Transcripts For CNBC Squawk On The Street 20140929

Busy week for data. Dreamworks up in premarket. Considering a buyout of the movie studio. Insight on whats going on. Reports apple could be facing fines of more than 1 billion euros over deal to allegedly minimize its tax bill in europe. Facebooks new ad system. Gopros new cameras as well. Futures lower, negative tone set overnight as the unrest in hong kong sent the hang seng down 1. 9 . Stocks off a volatile week, the dow posted triple digit moves every day. The worst week for the market since the week ending august 1st. Andrew and jim talking whether were at a stage where we know if the dip gets bought or not. Right, weve got this weird binary approach to the market. For instance, say youre in a vacuum, youve got Consumer Spending this morning, plus. 5, i thought terrific number. Consumer income, plus three, terrific number. In a vacuum, we should be going higher. What are we doing going higher friday . Other than nike, what went right . Were in the grips of were going to be making very big moves on nothing. I mean i can argue with aclon, an Important Oil deal, with tipco saying tech is undervalued, well talk about dreamworks, but the machines are in control here. Dont think for a minute that people arent thinking, fed funds rate about to spike, regardless of what they said, Dollar Dollar did on a trajectory, worldwide, it would make it youre exporter youve got to be shaking. 11 straight weeks. 11 straight weeks. What a trade that is. It is. And perhaps has a lot further to go depending whom you speak to. I think so. Some believe the yen is going to continue to lose a great deal of value from here. Yeah. Theres always we hear Money Managers who hate the United States because fed fund rates going to 4, this mythical 4, love that from delivering alpha, and they want to buy japan. They want to buy japan, though the companies that deal with japan are doing terribly. They want to buy europe off weak europe. I was working on one European Company this weekend, one that i wanted to be involved with, just one. Come on. Got to be an exporter in germany that benefit from a week euro. Did russia get solved over the weekend . A deal to supply ukraine with gas through the winter. I thought very positive. At the same time, theres weakness in germany, makes it so i question the numbers. Look, i dont question numbers of u. S. Domestic companies and russell 2000 companies. But is there a worst index right now than the russell 2000 . The machines have run wild there, too. Theyre knocking out bids in the russell 2000 every day. The actual Companies May be doing well but the indices are in charge. These are machine gun selling and buying. Right. Youve also the rally we had, certainly over the last few months, not broad. No. We pointed that out. We lost that. Whether the russell or s p as well. We lost the big industrials a long time ago. We lost the Consumer Products companies with exception of a mcdonald, which poorly performed. What does it all point to, then . Rough road from here for the rest of the year . We need leadership. We dont need any more equities, we dont want any more supply. We had 128 billion in supply, it was thrown into the market, into the mutual funds. We have to cool it here. Thats my approach, just cool. Dont commit new money. Despite, you mentioned fears about the fed funds rate, evans with liesman saying hed rather overshoot on inflation to get jobs. People are wondering why printing 200,000 jobs a month anding steady and slow as it is . Savings rates back up to 5. 5. We cant seem to get Interest Rates higher. Someone wants them higher. Were the safest halven in the world. Look around, its interesting, so right to focus on the hong kong demonstrations because, i havent had a piece of good news out of china in ages. Give me good news out of china. Hong kong demonstrations. Oh, you mean oh, oh, are you in civics class . Longterm positive story. A problem with the party . Thinking hundreds of years over there. Well, thats true. We dont. It actually is a serious story. Thousands of protesters flooding the streets in hong kong central. Peaceful. Business district. The worst unrest since china regained control of the former british colony in 97. Susan li live in hong kong. Good morning. Yeah, good morning to you. Thats right. We took a crude head count, looks like more people on the streets tonight than there were yesterday. So looks like the movement has been gal ven nized by the violent early into the wee monday morning hours, we saw something we havent seen in hong kong since the handover in 1987, back to china. So we saw the protesters with baton charges, bloody faces, tear gas fired, pepper spray being sprayed. One point with Police Holding up signs saying disburse or well fire. Concern of rubber bullets shot into the crowd. Telling them to back down, retreat and go home. Not something they did. Hong kong was shut down today. The fifth Largest International market, and a dozen banks were closing branches and telling employees to say home. The Monetary Authority had to step in saying well add liquidity if and when necessary. People taking risk off of the table. Steep selloff of 2 . No one wants to hold risk going into the long weekend because it is a holiday on october 1st and october 2nd. Now the concern is about whether or not this the protests spreads to other cities and other special administrative regions. First, national day, october 1st, mccau is now expected to hold demonstrations for their own democracy. And how does that impact casino shares and tourism given we have travel alerts issued by australia, sing boo georgia p s. A mass influx of mainland tourists but Retail Stocks a big hit in theton markets because maybe the cash tills wont be ringing as they have been in the past pause of images people have been singing on television sets. Susan li in hong kong. Dates back to ruling out of beijing that would essentially let them weed out candidates in hong kong. Thats what students are upset about in the first place. I think the rules coming out of china amazing. We have crackdown on gambling. Crackdown on junkets. Crackdown on expensive liquor, showy signs of wealth. Next the crackdown on watches that are hundreds of thousands that people buy. The partys returning to its roots we dont seem to realize that. Right. And so the impact will be what . Youre not going to sell as much stuff at high end . Theyre minting millionaires every day over there very quickly. Alibaba, of course, creating billionaires. Turning internal again. I think that alibabas looking, very good report out this morning gave you numbers for alibaba, from susquehanna, quite incredible. But largely chinese spending. And i think that the focus is internal, not external. One good thing coming out of china is they did solve some of the hatred with japan. Theres cooling in those tensions. But the strong dollar is a margin worldwide. Theres lack of liquidity worldwide. Emerging markets are going down. Ive seen brazil, you know, brazil falling off a cliff this morning. Mexico, pesos in trouble. A lot of emerging markets Fund Managers have not come on lately and told us how great they are. Its great you soccer retail people give us your money, yeah, well be down 40 , up 60 . Noncorrelated but always correlated. Always correlated. In the end, alibaba, right now people are correct in saying that that was the shortterm peak. Such an easy call. It seems so trite. It does seem trite. It cant be that simple. Its like, that was the top. Of course, people say, no bells rung at the top. They say, no. They rang the bell at the top. I dont know, maybe they had a hearing problem. They rang the bell. Shares of dreamworks surging. Published report say softbank, the company run by japans richest man, is in talks to acquire the studio known for of course movies such as shrek and madagascar, softbank offered 32 a share for dreamworks, almost ten bucks above the closing price. I want to put cold water on this one. Having done reporting this morning. People, lets call it, close to the situation indicated to me theres not that much going on here. Yeah, i mean, dreamworks has been for sale what feels like forever. Stocks up huge. The new guy at softbank, remember came over from google, who has been tasked with looking for content. Smart as all get out. And he just began, although starting his job before he really started his job, hes now in there. So while may be a lot of chatter, people ive spoken with indicate very early, may very well go nowhere and also point out, listen, may be an interest in working together, dont forget softbank owns two gaming companies. They need content. Theres also opportunities to cobrand with movies, create games off of movies. So, just, at least based on conversations i had with people who would know, id be careful that theres a lot, that this things going to get announced tomorrow. Doesnt feel like thats happening at all. Is there a sense after tmobile, that hes flailing for something, anything american right now . Im sure he would dispute the idea of flailing. What i think they would say, they are interested in content, somehow marrying that contents perhaps the way theyve done to a certain extent with wireless offerings in japan, what they took with lagging properties from vodafone, and they have a war chest that is unrivaled given the performance of that stock right behind us, alibaba. But 32 . We havent gotten to talk about starboard, about yahoo yeah. I mean, any hope there that i dont know. What did you think of that . I found that in a letter i think a lot of him in terms of hi thinking, jeff smith at starboard, disciplined in that way, i found that letter, public letter, he owned less of what he owned. Like tax considerations. Coming up with a name so trafficked in and also yahoo i dont know. To me it feels like a marketing pitch, frankly, for starboard. Yelp, im closer to youre not writing public letters. Listen, you shouldnt be running this company. But he didnt want to say that. Yahoo had a response out this morning, i think you probably saw it. I think we should send letters listen to all of the shareholders. Send letters, exxon, get out of russia, verizon, close the longterm, pfizer, spin off Everything