before the open. near the lows of the session. check out some of the biggest components of the dow slide, caterpill caterpillar, home depot. caterpillar and boeing, knock on. home depot got out a few years ago. >> make sure you join us tomorrow if we're all still here. "squawk on the street" is next. >> good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer. futures down big as we ring into the month of september. no surprise china's pmi goes negative. we're on alert for macro data. europe is looking at losses around 2 pc. shanghai down 1.2 ten-year hanging back and oil settling in a rally.

shame worries about china. the country's manufacturing sector contracted at the fastest pace in three years. it wasn't a miss necessarily because people including you were expecting this today. >> we have a worldwide slow down in a bear market. it's a mini bear. it happened out of nowhere. and this slow down is taking people by surprise. i don't know why. if china is decelerating, a lot of countries will. the good thing is the dollar has gotten weaker. maybe that's because the chinese are selling their german bonds to be able to prop up the market. there's a lot of lies being told about china. they say they're not buying. they're propping things up. they like it when the shanghai is over 3,000. the shenzhen is propped up pretty much every night. crude coming back to a level where it's getting interesting given the fact that good crude people are telling me the inventories are not as big as you thought. divide by ten if you want to get more comfortable. instead of it being down 500,

say it's down 50, and china stop being psychologically paralyzed. yesterday disney was saying it's coming back. when it's at 92 or 95, maybe you missed it last time. start getting opportunistic. if it's down bad today, i'm not going to say, oh, i see that. >> you have primed the pump on this one. there's no doubt. >> yesterday your thesis was prepare for another close or another level like we saw at last tuesday's close. interesting, there's a split between what the dow did that day and what the s&p did, but for the dow, you would be looking at 15.666. >> you have the dow down. i have my cheat sheet. a lot of people have fantasy cheat sheets. this is my where are the lows, where are monday and tuesday.

i'm waiting to see if some of them are taking out what the real buys are. got cash from my travel trust. we're looking at stocks like, i mean, trying to be clinical about it. auto zone, if it goes below 687, interesting. celgene, maybe it takes it out because they're worried about patents. get your cheat sheet, take a look at what gets taken out. maybe you get buys. there's obviously nothing going on with the futures that's substanti substantive. >> do you want to see the levels violated, held. >> violated would put in real fear and then you get a real buy. the united states is not part of the slow down, and if it is, the fed won't raise. if there's great volatility, we're not going to do anything. suddenly there's great volatility. if you want the fed not to do anything, you'll be fine. china, let's accept the fact

that every single prediction is much too high. that's because the people who make the predictions are wrong. in sports we would not tolerate this. this would be someone who is wrong every sunday but we would say what are they saying? we would not tolerate this in sports but in this game we play with real money, we tolerate these morons. i'm tired of it. the numbers are very bad in china. when they happen, don't say, what do i do now. >> assume the worst? >> assume the worst and accept the fact that if you're trying to buy merck if it goes back to 50, it's kind of interesting. bristol meyers is interesting. stop being scared and thinking you can't believe it. start putting your head in the head of the guy who is selling the futures now and ask if he's smart. is he smart selling down 50? is that something i think is smart. because not everything on your

screen is smart. some of it is stupid and that's when you can buy things. warren buffett is right. if you can get the market to take stocks down to levels that you like and there's stocks you like, that's good. it's not paralysis. it's not fear. stop fearing the futures. there's probably, i don't know, maybe ten guys in a room in their pajamas as 4:00 this morning. >> this is your long standing complaint about the market. >> right. i was up looking at the futures. there's a guy in pajamas selling down 40 because he thinks he can cover down 60. god love him. if disney goes to 90 and that means it's down from 122, that means espn is worth zero to me. fine, so they paid too much for the bcs. >> let's drill on oil. all the headlines today. it's the cover of usa today. biggest three-day rally in a century. opec saying the cooperation is now the name of the game. we want to talk to people to reach that equilibrium.

does it deserve to move $10 in a week? >> when oil was at $100 they said it's getting cut in half. when it's cut in half, he says it's going lower. it's around $38 and then yesterday at $45. i said how much lower is it going, and mr. ice water in his veins says no, i said it was going to go all the way down. it went all the way down, i'm turning bullish. the production numbers are going to be cut dramatically by the end of the year. the saudis pumped 11 million a day earlier this month in august, and they can't do it and they're going to have to cut back. there are no x packs in iran. all the things you hear about iran and the pump, forget about it. nobody knows what to do in iran. he's a guy at 100, down to 40, said it's going down. we get to $38 and everyone is like oh, and he said i think it's bottomed. who has a good call?

>> now, a lot of people are looking at the oil rig count which is starting to tick up a tad as a sign there are some producers for whom the levels are profitable. >> they lowered -- some of the guys are making money. there's a piece of research saying some of them are making money at $50. suki said smart guys shut it down. you may see some drilling up, but most of them have shut down, and that's why you're going to see production down 500,000 barrels by the end of this year. this time next year, you're going to see dramatic production drop and the cap exfrom the majors has fallen so much that you're going to see oil back dramatically in 18 months. if it goes back to 38 i'm switching my direction. these people who have been so smart, my friend who hated oil,

he has said below $40, everyone is panicking, i'm getting interested. again, we can look at the u.s. stock futures tumble really scary or say, okay, this is not 2008, and oil, if it comes back down, kind of interesting. worldwide growth is not bad. >> demand is on the rise. figures out today, worldwide demand end out of july 1.9. a year ago .8. >> if saudi arabia cannot keep pumping at 11 before they actually hurt their wells, they drop back to 10, and suddenly you say listen, we have this rules for freezing stocks back again. and we look back a week ago and say, okay, when rule 48 was invoked last time. >> and again today. >> yeah. was it a big buy or sell, and the answer is that if you come

back in, we got glib on tuesday. there were a lot of people who said why didn't i deal anything. here they are, the same people, what are they saying? i'm really scared. if you're really scared, go to cds because you don't belong in the lake. >> before we get to commercial, apple reportedly getting into the original programming business. according to the trade publication, variety, apple has held talks with hollywood executives adding the company's goal is to produce long form content to stream. apple partnering with cisco aimed at increasing the use of iphones and i pads with corporate networks. and here's what apple ceo had to say about that partnership. >> we want to transform the way people work. and we know that we can't do that alone. we cannot do that alone.

