good morning it's 11:00 a.m. in washington and 11:00 a.m. on wall street as well and "squawk alley" is live. ♪

♪ good monday morning. welcome to "squawk alley." i'm carl quintanilla along with morgan brennan and john fort at post nine. the gains for june are gone. dow son track for the lowest close since the beginning of may. let's get to bob pisani for a closer look. good morning, bob. >> good morning, guys. good news is that we're off the lows the bad news is not by much. s&p 500, 2717 was our low moments ago. we're off of that, but the problem is very simple take a look at the sectors here. not only are the usual names affected by the trade concerns -- i mean industrials and materials, transports, for example -- but a broader tech group is being affected. metals and mining, transports are classic industrials, materials. they're all affected by the trade names.

semi conductors, probably the worse day in two or three months here all the big names are down three, four, even 5% in the case of advanced micro. momentum names, your classic faang names are all down roughly 2% facebook, google, amazon, other names in that group, apple all to the downside as well. then you have what i call faang plus names alibaba, nvidia, baidu not just industrial materials but high momentum tech names are down you can capture this in an etf several are out there. s sphb, you can see a slow downturn there there's a lot of stocks in this one. that's down 6% in the last two weeks. back to you. >> good setup. bob pisani on the floor. thank you for a look at how tech

is performing in all of this we're joined by credit suisse. >> thanks for having me. >> biggest losers on the ndx today, micron, nvidia, all with 80% gains for the year, year on year is today about valuation or fears across m & a >> we get a lot of questions on valuation. trades are 12 times, that's up a little bit versus historically 11 times or so the interesting to look at the valuation of tech is to look at it on a peg basis and the other verticals. when you line them up -- say staples, discretionary, et cetera, tech is the eighth or so most rich vertical you have seven other in front of it when you look at tech relative to market on a peg basis it's basically where it's been. i don't think tech valuations have run away.

>> if chinese investment in u.s. tech gets curbed or slowed down, what is the impact spend some time in silicon valley look who is buying real estate you see a lot of chinese investment coming in, at least on the ground level. is that money going to significant places that will see a slowdown that could eventually tri trickle through to the market if that happens >> you could obviously have an impact you're seeing that with investors, trying to assess it today. the last six quarters or so, they're trying to gauge the impact of this tech m & a has been down because of regulatory issues that chinese companies will have to handle having said that, don't forget about the big pockets of capital that can step n softbank fund is making very large investments. other pockets of capital could step in if there's other disruption. >> it doesn't sound like you think that will throw cold water on deal making in silicon

valley, for example. >> i don't quarter one was the best we've had. tech in q1 was up 30%. so you're really seeing it push through this a think a lot of it is because of ambient technology, autonomous, all these great investable themes that a lot of these great big companies and nontech companies want to be part of. >> are you getting the sense from tech executives that they, too, are trying to push through this valuation pain, price action pain in return for freedom on the chinese having forced jvs or stealing ip? >> yeah. we talked to executives, they're very much not looking at the short term price s and impacts short term or geographic trends as well you saw even walmart recently make a big move in india

it was a huge market they had to be part of you're seeing executives think longer term and the boards are supporting them, thinking through near-term valuations. >> it's the curve that comes back from china is to slow down u.s. investment in china, does that have an impact? we see the ipos coming to the floor here in the new york stock exchange we see google just make an investment that has to be fueling the market as well. >> impact to not only stocks there but the amount of dollars flowing in there as you know for u.s. companies investing or trying to start out on their own in china, it's been a difficult endeavor for a decade the google announcement you saw was an acknowledgement of trying to work together things such as ai, things such as the speaker, autonomous speaker and all types of things you're seeing them look at. >> in light of the conversation we're having around valuation, how big the moves up until this point have been, particularly

the internet names -- >> yeah. >> what do you invest in now, moving forward >> for investors, they want to look at these big ideas that we talked about large tams that are underpenetrated that are just taking off the moves they've had are commensurate they see the growth trajectory changing it's important to look at those peg ratios to see how they've been historically versus today. >> isn't there some -- i mean, for years people wanted companies to have a china strategy because of the huge, addressable market is there no regret that perhaps that tam is at risk? >> yeah. a lot of companies have tried to have a strategy in china, whether it be amazon, google, et cetera it's been difficult there. as you go forward, you're going to see more and more of this omni geography across the two. jack ma talked about this with