Else. Write letters. Fire off letters. Why not . I own six shares of this, ten shares of that. Mick done mcdonalds get out the breakfast business. Buy one share, evelyn davis, lets just get it nike, i want to see no, nike was good. Dont have do anything. Allergan shareholders sending letters and allergan responded this morning. Another story. Letters per share in the allergan deal. Letters per share in darden. He owns a lot of the company, going for a proxy fight. Here, yahoo really . Before break, pimco. Okay. Glad we got that in the ablock. Have we mentioned pimco . When we come back, headache for apple from overseas. Well tell you all about that. Take another look at premarket. Looks bumpy here at the open with futures down 145 on the dow. More squawk on the street from post nine in a minute. When the world moves, futures move first. Learn futures from experienced pros with dedicated chats and daily live webinars. And trade with paper money to testdrive the market. All on thinkorswim from td ameritrade. Take a look at futures. Moderate weakness at the open income and spending data. Big jobs number on the way friday. In the meantime, eu publish decisions tomorrow on tax probes into anal and fiat. Ft reports European Commission set to accuse the iphone maker of benefiting from illicit state aid in ireland. The paper suggests the probe could leave apple facing billions of euros in fines doing business there challenging for uber and apple and other companies. Vie trouble with it. Look, apple, read the story of china, too many iphones. Europe, again, seeing the same thing out of china and europe. Finding ways really to knock us. The google investigation thats endless. In china, waiting for the amat deal to close. They examined a lot of different companies. Nationalisms on the rise against the United States. Yeah, though in this case, lets not for get, we have been focused on inversions and potential tax revenues that will not become to the u. S. Companies such as apple, which are not a focus of any changes in treasuries, treatment or anything else, move intellectual property overseas and generate enormous profits. Around the rest of the world. Why cant you shop venues. Intellectual property developed in the United States as a result of tax dollars that we all spend to make great universities and other things that contribute to the ability to develop that kind of creative thinking. Tax code says specifically, everybody has a right to try to figure out how to have tax avoidance. They do. Just not tax evasion. Right. But that is how you end up with these kinds of issues. Laws very clear here. Supposed to be avoid them all you want. The law is clear, which is why we need comprehensive tax reform on a corporate level, bring rates down, close loopholes. If the government could bring a case, they would. Guilty until proven innocent u. S. Tax court. Only court in the country where youre guilty a4 head of time but got to have a law to prosecute we dont. Update version of the Atlas Advertising platform, allow advertisers to track and measure impact of campaigns on facebook and devices as they try to convince users their privacy is not at risk. But this will be a big step in mobile advertising. Yeah. I mean, going over the compares facebook versus alibaba. Facebook surfaces cheaper on 2016 basis. Look, they both have fabulous margins. Gross margins for facebook amazing. Stuff like this, nothing costs them any money. Everything they do, youre provided. Can you imagine if abc, cbs, nbc, you sent them programs, like, im going right im sending them black lisp how much are they going to pay me . Im sending it to them. My personal program. I want you to run it. Thats why i like youtube. Hey, fantastic thing. Let me just give youtube everything i have for nothing. A great business. Though i would love to understand the numbers a bit. 2016, facebooks multiple below that of alibaba right now based on estimates . A lot of different estimates all over the place from alibaba. Its really difficult to try guys who do the 2016 numbers disparity in wall street, i mean typically people understand theyre clustered for most companies. Guys wild high,explosive. I dont know, i look, if you think chinas on fire domestically, then theyre taking such huge share, its incredible. You get gigantic numbers. But facebook, its margins, margins fantastic. You said alibaba too rich at 90. I assume that remains true . Yeah. I still would like it lower the market doesnt look great. They may give you a chance. All you need is one data point that says babas not as perfect as you think. Some guy who decides not to buy apple 6 plus on a right on alibaba, you wont get that guy because, because, his phone bent and communist party wishes he doesnt have a fullsized phone, thats. Theres the market. We get cut in half. October surprise. Someone is like youre making jokes about the decline. No, not making jokes. Trying to explain it. Exactly. Arent too far from october. Talk about seasonal patterns later on. Cramers mad dash as we count down to the opening bell. Final look at premarket. Squawk on the street continues in a moment. Take on the challenge of Trading Options and futures. With the easytouse suite of trading tools. At optionsxpress by charles schwab. And well give you a one hundred fifty dollar amazon. Com gift card when you open an account. If youre looking for a trade idea, start at the idea hub. Where options and futures opportunities are organized by volatility, earnings, market activity and income strategies. Then run your new idea through the trade and probability calculator to get a quick look at the possible upside and downside. Streaming charts give you the realtime quotes and customized views of the market that can help you make your final decision. And when youre ready to make it happen, walk limit helps you save time by searching for the most favorable price. Find new ideas, analyze and execute your trades with just a few simple clicks, with optionsxpress. For a one hundred fifty dollar amazon. Com gift card when you open an account, call 18889805745 today. Optionsxpress by charles schwab. Goodnight. Goodnight. For those kept awake by pain the night is anything but good. Introducing new aleve pm. The first one with a sleep aid. Plus the 12 hour strength of aleve for pain relief that can last until the am. Now you can have a good night and a. Good morning new aleve pm. For a better am. You can see, getting color from trading desks. One of the busiest overnight sessions for Index Futures theyve had in some time. A lot of hedge fund selling futures. 2. 5 billion in volume, one house i know of. Keeping an eye on the markets. That makes sense because fridays rally seemed thin. Thursday. Was convincing the downside but it was rosh hashanah. The International Marks are all bad. Only place to sell liquidity is us. What are we talking about. Aflon, the thing we used to talk about before overrun by futures and fed funds going to 4. A bid from encannon, natural gas, shifting quickly to oil. This is a perm onplay, 30,000 barrels per day. Why do we car so much . Theres existing pipe out of permian. They have to put more in because we found so much. Things happening, oil to market, how does it get there . If its by train, truck, we dont want that. If its by pipe, its good. This is a great acquisition. You believe its a great effort . I think its great because perm onis incredible. Producing 3 million more per day than four years ago. You dont hear about it, fossil fuel, washington doesnt like fossil fuel. This is we dont know what to do with it. From oil to technology. The other deal is lbo, technology lbo, biggest of the year. Maybe the biggest lb of of the year. Got to check that. Biggest technology. Lbos have not been around, leveraged buyouts, m a activity led by strategics. In this case, it does appear vista, the buyer, which is a private equity firm that focuses only on software outbid a number of strategics. Interest in an auction for this company, jim. They came up with the highest price, 4. 3 plus billion lbo. Herb greenberg for reality check saying this is one thats going to go. People interested in spotifier, does Business Intelligence that people feel is worth much more. They did buy. If they spun it off. Maybe what vista sees they can buy ittipco and get rid of the division which is core. Feels like emc, okay, and vmware. Can you get a tax, i mean vmware you can run the sacramento kings, right . People feel like he was running the sacramento kings. Used to come on the show a lot. Missed, missed, missed multiple quarters. A company that feel was outrun by other companies in the cloud in terms of speed, s. A. P. , sales force. Com. Hes going to get a decent price. 26 , what they call, unaffected stock price. The opening bell for what looks like certainly a busy and down morning right after this. Take a closer look at your fidelity green line and youll see just how much it has to offer, especially if youre thinking of moving an old 401 k to a fidelity ira. It gives you a wide range of investment options. And the free help you need to make sure your investments fit your goals and what youre really investing for. Tap into the full power of your fidelity green line. Call today and well make it easy to move that old 401 k to a fidelity rollover ira. Squawk on the street live from the Financial Capital of the world. Well get the opening bell in just about 40 seconds. In the meantime, keeping a close eye on protests in hong kong. Some student protesters probably not alive at the time of tiananmen square. Jim, youve been tweeting, premarket people want out, they want out worldwide. Only market to seem is this one. Our market is broader than emerging markets. And, look, we dont know the effect of the pimco selling. I mean, 10 billion on friday. So minimal. Thats just friday. Its early. But a lot of a lot of people want out. Where were they friday . There were ample opportunity to sell friday. Where were they . What happened this weekend that was so bad other than russia maybe reaching a conclusion with ukraine . I dont trust the down. I dont trust the up on friday. I dont none of this stuff seems to have conviction. As we break fridays low, do we accelerate . Probably, yeah, i think so. Theres the opening bell, by the way. Poor breadth in the s p at the top of your screen. Here at big board, headstrong project, helping iraq and afghanistan veterans suffering from posttraumatic stress disorder. Anthony edwards among those ringing the bell here. Nasdaq, Dunkin Brands celebrating National Coffee day. Nigel travis on squawk box this morning. Im looking for an uptick. Coffee prices have started to roll over, one of the last commodities that hadnt rolled over. Thats good news coming in the coffee world. Really, arabica no, im glad to hear that. Beans up 65 , come down 10 in the last five months. Still 1. 