year lows and that 2 handle is not that far away from oil and new consumer concerns here at home. retailer macy's closing stores and cutting thousands of jobs. it's thursday, january 7th, happy new year and squawk box begins right now. ♪ >> live from new york where business never sleeps this squawk box. >> good morning, everybody. welcome to squawk box here on cnbc. i'm becky quick with joe kernen and andrew ross sorkin. another wild morning for the markets. chinese stocks halted for the second time this week. this time around trade was suspended for the day. just 29 minutes after the market opened and by the way, for the 29 minutes, most of the time the market was suspended for that too. there was about ten minutes

trading. after the market fell for about 5% in shanghai. that was a 15 minute pause when things opened up again very rapidly it fell by 7% and those are the things that triggered close of trading for the day. 29 minutes and most of the time the stock market is not trading. the only thing falling faster is the yuan which is precipitating a lot of this. >> in the brief moment i had on worldwide exchange i mentioned when do you get to see that? you already know where china ended the day on the front of the wall street journal. >> their lockup times are like 7:00 p.m. >> you already knew the market had closed in china and you knew it was down 7% because it only traded for 30 minutes. because i was looking at everything on the way in and i go oh good the journal has the story. >> but isn't this a total mirror of what took place in the summer? they started buying equities and everybody stopped and said maybe

things are okay and they woke up the next morning and said this is a terrible idea. >> the devaluations is as steep as since august. >> i don't tight only to china. it seems like a lot of hideous things are converging right now. i also said back in august we weren't at $30 oil. i know we said supply and it's not demand but the last time we had $30 oil we explain it away at the middle of the financial crisis. we're back to $30 oil. if it's supplied it's one thing. >> it was triggered yesterday because of a declining demand in the united states for gasoline. >> it's more than north korea and it's more than china and it's not a consequence that when was the fed move? how long ago was that? a couple of weeks ago. >> less than that, maybe. >> light. >> just watching one of the things the journal points out in the story today if you think pain is over at this point, they have a shanghai based retail investor and quote this person saying i'm speechless.

i was about to clear my position but it couldn't since the stock was already down by 10%. don't you think these people are going to want to sell tomorrow. >> what do we do if things start getting really ugly? what has the fed got left? >> he was asking the fed may be pressured to try to still continue to raise rates because if you look at wage inflation that's going to be a concerning thing that starts showing up here. >> but the tank is empty here and you can argue there's already doing most of what they can do in europe and in japan. so the tank is everyone sy. the central banks they tried everything and made it better for five or six years but who knows whether at this point -- >> you could start buying up stuff again. >> what do you mean? >> you could -- >> they could do qe. >> if they go back and do qe. >> you just said what could they do. >> i know but that should show the absolute desperation and i don't think that would be a good sign for anyone. because you see the chinese

authorities are doing stuff we wouldn't even consider and they're getting overwhelmed. >> what is shocking is the markets in china only 25 years old at this point tells you how new all of this is to them but if you think this is not globally connected take a look at what's happening with the dow futures this morning. down by another 370 points. this is not the worst levels we've seen today. down by 400 points through the morning. >> the first week of january goes so goes the -- >> yeah, the entire year. >> how is monday, tuesday? we had a nine point up day. other than that it's been tough. >> straight down. every morning coming in the futures down triple digits. s&p futures down by 44 points. you can see the early trading in europe. the dax down by 3.25%. markets in france and london and italy are all down by 2.5%. same story in spain. we'll continue to monitor all of

this as we get closer. >> maybe question drum up some bearish sentiment. because what a horrible year last year. s&p was down .7%. what a crappy year in the stock market. do you remember the quote in cape fear? you're going to learn about loss. maybe we won't but .7% is not a horrible year. i just said 2015 so many bad things happen just across the board in term of isis and all of these horrible things and god you hook at this and it's like you get nostalgic for 2015 again. >> maybe this will be the bottom. >> maybe this will be the bottom. you never know. >> it's the question you'll be asking i guess. >> we'll ask. >> don't try to pick your bottom. >> thank you, sir. >> it doesn't work. >> take a look at oil prices right now. wti crude hitting the lowest level since december of 2003. referring to this earlier. brent crude touched it's lower

level since april 2004. you're looking at wti crude at 33.10. let's get over to china and bring in eunice yoon in hong kong. eunice. >> thanks so much andrew. china's stock market as you guys said had the shortest trading day in it's 25 year history and it's ugly over here. the chinese investors have been concerned about the big downward adjustment that we saw in the currency. it was the biggest we've seen since august. they were also fretting over the governments decision to lift a ban put in place over the summer that was restricting shareholders from selling their shares. that ban was supposed to be lifted on friday. the circuit breakers were also a major issue. of course they're designed to try to calm people down and give people some time and space to think but they actually were very counter productive. in fact, today chinese investors online have been calling for an end to the circuit breakers. there was an online poll that

was interesting saying that 86% of the people polled believed that the circuit breakers were not reasonable and more than half of those people polled believed that the circuit breakers were going to be triggered again when trade opens on friday. and the chinese regulator has been trying to limit some of the damage saying that they unveiled new rules and they're going to limit the size of the trenches that the major shareholders will be able to sell and they'll do it overtime but it wasn't enough to turn around sentiment. we're talking about somebody in shanghai that the wall street journal quoted. we spoke to an investor that said he will be on his computer at 9:30 tomorrow to be one of the first people to sell shares. they see this as the window for themselves. >> when you hear stories hike that it makes you they the sell as good going to continue. is there any thought that at some point they might change some of these triggers at this

point? >> well, i think the government is probably going to depend a lot on what the government does and i think that the government could potentially as we have seen over the course of the week allow for some state funds to come in with buying to rye to act as a counter weight to some of the selling pressure that's expected for tomorrow. another idea that's been going around is a shock and awe. some sort of stabilization fund or something that would be announced to try to get it into people's heads that the government is behind it but it's still a really difficult thing to see just because we don't know if it's going to be so effective since so many of the governments measures have not been effective the last time around and so far the government has lost a lot of credibility because they don't have the transparency that's required to really act as a support. >> would it be harder -- china has been supporting the yuan for years. would it be harder to support --

why don't you start there? >> we want to try -- >> maybe it's a sign of how bad things are in the economy. >> that's what i mean though. but instead of throwing all the money at the stock market. the reason the stock market feels this way is because it's watching the yuan. i'd start with the yuan and maybe the stock market would stabilize. it would be easier. >> there's one school of thought that what is the government doing? nobody knows because the pboc is not as transparent as the fed or the ecb or japan central bank. so nobody really knows but there's one school of thought that is that maybe the government is trying to allow -- help the exporters. on the other hand people are kind of wondering if this is just sign of the weak currencies, it's actually just a sign of the weak economy and that's actually spooking a lot

of investors. so the government is in a really big dilemma right now. >> maybe central planners and same with our fed here. they can't help themselves. they can't help themselves when the economy devalues your currency. and europe, everything, greece, greece can't do it. that's why they're stuck. but that's the first move that people, i guess -- >> chinese central banks should just rip off the band-aid and that's another idea that's been going out. that they had this dual system with their currency where they have an on shore and offshore and because of the two exchange rates you see that, you know, the on shore folks are, you just keep following all the market players selling in the offshore currency. so because they have this kind of different system it creates all sorts of distortions. >> so much for turning into a consumer society though. you're going to -- the average income of the average chinese

person goes down, you know, it's cut in half and their network is cut in half so you're back to selling stuff to walmart and hoping that you export enough cheaply to keep it going. i don't know. all of those great plans. best laid plans of switching the economy over there are going to go by the wayside. >> yeah. and it's definitely having an impact because people are getting more concerned about the economy and they aren't -- a lot of people are losing their jobs in the industrial sectors. so these people are feeling like they don't want to actually buy as much because they just don't have the money or they just don't have the money to buy anything else. or that's the problem that you're seeing, even yesterday when we saw the services numbers they weren't really as good as people had hoped so these jobs are supposed to help with jobs being lost on the other side and industry and manufacturing and it's not happening quick enough and then people aren't -- it's different here compared to the united states where you would maybe see more training programs or something like that.

but here i'm speaking to a steelworker and i just thought his prospects are awful because he doesn't know what he would be able to do. he can't even get a security job guard that pays him $250 a month. >> we're blaming china and we haven't come to grip with our own. you have the transports down 20% here. oh no, that is china too. how much of it is an industrial recession in this country. >> industrial recession and people are pointing out this is the first time since the 60s we were being lead out and a lot of that had to do with oil and when you're not drilling oil and bringing as much out of the ground that weakens things too. but let's bring in wilfred frost. what are you watching this morning. >> let's have a quick look at european trade because it's effected that heavily too. we have the dax off more than 3% bearing the brunt the europe. heavy exporters are suffering the most but all of europe is

down by 2% plus the ftse 100 itself down where the likes of bhp are off 5%. oil names also suffering and the exporters like burberry are suffering. bmw in germany suffering as well. so it's effecting everywhere. i want to come back to your discussion and joe you asked that question why don't they try to sort out the yuan first and that's the same question investors are asking. that's been the spark this week and the fact that it's continued to allow to devalue is why people are spooked because they're wondering whether the government is starting to lose control of the currency. it's propped up the currency for four or five years but the speed with which it is falling over the last week is spooking investors. now they would argue that the imf approval has already happened. or they would say that maybe

china is now managing the currency against a basket of current sis and that's worth pointing out. it was, in fact, slightly positive against a trade weighted basket and if that is now their target then we have to look at those stats not just against the u.s. dollar. however the bear would say that the chinese government is losing control. otherwise it would have stopped it for a week or two to try to get positivity into markets and things like a flight of private capital is pushing the offshore market down and therefore drags the on shore market with it and despite their huge reserves china is struggling to control it and therefore day-to-day this week it had to allow the currency to slip more than would otherwise be the aim. the one thing that's clear whatever the reason is that their communication as been terrible. once again, like last august, we don't know what their intention is. it's hard for investors to gauge what the reason is and how much further it's going to go and i'd say that level of communication is not just applying to the

currency but also to the stock market. we didn't understand the circuit breakersed on monday. we might have a better understanding of them now but we still don't they they're working. it wasn't even half an hour. it was open 14 minutes. the 5% breaker kicked in and it was closed for 15 minutes and only opened again for a further 2 monies befo 2 minutes. communication they need to work on. >> i mention the yuan but i don't have that accent to talk about the yuan and it was just not nearly as cool as -- >> not quite as authoritative. >> it didn't. that's why the greatest actors ever are british. even if they aren't any good. it's that accent. >> i think wilfred's take on -- >> but if you had done that in your southern american accent yesterday people would have said that's the stupidest stuff i

ever heard. >> as long as you don't make me do it in a chinese accent, that would be tricky. thank you. >> my pleasure guys. >> good to have you in this country now on worldwide exchange. for more on the global market sell off. hook at that. look at that andrew. what do you want to do with that? >> it's up to you. >> because there was a famous -- it's -- >> you put me on the spot. >> like dave the busher. >> he was my father. >> he was your father? >> yeah. >> if i knew that i would have nailed that but that fairly bit on the one line. did we book you today for a reason sam? sam coffin. that's nice and morbid. senior u.s. economist at u

usbmacro research. have you been on squawk box before. >> i was here a month or so ago. >> i must have been out. maybe not. i remember. are we drumming up enough bearishness or is it justified? >> if you look at the u.s. economy, the domestic economy it's all right. >> what does that mean for the market though? >> for the market there's obviously a lot of strength coming from china. a lot of nerves coming out. the fed finally moving i think but maybe there's spill over. but the main thing is the china moves. >> if they point out the kind of flaw in the fed thinking in general because we're probably going to have -- we had a great adp number and probably a great number but that's a lagging indicator. what does that have to do with what we're in right now? >> it has a lot to do with what we're in right now.

