Bill theres plenty of attention on what a poorer start this trading year is off to and not just any day or two days to see this kind of pressure but the two days to kick off the year traditionally not a great sign. Two other markets very quickly. Oil, yes, we continued lower again. Big time. Down another almost 4 on wti. We are now at 48. It did touch the 47 range and brent is threatening to go below 50 at this point. Lets show you if we can the 10year yield. It touched 1. 88. At its lowest point today taking us back the lows of last october. Yes. On your screen there, you are seeing the 10year u. S. Treasury note below 2 . The 30year well below 2. 5 . I mean, we are talking about levels we havent seen since the financial crisis and there is a big element perhaps of whats happening overseas but lets talk about it in the exchange. Markets see the dow off 92. Nasdaq off 39 and s p off 11. Joining us in that said exchange today, margie patel, david kudlow jeff reeves Samuel Stovall and Rick Santelli with us from chicago. Sam, i am going to ask you that question i was mentioning earlier. You know the stock market is down about 3 plus in the last couple of weeks here. Why is that do you think . Whats going on here . Well i think that an awful lot of investors bought into momentum heading in toward the latter part of 2014. They a lot of active managers realized they were behind the benchmarks and so i think trying to squeeze out as much alpha as possible and then basely after theyve had all those good names put on their reports for the end of the quarter now i think theyre lightening up on the names. We are seeing concern creep back in obviously, regarding energy and regarding earnings. S p capital iq estimates calling for less than 125 in earnings for 2015. Wow. Thats fresh pressure on the energy space seeing across a bunch of names today. Jeff would you describe the drop in oil prices as a spring or as a trap for the u. S. Economy or markets . It is a big concern. The biggest thing is Energy Investment. We saw halliburton lay off 1,000. Conoco phillips is cutting spending by 20 this year. Thats a big deal. Talk about the research and development you want at amazon but the Money Big Oil spends on investment, jobs rigs thats real money in the real economy and from a macro perspective, its more than gas prices and consumer spending. A lot of fields in fracking they dont have the jobs there, north dakota hit, texas will be hit and we have seen that so my biggest concern of a macro perspective is Energy Investment to see dry up and a big sucking sound. Is that why the 10year hit 1. 88 today and the 30year below 2. 50 . What do you think that was all about . I think its a culmination of lower inflation. We have energy adding to that. I think its still a concern of flight to safety. The u. S. Treasurys most attractive security in the world. So much uncertainty. I think that draws more buyers and keep levels very low even lower than we are today actually. Do you think they are forecasting . When you see those are extremes right now relatively speaking the levels today. Are they trying to forecast a much Slower Economy here in the u. S. . I think its not forecasting a lower economy. I think its showing that market is distorted by the fed buying so many bonds. And i think that also it says inflation is not going to be an issue and it really says other Asset Classes are more attractive than treasuries. Rick heres fascinating thing of drop in inflation and Inflation Expectations pulling treasury yields lower. If this suspect a financial crisis, somebody better tell the market well thats not what i think is going on. Just look at bund yields at 44 basis points add 1500 an youre right exactly where you need to be in 10s. We could argue the motivation for europes rates but you know, we could talk about the old party line. Theres not enough inflation. And we could all jump to the notion that Central Banks need to save us from that dynamic but i continue to ask one question. What are they doing to reverse it . I dont see anything. Coming to mario draghi little doubt in my mind today the treasuries really werent about oil and maybe they were an indirect offshoot to the weaker equities. Everybody in the worlds equities are weaker except china. I think its what the ecb floated as to the three choices of qure. It continues to like highlight that theyre going to do something magnificent but when you throw out there that theres three possibilities and the meetings january 22nd, a, the market is nervous, b, speckulator speculators are flooding into the products and also consider tracking the bunds and negative rates out the the 5year. We do not. The yield curve. At a 1. 50 about in a 5year. Todays intraday low on the 10 was the same as 1. 88. It was 1. 11 in 5s october. So the short end is thinking the fed is telling us the rest of the story and the rest of the curve dont believe it. Or believe it or see negative effects from it. I think the negative effects are here. Whether the fed or any central bank can reverse them. What do you think about that david . Well i think that what were seeing in the marketings now is about investor psychology and along with what rick said, uncertainty right now. The trade to bonds i think to treasuries is a flight to safety trade. Based on when people are looking right now oil falling, 4 5 in a couple of days, we have oil crisis selling precipitating selling in equities. We look across to pond to europe as rick was talking about. We have the ecb meeting in january that i dont think that he can deliver anything near to what the market is expecting. Okay. So what ends this david . Understanding whens driving it what ends it . What ends it . See if today around 1 00 was the capitulation selling. Earnings start coming in. Aside from the problems in europe aside from oil, when earnings start coming in people look at the