mega millions and buy that. >> you're a value investor. >> i'm afraid to walk outside. number one, i could get struck by lightning, and at the same time i could get attacked bay great white. >> better chances. >> all right. >> thank you, mike. >> make sure you join us tomorrow. i'll share my winnings, joe. >> dream on. >> "squawk on the street" is next. ♪ >> congratulations to the alabama crimson tide on winning college football's national championship. good tuesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. futures with some bounce this morning as we get alcoa earnings under our belt. a few upgrades including apple, decent guidance on consumer names. europe in the green, germany up 2% or more. oil is the spoiler, some new forecasts predict more gloom

ahead. we begin with apple poised to open back above 100 after this upgrade at b of a and elon musk once again saying apple is working on a car. >> starbucks is expanding in china looking to open more than 500 stores despite what is a slowdown in the second largest economy in the world. and lulu getting a boost after strong holiday sales. company raising guidance and they're not the only ones. first up keeping an eye on the explosion in turkey. a bombing in istanbul killing at least 10 people and wounding 15 other. the turkish deputy prime minister says the bomber was a 28-year-old syrian national. we'll stay on top of that developing story. richard engel has been on our air all morning long. futures are higher. european stocks rallying after a stable trading session in shanghai. brent fell to the near 12-year low, bp announcing it's cutting

4,000 jobs in the wake of the slide in crude. some forecasts out there, jim, saying 10, maybe. >> i know people who i feel are chasing the downside. i had rusty brazil on who has been dead right, he said it will be this way longer. he felt this way at 60, 50, 40, 30. the saudis are showing no signs of finishing. howard hamm this morning was saying it is hurting the saudis interest. that's not true. the saudis have a game plan to wipe out u.s. production to follow up on what the "wall street journal" reported, major bankruptcies. they're trying to get shelf space. that's all they're doing. you lose market share to the u.s. unless the u.s. cuts back. so the saudis are doing everything that's in their interest. the moment they let up and oil goes higher, the u.s. comes back and pumps more.

that's what happens. it's a market share game. i wish there were more to it. that's all there is. >> it's also a demand game, isn't it? >> you need -- you need a geopolitical event and demand picking up. we have not seen much more than a couple percentage increase in gasoline demand. china we saw the auto numbers. not so good. the auto numbers that are good are the ones where the tax was cut on smaller cars. i don't think you want to outthink this. there is no more space to put oil. >> no, there isn't. even the tankers are all filled up. you have to sell into the market. >> i talk about nordic america tanker. one quarter of how much i paid for that home that you guys were in. >> it would have been like the "mad max" movie. the first one. >> you would have been up on the thing -- >> but i couldn't get through

the odor. the odor issues. not to be facetious, the tankers are filled. the tanks that you see in cushing are filled. wherever you can do it -- we exported oil to the netherlands at a discounted price. it's possible that anything can happen, and we could spike. you hear 10, everybody is trying to up the forecast to how low it will go. >> we have not seen zero yet. there's a note from deutsche that says cheap oil does eventually provide upside risk to global growth. that cheap oil is good. >> absolutely. >> setting aside the "journal's" piece on restrictioning. >> i have dow chemical on tonight. everybody thinks they're totally related to -- as oil goes down, they do, too. but they use a lot of natural gas liquids. need also to say, when everyone comes out and says oil is going

dramatically lower, you can trade around that. >> that said, i had conversations with people who say most of the companies in houston will be restructured. >> most? that's different from one-third. >> i'm trying to be -- trying to change it. i think he said every company in houston will be restructured. >> looking at the debt -- >> that's energy companies. >> looking where the debt is traded? >> yes. they are. if your bonds are trading below 60, you probably have issues. right now on the bond market, much of it is high yield for these kinds of companies. >> some of these are fine companies. the pioneer deal didn't hold, 8 points in the hole. >> yeah. >> coined a new term, one of my sources, dead man drilling. >> that's better than zombie.

dead man drilling. >> dead man drilling. >> could that be showtime? >> i kind of like that. >> probably a reality series somewhere in there. >> the making of the dead man drilling. let's get to it. >> reed hastings, he does it ail go r it algorithmically. >> the question is is there more contagion? >> no. >> nonetheless you will have a long period of time where many of these companies will be restructured. not necessarily in bankruptcy, but huge debt for equity swaps. equity will be wiped. at some point, you may get mergers and acquisitions and consolidation. >> it could be the year of cash. >> and only in america will the industry emerge stronger than it is now. >> 2016 is the year in the second half where companies with cash can pick and choose. i don't know, freeport downgraded by jeffries today.

>> where are those bonds trading today? i don't know. i don't have a quote on fcx bonds. >> how is -- >> dead man drilling. >> i love that. >> that's a tf end call. >> thanks for nothing. >> speaking of calls, after a rough start to the year, apple looking to open back above 100. price target of 130, they say reduced iphones are already reflected in the stock and they are bullish about the new watch, iphone 6c and in '16. dominic chu points out the average target on the street is still 144.66. >> i listened to dom's piece. the printed numbers are like that.

the sentiment is amazingly negative on the stock. when i saw merrill go hold to buy -- remember, there's big firms that have downgraded the thing. apple is so hated, it, too, can have a trading bounce. even though the listing of the guys are buy, price targets keep coming down. the chatter is so negative about the supply chain that you could get a bounce -- remember, it's an inexpensive stock. it's no longer a momentum stock. >> do you believe the cash balance is so big -- >> last week david faber questioned my notion of having another revenue stream and how important it is. the watch can't do it. the app store can't do it. the itunes can't do it. the auto can do it. that's the other form of mobility. >> do you think it can present -- the watch may do it

one day, jim. i know you're not wearing it. >> what is -- >> i was about to say something positive, now he's not even wearing it. >> okay. the band -- the band broke. >> the band broke. >> all right. >> you can put the band back together? >> my wife and i tried to get it together. we couldn't get it together. >> couldn't put the band back together. >> well t happens. >> all the kings horses, all the kings men and lisa couldn't put it become together again. >> wearables, you can imagine one day will be perhaps the way that we all communicate. so they will be there. >> they need do it with nike, david. they need to sit down, tim cook is on the board of nike, they need to issue a $200 nike wearable that is nike apple what a combo. mark parker and tim cook together. this is my other idea besides autos. i'm filled with ideas. i did tell them to buy netflix at 25. >> yes, you did. >> won't let us forget that. >> speaking of cars, elon musk

talking about the apple car saying it's hard to hide something if you hire over 1,000 engineers to do it. open secret is sort of telling you where he's coming from. >> it's hard to dislodge harmon from the car brain. you have to put the plants near the plant. you have to put the plant next to the plant. you just can't be in silicon valley. mercedes, bmw demand you have that right next to them. they can get away with it. they sell a lot of cars. a lot of cars! >> a lot of cars. will they continue to in a world where we have fleets of ubers. >> i don't know. you think there will be another round of uber? >> i don't know. >> i think it's ultimately going to has. let's not get ahead of ourselves. >> no? >> people still like having a car. >> they do. driving can still be fun, too. >> do you see the chinese car

