good morning. earnings central, dozens of s&p 500 companies ready to roll out results today. china's economy growing 6% year over year in the third quarter, in line with expectations. and a showdown in las vegas, hillary clinton and donald trump will face off tonight in the final presidential debate. it's wednesday, october 19th, 2016, and "worldwide exchange" begins right now. ♪ good morning.

welcome to "worldwide exchange." i'm sara eisen. >> i'm wilfred frost. good morning to you from me. >> let's check in on the global markets. after u.s. equities ended with positive gains yesterday, more than half a percent for the s&p 500. dow futures under just a tiny bit of pressure. down nearly 4. s&p 500 futures down almost 2. nasdaq futures down 11 points. let's check out the ten-year yield. yields backed off the highs yesterday. that core cpi, consumer price index coming in a little soft. that led to yields lower, 174 is the yield on the ten-year. more than 60% chance that the fed hikes this year. though it's not really moving much from that 60, 65% chance. it's not fully priced in. ten-year yield off the 180 level. >> the equities, even though gains were not huge, they were broad. all 11 s&p 500 sectors in the green yesterday. let's look at the global story this morning.

china gdp. the economy there growing 6.7% year other year in the third quarter. interesting that matches the aim and also the last two quarters, coincidence or not. so therefore it was in line with consensus, also data, other data out, september industrial output expanding 6.1% on the year. slightly below estimates. retail sales rose 10.7%, a bit better than forecasts. stocks in asia are mixed. shanghai coming off a decent couple of weeks trading is flat. hong kong down 0.4. japan up 0.2%. in line with expectations but likely fueled by stimulus on which note which was a sharp rise in chinese lending. keeping an eye on those figures. gdp bang in line. european equities, a strong day yesterday, up 1.5%. today they're giving back some

of those gains. you can see 0.2% for germany and france -- for germany and the uk. france is flat. as for the broader markets, seeing strength in the price of oil. surprise draw down in the api inventory number yesterday. we'll see if we get that trend today in the government report with crude inventories. that sent wti above $51 a barrel. brent, 52.41, up 1.4%. still talking about gains of about 13, 14% since that deal was announced in order to curb production. we'll see if they can go through with it. that gave the oil bulls hope. now breaking out of this range. >> that gain still very much based on rhetoric as opposed to action. >> strong signals. >> feels like there's a room for slippage because we've seen these things fall through before. $51, very healthy. >> importantly, it's come at a

time when the dollar strengthened. let's show you the currency trade. off the eight-month highs for the dollar index. the euro is getting a boost after a big selloff last week. we'll see. going into an ecb meeting on thursday. dollar/yen hovers around the 103.41 level. so, again, following yields, the dollar. as yields come off their highs, so does the dollar. last week the story was stronger dollar, higher yields, this week giving a little bit back. the pound, 1.2320 is the level. a bit of relief on the idea that maybe there will be a vote on the brexit terms? >> this morning also some labor market data coming out that is slightly stronger than expected. the vote aspect is complicated. there's some legal challenges on the brexit issue. there's likely to be a vote at the end when the negotiations are complete.

the wild card, which i think still is unsure, is whether there would need to be a vote to invoke article 50. still middle ground to expectations that there would be a vote soon to block the idea of brexit. >> they're figuring it out as they go. as for gold, let's show you the trade there. getting a bit of strength today, not much. about two bucks. gold trading 1265. shares of intel sliding despite better than earnings revenue. the stock declined on intel sales guidance which came in short of consensus. the chipmaker's executive vice president, stacy stit, stressing the positives. >> we had a clean beat this quarter. in terms of the guidance we set, we were higher in terms of revenue. our best ever revenue quarter,

up 17% versus last quarter. a 65% gross margin and 18% profit growth. a fantastic quarter. >> smith highlighted the company's success with noncomputer devices and that it aims to reduce dependence on selling chips for pcs. yahoo!. earnings last night beating estimates while revenues met forecast. issuing a stronger than expected outlook for the current quarter. the core advertising business continued to see declines. we found out from the report that the usage of yahoo!'s e-mail service has increased slightly since the company disclosed that massive data breach last month. yahoo didn't have the from traditional earnings conference call, but marissa mayers said she is confidence in yahoo's core business as the firm preparing to integrate with verizon. investors waiting for a tick up of the earnings and the trends of yahoo, now they wait until is

