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good wednesday morning welcome to "squawk alley." i'm carl quintanilla joining us this morning former ceo with us, a mentor at index ventures good to have you with us we're down 85 points some of the selling is intensifying although the losses are not huge, the dow and s&p are having their biggest one-day drop in about seven weeks. >> worst performing sector is telecom. that's a small sector, big move on at&t, causing after earnings miss last night. a few other earnings movers to speak of, we're seeing weakness there. utilities, financials, industrials, broad-based selloff here when it comes to s&p. tech holding up relatively well. ge getting hit again. >> yes opened below 22. we're going to get to the

markets with dick in a moment. first up, dick, social media and regulators, twitter saying it will add labels to political ads including who bought them, how much they are spending, ahead of representatives facebook, alphabet and twitter all testifying on capitol hill next week and follows prodder concerns over ad policies, fake news, privacy, dick, the sheer size of big tech how is it being talk about where you are and how is it being thought about in your own head >> i think there are sort of two camps out here, i would say. in one camp you've got sort of historical perspective, hey, we're technology companies we're platform companies we're in the business of distributing other people's content. we don't want to make -- we don't want to have to get spot mud, if you will, of making editorial decisions. i think there's another camp that i've probably caught myself in this second camp that's more of the opinion, look, we always make editorial decisions you make user safety decisions

about what accounts to suspend and what accounts not to suspend. we should just, you know, take the blinders off and admit that we always make editorial decisions and we should -- we're going to have to be more and more in that business. i get the hesitance to want to admit that because with hundreds of millions of pieces of content pouring in, you're going to miss a lot of border cases and edge cases. i'd like, for example, seeing twitter get more dpref about some of the things they are going to do like tag these ads and get more aggressive on user safety. >> dick, it seems to me political ads are not the problem. if it's a political ad and you can see it's political, fine it's the ads that are maybe divisive or controversial that aren't explicitly political and the fact the viewer doesn't necessarily know who placed that ad i'm not sure twitter or other networks know who placed that ad how much more visibility do we

need into the character and motives of the people who are trying to use these platforms to manipulate. >> one of the suggestion has been to make sure these tags and the ads, if you will, are in some sort of machine readable format there's no way you or i or any other small group of people is going to be able to pour through the overwhelming quantity of ads that go through these systems and try to figure out who is targeted with what if you put them in machine readable format, the ads and tags themselves and make that available for review by some other machines and other computers, you'll have a much better way of trying to figure out where these things are coming from and what's actually happening. that's probably where this all needs to head. >> this is already being discussed, as you know in congress there's honest ads act, bipartisan backed by mccain and klobuchar and warner that sort of gets at this idea.

do you think the rules need to come from washington or can the industry police itself >> you know, the challenge irrespective of where the rules come from, the challenge is going to be trying to figure out who is behind these things as you know, you can create any sort of company to buy some of these ads. even when they are tagged, it's going to be a job of combing through the tags and trying to figure out who and what are behind some of these ads again, irrespective where they are political or otherwise. >> two questions here, dick. what do you expect the tone to be like when everyone goes to the hill in the coming weeks, and how much of this -- i always come back to you now, famous memo, about abuse and how you thought the company wasn't tackling it well enough at the time how much worse is it now than you thought it was even back then >> well, i just wanted us to be more aggressive. i liked some of the things that

i just -- jack has just recently announced they are going to get more aggressive. i was excited to see that i always wanted us to be more aggressive about tackling those things the challenge whenever you create new rules is you get new gray areas right? now you've got to have more people looking at these gray areas. that's just something i think all of these platforms are going to have to deal with i'm talking about facebook and youtube and all of these, again, platforms that are distributors of other people's content but also make editorial decisions every day. they are all going to have to get more aggressive. >> dick, let's turn to technology and the markets tech has taken a step back in the recent run-up. they have been overshadowed by industrials and blue chips which appear in the driver's seat this week for a year it been about tech. i know you're a savvy investesh, although you don't talk a lot

