oil down 15% since the opec meeting. our road map begins with oil hitting seven year lows. >> we have news on the m&a front. the latest on deals that may or may not happen. >> and chipotle down another 5% pre-market, dragging that stock down nearly 20% so far this year. the latest on the company's e. coli outbreak. futures moving lower following monday's stock market decline. november data showing chinese exports fell for a fifth consecutive month. we've seen wti fall below 37 for the first time since early '09. shares of mining companies taking a hit after anglo american announced plans to cut jobs as part of restructuring. rio tinto said it will cut cap x in '16. it's all over today. >> rio is off 39, valet, 69%. when you slash 85,000 jobs out of 135,000, what does that say about the amount of equipment you'll spend? what does it say about the ancillary companies related to mining? this is all related to china. 13 straight months of chinese imports slumping. you can't have a strong industrial economy with those numbers. >> you know, a year ago or so, if you said oil prices will come down as they have -- already had a year ago and stay down and commodity prices, you might have turned around and say that will be good for the u.s. economy. i just wonder at this point, talking more here oil and gas than i am anglo american and the mining companies, but the pain felt in certain areas of the economy and how that's rippling out is interesting. i spent some time trying to talk to people in the credit markets to get a sense of what's going on with these energy and energy related companies. they have been doing everything they can to hang in there, to hang in there for the day when the price stops going down or starts going back up. looking at the capital structure. they can no longer issue equity. they have high-yield debt outstanding. some of them try doing exchange offers where they will give you higher -- make you higher in the capital structure but less in interest payments by giving you a lower principle amount. you wonder where we are in this, when we will start seeing the true restructurings or if we can muddle along. >> i hear people say that opec meeting was not a big deal. it was a big deal. it basically said there is no opec. saudi arabia is determined to break companies. a lot of people around the oil patch for a long time were dead wrong this time. oil is only 6% of the s&p. but the s&p is not riddled with all these master limited partnerships. it does not have all these -- what's known as the mid stream companies. there had been a gigantic infrastructure built up. only 16 states had that much at stake in oil and gas. but the companies that were spending were spending at a rate that really did presume that oil and gas would not go to these levels. you don't need it all. i would love to hear warren buffett on this. he's huge in pipelines. pipelines don't have to be bad if they're not attached to debt, and there's natural gas being used. by people felt we would hang in and they would sell oil at 50, 51 in the futures. the saudis wiped that out. that's what happened on friday. they wiped out the ability to sell in the futures market. >> of course everyone is now recalling goldman's bear case for $20 washout, wondering whether that call is worth paying more attention to. we have all these -- the "journal" a nice piece about why produce? you need to service this debt as the average yield on speculative grade is post-crisis high. >> i still don't buy the 20. i don't buy the 20 because the production cuts will be far greater now. people have to remember we just peaked three months ago. people felt -- one of the great things -- the bookcase was we will ratchet back fast. we didn't. natural gas last month, biggest month we had for production. >> to carl's point, in terms of the borrowing ability or the ability of these companies to continue to borrow, high yield, overall it cost the capital 8%. you hear high yield being a disaster, but 20% of it is mining and energy, their cost to capital is well higher than 8.5%, everybody else is borrowing close to 7%, which is not bad. defaults will be extremely low in that part of the market, much higher in energy and mining, jim. we talk about the banks. they have these revolvers essentially that provide liquidity or cut back on liquidity depending on the price of the actual -- what's in the ground. every quarter they're reassessing that. we wondered out loud when are the big restructurings coming, because they haven't yet. >> rbm which does the best work on this, i always reference them, they pointed out there's less than 5% of revolvers revoked. would have thought -- rbm has been saying it's not -- the production is going to continue , it won't be as great next year. they are drilling in the eagle ford. mr. papa would tell you eagle ford is similar to saudi arabia. in the permian, higher. bakken not so good. colorado not that good. those are the areas -- they were building pipe to areas that were presuming there would be a lot of drilling because we're 80 to 100. union pacific they tell you where they're not -- they don't have a lot of oil being shipped. >> to your point what about the pipeline companies? we're still waiting on kinder morgan on what the decision will be from that company's board of directors in terms of whether it cuts its dividend or not. the alarian was down yesterday. chesapeake energy down almost 20% at one point yesterday. a big energy conference with wells fargo right now. >> yes there is. >> what do you tell people who own these mlps? >> remember you what said at the beginning? people don't want equity. >> they can't use equity anymore. it's ratcheting down instead of up. >> they all go -- >> they have to be self-sustaining somehow from their own cash flow which means cutting the dividends. >> then there's no reason to own the stocks. the only reason people own them is income. >> haven't they already adjusted to the expectation? >> the expectation is they would not suspend the dividend they would reduce it. >> there's no evidence that the day or two after the stocks cut, they would rally. >> all these funds would keep spitting them out. >> individuals own them. it was a great way -- this will turn out to be the reach -- each time there's always a reach. there's always somebody reaching for yield. there's always someone trying to get a little extra juice, borrowing money. and this is the group where honestly people right now are trying to figure out is this model completely out the window? rates go up. >> i think back to when they were putting trailers in north dakota, trying to find places for guys to live. everyone asked at the time, is this going to work? >> i remember speaking with farmers up. there the farmers were saying we've seen it all before which is why we are the largest navy bean state, the largest sunflower oil. we've been fooled before. they'll fool us again. farmers. the agriculture department, met with the head of agriculture. he said it will all go away. >> i think rents have fallen for those man camps quite a bit. >> the man camps. >> and in general. the building that took place in north dakota. >> but eagle ford -- i don't want to say anything positive about the group, but there will come a time when people recognize that the companies that have a good alignment between the general partner and the limited partners, the companies that have good cash flow -- look at end bridge. the other day, endbridge dramatically raised distribution. why? it's a conservative. it's really run like a company. >> are nand there are names peo want to hear from back to kmi, jim. why haven't they told us anything yet? why are they waiting and everyone else is waiting to see what they'll do? they'll the big shoe. >> i agree. i agree. we have to hear -- that last acquisition, i hear good and bad about it there was a way to raise capital. >> what do you think they're trying to figure out? is it possible there's something else? another source of capital they'll tap? i don't know. i'm speculating. >> balanced against the negatives of the debt and that last piece of paper they did is rich kinder. rich kinder is revered in the industry. people feel he must have something. he must have something up his sleeve. i know that seems difficult but that's what you're betting on. something up his sleeve. now there are people that you -- >> no faith, essentially. >> rich kinder, you interview a lot of people. john malone. he might get angry that i put rich kinder in the same sentence. i don't mean to upset people. they are people revered in the industry. last year at this time in november he issued a statement saying we will be able to raise distributions for years and years and years. last year in november. that's not happened. we have to hear from him before we pronounce him guilty. the stock has been pronounced guilty. >> when we come back, one takeover bid has been received, another rejected. we'll have the latest on this morning's m&a and what people are saying about the doj and the ftc. we'll talk about chipotle and