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 of those gains, yeah, from 2015,

i think. >> yeah. >> they're gone now. right around that 2% level, and there is a look, of course, at crude oil, which i have a feeling we'll be talking a lot about. also, by the way, a lot on the s&p case-shiller home price report. it's just been released. national index up 5.3%. unchan unchanged in if november from october. 3m, dupont, procter & gamble and johnson & johnson. aig announces a major

restructuring. asple report after the bell will sales seem to be so bad as so many are anticipating. stocks looking to rebound a bit from the oil prices also moving higher, above 30 bucks a barrel, that would help markets at least seem so shrug off the drop you saw in shanghai overnight, jim. china, oil, china, oil, fed, china, oil, fed -- that's the conference. >> if we're going to take a hike, we'll have. >> like take a hike, get them off the table, saying we'll commodities. inflation coming down. maybe it's at a level where they

can just take a pause, then would you have a big rally. no one wants to come out and say bear mark. yesterday was the most discouraging day of 2016. >> why? >> because it did matter, the financials, the soft goods went down. it was so discouraging that i think a lot of people said, you know what? there's no money to be made in 2016. i just don't want to lose a lot of money. what happens today? procter is better, 3m is better, dupont i regard as better. aig, david, sprint the ebitda was -- >> we'll talk about sprint in a report before. with a huntington bank, coach was better than expected. schlumberger was better than expected. none of what i just said matters if oil is bad, china is bad, the

fed doesn't -- >> and we've moved significantly lower once wti gave up the $30 level, but we also got data out of texas yesterday that was not particularly good. you noted i.p., international paper not being particularly good. i know you had the kimberly-clark ceo last night. he missed a number off of argentina. >> let's listen. >> for the year we had, you know, a couple points of organic tom line, a little weaker in the fourth quarter. some different causes in the u.s., distributors took their inventories down a bit, so the sell-through was still at better levels. markets like brazil, which is pretty big for us, it actually decline, and that is having an impact on overall levels of employment. so kind of aics somed bag, but we have a strong franchise kc,

and we expect that proprogress. >> nothing terrible out of him. >> no. no. >> you mentioned the other names that seem to be okay. >> that is with regard to the stock being down hideously. listen, i like at it and see argentina is an issue, i see some of the professional business is an issue, but year of the monkey means a higher growth rate in china. the birthrate -- he mentioned it, not me. birthrate is going up in the country. this has been a stock that's been the bellwether of that group, and frankly it took people's breath away. okay, there's no place to hide. whether it's whole foods, a lot of people feld the supermarket business was doing better. banks, jpmorgan had a great quarter, that thing is being crushed. >> the financials are stunning, goldman is down, 52-week low. they should be -- i know they --

>> bav of america is down 23% for the year. morgan stanley done 21%. to your point they are all getting crushed. a lot of people field the fed raises, that's going to go away. i think of the three, china, fed and oil, the fed is the most important, yes, because a lot of this -- like the caller pillar selldown, it was very well reasoned. >> are we going to hear anything from the fed of importance? >> yes, i think it will be very important. we have done our hike, and we have to be more data dependent is oil is at 35, and bill lard has this thesis -- i mention him

because he is a hawk. remember, he came in and the after effect of drawingi and japan and from china all that goes away, because oil -- not following schlumberger's depiction of an idea we will bottom, talking about a massive comeback. then family -- is china -- >> the journal today wrote a lot about china and peak oil demand, even though it's still expected to go u this year. it's not peak. like in many things china it's a slowing rate. they are different, an all decline would really get the

saudis to wipe out a lot of our -- >> i think more and more we got to take the show to china, we should sit there, put on our oxygen masks, and really get a sense for what's going on there. >> it 100 in china is where you erase the bubble. anything below that begin to be 2001? the united states. 3m exceeded street forecast. dupont and johnson & johnson had a bottom-line beat. the top line, though, perhaps less of a beat. >> $dollar. the company's cfo expressed optimism about the prospects in china. >> china we really see as continuing to offer opportunity.

if you think about our business to a consumption-based economy, that's a good thing. if you decide that, look, we're stuck in this new world and the stock keeps going higher, you have to sell ever one of these stocks. if you think that the dollar is going to go higher, if you think like, say, maybe dupont may not be as much of a factor. why? the growth comes in at plus two for procter & gamble. that's a dramatic delta, so to speak.

aural talking about a 6.8% decline as a result of the dollar. >> well, but fourth quarter adjusted is 5%. currency is minus 6.8, domestic increase of 8%. without any noise plus 10.6, worldwide plus 6.5. these are excellent numbers, but again the dollar is going to keep going higher, you should say it doesn't matter,ut i am saying it does matter. if oil had dropped more yesterday, that stock would be down. it tipped with oil. gasoline gets people out on the road. if you're on the road more, it

helps mcdonald's. >> not to mention you feel bigger about taking a bigger ticket, buying another cheeseburger. i don't know. >> and trying to get the company to say that, but they're not saying it. inga tile even, did i -- >> very good. >> ceo of 3m. organic growth, a little better than we thought. returning all good. it's all good. finally dupont, which, by the way, is in the midst of a significant reduction in operating costs, prior to the deal with dow chemical. a massive deal that sometimes i feel like we don't talk enough abo

about. he'll be ceo of -- i'm forgetting -- one of the companies under -- >> i think the key is it's ahead of expectations, earnings are a little bit ahead of expect aatis this combined company could be tyco 2. you would say wait a second, ag, who wants that? and the answer is that ag will not be a drag forever. i did feel the cost outtake was well ahead this was the best in the last three quarters. >> all right. there you have all those dow components. also coming up, a live interview

with peter hancock, that about his company's necessary strategyics actions. we'll be talking about though after the break. we have a lot more of "squawk on the street" coming right at you. welcome to the world 2116, you can fly across town in minutes or across the globe in under an hour. whole communities are living on mars and solar satellites provide earth with unlimited clean power. in less than a century, boeing took the world from seaplanes to space planes, across the universe and beyond. and if you thought that was amazing, you just wait. ♪ in new york state, we believe tomorrow starts today. all across the state the economy is growing, with creative new business incentives, the lowest taxes in decades, and university partnerships, attracting the talent and companies of tomorrow.

