tv Worldwide Exchange CNBC January 14, 2016 5:00am-6:01am EST
>> all the major stock averages in correction territory or worse. more than 3 trillion dollars wiped off global stocks in the first 8 days of the year. >> and jackpot winning tickets to last night's record 1.5 billion powerball sd in three separate states. it's thursday, january 14th, 2016 and worldwide exchange begins right now. >> good morning and welcome to worldwide exchange here on cnbc.
>> i'm wilfred frost. we're following a deadly situation in jakarta at this hour. police arrested four suspected militants believed to have been involved in a gun and bomb assault in the center of the capital. three suicide bombers exploded devices in a starbucks cafe. in total as many as six explosions and a gun fight leaving at least 7 dead. no one immediately claiming responsibility for the attacks. we'll have a live report in a few minutes time. >> but first, let's bring you up to speed on the big market stories of the morning. another brutal session on wall street yesterday. a mixed session in asia overnight. the nikkei in japan closing down about 2.7%. that was off the session lows. stock there dropped more than 4% at one point catching up to what we saw on wall street yesterday. also locally some new data there showing japanese core machinery orders fell for the first time in three months. check out what happened in china. bucking the trend, stocks turning higher in the afternoon
with the shanghai composite closing higher by 2%. all the attention these days is on the currency. the yuan trading weaker in the offshore hong kong market which is more freely traded despite the fact that the central bank set a firmer midpoint officially when it comes to managing that currency so we'll pay attention to that gap. oil prices, the other front and center market move edging higher earlier this morning after break beg low 30 again in the $29 barrel region. we'll talk a lot about that. >> as for u.s. equity futures this morning let's take a look and at the point we're pointing to a slightly positive open. 3 or 4 points s&p. the dow up about 46 points and the nasdaq up about 9.5 points now. an ugly session on wall street yesterday. the nasdaq turning in the worst day since the august flash crash. the dow transports index suffering it's biggest drop in
nearly two years and check out these numbers. all major u.s. indices in correction or worse from their most recent 52 week highs. the dow is down 12%. the s&p 11.5. the nasdaq down and asian markets are trading this morning but what we're seeing is selling off. earlier strength in europe now. you're seeing declines across the board with the german dax down more than 2% in france. more than 2% declines as well. check out the euro. some are attributing this to the euro move shooting higher against the dollar. good for corporate america. bad for corporate europe so potentially that's a reason why some of the german exporters are selling off. why is the euro shooting higher? >> there were comments today saying that an ecb member would
suggest they don't need to do much more. it might suggest again that less easing is needed but also they're playing a bit of catch up compared to the u.s. and that's an interesting point to make this week. last week clearly international developments were leading u.s. markets where as this week yesterday it was the u.s. that had a much bigger move than anywhere else. oil playing a big impact but i think today asia and europe are playing catch up to the u.s. move yesterday. >> a few features to mention at the end of wall street. the same stocks. drove the markets higher last year and sold off especially sharply in yesterday's session.
u.s. stock continue to slide on fears of a global slow down. this is not the wall street journal. perhaps a sign that pessimism is increasing here. whether it's fears for fed rate hikes and china slow down. the bearish arguments are up. it's more sharply yesterday and this is the valuation. >> a lot of people are thinking why do we want to be in equities right now in a year where we'll be hiking interest rates. >> so the question today and going forward is one of the catalysts for a rebound if any.
