Matters to the markets an your money. Forget trump and xi and china. A new trade war just started well tell you what it is on this wednesday october 2 as Worldwide Exchange begins right now. Good morning, good after, good evening wherever in the world you are watching maybe you are in australia, the home country of acdc if you live around here, this is a scene in new york. It is dark get ready. It is going to be hot. Right now, it is 5 00 in the morning. It is already 73 degrees it is going to hit 89 or 90 degrees. There is your weather hit. Our first ever lets see how the markets are coming off of yesterdays decidedly cold drop. Not only did we fall, we gave up all of our gains from the Third Quarter in a single day. Futures, as you can see, they are down dow futures are off 139 points right now. Remember something about october. October gets a bad rep it is known as a volatile month and one of the worse per forthiformin months of the year the last few years, october has been relatively strong people think it is nasty but it has been relatively good something to keep in your mind here in bond, yields are coming down. Benchmark deal at 1. 3 yesterday closed that national day holiday. Military parades eunice couldnt open their window there kospi down as well european markets, you see more of a trend a lot of red they are following our markets watch what we do today to see what europe does tomorrow. Lets talk more about the macromarket setup. To our Global Market strategist at jp morgan i dont want to make too little of that manufacturing data but i dont want to make too much of it manufacturing is only 17 of the United States economy. You are going to be paying more attention to the nonmanufacturing or Services Side of the data, correct . Thats true being looing at the data, you saw manufacturing is weak but the service side is holding up along with the consumer. We have seen signs of slow down for the consumer and the component over the Consumer Confidence index that is now at about zero. Now our attention turns from the data in the Service Sector to see whether last month that came in pretty strong the pmi version had been quite a bit weaker it will be interesting to see if that echos the concern and continues to paint the picture of a Healthy Service economy there is a risk it comes down a bit. The level we saw in that survey that it would come down 52 1 2 if we start to see that fall, it raises a few concerns that the story that everyone is pinning their homes on that the consumer side of the economy is holding up you are starting to see a few cracks of that story it has come down about 2. 7 growth i look at the retail sector. Again, not materially impacted by the trade war you see jobs being shed from about last year. Thats what im pretty focused on both on the payrolls report and the nonmanufacturing survey as well there is weakening, there is weak and there is slowing. There are Different Levels there could be a long show down over the years we could hit the break and be in a recession over the next few months do you see a recession in the next year in the United States i think the risks are rising, so in terms of the level, the difference between stalling and falling in the territory, the run ray of payroll growth in a three month average has come down from around 250,000 to around 150,000 at the moment. Historically, the level of which you start with the Recession Risk is to that level. Not yet flashing a warning signal also, if you look at conference boards leading the year on year pace has slowed to only 1 only painting a picture of the economy that is slowing. Only the Manufacturing Sector that is flashing the meaningful warning signal we need to focus on that and see whether that is an isolated concern with the consumer part of the economy. If you get that red warning signal, let us know. Well get you back on the show thank you very much. Big corporate story as well. Another major u. S. Drug maker is settling a series of lawsuit as a part of the effort to avoid a trial. Contessa brewer with more. Johnson johnson has agreed to pay more than 20 million with no admission of liability. The Fourth Company to settle that case is seen as a bellweather for more than 2600 lawsuits saying the settlement allows it to avoid the demands and uncertainty of a trial and recognizes that the Opioid Crisis is a complex challenge. Other companies also settled in august remaini remaining defendants as well in the summer, a judge ordered Johnson Johnson to pay the state of oklahoma for deceptively marketing pain killers interesting to note in the news release, Johnson Johnson said, look, we account for less than 1 of the oxy and opioid prescription we havent marketed some of them since 2008 when they look back, theyll regret that jansen pharmaceuticals. They bought this they look back and think this was a great mistake we made not understanding how this crisis was coming thank you. When we come back, just because its ipo canceled and the ceo stepped down, does not mean the story is over. Facebook is doing its best to keep