welcome to "squawk alley" for a thursday. joining us here at post nine, jon steinberg, account accoukay here. jon fortt is off today. the main story of the morning, maybe the afternoon, down 188, 189 on the dow. s&p down almost 30 points. 1942. back to our first touch of the 50-day moving average since may. internals are not good. the a.d. line, 9-1 negative. gold is down. oil is down. really the only thing performs today is the dollar, as you've got ukraine, argentina, portugal and now with this employment cost report, kayla, the idea among some that the fed and yellen are behind the curve. >> and employment cost report doesn't often move the market. given the strength, gdp, the statement from the fed yesterday afternoon, they'll continue tapering, slack in the labor market. otherwise, overall the economy

looks good. that's a market where the employment cost index will matter and it's going to start having traders scratch their heads saying when are rates going 0 rise? >> cashin said 1950, important critical area for bulls to hold. below that, clearly. see where we go this afternoon. meantime, earnings, another part of the story. big loser, stock sinking, despite revenue that beat estimates. investors are concerned in the active business accounts increased a lot less than expected. meantime, micron, charter communications, whole foods, apple, among the names leading the nasdaq to the down side, do you more than 1.5%. amock the big players i know you want to talk about yelp, something about tech and earnings? >> broadly, these companies are expensive. any cracks in massive growth and massive opportunity they get punished. and in the information, an article out today talking how limited supply may prop up the tech stocks, because there

aren't many ways to play it and not a lot of ipos. another point as well. hot air can easily come out of these stocks. >> we mentioned yelp. raised projection for the year. up 27. what's wrong with this? >> who cares about a little profit on a company that's $5 million? supposed to come in at 82,000 local active business accounts. that's the businesses advertising on the platform. instead came in at 80,000. 4.5% of the total business accounts they have. it was 4.6% in the prior quarter. so it's not expanding fast enough. >> yelp's proposition has always been it's the go-to name in local. the name to beat. when you see growth like that slowing, leads people to say, hmm, maybe facebook is starting to eat into that market share. maybe some of the other platforms are making a better value proposition as the other local businesses. other thing, international expansion, even when growth was slowing here in the u.s., yelp marketed itself ars the internationally local business

home. but when you see them go to places like japan, expansion there is extremely expensive. even though they eked out a small profit, the idea, costs will continue to grow. >> and so crowded. i worked in local at google years back. people are interested in local, collecting revenue in hundreds and thousands instead of hurns of thousands with national advertisers, because it's so hard to get into and hasn't been cracked. now you have amazon in there, open table, grubhub seamless, google doing local delivery express. everybody's going after this right now. >> what about the idea there's a floor to some of the stocks, because there is always the option of a take-out? especially with yelp? >> interesting. once they start getting into multibillions of dollars and below the kind of high hundreds of millions, gets tougher. someone talking about twitter. roger saying yesterday, twitter could be a take-out, at $22 billion. it's not possible. relatively few media companies that can do a multibillion dollar take-out. >> carl, look at the chart now. a spike in the middle of jurn on

the back of the open table deal. everyone said, if open table can be bought by priceline what is a company like yelp worth and added premium to the stock. you can see in the beginning of march, it corrected in a big way. when the rest of the momentum stocks did, and didn't make it up until the rumors started again a couple months ago. i think there is definitely a premium, or was a premium baked into this stock, and when you see growth creator, maybe bigger questions? >> right. one anchor on the comp is going to be apple, and samsung. according to a report from the information, apple is going to have to delay its next generation of apple tv, because cable companies and content creators are not cooperating. they think apple doesn't have licenses to distribute all of the content they want to. meantime, apple competitor samsung struggling. 24% fall in second quarter operating profit now on track for its first annual profit decline in three years as smartphone sales slump. a lot of discussion about jk

shin and whether he overestimated wherewith all in the sector. >> absolutely. and cheaper chinese competitors now. the short story is, cheaper phones beat samsung this quarter. on apple, interesting there, apple wants to be a set-top box. everybody wants an apple set-top box. the cable companies won't let apple do it. they need to give it up and let the people have what they want. ultimately, at&t did this whip the iphone. remarkable success for them when they had it exclusively. you can only hold back the tide of what people want so long. inevitable, the best makers of hardware and software will be in your living room. fighting it is fruitless at this point. >> interesting to see the samsung number specifically with executives say they need to go to the below $200 per phone market? an extremely cheap phone. even in china. >> yes. remember in a lawsuit documents that cake out between apple and samsung, all the growth, $300 phones, the larger screen size and below $200 phones.