numbers. >> i didn't. >> yeah. >> i should have. >> china sold 21.1 million cars last year. up 7%. up 10% in 2014, 26% in 2013. ford up 3%, but they're still buying cars in china. >> starbucks announcing today it plans to open more than 500 shops in china this year despite the country's economic slowdown. the coffee chain has continued to grow in china as other brands like yum have seen a slow in shales. howard schultz today on "closing bell" at 4:00 p.m. eastern time. whether it's starbucks, lulu, some of these consumer discretionaries having guidance. >> if lulu doesn't get the stock up, they will be acquired. bf corp, excellent downgrade. morgan stanley saying the risk

is that they buy someone. howard schultz, the numbers are extraordinarily good in china. this dovetails with the notion that the consumer is buying coffee, but baltic freight down to a level i have never seen. oil, copper -- they continue to produce copper and iron ore at levels that are insane. >> like crazy eddie. >> where prices are insane. they definitely are. when we come back, the last two months have been rough for gamestop. we'll have an exclusive on how the video game retailer plans on getting it's groove back. the nasdaq, a down day today would be nine in a row. we have not done that since '84. >> what? >> wow. >> more "squawk on the street" in a minute.

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♪ discover the magic of scottsdale. plan your getaway at magicalscottsdale.com who would have expected after last year's finish we open up this year with so much confusion in the market. we know that the financial market swings stronger than the industrial markets. there is a lot of volatility in there. markets communication. but in general i would say, yes,

we worked hard on the value side to be positioned in those markets that have growth and on top of it we are actually having an accelerated growth in those markets. we are aluminumizing these places. >> klaus kleinfeld on "mad money" last night. your conversation with him and the play book for earnings season that comes out of their report. >> it's different now because they're splitting the company up. i was surprised and disheartened that alumina, which is part of the commodity company, the price continues to fall. so how alcoa did is a snapshot. it's continuing to go down. they're working mightily, but the reason why the stock is not up is that the actual decline in alumina and the decline in

aluminum, no matter what they do, they're trying hard to stay ahead of the posse, but the orders for aerospace are good. i was disheartened to hear the acquisition they made was behind. that was new since the november outlook, as was the decline in alumina what can do you? this is a company with a half commodity business. commodities remain in bear market territory, even if you cut back higher production. it was not great call. >> still on track for the split overall. >> yes, mid year. but i would -- people might say, wait a second, how could the stock not be up big if they beat? the call was not a good call. the analysts were mystified that things had broken down since november. i remain convinced that the split will be excellent and that the company that is the hire value added is an aerospace and auto technology company, and you'll want to own that. >> they got in front of the

earnings report. big order. >> huge. $9 billion in orders. it's terrific, but people will say jim, you say it's terrific, but why isn't the stock up? >> the analysts were dnegative n the call. >> and do i hear you have dow on tonight? >> yes, going from freeport where they use various different fuels to build plastics. the question i have is would dow chemical be higher had it not merged with dupont? i think the answer is yes. >> it may be. but it's a difficult deal forevfor a lot of people to imagine, because they're asking you to imagine the company in three. delaware could disappear as part of dupont. it's amazing what could happen as a result of that deal. >> it's a landmark deal. i think it's a great deal, longer term.

look, i'm not oblivious. the stock was at 53, it's gone to 45. my travel trust bought some at 45, 46. that doesn't mean anything. the direction of the stock has been horrendous since the deal. >> a lot of discussion about antitrust review and healthcare which we may get to later in the hour. we'll get cramer's mad dash and count down to the opening bell and one more look at the premarket. the past rallies of the market have been sold. we'll see if this one lives today. sup jj, working hard? working 24/7 on mobile trader, rated #1 trading app on the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of other competitors do on desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivatives pricing model, honey? td ameritrade.

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of reports. intel reports january 14th. goes from hold to buy. why is this important? this company is being reinvented after the altera acquisition. we saw what happened with microsoft when price multiples expanded when it got beyond pcs. watch intel, when you get these reports ahead of a quarter, it's bullish. >> it is. >> i think brian will do good on the call, so will stacy smith. there's a lot to like here. >> mobility, that's where they got to be. >> man, did you ever take the words out of my mouth. >> thank you. >> quite welcome. >> where else do we want to head. >> i want to talk about a name -- we talked about starboard yesterday and macy's. they liked macies from 70 down to 35. they're selling darden. >> we should point out, they sold 1.3 million shares. they are still a large share holder in darden.

i assume harvesting gains. >> i'm trying to go 9.1%, to get people to understand that's not a reason to sell darden. the last quarter for darden was extremely well. darden has been correlated to the price of gasoline which is going down again. olive garden has been good. capital grill do be incredible. lone star. don't sell darden on a trim by a hedge fund that has a big gain. that's not a good reason to act. >> right. one of the few beneficiaries of lower gasoline prices. don't hear much about that, jim. it's ban year neen a year since been looking at $50 oil, where is the benefit? >> that's an extraordinary conundrum. other than cedar fair and six flags no one has come out and said this is terrific. carnival can say it because bunker fuel is down so much.

carnival said that on the call. the airlines, their hedges are off in large part. they should be doing much better. people are worried about fare increases. i think the airlines are buys here. >> you do. >> yes i do. >> speaking of fuel, we'll come back to oil as we often do in these days. the opening bell a few minutes away. stay with us.

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you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in three minutes. for the first time in several days, relative stability on oil. we got flat session in shanghai, some of the regulators there, according to reports, say the expectation of a 10% decline in the yuan is ridiculous and impossible. and that shorting will not succeed. >> a lot of that decline has been people fleeing the chinese dollar, chinese yuan for the dollar. i have go back to this 1984 thing you said. that was an extraordinary period. we had this huge, huge pile on of many, many ipos. many of them of dubious quality, very few survived. that's when we got that decline

in '84. so, you know, the ipo market is not working. maybe shanghai is working. maybe not. there's just -- what's happened is i think china stabilized, that many down days, carl, it's just -- that's not sustainable to have that many down days. there's a sign that there's tremendous bearishness. too much bearishness. the fact that china didn't go -- i was watching closely last night and this morning. i said, okay, you know what? they screwed up with these circuit breakers. it brought out a lot of selling. they screwed up with the re-val and de-val. the party is trying to regain control but they're still propping stocks up. that's not sustainable. >> some reports say prepare for them to abide by an l-shaped

recovery, not infuse so much stimulus this time. try to make this giant shift in the economy. >> well, starbucks would indicate that the shift is occurring. nike would indicate that the shift is occurring. our freeport wouldn't indicate the shift is occurring but they tried to diversify away from copper and bought -- i don't want to be facetious, people at home don't get that. but at top they diversified into oil and gas. that was the kind of thing you could say if they had not done that, copper was at a nine-year low, but the fact is a lot of these mineral and resources companies have not recognized the world has changed. but the bulk index that i follow down again today. if it takes out 400 that would be extraordinary. >> let's get to the opening bell and the s&p at the bottom of the screen. as jim mentioned, nasdaq down today would be nine in a row.