retail 2.0, right? and the new e-commerce not only domestic within each country but also globally. i believe jack has talked about delivery of packages globally within 72 hours, no matter where you are. you'll only see this move further and further. >> satya nadella told us that the way to look at this is that the future belongs to the u.s. and china together, moving forward, kind of connected so that needs to be taken into conversation the alternate point of view is that china is stealing u.s. technology there needs to be a fight to make sure that china is held at bay. what gets lost, perhaps, if satya nadella is right, that there needs to be more of this diplomatic compromise position and if that's not the road to take. >> i think it is a fine line from being able to work together and also making sure that your ip is safe and quite honestly the news the last 72 hours is

about national security, making sure that's our top priority there are ways to work together. i look for both countries to try to work together that way because the opportunity is so large for all countries. >> long-term investment play that all of this shakes out and you end up with better protections around ip and a much more amenable investing department in china that this becomes longer term a huge opportunity? >> absolutely right. couldn't have said it better than myself. >> that's why we have you here, to say it better than the rest of us. coming out of tax cuts, repatriated profits was a big part of the conversation has m & a exploded in the ways you anticipated coming out of that is this dampening that at all? >> '17s, it was better than all the years except the big boom

years. you are seeing that cash put to work look for nor m & a to continue the rest of the year you had nice momentum throughout the second quarter as well. >> will it be concentrated in any particular silo in tech? >> i think the we're going to think about tech in the future is not as a vertical but it's going to become incident grai -- integral it's going to become part of the genetic fiber of every single company and you'll see that happen to the point that we don't think of tech as its own individual vertical. >> software leading the world. >> exactly right. >> thank you. >> thanks for having me. tesla, as the deadline draws closer. iconic brand getting hit by new eu tariffs looks to make a move "squawk alley" will be right back the rhythm of the world.

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the chin is harley davidson, imposition of increased tariffs of motorcycle exports. despite an increase in tariffs from the prior 6%, it will not raise prices on motorcycles intended to export from the u.s. to europe. instead it says it will absorb the estimated cost of $2,200 per motorcycle and implement a plan to gradually implement production to international facilities rather than make them here in the u.s. in a statement, harley davidson did say in this filing, quote, increasing international production to alleviate the eu tariff buriedsen not the company's preference, but represents the only sustainable option to make its motorcycles accessible to customers in the eu and maintain a viable business in europe shares are down almost 5% right now on this filing that we've got before the market opened but it is also worth noting that harley, over the last couple of years, has been going through a

very rigorous transition to stoke sales and interests among newer generations and remaking itself with more street bikes and the like in general, at a time where the company has already been hurting the last couple of years and trying to reinvent itself. >> how reversible is this? to deal with this tariff issue, that a lot of people are hoping is temporary, maybe the trump administration gets what it wants. other countries give in on tariffs. does that mean harley davidson shifts back and starts manufacturing more in the u.s. again? >> it takes a long time. they said in this filing it could take nine to 18 months to shift this production to some of their other international facilities they have places in india, brazil, australia. they're opening a facility in thailand right now but that's going to take time i would imagine it would take just as much time to bring that back stateside this will be one to watch, especially if this tariff situation with the eu does, in fact, drag out

it's not just harley davidson either. trade worries are hitting automakers today, auto stocks slumping on the heels of president trump's threat scott, thanks for joining us today. >> good morning. >> we have automakers selling off again today. that's been the case for days now on that th tariff talk how do you perceive this playing out? >> it's important to look at the long term, not the day-to-day stock price and in reaction to today's news or today's headlines. as we're seeing with harley davidson, i think car makers will be very rational. all of these things are just a math problem in terms of whether they take manufacturing and move it outside of the u.s. or leave it in the u.s. you have car companies like bmw and volkswagen that produce a significant number of vehicles

in the united states for exactly these types of reasons. >> i'm glad you brought that up. i'm trying to understand how the math works here. if you see tariffs on german autos in the u.s., does that throw cold water on sales by americans? >> i don't think consumers at the point of sale are going to be affected by today's news. you have to look at how that plays out over long term it's important to separate the what from the how in this equation what president trump and certainly the administration is trying to seek is a much more balanced equation. germany is tariffing our vehicles at 10%. we're tariffing at 2.5%. he's seeking a more balanced equation the how, he's doubling it, saying we're going to go to 20 if you don't level up. right now we're all seeking a little bit more balance in the equation and how he goes there is sort of textbook trump but that's his process.