to your point earlier i don't think the decline in the yuan and chinese stock market is not the cause of everything going on. it's more of a catalyst. the cause is we have weak global growth, high multiples globally and i would argue there is some delusions of control with regards to the chinese economy that they could continue to derive some type of level of global growth that would support everything so you see things like today that gets undercut at a time when multiples are high relative to history and ma macrfactors. he might have eluded to this earlier you have a fed in play. you have productive growth that's higher. the fed is likely to heighten financial conditions. at the same time the output levels are that weak. multiples do not deserve to be at the levels they're at at

least. >> you're looking at at least a multiple, point, point and a half contraction. >> our forecast coming into the year, 1970 so we're low on the street but we're below that this morning. >> how do you break it down. >> a lot of that. it's going to be pretty much across the board. we are less positive on let's say energy relative to consensus. that would be one area where we continue to see. >> more negative. >> it's not that we're more negative. it's in energy and based on an oil price increase that we just don't see taking place. i don't think oil is going to decline a lot but we have been very negative on the outlook for the chinese economy and global growth so it's tough to get too excited about any broad based increase in commodity prices. >> the fed waited so long in watching lagging indicators that if they raised 13 months ago things were good. they may have waited so long that maybe it isn't time to raise now but they waited so

long we're moving back into a slow down already and the friday jobs number is probably lagging and says nothing about the current environment, does it? >> it says several things. first of all, you haven't had other hiring. there's been some slow in the hiring. >> lagging though isn't it? >> it is but you also have wages coming out which is a leading indicator of better sport for consumption. so sure there's some lagging job component there but job growth is still probably moving on a descent clip and wages are starting to accelerate. >> if you just purely said we're still the best economy in a bad neighborhood it's going to find a market here and not dragged down by global concerns? we still have a economy that's going to be able to outperform the world. >> i think that's right. q-4 will be weak.

partly because of consumption slowing. it's still move ago long domestically. >> how tall are you dennis? >> much shorter than my father. that's why i'm here. >> and i was a little confused, baseball, basketball. i know i was confused. both. >> both. >> that's a tough act though. you better be good at managing money. >> well -- >> good one. >> do want to make a point though you can blame the fed if your investment thesis was based on multiples can keep on going higher despite the deteriorating outlook. the fed has not done you any favors but from an economy point of view what they're doing is not wrong. there's a lot of complaining about the fed and setting off this -- >> you mean about raising -- >> about raising rates.

>> see my complaint is that they try to know pain after the financial crisis. they threw everything they had at it. and there's no price discovery and things that are supposed to fail don't fail. left with the foundation. >> i understand that argument but at some point they're going to have to raise rates. or was that a good price. >> i don't know the figures off the top of my head. there was a lot of mall investment or high yield wouldn't be doing what it's doing right now. >> we debated it ourselves but where would we be if we hadn't done it. that's the question. >> yeah. >> but the wegs is what if they had raised rates a year earlier? what if they had done everything they had done and raised rates a year earlier. >> what do you mean done it? one round of qe? three rounds of qe?

>> they didn't have to do three rounds of qe. maybe they do one round of qe to save us. maybe they stay for four years to save us. >> not right now. >> maybe they should have. >> just saying they didn't have to do everything, almost most rational people say i agreed with the first round of qe and a agreed with where rates were but the second third and fourth or whatever may not have been -- why do we need those? what was the point of that? >> gets complicated. >> splitting hairs. i don't know. thank you. thank you guys for coming in. it's a roller coaster of the morning. much more on this morning's global market sell off. we have going to talk about the impact of the weaker chinese economy on currencies and

commodities. and later a major retailer slashing thousands of jobs and closing stores. we'll take a look at macy's restructuring plan and thelth of the consumer. we have a lot to talk about. squawk returns in just a moment.

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this morning. renewed fears of a slow down in china weighing heavily on commoditi commodities. he is a cnbc contributor. >> great to be with you guys. >> you wake up on a morning like this and they thinks this is reflective of 2008 if you want to scare yourself and here we are. >> it's funny. is this the real big short? being early is the same thing as being wrong. it made me think about them here for years talking about the fact that china is a big blow up and maybe it's all coming to fruition at this point. from the macr story aside, i think the psychological dynamic of it was fascinating. several analysts pointed out that what happened in chinese market, the reason why is the way they set off their circuit breakers they have a 5% down and

they stop and they stop trading so the mentality of the market is i want to get out before it goes to 7%. the way they structured the whole circuit breaker situation they have to change it. they have to extend it from minus 5 to minus 15. >> but another 2% down. >> so what is your first mentality? get me out of here. >> apologies for not knowing this. how do we do it here exactly? >> i think it's like 10 and then, you know it stops for time not for price. we do it better here. >> are they not supporting the yuan because that's more expensive than the stock market? >> they're trying to figure out how to export their way out of this which is the old play book. >> they're supposed to be

transforming their economy. it's such a short period of time and the really big problem of course is the mal investments. it's all the chickens coming home to roost. it's all the money that completely misallocated. >> the actual exuberance? >> we may be seeing mall investment a lot. >> despite all of what you just said is chinese consumers at the pig play. >> the stock market is what happened was they got shut out of the real estate market and they died on them. they all try to put their money

in the stock market. the stock market in china and they all try to create a lottery. small amount of money and leverage it up and get trapped in a bad situation. the interesting side note of this is we talk about dollar being the source of safety, the source of safety is new york city and vancouver real estate. where are they going to put the last dollars they have of safety? vancouver real estate up 15% even though canada is in a quasi depression at this point. >> let's say the gdp is as low as 3 or 4% which is much worse. >> let's say it's much worse. if things are that bad does it really implode the global economy though? >> it does. china is the marginal consumer for everything. a billion -- >> iphones. >> exactly and if there isn't

additional demand who is going to pick up the slack. we're still the best of everyone else. remember when i came on before the new years and i said it's going to be one and done i had forgotten one of my primary reasons is i didn't think china was going to be able to hold it and i think it's going to be very difficult for the fed to continue tightening into this environment. >> mistake or not? >> to tighten? >> yeah. >> not if that's all they do. one and done is okay. it will be a 1937 type of mistake. >> that's pathetic. if the most that they can handle is a quarter point. >> that's the problem. >> they should have raised earlier. >> if we lived in normal times then yes. but we live in japanese time. >> we need to go, back then, countries like greece were going

under them and when the fed is out of bullets do we go to the other planet. >> who is going to bail us out this time. >> we're in a serious pickle now. there's very little policy flexibility left and it's going to be able to see how we navigate this year. it's going to be to sell rallies. >> historically, we have pictures of them in statues or do we say remember bernanke and yellen? >> i don't think they're to blame but they did the best under the worst of circumstances so you can't -- you can blame greenspan to me. >> blame them all. >> but it's difficult but i think it's going to be a very very volatile next few days. >> always great to see you. >> you're crazy, predicting volatility. you're nuts. how do you come up with this stuff? we'll hold you to it.

futures down sharply and up to speed on stocks in europe in the 12 year lows in crude. you lose a lot of money in the stock market. go out and fill up your car with gas if you want to fill better i guess. as we head to break a look at yesterday's s&p 500 winners and losers. ♪

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♪ >> welcome back to "squawk box" here on cnbc. first in business worldwide. if you're just waking up get ready for red arrows this morning. another day of triple digit declines. did dow futures are down by 360 point bess low fair value. s&p futures off by 42. this is all coming after the chinese stock markets closed 29 minutes after they opened for the day because of the significant losses on the market. >> more on the sell off in a few minutes. here's what happening. shares in burberry down. many are getting hit by fear of a china slow down. you can imagine that one. also oscar munoz underwent heart transplant surgery. he should be returning to the job by the end of the first quarter or the beginning of the

second quarter of the year. also watch shares of apple today. the stock dipping below $100 yesterday for the first time since august. investors worried about slowing iphone shipments. i'm surprised i didn't get an e-mail alerting know that. >> where it closed yesterday it was 550 and it's down another 3 points today. >> you said i get one under $500 billion. >> around 520 or 530 today. >> okay. i like to root for american business. i want american businesses to do well rather than talk them down. also transcanada suing the u.s. government. the company alleges that president obama's rejection of the keystone pipeline exceeded his power under the constitution. as a result they expect to record a 2.5 billion to $2.9 billion write down. when we come back, macy's announcing job cuts and store closings. what means for the future of the

retail giant and consumer spending. red arrows across the board with the markets there down nearly in some cases more than 3%. back in a moment. that's right. i have read it is the hardest job in the world. that's why i'm here. can you... i can offer advice from the accumulated knowledge of other educators... that's wonderful but... i can tailor a curriculum for each student by cross-referencing aptitude, development, geography... sorry to interrupt. but i just have one question: how do i keep them quiet? (pause) watson? there is no known solution.