gets sold to verizon. some of the other top corporate stories. standard & poor's lowering the wells fargo outlook. following the downgrade, wells fargo delayed selling a ten-year bond. it's now expected to price today. >> the wells fargo fallout continues. the state of massachusetts will now stop using the bank as a bond underwriter for a year. joining a growing list of state and local governments suspending ties with the lender. the state's treasurer said she is not convinced that wells has grasped the level of seriousness of its actions or addressed the systemic failures within the organization. >> it's not all the states feel like they need to jump on. >> sort of political? >> doesn't hit their earnings. also not part of the business that was affected in the scandal. >> trying to make a statement. >> it's political, ahead of voting. it's, i know, it's drip feeding

it through, but not a huge issue for wells. >> though, as these little bits of news come out t hasn't stopped the bleeding. certainly from the stock and from the questions about whether wells has fixed what looks like a systemic issue. you still see the share price under pressure. >> yeah. definitely. we're still on wells fargo, former ceo, john stumpf resigning from the boards of target and chevron. chevron said strumpf left the board for perm reasons. it's another busy day for earnings and economic data. september housing starts are expected to have rebounded. 2:00 p.m., the monthly beige book report from the fed which tracks conditions in the 12 districts. a trio of fed officials are speaking today, san francisco fed john williams, rob kaplan and new york fed president bill

dudley. look for results from morgan stanley before the bell. american express and ebay after the close. overall what was a pretty strong quarter and strong thanks to fixed income bond trading. >> mainly because of fixed income bond trading. investment bond revenue more mixed. the m&a pipeline was pretty good. the stand-out thing from goldman sachs was the return on equity, up 11%. that's -- >> haven't seen that in a few years. >> and it's a real stand-out relative to other banks. all the banks saying it's not a stellar environment to be trading trading in, but all of them showing decent returns. it will be hard to beat that r.o.e. landon has three things for us to watch in a different set

of numbers in american express, which reports today. landon? >> the street expects american express to swipe up third quarter earnings up 97 cents a share on revenue of $7.7 billion. beyond those numbers, here are the three things to watch. costco impact. they may sea weak earnings following the end of the relationship with costco. watch for them to restrict sure. though jeffries group remains cautious citing a tepid spending, lower prices at the pump and airline prices have given extra cash in peoples pockets and should be a positive. and spending. will the bottom line suffer from higher marketing and promotion expenses in order to gain market share against the competition? shares of amx down 6% in the past three months. the stock declined the day after

the numbers were released nine out of the last ten quarters. still to come, a round up of the stocks to watch. there are more of them. a live report from vegas where hillary clinton and donald trump will square off tonight in the final presidential debate. first, as we head to break, a look back at this day in history, october 19, 1987 forever known as black monday, when markets around the world crashed. the dow falling 22%. the crash leading to the creation of trading curbs or circuit breakers. looking at old school trading footage. back in a couple minutes.

good morning. welcome back to "worldwide exchange." let's get you up to speed on the market action. yesterday about 0.6% of declines for the s&p 500 -- excuse me, of gains. the nasdaq was up 0.8%. it was a broad rally. all 11 s&p 500 sectors were in positive territory. this morning we're in the red, marginally so. just below flat in the premarket off the back of chinese gdp data being in line. asia mixed to flat. europe just below flat. let's look at oil prices. api inventory data showed a bit of a tick down in inventories, more than expected.

that led to 0.8% of gains for wti. today above $51 a barrel for wti. other stocks to watch, a profit for cree, but reporting a sl sluggish quarter. intuitive surgical beating forecast on higher sales of its da vinci robots and growth in using its products. the company is maintaining its growth outlook for the year. hp enterprising warning it will take a financial hit when it spins off its computer services and software business in the coming year but the company says its remaining operation should grow slightly in line with forecasts. visa is hiking quarter dividend by 18% to 16.5 cents a share. the move comes a day after the company announced the ceo is

stepping down. asml reporting a 23% jump in third quarter profit. the chipmaker equipment revenue's increased on the back of new machines. orders were up almost 3%. nissan will report carlos ghosn as chairman of mitsubishi motors. mitsubishi admitted to falsifying mileage on several vehicles. shares up a half percent. a federal judge in california says he is strongly inclined to approve volkswagen's $10 billion settlement over its diesel emissions scandal. the final resulting will be announced next week. vehicle will pay up to $10,000 to each of the 475,000 affected owners. the automaker handledired 900 p

