"squawk alley" is live. >> welcome this morning. shelly palmer, managing partner with landmark ventures. joining us as always john and calla. the markets are trying to rally. rallying ever since the open. currently up 213 on the dour. we would have to gain an additional 1,600 points to break even. bob pasani is on the floor. >> the important thing about today is it's another one of those lopsided days.

6-1. that's lopsided. the volume is moderate to heavy for the final trading day of the quarter. most of the volume is going to any stock on the wrup side. it's one side or the other piling in. take a look at the s&p 500. we're down 8% for the quarter. we are sitting just off the highs for the day. i think here's what's important. we're getting a very tech weighting here. tech is doing well. the dow leadership is tech stocks. cisco, apple, and ibm moving the down forward. nike also doing well today. crude stockpiles built. they rose more than analyst expected last week. the xop, which is oil and gas exploration, when the numbers came out at 10:30 kind of dropped initially, and then sort of rallied back very quickly. we've had a lot of this kind of choppy action recently. they can't seem to decide what side of the trade they want to be on.

for the moment we're to the up side. elsewhere, we see health care bouncing back again. the three largest health care etf's are doing very well today. by and large, your biggest health care etf is xlv. that's the s&p. they like to slice and dice them. the ibb. the third biggest is actually the pharmaceutical group, pjp. that's although big pharma names. your merck and pfizers. that's got a big following as well. that's been hurt very badly as well. you know we're going to obsess with biotech, but since the last week and a half since hillary clinton made her comments, john boehner resigned, pnp has been under a lot of pressure. those are all the big pharmaceutical stocks. germany, worst quarter we've had. down 11% in four years in germany. looks modestly positive here as we end, but there you see, that's the quarter to date for germany. they have had a re rough time of it over there as well. carl, bye. >> bob, we'll see you in a little bit. bob. some tech news this morning. if you signed up for a

three-month trial of apple music on day one, it's time to pay up perhaps. the first wave expires today. apple will start charging $10 a month for individual plans. $15 a month for family plans, and this comes as apple music, itunes movies, and i books launched today over in china. we've been talking for a while, guys, about what it's going to be like to see this subscription stand on its own legs. john, your thoughts? >> i am one of those people that signed up on the very first day, and immediately turned off automatic renewals because i'm actually -- i'm not going to pay $10 a month for this. i don't think i'm a typical consumer, though. i get through sirius-xm that has a streaming service. i use the streaming service. i don't want to pay another $10 a month. i've got kind of subscription fatigue. between netflix and xm and all the other stuff that wants to charge you nickel and dime you this much here and there. >> apple will say it's not a skrepgs.

it's a membership. it's exclusive. >> will they make a difference. >> john just said everything. a different way than i would say it. he streams everything. apple makes living by downloads. that business is going the way of dvd's and cd's. it's over. in order for apple to stay music relevant, they're going to have to have a music service. they may have gotten it right or wrong. it may need to be tweaked. maybe $10 a month. tomorrow they could buy spotify and pandora and not know they wrote the check. >> they want you in apple

prison. >> steve jobs was not a genius at everything, and he got music terribly wrong the first time. the first time he messed up and went back and did itunes. for a long time he said people want to own their music. might be the oel man who actually still does want to own certain pieces of my music. i'm not saying i'm representative of people at large. the millenials like kayla here. need to pay attention to kayla, not me. >> consumers are clear. they've demonstrated that they are way more interesting in access than ownership now, and the trend is very clear.

i don't think i'm going to renew my apple -- i can say out loud to the world, i'm not doing it. but at some point they will get me back. if it's easy. one of the things apple does great is make lime frictionless. to the level that they can make music subscription frictionless, all good. if they can't -- >> we'll talk more about that and what that means later on, i'm sure. in the meantime, the first model x from tesla has been delivered. the suv cost $132,000 minimum to get your hands on one. >> shares of tesla having a decent morning and a pretty good take, of course. the dow up 200 points or so. a lot of attention to the design. >> first off, i was wrong, carl. i was wrong. phil lebeau has set me straight.

