50 percent of the exports go to the continents. that is essentially preferencele statement. they have to make an investment and they need to scramble because the economy is going to be in deep trouble. as you say, you unless the european union changes, this is going to happen again. so it's a shame, but we're seeing the small -- this dismantling of the european project at the time when asia is coming together as a region and block, so it's not a good thing. i think that they over shot rick. i think that they went too far and it's a political union, and they just over played their hand. >> i would not agree more, and

coming from someone that's in government there's more than you and other others. >> thank you again. >> kelly, back to you. and breaking news we're in the last hour of a really rough morning on wall street as stocks continue to tumble. we're here the session lows and the dow is down more than 30 points and the s&p is down and i am john and kayla is down by the financial hub of london and tracking the latest on brexit and also in london is wilford frost. u.s. banks following the european banks down in the s&p 500 and all major industries trading below the 50 and hyundai moving average. joining us now is the chief economist and here is the post nine and then the chief investment strategy and then it's the asset and then the

gentlemen, thank you so much for being here with us this morning. joe, i want to talk about what investors should do from here. you say that you want to stay at a high quality fixed income. in terms like this, it seems like we also get that work day and the work day is down ten percent or more for the week and the text stocks and nearly that much and nobody says to buy these kinds of stocks when we get this kind of hit. why not pick up some of those depressed name sns. >> well i think investors and smart investors and those that are disciplined are taking advantage because they're following a rebound and strategy. i mean we went into the year with a guarded and muted outlook for the return on the markets, and with that said we were not certainly embarrassed that investors should withdrawal within the market. it's going to have decisiiscipl

and fixed income. the smart investors are rebounding today. >> okay. john, you say now you is the time to seek babies and that's kind of a horrifying image. we work with them. help to spot the babies. is that the european exposure that is -- okay. hold that thought. we're going go and there are questions for the prime minister at the moment. >> for the submarines before he leaves office. >> i think it's very clear when it comes to numbers he owns four submarines and he makes a good point and that's when the house voted it was by a margin of six to one to hold that referendum. we're obviously coming forward with the plan and other decisions that are made in the remainder of this parliament

session. >> i want to thank the prime minister for his session and throughout that time there were things that he and i disagreed on, but i appreciated his civility and good humor on display today and the ability that's rare in politics to see politics from other people's points of view. i any that all of them insure the stability that was so necessary as they were recovering from the economic shocks in 2008. for that, he should be thanked. only members of the conservative party constituting 0.003 percent of the total election should only be people that have a say with new priorities and different to the ones that he

got selected on last year. >> well, first of all let me thank him for the kind words. we did thank him and he paid a large and political aprice for the support that he gave the government. i do think that it's the stability and real process, and i thank him for that. when i thank him and it will take place and the other points, skpst all parties for electing the leader that arrive and the only other point that i make is that in the coalition agreement we believe that the act and we believe that many of them have deals act. it's a good measure, and as a result i think that a new prime minister take office and for them to decide to fulfill the parliament or something else.

>> addressing the issue and that was nick who was part of the government that made the suggestion and he seemed to indicate maybe not straight away. we're still here with the gue s guests. >> we have to say that we're in the eye of the storm. when we rook back historically, when the eye of the storm occurs, in hindsight is always one of the best times to pick up what thrown out. we have to think that the markets here for the investors are offering for months for now. >> how panicly is it in the u.s.? you're at a three month low and then handling it for a while now. do you think that it's too early to think it's time to start to

buy it? >> we would have to say that it's a good time right now not to back up the truck, but to to build the shopping list. and then that's in there and then start to layer in so to speak and these conditions are there and the u.s. market handling with with the resilience and we would have to think probably as early as midweek to late in the week se we should see a nice rally here and that's likely tested. this is a longer term deal and the problem is that gun vote and pop lichl really showed a large hole that has to be dealt with with to access the damage. it would appear to me that the british is doing the right thing in moving forward and addressing the issueses. >> well, as we're trying to figure out how to access the damage, the banks are a natural first place for the investors to

