>> thank you. >> thank all of you. >> thank you very much. >> i love it. >> i want to thank the highly educated and we want to shank you. >> thank you. >> "squawk on the street" begins right now. good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla along with david faber and jim cramer. we get earnings from target, lowe's, the ten-year yield has softens after a tough 24 hours. our roadmap begins with crude falling again after the saudi

oil minister made strong comments about production cuts. we're going to look at the ripple effects across the energy market. >> honeywell singing a different tune. the united technology is about the prospects for the merger of the two. >> target and lowe's. both retailers are in the red before the bell. stocks falling all around the globe. the saudis ruling out this production cut and then data from the api showing a bigger than expected build in u.s. crude. of course, we'll get eia cue out with its own inventories in about 90 minutes. it's been a rough couple of days. both the chatter and that, jim. >> it's a hoax, the deal. what they basically said is we're going to produce a lot more if iran and iraq produce a lot more. they're good for about 3.25, 3.5 a day.

not only was there never any deal but they went up to 11. they're doing 10 .5. all these people who came on and said they don't care, are they out of their minds? >> what's it been? a year and a half? let's go over the numbers. >> u.s. crude slips to hit only 8$8.7 million in 2016. that needs what the saudis drop. they want to see a 50% drop because they're seeing a 50% capex like chesapeake. we're going nowhere fast. short covering. we go back to 2016, which, by the way s a crucial number when you go back over the conference call. >> big picture, does opec have any power? >> there's no opec. it's just the saudis.

>> we were this close to being sel self-sufficient, and we still are, can't we? >> unfortunately it's the gunk and you didn't have -- i don't mean to say unfortunately, because those against the big keystone would recognize this. this oil is going to get to their country. there's no place to put it. and the problem with no place to put it, we're only exporting gasoline and that's not enough. we went up because of the deal with the saudis and russians. >> you're calling the oil message a hoax. that leads me to believe you don't have trust in this whole bounce that we've seen in the past week with the stocks. >> i think we got overbought very quickly. i think a lot of companies -- there were big shifts with the cyclicals. we came back from china and china had five out of six.

that bounce has now been unkun and you're look at a freeport and chesapeake. every night, transocean last night had a bit rate. it's very leavered yoil companies and you over what wells fargo said recently. you realize that there's an oil industrial complex that really does include the banks, including the steal companies and freeport and these are right back on the red-hot griddle while the consumer is going to do better. i hope that doesn't mean james bullard who i totally agree with, he's on "squawk" tomorrow. >> you guys are simpatico. >> what does it mean? jp bank talking about earnings and committed lines and lines that have already been drawn down and lines that maybe. i would point out when a bank is

about to go out, it will draw down all available before it files. if you've got any commitment whatsoever to an energy company, even if they're not currently fulfilled, let's call it medium to small energy company, let's assume it would be. >> didn't like that at all. here they're talking about their exposure. 44% billion. i quote mark "papa" who used to come on "squawk box" all the time. he said there would be a lot of bodies, a lot of bankruptcies. a lot of bad loans have not been recognized at a wells fargo. but j.p. morgan has reserved it. >> stays there for months. >> that's nothing. the average exploration company

loses money at $35 a barrel. last i looked, we're not at $35 a barrel. by the way, canadian tar sands making minus one. thank you rbn and rusty brazil. you can argue. they are pumping like furiously. the exposure is huge. now the saudis are sitting there saying when is it going to roll over. not very soon. i've got to tell you, wells, not them. how about bank of america. i'll lied to see that number. we'd like to see that number. we'd like to see that number. >> do you really want to see that number? >> i don't know. brian got a big pay increase. >> it's stuck in your craw a

little bit, didn't it? >> you've mentioned it a couple of times. >> they talked about $21 billion in the exposure but they onto used utilized exposure. >> the point i was just making. >> if you're one of the bodies, mark "pappa pap pap pa was it. >> a year ago they thought that was the point and they all got crushed. >> all i'm saying is there's a $25, $26 level where i think the banks are understood reserve and the banked are saying they're fully reserved. the last time i heard i had houses i wanted to give them. this is not the big short two. jpmorgan is senior. senior to what? >> it's a hole in the ground.

>> maybe you can build some houses. >> to your point we're not talking about skur advertised products on top of skur advertised products, referenced skur advertised products, security advertised products that don't make sense. you've got to go to norway where it was destroyed. >> narvik? >> narvik. >> let me pull back from my -- >> this is simple exposure. >> the fact is it's fabulous. they were hoping to buy all the stock back in the world. i don't know if thiel be able do that. i went back very closely and scrutinized the jpmorgan report and if you go back and look at the presentations, you're not going see this gigantic amount of debt that was now revealed in the fed 9, the fed 10, and

yesterday's presentations. so all i can tell you is there's a reason why these stocks are going down and the reason is there's a lot more bad loans than they realize. they're discuss southeast cured, the head of others, but an e & p company is losing a ton of money. the only places that are really feasible in our country are the scoop in oklahoma and some of the perm i ant. that's it. >> if you say so. on a brighter side. comps up, lowe's meantime posted q4 on rating cents in line. full year guidance were above expectations. target up. >> makes amazon looks bad. this target -- >> target looks better. >> listen. now i am talk on my book.

