you. >> okay. stick around. we'll talk to someone on the newsline. let's get to theodore o'neill.

is the tesla, are there people you believe buy that because they're frugal in terms of gas and they're doing the break even on what they pay for it versus what they used to pay to fill up a tank. i made the point yesterday that $45 oil might effect it and i got some push back from people that said tesla s buyers it's not because they're trying to save money on gas. they have plenty of money and they're buying the car because they like that it's cool looking and fast and everything else. are there any people buying that to try to save money on gas. >> no there's not. no one is buying this car to save money on gas. if you look at the price of electricity delivered to your home in connecticut, new york most of the east coast it's 25 cents a kilowatt hour. that works out to an equivalent in terms of dollars something that is about $22. so if you can get a car that

does 25 to 30 miles per hour you're already better off financially with that kind of car than you are with the model s. so nobody's buying this car because they're tieing to save money. >> what about, okay we'll talk more about tesla but just the hybrid the green, you know, cheese wedge cars that everyone is driving around. will it make it less likely that people buy those? or the gm volt at $45 oil? >> it definitely will have a negative impact on the hybrids and chevy volt that have gas here at $2 an hour. none of the people buying the s are buying it to save money. >> okay so wondering how long we're going to have republicans in the senate now and i don't know what happeneds in 2016 but can tesla count on government support forever and if they're not going to see profitability

until 2020 that's not going to get any better with republicans perhaps in office will it? >> i don't think it's going to be an issue. this is the car that has absolutely no competition and looking for bmw to respond to this. >> no, i understand but is it important for tesla to earn a profit? to have a stock price trading at almost $300 a share? >> yeah it's important for them to turn a profit at some point. absolutely. >> well it's only 2015. he said five years from now it would -- so you'd buy the stock right here even though there's no profitability for another five years. >> absolutely. no question about it. getting -- it's something less than a 2 in front of it that's a great opportunity. >> it's a shorter time frame. >> let's talk about the elon musk comments by profitability by 2020. he said the reason that he thinks 2020 is the most likely

time when they should be profitable is that's when they expect to have what he calls full production for the third generation model which will start in 2017 and they plan to ramp up production. he thinks by 2020 there will be a full production of that. he says we should be at profitability by then and in his comments he was asked how big do you want to be? he said look we plan to keep regrowing production over and over. not like we're going to stop at 700,000 vehicles some day or a million vehicles. we hope to have at least a couple million vehicles in annual production by 2025. some people heard that come men and say what kind of an estimate is that. maybe a couple of million vehicles but the point is he was saying we plan to continue to increase production. we're not going to stop at 500,000 in annual production as a target for 2020. we plan to go beyond that. >> okay but you never went to a neutral -- do you have a rating system. >> i have a $320 price target

and this is battery company that happens to be making cars at the moment. you can extend it into a number of multibillion dollar markets and that's what we're looking at to justify buying the stock here. >> but you never went from 290 all the way down. >> i did not. >> all right. theodore thank you. phil thank you as well. we appreciate it and the story will keep happening. at least until 2020 now i guess. see you later. >> all right coming up this morning, think the payphone was a thing of the past not to fast. we have the story of one company turning the street corner booth of yesterday into the hot spot of tomorrow. later quarterly results from two of the nation's biggest banks. and marco rubio will squoinjoin us to talk politics and the early race for 2016.

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that's the phone booth but for all of you millennials those were payphones and seen on almost every new york city street corner. now we're saying hello to free wifi. you're looking at photos of the new free wifi kiosks across the big apple. they're old payphones and will be pumping out free wifi. you can use them to make free phone calls and charge your cell phone. now here are people responsible for much of this and integral to the project. he's the managing director of city bridge and she is the council to new york city mayor bill de blasio. >> good morning. >> we see all of these phone

booths and they're relics. i always thought they get torn down and you decided to use them in this way. >> to make the coolest thing ever. the largest free wireless network in the world. up to 10,000 locations. >> 10,000 locations. you'll start this summer. how many will we see in the first year. >> so, well scott. >> so the contract requires us to install 500 in the first year of the contract. the first year starts in june or july of this year so you'll see 500 by 2016 mid year. >> free wifi for anybody. >> for anybody. >> paid for by advertisement. >> correct. >> paid for my advertising. when icon nekt to wifi or on the actual booths thelsmselves or both. >> we'll have over 13,000 digital displays which will be the largest and most interesting media network in any city in the world. new york city is the greatest media market in the world and so

the overwhelming majority will be on the displays themselves. we're not going to be serving annoying text message ads. this is supposed to be seamless and really interesting and helpful. >> so this isn't like what goes on at the airport. you go to certain airports that offer wifi for free and what happens before you get online they show you a 30 second ad or whatever. this is an outdoor advertising play and in exchange you're giving new yorkers free wifi access. >> absolutely. this is great for the average person walking down the street because it's seamless access at any location because once you logged on you bo to another borough and pass another hot spot site you can get right back on the system. >> anywhere where they offer free wifi most of the time i don't use it because i'm worried about somebody stealing my password or logging on. you use your computer to do sensitive things. how do protect that?

>> security is incredibly important to us. we worked to hard to insure this is going to be completely secure. it will be the first publicly encrypted wifi network in the world. it will be much more secure than your public wifi network. we'll use the same data encryption that banks use and we're required to look at the security protocols every year and every day and make sure they're start of the art and the city of new york and city bridge developed an incredible robust privacy policy so it's really one of a kind. and so the amount of information that we need for you to log on the system and for you to use the system is extremely limited. much more than your home internet provider might ask for. we don't need your name or phone number or want your financial information or credit information. that makes the network more secure. >> how robust will the network be? is it possible there will be so

much wifi access and at such speeds people will just decide that they can live off of this. >> let's be honest this isn't going all the way to people's homes and people still need access in the homes but it is going to be the fastest speeds that we have around the world. several of these installations will be 1 gigabit and a minimum of 100 megabits per second for free which is significantly faster than most people are paying $60 a month for. >> how are you going to pay for this? >> completely through advertising. it's no cost to the taxpayer or city of new york. we're guaranteeing $500 million in advertising payments over the first 12 years of the agreement. >> how much is it going to cost you to build it. >> $250 million in capital. >> and last question in terms of where your doing it. are we talking about manhattan, brooklyn, queens. >> this is critically important because it was key to this administration's deliverable for the people of new york every

borough. >> okay. hopefully we'll have it from here. >> yeah. >> we will not discriminate against you. >> when our computer system goes down we'll tap into new york city. interesting. very cool. >> when we come back this morning proof that at least one blackberry employee is using an iphone. what could be a very embarrassing story for the company right after this. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

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♪ hey i just met you this is crazy but here's my number so call me maybe ♪ welcome back everybody. we're in "chairs" looking over stories that caught our attention. i think have to tell you guys, here it is i have to tell you guys about a story that caught my attention yesterday. blackberry. you know i still have a blackberry. i'm still addicted to this thing. however, blackberry itself the account, got sending out a tweet, i read at the bottom from an iphone. >> yes. >> so even the blackberry folks themselves are known to need iphones to do typical things. i will admit i tweet from an iphone because it's a heck of a lot easier. the blackberry it's important for that stuff because that's why they've lost the market share that they've lost along the way. >> if you have a reason to really need to stay with a

blackberry, you are sending too many e-mails to people. because that's all it's good for. >> i send e-mails. >> you do. i don't anymore. if die need to send any, i use it i dictate it. i laugh, because it comes up with the most ridiculous things and then i change a couple of word. >> i rely more an more on my iphone. >> but you'd be sending fewer things to people. right now, have you ever felt that you are so -- you know, if you're out of touch for five minutes, could the world end? >> yes. no i can be out of touch for five minutes. joe, you get the same thing. you have hundreds and hundreds of e-mails that come in every day. >> but i know it's cut down on the amount of interacting with them in print. and then everything else that comes along with the iphone, the iphone is just -- >> i have the iphone 6. i'm there. >> i just think with people -- you know what i mean?

