full throttle for several minutes. campus authorities finally managed to stop it. >> those college pranksters. >> we should play this type of music at least once for every show. >> benny hill. >> we've got to show big-busted english folks. >> make sure you join us monday. have a great weekend. "squawk on the street" begins right now. good friday morning. welcome to "squawk on the street." i'm carl quintanilla with sara eisen, david faber. cramer is off today. fair amount of red in the premarket as europe is selling off to the tune of about 2%. china cracking down on margin lending. concerns about greek debt today. earnings back here. ge honeywell, american express among others. oil settling back after a big week to the upside. the ten year is around 1.89. consumer prices this morning largely in line.

our road map begins with the markets taking a dive overnight. dow off triple digits as the stock moves overseas. disappointing data weighs on equities in the u.s. >> earnings from ge honeywell and american express have those stocks moving as well as another round of job cuts from schlumberger. >> verizon announcing it's breaking up the cable bundle into smaller bundles. the new tv offer we've got to explain coming up. futures moving lower. taking their cue from declines in europe. here in the states consumer prices up 0.2 due to higher energy cost. the core rate up 0.2. few things working against the bulls. we mentioned that crackdown on margin lending, the back and forth between greece and germany continues. few downgrades today. several revenue misses on large caps, as well. >> seems to be a number of things rattling traders, including what was a glitch in the bloomberg system overnight

delayed a uk bond sale. never good news when you have a bad behind what happened in china and worries over liquidity spooking markets. dependency on that machine front and center. plus talk of the fed still. and when they are going to raise interest rates. seems june is off the table. the market is not pricing it in until the fall. >> one might not anticipate a move in the chinese market would have an impact here but apparently it is. this move by the china securities regulatory commission to allow short selling on a lot more stocks and ban margin stock trading had those stocks down after hours over 5.5% which did seem to spill over to our futures in the early going. >> you can't forget both china and jurp which is selling off sharply, have had tremendous run-ups. so perhaps it's time to take a little profit. perhaps time to have a

correction. i mention the fed. also a lot of focus on stanley fischer, vice chairman of the fed we got to speak with yesterday in washington. particularly his comments about the timing of raising interest rates. have a listen. >> where most people think it will happen this year but you don't want to get a lot more definite than that. it depends on how the economy develops. we'll try to do it at the best possible time. we would like to see the economy beginning to grow again. and grow at a decent rate. >> he got a lot of attention for those comments. we saw bond yields go higher after that. a few research notes this morning in terms of what he says or hints. he can't give an exact time frame. he said inflation rate was starting to turn up toward the target. zero interest rates can't last forever. he also said you are starting to see a sign of a turnaround in

the u.s. economy. he is shaking off the boor data we saw in the first quarter. >> we'll see. "the journal" argues jobs starts, industrial production, even claims showing weakness. we'll talk about that right now. >> david leibowitz and tom borcelli. of all the fed talk in the last week or so would you agree with that assessment? june off the table, looking more toward the fall? >> i think it is. we changed our call. we were officially june. we shifted it recently. for whatever reason whether it's this soft patch of data or some other reasons, reality is the fed is from our vantage point trying to push out expectations. we shifted our call. we weren't particularly happy about it. i think the data broadly speaking are consistent with an economy moving along at a decent pace. the softer patch of data notwithstanding. like i say to clients, i'm paid

to tell them what i think the fed will do not what they should do. it seems like a foregone conclusion september is off the table. >> of all the worries we mentioned, we talked about the china parnlg-in changes and regulatory changes, the bloomberg glitch the fed, perhaps this market is due for a correction. what has investors on edge? >> i think a lot has to do with europe. the lack of progress made on greece is being reflected in particularly european bond yields. you saw a flight to quality over the past few days. decline in german bund yields. it's europe and greece driving the bus right now. >> flight to kwlt. the german ten year is 6? >> they are under 5. >> they are negative to nine years. you can buy swiss paper 30 years and get 21 basis points. that is a great bargain. that will pay you 6% over 30 years. not 6% a year. >> i think you make a great point. u.s. treasuries look like a

high-yielding asset. i think that's part of the reason we are seeing dollar strength. long as we have more attractive rates, that is likely to continue. >> we would agree with that. what we've been saying you go through conundrum part two where ten-year yields, the yield there is capped. we wouldn't be surprised if that happens. what is interesting is how does the fed respond if that happens? the reality for us is you look through that entire conundrum period, end user consumer rates didn't budge either. dudley has been talking about this in various speeches. he suggested if these end user consumer rates don't respond, you can actually see a more aggressive fed. >> you think we are done seeing oil/energy weigh on inflation? >> i do. that's part of the house call. i have no reason to disagree with that idea. what's interesting about that is all we've done is set up a really low hurdlerell for yellen to

achieve this goal. >> do you have to own u.s. treasuries at this point? are you better off going into equities with these rich valuations and run-up that we've seen? >> i think in the current environment we maintain a preference of risk over high quality fixed income. we tell clients bull markets don't end at average valuations. they end at recession. we hit a bit of a soft patch in the first quarter, broadly speaking our expectation is for an acceleration in the second half. >> i was going to bring up the fact also in the conversation with fischer yesterday, i asked what is a ten-year yield below 2% signal. weird answer. he said it signals that the market is waiting for clarity from the fed on what their next move is. the market is trying to figure out what the next move is for the fed. >> it's hard when everybody has different opinions and we are getting ten opinions per week.

>> isn't that part of the problem? how many people were surprised when the fomc meetings came out and several fed officials thought they would go in june? we were surprised, to say the least. to the point on fischer's comment, what you have to consider is i don't necessarily think -- it's great it's luke the fed talking their book. they are waiting for us. i think actually what's happening is this idea we've been talking about on this conundrum. there is so much flow out there the ecb picking up the qe baton, there is additional liquidity that suppresses rates. >> the concern about consumer spending, which seems to not be there to the extent we expected are they measuring it properly? i don't even know. i would hope they are. it does seem rather odd given job growth and gasoline prices alone. >> i would say it is hard to square that circle. i take the data as they are.

if they are properly measured or not, i leave that for academic discussions. reality is this. given what are actually fairly sound, not talking about robust but fairly sound consumer fundamentals, it's hard to square the circle of a weak q-1. i would argue you get something of a bounce in q-2 once you get past overwhelmingly weather effect. >> thanks for joining us to talk about all these themes. tom porcelli and david leibowitz. general electric reported first quarter operating profit. revenues were below due to currency p.m. and declines. american express posting quarterly revenue below consensus. the strong dollar having an impact. the end of that co-branded card relationship with costco and jetblue. we focused a lot on that here with jim cramer. earnings were ahead of expectations.