>> scott, meantime what happens to the cost of ownership for americans, who are looking to own cars you are kind of disrupting the cost of ownership model overall. does this potentially accelerate that because it affects a small percentage of overall autos, does it not have much of an impact >> the concept of ownership is dead in modern life today, everything we get, whether it's our cell phones, datea content, movies, music, everything is by subscription it's all on our phones what fair is doing on the used car side is giving the promise that technology is always offered, a simpler way to do things at a lower cost on the new car side we're starting to see it happen across the board, whether it's with car makers like cadillac, poresche or volvo, everybody will be doing it we're entering a new era where

the car will be a service. >> what does that mean in a country like saudi arabia, where you have women driving for the first time we have reports out there that ride sharing and new tech start-ups focused around the car industry could really have a big impact. >> i don't think it matters where you're talking about around the world the concept is a huge issue. 1.5 billion on planet earth carrying nearly 70% of that would be classically be defined as subprime automotive debt. are we forcing people who are getting started in life or financially in the most vulnerable spot to take on crushing debt in order to get the basic access to transportation that they need to get a job or to feed their families and so this idea that there's a new way to access mobility and get a vehicle is a big idea and will apply everywhere around the worl

world. >> we're showing a stock board of tesla as you're tal with us production numbers, whether they'll hit 5,000 for the new model three, the number that wall street and others have been looking closely for. lot of focus on the tens and whether it's a good or bad thing. is it a good or bad thing for production >> at the end of the day, tesla is a unique story. do you believe in the long-term value proposition of a shift to electric or do you think about the 90-day shot clock of setting expectations in the marketplace? the challenge for tesla is double what most manufacturers have it's really about the future and the shift away from internal combustion and toward electric. >> so, scott, what do you see affecting the adoption of these new models post ownership as you argue when it comes to transportation how much of it is

technologically driven as the economy continues to be pretty decent, humming along, unemployment is low. how much is that affecting the shift to these new models? >> clearly, the technology is here today. >> it not only removes the complexity it is a transaction for the dealer it's good for the industry t does reset their relationship, reboot their relationship with consumers who universally have said they don't want to go into a high confrontation, very expensive negotiation to talk on for what people is a third of their net worth this idea that you can remove the complexity and save money, what we're doing at fair, for example, is half than without having to take on that kind of debt. >> scott, great to get your thoughts on a wide variety of topics where the auto industry

is concerned scott painter, ceo of fair. >> thanks for having me. session lows are awfully close. dow is down 328 after a quick bounce off key technical levels. s&p down 37, will take you back to 2716. we'll watch all of that. "squawk alley" is back in a minute

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welcome back to "squawk alley. trade tensions continue to ratchet higher the dow wiping out its gains for the month of june. mike santoli with that mike >> still trapped in this trading range environment. a column on cnbc.com that looks at the mid point of the year and a very unusual path to what looks like a fairly routine total year return. what's unusual about it? we had the best january every. best start in 31 years then the sharpest decline,

fastest 10% or more drop from a record high in 90 years, followed by an unusually prolonged process of repair, recovery and you see right there, slumping right back down toward the middle of the year-to-date range. what does it actually mean coming into today we were on track for an 8% total of the year now on track for 6, 6.5% return, which wouldn't be bad. here is why it feels nerve-racking. it's a push/pull between the corporate. & financial tightening uneven market. many more are under performing than you have out performing on even geographically to the rest of the world is really in correction mode. the u.s. is trying to buck that trend. i think the bulls -- the uptrend is intact but by a thread. you're kind of holding on to the longer-term uptrend. friday was the longest ever stretch without the dow closing before its average there's no magic trigger if we

do close below that. it would be an extremely unusual year if we didn't end high when credit markets are not blowing up and the economy is growing quickly. >> sounds like something we said during the first 10% down earlier this year. >> that's true. >> don't try to string it out. if we do go back again then what >> i would have to define go back if we go back to those lows, you know, i don't think it necessarily means it's over because you did have one of those double dip corrections in 2015 into 2016 and the second time you tiptoe toward the lows in 2016, that was a low. again, you're not really seeing the same dynamics here then you had the earnings declining. right here you have the opposite the market is kind of just turning up its nose at very good earnings growth. >> one thing we haven't been talking about very much yet is mid term elections and the impact that could have as well historically, in years where you have mid terms you've seen a move to the upside in stocks

