>> donald trump, how long is he in the race for and is he the next president? >> no. i shouldn't have laughed, i guess. i have to gasp at the question you have to consider. i think he's in the race for quite a while. he's tapped in. he has 25%. at a certain point i think it helps jeb bush. >> thanks, everybody. make sure you join us on monday. "squawk on the street" begins right now. ♪ good friday morning. welcome to "squawk on the street." after the worst day for the dow in four years the premarket is red for a ninth straight session. all the technical levels now broken. we're going to find out what they may mean. china's flash pmi disappoints again. yields here have not moved

around as much as equities. oil may put in eight straight weekly losses. we've not done that since the 1980s. hp out with results. sales force ceo calls it the best quarter ever. find out what else he told cramer last night and fedex launching a $4.8 bid for a buduh rival. you were not supposed to be here today, but you had the day off. but it's important enough to see how this goes down, at least in your mind. >> i think people are trying to revalue equities. i want to help people. i'm not so self-important, but i think it is an important day, and i think it's one of the things where i think a lot of people are just giving up. a lot of other people are saying there's no price to pay for anything. it's not a great time for the market. there are things that are happening. while it's not a great time, the dollar is getting weaker. no one talks about that. when commodities come down, then

you can see the notes today, vf corp., that's a winner. pepsico is a winner. sales force doing a good number. hu hewlett-packard is not as bad as people are saying. deflation is responsible for everything, including stocks. don't hear anything from yellen about it's not time to raise rates yet. we need that. we have no leadership right now. none. the president, secretary, fed, charn chairman, nobody says anything. we need it, and i think everyone is so hopeful about employment that they don't feel they have to say anything. there are other aspects of the world other than what employment claims were. i think we're in an uncertain time and people want to pay less for every single stock, and disney is really the textbook of what's happening. >> disney, you've called it a

tipping point from the market. went from 121. has a 9 handle today. the ten-year is at 2.07. the vix has not cracked 20. the way we've seen things happen in prior corrections like this. >> i think that's because rates are low. that makes some of these stocks -- let's use a clorox. it's plain vanilla. that's an expensive stock historically trading at 22 times earnings, but all the kmocommod costs are coming down. and at the same time they're in a situation where they're trying to be a little bit overseas and a weaker dollar will help them. >> does it make you feel that this is more about algorithms playing off the averages, playing off of support? >> it's a thin market. i remember trading in the week before the crash in '87. that was the second worst week we'd had. people forget that. it doesn't feel like that at all except for the fact that it's august and there seems to be no

bids underneath. when i watch netflix, giving up almost all the gains it had the day after. it's still not back to where it reported. i say i think netflix is a really good story. let everyone sell it so i can get back in. sales force yesterday, really good story. these are high multiple stocks. in the interim, i can make a case right now that some of these consumer product stories coming back down, they're interesting because they're just gigantic plays on commodities. let's talk about disney for a second. i want to follow up on this. that was the story that just said a perfect stock, we're paying too much. numbers weren't cut at disney. that's the amazing thing. the buy back is huge. 13% growth. we were willing to pay 122, and there was a ching in espn numbers. do we see how much of the stock they bought back? maybe. but it might go to 90 first.

>> we're going to have to wait and see on that one. disney is a fascinating case study. >> listen, when i see gold up -- these are all things that are not great but if you have some cash, you're going to get some bargains. that's very different. i'm saying it's going lower. how long has it been? >> you've been consistent on this. >> i said hormel, that's the stock i like, and why try to get me to name another stock. i didn't have another one i liked. i will have more stocksic like at this pace next week. >> hp, what do you say? >> this is the crucial story. shares of hewlett-packard are a little bit lower after they -- i'm not sure if they missed on revenues. they are splitting in november and that's the crucial thing. and we are fortunate enough to have meg whitman.

she is the ceo. it's great to have you. i felt that the enterprise business was good and i want to give you the floor on that because that's an opportunity for people buying at much less than the other enterprise companies in the stock market. >> well, thank you very having me. it's great to see you this morning. i'd say overall the company had a good quarter with a lot of progress on my fronts but you're correct. the highlight was enterprise connect. that performed very well. 2% growth as reported, and 7 % growth in constant currency and industry standard servers was a 15% growth in constant currency. we also saw strength in converged infrastructure, all flash array was up 4 00%. a nice story. and enterprise services, you'll recall this is the division that hp bought back in 2008 that was

eds, also had a very good quarter as they turn around their business which we've been working on for a couple years. nice new logo growth. good cost reduction. good competitive offerings in our strategic intersurprise -- enterprise servis. we outperformed the markets but the markets were pretty tough in pcs and printing. >> we're going to learn a lot more and you made that clear in the conference call, but you were adamant, as you always are because you call it straight, you used very soft several times. you used weakness in the consumer. you used a lot of combinations but the most telling for this is the print side, the hp side, is that the japanese yen, they're carving out a market that you've had for a long time. is this a nutritional split?

or is this one where quick events in the world has made it so that hp is simply very difficult to own no matter what? >> i'd say both companies are going to have real strengths. let's talk about the printing and personal system side. so, that business, hp is the leader in worldwide commercial pc share, number two in overall share in pcs, and that business, depending on what happens with windows ten, we think is going to come back in the long term. there was definitely a consumer pause waiting for windows 10. on the print side, this is one of the great all time businesses in the world. hp is incredibly well-positioned, and obviously currency, the change in currency over the last year has been very hard for every american company.

i mean, hundreds of millions of dollars of operating profit out of our pnl strictly due to currency but in prints this had an interesting other effect. because the yen was being devalued in the face of the strengthening dollar and weakening euro, the japanese competitors, particularly on the print side, had a big advantage. and that will mitigate over time. listen, i think this is going to be a strong company. excellent cash flow. terrific leadership. despite the market softness, they have done an incredible shop gaining share in the areas they wanted to. i'll be a holder of both stocks and i'm excited about both companies. i'll be the chairman of hp inc. >> it's the first time in a while we haven't had a big negative surprise. there wasn't any reduction in cash flow forecast or separation costs. can you guarantee investors that we have seen the last of those types of bits of news?

