Transcripts For CNBC Squawk Box 20141216

Suffered its worst trading session in 15 years. The ruble bounced back at the open this morning, but it has since dropped once again, falling into negative territory against the dollar despite these extremely hard core moves by the russians. Russian stocks selling up again as Oil Continues to decline. Michelle ka reduce sa cabrera will join us with the russian story and why the markets are very worried in just a moment. Headlines out of china grabbing attention this morning. The first flash reading of the hsbc pmi showing the First Manufacturing contraction there in seven months. It was a reading below 50. This is the latest sign of weakness in the chinese economy. Stocks rose on hopes of more stimulus from chinas central bank. As for how things are shaping up here at home, check out the futures this morning. At least in early trading, remember yesterday, everything reversed by the end of the day. We were up 100 points in premarket. But in the premarket this morning, dow futures are indicated up by close to 80 points. S p futures up by 9 points and the nasdaq up about 17. 5. Boeing hiking its dividend 25 to 91 cents a share. The Aerospace Client boosting its Share Buyback program to 12 billion from 10 billion. About 8. 3 billion excludeing debt. The electronic payment firm trying to move away from traditional payment. Joe . Thats pretty good. Whats the yield now . Well, what did you say, 25 . You can figure that out, right . 25 . Three times 25. Disney raises by the large amount. This is from a yielder to even a bigger yielder. And, becky, yesterday you were right, it was not a triple digit loss. 99 points, wasnt it . 99 points. Gained back, only finished down with wait a second. You will argue that is not a hundred point no, no, im saying people that did argue that it was not a triple digit loss. Doesnt seem to be able to slow the rubles decline. Chief International Correspondent Michelle Caruso cabrera is here to put it all into perspective. I would like 17 Interest Rates. Is there any reason to believe id get my principal by by investing in russia . Thats the big question. The general rule of thumb, the higher the yield no, but thats what i mean. It seems like kind of a futile attempt when theres so much question as to whether youll ever see the principal. They have so many things working. No, that was different. They did it once before, didnt they . They wiped that out before long ago. 1998, yeah. I wish we could do this int intraday. With we at 66 of now . No, were at were not. They raised Interest Rates last week by 100 basis points. They did nothing to stem the decline. I remember at the time you said this is really big. They raise to keep benchmark rates again at 6. 5, 650. And the runl is still declining. Yesterday, the finance minister came out and said they think the economy in russia next year could fall 4. 5 . Oil stays at 60 bucks. The decline of 4. 5 . No. I wouldnt think they could fall more than that. Yes, no, absolutely. Absolutely. Agreed there. Possibly leads to more sanctions against russia. Roft democracy net, the other day, issued a huge number of rublebacked funds, ruble bonds, piles and piles and piles of them. The question here is what are they going to do with all those rubles . Theres fear in the currency market theyre going to go out and buy dollars with them because they would need them and then youll have a flood of even more rubles coming on to the market. The situation is getting to the point where theres one member of the duma trying to get a law passed where if youre an exporter and you bring in foreign exchanges, you must sell 50 of it back right away. And now its zero, presumably. Did you say yesterday or i read somewhere that if it gets through 50, its just ive had people 60 or are you talking about oil or the ruble. Yeah. Ive been people telling me its going over a hundred. I thought that was the key it hasnt been there recently. You probably had a currency trader on who said that. I didnt say that. It was a technical level. Michelle, there are would places where they could essentially matter . The extraordinary debt to gdp, it looks manageable . Absolutely. Like 1998. 98, right. If the dead is in rubles, its its not something thats the way it supposed to work. When i was there, the ruble was a sign of power and it was a real sense of diminished power that the ruble had gone down quite as much. This number here at 70 is, like, double the biggest one you can go back ten years under putin. Does this undermine putin domestically . So youre asking essentially the question does this make putin blink . Im not sure. So far, he still has tremendous support from the people. Theres been an increase in purchases. Consumers have been buying more because they import everything there. So they think, oh, my gosh, my currency is getting weaker by the minute here. Let me buy everything i can right now because its not going to have as much purchasing power down the road. We hear stories about empty shelves because they import so much from europe. So you think i better spend my paycheck today the thats latin america in the 70s and 80s. Its all dependent on putin, if he abide eggs this right. And we know now that theres deep divisions now twl between the central bank and putin. And at first he didnt want them spending reserves, supposedly, to defend the currency. But now, you know what they do . They come out and they say were not going to defend the currency. What have they done nearly every single day since then . Defend the currency. Are you hear for the fed stuff or because you lived in are you a russian expert . There are many reasons. Arent my good looks one of them . It could be. And you lean communist, but joe, last time, where i became a capitalist was russia. But we the effects of you a tonnism was we found a guest named boris. Boris, are you there . Hes russian, isnt he . He is russian, i think. R managing director at bk asset management. You also i was just kidding. Youre a big currency expert. Werent they supposed to defend that . Everything you guys have been saying is absolutely true. One of the key components that they have no control over is oil, right . The ruble is such a currency right now, theres a massive correlation. The lower the oil goes, the lower the ruble goes. So we can control one side of the trade, which is Interest Rates, but they cant control the decline in oil. And i wonder if theres a Massive Hedge Fund trade. Id be shocked, shocked that a hedge fund was trying to do that, boris. Exactly. Even as we are sitting here right now, we are close to 70. We started at 65 just an hour ago. I think the market is starting to take shape right now. Boris, they raised Interest Rates 650 basis points, right . Right. And its still tumbling. Why is it tumbling . Because they can only control one side of the trade. Oil went down overnight, and that killed their whole plan. If oil stabilized right now, they could get some breathing room. So back to the panel, then, this is a situation where pultin has to decide what he does at this point, what hes done to this point is stir up nationalism. And rally the people around him. If obama wants to break putins back, he wanted to wait a second. Obama doesnt decide that, but our central bank, right . Correct. Which is why you cant have that im playing real politics here, fantasy land. The fed is going to do what theyre going to do. My point is, there are a lot of political ramifications of this. Even if the fed decides to tighten up Monetary Policy and the side impact of that is weakening the ruble even further, you could have massive destabilizati destabilization. I was thinking its fortunate we have sanctions in place because that allows putin blame sanctions for whats going on rather than pointing a time of Lower Oil Prices and this kind of stress on the economy could be a time for economic reform in russia. I dont think thats going to be the case this time, particularly when you have countries, michelle, that when oil prices fall, they suddenly open up the oil market to investors, open up the economy. Russia was a good example of that. That may not be the case this time. The currency trade in geopolitical mess, if putin uses that as an excuse, we could continue to have some problems going into next year. Keep in mind, beyond the ruble, emerging market currencies are just i mean, it is a disaster zone and theyre sending out all kinds of signals. Emerging markets. Which is why i think the fed being the macroeconomic factor in all of this is going to temper their rhetoric. And they dont want to exacerbate the em crisis. All they have to do is remove that phrase to make people move that even further. They still reserve the right to watch the markets. The recent moves are going to expand our i think its tomorrow. Were going to move, but they dont mean it . Yes, yes, yes. And you somehow defend it as appropriate and fair . Its necessary. Is that doesnt mean youre not. I want to get to this issue. The indian rupee, boris, as well, and michelle was bringing this up. Malaysia. How far does it spread and what are the risks now that this becomes systemic . Well, it all depends, again, on what the fed does. Where, you know, where the oil prices go, whether the market takeses the whole psychological move to all the em nations. The other point here is what else can russia do to stem the tide here . And then the final scenario, they could actually start monetizing because we dont have any assets, really, of oil and land. I think they have like 500 billion, maybe 400 billion, but theyve gone through almost about 100 billion over the last month. Its never enough in a crisis. At least thats what they can do in the meantime. And the key difference between now and 98 is growth. Right. So hopefully the adjustment here will be something the last thing, i am not a stock analyst. But the only thing as a russian asset that looked interesting to me is luke oil. Luke oil is up against Everything Else and the reason why i kind of like it is because it has a lot of assets. So maybe its more diversified as a russian asset. Whenever we have a crisis and a bubble and a boom, we always regulate everything. A continue mall ves already left. If someone had said whats the next big bubble and what will cause the next big selloff in financial assets, if someone told you a collapse in oil prices, that would have been the last place you looked for the next development. Here were watching it play out as it does and nobody knew the amount of debt and high yield and and nobody connected all the dots. Theyre saying jack lew said theres not contagion and its not housing that affects everything. But were watching it where were even taking it as a negative from the stock market. Im coming back this hour and im going to bring you a chart. Is that where some of your friends inflated a little bit too much with their loose Monetary Policy . Is that where some of the oil. This is the feds fault. Basically, everything is its not their fault, its your fault. Its my fault. The dollar against the weaker oil prices. Dollar denominated trade. But the reason it was up there in the first place was because of how people could perceive it was going to be weak because of the central bank. Boris, thank you. We have had do you remember . We had natasha on at the same time. Boris. One time. Which would be a can i say one thing before we go out of this . Which is this but please, this is a moment when people have made fortunes in the russian market. It will come back to that later. Trading below multiples of five. When it gets ridiculous, people have made money. So i should go to the Russian Party in davos this year . Im sorry, ann, i apologize. Well see you back here next hour with more. Still to to come this morning, how close janet yellen to a rate hike . The findings of an exclusive cnbc fed survey right after this. And then in the next half hour, his predictions have been spot on right here on squawk box. Markets stage mark grant will join us with his new call. First, though, we are watching a developing story out of pakistan. Nbc news reporting an attack on militants, killing over 46 people, most of them students. We will follow the situation. Bring you the latest throughout the morning. Squawk box will be right back. The Volkswagen Golf was just named motor trends 2015 car of the year. So was the 100 electric egolf, and the 45 highway mpg tdi clean diesel. And last but not least, the High Performance gti. Looks like were gonna need a bigger podium. The Volkswagen Golf family. Motor trends 2015 cars of the year. Welcome back. The fed begins a twoday meeting today. In light of better growth, whats happened to the prediction with the estimate in the forecast for the first rate hike . Unchanged, it was july 2015. Same as it is today. Next metric we look at is when do you think the fed is going to let the Balance Sheet decline . Thats 4 trillion plus of assets that it owns. That has been pushed ahead a little bit. You might see these adjustments in the wake of the qe program. When will me allow assets to run off right there . Then the next metric, when will you now its pushed ahead. Now its the First Quarter of the 2018 number to merely three years to get there. You can see this change in a much more gentle slope in turn of where the fed hikes rates. The end of 2015, now its seen just 0. 8 . The end of 2016. Still under 2 . And you can see that terminal rate being pushed out. It was 3. 