just like driving a car, the more you drive, the more miles you get. every successful candidate that moves through the process was a man. >> based on human input into that >> exactly thank you very much for joining me today >> folks, make sure you join us back here tomorrow, right now it is "squawk on the street." ♪ >> good wednesday morning, welcome to "squawk on the street," i am carl quintanilla with david faber and jim cramer. >> s&p and futures are threatening a fifth day lower. a lot to watch today including hurricane michael and the president on whether the feds are hiking rates too quickly ppi is up for the first time in three months, our road map is

going to begin with florida on alert braising for a large and extremely dangerous storm as michael bears down on the gulf coast. >> president trump is urging the fed to slow down on rate hikes stock futures are lower this morning. >> snap's content push first up, stocks are set to open lower as rising rates do remain in focus the s&p at a four sessions losing street. producer prices rose at expected in december of 2.0 >> i think there are some things that are in the work that is are changing ever since jerome powell say listen we have to over shoot we can't do that throw off the janet yellen's play book. people in the network are

echoing it my problem is are you kidding me you got housing and airlines and constructions. so what's really good? yum brands >> mcdonald's. mcdonald's is good i am looking for some silver lining >> franchisees are upset because they got to catch up with kfc and taco bell. >> what's the problem here it is raw cause. the fed says everything is fine. i think the fed is looking at soybeans i don't know what the problem is here >> what happened

i went away for two day and suddenly darkness descends, what's going on? >> you have acknowledged that we lost home builders and semis but now we are looking at materials, ppg, that changes a lot. >> you are on a great airplane and four-engine and one goes down and the other three pick up and the third goes down and you're doing fine. well, i don't know -- is it so good give me something. give me a reason to quote an old winter and fire storm. what are we looking at here? maybe a strong hurricane like 1995 i lived in the panhandle for two years and a lot of chemical factories there. those go offline or you can do further cost like what clorox had to do. this all started with jerome powell saying listen man, let's

break out the old nike's play book we got a hot economy let's do large steps and forget about everything i will talk to you next year at this time. at the same time we are getting earnings are the earnings good? what does trencio really do? that's housing and autos, that's consumer goods i mean -- i don't know, i guess they don't matter either what matters is i am seeing chipotle is having a good quarter. chipotle is coming back, david >> yes, you have been telling me about a while now. >> those are the basic building boxes of the economy i don't got to worry at all because powell got us under control. he has got on us the pilot >> you are not the only one unhappy of the feds.

this is the president talking to eamon javers >> i don't like what they are doing because we have inflation and we have a lot of good things happening. so, i will say this, we are normalizing money and that's good but i think we don't have to go as fast. i want to be able to pay off debt and also importantly i think that the numbers that we are producing are record setting. i don't want to slow it down just a little bit especially when you don't have the problem of inflation and you don't see that inflation coming back at some point, it will and you go up. i don't think it is necessary to go as bad. no, i like to stay uninvolved with him >> i don't know. that was reasonable. >> right, reasonable >> i am not sure what he meant

by paying down the debt part do you know what means when he referenced that? >> government interests being the number one >> it will get larger and larger as the numbers keep ongoing up >> i think he's articulating as eamon just said of an endorsement. >> i go for two days and that turns, too >> he want s to see the data. why not replace janet yellen >> his predecessor rarely and spoken in terms of just discussing it. >> he sounds like harry somers

>> i have to deal with the facts. i mean the facts are getting in the way of this story. employment is good how long can that last i have barry stern on tonight. >> he's a smart fellow steel is not worth building. well, if it is not worth building then what do people in building do? they start building pipelines to get natural gas? at this point of the president, there is no inflation. >> there is also inflation results in tariffs >> right, that's amazon. >> every time you are not speaking to somebody who are exporting some extent or things that comes from there or china may figure out how much is passing along. same thing, housing starts to slow and starting to see it. >> they're seeing slowing in

their own sales as a result. >> our good friend who sits there in the old days but not until he got into the housing business, he decided to go in big on denver market it is down 30% in the last six months if the oil and gas measures on the ballot is won by those of conservations so to speak. you will see the denver market down even more we are seeing housing markets declining across the country we listen this morning to the mortgage application stories >> 30 years above five the first time >> terrible. >> so wrap this all up for me. i have been out of the country for a couple of days where are you now in terms of your on thoughts of the broader equity market as a result to this relatively new stance >> we do a 2019 one more hike and we'll wait to see.

you got to see trucking come down and the dollar come down and some resolution about china. you got to see something like mexico/canada. if the fed says you know what, maybe we are a little too aggressive if powell said it then i think a lot of my concerns would disappear. we have higher costs and mortgage compression just get david on the same page with me. the real issue here, david, is earnings season. i am worried because of ppg. there are steel flat i thought they're supposed to help >> that's the industrial economy. the consumer is strong as they have been and i don't everyon kw

long >> amazon raises their wages to $15. amazon has a plan for the next three years so that you just check out with this. let's say the $15 minimum wage, there are 3 million people who are jobless. >> we are going back to that now? we talk pd about that two years ago. >> david, from a really good old movie, the future is now >> in that case, snap today, a parent of snap chat includes a snap original. stocks have lost more than half of its value this year earlier in the week they have short of profits and quickly running out of money

>> mofett knows. >> and in that report questions whether or not they can stay into business. that's as new angle. >> they are fixed. they have to redo those contracts. snap has been losing a lot of advertisements to facebook instagram stories have tipped that facebook stock high in the 157 and 158 range >> yes it is becoming a two-man race if facebook does not get its act together that's going to be amazon and alphabet good news of waymo and google stocks like to go down everyday. remember the old days? >> you mean a few weeks ago. >> david, that's a lifetime. >> in your world, i know it is

>> okay, like warren buffett >> will it make you happy? >> for what? >> okay. >> guys, you lost me completely there. on google -- lower highs and lower lows, jim, really since july you had the google plus issue earlier during the week >> yeah, i know. i am a total believer in it. i think they're trying to get into china we are in the moment right now where if you are too powerful, you will get up every morning and read about a billion dollar fine all these companies feel like rock rockerfella. >> well, i read about it but i was not alive during that time

