Set for another lower open with a rough start to q4. Wework has been jumped. Downgraded by 2 gnashes. And shares of stitch fix tumbles. Company forecasts a soft quarter ahead. Stocks continue their downward momentum today, a day after the ism Manufacturing Index fell to its lowest level in a decade yesterdays selloff erased the gains for 3q we did get Economic Data in the past hour. Adp says private sector added 135,000 in september that beats forecasts by about 5,000. There was downward revision to august, though, and refinitiv, jim says, adp estimated bls in eight of the last ten septembers well watch for friday right i do think that there is a pall cast over this market since the impeachment announcement every piece of data that comes out, instead of good things, bad things well talk about stitch fix. The quarter was Good Business is good they decided to invest uses the word invest over and over again in a Conference Call. Invest to make the business great. Everything that she said in april would have sent the stock to 27. Today, it sent the stock to 17 this is the palpable gloom that we have that if youre investing, forget about it if you think you can grow, you wont be able to and a lot of this has to do with washington also a lot has to do with so much money went into all these ipos and there is no new money coming in. And i really think that stitch fix is emblematic of this particular moment. I listen to the call and it was so Glass Half Full to me i have her on friday but it is glass quarter full too. Not even like glass half empty what i saw i tried to read the Conference Calls in a vacuum, dont look at the stock. And i honestly, i do you come out of the chamber i was in the cryo genic chamber, i wore socks and i was protected. The thing that was interesting, i said, all right, i could see this be at 24, 14. You can see which theyre choosing and it has to do with the belief that it is not worth investing, we just want earnings right now. What we really want is mccormick, frenchs mustard and franks hot sauce. Tell me a bit more about the why you think the impeachment inquiry is having an impact. Is it because it will delay other potential legislation that would be helpful or have an impact on the trade negotiations with china the ustr, or is it, in and of itself, i dont follow why. Sure, a couple of things. One is that when i spoke to Speaker Pelosi with weeks ago, i felt, look, it sounds like there will be a deal for canada and mexico you had abney on yesterday, pretty good usmca. He needs the deal really bad. Plain vanilla company, needs the deal a lot of u. P. S. S out there i also think that the chinese can stiffen the resolve because they can figure they can wait out President Trump. But you pick up the paper today, im not as fearful as Elizabeth Warren as wall street is, but you pick up the paper today and youve got the new york times, sanders and warren trying to figure out how to make people who are billionaires lower than billionaires i dont know, david, not a billionaire, so you may have read that and not been as frightened if you are, it has a leninist feel to it, if youre sanders, if youre a billionaire, because it is wholesale redistribution so you read that, you e all trye billionaires, maybe trump is not doing as well. Whose leader sanders raised the most money what is he saying . Hes basically doing a socialist agenda i dont think thats too much of an exaggeration, hes a socialist agenda. You read the commentary in the survey yesterday, ism survey, you dont care so much about that it is more about how our supply chains have been collapsed i do think, look, were not a manufacturing country. 17 . Thats the other thing i keep hearing. 12 of the economy, 14 of employment, twothirds of s p earnings are in manufactured goods as opposed to strict services. Look, i think that when you look at the big companies, you can argue that, i dont know, the ones that trade off of are caterpillar, emerson, 3m, honeywell. Used to be ge. Those are the ones regarded as industrials, the rest of the economy that we trade is alphabet and it is apple, apple is a manufacturer, the biggest, they dont trade like that microsoft is regarded as a manufacturer they make something. They make air in a box, it is all intellectual property. Faang and m are regarded together as companies that are big exporters of things we make. Exporters. Big exporters. Yes not necessarily not theyre commerce. Im saying theyre not centene and not united health. Theyre not healthcare companies. Im just saying that, look, i dont want to conflate it. I say industrial, to this market, thats free port and we dont have a lot of industrials to trade we used to a lost peopft a lot of people feel they have been wiped out were not going to value anything as highly as we did before because there is a genuine thought well wait a second, a transaction tax. Sanders you read what sanders is talking about, he wants to the word that they use is confiscate he wants to confiscate i remember reading it last time too, he was on he raised a huge amount of money. Transaction tax, every trade that took place. Okay. You see, if you have impeachment, it is it continue during this period, maybe it increases the likelihood im just giving you the mind on the markets. I dont thats not oh, im selling because im afraid Bernie Sanders is coming for my money. Elizabeth warren. Oh, elizabeth, or Elizabeth Warren shes only 2 . It is only you know what i think trump is going to win big and were all going to ma ing ting to mak. Just saying im saying there is it is a different tone do you think the tone is not different . You got all those houses, pen his on the dollar. Dont take my houses away more shortterm, though, if there is any kind of truce or peaceful discussion next week, and if the market buys it, its going to stick this conversation is going to be i think that there was something that happened yesterday, this is what im talking about, listen, stop tweeting and listen to me. Im talking about pay pal. Yesterday, something happened to pay pal, probably the most significant announcement that has come out since the trade talks got bad. The chinese okayed pay pal to buy a company, in china, and become a huge credit company, may not be initially, in china that was a signal, that, look, were willing to deal here it meant nothing did you see the way mellanox jumped at the close . Thats a signal theyre going to let nvidia buy mellanox. It hasnt happened. Im saying that chinese were making singles because this market so negative, no one paid attention to the pay pal deal i want dan shulman on right now. Dan shulman is the ceo of pay pal, thats the most major breakthrough for a financial, nobody cared were so negative. The commentary last night about more signals of goodwill going into the meeting, no doubt about it. Yes, our president wished him a happy 70th i dont know i wouldnt have wished him happy birthday but i do think that there are positive signs, but theyre not regarded as positive theyre being overlooked Financial Times led with the pay pal story. Nobody cared nobody cared because United National foods had a bad quarter. I just have to tell you, im fed up with the negativity getting over stop it. I didnt do anything. The podcast people think youre making fun of me with the faces. Youre making the faces. You dont think things the tone has changed look at the stitch im using an example. The mind set of the reason people are looking askew at the investment mentality is that others are being more cautious. Yes and i look look, again, i point out that fix is the key to this market stitch fix . Im saying that if stitch fix had reported in may, march or april, everything they said would have been well received. It is a reflection of the change in mind set thank you. Youre welcome. Live long and prosper remember spock remember spock and the whales. Versus i am going to put an ear wig in your head right now rath of con by far the best, right in there i think that doesnt mean it cant switch because of what you said i think when you pick up the times and read about what read that article. That article did you read that article about warren and sanders and what theyre trying to do and what it would do to jeff bezos now remember what lenin said if the rich are unhappy, it is their own damn fault we have lenin has to be invoked and not john, interesting time no nothing im with you im 100 with you. Youre not with me. While we wait for auto Sales Numbers theyre going to be great. Wework is the story today, when it rains, it pours. S p cut it by one notch. Theyre now triple c plus as we get news theyre trying to spin off some recent acquisitions don peebles on yesterday, big developer, says hes on the lookout for defaults. Yeah. No shortage of challenges facing this new Management Team that wework as they try to skinny down the company to the core business and sell some recently bought assets. And focus on i think the key thing last week, theyre not leasing new space, which for a gloe Growth Company seems to be a bit odd. You can go down a number of roads here that dont lead you to much of a value no. For this company. Didnt you feel like it is i dont want to use the b word, but try to get public, they were unable to, and i think at this point it is very much unclear when they will try to are your friends behind the scenes more worried about this than the Warren Sanders stuff. I think locally certainly, in new york city, in terms of the office space market, if youre a large real estate company. Most of the places are filled most of them are filled. A lot of debt continue to raise capital, we talked about it yesterday. And the question will be can this new Management Team instill enough confidence in both their existing investors and were talking about softbank and potentially others that they can raise necessary amounts to continue to move towards what they think will be a break even number at some point, that will show the Public Markets this is a real business, this can be profitable but even then, what are you going to go public at . Youre not anywhere going to get anywhere near the Technology Multiple 10 billion . 