the sensors, they won't bump into anything. the kids will be able to get into the car in the wintertime. elan musk, of course, has thought of everything. if he could kolonnize mars, he can get my kids into the car. i should have known. >> i like the fact that the audience applauded the door like they applauded the lanyard on the ipod back in the day. this was theatrical and awesome. the most important thing that happened with this tesla launch is what happened -- what's happening in silicon valley. if you look at what google is doing with driverless cars, if you are looking at what tesla is doing, looking closely at what tesla is doing, and thn you look a little to the east, you notice detroit is sitting on its hands. i got to wonder, this is fascinating to me. this fantastic -- it's inspirational innovation going on. i don't know. i'm wondering where the guys who are selling cars are. this is so reminisce ebt of the old railroad story. if they weren't in the railroad business or the transportation business, the guys who are in

the car business feel like here in the car business, and silicon valley feels like they're in the let's get it done in the future business. >> i don't think gm would have an easy sell. they're saying we'll have a car three years from now that's going to take eight to 12 months to deliver. this was promised late 2013. detroit couldn't get away with that. >> i don't know the answer to that if it was this clientele, right? this group, it's a lifestyle choice. they say i want 132,000 crossover that hes electric. that is a specific client. >> detroit has to sell specific cars. the f 150 is a very interesting thing. they can sell all the ford focuses that they can make.

they don't make enough money off of them. you sell escalades. you are making money. cadillacs? not so much. they have a different set of problems, to be sure. my question is inwrnovationinno inspiration. >> the danger is that silicon valley is making cars for people who will never really exist en masse. it's the bell lab xerox park danger. those are great innovations. who are you going to sell them to? there are a few people around here that can look at that and say, yeah, i'm going to do it. for most people that's eight to ten cars. not one. >> again, somebody somewhere has to say it's a world where energy is important, where climate change is important, where inwroe vegas is important, where self-driving cars for safety are important. would i love to see that. it just makes sense. could g m'baye tesla? i'll just sit here. >> could tesla buy gm?

>> that's a -- that's -- i was waiting for you to say that. >> it's always good to see you. >> when we come back this morning, a cnbc exclusive you do not want to miss. our sarah eisen sits down with imf managing director christine lagarde, and a new device from tivo says you can skip all the commercials with the press of a button, but is that time worth your money? walt mossburg will have his review. we're keeping an eye on the dow rally that continues to 200 points. s&p up 26. slightly off the highs. don't go away. this bale of hay cannot be controlled. when a wildfire raged through elkhorn ranch, the sudden loss of pasture became a serious problem for a family business. faced with horses that needed feeding and a texas drought that sent hay prices soaring, the owners had to act fast. thankfully, mary miller banks with chase for business.

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zimplt tivo unveiling tivo bolt this morning. the dvr pioneer now targeting cord cutters and further embracing streaming. joining us read code editor at large and executive editor at verge walt mossberg. you seem to like it despite a few quirks. perhaps they might oversell the commercial skipping a little bit because it only works on certain channels, but, i mean, overall is this the future of dvr's? >> oh, wrau. it's -- john, it's the future of dvr's, and it's the future in particular, i think, for people who have not cut the cord. i mean, obviously we can see that the trend is clearly towards cutting the cord, but saying the trend is toward that

and saying most people have done it are a few different things. most people are still watching regular cable and a lot of those people have another box, like an apple t or roku or something. for a wheel now tivo has tried to combine those. this time i think they've put a sufficiently faster processor and software platform in there that it's very smooth. it works really well. they've integrated the search. >> whether it's amazon or whatever. you can choose where you want to watch it. all of that is good. the commercial skipping, i think, though, is really pretty cool for those that still watch cable. you can use that money you're saving by not subscribing to apple music.

they're all big broadcast networks. most of the major cable drama kind of networks. it covers a lot of territory, and it's amazing because you know -- as you know very well, commercials are done in blocks. you can't always tell how long the block of commercials is going to be in your fast forwarding or whatever. this thing, you hit one button, boom, it is tagged behind the scenes, and it goes right back to the next actual part of the show. >> how does it speed up compressed time without making it sound like alvin and the chipmunks? >> i've seen this with other pieces of software. they have audio pitch control. it's pretty amazing. i mean, the voices sound pretty much normal. if it was being done on this show right now, we would be

moving a little bit faster, but we're not moving a whole lot. this is not an action show yet. and our voices would sound pretty much normal. i got to say, it allows you on certain kinds of shows depending on your taste to watch it 30% faster. >> you'll be able to watch that every minute of the intended content of that show in a lot less time. >> i'm wonder if anything you think this is a meaningful enough product to get consumers to spend that type of money on something when most cable packages give you a very affordable dvr option as it is.