>> it was like grade schooogle g to appeal. >> they're appealing on the 5 billion dollars on androids >> if every you pick up a pirp a paper and there is as hack and you got jeff bezos setting prices for workers in this country? setting the price? >> okay. you are telling me you believe it >> you are saying don't look for fang leadership here >> i will say it looks like they're trying to hang in there. you buy it because of what's going to happen. the economy is going to slow and the fed is raising too quickly when the economy is slow, you buy fang that has always been the case. every time the feds have screw it up. i just agree with david. >> i am glad he's on the train

>> no, that's a football player. >> oh, because it lets out right here >> when we come back, hurricane michael is bearing towards the panhandle. kourtney is there. good morning >> reporter: we are still a couple of hours away of the most intense part of the storm. governor scott just held a press conference, we'll give you the latest coming up on "squawk on the street." >> s&p aiming at fiver days down down -- five days down in a row. have not done that since 2016. back in a moment

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florida panhandle is bracing for hurricane michael now. it is expected to make land fall today. let's get ready for kourtney reagan a storm like this has not hit for a long time. >> reporter: this is historic and unprecedented and we never

had a category four storm hit this area of the florida panhandle. businesses have been boarding up since yesterday and taking it seriously. small businesses, i saw them putting out boards at the walmart yesterday at 3:00. they're not messing around here. 92 georgia counties are under a state of emergency governor rick scott did ask president trump for preland fall disaster he did grant that just an hour ago. the governor communications are still open there are no more fuel at this time the governor says it is also very dangerous the time to evacuate has passed. the roads are clear now. that could change quickly. he's urging resident if you have not left yet, to shelter in place. >> again, hurricane michael is forecasted to be the most

destructive storm to hit the florida panhandle. take this seriously and keep your family safe the state is not taking the storm lightly and neither should any family in the state. >> reporter: there are 35 members of the national guard on standby and a thousand search and rescue personnel 3,000 employees have been deployed in the area where the storm is expected to hit let's talk about this here, about three quarters of the state is going to get hit by the storm. that's at risk and 12% of the cotton has been harvested and that could be a major problems for farmers. if prices go up. for now i am going to send it to you guys

>> the courtney, the storm surge you are talking about, how long can you do live shots from the beach? >> reporter: that's a good question every several minute we do have to be careful. this area is in danger of a storm surge between 9 and 13 feet. i understand when it happens, it can happen very quickly. we may be moving up the balcony here some sometime soon. >> kourtncourtney reagan, at fl beach. >> this is a chemical area >> gas and oil production in the gulf already down. >> we'll get cramer's mad dash and count down to the opening

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you can put smart to work. all right, time for "mad dash" as what we like to call here hump day. >> if you do the economy has a step down which could be remedy of powell going into the yellen mood we are back.

16 million shares, janet bought $5.6 million on it help to finance the pinnacle deal. the last quarter was a little bit loike it >> it is not a secondary >> here is the great thing this company when it merges to pinnac pinnacle when economy started down taking which is beginning with powell saying listen, stop worrying oil is doing well. >> the industrial economy because of china and trade worries and autos and housing and basic building block >> well, will this compan company -- we'll get enough truckers and truckers are being trained. it has to do with the really important federal safety rules

that is you can't drive 80 miles per hour a week anymore. you drive 50 >> i do not want to be negative if the feds take its foot off the juggler of american industry >> you are on this do you think powell is watching? do you think he cares? >> he's not saying, loo, whk, w he says is a joke and until the end, he'll be listening to me. >> david, you, the president and me >> the three stooges >> hey, i am curly. >> there it is >> we'll be back right here on "squawk on the street. only half the story?

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♪ (whistles) ♪ come on. come on, squirt. (dog barking) whatever your financial goals are, a u.s. bank wealth management advisor can help make them a reality. talk to one today. u.s. bank - the power of possible. you are watching "squawk on the street." opening bell is 90 seconds on this busy wednesday, watching hurricane michael. a bit of a losing streak here on the s&p would be the longest going back to october and

november of 2016 where we had nine days down this is only five if we close out the day. >> we start to realize, this is not the end of world and you fought a big rally that's what i am looking forward to happen again. i think jerome powell is going to walk back those statements. all he has do is say i think everything is on the table kind of like what larry culp say in ge. if everything is on the table and he says look, i am paying pensions to all the data then we have a rally >> can we normalize interest rates already? can we get back to the world we oneself knew 20 years ago? >> guys, we are at the cusp of where we should be i am being bottom's up. it is a sudden change in china and higher rate.

t it really shows the housing market happens over night. >> i saw this in a second. >> foreign search, this is one of the most powerful from atlanta. >> s&p is at the bottom. >> the big board is valley and chaparral. >> speaking of the nasdaq, the folks got a good -- when it is down 1% plus and starts on the sixth day. the rest of the month is positive putting out key bags today service growth stocks, the october pull back have been monstrous since this month

began. these stocks are down double digit. i agree with the idea that there could be a balance i got to tell you that if you think things are slowing down rapidly, even these stocks will get hurt take a look at mahinm micron. i think we can get that kind of balance but we are not on the bottom it has to happen when the feds walk back its ill-advised comment. >> china and antitrust continues to be a big issue in this market and i will turn and take a look at nxp >> nxp, that buy back. >> going through that money. >> nxp is the auto assembly day, david. >> it is below $80 a share they had a $127.50 deal on

qualcomm authorities would not approve. they never dedinied it they simply did not approve it >> 170 >> what's the similarabymbol ofs >> i don't know. >> a lot of concerns of utx and rockwall colin >> the spread is opening up there. i am saying a lot of concerns in the marketplace so that's why the spread is open what i hear is confidence in the company themselves in terms of just waiting, just waiting >> i am looking. there is a little bit of a report that gos es on, i don't recommend it don't text or e-mail, you can't learn as much. >> my friend adam chef, his dog is sick. >> so i remember flannery to hear that.