10 billion i dont know. What is the number . 10 1 2. Softbank in for if you crunch the debt, have to crunch the debt, right . Isnt that what the thats what the market is saying. Thats why theyre thats why theyre i dont think thats good for suboptimal situation. It is a suboptimal situation, as jim cramer likes to say. We have a few of those things going on well get cramers mad dash, count down to the aprili inopenl check out the podcast. Cnbc. Com podcast take a look at premarket as we keep our eye on the reaction at ism anadtoy. Ckn montd p da i wanna keep doing what i love, thats the retirement plan. With my annuity, i know there is a guarantee. Its for my family, its for my self, its for my future. Annuities can provide protected income for life. Learn more at retire your risk dot org. Were getting ford numbers phil lebeau is in santa clara today with those good morning phil. Good morning. Slightly better than expected results for the Third Quarter from ford. Decline in sales overall decline of 4. 9 . The estimate was for a decline of 6. 1 . So little better than expected the strength in the Third Quarter, clearly still remains with trucks and suvs fords pickup business up 5 in the Third Quarter. Most of that driven by increasing sales of the ranger, the midsized pickup. Overall for the f series, sales down 6 . Not a surprise in that regard. But, guys, this is the number that is going to stand out the average transaction price, what we pay when we go it a dealership, if you went in a ford dealership in the Third Quarter, on average, the buyer is paying 37,900, up from the Third Quarter of last year they are continuing to move those prices higher, and theyre getting it, with overall sales declining 4. 9 in the Third Quarter. David and jim, back to you. Phil, thank you we have gm is the story we havent even touched on. I thought look, what the f 150 is selling really well ford needed that win ford is trying to do india right, latin america the stock has been awful. Yeah. Thats a positive. Were here at the board, of course, because were going to do a mad dash. J j, another name in the news. 20 million roughly, they settle the ohio litigation for opioids. Yeah. You can say they when they took on in oklahoma, refused to settle, went on, and they ended up losing at 572 million judgment. Which theyre appealing which theyre appealing this time they have got a settlement course. There is a lot of people who think that j j correctly is 1 of what sold looking at j j would argue strenuously they are really one of the better least likely to have done bad here this is a way out. A settlement, people just want j j to write checks, the shareholders they know they got a aaa balance sheet. On principle, they dont want to write checks this shows to me theyre willing to write some checks and that means that maybe there is an end to this Long National nightmare however, there are still hundreds if not thousands of lawsuits thousands they have to be consolidated this is something my travel trust owns j j, never heard of it, i did not expect talc and opioid, it is a pretty good company, but anything that shows that they can settle and get some of these things done is regarded as positive because the stock is the cheapest it has ever been, which is what attracted to me. Alex gorsky is deng a gooing a. It is lumped in with teva and m mellancroft. It is no con ed you had them on last night. Up 20 . 20 . Yeah. No risk our bills keep going up yeah. My god. Bill this summer was up 5 eat it. Ridiculous. Eat it. If i taxed your wealth, it is look a property tax. Im well im going to im well below. Tax your suit. However, you i get hit bad on a suit tax. In the warren zone. Were in the opening bell zone here on squawk on the street. We got the beginning of trading ten minutes from now stay with us yeah, thats half the fun of a new house. Seeing what people left behind in the attic. Well, saving on Homeowners Insurance with geicos help was pretty fun too. Ahhhh, its a tiny dancer. They left a ton of stuff up here. Welp, enjoy your house. Nope. No thank you. Geico could help you save on homeowners and renters insurance. The ism echoes around europe, asia and this morning again on wall street futures down 183 for the dow well see if anything changes when the opening bell rings in eight minutes. So. How are you feeling . On a scale of one to five . One to five . Its more like five million. Theres everything from happy to extremely happy. Theres also angry. Im really angry clive actually, really angry. Thank you. But what if your business could understand what your customers are feeling. And then do something about it. Turn problems into opportunities. Thanks drone. Customers into fanatics change the whole experience. Alright who wants to go again . I do i do i have a really good feeling about this. Youre watching cnbcs squawk on the street live from the Financial Capital of the world. The opening bell in just under five minutes another busy wednesday as we got off to a rough start to the quarter, although bespoke had good numbers on octobers that have a bad first day and end up having a good month. I read that, this is, again, the mind set of the market, i read that, i like to read bespoke, no, thats too positive in the zeitgeist, needs to be counted. Remember, people say, wiped out the whole gain of the Third Quarter. Wasnt a big quarter headline bait. Headline bait i think that the bespoke thing has to remember that october is volatile, you do have a lot of money, flows coming in and out, we need to see the ipo window close because there is just not enough remember, all the deals, lets take peloton, all right . There is no money that comes in is indexed. Thats the way money comes in, 55 to 60 of the money is indexed. So lets say you have 40 of the money comes in, you have a huge amount of money coming out every single month to bonds. Where is the money to buy peloton at 22. Who wants to go buy peloton . Who wants it it is a please go away peloton that brings to mind the story that crossed last night about vcs in San Francisco holding meetings, trying to convince young startups to go direct listen rather than ipo after what happened in the last month. Right, there is bill gurley has been on our air, Venture Capitalist, talking about the studies they have done in terms of direct listings and the getting out the friction, the transaction costs and so many other things. That said, what they were talking about is probably going public earlier in their growth curve. It is late for that now. It is late for that now. But you could make that argument, jim, that a number of these companies, because of the access to private capital for such a long period of time, did not hit the Public Markets at an opportune time, the growth curve had changed. We made the same argument about facebook, but then they had a reacceleration went from 18 to 100 to 200 and change i continue to think that facebook is doing many things right. And that there are no more than any of the others, there is some guys backin lib libra, it is not here yet. They got to do more to empower people, not to create a currency but, look at slack, slack is a really Great Company and really bad stock. It never found any institutional home look at that you think thats you said something, direct listing. I dont like direct listing. No. You need the road show to get people all excited and the road show, for peloton, was really good. Do a road show anyway they do. Does that look, is slack the Venture Capital would argue, youre transferring wealth to the hedge fund guys, who sell the stock. I would say if i were goldman sachs, which im not, i would say, look, were done, we have hurt our clients so badly on the investment side, go away go away from my window. These are not the ones we want smile direct, lyft. Smile direct. Smile direct frown direct want frown direct. Podcast heard. No teeth at all direct. Oh, geez, really . Empty mouth. Dentures direct dentures direct. Wow, dentures direct. They hate me already what do i care. Youre not in the business to be liked, jim. Not trying to make friends remember lou by npanetta, th would be boo, but really lou im not juuling but im jeweling some argued regional survey, there is a split between ism and what some of the fed regional surveys have said. I know i can easily make a case that gm will hurt things. It is a big darn company so if you start looking at companies that are involved with it, youre going to be negative. Look at this is a company that is indoor and outdoor lighting, a lot of commercial, institutional. They reported a really bad number there is something i fear. Thats not part of the it is not. I want frenchs mustard. I want mccormick i want david, the sars group. What about it that is a big group. Can you give me a little no i mean, youre the m a guy, can you give me a little creative efficiencies in consolidation, it is a growth play they need scale. What do you want i dont know thats what you say for every single one. Every single one. I could try that talking point on any deal ever the reason i mention it, gambling is a new growth area. It