brian cornell really delivered. 1.5, 2% on the comps. i would not look at the average earnings per share. home was incredibly strong. lowe's -- i like it very much and i have a really nice lowe's, you've got to start reporting the day before home kai podepot. come on, guys. whatever they do -- they report on the 22nd, report on the 21st. report sunday, i don't care. stop reporting after home depot. you're up against some difficult comparisons. did you hear? were you on the comps call. >> no. lowe's put -- h.d. putting up 8.9, lowe's, 5.5.

they're always the bridesmaid. >> let's give tjx some credit. again, see, you always have to -- you like to put it in terms of movies. was it "star wars" where you can't compare it. but i do think it was an academy award runner-up for the best conference call. >> tough market yesterday. stock didn't really do very much. >> the stock didn't do very much. thank you for that. was nthat a surprise? >> i think oil takes the stock down which is completely wrong. they buyering back stock. every aisle was good. it did double digits in the south, which was a great. they kid incredible in roofing. you know what? it was an easy winter.

in tools they were doing double digits. their christmas season was now. the planning season. don't take a cue from the stocks and they're taking the cue from s&p futures which is taking a cue from the oil which is taking a cue from the oil minister, a lot of cues. >> that's one powerful man in al nigh emeigh. >> the futures were down. he basically said, listen, over my dead body. the cost is 20 -- actually the cost is 11. i don't know where he came up with 20. i love the guy, but come on. >> there's a lot in earnings. sales force and transocean. >> i think another ring might have canceled. do you know how many idle rings they have? it's extraordinary. >> all right. you've taken it to a new level this morning. you're like -- >> this is a personal best for you. >> you know why? i had a cup of coffee. this is going to happen. >> i think you dpierng start

levitating. watch it. there would be a screen overhead. >> you're responsible. it ain't going to happen. >> when we come back, we ee get honeywell's response to utx. apple versus fbi. mike pompeo says tim cook should not stand up against the f bii. more "squawk on the street" in a minute. your boss? yourself? your family? our financial advisors are free to realize a plan to fit your family's unique needs. we'll listen. we'll talk. we'll plan. baird.

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welcome back. late yesterday honeywell releasing a press release right before the market closed taking issue with comments made by united technologies ceo gregory hayes about a potential tie-up between the two deals. honeywell for its part saying it believes, in fact, that the combination would not see a material obstacle from anti-trust regulators. in fact, they say it would benefit our customers and enhance the ability to offer a more comprehensive solution for them. there you see a quote for them.

we told you yesterday honeywell was citing in its conversations that had taken place with united technologies previously. of course, those technologies dating back to april and may when honeywell made an approach last september and yet again last week when the two companies had face-to-face meetings and a new proposal was presented. $42 of that in cash. the rest of that in honeywell shares. it's interesting they have chosen not to simply say, see you later. it's unclear whether they would have made the same decision had these talks not been made public. they decided not to follow up with a so-called public baearer. now it's been made public they

seem to be going a few rounds here. they do not seem to folding up a tent and going home. one of the latest examples of what we may expect. they're trying to communicate with their shareholder base saying, hey, we see a lot of merits in this transaction. we believe it's a transaction that can get done and that would add value to all of the shareholders in the combination. they're also telling their own sharmds, we're not going to go crazy in the combination, but they're making it clear, jim, that they're not done and the question then becomes, okay, what is the response of the united technology shareholders and if they do get a response and let this hang out for a while. the question becomes does honeywell come again with a higher offer or something that also includes some protection on the anti-trust fund. i'm not saying that's going to happen but it's clear they have yet to say it's done.

quite the opposite. >> how does it work? you have a ceo -- mr. hayes comes on. it's very bad for the commerce. isn't that exhibit a if you want to the anti-trust department? >> it is very difficult when a ceo is saying things about anti-trust conceivably to take them back. here's what mr. hayes had to say. >> the fact of the matter governorneance has always been big deal. it amt going to happen. >> we've thaerd many times. were, of course, trying many

times to make it clear they were not going to engachlkt many of these take a life on their own. as we talked on and off camera, it's also the eu which could be very important if they were to ever actually get together and try to forge a combination. >> i do think if you own the cob pick and engine and fight language and a lot within the planes, i think anyone at boeing would argue, hey, listen, there's no one to pit against each other. i would argue it's basically a way to say, hey, listen, we're taking some of your margin away. this is a reaction which i thought mr. hayes maybe was -- i wish he had postured less, so to

speak f you're trying to put that together. boeing and airbus have had their way. >> this is clearly going to be a case of a great debate. >> mr. hayes kind of minimized that one. that was to say, we even got landing gear and engines. don't mess with us. and they did. they messed with them big time. they don't make any money on it. it's on the service revenue, so they need everything they can. they would be able to go to airbus. wait a second. which is kind of what you want. i don't know. i mean if you're anti-trust, you're watching this show, you'd say, listen, i'm going bring this guy up there.

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with the guidance of a pnc investments financial advisor, know you can get help staying on track for the future you've always wanted. all right. it times for mad dash. we try harder. >> david, what happened with the world, gm, morgan stanley. >> avis with a projection looking for 330 to 343. they're now guiding down to 270. david, this was the good one. remember hertz was the bad one

and the guys bought zipcar? this took my breath away. i remember when we got the numbers from the millennials not getting their licenses. is there a wholesale shift going on? an anti-car shift? morgan stanley says they could be done in terms of gains. >> you know, i'm -- >> i'm baffled, i'm baffled. >> people are getting in an uber instead of renting. one-day rentals have increased. it's not clear that uber is impacting them. i would say those who own the stock here, jim, point out to me that you have a 17% free cash flow yield. that's strong.

