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tv   Squawk Alley  CNBC  January 4, 2016 11:00am-12:01pm EST

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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 elevated.
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with the vicks towards 23 or so. you see everything here, teshg financi financial, consumer discretionary. you'll notice energy is not doing as bad. energy was doing significantly less bad just a short while ago but that's changed a little bit as oil has started to move into negative territory. show the xle, which is the energy etf, the largest energy etf out there. that's been moving down in the last 15 or 20 minutes. that's why the markets have taken another leg to the downside. it's the energy stocks that are down. they previously were somewhat supportive. elsewhere, they're having a down day, particularly weakness in automative stocks, volkswagen, bmw, daimler. they all have 10% to 20% of their revenues over in china. ford and gm do not. they have very small percentages
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of their revenues in china. 4% to 5% for ford. they're not down nearly as much as their counterparts over in europe. as for the financials, this is one of those days it really doesn't matter whether you're dealing with a big money center bank like jpmorgan or even a trust bank like bny mellon. they're all week here today. what you want to watch is the china etfs. fxi is the hong kong etf. trading in hong kong. the shares that trade in mainland china, for that, you need the ashr, that's the main index on the mainland, and that's down 9%. this seems to indicate traders are betting the open in china may also have another -- at least the open, a little more weakness at this point. no pickup though now at the low of the day, 450 in the dow. back to you. >> the worst start to the year for the dow in 84 years.
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for more on this massive sell-off, let's bring in the chief global investment strategist at charles schwab. given the depth of the sell-off, the breadth of how many comb po components in how many directions are selling off, does this look to you like more than sentiment, something pent up from the holiday week? >> certainly china's one the big drivers of volatility this year. i think it's geopolitics actually. i think these tensions between saudi and iran, u.s. and iran over new sanctions. i think they are invoking big moves on days where gee political events occur. i point back to that turkey and nato member taking down a russian jet. think back to some of the skirmishes between japan and china over some of those islands in the south china sea. these have all about one-day events fortunately for the markets. i think what we'll see today is the start of another year of
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volatility for stocks. >> we're seeing abrupt moves in what we talk about as safe haven trades. treasuries, rallying. will those moves be short-lived or do you think those are trades that will continue to pay off this year? >> well, expect volatility in them. i don't think they're going to move in one direction for a long period of time. i think what you're pointing out is exactly right and why i think it's more geopolitics than merely economic concerns around china because you see the gold and the dollar and many other geopolitically related assets moving. they've tended to be short-lived. i think these mideast tensions will come and go over the course of the year. that's going to create volatility, rather than a consistent trade in any one direction. >> on the backdrop of all that uncertainty, jeff, then why aren't equities expensive here? >> well, couple things. one is i don't think we're headed to a global recession in 2016. yield curves aren't indicating
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that. i don't think we're seeing that in it the leading indicators around the world. i think this is a year where investors are wise to stick to their long-term allocations. t diver diversecation may pay off. long-term allocation should benefit you well here in 2016. >> i'm curious how china plays into this. as i look at tech stocks that are down this morning. ge and alibaba and yahoo! of course is a proxy for alibaba are among those down the most. facebook is down about 4%. apple is down about 2%. facebook doesn't have china exposure but apple does. is that some of an attitude toward risk, given facebook's valuation, versus apples? or what's going on there? >> yes, it may be a valuation issue. you know, when we last heard from apple about the china situation, they were saying, look, things look pretty good for us there.
