right now the dow futures are indicated up by 171 points this comes after strong earnings across the board meeti beating expectations and leading to high numbers. check things out, wti down by 37 cents. that does it for us today. make sure you join us tomorrow >> okay, hi jim, hi carl, "squawk on the street" is next ♪ good tuesday morning, i am carl quintanilla with jim cramer and david faber at the market stock exchange the dow s&p failed to hold those gains on monday. goldman sachs and black rock and unh and j&j is all beat. rally on italy and 10-yr yields

16 futures point to a higher open after strong earnings from some of the largest u.s. companies. a key question is the market cheap. >> the third quarter continuing to impress with strong results of the peak earnings, johnson & johnson and united health this morning. >> pot stocks surge, cannabis recreational legalization tomorrow stocks are opening higher after yesterday's decline on goldman sachs and black rock all better expected larry fink weighed in on the markets following last week's sell-off >> if you like equity and everything felt great, you have to like them more today. the market is actually adjust to this fear. the market is adjusting to the uncertainty. >> maybe we are in peak earnings or maybe we are not.

the equity market is cheaper than today >> some of these flows are going back to etfs >> larry think it is fabulous and still net in that's what matters. i agree with larry we are fine if the fed does not continue to raise interest rates. the problem is we know the fed is committed now the fed -- >> so we are not fine. >> i am saying there is this iceberg and the fed is absolutely committed to sideswiping the iceberg and you know it is like the movies >> that was a true -- that w >> the "titanic" metaphor. >> how about durian --

>> what is it? help me here google it. >> which one >> the one that's really bad one. >> if the fed does not blink, we are in trouble >> the fed has to blink. they need something in their eyes >> lemon juice andrea dorea is the name it just came to me if they don't do anything. we are going to have the rally all i am keen on is a lot of people saying jimmy, keep on blaming the fed. no, it is okay to have jb hunt for pay more they were not making enough. why should they make more? everybody got a big tax break for heaven sakes

>> the delivery pressure is going to work themselves out >> i think they will you got these people that want to come on our air and want to talk as if everything is great in 2019 and they keep on thinking, how do they know we don't know if it is going to win the midterm elections. what is that about three weeks from today yeah >> how do we know? d if the democrats win, will it change the forecast? >> the stock is down a lot and another industrial main and last week you were keyed on ppg and another industrial name last week that did not have a great number >> trinsio >> i happen to love granger business they're like syntax that missed

the quarter. it is not j&j and united health. adobe says listen you got to go back into high growth. the grangers have blow out after blow out fewer or smaller business person, granger has everything i mean it is incredible what they have. they did not blow it away and i would have liked them blow away. >> people think it is tariffs so they say it is well-understood >> what does that mean >> it is another feature of some of these concerns that you have been raising about the economy >> i am certainly concerned of united health. have you looked at your bill they tried to charge me a policy for one of my family members because they turn 27 i think she would end up losing money every year she works >> eventually just throw your

hands up i give up. >> i won't ask you paying. >> i think jeff bezos is the driver remember the statement he gave >> geopolitical pressure? >> everything was upbeat, listen, i got to take my stock down michael kkorbach did not say i m going to take my stock down. >> goldman sachs will have a fantastic conference call because the new cfo, i think he's going to have a conference call the likes of which we have not

heard from goldman >> the likes of which we have not seen >> you will get on all right you clowns -- well, he never called anyone clowns. >> he's a polite man >> here is what we have earned and why you should buy our stocks >> the return is not higher than 6% >> i never said that >> i did say it is going to be difficult to get in the double digit. they're killing it they're the number one >> gorman says that's going to change >> i love gorman, too. the group is so cheap. did you know the book value of goldman now, $179. >> we are down 10% year after year they were below and equities were up 8% as you point out, investment banking was one of the brightest