about it cost low capital management, what do you like >> i'll tell you, as crazy as some of the valuations are, long-term i still like these big tech companies as they become distributors of more and more content, more and more original content, you know, reed hastings and netflix knows this, he's going to face increasing competition obviously from amazon. he's talked about that but some of these other big platforms as well, google, twitter. these are huge opportunities they see these huge opportunities and are attacking them aggressively and i like the future for the big tech platforms, the fang companies, if you will. >> dick, saying long-term is one thing. i'm taking a look at some stats here over 12 months oracle up 30%, apple up more than 30% go down the line, intuit up, goodness, in the 40% range would you buy those here and

now? i mean 12 months ago apparently those were ridiculously undervalued if we're okay with those here >> i'm more focused on i would say some of the, you know, the top of the pyramid amazon, for example. i'm sort of a feel the way he does, talking about the potential. it's hard to see anything traeg down other than macro economic trend taking amazon down in the mid or long-term jeff has been incredibly successful with multiple lines of business. amazon web services is a juggernaut obviously what he's starting to do more and more aggressively in retail with the whole foods acquisition seems to have tremendous upside. so i just think that these are extraordinary companies with extraordinary earnings potential. >> the fact that they are

attracting the interest right now of regulators, a that can manifest on earnings we've seen that with bigger eu finds, for instance, for antitrust division does that not worry you? is that not a headwind for business earnings and stock performance? >> i'm sure it worries them. it doesn't worry me so much. you know, you can imagine it does merit investigation in some of these cases some of these companies have enormous market leverage and i'm sure leverage is a word they wouldn't like to hear me use, because it does sort of invite regulators into the tent i just think amazon has so many areas of business where they have extraordinary earnings potential. it's hard to see regulators doing into that that would really hamper their ability to operate a number of these businesses successfully. >> dick, i know you're usually love to tell jack dorsey how to

do his job, this morning we had a discussion about square market cap on the cusp of eclipsing twitter, we looked at a chart versus square versus s&p remarkable to see what it's done in fintech space a lot of viewers wonder if you think it would behoove jack to pick a side. either do with the one that remains challenged or go with the one that's got a big tail wind. >> i'm not usually loathe to tell jack what to do, i'm always loathe to tell jack what to do look, i think he's doing -- he's doing a great job. he's present at both companies he's got an incredible ability to sort of compartmentalize. when we talked about twitter all the years i was there and he was on the board and adviser to me, we would only talk about square if i brought it up it wouldn't otherwise come up.

i think both his leadership teams, you respect him and admire him i'll tell you, you know, for years people were sort of shaking their heads about square and how is this ever going to work it's a testament to his persistence and resilience that it's doing as well as it's doing. >> dick, we always appreciate your candor. good to have you back. it's been a few weeks. hope to talk to you soon. >> great thanks for having me. >> dick costolo joining me from one market dow down again on absolute basis, not impressive selloff, .4%. but you've got to go back almost to late august to find a loss this large on the dow and s&p. >> it really does appear to be earnings driven, which was what was behind the rally yesterday boeing is the biggest weight on the dow, even though we got great numbers on the economy this morning new home sales, highest level in a decade durable goods showing business spending is picking up keep in mind the context here also you've had this very

buoyant risk on kind of mode it's boosted the dollar and treasury yield and stocks. so we're taking a pause coming off those highs. >> air pocket for amd, that company down more than 10% so far in early trade shutterfly also off nearly 8%. so the smaller tech names not doing so great. >> when we return this morning, is apple sacrificing quality or quantity when it comes to the new ten? we'll fill you in. later amazon wants to deliver packages inside your front door even when you're not home. we'll talk about that when "squawk alley" comes right back.

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stocks are lower this morning following a slew of earnings major tech companies now on amazon, all reporting tomorrow this as investors waiting for president trump to name the next fed chair. 100 point decline on the dow, worst day, biggest drop for dow and s&p since early september. let's bring in brian jacobson, senior investment strategist and wells fargo and mike santoli back on set. you see amd, chipotle, not as

strong as the industrial stal warts we got yesterday. >> i agree with that it's definitely providing an excuse to take profits i do think this earning season has been fighting the general sell on the news effect we often see with earning season. i mentioned yesterday at this point in the last earning season, which was also a good one, stocks topped out for the season two weeks into the earning seasons july 27th, i think the market just kind of says, okay, we got it. we're a pretty good run rate of earnings growth. we price that in, already have priced it in i wouldn't necessarily draw too much from today's action about anything so nasty in the earnings report as much as it was an excuse after a really good streak on the upside to pull back a little bit also big tech stocks are not running to the rescue of the broad market they are also, in fact, down more. >> i was going to say, intel, microsoft, amazon and alphabet all report on thursday and all are down. >> they are all down that's not really been the focus. mostly about the cyclicals, not running up into those reports. i think in terms of this whole