3 , now its down a little bit and out a little further. That is how people are going to adjust to incoming numbers. Economy lists and trat gists and fund managers, whats the effect of inflation on the First Quarter of next year . 0. 4 , up on gdp for the First Quarter and about a 30basis point decline in inflation. Another number, 66 say its time when its to change the statement. A lot of these things that happen have been happening overnight, steve. I think theres a sense in the market right now, becky, that the fed is committed to that first rate hike and theyre committed to it around july 2015. What happens after that . Thats where the adjustment is going to be made. They could wait a meeting, they could not go every meeting. The fed is committed to that first rate hike to try to get something under its belt. Steve, make your way back over here. Well talk more about that with our market. Joining us right now is dan hecmman from bank wealth management. Kaven cavanaugh is here we say, as well. Dan, let me start with you. You obviously have been trying to figure out what the fed is going to do at this point. Boris made an interesting theory that they may change that statement, but theyll have to softening because theyll be worried about global contagion. What that means for Central Banks around the world. I agree with that statement by boris. We think theyll change the language, becky, this month. The Economic Conditions here in the u. S. , just focusing on that for a moment, are incredibly strong. Unemployment below 6 . Consumer confidence at alltime highs. Oil price res just a tremendous windfall for the u. S. Consumer. And we think that bodes well leading to melt yum economically in 2015. If the fed does remove that statement but they hedge it, how does the market react to that . Its almost like a nothing move. The economy is doing much better. Were in a sustainable economic expansion. I think the market is going to continue to move on. The markets are volatile. What about whats happening with russia, whats happening with some of the other emerging markets right now . Its something that we keep our eye on, definitely. Oil has dropped precipitously. That could destabilize whats going on. But for now, lower oil is actually a net benefit. 80 are doing better. Consumers are going to be doing better here in the United States. It will be good for economic growth. Those are some of the emerging markets and, of course, russia and some of the companies with oil. A fewer minutes ago, the ruble did pass that 70 mark that michelle told us to watch. I have 70. 7. So this is something that is speeding up rapidly. When you look at Something Like that, what do you do with todays markets . This is moving in realtime. We think investors, especially fixed income investors should continue to gravitate towards u. S. Treasury. When you look at them from a treasury super speculative, u. S. Treasury rates continue to be very attractive. U. S. Treasuries are key for investors here. Foreign investors have benefited by going into u. S. Treasuries. Theyve had a great windfall in addition to yields falling by the american dollar depreciating. Dan, karen, thank you for joining us. Thank you. Coming up, oil prices have been plunging and the ruble sliding. First, as we head to break, here is a look at s ps 500s winners and losers. Good morning, everyone. If you are just waking up, futures are starting to take notice of whats been happening in other markets. Right now, the dow futures are up by 58 points above fair value, s p up by 6. If you watch whats been happening in some of these other markets, take a look at whats happening in european markets. They are still posting gains at this point. The ftse up by 1. 05 . Russian stocks taking a tumble, down by another 14 . A lot of this because of what the central bank stepped in to do that doesnt seem to be working. Very quickly, take a look at asia, whats been happening there. Asia overnight one saw the market hang seng down by 1. 5 . The nikkei down by 2 . Shanghai up by 2. 3 . But a lot of these moves have been taking place since the dollar closed. The dollar is down against the euro and the yen, but its the ruble that is catching peoples attention at this point. Just moments ago, the ruble moved or the dollar moved to 70, above 70 versus the ruble for the first time in history. Moments later, its already at 73. 72. A lot of this is because of whats happening in oil prices. Russias economy obviously based closely on what happens with wti and thats been down another 2. 5 this morning. A decline of 1. 42, 54. 49 for wti. Again, this is after the russian bank moved to raise Interest Rates to 17 . That was an increase of 650 basis points. Briefly, it helped the ruble before kind of losing all power. The oil traded one out on this. If the thai baut with almost end the world, what is what can happen if it totally gets out of hand . And yesterday in our market, i figure we had 1 move. Markets can move 2 and 3 , up 2 , down 3 , up 3 , down 3 . Its been known to do that. Volatility. But 1 is not really where we think it is, but it isnt. But think about if we do 2 and the moves up and down. That will get your attention. Whats 3 of 17,000 . 500 points. And what happened to santa claus smp. Santa claus may have come early this year. Its only december 15th. You saw the tenyear trading just above 2 this morning. Somebody has been calling that. You remember how universal the belief was that we always rally into the end of the year, too. Right. Whose mike is that . Is it mine . I dont think its yours. It could be mine. I dont really know. Is it mine . I dont know. I love involving the viewers with anyway, this guy was on. Ive heard of him. Bill gross making a bearish called on high yield bonds right here on cnbc yesterday. Its not a great bet at the moment. Its moving high ner terms of yield spread and as the economy slows, which i think it will. Now, based upon the oil price. You know, i think there are better alternatives in treasuries than those good Old Fashioned tips. And he also sees the tenyear Holding Steady around 2 . It would have been interesting to be able to tell him all these things two, three, four and five years ago. He might have had a different take on how he managed money at pimco. That certainly wasnt his viewpoint back then. It would have been knife nice, nice to have that viewpoint now. I think were going to be at 2 . Where are we . 2 . Lets get more insight on the treasury market with mark brandt. Thats what everybody does with oil, too. Every analyst weve had on, 9 0, whats the low . 89. 5. Nobody saw this. Someone said the black swan is when we find an analyst that knows whats going on in the oil industry. Meanwhile, im surprised youre on here. Ive seen some of your recent comments about Cable Companies. Youre dead wrong, number one. There will always be a future of Cable Companies because of the internet. Thats where Cable Companies bring internet to the home. Go ahead, short the Cable Companies. You wont have any money left to do anything. Did you see all these comments . I did not. What is your thesis . You think its all going to come over the top, it wont be through cable . Well, no, i think kibble will provide the internet, joe. I agree with that statement. But theyre providing content in terms of tv shows and movies. Theres no need to do that any more. You can get it just off the internet. So the Business Model of the Cable Companies isnt going to thats so easy, mark, to have everything right there. Its the way i have it now and im not going to mention what Cable Company i have. But the way i have it right now, all my entertainment needs are totally satisfied. I dont want to change anything. Can you stick to the like currencies and yields in europe, please . Now youre a Telecommunications Analyst . Anyway, how high could where could the ruble is there any reason why it doesnt go to infinity at this point . No, theres no reason. Its probably going to approach a hundred and maybe break through that. Russia is in real trouble, serious trouble, and what frightens me frankly, joe, is that given who putin is, i think hes going to turn and increase pressure on ukraine to shift the political argument and i dont think this is going to end well. Ive seen countries sort of get aggressive, but you have to pay tore things like that. Was it really a good time to start a big old war or to expand really . Thats bad. But i will give you one thing, though, mark. Youve been at you said we go back below 2 , right . You said we would do it again and you are not shy about saying that you said that. No. I mean, i say what i say, so you know, i think were going significantly lower in yield. I look at the tenyear, 1. 75, probably down to 1. 50, and thats because by the strengthening dollar and caused by the deflation in europe. Thats going to be caused by china slowing significantly and the problems in japan. And theres no reason, if you look at our yields versus european yields, for our yields to be this high. Plus, i think that our economy is doing well only for the moment and is going to get hit by all this in the First Quarter of 2015 because all these statistics lag, as you know. That is what listening to you, ill just tell you, becky, when you see any market, it doesnt matter what it is, how small or whether you think its inconsequential or not related, when you say stuff that you cant even believe, when they raise Interest Rates, you see we can go to a hundred o ruble and oil goes from a hundred and we dont know if its going to stop at 50 on the way down. When you see stuff like that, i think people in the stock market go i dont trust any thats uncertainty that causes people to feel nervous about being long anything. I agree with that, joe. The reasons theyre given, but the outcome is always similar. If cypress goes, we all go. This sounds different from what ive heard from you in the past. Before youve been saying yields would go lower on treasuries, but it would be okay to be in stocks. Now it sounds like youre changing your position and you dont think people should be in stocks at this point. Well, i think theyre closed in funds and municipals for people that need them and long bonds. If you look, becky, at the long bonds, the long 30year boring u. S. Treasury bond including the coupon, it could turn 28 from january 3rd to today. How good is that . So people dont like to talk much about Interest Rates. Theyre scared to death to call them. And steve looed liesman just made a very good presentation of the consensus view. Really . But again, last last january, i think the consensus view is wrong. Its going to be lower than that is what youre saying . Correct. Mark, walk me through your concern about european weakness and how it comes over here. It hasnt shown up in the data so far. I get to the datas lag that you would have thunk it would have shown up in the trade data or some other. The u. S. Keeps printing these greater than 6 gdp numbers. Youre saying this is a false sense of security right now . I think so. I think it represents the lag from last fall and i think as we hit 2015, france just supported out a core inflation rate of minus 2 . So they say lack of inflation in europe, but im telling you, its deflation and he think its across the continent in the numbers that you see. I was just going to say, did i read right, britain printed a 1 number this morning . That he can. And so carney is going to have to write a letter now to the treasuries office now explaining why hes not hitting his inflation target. So, you know, were part of a global world, this is going to come to our shores and its going to affect us. Thing that a lot of people doevent talk about in oil is oil represents about 30 of the cap ex of the s p 500. Oil keeps falling, you dont think were going to be affected by that or, as joe said, were going to have trouble on the high yield market because of all these loyal Shale Companies and the debt theyve put on . Weir in for a bumpy ride. Is there a way we can blame the fed for this somehow because were staying at zero for so long . I think were going to stay at zero longer than anybody thinks. They invested all this new stuff and it didnt work . Well, it did work to the extent we got out of 2008 and 099 and were in reasonable shape. I dont europe, joe. Unless we would be in better shape if we had just flushed out the entire testimony and taken the pain at the time, led trades clear and then you form a real bottom instead of this bottom would he we keep forming. Youre serm right, joe, in the sense that not just the fed, but all the Central Banks. They krood to be the referees of the market, now theyre the goalkeeper and the referee of the market. And theyre you know, moving yields around and policies and trying all these things to the extent that ive never seen in my life. Okay. Okay. Mark, thank you. Weve got to run. Thank you, joe. Keep this updated. I get a lot of your stuff, i look at it. Thank you. Still to come on squawk box, why youre allelectric vehicle might not be so green. Then at 6 50 eastern, the ceo of omaha steaks talks Consumer Prices and holiday guide this season. And later, a guide for men, why she thinks even the best mail managers can be clueless when dealing with women in the workplace. As we head to break, a quick check off whats happening in european markets right now. New cadillac. My baby drove up in a brand new cadillac. Look here, daddy, im never coming back. Discover the new spirit of cadillac and the best offers of the season. Lease this 2015 standard collection srx for around 359 a month. shouting location. Heres the location that matters the most. Here. Or here. Or here. Its wherever this is. To get customers to come here and stay here, youre going to need an app that connects to all your systems. So they can bank, shop, do what they need to do, and you gotta do it fast. Before the competition does. Its tough out here; you better be on the right cloud. 