pressure and earnings beat not enough to reassure investors about the company's pivot away from the struggling pc business and it's margins. it's friday, january 15th, and squawk box begins right now. >> live from new york where business never sleeps, this is squawk box. >> good morning, everyone. welcome to squawk box here on krr nbc. i'm becky quick with joe concernconcerand andrew. a global market sell off once again. shanghai stocks entering bear market territory. it is a decline of another 3.5% in shanghai overnight. elsewhere in asia, take a look at these markets.

you'll see the shenzen down by 3. %. in the united states, the dow, the s&p and the nasdaq all having their best sessions in a month yesterday but sit a new story today. take a look at the u.s. equity futures and you'll see it playing out here in the united states as well. the dow futures are down 300 points below fair value. the s&p futures down by 36 and the nasdaq off by 97 points below fair value. it's all happening as oil prices are plummeting once again. oil prices down by more than 5% back below $30 barrel. it would strengthen the crude oil market yesterday that lead to the gains that we saw in the equity market. you could see this morning wti trading at $29.53 barrel. >> i mean, when you're at 31 and to still be able to lose 5% in a single session you'd be at zero in a week. >> if it kept one this pace? >> not really but in a couple of

weeks what's the problem here? we know about supply. >> we know about supply. the end of the week is when iran was expecting it might be able to get clearance to start selling more oil down the road. >> we've known that for a long time and there's questions about how much they could actually get online. >> but that looks like, people, there's a lot of fast money. there has been. a lot of fast money in 100 too and you know what is calling this. it's all the etfs. >> looking over at larry. >> we'll get to larry in one second. we'll get you caught up on the big stories this morning. general electric announcing a big deal to sell it's appliance business to china's haier for $5.4 billion. ge has been working on trying to sell this unit since regulatory

issues forced it to abandon a $3.3 billion transaction earl r earlier. >> you've read these headlines before and then it came back and now we're here. dow component intel trading lower. beating fourth quarter forecasts but slowing growth in it's data businesses raising new worries and goldman sachs has to be paying $5 billion to residential mortgage backed securities. the agreement will reduce third quarter earnings after tax. >> our guest host for the next hour is the world's largest money manager. larry fink is the chairman and ceo of black rock. black rock's fourth quarter earnings coming out moments ago. why don't we start with the news and go through the numbers. thank you for coming in today.

>> hi becky and guys. >> for the fourth quarter black rock earned $4.75 a share. the street was looking for $4.80. revenue came in better hahn expected. $2.86 billion. you raised your dividend and it looks like just for the quarter, the long-term net inflows were $54 billion for black rock so let's take a look at all of the numbers. first of all people will say why were the earnings per share below expectations. >> so first as you said revenues were higher. flows were higher. $152 billion. let's talk about the environment. our assets are unchanged for the year so between fx and the decline in the equity markets last year we were down $150 billion. so we kept flat but we grew. we grew in revenues so one time

earnings we identify that so -- >> let's go back to that fun flows number. $152 billion for the year which is hard to get your head around flows like that. but you say the market exchange and current declines -- >> this is what you're seeing in earnings. so many companies have been harmed by the dollar. the one other thing that was a huge difference between our 14 and 15 year was our tax rate. tax rate was up 5 points. now one is because of the dollar. when your business is depreciated because of the rising dollar your mix shifts more to the u.s. and your tax rate goes up. those are all the dynamics that

every company is trying to deal with but probably the most important thing about the mix, joe made a reference to etfs, probably one of the most important statistics that we had great flows in 2015 in active management too so we are seeing a pretty good global response to what we're offering to our klines worldwide. we raised over a billion dollars in 13 countries. we had 65 products that we raised over a billion dollars. so equity and fixed incomes and multiassets is pretty large so we're, despite the bearishness, people still have to put money to work and if you look at the bond deal where you had $100 billion in demand, insurance

companies and i have been talking about this for quite sometime they're struggling because their liabilities are longer than their assets or we're waiting for interest rates to go higher. obviously they're not going higher but they're widingen significantly. this is an opportunity for some to come in and buy so there's new orleans such thing as a one directional trade. we're in the midst of a decline bordering on a bear market but the speed this is happening is a reassessment of the risk. reassessment of where we are going. i believe there's not enough blood in the street. we'll probably have to test the markets lower and it's going to be a good-bying opportunity. >> what does ka pitcatpitulatio like. >> another 10%. you can see oil testing 25 or 24

but my worry about oil prices today i'm sure 9 out of 10 of your guests talk about oil going lower now so it's a very heavy trade. where were they when it was 50 or $100. >> what tips you toward it. what would get you there or is it just a general malaise. >> general malaise. fear. let's understand. having it really in my mind puts a negativity across the economy. a negative to every ceo looking at his or her stock price and negativity related to business. you'll start seeing more lay offs because if we don't see some swift rebound and as i said i think we're going to have probably more pain before we have that lift but i do believe

by the second half of the year the market is going to be higher so i just believe this is just a great capitulation. and that it's going to feel awful. you'll have all the pundants talking about bear market. >> 10 would put us in a bear. >> but i don't know how we define a bear market. when you have a capitulation that's so swift and maybe so severe. i look at it as persistent water to fur day after day after day. i'm not sure. >> you just described the opposite of the wealth effect which is probably not a great thing because of instead of the stock market effecting economic fundamentals it influences negatively. ceo mentality, consumers. >> the consumer, here's the big question and i can't answer it yet. i mentioned it the last time i'm

on the show. we have to find out why consumers are not spending their energy savings. >> oil money. >> it's significant in all the years we had the big declines the consumer used that savings to spend an consume other things. we're not seeing that. we're seeing some consumption. my fear is we're starting this coming to terms with inadequacy in the retirement and as we shifted out this is the first time that we have americans aging in a d.c. world and they have an inadd question equacy o. maybe they'll be investing more when they feel more comfortable but there's evidence that

they're paying off debt so black rock did a survey, the average american today has enough money for $9,000 a year in retirement. you add that plus social security which is 18,000 a year. so the average american will only have $27,000 a year to live which is poverty and, you know, the average american -- >> this is in what year -- >> we din say what year. we're asking -- at this time if they save at the same level they're saving now it will turn into $9,000 a year. the average american has also said in the survey we believe we need 45,000. so it mines we'll have to have some type of assessment of how much we're saving. right now we're seeing the pain and suffering from the energy

sector but right now you see all the growth in the consumption of consumers we're not seeing that and i don't have an answer yet. if that's it, we're going to have a very slow economy for sometime. >> we're spending it on allergy medication. >> allergy medication. >> health care spending is up significantly. >> but i found a soul mate here. i've never seen anything like this. it's global warming. >> i hope it's not effecting your savings patterns though. >> it is a little bit if you've seen clare tin and zyrtec prices. >> when will we know if they're saving that money for a meaningful way? do you think that's -- is there proof that they're saving that money for the purpose that you think they are? >> no, we don't have enough evidence but we're seeing evidence that the savings rates are going higher. we are seeing a little reduction in consumer debt.

and everyone says look at car sales. we have 11 year inventory. rates are zero. so you could elude to some of the savings may be going into cars but that's not enough. >> larry, once we got richard fisher and none of his colleagues agreed with him but he said a lot of the commodity bubble was caused by qe 1, 2, 3, 4, and aand a lot of the commodities were trading higher and there might be a case to be made that $100 oil was always about fast money and zero interest rates. as it changes and we're now -- money is coming out and no longer in that, is it a consequence that oil is $29 barrel? >> there's no question if you look at the big mergers in 2010 and 11. it was energy and metals and

mining mergers. i think and we talked about this the last couple of years. i think technology is transforming the energy sector so rapidly and i think we misjudge and when i go to the middle east i do believe they also misjudged how technology is transforming the whole future of energy. the ability to discover energy is dramatically different than what it was ten years ago. the ability to recover the energy is different. a fraked well is a garden hose you turn on and off when you believe it's profitability so the storage ability of energy has totally changed an then in some countries their cost of, their marginal cost of energy is still 3 or 4 dollars barrel.

so pump man pump. and the biggest issue is some of the energy countries in the last ten years have ramped up their societal spend to such large levels they can't afford to reduce. >> they have to reduce. >> they don't have a choice. >> and then you have the stands of the world continuing to develop more and having more capacity. we have iran and we have -- if we ever had a safe iraq, i have been told for many years iraq has actually more potential energy than saudi. so add that up and we have a supply problem. right now we're sitting with a 1.5 million barrels more than demand. >> a problem in one persons eyes. we used to add to the spr whenever we could. >> but i think it's really important. we know the energy sector is going to get walloped here and

that's putting a major, you know, really putting the pressure on the marketplace. we just can't understand where the consumer is and that's the question we need to answer. >> can i go back to one thing you said, you think there's going to be more blood on the streets before we find a bottom in the markets. what tells you that? obviously you have access today at a points that other people don't. >> this is just my 40 years of doing this. this is not data. we seeing flows, our fourth quarter really showed that, you know, that there is two directional trading going on despite -- and i do believe lower prices is good for many clients. they have a lot of money to put to work. i don't think it's as dire and we're recommending to our clients start adding to your positions right here but more importantly we're telling them we think there could be a further degrading in the

marketplace and over the course of the next six months we think it will feel better. but let's also talk about it since this is the morning after another republican debate. if you are told through the debates that the country is doing badly and the world is bad it does effect consumer confidence. >> but hilary and bernie sanders are saying the same thing. >> i was just talking about last night but political elections and the way they're being done today is not about optimism. it's about fear and fear mongering. >> yeah but there is -- that's is a reflection of 70% number of americans that are fearful and that, they're fearful of security. they're fearful of economic security. they think that the country is headed in the wrong direction. the candidates decide this is a good issue first or did the country feel this. >> i think it is a combination of both. >> and then the candidates

decided to talk about it. >> nobody is feeling optimistic. >> meeplease. car sales are 18 million. we don't want to focus on the good things going on in the economy. i don't think it's as bad as it feels. >> good for us. not good for everybody, though. >> what's that? >> it's good for people that have assets. it's good. there -- >> well, our assets are lower today than yesterday. >> well, speak for yourself. >> okay. you're all in cash. >> no i'm not in all cash but we're not allowed to buy stocks anyway here. did you know that. >> you can buy mutual funds. >> i own mutual funds too. >> through blackrock. >> yes you can. >> he might sell you a an etf. you can pull the pin out any time. those things. >> larry fink is our guest host. he'll be with us the rest of the hour and we have a lot more to talk about with him. >> u.s. equity futures are

plummeting this morning but economic data and fed speak that could change things. we have to see. a run down of today's events to watch next but later this morning earnings from citigroup and wells fargo. those numbers and analyst reaction. back in a moment with larry fink.