is being legalized. People want to get ahead of it i see networks embracing gambling starting to talk about the line. No longer just talking about companies about what is going on, say, with the eagles or the jets theyll say, listen, the eagles are favored by 14. We havent had that stuff since jimmy the greek. Cbs sports. Remember that that was the benchmark. Big deal. And brent there is the bell at the big board, new York State Department of Financial Services celebrating the eighth anniversary at the nasdaq, a medical Technology Company focused on womens health. Jim, you mentioned gm, day 17 of the strike, uaw rejected the latest offer, more layoffs in mexico this time as their supply chain gets affected. Huge transmission, transmission rate. There was a rumor last week spread that i hated which said the deal things about the settle, gm has got a this is a very tough moment for gm stock never goes up. Not hyperbole, right stock is unchanged they got to do something to make it so that they do not pay more because as it is, youre not allowed to run to mexico anymore. That and their factories in mexico are short parts to make the trucks that are the big sellers, right yes. It is look, it is fords time to just i talk about, like, ford yesterday, india had this great announcement and impairment, it is one step forward, 1 1 2 steps back for ford gm this is their time. They get a good deal, people want to own that stock you look at these the auto segment is the worst part of the u. S. Economy it just is you saw the journal piece yesterday about these extended auto loans as a signal that the american middle class cant afford a middle class lifestyle. The fed has to cut because a lot of these loans these loans are based off of the fed funds rate ford told me a huge hit, huge hit that the fed is so tight i know it sounds like that will help with all the other things that the middle class is how about child care and medical costs and is that going to help . Senator sanders, im sorry, david faber, im not sure. What im talking about is that the there are many loans priced off of the fed funds rate the president is not idle when he says this thing is hurting. You got a Home Equity Loan priced off that rate ford told me again and again that rate is incredibly important and we cant just dismiss the idea that the fed is too tight. It is. Okay. Yes he wants financing for his trade war. Thats thats what the president wants. He thinks that powell is letting us down because powell doesnt understand that we need a concerted effort this is the president thinking, that, listen, i need you on board, jay powell, im going hard and what are you doing . Youre undercutting me and youre perhaps electing Elizabeth Warren biden is in the talked about. Hes not talked about by you. Hes talked about by some other people. Hes not far behind in New Hampshire and iowa. I know how to put this. Again, i know this was reviewed, when i said this, it was viewed i said it, i said when you speak to wall streeters, they are terrorized in fear of Elizabeth Warren i know that came out as a paid announcement remember when senator warren did that yes. Shes a shes her supporters saying, great. Yeah, great look, wealth tax, david, would be a new way to tax wealth lincoln didnt go for that lincoln was in favor of an income tax. To become a nominee and or win the election, that there is any chance that a bill like that would be able to pass. Okay. I think that it is a false construct, it is a straw man, you should not be investing as i said last naight on the prospect democrat sweep and president warren thats not the way you should be investing. All of which back to big picture themes we hit on, goes back to the disparity in times of wealth in this country being the largest ray dalio, published yesterday. Even with hitler. The largest wealth on political gap, leading to the emergence of conflict between populist and so it seems reasonable to worry the gaps between the rich and the poor is there anything he just said that isnt being born out day to day . Munich, the price of peace. Great book by Telford Taylor it is out of print if dalio knew his history better, he would read the price of peace not too critical of him. You may be more well read than ray dalio the best book about what happened teleford taylor, it is fatuous to compare this period to it is just fatuous. That leads to the world war ii and the holocaust. Im just not you dont want to believe it. No, dont want to. You dont want to believe it. It is uncomfortable. Why do the germans never use any fiscal stimulus . Because they remember the savings rate is sky high. They wreck the savings rate and it brought the National Socialist party power. I dont like i do not like the analogy. To be fair, he says these elections coming up will be the greatest class we have seen in our life times nothing were talking about every day that doesnt seem to bear that out. It is a critical he says approaching the extreme clashes of the 30s. I just think you have to be very careful when you invoke that you have to be very careful. Dalios job is to see around large quarters, which hes done. As much as we dont want to talk about it, right . We are more as nationalists, 32 different nationalist parties in in the 1930s. In europe. And that was a frightening time. We have nationalist parties spreading. Remember, that was a violent time already and i just think that youre talking about violent social revolution when you bring up what hes bringing up. Violence and im not seeing that and i hope we dont see it i think you have to be careful the contrast of period of tremendous violence and lawlessness with what we have right now. Shorter term here, we did get an update out of delta this morning. Providing a q3 epps revenue in line with expectations Morgan Stanley on southwest, we know how much trouble transports had since the last index. They let us down. Look, i think fedex has been fedex was the only stock on the now there say race to have a lot of stocks it is fragile. No resentment to dalio anyone is allowed to make those analogies. I just think if you felt that, you should sell Everything Everything and buy gold. You look at fedex, which we just got to wonder if an activist is going to show up there. Good question i dont know anything im not presaging i heard something. I dont. It is just an obvious thought. That board has to be ready for somebody coming. I think we had i will take i brought up longterm serving ceos, a great ceo. I saw in davids mind the following. It is in his mind. Right now, it is in his cortex, maybe your cerebellum. Ill give you a parabellum for your cerebellum. A lot of empty space in there mostly. David farr, long serving ceo of emerson under fire because people feel that it is time for him to move on potentially he said hell move on 2021 there is a group of people a group of people right here in your cortex that say that it is time for fred smith to go. Right thats what you are really saying you didnt want to say it. You said it for me. I did this stock i think fred smith is one of the great executives of our time i think that on that Conference Call there was an open re bebelo call what you look at is perhaps there is going to be a real change coming. And if you want to vote for rebellion, listen to the United Natural Foods call, theyre begging for please help us, please help us, tell us how you do it, enough. Thats how you get a stock down. Stock is down a lot. Big hit was that a similar rebellion on the call . That was just that was insurrection it is down 26 . Small market cap company. Ford is quickly ford is quickly back to the probably call it a sixmonth low. Down 5 . If you missed phil lebeau with the numbers. Overall the number was okay. Trucks up 88, respectable suvs down 10 is a surprise, i guess. Car sales, down 29 this is a quarterly number 7 yield. Which nobody trusts. Six times earnings do you know micron is now below six times earnings you mentioned yesterday, as a linchpin. Linchpin. It is not linchpin is rocky holding in like a chinese made screw. Did you see ameritrade met late yesterday met schwab with the move to zero not helping ameritrade stock, which lost a quarter of its value. Unbelievable. That was incredible to watch. Commission wars, should say no Commission Wars is that because of robin hood, men in tights, how much o it is robin hood men in tights the market share is fairly small. Yeah, but did you see the piece, which said, it was in the new york times, quoted executives from schwab saying were not being hurt, dot dot dot yet. Theyre being theyre taking aim. Their asset base is so big. A great move for them. The greatest asset fwgallery of our time theyre better than everybody else. Yes what do you how much money do you make when you dont charge i dont know. Charge us for order flow . It is not that i think rich was on yesterday, talking about ameritrade, 25 of their profits and 60 if they go to zero, of that 25 would be impacted not insignificant. No, it is not got a real wholesale selloff here, man. Yeah, were going to lose 2900 here in a bit really gloomy other than costco. Lennar, lennar, decent. Yeah, lennar, yea. Revenue ahead there goes your housing print. Stars group, because of the consolidation. Charter is up greg move ffett will join us lar in the show. Talking about the profitability of the capability in terms of margins, how strong they have been as they move to broadband based models and away from just distributing video i like that positive things thank you, david. Thank you. To bob pisani that was the open here. 5 to 1, declining to advancing stocks, not much up today. Gold