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Com trading. Tdd 18003452550 schwab trading services. Tdd 18003452550 your goto for trading knowhow. Tdd 18003452550 welcome back. A new study says all green vehicles may not be so green. The key is how power is generated. Coal is the source of your we have to do it in 20 seconds. If coal is the source of electricity, the car produce more soot and smog than gas. Thats not the case if natural gas is producing the energy. It depends on where you plug in . It depends on the power source, mott the not only are you driving something that looks like that, but youre not as green as regular cars . It might not look like a cheese wedge. Up next, these prices soaring 20 this year. Do you have one . I bought a hybrid. I caused gas prices to fall. Well talk to the ceo of omaha happen steaks, next. But first, check out oil prices. The Holiday Season is here, which means its time for the volkswagen signthendrive event. For practically just your signature, you could drive home for the holidays in a germanengineered volkswagen. Like the sporty, advanced new jetta. And the 2015 motor trend car of the year allnew golf. If youre wishing for a new volkswagen this season. Just about all you need is a finely tuned. Pen. Get zero due at signing, zero down, zero deposit, and zero first months payment on select new volkswagen models. The smallest cattle herd since 1951 is one of the main reasons beef prices are surging 20 this year. The price of that holiday roast is hitting if consumers are willing to spend more this year. Joining us ceo of omaha steaks. Would you say beef is really elastic . If youre stuck on it, you dont really substitute that easily, do you . Well, you really dont. But what people are doing is when they choose to eat beef, theyre choosing the highest quality beef. And thats what were really around for. Thats what omaha steaks provides. Can you shed some light on the issues that are causing what is that . Thats like 60 years, 65 years. Right. Well, first we had severe droughts for a few years, then high grain prices. It really drove a lot of people out of the business. And created a point that the herds were liquidated. Now were dealing with a small amount. It takes 30 months to bring these animals back online. So were kind of stuck with this until some time in the early 2016. I dont think people are necessarily we dont think that way, do we . We just think we need more cattle. Lets make a few more. It takes time. So it takes 30 months to do that. Well, it does. Theres nine months gestation period and then they have to grow up. Yeah. As far as trying to fatten them up with what they eat, theres not an input cost inflation there, is there . Or hows that . Fortunately grain prices are down, but for a few years there we had record grain prices. High corn, high commodities across the board. Then the drought contributed to less grass for the animals to eat. So go ahead. I want to ask bruce, are the herd sizes right now in the process of being enlarged . Well, i think that theres a lot of production going on right now. The calf crop this year was very good. But, you know, also theyre very expensive right now. So, you know, well see some increase in the calf crop. And then, you know, the responding reductions hopefully the 2016. Do you make more money when beef prices are up . No. No, we dont. Right now, how would you people order online all the time, right . What do you look for year over year in terms of sales growth . What would be a good number for you . Well, if were 7 to 10 , im pretty pleased with that. Weve experienced some great years. And we look forward to many more. Like i said before, the objective is to provide really high quality beef for consumers. Right. Okay. Do you i was mentioning yesterday when im driving Cross Country i see a lot of cows standing in the rain. I mean, is that thats their life . They have to stand out in the rain . Do you ever let them come in . You wonder why they get angry. Not going to answer this. Look at this. Well, they dont get angry. They like it out there. As long as it doesnt get too cold, theyre pretty happy. I think youre right. I think ive seen a comic bit on that. You wonder why theyre so angry. Then he went on to how leather thank god they dont have a problem with it in the rain. It only happens after. Anyway, bruce, thank you. We appreciate it. Thanks for your time today. Send some steaks. We well cook them up. You got it. When we return, well have more of todays top stories. Including the russian market plunging. Check out what happened with that market. It was down 14 almost. The fed in focus this morning. It is the most anticipated Central Bank Meeting in years. We will ask two wellknown strategists to handicap the change in language and explain what this could mean for the markets if those two simple words are removed. Check out oil prices because this is what is pushing the russian market, pushing the ruble which is well above 70 at this point against the dollar. Thats the highest weve ever seen. Lowest level for the ruble. Wti down another 3 this morning. 54. 21. Stock market futures here are looking like they are actually theyve turned. Gone from more than 70 points above to down 5 points. This is a big reversal from an hour ago. Well have more when squawk box comes right back. Currency crisis in russia. A surprise rate hike failing to stop the rubles fall. So far. The impact ton the markets here and russias next move. A deal in the hotel industry. The ceo of Intercontinental Hotel joins us to talk about the health of the jobless sector. The second hour of squawk box begins right now. Welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernen along with becky quick and Steve Leisman. Andrew is off this morning. Were watching general news area. Nbc news is reporting that militants attacked a school in pakistan killing at least 126 people. The taliban claiming responsibility for the assault. Well bring you the latest throughout the morning. But were dealing with something here thats getting interesting. When youve got the market was up and we made the point that when the ruble or whatever youre looking at, oil prices, when they just fall so much further and faster than youre expecting, its hard to hold stocks. Just an hour ago we were looking at dow futures up by more than 70, i think. 72 i saw at one point. It has reversed course quickly. Five minutes ago we were looking at dow futures down by five points. Now youre looking at dow futures down to close to 52 points below fair value. S p down by eight points. And the nasdaq by 17. This has been a very Rapid Response to whats been happening in russia. The ruble there pushing above 70 for the First Time Ever by 6 23 this morning. Now youre looking at the ruble above continuing to trade at two which raises eyebrows, whats happening. Oil cant find a bottom at this point. Its just you connect all the dots. Its the uncertainty of not knowing. Oil is continuing to climb. This uncertainty pushes through. A decline of 3 . This is all happening what dont we know . As the fed is getting red i do meet. And this will change the scenario of what theyre sitting down for. They could be taking out the language for a considerable time. This changes that picture. Wouldnt you say that im not even interested in what theyre saying now with all this other stuff happening. Im interested if they thread the needle. True. But this has taken precedence over the fed. Its not their business to do anything right now either. No, but its got to make them feel much more nervous after watching great economic numbers that have been coming through here. If it comes this week. Were going to talk to Steve Leisman in a few minutes about a fed survey. This is changing minute by minute. And steve, i wont put words in his mouth, but he said that first rate hike is already baked in. Well see. If this continues and if it will get worse. Emergency rate hike by the Russian Central Bank has so far failed to stop the slide of the ruble which people are talking 60, then it got to 70. Michelle joins us again on set for this. Lets keep it on the screen. Its been in free fall all morning long dpp we get close to 76 here . We did. A few months ago we were talking about 35. So this was a huge consider this. The central bank of russia overnight increased Interest Rates. A huge, huge move trying to stop exactly what you are seeing on the screen. It did not happen. They did this at 1 00 a. M. Moscow time, the announcement claimed. We were shocked to see it go to 65. Its been ununbelievable, breathtaking move. I want to show you all of the fallout. The german 10year yield moving below 6 for the first time. When we talk about any economy thats more linked to russia. Of size, magnitude, importance, it would be the german economy. And you can see the big move thats happening there as well. I want to bring up one other chart which i think is very, very telling. Beyond the certain situation that we know about within russia, because of the strike we had seen in the dollar and wondering about the Federal Reserve, there has been all over the emerges markets there has been an incredible amount of concern. A lot of people believe the signs. What im showing you here is proprietary to credit suisse. It comes to u. S. Credit. All i want you to look is look to the right and bottom. Weve moved into the panic area. This is a ratio of are you buying very, very safe Corporate Bonds versus buying riskier Corporate Bonds. And we have seen i can show you dozens of measures that different houses on the street use about what is going on with credit Market Capital flows and they have gotten incredibly defensive in the last that was a multiyear chart we were looking at. In 2008 and 2009, it was euphoria. It was at the high end of those. If we brought it up, it was actually right before the big kra crash is when we would see the signal things would turn. Some people use these as contrarian indicators. So it goes from. 62 to. 57 and we make something of that . Think about what were saying. Instead of getting 62 cents a year when you lock your money up, this is what you get every year for ten years. Instead of that you get 57 cents . Is that worth talking about . Its crazy. But its not the its that your money will be there. Thats all youre getting at that point. Return of capital. You dont even know if thats going to happen. Also why would you buy that . Because you think inflation is even lower than that. Right . Thats the issue. 6 starts to look really good if you think yeah, exactly. Buying power is actually going down. Incredible. Maybe leisman i know hes hes always chomping at the bit isnt he . Champing, chomping. He chomps, i think. Are we going to him or joe first . No, were going to bring steve in here too. Good. Hes waiting over there. Also been talking about the fed waiting today. This is a tough time. Its already old. I think its worthwhile to repeat back on the table what you were talking about. Which is how does this foreign situation change fed policy . Will it change it today, change it tomorrow . I dont have a good answer for that. What i can tell you is the number one problem, the number one threat to the u. S. Expansion in our survey turns out to be european recession. Ill tell you that. It took out the perennial one which was regulatory and policy. Now the threat is over. Did not ask about russia specifically, but the threat is seen as the number one issue. Already leading into this meeting they were looking at a gentler fed rate cycle. Its come down ten basis points, twenty base points. When the terminal rate will be hit, when the fed will stop hiking rates. Its now down to 3. 2 . But the average pushed out a quarter. Lets go to where people think the risks are. Its in that 50 threshold for awhile. 6 say too restrictive. Thats come up a little bit. Now, where are the risks . If youre going to be wrong about fed policy in 2015, how will you be wrong . 50 say the fed will be more dovish than i expect. The important thing about that, its come down from 64 . So fewer people are afraid of the fed being more dovish. 