ge the big news is a week old. the decision to dispose of most of the assets in ge capital which astoundingly sent that stock up one week ago over 10% in a day. it has come back a bit. on the call this morning, a couple of headlines to share. generally positive immelt saying the first quarter was a good one. good quarter marked by slow growth and volatility. u.s. is getting better every day. europe improving. china is good for ge. industrial cash flow was lower than expected because of aviation supply chain issues. power and water. and the like. of course it was the news again of last week that will continue to play out over some time here. the huge $50 billion share buyback. the deal to sell real estate right away $23 billion to wells fargo and blackstone. and that decision to take the hit. you are seeing that in this quarter in terms of the charges

associated with the eventual dissolution of ge capital over the next couple of years. referencing back to one week ago what mr. immelt had to say about the changing portfolio of businesses. >> i think just the ability to get a good return is really difficult today. at the end of the day, our primary job, maybe more than more companies is capital allocation. if you've got a sight of a company that can generate 15%, 17% return on a side that feels like it's going to be hard to return cost of capital, it's an easy capital allocation trade. you know markets change. i think to a certain extent financial services this isn't a cycle. this is a generational move. this is a long term change in terms of how people view size and liquidity, things like that. >> the first earnings report we heard since the big announcement. they are framing the company in

that way. in terms of excluding ge capital exit impacts and looking at these industrial businesses. the portfolio businesses that are going to be given the judgment in the marketplace over the next few years. >> oil and gas revenue down eight. orders down 10. as bad as that sounds there is a sense this morning it could have been worse. that's maybe one reason the stock did form a bit of a bottom pre premarket. >> american express, would be starts to wonder how because there is so much activism is it a possibility, you have to consider it although it's not clear there is one simple route to go down. it's more when i talk to investors about a turnaround that would take some time. so your activists would have to be of the likes of a value act, someone willing to be there a long time. >> sounds like the question is,

has the environment and what has propelled american express to the top, which is the highest spenders, has that mod p he'll completely shifted with increasing competition and with the fact there are better rewards at different credit cards? i didn't realize, it is the worst performer on the dow jones for 2015. sentiment is pretty bad. for people who see value there, it is cheap relative to some of the other big credit card players. the head of verizon fios looking to change the pay tv game with a new custom service. it appears the force is with disney when it comes to the new "star wars" trailer. interesting numbers to tell you about. how the stock is reacting to that trailer. take another look at the premarket. we've not gotten to honeywell or mattel. downgrade of golden sacks. a lot more "squawk on the street" in a minute.

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bloomberg trading terminal had an outage causing a lot of problemses. interruption began 8:20 this morning london time. bloomberg said service was

restored to most customers. the company said there was, quote, no indication at this point this is anything other than an internal network issue. i guess when it comes to electronic trading glitches and problems, everyone wonders, is it a hacking, something with the network? bloomberg saying doesn't look that way yet. people are dependent on this thing. >> uk postponed a bit of a buyback of government debt. after all those sony e-mails were put on wikileaks and available for search it was on people's minds was this a possibility? >> disney releasing that new trailer for the next "star wars" movie "the force awakens." it racked up 19 million views in 24 hours on youtube. it pushed the stock higher. bob iger talked to julia boarston after the announcement. >> no predictions how big this will be.

we know that "star wars" films did incredibly well. there hasn't been a film out since 2005 actually. the movie-going audience in the world is much larger than it was. there are markets today that were nonexistent before. china being a great example of that. we are fairly confident this film is going to do quite well. way too soon to make predictions and probably we will not make any in public. >> stock at $108.10. all-time high $108.94. we have to get used to new names. b-88, kilo rem. >> i wish i was a "star wars" fan. >> you weren't alive when the first one came out. >> that is not true. when was the first one out? >> 1977. >> no i wasn't. i can still appreciate harrison ford coming back with that cameo. that was very exciting. >> julia's live shot with r2d2

or were you traveling? >> what did you tweet, got nine times more views than hillary? >> this is about nine times that. people responded saying this is bipartisan. >> this maus be it. >> disney the power of these franchise whether it be "star wars" or the others they also have. frankly, the company paid $4 billion for lucas film. one wonders how quickly they'll realize the return on that investment. wouldn't seem to be very long which some expect to be record-shattering numbers from this one. i go back to thinking about the pixar deal the multiple they paid. i remember giving iger a hard time about it. redick lis how important that was ridiculous how important that was to setting the standard. and espn when we talk about this

fios announcement. >> contrasts the challenges dreamworks had. for disney that would have been a modest hit. it's done wonders for dwa. >> are you a "star wars" fan? >> not a huge fan. did watch them all. i've seen more or less all of them. >> you are. >> you don't want to know how big a fantastic i am. >> didn't you use the hashtag chooey we're home. >> yes. amazing. >> that was all you? >> yeah. coming up art cashin on what he is expecting from the final trading day of the week as we count you down to the opening bell with futures in the red. dow jones futures almost near the session lose. we saw 150 earlier. down 140. s&p set to open up down 12.50 points. buying treasury and the dollar this morning. more "squawk on the street" when we come back.

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just about 6 1/2 minutes till the opening bell. let's get art cashin's opinion who joins us here at post nine. good morning. >> good morning. >> got some fires burning today what's the top of the list? >> i think the probably the media reports that greek banks have been told to sell their sovereign debt if that is so things could heat up pretty fast. right behind it is china's move on margins and increasing the

amount of stocks that can be shorted. that was a surprise after they closed and it knocked the futures down about 5% at one point. then simply the fact that you had that disruption with the bloomberg terminals. that has kind of an unsettling flash crash kind of response among traders. you put all those three together and that's why you are seeing markets around the globe doing what they are doing. >> on greece we keep making this round trip right? concerns get acute, they push it back or settle something. they push it into april, may, what have you. how damaging would it be if we got into the living room the fire got into the living room so to speak? >> i think there is some concern this time in that they asked the imf for a postponement and they gave them the back of their hand. you saw the credit default swaps in greece begin to pop-up. there is money being bet out there that this may come to a

head and it may come to a head quickly. >> do i need to care about greece? i feel as though sometimes we go back and forth about its importance in terms of the macropicture. >> the only reason to care is that it will disrupt currency markets. the euro without greece is a substantially stronger euro. what will that do? it will be based much more heavily on germany, which is ahead of the game. then is it going to be like a set of dominos? after greece leaves and i'm assuming -- >> the pressure will come on some of the others. >> even if you are not seeing that contagion, a lot of the discussion at the imf world bank was sure the markets aren't signaling that but that does set a bad precedent if trouble does pop-up. >> it isn't as though people haven't been prepared for that possibility for years. >> and the imf has their own precedence to worry about.

allowing payments to be delayed. they haven't done in 30 years. >> absolutely. it's a question of do we follow the rules or do we approximate following the rules? this is heating up. if you asked me a year ago i would say 20%, now it's 40% chance. >> we'll get the opening bell in a few minutes.

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you are watching cnbc "squawk on the street." opening bell in about 40 seconds or so on this friday. a busy week it's been. it's not going out quietly. earnings from general electric american express, honeywell, schlumberger. i tweeted earlier the story of the morning is revenue miss and a lot due to currency. it's interesting to see how investors parse that out.