haven't done that since may of '84 when we actually had 16 days down in a row. >> i remember that period. i just started as a salesperson at goldman. it was like, hey, guys, i got some interesting -- shut up! shut up! i don't want to hear about the nasdaq. >> there's the s&p. at the big board today, first trust celebrating the tenth anniversary of the first trust biotech index fund. at the nasdaq, daytona international speedway celebrating powershares sponsoring of the xfinity opening race. speaking of biotech, people want to understand what happened yesterday. >> holy cow. my show is not about friends, it's about money, but bob hugen is a friend, neighbor, summit, when we heard bob was stepping down. going executive chairman, it

took many peoples breaths away and crushed the index. >> that stock is down 13% in six trading days. >> bob is a remarkable executive who has reinvented celgene and done a fantastic job. i was like are you kidding me? bob hugen? he came on "mad money" many times, but that was incredible. i think people are way too negative. celgene now trades at a cheaper level than almost every major pharma that i follow. that doesn't change because of bob. bob hugen, meg had a terrific interview with bob, but i felt incredibly old. i said he's so young. i realized, he's roughly my age. >> to be fair, while celgene is down more, biogen and amgen, two of the other larger biotechnology companies, if you will, are also down 9%. >> multiple shrinkage.

as soon as you hear that, you think about costanza, but people are fleeing this group. the speculative ones -- i think this jpmorgan healthcare conference is going very well. a lot of the biotechs are doing well. but this is that -- people think they're risky and selling risky stocks. amgen is inexpensive. inexpensive stock. i'm intrigued. i'm intrigued with celgene but disheartened to see bob step up to executive chairman. you want him at the helm. he has a deep bench. i'm sure he's right, which is why i think celgene is a buy. if t the jpmorgan is usually a time you want to buy stocks. >> the guidance from anthem and aetna not bad. >> no.

balance that against mckesson which is horrendous. rite-aid, maybe losing that contract. >> the three big gainers on the dow, intel, coke and apple are all upgrade related. you already covered the intel call. stifel takes coke to a buy. >> i think coke is doing well. i do. people just say, well, they're yawning, coke is hedged against the yen and hedged against the euro, not against some other currencies. there's been a lot of changes put through, and you will start seeing better numbers from coca-cola after a long period where the stock has been stagnant. i think it's a buy. i also like pepsico here. also doing a great job. >> the stock has been a decent stock. i continue to wonder -- again, this is a big question mark given the state of the equity

markets -- whether we will see end-stage or late-stage consolidation in these consumer products, big companies? pepsi may choose to do something or -- >> really? >> i think there's a few more deals to be done, back to m&a. >> are you talking -- >> no, broadly speaking, whether we will see larger deals in the food industry. >> they're not that great. >> we had one enormous deal, being abi, with sab. >> someone downgraded today sab. people just think the stock mark market -- stock moved too much. i'm watching starbucks, it's a way to gauge whether good stocks will go higher. hane preannounced last night on the down side. the stock is up. the stock also has been cut in half. >> back to oil and gas commodities as well, we talked

about glencore not that long ago. that stock has almost revisited its lows. it's up today as are many of the other names that we frequently mention here, whether it's fr freeport or glencore. that level is close to the -- the lows are not that low when a lot of people are concerned. >> big copper company. they have done a lot to fix their balance sheet. >> they have. >> have to give them more credit than other companies who said they will fix their balance sheet but have not been able to it's a black box, glencore. we all wish we knew more about glencore, but it's more secretive than other mineral companies. fair to say? >> yeah. trading is very important there. we don't want to dismiss that. >> twitter is worth getting on the record. trying to get back above 20. not succeeding in the early going, finally integrating

periscope into the timeline. by the way, periscope saying they official i will have 100 million broadcasts. >> yeah. >> where is your appetite on this one? >> i do a periscope every night before "mad money." the problem with periscope, it still dose haven't that big pick up that people expected. you would see -- i know that's an impressive number. but it's hard to build loyalty this could help build loyalty. i think people have to be patient with twitter. a lot of the things they put in place are not immediately monetizing. you have to be patient. some people are not patient with a stock that's been not that great of a stock. >> not that great is an understatement. >> yeah, it is. you mentioned gamestop being so heavily shorted, people don't want to give it the benefit of the doubt. holiday comps were better than expected, but the biggest loser on the s&p. >> stock was up instantly, when people saw that the comparable stores numbers were better.

you have to speak to paul raines. >> we will. >> paul -- ken introduced me to paul, the great "squawk box"ain remarkable job. the activision is so incredible. done a remarkable job there. i like take two, too, but act e activision is higher. >> f.a.n.g. is higher. tom lee this morning, jim, fo formerly of jpmorgan said day-to-day this looks like a growth scare, the possibility of a v a v-shaped recovery goes higher. does that ring true to you? >> on f.a.n.g., ever since the fed decided to tighten, i have

been more negative on f.a.n.g. negative on a lot of things because i think the fed has to get away from that rate hike. could it broaden here? i think the u.s. is doing well but it's such -- it hasn't mattered. i'm cognizant, maybe today it matters on a trading bounce. but until the fed comes out and says we see tremendous deflation, we don't need to do anything other than go back to the data dependent way, if they did that, we would see oil stabilize and china stabilize, that would be very, very bullish. f.a.n.g., my travel trust owns alphabet and facebook. facebook is not that expensive but on 2018 numbers. alphabet is not that expensive now. next year it will be almost at a market multiple, which is extraordinary give than ruth

po porat came in and kicked some butt. this company is brought down by the notion that everything is over. i think alphabet, google, whatever you want to call it is having a tremendous run here. don't forget, it has no china by choice. >> yes. it's been years now. >> f.a.n.g., people like amazon not that exposed. netflix not into china yet. facebook doesn't need china. in a growth scarcity people have hung on f.a.n.g. alphabet is undervalued on a traditional price to earnings multiple. no shrinkage there so to speak. the dow is up almost 1606789 let's get to bob pisani on the floor. >> we started up, we're at the highs of the day. that's what's been going on in europe as well. i want to show you asia. we had a surprising night. a surprise in that it was low

volatility. the gap between the high and the low was fairly small in shanghai. fairly small move to the upside. the important thing is a number of chinese officials try to come out and squash speculation that anyone would be successful in betting against the yuan. number of chinese officials came out. the one most widely passed around was a comment by the deputy director of the central leading group on financial economic affairs who said betting against 10% declines in the yuan were ridiculous and impossible, china has the determination and ability to defend the yuan from devaluation. they did innervation. the gap between the on shore and off shore renminbi is almost nothing. who knows if they can keep that up had overtime. in europe we opened down, by went up. glencore, which was down initially, is now up. bhp, antofagasta were down, rose