we don't talk on iphones. >> we don't talk on iphones. you can make a phone call if you want. you don't need to use your thumbs. >> faster to e-mail. >> okay. >> i've got a story for you. >> i don't care about my story. you're obsessed with this person. >> this just gets me crazy. so "the washington post" and ben wyche picked this up about elizabeth warren and the santonio white thing. quotes that a person who works for elizabeth warren saying that their ability to get rid of weiss shows that we have the ability to bring somebody down. elizabeth is a bigger boogieman in the rooms. i think there's a fine knit amount they're willing to bleed. this is somebody that had workforce elizabeth warren. >> let me tell you the truth about elizabeth warren. i've put this out on twitter and i've seen it other places.

she's much more valuable her faction not running for president. she could never make it. she is wail right now. just a big bull horn. people in journals take it that weiss actually won. he can talk as a consultant. he doesn't get the little diploma. >> it says so much about politics and not power and what is the right or wrong thing. >> you have seen politicsians that go to the higher level. they need to apiece the base the middle. she can't act like she's acting now. this is the way she can continue to represent 5% of the population. we've got to run. jpmorgan's earnings coming up after the short break. see you in just a moment.

jpmorgan report. we're going to have the numbers and instant creation. canada feeling the pain from the plummet. brian salgrin is in calgary. and the return of the muscle car. the first big classic car auction of the year kicking off. it looks like big money is going for big power. looks like them "squawk" boys bit off a little more than they could choose. >> oh watch out! hello! the second hour of "squawk box" begins right now. ♪ ♪ just the good old boys never meaning no harm ♪ welcome back to "squawk box." cnbc right here. first business. along with joe and becky,

jpmorgan jpmorgan's earnings are hitting the tape right now and we're looking at them as we're coming back on the air, guys. >> look at the stock. >> looks like it's coming down a little bit. >> 57.90 is where we have the stock trading. the $1.31. and then $1.19. a revenue of $25 billion. >> i see a couple different numbers. $26.66 billion -- no 23.6. >> 23.6 was the stilt. but i'm seeing 23.55 revenue on a managed basis. >> right. >> as they call it. >> that's the one that the analysts actually key on. >> the stock is still continuing to trade a little bit off on this so far. there's a lot -- as i said i love getting jpmorgan as well as any big bank. andrew, this jumped the other

day, when we were talking about that report about breaking it up we'd prefer if they'd break this company up actually too. based on the numbers a little bit. >> it's pretty tough to look through a big report. >> it is. that really wouldn't be a reason to try and help us. but it is a pain trying to figure it. okay consumer and community banking revenue under $11 billion. corporate and investment banking, $7.4 billion. the $1.31 looks 12 cents below. they said analyst has estimated $1.31. commercial banking revenue had, $1.77 billion. almost $1 billion in legal expense. i don't know how that compares to previous -- i'm sure they always had had had a big number. april lot of lawyers do very well-being affiliated with jap ed withd with

jpmorgan. the return on common equity 9%. the return on common tangible equity, 11%. core loans, is this good or bad? core loans picking up 8%. >> i'm just going to tell you how jamie dimon is justifying some of this and going through and looking at the units. he said the corporate an investment banks have strong performance and fees. in 2014. he talked about particular strength in markets, with a capital "m." remain somewhat challenged commercial banking grew a period in loans 8% versus the prior year. and commerce banking giants generated revenue over the quarter of the year. also asset benefits $80 million. overall, up 9% this quarter. >> the $4.93 billion. the $4.93 billion profit compares with the year earlier

profit of $5.8 billion. so it's down. was revenue below last year -- sometimes the wire estimates get mixed. >> that's right. it was expected to be lower too. market knew that. >> right, right. but still -- you know higher revenue, you call it you make more money than you did in the period, right? >> well profit is actually slightly lower too. >> yeah, profit. >> you know what i don't see, any comment is about the cybersecurity customer data issue. a lot of analysts and investors looking to see if they're going to talk about that. they may talk about that on the conference call today. >> they won't put to earnings unless they're going to spend some money and try to deal with it. they already did spend some money. >> exactly, maybe they're putting that in the legal category. i don't think you put that in the legal issue. them also face big selling

related to the foreign exchange activities. maybe that's built into what they're falking about there with the justice department. there's a number of things. then of course the issue of u.s. regulators trying to raise capital requirements for all banks. of course, they get the hardest statement, and a week ago, goldman sachs, that report suggesting the company could be worth more broken up rather than together. on the assumption that the capital requirements gore ss are going to make it tougher. i imagine that jamie dimon might talk about it on the call in when we do get to that call. >> let's bring in another voice to talk about this. we're going to talk about a jpmorgan analyst in a moment. in the meantime let's get the big perspective on the banking industry, to say that jpmorgan as andrew just mention shod break itself up. joining us now, vice president of equity research at rafferty capital markets. dick thanks for joining us this morning. >> thank you.

>> i know it's the early days. this is the first big days that we're getting reports on. what do you think hearing from jpmorgan what we're talking jab and what do you expect from other banks this season? >> well you know, i think it's going to be a relatively lackluster quarter for the banks. i think there are certain loan categories that should do well, commercial, credit cards, auto loans likely to do pretty good. commercial real estate is likely to do pretty good. you're likely to see weakness in home mortgages on home equity loans. you're going to see pressure on margin as a result of the low interest rate environment. and what will be interesting to note, whether they'll be able to take their loan reserves down again the way they have over the last four or five years or whether they've reached bottom because loan offices are now well below normal for the industry. and we're likely to see others. small improvement, is that the cost of winning the organization should be a little bit less. but when you put it all together, what you're going to find is there will be some moderate improvement, i think

for industry earnings. nothing particularly dramatic. on the capital market side you know trading will be mixed with equities probably doing better. and some weakness in you know currencies obviously. and fixed income. the banks are likely to try and push their dividends higher and buy more stock back which i think is what a lot of people are looking for from the industry. >> meaning this is a good time to be a buyer of these shares or, no? >> i think if you believe that the economy is going to do well in 2015, and i really believe that it will do really well in 2015, because, you know, the increase in the value of the dollar has created a tremendous increase in the real income of americans. in other words, you know commodity prices are not the only thing that's coming down as a result of a strong dollar. you're seeing a reduction -- you will see a reduction in the prices of cars televisions and just about everything else. even if you don't see an increase in wages in the

american american, you'll see an increase in their buying power. i think, therefore, that will drive the economy. and if the economy does well it will be almost impossible for banks not to do well. >> dick as you've been speaking, i've been digging into this a little bit, the reason it looks like they missed on that eps number there is a $90 million after-expense number that most analysts didn't have in their number us. is that something that you say is a one-off? or by the way, they become one-offs and you can't think of them as one-offs anymore? >> yeah they're definitely not one-offs. basically, we've made the assumption five years ago that these companies, tobacco companies or asbestos companies, in that there's going to be continuing expense for legal that will expend out certainly for the next three to five years. legal expenses will stay high in the industry and will stay high for quite some time. so all the rules have not yet been written for street. i think street has been

nationalized effectively by the u.s. government. and basically, the u.s. government is pressing hard on the profitability of the banks. you know creating these tremendous opportunities in the nonbank area. but the banks are facing you know, real difficulty with regulation. >> you just compared banks to asbestos and cigarette companies? >> yeah. in other words, asbestos and cigarette companies, you know go to court, you know, on a continuous basis. did so for years. they won some lawsuits. they lost some lawsuits. but you could expect that their legal costs every year would be relatively high. that's what you're seeing -- and we've been saying this now for five years, i mean that's what you're seeing in the banking industry. their legal costs will stay relatively higher. there are still thousands of lawsuits which have to be gone through for each one of these big banks. and, you know, the smaller banks don't have the same issues or problems. but they're also subject to the cost of regulation. so you know it is a cost of

