time. matt, you mentioned trying new things. what about trying old things? are you going to be jane bourne again? >> i hope so. we are trying to figure out a story right now. >> is jeremy renner out? what happens to him? >> no. that's parallel. >> i'll rush you. >> maybe after we are done. >> gentlemen, thank you for joining us today. don't miss our conversation with former president clinton. right now it's time for "squawk on the street". good morning, welcome to "squawk on the street." i'm david faber with jim cramer. don quintanilla has the day off. if you are short the market, it

would be a good start. let's get to our road map and start things off with the markets. extending yesterday's losses, disappointing economic news and air strikes in syria are setting the tone for the morning trading. also weighing on the market, the obama administration makes its move to counter inversions. the rising trend of american companies leaving for lower taxes. shares of takeover targets such as medtronic, shire and abbey are moving this morning. we may be getting closer to two large transactions. allergan is in advanced talks to make its own deal to defend off valiant alachemann. alachemann is already redding to sue. >> yesterday nasdaq posting its worst sessions since july 31st.

dip ing dipping to a 2014 low. china rose slightly. you have the u.s. and arab allies launching attacks against islamic militants in syria. president obama due to make a statement on the u.s. strategy against isis later this morning. >> coming up at 11:00 a.m. eastern, becky quick is going to interview former president bill clinton. that will be live from the clinton global initiative conference in new york city. that interview will air live here on cnbc. oh, man, we've got so much to go over. let's start with the markets given yesterday. b we saw the s&p down 0.8%. geopolitics this morning with significant bombing of targets and syria. what do we do? >> we are in a bear market for commodities. it's begun the last few weeks and accelerated yesterday. the fact that oil is up 60 cents

despite potential major disruption in the middle east. shows you, it is just -- popper was off gigantic yesterday. these are signs of a worldwide slowdown. if there isn't a deal between russia and europe, europe is going to slip onto a very serious recession. the chinese comments resonated throughout the world. we are starting to see new signs. oil slowing. truck building slowing. that's been driven. aerospace rolling over. when the commodity complex rolls over, it reminds people of august of the between period where you began to see -- no, bear market and commodities. you've got to own it. >> that's when the credit markets stopped functionally properly a slow, steady drip of credit markets seizing up. that is not happening now. far from it. >> empirically.

>> is this in china? >> yes, all china. china would tell you if europe doesn't turn around, we've got no place to put the stuff we do export. it's russia. it all started with russia. we could have been up today with that chinese pmi. chinese was okay. we are looking at a self-inflicted wound between the tensions in western europe and russia, and as it gets colder, all i hear about over and over is gazprom shutting down the west. david crane talking about solar power in germany. europe is powered by natural goods. natural gas comes from russia. if they don't get a settlement here, if the tensions continue, europe does go down minus one, minus two. that means china, just the

reverberations. >> the bear market is in commodities. event lu, you would think what a great beneficiary we are. >> the stuff i saw yesterday on the nasdaq had nothing to do with commodities. >> that was a lock-in feel. yesterday was a very bad hangover. there was a big belief that alibaba did well. we are in great shape. alibaba did well, everything is good. with the exception of mobile eye and go pro, the news was all bad. apple was such a buy. no one wanted to touch it. alibaba, you take $92 and $68. this stock can trade down to around $84, $83. those guys will come in and buy it more. you give up on alibaba you, give up on the bright light. in the meantime, it is incredible you can to the get any lift in things like wheat and corn. yet somehow that's not reflected

positively on markets. our markets are so linked to other markets, we just go down. and the inversion news, which you are all over, ain't helping no one this morning. >> it is very complicated. it is significant. the obama administration, jack lew treasury secretary announcing new rules to make it more difficult for u.s. companies to cut tax deals striking these deals in terms of merging with a company domiciled overseas. some get access to their offshore cash without paying u.s. tax on it. >> we have looked at the tax code. there are a lot of obscure provisions in the tax code. we do not believe we have the authority to address this inversion question through administrative action if we did, we would be doing more. >> a lot has changed since then. let me just say at the outset.

it's very complex. in speaking to as many people as i could this morning and late last night, these actions are harsher and more severe than might have been anticipated, though frankly, many of the companies that have yet to invert may be in deals. we are talking about the two biggies. we haven't heard from them yes. everybody is trying to work through this and understand it. medtronic deal, just to give you some sense what we are talking about and why it is important. bernstein, if medtronic were not able to use its overseas cash to fund the deal that, would appear to be the case, this change could change the near-term economics of the deal since it would most likely then need to borrow the same amount to fund the transaction, and raises the possibility medtronic might want to renegotiate the deal. we stress it remains uncertain whether that scenario plays out. as people are trying to

understand what is at stake here. ability to access overseas cash once you bring it back has been impacted here. not earnings dripping where you put debt on the said companies. it's not going to hurt the multinationals which was a fear. it really is conceivably going to have a significant impact on those that are considering inversion, including the two companies i mentioned because it could change the economic balance of those deals. it doesn't mean they won't happen. i suggested there were many things could you do with the tax code. i think it's i real write important to recognize is that everyone who is in the administration always has the ability to manipulate the tax code. that's what they do. you're supposed to need congressional action. that is something you hear about. that is what alexander hamilton

wanted. irs can decide tomorrow your suit is not deductible any more. whatever they want. i am concerned this is the wrong day for it. yesterday we had the beginning of what i felt was a terrifically hideous sell-off in a lot of stocks. today we come in and the one safe place was health care. health care is where the action was yesterday. a lot of the health care stocks were up yesterday. hmos were up. drug stocks are up. you look at this and i'm thinking, medtronic. >> it's a $1.6 billion break on abbey shire. you can't recut that deal because it's uk takeover law. you would have to sink it and start again. also that one said legislation.

is this legislation? >> no. >> i don't know. you've got isi and a bunch of other banks. everybody is trying to make sense of this. nobody is fully certain what is going on here. >> astrazeneca is going down. abbey is a great company. these are great companies. it's just that the european markets are so hideous that they are cause to take a breath and say wait a second. there is something bigger going on here. the bigger is the german numbers which came out last night. they show that this cold war with ukraine versus russia is beginning to really crush the economies. as we knew it would. >> we are going to have a lot more on inversions as things become a bit clearer because it was supposed to take effect immediately. people are unclear exactly what that means. doesn't seem to apply to already-inverted companies. only those considering it. not really an issue for the burger king deal. much more so for the two we

mentioned. we are going to talk allergan, valent. and michael dell, what he thinks about the newly-wub alibaba.

