it's 5:00 a.m., here's your five at 5:00 stocks slide wall street pointing to another lower open as a selloff in the bond market continues. tech tumbles the f.a.n.g. stocks holding in the red this morning we'll find out what's driving that tech wreck. also tesla shares, they are moving lower after elon musk mocks the s.e.c. in a tweet. also the supreme court nominee, brett kavanaugh, sounding off in an op-ed as lawmakers move ahead with a key vote. and we're counting down to the big jobs report.

the magic number you need to watch. it's friday october 5, 2018. "worldwide exchange" begins right now. ♪ >> good morning. welcome to "worldwide exchange." i'm dominic chu. brian sullivan is off today. as you can see, the futures picture looks like it will be another negative day the dow opening down about 20 points not too bad. the s&p off by two the nasdaq was a loser yesterday, off by 25 points. on the treasury side of things, very key because interest rates were the biggest driver in trading action over the past couple of days the two-year note, 2.88% the ten-year, 3.20%.

let's bring in gina sanchez. as we talk about the way rates are reacting and the way markets are reacting to those rates, can we see this driving trade for rates and the stock market continue the way it has? >> you know, i don't think that there's necessarily going to be -- that this is going to last for a very long time but i think this is a catch up if you look at the front end, the front end has been rising now for a while driven by fed policy jerome powell has said i'm committed to continuing to normalize rates. yet the long end stayed steadily down for the long end to move up it means that there is growth or inflation coming for our thinking i think it's inflation and not even productive inflation that doesn't sustain the long end high for that long >> gina, why is it -- so it's inflation. what is driving it

we talk about the volatile parts, energy, food, commodity side of things is that going to filter through down into that core inflation number what will be driving that inflation trade? >> so there's a couple of things one, a lot of people have observed that if you look at wage inflation, wage inflation has been really low. if you look at the fall in unemployment and the sort of commensurate rise in wage growth, wage growth simply has not returned to kind of pre-crisis levels. unemployment is well below pre-crisis levels. so there is still some room for wage growth to result in inflation. that would be very positive inflation. the negative inflation is the kind of inflation that comes from trade tariffs tariffs tend to be inflationary, and continued immigration response, which is sort of affecting the wages at the lowest levels. and so those two things combined tend to create inflation

that kind of inflation is starting to get priced into the market >> how do you navigate around this, as we talk about the markets and the way they reacted yesterday. is this something where we think this is the beginning of a trend in volatility because of these rates? if so, how do you position your portfolio to hedge against it or take advantage of it >> look, when you have these kinds of outside rate moves, you get negative equity markets. that's what we're seeing now in fact, i would say that this is going to potentially herald a catalyst the markets have been overvalued for some time, but that overevaluati overevaluation -- overvaluation was fed by growth. if that is coming, those valuations can remain high if there are questions of that remaining more inflationary, that puts a dampener on spending that's negative for equities i think the play here is to think about is this u.s.

america-first u.s. overweight equity trade going to continue we are looking at europe as a place to shift money it is more attractively valued, but also, you know, if you look at the hurdles that u.s. equities will have to go to six and nine months from now in terms of compaa comparisons, col be challenging this could be the time to say hey, maybe time to take our chips off the table. >> thank you very much, gina sanchez. rates remain front and center as we spoke about on wall street the yield on the ten-year government note hitting its highest level in seven years we could see another big move in the bond market. why else because today's big jobs report is almost right here upon us so joining us now on the cnbc news line is boris ra ashgrjavi.

gina brought up the idea of good and bad inflation. is that the primary driver for rates right now given all that we know and given what fed chair jerome powell spoke about earlier this week? >> well, inflation is certainly a very important driver for the bond market. so, yes, i agree with your previous guest growth and inflation are going to matter a lot. it's kind of refreshing to see fundamentals make a comeback as drivers in the bond markets. we have not seen that for a while. i would point out a couple of other important developments one of them is trends in treasury borrowing so, we estimate that the government -- the u.s. government will run roughly 1.2 trillion deficit this year they need to finance that deficit. they have to issue a lot of debt and we think we're looking at something like 450 billion net