>> listen, we're a much stronger company today than we were four years ago. we're four years into our five-year turn around journey. we have stability. we've earned the trust back of customers and partners and employees. you can see the fundaments of how we run the company are improved but this is a volatile business. no one would have predicted the foreign exchange shock we got in january through march. anything that -- anything can happen, but i feel good about the leadership team, the fundamentals, how we run the business, the discipline with which we run the business, and while we turned in a pretty solid quarter on many fronts, we also are far along now in the largest separation that has ever occurred in american business. we are effectively operating has two separate companies, so we're invoicing separately and collecting cash separately. we've got separate supply

chains. and so that was an enormous, enormous undertaking that was done almost flawlessly on the first of october. so we're very proud of that as well. >> i hope won't mind at least one sort of macro question. you talk about the surprises we faced in the global marketplace and especially regarding fore x. how do you model your forecast for currency or the dollar going into mid '16? >> right now we have it modelled for our fiscal year '16 at about 107, the euro versus the dollar. i don't know if that's going to party or if it's going to drift up to $110 or $115. it's almost impossible to know because there are so many factors. and the euro is not the only currency that we have exposure to, the yen, as i mentioned before, is very important to us. so we try to take the center point, we look at what other folks say who model these things

and then we build a cost structure to deliver our forecast against a point in time. we try to -- it's we can turn more. >> all right. well, i feel terrible about that. because, oh, okay, meg. sorry about that. >> that's okay. >> you called your services business ys, the technologies it's called and that's going to the enterprise. the crown jewel, but at the same time, there's companies like ak senture that have taken a lot of share. how are you going to get that share back and grow that business the way we all expected you to do? >> yeah. there's two services businesses within hp, and what i was referring to is our technology services business which is part of the enterprise group. that is the group that does all the service and support for our

enormous hardware footprint around the world, so if you have a data center with hp gear, we have a services team that is second to none with some incredible products that make sure that your data center is running all the time. that's a different business than enterprise services and that is the crown jewel of enterprise group. it has been in a turn around since i joined the company j and i'm feeling great about it. they can be the tip of spear for helping companies transform their it infrastructure to what it must be for them to compete. so two quite distinct services businesses, both very important. but what i said on the call was the crown jewel of enterprise group is technology services. >> okay. thank you. cash, 17.4 billion. if you had to, i know you're going to trace things out at the september meeting, but is that

cash position going to be divided between which companies? how will you do it and is the buyback going to continue in the way it has? >> yeah. so the capital structure for both companies are going to be designed to go after the markets in which they compete, and one of the benefits of separating is you have a capital structure that is right for both companies and we just filed the form 10 which details the capital structure of hewlett-packard enterprise. hewlett-packard enterprise has a stong cash position on the operating company and less debt on the operating company than hp inc. will have. that's appropriate giving the markets that the two companies are going after, and where the cash generation capability is. we've said that the dividend will be the same as it is today.

maybe slightly differently allocated to the companies but the dividend across the two will remain the same and we'll talk more about share buyback, but i suspect both companies will have a return to shareholders, including share buyback and dividend. >> you talk about windows 10 and you always have the, i'm using one, i know the corporation corporations use it but is the era over just in terms of any possibility of growth somewhere down the line? >> i don't think so. you know, the productivity and knowledge workers use pcs all the time. there's only so much that you can do on a smart phone and a

tablet. and i have to say, i'm very bullish on windows 10. i use it. most of our senior folks here use it, and it is a big, big improvement from windows 8. and so i actually am quite excited about that offering. we'll see. i think we'll know more in september and october, how important windows 10 is for the consumer. it will take longer for enterprises to decide they'd like to upgrade now from windows 7 to windows 10, but i think pcs are -- i remember when i first time to hp, you'll remember this, jim. pcs are dead, printing is dead, therefore, you're dead, and, of course, none of those two things turned out to be true. i think it will be a slow growth business. this isn't a rocket ship but it's got some good legs and hp is beautifully positioned in that market. >> excellent. really, always great to speak to you. thank you so much. hewlett-packard enterprise ceo but also chairperson of the new hp. thank you so much, meg. >> nicely done. a lot more moves to talk about this morning. including sales force out with some upbeat results and

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we have a clear trajectory to 10 billion in revenue and beyond. that's way beyond our expectations. it was only a few years ago when i was on the show we were talking about the billion dollar sales force year. now we can see hitting that $$10 billion number and we're going to go through that too. we're the fastest enterprise

software company ever to $7 billion. you can see that on the numbers today, and we're going to be the fastest to 10 billion. that's my dream. >> talking about growth trajectories after a nice beat in a raise. >> let's put this in context. beats and rays have not produced up stocks as of late. i want to distinguish between the company and the stock. the company is taking things away from oracle. i'm sure companies would dispute that. they had a lot of wins. it was a good quarter. that said, we know that we're in an era right now where we're ratcheting down where what we pay for growth. whether it's the private company markets or a netflix, a fantastic company whose stock is going down. be aware. this is the kind of thing i'm

talking about. after the stock comes down, you might want to get involved. you may want to wait of revaluation of all stocks as the deflationary ripples through. started in china. don't have the fed saying the right thing. don't really want to be encouraging for people. like cash here. i don't want to be encouraging. i think there's another level where i can be encouraging. we're just not there yet. >> like target earlier in the week, wouldn't surprise you too see it in the red. >> target was one that i thought was a great quarter, and there they pulled the rug out because they try to get expectations lower but it was as good a quarter as sales force. and if you went to target, you didn't do well. this is a good opportunity to re-evaluate, have cash, wait for things to settle down, maybe china takes out the 3500 level, and next week we come in and get a wash out.

the fed says things are crazed but be cool. get some cash. my travel trust yesterday, sold soft. we talk about i'm struggling to find enough stocks that i like right now. so let's just -- i'm not -- i'm saying there's a time when sales force, you're going to see, i really got a chance to buy it. >> on that note, we'll cover all the stories we haven't gotten to. the opening bell in about five minutes.

you're watching "squawk on the street" live from the financial capital of the world. the opening bell in just about 90 seconds on what has been a tough week. week to date, shanghai down. s&p down 2.. dow down 2.8. >> i think it is a worldwide revaluation of stocks and what you want to pay for stock. i think whether it's the growth a sales force has which is good but i think we're going to say

i'm not going to pay up for the one stock today or whether it be the traditional stocks. raw stor ross stores down. ross stores does not have a home goods division. so ross goes down. people thought foot locker would be good because of the headline number. then they're not bullish in their tone. so you have to keep watching and waiting, and i'm telling subscribers, just watch and wait. we're not there yet. but don't panic. what's going to happen is you're faced with lower interest rates and lower dollar, and commodity costs and you might have to be able to say i want to have money for when these stocks that had great quarters have come down to the point where i either can get 4% to 5% on the yield, the slower ones. provided the yield is save. or i want to buy growth at a reasonable price. we're not there yet. >> we'll get phish herfischer, s

not until saturday. when you say you're looking for leadership, what do you want them to say? >> well, i just want to hear -- it would be nice for the treasure secretary to come out and say we understand what's happening in china. we want to watch it. this is a time when we respect that the dollar, we don't want it to skyrocket right now. now, these are things that i've seen treasury secretaries too do, which are being a little bit calming. it wouldn't so bad for the treasury secretary to have a little conferences. when you see a stock like deere down horrible or you start worrying about the dividends of the oil companies, you say you want cash but you also want to know that all is not wrong in the world. >> there is s&p with negative breadth. at the big board, it's world wrestling star, john se na.