take out the frustration. they're after all under any economy, and i am wondering if you're feeling comfortable in jumping back in the u.s. or the european banks and giving how much we don't know how this is going to play out. >> i would have to say that the they're quit comfortable even with the uncertainty that's out there because the situation is being addressed. if people were not looking for what the problem was and not speaking as we saw the communication in parliament. it's a function when you have something go wrong, if you bury it or don't address it. we have seen that happen in japan in 1989 and after the tsunami and then the leaking of the rad owe activity. if you don't deal with it, it's going to haunt you for years. if you deal with with it, just consider 2008 was followed by 2 20009 and that was not a bad

year if you look at the market. >> they say that we're in the eye of the storm now and that assumes that it's not hurricane season. for me the question is what happens in the rest of the eu? do other countries start to talk about getting out of the union and the scott land press to stay in the uk. how do you feel about the possibilities from here if this is the only shot that the markets are going to take? >> well, it's really who's next? i think that it's important two things. one is that they will not go away over night. secondly is to appreciate that there's great support for the eu and other members of the country and others in the uk. we were very concerned about the market leading up to last week, and i think that it's fair to say that the market is involving and the more likely that we will see the policy responses out of the eu and then the central

bank. >> just look at the span irk selection and then we have a good vote there. it was not totally clear cut, but it did show and i think what the spanish got shaken up on what we saw happen in the uk. that was a good outcoming from all of this mess that we have seen over the last few days. >> yeah, we want to see people stay in the eu and thank you joey davis from john. before we go break let's get to a big question. what happens next in the uk? well, frost is live in london with more on this very question. >> reporter: kelly, this sums it up with the speech. the first one is that he says that he did not think that it was a right one for the uk and

despite the losing side, and then it's perhaps the idea of the second referendum. he made it clear that when to invoke the article 50 and begin and that would only happen in place and then the part confirmed that it would be by the start of september. he also spoke about bringing the country together and stamping out the hate crimes. he did site it and said that the economy and the banks are not stronger than they were when they took office in 2010. just to come back to the part of the speech that you dipped back into in the presentation and that it's possible to have a early general election and the next one scheduled for 2020 and the next one i would say is george osborne and the campaign er and prime minister is very clear and remained campaign er and they came out despite on the

losing side and must move forward and added to that the next prime minister is up to him. there's a lot of callings and questions and heated debate in places like the house of commons behind me at the moment. the decision to move forward with this and when the start to negotiation is the decision of the next prime minister that will come by early september. kelly? >> i will take it. seems that cameron is is done in calling connections right now. kayla is in london with a closer look. kayla? >> well with, john some of the stocks did start to move when the former prime minister was ste speaking. they have not trimmed the losses in my way and even though that they're off the lows of the day, the carnage is undeniable and

they lost $2 trillion and that's the worst dollar day and then the banks alone have begin up a hundredle billion dollars in the market cap. while they're lingering concerns, what's on the balance sheet and who the counter parties are, this time it seems much much much broad er than the last time that we were talking at risk in the uk financial system. that was back in february when we saw the sell off and volatility and we worried about the banks exposures and this time around there's the session and it could happen as early as 2017. you have the prospect of early easing and from the sent is ral banks. that's pretty much a given at this point and then the banks earnings are going to get hit from that and then the access to the market. that's a cost affective way to move the people and do business across all of europe. it's really unclear whether the

uk and all of the companies would be able to keep the access to that market and who is in power come this fall? what sort of deal to do the business in the eu. that's the biggest question that the people are raising in the wake of the voechlt tate. they don't get much money from the uk and they do have heavy exposure and more capitalized than the uk. later on this week we will get the results from the stress test and that's going show how much capital and how healthy they are. we get that in a couple of days and the red arrows across the board. >> thank you. coming up to leave the union and continuing to weigh across the market. the u.s. transports are down 265 points and then there's the

nasdaq down as you were pointing out and one of the worst performers today and then the same pressure. what sectors could stand to benefit? more on that when squawk alley returns.