welcome back. we reported late yesterday after dow jones had a report, as well, on allergan's interest in salex. that has ramifications for valeant's offer to buy ackerman. talks have been serious for a number of weeks. david pyatte seems to be taking a measured pace here. nonetheless, they are of significance.

there is interest in salix by allergan. it would be an all-cash deal designed to close prior to the december 18 special meeting of allergan shareholders. what i can also tell you at this point is they are just beginning the discussions about price between allergan and salix. if they want to get something done, they need to get it done with relatively quickly, within the next week or two if they want to get that timing for closing the tender offer. remember, that's got to be open for some period of time prior to the december 18 vote, which then makes that vote all about, do you want to get rid of directors who did a deal which you had no vote on? it would take up much of the balance sheet capacity of allergan valeant is relying on.

it becomes unclear whether valeant would be able to raise a lot more money. this morning phil ekman comes out in a letter saying my undertaking the acquisition without a shareholder vote, you are breaching your commitment shareholders would have a vote. >> i'm a fan of david pyott. does it make sense to have a gastro? this is a pure defense maneuver wall street loves. all the research said this would be a natural fit. allergan stock would go much higher. there is another bidder underneath.

i find it amusing, and i'm pro-pyott. >> it is an already inverted company. this i do not have reporting on so i'm relying on others. there was not interest from allergan, but they are still out there. i don't know whether these talks with salix motivate activists to become more aggressive or offer a price allergan would consider. we shall see. a salix deal would go a long way to preventing valeant from being successful. >> and the deal drops out. >> salix can walk away from its cosmo deal with nothing. >> allergan is a buy. you have a deal with street

lights, a $16 number on 2016. that would be too low. ten times earnings with 11% grower. how can you not buy allergan? people say it was at $88 this time last year. yes. they had genuine patent woes. allergan is a buy. >> how about cf industries shares up sharply. the company is in merger talks with norway's yari. it would have the biggest producer of nitrogen fertilizer. yara, 36% owned by the norwegian government. we've been talking seriously for three weeks. structured as a true merger of equals. you split the board, you split the chairman and ceo. 50/50 shareholder. the respective market caps are such that it becomes impossible

from that side of things. i'm hearing the synergies are beyond what analysts might be projecting in such a combination. i hear is there a lot of momentum behind these talks. yara is underlevered. you could combine the balance sheet more. >> i like this deal very much. i was worried about a down year for cf. i mentioned commodity decline. i was looking for a couple dollars less than 2014 than we would get in 2013. why i like this deal, go to the cf industries website. you will see where their plants are. plants in oklahoma and louisiana, where is oklahoma and louisiana? in the heart of natural gas land. what do you use for fertilizer? what is behind fertilizer? it's not gas. this country is filled with it. the fertilizer companies are all relocating here. this deal makes a ton of sense. i like it. >> unclear from what i picked up

is to where the combined company would be located in terms of -- it's not an inversion, so to speak, but they could become a foreign company. >> right. >> these are the good vikings. these guys win. >> they win. we'll see if that deal happens. they were once adversaries. yara was the white knight. they had to up their bid. >> they obviously don't like each other. >> now they do. new ceo at cf. also on the social issues could become a bit easier. >> if you are in the fertilizer business, you need to be located in louisiana, oklahoma. i suggest that the norwegians start learning a drawl. >> got it. up next, we've got cramer's mad dash as we count down to the opening bell. one more look at the futures.

coming off a 0.18% drop in the s&p. 1.4% drop in the nasdaq. we've got a lot more "squawk on the street" after this. we needed 30 new hires for our call center.

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>> i want to salute this stock clorox. he is retiring from the ceo job. job well done without a lot of great growth. there is no growth in clorox. most companies would kill for this rally. >> nobody is going to buy it at $96 a share, are they? >> take profits. i agree with citi. sell clorox right now. just sell it. get that $110 bid from unilever, sold to you. i'm taking down numbers from unilever just thinking about buying clorox. this is going to drive you crazy. bed bath and beyond saying this is the most amazon company on earth. william blair comes out today, downgrades buy to hold. you are a research analyst. you know you downgrade it.

do you think that's done idly? you think the guy says today is a good day to downgrade? it reports after close. how bad is it going to be? they have great cash. every time i mentioned before it goes down, talk about private equity. you talk about the tooth fairy and other illusions i've had in periods of my life. i don't want to put in the pe. down graded on a day of reporting is usually not bullish. >> good thing to know. or else you are a silly analyst. >> you don't want to be a penguin. you would like to be -- >> listen, if he turns out to be right, tomorrow we'll laud him for having had the guts to make a call prior. >> exactly right. tomorrow we'll praise it or marie antionette the guy. let him eat gateau, partner. >> sounds good. [ male announcer ] once, there was a man

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"squawk on the street." opening bell will be ringing in about a minute. what is the key to your market today? not necessarily a stock. >> yahoo. getting $5 billion after taxes. has a giant stake in alibaba. here is a company valued at minus ten. you've got guys like dan niles saying they are basically incompetent fools who don't know anything. this is a company with actual earnings power with a ceo that will be given a gigantic check to buy back stock. where does it say yahoo is a fine yus $10 stock.