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aig announcing a number of strategyics actions, including plans to sell off the broker dealer network and return $25 billion to shareholders over the next two years, carl icahn has called for a breakup of aig, but the company said it had detract from, not enhance shareholders value. later we'll have an interview with peter hancock right here from the nyse. the capital return over two years, not that different. they return $12 billion in 2015, so it's along the same lines, ipou to 1.9% of upc. it's not a large deal, but they did have a lot of compliance people that came along with it, so it had a lot of costs. and 3.6 billion to reserves in the fourth quarter of 15 as

well. >> now, i thought, remember the buyback, the stock is currently valued at $68 billion, so that's got -- >> percentagewise over two years, it feels like they're doing a good bank/bad bank, where these putting these legacy assets away. is it enough for icahn? i think they're going to make a concerted case that what icahn wants to do is put them in trouble with the regulators. now -- >> they feel like they get a break from the regulators trainingly enough in terms of the diversity of their business so if you were to pratt is, the regulators would be tougher, and you would not get larger returns of capital. >> someone could say, listen, they screwed up on the reserves, property and casual is not doing

that well, but the fact is the buyback could trump that. david, if these banks wering to to be doing the kind of buybacks that they were doing, they wouldn't -- its hideous out there. morgan stanley, did you see where -- do you know that they didn't have that bad of a quarter. >> it wasn't good, but it wasn't overly bad. aig is modularizing its business. they keep using this world. modularizing? >> they're going to make a load of that i businesses into modular. >> so you can split them up. >> they figure together, but you can split them up more easily, i guess is the idea. >> maybe this is a way to say we are responsive, but not irresponsible. i think people will like it at the same time, i always hesitate to say someone will like it. when i god up oil was at 29.58

and i said ticks were down -- >> it's not a one-day response. >> that's why i said to mcdonald's last night, you know, he isn't -- to announce great comparable store sails again today, but oil will take a stock down if oil wants to. >> at some point, as you and i have discussed, things will decouple, the fear people have of the underlying economic stress that's being caused on certain areas of the economy will abate or just get accustomed to it, right? >> and things will start to trade. >> freeport you would feel better about today. sprint -- >> so today is the day you'll feel better about free bert? >> wow, look at that stock. it will be up sharply. >> because they had operating cash flow of $612 million. they were going to cut the budget pretty substantially. that's almost in half. the thing that's important here

is they continue to say they'll accelerate the paydown, but, david, they paid no debt down, but they sold 210 million shares at the market. in other words, like you say, why isn't that stock lifted? because they're out there selling it every day. >> but, listen, better to stay alive. >> this is the day where the dog versus their day. i just want to caution people that the common stock may not be what this is about. real money on the street, putting the stress down index. that means don't look at the common stock, look at the bonds. >> that's why we sometimes call the xomt an option. >> thank glue we have a lot more, including jim's mad dash. here's one more look at future. more "squawk on the street" is coming right at you, straight from the new york stock exchange. trader offices. steve, other than making me move stuff, what are you working on? let me show you. okay.

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life after twitter. plus inside the shake-up, "squawk alley" today on cnbc. it's that time. where are we headed? >> why aren't things that good? one of the reasons, david, a lot of companies have very high priced bargains. underarmour is a good example. suntrust cuts some -- now, in truth, david, what is happened is the stock has gone down a lot. when the commentary comes, deutsche bank has to cut its

pressure, because it's unrealistic. when this company reports, and obviously also people are affected by the chart. will it matter? in other words, will it matter? will people say, you know what? that was weather, because they have a lot of clothes that do better when it's colder, or will it just be ignored? i did a big piece on columbia sportswear, and sorel boots. i would bet betting against kevin plan has been a mistakes. the stock has come down a great deal. if it goes lower, you want to get involved, pending the idea they're not discounting too much what's important is you have natural contraction. >> these high multiple stocks are being crushed and the

commodity-related stocks. twoiers caterpillar was -- you leer forward, it's much more expensive than the stocks in the dow. >> a lot of people it's endlessly about discounting, the shoe business is not that good. the weather hurting the very good apparel. i say again there's a man who is in charge here, kevin plank. there's been ups and downs, but in the end it's been up, but i'm not calling the quarter. the quarter is not going to be that good. we know that. so maybe we say, wait a second, it could be lie 3m. j & j. all these companies did a bit better than expected. we're going to look at those stock prices when the opening build rings about four minutes from snow. stay with us on "squawk on the street."

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he ways the winner at the ace polo theater ham tour night. they're about to run the opening bell. there he goes. and there's the applause for that quick rendition. >> what is the key to this marcus? and again, within the last 24 hours, you had the international baseball number. the price of just regular paper that's not good. that's the bad stuff. when i left here, i like -- and

it was up 80 sense again. anybody who buys the market here has to recognize a fed meeting tomorrow, and, you know, we just can't trust them. unlike the earnings. >> you can see the real-time exchange. it looks like there's a lot more green, that was ringing the opening bell, the representatives of the apology ooh theater. over at that's dpak. netapp is celebrating its 20th listing anniversary. 20 years i remember 1996, fairly well. were you coming on with us? >> yes, i was. >> that's when i was still at good morning america.

during that period when we watched, of course, and remarked every day on analysts doing whatever it took to get banking business. why are we hard on them? >> there's a lot of reasons, but there are some good once. but they are far all few between. >> in the analyst defense, in the old days, there were ways, before regulation.