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welcome back. hey, u.s. equity futures are well off of their worst levels of the day. only down 340. 342. they're down 400. well, more than 400 for most of -- or at least when we first got in here so they paired the 50 points off of the losses but that's not even -- is that 2%? even at 4 and change it was still under 3% so we have to get

used to these numbers. >> just back to back days of that. >> monday, tuesday. we were up 9 on tuesday. >> although the markets were mixed. >> yesterday back down and back down today. so the s&p is indicated off 40. and there are some significant support levels coming up here. the s&p was at 19 -- so we're talking about below that 1960 support level if it were to open there when the markets open. we're well below 2000 already on the s&p. the nasdaq, that's a big number too. 117 points indicated down on the open this morning. >> from the global markets to consumer concerns back home, macy's announcing a major restructuring plan. cutting 3,000 jobs and cutting 36 stores. they plan to trim expenses by $400 million annually. joining us now is rick snyder.

he's the senior retail analyst and courtney reagan is here on set with us as well. good morning to both of you. >> good morning. >> let me ask you, he told us it's going to be a pretty harsh season. this sounds like it was worse than we were anticipating though. what happened? >> i think even in telling us it was going to be bad i think he was a little optimistic and i think the consumer an it was almost the perfect storm. >> the show this morning has been focused on a lot of global factors and some of that is bleeding into talks about the international tourism having an impact and he did bring it up again especially in the major cities and rick and i were speaking before we came on about the yuandevaluations.

>> tourist traffic took another turn down and i think this yuan devaluations may take another. >> we're talking about -- not times square but harold square. >> that's the big issue. >> and other big cities. >> do you look at macy's and think there's an operational problem? or do you think these head winds from coming from all over the places and you don't put the blame on the management? >> well, one of the things that they have done over the last few years, i call it another year, another restructuring. why doesn't macy's just get to the structure that's optimal and stay there? >> maybe because consumer tastes are changing. >> i think that is part of it but, you know, they're closing more stores. they have too many stores so it's not only a macy's problem. there's structure changes. >> you think they couldn't bring themselves to close them. >> it's not all that easy to close stores sometimes. sometimes it's easier too or

more profitable to operate them at a loss rather than buy up a lease. you don't close the store. >> but you don't think there's something functionally wrong in terms of the kind of brands and the kind of consumer they think they're appeal to? all the issues and the way they approached the omni channel. >> i think it's really under a lot of pressure and macy's does it better than the competitors but i don't think there's anything wrong with the way that the team vuning the stores from an operational perspective. they're being pretty defensive. they're doing almost everything all at once so we'll see if that helps us. a lot of the south side analysts are saying some of this pain perhaps is priced in. shares down 47% since mid august. maybe this is the point where we get in because macy's is one of the stronger players in the group. >> let me ask you i saw a snarky headline saying macy's is going the way of sears.

do you think that's overstating it? >> i think it's overstating it a lot and operationally macy's is doing all they can. >> would you buy the stock here? >> no. >> what do you need to see? >> lower. my price target is $32 so it would have to be below that. i don't think the pain is over and i think we'll get guidance in february and i think people will be surprised at how low the numbers might be. how low the guidance might be. >> rick, thank you. courtney, thank you. >> okay. coming up fears of a weakening chinese economy helping drive prices to 12 year lows among how many other things can we talk about with why that's there? that's been a long fall to 100, right? we'll talk about oil demand after the break.

welcome back, prices trading at 12-year lows, and we are joined from london with a geopolitical analyst at energy aspects, and maybe, richard, it doesn't help to try to assign so much to supply or so much to demand and attribute it to fracking and all the new technology. it's a combination, i think, at thirty bucks, combination of

slow and weakening demand as well as over supply. >> absolutely true. the catalyst this week has been the news out that the chinese stock market and ripple effect seen from markets around the world. if we look at fundamentals, they really have not weakened dra t dramatically in the last few days, not explaining why we are lower, but acceptabilitiments were negative, and the china news is the catalyst. >> funny, though, because when it goes down based on people trying to get ahead of fundamentals, they, lately, have been then catching up with it, and we see, wow, there is -- look, there's the five year records, how much is in storage, and it seems to finally follow there has a lot of oil on the market right now, no? >> absolutely true. i mean, last year, we saw very big inventory builds, and we'll see that over the first half of the year, but i think the

balance is going to change as the year goes on, and rs in f, china, all the worry now because of the slow down, the economic market, china will be a strong performer in terms of end user demand growth and crude demand filling up reserves, awarding licenses to the smaller refineries to import crude. i think china will take more additional crude, and as we see lower investment in the upstream, slow down, nonopec supply later this year, that tightening coming up before the end of the year. >> people are starting to, con accept sus that oil stays here for a while, it seems like if it's going to unreasonably low levels, that makes it snap back faster. talking over here, like, the transportation stocks, the mo movement of oil products, although people use oil to move them around, that is not benefits them. there's no oil moving around because we stopped fracking or stopped producing in areas.

that's hit a lot of the rails and the truckers. i mean, if we just go the pendulum swings too far, does that indicate a quicker snap back than people think? >> i think that's exactly right. the deeper the drop now, the bigger the recovery and bigger increase we'll see later. the volatility that's likely to follow in the market can be very high. you pick out midstream operators, they are definitely starting to feel the pain. it's not just the upstream, and what we see is, of course, the more you stimulate demand growth rs the more that you force a slow down in supplies. the bigger the rebalancing, and so the sharper the rise in prices down the road. >> i wish there was a way of, you know, an algorithm that tells me e exactly what a barrel of oil is worth. there should be one based on how much it costs to produce and, you know, what demand's going to be.

do you think it's $50? $70? what is it worth? i know it changes over time as we, you know, find other sources, but what do you think the inherent value is, or is there such a thing? >> well, i think it's very different to average it out. you can go from, you know, the cheapest field in the middle east where the cost of production is a dollar or two, but perhaps the government's need for higher budgets to fund social spending up to the other end of the cost curve, there's ultra deep water projects that don't break even unless oil is above $100. they are cancelled, pulled from the list of future startups as investment gets slashed, but i think in economic theory, it should be that most high cost marginal barrel that sets the price. reality is, the market works in a much more complicated way, diverging from fundamentals for a period of time, but it can't for a length of time. we saw that in 2014 stay high

for a while after fundamentals really started to weaken. i think we see is stay low until fundamentals visibly tight ped in the market, and then the snap back begins. >> future marketings, you know, there's fast money in and out, and investment money, and not all of it is supply and demand, and future markets, who figures those out anyway? half the time. >> absolutely right. >> yeah. all right. thank you, richard. appreciate it. okay. a lot more to come in just a moment. talking about the global market selloff and what's really happening. charles with us on set after the break to break it down. so you're a small business expert from at&t? yeah, give me a problem and i've got the solution. well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere. my drivers don't have time to fill out forms.

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breaking news, global market meltdown, stocks in china plunging, futures crushed, and indicating an ugly open. what's driving the selloff, and what it means for your money straight ahead. oil in free fall in the crude crush taking a major toll on the dow transports. the index now at a 52-week low. a closer look at how shippers navigate their way through the choppy markets. jobs data before the jobs data. john challenger has the latest poll on where the jobs are in america as the second hour of "squawk box" begins right now. live from the beating heart of business, new york city, this is "squawk box."

welcome back to "squawk box" right here on cnbc, first in business worldwide, i'm andrew with becky and joe, and we have a sea of red for the markets this morning, in a bad way, starting in china overnight. trading halted there after a benchmark tumbled more than 7%, triggers breakers for the second time this week. bad numbers there. the dax down 3.5%, and cac off about 3%, and ftse off by 2.5%, and that is of course, pressuring markets in the u.s. showing you what's beginning on with the u.s. futures at this hour. they came off some of the worst numbers earlier, but dow looking like it would open down 365 points, and s&p 500 off about 43 points, and nasdaq would open down as well, 126 points. in the meantime, over to more on all of this. >> reporter: hi, andrew. a couple points in quick

succession. first lay, the capital markets in china are a work in progress. circuit breakers, arguably, over the past week, what's showed us is that they are causing volatility rather than achieving their intended purpose, which is to contain them, so i think beijing is going to go back to the drawing board with this one, and try to refine them. the other factor here is that very clearly the depreciation pressure on the chinese currency and yuan is the feedback loop here that is spooking markets pointing to a deeper malaise, arguably, in the economy. the final point is that during the high to the summer route, back last year in 2015, we did see the pboc intervene and cut the main lendi ining rate to tr stabilize markets and restore calm. do not rule out some near term action. maybe tomorrow, possibly over the weekend. that has happened before, both

here and now, i have to stress the evolving capital market. we are going to see more volatility, and we have to get used to it. that's where we stand, becky. back to you. >> sri, thank you very much. joining us now, liz ann sau sanders, and jeffrey sound, the chief investment strategist at raymond james, and steve is on set with us. people are looking at this, a little thrown off by the start to january. every morning, you come in, the dow down triple digits looking at back-to-back losses on some of these things. how do you feel about the situation? >> somewhat similar to august. i think the fact it happens to correspond to the beginning of a year probably adds to the angst. >> 2015 or 2008? >> or 2011. >> it matters, though. if it's 2008, i want to know. >> i don't think it's 2008. i don't think the leverage -- >> august every year, right?

>> august every year. well, now, some years have been better than others, but i think, you know, the proximate cause being the initial devaluation of the chinese yuan and activity of the leaders there have done more damage in terms of confidence than have helped the situation. >> i think we're wondering what's happening with the chinese economy. do you think this is reflection of a severely weaker economy than anticipated? >> our view is that the growth will continue to slow, but this is a soft landing scenario, not a hard landing scenario. at this point, the fundamental connection between the u.s. and chinese economy are relatively low, and 7% go to china, 12% of the economy is export oriented, so do the math, less than 1%. >> soft landing here or china? >> china. >> a soft landing here. >> we already are in a soft landing here.

a slow growth environment. >> it was fine in the soft lan i landing. >> soft is relative term. risk is not zero, but i think it's maybe less than 25% chance. >> industrial recession? >> already in industrial recession, but manufacturiing i 12% of the economy. >> not a consumer recession. >> not at this point. >> if i lose my money, will you pay me back? is that whatt ethe ads say. >> from me personally. >> kids ask the parents -- >> i'm in the -- >> if you lose money, do you get it back? >> there are certain fee rebates, but i'm not the corporate spokesperson. >> i don't gept the principle back? >> i didn't know there were rebates. >> steve, a question for you, joe mentioned, what can the fed do? what can the fed do? >> haven't they done enough? >> a couple ways to react.

first, look at the situation, ask itself, looking at a financial problem or economic problem? if it's a financial problem, i think the result is that it will slow down the pace of tightening. if it's an economic problem, by policy statement, it eliminates tightening. two things. first, it's a schedule enning with rhythm. >> the u.s. financials, the -- >> it's going to look at -- all i can say when fischer told me yesterday, what williams said monday, they look, step back, do not panic, and they are not -- i think there's a feeling they, perhaps, overreacted in august. they are not necessarily soy they went. >> negative tightening. >> that's on the table. it's used in europe.