some reports coming out of bosto boston. more "squawk on the street" in just a moment. at ally bank no branches equals great rates. it's a fact. kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason. it could've been brenda. shares of chipotle getting hit this morning after boston college said several students, including members of the men's basketball team felt ill after dining at the chipotle in boston's cleveland circle. that restaurant has since been closed. the massachusetts department of health has been notified and is working to determine if there's a link to the ongoing national outbreak of e. coli. this has been a west coast story for the most part. >> i want to be careful on this one, there's been no confirmation it's e. coli. people got sick after going to one, i won't say it's not chipotle, but i felt it's important to point out that that entity has not found e. coli. but there's some sort of illness at that one, the cleveland circle. the stock held up remarkably well yesterday. the company does have a buy back. i think that people are split down the middle about whether to continue to go there from the poll that i took. but obviously this one is the one that's going to get big headlines, you were going from 45 to 52 people suddenly to a basketball team. >> is there an execution issue here? >> i know. i know. that's the issue. >> it's been weeks now. >> the cdc is involved. we had these things before. we had one from taco bell in 2006. the cdc got in. it was the onions. they pulled the onions. took a long time for the company to recover. the fact that the stock was barely down yesterday, even though the numbers were considered to be very, very terrible for same-store, shows you there's great belief they'll pull out of it. danny meyers said, tjust ate there. >> do you think they should have waited longer before they came out and said this is how we think it will shape up? >> i think they were looking at the order book. i thought they were surprised that they gave a forward forecast. they could have stuck with what they had. i don't know why they did that. the company is not -- some people feel the company has been forthcoming, giving the data others have said, wait a second what is that prediction based on? i don't know. >> i was going to say, ancillary effects in the inverse, to mcdonald's, sonic, shake shake? >> my travel owns it, the one that's been the winner is jack in the box. which had an incident itself some time ago. >> yes. >> really bad. >> yes. >> they have qdoba. mcdonald's has been going up. but it's a strong belief in what easterbrook is doing, and that the numbers will continue to get bettermen better. gasoline goes down, people go out. that's not a false fear -- false read. clarence otis was on squawk saying the same thing. when he was running darden, he said that was the crucial thing, gasoline down. we'll see. >> good amount of m&a news to get to. we will get to all of it, including norfolk southern today, which will be the subject of a lot of talk from canadian pacific beginning their conference call now. i wanted to get to yesterday's story. the washington journal reporting late in the day. it moved both stocks. i'm talking about what was not a lot of detail story saying rubbermaid and darden are in merger negotiations or negotiations about a combination. that's about all we know from the journal. i have nothing to add at this point. the two sides not willing to give me much of anything there. people, that is analysts weighing in this morning at wells fargo. they say they estimate a new acquisition of darden could be 8% in year two. if you consider a 25% purchase premium to monday's close, 4% maximum leverage ratio. others say maybe it would be a merger of equals. they are of similar sizes. interestingly, jarden has the lower multiple. newell rubbermaid is 18%. >> the last acquisition confused people. >> by jarden. a $1.5 billion deal. >> when i spoke to martin franklin, co-founder of -- co-chairman. mr. lily runs the company. >> martin has other things going on. one is platform, one is nomad. he has a lot on his plate. built this company over the last 15 years through a series of acquisition after acquisition. >> mr. -- >> there's some products we're talking about. >> he has bought back stock. you have to take a longer-term view of what martin has done which is very, very strong. he has revitalized the brands he's bought. has a lot of space. he once took a tape measure to different stores. mr. polk from unilever who runs newell, was on "mad money" recently. he has revitalized that whole place. not on >> 10,000 mergers and acquisitions this year. >> 10,000? >> 10,000. >> and the ftc, whether it's ge, electrolux, regulators have finally said that's enough. >> you can't just -- >> too many. >> i saw the ftc -- you know, there is such a thing as -- do they not factor in retailers have to get together to stay in business? >> many people were surprised initially, as is so often the case, many people thought otc staples not a problem. they will go to court. could be an interesting case. they believe they have a strong case. >> they believe they have a strong case if it doesn't happen, the two entities could really struggle. this is one where a lot of retailers, i think, are thinking how do we get together and defeat amazon? the fact is that amazon doesn't seem to factor into the decisionmaking of the ftc as much as i thought it would. >> when we come back, cramer's mad dash, count down to the opening bell. look at the premarket on this tuesday. expect weakness on the back of oil. below 37 today for the first time since '09. back in a moment. this is the one place we're not afraid to fail. some of these experiments may not work. but a few might shape the future. like turning algae into biofuel... ...new technology for capturing co2 emissions... ...and cars twice as efficient as the average car today. ideas exxonmobil scientists are working on to make energy go further... ...no matter how many tries it takes. energy lives here. it is that time for a mad dash on a tuesday. 6 1/2 minutes before the opening bell. we will talk a little outerwall. >> they came out last night, stre supreme disappointment. this is red box, it's amazing it held up there given the fact of netflix and the fact of how easy it is with amazon. when you go to your cable provider, they have a lot of movies. what's happened is they blamed the decline, not only a secular decline, which is what i think is at stake, but on theatrical releases, saying it was the worst in four years, that's why red box did poorly. i want people to be careful here. that may be true about the theatrical release, what matters is red box has the most powerful competition on earth. the companies that we -- netflix, someone floats, maybe content is costing too much. that can go down. these are hard stocks to value. i was reading on twitter, buy metrics, how you can value netflix? i come back and say this is how they value it. i don't value it. i can't. but the emorpthey say it's bad. >> amazon introducing new things. they're all creating their own systems to give you variety that only comes over broadband so you don't need to take the video offering. >> and i think there's no room -- outerwall. people used to use -- i used to send discs back and forth on netflix. my kids said, dad, let me show you how to download. i got that circle, the buffer. they said do you have wifi? we switched to wifi. i have never gone back. >> never looked back. some of the old movies, you still need to get them by mail. >> that's true. the opening bell a few minutes away. keeping a close eye not just on stocks but bonds and oil. we're back after this. here at td ameritrade, they're always working. yup, we're constantly making thinkorswim better. like a custom screener on your desktop, that updates to all your devices. and you can share it with one click. wow. how do you find the time to do all this? easy. we combined every birthday and holiday into one celebration. (different holidays being shouted) back to work, guys! i love this times of year. for all the confidence you need. td ameritrade. you got this. with t-mobile and the incredible iphone 6s you can reach more people in more places than before. whether you're at home in the basement on the open road or pulling the late shift at work. you're more connected now because t-mobile doubled its lte coverage in the past year. and our extended range lte goes two times farther than before and is four times better in buildings. get iphone 6s for zero upfront and just five bucks a month. you're watching "squawk on the street" live from the financial capital of the world. the opening bell in about a minute. you'll be hearing the phrase seven-year low, six-year low quite a bit today especially as it relates to oil on the back of chinese trade data which came in weak. imports down, estimates were lower. people are saying, wouldn't it be argued that the chinese story is at least not conclusive yet? >> i would have thought that. the baltic freight has been a great measure of