up and now back down again. not much of a bounce given how badly all the stocks have performed. i would call that a modest recovery in a critical area. some of the automobile stocks over there also down are now up in the middle of the day. in the u.s., all ten sectors opened to the upside. tech, energy materials, consumer discretionary leading. lagging are consumer staples, telecom names. that's what you would think in an oversold market where tech, energy and materials are dramatically oversold. we'll talk about bank earnings in the next few days. tomorrow jpmorgan. we'll also get -- thursday jpmorgan. later on in the week citigroup and blackrock and pnc, regents financial. this will be on friday. what is quite amazing to me is the stocks are very, very cheap right now. one way to look at them is tangible book value. it's just a value of hard assets

carried on the balance sheet minus intangible assets. when you're below one, you're betting into cheap territory. i picked an assortment of banks. we're getting into cheap territory. comerica, bank of america, zions, citi group below 1. that should start attracting attention. we go into earnings season with some of these stocks down 10%, 11% 12%. we're not attracting a lot of analyst commentary. few exceptions. one of them is wells fargo, three upgrades from citi group, goldman sachs and kbw today, all upgraded them on valuation. it's not making much of a difference. up a bit today but a rough start along with everyone else. sun trust, that's been down about 10% that was upgraded at mank of america today. berme streen upgraded thbernste

last week. again, david, i'm not hearing a lot of enthusiasm from the bank analysts as we go into earnings season. we'll talk more about that when the season officially starts tomorrow and on thursday. back to you. >> thank you very much, bob. speaking of enthusiasm, we have a bit in the broader market with the s&p up over 1%. we'll see if that continues this morning. did want to come back to oil and gas, specifically to a deal, a deal that was long in the making that finally got done. it's been nothing but pain for everybody involved. here i'm talking about ete and williams. you may recall the two enormous pipeline companies, recall if you will, it was over a year ago when actually ete started to try to get williams to come to the table and agree to a potential deal. it was in late june when williams said it would explore strategic alternatives. and almost immediately rejected an offer from ete that was made

public as well the next day. started at 48 billion. in may of 2015. then when they got the deal done in september, it was worth $32.6 billion. now, it's worth a lot less. just to put this in some perspective. ete shares are down 21% this year. williams shares are down 25% this year. that's right, in six trading days. where does this lead tve the de? $8 a share in cash payment from ete to williams holders. at the time when the deal was valued at $43.50 a share when it was announced in september, 8 bucks on a $43 deal, not that large a percentage. now it's 8 bucks on a $19 stock. it's a lot larger percentage overall as well given its $6 billion in debt that ete would

be taking on to pay that cash payment. so there's been a lot of questions in the deal world will they try to restructure this deal? is it possible that et would be able to convince williams board they're better off taking away the cash component, replacing it with a new ratio on stock, that way they would not be weighing themselves down with more debt in a difficult environment, to be fair, one with fixed contacts that pay over a long period of time. we'll see. no talks have begun on restructuring the deal, but a lot of posturing, some public comments, many private comments from the ete about the possibility. i've been hearing it so often. >> the drop down, it yields 14. that's a red flag. thinking that there would be some re -- more stock given, also the company had just raised

its distribution, p.a.a. just declared distribution which is a very bedraggled one. planes all american. this is news they're not talking. >> they're not now. nothing says they won't be. it's unclear what the most tur of williams would be. would they be approached to restructure a deal. you're talking about a board that was somewhat divided when they got together on the deal any way. so this is one that we've been following for quite some time. it's fallen victim to this enormous drop in oil prices. it is certainly one worth watching. the spread in the deal is quite large. $8 a share in cash. ete shares -- >> ete. >> this is -- i'm glad you talked about this. this is the gaping hole in the whole oil complex, everyone has

been watching these two. other than kinder and watching the bonds and kinder. not good. i'm glad you brought it up. they have to restructure this deal. the fact that you said they might not is killer. >> they haven't begun discussions. >> it's a great natural gas link up. when luke at the link up, it's positive. natural gas is still flowing, it's cheap. your reporting is excellent as always. >> all right. i'll shut up after that. >> i'll take that. >> your prices are insane! >> when we come back, regeneron's ceo on what the company has on tap this year. dow building on early gains. i am a technological breakthrough. this morning i read over 4000 articles on leukemia.

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. i'll trying to erase earlier losses. let's get to jackie deangelis. >> oil edging up to $32 a barrel, this is a technical bounce after such a rough start to the year when it comes to

crude oil prices. 30.41 was the session low. after hitting these lows we have not seen in two years, two opec delegates are out saying there will not be an emergency meeting but that a couple of opec members suggested they wanted one. but they will not be doing that. the next meeting will be in june. other headlines this morning, bp cutting more of its work force. 4,000 jobs, another 5%. part of the restructuring here, always reminds us these low prices are having an impact on oil producers. the api will be out with numbers this afternoon. department of energy tomorrow. pl platts is looking for a $2 million barrel build. 500 million barrels is big supply in terms of numbers. the five-year averages this is about 40% over. >> jackie, thank you very much. >> you think once we get these

outlyer calls, that's better for sentiment long-term? >> exactly. people have to understand there are a lot of people short oil, okay? it's been such a winning trade. when you see analysts come out saying they could go to 10 a disciplined trader says i have to take something off. that's such a big whim. imagine you're short under armour, a guy comes out and says sell under armour, i'm cutting my price target to 50. a disciplined trader says that's the win. that's what i'm looking for. if you have been short this a long time, you cover it as a notion of taking it off the table. that's how trading works. very good traders would know, wow, what an opportunity to cover to bring that short in. go right back and do it again. >> speaking of trading, we'll get stop trading with jim in a moment.

morgan stanley has a mea culpa today on holding canna.

t when you see the oil stock, you think everything will go up. let me buy oil companies, be aware there are dead issues with some of these. this is different from pioneer which is up nicely. they did a big equity offering, does not have as much debt pressure this is what is really out there, encan tha needs dramatically higher prices. >> not likely. >> no. >> what's on "mad money" tonight. >> okay. andrew liveis -- this is not about numbers, but some exciting thing going on with dow, new plant. we will talk about cost structure. also the dupont deal what it hurt the company. and stan erck. novavax, a biotech company doing

everything right, and it doesn't matter. this is one thing we learned in the bear markets, it doesn't matter what you do. to say biotech has been in a bear market, that's an understatement. also listening to monster beverage tonight with an interesting analyst call. i try to drink it before i do the show. >> i'm aware of that. >> five-hour energy drinks don't do anything. monster -- >> we got it. david kostin and paul raines coming up in a minute.