>> i could go with apple, too. >> there is the opening bell for this tuesday. a banking group in colombia and south america. >> i always liked colombia. >> fibrocell science at the nasdaq. >> carnival raised its full year forecast, as well. carnival results being helped by a jump in last-minute bobbi ibo. increased onboard spending. >> when we hear fuel prices go down, they decline 3.5% for carnival. i thought it was interesting to

see continental europe strong yield. asia shipped a lot of boats there. this is a major, major bull market going on right now in cruise lines. there's been great consolidation, too. it's a win, it goes much higher. i said friday you should buy carnival and it's not done. >> on my screen my eyes tend to bigger names than technology, whether apple, facebook, ebay, yahoo, twitter, all which are down this morning. yahoo down more. twitter has been giving it up, as well. does this negative tone in some of these big mega cap names continue on the down side in the nasdaq? >> a lot of tech is europe. europe is the biggest danger zone. you need to wake up one day and see that ukraine's got a bumper

zone in there. ukraine joins eu but not nato. when do you that, all these stocks will reverse. many of these companies have gigantic exposure to europe. twitter can be a buy. why? twitter is in major profit mode. last week we had peter teal tell me which i'm a complete moron, which i always enjoy. my mom used to call me a moron. then again, she was family. it was easier to take. peter teal wants to call me a moron, that's fine. >> except he's not a sibling or parent. >> he's on tv and we are kind d kindred. i have no grudges. >> we know people. we can take care of him. >> i'm much more in that lincoln thing. >> much more forgiving. >> yeah, like bishop tutu.

>> i think noto changed the inflation. i think twitter is a buy on the way down. it is on the way down. it's not like i'm saying let me be butcher block for you, throw me a knife. i do like twitter and facebook. they are coming down. they are coming down because they've got a little profit taking going. your cf industries is the only green i see. apple is having so many good things happen right now. you need to see apple stalize. then you need to see ya hoo stabilize. then come back to twitter or facebook right here. >> want to come back to inversions, specific to the enormous deal between medtronic and covidien. where is covidien based again? they are irish.

>> how many workers do they have in that build iing. >> meg terrell has a statement. "we will release any impact following complete review." >> when i spoke to st. jude. st. jude was upset by this because it was such a competitive coup. jack lew doing the right thing in terms of trying to make the competition be leveled again. >> if you already inverted, it's not level for anybody who hasn't. bob willen. >> said nothing can be done. we are a hapless, pitiful, helpless giant in the face of the tax code. who said that? >> i don't know. >> it's a variation of nixon. >> alexander hamilton?

willen this morning in a note released said he doesn't believe the new rules should invoke the provision of the medtronic deal that allows the parties to walk away. these rules will not result in medtronic being treated as a u.s. corporation which we understand is the only condition that permits the no-fault aggregation of the deal. when you change the economics, when you impact their ability to access their overseas cash, some of these deals can go from accretive to somewhat dilutive. that could impact how much they want to pay for it. we'll see. >> we don't want numbers cut. >> these are the biggest deals out there. two of the biggest deals of the year. both big inversions. >> abbey coming back. remember, there are

fundamentals. abvie is doing quite quell. there was a sense pfizer would come back. >> there was a hope. >> a hope. >> always a hope, isn't there? >> i don't want to hear about it. >> actavis becomes prey for pfizer. >> really? >> it's been around for a long time. >> now with the new inversion rules, who knows what anybody can or cannot do. >> valiant. as that stock goes down, whether ackman sues this guy or that

guy, that is the death knell. >> that hurts. >> it is in david pyott's interest to not quell any talk about actavis which a lot of people like. it doesn't hurt to quell. you don't want to quell salix. everyone is what a natural, what a great company. no one great a darn. that was the most overvalued, now undervalued, a gastro? the dominant gastro player. pepcid? >> we don't know what the price will be. they have begun that process trying to figure out what price allergan would pay for salix. there is no guarantee there will be a deal here.

pershing square threatening lawsuits. maybe they close it and don't give shareholders a voice at all. will that board coming up in the special meeting scheduled for december 18th find itself out of a job? some would say that. if you create value at allergan with this deal, perhaps nobody will be in a mood to vote out the board other than bill ackman. >> valeant needs to make acquisitions to make numbers. >> yes. do i want to be invested in a company that needs to constantly buy companies to make numbers? >> that is part of the strategy. they are a roll-up. of course, more than anybody, they benefit from that lower tax rate that they got from the old bio fail deal. you know the strategy, cut wasteful r&d and benefit from enormously low, very low tax

rate. >> the reason i like allergan, they've been able to convert r&d to actual earnings share. one company in the drug business that is not just a giant sales force. >> you love sales force. >> we'll hand it over to bob pisani on the floor. >> another weak day following on notable weakness in europe and asia. we have a new stock trading here

at the stock exchange. you see the crowd behind me. this is colombia's largest bank. it's not an ipo. technically, it's a secondary. it trades in colombia. priced 81.5 million shares. that is a big covering on the heels of alibaba on friday. there's a lot of competition coming this week including pricing tonight. this is going to be the second biggest ipo will be priced tonight after the biggest in history. how many demand for more money is in the market here. $23 to $25. this will be an indication of overall demand. that price range at $23 to $25.

elsewhere in the world, most of the rest of asia was not up. australia was. i see brent moving to the downside. copper is down. i have aluminum on the down side. no real influence or follow through. we are in a down trend for a while in the commodities sector. europe on the whole, their pmi numbers weren't very good either. you see move to the down side in all the major markets here. the slowdown there has affected brent crude, as well. there you see all the major markets down about 1%. as for stocks here in the united states, carmax is an interesting situation right now. they were very disappointing on margins and comps. the used vehicle volume was flat.

they didn't show growth at all. this company has a large percentage of their buyers in the subprime market. that market was much stronger last year. i think the fact it's not as strong this year is one of the prime reasons they were disappointing. if there is any good news at all, i would say they are continuing a very big buyback program. other thing we are seeing today is weakness in some of the social media stocks. the same situation is happening again here. most of the names started to the down side, yelp, twitter and groupon. facebook is now up and linkedin to the upside. more weakness in energy stocks. we'll get that big citizens bank deal tonight. $23 to $25. if we price notably below that $20 or $21, that will be a sign of strain in the ipo market. back to you. >> all right. thank you very much, bob pisani. now to the bond picks with rick

santelli in chicago. >> treasury market in many ways has gone back to sleep. if you look at a two day at 5, you can see we are staircasing lower in yields. there was a good run in yields. you see the curve effects of this play out. let's pick the first week in august to start several charts. the first one is five year. what you want to notice is it's a 45 degree increase of interest rates. basically, we shifted everything up 25 basis points. look at the ten over the same time period. higher interest rates started much later. that steepness doesn't start until halfway in. if we look at boons,s you should notice how similar the left side high yields are to the right side. they can get no traction for higher rates with regard to boons. yield curve. you can see even though in this

submicro chart going back to august there's been dramatic flattening on the curve. we had steepening. it subsided a bit. many think that will go hat in hand with higher interest rates on the entire curve. let's look at what's going on in foreign exchange. two-day dollar yen. we see the dollar taking a breather. this big rally as the weak yen gets magnified based on some of their economic internals hoping that chart to open of 2008. that's the last time we were here. although on the 19th of this month is really technically when we hit the highest level. with regard to the dollar index, very euro centric. we are close to 50-month highs going back to june of 2010. we comp back from 14-month highs several days ago. back to you. >> thank you, rick santelli. up neck, exclusive with dell