issuance of treasuries in q4 central banks have been, you know, for the first time in ten years making a major retreat from the bond market more debt issuance, more borrowing, we think that's one of the big factors, along with growth, along with inflation that's driving treasury yields higher >> treasury yields higher and steeper is the keynote you brought up there markets are watching for whether or not the yield curve or that term structure steepens more do we feel that's in place that would be positive for the banks. we saw the banking stocks perform relatively well in yesterday's trade, possibly with the expectation of the yields rising and the steepening of the curve we could see the bank profitability rise what wi what will the term structure look like going forward? >> as i outlined, we expect moderately higher treasury

yields and steeper curves that should be a favorable environment for financials in terms of specific numbers, we are at 3.20 on the ten-year, we expect 3.85 by the end of 2018 and move as high as 3.50 or 3.60 at the end of next year. as far as the curves, i have to tell you, one of the most recently asked questions by clients in the past couple of months, when will the u.s. curve going to invert? our response is we don't think it will. we think we're looking at the spread between twos and tens to get up to 35 basis points area, right now it's 22, 23. >> so, we will see that steepening effect happen one other point is the idea that there's an appropriate interest rate, a neutral rate that we talk about sometimes do you have a target or what do you think the ten-year note should be yielding now what should the two-year note be

yielding right now given those fundamentals you mentioned you will steepen out to 35 basis points between twos and tens, what is that level in the tens that is appropriate? >> gosh, that's a tough one. i would basically tend to take the federal reserve at its word. the consensus that the fomc is con verbali inverbal -- converg5 basis points if you add 2% inflation target on top, you end up with something like 3%, maybe 3.25 in terms of fed funds right now with 2.25, the fed has got about 100 basis points more to go, another four hikes, that's in line with our forecast so, again, you know, we expect

yields, long-term yields to move higher where the ten-year should be, we think it should be around 3.35, maybe 3.40 by the end of this year i think ultimately you really need to be watching what happens with the fed balance sheet to kind of determine where the ten-year should be trading in 2019 and beyond. >> big question out there for a lot of investors,thank you ver much, boris. breaking news, this year's nobel peace prize has been awarded. the noble committee naming dennis mukwege and nadia murd as winners. that's happening just right now. we'll keep you updated on any other developments as we know them here sfwlooch. tesla shares slipping after elon musk mocks the s.e.c. in a series of tweets

frank holland joins us now just when you thought it was settling down for elon musk. >> elon musk la been in the nha news a lot, and now after settling charges with the s.e.c. he's taking new aim at the agency musk tweeting out the short seller enrichment commission is doing incredible work and the name change is so on point he also called out blackrock for pocketing excessive profits from short lending. the settlement deal hit a snag yesterday as a federal judge ordered the s.e.c. and the founder to justify the agreement as fair and reasonable tesla shares are down 3% today in other tesla news, billionaire

mark cuban urged elon musk to strike the deal with the s.e.c you can find out more about that story on our website, cnbc.com back over to you >> thank you very much for that update. to your top three stock stories, costco reporting strong sales growth in the fourth quarter on higher store traffic. same-store sales rose 9.5% online sales slowed near the end of the quarter costco says it found a material weakness in its internal controls but has yet to find misstatement of its financial results. as a result shares are off 2.5% premarket. samsung says third quarter operating profit probably surged to a record high on strong demand for its chips, but analysts believe earnings will peak this quarter due to a sharp slide in prices for certain types of memory chips. and toyota is recalling 2.4 million hybrid vehicles including the prius due to an issue that can cause the cars to

stall. the recall covers vehicles between october 2008 and november of 2014 with 830,000 sold just in north america. we are just getting started on "worldwide exchange." coming up next, the tech wreck f.a.n.g. stocks feeling the heat this morning again we'll find out what's weighing on that sector. and later breaking out our protection playbook, the best places to put your money if the markets continue to tumble and as we head out to break, a quick check on the futures picture. it's a bit of red but not that much stick with us. "worlddexcng wl wi ehae"ilbe right back do you hear that?