afterwards. >> exactly it usually is a little bit kind of anxious going into it it's very hard to handicap right now. i don't know exactly what the market perceives as the outright stakes for the economy or for policy going into these mid terms but it is historically true that the summers before mid term election, they tend not to be that great. and i think you have the same kind of chopiness out there, the market getting a little bit nervous that it might be something more than just a one-day here but again we're back down to four week ago levels in the s&p 500. it's hard to make too much of it when we've seen so many instances where literally it looked like this at 11:30 and at 4:00, you had minimized the losses. >> we'll see if it happens today. dow down 350 on the nasdaq 500, five names agreeing on the 100. let's get over to bertha coombs. >> this is a tech-driven

sell-off year in the nasdaq led by the chip sector semi conductor index, the largest cap of the chip stocks negative for the month in the sixth day of the last seven sessions, trading below it's 50-day moving average and about 9% below its 52-week high. some of these have been real high fliers. take a look at the losers today. micron gets about 50% of its revenues, or at least did last year, from china it is now 7%, down 7% month to date and down for the second out of three months. there's some analysts who say take a look at some of these chip names and they do have some flexibility moving where they fabricate. although micron, for example, has a lot of exposure to china, that's not where all of its fabrication, not where all of its factories are. so it has the ability if we see tariffs in china, perhaps, to

move some production somewhere else meantime, it's really those faang names, faang plus really that we're looking at. these are the top ten tech names that have moved up the furthest this year and have done the heavy lifting because they're such large cap names moving this market forward apple is negative for the month of june, trading at its 50-day average. seeing technical damage. the interesting thing is that the biggest name trading to the downside today is a company that doesn't have exposure to china within that group. netflix. it is off -- was off as much as 6% this morning. it is trading already atwell above its average daily volume over the last 30 days or so. and it's the worst we've seen percentage terms for netflix since april, which has a lot of people talking about the whole faang plus there is an index for that, for futures. it's gone up three times as fast

and folks are wondering whether it's time to take a big pause here back to you. >> bertha, thank you for that look at what's going on with the nasdaq now let's get to seema mody at headquarters with the european close. seema? >> jon fortt, european stocks are retreating today, way down by those deepening trade concerns the euro, i will point out, slightly higher. apparently it won't take action on raising short-term interest rates until october of 2019. that, according to a top ecb official that had an interview with the wall street journal euro holding on to 116 against the dollar these trade sensitive stocks, we tend to look at the european car makers once again they're down, led by volkswagen, down 2.5%. ongoing trade concerns have pressure, european automakers throughout the year. automakers down about 12 to 15% so far in 2019 let's also talk politics

turkish president erdogan won the most votes in the snap election, granting him 15-year sweeping executive power, ability to have larger oversight of the government, military and potentially the central bank at a time when turkey, once seen as a vastly growing emerging market is facing serious economic pain. inflation is above 12%, growth is slowing and the currency is down 20% just this year. there was a bit of a relief rally we saw this morning. that is being reversed here. u.s. dollar holding on to 4.69 against the turkish lira back to you. >> thank you very much, seema mody. >> let's get a news update for this hour. we turn to sue herera. >> thank you, carl two fire firefighters and another person wounded after a shooting at a senior retirement home a suspect, believed to be a resident in that home, is in custody. moments ago, unfortunately, one of the firefighters that was

wounded has passed away. the supreme court granting the appeal of a washington state florist, who was fined after she refused to sell flowers to a gay couple for their wedding the action sends the florist's case back to the state court for further consideration. protesters in tehran forces shop keepers to close their businesses protests come months after similar demonstrations rocked that country in which 25 were killed and 5,000 more were arrested. prince william touring the ruins of roman city in jordan. he met with children, including syrian refugees from a u.n.-led education program, accompanied by jordan's crown prince hussei. n. you are up-to-date down, i'll send it back to you. >> thank you, sue. as trade tensions continue to rise between the u.s. and

many countries, president trump planning a new target. countries that steal u.s. technology woerhond w those could be. "squawk alley" will be right back welcome to holiday inn! thank you! ♪ ♪ wait, i have something for you! every stay is a special stay at holiday inn. save up to 15% when you book early at hollidayinn.com

