i didn't say that. i have to host "power lunch" at 2:00 p.m. eastern time. tune in, america. >> we'll see you at 2:00. he'll be back tomorrow morning, too. >> get some coffee. thank you very much, everybody. right now it's time for "squawk on the street." good tuesday morning. welcome to "squawk on the street." i'm karl kin nilla, david faber, jim cramer. an ugly session in asia overnight. japan was down 4% as the glencore worries made their way around the globe. the oil is up. case-shiller is home prices are up. carl eye sawn's danger ahead individual is is out, filled with words of warning. >> glenwore rebounding a bit.

citi for one part sell if the sell-off goes any further, maybe the company should consider going private. >> yahoo planning to forge ahead despite a ruling from the irs, but first of futures are on the rise as stocks look to rebound. meantime goldman lowering the s&p start from 2100 to 2 0uz, cutting the earnings forecast as well. carl icahn releasing his full "danger ahead" video expressing worries about the economy and markets, take a listen. >> low rates by almost definition building bubbles, building real estate bubbles, building bubbles even in the art market, because the fed balance sheet has mush roomed from less than a trillion to over 4.5 trillion, which is a huge almost unbelievable move. and all that money crowds out the little guy, the middle class

investor has nowhere to go with their money but into the market or even more concerning high-yield bonds that are very risky. >> an echo of what he already said. he covered a crowd in 15 minutes, covered carried interest, corporate taxes, your reaction? >> it makes a lot of good sense. i've been saying you have to avoid this high-yield market. it's where people have reached. people have reached on emerging market currencies. they're going to have to raise rates because the currency is falling apart. is he stating the obvious? no, he's stating what has been obvious to people who are in the market every day, but not obvious to people at home. >> anybody who has listen to do carl icahn, whether it's on our air -- you've heard these arguments from him before. i honestly believe there's a part of him he believe that donald trump that is a reasonable chance to be elected. if so, i think mr. eye sawn, who

support mr. trump, thinking he has a real role in the administration. i think that lends to the sense of him in some ways being a seer, whatever you name t. treasury secretary, than anything else we've got out there. that said, on high yield, which he mentioned that, which he has for some time. el is paying about $350 million a year to keir carrying that, i think he may be right. judging from what i've heard even this morning, and how that leads into our own equity markets, i think this is an area you've got to be very much aware of right now. and just keep an eye on. every day there's another blowup. every day there's another valiant, the huge spring downgrade. >> dysthe bonds. >> average high yield is now 8%.

hasn't hurt investment grade, but the debt markets are key. we're back to a debt markets where you look at the debt side first. >> amen. amen. look, i think the alcoa breakup is good. the bonds got killed yesterday. they did. i like the breakup. the people are saying, listen, jim, be very caresful. i asked klaus kleinfeld last night, and he said listen, be mindful of the bonds they have reached. they don't know that they have reached, because -- >> in some cases it's a pension fund that has their money. >> and that's a very valuable service. it's very interesting you say, for trump -- and the reason i say that is because, you know, this is something that i actually wish a treasury secretary would say. i don't think people view it as

their job. bob ruben said, hey, listen, i think the yen has gone down enough, i think we bail out mexico. there were things that he did as treasury secretary that are like what icahn is doing. >> some raise their eye browse and wonder how can he mark the warrants and yet still argue that apple will double? >> the more different one for me to be candid is the increase in shaneer. >> he's lost $7 billion from what i here from people who know, in energy. all right. maybe he was a little early. >> maybe he was early. the people really getting killed here are hedge funds. >> crushed. crushed. >> the big positions in value. >> ete, sun edison.

>> ag basic of china. >> the hedge funds are acting from emotion, they're basically just running for the hills. >> remember 2008, 2009, the redemptions. i used to play bob marley's song "redemption" every night. >> another story thor about qatar, pulling tens of billions out of funds. >> qatar has gotten killed in volkswagen and glencore. they own, what is it 8%, 9% of glen core, 17% of volkswagen. that's a bad week. >> i would call that sub-optimal, yet glencore is being from floated that guess what? the cavalry might be coming. >> let's get to glencore.

it is up in the premarket. citi has a buy rating on the mining giant. it's out with a note saying the sell-off is overdone, and if glencore management should take the company private, to which i would say, yeah, okay, guys. we were around in 2007 -- remember the lehman go private rumors? by the way, to take it private, wouldn't you have to borrow in the bond market? and now it's being traded like a ccc? >> how will that happen? >> before i say $50 billion in debt, the numbers of net are all over the place. some say 50 billion some say 5, they generate a lot of ebitda, but they do in the trading business. the fact is if they want themselves out of the this mess quickly they'll need someone to basically buy a lot of the equity, either like a qatar, who

can write a big check, or china. >> right. china could do it. china has reserves. >> china could do it. >> if carb decided we're going to let oil go higher, a lot of the problems would go away, but i think they are insistsant in starting to do a good job, the high-yield markets would shut down. the credit markets are going against the drilling. the drilling market has fallen apart. you saw royal dutch pull out -- sheesh, i don't want to say how wrong they've been, but they spent a forting on dry holes and places that are hard to drill. and pure chaos everywhere. i think to come back and say i'm starting to warm up to my chron down 80%, down 60%, you have to be very, very careful here.

valeant -- >> back to the first conversation on yield, those were down. >> these are huge moves. >> it may be more emotion than anything else. yesterday it came out with an a.k. saying we don't even need toe. but it was when they received that invitation, i think, to appear before a house committee. >> not so great an invitation, so today people are wonder who will get hit on this market on the bond side, and by the way, on the glencore, some people say net debt is 29.5 billion, but many people don't include readily marketable inventories, the idea if they had to liquidate a lot of their trading business, they would have to do so at a level far below what they have it marked at. $17 billion, by the way, in that. >> let's put it in perspective.

at one point we had lehman brothers, aig, fannie mae. this is a little more isolated, but long-term capital was a little more isolated. >> today, by the way, the seventh anniversary of the house voting down tarp. >> that's a bad day. >> the worst decline in history up to that point. here is you, jim, cited this morning in "usa today" -- jim cramer of cnbc's "mad money" has been calling the point negative. the wife said with twitter, you put the pictures to rest, and the dogs will put hand hand kerr chiefs -- >> what i'm saying is i want everyone to buy everything including magnum hunter.