as we look at the s&p now, for the first time in three years, s&p is not positive over a rolling six months. it's no longer a risk-free cd. >> that's a great point, carl, and that comes from the point of view that we're not seeing tremendous earnings cuts. but we are seeing a recognition that at any given moment, we could come in and china breaks the level and it comes down. latin america -- south america a black hole. who knows what's going on. and in that world wild thing, do we want to pay up for kroger or tjx? why don't we wait for home depot to come down? there are few stocks doing well. and i have to tell you, the chartist in me of which i still

have some is saying there's nothing that stands out as good, and the transports which were the tell all along are terrible. >> 13% from their all time say. the russel today is making news. almost 10% from the closing high. yesterday there was a narrative that all the big names that went public in the past couple of years were back to their price. now it's alibaba which is 60 cents from the issue price. >> alibaba is a stuff stock to own. i was going over what's in the shanghai index. this one trades everywhere, but you notice that when stocks really go down a lot over there, they halt trading and they're trying to keep that level. there's no halting of trading in alibaba. the stock was well-timed to come possible. they timed it. that's the stock to avoid. i don't want to own that stock. if you insist, you can own it through yahoo. they didn't get that deal done. let's take facebook for a second. facebook reported magnificent quarter but they're going to

roll that back. but is facebook growing well with cash flow? yes. am i saying buy facebook? no. i'm saying there's a company called facebook and it's good and you'll get a chance to buy it provided you have some cash. let's default to the old case of bristol meyers. is it impacted? yes. you're being impacted by the stock going down by the company doing better. we want to wait for those opportunities. deere down 5 off of a number that was exactly what i was looking for with an estimate cut of exactly what i was looking for. when i get things that are exactly what i'm looking for and they're down five, i don't know. forget the president of treasury talking for a second. would i like to hear bob iger some out and say we finished our buyback and we're doing another one? he could pull through his 2016

miscal a m fiscal and say they're buying back more. that's reassuring but he's not about reassuring. he's about running a business. you're getting pretty good businesses at prices you don't deserve and there are going to come moments when things are overdone. i'm seeing some things i like. i just don't like the setup. but i'm seeing some things i like. >> you've been saying that consistently. >> thank you. >> that's remarkable this morning is at the bottom of the list of losers, in other words, the worst losers are the biggest year to dates. netflix, electronic arts, facebook just broke 90. people are selling urnnder armo and boeing. >> that's what they do at the end of a sell off. they get to the ones that have held up the most. we've had some stocks down 20%. i was saying to myself, i did not say it on mad money because i was trying so hard to not use

this term but there's been a horrendous bear market in a lot of stocks. in you're in free support, this is not like holy cow, fcx, what's that doing. and now we're wondering is the bear market going to extent to the classic growth stocks. i think no, it will not. commodity costs are low. it's hard to find out what to pay for a pepsico, but pepsico is doing really well. your just wait for your price. disney, 1 22 to 97. there will come a moment when bob iger and his company will say you've now wiped out the value of sba. you've piped out the value. at that point you might want to say for my kids, i'll buy some disney. is that the time? is that what warren buffett might say?

yes. is warren buffett a not smart man? no. but i think if he were looking at this market he would say if r you deciding these are worthless? i'm not saying buy. i'm saying be ready. be ready. it's not so bad. >> all that said, the things that are catching a bit today are the names that have been routinely punished for months. apac apache, staples, diamond offshore. >> i want to be careful on the oils. they're hold in but at the same time iraq is pumping, we are seeing some incredible deals that halliburton is making. f there's a lot of money going from private equity. the oil companies aren't collapsing take they should be. but i think if you're going to buy the oils here, you'd better

have a better thesis than what's going on with them. give me an example of hewlett-packard. this stock was down badly and they did everything i wanted and more. i really did like the intersurprise services. it's good. how much is that stock down today? none. why? because it was down more than 20% going in. that's what i'm looking at. stocks down badly that didn't disappoint. that's what i want. >> we did talk to meg whitman about 30 minutes ago. we talked about the server business, the pc business, how they're modelling the dollar. let's hear what she said. >> over all the company had a good quarter. but you are correct. the highlight was intersurprise group which is our servers, storage, networking, part of the business, cloud part of the business, and that performed very well. some challenges in our pc and print market. we outmarketed the market but the markets were pretty tough in

pcs and printing. >> the one thing people are taking issue with is the server enterprise revenue is up 2. operating margins were down, and it's hard to sell servers if you're going up against white box vendors. does profitability suffer at the expense of growth? >> i think the raw numbers were good enough for me to say that it may suffer a little bit. that was really the kind of gradeoff her tradeoff. for printers it was profitability versus share. i think you're not paying a lot of money to be able to face that debate provided that at the september analysts meeting, they talk about buyback and dividend. remember, when companies have split up with the exception of the oil companies where some oil companies lost their best assets by sending over to refineries, most of the breakups have produced value. there are some very big numbers out there about the sum of the parts. hewlett-packard is not

expensive. that's why people are saying they did a little better. and it was better, and i think a lot of people in this market let the stock determine if they think something is better. don't. do your work. realize that intersurprienterpr better than we thought. that's positive. if you do work and don't let the tape dictate, you'll find stocks that are down nicely that you'll want to buy. and hewlett-packard, i said that's pretty cool at 26. >> a lot of people thought they would bring their free cash flow estimates in. >> no. but i don't know. they have $17.4 billion of unallocated cash. do you want a printing business? yes if it's cheeper an lex mark. you have to be price sensitive. that is really the essence of what i'm talking about for the whole market. price sensitivity. can i make a case that the drug

stocks can come down with the buyback and the dividend? i think the answer is yes. can i make that now? can i make a valuation on the consumer product goods storys? i think you can say that some of those are worth buying into this weakness. not a polly anna. i know a lot of stocks are too high, but i'm going to say it. i'm not as worried as everybody else. i was really worried for a long time. >> it sounds like you'refacient. i wi -- patient. >> misery loves company. >> i said yai can't find anythi i like. no everybody is scared. i'm i thissing. -- thinking. >> reporter: good morning. end of a long week, but still off the lows for the morning here. i want to show you the sectors and it's a broad swath of general weakness. consumer discretionary,

industrials j technology stocks, health care stocks. everything is down 3% to 4%. i'll make it simple. over in china a rare double down day. down in the morning and the afternoon. down about 11% for the week on the shanghai. similar situation in germany which has had a rough week, down a little more than 1%. a weekly chart, down about 6% in germany. a great comment this morning. when asked why are we so week this week, he said it's august. there's a certain something to that but it may be a little bit deeper than that. the good news is the u.s. has weathered the downturn better than everybody else. the dow is down from a high in may. japan is worse. hong kong is even worse. i use hong kong because a lot of traders think it's a better read on how china is doing than the shanghai.