24 more hawkish. Thats about double what it was in the prior survey. And a quarter saying the risks are balanced. Theres some sense that where the risk is is moving more towards a hawkish bet. Still 50 think its more dovish. Thats down quite a bit. Joe . For more on the fed and maybe on the russian ruble as well and the impact on the markets, were on with howard silverblat. Youre on, howard. Were we right, joe, to say the ruble was on the other side of the world basically. But when it it goes through 60, through 70 just in a matter of minutes whats happening with oil. Doesnt that just throw people into sort of a quandary about what to do with u. S. Stocks too . I think you hit the nail on the head saying theres a lot going on out there. And its difficult to wrap your mind around it. Oil not only having an impact on the equity markets but also the credit markets. Now youre starting to see an impact on the emerging markets. And despite russias central bank, clearly just is enough. So youre seeing this currency so often, i think investors are scratching their heads. You cant help but thinking what is it i dont know. Something wicked this way comes when you see violent moves like this. I mean, is that a fair statement to make . That we may not know whats causing all this at this point . But it probably aint good. Its probably not a good thing. But its important to take a step back and think about really what happens when Oil Prices Retreat like this. If its a function of weaker global demand, we can look at ourselves and say that makes sense. Risk assets should pull back because Global Growth is slowing down. If its a function of over supply in oil, tough realize they are going to have a positive impact on oilconsuming economies. Some of these markets, people have stops in, people have places where theyre ready to throw in the towel. You start going through them and it feeds on itself too. You wonder how much of it is trael and how much is the way trading goes. Its not just trading. It is oil. Its both supply side and demand. And oil keeps going down. S p Small Cap Energy is down 53 in the last six months. So is the ruble. Both have the same cause. Oil. Lower oil. This is a political situation as well as a sovereign i mean with the supply and demand. This is whats killing the market at this point in time. Were still only 4 off the high. So its not that bad yet. But its getting a lot of pr, a lot of people nervous. Emerging markets have not been doing well. But its getting the market extremely nervous, a lot of uncertainty and uncertainty kills the market. So youre tying that does kind of make sense. I guess you would think the ruble would continue to collapse with oil going through 53. I mean, going through 55. Every Single Person weve had on we just had a guy on yesterday that said yeah 55. But last week it was the analyst from rvc, 64. 80. Weve run out of guests with credibility. Im not going to mention this guy dan dicker who looked straight into the camera. Oh, no. At 90 this market doesnt understand itself and is not listening to what i am saying its supposed to do. What is it they aabout markets in markets can make a fool out of you. But the ruble, leisman, the ruble going to stop here at 76. I have no question. Theres going to be no bottom for the ruble. I dont think thats true. I think there is an Interest Rate some place why if youre not getting princip principal. Youll get it back. In what . Caviar . Caviar is good. Ive had good caviar and vodka as you know. But michelle, there is an Interest Rate but their issue is capital flight. Right. People anybody who has money there be you a deputy Prime Minister which are many of them who have money for reasons we both understand. To businessmen, this a time to send your money over here which is maybe why were getting a kick in the u. S. Treasury as well. The institute of international finance, they pressure flows and one of the data points they put out was were seeing net outflows from foreign investors, people outside of russia and people within russia getting their money out. You see it in buildings in london. Right . There it is. Heres what i want to do, michelle, if you dont mind. I think theres a good point that joe makes here. Which is this thing doesnt make sense that one should panic on the rubles spin of tail to me to the u. S. Equity markets. Should make me sell u. S. Assets. I think the rapidness of the decline in two days just makes you wonder, is this some butterfly flapping its wings, same comparison about the baht way back when and are we going to see fallout we didnt anticipate . We dont know and it may be nothing. And because weve been able to see this in slow motion coming, maybe not. If i was an attorney and you were on the witness stand, i would say your answer is nonresponsive. Ill tell you why. Because we asked you for a fundamental theres no fundamental draw. Its a panic thing and an uncertainty thing. You want take a crack at that, joe . You know, you have to ask yourself if it isnt truly fundamental. If i cant pinpoint the reason, is it purely oil prices. Is it the sanctions imposed on russia by the west. As a u. S. Investor, i have to ask myself what does it mean as an investor here in equity markets. I thought what happened in october was a bit of a knee jerk reaction. Markets overshot and what were seeing here is similar to that. You just want to see what kind of fallout there is if some very Large Hedge Fund is on the wrong side of the tray, et cetera you dont know what you dont know. Exactly. And maybe it is nothing, howard. You think its good. U. S. Stocks, were taking a beating but not as bad as the rest of the world. Equity, big caps. Theyre doing better on there. Were not that far off the highs on here. If money starts coming in because theyre afraid of bond situations. Its going in the bond market. Youre not getting too much there. I know. But thats where a lot of it is. Going to get some bargain hunting somewhere here. You know, i have no credibility. On the 10year. I do not. Thats never stopped you. Its stopped me. I do a good job predicting gdp and unemployment. But i have no credibility predicting Interest Rates. All right. Thank you, howard and joe. Thank you, steve. You can leave now. Thats true. Could i get breakfast some place . Thatd be nice. When we come back, a hotel deal. Well talk to the ceo of Intercontinental Hotels. Then an investor says to expect more in the energy sector. Which parts of the industry will be hardest hit. And more later on the sharp decline in the ruble. Didnt work. Russias ruble still in free fall and that is affecting lots of markets this morning. Squawk box will be right back. Welcome back to squawk box. The futures turned around sharply this morning in the last half hour. To the negative side. We were up, we believe up over 70 points earlier this morning. And then with the decline and the parabolic decline of the russian ruble, were now down. And two dow components announcing dividend hikes. 3m with 20 . And boeing with a 25 increase. Boeing also added 2 billion to its stock. Were also waking up this morning to a hot hospitality merger. Intercontinental hotels acquiring kimpton hotels. It has 62 locations in 28 u. S. Cities. Joining us with more is richard sullivan. He is the ceo of intercontinental. Morning, becky. So why kimpton . Its a great business, actually. And the boutique sector is the Fastest Growing in our industry. Kimptons been around 30 years. Its the biggest there. It just makes a really good fit with our existing boutique business which is hotel indigo at a lower price point. So were creating the worlds leading boutique and Lifestyle Group in a fastgrowing sector. Yeah. It is a hot sector. Many analysts have said they like this deal. The one question when it comes to boutiques, this is a fastchanging industry. How do you make sure you stay relevant and competitive . Thats a great question. This business has been successful for 30 years. I think theyve got a good recipe. And excellent food and beverage. They have real destination restaurants, great design and boutiques to make them a really personal service. On our side we have really good consumer insight. And you put that together, i think you can definitely stay ahead of the market. And understand your consumers really well. Richard, we are waking up to some turmoil around the globe this morning watching whats happening in russia. I believe you are one hotel in moscow. Stuff like this can end up affecting broader markets beyond. One of the reasons were delighted with kimpton actually being in the u. S. Thats been a strong market. Lots of great Growth Opportunities for us. We are in russia. We have fewer than 20 hotels, but we have seen it. Theres a good Growth Market for us. Clearly one of the economic positions wont necessarily see that. But were in a hundred countries and generally more countries are doing well than not so well. And so on balance, were still in good shape and see lots of opportunity. But russia clearly question marks. Dont you have a hotel in davos . We do. Yeah, we do. We cant get in there, richard. I think i might have a room depending on the rate youre prepared to pay. We dont pay. Cnbc pays. We may need to talk. Because were in a former sanitarium basically with no lights in the halls. I asked for room service. They laughed. They go, room service . We dont have a kitchen. How about a shower curtain . No. Thats a great hotel, actually. I know. But its too far i was kidding because we cant really walk. We need to walk to where we do the show and where all the events are. You could walk. Do you have a car . We do. Maybe we need to do a kimpton in davos. Which person on our staff contacted you . Well talk. Thank you, richard. We appreciate it. Lets do that. Ill see you in davos. Coming up, gas prices below 1. 88 a gallon. And then an investor sounding off on the drop in oil prices. And how the industry is reacting in what he calls the long bloody downturn to come. vo watching. Waiting. For that moment, where right place meets right time. And when i find it i go for it. announcer at scottrade, we share your passion for trading. Thats why we give you the edge, with innovative charting and trading features, plus powerful mobile apps so youre always connected, wherever you are. Because at scottrade, our passion is to power yours. All right. Welcome back, everybody. The situation is getting worse by the minute. Take a look whats been happening with markets. If you have just woken up, there was news overnight from russia. Central bank trying to intervene to strengthen the ruble. That did not work. They jacked their Interest Rates all the way to 17 from just 10. 5 . Sounds like youre throwing everything at it. It didnt work and the ruble continues to weaken. We were looking at the ruble going all the way to 65 yesterday. And that was the highest level wed ever seen. It hit 70 this morning. Now it is testing the 79 level. Check this out. 77 but its gone as high as almost 79. And thats moving with oil which cant find a bottom. Right. Wti continues to weaken. Cant find a bottom. Take a look. Right now down about 3 . 54. 12. Weve seen even lower earlier this morning. When we walked in this morning the dow futures were indicated up about 70 points above fair value. Right now youre looking at the futures if we can look at that board one more time. We went from up 70 points to down triple digits. Down 170 points since 6 00 a. M. Usually wait for the market to get open before we have swings like that with all the players in for the dow to move around. But we also made the point these are small moves on a percentage basis in the dow. If we ever get 2 and 3 moves like that with true volatility like other markets, thats certainly going to get your attention at some point. Weve been down really at least im telling you when you get 300,000 jobs and youre still sitting at 0 Interest Rates, that was a week ago frieds. Weve been straight down since a week ago friday. Whats your takeaway from that though . I just think some chickens are coming home to roost for a lot of different reasons. Also a lot of complacency and everyone thought the market only goes up with the santa claus rally. Suddenly we were in a goldilocks scenario. Down the road it should be, but when it gets sort of, you know, where you wonder where are all the big money, where are the positions. When you go that quick and that far, somebodys getting hurt somewhere. People have to sell other markets to pay for margin calls in that market at times too, right . Thats absolutely right. But after the dust settle ifs you look at the fundamentals, the fundamentals are good. And the fundamentals are good for the u. S. Economy. But so good a week ago friday. We had growth here, inflation, low Interest Rates. We got an oil price cut. We had all these things. Its like theres no reason to go 100 long which is a reason right there. But that doesnt mean the fundamentals are bad. No, but we dont know what the fundamentals are going to be in nine months. You think the market is telling you that did sh. We never know. That 2 on the 10year at least tells you inflation is not do we get a handle i think its possible. Youre within a whisker. Do we get it on oil . Easily. I covered it, joe, when it fell to ten. Do we get a triple digit ruble. Triple digit ruble to the dollar. Ten was the bottom price in 98. That was the signal when opec finally said this is too far too fast and weve wrung out the excess from the market. Just yesterday opec said they stand by it and if oil falls theyre not going to but the thing is you have to get a certain level in order to get people to act collectively. Because right now the incentive is to cheat on any cuts and the quota system because you want to maximize your revenue. At some point that curve shifts where higher price gets you more. Does the dollar ever get too strong to where all of a sudden our multinationals go i think it can. Thats going to move on this too. I think theres a ways to go. The good thing about the United States is we have a dynamic economy. But its going that way, isnt it . Where was the last quote . Its strengthened a little bit. I think because the euro strengthened. Im not a big, like, apocalypse now on the dollar problem. Okay. All right. Do you want to worry or do you