>> make sure they understand sarcasm. >> it's sarcasm. let me give you some facts. now everything is getting bearish. 600 of the s&p 1500 are now down -- 117 are now down 15%. i've been saying it's getting bearish out there. the problem is when you see those numbers, it's not getting bearish. people are starting to talk about, is it a bear market? these are the stats, it's been a bear market for a long time. >> all i know is when i start talking about fixed income and debt before equity, that's never a good sign. >> i feel like the gollum. you're seeing declines in bonds like what. >> fetch sprint triple c downgraded a week or so -- >> ike looking at something like

wynn, steve wynn, is there an event coming? look at valet -- steve i don't mean to link wynn with valet. saying to dow jones business remains operational, has no debt covenants, taken proactive steps confident in the immediate union long -- shares up 17%. >> one of the things people can do on the glencore. cds markets are not particularly liquid. we saw this happen during the crisis and then it's a self-fulfilling crisis. >> please talk about counter-party risks so people understand why this isn't isolated? >> they stop trading with them, then it's over, to run their

trading business they need credit. they do trade in a lot of clearing houses, but trading businesses, you know this, it's all about confidence. >> can we hurt it? >> we can. >> well, that's important. i'm not talking about "breaking bad." highsen berg. >> it hasn't been that long. >> watch "banshee" it's like "breaking bad" on steroids. >> i want to stay away from rollups, do i? >> rollups are -- >> not good. anybody who needs access to the market, anything -- >> i have brad jacobs on, the xpo, one of the platform companies. performance chemicals, he said, listen, if you believe, you want to buy. some people might believe.

hey, some people believe. whether we come back, what yahoo is saying about alibaba giving a lift. also ahead, kroger posting gains this year, in obviously a tough market environment. we'll have an exclusive with the ceo how the grocery chain plans to keep the momentum going. a busy day shaping up. live from the street in a moment. need to hire fast?

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yahoo shares are rising in the premarket. the company says it is moving ahead with plans to spin off its stake in alibaba. yahoo says it expects to complete it in fourth quarter. i've said a number of times that that was probably the route they were going to stick to, but giving some of the chatter, it was unclear. there was a plan b to leave the alibaba stake, but just to refresh mime's memory, it was the end of january wheria hue

said it would spin it off into a separate compete. back then, of course it was valued at $40 billion, not anymore. some saying why didn't they just do it, forget about taxes, bass alibaba was higher, but they were locked up, to be fair, that having expired recently. that's what they will follow through with, jim. that spin and of course the question is, where is alibaba going to trade. there will a discount accorded to the spun company. it won't be traded at the same value, but it will be some sort of discount, and then you'll be able to value core value, an the yahoo japan stake. >> i think it's worst something. you can say that means he says, maybe it says that i don't like aaron rodgers. i don't even know anymore. this is really important. the i.r.s., i don't know if you've ever been involved with the i.r.s., it's a little

different. if you go to i.r.s. court, did you know you're guilty until proven innocent? the i.r.s. can decide, listen, we're against this, apparently they have some sort of out there? >> i don't know what an out is. it can take years to get to any sort of decision. >> why risk this? why risk the wrath of the i.r.s.? >> because i think they're being told it would be viewed as a tax free. the i.r.s. has this particular issue with active trading businesses which need to be included in these spun companies and they're not large enough. i don't want to get into the nitty-gritty of it, but it could come down to something like that, jim. it's not necessarily going to be grandfathered, but there have been comments that seemed to lay the groundwork for it to be allowed for them to not do anything. i continue to believe that yahoo is worth something, what is that something?

>> it's worth something to someone else. congratulations to henry blodgett. >> big story today. >> worth a valuation of $500 million, so what am i supposed to do with yahoo? say it's negative? what's the ad business worth? you don't like marissa mayer, you think she did it wrong, if they got a ruling, boom, lock up, this would look smarter, but to think of that business, where so many people are on it for yahoo finance, for yahoo sports, forria hoo entertainment. to think it's worthless is so lard for me to feel. >> i think you're probably right. there is a multiple -- it ain't glencore. it doesn't need saving. they don't make copper, they're

not an iron ore is company. >> those they're no valet. >> petrobras, a six pack of pbr is more than a petrobras, ppr. we haven't gotten to updates. abe is on the tape, and sara eisen in cincinnati with a ceo doubleheader. hey, sara. >> good more, i'm in cincinnati where kroger is holding its leadership meeting behind me here. they have phoned in thousands of associates we'll talk to rodney mcmillen how they plan to keep 47 quarters of growth, and keurig green mountain launching its new cold machine.

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let's add credit suisse. sales are churning. easterbrook is a big mac guy and breakfast all day guy. the changes are working, sales are turning up. the estimates are too low i've liked the restaurant group, because the costs are going down. i paid 1.80 for gasoline this weekend. 1.80! we a volkswagen beetle from 2002. one tank the gas will last for one semester. >> there must be soft in software in there. >> just not a diesel. >> it's a joke. i thought you were being

serious. mcdonald's fits my profile of what to buy. this makes sense, good balance sheet, good yield, an analyst who has done a lot of work, so i'm adding the list of three stocks, i'm going to put a fourth on it. s&p has 500 more -- >> you're almost at 1%. >> i'm getting there. 496. not yesterday. four, bingo. we're going to try to watch all other 496. what will valiant do or -- what a disaster. we'll take a look at those stocks and those going up. when the opening bell come back.