the bigger debate and the more serious one is given that the s&p 500 has almost half the earnings overseas, why am i paying 17 times forward earnings if the global economy is contracting? that's why we're seeing the unwind of global growth plays. the companies i love, the eatons, the people who make the stuff behind the wal and industrial parts. this is a trend going on since june and that coincidentally is when china started slowing down. they all started showing down in june as the shanghai came down. what does that mean for evybodelse? slower global growth is also causg a t of investors to question the ability of young tech comnieso gro athe speed they were projected. a bigech invtor t a lot of play yesterday. he tweed out yesterday the bottom line is that global tec

vaatio multiples are dock pressing quickly. and he has a point. and we've been seeing is. th does not happen this week. we've been seeg ts f a couple months. big tech names in sial med have been weak for a while. we know what's bee gng o with yelp. groupon. even lincoln inn. the good news is the valuations aren't as stretched. investors might be losing patience quickly. some companies can reinvent themselves. look at google and netflix and amazon and price line. and we've all rewarded these companies with these wonderful prices and deservedly so, but it's a small group. we bring up these four companies every single day when we talk about the tech leadership.

it's a small group that's able to outperform like these four companies have. deere, the beat but the revenues were light. that's the problem here. sales were down 22% here. now, here's what's important. during the 60% of the revenues inside the united states, they don't have anything in china. little sales in china. this is not a china play but it is a global play. global sales down 22%. outside the u.s., sales down 23%. it's a great example of currency. if you take out currency, constant dollars, global sales were only down 11%. that's a steep drop that's not good. you need to look at these companies in a constant currency read to get a better idea of what's going on. here's something else. this is mostly farm equipment. not construction and mining. 70% of their sales are farm

equipment and when you deal mostly in the u.s. with farm equipment, that's not a good sign. i think that's another reason the stock is down. right now the dow down 178 points. back to you. >> thank you, bob. seeing some mild red arrows in oil today. >> reporter: good morning. that's right. of course, it's really all about china. or worries about what's going on in the global economy and what demand will look like going forward here and what it's looking like right now. oil getting a little bit of a footing in the last 25 minutes or so but still falling fairly close to that $40 a barrel level. i think many traders wondering not if but when we will broke below that four handle. crude oil prices continuing. this incredible slide that we've seen for eight weeks down more than 32%. that's the longest losing-streak since 1986. that is quite a long time. 29 years for some fast math. we're watching crude oil prices continue to fall.

again, just getting a little bit of footing back here but very few traders are comforted ablebeing long going into a weekend in august, especially when we have a hurricane heading toward the caribbean and not even hurricane danny can help prop up the crude oil prices. it's expected to hit land fall in puerto rico next week. take a look at what's going on in r bob gasoline. down this morning. maybe going to be good when that trickles down to the prices at the pump but we know it's a double-edged toward because of what it means about the economy and why those prices are depressed. a quick round up in the melts mark ment metals market. copper closely tied to economic activity in china, lower again today. back to you. >> thank you very much. when we come back, apple, as you probably know, down 15% in the past month.

we're going to talk to bernstein's about when the worst may be over for that company. later, an exclusive with jam khanos who will offer a take on a recent market slide. dow is down 188 in the early going. back in a moment. more and more, data is visual. in fact, the number of mris has increased by ten percent a year. and a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. because it's so challenging, a research project is teaching ibm watson to see. in the future, it could help clinicians spot key patterns quickly and precisely. ibm watson is working to make healthcare smarter every day.

the 17 handle. now 16,000. amidst all the selling the ten-year yield refuses to go below 206, 207. >> interesting because you would expect to it go lower. it's going its job in terms of holding some stocks up. again, we talked during the break. i mean, i'm not trying to say yar, listen, i think everything is fine. i'm saying i see some opportunities and there are stocks that are come down in the packaged goods and foods and

drugs that seem kind of, if you haven't put any money to work, you're going to do okay. >> there's still a large school of thought that this is all about the removal of policy and long-term, and that band-aid, we're just starting to peel that away. >> i think that's one of the reasons why there seems like there's no hope. i think there are a lot of companies that generate a lot of cash, and free cash flow is what you're going to look for. i don't want hope. i don't want companies that are just kind of expensive on traditional valuation. if i can get an opportunity to buy something that had a great quarter that we just heard of that is down 8%, 9%, i'm going to look at it. am i going to look at a kimberly clark? i love that, and dr besides w hormel, when i see stocks that i like so much bottoming that i've

been waiting for, i can't run from a stock that's bottoming, and also apple. what, does it go to 100. it's overshooting to the downside. might be interesting. >> we're going to get to stop trading with jim in a moment. don't go away. ♪ ♪ isn't it beautiful when things just come together? build a beautiful website with squarespace.

time for cramer and stop trading. >> the trade market is down badly and i think a lot of us, it's because of management. a lot of people are going to be panicking in the natural and organic. painful deflationary trends and doing a repurchase of stock, not regrowing the company. people don't like to hear that. it sounds like there's no opportunity in natural gas, totally wrong. don't take your cue from this company. they had negative comps. at a certain point people are going to see whole foods is down too much. not yet. disney let us down so they're the one that has to bottom before you want to get more aggressive. if they bottom, then i they you're going to see a lot of people coming in and saying that was the proximate cause.

i'm going to start picking and i'm going to buy for my kids. go home and take the week off. buy it for your kids. >> one thing i want to get on the record was the fedex launching this bid for tnt on monday. the same firm ups tried to buy and was turned down by regulators. >> it remind me of ge. europe is turning. maybe ge is not so bad. am i recommending ge? you know what? when it's 4 %, i am. there you go. i'm getting 2% on treasuries, and ge has a better balance and it's an industrial company that's doing well. again, i was saying i was worried for weeks and weeks. i would come here and feel badly that i hated the setup. i was worried about the dollar. i'm not as worried now. >> the pmi out of europe is going, and ge yield is -- >> when it gets to 4%.

what are you doing, 47? take your estimates down. because their economy is goung down. >> what's on mad? >> we have a game plan for next week. high quality retailers going down a great deal. i urge people to recognize that we have retail doing well that's coming down. and we'll have a sell off. we'll talk about the sell off, what to do in the sell off. >> get your rest. >> the panicking, carl. and the time to panic, like, you're panicking now, the time to panic was two weeks ago, august 4th. >> jim cramer, mad money tonight. we'll talk to robert shiller about this market after a break.