fischer spoke against it. >> doing it, though. >> he said it's out there, but we're in the going to go there. >> i just meant that the word for easing, you know. >> digital qe. >> negative growth. not necessarily qe, but going back from a quarter. >> they could. i think they are a long way from that, joe, and i think what we are looking at -- >> 4,000 points away. >> there is some number here where the data -- what's happening in the market affects the economy, but we're at a little below trend. there's an expectation that we have something of a bounce back in the first quarter, and think if it's in the end of the first quarter, end of the second. >> jeff, weigh in. what do you think happens here? people are wondering if it's a buying opportunity or scary situation to step back and wait and see how things shake out? >> well, i wish i could say i predicted it, but as you know, i was looking for a santa claus

rally. >> rip your face all rally. faces are ripped off, jeff, but not from going up. >> yeah, exactly, exactly right. it was a series of events that began with the $1.2 trillion option in future expiration that upset the rhythm of the rally, but gathered strength and came back the next week, and then you've been hit by a potential war between saudi arabia, iran, and chinese slow down, the h-bomb from north korea, and markets are free falling here. the market is oversold on the oscillator on a short term basis, but it feels like we're in one of these selling substantial peestamped stamped stampedes, and this is session six. i'm more cautious here. you know, when you're wrong -- >> jeff? >> yep? >> weighing in on this, there was a story yesterday on cnbc.com by jeff cox, talking about just how lousy earnings

are in the u.s. if you told me the market was going down while the earnings picture was brightening, you could get to the fed and blame the fed in policy. right now, there's no floor in the earnings. you have negative earnings year over year comparisons. how much does that have to do with where the market's pricing itself rights now? >> we don't make the top down earnings estimates, but standard and poors at 126 for 2016. that would be up from something like 111 or $112 for 2015. i think earnings improve year over year and earnings comparisons get better. >>.75 of negative comps, is that right? >> yes. >> that's lousy. >> that's right. >> it is. it's priced on earnings, and assumption there's a lift, the hit that's come from the strengthening of the dollar and weakness in oil. it's concentrated in materials sectors. you get the near term hit from

the forces, and longer term offset coming to the consumption oriented parts of the economy, and that's, i think, the assumption built in. if it's wrong, i agree, valuations not supportive enough to allow for an elongated period of weak earnings. >> you are sanguine about this. >> cautious since 2015. theme for the 2016 outlook was unfinished business. >> so, two things, this morning's headline, george soros says this reminds him of 2008. he really thinks there's -- i spoke to hedge fund managers, joe has, becky has, there's a whole community out there think the world is going to end here. smart people too, by the way. >> more of 1998 than 2008. with currency turmoil and significant crisis, but it doesn't bring the global economy or global financial system down with it because i think, you

know, the leverage situation, no comparison. >> andrew, this can't remind you of 2008. in 2008, when you walk in in the morning, there were guys that were asking me the question, steve, i'm on the ledge, should i jump. of course, i said, yes, not knowing what ledge they were on, thought they were -- no, no, you come in the morning in 2008 -- >> it's not that. i know. >> incredible unknown frontiers. felt like that early on, joe, 2007, you talked to guys in the repo rate blowing out. >> took a long time to get to the 66 -- >> there was a buildup, and we don't need the history lesson, but in the summer 2007, i could argue this feels like the summer of 2007. >> 2007? >> yeah. >> i'm telling you in the summer of 2007, i was in touch with people in the fixed income -- >> felt okay. >> no, they did not. some were in the big short where the guys i talked to. i was not smart enough to write

the book. >> look at the chart. you see it. it's step wise, a move down that happened over a period of months, stated slowly, stepped down. >> not when you look at the fixed income markets. they were panicking and blowing out. >> sub prime a small part, and ben bernnanke, no way it's out of hand. >> 2007, i cancelled vacations to come back. >> exactly. >> talk about investments, whether it's -- >> yeah. >> give us time. >> retail investors, pension funds, hedge funds, long exposure. i just don't think that there's as much long exposure in the equity market as we were looking for. >> not only that, but as you know, if this is an equity issue, you take the loss, and you move on. whereas a leverage issue and a debt issue just echoes infin natalie into this financial system. >> the whole world driven to zero interest rates to grow faster. a bond bubble, maybe it's not an

equity bubble that follows along, but this is a huge of amount of money if that's a bubble. i don't know whether you need -- you don't need housing to be the only -- >> yes, you do. >> i don't know. >> you need a variety of things to go wrong to create 2008. >> really? >> you need incredible -- >> you -- >> before the bailout, you need an incredible obscure packages with leverage built upon leverage. the fed's at zero, growing at 2%. i know that there are excesses out there, but there's hard to see the buildup of excess upon excess because where's the growth? inflation? other than in the fixed income markets is the only place you see prices driven to extremes. >> the atlanta fed is now below

one. deutsche bank at .5. if you're at 0%, and you're at 0% growth -- >> you're too low. you're too high on your rate. >> then what do you do? >> too high. if that lasts, i mean, you still have the consumer who has done 3% over about eight quarters now, the best eight quarters of growth since 2006. >> slowing in december, consumer demand, gasoline fell -- >> what's the perspective of the american right now? >> most can't deal with it. >> the average american, like, households like 100% debt. >> can't deal with the emergency room bill or $500 car bill at this point. >> i don't know, i traveled all over the country, and i go to full restaurants in your town, you go to the restaurants, they are full. looks to me like it's in good shape. >> that's an argument. stadiums are full for the nfl

games. that's right. >> you think the selling stampede could last, and 17-25 sessions, but then things rebound? >> i actually -- i actually think that we're not going into a recession. i think that the economy's going to improve in 2016, and i think we've solved a lot of long term problems, manufacturing jobs are coming back not u.s., the pique oil thing i heard for 40 years in this business is solved. we've addressed long term issuings, and 2016 is okay. i agree. the balance sheets are no longer lever levered, and everybody's pessimistic. i think that's the recipe for a move higher. >> liz ann -- >> and there's an election, jeff, and there's an eight-year maximum term. right? >> i didn't hear. >> an election in november and can only be elected twice. >> yeah, i agree with that.

>> how do you feel if you come in tomorrow with a 200,000 jobs number. does that refocus the market? >> i think the wage piece is more important than the headline jobs number. i think that, you know, the fed has moved its sights from the jobs mandate to inflation mandate and not sure a jobs number other than a massive extreme in one direction or another off consensus changes the metrics in terms of expectations around fed policy. i think it's more about inflation expectation. >> i think so too, yeah. thank you for coming in, great to see you. jeff, thank you for joining us, and, steve, see you later this morning. >> i don't know yet. it depends. >> maybe i'm making that up. >> depending how bad news is. >> if news is bad -- >> yeah. >> if the up employment rate taked up, that scares me too. >> you know, what if that's -- never mind. >> can't happen? >> it could happen. >> these are all lagging. friday's lagging. >> when we come back, the retail

conglomerate, hudson bay, adding online flair to the portfolio, buying gilt group. we'll talk about it, gerald storch joining us, and the data and jobs report straight ahead. we have the numbers. "squawk box" returns in a in a moment.

welcome back, hudson bay's owner announced they are buying gilt group for $250 million, and the ceo of hudson bay is here, good morning to you. >> good morning. >> you have been on an acquisition spree. what's this deal all about, and my understanding you are going to integrate it with the sachs, the off sachs piece? >> sure. at hudson bay, we believe in the retail model, this is our typical all channel model. gilt is online only at this point. one of the points for their customers is returns. now, february 1st, they can make returns in the stores. within that, they can buy more from us, and meanwhile, we'll use the customer flow to sign up more gilt members to shop online. >> one of the challenges, is

that they suffered and struggled to have enough merchandise, it's a flash sale business, to have enough of the brands that want to be there and be able to do it repeatedly over and over and over again. does that dynamic change? >> we think we can help a lot. we operate 460 department stores with a continuous stream of merchandise. beyond that, we purchase together, share inventory, and one of the issues withremainder. what do you do. sell in the store. we have inventory to pull from, and -- >> what happens to gilt? it was one of the great high flier, going to totally revolutionize the retail world, and it did to some degree, but you're getting it at a discount to where people thought it was then. >> the businesses belong with bricks and mortar retailers wharks , what we talked about year after year after year. there's a false dichotomy,

continually, even to this moment, that is drawn when you read about it between online only retail and the bricks retailer. in reality, she wants both, choose how she wants to shop and where. that's what the model is about, what we get with gilt. this is in the value space. the gilt acquisition not only gives us, you know, access to a much larger millennial, by the way, affluent customer base, but additionally, it grows the pence in the out of price space. >> right. >> these are two of the most dominant things in retail today, value and internet. >> i want to talk retail, but a quick question, you keep the name? >> of course. >> ultimately -- >> no, gilt is gilt. there's physical embodiments of the brand. wow, a lot of the internet only retailers need physical presence. you see the warby parker and others. we'll have it. it will be awesome. >> the other discussion this

morning is the consumer, health of the consumer, look at what happens at macy's, restructuring taking place there. what's happening here? >> i think when you give the consumer what she wants, she comes. there's many factors that affect its sales, like apparel over the fall season. historically warm weather, i never use weather as an excuse, but 72 on christmas eve, that's a factor. gosh. the strong u.s. dollar, affected tourism, that is a factor. >> you think it's cyclical? nothing secular? >> you have to change. this is why we're buying gilt. it all is linked. the big star of the holiday season was the internet. we know that in double digits. >> we'll hear concerning news what it means for sales and what it means for revenue and profit. for the profit numbers for the quarter earnings. are you hit by the same thing? >> you know, the -- we believe we have a great model, and we gave guidance in december, early in december, and we, you know,

are on track. >> standing by that. >> okay. >> and the -- there is no doubt that there are head winds in the retail industry, but no doubt, when you give them what they want, they come and line up for it. >> congrats on the deal, thank you for coming. check out the futures, down in a major way. more on the market selloff that's taking place in china. time now for today's aflac trivia question. what telescope did nasa launch in 1990 to help scientists learn more about the solar system? the answer when cnbc's "squawk box" continues. flr ohh ah ah aflac! aaaaf-lac! ta-daa! he's not a very good magician. he paid my claim in just one day. one day?! shh! how does he do it? in just one day, we process, approve and pay.

one day pay, only from aflac.

