Transcripts For CNBC Squawk Box 20141217

Speak the language in a statement and remove a considerable time frame. The statement and an updated forecast is due out at 2 00 p. M. Eastern today. A half hour later, chair janet yellen will field questions from the media. Beyond the fed, the ruble and oil. The russian currency dropping about 60 against the dollar this year. Cnbcs Geoff Cutmore has made its way to moscow and will join us there in just a minute. He is looking at russias move to sell the currency. As for oil, worries about a surprise pressure in prices, france is now down nearly 20 since opec decided to keep rates steady late last month. Add all these stories together and we have a very jittery market. The dow has shouldered triple gains and losses in the session. The blue chip index swinging 700 points yesterday alone. The dow, nasdaq and the s p closing at their lowest levels since the understand of october. Just a little after 6 00 a. M. Is how we stand right now. The futures look like they are headed up. But as we know, where things stand right now, it could be a very different picture at 9 30. Could be a different picture from that at the end. And 1. 5 , only were just not used to it. 1. 5 is 250 points. By weve been aside sleep for so long that the young kids in the market are like, wow. When we think 80 points is a lot, thats fractional. It was moving with oil. Did you w567 it . Oil was down a couple of dollars . And the market was up by 270 and i looked and oil is up 1. 50. The market was pulling back, goes back down a little. It broke within a little bit in the morning. For a long time, based on the ruble. And the ruble took over the story line as russia looked like it was going to get more actively involved. Cut more gets to go to russia. Im sorry. Dude, im working on the visa. Are you, really . Yes. Certain countries make it more difficult. I wonder why. Use a mastercard. Americans express wont get you there. You can borrow mine. Actually, that might not be a good idea. Where is the ruble today . Did it get above 80 . No. 79 something. 249 was the high yesterday, but 68 is it stabilized . I was convinced oil again yesterday. Because of the market. You could see it moving around with well, then you saw ge did come out and say sluggish. When youve got so many different and sundry something is always going to be affecting it. Theres always something doing well. Always something. Doing badly. Its like the best laid plans of mice and men. Oh should have thought of that. Lets check some of the other markets. We can always talk about more. The tenyear yield. But thats too much. Exactly. So very close to that 2 level. Were near the oneyear low, absolutely. Lets show you whats going on. We showed you with the ruble, it is stronger against the yen. 117 yen for every dollar euro is going to cost he 1. 24. The pound sterling. Gold right now, if youre not gold, how do you make a case for gold . Higher by 2. 70. The ruble roller coaster, the currency has collapsed leaving ordinary consumers in the country to rush out and buy imported products such as cars and appliancappliances. Inflation is making those items more expensive now on a daily basis. Russians are not able to buy ipads or iphones right now because apple is holding the sales in russia saying the rubles instability has made it too difficult to set prices. They were taking price necessary ruble as but what does that translate into dollars . It was changing by the minute. Remember when someone said the bitcoin . And the minute they got it, they would sell it because you dont know where its going to be ten minutes later. I wouldnt, either. Currency is all psychological. When you really start to think about where the kurchtsy is. Lets head to moscow. Geoff cutmore brings us the latest. Geoff cutmore with the visa. Hey, geoff. Yeah, hey. Yeah, the shell is just to get a multi entry one in there for a year. And then anytime youve got a crisis youre on that plane and youre straight back. Youre not missing too much weatherwise. Its about zero degrees right now and were expecting snow. So it is going to get chilly. Lets move away from the weather, though, because i want to talk about what weve heard over the last 30 minutes. The Prime Minister has come out and said the currency is now outside of the comfort zone for the economy and he has singled out russian exporters and suggested maybe part of the problem here. To some that sounds like nibbling away at some form of currency control. What they could do is sell the exporters that they need to start selling some of their hard currency stash, their foreign currencies to try and provide some support here for the ruble. So we have that. We know the finance ministry is in the game now. Theyve got about 7 billion worth of foreign currency that theyve threatened to sell into the markets. The Central Bank Put nearly 2 billion into the market yesterday. And, of course, we have that dramatic hike in Interest Rates here which takes us up to 17 . And thats supposed to present a huge incentive for russians to keep their money in the bank. But as youve pointed out, weve seen them heading to the stores to buy electronic goods and cars and things they might think at least will preserve some of the value of their assets. Back to you. All right, Geoff Cutmore, thank you. Zero degrees, wow. Thats how i think of russia, the cold. At one point, there was one point when vodka was a story value in the history of russia because it had more stability in terms of its use and vaublt and tradability compared to where does that freeze, do you know . Below zero. He keep it in the freezer. Sorry, geoff. Have you had some vodka already . Not today. Yes . Yeah, no, not today. Joe, theres a big speech tomorrow. And i think thats this is a very interesting point because president putin gives an annual media speech. And coming up to that, weve now got obama with a bill sat in front of him to rachet up sarchkzs in the sector. The europeans have juflt said they might find a new to put more pressure on president putin. So it feels like the story is coming to a head. Just yesterday, kerry made comments and the rublt seems to be off its lows. I wonder if were hearing from putin, this game that he always plays where he suddenly sounds dovish and everybody is relaxing and relieved that hes going to take the off ramp. And when reality sets in, the fact that nothing has changed in eastern ukraine. Yeah. And you know what . The problem here well, i say problem. From the western perspective, you look at these opinion polls and they continue to suggest that he has widespread support for the steps that hes taken on ukraine and crimea. So even as russians are feeling poorer by the hour because of whats happening with the ruble, theyre not blaming the president for that. Theyre pointing to the government. Prime minister medvedev and his Economic Team and theyre saying, you need to do something about this. We dont think president putin is to blame. So the country seems to be on side with his position as far as the ukraine is concerned. Which what makes tomorrow so fascinating because, really, if he wants to save this economy, he needs to take a step back here. Because, what, theres 670 billion worth of u. S. Dollar and other foreign currency debt in this economy thats going to need servicing over 2015. And if they dont get access to capital markets, thats going to be really tough. Okay. All right. Geoff cutmore, thank you. Thank you for that report. Either way, im going long vodka in that country right now. I dont think youre going to be able to get your hands on enough. Were going to get to roger altman in a second. And when putin goes in front of the media over there, is it like it used to be . You know, how do you do it so well every day . Is it like that or does he get grilled . Hes in the audience. Remember, geoff was there not long ago. He had a pretty tough interview. But if you have western journalists in the audience, i think youll get im wondering whether they grill them or whether its like here with our press corps b do layups with president obama. Or is it like here where its an arm of supporters . Yeah, arm of the white house. Joining us for the hour, whats his name . Ed henry. Anyway, joining us for the hour to talk about russia, the oil stock and roger altman. When i first heard michelle say why would gold go up . I first thought well, maybe in anticipation of world ward iii, but that probably is not going to happen. We were saying putin might be pushed to become even more i dont know, troublesome. More troublesome based on this. Well, i think its hard to interpret kerrys statement. And my own interpretation is that theres some thinking at the state department as to whether or not we might like to find a way to assist Russia Agency a way of possibly moving wards some stabilization of the relationsh relationship. I dont think anybody thinking if we were to offer an olive branch to russia all of a sudden there will be some pullback in ukraine. Thats not putins style. I dont think were going do see any softening at the moment in terms of the russian approach there. In fact, there may have been provocation as you just said including along the baltics and weve seen these odd flights over scandinavia where russian aircraft show up unexpectedly. Its pretty interesting, though, that worrying about global stability of the Financial Markets, even though we put the sanctions on, were like watching and if it gets too bad over there, were ready to try to assist because nobody wants a huge global problem that could be sparked by russia. Although you dont think that can happen. Its not a big enough country to spark a global i dont. If you step way back, what does this crisis really exposing . Its exposing, i think, how profoundly weak russia is. But even beyond that, so russia has a gdp about the size of france. About ninth in the world. It has a relatively small population for such a vast country, 140 million people. Population is falling. Life expectancy in russia is falling. Thats unbelievable. Its obviously a commodity centered economy. Its suffering massive financial plight. Theres no meaningful guide at the moment. It has a heavily leveraged corporate sector. And its a very weak country. Treasury must be thrilled at this point, right . Because the sanctions didnt seem to have much of an impasse. But then when you add on the layer of falling oil prices, the corporate sector, which needs to roll over so much debt and now cant because Western Banks are prohibited, now youve got the perfect combination where you have the real squeeze on him in a way we havent before, right . Yes. Michelle, i think sanctions had a bigger impact indirectly. Everybody measures the precise effect of the sanctions themselves acid written. But theres an additional effect which is the freezing of investment and financing into russia on the part of so many participants who look at the sanctions, who look at the tension and say im pulling back or im not going there. And ive seen in so many situations investments that might have been made and foreign direct investment, yes, its hurtful to them. But now, gazpron, roftnet, that is where the problem is. Now were getting close. The russian population blame us instead of their own government and their president for their problems at this point. We win support and lose support and thats one of the other things being exposed by this crisis. Putins popularity has soared in recent months because of his annexation of crimea, his moch into eastern ukraine, all his talk about legitimizing russia as a great power and all of that has made him very, very popular among the russian people. Which is why i dont think well see any pullback for the time being in ukraine or in the level of tension. And its also why i think putin is in a really, really tough spot. Because so respond to any overture from the west, that there should be one, hard for him to do. And so he in order to do the right thing for his economy and his people, it makes him look weak. Because he spent all this time effectively demonizing the west, demonizing the United States, and seeing his popularity rise. So he is really cornered. One more thing i think is fascinating, how many millions of did we read over the past few weeks and months about how and i remember this phrase so vividly. Putin is playing chess and the u. S. Is playing checkers. You know, it hasnt been that way. Even with how much crimea had oil wells and thats what he wanted. Now that he got it, you add it all together, is it worth the same it used to be because its all been marked down and halved . Do you even believe the opinion polls . If somebody calls you up in russia and says, how do you feel about putin . What do you say . Do you say no, i dont like him . And do we care whether the russians blame us . They dont like us, anyway. Do we care were not popular over there . I think thats the only way putin ever gets pushed out. Well, hes not. Hes basically going to be there until hes gone. But is there total oil wealth . Its about the same as it was before they took crimea. Its been marked down 40 , hasnt it . I bet you they havent even broken even. Im not close to that. Im not sure the oil reserves in crimea are that enormous. Why did they do it . Theres also the coast. Sacred from a russian historical point of view. But he is in a real corner. And thats dress. Grudge picked up on this yesterday, art cashin or someone said hes like a wounded animal now. I do think that kerrys comments, it might be the case of the United States and perhaps the west as a whole look like to find a way to assist russia. Even if theres no shortterm payback. Its an off ramp. Nobody wants to take it. One of the interesting dynamics here is whether there will be any overture at all from the u. S. Or from the west as a whole or perhaps on germany on assisting russia financially. That depends on how bad this gets. He only knows bullying is and power. All im going to say is it might be the west would like to see an opportunity there. For sure. Im not sure we want a total collapse of the russian economy. I dont think we would. That would be first of all from a financial point of view very destabilizing. Much more with roger altman over the next hour. Still to come this morning, the latest fallout from the sony hacking scandal. Why the new york premier of the interview has been canceled. And then could russias losses be a gain for some investors . Well have one argument on why now is the time to buy. And in the next hour, American Consumers saving big bucks at the bump right now. But what are they doing with the extra cash . 