>> well, first of all, i'm not a student of every cable package, but when you add up the rental cost of the box and the dvr charge, it may not be quite as affordable as you think. this is a premium product. there's no doubt about it. your cable box from time warner, wherever it is, that you have, kayla, is not going to also have amazon and youtube and netflix and that stuff on it. it's not going to have both these commercial skipping features i mentioned. it's definitely a people wrum product. personally, and i said this in the column, i think it's time for them to figure out a way to drop their feed, which is part of what's baked into the price that makes the initial cost as high as it is. it's actually -- it's actually

about $150 price, but they bake the fee in. >> i also dumped divo a couple of mogs months ago. it's subscription fatigue. too much. perhaps this box will be tempting for a lot of people. walt, always great to have you on squawk alley. >> thanks, guys. >> up next, will they stay, or will they go? that's the question people are asking now that apple music's three-month trial is over for those early adopters. plus, stay tuned for our exclusive interview with imf managing director christine lagarde. that's coming up a little bit later on. still watching the markets in rally mode today as we look to end the third quarter. dow, s&p, nasdaq, all up by more than a percent. "squawk alley" back in a moment. surprise!!!!! we heard you got a job as a developer! its official, i work for ge!!

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>> starting today, the free trial ends for apple music on day one. how many of those folks are going to stick around and be paying members? josh lipton has the story. josh. >> users have complained about what they think is a confusing user interface. >> am rolled out guided tours to help ease the confusion. >> despite any criticism apple still pinning its hopes on a catalog of over 30 million songs that apple thinks will win over paying subscribers. an exclusive content from superstars like dre. there's also beats one, the 24-7 global radio station where artists like drake, pharrell, and elton john post shows. now, analysts do expect apple to sign up a lot of members. mark mulligan, a music analyst

with media research, says if we assume a conservative conversion rate of 25%, there could now be about 2.8 million paying subscribers. that would mean apple would be behind 20 million paying subscribers. apple setting its sights on china where it has officially launched apple music after a three-month trial. members will pay only about $1.50, and that is basically in line with what local competitors like ten cent charge for their music services. guys, back to you. >> all right. thanks so much. josh lipton from our headquarters in inglewood today. thanks. with the expiration of major rival spot few out with new initiatives today including coming available to chrome cast and testing targeted ads aimed at both chrome cast and sony

playstation users. >> the last time we spoke to you was in may. i want to talk to you about that. you said at the time apple wasn't necessarily a competitor or a threat to spotify. how have things shown yourself to you the last few months? >> we were excited to have the attention on scream, right? this is a business that we've been in for eight years now. we're the pioneers in streaming music. as you noted, the market leader in this. i think it's really exciting that apple who has a great history of music has also acknowledged that, you know, downloads isn't really the way forward and that streaming is, and to have them join our ecosystem and to raise more attention and help teach more consumers the streaming music is the future, we're really excited about by that. >> streaming music is, of course, the future, but there has been this tension of getting people from the free tier to the paid tier. nielsen in a recent poll found

that 78% of respondents said they would be unlikely to pay for music in the next six months. >> well, the way we think about it is we think that there's a place for both free and paid ecosystem. that's our business model. if you want to listen to spotify for free and listen to ad supported music, can you do that, and if you want to remove the ads and have that music on demand and listen to as many songs as you want without the ads and off line mode or however you want, you can do that for $9.99 a month. for us it's about choice and providing both options to our users. >> acceleration, deceleration? >> there's not a change, and if nothing else, positive acceleration for our business. you know, it's probably to be expected that any time there's a tension around the category and any time anyone is educating the consumer base around streaming,

we found we've been a beneficiary for that. >> i spent a big part of my discretionary budget on albums, on records, and then later on dvd's. has that fallen as a percentage of people's budgets as the new generation? are we just so used to paying a minimum amount? >> the whole concept of streaming, it's still -- we're in real-time sort of creating that future, and there's a lot of the adoption term that's yet to happen, which is why we think it's important to have a free platform. >> you would expect that to shrink over time as a percentage of your overall business? >> i think we feel very excited about both sides of the business growing over time. we're in 58 countries. continue to expand globally. for us we are perceived to get more music to more people around the world. >> tell us about how the roll-out of news and podcasts and some of this comedy content is going. are people going to spot few for that type of content?

