to what draghi was saying, is the markets coming back off of their highs thinking it is bad news because of the economy or because they are going to think about this in march and it seems like a long time away. >> we are going to wait for more punch. >> we have a huge show coming up tomorrow. >> join us again. >> join us. >> watch "squawk on the street" and make sure you join us tomorrow. that starts now. good thursday morning. welcome to "squawk on the street." i'm quintanilla with jim cramer and david faber. the market was soft. mario draghi arrived. he said they may reconsider policy. europe did post sudden iof almot 2%. shanghai down 3%. ten-year, remains below 2 and

oil, keep an eye, it switches to the march contract. we begin with european central bank president, mario draghi speaking. >> two dow components on the move. what you need to know from verizon and travelers earnings. >> the earnings is underway. what has southwest shares seeing a pre-market boost. u.s. futures are higher erasing some of the earlier losses and a news conference still going on in frankfort. the central bank will weigh more stimulus measures at the next meeting in march. draghi believing that downside risks have increased again. after the ecb left interest rates unchanged. whether they believe further policy has any meaning at all. what does this tell us. >> i think it has tremendous meaning if you sell your product in euros. he managed to crush the euro once again. this i the quarter where our international companies are taking it on the chin. we were looking at the real

numbers. we used to do currency. it is very bad for international companies. if this couples with oil going down because the dollar is getting stronger, would mean you shouldn't buy the sucker opening. the only thing that was really important was our jobs claims spike. if there is someone from the fed, they might say, we have to go with draghi, because or inflation rate is low. mr. bull regard said, if inflation keeps going down i-there is no need to continue to raise rates this rapidly. i am looking at employment claims and the economy is soft. >> you did make the comment right before we went on air, jim, that given be that, the dollar is strengthening against the euro. what are we, 107.9. that's the theme. i saw you talking about it last night on "mad money." we talked about it here as well as it related to ibm and so many others. you are saying what you are saying here, forget about it. stop with the constant currency.

it is what it is specially given where we are today. >> we didn't hear all that much when the dollar was weak. >> they never gave into you and constant currency as the dollar fell for 20 years or whatever it was. >> beware. you will look at a company like treehouse p. the price is 65. that's a domestic company that does not all foods. that's the kind of company that stock has been up one, two, three. why? people are going to go domestic on this. what draghi is doing is dragging you towards domestic health companies and food companies. he is killing the euro. that's what he does when he makes these statements. he kills them. >> in the meantime, a lot of discussion this morning saying the data, namely employment and sentiment and energy not behaving in a prerecession way. the market selling off instead on lack of confidence, lack of policy credibility in their view with the chinese, with the fed,

maybe dra gi. if they did reconsider in march works that do anything. >> i disagreement with them about the actual fundamentals. the fundamentals are weaker. i hear these guys saying the fundamentals are strong. maybe they should get in the trenches and look at the numbers. union pacific reports this morning. this is wow, recession. >> so people pointing to jobs, you are telling him that's a lagging indicator. >> housing starts, our economy got weaker. i also think that alan blinder raised some very good points in a terrific op ed segment. >> the two that you are getting wrong is china. >> we have talked about that a number of times during this incredible selloff we have seen in 2016. he did put it to paper and had some assumption s in terms of te

gdp, an export-led economy. not of that much importance of our overall gdp and made the point on oil which has been made over and over again by the series of excellent guests they had on "squawk box," including jack lui, the treasury secretary, saying, why is it we are painting this as a one-way story here and oil is suddenly going down is only bad. >> $100 billion saved in terms of the import amount of money that goes overseas. a very good reminder. he made the point that people we export to will get hurt. they are giving up on the reality letting the currency go wherever the heck it is going to go. that could cut gdp but it is still very small. union pacific, urfourth quarter

revenues. chemicals, down 7%. pbg did good today but trimming, saving money. agricultural products, down to 12%. air freight, down 14%. coal down 31%. union pacific, china coming east from west. this is not the panama canal. in is real america. we can do whatever we want. union pacific car loads is something they can't put a space on. wow, these are really great numbers. union pacific is such a great company. they are not losing traffic to anybody else. >> keep an eye on the index people say all day long. >> this is data. what am i supposed to do? am i going to say jamie dimon is right, that things are great, gorman, things are great. his stock isn't that great.

i like gorman. i am not knocking these guys. they should say, hey, you know what, i read about freight and i recognize the country has gotten weaker. union pacific recognizes the country got weaker. th they are in the rail business. our team did outstanding. commodity prices. the strength of the u.s. dollar, a major impact on our business. hey, there is the real world. this is real. >> that's good. as we talk about that, the comments from some of the bank executives versus the usp data, steve lease map is continuing to moderate draghi and that news conference. >> let me talk about the significance. draghi said that they are going to come back and review the policy stance in march. most guys i have been reading was the ecb would not come back until june and wouldn't acknowledge the issues until then. what happened, a huge decline in

the oil price. he was asked the question, hey, is this a thing to undermip the ecb's credibility to have just done something in december. he said, the oil price declipd by 40%. the outlook for inflation has declined significantly. we come back and revisit policy. he said the downside has increased and there are no limits to how far the ecb will go in deploying its tools but he would not talk about what specifically they would do. he has accelerated the timetable for when the market believed the ecb would respond to the changing economic environment. carl? >> steve liesman, we'll continue to watch what draghi is saying. in the meantime, we want to touch on yesterday, intraday, low on the dow. 565. closed down, 249. doug cast calls it the noon swoon. >> if oil doesn't go down, it is

a sign. i could show you. i have a chart that shows that basically oil started going down and then the stock market went down and they are really linked. if oil goes down, we will go through that level. the 1812 overyur. that's what we hit, the s&p. the dow did travel 1,000 points. some numbers hit the low which is the highest we have hit since the crash of 2008. we are still expensive. i don't think we did anything yesterday that is significant. look at the oil. it happened too quickly. i think you will see those levels again. >> you do? >> the jobless claims this morning. they are going to break 300,000, the moving average. will the fed really just say, well, the unemployment situation is great. >> if the fed says something, you will dpget a buy. i could give you some down side

targets but they are too negative. >> we talked about your 126 multiple yesterday. it takes us to at $110, $17.50. >> if you use the low multiples. i'm going to do some stuff. dal io says it is depression. if you use the low mo for 38, we are going to be down. you go down 31%. 2013, you go down 15%. you are already at the low of 2013. we already hit it. 2011, that's greece. we only have 9%. >> we did talk about oil, of course. it was interesting to see the series of guests, jack lew, gary cone, gorman before that. i think we have lieu here from earlier talking about the benefits of oil. he is usually not that clear when he speaks, mr. lui.

