2016. "squawk box" begins right now. live from new york, where business never sleeps, this is "squawk box." >> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with bill kerr anyone and andrew ross sorkin. another selloff in china overnight. the shanghai composite dropping over 6%, hitting its lowest level in over a year. the chinese central bank conducting its biggest daily open markets operation in three years, injecting 360 billion yuan into money markets. we'll have a live report from asia in a moment. as for the u.s. and how that's playing out here, take a look at the futures. they're off their lows of the morning. we were down by over 90 points earlier today. you're now looking at the dow futures down by just about 16 points. s&p futures are flat.

the nasdaq down by just over six. that's all coming as oil prices have rebounded this morning as well. we were looking at wti yesterday after the close ticking below $30 a barrel. it was down there this morning as well. as you can see, it's recovered a little bit. it's now back at $30.41. >> okay. let's also tell you a couple other things going on today. the fed and earnings keeping the markets busy. the fomc kicks off its two-day meeting today. steve liesman will have the exclusive results of the cnbc fed survey. also in earnings central, super busy this week, especially today. we have j&j, proctor & gambl gamble, 3m reporting before the bell. apple reporting after the bell this afternoon. a lot of people watching that. the company expected to report that iphone sales increased slightly more than 1%, but that would be its slowest growth ever

for the device. analysts expecting 75.5 million phones were sold in the final quarter of 2015. >> in huntington, bank shares is buying ohio rival first merit for about $3.4 billion in cash and stock. huntington offering about $20 a share. that's a 31% premium to monday's closing price. the new company will have nearly $100 billion in assets in eight states. huntington ceo will join us at 6:20 eastern time. and lululemon shares moving higher after hedge fund loan pine capital disclosed a 5% stake in the yoga wear maker. loan pine is run by stephen mandel. now owns about 6.4 million shares. j.p. more began chase will pay a little more than $1.4 billion cash to settle a financial crisis lawsuit. they had been accused of draining critical liquidity from

lehman just before the collapse. >> as we mentioned -- is the lunar new year in china, is that just the new year? year of the monkey, all those things? >> right, i think so. rolling new year. >> when we go to the west coast coming up, one of our favorite trips to the &t, sometime when is you're in san francisco -- we were in san francisco one year. it's like wild. we stay at this hotel next to chinatown. it's fun. >> it's a big deal here in new york too. >> so that is coming up. we're going to be out there again. >> you can do it in chinatown here. >> i want to do it in san francisco. it's closer out there. you're halfway there. but as we said, you know, they

shouldn't have run that market up in the first place. they ran it up in 2015. now it's killing us. we'd have never talked about it in 2014. >> the futures have completely rebounded despite the massive collapse. watching oil more closely. >> as we mentioned, the market plunging in china overnight. let's get to sri in singapore for an update. maybe it's good. we never talked about it in 2014. let's go back there and stop worrying about it. >> let's bring you up to speed, what's been happening in the here and now. we are seeing the return to v volatility in the mainland china market. we are starting to see some signs of stabilization in the oil price. also more specifically to china, it's back on the currency. there are fears of capital outflows. further capital outflows because depreciation pressure remains on the chinese currency, the yuan,

despite the fact we've seen a series of fixings by beijing. it's going to come down to. si. it's going to come down to the fx regime. i think it's going to come down to the fomc as well and the bank of japan towards the tail end of this week. are we going to get any dovish rhetoric from them? that will be a positive catalyst for these marks. we got it from mr. draghi last week. the effect was relatively short lived. i think apple's numbers, your side, will be a very, very important driver for sentiment out here. remember, apple does a lot of business in china, but it is facing fierce competition from their domestic rivals over there. so this is where we stand. return of volatility. never really went away, mind you. remember, this is an evolving, capital market. we've got to get used to this picture. back to you now. >> right. exactly. we've got to expect this type of thing, sri. it should not be affecting

western markets, i don't think, to the extent it is. probably more oil anyway. anyway, sri, thanks. the fed meanwhile has a two-day policy meeting that kicks off today. that could add to the markets' jitters. joining us now, steven parker, head of thematic equity solutions, a jpmorgan private bank. why would you want any solution that's not thematic? what the hell does that mean? >> our clients are increasingly looking for more targeted -- >> they come to you and say i need a thematic solution? is that what i need? >> we should talk after the show. >> when there's chaos, people want a story line that explains why i should be putting my money in those places. >> senior market strategist at morgan stanley. are you going to give us thematic stuff? >> we like themes. >> you do? i'm sensing a theme here.

don't come up here without any themes. >> never. >> not just about making money. anyway, so the fed. fed is not going to raise four times this year s it? either one of you think that? >> financial conditions have tightened. i don't think they can back off specifically four rate hikes. >> what's tightened other than market volatility? >> market conditions. i think the ability for the market to, you know, the life blood of the economy to get out there has been hampered. >> i think that's a theme, isn't it? oil, right? isn't that dictating everything in our lives right now? >> absolutely. the first thing everyone checks when they wake up in the morning is what's happening with oil prices. but i think we're about to enter a point as we really hit the core of earnings season where some of that dialogue may begin to shift a little bit. >> it's never been this perverse and warped though. we always thought what a great

world it would be if we got this huge tax cut from oil prices. if it really is supply, we should still be able to look at it as a positive, but we just can't. we just assume there's something going on here other than supply that makes this worrisome. >> well, markets hate instability. whenever you see a move as big as the one that we've seen in oil markets, you start to translate that into bigger questions around the economy and what that means. >> someone is holding huge losses. >> that's right. i think if we just see some signs of stability in energy markets, the economic story, the corporate earnings growth story is good, not great, but certainly not reflective of the types of drawdowns we've seen in markets so far this year. >> if we rounded off at 100 -- it was higher than 100, wasn't it? we've suffered through every dollar of $70 on the way down. only have 30 left. we can't even do 70 again, can we? so it's got to be getting down to where we can't have this pain every day. >> same thing on the s&p

earnings front. in 2014, energy contributed $12 in earnings to broader markets. last year it was five. if earnings fall again by 20%, that's only a dollar. the base effect between oil as well as the dollar for the u.s. should begin to stabilityize a little bit. >> very theme attic too. did you see that? >> i like it. i felt better hearing it. >> you brought your a-game. you're up against this guy. >> it's tough. >> we have a story here. do you think we end higher at the end of the year in the equity market? >> i think we do. i think we're near the end of the downturn. it's a correction. it's not a bear market. sentiment is completely washed out. it would take that much good news, i think, to get the market hik higher. we saw that last week with draghi and the ecb. i don't think it would take much out of the fomc statement tomorrow. >> if we're convinced the fed is

going to chicken out, then the dollar should be okay too. >> dollar should be okay. the dollar has been strengthening. to stephen's point about oil taking a chunk out of earnings last year, the dollar took a big chunk as well. if you get a stable dollar, earnings expectations should get better through this year. as you guys know, equities it rise on earnings. >> we talk about earnings expectations, what that means. i talked to some ceos recently. look, they don't care if the dollar just stabilizes. let's say you're in shipping or something. you're still facing that massive head wind. if your currently has appreciated 17%, they're not going to use you and that business is not coming back. i understand the expectations from the market, but it's still painful for many of these operators. >> yeah, and they're still going through that. we thought fourth quarter would be the trough in earnings. i think it's important to look forward. the market is a discounting mechanism. it's gotten cheaper. >> just looking at valuations. >> exactly.

>> the challenges of the stronger dollar for u.s. companies is a benefit for some of their international competitors. we've been looking at markets like europe and japan, where you're seeing the benefits of weaker currencies, more supportive policy. if you're looking for markets that can deliver that earnings growth, places like europe and japan have become interesting. >> does it create a mass i shift in your thinking if the fed says we're not going to be raising rates, the dollar as a result has not strengthened anymore, and potentially even weakens. >> i think the question for markets like europe and japan is if you see stabilization in the dollar, that's okay. if you were to see a reversal of what we saw last year, then you have to step back and re-evaluate the story. that's certainly not our view. >> ten years under two again, right? >> is it? >> not much value there. >> i think it is under two

again, which is -- >> barely above it yesterday. >> if the euro is weak, that's what we want to help our partners in europe. >> not really. it comes at our expense. >> we have divergent economies can and divergent central banks, and we're doing better. it is a village. we want everyone to do well. it's an egalitarian world. we should be willing to let our dollar strengthen. >> it's a zero-sum game. >> is it a zero-sum game? >> it is. over time, our currency strength leads to better growth elsewhere. europe last year, there was talk in the middle of the year about the japanification of europe. god forbid that talk comes over here. i think at some point, you need -- japan's currency is extremely cheap. i think the finance minister over there last year talked about 110 being a better level for the yen than 120. i think you'll start to get that

talk around the euro as well. i don't think going below parody is going to be a good thing for us or a good thing for the euro area. i think stability is what you want after the downfall after the downturn we saw in the euro last year. >> people were really negative in davos. you guys aren't that bad. a good sign of -- >> i think to stephen's point, you talked about themes before. we've been banging the drum in global equities for the past year. they did well in europe last year. did well in japan last year. i think steve's got a really good point. you get a weaker currency, delivers better earnings, growth potential. the earlier in the cycle. we're late in the cycle. doesn't mean u.s. equities can't do well. but i think you have more upside potential in europe and japan. >> anything to say? agree with him on some things? >> i think he's spot on. >> really? >> yeah. >> this is nice. that's an aussie accent. >> yeah. >> barely.

>> sounds just cool enough to do well at a bar. just enough, right? >> i get boston all the time. >> you do? >> yeah. that's weird, isn't it? >> not really. i went to school in rhode island. maybe picked that up. >> have you been there, sorkin? >> i have. >> you have not, have you? >> i have not. >> how did it go? >> it's beautiful. >> except for the sharks and snakes scare me. >> come on. it's great. they got nets and spotter planes. you'll be good. >> there was a guy wearing wallabys. really out of style. anyway, thank you. >> absolutely. >> good to be here. >> up next, the banking transaction of the day. huntington bank share ceo talks about his first new multibillion

dollar deal. plus, bernie sanders, the ice cream the presidential candidate getting a high honor in the dessert world. and i don't know if john harwood is up yet, but duke is in danger ahead of march madness. we have those stories and much more straight ahead. first, though, this day in history. we're the hottest young company around but if we want to keep the soda pop flowing we need fresh ideas! >>got it. we slow, we die. >>what about cashing out? no! i'm trying to build something here. >>how about using fedex ground for shipping? >>i don't need some kid telling me how to run a business! i've been doing this for 4 long months. >>fedex ground can help us save money and deliver fast to our customers. not bad, kid. you remind me of a younger me. >>aiden! the dog is eating your retainer again. let's take a short 5-minute recess. fedex ground is faster to more locations than ups ground. hundreds of crash simulations.