the sum -- if you think about what's key in the enterprise space, the device is very important. the apps are very important. the network is very important. >> all right. what a busy time for apple. you have to event, is september 9th event, the variety report on content. we'll watch it at 1:10? >> i have to tell you, i think and apple will go down. trade $93, 95 on the day they said it's better in china. camera guys focus on this. phone up in the air. so this is what you do. how many times have you been on this and say i'm at a land line. no. your land line will have a cradle if it's a cisco phone. you put this in and you don't have to switch phones. i think that's a fantastic integration. i think chuck robins and tim cook and john chambers really came up with a great product, and this is an example of what no one cares about today, but

there will be added in 2016. we're worried about china and there's a slow down -- so we forget cisco travel trust is going to sell at 3.5, and we sit here paralyzed because there's a couple of guys in pajamas who say the market is going down. they are ruling right now. there is a worldwide slow down. brazil could collapse. what time is it in my apple watch? we have doomings day built in. i'm going to go to the war room. there's no fighting there, and it's about bringing on kissinger, yes, dr. strange love. >> we'll get you your love in a minute. ford auto sales out after the

break. we'll get you those. premarket is down big and we'll get the opening bell in about 20 minutes. hello. i am a fully automated investment advisory service. i can help you choose investments. monitor them. and rebalance your portfolio. i can do a lot of what humans can. except have a real conversation. if you'd like that, you can always speak to someone at schwab. they aren't algorithms. try not to hold it against them. say hello at intelligent.schwab.com

>> welcome to the month of september. futures down for the only month for the dow that has negative returns over the past 150 careers. september has had a good record since the fed got involved with qe. >> better than expected numbers from ford, and better than expected sales in august increasing 5.4 %. the estimate was for an increase of 2 %. no surprise what's driving sales. trucks and suvs both registered double digit gains. gms numbers coming in 15 minute. we are in the sweet spot of the market right now for the big three. you saw the numbers from chrysler. more than 200,000 vehicles sold in a month. first time in forever we can remember that happening. strong numbers from ford, and, again, we'll get the gm numbers

in about 15 minutes. the expectation between 17 and 17.4. based on what i'm saying, i wouldn't be surprised if we're close to 17.4 or 17.5. >> all right. now everyone is going to say i'm going to buy ford. ford brazil is more important than u.s. gm, they're levered to china. look, phil is the best. these numbers are fantastic. they are as meaningless as they are fantastic. >> because they're domestic? >> yeah. they're huge company that have gotten the world wrong. it doesn't matter. they sell cars in places like china, brazil. these are bad places. it's like -- these companies all expanded. i mean, you can't judge anything on their domestic.

which is a shame. they have a lot of cash flow and they're doing a lot of things domestic but domestic isn't as important as the losses they're going to rack up in latin america and the fact that china has slowed down. no one cares right now because we're trading lock step with other countries. >> a lot of the critics of anybody who works on financial news or messaging says the word decoupling didn't work last time, and now you're arguing the world has decoupled. >> standard pacific, i thought they were a local bank in l.a., maybe some san francisco. no. . i'm just saying to understand that we spent -- all you hear is the banks are overcapitalized. you know what? they're going to be right here.

does that mean you buy goldman sachs in let's see. let's get the cheat sheet out. goldman was, be careful. it traded at 178 on tuesday. let's see. do we buy it at 173, perhaps, nearing book? well, you might get that chance. i'm saying, please, be offered with the cash you raise in the rally, let's start thinking about the ridiculous selloff. and a ridiculous -- they're both ridiculous. we're going up and down on nothing. i have analysis to the nfl because there's more serious. they have a fourth game preseason. does anyone really play? yeah. this is a preseason game. a lot of people coming back next week. i'm not saying it will be better. the numbers according to dom, he said don't take it so seriously. the idea that we're all supposed to take our cue from the futures

because they're telling us, please be scared is harder for me. i'm older. i've been scared. i remember in '84, in '87 i was petri petrified. and one day karen cramer said i don't want to work with you anymore. she was my head trader. she was like why don't you recognize it? that's an opportunity. i'm not saying today is the bottom. then people will say he said it's at the bill of indictment. i think when you go back over what's happened and where we were, we're going to go there again. that's what we've been saying. so when we get there, why do we panic? i said that china was going to be awful. when china is awful, do we now -- it's the way it is. so look for things and companies you like. >> yes. i hate it when you talk common sense, jim. >> i know i'm out of it. i feel like i'm drafting, you

know, drafting gino smith, but i'm not. i'm doing andrew lock, and then ap and lacy on the board. they're scary. that's why. ap and lacy, i don't want those guys. enough. >> we'll get cramer's mad dash. we'll count down to the opening bell. take a look at the futures as we trade in the range to the downside. here at td ameritrade, they work hard. wow, that was random. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement.

there's no way to predict that. for all the confidence you need. td ameritrade. you got this.

e september starting out weak. the weakest in three years and we have some other news here state side as well. dollar tree a miss? >> dollar general reported last week they're not as good an operate as dollar tree. maybe dollar tree was down and maybe an opportunity. they did not give you good guidance. they're merging with family dollar. this is one of the situation where people are talking about twin peaks. but this is a good company and the family dollar merger will go on over time. the stock is up very big, so what we're doing is taking out a lot of the october lows going on right now. maybe you wait but dollar tree is in a secular up trend because it's got the right price point for a frugal economy and everybody who has been to a dollar tree, and people make fun of me, a great one in jersey and

the hamptons. if you've been there you know it represents great value. you may think they don't know what they're doing but they do, and when they integrate family dollar, it will be good. >> they beat by a nickel, comps of 2.7 were a miss. >> this is a conservative company. it's like game stop. they're going a miraculous job. they say same store sales down but one of the questions is why do you say that, and he said i like to underdeliver and over promise. game stop maybe goes to 39. you buy it. maybe this goes to 65 and you get in. don't be paralyzed about a worldwide slow down. you want a company that sells things for a dollar, and by the way, when i say a dollar, you can get sugar babies there. >> not a joke. >> you can get dots there and juju bees. what? >> people need more than that in their indict. >> okay. so sunglasses?

i've bought so many pairs. you would think they're ray bans. ray bans are $150. i got them for a buck and fooled everybody. >> we'll get the opening bell in a moment. you've seen the premarket. let's get the session underway. back in a moment. my name is chris hughes and i am a certified arborist for pg&e. i oversee the patrolling of trees near power lines and roots near pipes and underground infrastructure. at pg&e wherever we work,

we work hard to protect the environment. getting the job done safely so we can keep the lights on for everybody. because i live here i have a deeper connection to the community. and i want to see the community grow and thrive. every year we work with cities and schools to plant trees in our communities. the environment is there for my kids and future generations. together, we're building a better california. can a a subconscious. mind? a knack for predicting the future. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul? can a business be...alive?

this just in: 50 million customers' data was not compromised this morning in a security breach that didn't happen. wall street. not rattled. at all. no. not at all. not at all. i mean, look at the day. sir. sir. what went right? what went right? everything. thank you. with threat intelligence, behavioral analytics, and 6000 experts, ibm security will help keep you out of the news. my dad's company wasn't hacked today. cool.