that middle area that doesn't really work. increasingly, the size of phones is getting larger and larger, basically an arm's race. who can have the largest screen over $300. >> margins become the big question. >> and discounting that hit samsung, operating went down, discount phones, because too many are sitting in the channel. >> and not stealing share. worldwide share, to 25, quarter on quarter. >> and iphone held up stronger than expected. the other part of the story. they had good numbers. >> and i liked when john ledger said there's going to be a move in the third quarter that will give consumers a chance to switch. there will be a new product. >> interesting. >> coming out. >> oh, a new product in the fall. i like that. like to idea. >> and we actually -- read an article yesterday saying sprint was offering more costization on pre-pay. didn't need to get all the blow ware on your devices as well. >> and the mac requirements, going to launch the 6, take this with a grain of salt on tuesday

october 14th citing one of the employees at the apple stores. not in september, but -- >> i know you doubt the apple sites i like. like 9:00 to 5:00 mac, mac reamers. they typically get it pretty right. if they're off, off a little. not like they get it totally out of this universe wrong. >> and t-mobile u.s. saying the new iphone in the third quarter, a bump for us. pretty definitive. wouldn't you say? >> and also we don't know how much john knows. apple keeps secrets even from john. let's take that with a grain of salt as well. >> we heard that one. >> i'm sure he heard that one. >> want to get back to the markets, still trading well to the down side. dow now down 178 points. bob, a lot of moving forces in the market. what are traders telling you this morning? >> exactly right. a lot of moving parts and not one reason. start with europe. europe is ugly. it was ugly from the outstart. a lot of nasty vitriolic rhetoric out of the ukraine. prime minister saying russia's trying to essentially -- an

actual quote -- came out and said they were essentially trying to revise the outcome of world war ii by annexing the crimea. nasty rhetoric. weak all day. markets there, you see. what's going on with adidas? weakness in russia lowering their guidance and talked about a need for the poor retail sentiment to turch around. used the word in general, affecting retail stocks all over the place. portugal, talked about this, huge loss there. don't have the capital to cove the loss. will have to raise capital and portuguese market at lowest levels since october. and here in the u.s., another reason we were weaker here. moved up -- employment cost index spiked rather notely. 0.7%. important, details changes and the costs of labor to businesses. now the hawks are out there saying, wait a minute. things are heating up faster than anticipated. another reason the fed maybe should want to raise rates sooner than later. hawks have more ammunition on

that. and then argentina's default causing problems in the emerging market end of the world. so the argentinean stock market is down, but also other emerging market stocks are down as well. finally, guys, i want to oint out, home builders disappointing earnings numbers. orders down, down single digits. missed on the top and bottom line. lowest since october. ryland, 1.7% ord other growth? what? i have 10% people expected. still scratching heads. look at the delines. the itb. home builders, one group. lowest level since going back to october. finally, carl, not enough. we have all of the issues of seasonally weak times of the year. august down for the last five years, september's generally weak as well. throw that into the mix and you can see why we're down here. back to you. >> bob, come back to you soon. bob pisani. a "market flash." julia boorstin in l.a. >> carl, ew scripps and general

communications stocks soaring after the two announced they reached an agreement to merge broadcast operations. the two spin off newspaper holdings into a separate company as part of the deal. ew scripp shares trading up over 10% and journal communications based in milwaukee, its shares trading up about 25%. carl, over to you. >> julia, thanks. quick programming note. tune into this program tomorrow. a first on cnbc interview with nick woodman, the ceo of gopro. this will be his first television interview after gopro's first earnings as a public company. of course, after the bell tonight. when we return, tablet sales boomed but are now crashing. strong words from the ceo of best buy. and walt mossberg joins us to tell us if tabletmakers are in big trouble. going to break, look at the media and telecommunication names. the breadth is horrible. back in just a minute.

