Skip to main content

tv   Squawk on the Street  CNBC  January 4, 2016 9:00am-11:01am EST

9:00 am
polled investors are worried about the u.s. economy. make sure you join us tomorrow. "squawk on the street" begins right now. good monday morning. welcome to 2016 and to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. first trading day of the new year. this one is not coming in quietly. futures down sharply after a selloff in china. shanghai down 7% on a weak pmi. trading was halted, hong kong and japan each down 3% as well. that's led to some weakness in europe. the worst day for the dax since august. crude oil and gold among the few things working today. the new year for the markets beginning with a worldwide selloff. global growth concerns sparked by data showing chinese
9:01 am
manufacturing contracted for the tenth straight month, and contracting at a faster pace. and this ban on insider selling will end in a few days. >> china put in some circuit breakers that remind me of '87 and they didn't know how the circuit breakers would work. they encouraged selling, not discouraged it. the communist party can be late at figuring out what to do. i would not count them out in terms of their ability to manipulate the market back up. one thing is certain of 2015, in the face of bad economic data, the market did not react because the communists propped it. they have abilities to stop selling, including making it criminal prosecution. it could be criminal again to sell. that -- we all know that's true. could be a white collar crime once again to sell. so, the idea that you think china will be down multiple days
9:02 am
f you're selling stocks because of that, the communist party won't let that happen. >> some say the manufacturing data from december was not a big surprise, and perhaps it was the market getting spooked to a certain extent by the circuit breakers, the first time they were put into effect. >> that's point blank right. when -- we have a new program on worldwide exchange, sara, mr. frost. we caught -- there was great moment, had to cut to china you could see it was -- at first it was okay. then they kind of -- it was like everybody realized, wait a second. maybe there is a fire in the theater, but there was no fire in the theater. wow, good time to go down. >> did it undermine confidence as opposed to help it. >> at the same time you have a major breakdown in diplomatic ties between the saudis and iran, some other neighboring countries, downgrading their diplomatic status of iranian officials. people are worried about the prospect of war breaking out
9:03 am
between shiites and sunnis. >> had a proxy war in syria, proxy war in yemen. if you look at military expend didn expenditures of the saudis. this is important, we left 2015 in crazy town. crazy town meant when oil went up, the market went up. when the dollar went down versus the euro, the market went up. we will face a test case this morning. the dollar is going down versus the euro, and oil is going higher. the machines are set off to buy, not sell! will the machines readjust for 2016? >> i don't know. they also have to take into account the fact that other commodities, ones consumed by china are going down. copper, for example, i believe. >> baltic freight down again. >> those manufacturing numbers from december. we have a strange bifurcation that we don't typically see. usually oil is moving down along with everything else or much of
9:04 am
what china consumes a lot of. >> we had the first exports of oil from this country, went to a dutch trading country, no ripple whatsoever in the price of oil. more oil coming in. it has to be a hotter war than what we have now to drive oil up because the glut is so great. we were in a tick for tick market in 2014. oil goes up, we go up. this will test that. we'll test that today. >> people talking about january once again. last couple januarys have not been good. actually this first trading day of last year was very mild, dow down 10 points on the day. doesn't look like it will repeat. >> when the futures opened last night, wow. interesting start to the year. we had a down week. maybe -- buyers come in. when china collapsed, we went back into that august -- last
9:05 am
week of august mode, the last week of august, tremendous decline. sometimes we forget how bad that market was. that is when mr. bullard was so sanguine, reinvented that word, made it more than the s.a.t., part of the s&p. we went down. that was lock step with china. i don't think that will happen again. what we were most worried about is the fed hiking. the fed hiked. other than the fact that we all have to ask everyone including dogs whether the fed will hike this year, we know the fed just hiked. it's unlikely it will hike now. i can turn to you, do you think the fed will hike next month? no we just hiked. changes the discourse. changes the discourse. we can do it. we're pavlovian, but it
9:06 am
certainly has less relevance. >> the december move was warranted, and there could be four or more in '16. how can they see that far? do they see around the corner? what do they have? night vision? night-vision goggles? come on, guys. stop it with that. the four -- four -- because it rhymes? four on the floor? four. what is that? the magic number? the lottery is 300 million. play 444. like moses malone, 444. i'm done with this. >> know we're focused on college basketball, final four. >> we're focused on the playoffs in denver, any way. >> thank you very much. i was finding myself, what do i focus on now that i'm a new york sports fan. do i have to wait for the mets? >> i have to wait until 2018 for anything! >> yes, you do. >> 2018 plan for my teams. >> those sixers are coming around. >> any minute. i wanted to go back to this idea
9:07 am
of the fed and discussion of the fed. i'm dealing with companies, i'm talking about kroger, netflix, talking about amazon. talking about winners. they'll be down today because people, like some guy decided to downgrade netflix because of rising costs. whatever. you can make anything up. today is a down day. i urge people to remember there were four hard down days during the sanguine period. this is probably day one of that. you want to start looking at the companies that were winners last year that are just going to have multiple compression year. you don't say i'll buy caterpillar. >> but, jim s that -- >> let them come down. let them come down. it's cold in this country. retail ended on a warm note. in other words, it was warm. and you will get really bad quarters from retail. i'm looking at a stock like lululemon, two upgrades, a note
9:08 am
from jpmorgan, matthew boss, talking about the standstill ending with advent the first week of february. watch lulu. >> taken to a buy or outperform. >> that stock -- i know it was stock specific for you, david. >> that's okay. >> lulu did not go down after that horrendous quarter. i know it has nothing to do with the saudis, iran, china, maybe that's positive. >> maybe. maybe. >> not the only research we've got today. cmg taken to market perform saying earnings will not only miss this year but next year as well. they name buffalo, wild, jack and yum. >> pop eyes doing a lot of playoff advertising. i read that note. i'm cautious on being too cautious could. it go to 400? i went to two chipotles in the last ten days. i was kind of like the only guy.
9:09 am
>> were you sort of alone in the line? >> yeah. but i got a chipotle family. there's some more people in the chipotles in the south that my daughter went to. in other words, antidotically it's real bad. >> i walked by a couple, didn't look crowded. walked by one, went to panera. jacked. >> been some empty chipotles lately. news out of gm, investing $500 million in lyft, going work with that company to develop self-driving cars. carl icahn may be smiling when he wakes up. >> so often we don't get this level of detail from these companies that are not public. they're telling us this values the company at $5.5 billion. what i found most interesting is that together the companies will work to create what they're
9:10 am
calling an autonomous on-demand network. essentially i think they are putting in place at least the idea for the future of having an on-demand network of cars that drive autonomously. therefore gm would be the provider of many of those cars. i don't know if it's 10 years, 15, quicker, slower, but the day is coming when we have autonomous fleets of cars out there. you have to start to wonder what is it going to look like in that world? >> we talked about fang. facebook, amazon, netflix, google. alphabet is going to be down hideously today. on thursday it will be downgraded because you can't take the pain and then buy. >> they're ahead on autonomous
9:11 am
>> do i want to own the network or the car company? wouldn't i rather be in an uber or lyft in a world where people may be paying me a monthly fee -- >> i just want to own the technology. >> of the autonomous car itself. >> yeah. >> what are annual sales in a car industry where you have fleets of autonomous vehicles roaming the streets at all times? >> that's up to my kids. >> people in urban areas don't need to have a car. >> barclays talking about it being cut in half. >> tesla made its 17,000 quota. >> it did. >> ferrari now free -- >> you don't want to engage in this world. you don't. >> i'm not as fearful. >> it's not fearful. sounds good. >> i think general motors, that's good, threw a half billion at them. i would rather them throw the
9:12 am
half billion at the dividend. i like income, not a self-driving car. maybe one day i'll like a self-driving car what would be the insurance on a self-driving car? higher or lower. >> we will talk to dan ackerson at 11:00 a.m. stay tuned for that. when we come back, an exclusive with san francisco fed president john williams as well. how will global growth worries affect the fed's interest rate strategy. another look at futures. more on the china selloff, too. more "squawk on the street" in just a moment.