>> my point is there is still a lot of waiting and worrying going on >> whuns that's done, they'll move potentially to close the company. >> they have to do this. >> well, they got away from the chinese. >> you are telling me they're not going to win on proxy and that company will go down. >> i think cotton and candl candles -- >> i used to like the cheese crackers, yeah, the orange ones. they only have 1,000 calories. >> china's words are not confined to any antitrust >> take a look at alibaba. >> oh my god it will be further amplified by

the political tensions between the u.s. >> raising conversations from newly listed names >> is that the barclays? >> barclays did cut it from 2.0. >> let's join that morgan stanley says the number is going to be below 3% consensus. >> there is only one that'll work today we work it adam n ad adam newman -- >> he's an interesting guy >> what kind of market are we in when soft bank chooses to put $15 million into >> exactly >> there are talks to buy what would be a majority. i am not sure where we'll be valuing. we all know by far is the largest out there of its kind. it dwarves all the money co

combining, coming into venture capital. >> i don't doubt the journal story. >> he wants to be the amazon of real estate. >> it is just a real estate company and spending enormous amount of money buying leases. >> you just pointed it out > >> he says that that's when people were saying jeff bezos is just a book seller >> it is quite compelling. >> i think barra would have a different view >> speaking of real estate, sears holdings, these reports, they hire m-3 to structure, 125

years in business. eddie lambert, is he running out of cards here? >> he's been able to take a lot of good assets from sear's this has been a slow motion train wreck. >> stocks not that long ago, it was at $1. >> a decade ago, $140. >> yes >> i knew a number of people who believed as a real estate play it is going to be able to create incredible values. >> we have looked at declining sales for almost that entire period double digits very often somehow though, don't you need them to go up at some point? >> this is bad news for home

depot and lowe's, sears has been a share donor. >> he wants to restructure and not go the toys r' us roots >> right >> at some point he says get back to being positive maybe they can make it like the old sears. that'll be positive. >> some oretailers are having an morning this morning depot is up on hurricane there will be a lot of homes unfortunately. i have been there as a reporter, the last thing you want to do is be there yeah, i think that home depot will be up on that and the surge that came from florence was not

that long. retailers are reacting to the possibility that they were over sold there is a bunch of retail comps. walmart is doing better. what are you laughing about? >> nothing, i just like the way you -- he's got nice big homes in washington, d.c. so i assume it is like a secondary form of government now, is that what you are saying >> i am looking for $3,000 per square foot in new york. those are coming down rapidly. i don't think people realize that real estate has been frozen i mean frozen. >> has it moved yet? >> they're showing it, i think >> i say to lisa, should we look at manafort's place because he

paid five million dollars on it. >> maybe a lot he's going to spend a lot of time in prison >> we do have a deal this morning. this guy is hardly ever been a name he had. cyber security >> yes, cyber security and specifically in the clouds and across fireworks and environments >> 55:75, crash. they do have a 45-day go shop, that's typical in private equity deals. a $43 close. stocks are going to be higher. >> they do a lot in technology >> here is the problem with that there is still like a ton of other -- i like that group were much we need consolidation and a lot of different markets i think horton that was the

beginning and we need more deals. we had so many -- that's just a disaster we don't talk about that i pill caused people so much money. we got to cool it. >> i know that's been going on >> i mean not that the president is telling us to sell our ipos when we are blocked from that nxpi, we'll go to a company that's doing business with the rams and i got rid of the ceo. there were some comments this morning of peter navarro not being in charge. >> i think he's in your ear right now? >> is he thinking for you? >> is he just -- okay, just making sure.

>> that last little bit, i think pete is absolutely -- >> no, it is a dr.'s report. i do believe that we are absolutely in the grips of what i think is a major retaliation against the chinese that has been navarro speaking to the president here i did not speak to navarro >> some headlines from the fbi director from christopher wray, china represents a firm by the u.s. that's not going to be fixed in some meeting >> passengers said on air, if we turn someone that could turn into diet. >> that's not happened >> that's out liar

>> it is whatrd to find anybody who really knows everything here in terms of what's going to happen i will say that the people ought to be talking more about long-term relationships in which this is going to be the new normal and tariffs will be 15% starting in the new year and expect it to go on potentially for a long time >> thank you for saying, well, i have been saying, which is this is not something that's going to be resolved by the chinese thing. we'll stop the next round. we'll not do tif-for-tat >> you are thinking they may back down. will you change your view? >> they need to be a little more like mexico and canada >> that's the way they roll. >> the nuclear options that they are going to sell to our

treasury and that means they'll have to buy the yuan >> he did know it is a great call look, i am worried about the chinese economy. >> a bit of a paper tiger. >> got it. >> indeed. >> who says indeed at the end of the densentence what. >> there you go. the same president and especially relationships >> dow is down 100 and snap is below 7. let's get to bob pisani. >> yeah, it is a rough open. five days in a row, we could be down in the s&p. we have not seen that since 2016 not a lot of bright spots here utilities and banks and that's about it the key thing is big losers continue big industrial names is

weak again and tech names. this is unusually complicated earnings season. they're trying to figure out what the guidance will be looking at we got higher rates and material costs and fire wages and we have weaker currency. >> one thing that could help margins is revenue growth. now, it is one thing when your costs are going up 2%. look at these revenue growth we are seeing for the end of the year or 2019 your revenues are growing 7% or 8% that's a huge help that may be the one thing that ultimately saves us of this revenue growth there is still a lot of concerns out there. it is in the market already. some of this week we are seeing, look at the global market.

tha shanghai is 23% and south korea and germany. and our markets we have been talking about all the sectors that are doing crummy and home construction stocks at new lows. they're down about 25% or 28%. social media, we have been talking about the week that's there. and even the russell which was a market leader in the first few months and it is now 7-year-old. did you notice procter & gamble? they got an exception to steal on their tariffs we have not seen many of these we don't know how material it is but just the fact they got an exception on the tariffs it waiting for comments, here is

a big company. say something like tariffs ochlt you see it is down 2%. the conference call will be at 10:00 a.m. eastern time. hopefully they'll have something to say of the impact of tariffs and maybe we'll get more information going on ipos interesting one, trade is tomorrow here at the new york stocks this is a big producer of lithium. we'll keep an eye on that. there is not a lot of lithium producer out there there is alb, so this is really a play on supply and demand on lithium. there is a few suppliers out there and trying to increase their supply we'll see whether the supply or demand equation is going to be in balance the man is going up for that >> we'll sit at 104 points in

the dow. back to you. >> 8:84, it is somethi84 is goo. >> i don't think this quarter is good >> take a lot of capacity out. i would not give up on the quarter of the dividend. i checking in on rick santelli as well. >> good morning, carl. >> certain aspects were warmer than others which sets the table. cpi, we are very if i remember if you look at a 2-yr note yield, it continues to push the envelope back in history look at today of tens looking pretty good there, right when you put it into context of injuring a read yesterday of 326. you can really see that. we are sticking and lofty.

