Welcome to squawk alley for a monday morning, im Carl Quintanilla at the new york stock exchange. The dow and the s p still on track for their worst month since january of this year. Lets bring in citis chief u. S. Equity strategist, along with mike santoli, who joins us at post nine. Good morning to you. Good morning. A lot of discussion about what fridays dramatic mean follows, were not seeing it this particular moment. Was that a one off . Yeah, i think so. Look, the market was fairly vulnerable already when we tracked investor sentiment, we saw complacency coming up, our interstock correlation data particularly was sending a warning signal and as a result i think you just needed a catalyst, could have been any catalyst. I think people respond to the particularly the comments, but it could have been the uwan weakening, fears in the u crane, anything can hurt you once you have vulnerability in the market. I was going to say, if i asked you a month ago if rosengren would bring a 400 point down draft, you might have laughed at me. Although the idea of a violent or dramatic increase in Interest Rates, that was a plausible one and i dont think you can now say all of a sudden bond yields are going to be continuing to lift and were going to have to adjust to a new scenario there, but i think it creates an opportunity for a gut check, because the Interest Rate sensitive sectors of the market are now bigger than the financial sector, so i think you have a lot of premise of a lot of the recent rallies and the new highs was lower for longer Interest Rates, economy improving, fed basically sidelined until december, so some of that got complicated in the last couple of weeks. Tobias, are we looking for things to worry about and looking in the wrong places . After the earnings season that we had, it was better than some people expected, but still the growth wasnt gang busters. Are there Different Things that we should be looking at as potential potholes that we should worry about more than Interest Rates . So weve been worrying about things constantly. It was very interesting, last week we were hearing a lot of concern, for example, about the services and manufacturing indexes came out and looked weak and all of a sudden youve got the feds never going to move, too, and i really jump on mikes comments about how people have really rushed into and almost desperate search for yield, rushed into these dividend oriented quote, unquote defensives and at a point they start being defensive and they were, and they still probably are. I see telecom up today, i probably wouldnt be chasing that, id be taking advantage of that and lowering my positions. Decidedly different form with so much of the debt out there turning negative yielding. Are negative rates working, pushing people into the right Asset Classes . I would say not, but look, theres a concern about when rates get too low, you know, what do you do. If youre a consumer, do you have to save more because youre not going to be able to save for retierm with a decent return on your money, do you spend less, or do corporates look at low rates, negative rates, and say theres real problems out there, i dont want to invest in my business, so you can make the argument and it doesnt seem to be having the impact Central Banks want. Tobias, how are you thinking about politics, debates, election day itself, as a variable . A lot of people cant get their hands around whether the markets are reacting to the news flow or whether it is, and to what degree. You know, carl, im going to hide and say im canadian, i dont vote in this election, but more seriously, the notion of who wins does matter more for sectors, we think, than the broad market itself. Right now most people believe that hilkt will win, thats what most of the numbers suggest, most surveys suggest, and as a result if mr. Trump were to all of a sudden win, i think that would be viewed as a negative development simply because it wasnt expected. Not necessarily because its necessarily bad. On the other hand, health cares probably under pressure under either one of them winning and you could think about environmental Sensitive Industries would probably do better under a Trump Presidency than Clinton Presidency and financials do better under either one, as well, as they are both thinking about pro growth policies. Curveball perhaps, but where have we seen the market react to unexpected political news up to this point . Are there specific sectors that have been more effective . For instance, Hillary Clinton and biotechs or others that we should expect to see perhaps get more volatile as we approach november . Sector level has been health care if you look at the positive side, anything that could possibly be a beneficiary of more Infrastructure Spending seems to be a bipartisan case. You look at the gravel stocks, no joke, thats really some of them that have been rolling, but i think in general the market as a whole has broadly been tracking the probability of a Hillary Clinton win. The folks have chronicled this a bit. Its not so much a one for one, day for day thing, but Economic Confidence and clinton win seems to fit better. Thats what you worry about. We saw what happened to brexit. Trumps comments about the feds independence or lack of independence will take on a greater sense of concern around it, especially involved with international investors. Well see if he doubles down on those in the next few days. Tobias, mike, thanks, guys. Lets get to some color on what is moving with the dow now up 53. Bob . Carl, quite a reversal weve seen. Bottom line is simple here, its a mirror image of what happened on friday. Take a look, remember friday, consumer staples, Telecom Utilities were all down, thats not happening, reverse is happening today. Banks flat to up were generally down today and the same situation is playing out if you look at the dow leadership. Tech names like apple and intel are up, oil names like chevron is now on the upside and banks generally remain in negative territory, although only fractionally. Whats it mean . Remember what happened, we have had a 75point move in the s p 500 from friday open to all the way about 6 00 a. M. This morning. That is a huge move in the s p 500. 