9:13 am
♪ aflac. ohh ah ah aflac! aaaaf-lac! ta-daa! he's not a very good magician. he paid my claim in just one day. one day?! shh! how does he do it? in just one day, we process, approve and pay. one day pay, only from aflac.
9:14 am
9:15 am
going to open with a selloff here. dow futures down about 322 points after disappointing overnight in china. apple falling in the premarket snapping a six-year winning streak on thursday. the dow component posted a decline of 4.6% last year, down about 22% from the all-time intraday high of 134 back in april. it's been a while since it had a year like the one it just posted. this is the year where the
9:16 am
company has to prove it's more than just cell phones. skyworks clinked with cell phones. anything with cell phones people have decided it will have a downturn. i think apple needs to come up with the second revenue stream whether it buys it, produces it, comes up -- nike with a wearable that can take off. buys pandora. i saw rob peck downgraded pandora. i mentioned last week why would apple buy a failing service? apple needs to develop another revenue stream. those who sell it are saying they can't. i think it can. >> those who sell it also seem to be focused on all the different data points that are offered out there from various services about foxconn gave its employees longer vacation time or time off in january that wouldn't typically be the case.
9:17 am
we keep getting these reports but they do seem to have an impact. foxconn the assembler of the i phone. >> do you own the stock because it's inexpensive and you believe the company will come up with a better revenue stream? it doesn't have that now. people say i don't want to own a stock where it may have down earnings. >> how are you supposed to replace revenue stream with the iphone and anything comparable? it's a virtual impossibility. >> is it. >> the iphone is the most -- >> the things they have shown promise in, like cars, do that globally, what they've done with the phone, would be very difficult. >> what is mobile besides mobile? cars. so i have proposed -- i proposed so tim cook they should buy netflix when netflix was a quarter of where it is. it was a good call. >> good call. >> now, tim, you can buy harmon.
9:18 am
why harmon? if you go to a harmon plant, you will see it's deeply embedded within the bmw, mercedes, lexus families. you can't get in. you can't with apple car just get in. you have to be there in time to insert your $1,000 brain into a car. they need to own mobile car internet of things go with mobile phone. that would be a revenue stream. just buy harmon. harmon was going go private at one point. >> kkr, kkr ended up buying a piece of it. >> if tim cook listens to me -- could be. my wife listens to me. does she? >> check that. maybe there's a shortage of people who listen to me. everest and bug listen to me. >> the pets. >> i would tell that you harmon
9:19 am
is the key. >> harmon. >> you need to have mobile car to keep mobile cell phone. it's the only other air of great growth that apple can get into besides having a product with nike that's $300, wearable products. tim, you're off to the races. happy new year. we'll get cramer's first mad d dash of the new year. look at the premarket as we get this thing started in about 11 minutes. those new glasses?
9:20 am
9:21 am
they are. do i look smarter? yeah, a little. you're making money now, are you investing? well, i've been doing some research. let me introduce you to our broker. how much does he charge? i don't know. okay. uh, do you get your fees back if you're not happy? (dad laughs) wow, you're laughing. that's not the way the world works. well, the world's changing. are you asking enough questions about the way your wealth is managed? wealth management, at charles schwab. about 8 1/2 minutes until trading begins in 2016.
9:22 am
a global market selloff to start the start of trading for the year. we'll see where we get after we begin trading. right now we can get to our mad dash, first one of the year as well. >> some years begin the way they ended. fidelity decides to leave american express. they have an infinity deal. and embraces visa. remember how we thought costco and american express wouldn't be that impactful. turned out when those split up, it was very bad for american express. all i can tell you, david, this was one of the worst performers in the dow last year. the question is when will they make changes to stem this decline? >> changes as in what, management? >> yes, management. this is it. i think ken has done a great job over the long-term, but this is a stock that is -- you can leave
9:23 am
home without. >> okay. >> where is karl malden when you need him. >> he lived a healthy, long life. >> let's move on to netflix. >> we happen to have a baird analyst later on today. a man who has the guts to downgrade jessica conjones, downgrade "narcos," downgrade net flick. international expansion worries, pricing issues on content and potential rising churn. david -- my god, look at that that's a head and shoulders! holy cow. >> reasonable downgrade. price target is where the stock is. >> totally reasonable. >> it's more about price, saying maybe it's priced in the expectations in terms of international. >> this is the kind of stock where i say don't make the first move today if you want to own netflix.
9:24 am
it's up a great deal like facebook, amazon. there's no need to be a hero on day one. the only stock i will tell you if it opens dow that i want to buy is lulu because of the two upgrades and the note from jpmorgan. netflix is like, okay, i'll make a rnd caeasoned call. i liked it all the way. a little dicey. that's why i'm so glad we're having him on today. >> yes. >> he is coming on. or on as you like to say. >> they made fun of my philadelphia accent all week. >> really? i don't hear it that often. >> al, towel. >> first trading session of a new year. stay with us on "squawk on the street." i asked my dentist if an electric toothbrush
9:25 am
9:26 am
was going to clean better than a manual? he said sure. but don't get just any one. get one inspired by dentists. with a round brush head. go pro with oral-b. oral-b's rounded brush head cups your teeth to break up plaque and rotates to sweep it away. and oral-b delivers a clinically proven superior clean versus sonicare diamondclean. my mouth feels super clean. oral-b know you're getting a superior clean. i'm never going back to a manual brush.
9:27 am
you're watching "squawk on the street," live from the financial capital of the world. the opening bell in 2 1/2 minutes as we kick off 2016. s&p closing with a slight decline from last year.
9:28 am
worst year since '08. this morning we begin with a big selloff in china, bad macro data there, bleeding to europe and the u.s. sounds like you don't think it will be over for a while. >> i think we are used to china being this gigantic boogieman that we can't put it in a box. what happens is that near the end of the day sellers come in because they're so afraid of what will happen at night. that was the pattern during the summer. the market tends to repeat its own ugly patterns. things are different now. then it was will the fed raise going into a china decline. the china economy is doing badly, let's sell stocks. i'm saying wait a few days. then take a look. don't be a hero. looking at celgene down, that will have an extraordinary year, i think, in 2016. do i buy it down two? no, some clown will sell it down five. i say clown because if you look
9:29 am
at celgene and where it's set up versus china, versus europe, versus the dollar, they don't relate. they happen to be part of a basket called the s&p. that is set up to have a big year. i'm looking at that as a stock, that's an opportunity. so you should look at your opportunities, map them out as the panic spreads, take advantage of them. take advantage of panic, but not when it's happening, but more when it's kind of like near the end of the panic. the first move, you'll get annihilated. >> did they tell you when the end of the panic is? >> thursday. a week from thursday. >> three days down, by day two, celgene bottoms, day three, celgene is up. i studied this i'm so old. i said this is my 680th down whatever. it will be a busy week for
9:30 am
data. we'll get ism, construction spending, some fed minutes, the jobs numbers coming on friday. there's the opening bell. and a look at the s&p at the bottom of the screen. at the big board, the nyse regulation team kicking off the first trading session of the year. at the nasdaq, microsoft band and microsoft health celebrating fit week. >> microsoft. >> yes. >> that's an interesting stock. microsoft was the first large cap stock to bottom off the august decline from china. that's when it all began. if you look at the microsoft rally it began in the midst of the china decline. probably one of the best performing big cap stocks from that moment. >> it was. it had a good 2015. >> yes, i did. it had double digit increases. i think it can repeat.