50 at the stand. You want a windfall . No, no. Coffee windfall . I would pay them more, those guys work so hard. Good point. You can count the number of stocks in the green on two hands. And after triple digit moves every day last week, jim, this volatility i dont like this. I dont like this. Its not conducive to the market going higher at all. I think were already struggling with the idea that octobers a bad month. I mean, there are certain, of course, we know octobers the end of the quarter is tomorrow. Right. I thought friday might have been markup and todays you can take your positions up as long as you dont do it the last day of the month. And i think that you should never be doing that, obviously, not something people like, regulators like. But there seems to be nike happens and micron happens. Nike bullish for the complex of apparel. Micron, bullish for pcs. Nobody cares. New day. Forget that. Long weekend. What happened other than eagles losing to the niners . I mean, jeter. Markets not a theres no referendum in jeter here or wed be much higher. Missing jeter the jeter done rally. Jeter done unrally . But we do have, yeah, more or less everything. Everything. Why should stocks be going up . Why should stocks being going up . Personal income and personal spending. Spending number is the best number in real terms in five months. Great number. I mean, it should matter a lot. It doesnt seem to matter. Of course, keep our eye on. A lot of data this week, jobs number the headliner on friday. I havent seen recent consensus estimates. No, but we need a better number. Last one weak, two in a row, going to signify a slowdown. Love the dichotomy of slowdown in hiring and fed fund clamor for hedge fund funds rate. Why clamor if youre so short bonds you need that . The countrys not look, i dont think the fed should be buying bonds, thats a mistake. But it sounds like our countrys got a great economy building ahead of steam. Wheres the steam . Friends have been getting letters, with beautiful hopes, i like the lot drawn. Tear down your home. Thats the scarcity of land in suburbs. Making my head spin here. Give me reasons the market should go up, youre telling me making fun of the me. No, im saying an economy of equilibrium, where its not too strong, not too weak, you have an athlon deal, tipco deal, a deal in Womens Health people we havent talked about, personal income good, personal spending good. This is a market if we were an island unto ourselves youd be buying stocks but were not an island unto ourselves. Its massive funds going around the world trying to get out of everything and coming here because you can hit a bid. A lot of hedge fund selling now. Right. A big asset class. Maybe people feel, look the fed is done, its a big joke anyway. One stock able to trade up even on bad days last week was gopro. Its down today. A lot of discussion of three cams ra roca cacam cameras roll out for the holidays, 500 bucks. Orders twice as much as last time. You cant borrow the stock. The best performing of the new ipos. And i would question, i have been behind it. I dont feel at 81 someone saying, jim, you think it represents value . Its not a value play. Right. Its a great momentum stock of the year. You know, i just know the numbers from different sources that i have that its selling very well. At a certain point youre going to say, wow, thats in the stock. You know how many nasdaq 100 names i see green . One. Actually two. Wheres the story about Dollar General might be dollar tree . Did you see that one . I missed that one. I was going to put it to you but it was so embarrassing. My other contested situation that i have spoken about, as we look at dollar tree, of course is allergan and its continued attempts to avoid and tell shareholders that it has no interest in taking a deal from valiant. A lot of letters written in the last few days by large shareholders, not just hedge funds, not just risk arb funds but likes of jackson squair, t. Rowe at 5 , purchasing 9. 7 , and allergans board this morning did respond in a letter, although frankly, it was the same letter they responded with more or less when we heard from valeant when we first told you Third Quarter numbers going to be pretty strong. A lot of this, jim, designed it would seem, from the shareholder perspective to say, dont do the salex deal, a deal ive reported, serious discussions about, but last week did seem to slow or at least hit something of a i dont want to call it a snag but certainly slowed. I dont have an update on that. There does seem to have been a belief amongst the Shareholder Base at allergan and perhaps on valeants side, encouraging that letter writing, as you might imagine, you might see a deal announced this morning with salex, instead a letter from allergans board, many people saying youre not going to see a deal, its off the table, i cannot tell you thats the case. What i can tell you, this company does continue to think about acquisitions, they continue to say they have a high bar for doing whatever it is they would do if they were to do something, allergan, to use up Balance Sheet capacity to effectively put arrow through the heart of valeant. We shall see. But interesting to note, no salix deal, another letter saying saying, we hear you, were doing the right things and increasing earnings per share enormously, 475 million in cost cutting and all of the things weve done for you. When you have managers up 100 yearoveryear, why dont they do something that is not all that crazy . Why dont they sell . Lock in that gain . A lot a lot of allergans old shareholders have gone. They are gone. That makes sense because, boy, ill tell you, dont let a win turn into a loss, people. My god, gopros up. Gopro. You know, the sales are very good. I will be getting a new gopro. Really. What are you going to do with it . Attach to kites, dogs. I have an african tortoise. Yes. Very large. Attach it to him. Im going to do slow motion from slow motion. Very exciting. When cactus eats that watermelon, that could blow that out on youtube. Remember, they look at youtube, gopro, where you do something thats kind of cool, they promote. I think an african tortoise with a gopro on her head, i think thats worth watching. It would be like that andy warhol movie, empire state building, right . Thats art. Thats art. See that in the whipping soon. Cramers tortoise with his gopro. Dows down almost 160. Bob pisani on the floor. Good morning. Very broad weakness in the market across the board. Allot of problems stem from three countries overseas. Talking about hong kong but point out whats going on in brazil. There is an election coming up next weekend, first round of elections october 5th, the incumbent there and polls over the weekend indicates a lead over her challenger, silva. Put up the ewz, thats the brazil exchangetraded fund. Look at that, down almost 6 . And its been weak for the last couple of weeks because this elections very much uncertain. I can tell you this, obviously, the stock market is favoring silva, who is was looking very good up until the weekend. So theres a lot of issues here associated with this. One of the causes of weakness. Take a look at brazilian stocks, including the biggest stock there, petrob ras. Brazils the big teleconcome. Bali, big iron orr cop. Ripple effects in the international market. Emerging market etfs, looking at eem, largest one. Brazils 10 of the eem. So you can see, emerging Market Exchange trade funds week here. Eem down 2 . Move on to hong kong. You can see whats going on there. Youve talked about that a little bit as well. Pro democracy unrest there. Hong kongs been on a roller coaster ride. It was 23,000 two or three months ago, went up to almost 26,000. As you can see in the last few weeks come completely back around, back down close to 23,000. The low for the month in hong kong. The third country i want to talk about, or problem area, is over in spain. Theres a little bit of dispute between the spanish Prime Minister and the cat loanian president , mas. They are planning an independence referendum there and theyre in a dispute over whether they can plan it or not. You can see the effect of the spanish market. Europe generally weak as well. You can see spanish bond yields moving up a bit today. Prices moving to the downside. Its unchanged now but up earlier in the day. I think those three areas are causing turmoil in the international market, spilling into our area. An interesting week for ipos, not huge ipos but some tech ones that are coming, that are very interesting this week. Later in the week, a Financial Services platform, yodlee. Hub spot, they do software as a service. Inbound marketing, basically promote companies through blogs and podcasts and social media marketing. Very interesting area to work in. About 100 million deal. Keep an eye on that. Thats called inbound marking the phrase that people use there. Finally, they have dave and busters, restaurant business, announced terms for ipo. Offering 5 million shares, 5. 