libra currently from falling into ob livon. And why investors are in for a reality check. Stick around more news this morning in theongoing wework saga after replacing the ceo and shelving the ipo, the company is looking to boost its Balance Sheet and reports of spinning off two more of recent acquisitions called space iq and team also looking to scale back the China Expansion plans. Fich rating down grading wework, cutting Credit Rating to cripple c plus that is deep into what they call junk territory cracks are forming that facebook assembled to build libra. Some who signed on are now considering involvement. Following backlash of those wash dogs nervous from attracting attention. Some have declined facebooks request to publicly support the Digital Currency still on tech, call it the trade war rocking wall street and vesting world that has nothing to do with trade and everything to do with trading. Later, your big number of the day. 25 that is the percent of all condos built in manhattan since 2013 that remain unsold. We are talking autbo it here on Worldwide Exchange. Your employees must love you. Thank you. Ah, you could say that. So how are things with you guys . Great. Thank you. Thank you, sir. Lunch next week . Terrific. Say hi to the team. Will do. Call my office, i will. Sounds good. Alrighty. Servicenow. Works for you. You should be mad at airports. Excuse me, where is gate 87 . You should be mad at nonseasoned travelers. And they took my toothpaste away. And you should be mad at people who take unnecessary risks. How dare you, hes my emotional support snake. But youre not mad, because you have e trade, whose tech helps you understand the risk and reward potential on an options trade its a paste. Its not liquid or a gel. And even explore whatif scenarios. Wheres gate 87 . Dont get mad. Get e trade and start trading today. Trading fees, boxed clothing and gambling the race to the bottom in trading fees td ameritrade. Clients who pay options will now pay 60 cents a contract. The same for Charles Schwab yesterday. Td up. Stitch fix reporting better than expected Fourth Quarter earnings increasing investments in technology the personalized Clothing Service which sends you clothes in a box below an analyst. The stars group and Flutter Entertainment will take advantage of the opening of the u. S. Sports gaming market. Coming up, reports of a Missile Launch a story, youve got to see to believe. A woman crossing a safety barrier going face to face with a lion dont do that. The video coming up. High protein. Low sugar. So good high protein. Low sugar. Mmmm, birthday cake pure protein. Find our coupons in sundays paper. Welcome back and good morning. 5 20 here. 5 21, the temperature is 73 degrees at 5 21. Going up to 96 degrees today in washington, d. C. We have a Great Program tomorrow called capital exchange. Yes, d. C. , im coming your way tonight. Just cool it down a little bit outside our programs, investors continue to follow impeachment talk tracie potts with us now with more from washington a lot of talk going back and forth now between lawmakers on capitol hill and those accusing each other of trying to intimidate others. The Trump Administration trying to slow this inquiry the former ambassador to ukraine will not appear today. As they continue to battle it out. Do you have any comments on the report you were on the call with president zelensky. He accuses those of trying to bully and intimidate the democrats accuse pompeo of obstruction. Well know even more about something we already know a lot about. That something is whether the state department ordered Rudy Giuliani to dig up dirt on biden and the ukraine. Giuliani is under subpoena to produce documents on his contacts in ukraine. Hes hired his own lawyer and told fox he may sue. The members of congress individually for violating constitutional and civil rights and for trying to violate th attorneyclient privilege. The president tweeted the impeachment inquiry is a coupe attempting to take away the power of the people. The president has a prescheduled News Conference on a different topic at the rose garden hell likely be asked about this hes still very focused on identifying that whistleblower who is protected by law. I have a feeling your in stikts are correct he cant avoid tweeting or talking. Cool it down in d. C. For me today. Other headlines including new reports of another Missile Launched by north korea. Phillip mena is in new york city with that and more good morning, there are new reports out of a north korean Missile Launch they say two Ballistic Missiles were fired and one projectile made it into the waters of their exclusive economic zone. This comes after north korea had agreed to resume talks with the u. S. The impeachment inquiry is firing up trumps base raising a whoping 125 million in the Third Quarter to over 300 million double what obama and democrats raised at this point in 2011 for his reelection campaign. File this under lucky to be alive and or what in the world were they thinking a woman who crossed the safety barrier in new