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together, we're building a better california. dow down about 400 s&p down 44. vix has been making stair-step pattern increases all day, getting close to 19 now. president, meanwhile, continuing his hard stance against chinese

companies as he moves ahead with plans to bar china according to some reports kayla tausche has details on that kayla? >> reporter: we got a tweet from the treasury secretary tweeting on behalf of the president saying some of those reports on investment restrkss are false because they're not specific to china, but to all countries that are trying to steal our technology here is what we know about the trade deadline on saturday trade principals will be meeting to try to refine this proposal, result of a china-focused investigation. we know that they are going to be targeting investments in sensitive u.s. technology. there have been voices within the administration divided on the scope of these restrictions, level of ownership to be reviewed and whether outbound investments by u.s. companies should be included that was one thing left out of legislation that congress has been pursuing down pennsylvania avenue but these restrictions are going to come as the u.s. fight with china and other trading partners

have been escalating china says that on july 5th, right before new u.s. tariffs go into effect, they'll free up $100 billion in money for new lending. you have new tariffs from mexico, canada going into effect in a week and you also have these new tariffs from europe from friday that are already beginning to cause u.s. companies to revise their outlook. harley davidson did so just this morning. we did get a statement from the office of house speaker paul ryan from wisconsin, where harley davidson is based ashley strong says this is further proof of the harm from unilateral tariffs the best way to help american workers, consumers is to open new markets for them, not to raise barriers to our own market the speaker is set to go to milwaukee where harley is based for the new fox con plant. we'll see if he hears from

harley execs while there. >> thank you, kayla. the dow down nearly 400 points major indexes overall down between 1.5 and 2.25%. nasdaq faring the worst. ken palcari hases director here at post nine good morning to you. >> good morning, jon. >> kenney, it's getting real i look at the tech names that are down the most. it's not as if china exposure, european exposure has the most to do with it. >> i think it's anxious at the moment we're at a key point right at the 50-day moving average. i said it in my note this morning. you wanted to see the market, if it broke 27.45, you want to see it go there to see if it's really defended. to your point it's kind of this risk off mood, the sense that people will take money out of the stocks that have out

performed and put that money, whether they reinvest it right away or put aside and wait for the anxiety to settle down nobody should feel like today is throw everything out the window kind of day with people paniing. it is slow, methodical but it does feel like it's getting, certainly, more real. >> never panic scott, what should investors do as they watch these trends what point should they make a shift in strategy? >> reporter: i don't think they should shift strategy. our macro outlook is good. it's not great we think the psycycle will continue we want to be involved in industrials, which have gotten hit here lately. consumer discretionary, financials, we don't want them being defensive. kenny mentioned a bunch of technical support. i would argue really anywhere from here to the next 50 points down to the 200-day moving average if you have cash on the sidelines you want dedicated to stocks you need to be stepping in here. we've had umpteen opportunities

since february 9th to buy stocks at good levels and if your forward outlook is good, which as i said, ours is, you need to be stepping in here. i don't think we're going to have a trade war i think that's a low probability event. we had a great run since april up to the recent highs and now people are taking money off the table and are selling those liquid names that have run hard. and i think it's natural market back and forth and, you know, this is going to equate to another buying opportunity. >> scott, you sound like a man who believes u.s. equities will end the year higher. what's your target >> morgan, our target, the middle of our target range is 2850 in the s&p 500. that's not all that far from where we are now on a total return basis, let's call it 9% for the year, something like that, clearly next year our earnings growth isn't going to be anywhere near what it's going to be this year. i think you're still going to see a positive return in '19

we want to be invested here. we want our clients invested and want them leaning toward sectors that will benefit in this recovery. >> people don't want to call what's happening here a trade war even though we have actions, counter actions, real money is about to start, at least, being affected does it matter what we call it and at what point does it become a real concern >> when you throw the word "war" in anything, i think people are trying to avoid that and walk us through it i don't think in the end there will be an all-out trade war but there will be angst and nervousness until we get clarity. if we don't hold 2710, if we