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good morning. welcome back to "squawk box." march madness is still more than a month away, but duke is struggling to stay in the top 25. talked about this yesterday because chuck todd is probably really happy. miami might not have a football team, but they do have a basketball team this year. the blue devils have lost 4 of their last 5 straight games. they fell to miami. it wasn't even close last night. 80-69. now it's the 24th ranked team. it's in jeopardy of falling out of the ap top 25. that wouldn't be the end of the world, but it would be the first time for duke since 2007. that year they went 18-13 and lost in the first round of the tournament. i can't imagine that they're not in the top 60, 66, 64, whatever it is. no way they don't make the

tournament. >> i would guess that. also, ben cohen, the cofounder of ben and jerry's unveiling a new flavor this week. bernie sander's ice cream called bernie's yearning. >> only in vermont. >> oh, god. where he's leading. he's up like 60 points in new hampshire. >> of course, the ice cream won't be available in stores. only 40 prints were made with 25 donated to the sanders' campaign, whose supporters can enter a contest to win one. the new flavor isn't associated with ben and jerry's, the company, which is now owned by unilever. this is brand new. >> i was going to have an ice cream party this weekend. now i found out i can't. i can't get the ice cream. kind of a good little marketing

gimmick without actually selling it. we have a regional bank deal just crossing the wires. huntington and first merit entering in an agreement to combine. first merit will merge into huntington in a stock and cash transaction worth $3.4 billion. here to talk about the deal and what's going on in the heartland, the chairman, president, and ceo of huntington bank shares. good morning to you, stephen. thanks for joining us. >> good morning, andrew. >> speak to us about what a deal like this means, but make it more broad, if you can, about what it means to the banking industry and what's going on in this country right now. >> well, there are two great ohio banks, both 150 years or more that are coming together. for us, it really helps our distribution and complements all of our business lines. it's a hand-in-glove fit. they do exactly what we do with consumers, with small business, privately held businesses, auto, wealth, et cetera. it just brings scale to us. as we see increasing competition

from larger players, from nonbank entities, we see the increasing pace of mobile and digital, and the required investments that banks have to make. this scale is very, very valuable to us. >> stephen, you just talked about the nonbanking entities that you compete with. who are you talking about? >> well, they would be a variety of financial technology firms, companies that are trying to get into the lending business or interrupt us on the payment side. apple wallet would be an example, google, et cetera. then there are a variety of lending platforms that are out. >> so you see yourself right now competing both with the apples and google wallets of the world but also with the lending trees and lending clubs of the world? >> we've been a part of lending tree. we use that as part of our distribution process. but there are other forms. lending club and cabbage, others, that are looking to disintermediate us with our customers. so part of getting to scale allows us to develop more fast, more quickly other products and capabilities and particularly

delivering them in a digital, mobile environment. >> stephen, in the old days, i imagine -- and when i say old days, pre-2008. is it possible a transaction like this wouldn't happen? that instead, somebody like jpmorgan or bank of america would pick you off? >> well, both banks have been in these communities for, as i said, more than a century and a half. so the community dimension is very, very important to the first merit board in akron. what we've done by way of committing resources to akron, i don't think any of the large banks would have done. but it would have been possible perhaps back then, certainly not today. >> as a community bank, how do you look at the too big to fail issue, how do you look at the big banks, all the regulations that have come with them that to some degree have come on to you? >> well, there's been a lot of regulatory impact on the so-called siffy banks of 50 million or more. that's impacts us and others of that size. it's a reflection of a massive

amount of regulation at the global level, the too big to fails. we've never considered ourselves that. accordingly, our markets are local. we do a lot with small, medium-size business. we're a good consumer bank. so we're not systemically important in any sense of the word and wouldn't be considered that in the world. >> stephen, i have to, you know, stand up for -- are you in columbus? where are you? what's the city backdrop behind you? you know what we were calling? because we're in new york here. we're really not interested in what your specific city is. we had ohio. so you're somewhere in ohio, which is just some monolithic place we don't really need to know much about anyway from new york. is columbus the capital? is that where you are? >> come on, joe. it's columbus. it's not that far from your hometown. >> i know, i know. it's cleveland. there's akron, toledo. there's columbus, there's

cincinnati, dayton. but back here, we have no interest. we just had live, ohio, because it really doesn't matter, does it? stephen, really? >> well, you know, we're part of -- we're one of the top ten gdp states in the country. there's a lot going on here. we matter. >> if you don't win ohio, you don't win the presidential election either. which is why kasich, who knows. you like that guy? >> i like that guy a lot. he's been a tremendous governor. he'd be a great president. >> why does he go like this all the time? and he slouches. he slouches and goes like this. have any of his handlers told him, stand up straight and stop with the karate chopping. you won't be veep. if you can advise him. >> i'll pass along your advice. >> you have any other compelling questions? do you care where in ohio that was? >> i was talking about the banking business, but you can -- this was much more compelling. >> that's what i mean. you didn't really care where in

ohio. you fly over it occasionally, but it's not a place anyone wants to see. >> i've been in its greatness. stephen, congratulations on the transaction. we appreciate you being here this morning. >> thank you. >> very quickly, have you got this? >> they've got me reading it. can you read it like this? >> no. you do it. go, go. >> it says you. you really want to do it. i haven't looked at it. >> i will tell you, they came in with anned adjusted number of 2 cents a share. they point out their sales were cut by 8% by foreign exchange currencies. they're also talking about their full-year guidance. they now say $2.95 to $3.10 versus the 3.10 the street had been expecting. they go on to say they're expecting this merger to close in the second half of 2016. they do say the merger process with dow chemical is on track. >> it's dupont-dow or

dow-dupont. >> dow-dupont. >> i liked dupont-dow. >> i did too. but it's dow-dupont. >> actually, i guess it doesn't matter. coming up, why hedging fuel prices in the airline industry has no the bet been a safe bet. there are guys who have agreed to pay like $80, $90 a barrel. plus, we're expecting results from dow component johnson & johnson. we're going to have the company's cfo dominic caruso to break down the report at 6:50 a.m. eastern time. i think we have the p&g cfo too, who's from cincinnati, ohio. not from columbus or cleveland or toledo. as we head to break, here's a look at yesterday's s&p 500 winners and losers.

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lot of companies, and you would expect airlines to be in that group. for the most part, energy is either number one or number two in terms of costs for these airlines. it's that and the employee staffing they end up paying for. some of the airlines have taken a gamble and have bet on the wrong side of things. >> hold that up a little higher. >> right here? sorry. what was he doing? hi. >> you don't want to know what he was doing. he's going to jail. >> okay. anyway, airlines have been -- >> hold it up. sorry. >> airlines have been on the wrong side of some of these bets, particularly southwest airlines, which came out and said it was on the hook for $1.8 billion in fuel hedging costs through 2018. they've been on the right side of things for a very long time. they've always been very profitable because of doing this. it just tells you the reer haval you were talking about, down $70. they've gotten stuck in a big way. i guess they've made some changes.

they've cutting back at this point. delta actually said that it saved more than $700 million from the same period the previous year because it got out of a lot of hedges. >> we asked whether he would lock in at this price. he said no. >> because i guess the thought is it can't stay at these prices for forever. >> no, but -- >> i don't know why would wouldn't lock it in. >> i would lock this in. call it a day and lock it in right now. >> he's got to deal with the locked-in prices he already has. >> i would spend the money to lock this. everybody thinks it were at a low, lock it in as long as you can. >> right. that's why the forward contracts are even attractive. they're 40, right? >> i would think. i don't own an airline. what do i know. there's no good segue for this. a great article about drunk texting. >> drunk tweeting. >> well, drunk tweeting and texting. this is drunk tweeting, texting. there's a number of new apps to prevent you from drunk texting

and drunk tweeting to some degree. i think it's focused more on the texting issue. they make you do math problems. you're very good at math, joe. >> i can do it drunk or not drunk. >> i don't know that i could do it drunk. >> do you think if you were completely drunk you could do the math problem? basically, be evfore you send, y make you do a math problem. >> if it were integral calculus, maybe not. >> 804 plus 651 plus 61. >> i'm not doing it now, but i could. >> are you sure about that? >> i don't feel like using my brain. >> i wonder if the app actually serves as a counterintuitive measure. i imagine if you had a couple drinks, you're going to get a little belittle geligerent, youg to tell me i can't solve this, i will do it. >> i think the math would stop a lot of people. >> you may see it as a challenge. you're going to tell me what i can and can't do? >> i love all our bosses and everything. there's times i get a little

mad. i'll send them. by i'm not worried. i'm not worried about texting. i'm worried about the world. >> the world at large. >> the world. >> the tweeting. >> oh, the tweeting. >> it's better not to tweet. >> i don't think they have it set up for that. >> not just him but anything. >> this is the best app. >> keith olbermann got in trouble for that. >> i got a future for you. this one is called bread crumbs. this allows users to trace their precise whereabouts from the previous night. so people get drunk -- >> you've been drinking that much, you have a problem. >> not what you've done? >> no, it could come in handy when searching for items that have been lost during an outing. >> you don't need an app. you need professional held. >> you need a 12-step program. >> sometimes people lose their phones. there was a wall streeter who will remain nameless. they used to lose their blackberry. there was a whole article about

it. >> you can track your kids the same way. you know how they always have the phones on? if you have that on yours. >> at the airport, there was a guy he puts a little chip into his bag. he can find his bag. it has gps. pretty amazing. >> that's a smart idea. you can do it with key chains too. >> anyway, pretty cool. >> i've looked at responding to certain tweets, and i think in my head -- >> drunk? >> no. i wish i was drunk now when i'm on with you. i look at it and think some of the stuff i could possibly say, and i think if i did say that, what would happen. some of the stuff really scares me. i'd probably get tarred and feathered. we have politically incorrect

thoughts at times, don't we? maybe you don't. anyway, it just scares me. i think about what if i did. i'm scared. >> they're playing us out. when we come back, we have the chairman of the homeland security committee, senator ron johnson is going to join us. of course, from the home state of johnson controls. we might talk to him about that as well. we're going to talk about fighting isis, the iran nuclear deal, and who he's betting on for the race to the white house. a quick check on european markets. right no across the board. back in a moment. so you're a small business expert from at&t? yeah, give me a problem and i've got the solution. well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere. my drivers don't have time to fill out forms. tablet keep it all digital. we're looking to double our deliveries. our fleet apps will find the fastest route. oh, and your boysenberry apple scones smell about done.