doing business. >> given the regulations -- given the regulations that you're talking about, do you agree then with the goldman sachs report suggesting that the company in jpmorgan's case or maybe more broadly, that the businesses would do better split than together? >> no i don't agree with that at all. and neither does goldman sachs. you have lloyd blankfein on did you ask him, should we break up goldman sachs? >> he was not prepared to say about goldman sachs. but he did say there were many in the industry that rethink their model in recent years. >> yeah it's good for him to get up and say i think my big competitor should be broken up but i shouldn't be broken up. right? i think it's a very self-serving report. i think it was probably one of the worst things that goldman sachs has written in a long time. because if they don't believe big banks should be broken up, and they don't, they only believe that their competitors should be broken up. i don't think that that's a

pretty good research. anyway, the bottom line is what you really have to ask yourself is why do you have so many big banks that do relatively well. and you lose one bank every day, and that's been true since 1987? that's over 10,000 banks that are gone. what is the economics which drive all of these other smaller banks out of the business. and keep these big banks in business? and the answer is very simple. the big banks have economies of scale. they bundle their products. they offer more services at lower prices so the consumer benefits, whether it's a corporation or an individual from what the big banks do. and, therefore, they do business with the big banks. why do you want to break up these big banks? increase the costs of banking to the consumer or the corporation? i don't see where the logic lies. >> all right. dick, i want to thank you for joining us today. great talking to you. >> thank you. okay. we have an answer.

how do you know that the analysts didn't know about -- >> if you look at some of the estimates there were some breakouts in terms of what analysts were expected for the legal numbers. looks like there's $900 million more. there's 25 analysts that follow the company. and i don't know whether you add that back in and say they hit 131. let's get more on the numbers. joining us on the "squawk box" david hamilton. this is more than a science. it's already an art, david. but i can't imagine analysts thought there would be zero expenses. what would 990 million be per share if we were to add that back in? >> it's about 25 26 cents a share. so the core number was around $1.45 which is actually above the consensus of dollars. >> so you would characterize this had as everything else the legal fees notwithstanding, the

company did better than analysts were expecting? >> yes, i would say that absolutely. i mean if you look at trading revenues in investment banking, they were quite strong. equity trading was up 25% year after year. investment banks were up 30% year over year. fixed income trading was down 14%. but i'd say it was a very strong quarter, again except for the litigation provision. and core loan growth was 8%. year over year. that's very strong. >> has there weren't a quarter where the company didn't have legal -- >> it's been a long time since is there would have been you know essentially zero. >> what have they been averaging? have they been averaging a lot less than 990? >> actually the third quarter it was -- and the 990 was an after-tax number. i haven't seen presentation yet. the third quarter, the pre-tax number was 1.1 billion.

>> there's 25 analysts. i can't believe no analysts -- i can't believe every analyst had zero for their legal expenses? >> i think you're right. analysts vary. some analysts make an estimated of maybe a couple hundred million dollars lately. the last couple years in litigation expenses. >> okay. >> i had thought, given the charges that jpmorgan has had, that it certainly would be a lot less than 990 million. >> really. then you just got to decide too, you know is it -- you know -- >> well i think for an analyst or a shareholder, get is how do you value the stock. i think you value the stock, based on ongoing earning power. i think in this quarter, jpmorgan showed very strong ongoing earnings power. >> but, david, one of the issues, and this is what we were talking to dick about. you have these longtime legal

dispenses. but every quarter, one time every time. therefore, how do you as an analyst or investor build that into your model to the degree that you believe, i believe it was a bit incendiary the number was dick bove calling it the equipment of cigarette companies or asbestos over the next years. i think had was referring to it as thinking about it as a stock, rather than a company but nonetheless, legal. when it comes on a legal basis, you have to start thinking about them on a legal basis as opposed to one-offs? >> unfortunately, there's some truth to that. i had expected that we would see lower quarterly expenses in many of the large banks given the amounts that were set aside last year. or in the first three quarters of last year. so, we'll see where 2015 is. i don't think that the government contention to bankrupt the banking industry. but the costs have been extraordinary. >> right.

i guess if we're looking the a macro, andrew it's legal. a great time to be a lawyer. how many times is that 990 -- >> that's not legal -- that's nod paid to law firms. >> no i know. >> that's set aside for payment to governments mostly. it's been a great time to be a collector for the treasury. >> but, david, you say the government's not trying to bankrupt the company. that may very well be. but they clearly maybe want to change the model of these companies. and that goes back to what we were talking to dick about which is this report to goldman sachs, suggesting the valuation could be higher if they were separate. does that make sense to you? >> well first of all, you have to understand that the federal government is a very large organization. i don't think there's a coordinated attack between the justice department and the fed. the costs that dick bove was

talking about are set by the feds. and it's my view today that it makes more sense for jpmorgan to be together than to be broken up into pieces. i think over time discussion of that might have a beneficial impact on the valuation. i've written that i think, you know trying to -- attempting to break up jpmorgan today would be a permanent solution to a temporary solution. valuations change every day. they can change a lot even in the course of a year. i think it would make much more sense to look at where jpmorgan and all its competitors are, how they perform, when they're also capitalized down the basel three rules and after they've been through recession. let's see who gets through the next recession in the best shape. >> okay, good. all right. david, thank you. >> happy to do it. thank you. >> in summary, i guess, if you want to determine the deal with jpmorgan, you need to be smart enough to look at their ongoing

business and decide whether you like it or not. we don't know what analysts -- there's 25 of them. what was the average assumption for legal costs, 300 million, 500 million, take that out and add a couple pennies to the dollar. and give them a pass? >> i like what he had to say, they outperformed underlying businesses outperformed. and then the question is what are these legal expenses really about. they already settled part of this foreign exchange case. there's still more to it. >> to the extent you believe this is the last staunch of that, and then a recorder is there more to come in another place or how do we -- >> i agree with david, this is not just a case of coordination. this is a case that hey, there's money here. >> the analysts had it wrong, jpmorgan, everybody had it wrong

in terms what the government was going to extract the first time around with the big numbers. and it may well be that the lawyers are sitting across the table trying to solve this case and they see the numbers go up and up in litigation and say -- >> at least five minutes ago, our last viewer had switched over to the "today" show with the golden retriever puppy, anyway, don't you think? >> no. those are interested in the nuts and bolts. >> did you see that golden retriever puppy that fell asleep on matt lauer? >> no. >> the cutest. that's a good idea. wow. ding ding ding ding. >> puppies -- >> let's get that. >> remember i always wanted to have a chimp on the set. >> no, thank you. >> we have a chump on the set too. >> a chump. when we come back this morning, investment ideas in bio-tech and retail.

investment platforms for bio-tech and more neck. a nobel laureate in the house, robert elliott is here to talk. and housing on the rebound. take a look at u.s. equity futures.

welcome back to "squawk box" this morning. the squawk platform portfolio online. you can do it in realtime. plus the exclusive analysis. joining us to share his picks, the chairman and ceo and chief investment officer. good morning. >> good morning. >> we want to start with activists. >> i haven't changed any of my picks. sales are the big story this quarter because the strong

dollar is pinching the profits of the multinational. activist, 36.5%. earnings won't be up quite as much because of acquisition. >> you like it? >> very much. very volatile. >> are you buying more? >> absolutely. bought more yesterday. core holding, we'll see the response in had strong sales. hepatitis c is a very serious issue. one pill solution is better than multiple pills. the express script thing helped the market more volatile. >> let's hit the third one. you have bishop hold. >> yeah i like that a lot. >> make the case. >> it's an internet company in china. >> do you believe the numbers? >> oh yeah there's no accounting issues in china. four companies in deloitte a long time ago.