rotation you're not seeing that direct support at least on short-term basis. >> interestingly information technology better performing sector in s&p. names like visa which actually have good earnings as well how does this set us up for slew of big tech earnings. >> it will be interesting what they come up with. i agree with mike. i usually agree with mike, that shouldn't ab surprise. reassuring this is actually more of an earnings-driven phenomenon as far as the mild selloff we're having today you think about it, we're actually back where we were five days ago it's not that huge of a move at least in terms of s&p 500. earnings still matter here i think that's really relevant for investors when they are thinking about valuations, they are stretched, are they going to implode in on themselves just because of the weight of the valuations the answer is still no as long as you see earnings continuing to rise, that should be constructive for the market

overall. and when you look at the economic backdrop, the new home sales numbers, those are probably slightly distorted as a result of rebuilding from hurricane harvey those are looking good looking nord to third gdp number, what's that going to tell us. people are beginning to ratchet up their expectation for low expectations for the third quarter here that actually bodes well for the market. >> netflix, blowout report, the stock has done nothing amd last night top and pobottom line. gross margin, down 10% those are stocks that tend to move quite a bit on positive news but they are doing something weird here what, if anything, should we take a look at that. >> i think many stocks got stretched. basically you got everything onto the boat thinking a good number netflix double in 12 months

before. >> are they bellwethering? is it running out of gas. >> i don't think for the broad market i think it has an issue in terms of making sure thea path continues higher if you do back to the third quarter of 2014, okay, earnings this third quarter that we're hearing about right now are up 10% from the quarterly run rate three years ago. 10% in three years over three years s&p up 20%. so there you go. the market is a little more expensive. you have to have a higher hurdle again, as brian says, nothing in the macro is making you knock down fourth quarter numbers or downscale your expectations for 2018 until you can kind of make that case that you're really having a downgrade earnings expectations in a big way, i think the market can kind of hang around here. >> how much of an overhang do you think is the question of taylor versus powell versus yellen >> i think short-term -- >> if not on equities, volatility 1267 on the vix gets your

attention. >> i think it's one of those things traders have decided to fix. when you have something that's a soft or hard deadline that everyone can focus in on, we've got to surf every headline, i think it becomes a preoccupation especially when the bond market seems like it wants to break out in terms of yield. >> finally, brian the data strong surprise jump in home sales since 2007, durable goods. are you surprised to see the dollar weakening here and treasury yields moving sharply higher >> day to day moves can be confounding, stronger growth numbers in the u.s. you'd also see a stronger dollar. you also have the yields moving up significantly here. it is a little bit perplexing, maybe a bit of a head fake as far as the move of the dollar in the near-term. i think as most academics would point out, exchange rates are prone to overshooting both on the upside and downside. so maybe it's just more noise, not so much signal here. i think that maybe the fed chair

decision might be coming to a head wen the next few days here. let's keep in mind as far as with that, there are a number of vacancies on the board it's entirely possible president trump could say you're all hired in some capacity or other. >> yeah. and what would the markets do with that? i don't know tilt it more we'll see what happens, brian, thank you for weighing in. brian jacobson and our own mike santoli. >> shares surging leaving s&p 500, we'll talk to the ceo right here next.

>> akamai technology is a leader on s&p this morning cloud security and content delivery provider reporting 9% decline in

profit year over year but beat estimates by growth in its security, cloud security business joining us now here at post 9 akamai ceo thom leighton good to have you. >> nice to be here. >> you started off your call talking about cloud security, your kona product does among other things prying to prevent exactly the kind of thing that happened to equifax. >> okay. >> so how much have your inbound calls increased post equifax how is that affecting the business going forward. >> security business at a clip, half a bill a year, growing high 20%. kona does provide security to keep things like that from happening. >> confident you stopped it. >> those kind of things easily stopped just by filtering traffic coming into the enterprise. >> while your cloud security business is growing quickly, the