you're watching "squawk on the street" live from the financial capital of the world. the opening bell is set to ring in just under 2 minutes as begin the month of september. obviously we know the month of august was really no good for, especially a lot of big funds. we're look at results, inehorn down. lobe, people wondserring if they're going to be forced sellers throughout the year. >> they are big guys and for the most part loved by their investo investors. i think lobe, i think they have

tremendous followings, and people will use the break in their performance to use them more money. i have been critical at times of them, but i have tremendous faith that these are people who if you're wealthy and gave money to, they would come back. i'm taking a contrary view. i don't know either gentleman. one of them has attacked me many times. it's not personal. i would probably give money to him right now because i don't believe he's going to be that bad. he's a good manager and rigorous. >> the times today does a piece saying he's starting to survey. >> he has a long-term track record. lobe has got a good track record. he's a tough guy. if you were rich you would say he wants money, i'll get on lobe and inehorn.

i would bet with them, not against them. >> let's get to the opening bell. china ease pmi went negative overnight. that's a source of a lot of strain here. japan down. pmis in europe weren't too bad. >> that's why i have such trouble, because i look at -- remember, i'm worried about the strong dollar. the dollar is down nicely today. beginning in january, you're going to laugh and begin to get better comparisons. starting many september, people should be looking at 2016 numbers. that's the way the calendar shifts. looking at 2016 saying the dollar will not be strong near over near. this is kind of where it is. that's opportunity. if you want to take a look, let's say someone comes out and says, procter and co& gamble at and i don't think it's had a good quarter at all. but they're not totally bozos.

there are smart people at procter a procter & gamble. if you want to throw it away at $68. i'd be a buyer. >> that is a long way from $94. >> don't 25% for a great american people. people are paralyzed and the people are saying i'm taking procter down, and i just look at it and say, maybe procter, a year from now is going to be higher. i look at the oil companies that everyone said were going under a few -- i was, unfortunately, my travel trust owns them. getting nervous. but i look at the oil companies and say some of them are going to do okay if oil stays above here. i look at companies like an eaton which i'm not recommending but when you get the 4 % yield, that's kind of interesting, isn't it, with the treasuries at 2? >> yeah. we have 28 dow stocks well in the red. microsoft the worst followed by chevron. >> what happens with microsoft? >> waiting for indication. we just got walmart which has not opened and ibm, i have not

seen an indication yet on ibm. so the rule 48 being invoked today. >> let's look at walmart. are you selling here near the top? oh, it's down 25%. it was 90 and now it's trading at $63. it's a 3% yield. maybe if you can get back in at 60, now is the time. i'm not being glib. i'm looking at these great american companies selling at 3% yield. i'm thinking about stanley fischer when he was in the calm and he was saying listen, if it's volatile, i might change my mind, and i say, okay, it's absolutely possible that you should freak out. so many individual investors left the market last week. they left the market at apple when it was at 92. was that a smart move? it's 110. pick your companies. use the weakness. you want to do etfs, forget

about it. open an annual. >> we got ford just a few moments ago. it was well above the estimates. it's time for gm now. >> a little better than expected for general motors. a recline of 0.7% for august. the estimate was a decline of 1%. we're comparing with august of this year and august of last year. the raw numbers are different because labor day was not part of this year's sales and it was a strong august last year for gm. gm down 0.7%. a little less of a decline than expected. and gm is saying it expects industry sales for the month of august to be at a pace of 17.5 milli 17.5 million vehicles. if that happens and we do expect it over 17 million, it would be the fourth month in a row with a pace above 17 million.

we haven't seen that since 2006. >> the journal today talks about leases and used cars being a potential drag for auto sales despite what phil just said. >> i think that people have been saying that auto sales have peaked since 2011. they haven't. the average car still 12 years old. that's one of the reasons i like auto zone. we're selling a lot of cars in this country because we have good employment. when you that, you need a car to go to work. people held onto their cars in 2009 and mailed their keys to t the bank. we can take our key from japan, but japan in 2009, when i dropped to 30,000 everyone was petrified and at 10,000, everyone was buying. not japan, us. >> only three s&ps in the green, ford, and then american and delta which got upgraded at deutsche bank. >> that made sense.

cheap on a cash flow business. they'll be down soon. but that's the way it is. >> fdx also speaking of transport city, makes it their top transport pick. highly levered to e-commerce growth. >> not today. i mean, come on. fedex, maybe in a couple of days. ups, when they get yields of 3.5. stock is down a lot. that's levered to world trade and that's slowing with the exception of europe getting a little bit better. i don't want anything that's world trade right now. i'd prefer to buy at home. it's just easier. >> fcx, much different story despite all the pain. those investors have withered citi cuts it to a neutral saying the pricing environment is weak. supply in their words, is not going to come to the rescue. that's a name that i would have thought you would have taken a look at given however it's

fallen. carl icahn interested. i don't like copper or oil. i'm warming up to oil but they pay too much for oil. there's so many oil companies like a schlumberger that bounce nicely. i like that. that's an interesting situation as it comes down. it's interesting exxon is only down 2%. on my cheat sheet, it goes lower. i want to buy the oilins as the really come in. not yet. when they get there, you want to look at the oils with good cash flow and can maintain the dividends. >> so 73 still not in your target zone? >> i want it lower but exxon is interesting. i don't think it's going to go to $35. this is because people who are much smarter than i have said that's where real demand comes in. >> so no longer, you're not in the school of thought that we go to the low teens?

>> there's just too many smart people who were so negative at 100, 90, 80, who are now positive. and there are too many people who liked it that are freaking. i understand why people want to panic. it feels good to panic, it's not a strategy. no one made a time panicking. i've panicked in my career. and there isn't an instance where it made me money. not a single instance. i've panicked a lot in my career, a lot. >> interestingly, some of the worst, looking at the dow, some of the worst components for august are the ones that are down today. disney, down 15% last month. >> i think disney, at a certain point, there's a note today about disney, and it talked about star wars. my first reaction was, this shows you how you can get to paralyzed and fearful.

i said star wars doesn't come out until december 18th. a few week ago, people were focussed on star wars because it's a fourth quarter phenomenon. people are saying now, forget that. they paid too much for -- i don't know, what did they pay? the mid american conference, whatever they think they paid too much for, now disney is so in the dog house. not the mouse house but the dog house that people don't care. but i think disney is buying back a lot of stock and they're up 8% for the year and doing a lot better than the programming i can netflix. it's hard to netflix the monday night football. we have a monday game, the eagles, against the jientds. how many people in new york are going to say i'm going to catch that on wednesday? >> yeah. it's true. >> i'll catch that game. i'll come in on thursday. by that point everyone has seen it. it's not house of cards. >> no spoilers.