break that, that will be the next move. if you're a long-term investor, you should be looking at that as an opportunity the trader types will create the noise around it because they'll take advantage of that noise right? >> meanwhile you've got soccer going on, vacations that will start in earnest here. how much of this is being driven perhaps? >> it could be some of that, too. you can also feel it right there's not like -- like i said, that sense of panic. earnings will start the week after the fourth of july analysts have been cutting earnings quietly a lot of these earnings have been cut by almost 50%, agriculture, industrial names. no one is really talking about that what's going to happen is that when earnings start to come out, we beat these numbers. excuse me? they've been up here and they're way down here and now you beat them. >> i'm glad you brought that up. we're closing out the first half of the year here the end of this week is it this idea of peak earnings, mid terms, trade

angst, something else? >> i think it's all those things, right? they're all very important but from an investing point of view, don't forget the noise just creates maybe opportunity but noise doesn't price stocks it will be very much more the macro data what we hear about some of these ceos and cfos are saying about the future and trade talks and this rhetoric and how it's impacting what they're doing going forward and the message they send. that will be much more important than the rhetoric around mid terms and all of that. that will just be noise that will get ugly. >> scott, you said you don't expect a trade war in that case, does a trade war, should it happen, change your thesis where is the line for you? this angst adjective, whatever you want to call it, becomes more serious >> all-out trade war, that would be terrible for the economy and for the overall market and, you know, we're leaning toward these more cyclical

sectors. that would not be the way you want to lean want to hide in utilities and staples and things like that i think that's a low probability event. like it or not we're in the business of trying to figure out what the probabilities are but i think that what's going to happen here -- and this may sound naive but i think the administration is negotiating here over the next two or three years, rather than the level of global tariffs rising, i think we'll see the level of global tariffs go down. right now, china, if you look at the wto data, their average tariffs are three times what they are and eu is probably double there's room to negotiate here i think the u.s. has leverage. we're not going to see more tariffs. we're going to see less. >> you say that process will take a few years >> i think so. these trade situations have been in place for decades we're going to be sucked into the headlines here from time to

time but overall i think we're going to make progress on this, on a global basis for global tariffs but it's going to take time. >> that will be one headache. >> it's a long time to grind it out. >> it is. >> i think that's what we're in. i think that's the kind of environment we're in. >> things have gotten cheap but europe has gotten cheap, too, scott. i wonder if your allocation is shifting around. >> i tell you, we have been unfavorable toward emerging markets. we have been more neutral on developed international markets like the euro zone the way that emerging markets have come off here what we've been telling our clients is that you want to be more neutral and bring longer-term allocations up to where they should be. these retail clients are all underweight. so the opportunity is shift some money around if you have some cash on the sidelines, stick your toe into these international markets and i think that's the way to be it's kind of a rebalancing, put some money to work kind of

situation. >> all right scott, kenny, thanks. >> thanks, guys. >> i know my delivery is unusually smooth when the guest mistakes me. >> i want to draw your attention to shares of carnival, down 10% on pace for biggest decline since january 2012 biggest cruise operator in the world cutting its profit outlook for the full year due to higher fuel prices and stronger dollar, expected to decrease earnings 19 cents per share compared to its march guidance, still hurting from weakness in the caribbean on the conference call saying hurricane malaise is what he's seeing in the caribbean. though he's optimistic about an improvement in this region carnival is hoping to offset this weakness in emerging markets. arabian gulf to attract new customers. investors want insight on how this will help future

profitability. all the cruise stocks are down today. even on the year, carnival is the key laggard down 13% to 14% on the year, guys. back to you. >> i think arnold donald will join us at 3:00. we'll see what he says later on today. >> markets meantime selling off this morning amidst continuing global trade tensions. details on that. doun dow down 341. rick santelli, what are you watching >> i continue to monitor the notion of how much treasury rates seem to be ignoring the soft patch in the stock maetrk why? that's what we'll talk about after the break. how do you know you made the right call... ...you just do. the light beer you've been waiting for has arrived.