6 40 eastern. 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. Its a great outfit is what i was saying. Thats not what i heard. I heard one of those shirts again. You give me a hard time when i went simple. You said i was too corporate. I cant win. Youre right. Lets talk about whats going on here. Best dressed man. In the northeast this morning. Weve got a warm front here. Weve got some rain in through boston, in through massachusetts. New york just cloudy at the moment. Later this afternoon and this evening, theres a little snow. For this time of the year, you expect to see more blues on the map, more snow for the system. Maybe buffalo seeing some snow later on this afternoon and this evening. We need more of that after the seven feet they got a couple of weeks ago. This storm system hanging around, just messy through new england again. Maybe a stray shower into new york city later on. Big snow up in whats called arista county maine. Not a heavily populated area. Just some key areas for the most part and some moose live there. To the north and east, it will be out of here tomorrow. Big snowfall totals up here, not getting down to the major cities. Syracuse, looking at 1 to 3 inches. Real quickly, guys, i want to give you an idea of whats going on for Christmas Eve. Were not sure exactly whats going to happen. Probably pretty large storms on Christmas Eve and christmas. Well watch out for you. Do you get to play like this anywhere else . Do i what . Do you get to play like this . I get to work with al roker every morning. But sometimes you guys are nicer about it. Iems like, is al kidding or does he hate what im wearing . Theyre way too serious. I usually get a straight serious al sees this young, handsome up and comer that knows whether like nobody else. And hes like, the whippersnapper, who is the boss . You know what, though . Al reported for 34 hours straight. You dont have a diaper. I think he made time to go to the bathroom. I started watching that just to check in on him. He was awesome. Im kidding pep made some reference to that at some point. Punch drunk. 34 hours . Three hours, we get punch drunk. Thank you. Well see you again tomorrow. There are new threats from those responsibilities attack against sony picture studios. The group is now making threat against movie theaters set to show the comedy the interview. The department of Homeland Security says they are aware of the threat but there is no credible intelligence to indicate a plot against the u. S. Movie theaters. The new york premier of the movie has been canceled. That is a tough way to launch a movie. He would be worried that people wouldnt show up, right . You have a big premier and its empty . Bad, bad pr. But you remember lenny bruce was before his time. In terms of what you could do. Now, youve got to think of the whole world. We think that everybody is, you know, gotten our point in terms of cultural freedom, liberties. Can you imagine, when they even found out that this was not certainly saying that they had any right to do Something Like this. But they have to be like, youve got to be kidding me. In china, you cant even Google Tiananmen square in china. This is about assassinating a world leader . You would think here its its a parity. Over there, im sure they you know, i dont know. Clearly. But what scares me is so they got bad about a movie and they can decimate sony. If it was what if they got mad at somebody else, is it that easy to hack United Technologies or is it that easy to hack my guess is the banks have much better security. A bank . Coming in and trying to come through the front door. Movie studios, maybe not so much. I think thats right. Banks spend enormous amounts with enormous help in terms of fortifying themselves against s p 500 cyber attacks. Although its a moving threat all the time. And it is a wakeup call for corporate america. Right. Everyone should also, the hold story about dont put on an email what you dont want to see on the front page of the wall street journal. Never goes away. People dont learn that lesson well enough. Its become our equivalent of talking. We use it very, very freely. Snapchat. Yeah. Disappears, but it never really does, right . No. If youre in a litigious business, and there are m, its a really practical risk. Some email you send can end up in a can become public. So one of the many lessons of this, i think, is people are awfully loose with emails they send. Well see, this theres going to be further fallout from this. Back to russia with the ruble in free fall and russias economic free fall, is now the time to be seeking Investment Opportunity in russia . Chris granville is cofounder of the trusted sources. And also our guest host, roger altman is here, as well. I interviewed a guy named harvey yesterday running an Investment Fund in russia for 20 years. And he says, look, this looks bad right now, but back in 1998, people who bought at the right time made a boat load of mope. You bought gazpron for 99 cents and sold it at 12 later. Are we there yet when it comes to russia . Well, people were asking that question back in 1999, as well, and also in the fall of 2008. And the proverbial falling knife is very unpleasant to try and catch. But harvey is spot on. The scenario is exactly that one. The bounceback will come. It will be dramatic. But it wont be quite as quick and instant gains, as it was, in those previous russian crashes of 1998 and 2008. Why not . Then in 1998, the russian economy had tremendous pent up growth potential. The economy had just lost half of its output due to communism. The whole world was rallying around to stimulate and now the world is rallying against russia. Also back in 2008, re, the saudis were disciplining the oil pushing up the oil price again by cutting some outputs, which is the opposite of what theyre doing now. So its not going to be that dramatic. The scenario is basically the same. The opportunity is there. And the driver is the key point. The fundamental driver is geopolitical still. The oil price is a severe shock for russia. But without the sanctions, it would not have had the effect of causing the meltdown that is now occurred. The sanctions lifting the industry driver, the conditionality of that is the peace settlement in southeastern ukraine. The socalled there is progress there. Secretary of state kerry speaking in london yesterday, congratulated or commended russia for constructive measures towards theyve done that in the last two weeks. That is the key positive and that i think which should make investors think about this opportunity despite the proverbial falling knife problem. For the record, harvey said not yet, as well. Dont catch the falling knife. How about the opportunity, a shortterm opportunity based on what youre talking about . I think he will maintain a straight line, the Interest Rates will be the main point of volatility. But in addition to those kind of ritual signals, remember, crimea is not affected, is not relevant to the key sanctions. The United States and did European Union have not made the release of crimea a key. Its rhetoric on that which takes us further than weve been so far. That would away key signal for investors to look out for. Chris, great having you on. Thanks so much. In the past weve seen institutiones like the imf step in when youve got an emerging market debt crisis. Chances of that in this case are what . Low. Zero. Theyre low. After all, the imf, you know, represents its shareholders. And they have to be agreement among shareholders for an Emergency Rescue generally or at least an implicit agreement. I think that would be hard to get. More over, i dont think russia wants that at all. So i dont think that at all. Theres no path right now. I know we talk about the amount of corporate debt as its coming due over the past several months. But i think theres more than 100 billion coming due in early january, right . No. To the end of 2015, its 137 billion. Theres a huge chunk of it that is due in january. 30 billion between december. January. Thats additional pressure or is it not a big deal because they have 400 billion that they can play with. The central bank has a big pile of money. What do they do with it . They try to protect the ruble . Do they partial it out and say here, gazprom, you get to use it in order to deal with your repayment. That kind of thing. Theres a lot of speculation as to how much, the Russian Foreign Exchange Reserves are available right now for intervention. And there seems to be a lot of confusion in the markets as to how much that is. I thought it was odd today 7 billion, which was fed was fed by finance ministry, not by the central bank. That is odd. The central bank there is not independent. So im like, here. And it was left over, they said. Under the rug. That was odd and not a confidence builder. Lets go to break. Coming up, Global Markets have been looking at russia, obviously, also focused on oil. But investors may have overlooked, but i dont think so. A little thing going on in washington today and that is a fed decision. But moving that considerable period, some would argue, that explains oil. That also explains the ruble because of the strong dollar. So we know this is coming. Well be right back to squawk box. 4 467. Welcome back to southbound is southbound. Joining you right now is bruce kagman. Steven whiting is a global chief strategist. Our guest host, roger altman. Why dont we talk about what role janet yellen is today. Shes putting on a much broader scale, a much bigger world stage than she would have been given whats happening in russia. She is now going to be taking politics into her hands. Well, i think the fed has to keep its mind on whats really important in terms of what its seeing in the economy, in terms of the international influences and how its seeing risks to the Financial Market moves. And i think the basic message theyre going to give us today is that they continue to stay on track on their forecast. That keeps them with their guidance for the june move. But the world is very uncertain and nothing is decided and theyll ton be data dependent as well as sensitive to whats happening. But the fed is not going to back off of its guidance. And i dont think on balance the risks here are pushing them to get more worries about whats going to happen in the u. S. Next year. Roger, again, i think the framework has chavengd drastically over the last few days. It was teledpraved by the fed that they were going to be removing considerable time from the statement. We know theyre moving closer to raising rates. But if janet yellen says anything that is very forceful today, she will push for the rise in the dollar and push the ruble down and that could changes things on a stability level. There are peoples clearer to this than i am. But i dont think these going to deviate from the expectations. Sticking to the script that we would have seen a week ago or two weeks ago. I doubt. Shes got to walk a fine line, though, in what she says in this press conference. Its too late to have a press conference. But i dont think that russia related factors or global Financial Market factors centering around russia are going to change what others we all expected over the past week or ten days. What the fed says and what the message is. I dont think so. Steven, we probably wont hear much difference in what we expect from the fed. But how do you figure out how the markets might react to any of that news . Its a very difficult time. You can take a look at liquidity in the marketplace as being rather low. There is just tremendous turmoil within the marketplace. And theres lots of spinovers. This is not just the russian ruble. This is the high yield market in the United States. Credit conditions to borrowers outside of the Energy Sector. This is some markets that are closer to home. Theres been a weakness in emerging markets. Take a look at the mexican peso, for example. So this is a time where we get to see what the fed is made of. The u. S. Economy has grown probably 4 in the fast three quarters and employment has been strong. But there is this undercurrent of Global Financial vulnerability. I think she has to acknowledge that, at least, in the press conference. What do you think is going on in terms of how you try to figure out what gdp is for the next year . Thats good news for the gdp. But the concern about potential contagion from whats happening around the globe . How do you even put that into a model . I think its hard because you dont know where its going to lead. There is a sense of uncertainty here. But i want to reinforce the point that the Oil Price Drop even with the dollar rise combined with what were seeing in the economy overall is a solid message for what 201 is going to look like. So i think you continue to have a positive tone on the economy. You continue to be openminded to things happening, particularly stress in the Financial Markets. And i think thats kind of the way the fed is going to play it today. Theyre openminded. Theyre data dependent. They doevent lose site of the risks. But right now when they put their thinking cap on, things are looking better for 2015. Steven, very quickly, in terms of how you feel about things in the market, would you be telling investors to go ahead and get in here . Yes. We are overweight, large cap u. S. Equities. We like risks for the next year. You know, i would just bear in mind, at this particular juncture, that this extremely large drop in crude oil strongly dividing winners and losers, its probably a trillion dollar global stim use husband for consumers. But that stimulus is very widely distributed. Its a small positive issue for most everyone. It is a tremendous Financial Stress for a few. And youve seen in the past, for example, just look at greece within europe. That you could see extreme stress for a small number of borrowers can create problems that can cascade a bit. So this something that we have to be careful about that markets dont discern this very well and there can be spillovers that could be intended. Thank you both for joining us today. Roger is our guest host and will be with us for the rest of the hour. Still to come, what are americans doing with the money they are saving at the pump . And then bob breaks down the russia situation. 