rate decelerated what, if anything, does that say about the maturity of the business and does that in part drive m and a. >> we have a long way to go in security you can look at the headlines and see the attacks and damage they are causing recently we debuted new technology using machine learning to distinguish between a human's behavior and a bots behavior how you hold your mobile phone when you're doing a transaction and that's really important because so many login attempts are bots trying to break into accounts, steal people's money. >> how you hold your phone. >> yes. >> using nanotechnology to say a human being is actually doing this by hand >> absolutely. you'd be amazed as you hold your phone you do certain motions, click and tap. when bots come into your site different profiles it makes a big difference saying, hey, this is a bought that's stolen somebody's

credentials. we have to block them and alert security. >> what's happened in the media business the traffic you dealt with up 24% but revenue is down. that doesn't look good for margins. you say it stabilized. how confidence are you why are you confident it has stabilized and what's happening with that dynamic? >> traffic grows and price decreases. overall revenue pretty steady in the media business now but traffic is starting to accelerate so the internet as a whole growing about 20%. we grew more than that we're gaining share. video almost double that look to the future with more and more video going over the top. huge potential for growth. that will drive. >> you don't break that out specifically in the media business >> we talk about it sort of once a year but video is rapidly becoming large portion of our traffic. if you look to the future of the internet, that's what drives the growth of traffic on the internet. >> what's the impact of the

cloud giants on your business? the expectation, once they have consolidated all those bits and facilities they are going to use pricing power to make sure they don't have to pay a lot to folks like you. >> well, the cloud giants are very big companies they have already figured out how to use pricing power several of them are my customers collectively all together they account for 8% of our revenue now. so we're much more diversified than we used to be when they accounted for about a quarter of our revenue. i think it's a pretty stable situation right now for us we provide real value for them you know, i think the impact they have had on our revenue growth at this point will start to abate. >> as you see these clients spend more on business, everything from security to all the other services you provide, do you get the sense that business's appetite for spending is picking up, or waiting for things like clarity on tax reform and corporate tax cuts? >> i think when it comes to

areas like security, there is no choice they have to defend themselves the attack landscape is evolving very rapidly we're about to see i think a revolution of the notion that perimeter security isn't good enough anymore we're entering a world of zero trust. you can't trust anybody at all they might be infected and not know it. so i think in that environment there's no choice but to spend on cloud defenses to protect you. i think as you get more ott watching, there is no choice but to spend and deliver the videos into the homes. >> can't just check ids at the door anymore, you need to watch them on security cameras digitally speaking thom lleyton from akamai stock up 5% this hour. >> nice. get to dominic chu. >> gains ahead of ecb policy meeting where stimulus pictures will be in focus president mario draghi expected

to outline the plan for bond buying program some analysts think ecb will scale back its net purchases by half to 30 billion euros a month and possibly lengthy extension of the program draghi faces challenges in europe including inflation below ecbs meeting ahead of the meeting, ten-year yield. you can see 48 basis points or so moving onto the euro up 12% to the dollar those euro trade $1.18 a little euro strength british pound getting a lift gdp numbers rising better than expected .4% third quarter that news strengthens expectation bank of england might raise rates as soon as next month. we'll finish with a couple of stock stories. first of all french luxury group up sharply better than expected third quarter sales helped along by strong demand for gucci brand. also lufthansa higher after beating estimates there despite

lower third quarter profits and costs shares of that german carrier have more than doubled, guys, so far this year back over to you, carl. >> thank you softbank ceo in riyadh at that saudi vision summit where he sat down with our own andrew ross sorkin a little bit ago who asked about uber and future of artificial intelligence. >> the usage of the vehicle is going to change. it was a premise that everybody have to own the car. no, we get ride on taxi, bus, and a train. so just extending with the power of the internet, a little more convenient and later on autonomous driving is going to happen. >> final question. 2050, are robots going to be better investors than you?