want to i dont know. When you see people arent prepared for moves of this size anywhere. Oil is threatening to go to 40 and the ruble is threatening to go to 100. I know we got to go, but when things change, the productivity capacity, for example, of the oil wells will decline with the decline of price. But you dont have the capacity to take advantage of that right now. So when you have shocks and transitions, there are negative things that happen as a result of it. Coming up, bankruptcies in consolidation in the sector. Big problems for the industry. We were just talking about that. As we head to break, take a look at the plunging price. Theyre still after me. Get to the terminal across town. Are all the green lights you . No. Its called grid iq. The 4 51 is leaving at 4 51. They cut the power. Itll fix itself. Powers back on. Quick thinking traffic lights and self correcting power grids make the world predictable. Thrillingly predictable. Look, i love the way he controls abthe lightsbutler. And unlocks the door when i forget my keys. Its just that. I feel like hes always watching us. Yes, that is why we should use wink. Look, it can monitor and manage our house but it wont start to develop human emotions. Hey buddy. Control your entire home with one simple app introducing wink its like a robot butler, but not as awkward. Welcome back to squawk box, everybody. We do have a Global Market selloff on our hands this morning. This is something that has been sparked over the last hour and a half. We watched it take place on this show. If youre looking at the dow futures this morning, they are now indicated down 85 points. Thats off the worst levels of the morning. But also off from 6 00 a. M. This morning where they were up 70 points. S p futures also traded down. They are now down by almost 14 points. And the nasdaq down by 28. It all started with russia and their big moves overnight. Those moves have not worked, not been effective to this point. But crude oil has been what everyone has been watching. Thats down by 1. 74. Another 3 decline to 54. 17. Thats why russias moves havent worked. Take a look at what happened to russias stock market. The Russian Central Bank stepped in 1 00 a. M. Moscow time and tried to stem this massive decline weve seen in the ruble. They stepped in and raised Interest Rates to 17 from 10. 5 . That is an increase of 650 basis points. Its a shocking move. One you would think would actually work. It didnt work for the ruble. Moscow stocks sold off about 15 . The russian ruble has continued to decline. That did put a floor in for the ruble, but since that point, the ruble has moved through 70 all the way to 75 and has tested higher levels this morning. I saw 79 at one point. If they hadnt done anything, i dont think they would not be at 76. Because it showed a panic. They dont have enough money to do they . They dont have the financial will to do it. They have 400 billion as we understand it. Do you think theyll thats what its for. You would think. People are testing that. Thats true. You have watched and seen how this played out. Same thing happened in europe that we saw happen here we the futures. In Europe Markets had been up. I think the ftse had been up. Its now in a decline. The cac down and its played out as the fight for equality has played out here. Youve seen the 10year here in the United States. Gold prices, lets take a quick look at that. Gold prices this morning look like theyre up about 750 to 1,215. 20 an ounce. Im trying to go back ten years to see how long its been since weve been down below 2 . I guess it was back in 2013. Was it the summer that we were down to 141, i think, was the bottom in 2012. Looking at the end a the year, yields would be higher. Maybe up 3 . Exactly. Were not at 10 unemployment. This is all happening with this weird backdrop. Its, like, surreal. Were here in this country where things have been getting better. We just booked two 4 plus quarters. I feel theres a disconnect. Falling under 2 , theres a disconnect. Oil ready to go under 50. Every number has been a positive. Either were wrong or the market either the economy is not ready to do as well as people think, or its affected by other Carl Quintanilla is down at the Stock Exchange and says some of them are pinning that decline in the futures here on wideman. Hes the ecb guy that says hes not in favor. Hes definitely not in favor of stimulus coming from the ecb despite the lower oil price. Hes the german representative to the central bank. Obviously they have been against quantitative easing. Im reading from the stories today is he has made stronger comments than he has in the past. I would tell you our fed survey, north of 70 of respondents expect quantitative easing from the ecb outright. The average is february of next year. So thats baked in right now. I wonder mark to market how many things are just that we arent thinking about. Such a huge, important aspect of economies around the world. I mean, heres the article today in the journal and we already talked about this. The reset for general electric. And ill hold up this one. Ill take your headline and match you. Look at the ft. What are the the ft is the other side of that. What is it worth and whats the cash flow they were assuming they get now . So whats ge stock. Heres the headline. Plunging crude prices threaten 1 trillion of projects. Then you take people that run money and you wonder the ramifications of, you know, theyre always leveraged, most of the time. And you just wonder when you get moves like that. And some of the moves probably are liquidations. Years ago, the managing editor of the wall street journal said follow the capital flows. This right now is Something Like three quarters of a trillion dollars flowing from producer to consumers. I think youre right. How do you value it . Where is that value coming from . I dont know where to put it just now. I know that those projects are probably going away. But where does that money go . You saw what happened when mortgages and houses and real estate and property was marked. At least it wasnt mark to market but we knew what it was worth. And you wonder all these things globally that are based on 100 oil, what are they worth now . Are you ready for another boris now . This guy is not nothing. Ive known this guy for more than 20 years now or maybe more than that. He was one of the american pioneers into russia. Remains there. Boris jordan joins us now for more on the fall on the russian ruble. Hes president and ceo of the sputnik fund. Thanks for joining us. What do you make of this fall of near 80 to the dollar here on the ruble, does it have further to fall . I mean, i think its a lack of complete lack of confidence many the central bank and the government right now. Its panic driven at the moment. Were not seeing it in huge banks yet. But i do expect over the next couple days you probably will. Theres certainly no dollars left in any of the Exchange Points left in moscow or st. Petersburg. And its just a sign that markets dont have any faith in the central bank and the governments policy. Go back to 2008, we had oil at lower prices at 40. We had a Global Financial contagi contagion. Controlled the voluation. It raised rates. It curtailed ruble liquidity. And it controlled the exchange rate. In this particular situation, we seem to have a new central bank chairman. And we seem to have a government that cant deal with the current situation. So theres a complete lack of confidence in russian Monetary Policy. I want to ask you two questions that i suspect have different answers. The first one is what do you expect the russian government and central bank to do here. And the second one is going to be what should they do. Well, i think the at the moment its difficult to understand what theyre doing food. They havent been behaving the way theyve behaved in the past. An earlier question that joe asked, do they have enough money. They definitely have enough money. The Russian Central Bank has, you know, 460 billion of reserves. Theyve got another hundred billion dollars stashed away in a sovereign fund. The government has enough money. You have 160 billion of maturing debt of russian corporations over the next 12 months. Thats what everyone is worried about. You have a massive valuation and you have to repay 160 billion. And virtually no financing available to Russian International markets due to the sanctions. Is that foreign debt . Thats not ruble. Thats dollar and euro, right . 160 billion over the next 12 months to 18 months. Wow. So is there a rate they should be hitting to stop the slide . Is stopping the slide important for them economically . I think, you know, the fact is at this point some ruble devaluation was warranted. And a level of sort of 45 was definitely warranted. It helped the exporters. It didnt create too much inflation in the domestic market. So that was okay. But 80 is out of control. So they have to do something. Theres no question. I think theres one thing to do that will stop it immediately. And that is something president putin doesnt want to do. And stipulated he wont do including in shanghai and beijing recently. That is what they need to do is force exporters to sell 50 of their hard currency and buy rubles. And that would immediately stem the fall in the ruble. Boris, do you know someone with a history of the ruble back in 98. Is either someone like soros on the winning side of this . Do you think theres big money . Yeah. There has been a lot of shorts in the market place. Both hedgers and speculators that have been short the ruble. Its quite expensive to short it now. It has been for probably the last several weeks. But given the moves weve had, there have definitely been significant short sellers particularly in the Global Hedge Fund community. But theres no question that theres been and you know theres another side to all those. You know glen hutchins. A mutual fund at silver lake. He just happened to write in and mention that you are right with this drastic of a move. Something or someone has to roll over. Just stay tuned because its coming. Can i just ask boris. Quickly, that what joe just asked you about somebody being on the other side and youre saying there have been a lot of shorts, doesnt that make it right for a Central Bank Intervention here . And there could be a lot of currency or a lot of action on such a move there. Steve, we are all baffled, to be honest. Historically at least since 98 the Russian Central Bank under putin has been the biggest stabilizer in the russian economy. And its been the most wellmanaged organization in the country, probably. We were all baffled why theyre not stepping in to protect the ruble at this point. The other thing weve been trying to figure out is how putin might react. Nationalism has got him a long way in terms o the popularity in the country. You think he lashes out in terms of the ukraine and surrounding areas . Or do you think he backs off as a way to try to get rid of the sanctions . Obviously again, thats a difficult question. We all hope theres no overreaction to the situation. Just to solve the ruble devaluation issue. Obviously theres geopolitical issues at hand as well. I dont think putin has never overreacted on geopolitical issues. Hes historically kept his cool. I dont think hes going to lash out in any aggressive fashion. I think what they need to focus on is stabilization. Theyre going to have double digit inflation next year. Youve got massive problems with food prices and russia right now. What he really needs to focus on at the moment is domestic popularity. At some point in a capitalist economy globally, the inflation and price of your local products is going to have an effect on his political position. Were coming up against a hard break. Thanks for joining us this morning and giving us your expertise about the russian market. Thank you. You brought up george soros. I emailed his people to see if he has any thoughts. He says he does not. Not at this point. All right. Few know that market better than boris. Hes been there a very long time. Coming up, the effects of the oil price slide. Thats coming up in the next half hour. As we go to break, look at gold. A traditional flight to safety, but it got crushed yesterday. Tdd 18003452550 [ male announcer ] your love for trading never stops, tdd 18003452550 even on the go. Tdd 18003452550 open a schwab account, and you could earn tdd 18003452550 300 commissionfree online trades. Tdd 18003452550 so if you get a trade idea, schwab can help you take it on. Tdd 18003452550 were getting a lot of questions tdd 18003452550 about organic food stocks. 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The futures right now, stable after being up about 80 now down about 60. Things rarely get started at 9 30. You watch it throughout the day, you never know. I mean, it can be up from 200 to down 200. Its coming back. Anyway, steve, whats coming up . Coming up, joe, your list of stocks to watch ahead of the opening bell including a dow component thats actually taking off. Engineered holiday excitement. At the volkswagen signthendrive event. Right now, for practically just your signature, you could drive home for the holidays in a new volkswagen. Like the sporty, advanced new jetta and the precisely engineered passat tdi. Ah, the gift of clean diesel. For the new volkswagen on your list this year, just about all you need, is a pen. Festive, isnt it . Get zero due at signing, zero down, zero deposit, and zero first months payment on select new volkswagen models. Individual issues on the move this morning. Boeing hiked its dividend to 91 cents a share. Not like it was a real low yielder to start. It was yielding 2. 