>> they used to do a lot more work, and of course that continues to be a key conflict. if you are particularly aggressive in terms of criticizing a company, they can shut you out. that makes it different to do your job. it's like, well, wait a second, why didn't you do it then? maybe there's feelings. people are human. i don't know what happened. that's the kind of thing where i say, listen, i know no one wants to come out and say you did a terrible job. there is comity involved where you decide if there -- remember there was also value against the ceo and procter & gamble, i felt

they were too rom buns on the ibm call. the american express call what us surprisingly sanguine, given what was said. >> why is that? it is always interesting to listen to these calls, as you often do. to get the tone from management, from the analysts, sense of frustration on their part sometimes. oftentimes they're just looking for model for their number. then a guy will say what's the puts and takes on india. and it's like -- that's the starbucks situation, and there's howard shultz has his team, and then someone says, now, if we take the number from the japanese refranchising, and we extend that -- and it's like, are you kidding me? the forest through the trees? >> just go off-line and figure out your model. >> the broader market is up

almost half a%. oil has holding late in the trading session, it is back above there. many of the stocks reported this morning, dupont is not necessarily the one to look at. p & g is up this is on company -- people said, where is the oil? but the companies themselves don't talk about how we got the benefit of x. raw costs, look what's in shampoo. what's in shampoo? it's based on oil, and it's in a package of oil. they use oil to get it to you, but they just won't give it to you. they will not say, listen, oil was worth x for us. they will say the currency was worth x. i saw wait a minute, if the dollar against the emerging markets, the dollar stays strong

because the at the raises rates, are you kiting me? i'm nothing going to look at your -- no, i would say, okay. that's the new normal, and they're going to try to knock you out. there's going to be a hot of european companies that do well. so i mean, let's stott asterisking. it's just not working. here's a name you and i have not discussed for some time. coach. i mention it because the stock is up rather sharply at earnings were ahead of estimates. >> this is a new quarter for them. >> i know. they're actually having significant sales increases for a number of quarters in a row after what was a horrific is period. >> you have to understand that manage has come in, not unlike easterbrook, he's been very strong. he's been telling you listen,

there's a big turn going on. in that accessory area it's nothing but disasters. no one wants to own accessories, because they're sold at bush but this is a game changer. boy, today they're not looking at that currency at all. people love it. >> j & j is up 2%. how are you feeling about gorski these days? >> the medical device business was a real problem for me. they took the charge. they did have to fire a the lo of people. i've been waiting for them to rationalize that division. he has always said underperformers are going to have to pay. that's what he did. i think that will help the situation. waiting for him to be as tough as he indicated, and this may be the quarter where he is that tough, because -- if the live in the philadelphia area, the jersey area, you know that was gorski saying, all right, i've had enough, we're going to start

doing better right now. so it was a significant charge that he took, and significant group of firings. tough, tough. as we await apple earnings, the stock is -- down a bit, jim, long takeout today in the journal about china, and iphone demand, what they can expect there or not expect. the key, of course, continues to be a focus on what can we expect when it comes to growth for the company's key product? >> people keep talking about 1% growth in the iphone, and if they do 2% growth, it goes down, i mean, this is that -- last week we had this amazing dichotomy from one firm who said -- and they had pretty much the same number as the good. and the good guy said the bad -- so this is a very psychological tug of war. if you step back it's an inexpensive stock, where they

have new product, but will people look through it? one of the things we found is people won't look through. maybe they should if apple is at 95 or 94. maybe we'll take into account some of the names. finally we mentioned j.p. dupont, which we know, the big news there is the pending deal with dow is down, but again you have a lot of different moving parts. today is a day of forgives in.

again, i urge this better be on inventories of oil, because that will reverse. which is what made yesterday so sickening. all of the airlines got crushed on the lower oil price, the single biggest dermer. how they went full fare -- no, between six and ten times earnings. speaking of the market, the s&p is up about 0.6 of 1%. courtney reagan has more. >> good morning, david, i like what jim says, because things seem difficult when equity accelerated their losses, the energy sector was sharply lower, leading the way all s&p 500

major sectors are higher today. there's a lot for investors to consider, the fed, oil, all taking that i sees, but reporting results at some point today, either this morning or after the bid. you all have gone through a lot of it. crude oil is actually hovering above $30 a barrel. that's a reversal, so maybe more of that forgiveness trade. that perhaps is what's giving us the legs in the market for equity. it seems the stocks have decoupled. take a look at what we saw in the, overnight in asia. the shanghai com pot illustrate down more than 6%. if you look at the action in

europe, things are actually fairly neutral this morning. we'll see what happening into that close. of course we have a couple more after the hours there to go. there is a big deal that happened in the world regional banks. it happened in ohio, first merritt, shares up shatterly. huntington being shares actually lower on the deal, as you might expect. but investors are rewarting companies that have strong financials, and there's a lot of betting on the consumer today. you talked a bit about coach, but it's worth repeating, the company did report an in-line quarter. that's pretty good considering the year or so that coach has been struggling with. north american comps still down 4%. and so you see shares there higher for coach by more than 9%. also, we know that a new hedge fund is taking a new 5% stakes.