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welcome back to squawk box. right now it's time for today's executive edge. these are stories designed to give you a leg up on the day ahead. we'll start with the markets today. u.s. equity futures, this is more of the same. dow futures have been down by 300 points this morning. those futures are 282 points below fair value. s&p futures down by 33.5 and the nasdaq is down by 91 and a lot of it because of what we're seeing in the oil patch. up by 2% and that lead to the rally in equities. wti down by 5%. back below $30 barrel at $29.60. >> let's tell you what's on the watch list today. december retail sales at 8:30 eastern time with a small decline expected. we heard from several retailers including macy's and best buy that holiday sales are coming

up. inflation is forecast to drop two tenths of a percent. then december industrial production and just before 10:00 a.m. january consumer sentiment. a lot going on here. we'll be hearing from bill dudly and fransisco's jon williams and new dallas fed president and it's all about financials this morni morning. >> corp. stocks. >> okay. >> yeah bhp billiton is going to write down it's shale assets. sparking speculation that they'll be forced to cut their dividend for the first time in

more than 25 years. i'd like to know the yield right now because i bet it's a juicy one. 11.4%. they don't need to cut that. shares of -- you know what, larry, i'm going to put all my money -- why not get 11%. i'll put all my money there. >> it's oil companies too. >> someone yesterday was a 12% yield. if it's too good to be true, probably is. shares of dialogue semi-conductor rising in europe this morning. the company says it will not enter a bidding war for chip maker atmel. they called a proposal from microchip technology superior to the one it got from dialogue. in yahoo! investor canyon capital sending another letter to the company urging them to prioritize sales of its core business which we have been hearing. a portion of its assets to entire company and not waste any more capital on acquisitions.

the company is a key supplier from apple. they blame weaker than expected demand and it's portable consumer unit. apple suppliers are issuing a sales warning including taiwan semi-conductor. >> some of these are pretty big because of a slump in smartphones sales. 11% cut and we should probably look at apple if you want. that's down at about 97 this morning. it closed at 99.5 or so. >> shares of experian rises this morning. posting an increase in revenue at unchanged exchange rates. so the results were helped by strong growth in it's north america and latin american businesses. morgan stanley naming a new head. i have been recommending this

guy. i have no idea who any of these people are. fixed income trading unit we are going to tell you who it is, though, the wall street firm is trying to turn around the struggling business. he's going to replace the current global co-heads. way to go sam. way to go person. could be samantha, right? is it a sam? we don't know. we have a sam here that's a woman. >> and he's also, if you're wondering, he's going to take over responsibility for the commodities division. which i was wondering. who is heading that up andrew. >> now you know. >> now we know. >> big news. >> we do have much more from our guest host black rock's larry fink. but intel falling sharply. the company is moving away from the struggling pc business but net income slid from a year earlier. we'll talk to an analyst about intel's report. don't miss the exclusive interview with u.s. attorney

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welcome back to squawk box this morning. our top story of the morning. global market sell off taking place as we speak. take a look at u.s. he equity futures. dow going to open down in a big way off the 275 points now. the nasdaq would open down as well 89 points and the s&p 500 off 33 points. overseas in europe. stocks trailing more than 1% across the board. you can see that. it's all down at least over 1%. in some cases much more. in asia, china stocks dipping into fair territory. hang seng dropping. take a look at the price of oil. we're under $30. wti crude trailing at 29.62.

>> some people, and a lot of market watchers, like jim cramer or somebody, when you see we're in this period like this and you see an early morning opening hire like 50 or 100 points i go -- i'd rather have the opening where it's down 275 and get, you know -- >> get it cleaned out. >> and by the end of the day maybe recover. so i am optimistic. i'm trying to be at this point. this would probably, you know, coming after we tried to rally yesterday this would have a little blood after people see that and i wonder if maybe we don't absolutely have to go down another 10% because i was watching worldwide exchange this morning and they tweeted how many people think we're going to hit a bear market. overwhelmingly viewers are saying that we're going to go down 20%. >> sentiment. >> so yesterday i was hoping if this thing got going -- instead

of going back up and people started saying wait a second -- what am i doing -- >> i'm missing it. >> what am i doing? i don't know. later today. >> it's closed down 500 today but maybe today it comes back. we don't know. oil would probably have to bounce back above 30. >> but i think all the trends for oil is going to continue to go down. it's going to test lower levels. we know that. >> we were in the 20s. if we were in the 40s i wouldn't have believed we were going to the 20s. would you? >> behaviors would have changed. you would have seen modification in production and you're not seeing that. when you think about how long it took for us to bottom from '08 than '09 it took longer than anticipated. >> don't use those years. >> i'm using that as a good example. we're nothing close to that. we don't have leverage in the system. like i said earlier, i don't believe this is a real bear market. >> set the triggers. >> not a second. >> but isn't there psychologically this is almost

an indicator, if everybody believes what you believe which is that things are going to go down, you'll never see the full capitulation. you think that the market will be up in the next six months anyway. >> we'll be at least back. >> tow mean up from here or do you mean up from where we ended. >> that's my point, if most people actually think that ultimately we get to this other place in a some what tight period they're never going to let it fall the full 10%. >> the biggest problem we have in china that's causing this china's equity market is still based on leverage and that's what we woke up to. a big decline in china again. so the problem is we have an immature capital market in china. it's mostly based on retail and leverage. so you have to deal with that problem until they stabilize there. until we stabilize oil the trend is still a negative bias equity

market but you're right andrew, if everyone thinks we're going to balance from here you're not going to sell. what i think about blood in the street, blood in the street is you have no choice but to capitulate. there's not that much in their system. that's why all the anlages are erroneous but there's still leverage players you see once a week you read some hedge fund closing doors whether they're opening a family office or just returning all the clients money. i think you're going to see grater trend toward that and it's just a sign that it's much more difficult. >> maybe people will be wrong saying we go down 20 because they don't really see we're going down 40. >> right. >> no, it's -- >> they're off. >> there are some people that think that this was just the central bankers of the world orchestrated this huge, you know, sort of a tower that has no fundamentals.

>> that's not -- >> people think that. >> there's no question the federal reserve and other banks stabilize the world and the economy and stabilization, it stabilize equity markets and through all the money you have seen, more money going back into equities. on the other hand corporate earnings did grow up. the pe's are not out landish so earnings are there and now the question is where will earnings be in a no or low inflation environment. you don't have that? where will earnings be when you have a drag in metals and minings and industry? that's a fundamental reason. >> you have spoken about china and you have spoken to chinese officials. you're one of the people that does this. >> but i never confirmed that. >> okay. >> i was going to say -- >> we have reported that. >> okay. >> i don't talk about my meetings. >> let me try it this way, whether you had a meeting or not, hypothetically if you were

speaking to the officials in china you would be telling them what and you would be saying what about some of the policies and the maneuvers they have made in the past month even. >> at this moment there's a lot of confusion. i think the ten year plan that the government initiated three years ago was a plan to expand it's domestic economy. much more service oriented economy. that means you want a strong currency because you want your consumers to benefit from the fall in oil price. so their behavior is now allowing their currency to devalue. in my mind it's going against the long-term plan. is this a pivot of the ten year plan? i don't know yet. but i know this behavior does not make sense to me. that's part one. part two, i would tell officials in china you need to expand your

markets. you need institutional -- you need more international participation. as i said their markets are heavily dependent on retail. they don't have a strong broad pension funds. they don't have long-term investors so the need to expand the participation of chinese markets is really important and i think they're too dependent on this leverage retail trade. >> but to do that they're going to have steady rules and people need to know the rules. international investors aren't going to get involved. they know when you'll be allowed to sell. >> you're right. i'm not suggesting they're going to have to have a much more open market. if they want to have these types of controls it's going to limit that type. >> what is their ability to get there? meaning the way they're thinking about this process? >> i don't know. >> hypothetically assuming you might be talking to somebody. >> i don't know. i'm confused by their recent behaviors myself. i don't know. i'll be in china a few more

times this year. just to visit. >> but it makes sense. they want to liberalize everything and become more free market oriented but they're in a slow town. they need a weaker yuan. they have to put on hold all the efforts. >> the biggest problem with china today is part of their whole reforms is to allow their state owned enterprises to become more efficient. and that means huge reforms. now what does huge reforms mean. >> that's a lot of pain too. >> huge reforms means consolidation. it means lay offs. so this is why their ten year plan was all about expanding their service side. if you don't have the expansion of job creation in the service side it's very hard to do the reforms on the industrial side. so unquestionably what china is trying to do and navigate, they're trying to do in ten years what it took most

industrial companies 50 years and most times when you transform your economy from an industrial bassed economy to a servant economy you have a couple of recessions in between so let's be clear, what china was trying to do and still trying to do is a very audacious type of plan and there's going to be set backs and the question is how severe is this set back? is it going to be very severe or temporal. >> but it's almost contradictory. in order to have open markets and to entice foreigners to come in and start investing in the markets they need to allow things to float. if you allow things to float the yuan is going to tank because people are worried about it. it's a chicken and egg again. >> unless the central bank comes in and stabilizes it. >> that's expensive. >> if you want to expand your domestic economy you like having a strong currency. it allows all the imports and one thing i can say really

clearly with commodity price beings so low, their companies actually have higher probabilities of making profits this year than a few years ago. so it's not all -- it's not all bad, however, i think it's fair to say their economy is slowing down probably more than they want it to. >> right. >> we'll continue this conversation with larry fink. he's with us for the rest of the hour. also when we come back intel falling sharply after posting an earnings beat. we'll talk to an analyst about the struggling pc business and the other factors weighing on the blue chip chip maker. squawk box will be right back. the future belongs to the fast.