>> i thought the order was good. you're saying, tell me something. what don't we know. the guidelines were so abysmal. that's the one where they're winning and hertz is losing. and then i'm like, are you kidding me? i'd like to know more. it raised eyebrows. it raised eyebrows. >> perhaps we'll learn. >> have i talked with you about the exposure? >> a lot more to talk, oil and gas and some of the other things. the opening bell is coming up next.

you're watching cnbc's "squawk on the street" like from the financial capital of the world. we're watching oils and the bank specifically. some weakness out of europe. this warning out of hmbc that a brexit could crush the pound down? >> that was incredible. i think that story is being overdone. i don't think they're going to do it. i do think hsbc has horrendous

numbers. you can blame it on anything, but those numbers, man, were awful. that yield is very high. these european banks have not delivered. by the way, in terms of foreign stocks, anyone see that? that's company that is a joint venture between brazil's valet and bhp. when you charge the ceo of the division with homicide implications. >> on a day where moodsy's push brad still further into junk territory. there's br still. indoor team cycling events raising money to fight rare cancers. the andersons celebrating its 20th anniversary. i think you had a note, out of gm? >> man. this thing was so negative.

resuming coverage. gross margins expect to fall from 10% to just near break even. i mean they're talking about an extraordinary scenario that would be enough to be able to wipe out their profits? i don't know. i red this and i said, this is so out of synch with what i'm seeing. >> what's it based on. >> it's recession. >> i imagine brazil's got to be a part of it. didn't dan ahman suggest canceling that? >> they had been realized profitability. their estimates are 3% below consensus but the bottom line is you've got to sell. it's going to $26.

it's incredibly knellive. i think he's been saying, look. the negativity is stabs to affect the market. this is a critical piece. i don't know. it was a little devastating frankly. >> yeah. >> i mean, geez. >> midday, viacom saying it's received incoming interest from outside parties in terms of investments. pair mount has been suffering for some time. they kwoited saying some don't consider it a major studio given how few movies it puts out but

viacom stock has moved up. now it's down. they bought paramount for $10 billion, of course, many years ago. i made a comparison perhaps a week or two ago to what it might be worth now but that's not fair because it did include madison square garden back then. it did produce the tv company which went with cbs. so it's not apples to apples versus what they paid now but it isn't anywhere near that. >> people got excited. >> it's amazing the number of would-be sales and yahoo! which, by the way, even more funds wag in on. >> canyon sent a letter, another shareholder. they've been pretty vocal just saying we want to make sure you're moving this process along. we believe you should sell the

core business. so they keep the pressure on. they're pretty busy fielding various letters from their ownership. i don't have an update for you right now. but the outgoing calls are being made. there does seem to be some interest. we'll see whether it comes to a deal. >> wi know the studio has value. lionsgate doing just terrible. >> crushed. >> "kung fu beganpanda 3" is goo

be a big hit. jamie dimon, get back to that level. on the 1'1" jp bottomed at $52.50, which is about two dollars. >> he may have to do some averaging down. it's a big purchase. remember, these ceos can flip. it just so happens, he turns out to be worth a lot more than people in the country. if he goes down there -- >> what does he own, 6.75 million shares? >> ilts's a lot. they say, listen, can we police understand, we it. i'm going to give them that. i'm going to give them that. if it was wiped out they would still be doing pretty well. that's how much the banks have saved.

i'm going to give them that. >> are you more concerned about bank of america? >> yes. i'd like to see bank of america's total exposure, not just the -- you know, the entire possibilities. maybe they say, jim, we don't have any more than that. that's the entire possibilities. i'd like to see the e and p breakdowns. they gave you a talk about what exactly they have but not all the companies were doing apples to apples. wells was using a $42 million number. bank of america was using a $41 million number. you're not using the en-- they gave you the utilized exposure. you have taught me the difference between utilized and total. >> right. it doesn't mean it won't be. they would pull down that line prior to filing. >> again, the mark pappa is

raising money -- mark pappa came in here -- the last time he was on, the oil was flying. he came on with "mad money" and said, listen, i think it's too high. are you kidding me? >> jim, when you come back to the banks and look at the performance already this year, less than two months into the year. morgan stanley down 11%. goldman sachs down. bank of america down. >> look, either the book value is not that firm or maybe because of oil and gas or because they're not going have these rate increase. remember, there were supposed to be four rate increases. that would have moved up the needle for all of these. the one that is most puzzling is morgan stanley. he should come on because i don't think he should be lumped in.

i'm always trying to book temperature gas. it's called hustle. >> yes, it is. and it works for you. >> when you have someone on like mr. harks sometimes it can be rev latorre. >> sometimes it can. >> unless you're in the sports world. someone just comments on the sports world and they're going going to blow this off. it was peyton-like. remember when peyton was pretty convinced? apple has a story. how this may go beyond one phone and whether it's bill gates or ted olson, everybody is weighing in on this, loretta lynch. >> right.

this was not sound narrow. you're going to cecil con valley saying, hey, listen, guys, you can't say it's narrow when it's all these phones you want. you can't. it's going to be a longer fight. maybe they need congress. i don't think you're going to get a real con senn suz. >> no. if it does make its way up the process for quite some time. who knows. >> you know, there's people who say apple did this because they want to sell more phones. tiresome. tiresome. the whole company's been based on privacy. all of a sudden it's a gimmick? samsung says, wow, we'll give up everybody. you know what john ledger is going to say? >> open a commode. take us all.