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>>. >> we are waiting for president obama to deliver a statement from the white house on air strikes that began yesterday against isis in syria. we will bring that statement live here on cnbc. john ford had a chance to sit down with michael dell, the ceo of dell yesterday in an exclusive interview. take a look at what mr. dell had to say on alibaba's recent public debut. >> it's an interesting company. it's good to see jack succeed so much with that platform. i've seen a few studies that have shown that founder controlled shareholder structure seems to be working well

impericaly across companies. that is not something we think about. >> i'm not sure i understand the context of the last bit. he, in fact, is the controller shareholder in dell. >> he caught the bottom in the cycle. applaud that timing. he knew his company better than anything else. terrific move. >> special exit's of dell said they negotiated hard and long to get the best price they could from mr. dell. carl icahn appears to have been the best one arguing he was getting away with it on the cheap.

>> before the deal he would talk to people and they were saying things that were really good. it's just no one believed. people thought it was a secular down turn. you get a million shares on deelt at $68. you are trying to create a blended average. if you buy a million shares at $88 you've got an average of $78. that's why you're seeing support at each level. i mentioned yahoo is the key to this market. yahoo is stabilizing. i know that there are a lot of people critical of the management of yahoo. i am never critical of big checks coming my way. >> the question becomes on the 394 shares remaining.

will they dispose of that in a tax-emission manner? that is a huge delta. huge. >> we don't want to float the soft bank rumor because that's not true. >> i don't believe that is true. >> if you accept yahoo has all this cash, why does someone not come in it has negative enterprise value. >> alibaba could buy it. then they own their own stock. it's a huge buyback. >> i'm stunned. i am professing being stunned. >> why would anyone want to own yahoo? >> why would anyone want to buy aol? these companies are sticky. the applications of yahoo were sticky. because i think they go buy yelp, grub hub and suddenly they are the one-stop yellow pages

restaurant, inns, hotels. they can buy travago. no they can't. priceline has been going down lately. it is a buy. my father has been warning me the travago ads are so compelling people are selling priceline. that's not game. >> that cannot be your stop trading idea. >> no, it isn't. [ male announcer ] some come here

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time for stop trading. >> restoration hardware. the ceo bought $2 million last night. that's a real buy. open market buy. stock 27 cents short. people were disappointed with the quarter. so was he. he said it wasn't a great quarter. better quarter wasn't. they had that very heavy catalog. that was a miscue. that's behind them. buying the open market. >> do we have history in terms of his previous purchases of a

like nature or not? >> he is in there buying it. candidly, i don't know. this is a big buy by a smart man with a big brand strategy derailed by a very heavy catalog. >> i didn't get the heavy catalog. it must have caught a lot to mail. >> it was a lot of catalogs coming at once. for those of us with l-5 problems, it was a nonstarter. the stocks i talk about, i see yahoo stabilizing. let's see if this stock can stabilize. oil and gas has been horrendous since continental resource had an analyst that said it wasn't so odd. we need to see china be able to increase its gross domestic product.

we can get back to where we were before alibaba. >> well summed up. thank you. >> it was fun. did they cut your pay when you say that? >> i hope it's fun. >> simon hobbs has a look at the next hour. >> a statement due from the president on the bombing overnight on syria. we'll bring that to you live. more of our exclusive interview with michael dell and talk about this market down now 27 points with morgan stanley's chief u.s. strategist adam parker. 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. what's up for the next shift? ah, nothing much. just keeping the lights on. (laugh) nice. doing the big things that move an economy.

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[ male announcer ] ship a pak via fedex express saver® for as low as $7.50. welcome back to "squawk on the street." you are looking at a live shot of the south lawn on the white house. president obama set to deliver a statement momentarily on the air strikes against isis in syria. cnbc's chief washington correspondent john harwood is joining us from the clinton global initiative in new york where the president will be heading after he makes this speech in washington. >> incredible juxtaposition of events. the president preparing to speak at the global initiative here this afternoon and united

nations tomorrow. he will chair a security council meeting. the discussion will be these air strikes which he signalled before, but the timing of when the united states was going to hit isil and related groups in syria was not known. it happened last night. the president is going to explain to the american people why he took a step that many people never expected him to take given his track record, given his opposition to the iraq war, expanding the fight into syria is something that wasn't his natural inclination. >> is it too early to say anything about the success or exact mission he is trying to accomplish on the ground? who he has hit in the air

strikes and what has been done so far? >> in a limited way, he can describe the success of the strikes last night, but he has indicated and everybody knows this is going to be a very long campaign beyond his own presidency. this is something that is going to continue for the next occupant of the white house. i think he will do an interim report and say what we did last night, but i wouldn't expect him to raise expectations that this is going to be a victory any time soon. >> important to detail the arab partners and only arab partners he had in that strike. we'll leave it and obviously return to the east lawn soon as we see the president there. let's focus where we are with the markets. the dow slightly negative, cutting its earlier losses. let's bring in adam parker, chief u.s. equity strategist with morgan stanley. welcome to the program. we are obviously joining you at a very important geopolitical

time for this country as the strikes are activated on syria. so far the market seems relatively unmoved. would you expect that to be maintained >> i focused on corporate earning, corporate cash flows and the growth rate of them. that's my key focus. we don't forecast geopolitical risks and they can have short term and meaningful impacts on the market. ultimately the key focus will be corporate earnings and the growth rate there. i still feel optimistic for improvement. >> there are many people meantime who are concerned that at least the volatility in responding to these sorts of events and the news flow may increase as we come towards the end of qe from the fed and we have perhaps no qe from the european central bank until next year. would you expect volatility to increase? >> i think that's the consensus view. that is probably right. the volatility of the