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good friday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and simon hobbs. you are looking at the cherry on this sunday. the dow down yet again. not much working, although, we are beginning to see some things that have been punished routinely. a find to bid, crude oil not among them.

down. >> our road map now. economics professor robert shiller will join us live later onto weigh on the volatile market. >> apple down 16% from the high in april. >> and gold is trading at new highs. investors look for save havens. all that coming up. >> the markets, dow currently down 135. art cashin joins u now. this is moving in the right direction for most people. >> well, it's basically stemming some of the losses, as you said. china closed in a rather ugly fashion. they broke 36.64 which is where they had turned previously, then a aclosed barely above 3500 with the rumors that the government had to step in and prevent it from breaking the 3500.

a lot of anxiety around. no not fear but concern that the markets are beginning to develop a negative correlation here. >> the bigger picture is that we traded within this tight range for seven months and then we broke it. as we begin to erase losses, the question is are we going back to kind of where we were and this was a temporary swoon, or are we making out for a major correction. what does it feel like? >> having broken the way it did and the fact that the global markets have become so co-related, there is concern this could be something that goes on into the month of september. >> throughout the bug market that we've had going on 6 1/2 years, it has paid to buy the dip and be buying on these sharp corrections. is this time going to be different in. >> i don't think so, but i think you want to be careful where you pick. among the traders i talked to,

there's growing concern about apple. and the feeling is maybe it's just not that the watch and they're having some difficulties in china, they may be finding new competitors in the phone business, other than samsung. they're watch it carefully. we saw what happened with disney over the past couple of weeks. >> or even yesterday, and time warner. the federal reserve has decided it's going to put an adult into the room. stanley fischer is going to appear now at jackson hall, we've all spoken about stanley fischer and whether he was out to appear more hawkish than they were behind closed doors. what is the environment now when we speaks? if he talks about delaying interest rates rises, does that lift the makt lirket like it ha the past or we'll see even the

federal reserve can't raise rates from here? >> i think he won't be that direct. his topic, as far as i understand it, will be inflation. and that will be critical, and he gave some hints when he did some press interviews recently when everybody was saying where you wanted to be laborwise, and he said but not inflationwise. that's a keying to. if he holds to that point, then it will be a subtle way of saying we're not ready to go yet. >> but my question is what is the market reaction to that? if you delay interest rates, is it stock market positive or an indication of a problem with growth and it's stock market negative? >> i think it probably becomes stock market negative. not so much for growth here but as an indication that the fed is on the sidelines and, therefore, they can't do anything about the global situation, and that's why i think after the fed minutes you saw the kind of reversal that you had.

we rallied back to plus territory and then they said it's not really just about the fed, it's about the global problem, and back down we went. >> i made a special graphic for you on the global problem. it sort of sups ms up where we . the losses that we have seen, if you're an emerging market, and your economy is dependent at all on commodities, you're getting killed. losses in the brazilian raul, we're talking about a 20% decline in a currency in a month, that's how much the ruble has sold off. >> and kazakhstan, their current si went down in two days. it can get very challenging. that is something we're all worried about. everybody remembers 1997. the different here is back then everybody was pegged to the dollar. it was the unpegging that was disruptive. but the fact that they're going

to get into accidental currency wars have the markets rattled. that's one of the things that's helped gold is the fact of the market currency. >> you mentioned the vix above 21. you mentioned in your notes today, the dow theory sell signal, tom mclennan overlaying s&p saying it begins in september. >> i don't buy them. what you have to do is see what's out and see what it's doing to trader mentality. and see if people turn certainly more negative. as i said, everybody is nervous and anxious so far. i don't hear a lot of bearish pessimism, but with those things around, you can get picked up on, you know, back with the hindenberg in no time. so you want to be aware of what's out there. you want to be aware of what traders in chat rooms are talking about, because chance

favors the prepared mind. if you know what other people are beginning to think of, you look for the right mile posts. >> i'll tell you what's working today, hp, a q 3 earnings beat, despite a revenue miss. we spoke to the ceo earlier. here's what she said about the pc market and windows 10. >> the productivity and knowledge workers use pcs all the time. there's only so much that you can do on a smart phone and a tablet. and i have to say, i'm very bullish on windows 10. i use it. most of our senior folks here use it, and it is a big improvement from windows 8. i remember when i first time to hp, you'll remember this, jim, pcs are dead, printing is dead, therefore, you're dead. none of those two things turned out to be true. >> we are joined this morning with more. john, i'm going back a ways. i can't find the last time we had a 6% pop on hp.

>> that's right, carl. nearly 6% at this very moment. granted, it is off 52-week lows. let's take a look at hp. it's popping in early trade. on results i'd say were better than some feared, in particular, industry saturday servers saved the day. yesterday, that was going to be a key number. networks all turned in some decent numbers. even if you consider the if you move out the areeva acquisition. pc sales might not be dead but they were terrible this quarter. also a pause in consumer buying ahead of the arrival of windows 10. margins were under pressure from price competition, and the printing business also suffering. no not dead but suffering. competitors cutting prices, particularly in japan, pressuring hp. what's next? the separation. hp splits into hp inc. and hp

enterprise. there's going to be a meeting in four weeks leading up to the changes. less than four weeks even. but the question facing both halves of hp remains this. the company as it existed was based on scale. the pc business generated cash for the enterprise but it needed to be incredibly tightly manage. that company model failed. hp has been adrift since. they had cash but they did snap fish, software on the consumer did. instagram worked. three par, didn't work well enough to make them a storage power house. and then you have autonomy, now straite separated, they have less, and they need to make the case of how they can grow in giants in networking, in storage, in pcs

even with dell with a little more leeway to make investments. we'll see what they do. >> thank you very much. bucking the sell off in technology off. up next, an eye on the broader markets. plus big moves in commodities this week. oil flirts with multiyear lows. "squawk on the street" will be back.

keeping an eye on the markets. lower by triple digits. closed down more than 300 points yesterday and still at the lowest point of the year. we'll continue to monitor. with the s&p 500 now down about 17 points, the nasdaq composite lower by almost a percent. >> crude oil flirting with lows on track for the longest losing streak in years. joining us from seattle, a gene your investment and commodity strategi strategist, welcome to the program. >> thank you very much.