75 points, my heavens, in a day and a half on not a lot of substantiative news at all. No surprise we should have a modest bounce. If you look at people should be thinking, rate hike is not coming or rate hike is not going to kill the stock market. You can pick which one, i think its too early to talk about trends right now, but those are your two choices. What we are seeing is them picking on lower priced stocks right now. Today is much lower volume than friday, but look at the number of etfs, the ones with the most volume today are the broadest kind you can buy, the russell 1,000, the dow jones u. S. Market, the russell 1,000 value. These are widely held etfs and have by far the largest volume today. Picking the bones of sold off groups here. Back to you. Talk to you in a bit. When we come back, turn it off, turn it in. Thats samsungs recommendations, the impact to the stock and the companys reputation left. Teslas ceo making an announcement about the autopilot feature, calling the update unequivocally safer. And the sixth annual delivering alpha conference tomorrow. Check out the guest list, jack lew, carl i con, and more. Squawk alley returns after a break. You know what, guys . Theres a lot of tree branches and dry brush over here. We should probably move the bonfire over there. [smokey whistling a tune] im guessing smokey liked that idea. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Samsung urging users of its galaxy note 7 to turn them off and turn them in as soon as possible because of the risk the battery may catch fire and explode. The recall comes on the heels of an faa saying the devices should not be used on board or packed in luggage. More than 14 billion wiped off market cap since the problem began. Guys, good morning to both of you. Good morning. What do you do with Something Like this, right, where you have an engineering flaw thats already made its way to market . Other than just starting from scratch, starting all over. This is, like, the biggest nightmare anyone can think of in terms of phones that are not just having some problem, but exploding, catching on fire. I cant think of a worse situation, and i think that what the company has to do is be up front about it and be very clear about how it will fix the problem, what happened, and how it will work, because they were hoping this is the best phone thats ever been released. In fact, its going to go down as one of the worst and the letter s on phones used to mean the next edition, especially in the iphone family, and now its going to be very scary for samsung. This doesnt help, certainly, at a time when apple is coming out with the iphone 7, but my question is, how much does it hurt . I know people who are die hard samsung fans, who are more than willing to wait a couple of weeks and get their note 7s back, because they already purchased them and said they like it better than whatever phone they had in reserve. How much does this really hurt samsung, do you think . The way samsung handled it is excellent. They admitted fault, doing a full replacement in correcting the problem, so samsung will get over it. I have no doubt a few weeks from now they will have replaced most of the telephones and the fans will continue buying the phone, because it is a beautiful phone. Its the best phone ever made. Thats why im still optimistic about samsung, despite the damage that took from the phone. Could this have happened to any company, or do you think this is a result of an engineering shortcut that was taken by samsung to get out ahead of the crowd . Well, when apple remember when the iphone 4 came out, we had the antenna gate, you held the phone wrong, it didnt work. These things happen in technology. What samsung are doing is rapidly getting technologies out, where apple is constipated. Youre not seeing new features out of apple other than a better camera, Water Proofing it, they are copying everyone else. Samsung is truly innovating. Wait until the samsung 8 comes out. It will blow our socks off, be ahead of apple, and well forget about it. I love it, samsung, strongly pro samsung partisan on squawk alley, i love it. Im a big fan of yours, but this is not the moment to think that everything is going to work out fine in samsung long term maybe, but the least you expect from your phone is it doesnt blow up and catch fire. Technically, its very different from this. There were many problems from there, but nothing compared to this. Fair enough. This is a serious problem, but theyll get over it. Thats the Way Technology goes. Things go wrong. Teslas car, selfdriving car started crashing. These things happen in the tech world. Speaking of which, elon musk announcing big improvements to the autopilot feature, saying the this. Just really quite unequivocal that autopilot improved safety, yeah, i think this should be and with this update, improves it even more. I would estimate that with learning, with the improved software, that i think well end up probablthree times safer than a car that isnt on autopilot. Thats my guess. Thats my guess. So here we have a situation where there was controversy, not just around the product design, but also disclosure