. >> good tuesday morning. welcome back to "squawk on the street," i'm carl quintanilla with sara eisen, i'm isimon hobd david faber at the new york stock exchange. a bit of a bounce here, looking to see if it lasts. dow is up 153. oil relatively stable. shanghai relatively stable overnight. that's built what we got this morning. let's get to the road map. goldman sachs chief executive

strategist david kostin is at post nine with his new outlook for earnings for the year. and an exclusive interview with the ceo of biotech rejen remember live from the jpmorgan healthcare conference. and gamestop falling sharply. the ceo joins us live in an exclusive this hour. starting with the markets. joining us at post nine exclusive is goldman's chief u.s. equities strategist, david kostin. david, good to have you back. >> nice to see you. >> we had you on repeatedly. your thesis has remained the same, fading margins. this time you gave a list of companies expected to actually gain some basis points in the market. are those your favorites? >> when i think about it, margins, energy, china are your three big issues to be focusing on for this year. margins are the most fundamentally driven in terms of stock selection. we looked through some companies

which we expect and my analyst colleagues at goldman expect margin improvement 50 basis points or more 2016 and 2017, the reason this is important is that margins have been flat the last five years. we look at alphabet or google, starbucks, visa, amgen, bristol-myers. they're in a rare area -- we only found 34 companies that met that criteria, growing margins over the next couple years by 50 basis pointses or more. >> how does that counter your view of what the overall markets will do. >> margins have peaked in the market, the economy grows at just over 2%, it's hard to get sales margins over that the top line revenue is not growing that much. so if we can find some companies

with the ability to have better top line sales growth, more importantly compliment that with higher margins. >> you branded the outlook late last year for this year as a boring market given the flat s&p forecast. it's been anything but boring. i wonder how you have seen the last week or so volatility in the markets. >> big issue is any time there is macro news, that happens during a blackout period of earnings repurchase, the ability -- five weeks or so before companies report their results, they're precluded from buying back stock. corporate repurchases are the only source of net demand for shares in the market. so, if there's uncertainty or volatility in this case, uncertainty on some developments in china, energy markets as well, there is no net buying in the market. when you are finished earnings season and companies are back

in, my forecast will have over $600 billion of 7% increase in share repurchases by corporations this year. that will be a support structure for the market. >> which wasn't far off what we had last year and the markets didn't rise. >> that's right. you had a big increase in repurchases, a stabilizing force in the market. basically -- >> what would happen if it wasn't there? >> if you have a supply and demand. not as much demand, you can see the implications. does that mean in a few weeks we get a real bounce? >> i would expect you have more stability, less volatility, more stability if companies are able to repurchase shares. which they will. the management has a high quality problem. high quality. they're operating with high margins, not growing, but high. the question is what do you do with that money and with capacity utilization running at the long-term average, 40-year average, not a lot of reasons for incremental cap x more than maintenance cap x what do you do with the money? two choices, cash m&a or

buybacks. buybacks is a big source of cash. >> you said to us the only net demand on the market is cos buying back their own stock. >> correct. >> if they didn't buy back their own stock, therefore the stock market would fall and they could pick up their stock more cheaply down the line. >> the question about timing of repurchases is a much debated one, which is to say the market is trading around the 90th percentile of historical valuation. it would suggest this is not the most optimal time or doesn't void the issue that there is a lot of cash, what will they do with it? repurchase it, keep it on the balance sheets. most companies looking to spend the money. >> david, many people are really confused and very absorbed by what's happened so far this year. i appreciate you say it's because of a lack of corporate buybacks, but across asset markets there's a significant repricing for many people. did the world change over the last two weeks? or is it because of the fed -- did the fed make a mistake or is

it simply they're not supporting asset prices or the perception they're not supporting asset prices? >> there's a concern about what is the right level of energy, and a concern about the amount of activity, economic growth in china. those are your two -- sources of uncertainty. it's not related so much to the federal reserve, it has do with those macro issues. energy companies are now contributing $3 per share in s&p earnings. put that in context. in 48 years, since 1967, the energy sector as a whole has never lost money. it will post a loss in 2015. >> big one. >> big one. that is for the whole sector. there's a lot of issues around that but it's not as important as it used to be. in 2014, energy companies delivered and generated $13 of earnings out of 113. now it's about $3 out of 117. it's much less important. but there's a lot of uncertainty

about the credit issues involving some of the energy companies. it's a legitimate area of concern and focus on the part of investors. the second is what is the situation in china? how much demand is there? the weakening of the renminbi. it's relatively less important here in the u.s. equity market than two-thirds of revenues are domestic, there's a lot of demand, you had 2.7 million jobs added last year, you had, you know, certainly concerns -- there's a recession or contraction in a lot of the industrial parts of the economy. the consumer is doing okay. you mentioned buybacks being a primary source of demand. people look to the cash allocation of mutual funds, a lot of money, highest allocation since '07. does that mean there's a firm floor where those funds would get interested in equities? >> it suggests if there's more inflows there would be more

buying that might go on. as i said, it's corporates. when luke at the flows across the market, corporate repurchase is critical. >> are you concerned about the outlook for corporate credit here and what that might do to u.s. stocks? >> the concern tends to be isolated in certain pockets, particularly in energy. let's so in other areas. corporate balance sheets have definitely weakened, the weakest in ten years. look at net debt to ebita. there's metrics, and strong balance sheets. strong balance sheets to weak balance sheets is your best long-term secular strategy for two years, almost 40 percentage point increase, weak balance stocks beating strong balance sheets because the excess cash was not benefiting anyone. now you have a tightening of financial conditions. >> some of that leverage was used to buy back stock.

looks great going up, but not as good on the way down. >> right. >> can i have one last -- i know we're out of time. one last question. >> simon, always time for one last question. >> why if margins have peaked, and you expect the economy to grow by 2%, how do you forecast the market will rise by 10? >> so the top line will grow about 4% to 5%, that's because while real gdp is around 2% 2.5%, inflation is around 1.75, almost 2%, that's your nominal -- sales report in nominal dollars. there's faster gdp growth and higher inflation outside the united states. broadly speaking top-line revenue is growing there. you're getting faster growth in financials, so when we calculate the margins that excludes the financial sector. and you have a recovery, a slight recovery in margins in the energy space. that leads to what is a -- which is about a 10% growth in

earnings, but ultimately if you look outside of energy, about 5% growth. >> thank you. >> d.k., good seeing you. >> thank you. starbucks planning to open -- this is one of david kostin's stocks. starbucks planning to open thousands of new stores in china despite worries about the country's economy. eunice yoon is live in beijing with more on that. welcome, eunice. >> reporter: thanks so much. despite the concerns over the economic slowdown the ceo of starbucks says he is bullish about china. he said he's going to be moving past all the rhetoric, issues and the noise and instead the company is planning to roll out 500 stores every year for the next five years. the company already has a sizable business in china chi. china is the largest market for starbucks outside of the united states. and he expects this market to be number one some day.