price-to-earnings ratio over the market is far greater than volatility of earnings themselves. what's given people comfort is that while the base case for growth might be plain or mediocre, the probably of the bear case in earnings isn't that high. long as i can think next year's earnings are above this year, i buy dips that form from geopolitical risks. that's my mindset right now. earnings are generally improving. >> you said the words, buy the dip. that what is people are wondering. when it comes to geopolitical events or concerns overseas economically from europe or china. we've done some damage in the last day or so to the markets. people are monitoring breadth and momentum, saying it's not as strong as it used to be. are you confident buying on the dip strategy will work as well as it did in the past few months? >> the market never goes down by 10% or more unless you are afraid of an earnings recession.

what can cause earnings to decline? my view is it is two things. hubris and debt. hubris too much management arrogance. right now that froth meter looks light. i feel like it's a good opportunity. what really matters more to people i talk to isn't whether the market goes up or not but how to make money relative to the market. these events tend to create shifts in the underbelly or micro structure. we saw that earlier this year when the fed made commentary. that's the focal point right now. >> what would your answer to that question be then? you posed the question. how do you outperform? >> sure. we have a couple of ideas there. we are recommending our biggest overweight in health care. we like it better than staples. that's one big pair trade. the second, i don't think there

will be a lot of capital spending from companies. it remains muted. companied invest in software. we like technology. select software names. one part i'm looking at maybe could have a pullback might be the financials. it had a nice move last month. i'm more concerned about their estimates and growth in the second half of the year tactically. we are saying health care and tech over staples and financials. >> the white house is trying to crack down on inversions with new rules, you were looking for sectors with an m&a premium. is that still the strategy? if so, which industry groups are you looking at? >> the only places we've seen above average m&a have been staples and discretionary. there will be more tech m&a as

the economy slowly continues to improve. the other key point is small caps. they lagged the last 12 months. you mentioned breadth in the technicals near term there. small caps have more margin expansion potential. they grow faster. it might be a good opportunity to look at russell 102 versus the dow to trade between now and year-end. >> you keep mentioning technology. technology is one of those sectors, correct me if i'm wrong, where it has disproportionately large amount of revenue and profitability from overseas. the dollar is clearly rising. what does that do to the stock market? obviously, it's going to translate overseas earnings as depressing those figures when you factor them back into u.s. dollars. at the same time, i read in the "journal" over the weekend, this

idea the dollar will gain is why more people will chase u.s. assets which is a conflicting argument. >> it is and isn't. it's a great question. there are select group of companies, for sure. large-cap ones that are going to have an impediment to earnings as the dollar strengthens. there is evidence a stronger dollar and s&p can be associated with a higher s&p. the reason is usually it's a sign the u.s. economy is better. that might be the case right now, particularly relative to other parts of the world. i think that might support the small cap argument a little bit. many of those companies have less currency exposure and benefit from improving u.s. >> there's a lot of hysteria whether the russell 2000 is trading. what would you say to those people concerned about the russell at the moment? you were suggesting to pair it as a short against -- short the dow against the russell. >> i like both. we like u.s. equities.

i never want to short something i thing is going up. to me, i think the small caps underperformed by a substantial amount in the last 12 months. i have mega cap company margins at an all-time high. if our base case is right, economy improves, i get more potential expansion. >> okay. good to see you. thank you very much for joining us. >> thank for having me, guys. >> i'm not sure if that means the president is about to appear. >> two-minute warning. it is within the syrian territory this al qaeda-linked group. we may get more information about that. you are going as a coalition with five other arab nations so

the united states does not appear toing acting unilaterally. the first thing would be appear to attempt to prevent the reenforcement of those forces in iraq. they are sitting syria in order to try and destabilize what is happening in iraq at this stage. >> yes. the target is isis. other militant groups. that pose a more immediate threat to the united states. we are seeing gold strengthen here. you do tend to see gold rise when geopolitical tensions have increased. brent crude oil bounced off the bottom. yesterday it reached a new low. waiting to learn more from the president's strategy. and to see if there have been any successes at this point. clearly, this is going to be a very long, open-ended fight. >> the timing is interested. he started launching the strike the first day world leaders were

gathering here in new york for the annual meeting of the united nations. he is going to fly off to new york in that helicopter. one sidebar is there has been criticism from russia which is syria's closest ally that the united states and its allies may be acting outside the international law. here comes the president of the united states to talk to us. good morning, everybody. last night on my orders, america's armed forces began strikes against he's isil targets in syria. today the american people give thanks to the extraordinary service of our men and women in uniform, including the pilots

who flew these missions with the courage and professionalism that we've come to expect from the finest military that the world's ever known. earlier this month, i outlined for the american people our strategy to confront the threat posed by the terrorist group known as isil. i made clear as part of this campaign, the united states would take action against targets in both iraq and syria. so that these terrorists can't find safe haven anywhere. i also made clear that america would act as part of a broad coalition, and that's exactly what we've done. we are joined in this action by our friends and partners, saudi arabia, united arab emirates, jordan, bahrain and qatar. america is proud to stand shoulder to shield were these nations on behalf of our common security. the strength of this coalition makes it clear to the world that this is not america's fight alone. above all the people and governments in the middle east

are rejecting isil and standing up for security and peace the people in the region of the world deserve. we are joined by partisan majorities in congress to ramp up our effort to train and equip the syrian opposition to counterweight isil and the assad regime. more broadly, over 40 nations offered to help in this comprehensive effort to confront this terrorist threat, to take out terrorist targets to train and equip iraqi and syrian opposition fighters who are going up against isil on the ground. to cut off isil's financing, to counter its hateful ideology and stop the flow of fighters into and out of the region. last night, we also took strikes to disrupt plotting against the united states and our allies by seasoned al qaeda operatives in syria. once again, it must be clear to anyone who would plot against