that was i go through them. >> what is victimshop? >> it's an internet company in china. it's up over 100. i'd take that rally any day. >> is there any point at which you'd sell any of these? >> vipshop is more volatile. >> walk us through it. let's go vipshop, first. >> well -- >> the viewer watching may want to piggyback the trade. the question is is this the time to piggyback the trade? >> yeah i'd do another 60%. >> 60% in? >> 18 months. >> well first of all, all my stocks don't go up as much as earnings and sales do okay? so if i have a company, that's 80% sales both like a vipshop,

and with the p.e. expressing a tad, my average stock trades 15%. wall street has been compressing premiums. but these are all big quality stocks. >> if you had to get into one of these three in terms of upside -- >> gilead. >> if you think vipshop has a 60% upside what do you think gilead has? >> it is a keeper for a long time. that could double from here. >> that would be a $300 billion bio-tech company. >> that's okay. what's wrong with that pills are better than procedures. >> that's unbelievable. >> $46 billion. >> you know joe, people die if you have to take a series of pills, okay. i realize there's a competitor that got express scripts

approved and going to take a series of pill. so gilead is a better solution. >> gilead is about to overtake ibm on the market. >> that's fine. pills are cheaper than procedures. >> activist. >> activist is a big pharmaceutical. >> thank you so much. >> thank you. >> we'll be tracking and following this. we look forward to seeing you soon. of course you can track it online yourself cnbc pro. you can get alerts and exclusive analysis. also coming up at 8:15 earn time, susan byrne will give us her top platinum picks for 2015. coming up a huge number for mortgage apps. those details next. then later, why muscle car, seeing a huge rebound at classic car auctions. eye candy for gear heads.

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>> announcer: now the answer to today's aflac trivia yes. what year did chase manhattan buy jpmorgan? the answer 2000. the deal was worth $34 billion. welcome back to "squawk box." among the stories that we are watching this hour yemen's top al qaeda leader is claiming responsibility for last week's charlie hebdo massacre. in a video posted this morning rng the al qaeda group leader said they planned and financed that attack. also criminal charges have been filed against the man who allegedly threatened to kill house speaker john boner. michael hoyte was charged with training to poison boehner's drinks. elon musk called an industry conference, sales in china were

unexpectedly weak in the fourth quarter. he said that tesla may not be profitable through 2020. earlier this hour that weekly mortgage applications. the biggest gains in six years. diana ola joins us with more. >> this is a huge number becky. mortgage rates spiked on a holiday adjusted basis from the previous week. a sharp drop in interest rates combined with new costs from fha and fannie mae loans were behind this now. re-fis, up 66%. jumbo refinances quadrupled. they're more sensitive to interest rates. the rates to purchase a home up 24% from the previous week all this, as the average contract rate on the 30-year fixed conforming loan dropped to 3.89%, the lowest level since may 2013 that from 4.1% the

previous week. adding to momentum fannie mae's new 3% loan. announcing last week by the fha that it would cut the annual insurance premiums by 50. but borrowers i'm told are applying for this. >> diana, i've heard so many ads on the radio to try toe get you to come in and refinance. >> and we thought there was such a small pool of people who haven't refinanced and benefit from the lower rates. given that we've got home equity, there are a lot more people able to get back into that refinance market and lock it in on very low rates. >> diana, thank you. coming up canada getting crushed by the drop in crude. ryan sullivan is going to join us from calgary after the break. then we have nobody well laureate robert shiller going to join us.

and taking a look at jpmorgan. shares are down after they took an expected legal number. we'll talk about that coming up.

welcome back to "squawk

box," everyone. a huge drop in oil prices is having a big impact on our neighbors to the north. ryan sullivan joins us from calgary. in what is known as the houston of canada. is that what it feels like brian? >> reporter: minus the heat. they're, yeah, becky. this is an oil lube town. they're all right behind us here. calgary is where it's all happening. maybe things are slowing down dramatically, in fact last night, sun corps, one of the canadian biggest producers announced 1,000 layoffs. what we're seeing is happening is happening as well here guys. we're going to talk about this all day on cnbc. but from a political standpoint we had a chance to sit down yesterday with the ceo of transcanada, they're the parent company of the keystone pipeline. and one of the big criticisms that hey, none of the oil used

by america is going to come from here and go to the gulf coast to be exported. and i asked ross gerling, if that is a fair criticism. oh well there was supposed to be a sound bite there. basically what he says guys is this, that is not a fair criticism because basically the oil that's going to be pumped down to the gulf coast is going to be bought by exxon, valero conocophillips and others. they're going to refine that oil. and yeah they may export some of refined gasoline. but basically, americans will guy that oil and profit from it as well. i also asked had him if he was surprised by the outrage over the keystone pipeline. he said actually yeah. that was one of the main things. he said it's kind of weird that you could either buy oil from venezuela or buy oil from canada. if you had your choice guys which one would you choose. so we did a long interview with the head of transcanada. all day on cnbc. we're going to be talking about

canada, the concerns here. talked to the ceo of keystone. there's a lot going on here guys. i'll tell you, i sat down with some of the locals last night. and they're concerned. everyone's trying to put on a brave face. we're fine. we're fine. but make no mistake, just like north dakota just like in the basin of texas, there's a concern here. >> brian, even in that we don't want to be cynical, but there are political concerns with the green lobby that the president is satisfying. it's pretty simple to see what's going on. all these arguments where it goes. all is fungible. it's a global commodity. 7% co2 or something. but compared to the tons that are being released it's de minimis, the additional amount. it's sometimes scarier to move it by rail than it is to move it in a pipeline when you're talking about spills and the

likes. so when it comes down to it it's purely political. a lot of things that politicians do in this country are political. >> reporter: you know joe, i think your point about moving the oil is well noted what ross gurling said to us listen we're moving it anyway. it's not like if we don't put the pipeline in the oil production is going to cease. the oil production is going to continue, we're just going to move it in a different way. he really wanted to hammer home the point that listen, american companies will benefit. yes, some of the gasoline will be refined and then exported out. but the american producers like exxon and valero and conoco. we can buy it from venezuela, kind of known as an unfriendly nation to us. or we can buy it from canada but we still import over 4 million barrels a day. we're going to buy it from someone. that was his point. >> no doubt.

it's hard to listen to some of the reasons. anyway, thank you. thanks, brian, thanks for going there. i've never been to calgary, but i would like to sometimes. let's turn to one of our "squak" laureates. joining us is bob schiller. founder of home price index. a fewreal renaissance. when it goes from $100 to $45 globally, it's a huge -- there's going to be huge ramifications, whether positive or negative. up thought this through? >> well i don't know if i have the answer. >> wait a minute wait a minute you have the nobel prize, okay? that's all you got to say. >> right. >> tell us -- it is positive or not? >> net net positive on what. now, for calgary home prices

it's net negative. >> you're going to look at it for home prices. in general, as an economist, is it a tax break for the entire world except for the -- >> historically, business cycles have been associated with oil prices. and, you know, the '73/'74 recession, an oil price spike. and '79, one of the big recessions of our time another oil price spike. not only that, but it affects consumer confidence. and if you look back -- could you remember '73 '74? >> i do remember it. >> there were these lines out in front of gas stations. >> i know. i think i was paying under a dollar at some point. i had a car i was driving to high school. and $2 a gallon was like -- >> i worked in a gas station at once. i think it was 35 cents -- >> i think it might have been cheaper. >> but it really affects psychology. and i think that it's hard to say exactly how it will affect psychology in this case when we

are suddenly losing a huge profit from their new technology. this country is proud of our oil technology. and it's been boosting our spirit. animal spirits. it's hard to predict where they will go. >> that's part of the net negative. i've had people write in the 2008 price, people minimize the influence of oil prices on that financial break as well. if you look back the oil did go -- >> absolutely. >> 1.20 before the financial crisis. and that didn't help. >> i had an oil product that was my company, macro markets. we had to shut it down because oil prices doubled. that was in our contract. so i remember that was a crisis for he. i didn't imagine that it could have doubled so fast. >> wouldn't oil overall -- i mean, you could find pockets where it would hold housing but overall, wouldn't it help

housing? >> overall, i think low oil prices -- i said calgary, but its remote suburbs as well have not been doing as well recently because -- well maybe people are getting more urban. >> right. >> but recently higher oil prices, that's a factor. and everyone is subject. and i think the real estate market is not a monolith. >> but cheaper to drive far away. >> we did hear from diana olick about the mortgage applications. and those jumped the highest in years. probably because mortgage rates are so low. >> the boon that we've seen in the housing market in 2012 i think was precipitated by the record low of -- we have a record low of 30-year mortgage rate. and people are really influenced by that. and we're getting close now, the 30-year treasury is essentially at a record low. very close to that. >> it could be another refinancing boom.