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let's talk global technology shares of chinese companies taking a nosedive following a report that china planted spy chips in apple and amazon servers. arjun kharpal joins us with more this is the day and age where maybe this doesn't surprise me all that much, but this has wide-ranging implications on what's happening with many of these companies around the world. >> yeah, i wasn't massively surprised by this, you just assume this is happening in the background, but the implications here and the most striking thing about the story is the infiltration happened on a hardware level we hear about the software problems, but this is wwas a hak that occurring on the motherboard. the implications are far

reaching you are seen a massive hit on stocks like lenovo and zte lenovo one of the largest computermakers they're taking a hit on worries that many customers around the world won't trust some of this chinese hardware anymore that's big hit i want to switch the gears and look at europe and what happened here since the market opened a couple hours ago these are all suppliers of apple i phones, even they are taking a hit. the issue wasn't with the iphones, it was with the servers that apple was using none of these makers are the implicated in this story, but there's a knee jerk reaction perhaps and wordries about what could happen with the supply chain. in the end, what does this mean for the china/u.s. trade war, will there be more tariffs on components, technologies, and those questions that remain to be answered but will be closely

watched by the markets dom, back to you >> those are wide-ranging those ripple effects let's bring in dan ives from equity research and arjun talked about the ecosystem, it's wide as to where we are feeling this in the marketplace is this justified? should we be worried should the stocks be taking the kinds of hits they are because of this? this has been a silver bullet moment and it took the worries about china and some of the battle going on between the u.s. and china from background noise to the forefront this is something that could be a fort s sumner type moment when you look at the chip food chain on the smartphone side, this is one that now we'll see what the coming responses are. but in the near-term it is a risk that as of some uncertainty in terms of the next move here

>> does this in any way shape or form alter the business outlook, positively or negatively for u.s.-based hardware and technology companies could there be a situation where we turn back more towards do mets mestic producers, or does this have no way of happening without china? >> i think over the medium to long-term, just given the threat nature and given what's happening here, i think you will see more focus of u.s. tech companies in terms of where those components are being made, what the security is around it and ultimately you could start seeing some more very proprietary ip manufacturing coming from the u.s., but from a cost perspective, that's the issue. >> this comes at a crucial time

for technology global speaking those shares across all countries have been weighed down it's been a leadership position so far facebook, amazon, nix, goietfli google, they have not hit highs in about a month are we worried that the tech trade is rolling over? >> from a valuation perspective, you are seeing some lethargic conditions fundamentally it comes down to earnings what earnings look like coming up in terms of this quarter going to year end. from a technology perspective, there's cycles going on in the enterprise and consumer side a lot of that is focused on small number of names here now a small cap and mid cap and some broader names will take over is there going to be m&a that will be sparked as more cash is out there? it is a pivotal make or break sort of 3 q in terms of how the stocks react, but this is

something here, in terms of the large cap tech names, that's not something investors wanted to hear >> and we're coming up on earnings season. dan ives, thank you very much for joining us. still ahead, brett kavanaugh penning an op-ed as lawmakers gear up for a vote. and later we're counting down that big jobs report today. the magic number you need to watch when "worldwide exchange" returns. takes more than just investment advice. from insurance to savings to retirement, it takes someone with experience and knowledge who can help me build a complete plan. brian, my certified financial planner™ professional, is committed to working in my best interest. i call it my "comfortable future plan," and it's all possible with a cfp® professional. find your certified financial planner™ professional at letsmakeaplan.org.

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inny in news out of washington, d.c., brett kavanaugh penning an op-ed and tracie potts is live with the latest >> good morning. on the day that senators take the test vote literally in a few hours, they are also reading an op-ed from judge brett kavanaugh speaking out on behalf of his own nomination in the "wall street journal" he talks about his qualifications, why he thinks he's imminently qualified for this job, but also about what he calls the wrongful and vicious allegations against him. and he talks about his temperament at that hearing last week it's been a big topic here aside from the allegations saying he was emotional and sometimes too