things. but the anglo american reduction took peoples breaths away. we've not seen the upside from oil. southwest air, put out very good numbers this morning. down 3% on good numbers. toll brothers, i like their numbers. it doesn't matter. toll brothers said good things. it doesn't matter. >> toll has new orders up 12. average selling price to 790, down 4%. >> i think there's overreactions. but when you're in a down mode like this, you say there's overreactions, people laugh at you. you get ridiculed. i've seen overreactions happens periodically in my time. >> the s&p at the bottom of the screen. the opening bell at the big board. the ceo summit on digital transformation being held at the nyse today. at the nasdaq, amamedisys. home depot does confirm sales. no being surprises out of h.d. >> the market moved up a lot. people are freaked out about oil. people are saying we made judgments about oil, now we're dealing with earnings. people decided that this is the last good quarter, hearing a lot about that. so you need to see a jarden and aubbermaid in order to move up. you need to see deals. then you have office depot and staples being blocked. i keep thinking if we suddenly have an active ftc, wow. >> not every deal has a question of antitrust. there are plenty that don't. >> i was trying to give you a cue to norfolk southern. >> i was going to do that in the faber report. >> i was going to do a segue like i learned from mori amsterd amsterdam. >> from the old mary tyler -- >> the alan grady show. >> the dick van dyke. >> fabulous show. that holds up. >> that holds up. >> that holds up. >> great show. >> rob? rob? >> the people involved were about the greatest actors and actresses of the year. i think -- what i'm saying is that you got this kind of -- maybe it will get taken over if it doesn't move. but -- the keurig, which i don't think we've talked enough about was about the notion of the reinvention of coffee, which howard schultz did. suddenly coffee is a hot commodity. you have to have some thesis besides just, well, i don't know. the stock could go higher because earnings are okay. people are petrified that a higher rate increase will hurt cars, housing. i think that's extreme. that's out there. >> are you saying that the meeting this month is in question yet again? >> no. no. i think that's -- i think we're now going through the -- we're in the hangover mode. like if the whole "squawk on the street" group went to, like, bar san miguel on a sunday night and pounded tequila, then the next day there's pain, it feel like that with the employment number. >> what happens to the year to date gainers? do those get sold today as a source of funds? >> i think they get sold. everybody is scared about everything. everything goes down at once. then the smoke clears, people say let's go back to the stocks that have done so well. we're in a selling squall here. people say, jim, just say we're in a major decline. no. no. we'll get oversold. things will happen that's good. there are things that are wrong. i backed the master limited partnerships as a way to get income. that's not working. i feel, wow, i got that wrong. i thought that the ones that were toll roads, that didn't have commodity pressure, would still be able to pull it off. they're raising distributions and covered. yet the group just trades the other way. it doesn't matter. >> once equities decline, it becomes self-fulfillingness cycle because they're unable to hit the capital markets with more equity. >> i'm owning up to the fact that i thought there would be a distinguish between the ones that had a lot of coverage on their debt and the ones that were tight. >> km circumstances really levered. >> you're right. >> i remember many years ago the old at&t, the mike armstrong at&t, when it had a levered balance sheet it was fine, it was fine. suddenly it wasn't fine anymore. there you go, comcast, our parent company, had the opportunity to buy the cable business. >> i think you're in a fickle moment. i go back to airlines. there's a positive note about spirit and how spirit is doing better that was from cowen, raised the price target from 50 to 55. last week that stock would be up nicely. instead it's being killed. >> we're re-visiting again kmi down another 7.5%. right near a new low. pipeline companies you're referring referring to just continue to decline. >> yesterday, nxp, we had the ceo here. very nice story. the stock was down horribly after we talked about it. people -- there's a revulsion right now a lot of it is wealthy individuals being crushed. >> exxon down 3%. anadarko down 4.5%. chevron down. it's not just confined to pipeline companies. it's the majors, the mediums, the miners, all of them. >> i was thinking about cater miller. does caterpillar have to come out once agains , as they did lt time, and say there is another ratchet down. the companies we're talking about are gigantic users of caterpillar. the ones who took down debt and got in at the end, that's what you're seeing. the goodriches, it doesn't matter. those were very owned. they were owned stocks. we can look at them and say look how little they are. people were in these very big. >> auto zone is going to be the exception, 8.24, be9, beats an estimate of 8.24. >> auto zone has gone down, then day three gone up. they have the best buy back, best percentages of stock that there is. typically they have not blown the number away, but snap-on tool, a great stock which they told me forever, it's -- the fleet gets older and older and you go to the zone rather than get a new car. though new car loans people think is the next big patch. the bubble turned out to be in the oil patch. >> the bubble was really the oil patch. >> when the stock went down big, then it went down again with boardwalk pipeline. we saw the kmi bonds go up yesterday. sometimes that could be an h harbinger of the dividend being cut. sometimes it's the rabbit out of the hat. >> i think it's number one. >> that's important. >> xle going for the first five-day losing streak since august. every dow component in the red. bob pisani is on the floor. >> it's not just general. it's a generally weak open. at the open we were almost 10/1 declining to advancing stocks. that's a bit unusual. i guess indicative of the general gloominess on the street. look at the major sectors here. you will see what i'm talking about. energy and materials leading to the down side. even the big global industrial names are weak and big technology names are weak. materials is a small portion of the s&p 500. what matters really is tech, financials, healthcare, the biggest sectors. watch that in terms of the influence. there's a phenomenon that happens in the middle of december every year that is exacerbating the declines we are seeing. it's called the free lunch phenomenon. in the middle of december, traders start selling the biggest losers of the year for tax purposes. and there's been a lot of big losers. the tendency here, the only good news about this, they tend to outperform over the next two months as investors buy beaten down names. there's a phenomenon with oil hitting new lows, aggressively selling energy and material names, global industrials, but i think it is exacerbated by this phenomenon of selling for tax purposes. this should be over fairly soon. a lot of concern about dividend cuts. anglo american selling assets, and shelling their dividend. talk of them raising capital. they are in the worst business in the world. the iron ore business a quarter of their business. a coal business, a quarter of their business. platinum is not doing well. the one bright spot is they do control debeers, the biggest diamondmaker in the world. even there they were saying the diamond business is not that great either. three out of the four businesses are not doing well at all. the fourth one is tepid this is a difficult business for them to be in now with platinum, coal, iron ore prices down dramatically. rio tinto revised down its capit capital expenditure from 6 billion to 5 billion. glencore also in iron ore. cliffs, vale, a new low for cliffs there. you guys were talking about auto zone. home depot has the investor day conference, affirming everything, 2015 sales and guidance. look at the metrics. great sales growth, almost 6%. that's phenomenal. but the earnings growth is earning this a real winner for the year. 17% earnings growth. it's consistent. it's not like this just happened this year. look at the earnings growth for the last several years, $3s to $4, to $5, to $6 here overall. that is expected to continue into 2016. that's why home depot is up 25%, 26% so far this year. the other winner, of course, auto zone, you guys mentioned. up about 20% or so this year. their earnings growth, a small beat, but they got a lot of benefits going for them. besides the way the company is run. they had 20%, 25% lower gas prices from a year ago that helps them. miles driven has risen. that's a big help. the diy market. earnings per share up 14% and consistently growing around that level. there's a couple comments and concerns. if you get a warm winter, that generally doesn't work well. people go in to fix their cars when it's cold. and it's expensive right now. peak multiple for that. that's the only down side. but great stock and a good year for them. guys, back to you. >> thank you very much, bob pisani. now to developing story again today. namely canadian pacific's renewed attempts, if you will, or continuation of its attempt to acquire norfolk southern. canadian pacific made an offer it was rejected by norfolk. the main reason, norfolk southern believes there that there is no way that said merger or acquisition would be approved by the merger board. today there is a conference call and a new offer from canadian pacific. bill ackman is on that call. it is expected to go on conceivably for hours. they will take every question they get until the last question is asked, i'm told. i'll share with you some comments already coming from the conference call itself. first of the new offer, they lowered the cash portion of the offer and increased the amount of shares that you would get as an nsc shareholder. the new offer is 32.86 shares and 4.51 shares of the new company that would be created. 