we love you but he did have something to say on oil that's worth listening to. >> this is the first time that i have heard p prices described only as a bad thing. i think you have to be careful to get both sides of the oil price occasion. you look at economic growth in europe and the united states where in spite of head winds internationally, we are maintaining steady, good growth, good consumer demand. lower out prices are part of the reason. if you are in the oil patch, it feels terrible. >> as we know, of course, dead men drilling. >> here are some things that you have to know about oil. if you go back to 1986 and you look at where we were this week in january, we were $26.50 in the beginning of january. if you look at the last week of march, we were at $10. >> we went from $26.50 to $10 in

'86 in the space of three months? >> less than three months. thank you, rusty brazil, for giving me the data. >> which means what? >> i'm just saying oil has a mind of its own. it just has a mind of its own. when you think it fell in '86, what happened? the saudis really flooded the world with oil and we couldn't cut back fast enough. the oil companies here, mostly the middle market oil companies, a lot of them weren't able to pull back. they failed. we ended up having a big down turn. all i'm saying is that if oil has a mind of its own, we should not get confident that we saw the bottom. if you can have literally a three-month pullback in oil that was no win. i went back and read the stories from 1986. it just happened overnight. it happened overnight. i went back to january of 2015.

most people were calling for a "v" bottom. goldman calling for a "u" bottom. that was a bad call by goldman. look, i'm looking at oil. oil is not -- draghi is not moving oil up. he is moving it down. the deadmen walking theory about the oil companies. i know we have the music in the background. the gulf of mexico is going to pump so much oil in 2016, thank you oil dutch shell, we are going to almost offset the oil. we are not going down. >> got to pay the bills. >> good luck. when we return, profits, snowstorms and what's at stake for the airlines. a lot of earnings out from love,

and alaska. jim just mentioned that. we'll talk to the ceo of the railroad giant. take another look at the pre-market. the dow did not take out the august, 2015 low. neither did the nas m. something to keep in mind ijoo ri rents from national. i can bypass the counter and go straight to my car. and i don't have to talk to any humans, unless i want to. and i don't. and national lets me choose any car in the aisle. control. it's so, what's the word?... sexy. go national. go like a pro.

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a lot of news involving the airlines today. southwest reported inline reports for the quarter, profits hitting record levels for the full year. united, continental, below estimates, hurt by a stronger dollar and fewer sales impacted by lower oil prices. several airlines waves fees for passengers to change or cancel flights before the snow. 1-2 feet barreling towards the east. >> we could have a drawdown in natural gas. kinder morgan had an up 5%. it is doing pretty good in terms of usage, not that good in terms of price. you women see chesapeake and you saw southwest with nat gas. stock had a big move. that's all related to this

flch. >> you said you liked the airlines repeatedly. >> they made the point that less than 2% of their business is t international. it sells at a very low multiple. delta sells at even a lower multiple. that was good. these are the beneficiaries. no one seems to care. it is just not that kind of market. >> delta highlighted the paris attacks as a potential revenue head wind going ahead. >> and united. we have to find out more about that. southwest and spirit, spirit, i think, big move. these are very cheap stocks. bill is a very good investor. he would tell you these are the cheapest stocks in the book and they do sell. it is not like the old days. spirit was lower when he left. i find it is a problematic group. i want to be drawn to it. southwest is my fave. alaska is pretty good. delta is very cheap.

in the end, cheap hasn't done anything. they have not -- you would think one for one, that they would have benefited from the downdraft in oil this year. the stocks are down. it is just not working. the wrong linkage is happening. i can't suddenly pretend it doesn't matter. >> a lot of unexpected linkages in this market. oil goes down and pie obiotech down. >> they are totally linked. we are being facetious. oil should be linked to say, key resources. >> one linkage that there is is through the overall market. you pointed that out. those charts are incredible. >> david, i want to point out. i have a wall of shame. i should have put freeport on my bad. world dutch is aim tog do it. they started a big project in the gulf of mexico in 2015, spending a fortune drilling in

the gulf of mexico. i googled, most stupid executives. it didn't come up. i am thinking about it as a problem. maybe it is a search engine problem. >> those are long cycle businesses, jim. it is hard to turn on a dime. they missed it by this much. >> long and wrong. they are in the oil business. don't they have marketing. no. look. they got it wrong so bad. the reason i mentioned, david, i want to get david involved. this is a little mna. how is that bee gee deal? >> looking great. they are probably going to get the vote, jim. >> better than the williams deal. >> we have to talk about that. >> i keep coming back to david's world. your world, i don't want to welcome to it. >> your mna world. >> it is so bad. >> it is not so bad. >> it is bad. my world is better.

>> get a tavern and i'll feel better about you. gary kohn was very sang win. >> we will play some kohn and maybe some gorman later this morning. we have to rally after draghi's comments. more from the nyse straight ahead ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ where self-proclaimed ofinancial superstars , pitch you investment opportunities. i've got a fantastic deal for you- gold!

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a tale of two stocks in trouble. today, twitter and square take a big hit. what's the next move for the ceo and for investors. "squawk alley," 11:00 eastern. time for a mad dash. 6:30 before the opening bell. we want to talk a little xlinx. >> i am looking at earnings. my world is a little better. a wireless bottom, which is really important. they are wireless.

they did better than al tear ra. why did they do that? >> it is really getting people talking i have been go the fact that al tear ra was bought and it is the wireless bottom. they are the fabulous, wireless, semi conductive company, although they have a lot of automotive. people are saying, hey, you know what, maybe they are done and it would go up here. >> yesterday, at 12:35, david, a bongo was the first to start moving up. it was incredible how the semi rallied and then in the end, they drove up apple. apple had been down. when ivago and skyworks goes up, you begin to get, well, wait a second, the chips in cell phones are up. it is a femoral, i don't want to buy these.

i am just saying they were the first stocks to move and that xilinx could cause a second day of enthusiasm. it is time to buy my micron. the question is is it too early? and is jack going to run a third couple? grub hub. uber is coming. maybe jack wants to rescue grub hub. >> possible, possible, too early. >> at 17? >> too early. we have the opening bell. we'll take a look at twitter and a lot of other things, including verizon earnings. corona wins the earnings. >> we're back after this.