>> there's some talk despite the fact that oil is down, that we're bottoming here. do you see that? >> i think we're still a little ways from bottoming. i think we need more of a roleover in production to see more production. and i believe we need to see signs of better economic growth around the world so it looks like demand is ticking higher. i think we have some more time before we see a bottom in oil. >> so for people who that are still in some of these stocks, what's your advice if they're sitting on paper losses? >> we're currently underweight both the commodity sector as well as the energy sector in our equity portfolios. we'd recommend people maintain underweight. there are probably interesting stories through time and people should look for opportunities but we keep below long term targets for allocation. >> where are the opportunities

in your view? >> i think there is going to be an opportunity in energy, as we get through some of this decline. i think there's some interesting cash flowing stocks that we can look at in the energy sector. but beyond that, i think it's a rout right now in the sector, and that probably continues for a little longer. >> one place there's not a route in commodities is gold. a six-week high. is this a near-term bid because of the all the worry or could this be a real turning point for gold? >> i do think we're seeing some safe haven flows into gold. you had a good setup for a rally in gold. large short positions and sn sentiment was negative. there's lower confidence and fears that the fed may not move in september, and there's a weaker dollar. the struggle is i think the

mundment tams over the rest of the year are negative for the gold market. we think the fed does raise in september. we think this is a short-term issue. >> let's put in this context. it's a 3% move on gold. you have parts of e americanimi markets that are imploding. if gold can only muster this, it's hardly a save haven play. >> it's a little bit of a demand. it's a little bit of a change in the recent trend but it's not a huge trend at all. >> and in the one minute we have let, where are the opportunities beginning to emerge, do you think? >> really, for us, we think equities will be interesting as you get through this rerating in equity prices. we'd prefer to be in equities.

ed in in the commodity space, we're neg ty. we look to equities. in the short run, we'd hold a little cash and mu nnicipals ar interesting in the short run. >> tis the beginning of a major correction in the markets or is it a little white noise on thinner volume in summer movant that taken us out of a trading range that we can return. >> when we look at the macro backdrop, especially in the u.s., we see positives. we think this is probably a short-term correction that can be bought for the longer-term. but in the meantime, we -- there's just not many people around. it's august. it's holiday season. >> yes. >> good to see you. thanks for sparing the time. >> when we come back, shares of

apple down 16% from their all time high. what's gone wrong? you might know the answer but we'll talk about it after the break. the mercedes-benz summer event is here. now get the unmistakable thrill and the incredible rush of the mercedes-benz you've always wanted. but you better get here fast... yay, daddy's here! here you go, honey. thank you. ...because a good thing like this phew! won't last forever. see your authorized dealer for an incredible offer on the exhilarating c300 sport sedan. but hurry, offers end august 31st. share your summer moments in your mercedes-benz with us.

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tech stocks continue to slide this week. apple one of the big names that tipped off the tumble. could the event on september 9th turn things around. toni sacconaghi joins us on the phone on this friday. g good to see you again. >> thank you. >> so much to talk about. just what's happened to the stock. what's the lesson on apple this week? >> i think the investor, the lesson from investors is that people are worried about china. apple gets about 25% of its revenues from china. and there's been increasing unease about the overall chinese economy. we've seen other premium goods

forev manufacturers starting to look at china. apple is coming off a tremendous iphone 6 cycle. iphones will be up about 36% this year. and i think investors are worried that apple has pulled in a lot of customers and growth next year may, in fact, be negative on the iphone. those are the worries that i believe are affecting the stock. >> so some of your colleagues on the cell side have argues maybe december quarter is negative. we still don't think it's that big a deal relative to how much the stock has come down. do you disagree? >> i think from a sentiment perspective, if iphone units are down, it's very difficult for the stock to work. iphone is about 70% of the profits of the company. it's an enormous company, and so something like the watch simply can't make up for it in the interim. and so psychologically, if you

have the biggest driver of the company down, i think it's difficult for the stock to work. i think it's possible that iphone units next year could be up. >> all right. but even at that, at this valuation, tony, how cheap can it get? >> historically we've seen the stock trough at about 10 typime earnings. that would have the stock price at a high 90s as a floor. that happened when gross margins were fall. that's not happening now. i think we're pretty close to the floor. i think the risk reward is attractive for patient investors. but if iphone units are down, the stock could continue to tread water and underperform relative to the market in the near term. >> we also got disappointing survey results on apple music,

and the watch is coming in below expectations. do you think there's some negativity around new product launches. down the road and the whole concept of apple as an innovator are pushing the stock down? >> i don't know if it's a principle reason for the stock being down, but the absence of success is material. because the iphone is so huge, and at some point it will slow, and the controversy is is that now or in a couple of years. investors would feel a lot better if they saw the potential for another big business coming from apple. and as you point out, sara, we're not seeing evidence of that yet. certainly for music, and from the watch. i believe that longer-term, the watch could be material, but it's going to take a few years to get there. we're at a jen 1 product, and i think it's going to take a few years until the functionality of the watch is compelling enough

to have it be a mass market device. >> can i set you free, two-thirds of the tech sector are in correction territories. the chip stocks are right at the helm of that, intel, materials, some of the chip stocks are down 30% to 60% from their highs. do you see value there? where should people look to buy in the sector as it falls generally poorly for a second week? >> it has been a market of the haves and haves notes in the technology sector. we've seen slowing pc and smart done growth. the important reason is semi conductors. we've seen pressure on those names. there's elevated inventory levels, particularly on the pc side. i think overall smart phone

units, apple, notwithstanding, are not great. i think there's lots of value to be had in technology, but i don't see us necessarily coming out of it any time soon largely because the fundamentals continue to peter along, and when we -- when you have elevated inventory levels and you don't have robust demand, that's not a recipe for improvement in the near term. >> and any metrics that indicate you're taking share from samsung has been made clear, that's not true. >> i think for apple, that's an opportunity. i believe iphones will grow next year and the key way that i think investors should think about it is we estimate that the high-end samsung installed basis smart phones. that's the galaxy s lines, and

apple has taken share from samsung over the last couple of years. now, with that large base, and there's about 30 million blackberries out there also. we think apple can gain share. even if you have a market that is not growing at the high end, which we think is the case, we think the opportunity for apple is to gain share and that the eco system and large screen devices are increasingly attractive relative to the competition. >> that's a big story going into the next few months. >> thank you, carl. >> straight ahead, another group feeling the pain recently, media stocks. more on those when we come back. e rheumatoid arthritis like me... and you're talking to a rheumatologist about a biologic, this is humira. this is humira helping to relieve my pain and protect my joints from further damage.