york had a Close Encounter with a lion. Lucky for her, the lion kept to himself. The zoo said her actions were unlawful usually the story is someone falling in dont do that. By the way, i love the shirt how was the disco last night pretty good i dig it my next life, im going to be phillip mena im never doing that again. I dont even know what that was. Coming up, dont care about oil and gas . Well you might care about the American Economy well show you how and why a shale slow down could slam the nation hes at it again. The houston Mattress King just made one of the biggest sports bets in American History upbeat music no coverup spray here. Cheaper aerosols can cover up odors in a flowery fog. But febreze air effects eliminates odors. With a 100 natural propellent. It leaves behind a pleasant scent youll love. [deep inhale] freshen up. Dont cover up. Febreze. Red arrows and down markets futures point to a lower market after stocks stumble red flag what the Energy Sector might be telling us now a warning, our Hedge Fund Manager says cutting off capital flows to china may be just the beginning for washington you are watching Worldwide Exchange here on cnbc good morning. Welcome back here at just about 5 30 happy wednesday. Im Brian Sullivan from here at cnbc studios the markets are cold but on the east coast, its going to be hot. 90 in new york, 96 in washington, d. C. It is, by the way, october 73 already in the bigapple and new jersey hot outside. Icy on the markets the dow falling 343 points giving up all the Third Quarter gains. Dow futures given up 180 points. We get a better read as the hours creep on and traders start to fill the desks. Dow futures indicating another lower open october has the represent of being a volatile month and one of the worse performing months october got a bad rep. The last few years, october has been strong. We think october is bad because thats when the 87 crash happened the last few years, october has done well. Buyers came in yields came in yesterday they remain down 1. 63 all these moves in the last 24 hours stem from this u. S. Manufacturing purchasing managering index the ism manufacturing number came in at 47. 8. That is the lowest reading this is a 10year chart. Here in 2019 this is 2009 remember what happened here. Financial collapse, it popped back up, thank you oil and gas you can see that number has been weakening. That number below 50 really freaked people out you have the nonmanufacturing index. Services, that is tomorrow servicing a much larger part of the economy. I can guarantee you, everybody here and everybody in wall street is going to be looking at that number. That number is far more important. If that number confirms this number, watch out. That number brought new attention to the economy we cannot talk about the industrial economy without talking energy you know how weak stocks have been that data has been terrible there playing havoc with the numbers. Looking at shipments to oil and gas on the year. New orders have fallen in recent months that may not sound like a whole lot. Talking hundreds of millions of heavy equipment being made, that matters. That is a twoyear chart in august, weve been down 9 of the last 12 months last year, there were 863 oil rigs in the last year. Last week, 713 much of that drop coming from texas. Drilling rigs in texas have fallen by 111 rigs from a year ago. Each drilling rig is a big, heavy pipefilled piece of machinery. It takes many vendors. Here is the most important thing to remember, in 2008, energy single handedly kept the country from falling into worse depression oil and gas was the only industry to add jobs in the country. Each rig represents 75 workers directly or indirectly we may start to see the slow down on the big daddy on all of the numbers, which is the monthly jobs report. The data sending stocks on the slide yesterday, how are those charts shaping up. One of our favorite guests and a guy who is going to point out despite all of our hoop law of the best nine months, we have only now gotten back to where we were a year ago. Hi, brian absolutely the dow made a high last year tomorrow on october 3, 2018. It was at 26,500 now we are just below that again. The major indices dont go any lower than that. Weve just regained. If you look at the underanther, they are all down about 10, 11, 12 . That divergent market going on i feel like i can editorialize a bit with that swing in the data coming out im sure there were times but i cant remember any times when that data was not ignored but moved the markets that much. It told me the market seems to be the strategy underneath the entire year, we have not rallied on Earnings Growth but on multiple expansion on the expansion of trade on trade optimism. The longer this trade war drags on, the worst the impact will be on the macroeconomic data. We see that globally basically, thats a Global Manufacturing segment building i think the market will be running out of patience shortly this is the first time theyve run on the data. This trade meeting next week on 10th of october is really