9:31 am
>> many of the names in energy did not. we looked at them in terms of the biggest loser list, jim. >> yes. >> we see wti up this morning on these increased tensions between iran and saudi arabia. at the same time, i have to revisit, we are in '16, when will we see the restructurings that we talked so often about as a possibility for these companies. >> i got a quib from rbm, has a new book coming out about oil, this is a longer situation, this is a year, as he calls it, of capital. whoever has capital will make out this year. the flip side is if you don't, you're done. i think that's what we'll see. it's interesting. you see a downgrade today. i talked with my friend carl english at thestreet.com. we put this under the category of thanks for nothing.
9:32 am
we got a downgrade of chesape e chesapeake. raymond james goes sell to hold. tfn. thanks for nothing. >> exactly. >> tfn category for 2016. >> you mentioned some of the top gainers. mcdonald's and wendy's gets an upgrade from nomura, neutral to buy. >> mcdonald's, i treated myself on christmas day to a mcdonald's on the freeway, i had a fantastic egg mcmuffin. i tweeted it was a great tasting thing. mr. easterbrook thanked me within -- the guy is focused. focused. >> focused. >> great, by the way. in and out, fast. mcdonald's is a great place to look at today particularly with the euro not falling apart.
9:33 am
look at mcdonald's as another one. take position in that. >> tesla reported the preliminary q4 deliveries. 1 17,400, consensus was right around there. maybe a bit light. >> yeah, tesla is a cult stock. cult stock last year, this year. there's people who love it. they'll love it no matter what. when the market is down 300, you don't reach for tesla. there's other things to reach for, i think. >> such as? >> we just mentioned mcdonald's. you get that down 2%, 3%, home depot down 3%, 4%, kroger down 3%, 4%, those are wins. >> yep. yep. one that isn't is a win is wynn. macau revenues down. they cracked down on corruption in china. we talked about it a lot.
9:34 am
that stock peaked a lock timeng ago and did not have a good 2015, but adding another 5% in terms of losses on the numbers, many would say we anticipated -- we knew things were not going well there given the crackdown. >> you see the vegas numbers for december? extraordinarily strong. >> yeah. vegas is hot. >> yeah. if you want to straddle that, you do mgm, forward management. you talked about what they're doing. buy mgm, not wynn. i think mgm is a winner. i don't want to do a pair trade. i never want to bet against steve wynn, but i like mgm. there's one go to in this bad market. >> las vegas sands down, but not nearly as much as wynn. >> disney, "star wars: the force awakens" the number one movie for the third straight weekend. $88 million.
9:35 am
it will surpass "avatar" as the all time winner. pacific crest has a note out about some media companies arguing for peak nfl, meaning the ratings have been so stellar it's hard to imagine they get stronger from here. >> that prevsumes will not have more than just the giants placing with the queen in england. because i think the nfl's plan -- the reason why i disagree with this, the nfl has international rights. they're out there what would alphabet pay for those rights? what would they pay for the rights to have games in china? to watch it in china, which is what happens. you have great prime time stuff in china when you do lots of europe. betting against the nfl is like betting against fine art. they don't produce more of it. nfl club is like a piece of fine art. they don't make it anymore because the artist died.
9:36 am
they're not -- you seen a lot of jackson pollack? new ones? >> not new ones. >> rembrandt. history. still trading. look at the nfl as an international property. you want to call that the decline, before they have even gotten off the ground in europe. no. not going to happen. >> underappreciated expansion story. >> yes. everybody is locked up for years, all they were worried about is then google buying things. all the contracts are long-term. les moonves, how many times has he told us bet against the nfl, see what you do. the whole thursday slate does well. >> at the same time disney, which was $114 a share in december has declined primarily as a result of how much it's paid for those sports rights to block out nbc and/or fox as they try to get more aggressive and
9:37 am
the concern about cord cutting, cord shaving, how much revenue will come in as a result given how much you paid up. yeah, the nfl may be a great property does it mean it will keep getting bit up? particularly in a world where do you have enough people to pay for it? >> i think it will continue to get bit up. it's a game that survives. last year there were things that happened outside the lines that were such a disgrace, you would have thought one of these major advertisers blinked. no, they paid more. >> you didn't see the "concussion" movie yet. >> no. have you? >> not yet. >> all i can say is the nfl -- betting against the nfl will be a sucker's game because of the international rights. you may say espn paid too much for basketball, but the biggest problem with espn is i watch it on my cell phone. >> speaking of international
9:38 am
expansion, reports that netflix is set to introduce india at ces. another report says russia is on the docket, and baird takes it to a neutral today. >> crouching tiger hidden dragon 2 coming out in china. they're not in italy yet. they have a lot cooking. profit taking is in order for a stock like that. makes sense. makes sense. up a lot. market is ugly. you buy netflix, you're a hero. i don't want to be a hero. to me a non-heroic stance is to that is down big. we can say rates -- i haven't asked you guys in this segment, when do you think the fed will move? i had to put that out there.
9:39 am
pavlov told me. >> will come up today on cnbc, i promise you. it will be discussed. >> won't be on "mad money" tonight at 6:00 and whatever. we're making it a fed-free zone for a couple weeks. >> i like it. >> that will get a rating. >> put it out components are in the red. bob pisani is back on the floor. >> look at sectors, there's a bit of differentiation going on. tech is a notable weakness, particularly the more popular names. consumer discretionary down, industrials down, financials down. you can see there's an awful lot of the big sectors down 2%. the stand out is energy as oil moved up on concerns in the middle east. just to give you a sense of how confused things are, interest
9:40 am
rates sensitive groups are down. emerging markets are down. normally emerging markets would benefit when rates go down, but they're down here as well. regional banks would generally benefit when rates are going up. but they're not. they're going down here. nobody is discriminating against anything, interest rate sensitive or not. it doesn't matter. much of the concern is on china. it's important to note that this was the first day of the china circuit breaker, the system wide circuit breaker. the csi 300, a big index in china is the main benchmark there. when the market drops, the csi drops 5% or more, there's a
9:41 am
15-minute halt if it drops 7%, you are halted for the day. as for the decline, nobody thinks the psi numbers were the main cause. most people think it was the proposed lifting of the insider selling allowed on previously halted stocks. they'll do that on friday. that's the proposal. others feel it was circuit breakers and themselves the problem. halting at 5% and 7% is a narrow band for a market as volatile as china. most people feel they will make changes in that, they have not announced anything. shanghai down, and the shenzhen down. the shenzhen affected by this trading change on friday. just for the purposes in the u.s., the u.s. revised its circuit breakers back in 2012. we have halts at 7% and 13% in
9:42 am
the s&p 500, those are 15-minute halts, like china. we do not halt trading for the day unless it's down 20%. that's a huge difference. china has 7% halt for the day, we have 20%. talking to traders on the floor and around the u.s. today, people feel they'll go closer to what our market-wide circuit breakers look like rather than the one they have now. here in the united states and over in europe, europe down about 2%. not surprising, the automotive stocks are weaker. adele delphi, 2%. volkswagen, 2.67%. some of the dow laggards in technology. apple gets 15% of its revenues from china cisco down. goldman and jpmorgan, all the big banks down 2% 3% across the board. as for the most popular stocks,
9:43 am
last year the so-called f.a.n.g. stocks also to the down side. all down 3% 4% 5%, net flick down the worst because of the devaluation by baird. a lot of peop a lot of big sources of funding. one thing you want to watch today is the china etfs. there's two to keep an eye on. one is fxi, this is the biggest of all the china etfs. it's hong kong stock. stocks traded in hong kong. asher are stocks traded on the mainland. the mainland stocks are down much more than the hong kong stocks. you want to watch this to see if it drops below the 7% level.