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good morning. here is your news update at this hour. tensions rising between north and south korea after the two exchanged artillery fire on thursday. north korea state run tv reporting kim jong-un called an emergency meeting saying he would launch strong military action unless the south stroppe broadcasting propaganda. deadly wildfires continued to rage in washington state. an order comes one day after three firefighters were killed

and four injured. nearly 90,000 acres have been scorched. three people were injured when an explosion rocked a building last night. the new york mayor visited the scene. and air bags on some older honda accords may not inflate in a crash. we'll be following that for you. that's the cnbc news update this hour. back to "squawk on the street" now. welcome back to "squawk on the street." media companies mixed at this hour. twenty-first century fox, disney and viacom off the lows. is more pain ahead for the media group. we have the perfect guest, jim

stewart. this is really your wheel house. it does feel like as the broader sell off takes shape, there's a rethink of how the media companies are valued. >> yeah. these stock prices and these companies were primed for double digit growth, especially in the cable revenue area both from subscriber affiliate fees and from advertising. and that model has really come under question ever since disney sort of lowered those expectations down into the single digits and now people are saying is this really a secular decline. they'd had a perfect world going for them with the old cable subscriber model. it is so lucrative, but it's based on the fundamental premise that people will pay for things that they don't which, which are 90 out of the 100 channels that get delivered to their home. and that model is not going to hold up forever and people are now i think thinking it's t

reaching a tipping point. >> yesterday netflix joined in the selling. they were the star of the s&p 500 this year and it was one of the problems behind why the media companies were selling off and now it too is under pressure. >> that's interesting. i think one thing investors need to realize is netflix has had a revolutionary impact but they benefit. if you're paying $100 for your cable bundle, and netflix comes along and says pay me $8, that sounds reasonable. let's say the bundle goes away. most of the channels are costing people $0.50, $2. suddenly netflix doesn't look like quite a good deal. it too has been feeding off this universe in this media space. >> the punishing on disney is worse than ebola was back in october, but historic capital

management, they get interested at $98. >> i think the disney sell off is overdone. this thing is not going to go away overnight or even over weeks or months. it's going to take years. it's going to take a long time for this transition to happen, even if it does happen. disney has great prattoperties. they have great franchises. the theme parks are doing well. it's just not being seen as the fast growth stock that people were hoping for, but it's still a solid company. >> i think a lot of that had to do with the decline in the outlook for subscribers for espn. i wonder what's going to happen. the whole idea was live sports was going to be immune. >> espn is a big problem for disney. that's one of the reasons it's getting beaten so much. the problem with espn is it's the most expensive component of a cable bundle. the people who don't care about

sports, a the ratings there aren't that high. those people can on the out of there. that's vulnerable. secondly, sports rights have gotten so expensive. espn is locked into a high-cost structure. they've invested billions to acquire the sports rights. they don't have room for cost cuts into revenue reclines. >> can i refer to your article. i read it as part of the notes. you're not one to fawn over our parent company comcast, and in this article you describe them as tight-fisted. but in a good way. >> yes, i think in a way that investors like. what i was looking at is the surprising talk about media, the surprising success of universal studios. this place was written off long before nbc universal even came into existence as acquired by comcast.

suddenly it's not only the top of the box auoffice, it's way o in front, and even more amazingly, no caves. no super heros, no superman avenger block busters out there. that has stunned people in hollywood. because the disney model, that has taken the grip of hollywood. this is like opening up maybe a new path. they've had some successes with relatively small digit niche films, compton qvbeing the late. >> i'm seeing it tonight. >> everybody is. and jeff shell is not your classic hollywood guy. >> he's low key. you know within two minutes of getting on the phone with him that he's not the swaggering chief ton type at all. i will say this. to put a little cold water on this. the problem with this theory is it has been done before.

disney did this many years ago. they called it the singles and doubles strategy. it's great while it works, and then like every other formula in hollywood, one day it doesn't work. wall street thinks this is a hard model to replicate. they've had nine out of ten hits in their last ten movies. can they do that again? hard to believe. >> and then star warss arrives at the end of the year. >> that blows everybody out of the water. all eyes are going to be on star wars. if the super hero model is going to work, this is it. if this doesn't work, there's going to be a huge reaction. >> yeah. i mean, i think to your point, the question is do comps get a lot tougher next year? >> they're going to be very tough. they have two movied moved in. the hollywood community is thrilled about this. you excited can you be about

another super hero thing. >> you're not 16. >> i know. i loved all that stuff when i was. but there's hope for some adult movies and some movies that try to do something more than just hit you over the hit for a few minutes while you're in the theater and then you forget about it. >> the dow is now down. >> nobody ever wants to hear this, but my feeling is i said this hear before, a correction is a healthy thing. it creates buying opportunities for people who have a long-term perspective who don't need the money tomorrow. this is healthy. it's been a long time since we've had one of those and we know the market doesn't always go up. the u.s. economy looks good. if we're already down 8, so what if it goes down 2. >> jim stewart, always good to check in with you. >> thank you. >> let's tell you the temperature of one of the corporates today, gap trading down slightly this morning.

the ceo made some comments. we have the details. >> good morning. gap did report in line earnings, 64 cents per share. gap is one of the few retailers that gives us a monthly update. we knew that total same store sales were down 2% and revenue came down at $3.9 billion. it was a little below expectations. the gap brand continues to be weak. down 6% for the quarter. old navy continues to be a stand out. the only positive segment, up 3% for those comps. on the conference call, the ceo called old navy's consistency a thing of beauty and they're using many of the product processes from old navy to translate to gap and banana. many have discussed it in notes today. but he also discussed the noise

surrounding the consumer. likely the same as what we heard from the ceo of macy's last week as well as the commentary about the lack of desire for apparel from the u.s. consumer. >> from where i sit across all of our businesses, our job is to deliver regardless of the noise that's out there today. and what i see is i see a consumer who has confidence. i see dollars being spent, and i see an opportunity for us to continue to get more than our fair share as i look forward, and i am very optimistic. >> and peck also said that he is not worried about what's been happening in china. it does not change the direction or intensity or strategy for gap over there. simon, back to you. >> thank you very much. up next on the program, are asian markets about to have a repeat of the '87 financial

cris crisis? that's next when "squawk on the street" comes back.