emotional and sometimes saying the wrong thing. he's been accused of being political, bringing the clintons into this talking about democrats and others who he thinks are against him that's what lawmakers will be looking at as they head to a test vote this morning after that, 30 hours of debate the final vote of kavanaugh's nomination could come as early as saturday afternoon with four key senators still undecided after seeing the fbi report, but two of those seem to be leaning towards cavanaugh, senator susan collins of maine, senator jeff flake of arizona, both of them seemed to be satisfied with those fbi interviews >> can you take us through what are the expectations, does it seem like brett kavanaugh, judge kavanaugh is on his way towards confirmation with those wildcards or are the odds still long >> the odds are out there because even if flake and

collins both support him, then you have got one democrat who may or may not side with republicans, and you have one outstanding republican, senator lisa murkowski of alaska if lisa murkowski decides to defect from the republican party, for example, that one is fine the other two, it's critical that both of them, it would side with republicans, because bottom line they can only afford to lose one vote here it's a tight margin, 51-49 in the senate >> thank you very much for that update there a big vote coming up this weekend. still to come, yields rock stocks, but could markets make a comeback today your full wall street rundown is coming up next. later on, calling foul some bad bird behavior wreaking havoc on one town. that's when "worldwide exchange"

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wall street pointing to another lower open as a kelosel in the bond market continues. we are three hours away from the big jobs report. the key number you will need to watch. and fact angry birds, we'll tell you what's happening in one minnesota town that has many residents calling foul it's friday october 5, 2018. you're watching "worldwide

exchange" on cnbc. ♪ >> good morning. welcome to "worldwide exchange." i'm dominic chu, brian sullivan is off today let's kick it off with an executive recap with frank holland. >> good morning. here's what's leading cnbc right now. the nobel peace prize winners have been announced. they won the price for their efforts to end the use of sexual violence as a weapon of war and armed conflict. tesla feeling the heat after ceo took to twitter mocking the s.e.c. he tweeted in part the short seller enrichment commission is doing incredible work and the name change is so on point this coming after musk reached a deal with the s.e.c. to settle fraud

charges over prior tweets. and toyota recalling more than 2 million hybrid vehicles including the prius because of an issue that can cause the toyotas to stall this covers vehicles produced between october of 2008 and november of 2014 >> thank you very much for that update let's check the other top headlines. frances rivera has the latest. >> good morning to you it is a race against time in indonesia as crews are searching for survivors one week after the country was hit by an earthquake and tsunami. the death poll climbing higher overnight. officials now say over 1,500 were killed in the disaster as rescue efforts continue that number is expected to rise higher. melania trump is in kenya this morning the third stop on her solo trip to africa. she spent the earlier part of her day visiting some baby elephants at nairobi national park she is also taking in a safari before going to an orphanage

this evening a major recall for nearly 7 million pounds of beef that may be contaminated with salmonella. nearly 60 people in 16 states have gotten sick in the outbreak the ground beef came from an arizona company. back to you. >> thank you very much for that. have a great weekend. let's check on what's happening with the early market action futures are pointing to a slightly lower open on the heels of yesterday's loss. the dow jones opening up about 15 points to the down side the s&p off by 2 the nasdaq off by 23 on the treasury side of things, they have been a driver, those interest rates ten-year interest rate yields at 3.208. the two-year treasury note yield, 2.88% let's discuss the markets further. joining us is the chief

economist over at stifel are these rates, as the drivers of the market the reason why we could be due for more volatility ahead? >> i think that the economic conditions of the u.s. are driving a lot of is that volatility as we saw earlier this week the ism nonmanufacturing number came in well above expectations but the jobs report is scheduled to show more moderate conditions in terms of the labor market. so we're seeing this back and forth between market expectations driving a faster pathway for the fed against the backdrop of moderate conditions falling below expectations and keeping the fed on a more gradual or patient track >> you used the words moderate and gradual it seemed like that's how rates were moving over the past several months, yet in the past few days they've skyrocketed and gotten new life. what's behind that