>> in many subject compared to the index and so on, they will be definitely the smarter than us however, if you have to envision ten years, 30 years later, at least some human will have a better imagination than them so it's not the end. the power of the brain is no limit. the imagination that we can have has no limit so we are also going to include our imagination and our feeling, gut feeling. so if you watch the "star wars" movie, don't just look at what you can see. listen to the force. >> listen to the force

he went on to talk about basically the curve with which robots will get smarter, saying this is the beginning. it's going to grow a million times charlotter today is one, 30 years later, a million times. he says we're at the beginning of an amazing evolution in ai. >> i don't know how to feel about the idea i'm going to have to search my feelings. >> to feel the force. >> provide value beyond ai. >> here is a feeling he also talked about meeting steve jobs for the first time and it was before the iphone here is the quote he said, massa, see what i'm developing when i finish i'm going to show you, you're going to piss off your pabts, which created laughter in the audience he said when i saw it, i almost did. nice little anecdote more heavy conversations coming from andrew in riyadh. when we come back, letting amazon deliver packages in your home even when you're not there. i don't know how i feel about it apple sacrificing quality for quantity when it comes to new

iphone x exclusive interview with nike chairman and ceo mark parker today on closing bell. it is the company's investor today. all the action around noon we'll be covering it all day including that exclusive interview. we'll be right back. "volatile markets." something we all think about as we head into retirement. it's why brighthouse financial is committed to help protect what you've earned and ensure it lasts. introducing shield annuities, a line of products that allow you to take advantage of growth opportunities. while maintaining a level of protection in down markets. so you can head into retirement with confidence. talk with your advisor about shield annuities from brighthouse financial established by metlife.

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now what? well, after your first reaction, consider your choices. go it alone, against the irs and its massive resources. hire a law firm, where you're not a priority. call your cpa, who can be required to testify against you. or, call the tax law firm of moskowitz, llp. i went from being a cpa to a tax attorney because our clients needed more. call us, and let us put our 30 years of tax experience to work for you. good morning, everyone i'm sue herera here is your cnbc update u.s. postal service expects to deliver 15 billion, with a b,

pieces of mail this holiday season the carrier predicting 10% increase in the number of packages it will leave on doorsteps this year. the naacp is warning travelers who fly american airlines to use caution. the civil rights organization says a series of incidents suggests a corporate culture of racial insensitivity american responded in a statement saying it is, quote, proud to serve customers of all backgrounds, end quote a law firm representing hillary clinton's campaign and dnc helped fund opposition research which became the infamous dossier on donald trump. the revelation was first reported by "washington post"" that dossier contained allegations including collusion with russia, something president trump has denied that is now the subject of a special investigation. tech billionaire timothy draper is spearheading a measure that would split california into three states the proposal needs 365,000 signatures to qualify for the

ballot next november that's the news update this hour back downtown to "squawk alley." jon, back to you. >> thank you, sue. meanwhile amazon launching a new service this morning that's going to allow delivery drivers to deliver packages inside your home even when you're not there. take a look. >> with am sentence key you can get your packages delivered just inside your door you can track your delivery with realtime notifications, watch the delivery happening live, or review a video of the video after its complete. >> we'll see how people feel about it deirdre bossa is out west with more deirdre. >> if it sounds and maybe looks a little intrusive, it is. ultimately they are beating convenience will outweigh security concerns. just spoke to vp of devices who said they focused on security for the product, secure authentication and content is

constantly overwritten meaning your home video will not be stored on amazon's cloud i also asked him about potential accidents and liability. like what happens if your dog runs out during delivery or bites the courier. he dodged that question. amazon provided a statement when i followed up saying delivery drivers will be mindful of pets during delivery. they will listen carefully for barks, meow, scratches and other signs. if the delivery driver feels a safe delivery cannot be made he or she will go back to standard delivery, ie, leave it on your porch. the price of the camera, $120. that is significantly lower than competing products out there like alphabet's nest cam which starts at $200 i asked about margins. he said they are focused on how they can get the product spoke people's hands the idea more people spend more mope within the amazon ecosystem once they have amazon devices. this is a good example how

amazon is competing in logistics space. last mile delivery, last foot or inch by getting that package into your home to use the system you needhamson's new cloud cam, accompanying smart lock and subscription package -- and a sub stripgs, starts at $250 and goes live november 8th back over to you. >> deirdre, thank you for that let's bring in angel investor jason calacanis. good morning to you. >> good morning. >> the privacy or worries, concerns are obvious if you want to go this direction but will this work? >> yeah. i think it's going to work it shows amazon's commitment to making prime indispensable and really figuring out every edge case in which they can't get a package to a consumer. it obviously lowers the amount of theft of products what is most interesting outside of the amazon prime lock in