you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bet in 30 seconds. two sessions left in the quarter. today we got this video from carl icahn, and the ten-year yield is along yesterday's low

making something this. >> can you break into some things like a biotech stock? it's going to go lower, but i think at the start i've been very negative about tech value in this group, and i think, okay, there was a guy who was supposed to have been working for me worked for berkowitz, and he started a kind of tsunami haven for drugs and bernie sanders, by the way, is so popular in college campuses, i think this group will recovered from that. >> there's the opening bed. pink ribbon red ribbon, a global ngo, and boy tech rejenneren, one of the biggest losers today. and now we have the house

economiee on oversight and government reform looking -- hard drugs at valeant, and that continues to spread. >> there's a company called aspeer on. this is a company that has a hyper cholesterol drug, they put out some stuff about how they have a phase 3 trial that may not be going all that well. it's convoluted, but basically what i think the government says is we have two new cholesterol drugs, but that's the weakness in biotech. regeneron is -- >> and we've talked a lot about it, not a boy tech company, about a large let's call it pharmaceutical company.

they may be getting out. by the way, who knows if anything would come to pass on that front but nonetheless people are not looking for the answer, but hearing the question and getting out. listen, it's five timed levered, because it it generates cash flow, and mike is fascinating to watch as an operator. how they go about running their business, but i'm keeping an eye on it. allerg allergan, for it's part was crushed this morning. >> my charitable trust opens it, a longstandic ownership. i don't think it's valeant. this guy said i'm restraining -- brent saunders and allergan said

they have not down that irresistible to hedge funds, jpmorgan reiterates today. sanders and hiller reevaluating and martin strelly, and counteracted the valeant plus side, but this is an election year. i cannot think of a bigger opponent that everyone would agree on, but we hate valeant. >> that guy galvan iced, that 32-year-old guy -- what's his name. >> i don't know, anyway, he galvanized -- >> how could they not? >> he's like electric llexl lut. no confidence really in the

overall market? >> yes, and i think it's important, here again, when you look at they stocks, you have to realize how much you're done. bristol-myers is upgraded by ubs. 109 to 91, diversified pharma. the stock was up yesterday. i think people are saying i want to be in safety safety safety. the aaa balance sheet, but it's what you recommend when you're at goldman sachs like i was during a bearish phase. i like heinz and j. & j. you recommend those stocks, you come back and the guy on the street isn't say you idiot that's a win in this market. >> it is. you would be upset if somebody put you in energy transfer, though this morning at least it's up. yesterday it did announce the

long-awaited deal to acquire williams. both stocks, i mean, you couldn't have for a worse reception. >> no. >> you can't draw it up any worse than that. there have been. i think that dialogue was down even more, but everyone is saying why are they doing this? >> because they paid much less than they started to, and they're now a natural -- no -- >> e.t. started i thinks when it started. maybe i'm overstating it. >> no, no, it was actually right there, david. it was a good call. >> it was a lot higher. >> we're going to be oversold not been oversold before. it is the end of a quarter. some people will flee. it makes them look bad. i will point out when you have 117 stocks down 15% from their high, there are some values being created. that does not make me a bull. it just makes me a little less a

bearish. i want to be clear on that. >> some in addition a's today of apple and go pro over at steaer with a buy. i thought atp had an 8., 9% yield, you own it for the next ten years. he's put together an unbelievable -- >> largest energy structure in the world if the deal gets done. >> this is really a believer in natural gas. you know, it's not as much exposed as a lot of others, but people don't want to hear it. it's a master limited partnerships, which means annihilation right now. you know, periodically we have that, but i've got to tell you the pipeline fundamentals in this country are not that bad. people don't want to hear about them. money flow and fundamentals are disagrees, but that's been happening. money flow and fundamentals, but

fen if you're positive, you're wrong. >> the banks are taking it again today a bit. goldman sachs down almost 2%. jpmorgan down about 1%. i've got to believe that's concerns whether it's glencore related or -- tum multi, lack of issues perhaps could hurt the bank certainly. investment grade, by the way, not getting hit. will budweiser be able to follow through? yes, sir. 25 basis points is all we have seen in investment grade verse i think 300 -- >> paid 9.75%. i think here's an important point. companies cannot defend themselves. they cannot say, listen, they can't do it, but a lot of the

buybacks are stopped here. so you're having this no buyback, no way to defend, free fire zone. remember the zebras when you watch them in the "national geographic" things? they always get caught. this is not the snowshoe hare that gets caught. i'm not talking the eeb bras -- >> i with remember marlin perkins say it, there goes jim and the zebras. >> luckily jim came out alive most of the time. >> as we said a moment ago, the premarket rally getting sold here, barry thompson is on the floor. >> hey there, mary. we did see a bit of a rebound in the markets, but we have seen since then the russell and nasdaq turn lower. and the nasdaq the hardest-hit index in yesterday's sell-off.

we continue to see weakness and also retailers under pressure. the markets, of course, this mixed session right here in the wake of what's an up session in the europe, and a lot of weakness in asia as well overnight. the japanese markets falling about 4%. we're watching the s&p here, because again even though we're seeing a bit of a rebound, traders continue to expect it will retest the august lows, 18 at 67 on the s&p, so that is a level to keep watch on. quickly checking some of the sectors as well, yesterday of course the leading sectors to the down side, including energy, we are seeing a pickup in west texas intermediate, up 56 cents. they continue to watch that 44 level on crude materials. also higher glencore saying business is robust and citi defending it.