7 20 eastern time, blackrocks chief of fixed income will join us, as well. Welcome back to squawk box. U. S. Equity futures at this hour suggest were going to have a positive open if it continues this way. The dow would open higher by 96 points. Making headlines, baidu is buying a stake in uber. The skp making the announcement in beijing today, but terms were not disclosed. The Ride Hailing Service is valued at about 40 billion. In addition to baidu, other investors include Goldman Sachs and google. Coming up, falling gasoline brices, that is welcome news to most consumers. But where are they using their savings . Well have an exclusive survey when squawk box comes right back. Squawk box wanted to know what consumers are doing with the gas price savings. So we asked the National Association of Convenience Stores to poll their customers. Look at that. 2. 54 f 2. 54 for unleaded. compared to last years 3. 23 per gallon. Joining us is quarters of all gasoline sold in the United States of the good to see you, john. Good morning, how are you doing . Good. You surveyed consumers, they have saving a ton of money, nearly a dollar a gallon on gas. What are they doing it . Spending it on daytoday essentials or holiday spending, and the other half is paying down debt. How much is driven by where they think the price is going . Do they think its falling or rising . Do think they about it . You know, we asked them that question every single month, and this month, for the first time, more people thought price in the next 30 days would be lower than higher. They are optimistic, but the trajectory seen in the last few months continues through the next 30 days. The other question, are lower questions a sign of an improving economy . You asked that as well. What did they say . 65 said it was true. Look at the crop tabs, group 18 to 34 is more encouraged of the lower prices. I thought you would say they are buying donuts and coffee. We hope they are. We really, really hope they are because, you know, from our model, we dont make a lot of money on the fuel, but inside the store. Its get them to the store, get them inside so we can do a good job. When will you have a good idea if they are doing that spending, john . Well see results in the next couple months. We get scan data from a chunk of the members every month, taking a month or two to really analyze numbers. Hopefully, by the enof january, well have a better idea of what the effect of uptick has been because of the lower prices. Well have you back then. Thank you. Our special guest this hour, roger, weve been talking 5 lot in the breaks about what you think is happening here, what the potential fallout is. What are the take aways of the situation with russia and what it means . Well, we started often talking about how this exposes the russias profoundly weak, not strong. Falling population, falling life expectancy, heavy of heavily indebted, and so forth. The big take away is, you know, russia may view itself as a great superpower, and, of course, we know they have a nuclear arsenal, very important, but its looking small compared to the power of the Global Capital markets. We live in the era where the Global Capital markets are the superpower in the world. When they move against you, as they moved against russia as we see, theres nothing that can stop that. So, however, as we all said, a month or two ago, a few weeks ago, and not really, and the Global Capital markets have spoken, and russias on its knees. Its, again, a verification of the one superpower in the world is the global Financial Markets, even for russia. And thats lets underline that thats a good thing, right . Of course its a good thing. Moving over democracy over capital so we dont have to go to war anymore with guns and armor. Right. Instead, investors walk with the feet, and that brings, on occasion, some countries to bearment well see if it works. No meaningful country can essentially withstand the global Financial Markets moving unmassed against them, and russia cant either. Do you think he realizes that . I remember in the european financial crisis, german leaders said, we will not be pushed around by the Global Capital markets. Oh, yeah . Watch. Right . Do you think he realizes what hes facing . Ive never met mr. Putin, but people i know well spent time with him. They tell me that, number one, hes not particularly knowledgeable on economic and financial matters, and, number two, hes not particularly interested in them. I think hes going to try hard to essentially ignore this, and i have no idea what hes going to do at the press conference tomorrow, but it would surprise me if he was concessionary, and i think for public consumption purposes, hell ignore the collapse, but fundamentally, you know, russias in a corner and in a really tough spot. If thats the situation, then this turmoil may continue for some time to come. Yes. I mean i mean, capitals flying out of russia. Brains are flying out of russia. Every person with a western education and or a meaningful amount of money left the country or is trying to leave the country. This is a country thats sliding both short term and very long term, and, you know, it does not have a lot of friends. People talk about the relationship between china and russia. You know, well see. The chinese are happy to buy gas from russia at super cheap prices and happy to take advantage of russia, but are the chinese going to say, lets, you know, embrace or close historical friends, the russians . No. I think russia is isolated. I think its weak. I think putin is cornered. Might serve the west as we discussed earlier to try to figure out a way to help him, because in the long run, we need a working steady relationship with russia somehow, but theyre in a tough spot, really in a tough spot. If you believe Oil Prices Remain at these levels for the next six to 12 months, which i do, its just going to be worse. Next year, what will they do . 4 to 5 decline in the gdp. I agree. Its not going up. It isnt. They tried too hard. They got invested interest in keeping it here to try they are devious, trying to hurt some of our frackers and hurt our lng. Imagine youre in a board room in the United States or, you know, the board room of a Major Lending institution, and the question is do we put money in russia in one form or another . The answer is no. That reflects the sanctions, difficult relationship, and financial outlooks. Roger, thank you for joining us. Great to be here. Heres kind of a democrat, kind of. Well let roger go. Conservative democrat. And youre in business. Theres not anymore of those these days. And he runs a business. He has more experience than most. Ready to take his seat, bob, russia, oil, the fed, why Hillary Clintons the greatest president ial candidate in history and the Global Markets when squawk box comes 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. We have a lineup of experts to tackle turmoil. Bob on new risk and new opportunities, and u. S. Diplomacy with russia. The wild swings in global stocks. Black rock, fixed income chief on todays fed announcement, and janet yelps News Conference. Plus, policy experts on oil and currencies. Everything you need to make sense of the quickly moving market as the second hour of squawk box begins right now. Welcome back to squawk box here on cnbc, first in business worldwide, im joe with becky and michelle carusocabrera, and andrew is off this week. We have surprising study about deaths in chirps animated films. A story that makes you think twice about the movies your kids watch. Details later this hour. I was forever traumatized by bambi. My mom had to take me out of the theater. We know about finding nemo in the beginning, the very beginning, the mother you know, and then hes stuck with albert brooks. Who wants that . For a father. Take a look talking about turning out totally neurotic no matter what happens. Dow futures indicated up by triple digits. Becky . Wild rides. Among the top stories this hour, though, the ruble strengthens overnight, and more on the currency move in a moment. Apple halted online sales of the product in russia. The rubles instability made it too difficult to set prices in russia. On the economic agenda in the u. S. , the latest Consumer Price index released at 8 30 a. M. Eastern time, and then 2 00 p. M. The policy statement, and we watch for a change in the feds language on how long they keep rates low. The statement will be made followed by a News Conference that fed chair janet yellen will lead. Plummeting crude prices and g geopolitical shock waves throughout the market, and the fed caps off a two day meeting. To put it in perspective is our guest host, vice chairman at Kissinger Associates and former state Department Undersecretary for Economic Growth, energy, and the environment. On the markets, jim paulson, chief investment strategist at Wells Capital management. I dont know. I was not channelling you, jim, or just you, but you remember i was nodding when you were talking a week and a half ago about how almost everything positive of which there are many things, all the positives were pretty well nope known by the m, which is different than its been for the last two or three years. The market likes to go up when the negatives are well known and takes a breather when its down. We are down 4 or 5 since you were on. Yeah, i think, you know, joe, its significant. We had essentially three, you know, at least minor corrections now since june. This is the third one. And were sitting here this morning about where we were at the end of june, and so it we are doing starting the process of refreshing this bull market, if you will, by basically going nowhere in the last six months and getting some minor gut checks along the way. Thats the type of thing that refreshes some of the challengesment one is being too optimistic of sentiment. Another one being, you know, fairly high valuations. Were sitting about 17. 5 times earnings tonight. We were at 18. 5, you know, at the market top. I still think, though, the big elephant in the room for 2015 is the resetting of Interest Rates, which we hear about this afternoon. I kind of think that i just cant come to grips with why falling oil and falling long bond yields throughout the globe is 5 bad thing for the Global Economy or the market. I often think well find a bottom here somewhere and get a rally at least for a period of time if we decide that crude oils bottomed. You love the market, and i do too. Watching it work, all the stars aligned for a great market and a santa claus rally a week and a half ago. You never know what its going to be, and who knew that oil prices being too weak would actually be what started getting people adamant. Weird how it works. I think so, joe. Its been a puzzle what, why the markets come off this time. I still wonder if its more tied to the fed than people think. Well, is it oil . Isnt oil . Isnt it the ruble . Were separating we have oil, just separate from the ruble, which is separate from what yellen will say. Its all the same thing. The feds on the way out, and the dollars on its way up, and oil and, you know, the ruble on the way down. They are all interrelated. I think so. Its hard to sort them out, but what happened with the Oil Prices Going down, and, particularly, the russian prices, russian prices hurt of lot of emerging market debt, high yield debt, the Lower Oil Prices hurt high yield debt particularly for Oil Companies and companies in the space, so they are all creating to the uncertainty in Financial Markets, and then some important countries are going to be adversely affected. Dont be gleeful what happened to russia. Thats affecting a lot of markets around the world. They are the third biggest customer for western europe. Western europe is our biggest market. It all interacts. Pulling it apart to dissect them, its a period of uncertainty, and Lower Oil Prices is part of the russian problem and diversely affects the Financial Markets, but its good for consumers, and netnet, its good for the United States. Right. And, you know, you would imagine that unless theres something ahead of this that we just dont know about, that growth story is on track, 3 here, but when you see oil do that, if its not supply, you wonder if youre missing something. No, i dont think were missing. It really is. The oil is going down in large measure because of two things. One, higher supply particularly, and then its a story thats emerging for a period of time. The other part, though, is weakening of demand in places like china. Not a collapse, but if you look at the Growth Outlook in western europe, in china, in many other countries, its a little more diminished, and, therefore, some of the