to handle the buybacks. coming up, the final presidential debate between donald trump and hillary clinton is tonight. a report live from the strip is next. first, here is the weather from jen carfagno. >> halfway through the week, the heat is still on. more than 200 million, 220 million people above average today. with temperatures. we'll feel it in the east. some records again. new york city going to 83. atlanta, 88. so far 177 records set and the trend continues. in the southeast and northeast warm. still warm in texas dallas 89. chicago, not quite as warm, but still above average with temperatures in the 70s. when it comes to rain, we have a front we're tracking. could be some strong, damaging winds or hail with storms in

missouri later today. other than that the big story are the winds, up again today in southern california. i'm jen carfagno for the weather channel. "worldwide exchange" continues after this. , but you can still move around. and now that i have a tempur-flex, i can finally get a good night's sleep. buy the most highly recommended bed in america for as low as $25 per month and a 90 night free trial.

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with up to 4 times the freshness in one refill. pluggable febreze and fabric refresher [inhale + exhale mnemonic], two more ways to breathe happy today, i am helping people work better... and also feel better. i am helping hospitals personalize treatments using billions of data points. and working with medtronic to predict the highs and lows of diabetes, hours in advance. and i am working with orreco to use biomarker data to boost the performance of athletes. hello, my name is watson. working together, we can outthink anything. welcome back to "worldwide exchange." less than three weeks from election day and the presidential candidates will go head to head one last time. the third and final debate tonight in las vegas.

tracie potts joins us from las vegas with a preview. great back drop there in vegas. i'm sure people are still out from last night. >> reporter: no question about that. good morning, everyone. we're actually overlooking the strip because we had to move off the unlv campus because they're doing the final security preps for the debate tonight. we asked both campaigns to show us how their people on the ground are getting ready for this debate. the trump campaign declined. the clinton campaign gave us this inside look at volunteers. >> hi, i'm calling from the hillary campaign. >> reporter: volunteers. working the phones at hillary clinton's nevada headquarters. >> voting is in three weeks. is there anything we can talk about? >> reporter: confident in their candidate but some anxious about tonight's debate. >> one little thing can go wrong and that's all people remember. >> reporter: donald trump claims the media focuses more on sexual assault allegations against him

than e-mails suggesting the state department tried to declassify a top secret e-mail after clinton sent it. >> reporter: the press has created a rigged system and poisoned the minds of the voters. >> i'd advise mr. trump to stop whining and go try to make his case to get votes. >> reporter: the president's half brother is attending tonight's debate. he's a trump supporter. so is the mother of bengahzi attack victim, sean smith. she'll be here. clinton's guests include mark cuban, a trump critic, and republican donor, meg whitman, now backing clinton. clinton arrived in las vegas, her game plan, stay focused and look presidential. trump's game plan, go after clinton's and look smart. >> he'll be go out swinging. >> he'll be on the left, he'll be on the right with millions of undecided voters still in the middle. we learned overnight that donald trump touched down late last

night a few hours ago. clinton will get the first question tonight. >> what is the status of nevada itself in terms of which way it will vote and its own senate race which i think will be tight, right? >> talking about that senate race in nevada which is interesting. they're replacing harry reid who is retiring as not only the minority leader, previously the majority leader but also the representative for this state. it's a tight race. when i was at clinton head quarters yesterday, as they're maki making calls, that's one where they're more concerned interestingly. >> we'll see how harry reid and donald trump play in, even though neither are running for that senate race. thank you, tracie potts reporting for us. on the vegas front. >> yes. >> lucky numbers? >> roulette i always play. the most social game. 26 is my number.

>> 26? >> mm-hmm. >> any reason? >> just a number everyone in my family has played on roulette. >> what about you? >> number 11. >> it's a fun game. we should go. >> we would gamble the whole time and miss the debate. we did hear from tim kaine on cnbc yesterday. he spoke with kelly evans and said hillary clinton would seek to strengthen regulations on wall street. kaine also hammered those who argue donald trump would be better for the economy than clinto clinton. >> i can't imagine any savvy financial person who thinks that the trump plan is going to be better when the independent analysts who are sharp at this say it will be dramatically worse. secondly, when it comes to taxes. the trump plan does a lot of tax giveaways, but groups left, right and center who look at it say it will raise taxes on millions of middle class families.