welcome back. tough times for the market. the next guest thinks that this could be a boom for the sector and he is the ce skporks cofounder of the fire apps and

then the wishful thinking or why could they benefit here? >> well, obviously since they're all in the clouds is attached to the nations as is the other companies. if you look at the companies like next week and a great companies of ours and they're not as flexible. they're much more flexible and able the do it. on top of it they're much expecting about the technology that can help them understand and manage and communicate the currency because as we all know at the end of the day they sew that it's about currency. what are the moves and what company is currency wear and what is not? >> yeah, i see that you're doing this this for the period. i want the get back to the original point and a lot of it has come out of the u can k and then the u.s. is ham strung

sometimes by the banking infrastructure. walk us through the next year and beyond and who particularly does it stand to benefit? >> well, first of all, we supply the companies that understand that. it's a data problem and it's massive. you have to select the data and know where the exposure is going. now that you're thinking of the uk a lot of sen tix over there. they're thinking of how to negotiate with the u.s. and others. at the end of the day the companies are flexible and they're thinking of how to address that within germany and china. big issues coming out there and then how to address this. >> moving beyond that, let's talk about some other industries that might benefit from this brexit talk. it's going o to be a while before we get any concrete move

and within the uk and saying not until there's a new prime men administer and we might expect that to happen until the fall, would they invoke the article 50? in the certain period between now and then, what sort of businesses and stocks beyond 50 do you expect to benefit? >> well, it's interesting about that is that they're most of these sectors are actually all have one thing in common and it's currency risks. you have to look at which company actually understands currency and is managing it. what is going to happen is that the analysts is going to call on the calls and ask them very specific questions on where are they and then how it's impacting the revenue and then the expenses at the end of the day and then the earnings. the companies are going to have a good answer to this and that's where they're getting answers on

questions where they don't get it strait out. >> yeah, and reminding companies to open the lines and anybody want to name before we let you go? >> well, i like to say the east side and text sectors. a lot of companies are aware. they should look into the earnings call. >> okay. great. thanks for joinings us and that's wolf gang. a look at the future of the u.s. economy in the eyes of jake lou and u.s. and european banks among the biggest losers today. check it out down 23 percent again and then hsbc under pressure gain and then it's limits away from the close. we will bring that to you live in less than ten minutes. stay with us. ♪

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economy? steve spoke to jake lou this morning. >> yeah good morning. the first comments after the city man and seeing the exclusive interview and saying that he understands that the asset prices have the adjust after the unexpected votes by britain to leave the european union. there's no sense of the financial crisis right now and that trade and markets has been quarterly and will end up being ahead of the u.s. economy. >> there's no question that this is an additional head wind, but i think that it's something that we can manage through and europe and the uk can manage through. you have seen the policy makers act in a responsible way and there's no sense of a financial crisis developing. >> they're saying that a big part of that reason is because of the laquidity and the provisions by the central banks in the uk, u.s. and he did say

that the important differences when it comes to the european banks verses the u.s. banks. it was the response when i asked about the evaluations when i asked about the european banks. >> the market is reflecting, you know, the fact that not all institutions have the same degree of capital and soundness. i think that there are the tools in place to manage this and also the longer term challenge that all of the financial systems are sound as possibility. we have said for some time that we made the process and others need to catch up. >> lou, also noted that the treasury is watching very closely. o o offici o fishfths from the imf are tryg to do their best and suggest that the issue of global communication and trade

agreement are not off the rails. now to london. >> great. thank you so much steve for bringing us the exclusive interview this morning. keeping with the evaluations of the you peuropean banks and som still getting hit and what after shocks lay ahead for the global financial system. joins us is former assistant secretary lee sacks that's chairman and cofounder and lee, it's great to have your in sights on day like today. >> kayla, thanks for having me. good to be with you. >> perhaps you're in charge of the obama administration to the crisis and we just heard secretary lou say that this is not a financial crisis. are there any parallels or differences that you would highlight in the situation compare today the 2008? >> well, i think secretary lou

is right that this is not air financial crisis. it's obviously a political crisis. it's got important economic implications and at this point, it's not -- it's not a financial crisis. things that we used to look for to indicate that is changes is the changes in credit spreads and the laquidity drying up. we're not seeing any meaningful indicators like that at this point. >> so we're not seeing it at this point, but the key question is how quickly some of those metrics change? is it something that could over night or in a week. do you have in the time for the financial institutions to prepare for that sort of change? >> i mean these things can change. at any point in time you can

craft a scenario that does not look very good. does not look very attractive. in terms of our own institutions here, the financial foundations or the foundations in the financial systems are much robust now than they were in 0 2008 and 2009. they have more laquidity and they do not have the prioritary trading positions that they did back then. this is a very different scenario. sure things can can change. things can can change and when you talk to people on the fines and trading partners, you really are not seeing that stress.