. now the answer to the trivia question. the answer? the hubble space telescope.

welcome back to "squawk box" on cnbc, first in business worldwide. among the stories that are front and center this morning, check out the global stock markets. stocks selling off right now after clie that's shares plunged before being halted for the second time in a week. today's trading session was 2 the 9 minutes long. you see the dow down by 335 points, and just waking up? that's off the worst levels of the session. we were down by over 400 points earlier this morning. s&p futures down by 3 the9, and

nasdaq down 113. germany hit hard, below 10,000 for the first time since mid-october, a decline of 3.3%, and weakness across the board. france is down 2.6%, and same story in italy. jcpenney reporting sales up by 3.9%, and plans to generate positive free cash flow in 2015, stock down by a penny. challenger gray, and christmas, and the number of planned layoffs fell to the lowest level in 15 years for the month of december. here to take us through the report, you look at the numbers, and then you look at where the market is, and square it for us, john. >> well, one way of looking at it is that we are at full employment. when you get to full employmen,.

5%, but low layoffs as well, you see recession for the first time on the horizon, and what leads to that is companies can't grow anymore because there's not enough skilled workers to fuel the growth. maybe for the first time we're seeing more evidence of that. >> more -- it's hard to find skilled workers now? i thought that half the problem was that you know, the full-t e full-time -- or the people who claims -- the jobs number was never a real number. >> no. don't quite believe that. certainly, you know, jobs for programmers and systems managers and i.t. world and for health care workers, skilled workers like nurses and pharmacists and doctors are in tight demand, engineers, accountants, so we're seeing a tight labor market, and it is funny because the great recession was so deep at times i talked with people that still feels like we're just in recovery. >> well, i just want to go back to the idea you think it's an indication we're head the towards recession, though. >> well, i think it's just on the horizon.

it could be years away, but getting to low unemployment -- now, in the last period, in the dot-com expansion, we went past full employment. maybe we'll do that again at this point, but we're in that range, and economies can, at some point, can no longer grow, just not enough workers to fuel that growth. companies at that point, at some point scale back plans. >> people have been saying the conditions for years are not right for recession, that expansion's don't die of old age, needs to be a reason, blah, blah, blah, and one of them is that you get to where you're at full employment, and maybe it's true. >> john, i wonder one of the things to watch tomorrow when we get the jobs numbers for the country is what happens to wage inflation? that's something the fed watches closely too. you think that number will tick higher? >> you'd think it's got to. that's been the missing piece of evidence, and it's one of the reasons the fed, you know, has

utilized, probably the number one rationale why interest rates have been kept so low, certainly, the participation rate, there are fewer people who could be working that are working. that number has not fudged much either, so, yeah k i think we are seeing more pressure on wages and will continue to see that in 2016. seems like you just have to, but, again, it's not been much evidence for some time, you know, that is the big question on the labor front. >> okay. john challenger, thank you. >> thank you. >> all right, joining us now, kevin, director of economic policy studies at the american enterprise institute, also with us, mike santoli, and michelle caruso-cabrera. can they handle what's happening, or have you checked flights to beijing as our international -- >> have you thought about it? >> not yet? >> there are countries in the world it's more difficult to get to for visas, and by the time you get the visa, the news is over.

this is one of the couple three. >> that's funny. we used to sweat greece. >> right. >> the economy the size of delaware. now china. >> much bigger. >> what were the lows on the greeks? do you remember? did you see today? >> no. >> 570. >> it's declining still? >> down today, like, woah. >> i have not been looking at it for weeks now. >> it's delaware. >> china's much more concerning, of course. >> going along here, you've been sitting on issue watching the stuff for a long, long time, and now here. what's it feel like to you? >> you know -- >> a little mini-2008, like 1998? >> feels like 1998 in the sense it's capital flight from the growing parts of the world. in the first days of the year so far, the rest of the world selling into the night into the morning, and late in the day, there's not sellers in the u.s., so we've had little late day rallies in terms of stocks.

i don't know that that continues. i know we've never in this country imported a recession from the rest of the world, but imported bear markets. maybe we have a nonrecession bear market. it's too early. we've. wa we've been walking that line between the uptrend in stocks or worse. >> all right. american enterprise institute, you hear about that book in 1776, adam smith book -- [ laughter ] we've not done much price discovery recently. we've been, you know, sort of for how long? both fiscal and monetary, some say that maybed dislocations. >> that's right. >> again? >>. >> developing countries have

been issuing dollar denominated debt like crazy, and there's -- it's not just an asian crisis brewing, but like 20 potential greeces out there. you know, they are probably going to get resolved better than greece, but right now, the market is scared of that. because the economy is not strong. >> because of the dollar denominated debt? >> when the economy is down, they pay us back dollars, there's a debt spiesral, but no with saudi arabia, sudan, russia, and president obama has a hands off foreign policy, so every bad guy on earth wants a property right before there's a new president. there's a lot of bad things happening. >> north korea wants an iran deal. can we get one too? 150, whatever it is? >> i was going to weigh in on chi china, and talking about suppressing the markets. in china, everybody's focused on the stock market there. if you go to the currency, the currency has fallen 1% so far

this year, moving 2 pgts in the last two months of last year. that's a huge move for the currency. you have to remember about the chinese currency, it moves because the central bank deems it to move. central bank is deciding. you want to look at that and say, what is the central bank doing? why are they doing this? are they doing this because they think the economy is bad, and they need to help improve exports, and, by the way, it's pegged to the dollar, basically, so when the dollar rises, it makes them less competitive so they are more incentivized to move. that's the big overarching fear. the second issue, though, you have to also ask is, the imf said to them, your currency's got to float freely. there's parts of the world where the chinese currency does float freely. a few markets, very little, and it's much weaker than we've seen it. the central bank may be saying, gosh, the real market is telling the world what the currency should be if we don't let it

depreciate, we're going to be in trouble with the imf, look like we're not ready to interview the global economy. well, you know, they claim they will move towards a more free market approach on currency at some point maybe, but right now, depreciating currency suggest it's a waeakening economy. >> remember we thought the fed would move in september? then there was a little bit of a scare in markets that looks like this. it started in august. people started talking about china, and then the fed did not movings and they mentioned the risk of global problems and so on, and then afterwards, the fed more or less signalled that's behind us. we don't have to worry about the meltdown anymore. they didn't say why, right? i think what's going on now is people are recognizing that the fed faked them out in the fall when they seemed to say it's under control, but it's really not under control. >> thinking back on this. as oil was falling, every time

it would fall, it's, like, wow, when is the stock market going to start going up because of this? man. consumers. then we got used to saying, wow, this may not be great, the s&p's, all the oil stock, and maybe it's not great for the economy. now i understand. we should -- that should have been the warning what's happening. supply, doesn't matter, and the same guy that i talked to once in a while, said, if you give texans free money for five, six rs sev , seven years, they will drill oil. doesn't matter the price. the malinvestment we talk about in ch china, the collapse in oil almost from that being caused to some extent. >> i think the collapse, by the way, comets, and one of the main reasons is not the world economy, but that the saudis make money from oil for a long time, and they have not fretted away on all sorts of things in their own country, more or less, hording wealth.

japan and russia pose in a negative way to saudi arabia. they need this year's money to be more dangerous, so the saudis have a stock of wealth, they like making money too, but they have 50 years in the bank to protect themselves. the russians and iranians need profits now to ramp up their act on saudi arabia, so saudi arabia keep the spigots open for low prices to protect themselves. >> the global tax cut is just as good as the other stupid supply side tax cuts the aei talks about. this did not work either. that will make you mad. [ laughter ] get her madder than you, but the tax cut -- the whole world -- >> the consumer's doing great. >> worked on the level it was meant to work at. >> car sales -- >> car sales are up. >> consumers are okay. it's one of the areas doing okay. >> every company -- >> you know what malinvestment? another word is, you know, creating good things for the long term future, the tech bubble gave us fiber ob ti--

optics around the world. it's good long term. we have to work through it. the s&p industrial earnings is way too tied to the energy business or more than -- >> more than that, indicating -- >> really, it's just deflationary cast of everything what has it. >> do you remember who told you that on set? lloyd sat here, do you remember this? he said, look at the price of oil. i think, what, what's he telling us? you know, he's a market guy, a trader. >> risk guy too. >> discounting the future, right? if you believe markets are telling you something, discounting the future, oil was telling you something. >> last time oil was at 30, oil was at 666. >> okay. >> we're higher than that now. higher than that now. that scares me. that's not correlated. >> china's economy matters because it was the marginal buyer. >> right. >> on all commodities.

anything rippling through, seeing the dropoff there. >> if they are the buyer for 20-30 years, and now they will be less so, people come on and say, well, don't forget, they grew so much, if only they grow 2%, it's greater volume, but, still, people have expectations in growth that were far greater. >> the smart people you talk to, normally, you talk to smart people, what's the s&p going to be up for the year or down for the year? >> it's going to be up from whatever the january low is. at some point. in other words, there's going to be a good rally coming in. nobody came into the year buy everything, we're in good shape. that's why buyers are slow. >> right. and yesterday, saying something that he said, volume has not been a bunch of sellers, absolute lack of. >> rest of the world sells overnight, and we say, okay, here's the price. >> no buyers. not bailing out. >> you okay? >> yeah. >> greatest country in the world. >> i think the year after is probably going to be okay, but there's so much turmoil. i think there's bad guys doing bad things all year. >> rally in jeopardy.