>> right. giants won on thursday. no. it's not programming that is easily replicable. i think people don't care right now but they might by the time the season starts. >> netflix is down. takes it right to the 50-day. >> netflix, people, it went down to 98 where it reported the great quarter. took it out. people said it was over. next it's right back. again, i struggle with the notion of getting really scared when netflix is still well above where it was. facebook is one to watch. my travel trust owns that. i put pencil to paper over the weekend. that's a fool's game. the futures say it goes to 82. it did last week. maybe that's a chance to buy it. it sells at 20. scrolling at 28%. but this is the kind of rationality that is not being used right now. time warrener i saw at 70. there isn't anything on it

including the fugitive which i've watched 1,000 times. i don't need to watch it anymore on time warner, but when it comes to that, i'm not talking about women's la crosse on espn 7. espn 7, women's la crosse network will not happen. >> you still have your devil and mcgreg or, right? >> one time i mentioned it as a joke and "the new york times" said i confused things. i always have to add, i'm being facetious. richard, i don't mean it. he knew about it. >> ford is up a percent, but that's it. bob is on the floor. >> i'll tell you, this is interesting. and this is not last monday. very different than last monday. we had waves of sell orders come

in. there were delays in opening the stocks because of the waves of orders and trying to price them right. this is a very different environment. there is not nearly the amount of volume and selling pressure that we saw at the open than we did on monday. it's very different. so at 9:35 last week, for example, these panels here were full of a lot of gray as there was delays in opening some of these. there were a few small delays, not everything opened exactly on time, but it's nothing like last week. so this is much more orderly than we saw a week ago. it's because there's not as many sell orders in the market. to show you the s&p, we started deteriorating as soon as the china pmi numbers came in in the last 18 hours or so. you can see the deterioration as the numbers came out late last night on china. if you look at our sectors, everything is down about 2%, but everything is already off the lows.

so tech, consumer discretionary, energy, but this was weaker right at the open as stuff was opening up. the i do leadership, a vast s.w.a.t. swath of stocks are down. ge is up. 2% is the general norm to the downside. energy had a huge day yesterday. a lot of the heavily shorted names were up 3%, some of them 5 and 6%. we're seeing declines in line with the market in some of the big names here. as you can see, banks, another similar situation. bank of america, everything is down about 2 %. it's a 2% market, but this was right at the open, most of them were down around 2 % and have not deteriorated much since then. china, you know what went on in china. alibaba broke below 68. that was a week ago. monday it broke below the ipo price of $68.

no surprise there. take a look at shanghai and shenzhen, shanghai declining more than the shenzhen overnight. i think importantly, there's some modest knock off effects on the market. not as much as you would expect. they're not down that much. vietnam was only down fractionally. thailand down. china is doing an interesting doing. four regulatory agencies issued a joint statement encouraging companies to do things to shore up their shares. they want them to buy back more shares and there's talk about them providing more tax breaks for the government to buy back more shares. they want them to do more mergers and they're encouraging state-owned banks to provide loans to do mergers and

acquisitions and they want more restructurings. there is report the government is not buying stocks in the market. nobody particularly believes that. and there's good reason not to believe it. but now arrests are being made. lots of e-mail flying about these supposed arrests of the head of man groove, one of the biggest hedge funds in the world in china. we're having trouble confirming it. the point is, invest or perish, and stay long is very clearly the message from the regulators in china. we've been stable with the dow down through the open. >> thank you for that. we have our eyes on treasuries as well. let's get to rick santelli. >> reporter: hi, carl. isn't global tinkering working out well? absolutely. august is over. so the vacation and the whole qe arrangements in europe are under the microscope. we're going to normalize rates and china, the more they do, the

less it works out the way they want it to. that's the way it is. if you look at the shore don, it's hard to argue that the market is believing a lot more that the fed may deliver. look at a two-day of two-year note yields. we're still at 72, and yesterday we virtually got up to 74 basis points. open the chart up to january of 2011. we haven't settled above 74 all the way back there. so you want to watch this trade. let's see what's going on here and in europe. look at a two-day of our ten-year. yields are down but they're still solid. they're basically still higher on the year, and here's one of the main culprits. look at a two-day bund, it's leading the way. the margin issues are turning into all margin issues and the tinkering of the value on fx and fords in china is making

everyone a bit nervous. look at the difference between tens and bunds. it's back under 40. the smaller that one gets, the higher rates will go. this thing has a life of its own, and if you look at a two-day dollar index, you can see this isn't doing a lot. really, it's rates in europe moving up, making the euro a lot more stable even though our short end and yield curve is afraid of the fed and all this is happening at once. get ready for a larger roller coaster ride. that's what the traders are saying. >> certainly what the vix would suggest as well. rick santelli. oil down about $1 year. let's go to jackie. >> reporter: good morning. oil prices retreating today. perhaps taking the pause to reflect and digest. it appeared we were taking yesterday morning before a slew of headlines that created a crazy day for prices. wti down.

wti got close to 50 but didn't quite get there. we have rent crude trading over 52, perhaps because of some of the headlines saying they may want to talk about what's happening with the production and the prices. these are talks about talks. also watching the products today. we have october contracts on board. they are lower. they're probably bringing crude oil prices down as well. tomorrow we'll get inventories. watching for the number. we saw on a monthly a basis overall u.s. production down yesterday. the inventory could go down because we have fires in canadian production facility that have created a halt there. we take in a lot of oil from canada. the inventories going down tomorrow could be support v of prices. dollar is lower today, not really impacting these prices at the moment. >> what an amazing few days you've had. we'll stay on top of this

morning's selloffs. dow is down 286. led lower by the oils. big day? ah, the usual. moved some new cars. hauled a bunch of steel. kept the supermarket shelves stocked. made sure everyone got their latest gadgets. what's up for the next shift? ah, nothing much. just keeping the lights on. (laugh) nice. doing the big things that move an economy. see you tomorrow, mac. see you tomorrow, sam. just another day at norfolk southern.

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>> much like last tuesday, almost all the kpoepts of the s&p are in the red. there are a few into the green. some of them on upgrades like american and delta. now mining newmont, chesapeake leading the charge. >> i see some of the upgrades are working. that's important. don't forget with interest rates going down, look at some of the dividend stocks like a kimberly or procter. so out of favor. the quarter is bad at procter. it's like i knew about china. the quarter is bad at procter but maybe you take a perspective that procter won't be that bad this time nebs year. >> you mentioned procter. >> i like to buy these good

quality stocks with good balance sheets. >> you would be prepared to buy it and have it go lower an not have remorse? >> right. beginning in probably february yk we're going to look at it and say the dollar is really not going down much more. it's not going to go down much more but maybe not going up much more easier. good comparisons. i wish procter were doing better in the international market. walmart is having a bad quart quarter. these companies are struggling. i believe people will go to procter and do a better job. someone in business school is taking look and saying i'm going to go there and do well. they're going to get guys to fix the company. dudley knows that. mas magn this is magnum force. go in there and get it. in terms of this chinese market,

they are who we said they are. all right? have to break out the denny too. >> we'll get to stop trading with jim in a moment. dow is down 287. [ male announcer ] we know they're out there. you can't always see them. but it's our job to find them. the answers. the solutions. the innovations. all waiting to help us build something better. something more amazing. a safer, cleaner, brighter future.

