citing pedestrians may not know a vehicle approaching noiselessly. noise making gadgets are standard but can be switched off manually. the new regulation will make it impossible to disengage the noise maker which will be louder and more recognizable. i like that one. >> good noise. >> thank you, melissa. >> my pleasure. fun being here. >> see you "power lunch," later in the afternoon. make sure you join us tomorrow. "squawk on the street" starts right now. ♪ good thursday morning. welcome to "squawk on the street." ais i'm carl quintanilla with david faber at -- jim cramer at one market. a lot to get to today. imf meeting, hurricane matthew strengthens overnight, more pain for the pound in the uk. jobless claims 249 and oil hits 50 for the first time since

june. road map begins with walmart's annual investor day taking place in arkansas. shares down in the premarket. we've got all the headlines coming out. shares of twitter down hard this morning on reports of google and disney will not make bids for the company. i'll give you the latest on what's actually going on here. and yum taking a hit after yesterday's earnings report. what has the fast food chain moving. and latest on the company's china plan. twitter is taking a hit in the premarket. google and disney will not move ahead with a bid and apple is also unlikely to pursue the company. down 18%. it would be the worst day in over a year. >> yeah, the moves in the stock are truly extraordinary, carl. of course when a process like this becomes public, as of course we made it a few weeks back, the stocks can move all over the place. the only important news this morning, i think, from recode is frankly that google's not involved. i can't confirm that, but that is a significant part of the story, of course if you remember

when i first reported the expressions of interest, salesforce which continues to be aggressive and i know we're going to hear from jim in a minute about benioff and his conversations with him yesterday. and google seen as another potential bidder. now, disney came in but frankly none of us believed disney could do anything of significance certainly at a price recently n inhabited given it was sort of walled off by the world of eps and earnings dilution, conceivably. i'm told there are other potential bidders taking a look. i cannot tell you who they are, unfortunately. haven't been able to figure that out at this point. microsoft indicated not to be one of them. previously indicated facebook not really involved. these things can change but that was the most up-to-date reporting i had on those two names. but i am told by people who are close to the situation that in fact there are beyond salesforce still others taking a look. and remember that's how these

processes work. you come in, you express interest and then you get to take a look before you even choose to make a bid. by the way, these reports that bids are due by the end of this week or next week is not right. they're going to see how that goes and take the bids when they can get them and work with a timeline that can keep this thing as quick as possible but give it the most chance of success. does that mean, well, next 30 days? yeah, probably. somewhere in there. the idea that they want to get it done before earnings is also not necessarily accurate. so that's kind of where we stand at this point, jim. you know, your conversations i'm sure may prove to be more interesting in terms of what it is salesforce really wants or doesn't want here. >> well, look, it's certainly not the company currently configured nor is anyone who works there. i do believe the sticking point is 2-9, that's right, $29. if you don't pay $29, you don't get it. at that price i think marc benioff met a wall of resistance

yesterday from shareholders saying we're going to punish you beyond all reason. unless marc is able to find an outside buyer to go with him or some ability to be able to layoff some of that cost, i think benioff can't do it alone. i understand also that google is out. i also understand disney was never really serious. >> yeah. >> by the way, let's just understand each other. i understand a lot of these people think twitter's destroyed itself over the course of the last year by cutting back, not developing anything and making it so it can't be resurrected by any of the bidders. and that at $29 has been the deal breaker. >> jim, you did talk to benioff about this yesterday. couple of times. let's take a listen to what marc told you on "mad money" last night. >> it's a great product. it's an exciting product. but obviously the business is a lot of challenges, very severe challenges. i can do one thing, wish my good friend jack dorsey well. he's the ceo of that company. it's his job to make that a great company.

it's my job to make salesforce a great company. >> i'm sorry, jim, if you're right on 29, that could be a bridge too far for anybody particularly if you're not in a competitive situation. again, salesforce i think, and i think you know, continues to be intere interested. benioff certainly didn't indicate otherwise. there are other parties as well taking a look. if one maybe were to come forward gets more interesting, but that's a big number, jim. >> look $14 is where all this chatter really started. it's kind of like when linkedin cratered. that's why marc started looking at it. he felt he should have bought linkedin. by the way he has some really tough words, not about nadel at the top, but a lot of underlings at microsoft. but that break is what caused this. now, when twitter broke to $14 suddenly was interesting. completely uninteresting at 24, not because marc doesn't love the product but his shareholders hate it.

that's the word i keep saying. hate. and marc has a lot of good friends of which jack dorsey is one of the good friends. >> how much of this, david, is speculation being driven by someone who wants the price lower for a bargain? or someone who wants the price higher to make their rivals pay up? >> yeah, i mean, listen, when you're in a situation like this particularly when it hits the public realm, all sorts of game planning takes place, some of it in the press itself. we might have gone along our merry way and twitter simply might have announced a deal of some kind. i think a key question continues to be what is the underlying fundamentals of the company going to support in the marketplace? and what are they showing to potential bidders that says, hey, this is why there is great value here. and, you know, jim, when we first did the story about expressions of interest, i think the stock went up 22% that day shot up to these levels. you and i have talked oftentimes about it being a level that perhaps was eclipsing the underlying fundamentals, which we don't really know about.

we're going to see the end of this month just how bad or not bad things really are at the company. >> look, what i'm told is things are really bad. and when that quarter happens, the stock could take another hit. and then anybody who buys it between now and that quarter is liable to look like a complete moron when they see the number. this company once again the way it's being run by part-time ceo jack dorsey is considered to be horrendous from almost all of the large institutions i've been able to check in with. i cannot think of another company that is not having let's say accounting problems, that is as despised as this one. you never hear of dorsey mentioned other than par-time dorsey, part-time dorsey, and that this company needs more help than any ceo can give it. but this part-time thing with square is such a turnoff to people that $29 just seems -- i like that bridge too far. pretty good analogy. >> yeah. jim, one last thing, iger did give some comments yesterday talking about all the content

they have, all the franchises they have. but then he adds, it's almost not enough to have all that stuff unless you have access to your consumer. so what are we supposed to think about content versus distribution being king? >> well, look, i think that he feels he already gets about everything he can about twitter. let's go back on what he really wants. he wants better earnings per share. he wants people to recognize that there's more to the company than espn. he wants to talk about how great shanghai is doing. by the way spend a lot of time with the technology guys who drive the theme parks, they are still on fire. i know that bob wants that to matter more. i think he was never really serious about twitter unless it was dramatically lower. this $29 number that i heard maybe a hundred times yesterday, i don't know, you want to ruin your earnings for two or three years, be my guest. you actually need a warren buffett to partner in this thing, somebody like a heinz where you can layoff some of the expen

expense, because oh, man, this could kill anybody's quarter. anybody. >> carl, when it comes to disney and so many of these media companies, they continue to be focused, as they should be, on this changing landscape we've talked so often about here because it is happening. over the top skinny bundles, the changing nature of the way to deliver video product to your consumer is finally here and changing in significant way. and it's what they are thinking about. it's what they should be thinking about. >> sure. yeah. even taking down giants like live sports, which is interesting to watch. guys, walmart annual investor day today. the dow component reiterating prior guidance for the current fiscal year adding it expects the following year's earnings to be relatively flat. also saying they plan to slow down new store openings and pour new money into its online efforts. jim, they are trying to make sure that the majority of the u.s. population can be delivered to in a day. >> people arecowerring out

here. most companies are trying to equalize what amazon's trying to do. everyone's fearful of amazon. i think walmart is right to do this. i don't know where these estimates came from people felt walmart is going to have a big up year. i know the last couple quarters have been good, but how many times does mcmillan have to say we have to spend in order to keep up. and by the way keep up is code for unless amazon kills us. and amazon's not here. they're 807 miles north of here, but they are the company people are talking about when they're not talking about twitter e. >> anniversary day of the day i believe they gave out in this building and we all had our jaws gape at the guidance and certainly the stock had a rough day that day. >> we also gave them -- we didn't give them high marks for communication either given they had been earlier on our air and failed to disclose that key point. to jim's point, the company has rebounded quite nicely from what was that disappointment one year ago. and seemingly has the confidence