47% of said new company would be held by company nsc shareholders, as you look at bill ackman there to my left. why not? keep him up. it would be put in a voting trust. meaning that you would get your 32.86 and your shares as soon as may of next year, while they then awaited all of the approvals necessary for the deal to actually be allowed to be cones mated. you as a norfolk southern shareholder would get the consideration, and put in an actual trust, the trustee, not board of dreshgirectors, truste ceo. it gets complex. norfolk southern making the same point it made when it was talking about anti-trust or the surface transportation board's view, namely that even a voting trust structure they believe will be rejected by the stb. now, these used to take place often. back when the icc was reviewing these kinds of things. but they get a couple commissioners, former stb commissioners, they are paying them but they've come out with their opinions. current stb regulations set a high bar, these were changed back in 2001, for approval of canadian pacific's proposed voting trust. they point out the stb will still not approve cp's proposed voting trust and the cp and ns merger. it says the deal itself, the creation of the voting trust itself has to be in the public interest. they don't believe there's a case to be made on the norfolk southern side that that would be the case. now, cp on its call that is ongoing, offers the following saying the proposed end to end cp ns merger does not result in anti-competitive impacts, nor is there reason to assume that other carriers would feel the need to merge to compete. they are talk about the trust structure itself. they believe the stb board will judge that application based on its merits, and when they do act, they will act favorably on it. that's the ceo. we'll see, jim. what i get from the nsc side is absolutely positively no way are we interested. it's a difficult road for cp to go down when they get that rejection, because it would take years for the deal to come to fruition, even with the voting trust structure f that were , io be aloud. it's hard to imagine an activist shareholder getting involved. i wonder if mr. ackman is a holder of norfolk southern. >> there's a great cynicism in that this was something that boosted canadian pacific's stock initially. in this environment -- the norfolk southern release just basically says, listen, this is the last thing on earth that will happen. and once again, that stock snuck up. i think people have to -- i always recommend on "mad money," don't ever buy a stock in you think it's for takeover. the fundamentals for norfolk southern short-term are subpar. longer tomorrow, it's fine. 38% down to 35% of the utility fleet still uses coal. that marginal coal buyer is bad. norfolk southern has a lot of coal. >> yeah. finally, quick way to think about this, when you talk to norfolk southern they will say we will never allow or facilitate the sale of this company to a canadian/ackman controlled company that would be an inversion that would be done at a nice is nowhere near the overall economic value of our company and has huge, huge antitrust risk. >> huge. geez, ksu is the only railroad i think you could acquire. >> that's true. sorry. didn't mean to interrupt. >> that's all right. you're seeing an interruption in data at the bottom of the screen. everybody is working on that. just for your information, dow is down 163. s&p down about 15 and change. >> let's turn from stocks to bonds. check in with rick santelli at the cme group in chicago. rick? >> good morning, david. a lot of folks are focusing on the five-year note yield. we're been talking about the flattening curve for a while. if you look at the one-day, you get a certain view. the two-day, you can see we're going the other way in rates. rates are melting. nothing aggressive. open the chart up to november 1st. this is a wild ride for fives. consider this. right now we've seen prices rally, these yields coming off a bit. so we sit around 166. on the second day of the two-day, october fed meeting on the 27th of october, it was 30 basis points lower at 136. two-day of 30s, same scenario. you know where the 30 year was on the second day of that october meeting? around 286. so, it's only nine basis points away from that level. there's your curve flattening in a big way. the flattening trade that been one of the features of 2015. today with the china trade information coming out on the soft side, it's been a big topic. so has the notion of the chinese trying to bolster the yuan by selling dollars. we saw the huge drop in the foreign reserves yesterday, down $405 billion. why is that important? look at the currency today. that's the dollar versus usian. the dollar is at the best level since 2011. 52-months. but look at it the other way. the chinese yuan at the low of that time period that speaks volumes. the last chart, let's look at the dollar index. a march 1st start there, you can see clearly traders are selling off of that. underneath, 98 is considered a good support level. back to you. >> thanks, rick. rick santelli talking currencies that brings us to oil. wti hit a low of 36.64. jackie is at nymex. >> we are seeing more pressure after 56% drop in oil prices yesterday. not to be unexpected after the opec meeting on friday it looked like we had support early on in the session. optimism about chinese oil demand. imports, surprise to the upside. we are still awash in oil. until something changes in this story, we're probably going to see more pressure on prices. the folks i'm talking to are saying they don't expect the extreme lows to be long lived. they think we could bounce lower and come back up. the fed and dollar are part of this story. watch that. we'll have the api this afternoon, setting us up for inventories tomorrow. that could change things as well. back to you. >> jackie, thank you very much. when we come back, morgan stanley's chief u.s. equity strategist adam parker on the markets. dow is down 150. slightly off of the session lows at this early hour. s&p down 14. when a moment spontaneously turns romantic, why pause to take a pill? and why stop what you're doing to find a bathroom? cialis for daily use, is the only daily tablet approved to treat erectile dysfunction so you can be ready anytime the moment is right. plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart 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solutions connect machines and people... to keep your internet of things in-sync, in real-time. leaving you free to focus on what matters most. we had a number of losses versus winners early on. we had 10/1. that's the level that is said be aware for a crescendo. the stock to watch may be fireeye. this is one way ticket down. this is a company that's forensics for hacking. citi upgrades it today. the chart has been a house of pain. that's a good way to watch and measure a market if a recommendation starts taking hold. the biotechs doing better. emotional opening. oil turned around. it's weird that oil goes up and biotechs go up. but we're looking at a market that's emotional. strange things happen. >> what will happen tonight on "mad?" >> wei did not think these stoc would have that pressure, this is for barry davis and enlink. you want to own when you see something wrong. i did not think we would have a collapse of the toll road companies that were master limited partnerships. i got that wrong. i want to tell viewers i got it wrong. >> jim, we'll see you tonight. when we come back, morgan stanley's chief u.s. equity strategist, adam parker. good tuesday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, david faber at post nine of the new york stock exchange. simon hobbs is off today. cramer called the market an emotional opening. down about 1%. chinese trade data and price of oil today disappointing bullish investors. >> let's get to the