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time for criamer and stop trading. >> i want to get an example. let's look at celgene. it held last time at $112 on the worst day which was. it bounced to 117. i know this is clinical for people but i think it can earn. you're buying a company on next year's earnings at 753. and the deal just closed and you're getting a bargain, but when it got there, i think people ran from it. all i'm saying is find the stocks you like. celgene probably revisits that again. it's a long day. i'm urging people not to panic. is it time to get back in the pool? it's time to find stocks you like and let the pa jam ma game continue among the 23-year-olds

who went to cal tech and really understand the futures and i'm just older and i don't think it's the way to go. >> yeah. >> i remember trying to trade the futures in '87. it was like, i don't know anything about the futures. i know about companies, and they're going to take celgene down to 2017 earnings. a good manager. i think he'll do a great job or do i say the guys in pajamas are telling me it's going to 108? i'm not playing that game. >> people love the pa jam ma thing. what's on mad tonight? >> i had a woman who told you that oil was going to go down to 50, and she said it was going to go to the 30s. what do you think she's going to say tonight on technicals? she was right. said oil would be cut in half. let's see what she has to say.

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good tuesday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and simon hobbs. david faber is off. ism is out. let's get to rick santelli in chicago. >> ism is not a surprise to the up side. the august read on ism is the manufacturing side. that is the weakest level in a string of ties where 51.5 mid year were the tied lowest levels. this takes us back to may of 2013 to point a lower number. that's not good. the price is under $40. let's go back and look at july construction. we're looking for a number that would be roughly up six tenths. we ended up seven tenths but let's put it in perspective. up 3 . 8, the best since 1998.

last month, originally released at one tenth is now up seven tenths. construction spending delivers. ism disappoints and interest rates are still loftier than they were for most of the trade last week. carl, simon hobbs back to you. >> thank you very much. with an eye on what the fed will be will do, let's bring in steve liesman. we have the weakest pace of manufacturing for two years? >> yeah. and the details were not good. when i looked at the different areas in employment production, all of them were down. it's still growing. there's still growth there. inventories were down. we're looking for an inventory correction in the third quarter. construction spending, better than expected, and the july revision is probably going to help gdp a little bit overall. what you did see there was private sector was up and the

public sector was done pretty much offsetting each other. let me give you a little bit of what the fed is going to be looking for over the next several days or several weeks before the next meeting. some key economic reports and some key issues that are going to go in to this decision they make. first, obviously the jobs report looking for 220,000 dl on payrolls. that's going to be a critical factor. i think there's some tolerance there. if you were in the 180 range, it wouldn't be considered all that weak because we've had a strong thing of payroll numbers and this report off the radar but increasingly on the radar, the quarterly services survey. that's for the second quarter but it has been a big swing factor in gdp in the overall growth picture, that second quarter reported add 7.3%. we'll see if that adds or subtracts. an important read on retail sales and inflation on september 16th. these things are bigger but i'm not sure.

maybe the other icons over here, if you can get over here, are more important. certainly on a day like today, the dollar sign there for watching the changes in exchange rates, critical. the globe, global economic weakness, you see how the market is moving based on the chinese market day the. these may be more critical. i think the fed is going to be reluctant to hike amidst this kind of market volatility we're seeing and until maybe it gets a better read of what's happening in china in terms of the manufacturing out there. >> all right. thanks, steve. good way to put it. steve liesman on the latest economic day in in the u.s. taking a look at the markets, the dow is down 384 points. s&p down 2.2 %. and the nasdaq down a little less than 2 %. joining us to discuss the reaction, director of global macro. i saw you last week.

you seemed to imply the market was overreacting then to the china news. do you think that's what's happening now as well? >> it's interesting. it really comes down to what the fed does and what china does to the currency. you would not think the two are related but they are. if you believe that the chinese devalued the currency a few weeks ago in anticipation of a september liftoff because that would bring up the value of the dollar and the yuan is a managed float, so it would bring up the value of that, the chinese worked that off, and then the market sort of went into a tail spin, and then the odds of a september liftoff for greatly reduced to something like 20% and everything kind of got calm again. and now with september being back on the table, if we have to go by what some of the fed officials have been saying lately and the fed is going to go if september after all, it puts china back on the hot seat

in terms of what it does with the currency. the whole thing is related, and i think the market is concerned about the possibility of a fed policy error coming in september, and i think that's why we're getting more volatility again. >> session lows right now, the dow is down 400 points. the u.s. economic data didn't help that commissions were predicting. how vulnerable are we to what is happening around the world. canada in recession. brazil and russia in recession. >> clearly emerging markets in a tough spot. the commodities flow from there and that puts countries like brazil and canada at risk because they're commodity exporters. clearly, there is a wave of deflation being exported from em to our shores, but at the same time, our economy in the u.s. has been pretty strong and a pretty solid mid cycle expansion. that is why the fed is talking

about a september rate hike. unemployment hike, and we'll see the payroll number is coming up soon. the economic data by and large have been pretty supportive of, maybe, normalization of interest rates. and we continue to be in a mid cycle expansion. so 13% of the economy six ports. what happens in china really shouldn't play that much -- >> hang on. are you saying they should hike rates or shouldn't hike rates? >> i'm think they should not hike. it potentially is a policy error because the market will tighten for them as is already happening to some degree. if you look at the credit spreads, they are saying to the fed, don't tighten. >> leaving aside the fact that the chinese seem to have put hedge managers somewhere. it is their failure to calm the market that has a lot of people

worried and it comes back to the question as to whether this is something bigger that is unwinding as you watch these stocks fall out of bed again, disproportionately from what really was a data series, arguably, within china. i want to draw your attention to what the head of macro credit research writes in this morning's financial times. under the title that central bank arsenal is increasingly ineffective. they are failing to generate enough upswing to one against the structural forces constraining growth and inflation. his conclusion, central bankers run creasingly appear to be parading in emperor's new clothes. this central bank put under the markets is being eroded and what's happening with the fed just draws attention to it for the eyes of some people. >> yeah. i mean, we are clearly on this

deflation reflation knife's edge. we have been for a number of years. really since the global financial crisis. we get these bouts of deflation whether it's from the eurozone debt crisis or now from china and then we have a reflation response from the fed or the boj in 2030 13 earlier this year. and it's this battle between deflation and reflation. and so far, the reflation ary weaponry has been efficient. the economy has continued to expand. and it's a little early to know whether this is the time where ongoing reflation nar tactics won't work anymore. >> what do you think? what's your opinion? what do you think is happening here? >> i think we just have a lack

of agate demand around the world. growth is slow. it's running at 2%, the u.s. is one of the better sort of places in the world in that sense. japan is okay. europe is okay, but em is clearly lagging, and china was the marginal growth producer over the last five years or so, and china is slowing, and what happens in the shanghai composite, i think is a side show. that's a separate thing than what's going on with the chinese economy and what's happening to the kurp si. and the currency is a big thing. if they keep devaluing and that's the start of something bigger, they're going to keep exporting deflation. it keeps the fed on hold. the fed hopefully will listen to that and will kind of hold off a little bit longer. >> so we've got your views on the fed. on china and the currency. on the u.s. stock market, as we look at the dow now down 358 points. you guys manage a lot of money