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ecb keeps rates unchanged by draghi says they are open to changing their minds come march. philly fed was not the disaster like empire was. jim, you said earlier in the week, would you like to see a rally so you could sell more. is that where we are? >> i just want to, i need a big checklist, pretty regular on "mad money." i would like to see the fed narrative change a little, china stabilize. i don't have that. i would like to see oil stabilize, don't have that. other commodities stabilize. i don't have that. a little political clarity ahead of the iowa caucus. don't have that. stock dollar getting weaker. don't have that. we do have sentiment. we are very negative sentiment, back to where we have been at historic lows. >> the vicks cracked. >> you need a stark. you can't start a fire without it. >> by the way, china was down overnight, down 3% p.

adding liquidity ahead of that lunar new year. that's going to be interesting. >> i have to get that sky. that great app that i do with my quarter. >> there is the reopening bell and the s&p at the bottom of your screen. at the big board, mentoring organization, big brothers, big sisters of new york city. at the nasdaq, the colonial williamsburg foundation, operating virginia's 18th century capital. verizon, 89 cents beats by a pep any. we will get to the t-mobile shrinking game. >> i want to hear more about that. as for verizon, when you look at these bottom-line numbers, you have to take into account this equipment installment plan that they are replacing their entire base with. you are talking about that during the quarter as well. 67% of phone activations came on these equipment installment plans. this is 58% last quarter.

that has the effect, excuse me, of sort of distorting some of those bottom line numbers. better to look at free cash flow which was up rather strongly. churn, at .96 was not bad. they did add 1.5 million during the quarter. i think 4.5 was the number overall of the year. generally, being viewed positively by the marketplace at this point. ebitda margins were pretty strong. you do have a positive stock price. >> one of my favorite stocks here, yields 5% or less with this rally. not everybody agrees. john legere just tweets me. so we only doubled the post-pet phone. i am not going to see what hashtag he is using coming in two minutes. it is a bust or challenge. >> it is amazing how he can take over the narrative. >> he is amazing.

>> average revenue per account was about 148.30. that was below consensus and shows you that was a 5.5% decline from one quarter ago. 6.6% year over year. that gives you some idea as to the price. you have a lot more tablets being added which don't use as much. it is per account. >> ledger comes back at us. monetized millennial, stop the drinking game. they have a gra las of corona. >> what do you have it? >> every time they use the term millennial or mopti millennial mon or monetize. the gorilla warfare. >> once he called them dumb and dumber on air. i think that was the beginning. no going back. >> it is the hashtag ball buster

challenge. john has the narrative. do you think the goo is, paintball? >> against ledger? >> i don't know. verizon is still so much larger than t-mobile. >> are you ever a diplomate. i was thinking about a rumble in the jung jungle. >> you could pick him out. he is always in pink. >> magenta, i've made that mistake, david. magenta. >> not too many ceos have 2 million followers on twitter. >> i said, don't you have lawyers to tell you what to do. he said, that's the other guys. he is the voice of what, reason? >> i don't know if i would say

that. >> smartphone penetration at verizon up to 84% from 79% a year ago. sometimes they make some comments that might give you some thoughts about apple given how important it is overall. i'm not seeing that right now in terms of their comments on the call. >> you can't do any read through at all? >> no read through. >> the upgrade cycle, they had more in the urth to than they did in the third. nothing more than that. >> obviously, apple, yesterday, in that miraculous rise after the uvs, pushed down. they are giving them the business and then the rally off the semis was pretty amazing. we'll see if that has any legs at all. >> "usa today" has a story about apple getting nibbled to death. specially among young people as they begin to at least convey that they think android phones are cooler than apple phones.

>> young people don't even drive anymore. they are not even buying cars. you buy a car as soon as you get a job. you don't share a car. these guys share everything. this shared economy, i have had it. i'm the me economy. >> is there sharing a dog thing? >> you would have to pry them away from my cold, dead hands, the guns. g.m. froze but the others are going to be in short-term rental. g.m. is saying, our business is going away because of the university of michigan. they are not saying that. >> have you seen driver's license penetration rates in this country. >> when did you buy your first car? >> 17, 18. >> i won the phillies home run payoff. a 2-2 pitch off the left center wall.

i immediately went to my ford dealership. now, what do they do? they buy a cell phone with a big package. >> a lot are living in urban many areas and don't need them. this is well before the advent of autonomous fleets roaming the streets to pick you up. it will be voice activated. you won't have to go to your phone. you will say, car, please. can you fault g.m. for trying to think about its future? >> i think the long-term implications are the short-term implications. it has happened so fast, this shared economy. look at the hotel stocks. unless there is some major thing happening, hotel stocks are reacting to air b&b. >> what about hertz? >> shared economy? >> the declines on hertz, unbelievable. >> unp is the biggest loser on

the s&p. we are going to talk to the ceo. they can't suddenly go into the millennial rail business. >> are you drinking? you said millennials. >> omg millennials. >> ledger is like a channel. we should ask bob if he wants to include it. >> over the top. >> yesterday, that interview. skipper is so good p. >> they were good. >> arguing that, yeah, we have lost some subs. add revenue remains intact. >> that was an important interview that everybody missed. >> he was talking about the skinnier bundles versus cutting, cord cutting, cord slimming. they are dichb things. >> i've got comcast, vie o's, time warner and i have dish, because i'm trying to compare. i have got vios.