9:44 am
if that happens, there may be additional damage overnight. we'll be having brendan ahern on power lunch later on today. the dow down 382 points. carl, back to you. >> bob, thank you very much. bob pisani. let's get to rick santelli at the cme in chicago. happy new year, rick. >> happy new year, carl. good morning to all listeners and viewers. looking at lower yields, down about 5 basis points on a five-year. look at the six-month chart, important to pay attention to all the tops you see in the 170s and 180s area. that's the options pit and treasuries. having an interesting high volume first hour of trade. looking at a three-month chart of ten years, you can see the low to mid 230s was a breaker bar for the market towards the end of last year.
9:45 am
no different this year. actually now under the pivot, so say traders, right at 2.25. it's all about china this morning and deservedly so. the globe, so much economic horsepower, each contributes, each developed, and the emerging market and frontier economy all tossed in. every country tossing less in reflects the picture. that, in many ways, is what is going on with china and the markets. look at their currency, dollar/yuan intraday. the last time the dollar was at these strong levels was in april of 2011. it has been a big move many sessions in a row in december. if we look at the dollar index specifically on a three month chart, look at the pattern. the dollar index is the inversion, the mirror image of the dollar versus the euro. the three-month of the dax is correlated. having a nasty day like all equities. when it gets dicey in the
9:46 am
economy and equities, we find buyers in the fixed income market. especially skovereigns. carl, back to you. stay tuned with an exclusive interview with john williams. and gm making a half billion dollar investment in lyft and planning to develop a self-driving car system with the car company. we will talk with dan ammond coming up.
9:47 am
9:48 am
9:49 am
look at the dow 30, jim made the point early on we're seeing a strange new relationship between equities and crude. oil is up about a buck. jackie is at the nymex today. >> good morning to you. we had come off the session highs after we bounced a bit on the geopolitical tensions between saudi arabia and iran. wti over $38 a barrel. brent is seeing more of a gain here since we are talking about international affairs that impact that price. in the past, traders tell me headlines like this could have driven the market up more. some of the conversation on the
9:50 am
floor right now is whether we're seeing a seat change in how much geopolitical tension does impact oil prices. it's not surprising to see a pop, but at the same time the pop seems muted. bottom line is that it's a new year, and traders are trying to see what the notes are that will set the tone for oil prices. most people i'm speaking to say because of the supply situation right now, because the world is awash in oil, they still probably are not going to remain short. carl? >> jackie, thank you very much. as jackie has been speaking. reuters reporting that saudi arabia, the foreign minister cut off commercial ties with iran. this escalation gets worse. >> i think it's reasonable that oil can trade maybe to 40 on this. let's not forget, the glut is real.
9:51 am
with jo without something dramatically happening to the pipes in saudi arabia, you'll have a move to the upside. i do point out that gasoline in this country, it's going to be the year where people realize, geez, it's not a roller coaster. >> it's still 2 bucks, may stay there. >> 1 million barrels coming from iran in the not too distaint future. saudi ayrabarabia, which is tryo finance an active war in yes, ma'am be a yemen. how can you not keep pumping then? >> if you get the equilibrium going. some of these oil stocks are down precipitously. if you want to trade an oil stock, make some money. >> yeah.
9:52 am
>> we'll get stop trading with jim in a moment. dow session lows, were down about 400, now 338.
9:53 am
9:54 am
. time for cramer and stop trading. >> i will mention a company,
9:55 am
people will say it's so small, why you mentioning it? >> it's ulta. retailer, unbelievable last year. 191 target, goes to 203. ulta cannot be done in by amazon. my mom would call it a beauty parlor. fantastic double digit same-store sale grower. this company was up last year and could go up again. i mention it because it shows you how few there are now. but that's one of them that works. i want to point out again, when you have china declines, the last half hour tends to be bad. the machines say i don't want to be in for when china does whatever. the communists will make a line in the sand. they always do. they're communists. they're in charge of the supreme court, the s.e.c., the newspapers, the judge, the jury -- there's a good book that
9:56 am
came out this weekend, but they're communists. they don't play by capitalist rules. >> right. >> they shoot short sellers, don't they? >> haven't gotten quite to that. >> i'm just pointing out we act, oh, they're communists. fine. those guys on "squawk on the street street",. >> what is on "mad" tonight? >> wing stop is on tonight. ye yeah, wing stop. you think they care about china? this isn't yum. i had some critical things to say about wing stop, charlie morrison wants to talk about the trade. i like that. i like that. we will reopen the books on whole foods. >> a view of chipotle.
9:57 am
>> one good experience at a tucson whole foods? >> no, it's called the work. didn't you read that interview with me. >> i paged through those things. hit that refresh all the time. >> i love you guys. i missed working. you can imagine? if the bosses are listening, don't hold it against me. >> we'll see you tonight on "mad money," 6:00 p.m. eastern time. when we return, ism, construction spending as we watch this selloff. back in a minute.
9:58 am
9:59 am
10:00 am
good monday morning, welcome back to "squawk on the street," i'm carl quintanilla with sara eisen, simon hobbs, david faber at post nine of the new york stock exchange. big selloff in place with data on the way. for that we go to rick santelli. >> we're looking at a november read on construction. it's down 0.4. this is the lowest read since june of 2014. it's the first minus sign since november of 2014. not a good data point there.