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welcome back. intel falling sharply after reporting quarterly results.

the world's largest chip maker topping analyst expectations but potential slowing revenue growth in it's data center business plus an overall decline in the pc business that fuelled concerns about investors. joining me is christ rolland and that stock is down by over 6.5% yesterday. these are the comments that brian gave out on the earnings call that caused concern about the slow down. >> yeah, the implied revenue says a lot i think about the macro so it was weaker. there's two things going on. first their core pc business looks like it is effected in the emerging markets but secondly they bought a company recently that has chinese exposure as well as broad based industrial exposure and revenues there implied revenues are a little light thus far for 2016 and this change comes after an analyst day they just had two months ago.

so it's a pretty marked change in just a couple of months. >> you think that is not intel specific. this is a real slow down that's come on pretty quickly. >> i got back from las vegas last week and virtually every semi-conductor management team i met with talked about weakness particularly coming out of china. the industrial sector there. stuff like white box appliances. there are certainly some reverberations working through semi-conductor. >> what do you do with intel lower an the rest of the names in the area? >> there's a little bit of turbulence right now. intel might be different than the other names out there. >> different better or different worse? >> differ better. so data center for them was a little bit weak. what was interesting is they had comments about amazon focused on selling things in the fourth quarter as opposed to services

and deployments. so those dynamics and that seasonality is changing for them as these hyper scale players become far more significant part of their business. >> would you buy intel here? >> i would. absolutely. >> thank you for coming in today. >> thank you. >> when we come back we have much more from our special guest blackrock's larry fink and a read on the volatile markets from james lui. take a look at u.s. equity futures. we're in the red in a big way. squawk returns in just a moment. ? oh hey allison. i'm val, the orange money retirement squirrel from voya. val from voya? yeah, val from voya. quick question, what are voya retirement squirrels doing in my house? we're putting away acorns. you know, to show the importance of saving for the future. so you're sort of like a spokes person? no, i'm more like a metaphor. okay, a spokes-metaphor. no, i'm... you're a spokes-metaphor. yeah. ok. see how voya can help you get organized at voya.com.

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welcome back to "squawk box." back to the guest host, larry fink, blackrock's chairman and ceo. we talked about a lot of things, but not the controversial one, which is to say -- >> joe's allergies? >> that's one piece of it. the other is etfs. >> oh, okay. >> we had a fellow who you know from alliance bernstein on a couple times commenting on what he thinks are the dangers of etfs and what he thinks of the premium price, if you will, t t investors pay, what he thinks is a disconnect. do you want to take that on? >> no. so let me talk about what etfs did in the periods of real turmoil. so, i think you had peter on during the periods of turmoil.

during the periods of two weeks in december with huge vehicletity in the debt markets and there was a lot of worries about the high yield market, to our high yield etf in the two weeks period of time, we had $20 billion worth of buy and sells, and during that two week period of time, we had $1 billion in redemptions. that tells you etfs provide liquidity in the market place. there were replacing what dealers balance sheets used to do. dealers used to provide liquidity, and more importantly, what we did not know, dealers used to provide derivative based contracts to hedge credit exposures. that has been chiefly eliminated, reduced, and people are still looking for hedging products and looking for

exposure products, and etfs are the most liquid component of the capital markets providing that. but if we did not have etfs and people just were buying and selling high yield at that period of time, you would have had billions of dollars of sales which would cause more volatility in the morarket, and our research has shown in every hypertension capital market, etfs provided liquidity the market wanted. it's a buy-sell mechanism, like a stock, that reduces the actual selling of a physical asset. so -- >> there's a difference in the difference from the price, etf price and what's inside the etf. >> at times, there may be, but that's part of the price discovery. i'm not suggesting there's not variances at any moment of time. >> right.

>> but in many cases, first of all, those were buying selling etfs every day are not as worried about plus and minus and valuation, but looking to reduce or increase exposure to the product. >> right. >> the investors looking to invest in exposure over a long cycle, they are not the oning buyi ining and selling. >> there's a closz ass of inves who have the traditional mutual fund with an etf. rather than waiting until the end of the day, if you will -- >> much more risky because you have no idea. i mean, if you are worried -- >> which is riskier? >> well, i believe a mutual fund is presents more risk than an etf because you have until -- you have the aggregation, no idea when you buy or sell, wait

until after 4:00 and there's a liquidation or purchasing. all my conversation with regulators, when they focus on liquidity risk and the common period, and in all private conversations with them, if we worried about etfs, we have to worry more about mutual funds. there's daily kickedty, consumptions, and some believe there's a mismatch between the underlying asset and liquidity of the mutual fund, you know, depending on that, but the etfs throughout the day is matching buy, sells, buy, sells, and the mutual fund aggregates all at one time. that's more risk. >> okay. we'll continue the conversation in davos. >> we will. we will. >> thank you for coming in this morning. >> always nice to be here. >> see you soon. >> a run down the debate,

highlights in south carolina. plus, much more on wild ride in markets, and bank earnings with robert albertson. look at the futures. dow futures still down below fair value, s&p futures off by 30, and nasdaq off by 83. "squawk box" will be right back.

another market selloff and oil below $30. black rock's chief predicts 10% lower move, perhaps. this morning's market moves straight ahead. leveling the playing field for free trade. michael sheer to talk china, taxes, and keeping jobs in america. >> and can the pc be saved? a closer look at the industry

after intel says they are moving away from the legacy pc chip business 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" here on cnbc, first in business worldwide. i'm joe with becky and andrew, and breaking news this morning. another market selloff in the futures. global, really. shanghai's down, likelike, 3%, brent and wti both below $30, a 12-year low on one of them, and i did the math, that's, like, four years before the financial crisis. >> yes. >> so we've gone right through those lows. we went through the end of the world lows, and now we're even at lower lows.

this is the end of the after world maybe. on the phone, john killduff, founding partner after again capital, and a cnbc contributor talking to us again because every time oil is down, this is another one you talk about as a possibility. two handle now. got to be bottoming here, john. >> caller: you'd think, joe, but the bad news just keeping coming out of this market. you know, we talk about, is it supply, demand? i believe it's both. overnight, the iranians are set to ramp up their oil exports. they are up 21% this month over last month, nine year high for the iranians as sanctions come off, if not today, they will on monday, and then this data out of china is just driving the oil market crazy too, i mean, the new loans dropped 30% month on month so there's a lot of trouble there, more than they

thought, bad news for commodities in a big way. >> pretty amazing, john. we talked about how maybe a hundred, some was investment money in fast money, and people wo are not ordinarily suppliers or producers or anything else, when does supply and demand take over where it just gets to the point where we shut it all all here, and we actually need and find support based on real fundamentals? we got to be close. >> caller: we're going to go way down. there's a lot of crazier calls out there, $10, $15, pick your number. at this point, the point is the market is going to have to go to a shock price point that's going to bring producers like you say really to their knees and finally react, heard from comment from russia they will abruptly shut off at some point,

and i keep waiting for them, as much as they hate each other, joe, they have to come together to understand for their own sakes that they need to cut back on some of this supply to get the price up and sell less oil at higher numbers to get more revenue. i don't know when that's going to dawn on them, but it's going to be lower from here, seems pretty clear. >> yeah. that's amazing. at this point, it also is, only, we got the demand side factoring into everything. china, everything else. can you explain exactly why the equity markets are tied at this point? i know that's not your thing, but we can't get out of our way when oil goes down, the global targets go down. if it was supply, that shouldn't happen. >> caller: right. the bigger and bigger part of this is this demand picture or question out of china, but it's not just china. there's been bad japanese manufacturing data too this week. i think it's putting a real scare into the equity market because you don't -- you know,

if there's not going to be this growth, particularly manufacturing growth and csx ceo said there's a manufacturing recession already in the u.s., and you had a great conversation yesterday, i think, talking about pes, and you don't know what the e is, what the difference is in the price. that's what's happening here. there's a real uncertainty all the sudden about a key sector of our economy, the manufacturing part of it. i know we're mostly consumer and services, but this is important because this is where the high paying grade jobs are, where the growth was to be in asia, and it's faltering. it's faltering in a big way, and that's scaring everybody, i think, so much at this point. >> yeah. it all -- in a lot of ways, john, it looks like the final last hoorah of the argument. i'm not tieing arguments to the other arguments that e we have where we're brand deniers, skeptics and everything, but, oh, when you got hydrocarbons at $29 a barrel, it's going to be

really, really tough to wean yourself into solar and wind. i don't know. the bubble will pop someday, and this could be the start. thank you. >> caller: thank you, joe. >> okay. >> thanks, john. when we come back, we'll turn attention to the broader markets, joining us now is robert albertson, from sandler and neil partners, global and chief strategist. we'll talk financials in a second because i know that's -- >> we don't have to go there. [ laughter ] >> let's talk about the market. >> yeah. >> broadly. you wake up this morning, and we're down again. you heard what larry fin kid, thinks we're headed for some form form. it could be 10% down. >> it could be. the market is trying to deal with what it's trying to sort out in terms of china and oil, and they are interrelated, not just oil, but commodities and all emerging markets feeding off each other is the problem. it's not hitting the u.s. so will the market have to go through another couple weeks of gyrations?

i expect -- i don't think it's going to be simple, but dramatic. when you look at the fundamentals of what it means, it doesn't compute. if you take a china, which is sometimes half a global growth, that's not really a number you care about, but how much are imports? 9%. if we stop importing anything, exporting anything to china, one year's worth of growth on housing industry offsets it. it's really much more insulated now. we're in a different world than we were five, six, ten years ago when the emerging markets were the driver. now, we're the driver. to some extemnt, slowly, europeans are getting their machines running. >> you believe the market is oversold? >> i think the u.s. market is oversold, for sure. >> by how much? >> probably by 10%. if it goes down another 10%. >> if it's down 10%, but right now, it's flat? >> there's no reason for this to

have done this much damage. it's overreaction. over reactions go on and probably will for a while. but it's oversold. >> the argument that if you look at american corporations right now, for the most part, profits are not growing at a rapid clip to the extent you have seen it, it's coming from cuts. we have buybacks, helping eps. but there's all sorts of machinations taking place, but actual real growth hard to come by. >> correct. because we're not growing like we used to. the simplest thing to look at stabilizing my brain, look at post recessions over the past four or five recessions, and every time coming up, there's a lower growth rate. we used to be a four. now we're a two, barely. okay. so that's what it is. that's better than zero. if you can get yield, and your expectations are to go back to the '90s for great returns, this is a perfectly sensible market to buy into. yeah, avoid the falling knife

until it's hit the ground, but i don't think -- >> market prices make sense to you? even at 2% growth rate? >> yeah, i think they do. you don't have much inflation. >> let me ask another question. >> he's a banking expert. >> yeah. >> full-on banking expert. >> another -- >> are you now -- >> let me -- >> are you now a market strategist hat? >> oh, forgive me. another data point. when larry's here, he's got so much information, right? the only thing i can give you is that the fact that i get to see, on average, a dozen banks a quarter in their home market, wherever they are, whatever east going on in the u.s. economy, you see it through their eyes. there's not been one bank in a year that i talked to that's complained about the economy unless i go to midland or some corner of north dakota. they don't see it. they are not reacting to it. they listen to what they hear, and they say, i don't get it. it's app amazing disconnect.