at fa ded fidelity. what are you telling your clients as far as how long the correction and the volatility is going to last and what they should be doing with their money. >> we tell them what we always do. that's have a plan and stick with it. last week showed that if you got whip sawed by short-term movements in the market like a week ago monday when the dow opened down 1,000 and 15 minutes later was down only 500 which was still down 500 is to not get whip sawed by that f. if you're a long-term investor, decide if what is happening is systemic to the u.s. economy and to earnings and the stock market. one flows into the next. and this is not a systemic issue. this is like last year or maybe even '97 where you had a fairly quick decline and it rebounded

and things settled down again. the fact that oil is back up from the lows, i think is also significant, because the energy sector has been a big transition mechanism for earnings for the overall stock market and obviously with valuations being fairly full here, stock prices are only going to do with earnings are going to do here. if earnings are flat for the year, then the market is flat for the year. we're down a little bit more than flat. we may end up flat if that's the case. >> a lot of comparisons to 1997. >> when we come back, crude oil losing ground today after the three-day rally. even with the losses, still up 20% in the last week. we'll have more on where oil is headed. first, another look at the markets. dow down 365. s on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop,

and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great.

i'm a gas service rep for pg&e in san jose.. as a gas service rep we are basically the ambassador of the company. we make the most contact with the customers on a daily basis. i work hand-in-hand with crews to make sure our gas pipes are safe.

my wife and i are both from san jose. my kids and their friends live in this community. every time i go to a customer's house, their children could be friends with my children so it's important to me. one of the most rewarding parts of this job is after you help a customer, seeing a smile on their face. together, we're building a better california. perhaps no surprise oil prices are falling after the stunning rally for three days in a row that took them up 27%. jackie is with us with more. >> it's not surprising after three straight days of buying and short covering like you mentioned, 27% gain in oil

prices. in fact, wti prices are steepening as the equity market hold onto the losses as well. wti down 2 .37. a couple of things to think about. what started the momentum upward yesterday was this motion that perhaps big producers are going to start to cooperate or talk about it. but they haven't actually done anything yet. we did see those production numbers out of the united states, the monthly numbers, two straight months of declines. that is positive when it comes to what's happening at home. now traders looking to the china story. the fears and worries about demand could create an imbalance. at tend of the dhe end of the d remains the same at this point. i will say we have a lower dollar today and crude is bucking that trend. it happens to be lower alongside it but the products are seeing declines as well. they went off the board yesterday. products are going down. summer driving season is over.

we'll see the demand start to fall. that is equation you need to look at. >> let's bring in chief commodity strategist. >> thank you for having me. >> i'm told to ask you about the saudis. >> i love them. we have saudis king visiting washington this weekend, and all discussion yesterday was on whether opec would finally pull the trigger and cut production. what i was telling everyone was this was not a new story. officials have been saying since november they've been reaching out to the russians to see if they can get a coordinated cut. russia has turned them down. i'm looking to whether there's any change in moscow to whether there's going to be a change in terms of the opec position. >> it's not about them talking to anyone else? >> there's some discussion with the mexicans. if you look at 1986 and 199, there were coordinated cuts between opec and nonopec. they're focussed on russia.

the brutal market share war is between the saudis and the russians. the russians became the largest supplier of china earlier this year. the saudis are saying we're not doing this alone. you're not going to eat our market share. >> if that worked out between them, what happens? >> i think the problem is the overhang is so large right now. going into the november meeting was like oh, they'd have to clear out a million. now the overhang is nearly two million. to be really effective in clearing out the brent market, you need to sit down. the nigerian barrels are choking the market. you have to have certain countries also sit down their barrels to make it truly effective if you want to clear out the overhang. >> and the head of the imf talking in indonesia said prepare for another cut to global growth. weakness, projecting 3.3% global growth. that's slower than last year.

is that factored into the price of oil? >> one of the things we're concerned about with this market is demand has been great this year. so prices are struggling in this demand environment. if we're looking at a worst demand environment next year, that's more head winds for oil. >> i find it amazing it can move that much in a year. it's not -- it's an interesting juxtaposition that the king of saudi is coming this weekend and a rumor ripped through the market that moved the price of oil higher. >> there's so much volatility right now. the people were so bearish that even last week there was a pipeline attack in nigeria and people were like is it rolling. >> that's not my point. >> in this type of environment, these headlines can rip through the market. >> said the lay -- >> from a u.s. position, lower

prices are a good thing for the u.s. government. >> the fundamental question is why would the saudis, having incurred so much pain. budgets cut by 10% including the defense budget, why after enduring such pain would they decide to turn now if it's true? >> the question is, did they see the downturn in prices? i was at the opec meeting in june, and it was a love fest. it was all about the recovery in price. >> they didn't do anything, did they? >> they believed it would pull us into the 70s comfortly. if you're looking at a situation where 75 by mid 2016 looks like a mir raung mirage, you have t c back and cut. they have high unemployment. it's a balancing act. is it working for them domestically, and they re-evaluate it.

>> cutting budgets is not a picnic. >> it's not what you want to do. >> our view is on fundamentals, they should not really support oil below 40, 45, but then you have can have a macro story. you can have a negative story in china and go back. >> thank you. >> told you to get her started on southbounaudi arabia. >> take a look at the biggest s&p losers today. we'll be right back. .

>> we're down 368 points on the dow and falling.

>> energy a focus or traders. the hardest hit sector today followed up by financials. leading to declining on the energy side so far. noble energy, valero, halliburton. all down. when it comes to financials, e trade financials, citi group, even zions ban corp., lincoln national, charles schwab. energy and financials. >> thanks for highlighting these groups. we'll keep watching this market sell off. the dow is down 350. straight ahead, how a fed rate hike could be positive for the markets.

here's your news update. the defiant county clerk in kentucky has denied a marriage license to another gay couple. she stopped issuing licenses the day the u.s. supreme court legalized gay major. >> hillary clinton was aware of the need to protect e-mails.

it made public more than 7,000 pages of the e-mails last night. an israeli raid turning into a gun battle. they surrounded a use and after calling on the operative to surrender, they demolished the house. hundreds of palestinians rioted in the area. >> and members of the iran's not changing their policy toward the u.s. saying it remains iran's number one enemy. that's your news update this hour. back to you. >> thank you, mary. welcome back to "squawk on the street." u.s. auto sales trickling out. ford and gm and chrysler coming out better than expected. >> for auto investors, this really hasn't been a market where they've been able to trade on auto sales.

in other words, even though they've been strong for several months in a row, we haven't seen that reflected in the stocks. let's look at the august numbers. all of these are better than expected. what stands out here is not the percentage of these being up or down but when you look at ford, double the estimate out there. up 5.4%. what was driving sales in august? for the big three and really for the entire industry, retail sales. general motors in particular, up 6% last month. gm is doing really work in terms of driving better retail sales and higher transaction prices. up $666 in august compared to august of last year topping $34,000. trucks and suvs are in command right now in part because of the lower vehicles but also lower gas prices. this wall is the pace of sales currently this year at about