also we are watching the banks index, keep in mind the fed williams was out with a speech yesterday, the latest to call for a rate hike by the end of the year. he believes that it's best that the fed begins raising rates in order to continue to start this normalization process, but of course offsetting this, at least for the big bank are concerns about slowing m & a, and some of the exposure some of the big banks may have. just a quick check of smell dow movers as well. walmart plans to deliver online grocery orders soon. j & j with an upgrade. and then microsoft being fined in china over the xbox activities, the company saying it's restructuring its reporting to better highlight its cloud

software business. so again the dow has turned negative after a choppy start, now off just about five points. thank you very much, mary thompson. to the land of media this morning for a bit of news, including news involving fox. that company thunderstorms 21st century gnofox is a family controlled company as our views knows. jeff ubben took a position last summer, and of course it did not succeed in doing that. mr. ubben i'm sure wishes he had taken the position now, not then, but that being said, he also at the time hoped that he might be able to gain entrance to the board of directors at fox. it is interesting that they are not nominating him to join that board. we'll take that board up from 12

to 13 directors. he is nothing if not an outspoken perhaps board member at certain times, and has developed a strong working relationship with the company's ceo james, as well as with lackland as well as rupert mu l murdo murdoch. he said we spent a lot of times and feel our role is coming into focus after a year of getting to know the businesses and the people better. the narrative of net flex driven unbundling and moving to mobile is easily adopted by investors. oh, yes, it has, hasn't it, a lower stock price becomes a catalyst for fundamental change in strategy, so he says in his

view james and the board are being freed -- it's an interesting idea, isn't it? because the multiple is so low, we can do what we want, because we're not getting rewards for anything in the market anything, so we can be bolder. it may makes sense for fox to pull an adobe. >> yes. >> he was on that board with ubben. >> that was the beginning of the adobe run, and people saw through t. and they saw the conversion to cloud. i think that's happening right now in microsoft. >> well done. he went on to say he thinking james mural dahl has -- it's language like that, of course, that will get you invited onto the board of director. the stock is up. quickly to yesterday's bid in the broadcast area, if you will, nexstar, remember that

company? trying to break apart the current deal, getting it heavier in print. i did get a chance to catch up with the ceo. nexstar, he built it into 100 station right now. the key here will be the vote. media general have to vote on the meredith deal. one large shareholder, standard general is locked in to say yes. it will be of the majority of the votes cast. i asked him, can you get the vote to go your way if it even comes to it? >> we feel that the media general board may have rebuffed our offer, but the shareholders have spoken loud and clear, first of all as to their opinion of the merger, but also have contacted us unsolicited to express their support should we move forward with an offer for the combined company.

i think ultimately we'll let the shareholders discuss, but we feel good the shareholders will evaluate the best proposal and we think that's ours. >> we'll be keeping an eye on this deal as it moves away, and from talk from some media general/meredith. let's check in with rick santelli in chicago. >> hi, david. i'll tell you what, we are volatile in terms of wild differentials from close to close to close, but the last session yesterday did drop us out of a range a bit. if you want to look at the short end of the curve, let's start july and the two-year note yield. you can see we had a couple spikes that were fed related in terms of, hey, they're going to tighten, but for the most part it's pretty steady. you can see on a two-day chart of tens, we are below some key areas. first thing that comes to mind is 217, but a lot of action

between 212 and 214, opened the chart up to may, you can see those little bottoms, 212, 213, 214. yesterday's settlement is very significant. let's look at the curve. you have the polar aspects, 2s and 30s each other two basis points. 5s and 10s are down three, if we look at bund yells, look at the 24-hour chart. you see basically the first prints were under 57 basis points, very significant. why? open the chart up on the 21st of august, a significant bottom there at 56 basis points. we want to see how we monitor close to close. let's keep in the european spirit of things. the two-day chart for the dax. yesterday wasn't pretty. moved down, today even though it's a two-day chart, you can

see some up side. it's the carry trade. whatever the dax does, assume the opposite. the dax recovering a bit, the euro is about ready to violate that two-day settlement line. pay close attention to that. carl, back to you. >> thank you very much, rick. when we come back, brian kelley, who is betting on the cold emergency to be the net growth driver. the dow is down 35 points, and we're back in just a moment.

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minute before the release to tweet us your predictions. the first one who is right, of course always wins. estimates about 210, jim. i think at this point people will be glad to get a number with two. >> paychecks, small bit not doing all that bad, but we're -- the fed wants to raise. and certainly i make a joke there. i meant strong enough. so i this is that it's a forgone conclusion. jack welch said i don't think we should have a rate hike, i don't care anymore. i'm not going to fight it. it's like enough. and now williams last night echoed. >> well, mr. bullard, you know, i'm not as euphoric -- noticed how i changed my word, because i am a gentleman.

downside targets, we're almost there for my s&p. we're so close, 1708 is probably my new down. the dow i think you go to 15,231, and nigh new down side is 14,793. by the way, that's lower so that people aren't interpreting me as being bullish. that's lower. >> they'll do the math. >> will they? we are down about 29 points, s&p 1879. back in just a moment. 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.

time for cramer and stock trading. >> we got a nice shakeoff. people got picked off at the opening buyers come in. again i'm not a bull, but that's bullish sign. true fecta has a rheumatoid arthritis drug, r.a., a very painful disease. if you're short-term buy eli lilly. what's on med tonight, and a

doctor who understands a lot of the changes. i want to talk about all the things that people hate. try to go a bit the other way. i've been unrelending being 3-0, i don't want to give it away. no, that's aaron rodgers. >> nice game last night. >> i love andy reid. >> we'll see you tonight, "mad money." when we come back, consumer confidence at the top of the hour. and an exclusive with the ceo of kroger in a moment. i'm only in my 60's. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i looked at my options.