is up not much else. A lot of stuff at lows for the month. One month lows, lets call closh low. Retailers, industrials i love covering ipo this is the lowest level since february were seeing for the renaissance ipo etf. A lot down 1 to 2 . A lot of negativity out there. Pretty darn good year though i want to point out, our friends over at the bank of america, thank you, through the Third Quarter, total returns on the s p up 21 thats total that includes dividends 2 this is the best first three quarters since 1997. So i know everybody is worried about the next six months or so. But we a pretty darn good year going into the Fourth Quarter overall. The important thing here about what is going to happen in the Fourth Quarter, a lot of people talking about selling their losers more and buying winners as the active managers try to catch up i dont know it has been pretty wide dispersions between winners and losers the techs have been great. The semiconductors, amd, there is Apple Holding up a good part of the market, up 42 , not a typo, year to date for apple the dispersions really is why. Look at the losers in key groups, retailers, healthcare, some healthcare, pfizer, united health, humana, all down double digits here. We have seen some of the energy stocks, you know whats going on there, been a complete debacle, halliburton, stuff down 20 or 30 . If you look at the energy laggards like halliburton, cabot, national oil well, all week as well here. Put the Healthcare Energy laggards up there. Theyre all weak here. The retail laggards, targets, had a good year, walmart had a good year. A lot of damage here with macys, gap, nordstrom, kohls, wide dispersions between the winners and losers one thing, im not sure there will be a selling of the winners. If you look at gap, the s p at the close on friday up 20 this is fridays close the average Large Cap Core Fund active Management Fund was up 19 . My thanks to cfra for pulling this out these are the guys importantly who do the active management thats a pretty close difference that 1 difference, thats the fees that theyre charging so active management has not had a bad year this year im not sure well do a lot of window dressing, lets catch up because we have been lacking behind story on ameritrade, david just mentioned this, market cap, ameritrade, 18 billion right now. Not helping with that announcement that theyre going to zero commissions. I expect etrade to come back very soon, announced theyll do the same thing where we are today on this is very simple. Not a lot of traders that do a lot of active trading everall. The key thing is that lower fees, lower anything, lower commissions will be good for the consumers. Will see consolidation and slower revenue greowth and technology will help the companies here and customer retention, thats the key for the entire brokerage industry. Right now near the lows for the day. Carl, back to you. Thank you weve been watching ford on their numbers, now getting Fiat Chrysler for that, back to phil lebeau. Once again, an automaker reporting slightly better than expected sales for the Third Quarter, Fiat Chrysler sales up 0. 1 fractionally higher. The estimate was for the decline of 1. 1 . And much like ford, the strength is in pickup sales the ram brand sales were up 15 in the Third Quarter jeep sales down 2 if you take the numbers from ford and Fiat Chrysler in the Third Quarter, gm in 45 minutes, along with the september auto sales reported yesterday, year to date, the pace of sales in the United States are above 17 million vehicles now, i know we have a long ways to go this year, if it holds, this will be the fifth Straight Year with auto sales topping 17 million. Guys, back to you. Phil, thanks. To the bond pit as well, Rick Santelli at the cme. Good morning, rick. Good morning, carl. There is a couple of things i consider quite important yesterday. And they dont seem to be getting talked about much. Didnt read about them much. My favorite publications first, is, of course, that rates are going down, but the curve is flattening most talked about the ten year down yesterday, came way off from its highs because yields started higher yesterday but only ended off 1 or 2 basis points thats correct not so for the short end look at today. Look at three day chart of twos. Look at that pattern realize right now were down five basis points in the two year now, lets look at the ten year threeday pattern. See the way the right side is higher, more continuity, the big drop is continuing in the short end and curve continues to steepen with rates moving down really jumps out at you if you look at tens minus twos starting in early june. Here we are, basically hovering at the steepest the curve has been tens to twos since the first half of august now, there is another dynamic that i want to bring up, that is what is going on with japan. Hardly any coverage. Really horrible auction. The bank of japan and the largest Government Pension Fund are getting much more discriminating and choosing less domestic debt to buy that is huge, we need to continue to monitor it as for the other relationship with europe, thats changing as well look at a threeday chart of ten year bunds republican t remember the patterns in first couple of charts this is almost lateral it is not breaking down. Now, granted, it is only about 20 basis points or so off its all time low closing yield but it really has been Holding Better and i think whether it is all the people running from the policies of mario draghi, and the germans getting nervous about it, or what is going on in japan, finally, tens minus bunds, it is really narrowing and this is something to Pay Attention to our yields are getting closer to their yields carl, jim, david, back to you. Rick, thank you very much so were watching all kinds of levels here. S p 2910, transports below 10 k. Vix above 20 dow has broken its 50 day first time in a month. Back in a moment when it comes to your customers expectations, theres one thing you can be sure of. Theyre changing by the nanosecond. Thats why cognizant created a unique engineering approach to design and build new digital products. Learn how cognizant softvision designs experiences and engineers outcomes. Cool. I wouldnt be here if i thought reverse mortgages, took advantage of any american senior, or worse, that it was some way to take your home. Learn how homeowners are strategically using a reverse Mortgage Loan to cover expenses, pay for healthcare, preserve your portfolio and so much more. A reverse Mortgage Loan isnt some kind of trick to take your home. Its a loan, like any other. Big difference is how you pay it back. Find out how reverse mortgages really work with aags free, noobligation reverse mortgage guide. 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And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Lets get to jim and stop trading as we look at the dow. One of the stocks that should be working on clorox its been under pressure a lot is being challenged. Also kingsford issue i think theyre going to announce a new strategy and hes going to include lower numbers and prerhaps giving you longer term good news this has been crowded when the economy is soft. Maybe down first and then up, but i like it. Its done a very good job. Lets see what happens. Jim, how about tonight . Ive got paychecks on which is good because we also give a few of how the world is coming to an end and were about to have the rise of the nazi party. I cannot believe that piece. I cannot believe that piece. I just dont like the analogies. You make those, youve got to live by them once do you that once, youre out of the box. Jim, well see you tonight. Were going to watch the sell off here dow down 328 were on the cusp of losing 2,900. Back in a moment what a time to be alive. The world is customized to you. Built for you. So why isnt it all about you, when it comes to your money . So. Whats on your mind . We are edward jones, a 97yearold firm built for right now. With one Financial Advisor per office, were all about knowing whats important to you the one who matters. Edward jones. Its time for investing to feel individual. Good wednesday morning welcome back to squawk on the street. Bit of a selloff in progress the dow is down 320 and the s p almost cracking 2900 on the down side as we get the reaction to the ism yesterday, and then some soft auto Sales Numbers today. Our road map starts with stocks selling off extending yesterdays losses how you should be playing this market volatility. Plus manhattans real estate prices plummeting to their lowest levels since the crisis adding more troubles for wework. And is cord cutting good for cable stocks why one analyst remains bullish on that sector. Stocks are continuing to sell off. Q4 getting off to a rocky start as you know. Should investors be expecting a rally going into the end of the year lets get to dom with the streets top strategists. If you take a look at the way markets are playing out right now, yes, the Fourth Quarter is off to a rocky start, but it has been a positive one over the course of the past couple years. If you look at the sa p 500 wee broken down. This was the 50 day average price of the s p 500 falling below that could signal for some traders out there, at least more pain ahead. Were watching that closely still below that level if you take a look at the top strategist we have out tlrk the the survey has a median forecast of 2,960, so if you take a look at that number, thats only slightly higher than we are right now so the markets are pretty much in line where where they feel it should be the high mark is 3,250 that represents about 12 upside from crept levels. The low observations come from mike wilson at Morgan Stanley and bark lay if you want to take a look at the last 10 years in the s p 500, between the end of the Third Quarter and the end of the Fourth Quarter, over 10 years, the folks looked at the numbers and posted them on average. The last ten years the s p has gained between the end of september and the year end about a 4 level for the s p 500 if that was to come to fruition again this time around on average, remember 4 , the s p would end up at 3,101. So it would be a record high, but carl, certainly something to Pay Attention to when the Fourth Quarter starts off as roughly as it has for the bulls so far this year back over to. Thanks a lot. Dominic keeping us honest. Watching some news out of the uk as we keep an eye on developments on brexit and footsie having its worst day. We just had a result of the arbitration process around this air bus complaint going back some 14 years or so. The arbitrators a hounsinnounci theyre entitled to impose tariffs up to 7. 