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take a look at the markets. coke the lone standout, it gave up the ghost. down 25 points on the s&p. haven't had a last day of the month decline of 1% or more since may of 2013. that's according to the spoke. and volatility hitting a highest level since april 15th. strong words from best buy ceo hubert joely in an exclusive

interview saying tablet sales are crashing. what does this mean for so many others in the space? the co-executive eder of re/code joins us, walt, good morning. >> good morning, carl. >> you have a way of getting ceos to talk in plain speak. thinking of eddie coe at the conference and now this? in what context did he say this? >> i was at best buy headquarters, had never met him before. i was meeting with a number of people there, and you know, he said he'd be happy to do a short interview and in the context, it really was, i wanted to know what about the different categories of products. i was talking about pcs primarily, because as you well know, pcs have been flat or down for several years now. and he chimed in to say that tablets were actually, volumes, were crashing, and then went on

with kind of his explanation of why. so that's how it came about. >> walt, what do you think is attributable to the fact best buy sales alone have been weak the last two quarters? does it say something broadly about the tablet market or something more generally about best buy's health and its ability to push inventory? >> both. best buy has been struggling. they've had some quarters up, some down quarter, but clearly they're struggling. that kind of retailer is facing a bunch of pressures from online merchants, from high-touch kind of stores like apple stores, but personally, i think, you know, certainly in the consumer electronics part of the store, they have depended for many years on windows pc sales. and windows pc sales are not doing particularly great, and then for a while the tablet

sales were kind of moving in to replace some of that. maybe even more than some of it, and now -- i mean, you know, you can see it in ipad sales. and you can see it in the android tablet sales, and the microsoft surfer certainly hasn't been a giant hit. so i think all of those things probably contributed. >> walt when you look back at the cycles on mobile phones, i remember we used to all own our mobile phones much longer and they advanced more quickly and we upgraded more quickly. tablets once they advance nor quickly, look at the history of product cycles you've covered -- >> yes. there is. and, in fact, he referred to it. he said, look, if we get more innovation in tablets, they can come back. and the truth is, you know, the tablet leader, apple, did an

engineering feat, i would say, in thinning the ipad, the big ipad, down, and not losing battery life and making it lighter and all of that, but it wasn't a big jump and a big innovation there. and so, you know, i think there's kind of a -- a lull moment here, or a pause moment here. not only on tablets but frankly even on smartphones. you've been talking about samsung's numbers. >> yeah. >> you know, i think people are waiting to see what's the next big deal. it might be whatever apple -- apple could be announcing catch-up things with the nebsxt iphones in terms of screens and things but will probably have something. if only, you know, maybe a screen that doesn't break as often. that might attract people to want to move. >> we keep pointing to mark andreeson's tweet from yesterday, walt.

tablet sales are on fire. most have four to five-inch screens with higher resolution than the first ipad. that might be part of it. >> yeah, yeah. i know -- >> it is throwback thursday, by the way, and while we're on the subject of tablets, we wanted to look back at the original ipad. this is from the first-ever commercial for the tablet premiered back in march of 2010. ♪ ♪ be, be the charming tide take off your gloves and show what they hide ♪ i'll let you apply ♪ >> walt, look at your review of the first ipad. you wrote, i believe this beautiful new touch screen from apple has the ability to change computing for families and the primacy of the laptop could help eventually pro tell the finger-driven multi-face ahead of the mouse that prevailed decades. you've got to feel good about that i feel great about it, and

you know, whatever is happening in the sales figures, even joely in the interview with me pointed out, almost nothing has grown as fast, maybe nothing, in consumer electronics has grown as fast and gotten as big as quickly as tablets. so we have to keep that in mind. >> and yet looking back at that commercial, walt, the ipad of 2010 doesn't look all that different from the ipad of today. looks very similar. >> so right. i was thinking that, too. it's pretty much the same. >> yep, and i may be unusual in this respect, but i use my ipads and i have a couple of them. i use them for productivity. this idea nobody can be productive on a tablet. i mean, with or without a keyboard. i do a lot of what you would call business stuff on there, and that has only accelerated since microsoft put a really well-done version of office on the ipad. ironically, not -- they don't