we haven't had one in a while. >> yeah. and that kind of thing generates animal spirits. we haven't seen much -- you know, it hasn't been dramatic. we haven't seen -- except in some cities like san francisco, maybe. but generally, not. >> for the affordability index for housing, mortgage is probably the most important, obviously. >> right. >> but is your monthly energy bill also part of what it would be -- >> you know what i think, i like to look at real home prices. they are -- you can compare. but consumer price index is probably more affected by oil prices than our home prices. so that means the denominator is going to go down and real home prices up. >> really. >> but that's a -- maybe that's kind of a technical thing. i should have -- maybe i'll start correcting with the core inflation, yorn overall inflation. it's becoming a big factor with huge volatility in oil prices. >> it is indeed.

well, you sound -- except for the analyst spirits that we lose in the oil and technology, it seems like that we're gaining in other areas. even in terms of analyst spirit. >> i like to understand social psychology better than i do -- to me it's a national pride thing. it's the american dream. we are so happy that we have done this to oil prices. i feel proud to be an american right now. it's the revolution of the world. but on the other side it has effects on -- >> it does. but i feel the same way, because it's not like some of the people that have held us hostage. you know people that i really love a lot. that we're very friendly with and hope that they do really well. i mean there's a lot of satisfaction we can take in a lot of this if we wanted to be zenophobes and we do don't we?

>> i don't like this word "zenophobes." >> maybe we're exceptional. can we start thinking that again? >> i think that's the american psyche. whether you're republican or democrat, american exceptionalism is part of our self-esteem, isn't that right? >> it's also part of the -- >> it's not nice to gloat. >> right. >> but this had country is built on creativity. and the oil price thing is deeply related to that. >> i like what you're saying there. even from yale. it's good. >> even from yale. >> even from that bastion of -- yeah, you don't hear that -- eli whitney at yale -- >> well he was an entrepreneur. >> that was back in the '70s nap was a long time ago, by the way. coming up when we return big money meeting. big power at the big first classic car auction of the year. we're going to get behind the wheel with robert frank after

the break and why muscle car sales are picking up pace after slamming on the brakes during the recession. we're back.

♪

talking muscle cars this morning. it's the first big classic car auction of the year kicks off in scottsdale arizona. our robert frank joins us more. it's just too easy to say, wow, 45 muscle cars are back. >> they were back before. check this out. cars as a whole have been the top investment for the past five years but muscle cars never really recovered from the recession until right now. according to hagerty, muscle car values jumped nearly 50% in the back half of last year. the average sale price is now $296,000 for the top 15 models. that's back to the prerecession peak for the first time. the biggest car auction starts today in scottsdale arizona where 285 million cars will go under the hammer.

1968 achieve yajko. he was a racer and entrepreneur. he modified chevys. this one has 400 horses under the hood. estimated $500,000. the hemi cuda is the ultimate muscle car according to many aficionados. the purple hard top with white interior. estimate of $400,000. the god of american racing carroll shelby this 1969 gt 500 cobra mustang 500 that he owned for years, check that out, could sale for over $600,000. and finally corvettes, they're not really a muscle car but they're very cool and very expensive. this 1968 l-8 convertible could sale between $1 million and $1.5 million, corvette. so not quite at ferrari levels but getting up there. >> someone should give jay leno a show to talk about cars.

>> that would be huge. that would be huge. >> if you could induce him to do that. >> it would have to be quite a network. >> it would have to be a very smart, prime time network. >> yeah. >> a good message, a lot of demand was coming from oil and energy wealth. a lot of these contractors, a lot of guys working in the oil patch. the big question is how oil prices and what's happening in the oil sector will affect that. that's the big test. >> i'd rather have one of those cars -- i'm not big on -- we have a lot of great technology in a car. >> you can buy two new ferraris for what it cost for that hemi cuda. >> phone booth, man, where are you going to change? >> starbucks. starbucks is the new phone booth. cnbc prime is getting ramped up with car chasers. coming up we're going to

tell you why gopro is taking a big hit. and later on in the hour senator mark rubio will join us on the set. stick around. "squawk box" will be right back. experts... ... name the volkswagen golf motor trend's 2015 car of the year? we'll give you four good reasons the all-new volkswagen golf starting at $17,995. there's an award winning golf for everyone.

welcome back we're watching gopro. the stocking sharped deeply yesterday after apple received a patent that suggested it could soon enter the sports camera business. are you hip to this story? >> i've heard about it but i'm not hip to it. >> you don't know. that would scare me that would

scare me if i were gopro. with apple. anything apple says i still think -- where does apple buy -- by the way how cheap does it get, need to go to 150 for apple buyers? where will they buy it? >> how much did elon musk own? >> well everybody's got a price. >> can you hit it? >> we've got to go because we have a great 8 hour coming up. summing, senator marco rubio is going to join us. and the alternative to raising the minimum wage. and the earnings season kickoff. we're expecting the wells fargo reports as soon as they hit the tape. swx "squawk box" returns in just a moment. 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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bipartisanship in washington. senator marco rubio joins us to discuss what it will take for both sides of the aisle to come together in many issues facing the nation. big market swings leave investors hanging. portfolio number susan byrne where to put money to work now. and big data this hour. retail sales are going to tell us if the consumer is taking

advantage of lower oil prices as the final hour of "squawk box" begins right now. live from the most powerful city in the world, new york. this is "squawk box." welcome back to "squawk box" right here on cnbc. first in business world. i'm andrew ross sorkin along with joe kernin and becky quick. see how the market is setting itself up this morning. >> that's my line. >> i know. >> the dow looks like it opened off about 118 points down. nasdaq down about 20 points. s&p 500 off about 12 points. let's check the european markets as well. you're seeing red hours there. the ftse over 2%. crude $45.72. becky, in the meantime has some headlines. >> that's right. we do have earnings coming in in wells fargo, looking at those numbers, joe -- >> oil, 102.

revenue, 21.44 billion. that looks like it's above unlike jpmorgan above 2.32. many are expecting that above the yesterday close. so actually look at the trading right now, that gives you some indication of whether it's above or below. but in this case it was right in line with expectations. obviously with wells fargo, we looked at housing, also credit as well. it's up 0.3% so far. this morning, what are some of the more important things,.35.7 million. made quite a bit more money. 5.71 for wells fargo. but i think the revenue number

was below jpmorgan. >> right. >> so they would actually make more money on more revenue. >> we saw them making comment on things they'd like to highlight. they did increase positives, commercial and consumer loans. and impressing discipline. just talked about credit quality continued to improve. >> original mortgage origination. $44 billion. $44 billion versus the $5 billion. we'll keep an eye on it. 2%, 11 cents right now, andrew. >> and phil is back with breaking news on gm. phil? >> thank you andrew. right now, mary barra, the ceo of general motors is about to beginning a presentation at the deutsche bank coming up talking about the guidance. for 2016 general motors expects

modest improvement in adjusted earnings and margins. keep in mind the margins were about 5.5%. they expect modest improvement on that. also improvement in all regions of the world when it comes to the auto business. so no region is not going to be improving in some fashion. capx is raising. finally, she is going to be reiterating that general motors is on target to meet the financial goalpost that they put out there for benchmarks for 2016 as well as 2020. that 2016 guys is important, because they plan to be profitable in europe next year. they're on target for that. guys back to you. >> thank you for that. jpmorgan chase out with quarterly results earnings. wells, too. eric joins us with more. good morning to you. i don't know if you want to run through wells fargo or if you want to start with jpmorgan. clearly, at least in the case of