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welcome back to "squawk box." it's time for the squawk planner. more earnings on the calendar this morning, including proctor & gamble. we're also going to get 3m and apple comes up after the closing bell. more clues for the health of the housing market. the s&p case-shiller home price index comes at 9:00 a.m. eastern time. the federal open market community kicks off its two-day meeting today. a decision is expected tomorrow at 2:00 p.m. eastern time. that's today's squawk planner. the ink on the iran nuclear deal is pairly dry, and president rouhani is already in the midst of a european tour, with hopes of strengthening economic ties and pursuing a range of economic deals to get money and goods into the country. should americans be worried that some of that money could get funneled to terrorist activities? joining us now is senator ron johnson. the lead story in "the wall street journal" is all about the billions of dollars in business that rouhani is getting from

europe right now. last week we spoke with secretary of state john kerry. heaid some of that money very likely will be funded into terrorist activities. what do you think about that? >> it's pretty obvious. you know, let's face it, iran is widely recognized as the largest state sponsor of terror. they're our self-proclaimed enemy. i would thing the strategy ought to be weaken our enemy, not strengthen. i think it's a crazy deal to enter into an agreement that doesn't guarantee they'll never get a nuclear weapon and that's going to inject tens of millions of dollars into the economy. >> the argument at the time was this deal with the europeans was going to go ahead with or without us, that the europeans were not going to stand pat on the sanctions anymore. at least this way, we could get some sort of maneuvering. >> i think the europeans thought we were going to capitulate on that deal. the president was so dead set on doing that deal, they thought, let's join the party. to me, it just makes no sense whatsoever. i know president obama was also hoping that there would be a

change, a modification in iran's behavior for the better. they modified their behavior for the worse. it's emboldened them. we've seen them contrary to u.s. resolutions, they've test fired ballistic missiles. they detained and humiliated american sailors. that's not better behavior. >> the other piece in the journal is there's three defense contractors missing. >> that's the other thing. when you start trading for hostages, you're going to increase the chances -- >> it says the disappearance of three u.s. citizens just recently posing a fresh test of the obama administration's relationship with iran. they know that they're somehow associated, they get funding from the revolutionary guard, the guys are talking about. >> we've seen because of this agreement, you know, the beg beginning of the strategic realignment in the middle east. iran has basically succeeded in that shia crescent. from my standpoint, i don't think that's a good thing for either regional peace in the

middle east or world security. >> what's the recidivism rate you use for the gitmo guys we'releting go? >> it's certainly a factor. >> is it 30? they say it's ten. other people say it's 50. >> well, i mean, we had hundreds there. when president bush left office, they were pretty well evaluated as high risk. so they keep reclassifying these folks. that's a real danger. so exactly what it is, i mean, there's literally hundreds. sounds like a couple hundred that are probably rejoining the battle or want to. >> so give them the rights to make sure we're not violating habeas corpus. once they go back and join the fight, we try to hit them with drones and kill them. >> it makes no sense. sten, i've been down to gitmo. it's a first-class facility. i think one of those prisoners refused to be extradited. he wanted to stay there. if we're going to -- >> say that to "huffington post." senator ron johnson said most of these guys would like to say. >> i didn't say most.

there was one reported. >> don't print that. >> well, whatever. the fact of the matter is our first line of defense against islamic terrorism is effective intelligence gathering capability, detaining terrorists, and then over time questioning them. i was down there. that's how you get the intelligence. over time gaining their trust. then they start spilling the beans. we're not doing that anymore. we're really ruessing the human intelligence we're going to need to keep this nation safe. >> there is a new threat that some experts have been warning is potentially even more dangerous than isis. we haven't much about this. but al nusra, do you know much about this? >> they're one of those groups, which is one of the reasons syria is such a mess. who do you side with? again, i'll go back to the historic blunder of not leaving a stabilizing force behind in iraq, which would have helped stabilize that region. again, that humpty dumpty, he fell off the wall. i don't know how you put that back together. >> do you know anything about the fbi and indicting hillary clinton? do you know whether that's a possibility? >> i talked to james comey. he testified before our committee on our threat hearing.

my point to him was, you have got to get to the bottom. you've got to uncover every e-mail that was ever on that server because we have to assume our enemies have all that information. >> you saw the video yesterday that fox news was running. they absolutely knew blackberries were not the way to do this. >> i read about it. i didn't see the video. it's obvious what she was trying to do. avoid any kind of disclosure. we've seen that elsewhere in the administration. just really trying to circumvent the federal records act. she put america's national security and potentially lives at risk because these classified -- this classified information on that private server, we have to assume our enemies have that. we have to find out every one so we can mitigate the damage. >> how does it work? he gives it to justice and loretta lynch has to act on it, right? >> i think he's a person of integrity. i think he understands his responsibility here. if he sees there has been a

potential crime committed -- >> doesn't mean they pursue it. >> at that point, he would recommend indictment. i have a hard time think about president obama would let loretta lynch indict her. >> i got to ask you a business question. >> sure. >> jauohnson controls from your very state. fleeing the kwucountry. what do you this? >> it's just math. it's just math. we've got to, you know, stand up a competitive tax system. if companies -- >> so when are you going to fix it? >> we need a president to actually understand we've got to make our tax system competitive. by the way, our regulatory environment competitive as well. i was encouraged by this. president obama, his state of the union, one of the loudest applause he got was for regulatory reform. >> both sides talking about that they need to fix this problem. we have some of the biggest american companies on the runway ready to leave here. >> all the democrats want to cut taxes on the corporations.

it's both sides. it is. >> the problem is president obama. in order for any tax reform, first thing is you got to have a trillion dollars of tax increase on the table. that's not going to be good for economic growth either. if we actually had a president who's willing to lead, understood what made an economy grow, and is not punishing success, it's actually incentivizing. look at the basic math. >> independently, you have no problem with this? i'm curious just because you've given huge tax breaks to this company over the years. >> i haven't given huge tax breaks to anybody. the fact of the matter -- >> your state has -- >> this really doesn't change much because it will still pay u.s. tax and wisconsin tax on their u.s. operations. by the way, because of our uncompetitive tax system, those overseas profits aren't taxed anyway. >> would you include any type of exit tax? >> what do you mean by exit tax? >> hillary clinton, for example -- >> oh, in terms of penalizing them for doing this. if they didn't invert, you know what's going to happen? they're going to be purchased by a foreign company.

that's the effect of this thing. they either invert, they actually buy a foreign company and invert, or a foreign corporation will buy them because it's math. $150 million is what they're going to save. if you're a responsible corporate manager, how can you not take that type of move? so i don't blame the corporations. i blame our completely uncompetitive and broken tax system. >> all right. thanks, senator. >> senator, thank you. >> didn't get anywhere there. >> he's a hard guy to convince. >> tell me about it. earnings just out from dow component johnson & johnson. company is reporting $1.44, which is two cents ahead of expectations. more next year, the estimate 6.38. the company is forecasting 6.43 to 6.58. that range is actually above. >> operational sales they're expecting looked like it's a little below. >> does that include everything? >> i'm not sure what operational means, but it did say operational sales growth of 2.5% to 3.5%. >> we'll break down the results.

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johnson & johnson is out with quarterly results. health care giants posting a profit of $1.44 a share.

it sees 2016 profit above forecast and joining us now is chief financial officer at johnson & johnson and also here cnbc reporter, meg terrell. will sales be below where wall street is, wall street looking for total of 71.844 and are you looking at something below that for the forecast? >> good morning, joe. thank for having me on this morning. you're right. we delivered above earnings expectations for this year and our guidance next year is also above earnings expectations. we quoted in a press release operational sales growth which i think becky is referring to up 2.5 to 3%. it would be about 1% to 2% including the impact of negative currency headwinds based on just

today's rates. >> why aren't analysts smart enough to figure out the currency adjustment. why are they still above your forecast? >> they may not update their models as frequently as we do. the last time we saw updated models was after your third quarter earnings back in october. >> safe looking haven. >> i'm curious to know how you're looking at the similar. people for cussed when you'll get competition. how do you run that with forecast you're giving. >> thanks for the question, meg. we're aware that's been written about biosimilars. our guidance for 2016 does not assume there will be a biosimilar in the u.s. as you know, meg, obviously the biosimilars are not ge n generi.

>> currency a big thing. analysts have trouble modeling it. how should people think about the impact of currency. it's been really tough for the last few quarters for you guys and across the industry. >> we always provide constant currency guidance as well as currency effective guidance. to give you a perspective this past year, 2015, currency impact sales were roughly about 7%, 7.5%. pretty good significant hit. next year we're no deling that impact to be 1.5% but we'll see where currency lands but that's our expectation for 2016. >> you have a good handle on every sector of the world in consumers or how business is, i mean across china, asia, europe? can you comment on each? >> yeah, sure.

we're seeing some slow down, for example, in china. a lot has been talked about there. but china is an important growth market for us. especially with the rise of consumer spending in china. but it's a long term play. just to put things in perspective, china represents about 5% of our sales today so any short term moments in their particular economic activity would not likely have a significant impact on us. we saw some slow down in europe but overall our sales growth for next year underlying operational sales growth is expected to be about the same as it was in 2015. >> okay. just real quickly why do you sell a billion dollars more in any given quarter than like in the previous quarter. christmas quarter you sell a billion dollars more. i can't figure -- what's seasonal about your business? >> well sometimes -- there's just ordering patterns for distributors and stock to do product launches.