we'll see any corporate commentary and guidance and economic data. there's some strength in the u.s. as long as that holds up. >> and those banks earnings will be key. we'll talk more about the previews later in the show. back to the story, massive blast in jakarta. martin is covering the story for us. what's the latest? >> good morning. you're right. jakarta the indonesian capital is still reeling, stunned and briefly in a security lock down after a series of blasts, at least 6 of them ripped through the commercial heart of the capital. a very popular shopping area or district and also where a lot of foreign embassies are. what do we know? let's recap. starting around noontime, lunchtime, local time about six hours ago the first of the blasts started taking out among
other things a local starbucks, a police post and also damaging a major mall. where was this? it was right across the street from the united nations headquaters and by the way also very near the u.s. embassy as well as embassies for turkey as well. now there was also a gun battle between these explosions. some say at least four attackers were killed. others say they were merely arrested. also unconfirmed reports that a number of security personnel, police as well as military were killed, indonesian ones as well and it gets more confusing because no group has claimed responsibility for the attack. the indonesian president has come out and called the series of explosions and the gunfire and this whole incident an act of terror expressing condolences and sympathies and promising to
get to the bottom of this to hunt down the people behind these attacks. a loft people in indonesia have been warning for months now of an impending and major terrorist attack on indonesia. you might recall a couple of weeks ago indonesia foiled a major terror attack planned for the christmas and new year period. a series of raids across the country. they arrested nine people with apparent links to is. so this is something that we're continuing to follow very closely. a major story in asia and also for markets out here. back to you. >> we'll keep you posted on that. martin thank you for the update. let's get a check on what wall street's agenda looks like in the day ahead. it is thursday. that means weekly jobless claims are out at 8:30 a.m. eastern time. first time filings for unemployment expected to hold near the 275,000 level. they have been below 300,000 for 43 straight weeks. that's a sign of strength in the labor market. also look for december import and export prices and we have
more fed speak. st. louis fed president speaks about the economy and monetary policy at 8:15 a.m. eastern. there will be a lot to digest before the market open and you can add earnings to that. intel is out of the close. >> stocks to watch today. go prowarning it will fall below forecasts. the company is also cutting 7% of its work force. the stock getting slammed in extended trading as you can see down 25% overnight and over the year down some 80%. not a good period for go pro. extra space storage is being added to the s&p 500. it has been acquired by ace. nice share price up 2%. >> it's in and around 5% of the
work force. the firm is now looking to cut up to 10%. fixed income traders and deep cuts are expected in debt currencies and commodities. and the reports of a 10% cut are just, quote, speculation. >> other news for you this morning. sears plans to close a mall percentage of u.s., k-mart and sears stores. it's part of a review and quits in with efforts to cut costs. the engineering union reaching a pen tif agreement to extend labor contracts for more than 20,000 workers. union members will now vote on the six year extension and chipotle says they're con fireworks den the chain can prevent future food poisoning outbreaks. the company speaking out at a conference yesterday about steps it's taking to improve food safety. it rose on the comment but the stock is still down more than 30% from its pree.coli outbreak levels back though above that
$400 a share. >> right we have a winner or winners. at least three people managing to beat the odds managing the 6 numbers in the largest powerball jackpot in u.s. history. landon joins us with more on that story. >> unfortunately there wasn't any of us. but three winners in three states california, florida, and tennessee. one came from this 7-11 the winner picked the five matching white balls and one winning powerball. the odds of winning the jackpot were 1 in 292.2 million. you had a greater chance of being eaten by a shark or hit by license twice. and they're lining up to buy tickets in ticket where is they're sold.
even hopefuls that lived in states that don't offer the lottery crossed state lines at the chance of becoming a billionaire. the current round began november 7th and rolled over 19 times. the three winners that we know will split the $1.6 billion prize which after federal taxes is $737 million if they take the lump sum. >> i was trying to do the tax math. obviously they do pay the federal tax but state and local taxes as well which would be pretty fortuitous that they're the ones you mentioned because of lower tax rates. new york is a horrible place to win because you have to pony up more. >> the 30 annual installments but what's great is the three states that had the winners is none of them have the lottery and a nice lump sum they're taking home. >> the best would have been puerto rico because you don't have to pay as much taxes.
>> there we go. the powerball winning. >> when we come back the currency shot heard around the world. remember this? this week, tomorrow marks the one year anniversary since the shocking swiss franc devaluations. we'll talk about the ripple effects still felt today, next. >> plus a world of worry. from unrest in the middle east, geo politics leaving investors on edge. we'll put things in perspective with citi's chief global political analyst. you're watching first in business worldwide. oh hey allison. i'm val, the orange money retirement squirrel from voya. val from voya? yeah, val from voya. quick question, what are voya retirement squirrels doing in my house? we're putting away acorns. you know, to show the importance of saving for the future. so you're sort of like a spokes person? no, i'm more like a metaphor. okay, a spokes-metaphor. no, i'm... you're a spokes-metaphor. yeah. ok. see how voya can help you get organized at voya.com.