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i think that's generally true for many consumer products. selling into china. they sell good news. industrial equipmentmakers saw very bad things in china. that's the tale of two economies in china. the more you're oriented towards the consumer, things look good. if you're focused on business or even infrastructure spending, that's not going to fare as well as it comes to china's growth in 2016. >> jeff, why are we seeing this outsized impact on some of these china stocks? because we know that the evolution of the chinese economy to a consumer-based economy from a manufacturing-based economy is going to take years at this point. it's going to take a lot of trial and error. like what we saw in the circuit breakers overnight. why does this still surprise the market? >> well, that's a great question. i think in part certainly even today's pmi data suggests that transitions still taking place. what we may be getting today is a delayed reaction. it's intervention, circuit breakers today, in response to intervention from six months ago. remember, insiders were banned
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for selling for six months on july 8 of last year, of 2015. that's likely to expire unless it gets extended this week. the concern we've now got another round potentially of selling from those banned from selling over last six months might kick in and cause another round of drops in the a-round market of china, i think is what we're seeing today and less about the economic transition. >> with the buyback programs to issue we'll see if any of them sell today. >> despite the first day sell-off where do we expect the biggest gains in 2016? don shu asked the experts. he's back at hq with more. >> every year we put out our market strategists survey. we pull those strategists -- actually get forecasts for the s&p 500 to see what they think and then come up with their average numbers, that sort of
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thing. let's reset for you. we know we're in a down day. we're hovering just below 2,000. a nice round number as things stand. where do experts think we'll finish for the end of this year? the medium forecast for strategies we surveyed were put out targets for the year end say it's going to be around 2,200. so think about 10% higher than where we are now. that's the median forecast. the center forecast, at least where we polled strategists and what they're saying. as for where the highs and the lows are going to be here, this is interesting, because it's a very narrow range. most people think we are going to go higher, although modestly. but even the lowest target price among those strategies we pulled is around 2,100. so again, that's maybe about 5% higher than where we are right now. 10% is where we think it's going to go, at least the median
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forecast from there, right? on the high side of things, it's 2,300. 2,300 represents about a 15% increase from current levels. so think base case, median forecast, 10% higher. the low send a 5% move higher. on the low side, you talk about david cosnic at goldman. on the high side of things, it's rbc. so those are the strategies, what they think. it's going to be interesting to see whether or not we actually do get a 10% move higher. right now it doesn't feel that way. that's where strategists are starting the year with their forecast call. back over to you. >> dom, thank you very much. after the break, an exclusive interview with the san francisco fed president john williams. meanwhile, we have a 16 handle on the dow. a one handle on the s&p. close to session lows with the dow down 450 points. here at the td ameritrade trader group, they work all the time.
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top policymakers kicking off the year in san francisco. that's where our senior economics reporter steve liesman join us with an exclusive interview. hey, steve. >> carl, good morning. i'm here with san francisco fed president john williams. at the american economic association annual conference. john, thanks for joining us. >> welcome to san francisco, steve. >> thanks. let's get right to it. the market looked like it fell
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out of bed this morning over concern out of china. how much concern do you have and the potential for it to ricochet back on the united states economy? >> it's important in thinking about the chinese data and developments there to realize china's undergoing a significant pivot in terms of slower growth, in terms of the trend slower growth path and also a pivotal wave in manufacturing, more towards the consumer spending. to me it's not as surprisings w weaker data. part of the process that's been going on for the last couple of years. we're seeing good data from china on consumer spending and some other areas. so i'm not that as concerned about that. i think this is an ongoing process china's going through. and, again, in terms of those developments ricocheting to the u.s. economy, i think we have really strong fundamentals. so right now at least, this
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isn't a big concern for me but we watch the data carefully and realize we're in a global economy. >> in this post-financial crisis world, the big worries about systemic risk, do you see connections between the chinese financial system and negative things that could result from that, from the slowdown there, that could ricochet and affect the u.s. financial system and create broader global systemic risk out of china? >> i really don't see that coming out of china now. i think a lot of it is how the stock market affects relatively small, it doesn't affect the u.s. financial system directly so those are not major concerns in terms of systemic risk now. >> what was the lesson from august? some thought the fed should have hiked rates in september. do you think that's going to make the fed less likely to be influenced by what's happening overseas? >> i think what we need to do is focus on our dual mandate goals. we're focused on the median
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term. not just in china but emerging market countries. and obviously the effects of the strong dollar on the u.s. economic outlook. we're focused on where the u.s. economy is, where it's going over the next couple of years, how we're doing on our goals. so i think that of course we're entering, you know, a global economy so we're affected by those. really what matters is how does that affect our objectives. >> one of the themes is the contrast between what's happening overseeing and the u.s. economy. could you give us your version of what's happening overseas versus what's happening in the united states? >> sure, in terms of the u.s. economy, we're in good shape. unemployment's at 5%. gdp growth averaging a little over 2%. i see that momentum carrying into this year in 2016. i think we're, relative to most other countries, in very good shape. i think partly because we took very aggressive monetary policy actions and other actions to get our economy back on track sooner. clearly, europe, asia, is struggling more. the steps i see happening there