8 million shares, 16 to 18, that will price thursday october 9th. When we get closer, well give you more information. Right now the dow off the lows for the day, 152 points to the downside. Carl . Thanks a lot. To the bond pits and check in with Rick Santelli at the cme in chicago. Rick . Good morning, carl. Everything that bob pointed out around the globe, ask the question, from the markets perspective, is that aiding or taking away from Global Growth . Add into his litany of things that are going on in the globe, Something Like the french political scene which socialists lost the upper house. Theres a lot of dissatisfaction. Its hard to say what caused what. Many believe its rooted in weak economic growth. If you look at the yield curve, lets look at tens minus twos, around 191 basis points. The chart starts, its about a fiveweek chart. You can see it had a good degree of steepening, 20 basis points but reversed. To get a true picture, take a step back, show the start in june of 2013. If we look at tens, whether its intraday or twoday, losing momentum to the sell side. Many thought a knee inform jer speculative reaction of bill gross at pimco leaving. Down five basis points today. Open the chart up to july, you get a good glimpse of where resistance is and how the market has turned. Comes to foreign exchange, look at a lot of areas, lets start at euro versus the dollar. The chart goes back to september of 2012. Call it a twoyear chart. Thats basically when the euro was last here. We can see its been a long, very methodic slide. Similar to the dollar yen. Thats a chart of the dollar, screaming against the yen. Thats a main driver, of course, of the recent strength in the dollar index. Even countries that arent really present in the dollar index like mexico, peso losing ground to the dollar. Back to you. Thanks so much. When we come back, well bring you the latest on the protests in hong kong that are contributing to the mornings selloff on wall street. S p, if it closes below 1960 tomorrow, flirts with a negative quarter for the first time in seven quarters. Be right back. In a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Rough morning for the dow 30. One component in the green, intel it looks like, but Everything Else is down. Well keep our eye on that and the number of s p components in again, not too many. No. The opposite of friday. You can panic on this and say, which was real, wednesday and friday or thursday and today . And i think that whats real is that people are just trading like mad, theres not a lot of liquidity. People want out, its very hard to sell these other markets. Bob went over this report, you own brazil, are you going sell it down 5 . You own spain, down 2 . That is a really bad move. Remember emerging markets, i tell people, please, you think its diversified, they trade in lock step, theres people who always proselytize you should be in these because they have certain good performance at certain times not for retail investors. Whats wrong with taking a pass, waiting for a postqe environment, tapering anyway. Back off. Exactly. Going into earnings season, maybe im better off being short than long. I dont want to be short. I think, look, you want to put new money in, no, wait. Better opportunities. Thats all. You think a chance to buy in q4 . Yeah. I mean, look, in the end, when the United States trades on its own, which does periodically happen, well recognize were the safe haven for money than opposed to hedge fund. Hedge funds do that. A lot of group think, the mutual funds pick among the rubble and say thats a great opportunity. Active managers underperforming the market. Well, they like the market down. Hence you get 4 , im harping on that because its the dumbest thing that could ever happen for the country. Boy, wouldnt it be great short bonds you want the fed to panic right now. Theyre not going to. What would make them panic . Nothing. Theyre trying to worry about people getting jobs and putting food on the plate. That is like, you know, makes me sound like a liberal softy i want dinner that a lot of people in america play for dinner. But they do play for dinner. Some argue the pattern of high on expiration friday followed by three to five down has happened again and again and again this year. Let it happen. A lot of good situations im looking at. A lot of drug stocks coming down, the rails coming down, some oil coming down. A new valuation on athlon. Theres plenty of companies in the permeon, if you want to be there. The permeon is producing oil like mad. One thing we havent mentioned, a walmart adding kevin systrom, 30 and a director of wmt, pretty good. Yeah. They need to get more hip, walmart. You know, some i went to a walmart that had a nail savuka lon over the weekend. So, i tend walmart, nail salon. I dont think, maybe kevness got ideas. I may put a gopro and walk cactus i tweeted a picture, walk cactus down the aisles, get a lowlevel look at what walmart looks like from the floor. Id like to put a gopro on you on your shopping days, which is virtually every day, see what stores you vis it. Look like fast motion but realtime. I did very little shopping this weekend. Granton road, order stuff. I dont know what that is. Its a website. Oh, okay. It was a beautiful day. I didnt want to shop but had to get a little shopping in. Gorgeous weekend. Gorgeous weekend. Got hangover from the gorgeous weekend and sproles getting the ball once. I love you but give it to sproles. Stock trading with jim. Dows down 150. I have saved 75 in checked bag fees. Priority boarding is really important to us. You can just get on the plane and relax. I love to travel, no foreign transaction fees means real savings. We can go to any country and spend money the way we would in the us. When i spend money on this card i can see brazil in my future. I use the explorer card to earn miles in order to go visit my family which means a lot to me. Open port twentytwoohoneseven on the firewall for customer db access. Install version twopointthree of db connector and ensure verbose flag is set in case of problems. clapping sound isnt the cloud supposed to make business easier . Get the one that can connect to the systems that you already have. Today theres a new way to work. And its made with ibm. Or a helping paw ater, Everyone Needs a helping hand, so mattress discounters good deed dogs is raising money to help train Assistance Dogs for wounded veterans. Veteran i live independently because of what all it provides for me. And its huge theres a lot of wounded, ill, and injured out there just like myself, who just maybe need a little bit of help. Tag you can lend a helping paw too. Give at mattressdiscountersdogs. Com or any mattress discounters. Mattress discounters good deed dogs helping dogs help people. Dows down 149. The dows had plus or minus hundredpoint days 8 of the last 10 sessions. We havent do that in a couple of years. I find that unof theable. It says nobody has any conviction. Just sort of wait for your pitch. You know, jeter, you dont have so swing at everything. Swing when you can get a hit. Especially last at bat. Kram somewhe cramer and stop trading. Merrill lynch raised from 36 to 43, thats the one that can sustain us because intels pcs, we know from micron, is good. A stock that gets pushed and works, thats a signal that well get a turn. Finish line, the ceo was on mad money friday. Jeffreys and janney say buy. They had the wrong jordans, believe it or not, by their own admission. They had the jordans that didnt sell well, talking about nike, and think theyve gotten merchandise and inventory in line. Stocks down very big. I would urge people who feel that the whole shoe business has been pretty good. This is down and out. I think its one down, four up. People took nikes numbers and used as argument were not just buying cars and stuff for our house. People forgot nike already. No memory of what happened the day before. I dont like that kind of market because it says, listen, you know, bad data point, we go down even harder. Whats on mad money tonight . A whole group of companies that came public in the last year. This is marketo, cloudbased marketing software. One of the things people have to worry about, cloud stocks are not holding up here. Theyre just not holding up. So lets find out whether thats, again, hangover. Alibaba drew a lot of money, a lot of money went away from a lot of cloud stocks into alibaba. I dont want to say theyre in freefall, but got to see if something to buy. Chevron, these oil stocks are incredible. Horrendous. Yeah. Not in a good way. No, no, not in a good way. Despite the deal today. Im putting a gopro on chevron, see what it looks like to go to 110. That being said, is it an opportunity here . Eventually for retail, thats the problem, david, todays not you should be buying retail today for the up 100 tomorrow but people dont think like that. They think weve got to sell everything. No, oil coming down is good. But thats too dont go fluffal. Go to walmart. The nail salon. Take a break. Walmarts trying anything. Yes. Accounts for consumers, nail salons. Name jeter ceo of walmart, im a buyer. Youre a buyer in. Whatever jeter does, im a buyer of. Interesting to see. I never met him. He must be like the greatest guy in the world. I never met him. He must be amazing. Hes just retiring. Hes not going anywhere. Hes got that thing from gatorade walking around, saying hi to people. Only 40. Jim, see you tonight. Mad money 6 00 p. M. When we come back, so much more for us to get to, including update on protests in hong kong. Heres some pictures you might have seen. One more time, dow down 142. Back in a minute. Goodnight. Goodnight. For those kept awake by pain the night is anything but good. Introducing new aleve pm. The first one with a sleep aid. Plus the 12 hour strength of aleve for pain relief that can last until the am. Now you can have a good night and a. Good morning new aleve pm. For a better am. Charlie, the demand on this network, it is increasing by the second. Its crazy, huh . And people are relying on it more than ever. We cover more than 99 of all americans. I know, i cant imagine living without it. Its a place where people can come share knowledge and ideas. Its beautiful. Thats deep charlie. My selfie just hit a hundred likes. gasps a hundred at t is building you a better network. Its a rough open, as you can see, down 126 points. All of last week we had tripledigit moves on the dow. Weve not had that for a long time. Some of the stocks that have done the best, early sellers. Data from diana. Pending home sales down, 1 , month to month. Seasonally adjusted. Spending home sales, signed contracts of existing homes which were an indicator of closings in the next two months. They are down 2. 2 yearoveryear. This, the street expecting either unchanged. August pending sales down 1 , regionally speaking in the northeast, down 3 month to month, down 2. 