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a never before seen move rattling investors everywhere so while it's weakening and it's economy is healing central bank shock therapy is still with us. take china after years of letting it's currency climb boom, last august. it is sparking panic about the state of the economy. that's still going on now every way. we're waking up to see which way china managed it's currency after more drops last week and more in the offshore market or europe, mario draghi promised to do what it takes to boost inflation and then failed to deliver massive easing in september sending the euro spiking 4%. why are these surprises happening? six years into the recovery central banks are running low on bullets to fight on going economic sluggishness but they're causing communication mistak
mistakes. so far janet yellen has communicated clearly and the fed forecast for the market is over reflecting two leaving the door open for potential surprises and challenges when it comes to managing the expectationexpecta. everybody is wondering whether saudi arabia can afford to keep it's peg destroying finances but it's the surprises and the shocks and rising amount of policy errors keeping currency traders and everyone else on high alert embraced for volatility this year. >> you said it, communication is key from the central banks. i remember that move very well. we were on air when it broke last year. more breaking news this morning, a string of explosions and a gun fight left at least 7 dead in jakarta. police expect at least one suicide bomber was involved. the attacks on the indonesian capital are the latest on a
string of geopolitical risks adding to overall uncertainty in the market. here to discuss global concerns is citi's chief global political analyst. great to see you. let's touch off on this development in indonesia overnight. another geopolitical concern for markets to get their head around. what's your latest perspective on how significant this one is. >> well it comes fast on the heels of the attack in istanbul earlier this week. they're in the center and targeting civilians. that's very much in the broader context of what you see in the data about terrorism. now more countries had the terrorist attacks than not. that is a big change in trend. from a security perspective of course it just underscores how difficult it is to prevent these attacks. these loan wolf attacks as they are known. it's becoming a feature of the landscape but it will unsettle the local markets at the time.
>> and it seems if we look at the paris attacks that economies and markets are able to continue. they are able to focus on the positives if you like and move forward. is that still your take? that despite the elevated number of attacks that we expect in 2016 that markets and economies can plow on regardless? >> well, i think we have to look at it in two different ways. right? the momentary market impact tends to be minor from such incidents. and fortunately i think it is increasingly regarded as part of the background of the times that we're living in. but it does register in terms of policy makers priorities and i think that that's quite important. we have seen terrorism rise to the top of the list of concerns for u.s. voters for example in an election year despite the fact that the u.s. has not experienced a terrorist attack and for holland while the market impact in france might have been
neglibile he moved to have france intervene in syria and france has taken a much tougher foreign policy security stance and needs to be seen to be involved and taking an active stance whether it's on security, police, and also on the immigration and integration debate. so it really effects the amount of political energy that's available for other things as well: people need to feel safe. that's the number one priority. >> given this state of financial markets that we began the year, the worst ever start to a year, clearly there's a lot going on economically. financial markets that are concerning but in terms of geopolitics, the rising risk of terrorism. what's happening in the middle east, do you think that is being priced into this risk off marketplace? or do you think it's being underpriced in the market? >> it's a really difficult question to answer. the way that we approach it is
that not only are old style geopolitical risks rising. sorts of things that explode as we have seen with real distress but our concern is that these two risks are converging where geopolitical risk used to be transmitted via dproeth shock or oil price shock we wonder for example if a new channel is emerging with refugee risk transmitting developments from the middle east into develop market political risk in europe in particular. that we see as something new. i think markets have great difficulty pricing structural changes, right? you need an event risk and so far all of the events we discussed whether it's the north korea hydrogen bomb test or the terrorist attacks in jakarta and istanbul have not been enough to move the needle but taken together it paints a pretty
worrying picture. i do think a more macro level risk would be required to move markets but it does effect sentiment and i think that that's important. >> tina, just a final question from me on missing home, the news over the weekend was that we might get a brexit vote this year rather than next year. what's your latest thoughts on that and which way that might go? >> well, home misses you too. it's sad not to have you sitting next to me here in london. the brexit referendum is turning, to my mind, into a risk of a brexident. sorry to keep using these kinds of words but they have taken on a life of their own. cameron hoped for a deal at the february summit that could lead to a june referendum, why? because nobody wants to hold that referendum in the middle of what is becoming known in white hall as the summer sailing season and they don't mean