big emerging consumers of oil are not buying as much. You saw pimco with the emerging markets bond fund, and we talked about who is getting hurt here, the 3 billion fund. They are down. Hammered. Well have valerion on, but he said we were out of the u. S. Trash r treasuries, but we end elsewhere if it fell that way. This shows what happens when you go elsewhere, chase yield in emerging markets. Thats what happens. Exactly right. Chase the yield, these are emerging markets, and many of them are vulnerable. Not as vulnerable as a 1997 and 1998 with the Asian Financial crisis and then the russian financial crisis. We shouldnt forget that was worse so far than this. They raised Interest Rates to 150 basis points, by over 150 , right . In i understand nendonesia . Went up 150 over a period of time. The ruble declined by 80 in the course of a month. This was volatile. What picked it up over a period of time was Oil Prices Went up in 1999 and 2000. The probability of that happening . This time around . Very low. Although, jim, roger altman made the point off camera, didnt get the chance to talk about it on camera, seeing a dramatic decline like this in oil prices, it tells you its Financial Markets. Investors are Financial Markets in this, these are not end users, no longer a proxy of what happens in the economy. Do you agree with that . Halfway sorry, jim, and then bob. Okay. Thanks. I was going to say i do, becky. I think what i notice about this collapse is its been interpreted as evidence of a deflationary pressure and spiral. Look at Commodity Prices. I see oil way off. Look at the s p Goldman Sachs nonenergy Commodity Prices, its flat year to date, and its been up 4 since september lows. I see the same thing with industrial metal prices. Theyre up since september lows and flat year to date. This is not a broad based commodity price spiral downward due to economic weakness. This is a one off commodity collapse. I think due to Dollar Strength and over supply maybe because of the United States, and its a different message. I really think that the part of the reason why the markets coming off is because people worried about weak Global Growth and deflationary pressure. What we get from this is what were getting is a massive fiscal stimulus with an oil tax cut and massive decline in bond yields which might cause just the opposite to happen next year, a pickup in growth. Im with you. The thing youre bullish on, prospects for growth, especially in the United States, and i was going to ask whether this changes your view. I dont think it does. You point out that growth could say where it is, but it might be good that rests stay low and the feds not in a rush because theres cover from oil being low. Take it for what it is. It is good. In the meantime, things got over confident. Youre bullish long term. I am. All good things, but i see you dknow, it may be, wait a minute, the fed does not have to rush here, and growth is 3 or above . Thats reallied goo, by egood. What we did with oil prices and bond yields, the eurozone, everywhere, actually, the u. S. Does well, but next year, there could be a bounce in the eurozone, japan, the emerging world as far as Economic Growth giving this Global Economy another feel. Paul sen, great minds. That or im hiptized. One or the other. Bob will stick around the rest of the hour. Thats how you thats what salesmen do. Am i right or am i right . To make you say yes . 1 00 a good time to call . 5,000 shares . 3,000 . When we come back this morning, counting down to the fed statement, and yellens News Conference, and black rock chief joins us with more on what to expect from the central bank. Them the drop in crude prices could have a dramatic impact on diplomatic relations between the United States and rush. S talking oils ripple effects at 7 30 a. M. Eastern. The slide of the ruble, can we prevent an allout currency crisis . Well be right back. [sound of crickets] brii,brii,brii [male narrator] weve all heard how military veterans adjusting to the civilian world may have. Certain. Issues. 2. 30. 70. If only everyone had this issue. No matter what challenge they face, easter seals is here for americas veterans. Welcome back, futures now are suggesting a positive open. Last we checked, the dow is stronger by the minute. Opening higher by 131 points. Chinese internet giant is buying a stake in uber. They plan to collaborate to expand ubers presence in china. The size of the stake was not disclosed. Joining investors like Goldman Sachs and google. Its valued at 40 billion. A new study found childrens cartoons depict death more than for adults. The main marks in childrens cartoons were two and a half likely times to die than protagonists in films for grownups. The characters were three times as likely to be murdered. Its not a trend. Theres no evidence that the level of violence increased since the 1937 release of white, and the queen stumbles off the cliff after a pursuit by the seven dwarves 37. And dumbo, they lock his mother up in the chains. Terrible. He gets out. Come on. Eventually. Awful to watch. Nemos mother is eaten by a shark, only one egg does not die. Youre right. Every single one thats part of the human experience. Its part of the human experience, but kyles 3, and the other night in his sleep, he was crying. Theres too many deer around. In california, you cant go after them. They are everywhere jumping into the cars. They are pests, yes. I have no sympathy. Moving on. The group claiming responsibility for the hacking attack on sony is now making threats, serious, serious threats, against movie theaters. Which are set to show and open that movie called the interview, and the department of Homeland Security Officials Say they are aware of the threat, but at this point, no credible intelligence to indicate an active plot against u. S. Movie theaters, but if you say youre going to do something to the movie theater, people remember the batman premier. Its hard enough to get to a movie, for reasons not to go the stated intention of isis to have lone wolf and other groups, lone wolves do the damage. Premier has been cancelled, and seth rogan and james franco cancelled their appearances. Did you see the emails about him . Oh, my god. No, i didnt. How he acts. He had difficulties when he hosted the oscars, but with seth, that brings out the best. Just cant get wasted. Always makes movies about getting wasted. Is that a coi understand dense . I dont know. Coming up, the final fed meeting of the year, traders watch closely for a language tweak. Steve leastmans going to explain next. Next, we talk to Jeff Rosenberg from black rock. He manages a lot of money and talking about the feds move today when we return. Time now for todays aflac trivia question. Who is the richest person in spain . The answer when cnbcs squawk box continues. And a gentle wavelike motion. Ahhhahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim in just four days. Ahh four days . Yep. See why speed matters, at aflac. Com. 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. Which means its timeson 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. Now the answer to todays trivia question. Who is the richest person in spain . The answer . Inditexs group founder, Amancio Ortega with. Hes like one the top three in the entire world. Rapping up the two day meeting this afternoon ending with yellens final News Conference of 2014, and who else other than steve will be there . Give us the expectations for todays decision. Michelle, this is the most important of the meetings so far whether to cut the cord and do away with the guidance that the fed stays at 0 Interest Rates for a considerable time. This would be noless than a change in the regime governing fed policy for more than two years now. The change from banks that promises to stay at 0 for several meetings to one where it raises rates at any meeting based on the economic data. It would be the First Step Towards the first rate hike in 8 years. The recent stronger u. S. Growth data for jobs says, you know, the feds should be making the change to begin a process of coming off of 0. The trouble for yellen is that its at a time of global volatility caused by weakness, plunging oil prices, and turbulence in currency markets. The mfed will see oil prices asa positive for growth, but theres concern that prices will keep it from hitting 2 inflation target. Twothirds say the fed drops the considerable time frame from the statement, and the others say the wall street is on track for a july 2015 rate hike. The risk for yellen is launching a new regime today adds to market volatility and uncertainty in a time when the fed prefers to be the source of stability. She could, by the way, offer a dovish take on the change at the press conference. What could influence the fed today any sign in the Consumer Price index report what we see with the Lower Energy Prices reducing core inflation or taking it out or taking out food and energy, thats what core inflation is, could give fed pause to see the core inflation number coming down. Michelle . Thank you, steve. Tune in at 2 00 p. M. For the fed decision followed by the News Conference where yellen may strike a dovish tone, poly, or change things regarding the statement. It matters this time around. If they remove language from the statement, they have to walk a fine line to not spook markets too much. Keeping the feds expectations, and chief investment, and that firm manages fixed income assets, and thank you for joining us today. Thanks for having me. Before we get in the fed, what do you think of russia, what is does to emerging markets, and what youre doing as a result . Thats a huge concern. Its another big concern as steve talked about. How much will Financial Market uncertainty change the outlook here for the fed . Certainly, in emerging markets, youre looking at currency volatility, and historic volatility, and its having a big issue on Financial Market conditions. As steve highlighted as well, though, when you think about the Oil Price Decline at the heart of whats rattling Financial Markets around russia, Oil Price Declines is good for the real economy. The real question is going to be, how much is the fed concerned about Financial Markets versus hoump is the fed concerned about the real economy . They are going to weigh on the side of the real economy, but it is its a close call here for the this afternoon. What have you been thinking as you watched, you know, you refer to volatility in the currency markets, but looking at the ruble, thats off the charts. How has that impacted other markets you watch, and are there markets crushed that shouldnt be . Well, i think this is a real change in the outlook from what weve been thinking about, talking about the last several years. You know, steve mentioned a historic change in terms of fed policy. The big change here is leaving an era of 0 Interest Rates behind, and in that era, its characterized by behavior where the reaching for yield is associated with not taking on any risk. I think the best way to put it into context what we see with regards to Oil Price Declines, were seeing in the energy space, impacts on high yield, and, of course, russia, emerging countries highly exposed and vulnerable to declines is an invex of default risk and credit risk. For the first time in a long time. This is really the turn in the credit cycle, and it really begins to challenge the ability of investors to think about getting yield without feeling like they are taking risk. What we see is when you reach for the yield, you are injecting a lot of risk in the portfolio, which we are finally seeing that show up. Have you heard any complaints at this point about lack of liquidity . I hear from people who trade corporate debt, they have an incredibly difficult time getting a trade on. High yield, we saw dramatic gapping in pricing, and they believe its now sending to corporate debt. Your firm put up the note that the Corporate Bond market is broken at this point . Any implications of that at this point . We are seeing implications. Liquidity is always challenged in terms of corporate markets, particularly around turns in investor expectations. A minute ago, we had a long period of investor expectations, a period characterized as complacency, where people add risk in the portfolios and not feel like there was a lot of risk. What you see in the markets is very oneway behavior. We go from student body left to student body right. Theres no intermediation of risk in the period, thats not really a new thing. Its just new in terms of the fact that for the last six or seven years could we have had a oneway move. Could we have a systemic effect because of it . Could we have a big systemic event . We have to be careful with those questions. People think of 2008 as a systemic event. I dont think thats what we are talking about here, but theres been plenty of credit events in the recent history, 1994, 1997, 2008, 2002, not rising to the level of the Systemic Risk of 2008 bringing us to the Great Depression 2. 