which this will cause is local services and white labeling of all products on amazon so if you are a product manufacturer and you put your products on amazon, they are studying you and they are studying your competitors. they have been white labeling with amazon basics and this product over and over and over again. so really product manufacturers need to be careful they are really in a conundrum if you put your product on amazon they are going to copy it if it's successful if you don't you can't sell your product because consumers are so locked into prime. you've never seen a company be this creative and release this much product in the history of these technology companies they are moving fast and they are releasing tons of product. it's truly impressive. >> i worry a little about safety here for the driver actually especially in states where people tend to own guns. you hear the news stories somebody shows up at the house, the door opens, somebody didn't

know they were coming. granted somebody has given authorization for this, so people shouldn't be surprised but there's always those edge cases. how much thinking about how this changes technologies like this, how much interact with people and how much we have to adjust. >> definitely a learning curve and behavioral change. humans are very good adapting to this in terms of security, what we saw with airbnb and lift, i'm going to represent my home or live on somebody else's couch or get in somebody else's car in fact what technology did was because it was tracking every single movement along the way during a ride sharing event or because you had reputation and you could see how many times somebody stayed in airbnb or rented it, the added technology if executed properly, makes a safer service. ultimately this will be safer than somebody not having access tower house because you won't do something stupid like put your key under a plant or door mat,

which is how people deal with this now the net net is this will be safer for people and there will be a tracker anybody who uses this, who is a delivery person who had bad intent, they know how the system works. so they would not ever pick this as a target. you pick a different target if you actually were going to commit a crime, i think. >> i guess we should say walmart is working on this i know you love amazon. >> who >> walmart it's turning pretty competitive here when it comes to ecommerce, coming to a lower base but growing the business a lot faster this is going to be a rivalry to watch, don't you think >> yeah, certainly you can dismiss walmart -- you can dismiss a lot of retailers, walmart is not one of them obviously walmart is playing catchup. the big problem walmart faces, i actually believe amazon has no intent of ever making selling products a profitable business so it's going to be a race to the bottom i think what amazon is ultimately doing is building this huge cloud computing

effort and the entirety of selling products is a front for that giant cloud computing system, massively profitable if you think, all of these retailers are so threatened by amazon they are taking themselves off amazon's cloud. that's what it's come to, right? i think you're not going to be table to compete with amazon when they start white labeling everything that's going to be the end game. they are going to have every factory in china and other places making amazon white label products millennials, by the way, they don't care about brands as much as we gen xers and baby boomers do. >> we talk about that. in order to meet demand for holiday rush they are allowing suppliers to reduce the accuracy of the tens facial recognition reached out. shares are lower but obviously

in a difficult tape. some of the sourcing is more and more thin over time, jason what do you believe? >> so what i believe is this will be the best selling cycle of iphones ever with the highest profit margin. i have to say apple is incredibly bold and risk taking to release two different iphone lines at the same time they released 8 and x. last time they did that was 5 and 5c and 5c was not a lasting product. this time if you look at the x i put it into my checkout, it's $50 a month, $1200 more than an ipad or mac book air. i love how bold tim cook is being saying let's see if people will pay one-third more the most expensive on the market. if this works, the x works, they are going to be printing so much money it's unprecedented. >> it's already unprecedented. >> it's already unprecedented

then they take this incredible action saying you're paying $750 for a phone, let's see if you pay $1200. it's insane. if they do, the amount of money pouring into the coffers at apple will be more mind boggling, which speaks to we have to repatriot this money quickly. the other countries when they see apple pile up another $100 billion they are going to want that money repatriate it. trump, congress, everybody, get it done. we've been talking about this three years. >> we have jason, thanks. we'll talk to you next time. jason calacanis. >> yum yum yum as we head to break shares of chipotle, the worst drop in five years. take a look at this stock. company missing estimates on both top and bottom lines, down almost 15% right now rick santelli, what are you watching today >> i'm watching ten-year note yield right now unchanged on the year many are talking that this could

be the end of the great bond bull market. i think that ended a while ago we'll talk about that oerinth interesting rate dynamics after the break.