even though there's a general slowdown for many consumer products like smartphones or cars, the brands that have an aspirational quality like apple are still doing well. this is what one customer at starbucks had to say about the starbucks brand and expansion plans. >> translator: i think starbucks as a brand is very attractive to young chinese in the smaller cities. unlike in beijing or shanghai, starbucks is brand-new to them. and young chinese will still enjoy the feeling of being able to afford to drink a starbucks coffee. >> starbucks wants to connect more with young chinese. the company said it will be expanding its digital strategy with the help of alibaba's jack ma. both shultz and jack ma were on a stage in western china. we don't have details of what they'll do, but the talk is that it will involve getting starbucks either through mobile

payments and other ways on to mobile phones so people can obsess about their coffee and cell phones. >> eunice yoon, thank you very much. live report there from beijing. certainly notable to have such a bullish call on china from starbucks. more on this discussion later on cnbc. howard schultz will be on "closing bell." 2016 has not been so kind to biotech stocks. regeneron falling about 10% in the new year. the ceo joins us for a live exclusive interview. before the break, a check on oil. wti briefly going negative. now back positive, barely. 31.45. brent still positive. dow up 126.

the jpmorgan healthcare conference is underway in san francisco. meg terrell is there with an all-star lineup and has an exclusive with the ceo of regener regeneron. meg? >> joining us now is len schleifer of regeneron. good morning. >> good morning. >> we were talking about yesterday was such a tough day at the markets here at conference, the worst start to the conference from a stock performance since 2001. how is the environment in biotech now affecting the way you're able to do your business? >> i've been coming to the jpmorgan for about 25 years.

if you asked me to tell you how the mood was in any one year, i couldn't tell you. it doesn't matter much for our business. we focus on the long-term. our cycles are -- product cycles are 5 to 10 years, so how this week goes is not relevant for us. >> there's a lot of conversation about drug pricing. how are you viewing that issue? you just introduced a cholesterol drug to the market that has a direct competitor. how has drug pricing affected you? >> drug pricing is very important to the industry. if we don't have adequate incentive to develop drugs, take the billions to get it to market, it won't be done. when we get up in the morning, we don't check to see what some person in moscow has invented in the drug business because there's no incentive there's for them to do that. here we have a good balance of incentives, risk, and reward. if prices were to come down and

upset that equation that would be overall bad for the industry if the proper incentives are not there. on the other hand, we must price our drugs according to the value they deliver or there will be pricing pressure that's worse. you mentioned the cholesterol class, our drug is out there with a competitor. competition is good. that brings out the best in us in america. so we have no problem with that we're out there competing. of course it brings down prices which is okay in this setting. >> how are you looking at the drug industry's reputation right now? your chairman is one of the most admired people in the industry. one of the most admired leaders, but the drug industry is under attack from politicians, drug pricing, inversions, everything. how do you turn that around? >> you're right. roy has been an icon for the industry, we tried to follow in his footsteps. we tried to do the right thing.

the right thing he always said and that was a tradition at merck and is a tradition at regeneron is to focus on the patient. occasionally people stop focusing on the patients, and you get some weird behavior. frankly egregious behavior. i don't think that's an indictment of the entire industry. when i look at pipeline of things we have at regeneron and what the industry has as an whole, this is an exciting time. we have to do the right thing. somebody came to us and said can we help with a drug for ebola? we put our people right on it. not thinking about whether we would make money on that, whether our technology could help and we have a product candidate now entering human clinical trials. we are trying to do the right thing but it's easy pickings when a few people in the industry do the wrong thing. >> we're short on time. i want to ask you, it's been a tough start for all biotechs so far this year. what will drive your stock?

>> we have a lot going on. we have the cholesterol drug approved this year, i should say last year. in 2016 we hope to have the rheumatoid arthritis drug. but a real exciting drug could be our drug for allergic diseases, such as atopic dermatitis, a serious tomorrow of eczema or asthma or other allergic disorders. the data we've seen so far is exciting. the fda called it a break through drug. i think we get the data from that, our phrase three trials from that program this year and that should be exciting. a lot more to talk about. we hope you will join us for all of those updates. thank you, dr. schleifer. >> thanks, meg. coming up next hour, the ceo of gsk, sir andrew witty. simon, back over to you. thank you very much. more immediately gamestop is down sharply despite rising sales numbers. it is the worst performer in the s&p today. live from texas, we'll have an exclusive interview with gamestop's ceo paul raines on

his battle to diversify to life after the video game disc. tucson.

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gamestop the biggest loser on the s&p after holiday sales plunged after what had been a 5% rally this january making it one of the best performers, albeit on short recovers. traders betting online sales will damage gamestop's business and made it one of the shortest of all stocks, erasing 40% of market cap in six months. we're delighted to welcome the ceo of game stop, paul raines joining us from texas. welcome back to the program. it is a tough morning. how was the holiday? >> holiday was great, simon. we've been in a quiet period with our heads down, grinding it out. results are good. we had good comps, 4.4%. it's interesting to be discounted so badly when we're performing as well as we are. we had a good holiday.

happy to discuss the components of that. >> let's do that. i guess -- within the press release you're really explicit new software sales declined 9.7%. down 5.6% when you take account of the currency moves. that's essential to many people and their concerns about the stock. >> is some confusion, maybe a lack of understanding there. new software did decline. the thing about that is everyone assumes that's full game downloads taking the place of physical software. we would love for that to be the case, but it's more about overlapping nintendo titles that didn't repeat this year, maybe a decline in prior gen. this digital thing is interesting and important to talk about there's three points i would make on this. the first is that we're a meaningful player in the digital game and are on track to have over $1 billion of digital receipts this year. our digital business is in

mobile publishing and downloadable content. the second point that is important we sell most of our digital revenues in stores. that's because we believe that education is a big part of it. so, when we sell you downloadable content we take the time to explain to you is that too violent? is that something my kids will enjoy? >> sure. >> that's an important part of our differentiation. the third point is that there's not a common framework for reporting. you know, i talk to a lot of industry executives, one of the frustrations maybe is they all report a bit different. for us, everyone turns it into more digital means less physical. i was speaking to even andrew wilson the other day at ea, talking about ideas for this year. we want to come together to put together a common framework,

maybe add sodigital framework. are you pulling down your earnings per share forecast for the fourth quarter and next year? >> i don't think so we updated from 3.70 to 3.78. there's still three weeks left, we have more time. i think we are right in line with what we said at the beginning of the year. >> longer term, how will you take on this larger force of short selling which has wipe d d 40% of the stock market off. how do you take that on? >> our thing is gaming is cyclical. technology brands had a whopping 80% increase last quarter. you've seen us develop a collectibles business. we believe we need to be a family of specialty retail brands. i'll tell you why. we have an enormous real estate asset. we have steadily declined our

gamestop businesses and put them into at&t dealer stores or apple stores. i was at georgia tech this weekend, we took our old gamestop store there and flipped it into an at&t store. that is our strategy. we think it works. >> a thousand technology branded stores, still 7,000 bricks and mortar video game stores. paul, finally, how do you feel about the short-sellers personally? >> you know, i -- simon, i've been at this a while, as you have. we have to educate them. if we knew exactly who they all were, we would get them in a room. some of them don't talk to us. it's easy to fall prey to that argument that gamestop will go away overnight. as you can tell from our release, that won't happen. we'll be here a long time and just keep trying to educate them. >> i know you have a flight to catch. we'll let you go paul raines, ceo of gamestop joining us live from texas. when we come back, after a record year for m&a what does

this year hold? robert kindler will join us live. dow was up 192, it's been cut by more than half. back in a minute. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. td ameritrade.