>> listen. telecommunications providers have cooperated with the government and, we know, cooperated with the nsa. >> that is a very good the point. >> very much so. >> some still argue collection of metadata is not what they're asking for of app. >> if you got my phone, you'd see pictures of dogs. if the government wants my phone, take it. enjoy it. >> but we know that. >> you're an open book. >> enjoy. >> only one dow stock in the green. that's utx. mary is on the floor. hi, mary. >> yesterday the dow and the s&p closing back into correction territory after the decline and the klein as it continues to

pull back. let's take a look at what is happened in europe because we're seeing numbers, concerns about the breks i. there's a downkbrad of the city of minors. concerns of when the g-20 meets at the end. there won't be anyone to support the economy the target for the yuan was lower. yesterday we get the d.o.e. numbers later today. saudi arabia basically down.

we want to point out the company is talking about its deficit. it's had a long and stheet debine what you might see a iit. the vicks also a little higher as you might expect as, again, investors are concerned about the weak energy outlook and, of course, concerns about the global economy. let's take a look at the financials as well because there are a couple of things that placement we did have a number of fed officials commenting and they're downplaying negative interest in the u.s. and certainly not saying or they are. we'll expect it later this year.

maybe not the four hikes. we did get retail numbers. with lowe's being the exception. its results were ooh less. its stock not reporting. carl, back to you. >> mary, see you soon. mary thompson. thank you. let's get to bonds with rick. >> good morning, carl. as we continue to see the big drops in the equity market, its is purchase of treasuries, purchases of boons, the real question is speck laters. sell rallies and equities or is it going to change the

technicals. we're down to a hn ill. is the chai going for ten-year rating dchlt we have a lot of important players and mr. look at a day of boons with ten-year note rates. there's no doubt there's a tefbive trade there. let's look at a two-day of the dollar chen, shall we? open the chard up to. you can see how far back this trade going. whenl you see these risk aftof

and the unravelening on after that which pushes the dow bedow. nobody knows what it's going to do. nobody hows how london and the u.s. in. and the spn is. look at 2000le 8 but more importantly let's open up the char to to year. we're coming for a mump blingerstore. >> still to come, thousand budget committee member chris val hollins wants to tighten some of the restrictions on the corporate tax enversion. we're back in a minute.

google showed off its human-like robot atlas. it's smaller than its predecessor and is not tethered to a power cord. interesting to watch. at the same time getting news that spotify is moving a lot of their technology to google cloud from aws. a nice little win for alba bet. >> and etsy doing better than expected. >> was that robot about to get up? i think he was getting up on his own. that's pretty cool. that's frightening. merger bots.

>> they're not going to happen. a.i. is number three. >> how about rg3? >> playing for another. >> there he goes. oh, man, that's scary. >> why is that scary? >> it scares me. >> you get scared by something real. >> i want them to look like they did in sleeper. >> good call. >> you know the woody allen character. that to me is friendlier. >> miles stan idish. >> you're right. >> you can still rule on mars. >> you can grohl potatoes. >> let's take a break. the market is down 231. don't go away. 4 4 it's time for stock tradin.

>> remember. it has nothing do with oil.

a great sale. congratulations to these guys. build a better mousetrap. my problem with that is if you're using $25 oil, that may be too optimistic. evan's losing money. i suggest they do some more work. do some more work because your work is not as good as it should be. >> look at inflation in the three years. >> gold goes up every day. they've downgraded over and over again. gold is a reaction. it's a very confusion situation right now. i want people to be careful.

it was 26 and why shouldn't they go back to 26. i don't know. there's no room. >> pajama traders. pajama traders. they do not -- they have feet pajama and they sit there and watch twitter. those guys woke up and smelled the coffee like the accountants should do at jpmorgan. >> their computers never sleep. >> don't either. i'm like a merger bot. >> like terminator. >> vista. >> another conference call to listen to and read.

>> what's on tap? >> d.a.t. reporting. louisiana popeyes. my kids make fun of me. they say popeyes, but i'm from louisiana. it's a little ridiculous. the machines, they not only can get up, they can sell stocks when oil's down, especially companies like popeyes louisiana kitchen. >> was that robot about to buy popeyes? >> i'm not sure. i'd like to. >> when we come back, new hoemt sales and mike pompeo on apple versus the fbi. back in a minute. i know you're my financial advisor,

but are you gonna bring up that stock again? well you need to think about selling some of it. my dad gave me those shares, you know. he ran that company. i get it. but you know i think you own too much. gotta manage your risk. and you've gotta switch to decaf. an honest opinion, even if you disagree. with 13,000 financial advisors, it's how edward jones makes sense of investing.

sometimes they just drop in. always obvious. 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. good wednesday morning. welcome back to "squawk on the street." i'm carl quintanilla along with sara hobson, david farber and

michael holmes. let's get to rick santelli. >> yes. wleerking for a number that's down somewhere between 4% and 4.5%, somewhere in the 520 cap. we dropped the handle 449,000, which when you frame it against an unrevised december's 544,000 is a drop of 9.2% and 4.9d 4, is only the weakest since last year. if you want to really understand what's going on, of course, let's aim east and go to diana olick and dig deep sbeer this january report. diana? >> well, rick, as you said, this is a disappointing number. we got 494,000 and that is well

below expectations. this is based on signed contracts. that's folks out shopping during jarch, not the closings we generally see. you know me. i'm always going to be looking a tt home price. mean yad price, newly built, $272,800,000. that's lower than a year ago when it was 2 $2,000. toll brothers were able to raise their prices and now they're looking at the home end buyer. so it's a good time. we'd like to see a little more housing starts. we're running at a 3-point low. we're getting more of a supply which could help easing prices

for buyers out there looking in february. that's a disappointing one at 449,000. carl? >> thank you for that. meantime stocks as we said are falling as fresh declines worry investors along with these concerns about what they're calling a protection it. good morning to both of you. >> good morning. it was short res setting. we didn't take out trough valuations. was that a head fake? >> it's not a head fake per se. i think you can justify the rally. at the end of the day for the markets to make a real low, the fed has to get pressed out of the market and that's not happening any time soon. while they may pause. they haven't done that.