0, but nevertheless significant market events, significant for portfolios. Im not saying thats what we have here, but, certainly, its a different era, a different point on the credit cycle than we thought we were just three or four months ago. Hey, jeff, just to cut through that, i hear what youre saying, risk changed, when these things move, they move quickly and one directionally. Very simple advice. What do you tell people now . Come back to the u. S. . Well, i think what people are going to be reassessing is what is their tolerance for risk . People have needed yield, and they reached for yield and they have been reward r for that in six years. Well see how much risk tolerance people have for principle losses given the yields they are getting. People have to reassess what is the right waiting in their portfolio for the higher risk instruments . As we see that, we want to caution people from overreacting in that environment, but, of course, as the outlook Going Forward changes for the amounts of credit risk and default risk we see in the market, theres a permanently higher level of perceived ri ed risk. Thats going to shift portfolios. During that time, theres great opportunities, and so to the extent that portfolios had liquidity in them, thats where you are going to see the value of that portfolio because you can take value of the dislocations seen in the credit markets. Sounds potentially painful for people. Blackrock that wrote the piece or blackstone . It was you guys. Could have been black water. We had a piece talking. Corporate bond markets. Jeff, thank you for joining us today. Thank you. Love to have you back again soon. Great. Confusing, black stone, black rock. Black stone. S. Oh, thats a good way. Black water. That was iraq, right . Theyre gone. I dont confuse that onement i got that one. One of the lessons is this is by and large oil prices good for most countries and most companies and certainly all consumers. There are few companies that are adversely affected. If youre in the energy space, theres exporters add vaersly affected, but for the Global Economy, europe, japan, for the United States, for india, for china, for most emerging economies, this is a plus. We have to get through the financial volatility, but the real benefits for a large number of people is positive. Being journalists, we focus on the negative. A latin american investor says it becomes the somalia. For venezuela descend into that chaos . They are poorly governed, Energy Sector is poorly governed. It could be more chaotic, and a real problem. In is hitting the fan here, fedex, take a look. Lets bring up a chart of where it is. Oh. So far, just just happened. The companys reporting 2. 14 a share, the estimate was 2. 22. Counter intuitive with oil prices down. Not the most important number for them, of course. Next quarter will be more important. 912 is what the year estimate was, and they just said 850 to 9. The outlook assumes continued moderate growth at a modest net benefit. 8 to 9 is below. They dont give guidance. Street can get ahead of itself. A lot of times, seen many times in the past where the stocks shakes it off, ends up being up. The chairman, fred smith, looks at this positively. A strong result, higher operating margin in the Second Quarter with continued growth and volumes in base yields the transportation segments. Points out the final stages of the years final shipping season. 11. 985 was the estimate, this is 11. 9 is all i know. I dont know if its 800 million is that 800 . No, 80, 80 mill shy. One of the things to point out is revenue was higher because of u. S. Domestic package volume and export package based revenue, but offset by fuel charges and exchange rates. I forget about that. They have fuel surcharges they are in as lower fuel prices come down, they see some benefit from it, they dont get surcharges that the analysts expected. I dont know why they dont back that out. Thin trading, but its 169, that trades down 476. So, you know what, ultimately, is the core issue . Lower oil prices, but how how do people get it so wrong when we know people are just shipping more and more and more at christmas time. They dont give guidance to the stuff, so the analysts are left to their own devices. Its been an issue forever. We had them on 15 years ago. It would be hard. To what . Ceos have a hard time knowing how much. True. If youre outside the company not getting the updates, its hard. They said they had a lot of improvements on the operating margins. Part of that was growth in international export, and Cost Management related Profit Improvement programs, lower pension expense, and a benefit from fuel. It was offset by the timing of higher Aircraft Maintenance expenses. That could move into a different calendar setup for them. Maybe thats something all the numbers are up . Net income is up issue revenue is up. All below expectations. Yeah, i know. Does not matter. 168. By the time the market opens, it could be unchanged. No, i get why the stock is down. Im saying, in general, i think you got the wind to the back with fedex at this point. Right. Why its not up as much as expected, we dont know. We assume the economys cranking. Oh here we go. Sure it is. You see fedex, good, you know, cant put your finger on it. Countrys benefitting from a tax cut of Lower Oil Prices. Has to be good. A tax cut in this administrati administration . Well, but time for good things. Its a kris mat present. A drop in crude, how the price of oil could change relations between the u. S. And russia. They are suggesting a positive open. Welcome back, stories front and center, the ruble rebounding after the finance ministry sold currency today. Thailands central bank unchanged at 2 as expected. Policymakers say its low enough to support the weaker than expected economic recovery. Online lender, on deck capital, pricing ipo at 20 a share, above the expected range, the offering values the company at 1. 3 billion. Shares set to trade on the nyse today. The oil shock keeping markets on edge now. The price of crude is 54. 48, down 2. 5 . Lets discuss the fallout with kevin buck, managing direct of research at Clearview Energy partners. This is a quick rebound or here for years, kevin. Years . Joe, are you driving more . Seeing if you have been dead wrong on the way down from 90 and whether youre clinging to your mistake or whether yeah, so without oec demand have you been caught at 6 5 . Everyone calls the bottom the whole way down and claim they were right the whole way up. What about you . We have a 75 average for next year, slowing u. S. Production, balancing the market, bringing us up from the lows right now. Are we going to stay here or go up . Yes, i drive a car. Is that implying that were going back to 90 . No. The problem is that demand does not rebound like it used to. Were not a country or even as an economy, the oecd, as a drgrp of countries is not driving more in response to prices. It takes a long time to get that demand response. Without gdp demand in asia, you dont get a rebound fast. You need global Economic Growth to pull it back. What about the other side . That is whether you drive the price low enough to where suppliers decide its not economically worthwhile to develop it . How long does that take to happen . Its happening now. The latency takes time. Thats why youre not seeing it happen right away. We look at the breaking point after the price break in the production picture. Here in north america, at four to six months before we start to see a material change. Not a reduction in oil production, but a slow down in growth. Probably if you look ahead to next year, 75 a barrel a year average takes you down from a million one to 600,000 barrels a day of nonopec growth. Enter the year at 55 or so, to get to average 75, by the end of next year, were back up in the 80 area, kevin . We come in higher. I dont think we linger too long in the 60s. One of the things that is happening right now is that the Financial Market moves at the speed of light or near it. Oil balances on the open seas in two to four week intervals. Takes a while to normalize. That shakes out after Fourth Quarter destocking and inventory rationalization passes. Took ten years to do it, but we have the notion that 90 is the right price for oil. Its engrained in us. It was top heavy when there. Isis was doing all these things, worried about iran and, you know, all kinds of and ukraine, all things going on, and it was barely able to hold 90 indicating it was top heavy and supply and demand took it down to where people who should know what they are doing and really know how to make none in this market, they totally missed it. I dont know what to think anymore. I dont know what the fair value is. I dont know where oil should trade for the next five years or average. Think a hundred for the next five years or average 55 for the next five years . There are rules of thumb m one of them is is that you look at the marginal costs here in north america and multiply by three, you have what a typical market price should be. It averages 25 a barrel, and so that implies a 75 barrel. It could be a good forward look at this price. If we average 75 in five years, that would recalibrate everybody would change models for everything from corporate earnings to gdp for everything to around the world. That would be amazing. I think people have 90 or 95 in fact, ge said yesterday, wed do better at 120. We wish it was 120. Its not. Well muddle through. People had 120 for an estimate over the next five years as demand always goes higher. It may not happen. Which is a huge seat change that we have to think about. Youre right. We count on you to give us the straight dope. I hope you understand that you have weight on your shoulders here. I carry weight around my waist. I dont know if i can have more on my shoulders. Oil causes that, vegetable oil, olive oil. Despite claims its healthier. Right. Well, thank you. Thank you, kevin. 75 next year. Well watch. All right. Have a great holiday. He took it well. Took what well . You giving him a hard time. I did not give him a hard time. You still driving . Yes, im driving a car. I am not walking to work. That was a rhetorical question, wasnt it . You driving three suvs . Nope, only two. And a minivan. When we come back this morning, the ruble after russia stale i stabilized after selling foreign currency reserves. Is it enough to avert the crisis . Well ask a russian policy expert after this. Later, the governments read on inflation, telling us what it will mean for todays fed News Conference. [ hoof beats ] i wish. Please, please, please, please, please. [ male announcer ] the wish we wish above all. Is health. So we quit selling cigarettes in our cvs pharmacies. Expanded minuteclinic, for walkin medical care. And created programs that encourage people to take their medications regularly. Introducing cvs health. A new purpose. A new promise. To help all those wishes come true. Cvs health. Because health is everyth cvs health. I love my Meta Health Bars. Because when nutritious tastes this delicious, i dont miss the other stuff. New Meta Health Bars help promote heart health. Experience the meta effect with our new multihealth wellness line. The foreign ministry, the finance ministry, brought strength to the ruble overnight, at 65, talked about it going to 79. Joining us on what russia can do to avoid a full financial disaster is the Foreign Policy initiative fellow, and with us, our guest host. Good to have you here, kevin. David, 4. 5 decline with russia and oil at 60 a barrel, but that was before they raised Interest Rates to 17 . We are looking at a cratering russian economy. Does this change putins calculus at all in terms of ukraine or give incentive to lift sanctions . Absolutely it changes the callus. Thanks for having me back on the show. The question is does it make him more aggressive . What we saw until now is in response to every americans threat, every american promise to impose consequences, only became more aggressive, and hes winning at home because of that thanks to the control of the pr propaganda machine. Do you believe the polls . Youre russian, live in russia, a pollster says, what do you think of putin, will you say anything other than great things . May be a bounce, but theres change overtime. Its flux waited and has gone higher. Not up in the 80s, but probably more pop pie lar than any american president could hope to be. What do we hear tomorrow . More bellicose or more conciliato conciliatory . Its the question. His tendency is not to announce aggression in ukraine. He insists its not russian troops, not russian weapons, shooting down an airliner and kill 300 people, so if he did, he might do it quietly. He might say hes been conciliatory and do the opposite. The question is whether he thinks he can gain benefit at home, disdirect people from the economic crisis by stepping it up in ukraine. David has a good point, bob. Look at the historical fact pattern, hes sounded conciliatory been here in the mornings we watch a megarally in the futures because putin said something conciliatory and the mart bought it hook, line, and sinke rerk sinker. Its possible hell be moderate, but look what happened yesterday. The foreign minister said we have the right to station Nuclear Weapons in crimea because its now part of russia. I dont think they will buy the notion its all the fault of the americans and the foreigners, that the russian have problems because of those abroad. Thats what hes trying to do. Basically, i dont think hell make major positive changes, visavis ukraine. He uses the nationalistic heart in a very clever way. I dont know that itll last forever, but hell try it for the time being, but russians are feeling pain now, and he cant fool them forever. This is a problem caused by Lower Oil Prices and caused by, in part, by sanctions. Gentlemen, thank you so much for having you on. Well watch that speech tomorrow to see what exactly he says. Huh. All right. Thank you. Thank you. Coming up, five russian stocks that trade here that are getting hurt, and later, a top strategist from fidelity and top economist from morgan stanley. Well talk russia, and, of course, the fed, and the dramatic swings that we have seen in a lot of markets when we return. ] 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 when a market move affects one of your positions, tdd 18003452550 schwab can help you decide what to do. 