spots. >> although morgan stanley is the only one so far to beat on ib and equity. >> everybody seems to have that blemishes. everyone thought therefore the quarter is going to be bad wait for the conference call if he does i am hoping he says >> what happens to the stocks here we see goldman up now and morgan stanley looking up how long for 20 minutes >> goldman is so over sold, it is entirely possible it goes up to -- >> both morgan stanley and goldman gapped up for five consecutive quarters but traded open from opening to close each time >> keep that streak going. it is not going to be a guy that

says listen, on his conference calls, this is not what we are doing well or this is what's being heard. he ak accentuaccentuate the neg. i thought j&j were terrific. look out for the scadamy >> we are on cannabis, we are back to j&j. >> it is about progress or being brady like or mahomes. >> now we are in the nfl >> that was sunday night >> i was playing jimmy garoppolo. i didn't get to play devonte adams. >> now we are on disney. >> stay up with me, i have been

up since what were you doing? >> is this throw back tuesday? >> yes, it is. in the release they say permanent tax benefits and changes of the earnings mix are sort of part of the new tapestry when it comes to goldman they don't explain what that means. i think on the call, we do want to listen and carefully see what it means the stock is down 50 it used to be the premier. remember the multiples used to be higher. the tax break is 18% the only time i have seen it like this is when they blew up the bp deal. remember the bp deal goldman got killed on that the stock is acting like if there is another bp. goldman can tell a good story just because they're down so much and as long as they don't

ruin the call. i think the stock can continue to go higher >> the quarter in your view is more and adobe goldman quarter >> adobe is big. >> we'll do 20% quote which is going to return people buying long data assets as david said, the ranger economy, part of the economy that jay powell wants. he's going to have success >> it is interesting to listen >> i think it is lining up pretty well for you in a few years. >> are you going to be on the board of sears >> no. i don't believe if i take that on there has been presidents from queens you never know >> and on the sears' board

>> hamilton was about 10 minutes from where i live. >> yes, he is. >> there is not even a plaque for him. >> he's got a nice grave site right across the street if you are ever downtown. when we come back, we'll talk more about these red hot cannabis names rally continues as we are a day away from legalization in canada we'll get you caught up on kn t netflix and walmart with some guides there is the remarket, we'll get more on this when "squawk on the street" comes right back alerts -- wouldn't you like one from the market

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kwaquarter after the hour, let's go to rick santelli. what's the number? >> a nice strong one, off 3.10 of a percent on the utilization rate, a little higher. the reason i am hoping it will be 2 is 78.2 was the number that goes back. we are not on the high for this

cycle but we are awfully close 316 on tens. that's only seven basis points in the highest close in seven years. the dollar takes a hit today we'll continue to talk about that carl, jim, and david, back to you. >> see you in a few minutes. there seems to be no stopping of the cannabis rally it continues to rise, marijuana and legalization comes to canada tomorrow shares of stores over 900% over the last three months. jim, what does tomorrow mean >> i spent a lot of time this weekend with consolation of the king of cannabis because he's the ceo of canopy. one of the things that bruce explained was it will be october 19th or 20th oe, i am recommend short term traders should sell

into this. it is like people just discovered these but these stocks are been going on months for months you can buy them lower by friday there is way too much money buying in. canopy is the best a huge percentage of the stocks are made up in cash. they're getting the 5 billion in u.s. dollars from consolation. they'll be the winner. they're running a number of different studies and they represent more than 30% of marijuana in canada. they're in play. just be careful, stock was abate yesterday and i have been recommending it and i was pushing really hard this weekend because i was so excited it was 48 bucks and now it is at 59 >> you had tilray on yesterday, he's going to join us. >> you can't really borrow that stock. the one that you can borrow is canopy so it will be short in

cano canopy the other side is this is a new york stock exchange, they would not let him ring the bell. they'll let him list but not ring the bell bruce menti bruce mentioned that over the weekend which odd. so brendan kennedy -- look, i think they're doing the right thing. the people who buy the stocks went nuts. >> they did. you pointed this out you can't short the stock. it is possible the cost of borrow is something anybody have seen >> right >> that's why they're going to short canopy i think people are trying to knock it down. they woiuld be better buying ban stocks >> do you think official