>> yes. what's interesting is we've always had a lot of this content on spotify. we've been trying to find ways to surface it to places that matter. to be able to show news around a morning commute or be able to give podcasts around an afternoon break, but we focus on making sure we put the right content in front of the right people at the right time. >> you know more about your customer. you make more money. how has that played out? >> we're hopefully serve willing better ads to the right people, and it's bringing them value as well. >> we work with all the top major brands, and we're doing smarter things. we announced chrome cast it week. you'll be able to use your free spotify and flip it up to chrome cast, and we can target advertise, and same with our relationship with sony playstation where you can listen to spotify on sony playstation. >> was taylor swift a nonevent? >> i this he in retrospect we would love for taylor swift to

understand the value of both our free and pay platform and that her audience loves to listen to music on spotify and one day maybe she'll rejoin us. >> it's always great to have you. thanks for coming in. >> europe is about to close in two minutes. closing out their month end quarter. simon is here. >> you can see a good bounce as we've had in this country as well. good gains for stock market. for the quarter the stock 600 index, the broad index is still down about 9%. a lot of focus today on the fact that the euro zone has edged back into deflation with prices down unexpectedly 1/10 of 1% year on year. more importantly, the core rate of inflation in europe is not as strong as we thought coming through just 0.9%. that's reinvigorated the discussion about when the ecb will think it can get back to a 2% inflation target and, therefore, as those figures come down, whether they will have to expand qe. s&p is suggesting they could well double that beyond september 2016 to the middle of 2018 and 2.4 trillion euros in

total. it's one reason you can see the euro has fallen today. it's also another reason why yields on a lot of the bond markets around europe are under pressure. the spanish yields are at a seven-year low as you can see. on the stock market, the u.k. supermarkets have done extremely well today sainsbury has suggested it will have a better than expected market, and glencore continues to rebound in the wake of monday's 29% loss wlsh still down 7%, though, for the past three sessions, as you can see. news that insiders are buying also helping to knock some of the shorts out. finally, i wanted to bring you an extraordinary speech last night from the canadian who is running the bank of england. mark carney suggesting that climate change or the way that governments adapt to climate change will define financial stability because the vast majority of fossil fuel reserves could be stranded. oil, gas, coal. it is unburnable without expensive carbon capture and

that would, therefore, alter the economics of fossil fuels. he is warning of "huge potential losses for u.k. insurers and investors in general." >> thank you, simon hobbs. when we come back, one of the most powerful women in the world sits down with our sarah eisen in a cnbc scluz. imf managing director christine lagarde is coming up. we're watching the markets. dow up 221. even as oil is just now slipped into the red. more "squawk alley" in a moment. opinions. there's no shortage in this world. who do you trust? whose analysis is accurate? how do you make sense of it all? a simple, unbiased stock score consolidated from the opinions of independent analysts... is that too much to ask? nope. equity summary score, powered by starmine, will help you execute your ideas with speed and conviction.

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sdmrirchlgs hello. i'm sue herrera. here is your cnbc news update at this hour. fighting in the afghan city is intensifying. u.s.-led forces have had their first on the ground clashes with taliban militants who captured the city wrerl this week. hurricane joaquin is gaining power as it heads towards the bahamas. the storm has maximum sustained winds of 80 miles per hour and is expected to hit the island chain tonight before moving towards the mid-atlantic coast. ford is recalling over 342,000 winstar minivans for a second time. the issue involves the car's rear axle. ford had recalled an issue -- now says that initial repair may not work. and bargain hunters, listen up. target says starting tomorrow it

will match its on-line prices with over two dozen on-line competitors, including wal-mart and amazon. while the announcement comes ahead of the holiday season, target says that move is permanent. could be a game changer. and that's our cnbc news update this hour. back to "squawk alley" and john. >> thanks, sue. let's get to the cme group. rick santelli with the santelli exchange. >> thanks, swron. this will be a two-parter. first we're going talk about elevator rides. when you are going up, let's say, to the 30th floor, and the elevator doors open on the fifth floor where you are standing, but the arrow says down, you can certainly get on, and after stopping at a few floors on the way down, the elevator reverse and go back up. you will eventually fwet to your destination, but, of course, you are better off getting on five on your way to 20. on five the light goes on and says up. what does this have to do with markets? everything. you know, buy high. sell higher is not what you hear