leisure sailing they mean refugee sailing season. that's what i mean about the refugee channel transmitting risks to developments that would have been totally unrelated when the prime minister went and asked for this referendum. the negotiations are continuing in earnest. it's all looking a bit complicated. i don't think we get a referendum in june. i think september is more likely and that brings with it more risks of more complicated environment because the rev withdrew gee flows may be slowing for the winner but they're likely to pick up again in summer and that effects perception. we still have 20% of british voters undecided. >> tina, thank you for joining us this morning. great to see you as ever. >> not enough time because the wall of worry grows and that's our twitter question of the day. i asked you on twitter what's sailing stocks. unfortunately there's only four choices for a poll so i chose oil, china earnings or the fed. feel free to write back all of
the above. geopolitics. wilfred is worried about the brexit. there's a con influence of negativity. jim cramer writing did twitter expand to 10,000 words yet because that's how many you'll need to explain this market where even good news isn't taken as good news. >> do get involved with us on twitter. >> we'll read your answers. >> we'll assess the results of that poll later. >> when we come back in a galaxy far, far away, fed chair janet yellen seems to be a fan of star wars. just kidding. but we'll tell you how it made into it the beige book. but first grant johnston joins us with today's business travellers forecast. good morning, grant. >> hey, guys. good thursday morning to you. looking at a little snow off the great lakes this morning. buffalo could see a couple of inches. lesser amounts farther east. just flurries this morning. no accumulation. elsewhere good travel weather. milder weather. sunshine, chicago, a little snow
developing in the upper midwest and northern plains later today and another round of rain. also showers down toward houston later today. temperatures will be milder in the south. still pretty cold up north but not as cold up toward the great lakes. more on worldwide exchange right after this. friends coming over? yeah, so? it stinks in here. you've got to wash this whole room are you kidding? wash it? let's wash it with febreze. for all the things you can't wash, use... ...febreze fabric refresher whoa hey mrs. webber inhales hey, it smells nice in here and try pluggable febreze... ...to continuously eliminate odors for... ...up to 45 days of freshness pluggable febreze and fabric refresher... ...[inhale + exhale mnemonic]... ...two more ways to breathe happy
in a gun assault in the center of the capital. three suicide bombers exploded devices in a starbucks cafe. as many as six explosions and a gun fight leaving at least six dead. no one immediately claiming responsibility to the attacks. >> let's get you up to speed on the overnight market action in asia. sharp sell off closed off the lows where stocks were down at one point over 4%. the nikkei closing down 2.7%. stocks weaker in hong kong. shang high bucked the trend again in china. a gain of 2%. chinese currency was actually managed stronger though on the offshore less regulated markets went weaker which is something to watch through the session. in terms of european stocks right across the screen, strong euro doesn't help when it comes to the exporters fortunes. europe reacting to what we saw in wall street overnight where we saw it taking us back to
september levels and more than 20%. all averages in correction mode. that means 10% off the most recent highs. strength in terms of futures not very convincing though. dow futures up 6. s&p and nasdaq futures have turned red. nasdaq will be one that people are closely watching after the tech sell off lead the decline yesterday. a lot of the 2015 high flying momentum names getting knocked hard. amazon and netflix around the open to see if there's more selling. >> all three falling into the red there. now to today's trade of the day. the benchmark ten year treasury yield is headed back to the key 2% level as investors flee the stock market and look for safety in bonds. our data team crunched the numbers to find out the best and worst performing sectors in the s&p 500 when the ten year fell by at least 10% in over one month. they found pharmaceuticals and medical device makers all perform well while financials
and energy companies perform the worst. go to cnbc.com and check out cnbc pro. >> you have been waiting for that. you have been saying it's not moving that much. >> still small moves but closer to 2% it's something to keep an eye on. 2.065 this morning. >> did you see this, the latest star wars movie such a global phenomenon that the federal reserve has taken notice. the beige book noted very dryly in the boston area that a toy company reported much stronger sales driven by the force awakens. however the beige book didn't offer nigh details such as whether old favorites or new star wars bb-8 stoked demand. some economic impact there. >> there we go. >> from star wars. overall, the beige book reporting solid economic activity though wages not rising. that's something the fed has been looking for. didn't really see it. >> we'll have to keep an eye on the rest of the data coming out this week.