i have the skinny bundle. it is never the one i want. i want the chef espn. >> he has his own channel also. >> disney delaying the release of the next star wars episode to december, 2017. npd has some results on toy sales from last year. star wars toys alone, $700 million. it brings the toy cat gorie of to 67, best in years. >> i know entirely the whole disney narrative and how flawed it is. you really lose faith in iger long-term, i think it is a mistake. >> you did come into the star wors wars opening. gout a $93 stock price. >> what did rich greenfield say? maybe he didn't like the first one. >> it won opening day. i stayed and watched it the second time.

harrison ford, he is younger forever. >> let's hope so. >> he was a painter. >> supposed to be a great guy. >> starbucks is up better than 2%. we are going to get results. a lot of discussion among the cell side that it deserves the premium multiple it is getting. >> i hate to hear that. all it says is that when it reports, it goes down. my charitable trust owns starbucks. you want it to go down so you can buy more. it is almost like a jinx, like the "sports illustrated" jeeng. i read the stuff. they said, starbucks is justified. i said, no, no, you want guys short stocked betting against it. it is a technology company that sells coffee g sl there was this one across the street. i thought it was mine for a while and now it is like crowded. >> did you buy it with your phone? what do you do when you buy your starbucks, do you use your phone? >> i still go to the truck

outside. >> you have a different guy. >> whatever he serves you, it is good. >> go to him. >> i go to maksood and starbucks on days i want to throw them some business. sometimes i go to maksood and starbucks. those are the days that i am so wrapped up, you don't want to touch my engine. i have too much torque. i have a lot of torque those days. >> yes, you do. >> red lining rpm. >> dow is up just 20 points. >> we had a rally. once again, they sold into it. i want to show you the s&p futures. mario draghi, not only moved europe. he moved us. see that big blip up. that's mario draghi repeating the speech he gave. as you can see, we opened up and they sold right into it. we did go negative. we are basically flat on the day. in europe, germany moved up.

the euro weakened and the dollar strengthened. they are still on the up side. you see the effect that mario draghi had that straight up there. not so good in asia. big down day. shanghai was down over 3%. hang seng down 1.8. japan down 2.4%. japan is down almost 16%. here in the u.s., kind of a blase here. not a lot of trends. telecom, consumer discretionary up, health care down. still not clear on the trends. we are getting the ream nal bank numbers. bank shares beat on revenues. fifth third beat. i am looking at the revenue numbers. >> here is my impression of the regional banks so far. expenses are higher.

i would call this so far fair, not great. airlines, a little more interesting. southwest, light on revenues, though. united continental. they missed on sales and earnings. i don't know what's going on. they talked about lower business travel. the jet fuel costs are a big, big help for them. the average fuel costs are down 36%. fuel prices were $1.73 a gallon now. a year ago, $2.69. speaking of earnings, we are now, we have got about 60 companies reporting. that's not a hume number so far of the 500. 69 have beat on earnings. that's an average number. we are still light on revenues. half the companies are missing

on revenues. we are still not getting any any revenue. >> down $13. >> the key point, down more. the 50 biggest daily gains since 1940. 31 have occurred in bear markets. if you think this is a garden variety correction, there is a good chance the bottom was quite close to where we are going to end up. if you don't, you think other things are coming here. judging by the way they sold right into this rally on talks of potential stimulus, a lot of people feel there is still somewhat to go. >> thank you very much, bob

pisani. let's get to the bond pits and check in with rick santelli. good morning, rick. >> dude morning, carl. two days tells you a lot. yesterday was the first day, not on an intraday basis but a closing day basis, a real closing day basis, not when the stock market closes at 4:00 p.m. but when the stock market closes. it closed under 2%. it hasn't happened since october. we closed around 2.27. i am unable to show the chart. if you showed a year to date for the same time period from the end of 14 to january of 15, the same day of the 21st. the patterns are almost identical. the only difference, about ten basis points. we settled 2014 at 217. if we look at bund yields, very fascinating. some out there believe that mario draghi and the ecb can take all the financial culture

of all those different countries and come up with a bernanke-like put. if you look at bund deals, they are 2 basis points away from low levels. if we look at foreign exchange, two-day of the pound dollar, it continues. the pound continues to move lower. if you open the chart since the last time we were here, we do this every day, it is still around the spring of 2 thoup 9. let's look at a 20-year chart, shall we? we are sitting at a very, very important level regarding the valuation of that currency against the green back. let's take the same strategy and look at the dollar yen. it's a one-year high against the green back. let's go back a couple more years to january of 2012. also, sitting at a very important level. if you were to look at the dollar index hovering just below 100, also an important level. for now, we're in the eye of the

storm for foreign exchange. should that storm get stormier, it is certainly not going to subtract from some of the volatility that's transmitted to the equity markets. carl, back to you. >> rick santelli in chicago, thanks so much. >> union pacific lands fritz on what they are saying about the economy and that company's future. the biggest loser on the s&p. they are down about five points. s&p is down 16. back in a moment. ijoo 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 do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension,

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strategy the same way to create a financial plan built to last from generation to generation. we'll listen. we'll talk. we'll plan. baird. we roll over to the march contract on oil. jackie is at the nymex. >> oil prices trying to stabilize after the dramatic session yesterday where we fell about 7%. march contract is going to see less vol tilt than the expiration yesterday. i want to draw your attention to headline frs the saudi arabia chairman saying that the balance was inevitable and prices have been irrational.

he is saying that saudi arabia will cooperate to balance the market. getting everybody on the same panel is a difficult thing. last but not least, the draghi'

than it did earlier. it remains to be seen. if the u.s. fed next week follows through with some similarly dovish action or language, next week, carl, i don't think they are going to do anything with rates. in the statement, the fed could say something like, it's taking note of the market volatility

and softness in data and maybe repeats this idea that any future rate hikes are dependant upon the data. >> certainly something we are going to be listening for. steve liesman at h.q. it has been a wild 24 hours for the markets. you remember the action about mid-day yesterday when the dow was down 565 points. scott wren is the senior global strategist and jody gunman is the commodotist. what does it tell you when draghi can move the markets for an hour? >> if anybody had any doubts prior to today that the ecb was going to do more, i don't know how, mario draghi hammered it home. they are going to do a lot and do it soon. you can see how the market is just very volatile from when he started talking to where we are right now. you've seen a really, really wide range.