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slg good tuesday morning. welcome back to "squawk on the street." i'm here with david faber and simon hobbs. sara is in ohio. first, a look at the markets. a bit of a spill at the open. dow currently up about 30 points or so. dow is relatively steady. >> our road map starts with

warning signs carl icahn with a video out called "danger ahead." countdown to shutdown is onwards. will a bill be passed in time? among the top performers, as we had an -- in a few moments, bus first consumer confidence with rick santelli in chicago. >> here's one you will not guess. consumer confidence for the month of september, we're expecting 97. wow, 103. 103. that is a stellar number. as a matter of fact, if you look at the best three going all the way back to the summer of 2007, it was the first month of this year, january, at 103.8. so 103.0 is the second best

number going all the way back to august '07. will this make you money? i think it's more of a trailing indicator, mostly reflects optimism. in the end, a solid consumer confidence number. >> in the meantime, slightly higher on the dow, up 42 points almost 9%, meanwhile, carl icahn releasing his "danger ahead" video, saying he has no idea where we're going, but it's very dangerous and could be disastrous. low rates, almost by definition building bubbles, building real estate bubbles, building bubbles even in the is bond market, because the fed balance sheet has mush roomed from less than a

trillion to over 4.5 trillion, which is a huge almost unbelievable move. has nowhere to go with that money, or even more concerning, high-yield bonds that are very risky. >> it's an interesting watch, and you can do that on cnbc.com. an dan greenhouse is also with us. tolleson, you were poring over the video. is there anything that may not have encountered before. >> it's a worry i run into from time to time. and it raises an important question. if the fed does raise -- or will it too late and are we doomed?

in other words, is it a situation where there's just nothing to do? >> have you had a chance to watch it? >> yes. let's be clear. in order for the you have to frirs have a bubble. i am not yet conventioned there is a bubble about which we should be worrying all that much. and then 5% next year, and a number of bulls on the market continue to come down. are you able to quantify where we are likely to go now? >> i want to be clear here. the bulls, so to speak, are the people with 2300 price targets.

with all due respect to my comrades, all well-meaning individuals, that always seemed like a stretch to us. six, seven years of s&p 500 precious on an annual basis is -- and by the way, to be clear, something like 35, 40% of the time, going back 50, 60 years, the s&p has rallied enough to put the s&p this year up on the year. al that said,. >> yeah, i guess the consumer confidence figures are important just to come back to the heavy selling we've had for five days, down to the lows more or less for the years, china has been one of the reasons they keep coming back. is that an excuse, given where

we are going and given what happened yesterday? >> the fed continues to expect it's like a battle between the economics textbook and the financial textbook, which has basically money flowing into -- and things too far away from fundamentals where markets are trading in a way -- >> i'm not clear, if i look to explain what's happening here, are you saying that's about -- and the losses we had with biotech particularly yesterday, are you saying this is not china, or in addition to china? >> i think the chinese story has had a significant impact on earnings and s&p, no doubt about that, but a very limited impact on gdp, so we could have a profit recession without having an economic recession. >> so where is the opportunity, in your view? >> i think the opportunity continues to be, do you believe that this will be a smooth exit, or do you think it would be associated with a lot of volatility. that's from a mac ro

perspective. >> dan, where do you think the opportunity is finally? >> with respect to what torson just said, i want to be crystal clear. i don't think anybody thinking this will be a smooth exit. if you look at what's happened the last couple weeks, had in high-yield credit or spread markets, we've already sort of proven the idea that the fed isn't going to exit smoothly. the question is how much volatility will there be? but again iffist not is -- you can have volatility and still push higher. >> thank you, dan greenhouse. let's send it over to sara eisen, who is in cincinnati with a very special guest. hi, sara. >> i'm here with the ceo of kroger, rodney mcmullen. we're here with the kroger leadership meeting. thousands of employees. thanks for joining us. >> good to see you.

thanks. >> it's the growing footprint that kroger has had. we just got a blowout consumer confidence reading across the nation. are you seeing that kind of spending? >> yeah, one of the things, as you know, our strength at kroger has been strong for a long period of time. so we've been strong, we continue to see strength, so it's great to see. if you look at like murray's cheese or wine, boardshe had, sushi, we've been growing in all of those areas. >> are you seeing a change at all? >> no, people who are on a budget that's worried about the next paycheck, they're still being very disciplined, but we would expect that to continue for a while. we are starting to see pickup? employment. right now we have 20,000 openings. >> at kroger. >> at kroger. >> last year we added 25,000 jobs, so it's a -- the labor

market is a little tighter, so that is an illustration of things picking up. >> are you starting to see the consumers spend gas savings? >> not really yet. we keep hearing they're saving it versus spending it, but time will tell. >> i want to ask you about your business specifically. you mentioned the consecutive 47 straight quarters of same-store sales growth. another 5% plus. what are you getting about the consumer that your competitors are not? >> well, i don't know it's so much what the competitors aren't, we're focused on the customer. >> but -- >> yeah, but we surveying over 40,000 customers every quarter to see how we're doing, and we really do listen. our 400,000 associates really are taking care of the customer, and we keep taking costs out of business and reinvesting that,

so we have reduced our pricing about 3.5 by on. so it's a lot, you know, it's 100 small things, but together it's a beautiful picture. >> some analysts are concern some of it may be temporary factors. for instance fuel has helped the profitability. what about this idea that pharma inflation is under increasing political pressure. hillary clinton is tweeting about high drug prices. this is a big chunk of your business. are you worried that tailwind is going to fade? >> if you look at fuel, with our investors we always try to show results with and without fuel. what is really important is our core supermarket business continues to grow and improve. the core business really keeping improving. that's what we are focused on. >> what about pharma? >> on pharmacy it's about 10%. it's one of the things that's night about being a multifaceted business. pharmacy might be tough, but our fresh departments are on fire. if you look at narg and organics

it's on fire. simple truth. investors love this. >> i have been talking to jim cramer. he wants to know why millennial are going toward your private label organic brand and not the others. >> first of all, i think it's simple. there's 101 ingredients it's free from, so the customers connect with that -- >> but isn't everybody doing that now? >> yes, but not everybody would be 101, some have different standards. the other thing is it's across a whole broad spectrum. my niece was telling me it just makes it easy for her to shop, because the values are consistent with what she wants. all she has to do is look for simple truth. it really is connecting -- >> it's gone to a billion in less than two years. >> i think it's -- i always say your imagination is your only

limitation it's still growing with strong double digits. we continue to add products it's actually going to be sourced abroad. >> it's really the foodie customer. as you know, customers -- more and more customers really want to try a new food experience unique small farmers. the product is incredibly good. it would be a higher priced, to the cost in the product. what we are finding is it's more of the foodie customer, not just the upscale customer.