that's just to the what we ought to be doing right now. >> kaine added that no one should worry about fair wall street regulations that will allow the economy to grow in a sustainable way. an interesting question she asked is what role would elizabeth warren and bernie sanders play in the next administration if they win, he declined and said we won't count our chickens before they hatch. >> i don't see elizabeth warren playing second fiddle very well. she likes to be out in front. >> she has an op-ed this morning in the "washington post" going after donald trump. >> the other thing, to enhance her -- hillary clinton's business acumen and vote on that, did you see the story tim cook was considered as a possible running mate? >> there's a long list -- >> that would have done well. i don't think any of them with have accepted it. >> this is in the week the podesta e-mail came out. a number of corporate leaders, the ceo of coca-cola.

howard schultz of starbucks, i guess it was considered not that big of a deal. >> but it could have been an interesting balance of the ticket. sticking with politics, richard branson is not rooting for donald trump to become president. appearing yesterday on "power lunch," he said the u.s. would definitely benefit from having an entrepreneur run the country but trump is not the right one. >> i'd listen to what he's had to say, and i think what he's had to say is dangerous. and hurtful. and he's not a good listener. he's not somebody who could get a great team of people around him to run this country. he's had a lot of disaster with his countries. he's been bankrupt three times, despite being given a lot of money from his father in a silver spoon. branson endorsed hillary clinton in a blog post last week writing a trump presidency would be "a disaster."

>> you can catch all the action from the third and final presidential debate right here on cnbc. coverage begins at 9:00 p.m. still to come, the top stories including the latest gdp figures out of china. a live report from beijing still ahead. don't miss goldman sachs mareman and ceo lloyd blankfein. he will join david faber live at 2:40 p.m. you're watching "worldwide exchange."

good morning. new data on china's economy. a live report from beijing straight ahead. shares of yahoo! and intel on the move this morning. and rewriting the rules. why facebook wants you to discuss politics with friends. it's wednesday october 19, 2016. you're watching "worldwide exchange" on cnbc. ♪ >> good morning. welcome back to "worldwide exchange." i'm sara eisen. >> i'm wilfred frost. good morning to you from me as well. let's get to the market action. we saw gains yesterday led by the nasdaq up 0.8%. the s&p 500 and dow up around a half percent with all 11 s&p 500 sectors in the green. today we are looking at declines, only slight. just below flat.

this off the back of a mixed picture of trade. slightly soft in europe, down 0.2% for the main indices. of course yesterday your closed very strong indeed, up about 1.5%. a bit of profit taking understandable. also a bit of treading water the day before an ecb meeting. >> feels like the stock market can't get itself going in terms of momentum. one day on, one day off. yesterday's gains were the best of october for the s&p 500 and the nasdaq. the momentum is not there. will it come from earnings? we're looking for a catalyst. will it come from the fed? that's where investors are trying to figure out whether december is a go, whether that's okay for the economy. a lot of big question marks. >> the momentum is not there but it comes off the back of a strong quarter for share price performances or in and around record highs for the nasdaq. >> high valuations. >> high valuations and bond yields ticked up. we were down to 1.6. now close to 1.8.

the fact that markets have not been derailed is how we should be framing it. >> the bull side, you have oil prices breaking out of a range at $51 a barrel. and you have earnings growth. look at what the banks just reported. the bar may be set high for this group. certainly profits and better trade revenues. we'll see what the consumer sector, discretionary kicks off as. >> i think the banks paint the picture well. if you take goldman sachs out, compared to q1 and q2, they already had good share price perform plans. based on fed rate hike expectations. that's what it comes down to for the banks and other sectors. earnings beat, we got a bit of a pick up in share prices. it hasn't held because it comes down to one factor, will we get the rate hike, in which case they're off to the races, if not, they're not. >> on that front, there's

squishy data on the economy. >> squishy. i like the word. >> the global market story and mi economic story is china growing 6 6.7%. eunice yoon has that and more. good to see you. >> good to see you, too the economic stability here is really the main priority of the government but to some exists the numbers that we're looking at are not only squishy but maybe a bit too stable. the gdp figures were 6.7%, the same as the first and second quarter, that leads to questions of the voracity of the numbers. a lot of economists have been looking at the september figures. trying to get a better sense of the growth momentum. the industrial production