1 in the midwest. Down 1. 4 in the south. In the west, they did gain 2. 6 , again month to month nationally spending home sales index is still at its second highest level in the past year. The realtors are blaming an echo does of investors from the market for this drop in home sales. Now we are relying on the mortgage, firsttime home buyers and theyre not returning to the market the way we expected them. Report from black knight Financial Services shows home prices nationally in july up 5. 1 year over year. Gains are moddering. Much higher in the months before, 5. 1 begin in july. Pending home sales disappoint, month to month. Not doing anything to let the alreadysour sentiment. U. S. Stocks remain sharply lower, off the lows this morning. Still the dow down 130 points lets bring in the president and cio with castle market management. Also with us, cnbc contributor, don luskin. You have been wildly bullish on this program, and in your recent notes. Are you nervous now, given what youve seen last week and the follow through today . Wild bulls have to say there are corrections from time to time, please. What was last thing i said on cnbc . I said, we are going to have a sharp correction right after that crazy circuslike alibaba ipo. These things come, these things go. Its happening. It doesnt scare me from the longterm program. We are in a longterm secular bull market. Mama said there would be days like this. My mama told me there would be buying opportunities. Exactly what this is. What does this correction look like to you . How sharp, how deep does it go . Weve gone three years now, without so much as a 10 correction. I dont see any reason out there in the world why we should have one now. I think its another one of those 3 to 6 corrections. It will turn around, have a slow motion meltups for new highs. It will be this constant slug up the wall of worry like weve had the last 6 1 2 years. Thats going to happen this time, too. Unwavered. Jerry, what do you make of the recent volatility, the newfound volatility in equity markets cop coming off i strong year . Quite healthy. Investors have to be reminded stocks are risky assets. At the same time you have to break the market down into its component parts. Theres a lot of stocks that should correct not only 5 , but maybe 10 , 15 . Others stepping into right here because theyre at the beginning of a multiple expansion. Like what . Well, for sure the energy space is trading today so the price of oil is going to break 80 and go to 60, all on the basis that the dollar has somehow meant something to Commodity Markets that royal represents. Thats not the case. Energy stocks in attractive longterm valuation models, sometimes 10, 12times earnings. Those are names you can hold during and coming out of a correction. Look at financials, in a wonderful place in the event that overall yield curves going to start moving up again. These are companies, again, inexpensively priced and ones that should do quite well in an up cycle. You have this wonderful opportunity here. All right. Financials and energy, what about you, don . Where are you finding pockets of strength . What weve seen at least during the selloff big names, multinationals, are doing better than small caps which are getting beat up. Russell sharply underperforming for the year. What i like do in corrections like this, i look at sectors that have provided the strongest leadership in terms of price action and in terms of a durable sustainable rational bullish narrative. And wait for those to have the sharp corrections that that kind of stock always has and buy into them. For me, that would be the biotech sector. This is where American Innovation and capitalism is showing its finest flower, yes, theyve appreciated over the last bull market. But when you get corrections like this, thats exactly when to get on those leaders who go through the deepest corrections. Don, what about the underlying state of the economy . We shouldnt lose sight of the fact that were now in the strongest stretch of growth that weve had in this country for about a decade with growth exceeding 3. 5 of 3 of the past 4 quarters and presumably thats what well achieve tomorrow as well. Where does that take you . Thats biotech arguing. Something more profound about business spending, Construction Spending and not a consumer thats looking very strong. Right. I like to look at forwardlooking indicators of economic health, things like capital goods orders, surveybased things like forward earnings for the s p, pmis. Those are absolutely surging. I think after this crummy recovery that we had out of the depths of the great recession, we finally beginning to pick up our stride and having something that feels like a recovery that our daddies would have recognized. Weve waited five years. Now the Business Cycle supposedly mature, its entering into its youth. Its a a wonderful thing. Bullish don. Jerry, emerging markets into the discussion especially whats going on in hong kong. Protest theres, concerns about financial stability. It is a hub of Financial Services. Its not just hong kong. You have to worry right now about some of the emerging markets with the Federal Reserve transitioning into a tightening mode. Yeah, you do but remember taking the feds place here is going to be the bank of ajapan, most likely euro, and clearly chinas in inflating their Balance Sheet as well i dont think its going to be the problem that People Associated a couple years ago. And i really think, as you watch emerging markets, while theres always one or two that have more risks than the other, the broad group, should never look back on an exposure to too powerful of economic engine toing priced at 10, 12 times earnings where they are right now and those are the exact kind of names you think you can get back to and youll see a breakout and wish you bought those names where they are today. Just might have to be patient. Thank you both on this monday morning, jerry and don. One of the individual names to watch this morning is clearly alibaba. For the first datetoday, more people get in with the company or against it, as options begin trading for the first time. Youll be aware that the shorts moved in with some effect last week after the 38 bump that we had on day one. Joining us now is brian nowalk, one of the first analysts to come out with research and put a price where you think alibabas going to be. The price is 110. You believe 20 upside from here, why . Its not stretch if you go to 110. The company over the next three years is growing top line almost 40 and its earnings 30 . So, if youre willing to pay 28 times earnings for a 30 grower in a company thats driving the secular china ecommerce story you have 110 stock. Okay. In the meantime, of course, so many risks, as weve spoken about, over the weekend. They spent half a billion buying a share in an Online Travel operation in china. Does that worry you . Does that distract you from the price target . No, it doesnt because this is this is something that investors have to understand with alibaba, that this is jack mas company. Part of what youre buying at 28 times earnings, you are buying the fact that jack is going to invest in multiple sectors and make this a global story across a lot of different categories. Its not just an ecommerce company. Its a platform to enable all online trans aac acactions incl travel. What does the fact that options start trading today mean . Last week, despite the fact that its difficult in initial days to borrow stock to short sell, people did that and managed to ramp it up to 3. 3 of the equity available and the stock fell almost 4 as a result. Once options come in what ratio do you think theyre likely to be . The facebook, of course, it was negative. Right. You know, its unclear. The nice thing about the options now is it will give investors are another way to invest in the stock on the positive or negative side throughout options as opposed to straight equity. Not sure where Short Interest will shake out on earnings. Are you surprised we havent seen volatility in the name . Its option of facebook. Last week less than 3 move on alibaba. Its treated as a mature company. A lot of credit go to the nyse and the way in which the ipo was handled, smoothly, good setting the initial price for when it floated. It is a great story. Its harder to punch holes in this story at this point than it was facebook when it first came out because mobile was the debate with facebook. With alibaba its clearer kind of the secular growth story where were going relative to facebook going public. Some might argue if the facebook ipo was about mobile, this ipos about transparency and regulation in china. Hong kong protests dont help. Correct, correct, its fair. What does that tell you today . Whats happening in hong kong . Yeah, its all part of the china risk with alibaba. You know, its like any of the chinese internet names. S always uncertainty among transparency. Part of the reason why, its not trade at a peg or priced to earnings faster growth, not going to trade 35, 40 times probably trade at 28 . 25 to its peers. Yeah. What about the slowing chinese economy . A lot of people talking about, im surprised, in connection with alibaba last week. Yeah. Its something to watch. But the one thing to keep in mind is the chinese economy may be slowing but the chinese ecommerce online story has growth ahead. The number of people online every year in china is growing over 10 . Essentially they have 10 Customer Growth every year. Of the people online in china now, end a quarter are on alibaba. So you have 1. 