until thanes oil and treasury and dollars will continue to dominate in the markets. >> maury, we've had fisher and others. are they back? >> i think your chances of negative rates are really very low. if the fed feels they have to do, that they have to feel they have to turn to something as negative at short-term rates. >> you know, krishna, i wonder if that's what you said. this really is all about oil. i wonder if we'd see that. is this about the feds speaking

more hawkishly than we would like? >> clearly oil is an issue, but i think these are symptoms rather than the cause. the cause has been the 18-month fed talk of deflation and delever rasing on a global basis and while the u.s. economy continues to do okay, the rest of the world is still growing at a very slow rate and they need to support things on a global bay is. . mar maury, the reason they're tacking about that is they're not sure it's going lead a substantial imprint on the economy. they spoke readily about what they can do. where are you on where the fed thinks it is and the strength of the recovery here? >> i think the fed is going to

pass up the next few opportunities to raise the funds rate. i don't see them starting to raise the funds rate until we get out into the autumn. i think the prerequisite for that is you need to see -- there's two prewrerprerequisite. you also need to get beyond this soft spot and overall gdp and that's going to continue through the first half. so i think the fed's out of the picture in terms of what they actually would do until we get past the soft spot in the economy, which is probably more like the second half of this year. >> krishna, what explains the relative strength in the consumer on a week when we're getting home depot and lowe's, these giants that proadvice it. how is that not a stronger

anti-recessionary argument? >> i don't think we are in a recession. i think while some of the markets may be indicating that, i think economic growth is strong enough. i sthi what the world wants is a good bond. when they can't get that level in a bond market and they're scared of the credit, they go to equities to find solace. i think that's what they're looking at. >> it's astonishing to see. today the ten-year's at 166, maury. what does that tell you about what's happening in the real economy? >> what it tells you is the tenure is very focused on inflation and at a day when oil has come back down, i'm not surprised the ten-year yield is coming down. it's not telling me so mucher the real economy in terms of jobs or the gdp. it's telling me more about

inflation. it's two weeks away. it must be something that prss rates down. do you believe it's actually reasonably strong. not spectacular but strong at the moment? >> i don't think it's strong and solid at the moment. i think we're looking at gdp and i think until we get some stability in oil prices and some stability in the dollar, we're probably going to have very slow motion, slow economic growth. i think we start to pull out of that later but for the time

being i think the numbers are going to continue to look very soft. >> one last question, that marty heldstein piece where he argued the economy, whether it's economy, wages, cpi, confidence, retail, the economy is much stronger than the stockmarket's gifrping you credit for because the stock marked pulled forward in all those gaens. what did you think of that? >> well, look, the economy is doing well on the consumer side and that's what it was like. you're not on the verge of recession. i think the markets are acting like they're getting that. we' we're glad to hear it.

thanks for the insight. >> wanted to mention we have an ipo. it's the biggest ipo of the year, which as i mentioned is not saying much. it is trading, trading higher. a little action. the ceo is mark pappa. again, this is one that skauled a blank check to go bargain hunting in the oil patch. in other words, raising money to do deals in the battered -- >> which is why it's flat. >> on day when oil is falled a second day. >> crude oil seeing a steep slide following another 3%. we'll talk to the canadian minister of natural resources about what he sees when "squawk on the street" comes right back. your investments through good times and bad.

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today marks the first day of the export of liquefied lgs. jackie deangelis joins us. >> absolutely. good morning, simon.

this is a groundbreaking move that chenier is making at this point. groundbreaking really when you think about it. this project was in the works since 2010, so roughly ten years of planning here, lots of capex investment in this as well. cheniere has a roughly two-year lead on its competition in terms of the export so really positioning itself as a market leader here. now, the process taking place behind me on this tanker, it's going to leave later today s the loading and propping process. 's when they turn the natural gas into liquid and they actually put it on the ship. we're talking about gs being sent off to brazil today. meantime experts are his store igs. we have access to it now which has really revolutionized what has happens, giving companies a

place to go with it especially as prices are so low right now. market for this internationally will be south america, europe, also the far east just to name a few. people are worried about this in terms of pricing. will it raise the prices here at home. the companies say studies show we have enough supply that for at least the next 20 years you won't see prices significantly increase from here. we're talking about oil exports out of the u.s. as well. so we're seeing a revolution near. cheniere certainly leading the way foorkd guys. back to you. >> jackie deangelus, very cool to see you live. the saudi's oil minister rattling things, listen to what he says. >> not many.