of its shareholders and really the only ones that matter are the walton family who control little more than 50% of the company itself giving them the time at least and the money they may need, jim, to try to fight off that huge challenge that you cite so frequently from the company that i don't want to even say the name because we say it so often. starts with an a. >> maybe we should be saying jet.com. i think walmart is right to slow down brick and mortar. only thing exciting about brick and mortar is pick it up. you can pick it up. by the way, when you get off the desk at walmart, what they are talking about is perishables will not stay in somebody's house when u.p.s. delivers them. perishables are the king when it comes to the next generation of what people are trying to get home. and walmart knows you have to pick it up on the way home. it just doesn't sit there well and say 90 degree -- you don't want a chicken sitting there kind of just hanging outside on a really warm day. and that's walmart chasing, boy

they got exploited fast. >> more on walmart, of course costco comps out. downgrade of am ex costco, keeping our eye on hurricane matthew now responsible for dozens of deaths in the caribbean. already slammed the bahamas and now taking aim at florida and carolinas where officials have ordered evacuations in a number of areas. strengthens overnight, gusts of 125, they're looking for like nine inches of rain in some parts of florida. >> and i guess the latest headlines, carl, have the storm potentially hitting between west palm and cape canaveral and picking up strength. >> yeah. the hovering over the water is going to add to the strength and i think landfall some time in the early morning hours tomorrow. so we're going to watch for that. when we return, an earnings miss for yum brands. we'll look at how its china business fits into the picture. sarah eisen with some big interviews from the imf and world bank meetings including

world bank president. take another look at the premarket after the dow up 113 yesterday. the best day for banks in two months on those rate expectations. we're back in a moment. rsuit of. it begins from the second we're born. because, healthier doesn't happen all by itself. it needs to be earned every day. using wellness to keep away illness. and believing a single life can be made better by millions of others. as a health services and innovation company optum powers modern healthcare by connecting every part of it. so while the world keeps searching for healthier we're here to make healthier happen.

yum brands falling in the premarket. the parent of kfc, pizza hut, taco bell missing with its quarterly results. yum hurt by a surprise 1% decline in china comps. jim, we were looking for something closer to up 4, 5. >> yeah, boy, right ahead of the split. this is not the news you wanted considering the fact the stock has run so much betting that this is going to be the upside surprise start, meaning that china's going to be hitting it and the rest of yum the other part everything but china is going to be fine. china a little flummoxed here because they can run this right into the split without any problem. >> remind people it will be november 1st they do the split. enormous company in its own right of course what we call the china business, the separation of yum china holdings right here at the nyse, by the way, november 1st. you know, jim, i guess everybody already is valuing that the way they are. does this effect at all the way

you look at that part of the business? what do they have system sales up 3%? i guess. same store sales down 1. >> yeah, people thought they had been kind of building some momentum. and by the way, i mean, i think this was in sync with a lot of numbers we were getting out of china for whether it be shoes, coffee, is china's better. so this is a change in the narrative and one that certainly makes it so the stock could head down for a couple of points. look, i like the split. but i was surprised by this because when we had spoken to the ceo not that long ago, i really had great comfort. we got to find out what's really going on there because a lot of people love the fast growth of china. that's not the kind of growth. if i want that kind of growth, i will return to mcdonald's. >> speaking of mcdonald's, we're going to talk later this morning about the one-year anniversary already of all day breakfast. what that did to comps over the past 12 months. continued reports and speculation about franchise

rights they're going to sell in asia, jim. what are your thoughts on that? i guess qsr in general as the quarter does not appear to be that healthy. >> many, many people out here who are involved with the powering and engineering of loyalty and loyalty of whatever kind of loyalty program feel that mcdonald's is way behind, about to catch up. without it, i think that you just kind of feel like, you know what, you can't compete anymore. every company's got a sophisticated loyalty program. i think mcdonald's will have one. but they need to do it now. >> yeah. watching that stock down almost 4% for the year. we'll talk more about that later in the morning. we'll get cramer's mad dach, we'll count down to the opening bell in a moment, take one more look at the premarket on this thursday. more "squawk on the street" from the nyse straight ahead.

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♪ it is that time for a thursday mad dash one more time across the country to my man, mr. cramer. where are we starting? >> geez, david, i got to tell you this goldman note about tesla really kind of warning you that this thing has got real problems. their talking about by going buy to neutral that this should have a 180 price target and it's actually going there. they kind of put some fear for the model 3 and how much that would cost, obviously some errant m&a. this had been a company that goldman had been a big supporter of tesla and also raised a lot of money for it. so i think this is going to cast

a pall over that stock. a lot of people talking about cars and where cars are going lumps in tesla. it's a battle of the relevancy of the non-driver car. >> there are few things more important to the industry than autonomous driving, right, jim? >> the future of the industry of autonomous driving is driving a lot of semiconductor business, driving a lot of internet of things, driving a lot of, look, machine learning, artificial intelligence is behind a lot of it because you have to figure out whether that's a person ahead of you or a car. so tesla, while definitely forward looking, may not be forward looking enough. and i think the solarcity thing is really bumming people out, david. >> yeah. >> they really feel like this is not a good deal. remember at delivering alpha chanos talking about what solarcity would be doing if it weren't for the deal. this is a non-starter for the deal. i think to see a guy like goldman move away very big, very

important. >> so interesting when we talk about self-driving cars, miles driven, the data, become so important for those pursuing it. i know you also wanted to hit on chips, which you just mentioned briefly. but kla and lam research call it quits. >> this is very unusual as you know because you cover m&a better than anyone, david. both companies, the stocks are going higher. even if the deal didn't get done. obviously recognize antitrust doesn't like it. but the cycles are so strong. this is all about the semiconductor cycles and how both companies have more business than they can handle. lam research, this remains along with applied materials the hottest part of technology. semiconductor equipment, all three companies, kla-ten dlcor,d geez, lam research may be the best of all. people want these. they don't necessarily care that

a deal gets done. >> another deal by the way that fell as a result of opposition from the department of justice. let's not forget when it was announced people said there's no real overlapse even though they obviously compete. they couldn't get them to agree to a dissent decree of some time and as you out go their own way. interestingly again as you said the stocks are up, not down. >> right. i got to tell you the justice department is so active. and i think remember when that deal was announced talked about with the ceo of lam really didn't think that the customers would oppose. but we keep hearing whether it be a schlumberger, a deal with baker hughes and halliburton, schlumberger tells people, listen, you ought to get in there and maybe that deal is not so good for your industry. david, the seed business, monsanto reported a not great quarter, the stock isn't doing anything. it's almost as if there isn't a deal at all. and i continue to think that deal is a non-starter. >> all right.

jim, we're going to countdown to the opening bell. talk to you in a few minutes. we're right back on "squawk on the street."

you're watching cnbc's "squawk on the street" live from the opening bell. we've talked about twitter, walmart's investor day, hurricane matthew getting stronger overnight and quickly approaching the florida coast. imf meeting which sarah eisen will have later on today. jobless claims you got to go back to 1973 to get a number this low. 249,000. and then, jim, oil at 50 for the ugh t time since june altho some argue it has to stay here for a while to suggest we're in a new chapter. >> well, i do think that the hurricane is going to cause the shorts to do a little panicking, the longs keep pressing it. i know a lot of oil comes back on the market at 50 in the united states because that is a level. expect to see a lot of futures selling. i think it's interesting the 2021 futures market shows a $20 increase during this whole run from 42 to 50 which says they

are skeptical -- people who actually buy and sell oil on a buy and sell basis are very skeptical of this move. i do think the shorts will cover if this goes above 50 because of the hurricane. >> that's interesting to watch. you know, you mentioned the kla-tencor stuff. talked about twitter. are we drawing a line between these would-be deals? are we in an era where m&a starts to take a step back? >> i think, carl, antitrust has been so prominent this year that it's hard to imagine that when you're putting a deal together even if you don't believe you really have significant risk, you got to be thinking or re-thinking that. and i do believe it figures into at least some of the planning or the yes or no go on a deal is if it is of size. but that said i think we're going to have a pretty busy fourth quarter. >> let's get to the opening bell here and the s&p at the bottom of your screen.

