>> sometimes you don't know. i'm going with that. >> i'm getting younger every year. >> dog years, 8 and change. >> big plans today? >> big plans. i get go to breakfast with the boss. >> nice. >> it was not because of this. because we love each other and he's good at what he does. >> happy birthday. >> thank you. join us tomorrow. >> happy birthday. >> thank you. >> join us tomorrow. "squawk on the street" is next. good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. a lot of hand wringing going on today with north korea claiming to have tested a hydrogen bomb. the yuan at a five-year low. news from apple and chipotle not helping. watching for cues from europe today. one silver lining is adp, the best since july of 2014, oil at an 11-year low. and inventories at 10:30 eastern

time. we begin with north korea claiming it has successfully tested a hydrogen bomb. global markets are selling off. valeant announces it has a new interim ceo effective immediately. and some new numbers out for chipotle and news on a subpoena. is this a tipping point for the company? first up, global markets back in selloff mode. north korea claiming it tested that first hydrogen bomb, if confirmed it would be the first nuclear test since 2013, violating continuing u.n. sanctions. the peopling bank of china allowing the yuan to weaken as data for december showed the services sector expanded at the sloeft pa slowest pace in 17 months. all of this sending oil down. after china and saudi arabia earlier in the week, the hits keep on kcoming. >> you have to look at south korea, which is more a

theoretical blast zone. did well last night. we can ascribe the inability of being able to accurately present thermonuclear war as a factor in our markets. we have never done that. we have two instances of nuclear in the last few years. we know -- we know that fukushima caused the market to decline precipitously. you have a 3% and change. we know that august 24th in 1986, from chernobyl, we had a 4% decline. these are both attempts to try to integrate. i remember trying to short mcdonald's. it did not turn out great. mcdonald's less than a percent. we're also in -- if i can be pop culture for a second. a lot of people are watching an amazon docudrama about the h-bombing of washington. these are the kinds of things -- >> you're referring to "the man in the high castle." >> "man in the high castle."

that's fiction. >> yes, it is. >> where is dennis rodman? he's not henry kissinger. you can't have that diplomacy that you might have with henry kissinger, israel, egypt, 1975. >> '73. >> this is the other h-bomb. this is stanley fisher saying we're data dependent. the data, including the adp, says hike. we can put china in a box. china went up. they are going back with insider selling. i am not going to trade this on the idea that they're going to drop an h-bomb. here's some data that is healthy. we were at war with the japanese, okay, in 1945. we went -- we dropped and did the test in new mexico on july 16th. we dropped it august 6th. we want to put that into the equation, we're stupid. >> yeah. you're starting to include some really extreme levels of

history. >> but strange love, another docudrama. let's sit back and say tomorrow are we going to talk about an h-bomb being tested again in north korea? there's been four other tests -- >> this is the fourth. >> i went back in time. here's a good way to recommend -- our country was once in a cold war with the soviet union. do you know in the 1953 h-bomb test, which was a realistic test, our market dropped less than a percent. this is the 1953 h-bomb by stalin. more likely -- >> you went back and figured -- >> listen, man, icbms were a remarkable thing. that was a chance where you could say h-bomb, soviet union, coming our way. made sense. >> what about the cuban missile crisis. >> not so bad. not so bad. >> and it's not clear completely that whether it be china or this h-bomb potential h-bomb test is

what's behind with what's going on in our market. i wonder if there are just simple things like large head funds who thought they would get big redemptions in the fourth quarter, didn't, but preparing for first quarter redemptions. and the idea of taking risk off as we ender the new year. that seems to be what's going on here. not necessarily -- we can pin it on any number of events, i don't want to minimize whether there is a slowdown in china. >> or fed funds rate. >> or geopolitical concerns, i wonder if absent all of it we wouldn't have seen significant selling. >> that's true. seasonally doom and gloom is very much a part of things. i think people -- is anyone looking at sonic, which reported a 5% comp number, then gave 2% to 4% guidance? >> no. >> that was the only earnings report last night other than monsanto having a better than

expected quarter. earnings not an issue. we have stanley fisher in an unbelievable interview with steve liesman saying, listen, we're not as data dependent as we were. if we look purely at the data, we have a lot of things strong, but he talked about oil being temporarily down. if this is temporary, holy cow. this is precipitously temporary. >> yes. >> so you have a lot of data coming at you that we are all deciding is negative. i paid 1.90 for gasoline last week. felt pretty good. if it goes to 1.70, will i not go out and wait until next year because of the fallout from a potential nuclear test in the 39th parallel? no. >> fisher did talk about riley pointing out that oil will rise again one day. >> good. >> talked about market expectations for two rate hikes this year. he thinks that's too low, that four is in the ballpark and inflation and accommodation. >> as long as inflation is -- is

lower than the 2%, and unemployment is somewhere around where it should be there will be a force requiring us to maintain an accommodative policy. >> so, what was fisher's message then overall? >> you know, i thought it was one which said, listen, we will still look at the data. the best line was we wouldn't bother to meet. stanley has a terrific sense of humor. loves "mad money." once told me that. >> who doesn't. who doesn't. >> there's more to it than that. a little self-promotion never hurt anybody. i do point out that he -- this adp number comes out, if you're employment dependent -- this economy is amazing. where are these jobs being created? certainly not in the manufacturing sect every or the oil sector. his hand is being forced by incredible job data. >> not stopping deutsche, jpn

from cutting q4 numbers and q1 numbers. >> yesterday we decided we had peak out to people talking about peak housing. peak cell phone. yesterday, wow. we're in the high peaks region. >> we seem to be. >> we'll get to apple later on. >> apple -- >> again, on that one, perhaps no big surprise. we talked earlier this week about the vacation times being given at foxconn and how their main manufacturing hub for the iphone. same story. that was out december 20th. >> exactly. >> noting that extended vacation times. >> we have to see the number before we think about the easier compares. there's a gloom -- i never used the risk often. >> i know. sorry. all right. i know. penalty box for that one. i take it. >> rangers are good this year.