it is a 17 year highs. it is a pretty trained trading we traded over 3% at this point. we'll comp it for a while. if you look at what's going on in bund yields the slet continues to diverge. we are trading at a zone whe where -- it has a host of issues rather unique to it that's keeping rates down the longer that occurs, the tougher tougher it will be >> we look to the one and we all know we are getting close to 7:00 >> story very lofty level.

everyo everyone today is the ladder move you can see how close we are to the 17 highs we jump all the way back to 2008 finally the dollar index how is your today's chart. shows you we are not at the high >> but, outside of that company of week period we are, even though we lost about half a percent and did have some everyone trading about that. carl, jim, daifvid, the whole gn is back. >> good to be back >> as with egoto the break, we got tiffany and estee lauder >> we'll be back in a moment

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let's get to jim and stop tragd. >> the market is getting a little gloomy. so because i kind of --ding. >> the market is getting a little gloomy. so because i kind of -- i'm going to have to mention it. there's classic reporting on the turban business. not turbine. he said larry culp is not going up too well. his reporting is extraordinary he's not even a journalist. >> he sure acts like one. >> the guy is like the woodward and bernstein of ge. it's incredible. >> so tonight sternlicht along with -- >> i have canopy remember, canada goes into repeal and i have carnival arnold donald is a great

manager, i like that stock but we have hurricane risks and courtney reagan, please move i know that area i live there it's too flat. if tyndall is moving the planes around, you go away. >> that storm surge will be something to watch we'll see you tonight. "mad money" 6:00 p.m. eastern time a lot more on this market decline, dow is down 174 dow is being led by verizon and depot on some obvious reasons. there's hurricane chmiael as it surges toward the panhandle. don't go away. we help farmers lock in future p banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here. cme group - how the world advances.

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welcome back to "squawk on the street." our last bit of breaking news, our august final read on wholesale inventories and trade sales up 1% on inventories now, since this is a final number, the up .8 was a mid-number that gets tossed, replaced with 1% and 1% is huge for a variety of reasons. it's third-quarter number, that's going to enhance gdp and it's the best number going back to october of 2013 for wholesale inventory. trade sells were up .8

these are solid numbers, inventory builds matched with strong sales, yields have backed up a little bit from up a bit to unchanged. carl, back to you. >> thank you very much rick santelli welcome back to "squawk on the street," i'm carl quintinilla with sara eisen and david faber at the pink thanew york stock e. >> our road map for the hour starts with category 4 hurricane michael barrelling toward florida's panhandle. let's look at michael's potential impact on business and the economy. >> market is in the red. the president renewing his criticism of the fed, urging them to slow down on rate hikes. plus we have action from activists, three wall street big names making moves on three separate companies we'll give you some details. >> we are keeping our focus on

riding rates the president repeating his displeasure with higher short-term rates saying the u.s. doesn't have an inflation problem. >> i like to see low interest rates. the fed is doing what they think is necessary but i don't like what they're doing because we have inflation really checked and we have a lot of good things happening so i will say this, we're normalizing money and that's good but i think we don't have to go as fast. >> joining thus morning to discuss, washington crossing adviser senior portfolio manager kevin caron and burns mckinney thank you for the time this morning. kevin we are going to get more supply today some three-years and 10-years. what do you make of the president's comments and how much are you keying off of what rates. >> well, with the long end of the curve steepening somewhat,

you have to be mindful of what causes that and one of the things that causes that is uncertainty on the future of inflation and where interest rates are going and the fed doesn't control that as much as they do short rates. so part of this backup we've seen here i think is attention getting and it's not really entirely about what the fed is doing and we do have inflation expectations above 2% and trending higher so not a huge problem, the level isn't bad but the direction is something the fed these pay attention to. >> burns, do you see any of this altering the narrative written by powell at least at the last presser? >> i think that jay powell for one -- and the president has tried to put a little pressure on him -- really has exerted his independence and hearing him speak, you know, he does make good points. what the fed is trying to demonstrate is that they want to

stay ahead of the curve. granted as the president stated, we don't have inflation d.o.d. but if you look at the trend level, the trend levels have gone up. and what do they say about inflation? it's like toothpaste, once it gets out of the tube you can't put it back in that's why the fed wants to stay out ahead of that. >> the question is we're not seeing that. the president has a point. you have today's ppi numbers out, wholesale inflation doesn't show a worrisome sign into breaking into anything dangerous. is the fed moving too fast or preparing to >> no, the fed isn't moving too fast if you look at where short rates are today, just over 2%, look at the past peaks in short rates. they're higher than where we've been today so with the fed just with short rates just about where the forward look on inflation is, there are more neutral than they were a year or

so ago but they're nowhere near what would be considered tight and so if you look around, look at the performance of asset classes and the economy in general its seems like the fed so far has done the right thing and by putting -- by restoring some of a positive interest rate it gives them a little ammunition should something go wrong down the road. so the fed does need to address tightness in the economy by raising interest rates and they're just simply going about doing that. >> burns, how much of this is being driven by things -- external factors outside of the u.s. i know mnuchin talks to the ft and says brexit and italy are -- neither one is a significant concern at this time but it's happening on the backdrop of tightening, slowing qe in europe and slowing qe in the states how much is no longer about watching paint dry >> well, you are seeing

movements elsewhere and one of the things that's been keeping u.s. interest rates down for a long time, it hasn't been the u.s. economic fundamentals, it's been tethered down by lower interest rates in europe, lower interest rates elsewhere but you've seen the bank of japan start to take their foot off the gas pedal a little bit in europe you're seeing the same thing so one of the things we're telling our clients to focus on is in this environment it's a good place to focus on both -- or to expect higher levels of volatility and among that volatility it means it's a good market for active stock pickers and a good market for things like dividend payers that maybe have more stability in their returns. >> active stock pickers who pick what what stocks? what sectors >> you know i think one place that's lagged has been financial services there's been a little slower loan growth but it's a sector that should benefit from higher interest rates you have low expectations baked in whereas loan growth has been

slower, revenue growth has been disappointing but earnings have been strong, you've seen margin improvement and you've seen banks focusing on better returns on capital and better returns of capital. it's one of the places you're getting the best dividend growth. >> we'll see those bank earnings come out toward the end of the week but kevin, financials are down so if you look at stock market action, it tells you a different story three sectors that are higher are utilities, consumer staples and real estate. invests or buy that when you see rates moving lower i know there's hand-wringing about higher rates, but i wonder if that's the full story does it seem like there are bigger concerns about global growth financials are not higher and rate proxies are. >> there's a few things in there. financials are seeing a higher cost of funding of their loan book as short rates go higher.