retail sales tomorrow. coming up this morning's top stories including another wild session in global markets and our news maker this morning, worldwide investments head of european equities, he'll join us just after this short break. your path to retirement may not always be clear. but at t. rowe price, we can help guide your retirement savings. so wherever your retirement journey takes you, we can help you reach your goals. call us or your advisor t. rowe price. invest with confidence. in new york state, we believe tomorrow starts today. all across the state the economy is growing, with creative new business incentives, the lowest taxes in decades, and university partnerships, attracting the talent and companies of tomorrow. like in utica, where a new kind of workforce is being trained. and in albany, the nanotechnology capital of the world. let us help grow your company's tomorrow, today at business.ny.gov
off global stocks in the first 8 days of the year. >> how's this for a business meeting. pope fran chis and google gathering for a rare tech summit at the vatican. it's thursday, january 14th, 2016 and you're watching cnbc worldwide exchange. ♪ >> france off a similar amount and the ftse 100 out performing in a relative since but both down the best part of 2%. he is head of european equities at fidelity worldwide investment and joins us from london paris. thanks for joining us. let's talk about this turmoil in european markets. last week it seemed to be lead by china and this weak lead by
what happened in the u.s. particularly yesterday. is it fair that europe is reacting so negatively or, in fact, is there positivities to focus on in the economies this year? >> well, i think that if you try to think about why market versus been so volatile or so -- opposed to such negative returns since the start of the year it's actually quite consistent with what's been happening over the last few year which is is that every time there's been a concern about the macro economic environment or growth in the u.s. markets reacted quite negatively and the reason for that is for the last few years while market average versus made progress corporate earnings growth has not. so in a sense the market made progress in anticipation of a recovery in corporate earnings so every time, especially from china and the u.s. one of these concerns about the macroeconomic out look there's a fear that the
corporate earnings recovery gets pushed out to the right and you get bouts of volatility. >> do you expect corporate earnings to grow in europe or is this volatility we have justified because we're not going to see the earnings growth? >> over the course of this year we'll start to potentially end up with a more positive perspective on the outlook for corporate earnings growth so as a result of that i do think that some of the reaction in the short-term has been quite overdone. >> i want to pick up on that point when it comes to finding a bottom, oversold conditions. i mentioned that on the cover of the new york time which is is not a business paper, front page, top of the fold, u. s. stocks continue to slide on fears of a slow down. clearly pessimism is rising and the negative reasons for the sell off are piling up. how do we know when it's reached a fever pitch and when it's safe to buy. >> there's an old adage in markets which is that when it's
in the press it's in the price and certainly you have given a very visual demonstration of the fact that the nervousness and negative sentiment, you know, has reached the front pages. so, you know, i think that what interests me is, you know, and us as investors is that more positive scenarios about the development of the economy and, you know, in the u.s., in europe, in the u.k. and across the developed world are being crowded out, you know, by concerns about sort of near term sort of negative factors but actually if we look at, you know, many other points of data whether it's purchasing managers index, whether we look at indications of consumer confidence, we look like we're in the phase of a kind of gradual economic recovery. so it's important, i think, to take a step back from some of these negative headlines and think about what could be some of the more positive drivers over the medium term.
>> clearly oil price weakness had a big effect on equity markets this week. europe a net importer of energy. is this a positive to be celebrated? >> absolutely. i mean, i think that when you think about what's happening in the world right now and you think about what's happening in commodity prices they're effect i havely a form of value transfer from commodity producing parts of the world to commodity consumers. so inevitably as the costs of energy and all of the inputs comes down that is a form of let's say tax cut or income growth for the average consumer in the developed markets. now obviously that takes some time to feed through but inevitably i see that as being part of the positive story over the medium term. >> thank you for joining us a.