>> rangers were good. >> penalty box. i think that the important thing is to say it's hedge funds, just franically dumping. the futures last night -- >> or said another way it is -- >> no. when we got the first seismic and the futures dropped 25 ticks immediately, the first seismic came out, that's when south kor korea -- i was trying to come up with a positive scenario. let's say north korea takes out samsung, is that good news for apple? no. >> you really went through that and -- >> 1961 they told me to put my head in a cubby heart at the heartwell lane elementary school because we would do better if the soviets dropped a bomb. we were the poorest people on the block. we did not have a fallout shelter. we did not have a basement. i was plenty worried. i was more worried then than now. >> you turned out okay.

this is a hard pivot to chipo e chipotle. fallout from food safety concerns, chipotle sees fourth quarter comps down, 14.6, dragged down by a 30% drop in december. the company says it received a subpoena related to a criminal investigation being conducted by the u.s. attorney's office for the central district of california that requires the company to produce a bunch of documents related to a restaurant in the state of california. is this the kitchen sink or not? >> you know, this is -- these are unfortunate things. the neurovirus did -- comps down 37%. chipotle did point out in december, i was looking for 14%. somebody is putting out an estimate that people were thinking it would be 8% to 11%. we were all looking down 14%. i like the fact this they increased the buy back. another 300 million. they bought back in the 500s. nobody is perfect.

they make burritos, not stock buybacks. taco bell once had e. coli, bounced back. jack in the box -- >> much worse. >> e. coli there was fatal. i was at jack in the box last week. i was at chipotle last week. i'm radiating. >> you were alone. >> i was one of a few people in a tucson chipotle. i went to panera, because i didn't want to be alone. >> when do you choose to buy the stock? >> annualized compares. you have to get one quarter ahead of the easy compares which would put you in september to october time frame. the company is buying. could you do 395 -- be time sensitive. we don't know what january comps are. these guys maybe give us this week's numbers.

>> stevens went back and looked at lulu and past experiences with starbucks and said when the brand is this troubled it takes about a year. it tends to bottom out around 20 times. >> i would point out this is a millennial stock. they hate monsanto because of gmos, people think i will risk e. coli in order not to have long-term cancer. short-term illness versus long-term cancer this is a health and well ps stock that sells burritos. there san affinity to this company that can transcend e. coli where people said i'm getting fat and now sick. >> down 30% for december. >> as bad as 34%. >> that's jcpenney. >> those are ron johnson numbers. >> that's jcpenney we're referencing. jcpenney came back as a relevant issue. to be clear about it, i think

the company is being forthcoming for what it's worth. when we come back, chips and drones. intel making some news at ces in las vegas. we will talk to brian krzanich in an exclusive interview. futures are decidely weaker. a lot to worry about. we'll get to all of that and more when "squawk on the street" comes back.

valeant announcing board member and former cfo howard shiller has been named interim cfo effective immediately. michael pearson remains in the hospital being treated for extreme pneumonia. bill ackman says we think howard will do an outstanding job and we have enormous confidence in him. mr. ackman did sell some of his shares taking his stake in the company down from 9.9% to 8.5% with the sale of around 5 million shares of valeant at the end of the year.

he said it was for tax selling reasons, generating tax losses for investors. not sure i've heard that often as an explanation. the key here is what the future of this company is. schi schiller is fairly well regarded. stepped down not long ago. has been back since the philidor controversy. mr. pearson's health remains a history beyond the diagnosis of severe pneumonia. my understanding is that the board is not getting much information from his family. they want to keep it as private as possible in terms of where his health stands. you know, on these kinds of things shareholders want as much transparency as possible and for various reasons families may not want to give as much information as would be hoped for. >> i find it quizzical.

pneumonia. we have drugs for pneumonia. you don't know how severe. this is kind of an appointment of a man with some esteem. i listen to the sales you tell me about by ackman. this one doesn't add up to me. there's too many question marks here. what's really going on with shareholder base? what's going on? >> we always try go back and draw parallels. it goes back to jobs. jobs at apple and the degree to which the board at the time of his pancreatic cancer was disclosed or not disclosed. >> how important is pearson? >> some would say he's the architect of the entire strategy that built the company and watched the stock price soar for quite some time until the last few months when it cratered. through his decision to acquire aggressively to use that tax rate that the company has.

and to cut rnd spending, to raise drug prices which got him in the sights of congress, if you will he's something of an ic iconoclast to say the least. and a workaholic as well many people say. >> a workaholic. >> yes. >> workaholic. >> yes. >> when we come back, we'll get cramer's mad dash, count down to the opening bell. looking at futures. we will see how europe continues to trade into its close. "squawk on the street" is back in a moment.

we have about eight minutes before the opening bell. set up for a far lower open at least it looks like right now based on -- well, so many different things. >> let's talk oil for a second. >> please. >> there's a fine oil company which does dominate permian, which is pioneer. trading at $213, it announced a $12 million share secondary at 115. this needs to hold that price. this is an excellent company. but stanley fisher said he felt that oil, the decline is temporary. if you're in the fisher camp, maybe you want to buy pioneer. if you're in the rest of the camp, wait a second, oil did not go up on saudi arabia tensions, maybe you wait. >> depends on what mr. fisher

defines as temporary. >> that's right. he plays the long game. >> 3 months or 30 months. >> i studied his life and family in zimbabwe. fantastic story. take some polish immigrants, put them down in zimbabwe, own some general stores. he's a great man. but he did mention temporary. i'm saying maybe longer lower. >> importantly -- when was the secondary done? >> last night. >> so they do the secondary. they raise 12 million -- raise the money while you can. isn't that always the story? >> at point would have been better. >> right. they didn't think they needed it here. >> yeah. >> but my point is that pioneer -- watch it. that will be the tale of the tape. inventories. people are bearish on oil. brent was bought down to parody by wti when our government allows exports to try to sell a tank. >> i know you have workday also.

>> barkley goes with workday. it's all netflix and amazon. workday is a great company. but people are shying away from anything having to do with high-priced earning multiples. this is a revenue growth story. so there's -- i put this in because you mentioned a term we don't use usually. you don't own workday if you're worried about stocks going down because they're expensive. if you're thinking about great growth over time, you want to own workday. let's watch workday and pioneer. >> we'll keep an eye on future force a few more minutes before the open bell. they indicate a far more lower open after north korea claims to have successfully tested a

hydrogen bomb. we're back after this.