as far as sector leadership goes, staples and things like that, you said they typically do better when rates are falling. well, why are the rates falling? usually it has something to do with worse growth and maybe your last point about global scene points at it because even though things are good in the united states if you look around the world think about emerging markets, turkey, et cetera this year it's been shaky. chinese growth is slowing so when you think about the global scene, 2016 and 2017 was all about accelerating global growth, clearly. but this year we're getting mixed signals depending upon where you look around the world so there's a lot to that and ultimately as far as this is concerned, you want to see higher rates because it reflects an improving economy but you're getting late in the cycle and you want to be careful so quality stocks with paying dividends, increasing dividends, well-covered dividends and good balance sheet would be where you want to go to invest money.

>> one reason names like verizon leading the dow today. appreciate that very much, kevin and burns. dow is down. while we spoke, a very quick 270 which will make it the worst day since june 25 for all three. >> and technology is getting slammed again. worst sector, nasdaq down 1.5% when we come back, it could be the strongest hurricane to hit the florida panhandle in history. courtney reagan joins with us a look at what's coming up next. courtney >> good morning, we are live in panama city beach, florida, the rain is picking up, the winds are picking up the ocean is still at bay but the waves have come all the way up to the dunes. we'll bring you the telast with hurricane michael right after this so no matter what you trade, or where you trade, fidelity. open an account today.

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x1 help. another reason to love x1. say "teach me more" into your voice remote to get started. welcome back to "squawk on the street." hurricane michael bearing down on the florida gulf coast, potentially the most dangerous storm to hit the region in a century. farmers from florida to the carolinas are struggling to limit the crop losses. courtney reagan is live in panama city beach, florida how is it looking? >> conditions are getting worse, getting more windy the rain is coming down a little harder the ocean is still at bay but we just saw a really big storm come and move this jetski rental from its original position so things are getting more serious we know 1.8 million people are in the storm's path.

92 counties in georgia in a state of emergency president trump went ahead and approved pre-disaster relief of ahead of the storm's landfall which we expect around 2:00 p.m. local time we think they will see the eye of the storm hit here. the time to evacuate has really passed the governor and local officials warning about road conditions saying here in this county the roads and bridges are open and passable for now gulf county, however, those roads are closed the panama city manager saying on the "today" show that he's afraid 50% of local panama city residents are still here and in low-lying areas. governor rick scott spoke about critical infrastructure. here's what he had to say about where we stand now. >> there are 19,000 personnel staged to begin utility restoration and we will post power outage numbers from every utili utility. getting power on is critical to our recovery and response effort and it's a top priority.

we've focused on keeping all communication lines open following the storm, we will have resources available to quickly make sure fuel is moving to where it's needed. >> so for now, communication and fuel are in an okay position but as you heard the governor, it's paramount to make sure it stays that way we spoke with verizon. they say they have lots of generators on standby, thousands of gallons of fuel to fuel those generators they also have portable cellular towers available and personnel ready to deploy. again, once it's safe and if we lose those critical communications lastly, let's talk about crops luckily, the citrus crop in florida is in the lower two-thirds of the state. that part of the state will get mostly spared from the storm however peanuts, 825,000 acres in georgia, those are at risk and only 12% of the cotton crop have been harvested in georgia so that's also a fairly big concern. for now, i'll send it back over to you guys. >> the fact that this has come

so fast and people haven't had enough time -- or haven't had a lot of time to prepare, have you seen home depots and lowe's open we usually see long lines and people making preparations, evacuati evacuating, businesses having time to close? what has it been like? >> we spent the day at lowe's and home depot yesterday at multiple locations some closed as early as 1:30 p.m. one of the local walmarts closed at 12:00 they closed much earlier than anticipated. a number of speak we spoke to buying plywood, i said you're going to stay? they said we haven't decided but we didn't expect a category three, now here we go a category four. >> this is moving awfully fast we look forward to more coverage as we go to the break, dow down 268, close to session los transportation average as well

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stocks are selling off as you can see right there. the nasdaq the worst amongst them, down 1.7%. all the typical names you might expect pressuring that index overall. mike santoli is with us right now. look at the bullish and bearish signals in the market. >> more bearish than bullish at the moment and it's been a mixed message. if you look at the etfs that have been making 52-week highs and lows, it gives you a sense of how split the market has been the major index is succumbing to that weakness but here's the 52-week highs yesterday and two of them are short the market so the eum is short emerging markets, epv short european stocks, that's a year to date change on the right there up between 8% and 12% but utilities is an interesting one. we've been remarking about how utilities have had this bid. it seems it's about the fact that it's a safe sector, dividends will grow over time. also there's a bit of an energy

exposure play. oil and gas are up sometimes they get the benefit of rate increases. there's a whole lot more of them, here are four representative ones. xhb, housing sector peaked a while ago, home builders are on their lows, gxc is the greater china fund we know what's going on there, but materials is another one so these are sectors that should be cyclical, they should be giving you a good message of an economy running hot but maybe they're telling you that the market is on alert for the end of this cycle wherever it does come so we have such major split between sectors. it's one of the reasons index volatility has been lower than you might expect given the number of 52-week lows, given the stocks 10% or more off their highs because you have a push/pull of strong and weak stocks correlations is very low. >> who breaks the tie? industriales >> in terms of the bellwether i

think you would probably look for industrials. consumer is still fine what the market is suffering under is the lopsidedness of the market the u.s. outperforming the rest of the world too much, too much tech in the market, nowhere to put it the market can't handle tech down 2% on the day even though banks are up banks is another area that could be a net beneficiary. >> you had a good discussion on "squawk" and cramer said powell needs to change his tone but the trajectory of rates we've seen this cycle isn't as severe as going into '07/'08. >> not even close. they were raising at every meeting and transparent about the fact that they would be doing that for a couple years. personally you might say powell needs to change his tone but the tone he has right now is very purposeful there's a reason he wanted to put the markets on alert that they were a little complacent about the possibility of more rate increases that's my view so it's not an accident. he doesn't say wow, i broke something. he says i successfully added a