surrounding the product. How will this play out west, sort of tesla country . Well, i drive a tesla. I got here to this stanford studio in autopilot mode, so i trust elon musk, i trust the self driving capabilities, except i know when the limits are. Thats the problem is. If you expect it to do magic, it wont. Its two or three years away from being fully autonomous, but the radar is brilliant. The problem with cameras is they cant perceive depth, you know, adequately and they cant see ahead of whats in front of you. With the radar they can do it, they can look under the car and see much differently. They are doing the right things. Im a big fan, i put my money where my mouth is, i buy the teslas, drive the teslas, im there. Obviously, elon musk is wicked smart and i trust him with your life, im just not sure i trust him with mine. The way he talks about technology and autopilot is so numbers driven. Okay, one in however many people dies, but really thats okay. Im thinking, ive never died in a car crash, not looking forward to it, but i get the feeling elon is okay with it. Exactly, exactly, is that an issue, is that a problem . When you listen to him, he doesnt sound like somebody you want to put in a car with your mom necessarily. This is exactly what ive been thinking about and reached out to a friend of mine who has a tesla in San Francisco. He writes, i love it, driven twice from San Francisco to l. A. , annoyed with the new update that requires you to hold the Steering Wheel every five to ten minutes. For some people, people like vivek and others in the world of the tesla, they understand the risk and how it works. For those that dont drive it every day, certain sli not there. The pittsburgh news about the driverless taxis are all part of this new world. Glad to have you, vive ask, our studios in one piece. You understand the risks and beta testing about a feature that eventually could be life and death, but people talk about traditional automobiles have a higher rate of accidents and fatalities, but they also say the only way you can guarantee these vehicles are as safe as they can be is if every car on the road is an autonomous vehicle, because there will always be the room for human error. How often when you drive on autopilot does the other driver make a mistake that you need to react to . Thats a problem, but i trust autopilot more, i dont have eyes in the back of my heads, my car can. I put it into autopilot when im on the highway because im worried about someone cutting me off. The car can see them. It is actually safer than human beings driving. So i look forward to everyone being in autopilot mode and every car being self driving, but in the meantime, im perfectly happy to let my car take over when im on the highway. Turning into the hour about technological flaws between tesla and samsung. Guys, good to see you both. Thanks so much. When we come back on squawk alley, highlights from our exclusive interview with barclays chief jess staley. First, donald trump joining squawk box earlier today with some very strong criticism of janet yellen and the Federal Reserve. Shes keeping them artificially low to get obama retired. Watch whats going to happen after just a serious problem and i think its very political. I think shes very political and to a certain extent i think she should be ashamed of herself. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Mapping the oceans. Where we explore. Protecting biodiversity. Everywhere we work. Defeating malaria. Improving energy efficiency. Developing more clean burning natural gas. My job . My job at exxonmobil . Turning algae into biofuels. Reducing Energy Poverty in the developing world. Making cars go further with less. Fueling the global economy. And you thought we just made the gas. Energy lives here. Welcome back to squawk on the street. Shares of apple up as much as 1. 8 on the day. The iphone maker having the most positive impact on the nasdaq 100, this as investors digest negative news surrounding samsung. If apple can hold on to these gains, it will be the best day since july 27th when it gained 6. 5 fkt. Kayla, back to you. Thanks so much. Earlier this morning barclays Ceo Jes Staley joined me in an exclusive interview here on squawk on the street, and as we think about the fact banks have been among some of the hardest hit companies in the fate of low Interest Rates, barclays is the most in the cross hairs. Its in the uk, which has seen the economy detract from the brexit vote. It is still increasingly globalized. They are undergoing an overhaul, which he said is not necessarily thrown off track by brexit itself. He called brexit a reality and says they will be realigning their business because of it, but for now the economic doom and gloom hasnt actually come to pass, although theres still many Market Forces outside of his control, namely the Central Banks. Take a listen. Credit markets are wide open. The british Banking System went into the brexit vote very liquid, very strong. I think the bank of england under Governor Carney has acted swiftly and correctly, in our judgment. You service so many Multinational Companies and right now a third of euro zone corporate debt is trading with negative yields. That cant help. Negative Interest Rates are not helpful, and i think one of the questions we all need to ask ourselves is, has the Monetary Policy going towards zero and negative Interest Rates, has that run its course, is it having the benefit one would expect by dropping Interest Rates, and i think its a fair question bankers need to be asking themselves. Whats that mean for the fed next week and what did he think of Donald Trumps comment that the stock market will plummet