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in terms of policy responses i think are going to help give those economies back on track over the next couple of years. clearly, we're a little ahead of the pack in terms of getting back to full employment on a good sustainable path. >> as a central banker do you feel difference being too far ahead of the pack here? is there a limit to how much the fed can and will do this year because of the weakness overseas? >> we talk about divergence between the u.s. and the rest of the economy. there's divergence within the economy too reflecting that. specifically, our domestic demand, consumer spending, domestic spending. so, you know, the way i see it over the next couple of years, we're going to need significant monetary accommodation. to keep our economy on this 2% to 4% growth path. given the headwinds we're facing, especially from abroad. >> let's talk about the path for fed rate hikes this year. the median seems to be
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suggesting four this year. is that also your forecast? >> i think given the forecast i have for where the economy's going, what's happening with inflation, inflation is the one thing we're still struggling to get back to our 2% goal. that to me is the main focus. i think something in that 3 to 5 rate hike range makes sense at least at this time. but we're data dependent. so the data's suggesting that gradual pace of rate hikes makes sense. we'll have to re-evaluate that, reassess that, based on where we see inflation and other indicators that kind of are factors in recession and economic growth. >> give us your overall forecast. another 2% year for growth? >> yes, it is the new -- >> excuse me while i yawn. >> well, it's good though. we're on pace, we think, to add about 2.5 million jobs last year. we don't have the december data. i think we're on pace with still a very good job market and continued job gains. so, you know, it may be a yawn in terms of one more year of 2%,
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2.25% growth. i think that's good. we're adding a lot of jobs. we're getting unemployment even lower. >> that's the kind of gdp growth that leads you to a median rate hike number, right? which is the 2% growth is -- was what the overall fed was looking for and that would be commensurate with the four rate hikes? >> i'll give my normal disclosure. yes, a growth path of 2% gdp growth, unemployment edging down in my view below 5% this year. and inflation certainly to move gradually back to 2% this year. are the kind of ingredients i see as feeding into a, you know, 3 to 5 rate hikes this year but, again, you know, we'll watch the data. >> how confident are you you're going to get inflation moving back to the 2% number, particularly with what's going on overseas? >> well, you know, i'm reasonably confident.
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that's the way we put it. you know, obviously inflation is influenced by the economy, through unemployment, through other factors. there's always unforeseen events. what we have to do is focus on where we see the inflation moving. >> how about risks like we're seeing on the tape today. when the market wakes up out of bed. how does the central banker react? >> again, i have a median term outlook. i don't have a terminal on my desk telling me how the market's going up and down. really, i want to focus on the next couple of years, how our monetary policy can best be calibrated to achieve our goals. the markets move up and down. this is a capitalist system. that's going to happen. when the market moves significantly, try to understand
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better, what are the factors driving that? rather than responding to just ups and downs of market moves. >> you mentioned the dollar earlier, is that -- does that create a limit on policy in terms of how strong you're prepared to let the dollar go, become, as a result of changing differences or differences in monetary policy? >> the dollar's determining international markets. it's not something that the fed targets or has a goal objective around. obviously as the dollar changes, it effects our exports our inflation. clearly it's a factor that affects the outlook, affects the right policy mix. but it's not something, you know, we target separately from full employment and 2% inflation. >> john, thank you. back to john at the new york stock exchange. >> important insights on a day
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like today. general motors is betting big on lift. announcing a $500 million investment. we'll have the gm president along with lift co-founder john zimmer. and the sell-off meanwhile is accelerating as we're counting down to the european close. the ftse down 2.5. the cac down 3. german blue chips down 4.5%.
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a volatile day in the oil market. saudi arabia severing diplomatic ties with iran which did push oil prices higher. wti has since reversed course. michelle caruso-cabrera has more on that story. >> the conflict in the middle east, sunni-led saudi arabia and shia-led iran, could be reaching a boiling point. an anti-saudi arabia rally in tehran today after saudi arabia announced it will sever
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diplomatic relationings with iran. the saudi foreign minister telling reuters that means saudi arabia will end commercial relations with iran, including all air traffic between the two countries. and will bar saudis from traveling to iran. three other sunni-led countries took diplomatic action against iran. sudan, bahrain and the uae. this is more fallout from events over the weekend when the saudi government announced it executed 47 individuals including a well-known shiite cleric popular in iran. the iranian government allowing protesters to ransack and set fire to the saudi embassy in tehran. markets were lower across the board. saudi arabia in particular getting hit hard by more than 2%. the question being asked by watchers of the region, does this war of words between the two regional powers escalate into a full-on military conflict? keep in mind, these two countries are already fighting proxy wars in yemen and syria. carl. >> it's going to be a defining
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question at least for the first part of this year, michelle, thank you very much. michelle kar rcaruso-cabrera. a lot of red across the map. we'll get you the latest after the break. and lift now valued at over $5 billion. gm following the foot steps of them, betting on the ride sharing start-up.