from most brokers. that used to be a battle cry to a famous trader here in chicago called richard dennis. he liked it when markets were moving higher and strong. he would buy high, sell higher. markets were weak and selling down, he would say sell lower and buy lower. okay? versus buy dips. it's kind of your elevator ride. how do you make the decision which to do? it's highly correlated with time. a day trader will be getting on and off the elevator a lot no matter where it is and which direction it's going, trying to handicap the floors. if you are a long tv term investor, maybe you are 30 and you don't plan to tweak your stock. make them get off whenever the elevator door opens. second part, of course, we are all looking forward to sarah eisen's interview with christine lagarde, but i have a couple of things out of her speech i want to hit quickly. put it on the screen. the pros ticket of rising u.s. rates has already contributed to hire financing costs for some borrowe borrowers. this process, however complicated by structural change in the fixed income markets,

which shall become less liquid and more fragile." this is about foundations, and it's not just about interest rates. it's about everything. since the crisis, a lot of the structural issues, when you want to fix a foundation, they are structural issues, and they take a long time. many of the reforms that europe needs to do haven't even really begun in ernest. this many years after the crisis. the fact that we need to raise interest rates, it's going to make a volatile market in a lot of things, commodities, foreign exchange, we don't have time to tweak the foundation. we don't have time to work on it. this u.n. type way to attack the markets via individual central banks, we can't get our own central bank to agree much less bring in groups like the imf in. they're smart people, but maybe our central bank ought to think about more about our economy and the things that will clean up structurally in time to normalize. i have a long line of time to do that. john fort, back to you. >> all right. thanks, rick. a lot to think about.

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>> what's the latest is this. >> it's been a year since twitter started testing e-commerce, and now it's rolling back its buy button nationwide for any retailer big or small to sell physical products, digital goods or services all within a tweet. twitter is partnering with all the big e-commerce platforms, shopify, big -- they can also list products on stripe relay. the big retailers already on board include best buy, adidas, and pac sun. twitter is hoping this will create a whole new revenue stream. it will take a cut of transactions and also driving retailers to spend more on ads because they're designed to have a bigger impact on driving

sales. pin all look to make the ads more powerful ahead of this big holiday shopping season. of course, there's also a lot of conversation about twitter trying to extend tweets beyond 140 characters. >> also, we're waiting for news. >> is the convergence of news about ad week, or are they putting these things in front of the big announcement? >> i don't think that there's any strategy of getting this out ahead of the announcement because i think this has been in the works for a we're. >> getting a lot of attention. we'll watch it. >> when we come back. she will join sarah eisen on the other side of this break. it's one of the most amazing things we build and it doesn't even fly.

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pg&e is dedicated to the community. i love working here because this is my home. oakland is my home. this is where i'm raising my children so it's important to me to make sure my family and friends have the power and energy that we provide. this is very personal to me. it makes me work a lot harder knowing that this is my community. together, we're building a better california. the ihf christine lagarde wrapping up her curtain raiser for the imf world bank nooegt meeting next week. let's go to sarah eisen who is with the manage director this morning. hey, sarah. >> thank you for being here. >> my pleasure. how are you? >> we just heard your speech, and you have been warning about a global growth slowdown for a while now. >> yep. >> how much are we talking about? what kind of slowdown are we looking at? >> there is recovery. don't get me wrong, but it is definitely slowing down, and it

is less than the recovery we had last year, and we don't forecast next year to be much more than what we eventually end up with this year. >> i know because of the uncertainty around emerging markets and china, you have asked the federal reserve to be patient and hold off. you must have been happy that they did not raise rates a few weeks ago. >> i didn't -- i wouldn't dare ask the federal reserve to do certain things. as far as the fed is concerned, we are very pleased to see the fact that the decision will be data dependent. we think that's very, very good. we don't see much movement on the inflation front, nor on the wages front, so we also are very interested to see that the international scene is also perceived as likely to have domestic affect and may have been factored into the thinking. we're want asking. we're saying data dependent, perfect.