road map. stocks falling sharply today. all 30 dow stocks in the red. we will talk with adam parker about where we go from here. oil hitting a seven-year low this morning. the big oil names trading lower. find out how you should be playing the sector. and tim love weighing in on the e. coli outbreak at chipotle. how should the company be responding? we start with the markets. dow down 188. stocks in the red across the board being pulled down by heavy losses in the energy sector as the oil route continues. for more on where investors should be focusing, we have adam parker, chief market strategist at morgan stanley. good to see you. >> good to see you. this ro >> this rout in commodities is looking worrisome? is this just temporary or -- >> we are underweight energy and industrials. i think it come downs to supply/demand dynamics on the i'll price. maybe you don't reset inversion point to 2017. i think people are more optimistic they can reach e equilibrium in 2016, and that's being pushed out. >> less than a month to go for trading in 2015. the dow is down for the year. s&p 500 is flat for the year. do you maintain we're in the middle of this multi-year bull market? >> our view is you're in a long expansion that may last 2020 with low growth, low inflation and slow retrenchment from the fed. when we came with our outlook a couple weeks ago, we were cautious, calling for a mid expansion, you have a strong dollar, the fed lifting off, more apprehension and negative sentiment out there. we still think earnings will grow for 2016. we're forecasting 4% earnings growth for the s&p. on top of that, a 2% net buyback and a 2% dividend yield. the u.s. could look okay. i would say we have more of a balanced view than outright bullish for 2016. >> i want to get back to your last year target for this time. you were pretty optimistic at the end of last year. you were looking for 22.75 on the s&p. clearly we didn't get there. i know you had to lower that target since then. what did you get most wrong. >> on the earnings front, we were forecasting higher earnings for this year. we set that target in november of '14 based on the 2016 earnings, and how you will feet about them at end of 2015. as i always say on your channel, i don't assign a lot of value in forecasting the market multiple. i think it's hard to do. we think much more the value is on the stocks and sectors, cohorts that have to beat the market and we focus more on institutional investors in our meetings on how to beat the index. i don't know. i think it's more strong dollar, week oil, some sentiment that changed there. folks at morgan stanley i think were too optimistic a year ago on the oil price. >> adam, the first time since the crisis you're going overweight financials. talk about that and what happens if the process of rate rises are more gradual than we think they are going to be. >> i've been a strategist since january of '08. we thought the big growth and shareholder return, the strong dollar not impacting the big banks as much as other areas and the spector that you have liftoff would help. the positioning is in the big banks, but also material bets in the credit card companies. our view is that people have more money, they are making more money per hour, the interest rates are down, debt burden is down, gas prices are low. so they have more money. it's difficult with small cap retailers, department stores, to figure out where the next land line is. but they will use plastic or cash, so that's where we position. does that connote an increase in sales? >> a lot of news flow is saying this one is missing, but the total dollar is there. if you look at big box retailers, the traditional ones, home improvement companies, if you look at the classic growth names, what's going on is the big companies with revenue have comped well. lots of small ones haven't. a problem with traditional retail sales, maybe it's not totally measuring accurately what the consumer is doing. they're spending on the internet. there's other ways it's transpiring. sometimes the data points are not capturing the true sentiment. i think the consumer has more money. it's just pure math. you'll see that work out, continue to work out over the next 6, 9 months. >> adam, it looks like you liked health care for the last number of years. now your market weight healthcare. is that trade going to change next year? >> so, look, our biggest overweight from 2011 to 2014 was healthcare. we went neutral at the beginning of this year. in september we got cautious, sort of said, look, you got 10% of the healthcare companies receiving tender offers, they're rate sensitive. hedge fund exposure was high. we got more negative. the sector went down on a couple issues, some concerns about complicated bookings at some companies. concerning about drug pricing from politicians. i think now, if you're looking at it soberly, you have to like healthcare more than you did two, three months ago. some stocks are down 20%, 30%. a number of big deals are still likely out there. the deals and the access to capital is still there. on the margin, we're getting more optimistic about healthcare. we tried to indicate that in the year ahead outlook. that's one area we've done well. >> as we ponder the year ahead, no question it's going to be a political year. not only the u.s. presidential elections, more talk about this vote from the eu for britain. there's an increase risk of terrorism and war. how do you factor all of that into the economic and market outlook of the year? >> there's conflicting forces. it's a nine variable problem and you want me to isolate it to one. the challenge with forecasting the pe ratio is some things you listed could be good. historically the economy doesn't do that poorly in an election year. there could be some fiscal stimulus. earnings are growing 5%, 6% this year. maybe they can go 5%, 6% total next year. on the flip side, how do you deal with the fact that the world has a risk of terrorism, that's scary. it's tough for people that i talk to on the institutional side to position for all the time. they end up being more reactive than proactive given the difficulty of forecasting it. >> you did it, all in one answer. adam, appreciate it. your forecast for 2016, just want to reiterate -- >> mid single digit upside, again, i think the value is much more on how to beat the index. that's where the body of our work is focused. >> adam parker, chief u.s. strategist at morgan stanley, good to see you. >> take care. when we come back, oil the big story today, falling to a seven-year low. is there an end to the slide in sight? oil prices continue to slide hitting some fresh seven-year lows. fundamental concerns regarding oversupply weigh down that sector. what will it take to turn things around? let's bring in rob heyward, senior investment strategist from ubs bank wealth mang. good morning to you. >> good morning. >> how much damage do you think this opec meeting did? >> i think it did quite a bit. it took away hope that the oil market participants had that opec was going to step in any time soon to support prices. and i think now this oil market is in a prove it mode. they want to see prove that production will decline somewhere in the world to resolve these -- to resolve this access of supply, push prices higher eventually. if that were to happen, who would step on the breaks first? >> well, i think at this point we're not expecting anyone in opec to do that yet. they seem well committed to this -- to their own production. i think it's u.s. oil producers who are eventually going to see cuts in production. either because it becomes uneconomical or because we see some defaults in the high yield energy space, and then production gets cut. ultimately u.s. production falls at some point. for now that hasn't happened in the last two months f we look at energy information administration reports. >> they have bills to pay, right? >> right. >> is it only through defaults that production cuts come? >> yeah. i think we need to see -- i think -- we have seen investment decline. the leading indicators are there for production to fall. we've seen investment decline. counts come down. i think now it's a question of for who does oil become uneconomical. is it the producer who ends up defaulting and that production moves into stronger hands that decides it's not efficient to produce there? or do others just decide it is not right price? it seems like it's taking a lower price to get there. we're in a period of weak seasonal demand. so demand growth really isn't there. for now it seems like lower prices are what it's going to take to pressure producers. >> wasn't the mantra that opec doesn't matter anymore? it's sort of an antiquated cartel, that the u.s. is now the new swing producer? was that completely proven wrong? >> no, no. i don't think that's been proven wrong at all. saudi arabia could choose to be the swing producer, but no one else is willing to step up. at this point it's market efficiency that will be the sing producer. meaning that where marginal costs of