u. S. Again and say we have an expanding economy. We had a quarter of 5 gdp. Looking for better than 3 next year. We have growing jobs. We have increasing wages now. And earnings coming in. People will come become and say the u. S. Stock market is okay. And thats where you want to be. Speaking of that bottom at least for today that we saw around 1 00 eastern, sam, you think its time to buy . Are there any sectors you see attractive valuewise here do you think . Well, the sector likely to show the greatest Earnings Growth in the Fourth Quarter and starting in earnest next week is health care and a group that still has relatively attractive pe ratios obviously very strong Earnings Growth and is one of those areas that while investors try to beat them down as we saw last week week before in the biotechs wants to bounce right back. Health care is an area that we would maintain overweighting. Erp looking at the s p 500 areas of green on a day like this and, bill you often thats where youre finding them. The rate place. The you till is and finding them in health care after the run we have had. Jeff, a quick question to you. Do you think this sfreng in health care can continue . Are there concerns on the policy front as today we look at the inauguration of the Gopled Congress . I mean i think health care runs far long time in the short term probably the best of a bunch of bad alternatives to be honest. I think the demographic shift to the boomers pushes this. Obamacare is bringing customers in. I dont think the gop will gut it completely and its a tailwind thats pretty good for 2015 and beyond. Anything you would be buying here margie . Well i think the industrial sectors actually turning out to be a sleeper sector. People are very negative because of capital expend yours relating. Energy Services Goods but thats all wellknown and so the stocks are reasonably priced for the cash flow. They have a lot of levers to improve the cash flow and might be a surprise sector and do People Better than people worried about. Would you buy a caterpillar and becoming lately a favorite short of bigname investors . Im not interested in caterpillar in here. I think there are industrials more tied to process industries much more better positioned aenl not so directly related to farming and mining which i think are sectors under pressure. Other areas will have attractive returns. Including john deere or others that you can let us know about . Not really related to the Agricultural Sector no. Other parts, process industries. Anything that can improve efficiency in manufacturing i think will do well. Okay. David, what would you be buying here . Anything . Going into 2015 technology is our most famous sector. Still . We think still undervalued and will do well in 2015. And i agree with sam and jeff on health care. Its a defensive industry thats become more of a growth industry. Has done well and continues to do well. Obamacare just adding to gains, revenue in that industry. I have to tell you, behind the scenes kelly and i were just elbowing each other as you said technology. Highest Profile Technology stock lately has been apple with that tremendous decline. Its experienced in the last, what . Since late november. Since thanksgiving peaked and not looked back. Does apple look attractive to you here . Apple is attractive. Apple has come a long way since the reverse split and we have seen or since the split and we have seen a lot of the Technology Sector continuing to do well. We think apple has a good year ahead of it. Okay. There well leave it. Thank you for being here this afternoon on a session where markets are off more than 200. The dow off only we should say 82. A rough start to the day. A number of data misses. Now attention turning to earnings among other matters. We have had turnaround tuesday twice today. Right . Coming up, closely followed wall street strategist byron wien with us today. Hes not making predictions. Non predictions he is emphasizing. He says the s p jumping 15 this year and that was before the last 2 days he made that thought known. Not a prediction. Sticking to that call . He will join us ahead. Drivers not wanted. Mercedes with the selfdriving electronic driving car in vegas. Phil lebeau will talk about it. Is it a problem of insuring Driverless Cars . Cannot wait for that. How do you that . Tom wilson joins us from vegas coming up. [container door opening] what makes it an suv is what you can get into it. [container door closing] what makes it an nx is what you can get out of it. Introducing the firstever lexus nx turbo and hybrid. Once you go beyond utility theres no going back. Welcome back. Joining us looks like just slight down day. What a day its been. Up 80 points on the open this morning for the industrials. Then midday a big selloff down 239 at the low. And now we have come all the way back here down 63 points. S p down about 9. Nasdaq down 34. Heres the s p 500 heat map. These are all 500 components of the Standard Poors index and you can see green to red. Mostly red, obviously. Talking about looking for the ports in the storm. Alibaba up 2 today. Twitter making a big move up 7. 