10:01 am
let's look at the december ism read. 48.2. it's about 0.8% less than expected. get this. the last month of 48.6 was the lowest read since june of '09. so, 48.2, we'll have to really go back a little bit. it's still the lowest read since june of '09. that read was 45.08. on the ism, the new orders component was 49.2. that's actually up from 48.9. maybe this week in particular, carl, the ism employment index should be important. 48.1. it dropped from 51.3. so the first two data points of 2016 certainly are not welcoming in any significant strength, which goes hat in hand with the type of trade we're seeing globally, especially in the equity markets. back to you. >> you said it, rick. thank you very much. 2016 starting off with a massive
10:02 am
market selloff. the dow down 381 points. for more, let's bring in the global chief investment strategist with blackrock. happy new year to you. good to see you. >> happy new year. >> a lot of people will be looking at what happened in china and going why isn't the market more discerning about this? we know retail investors didn't like the limit down stuff that went on, wanting to get out before they suspended trade in china. there's the whole question of the big investors. why should we react to china like this? we probably shouldn't. the direct contagion effect is limited. very few investors outside the local market own china shares. i believe this is a bit of an overreaction given as we learned last summer the chinese domestic market is incredibly volatile. at one point last august we saw
10:03 am
annualized volatility on the short-term at about 70%. i think that today's reaction might be overdone. >> that said i get china is one of the big calls that people like you and every other investor will have to make during the course of the year. this is a market that's been searching for direction. we didn't get it at the end of last year. now down 400 points on the dow, just losing 2,000 on the s&p, we're clearly finding it. >> we'll, we did. there's a couple things we have to get our arms wrapped around when it comes to china the economy will decelerate. it will decelerate further. the manufacturing sector, the noted catalyst for the selloff for last night will be hit worse. that said, most of the signs suggest that china's engineering a soft landing. between 6%, 6.5%. there's not that much evidence that the economy is collapsing in a way that would take down the rest of the global economy.
10:04 am
>> what do you do on a day like today where the dow is down more than 400 points? stocks selling off across the board? do you buy the dip? wait it out? >> the short-term is going to be volatile. in the long-term this is creating value. i'm not sure why a technical selloff in china means the dow should be down 400 points. investors have to accept more volatility. it is creating pockets of value. talking about european equities. germany down today. value there. some of the u.s. technology names make sense. and also parts of the market like healthcare that will be resilient even if the economy once again disappoints. >> do you to publish a year-end forecast? do you have to nail your colors to the mast and where the markets will go? >> i try hard to avoid that. >> many people would like to shot have do so, but clearly a
10:05 am
lot of chest beating going on about how dire things look for the coming year. in that environment, isn't there part of you that goes everybody is really pessimistic. isn't that very fertile territory perhaps for a bounce at some point, a significant bounce given what peoples expectations are? >> i would reject the notion that people are particularly pessimistic. the s&p 500 is still trading 17 times, 18 times trailing earnings, that's not indicative of a market where people are throwing in the towel. you're right, in the short-term there is pessimism, this may represent a buying opportunity. but valuations are still elevated, so people are not overly optimistic. >> on the one hand you're saying this may represent a buying opportunity, then telling us the valuations are rich. >> i'm saying if you have a short-term perspective, you will be able to get some stocks a bit
10:06 am
cheaper. you are probably glad you bought them in a month or two. if you look at the long-term, the next two, three years, my starting assumption is if the u.s. market is trading at 17 times, 18 times trailing earnings, you have to have more modest expectations for long-term returns in the u.s. market. >> i guess the open question for many people is what is the shape of the business cycle? how long have we got now on the upturn? do we have one, two, three years of an economy that grows substantially, revenues can grow and margins can grow? or is our conversation about a slowing economy and a market that will be under pressure because at some point we'll turn down significantly? where are you on that basic question? >> i'm less worried about the business cycle. this is an important point. i don't think the biggest risk in the market now is the u.s. recession in the next 6 to 9 months. most indicators suggest slow but positive growth. >> but forgive me, it's not a
10:07 am
downturn in 6 to 8 months, this stock market should be looking 18 months ahead. where are we 18 months down the road? >> i'm skeptical there's any indicator that will give you a good forecast of what gdp will be like in 1 1/2 to 2 years. so, what we know is that if you look out the next year, where leading indicators have some value, you're probably okay. to me the bigger problem is you borrowed returns from the future, used it to pull returns forward and valuations are extended in the business cycle. because it's a muted business cycle, it may go on longer than people expect. >> okay. we'll leave it there, sir. have a great new year, thank you. >> you as well. this steep selloff in u.s. stocks in part due to worries about china. chinese stocks went down 7% overnight prompting a stop
10:08 am
trade. >> china's economic troubles are the focus. the latest factory and manufacturing data pointing to more bad news. some analysts saying it suggests the central bank's policies to stimulate growth are not working. it's important to know weak data is not the only factor at play here. investors nervous about a six-month ban being lifted on large share how old holders tha them to reduce their large position the. china experts say the unwinding of these emergency controls may trigger further selling this week due to rising fears that these big shareholders, which primarily include heads of state owned enterprises will sell stocks. that ban is expected to be lifted on friday. today's selloff triggered the first ever circuit breaker.
10:09 am
trade initially halted. at the end of the trade, the shanghai down by 7%. it's the latest sign of that economy as the new year unfolds. >> for mr. about the quhin that turmoil, let's bring in steven roach, former morgan stanley asian chairman and yale university fellow. joining us on the phone, the man you want to hear from on a day like today. professor roach, good to talk to you. >> good to talk to you. >> do you see this 7% slide in chinese stocks driven by the economy and the currency or wth more market fundamentals and technicals? >> i see it more as what seema just said, market technicals and then the bears are trying to back this into an economics
10:10 am
story. the index was weak by a caixin report released overnight. but the national bureau of statistics in china put out a slightly stronger purchasing manager's report. you have some conflicting stories on the purchasing managers indications. high frequency data of china, whether it's electricity consumption or output is more a bott bottom rather than one that is precipitously falling, as the interpretation of the drop in the market has led some to conclude. >> can you give us an insight as to what has been happening with their currency? it started last summer. sent the u.s. market into a
10:11 am
correction. why are investors globally so spooked about the currency? >> they changed the foreign exchange regime in early august to more of a market based mechanism. the currency sold off a bit after a ten-year sharp appreciation. the fear is that china will move to take the currency down sharply in an effort of competitive valuation to buttress market share in a declining global trade environment. i think those concerns are overblown. china did just make it into the imf special drawing rights, the last thing it wants to do is embark on a major currency war. >> the bigger picture here is the transition that china is trying to make with their economy, from export to consumer, savers to spenders, cautious to confident.
10:12 am
how is that going? how many more bumps will we see? >> it's going. but structural change is glacial for any economy. the reformed announced late last year and that will be put in place with the national peoples congress when they meet in march of this year. this fixation on china as an industrial production story is really outdated. the services sector is 51% of the economy and climbing. much larger than the industrial and construction sectors. that's where the dinemism is. growth rate and services is about 2 1/2 times faster than manufacturing construction combined that will continue to expand. >> stephen, coming back to the point about china's currency, can you talk uses through how
10:13 am
you see the relationship between that and the rest of asia? in this country people focus on the exchange rate and the dollar. s they want to break that peg. while the dollar may be up 5% against the yuan, it's up 25%, against a basket of current sis. isn't the major concern what happens with the rest of asia and what would happen with that moving forward? shed light on that if you would. >> that's a fair point. the chinese have sent some signals they're now looking at the renminbi relative to a basket rather than a bilateral relationship to the dollar.