numbers came in a bit slower. but at the same time, the fai, fixed asset investment and retail sales kale in improved. that was good. what was driving the growth in the third quarter is government spending as well as recovery in the property sector. we've seen the government unleashing -- or green lighting a lot of infrastructure projects, and through the state banks unleashing credit. that's helped to lift the housing sector. though now, guys, people are more concerned about the potential dangers and risks that come with that. >> that's always the question right after these numbers what st is the expectation for the stimulus, how much stimulus is there in the economy. we're trying to figure out these puzzles. how would sum up the government involvement on the economic side to get the 6.7% growth number? >> i think the government

involvement is very, very heavy. on one hand the government has voiced their concerns about not repeating 2009 after the financial crisis. so there hasn't been a big flood. at the same time they do have growth targets they want to reach. that's the big concern, that they are more focused on the growth targets, and letting things go a bit with the whole credit and concerns about rising debt. >> eunice yoon, thank you very much for running the numbers out of china. as for the broader market picture, i mentioned oil. nice rally, wti above $51 a barrel. brent 52.44, up 1.5%. surprise draw down in inventories from the api report yesterday. we'll get the crude number later in today's session. ten-year yield off the highs of la last week, 1.74. the consumer price index a bit

soft. >> squishy. >> you love that word. >> it's yours. >> as for the dollar which has been following yields closely, it's also backing off with yields. the euro stronger, 1.09. weaker against the yen and the pound strengthens, 1.23. >> the dollar you might say today is -- >> squishy? >> yeah. >> dollar yields a bit squishy. >> have not been solid recently. gold prices to round things off, i wonder what they'll be -- >> higher. >> solid. >> up half a percent. >> not squishy. >> 1.269. shares of intel sliding despite better than expected earnings and revenue. there was growth in the pc demand and date and cloud z services. stacy smith stressing the positives on closing bell

yesterday. >> the data center was an all-time record. the internet was an all-time record. fo from t from what we see as our strategy was hoping, we see this strength in the cloud and the data center, then all of these smart and connected devices connecting to that cloud. that's where you see strength in the internet of things and the strength in the client sector with pcs. >> intel transitioning to faster growing areas like cloud. shares down about 5% in the premarket. they were down yesterday as much as 6% after the call kept going. that's when they started to lose steam. a lot of people talking about the lowering of the bar for the data centers growth to the high single digits. that needed to be double digits according to investors. the stock has given about half back in the premarket.

>> and intel has not hit the growth target for data centers, only did that once in the last six years. >> and that accounts for nearly half of the company's operating market. yahoo beating estimates while revenues met forecasts. yahoo issuing a stronger than expected outlook for the current quarter. yahoo did not have its traditional conference call, but in a statement marissa myer said she is confident in the core business. shares up about 1% in the premarket. a leaked document from an internal presentation from earlier this year shows sales force.com was looking at more than a dozen potential takeover targets but twitter did not make the list. the document from may was part of hacked e-mails from former

u.s. secretary of state colin powell. he's on salesforce's bond. the document has 14 possible targets including adobe and linkedin. clearly when we get e-mails like that, it's going to cause a lot of chatter and discussion on wall street. >> indeed. beyond earnings, let's get to some other top corporate stories. standard & poor's lowering wells fargo forecast from stable to negative. following the downgrade, wells fargo delayed selling a ten-year bond. it is expected to price today. another busy one for earnings and economic data. today, september housing starts due out at 8:30 a.m. eastern time. they are expected to have rebounded this month after

falling 6% in august. 2:00 p.m., the monthly beige book report from the fed which tracks conditions in the 12 districts. a trio of fed officials are speaking today, san francisco fed john williams, dallas fed president rob kaplan and new york fed president bill dudley. look for results from morgan stanley before the bell. after the bell, american express and ebay reporting. >> 7:00 a.m. for morgan stanley. >> and then the call. an unusual collision of business, government and hollywood today. leonardo dicaprio says he is cooperating in the malaysian wealth fund scandal. the doj argues 3.5 billion has been stolen from the wealth fund. leonardo dicaprio says he is waiting to hear from the government about any ill-gotten funds that may have helped finance his film "the wolf of

wall street." today's top trending stories, president obama and first lady michelle obama hosted their final official state dinner last night. they were hosting italian prime minister mateo renzi and his wife that was a star-studded crowd. guests included gwen stefani, mar mar mario bitalli. here is part of president obama's toast. >> i wanted to take this occasion to thank my great friend, mateo. he may be the youngest prime minister in modern italian history. he makes me feel old, which is unfortunate. when i came in, i was the young guy. now he's the young sguy. >> do you know how old is he? >> early 40s. >> over 400 people attended the