6 so whos to say it doesnt pay to take a careful look at the value out there . Driverless cars making a huge splash at the Consumer Electronics show in las vegas. Where we find phil lebeau in the middle of the fun there. Mercedes with the self driving concept car. Tell us about it. Reporter its very cool. We had a chance to go for a ride in the vehicle. One of only crews in the world to drive inside this vehicle. The fo 15. A couple of features stand out. Fully aon the mouse. If youre in the vehicle, you wouldnt have to hold the steering wheel. It takes you where you need to go. Fully electronic. On the door panels are touchscreen panels to surf the web, look at video. Communicate over the internet with other people. Very cool technology. Built into this car. Earlier today we talked with mercedes ceo and asked him, is he a little surprised how quickly Autonomous Drive Technology has come along. Heres what he had to say. I would really say at least i expected five years ago. And today, our cars in the showroom are autonomous up to 18 Miles Per Hour and were waiting for the regulator to allow us to do more. Technically we are there. Reporter almost everybody that ive talked with in the Auto Industry here said the same thing. The technology is there. It is coming so fast that weve heard predictions of five years fully Autonomous Vehicles and a number of executives said quicker. It is a matter of whether or not regular lay fors and the public are ready for these selfdriving cars. Back the you. You know i guess the word autonomous is better than driverless car. Thats a scary sound to it. The language is telling. After i saw in that audi yesterday, i feel like that futures already upon us. Great stuff. Thank you, phil. Good to see you. Reporter you bet. How will insurers handing the Driverless Cars socalled. Autonomous. Joining us from the international Consumer Electronics show in las vegas, allstate chairman and ceo thomas wilson. Tom, happy new year. Great to have you back. Do you say driverless over autonomous . We say autonomous. Its going to happen kelly. Its just too good for customers but it takes longer than some people think. Were not waiting. When you say were not waiting, tom, because this is a message it sounds like the industry is keen to send. The accident rate isnt going to zero and up end the insurance model. Why do you see it as attractive and playing the space . Well first, its good for consume earls because they spend a ton of money on their carls today. And all this technologys going to make it cheaper. Could be 200 a month or so in terms of lower cost and a long time because you got people to buy new cars fix the cars. Change the part number and parking lots and going to take tenplus years and not waiting. What we have done is using that connectivity. We have drive wise to give people lower prices improve the drivinging experience access other people in the low call area and we are in the marketplace today. But let me go back to the Autonomous Cars for a minute here tom. Accident wills happen. How do you assign liability . The guy, the person in the car wasnt driving. Whos to blame then . Do you blame the auto maker . How do you work that out . Thats what im trying to figure out here. Well, when there was when the entire system, bill, would be Autonomous Cars then it would most likely be a system failure and a commercial liability not the person in the car. But its going to take a long time before people give up the cars and in certain rural areas you will always have it. Because that meenls fewer accidents which is a good thing for customers, were expanding our relationship with them from not just not mixing the car when after its been wrecked or helping them get through medical bills and expanding the relationship to improve the experience with the connectivity. We can get in the car and give them money for doing it. Oerls want customers to pay a month and our deal is differently. If you sign up you save 20 a month. Let me ask it another way. If there is an accident are the automakers that make the Autonomous Cars opening themselves up to even greater liability if you point to them saying its the system failure and you should be paying for this, not the person in the car . I think there would be an increased amount of Product Liability. Keep in mind, they have Product Liability today. They have problems with the accelerators or brakes theyre liable for making sure the car works effectively. This expands it some but the benefit of machine to machine communication is it should bring the overall number of accidents down which means the total cost for everybody, whether its customers for Auto Companies or Insurance Companies ought to come down so its a good thing. This is fascinating, tom. Like you were just saying i think it could expand the Product Liability, certainly, would open it up some for the automakers. Some ways what you are saying is going into the technology, you better get the accident rate to zero. Well they clearly they want to do that. They want to keep the customers safe. Were saying not only mean fewer accidents, we are trying to improve the driving experience so if that car breaks down for example, with our drive wise application we can automatically dispatch a tow truck to take care of them. We can tell them where the traffic hot spots are. Tell the spouse how long it will take them to get home at the current speed and theres a lot of things we could do to expand our relationship with this connectivity. The connectivity is a good thing. Is it settled yet, tom, in the industry . Is it clear where that liability is ultimately going to fall or is this an issue thats going to be tussled over in the years to come . Oh i think it will be tus led over. There will be people to debate it. Software manufacturer. Not just the Auto Companies. They make a piece of hardware. They make some software. Theres a number of Software Manufacturers that make middle ware that goes into the car. Theres applications which might fail. So its the liability for keeping people safe is really everybody whos involved in the car which is why its important to make sure we get this right. So while im very excited about whats going on it will take a while to make sure we get it right. Theres not all Autonomous Cars in five years. It takes tenplus years to reconfigure the system. Phil said its happening quickly here. Theyre coming out fast. Good to see you. Thank you for joining us. Enjoy las vegas. Thank you so much. Nice to be here. Allstate chairman and ceo. I dont know. Are the drivers going to have to load up on more insurance or the automakers