jpmorgan, the numbers on the operational side look better than people expected but then you add in the legal costs and it doesn't look as pretty a picture. >> right the legal costs were elevated. qfr are the kitchen sink and then legal costs not a big surprise. the top line was a disappointment. down 2% from a year ago. and that was largely due to interest rate compression. their net interest margin went from 214 down from 219. that's a huge change in just one quarter. and that really helped to drive a lot of the revenue under performance. we saw very strong loan growth. but they're just not able to grow revenues in this interest rate environment. >> so you're not saying -- we just said the operating results are better than people thought. >> well if you look under the hood some of the operating results were a little bit better. and some were a little bit

worse. i would say in terms of revenue growth in their consumer and commercial banking that that was a little worse than expected. and i would say that in the investment bank is a little better than expected. the investment banking was strong. m & a is strong and ipos. and the decline in fixed income market was 14% organically. they were telegraphing about 20% from a year ago. so the decline is not as bad as expected. asset management was a little disappointment. even though assets grew 2% from a year ago. revenues fell simply because the expenses could not keep up with that revenue decline. >> it recovered -- it was under 58 recovered to get back to 58 and change now. jpmorgan down again. it's down like over a dollar. $1.10 or so. as you can see right there. what is that -- that's almost 2%. i don't know that's not legal class.

i don't think. i don't know what it is. do you put that in legal class category or a larger problem? >> i think there's a larger problem of interest rates. i think this was the one quarter where interest rates really hit them hard. usually, they've been a pretty steady-eddy kind of bank with interest rates. 220 a year ago, fell to 219. the qfr was 214. that's really a huge change. it leads me to know what the spread picture is for 2015. >> give me your quick results on wells fargo? >> well, wells fargo just reported at 8:00. looks like they've matched the mainline expectations. the main question with wells fargo is the interest rate margin. they've had problems with sequential declines in the net interest margin and that's

simply the fact of having so many deposits on their balance sheet and not enough loan growth for their deposits. >> thank you for joining us. >> thank you. let's change gears from corporate results to washington. taxes, trade, cybersecurity were all on the table as president obama met with congressional leaders. and now with republican-controlled senate and house. hopes of bipartisan cooperation really to get legislation passed this year remain high. hmm. joining us for the next hour our guest host florida senator marco rubio. he's the author of "american dreams: restoring american opportunity for everyone." the writer i didn't check out who wrote it but the writer said they're optimistic about bipartisan participation? >> i am. >> you don't really believe that you just want to sound nice? >> no i really do. look, the country needs

stability at the government levels so the government can grow based on factors that are important but the company needs leadership to understand the economic structural transformation. one of the purposes of "american dream" my book they were trying to solve 20th century ideas. it's continuously restructured. i'd say we have the equipment of an industrial-type shake-up every seven or eight years. we need to become more globally competitive. >> i guess a dozen companies want innovation that's happening. >> i guess i meant if you were to talk to partisan on either side. the leftist would say, the tea party types, would say they're not going to do anything. and the right would say president obama has no interests -- >> i think there's a major

issue. >> it's hugely major. president has a bounce in his step now. he got handed a complete refutation of all the stuff - there's no doubt his view of government is substantially different than that which covers -- >> they're middle ground. >> there are examples for foreign policy. >> do you think we should do free community colleges? >> well here's the point of free community colleges in concept it sounds great. i'd love everyone to have advanced degrees. in the 21st century unless you have an advanced degree you can't get a job that pays over minimum wage. what i'm concerned about many students would benefit not from a degree but a certificate, a skill, a trade, a craft, electrician, airplane attendant. >> but the industry was slightly rejiggered with that. >> all of that opens a bachelor

degree. and if it's a bachelor's degree in greek philosophy, you're going to be looking for a job. >> your idea it's not just a directed degree. the government could decide as a country. these are the five jobs. we need these jobs or is it the overall cost? >> well there's two. the fundamental problem for most students, the reason why they do not complete community college is not the cost. if you're a low income student you already qualify for generous pell grants that help pay for school. and the cost of those schools are still comfortable compared to four-year universities. it's not just community colleges as we know them today. we also need to have courses throughout things like core sara, are you talking about accreditation? >> absolutely. we need to have at any of

accreditation models that allow to you practice from a variety of sources. learning experience life experience. proficiency that you acquire on your own. online course work military service, you should be able to package what you learn into an equivalent of a college degree. >> accreditation process has been a huge process. i agree with you completely on that. >> for people at home that maybe haven't followed this carefully. the only people that can give you what the private sector or what the public sector recognize as a degree is a college. >> some of the employers are breaking through and saying -- >> because they're innovators and they understand we need to break through to every sector because learning is learning, no matter where you got it. >> things that the president and congressmen ought to agree on things that the president and congress will agree on there are

tax reform? >> everyone wants to do tax reform but when you open up the kimono -- >> does the president -- >> yes, he wants to do corporate tax reform but raise taxes somewhere else to pay for it. the purpose of tax reform in my mind is to make america more globally gettivecompetitive. we're american, we have to be there. you guys know from doing the show that's not true there are dozens that developed economies where people are more than comfortable in investing and innovating. >> capital should want to come here. >> we have $3 trillion of capital sitting there. >> and andrew said the last time we brought it back we used some of it to enrich shareholders. i mean there's no way we're bringing it back? >> you mean like shareholders like teachers unions?

>> yes. we need to hire them. >> my point is we're not going to collect it if we don't bring it back anyway. >> how about trade. it says we agree on trade, yet, the president can't -- harry reid won't even bring it up. >> that's an interesting dynamic. the president and republicans agree on fast track authority to move forward on ttp and other things. >> harry reid actually but the kibosh on that very early in the last congress when he told the president we're not doing trade. i happened to be in asia when that announcement was made. >> will it get going? >> i hope so. i think there's the vote it's in the republican senate to do it. >> to carry a vote? >> well we're going to need some democrats. >> can i back step. you mentioned the pension fund for teachers. >> not just teachers but, sure. >> i think we need to find a way to change to a territorial system. >> that's what i'm after. >> but as long as you're having these constant vacations, the beneficiaries of those

vacations, bringing that money back, people putting their money overseas as long as they humanly can. the beneficiaries are disproportionately are going to be those who own stocks and equity. you talked at american class and equality and issues there are people who would say, i would suggest to you to some degree, it would exacerbate at least in a temporary way -- >> you got to keep everyone from not having it -- >> no no. in the meantime, so don't let anyone get it? >> no no. >> the issue is when it comes back to have a plan in place so we get the money and we're not creating this, you know ridiculous system over and over again. >> but that leaves -- >> but what happens you push to have the money come over on a one-time basis it doesn't. >> we're not saying that. not just on a one-time basis but ongoing basis. >> hold on. here's the issue, if you can't get it done on an ongoing basis

and re-create it then the alternative is can you push for that alternative and is the alternative better? >> i don't think the alternative is better i think to have that an incentive for american companies to leave that money abroad as opposed to bringing it here. but my other point i'm going to make is i don't think we're going to solve the problems of the american economy is to keep the top down. the way you solve it keep the middle and bring the bottom up. the more they are, the better all of us are going to do. my dad was a bartender, right? he never made a lot of money but he was able to make money because there was an upper middle class that was able to fly to vegas and do business for three days. that's our consumer class that powers the american economy. >> amen to that. >> did you see the people that

negotiated this cuban situation was like -- >> a speechwriter. >> it wasn't kerry. it wasn't diplomatic. >> the state department. >> how long did they talk about it? someone put their finger up and said -- >> it was done out of the national security council that was originally designed to be a strategic entity. it's now become an operational entity. that in fact has become a super pentagon. a super state department. and then you send people that are nice folks, i imagine, very smart, but unqualified to negotiate with hardened -- >> we can talk about the merits. united states gave cuba more commerce, more trade, more telecommunication, in exchange for that cubans agreed to release 53 political prisoners. most of people are at the end of their term. all who are warned if they go back to advocacy they'll be

rearrested in a secret list. and at the same time they arrested 8,000 people last year. the ratio is not very good. look the record in contemporary history of an economic opening leading to democratic change in a reluctant tyranny is not very good. ergo china, vietnam. and even burma. >> who did he score points with? why did he do it? >> i think he was looking to -- he started to fill the achievement bag. had he is nearing the end of his term. he wanted to say i'm the nixon that went to china. i'm the obama that went to cuba. >> it's easy to convert people if it's the right thing to do if you just look at the face value. >> and i have no problems with changes towards cuba policy but they need to be reciprocal. >> we're going to talk more about this in just a little bit.

you have gotten some tough talk back from your own party along these lines. senator rubio is going to be with us for the rest of the hour. when we come back key retail sales data for december. senator mark war warner jim cramer on jobs and the economy. stick around, "squawk box" will be back.