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>> china shares plunging again. 14 month low. oil dropping back below $30 a barrel before recovering. fears of a global slow down persisting. are there headwinds ahead for u.s. economy. and jason fuhrman is our guest. >> are consumers spending more on household goods? proctor and gamble's ceo joins

us. how brands like gillette, parchers and tide are handing the down. >> robots are coming. >> oh, hell no. >> how some disruptors are using artificial intelligence to find out more about you as the second hour of "squawk box" begins right now. ♪ >> announcer: live from the beating heart of business, new york city, this is "squawk box". >> welcome back to "squawk box". we want you to know the futures are higher, i think, right? >> there you go. >> it's up. at least we didn't use a trillion dollars in market cap. futures are up. opposite joe kernen with andrew ross sorkin and becky quick.

oil was down, shanghai dropped 6% in the european markets followed but now oil is up. it's all it took. also just quickly proctor and gamble is reporting some numbers here and, you know, you haven't changed this stupid thing, becky. i have to go back to earnings per share. the operating number adjusted is $1.04. the number for sales is 16.92. >> you said it was 1.04. >> i said 1.04, yes. >> that's six cents better than the street had been anticipating. >> good. i'm stuck here. >> trying to learn new machines. >> while you guys do that. let me give you some breaking news. aig announcing a series of strategic actions. aig will return $25 billion in pal to shareholders over the next two years.

this just crossing the tape. will execute an ipo of its united guarantee corporate unit and will divest and sell a number of its units including its revision group. here's the important point it will not consider a full break up saying that would detract from shareholder value, in particular investor karl icahn called for a break up after taking a steak in aig. he wanted them broken up in three separate pieces. the issue in this case is a tax one and ability to distribute some of that money because of the credit rating agencies and how they rate aig. so there you have it. >> and that was banned by a guy last night. there you have it. i was watching some show where at the end of the show they do an overuse phrase, going forward

at the end of the day. all eyes are on. there you have it. >> exactly the same thing. >> markets, we just talked about. markets in china plunging more than 6% overnight after a late bout of panic selling triggered by oil prices and stocks. it helps to be first with all this stuff. you're up early. you're 12 hours ahead. but you close down because of oil and now oil is up and we're recovering. you are yesterday's news already and it really is sort of like yesterday. >> reporter: well, it's not only oil but some comments that george soros made. he was a huge topic of conversation today among chinese investors. last week at davos the billionaire investor said he was besting against asian currencies and even though he didn't call out the chinese yuan specifically because people are so worried about the direction of the currency as well as capital outfloss the communist

party people's daily respond to soros today saying any challenge to the weaker yuan would fail. the chief of the national statistics bureau here said george soros is only one voice, one opinion and the bureau is confident in the outlook for the stock market the yuan and economy. unfortunately for them, though, regular investors didn't really agree. the markets dropped to 2750 which is a 14 month low. then a financial newspaper ran a poll which showed that half of the people who responded believe that the markets were going to continue to fall to 2,500 or below. they mentioned the oil that you were talking about, poor liquidity and also mainly they were concerned about the regular argue la -- regulators and their ability and the economic outlook. back to you. >> thank you. keep watching. maybe we'll have a day that doesn't reflect what happened in shanghai. we got our fingers crossed.

see you. >> by the way, on the aig, the issue,ing the exact issue, joe, which i know you're paying attention now to. the reason why aig is so doreen gentzler the karl icahn breakup it would reduce the amount of capital aig can distribute said it would lose a diversification benefit it gets from rating agencies and lose tax benefits. i don't know if you understand that or not. let's go to washington here. you're right here next to me. despite what we're seeing in china and with the selloff in oil the white house is maintaining its view on economic growth or it is. joining us right now chairman of the white house council of economic advice divorce. we're all waiting to hear what the fed will say tomorrow. you think we're still growing at a meaningful clip? >> you look at the real economy, you look at the job market, and you see something that's moving ahead, moving ahead at a pretty

decent clip the best month we had for jobs last year was in the fourth quarter. some of that was warm weather but a lots of an economy where workers are getting 2.5% more than they got the year before in nominal terms with inflation low. that's a large real increase. >> do you have any anxiety at all that we'll have a slow down. >> certainly seeing two different sets of indicators right now. you're looking at the economy and you're looking at financial markets and they are telling you two very different stories. i place more weight on the first but you certainly have to be nervous about the second and the impact it will have on us. we're part of a global economy. i've been worried for a while now about our ability to grow and a lot of other countries aren't growing in the same way. last we're the rest of the world took about .7 off the u.s. growth rate. financial markets can spill over. but, you know, something that's most important thing in our country do people have jobs? are they getting raises?

the answer to both those questions are yes. >> you sound a little more hesitant same thing we hear from ceos who are looking at things on the ground not just international but people who have operations in the u.s. there's a sense of nervousness out there. >> look, we're taking the situation seriously. we're monitoring it closely. you know, financial markets affect the economy they affect it in straightforward ways when stocks go down, people have less money, they spend less money. that wealth effect is measured in tenths of a percent. you see a lot of events, stock market is predicting 20 out of the last eight down turns we've seen in this country. but, you know, one does have to pay attention to it and take it seriously at the same time, those most of our time is spent looking at how people are doing in our economy, and, you know,

people are seeing faster wage growth. people are seeing those jobs. >> can i ask you a different question. this binversion, another one. what are you doing about this? >> i won't comment on any particular corporate transaction. treasury has done a couple rounds. but we consistently said there's a real limit to what we can do. what the solution to this lies in congress. you could do it a simple way that does a decent job of it which is to ban these type of transactions, or you can do it in an even better way which is reform our business tax code as a whole. >> so you guys talk about reforming the business tax code and republicans talk about reforming the business tax code, how far apart are you? >> i'm here actually today in new york speaking to the new york state bar association tax

section about business tax reform and what i'm going to tell them is in a lot of respects there's agreement. cut the rate. broaden the base. >> right. >> reform international system to make it a hybrid system that collects more revenue while helping our companies be more competitive. i think frankly the big obstacle is whether you also want to cut tax rates for high income individuals. and if you're insisting on doing that together with business tax reform, it's just not going to happen. >> who is insisting. >> many republicans would like to see, you know, use business tax reform as a way to do a broader set of tax cuts. if you could set that broader set of tax cuts for high income individuals aside that's a different issue. different debate. we could focus on business. >> you go ahead. >> no, you go ahead. >> usually, though, it's comprehensive things. if you want actual change on very difficult issues you that

have to take comprehensive so every side feels they are losing at some point. go back to 1986 with the tax overhaul some of the examples in connectiono where they were able to get thing done with a congress that was not the same party as the ruling president, it dwoes taoes take broad swath things. >> look, first of all, the president put out a framework for business tax reform four years ago. i would describe it as a pretty comprehensive framework that gets at a real economic issue that our country has which is we have the highest tax rate of any advanced company and a ton of ways for does avoid paying that tax rate and those two things are the nub of our problem. we can all agree on that. when it comes how tax should be distributed the tax level much more controversial issues, really important debates. i want to have that debate but we're willing to do that debate privately from addressing our business tax system. >> you said town halls, climate

change, guns, this hasn't been a priority. it's going to wait until the next administration, obviously to do anything with this and you made the point if it was not an inversion somebody else from, you know, foreign entity can buy because their tax aviate cheaper. the capital is leaving because it's not competitive here. it hasn't bean priority. that's what the bully pulpit is for. >> he's the first president to call for a lower corporate tax rate. i think you want to talk to congress and ask them. this is very simple solutions here. they can pass them tomorrow and -- >> why are you asking me if i'm willing to cut -- >> because you're on that other side. >> i'm on the other side of you. i don on the other side of every democrat. >> anyway, jason --.

artificial. proctor and gamble is out with quarterly results beating estimates by six cents, profit of $1.03. brands like tide, gillette, crest, also reported revenue in line with forecast, john muller joins us now, cfo of p and g and part of cnbc's global cfo

council. you don't run for that, do you? we just ask you for that? >> that's an appointed position. >> all right. so you haven't been voted in. you know what we ask you, john. we always talk organic sales growth and you always give us an estimate. stock is higher. i assume you hit most of those numbers. what was the last one you told us one to three and did two across most segments for organic sales growth around the world? >> that's right. we said we would reaccelerate organic sales growth. strong quarter. up 9%. constant per share up 21%. triple-digit basis margin improvement both gross and operating, 117% free cash flow. good quarter. >> that's above what you thought three months ago? >> slightly above, yeah. about a point above.

>> why? >> actually the biggest bright spot has been our u.s. business. we went from a decline of 2% to the prior quarter of growth of 3% in this quarter and that really reflects the strengthening of our initiative pipeline into that market. >> in this country and it wasn't just an improving consumer or economy it was initiatives that p and g undertook -- like which new products? what was innovative. >> we launched a new razor that has a lubricating strip on both sides of the blade. we improve our detergent platform with new products in that very convenient consumer friendly form. we launched into the adult

incontinence market. so really across the product platform continuing to innovate and strengthen our offerings to consumers. >> i see it marketed a lot to the ladies, john. is always a brand for both sexes or gender specific? >> it is gender specific. it's a product for women. >> okay. is that where the market really is more than men, or both? >> it's both but the incidences is unfortunately greater with women. >> my wonderful mom who is not with us any more, whenever she sneezed i would ask her if everything was okay. i understand how that works from time to time. what's the other thing i wanted to ask you. the first thing that you said. oh, wrae you were making a razor that had only one strip of lubrication on it? how many years were you making

the razor with only one lubricated strip instead of two. >> just think we were making a blade with only three blades and one lubricator strip. how much the world has improved. >> now you got five and two or something like that? >> that's right. >> okay. geographically in europe any improvement at all with the -- i know currency doesn't necessarily affect you with how you sell over there. is the continent improving economically? >> really not a big change in europe. certainly not any more decline. but, europe is growing, you know, depending on the quarter between minus one and 1% it's pretty flat. >> and in china? >> china we really see as continuing to offer significant opportunities. you think about our business, the transition of a manufacturing/export led my to a consumption led economy is a good thing.

going from one child to the possibility of two children per family good thing if you're a manufacturer of pamper. that market continues to premiumize. the market is growing at double digits where the bottom tiers declining. big shift that's occurring across channels particularly into e commerce and specialty stores which is an opportunity. growth rates have slowed a little bit but still very attractive. that's our second largest market in both sales and profits and it's a market we're very focused on continuing to grow and profit in. >> john, i know we were just talking about men's razors. you guys are suie inine ining d club. does that mean their razor is as good as your? >> obviously i'm not going to comment on an open litigation case. but as we have tested our products consistently with consumers, there are significant wins and consumer preference

across 18 attributes of the shave that we measure and importantly -- >> there's a lot of shareholder i got an e-mail from shareholder about this the idea you sued them raised the stakes in suggesting a company that basically didn't exist a couple of years ago is now making a serious claim on your business. they are now apparently number two, just beating out schick. they are coming up right on your heels, no >> look, we vigorously protect our intellectual property. we do that regardless the size of the manufacturer. we continue to be significant leader in terms of market share and shave. we just launched an online presence. we gained six share points since june. so we're very comfortable with where we stand in the marketplace but we're not complacent and vigorously protect our intellectual property.