america and try to do americans harm that we will not tolerate safe havens for terrorists who threaten our people. i've spoken to leaders in congress and i'm pleased there is bipartisan support for the actions we are taking. america is always stronger when we stand united. that unity sends a powerful message to the world that we will do what's necessary to defend our country. over the next several days, i will have the opportunity to meet with the prime minister of iraq and with friends and allies at the united nations to continue to building support for the coalition that is confronting this serious threat to our peace and security. the overall effort will take time. there will be challenges ahead. we are going to do what's necessary to take the fight to this terrorist group. for the security of the country and the region and the entire world. thanks. god bless our troops. god bless america. a brief statement by

president obama on the south lawn of the white house laying out what has been done in syria last night. talking about the strength of the coalition. it is not just a u.s.-based fight. it is not just america's fight against isis and these terrorist groups in syria. let's bring in john harwood with more reaction. the president was briefed and he said this is what we are doing. by the way, we've got support from the international community and congress. >> in response to your question earlier, sarah, he said it's going to take time and there will be challenges ahead. he was guarding the american people for what's going to happen. the one success they claimed was they had disrupted imminent attacks on the united states. no specifics there. we haven't gotten any from the military, from the al qaeda operatives. he emphasized the breadth of the coalition. it's very important for the united states to have sunni allies, moderate sunni states aligned with the utnited states

participating in the fight. the president said we are not going to have american groups on the ground. he wants moderate sunni groups on the ground. those free syrian army fighters will be trained in saudi arabia. saudi arabia was one of the participating countries. that is the challenge of the president to maintain a front that shows the world this is not simply a u.s. operation. that is what the trip to the united nations today and tomorrow will be about. >> i think he will speak twice today. 12:50 at the u.n. climate summit and 2:00 from the clinton global initiative. what does he have to do to broaden the strength and base of the 40 countries willing to act side by side with this country. >> i think he's got to show participation for other, by other muslim countries. turkey has not participated so

far. that's going to be one. that is one potential target for the united states to recruit. the acid test will come when we see fighters on the ground. you can't take and hold territory that isis now controls, unless you have troops on the ground and the composition of those forces, the size of those forces is ultimately going to determine whether the initial advances produced by these air strikes can be sustained. >> to be clear here, we are still not talking about this country putting boots on the ground. this is about involving others that would fight on behalf of that coalition. >> yes. there will be american special forces and intelligence agents on the ground that doubtless they were on the ground last night calling in the locations for these air strikes, but in terms of combat troops, the president's been very defensive. obviously, that can change.

general dempsey's remarks before congress last week indicated under some conditions, he might go to the president and say we need combat troops, but the president is drawing a firm line for now. i don't think you can expect to see that any time soon. >> all right. no question an escalation. john harwood, thank you for helping to interpret what we heard from the president this morning about those air strikes. up next, more of our exclusive interview with michael dell. what he had to say about taking the company private and what he managed to accomplish so far. in] [ inhales deeply ] [ sighs ] [ inhales ] [ male announcer ] at cvs health, we took a deep breath... [ inhales, exhales ] [ male announcer ] and made the decision to quit selling cigarettes in our cvs pharmacies. now we invite smokers to quit, too, with our comprehensive program. we just want to help everyone, everywhere, breathe a little easier. introducing cvs health. because health is everything. introducing cvs health.

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private. john ford with his exclusive interview with michael dell. >> he seems happy to be private. i had a chance to ask him about the company now that it's gone private, what that means for returns. let's have a listen. >> i will tell you that the kind of absolute returns in our business are healthy, so the business is strong. we are certainly paying down debt at a rapid rate. already paid down $2.4 billion in the first six months of the year. but the beauty of the private structure is that we get to focus our attention essentially 100% on our customers.

>> i asked him what are the chances he'll go public again? we'll get to that in the next hour. i also pressed him on his timing. almost right after he went private, the pc business, particularly commercial, dell's strong suit turned around. that's why he's able to pay back all of that debt. you got a good deal, didn't you? he didn't take the bait on that. he said there is a pc upgrade cycle, will continue to be one. people need pcs and we are benefitting from that. >> special committee of the board of directors of dell argued things were in such decline numbers and projections kept coming down. they were doing a great job getting the price they did from dell. carl icahn argued they are going to steal the company. looks like he may have been right. it's difficult to say what might have happened to the pc market. time diagnose go his way.

>> there are two sides. investors maybe could have done better if they had a crystal ball. on the other hand, you've got employees if texas, austin and round rock, that aren't losing their jobs, who are with this company that michael dell is still leading. they are feeling confident, gaining share. you're happy for them. >> did he give you sense how he is doing versus the competition, for the comeback, commercial enterprise business versus oracles and ibms of the record? >> in commercial pcs and commercial servers, dell have been gaining shares. dell share gains are particularly strong. he said he is gaining across all the businesses in revenue and profitability. he is happy to be off that 90-day shot clock of being public. >> isn't the rebound in pc sales due to the windows xp phenomenon? >> that is part of it. >> could he have known that in advance that was in the calendar? >> people did know it was like l i to boost pc sales. at the time there was this

thought there was a huge massive migration to tablets. people not buy pcs. there is a window server 2003 refresh that might help server sales. >> you talked to him about alibaba, which we'll hear about in "squawk alley." >> sure will. the treasury trying to track down on tax inversions. will it work? [ male announcer ] some come here to build something smarter. ♪ some come here to build something stronger. others come to build something faster...

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you are looking at a live shot from the clinton global initiative conference in new york city. we are showing you this panel because jack ma, the man of the moment, the founder and of course chairman of alibaba is speaking on a panel. he is speaking alongside mary

berra, chief executive officer of general motors. >> which this lady is neither. >> right. it looks like the finance minister of nigeria. she used to be a world bank official. she speaks actively on these world national forums on global economicses and global change. there is jack ma and mary berra on the other side of her. jack ma is getting the star treatment after the new york stock exchange, many other dinners with other ceos and now on a panel at the clinton global initiatives. in an attempt to lessen companies from moving overseas. more on that in washington. >> treasury secretary jack lew said yesterday the administration can't wait for congress. they concluded congress isn't going to take action on tax

inversions before the lame duck session after the elections. they said they have to move forward. here is a quick take on what this regulatory move will do. one of the things they are saying is the move is effect whyive as of yesterday. that could mean pending deals in the pipeline might get caught up in this, depending whether they hit some of the very specific narrow things treasury announced it was going to do yesterday. these regulatory changes said are designed to make the deals less profitable. trying to pull back the economic incentive for companies to do tax inversion deals. the president said these deals are unpatriotic. they are trying to put speed bumps in the way of companies doing inversions. they are worried about the long tail impact of this. not just losing tax revenue this year and next year but years into the future of all these companies that choose to do these inversions. there's been a wave this year.