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. you're watching cnbc "squawk on the street," live from the financial capital of the world. the opening bell in just about two minutes on this wednesday. the geopolitical uncertainty and to some extent the macro uncertainty continues. we mentioned brent near an 11-year low. west texas near a 7-year low as crude is below 35. and we'll see what inventories say. api showed a build last night. >> i would like to be as negative as the market indicates. tomorrow we'll wake up and say what was that about the h-bomb and n? we'll say job growth wasn't that bad. stanley fisher didn't say four hikes, he said more than two hikes. he's not on autopilot, i like that. i worry about the fed's balance sheet but i feel a little bit more sanguine. let's find things that we can buy. i want to see oil inventories and the minutes at 2:00. >> minutes coming up. and services, ism later on this morning is we'll be watching some levels.

apple at 100 that will be interesting. you agree? >> yesterday the big breakdown wasn't really apple, it was in corvo and skyworks solutions. the pure plays on apple. my conviction on apple has nothing to do with this quarter, it's the fact they can develop another revenue stream because they have so much cash and doing good things. the idea of trying to pull a bottom in apple down 4% last year, it's hard. how about if you want to own apple an inexpensive stock that has a brighter future in three, four months when comparables are better. nobody is thinking anything but three or four minutes. if you looked at the action yesterday, i rewrote the top of "mad money" multiple times. my nephew and i go back and forth. back and forth. good day, bad day. horrible day. great day. wow. >> that's definitely the kind of day it was. people talking about apple in the context of fitbit which

we'll get to in a bit after a miserable day yesterday. let's get the opening bell done and look at the s&p at the bottom of your screen. at the big board, cancer diagnostics company, oncocyte celebrating its listing. and at the s&p, pure barre celebrating fit week. brings us back to fit. this blaze they unrolled doesn't give you photos, phone capables or third party apps. >> there's a lot of competition. everybody has decided from the consumer electronics show that the market is saturated. i continue to believe rob peck will be right. james park developed a better mousetrap for health and wellness. that was wrong. when i say wrong, wrong yesterday. i didn't think fitbit was near as bad as it should have acted. i go back to peck's work, which

is impeccable. he likes it. >> he did say -- he gave ten reasons why you should be bull irk on f.i.t. >> i think park is in there selling to so corporations. that will slower insurance bills. i don't know. stock was rated yesterday. i thought there was a short rate on it, like the old days. >> you felt that way? >> yeah. >> david, everyone is talking about this starboard letter. you going to save that for later? >> we'll talk about it in a report in a bit, carl n terms of yahoo, which like everything else is down. the broad market down sharply as the s&p -- down over 1%. interesting actually. we mentioned chipotle, it was down only 2%. >> it was bad. but did anyone think that people were clamoring to go to chipotle after the neurovirus? wow, that's a great reason to

go. maybe you want to wait for a couple months to go by. my daughter went there last week. she said i took out. i didn't want to look stupid. >> well, all that said, apple is right around that $100 level, 80 cents above. and disney is below $100 a share. if you had told people heading into the opening of "star wars: the force awakens" that disney would be down, what has it been down, 10%, 12%? >> yeah. >> they might have said that that doesn't make a lot of sense. the movie has done nothing but exceed expectations. >> disney and apple are the two where people say wait a second, these two are in a foot race to 90. i think bob iger you would like him to come out and say we will have sharply better than expected numbers. we'll be buying back stock. you would like tim cook to say i don't know what people are doing. won't get that. james park won't come on and say it was a fitbit christmas.

we are in this window where there's uncertainty. uncertainty sells. is disney bad? people feel like it has to retest the low. >> 20%, if i'm not mistaken is around 98, taking it off the highs. a lot of discussion about a long-term test for disney, the trend line post-2011 is right around where we are. >> you have shanghai, disney coming up. you have a company diversified away, not as beholden -- this is all cable sniffing, comcast, i own shares in that company. these stocks are in down trends. right now the charts are controlling, fears are controlling. apparently felt that electronic arts didn't sell that well and the "star wars" game. that trumps the box office success? box office in china year over year up over 50%.

they don't even have "star wars" yet. everybody is taking the data and interpreting it negatively. i was on the sonic call last night. sonic what does that have to do with anything? i'm desperate for data. the sonic call was good. they give you 2% to 4% guidance, people now saying that's bad. i urge people to say -- we verniverne i have earnings next week. the economy is not that bad, earnings are not that bad, the stocks are bad. maybe that's wrong. >> the names with the highest multiples are take the largest punishment in the first two trading days of 2016, now these four minutes we have, amazon down 7.5% for the year. tesla down 8.7%. netflix down 7.2%. those are significant moves. tesla was not a big mover in 2015. >> if the nasdaq falls today,

that's five days in a row. we haven't done that since november. >> nasdaq down. the stocks bottom when china bottoms. you have a chinese investigation. the two strongest sktocks i followed were clorox and kimberly clark. >> a name we have not mentioned often, twitter approaching a 52-week low. not having a good '16 to follow up a poor '15. market value around $15 billion. >> talking about longer tweets. we don't want longer tweets. we want better stock prices. my travel trust has a small position, why? i tweet a lot. i want to keep track of it. it's still too expensive and

doesn't have moment hum. it's flailing. >> morgan stanley out with a brief note to raise the character level. he said it seems desperate and square is down another 3% close to 11. >> it's a market looking to sell off on anything. as my nephew writes to me, north korea has had nukes since 20020. they set off another richter scale in 2013. i'm saying -- i will give you a facts don't fit the as negative market story. europe wasn't down 4%. south korea wasn't. that was barely down after being down 1% intraday. you can sell all you want, but if inflation low and we are hiring people but stanley fisher is saying don't expect four. i don't want to sell everything. i don't want to sell everything. i want to buy some things.

is that bad? >> no, that's not bad. >> i want to buy google -- alphabet at 25 times, 24 times earnings. >> nobody is stopping you. >> no? >> no. >> i don't want to buy chipotle, but mcdonald's -- i like mcdonald's. i'll put a bag on my head and do some buying. >> we'll sit on the other side of the room when do you that. >> tom coughlin, that was right. pulli putting everything negative on the table. does pioneer break 115 or finish higher? should i look at disney and think because everyone is selling it i have to join the sellers? should i do that? >> no, you don't have to do that. you are your own man. you can be strong.

>> remember, joe stalin, when think announced that h-bomb, opportunity. the market did go down from 24 to 22, the dow, after that. but i think the h-bomb opportunity presented itself in august of 53, those who decided to launch missiles were paying too much attention to stanley kubrick. >> remember the undertitle there, how i learned to love the bomb. >> and where is rodman? did you ever see the 30 for 30 about detroit? >> no. >> rob will game at one point. are we are going to react about this or talk about celgene at 16 times earning? >> right. >> are we going to react to this or talk about lily about the right thing with earnings.