17.25 million vehicles, we are expecting the august sales pace to come in at perhaps 17.4. gm expects it to be maybe 17.5 million. as you take a look at the auto stocks, we've been talking about this for some time. u.s. is the most lucrative market. you can't ask auto makers to do any better in the u.s. but that's not impacting the auto stocks. august sales stronger than expected. and the pace could be 17.5 million vehicles. back to you. >> all right. phil, thanks on the latest auto numbers. the dow is down 325 points. s&p 500 down a little less than 2 %. off the lows of the session. heavy losses across the board. nasdaq fairing the least bad. down 1.5%. continuiing concerns about chin. data showed manufacturing activity slumped to a three-year low. joining us to discuss china is

the china director at trusted sources. thanks for joining us here last minute. should we be alarmed not so much by the data and necessarily the market reaction but by the fact that china has been pumping liquiditity and stimulus and the data is not turning? >> this is the big question. it's too soon for that data. that refers back to last mornnt but we've had these easing attempts by the government, although it says it doesn't want a big credit boom like it had in 09, but the stimulus packages aren't having an effect at the moment. we would expect the economy to go sideways in the coming months and we'll have to see longer term whether actually the credit easing does get through into the growth numbers. >> it says in your bioyour specialist area is policy interpretation. please interpret the policy we are getting out of the chinese

authorities. it seems like they seems they keep switching course. one writing in the financial times they need to communicate better. is that the problem? >> that is a big problem. the whole question. for instance, we've had about 200 people who have been taken in for questioning or helping the authorities with their inquiries, as they put it, over the stock market gyrations over the last few weeks and these include a journalist who forecast that the official state funding organizations were going to get out of the market. it includes hedge fund managers who are dealing in the market. nobody quite knows what this is about. as for the broad policy, the chinese communist party leader and state president will be meeting president obama later this month. he wants to keep political control and keep the communist trouble master of china. but at the same time, he wants to introduce economic reforms. and the trouble is, that by

their nature, economic reforms liberalize, getting closer to the market, all that means a reduction in the political power grip. that's what the whole story is about in china at the moment. >> you're being terribly polite here. it's nice to see you again. people will remember you are editor of a paper in hong kong for half a decade. >> quite a long time ago. >> but it was an important job at the time. it's an act of gross stupidity to herd hedge fund managers. one may be in some form of detention as we speak. it's stupid to sell these people in and say we want you to support the market in an environment where they're declined in an undisclosed environment. this is not going to help them, is it? >> answer lite not. you're right. one case we don't know.

there was one report she has been taken in by the authorities and being questioned. there's some uncertainty about it. but what you say is absolutely true, and this has been the path throughout the stock market saga. the government has come in with heavy boots on several occasions, trying to control the market. and the trouble is that if you're going to have more use of the stock market, the prime minister wants to get companies to raise money through equity funding rather than more bank loans and more debt and credit, but as soon as the market started acting in ways that the authorities didn't like, they came in with the national team which spend hundreds and billions propping up the market. this has created, already, a feeling that this is a fixed market. which is going to respond to what the authorities want rather than what investors want. >> the question is at what point do they not come in to raise the price at the end of the session. >> absolutely.

>> there was a big military parade that everybody seemed focussed on in terms of pollution and stock market moves. have we had that parade now? >> no. that's on thursday. i'm flying to beijing tomorrow morning, and i expect the sky to be beautifully blue for once in beijing for the parade. but that's been the attention and there's a kind of feeling that as with the anti-corruption campaign and all the other political campaigns that have been launched, the whole dynamic of the market as far as the currency and the market are concerned is to make things good for the parade. perhaps we'll see change afterwards, i wouldn't bank on it. >> as for exposure. u.s. stocks heavy selloffs in a lot of the chinese etfs. is it true that the technology names can with great china exposure are more vulnerable here because this is a supply

and manufacturing slow down. where the apple and the yum brands are in better shape? >> i think that's probably the case, and you've seen nervousness among big u.s. companies which have become quite dependent on china. you were talking about autos a few moments ago. that's a good example. the china auto market is slowing down. it was bound to slow down. some companies like mining companies too, may have back bit too dependent on china, once china starts to move the economic growth off the hot pan onto the back cooker. >> thank you for weighing in on china for us. >> speaking of things that are hot. let's look at the selloff. the dow down 283. it's another rough opening. take a look at the worst performing s&p sectors today. energy is interesting after the

strong rally we had for three sessions. "squawk on the street" will be right back.

>> is the recent stock market volatile till short term or here to stay in one technician said it could take up to a half a year to stabilize. [ male announcer ] we know they're out there. you can't always see them. but it's our job to find them. the answers. the solutions. the innovations.

all waiting to help us build something better. something more amazing. a safer, cleaner, brighter future. at boeing, that's what building something better is all about. ♪ well, the respite was temporary. we're heading back down now. 328 points on the dow. >> what a day. what a day. it's always going to be better because we're going to have the next guest on, beeterman, charles, thank you for taking the time today. let's get into it. >> sure. >> let's talk flows.

quickly, give me an assessment of flows both domestic and foreign, equities and fixed income. >> individuals are bullish. it's bearish. we're seeing a lot of money going into lemplged long etfs. money is going into europe. money is going -- investors are betting that the market has bottomed, and that's not what we see at a bottom. there's been outflows from bond funds. outflows across the board from bonds but inflows into the equities, all except emerging markets. >> we can understand emerging markets. give me the bottom line. >> given that insiders have not picked up their buyers and companies haven't picked up their buying. last week was not a bottom as this week is saying. we think there's more to go on the downside, and the end will

be when individuals start selling what they've been buying. >> well, one thing i want to go into. it says flows. something that hasn't change that you instructed many viewers on years ago natu. that is the supply of stocks has been getting smaller so it exaggerated a lot of the multiples we look at. they didn't dramatically increase the supply of stock. china won't be able to keep this mouse trap humming along. stocks get to make a case, at some point the globe is going to be eyeballing our stock market but maybe from a lower level. >> this is similar to what happened in '11 when the number of shares in the market kept shrinking even though the third quarter of '11 was waeng, and it's weak for the same reasons. global uncertainty. then it was europe or whatever. now it's greece.

the global central banks are taking us into a recession. there's a global recession created by the central banks. that's what's going on. and people don't seem to realize that. >> well, on the central planning side, i don't think there's any disagreement on anybody i bump into on a trading floor. now, if we go to school, maybe it's a different story. in the final thirty-seconds, do you see interest rates remaining stubborn as we get to the september meeting the way they have in the last week, even in the face of equity weakness? >> good question. depends on -- nobody knows what the fed is going to do. macro economic index shows there's been no growth and last year it was up 4.3%. there's a no-growth economy and the fed wants to raise rates and then raise the dollar? there's a mess. >> you're making my case. if we get a global recession in

election year and they do quantitative easing next rendition because they have no other encore performance, the fed is going to be topic one or two when we have debates. it's going to get fascinating. we'll be welcoming a lot more journalists into our neighborhood. thanks for taking the time today. let's go back to post nine. >> thank you, rick. you're going to love this one informal co. could a fed rate hike be good for the markets? when "squawk on the street" comes back. and when i find it- i go for it. (announcer) at scottrade, we share your passion for trading. that's why we give you the edge, with innovative charting and trading features, plus, powerful mobile apps so you're always connected, wherever you are. because at scottrade, our passion is to power yours.