little risk into the market. >> so no rookie mistake? >> i don't think so. and i think it would be as easy as saying well, if trade really causes an economic hiccup, we might have to reconsider, boom then you take that risk out of the market's perception. >> all right mike, thank you. mike santoli with the down down 230 points. let's get back to the monster storm bearing down on the florida coast right now. hurricane michael expected to make landfall in just a few hours having major impact on crops, energy, the local economy. joining us to talk about it is mark misjac who served overseeing the emergency food and shelter program. a category four hurricane in florida might be something the state has never seen but it's no stranger to powerful storms, irma in the last 13 months or so can florida be adequately prepared for a storm like this >> i think with this storm it

was fast-moving. it was put together, there was certainly less time in the way of evacuation orders than there was for something like florence. it was slow moving and everyone was talking about rainfall as the big concern. in this case, wind speeds, huge debris and storm surge is the most dangerous portion of the storm. >> so in terms of how you even assess the damage it's storm surges and these high ocean waves that could be flooding in. what do people need to know? >> so right now i would say everybody needs to be at whatever the safest highest ground, most sound structures they can be in there's a number of hours left for people to get there. one of the things that i would say is that the further inland you are the more likely you're going to be able to avoid the most dangerous of the storm

surge. the coast of florida probably won't look the same. some pretty significant impacts and a lot of the positive brashibrash i -- brackish waters, soil composition, everything will be changed. >> so many interesting wrinkles, tight eye wall not a lot of respite for those in the path of the storm if you had your choice, if you were a homeowner, we always say it's not the wind it's the water. would you want a slow moving storm that dumped rain like florence or something like this? >> slow-moving storms give a better chance for preparation so if i had a choice i would choose more warnings instead of less. obviously i think the bigger concern with a storm like this or those that felt they didn't get the type of notice they would have wanted to get and there wasn't much that could be done with how quickly this

strengthened and how fast it's moving so these things happen with the weather but the big concern living on the coast is know in advance your evacuation routes have a kit ready to go to take with you those are the things people can do beforehand but when the warning bell goes off and you're getting the evacuation order, go as soon as you can the longer you wait, the more chance you face things like gas outages and those things that will hamper your evacuation. >> we weren't talking about florence that long ago it strikes me that theme storms appear to be coming with greater frequency and intensity. does this change the economics for the insurance industry or the federal government under fema, the fact that these storms continue to come fast and four usually toward the country >> absolutely. fema has been engaged in education process across the

country with people about what it means to live on the coast and the increased frequency of storms as well as the increased strength of storms there is certainly a historical perspective they offer one of the things that is a big message to businesses and those that operate and being prepared on their own for some supply chain logistics to address that. large corporations do it well. small businesses in coastal communities probably need some help but i think that is a big message that fema has been trying to put over the last couple years. >> mark misczak, thank you for your perspective. >> thank you. when we come back, we'll continue to monitor the hurricane. here's a look at the energy complex and what it's done the last few hours here. as we go to break, look at the major averages dow with a small intraday bounce s&p is bk acto 2854.

don't go away.

good morning, everyone, i'm sue herera here's your cnbc news update at this hour. a turkish television station airing surveillance video that reportedly shows missing journalist jamal khashoggi walking into the saudi consulate in istanbul. turkish media say the van carried a 15-member assassination squad sent to target khashoggi 15 people have died in western kenya after a bus they were riding in went down a slope and crashed. dramatic video shows california firefighters rescuing a man trapped in a burning building the helmet camera images come from fresno firefighters

responding to a house fire last thursday the man was taken to a local hospital and then later released a chinese sports delegation that includes former nba basketball star yao ming was greeted in pyongyang the chinese women's basketball team held a game with the north korean team to celebrate the 73rd anniversary of the workers' party of korea you are up to date let's send it over to jackie deangelis for the eia inventory report. you can see oil prices are down ahead of this report around $74 a barrel after the imf downgraded economic growth forecasts for 2018 and 2019. you'd think on a day when we're watching hurricane michael, they would spike because of the refineries but that's not happening. trading at 7381, just under the

$74 mark i'm waiting for the number, i don't have it just yet but we'll come back to you when we do. >> jackie, thank you. welcome back to "squawk on the street," i'm sara eisen with carl kiquintinilla and david fae live at post 9 at the new york stock exchange the dow is down 220 points right now. the s&p 500 down almost 0.9% we have staples and financials just popping into positive territory. just staples now everybody else is lower. technology, strils and consumer discretionary are the biggest drags, the nasdaq taking it the hardest.industrials and consumer discretionary are the biggest drags, the nasdaq taking it the hardest for the s&p, if we're at these levels it could be at the lowest close since back in august, five days in a row lower for the s&p 500. meantime, hurricane michael

expected to blou expected to plow into the gulf nbc meteorologist kalee dionne has an update on the path. hey, kalee. >> we are looking at a storm that's only 15 miles from the shoreline at this point and it's moving quickly toward the florida panhandle. i wanted to compare it to the most recent hurricane we've been dealing with so i compared hurricane florence to hurricane michael and they're two different storms category one at landfall, 90 mile per hour winds, storm surge six to ten feet. now hurricane michael, category four storm with 145 mile per hour winds at landfall, nine to 13 feet in regards to storm surge so those will be the main concerns, rainfall not as much as florence, florence moved at a snail's pace mike logical haul once it make's landfall i want to talk about the pressure that is continuing to drop that means the storm is

intensifying and if we look you can see at this list of lowest pressures at landfall, if it stays at this pressure, there's only been seven other hurricanes that have made landfall ever with a pressure lower than that, irma being the most recent one if we look at wind speeds as the storm moves closer, winds anywhere from about 35 to 60 miles per hour of course tracking this throughout the day. >> kalee dionne, thank you very much we will see you soon. oil markets reacting to geopolitical fears as the november 4 deadline for u.s. sanctions on iran draws closer bp ceo bob dudley spoke with steve cedric in london and warned oil markets could continue to face this kind of volatility until the sanctions go in place. listen. >> i think it will be 45 days of extreme volatility, it could spike up it could also go the other way if waivers were granted to others for -- big consuming countries you could see it go