everybody likes a great meal, and you're comparing that to some of the restaurants or something else. >> 8451. investors want to know -- explain what it is, and what it's telling you. >> i always say it keeps you honest with yourself. i don't mean ethical honest, but as retailers, we are all shoppers, and we think we have all the answers. 8451 does a beautiful job of telling you what it is versus. >> what's it telling you right now? >> like the foodie thing was our and it's not as sensitive to the price.

so that would be an insiding we would use, and then -- >> before we let you go. i want to ask about john boehner stepping down, hometown guys, politics, dodds it as a headwind to the business, we are facing yet another threat of government shutdown and more arguing in washington? >> if you look the last time whenever it became the front page news you could see it affect our business the next day. >> it could. >> as soon as it stopped being the news, it immediately recovered, but people are just a little sensitive. as you know, with 47 consecutive quarters, we've been through all kinds of economic environments it really is taking care of the customer we try not to be involved with the politics other than supporting, and we wish john the best. >> obviously wall street appreciates the stock.

thanks for having us here at the kroger leadership meeting. we'll send it back to you guys, but later an exclusive interview with brian kelley with keurig. >> thank you, sara. in the meantime, like it or not, the countdown is on. we'll discuss the possibility of a government shutdown and the effort under way to keep federal services running, next on cnbc. [female announcer] for thousands of local foster children,

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our eamon is watching that for us. that gives the flexibility to cut a deal. the senate cleared a key procedural measure last night. they expect to vote on the final passage today where what happens after that is anybody's guess. now it's a free for all in the -- campaigning for speaker of the how vlts he'd like to succeed john boehner. he was a "squawk box" this morning. here's what he said will business leadership style. >> i've heard what's happening

across the country. i've watched what's happened in washington, where people care more about power, more about institutions than they care about changing the lives of everyday americans. so you're going to find i'm going to listen to every voice, i'll have the wisdom to listen to america, but also the courage to lead. >> another interesting one this morning, a bit of a bush from trey gowdy. it's not clear whether he's going to run or not, but he's the head of the benghazi committee, very conservative voted against the last dead limit increase, so that would add to the mix here, very dynamic situation up on capitol hill. we heard from speaker boehner himself within the past few minutes, he said he's undecided on the timing of these new leadership elections, but expects to make a decisions on when to call the elections pretty soon. back to you. >> thank you very much, eamon javers. apple a deeper target with the introduction of its hermes

brand. what about the ultra-high end? the the ceo of hublot will weigh in.

take a like at the biotech ind index. not a surprise fell below that flash crash of late august, trying to rebound today some 3% or so. again, one of the lowest levels we have seen since november or so, the fall of 2014. in the meantime, sue herera joins us with an update on the volkswagen scandal. >> yes, v.w. just put out this press release, a translation into english, here are some of the highlights.

volkswagen will present authorities in germany with technical fixes for the emissions problem, probably in october. they say the affected customers will be informed how to fix that particular emissions problem. all cars technically are safe and are drivable. customers will find out in the next couple of weeks, maybe out to a month. the impacted cars will be listed on vw's website where you can get an update. out of the 11 million cars that previously were thought to have this issue, only 5 million volkswagens will need to be serviced according to vw. the golf sixth generation, passat seventh generation and first generation of tiguans. you can see volkswagen down better than 2%. back to you. >> sue herera, thank you very much. the apple watch may be

courting the luxury watches with timepieces, but swiss watchmakers are not standing by quietly. tag hauer announced it's partnering with google, and hublot is announcing the expansion of a swiss factor. talking to us is the president division, which includes the jean-clau jean-claude, great to have you back. good morning. >> yes, good morning. good morning. >> last time we had you on, your argument was that the apple watch would be good news for makers of watches everywhere, it would reeducate, especially young people, to wear something on their wrist. has that point of view come true, do you think? >> oh, yes, i believe so. i believe very much so. they did a great job. they really put something on the

wrists of this young generation which would forgotten to wear a watch. so somehow the apple watch is a great promoter for for the real watches. apple is also a great promoter for the collectible watch, because now somehow the collectcollect ed connected watch is also in the luxury. on the 9th of november, tag hauer will present the connected watch from tag hauer, together with internet and google. we're very pleased. and we were a bit concerned about the price, because we are going to sell it at $1800 the watch, and now we are quite reassured, because apple is telling us that we can sell at $1,500 or even more, and that's positive for us.

so i'm very, very pleased. how hard is it to chase apple from a defensive position? >> oh, it's nearly impossible. we should not chase apple. we should chase the swiss watch industry. chasing apple would be ridiculous. we don't want to compete even with them. now on the technical side, if you have us partner intel for microprocessor or hardware, and on the other hand you have google, my goodness, is it possible to have two better partners? no. we have the best possible partners, which will enable us to always be updated, to never cup out with a product that's

object sleet before it's on the market, that's for us, of course, the best possible solution. >> jean-claude, more broadly can you give us an idea of where the luxury goods industry is good? some people believe it will have to go through a major structural change to deal with digital and to deal with and the fact that its main clients in europe and china are really hot on e-commerce. you know, you recruited paul rogers from apple, and many people wonder where that would take you i believe in the wearable. there will be a huge develop in many feels from fashion, leather

goods, even your wine you know you have this enormous problem of the fake wine in china. it had be advisable to have an identity on the wine and the wearable is definitely part of our future. if you underestimate it, it will be out of the market. that's immediately why we jumped in with tag hauer but of course we could not just in -- we watch makers, and a connected watch is not just a watch. it's a computer. that's why we had to admit alone we would not do it, we would not reach it.

jean-claude, our thanks to you, as we watch this interesting space. we're rebounding, the dow is up, five big days of sell off. we'll take art cashin's view next on cnbc. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