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so i'm more than confident. how's your family? kayak. search one and done. i'm melissa lee. here's what's coming up on "the halftime report. the tech selloff, is now time to take cover plus, one big tech name gets an upgrade. the stock up 40% in a one-year period >> and jon najarian is tracking unusual activity in the options market we'll get his latest trades on the moves. that's at noon eastern time on the half >> we'll see you in a few. let's get to the santelli exchange in the meantime, get to the cme. >> hey, carl you know, this morning my guest from newburgher berman, we were really discussing what has been an ongoing topic of discussion, really for the last year really accelerated in late january. that is what happened to the

kind of crash rule whenever treasuries get soft, in 1987, fixed income traders were conditioned to buy treasuries. and it worked very well for many years. this year seems to be the exception. let's throw up a cart, a chart of the vix and ten-year note yieldswe know we had that bout e portfolios use of jamming as big a position as possible with one of the thresholds to decide how packed it was being volatility, that trade blew up and you can see where vix was at its highs in late january, early february and you see ten-year note rates. now, the rates i'm going to point to is from february 5th. that low yield closes 2.71 treasuries have been unable to close any near that ever since second chart, for 2017, the high for the year on a closing yield basis was 2.63 those are two yields you really need to put in red dots on your

charts 2.63, 2.71 because our market is poised for all the right fundamentals why are we so buoyant? why is virtually every trading day in this month closing at 2.89 plus all the way into the 2.90s. and those three pluses i'm talking about, we round to 2.90. i want to be official here you can argue that every day has settled in the 2.90s plenty of days like today where the intraday activity seems obvious. stocks are under pressure. the vix is up a bit, but nothing like it used to be but it always seems though we come back to that kind of home base we have a strong economy and our fed is clear in its path and we have a lot of supply, which by the way, will start tomorrow and go tuesday, wednesday, and thursday. but on the other side of the ledger, things hard to handicap as the trade issue currently affecting us hey, it might tunch out all

right. the last guest said it will all be about lower tariffs and he put a timeline of three years. in overseas markets, central banks have a task that is very tough to complete and get an a-plus on the assignment and that aspect is weighing. very few traders want to be long this market, which means anything below 2.63 and 2.71 will be an air pocket. a level you should protect against, even though it might not trade there for very long. carl back to you. >> all right, rick, thank you. rick santelli thismorning. >> we're watching the selloff today. dow down 344 not quite to session lows. the dow has gone negative for the month, and bob pisani has been keeping us honest >> they're selling trade names and momentum names double whammy. take a look alt the big material names. mosaic, all the big names in that sector, dow dupont, a dow compone component, also down noticeably. with the big industrial names

the other group moves to the downside, freeport newcore the industrials, logistics names like c.h. robinson as well as caterpillar and boeing to the down side. fang plus, high momentum stocks you look at, baidu, alibaba, twitter, nvidia, all also to the downside finally, one of the worst day yz have seen in months of the semi-conductors. probably going back to late march, early april, declines of 2%, 3%, even 4%. back to you. >> thank you very much we'll keep our eye on all of this with the dow showing pronounced weakness. s&p down 40. not quite to session lows. >> sometimes it's hard to figure out what people are selling for what reason. it's interesting this morning, apple down 1.3% while amazon is down 2.5%. afffubet down 3.5% it really does seem like some of those more popular names are getting sold off, but not all.

again, the semis, as bob just mentioned, are taking a particularly on the chin, but then, you know, ibm is not >> i would also note amex is up 2% and bucking the trend after the supreme court ruling that came out earlier today >> when we come back, i'll cover a lot more of the action today on a busy monday

lots of different threads to watch today. even beyond the moving averages. you have the ten-year fall below 2.87 the vix went to 18 semis had their worst day since april at least and micron, the worst performer on the ndx, where there's just a handful of winners and even those names are like henry shine and express scripps. >> it's also worth noting where the dow is concerned is sort of the end of anige the last day ge trades in the dow industrials. stock is down, you have trade woes playing out they also announced a deal for their industrial gas engines i think investors are mulling over that as well. another name to keep an eye on today. >> speaking of trade woes, alibaba down 6% at this hour we'll see how that shapes up

whether that's being blamed for a general skepticism around chinese stocks, jd not faring as poorly that's down about 3.75%. >> watching key headline names jpmorgan and boeing, sorry, caterpillar, with lows for the year let's get to melissa and the half welcome to "the halftime report." i'm melissa lee in today for scott wapner top trade this hour, the tech wreck, the hottest trade of the year under pressure. is it time to take cover here to debate that, joe, steve, sarot, and jon also, erin gibbs so we have trade war fears, the selloff the likes of boeing, t caterpill caterpillar, but today, we have a sharp rollover in technology what do you make of this >> this is what we talked about last week. pete and i dia a