legalization makes them candid of their plans >> consolation is going to have, they'll have every kinds of choice and they'll have it ready. >> there are others where you try to press like pepsi. >> it is interesting and the other guys are being left behind what consolation did was listen, we build a mode and we give this one company all the money in the world and everybody is afraid. nobody wants to be in it consolation is figured out bruce bought stocks on consolation. we are talking about how much constellation. it can be up to 50%. >> and, did they agree >> no. >> which includes -- >> yes, constellation, they have

all sort of drinks that's like proof. that's like 10% proof. that's like 180 points that's like sterno keep track of the fact that it is going to be big lines our government does not want that to happen they'll have a full suite of drinks it will be bars and you will hit stoner bars. >> amsterdam >> literally new amsterdam if you are starting right now to build this, there will be people building position for a long time that and constellation, it is a great company. they had a great quarter without cannabis they'll be able to pay the debt they took in a short period of time you should stay focus, david >> good stuff, tomorrow is a big day. futures is looking good here as

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>> i think increase of 6% or 7% but then you have operational of a dollar they got 13% growth of international sales. this genuine, organic growth head and shoulders is going to break down historically, they have drirch driven it down a little bit. they have a fantastic array of new drugs coming medical devices and the people that don't like j&j is going to continue to talk david, they have many new drugs coming in. they have a new drug of the nasal spray, treatments for adults the fda will fast track this because it is going to be used by veterans who have post-traumatic and it is a virus important drug because what happens is the moment before

suicide, you spray your nose and it should alleviate that instinct to kill yourself. army guys understand they're not going to talk about it much. it may be the new miracle drug when you drop off the es of what you have, if they can find a way that can make it for veterans that, there is as wave of suicides that they do not talk enough about >> the antidepressant on the markets are not capable of treating it. >> what's is they kill themselves you got to stop that >> okay, we got opening bell in less than five minutes from now. stay with us on "squawk on the street," a lot to catch up on.

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♪ ♪ ♪ ♪ the difference between possible and impossible? it's a person who believes they can, surrounded and supported by others - by us - who believe it, too u.s. bank - the power of possible. you are watching cnbc, "squawk on the street," the opening bell in 90 seconds, busy day as earnings season starts to kick in a high-gear with unh and

pompeo in saudi arabia as this khashoggi investigation is underway does this one hold >> i think this one -- there were a lot of feelings and really interesting moment last night between i would say 355 to 405. every nasdaq stock traded down a lot of people would have been happy with 19% we have seen accelerated growth for his commerce cloud and that got the cloud kings going back there was a short position built into the bell betting china would collapse over night. will they have staying power if netflix is good, they'll have a staying power.n netflix is that important. >> netflix had its price target cut by goldman and today morgan stanley are all going in >> this is what you want to see

if -- the stock has come down tremendously i think that while certainly it is not cheap, if they grow international -- holy cow. >> we'll find out more about netflix in a few hours there is the opening bell. blackberries are on the big board today. the congresswoman from new york, carolyn maloney. sale projections remain unchanged. >> yes, ecommerce is good. people are looking for 2.2 the flip card is necessary they have to do that you have a lot of dow stocks are good news. it does take someone safe from the fed to derail us they have been pretty good in putting the words out. if that i are quiet today, the

rally could have some staying power. they have to be quiet, they can't talk >> oil is down, i like that because people have been very worried. adobe is up very big and it trapped a lot of shorts. >> key to this mar market becaut is the great market and the story in town. >> it gets people back to the idea of momentum >> yes, accelerated growth in the time maybe the fed is trying to grow the economy is very bull iss lish i am glad that walmart is acting correctly. it was strange that it was down. >> you get the high gross start. >> we got adobe and we got ww granger. >> take a look it is 10%. >> we did pull this line on estimated tariffs exposure