>> what has been wrong with the automobile company stocks even as the economy improves and car sales go up? ford and gm shares have been stuck in a ditch. is it time for investors to step in and buy? we'll find out on cnbc.com/trading-nation. more and more, data is visual. in fact, the number of mris has increased by ten percent a year. and a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement.

because it's so challenging, a research project is teaching ibm watson to see. in the future, it could help clinicians spot key patterns quickly and precisely. ibm watson is working to make healthcare smarter every day. some people see ghosts of the 1997 financial crisis in asia at the moment. we have more on how it compares. >> reporter: the bottom line it's difficult to make a true comparison between what happened then and today. there are a few places in the market that some traders are looking at to see if there's something to glean from what

happened back then. we'll take you through a few charts. they're 20 years back to see the trading ranges that developed for certain parts of the market back in '97 that spilled over to '98. steve liesman showed you thisserier. we took a look at this chart. the thai baht. arguab arguably, they are not the epicenter of this move these days. you can see at least we're not seeing any exacerbated moves. currency pegs and different scenarios, a little bit different between then and now. then take a look elsewhere in the markets. what's happening here with the volatility index. going back 20 years, here's what

we are right now and we're seeing a spike all the way up to 22. a pretty decent move higher but this big blip here was the financial crisis. in '97, these are the levels we're talking about. if not there yet. we have an elevated vix. i'm not trying to down play it but it's not quite at the levels we saw back then, and one more place to look. this is a little bit more interesting because we want to see that flight to safety stride happening. ten-year treasury notes. we know when safety comes up, the bond prices get bid up and yields go down. if you go back to '97, we saw a trend lower here but we haven't seen that develop as much right now. maybe it's just the beginning but the caveat here is you have central bank intervention from all over the world right now that's distorting some of the markets. as you try to draw a conclusion

between whether '97 looks like today or vice versa, it's hard to make that comparison. anybody who tries to tell you that, yes, there is a case but maybe not the strongest case out there. back to you. >> i'm disappointed in you. you should have sewn kazakhstan's currency of the week. that's what everyone is looking at. >> i could have shown others adds well but i figured the thai baht was one representation. >> and the ring et is trading at levels seen back then. >> and coming up, robert shiller weighing in on today's market action. he's been warning that stocks have been overvalued for a while. find out what he thinks of the sell off in a moment. great bur, or building the best houses in town. or becoming the next highly-unlikely dotcom superstar. and us, we'll be right there with you, helping with the questions you need answered to get your brand new business started.

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let's check on where we're trading at the nasdaq after yesterday's brutal sell-off. still negative, bertha coombs has more from the nasdaq market site. >> the nasdaq certainly seeing a big pull-back here. below 4800. but i would remind you the nasdaq is still up for the year. and it is not yet in correction territory. not yet down 10% from its july high. but take a look at some of the different sectors that are.

small caps are now off 10% from their june high. biotechs off more than 12% from just a month ago and the chip sector etf, you can see is down 20% from its june 1st high. apple continues to be a drag here. and it is tipping from correction territory now closer to bear market territory. off about 17%. from its april 28th, all-time high. but take a look at netflix. that's where we've seen a real violent turn. the speed at which it has declined, moving into correction territory. and remember, this is one of the four f.a.n.g. stocks that have been carrying the nasdaq this year. facebook, amazon, netflix and google. and right now, when you look at those four, the only one that isn't in correction territory is google. it's off just about 6% from its all-time high. so we're really seeing a very big rotation out of what has

been working this week, sara, as we've sort of moved into this risk-off environment. >> thank you very much, bertha. hard it to believe the nasdaq still has a gain of 1% for the year. the dow is now down more than 200 points, concerns about the u.s. fed, about a potential rate hike, timing of that a big part of investors' concerns, we want to welcome now to this conversation robert shiller, professor of economics at yale university. he joins us on the cnbc newsline. professor shiller, thanks for calling in. you've been warning for a while that you saw trouble in the u.s. equity market. that they were very expensive on an historical basis. so you're probably not too surprised to see the action that we saw this week. >> i'm not surprised i don't know that this is a big story. but my story has been, you're correct, that valuations are high, quite high. historical standards, it's only been a few other episodes in u.s. history when they've been this high.

>> well now the s&p is turned negative and the dow is off more than 8% from its recent highs. i guess the question is, how much more of a shake-out do you see before stocks look more reasonable? >> well here's the problem. we really find it very difficult to predict short-term changes. the easier thing to predict is volatility. i think that the, the shock that we just saw yesterday, might create aftershocks in either direction, in the short run. we've been in a low volatility era and this is, this is a big move down. but it's not the end of the world. i'm not sure that there will be a huge reaction to it. >> between the fed, emerging markets and china, china seems to be the scary scenario for investors. how deep is their slowdown and how many tools do the chinese policy makers have to fight it? are you concerned?

do you think these concerns are justified? or do you think that they will be able to find a way to put a floor under their markets and manage their economy slower? >> yeah. well i still expecting good chinese growth. i think that this chinese story is just that -- it's the story that's circulating now. every time we have a market correction, the public fixates on some story. and i think it's more a story than a reality. >> and that's probably very true. and it's interesting to look at the candidates that have gone through that, i mean greece not so long ago. professor shiller, i think for many people and to the point you were making recently on cnbc when you called i think this very tight trading band for seven months, an enigma. the fact that the stock market in this country held in there, so strongly despite what was happening around the rest of the world and suddenly we've broke. and that's for many people it's what does that mean? the fact that we broke that

almost straight line going for seven months. >> right. yes so i, i'm a behavioral economist, i think psychology matters. and there are times when our attention is drawn to the market. when people who don't normally pay attention to the market are brought in. and it can feed on itself like an epidemic. and the event we saw yesterday was a hint of that. it wasn't huge, but it was big enough that some people who don't formally pay attention to the market are starting to wonder and starting to make their re-evaluations. and it could be followed by a series of bigger and bigger moves. you know, you cannot really predict this very well. >> you can't tell us in which direction those moves would be? >> well, i have a general bias towards down. because the market is overpriced. but these things unfold over years. you know it's not something that is, we tent to overfocus on the latest news. that's human nature. >> i want to end it on an upbeat

note. this has been a lot of doom-and-gloom conversation. your other area of expertise, the u.s. housing market is showing strength and has been a pretty good bright spot in the recovery -- finally. do you see the pieces coming together for a housing recovery? and where are we in that stage? >> well the housing market has been going up -- yes, at a good clip. and it's gotten a little pricey, also. in some places. especially. there is some bubble mentality going on in some places. like san francisco for example recently. now i don't know how much longer that will continue. i don't have, i don't have a great way of predicting housing market. i note that expectations are still up. the recent pulse economic survey confirms. they're not thinking that the end is near in housing. it's still modestly positive expectations. >> the builders are optimistic, robert shiller, thanks for

calling in yale university professor and nobel laureate in economics. time for the last "squawk alley" for the week, let's check in with jon. >> we'll make it count, first on the sell-off, the dow is down more than 200 points, the s&p, 1.33%. and bill gurley, noted venture venture capitalist, saying the drop in the public markets is going to have an impact on late-stage private companies. and apple struggling, down about 3% right now. but more news coming from them in the next few weeks. we will look into that and more coming up on "squawk alley." ♪ if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer. but hurry, offers end august 31st.

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