and p & g also beating by a nice bit there. david, back to you. >> thank you very much, courtney reagan. rick santelli joins us from the cme group in chicago. take it away, rick. >> thank you, david. you know, let's look at the five years, a very important maturity, especially if you're monitoring the year old curve, also financing, just a real rate. it's kind of right in the middle. it's the fulcrum in many ways. as you look at a one-day rate, it's moving up. there's volatility, close to close to close, less volatility. if you open it up to october 1st of last year, you can see why the 139 to 142 level is so important. we did a lot of work down there last october. now, if we switch gears a bit, let's look at it against the bund in europe. there were many, many many months where 150 was considered home base. it is starting to widen, get closer to 160, 156, 157 now,

what does that mean in english? that means that the bunds aren't keeping up with some of the rate up side of our market. our market has done nothing but fall since the beginning of this year. so that gives you an idea of sort of the growth spread, oversimplification, but still a good way to look at it. shanghai composite. you look at a wild ride, and certainly don't get off at the same place. if you look at it from august, i've been talking about it a lot, a very significant low we had on august 26th, 2927, as we closed below there, it's been a fairly easy trade. maybe it gives you a headache. if you open it up to december of 2014, you can see the last time we were closing around 2750. finally we'll finish up with a december 1st start on the dollar/yen. this is a very significant area we're hovering at, around 118, as you can clearly see on that

chart. many believe the dollar is finished softening up against the yen, which means that maybe the short covering on the carry trade may be finished. if you're afraid of volatility, that may mark the end of this period, at least from a more make roe timing event. david, back to you. >> thank you very much, mr. santelli. we do want to look at sprint in today's report, if we can. of course, the stock is up. yesterday it was down. there were reports of significant layoffs, but frankly those were old news reports, just putting a number of previously announced plans to trim the workforce at a company that is trying very, very hard to keep moving forward while it deals with a $20 billion debt load on its back, if you will, and there are varying degrees of optimism and/or pessimism when it comes to print, gym, of course in terms of what people think. many believe all you're talking about is a long dated option here when you look at the stock

surprise, but the quarter itself was not a bad one 689 the loss was less than expected. most importantly the boost in guidance is something that is being embraced right now, at least by investors. they did it 501,000 most -- that was up substantially. net additions total, you see it right there. they also were ability to cut 500 million in costs in the quarter, bringing that total to $800 million in cost savings so far. turn improved, and in the press release that accompanied the earnings, we got a whole breakdown, of course, of the company's cash position. liquidity was 6 billion, $3 billion undrawn borrowing capacity, and revolving bank facilities, things of that nature. and they tried to be creative as well in terms of leasing deals, and in terms of finance of how they go about financing their business, but when you take it

all away, you look at the five-plus billion that they'll be able to spend on cap ex, will that really be enough? you're talking about verizon and at&t, you're talking about a resurgent t-mobile that we all know about and talk about so often, adding, what, 8 million subs, moving into the urban centers, by the way, as a result of its acquisition of the 700 megahertz band spectrum to allow it to be a bigger player in urban centers. that's what he goes after. he's such a brilliant marketer you see the latest with the at&t drinking game? >> yes, i know. >> he knows his audience. >> he sent me a box of red bull, and, you know, some sort of espresso starbucks and mountain dew and said i have to get more revved up. he's a close observer.

the stock is up nicely. verizon has been a real winner here, david. it's important to point out that -- >> where do they come from is a good question. el we talking about real subscribers per using moving up. with sprint, many believe, listen, you just try to keep it going as long as you can. you have 20 billion in there. he's very much focused on ways they can improve the network, whether it's using government, you know, wifi or -- all sorts of different ways they can conceivably propagate a signal without having to spend as much money to do so, but the prospect of a deal down the road is very unkernel. without a restructuring, so i think we continue to wonder

whether at some point a restructuring is in sprint's future. >> despeed really digging in. >> in part because of this, and alibaba with the significant stake there. >> i think you have to watch the bonds. >> i think that's a better reflection overall. still to cub. dick costello, a lot to talk with him about, including his new venture. we'll be right back. 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. tablets. keep it all digital. we're looking to double our deliveries.

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oil prices are rising. jackie deangelis has more. >> a bit of a turnaround here, the perfect storm if you will to send prices lower 29.25 was the session low, more pressure, china is still a problem, waiting on the fed, a dollar index, and fears about oversupply, how did it turn

around? a bit of a boost here and also some comments coming out of the middle east. opec's -- saying kuwait would be willing to cooperate. this isn't necessarily something new, but it's more rhetoric coming out of opec there may be some action. the market likes that, david. >> all right. jackie i don't trust opec will -- >> why is the gulf of mexico coming on when the cost of production is higher than -- >> they spent a lot of money going in there, thinking that oil prices weren't going to come down. you make a project based on 2014 prices, it made a lot of sense. i'm reluctant to say the companies did the wrong thing, because it takes so long to drill it. those are giant wells. >> they keep going for a long, long time. >> exxon pumps out of those for

like 30 years. up next we're going to have stock trading with jim. "squawk on the street" is coming right back. everywhere, every time. and 2% back at the grocery store. even before she got 3% back on gas, all with no hoops to jump through. katie used her bankamericard cash rewards credit card to stay warm and toasty during the heat of competition. that's the comfort of rewarding connections. apply online or at a bank of america near you. can a business have a mind?