>> can you raise prices now given the competition out there? >> it's a question of the relationship of price and product performance and efficacy and value that the consumer attaches to that. and that's really what we're focused on more than price itself. it's a superior value equation with all aspects of value, pricing, product efficacy, aesthetic, use of experience all wrapped into one. >> i told you about the bengals, didn't i? >> don't bring that up. >> i told you. i warned you. >> let's talk xavier. >> let's talk xavier. i don't know if they are five or six. can they beat oklahoma do you think? they lose to georgetown, they lost to villanova. i don't know. >> tonight's a big night for providence. >> who do they play tonight, dupaul? >> providence. >> that's right. chris dunn.

he's unbelievable. >> good test. >> it will be a good test. that will be a good test. providence just beat villanova. just beat somebody the other day. >> thanks joe. >> all right thanks, john. see you later. coming up apartments in california dangerously lose to falling into the pacific ocean. we got details right after the break. then a couple of minutes from now economists and market watchers expecting car loan rates to rise. will it be enough to unnerve potential buyers. we'll take a closer look at the red hot auto market with three experts. "squawk box" returns in just a moment.

back everybody the wet el nino weather causes dangerous clip erosion along the california coastline prompting a state of emergency. check out this drone video and how dangerous this situation has become in the pacific city. the falling bluffs led officials to declare three apartment buildings inhabitable. storm damage led the city manager to declare a local state of emergency. the pacific city council approved the emergency declaration after storms caused by el nino left behind a

sinkhole, damaged seawall and a trail of destruction. just in time for our visit. >> yeah. how far out do those weather services go? >> accurately? not this far accurately. >> i need good weather. okay. >> "squawk box" returns in just . iall across the state belthe economy is growing,day. with creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow.

like in the hudson valley, with world class biotech. and on long island, where great universities are creating next generation technologies. let us help grow your company's tomorrow, today at business.ny.gov ♪ lost shipments, lost invoices, lost prospects, lost respect. well-crafted solutions for today's problems in commerce. pitney bowes, the craftsmen of commerce.

welcome back to "squawk box" this morning right here on cnbc first in business worldwide some of the stories front and center that hour. federal reserve policymakers begin a two day meeting today with their latest decision announced tomorrow afternoon. that comes after the first rate hike in nearly a decade at the december meeting trying to figure out what to do next. latest data on home prices in 90 minutes when the kay schiller report for november is released. analysts are looking for an increase. one of today's most widely anticipated earnings report happens after the bell today when apple issue its quarterly numbers. analysts there watching for the impact of slower iphone sales.

check it out. in new york during the blizzard, youtuber local filmmaker and snowboard enthusiasm -- saw this last night too -- took advantage of the crazy weather. the snowboard is crazy. there was snow in new york. since he made the film two days it's gone viral. 9 million views on youtube. >> they were dodging taxies. they were flying over the curbs and in the end new york city police department pulled them over but then i think they let them go which i was glad to see. that was pretty cool. >> 2015 was a record year for the auto industry with nearly 17.5 million vehicles sold. flunging gas prices, low interest rates and a wave of incentives were the key drivers of sales. but some are concerned this is

being fueled by an auto bubble. we spoke to jamie dimon about this. >> they performed better than any class in '08 and '09. people going seven years. it's going stretch. if you're careful and how you underwrite both the person, the car, if it's a lease, you can be okay. auto loans i think are a trillion dollars. mortgages are 10 trillion. keep it in perspective if it has any systemic effect. >> joining us now is ron bloom. and former assistant to president obama for manufacturing policy. also strength rattner current chairman of willett advisors and former auto treasury adviser as well. thank you for joining us. we have a lot of questions. great to see you. first of all, jamie didn't worry too much about the quality of loans but mike jackson from auto

nation who came on and said look can we continue this type of growth after six really strong years and i just wonder what you two think? >> i think growth will have to moderate for a number of reasons. subprime piece is one of them. wages have been relatively flat. what you see going on here is pent up demand. we had four years of car sales well below and the fleet was ageing, people had to buy cars. you should expect moderation going forward. >> ron? >> i think that certainly growth is going to be slower, but do remember that while steve is correct the fleet is still actually older than it was back before the recession. and you have low gas prices. which, obviously, drives demand for the larger cars. so while i wouldn't predict significant growth, i think we still have a way to go. >> that brings up another issue the low gas prices as you mentioned it means consumers are

looking for suvs, looking for some of the big gas guzzlers instead of smaller cars. we have for a long time been incentivizing these car companies and telling them they got get their gas mileage down. what do you think about gas prices. good news for the consumer. conundrum because we have a free market approach and consumers can buy what they want and right now they want larger suvs and so forth. car companies, detroit companies are well positioned in that market. >> that's where profits are. >> very hard to make small cars profitable. you have these cafe standards. car companies have to find a way to meet those mileage requirements. you'll have a bit of push comes to shove. >> is that part of the reason smaller cars are so cheap, auto industry has to have a certain amount of sales in those levels. >> car companies do have to meet their mileage requirements so

there's, obviously a balance and the price of a car is driven by competition from all the different car companies. >> what do you two think about how the industry has done since you folks stepped in and had to restructure and is there anything you would have done differently in hindsight? obviously we can all play 50-50 hind skiesight quarterbacks. is there anything you wish you had done differently >> honestly not in a fundamental way. look, our charge was by definition somewhat limited. we had to act very, very quickly in the face of, you know, an enormous global downturn, and i think we acted significantly to restructure the companies. but our charge was not to go run general motors. that became the responsibility of the new board of directors and the new management. and so as one sits and asks questions about strategy and such that's really not what we

were charged with doing. i think -- so i think the right way to evaluate the intervention is given the incredible crisis and given what we face did over that relatively short period of time where we intervened did we act reasonably? honestly i think we did. >> i'll go to my favorite topic which is johnson controls and this inversion transaction. you i know -- >> not going to speak about that. >> i'll go steve. how much of a benefit was johnson controls indirectly as a function of your bail out of gm and chris rear? >> no way to quantify it. it was all very indirect. we saved the car asemiblers and therefore by definition we saved the supply chain. johnson controls as you know have been trying to diversify out of the auto parts business. i can speak with it because i don't have a dog in the fight

except as a taxpayer and the whole inversion situation is a travesty and leads to lost revenues and jobs. it's a situation that nobody can think it's a good place to be. >> we talked to furman this morning, ron johnson. how can we get them closer. >> there was a brief moment last fall when people thought maybe there could be a corporate tax deal. pretty quickly you reallied it gets wrapped up with individual rates. it becomes part of a bigger deal. certainly something to do on the infrastructure side to get the democrats and people gave up quickly. right now i don't think anybody expects anything to happen in washington. >> we'll see another dozen big companies leave. >> its a tragedy. >> furman pointed out the ugly way of doing it is say that can't happen but that leaves open the possibility it's much cheaper for a foreign company to come in and bipartisanship these

companies. >> jason is a could economist. he knows you can't say it can't happen. designee said you could say that. did he say that. >> one way or another these jobs will find their way to the lowest tax haven they can get to. it's very bad. not just for companies -- you have the inversion problem but problem of foreign companies coming here and buying our companies. >> i didn't have anything to say. >> since you're here -- >> i feel i'm like on "squawk box" >> you're close to michael bloomberg. >> tell us. what do you think the chances are that he runs? >> you know, i have a rule you never talk about the guy who signs your paycheck. it's a really bad idea. >> let me ask you about this. >> whether mike bloomberg runs. that simple.

>> what do you think about fiat chrysler making all this noise that they would like to merge with fwm gm. how would you feel about that when u.s. taxpayers stepped in to saved in to save general motors. >> the united states taxpayer got what he asked for out of general motors. we saved millions of jobs, the entire economy, the entire car industry was saved, i think as a matter of the investment in the car business, i think it was a hugely good use of taxpayer resources. >> i'm speaking of political. ramifications. >> i don't think the taxpayer per se simply because we made that investment should be concerned about whether or not those two companies merge. >> i have a hard time thinking it wouldn't be. >> politically there would be a lot of blow back. it's a substantive matter. what sergio saying and he's right there's too much car

capacity around the world, too many car companies around the world, there has to be some more rationalization on the industry. we did save the companies. the president saved the companies. everybody should be happy about that. the broader question is jobs. because we're still in a tough competitive world when it comes to jobs. and these same companies produce cars in mexico, they produce parts, other companies produce parts in other parts of the world and when you look at the manufacturing sector where ron spend a lot of time, i spent a little bit, you can see job recovery has not been there to the same extent as it has been in the rest of the economy. the wage recovery is not there. manufacturing wages are down since the recovery began. auto wages are way down since the recovery began. some of which was necessary for reasons ron spoke about. that's what we should worry about, jobs more than where the company's headquarters happen to be. >> ron, what do you think? >> absolutely. this is a jobs question. and, in fact, both fiat chrysler

and general motors have added a lot of jobs as the economy has recovered. but steve is right, certainly fewer than they had before. but both of these companies have actually been, while steve stg right they have been investing in mexico, there has been substantial investment in the u.s. by both companies. >> gentlemen thank you both for your time today. >> you're welcome. >> 3m is now reporting -- see what the stock is. stock is indicating big widespread. profit of $1.80, 17 cents above estimates in revenue beat forecasts. mixed metaphors. >> i know it did it with the 50-50 hindsight. i realized i did it. >> 50-50 hindsight. >> monday morning running back. >> i realized i said it. >> i'm using that. it will be a walk in the cake. coming up aig responds to karl icahn and announces a number of

changes to its business details. check out oil this morning which is now up a full percent, up 32 cents at $30.64. directv?don't we swo now mother, we are settlers. i've settled for cable all my life. but directv has been number one in customer satisfaction over cable for 15 years. we find our satisfaction elsewhere. the boy has his stick and hoop. the girl - her faceless doll. and you have your cabbages. and you...have your foot stomping. i sure do. (vo) don't be a settler. get rid of cable and upgrade to directv. call 1-800-directv.

aig announcing some new

strategic actions to increase shareholder value but also saying it's against a full breakup. mary thompson is here with the dale -- not here but somewhere. >> reporter: i'm in new jersey. now is not the time to be short sighted aig ceo peter hancock unveiled broad base plan to return known shareholders and improve the business. setting up the firm for a possible breakup in the future. the plan includes returning $25 billion to shareholders. cutting expenses by $1.6 billion. reorganizing into nine business units that could be sold or spined off should aig decide it's in its best interest. karl icahn has been pressuring the firm to break up.

i want would allow aig to remove it from special oversight. aig countered said it's incremental. that number could change once final rules on regulating aig are in place. aig said breakup would cost $15 million in tax assets and splitting up would prompt rapisting agencies to boost capital requirements for the remaining firms as lines are seen more risky. company responding to karl icahn's call. they haven't performed as many people would like them to. so that's critical as part of this new strategy. >> mary, thank you very much. when we come back this morning the rise of the robots. artificial intelligence catching the eye of wall street's largest

banks. our series to take a look at how some of these names are making waves in the world of ai. that's right after this quick break. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. aifrl artificial afrtificial

intelligence .

welcome back to box. cnbc disruptor series taking us to the world of artificial intelligence since the rise of the robots and julie boorstin joins us now with more talking about which companies are looking to shake things up.