>> that is the common thread that tied the big components together. schlumberger is the world's biggest oil services company. general electric there. >> municipal bond assured guaranty. over at the nasdaq invivo therapeutics on the treatment of spinal cord injuries. a lot of skepticism criticism of the company that fired 9,000 workers last year now cutting an additional 11,000 workers. earnings down 39%. cuts their view but beats the street. >> that was 15% of the overall work force. another big lay-off announcement. don't want to see that. the mover up 2% on cost cuts. the question is are the oil

services companies the beginning? are you going to see it next some of those capex cuts which schlumberger did cut further. 2015 capital expenditures set to be almost half of what they anticipated it would be last year. $2.4 billion now. >> we had a number of rigs go down substantially. there was a report today in the "journal" bringing up the idea u.s. oil production has peaked at least for now. we'll see. we heard that before. it does appear that the wells that are still being used even though the rig count is down are more productive than rigs being used on other wells. that is an important overall metric for the market as we keep an eye on oil prices when had a bit of a rally lately. anybody take a look at mattel? that stock suffered for some time. not today. after reporting numbers that were better than anticipated, at least in the revenue line i

guess. interesting to note mattel and hasbro have the same market value. wasn't that long ago mattel was substantially larger than hasbro. a number of missteps at that company. >> and loss in barbie sales. not as hot as she used to be. >>ing that tells the story right there. different today for mattel which again is up almost 7%. >> eight cent loss. narrower than expected. a new ceo in chris sinclair. one of the knew names working today. amex is the worst performer. if you take out currency and the travel operations that were part of the business last year, revenues up 5%. card member spending up 3 the ex-currency thing is becoming to become a common thread.

>> as you mentioned, the question is do they give them the benefit of the doubt? guidance was reiterated on amex which would be flat to negative because of what they are dealing with. costco contract and the jetblue contract. a lot of notes about that and how that is going to hurt the stock. i'm watching reynolds american. the cigarette maker and big question here is do you have this ftc decision weighing over reynolds american, whether they will be allowed to pursue their $25 billion takeover of lorillard. numbers came in better on higher pricing. reynolds has been able to raise the prices on cigarettes and that offset declining volumes and shipments of cigarettes sold. >> update i've seen a number of analysts weighing in as they need to do in terms of speculating how the process is going at the ftc.

>> reiterating it is fairly confident this deal will get signed off and we'll get a decision by the first half of 2015. they are sticking to that. we've got a few more months to go. bonnie herzog of wells fargo says 90% probability. >> i saw that note. with limited divestitures. one brand that is not particular? >> they've been working on this. they have divested to the number four player. >> yes. that's part of it. the question is whether there be additional need to do anything of significance. >> no word yet from management on that. as you mentioned, the stock has been pretty rangebound until we get some sort of decision on this. >> it was imperial taking a lot of the brands. can you create another player. of course this is one area where it wouldn't seem the government cares that much if prices go up because you don't want people to smoke. >> do you see statistics on

vapor? percentage of teens that use it up three-fold a year. 13% of teens. unbelievable. >> that was a bright spot for reynolds. they have their new e-cigarettes. >> amd is a big loser down almost 10.5%. nine cent losses four cents wider than expected. revenue shy as they exit the dense server business. series of downgrades today. a lot on valuation. kbw cutting goldman to market perform. citi takes hershey off their focus list. same margins are coming down. barclays cuts travelers to equal weight on valuation. head winds and property casualty. travelers has been one beautiful chart. a stock that has barely cracked below its 50-day moving average. only one dow component in the green right now. that is g.e. >> all the major industry groups are in the red except utilities are flat. financials had a good week after stronger than expected earnings.

not so much today. >> we got good numbers for most of them. goldman and jpmorgan the standouts. >> goldman had a good day yesterday leading thee ipos. >> the stock itself did not perform well even though numbers were quite strong and now you've got that downgrade today. should we get to the faber report? >> let's do it. we've been waiting. >> want to weigh in on this announcement from verizon which we'll have more on. it is yet another signal perhaps of the very rapidly now changing face of the way content is distributed to those who use it in their homes. in this case verizon, if you missed it talking about what they are saying is the new fios custom tv. a number of different bundles of channels that their customers will be able to choose from at various price points including sports or not, including various

things they may like. it is yet another signal that the bundle itself as we know it is certainly being challenged. we talked about this and its impact on both those who provide the distribution namely the cable companies, as we call them. i argue that probably needs to be changed to broadband companies, and the content companies themselves. the impact probably larger on the content companies. particularly those that may be in jeopardy being marginalized, some would argue. you can look at viacom scripps, amc. i bring disney not because it will be marginalized, but espn is considered such a core for so many of these bundles, despite how much money they charge. what's interesting is the impact not as large on those that provide it. we are owned by comcast. we always need to point that out. it's not a particularly profitable service to bring content because they are paying all the content providers that bring it to you.

margins however, marginal cost for a new broadband subscriber, that's zero. that's why that business is so much more important. that's perhaps why that part of the business is getting particular scrutiny from anti-trust regulators as they continue to look at comcast's plan to buy time warner cable where. we go from here the bundle itself can be economical for many consumers when you get to a certain price point. ott offerings starting to pro-life late. over the top offering. sling tv from dish is one of them. we'll see what apple tv comes with. that could be very important. how slim their bundle offerings are, what they look like. given apple, one has to pay close attention to it. a lot of questions. certainly putting pressure on those that don't have enough cable channels to have the leverage with those that provide these bundles. and continued questions about what it's all going to look

like. it is changing very very quickly. let me send it now over to -- carl, would you like to? >> dow down 155. bob is on the floor. >> weak open. all ten sectors of the s&p are to the down side. just put up the sectors, i'll show you. broad weakness techs, financials, everything is down 0.5% or so. i want to concentrate on europe because the obvious concerns on a greek exit flight to safety german and french bund yields plunging. italy, spain and greece are up. european banks. deutsche bank, ing, national bank of greece. intesa, everything down 3%. they've been weak since the open. one of the causes of weakness in europe. then we've got china. after the close, regulators instituted this crackdown on stock market trading over-the-counter stocks. that's after the close. i want to put up chinese etfs. china ended on the up side in

shanghai. look at the chinese etfs here. they are down about 5% here. fxi is the big one, that's hong kong and the asa chart is mainland china stocks down about 5%. this is reflective of where the market is really right now, not the chinese close. we also had, i want to talk about the market here. some strange revenue misses. a lot of them recently. ge seagate, key corp honeywell, blackrock, sherwin-williams, schlumberger all missing. this is a problem here. if you take a look at the earnings today, honeywell and american express everyone is blaming the dollar. i guess you get a pass on that. american express in the decline. we are seeing a notable decline in revenues though. i think you need to keep an eye on that. earnings are not coming down as much. down 4.1%.

that's better than a few weeks ago. look at revenues. revenues are continuing to decline. you can't keep having revenue declines and earnings getting better. there is a dichotomy. that's got to be resolved. schlumberger and here is the key sentence, a recovery in u.s. land drilling will be pushed out in time inventory of uncompleted wells builds and refracturing market expanding. that means redrilling an existing well and extending its life. good numbers from schlumberger. that is a clear shot across the bow that the markets are overbought conditions. schlumberger up 10% so far this year. back to you. >> up 2%. thank you very much. you might think with 190 in the dow you would be a flight to safety with the bonds. rick santelli in chicago. what's going on?