9 it was yielding 3 basically. So 25 is a pretty good yielder now. The air space giant is also boosts its buyback program. And 3m is raising its dividend by 20 . It obviously makes a difference from where i think we should include that. It was yielding 2. 1 before this. It had a 3. 41 dividend. Spains repsol is buying Talisman Energy for a 54 premium. It has come down. You can see it was at 12 and now theyre able to buy it with a big premium such as 6 premium. We have been watching the ruble all morning. Lets take a look now. We were as high as 76 or 77 lets see where we are now. 72. So its maybe stabilized a little bit. What youre seeing is the value of the dollar versus the ruble. Thats why it suz u. S. Dollar and shows higher. The higher that goes, the more the ruble is depreciating versus the dollar. It was 35 a month ago. It was 35. 35 to the dollar. It was 65 we were concerned when it hit 65 yesterday. Average russian salary in dollars has gone from 15,000 to 5500. Theres crude. One of the reasons pressuring the ruble here. What do i see here . Down nearly 3 . Gasoline down as well. Futures got a little worse just the last couple minutes. They were down this much, stabilized, now came down again. And the reason were talking about this is because its a big change from just 6 00 a. M. When we were looking at the dow futures up 70 points. A swing of 140 points over the course of the last two hours. We dont know what that means. When we come back this morning, well have more about this Global Market selloff spp this is a classic case of the chicken and the egg . More on that when squawk box comes right back. Many americans who have prescriptions fail to stay on them. Thats why we created programs which encourage people to take their medications regularly. So join us as we raise a glass to everyone who remembered today. Bottoms up, america. See you tomorrow. Same time. Another innovation from cvs health. Because health is everything. The ruble turning to rubble. A rate hike fails. Why it could spell trouble ahead. Whos winning the Big Box Store and why people arent shopping in the mall. And the whiz kid stock picker is actually just a good story teller. The buzz story of the morning as the final hour of squawk box begins right now. Welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernen along with becky quick and Steve Leisman. Andrew is off. Developing at this hour, the futures in this country have turned around after being up and having the worst week in three years last week and being down yesterday after an initial strong start. And the focus is on russia. The central bank there tried to defend the ruble by raising its Interest Rate to 17 after the ruble suffered its worst trading session in 50 years. It didnt help. It made it worse. All stemming from the notion that russia really doesnt do much other than oil. They dont you were there, steve. They dont manufacture anything. Vodka and oil is it. Maybe a little caviar. But they dont. When you go from 100 a barrel to 50 a barrel and youve got expenses, its not working. And the ruble is what were seeing here. They have metals and titanium. But its all commodity based. Youre not talking about a slow and steady decline. Whats the average salary there . At the old 30 rubles to the dollar, it was 13,000. And now its like 5500. Thats the reason im glad andrew is not here. If he knew people were only making 5500 in russia, this would be i dont know at this point this is nasty. And the ruble is the story. But i think its tied to oil. I think so too. Lets run through a couple of these boards quickly. Michelle is here, shes going tell us about this in a moment. But ill show you quickly. The ruble 73. 31. As steve was pointing out, what youre looking at is a chart of the dollar versus a ruble. When you see a spike up, that is massive pressure on the ruble. Michelle is telling you about that in a moment. As joe mentioned, oil is the big story. We are watching Oil Prices Continue to decline this morning. Theyre off the weakest levels of the morning, but you see it at 54. 12. The ruble was also getting punished very heavily. Russian stocks selling off as well. Michelle said its 3 00 in the afternoon right now in are ush sha. You can see a decline of 12. 3 . Also the u. S. Futures here walk you through quickly. When we walked in at 6 00 a. M. , we saw the futures were up by about 70 points. Now the future is down 70 points. We did see the dow futures weaker this morning with a triple point decline. S p futures right now down by ten points. Nasdaq down by 23. The 10year has been interesting to watch sitting just above 2 . Is it really just oil . Chief correspondent Michelle Carusocabrera here with the chart. Its breathtaking to watch. It went to 79. 66 at one point. Its unbelievable. If you look to whats happening there on the righthand side, theres speculation the Russian Central Bank is intervening to bring it back to 73. That is an incredible intraday move for any currency to make. And this is clearly a free fall situation in the last two days. Because remember this is day two of big selling. They raised Interest Rates to 17 from 10. 5 in the middle of the night russia time and it didnt work. Its a startling number considering in a general Interest Rate world. Right . Were going to see fallout. Why is this happening . Oil is probably the biggest driver. City estimates for every dollar per barrel decline in the price of oil, gdp for russia goes down by 0. 8 . You can do the math. The central bank i mean, the ministry of finance said actually we think for 2015 we could see the economy decline 4. 5 . Thats straight oil. On top of that the sanctions because of the situation with ukraine which has been brewing since march. And then boris our guest who was on just about ten minutes ago brought up this last point, corporate rollover risk which hes right. Theres about 137 billion of Bank External debt matured by the end of 2015. Because of the sanctions, its incredibly difficult to roll that over. They cant access a lot of the credit markets in the world. You have to wonder about corporate issue there is. And that was money not in rubles. Thats in dollar denominations. You cant access dollars, how do you roll that over . You end up trying to do it in the interior markets and issuing a lot of rubles. Michelle, boris i thought one of the interesting points he made is they had this problem back in 2008 and they managed it fine. The ruble weakened to 40. The central bank intervened. He said everybody in moscow is wondering. He said its more than enough money. 400 billion in reserves, why wouldnt stay stabilize the ruble . That is a great, great question. The reporting ive done suggests there is deep division between putin and the central bank. And that at one point putin didnt want them to use the reserves in order to defend the currency. And then they came out in november and said were going to let it float. Were not going to dechd it at all. Subsequent to that they have done many interventions here, there, and everywhere. According to reuters, its unclear exactly whether or not there is a clear policy and who is in charge. Its not an independent central bank, of course. And hedge funds and investment firms, some of their biggest bets are in currencies. If you remember in 1997 it was like the thai baht which really started the asian crisis which ended in longterm Capital Management. A longterm Capital Management was at 5 billion. And its coins now. And russia i dont know whether thailand had the financial wherewithal that russia has. Maybe. But it seems the ruble is more important than the baht. Although a lot of other currencies followed the baht. Its already happening. You have emerging market issues. If i was saying whats really going on in World Markets today, its not just the ruble. Agreed. Brazilian riyal. Thats some anticipation of Federal Reserve rate hikes along with the eroding economics created by weaker commodity prices. Sfl its raining on our global tax cut for oil prices. Hes always been very optimistic about things. Low cost energy and firm for american businesses is helpful. Economic impact on countries, not especially friendly to the United States. Also positive in my opinion. But a run on a currency and an asian type baht crisis is not helpful. If it spreads to that. For more on energy prices, were joined by pavel mulkinov. He is at raymond james. And on the phone steven schork, editor of the schork report. Pavel, ill start with you. Youve got an interesting take on this. We heard the saudis wanted to put the frackers out of business. Youre one of your views i heard expressed is they dont like lng exploding to their part of the world either. And eventually this could even hurt that. Could you explain that . Absolutely, yeah. Look, there are a lot of motivations for why saudi is trying to create oil prices. Clearly damaging supply growth. There may be some geopolitical reasons. Take china, for example. Chinese oil imports are up 30 in the last five years. Not bad. Chinese lng imports are up threefold in the last five years. Thats a big deal. And lng eats into the market share. Are using it in many cases as a substitute for crude. Aww dee does not make lng. Qatar does. But saudi does not and most other opec members do not. So all saudi cares about is protecting the Addressable Market especially in asia for its barrels. And lng gets into that because economics have traditionally been tied to the price of crude at a ratio of about six or seven to one. The price of lng in asia also falls. Another tax cut of sorts for the chinese economy and japanese economy. Not a good thing if youre an lng exporter. So have we overshot now on how low it is. Our review is that we are in the bottom process. Frankly the day after the opec meeting, the day after thanksgiving felt a lot like capitulation. Obviously weve seen prices deteriorate further. So you were wrong about it. You already thought we bottomed and we didnt. Thats true. All right. Let me i cant remember what you said, schork. You know, ill give you another you get a free pass. Are we getting close to the bottom now . You absolutely cant pick a bottom. The last time i was on with you guys, we were in that low 70 range. And i said that 75, 70, i thought that range would hold. It did not. As soon as it broke i had to position myself for lower prices and im still positioning for lower prices. This is the yield axis. We are beyond the point of economics where the economical price for pulling oil out of the ground is. Were completely disconnected from that. As weve seen with the ruble and as weve seen with the demand issues elsewhere, theres no telling. So the next target right now in wti would be right around 52 a barrel. And then the next target below that is 42. Could it get there . Absolutely. So at the end of the day, no one can tell you where this markets going. We could already hit bottom or could be heading lower another 15. Thats the scary thing about this. This is 2009 all over again. Pavel, do you have knowledge about russia . What would 42 do you have an opinion what 42 would do to the ruble . Well, i dont have a prediction on the currency itself. Look, 40 oil would be lethal to a lot of players in the global oil industry. In the United States, in canada, brazil, russia. Frankly more than half of the opec countries. So oil certainly cannot stay at 40 on a permanent basis. Its probably not even going to stay at 60 on a permanent basis. At the beginning of 2009 when oil briefly touched 30 bucks, you know, near term anything can happen. But lets remember back to 09, prices bounced back to 60 within a couple weeks of touching 30. This is different though. Thats a more sustainable price. I understood it back then. We were in a Global Financial crisis back then. And it still bounced back. So i dont know whether that comparison holds. I dont know whats going on now. It seems totally different than what that was maybe totally demand and this time its not demand. I think it is part demand right now. What . I think it is part demand right now. If you look at the situation a lot of these weak places, theyre getting weak from all this. That is probably starting to be sel selffulfilling the demand. Yes. Commodity prices dont drive economies. Economies drive commodity prices. But with a rising dollar at a fiveyear high, the u. S. Trade weighted value, who are we going to sell our manufacturer and exports too steves not worried about that. Thats the scary part here. Steve isnt worried. Why arent you worried . Its a negative, but not a decisive negative. Its not going to determine the outcome of the u. S. Economy. It is certainly significant concern at this point. All right. Pavel, thank you. And steve schork, thank you. Thank you. In that picture he looks like hes 12. Where are we going to send you . Were working on that. Rubles. Theres certain countries in the world that make it hard for journalists to get places. But that red square shot is a good one. Its beautiful. A snickers bar was 25 rubles. Id come home and it was 30. That was before 98, though, right . It was hyperinflation. Reliant on foreign imports for standard of living. Yes. Coming up, the retail industrys naughty and nice list. Dominic chu