>> you do previously say perhaps it would be prudent to wait until next year. >> we said that the best thing is to move and not to have to move back. when the data and the information are -- when there is certainty, then fine. >> we don't see it. i don't think the fed is seeing it either. >> janet yellen is still talking about a rate increase this year. would that be a mistake? >> i wouldn't say that. i would say that, again, let's make sure that it is data-dependent. if the data are not telling that story of inflation rising a bit by december, then why do it in december? i think the chairman yellen was right to say it should be data-dependent. she's gone into great details to explain what data, how it should be analyze and so on and so forth. we were very impressed and happy with that. >> well, some might say it's

just one little hike off of zero. 25 basis points. still very easy policy. very accommodative. what are you so worried about? >> we're not worried, but we think that the transition has to be managed properly both at source, no doubt it will be, but also at the receiving end as well. those decisions have spillover effects. they have ramifications across the world. it might be a 25% -- 25 basis points increase, which is very low. you are right. it's a movement away from a trend that we have seen for nine years. the fed has not moved up for nine years. if it moves, moves once, it will move another time, and so on and so forth. it's an indication of a great thing. the u.s. economy is doing better. supe superb. it has also, you know, spill-away affects outside, and it has an impact on exchange rates. it has an impact on the financial conditions of those who are borrowing elsewhere than

in the united states as well. >> when we think about the spillover, we think emerging markets. we're already seeing some of the carnage there. you mentioned five years of declining growth rates. what would happen to emerging markets when the fed raises rates? >> first of all, let's not forget that the emerging markets and the developing world have been driving growth for the last five years. yes, it does mean declining, but for the last more than five years, actually, they have driven growth. they have been 80% of the growth that we have seen. they're now playing a major role in the global economy, which is why those spillovers and spillback affects are so important. you know, financial terms, are going to be different, and those who have borrowed in u.s. dollars, for instance, are going to, you know, feel the consequences of that change of interest rates going forward,

and there will be increased volatility. i think some is already priced in, but there will be some. >> some more pain ahead for emerge markets. >> some more volatility, and some more, you know, evolution both in terms of financing conditions as well as exchange rates. yes. >> you warned in your speech just now of corporate failures. is that one of the risks you're looking at? >> it is. it is one of them. the emerging market economies have seen the culprits accumulate a lot of debt. debt to finance investment, dote finance infrastructure. they are much more leveraged than they were a few years back. that is a potential risk. one that they have to hedge against and, you know, we don't have a lot of information in details about the hedging policies of those. it's one thing where we say to the policymakers, through the governments of those countries, watch out, look into that, and make sure that there is -- there are precautions taken, and you have a system in place,

including the judicial, the legal system, and the safety net that is are in place to address that potential risk. >> china has been a big source of anxiety for global investors on this emerging markets slowdown. help driving the meerjing markets slowdown. you have actually been relatively upbeat about china, that they have it under control. you called it a welcome transition. how can you be so sure that they are able to manage the slowdown? >> we are seeing it as a necessary and healthy transition. one that many have called for for many years. from being more domestically focused than export driven. from being more determined by market rules. all of those are massive transitions. they are happening, and they are taking place, and they are surprising the world. a lot of investors have been taken a bit by surprise in the

course of the summer by what they saw, but that is exactly what was expected, what we regard as necessary and healthy. on china, we more or less maintain our forecast for this year and for next we'year. what we are seeing is a lot of spillover effects which certainly we would not have seen ten years ago. the trade channels, the investment channels, the market channels, the commodity channel, all of that is, you know, conducing the consequences of this necessary slowdown. we have to adjust. we have to manage that transition. >> on commodities, i mean, it's one thing to have commodity prices falling, but now you are looking at all sorts of damage from glencore to brazil. i mean, does the -- what you call prolonged, so it sounds like you expect the commodities slump to continue, start to worry you some? >> if you look at the evolution both in terms of metal prices, oil prices, food prices -- less so food, but on the other ones,

there's a very strong correlation between the gradual slowdown of china and the -- not just recent, but the decline of commodity prices over the last five years. clearly, there will be less commodity addressed through exporters. i think it's a fact that the world has to get used to, and that the policymakers have to adjust to, diversifying the economies, hedging against the risk, checking that they have all the macropredeshl tools to make sure that what happens in the corporate world does not translate immediately to the banking world and then to the sovereign.

>> they have looked a little exuberant. you would never use the world bubble, but some do. now we have corrected, and we're seeing all sorts of violent swings, markets in turmoil. that's necessary and probably quite healthy adjustment. we are going to face that reality. what i'm more concerned about is what impact it has on people, what impact it has on the real economy, you know, whether people are going to keep their jobs, whether the corporates are going to be able to readjust and diversify. i think that's far more important and more long-term. >> you think it's a risk to the u.s. economy, what's happening with financial stability? >> i think this shows financial