5 billion on european products as a consequence of subsidies payed to air bus over specific periods in the past. What needs to happen now is that this ruling needs to be adopted by the governing council thats the dispute settlement body the next meadieting scheduled t end of october the eu making very clear they dont want the u. S. To impose tariffs on european products if they can help it, and weve got a statement out from the European Commission of trades saying applying Counter Measures now would be sort sited and counter productive quote, both the eu and the u. S. Have been found at fault by the wto dispute Settlement System but continuing to provide certain unlawful sud sidb si sus were expecting a ruling from boeing and as a consequence the europeans are hoping this can lead to settlement talks rather than the tit for tat tariffs that might be expecting. Both sides have drawn up a list of products theyd like to target the u. S. Essentially now has the next move, guys. Just to put it into some context, do we know offhand how many times wto tends to side with the u. S. In a dispute its not even that. Its essentially going back to 2011, a decision was made. They went into arbitration to talk about whether the europeans in this instance on air bus have complied with earlier rulings and that arbitration was suspended for many years having restarted, they came to the conclusion just last year this was something where the europeans have failed to comply and this arbitration over the last few weeks was much more about getting the specific number the u. S. Had requested 11. 2 billion be available to them the european said that was much too high it looks like the arbitrators have to some degree agreed with the europeans. What we heard last night interestingly is because of that boeing case down the road being a reason they might have to hold off to be wto compliant with their own measures, they may look at some old wto rulings from the last decade or so where the u. S. Was found at fault, the eu was entitled to take Counter Measures they chose not to then, but they might now take them if the u. S. Imposes their choice to respond. Were going to keep our eyes peeled for their next move villa mark is watching the air bus boeing news. Back to the market, joining us is barry banister, urian timer good to see you both barry, youve been saying for a while, feds too tight, earnings consensus is too high and the 2,900 was fair value and thats right where we are what do we do now . Still a lot of risk in the market when you look at 2,900 just simply balances the high pe multiples you get from low Interest Rates, low real rates against the earnings risk of a recession by mid 2020, which is what the 50 Day Moving Average of the 10 year minus 3 month curve would seem to indicate. Do you think were overreacting to ism given the gm strike, given what some of the regional surveys have said that are slightly different within all sectors, manufacturing has the highest gross value added as a percent of gdp it does matter and it can lead the pmi services nonmanufacturing lower well get that tomorrow. But i would say there has been leakage from the weak economy overseas into the u. S. Market and were seeing the effects of that now so a lot is riding on services and then on bls friday. Whats your take on the week so far . You know, certainly the fed is not in an enviable position here because they have to balance, you know, a pretty strong consumer driven economy with all the data that we know, lowest unemployment in 50 years, rising wages, strong housing numbers. But as barry points out, hes done a great job sort of capturing the whole narrative of the market over the past couple of years is that were basically in an industrial recession, a global one, and it does remind me to 2016 to even 98 where the u. S. Was okay, the rest of the world was not, and if you look at the ism, 48, the lower it goes, the better your forward returns get, but it all depends on whether the bottom is here or at 46, you know, months from now and that could be like catching a falling knife. It is a very tricky period where you dont know where the bottom is going to be and whether the decline on the industrial manufacturing side is enough to tip the entire economy over and again, for the fed, its a question of do they look at forward looking indicators like the yield curve, like the bomb Market Pricing and three more cuts when the fed probably doesnt want to do any more . Or do they look at just coincidence indicators which are coincidence dent and not leading. It is a tricky time. Its also the Fourth Quarter it is earnings season coming up this week and the 2020 number as barry said is too high at an expected rate of 10 usually the Fourth Quarter before that year is when the number comes down. So its very likely that that 10 is going to end up closer to five and so that has to get priced in as well. And as we look ahead to the earning season, all the macro force is whether its with regard to trade or industrial recession as you called it, do you believe those will start to trickle down in a meaningful way for q3 earnings such that we could see some downward pressure on the markets as a result i mean, we have seen some preannouncements, some pretty major ones, and its just a question of balancing the companies that are exposed to the Global Industrial cycle versus the companies that are exposed to the domestic consumer cycle. Which side wins remains to be seen, but right now the consensus growth rate is minus 3. 2 for the Third Quarter. And usually you get about a 3 to 400 basis point bounce and we saw this in the first quarter. Second quarter they both started negative they ended positive. If the last two quarters are a guide, we may actually still avoid a negative quarter, but it will be very, very close barry, what if we were to get an unexpected resolution to the trade war with china whats that do to the s p . It would obviously help, but you have to think about the chinese negotiators position it sounds like a line from the godfather, but they figure why should they have to stab the u. S. Negotiators in the front when the negotiators are being st stabbed from the behind by the disarray in the United States. I would not expect the chinese to move very much and i think trades going to be a hard slog from here on out barry, some others have pointed out, you know, if we get something that looks like a truce next week, how long does it take for the market to truly believe its going to stay in terms of a trade truce, you said yeah. Some kind of handshake agreement . Given how close we were in bain buenos aires and other meetings theyve had . They may recall more u. S. Stuff and in the late 1980s the japanese offered to buy more u. S. Things but that wont solve the overall u. S. Trade balance because if thats a certain of the administration because it doesnt invest in the underlying balances in the whole world. I would look at it as positive but it would only defer the trade strive until after the 2020 elections if the Administration Wins that one so i would view it as temporary. The market would see through it. I dont think the reaction would be that extreme. All right were obviously going to watch starting next week thanks, guys, appreciate it on an important morning see you soon. When we return, why cord cutting is actually good for cable stocks craig moffet is going to join us and give us his bullish take plus more trouble ahead for at ark thsll when squawk on the street returns. But were also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. From the day youre born we never stop taking care of you. A strong run for cable markets. Craig moffet makes the case for a relating of the entire industry arguing cord cutting may be good for the companies and their stocks he joins us now. In the note you say cable margins could climb as high as 50 shouldnt be viewed skeptically. Why shouldnt it be . There are a couple things going on as you lose video, its a much lower product than broad band. You get a positive makeshift that raises margins. Everybody sort of understands that and gets that as video declines, there is uplift from margins for that beyond that, there are a number of other things that happen. First is because customers get a discount on broad band by taking video, when they disconnect video, their broad band price goes up. That gooses margins even more. You also have the fact that video is a more cost intensive product for nonprogramming costs things Like Customer Service and repair and maintenance. As video declines, you get