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good morning, everyone. here is your cnbc news update this hour. iraq releasing video showing air strikes being carried out against isis militants. their hideouts and vehicles. the attacks taking place in anbar province with is north and west of baghdad. gop presidential candidate donald trump releasing his first tv ad of the presidential primary season. it features dark images of the san bernardino shooters, body bags and images of masked men. it will begin running in i'owa and new hampshire tomorrow. approvals for new u.s. drugs hitting its highest level in 15 years. its approvals are considered a barometer of industry innovation. and aaa saying gas should remain a bargain this year. it estimates that the annual average price of gas in 2016
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will be between $2.25 a gallon and $2.45 per gallon. that's a little bit cheaper than last year. that's a little bit of good news on a day when there's not a lot of good news out there. that's the cnbc news update at this hour. carl, down to you. >> thank you very much. simon hobbs is back at post nine as europe's trading day mercifully comes to an end. >> don't forget european stocks gains 6.8% last year. a lot of people would say the overweight going into 2016. but the screen says it all. germany's off its lows but it was down 4.5%. clearly china is weighing, the middle east is weighing. the manufacturing data ticking slightly hire. showing you've got a expansion in manufacturing at a rate you haven't had in months. it's interesting, stocks, mining stocks, that are low those german heavyweights really right from the off were clunking down. germany of course shut up
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earlier, had one less day at the end of trade last year so there's an element of catch up. the german inflation data that came through today was actually negative. you can have a whole conversation about the ecb and whether that will fall out of the series when the energy effect kind of dries up, if you like. but nonetheless, it was a fairly depressing picture overall. the biggest loser today in europe is fiat chrysler. you'll be aware that yesterday officially as the books tell the story, they gave away the other 80% of ferreira to fiat chrysler shareholders. we've lost over a third of our value. you're taking a $9 billion asset and distributing it in a different way so it's inevitable the stock will fall to take account of that. in milan today, sergio marchaloni went through it in the same way he did here at the new york stock exchange some months ago.
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of course, as far as he's concerned it leaves fiat chrysler to potentially deal with a merger with somebody else focusing on the debt, focusing on the growth. for ferrera, he's promising clearly good days to come. though he had this interesting warning. >> the important thing is not to do anything big or stupid. we've got to be very, very carefully. >> ferrera opened 43 euros in milan. it was then suspended as a result of the area we have up. and some of the oil stocks have done reasonably well, air france-klm up. we had an upgrade. and then it was a buy recommendation. further investigation would seem to suggest it's the bonds, the senior bonds, that they've gone overweight. there may be a stock call in there as well. air france-klm one of the gainers today in a very down day
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for europe. general motors investing $500 million in lift, valuing the at $5.5 billion. the two companies are joining forces to create an autonomous on demand network. john zimmer is the co-founder and president of lift. gentlemen, good to have you with us. >> thanks for having us. >> i want to get to the components of the deal because there's some long-term and shorter-term aspects to it. dan, some people are wondering why gm are investing in a start-up that you might argue have a negative effect on new auto sales. >> we've said a number of times we see the world of mobility changing more in the next five years than it probably has in the last 50. we see rapid emergence of growth in ride sharing in particular as part of that. that was really the beginning of our engagement with lift. as we talk through that, we found more opportunity around the autonomous on demand
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network. really around redefining the future of our ability, particularly in the urban environment. we at general motors really want to be at the forefront of that change. >> john what does this allow you to do, that you couldn't do before? >> yes, i think being able to partner with such a large and successful company that has an amazing vehicle platform as well as a leadership in connectivity allows us to take steps towards that future we're all excited about with autonomous cars. >> dan, how are the economics of this going to work for you guys? because every time i get into a lift or an uber, i like to ask the drivers about how it works for them businesswise. it seems like maintenance and insurance are two key things that determine whether the business works for them. how involved is gm going to get in making sure that the rental rates are such that the drivers can make money? >> well, one of the really significant parts of the alliance beyond it isthe autono
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on demand network is the fact we'll roll out these hubs across the country. at a price point different than what they've been able to access previously. we have advantage in our ability to finance them through the gm financial platform and a huge advantage through onstar. putting all that together we think makes a compelling package for the lift driver. will allow many more lift drivers to join the platform and really push the growth and the business in a way that's really different than lift has been in the last year or two. >> how are you going to change the perception of what lift is to be able to recruit drivers who don't already have a vehicle to participate in this program? up until this point, to be able to be a worker for lift or any of these other companies, you have to have your own car. how do you market this to people who aren't already in the system? >> yeah, we actually have thousands and thousands of signups for individual whose car doesn't qualify.