critical markets want to see measurable process. Manufacturing here is a small part of the economy. How snoornt Services Number tomorrow now at 10 00 a. M. , will be on the Services Number, i imagine the question is, will we see a spillage into the Services SectorConsumer Confidence has slowed down a little bit in recent weeks. If we get something out of this meeting, we have a lot of potential to move higher to the extent that we dont and we get some interim deal, rallies need to continue to be so going into this Fourth Quarter, Consumer Confidence is important to watch well see this with earnings Earnings Growth is negative. It is margin compressions on the side of companies. Well have to see how they react in terms of hiring going into the Fourth Quarter i like that if they do rally, you want to sell those rallies have a great day talk to you soon thanks, brian vaping Industry Leader juul facing a growing threat from rivals now all amid growing regulatory scrutiny our first look at how a recent spike of deaths and injury is reshaping the market juul with 72 of the sales market but has slowed dramatically to 16 over the past few weeks consumers are increasingly turning to juuls competitors. With 2 of the market, they saw its sales grow by 31,000 . Showing customers are looking for options beyond juul. Seeing sales increase by more than 1200 my blu seeing growth slowing Parent CompanyImperial Brands lowered guidance saying growth would fall to zero snus is the majority very similar to chewing tobacco in a pouch is banned in most of europe. Are there any e cigarette alternatives iqos has a lot of upside. The fda ses it has less toxins it heats up tobacco. It releases the nicotines that way and you avoid some intoxication inns by not setting it on fire lets find out what else youll be talking about today. Mattress mack. Youve seen a lot about these smart watches and jackets. Google and levi are teaming up the duo first introduced the jacket in 2017 upgrading it with new features control their music, answer calls, snap a selfie, get notifications and control the world. What . A Houston Furniture salesman just made one of the largest sports bet in the world. Betting 3. 5 million that the astros will win the world series should they win, he would walk away with nearly 8 million. Hes been running this promotion guaranteeing a refund if the castros win. It will cost him 15 million it wont cost him anything. I know someone who knows him well hes a genius promoter he has insurance policies. If they win and he has to give everybody free mattresses. The astros are probably the best team in baseball. We should go to a game we should you are wearing red did you stay up for the game last night i did not i did because im an idiot the nationals hosted the brewers of milwaukee in a battle to see which team was headed to the postseason things going pretty well for the brewers. Everything came crashing down in the eighth inning. This is a tough miss missing a crucial catch. The ball went through the glove giving the nationals enough time to score three runs. Brewers lost their best player to injury. The nationals will play the dodgers of brooklyn. This is really tough for him. By the way, contessa brewer, no relation to the brewers and lived in milwaukee they loved it when i lived there. Only a couple of years ago. I hate to see the game end like that nationals versus the dodgers sure there is hong kong and middle east. We are talking about venezuela and why citco may get sold because of a hedge fund. Servicenow put our workflows in the cloud. This changes everything. Youre right sir. Everything. No not everything, i mean youre still blatantly sucking up to me gary. Brilliantly observed, sir. Always three steps ahead. Six steps ahead. Sixteen. So many steps. You done . A million steps ahead. Servicenow. Works for you. You mighyour joints. Ng for your heart. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally discovered in jellyfish, prevagen has been shown in Clinical Trials to improve shortterm memory. Prevagen. Healthier brain. Better life. Fourth quarter wiping out all of the Third Quarter gains dow futures down 203 points now. We are back right after this the world is built for you. So why isnt it all about you when it comes to your money . So. Whats on your mind . We are a 97yearold firm built for right now. Edward jones. Its time for investing to feel individual. Welcome back much of the worlds focus has been on flash points like hong kong and the middle east maybe forgotten in all of this is the economic and humanitarian crisis still going on in venezuela. Houston based citgo. Able to make a debt payment to russia all of this as American Court potentially paved the way for venezuelas most prized asset, citgo to be sold. All of these things have been clouded with impeachment talk. This has been in the courts for years. Suing to take control. Big ruling is it likely at all that citgo 10,000 american employees, could be seized and sold at auction . Very much so. The attachment order has already been served on the parent of citgo. In the court of appeals in philadelphia removed the stay preventing the hedge fund from executing on that judgement. They are now free to do so theyll prepare the process of auctioning off the holdings to raise the billion dollars they need to be paid. Theyve got three big refineries, thousands of employees, gas stations all over the place and this small hedge fund in new york city could end up taking control of an asset potentially worth 8 to 12 billion. Exactly although it does have a lot of debt on it. There is 4. 