in my opinion a, yesterday was a perfect example in the s&p 500. we are in a capitulation phase. we are in the process of forming a bottom. these markets are going to be pretty wild and volatile over the next couple of months. the ecb is going to get a lot easier. there is no end in sight to the q.e. over there. >> scott, it is not working. that central bank magic doesn't seem to be there. when you have one of the most powerful central bankers saying we have the power, willingness and determination to act, adding a specific month to recalibrate policy and we barely get a rally. doesn't that tell you something is wrong with this dependence on central banks. >> it has been pushing on a string for most central banks. the fed didn't get much bang for their buck. they held us in here, kept us probably out of a depression. you can't generate any growth in the wake of a gigantic credit bubble. this is what happens. rates can be on the floor.

it's going to take time. this is a five, ten-year deal until we get out of this. probably through the next recession. it has not been effective versus any of the past cycles we have seen over the last 50 years. no doubt about it. >> jody, we are talking about central banks as a catalyst for equities. what is the closest you can see for things like commodities. >> the commodities and equities are now moving together. fundamentally, this is the worst we have ever seen in history for oil. it is the combination of the supply war in the '80s and the global financial crisis, demand crisis, happening at the same time with a strong dollar. the rising interest rates set off extreme market fear, which has spiked the correlation four times higher than it was before the interest rate rise. so, investors are just getting out of risky assets. >> we've had a couple of high

profile guests, gary kohn this morning on our morning show argue we are not in a demand crisis when it comes to oil, at least. it is just irrational, fundamental oversupply in his words. do you agree? >> the data from china is showing slowing demand growth, that on top of their currency devaluation, is making it more expensive and they have filled the strategic petroleum reserves. a lot of the buying might have already happened last year. i do think there is a very weak case coming from china and we see it spread into the other commodities as well. >> if this is a commodity move, have you reconsidered your outlook for the year like so many other of your fellow economists and strategists rethinking global growth, u.s. growth and what the markets are going to do this year. >> i think you have to think about it. in these kind of markets, you always have to reconsider this. we were expecting growth gdpwise here in the states upwards of

2.5%. something like that. you always have to take a look at that. i feel, though, based on the work we are doing, that growth is going to be very modest but pretty dependable in the u.s. the global growth stories are a little more dicey. i think you are going to see better growth, a little bit better growth out of europe. probably a little bit better out of japan. you are going to see some stability in china. clearly with these commodities, i think this is a supply situation. the world was built for 15 years on thinking that china was going to grow north of 10% every year, way too much supply and capacity was added and now we are seeing the down side of that, because china is not growing 10%. >> you would agree with jody that the high correlation, near historic peaks and asset correlation is a dangerous thing. >> i kind of do, carl. i think really here in the states, the fear is that commodity prices, low oil prices, a lot of high yield bond

issuers are in that business, 15%, 20% of the total high yield market. y >> clearly, we are going to see a lot of defaults. traditionally, those widening, high-yield spreads infer a big slowdown or maybe a recession. i don't think that's the case this time. the market is definitely shredding that. there are going to be some. there are going to be some defaults. there is no doubt about it at any time but certainly in this energy sector. how do you begin to find a bottom, spot one in the middle of a crash. the supply is relentless. there is more storage capacity than there has ever been. finding the bottom is a difficult thing but what investors are doing is they are diversifying by getting into other types of real assets like property and to infrastructure. as they pull money out of the

energy markets, then we can start to see the stabilization begin. >> jody scott, it is going to keep us busy this weekend and for many weeks to come. >> have a good day, guys. up next, china having a major impact on global markets as well this year. the ceos of citigroup and jpmorgan weighing in alopg with jack lew, ray dalio and more big names in finance. we'll bring it to you right after the break on "squawk on the street."

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asian markets deep in the red. eunice yoon is live for us. >> we did see a reversal of fortunes. we started the day looking relatively stable. then, the fears about falling oil and economies took over. january an, which is already in bear market territory dropped by 2.4%. the hong kong markets shed about 1.8% as the hong kong dollar did stabilize as well as the chinese yuan. the chinese markets led. the shanghai index dropped by 3%. we hit the 2880 level. this is getting very close to the levels we saw in august during that steep decline. the investors here have been spooked mainly by some of the comments they heard from the

vice chairman of the stocks market regulator. he told global investors they shouldn't have to worry about the market volatility and they should get used to it. even though those comments are meant to calm global investors, it was taken as a sign that the government is going to take a more hands-off approach and r reduce state intervention. we saw quite a tumble at the end of the recession in shanghai. the chinese central bank injected liquidity into the banking statement. that didn't stave off the falls. we are expecting more liquidity over the next several days ahead of the lunar new year in early february, mainly because at this period in china, a lot of people start taking money out of the banks, because they are traveling for this massive migration. so of all the times, the banks tend to be a little nervous about the liquidity crunch around this time. sarah? >> we're a little bit nervous about that too here. we'll see what it brings,

eunice, thank you very much. business leaders and ceos weighed in on the declines in china from the world economic forum in davos. take a listen. >> china is actually slowing but it is not collapsing. i think there is an overreaction to what's going on. >> there has been a lot of noise about china slowing. i just got back from beijing. you would never know it by being on the streets of beijing and meeting with state-owned enterprise and commercial int s entities that it is slowing. if you go back to 2010, when they announced the monumental shift of their economy, and where we are today, the world is a slower place. the chinese currency has been one of the stronger currencies and exacerbating their competitiveness in manufacturing. >> we are now in a situation globally where china plays an important role on the rest of the world and the rest of the world plays a role on china.