4 total billion people in china, half online, and only half of those are in alibaba now. Even if the economy does slow, theres still a lot of natural growth, more people to come on the platform and spend. Good to see you, brian. One of the first analysts out with the rating on alibaba. Up next, protests in hong kong, of course, taking over major highways, blocking traffic, forcing schools to close. Riot police have drawn. Squawk on the street comes right back. Big day . Ah, the usual. Moved some new cars. Hauled a bunch of steel. Kept the supermarket shelves stocked. Made sure everyone got their latest gadgets. Whats up for the next shift . Ah, nothing much. Just keeping the lights on. laugh nice. Doing the big things that move an economy. See you tomorrow, mac. See you tomorrow, sam. Just another day at norfolk southern. Ameriprise asked people a simple question in retirement, will you outlive your money . Uhhh. No, that cant happen. Thats the thing, you dont know how long it has to last. Everyone has retirement questions. So ameriprise created the exclusive. Confident retirement approach. Now you and your ameripise advisor can get the real answers you need. Well, knowing gives you confidence. Start building your confident retirement today. For over 60,000 extra curricular activities help provide a sense of identity and a path to success. Joining the soccer team. Getting help with math. Going to prom. I want to learn to swim. Its hard to feel normal, when you cant do the normal things. To help, sleep train is collecting donations for the extra activities that, for most kids, are a normal part of growing up. Not everyone can be a foster parent. But anyone can help a foster child. Its called the worst unrest in hong kong since the city was hand over to china in 1997. Thousands of prodemocracy protesters dig in, challenging beijing over its decision to rule out democratic reforms protesters demanding the communist leaders allow fully democratic 2017 elections. Joining us on the phone from hong kong, the wall street journals asia finance editor and Hong Kong Bureau chief, ken brown. Good to talk to you again. Hi. Seeing pictures and seeing video, but can you being there characterize how serious this is and long lasting it might be. Well, tonight is a contrast to sunday night. Its now monday night here. And its really peaceful. The protesters are out there. Police are nowhere to be seen. And the protests have spread across three of the citys biggest districts. Last night was pretty outrageous. They havent seen anything like this in hong kong, yeah, going back to the handover, tear gas, pepper spray. It was a really dramatic scene. How much anger is there, ken . And is there a sense that the chinese might have to deploy troops, that they might bring in the military . Is that a fear . Well, i think its very premature to say that. Theres no evidence that that is going to happen. These protests have been going on on and off all summer. Hong kong has protestifies all the time. Its common here. Hes are the most serious. The issue is the protests are likely to continue this week, its a holiday week. People expecting them this week. The question is, do they grow and does there seem to be no enin sight . What happens last night with when the tear gas came in it created a huge ground swell of support for protesters and so today, as the day went on, more and more people joined protesters and the crowds got bigger and bigger. Ken, can you explain exactly what the protesters are after and whether they feel completely denied or whether they feel that ultimately they might be pushing at an open door . Well, thats a good question. Hong kong protesters have beaten back beijing on a bunch of stuff over the years, including education curriculum beijing wanted to impose two years ago. Theres always a possibility. This is much more serious. This is a democratic election of the chief executive, which is the top official in hong kong. You know, the constitution of hong kong essentially came with the handover says there will be universal sufferage for this election and beijing has no problem as long as they get to choose the candidate, and thats the issue that upsets people however. They want to have a real election. This place is a colony until 1997, they never have been able to vote on their leader. Its an important issue here. Ken, we mentioned withdrawals of some of the forces, some of our ruers who have longer memories remind us in tea enma minute, a similar dynamic, forces withdraw, came back in following days with more brutal force, and we know where that led. Is the expectation in hong kong this is going to get worse . Well, again, you know, i think thats very speculative. Theres no evidence that its going to happen. I mean, if the Hong Kong Police department is a wellrun, professional police force and they have not handled this well so far. But you know, they have capacity if they need to to handle something. Youre talking about is the Peoples Liberation army, chinese arm coming in and taking control. I mean, that would be a huge event. You know the issue is the protesters have scattered all over hong kong. Its not like theyre in one square. And i think the police realized that using force only, you know, drew in more people and now theres a government came out today in hong kong and had some concessi concessions, minor, the plirs force came on tv to discuss what they did and defend themselves. So this is not like a standoff where both sides are, you know, glaring at each other. This is, you know, a give and take. You know, this is a pretty open city. I think it would have to get much, much worse before anyone thought there was going to be some military intervention. Ken, quickly, we saw sharp reaction in hong kong stocks overnight. The hong kong dollar, which barely moves, sitting at a march low. We know its an economy that is dependent on Financial Services, investment. Is what the feeling whether this will make a big impact . Yeah, thats a real question. I think a bunch of Bank Branches closed today, blackrock and cpng told people to stay home. A lot of protests going on in front of a lot of the financial district. You know, the markets been down a bunch for the last few months. I think the biggest immediate concern is this is a huge shopping week in hong kong, because its a holiday in china and mainland tourists come down to shop. October, which starts this week, is the second biggest shopping month of the year in hong kong. And already the chinas economic slowdown and crackdown in corruption there have hurt retail sales in hong kong. So thats an immediate blow that the citys feeling. Financial services, you know, if it gets really bad, but so far theres been no real evidence besides the stock market move today. Yeah. Golden week underreported. Just the heat, apparently incredibly hot in hong kong this weekend. Hope youll come back on the phone as the situation develops. Ken brown in hong kong. Up next, on squawk on the street, was the government bailout of aig unconstitutional . Former ceo Hank Greenberg thinks so. His lawsuit against the government begins today. Likes of tim geithner, benner n bernanke called to the stand. U. S. Stocks are falling monday morning but they have been cutting earlier losses. The dow is now down less than 100 points, 97 points. Earlier it was down 178 just around the opening bell. S p 500 down now less than half a percent. Did get a disappointment on pending home sales. As you can see, stocks starting the week in the red, extending last weeks gains. Six years after the u. S. Government bailed out agio, the long time ceo is suing for damages. The trial begins today. Our Mary Thompson is in washington where the trial is taking place. Shes got more for us, including whos going to be there. Mary . Reporter good morning, sara. Opening arguments under way as we speak in what is what will be a sixweek trial. Boyce, representing greenbergs firm is saying, there is nothing more of critical to our rule in law than power and discretion of government officials, that power and discretion must be used within the established rule of law. If not, it has no beginning and no end. Arguing that the government violated aig and its shareholders fifth amendment rights during 182 billion takeover, claiming it unlawfully demanded equity in aig in return for loans and demand punitive Interest Rates on loans, Interest Rates that it didnt charge other firms that provided aid to during the crisis. Starr international is greenbergs investment firm, the largest shareholder in aig. The lead plaintiff in this classaction lawsuit. This, opening arguments but during the second week of the trial, key argue techs of the governments response to the financial crisis expected to take the stand, including Federal Reserve chairman ben bernanke and former treasury secretaries hank paulson and tim geithner, running the new york Federal Reserve at the time. Greenberg, ran aig 40 years and resigned amid accounting investigation in 2005, has long maintained the government treated aig unfairly, declining to offer terms and options granted to other companies during the financial crisis. Suit seeks damages between 17 and 55 billion. The government denies those claims. The lead lawyer presenting his argume argument shortly. Saying starr never established what kind of damage was done to aig shares given aig had few options at the time of the crisis. An interesting six weeks. Thank you very much. Straight ahead on the program the largest advertising conglomerate in the world as ad week kicks off in new york. Sir Martin Sorrell will be with us. Goodnight. Goodnight. For those kept awake by pain the night is anything but good. Introducing new aleve pm. The first one with a sleep aid. Plus the 12 hour strength of aleve for pain relief that can last until the am. Now you can have a good night and a. Good morning new aleve pm. For a better am. Machines will be sprayed to be made. And making something stronger. Will mean making it lighter. One day, factories will work with the cloud. One day. Is today. Markets had a case of the mondays at the open down as much as 170 point on the dow. S p down to 1963 or so, which is seen seen he essentially flirting with flat for the quarter. Havent had a negative quarter in about seven quarters for the s p. Talking 1967, 1969 critical. Importantly about to get data from the dallas fed. An interview over the weekend, worried the fed might be getting behind the curve on raising Interest Rates. Not a new position but what he did say either today or tomorrow the dallas fed would release data which he said, quote, would knock your socks off. That may move the treasury market after an interesting day. Unusual for a fed president front running regional data like that. But dallas has been strong. Texas and other oilrich states have been outperforming. We know where that feeds in terms of fishers world view. Yes. Rick santelli in chicago and see if it does knock our socks off. Rick . You know, socks are ready. Trying to see what this number is. It should be out any moment. Last look was 7. 