>> reporter: artificial intelligence is not just far off signs fiction. ai is already part of many companies we interact with every day from apple's siri to how uber dispatches drivers. ai is a priority for many tech companies including ibm and microsoft. also called machine learning artificial intelligence is key to helping companies crunch big data. for instance, palenter technologies helps government agencies and wall street firms mind data sets for practical apply occasions from thwarting terrorism to preventing financial fraud. now there's a flood of financing into this space with an estimatestimate ed 300 million invested into ai technology. high-profile investors are placing bets. >> i'm investing very aggressively right now in artificial or human assisted

intelligence meets health care, education, financial services around the block chain and media. >> reporter: we expect to see a number of ai start ups in the running for disruptor 50. we're looking for nominations. go to disruptor 50 at cnbc.com. tomorrow we'll look at the rising trend of connecting devices and how that's shaking up a number of industries. >> thank you very much. we do have a few more stocks to watch. rambus reporting better than expected fourth quarter earnings. it tops the streets expectations. the company boosted by higher royalties from ibm and renewal of the license fee from toshiba. that stock is up by 7%. also, swift transportation quarterly results beating forecasts. the trucking company citing lower costs from fewer accidents and insurance claims. higher freight rates and fewer empty shipping loads carried by its drivers. that stock is up by 6.8%. sony is moving its headquarters

of playstation gaming unit from japan to california. the company says the move makes sense as it has several business partners in the u.s. and needs to respond quicker to industry trends. the u.s. is the world's biggest video game market. that stock is down by 1%. >> fed and markets keeping things busy. market can be focused of course on any statement looking for any clues what a future hike might be. that will be released tomorrow at 2:00 p.m. eastern time. steve liesman will have the results. earnings central super busy. j and j, proctor gamble, 3m those companies reporting this morning and apple coming up, the big one right after the bell today. the company expected to report that iphone sales increased slightly more than 1%. slowest growth ever for the device. analysts expecting 75.5 million phones were sold in the final quarter of 2015. and it's one more time. one more time.

so good check it out. only in new york during blizzard youtuber and local filmmaker and snowboard enthusiast, casey took advantage of the crazy weather to snowboard the streets of new york city and since he made the film and it's gone viral there have been more than 9 million views on youtube. twice in the hour. he really likes -- yeah, really? all right. saw it last night. good for you. all right. >> still to come this morning, alliance chief economic adviser will join us to talk about his new book. central bank instability and avoiding the next collapse. he's our special break. take a look at futures. we're back in a moment.

>> earnings central new this morning quarterly results from dow components, 3m, dupont, johnson and journey and proctor

and gamble and markets counting down to apple. >> could the fed be a game changer. janet yellen convening a policy meeting amid global market turmoil. breaking this hour a new look at expectations courtesy of the cnbc fed survey. plus special guest, mohamed el-erian. >> hot housing market goes cold. we take you inside new york city igloo going for $200 a night until it got iced. final hour of "squawk box" begins right now. ♪ let it go ♪ let it go ♪ can't hold it back any more ♪ let it go ♪ let it go >> announcer: live from the beating heart of business, new york city, this is "squawk box". welcome back to "squawk box". right here on cnbc first in business worldwide we're now less than 90 minutes away from the opening bell on wall street. futures right now a bit of a mixed picture but things are up marginally.

do you opening up 20 points higher. s&p 500 up about three points. oil prices if we take a look at wti crude trading at $30.38. we're also going very excited to talk to mohamed el-erian in just a minute. first before we do that, becky has got the big headlines right now. >> we do have a bit of an earnings parade this morning. let's look at 3m company posted better than expected earnings and revenue. we've been waiting to see its first trades go through. also a mixed quarter for dupont. revenue fell a little bit short. sales were hard hit by a strong u.s. dollar. sales were down by 8% for the quarter. the company announcing that deal last month to merge with dow chemical. says everything for the merge certificate in time at this point. moving along as planned. that stock is up by 12 cents. johnson & johnson procht profi topping expectations.

it did come out and say it sees its 2016 earnings above estimates. the cfo joined us earlier this morning. >> we delivered above earnings expectations for this year and our guidance next year sls above earnings expectations. we saw some slow down in europe but overall our sales growth for next year underline operational sales growth is expected to be about the same as it was in 2015. >> another dow component proctor and gamble seeing its earnings and revenue both beating the street. that stock is up by 1.5% and the company's cfo joining us in the last hour. >> there was a very strong quarter. up 9%. constant currency per share up 21%. triple-digit basis point margin improvement both gross and operating 117% free cash flow. a good quarter. getting a two day policy setting meeting in washington this morning, steve liesman

joins us now with the findings of the ultra, ultraexclusi excl cnbc fed survey. >> our respondents to the cnbc fed survey see this as a case of rate hikes delayed not necessarily cancelled. the important thing is remember going in, wall street see only two hikes this year not four. so that's a big difference. let's take a look. here are the prior results of the last survey we had. we are measuring not when the first hike comes which we did for a very long time. it was april 2016 now we can see that's coming in may. delay that next hike until may by one month. when will the balance sheet be allowed to desflien that was december '16, delayed two months to february '17. terminal rate when will the fed stop hiking in mid-cycle, had been in the first quarter of '18

now second quarter and very low rate. a long time to get to a low rate from what is now about 25 to 50, 2.5 up to the second quarter of 2018. take a look what the conviction is that the fed's next move will. 88% of 40ur respondents think the fed's next move will be a hike. 13 combined see lower fed lowering rates or launching new qe. so they are not deterred by this global economic reading or don't think the fed will be by the global weakness or market volatility. just one other thing, here's the expected path of the fund rate. the way you read this chart back in september of 2014, we thought that december 2016 the fund rate would be 2%. that's come down, down, down. now the belief is only 90 basis points. there's the outlook for rate hikes. cnbc fed survey only two hikes

forecasted for 2016. the fomc is forecasting four hikes. here's some of the commentary. a big time fed critic thinks the fed should not have hiked. the fed is dogmatic. keeping its eye on the bouncing ball of growth and of changing fortunes. but he says we see nothing fundamental in market dips and expect the fed to look through this in march. he thinks marsia possibility. finally rob morgan said the fed will raise hikes four times this year and i believe them. u.s. job growth is accelerating and insflags is coming in to the fed's desired band. there's a wide spectrum of opinion. overall two rate hikes very gentle and later more into this, into the thick of the spring before the federal reserve were to hike rather than earlier. becky >> steve, thank you very much. for more on what to expect and the global market our guest this this morning for the next hour is mohamed el-erian. he is alliance chief economic

adviser and the author avenue book that's out today," the only game in town central banks instability and avoiding the next collapse." we really are coming to the end of an era we think in central bank involvement in policy. why do you lay out where do you think where we are? >> it's more than tend of an era of central bank involvement. it's the end of an era in which we brothered economic growth from the future and borrowed financially from the future and now the decision has to be made. either we validate the financial asset crisis, and grow faster, or alternatively we'll slip into a global recession with financial disorder. the chances are that stark and within the next three years and the timing is really hard but within the next three years we'll dip one way or another. the path we're on for a while is ending. >> at the time we thought it was a good where to be pulling forward some of this economic growth because we needed it so

desperately to prop things up. is this the message there's no free lunch by pulling it forward we just spread out the pain a little bit. i think you think the fed did the right thing at the time. when do you think things have gone wrong or have they? >> three phase. first phase was averting a global collapse. first it was '08 to 2010 for the ecb up to 2012 and do whatever it takes and normalizing financial markets. central banks did well. second phase is when they stepped in to take responsibility for the whole economic policy making. >> policymakers western doing things so central bank said okay we'll keep printing money. >> correct. this was august 2010. but no one imagined that the political system would remain dysfunctional for so long. central banks ended up in a world that they didn't want to be in for much longer and now the third phase is we're dealing with the consequences, the

collateral damage and unintended consequences of being in that regime. >> do you think phase two was a mistake? do you think the fed should have stood back and allowed things to hit the floor? >> it's hard. i don't think it was a mistake as much as it didn't hand off properly. i would have done the same thing then but wouldn't have stayed that long in it. i think they were waiting and waypointing. the irony is the company has healed but not unleashed. >> the fed is actually started on this mission of raising rates. we've seen one quarter point hike. we have been telegraphed we can expect another three or four more this year. is that the right path given what you know about the global economy. >> we won't get four. this notion we'll get four hikes is divorced from reality. i think at most we'll get two. i think the survey that steve just spoke about is right. we're going to be very shallow part -- the major issue is

global. what do you do when central banks are on divergent paths and the only thing that's the shock absorber is the currency market. >> we're watching the u.s. federal reserve raising rates, continuing easing from the bank of japan. >> we see no other adjustment. so there's only -- >> what do you mean? >> when you have divergency in one policy instrument you compensate with others but the others are frozen. it's the markets that are going deal with that. this volatility we better get used to it because that's the story of 2016. >> one thing we kept hearing in davos from bankers at some of the big banks is we have effectively legislated this volatility because we effectively put the banks out of business from being the middle man. do you buy that? >> there's one element much it which is less liquidity in the system. we shrunk the center and grown tend users. so when the paradigm changes the pie is too small.

we have also changed the fundamental regime, we are weakening global economy and seeing policy regime. put them all together there's more volatility. that's absolutely guaranteed. >> when you start weighing both signs of the ledger trying to figure out how to get out of this and how painful it is what do you come up with? >> i have this notion what the british call the t junction. road you're on ends and there are two exits and equally probable. it's about the decisions we make. it's about decisions that are made by policymakers and decisions made by corporations and households. there's nothing pre-destined. we're heading towards this t junction. if we continue on where we are on now we'll end up on the wrong road. >> what are the right decisions >> first and foremost we need four things from our policymakers. we need to exit from a finance

dependent economy where we depend on central banks to engines of growth and that means dealing with an anti-growth tax system. it means infrastructure spending, private public partnerships. secondly we need to match better the wallet to spend. we have a huge gap between ability to spend and willing to spend. third, we need to deal with some pretty tricky issues especially in europe which is too much debt and finally we need a lot better global cooperation. unless we get these four things we'll take the long turn. i'm not giving up that easily. we have made political changes. we have very strong anti-establishment moments that are forcing the established parties to think much harder. >> you like this, this kind of push back that you're seeing in politics right now. >> push back in politics is one of many the evenings coming up. what people don't realize if you run a western economy a market based economy and low growth you

get tension. you get political tension. economic tensions. you getle financi financial ten. you talk to the oil trader and they blame the equity markets. equity markets blame oil markets. these two things demonstrate something bigger. the storm we're on is unstable. >> having one side concerning bernie sanders and the other side considering ted cruz could possibly be a positive that we're considering some anti-establishment notions. it's just so much further away than we've ever been. think about the previous elections. you could barely tell the candidates apart with these policies. these are 180 degrees. >> you know what, also happening in europe. >> right. >> it's happening all over the western world where people are being pushed okay to look. we just, joe, need more of a debate and i welcome that. other wise we'll think we can continue stumbling along relying