that is negative. >> we are having slow growth. >> china, i think they have the wherewithal to grow with their 5%, 6%. europe is going to grow a little bit. it is going to be worse than we thought. >> they have not been entirely clear in their movement in how they are behaving. it creates confusion. >> certainly, that last bite in lew really gets to the heart of the matter. according to some quotes, the chinese leaders recognize they may have made some missteps and confused people. >> i think the problem, which might be the communication challenge. the bull case on china is that even though they are slowing, which they are engineering this slowdown that started in 2011 to try to make their economy more geared towards consumption and services and less towards manufacturing and exports. the problem is, the communication breakdown. when it comes to the currency control, the market control and the economic control, every weekend, there are all these expectations that they are going

to cut interest rates or infuse a massive physical stimulus. you get these infusions like eunice reported. it is the money markets which are getting big ter. it is not doing the trick. nobody knows what's going on beneath the hood, because they don't trust the official data. they want the communication on the policy. >> that's the key. nobody really knows because they just don't trust what we have seen for years there. we don't know what the underlying growth rate is. it is difficult to know what to measure so we can get a sense of what's going on. >> starbucks is reporting after the bell today. that's one of the companies like nike and apple that has not reported a slowdown in chinese consumption. it is, you do have this conflicted market about how to view china. >> in the long-run, companies like starbucks and nike are

still bullish. >> did you read that where it should not have as large an impact. focused economy. a third of global growth. the engine of economic power. >> barely grow in the urfourth quarter. china is slowing down. we don't know to what extent. how does that set up that. you have seen the pain they are suffering. the recalibration is in the global picture, i think. >> you might argue, a lot of the pain is still to come. >> just look at the currency. brazil and russia, ouch. when we come back, despite the drop in oil prices.

even with the low costs. phil lebeau joins us after the break.

welcome to "squawk on the street." the dow jones. the dow industrial. up by about two-thirds of 1%. hone ng on some other parts p they include huntington bank shares and two transportation companies, rail and kansas city southern and union pacific down.

kansas city southern and union pacific are weighing down the most on the dow transportation index so far today. sarah, as we talk about what's happening with the overall dow and transportation stocks, we are trying to see if there are any leading indicators, small capps, transportation stocks, biotech have been some of those sectors that we have been focusing on for a while. transportation stocks trying to find stability. sarah, remember, this industry group is down about 30% over the course of the 52-week highs. back over to you guys. >> something we are going to talk to the union pacific company. a big part of the reason railroads are getting hammered. speaking of transports, a triple dose of airline earnings this morning. alaska, southwest and united continental, all out with results. our phil lebeau, all the details in chicago, and the stock reaction, phil. >> let's start with a mixed bag of earnings reports for the airlines starting with united which missed on both the top and bottom line in terms of

earnings. the company falling 4 krencents. revenue at just over $9 billion. that was shy of the estimate for $9.08 billion. take a look at shares of united. down about 18% in the last three months. one interesting note. it did notice a drop in the number of epgy-related customers because that sec ter has been under so much pressure. keep in mind, houston is one of its hubs. so, naturally, you are going to see lower passenger levels going into that market from the energy industry. southwest came in line with expectations earnings 90 cents a share in the urth fo quarter. one-way fairs were down 5%. having said that, southwest has said, we are going to be increasing our share of buy backs. take a look at shares of southwest. up slightly today. alaska airlines, 6 cents above estimates earning $1.40 a share

in the urth fourth quarter. up 11.6%, we take a look at what jet fuel has done in the last year. keep in mind, it is now itradin at 2010 levels. if jet fuel is so cheap, the airline stocks should be going through the roof. they are facing pressure because their seats are the lower-end seats they are adding into the market and for the international, there is the currency exchange difference. some of them getting a bit of a bounce but not a huge rally in store. >> phil lebeau, thank you very much. keeping an eye on europe here, a nice rally building after comments from eco president, mario draghi.

>> you weren't expecting him to say a lot. >> we got exactly what we expected. i wasn't expecting him to make any exchange to the policy, indeed, he didn't. he did strike a dovish tone with his press conference that saw a fall in the euro. intraday, it saw a pretty sharp move and the two lines that achieve that, inflation expected to remain very low on negative in the coming months and also they would review policy in march. a lot of commentators saying we might get more action in march, albeit we didn't get any today. that's a lot of stock to rally europe over 1%. the stock up about 1.4%. dovish, allowing the euro to fall but not too depressing. the markets allowing equities to rally on that note. for example, on china, he said we would have a gradual

deceleration by and large in line with expectation. managing to move the markets, mario draghi of old without any specific action, guys. >> not yet, anyway. when we come back with the global market turmoil, will the fed hike rates next week. we are going to talk to former p fed governor, randy kroszner when we return. joo rirks i'm here at the td ameritrade trader offices. steve, other than making me move stuff, 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.

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o. good morning. im. >> sue herera. a british judge says russian president, vladmir putin, probably killed a plan to kill former agent, alexander lipenko who died three weeks after drinking tea linked with poison. judge robert owen releasing his report today. general motors opening its new cadillac plant in shanghai to push further into china's luxury auto market. the president of gm china says the market still remains full of growth potential. walmart says it plans to give a pay raise to most of its u.s. workers. starting next month, some 1.2 million employees will earn $10 an hour. how about this. tuesday night, senator charles grassley of iowa broke the record for the longest streak without missing a vote. an astonishing 22.5 years. the previous record holder,

senator william proxmeyer of wisconsin. the department of energy out with its weekly natural gas storage report. a drawdown of 178 billion cubic feet, less than expectations. looking to sea a little bit of a steeper draw. we didn't get it. prices were trading at 218 before the report. a nice little pop going into this. we have given back some ground, around 212 at this point. what's interesting here, is that this drawdown is more than we saw last week. that's because the temperatures have been getting colder, expecting a winter snowstorm here on the east coast this weekend. the total stocks were at 4. $2 to $2.30. a trade that will be touchy and depend on the weather and how much demand boosts, because

winter is perceivably finally here. jackie, thank you. >> global economic uncertainly following oil prices, turmoil in the stock market. all of that getting a troubling start to 2016. will the federal reserve continue with its rate hike plans when it meets next week. might the fed return to a policy of quantitative easing as hedge fund tightening ray dalios p says. randy, good to see you again. >> good to be with you. >> we just got this very strong language, very dovish from ecb president, mario draghi, helping to rally stocks, crush the euro. do you expect we are going to get similar type soothing words from the fed next week. >> i don't think it is going to go nearly as far. we are in a different situation. europe is facing the serious threat of deflation. the u.s. has very low inflation. i don't think there is an