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"squawk box" and portfolio is back. now you can go online to cnbc pro on cnbc.com to track the portfolio picks in realtime. plus read the exclusively analysis. joining us with her stock picks is susan byrne. susan has $19.8 billion in assets under management. susan, thank you for coming. >> thank you for having me. >> let's talk about your picks. first off, you like honeywell, why? >> i like honeywell, because it's part of a group of companies that have increased their dividend every year for ten years. when you hear people talk about, oh gosh what's this year going to be and the following year people have very little confidence in whether china will come back or europe since the depression. i think it looks sense to look

to companies that have been through the last ten year which is has not exactly been a trip to the beach. and have been able to raise that dividend ahead of inflation. so i'm using honeywell and franklin resources and qualcomm. >> well let me start with honeywell, though, just with the idea of being able to raise your dividend. we are looking at crazy things happening with the commodities market. not just with oil, we've been watching copper battle beans. that are falling to levels that we didn't think we would see again. does that concern you about the demand picture and what does that mean for an industrial company? >> i think it may be there was much more a holding mentality going on let's say, three or four years ago when china was -- that we were unaware of. and now, that's sort of coming out of the wood work. but none of this affects honeywell which is much more of

a systems provider in a negative way. and in many ways could bring the costs of goods sold down. >> let's talk about franklin resources. why this stock? >> well franklin resources sounds like an oil company, but it is franklin templeton. and it's a money management firm. they've done very well in the international area with the templeton funds. and also in fixed income. they're making a -- attempting to make a comeback or first come out in the equities side. so i think they are moving into a growing business. and they do not have a very high pe and they also have raised their dividend every year for last ten years. >> assuming that's the case with qualcomm as well? >> yes, yes. and should we get any change as senator was referring earlier to

changes possibly in how had we can bring stranded cash over or come up with something in the next couple of years, qualcomm stands to benefit tremendously. by having a lot of their cash offshore. >> right. susan, thank you so much for joining us. it's been a pleasure seeing. you. >> thank you. by the way, don't forget, folks, you can go online to cnbc pro on cnbc.com to track the picks or get realtime alerts and exclusive analysis. to come to me saira malik and john rogers. and when we return retail and how oil could affect the season. i want to hear about whether you lost a little bit of your swagger. right back.

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♪ welcome back to "squawk box" this morning. we are watching shares of gopro, the shares hitting this week -- got hit, rather this week, after apple received a slew of patterns including one for a wearable camera that could compete with gopro. i just thought they'd use their phones as gopros instead of gopros. >> you put it in a case attach

it to your helmet and go. also tesla investors getting a slamming on of the brakes. elon musk said sales were unexpectedly weak in warning that the auto make are will not about profitable for another five years. we're watching what happened with the markets, obviously by yesterday's huge swing, we saw the dow go 425 points below its highs at one point. if you want to take a look at what's happening with futures, it looks like we're on track for a rocky ride. dow 133 points s&p down 14 points. and look at the oil market. oil prices yesterday hit a low of $44.20. that's nearly a six-year low. this morning, you see it there, quite a bit higher than where they were low levels.

wti to $45.57. it's a key to what's happening with the bond market. the yield here the ten-year also moving lower. to what people were expected. >> 185, rick will probably mention that. >> i bet he will. we've been watching that one of the markets we've been keying off. we'll have the numbers coming out in just a moment. rick santelli is standing by in chicago. steve reese is right here on set. he's going to go over the numbers as well. rick we want to hear what you think about the yields. we want to hear what you think about the numbers. go ahead, take it away. we've got december restale tail sales. >> reporter: we started with a little down and we ended up a boat load of sales. down 0.9. last month, up 0.7. a very respectful line.

slashed about 0.4. if we take x autos down was down a whole percent. x autos down three. the control down 0.4. just one other thing i want to go over on that x autos numbers, last month that was up a half%. they took that down to positive 110. import prices down 2.7. certainly not shocking. down 5.2 year over year. i guess this is expected no farther than what's going on with how energy affects the equation. down 8.5 month over month. down -- if i didn't get that right, down 2.5 month over month. that was actually less than 2.8 expected.

let's summarize the export prices if we look at exports instead of imports that was down 1.2. year over 84year we want to pay attention. 1% interest rates, as we speak, by the way, i hear a cheer coming, 30-year bonds at 244, guys, and becky. these are all new all-time yield bond closes. and they really exaggerate and accentuate what's going on in the interest rate complex. because the last time we were looking at these october 15th levels of significance the close were much higher than the low yields. but the low yields were 186 and 267 for the 30-year bond. here we are at 182. power basis points before that interlow. but look how low the 30-year is.

2s to 10s, 5s to 30s. and the affectionately referred to the bonds. the interpretation it most likely for most participants is a negative interpretation. >> holy cow. rick, stick around a second. we want want to point out while rick was telling you with bonds and yields being crushed, take a look at equities as well. about two minutes you saw the dow was indicated down by 130 points. you can see on this news the dow has dropped 200 points for a value. s&p 500 futures down 23 points. nasdaq futures off by 40 points so we're continuing to see the huge pressure. steve, what jumps out to you on these numbers. >> i lot of moving parts, becky. let's talk about the revision.

part of the revision was the revising downward gas station sales. just a 0.8% in gas station, now a 3% decline. add that to december you have a 6.5% decline in this month. so whatever the total number is it's a big part of the dow down. >> why do we care? we think this is good news for consumer. >> we do. we do. because we have a mystery. we have a mystery. the money is out there, there's a windfall to consumers, we don't know where it's going. we had something from a pull from colder weather. down 3.3% in december. what's going to happen here i think the control group which is what rick talked about unchanged 0.6 and 0.4. you're still at 3.5% for the fourth quarter of consumer

spending. >> it's a lag effect right? >> it's a lag effect exactly right. but that lag effect is still to come in terms you have this extra money -- >> but when you're only talking 10%, $20 at the pump when you're filling up. >> you don't realize it and you don't make a dramatic change in how you live. every time if that ten bucks is there every time. maybe i'll do one of two things. i'll save a little more. pay down some debt. maybe i'll drive a little farther. some people may do that. and spend a little more. the issue of getting sweaters and gasoline into sweaters is out there but it really hasn't happened yet because people haven't changed their attitudes. i don't know this is going to cause people to rethink drama theically. i think consumer spending if you add in october and november is still pretty good. you just didn't do a great number in december. >> hey, rick back out to you, it's disturbing to see the moves in the market. you're someone in the business

seasoned for a while. is it startling to you, too? >> on the oil market or the treasury? >> on the bond everything. >> listen when it comes to energy it's reprising. the problem with reprising and commodities, i think at the time when we reprisece, and man there, these things get messy with commodities. i think in history when the market was moving up and speculators were moving into these products and commodities became the portfolio diversification where it had the smallest tent and after the crisis became the most popular tent to hang out in. i think everything was exaggerated to the upside. those types of corrections i remember years ago in the grain markets there was an issue -- long story. but the repricings and things like soybeans and corn can be super, super aggressive.