on central banks and that's a big mistake. >> that's a good thing. the chamber -- the tank is empty. gas tank is empty from central bankers because we need to figure something out. we're still slow growth. no way out. >> we have few ways, any spare tires and the road is getting bumpy and i'm not sure i want to be in that car. we better do something about it now. >> i like that you tell us all these things to think about but i don't like that every single time we hit a t road and you don't give us anyway which way we should be going. like you highlight the problems but you don't tell me, you know, what the future will bring. >> the question is am i intellectually honest with you. i've spent two years looking that. it's about choices we make. i can tell you that with the few changes -- >> what choices we end up making

and then you'll be able to tell us how it will turn out. >> you wouldn't have predicted that we would be where we are today. you wouldn't have predicted central bank would have done anything they've done. >> you said that yourself. let's be honest. >> i didn't believe in qe infinity and there's a possibility of that. >> what i think is the biggest insight of this book and i spent a lot of time is realizing how we as humans get paralyzed by this unusual uncertainty, by more distribution and this t junction. it's important to understand what happens to us as investors as households and companies when we see this uncertainty because we don't behave well. >> should i buy stocks and sell bonds? >> right now you should have cash as part of the asset allocation which most people say -- >> when you say part of your allocation. >> 20% to 25%. up need the optionality that

cash gives you. no other instrument right now gives you that. to tell you that cash should be part of the asset allocation. >> exit public markets where valuations have been distorted by central banks. cash and more in liquids. now i'm telling you part of the public markets are starting to look attractive but you have to be very careful because there's a lot of volatility and a lot of contagions ahead. have cash and be patient. investors will have massive opportunities, there are now three unhinged segments completely, high yield is unhinged, energy is unendinged and emerging markets are european hinged. you have to be very selective right now and you need cash. that's something that investors don't like having because they have this notion that cash is a wasted asset.

it's not. you need the optionality and you need the resilience. >> mohamed el-erian is our guest host. the book is called "the only game in time central banks instability and avoiding the next collapse." we'll be talking about it more in the next hour. >> i need more. i need some specificity. i think i'm next to talk to you about it. >> the figures are out. thank you. >> threw go. >> coming up it is the big one apple gearing up to report its holiday earnings quarter this afternoon. the stock now down though by 25% since hitting its 52 week high last april. we'll break down what you need to be watching. first, take a look at the major european markets right now. stay tuned you're watching "squawk box" on cnbc first in business worldwide.

partisanship. welcome back to "squawk box". making headlines, lockheed martin posting better than expected earns and revenues. the company plans to announce separate and combine it's government i.t. and tech services unit with leidos. shafrld will receive 55% a stake

in that combined entity. and if you would, if it's not too much trouble, you might watch the shares of lululemon. hedge fund lone pine taking a 5% stake in the company. >> let's check out another stock. swift earnings beating the administrate by six cents. the trucking company's revenue was slightly below forecast but swift was able to benefit from higher rate hikes. that stock is up by 6.8%. >> first merit is being bought by ohio bank. bank shares for 3.4 billion. that deal valued at 020.14 per share. huntington bancshares joined us on "squawk box" earlier this morning. >> for yours it helps our distribution and compliments our business lines. it's a hand in glove fit. they do exactly what we do with consumers with small business,

privately held businesses, auto, wealth, et cetera and it just brings scale to us. >> jpmorgan will may $1.4 billion to resolve most claims involving lehman brothers. lawsuit accused jpmorgan of draining lehman of liquidity in the final days before the firm's september 2008 collapse. cost them more than they would have expected. >> everybody is waiting for apple today set to deliver quarterly results after the bell. the wig question for consumers iphone growth plays into china growth. josh lipton joins us from cupertino with the look at the challenges that the tech giant face. no negative growth yet, right, with this, josh? that could be next year or this year sometime, right? >> that's what we're waiting for. certainly, listen, a very rough ride for apple bulls so far. just take a look at that chart. you're looking at 25% drop from

that 52 week high of 134 back in april. some 200 billion of market cap has evaporated over that time. to put that in perspective that's about the size of walmart's market cap. the worry iphone unit growth for all the talk about apple watch, music, tv, it's the iphone that remains apple's tlagship product. but now you have a number of key apple supply chain partners coming out and reporting seeing current quarter weakness and that's part of the reason apple for of 50 million. that's a 32% drop sequentially. but you still have about 90% of analysts right now rating apple a buy and that's because they see comps getting easier. they will talk what they say is a healthy fundamental business. iphone fans switching to apple

in record numbers. they will mention highly attractive valuation, large cash balance and capital return. the near term risk for apple is iphone growth, is it actually worse than the street expects or do margins take a hit. we'll find out what apple reports after the bell so stay tuned. back to you. >> all right, josh thank you very much. when we come back some household brands coming to the rescue of flint, michigan as it deals with a major water crisis. we have the companies involved next. plus a new york city igloo goes for $200 a night until it gets iced by air b and b. we'll have that story when we come back.

impeachment. gentleman welcome back to

"squawk box," everybody. we've been watching the futures. you can see that the dow futures are up slightly. is that in the air round from what we've been looking at earlier this morning. we've been watching oil every morning and futures following that. when oil prices were lower we were looking at lower futures. now that oil prices are coming back you're looking at a gain four futures. coach posting better than expected earnings. rising for the first time in ten quarters. the company benefiting from its expansion beyond handbags. its boot business did well.

some corporate giants domg the a -- coming to the aid of flint, michigan. they are pledging to deliver track loads of bottled water to the city which is dealing with a health emergency. the collected donation will include up to 6.5 million bottles of water through december for 10,000 school children. that's a little bit of good news this morning. >> ethic this out. a brooklyn man making the most of the blizzard. he built an igloo. put it up foreign on air b and b pitching the backyard snow dome as a boutique winter igloo for two. air b and b shut down the igloo ad six hours after it went live said the dwelling wasn't up to code surprisingly. >> presidential hopefuls hillary clinton and bernie sanders both slamming the johnson controls and taico merger.

she called the plan is outrageous. sanders took to twitter to make his opinion known saying quote the potential johnson merger would be a disaster. he said companies that receive corporate welfare shouldn't be allowed to renounce their u.s. citizenship to avoid paying ta., we spoke to ron johnson this morning. >> if they didn't invert you know what will happen they will be purchased by a foreign company. that's the effect of this thing. they either invert, buy a foreign company and inuniversity or a foreign corporation will buy them because it's math. $150 million is what they will save. if you're responsible corporate merger how can you not take that type of move. in don't blame the corporations i blame our completely uncompetitive and broken tax system. >> he controls the uncompetitive

broken tax system. there you have it. joseph? >> coming up, this morning stocks to watch including hess. first as we head to break take a look at u.s. equity futures which are still positive. when we got here they were negative. so doing pretty well this morning. ♪ i found out everybody

♪ it started with a whisper welcome back to "squawk box," everybody. let's look at some of the stocks. sprint spares are popping after the company report ad smaller than expected loss. also sprint's numbers before earnings before interest, taxes, depreciation and amoretiization

is up. also chip maker rambus earning 18 cents per share, eight cents better than expected and gave an upbeat outlook good for a 9% pop. >> aig announcing new strategic actions to include shareholder value but against a full break up. mary thompson has horse. >> reporter: under pressure from activists investor carl icahn aig is countering his call to break up the firm. now on the investor call which is taking place right now ceo peter hancock saying there are opportunities to exceed that $25 billion target should the firm decide it makes sense opinion rescued by the government during the financial crisis aig is a much smaller firm though it's

core business has struggled to regain traction. carl icahn has maintained the firm would be better off to be split off. get aig out from what he says is costly special oversight of the federal reserve. aig has maintained those costs are incorrectmental and splitting up would not free up capital. hancock also saying on the call those calls to remove the systemic important financial institution designation are a distracti distraction. they plan to cut competences, reorganize nine units and improve it's p and c loss ratio. aig stock up in the pre-market. we'll see fit carries through the rest of the day. back to you. >> okay. thank you, mary for that. we should tell you quick programming note. pet are hancock will join

"squawk on the street" at 10:30 eastern time. >> u.s. futures are now pointing to a higher open after oil recovered even though china was down over 6%. the reversal as you can see in oil gave everything else a boost. joining us is senior u.s. equity investment strategist at bank of america merrill lynch and our guest host is mohamed el-erian from allianz. get to you in a moment. let he had start with dan. it's obviously almost correlated directly with oil on a daily basis. does that relationship ever weaken or, you know, do you invest in less than 50%. >> it's gone up a lot. over the long time it's less correlated. right now that's the worry that's driving earnings down. that's the major head winds to earnings in the last year or two. if oil can stabilize then it becomes less correlated over

time. >> i would think 30, we said this at 40, 50, 30 is probably reasonable to think that you're getting somewhere close to stabilization, as you said. why doesn't the stock market look beyond that? it's over sold. >> i think for the reasons you just said. because people said that it count go lower than 50, couldn't go lower than 40, can't go lower than 30. i think we are getting lose to that bottom point. in the near term over the next couple of months you'll see more down side. >> not only should you eventually ignore the negative aspects of it but should start to see the positive aspects and a tax cut for everybody that's not an oil producer. >> for the economy that's true. but what we've been saying for a long time if you look at the s&p the exposure to oil is positively correlated. you have these big companies that make the benefits to earnings for the s&p is a lot more positive with oil than small portion of companies within the s&p to benefit. >> so mohamed el-erian talks

about cash. everybody assumes maybe a little cash is good. be nice if we had, you know, couple of interest rate cuts to make here too. always nice to have dry powder. but do you think at this point the equity market is over sold and this is a point where you could enter it if it went down further or sell rallies. >> it depends on you. if your time horizon is next six to 12 months or six to 12 years you'll do well in stocks. stocks will go higher. if you're asking me where can it go in the next few months it can go lower before it gets higher. we've seen definitely increased signs of panic and sentiment which is what you're looking for. haven't seen out right capitulation. 80% of the markets are in a bear market. small cap stocks in u.s. have been essentially in a bear market since 2011. you are looking at all these different indices. cash levels are the third

highest levels since 2008. there's a lot of fear out there in the market. we're closer to the end. >> i wonder if capitulation ever -- you got near term bottoms, intermediate term bottoms, longer than intermediate bottoms and then big secular bottoms. capitulation only happens at the multiyear bottom. everybody wants that but it's never that clear or else -- >> you're right. which is why i think if your time horizon means long term and you don't want to play that game and don't want to guess when you see capitulation -- missing fwrent is growth. so i think sentiment is negative, valuations are below historical averages. the key ingredient is to see signs that estimates are not in free fall and growth is not in free fall. one you start to see any signs of that we basically start to price in a global recession. and just like in august when you don't get it you have to price it out and i think the market can react to that pretty violently.