at the big board it's u.p.s. doing the honors. over at the nasdaq, coupa software celebrating its ipo today. we're going to talk to the cloud software company's ceo in "squawk alley." jim, another cloud ipo. what do we make of that? >> boy, i like this one. this one was upsize 6.7 million to 7.4. raised the price. this tells you when you're getting bang for the buck with technology. i hear a lot of companies out here when i'm at dream force talking about how much they can save you, how much they can put you in front of the customer. but many of the companies are skeptical when their customers about whether they're actually getting anything out of it. this is a company that plays a key role, which is are you spending too much on technology and not getting what you need? i expect this stock to be incredibly hot. will it join twilio? will it join acacia as being hottest stocks in a year? i don't know. it could. it's really priced at a pretty

low price. it's going to open up big. >> we'll bring you the first trade when it happens of course. got some retail comps, zumies also well above with a 3% comp. >> i think people don't understand leslie wexler made big changes at victoria's secret, which had been a problem, and i continue to believe this story in the mall along with urban outfitters, a lot is because they understand fashion, a lot because when it comes to what l brands has done, it's bath & body works pretty good, turn around victoria's secret good numbers and pink is the number one high growth retailer in the mall. so i think l brands has it going. i like the situation. >> jim, you and carl both have been talking about chipmakers, the internet of things. i did want to share another bit

of insight on another potential deal, i think it was bloomberg, maybe it was the journal that broke, of course the talks between nxpi and qualcomm, this would be an enormous deal, by the way. you know, probably over $40 billion when you get to it in equity value, not mentioning debt. the ask apparently from nxpi is 120. that's the number right now that they're at least trying to get. it's been around in the marketplace, you know, we'll see where they end up with qualcomm. this was reported on or broken as i said by the other news organizations fairly early. and so sources close to the conversations indicate, you know, nothing is imminent, don't expect to see something this week or even next week. it was the journal that broke it originally. but did want to at least update, again, they asked 120. jim, we'll see where they end up. doesn't appear that there are any other potential bidders at this point. so it is clearly conversations between qualcomm and nxpi that continue right now. >> look, you said it, internet of things.

i think when nxpi bought free scale, that was the sign that they are the auto. when you look at who has the most intellectual property in an auto, it is nxpi. i know rick clemer is willing to sell but has to be that price. i love the fact qualcomm, which is so tel commuecommunications be broadening because it reminds me of what happened when avadco and broad cogot together. it's a big deal, but so was broadcom. >> yeah, well, we'll see. you can get there on some multiples but you have to get pretty high in terms of comparables to get to a price of $120 being justified. to your point qualcomm's done nothing but go up since these talks were first reported. and that has to make them feel fairly emboldened, carl, in terms of what they're willing to do. again, usually you don't get asked unless you have somebody else there willing to pay it too or come close. >> we'll watch it closely.

research wise nomura takes am ex to reduce. target goes to 56. first full quarter without costco which had comps out, four years they argue of declining market share in the u.s. in terms of billings. and that is the second worst dow stock right now second to walmart. >> i think when they lost the costco business -- and remember, we heard charlie monger talk about what a bad idea they didn't get in there, i think it lost a lot of international momentum. american express is going to be in your face saying costco didn't matter. but remember when they decided they weren't going to take that costco, the new prices that costco's offering, that stock got hammered. it has been in suspended animation. and this was the first call that says do not be in ahead of the quarter. can i tell you mastercard put through a very big increase, the retailers, mastercard and visa are the ones that are on fire. aja is getting his due. he is really realizing you can

put through small increase that retailers will not fight it, those are the two to be in, not express. >> oracle's tender for net suisse expires tonight. previous reporting it was going to be close if not loser for oracle in terms of getting more than 50.1% of unofficial shares into that tender. what will they do if they don't make it? they could conceivably raise tomorrow. no word from oracle. they've had nothing to say reaching out to them and their advisors, nobody was really willing to talk about it, jim, but the stock is trading above the price oracle was willing to pay. but their own advisor put an evaluation far above what the number ended up being for them at least. so there are shareholders including of course t. rowe who came out publicly saying this is not enough. >> right. i got to tell you i think t. rowe is probably the most vocal on trying to get marc benioff to buy twitter.

i think that, hey, twitter, t. rowe, and i think they literally said to marc, listen, we're gone. i know fidelity didn't like the deal. i don't know, david, i really feel that net suite was a statement by oracle that we're not necessarily going to be able to dominate in the high end. i know there was some talk, kate kelly did a piece this morning talking about how workday may be one of the great growth companies. remember, workday's going after oracle's customers, oracle constantly trashing workday in the conference call, but net suite is a go down small medium, oracle has to go up and take share or take a lot more share than they are. again, oracle's going to tell me, jim, we're like ten times the size of workday. that may be, but look at the client wins that neil's been getting you know that net suite is the way to get the companies most people haven't heard of. and they need that suite. but it's surprising that they do need netsuite. >> speaking of companies in netsuite, salesforce up almost

5%, jim, after the worst day since february yesterday, we can probably guess as to why. >> you know, when i asked marc, i said can we please put down 3.5 to 3.8 billion market cap just say no to twitter right now. he wouldn't do that. i asked him maybe about 27 different ways about whether he would just stock twitter. i think the stock is saying, listen, we will not pay these prices. it's not saying we don't want to buy twitter. it is saying don't worry shareholders, if we buy twitter we will not overpay. we will do what's right for you. that's one of the reasons i think is really interesting they all walk away from twitter, twitter goes back to 17, 18, maybe a deal gets done. david, you know the price was a very big sticking point here. >> price is always a big sticking point. and certainly, again, we pointed out so many times when we first reported this that the run up in the stock in terms of the fundamentals of the company and potentially a media buyer for example being interested would

seemingly be ruled out because you have to look at the set of assets in a different way to argue or justify that price. you've been very close clearly, jim, to the concerns amongst salesforce shareholders that they would pay that big price. but this is not over yet. >> right. >> this is not over yet. >> no, but i think that these institutions, david, institutions for using the term myspace. now, jack dorsey, adam bain, if you mention myspace once again in the same sentence as twitter, you really just casting dispersions. just not fair. it's the institutions that own salesforce they keep bringing it up myspace. obviously myspace being one of the great disasters of all-time. >> that's just terrible. >> two days in a row. >> you are really piling it on. >> isn't it? >> that's horrible. those twitter guys are not far from you. they may come and find you. they know where you are. >> one market.