subject to tariffs of 50% of that >> wow >> and incremental tariffs of rough roughly 25% and u.s. cost of only 2%. it does not appear to be that much they do have to take action including alternative sources and pricing action this is what we have been talking about. you change your sources from where we are getting things from >> some of the products that are under tariffs. >> i thought that walmart is going to indicate that it is going to hurt them i thought costco did say it will be an issue. this walmart didn't really raise to the point where they are concerned of tariffs and that was bullish. i have to tell you granger is representative of this kind of

cohort that i am concerned about. >> here it comes there it is down 12.5% >> so you buy j&j. the fed by reckon the economy to save it, buy j&j and united health, you can't buy granger. you may not buy anything related to autos >> autozone, o'reilly and plenty of auto related names leading the s&p lower this morning >> anything autoor anything housing. these are the things that i worry about. >> the rally in ge come s to an end. ge approaching 12 bucks again. >> looks like $13.5. my sources tell me that culp comes in and basically says here is how we are going to fix this,

very stern very tough >> that's good if you are with mr. flannery, you will take those celtics tickets right now. that's about what you got. that's your package. >> semi is hanging in there why the cycle looks worse than the 2015 down cycle and getting over done in the near terms by no mean in the woods >> i agree with that when you look at the pause that people have been talking about and a lot of people are saying that the pause is not going to be over this quarter or next that you will be in the middle of 2019. if you feel that will way, you should buy cisco and hpq because they're the buyers of deramps. i don't like this stock. i just don't like it you are not going to get me to turn >> you got domino's on tonight

they did beat by 20 cents. domestics though are slightly below. >> allison is from overseas and did a great job. domino's, how can you keep on raising the bar and raising the bar, i think they are a victim of bar raising? we'll hear from ritch allison, he always brings me a tomato pie because he knows i don't eat cheese we'll get to the bottom of it. it is harder you can't look at the numbers and make a judgment. >> we did see that crazy decline in food and drink out of retail sales yesterday. that was weird >> i know. they don't want to go, they simply do not want to go -- the super market ialienates them >> they hate gillette with all that plastics.

>> microsoft stock is up 2% this morning. >> you did not mention paul allen. >> what a nice man >> i was not aware of it >> i saw him at the super bowl he was a great man he did not wear his philanthropy on his sleeves a lot of people are going to discover -- >> giving away half of his wealth to charity. i didn't realize sky had a good peace of the ebola scare the largest donor, organizing to all stopping those crisis. never heard about it >> anybody have met hi him -- jesus, is that guy like a wealthy guy and i said it as wealthy as they get. what a nice guy. everyone was taken aback of regular nice guy shy and you see all the things he did.

i am glad we mentioned him, he's a great thing, he was a great person in america trying to get america to be better i like that. >> way too young, 65 >> yeah. >> guys i want to come back to yesterday, it is going to be a continuing battle that's joined by carl icahn. i am talking about this battle over the tracking stock of dell technologies stake in vm ware and the battle there is of course about the tuerms of the deal that's offered by dell and along with cash for what they say would be worth of 109 bucks a share. carl icahn joined a lot of shareholders in opposition of that deal. he made a point that i don't believe that the company cans s

successfully move to option b. mr. icahn yesterday joined scott walker and i in an interview and he discussed one of his key reasons for why he thinks that ipo is doa, and it has to do with delaware law. take a listen and we'll explain more >> they can do ipo we are not objecting to ipo. you can't go say by the way if you don't take the deal i am offering you now, we'll do an ipo. >> and he's pointing there about fairness and this orning, ther is a no doubt - analyzes these kinds of situations. under delaware law in a transaction of a controlled shareholders, requirements must be satisfied in order to avoid applications of entire fairness. they go onto say the vote of

minority shareholders must not have been coerced. the timing of dell consideration for additional ipo is contingency if it is not appr e approved by shareholders and created an argument that entire fairness applies that would seem to be where mr. icahn want to go in terms of litigation and delaware and everyone the threat of it potentially holding them up would aid in his or would it discourage under writers from taking on dell what we did get from dell is a response to mr. icahn's presence, although they did not bring his name up in their statement. they say the transaction of what they're trying to push ahead with is the results of transparent and a process of evaluating multiple alternatives