stability, and will have more direct impact outside the united states. that's why we believe it would help reinforce confidence and predictability. >> we haven't heard from you since the greek resolution, nonresolution. another epic showdown over the summer over greek debt. hundreds of billions of dollars have been spent bailing out greece, including some from the imf. has the greek crisis been solved, or has the can just been kicked down the road even farther? >> you know, the latest development was mid-august. i remember clearly. we are -- we spent quite a bit of time on the conference calls in the middle of the summer. there have been more recent developments. i think the political. >> the elections that took place ten days ago and the formation of the new government are

certainly stability factors in the greek landscape, and i certainly hope that it will help to implement the reforms that they have negotiated in the course of the summer. it's, again, going to be where is the implementation, how quickly, and as far as the imf is concerned, we are prepared to engage, you know, under certain conditions. >> you wanted a debt write-down, and so did many others. germany blocked that. are the german policies and the german mentality hurting the rest of europe? >> we are talking about debt restructuring. that can only take place if there is resciprocity. that is if the greek people actually implement the reforms and go towards, you know, more fiscal stability.

a reform of the old clientele-based system. if they take serious decisions on the pension front, then clearly on the other side the partners have to look at alleviating the burden of debt over a period of time. wrau. >> let's talk about the problems here in the u.s. the political issues in the u.s. now that house speaker boehner has stepped down. we're facing another looming shutdown dead looirn in the next 12 hours and potential debt ceiling one come next fall later in the fall or even in the winter. are the political problems and uncertainties here a headwind to growth and what has been the global bright spot for the imf, which is the u.s.? >> i remember when i joined. we had the same issues. the more it changes, the more it is the same, and i'm just wondering whether the economic key players are not getting used to it, which would be a pity because i think, you know, policy make sure are playing a

role in building confidence, removing uncertainty, giving predictability to a system. i hope that is the case. uncertainty is not helpful. when we see them leading the global charge by having a reasonably good growth, it's a pity not to leverage that. >> what do you think of donald trump? >> i don't know him personally. >> well, you do. i know you don't like to play politics, but the imf does look at the fiscal policies of countries. in fact, you just said that the u.s. needs an urgent sound fiscal policy along with japan. i just wonder what the economic and fiscal prospects of this country would be under a president trump? >> we're saying for the fiscal policy that the country needs a medium term anchor, and there are clouds on the horizon.

whether it's entitlement, whether it's pension, whether it's the aging population that requires health services and so on and so forth. it needs to be properly anchored. we've been saying that for the last three or four years, and i repeat it. it needs to be anchored, which doesn't mean to say we need absolute austerity today. >> finally, i want to ask about you yourself. you're actually in your final year as managing director. term ends -- >> does it look like it? yes, probably. >> we have a new crisis to talk about every time we go into one of these semi-annual meetings. what do you hope to accomplish over the next few months, and then what's next? >> well, over the next week, actually, because the 188 members will be meeting in peru for the first time in the last 50 years, and i hope that they talk about the necessity of the upgrade of their policies. i think many of them are doing some right things, but it needs to be upgraded in view of the urgency and in view of the size of challenges that we are facing. we will push that very strongly,

and it needs to be a elective upgrade. it can't be just i'm doing my own things in my own backyard. it's a collective issue. >> well, hopefully we'll talk to you a few more times before that. thank you very much, as always. madam christine lagarde, the managing director of the imf. back to you. >> thank you to you, sarah eisen. it is slowing, the recovery, meaning the imf is not asking the fed not to raise. we said the best thing is to move and then not to have to move back. then saying it would be a pity if lawmakers are getting used to the dysfunction surrounding the replacement, for instance, of the speaker of the house. >> yeah. saying we should leverage the u.s.'s relative strength in this global economy. quite a few important comments. including that this market downturn overall looks healthy, but she's concerned about the impact on leg people. >> even suggest, i thought was curious, that emerging markets exposure to rising intus rates

in her view, some of the volatility. they said it has been priced in. we will see. of course, we're closing out the quarter. nice morning rally. it's fading as we speak. we're up about 160 points on the dow. that's well below session highs. we did get some bearish oil inventory numbers. we'll be watching the afternoon session. let's get back to the judge with icahn and the half. >> carl, thank you so much. welcome to "the halftime show." by now you know about carl icahn's warning of danger ahead. we'll speak to him live in just a few moments about his much talked about video. first, the final trading day of the third quarter. stocks bouncing. the question is where do we go from here? is this the start of a bear market? josh, you write in a well written column, i might add, in "fortune magazine" are you ready for the next bear market? is that what this is? >> well, you know, i think