>> there certainly has. when one does it, it has a better competitive position than another. many people on wall street trying to figure out the ramifications of this immediate action from treasury, particularly in light of the two largest inversions out there, medtronic's plan to buy covidien and abvie's plan to buy shire. it would remove the benefits of hopscotch loans and the decontrolling strategy. it's not doing things about earnings strippings which you could unload your u.s. sub with debt and lower its tax bill. eamon, there are questions from isi about the treasury action and whether it was lawful. they say they are taking public comment on future actions it might take but characterizes

monday's actions as having immediate effect not utilizing the normal rule-making process. therefore, treasuries actions attack inverted or about to be inverted companies. treasury could be subjected not just to lawsuits but court action. i don't know if you heard anything about that as a possibility out there. certainly it's been talked about. >> absolutely. it's extremely good point here. a lot of people are expecting there will be some legal test of this at some point. one of these companies with a pending deal will say we are going to take our chances in court. the important nuance here, and this gets very complicated, what treasury did yesterday was not the official rule making. what they did was put out a poeties they intend to make a regulatory change. that notice puts everybody on alert as of yesterday that this is a change that is coming. there's going to be bureaucratic process here they have to go through in order to make that actually happen. that is the notice that made yesterday the magic date after which you won't be able to do

any of these specific things you are talking about in terms of the hopscotch loans and other elements they are trying to stop yesterday. overall treasury says they are trying to make them more costly and prevent some of them. >> i reached out earlier to burger king to see if they had comment. i just got a statement back from a spokesperson from burger king saying we are moving forward as planned. this deal has always been driven by long-term growth and not by tax benefits. we were just talking about the fact burger king isn't going to get hurt by these new rules because their goal is not to repatriate foreign cash. >> once they invert they are no longer u.s. companies, to access overseas cash, bring it back to the u.s. and not pay u.s. taxes on it. burger king is not central to the thesis behind the deal. they were lower their tax rate.

>> the cash they are accruing overseas, they use overseas. medtronic has $13.5 billion outside the u.s. and the ability to use that in the covidien deal will come into question. >> eamon, thank you very much. straight ahead, let's check the markets. we are down 20 points on the dow. we'll talk more about the markets after this break. when fixed income experts work with equity experts who work with regional experts that's when expertise happens. mfs. because there is no expertise without collaboration. (vo)solver of the slice.pro. teacher of the un-teachable. you lower handicaps... and raise hopes. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price.

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on the markets now, u.s.

stocks extending losses fractionally this morning. we want to take a closer look at technicals. everyone is talking about it. let's bring in katie stockton, chief technical strategist with baig. good day to have you today in our matching electric blue. breadth is the word of the moment. people are wondering if we still have the momentum we had in this stock market rally. the s&p hit a record high last week. we hadn't seen it in the russell since march. >> short term momentum has fallen off. you can see that in the small cap indices and also in the nasdaq composite. really, interneed and long-term momentum still very much is positive, supportive of the up trend. everyone seems to be talking about market breadth or participation. they want to be bearish about it. i don't think it's the right take on breadth right now. breadth has been weak for the nasdaq names or momentum names behind the market. that's been the case all month. it's less so than in july and

even less so than in that march to april to may period. to me, the breadth is bad, but not terrible. really, when breadth is bad, it doesn't necessarily have negative implications for the direction of the s&p 500. i really view it as sort of a temporary digest phase and not indicative of something worse. >> i'm curious as to what would convince you it would be worse. for instance, we get a list from our market stats every day of the new 52-week high. that list has shrunk down. it's nowhere near the highs. >> that would be an indicator of leadership and it's contracted as the market congests. i would like for breakdown on individual stock levels. going deeper than the major indices. looking at individual names. if they are breaking down below support levels week after week, that's when we need to worry

about market breadth. >> i want to ask about the oil chart. we are seeing brent recover a little bit begin what's going on in the middle east. we are near a two-year low. oil prices make a low on the idea there is a glut in crude oil. >> the down trend has been persistent in that energy complex. you've seen it in the relative strength behind the names or stocks. crude oil looks poised for a relief rally. that could be significant. on wti initial resistance is $92.6. we have countertrend signals or oversold buy signals for that contract. >> on the s&p, bad breadth but not enough to worry about. katie stockton, always good to have you on. >> thank you. as the growth in the housing market appears to weaken, which

are sellers' markets and which turning into buyers' market? diane olick is live in washington. >> the housing market is cooling with the temperatures. some great for sellers, others better for buyers. thank goodness we have a new list and surva i to tell us which is which. according to zillow, a seller's market is not necessarily where prices are going up but homes are on the market for a shorter period of time. price cuts occur less frequently and homes are sold at or above asking price. a buyers' market is where homes stay on the market longer. there are more price cuts and homes sell for at or less than asking price. drum roll, please. the top sellers' markets in california. seattle, dallas and denver round out the top five. riverside and las vegas are still up there in the top ten. these markets had huge inventories of distressed homes.

investors plowed through and wiped them out. providence, rhode island, takes the top spot for buyers. look more to the middle of the country, cleveland, milwaukee, or chicago. prices are still relatively weak and investors did not help as much with the distress. demand is low, which give buyers the upper hand why. do we care about a buyers' or sellers' market? the two biggest cohorts to be moving will be millennials and down sizing baby boomers, buyers and sellers. go online to realtycheck.cnbc.com. thank you, diana olick.