i'm scott walker, coming up top of the hour halftime report. moment of truth has arrived for bond bull market, has it as well for stocks if rates keep rising. with chipotle suffering its worst day in five years an analyst tells us at noon why the

worst is far from over wall street showing love for a stock josh brown has been telling to you buy for months. the name and the trade noon eastern. carl, we'll see you in just a bit. >> scott, thanks let's get over to cme group and get santoli exchange good morning, rick. >> good morning, carl. you there's many ingredients that go into baking a real growth environment that would result in higher rates in a good way now, in order to understand the picture fully, i think we need to look at a three-year chart of ten-year note yields on top of dollar index now, as you look at this, they correlate highly obviously, but something happened on the right side of your chart around mid-2017 where they really went in opposite directions, and that is an integral part in my opinion of getting all the dynamics right at ten-year note yields hover and they haven't hovered unchanged on the year since march. now, let's geth go to my white

board. here's what happened mid-2017. ten-year bund yields shot up from 25 basis points up to 60 basis points in nothing flat and it was at that point that we saw the dollar index turn back down and interest rates kept moving up. why is that so important, you ask, because the one ingredient that has never fit, and it's also one ingredient that has been the holdout making central bankers perspire in this country, and that is the notion that bringing rates back to more historic norms, ending crisis policies almost a decade after the crisis ended made them worry that the dollar index would get too strong and in that regard hurt certain multi-national corporations, so it's a big on all fronts, but, i don't know i think that there's a lot more going on here. first, let's think about what are the ingredients for higher rates in the current environment?

for sure, it's one part central banks. central banks are now realizing, and we can debate why, that the policy that they have currently been un, crisis air policy has run its course, and it's time to pull back. i would go so far as to say it's become a mogul to the goals that they have in mind, growth, better employment for all. okay the second part of the ingredients is economic. it's hard to argue that certain things have not improved rather dramatically and many of them since the election, and that brings up policy and election. that's one part, too, but this part gets complicated. because policy -- policy that wasn't, meaning we don't have more regs, we don't have more talk about higher tax rates, all the things that this administration is different than previous administrations, and the second part of policy is kind of like dickens, you know, what the future may be, policy that may be that has investors excited like taxes real quickly also summarized, i

don't think that today at 2.44 and change for the year, and by the way, we need a dale and weekly close above that level, it isn't the end of the bull market you know when the bull market ended. it ended when we saw the 139 bottom in july 2012 and 139 bottom in july 2016 and march a 2.63 trade that double bottom ended now it's the new psych let's see how far it goes. sara, back to you. >> i'll take it, rick. good stuff at the white board. rick selly in chicago. when we return, some major movers on today's earnings reports. we'll take a look at what's dragging stocks down with the blue chips down 115. don't go away. all i remember saying was,

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dow is down 118, led lower by some large names. bow, ibm and cat ge is in there as well, below 22 and now 2146 more slaul more "squawk alley" in a moment.

this morning on the 9:00 a.m. cramer said every day this week it's been another dow component that takes your breath away whether it's cat or gm -- cat or 3-m today visa is in that school, but it's being offset by the likes of boeing and ge and ibm and cat. >> yeah, caterpillar, ge, ibm, all on the bottom of the list. boeing is actually still the biggest winner of the year for the dow. i'm watching another dow component we're about to get nice on which is nike, of course, in this investor day which kicks off this hour. we'll bring you the headlines, especially the new target numbers that we're expecting them to update. >> meanwhile, smaller tech names also taking some people's breath away we mentioned amd, dow, down more

than so% this morning. grubhub knocking on the door of its 52-week high approaching a $5 billion market cap again. it's up 9.5% at this hour. people ordering out a lot. >> yeah. >> not a packed calendar tonight. amgen and buffalo wild, a chance to rest for tomorrow which is going to be insane. >> all the tech names. >> let's get to the judge and "the half. and welcome to "the halftime report." i'm scott wapner our top trade, the market selloff on this higher move in interest rates yields climbing now to their highest level since march leading jeffrey gundlach to suggest the moment of truth for the bond bull market has arrived, as well for stocks. with us josh brown, steve weiss, jon and pete narngian. the selloff accelerating within the past hour, most eyes squarely focused on the bond market many stocks falling, especially this