production is higher than current oil prices, those are the producers that will probably cut. it's back to the market, which is what it hasn't been since opec was founded 30 plus years ago. 40 years ago. >> rob, we appreciate that. >> we're back to the market. >> it's going to be one to watch for several months. rob, thanks a lot. we are getting some news here from chipotle. for that we go back to dominic chu. >> we are putting chipotle shares in focus again. they are near but off of the session lows on heavy volume. there are reports now that chipotle has said that they have identified at least something that looks like it could be a neurovirus located to one restaurant. there were concerns about a possible e. coli case out of boston. the boston area with numerous boston college students reporting illnesses of a gast gastrointestinal nature. chipotle says the pattern looks like neurovirus isolated to that one restaurant at cleveland circle in the boston area. neurovirus not e. coli, but an acute gastrointestinal illness. it could be one more indication, but chipotle saying it look like it is neurovirus, not e. coli, and limited to that one restaurant in the boston area. >> i don't know if that's better or worse, dom. sounds bad to me on both of them. chipotle shares down more than 2%. when we come back, much more on chipotle. tim love joins us live to weigh in on this crisis. how safe is our food and how does a restaurant deal with something like this? [vet] two yearly physicals down. martha and mildred are good to go. here's your invoice, ladies. a few stops later, and it looks like big ollie is on the mend. it might not seem that glamorous having an old pickup truck for an office... or filling your days looking down the south end of a heifer, but...i wouldn't have it any other way. look at that, i had my best month ever. and earned a shiny new office upgrade. i run on quickbooks. that's how i own it. . mining companies are falling sharply this morning. anglo american says it plans on cutting 85,000 jobs, that's out of 135,000 total. it is also suspending dividend an others in the industry as well looking at their cap x spending. all the stocks down sharply. we are seeing a bit of a rebound in some of the oil names. they are still down, most of them. not at the lows as we watched the key commodity there, wti and brent moving up from session lows this morning. >> which is a reminder this move, brent below 40, the big headline today, is not just oil move, it's commodity rout in general. metals getting clobbered. it's a bigger move. we have the china data overnight. chinese imports continue to fall. exports continue to fall. it's not an isolated oil move. >> story out of reuters saying morgan stanley is closing their base metals trading desks globally. they will continue to trade pressures metals. that's a sign of where we are. eric schmit wrote an opinion piece in the "new york times" on how to build a better web. one suggestion is to target social accounts for target groups like isis and remove videos before they spread. he said we should build tools to deescalate tensions on social media, sort of like spell checkers but for hate and harassment. "the times" having a story about pressure being applied to social media to police this traffic like they would police child pornography, viruses. technology is getting in the middle of this debate. >> and schmidt in the op-ed did not use encryption, backdoor. as political pressure mounts on the companies to do something like that, the companies continue to resist that. there are privacy concerns. they won't acquiesce to the idea that they could open a back door passage for the government to share information. you wonder if they will be forced to do so eventually. when we come back, more on this now session low decline. dow down 228. we'll get to chipotle, shares falling again today in the wake of this report of e. coli outbreak. the stock down nearly 30% since the beginning of october. restaurateur tim love will join us to talk about what it will take to get the name back. good morning. i'm sue herera. here is your cnbc news update. we start out with gop presidential candidate donald trump making the rounds of the morning talk shows after proposing a ban on muslims from entering the united states. on msnbc's "morning joe" this morning he said the ban would only be temporary but not elaborate on when it would end. vice president joe biden addressing the ukrainian parliament. he criticized russia and said the u.s. and all of europe stood with ukraine. he said the u.s. is providing support to help train the country's security forces. an air france flight from san francisco to paris was die ver diverted due to an unspecified anonymous threat. and oscar pistorius will remain under house arrest pending his sentencing for murder after a south african judge granted him bail, bail was set at $692. with his house arrest extended to april 18th when he will be sentenced. that's the cnbc news update. i'll see you in another hour. keeping our eye on the markets. dow down 227. we said earlier this morning all the dow components are in the red. the xle is tracking for its first five-day decline since august. y'all remember how volatile and crazy the month of august was. though some are pointing out we're getting to that level once again where key support, as they say, starts to become the name of the game. >> healthcare is doing the least worst in terms of the industry. all of them are in the red. it's interesting to see the forecasts coming out for next year. just during this time nsh, the consensus, if you look across the board is flat to low returns in 2016. part of it is this fact that it will be lower for longer for oil now that brent is below 40. the dollar continues to strengthen. a lot of folks see that as a major theme. morgan stanley has 2175 for next year. here we are just above 2,000 for the s&p. bank of america and golden sacks around those levels. just another year of this. you wonder if there's going to be more surprises. nobody called the downturn in energy we saw this year. >> since 1960, the following year when it was down 3%. which is where we are. >> the following year was good most of the time. this would be a reversion of that. >> as we speak, the s&p 500 unchanged for 2015. dow down slightly, the nasdaq faring the best. up still. >> at least it's been the beneficiary of amazon, google. wti bottomed a bit below 37. however it's rebounded, let's call it, to 37.40. the energy stocks did not bottom the overall broader market, which is making new lows right now. >> transports down 2.5% on a day where oil cracked below 37. that's what some are finding extraordinarily odd. this idea of -- whatever happened to the idea that low energy prices were good for the consumer, one, and good for transports two. >> it's already cost this economy more than 100,000 jobs. we have a vibrant energy industry in this economy. it's completely different. and you have a much more globally intertwined market and global economy. and places like canada, the canadian dollar hitting an 11-year low. these economies, canada, russia, brazil, all in a recession. if we don't see a bottom to the commodity prices, the pain will get worse. >> that said, we're talking about potential deflation and real savings for american consumers, 70% of our economy is a consumer led -- >> that's not the message from the markets. >> it hasn't been. it hasn't been for much of the year, despite low oil prices for a year. low meaning lower than -- >> that's completely changed. it's hurting earnings and you also have the credit problems bubbling up. >> in energy and mining. not -- you can try and say it's broader than that in high yield, but it's not. it's contained to energy and mining. we'll see. the problems are not there yet to the extent we thought they were. there has been an ability to extend. >> and you have an industrial rever recession and the consumer spending boom simultaneously in this country, i don't know. speaker ryan weighing in on donald trump's latest comments. for that, we will send it over to eamon javers. >> we heard from paul ryan just a few minutes ago on capitol hill. he said this proposal by donald trump to bar muslims from entering the country is simply not american. it's not what we stand for as a country. it's not what republican party stands for as a political party. here's the speaker of the house. >> normally i do not comment on what's going on in the presidential election. i will take an exception today. this is not conservatism. what was proposed yesterday is not what this party stands for. more importantly it's not what this country stands for. not only are there many muslims serving in our armed forces, dying for this country, there are muslims serving right here in the house, working every day to uphold and defend the constitution. >> paul ryan was also asked whether or not he feels that this represents potential lasting damage to the republican party, these kinds of anti-religious, anti ethnic comments coming out of the trump campaign. he