have a similar thing on their own tablets, but on the ipad, they've got a very capable version of office on there. so -- i'm not giving up on tablets. but the replacement cycle may be more like a laptop and less like a phone. >> hmm. >> that may be what's going on. >> that's what joely pointed to. great news-making interview, walt. looking forward to more from you on that front. for now, thanks for joining us. >> i love being here. >> walt mossberg of re/code. when we come back, more on the markets here and abroad. volatility spiking. the european close on top as well and with most of the u.s. market down, a quick check on the morning's big ipo. now edging into the green. just 6 cents above its ipo price of $23 a share. and the most active stock on the nyse today. "squawk alley" is back in two. if energy could come from anything?.

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all right. look at the markets. that is -- that's the breadth of the s&p. you've only got a few dozen companies in the green now. as the index as whole down more than 25 points. dow down 176 and basically close to end of the year. joining us from wonderlook securities on the foreiphone. is this the beginning of something new? >> we're seeing something that doesn't nap a busy earning season. macro usurping the micro. all the global mack concerns manifesting themselves things like inflation pressure and the numerous global macro concerns we have russia, ukraine, certainly causing a slowdown in economic activity in europe and that's showing itself in deflationary pressure we're seeing.

obviously, the argentinean defaults, not a lot of weight in that. a well publicized event, and ongoing pressure in gaza. the real concern for the first time we've seen an aggravation of all of the global macro concerns we've had manifested itself in pressure on u.s. equities. we'll see how this bottoms out. sort of looking at the 1930 level for near-term support in the s&p, a 3% retracement, you know, if by chance we closed above the 1950 level, certainly a positive here, but down 25 now does not look good. i think it has a lot to do with things outside of our control and outside of the borders of the united states. >> 1930 would be a big move, art. wondering, a lot of these factors have been present for at least several weeks, if not months, whether it's ukraine, new sanctions announced earlier this week, and now we have a couple companies finally saying, yes, it could start to hit the bottom line. but i'm wondering, what about

today? do you think what has brought this in focus and actually made people start selling? >> that's a very good point. i think it takes evidence of what we assume is going to happen. so you've heard about sanctions as an ongoing process against russia. when companies actually come out and saying, adidas, talked about what they had to do in reaction to a slowdown, economic growth in europe. you actually see european inflation numbers coming. the manifestation of what we assumed would happen in the eurozone with more significant sanctions against russia that actually brings us home to roost. that's what's happened today. we've had a culmination of all of the global macro ing this we've been concerned about showing up in real detail. that's the tipping point today. actually getting evidence of the things we were afraid of, playing itself out in the u.s. markets. this is a market that hasn't seen a significant pullback in 2000 trading days. it's not unusual to see a pullback like this. >> quick to forget that, art.

thanks for coming to the phone. see you soon. >> okay. talk to you soon. count you down to the europe pone close in about three minutes. across continental europe, shares lower investors react to earning and disappointing data. eurozone inflation fell more than expected sparking new fears about deflation footsie boost. and gas bank directed at russia, in turn affecting their own economies. the conundrum they're in. >> the russian market on the whole earlier was up. sell on the room buy on the news. but we're seeing these hit the market a little bit more -- >> adidas, it's not a major company. them reducing guidance by 20%

and have it have an impact on the market is a sign how prac l fragile the market is. >> and goldmans call last week looking for near-term weakness in equities, as of today. when we come back, a biotech company is going public at the nyse today. right now shares are down just a touch. backed by blackstone. should you think about buying this this morning? the ceo will make his case in a moment. again, checking overall markets. worst day since april 15th. back in just a moment.