i think me of commodityized every market. from double short, triple short, treasuries. corporate. you're not really buying or playing in the real game. you're in an alley down the street kind of laying dice. i think that makes the highs higher and the lows lower. >> rick we're going to start seeing people sitting out this year from the fed. i can feel it starting already. the thing that makes we think maybe they're set to do it. i think they can get away with it either way. but what scares me remember we thought they were in somewhere where they weren't able to get out. we thought they weren't able to get out because we didn't think the economy was going respond. the economy at least here seems to have responded 5% gdp. 5.6 unemployment. which looks like they can get out. how do you get out when everybody's at zero? how do you get out at zero? >> not only that you have wages. we're waiting to see january and

dis. >> they can't get out. >> at the moment how do you go to the american public and say it's time to raise rate's. >> believe me the american public isn't the problem here. it's wall street at the top of the pyramid. come on. do you think the middle class person if rates move up 35 40 basis points you think their financing isn't worthy too big to fail banks are. their mortgage to go to the investor class. i think you're highly underestimating it. if anything maybe the passport savings account, $10 a week savings in gas will respond. and the other thing is think about it why isn't the benefits of dropping gas prices showing up in the numbers? because wages are going down. this isn't the good old days where it's extra money. it's like a guy making $60,000 is now making $40,000 and you give him an extra 50 a month, he likes it but it isn't necessarily going to make his standards of living go up. >> and draghi he's finally

going to go qe to 20 basis points? >> negative rates, they'll charge customers to hold the money. it makes no sense at all. >> wait one second there's still a possibility here a lot of what consumers buy these days especially rich people services. so this report does not include services. and i think it's possible we're going to see some of that bump up. >> well the stock market is not listening to you. could they raise? >> i think the monetary policy is based on stable money. not on the levers ss of the lot of consumers believe, this is the future. in the falling wages, people are no longer seeing this as extra money. this is helping to pay the bills. this is not shocking with the fact that wages are stagnant across the country. when we return this morning, we will have more from our guest

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that i'm told is ongoing to manipulation of currencies. we talk this opportunity to ask jamie dimon and cfo marion lake about macro issues like stricter capital rules coming from the banks. they say whatever regulators want they will do it. then there was some consideration on how much capital they're able to give back to shareholders but they're committed to apply to get rules. will it break up the company? cfo lake said you do not undertake an industry when a business model is working. and what the fed diamond said that it is dayton driven they will not move rates unless the data point it's in right direction. they will not react until that data is there. also oil, they're watching in denver, dallas and houston. they're watching oil, but the consumer will ultimately benefit. that, of course, is moving the markets. whether consumers will benefit from oil. whether they're spending it in december. the data looks like it's not. you can see what the datea is

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welcome back everybody. the futures plunging this morning after the numbers that we got on december retail sales. check that out. dow futures more than 200 points. s&p futures off by 27. i just saw a ten-year yield that went 1.79% on a ten-year field. what are the markets telling us about the state of the economy. washington obviously watching it play out. joining us senator mark warner of virginia. and on the set, senator marco

rubio. gentlemen, it's tough enough to get together when things aren't going well. the concerns with what's happening around the globe. i wonder what you think. senator warner you're somebody who has a lot of experience in business. are you concerned about these moves today? >> well i think we're seeing a very choppy economy. i think we're seeing obviously job growth numbers that look very good. job growth hasn't translated into wage growth. i think we ought to look at ways to continue to reinvigorate the company. some of that will be doing not doing stupid things in the way congress has with shutdowns and fiscal cliffs in the past. one of the reasons we ought to make sure we get a budget done as quickly as possible. >> our guest host. >> senator warner it's marco rubio. welcome to the show. i'm the only one on the show who

knows you've got shorts on with that suit and tie. let me ask you a question. >> sure. >> there's a big factor here right? and one of the big factors we have in the economy is student loan debt and something that you and i have worked on very closely. first of all, in order to increase those wages, in order to have a middle class job and beyond and allows you to become a consumer that can spend more you have to have some sort of advanced education. but there are now hundreds of thousands of people who are stuck with degrees who don't have a job but significant loan debt. in some instances, second or third largest item in their monthly item. for those looking good acquiring higher education in the future? >> thanks marco, this is an area, you're right, you and i have worked together. we both have personal experiences with student debt. first in my family to graduate with college. i came out with 30 grand in

debt. failed in business miserably, twice before i did well in the cell phone industry. you got student debt at $1.2 trillion. i think that is having a direct effect on first-time home buyers. i think it's having a direct effect on the lack of startups we're seeing particularly from younger folks. something you that and i marco have said income-based payment. we have new legislation, new bipartisan legislation that says, let's make it one of the top options so people can come out can go into an income-based program. cap it at 15% of their income. allow them to take that entrepreneurial chance coming out of school. and it doesn't mean they're crushed by student debt. you still got to pay it back but this gives more of a runway. are 30% of default rates happen in the first years coming out of

school. this isn't a silver bullet but it's part of the solution set and i think so there's a lot interject with follow-up question. a criticism is you've incentivized people to take out loans, they have to pay back take on more loan. we're better off having them pay something than nothing. defaults are devastating to someone. you can get them taken away by bankruptcy in essence, someone who defaults on student loan gets permanently locked out of the housing market and access to credit. isn't basic argument at the end of the day, we're better off getting them to pay something on a steady basis than having default and get locked out to credit long term et cetera. >> absolute i. the annual to do start-ups, to take chance first few years out. one the thing legislation does above $57,000 in debt pay out for 30 years, not 20. again, i think we've maybe not perfect but a bipartisan idea

here that on a merit full consideration. >> we hope that people actually give that a serious chance. a great idea. thrilled to see both sidesing working together. hope we see more of it. senator warner thank you for joining us. senator rubio, take care. >> yesterday's highs, wow, we're back to 18,000 basically. >> one point. >> almost back 2018,000. today, we'll be at 17,300. how things can change. when we return, jim cramer and his take. financial noise financial noise financial noise

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finished down 1.2. who knows where we'll end up? i don't think we can rely on futures. i don't think we can rely how we thinks stocks will do because there's so much that's ahead of us. jpmorgan bad. we're just in a weird mode here joe. we have to be whippy until we get through it. >> it's weird. so many great things low interest rates, oil prices low unemployment good gdp. so many things going well. that is the time things go down because we don't know why. >> yeah. look, we've got a european ruling that said maybe there will be qe. i know qe won't mean that much and they need structural reform. copper's down. we're a net importer of copper that's good for. oil's down. none of the good stuff matters now which tells me don't bow out of the market yet. >> thanks. see you in a couple of minutes. coming up word from the floor of the cme on the move in

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welcome back everybody.

talking about serious moves in the markets this morning. dow futures down 250 points. the manager director of tjm from cme. what do you think of this? >> i think it's interesting. if you go back two days ago, we started to see oil prices getting created low wage growth and thinking about disinflationing ask, is the fed going to raise rates as quickly as they want to? now copper getting hit and crummy retail sales numbers, we start to push back expectations considerably. the thing that's fascinating, remember supposed to be -- the stock market worried rates going up? now pushing those back in the stock market. so the stock market is just confused about change. i don't think it's a huge deal. >> jim, thank you. >> we want to thank senator marco rubio for being here. >> thank you. >> i wish you were here longer. we have a million things to talk about. can you come on back? >> i will. today's an important day. ties about what i talk in

american dreams. >> ten seconds. >> people aren't responding to despite lower gas prices lower unemployment, they're not making money. you don't have money in your pocket, you won't spend it you're afraid of the future. >> join us tomorrow. "squawk on the street" begins right now. ♪ good western morndnesday morning. carl quintanilla, jim cramer. david faber. retail sales for december a big dis disappointment. jpmorgan misses estimates after the reversal in the dow yesterday. s&p looks to open back below 2000 this morning. oil's lower. copper's down almost 4%. miners getting hit. real story is in