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good morning again, i'm sue

herera. here is your news update. secretary of state john kerry after meeting with his russian counterpart sergei lavrov, say they agree on some principles in syria. afghan forces clashing with taliban fighters today in a bid to retake the city of kunduz. walmart is exacting the online grocery with prepickup service to several new markets. the service lets grocers order, and choose a pickup time. the new locations through atlanta, nashville, salt lake city and tucson. the eiffel tower turning pink last night as part of a push to fight breast cancer. as you probably know october is breast cancer awareness month.

that is the cnbc news update this hour. simon, back down to you. >> thank you very much, sue. the markets in the green today. we're up 104 points, 105 points on the dow. we dipped back into negative territory. it's primary as oversold bounce, and we're getting cooperation from two classic areas. the fact that the biotechs are not spiraling out of control as they were yesterday. so that's what's allows the bounce to hold. it is not on particularly heavy volume, however.

you don't get a sense of commitment. >> is the tenor of what happens happening different from, say, august. if you look at what happened yesterday, is it different now? >> i don't think so. i think it has some real similarities to what happened in august. that had traders a little nervous yesterday as to whether you might get some follow-through. you saw some -- enough concern there was a flight to safety into treasuries, and a variety of other things. so it's going to take more than a one-day bounce back. >> there was a suggestion in the commentary, that john boehner's decision to resign might mean that the fed rate hikes in october. you don't believe they're going to hike fed rates at all. >> not at all. i did want to know that, but the feeling goes like this. boehner resigns, so that he

could basically compromise with the democrats and some republicans, and fund the government up until december 11th. that would then leave the fed, if they waited until decent with the uncomfortable deal of deciding whether they would push to cut rates at a time that might be tumultuous in the government. there was some thinking that since they couldn't wait to play that card in december, they might have to play it in october. i don't believe it, but it's something going around on the trading desk, and i felt it important to tell people that. >> how cloud railroad watching the high-yield market these days? >> reasonably close. it's been giving op some anxiety signs here, particularly with the drift-down in things like crude, because there's a lot of high yield tied into energy and fracking and those other things. the traders keep a solid eye on

that. >> we're looking potentially at back-to-back losses with the s&p. the last three times that happened, we're heading into a good seasonal time of the year. is santa coming or in the? >> it's a little early for santa. we have to worry about the goblins of halloween first. it's usually a month in which we see important bottoms put in, and -- but they usually come a bit later in the month. we got fooled in 2011, when i believe it came early in the month. >> a lot of people are hoping for a repeat of 11. >> keep your eye on oil. i think the viewers -- we've got it up above 45, as you said. if it depends back below 45, that may put pressure on the market. >> art cashin, thank you. carl icahn's new video is out. icahn is worried about creating

bubbles in various asset classes, but there's much more that mr. icahn had to say in a conversation with our very own scott wapner who joins us now. >> hey, simon, thanks so much. using that new video to dish on issues he find worrisome in the market. >> instead of taking the money that they could borrow and really investing in a lot of capital new machinery, new equipment, to make them more productive. what they do with the money is almost per verse. at the just go in and buy another company to so the handlists that earnings are going up, so the stock will go up, and it's financial engineering at its height. >> okay. but icahn clearly not fretting too much over is apple, his biggest stock position, icahn telling me in a phone interview surrounding the video's release, he's sticking with the stock,

reel veal the size of -- and icahn telling me a familiar refrain that he thinking the symptom is still under valued. why he's built such large stakes in the, icahn telling me he bought free port, because he thinking that copper prices will recover in a couple years and clirn cheniere's counters. last night he revealed a new 13-d and biggest stake in the lng exporter. he also admitted while he's more hedged than in years, he's probably still more long than he is short. on china, he's telling me china can take care of itself, but it could get worse before it gets better. politics drawing his ire, particularly the lack of tax reform and congress. >> we need government to get out of this gridlock.

everything agrees that repatriation should be done. it's just a food fight over -- it's almost funny if it wasn't so sad, who will get the credit for it. will it be the reps that are going to put their food down and say, we're not going to charge any tax to take it back or the democrats who want 15% to take the money back. the whole thing is absurd. >> he says middle classer are fed up. he did laughingly dismissed the notion that he's ready tosh trump's treasury secretary. >> why is a billionaire who has access to television anytime he wants make a video like this that's full of animation at some cost, with lots of cutting and editing, what is the aim here? >> i think he wanted to make a bigger splash to a message he's been telling us and others for many months.

frankly i think he did it because he could and he wanted to, a way to get his message out more clearly, more directly in a highly produced way, one in which he can control the message himself. that's clearly what he's done. whether it's on the issue of corporate tax reform or donald trump or the markets at large, clearly thinking that he has a duty in some sense to warn investors about the things he himself is worried about. >> we'll see what happened, scott, thank you so much. when we come back a soda fountain in your home? that's the new product that keurig is rolling out today. we sit down with brian kelley, in a moment.

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glee let's check in with rick santelli. hi, rick. >> good morning, carl. i would like to welcome bradley tank, first time on the santelli exchange. >> thanks for taking the time. my first issue is everybody, of course has been talking about carl icahn, a friend of cnbc, great businessman i've been saying the big and powerful too big to fate banks. where many arch americans haven't have really done quite well given -- would you or would you not great with that? >> absolutely. >> it's true. >> i guess what i'm saying is

pretty much want to take it to slaughter. i think all those people i mentioned aren't doing as well. >> would you agree with that? >> take it a step farther. that's been a topic on this floor for a couple years. your portfolios, let's look at them as oatmeal raisin cookies. both junk and investment grade. many of your portfolios must have raisins in there, right? >> absolutely. >> build a diversified portfolio. if we see situation like we've seen over the last -- corporate bonds will not -- that's been the case. >> spread winding means they're not specifically keeping up. the last couple months, probably not only newberg or berman, but many of the portfolios have lost

some money. >> if you've got tilted toward high quality or government. >> you have no desire to put any mohr raisins out of the cookie. correct? >> true. my question to you is, is this going to be an issue when the markets continue to morph and recalibra recalibrate? will we see more -- but many -- but many do? >> you could see some surprises. i think we will recalibrate the next few weeks. we're not knee a bottom today there will be value in the market again. >> you've been very outspoken with me about the fed has an issue, what is that issue? we have a messaging problem. >> they're not synonymous? >> not at all.