always willing to sit down. you know what, they can tweet me and tell me what a jerk i am like the other hundred people that did yesterday when i had sack and cuban on. i don't mind. listen, twitter guys, i'm right over here. i have time for lunch. we'll go for, you know, go for a slice. >> yeah, go for a slice. why not? hopefully you'll survive it. >> by the way, walmart dragging the dow down the most. index is down 81 points. let's get to bob pisani see what's moving. hey, bob. >> good morning, carl. we are down on the dow and the s&p. however, remember, we have new leadership out there. we've got banks, we've got energy and tech that matter. oil over $50. i said yesterday we saw new highs in some oil stocks for the first time in a long, long time. so eog, big exploration production company at 52-week highs, some smaller companies like con cho, cimarex, most of the oil patch up. banks another group, yesterday

as well as this morning we saw comeri comerica, suntrust, regions financial, zions ban corp. remember all the interest rate sensitive stocks all the rage earlier in the year? they hit their highs a couple months ago, so you see utility stocks, real estate investment trusts or reits, telecoms down about 11%. they're about 10% or 11% off of former highs. that's a very notable decline here. what we're seeing here right now overall is sector rotation. so we're seeing higher yields, improving economic news, valuations that are too high for interest rate sensitive groups like those utilities and telecom stocks. then we've got an oil rally going on and you heard jim talking about the semiconductor up cycle that's been going on. put it together what's it all mean? well, you've got new leadership out there. look at today you have bank stocks doing a little better

than the market. you have energy stocks doing bet eer than the market. you have tech stocks and utility stocks doing better than the overall market. utilities selling off. so banks, tech and energy are the key leadership groups that we've got today here. those semiconductor stocks here there you see the bank, energy, tech utilities to the downside here. semiconductors, lam, kla-tencor, kulicke & soffa, 52-week high. nice day again for ipos. we're waiting for coupa software to open at the nasdaq. usually about 10:30 they'll start moving that stock. but important thing here, cloud base, spending platform price talk earlier this week was 14 to 16, then they upped it to 16 to 18. this is another one of the recent ipo stars that we've seen. take a look at twilio, nutanix and aptio all with notable moves

in the last several weeks as their ipos happened. twilio up over 100%, nutanix up over 1 h%, apptio up overall. remember we had a lot of former ipo stars we all went gaga over when they came public. remember fitbit and gopro and groupon, they went multiples above their initial price and you saw what happened to them. i'm not saying that's going to happen with everybody else that i just pointed out, but bear in mind we had a lot of former ipo stars. right now the dow down 84 points. carl, back to you. >> thank you so much, bob pisani. let's get to rick santelli at the cme keeping an eye on the 10-year. >> hi, carl. yes, these are very important sessions today, especially if you're a technician or even more important if you're monitoring fundamentals and you try to put all the puzzle pieces together

because we're at critical areas when it comes to recent ranges and historics with regard to price and yield action. look at 2s and 5s, pricing back if they close at these yields highest yields since the first few days of june as you see the 2-year and 5-year. go down the curve and look at the long end of pretty much any sovereign, the key comps, no surprise, are brexit day. because that was the day markets had big moves. if you look at 6/23 on 10s and 30s, basically that's what we're comping to, although there is a bit of an asterisk there. we are right at the 1.73 level for 10s from 9/13, september 13. we're right at the key level with respect to 30s. and when you look at jgbs in particular, this is fascinating. now, we call this sort of a yield plateau the way it extended. and many were looking for it to go back down. it has started to turn up in yield. this is significant. that is the weak link in the chain. that's the one that traders are

monitoring to see if yields can actually rise. if they can actually get to that zero mark or not, this is critical. gilts, if you look at gilts and look at what's going on there, we talked about this, you want to look at 1.73 in 10s. you want to look at 90 basis points in gilts. they're right at 89. so is this going to be resistance or are we going to chop through? you know, it's always hard to call when you get to these situations, but we have a lot of momentum based on the fact we're reversing from areas that were highly traded in august and september. and last, usually when yields go up, currencies tend to firm up. not the case with the pound, as you see. now this is a one-week chart. we all know the pound hasn't been in these levels since 1985, option markets are picking up and treasuries as we get close to these levels. but the pound on a five-day chart is weakening. in five days we've gone from a whisker under 1.30 to getting close to testing 1.26, something we really want to continue to

monitor. carl, it's all yours. >> see you in a bit, rick, rick santelli in chicago. former fed chairman alan greenspan sounding the alarm on our program back in june. take a listen. >> this is the worst period i recall since i've been in public service. there's nothing like it including the crisis. >> a lot has happened since that interview. remember that day? in the global economic environment. stick around for a live interview with greenspan as the dow is down 82 points. don't go away. important than your health.

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our sarah eisen's at the imf and world bank meeting in washington today. she's got a stellar lineup and she joins us this morning to raise the curtain on that. hey, sarah. >> hey, good morning, carl. good to see you guys.

all the financial heavyweights are here for the semiannual imf world bank meetings. at the top of the agenda, the frustratingly slow and sluggish global recovery that we talked last week first on cnbc with imf managing director christine lagarde about amid a rise of populism sweeping the world in the wake of the brexit vote and ahead of the u.s. election. the backlash against trade, the economic and global policy elite, the finance minister, central bankers and even bank ceos that are here today need to make the economic case for fair and open globalization amid an economy, guys, that's still vulnerable at risks and shocks like extreme weather happening right now, like shocks in the european financial system which is still a very much open question with john cryan, the ceo of deutsche bank here in d.c., and of course uncoordinated central bank policies ahead of what could be the second federal reserve interest rate hike. in the last decade. we've got a perfect lineup to

talk about all of these front and center issues. we're going to talk to jim yon kim, we're going to talk to the ceo of ubs, sergio armati swiss bank here in town. he also has to negotiate with the doj about a fine, so watching very closely what happens here with deutsche bank. and of course alan greenspan, former federal reserve chairman. you remember his warning last time on the day after brexit that he's never seen anything this dire and scary including the 1987 crash. we'll see how he feels about the state of the financial system today all coming up in the next few hours of "squawk on the street" and "squawk alley," for now, carl, back to you. >> hey, sarah, be interested to hear more about the degree to which the imf is folding geopolitics into their forecast something they haven't done in a big way over the last couple decades but getting tougher and tougher to ignore. >> folding into their forecast and also, carl, being more vocal

about it. ian bremmer, the head of the eurasia group to get more involved sort of united nations style in these conflicts. you've heard imf opine about trade, that's probably as far as they're willing to go when it comes to intervening on the u.s. election, but i will ask jim kim about this as well he's been following issues and the ripple effects that's going to have on the election in germany next year. so for sure they need to start weighing in order to keep these institutions relevant and at stake is the global world order which the imf and world bank, carl, are very much a part of. >> jim, sarah brings up a good point. a lot of emerging economies, even developing economies have to start making plans. what do we do -- what do companies do if this antiglobalization does get worse? >> well, look, i think that one of the things that has to happen is that you get a country like germany, they have to start spending in order to make it so

the people who are coming to that country who don't have the skills and really are hurt by globalization get jobs. i can't believe it hasn't happened yet. but it will happen in the next year. and it will be a major theme. sarah's dead right. these countries can't avoid it. they have to start spending. they haven't spent. they will. >> sarah, we look forward to your coverage later on this morning. sarah eisen at the imf world bank meeting in washington. we will get one more take with jim as the dow's now down 103. don't go away.

i think people are ignoring the comments marc benioff made yesterday about microsoft. he's talking about blatant anti-competitive behavior by some of the executives. not sacha, the ceo. there really is a belief at salesforce that microsoft is trying to go back into the world domination game. and that won't cut it. i think we have to stay closer attention to this microsoft/linkedin deal.

see if some of the comments marc benioff made don't resonate don't hurt that deal. >> all right. you brought us so much this week, jim, from out there. what's tonight? >> all right. fitbit very controversial. i mean, do people feel it can compete against my apple watch? it's really not in the same category, doesn't matter. people have to say, listen, it's a show-me stock. we've got lew cirne, new relic, it is really doing some of the best growth i've seen. and then, anne wojcicki, 23 and me, i've been waiting for her to come on the show because she has the kind of gene sequencing that a lot of the boutique anti-cancer companies are saying you can save lives if you go to 23andme. >> jim, you coming back? you going to be home tomorrow? we going to see you back at the desk? >> no, too much stuff. as long as haters are dominating twitter, they'll be no deal. i'm taking them on today. you got a free fire zone. i'm ready. machine gunfire to show exactly why salesforce is afraid of

buying twitter. the haters. hi haters. >> i got to say, it's fun to watch you take them on, jim, on twitter. we'll see you -- >> periodically, but don't tell my kids. it's not sustainable. and it's not meditative. >> jim cramer, "mad money" 6:00 p.m. eastern time. when we come back, the mayor of miami beach as his city braces for hurricane matthew and just about 12 hours. we're back in a moment. the pursuit of healthier. it begins from the second we're born. because, healthier doesn't happen all by itself. it needs to be earned every day. using wellness to keep away illness. and believing a single life can be made betteby millions of others. as a health services and innovation company optum powers modern healthcare by connecting every part of it.