pharmaceutical company catalent debuting today. drug delivery technologies priced in middle of its range raised more than $800 million. stock down on a tough day in the markets overall. joining us now first on cnbc, the president and ceo of catalent phrma solutions. good to you have. >> grethanks. great to be here. >> what does it feel like on a day like today, with the markets down so much and so much volatility having your stock go public today? >> i don't think about the volatility. great to be on the public market. we've been under the private equity umbrella the last seven

years. blackstone has ban great owner for the company along with other minority sponsors, and we've been able to really refashion the company. so we feel great about the transformation we did with the business. and coming out today is absolutely terrific for the company and for our 8,000 employees. >> for viewers and investors who don't know what catalent does, you brought a box of your drugs with you. a drug delivery company. you have the patent on liqui-gel and time released? >> the way to think about the company, the world's leader in advanced drug delivery technologies and talk about advanced drug technologies, soft jehls, modified release, controlled release. and we also have a proprietary, an instantly dissolving dosage form. generally speaking, wes do dosage forms that customers haven't invested in to specialize themselves. they come to us, we help them develop a product and enter into

long terrell-term agreements. last, a company around 80 years, initially under another company. this company invented the rotary technology for soft jegels whic our trademark is liqui-gel. in a cvs, that's catalent. >> none exclusive? the customer pays for the developmentened you enter into an agreement. is it exclusive? >> depends. because of what we do, we are the leader in the space. customers may choose to pay us to be exclusive for them. in other cases they'll let us be, not the exclusive, and we can make it for other folks. in this case, we have some exclusivity with pfizer, the actual owner of the advil brand. >> is the sweet spot on the consumer side like an advil or changing the way a prescription drug is delivered, like a diabetes drug, where you don't

have to give yourself an injection every day? or something like that? >> i describe the company as massively diversified. we're not just in consumer health. 44% of our portfolio in advanced delivery technologies is in the branded rx base, about 10% in generic. 10% in biologics, the rest in otc, over the counter drugs and vitamin and mineral supplements. the sweet spot for the company is in technology. this is a technology and innovation company. what we do is help customers when they have a challenging molecule so it can't get into the body and work the way they want. they come to us, we help them formulate it and hopefully get into a long-term commitment if approve pd. >> we saw a report sales for the most recent quarter didn't fall. wondering what your outlook for phrma and phrma spend is? >> the economics of health care are up. the tides will rise with aging

populations. for catalent, what matters to us, because of our massive diversification across 7,000 products, generally speaking, what's important for us is what happens to an individual product, not what happens to a particular phrma company or something like that. so we build up a backlog of these products and they deliver over time and it's the reason we've been able to show a 5.5% keg over the last five years. >> using proceeds to do liever, important for the company as you continue growing. for now we'll watch the tape and we appreciate you join us. >> thank you very much. >> from catalent. and tomorrow is an important day for the fed. steve lease sman iesman is at h >> labor market, two pieces of data pointing to improving conditions in jobs, all raising the stakes for tomorrow's jobs report, maybe pressuring the market today and potential impact on fed policy interest rates and stocks.

four-week moving average for claims down to 297. lowest level since 2006, and the employment cost index up 0.7%. highest since 2008. although the question must be asked, was it a bounceback from a weak first quarter or with all the stronger data asking a sign of something new? making up his mind, while the fed keeps hope alive there is a deep can dark pool of laber that will come to rescue like batman, other evidence suggests that is a fanciful belief. the fed giving a new net trick, a new sheriff to gauge policy, when it said a range of market indicators suggests underutilization of labor resources. i went to the cheap of slack out there. former economic adviser to president obama, and he gave a list of what he calls yellen's dashboard. so all of these right here, these three here, are doing better than we did before the recession. layoffs, job growth and job

openings. the next group of indicators are doing worse. unemployment, the u6, broader measure and, of course, participation rate nap is yellen's, as in the words of bob, deep, dark pool. the debate sure to heat up. pressure build on the new fed chair to provide markets with a fuller sense of how much slack there really is in the labor market and how quickly it could be absorbed at the moment. a grows sense there is less of it and it's going away quickly. carl? >> steve cashin in the last few minutes suggested we might be on the alert for fed speak prepping the market for a rise sooner than we expect. are you in that camp? >> i think that's right. i think janet yellen will have to make her case on this story and convince markets that she knows what's going on out there in the labor market. i think jackson hold becomes important to, and tomorrow's number becomes important. two words you need to put on the potentially endangered list, considerable period. essentially what charles plauzer