will be checking it twice. Shopping deals for you. And a check on big box retailers. Squawk box will be right back. Welcome back on a busy morning here at squawk box. Investors starting to see which Retail Stocks are being naughty or nice this shopping Holiday Season. Dominic chu has the scene from the mall in the wall. Kind of the mall in the wall. I mean discretionary stocks have been fairing well this Holiday Shopping season. So we wanted to look at which ones are doing really well over the course of the past month. The Holiday Shopping season here. If you look at some of the ones weve highlighted here prp you look at certain ones in our wall map. Teen apparel has been a loser. Aeropostale and abercrombie fitch. The Big Box Stores, macys and nordstrom, both up marginally. Up about 2 . Then you look elsewhere along the size spectrum. Tjx and ross up very well. And then you look at the standouts. Some special situations, situation type stories, specialty feature stories. Dsw on the shoe front up 13 . And francescas mostly girls retail. Up about 34 . This has taken a beating over the past year but still some investors have bid this up about 34 . So overall, remember, becky, these plunging oil prices, these gasoline prices are supposed to do consumers a favor during the Holiday Shopping season. At least some of them are holding up well. The question is whether the falling Oil Prices Continue to help people spend. Back over to you. Thank you. This Holiday Season the big anchor stores at the malls are cleaning up or doing well comparatively. Jan kniffen is joining us along with courtney reagan. Jan, you pointed this out to me based on the traffic in the malls the anchors seem to be doing okay. Rest of the malls with not so much. The anchors are winning. Theyre getting more traffic than the mall. The anchors are so much better at Online Retail than the other mall players. I think its up 50 to 100 from last year. So they were doing 10 of it last year, theyre doing a little more online this year. So its a big change. Amazon wins when it goes online, but so does walmart and macys and penneys. If youre trapped inside the malling with youve seen it down for the first three quarters. I think in the Fourth Quarter its down a little more. Maybe 5 . Thats a big problem. Thats a big problem, courtney, not only for this Holiday Season but longterm. What does it mean for the stores if the inside of the mall is not attracting people like this . We talk about malls becoming more experience centers. Things you have to do in person. You cant get a hair cut online, you cant eat out online at least not yet. A lot of these malls are turning to multiuse properties. Theyre looking for attractions and services they can offer because it will become a problem. Now, thats not to say i think physical retailers are going to disappear. I dont. I think there is still a place for it because of what weve talked about with this web grooming. People are researching online, buying in store. Jan, what do you think . I dont disagree, but there are 1100 malls in america, theres 350 that are doing well. That leaves a whole bunch that are doing less well. Theyre bulldozing a mall right now in st. Louis, missouri. Its literally being torn down. There is a mall i visited that was one of the larmest enclosed malls in pittsburgh i visited a couple months ago. Its down to 50 occupancy. Each of those when they were built were the largest malls in the country for superregional shopping centers. Theyre going away. Will they all go away . No. But the ones that win will win and a lot will lose. Its the same story on stores. Do you really need a thousand stores to cover america if youre doing a lot of Online Business . Maybe you only need 500. This is story that is continuing. Thank you both very much. The futures now are not down nearly as much as they were. Michelle carusocabrera had some breaking news. First Deputy Governor should i learn how to pronounce this guys name . Is he the guy . Sergei clearly hes somebody speaking to reuters and is making comments. At least theyre quoting him which may be why the ruble came off of its lows. He says it is crucial in the stock markets and he says more importantly the central bank will take more measures after last nights massive rate hike. Look to the right of the chart there. Consider the ruble went to 79. 66 and now its only 73. Thats a sixcent move in the last half an hour or so. Thats a huge, huge move. It may be because theyre doing jawboning and trying to threaten speculators saying there could be more to come. Which is as you know this is what happens when youre dealing with this kind of situation. The central bank has to go to war and figure the tools to use to scare everybody out of it. They got the wherewithal to do it, you asked that question. But it was at 72 20 minutes ago. Volatility is unbelievable. Looks like our markets have come back as well. I dont know if the ruble stabilizes, is that really if thats really the key. Thats a good question. Coming up, a read on Home Construction and where the market stands with Lower Oil Prices. Squawk box coming right back. trader vo i search. I research. I dig. And dig some more. Because, for me, the challenge of the search. Is almost as exciting as the thrill of the find. announcer at scottrade, we share your passion for trading. Thats why we rebuilt scottrade elite from the ground up including a proprietary momentum indicator that makes researching sectors and Industries Even easier. Because at scottrade, our passion is to power yours. Well, its been a heck of a morning already. Look whats happening with the u. S. Stock futures. We saw the dow turn positive. Its been a wild ride this morning. Futures were up about 70 points at 6 00 a. M. Went all the way down to about 100 points below fair value. Now this has happened. Oil prices originally had been the mover. And oil prices at this point at least with still weaker. Theyre down by more than 3 to 54. 07. It is the ruble. That breaking news that michelle just told us has stabilized the ruble somewhat. But remember things are changing quickly. Stick around. Well be back with Housing Starts. You can bring back a lot of things from a trip around the world. But you cant always bring back customer data. Because many customers dont like it when their data moves around. Can i go now . If youre going to do business globally, you need a cloud that can keep your data where it needs to be. Today, theres a new way to work and its made with ibm. Youre down with crestor. Yes when diet and exercise arent enough, adding crestor lowers bad cholesterol up to 55 . Crestor is not for people with liver disease, or women who are nursing, pregnant, or may become pregnant. Tell your doctor all medicines you take. Call your doctor if you have muscle pain or weakness, feel unusually tired, have loss of appetite, upper belly pain, dark urine, or yellowing of skin or eyes. These could be signs of serious side effects. Im down with crestor make your move. Ask your doctor about crestor. November Housing Starts down to 1. 28 million. That comes from an upwardly revise that helps explain the minus sign. A whisker above 1 million. Its now revised up. So that gives you the u downward. So last month actually ended up 1. 7 . Now its down 1. 6 . Lets look at whats signed up down the road in form of permits. Thats a big miss. Down over 5 . We were looking for 1. 065 and change. Ended up with 1. 035 million. And thats from an upwardly revised number as well. Wouldnt have made a lot of difference originally. Permits now stand at 1. 8092 for october. And that october number was up 5. 9 . Now down a little over 5. 1 , 5. 2 . So lets look at it, take a step back. Theyre both over a million. Seven or eight years ago they were both radically higher. These are much better levels than a year or so ago. Just kind of sideways. Energy seems to be the big story, how its affecting russia. If you like sanctions, nobody does it better than the market. Of course, were going to continue to handicap what the market closes at. Many technicians have support somewhere in the mid50s. It seems to be getting clobbered in the aftermarket yesterday. That continues into today. And of course pmis are important as are default insurance. Which seems to be kicking up. Rick, does the ruble feel anything like the thai baht or should we continue to focus on the carnage that the oil price could do to generate a blowup . Will it be because of oil or the ruble . To me its all about oil. Its the cash flows and how theyre the detrimental effect of dropping oil to economies that so depend on oil. Whether its venezuela, russia. Of course if you have all your bills in your budgets and you want to support armies and aggression in other areas of the globe, it stakes some dough to do that. And the money so its not a full blown currency crisis like the asian crisis then . I dont think so. It doesnt mean it cant create a kind of a pingpong ball thrown in a room with loaded mouse traps everywhere. A couple of snaps and you know what happens next. They all start snapping. This isnt anything exotic. Its not anything truly from a systemic side. What is really is is a cash flow and a giant margin call around the world. And it came at the worst time when countries like china you remember a couple years ago, they were buying and leasing every kind of mineral and every country from lithium on down. And i think this is the reverse of that. But in my opinion, joe, it had to be something. This deleveraging is a good thing. I dont want to see it get out of control, but i think theres positives. At 5 59 this morning i was upbeat on oil prices, the u. S. Economy. I stood five feet from joe kernen for the last two and a half hours and im ready to, you know, take a few cyanide pills here. Lets get reaction. Lets bring in mark zandi to the conversation. Rick and joe are telling a story which i think is worth thinking about here, for sure, of interconnectedness of the Global Economy. As in we dont know where the risks are. Its whats happening in the ruble and oil. Is it a reason to be concerned . Yeah, i think its a reason to be concerned. I dont think this is another Asian Financial crisis, no. A difference is one of the major differences is the russians have a lot of resources. They have reserves. 400 billion in the bank. Its going to be painful, no doubt. Theyve got a whopping recession coming. But this isnt thailand late 1990s. So yeah its a reason to be concerned. Its a flash point. But i think at the end of the day this is not going to be the thing that does it. So stay optimistic, steve. Mark, do you think this plays a role in the fed meeting that begins today and how does it play a role . Yeah, i think it plays a role. I mean, its not on the top of their list. Theyre most worried and concerned about the job market, the labor market. And thats going very, very well. Of course inflation and inflation is below target. But theyre also worried about Financial Stability and this plays a key role in the Global Financial system. So itll play a role in their thinking. Will it stall or change their script . I doubt it. Their script is im going to start raising rates midnext year. Unless what goes on in russia the other emerging world spills over in a measurable way. I think theyre going to start raising rates midnext year. I dont think thats going to change. You know how roeporters need to make calls for sources. People are writing me. The esteemed former under secretary of the treasury says youve got to remember russia and just how poor the fundamentals have always been there. Gdp the same size of france. Only 140 Million People which is shrinking. Life expectancy is falling. Commodity centered economy. Massive corruption. Also sanctions. Theres a temptation to give it a bigger role because of the cold war and we thought its a superpower. But in reality, its always been weak and its not probably something that could be contagious or systemic to us. Does that make sense to you . Let me make one other point. That is about this being systemic to other emerging economies. Those economies and were talking about brazil, talking about india, indonesia, south africa, turkey. Those countries that have large deficits, theyve already gone through significant adjustments when global Interest Rates rose. So their currencies have adjusted and monetary policies have adjusted. They sill have them, but theyve come in quite a bit. Theyre imbalances but theyre smaller than a year and a half ago because theyve already gone through significant adjustments. That reduces the risk. But then theres oil, mark. I dont know what you think about that. It should be good, i understand, longterm. But when it moves this fast, you dont know what you dont know and you also just dont know whos going to get caught on the wrong side of that. This is a very significant net positive. Longterm no doubt. But you wonder no, immediately. You can already see it in Global Retail sales. In fact but im going to make this argument. The idea that oil is telling us something about the Global Economy that were not seeing in the data. No. I think this is theres a lot of things going on with oil, obviously, but its mostly supply side. The saudis have made up their minds theyre not going to accommodate the production increases in the rest of the world which everyone including myself thought they would do. They didnt do it. Thus the Lower Oil Prices. Then it takes on a life of its own. Give the government more money to spend, right, mark . At least 4 a gallon. Lots of people this is a 100 billion you dont want a gas tax . Guys, let me point out quickly, we keep rotating through the boards. Youll see the russian stock market looks like markets down by about 12 there. There are different ways of measuring the russian stock market. That down 12 number that youve been seeing is measured in dollar terms. Because of the massive devaluation of the ruble against the dollar this morning, it looks like stocks there are down by about 12 . In reality when youre looking at this in terms of the ruble, its actually up by about 3 . This is the rts. Again, this is the stock market in russia based in dollar terms. The reason we show it this way is because u. S. Investors are investing in dollars. So if you are an investor whos gone in over there, this is what youre looking at your loss today. If you were investing in rubles, you look at the stock market as actually up. Pretty significantly over a course of time. Becky, youre going to read the tease now and also say that were going to get mark zandi is going to stick around. Well be talking to him in just a moment. Up next, its the wall street buzz story of the week. A socalled boy genius who traded stock while attending high school in new york city. Turns out this might be just a sheep in wolfs clothing. We have details after this. Again check out the futures here. Things have turned around a bit, back down again. Dont take your eyes off this for a moment. The dow now down 32 points again. S p off by 7. 