>> very kind to bring that up wilf. >> thank you very much. >> had to get that arsenal play in there. >> i do, indeed. >> got stocks for you to watch today. reuters reporting three of the top shareholders are calling on the bond insurers new ceo to quit. they're claiming he has been too slow in settling $4 billion in insurance claims in which two of them have an interest. barrick gold sold 2 gold mines. it will help cut debt and strengthen its balance sheet and focus on core minds and the shake out in one time high flying internet stocks continues. we mention netflix and amazon. how about twitter tumbling to a new record low. down nearly 5% woenz. below $19 a share and go proseems like not long ago go prostock was as extreme as those that use their cameras to show them repelling down the side of mountains but a big drop
off in sells is causing them to ditch the shares and the bad news is piling up. >> so a little bit of a different story. gopro announcing it's cutting 7% of the work force and forecast fourth quarter revenue below analyst estimates. shares plunging 25% in after hours to 1102. a new low that reduces the market cap to less than $2 billion. gopro was hurt by slower than expected holiday sales. it pinned it's hopes on the camera it launched last july but it didn't sell well and they cut prices twice resulting in excess inventory. investors are questioning whether they can diverse identi. >> and analysts don't believe they have enough attractive assets to be a take over target. >> they do have a great brand but at the end of the day they
have very little ip. i think it's less than 50 patents and that's what a lot of companies are buying. they haven't been able to get a lot of traction on the media side. so it's not like a beatz type acquisition where you're buying guys that can build a real service. so i would say no it's not an acquisition target at this time and quite frankly i out the he would want to sell. >> the stock is down nearly 90% from its all time high of 98.47 in october of 2014. >> just crossing the wires, goldman sachs lowering it's price target on go pro. they're late obviously. taking it from 29 to 15 which is where it's trade beg low there right now. thank you. >> let's have a look at this morning's top trending stories. pope francis will meet with the former google ceo on friday. the rare meeting will take place in private at the vatican and does not relate to googles
global business. the pope has called the internet truly a gift from god and does have a twitter account with 8 million followers. i wonder what he will say as to the origins. >> he also gets a lot of money for climate change as well. perhaps that helped secure the invite. presidential candidate fed cruz failed to disclose loans he took out for wall street banks when he ran for texas senate in 2012. it could violate campaign rules. >> interesting. and his wife used to work at goldman sachs. >> but no relationship loans and there's no suggestion that he did anything wrong except for failing to disclose them. the cover story of the new york times. we'll see how he reacts to that. >> the annual scorecard of the best and worst airlines are out. alaska and virgin america leading the pack in 2015. >> they always win. >> 80% of u.s. flights a arrived at the gate no later than 14 minutes behind schedule.
flight cancellations and lost baggage were down significantly. i didn't know this came out. we don't have that in london. >> always those winners. they always make it on top of customer satisfaction. i have a blow back thursday. sunny d. >> we did. i don't think as big as here though. >> the orange beverage maker is going to be bought by private equity firm brenwood partners. they hope to revive the pantry staples americans turn to healthier drinks. it was the commercial. >> i remember the commercial more than the product in england. we did have it but the commercials stick in your mind a little bit. >> i never grew up with sunny d because my mother was a dentist and it had a lot of sugar in it. >> yeah. >> they'll have to rebrand it healthier. organic, gluten free sunny delight. >> orange doesn't have to be
gluten-free. >> it's not orange. it's something else. >> still to come here, this morning's must reads. general electric is boston bound. why one economist says the ge win is even better than the idea of hosting the olympics. you're watching cnbc. first in business worldwide. we're back in a couple of minutes. friends coming over?
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winning ge better than the olympics. here's the take from the research labs at mit and harvard to operating rooms at massachusetts general to the life sciences and tech firms in kendall square and just for good measure we have a steady pipeline of talent graduating every year saying it's a huge opportunity. in boston because ge is a hot bed of innovation they're doing all sorts of things on the internet of things and new technologies just on bringing a big innovation company which ge has been on top of its game. the stock has been up nicely. whether that's nelson peltz or the shifting of technology and
innovation away from financials. >> the state officials don't rest on their laurels and push for the next one to win as well. >> i bet rio would rather have a big company moving toward it than having to host the olympics. anyway we're approaching the top of the hour and that means joe, becky an andrew are getting ready for squawk box. becky joins us from new york now. and becky yesterday we were trying to point on the positives with europe bouncing back. a very sharp switch and it seems the u.s. is slightly leading the negativity this week as opposed to the international situation last week. >> i would agree 100%. usa today, lead story, i don't know if you looked at this yet. but the oil price pain starts to spread. it goes on to talk about how it thinks these lower oil prices have actually lead to a decline in growth by about .5% in gdp which look i get it. i realize that lower oil prices are pushing stock prices down every day but i think this is a
little bit ridiculous when you think it through and realize that lower oil prices is a huge tax cut on the consumer. they're a consumer lead economy. they talk about poor united which is looking at lower traffic in and out of houston it's hub because of oil executives not traveling. if you look at the airlines over the first three quarters of this year they had record profits. over 18 besi$18 beside $18 bill. their costs are down substantially so you understand around the margins where it hurts. you understand that there are high paying jobs being cut back and sectors getting tripped but all in all you have to look at lower oil prices as still good news for the economy and probably a very big part of the reason that the consumer stayed so strong through all of this. so you have to wonder if some of this is getting stretched just a bit on all of these things. >> add we just learned from fidelity, if it's in the press it's in the price. i wonder if that's true for oil
as well. thanks for pointing it out. especially with the move in transports. >> i have a question for you too. did you get lucky last night? >> sadly i didn't. you know what after all of my hopes of winning the big jackpot i didn't get a ticket. i bought one on saturday and embarrassed myself going into a drugstore and super market so ask if they did tickets and they looked at me as if i am an alien. >> none of us obviously since we're all here this morning, right. >> we'll have to leave it there. squawk box coming up in nine minutes time. >> thanks becky. when we come back, jp morgan set to post quarterly results within the next hour. the insideline when we come right back. ♪ the flu virus.