10:14 am
this is reflective of the dollar being so strong, the last thing they want is a strengthening curren currency, to the extent the renminbi weaken observe a broader basis, this is disconcerting to other east asian economies from korea to taiwan and several others that also rely heavily on exports. there's some fear and some have raised the possibility that this is reminiscent of the sort of currency contagion that was evident in '97/'98 that led to a full blown pan-regional currency crisis, one that china backstopped by not de-valuing the renminbi during that period. that is a stretch and not relevant in today's context. >> sounds like on the macro economy on china, you're
10:15 am
relatively positive with the dow down almost 400 points, there's a lingering concern that china will face a hard landing. are you saying that's not happening this year? >> i am. i'm emphatically saying to the extent that marketses around the world, including this country, discount a chinese disaster scenario or a hard landing, that i think the markets will end up being pleasantly surprised. this will not just be for the u.s. but for resource economies and their markets around the world that are also pricing for a similar implosion. i think the fears of a chinese hand lands are vastly overblown. >> stephen roach, thank you. when we come back, netflix getting hit with a downgrade today. the shares down about 7.5%. we'll talk to the analyst who made that call. before the break, another look at the selloff. equals great rates.
10:16 am
it's a fact. kind of like reunions equal blatant lying. the company is actually doing really well on, on social media. oh that's interesting. i - i started social media. oh! it was my...baby. every insurance policy has a number. but not every insurance company understands the life behind it. for those who've served and the families who've supported them, we offer our best service in return. ♪ usaa. we know what it means to serve. get an insurance quote and see why 92% of our members plan to stay for life. ♪ try align for a non-stop,ive sweet-treat-goodness hold-onto-your-tiara, kind-of-day. live 24/7 with 24/7 digestive support. try align, the undisputed #1 ge recommended probiotic.
10:17 am
10:18 am
. netflix was last year's biggest gainer, but it is the worst performer in the s&p right now. joining us is will power from robert w. baird, he downgraded the stock this morning. happy new year. good to see you again. >> happy new year. thanks for having me. >> not such a good year for the stock as far as you're concerned. you think u.s. subs might
10:19 am
disappoint again. why? >> that's probably a piece of the downgrade. the bigger downgrade is a balance/risk reward. we do a quarterly u.s. subscriber survey. based on our survey of 3,000 consumers it suggested flattish penetration levels, normally we would expect an uptake from q3 to q4. so that makes us a bit more cautious. >> and you don't believe international is going to be able to make up for that? >> i think international will be strong but a lot of that is baked into the stock. sentiment is the strongest we can remember based on investor conversations. a lot of expectations were built into the stock. they're high expectations for international. as you look at international, their low 20 million subscribers today. we think that number can get to 100 million in 2020, that's big growth. but a lot of that is expected at this point.
10:20 am
>> some bulls will point to the fact that netflix can raise prices, they're still at a low price point in the u.s. and internationally. do you not buy that? >> i think they can raise prices. i think, sara, part of the question is how much upside is there from here. what is that price sensitivity looking like. that's one of the questions for this quarter, for new customers, for the core play, your paying close to $10, that's $2 above where they were. we looked at the likelihood of prices being several dollars higher five, six years from now, coupled with ebita models, and part of that is built into the stock. >> one problem we have is the global local problem, it's easy if you're in the united states to be an english content
10:21 am
provider and take that to the united kingdom. but france, germany, other places might be able to fight back to a greater extent. that's the history of tv that has pan-european coverage. what do you see for netflix? >> i think there's a lot of uncertainty as you expand internationally. what content will resonate and where. every country has a different situation. cable prices are generally lower overseas. as a result, netflix is more expensive. to netflix's credit, they have done a great job with content not only in the u.s. but globally. and u.s. content sells in overseas. if you look at "house of cards" and recent shows, they continue to do well overseas. but as they continue to broaden their footprint there will be a lot of questions there. international execution won't be easy. there's still going to be challenges ahead for them.
10:22 am
>> finally, any theories as to why your survey came in softer than some might expect? >> you know, it's a good question. i don't have the perfect answer to that. it was somewhat surprising to us. but importantly it is a directional indicator. this is measuring penetration, a slight change in penetration in theory can have a big impact on the net ad number. they did raise pricing. maybe that had a slightly bigger impact and that pricing increase came in in october and it is possible that had more of an impact. we'll know more in a couple weeks. >> absolutely. tough needle to thread. will, thank you very much. will power joining us today talking netflix at baird. coming up, much more on this massive selloff now in the markets. dow jones industrial average briefly below the 400 mark, now down about 345. off the lows, but still looking at a 2% decline for the s&p 500 as well which briefly broke 2,000. the nasdaq getting hit the
10:23 am
hardest, down 2.5%. brent crude oil up 4%, saudi arabia severing ties with iran, oil on the move. we'll get a live report from tehran in a few minutes. well, it was nice to see everyone.
10:24 am
i just wish it had been for a better reason. me, too, but the eulogy that frank's daughter gave was beautiful. i just feel bad knowing they struggled to pay for the funeral, especially without life insurance. i wish they would've let us help. but, it did make me think, though. about what? well, that i could leave you in the same situation. i don't have life insurance, either. if something were to happen to me tomorrow, how are you pay for my funeral? or my other bills? nothing's gonna happen to you tomorrow. you don't know that. i made a promise to always take care of you kids. without life insurance, i'm not keeping it. besides, i already looked into it and between my budget and health, well ... you should call massmutual. they have a new policy called guaranteed acceptance life insurance. i got covered with one call, and it was an affordable option for reliable coverage. what do you think, mom? i think it's time to make sure i keep that promise.
10:25 am
if you're age 50-75, it's easier than ever to get reliable coverage at an affordable price. call massmutual today for guaranteed acceptance life insurance. with no medical questions or exams, you cannot be turned down. with one phone call, you can get coverage ranging from $2,000-$25,000, and premiums can start at less than $10 per month. guaranteed acceptance life insurance can help your loved ones cover expenses such as funeral costs, remaining medical expenses and credit card bills. we have several payment options, and benefits are paid quickly and directly to your beneficiaries. they can use it for any expense they choose. for more than 160 years, our policyowners have mattered most to us. massmutual's ratings are among the highest of any company in any industry. you can feel confident we can help you protect the people who matter most to you with guaranteed acceptance life insurance. call massmutual today at this number. call now!
10:26 am
almost an hour into trade, the good news is we gained 2,000 on the s&p and that steadied the market. oil continues to make some gains, caught between a tug of war on tensions in the middle east and all those risk/demand concerns coming from china still $38 on light sweet crude. ahead on the program, art cashin from ubs on whether now we have found direction for 2016. oh remotes, you've had it tough.
10:27 am
10:28 am
watching tvs get sharper, bigger, smugger.
10:29 am
and you? rubbery buttons. enter the x1 voice remote. now when someone says... show me funny movies. watch discovery. record this. voila. remotes, come out from the cushions, you are back. the x1 voice remote is here. good morning, i'm sue herera. a lebanese pro hezbollah tv station reporting that israeli troops were struck by a bomb near the south lebanon border. they were responding with targeted artillery fire. no reports of casualties. israeli security forces in and around tel aviv were still on heightened alert as they continued the manhunt for a gunman who killed two people and injured several others when he opened fire at a local bar. police say they are investigating possible motives.