down a lot of uncertainty right now. >> that uncertainty, is it undermining the good work done to get more stability back in the underlying price the critics of opec, the president has been critical of poe peck but a lot of the u.s. players and assets have benefited from the higher prices and more stable prices. >> we've been through this period, low prices up again. we can't plan on high prices right now. i think we're off the fairway of what is a good healthy price for the world so we'll continue to plan our company in a much lower price. >> for more on the oil market, let's bring in rbc global head of commodity strategy and barclay's head of energy commodities research i thought it was interesting he said we'll plan for lower prices, we're off the fairway in terms of what's healthy for the economy. do you agree >> i think when we return to the iran sanctions, he talked about waivers. there are senior trump administration officials at the

oil and money conference speaking today and there's little indication the trump administration is going to offer waivers. they say it's not a waiver, it's a significant reduction exemption. you have to show you are making a significant reduction in your imports going into november 4 in order to secure that exemption so i think the sanctions will be serious. i think they will be meaningful and the administration shows no signs they will grant latitude to importing countries to import barrels after november 4. >> so how much of that is in the market already at these elevated prices wti at 73. how much more upside do you see? >> i think there was some confusion in the market. there have been a number of reports out there, wire service reports indicating that the trump administration is actively considering waivers but, again, when we talk to administration officials say they, a, they're not waivers, you have to make a significant reduction to get an exemption and these exemptions will be few and far between so

i'm not sure the market fully appreciates yet how serious the trump administration is about trying to get iran to zero china will remain in the market as a buyer, india will make purchases at some levels but it will be a big hit to the market in terms of iranian barrels off. >> sort of a -- it's a bullish view on the price of oil, michael. do you agree as far as how the price is reflecting what happens with iran's production >> i do think that what halima said is accurate as we move into the next month and a half we'll continue to see barrels come off of the market the important thing to understand is that the iran sanctions don't work as a mechanism to take revenues away from iran. if oil prices go to $100 a barrel it's simple math so that is the problem i see with a sustainable removal of a lot of barrels of oil away from these target

markets, whether it's india and china so i think as halima alluded to, they'll have to have a significant reduction exemption and the other thing to keep in mind is that saudi arabia is producing at least what they say 10.7 million barrels a day of 400,000 a day barrel up tick in output and i think the key question going forward for the oil market is how concerned are market participants about spare capacity in light of these demand fears, in light of depreciation, a lot of different currencies that are the drivers of oil demand growth so when we look at the market for the coming year, non-opec supply is very much outweighing the growth in demand and we think that that is going to weigh on the market over the course of the coming year. >> halima, a second time in a couple weeks we've talked about the prospect of an spr release how much heat would it take off? >> we've had secretary perry out there saying there's not going

to be an spr release officials we've spoken to here have indicated there's no looming spr release. certainly if we saw some type of event happen in the middle east that sent prices soaring i think that would be a cause for a release but right now they don't seem like they're ready to release. and as we go into the midterms, rising oil prices don't seem to figure heavily in the midterm discussions at the moment. >> and i would say one thing more about the sanctions policy. trump administration officials keep saying this is foreign policy aimed at iran, they say they're not particularly concerned about the price ramifications, what they want to see is a radical alteration in the iranian regime's behavior hence why i think the trump administration is going to carry through with this policy they are trying to force the iranian regime either to leave or radically change course and they're willing to endure some economic pain to do so. >> what about global growth? imf warned it won't be as strong

as forecast. if we are starting to see slowing growth which, i mean, look at the u.s. joining the global market selloff today will that limit how high the price of oil can go >> i do think it will weigh on prices it's hard to say how much but we've seen base metals, for example, disconnect from the price of oil and i think oil is being kept up by these supply concerns when you look at global growth prospects, economists continue to warn economic growth is going to slow. as you pointed out the imf cut their forecasts. when you look at india and china and even in the united states over the course of the summer demand growth is starting to wayne at these higher prices and it's a question of how many different places start to see the impact in terms of data and how much that weighs on the minds of market participants and it may take another several months for that to truly affect the price of oil, but we do think that the economic growth

prospects from here look like they're turning downwards. >> finally, halima, let me know if i'm reaching here, but this story about jamal khashoggi, the saudi journalist, what could that do to u.s./saudi relations? >> i think it would be serious for u.s./saudi relations president trump has close relations with mohammad bin salman but the relations with the congress and saudi arabia haven't been so good so watch what happens in the u.s. senate. bob corker, chairman of the senate foreign relations committee has been highly critical of the saudis in terms of the investigation into the missing journalists and they've been critical of the saudi conduct of the war in yemen so i would look to the senate to put additional pressure on the white house to take tougher action against saudi arabia and i would not rule out some type of sanctions on saudi arabia, potentially on the sale of defense products to saudi arabia if the allegations prove to be true regarding jamal khashoggi's disappearance. >> where do we end the year? we're at 84 on brent right now.

>> i think that we could certainly end the year, we could be talking about the 90s for brent absolutely the critical factor would be do we have a geopolitical issue in the middle east? >> michael, where do we end the year >> i think we go below 80 and i think that trend will continue over the course of the next year i think prices have moved outside, as bob dudley alleged, outside of the fairway and i think there's a lot of froth in the leadup to sanctions so we're going see just how these fundamentals shake out and it will play out in the next month or so. >> slightly different views there. guys, thank you for weighing in on the topics. halima kroft and michael cohen. >> thank you. as we go to break, look at the major averages here, dow down 285, s&p below 2850 as we paur fm mereakdown in some dertesroso 200-day moving averages. back in a moment

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there's a stealth correction lurking underneath the market's surface, but it could be a bullish sign for stocks. find out more on tradingnation.cnbc.com more "squawk on the street" coming up.