immediate threat. i don't think the fed's word are going to be like mario draghi's words. >> how does the fed handle this market turbulence we have been seeing in 2016? they just hiked rates for the first time in a decade in december and the global economy and markets fall apart. how do they deal with it? >> i'm not sure the global economy has fallin apart yet. we need more data. when the fed moved back in december, they made clear what their intentions were. the markets were quite calm. i'm not quite sure it is all about the fed. some banks are quite powerful. they are not the only game in town. there is a lot of uncertainty about what's happening in china both in terms of the actual underlying economic fundamentals and the policy responses. there is a lot of uncertainty in the middle east with tensions there. i think there are a lot of other factors besides just fed's move back in december causing some of the volatility now. >> people are looking, trying to argue, randy, that the market is

somehow become separated from what the economy is doing. a lot of metrics like employment and confidence don't belie a recession coming. do you agree? if so, when do the two meld once again. >> the joke is that the stock market declines predict 10 of the last three recessions. there is a lot of volatility in the markets. if you go back to august, you saw very significant correction in the markets at that time and recovery. it didn't seem to have an impact on economic activity in the u.s. or reflective of change in economic activity. a lot of policy uncertainty and a lot of uncertainty in emerging markets that could get into a lot of trouble. the u.s. has not been exposed to them. our total trade with china is less than 1% of gdp. >> so then what is the market telling you, randy. the argument there would be that

the market is often a leading indicator and jobs are often a lagging indicator. >> sometimes it is a leading indicator of a false signal. what the fed is going to do and what we all need to do is step back and say, is there a fundamental, economic factor that's leading oil prices to go down and leading the stock market to go down and leading to greater volatility. a lot of that has to do with policy uncertainty, both in the u.s. i think it is not clear where policy is going to go this year. obviously, you have issues in the middle east, in china, in many of the world's major economies. >> randy, yellen is somewhat famous for saying there were heightened valuations for things like social media stocks and smaller biotech firms. do you think there is an element at the fed that is applauding the correction we have seen in equity prices at least?

>> i don't think the fed really tries to p move equity prices in and of themselves. they want to try to move people's views of where future cash flows are going to go. that could make the market go up. the fed never likes anything that moves rapidly and na they don't have a good explanation for. with the volatility we saw back in the late summer, that gave the fed some pause. this sort of volatility they are going to try to look into it. what are the fundamental factors driving it. is it being a leading indicator or a false positive about potential future growth. they are probably struggling with that right now. >> either way, it is looking increasingly difficult to pull off the four interest rate increases that the fed's own forecast has. it is strange to hear dovely and fisher, key members of the federal reserve coming out this year and saying, 4 sounds like

in the ballpark. dudley played down the market turbulence. clearly, they are on a tightening path. isn't it going to be almost impossible to race according to fed funds futures. >> i think that is quite useable the market has that approach. back in december, when the fed did the initial, sort of dovish tightening where janet yellen made it very clear, we are going to see what happens with inflation and the economy. >> i thought it was likely they would see a enough inflation they would be able to move before june. the path is going to be much more gentle. when the fed initially made their announcement, the markets naught it would be two or three, not four. that is quite reasonably no more than two or one. >> you think there is no chance

the dalio is right and the next move is easing, not tightening? >> if things go south, the fed would respond to that. i wouldn't want to take that off the table. i haven't seen enough to say that we are going down yet. it is possible. i don't want to take that off the table. giving my time in washington from 2006 to 2009, i never say never about anything. >> randy kroszner, thanks for joining us. the dow up 128. >> many of the emermiging countries are in bear market territoriry. >> that global equity rub has accelerated with 40 major markets trading in bear market territory, 20% off their recent highs. take a look at some of the key emerging markets. china, the shanghai composite

down more than 20% despite aggressive action being taken by the central bank to kick start growth. brazil keeping its interest rate on hold despite a rise in inflation. of course, these countries also dealing with a massive drop in their currencies, brazil, russia, turkey and south africa. take a look at it down about 30%. keep an eye on india and mexico. these markets are on the cusp of entering bear market territory. india, interestingly enough, stocks that are fueled by this excitement over probusiness leader, norendra modi. based on that, all gone. we want to take a look at some of the development nations that are in selloff mode. take a look at europe, despite that dovish commentary coming from mario draghi. european stocks trading in bear market territory, down 20%.

the strength we have been seeing in the euro so far this year. also, japan, questions over whether abe-nomics is really work, the yen has been seen as a safe haven. not good for japanese stocks, specifically those exporters. >> seema mody, back at hq. thanks so much. union pacifics is no p exception to the rough year. the stock is down about 5.5%. the ceo will join us for our first on cnbc interview and talk about that and what's ahead when "squawk on the street" continues.

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. welcome back to squawk on the tree. breaking news regarding united air lips. the conference call recording urth fo quarter earnings kicked off about ten minutes ago. the ceo, oscar munoz, who has been on leave since october when he suffered a heart attack. he was on the call. he is leading the earnings call. he started off by saying he feels great and expects to be back at united airlines on an active, regular capacity by the end of this quarter, if not by the start of the second quarter. take a look at shares of united moving higher. oscar munoz suffered a heart attack. he had a heart transplant a few weeks ago. he has been in and on conference calls since going home. we know that was announced by the company a few days ago. today, he is on the earnings call. not sure how much clarity he its giving regarding the urth fourt quarter. it is clearly a sign for many that believe he is the key to

united righting the ship. >> being treated as a pleasant surprise. >> now, we go to dom schu. >> stocks struggled to hold on to some gains early on. we have seen session highs up by about 16 points. telecom standing out. up nearly 2% in early trading. helping to boost the sector overall. shares of verizon, earnings beat, telecoms are the second best performing sector so far this year after utilities. important to point out telecom stocks is a sector. overall, the smallest in the s&p 500. verizon adding to those gains for the overall market today. >> dom, thank you. in the meantime, shares of union pacific are struggling after earnings missed in the urth to quarter. weak freight volume and pressure from low commodities stocks is weighing on this. something the company says isn't going to get much easier in