>> there are a lot of moving parts and going in front of a weekend. if you look at a 24-hour chart of 30. you can see post data maybe some ire regarding cpi, maybe it was just generalized selling from some nervousness in front of the weekend. rates are moving up a bit. it has been a curve-steepening week. that 30-year bond that is not only unchanged on the day, it's unchanged on the week. the rest of the curve yields are lower. tens but fives. fives are down seven basis points on the weekend. some of that curve steepening. maybe it would seem we should get more buying. the day isn't over. we continue to bounce on both ends of a tight closing yield. look at a year-to-date chart of tens minus twos. the tens minus twos unlike when you include the fives longer maturities, it's getting very

very flat. that is year-to-date chart. pay attention to that. 24 hour chart of the bund the most watched chart on this floor as we have the countdown to negative ten year rates in the euro zone. we are now down out to the nine year flirting with negative yields today. we know the eight year was getting out to about minus five basis points. that was minus five. two day of the euro versus the dollar. euro losing ground. this will change complexion of markets from this point forward. month for date holding well with that 1.07 handle. thank you very much. you heard us talk about verizon's new custom pay tv plan. we will have a live interview with the head of verizon fios next. dow now down 212 points. we have not had a triple digit move in the dow in the past eight days.

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american express this morning. >> verizon rolling out a custom pay tv plan that allows its fios customers to choose smaller bundles of channels each month, making verizon the first paid tv provider to offer this mix and match plan. while the new model isn't a la carte tv it does give more flexibility than their traditional cable packages. will the new plan lure customers away from cable rivals? the president of fios tami irwin joins us. >> thank you. good to be here. we are doing this in direct response to what customers told us. customers want choice. increasingly customers have choice on video. we said clearly we expect to be the preeminent broadband provider in the market. we want to give them choice. >> we have to make the distinction being a broadband provider and what we still call cable, so to speak. >> sure. >> you have how many subscribers, 5 million? >> yes.

>> what are the expectations in terms of what they are going to go for from the plans you are offering? >> my expectation is that there will be some percentage of our customers that migrate to these new plans, but i think increasingly we will have new customers that are attracted to these plans. i think millennials and how they are viewing video today, for example. the plans we are launching custom tv gives the customer a simple package content they can have the base and have local, which local is very popular. then choose from genres that are specific to their tastes and what they want. >> we are starting to see at least the beginning of over the top offering sling tv is a name we've become somewhat familiar when offered by dish. broadband is the more profitable product for fios correct? >> absolutely. >> to the extent you can bring in more customers even if your number overall on the cable side is not as great as it is now, you may be making more money?

>> broadband has great margins for us. so to the extent we can be the preeminent best broadband provider and give customers good choice on video, we think that is a good position for us financially. we believe customers look to us for video options, but they know that to buy broadband is the place to come to fios. >> do you think this is a stepping stone to a la carte where consumers can pick the bundle they want custom made? >> i think it's a step in the right direction, absolutely. as you look at the economics of going purely a la carte today, those aren't good economics for the business. based on how content is sold today. i think as you begin to look into the future and how we expect customers will buy, i think this is absolutely a step in the right direction. >> you mentioned dish. there have been reports apple is working on some type of bundle of channels. >> that is an over the top offering, as well.

>> who do you consider your biggest competitor here? >> i look at a lot of the over the top players out there today. i view them as complementary to our business model. broadband is a very powerful product for us in our portfolio and very profitable. i want to be the preeminent broadband provider but i want to give customers choice. that includes over the top, whether it's what apple is doing. the customer needs a great broadband pipe. >> what about your conversation we are looking at providers of programming. what is the conversation between fios and you have existing agreements with them. does that have to change or is it part of those existing agreements that you can offer this? >> we can offer what we are offering with custom tv as part of the packages we have today with our content partners. we spend a lot of time with content partners representing what we believe customers' views are, which is increasingly customers want to pay for what they use. we are not all the way there in

terms of a la carte, but we believe it's our opportunity to represent what we hear from customers. >> fios is still 5 million. you've got to spend a good amount of money to build it out. many say you still don't have the critical mass to build your business. is that true? >> i think we have the mass we need to be very successful in this space. we are selling off our west properties. we talked about selling off california, texas and florida. even then we believe we have the mass up and down the eastern seaboard to be successful. >> how did you come up with 55 and was it 10? >> we really looked at what we thought the market would bear. we looked at what the value was and said what will customers buy they view as a good value? increasingly customers expect value and want to be valued. we think this allows us that opportunity. >> how much of a discount is that to the regular cable?

>> $79.99 is the market price point. >> tami irwin, thank you for joining us. verizon down but the over all dow which is having a rough morning out of the gate plunging 235 points at the moment. nasdaq is down more than 1%. the s&p 500 down almost a full percent. much more on the markets when "squawk on the street" comes back. ? i have bayer aspirin. i'm not having a heart attack, it's my back. i mean bayer back & body. it works great for pain. bayer back & body provides effective relief for your tough pain. better? yeah...thanks for the tip!

some selling in the market. dow down 217. worse day since march. first triple digit move in more than seven sessions. a lot of this is due to concerns about greek debt this morning. the chinese cracking down on margin lending and some other ancillary things. earnings not the least among them. it's going to be an interesting morning. we are heading into a big weekend for cramer. he is going to be tying the knot with his bride-to-be lisa. a couple days ago he expressed his joy tweeting, yes i am getting married and i never use all caps which i think is true. we wish jim and lisa all the best and lifetime of happiness. he told us earlier in the week he is going to be here next week because earnings season comes

once a year. >> he'll take a honeymoon. he did take two days off. shocking in a way. >> our good wishes to jim and lisa. when we come back breaking news. consumer sentiment and leading indicators. and savita subramanian.