>> i was going to say -- >> oh, yeah. but economic momentum, loan growth, yes. worse? no. it's getting better. >> credit card. >> that's the bottom line -- that's the ground level. >> one of the things that larry pointed out, though, we don't know where the consumer is. the banks, actually, have a good feel of that too if they look at the consumer in terms of credit cards and in terms of mortgages and things. >> the difference in the recovery has also been that the consumer that has not come back anywhere near as fast as before. that's why the economy's back down to a two now or four or three, but in the end, you look at what the consumer's doing now. it's up every quarter a little more, a little more acceleration. we're in a boringly slow recovery. that's what it is. people think, are we off the cliff next month? recession next year? or there's a boom coming. >> well, we're gun shy. >> exactly. everyone's going back to 2008, saying, is this a reason for another 2008? even mr. fink. >> we will talk politics in a second with john harwood to talk

the debate from last night, and we debate on the set what interest rates -- or what growth rates in the country could be if the politics were aligned properly. you seem to be resigned. >> i resigned. >> to the idea there's not much you can do. >> it's not politics. it's not the fed. it's demographics. look at the labor force, the source of the money that is going to be spent in a 63% dominated consumer spending market, it is no longer growing the way it used to because of ageing, because of fewer women joining the work forcings because of a disaster in youth employment, and, frankly, pretty overly powerful safety net. we don't have that anymore. it's gone. it's got nothing to do with who is or is not going to be president, and, frankly, it's nothing to do with the fed what nay will or won't do. >> in the u.k., the welfare, they have not had -- there's been no decline in the participation rate there, up 3% or whereas it's down 3 here.

there's emphasis if you're out of work for a while, to get the benefits, you need to prove you are trying to get back. >> which is the ol way? >> we don't do that here. >> old way we did. >> 25-54. >> i misspoke, i'm including that fourth factor. >> politically, maybe, and i know you from the years, politically, you might think we might be able to do a little bit better if we had the right poll sicks. >> you might. i don't. >> you don't think so? >> both sides argue the same points in the same way, indistinguishable, and they are not fun to listen to. there's nothing crisp or sensible coming out of them that's any different. they are grasping for not an economic solution, but for a vote. that's all. >> i still think as we slip slide our way into the sort of entitlement state, and we -- europe's had growth rates of 2% for 40 years, not because of demographics, but because of regulation and policies. we're slip sliding our way there, but there's no way to

reverse it or it's inevidentble? >> i gave up on the tooth fairy. i wanted to believe it, but i can't see it. >> weren't you around in 1981? >> yes, i was. >> don't you remember how we did it then? >> yes, i do, but nobody cares. they are focused on beating up on the financial system, yelling out blame, gyrating income here where it belongs there. >> you boxed that narrative get said. >> it's baked in now. i think it's going to take a decade to get out of it. we can get out of it, but not in 2017. >> okay. >> thank you. >> appreciate the depressing news. not that depressing -- >> much more the opposite. >> you have a silver cloud with the market, less so with the real economy. >> speaking of polpolitics, tho, sparks flying, and john harwood has the highlights, john, good morning. >> good morning, becky. this was the debate that showed for this moment, the 2016 republican race is about ted

cruz versus donald trump. we saw in the "wall street journal" poll yesterday, cruz is leading in iowa and hopes to ride momentum from that on into new hampshire. you can see their dynamics in these two central exchanges in the debate last night on fox business. first of all, was with donald trump raising questions about whether ted cruz is actually eligible to run for president begin the fact he was born in canada. take a listen. >> since september, the constitution hasn't changed. [ laughter ] but the poll numbers have. >> there's a big overhang. there's a big question mark on your head. you can't do that to the party. you really can't. you can't do that to the party. you have to have certainty. >> i spent my entire life defending the constitution before the u.s. supreme court, and i'm not taking legal advice from donald trump. >> you don't have to. >> there's another exchange better for trump when cruz

raised the issue of new york values, which he described as socially liberal and focused on money. this was in an appeal, of course, to middle america. here's how donald trump came back on that. >> everyone understands that the values in new york city are socially liberal, focus on money and the media, not a lot of conservatives come out of manhattan. i'm just saying. >> the people in new york fought and fought and fought, and we saw more death and even the smell of death nobody understood it, and it was with us for months. the smell, the air, and we rebuilt downtown manhattan, and everybody in the world watched and everybody in the world loved new york and loved new yorkers, and i have to tell you, that was a very insulting statement that ted made. >> and with that, i think i've got to throw it back to the anchors and their new york values. >> and we have the new york

values proudly. proudly, very much. >> we're tied with washington on that, john. right down there, just a little -- you know, it's sort of a -- not an version, but similar, the beltway in mat hatten. >> i don't think it's the whole state of new york, just this little island here. right? >> it's an east coast thing. it's what mike huckabee calls bubbleville. you saw guys last night, another back and forth on goldman sachs where the question was raised about this "new york times" disclosure ted cruz did not report about the loan on goldman sachs against his own assets for the senate campaign and said if the "new york times," if that's the best they got, dig deeper for another attack. ted cruz is rising right now. >> depending where you are from, new york values, i saw something tweeted out about chris matthews said, what are you playing to the hicks in iowa?

you know, from here, they are hicks, from there, new york values. it's all a great country. >> joe, iowa, and then new hampshire, and then the race is south, where ted cruz hopes to dominate. >> yeah. >> john, thank you. >> that may play down there, the new york stuff. new york values. >> washington values. >> you see the yellow plates in other states, and people are like, oh. >> how are market swings affecting stock pickers, hear from david after the break and see if he's putting money to work or stockpiling cash. look at markets this hour, all down 1%. back in a moment. actions. they speak louder. we like that. not just because we're doers. because we're changing. big things. small things. spur of the moment things.

changes you'll notice. wherever you are in the world. sheraton. 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. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.

welcome back to "squawk box." shares of intel hit horde this morning, and earnings topping estimates, but stocks drops on worries of slowing growth and highly profitable data business as intel moves from the slowing pc chip business to strengthen other revenue challenges. we'll have more on the slowing pc space later this hour, and ge has a deal to sell appliance business to china for $5 billion, and they plan to keep using ge's appliance brand, remains headquarters in kentucky, and they were forced to abandon a sale to electrolux

last month, but ge is getting a billion and a half dollars more than it had under that last transaction. also, watch shares of yahoo! this morning, investor canyon capital sent another letter to the company. they are under a lot of issue, urging to be prioritized a sale of the core business, a portion of the assets for the entire company, and not waste anymore capital on acquisitions. >> let's take another look at the futures this morning. it's been a rough ride for yet another session in the early part of this year. believe it or not, this is off the worst levels of the morning. you are looking at the dow futures, down 250 points below fair value, seeing the number down by over 300. s&p futures down by 28, and nasdaq off by 78. this morning, we are turning to one of the platinum portfolio managers to find out what he's doing for his climates in this wild market. the chief investment marketer of asset advisers, back for a second year, and joining us now with the value plan and picks, and, david, maybe it's easier to be a value investor today than

ten sessions ago. >> we thought there was value in the beginning of the year, but better value now. the key to be successful in this market, we think, is to have a 12-18 month time horizon. there's tremendous negativity on a day-to-day basis. the market sells off. there's no rationality to that, but longer term, businesses are attractive. >> you are a brave man. you're wandering into the energy patch for a plan. devon energy is a stock you like. why is that? >> so we liked energy thinking prices would be better. we've been dead wrong. we think we will be right. supply is going down, tremendous reduction in capital spending, rate accounts down, and they are a survivor. one of the better managed energy companies thinking they are worth $150% more than the current stock price. if oil prices recover, and we do, we think devon has a tremendous amount of upside, and, ultimately, there's m&a in the space. this should be also very attractive on that basis. >> we know that oil prices this

morning are at $29 a barrel. where does oriole have to recover to? what price in order for this to be really something that looks attra attractive? >> well, devon is selling as if oil never recovers. think of oil at $40 by year end, this stock would be higher. oil will surprise people on the upside and could be better. >> you like hp. >> so, last year was a bad year for value. as a result, value stocks and deep value stocks sell at very, very depressed valuations. today's picks are depressed value. hp falls into that, about seven times earnings, a 4% dividend yield. there's tremendous opportunity to cut costs, buy back stocks, increase dividend to the share hood holders, and the stock is cheap. we're not optimistic about the end markets, but we think bids are worth in the high teens. >> viacom trading dpre ining det

people think the game changed and there's not a recovery. >> we do think there is value in the entertainment and getting eyeballs. we don't think that the media stocks or the newspaper industry. the stock is in the top ten cheapest stocks in terms of pe. they had product problems six months ago, but they turned trends. nick is doing better. there's intrinsic value ongoing, and there's consolidatioconsoli. >> how much, though, this is about the ultimate takeover premium for you versus what's actually going on inside the business? intri intrinsic value, but how much is a gamble it trades in the next couple years given the -- >> we think that's the icing on the cake. >> ultimatum. >> yes. we think the stock's shouldn't be at seven times earnings, but ten or 11 times. that's 30% higher. if they take over, you do better. >> finally, eaton the other

stock. >> it's an industrial company running the business very well, involved with power management, which is a a good long temple trend, and yet the stock sells less than ten times earnings, safe 4% dividend yield. if you have a 12-month time horizon, you do well. the thing about the four stock picks today, if we are right and market does better, you got 20-40% upside. >> they are not new picks? >> nay are not. >> 30% in all positions. you were down on 30%. >> depends on the situation, but eaton probably making money, but we've been there for some time. viacom is down. we're happy to sell, but in these kacases, the upside is mo. >> penny stocks, devon's been around a long time, inquisitive, and a great name in the past. surprised to see 25 down from

80. a survivor. >> for sure. shocked the prices are beat up like this. >> david, thank you. >> thanks a lot. intel touting the move from the slowing pc chip market as global sales drop to levels not seen since 2007. a closer look how hp and lenova handle the downtown. we're down 2 points. back in a moment. time now for today's aflac trivia question. which war based video game sold 5.6 million copies in the u.k. and usa alone within 24 hours of going on sale? the answer when cnbc's "squawk box" continues. 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 today's question. which war based video game sold 5.6 million copies in the u.k. and usa alone within 24 hours of going on sale? the answer? "call of duty: black ops."

breaking news, brent and crude trading below $30 a barrel. more on this morning's oil slide straight ahead. futures under pressure now, dow and nasdaq in correction territory despite yesterday's bounce. another down year for the pc, can the industry reboot itself? we'll find out. it's friday, january 15th, and

you're watching "squawk box" on cnbc, first in business worldwi worldwide. ♪ among the stories that are front and center at this hour, aef with global market selloff taking place. u.s. stock futures have been plunging as oil prices drop below $30 a barrel. right now, dow looks to open 300 points down keying off from europe as well as asia overnight. among the reasons for crude's decline, the market anticipating increased iranian oil exports. international sanctions could be lifted within days. also, blackrock's chief, larry fink, sees market turmoil right now, and we spoke earlier this morning. >> when we test the markets lowers it's a good buying opportunity. >> how much lower?