>> northrop grumman, a company that every time you read one of these things, people say i need new choppers, new missiles. ratheon. >> that's not painting a pretty picture for the world. >> david. >> not to rain on your parade. >> i'm selling everything. >> let's move on to yahoo!. it is back in the news yet again. another letter from starboard and jeff smith who owns a significant stake, less than 5%, less than a filing position in the company. writes to the board a scathing letter, really, saying that it appears to him that shareholders have no confidence that management and the board can execute on a separation of the company's core business. the reverse spin they're focused on doing from the stake in alibaba. that would also include its stake in yahoo! japan. starboard saying share holds have lost confidence, changing

the direction of the spin is not acceptable. changes to management and board composition and strategy are needed. he wants a new engage with potential interested buyers of the core business. this has been a key consideration, would yahoo! court and/or receive potential bids and engage in conversations with those who may be making a bid for the core business. i sfoek poke to mr. smith earli this morning. he indicated he was approached by parties interested in buying the core business but has been told they cannot get a dialogue going right now with the company. maynard webb was on our air along with marissa mayer when we interviewed the two of them, he said it is our fiduciary duty as board members to engage if, in fact, we think there's an opportunity to sell the core business and potentially realize

a higher shareholder value. we should get at some point more details from yahoo! on what it is thinking, how it's going to go about doing that reverse spin. and on what may be impediments to the sale of the core business. at this point it doesn't appear -- for instance verizon made no secret of its interest. it came public and said we might be interested if it was for sale. there are a few considerations here. not insurmountable, but you have a contract in terms of the yahoo! japan royalties. most likely a buyer of the core business doesn't want to buy yahoo! japan and you need to get a contract from masa or get out of that contract. what if the buyer is verizon? masa controls sprinlt, key competitor of verizon. how will he feel about that? could that raise difficulty?

possibility. not insurmountable. there are a number of other third party consents that need to be dealt with. you're leaving behind a 40 act company, because it's just an investment company, it's an owner of the alibaba stake. all of this comes about because as starboard says in its letter, it believes the decline in the yahoo stock that the alibaba stake at 30 billion is worth the entire company's value, so the business is being valued at nothing. he makes no secret of the fact that a proxy fight may be once again in the future where he seeks board seats for what he believes is the right path here, namely a sale, replacement of the ceo and a number of board members. >> impact of a letter historically? >> the boards pay attention. they do. he may galvanize others. there are plenty of other large shareholders here who feel similarly. i think at this point the board still stands behind marissa m

mayer. >> does he reference anything? >> the loss of significant staff members. if you're a shareholder, it's worth a read. he writes a good letter, does mr. smith. it continues to be a company embroil embroiled in controversy. it lk interesti it will be interesting to see if they engage. if you are an interested party, you can't just make a bid. you can come to some sort of reasonable expectation of reasonable value. if they're not willing to engame, when will they be? >> alibaba's percentage? >> the whom thing. >> this is not like a mutual fund that holds stocks. that's incredible. it's not the stock -- i think people go back and they buy high

growth, go to biotech, netflix, buy the defense companies, make a stand here because they don't think as negatively as the overall. seeing companies related to china, like cummings, but i don't know that i want to get yahoo. >> the dow is down 226. let's get to bob pisani. good morning. >> off the lows but just barely. i want to show you the s&p 500 futures. a lot of debate about the cause of the big drop we saw, more than 20 points after 9:00 eastern time. two things occurred, the word out of that korean nuclear test, and china said its currency fixed lower. a lot of volume there at a typically light time of the evening. north korea's nuclear test has added to the worry, the yuan,

the weak oil, and the fed rate hikes. we were trading 2,000 to 2100 throughout the s&p 500 in the last quarter of the year, now we're breaking below that. the low in december was 1993. the new trading range will be the late summer trading range. the 1850 to 2000 range. when people are unsure, technicals are important. we had good eurozone pmi numbers. very good. but europe down again. autos again week. mike jackson saying profit margins may be coming down. too much inventory out there. ford, car max, to the down side. you were talking about pioneer, the important thing about that $12 million share secondary, they had one about a year ago.

this is the second one they're dumping on the market. it's about 9% of the share count, that's an awful lot to dump on the market. banks are weak. down a little more than the overall market. i wonder if some of this rhetoric from the democratic nominees or people running, bernie sanders and hillary clinton who stepped up their rhetoric against big banks may not be affecting them again today. they're weaker than the overall market. metals sitting near new 52-week lows. the usual suspects down 5%, 6%, 7%. we did ask our friends at kenshaw what does happen after a korean nuclear test? day afters, s&p traded positive 100% of the time. the kospi over in korea, not surprisingly, down 1.7%. the dow down 207 points off the lows. >> thank you very much, bob pisani. let's get to rick santelli at the cme in chicago.

good morning. >> good morning, carl. we had a big adp number and a big drop in equity. equities are the story and what they represent and how correlated they are to real economic fundamentals. two-year note yield since october, we have not closed below 1% since two days before christmas. we're having some problems, i think. i will continue f we shift away, i apologize. october starts a five-year close, the lowest close since the 21st of december. last ten-year note yields, beginning in november, turning a bit. 1211 last time we closed at these levels. now let's switch gears to the big markets. dollar versus yuan. on shore, offshore spread winding, we will stick to onshore. march of 2011 the last time the dollar was at this strong level against the yuan. dollar/yen. there was a time it was at 1.20. not the case anymore, lowest

levels since august of 2015. the last one, i will switch on you. the pound versus the dollar. look at this chart. we should pay attention to the pound. the pound now is at a level we haven't seen against the greenback on the weak side of the equation since june of 2010. carl, the data keeps on flowing. how the markets will accept the 10:00 eastern durables, factory orders and sector services pmi is anybody's guess. >> thank you, rick. oil is at center stage again. jackie is at the nymex. >> significant selling pressure today. brent crude hitting an 11-year low. what's happening here, two things. the first is the geopolitical tensions not creating a rally in crude but creating an environment where people think the producers in the middle east will continue to bump oil to

maintain market share. they will not be able to pay bills if there are disruptions there. the second piece of this is inventories. 10:30 we get that number. we had an api report of a draw down significant, almost 6 million barrels. that doesn't seem to be impacting the market here at this point. certainly less important. tensions in the middle east and north korea giving gold a bit of a bid but not able to break through the 1100 mark just yet. back to you. >> thank you very much. we will stay on top of this selloff. the dow just a shade below 17,000.

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semiconductors after the smartphone. we'll dive into that and more next.

. time for cramer and stop trading. >> there was a stock, stock down 30% last year. a stock that represents over 100

million shares, it's called wall mark. how horrible is a market where walmart is your leader? and i question a market is as horrendous as everyone says when this stock goes higher. it's too important to the u.s. economy for me to think the end is here. and get in your fallout shelter or cubby because the icbms are coming your way from pyongyang -- not. >> jim, what's on "mad" tonight. >> i want to talk optimism with kevin o'leary. you can make some money. boone pickens, he has been bullish in oil. not a great call, but he's long. meaning he takes a long view. let's find out more. look, i -- i love to be as negative. i want to be negative. i will go home and i will just take some medicine that makes me as negative as everybody else. i will feel so much better.

so i'm in synch. boyz ii men. you said i could be a man. >> we'll see you tonight at 6:00 p.m. breaking news, ism services.

good wednesday morning. welcome back to "squawk on the street," i'm carl quintanilla with sara eisen, simon hobbs, david faber at post nine of the new york stock exchange. a lot weighing on the markets not to mention north korea and oil. we are getting some data as we speak. let's go to rick santelli for ism services. >> starting with the older data first. november factory orders down 0.2. if you strip out transportation, down 0.3. close to expectations. durable goods orders. these are for the month of december. headline number on durable goods unchanged. unchanged. if we look at ex-transportation, also unchanged. down 0.3 on what may be a good proxy for business investment, capital good orders, nondefense aircraft down 0.3%.

now, let's go to ism december read, nonmanufacturing. 55.3. 55.3. now, this is fascinating. our last look was 55.9 that was the lowest since april of 2014. and indeed it was a read that many didn't expect, 19-month low. this takes the comp further back at 55.3, comping to 55.3 exactly in april. you go to 53.7 in march of 2014. we are showing the chart, so you can see those early 2014 comps. there is a correlation with the weakness we saw on china with this weakness. with employment and strong adp, what does unemployment look like?