>> who knows what happens in july. >> okay. we have to go. thank you, kevin. >> we're going to see you. >> in a bit. a rough ride for the dow transports amid falling oil prices, what's driving the index to 52-week low, containers on the seas next. take a look at crude prices. back in a moment.

welcome back, dow closing down 2%, a 52-week low, and drop off in oil prices play a role in the slump, even though that defies common sense. for more, let's bring in jason, air freight and surface transportation analyst, and, also, morgan brennan, following the transportation sector. we think lower energy prices are better for transports unless it's bad news for the economy. you think this is a part of the problem? >> a case of two things, right, number one, look at some of the rails, energy accounts for somewhere of 10-13% of the revenue. >> from last year. >> from last year. they are losing revenues, and

when you look at the direction of oil prices, people are starting to get worried about the economy. when i talked to my companies, when i talk to the customers of my companies, especially in the industrial side, word is that we're in a industrial recession right now. i mean, you can see it by all the railroad carloading statistics as well. >> that was the question yesterday. industrial recession underway. is that something that bleeds out into the rest of the economy? >> well, and i think that's the big question, something i talked about in the last couple weeks, the ism number in contraction for the second month in a row. we've seen this. i hear it from the transportation companies, particularly the railroads. still, a small part of the economy. right now, economists think it's not something to bleed out. what to watch with transportation, you got the companies that service the industrial part of the economy, railroads, names that are weak or weaker, and then you have the names that serve as the consumer part of the economy, and that is the area i think to watch because you see weakness there with the names as well like the

trucking companies. >> jason, we talked to another transportation analyst yesterday who said he is starting to get a bad pit in his stomach where he worries about this really becoming a full on recession. do you think that too? >> we're getting worried as well. we launched a proprietary product yesterday, the transport supply index, right, there's two indexes we look at on the trucking side, drive in and temperature control. what the indexes does is track differential between the prices. what it showed is that the spot prices, which indicate the realtime market is well below the contractual price that could have been contracted up to three years ago, but in many cases, it's one year. >> a curious sign of weakness now. >> it is. that's for the trucking industry, right? names like night transportation, swift, guys like that. the only area of strength we saw last year on the transportation side was really in automotive, and anything to do with sort of online retail, so i have one of

my trucking companies coming to transportation, they picked up a big new e-company in the fourth company. they will have a strong quarter, but they are the outlier in the transportation group. >> morgan? >> yeah, i mean, i think i agree with all of that. when you look at names like ups, fedex, they are so -- look at pique season, e-commerce, what's it means, and you see the industrial weakness even bleeding out into earnings and outlooks they came out with coming into the new year. covenant is interesting. one of the companies they partner with is ups and do the expedited moving across the country, but back to trucking for a second in regime, i think one of the interesting things, talking about low energy prices, low diesel prices, that has been a benefit, particularly for the truckers, holing on to market share going to the railroads, but the fact we're starting to see softness in things like trucking tonnage tells me even

with the low diesel prices, it could be soft. like, it could be an issue to watch. where the trucking companies are concerned. what's your thoughts on that? >> it's dual, right? you had 2014 with a tight marketplace. we saw big increase in driver pay. '15, another increase in driver bay. they were able to seat the fleets more. the growth probably in the supply side was 5% in the industry. clearly, the economy was not growing 5%. that's why you have a glut in capacity, if you will, right now, and that's why you see pressure on a lot of the truck pricing. i think as we move throughout the rest of the year, just keep the economy stagnant, we could potentially see a tightening of that supply in the back half of the year with new governmental regulations put in place late last year, the prohibition of coercion law, the electronic log-in device law that could tighten up the trucking supply. >> thank you very much. >> thank you. coming up, global markets selling off, caught up on the

latest move, plus, is fox sports putting in a bid for the nfl's thursday night football? we're going to look at this hor morning's big market movers. we'll be right back. "squawk box" will be, after the quick break. flr

united airline ceo under went heart transplant surgery yesterday after suffering a heart attack in october. the airline expects he'll return

to his post sometime this spring. this is new, though. >> the heart transplant caught me by surprise when i read that. >> yes, certainly did. can be done, though. >> said it was the best possible outcome, what they hoped for. >> our good friend, roger altman, 15 years ago. time warner cable said 320,000 customers may have had their passwords stolen, and 21st century fox is on the move. the street.com reports that fox sports has put in a substantial bid for the nfl thursday night football package. a lot of people would like that. >> yes, they would. >> and you think it's a mistake, though, as the ultimate decline. >> no. it's great entertainment. >> wait a second, unless they switch to flag football, you think it should be banned.

>> no. technology and other things they do with the helmets, hopefully. >> it's not a -- >> no, no, i asked the question, 50 years from now, today, the question is whether there's a whole generation of kids who don't do it, and what happens years from now? >> unlike the american dream and middle class, it's not dying a slow death? >> it's not. go ahead. >> no. >> oh, it's me. sorry. a big hour on this morning's market meltdown, still ahead, ed morris on this morning's big slide in oil prices. >> i stumped you. >> stop me there. crude trading near 12 year lows, and u.s. equity futures, dow opening down 335 points. back in a moment.

markets on aletter after a tumble in china. dow set for another triple digit decline on the open. >> oil in free fall. crude dips below 33, and the global head of commodities on the route, and geopolitical risk out of the market. >> falling out of love with apple, should investors expect a

roaring comeback 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." >> i'm joe with becky and andrew, and if you have not been watching this morning, less than 90 minutes from the opening bell. ugly start. the dow futures seemed to stabilize. that doesn't give you a look, but it's all starting in china. the dow futures may have stabilized down about 350 because for the second time this week in china, trading sus sended after breakers were triggered, and first is 5%, reopened for -- barely at all

today, but the duration was 30 minutes and closed down, i don't know, 7% ore so. it was the shortest trading day in china stock market history, just 30 minutes. the spillover of china's tumble is what is being exported to europe and the united states. we are down almost 346, actually an improvement from earlier lows, and nasdaq taking it enough as well, down 114, and s&p indicated down 43 points. a quick look at europe and what we were talking about over there. somewhere 2%, actually, 3.25% in germany, and over 2.5% in all the other forces. >> the main catalyst of the selling in china, the chinese central bank sets rate on the yuan at the lowest self since march in 2011. half percent weaker than yesterday. that's the biggest drop since last august, and you when that was taking place. it's going to check the currency

markets now. you're going to see the dollar is actually down against the euro and the yen. right now, dollar at 108, and the dollar again at 117.58, part may be people look at dollars as a good place to be right now too. >> the collapse in crude continuing. dom chu is tracking the slide, and other areas of the market feeling the fallout. dom? >> that trade talked about, catching the eye of traders, no matter what they trade. yen a safe haven. as you see the yen buyers come in, maybe that shows you a little bit of a sign that risk is coming off the table, that's what some people say about how the yen trades. now, if you take a look at that pack as well, beyond currencies what's happening with interest rates, the u.s. ten-year government yield, there was a time when people thought, hey, rates rise up to 2 prepondera%. they have gone opposite directions. we have are down to 2

prepondera.14%. people are buying in the safety of the yen, buying up the safety of the treasury notes in the u.s. pushing prices higher and yields lower. you see over the course of the last year, that ten-year note trade, headed back lower on the right hand side of the screen. gold, another place, right? some say it's a safe haven, whether you agree with them or not, gold typically does run higher when people sense there's panic or sense there's a crisis brewing in the markets. gold up here by $8, right at $1100 per ounce, and you can see here, year to date, tit's been solid uptrend for gold. put it in context, gold slid from $1300 an ounce to where we are right now. check out, of course, the oil markets. we have not seen these levels in wti crude. at one appointment, down to the 32.10 mark. 11% lower year to date, the last few days, looking over the

course of the last year, of course, we were down 33%, and brep brent, the same situation. you see the prices, not seen levels since 2004, so as the oil shock continues, take a look what's happened overall, becky, in the sectors in the s&p 500 because there's only one green one so far in the first few days, utilities, and energy, by far, the biggest loser last year, now down 3.33% in the first three days, becky. the losing trend continues. we'll see if the big names continue to be under pressure. back to you guys. >> thank you. >> sure. >> digging into the commodities crush and tail spin now with ed morris, global head of the commodities research at citi, and, ed, the moves seen in the beginning of the year, catch you by surprise or not? >> we expected a tumble, we did not expect it to be dramatic,

but the pressure is on for lower prices. >> because china is not consuming? >> it's part of it, but whether they consume more is an interesting subject to dive into, but the world expects iran to put more oil in the market. the world expects inventories to build, no matter how misleading yesterday, looked bearish begin the jump in gasoline inventory. some is data driven, some is expectations, and inventory growing, with no place to put it, it's a real problem. >> we originally thought or people had come on and thought when oil prices decline quickly, you'd see a drop in supply, and places stop pumping quickly, despite that, the supply's held in. >> supply's been unbelievably e robust. the u.s. started last year with million and a half barrels a day being produced from wells that

produced 15 barrels a day or less. >> stripper wells. >> yeah. there's a stripper association too if you want to play with that -- >> so to speak -- no, but i had not heard that? that means? >> stripper wells is a definition that enables someone to mpay no taxes given a fiscal inacceptabilityi incentive to pump. they pump 15, a barrel a day or less. you can only lose money up to a certain point in time. we expect that if we keep prices more or less at this level or ten bucks higher, we could probably see from the beginning of last year to the end of this year. maybe 700,000 barrels a day stripper well production. >> remember the stripper story weeks ago? you wanted to do that every block. >> i do. i did.

a different topic. this is a different topic. >> they were going in and using the credit cards, running up the fees. >> it's a winter story, not up enough to say it's a bull market for natural gas, but it's a winter move, and it was under, but now there's cold weather. >> where do you see it playing out by the end of the year? >> all markets eventually balance. timing by the end of the year. part of the balancing will be a loss of production timely, and more tangible numbers year to date. a lot of it will be on the u.s., the swing supplier. it's just a slower supplier to swing down, and slower to swing up. >> how come there's not more an impact? >> surprising. the initial reaction of the market was maybe something will

happen, and then second day, nothing's going to impact oil, but the market is, itself, much more fragile than the price of oil indicates. >> what do you mean? >> we have, like, a 95 million barrel a day market and million and a half over supply now. that's 2%. 2% at a time when the saudis produce all out. the cushion of saudi's capacity is not in the market. >> momentum could change quickly? >> it could. there could be a supply disruption any day, overnight, without the saudi supply to, you know, reinvigorate the market with more production. >> why do you think so many of your peers were so clueless as we went from 90 to 85 to 80, every level that we were at

people expected this to be at 45 and 40, and now we're at 32. just human nature? >> i think it is. you know -- >> do you have -- did you think 32? >> i always say you never know where the bottom is. 20 is possible. calling the bottom -- >> this is what they do for a living. what did they miss? how can they -- they are paid by wall street firms for the advice, and they have -- probably no less than we do half the time. why? >> i think there's a tendency to rely on old assumptions. there's a tendency to be conservativ conservative. this is a new world we've never been through the first adjustment of shale and unconventional oil production in history. it's new. >> yeah. >> requires new thinking. >> kme >> completely. that's what you think someone following the industry close i follows drilling, horizontal drilling and all that stuff. they could have given a heads up. opposite, holding on to the idea that now it's 70, going back to

85 by the end of the year. holding they of cutting production with the opec cut, forgetting there's a new world when which oil is more valuable if produced than held in the ground for the way period of time when oil demand is not there. that, too, is the new world we're in. >> placing back to last night, we don't have the tape, but on "mad money," boon pickens believes that oil will be back to 77 by the end of the year. also saying that it took a long stretch in the 1980s, and it's not going to much to balance the market. that's the argument. >> i think that he's absolutely right. the other side is, $33 a barrel, now the average price oil from 18.51 to last year. we're right at the average. >> so this is an aberration? >> it's more fun to look at it.