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good thursday morning. welcome back to "squawk on the street." i'm carl quintanilla with david faber, mike santoli at post nine of the new york stock exchange. our sarah eisen is at the fall imf meeting in washington. dow's down almost triple digits, looking at investor day, hurricane matthew top of eye and oil at 50 something to watch too. our road map does start with twitter which is getting crushed, that is the stock after reports google and disney not going to make bids for the social networking company. details on what's actually going on here in a moment. walmart's investor day why

retailer is slowing down opening new stores and investing more in e-commerce. and as carl said hurricane matthew headed for the coast of florida. we're going to speak with the mayor of miami beach and just how he's getting his citizens ready. big show ahead. our sarah eisen as we said at the imf meeting in washington. she's sitting down with the world bank president today, former chairman alan greenspan as well. we look forward to thachlt but first david's got more on twitter. you know, carl, of course the stock is down over 17% this morning. this after recode late yesterday said google and disney will not move ahead with making bids for the company and apple also not likely to pursue the bid for the company. also importantly being seemingly taken by the marketplace is google which you may recall when we first reported expressions of interests that had been made to twitter included not just salesforce which continues to be in the running, but also google. google certainly thought to have been a company that perhaps could pursue it and pay a very high price should it choose to

do so. if that report is accurate that at least is one key reason why that stock is getting hit right now. of course shares had moved up dramatically when we first reported expressions of interest had been made, moved up even more when we reported on a process becoming more formal in nature in terms of dealing with potential bidders for the company. that process right now does continue and people close to it tell me there's no timeline on potential bids coming in whether they be from salesforce or other companies that continue to look at twitter. yes, they do. they may not include facebook or perhaps not microsoft, but i am told there are other at least interested parties here. whether they come forward with a bid of course remains a key question. and, again, the timeline on concluding this entire process, well, you want to keep it as short as you can given the public nature of it. in fact that we're talking about it all the time and many others reporting on every last thing that goes on, but nothing says that has to be within a week or two weeks. certainly you would hope within the next 30 to 45 days, mike, to

get something done. but it is getting punished today, is twitter, after moving up of course substantially. also worth noting salesforce shares are up today after getting whacked yesterday on continuing concern amongst its shareholders base it would pay a high price for the company. >> yeah, you're basically seeing since it had built up that it was going to be a very energetic auction. i think your point about google is very key. because the takeaway when google steps back, when alphabet steps back is a $500 billion company does not necessarily see the value in paying 15, 20, whatever the number was going to be for twitder, everyone though it links up with so many perceived needs and gaps within google's business. that was the sell side sentiment. so i think when they back away you have to be more creative about who's going to find value in twitter. that's why this salesforce thing you have to kind of come up with a thesis that it's about the data or some other kind of, you know, something you don't see in the financials, something you don't see in the current user and advertiser numbers. and i think the idea that you

can kind of step aside and not bother is what the market is absorbing right now. >> i think -- obviously i think that's true. i don't believe anybody really thought disney was going to be a true bidder there just because, again, they were so constrained by what would have been a very diluted deal and most likely buying it for the reasons that are very apparent. namely is another platform for advertising and for distribution. and so really google is the key here. but we'll see, carl, it is still early. i'm sure there will be a lot more drama to come. >> yeah. >> and stock's still up from when a lot of this happened. >> that's true. not 14 today, that's for sure. walmart is on the move as we said earlier hosting annual investor day. the retailer says it plans to slow new store growth and invest more in its e-commerce business. company also reiterated its prior financial guidance for the year. says it expects earnings to be flat next year but will bounce back up five the following year. yahoo posted a story saying

walmart's been investing in e-commerce for 15 years. >> exactly. >> and yet arguably has little to show for it against amazon. >> well, and now maybe you have to figure it's just the cost of doing business, right? this is the world you're in. i don't think the market is right now in a mood to pay for 2018 5% growth, necessarily. and i think one this that's happened to walmart, which has had a very good year on a relative base sis to other retailers is built up this premium in the likes of target because in part walmart is in a stable sector, got the reputation of more stable and winning in a lot of those areas like grocery. i think maybe some of that has to come out. i don't think it's a disaster for walmart or investors, but it's a rethinking of exactly what that trajectory might be like. >> again, we're back to an argument where, all right, so you double the number of stores that allow you to get goods to people quickly. it's not like amazon's sitting still. they're doing the exact same thing at a higher level, testing drone delivery in europe and a lot of other things.

>> yeah. it's obviously a capital intensive business. and it's always been the case when you compete with amazon, right, is that financially you operate by different rules. your investors want to see different things from you in terms of results than amazon. >> that's always been a frustration for walmart in terms of how it was judged on its bottom line as opposed to you say what's been a key for amazon which has been it's top line and continuing that growth despite what's been relatively anemic bottom line numbers from the company over many years. of course the market tells the story. amazon has eclipsed $400 billion in market value. there was a time when walmart was one of the largest companies. amazon not only trails what is it microsoft, google and apple in terms of its market value whereas walmart not to be, you know, $221 billion is still something, but amazing to watch over time the disparity. >> and the slowing down of store growth, have to figure out exactly what the formula is. >> retail is definitely going to be affected by hurricane matthew hitting the bahamas, next stop

is the united states. our mor began brgan brennan is a beach and joins us with more. >> good morning, carl. catastrophic, that is the term being used by florida governor rick scott to describe this storm who also very bluntly said this is unfortunately a storm that is going to kill people. so hurricane matthew is regaining strength as it barrels towards the florida coast. and nbc meteorologist bill karrins reporting we've never had a hurricane predicted to be this strong that, quote, confidence is increasing that we will be comparing matthew's damage to past historic storms like sandy, katrina, rita and andrew, when this is over. just to put that in perspective, these are the most costly disasters in u.s. history from an insured loss standpoint, this is according to the insurance information institute. you have 2005's katrina at $50 billion, 1992 andrew at $26 billion. those are the two most expensive disasters natural or otherwise

ever. sandy also on that list. so people have been scrambling to stock up ahead of this event. we've got many gas stations closed along the coast that are out of fuel. we've got store shelves in my retailers that are picked clean. here at this home depot they're actually out of plywood, generators, gas cans and starting to run low on water despite having more shipments of that this morning. so the company telling me that what's fast approaching 1,000 truckloads have been deployed throughout the region to restock stores including from a lakeland, florida, center that focuses exclusively on hurricane-related inventory. also worth noting, guys, contrary to some analysis, an event like this does not necessarily contribute to a sales month because all of the cost associated with restocking these store shelves can even out any sales boost you see by the stockpiling by people in the store behind me. >> morgan, thank you for that. we're going to come back to you of course a lot more today. let's stick with hurricane matthew. joining us this morning philip

levine is the mayor of miami beach, florida. >> good morning. >> governor scott has already given a degree on people obeying orders to evacuation, but sounds like there's some resistance. what's the status right now on people's willingness to leave the danger zone? >> well, right now miami beach and miami does not have an evacuation order at this point. we supposedly according to all the charts and graphs we're not directly in the path of hurricane matthew. but as you can imagine everything can change. emergency operation team i've been out with them, everyone's prepared, our beaches are closed, schools are closed and we're there making sure everybody understands this is very, very serious, do not take anything that's not -- you know, be very diligent and resilient on this and want everyone to stay inside. most important right now. >> our nbc meteorologist bill karins says we're about to witness this decade's equivalence of andrew and katrina. does it feel that serious to you?