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good friday morning, welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and david faber. simon hobbs is off today. a lot of earnings to work with today regarding large cap multinationals. the real story may come regarding securities regulation in china. worries about greek debt and oil which has been a huge winner for the week. >> steep doe kleins we are seeing in europe with the german dakotas. that stock market down almost 2%. you are seeing it across the

board. germany hit particularly hard as the money flows into german debt with that ten-year yield floating closer into negative territory. interestingly enough our debt though is not getting bought on this global sell-off. it's getting sold-off with yields higher today. >> the preliminary is better than expected. high water mark was in january at 98.1. that was an 11-year best. let's look at leading indicators, up 0.2. darn close to expectations. last month loses 0.1. it's the shorter maturities you want to match and the 130 level in the five-year note. back to you. we are keeping an eye on

breaking data. we've got inflation data coming in this morning. steve liesman is back at hq with more on what we can make of this rash of data. >> thanks very much. you don't want to make a huge deal out of a 0.1 move upward in core inflation, but it could be speaking volumes to the fed. i want to show you the data here. headline cpi up 0.2% down 0.1%. that's year over year. take a look at the core up 0.2% for a 1.8% year over year gain. that is up 0.1%. gasoline higher after huge declines. shelter up but food and airfare coming down. let's take a look. core inflation ticked up a bit to a still low 1.8%. the key here it's been up three months in a row. what's been happening, you had a stronger dollar which should be putting downward pressure on inflation. this could ease concerns that all that volatility in the

dollar and oil will not seep in to the core rate. it strengthens the hands of those on the fence, rate-setting open market committee who argued to look through the recent price shocks to the economy. that is what bank of tokyo says. core cpi 1.8% close enough to 2, let's go fed. this does not fit the slow growth economy fears. barclays weighing in saying head wind from the stronger dollar and second round effects of lower energy prices are still ahead. it was concern about the outlook for inflation and weak economy that stirred markets yesterday when fed centrist dennis lockhart said the data is murky and murk yeah data not a good time for a major policy change like raising rates. he said a june rate hike still possible, but not his preference. others on the fomc like fed vice chair stan fischer, sticking to a bit more of the party line. that everything is on the table

and we'll make a decision after we begin to see the second quarter data. there's a lot in play right here. all this data comes in and everybody is talking at once. it was a lot for investors to put into the hopper here. >> i wonder if you are attributing that to the sell-off we are seeing in bonds? saw a little bit yesterday. seeing it this morning. higher yields. art cashin put out a note saying that is where you are seeing the fed talk manifest this morning. >> if you look at fed funds future, you see a blip up here from around 32 to around 34. apparently the tips are higher here. there is a more inflation expectations working into the fixed income markets this morning. >> thanks very much steve liesman on the fed watch. we are keeping an eye on the stock markets. solidly in the red. dow down about 250 points with a slate of mixed data in the past few weeks. steve just mentioned this. i did ask fed vice chairman stanley fischer if he still

thinks we will see a rate hike this year. have a listen to what he said. >> where most people think it will happen this year but you don't want to get more definite than that. it depends on how the economy develops. we'll try and do it at the best possible time and we would like to see the economy beginning to grow again. and grow at a decent rate. >> let's bring in jennifer veil and savita at bank of america merrill lynch. if you add up stan fischer's comments to me yesterday, i would say the leaning was that he is itching toward an interest rate increase. bushing off what he called poor data in the first quarter and looking forward to better inflation numbers and better numbers on the economy and higher interest rates. do you think that is spooking the markets here? >> i'm not sure what is spooking the markets today. earnings have been off to a decent start. the fed call is tough to make. we think september. with some of the data coming in

softer, there are risks to the fed actually hiking this year or pushing that out a little further. i think we are in for a rocky road. we had volatility all year. i think we are going to have it the rest of the year. i do think the market hits a better place by december. we are still looking for 2200 on the s&p by year end. on a daily basis, we need to get used to volatility. >> jennifer wondering if all these factors prove temporary and an excuse to sell in what has been a solid trajectory higher for u.s. equities or you think something fundamentally is changing? >> at the end of the day, i think, i guess the best way to say it houston, we have inflation. i think the concern is that the fed may not be on hold at the june meeting given we are seeing three months of increase in inflation, despite a stronger dollar, despite the price of oil. i think there is concern perhaps

the fed may not delay and may lift off in june. we are still looking at a base case of september similar to our other partner on the phone today. we are still looking at a september lift-off date because we don't think the fed is likely to do anything that's going to potentially derail the sustainability of domestic economic growth. everything's on the table as stanley said yesterday, but september is looking more likely despite some improvement in inflation and wage growth. >> savita retail sales, industrial production starts this week. we know what jobs was like are we willing to look past all that? do you think the fed has the potential to look past all that and still move in june and september? >> i think they do move in september, unless something really derails the system. here's the thing. retail sales hasn't come in as

strong as everybody would have expected with this big oil drop that we were expecting a big resurgence in spending. we've seen a pick-up but not as much as one might expect. i think the consumer stocks might not work as well as everyone is expecting them to. that is one sector where we are underweight. i think the work horses this year are going to be some of the bigger kind of some what cyclical cash return stories. i think we'll see the market march higher but led by an odd leadership, something we are not really used to. not necessarily the consumption plays. not necessarily small caps. really, a small subset of larger higher quality names that could do interesting things. we've seen big, pretty big interesting companies announce divestitures. we had restructuring, cash return. i think that's the way the market moves higher this year not necessarily buying the real

consumption plans or buying the old leaders in the last cycle. >> quickly, can you give us a strategy as to how to navigate around this earnings season? because so far there's a lot of noise. obviously with the weather, but how do you deal with the foreign exchange pressure cutting profits in many cases, taking profits and revenues negative where they should be positive? how do you decipher the high quality names? >> there are a lot of high quality multinationals getting clobbered because of the currency risks. we are forecasting negative earnings largely on the dollar plus the oil, drop in oil. both of those are head winds to earnings. we need to look past this. in the u.s. we are not easing. everybody else in every other global region is easing. that spells pretty good signs for global growth. if multinationals are a way to play the global cycle and not just the u.s. cycle, why not look past a little bit of a

currency risk and start adding exposures to multinationals. if you've got a longer view might be a way to make money this year. >> jennifer interesting what you think of buying multinationals on this idea there's plenty of stimulus flowing and that should boost overseas economies? >> diverging central banks are not going away any time soon. the u.s. and uk are looking to begin a tightening phase where the rest of the economies are firmly in an easing mode. we've seen recent dollar weakness. we do expect the dollar to get stronger going forward. na that's going to continue to be a struggle for multinationals. it's a big hurdle for them to overcome begin our expectation for dollar strength year end. >> thank you both for joining us on the dollar, on rates and earnings.

good to see you both. when we come back while cheap oil may be a good thing for consumers, not necessarily positive for the oil industry obviously. schlumberger hit with falling profit. more lay-offs. what do you do with a name like that? the dow now down 268 points. ♪ ♪ [ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ ♪ she can print amazing things right from her computer. [ whirring

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the oil services industry bracing for another wave of dipping crude prices. schlumberger eliminating an additional 11,000 positions. is this the canary in the coal mine for oil services providers? i know you took down your estimates before the quarter. you weren't surprised. maybe even positively surprised. that announcement of 11,000 job cuts, did that come as a surprise? >> i think any time you go with your market down turn for energy and when crude oil prices get cut in half you are always going to brace for the worse. you kind of expect the company will react to that. you have to adjust to the situation. from the performance standpoint schlumberger did extremely well. much better than most investors expected them to. we could be a harbinger of the

bottom of the market coming in here. >> what about the comments bob pisani pointed out about what the ceo said of schlumberger? if you take that with the fact they are cutting capital expenditures plan, what does this tell you about the cycle for where we are in oil prices? >> we think we are close to a bottom in the oil field services cycle. the count has been declining at a less severe rate. rig count bottom will be put in count in the second quarter. we've been fairly optimistic the second half of the year into 2016. we think schlumberger will farewell as well as a number of other companies. >> can you take anything out of this and see what it means for exploration and production companies? are the oil services companies the ones to cut costs first in this cycle? >> the oil service companies really can't cut back until rigs start being laid up in yards.