objected to. interesting to see if others begin to object to using that term, which is the time between the end of qe and when the fed would raise rates. in the statement it says considerable period. some commentary this morning, carl, that that phrase could be endangered. >> steve, thanks a lot. see what happens in the morning. steve liesman. a quick look at t-mobile here. shares off the highs. still positive this morning after the wireless carrier did beat expectations for q2, adding 1.5 million customers raising subscriber growth forecast to a profit. joining us first on "squawk on the street" and credits shifting mobile trends for their growth. take a listen. >> everybody will have multiple devices. most people have more than one cell phone that they're -- a tablet, wearable device, and i think that's -- that's why -- >> different companies -- >> but i would also say, there is -- there is a lot of activity happening between carriers. there a possibility for large

switching pool. we had a 30% increase in gross ads year over year. this is a healthy, growing industry. >> cramer asked why it is that the turn is so low among most carriers especially t-mobile. he said it's because people are increasingly going to multiple devices. like you have here, kayla? >> and i have one verizon, one at&t device. different networks. >> it's the blackberry ceo, did the interview with ford talking about how customer, coming to blackberry. he wants to be the lockdown device. the first time i heard this brought up. >> a percent and a half, bracer and at&t posting a solid number and john ledger basically said, look, they have krach contracts. to turn that low, not locking somebody into a extract a big deal. >> and going from 1-5 to -- interesting conversation. quick programming note. tune in to the show tomorrow. as we said, a first on cnbc

interview with gopro's chief nick woodman. first television interview after the first earnings report after the bell tonight. when we return, all three major indices seeing losses of more than 1%. economic out the nasdaq. down 1/6. on pace for the first monthly loss since january. we'll talk about the sell-off, a lot more after the break. in a g faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.

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got a big show coming up at the top of the hour. continuing with a money manager on the front lines of the dotcom crash managing billions in the high-flying tech space in the late '90s. why paul meeks says he went from being asked for autographs to getting death threats. and stocks heading to are their first down month in six. with all of the global turmoil brewing, is this finally the tipping point for this rally? plus, gopro out with its first public earnings report after the bell today. talk to the most bullish analyst on the street about what he wants to hear. all at the top of the hour in about 15 minutes or so. >> scott, might have more action to talk about, too. look at t-mobile. shares halted after climbing 9 6.9% before hitting a circuit breaker. dow jones with a headline, iliad of france making a buyout offer for t-mobile, made to the board of the company. indicated 31 to 34. last trade, you can see. had john legere on earlier.

talking about the future of consolidation, including regarding t-mobile. he said many path, not just about sprint which is the conversation lots of people like to have, but if dow jones has this right, crediting a source, this got a lot more interesting. >> yes, said he need scale, but wouldn't wade into the sprint name specifically. so this would certainly be interesting, if this were to happen. >> by the way, iliad, not familiar, a french provider of telecom based in paris, into telephony, prepaid cards, founded in 1999. we may get more familiar with them this afternoon. mean thame, back to the markets. chief investment officer at bmo private bank to talk about a sell-off today. good morning, jack. jack, can you hear me? >> yes. can you hear me all right? >> yes, i got you. here's the way everybody's thinking. walk in this morning with portugal, ukraine and argentina and then get this economic data lending more weight to the argument the fed has to start

working and quickly. is that the way you see it? >> yeah. i think it's mostly really the onus on the ecb, quite frankly. interesting, up until maybe 15 minutes ago, there was actually a treasury market sell-off, which would suggest to me that, you know, that people aren't clamoring for more safety at the moment. it's turned around. treasuries are slightly up. seems to be more an international issue than a u.s. issue and now it's kind of, still pushing mostly on the ecb. >> jack, inflation was supposed to be the last nail in the qe coffin, so to get a .6% increase this morning is this the beginning of the end as you see it? >> i think it does put pressure on the fed. i do believe they'll do everything in their power to do nothing. i think we will hear a lot of