. i'm sue herera. here is your cnbc news update. turkey's prime minister blaming isis for a suicide bombing in an historic district of istanbul that is popular with tourists,

killing at least ten and wounding 15 others. nine of those killed were german citizens. iran's deputy nuclear chief is denying a report that technicians dismantled the core of the country's nearly finished heavy water reactor and filled it with concrete. he said iran will sign an agreement with china to modify the reactor next week. pope francis' first book is released today. he was hande the first copy of the printed book yesterday. the 150-page book calls for roman catholic leaders to be compassionate and not quick to condemn those who don't obey church teachings. alabama beat clemson 45-40 last night to win the college derrick henry scoring the late score to you about the the game away. coach nick saban's fifth championshipov shship overall.

my husband stayed up for the whole thing. that's the news update at this hour. back down to you, david. >> heck of a fourth quarter. >> it really was. global m&a hit a record last year. $5 trillion in deals last year. a report number of big deals, 10 or more above $50 billion. all that said the actual number of deals was relatively flat year over year from 15 to 14. we ha how will 2016 impact the deal market? here to give us inside is rob kindler vice chairman and global head of m&a at morgan stanley. hello. >> good to see you. >> you always give me your predictions at the beginning of the year. we have started off with six volatile days. that seems to impact deals getting done. will it mean we won't have a big year in m&a? >> last time i was here we had

volatility also. >> that was in august. >> i said if there was volatility that could affect the market. we worked our way through that. last year you made a good point about how even how volumes were up, the number of deals didn't go up. last year was also an anomaly in that usually the m&a market follows the overall capital markets. so, it's unusual to have a year where m&a volumes are up where the overall markets are flat or down. this year it's unlikely to repeat the dollar volume we had. too many very, very large deals last year. not over 50 billion but over 100 billion. >> abi, inbev, allergan/pfizer. dow/dupont. an incredible year of headlines. you don't think we'll see those deals again? >> we may see a few, but that was unusual in the overall size and how they drove the market. so far the activity is good.

if there is continued volatility, that will clearly affect. >> you came into the year with a decent backlog. when you say the activity is still good what do you mean? >> we had a good backlog coming into the year, because the market prices have gone down, deals are more likely to happen. >> so it's generally represent on a robust deal market. something else we saw last year is regulatory impediments, if you will. i can think of any number of deals right now, whether it's staples/odp or baker/hughes where there's questions. on and on. is that something that a lot of management teams are thinking about as they consider a large deal, particularly in a particular market?

>> and deals are taking a long time. the semens deal got done but it took a long time. it's hard to get deals done, yet people keep announcing deals. >> cisco didn't make it. >> you have time warner cable. comcast is a very, very large deal. that was not an antitrust issue. that was the fcc issue. sometimes people doing deals underestimate the political aspects of it. even though you could make an argument that -- technical argument that there is not an antitrust issue, as a political matter -- >> what do you do? wait for the next election thinking to get an administration that may be more conducive to deal making? >> that may be possible but i've been surprised by people who have tried to do deals in this market. >> how about hostiles? you always come on and say hostiles are tough to do.

be careful if you're doing them. you told me this many years ago. we don't see many hostiles. occasionally they work. shire/baxalta. >> the key for that you need to hire morgan stanley. >> that the key? >> you gave me grief about shire baxalta last time. we had depomed with horizon. all stock deal. >> tough to pull off an all-stock hostile, shire threw in 18 bucks in cash and things changed. >> it's harder, possible to do, but harder to do. >> do you think we'll see more hostiles in 2016? >> i think we'll see a continuation of hostile bids. not a huge percentage of the market. we have the norfolk deal coming in. >> they made it very clear they have no interesting. will that keep going? >> i can't comment on the deal specifically, picking up on what

i said before on regulatory, that's a deal where the regulatory issues are huge. it's also similar with the fcc, which you have with comcast and time warner cable, you actually affirmative i will have to find this in the public interest to do. very, very high bar. i can't comment on that deal in particular, i think we will have more hostile deals this year. >> what about activism? i know you don't like those guys. you're basically the first call. that's what you try to be. you get an activist, call kindler. >> these guys are likable people generally. activism generally -- i've said it before -- on balance they probably have done more good than harm. companies are thinking about stockholder reaction before they do deals. but the activism generally as an asset class is over $200 billion in that class. >> do you think it's peaked? better days behind? >> absolutely has peaked? >> why. >> i would short the class

completely. bill ackman, very smart guy. >> all right. you're up against him in the norfolk deal, let's be fair. >> some of his bets, if you look at two of his bets, valeant, nothing to do with activism, he just picked a stock. or mondelese where nelson peltz is already there. the opportunities are so limited he had to pile on on top of nelson peltz. if the big guys like pershing can't find opportunities, i think it's a tough ask. >> that's what underpins your belief to short activists, just lack of opportunity? >> yeah. what's happened is there are no more fortune brands. no companies own titleist golf balls and jim bean liquor, there may be a few, but very few. the whole idea of returning capital, people have recognized that's not a panacea for anything. it can be an appropriate thing to do, but buyouts in and of

themselves are not as favored as they were. >> finally 2016, we're not going to get to 5 trillion? >> i don't think so. i think it's -- personally i think it's going to be a good year for m&a, but very hard to repeat what we had last year. >> rob, thank you. rob kindler, global head of m&a. sara? >> when we come back, weakness in luxury spending weighing on tume. that stock down 30% in the last year? can they overcome the obstacles? we'll talk to the ceo after the break. the dow's gains have been slipping away. dow up 76 oil barely positive. with creative new business incentives, the lowest taxes in decades, and university partnerships, attracting the talent and companies of tomorrow. like in utica, where a new kind of workforce is being trained.