they are much more of a reactionary process. when the companies start to cut back and lay off rigs oil service companies tend to react quickly. we saw that throughout the course of the first quarter. again, the benefits of those cutbacks and costs, starting to see that improvement in the second half of the year. >> 14 weeks with a build on inventories, i wonder you think we get a draw next week? >> i don't know week to week. i don't know if the market knows week-to-week what's going to happen. >> it's coming. it's got to be. >> you know what's interesting here? with the build in the inventories we've seen crude oil prices haven't been making new lows right? you've got to take that as an indication the drop in prices in the second half of '14 is predicting what we are seeing now. what we've seen seeing from the eia and other data points. oil production in the u.s. is starting to flatten out. if not start to roll over. that's happening six months ahead of time. it's actually happening before the rig count is starting to take hold. you can see actually a pretty

steep decline in oil production the second half of the year. that's keeping the bid to oil. >> you think for those who have cash and are in the market for acquisitions, is that window closeing as some of these prices rebound? >> usually what i've seen happen in my history in this business the m&a activity starts to pick up once a cycle starts to get better. no one wants to sell out into a declining market. what they usually do when the cycle starts to turn more optimism comes in. the bid spreads start to narrow when you start to see deals. i wouldn't be surprised the back half of the deal to see a flurry of activity on that front. >> you are painting a strong picture of a rebound for the companies, for the price, even m&a. name some names for us. how do you play this recovery? >> so we look at every cycle going back to 1995 in oil field services. land drilling companies tend to do the best off cycle lows.

that would be nabors and paterson. from a service company standpoint, you heard about a lot of refracking opportunities. halliburton would be in good position to benefit from that. schlumberger would be in good position. maybe weatherford will get a benefit from the fallout of the baker hughes and halliburton merger. >> thanks for the tips. schlumberger green today. when we return, ipo fever in full swing. seven companies going public including etsy party city virtu financial just yesterday. will that trend continue? we'll talk about that. >> dow still down 251. s&p back to 2082. [announcer:] what if one stalk of broccoli could protect you from cancer? what if one push up could prevent heart disease? [man grunts] one wishful thinking, right? but there is one step you can take to help prevent another serious disease- pneumococcal pneumonia. one dose of the prevnar 13® vaccine

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about priority boarding is you can just get on the plane and relax. i put everything on the explorer card. i really want my united miles. the ipo market has been booming this week across several sectors, etsy party city all opening up strong.

will we continue to see a robust ipo market? we had cow bell on the floor yesterday. etsy doubled. is this the top? >> no. it's not the top. let's give goldman its kudos. all three of the deals that were the high-profile deals were the goldman deals. this is not the top. however, there are some cross currents happening in the marketplace. rotation, which is something that was crucial to the ipo market many years is seemingly stalled. we are stuck with just a small group of stocks as far as sectors and the underwriters keep pounding it and they continue to work. it's a little long in the tooth in some of the sectors. the markets are taking it. >> it's amazing what technology has happened within that sector. everybody ig saying there is a

new way to discover and they are drinking the cool aid. >> a lot of it was pent-up demand because this year has been so sluggish in terms of actual ipo deals compared to last year and the year before. how much buying was driven by that, hungry for new growth ipos and how much was the underlying companies driving it? >> the companies are the drivers. for the most part it's 45 47 which what is we have this year. we had a flurry of deals in a two-month period of time everybody said this is it and has it stopped? it's going on in a very ordinarily manner. >> we had a lot of companies selling stock in secondaries. that's been more of the story. >> it is. we are eight times in the quantity of offerings in

secondary than we are in ipos. it's nothing remarkable other than the companies realize they need to deleverage. they need to be available. the real estate investment trusts are on buy sprees. oil and energy are dripping saliva waiting to pick up these carcasses. that's what's happening. also we are seeing private equity firms getting out of their deals. so the markets are taking it if it's a cleanup. otherwise i think there is going to be a stall in that area of the market. >> there were comments why we are seeing late stage funding, companies going public. he says having a stock price is destabilizing to your work force. if you need to raise money the shorts make it tough because of what's supposed to happen during a secondary. has that played itself out? >> i don't know it fully played itself out.

this is a very big component not many people have been made aware of. the market owes you that debt of gratitude. what you are seeing with these valuations, and this is nothing new, they are coming in and people just have to put their money in someplace. when they are going to come into the marketplace the next 18 months what have you, you are going to see late round pricings or fundings that come in and ipos are going to be significantly below those levels and there are going to be a lot of disappointment. we might not get the performance everybody thought we would get. what about etsy? they may have been upset they couldn't get any stock. the market may not be as large as people seem to anticipate a double in day one. they did do that offering in a unique way. >> they did. i had this tug of war situation

of go through all the time. one hand i hate the underwriters. on the other hand i really respect them. i have to respect them with the pricings. they are not pricing to demand which would be an instant formula for disaster. if the emotions in the market want to go, they are going to get stung at some later point. >> interesting so far this year. good to see you. >> great to be here. it looks like the markets have stabilized. still the dow down 250 points falling all morning long. s&p down 23. now over 1%. the nasdaq is actually almost 1.5% lower. after the break, we'll talk to jim stewart about today's big market sell-off.

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good morning. i'm sue herera. bloomberg terminals went down for 2 1/2 hours due to apparent technical problems. this prompted the british government to postpone a planned $4.4 billion debt issue. the outage started about 8:00 a.m. london time as trading was getting onto full swing. the parents of the youngest victim of the boston marathon bombing are urging federal authorities to consider taking the death penalty off the table for tsarnaev. their 8-year-old son martin was one of the people killed saying the death penalty could bring years of appeals and prolong reliving the most painful day of their lives. businesses in johannesburg

were looted again. a japanese air carrier is paying homage to "star wars." they have plans to dress one of the planes as r 2d2. got some breaking news on apple. dow jones reporting that the company is in talks with six canadian banks to launch apple pay in canada. this is according to people familiar with the matter dow jones citing in negotiations with some of those banks about a potential launch in november with payments using iphones. there are discussions about security issues fees as part of the negotiations. apple is decisively below the

50-day moving average since january this morning on what is obviously a broadly weak table. >> not doing a lot for the stock today. down a percent. near the session lose of the day. sounds like they were expecting apple pay to go global and it is doing well domestically. >> this would be the first international expansion part of that plan. markets are in broad sell-off mode. dow down 253. bob pisani is watching the floor. >> everything is down basically. this is a classic degrossing. let me show you the broad market. everything is down 1.2%. if you look at the s&p 500, the russell, if you look at the mid cap, this is the way i look at the world. you've got 1,500 stocks here. everything down more than 1%. the question is this is this china? is this europe? the answer is everybody seems to be lightening up on their exposure to stocks a little bit.