what's it look like? >> 10% from here. >> another 10%? >> yeah. you can see that, and you can see oil testing 25, 24, but worrying about oil prices today, nine out of ten of the guests talk about oil going lower. it's a very heavy trade. >> we should point out that larry said he thinks stocks will be higher six months from now, but it could get ugly before it gets better. >> blood on the street, better bottom. >> right. >> and these people got, like, a whole lot more interesting just in the past couple days. some of the winners of the powerball jackpot coming forward today. members of the winning family from mumford, tennessee telling their story on "today" show just a couple minutes ago. >> i wrote the numbers down, got to looking, and i saw it, like, look again. they are the same.

looked again, and the third town, i ran down the hallway, john, john, check the numbers! i startled him because he was asleep on the couch. [ laughter ] >> got to love that. >> waiting to learn who is holding the lucky tickets in california and florida. i never under why -- i guess they want to get their affairs in order before you tell anyone. >> i wouldn't tell anybody. >> you want to hold it. >> oh, yeah. >> not only hold it, but avoid telling anybody ever, you're in better shape. >> worst thing in the world. everyone on the planet wants money. >> i would. >> i wouldn't. i would go in hiding. >> well, you better not lose the ticket, and knowing you, i mean, think of if you, that's app important thing to keep, right? >> whoops. >> it's not a -- >> we had a poll going on this one. >> i know you did. so they are like bear bonds. you lose it -- like losing cash. >> you have no proof. >> i would be afraid. you know -- >> you won't have to worry because you don't buy it. >> you might some day.

>> my 5-year-old son was sad yesterday morning because we -- >> how did you miss? >> we actually -- >> oh, shucks. >> he thought we'd win. >> like you. >> that's the sad thing. >> back to reality, in the latest poll -- >> never getting back to reality here. >> americans sport free trade, or the tpp, transpacific partnership. for an update on where things stand in the trade debate is the united states trade representative, and, ambassador, thank you for being here. >> thanks for having me. >> this is one issue where there's bipartisan support to get it through, but it's strange because there are people on both sides of the aisle who hate this fighting against it too. lay out where we are right now. >> sure. trade agreements and trade bills have. tough votes, but it is app area where there has been bipartisan cooperation. last year, three trade bills through the congress, and this is one area where we think that the president and congress work closely together to get

something meaningfully done. >> the republican congress. >> well, i think so. >> i know it's funny, this is the bipartisanship, but we're missing the president's people. >> well, there's always been a bipartisan support for trade, and now it's largely by republican votes and then a critical mass of democrats. that's how we got trade promotion authority through congress last year and get the tpp through. >> president decide to break -- on so many issues there with a far, far left. one of the reasons we've come so far left because of president obama, but on this issue, he's ready to abandon them and go to the more center democrats and republicans. why this one issue? i don't understand why e he picked this. i agree. i'm shocked. but why this one issue? >> the president believes this is critical to the economic future. we live, already, in the open economy, low tariffs here, we don't use regulations as trade, but we face higher barriers to the fastest growing markets in the world. >> tax reform is great for the economy, less regulation in other areas, a million things to

do great for corporate america that he decides not to do, and he picks this, i don't know. >> this reduces barriers, allows us to export more, supporting good paying jobs here at home. >> what's the timeline? what needs to happen and when? >> working our way through with the trading partners moving the agreement forward and consulting with congress about what the most conducive window would be for approval. >> and what does that look like right now? >> you know -- >> next month or two? >> longer than that. i think we've got a process we need to go through under the existing law. we have reports to be written, draft legislation to be submitted, and we'll work closely with congress and the stake holders to get it done. >> what's the biggest barriers now? what are the issues that you think need to get more attention? >> well, the good news is that there's broad support for this across most of the business communities, so last year, you saw the business round table, gnarl association manufacturers, chamber of commerce, tech industry out in favor. consumer electronics show,

interest there by small and medium sized business who see real opportunities here. there are discreet issues that some businesses felt we didn't go far enough, and we are talking to them about that to work through their issues as well. >> do it with this president, though, because the leading candidates on the republican side are against it, and leading candidates -- only two, but both of those are against it on the other side. >> it makes a lot of sense to move forward as quickly as possible. >> no brainer, right? >> delays are costly in economic terms and in terms of our strategic position in the region, global leadership. we hope to work with congress to get it done as soon as possible. >> more dieffficult to do in a time talking about the slow down in asian markets and in emerging markets? >> we obviously face a challenging environment. we got slow, and uneven growth in europe, slower growth in japan, slower emerging market, and for the figure time in several decades, trade is growing slower than the global economy. trade drove global growth, and now it's slower putting a

premium on getting rid of unnecessary barriers. we need to be rid of tariffs, other barriers to our exports so trade helps grow the economy as well. 95% of the world's consumers live outside the united states. >> right. >> grow the economy, create good paying jobs here, we need access to the markets. >> you mentioned businesses and industries are very worried and are seeking changes in this, but how much can be changed when it was negotiated with so many countries? >> this is a complicated agreement. it's 12 parties. it's more complicated than any other trade agreement we tried to negotiate before. the agreement itself, i don't think, is renegotiable, but we are working with various stake holders for ways to address their issues and concerns and reassure them. >> how does china feel about this not being involved? >> well, you know, they are following it very closely because, you know, they are going to have to live in a tpp world, a world in which their neighbors are offering higher standards, labor, environmental standards, intellectual property rights, protection, open and free internet, and that's going to make them have to compete for

the incremental investments all over. >> how is exporting all our oil now? is that a game changer for us? was that a concession made? >> i don't think it's a significant effect certainly on our trading relationship, but it was part of the overall deal at the enof the year to get the budget done for congress. >> good for the economy hurting now, right? >> well, i think that'll increase some demand for products, yes. >> not a big priority for you, it doesn't sound like. did you buy a lottery ticket? >> i did not. >> you didn't? >> sorry i missed out, i'm sure i would have got the winning ticket. >> if you won, say, i'm out of here, take that trade. this is a headache. you don't want to do it? fine. see you later. i'm going to -- >> i'll stick it through and get it done. >> where would you live? >> doesn't matter what the taxes are, i don't think, would it in.

>> yeah. >> here's -- >> you don't have to ask the ambassador. >> still working through it. >> only one twin -- that's weird, twin -- they both weren't -- one was more disappointed? >> one came with us to actually purchase the tickets so we had to explain what it was about. >> explain $292 million? >> i tried. >> i tried to explain to you, and it didn't matter, and you still bought it. >> we wanted to afford your house. >> yeah, yeah. i tweeted yesterday that the, you know, there are diseases that are 100 times more likely to get that are the most horrific rare things in the world. i'm afraid to -- i don't want to rock the boat to try to be that special. >> ambassador, thank you so much for joining us. we continue to watch tpp and appreciate your time. >> thanks very much. when we come back, pc sales tumble thanks to smart phones and tablets, a look at whether or not the industry can be saved is next. later, professional gaming now worth billions.

we power up the world of competitive gaming. "squawk box" will be back after a quick break.

another down year for the pc

market. global ship mements of personal computer totalled 2 million unites, a drop marking the fourth consecutive year of declines. here to tell us if the pc industry reboots from the levels, ed lee, editing manager from "re-code." >> is the pc dead, we all wonder. >> demonstrate the issue. >> no, we got the shipments number and intel's earnings. pc sales have. falling for a little while. what's interesting last year, total shipments, under 300 million. that's a line for pc. >> what's the upgrade cycle? >> that's a problem, right? it used to be that the os guys, microsoft windows and the chip guys would sort of kind of alert each other, hey, we'll upgrade os by this date and a new chip by that date, so everybody upgraded at the same time. a new operating system and new

pc. they are out of sync and cycles take longer. there's less reason to upgrade. >> the tablets have not taken -- i mean, there was that whole view tablets would somehow take the market. that's not happened either. >> it's not. it's the smart phone, really. you can do so many things from the smart phone, shopping from there, i can print from the smart phone now to the home printer. i don't need to log in -- >> ido you think a lot of peopl are going to give up having any pc at home? just the phone, accessories, and that's what we're -- >> i think -- at home, that's the thing. there's the internet of things, meaning everything now has some kind of -- everything's connected to the interprinterne refrigerators, and smithtv, i don't need to log into the computer. >> i use the laptop constantly, but i'm not upgrading it frequently. >> it becomes a commodity item for you, and because the internet is so distributed

widely in all devices now, and even more so, the pc itself just becomes, like, a weird terminal that's pushed out to different areas. >> the flipside argument is that if you have an interpret of things, you need the control panel. you need a central place, unless you think that all happens on the phone. >> that's the thing. every time i get a new devees for the phone, down load the app. >> exactly. >> all of these devices, ultimately, still need chips, right? only if your tv is that central device. >> question is, it may change the winners and losers in the game depending who makes what chips. >> do ipads have cpus? >> oh, yeah. >> they do. >> but smart phones don't? >> no, they all do. all require chips. >> but like the one that's in, you know, intel inside, you know, that one that was -- >> that, yeah, that marketing campaign, that -- >> central processing unit chips, but -- >> the central chip.

>> well, ones after ip tell makes and others rival chip makers, but even then, we talked about how apple iphones are not getting upgraded or people are not revamping or rebuying them at the same rates they used to be doing. that's an issue if smart phones -- >> do you believe intel can transform itself? this has been a long question coming, but now it's reached potentially a tipping point? >> they are a big company. they are -- the most important part of their business is their enterprise business, right? and so the cloud computing, amazon, facebook, and google needing more server to power up, yes, they will be fine. i think they need to be more anymorele in terms of supplying those parts of the business. >> intel's bear case was the decline of the pc hurt intel if it made all the cpus, why was intel thought of out of favor because it was involved with pcs? they make -- >> we have -- with the tablets and smart phones, intel was not

the go-to chip maker. >> even though they -- >> now they are mostly back into that. because of rival chip makers, samsung makes chips, a lot of stuff they use for their phone, at one point apple used as well. it was a crowded field. >> another chip maker you think ever reaches the status of intel in the 1980s? anyone pulling ahead so far? >> what was genius about intel in that period was they marketed -- there was commodity thing, behind the scenes thing, but they marketed themselves, part of the marketing. now it's, like, chips really are seen as a commodity. i care who made the phone and pc. that's important to consumers now. >> ed lee, thank you very much. >> sure. when we come back, the button pushing can be fierce. the e-sports market is closing in on a $2 billion industry. the big bucks behind competitive multiplayer gaming and the companies involved. don't forget next week will be

in davos, switzerland, it is a who's who in power, and we got jpmorgan, coca-cola, and gm's mary barra, and randall stevenson from at&t, and cisco's chuck robins. can't think of a better time to talk to all the leaders. we are live from the world economic forum wednesday. a lot s you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.