>> well, i can tell you in miami-dade county and miami beach we take it very seriously. we know something about hurricanes down here. they're very destructive. the governor's words are 100% true. we tell all residents of miami beach as the weather starts to deteriorate this afternoon, stay inside. we know we've been educating them telling them to have water, medicines, food for a few days and we're watching the storm very, very closely. this afternoon we'll know more and more about the positioning of the storm and of course our thoughts and our prayers with the rest of the state of florida wherever this may come landfall we want to be sure to make sure we're going to stand tall with the rest of our residents of the state of florida to help where needed. >> mr. mayor, it's my understanding at least having read a number of articles about it that parts of miami beach can flood during a very sunny day. are you concerned particularly about flooding from the storm? >> no question about it. now, the pumps that we've put in and we also raised streets, these are designed for sea level rise. they're not designed for hurricanes or necessarily tropical storms.

now, we trust they'll be able to empty out the water faster than normal, but they're not designed to handle a catastrophic of course hurricane or weather event like this. so flooding is a major concern. we expect to have flooding. and hopefully the water will dissipate as fast as possible. and we tell all the residents that if you don't need to go out, stay inside. and of course until the storm passes. >> one last question, mr. mayor. in person earing for the election begins october 29th. do we expect -- do we have any clue as to whether or not infrastructure will be back in shape to support that? >> well, i think it's too early to have that conversation right now. i think right now the priority is the safe and well being of our residents and our visitors and miami and the entire state of florida. and that's what i think we're all focused on. >> that is certainly true. we're all thinking about you and the state of florida, georgia, the carolinas. mr. mayor, thanks for your time. i know it's a busy one. >> thank you. >> mayor philip levine, mayor of

miami beach. let's get to sarah eisen at the imf sitting down with a special guest. good morning, sarah. >> good morning, again, carl. i'm here with dr. jim yong-kim, host of today's meeting. always nice to see you. >> thanks, sarah, thanks for having me on. >> we meet amid against a sluggish economic recovery. there's a panel going on behind us about rising mistrust of government, which is happening around the world. is that what you attribute the rise of donald trump to? >> well, you know, we're not involved in politics. we're a development bank and we don't get involved in politics. but what we're seeing is there's a lot of uncertainty. uncertainty about political outcomes, uncertainty about political movements, everyone expecting the colombia peace agreement to pass and it didn't. everyone expecting brexit to be defeated and it wasn't. so the uncertainty for us is really an issue because it impacts directly on the economies of developing countries and almost always inevitably.

>> how much uncertainty is there globally in your community here of finance ministers, central bankers and other global elite around the u.s. election and the outcome? >> well, you know, we don't know what will happen, but i think that there's a sense there will be a big difference between the two. and so that creates the uncertainty. we all are reading the polls, but there are populous movements happening all over the world. the thing we worry about is trade is really, really important for economic growth. trade is the reason that china left a million people in poverty and all the talk about looking inward, about not embracing the rest of the world, about bringing trade down, we're extremely worried because economic implications for everybody are very, very bad. >> so why -- you are shouting this message, the imf is shouting this message, and yet nobody is listening. both of our leading presidential candidates oppose the tpp, brexit vote was largely about trade and a rejection of that. why is it not resonating, your

message, pro-trade? >> you know, i think it's a very emotional issue. i think people feel that their lives are not better now than they were ten years ago. i mean, i grew up in iowa. i grew up in the midwest. and, you know, now i'm on facebook with all my former classmates. they really don't feel that life is better for them. if you look at the income trends, you know, the only group whose income did not rise between 1988 and 2008 were really the lower middle class and high income countries from about the 75th to 85th percentile their incomes did not rise. their complaints, their anger i think is real based on the fact they did not enjoy the benefits of globalization like everyone else. in fact, the only way we can get out of the current situation of low growth of jobs disappearing is to reengage, reintegrate and really revive trade. the trade growth is only 1.7% this year, this is really, really dangerous. >> and yet the populous movement goes against you.

how would emerging markets be effective if protectionism continues to rise in places like the united states? >> it would be very bad for developing countries. it would be very bad for developing countries. also at the end of the day it would be very bad for consumers in the united states. i mean, there's a reason why we get such great consumer products here in the united states for such low prices is because, you know, we have had a history of trading with countries that can make those products at high quality for lower price. you know, the only way we're going to ever end extreme poverty, which is our goal, is for there to be much, much more trade. you know, it was a key to china lifting 750 million people out of poverty. it was in fact in china it was openness to competition that helped them to grow their economy at the rate that they did. trade is good for everyone. it's just that when you look at job loss, people tend to blame trade for job loss. but the head of the world trade organization, my friend says at most 20% of job loss is related to trade. the rest is related to

innovation and efficiency, and people can't be against innovation and efficiency, so they end up being against trade. we have to get the data, the facts, the evidence out there. >> but they also blame people like you and other global institutions, the so-called policy elite forewarning of all these dire circumstances, warning about the brexit impact, and markets have recovered, the economy there remains resilient. there is this backlash. do you feel that? >> well, let's take each, you know, each problem very specifically. so brexit, remember they haven't began negotiating yet. and so after brexit mark carny, good friend of mine -- >> bank of england. >> head of bank of england, was brilliant. i mean, he was brilliant during the 2008 crisis when he was head of the central bank of canada. once again he was brilliant. and i think a lot of the moderation and the impact was because he was prepared and he got all the other banks in the uk to be prepared as well.

they really increased liquidity before the vote. so they were prepared. so i think you're seeing a lull in the action. but once the negotiations starts, then we'll see what the real impact is. i would say that we still don't know what the impact of brexit will be. >> yeah, that's the same thing that christine lagarde told us last week. do you see the european union's decision to order apple to pay $14.5 billion in back taxes to the irish government as part of this whole rising protectionist environment putting up literal and figurative walls around countries and continents? >> i don't know exactly what the motivation was behind the eu decision, but what i can tell you is that politicians are going to have to respond to their citizens. and right now there is this sense that the root of all evil is globalization. and what we would say is that's really just a fundamental misperception. it's a fundamental misunderstanding of how the global economy works. and why they enjoy the lifestyles that they do. now, the problem of improving the skills and creating a

workforce that's prepared for the jobs of the future, that's a problem that's shared by every country in the world. >> right. >> and, you know, not least of which are the high income countries in which these populous movements are taking hold. >> relates to another issue you you've been out on the refugee crisis you've been a big proponent refugees and help build movement and jobs, though trump has proposed a ban, how destructive would that be? >> there are global agreements and countries have signed onto these agreements that if another country is in trouble and there's so much turmoil that refugees leave, countries according to u.n. charters have a responsibility to accept and take care of refugees. what we're seeing is the economic impact, the disruption in the social life are such that what we're trying to do is to say, all right, we'll try to help the countries who've been the most generous at receiving refugees, jordan and lebanon.

we're now even though they're high middle income countries, we're providing them with very low interest loans because of the contributions they've made to the world. that's what multilateralism's all about. we step back and we say which are the countries that are making the greatest contributions helping the entire world, and then going -- >> there are countries like germany which could end up costing chancellor merkel her re-election next year. >> i have enormous admiration for chancellor merkel. i think she did the right thing. i think she is both a brilliant leader and a moral exemplar. i think she did exactly the right thing. and we're going to try to -- she's going to be hosting the g20 next year, we're going to be trying to do everything we can to show that focusing, for example, on creating jobs for syrian refugees in jordan, which is what we're doing, is the right approach. and taking care of refugees, if you can, is also the right approach. >> we'll talk more about merkel with the ceo of ubs later in the show. also wanted to ask you about another political hot button issue in your field of expertise, and that is rising

prices of drugs. we hear a lot about this on the campaign trail. you are a physician and a leader in health, worked at the world health organization. do you think this should be a political priority for the next president to crack down on rising drug prices in this country? and how much of the blame goes to companies like a mylan for raising the price of epipen? >> you know, in terms of drug development and access, the market works in some instances, the market doesn't work at all in other instances. if you have a disease where you have to take a medicine every day for a long period of time, you're going to get new drugs. hiv, for example, hiv is mostly in developing world, but because there are enough people in developed countries who will pay for them, we have lots and lots of new hiv drugs. tuberculosis and malaria are also huge problems in the developing world, but because very few in the rich world have them, there are no new drugs for them. drugs for hair loss, those will

always be available. but for things like antibiotics, you know, the second, third, fourth, fifth generation antibiotics, we're in big trouble in terms of resistance because there's no marketin centicent i -- incentive to make those drugs. we have to figure out how the market works, what kind of regime we want. we have to provide incentives to companies so they'll make new drugs, but we also have to provide incentives for companies to make the drugs that may not be so profitable but really important for the world. >> the one to figure out. thank you very much, always a pleasure catching up with you on all of the big issues. that is dr. jim yong kim, president of the world bank, carl. >> sarah, we can't wait for more. our sarah eisen in washington. we will be joined by the ceo of ubs, sergio ermotti, his take on brexit, bank regulation and a lot more. dow slightly off the session lows down 78 points. you're watching "squawk on the street."