>> we did see and the bank of england said that they had money to put with it. >> look, gain i don't see that now h. you don't want to be -- we all have to be very careful on being complacent. i don't see the need for a lifeline as you put it right now. again, the situation here is very different. we're not seeing runs on financial institutions. it's very important and you have been -- i think that you were talking earlier in the show obviously stock prices of many of these banks and other institutions have declined in

the last couple of trading days, but again they're credit spreads are anot meaningfully growing out. you're not worried of people taking the money out of banks. sure, could i craft this and something like that is necessary? sure. >> with the perspective you have to keep on checking in on this. we appreciate you checking in today. >> my pleasure. good to be with you. >> indeed. thank you also. european markets just closed moments ago and it's a matter of that and then we're here to give us the details. simon? >> yeah, down to about eight

percent over two sessions and the uk is known as badly and it's still protected as a national index and then big tobacco and big farmer. it's within the uk and the brexit vote that you see the action. the last guest was talking about the declines and then sure enough as you look they're roughly down a third in the market count during the course of the last two session ises. so they clearly -- you have 26 percent and 28 percent. that's the decline and they're not necessarily the most uk focused and today you have jp morgan talking skpand it could a problem. in the meantime anything that you're holding and the dominations is clearly valuing in the value. this is a clear move and you

have lost five in the session ises today. you have the move is because the u can k is a less of an attractive area because of the inflation rate. they're pushing up up and pushing down the tinier and that's trading below one percent to a record low, and that's going to impact everything else as well. partly as golden for example says that not only will the bank of england cut a rate, but there's a mild recession and then they think that it will knock 3 percent of gdp. they're coming out and the warning to the market and if you have been in london you know it very well and then the real-estate players have said that there's not a housing or a real-estate recovery in terms of the volume that they expected in the second half of the year. check out the house builders. confidence among consumers is the first lightly to be affected. this is a two session chart and down 40 percent a piece or

38 percent. i could show you more but that's an example. some of the stops are getting hit today and then the warning today. you have easy and then the huge european airline warning and then these are two day charts and down 30 percent. this is the operator of the tunnel and then london and paris. it's in the two sessions and down some 30 percent as well. let's have a look at the rest of the banks in europe. again, others say that maybe you don't want to hold investment bad banks because you just don't know at the moment. guys back to you. >> thank you sigh mochbmon. up next the nasdaq the worst performer in the industry and down about two and a half percent. what it means for names that you

know like facebook, google and netflix. we will dig into that many in a moment.

hi everybody. here is your cnbc update this hour. secretary of state kerry is in brussels after the fall out of leaving the union. they talked the general ahead of a summit meeting next month. the meeting is now as important as ever. five people are dead and 15 people wounded after a suicide

bombing the in lebanon. the national news agency says that they we that others were involved in the attack. kim jong involved in military exercises. no location of the date of the exercises. soccer star messi say that is she quitting the national team. this after they lost a final three years in a row and losing on penalty kicks. he missed one of the penalty kicks that lead to the team's defeat. now, that's the update for this hour and back downtown. >> thank you. what kind of blow it will deal to internet giant like facebook and netflix. joining us from los angeles with a look. julia? >> reporter: yeah, it's not bad

that people will stop using the facebook or google but it could hurt the growth and consumer and advertising spending as well as courage si exchange. now, they're raising concern and then the evaluations and then the netflix and then facebook generated 24 percent of the revenue in europe last year. warning that slowing european demand and translation issues could hurt the facebook evaluation. now, for netflix it's the caution that all of the growth story and capital investment is offshore. raising the concern is the impact and then the currency. netflix does not breakout the currency but 50 percent comes from europe and a third of that from the uk. then there's the uncertainty about how changes to tech companies private regulations play out. the u can k has pushed them to get a lighter touch on regulating google and the