5. Squawk box will be right back. Its more than the driver. Its more than the car. For lotus f1 team, the Competitive Edge is the cloud. Powered by microsoft dynamics, azure, and office 365, the team can gain Real Time Insights and instantly share information around the globe. 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Com gift card when you open an account, call 18889805745 today. Optionsxpress by charles schwab. Welcome back, everybody. A new twist in a story thats been the talk of trading floors and beyond over the past couple days. The socalled whiz kid of wall street who allegedly made millions while still attending an elite new york city high school. Turns out the whole thing was made up. Our scott already knocked it down yesterday. He joins us right now with more. Hey. What a wild 24 hours in this story. Just to give some back story, new York Magazine puts out a piece highlighting this kid in this elite high school in new york city. 17 years old. Allegedly made 72 million trading the markets on his lunch break. So we saw the story like everybody else did and said lets get this kid on and find out what the real deal is. You read the story and youre like im not sure this passes the smell test from the get go. So we invite him out here. My executive producer actually met with him when he came in here and said, look, lets see some trading statements. Couldnt produce them. What are you best trades . Couldnt name them. So we were a little skeptical to begin with. Then he met with some executives here. You immediately got the feeling that something wasnt exactly right. So they started to back down a little bit. Then i met with them directly and interviewed the kid muhammad to which point he and his partner told me the 72 million number is not true. They still led me to believe that they had some millions in their returns, but the whole thing just really started to spiral out of control. Then we find out later in the evening that they did an interview with the new York Observer essentially saying the entire thing was false and then put out a statement through their own pr. The new York Magazine article is inaccurate. While he runs an Investment Club which does simulated trades his millions are about as real as monopoly money. At the end of the day this teenage boy didnt realize the consequences of his actions. You know, i mean, everybody was talking about this story. Hold on. Couldnt they say lets see the statement where 72 million exists . Couldnt they have said that . They could have said a lot of things. Look, thats i dont blame the kid either. Hes 17. New York Magazine did put out a statement initially before the kids completely walked the whole thing back last evening to the observer. Why not check it first . I dont know where that rolling story stands either. There were people in the Rolling Stone story that were never interviewed. Thats what im saying. Heres what happened right. We wanted them to come out here. We wanted to see them fa facetoface and ask them all the questions everybody wanted to know. Where did the initial money come from . What kind of trades were you making . Et cetera, et cetera. And they couldnt the bottom line is you did it right. You did actual journalism. Cnbc did it right. Thats my headline. And then for you, you got you know, the democrats didnt ask anyone in the cia what happened. Im kidding. I just want the Huffington Post to pick that up. We asked what everyone wanted to know. That is good. Up next, brace yourself. Jim cramer with his reaction to this mornings global selloffs. Heres a look at the futures this hour. My baby drove up in a brand new cadillac. My baby drove up in a brand new cadillac. Look here, daddy, im never coming back. Discover the new spirit of cadillac and the best offers of the season. Lease this 2015 standard collection ats for around 329 a month. The popularity of options trading has skyrocketed. But we still hear from viewers every day who dont know how to profit from them. So we wrote an entire book to show you how we trade options. And if youre one of the first 250 people to call in right now and just cover the shipping and handling, well send you a copy for free. Look at the rates of return weve made on some of our recent options trades, versus what we would have made if wed just bought the stock. Theres no comparison. To make the best returns in todays markets, you have to learn how to trade options. And our book will show you how we do it for free. It shows you how to use options just like we do to make more money from every dollar you invest and to profit, regardless of which way the markets move. Its all right here in this book, folks. And today, you can get it for free. But only while supplies last, so call now. [ male announcer ] call the number on your screen now for your free copy of jon and petes new book. Thats. see the number on your screen call now. Lets get down to new york Stock Exchange. Jim cramer joins us now. Quite a morning, jim. None of it happening here, but doesnt mean it doesnt affect us. No. Russias for real. Russias an issue because there are a lot of banks in europe that are very connected to russia. So is it directly related to here . Well, we know from 2011 that theres always some knuckle head who bought a lot of russian paper we dont know. We already know there are funds that have ukrainian stakes. Youre going to feel it here. I dont want to say that russia is necessarily going to fail. That doesnt make sense. But it is absolutely certain that that one is for real. I think brazil is for real. I think some of the problems with some of the smaller Oil Companies in this country is for real. These all should put pressure on the market. I think oils going to have a hard time staying above 52. And i guess your view at this point, jim, you remember so well im sure. Where were you in 97 . I had a good year. I had come in short heavily. Got that really right. 98, no. I did not see thatcoming, and had to scramble from there. Not the same, is it . I dont think this is like someone hitting the ruble lie soros or anything, is it . This is all oil. No. Remember there were a firms that had just done some business with russia. A lot of the companies that i deal with, the honeywells of the world, they saw russia coming, theyre just not that exposed. The Financial System is always exposed, because there are people who are always drawn to a 17 number. They tend to do with it retail money. That retail money flees, but a lot of these different budgets are not u. S. Dollars, not based on our money, so it wont be as bad, which is why i understand were not down 20 or 15 , and i mention these numbers, because you could say that europe could be down that much. Were in better shape than europe, but i dont think theres a reason to be bullish on this stuff, but its not as reflected as it should be yet. All right. Okay. Jim, thank you. Well see you in a couple minutes. When we return, one last look at the wild swings in the Global Market. Check out europe this hour. A tough start to trading this morning. Putting pressure on Global Markets. Mark zandy is back. Jim iuorio, and Michelle Carusocabrera is here. Mark, you have an outlook for 2015 youre revealing now for the first time this morning. People follow you, want to know what you think. What is the good word for 2015 . Im optimistic. I think it will be a good a year as weve gotten since the late 90s. I think were going to create just under 3 million jobs. Next year over 3 million jobs. Thats going to reduce unemployment by at least a percentage point. I think by the end of the year, certainly by early 2016 well be back to full employment. What are the risks to this market, mark . Were observing one of the risks, that significant optimism seen incongruous with todays events. Most of the risk is overseas, whats going on in the e. M. , the emerging markets, whats going on with respect to china. The other key risk is Interest Rates. If em right, this means the Federal Reserve will begin raising rates, my expectation is theyll gracefully raise rates, but obviously thats a risk. Michelle, people are waking up this morning, central bank, racing the Interest Rates to 17 , 17. 5, from 10, the ruble is still selling off, weakening dramatically this morning how much concern do you have that theres some a huge concern . No, but you dont seed a commodity decline like its done, you dont see the ruble do what it does without knowing that somewhere somebody is on the wrong side of that trade and there will by a ripple effect. Can i add . I think treasury is probably thrilled today. Remember d. Think about the situation for russia in this way. They have a certain amount of hard currency reserves, do they use it to defend the ruble or do they preserve it so the corporations in russia can roll over their dominated debt that they cant do anymore because of the sanctions. As an investor, youve got to make a choice. Do you invest in those bonds or not . Theres only a certain amount of currency. Tim, when i came in oils decline was a good story, and now the whole thing has turned on its head. Apparently i want higher oil prices. Thats better for me and the u. S. Economy. Whats your take on this, jim . I will give you this. When we were at 62, i thought it was unambiguously good for the u. S. Economy. It gets stickier here, but i think at the end of the day its good. I think the stock market is reacting to the adjustment period, but there is one key thing that explains how the market is looking this morning. Theres the kriz in russia, and potential the way the fed will react. If we were concentrating on the crisis in russia the u. S. Dollar would be higher. Its sharply lower. The reality is theyre going to sit back and say should we talk more hawkish . Thats what the stock market doesnt know which way to run yet. Hey, steve, can i make one point . When this started happening, we thousand uhoh, whats going to happen in russia . They havent had to do anything except sit there. The geopolitical flux we thought was coming, it hasnt even had to come for us to be this worried about oil all of a sudden, right . Theres been many jean opolitical problems that stem from an economy thats crumbling. I think its a mistake to think we fixed their wagon, now they have no money. Iams that sows what if he does do something overtly aggressive. The fiscal times was reporting earlier they sent out the foreign secretary to say crimea has now become a part of country. Zandy wants to take about the gas tax how big of a gas tax . What . He loves taxes. If it stays at say we average next year at 70 per barrel. Lets assume we settle in on average 70, the benefit to u. S. Consumers is almost 100 billion effective tax cut for 2015. So thats, you know, assume two thirds of that spent, thats almost a half a point of gdp growth next year. This is the broader point, you know, in any big economic changes there are wingers and there are losers, the losers for a fight it most acutely. Leverage, but this is a net benefit to the Global Economy and a very significant net benefit to the u. S. Economy. When we look back a year from now it will be an add, not a negative. Do you expect the Russian National bank to interfere. It depends on the moves that we see today. Michelle, steve, thank you guys very much for everything. Its been great having you walk us through so were settling somewhere in the middle futures now down about 40. Is it possible its correlated to the ruble . That is crazy. This is what weve come to to . I think its correlated to a lack of clarity. Make sure you join us tomorrow. Squawk on the street is next. Good tuesday morning. Welcome to squawk on the street. Im Carl Quintanilla along with jim cramer and steve russia hikes rates in the middle of the night in an effort to save the ruble. It has not worked. Our even premarket trending lower, the tenyear yield, the fed meeting begins today. Oil officially h