55.3. a litany of data for you to dgt, simon hobbs. >> we start in north korea. the country claiming that it successfully tested a hydrogen bomb. eunice yoon is live in hong kong. >> reporter: thank you very much. north koreaen state media been describing this event as a special achievement of the country's 5,000 years of history. the country state media has said this test was an act of self-defense against the united states. so far the test has met with international condemnation from countries like japan, even china has says it resolutely opposes the test, that it wasn't aware of the test before it happened. and it says that it plans to call in senior north koreaen officials to lodge a formal

protest. so far there's no independent confirmation of north korea's claims. however the pentagon said it is investigating the matter. u.s. officials have said this could take weeks before we reach any conclusion. south korean intelligence officials have also weighed in saying they're not convinced that north korea has a technology to carry out this type of test with what pong young claims is a small hydrogen bomb. even so, south korean and japanese authorities have said so far they have detected tremors of a 5.1 magnitude earthquake in north korea which they say suggests that the quake was man made. chinese authorities, south korean authorities and japanese authorities have said they have not detected any radiation in the area. united nations security council will be meeting later today in an emergency session to talk about this further. carl? >> eunice, thank you for that.

that news combined with the lingering concerns about china. how worried should investors be? let's bring in scott brown and brian jacobson. gentlemen, good morning. good to see you. scott, let's hop on what eunice was just saying, that's the news from north korea. where would you rank that in the list of concerns this morning? >> it is certainly high up there. investors are also worried about china. we had a big currency move. in fact, that, i think, is a main story this year. if you look at where the currencies have gone verse the dollar, since the end of 2013, china has deprecated about 6%, 7% now versus the dollar, versus most currencies which are down about 30% or so. so the chinese currency has a

lot of downward pressure on it now. they're likely to see some move for depreciation by the central bank there. but it won't happen all at once. that might not be a good thing. if they did it all at once they could get it out of the way. it will be a major concern for investors off and on. the domestic economy looks to be in good shape. >> that is the split, isn't it? you got these far away dynamics out of china with currencies, north korea with geopolitics, yet our adp looks decent. how do you navigate that fissure? >> for investors they should watch but not worry about the long-term investment strategy. you saw this interesting confluence last night with the release of the slightly weak service sector pmi out of china about the same time that they deprecated their currency and also the news out of north korea. it's almost like you sort of got this triple whammy coming out of

asia to effect the markets. this morning's ism number is a similar story to what we see out of china. service sector remains good. going slightly in the wrong direction but remaining fairly strong. more the manufacturing side is taking the hit. a lot of manufacturing weakness is tied to commodities than the higher up on the food chain in terms of the value added part of the economy. >> brian, i don't know what your view is, but there was about 2 1/2 years during qe where the market just kept rising. i'm not sure back then it would have reacted like this to the news flow we had today or it would have reacted to monday on the news flow we had then out of china. if the market is as fragile as it appears without that blanket of central bank intervention -- and still fisher today was talking about raising rates three, four times during the

course of the year -- whether given the uncertainty people are willing to pay less for a given stream of earnings and therefore this market begins to settle lower. >> simon, i think you're right. investors will likely be willing to pay less for earnings only because of the likelihood that the earnings growth will be slightly lower. you don't have the back drop of incredibly accommodative monetary policy. now it's just accommodative. there's a bit more risk around that earnings outlook. when you combine the taking away of the support of the central bank a bit here, along with the risk of the -- to the earnings outlook, i'm not expecting a lot of multiple expansion in the united states. where you could see multiple expansion, albeit from low levels is more outside the united states, whether that's in europe or the meernemerging mar. that's why i'm trying to tamper the enthusiasm for the upside for emrnerging markets.

maybe we'll go back up to 2100 on the s&p 500 by we might go down to 1957 before we get there. >> scott, can i come back to the statement that you made about the underlying economy being strong here. maybe within manufacturing or industrials, people are focused on the liquidation of inventory. and gdp estimates are coming down as we speak. deutsche bank said overnight it may be because of the inventory situation that we dip momentarily negative on q4 for gdp what is your reading there? are we assured there will be a bounce back as many people say there will be. >> a lot of the details have come in, it looks like the fourth quarter was softer in terms of that headline number. if you strip away the net exports and inventories, you're looking at underlying domestic demand, private domestic final sales, probably still good. 2%, 2.5%.

a drag from the rest of the world, a drag from the inventory direction. but the inventory correction paves the way for a better year ahead. you're looking at a mixed manufacturing sector. the weakness in exports is a factor. the domestic economy is chugging along okay. ism numbers may be disappointing but not horrible. a system with moderate growth. now going through a tough time. we have the winter data that will be coming in the next couple months. those are often distorted. we normally lose around 2 1/2, 3 million jobs every january. so maybe difficult for the fed to get a handle on how strong the domestic economy is. i think the job market and the inflation outlook will drive fed policy. >> certainly that picture is going to clarify in just a couple of days. appreciate the insight. thank you very much. scott brown and brian jacobsen. thanks. >> claims from north korea on a

successful nuclear test what does this mean for the united states. let's bring in richard haas to discuss it. good to see you again. >> thanks. >> if this claim turns out to be true, what does it mean in terms of the progress of north korea's nuclear program? how big of a milestone is it. >> it's significant. it shows that north korea continues to advance its fourth nuclear test and presumably the blasts are getting larger and the actual devices are getting smaller. which suggests down the road they could marry them up with a longer range missile. secondly it shows everything the outside world is doing and is likely do today at the u.n. is counting for nothing. north korea essentially is more than prepared to pay the price of getting its wrist slapped by this or that sanction or this or that u.n. resolution and continue down the path of developing a small but significant nuclear arsenal. >> so how tough do the sanctions