1. The High Water Mark for the series was 25. And that was back in april of 2010. I still dont see it being released. Expectations somewhere 10 to 12, 10. 8. I know thats strong but the socks dont seem to be knocked very far in this one. 10. 8. It was 12. 7 in july. I dont want to dismiss the notion, its better than expectations and better than last months 7. 17 but knock your socks off, not sure, Richard Fisher is a hawk. Voting days are numbered. But it is a solid number out of the dallas fed region regarding manufacturing activity. Back to you, carl. Sometimes its better to underpromise and overdeliver. Maybe more data to come. Maybe the jobs report on friday. Doubtful. Dallas data. Markets in selloff mode. Triple digit decline on the dow. Keep our eye on than recovering some losses from earlier. More on whats moving throughout the hour. Tomorrow on squawk alley, first on cnbc interview with oracles new ceo, mark hurd. What does he have planned for the tech giant . In a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Mr. Daniels. Mr. Daniels. Look at this. Whats this . Clicks are off the charts. Yeah. Yoshi, were back. Yes, sir more shipping more shipping [ beeping ] biggest names in advertising are gathering in new york this week to talk about the industrys future and what new technologys being presented by the likes of facebook will mean to buyers. Leading off, sir Martin Sorrell, ceo of the largest advertising conglomerate, wpp. Joining us now with our own julia boorstin. Over to you. Thanks so much, simon. Sir Martin Sorrell, thanks for talking to us today. Focus in advertising and Marketing Services group. I have 0toask about the news, protests in hong kong. You made a until of investments in china, the recent one last week. China our Third Largest market. Hong kong is a major, major area for us as well. What kind of implications do you see from the protests . Obviously, its not good news. And the demonstration, i think its a little bit quieter this morning, but obviously the demonstrations are troubling. I mean, cause is a cause for concern. We havent seen demonstrations of that nature for a significant period of time. But the hong kong electorate are calling for greater freedom for the selection of candidates, not having a slate of candidates determined by beijing, but having a broader i think it is worrying. From the point of view of china as a whole, our Third Largest market, we have 16,000 people there in 80 cities. 1. 5 billion revenue versus 6 billion in the u. S. And 3 billion in the uk. Germany being fourth with 1. 4 billion. Its very important market for us. Its been quite bouncy or variable, volatile. Volatile. Q1 flat, q2 was strong. Volatile in july and august. Havent seen september numbers. I would say its troubling, it is concerning, but well will to see how things develop. What happens your outlook for the next couple of quarters . China, my view is i remain a very strong and passionate bull for china, but im biased because we made significant inhave thements. We have talking about poll start, join company with the government and several leading executives who left alibaba and are working with alibaba on building ecommerce platforms for our Chinese Brands we went with and multinationals penetrating the chinese target. Alibaba statistics, as you well know, 220 billion. Amazon, 180. Amazon is Something Like 79 billion. Amazon, i think, is zero profit. Alibaba makes about 3. 5 billion after taxes. Evaluation numbers extraordinary and gives them a considerable amount of stock market power to do more things. I think we have to if i was competing with alibaba or in the west, i would be worried actually. The other big news of the day is facebook. Sheryl sandberg stopped by. I think the bigger news, jeffrey katzenberg. The ceo of dreamworks china. That is deal going to happen . Jeffrey . Yeah. Ask jeffrey. Jeffreys iconoclasiconoclast, talented guy. Content is sons belief. Hell need content for mobile platforms. The latest sprint here and marsalis in kansas. Interesting to see what happens. So i have to ask about facebook. They relaunched atlas, neutrals buying ads across platforms and websites. Chatting with sheryl sandberg. I said to cheryl, competitive to us, she didnt think it is. But google, facebook, they like to say theyre Technology Companies but masquerading as technology. Theyre just like you. The tools are not good for advertisers. Not necessarily not good but j obviously they have a platform that drives volume and traffic to Media Properties whether google and facebook driven by doubleclick or atlas. The launch of at loolas a week two weeks ago, the old platform of avenue a which microsoft owned it wasnt used by microsoft as extensively as it could be and sheryl in her talented way is driving a competitor to the Google Doubleclick platform. We have our own platform, the most successful Data Technology audience online audience buying companies as access, the largest in the globe, on the globe, and is working close with eighth at nexus. One of the things we announced the relationship, which is the technological backbone to our platform which competes with doubleclick and atlas as well. Simon hobbs. Nice to see you. Hello, simon. Youre always presenting yourself at cutting edge of whats going on, thats very clear. For a lot of the industry, its in the analytics coming from facebook and google too come flex . Like at priceline, hundreds of people sitting in amsterdam trying to sort out how to advertise in realtime and do what digital demands. But for most people, a lot of them, arent they going to default to buying prime time tv on a thursday night because Everything Else is just too time consuming . No, i dont think so at all, simon. Actually, i think, you know, changes in the patent of tv ownership. We had a panel here, we had cbs interactive representative, disney, espn. What you will see is increasing fragmentation. Our clients want to buy the right audiences and we are developing through our relationship with at nexus as google is with doubleclick and facebook is with atlas at right platform to buy the right premium inventory online and offline. Now, does that mean that the demise of Live Television . No. As was said on the panel by the executives from espn and cbs, its theyre buying audiences in different way, audiences using consuming in different medias, tablets, smartphones and increasing penetration of tablets and smartphones it fragments media landscape and makes it important for us to adjudicate and adjust and value different media in very in different ways and effective ways. I think it makes it more important our role more important, the role of the platforms more important, and our judgment more important. Gives us a bigger role, actual. I sir martin, i have a question. Its sara, on the Global Economic nature of ad spending, what your outlook is now. Where are we . Since you are the biggest in the industry versus, say, before the financial crisis, where are we . Whats the outlook . What does it tell us about the Global Economy . Well, since 2009, which was a dreadful year for the industry and ourselves, we have seen steady. We saw a vshaped recovery in 2010. And steady growth in 11, 12, 13, when we had increasingly record result in each of the years. But for the strength of sterling and sterling has weakened because of the run on the pound when Scottish Independence was a possibility, but sterling strength obviously made life more difficult because we report in sterling. But were seeing improvements in the general industry and gnp growth. Gnp growth in 14 broadly better than 13 and weve had a lot of quadrennial factors like olympic games, world cup, et cetera, which helped midterm congressionals. 15 has none of the quadrennial factors but the buildup to the president ial election in 2016. Theres the buildup to the olympics in brazil, the european football championships all of these things i think helpful as a platform in 2015. But if you look at worldwide gdp forecasts, theyre forecasting 50basis point improvement in 15 over 14. I expect the trend of advertising to remain the same in relation to gdp and improve slightly next year. If its 4. 5 nominal this year for advertising spending, maybe 5 next year. The growth will come more in asia, more in latin america, more in africa and the middle east despite russia and the ukrainian crisis, despite whats happening in the middle east. Thats where the greater growth will be. U. S. Is steady and growing and improving. Uk is strong, in front of the general election in 2015. The problem in western europe remains france to a lesser extent italy, but still a problem, and of course spain is recovering but with high levels of unemployment. A final question about the trends you see here impacting the u. S. Media giants. A lot of talk how upfront ad sales were down and questions about whether tv ad sales would rebound this fall or whether moneys moving elsewhere. Where are advertisers are putting their money now . Well, i think, as i said in response to simon, when he was saying is it all going to go to prime time television, the answer is no. And the statistics that we use, a lot in presentations which shows for the first time a difference between time spent and investment by ourselves and our clients. The difference is papers and magazines and internet and mobile. Internet and mobile had to be increased, newspapers and magazines had to be reduced. Theres a discontinuity for the first time on television. I think that does reflect the change in Media Consumption habits. You and i consume Live Television but on an app, smartphone, tablet, you know you look at the new iphone, i mean, iphone is halfway between mobile phone and tablet or look at the blackberry passport, all examples of new screens and new ways that people are consuming. The answer is, i think clients will increasingly review where theyre investing their money and its good news for us in terms of trying to help clients find the best deployment of their significant budgets. Advertisers following users as they move