>> just adjusted for inflation, it's 80. >> iron ore is the same, 100 year average right now. >> don't make any bets is a good idea. >> i always say that, yes. >> ed, thank you. >> thanks for having me. zbln other news, changing for how they account for a pension plan, a market to market move, a move matching what competitors have done and likely to result in improved profit numbers and more accurately reflect the performance of ford's auto operations. also rp also, one economic number on the calendar. at the bottom of the hour, jobless claims expected to drop 275,000 from last week, and, also, a bill, repeal obamacare, and defund planned parenthood is on the desk, and he says he'll

veto it, but it's only one that passed house and senate. volkswagen estimates they buy back cars in the u.s. because of the recent emissions scandal. the auto maker figures they will offer owners a new car at a significant discount, of course, that's going to cost that company quite a bit. coming up, when we return, investors turning on the darling of wall street, that's apple, stock turning, and we'll talk to the biggest bulls on the stock and find out why he still have a $200 price target on it, and the markets are in for an ugly open. the futures right now are in the red in a very big way. the dow to open down close to 360 points down. we have a lot more coming up on "squawk box" in a moment.

welcome back to "squawk box." a futures tumbling this morning after another slide in china that triggered circuit breakers for the second time this week, and in early closure of the chinese markets, and, you know, we, shanghai made it all the way back to 3600 or so, after the august selloff, and looked like

it was quiet, and below 3,000 in china? there's our futures. now down 360 points, down over 400, 122 on the nasdaq. morgan stanley announcing the new president, previously served as head of securities, was on the show recently, prompting greg, he was on the show, widely seen as a parent to ceo james gorman, though now that he's out, there's lots of speculation that he could end up running another major financial institution in new york city. we just had him the past week, doing an amazing thing with the wealth management group. >> the margins amazing. >> a battle at the top, if you will, but long speculation he would run a big bank, now begin the shakeup. >> what's the difference in ages? do you know? >> greg's a little younger.

>> younger? >> yeah. >> and the other piece of this is that i don't think james is going anywhere in five or six years, and as a result, if you're an ambitious guy, also like greg, at some point -- >> sure that's why. he's been, like, number two a couple places. >> merrill, did a successful job there. >> gorman is 63, do you know? >> i'll get the exact numbers, but as i said -- >> 58 -- >> no, gorman's 57. >> that's what i meant. >> young managers. >> that's what i meant. >> that's the point. he'll be there for many, many years, and if you're greg, who i think is -- i'll give it to you now, 52, right, they are not going anywhere. anyway, other news this morning, apple's ceo, tim cook, got a raise in 2015, the compensation rose to $10.3, far from the top paid apple employee. that was angela aaron, the senior vice president for retail

and online stores. she has the highest pay with $25.8 million, and got more stock coming from burbury. >> left $37 million on the table. >> half a billion or more over there. >> in apple stock that did not include stock he bought, putting him up over $500 million. >> now the stock is down. >> i talk to analysts now. i love apple. >> we'll talk more right now. apple stock has a rough ride in 2015, dipping below $100 a share this morning. the question is, can apple come back or is the stock past its prime? the joining us from vegas, global head of technology hardware and software, good morning to you. as you look around vegas, seeing all the new products coming from everybody else, is there anything there that you say can

make apple stumble, of course, the company, not stumbling yet, but is there a competitor out there that you see? >> a lot is incremental. it's really about the internet of things, wearable devices, connecting your home to the interpret, your automobile, and drones and virtual reality. there's trends going on here, but it's nothing, you know, like introduction of an iphone or introduction of ipods. there's not like one killer product here. i look across the floor here and don't see a major threat to apple, but what i see is a major opportunity for apple to really capitalize on the trends that are very exciting. >> explain how you get to $200 for apple and what you think happened here? what's everyone's misunderstanding if you were absolutely right? >> we used 17 multiple plus net

cash per share. you know, when you start to look in early '16, investors look out to calendar '17 even. it's reasonable. you know, when you look at a lot of the -- i call them the shiver water companies, pepsi, coca-cola, they grow 5% a year for the past six years, apple grow grown in the 30% range, and right now, seven times x cash, and they trade at multiples of 19 times. i guess the one thought that i continue to try to drive home is, you know, apple is becoming so ubiquitous in our lives that it's going to be very similar to some of these staple names whether it's a coke or tooth paste. apple will be that type of company. >> but technology is one of those businesses where things shift. right? it's hard to say it's straight

up like coke. >> well, i think one of the differences here is that in the smart phone market, most competitors i feel like are falling by the wayside, whether it's nokia, htc, blackberry, the list goes on and on. there's only going to be a couple major guys left. samsung, apple is a good player. china. >> the point made yesterday that there is no one -- no one built a better mouse trap yet. i love your, you know, simply assign the 17 earnings, what they earn, and put a multiple on it, and -- i love that you say that, i don't know whether that's what an analyst does advising people to buy or sell a stock, it's nice, but, you know, the multiple is meaningless if the earnings, you know, if for some reason that doesn't come to pass, the multiple is meaningless. we said that about a bunch of

things, stocks and companies earning $12 a share one year, and a couple years later, earning $3 a share. what difference does it make if it was office seven times earnings at a $12 a share company. what difference does it make? what do your clients say? >> that's where we differ. >> obviously. but when they talk to you knnow and you say 200, brianin, give a heads up to buy 20 to 30% more if i sold above 120, don't they ask that? rather than sitting on your hands from 134 all the way to 97? >> right. although, it doubled from april 2013 to the pique. >> it was a $9 billion stock once too, and now it get to $780 billion, and you didn't see any problem with that doubling from there? >> at seven times e earnings, is

that attractive stock to you. >> nevermind. andrew's leading. i love apple products, the company, tim cook, everything about it, but it's just watching stocks over the past 30 years, just certain things are self-echself self-evident, and i don't know, i don't know. trying to help your climates that maybe you would have, at times, considered instead of just something so dogmatic, to say it's going to earn this, and i put this multiple in this, 200, and that's the story, sticking to it. >> we do a lot of work on china, what's happening there, and i tell you, that's a huge opportunity. in the near term, it's a negative from a sentiment standpoint considering china today, but i can tell you, we've been on the case there. it's been a huge market in 25% of revenue, and i can tell you, it's only getting bigger because they are nowhere in the five cities. another big opportunity is india.

this is going to open up next year. you may poo-poo the apple watch -- >> your peers agree with you. every analyst agrees with. that that's the other problem. everybody that loves a stock already owns it, you wonder how does it go higher. great company, we'll see what happens. it's under $100, although there's not a better mouse trap. what happens if someone else makes the motorola flip phone was cool too. >> apple is a computer company, making hardware and software. motorola and blackerberry did n. how is any company going to keep up with apple's ecosystem? it's impossible. the investment that goes into this, icloud or apple music, apple pay, all these different

ecosystem products, no company's going to be able to keep up with that. all the other competitors rely on google. they do not have an ecosystem. this is going to be a huge dif r renuater going forward. look at the competitors going by the wayside, it's only beginning. >> okay. >> the companies do not invest like apple can. >> thank you so much, good debate, conversation, looking forward to seeing you in studio. thanks again. today's stocks to watch, plus, later, the names caught up in the china downdraft. "squawk box" returns in a moment. equals great rates. it's a fact. kind of like ordering wine equals pretending to know wine. pinot noir, which means peanut of the night.

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few other stocks this morning, a rare winner, consolation brands, the spirits producer reported profit of $ $1.42 a share, and increased 2016 outlook because of stronger than expected beer sales. no small feat on a day like this. sports apparel retailer, finish line, is taking a beating this morning, losing 49 cents

compared to the 4 cents loss they expected. they are expecting to close stores over four years and promoted the president to ceo, replacing glen lion who will become the executive chairman. zplmplg 24 hours away from the jobs release report. coverage starting tomorrow at 6:00 a.m. eastern time, but today, we await the weekly jobless claims, a number we get in a moment. ahead of the numbers, again, look at the futures, at this point, futures are steeply urn pressure. watching it all morning long. looks like right now, they are down by 360 points for the dow, and s&p down below fair value, ten-year note is a huge appointment of interest, and the yield pushed down to 2.163%. rick santelli is standing by, and, rick, a lot to think about for the jobs report.

>> reporter: yes and know. consider what you mentioned, settling 2014, we are 163 on fives, two basis points lower than 2014, you know, 275, fixed income market has been on this story, the surprise is the front loaded equity markets. 277,000 on claims. i don't know that it's that much different than we expected, a couple thousand, but i really do think that this issue and especially richard frgs ischer on our channel, i found it, and i like joe's opinion, that was passed around like it was breaking news that the equity markets and the economy borrowed from the future do kind of feather the bed of the present and the past. the honesty of the statement was surprising. i think the facts behind it are

about as old as what you dig up in the desert. continuing claims at 2.23 million, a rise from 2.2. with regard how the markets turn out, the fixed income market is steady as she goes because it recognized new normal is here. as a matter of fact, new normal's getting old because it's been normal for a while. thoughts, joe? >> i guess it was what you said, someone surprising a former fed official, but it is former, number one, to acknowledge that, and even when he was a fed official, he -- >> yeah, he spoke up. >> he talked about oil, too, how some of the, you know, the rise in oil was probably due to the cheap money as well, making the point that the commodity increases were due -- >> joe, as a parent, okay, if your child is great friends with the neighbor next door, and your child learns how to light a

match and the kid next door ends up burning down the drapes, do you think you get blamed for that? >> probably, yeah. >> okay. one thing interesting about the interview was how touchy he seemed about the trip wire being china. to me, in many ways, the trip wires are china, are the ecb, are economics because trying to control outcomes to create a motion economic machine that ignores the, you know, the rules of economics, to me, we taught them how to do this. in a way, it is partially our fault. it's hard to point fingers at other countries that are just doing the same thing that we started, you know, the road we started down, the problem with all of these issues is when everybody does them, they don't work. when one country does them, we don't know if they work because we have not written any of the chapters of the epilogue of the grand experiment yet.