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whether it's a year requirement or the size of the vehicle. we can now market to those individuals that have already applied but didn't have the right car. as well as let people know this say really great income earning opportunity, whether or not you have a car. >> dan, there's been some efforts by some sell side analyst also to guess basically what happens to new auto sales in 2020 and 2025. if this network effect takes hold in ride sharing. what should the industry be prepared for? >> i've read some of the same reports you have. i think frankly at this point in time, you know, nobody knows what the real net impact will be. obviously our business today, our core business at general motors, is strongest outside of the urban centers. as we look at this opportunity to really disrupt urban mobility through this strategic alliance with lift, it's much more an
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opportunity for gm than a threat. >> uber, the big company in this space, has a valuation privately that's bigger than gms. why partner with david and not goliath in this effort? >> so what we found in our time we spent together with the lift team is a really common point of view on how we see the world unfolding, what that could look like, number one. number two, we found a really common perspective on how we can best work together to make this happen and to bring about this kind of change. frankly, also, a really good cultural alignment between the two companies. it's been a natural fit right from the outfit. really excited about us bringing our autonomous capabilities. putting that together with the lift ride share platform. the combination is something that's really unique and not out there anywhere else right now. as we push forward to this autonomous on demand network of the future. i think it positions both companies together to be in a really, really terrific position to change that. >> john, are you at the point where you can put a little bit more meat on the bones as far as
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this rental opportunity? is this going to be more like a lease where a driver could have a car at home for weeks at a time? or is it more like a car rental model where maybe it's only three or four days? and do you expect if a driver is active, it will actually make more financial sense to do this rental rather than use his or her own car? >> i think it takes the best of both worlds. so drivers will be able to rent by the day, by the week or by the month. but not have the long-term commitment or high interest rates that a lease might bring. so with the strength of general motors and general motors financial, we'll be able to provide drivers with an opportunity that they didn't have previously, which sits right in between rental and leasing. but something that they can bring home and use for their own personal needs as well. >> dan, whether it's ride sharing or outright auto sales, china continues to be a big topic of discussion, especially on days like today.
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we could really use whatever aneck docdotal insight you have light of that pmi this weekend. >> obviously, we've seen the same news and headlines that ya'll have been watching this morning. we frankly saw a pickup in car sales in china through the latter part of the year. the end of the year seemed to end quite well from our perspective. so we'll obviously need to see how this year unfolds. the china market from an automotive point of view has been maturing for a while. that means lower growth. it also means more suvs and so on. we continue to see it for what it is. it's the world's largest market. it's still growing. it's a very, very important market for general motors. >> dan, of gm, and lift, thank you, please come back. >> thank you. we are continuing to watch this sell-off back in the markets. dow is above 17,000 right now. but we are still close to the lows of the day. dow down 422 points amid this
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backdrop, rick sansantelli, wha are you watching today? >> well, you pretty much nailed it. we have a weak backdrop and on the overlay that we're going to discuss after the break are going to be two markers. one, geomarkets and energy. and the other, a strange change strategy. after the break.