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Look at the russian stocks trading here in the United States. Its impressive how big moves have been to the downside. We highlighted them. Vimpelcom, a Technology Company with a lot of russian business down 3 yesterday, down now 75 year to date, a huge move. Look here, another big one is yandex, and internet Search Engine, the google of russia, down 5 yesterday, down 61 year to date. Moving to another one, a big one, Mobile Telesystems down 11 yesterday, down 71 year to date, and another huge one, qiwi, the paypal of russia. It was down 13 yesterday, and down 66 so far year to date. A lot of these moves near whats been happening with Russian Companies that have exposure to all of that type of business, and just to show you one more, the rsx, the etf that tracks the russian market. Look at that. Year to date, lost half its value. This is how people play the market, but overall, those are tickers, the etf, and they have been hurt hard in the latest turmoil. Back to you. All the stocks priced in dollars, right . Yes. Thats why we see an even bigger decline than normal because of ruble as well. Thats rights. All right, thank you. Our guest host this hour, bob, if youre really looking through trying to figure out how to make sense of all of this, words of wisdom right now . Have investors look beyond the immediate crisis. This, obviously, had a major n effect on high yield debt, and general markets have been royaled by this and disrupted, but over a period of time, the knee jerk reactions will give way to a much more granular look at this. In other words, a lot of companies will be big beneficiaries of Lower Oil Prices. A lot of consumers will benefit, and theyll have more money to spend on other things. A lot of countries, if you look around the world, are beneficiaries of this, the United States included. That helps japan, korea, indonesia. Its not 1998 all over again in. Its not. 1998, you had a lot of ripple effects in part because countries kept their currencies for a long time fixed and used up all the Foreign Exchange defending currencies. Thats a big problem. Thats not happening now . Not happening now, deciding not to waste their money by defending currencies indefensible at that point because they were over valued. Many countries did not have a lot of reserves, countries learned the lessons of 1997 and 1998, and many now have more reserves. Investers have to take a look beyond headlines and beyond panic and look at individual companies, who benefits, who loses, countries who benefits and loses, and even in the oil sector, theres some companies that are well able to sustain this low oil price period for a long period of time. A huge bubble, not just in internet, but in the ge trading 50 times earnings. Much higher valuations. In the oil patch, oil sector, some are in good shape, they have low cost wells, and other companies have a lot of leverage. They will be hurt, and companies that are drilling in peripheral areas, the drilling costs are expensive, they are hurt. Investors have to look beyond the knee jerk and specifics and losses to be avoided. Thank you for joining us. Coming up, russian currency intervention brings strength to the ruble. A live report from moscow next. 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. Investors hone in today on yellen to see what the fed may or may not say and do amid the ruble route, and weighing in along with guest host of fidelity. Middle east tension back on the rise. Will the markets stay focused on the Global Economy or turn attention back to geopolitical concerns . We find out. Hailing a ride from uber, why chinas largest Search Engine makes a ride service app. The final hour of squawk box begins right now. Welcome back to squawk box here on cnbc, first in business worldwide, im joe with michelle carusocabrera, and andrew is out today. Feeling the pain of the falling ruble, swings of business, ap e apple, more on that and the russian crisis in a minute, and becky, well open the christmas cards from tim cook. Thats right. At some point. All right. Here this morning, lets get to the headlines. Russia taking steps today to sell foreign currency from the leftover stock boosting the ruble today. Its a relative term. The ruble is 65, much better than the 79 we saw yesterday, but if we go back just a month, this is a precipitous decline for the ruble. Decision day at the fed, wrapping up a two day meeting, and they are expected to tweak the language in the statement and remove that phrase, considerable time. The statement with an updated forecast is due at 2 00 p. M. Eastern. A half hour later, yellen fields questions from the media, and another economic headline of note, Mortgage Applications fell in the latest week as Interest Rates fell to the lowest level since may of 2013. Less than 90 minutes away from the opening bell on wall street. Futures suggest were going to have a positive open. Right now, we are higher by, well, ten points with the s p 500, and lets show you whats going on with oil, such a big driver of the major averages, and overseas margtkets as well. We are lower by 2 , and wti lower by 2. 5 , 54. 50 per barrel. Look at markets in europe at this hour. Weaker across the board. Other than greece, which, by the way has a president ial election today. Well wait to see the outcome of that. The gain does not make up for the losses seen over the last several months. Stocks on the move this morning, earnings at fedex short of estimates. Shy of where wall street was, and the Package Delivery giants full year guidance was short of where the current consensus was, but the company said it was affirming or reaffirming its own guidance of 850 to 9 dollars, although the street is at Something Like 9. 14. For whatever the reason, its not recovered yesterday, 166. 74 asked. The last trade down 4 for general express. General mills beat the street, fighting weak demand, slowing growth in europe and canada, but as a result, we have the stock up about 1 so far this morning. I want to see if the transportation average or dow whether futures weakened. Thats a big move. 4 . Almost triple digits, though. And the dow up. Well see. Apple has halted online sales of the iphones, ipads, and other products in russia amid the financial turmoil triggered by the decline of the countrys currency. The ruble plunged 20 yesterday even at Russias Central Bank increased Interest Rates sharply. By sharply, 650 basis points. The rubles value fell 60 since january. The instability made it too difficult to set its prices in russia. That prompted the closure of the online store there. Lets check in on russia now after the weeks wild ride. The ruble trading at 65 and the russian stock market, remember, we always show you the dollar stock market because as an american investor, thats how you purchase the mark. It looks bad because you have the ruble decline along with the stock decline. As you can see, right now, its a little higher for the rtfs based in dollars. Lets see how it impacts life in moscow. Jeff . Reporter hey, you know what . I think the russian authorities have pretty much drawn this to a mexican standoff throughout the day. If you are just catching up with the story, ill remind you how events unfolded here. After the dramatic hike in Interest Rates, we had an emergency cabinet meeting. The Prime Minister called together the finance minister, the economy minister, head of the central bank to work out plan to intervene in the market more aggressively. Thats where that 7 billion number comes from that the finance ministry has been using to intervene into currenciecurr. The Central Bank Put another 2 billion into the game, and within the last couple hours, the Prime Minister has, again, had a meeting, this time, hes met with Energy Companies ceos and Mining Company businesses. The message is we will do what we have to do at this point to try and arrest this very rapid decline in the ruble, and look at the numbers now. It looks like the markets come to a dead heat here, and, actually, there is buying back into some russian stocks, which would indicate, i guess, that greed is overtaking fear a little here. Whenever way you paint it, people in russia are worried about this very rapid decline seen in the currency, and thats why you have had people cueing up in Electronic Stores and going to Car Dealerships to try and pick up assets that they think may hold their value or keep them ahead of inflation in this game. Its been a very long and difficult day here for the government, but i think they may feel that they are getting ahead of this story for once. Becky, let me send it to you. All right, jeff, thank you very much. Again, jeff is live in moscow as we get into the Late Afternoon there. Russias now near the top of the list of hot spots on the feds radar. Today, yellen wraps up a two day meeting and faces the media for the quarterly News Conference. They go through oil to jobs to inflation. Joining us with more on todays big event is the chief u. S. Economist at morgan stanley, and with us is our guest host for the hour, from fidelity investments. Fed officials yesterday and today are in meeting trying to figure out what to do next. They cant help but be impacted by the news from russia. How does that play into the Decision Making process . Less than you think. You have to remember that they negotiate most aspects of the fomc Statement Last week. They nail that down, and when they make their remarks at the meeting, they are generally prepared over the weekend. Its scripted. They are not data dependent . Looking at old information, making decisions and then they stick with them . They are that dependent on making decisions, meaning by meeting based on the incoming flow of ma crow data, not necessarily the last couple ticks in Financial Markets. They try to smooth through that. Remember a few meetings ago when janet yellen said, oh, monthly cpi, thats noise. She was sincere. I think they try to smooth through macro data, and that because of the inertia in policymaking, dont respond as quickly as maybe they should to late breaking news. Vince, i have to ask you this. We had a number of people on the show over the last two days suggesting that the world will be watching what janet yellen says now. This is almost a political game, suggesting its the american governments response to whats happened in russia, and if it sounds like we are really talking about raising rates sooner rather than later, if the fed sounds dead set on that, and that in turn, pushes the dollar up, the russian ruble down, that could have global implications. Is that something janet is thinking about before she talks at the Conference Today . Janet yellen conducts monetary policy, not Foreign Policy. I think they are pretty much domestic centric. That theyll try to do is stay away from mentioning weakness abroad. Shell try to avoid strenuously in the press conference, having an opinion on the Exchange Value of the dollar. Well probably here thats the purview of the secretary of treasury, and most likely whats going to happen is the Opening Statement at the press conference will be longer than usual because that crowds out questions. If thats the case, if yellen does not address this, how does the market read it . Tone deaf to the market, or does it sound reassuring to think they only think about domestic issues . Ei think the market realizes the fed is looking at the whole picture, but, you know, the fed is looking at the economy that is growing at a decent clip. Inflation nonexistent lapsing to 1 , but that could be because of oil prices, and the market is giving the fed a pass to raise rates to some degree. If you look at the fed funds futures curve, that says the fed starts mid2015 and goes to about 2 over the subsequent two years. So the fed has a free option to normalize rates to some degree. It has to be careful not to go faster than the market expects or more aggressively, and i think the risk of that is very small considering how low inflation has fallen. Would you agree that the swift has potentially changed over two days . That rush that and putin, in particular, are going to be watching this very closely. The ruble stabilized. If the Dollar Strengthens, that could throw that entire thing out of whack again. Look at market swings of 700 points yesterday. Yes. If the fed does something thats more hawkish than what the market expects, then that would be dollar positive. That would be em negative. I doubt that the feds going to do that. I mean, already, the majority of economists think the fed is going to remove considerable time from the language. Im not convinced they will. A lot of this is already priced in. Its a nonevent for the markets today . If the fed stays on course, if they drop the words considerable time, and people think that manes they raise rates in march, thats a negative, but i dont think the feds going to do that. Whats the first increase be . Nobody knows. Im guessing 25. With 330 print on employment and 5. 8 up employment. Anyone in the world that doesnt think they need to do that . No matter what . Yeah. The fed has a free pass from the market to normalize rates to 2 . Yeah. Were at 0. Theres a lot of people who actually dont think they should, that the world is deflationary. Thats people that love the dual mandate. Thats as if the feds job is to generate full employment, which is a screwy way of thinking about what the fed should be doing anyway. It should be price stability. They are so far bill is gross is almost as far left. Okay. Ask when hes on. Hes over there too. Fed takes cues from the markets, and as long as they dont go ahead where the markets are, i think that, you know, itll be okay. Vince, forget about the fed for a minute and figure out what you think about the u. S. Economy. The 330,000 print with the jobs number, people question whether that stands because of the seasonal adjustments. How strong do you think things are here . How prone are we to any sort of contagious from problems around the globe . So the seasonals may not have picked it up, but the u. S. Economy is performing very well. Basically, the Oil Price Declines have saved our forecast that there would be a pick up in growth, and thats because consumption growth, weaker than everybody expects, much slower than disposable income. We are a big producer of energy, but we are a bigger consumer. Thats a direct bonus to households they spend in a time in which seasonal demands are the highest. We have a strong Fourth Quarter, strong first quarter, but theres pay back in terms of capital spending. Those Energy Producers are not going to be able to fund ambitions to continue to build out the oil and gas extraction industry, and so that means that the profile of gdp growth next year is going to be downward slope. Higher at the front end, front part of the year, slowing is the cap x toll takes its weight. At 60 oil, its to the point where its no longer just a net benefit to consumption. That affects capital spending, and you see this in the high yield market where the Energy Sector spreads have blown out. Using west texas intermedi e intermediate. We use 55. 