hawkish rhetoric from the fed and very little action. quite frustrating. on the other side of the ocean where we're hearing a lot of dovish rhetoric. so i would like to see kind of a reversal on the european side of things. >> jack, thank you for that. hate to keep it short, appreciate your time. jack pab ablin. now a halt on sprint. having hit a single stock circuit breaker indicated 6 to 8. last 737. you can imagine as t-mobile gets a bump on this report out of dow jones, that francis iliad is bidding for control. you might expect sprint to trade to the down side. looks like we might have sprint open again. t-mobile is open. sprint halted. getting some activity here in telecom in the midst of what is a very active day, but broadly to the down side. >> the expectation on the buy side that if sprint were the to come back at this point, talks behind the scenes have been

ongoing between t-mobile and sprint. if sprint were to come back, this deal would be a little more expensive than possibly they had planned on it being, and, of course, iliad, a company that had not been rumored to be around t-mobile in the past. carl, you mentioned it before. 1999. france, telecom company. but up until now, had been sitting on the sidelines of a lot of the action that had been squarely focused on sprint and t-mo. >> talking to fabor in a few moments about what this means and rerack hopefully sound from legere on our program, he said, watch out for beal married to a conversation that pairs us with sprint, because there's many different ways that consolidation can happen in the telly c telecons. >> scale is ma-of-whwhat it's a. >> a gain of 7%. keep our eye on that. meantime, dow is down 182, and bertha coombs is here with a

"market flash." >> big week for telecom. meantime, the worst performer on the s&p 500 by far. the defense contractor experiencing its biggest intraday drop ever. the company firing four employees as part of an ongoing investigation that an overstatement of net sales and deferred cost overruns in its aerospace business. as a result, the company taking a pre-tax charge of $84 million cutting its full year outlook. the stock getting hammered, down 16% on the day. kayla? >> thanks so much, bertha. cisco says by 2020 the internet of things will include 50 billion connected devices. in the world of crowd funding, the space has taken off becoming some of the most popular projects on kickstarter and indy go-go. this week, two such projects are battling it out. blink, you may remember a wireless, no fee, no contract home security system. sends alerts to users smartphones and can stream live video of your home.

the project's goal, $200,000 with a little more than a month to go, blink already received more than $340,000. it is up against jeebo. a robot for the home. adapting to user behavior. taking photos, order dinner on demand. jibo. so far it's raised over $1.2 million. vote now at cnbc.com/techcrowd. the winner joins us on "squawk alley" tomorrow. carl? >> all right. we now have both sprint and t-mobile resume trading. again, if you're just joining us, dow jones reporting citing a source francis iliad bid for control of t-mobile. during the 9:00 a.m. hour we asked in what form could they be involved in consolidation. here's what he said. >> obviously i'm a big fan of john legere running anything. let me go on the record, you know, and point that fact out. the issue, of course, is scale,

balance sheet. things if i want t-mobile and the carrier brand to lead the industry to compete and succeed to number one over verizon and at&t, if i want to be able to bring to the united states wireless industry sustained real competition, you need more scale than we can organically get to in the short to medium turn. therefore, transaction that gring brings capital, highly beneficial. >> precisely while you're seeing sprint shares down. if france sweeps in, takes a big piece of property, less for sprint. >> a piece in the "journal" from march of this year profiling iliad and co-founder, french reading might be better than mine, carl, ill yid sweiad bougr this year and seen as many as the key to international european consolidation in the low-cost carrier space. >> interesting how france keeps

coming up in our m & a. weth you are us trying to change our tax base to that country or them trying to buy spectrum here. >> interesting, look at daily motion. the deal bgot blocked. there is always a regulatory concern whenever france comes up as well. >> ge somehow managed to buy l al allstum. >> true. stocks continue to sell off. down almost 190 points on the dow. worst day for the markets since the middle of april, and we're back in just a minute. what would happen... if energy could come from anything? or if power could go anywhere? or if light could seek out the dark? what would happen if that happens? anything.