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coming up on the halftime show, the latest on this global sell-off. plus, our calls of the day, amazon and netflix downgraded. are the fangs topping out? and our halftime portfolio challenge winner on what worked, what didn't and what you can learn from his strategy. >> let's get over to the cme group in the meantime, rick santelli, get the santelli exchange. >> good morning, carl. i think 2016 is going to be a very difficult year to handicap. we all know that there's still lotsliquidity sloshing around but there's fewer choices as to how to put the money to work. december 16, the fed changed strategy. now, i know that was many weeks ago. but i don't know that the market really has had a chance to digest exactly what that means. it was a year-ending event. it certainly seems as though once the fed raised rates, even
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though it was a range of 25 to 50, not a big change, at that point, we all continue to focus on the dollar versus the yuan. let's put up that chart. there was a pause in the drop of the value versus that basket, specifically the dollar. but we see it's accelerated again as you see by the strength of the dollar on that chart. let's look at another part of asia we haven't talked about lately. that's japan. we all talk about the nikkei and the fact it performed pretty well last year. it didn't perform very well, benchmarked against the 80s high watermark. let's look at what the 10-year rates are doing. cognizant of the fact we're hovering at 2.20. all in all, rates really haven't done that much in the u.s. we're now at the lowest yield, almost a quarter point, so 26 basis points in a 10-year jgb. the lowest closing yield since
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january of last year, so we'll call it one year. all of these issues are going to be magna tied with the fed changing strategy. it's going to put more pressure on him for the performance he's trying to put forth, going against the current. let's not forget, our fed really drew the stencil that many countries and economies are using. but we changed it. how much difference does that make? maybe now we're just getting into that notion. now, add in energy and geopolitics. they're inseparable. you look at all the issues, all the wars, all the conflicts in the middle east. energy prices are falling through the floor. that's going to accelerate not only balance sheets concerns from russia to how europe procures its energy to saudi arabia as we've seen, but add in all the other terrorist-type issues and you really do have a volatile mix. one thing i can tell you for sure, that in many ways, it still makes the u.s. that much better in a comp. but there's going to be days where the correlations are heavy
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where we all move, like today. what's going to define 2016 is the notion we might start to see different economies like the u.s. moving in another direction. john, happy new year and back to you. >> all right, thank you, rick. not so happy for the markets thus far. the nasdaq faring the worst. we're continuing to watch this sell-off. the s&p also down, better than 2%. the dow off 427 points. we'll be right back.
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oil started this morning with some pretty hefty gains on the back of this geopolitical certainty. that has changed now. >> wti prices turning negative, under $36.50. with us now, from grz energy. geopolitical risk premium coming off. is this all about china? >> yes, definitely is. what we saw after the iran/saudi arabia, issues with those countries, is a lot of short covering in crude oil but not new buying coming in. when we saw what was happening in china and equities being sold off, crude oil started to follow later on. >> is this a little bit of a sea change? in the past, headlines like these would send crude prices up. is this a little tide turning because there's so much global supply now? >> yes, very measured response to this. i would expect crude oil to be up today with the two opec producers. it's really all about the oil
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supply. as long as that's not affected, prices are still going to be weak. >> right now, it's not in the interest of iran or saudi arabia to close the strait of hormuz. >> that's true. they both need the revenue from the oil sales no matter how low prices are. saudi arabia's looking for market share. if they close those straits, they're going to lose that. >> where do we go in terms of pricing? you anticipated a bounce. we got it but we're not holding. >> i think prices will be stabilized in this area. i don't see them testing the lows of that $33 we set a week ago. don't see them going higher unless there's an attack at an oil facility or some disruption in supply. >> if the markets continue to go down, u.s. equities overseas as well, do you expect more pressure? >> that could drag oil prices down for sure. that's been the relationship, the coo lation that's happened the last two months of the year. >> anything investors starting to kick off the year right now? >> as far as oil goes, we're looking for the increased demand about a month from now due to gasoline. we were expecting january to be
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weak post-holiday. and that looks like that's what's happening right now. >> gris, thanks so much. carl, back to you. >> all right, i'll take it from here, thank you very much, jackie. the sell-off continuing here. let's bring in peter, president of empire executions. peter, we had a strong reaction to china in the summer. some would call it an overreaction. you know, big drop and then came back some. is this that all over again? or is it different this time? are we getting different signals that should concern people, particularly about multinationals? >> no, i think this is an overreaction. when you're looking at china down over 7%. then they go to a circuit breaker which kicked in, probably shouldn't have. i think they'll figure that out later on. but no, i think it's overreaction. i think you know you look at the dynamics of the u.s. market. you look at the dynamics of the u.s. companies. our economy's not doing as badly as everyone thinks it is. >> so given that buying opportunity today, thoughts on
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sales -- >> i actually do think so. i'm still bearish. i think if you have an opportunity, you get a downdraft like that, there's always an opportunity to make some money. as a trader, that's what we're here for. >> the dynamic is we have been led by oil for months. and if it is true, that what was happening in the market this morning was short covering and not whole-sale buying, does that mean more weakness is ahead? >> you know what, oil is still a function of supply and demand. if there is an oversupply of oil, which you've seen from different, you know, data points we've seen over the last couple of weeks, there's a little bit of an oversupply still. once we figure that out, once the economy, u.s. economy, probably in the second quarter, starts kicking it up a little bit, they'll be more demand for oil, i don't think this is going to be a long-term thing. i think we'll probably see a bounce in oil at some point in the next, you know, couple of weeks. >> it sounds like you're not in the school of thought that thinks it has a washout at 20 or anything like that. >> no, no, no, let me tell you something, i've said this a couple of times.