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>> i typically would not focus on this, but retail has been kind of dropping off the screen. bank the america, why does this matter? nike has a total dog, just terrible. we talked about underarmour earlier. if there really is -- you look at macy's kohl's, they haven't come down. coach had a good number, one more thesis, gasoline down, people will buy shoes, apparel. it's going to hold for a bit. if the fed says the right thing. you're going to say why didn't i do some buys. i'm going to ask, are the rails a good buy?

union pacific, talking about widening the panama canal and what that means for getting a lot of cargo -- >> all-important transports. they've been crushing it. jim we'll see you tonight. >> thank you. whether we return, a live interview with peter hancock. keep it right here.

life after twitter. his first interview after "squawk alley" today on cnbc. good morning. new york stock exchange, senior markets commentator, also here with us on set. they do tent to go together. we have the broader market up, though as well, apple computer particularly, apple computer, here i am, i'm an old man. apple is particularly weak this

morning. 98.1 is the conference board consumers's confident level. we're looking for 96 and change. that is the best read since october of last year, so really not that long ago. when you look at last year, you know, just remember we had some juicy numbers. the the best since 2007, and if you look at the revisions last month '96.5 retrograded two tenths, and in terms of richmond fed, finally -- thank you, richmond, out at 2, exactly as expected, following sequentially a read of six, that is unrevised, and two, hey, we had a lot of negative numbers in october and november of last year we continue, of course, to

monitor all the issues related to the run-up to tomorrow's fed, considering how many believe that the fed has to pull back. >> we know you're talking about that. in the meantime we're looking at markets higher for a third day, 3m is a big part of that story. greg parsons from severaler capital management, also the council of urban professionals, and kevin joins us with more. greg, welcome to post 9. >> a pleasure to be here. just generally, this tick for tick, stock market and oil, when does it break? >> look, i think our perspective, volatility is back to stay.

we had years where things were basically on a general course up and to the right. >> you know, whether that kind of bifurcation between the markets and oil happens is unknown, but we believe the volatility is here to stay. >> how much stress are you seeing in the corporate credit mark as a result of what we have seen with oil and some of the other concerns. >> i think relative to the u.s., all the metrics continue to point to sustained growth. numbers continue to support the u.s. economy and companies focused. >> are you buys into that? if so, does that mean the stock market is a buying opportunity on all of this fear that's been with us. >> i think there is some buying opportunities to be had here, for sure. if you look at valuations particularly in the more hard

hit areas, energy all come to mind, what you have is a market that's sold off in anticipation of some difficult things ahead, in many economies around the world. particularly in the bric economies, but given the data we continuing to, we're not looking at a consequence here, and consequently a bit of a bifurcation. china, asia weakened, and i think this is going to be something we'll see continue to play out in weeks ahead. >> kevin, just this morning actually we have a pretty well-received earnings from 3m, some of the other industrials also getting a bit of the bid. they would qualify as one of the harder-hit sectors. you think those can drive some recovery in the states here or just a bit of a head fake? >> i think so. you have to be selective. we're thinking about balance sheet quality and consistency of cash flow here.

one of the things i have to say is we have a barometer that we have constructed, and that barometer turned negative in the latter part of 2014, so we have to be a bit careful about where we place our bets. i think we're at a point where you want to move up the quality spectrum. >> there's a lot of hopes riding on the federal reserve when begins its two-day meeting tomorrow, that they might say something soothing, they may use it as a communications tool, greg. do you buy that? do you think the market is likely to be surprised in a negative way? >> i think they've been quite transparent in what they're looking and and where they're going, our perspective is a gradual rise in rates is to be expected. i think they'll keep a strong eye on the u.s. economic data, but again those numbers continue to support -- >> you think they'll go through it the tightening as planned?

consensus is they won't -- >> i wonder, kevin, what that would do to and on the potential for a surprise in the statement tomorrow? >> yos you get much of a surprise. i think the fed has been trying to hold on that the economy is getting better, the inflation dip has been transjent and i think they'll want to continue to move forward. you're also going to have the ecb and bank the japan looking to do something. so i think that becomes the more important vocal point for

markets. >> are they buys on this dip? are they trained? >> i they are we're focused there is a lot of fear, you know, not a good way to start off the year, but there is the acknowledgement there's value to be found win the markets. >> thanks for joining us, greg parson and kevin cronn. good to see you as well. stocks in asia seeing big losses he said in today voss that he was betting against asian currencies.

that the community party paper responded to soros, saying any challenge would be feudal. also just in the past how, shin wa news agency said he has blinds in. also officials were actually weighing in as well. the chief of the national statistics bureau said that soros is only one voice, only one opinion, and that the bureau believed that the economy here, the yuan, as well as stock markets are all looking good. of course, investors didn't really great today. this is a 14-month low immediately a poll came out that said that about half of the respondents actually believed that the stock market would drop to 2500 or below. why?

people were saying oil, but mainly they're concern about the -- regulators. now, again the news agency was trying to shore up people's confidence after the market closed, they ran another commentary, quoting another american titan, bill gates, saying that bill gates believes, and they quoted him saying that he believed that china's growth is enviable compared to other countries. guys? >> eunice, thank you very much for the update. session highs, with the dow up 215, a 6% plunge in chinese stocks overnight. big changes coming. we'll talk to tom farley about that. >> and later peter hancock live here at post 9, to talk about changes. the restructuring plans and ballots with carl icahn. "squawk on the street" will be right back.

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listed at all times. we're very excited to have them join us. we appreciate all the hard works. >> who are you? what do you do? which means that we distribute quotes electronically for investors to access. we do this in markets all over the world. >> every single day. this is a real special and full circle moment for me. i got my start in this industry as a runner on the floor of the commodities exchange.

and if you work your butt off, anything is possible. >> it came out by michael lewis in 2014, that automated high frequency firms rig the markets. how do you respond to that with a partnership like this? >> in many ways it's back to the future. the first 200 years, the firms here on the floor of the new york stock exchange were very devoted customer service and very devoted to the technology of their day. i'll just mention, our markets in the united states are very complicated, very complex for better or work. >> but the more technology you have, doesn't that make you more vulnerable to glitches like we saw last summer, where the stock

exchange was closed for four hours? >> as i said, these markets el very, very complicated. >> what is your obligation as a market maker, we know this is an advantage to you, probably helps with fees, it's a vote of confident, but what's your object gale here the industry is transforming before our eyes, big data, big technology. and we need forms who are specialists in innovation and technology. it's that section knowledge that will best sir investors. >> what about the s.e.c. that into automated trading. are you expecting more

regulations, potential more fines? >> you catch me a bit off-guard with that topic. >> just liking into this idea of high-frequency trading, whether it gifts investors an edge especially after the release of the michael lewis book. i wonder if you're pants pating we're getting more regulations, more fines as a result? >> i think we have to some extent. if you like at mary jo white, there's been a lot of great activity from the s.e.c. to increase transparency in our markets, some nuanced detail items. so we have a much better all dilled trail. >> so absolutely. i continue to expect that there will be prudent, pragmatic regulations. >> no matter what finance instrument, we stand for full transparency, visitor confidence and lower cost.