what's the driver of that besides a record high nonmanufacturing and a hotter read on private employment in the u.s. >> think about the recent comments that we heard from fed officials. we heard from the chairman this week continuing to characterize the economy as strong, as solid. really building up this notion of a positive assessment of where the economy is as well as where they expect the economy to go the fed does not have a fantastic track record in terms of the outlook over the longer term,12 to 18 months if we do take the fed's comments at face value, it's certainly justifying their move in september as well as further perpetuating the idea that we're likely to see a fourth round increase at the end of the year and three additional or potentially more rate increases as we turn the corner into 2019. our expectation is that the reality of the economy as well as inflation falls short of those more heightened expectations making it difficult for the fed to follow through

with the pathway the market is believing the fed's willingness to continue to push rates not only to that neutral level but above that neutral level between now and the end of 2019. >> as an economist what are the most important data points that you aare watching what factors the most into your modeling for how the economy will do? is it the jobs number today? to so, what would you be keying in on? >> the labor market is a key driver of the economy. within that labor market report le e. we will focus on the wage number if the consumer is not happy, healthy, able go into the marketplace and spend on discretionary goods, it's going to be good to justify maintaining this 2.5% economy let alone meeting expectations for an above trend pace near 3% or 4% gdp. so it is all about the consumer and the consumer's ability to spend, which falls back on the

consumer's income growth or that wage component we have been seeing upward momentum in terms of earnings, we'll need more data points sustaining that positive trend to really get a good sense if the consumer is on improved financial footing. at this point there's a lot of volatility, and if we were really talking about a strong robust labor market we would easily be talking about 3%, 3.5% wage gains so we need to continue to see that upward momentum or measuring joblessness in the country in a different fashion to reconcile those two figures >> you focussed a lot on the consumer because consumer spending is the vast bulk of the u.s. economy we've seen a slide in consumer related stocks over the past few weeks. is there anything from the economic side of things that indicates consumer spending may be slowing down? >> if we look at traditional

retail expenditures we saw an above-trend pace of expenditures at the end of 2017 in anticipation of tax reform we saw a pull back at the start of 2018 as the reality of tax reform and that bump in our after tax take home pay fell short of many expectations then we reverted back to the trend pace of expenditures the concern here is that even maintaining that trend pace has been reliant on temporary factors. consumers drawing down savings consumers ramping up credit. earlier relying on lower cost energy a lot of these fact others are now proving just that, to be temporary. if we don't see the underlying support stem from organic job and wage growth, we do expect that momentum to begin to bleed from supporting the consumer so there are some red flags beginning to emerge on the side of the consumer in the u.s. economy. >> lindsay, always great having

your insights on this show touch for joining us >> thank you for having me as we have been discussing, rates still very center stage on wall street today. the ten-year hitting the highest level in seven years yesterday we could see another big move in the bond market with today's jobs report. let's bring in guy steer, lobal he global head of credit strategy at societe generale, as we talk about the way traders are setting up for the jobs report, is it fair to say the interest rate picture will be the primary driver given the jobs report and what exactly are you looking for? >> good morning. yes, i completely agree with you that the payrolls figure we're waiting for this morning will be key in terms of not just the treasury markets but also credit markets i think credit markets are a bit concerned about the fact that the cost of money is going up. we're in a tighter environment for money more generally

and that's true not just for the u.s. credit markets but also for global markets which are perhaps more sensitive to this issue >> is the fed now the focus, rightfully so, of the credit markets around the world is it the primary driver of everything else happening? >> i think there are two things, it's the fed and the state of u.s. companies and their ability to generate cash everything that your previous commentator said, i completely agree with with you one oth but one other thing we're focusing on is how strong the earnings have been and how strong the cash flow for u.s. companies have been. there's a combination on the one hand that the credit fundamentals of companies look good. >> but on the other hand we're dealing with a world and a lot of splay given the fiscal changes in the u.s., everyone expects more treasury issuance. there's a concern on whether that could crowd out demand for

corporate bonds from the investor base, too >> is it fair to say, guy, that the health of the credit markets here in the u.s. are still intact is it fair to say things are okay on that side of things? we have not been seeing a lot of stress, not yet at least on that credit side of things, whether it's investment grade or on the high yield side. >> that's true the surprise is globally u.s. high yield had a tremendous performance compared with things like european high yield or certainly emerging market, corporate bonds isn't the beginning of the year. u.s. high yield did better than spread movements and ur.s. investment grade that has had more to do with supply and technical factors than credit qualities. so i think there's a good case for saying we should expect now a bit of stability in terms of the u.s. credit market even if other markets could come under