didn't go there. he said his first concern was about first principles under the u.s. constitution and ultimately he has to stand up and republican leaders have to stand up for the values of their republican party. behind the scenes there are a lot of republicans concerned that the blowback from the donald trump campaign is going to do significant damage to their potential ability to win the white house next year. it is simply alienating too many different groups inside the country to have the republican party be viable going forward. guys? >> thank you. we have a hearing on the ab inbev sabmiller merger. hampton pearson has more on that. >> the hearing is just underway. as i tried to catch up with carlos brito just before the hearing started, he was reluctant to give away the game plan on how he hopes to convince the committee that this is not a monopoly waiting to happen if the deal goes forward. right now the hearing is just underway. mr. brito has been able to give his opening statement trying to make his case for why the merger should happen and specifically why he believes it's not anti-competitive, especially as far as affecting the domestic beer competition in the u.s. >> all right. we're watching video there, of course. hampton? >> sorry, i guess we don't have that sound bite. in essence, he said, it's the key to he and others who are in favor of this, making their case with u.s. regulators that the planned divesture of the miller coors piece, that's the essence of what should let the case go forward. on the flip side, a great deal of concern about the impact on the growing price competition for the craft industry going forward. that's the thrust of a lot of questions coming from senators, specifically those with craft breweries in their district. >> hampton pearson, thanks. a lot of fallout from the chipotle e. coli scare. tim love joins us. good to have you back. >> how are y'all. >> here we are again, talking about another retail restaurant chain talking about supplies in the supply chain. what is the most reasonable course at this moment for them? >> you know, i -- the most reasonable course for them is to stay the course, which, you know, if you read a lot about it, if you know anything about the company, the leaders of the company have been determined to find great ingredients sourced from nonprocessed foods. in america, that's what we want now. we want non-processed. with that, especially in the vegetable realm comes some risk as we see more often than we'd like to see -- you look at a company like chipotle who sources so many different vegetables from so many different places, and vegetables, as we know, are nonregulated, especially looking at it like meat. we look at meat as i was thinking this morning, you know when meat is bad, it smells bad. you don't know when there's some sort of, you know, e. coli or something like that sitting on a raw vegetable. it's about the cleanliness of the vegetables. and sometimes people make mistakes. want to read a line from the latest annual report. they say we may be at a higher risk for food-born illness outbreaks than some competitors due to our use of fresh produce and meats, rather than frozen. are they making it more difficult than it has to be? >> no. they're not making it more difficult than it has to be. the ignorance in our country of where food comes from is really making it more difficult. we have been buying -- we've been used to buy processed foods and processed meats. and you look at that and go, okay, there's an argument that says why aren't we using if we know what the process is and it helps us, you know, regulate the food-born illness. at the same time those processed foods make it bad for us down the road. you know, i can promise you, my thought process is you will look at the chipotle group, they will get together a bunch of smart people. they'll get in a room and figure out how do we get the supply chain to be better. what they're doing is monumental in the states. they'll figure out ways to do that. with that in mind, they also need to crack down on where the vegetables are coming from and the process of processing the food in the restaurants. >> right. >> as we can see, it's not a nationwide outbreak. it's more about a little specific restaurant. i think that's more on the lower management. >> so, you said processed many times what about their process? are they not washing the stuff well enough? is it an execution issue on the part of management, just not getting the personnel in the restaurants to do the right thing? >> you know, it is a bit of speculation. it's hard for me to say, i'm not standing inside their restaurants. when you have something that pops up today where it says a restaurant had 20-something people fall ill -- remember, this is not an e. coli situation, just people feeling ill that sounds like a specific location problem. yes, that would be a management problem. >> you are familiar with the consumer's mindset, the psychology of the consumer, once you lose them, how long did it take to get them back, especially in this environment where fast, casual restaurants are so popular. >> i agree. the fan base for chipotle is humongous. it's large, widespread. you can see with as many stores as they have across the country, people are visiting their stores. losing people like that is always a problem. it always causes you to think, okay what do i need to do? my guess would be you will see steve ellis get together a group that comes up with something big and impactful that involves the community to help them gain the confidence back. >> finally, we asked this morning, it's a horrible thing to say, it's the wrong word, but who benefits, so to speak? who takes share as a result of this issue? a lot of people say names like mcdonald's and sonic are not going to grab the consumer who was going to go to chipotle in the first place. do you agree? >> i do agree. the person who is going to chipotle is looking for the new version of fast food, which is people using fresh ingredients, exactly the way chipotle is. we know that the fast food and fast casual restaurants that have come out in the last five to six years all try to emulate what chipotle has done, which is saying we'll take good ingredients and a really simple process and show the world we can make fast food that is non-processed foods. so the consumer -- the place that will gain from that is places like shake shack. higher end, slow-processed food than fast food. >> tim, hopefully next time we have better news to talk about tim love. >> i agree, thank you very much. >> nine new episodes beginning wednesday, january 6th at 10:00 p.m. eastern time. when we come back, an early netflix investor weighing in on the stock's recent drop. will more new originals help the company or hurt it? that's coming up in "squawk alley." and can you explain why you recommend synthetic over cedar? "super food?" is that a real thing? it's a great school, but is it the right one for her? is this really any better than the one you got last year? if we consolidate suppliers, what's the savings there? so should we go with the 467 horsepower? ...or is a 423 enough? good question. you ask a lot of good questions... i think we should move you into our new fund. sure... ok. but are you asking enough about how your wealth is managed? wealth management at charles schwab. we . welcome back to "squawk on the street." biotech stocks as a part of healthcare helping the sector higher with names like celgene and biogen. it's the third best performing sector on that basis. t the ibb up about a percent or so on this down day as well. at least for right now, biotech showing relative strength. back over to you. thank you very much. let's get over to cme group and rick santelli with the santelli exchange in chicago. good morning. >> good morning. it's all about manufacturing. we have all become very much focused on that sector even given the fact that it's 12% of gdp because it's the canary in the coal mine, so to speak. to that i would like to welcome my guest today, chad nutrey, head economist from the national association of manufacturers. welcome. >> thanks. >> your most recent read, i'm feeling fortunate it is early. 59.6. these are quarterlies. it's not a finalized read. compared to previous quarters, this is the lowest level since q4q dominguq4 2012. >> 91% of our members were positive in december of last year, so we've seen sentiment fall dramatically over the course of the last 12 months. those global headwinds have been significant. lower crude oil prices have hit the energy sector and the supply chain hard. in general, manufacturers are anxious right now. and the survey reads that. i'll tell you the thing that interests me. when you look at the respondents, about 13% have no opinion how tightening monetary policy may affect their business. 