remember what happened in china, it's very important. after the close, regulators instituted a crackdown on stock margin trading and over-the-counter stocks. china closed on the up side. that was after the market. here in the united states etfs that are china based like that chart, mainland china and the fxi, that's the hong kong business, all down 4% 5%. the question here is a lot of people are long china. you doubt me take a look at the small cap chinese etf. symbol is hao here. look at this thing. just in the last month or so it exploded. there's been all sorts of movement over in china whether it's small cap investors going out opening new brokerage accounts. lots of people going long china. i think you are seeing people lightening up on their exposure. i see the same thing in europe. europe had a great run this year. the european banks are all up double digits so far this year.

everybody is piled into china. everybody is piled into certain european names particularly financial names all throughout the year. they had a great run. suddenly you get a little bit of news here on the greek front and also on the chinese regulator front. everybody says good heavens, i've got great profits. let's just degross. that means lighten up a little bit. i think that's what's going on. the reason i'm not too concerned is if you look at people who were trying to flee to protection look at for example the vix. these are people buying puts and calls on the s&p. there is not a lot of movement. we were at lows of the year yesterday around 13. i start picking my head up when this is 20. we weren't at 20 last time essentially about january. that's the last time i think it was in a real red warning district. we are not there now. we obviously have people lightening up on their exposure in europe and china.

>> thank you very much bob pisani. for more we are joined by cnbc contributor and pulitzer prize winning "new york times" columnist jim stewart. last friday you said the market was top heavy. >> i thought it was richly valued. markets do have to go down. that sets up investment opportunities. i'm not particularly concerned about this. >> how much of a washout would you like to see? >> i don't like to see sudden moves. i think that's destabilizing. how long have we gone without a correction? i don't want to see it exactly. >> 2011. >> we are going to have one. maybe we should just take our medicine and get on with it. what i find interesting right now is monetary policy's done about everything it can. globally rates are down. raw materials prices are down. the dollar stabilized oil stabilized what's left to happen? what's missing from this puzzle?

how about real growth? some economic growth. u.s. has been chugging along, but i think the rest of the world, europe especially everybody is in a wait-and-see mode. i personally would love to see finally some real results from all this monetary policy. >> a lot of laundry list of worries going around today. everything from china regulation to flash crashes and problems in the markets to greece. anything that is at the top of your list you really think fundamentally could drive this lower? >> whenever you see valuations get rich then the markets stabilize. you are not seeing a lot of momentum lately. i find when people start thinking not about reasons to buy, but reasons to sell. you can come up with something on the horizon. these are all real worries. none of them loom large to me. for one reason probably what really would send the market in a tailspin is something we are not expecting. this to me is part of the normal ebb and flow of markets.

>> would you like to see capex and hiring? >> definitely. >> instead we are getting $50 billion buybacks and dip hikes. now we are back to what larry fink is saying. >> a lot of financial maneuvering. banks this week goldman impressive. again, this is all a result of this financial transaction stuff going on. i don't think really is reflecting much real strength in the underlying economy. i mentioned last week raw materials prices are still low. i think maybe if you want to call it a bargain, i'd like to see firming, some strengthening there as a sign of underlying demand in raw materials from the actual manufacturers and producers. i think that would be a healthy sign. >> what is your sense of growth right now? we've got a lot of economic data and a lot of disappointing data. many economists say it will rebound in the second quarter and the second half once we start to see the weather improve and some of these other factors temporarily subside. >> i know. the weather.

again. here we are supposed to have global warming. is it the weather? isn't it? that's one reason they are unlikely to raise in june because is there a cloud over this data. they are not going to have the data from this quarter by june. we are not going to know how much is weather, how much is a broad or slowdown in the economy. i didn't feel like shopping in showbound weekends. >> steve schwartzman was on our air earlier in the week. you talk about what's left to be done, corporate taxes, right? you are into areas that seem unreachable because of the walls that are put up by our political structure. >> i'm happy when i see taxes bubbling to the forefront of the agenda again. some candidates are starting to talk about it.

we need individual tax reform. that would be a positive thing. >> i don't think they think, and they are plugged in d.c. that there is anything coming any time soon. >> i don't think they would be eager to bring that much money back. i've been waiting for decades for this to happen. i'm not holding my breath either. i think we've got to keep the pressure on. everybody agrees the system needs to be fixed. let's do something about it. >> can i direct people to today's column? >> this is a war of words developing between the federal judges in new york and the u.s. attorney. obviously, they both wield a considerable power especially over markets regulations, fraud,

insider trading. suddenly it's starting to be maybe bubbling up to be more than that. the words are getting harsh. there was some fear among judges i talked to that the judge in the sheldon silver case was going to throw the indictment out because she was so angry at the public remark s remarks. she didn't do it and spent pages of the opinion blasting bahara left people reeling. i do think it is a potentially serious issue, but one that let's defuse this. let's calm down and all be more judicial here. that's the answer. there's going to be give-and-take. everybody is a professional. everybody is an assault. let's all do the right thing. that is my suggestion. >> you don't think he's overshot? >> i don't think so. i think his arguments make a lot

of sense. he is very smart. has great people working for him. those are great judges too. it's more like the tone. maybe a little more deference, sprinkling my able colleagues on the bench. putting in a few compliments as opposed to saying that was the worst decision we've ever seen would help. >> i'm sure your writing the column will take the tension down. >> it helps. >> have a great weekend. >> thank you. coming up ge still holding on to gains. the only dow member to be positive right now. from the news that it's shedding its financial services business. and today its first quarterly results beat expectations. currency issues and oil prices are still an issue for the company. all the details on ge.

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one week after deciding to divest most of its capital, ge posted earnings today. they were ahead of analyst estimates, though revenue was below what analysts were looking for. mary thompson was on the conference call talking about the quarter. she joins us now. >> tight expense controls and strength in aviation helping ge post earnings while revenue taking a hit from the stronger dollar and expected weakness in its oil and gas business. here is ceo jeff immelt on the call. >> ge had a good quarter and slow growth. we are seeing the world we planned for. one of the two units posting weaker profits oil and gas. cost cutting did help to boost

margins, even as orders declined this. was expected giving falling oil and gas prices. so to counterthis, the unit plans to cut 600 million in costs this year. ge said it hasn't renegotiated any contracts yet. something people were looking forgiven the price decline in oil. a week after unveiling its plans to shrink ge capital and get profits to 90% of its total by 2018, the results showing ge's ability to improve industrial margins increased by 120 basis points ahead of its 50 basis points target for the year. on the call they said all the businesses continue to improve on these numbers through the years. on the call ge affirmed its full-year guidance for industrial profits saying it's tracking at the high end of the $1.10 to $1.20 range. aviation is tracking higher than earlier guidance given in december of profits of high single digits to double digits for the year. firm saying interest in the 165