10:30 am
a strong earthquake in northeast india killing at least eight people. the victims were hit by falling debris. local government officials visiting the hospital to meet with the injured. and afghan police say a suicide car bomber was killed near kabul airport before reaching his intended target. according to eyewitnesss, he was trying to target a convoy of foreigners passing through the area. simon, back down to you. >> a lot of depressing news. >> yes. >> not the least the selloff in a different sense than we had in china. the good news is we regained 2001. art cashin is here us with. it's a battle underway for the market. >> yes, it is. it's highly unusual on day one to see a selloff like this. if we don't rally and close here this would be the worst opening
10:31 am
day of any year since 1932. >> did you see that coming? do you understand why that might be? that it's blown out of nowhere? >> no, i looked at weakness. we talked last year the close two days of the year being weak. >> and we couldn't find direction. we were looking for that so-called santa claus rally and none came. >> we will have to put santa's picture on a milk carden. he's been hijacked. i'm looking for a better day as europe closes. volume is higher than normal, so maybe our friends across the pond are waiting for us. >> oil prices are up 3% here, 4% brent, that's not giving much of a boost to the u.s. market. is it because of the back of rising worrisome tensions in the
10:32 am
middle east? >> yeah, that's good perception. i'm a little disappointed that the oil reaction is muted. i would think with two major powers getting ready to go, at least verbally head to head, that you would think with a proxy war going on in yemen, lobbing a few missiles into the saudi arabian oil facilities. i'm surprised they didn't move stronger. >> i guess the china concerns weigh on that. >> i agree. if china were to implode economically, that would be a great drop in demand, and change -- >> not really where we are, i guess. i hope we're not. there what's more important moving forward for 2016? what we're beginning to see out of china or the middle east? >> obviously the middle east could be -- to use an overworked
10:33 am
phrase, a true powder keg. but china i want to keep an eye on because in sara's special case of watching currencies, that currency got weak again. if that continues to weaken, it will be far more important than the market selling off 7%. >> stephen roach told us no hard landing. he played down the fears about the economy in terms of move on markets today. we have blackrock also saying they're positive on u.s. markets. how do you think that sentiment factors in to 2016? it's downbeat, but still expecting gains. >> no. i hear what they're expecting. let's not forget last year a lot of people were expecting gains, too. i am worried a bit more about -- not the economy as much as the currency. if they let that slip further, and we got up to the edge of currency wars last year, if china allows its currency to
10:34 am
continue to weaken, we'll have some trouble. >> what about the ism manufacturing index, below 50 for a second straight month, which could apparently indicate there's some sort of contraction at least on the survey basis within manufacturing. >> it's troublesome did, but i don't think it's panicky yet. i want to look at some other figures. some of the ones that stephen roach cited, electrical consumption. >> we're looking at the major industry groups in the red right now, even energy is not catching. technology is selling off the hardest. what does that tell you? >> again, concerns about international commerce. technology has been a beneficiary of international commerce. i think if they think that will slow down, they will take -- >> and the rising stock market. >> they will take some profits. good to see you, art. >> thank you. we just mentioned the
10:35 am
geopolitical concerns, tensions escalating between saudi arabia and iran over the weekend. saudi arabia cutting diplomatic relations with iran. >> saudi arabia cut diplomatic relations with iran as well as yemen and bahrain and the uae has downgraded diplomatic relations with iran. this is not good with iran. iran was trying to mend fences with the international community, this will be a severe blow to that. iranians sent some 600,000 pilgrims to saudi arabia every year, it's an important pilgrimage for muslims. if they're not allowed to do that, it will be a bitter pill to swallow for devout muslims in the country. the downgrading of ties with the uae is also significant. a lot of very, very major businessmen in iran have a hub
10:36 am
in dubai where they do business from. that could have quite a severe blow to iranian business interests. also a lot of iranians travel to dubai for leisure purposes. it's not easy for iranians to get soovisas to travel around t world, but dubai is a place to let off steam, have some down time in dubai, if restrictions are put on that, that is difficult for iranians here. the they're trying to keep diplomatic ties at some sort of level with the saudis, but that doesn't look like it will happen. that will be difficult for the rohani administration, their track was to restore diplomatic relations, not downgrade them.
10:37 am
another fallout from this is also going to be the peace talks over syria. iran and saudi arabia had sat around the negotiation table with world powers trying to bring an end to that conflict in syria. i doubt the two sides will be sitting around the negotiating table trying to figure out a resolution for syria. so, this has very wide ramifications, this fallout between saudi arabia and iran. the two countries are major powerhouses in the middle east, one sunni, one shia, and that they're diametrically opposed on oil and al assad in syria. today iran's foreign ministry hit back a bit at the saudis. they were trying to be diplomatic over the last few days, today they accused the saudis of intentionally killing sheikh nimr al nimr to deflect from domestic problems in their
10:38 am
own country. >> thank you very much. straight ahead after the break, general motors investing $500 million in lyft. lyft's president and gm's president will join "squawk alley" live to talk about that. the dow down nearly 400 pounds. the s&p below 2,000.
10:39 am
10:40 am
10:41 am
checking out the listing on zillow i sent you? yeah, i like it. this place has a great backyard. i can't believe we're finally doing this. all of this... stacey, benjamin... this is daniel. you're not just looking for a house. you're looking for a place for your life to happen. zillow. with the dow down 399 points, let's get to rick santelli in chicago for the first exchange of 2016. >> thanks, simon. no better person for a wild reception that ira harris.
10:42 am
the title of this is geopolitics hot, the global economy not or cool. geopolitics. what saudi arabia did this weeke weekend, did that surprise you? >> whether it's a surprise or not, what was the message they were trying to send. they were told not to do this. they were firing a shot to put people on notice saying we're not all -- they're playing a different card here. how this plays out could go different ways. they were sending a message to somebody. i don't know what the message was, but they were sending a message. >> with regard to china, the market opened down a boatload today and it's affecting the global trade. in the end i heard comments, don't worry, the communist als l settle down the market. but the instability the communists are trying to stop is there for a reason. the root causes are still there. your thoughts? >> correct, but again, money craves -- i have a saying, money
10:43 am
is fascist. what do i mean by that? fascism is about stability. what did musolini do? made the trains run on time -- >> so it's about -- >> it's about stability. people want to believe there are people who will control this thing, maybe they're right. we know that they'll go to extremes to do it, money wants a 10% return with no risk. that's what money wants every day of the week. >> the bank in sweden did something today. thoughts? >> they came out and said they will intervene at any time that they believe the swedish money is too strong. here we are, january 4st, the first trading day of the year. they want to be able to intervene without notice, without cutting rates, we are in the midst of the beginning of another currency war.