concerns of the light of france and germany may push. now, googles european exposure maybe protected thank os to the sophisticated currency. well, they point to sales force.com and then there's long term sales contracts. kelly, back over to you. >> okay. the sectoral falling and should investors fear with the brexit exit ahead. now the cofounder of the elevation partners and then tucking in the tie dyed shirt. >> let me just take care of that now, john. >> let's talk about the impact of the volatility and a number of smaller stocks that might be more risky and then the work day

down 11 percent for the week. are there opportunities here or has this added issue over in europe caused some real problems for the countries looking to expand internationally. >> john, the way that you have to look at it is that when ever there's a shock to the system is to take the chest list out. are the banks going to be okay. we run the checklist and get back to business. that's exactly the right strategy. i think that everybody is doing that this time. i am not sure how it's going to come out, but i do think that we have to look at the problem differently than we would a typical market correction or set back from the news. that's that we're seeing a pattern of votes against globalization, and you saw it starting with occupying u.s. five years ago and it's building

every sense. brexit is by far the largest mass action against globalization that we have seen. this is a big deal because to me the people that run the various countries around the world and the people that run the businesses are all used to this post world war ii environment and where it's the engine of the growth and the entire economy. that's clearly running into the political opposition and that may change the game in the ways that we have to add into the risk models and think about differently. >> yeah, approximate but i've been toeigoing with the idea of borders and the process tekt of the uk leading the eu. data is moving freely. the it's not as if the facebook friend in the uk and if you're in the rest of europe are more accessible.

you're going to be able to search on google. >> well, i think that point is well taken. i think the observation that i'm making is our tendency to go and look at them. yes, there's relative winners and losers. again, this is a moment that we need to look at factors that we normally ignore as investors. typically they say that policies will take care of themselves and will not address the economy. if we're going enter a period now where there is less globalization and we're unwinding and we're not going to affect politically and fundamentally at least in the uk and a majority of the voters did not trust them and no sooner was the vote done and it was clear that the people were lying to them about the benefits of the vote. so i they this distrust of the

leadership and then religion and then the sectors of the economy, that distrust is manifesting itself in a way that may actually change the rules of the game. of how to economy works. >> roger -- >> of course the markets will adjust to that, but that's not a risk factor that we have had the worry about. >> how might that bump up against the big u.s. tech companies? will they will be seen as the establishment and the power relief that's exported to the country, or is it a general affect of the growth? >> well, if you look at europe, there's clearly a very different perspective on privacy rules and on the continent that we have in the united states or in the uk. if those perspectives are in the world, that's going to limit some of the opportunities that people like google will have. again, the point that i'm

looking at right now is is that i expect it as investors that we can figure out the strategies and leverage of the short term and what is going on in europe right now. what i don't think that we can protect zbens the political environment shifts and that every year we reduce the level of globalization because of some actions somewhere and if that happens, our whole risked profile has to change. >> indeed. roger, thank you. who missed it my tie dye was that he not name dropped in silicon county. >> well, i will have to name drop and get back at you. >> you're allowed. thank you roger for joining us. as soon as the european stocks closed, we did see a come back. that's 1 ht 4 percent and crude is under pressure and then the nasdaq is lagging 2.3 percent.

rick, what are you watching? silicon valley? >> yeah, well silicon valley. i am watching the markets and how much damage is being done. what was one to expect with this surprised outcome to the uk? it was tie that and there's no alternative. now, it's going to be nana. how do we know when it's done adjusting? we're going to talk about all of that after the break.