pressure >> guy, is the u.s. market whether it's credit or anything else still the place to be is it the safe haven and should it be considered such in this type of environment? >> i think there's a lot of interesting things in terms of u.s. growth taking place i think if you compare the credit quality of u.s. companies over the next six-month time horizon to the credit quality of emerging market corporates or the credit quality of some export sensitive european non-financial companies, on these kinds of metrics the u.s. does come out well i think i would echo something that lindsay also said, in the 12 to 18-month time horizon things are more up in the air, you can ask yourself some more questions. this u.s. recovery has been going on for quilt sote some tie we could see an acceleration in terms of u.s. capex do to some

changes in terms of u.s. chains that would increase the supply in the u.s. corporate market, these are more issues for 2019 than for the fourth quarter of 2019 >> all right, thank you very much for joining us this morning on "worldwide exchange." coming up, brady's big milestone. 500 reasons why the patriots quarterback is unstoppable before we head out, a quick check on how wall street is setting up for this big day. stick around, "worldwide exchange" will be right back can be relentless.

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it's friday. that's times square. our colleagues at "squawk box" are not far from there let's find out what else you're going to be talking about today. time for the top trending stories. frank holland is back with those. drunken birds, angry birs what a are they >> police in one small minnesota town are dealing with a group of young rowdy residents that cannot handle their alcohol, it's not college students, it's birds. the early frost is causing berries to ferment, and the

birds are eating the berries and are getting drunk. they are showing unsteadiness and aggression police are urging residents to wait it out until the birds fly south for the winter do they get ticketed for fwi >> i get it, flying while intoxicated. >> sticking with the booze news, a rare 60-year-old whiskey set the record for the most expensive whiskey in the world we talked about this, i don't get it >> you're not a scotch guy >> i'm not it sold for 1$1.1 million >> 1$1.1 million for a bottle of scotch >> so you don't get it either. the winning bid came from an anonymous private collector. he called it in. he wasn't even there what was so special about this i know when i go to restaurants,

the 2022 is more than the 2012, and the higher up in age they go, the more expensive they get. how old was this bottle to be worth 1$1.1 million >> 60 years old. i'm not a scotch drinker i'm never getting there. >> i'm more of a bourbon guy early in my days at cnbc, i worked with shannon siemens, one of our producers to do an expo says -- expose on bourbon. all right. last night tom brady threw his 5 500th touchdown and i will just say it best quarterback ever. >> you are a boston -- >> i came from boston, but i'm a philadelphia eagles fan. >> you grew up in philly, you spent a good amount of your professional life in boston.

tb12, could be the greatest ever >> it's official to me >> i'm a niners fan, so joe montana is always my guy however what has me talking is josh gordon. is this something he will be able to stick with in new england? >> he's had a troubled career. everybody knows that he's so talented if his head is in the game if he can stay available, he's probably one of the top five receivers in the league. >> do you think bell bill cheil with get him straightened out? >> if anybody can do it, he can do it. >> we're a little over two hours away from the big jobs report. we'll see a move in the bond market when the number hits. stick with us. ghorldwide exchange" will be rit back

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time to find out what's coming up on "squawk box." joe kernen has a preview of the show it's always fun to watch "squawk box" even more so on jobs days >> i thought you were going to say even more so when i'm on >> that's like every day >> when dom chu is on it's even more fun golf's over. >> i'm going to hang up the sticks soon. >> but it starts again really soon, which is amazing we'll talk about jobs today. what the heck. we are also going to talk about tech stocks given yesterday. and also the yields. and the ten-year, which already -- i will say one thing, we've been waiting forever, and we express a lot of question marks about why we have not gotten a 3.25 already, but do