dinner. it looked like a ball. >> state occasions are pretty cool. >> where is our invite. >> lots of italians got invited to that one. >> maybe you can go to theresa may's state dinner. i'll sneak you in. >> will you? >> if you take me. >> if you're nice to me. facebook wants you to back a political candidate. the social network is rolling out an endorsement feature. if you're worried about backlash from your circle of friends, don't fret, there's a way you can limit the audience of who will see your political pic, facebook having an issues tab with quotes and clips detailing a candidate's policy. if their experience around brexit is anything to go by, i would say don't post your political allegiances. there were a lot of vitriolic attacks. >> even though on this feature, you can make it so only your

friends see it. >> that's what i mean. it exposes divisions between friends which you didn't think existed. coming up, the must read stories in the papers, first early european trading at this hour. a mixed to lower picture across the board. the ftse 100 down about a quarter of a percent. honey, aren't we having friends over? it reeks in here. i know [goat noise] i stole the other team's mascot for good luck. we need to wash this room. wash it? yeah, wash it with febreze. for all the things you can't wash, use febreze fabric refresher wow [inhales] it really smells great in here. dog barks and try pluggable febreze, with up to 4 times the freshness in one refill.

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now to the must-read stories catching our attention in the papers. my pick in the "washington post," america's election is giving the world some serious anxiety. comes from david ignatius who has been traveling lately. i picked it because on "worldwide exchange" we like to give the global view of the u.s. political situation. he actually offers sort of a counter intuitive narrative that the world is not so bad. european allies are stressed by migration and populist but so far the fragile center is holding there, too. and it would be reinforced by a clinton victory. in asia, the next administration will build on enhanced economic and military ties with two close partners, south korea and japan. and closthey have become better

friends with each other, too. so ultimately the election should yield -- he assumes hillary clinton will win the presidency. and another op-ed in the "washington post" today about how donald trump could still win, even though he's behind in the polls. >> yeah. i think the issue, the comment on europe and its fragility. the issue with europe is they're focused more on their own issues than the presidential election. my pick is in the "wall street journal," millennials versus mutant capitalism. about 70 million millennials will be eligible to vote in the presidential election for the first time. the results of a survey seem troubling. about one-third of americans aged 18 to 29 support socialism, not even half back capitalism.

that's the basis of this article saying it's a worrying position to be in. yet the author goes on to say, strip away the titles of capitalism and socialism and the response is drastically different. a 2015 poll found that college-age respondents are far more supportive of a free market system, 72%, than they are of a government manages system, 49%. so a growing number of the pie are disillusioned with the status quo, but when you dive into it, it's not simply socialism they are supporting, they want to feel like they're getting exposure to free market economics, which they haven't done since graduating in 2008. >> one of the biggest questions is whether they show up and turn out to vote. that was a big question in the brexit vote as well. the older crowd showed up much more in force. >> absolutely right. >> voting out than the younger crowd, which wanted to vote in.

totally different dynamic here, not on turnout but what they want for the future. >> the expectations on if turnout is going to be a factor leading into this is similar to what they were before brexit and after brexit turnout, 2015 general election, 65%. 73% in brexit vote. a massive swing in turnout. that favored the wild card expectation. >> that's getting the bernie sanders supporters that are young, millennials to vote, that's the hillary clinton task. stay tuned, you're watching "worldwide exchange" on cnbc. futures down about 8%.

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what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley sprint? i'm hearing good things about the network. all the networks are great now. we're talking within a 1% difference in reliability of each other. and, sprint saves you 50% on most current national carrier rates. save money on your phone bill, invest it in your small business. wouldn't you love more customers? i would definitely love some new customers. sprint will help you add customers and cut your costs. switch your business to sprint and save 50% on most current verizon, at&t and t-mobile rates. don't let a 1% difference cost you twice as much. whoooo! for people with hearing loss, visit sprintrelay.com. there is just a dearth of aggregate demand.