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. welcome back to "squawk on the street." healthcare and technology stocks, as you can see, standing out as the best performing s&p 500 sectors. helping to lift healthcare stocks today, anthem, also aetna, medtronic and endo international, all up 2%, 4%. health stocks up because of the jpmorgan health conference, one of the bigger catalysts. healthcare stocks the third biggest sector in the s&p 500. so always a big influence on the markets. back over to you. >> thank you, dom. morgan brennan is live from the conference in orlando, the consumer and retail conference. she has a special guest. good morning, morgan. >> that's right. joining me now is jerome griffith, ceo and president of tumi holdings. thanks for joining us. >> thanks for having me.

>> global economic slowdown, how is that affecting sales in tumi, in light of china is a key market for your growth strategy? >> one of the things you have seen is the strength of the u.s. dollar has slowed down tourism traffic. overseas tourism traffic is where we benefit. >> the paris attacks may have affected revenue last quarter, the attack in istanbul today. how is that affecting tumi's business? >> it's not affecting us, we have a few stores in paris, but globally not affecting us at all. >> i think sara has a question for you. >> good to see you. wanted to ask you about the brand cache that tumi has. it's a luxury brand. how do you resist the temptation to discount in an environment where consumers are demanding

and getting accustomed to promotions all over the place. do you have to do that? >> there is a famous man once whose name i forget who said i like the company so much i bought it. i've been a customer of this company for over 20 years. and when i came into the country eight years ago i thought it's such a good company, such great brand, great brand name, we should really give the consumer the what they want. consumers that shop tumi don't look for a deal but the best quality, functionality and up to date and stylish product we can give them. that's been working out well for us. >> jerome, simon hobbs again in new york. nice to meet you. thank you for coming on the show. if you look at the stock chart, you lowered the guidance in may of last year. you have been bumping along, and the shorts have moved in, similar in some senses to gamestop, a rising short interest. what do you say to them?

what is your defense against, i guess, the argument as to what tumi does that means it will always survive and it will always prosper in a more competitive environment really every year as we move forward? >> our growth prospects in front of us still look good, even with big macro economic changes coming against us. we have a lot of opportunities in the digital space, a lot of opportunities even in the home market to open up stores, while many people are cutting back on store count. the thing that will get us past the current economic changes is our product and our product development. women make up about 60% of spending out there. they make up about 50% of our consumers today. women's accessories has been the fastest growing product categories over the past few years and we see it continuing to be a larger percentage of our business. we're looking at three areas product, digital press sense and

store force growth going forward. >> and just to piggyback off of that, one thing i've seen a few analysts have suggested that tumi could be a potential takeover target. would you be open to an offer? >> at $16.25 t depends observe what somebody wants to pay for the company. we see ourselves as a stand-alone brand with a big future in front of us. we're not really looking down that road today. >> great, jerome griffith, thanks for joining us. >> morgan, thank you very much. up next on the program, we've slipped below $31 a barrel now for crude. oil falling more than 10% since the beginning of the year. as you can see, trading there at 30.73. where do we go from here? more on that after this.

oil had been rebounding today, but it is now down again. more than 2.5%. we are below $31 a barrel. $30.60, the price of wti. ist down about 15% just since the start of the we're. a little over a week.

joining us is darren horwitz. you've been on with us over the last year predicting lower prices and lower prices. how significant is this $30 a barrel level for some of the energy companies that you cover? >> well, we think it's very significant, and let me be the first to say in the short-term, we think things get worse before they get better. you know, you're going to be entering a period where there's going to be meaningful refinery maintenance over the next few months, both domestic and abroad. that could take between one million to one million and a half barrel az day. i think there's a lot of concern from a macroperspective about what the chinese do with their currency. if that has a tail wind to the u.s. dollar, that means it will go low. that will be a challenge for producers. midstream xx. xx >> the record number of shorts in the price of oil right now, and even wall street firms are playing major catch-up after getting the price wrong for so long. citi, goldman saks -- standard

charter overnight put out $10 a barrel. isn't that the kind of bearish pile-on that we need to get a bottom? >> it is. there are a few things to point out. just to be clear, you're suggesting -- you mentioned the yun and what china is doing. are you echoing morgan stanley on the basis of the currency moves you could get to $20 a barrel? >> i don't know if are you going

to get to exactly $20 on a nominal basis, but i think you could see a two handle. i think there's a lot of concern around where the dollar is going to go, and you have to remember too, the inverse correlation between the move in the u.s. dollar and crude oil in terms of magnitude hasn't been perfectly matched. if we end up seeing further on a global basis currency devaluation that causes a spike in the dollar, that will send crude oil prices lower in the short-term. >> this -- but this is a real -- this is a statement of the ob where yous. this is an economic -- this isn't like gold or some piece of paper that kind of flies around. this has real economic importance in the economy. isn't there some point at which you quite clearly have overshot? i mean, i don't know the market anywhere near as well as you do, about the i'm looking at, for example, what happened with the german bund where the yields were careening lower and lower, and then somebody said, actually, this is crazy. this is the short of a lifetime. at some point don't you say the same thing about oil?

don't you say this has gone beyond the bounds of however many standard deviations, whatever the argument is. this is crazy at these levels. it has to rebound. >> look, it's a cyclical market. if you look back at the pendulum phenomenon, it's going to overcorrect on the up side, and it's going to overcorrect on the down side. you know, we're not expecting material down side from this point. >> maybe that's going to be driven by a series of data points of u.s. supply growth moving over and maybe it's going to be price-induced demand to help balance the market. our point is you could have a more elongated trough of lower oil prices until this market finds evening lib yum, and that's going to take some time. it's not going to be a short fix.

>> what percentage will be bankrupt? >> it's difficult to predict. you've also got to understand that the banks don't want to hold the keys to those assets. by and large, i think a lot of the banks are really racheting down on the producers to dramatically reduce their borrowing basis and to reduce the amount of capital that they spend through the drill bit. we think production probably remains pretty sticky. certainly lower prices will have pressure on balance sheets. i think this is going to be the year that a lot of these producers are going to be forced to reallocate their capital decisions. you will see bankruptcies, but i don't think you'll see as many as folks anticipated.

they have investment grade balance sheets. a lot of retained cash. from a financing perspective, rather low hurdle rates in terms of cost of capital should do well, and that's spekt are a energy corp. as an energy. >> thank you very much for joining us on this big afternoon. darren from raymond james. >> okay. high time we heard from john fort about what's coming up on alley this morning. >> good morning. we're going to talk about ipo's. they're not fairing so well. the companies that went public not long ago. also, look into apple. lots of interesting news about that it's under $100. we just got an upgrade. is now the time to buy? finally, twitter. integrating periscope. faebl right there on your feed. at least on ios.

android coming later. all that and more coming up on "squawk alley."

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♪ xxx ♪ welcome to "squawk alley" for a tuesday. joining us, john, kayla, myself at post nine as we are watching a rally that has withered a bit. dow session high was up 1 93. obviously off the highs of the morning. the price of crude is the touch point. a new 12-year low this morning. this is one of those situations, guys, where we have seen rallies in the open get sold, and we wondered if this would repeat itse