those are principles that help build the firm, principles we follow. >> in other words, you reject the critics that say there's predatory -- >> sarah, technology can be scary, change can be scary. i remember growing up my grandmother would not use the microwave oven. she was terrified of it. if we take a step back and say to ourselves, is technology going to improve society in the future? if we see how it's moving forward, i think it is, and we said firms like gts, who are responsible to price security, decreaseling suppress. the question to you, to be, more technology coming to the stock exchange, some may we the long-term viability of the trading floor, but as more firms come in, the fear is that

they're just going to take over. >> sure. the new york stock exchange floor is fabulous. the two large dish occur here, and we're the only exchange in the world that has ha human elements, coupled with the technology plus i think we all enjoy the tradition. it heally is a fantastic place, as i want, something we continue to support and very much in. >> thank you for sharing it with you. we're neighbors here. >> david, back to you where gts is becoming a designated market maker. >> thank you very much, sara. we'll hear from the experts are expecting, and a first on

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i don't think it's any surprise that markets around the world have been collapsing in the aftermath of the fed's raising interest rates, particularly because they continue to idiotically say we're going to raise rates eight times by the end of 2017. the fed has got to dial this rhetoric back or the markets will humiliate them by further declining. >> that is comments got a lot of buzz that was yesterday at the inside the ets conference, so what is ahead? light of this recent sell-off? we have the results of the cnbc survey. what did you find? >> i found they don't necessarily agree with gundlach what we found because of the market with global dmik weakness along with the market volatility, respond that they will delay hikes.

36% say no effect, and only 5% say it will leave the fed to cut rates, in another question that we asked, 80% think the rate hike was the right move. moving on to show you where they and how they have delayed it. in the last survey they thought the nest week in april, now it's may. now it's february 2017. on my other shoulder here the terminal rate. that had been the first quarter of 18 at 2.58%, now it's pushed ahead a quarter to the second quarter of 18 at 2.56%. there is in optimism there. here's the current level of the s&p. i guess that was yesterday. there you can see what's happening to the 2016 photograph. it's 203.5. that's up about 35 points.

also this is compared to our survey mid month, the worst of the pessimism is out there that represents an 8% increase from here and a 14% or 15% increase through 2017. not too bad returns in a world that's thought to be the world of low returns. the ten-year treasury, the outlook has come way down. the photograph was for the end of 2016, the ten-year to be at 3.5%. just, you know, come on this roller coaster of declining yield expectations, now it's just 2.51, 15 basis points higher. how about for 2017? that's come down, too, to be below 3%, almost two years from now. some of the commentary we've gotten reflects the attitude about the stock market. mike englund writing -- the longer-term fed policy outlook shouldn't by changing daily with daily changes in stock prices.

and -- perhaps june for the sect move. mar thal at silvercrest writes in -- the principal headwind has been and will continue to be declining earnings growth expectations. sara we have the entire survey on the web at cnbc.com for all the detail you may want. >> we'll see what the fed said tomorrow. steve liesman, thank you. straight hey the ceo of aig, live here at post 8 to talk about the restructuring. "squawk on the street" will be right back with the dow up 231. ♪ ♪ it was always just a hobby. something you did for fun.

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so what else is new? humm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird.

good morning, everyone. i'm sue herera. here's your cnbc update. the hopefuls made one final pitch in des moines last night. hillary clinton focused sanders defending his call for raising taxes for lower health care. martin o'malley meanwhile, asked his supporters to hold strong. donald trump continuing to dominate the gop presidential field. the latest cnn poll says more than four in den support him. french riot mere and fire fires

intervening after striking taxi driver set them on fire. the nationwide protests upset over uber coincided with a walkout by air traffic controllers that caused flight delays. wet el nino weather prompts a state of emergency, as officials declared a third apartment building uninhabit automatic. such a beautiful part of the world. aig unveiling a broad-ranging plain, sail at the spin -- cut 1.6 billion of expenses, return 25 billion to shareholders over the next two years, and a lot more. here to give us details i have not heard this word associated

with cold america typically. mod ullr. you explain what that means to your investors and our views out there. what are you talking about when you say you're going to mow lardize your by. >> we committed to say -- so breaking down this company that served 90 million customers into bite-sized chunks, announcing nine molar business united statesing. the run on cat and fully loaded expense. we think it would help investors understand the progress we are making to make this a more focused and more profitable company. >> how long will it take? >> we'll be adding to them over time, but disclosing think in term of fully allocated, so

investors will have the information to judge or progress. you say it will give you the -- to dispense of them, if you will, or figure out a way to spin them or sell them, i suppose, but that is not the intent at this point. your intent is to keep this company together. >> i think this idea of poplarity has many functions, it certainly gives you the strategic flexible to sell, should the buyer come in with a pry that is so com pes it overcomes the diverse i have been issues. but even at a continued growing business, just like a company like google, which went modular by crating alphabet, it creates more transparency, which are cash kouz versus which are the

growth areas where you have to take a longer time horizon. >> you added 3.6 billion to reserves. why? >> so we're in the business of ensuring large, complex risks over longtime horizons. the u.s. casualty business is a source of the reserves. they have about $58 billion of reserves in total. we aded about 6% to that number in the frrs. we announced that at the same time as our strategying to give people confidence that we have a capital base and reserves, and tuft give greater stability to future earnings. >> you know, you were asked on the call, though, are you getting more cautious? one does wonder why now as opposed to a different appointed in time? >> we are always reserving the reserve at quasi-.