2016. >> welcome, lance. thanks for coming on. >> thank you, sarah. thanks for having me. >> we have been listening over the last 24 over to interviews where bankers and policymakers are saying that the u.s. economy is doing all right. we heard it on this program. your earnings tell a very different story. what are you seeing? >> we saw a very challenging 2015, specifically urfourth quarter. one is an energy recession, specific to coal and oil and gas exploration in the united states. second was the strong dollar impacting export shipments of things like grain and steel. the third is the american consumer is a bit of a conundrum to us right now. unemployment says the picture should be pretty good. surveys say they are confident, buying automobiles at very high

levels. yet, other goods don't seem to be purchased at the same level. they are not out in retail buying goods as you would expect. >> would you say, and the debate has certainly heated up as we have seen declines in stocks this year. would you say that the u.s. is in or heading into recession, the broader economy, not just energy, not just manufacturing? >> certainly, i'm concerned about the industrial sector of the economy. it is hard for me to say that the u.s. is entering a recession. that's probably for economists or others to speculate on. our perspective is that with the strong dollar and with the energy recession in full blown, there are some pretty significant head winds to our volumes right now. >> last year, we tried to pars the carriers between who was more exposed to coal and who was more exposed to the things that were being shipped the weakest. you seem to be saying it is broad-based. am i putting words in your mouth? >> you are not, carl.

the weakness isn't just coal although coal is acute. it is still a great book of business for us. but it is down pretty dramatically in the urth to quarter and entering the first quarter of 2016 but it is broader than that. the rig activity in any of the shale energy-related plays is off substantially. that means inbound frac sand is off and pipe. the spread on crude oil are making crude by rail shipments relatively weak for us. it is broader than just coal. >> given that, mr. fritz, it is incumbent upon you to continue to cut costs. you have been doing that. is 2016 another year in which you are going to be focused on that side of the balance sheet? >> we are laser focused on productivity and getting the cost structure right. if you looked at 2015, we spent the first half of the year chasing the volume down. by the middle of the year, we got the structure about right and volumes continued to creep

away through the second half of the year. we continued to adjustment our cost structure. the real news story in the second half is that we created a much more fluid network. we really got our feet underneath us and we jep rated excellent productivity. as we enter 2016, we. >> narrator: we are in a totally different posture and poised to generate excellent productivity. >> you don't think there will be any change in overall freight shipments, at least at this point? >> volume is certainly our friend. we outlined on our call some of the head winds specific to the first quarter. regardless of what the economy hands us in terms of volume, we are prepared to get our costs right and continue to improve productivity and to generate attractive returns. >> if you look at your stock price, for a long time, your stock was outperforming the broader railroad than the traps ports.

last year, that changed and there has been underperformance. p i wonder how you are reading into the stock performance and the transports in general. >> we are clearly >> we've also shown the cost structure right to get our productivity right and all the while generate an excellent customer experience. the bottom line for us is excellent customer experience, outstanding franchise. those generate long-term opportunity for us to grow the business and generate returns. >> mr. fritz, the idea of consolidation is once again part of the industry conversation. very much unclear whether canadian pacific will succeed in its attempts to acquire norfolk

southern, but they recently kind of came back at you, your company at least, saying your opposition or concerted effort to block the planned deal to protect their businesses is a violation of anti-trust laws. your response? >> let me start by being clear, in the current environment we oppose rail mergers. we oppose them because we think the regulatory outcomes would be substantial. the service transportation board has been clear. it has to improve customer experience, the operations for customers, and they have to take into account any downstream or additional consolidation that's triggered by it. we focus our business on safety, on efficiency, on an excellent customer experience. we don't think a merger enhances that. we actually think it creates a headwind to the capital investment that's the backbone

of those efforts. having said that, there's no merit in saying that our communications with government officials are -- we have the right to exercise that right periodically. >> thank you for coming on to talk about those earnings and a sobering view of the u.s. economy. lance fritz, the ceo of union pacific. we're at session highs -- close to session highs. the dow up almost 150 points. s&p bouncing back. 0.9%. oil's turnaround helping to lift stocks. we're back after a quick break.

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a plan to fit your family's unique needs. we'll listen. we'll talk. we'll plan. baird. that's why i switched from u-verse to xfinity. now i can download my dvr recordings and take them anywhere.

ready or not, here i come! (whispers) now hide-and-seek time can also be catch-up-on-my-shows time. here i come! can't find you anywhere! don't settle for u-verse. x1 from xfinity will change the way you experience tv. welcome back to "squawk on the street" and my guest richard bart. thank you for taking the time, richard. >> good morning, rick. i thought we were doing this from davos. >> well, you know what, i'm kind of glad we're not. i don't want to rough shoulders with the test tube holders. listen, up 10,000 today in claims. highest levels since july. philly revision in december, minus 10.2. that comps us back to december of 2012. richard, is this data telling us

we're moving towards recession? fwloo we're moving very slowly towards recession. clearly the industrial sector is already in one. if you look at the philly fed data, hey, january was less bad. it was less contractionary. if you look at the revisions they took down basically the whole fourth quarter, and, you know, if you look at where the revisions were taken out of, they were things that really mattered. they were employment. they were new orders. they were inventory. clearly this is another down tick to gdp, which is already trending lower. >> are we wasting our time? you know, they have test tubes. are they going to ring economies from ever having a recession again? aren't recessions kind of therapeutic? >> well, rick, the whole objective with lowering interest rates and going negative in the case of europe is to essentially

make cash worthless and get people to spend and get people to invest, and mathematically that brings the question does it actually hold? certainly with the recent declines in markets, it looks like some of the froth is coming off of investment now. hopefully it's just a correction. >> if i was to think that what you said is the way i'm supposed to think strategically as an investor, how do i square that with what's going on with italian banks? >> you have been to be willing to -- that's not the case it's not a problem, but if interest rates are negative, ultimately the more negative people can go, the greater or the more negative the value is on investments. the goal is.

>> thank you for taking the time, richard. sarah, back to you. >> stocks are pushing up despite a shaky start. "squawk alley" coming up next. style... ...reinvented. sophistication... ...redefined. introducing the all-new lexus rx and rx hybrid. agile handling. available 12.3-inch navigation screen and panorama glass roof. never has luxury been this expressive. this is the pursuit of perfection.

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