>> well, rick, i think the other surprise for people was that may acknowledge that the fed was trying to orchestrate a wealth effect and raise asset prices, but i don't know they seem to have the opinion because we're at 5% unemployment that the overall economy caught up, and that they were successful in engendering a better economy to catch up with the rise in assets. i don't know how steve's working overtime trying to, you know, nothing to see here, with me right here, bring in steve, and he says he's learned how to argue with you, rick, by just what you have been doing sort of just now, sort of just -- >> what where you guys talking about? >> yeah, keep it that way, right? >> were you talking? >> we had rich bernstein on earlier this week, and if he had a middle name, i could tell you whether it was the same rich or a different rich. but you don't -- you're the same

guy in. >> here every morning. wake up, i'm here every morning. >> my waivering in how you're feeling? >> no, no. i think, look -- >> at the end of the day, no one's euphoric? >> one of the things that is missing from the discussion this morning is everybody's talking about china, and just remember, china was up about 15% in the 40 quarter. everybody heard that the chinese economy was going to be stimulated by the government, and everybody bought into that big time. it's not working that's what is reversing, so it's interesting is that despite the fact that the chinese government was not telling anybody they would stimulate until they needed, nobody noticed copper falling in the fourth quarter, and indicators of global growth were weakening. now you get the reality. >> a lot of people noticed, come on. the people that acted surprise that richard maybe didn't notice, but i find that, you know, a small majority of

investors that like the keep the blinders on because they only need to go to the teller window to cash the equity check. >> richard, i was going to ask you if it's all the fed's fault, withdrawal of money, the change of policy, the quarter point hike in rates, is it unwind of china, and our examples with the united states, is at fault for what's happening in china right now? >> you phrase the question, is this all the fed's fault? the answer is no, it's not all the fed's fault. >> but some? >> absolutely. what's happening now is an environment of global deflation, a profit recession in the united states, the fed has decided to reverse course. that's very unsettling ne ining markets, and i don't totally understand if we said, you know, copper's falling, inflation expectations are falling, the u.s. is in a profits recession, what's the probability the fed hiking rates knowing nothing else, you say it's slim. what did they do? hike rates. they are leading people to believe they'll continue to hike

rates. that's unsettling in an environment of global deflation that the most important central bank in the world is restraining liquidity. >> coming back to say for what it's worth is we are not tightening policy as in going through restrictive mode, but been very, very wide open, real rates are, in fact, negative as you know, in other words, the nominal rate, minus inflation is negative. we have 5% unemployment. we have 2% growth, a little above 2%, and that's right around the potential rate of the economy right now. >> right. >> a little above. >> it's -- we just need to be less accommodative, and so what they point out is if they raise 100 basis points -- >> right. >> getting to a point, well, where they stop, they are not going to do necessarily, but it seemed we're still going to be priming the pump of the economy, and they would point out, which is what fischer said the other day, stan, oil prices are not going to fall forever, dollar's not going to depreciate forever,

and remnt inflation coming through, and other issues that tend to raise the cei this year, we have to get out in front of that by being less accommodative. the idea that somehow this is the ignition switch for a massive global selloff, i mean, it could be. >> well -- >> it sounds a little farfetched. >> as i said, i don't think the fed is to blame for this. i think the fed is a contributing factor, but to say that they are the root cause of what's seen in the market, that's not right at all. you know, i mean, if you think about -- talk about china for a second. china has the biggest credit bubble seen in our lifetimes, massive overcapacity. they have been hording aluminum, hording copper, hording steel because they can't shut down the excess capacity in the economy. imagine what the unemployment rate would be if they did. they are caught between a rock and a hard place. they are trying another end, trying to depreciate the currency to be competitive. they are really caught.

>> if all those things are true, what i don't get, and we know there are little things wrong with the chinese stock market, why does china falling out of debt precipitate this selloff here in the united states? that's what i'm a little confused about. >> i don't totally understand that either. i think you have to decide, are you a consumer of chinese goods or a producer of goods that are sold to china? if you're the latter, you're in trouble. if you're a consumer, you're okay. >> people saying it's -- >> i mean, us. >> it's the catalyst, not the cause. the cause is the malinvestment that was brought -- >> makes no sense, joe. >> it's happening. saying that the markets are not doing what they should be doing. >> well, no, what you want to do is fundamental analysis, where the economics here? where are the profits? >> based on the past, and you don't -- >> the markets react and not necessarily fundamental ways over short periods of time. >> do you think that rips mike off? >> i was not involved in that, joe. >> they did.

>> i could smile. that's what i do. i just smile. >> okay. >> gentlemen, thank you. >> when we come back, u.s. stocks.

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welcome back to "squawk box" on cnbc, first in business worldwide. look at the movers in premarket trade, exxon mobile, prices sliding, down 2% in the premarket trade, on the industrial side, caterpillar also with exposure to china on machinery side of things, down 2 2.5% as well. alcoa, aluminum, a commodity play that could be infected by china, shares down by 4%, and then freeport, copper and gold, taking a dip as well, $5.92, down by 4%. more after the break. keep it right here on "squawk box." there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be.

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with the market the tumbling, is it a buying opportunity for investors or wait for more selling? that's the question, the cio of firsthand capital management, a platinum portfolio member, stock picks for the new year, but before we do, we want his take on the market and environment for tech stocks. kevin, given what's going on in the market, are you a buyer now or just hang out and wait longer? >> i would say there's nothing wrong with taking a deep breath and waiting just a little bit, but, yeah, i think it's a good time to be sort of a deliberate

cautious buyer. >> a deliberate cautious buyer. looking at the market broadly, though, do you say overdone? overpriced? underdone? where are we? >> i think this is a pretty common dynamic that you see, which is, if everybody knows that there's some selling to be done, most folks step back and let the prices fall, and so what you see is a discipline of a lot of buyers stepping back and letting prices come down, and it doesn't matter what the global crisis is that causes that. that steeems to happen every ti. no hurry. >> you like the semiconductor space, with you put your money, four different stocks. >> right. >> want to walk through them and the rationale? >> well, it's pretty simple. this is just a basket of good

candidates. the semiconductor industry after decades of people predicting this is finally consolidating. last year there was a lot of m&a, this year there's going to be a lot of m&a, and the mid cap chip companies are probably most likely targeted. >> do you look at this as a speculative play or there's intrinsic value here? >> solid companies, real revenues, real profits, and they are in a good spot, but they are just really good candidates for consolidation. >> okay. for example, we're looking at events, right here, rather integrated device tack, $24, 12 months from now, if it's not taken out, what's the value? >> if it doesn't get taken out, it might be 15-20% higher, something like that, nothing too spectacular. >> relative basis, that might be spectacular. >> well, sure, riemght. when you buy a stock, you should be able to see a fair amount of upside to it.

the -- but the other point here is, i'd be very surprised if at least one of the stocks were not taken out this year, maybe two or three. >> that was my other question. you know, you look at the list, you put your bets, you're in vegas, putting the chips on numbers here, how many are taken out? which ones? is there a sort of an order, a permutation in terms of how it all plays out? who's the buyer? >> you know, andrew, i think if i knew which ones would be taken out, i'd have explaining to do. for the record, i don't know which will be taken. >> right. >> but, you know, it wouldn't surprise me if -- well, i expect at least one to be taken out, wouldn't surprise me if two or three are taken out. >> all right. kevin, you're in vegas, what's the coolest thing you saw so far at ces? >> well, 3d television will be big, right? oh, that was five years ago. >> i would be scared if joe was in my house every morning. >> right, no, you guys are safe

from 3d joe for now, well, not you in the studio, but the rest of us. >> he's not at all safe. >> there's more startups than ever here at ces, doing great things, and thankfully, not all are doing drones, for goodness sakes, but the thing to watch this year is ar and dr. you know, augmented reality and virtual reality. the google glass flop notwithstanding. i walk around the show, and it's like being in a mall and airport. people are walking around with the heads down looking at the cell phone, and neck snaps up just in time to keep them from walking into somebody else, or not, so, we have to solve solve this neck snap phenomena. >> okay. >> and ar is going to be the way to do if. >> we'll look for that, kevin, great to see you, go to cnbc pro on cnbc.com for the latest on the portfolios and additional analys analysis. >> it is shaping up to be an ugly morning for the markets, the futures one more time, the

dow futures are still down by 336 points. we've been off by 400 points below fair value. also, crude prices dipping below that $33 level. you can see rights now, wti at . jim cramer's take on the market turmoil extending from beijing to wall street. "squawk box" will return in a moment.

let's get down to the new york stock exchange. jim cramer joins us right now. i have been waiting to hear from you. we have had all kinds of people talking about what's going on, what's happening. george thoros comparing this to 2008. you have drawn connections but how much anxiety is out there. in 2011, they said greece was equivalent to 2008. boone pickens has been pull ish on oil and he has been wrong. kevin landis, most people think is a bull is much more cautious. my take is that if we go back to august 25th where we saw china bottom, a lot of u.s. stocks that could fall much more.

the two that hit my radar screen are exxon and radar. we have to realize that the u.s. economy, we are going to one own domestic stocks. you have some fluff in those too. >> you mentioned boone pickens. he was on "mad money" last night. he had been optimistic about oil prices, thinking that by the end of this year, you will really see a turn. what does he think changes between now and then? >> he is using this marginal 1 million barrels in excess, 96 million being produced. boone did think it would stop at 30. there is a crisis. i also think we have to remember that we were in the 20s for a very long time before the iraq war. there are levels that we could go to in commodities.

i know it sounds really foolish to even mention earnings. you have great earnings this morning. constellation brands. l brands was great. now, no one wants to hear any of those. the companies are doing pretty well. >> jim, you have alcohol and sexy lingerie. we need those more in a down market. >> leslie is pretty much of a genius. corona is up double digits. >> it took the great recession to get us to 32 last time. this time, we have fracking and supply. so it is a totally different situation. the equity markets are much higher than last time. >> that's the problem. if you take a look and want to make analogies, you have to take to yourself that the whole market is overvalued. the economy is much better. there are reasons that employment, if the fed felt like it had to tighten.

we had terrible unemployment then. we have good employment now. those things do matter. they don't matter right now. that's really important. none of this good stuff matters right now. we have to recognize that. when the market settles down and when china takes out the 2900 level it held last august, you come in the next day and the market is down again. then, you take a look. we'll see a lot more from you in a few minutes. >> what a difference the dow makes. 17,584. oil was just before 50 on january 7th, 2015. there was another milestone event. we'll tell you what that was.

welcome back to "squawk box." the countdown is on to the jobs report. we'll have those numbers tomorrow at 8:30 a.m. eastern. you do not want to mention it. we mentioned before the break, what a difference a year makes. it was january 17th, 2015 when "squawk box" officially moved to new york city. the rest is history, a couple nice shots of what was taking place. the markets are in a little better shape by the way than a year ago right about now.

it is not our fault. we can't take too much credit. >> it is great to work in here. >> i don't know about living in here. >> it is a great place to live and work and. >> too many people living on top of one another. unnatural. too much waste. we have to run. >> make sure you join us tomorrow. "squawk on the street." also, from new york city is next. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber. china down 7% overnight. trading halted as you know fort second time in four days. europe has followed suit and then oil below 33 as a fresh 12-year low. as joe just said. china at the center of the global selloff. further devaluation