they're wasting aur time. good to see you. >> thanks. glad to be seen by you. >> the market took this very powerful statement from the saudis as effectively saying, nope, no production cuts. is that how you ski it? >> it's a tough time. there's a flood including in canada where particularly in our producing provinces there have been human consequences to these pric prices, job losses, layoffs. it's a tough time to the industry. we believe there are innovators

that will adapt to the new reality. >> you know what's interesting is the saudi arabia minister al naimi said they're going to have to get out. a lot of folks seem to think he was naming american and canadian companies. do you think he was? >> there have been lots the of cost compression and we're seeing that in the human relations part of their operations. we're seating it in investments and processes. it's the reality of this economic moment interactionally. at the same time there are many leaders in canada's oil and gas sector who are being innovative in the way in which we're extracting and the ways in which we're seeking more reliably efficient and sustainable ways of producing oil and gas.

the government is very aware of human consequences on families in the short term and in the longer term we're seeing that there are innovations and we think that we will be better off in the meanian turn than we ared a the moment. >> can you put a number on it? >> i can't. i can tell you about 63,000 jobs have been lost in alberta. the government has a role to play in terms of insurance and other ways in which we ensure that parts of canada are suffering, other parts come to help, which has really been the history and there will be no difference this time as the oil-producing provinces are going through a difficult period. the rest of the country will respond and be there for them. >> and yet through all of this difficulty and pain it's been amazing to see it actually pick up and continue to grow and flow. how long can that continue with

prices at these levels? >> well, there inevitably will be consolidation as there will be internationally. canada is a terrific place to invest. it's stable. i'm confident they'll be doing it. >> minister, i've been listening about one part of canada helping out the other parts and those parts hurting because of the low price of oil is. that an appeal to reinfigure rate the acceptance of pipelines across canada which clearly have been highly controversy and i'd like to get your take on keystone in 2016 as we head to an election. is that still a live issue for you? >> we expressed at the time our disappointment in the decision. it was an american decision. we have a very important relationship on many, many

fronts including the energy front. as a matter of fact, we signed a letter of understanding in my hometown of winnipeg just a few weeks ago that talks about continental energy on climate change, carbon captured storage. climate change and adaptation, so we're deepening the conversation in north america and i think that's also a very positive note. on poplines we have changed it. meaningful. we're taking the time to make sure that's the case. when it's time to make the decisions, those decisions by the regulator and ultimately the government will carry the confidence of canadians. >> we were talking just now about lng here in this country. five, ten years down the line, do we massive will i need to

increase the number of pipes across, say, north america, canada, and the united states? is that part of where we have to be in your view or not. >> well, i mean that will depend on international circumstance. as you know, very often we have to make 30- 40-year decisions out of political and nique nomic moment in time and that is often the source of controversy. what you do is use science. fact ts and an evidence based system along with community involve-month-old and community engagement to make the best you can of current circumstances so there's a short term strategy of changing these rules in transition and a longer term which is investment which is the cornerstone of it. we now have a main date from the

canadian people and we're beginning to implement the elements of that. >> and finally based on your world view of supply and demand, how and when does the price of oil stop falling? >> you know. you should come to houston and ask that question of 20 people. you'll get a variety of 20 answers. i think the best you can do is take a compendium of advice, do what you think is reasonable under the circumstance. most predictions are that we'll see a gradual rise in 2016 and more stable prices in 2018, but, you know, it's very difficult for governments to be in thes by of making predictions. you have do what you can with the advice available. we veal to make assumptions when it's time to put budgets together. as you know, it's fluid and changes every day. >> thank you for joining us. very good to see you. >> it's my pleasure. >> he's the minister of natural resources from canada.

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welcome back to "squawk on the street." the index is tracking for its worst day sense february 2nd. leading transportation stocks to the downside. shares of avis stock. that stock on pace for its worst day. they had been strong as of late, now showing a second straight day of weakness, carl. back over to you guys. >> thanks, dom, for that. dominic chu. donald trump winning by a land slide. marco rubio coming in second, ted cruz a very close third. chief washington correspondent john harwood has more on that from d.c. good morning, john. >> good morning, carl. it put him on a solid path unless something upsets the

apple cart. 45% of the vote by donald trump. marco rubio in a disstand second. ted cruz close behind as long as that vote is decided. the second place, third place finishers simply don't have a chance. he kmanlsd too broad a coalition within the republican party. let's take a look at the delicate math and see where he stands right now. that is way ahead of cruz and rubio who each have 17. john kasich with 17. b ben carson with four. huge delegate hall there. march 8th, that's where john kasich hopes to break through. and march 15th, that's when the snowball started to roll downhill if the candidate gets hot. the key tests are going to be on

march 1st. ted cruz has got to beat donald trump if there's going to be an argument. on march 18, rubio has got to win in florida, his home stand. john kasich has to win in ohio. both rubio and kasich trail in their home states. carl? >> john, thank you. they've survivor s certainly -- got the momentum. a bill introduced today by congressman chris van hollen. he'll join us live with how it works when we come right back.

welcome back to "squawk on the street." i'm bertha coombs. the expectation is for a build of about 2 million to 3 million barrels compared to 3.5 million barrels. that's compared to the industry yesterday of 7 million barrels. slightly better looking number than the big build we saw yesterday in terms of gasoline. we saw a decline of 2 million barrels and we also saw a decline of distillati ates.