10:44 am
up like last year the swiss fired the first shot, the swedes have fired the first shot and put everyone on warning. if you're an american and hearing all the comments you're making, has the normalization of the federal reserve been a key part of all the issues we're discussing? are these all moving plates that are moving any way and the fed should take care of business and ignore them? >> the fed has not normalized anything. take that off the table. range of 25 to 50 basis point on the fed funds doesn't normalize anything. it's interesting, stanley fisher's speech over the weekend, he's taking on larry somers directly. i have never seen anybody at the fed -- yes, he's the vice chairman but he notes larry somers in that speech, because somers argument about secular stagnation is ringing in the ears of the fed people and did they make a mistake. that unnerves me that the fed is
10:45 am
speaking to an academic and trying to answer that. the same thing that janet yellen when she talks directly to ralph nader, that they weren't financially repressing. the fed should stop listening and do the job they're supposed to do. >> lock the doors, close the windows, turn the tvs off and think big picture and do what's best. >> that's right. >> sara, back to you. >> thank you, rick santelli. the selloff is continuing today. stocks with exposure to china are some of the hardest hit. bertha coombs has a look at the names. >> one of the chinese depository shares is one of the worst performing. jd.com is a rival to alibaba in the commerce area in china. one of the stocks that sees big swings when you get concerns about china's economy slowing today. not surprisingly, the internet
10:46 am
names are being hit hard today as well. baozun, weibo, some of the internet social media stocks in china. and u.s. economies with a lot of exposure also today among the biggest decliners here at nasdaq. of course wynn resorts, about 70% of its business comes from china. we know that the result in macow were down again. that's weighing on the casino names. also you have apple, which is looking for big growth in china. still not the lion's share of its revenue. but it's still an important part of its business. yahoo! still has that alibaba stake. whenever you see alibaba and the chinese name down, yahoo! is also going to be suffering. there's issues for yahoo! with regard to what its strategy is going to be in the new year now
10:47 am
that it cannot spin off the alibaba stake tax-free as it had hoped. expediters international, some companies not tech names, also with large exposures suffering today. in the tech area, look at some of the chip names. skyworks, nearly 80% of its business coming from china qualcomm, more than 60%. micron, 50%. faring fairly well today but overall the drag on the big tech names here. back to you. >> worst performing sector now in the s&p 500. thank you. up next, it's not just u.s. stocks, the selloff in china is affecting markets across assets and across the globes. some shockwaves in currencies rocking the globe. the dow heading back down to 400. s&p down 2%. the nasdaq down almost 3%. "squawk on the street" will be right back. understandsevery insurance compy
10:48 am
the life behind it. ♪ those who have served our nation have earned the very best service in return. ♪ usaa. we know what it means to serve. get an auto insurance quote and see why 92% of our members plan to stay for life.
10:49 am
10:50 am
that's why i switched from u-verse to xfinity. now i can download my dvr recordings and take them anywhere. ready or not, here i come! (whispers) now hide-and-seek time can also be catch-up-on-my-shows time. here i come! can't find you anywhere! don't settle for u-verse. x1 from xfinity will change the way you experience tv. welcome back. casino operators win. all down about 2.5%, maybe more now, at this point in the early
10:51 am
trading. they fell 34% in 2015. among the reasons, we have slowdowns in an anti-corruption campaign that's eating into the income. the casino stocks certainly a focus. some of them, wynn, trying to work off the worst levels. ripple effects through currency markets as well. the dollar slipping nearly 1% against the safe haven yen. a big move signaling a sour mood in global markets. so obviously currency markets can be a signal for what would happen with markets around the globe including stocks. how much panic are you seeing out there today? >> i think we have plenty to talk about. i thought day one, we'll settle into the year and it will be nice and easy. >> not so much. >> all hell's breaking loose. i think currencies generally for me, i know you're surrounded by
10:52 am
equities, but for me, currency's where you get the hit, the immediate relative story. that's what we've seen this morning. the em sell-off. all of those things kind of speak to me about where these frailties are. seen primarily in emerging markets now. >> also the dollar versus the chinese currency at the center of the storm here. can you explain the significance of that currency being managed towards a four-year low and why it's spooking everybody? >> i don't think they're seeking a weaker currency. they're tolerating a weaker currency. they're acknowledging that's it is reflective of the kind of dynamic there is in china at the moment. previously, we've been used to them being very hands on in currency. so it's a new era. there's more volatility. i think the markets and policymakers are learning by doing here. you know, it's not an ideal setup that you learn by doing
10:53 am
under these circumstances but i think that's exactly how they're playing. >> i saw the notes coming in this morning. i thought it was so refreshing that you were here and calling for euro/dollar at 1.20 and not parity. i don't understand, two or three senior central bankers came out and publicly said to everybody, he doesn't have the votes to get this through. and still people think that dragge can have further easing up his sleeve. >> it's a really tricky thing for the dollar bill at this point. it can drag weakness. i'm not convinced, you know, as you say -- i don't say his credibility's shot but it's certainly been undermined by what we saw in december. >> he can't carry the -- >> there's not an awful lot of bonds left to buy. they continue at this rate they're going to run out. >> it's the flip -- it's the relative trade with the federal reserve set to hike rates and we'll get a jobs report on
10:54 am
friday. if that's good, expectations will rise. won't that help the dollar? >> it will help the dollar. when we talk about going to 1.20 at the end of this year, we think the conversation we have at this desk in six months time will be, are the fed done. irrespective of whether they are or not, that will be the conversation. everything we talk about now is will they hike again or how many hikes will they deliver. >> implicit in that is the view that the economy is not as strong as they believe it to be. >> every central bank that's hiked ed id in g-10 has had to reverse. >> the dow's down about 410 points. what we've learned after 6 1/2 years of this bull market is the stock market can rally during sluggish world economic growth but that is with the help of central banks. do you think that changes in 2016? >> there's still plenty of liquidity being pumped in. the japanese are still
10:55 am
expanding. >> are they still that cushion? >> they're a help. there's no suggestion that these balance sheets are going to be squeezed. so i think that's definitely helped. my understanding of the equity as well is they relied on, you know, margin expansion. that perhaps is a trickier story for this year. >> quick question, will the united kingdom leave the european union this year and are the implications as huge as people think it might be? >> the implications are huge. the opinion polls are way too tight to call that one. we worried about scotland a little. we should worry about the uk a lot. it's not just the uk, it would have huge implications for the rest of europe as well. >> what is the next central bank that's going to ease, that's going to q/e? jap jap japan? >> i suspect the next ease will be the swedes. i think they're twitchy about their currency. it's been strong on a trade weighted basis.
10:56 am
over christmas and the holidays we were all relaxing and they were issuing statements saying "we might intervene." >> that was fun. thanks for coming in. >> welcome to the united states. >> i know, i'm still trying to retain my accent for now but i'm sure it will fade. >> let's send it over to john ford for a look at "squawk alley." >> happy new year but not for the markets. we'll continue to track the sell-off on "squawk alley" coming up. the dow down 120 points. also, san francisco fed president is going to be with us. and we're going to have the co-founder of lift and the president of gm talking about this tie-up they've gotten and the investment gm is making in lift. turns romantic, why pause to take a pill? and why stop what you're doing to find a bathroom? cialis for daily use, is the only daily tablet approved to treat erectile dysfunction
10:57 am
so you can be ready anytime the moment is right. plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use. insurance coverage has expanded nationally and you may now be covered. contact your health plan for the latest information. at ally bank no branches equals great rates. it's a fact. kind of like ordering wine equals pretending to know wine. pinot noir, which means peanut of the night.
10:58 am
start looking for a house? oh did you see that listing on zillow i sent you. you see that bathroom? did we just decide to buy house? i think so. yay! find your way home. zillow.
10:59 am
good morning, it is 4:00 p.m. in london, 11:00 a.m. on wall street and "squawk alley" is live.
11:00 am
good monday morning. with me as always, john ford and kayla. want to extend a special welcome to our viewers across the pond. starting today, squawk alley is simulcasting in europe and on an important day. big sell-off is in the baking here in the states. the first day of trading in 2016. the dow's down about 433 points. for all our big movers, our bob is on the floor. >> let's look at the major sectors. frankly, this is one of these down 2% to 3% down days right across the board. china was the initial impetus here but the breadth is 5-1. it closed 6-1 declining to advancing. that has not improved throughout the morning here. vote you've, believe it or not, is on the moderate side. the volatility is

81 Views

info Stream Only

Uploaded by TV Archive on