need to be before you can see change. you mentioned there are already ongoing sanctions. the "wall street journal" put an op-ed out saying they're not designated as a sponsor of terrorism and there's a bunch of designations that could be put on north korea. >> there's only one sanction that would get their attention, that's called china. if china wanted to suddenly make sure that all of its border guards develop the flu and nothing moved, north korea could get the message fast. only china has the latent leverage to get the north koreans to do that. but so far china hasn't done that because of worries of instability on the peninsula. >> bring us up to speed on the relationship between china and

north korea up to this point. it hasn't been so smooth even though they've called allies. >> any time you have a relationship when two unequalled, where one is heavily dependent on the other. there's lots of friction. the chinese made it clear today they didn't know and they're not terribly happy. i wouldn't be surprised if the chinese voted in favor of a resolution condemning north korea. all this chinese displeasure, there's a ceiling to it. unless the chinese are willing to break that ceiling and turn the screws on north korea, i don't see north korea's behavior changing. >> they don't want the whole thing to collapse and have the americans marching north or refugees on thaeir border. the details matter. this is a clear provocation, but it scored 5.1 on the richter scale. as to whether they have been able to merge atoms and do what they say they have done, there's

a huge amount of skepticism before we get carried away. we don't know. the evidence would suggest to many that they're lying. >> fair enough. in the past they've often boasted about technological accomplishments and they were boasts. it's quite possible they haven't achieved what they said they have. a lot of this is brovato. still, the bottom line is even if this is only half a loaf, they continue to move in the direction of getting more capable and smaller systems and they continue to modernize missiles. to me it's more a question of when rather than whether north korea poses a great threat to the united states. >> richard, prioritize for us the situation in north korea versus the potential of

saudi/iran moving beyond a proxy war. >> i don't see saudi arabia and iran moving beyond the proxy war but there could be an intensification of that proxy war, not just in gemmen but in bahrain and even with saudi arabia itself. the 10% to 15% of the population there that is shia is co-located with the oil. i could see all that heating up. what i think this tells you is that we have multiple parts of the world that have real -- either the reality or the potential for instability. we have not even talked about pakistan and india, we have not talked about parts of africa or the problems in brazil. when you add it all up, this is a show about markets and investing, there's any number of direction from which bad news can come on the geopolitical front that would have real economic consequences. >> on that point about what wall street is trying to figure out. it's quite a back drop for 2016

to start. china is the real question now. how slow its economy is slowing down, how it will manage its economy and market from freefall. >> two things, one is domestically it suggests the government role in society will get even larger. the chinese will take great steps to make sure political instability doesn't break out. there's something of a debate going on, but it's possible we'll see a more assertive chinese foreign policy. in some ways to use nationalism as a way for compensating as a way for economic growth. that's a real concern. >> no doubt you guys are busy. thank you. >> thank you. in the meantime, the dow is currently down 219 points. cs, the consumer electronics show is in full swing in vegas. jon fortt is live there with the co of intel.

good morning, jon. >> good morning, simon. thank you very much. brian krzanich, you are joining us here. you had the keynote last night. quite a bit to talk about. i want to start off talking about this global geopolitical environment, you're very much a global economy. we have concerns this morning in north korea, of course china's economic slowdown. how is that affecting the way you look at the year? >> you know, when i look at 2016, i think from our perspective it's more from a macro economics copy of 2015. we saw china slow down in '15. we expected it to stay stable but slower than the growth we've seen in prior years for 2016. our model says those emerging markets, they also are slower as well. the u.s. and western europe continue to grow and the pace they've been growing. we look at '16 looking like a copy of '15 from a macro

economic standpoint. >> at least that's a copy of something we've seen already. touching on some themes you hit on last night. when people think of intel, they think of pcs. we just came out of a smartphone growth era. that growth is slowing down. you didn't talk that much about pcs or phones in the keynote last night. you had drones, bikes flying over your head. you came in on a lover board. where does that say about where we are in consumer electronics today? >> we are trying to find what's the next big experience that people are looking for. that's what we were trying to show last night. these devices will transform the consumer experience. it's how drones can go now and play sports, or your active life. how all these other devices can really interact with your active life. >> we're still fumbling trying to find that. you look at gopro, people are excited about it, they're selling a lot of units, but there's a lot of uncertainty in

how quickly they'll refresh those things. are you seeing any signs yet on whether it's going to be wearable sports related technology? whether it's going to be droning or something else that will power consumer demand for the next wave? >> well, i actually think drones will be somewhat of a consumer oriented product. i believe it will be on the industrial side. there's so many applications where people are using much more expensive devices or much more human elements, looking at cell towers, inspecting pipe lines. drones commercially will kick off there. that's where the real value is going to be. but from a consumer standpoint i think it's going to be things like robotics and automation and integration like that. those will be the next emerging trends that i think we'll see. as the population ages, that robot we showed last night, we

look at that as a personal assistant. imagine that carrying your groceries home for you at the store because you're aged. your robot can follow you and take care of them for you. >> i remember the first months when you came in as ceo. you gave a presentation where you said for each new era of devices, you get an order of magnitude, maybe ten times more actual chips, but the price that you get on those chips is a fraction. is that playing out the way you expected thus far? are you seeing ten times the opportunities that we've seen in the smartphone era to get chips out there but the prices coming in low? >> it is. you have to remember our strategy ties us back to all these things are connected, so it builds back on to the data center. if you look at curie, we announced it last night. it's shipping now. it will continue to grow through

2016. it's sub $10. i think a lot of people didn't think we could build a sub $10 part last night at intel. every one of those devices was connected up to the data center. all of these connected devices feeds our data center strategy as well. so it gives us a complete cycle of price points, margin points, growth opportunities. >> are you going to continue to have the leverage in the data center centers, the scale eating so much of the cloud business? you would expect at some point they'll say we would like cheaper prices on those data center chips. >> two strategies there -- actually three. first always make sure you take care of those customers and please them as much as you need to to keep them coming back. secondly, keep driving technology, such that people have to go -- they want to go

buy your parts. there's a need for the performance that you will provide. our acquisition of altera, all those drive performance. and the tier 2 data centers grew faster than the tier 1 amazons, if you look at 2015. there's a widespread growth of the cloud and data center occurring. yeah, it's being -- the big guys are growing well, but the hundreds and thousands of other little guys that are growing are feeding growth at a faster rate. >> interesting news. thank you very much. brian krzanich, ceo of intel joining us here at ces. lots more to come here today, including sony's ceo, kaz hirai who will be with us. >> thanks, jon. when we come back on "squawk on the street," what federal reserve vice chairman stanley fisher had to say about rates and global uncertainty.