it looks like if my eyes are not deceiving me. cushing had been flachlt people continue to watch the buildup of stockpiles at the nymex delivery hub. that's negative but it's coming well off the lows and we have stayed within this range of about 30 to $34 for about seven weeks or so, notwithstanding some of those big possibles we have seen with the hopes that opec might be moving toward a production cut. now on to sue herera with a news update. >> thank you so much and here's what's happening at this hour. president obama is seeking to nominate a supreme court justice who has an independent mind and understands how the rule of lay affecting the daily reality of people's lives nchl a post on scotusblog.com he urged the senate to consider his nominee. a t family of a woman who claimed she got ovarian cancer

from johnson & johnson got a. they found the wreckage of a small plane carry 2g 3 people on board that crashed in bad weather in the mountains of nepal. the plane appeared to have flown directly into a mountain. and 7'vanderbilt josh henderson who had taken only two three-pointers in his career lofting an 80-foot shot. it went in. it gave them a halftime lead in a game they went on to win, 80-74. pretty amazing stuff. back down to you, david. >> thanks very much, sue. a bill introduced yesterday but unlike to pass in an election year aims to prevent companies from lowering effective tax

rates after they move their headquarters overseas. it's a strategy known as earnings strings. joining me, maryland democratic congressman chris van hollen. nice to have you. >> thank you for having me. >> why a bill now that seems to have so little chance of actually getting anywhere? >> david, earlier you were talking about the elections, and these inversions are exactly the kind of thing that is driving the american public crazy. these are corporations playing with the tax code because by reduce their income tax liability they're requiring their citizens to pay even more when they're benefitting from american infrastructure, the education system, and so it's a -- this is a bill i've

introduced with send 11. we have bills that stop earnings stripping. >> right. where a loan is made to the u.s. subsidiary and therefore they can lower their earnings, their taxable earnings by actually paying interest on that which is tax deductible. i i've been following this for some time and there are many companies that have already inverted and in many industries, those that aren't able to are at a competitive disadvantage to those who can bring back to the u.s. and so i've seen a lot of these companies decide to set out to a foreign company all together. that's not a good ending here either, is it? >> no. ant i don't think you can find many cases like that. these are american companies that want to maintain a majority of the shareholders, but simply

stop paying. >> congressman, i have a list of over 50 company dms 2014. more than that in 2015 that did so. now, some sold out to companies that already were investfvertedd point is the same. >> no, no,ite knows tt same. >> yeah, it is because they're inskrerting companies that aren't, so it is. they're foreign companies. >> so these are -- as you know, these are u.s. companies that are acquiring foreign companies even though they still have a majority of u.s. shareholders. thenned a you said, the right hand is paying the left hand essentially loading it up. >> i understand. you're talking about the inversions taking place now. i'm talking about in answering your assertion that there weren't a lot of foreign companies buying u.s.

expressways. i mean ganl bought actavis. now, actavis was foreign inquired. actavis bought others. it goes on and on. my point is don't you need comprehensive tax reform to actually deal with the problem that's going to end up with many u.s. companies simply selling out to others because they can can access cash. >> i'm looking at reforming the corporate tax system in a way that stops the incensus right now to move american jobs and capital overseas. as you well know, david camm p put forward a tax reform plan and the one who ran fastest and

furthest was speaker boehner. in the meantime it seems to me we should stop the most egregious aversion. we have another bill to deal with inversion bills ought owl. this deals with the most egregious ones. it's undeniably a rip-off of the american taxpayer. we've been talking how they've been in an angry mood. this is exactly the kind of thing they're angry about, corporations able to use these loop hollywoods to rip off american taxpayers and a congress that refuses to close the loopholes. that's the problem. >> but people -- they'll look at you. what really puzzles me is why

you're doing this now. you know, the volume of transactions last year was $5 trillion. aren't you acting after the horse has already bolted? they should have done this three or four years ago. why come out and granstand now? >> we tried to introduce this. welcome to the party. wish you had been on the air calling for continuation to scloes the door. right now we're trying to deal with the most egregious part of it and we would welcome support because it is undeniably a huge rib-off of the american taxpayer. you're there every day. you're not talk about this. >> that's really unfair. really unfair. >> i don't think you watch that often, but i was talking about inversions and pointing them out before anyone knew what it was. >> i understand that part. do you think we should wait

years and years before we close the door on this? >> no, not necessarily. >> right. >> my expectation that they're not going to do everything it's not to united states but the owners is naive. if there's an opportunity for them and their competitors have already taken that opportunity. may find themselves as a disadvantage,'re going to do its. >> i want to emphasize we set the rules in terms of the tax code. the rye alt eality is it would them from ripping them off. i think all of you know that's not going to happen any time

soon. you can argue this provision won't go anywhere and the reality is the reason people are so ticked off around the country is because we can't get a vote on this keep of thing in the cob. so we think it does a service to the public key bait to put foortd a solution that is a real problem. >> understood, congressman. we appreciate you joining us and we'll continue following it here and discuss it in the future. chris van hollen. >> thank you. >> democrat from maryland. >> when we come back, jason calacanis will be weighing in. he'll be joining "squawk" aulie live. we'll be right back here on "squawk on the street."

rises, who do we treat next? more "squawk on the street" coming up.

welcome back to "squawk" on the streets. the stock trades. the financials are slipping. the worst today. the trades, the worst performing among all major success tors. doublets you look at northern bank corp, charles schwab. all down by 4%. these names are sending the spider bank down. tag by more than 2%. it's tracking for the second straight loss over 2%. sara, a lot of foges out there saying financials are an integral part. right now it's not look very good. back over to you, sara. >> the stocks are looking at 1% decline. let's go back to rick santelli.