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welcome back, everybody. we've been watching the futures, and this is more of the same of what we've seen since the new year began. we are now headed into our tenth trading session of the year, and you can see the dow futures are are down by 268 points. that's off the worse levels. we've been down by over 300 points. the s&p futures are down by 30, and nasdaq down, and you can see energy brept and wti back, after a stabilization, and you can see that they are back down another 5% to 29.54. china's market did not help either. shanghai down 3.5%, and 2900, just below 3,000. looking at weakness in all of the scenarios driving this. you see in the european market now, red arrows are across the board. at 8%. >> okay. espn is making a video, and we

have the details. >> well, andrew, this is happening off the field, espn.com is covering competitive video game play, just in time for the north league. the video game, how much e-sports have affects.

video game tournaments are across canada, and other sports feature halo, and accommodate world championships coming up in march. and then there's the competition over where they have amazon's twitch and youtube in the first broadcaster to enter the game, turner, which kicks off e-sports coverage with a live streaming tournament at es earlier this mob. it's worth noting action is bigger outside the u.s. there's already hundreds of millions of people watching e-sports in china alone. guys, back over to you. >> wow. yesterday, it was the big market for "squawk alley," vr, virtual reality is gaining.

is that the future? a bunch of people wearing those things, playing crazy virtual reality video games and other people watching these people at how good they are? i don't want to live in that world. i mean -- well, joe, there's probably going to be a certain amount of that, but right now, people are -- hundreds of millions of people are watching other people play video games. >> what kind? like the shooter games? >> all kind. all kinds. every variety there's a huge range of e-sports competitions, and now when you see companies like turner, we're talking about networks owned by time warner, the most, you know, traditional media companies getting in there, showing this is really very mainstream, but, yes, i think in the future as more gaming bids are about virtual reality, we'll see that as well. >> for a kid that is really good, what is -- hand-eye coordination? anything you can say is positive or productive about being really good at playing the video games? >> there are millions of dollars

in prizes if you win the competitions. >> all right. i remember tommy. that was pinball, right? when we return, wells fargo, numbers and market reactions, checking out the futures ahead of the numbers.

well, one day you sell off, bears in china, crude prices sliding and, and is this the new normal for investors? >> opening the vault on earnings. banking giants wells fargo and citi group about to report results, numbers, and reactions. one of the power ball winners came forward. >> a couple from tennessee getting a third of the $1.6 billion jackpot. >> i want your money. >> final hour of "squawk box" begins right now. live from the most powerful city in the world, new york, this is "squawk box."

welcome back to "squawk box" here on cnbc, first in business worldwide. we're less than 90 minutes from the opening bell on wall street, and the down draft we're seeing in the market this morning is starting overnight in china, and you're looking at the shanghai composite there, down 3.5%, and stocks enters bear market territory there, down 20% over the december 22nd, and elsewhere in asia, more red arrows after being up 2%. the nikkei finished the session lower. right now, we are keying off that. the futures here sharply lower. looking like the dow opens off 268 points down, and nasdaq down close to 80 points off, and s&p 500 off 30 points. check out the markets in europe at this hour. they are having the same issues that we are here. the dax, cac, and ftse off 1%. >> citi group reported a dollar -- 1.06, a penny ahead of

the estimates for 1.05. the stock closed at 45.38, down 53 cents, but it was down before the numbers came out, obviously, based on what's happening in the overall markets. the revenue number is 18.5 billion, above expectations, but, you know, you have to exclude cva and dba, but even with that, it's above revenue about the 17.86 billion that was expected. that comes out to about 3.3 billion dollars which is a lot -- jpmorgan missed over five? 2.2 billion, fourth quarter allowan allowance, and assets after all was said and done for citi group was 1.66 trillion, and positive -- all these numbers -- not that interesting, credit

loss of 1.76 billion, and the company said they'll return 1.8 billion to common shareholder ps. >> a look at wells fargo. >> you do them all. >> no, no, i was looking -- >> i have no interest. >> i'll do a quick one on this. 1.03 is what they earned, versus the 1.02 the street looked for. looks like revenue was in line, 21.8 billion the street expected. the company saying total average deposits in the fourth quarter, 1.2 trillion dollars, up $67 billion or 6%. also saying they increased deposits and grew both commercial and consumer lopes versus third quarter. we talked to an analyst who said, look, from the banks' perspectives on the issues, almost every bank is looking at an economy that looks good, both on the commercial loan and the consumer loan side of things,

unless you're in an area of texas or in the north dakota. again, if you want to look at what's happening with wells fargo shares, down by 35 cents now, but the company beat on the top line and came in close to in line on the baottom line. >> reverse that, beat the bottom line and closed to the top. >> this is quarters worth of citi group drk and found out yesterday they continue to improve. michael kors said overall, a strong performance year, generated $17.1 billion in net income, the highest since 2006 when the company was different in terms of head count, foot print, mix of business, and assets, and over the last three years, the company's made substantial progress towards our target and execution priorities, and we significantly improved our returns on both assets and intangibles.

>> he's going to come on? >> just think how the earnings go higher. getting rid of offices. >> really? >> no offices. >> just pods? >> they are going to have cubes. >> we're used to that. >> we are. >> film a sitcom like "the office," and everyone stands around. >> a little harder when it comes to the chinese thing -- >> analysts versus -- banks would never do that, i don't think, even if they could, would they? >> of course not. >> not niche. more top stories this morning. general electric sold the appliance unite to a chinese firm for more than $5 billion, this as ge continues to downsize and maximize profits, get r more for the unite, 5.4 billion. also, uber's unit in china worth more than $8 billion. they raised a billion in the latest fund raising round, but it's not popular in the mainland

yet because of heavy competition. he'll also be in davos, and bla blackrock rolls out results this morning, earnings falling a bit short by higher competition expenses, revenue topped expectation, blackrock is raising dividends by 5%. earlier on "squawk box," blackrock's chairman and ceo, larry fipg, gave us his view of the market and the current selloff. >> having a market decline like this in the first couple weeks of the year really puts, in my mind, puts a negativity across the economy, a negativity of looking at stock prices, and negativity related to business and forward thinking businesses. i believe you're going to start seeing more layoffs in the middle part of the figure quarter, definitely the second quarter because of this, if we don't see some swift rebound, and as i said, i think we're going to have probably more pain before we have that lift. i do believe by the second half

of the year, the market's going to be higher. >> all right. let's talk more about the markets, joining us now, the director of global macro at fidelity investments, and james lou, global market strategist at jpmorgan. do either of you think that we're close now to where don't need to put in more work here, or do we need another 10%? set up at this point to stabilize or more to go? >> well, markets are extremely oversold. i think only as of yesterday, only 9% of the stocks in the s&p were above their short term moving average so yes's move was not a surprise, but if you look deeper within the market, you know, the russell 2,000 is down 22% from the high. you know, that's bear market territory, so you can argue we're in a bear market of sorts, and i agree with the previous person you had on that this is

going to be sort of a first half of the year versus second half of the year setting up for a big bottom like we saw in 2009, only in this time, beaten down sectors like emerging markets and commodities, but we're still dealing with the saim issues we talked about so many times over the last, you know, six to nine months, which there a is global policy divergence in the two world's economies, u.s. and china, who happen to be tied together through a quasi fixed currency, and when you're on opposite ends of the monetary mo policy spectrum, that creates stress, and a million dollars of capital took place in the last year. imagine if you're trying to keep your currency stable, and you spend on foreign exchange reserves to do that, that's what they are doing, reverse qe of $130 billion a month.ening of c

which is not good for the markets. we have to get through the policy divergence until they are on the same page so the dollars come down and pressure goes away on the yuan, and i think we were setting up, but i don't get the sense we are there yet. >> all right, all right, all right, all right, wow. jame james is here, james, in the past, it's been very sort of popular, blood on the streets. when i look back on things, great big turning points i remember 2008, 1987, i remember that. for your garden variety, and i remember many times where the same people calling for con pitchlation, you don't get it, and then you are waiting for it, and, bam -- >> your moment. >> right. i don't know whether this is one of the moments, but maybe it's

something that's very clear, and then everybody would be able to buy, and it would be all clean and neat. that's not usually how it goes. do we need a big blood letting to build back up? >> joe, i think the most entertaining part of the market is how quickly sentiment to bearishness is. people loved the market last month. not much that change. bull versus bear cases, nothing original in those. we talkinged about stronger dollar, weak oil for a long, long time now. my view is the thing people are missing is the fact that earnings will be much, much better this year than last year. last year, they were slow to react, still tacking about it now. that was the 2015 story. that's really what's going top drive -- >> better on an absolute basis or better -- last year, it was bad because you were comparing it to a good year, the year before. this year, last year was awful. better on -- >> no. clearly, you know -- >> not oil, what? >> so not oil because revenues will not bounce back, and oil

fell in the second half of last year, but theest of the s&p, tracking double dimts earnings growth in 2016. nobody's really talking about, but focused onto 15 stories. >> i have not heard that, have you? double digit earnings? >> full year 2016. >> i i thought it was going to be flat. flat or double digit earnings growth? >> from the data i follow, the earnings estimate calls for about 7% earnings growth in 2016. in the short term, well, those numbers always play out. >> revenue growth. >> well -- >> revenue growth, usually revenue growth is half that. >> earnings growth. revenue growth, you're right. >> yeah. >> no, no, no. >> predicting double digit earnings. >> we're talking about -- >> accounting for the negative -- >> and they'll get the earnings

growth, what you're talking about is through buybacks and other things and cuts get you there, no? >> i'm saying historically revenue growth runs half of earnings growth, and like you said, the rest of the growth comes from share buybacks, et cetera. >> constant currencies, talking constant currency, not the strong dollar? we won't get 4% revenue growth next year, will we? >> probably not, even the 7% earnings growth, that is the cop census number, those numbers tend to come down as the year progresses. you know, in 2013, 5%, and 2014, 5%, and 2015, it was negative, but x energy, it was plus six. i think the risk over the near term for the market is that if you look at earnings number for '16, up 7%, it's 7% for the market, x energy, and oil has to bounce quickly for that to be true. >> james, what are we worried

about? choi that, we're worried there's a global slowdown, and if there is, we're not doing double digit earnings growth. you don't think that that is going to be imported here? >> so i think it will. so -- >> will what? >> we'll see that solid earnings growth even with china, what china does, though, is make the world risky. so people pay less. >> doesn't slow us down here? >> not necessarily. look at exports, fraction, 1% goes to china, et cetera, but it's valuations take a hit. look at valuations now with the selloff, back to where we were in 2014. you know, stocks have not. this cheap in two years. >> china slows down global commodities, although they are just 1%, but they can't slow down the economy? china was enough to kill the entire commodities lining right? >> that's true. the energy sector, obviously, too big a hit last year, but broadly speaking, the u.s. economy is relatively insulated from a lot of the global effects that we are seeing.

what the u.s. needs for everyone else to catch the cold. very few have. >> all right. >> exactly. >> all right. well, you know, i'm not -- quite -- now, i don't know, though. you guys know anything, andrew? >> i hope so. two different views. we'll see. >> not too different. >> one will be right. >> thank you for coming many. coming up, more reaction to wells fargo, and, plus, one of the winners of the powerball came forward, and how a call from a wife to a husband on the way home to work led to the jackpot, and, later, don't miss this, exclusive interview with preet bharara on confronting the cyber threat. doing that interview in the 1:00 hour. "squawk box" returns in just a moment.