some elevation in margins from that so what we have already seen is margins going much higher already than anyone expected and the idea that 40 is the baseline for cable margins where its been for 40 years is not appropriate anymore. Its reasonable to think you could see margins for more of these businesses as they look mire like telecom and less like media. As they make peace with the idea that some measure of cord cutting is acceptable and maybe even desirable, they stop throwing traditional save offers as you said at customers threatening to leave, but craig, it is still a profitable business, isnt it do i really want to see it start to really erode . Even though they may not make that much money and the margins obviously are far less than they are in broad band, they still make some money. Yeah. Youre right, david. Nobody here is saying were going to abandon video theres some small Cable Operators that have done that, but none of the majors are remotely thinking about abandoning video what theyre talking about abandoning is these crazy save offers where if you call and threaten to leave theyll give you 60 a video for 40. I think theyve come to realize thats not a sensible response anymore. So now when you say im threatening to leave, they will say well, let me help you choose between youtube tv and hulu and make sure you get the best price. Because what theyre trying to do is say we make our money from the broad band relationship and the idea that were going to try to keep customers in a Video Service that they dont really want is not good Customer Service and ultimately its not going to be profitable for us to do but theres remember, there is a huge segment of the market that still wants a video product and the Cable Operators do make money from those customers and theyre not talking about abandoning those customers at all. No. Although its interesting, given the focus we do have on cord cutting and obviously the rise of the verse streaming services, this would seem, this new attitude if youre correct would seem to accelerate what will be that continued trend of cord cutting. Do you agree no question about it. Its funny, you look at that comparison the satellite operators are losing video subscribers at 10 a year between the two directv and dish the small Cable Operators were losing cable subs in the 8 range and comcast and charter, who are really the center of gravity of the cable industry are losing subs only in the 2 range. The reason theyre not losing cable subscribers isnt because thaer havi theyre having a hard time hanging on to them its because the small Cable Operators decided not to try i think youre going to see the large Cable Operators say were not going to try to save those marginal customers either and if you let them go youre going to see rapidly rising margins the other argument we were making is not only does that mean estimates have to come up for margins, but it also means multiples have to come up quite a bit, because you are much more efficient at converting into Free Cash Flow as margins come up and capital intensity stays roughly the same or even comes down craig, part of the reason weve seen Cable Companies rise so much this year is because theyre more domestic lally focused. They have a higher dividend. Do you see your bullish case for the Cable Companies being reflected and some of the reasoning blien t reasoning behind the rise and could propel it higher definitely. I think there are a couple things going on. As you said, no question about it, these stocks are domestic o only and they generally are reasonable defensive businesses and thats been a good macro setup for the cable stocks anyway but the other reason theyve performed so well year to date, not only because margins have started to expand and people have taken their expectations higher is that the fears that 5g was going to be a viable competitor to cable broad band have been debunked at this point and so people are much more comfortable that cables position in broad band is still quite strong but nobody as far as i can tell has made the step yet to say lets actually think about what the warranted multiples for these businesses should be if margins really do approach Something Like 50 and its a hard modelling exercise to understand how your margins should rise and our sense is that at least beyond the next two or three quarters very few models actually appropriately accommodate this kind of Margin Expansion that youre likely to see over the next couple of years craig, well be watching them closely as we tend to given our parent company, of course. Have you on gwen soon to talk at t and a whole other area and interesting story, but for now, thank you, craig. Thanks, david microsoft hosting it as surface event in new york city lets get out to john who is live at the event. John hi, guys. This event is arguably the most important pc event now of the year not just for microsoft, but for the industry not because pcs, the surface is a big part of microsofts revenue, not because its a big part of the industry, but because of what microsoft set out to do more than half a decade ago when they launched the surface. That is to add to a premium in the windows category look at apple, the profit they make off of the mac, microsoft didnt want the windows ecosystem leaving that on the table, so their strategy was to build devices that would entice the rest of the windows ecosystem to step up we expect to see a new version of the surface pro this is the sixth. We expect to see the seventh big question here. Are we going to get a version with an arm processor . Probably something from qualcomm, the snap dragon. If we get that, it will have longer battery life . We would expect that it would and will it be able to run full windows 10 apps . That has been an illusive goal for the category if so, it could be some of a game changer for battery life. Im hearing also microsoft is planning to move into two different categories, an arm based surface would be one new category what else . Well see. The ceo is here. We expect to see him at the beginning and the end of this event. So normally they have something significant to say when hes around the microsoft folks try to tell me this is the most significant surface event since they launched the surface line to begin with, but well see. Back to you. A big day for microsoft john, were glad youre there. As we go to break, take a look at the worst performing stocks on the dow. Merck and visa leading lower we found some support at s p youve got some names mike micron and paychecks which s nit t genhere were back in a minute tell him were flexible. Dont worry. My dutch is ok. Just ok . Tell him we need this merger. Its happening. just ok is not ok. Especially when it comes to your network. At t is americas best Wireless Network according to americas biggest test. Now with 5g evolution. The first step to 5g. More for your thing. Thats our thing. Its too many for our etf spotlight. Taking a look at the financials kbe down again third negative session in a row after suffering the worst daily performance since august 23rd. Many of the big banks in that group are under pressure this morning. Goldman sachs citi among the biggest lag gagards. The vix now in negative territory. Dont go anywhere. At southern New Hampshire university, we believe in education built for all people. [woman] snhu was the best experience of my life. [man] without snhu, i wouldnt be the leader i am today. [woman] i graduated high school 19 years ago. I still finished. [man] in the military, you feel that sense of accomplishment. Thats what snhu is. You will march from this arena and say to the world. I did it. [woman] you did it. I love you. [graduate] i love you too. Good morning, everyone im sue herera here is your cnbc news update. At a News Conference in rome, mike pompeo confirming he was on the telephone call between President Trump and the ukrainian president which is now the subject of the impeachment inquiry. I was on the phone call the phone call was in the context of now i guess i have been secretary of state coming on a year and a half i know precisely what the american policy is with respect to ukraine its been remarkably consistent. North korea launching what is believed to be a Ballistic Missile which dropped into japans exclusive economic zone. The move comes just one day after officials from the north agreed to resume talks with th u. S. Aimed at ending its Nuclear Weapons program. And here at home the nations first cannabis cafe opening in los angeles. It is called lowell farms. Its the first farm to table restaurant which highlights cuisine and cannabis meaning dishes that are complement re to the effects of thc the dishes will not be infused with cannabis, but guests will be able to smoke marijuana at the cafe thats the news up date. Carl, i will send it back downtown to you. Thank you very much obviously were getting a little action here. Back to 2,900. Dow is down almost 350 there are no s p sectors in the green. Look at industrials today down 4 energy down 5 . Even utilities are in the red. Nothing is working. Its an ugly start to october for sure i dont know what that portends for the rest of the year we were talking about what it means for q3 earnings which are set to kick off soon interestingly were not seeing as Much Movement in other classes like commodities dont seem to be selling off as much as equities. Its interesting much of the risk off mentality is really isolated to stocks today stocks selling off with yesterdays ism numbers pointing to a recession in manufacturing, but could it also be pointing to a recession for the