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♪ mattress discounters welcome back to "squawk on the street." i'm sorry. "squawk alley," the best shoaff on, and in terms of today's "santelli exchange," i think we're going to be right on. what if i told you in this jar had a magic pill to cure the common cold. triple money back guarantee. you should laugh. it's ridiculous to think anybody would pay for a pill that would cure a seven-day cold in a month. but yet let's have a little counterfactual fiesta. i hear steve liesman talking about the dashboard and the federal reserve. you know, all i hear is this rumble of moving goal posts. okay? first of all, i think that the magic pills at the federal reserve have given are very analogous to a one-month cure

for a seven-day disease. in my opinion, the economy would have cured itself on its own in half of the time. i agree with my buddy peter, cnbc contributor. what lies in front of us that is now becoming a tail wind is the fed. and when i hear about europe and their deflation problems, i'm sorry. okay. all you economists put both fingers in your ear right now. because i think the whole deflation argument is as bunky as it gets. they need to deleverage. they need to reprice, and most of the things going on are because of all of the things they've tried to do to artificially fix something we can't. remember "poltergeist," they're here? it may be here. "it" means an ongoing recovery that is now going to be a head-on collision with unintended consequences of all of the things central banks have done, but one thing we need to really remember, in january i said, i think rates are going down, because people are nervous about the stock market for the

first six weeks. because in the end, no matter where treasury rates are, it's the only hedge for a down stock market. and if that is about ready to begin, watch treasuries. yes, come off 260, at 2954. remember the correlation. down stocks, down yields. i don't see any way around it, and if there is a way around it, that's the first chapter in the book of unintended consequences. back to you. >> rick, thank you very much. rick santelli, he make as good point about the fact that very few thing, working today. the dow is down 200 points. s&p down now 30 points. 1940. gold down, oil down. really, the dollar, the only performer of any sort today. de keep your eye on 16576 on the dow. the level we began the year. 16,576, basically, 101 points actually -- no. not even that. above that level. start talking about dow being

negative for the year if the trend continues. >> and the month, worst since april. only two down months so far this year. carl, the trend has generally been positive, but we are near the break-even mark. in the nshg space, too, exxon, mobile, connick ccoe, and to rick's point, always a big part of the story as well. >> you can't forget the idea, too, the jobs number is tomorrow. we'll get a lot more data, not just about participation and unemployment, the degree wages of changing in the country. -th and the m & a picture, david faber with more on what this means. >> i wish i could give you more. i made a round of phone calls, you might expect, after the dow jones headlines. unfortunately, don't have a great deal to offer. not completely clear to me when

john legere was sitting here what he knew if he knew much of anything. don't forget, t-mobile is crommed by deutsche telekom. the germans. he runs the show. a large company. they only 60-plus percent of it and talking to sprint for a very long time. this company, carl, what i can tell you, has about a $19 billion enterprise value, from what i can gather at this point, but a $17 billion market value. $2 billion or so in debt. it's a reseller, again, of network capacity. i'm not sure it really owns a great deal of network. i don't see what synergies, if any, would be available to them. yes, we have extraordinarily generous credit markets. you could imagine, perhaps, they would be in a position to try to do something, but they're smaller in size. that is market cap wise than t-mo. no synergies apparent to me at this point. granted it's early, in any sort of a deal. let's wait and see.

holefully a little more insight, behind these headlines. >> knowing what you know about the dance between t-mo and sprint over the last months, looking at the dow jones headlines. iliad may offer to t-mobile of u.s. do you think that's price depend ntd and the talks were deep enough to wait sand ewhat they could agree with sprint before entertaining that or something they would entertain on a parallel basis? >> i guess, kayla, if you can find a way to take the germans out of their position at the highest possible economics, i assume they have to look at it. the sprint transaction, may well face regulatory impediments, none the less seen as potentially value creating and something eventually both companies may need do. the germans under the plan that they had been hammering out for quite some time, as you say, would still own a part of the

combination. so they would still have that economic interest, but if you're giving them an opportunity to cash out entirely at a significant premium, you can't just say no to that. that being said, again, i want to do more. i want to hopefully talk to some people who actually can tell me exactly what's going on. but i would point out it's not clear iliad, whatever the bid may be, can reach that economic number for the entire stake, and it's unclear to me what synergies would be available to them. >> did you talk to investors who said there's no way this iliad company can do that? any sentiment from investors? >> you get people looking simply at what their business model is, reselling network capacity and the size of the company and people scratching their heads a bit. not much more than that at this point, john. again, i'm working off headlines from a competitor. >> right, trying to read into what legere told us at 9:00. >> interesting. of course, he said a list of potential options, carl, when we interviewered him in terms of