55, you say 55 as long as youre here, okay . Call me rick perry. Yes, sir. Thank you for joining us. Great having you. Thanks for having me. Our guest host is here for the hour. Where is brent . A few dollars higher. No, where is brent . Were in west texas here. Where are you from . Aruba and the netherlands. They dont pronounce js there. No, silent. Jeb bush, did you catch that . Oh, i like that thats good. The first step to the run after the break. And our squawk market master joining us live. Later, terror and the taliban back front and center. How will this impact markets and your money . Squawks going to be 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. 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. Open port twentytwoohoneseven on the firewall for customer db access. Install version twopointthree of db connector and ensure verbose flag is set in case of problems. clapping sound isnt the cloud supposed to make business easier . Get the one that can connect to the systems that you already have. Today theres a new way to work. And its made with ibm. Welcome back, shares of joy global under pressure, this is the Mining Equipment maker, beating the street, forecast is short, warning of a challenging quarter, more than 60 of the revenues come from coal miners, and they are cutting production. Very, very good. Jeb bush, and present is a bird. It is, but its also the formation layers of the original brent oil field. Okay. Jeb bush all be announcing his run for president ial, but exploring a run for the white house and race for 2016. Thats a big part of the latest nbc wall street journal telemundo poll. We have the details. How many things . I saw a bunch of interesting things, john. I wonder which ones youll talk about. This morning, walking in on the sister channel, i saw, what, 70 of the people want the next president to have a different method of acting than president obama, was that the question . What was it . Like a 70 number. Yes, different approach. 70 want a different appro h approach. Exactly. Thats, to me, the dominant figure of the survey. Okay. What we show is a slight rise in optimism since the election. People like the fact that its behind us, but as they look ahead to 2016, 23 of the American People say they want the next president to take the same approach as president obama. 71 say a different approach. Those are almost precisely the numbers that we saw for president bush at a similar point at the end of his towards the end of his presidency. We tested the candidates and saw interesting results. The better known you are, the more negatives you have. When we tested Hillary Clinton and jeb bush, theres 50 of the American People saying, yeah, i can see myself voting for Hillary Clinton, but 48 say they couldnt. High negative. On jeb bush, theres a third of the people say, yeah, i can see myself voting for him, but almost 60 say, no, they couldnt. Thats part of the hangover of the bush name. Also in negative territory, rand recall, chris christie, mike huk be huckabee. They start out with baggage in the race, but the one overarching thing thats clear is this is going to be a change election, and thats probably good for republicans, joe. Okay. John, im not sure where to take it now. I mean, i maybe ill throw it out there without commentary. 51 said water boarding was okay . 28 said it went too far. Exactly. Not water boarding per se, but when we talk about the enhanced interrogation. Exactly. The techniques that have been in the news. I dont know how much people appreciated what those were, but the point is the American Public does not share the sense of outrage that the democrats did that the Mainstream Media i watched it the way it was presented. The New York Times, this is, like, yesterday was like the fifth day in a row where torture was in the headline in the right side of the paper, where i mean i read a piece this is true for a long time, joe. I know, but there was a great piece by a guy in the post, if the New York Times can occupy a position of moral superiority, they run with it, but theyre talking to a country thats at 5128, john. Look, our surveys consistently since 9 11, weve showed that the American People favor a forward leaning approach to this, which is what the Bush Administration did. Right. Now, that does not mean that what the Bush Administration did was wright or wrong. I know. But it is an indication that democrats have only so far they can push on this issue as a political matter because the further they push, the more they lead the American People. Brett stevens had a great piece. He cut off pearls head. Im aware of that. Saying its my sacred right arming and hes still around. The president , himself, weve dropped a few drones where there may have been some unintended consequences as well, and the guys we drop them on, we were not just trying to water board them. I think were trying to kill them, are we not . Yes. Now, look, obviously, the question, joe, and, you know, it takes a everyone comes to their own conclusion right, i know. The question is how far do you go before you become what youre fighting against . I hear you, and i hear mccain too, and i listened to john mccain, respect him, and i respect that opinion, but i did not realize our troops, though, when they are trained where this might be done, they have actually weve shown them what thats like. They have been trained to be able to withstand a water boarding. Yes. If you use the word torture for water boarding, what new term to you use for what we know goes on in other parts of the world . Do you need a better term for that . Theres a difference between that and, you know, cattle prods or, you know. Shades of gray. Theres a lot of flavors of torture. Huh . Theres torture comes in a lot of flavors. It must. It must, john. I dont want to get into it. But you did. I already did. I dont have any feelings myself. But, john, thank you. Thats why i love polls, but i think we get polls where we go, woah, lets do it again. Mainstream media polls, thats not what we thought. Wait, hold what do you mean Mainstream Media . We need new people. Thats not the answers we want. John, you tell us exactly what we want. Anyway we are Mainstream Media. Damn right, you are. You are Mainstream Media. Speak for yourself. Love you. See you later. Coming up, the interview new york city premier cancelled. Thats the sony hack. French fry rations. Mcdonalds rations fries in japan. Really . Forget i can see this. Consumers will now only be able to order a small size fry. The burger chathis shortage ste labor dispute that has yet to be resolved. This is the unions causing the shortage . Do that here. Worry about same store sales . Try putting rationing on fries, and there will be hording. Yes. Graarage sale attire. I agree. A big mac is now 42 cents cheaper. See how the rationing will affect overall sales. We have to go supposedly. Did you say pp . I did. But what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Breaking news, novembers cpi down more than expected at down three tenths. Last months unchanged was unchanged. Look at x, food and energy, and we know the latter has an accent symbol on it nowadays, up one tenths and last months two tenths remain. Year over year, headline, 1. 7 core, you can argue that the 1. 3 is a little cooler than we were expected, but when you compare it to last look at 1. 7, that totally makes sense. 1. 7 on core year over year beating expectations at last look. Third quarter, a bigger deficit than expected, the larger cousin of the trade deficit, minus 103 billion, and last month, there was a revision from 98. 5 as a deficit to 98. 4. In summation, i dont know if its a surprise that were not seeing the type of inflationary issues considering the environment we are in, considering dropping prices potentially making other economies more productive, but the energy note is a dropping price that will ring truer downs road. Its just the time line is not the same. The impact on credit and Corporate Finance is immediate. The benefits to everybody else in all the economies that need energy, which is pretty much all the economies, will probably take more time to accrue, and well continue to watch the market battle exactly how the payoff, the deficit, the credits, and the timeline all play out as we go into year end. Interest rates . Back up a little bit, 209, 210, keep in mind that we dabbled with 2 yesterday. Joe, we talked about getting close to the water line. We continue to Pay Attention to the range and the close from october 15. Back to you. Rick, did leisman ask you for help for questions for janet yellen today . Did you get any emails from him asking for any questions . Any suggested questions . No, no, no, no, but i think do you have any . Theres a lot of appropriate questions. If i had a question, its an easy one, an easy one. Do they not have any confidence in the u. S. Economy . Do they regret they did not normalize rates and recalibrate them closely to reality in the past because it looks as though im thinking dictations, taking dictations, sending this to him. All right, steve got leisman. That brings up how the benefits comes in slowly. People anticipated fedex saying Aircraft Maintenance . Moving them into a different timeline than expected. Remember, this closed weeks ago, the quarter, so youll continue to see it as we get in the quarter now. The gasoline prices, there is a lag how quickly they catch up to falling crude. Joe, you talked about the issue of the dual mandate. These numbers could speak to the other half of the dual mandate, not the full employment, but the inflation part, right . Some people think im crazy to question it, like everywhere else in the world, but its the only place done that way. Heard from greenspan saying they completely ignored that aspect. Joe, do you read the text . Huh . In 2011 when Commodity Prices spiked, the market expected the fed to respond to that, and the fed looked through it, it was transit, and they were right. I expect the feds looking through this as well saying, you know, this is a temporary shock to the cpi. All right. Thanks, rick. Lets get to Steve Leisman in washington, d. C. Steve . Yeah, i heard ricks question [ laughter ] you didnt ask him for help, steve . No, i dont need help from rick, but i like listening to him. I dont know why id ask the question why they didnt normalize. Look at the numbers, its a good thing we did not normalize. Although, the guest hosts right comment is the right one. You have food and energy up as expected, so the year over year on the core is still 1. 7. Looking down into the details of this report, you do have this apparel down 1. 1 . Im looking at things not related to energy necessarily. Recreation, also a negative as well. Education communications down 0. 1. Maybe theres some concern. I guess a fed thats worried about deflation or disinflation more so than it is worried about inflation at the moment is going to look at this and say, you know what . Theres something to look at here. Be careful. I still think its a close call, but that considerable time comes out based on this report, but i think you could see yellen walking back a little bit, whatever hawkish tilt there is to that part of the statement in the press conference with dovish remarks there. Okay. Steve, i just i dont know. Because youre a dual mandate guy. I guess you mean in terms even as a dual mandate, theres 330,000 jobs, 5. 8 unemployment. Right. If youre dual mandate guy, unemployment at 0 you dont see any merit in asking that question to janet yellen, that at 0 after six years, you couldnt be just up a little bit . Just so that we know if you give money to someone you get something in return, you should be at 0 with 5. 