good morning, rick. >> good morning. i'm like to welcome biederman, biederman, biederman. charles biederman, thanks for taking the time. >> good to be here. >> i have to start out with a friend of yours, martin heldstein. the u.s. economy is in good shape. one of the sentiments is income is rising, production is tag sharply. two sentences later, basically paraphrase f phrasing that the unwindings of mismanaged prici. amen. listen. we have a solid 2% economy. maybe eve detear rating from that. wages, we've had one month of popping. we hope it's more. dwlou square the motion?

there's such a naivety about everything. whether it's the 2% economy in the shoulder bags or dumb legislation reforming dumber legislation is a good idea. >> well, corporate taxes is the most difficult thing. the money they make overseas is taxed overseas. instead of the stupid policy of taxes twice, companies are trying to avoid that and companies are saying it. why are they -- you should tax people taking money out of companies. it hinders economic growth. the real problem we're having is lack of economic growth. not that we need to tax more and it make it d michigan.

we track. every day. growth sthas stopped. if you read press rae reince millennial. if you lead some of the come men tear with sofr. you think that, wow, thilgs are file. we have no economic growth in the united states. industrial activity is slumping around the world. ze zero. they will ease again because the last thing they want is anybody to be hurt about their assets or money in their pockets. so we're going to have a bubble again or another boom when the

fed and everybody else starts helicoptering money around. >> i think you pretty much summed everything up. next time we talk about the etf. thank you. >> simon hobbs. back to you. >> up next. republican congressman mike pompeo weighs in on the encryption debate. why he says tim cook shouldn't stand in the fbi and his invitation for cook to join the committee. "squawk on the street" will be right back.

>> just want to show you the chart of crude oil. wti crude still falling more than 2%. as you can see it it popped after we got that supply data at 10:30 a.m. eastern time which did show a builder build by 3.5 million barrels last week. analysts looking for a number around 2.4 million barrels although they were pretty bearish on this number after the api suggested that we're going to see more crude oil stock

piles and we're watching the price of crude because as goes oil so goes the market. >> now to the high stakes fight between apple and the fbi over creating antiencryption software to access the iphone used by one of the san bernardino shooters. they have until the end of today to respond to the house energy and commerce committee which is asking both to come to testify before it. joining us now kansas republican congressman, a member of that committee and also the house intelligence committee. welcome to the show. good morning. you clearly feel very strongly about this. >> this is an easy case. there's no privacy at stake between this particular phone and apple. the owner of the phone has given consent. and give that information over to the government in order to

make sure that there aren't more folks out of there part of isis trying to kill further folks. >> what's fascinating is you describe it as so easy and that's not now where it would appear public opinion is in this country given the deep skepticism that exists. 46% almost half of the american public believe that apple should not bend to the fbi and if you look at those under 40 that rises to 64%. apple is playing out some deep privacy interest here but none exists. there's complicated issues around encryption and how we handle that but this is not the case. this is a simple one. this is not the fbi acting on its own. this is not the citizen claiming a privacy interest. this is a dead terrorist that happened to be recorded on a phone that he didn't even own and the person that owned that

phone is saying yes, please apple, help take this phone that i purchased from you and help law enforcement do its job in help keeping america safe. >> that's how you phrase it which is why it's easy for you. >> those are the facts simon. >> but other people in a legal sense would see it in a very different environment. that actually what's happening here is that the courts are being asked to tell apple to create a piece of software to unencrypt a device that does not exist at the moment. there's an argument as to whether the courts are exceeding that power. there's another argument as to whether actually code is covered by freedom of speech essentially. that's what they will argue in court. that's very different from where you are. on those issues, what would you say? >> simon, i actually think that's pretty clear too. if it's the case that congress needs to step in and amend the act that they're talking about. it's a piece of legislation, we need to update that to make clear that it is the case when the government goes through

appropriate procedures and follows what the fourth amendment requires and gets a warrant based on probable cause from an article 3 court. if we need to update that language i think congress ought to. it's one of the reasons we asked them to come testify before our committee. we absolutely ought to do that. and if we need to change the law to do that, so be it. >> it's not that simple though congressman because even fellow republicans disagree with you. we had the congressman on the program a few days agatha said he is siding with apple here and this is a real encroachment on american civil liberties. >> i just happen to disagree strongly. there's folks on lots of sides of this issue. i think the facts in this particular case are pretty plain. i think apple has tried to paint this as a branding tool. they said buy my phone and you can conduct illegal activity on this phone. i don't think that's appropriate and i don't think the american people will support that. >> but i guess, how can you know

whether this is a one off case? how can you ensure that when there's already reports this morning that the doj has a number of other requests out for apple to go through iphones unrelated to this case. this could open a whole can of worms. >> i don't think this is a one off case at all. this is an example of the case where the government has done precisely what it needs to do. it didn't act on its own. it went to court just like for a couple of hundred years sheriff offices all across this country go to courts based on probable cause and have judges evaluate whether it's appropriate under the 4th amendment for the government to have access to a house or phone or other technology. there will be other cases like this one where it's completely appropriate or pursuant to a court order to give access to a piece of equipment. >> in the meantime congressman do you know if the fbi director tim cook have agreed to the

invitation. >> no, sir. i don't know the status. what i last heard neither of them have agreed to come but i expect both of them will. it's hopeful. >> it's good to see you, sir. come back and talk to us again. republican from kansas reporting on the intelligence and intelligence committee. >> fbi special agent will weigh in. that's straight ahead on squawk alley. we're back after a quick break.

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