>> then how are people reacting to the fact we are now in a higher volatility regime? are they changing their asset alocations? >> are seeing it reflected. dollars more caution with every asset class. but the problem with when you look at asset allocations it's a zero sum game when you see asset volatility move up in every asset class you don't have a lot of option to minimize your volatility. that's why you see cash increase. the opportunity for investors, if you think about volatility, the short term volatility and long term volatility, i think long term volatility for stocks hasn't gone up that much. again not to -- i want to hammer home that point. if you look at any measure like six month volatility or annual volatility for the stock market it actually hasn't gone up that much. that's the key for investors unless you're focused on where

it goes week to week. >> what i'll say is one of the ceos, banking ceos we talked to last week, they pointed out that while they have seen a lot of selling that's been going on it hasn't been the retail investors doing that. it's more of the big institutional buyers who have been moving in and out of stocks. any thoughts on that? >> that's right. i think you're seeing it across the board. if you look at the various measures of sentiment, you see some polls, individual investors saying that positive sentiment is the lowest levels in over a decade. if you look at south side strategists more strategists saying sell to rally, selling everything. you're seeing these crazy negative headlines. hedge managers are building up cash. they are recommending 53% weighting in stock. that's low. that's being reflected across the board. that's the opportunity if you have the right timelines. >> to go back to what joe said

it's not so long ago we would have welcomed a fall in oil prices. it's great for the economy. now we see it as a burden, not only on specific stocks but on the stock market as a whole. so there's not any differentiation going on. when does that stop? when do people realize producers and consumers and consumers are benefiting enormously? >> yeah. i think there's a couple of things you have to look for. first of all, getting back to the s&p, it's much more exposed long oil if you look at the producers versus the consumers is a big part of the s&p but if you think about the real beneficiaries that will change their spending habits it's the consortium. so you're not going see a benefit s&p earnings as much as it takes away when oil goes down. now i think what you need to see to get people more confident about the benefits of oil is actually see it really show up in any sort of consumer spending numbers because there are

certain pockets of strength within the consumer but by and large if you break up the consumer spending basket it's not that strong. >> shouldn't be just consumers. there should be a point where you realize that around the entire planet if you were to go whatever it is, what ever you buy that for if it gets cut in half or third all the capital you were spending to conduct day-to-day operations that capital can be deployed in something else. it's a tax cut for everyone not just consumers. like finding cold fusion to get $20 oil. >> should be in general but there's a couple of dynamics that's offsetting that. one there's some correlation with growth and oil prices. >> we're deciding spy. it's not growth. it's supply. >> it's a little bit of both. let's just say that. the other problem is because there's not that much confidence in growth, people aren't going to take that savings and deploy

it into r and d. we have over capacity -- it has come down in the u.s. over the last couple of years. when you have a lot of capacity not like how far to build more factories. in fact you're seeing companies lay off workers. because you don't have confidence you won't redeploy that. >> maybe the market is smart enough to see that the instability of the middle east from these rises will be a real problem for all of us in the future. it's going to be -- i hate the worst case scenario. >> give the market a lot of credit. >> i think there's something in there. the minute you take away the safety belt you drive more slowly and we've taken away the safety market of the oil market. we used to believe that producers opec and saudi arabia would reduce production as prices went down. that's gone. so we are taking away a safety belt profit ducer, taken away the safety belt of the central banks and no surprise to me that people are driving more slowly,

right because the safety belt is not there any more. >> the four things global coordination, trying to figure out what that means. >> china, uncharacteristic policy mistakes. >> we have to coordinate with china? >> we have to coordinate globally. >> we're trying to. >> the minute you say interconnectivist. >> thank you. thank you. >> when we come back we have breaking news from twitter and a rough ride for crude but is the barrel half empty or half full. we'll drill down the winners and losers in this game. we're back in a moment. in less than a second. (speaking japanese) i can understand euphemisms, idiosyncrasy and complex metaphors. i know every detail of every public quarterly report

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>> some breaking news from jack dorsey. >> reporter: twitter ceo announcing a big hire appointing lesley berman as chief marketing overseas. he was evp of global marketing and digital partnerships at american express and as been at amex since 2005. she's taking on a big job marketing the service to help tackle its biggest growth challenge sueding users. dorsey saying it would invest in traditional and digital marketing. of course the appointment comes after dorsey announced the

departure of four executives. so a lot of focus how he'll shake up the management team and all eyes will be on earnings which is coming up on february 109. big new hire for twitter. >> we know that she was one of the names that had been floating around. any thoughts on how the media personality might be? >> reporter: they were talking about adding a big media personality named to the board of directors. there's been a lot of talk about how dorsey wanted to change up the board. one name i've heard floated which is interesting, is bob eiger, only because dorsey is on the board of dies i. i think he would be very much in demand for dorsey's board but no sense of whether or not he would take that kind of job or take that role on. i would expect he would be a top of dorsey's list. what's interesting here is that

there are potentially several name that could be anticipated to the board of directors. it's not just one. and this is a company that really needed to add more women to its list of managers. there were not very many senior women at twitter, especially since katie stanton left as of sunday night. her departure was announced sunday night. a good move to add another woman to twitter's management team. >> lesley is fleeing a ship that is sinking. she has been responsible for their marketing -- they give her a lot of credit for what she's done on social media. she put amex on social media. did it ever work? >> reporter: i don't know enough about her track record to give you a full report regard on her but she did win various awards while at amex. they do give her credit for various things. so thieves considered an innovator at amex. whether or not everything she did worked out well she's a big name hire and to bring somebody with her experience in both

traditional and digital market cigarette a good thing for twitter because twitter is making its first inroads into tv advertising and its first tv ads didn't get a great review. the key thing here is someone who has a real facility with madison avenue and can help navigate those waters. >> she's not -- she's marketing twitter. >> reporter: she has to figure out how to buy the kind of ads and put together the kind of ad campaigns that are going market twitter as a mainstream service just as a credit card is accessible to everyone and i think that there are many critiques of twitter's first ad campaign as being a kind of creative product that really fell flat. i don't month if you remember the 30 second spot but it was confusing. no one understood what was going on. too fast paced. people found it bewildering. she has experience with madison avenue she knows how network with createives to put out there a compelling and

easy-to-understand tv spot. >> okay. thank you. >> we'll move on to crude. collapse in crude is viewed as negative. but for some industries it remains a positive. here's a look at companies benefiting the most john blank chief equity strategist. good morning. who is the winner because we haven't figured out exactly where all this money is supposed to have gone. >> let's start off with casey's general store. they're out in the a suburb of des moines, iowa. point of sale where you are at the gas station and sell some goods that the extra ten bucks you save from your gas tank are going into. they are clearly one of the winners. another one is cooper tire. based in ohio, old economy company. seven gallons of gas go into a standard tire. they particularly win quite well. then go the airlines. one i like is lrs, a mexican

company. the peso is up to 19. got that working its way in. and you get a very nice uptick as an airline when every time the oil price keeps going down. they are doing quite well. >> before you move on you like southwest or american. we were just talking in the chairs about an hour and a half ago about the issue ever hedging and the fact that southwest is stuck with a big hedge that they should never have done. >> you have to be very careful when you read these financials. this is not a new news situation and a lot of these hedges are on. so that can be the case. i like volaris over southwest. you have a second peso play that i like a lot better. >> the airlines going to be locking in some of these, hedging at this price or no? >> you know, i'm sure they already hedged off half the risk anticipate leave half on the table. if i were a risk manager that's what i would be doing. i would say right now probably

their hands are tied. i don't know going lower i want to hedge at this point. >> you like murphy usa. >> murphy is an interesting one. they are based in arkansas. they have a deal with walmart. they position their gas stations in the walmart parking lots. murphy express, which is not walmart, but really what you've got is a nigh low-cost producer, they're all in in the walmart stores. that point of sail and proximity is what you like. >> you like jax in the box, mcdonald's, all cheap stuff? >> cheap stuff. i think you get ten bucks off gas tank, where are you going to put it. what's interesting of jack, is 80% of its business is drive-thru. if you use your car a lot, jack is where the pickup will be. final one, because this one is not cheap. vail resorts? explaining that. >> this is a short more than a long. they've been bought, it's a

value rank, and this one is a story that's already in the news and very well known. this is a short, not a long, and that's what you have to be aware of. >> john, thanks for waking up early in l.a., we appreciate it. >> no problem. all right. when we return, jim cramer will join us from the new york stock exchange. we'll get hess take on the four dow components out this morning. also looking ahead to apple tonight. stay tuned. "squawk box" will be right back. sfoo

. jim cramer joins us now. j & j, procter & gamble, 3m, and i don't think any of these missed significanti, so it's all strange that the market is having. >> sprint did better, freeport did better. i thought halliburton did a good job. mcdonald's did a good job. it's been a bear market, there's no doubt about that, but at the same time the companies themselves aren't doing that badly. if the fed were to say we have to wait and see, then i think you would have a big rally. you're afraid to do that given the fact that the companies are taking such aggressive actions to create value. >> what about apple? >> look, i say own apple, don't trade it. i notice at least so many it recommendations, business six months from now you have very easy comparisons. six months from now you don't have this dollar endlessly talked about. actual be a bit better. the earnings themselves are good. i think apple will reveal itself as a cheap -- that is meant dupont, it's meant nothing. everything has meant nothing other than oil. i agree with your guesses when we cutly get to a point where oil won't go down, we'll reveal this market as being pretty good. i know some people are saying

the s&p doesn't benefit, that's wrong. every xeep will they will you they got a benefit, but they think it's temporary. you know theo 8% of the s&p going to 7% has hurt. you can argue at ancillary 3%, 4%, anyone who's changing their tune saying that listen, oil is hurting us. they're not empirical. that's not an empirical analysis. >> cheap abundant energy should be good for the whole world. >> it is. we can make up anything we want to justify the way futures are trading. i won't play that game. i haven't done it that way in 35 years and i'm not going to start now. >> wee see you in about 3 1/2 minutes. later, aig ceo peter hancock is going to join the gang at "squawk on the street" at 10:30

eastern time to talk about his new strategy. 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.

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our very special thanks to mohammed el-erian, who has a new book out.

a final thought? >> i think something really exciting is what's happening at the microlevel and the disruption and the key issue foss investors is combining good content with existing platform. if you get that right, huge, huge windfalls. >> maybe twitter should be listening. >> thanks mohamed. >> thank. "squawk on the street" begins right now. ♪ good morning. welcome to "squawk on the street." i'm david faber with jim jaker. we lived. carl quintanilla has the day off. it's how about asia overnight, you ask in you probably already know it was not a particularly good story. look at shanghai, given up all