let's get to the cme group in chicago, rick santelli and the santelli exchange, rick. >> thank you, carl, i'd like to welcome my guest, thank you for joining me. >> thanks, rick, good to see you. >> we had ppi. certainly certain aspects of it are warm when you look at bottom of the food chain type impact costs which is trucking which has spilled into rail, passenger airline service. these year over year numbers are big. when you think just generically interest rates are bottom of the food chain costs, is it just a matter of time before we see inflation or will the anom tloif tloifr -- anomalies of the '80s going to

force the fed to take different actions. >> well, we don't think this is a scenario like the 1980s. but there's intermediate price pressures in the economy core pce is at the fed's target at 2.0. >> jay powell has given us many key phrases as to what he will monitor to decide how much he wants to raise rates i read his comments as code for monitoring the complexion and various gap in the yield curve your thoughts? >> the big message we take away from jay powell's speech at jackson hole and recent communication is he wants to be a little less model dependent and more see how the economy develops the reason he wants to do that is to see if capital spending picks up so the message is powell wants the fed to be more

let's react to current environments than our forecast of two to three years out. >> it certainly seems as though the gaps and curve have widened out a bit. >> this is the big story in the bond market. this selloff is much less about repricing the fed and much more about repricing the generic risk for holding longer duration government fixed income. >> because the term structure was screwed up by overmanagement by central banks >> and despite the selloff, those measures of -- we call them risk premium, they're still low and we think that is leaking into other markets and we think that will be the key development. >> as i like the say, the metric force valuation rallies that go on when markets get out of back like emerging markets in february and may and and now they're quite common looking as though they're a place you want to be. your final thought >> em has had a good retrace you look at september and the

hard currency trace, anywhere from 50% to 60% of year to date losses got recouped. in this rate move, we're seeing an underperformance of u.s.-sensitive credit and em is holding up relatively better on fixed income. >> the biggest underperformance seems to be on the equity side of fixed income, meaning like an hyg etf or the lqd to a lesser exsent when i look at the barclay's interest, they've turned up but they're really well behaved. >> the same story as rates in general, the move feels dramatic but we are still at a low base. >> thank you for joining me, david faber, all yours. >> rick, thank you. we have news on the m&a front. antitrust. the department of justice is going to require cvs to invest their part "d" production drug plan business to well care and that deal as has been expected

is going to move forward so they will be approving the transaction and purchase by cvs. remember, you had the expreses e scripts cigna deal as well this is a $69 billion deal but as was also indicated previously, a proposed nova scotia which you are will allow for what they say has continued competition in the sale of medicare part "d" prescription drug plans for individuals i believe bertha coombs may be available for us now as well she'd been following this deal closely, as expected >> largely but it was back on september 27 that cvs and aetna revealed they were making a divestiture to wellcare. there were no terms in the announcement disclosed but wellcare said it was going to be buying it with cash on hand so

analysts see this as a win-win it obviously clears the decks for cvs and aetna for their approval this was the one thing hanging up the approval coming from the doj. in addition they also get approval on this from five states at this point -- california, florida, hawaii, mississippi, and washington. they still have to await connecticut and new york has a hearing on this.

>> i think you're going to circle the wagons shortly. what you had this morning is basically an internal failure. the various indices came down to areas that we believe would show some support some moving averages, for example, some former lows. then as each of the different indices broke below the presumed support for them, you got a kind of domino effect everybody said, uh-oh, get out of the way, this could have life of its own. now that seems to be slowing up. i think the attention will remain on yields but at 1:00 today we have a very critical thing happening. we have a ten-year auction what we will watch very carefully is do the chinese participate aggressively or do the chinese boycott. that will have a great deal of interest and people will be

following. are they going to in a way try and up the ante in the trade wars a lot of people say they're the largest holder of tradeeasuriesd if they start selling, well, that's counterintuitive. if they sell, that's going to cost them money. if they boycott and don't participate, that could punish the u.s. to some degree because it means we'll have to pay higher rates and the chinese won't suffer at all because of that. >> you mentioned the moving averages they have been support, last intra day, the last three days any reason to think today would be any different >> no, that's why it acted as a surprise and why you got a minor trap door effect when you broke through them, people said get out of the way, this is not like it's been. >> art, we heard a number of reasons for the why, higher interest rates and yields are higher across the board. there's also worries about global growth, the imf warning, what we're seeing overseas

the chinese currency is approaching a key level. what do you see as the main culprit here >> i think it's concerns about rates and yields going higher and growing concern about the situation with china not only as i said before the idea of them possibly boycotting the bond auction, but your point about the currency and we're getting to a time when the treasury is set to decide if any nations are manipulating their currency and the president has made some noises about the fact that in a trade war or in a trade negotiation, allowing your currency to slip sharply is not considered good form by the trump administration so i think markets are worried about that certainly that would up the ante in the trade war substantially. >> art, we'll see you soon

thanks art cashman this morning. more activist investors in focus today. nelson peltis disclosing a 3% stake in ppg the third point raising its stake in campbell to 7% from 5.7, that's according to an s.e.c. filing. of course that all comes after pershing square $900 million stake in starbucks and some of these getting sporty on the front. >> i'm not sure why we're spending time on actman this year i think adp has gone fairly well for him but many of our viewers know it has been a very, very difficult period for mr. ackman. tryon and ppg not really having talked that's significant stakes for trion. they have been fighting battles and ge and procter & gamble -- >> one year anniversary yesterday. >> of peltz --

>> the shareholder meeting. >> and i'm not sure if they won or lost that proxy fight. >> they lost nelson peltz is on the board. >> but the numbers -- >> they claim victory and then had to walk it back and let him join the board the company doesn't have much to show for it. >> now, dan lobe, his track record of late and when it comes to proxy fights -- >> campbell's will be tough for him. i struggle to figure out what he is pitching. first it was an outright sale of the company. then a full board slate. now he's saying they have a fiduciary duty to see whether they sell but they could turn around the business, improving soup, not too specific the best thing they have going is the share price down 22% this year we got a date now also, november 29th for that meeting. >> the record date was yesterday which is why he increased the stake. let's get to dom chu head quarters for a quick sector check now. dom. >> the utilities right now a big

performer here to the upside in this otherwise down market a fifth straight day on track for its longest losing streak in five years for the s&p check out some of the stocks on the move with regard to that utilities trade as you see it play out remember, this is a big deal for a lot of traders as they look towards today's very interest rate appropriate treasury note auction this afternoon, so certainly something to watch, guys back over to you. >> all right, dom, thank you very much. dow down 318 now session lows what's coming up on "power" later today. >> "closing bell" and "power" all over the sell-off. technology hit particularly hard we'll talk to dan niles about what you do you do if you're holding some of ese thhot tech stocks that are cratering in the last sessions. "squawk alley" coming up next.

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