to different devices. Sir Martin Sorrell, thank you for joining us. Back over to you. Sir Martin Sorrell, knight of the realm on cnbc. Check out on the stock market, no doubt volatility is back. Weve plunged 178 points on the dow at the open boy, have we come back on that. Trip le digits. Art cashin will break it down. Relief. A cure. Today, we believe every life deserves worldclass care. As one of the top four hospitals in the nation, over 100,000 people from around the world come to Cleveland Clinic for care each year. And were ready for you with a Second Opinion or a sameday appointment today today today and everyday. Call today, for an appointment today. Whenwork with equity experts who work with regional experts who work with Portfolio Management experts thats when expertise happens. Mfs. Because there is no expertise without collaboration. This is kathleen. Setting up the perfect wedding day begins with arthritis pain and two pills. Afternoon arrives and feeling good, but her knee pain returns. Thats two more pills. The evenings event brings laughter, joy, and more pain. When jamie says. Whats that like six pills today . Yeah. I can take 2 aleve for all day relief. Really, and. And thats it. This is kathleen. For my arthritis pain, i now choose aleve. Get all day arthritis pain relief with an easyopen cap. The street. Im morgan brennan. Check out shares of nisource, the s ps top performer, sprinting off as sets, nat gas and storage into a tax advantaged mastership partnership, columbia pipeline group. Split complete by mid2015. Moves by similar companies, oge, energy, Center Point Energy have all had similar splits. Back to you. Thank you very much. Lets get to Rick Santelli, the cme group and the santelli exchange. Rick . Hi, carl. You know, weak pending home sales set of data points today, monthly, yearoveryear, followed by strong data over the last several weeks. Id like to ask our monday guest, mark hanson, taking for taking time, first guest of the week. Did you learn anything new from pending home sales . Can you handicap the recent trend in the housing industry for me, in your opinion, sir . You know, rick, its more of the malaise. The return to normal that sophomorically being celebrated out there as a positive when in fact return to normal, i believe, going to be what leads housing down 10 to 20 in prices and demand over the next one to two years. Remember, back in 2011, not coincidentally around the time twist was first announced housing bottomed on everything but end user fund mentals, the unorthodox demand by institutionals, hedge funds and private investors buying foreclosures to flip and remod and turn into rentals, the incremental pulled forward demands that fell down to 3. 25. End users pulled that demand forward and took house prices in some region like phoenix, inland empire, sacramento, up 50, 60, 07 in two and a half years. If im reading you right what youre telling me is that we didnt learn from the mistakes, the exotic financing that was around prior to the credit crisis, created a bubble in housing. After the bubble burst, we are now, we being the government, the fed, t. A. R. P. Type a laws, dodd frank, trying to recreate housing in a way that isnt it organic user driving it once again, is that about right . Is that about what youre saying . We did recreate 2003 to 2007. The last time everybody was turned into a speculator through artificial credit if you will, 1 , 2 only loans, stated income, we had a wide base of everybody in america speculating on houses. This time around, it will be all cash buyer took their place. Both parties from 2003 to 2007 and from 2011 to 2013, lacked what i call a Mortgage Loan house price governor. Official demand in that regard, mark, artificial construction going on . Are there extra houses built . Did the builders read this correctly . What do you see out there . There is no shortage of houses in which to live. Right now you can tell that by what the builders are doing. Housing starts for Single Family wont see a million you know in my kids who are 6 years old, in their school future. You know, its a thing that cant happen. Right now the multifamily and the Single Family for rent business is exploding. Its about ready to drop hundreds of to you sands if not millions of units the key piece of demand that end user, that repeat buyer, 8 or 10 million are stuck in their properties in mortgage modifications. Im going to have to leave it there. If im hearing you correct, never enough time. The return to normal in the Federal Reserves mind with regard to rates may be a bumpy ride for housing. Thanks for taking the time. Simon hobbs, back to you. Thank you very much. Lets see where we are on the markets. Every day last week we got a triple digit move on the dow and sure enough at the open today, we were down 178 points although weve clawed our way back. Art cashin, director of floor operations with ubs and cnbc contributor. Good morning. Good morning. What i thought was interesting at the open, immediately the selling was focused on the stocks that have done well recently, apple, delta airlin airlines, hp, green mountain. As we saw at points last week as well. Yes. I think people are trying to nail down profits. The markets are a little vulnerable here. We have both the geopolitical things going on, isis making some new moves and inroad, the taliban beginning to imitate some of the isis tactics and you had brazil and you had hong kong so general areas of concern and people worried about going into, if you would, september and october syndrome. Look at the intraday, art, we have clawed back 100 points we lost at the open. You sort of predicted this as we would reach a key technical level we would come back. Is that what happened . In my morning comments i said in the weakness traders would look to the 1963 1965 support area. And the low today was 1964. So Blind Squirrels do find acorns. Nice call. What about volatility . The fact its back. The vix is a broken indicator but all of a sudden were watching that closely after the spike last week. Im still not a believer in the vix, but i do think the volatility is back and i think its pretty much along the equity lines as of now. We had some similar volatility for a brief while in the treasury market and thats being exacerbated slightly by the guessing around what the bill gross move means. Will there be redemptions. If there are, will that force them to sell treasuries whether they want to or not to get the money back. A lot of question marks in the bond area. Jack this morning wrote in saying another expiration friday with an alltime high followed by a potential 3 to 5 dip. Do you see any reason to think this ones different . No not at all. But it still has a mild vulnerability to it. Jack is right, ive said often enough the week after the september expiration has a history for possibly being the weakest particular weak week of the year can make you vulnerable. See how we do as we get into october, the end of this week were going to have yom kippur and the beginning of the haj to mecca. That might be very and the jobs report. And an ecb meeting. Yes but in the prior two, isis might be targeting something. I hope you a good week, art. Thank you. Art cashin from ubs. Send it over to john fortt with a look whats coming up next on squawk alley. Good morning. Great show coming up. A look at facebooks latest ad moves that strike at google. Also take a look at Consumer Reports independent study of the bend gate thing. Is that finally over for apple . And finally, downtown las vegas, known for business deals, but not this kind. Could they be taking a cue from silicon valley. Find out coming up next. How much money do you have in your pocket right now . I have 40, 21. Could something that small make an impact on something as big as your retirement . I dont think so. Well if you start putting that towards your retirement every week and let it grow over time, for twenty to thirty years, that retirement challenge might not seem so big after all. And cialis for daily use helps you be Ready Anytime the moment is right. Cialis is also the only daily ed tablet approved to treat symptoms of bph, like needing to go frequently. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid long term injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any allergic reactions like rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a free 30tablet trial. Ask your doctor about cialis for daily use shouting location. Heres the location that matters the most. Here. Or here. Or here. Its wherever this is. To get customers to come here and stay here, youre going to need an app that connects to all your systems. So they can bank, shop, do what they need to do, and you gotta do it fast. Before the competition does. Its tough out here; you better be on the right cloud. Today theres a new way to work. And its made with ibm. Your customers, our financing. Your aspirations, our analytics. Your goals, our technology. Introducing synchrony financial, bringing new meaning to the word partnership. Banking. Loyalty. Analytics. Synchrony financial. Enagage with us. A new way to bet on alibaba begins today as its Stock Options gop. Were not going to talk about that. Dow down about 81 points. Been a rough morning as you know. But we were down about 170 plus on the dow at the open which was not a good beginning. S p 500 got to 1964 or so. We managed to get some of that back about 10 points as weve reached somewhat of a short squeeze here. Where are we going here . I think were going to go to squawk alley is live. We do have to start with the markets, stocks in the red off the lows. Dow down 84 as we said, s p 1974 coming after the stock market was either up or down 100 points every single day of last week. Havent done that. Dow has triple digit moves the lasts eight out of ten sessions. Joining us at post nine, john fortt, kayla tausche, john stein and well keep an eye. Art cashin telling us coming off an expiration friday you tend to get a dip, about 3 to 5 . Well see whether all that supply from alibaba, for instance, that cramer was mentioning means the market in cramers word has to cool it off a little bit. But thats a specific type of money manager a large cap tech stock holder. What