economy . Our Steve Leishman join us with more. That drop in the ism Manufacturing Index did ignite fears of a recession in the broader economy. While the data show we are headed in the wrong direct not quite at the recession level yet. It was the second month in a row the widely followed nix fell below 50 and that indicating the Manufacturing Sector weve had two months below 50 and it happened in 2015 and 2016 and that did not lead to the broader recession. Three months before recessions, we did the work on this, the ism average is a healthy 52. Were now at 48. One month before recession this index by the way goes back to 1948 we have a bit of a sample here it falls to 44 and then when its in recession, the average is 43. So were not there yet, but moving in the wrong direction. Barclays writes the latest reading continues the steady pattern of deterioration since the turn of the yooer and suggests that manufacturing production is most likely to remain weak on balance in the coming months. Most economists blaming the trade war along with slowing Economic Growth and trade for the manufacturing. This decline prompting markets to really begin to price in the fed rate cut for october we are at a 70 probability for october. It essentially moved that probability. The odds on bet was in december. Thats now moved into i guess thats this month. The most economists continue to see growth around 2 that is subject to change if the weakness spreads to the broader economy and were going to get a really important read on that tomorrow ism Services Report about 24 hours from now at 10 00 a. M. David. Phil, sorry, excuse me, steve, i am going now to phil lebeau he has the gm membenumbers. A little weaker than expected in the Third Quarter for General Motors sales up 6. 3 . It was estimated to increase 7. 8 much like we heard today from ford and chrysler the strength is with pickup trucks. Civ silverado sales up gmc pickup truck truck sales up 29 . Still shares of General Motors ticking lower. Down 3 . Now down around the 35 range. If you go back to when the uaw strike began 16, 17 days ago, this stock is now down roughly 10 . Back to you. Phil, were going to watch that and see how its absorbed in a tape thats getting a tad worse. Dow is down 412 now and weve lost 2,900 on the s p. For more on what this means for markets, were joined by who recently raised his target to 3,050 and a strategist who is positive over the next 12 months keith says we may see a new high in q4. Why . Well, listen, i think we have to have some perspective we had a really good year so far into september were having another gut check it almost feels like day shaw vi we rose 3. 5. I think we have to raise a difference between a slow down in recession were still not in the recession camp also even though theres been so much focus on the u. S. , something important happened in the global pmi yesterday that is they rose from the previous month the second month in a row theyve risen after a streak of 15 straight months down. I think were seeing some stabilization. Sentiment is getting reset right now. And eventually as we move past this we still think that as we move towards the end of the year we could still see upside as folks are seeing risk right now that any good news would go a long way. Tobias, thats the thesis thats running out there, that ism may be bottoming you get stabilization in the global pmis. We find out tomorrow if this is truly bleeding to services in the consumer what do you think . Carl, a number of things. Lets start with sentiment keith noted we are panicking for a model. Its not in panic, but its near panic territory yielding about 95 probability of markets being higher a year from now number two, cni are commercial industrial lending standards is a 9month lead indicator i kind of dont like to respond to an ism number that just showed up. We kind of saw this early this year when we saw tightening credit conditions. Nine months later well have problems the data actually improved in april and stabilized again in august which suggests were likely to see some improved Economic Conditions here in the u. S. In the Fourth Quarter into the beginning of next year thats not in the current mindset. So that would be supportive of markets of earnings, et cetera the third thing is we just completed a survey of Institutional Investors and theyre really fascinatingly shifting from being defensive and kind of growth oriented and more value in cyclical for 2020 in terms of their sector preferences. Investors may not be there yet but they do see a different view for 2020. Are you seeing, to bybias, wv seen some of the neutral pivot to europe. Are you on the cusp of making macro calls like that . I think thats going to be a dollar call. If you believe the dollar is going to weaken, emerging markets would be the biggest beneficiary of that. I personally struggle a little with europe given the conditions there. I would say if you have that dollar view and citi does have a few of some a what weaker dollar that taking some overseas positions over the u. S. Is probably not a bad idea. Keith, we saw a pretty sharp reversal toward value in september. Do you think that this is a sustainable trend as we look toward the end of the year i think at minimum the outperformance growth is going to lessen here tobias has talked about how important the u. S. Dollar is to us the most important call is the Interest Rate environment. What happened is Interest Rates stabilized and moved up. That was a period where value outperformed because financials are the largest part of the value index and it also goes with your regional call. If you think with europe, the biggest sector is financials theyre very low detech ekxposu. Were not there yet, but i think were getting closer tobias, i know you dont want to react to the ism so soon. Are you willing to step in front of what the Services Number could say tomorrow or what bls could say on friday . Adp wasnt a barn burner and they tend to overstate things in september. Well, again, cni data kind of leads this activity, including employment numbers, capital spending, industrial production, all of them have that nine month lag. I would suspect youre going to continue to see a little bit of weakness in the very near term but the key is are you looking at an inflection you know my background as an industrial guys, so im willing to stand in front and say i think things get better. Im not going to do it on a daytoday basis im not that good, sorry. One of the best caterpillar and deere analysts should we break ourselves for a soft Service Number . Again, i dont know what the ism Services Number is going to look like, but i do think the environment was going to stay soft here in the Third Quarter and then start picking up later not later in the year, but late, late in the year. Do you need some of the uncertainties out there to lift in order for stocks to be supported from here with regard to the trade war, with regard to whats going on, with regard to trade flows and potential slow down for Economic Growth does that have to sort itself out first, or do you think people will turn and focus potentially more on earnings and other factors . Ill defer to keith first. Thanks, tobias. I think next week is going to be a big week as far as on the trade if we get a trade truce. If we have that happen, i think that will be good for equities the other thing theres also a recent bias. We had a big Fourth Quarter selloff last year. Now investors are braced for that again one big difference is last year in the Third Quarter we saw over 30 net Central Banks hiking rates. 30 this year we have a mirror image of that. That should support stocks as well i would say the biggest risk would be if we had an escalation on the trade front, but again, i think more likely scenario is we see a truce and they start to focus on the earnings picture. Its going to be hard to ignore starting next week tobias, thank you guys we are getting some breaking news regarding the health of Bernie Sanders well go to sue herera. Indeed we are, carl you can attribute this statement to senator sanders Senior Adviser jeff weaver who says that on wednesday at a Campaign Event the senator experienced some discomfort in his chest they went to the hospital. Upon valuation he was found to have a blockage in an artery two stents were inserted he is still in the hospital resting comfortably and according to his aides conversing, but they will be canceling Campaign Events until further notice while he con convalesces. They inserted two stents and thats the latest we have on senator sanders, also a democratic candidate for the 2020 election. Back to you, david and carl. Sue, ill take it thank you for that news. We are keeping a close eye on the markets, Broader Market s p down 1. 