before we head to break, a check on the markets. the dow is down almost 200 points. on tv working with canines. are you a dog lover, watson? i do not own a dog. but i work with veterinarians. how do you do that? i help them analyse over one hundred thousand pages of medical studies. that's great... 'cause they can't exactly tell us what's wrong with them. isn't that right, rusty? rusty. who is a good boy? who is a good boy? you are. yes, you are. watson, i think you need to work on your dog voice.

federal reserve vice chairman stanley fischer speaking out this morning. steve liesman spoke to him. he's in d.c. with some of the

highlights. good morning. >> reporter: good morning. fed vice chair stanley fischer talked about weak economic data out of china, and while the fed is monitoring those things, he loosely talked about four rate hikes this year. >> those numbers are in the ballpark. the reason we meet eight times a year is because things happen. as they happen, you want to adjust your policy. otherwise we could meet in january and close down shop until a year later. we have to react to incoming events and we will react to them. >> this was fischer's first interview since the rate hike in december. he said they would be aiming for 2% inflation and unemployment rate of 5%. he said they want to hike rates without creating big messes in

the market, but he said they would not be guided by the market for rate hikes. >> we make our own analysis, and our analysis is that the market is underestimating where you will be. you can't rule out there's some probability that they're right because there is uncertainty. we think they're too low. >> there was some data this morning to back up his optimism on rate hikes. adp coming in at 257, well above estimates and above the nonfarm payroll number which includes government hiring of 210,000 total with strong job growth in the service sector. that data contrasts with the trade deficit at 8:30. so the story has been one of a strong u.s. economy and weakness overseas that hurt u.s. manufacturers.

fischer thinks the u.s. can withstand that weakness and post moderate growth numbers at least for a time. >> thank you very much, steve. when we come back, breaking news on crude oil. we'll get some weekly inventory numbers after api last night revealed a draw.

. welcome back to "squawk on the street," i'm jackie deangelis reporting from the nymex. just moments away from the department of energy out for weekly inventories for crude. api telling us we got a big drawdown last night, nearly 6 million barrels. looking for a 3 million barrel build. these estimates all over the place when it comes to crude oil. trading around $35 before this now coming lower. the number actually a draw down of 5 million barrels. this is not what we would expect. we would expect to see prices go higher a couple of competing things happening here. right now people are selling to generate cash and stay on the sidelines with so much uncertainty and there is the expectation that the mideastern

producer also continue to keep pumping. then there's the thing that happens this time of year with taxes and crude oil. crude gets shifted around. traders are talking about that and how accurate this number is as well. simon, back to you. >> the saudis still cutting prices to head off iran's return to the market. that was a big effect over the last 24 hours. >> yep. >> straight ahead, north korea claiming successful test of a hydrogen bomb now. we'll talk to the former chief of the cia's korea branch about what comes next.

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good morning. i'm sue herera with your cnbc new news update at this hour. an earthquake with a magnitude of 4.8 has shaken the inland region of southern california. the u.s. geological survey says the quake occurred at 6:42 a.m. and was centered near the town of banning, 85 miles east of los angeles. there were no immediate reports of damages or injuries. the office of german chancellor angela merkel has been sealed off due to a suspicious package. t chipotle says it has been

served with a federal grand jury subpoena as part of a criminal investigation in regards to a neuroo neurovirus outbreak. and a japanese fighter plane taking off from an air base in northern japan to collect radiation measurements after north korea's claim of a nuclear test. no radiation has been detected so far. that's our news update at this hour. north korea saying earlier today they successfully tested a hydrogen bomb. a claim that has been met with international skepticism, for more let's bring in bruce klinger from the heritage foundation and former chief of the cia korea branch. welcome to the program. >> thank you for having me. >> do you believe that they successfully have been able to effectively merge atoms and

therefore massively increase their potential explosive power? >> it certainly looks like they successfully conducted a fourth nuclear test. the seismologists can distinguish between an earthquake and manmade explosion. i think it's less likely that it was a hydrogen test. experts think what it might be is a boosted fission weapon. so it would be a larger yield than the three previous tests as well as the 1945 u.s. test or explosions, but not yet has obtained a fuel fusion hydrogen bomb. certainly it's a nuclear test. >> but we've had that before. so effectively they're lying to the international community. they're claiming they've done something they haven't done? >> well, we don't know yet. it would be a boosted fission, which some would call a hydrogen bomb. it would be a step up in the development from their existing nuclear arsenal.

i have not seen a reliability estimate yet of the explosive yield estimate. some say it was 7 kilotons which is what it was in the previous test. others thought it might be higher. we have not seen real estimates yesterday. >> do you believe the united states and the white house is adequately dealing with this threat? >> no. contrary to president obama's blame that north korea is the most heavily sanctioned country in the world, that's not true. the u.s. has sanctioned twice as many zimbabwe entities. there's a number of things we can do. in fact, both houses of the u.s. congress have pending legislation to increase u.s. sanctions because they both have been dissatisfied with the obama administration's policy of really timid incrementalism on imposing sanctions on north korea. >> the view is understandable,

but richard haas told us it's on china they're the neighboring country. they're the ones who have relations with north korea. don't they have to make the next move here? >> well, there's things that the u.n. and the u.s. can do. certainly china has been part of the problem rather than part of the solution. and some of the pending legislation calls for imposing third party sanctions. those entities either government or financial that are assisting north korean entities. there are things that the u.s. can do. even though went doe han't have trading relations with north korea, they still use the u.s. financial system which comes as a surprise to many. there are things we can do to directly sanction the north korea government. >> talk to me more about how it shifts the balance in the region what it means for japan and south korea, our key allies and our key economic partners. >> well, the fact that it's a fourth nuclear test certainly shows that north korea is continuing to prioritize its nuclear program, despite several attempts by the u.s. and its

allies at engaging diplomatically and resolving this situation through negotiations. north korea has repeatedly said they will never give up nuclear weapons. and the fact that they have yet another successful test as well as continuing develop the of a range of missiles to deliver them against south korea, japan and the united states shows it's a growing and more serious threat. whether it's a boosted fission or hydrogen bomb, that will also play out in the considerations by seoul and japan and washington in how to respond. >> so what would the aim of sanctions be? this guy that's now in charge, the son, is clearly as you said wedded to the nuclear program. that almost seems to be their reason to make these statements every day. are we aiming for a collapse of the regime? because china is not going to accept that. china will not accept the collapse of the regime, south korean or american forces

marching north. china won't let that happen, will they, mr. klinger? >> sanctions and targeted financial measures which are different, which are law enforcement and which we should be doing, have a number of purposes. one is to enforce u.s. law and u.n. resolutions. if we don't enforce them, they mean nothing. the second is to impose a penalty, a pain on those who violate u.s. law and resolutions. three is to put in measures to eliminate or constrain the inflow of prohibited iteitems. and in conjunction with instruments of international power is to try to get north korea to alter its behavior. that's less possible, so we have to ensure that the u.s. and allies have sufficient defenses against the wide spectrum of the north korean military threat. >> i'm not advocating that anybody breaks international law, are you surprised that

somebody has not taken this guy out yet? >> well, some will flippantly say why don't we take him out. that could trigger an all-out korean war on the peninsula. with a million man army, most of it deployed near the demilitarized zone with south korea and nuclear weapons, and the means to deploy nuclear weapons against south korea, japan and the united states, that's a dangerous step. so we should be using all the instruments of international power, including targeted financial measures, continued engagement but also make sure we're protected including ballistic missile defense in the u.s., south korea and japan. >> i'm sure we will hear more on this. thank you for your time, mr. klinger joining us from the heritage foundation. still ahead, live from ces in las vegas, an interview with

the ceo of sony.