32% think it's because it improves the economy, that's why the fed is tightening, which is the way it's supposed to be. what amazed me is 55.2% still see weakness in the economy. give me more detail on that, sir. >> we've continued to see manufacturers be anxious. so they're saying, you know, the fall reserve, you say you're data dependent? let's wait for better data before we raise waits. we've seen that in the last two quarters surveyed, manufacturers have said let's get better data before we start actually the process of normalization. i think more than anything, manufacturers really are just cautious right now. i think they recognize the fed is more than likely going to raise rates next week. the numbers speak to the fact that the dollar headwind s as a down and they're nervous. >> tell me why we should pay that attention. >> there's a belief out there that we don't make anything in america. the reality is manufacturer produce $2.1 trillion worth of goods last year. manufacturers is a path to the middle class. the average manufacturing worker earns $79,000 per year, including benefits. when you look at the long-term prospec prospects for manufacturing, it's hard not to be bullish going forward. there's, i think, a feeling in the u.s. that this is really the place to continue to make things and we are trying to do everything we can at the national association of manufacturers to make sure that happens. >> chad, thank you very much. next month, i want you to come back on. we'll do the updated read. now let's go back to carl quintanilla. >> i'll take it from here, rick santelli. it is the most popular rifle in the world among sharp shooters and hunters, but five years ago cnbc exposed a potential design defect. now the company is agreeing to replace the trigger on some guns, but they still maintain the guns are safe. scott cohn has more. >> the allegation is that the guns can fire unexpectedly without pulling the trigger which caused hundreds of injuries and two depths. as remington prepares to settle that class action suit, we have gotten access to a trove of court documents that were sealed until just now. they're in the hands of a montana man whose son, gus, died in 2000 when one of the guns went off. >> how many documents are there? >> my best guesstimate, in the millions. i have no idea. all i know is that i took the time to read them page by page and put the pieces of a puzzle together chronologically. >> there are handwritten notes from engineers, dealing with fsr, the internal term for guns firing when the safety is released, which is what happened to the barber's son, gus. these notes written a decade before gus was killed. we have many more documents and h much more in "remington underfire." it's at cnbc/remington. coming up, big oil names are taking hits today. energy is the worst performing sector in the selloff of the s&p 500. we should note they're off the lows of the morning. how should you play the oil stocks? more on that when "squawk on the street" comes back. i'm here at the td ameritrade trader offices. ahh... steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this. hi watson. annabelle, your birthday is tomorrow. i'm turning seven. what did you ask for? a princess. and a pony. you like things that begin with p. i like pink frosting too. will you have a cake? yeah. i was too sick to have one last year. the data your doctor shared shows you are healthy. are you a doctor? no. i help doctors identify cancer treatments. i want to be a doctor someday. i can help with that too. watson, i like you. chevron and exxonmobil trading lower, though they are off the lows of the day. bouncing back to positive territory marching towards $37 here in the u.s. with us now is sam, equity research director at cowan. follows the energy names. any reason why this sharp turnaround? earlier brent crude was below 40. that was certainly a big headline. what's the significance? >> yeah. i mean, i guess i go back to comments opec made, actually. not last week at the meeting, but at the g-20 summit in october. really making the case that oil stability was important for long-term investment. at these prices you're just not going to have any reinvestment in the business, and it's inevitable that production declines. i think this is the market trying to look forward into that and just say there's a level that's too low, and we need to promote more production at some point. >> you do think we've hit that level that's too low? >> well, i'm not a believer in sort of support levels that show up on a screen. i think there's the energy sector reflects that well enough. people thought support was maybe four months ago and there's further down side to that. i think the exact level is murky, but i know that very few plays are economic below 40 and certainly below 50 even as challenged. >> so opec's whole strategy here with maintaining their production levels keeping the market over supply was -- the idea was they were trying to squeeze out the shale players. is their strategy working? >> it is. it took a little longer than expected because capital has been really loose and, you know, neck week we'll have a fed meeting that might address that too. what wasn't anticipated was how long oil producers would have access to capital to keep reducing even at level that is were below. >> was something else that was unexpected their ability to cut costs as dramatically as they have to keep things going as well, sam? >> yeah. the shale business definitely has a lot of cost flexibility. efficiency gains have been a huge theme this year. you can produce with three rigs what you used to be able to produce with four. that's a factor as well. then also demand was a lot stronger than expected this year, which kind of put a bottom in the price through the summer as just drivers are on the road a lot more than people thought. >> it sounds like what you are saying is we may be nearing an end or we may be nearing a bottom. would you be buying some of these companies on this? >> yeah. i mean, the thinking is the worse gets in the near term, the better your longer term horizon is. you have that much more long-term supply that's out of the market in, say, 2017. that's the theme. if you are invested in big oil companies like exxon and chevron, you're not looking at the next six months. you have to have i a multi-year view. not just for oil. for natural gas too. not that there's no down side at these levels. certainly there's a lot of risk, and that has to be addressed, in whatever the positioning is. you know, in general we do think that this market will come back, you know, within the next 18 to 24 months and the big oil companies are going to be pretty well positioned. even through consolidation or through an ability to produce their own resource at better levels. >> is that consolidation going to come as a result of some of the restructurings that we have really yet to see in a full blown manner? you mentioned access to capital. it's more or less gone away from most of the smaller players certainly it would seem. one wonder when we're finally going to see those restructurings that we've talked about coming for some time. >> watch the bond yields for sure. i think you got to have a little more pressure and distress maybe for an extended period of time like three months, but, yeah, i think if there is more pressure from lenders or from bond holders, that's when the big oil companies will probably look to step in and take over some assets. >> i know you don't cover mlp's specifically. you cover the big oil names. a lot of talk of those on this program, how they are being beaten up. is it fair or unfair that they are getting punished, and how secure are those beloved dividends? >> i think one of the issues was that some of the companies in the space have commodity exposure that wasn't necessarily anticipated in this down turn. another issue is that even if you have a fee-based business, like a pipeline or a gathering system, you have commodity exposure too because the supply has to be there. in order for the supply to be there, the price has to be there. i think that's what's happening in that space. some is covered directly. it's a little bit of a market shock as to how directly exposed those companies are to the commodity price. sam, thanks for joining us to talk us through some strategy. >> thanks for having me. >> let's head over to john fort and what's coming up on squawk alley. >> good morning, sarah. we'll keep digging in on social media and security. eric schmidt and others taking a look at what social media companies can do in the face of terrorism. also, an early netflix investor will weigh in on that company's challenges around content cost and the man who launched the original xbox. we'll take a look at the holiday season, technology in entertainment. all that and more coming up on "squawk alley." conquer the weather. don't let it conquer you. with the capability and adaptability of lexus all-weather drive. this is the pursuit of perfection. nobody's hurt, but there will you totalstill be pain.new car. it comes when your insurance company says they'll only pay three-quarters of what it takes to replace it. what are you supposed to do, drive three-quarters of a car? 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