66 thats the low of the day. Well have more on this ck wn ce sell offheweom ba manufacturing turning ugly last month, but one of wall streets biggest bulls isnt afraid find out more on trading nation. More squawk on the street coming up. Cash. You can get a satisfaction guarantee. You can also wonder why our competitors dont offer that. Schwab, a modern approach to wealth management. Dow down 455 now lets get to the Santelli Exchange hey, rick. Good morning, carl. I guess i took a mulligan from the university of chicago. A month ago you ended a one year stint in d. C. Where you were the chief economic adviser to the council of president s economic advisers while you were there you obviously probably are in the know regarding whats going on with the president , the economy, and how he thinks about it do you think were going in a recession and how do you feel about maybe the most recent downturn, for example, in yesterdays pmi . The growth is slowing down. We had 3 . About 3 now it looks like about 2 thats still two points away from negative. Im not really worried about a recession. If he had a change of policy, bought the Corporate Tax rate back up, thats recession material. There is the most uncomfortable topic on the floor, this ukraine issue, trying to get rid of the president but its not doing good for joe biden should a candidate with more progressive tendencies start to gain the top of the ticket do investors need to worry about their mutual funds they hold a lot of large institutions. One thing the president told me, he wants them to take extreme positions so he can win, but hes worried theyre going to pivot after the primary is over common sense kind of tells you to pivot and theyre going to want to win, so probably i dont know about sanders, but some of the other ones who appear radical i think will appear a lot more mainstream come summertime. Casey, i dont mean to be political. Im not a Political Animal im a market animal. I really do think that many that like the more liberal candidates really dont understand that much of the retirement might be tied up in things those candidates dont like. Can you expand on that yeah. They like to look to sweden and norway and sweden and norway and denmark will tell you they tried those things and they didnt like them. They stopped doing them. Corporate tax rates are low. Theyre zero estate taxes in norway and sweden. That will maybe help them pivot. Weve looked at the modern countries that are doing a good job and theyre business friendly. With regards to things like regulations, when the president came in office, he said for every new reg i want to get rid of two ive read between the lines that the ratio is higher. Is that ongoing and what do you think about that its ongoing and the fine print of the same executive rds its based on the dollars of costs to businesses. Thats even better you can split two regulations into four and so on, but the dollars you cant make up. Thats been a powerful force every time they want to try something new they have to get rid of something old theyre doing that, the car roll i think is the next big one kpg arou coming around any day now alcohol be a big win. My kids obviously the Younger Generation very worried about the environment and i get it they tell me most of these regulations are getting taken away from the environmental side is that true thats one of the great myths about regulation over 90 of the regulations are not environmental. Theyre about the internet theyre about entry into the drug market. Theyre about the labor market you can go on and on and on. One of the most famous rules is about venting and flaring, which is interesting for the energy industry, but its only on federal lands. The regulation were fighting about is on federal land most of the great Energy Production we have on off federal lands. It gets constantly distorted because they want to make you think by pulling out the special interest that somehow the water is going to get dirty and they have very little to do with each other. Theres one area i really dont agree with the administration on, so ill be very blunt that is they are envious or seem to be envious of the ecb, europeans and how they affect their currency or japan. At the end of the day, i wouldnt want to swap places for all the money in the world to be in those situations. Your thoughts as a professor on this topic well, the ecb is part of europe and i dont know that many people in the white house are jealous of europes economic performance. But isnt that very much tied or a result of their monetary policies the last five years their whole portfolio of policies they do, regulation, monetary, they doebt nt do it l and they suffer. So why does the president continue to verbally abuse the Federal Reserve chairman its not like hes making laws to get rid of him. He doesnt like it hes very vocal. Is that wise i think jay powell really has the longterm economy in mind. I wasnt part of any of those discussions. I have watched over the years and i wrote in my book about how the fed way overestimated the obama economy. They were clueless about why the obama economy was so slow and underestimated the trump question again, clueless about what changed, so theyve got a little bit coming to them, maybe not as harsh as theyre getting it from the president , but their performance hasnt been great on some economic issues. I could talk to you for hours but i think were out of time. You have to come back again. So much more i want to discuss were going to go back to the gang leslie, back to you . Rick, thanks so much. When we return, were all over this sell off with the dow down more than 400 points its been accelerating those losses throughout the hour more squawk on the street returns. See thats funny, i thought you traded options. Im not really a wall street guy. Whats the hesitation . Eh, it just feels too complicated, you know . Well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade that could allow hackers devices into your home. Ys and like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Welcome back to squawk on the street. Stocks are trading right now near the worst levels of the morning so far with the s p 500 currently tracking for its fourth day of losses in the last five the second day in a row in the Fourth Quarter here. Were seeing weakness in industrials and materials. Disappointing Economic Data stokes some Global Growth concerns but lets drill down now into another one of the underperforming groups thats the Energy Sector that sector now has erased gains over the past month, trading about 27 off the recent highs since october of last Year Oil Prices now hitting fresh session lows after a report showing u. S. Crude inventories rose last week, up 3. 1 million barrels, nearly double what analysts were looking for in terms of build that drop in oil prices is weighing on phillips 66, chevron, valero and Marathon Petroleum all down by 2 so far. I will send it back down to you guys at the New York Stock Exchange thank you dominic chu as we watch the selloff. Dow down almost 500. Mike santoli is here you know things are getting serious when we say hello, you still there . 1. 75 is the threshold to get on the desk. What do we make of this a continuation of yesterdays story. The s p, were back in augusts range. I think we should have found the limit of how resilient the market could be in this kind of pile up of, you know, seeming oneoff reminders that were in a slowdown environment i think we never fully escaped that idea that some of the sands are falling through the hourglass of the cycle can we say it will lead to recession or not i dont think we have a determination on that in the least. I think the markets are on edge. Whats interesting today, the bond market is not having a huge move the long end of the bond market, still 1. 6 on a tenyear. Short end is getting compressed in terms of pricing and more fed ease to me this is a stock market event. People seem wrong footed about the idea that we hoped we could get the rate cuts without going through the bad data is it the ism that brought the recession word back into our have a incomel vernacular thats the most conspicuous thing that brought it forward again. Ive seen some work where you see a combination of ism under 50 like we got yesterday for a couple months in a row Consumer Confidence turning down the inverted yield curve is less inverted than it was that is something that was a precondition here. So all those things together have some people saying thats what were on alert for. So, yeah that explains a lot of it. This comes a day after you tweeted isnt the market bungee cord unstretched supposed to stop at 1 intraday . Thats the rule for september. It did for a while yesterday we bounced there, it didnt last. Were widening at 20 and change, its not showing theres some kind of headlong rush out of this market its okay, we have to reprice lower. Its the low and slow trade. Transports getting smoked. All the cyclicals. Whatever hope trade was in there, a turn in some of that data has been bled away. So, thats the dynamic you have not given up all the relative performance of stocks versus bonds that you got in august and september so at this point it just feels like youre readjusting lower. We bounced i guess we bumped up against the 20 yeartodate return level in the s p a few times. So were up 15 or so for the year were flat for the last 12 months exactly right back to 12 months ago. That experience of the Fourth Quarter last year, people remember it. One comforting thing, a year ago nobody was saying remember a year ago when we went down 20 in three months . The fact you have caution in the market going into the period, it wasnt as if people were super bullish going into october i think thats probably a cushion at some point. Back then we didnt have the ipo market look the way it does. We didnt have repo operations overnight. Yep all that stuff is the pile up of factors that i think the market was able to withstand for a while. When you get the cyclical indicators like ism, thats much more immediate the bond market, stocks have not been able to rally without bond yields going up let alone declining like they did yesterday. When we come back, bill gurley will join us first on cnbc, talking about the markets, valuations, ipos, direct listings and a lot more when squawk alley starts in three minutes. Good morning its 11 00 a. M. In new york city, 11 00 a. M. On wall street. Squawk alley is live