♪ light piano today i saw a giant. it had no arms, but it welcomed me. (crow cawing) it had no heart, but it was alive. (train wheels on tracks) it had no mouth, but it spoke to me. it said, "rocky mountaineer: all aboard amazing". welcome back, everyone, watching the futures, and, again, if you are just waking up, this is a little of a "hello" to you this morning, dow down again. right now, over 300 points, decline of 305 for the dow futures, and s&p futures are 35 points below fair value, and

nasdaq down by 90. this comes on weakness on oil and weakness from the chinese market, but a rough way to go into a three-day weekend. >> yes. fingers crossed between now and four. who knows. >> maybe we'll be up 300 at 4:00. >> or down 500. you know better chances are up 300 than winning the lottery? >> yes. >> okay, good. >> let's hope for that. not going to win the lottery, ever. >> in my dreams. >> you might win $4. citi and wells posting results, and we are joined now on the "squawk box" newsline, and, david, throw in jpmorgan, and, since today, you know, there's no reason for me to give you a quote on citi group or wells fargo in this market, but out of the three, did any shine? were they all pretty much in the same environment so they all had similar results? you looked at all three now, right? >> right.

i had a chance to look at citi and wells this morning. the operating earnings better than con accept sus expected in terms of citi and wells, and this morning, one cents ahead of consensus expectations. i think one of the themes across all of them is improving efficiency. citi's efficiency ratio, percentage of revenue, lower is better, was down to 57% for the year, down from almost 65% a year ago. and, of course, all of these banks will benefit from the rate increase that the fed put into effect in december, and jp mori gap yesterday said that simply its loan growth and the fed move already adds $2 billion to its net interest income over 2016, even if there are no further rate increases. >> so even if you don't -- if you see that, you know, the ten year is not playing along with this, so if you don't see any --

if the yield curve flattening, they can make more on just the little increases at the fed orchestrat orchestrates? >> yes, absolutely. i mean, citi, for example, disclosed in the past only 90% of the benefit it gets from higher rates comes from the change in overnight rates. so the citi has more extreme than others, but the benefit is really at the short end of the yield curve for the large banks. >> is there another business that was better than expected, or another business that was worse than expected with any of these, you know, whether it's fixed income or trading or consumers, any of those narratives? >> you know, i say citi's trading revenues were very good on a year over year basis. fixed income trading up 7% year over year, equity trading up 27% year over year, but it was down from the third quarter as signalled, but, certainly, not a bad performance. i tell you, investment banking

fees were a billion and a half at jpmorgan yesterday, a billion at citi today. investment banking is cooking along for the major firms. >> what about loan growth on a scale of 1-10? >> oh, well, loan growth is good in commercial and industrial loans. jpmorgan said yesterday their core loan growth up 16% year over year at wells and citi, it's not as much as at wells, core loans up 8% year over year, and, again, partly that is a difference in the franchises, difference in their strategy, but you're still seeing very strong growth in commercial loan demand, which i think is a good sign for the rest of the economy. >> as far as credit quality and whether it's -- wherever you look, the credit equality of the bank, anything to indicate that the unemployment rate's really not 5%? or really feels like a good

economy? >> caller: no, the consumer credit quality is as good as it's ever been, and, again, jpmorgan said yesterday their expectation was the credit card chargeoffs would be the same, same rate in 2016 as in 2015. of course, there's stress in the energy industry, and these banks are all lenders to various energy companies, but it's a small part of their overall portfolio in the range of, you know, 3-4% of total loans, making specific builds. they are putting up reserves for specific problems that they see or, you know, smaller energy related companies bankruptcy, b factor for the industry so far. >> okay, all right. david hilder, thank you. >> caller: thank you. >> okay. when we return, the fight sighting of one of the powerball jackpot winnerings, a couple from tennessee coming forward on "today" show, and while telling their story, yeah, things not looking bright here with the markets, at least not if you're

a bull. dow futures down 310 points below fair value, and s&p off by 35. "squawk box" will be right back. , 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. in new york state, we believe tomorrow starts today. all across the state the economy is growing, 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. and in albany, the nanotechnology capital of the world.

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we know now one of the winners of the jackpot appearing on "today," and the family is from mumford, tennessee, and they got in touch with the

"today" show, for a television appearance. only the immediate family knew they were holding the ticket, giving them a third of the billion dollar jackpot. >> i wrote the numbers down, got to looking, saw it, like, look again, and they are the same, looked again, and the third time, i went running down the hallway, john, john, check these numbers, and i started him because he was asleep on the couch. >> no word about the other winners from california and florida. although, i saw advice on twitter yesterday, if you win the lottery, hurry up, before you tell anybody, e-mail friends and relatives and ask them to loan you $500, and chances are you don't hear back, making it easier to decide who to help. >> so you see who is on your side and who is not. >> the numbers -- people get like thousands of requests. >> one guy, the mailman would no longer deliver mail to the house because he got so many requests for help and money.

>> are you ready for the article to be out in the next week, or so, i'm sure, for lottery winners. so many destroyed. end badly. >> when coming into money like that, yeah. >> and when it's earned, it's one thing, but when you get it that way, it's not necessarily, you don't particularly -- not as happy. >> we have economic data after this. retirement squirrel from voya. we're putting away acorns. you know, to show the importance of saving for the future. so you're sort of like a spokes person? more of a spokes metaphor. get organized at voya.com.

welcome back to "squawk box." a litany of breaking news, and here we go. retail sales for the month of december down.10, not good, but as expected. if we sift out all the auto sales, looking at down .10 arguably, much worse than the 3 cents they looked for. stripping out autos and sales of gasoline, unchanged. we are looking for that to be up half a percent. the control group, we got the right number, but it's .3, but the wrong sign in prompt of it, we looked for up. we ended up with down. let's look at tpi in december. ppi down .20 as expected, strip out food and energy, up .10.

empire manufacturing, this is a very interesting one because it is minus, minus 19.37, so the string of negative numbers continues. the only issue here is you're looking for down 4. pretty much multiply that by five, and you are spot on with the minus 19.37, and now i will say that it was right, signs were wrong. pretty negative data points, and, again, it seems as to the trends of 2015 spill over in 2016, and in my opinion, if you want to watch one thing today, watch the shanghai index. it had a significant bottom right around 29 or so. we blew through that, and this

is the lowest level of december 2014, and expermits say it doesn't matter here, and investors think differently. back to you. >> rick, thank you. let's get more reactions now to the economic data. steve is joining us back at headquarters, and on set with us is the chief economist of people's fixed income. steve, starting with you, what do you take away from the numbers? >> a slight correction on what rick said. it's december data. we don't know if it's carrying over into this year, but this is the last data from last year, 2015, and, indeed, the softness of the first fourth quarter seems to continue into the end of the month there. big declines here. .9% decline in clothing, big decline in gasoline, and no help at all from auto sales which had been strong up 6% on the year, and zero in december, and we are looking for declines there.

one issue we had with the retail report is prices, prices declined in at lot areas. when it gets translated into gdp points, it's adjusted for inflation. it could actually still be a slight increase, and then again on the p prgs i number, that trend continues seeing very soft input prices. ultimately, this could be good for companies out there and for profitability if they can get that extra on the consumer end, but that doesn't seem to be the case. ultimately, we have deflation or lower prices in the pipeline, none of this speaking well for fed members who want to hike more. becky? >> lindsey, talk about that a little because we have all kinds of things where you're now seeing these headlines on the front pages saying, oh, the terrible pressure coming from low oil prices, hearing industries you don't hear normally complaining about this, celebrate this, like airlines, complaining how it's hurting travel in some areas.

how do you make sense of this? low oil prices good or bad? >> price reductions are favorle for consumers, but when they reflect a decline in demand, that's when you start to hear the other side of the equation. companies saying, well, wait a minute, cost is down and demand is down as well. revenues are faltered in that case. >> how much of low oil prices are a reflection of low demand? >> i think it's a switch. i think there's a global supply glut and seeing a decline in global demand. we see that in the domestic consumption numbers as well. consumers against the backdrop should be outspending wind falls, but they are cutting back on nearly everything. even autos, which had rates that multiyear highs in ogts, those are down as well. consumers still very much tightening purse strings at this point, concerned without that component, which is income growth. we have not seen that. >> becky, the one number that is a january number is that empire

state number, and that's just showing that this manufacturing decline seen at the end of last year continues into january, indeed. you had the six month business conditions, what was the number i saw? one of the lower levels ever that we've had here. fell quite a bit in any event, and shows you different regional numbers out there, you had the broad national numbers showing manufacturing sectors contract. some work that's just about to show because of the manufacturing sector contracted does not mean the overall economy contracts. it's ultimately a drag, but not necessarily bringing down the service sector now. >> i'll ask you both, but we have heard from other quarters, intel last night saying, hey, there was real weakness in the last couple months that started in asia and emerging markets, but it's spread in other arenas. larry fink said, look, in eventually, he worries will lead to layoffs here in the united states. when do all of these min i

recessions in other areas pile up and lead to bad news here? >> i think they are already piling up. i mean, look at the fourth quarter gdp, waiting for the number, priced at 1%, disappointing data. from the fed's stand point, they continuously told us that better times are around the corner, thus the liftoff in december, but with manufacturing down, consumption, losing momentum, housing market losing as well, prices in negative territory, there's no sign of momentum or turn around looking into the new year. first quarter of gdp, still in positive territory, could be just as disappointing as the end of the year, around 1, 1.5%. the fed is focused on expectation so it's likely even if we see this continued decline in the economy or lack of momentum, that the fed will stay on track with additional rate increases throughout the year, but it creates a large divide between central bank policy and economic reality in the u.s. >> steve?