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that's why it's so closely paid attention to. banks overall have not been fairing well this month. they were supposed to be a bright spot for 2016 but the expectation is they are really falling prey to all of the head winds in this market and they're going to have to get through what is going to be dismal fourth quarter earnings before we get there. overall analysts despite very slight revenue growth around 2% but a sharper rise in profits thanks to massive on going cost cutting. that's for the sector as a whole. analysts expect jp morgan to post $1.37 a share but revenue to fall to $23 billion. that's a decline from a year ago. jp morgan and other banks as we mentioned they have a lot of head winds to deal with this quarter. some of them you can ignore. the steep decline in oil prices is a really tough one because banks have more than $100 billion in exposure to energy loans. jp morgan about $44 billion alone. most of it is high grade debt
but they're having to set aside more money in case of potential loan losses. jp morgan has said if crude stays at $30 barrel for 18 months they'll have to put away three quarters of a billion dollars in case of potential loan losses so that's no small feet. second higher interest rates mean banks will earn more on loans but there's a worry that credit quality phas peaked. the number defaulting on their loans is near an all time low. experts say it's too good to be true. it can only go up from here and this is happening just as debt gets more expensive. so potentially some of the loans could go bad. in the past volatile energy, rate markets, that would have spurred more trading activity but jp morgan's cfo said that a slump in trading activity that tends to be seasonal but, in fact, actually played the last several quarters for the bank that's going to continue in the fourth. of course we will get the earnings in about 45 minutes
time. always some very indicative come mens on the state of the u.s. and the global economy and we'll have those headlines for you very shortly. back to you. >> kayla, thank you very much for that. we look forward to those results. 7:00 a.m. eastern time and sarah, i have to say, all of the banks earnings fascinating to focus on. we have the investment banking divisions effected by the volatility and the falling stock prices and also the retail part of the banks with the rising interest rates and what their forecast is for that. >> we'll see if there's any commentary on raising prices. back to the narcotstocks, we as what's ailing stocks so far. 39% said china. 14% say earnings and 12% the federal reserve. there's a lot of mixed opinions. a lot ailing this market. we didn't put valuations or geopolitics. there's a landry list of things and we'll be watching the momentum stocks that sold off so
hard yesterday. >> we are, indeed. that's it now for today's worldwide exchange. coming up tomorrow, chief equity strategist bob dole. >> have a great day. today. all across the state the economy is growing, with creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow. like in the hudson valley, with world class biotech. and on long island, where great universities are creating next generation technologies. let us help grow your company's tomorrow, today at business.ny.gov
good morning, breaking overnight, explosions and gunfire. at least 7 people killed by attacks in indonesia's capital. four or five are terrorists themselves. fall out from the sell off on wall street. all the major u.s. stock averages are very close or in correction territory and more than $3 trillion wiped out on global stocks since the start of the year after another disappointing session yesterday. and congratulations to at least three powerball jackpot winners. one in california, florida, and tennessee. and condolences to the millions
of losers out there. i don't know what happened. i was sure you were going to win. it's thursday, january 14th and squawk box begins right now. >> live from new york where business never sleeps, this is squawk box. >> good morning, everyone. welcome to squawk box here on cnbc. i'm becky quick with joe kernen. sitting in with us is mike santoli. cnbc senior market commentator. our top story the major u.s. indices falling into correction territory or worse. most of them at this point looking down in double digits from the most recent 52 week highs. the dow is down about 12% from the most recent high. the 52 week high. s&p off 11.5% and the nasdaq down