coming up on the "halftime report." the full hour as the market sell off once again. we have the game plan for the navigation and volatility. plus four star fund manager and investor bill is going to join us. where does he see the opportunity now amist the turmoil? what's next for the investors? that's and more ahead in the "halftime report." >> thank you. see you shortly. let's get to chicago now and rick santelli. >> good morning and thank you kelly. it's fascinating to watch all of this and i understand that many are are feeling the change. investors probably had the vote wrong and in some way retailing investors or those that don't have it, well maybe the pain is not financial. maybe that's what showed up. what this really is about is

global trade verses global governments. you just turned the tech guest to the same thing. i think that once we get use today that, that the type of volatility that we're see nothing the marketplace as painful hearkens back to the credit crisis and tarp vote and the fact we have had six, seven, eight years of really less than stellar growth. so you have to frame the issue in the following fashion -- voting to leave has given us a case where we can actually see sort of a counterfactual inaction. the one government for one trade just doesn't seem to be a marriage that's going to last. and my guess is over time it will continue to break apart. doesn't mean it has to be as disorderly as the uk. maybe the eurozone, brugssels addressing the uk, less like an angry parent and more like an adult in the room coming up with a way to thread the needle to do

negotiations with the uk in a way that works out for both parties while by showing that leadership could actually cement the other 27 countries from, with sticking with it. that doesn't seem to be the outcome. i wish it would be more of the outcome. in terms of the markets, well, look at a 30-year bond over the last several years in the u.s., ke ca we came close to testing the all-time low, around 220. why do i bring that up? i think the counterfactual outcome showing high correlations with stocks is the problem. one government, one market, mostly the same policy. it's mostly tried to expand everything through debt. that is starting to break apart, and negative interest rates was introduced as part of the medicine. so those are the two issues you need to watch most closely. whether it's the ten-year boom, the two-year in the german yield curve, those big negatives along with a break of correlations in

actuaries give you the early word when we're going to form a new tina into a nina and i think that will happen long before getting into triggering article 50. back to you. >> thank you, rick. coming up, stocks continuing to fall, and here's a look at the s&p heat map. you can see about 9-1 decliners versus advancers today. there are some names in the green, but not many. we're back in a moment. ♪ before a movie star unwittingly gave you a global product endorsement. and millions of women everywhere decided, "i love that shoe." and the company's data center handled the spike in traffic without any drama. before all of this. cdw orchestrated a scalable software defined data center solution using vmware nsx technology. scalability by vmware. orchestration by cdw.

welcome back. the sell-off continuing today. across global markets really deepening around stocks sending the pound to a three decade logan against the dollar. all major indexes, guys, fataki a big hit. >> and basically back to those kind of 2012 all-time lows. why the financials are down as well as just this completely violent moves in currency and capital markets around the world. interesting, 11:30, a little bit of a lift after the european 345shg markets closed. for the u.s. stock market, ttoo orderly for traders to jump in. a pressure in increase until 11:30 as opposed to an irrational get me out type of diematics. >> almost 100 points off the lows in the dow. still down nearly 250 points. interesting, take a look at stocks actually in the green

today, today, at&t, comcast, sprint, verizon, t-mobile. what do they all have in common? >> domestic. >> i try to watch tv shows on some of their services. yes. domestic. with the yield oftentimes, too. >> right. all right. coming up, some of the biggest dow laggards, american express, dupont, jpmorgan and boeing leading the way lower. we're back with more on that in a moment.

welcome back. as we keep an eye on markets this morning, perhaps the main direct impact from britain the vote to leave the european union is on the dollar. the dollar index trades against basket of securities up nearly a point, mike, again today over 96. >> up another percent. not as high as at the beginning of year. heb, january, february, the strong dollar caused pressure and stress around the world. emerging markets. nothing like that unleashed yet. that's what people are focused on. >> and secretary lew, though, indicating not expecting a strong dollar to be a negative for the u.s. economy. >> well, hoping, anyway. oil, by the way, also a negative lately. more pressure felt there, too. >> right. >> i mean obviously the flip side of the dollar, the under

pinning of that february rally, strong yale, weaker dollar, earnings sitting there. see if that changes. >> a number of tech stocks taking it on the chin. smaller ones, western digital, of quite some size, box, see how it pans out. that's it for "squawk alley." from now, noon on the east coast meaning the time for the "squawk alley" report. >> welcome to the "halftime report," simon hobbs in score scott wapner. another big sell-off, investors try to make sense what this means for the markets. this after stocked to raise $2 trillion in market cap on friday. the biggest drop on record as, of course, we trade or traded close to all-time highs. we are off the lows. important to say. we were down 300 points on the dow but have come back. ten-year notes, 1.46 is the yield there. the pound, too, is off its earlier lows. get reaction from our