>> it'ssh did did i see that focus on the mandate. infloss, financial market stability. the other thing they need to talk more about, and this goes to icahn's comments is zero isn't normal they need to acknowledge it more publicly. >> they want to get away from it, but not necessarily being up front as that being the catalyst in the activity. >> brad, an absolute pleasure. thank you for taking the time. simon hobbs, back to you. >> rick, thank you very much. another day, another big move for the mining giant, what it means for global -- and christine la guard tomorrow, and on thursday, sara will sit down

with jim yong kim. we're back in a moment.

welcome back.

glencore continues to be a great concern for investors overall, whether in the equity or debt market. this morning, though, at least for those that are hoping for positive things, glencore shares, as you see, up rather sharply. this after the company came out in a statement this morning and said its business remains fully operational and went on to say that it has taken proactive steps to position the company to with stand current commodity market conditions. as i said, our business remains robust. we have good liquidity. no solvency issues. the stock had been done as much as 40% over in the last couple of weeks. since it announced the lan and actually did sell $2.5 billion worth of new shares, of course, its leaders also stepped up to buy to keep their position the same, but the concerns continue to swell as people watch the cvs balloon or trade down to levels of a triple c credit despite the fact that this is an investment grade credit, and needs to be if

they want to maintain their status, of course, as a leading trading platform for so many commodities. we will be watching it closely, as are many investors right now, to try to understand where things will play out. this morning a positive piece from citi suggests that there are possibilities of selling assets or even go private. in these kinds of situations where time is of the essence, it can be difficult to get an asset sale done in a timely manner to bring about at least an wrout come that would give comfort to the market and as well the whered of a go private, i think, is quite far -- is quite hard to imagine would, in fact, take place. you have to access the debt markets. a lot of focus right now on those debt markets. keep an eye on the cvs. on the bonds for glencore. today the stock moving in the right direction after the company comes out and said positive things. real quickly to another situation we've been following. actually, just got off the phone with jeffrey smith.

the man who runs starboard. they're coming out in the contest between nexstar and media swren and saying, hey, media general, we own 40% of your stock. we hope you basically do the right thing. in their position it does appear to be the right thing would be giving full consideration to that $14.50 a share offer to nexstar. important to note that they have done this. they also own the same amount of shares in yahoo, said mr. smith, and yahoo shares are up sharply today, we've noted, as a result of the decision by the company to move ahead with that -- what it expects will be tax-free spinoff of the 384 million shares in alibaba. the attorney on that, i am told, is going to give a strong opinion as to why it believes it will be treated as tax-free. carl, over to you. >> all right. the global gaming expo is kicking off in las vegas today, and it's an industry that's still trying to figure out what to do with mill enwrals.

our jane wells has more on that. good morning, jane. >> hey, carl. yeah. they don't like to play slot, so the industry admits it's throwing everything against the wall to see what sticks, including maybe a slot machine that plays like a video game. this is a new game from g2. it cost bz $20,000 to buy one. it's a concept called skill-based gaming, just to prove to nevada that up until now slots had to be games of chance, but now they can be a combination of chance and skill. it's almost two bets going on at once. like a video game. another idea, interblock is coming up with new ways of playing reulet and craps with stadium seating and individual consoles. one millenial craze, daily fantasy sports leagues, like draft kings or fan dual, currently not considered regulated like gambling. >> but you think it's gambling, right? >> of course, it's gambling. it is utterly in my opinion gambling.

do i think it's wrong? no. >> the concern we have right now is many regulators, many policymakers are saying that this is a gray area. well, it's time to make it black or white. casinos can either get involved or they can't, and if they can't, that begs the open question to the legality of the product. >> we have to find a way to make it safer for everybody, to prevent under aged people from gambling, to create safeguards so that you have a fair proposition, that if you win something, whether it's on daily fantasy sports, which is winning something, you get paid. >> they want in. more from jim murray later on when mckoy will turn around. right now it's ugly and mgm's possibility of turning into a reet. the first on cnbc interview of the -- it's one of the few stocks that is up. up 19%. why did it suddenly want to buy the tropicana on the las vegas strip. we will find out with the ceo. back to you.

>> an industry unto itself. jane, thank you very much. 86 days until christmas, and already john ford is channelling santa. >> have you to get in the spirit. plenty of red here as well. yahoo spinoff is one of the things you'll be looking at coming up in squawk alley. also, the green mountain ceo will join us live. finally, henry has made a lot of money selling business insiders. he will join us live coming up on "squawk alley." need to hire fast? go to ziprecruiter.com and post your job

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welcome back to squawk on the street. a couple of news items to get to this morning one involving at&t which may take, we're told, an estimated $1 billion charge. that realed to direct tv. it owns direct tv's venezuela assets. it's a less preferential currency exchange rate to value those assets. hence, the charges. the stock is not reacting. one stock that is reacting is discovery. it had an investor meeting this morning. strange time perhaps to have one, and during which it basically put out cash flow guidance that was not on the liking of the street over the next three years despite the fact it will generate as much as $10 billion in after tax tax

flow, can you see the stock has been suffering as a result. back to you. >> david, good morning. it is 8:00 a.m. at tesla headquarters in palo alto, california. it's 11:00 a.m. on wall street. squawk alley is live. ♪ >> kate mitchell's co-founder, fwraits to have her back. as always, john ford, and kayla. the markets having a spill in the early going, but managed to recover some of the early losses. al