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i would bet my salary against whoever said we're going to be trading down. i think it was at goldman. >> it was a goldman call, yes. >> that it was going to be at $20 a barrel. i would bet my salary against his salary that we will not see $20 on oil. >> the vicks is nowhere near it was in the worse of august, right? >> right. >> you don't expect it to get there, 50s, low 50s? >> no, i don't see that. i think we're probably going to see, continue to see a rally. we'll have a very, you know -- it's going to be a choppy market for the first couple of weeks. this is obvious we're going to see this now. i do think there will be some solidity and we will start, you know, getting the solid market base and that's where we'll go from there. >> a couple of china-related stocks or really companies based in china doing poorly this morning. i'm taking a look at jd and alibaba. yahoo! also by proxy, some high valuation stocks doing poorly. when you're buying on a day like today, are you buying the stuff
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in the middle or buying some of the stuff that's getting hurt the worst? >> when it comes to chinese stocks, i wouldn't buy anything in china because i have a fear of chinese market and the chinese equity market. i don't thing it's unfounded either. i think there's a lot of companies. we've seen that here with the dual listings. that some of them have not been -- maybe their accounting is not as transparent as u.s. accounting. so i try to stay away from stocks like that. but alibaba to me, you know, you look at it, you look at their business model, that's still a very strong company. when you get a little bit of a dip here, maybe it is a time to buy. >> all right, peter, thanks so much for sharing insight on a day when the dow is down, goodness, still more than 400 points. when we come back, dramatic way to start the year obviously. we're going to get to all the mo movers after a short break.
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after a flat 2015, stocks having a rough first day of trading in the new year despite the fact wall street strategists see the s&p rising some 10%. mike santoli. as our market is getting a
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little old. >> it definitely took on some wounds last year. we really did have the sense the bull market had a lot to prove to say it was still in place. i think today you saw a lot of the predictable, i think for some, predictable weakness in some of the high flyers from last year. you had some pent-up selling to be done in a new tax year. then one too many global shots. people thought perhaps china was not going to be the kind of negative catalyst in general as it was last summer. that came as a surprise. if oil can't get a bid on term oil in the middle east, what does that mean going ahead? i think you'll see perhaps a little more about global sellers just weighing on this market. this sense you can't sell your oil for as much. global trade has slowed down. so you have this sort of chatter out there. that you have these global entities that just are going to turn their equities into dollars now that the dollar's rising. divergences between the kinds of stock that are working and the majority of stocks that are not working and also divergences of
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central bank policy. and obviously that's at play today too. with the fed sticking to the party line of meth thodical rat increases this year and maybe the emerging markets in china not necessarily wanting to hear it. >> yeah, we thought we had divergences last year, we'll see if this year can top that. he's got a great piece on about that very topic. finally, some movers. netflix, downgraded today. the best performing stock in the s&p last year. we had will power on earlier in the program. their survey indicates that once again u.s. subs are going to disappoint. they don't believe international subs are going to make up for that loss. amidmany reports that they're going to announce india at ces, possibly russia in the days to come too. >> amazon also down quite a bit today, more than 5%. you wonder how much of that is just because of valuations, people getting a little skittish. or if there's a broader call.
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>> seasonally, amazon has performed that way though. it rises into the holiday season. it sells off before we get those numbers, which we could start getting some stats fairly soon. >> if you've been on break, welcome back. we'll see how the afternoon session settles. for now, let's get back to headquarters. scott wapner and the half. >> all right, guys, thanks so much. welcome. let's meet our starting lineup. joe terranova is here along with jim laventhal. calls of the day. what those downgrades for netflix and amazon mean to your money. these top performing fang stops topped out. and the winner is our trader of the year shares his strategy. what worked, what didn't and what you can learn from our portfolio challenge. we do begin with the global sell-off. stocks falling in asia all across europe and, now, here at home, on this, the first trading day of


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