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we are waiting yet another cloud ipo, this time it's coupa at the nasdaq. cloud company making its debut there today when it begins trading we will talk to the ceo in a first on cnbc interview. and coming up, walmart hosting its investor day today. we've got the latest from the retailer. plus we'll talk brexit, banks and much more with the chancellor of back after this

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walmart is hosting its annual investor meeting at its headquarters in bentonville, arkansas. our courtney reagan joins us this morning with more on that. >> hi, carl. we're not quite halfway through

investor day. we've already heard from walmart ceo doug mcmillon, bigs, then came out with jet.com founder mclori, 17th daze on day on the job. protect walmart and jet from the bureaucracy and let mark be mark. what makes jet unique is dynamic pricing. as shoppers add items to their carts and make choices, prices fall. it's why mcmillon bought jet. >> don't miss the point about basket economics. and don't miss the point about an empowered customer if you can let customers play a point in this process, a legitimate, authentic, transparent opportunity for customers to participate in a way that helps lower systems cost and you give that money back to them, you can win. >> mcmillon's goal is for walmart to look more like an e-commerce company over time and projects 20% to 30% e-commerce growth over the next three years. now, walmart reiterates fiscal

2017 earnings guidance. grow 5% in 2019. both below analyst targets. cfo says walmart wouldn't normally forecast so far out but it's doing it because they did it last year. and i spoke to bigs on the phone. he says walmart expects e-commerce losses to peak in fiscal 2018, but also says, look, walmart's very strong financially, gives us the flexibility and options that other companies don't have. walmart is also slowing its store growth, particularly in the u.s. as it makes these investments in digital. the retailer also doubled its stake in chinese e-commerce giant to 10.8%, but bigs wouldn't disclose further the details of that relationship or increased stake other than saying enhancing that relationship is good for walmart long-term as china remains a big important critical market. david. >> thank you very much, courtney. well, when we return, we're going to talk bank regulations, brexit and a lot more.

the chancellor of the exchequer, philip hammond will be joining us. and later, the ceo of ubs, sergio ermotti take a look where stocks are trading right now. you'll see s&p down about 0.25%. more "squawk on the street" coming up. across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, creative business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. let us help grow your company's tomorrow- today at business.ny.gov

good morning everyone. i'm sue herera. here is your cnbc news update at this hour. hurricane matthew pounding the bahamas this morning as it makes its way towards the florida coast. its center is about 215 miles southeast of west palm beach moving at a clip of about 12 miles per hour. it is supposed to strengthen to a category 4 storm. new jersey transit implementing a new rule for

pulling into two of its stations in the wake of the hoboken train crash last week. it says the conductor must join the engineer whenever a train pulls into the hoboken or atlantic city terminals. 70 people have been arrested after the exposure of a massive tax scam to cheat americans out of millions of dollars. fake call centers were set up in india telling americans they owed back taxes. the scam brought in $150,000 a day. and washington university in st. louis is all abuzz with activity ahead of the upcoming presidential debate. it is costing the university up to $5 million, but officials say the cost is overshadowed by the experience that the students will receive. cnbc will carry the debate live on sunday night. that's the news update this hour. now let's send it over to jackie deangelis with the eia inventory report. good morning, jackie. >> good morning to you, sue. that's right. we just got the numbers on natural gas for last week. we got an injection of 80

billion cubic feet. this was higher than expectations and you can see it was a bearish number it pushed the price down just under $3. this is the largest weekly gain we've seen since may. traders are getting concerned because the builds we've been seeing haven't really been that large. but this gets us closer to where we were last year around 95 billion cubic feet, and that's also just around the five-year average as well. so that's a positive sign when it comes to nat gas stocks. total stocks roughly 3.7 trillion cubic feet putting us in nice shape as we go into the winter. but remember stocks can be depleted very quickly depending on what temperatures are like when the cold weather does come. that's what traders have been questioning, and that's what sent us over $3 for nat gas. in terms of the impact of hurricane matthew, really not discounting that storm certainly severe, but it won't impact the natural gas producing areas, so traders aren't really watching that too closely. guys, back over to you at post nine. >> all right, jackie, thank you so much. jackie deangelis. let's get over to wilfred frost sitting down with a special guest this morning. hey, wilf. >> hey, carl, thanks very much.

yes, indeed sitting down with the british chancellor of the exchequer, the uk finance minister philip hammond, good morning to you. chancellor, thank you very much for joining us. >> good morning. >> great time to have you with us, the pound hitting a fresh 31-year low this morning. clearly that's acted as a bit of a short-term shocker for the economy from brexit, but how much free fall in the pound can you see before it brings into question the credibility of the strength of the economy? >> well, our economy is fundamentally strong, but we're now going into a period of uncertainty because of the brexit vote. our growth figures, our employment figures for the first half of this year have been revised upwards. we're probably going to be the highest growing g7 economy this year. but next year we'll be a slightly more turbulent period. we don't target any exchange rate. the markets will set the exchange rate that's right for the economy. but we're confident that once people look at the fundamentals and look at the process, things will settle down.

>> one of the reasons, of course, for ut fall in the pound, not quite so recently but over the summer has been the loose monetary policy, cutting rates recently in august. yesterday in her conference speech, theresa may added a change has got to come, we are going to deliver it. this of course coming from the prime minister. are you going to intervene in bank of england policy? >> no, the bank of england is independent. the bank of england has control of monetary policy. the the statement change has to come and we're going to change it was more wrap up to concerns she listed ordinary people feel that the economy isn't working for them. and the -- one of the examples she used was the way loose monetary policy has inflated asset values, widening the gap between the rich and the poor. it was one of a number of issues she referred to. >> but the bank of england can freely set interest rates, but

quantitative easing re-introduced in august requires your approval as chancellor. so moving forward no more approval for that? >> well, i can't say that. we will look at any case put to us by the bank of england in the circumstances. and i approved a round of quantitative easing back at the beginning of august as a response to the shock that the economy had felt. but we are conscious of the impacts that quantitative easing has. and we will use it carefully and cautiously. >> chancellor, you're here in new york to meet various bank ceos, wall street ceos, what are you doing to make sure that new york doesn't become the clear global number one financial center? >> well, we very much think it works best for the world to have two global financial centers n london and new york. we think that it's in europe's interests that london continues to be a global financial center. and we'll obviously work with our european union partners as we negotiate our arrangements

with them to make sure london continues to serve the whole of europe as a global financial center. in the meantime what i'm doing here and we're also doing of course in london is talking to the banks and financial sector players to understand the specific concerns, their priorities for this negotiation process going forward looking to address those concerns and reassure them where they feel uncertainty about the future. >> going back to theresa may's speech yesterday, she was critical of international elites and she said specifically, if you're a boss who earns a fortune but doesn't look after your staff, i'm putting you on warning. this can't go on nirm. was that a warning for wall street ceos specifically and other bank executives? >> what theresa may was doing in her conference speech was flagging a phenomenon which is not just british, but you've seen it here in the u.s. through the primary presidential primaries, we're seeing it in europe with a resurgence of extreme right wing parties where although the economy is doing