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take a look at consumer staples. one of the worst-performing sectors in the s&p 500. mary thompson is back at hq with more on that. >> consumer staples, one of the worst performing in an otherwise sea of red today. financials and energy moving higher. back to consumer staples, one reason we are seeing weakness is clorox dragging down the sector. the company said it is looking to sell its venezuela operations. it it citing valuations. shares up 1.7%, $95.57. >> they had a management shake-up. let's get to rick santelli with the santelli exchange. >> good morning, sarah. good morning to andy. thanks for taking the time this tuesday morning. judge, always a pleasure. >> first thing i want to say, do you believe the fundamentals of any given country should correlate with things like the price of their currency relative

to other currencies, more importantly the level of their equity markets? >> no question that is what's going on in a lot of countries right now. the central banks just got their pedal to the medal. you are seeing a lot of lowells in equities you haven't seen in years. >> what was the last gdp number you've seen in japan? >> wasn't it 4%, 5%? >> more like down 6% plus. did you notice the level in the nikkei. virtually hit seven-year highs. is the market, a guy like i am, does that bother you, is that easy to explain or more central bank chemistry? >> what's happening is as the fed has been the first to talk about potentially tightening,

even though they are trying to best not to, the dollar has soared, the yen has weakened. japanese stocks are cheap to global investors. there is no surprise -- >> it's pricing off the fundamentals yet to be. >> that is correct. >> okay. wonderful. let's look at the treasury market, whether it's research papers by blackrock or goldman. we are sitting on the cusp of 4%. i kind of like working on old cars. if you take a significant percentage of all the used and collectible cars out of the market, jay leno gets richer than he is, he buys half these cars what does that do to the retail shops in the business of buying and selling used cars? >> makes it difficult for them to operate. that's what we are seeing right now. >> what have the fed reserve done to the sox markets?

everybody worries about what happens when interest rates rise, we don't have banks. isn't this what central banks have done to that market? >> no question. that is a market they've thrown to the dogs. we've seen these markets shrink. when they need these markets next year these markets will not be capable of taking on what the federal reserve has unleashed. >> when you write your paper, and everybody does this -- let's look at fed funds, there is a 75% chance rates will be here march next year. how is that possible? how are those percentages anywhere reality when we have no idea how anything is going to play out in interest rates? >> i don't know how they do it. i'm looking over the next two weeks. i think rates will go lower. then they should go to the end of the year, rates will go higher. >> i'm with you there. we are out of time, unfortunately. thanks, buddy, for being our

guest today. back to you. >> thanks for the lively discussion. why one italian restaurant is campaigning to become the lowest rated restaurant on yelp.

>> in a world where restaurants fight for good review, yeone restaurant is offering --. joining us are the co-owners of the bistro. >> david, just back up a bit. what is the problem with yelp as far as you are concerned? >> problem that we had personally had in the past, we practically like to leave it in the past. what we like to do everybody knows, every merchant especially

know the issue that you are going face once your business is list in their site. we can explain to the public and yelp this way. if there is a possibility to either be in the hands of something that we don't want or being blackmailed or receive some kind of extortion, our campaign practically put us -- yelp in a position where we cannot be blackmailed. so if there was nothing before, we are okay with that. in a position that we are now, we are called it as prevention. >> i'm struggling as to why you thought you were being black mailed. i'm sure that is not what you actually mean to say. what is the issue here? and how did you go about trying to get this one star rating? >> we try to get out of the yelp

situation because we get many calls from them and to advertise with them. and we don't want to be there. so we just try to get out of li list. we are never be able to do it. so that's why we decide to go all the way to be the worst restaurant in the united states. at the same time we do our business but we are not involved in the situation anymore. >> you certainly made a statement. and i would think you have drawn a lot of attention to your restaurant. how do sales look to you? >> well they look fantastic. this one is something we were doing before. for years we played kind of the snarky restaurant that does the opposite of all the restaurant does in the country. and if you look in the website you will find out the answer you need to know. but definitely our piz business

improved. we were shocked and surprised to see how much support we receive from all over the country. actually overseas. the support definitely it was for us even though people don't know who we are, but if it felt kind of these very strong feelings of, i don't call it hate but dislike towards this company yelp. so it was very easy for us to use as the vessel in between the public and this company. we saw few negative comment about what we're doing but definitely yelp in a situation where it seems like they need to give lots of explanation to millions of people. >> you got the one star michelle. i don't know whether to congratulate you for that. i think you are still yet to be thrown off the site. we've got but leave there it. good to meet you both. thank you both. >> thank you.

>> over to john forth wi with ak at what's coming up. >> big show. we're going to dip in on becky and bill clinton at the global initiative. and we got help cracking open a iphone 6. and what's important for you. and dude, you're getting more dell. i'll talk about that next on squall alley. mpany. ing u.s. is now voya. changing the way you think of retirement.

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hi guys, some news out of the senates the disease control update with ebola numbers. as many as 550,000 to 1.4 million are expected to be inpercented by the end of december that. assumes current number of cases are significantly underreported. more than 2800 deaths so far. the cdc in a report saying between 550,000 and 1.4 million people in west africa could be effected with ebola by january. >> let's check out shares of the carnival meanwhile. which surged when they came

through beating earnings per share a by about 13 cents. this is partly because top on board spending have been so good. better than expected. also booksings are strong er frm this year into next year. but also some guidance at the end of the fourth quarter. at the extremity, 6 cents below market, which is partly why we've fallen back. and some concern particularly from sun trust about dry docking ships for fuel efficiency and emissions. >> asian demand, is that what's driving the industry still? >> they are pumping asian demand because they are going to put four ships in china. that will be the most of the exposed fleets around the world. they believe it is the growth market. >> and when was the last time you took a cruise? >> let's bring in john forbes as

we -- >> no comment. >> it feels like just yesterday whenever it was, i'm sure. and -- >> my cruise or your cruise. >> i've actually never had the pleasure of being on a cruise but my parents go frequently and they love them. >> it's a good place for families. >> so what have owe got in this hour? >> there is quite a bit. bill clinton we're expecting at the clinton global initiative. we have iphone 6 tear down. we've got just a number of things coming up. but we want to take a look at the picture now. it is new york. clinton global initiative, we're awaiting president clinton who will be there with our own becky quick. and the timing is crucial. i mean we just heard that news from meg terrel about ebola and a half million to potentially 1.4 million infected