our clients and regulators that face off of those clients, international regulators want to know we have a prudent capital structure that serving all of our stakeholders while team we are anxious to, with top share returns, so it's balancing the interest, that goes into our thinking here. >> when it comes to regulators, you have made a moe with me conbatting pockets that actually you benefit from the regime being a larger company. he's still say he does not believe that to be the kay. why is it still, in your opinion, the right way to go in terms of not purr sees the dessertification, if you will? >> as an insurance company operating all over the world, we are subject to the regulations of all of the u.s. states,

foreign jurisdictions, the fed is just one of many regulators. as we look at what the benefits and the costs of complying with all these regulators, we judge that our current situation as a sify, is -- and compared to that, the benefits of having a diverse company, both in terms of tax, which is about 1.3 billion the tax benefits being have you our life and superiority casual together, but more broadly the diversification, which is a 25 to 10 billion capital benefit far outstrips any potential hypothetical benefits of splitting the company in the hope that that would lead to decertification as a sify. also joined by an analyst at sanford byrnes ten. give us a sense as to today's

announcement, but i would like you to respond to john sterling and what he said yesterday about the size of the company. >> i think the fundamental problem the company has is i think it's an icahn iism, it's too big to succeed. they have too many different divisions, to which sprawling -- too little focus, and then from a regulatory perspective, it's been at the root of what officially ills wall street, they deliver far lower margins. >> far lower margins, don't meet peer returns, and the problem is you're simply too big to succeed. >> so aivity g is a much smaller company that it was, at the crisis, but our clients depend on our scale to deal with very

important issues, aig paid approximately $2.5 billion to put lower manhattan back on its feet serving clients like new jersey transit, the mta, coned, verizon and countless others, and small and medium companies. the nearest peer was a quarter of that size. so the industrial infrastructure of this country and overseas jurisdictions that we operate in view aig as a cried cal part. if you break up this country, you go at the heart of value added. so before you calibrate us against peers, you have to choose the right peers. i total share of return, which is what our shoulders care about

most has been to do quartile over the last three years and we extend it to say that way. have his comments mad you move forquickly? >> we had late out a timeline. we certainly have been listening to all our shareholders who have expressed a desire for more transparency on how we are doing, and stepped up the level of openness about progress and our cost initiatives, for instance, are on track this first year of the three-year period, 3% down in costs. next year we'll have about a 6% reduction in costs at the upper end of the range of our initial projections, so yes, there's a sense of urgency to deliver or results as quickly as we can. >> as -- this company has kept its eye on the ball twlu a number of years where many people had opinions on how this

company should run better or had their own views on how we should do things. if we listen to our clients and do what they need, we will meet our ambition toss the clients' most valued insurer, and we'll dewith investors and other stakeholders -- >> you returned 12 billion to shareholders last year and planning on another 25 billion over the next two years, as a percentage of a 70 billion market cap, that's an awful lot. why that number? >> so we want to make sure that we use our capital very effectively on solving our clients' most important problems, and that means that, as we shift our balance between a very capital intensive big model to a more balanced model, where it complements or balance sheet strength in a way that

creates sustainable, and as we use third-party capital, and reinsurance, we can run this franchise with less capital by maintaining or financial strength at at level that backs up our long-term -- >> have you heard from either icahn or mr. paulson's team at all this morning? >> no, we have not, do you expect to meet with mr. icahn at some point to discussing what you have done today? >> we will be very busy for the nest few weeks discussing our plans with all our investors, and we're always open to good ideas. >> we appreciate you keeping us updated. >> peter hancock, the ceo of aismt ig sara? thank you. bernie sanders has joined the ranks of blocking president obama's nominee to head the fda. meg tirrell has more. >> more opposition. sanders' opposition to the

nominee to the fda is about drug prices. sanders has long opposed the doctor's nomination, but today joining two other senators trying to play a hold on his nominati nomination, sanders says his ties are just too close, saying his extensive ties give me no regard theron just the ceos, now the fda is not supposed to consider price, but this is still tied to -- he joins other senators who are trying to place the hold on the nomination. >> meg, thank you. still ahead, former twitter ceo dick costolo will join us, plus new details on his new venture. "squawk on the street" will be right back with the dow up 240.

what might lie ahead for apple? more "squawk on the street" is coming up.

welcome back to "squawk on the street." positive territory. health care, however, lacking the most, weighing on the sector so far. several down by about 1% or more in the early trade. year to date, health care is down about 6%, the s&p is off by about 7%, so just about in line, health care still a big topic us because it was such an outperformer. wee see if things turn around. sara? >> dom, thank you very much. rick santelli has "the santelli exchange" day 1. >> day 1, you're right, sara.