. welcome back to "squawk on the street." check out what's happening at the markets. the energy sector standing out as the worst performing s&p 500 sector as crude oil, brent and wti hit multi-year lows. xle is down about 3%, tracking for the worst day since early december. exploration production names like apatchity, marathon oil, murphy oil and pioneer natural resources all down 7% to 9%. weighing down the most, shares of consol energy, down about 10%. energy a big focus given today's oil price action. back over to you. >> no relief for those energy

names. thank you. tensions between saudi arabia and iran are still front and center. geopolitical tensions are the concern of wall street. hadley gamble has an update. >> reporter: the big question for saudi arabia is, was and continues to be is can this economy, an economy largely based off of oil revenues continue long-term in this current price environment. i asked the saudi foreign minister about that in our interview yesterday. i asked him about the security question. you have to remember at the end of the day this is a country of 29 million people and most of those people are employed by the government and those government revenues are determined by the price of oil. i asked him about that and about one other security aspect here. we have to remember this is a country at war with yemen. this is a country where if you speak to anyone on the street they'll generally tell you they feel that the american public and the american people in government have checked out in terms of foreign policy element over here in the middle east and it's each to their own and that

saudi arabia does have to protect itself. the foreign minister essentially said security and foreign policy does not have a price tag, it's not optional and not a luxury item. so no big changes when it comes to what will be happening over the next several months coming out of saudi arabia in terms of foreign policy but something others will have to watch including tehran and washington. >> hadley, thank you very much. up next on the program, it's been a rough week for stocks. big selloffs today and back on monday. we'll have more on what's really moving markets when "squawk on the street" comes right back.

>> the s&p 50000 off 24 poins. monday santo shares trading lower. the seed company posted a smaller than expected quarterly loss as soybean sales rose in brazil, montsanto -- they have

1,000 workers bringing its total planned swrob cuts to 3,600. monsanto has come you should review. monsanto -- shares are about 17% lower. simon, so far over the past year. back over to you. >> a lot of pressure on both sides. thank you. let's get over to rick santelli with the exchange with the dow down 222. >> i would like to welcome -- thank you for taking the time this morning. >> good to be here. >> i want to get to china. before that service sector economy, the biggest part of the u.s. economy, and this comes at a time where manufacturing certainly looks recessionary based on many of the regional

and even national isms, but today we learned the certain sectors hovering at the lowest levels defined by nonmanufacturing and high sm this morning since the spring of 2014. any thoughts, sir? >> well, it's a case of i think the glass being half full because employment improved a little bit. new orders improved a little bit, and exports actually improved a little bit. >> let me interrupt you there. many of the trained conversation i have are, listen, as long as we're creating jobs, even if the data is soft, that's not a bad scenario, and i can respect that opinion. let's be honest here. it's the quality of the jobs and the low level of productivity that we are not accomplishing what i think the fed thought it would even given the labor force participation rate on the linkage of the colas vegas

between what is perceived as solid employment reports and less than solid economy. real household earnings are basically where they were i think since 1998, so it's flat. i think that that is absolutely right. it's got to be at this point. >> okay. which brings me to the china part of the story. you know, there was an interview with mr. fisher, not stan fisher today. richard fisher, ex dallas fed president. there was so much shock and astonishment. we front loaded an enormous rally in order to accomplish a wealth affect. what surprised me was the shock wasn't about the honesty of the statement.

it was about what it says. david, are you shocked? people have been talking about front loaded and how we've created a helium stock market. why such surprise? >>. >> the offset is that yields have been low, and now that we are getting away from that stimulative fed, yields are where they are. they're still staying low even though the fed is beginning to hike. i think that is the manifestation of at least for the bond market's perspective shock to the system, but when it's going on -- >> i totally agree. >> when the fed is easing -- >> let me interrupt you. my final thought to connect it all. then he was a little bit touchy when sarah talked about the trip wire for much of the activity of 2016 being china. who taught japan or europe how to pull the levers of trying to control outcomes? your final thoughts on how china

correlates with the global economy. >> well, listen, you don't do the second biggest economy in the world. we're not exactly going gang busters here. yes, it's going to be one of the major influences, and already it started the year on a sour note. i think that that's going to just manifest itself again. it's not the only issue out there, and i think many of the other things we're looking at are also somewhat discouraging for the growth scenario. >> david, thank you. we're out of time. always a pleasure. sarah and simon, everybody was talking about your interview yesterday. back to you. >> thanks for that, rick santelli. now let's send it over to john fort live from ces with a look at what's coming up from there. john. >> hey, sarah. i ran across the convention floor. now we're at -- to talk, of course, the geopolitical environment, and also, hey, tvs, some audio equipment, and some new cameras. all that and more coming up as we sit down with kazou hirai.

it'll get better. i'm at the edward jones office, like sue suggested. thanks for doing this, dad. so i thought it might be time to talk about a financial strategy. (laughing) you mean pay him back? knowing your future is about more than just you. so let's start talking about your long-term goals... multiplied by 13,000 financial advisors. it's a big deal. and it's how edward jones makes sense of investing.

>> market fighting the inevitability of oil down $34.

a lot of the oil stocks are down 8%, 9%. don't forget the back drop. that exclusive interview on cnbc. he said the fed's expectation of the rate rises for this year was about, what -- that was about what they thought -- >> as he put it, a rising dollar and falling oil will not last forever or even very long. >> 11-year low for brent. seven-year low for wti. also pointing out a few level whz it comes to stock. the dow is sitting below that q 17,000 level. q 1700 is -- obviously, went to pick up momentum on the selloffs. over to you carl for squawk alley.

♪ >> ceos of. >> down about a percent following the news of north korea has claimed it has successfully detonated a hydrogen bomb. the chinese yuan hit record lows today, and bob has -- >> we're off the lows, but go