there's austerity in europe, dysfunctional government in the u.s. we're not getting the fiscal spending we need to jump start things. central banks got rates down to zero. there's not much more they can do. negative rates have unintended consequences as we have been seeing. until you get something jump started which has to be government spending, we will be in the environment of low growth, low interest rates. >> that was york capital management founder jamie dinan on the half time report yesterday. joining us now to discuss markets, chanhans olsen. a dearth of aggregate demand is mr. dinan's phrase. do you agree? that was a bearish outlook on the economy. >> i would have a different view. if you look around the globe, through the lens of purchasing manager indices, you are seeing a picture of growth throughout

the world. perhaps the weakest link is japan. even there trends are pushing higher. i don't see the -- i understand the low growth argument, but i don't think that it is abnormally low for sure. >> we were talking at the top of the hour about how we're in this pattern now, one step forward, one step back when it comes to the stock market. i'm looking at the best performing sectors for the week. utilities, healthcare, that doesn't give you a good snapshot of the leadership or the direction the market is going in. >> we've had 47% of companies report. those that have reported have reported fairly good earnings, overall the expectations for q3 would be an earnings drop of 1.8% at this juncture. which is an improvement for where it was at the beginning of the quarter. that often happens. i think it will come in, when we look at -- if we hit anything

down 1.8 or better, that will be good. it will be put pressure on q4 if we have any earnings growth this year. that's why the market will be range bound from now through the end of the year. we'll bounce around the range that we've been in probably since the end of august. >> is that an encouraging sign? a positive to say that the fact that we're not seeing markets fall is encouraging given that bond yields are ticking up? rate hike expectations are 66% for december? is that a positive? >> i think so. the envelope of margin of safety we're operating in is getting thinner. the reality that eventually the federal reserve and other central bank also have to change their approach to monetary policy will dawn on the market. they'll be forced to do something, and that upset will be the source of the volatility that we talked about in the past. that is for another day. it's not even clear to me that they'll raise in december. i know the expectations are that

they will. but if past is prologue, you get closer, you get a weak data point or two. markets get worried about a rate increase, the central bank backs away. i'm not sure that won't happen this time. i don't think a rate increase in december is bad. should they raise? yeah, they should have raised for some time. will they? not so sure. you mentioned earnings, the ones we've seen have been pretty good. the question is are they good enough to please investors ? if you look at the banks, they were pretty good. the stocks rallied into them. with these valuations on the market, how good does this earnings season have to be? >> if it's in aggregate, at the end of the season, let's say four weeks from now, we -- you know, the earnings are on an aggregate level down less than 1.8%. >> you're including energy

there. >> yeah. all in. >> accounting for the drop. >> most of the drop is energy. yes. if we get those types of numbers, that's good news, i think. then it sets up fourth quarter for really being the hail mary pass that you have got to have -- >> at the moment, sector picks, you're underweight large cap, overweight the small caps, why is that? >> it's valuations. when you look at trailing earnings on large cap, you're roughly 20 times. more if you base it off q2 earnings. seems to us where we're getting the best value in terms of operating fundamentals and catalyst, because they're more linked, the small cap sector. >> hans, thank you very much. before we go, you can catch all the action from the third and final presidential debate tonight right here on cnbc.

coverage begins at 9:00 p.m. eastern. don't miss 2:40 p.m. eastern time, david faber's exclusive with lloyd blankfein of goldman sachs. morgan stanley reports at 7:00. d his cash rewards credit card from bank of america to earn 1% cash back everywhere, every time. at places like the batting cages. ♪ [ crowd cheers ] 2% back at grocery stores and now at wholesale clubs. and 3% back on gas. which helped him give his players something extra. the cash rewards credit card from bank of america. more cash back for the things you buy most.

good morning. busy day for earnings. dozens of s&p 500 companies ready to roll out results. we'll tell you what to expect and what's already happened. and china's economy growing 6.7% year over year in the third quarter. that was basically in line with expectations. we'll get a live report from beijing. and showdown in las vegas. no, i didn't this the perfect place, venue for the upcoming debate tonight between hillary clinton and donald trump. the final presidential debate.

it's wednesday, october 19th, 2016, "squawk box" begins right now. live from new york where business never sleeps, this is "squawk box." good morning. welcome to "squawk box" here on cnbc. u.s. equity futures, look at where they are this hour. they are slightly negative, despite the fact we did get that positive data out of chain that overnight. the s&p would open down by 2 points. the dow down by 9. the nasdaq opening down by three. let's look at europe right now. largely mixed. the only positive market right now being spain. the rest slightly negative as well. perhaps our futures are tracking that. look at crude. another good day for crude up 1.5% on wti,