today's op-ed in the journal, the chance of a global meltdown written by jerry odriscoll, who happens to be meyer guest today. welcome, jerry. >> glad to be on. thank you. >> great why, you say it may be viewed as monetary, rhymes with 1937 in my mind, but on the other hand you say low rates helped create the bubbles that are bursting now that we need lower rates to create more bubbles to fix the old. can you square those two dynamics, jerry? >> well, the fed is between a rock and a hard place. they put themselves there. on the one hand they're going forced to do the right raise, but if they back off, the markets are just going to -- these bubbles are just going to inflate inmore. >> jerry, you worked for the dallas fed, a great fed, richard fisher with our channel as a

contributor. i guess my question is this. do you think if we're going to have a recession, we're long in the tooth off business cycle, do you think it would have happen where december 16th quarter point or two or three more half or would it have occurred regardless, in your opinion? >> i think we are okay for continued slow growth. notice in my art i diddant predict a recession, but i predicted financial turmoil. they have a very narrow path which they are trying to get down, and i think it's -- i don't know, you know paul volcker had the backing of two presidents, i don't think the fed has the backing of the current president to do tough stuff. the chair, janet yellen is very focused on unemployment. it's going to be very hard to keep employment numbers looking good if they're going to keep raising rates. >> so backing of the president. isn't the fed traditionally

deemed apolitical? >> well, i don't think it's apolitical. it can't go against both congress and the president's desires. don't forget president truman fired a fed chairman. there was no legal right for him to do that, but he did it. >> isn't it better for a president to fire than to have a fed act in a way that they believe is either appreciated or in concert with a leader like a president or like congress? should they operate for what's best in the medium to long term economy? they're like day traders now, aren't they? >> yeah, they have really given up a lot of independence. they should be able to do this, they should be able to do the right thing, but it's going to be tough for them to do it. >> jerry, thank you for your thoughts today, greatly appreciated. sara eisen, back to you.

>> rick santelli, thanks very much. a barrage selfreports. 3m, j & j, procter & gamble, responsible for about a third of the gain, have been the best day since december 4th. we'll talk about it when we come back on "squawk on the street."

>> it has been a big morning from earnings. johnson & johnson just to name a few. the details on all of them. >> 3m's quarterly results exceeded wall street forecast despite a decline in their overall net sales. the company should cut about 1500 jobs in the fourth quarter says it's recent restructuring moves made it more efficient and position it for long-term success. 3-m did reaffirm it's sales cast of 1 to 3% sales growth. shares are up by about nearly 5%. chemical giant dupont posting a

bottom line beat. top line though, revenues came in on the light side of things due in part to the impact of the strong dollar. we heard a lot of companies say that again. the company is confident the cost cutting measures including the elimination of 6,000 jobs. dupont is in the process of merging with dow chemical. a move they expect to complete and finally on the strug side of things johnson & johnson posting mixed results. revenues did fall short hit by currency lows. it plans to restructure it's underperforming medical devices business which includes the reduction of about 3,000 jobs over the next couple of years. the company does see 2016 earnings above wall street forecasts even as it's results continue to be impacted by the strong dollar. shares are up by 3%. so sarah, some big themes. currently i know it's near and dear to your heart, a big one among them. also on the more sad side of things the job reductions happening there but still three

large components. back over to you guys. >> investors are giving them a pass on the dollar. i have another mover on this theme that would be procter & gamble. dow component up 3%. consumer giant behind swifer and tide did manage to beat on the bottom line. sales fell short and the forecast was disappointing. number one the strong dollar shaved 8% off of sales. this is a company that gets 2-thirds of its sales outside of the u.s. it's a headache. it's going to be a 10% hit on earnings for the year. but p and g is also struggling with volumes. this is a measure of how much was sold and they were down in pretty much every category lead by beauty. that's organic volumes and strips out the currency impact. so why is this stock up? some are encouraged that organic sales did actually rise 2%. which strips out the impact of the strong dollar but that was largely driven by pricing. p and g was able to squeeze more

from customers on fewer items sold and guys this is an interesting one because it is the first quarter under the new ceo, david taylor, analysts are questioning whether he's the right fix for p and g. he's been there for decades. the diagnosis is this is a company that needs a cull you are the switch and needs more innovation. they need to move faster. he has been on this show before saying this is a company that may need to actually break up to unlock value. but the company has rejected it and it's been selling off a number of the key brands. this was a strategy put in place by the former ceo except for wall street is not really buying it. if you look at a longer term picture of this stock it has gone nowhere and it's underperformed a lot of the consumer staples. you and jim were talking about kimberly-clark and a lot of people say that including nick wrote this morning p and g is

losing share. >> they were able to put through some price increase then given the volume numbers which was interesting to see, sarah. it's a little early to judge mr. taylor, wouldn't you agree? >> he's a continuation. >> he is but he's only been ceo for a short time. >> correct but he's been in the company for many, many years and a lot of people were looking for fresh blood, at least on the sell side. analysts are skeptical. >> bill ackman was there advocating for change as well. >> but he's the one that got him back. >> he wanted to see this company operate at a higher metabolism. let's say that. margins were too low. all the rest of it. i do think it's the kind of stock perfectly built for this market, right? people have loved these bond like very stable companies to own and it's been bad. >> but they also like the turn around stories on the staples. mcdonald's and walmart getting credit for being a defensive turn around story. >> today's a day when we're saying bad news is priced in. let's give it a shot. >> they should benefit from

lower energy costs overall. >> they did see better margins. >> right. >> this quarter and yes, energy goes into a lot of the production of a lot of their soaps and beauty products. also consumers should be getting a benefit from the lower oil prices. they didn't talk about it because it's being largely offset by the stronger dollar. >> with a 2% yield on the ten year and 3.35% yield on this stock. >> right. >> down side is. >> that's to mike's point. >> not too many stocks can say that right now. >> holding it up. >> let's send it over for a look at what's coming up next on squawk alley. >> look at the markets and all the near sessions highs. also am has earnings after the bell. is that going to have an impact on the overall market? and finally the former twitter ceo is going to join us and talk about his new ventures. we'll see how much we can get

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♪ >> welcome to squawk alley on this tuesday morning. cnbc senior markets commentator. carl is out today but let's jump right in with what's happening in the markets. rally mode right now. dow is up 241 points. for more on what investors should expect today and this week. art, we thought we would say wednesday was the bottom. yesterday gave us a scare. are we out of the woods now? >> there's a good chance you might be. today is one of the most favorable days for the bulls ev