you notice how nervous people get when we do it? you know, gundlach is weighing in someone was on yesterday talking about it this is something we've been waiting for, i thought this would have happened two, three years ago, but once it happens, i guess there is a bit of a day of reckoning, but we're working that out i read commentary about yesterday. not just cnbc.com but all of them, stocks tumbled on rate fears. and they tumbled in japan. i think japan was 0.4% or something. here it was a couple hundred points it was the worst day in a while. we have to recalibrate our -- maybe we don't we should recalibrate what we think 200 points is based on 27,000 on the dow. or maybe we don't and let it instill fear and angst, even

though it's such a small percentage move. that's a good way to keep the skepticism, to wring out the complacency quickly. what do you think? >> my old boss used to tell me there's only one end of the world, this is not it. >> that's true very significant when it happens, but likely to only happen once. your timing has got to be exactly right on the end of the world. normally it's not a good bet, i don't think. the sun comes up most of the time will you sing that for me? >> i will later on in private. thank you very much, joe >> all right >> have a great show we'll tune in closely. let's bring in david rosenberg from gluskin shiff you have been sounding alarm bells, but up until now things have been okay how could this jobs report change things? >> i think beyond the headline

which i don't think will be a surprise, the consensus at 185,000 looks right to me. but i think there's two things to focus on. on the inflation side, certainly from a bond market perspective the wage numbers will be key we had a 0.4% in average hourly earnings in august the market is looking at 0.3, i think if we get 0.4, that will provide more jitters going back to the beginning of the year where we had the first round of market anxiety it was around the risk of higher wage inflation. those were risks back then i think it's showing up in the actual data. that's one of the risks today. this is good news for main street to see higher wages the other one is factory payrolls one sore spot in the adp number which looks so great on the surface, once again manufacturing employment looks good in that report, the lowest increase since july of last year

that would provide the markets with nervousness over the tariff war, and the stronger dollar starting to impact on manufacturing employment, which for the past year had been a bright spot. those are the two potential worry spots i would be looking for today. >> david, you have an commit hat and a strategist hat has it been worrisome for you on either front the velocity at which yields have risen? >> it's been breath taking when you consider that the net speculative short position on the ten-year note in the futures and options pits has never been as high as it is today i thought the bond serl sellers exhausted themselves, but i guess they have not. so it's not just the move, but the speed of the move. this isalmost like a mini tape tantrum we have on our hands a lot of this is not just premised on the economic data. a lot of the bump is due to transitory factors, which i'll talk about on my daily today

but i think people had the wrong idea on jay powell that he was going to be relatively soft. i think the comments he made in washington yesterday afternoon or two days ago reflect the fact that he thinks that we're a long way from neutral and neutral is roughly 3% of the funds rate, and the fed has to go beyond neutral. that took a lot of people by surprise the markets were not in line with the fed in terms of how far they would have to go between now and 2019 so we are seeing a level of expectations start to change as it relates to where the fed is going to be. it's not according to joe kernen anything remotely close to pricing in the end of the world. but interest rates do matter on the way up and on the way down that's been reflected now across most financial assets. >> lots of things to watch david rosenberg, thank you so much for joining us on the show. thank you very much for joining us on "worldwide exchange." we've got futures now pointing

to a slightly lower open jobs coming up at 8:30 a.m. eastern, that's big a thing. "squawk box" is coming up next en information. where in all of this is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you partner with a firm that combines trusted, personal advice with the cutting edge tools and insights to help you not only see your potential, but live it too. morgan stanley.

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good morning we'll talk about yesterday's selloff in the nasdaq and the fallout from that chinese hardware spy report that has shares of apple suppliers plummeting overnight. elon musk, he can't help himself. poking the bear tweeting an insult about the s.e.c. and that alabama shot as goois not as god as -- no, not that you have to see it dropped a tweet. it's jobs friday we'll bring you predictions and the impact on the fed's next rate hike.

that's straight ahead. it's friday, october 5th the day after ten-four "squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" on cnbc, we're live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. let's look at the u.s. equity futures. things are relatively flat that's what you might anticipate given the big number we expect in two and a half hours time we have the jobs number coming up a lot riding on it because we've been watching with yields picking up we'll be looking closely not at just the jobs number but the average hourly earnings number that's important for what happens not only in the equities market but also in the