>> well, i mean, i want to really press lindsey a little bit on the inflags numbetion nu with retail, as prices fall, there's a decline in the nominal, but the real number remains robust. 2.2% year over year gains in retail sales compared to december 2014. that's not too bad. i'm not ready yet, lindsey, to give up on the u.s. consumer. the story is better jobs, lower energy prices, and i ultimately think sln though this sounds off here, that lower energy prices are good for the u.s. economy, that oil is an input, not ultimately the output of the economy that we use it to power machines that create better value added down the chain, and that that will show up, and, ultimately, we do have the challenges from overseas, but they are not going to determinist outcomes, in fact, it's more the other way around. the u.s. economy's going to tell

you more about what's going to happen in china ultimately than china telling us what happens in the u.s. >> not arguing the u.s. consumer is dead. it's positive spending pace, but you have to remember that's down from 5% this time last year, so it's that second derivative decliner that severe loss of momentum that's not thinking it is painting a capable picture well into the new year. if we continue to see downward trajectory, the consumer is at 1% or negative territory. we have to see something to turn around this decline in terms here, and, clearly, it's not lower energy prices. that's not enough to sustain the consumer. >> to file on that argument, what's happening in the target does not help consumer sentiment. it's something that gives people pause, and it also could, by the way, give hiring pause, one of the biggest concerns, guys, when you see the stock market decline, whether there's an economic impact, the ceo says, you know, this is not the best time to bring on that new unite of 50 people we were going to

hire or to add additional people to the work force. that could give people pause. if it's temporary, the hiring continues, but i think it's hard to imagine this kind of strong jobs numbers in december, given the gtp numbers we had, continue into january. >> you and all your buddies, loving wealth effect in qe. the other way is not pleasant, is it? when market is down and people stop hiring. maybe down to zero for another ten years, steve. >> joe, do you really -- >> get the markets back up to the old highs. >> joe, you see all the wealth effect from qe, no increase in earnings, level of s&p operating? >> not in earnings, no. >> it did go up, though. >> gdp or participation rate or any of -- not seen how people feel about the direction of the country. >> did not hire 292,000 people. >> i don't know about that. you know, are we back to where we were?

>> are we back to where we were before 2008, three jobs ahead of where we were and played back? >> i didn't say and were in 2008, joe. it's half of what it was. people were actually working, joe. >> 40 year low on participation. >> joe, is that the only number that counts? >> when the wealth effect goes the other way -- >> joe, how many people not in the work force now are not there because they are retired or back in school? >> i have to say the ten-year note is yielding below 2%. >> yeah, that's sad. yeah. you can see -- >> it's happening. >> a strong economy. >> losses into the futures too. i saw the s&p futures down by 40 points, looks like the dow is down by 347 points. so, again, this is accelerate ing heading towards the opening bell. >> makings things look better, but not actually better. anyway, thank you.

crude oil on pace for the third loss, get more on the commodity crush, and matt is joining us now, director of commodity research at separate data. 29 the low? >> seems as if it's not, joe, but go lower from here. we got economic concerns pushing lower oil prices, egging on economic concerns, and so we're just in this circle. it doesn't have to be that commodities were in a bubble from easy money, i guess, because if it's china, then it's slowing down, and that could explain why all commodities are down, but it's a good theory here as well, but bankers over

the past six years engendered the rise in commodities, and that's when they stop. some has to do with headed in the other direction, now, doesn't it? >> i think so, joe. we had a weaker dollar in the crude market higher all the way through 2009, 2010, 2011, and '12, and prices pique over 110 or 115 on brent and that was the most, the dollar strengthens in a sense, and crude prices are lower as well. there's that relationship involved there, and you really got the situation where in the land of the blind, the one eyed man is king in terms of u.s. doing not the bad, but compared to everybody else, it's doing pretty stellar to be honest, lending strength to the dollar, and we had an interest rate hike here, seeing stimulus coming from everywhere and devaluation in every other currency from the

turkish to the canadians from the russian and brazil, and so that is effective if the dollar strengthens going forward, you have to expect head winds in the crude market. >> supposed to be out of food by now too, matt, and fewer people fed on fewer acreages. how much is technology moving forward and we do horizontal drilling, able to get a lot of important commodities out of the -- whether we grow them, breed them, or use the right seeds, whatever it is, i mean, commodities get cheaper as humanity advances it seems like, and all the arguments about population growth, and everything else, they never seem to catch up with reality. >> well, specifically relating that to crude, should we see prices rise and demand increase, likely to see technological advancements so much that we then see more production coming to market.

horizontal drilling is managing to capture greater efficiencies all the time, and so from that perspective, we should see prices rise, we'll see more production, push prices lower again, and so, it could be winning the environment now going forward technology keeps us low prices across the world. >> okay. all right. thank you. >> thank you. >> we did go below 2% again on the ten year. what happened to 3? 2.5? and 2.3 and -- is it there again? still down there? >> right at 2%. it was 1.9. >> because raising rates. >> it is shaping up to be a wild finish to what's been a pretty crazy week. actually, a crazy two weeks for the market. next week, it will be a wild week in the mountains of davos,

we have a sneak peek at the guest lineup when we come back. heading to break, check out the futures, dow futures 360 points under fair value, s&p futures down by 41, and we're just about 40 minutes away from the opening bell. "squawk box" will be right back. this just got interesting. why pause to take a pill? or stop to find a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex

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another look at futures this morning, and it is already picking up to be a rough end to the week. we are headed into a three-day weekend. you can see the dow futures right now down by 385 points.

make that 392 points, almost at 400 points below fair value, down 398. i feel like i'm at an auction right now, s&p futures down by 47 points, and nasdaq off by 126, happening as markets everywhere are thrown into chaos. the temperature-year note now yielding 2.002%, fell below 2% moments ago. >> like i told you, you know, it's okay, if things are going to get dicey, becky, in the markets or global economy, the fed can cut rates. >> by 25 basis points. >> right, or we could -- well -- >> could do qe. >> qe or we could -- i don't know. anyway, you got any idea? >> nope. >> a wild week for markets, and there's still another whole trading day ahead. we had interesting calls made here, right here on "squawk box" on the state of the markets, and

to a trillion dollar mistake made in the oil market. >> i do think that there is high er risk in the markets today. i wouldn't be adding risk in my positions today. i'd be watching for market stabilization. >> we see the headlines, the markets are volatile, and we have a lot of risks out there, and they will continue to market volatility, but we don't think we're in the end of the world market. >> the saudis turn millions of barrels on, and now they have not got it done. it's. a monumental mistake for them, i have to add, a trillion dollar mistake, and we are seeing a lot of things occur from that. >> we have a total of 2016 figure for s&p? >> $126. >> that's not that bad, that's the multiple that's reasonable. >> yes, it is reasonable. >> unless we make 105. >> it is reasonable, but we think it's lofty. >> one the big surprises i think for 2016 will be that high yield

bonds actually have decent returns this year. i think it's going to be a -- it's going to struggle to have another negative year. >> you have to respect what the markets' to respect what the market's message is. look, they're uncertain, so people are stepping back, risk is coming out. we're deflating, right? i would be surprised if this is the end of the bull market. >> i believe there's not enough blood in the street. we will have to test the markets lower. i think when we test the markets lower, it will be a good buying opportunity. >> how much lower? >> another 10% from year. which is nasty. >> as you can see, we've had big calls this week. we will raise the stakes next week. we will be in davos, switzerland. our guest list is a who's who of the power players. ceo's from iconic company. jamie diamond, randall stevenson

from at&t, meg whitman from hewlett-packard and cisco's chuck robbins. we have blackstone's steve swartzman, larry fink, and ray dalio. that's only part of our fantastic lineup next week. tune in to "squawk box" all week live from the swiss alps. these are the people you want to hear from when you look at market turmoil. >> that is -- they're all going to -- really? >> that's not everybody. >> 400 points we're down now. could be interesting next week. >> yeah. >> we'll stay neutral. >> 432 points. >> we'll be in switzerland, at least we'll be neutral. i love three-day weekends when we're down 428 on that friday after being down 8% already this year. any way, we'll check in with jim when we get back to talk more about this. that's a little concerning there, down 400.

we'll check in from the new york stock exchange. futures sell off, oil under 30. ten-year under 2. close to the opening bell on wall street. 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. if only the signs were as obvious when you trade.

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let's get down to the new york stock exchange where jim cramer is. we have bigger fish to fry here. 400 points, three-day weekend, down 8% for the year. >> yeah. >> you know, we remember things like this going into weekends like this. we'll see, right? >> yeah. >> strap yourself in. >> yeah, no one wants to we're taking out the -- we'll take out the flash crash lows if we open up where this is. that was something we tested the other day and held. i think that will cause another level of very serious re-evaluation of whether you can take the pain. larry fink's comments -- look, you guys had larry fink on. he used the 10% number, that will make people stand up and take notice. all we care about is oil any

way. oil went below 30, okay. let's accept the fact that the market has to go down big. the saving grace? earnings have not been that bad. other than best buy which has been terrible. i look at citi. citi is in line. tangible book value. they're down 20 -- they've got room -- that stock has got a $60 -- $60.50 tangible book if they can buy back all the stock and the government can get out of the way, great. we all understand this is a tough market. intel's quarter was good. outlook terrible. >> the world almost ended in 2008, then we tripled from the lows with the equity markets, because the fed came in and did what it had to do. we knows there no free lunches. what do we owe? what do we pay forward by minimizing the pain the first time around? what do we have to give back to where we pay the piper for -- because there are no free lunches? i wonder how much that really means. you can't expect everything to

be perfect, right? >> no, you can't. do we test the november 2011 lows? that would be during election time. would that be a fair thing to do? i don't think that will happen. there's too much earnings in the s&p. could we go to 15 times earnings, where we feel the earnings have some gravitas? yeah. >> all right. >> holy cow, we're so oversold, but it's obvious we are not going to hold that level that people felt was a safety point. >> i'll be watching you at 9:00. >> all right.

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>> welcome to "squawk on the street," i'm david faber along with jim cramer. carl quintanilla has the day off. futures are down sharply. markets are selling off around the globe. more on that in a moment. we have a double dose of breaking news. we will start with steve liesman on new york fed president bill dudley. steve? >> david, thanks. bill dudley giving a speech now in new jersey saying future rate hikes depend on the data. he notes that in december further rate hikes were expected in 2016. he doesn't tell us how much he th