8. Joe, it is a valid question. You said it was not with poor rick. Maybe because hes crazy. Maybe it came from rick, maybe if you had said it thats why i brought it up, actually. You know that. No, i know. Thats fair. Heres the question. I think what they are doing is you think about the taper tantrum, and that change to markets there. You know the fed wants to avoid it. You know where they want to go. There was that important speech by bill dudley that takes cue from the markets and get the markets to a place where we think we should be. They dont see a hurry here, joe. No, i know. They look at the numbers, they not concerned, and they see considerable slack. Labor market. Anything other than just price stability, give them the mandate for it, suddenly, they are justified in thinking that everything is on their shoulder. Id rather have it on the private sectors shout lders. I dont want it on their shoulders, then they think its their responsibility how its been for years. We have a running attack on the counter factual. Now we do, its europe. Following the single mandate. That single inflation look at the problems though. Would you try to start a business over there . Would you try to be an entrepreneur over there . Depends if i have a nice place to live. Id like to live in some of those countries, two hour coffee lunches. They work to live, and we live to work, but whatever. Joe, their Balance Sheet declined, terrible growth and inflation numbers. We kept ours growing. We have better growth numbers. Maybe because of the we really are exceptional here as is our way of life. True. Its a multivaried equation. Belgiums think they are exceptional, and, you know, a lot of others we talked last week, is it a done deal to raise rates in 2015 . You said pretty much yes, but we now had two prominent people say not necessarily. Look at the inflation numbers, based on the dual mandate, put aside employment, put aside inflation, its not what the fed likes, right . Is it possible they dont raise rates next year . You know, i just heard we have no time left. Sorry, steve. We have three minutes, and then we need to talk ill email you the answer. Got it. He surely the price stability, get rid of that. It should be all juicing the economy, according to him. Three teams dominating, fed, oil price plunge, and russias ruble collapse, and yellen, listening to what shell have to say. Here she comes, here she comes in a big, fancy suv. Her Carbon Footprint is fairly large right now. Two of them. Thats a greenspan and bernanke came in one of those. I was not mocking you as a former ceo and coastcio of pimco, but youre a believer in the dual mandate . Feds job to help the economy . Caller good morning, joe. Actually, i believe in three mandates. Of course. Caller the third one is financial stability. My question caller one you share which is that at some point, we got to normalize monetary policy, otherwise we encourage excessive risk taking. On balance, if i were them, take out a considerable period of time. Theres risk of inflation, but above that, the economy is growing broadly, and its time to take stimulus out of the market and allow the market to stay on its own feet. Allowing you to stay dovish. 330,000 jobs, 5. 8 unemployment, and were at 0. You want to remove wording . Remove wording in order to move on rates in the middle of next year, okay . I think the fed tried to be transparent. It cannot leapfrog immediately to a rate hike, so, yeah, remove it now, and i think they will hike in the middle of next year. What do you think of whats happening with russia in, you know, that results from oil prices, but whats your view of the world right now . Caller so my view of the world is one word divergence in economic performance, big differences within the advanced world, but also across the globe, and also divergence in policy, and the result of that is massive Foreign Exchange volatility, and as we have discovered this sort of volatility tends to break things, so, you know, remember the wordy ver je divergence. Russia is in crisis that feeds on itself, leads to capital flight and risk of further instability, but its not 1998. I agree with bob. This is not 1998. Well, i got through the interview and had, like, 30 seconds left for you for the intro, that was like back where you went to college. You get longer if youre on camera than shorter . I guess so. So they removed considerable time, and they go up just 25 basis points, and the market can handle that . Thats the bottom line . Caller yes. Well have you on longer. We 4, you know, with steve and other things going on, but thank you for joining us, and well speak again. The middle east focused in the markets after a horrific attack in pakistan. Well talk geopolitical attentions after the break. The maker of chinas largest Search Engine hails uber for investment. Well be right back. [ breathing deeply ] [ inhales deeply ] [ sighs ] [ inhales ] [ male announcer ] at cvs health, we took a deep breath. [ inhales, exhales ] [ male announcer ] and made the decision to quit selling cigarettes in our cvs pharmacies. Now we invite smokers to quit, too, with our comprehensive program. We just want to help everyone, everywhere, breathe a little easier. Introducing cvs health. Because health is everything. Two serious terrorist events puts isis front and center again this week. Sydney, rattling nerves, and yesterday, the horrific scene in pakistan, the taliban killed 140 people, mostly children, injurying countless others in the school attack. These events shine the white hot spotlight on the turmoil in the middle east and potential spread of terrorism. Here to help us navigate the road ahead is david gordon, president of International Capital strategies, a former diplomat and intelligence officer. Good to have you here. What should we make of the two w horrific event, a sign they are better organized and doing more . Will we see more of them coming . Well, i do think that extremism is on the rise, and its on the rise in a much more vicious form. I think the australian event is thats sort of a different category, but what were seeing in both the middle east in syria, in iraq with isis, in afghanistan, pakistan, and in nigeria is the emergence of the very vicious groups who give very little weight to the taking of human life. So i think, yes, we are in a period where these kinds of attacks are going to be more common. What are the chances that it happens here again . I think that the big difference with the new radicalism, with the new extremism is actually its much more locally focused. That the todays jihadists are all about gaining political control and political domination this their local areas, so in some sense, this is a different approach than bin laden who put all of his attention on attacking the west. Its not impossible that the west gets take e attacked, but what we will mainly see is hes these attacks against local adversaries. That was the attack yesterday. This was not a general school. This was a school for children of Army Personnel serving up in northwest pakistan, which is a center of radicalism and jihadism in pakistan. If we think the attacks are more in the local regions, what should the american policy response be . Well, i think that the danger here is these groups over time could reformulate their approach, and, again, attack us. We have to be working with the pakistani authorities, with the groups in iraq, with nigeria to help build up their capabilities and to help promote a Counter Jihad Movement really globally. These jihadists are also much more tech savvy. They are using social media. This is a real challenge. David, good to have you on, david gordon is his name. More on the topic in a momentings bmoment, but thank you for joining us. Thank you. Making an investment in uber, a sign that the push into china is serious. Well have the details right after this. Oh what fun it is to ride. Get the mercedesbenz on your wish list at the winter event going on now but hurry, the offer ends december 31st. [ho, ho, ho ] lease the 2015 c300 4matic for 419 a month at your local mercedesbenz dealer. I dont have to leave my desk and get up and go to the post office anymore. 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Experience a whole new way to buy a car, with truecar. Welcome back, everybody. New threats from those claiming responsibility for the hack attack against Sony Pictures studios. The group is now making threats against movie theaters that are set to show the comedy movie the interview. Department of Homeland Security Officials Say theyre aware of the threat, that theres no credible intelligence to indicate an active plot against movie theaters. The new York Premiere of this movie has already been canceled. A strategic investment in uber. The app launched in china this year. Beijing has come to the u. S. Making a rare onset appearance. Good to have you here. Thanks for having me. Yeah, no, the whole uber story is really, really interesting. A lot of people saying this is a very important strategic move for uber because its been getting so much criticism in other developing markets. Now its partnered up with probably one of the most powerful companies in china. So difficult regulatory environment, difficult political environment, have a powerful partner. Expand. Im going to an uncomfortable spot right now. The Chinese Government wants to know about ubers location abilities. Thats a big question. That is a big question mark. But in terms of uber itself, i mean, a lot of people wonder about ubers foothold in china right now. They have a pretty good reputation compared to the other two. Right now there isnt a whole lot of i dont know how to say this politely Service Culture in the taxi worlds. A lot of people still sleep in their taxis or you hope you dont get run over by a taxi. So with uber so low barrier to entry is what youre saying. And high demand from a frustrated consumer. Theyve instituted a Rating System for their drivers. Just like here. And people are surprised. When you take an uber car, the driver gets out and opens the door for you. They ask you, can you rate me as a fivestar driver . So thats a really surprising thing. A lot of people see the drivers as more reliable. They see the drivers as better. Now because they have that big data map system that theyre going to integrate into the uber service, thats one way that the drivers will be able to get around even better than they have. So its seen as a good one, yeah. Maybe not facing the same sort of hurdles that weve seen in other countries around the globe that are saying, wait a second, were not sure about this competition. No, not yet. A huge positive. Yeah, it is. Any other questions . Im interested in the other not baidu. Anything jack ma, im interested at this point. So that was the other part. Whats interesting is that people right now are talking about this as the latest maneuver in the battle of the three kingdoms. Have you interviewed him yet . These three players in the internet, theyre all getting into each others space. Alibaba has a competitor to uber now in the taxi space. It basically means, like, fast cab. So you can see that jack ma has got a lot of investment, and hes putting it into different areas. Is he around . Does he hang out . Have you interviewed him . Yeah, ive interviewed him. He doesnt really hang around. Hes kind of high profile. I asked you about the night life in beijing. Hes not out surrounded by well wishers, so to speak . Actually, he probably is. I doubt hed be going to any nightclub. Hes very recognizable. Yes, he is. And very focused on business. Its different here. The celebrity culture we have over here for ceos, is it the same . Well, what do you mean . Over here theres sort of a celebrity culture. Sorry to break in. Just real quick, alan gross has been released by cuba after five years in prison. This has been a big case. This will get talked a lot about in general media. Theres talk about whether theres reproachment between cuba and the United States. Is that a french word . I dont know. Steve leesman told me i had to say it. Is it a spanish word . I dont know. Your pronunciation of spanish, i defer to you. This one im not sure. Sabotage, yogurt. Anyway. How long you here for . Couple more days. Ill be here tomorrow and friday as well. Hopefully well get to see a lot of you. Thank you. When we come back this morning, what you need to be listening to for from janet yellen this afternoon. And a quick programming note for you. General electric chairman and Ceo Jeff Immelt will be coming up on squawk on the street. Well be right back. 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. Take aand. Exhale. In. Aflac and a gentle wavelike motion. Ahhhahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim in just four days. Ahh four days . Yep. See why speed matters, at aflac. Com. 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. Today theres a new way to work. And its made with ibm. Welcome back. Breaking news. A Senior Obama Administration official telling the a. P. That cuba has released american alan gross, whos been in prison there for five years. He was a Development Worker who was put in prison there. I dont think its a stretch that this is possibly related to the decline in oil. Remember, cuba gets 100,000 Barrels Per Day from venezuela. That oil has to be at risk in this situation because they desperately need to get paid actual cash, venezuela does, that could be leading to cuba to doing some kind of improving of relations with the United States. That makes sense. Weve seen a lot of fallout from oil prices. What would you expect from here . What are your thoughts that you would tell people if theyre looking to figure out what to do in the markets . For investors, the question is always the same. We started the year with negative headlines out of em. It was chinas shadow loans. Were ending the year with negative headlines out of em. The question i always ask is, is this systemic for investors . Is this systemic to the u. S. Economy . Like we were talking about earlier, we are getting down to levels where it does start to hurt the economy and not just help it through lower gas prices. But other than that, you know, the problems in russia russia is the u. S. s 28th largest trading partner. Theres not a direct impact with the ruble. So i think the u. S. Economy is doing well. The fed will start raising rates around mid year. Theyll go slow. Thank you. Thanks. All right. Make sure you join us tomorrow. Squawk on the street is next. Good wednesday morning. Welcome to squawk on the street. Im Carl Quintanilla with david faber at the new york stock exchange. Cramer is going to join us in a few minutes. Green on the screen after yesterdays failed rally. Day two of russias attempts to stabilize the ruble, which has, in fact, strengthened just slightly from yesterdays lows. Oil has settled back below 55. Ten year is below 2. 10. Cpi does come in cool, the biggest drop in six years. Fed statement just five hours