billion in ge capital assets it plans to sell has been incredible. one thing to note the company's industrial cash flow for the quarter came in below forecast. the firm pointed out that was due to a tie-up in its transportation pipeline and timing in water and gas contracts. ge sees it being much higher in the second quarter. back to you. >> thank you mary thompson. time to head over and check in with rick santelli. >> good morning, carl. i would like to welcome my last guest of the week lacy hunt. thanks for taking the time this friday morning. >> great to be with you. >> in your writing that i enjoy, you point out that since s the credit crisis global debt has expanded, not contracted by 35 trillion. that doesn't sound like we've done a lot of deleveraging. can you explain? >> well basically up until the crisis in 2007 to 2008 it was mainly the united states and japan that were pushing the debt

levels higher. the united states and japan have moved it somewhat higher since then. we've seen massive leveraging in china and many emerging markets. by the way, the debt unfortunately, is a net negative. it's not a net positive. debt is an increase in current spending in exchange for decline in future spending. we are not going to solve this problem we have by trying to take on more and more massive amounts of debt. >> pursuant to that let's go in a slightly different direction. the euro yield curve is negative out to nine years. the ten year bund flirted with five basis points. that was the low yield i saw. it seems we are going to go negative in ten year bunds. is any of that significant? is it going to help the conditions you just described? >> i don't really think it will help conditions. the interest rates, these longer term interest rates are really

excellent economic indicators. we forget that. short term rates are controlled by the fed. the longer the maturity it's a reflection of market action. when business conditions are good inflation rates rising the long term yields will be going up. if business conditions are poor then they'll drop. the fact that the rates are negative in many parts of the world, very low levels virtually everywhere you look in the world, it's a reflection of how poor business conditions are, and these depressed business conditions are a direct consequences of our excessive indebtedness both public and private. >> sounds to me like you are describing us all as frogs in boiling water and we don't know how many more degrees we can take. if you had an extra thousand dollars, would you allocate any of that to the fixed income market currently? meaning a 190 ten year? do you think yields will be

lower throughout the next several years given your thoughts it can go down? >> we have a 20-year duration. we do not believe a secular low is in hand. actually not only will we see the rates move irregularly lower, but they are going to remain depressed for several years. this process is not coming to an end. it's dragging on. for investors that are willing to be patient and ignore the short term volatility in the long term markets, they are going to produce a good return. another element that is at work here, let's say that over the next several years, four five years, the long rates, the 30-year rates go down to 1.5% 2% and inflation rate goes 1%

negative. >> that gives 2.5% return which is excellent. >> never enough time to talk about my favorite market. markets are now negative for the week in the red. the dow is down 240 points. s&p down almost a full percent. the nasdaq down 1.3%. much more on today's pullback when we come back on "squawk on the street." excellent looking below the surface, researching a hunch... and making a decision you are type e*. time for a change of menu. research and invest from any website. with e*trade's browser trading. e*trade. opportunity is everywhere.

welcome back to "squawk on the street." shares of hudson city bank corp again in the news after announcing the deadline to complete its merger with m & t bank has been extended for a fourth time. to october 31st of this year. the planned acquisition is the largest pending u.s. bank merger out there and has stalled since it was announced in 2012 as the federal reserve reserves the m & t money laundering controls. so the shares are up on the specter that actually the deal gets done late they are year. back to you. back to the broader market. all ten major industry groups in the s&p are lower right now. broad selloff mode, ben willis joining us from the floor,

princeton securities ben, clearly this started overnight, has carried over into the u.s. session. what has traders worried this morning? >> the concern is leverage has been the motivator for all the major market selloffs going back several years, we saw a deleveraging in china. it wasn't that they were adding names to the what they were able to short. it was the fact they were constraining the ability to buy on margin. a huge impact on what we've seen as far as money flows out of mainland china into the connections of the other markets. if you do an everlay of the futures markets on the s&p, look at what the dollar index did, it traded down to 97 on the dxy. the selloff being driven by theover seas events in china and the fear in traders' hearts when they were unable to access the market because their bloomberg terminals were down. >> you think that was real? some people laugh at that as the reason for the morning's correction. >> they wouldn't laugh so hard

if their machine wouldn't work. >> you have to keep in mind it's been a strong market even in the u.s. so potentially just a correction? >> i would hope so. i was chatting with bill griffith the other day he had a guest on late in the afternoon session that said profits don't matter, it's all about cash flow. if that's not an indicator of market top, i don't know what is. that really put fear in my heart. because i'm long-term bullish. a correction is always healthy for the market. but i think when you start getting people who are going to go on air and tell you that profits don't matter as far as the pricing of a stock, that's a little disconcerting. >> is the fear about the disagreement between greece and germany? is that real or is there greece fatigue right now? >> i think there's greece fatigue and the big concern about greece is that it's not greece itself as i say, that's like rhode island announcing they're going into bankruptcy in the united states it really doesn't matter. if they're given the out wlarks will happen to the likes of

ireland, and spain and the rest and how exactly that will impact the rest of the eu i don't think greece should be in the eu but no one has called and asked me until now. >> the precedent it sets is what has people concerned. you mentioned earnings and cash flows, are you getting a sense of what earnings look like? i know we've got a lot of the big heavyweights consumer products companies out next week. the question was, are expectations so low that these companies are going to beat? >> absolutely. compared quarter to quarter, you had about a 65% ratio of companies beating expectations this quarter. at about 80 8 a% that terms you the expectations are greatly diminish. it will be stock-specific when you have a major market reaction. like the days when you have the major financials reporting what they're doing. >> financials at the bottom of the pack leading us lower. the dow down 265. we'll send it over to john ford with a look at what's coming up next on "squawk alley."

>> we'll be talking about that and the s&p down more than 1%. verizon the latest challenge to the bundle. might be a bigger deal even than it seems at first glance. we'll dig into it and "star wars," how can we not talk about "star wars"? we're home coming up. on "squawk alley." ync with your life it gets talked about... ♪ ♪ ♪ so you can live the way you live, and enjoy all the rewards. chase sapphire preferred. so you can. [ female announcer ] who are we? we are the thinkers. the job jugglers. the up all-nighters. and the ones who turn ideas into action. we've made our passions our life's work. we strive for the moments

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let's get a quick market check, we'll end the week on a down note. we've got the dow down 270 points. we're seeing new session lows s&p 500 down 23 more than 1%. the nasdaq also down 1.5%. i guess you would call it carl a pullback. not a full correction. correction is 10% off the highs and that is something we haven't seen since 2001. over to you. >> we'll keep our eye on that as we get into the late morning, early afternoon. it's 8:00 a.m. at disney headquarters in burbank, california, 11:00 a.m. on wall street, "squawk alley" is live. ♪ ♪ ♪ ♪

♪ ♪ ♪ ♪ ♪ happy friday welcome to "squawk alley," we want to welcome back kayla tauschi who got married over the weekend. congratulations, good to have you back. and john ford sheer, as we're dealing with a bit of a selloff, the dow is down 270 points. it's been weak for most of the morning. europe has been selling off for most of the day as well. with all major averages down 1%.