reasonably well, there is growth, a lot of people feel disconnected from that process. they feel it's passed them by. globalization is hurting them, not helping them. and we have to reconnect with those people. we have to persuade those people anew that our liberal market economics, our capitalist system really does deliver for everybody. because we're not going to be able to sustain support for the system if so many people feel excluded from it. where we see abuse, and we have had one or two cases in the uk recently which are clearly abusive, where we see abuse government will intervene to make sure that the model of a free market economy is working as it's meant to work. >> so in that sense, are there similarities with what happened in the uk with brexit and the rise of donald trump in the united states? >> i think there are. i think it's that what donald trump calls the middle class --

disenfranchised middle class, it's the same group of people we would call them a different name, expect to earn good money with relatively skilled jobs find now displaced either by imports as a result of globalization or by migrant workers coming from eastern europe and working for very low wages. >> without serious change, is capitalism actually under threat in the west? >> no, i don't think capitalism is under threat. look, we've tried other -- maybe you haven't, but we have tried other models in various parts of europe. they don't work. they don't deliver for people. capitalism is clearly the system that delivers a rising standard of living for people across the globe. it's doing that job, but we have to make sure we spread the fruits of capitalist success in a way that's sensible and fair. and i think there is a sense that over the last few years the benefits have become too concentrated among a small elite, not spread widely enough across the economy and that's

what we intend to correct. >> chancellor, just very quickly to wrap things up, we mentioned already the prime minister, theresa may, is it refreshing to work for a female leader? >> theresa may and i go back a long way. i have a good working relationship with her. i don't think gender is the dominant factor. we've had female prime minister before, of course, in the uk. and as i remember that worked extremely well. >> chancellor, thank you very much for your time. >> thank you. >> we appreciate it. carl, back to you on the new york stock exchange. >> wilf, thank you very much for that. when we come back, speaking of banks, the ceo of ubs going to give us his take on brexit, the health of banks and a lot more. dow's down 80. don't go anywhere.

here's a surprise. the average household is a lot more exposed to the stock market than it used to be. why is that and what does it mean for the market? go to tradingnation.cnbc.com to find out. more "squawk on the street" coming up.

welcome back to "squawk on the street." i'm seema mody. all s&p sectors, all 11 of them are trading lower with health care being the worst performing sector. names dragging down the sector include endo, mallincrod, mylan and perrigo, mylan under pressure again as the federal government says drugmaker overcharged the medicaid program by millions of dollars over five years for its epipen. health care is currently the only negative sector for the year down about 0.5%. now back to sarah eisen at the imf meeting in washington. sarah. seema, thank you very much. i'm joined by a special guest here at the imf world bank meetings in washington. sergio ermotti is switzerland. he is the ceo of ubs. good to see you. >> thank you. >> at a time when we are all wondering about the health right now of the european banking

sector. what are you telling people? >> well, look, the european banking sector is quite sound. we made huge progress in the last seven, eight years in addressing, you know, not only the capital position of banks but also developing of better business models and trying to be sustainable. of course the macro environment is not very constructive for banks. at low rates, negative rates, you know, putting a lot of pressure on profitability and all the rest of the story -- >> how can you say that the european banking sector is quite sound when last week we were all wondering whether the german government was going to have to come and bailout deutsche bank? >> i would look at situation as being good proxy for the entire banking industry. i think it's matter of capital and increased seven, eight times in the last years.

there are some issues where that needs to be addressed in europe. but in general the banking sector is stronger than before. actually, i would argue that the same kind of story seven, eight years ago, would have triggered much more volatility and uncertainty in the markets than we are seeing today. >> so you specifically use the word idiosyncratic, that's how you view what is happening at deutsche bank, not symptommatic of other problems within the european banking sector. >> exactly, i agree. that's the point and i think that european banks are suffering because of the macro economic conditions of europe, the lack of growth, low rates or negative rates are clearly putting a lot of pressure. there's also huge overcapacity in the european system. that's the problem, i don't call it something people should be concerned in terms of stability, in terms of financial system. >> what about this doj fine currently being negotiated or renegotiated with deutsche bank? clearly this will impact you as

well as deutsche bank is the first of the european banks to settle with the doj. you're next in line. >> well, we are not commenting on these kind of matters. every bank has its own particular situations. and of course, you know, i don't know what exactly is the situation of deutsche and i prefer not to comment on our own. >> do you see it as a crisis of confidence what the market's done with deutsche bank? >> i think, look, the truth of the matter is there is a lot of talk from public figures on this matter without any solutions. i don't think it's sustainable to continue to talk about one bank, which is quite big and systemic having potential problems and having no solutions about it. so i think that it is almost two weeks we have a situation right now. i think it's time to get a resolution. and create a better framework. we have enough problems out there, so we don't need to create new one by creating uncertainty. >> one of the problems that you mentioned is the negative

interest rates in europe, the policies of the ecb and the swiss national bank. do you think the central banks have come to a realization about the damage they're inflicting on the banking sector? >> well, if it would be only for the banking sector that gets damaged, the problem could be resolved and maybe could be an acceptable price to be paid. there are collateral damages that are created for sure, lack of confidence by consumers and investors, potential bubbles coming certain asset classes, stock market but also -- >> is the stock market in a bubble? >> well, the stock market is well -- i would call the stock market well valued at those levels in general. >> global stocks? >> global, yes. and the real estate market is also well priced. so i think there are collateral damages in the pension fund system, the retiring system and the assurance system is also under pressure because of low

rates. so it's not just the banking sector that is suffering because of that. >> do you see central bankers going farther into that realm? more negative interest rates, more creative policies growth o opposite? are they going to start to taper and go back to mcnamaraization? >> i think probably we'll see more of that, although they should reconsider if this -- >> more easing policpolicy. >> yes. they should reconsider if this is the best tool to address where we stand right now. center banks on their own cannot address the structural problems we are facing, particularly in europe. you know, central banks can only help transition it from one place to the other. it's not the only medicine available to address the issues we have. >> do you see more damage and more shocks to come as a result of the negative interest rate policies? europe? >> not shocks. but over time, you know, we don't know the price. the real issue about negative

rates and low rates and negative rates is you don't know the price you'll pay in the future. people are asking for inflation, yet when inflation comes it will be something very difficult to manage. as i mentioned before, i'm more concerned about the savings and social system being put under pressure. >> do you have a contingency plan if deutsche bank does not get resolved? >> look, we are always ready to manage -- our capital position is very strong, not only to fulfill regulatory requirements but also to be prepared for any systemic problems we may face. so the answer is yes. >> yes. okay. what about brexit? bill hammond saying london is the financial center of the worrell. you have thousands of people there. have you started to move them?

do you have plans to move them? >> london lost attractiveness in the last few years for sure. i would call it -- it's going to continue to be a very important financial center for sure. but depending on how they resolve the issues of passporting from london into the rest of europe, it will determine the next phase. i mean, i can't imagine london keeping the same status as they have tu if there is no passport into europe. so, yes, it's going to continue to be a relevant one -- >> based on your conversations, do you think they're willing to give that up? how much of a priority do you see in the negotiating right now? >> i think it's just the beginning of a long negotiation. i think at this stage everybody has an interest in my point of view to keep london as an important financial center. but it's gopg to be a long negotiation between different countries and parties and priorities. but of course london in the base

case we have right now in front of us is not a very constructive one for london. >> thank you for your candor. good to see you. >> thank you. >> sergio ermotti, the ceo of ubs, giving you a flavor, mike, of some of the big issues we're talking about here, some that are directly impacting his business, like brek it, negative interest rates and of course the financial stability of europe. >> absolutely, sarah. great stuff there and on the ecb debate. that was great. let's look at shares of bed bath & beyond. the company saying it's scaling back on its paper coupons, testing a membership teal that offers a 29% discount all purchases and free shipping. at 11:00 a.m., alan greenspan. our special today is the seared ahi tuna.

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good morning. 11:00 a.m. on wall street and "squawk alley" is live. ♪ welcome to "squawk alley" for a thursday. i'm carl quintanilla