5 billion of debt and another 1. 5 billion owed to bond owners. In addition to russia that has a lane on it for 1. 5 billion. It is a layer cake with debt essentially mortgaged. It is worth money as a growing concern. How do you think maduro paid the russians back . They had gold they defaulted to the russians twice but they are depending on the russians to save their bacon. Oil production has fallen 20 of what it was, they are making sure they pay the russians for the guns they think theyll need to defend against columbians or others who will try to remove them from power. Russ, you are the one to follow it. We appreciate you for joining us mat hnhattan real estate ha its worse Fourth Quarter lets talk salt. State and local taxes. Many blue states are seeing red. In d. C. , looking at two different states and two different approaches a federal courtrooms against four states that sued the u. S. Government over the new 10,000 cap. New york, new jersey, connecticut and maryland tried to argue the move was unconstitutional new york alone estimates the salt cap will cost residents 121 billion while in effect the judge wasnt having it he dismissed the case. Adding states have failed to show that the financial burden is any addition. They are seeing revenues go up as they change their own tax code i live in virginia that is a state that has enjoyed a great windfall theyve taken a different approach paying us back to the tune of 420 million checks are going out now 110 for individuals 210 for married couples it might be time to schedule a date night this is why i love also my home state of virginia they are smart you guys actually do something about. It. Virginia is arguing there is a lot of overpayment in the Previous Year and thats why they need to give this money back there was a lot of controversy of how it should go back should everybody get it or do those who are lower income need it more to pay bills or does everybody need it to go out to dinner and enjoy a nice bottle of wine. I hope you did enjoy some wine market ideas for the rest of the year when you agreed to do this interview, you didnt realize markets would tank what are you advising clients do now given that recent concern . Clients are really locked up right now. We are advising them to get a little more defensive. We like quality names. We like looking at preferred space where you are getting a little for fixed income. We are advising people to pull back how do you vest in a preferred stock . Really one of the most efficient ways to get that exposure you can look under the hood can you see exactly those issues a lot come from the Financial Sector looking at financials now, growth is slowing. We dont see credit issues we just dont see a lot of growth you are also pointing to fintech . It has a very Global Public market a lot of these ipos. Like square and more this space can continue to grow. They are just starting to take over digital payments, peer to peer funding and crowd sourcing. So only 2 of cars sold last year were electric one area we like are battery producers. They are building batteries for your iphone, i bad and for electric vehicles. I appreciate your time. Thank you for joining us electric cars, fintech thank you. Time for the rbi, the worst start to october since five years ago when the index fell 1. 3 to begin the month. That doesnt mean the month wont do well overall. That 2014 drop did not doom the market in 2014, the s p 500 went on to gain 3. 7 for the rest of the month and jump nearly 6 for the rest of the year bottom line here, the poor start was not a health of the market there have been 13 prior octobers going back to 1928 that started the trading month with 1 or more drops october always volatile maybe not always disappointing well see. Thats it for us squawk box begins now. Good morning, red arrows futures pointing to a lower opening. Global hot spots reports say china will take a harder stance in Hong Kong Facebook under fire. Key Financial Partners are said to be reconsidering ties to libra. Squawk box begins now. Announcer live from new york where business never sleeps, this is squawk box. Good morning, everybody welcome to squawk box on cnbc. We are live from marketsite. S p posting their worse day in more than five weeks the dow and s p managed to give back all of their gains. Dow was down 1. 3 . S p 500 off by 1. 2 . Futures this morning are wasnting another red picture for you. Futures down by 60 s p futures down by 20 all of this because of concerns about manufacturing said that number did show a big