the dow continues to fall. we're down 347 points. energy stocks and oil, big movers today. jackie has more. >> that's right. we are seeing the declines in energy and oil prices continue to steepen. $3 decline in wti, trading near $46 a barrel. china concerns. traders telling me they thought the bounce yesterday based on the headlines that perhaps global oil producers are going to start to cooperate. we're a little bit overblown.

we had a 27% rally in crude prices in the last three days. dramatic. this trade is not for the faint of heart. some of my most active traders saying they're sitting on the sidelines because crude isn't trading with any sort of pattern or normality that it normally does. a weaker dollar today. yesterday the headlines drove it higher, today it's china and the u.s. equity markets, and their losses keeping us lower. we have more data points coming out this week. rig counts on friday. those could move the numbers around a little bit. we have to keep an eye on this, and the volatility expected to continue. >> energy, the worse performing sector by far in the s&p. let's go to more with what's moving inside the stock market? >> let's pick up where you left off. two of the more volatile stock are large cap dow members.

take a look at exxon and chevron. both down around 3.5% or 4%. the worst points so far today. the day is young. two dow components in the red. oil and gas sector. broaden it out to what's gas. you broaden it out with what's happening on the dow intraday. we're off of the worst levels today. at one point we were off about 400 points in the dow. now 16,182, down about 350 points this means that this kind of move so that are year to date has seen the dramatic move lower in the just the last few weeks. if you take a look at the dow heat map, every single member, very much in the red. walmart down about 1%, down to exxon mobile down 4%, the worst performing stock so far in the dow industrials. if you broaden it out to the s&p 500, very much the same picture as well. red across the board for the s&p 500 heat map. you can see about seven or eight stocks in the green run changed

so far. and then sectorwise, we've been pointing it out. energy continues to be the big laggard so far today. you take your energy consumer staples, health care and those guys relatively outperforming, but energy, financials, materials, down 2.5% to 3.5%. the s&p 500 down 2%, the 40 points, the level now, 1942.43. a down day for the overall markets. our next guest thinks a rate rise from the fed would be good for the markets, she has $7 billion under management. she is from the tcw group, senior portfolio manager diane jaffe. good morning. >> if you can argue this, this becomes the holy grail for people selling stock market products for the next 12 sessions, for so off you go. >> we have decades of proof that shows that the fed usually

raises rates at the right point in time and the economy is continuing to expand and the data shows after the first month when that anticipation is really making investors nervous, the stock market actually does better than historical -- >> do you believe that will happen this time? >> i absolutely do. >> because of course the classic reply to that is, well in the past, the fed hadn't delayed rate rises by two or three or four or five years beyond where it should have raised rates and therefore you've built up a huge move into assets, they're fully valued and if anything, the fed is behind the curve and would perhaps like to be seen to be behind the curve of where the economic growth would justify. >> we can argue that we've had a fed-simulated recovery over the last five or six years and we're starting to see true economic traction take place. even on a day like today, discretionary stocks are actually you know, still in the red. but in the top five and they are big beneficiaries of lower energy prices and that propels the economy. >> then the argument becomes well have the markets broken

away from the real economy, so the economy may justify a rate rise, but assets won't deal so well with a rate rise, that brings us back to whether a rate rise will be good for the stock market. >> it feels good to be a stock investor when things are not good overseas. >> it feels good when the dow is down 357 points? >> i think earnings have been relatively strong, given that commodities have sold off so much. we've seen consumers driving the increase four to five times. wait until the heating oil declines and they feel those dollars in their pocketbook. the consumer is pretty strong. >> you have a lot of multicap names in your portfolio. i'm looking at some of them. a lot of financials here, citigroup, jp morgan, general electric, i don't see anything tied to energy or commodities. >> ge has about 15 to 20% of its portfolio in energy-related stocks. >> but none of the energy

companies that are getting beat up now. >> chevron is our largest energy holding. my argument is i won't want our clients to be void energy, we're underweight. but on a day like yesterday, it shows you how powerful it can be. and historically over the last eight years, september and october, energy stocks have outperformed in advance the heating season. >> did you see it coming, did you move, did you increase your cash positions, how are you managing through this? >> we're always invested however -- >> fully invested. no, less than 5%. over the last week or so, we have been gradually and specifically adding to favorite names. >> what have you been buying? >> chevron. >> chevron. >> which is down 4% right now, the bottom of the do you. but the year is not over yet. >> what else looks cheap to you in the broader sell-off? >> i think a lot of names look attra attractive. we're not investing for just today. so ge, comcast we've been adding

to. >> ha about the dividend appreciation fund? that must have looked really interesting. >> the dividend yields on chevron are above 5%. and ge is the heaviest dividend payer of all the industrial names right now. >> are you buying those stocks because you can lock in a really good dividend that will be maintained? or on the basis that say oil will recover? is it a dividend flay? a lock-in, if you like? >> we like the cash flow of these companies. that's definitely our measurement stick. however we believe in the individual company-specific stories like ge restructuring. >> the nasdaq, we're flashing a headline, that the nasdaq which was the only one holding up for the year just went negative for the year. looking into any of the momentum names? i mean likes what you are buying are the bigger, stable companies. what about high growth? >> we are relative value investment fillsly and i do think clients should be diversified.

tcw has great momentum growth strategies, but for our clients, it's relative value. >> diane jaffe joins us from tcw. straight ahead, art cashin joins us to help navigate the volatility.

the dow is down 356 points at this hour. s&p 500 down 2% or 40 points and the nasdaq faring the least worst down 1.6%. just finished the worst month for stocks since 2012, with the s&p off 6.3% and the selling resumes on the first day of september after china's slide overnight and the weak manufacturing number. >> it's the inability of the chinese to control the situation which has really spooked people. plus the fact that they've herded hedge fund managers and journalists into an undisclosed location to read the riot act to them. price of crude lower, energy

the worst performer. it is one of those days, the dow down 337. really nothing working for most of the session, as we get another sign that the global slow downcontinues, whether it's china pmi, jarngs cap ex, korea exports and here in the states, our ism, a two-year low as the dollar continues to rise and global demand falls, new orders down. employment down, energy not working. financials not working, some of the volatility may lead some to believe the fed will not move in september. energy falling after yesterday's rally in crude. some of the biggest losers include exxon chevron, ge, jp morgan and microsoft. art cashin joins us. walk me through the volume picture and why it might matter today, if at all? >> the first day of a new month. ordinarily it's prejudice to the upside. new money for the new month coming in. so far, it hasn't had a shot. it will