after we discuss of 40% shareholder base and the committee that represents dvmt shareholder and determined consistent with legal obligations. this battle is going to go on. dvmt is up this morning a little bit. we'll have to wait and see how it ends. carl icahn and michael dell at it yet again this is only day two >> i know, everyone has been talking about this at vm ware, vm ware is the nature on board waiting to get onto amazon they got this great deal with amazon and services that's all obscure by this fight. that's all people care about >> although you pointed it out i don't think he quite understand perhaps quite as much

as you do about the opportunity that vm ware has he's in the camp that's going to go up sharply and dell need s to move now before it becomes too large. >> they come on every quarter of "mad money." and i am always dazzled by the fact that many companies don't know how to get in a cheap way of aws you go to vm ware, they got the fantastic relationship of the guy that runs aws. it is important to have some way to deal with amazon but sometimes can be opec. >> i got an angry tax from a banker >> about what? >> about what i just said. >> it is all right >> with all that guys, nearly

every dow components in the green. down to 207. let's get to bob pisani. >> happy tuesday it is a great start and it is being led by tech, take a look at the sector. tech is up semis and microsoft and you got adobe leading the way here communication service is our new sector doing well and facebook and google and netflix are all up emerging markets are strong. banks are on the flatter side just turned negative there earnings were just great, all around and it does not matter what you are looking at when possible exception goldman and morgan stanley and johnson & johnson raised their number and united health we are off to a great start. q-3, we got 41 companies reporting. 88% beat on earnings, that's way above normal

65 is typical. easte this is the second or the best in years revenue growth is the key here that's the most important thing because we are up 8% and typically remember, 3% or 5% is what you will get. we were negatives in 20 in 2016 larry fink from black rock were talking about that larry goes along with the consensus here, we have a couple of good quarters in earnings that's larry talking about the mark overall he did site concerns and higher costs and tariffs pressuring margins. that's an issue out there and that's an issue for the fund manager. bank of america and merrill lyn lynch. the biggest concern they got out, the big global fund manager, the trade war along with the fed getting more aggressive than anticipated. those two things far and aware

is what's raising on concerns of the fund manager the china slow down is a distant third but still in the running for an issue the question for earnings in the stock market is those higher rate concerns, what will offset those fears? remember we had this earlier in the year and a move up in rates. what offset is the tax cuts and the better economy and everybody is calmed down in march. will anything offsets those concerns that are out there and a lot are continuing to point in the strong revenue growth which is going to continue and not just in 2018 but into 2019 if you take a look, we are talking about 7% or 8% q-3 or q-4 and even in 2019 thee these are numbers way above expectations cost are up 2% and revenues are up 8% or 7%. that goes a long way calming down the measure issue

that's not anywhere near of what we are dealing with right now. one of the reasons a lot of people are optimistic. back to black rock, it is down 4% it had a rough year overall. it is down in september. all the fund managers had a rough year in general. there is still in flow this is the biggest etf company that's out there only with black rock we had $10 billion in in flows and it was considered a disappointing quarter for inflows, money is still coming in but not the same rate before. s&p is up 5% for the quarter and emerging markets down 7% that's a problem i share controls that at edm and that's one of the reasons. carl, back to you. >> thank you very much bob pisani let's get to the bond pit, too rick santelli is at the cme.

>> good morning carl, two days of tens, looks like we are up a bit. it is kind of a scaling issue. look at one week of tens really hit you. we have been moving -- consider this, the last three sessions in 10-yr we have closed it at 316 and we are at 316 again. will this be the fourth day? 30s is the same. looking at october 1st start of tens you can see how we flat line they seem to leap and goes sideways a little bit. this one is a bit different and they're literally little push back and the big technical breakthrough is that 311 area that had been high for the year. that's very much pointing towards more sell-off in higher

rate the yield curve, we reached the 30 level and trading at 29 as you see on this october 1st chart. look at the dollar index, we have not closed below that technically significant 95 or even since the 27th of december. it is something you should pay attention to carl, jim, and david, back to you. >> rick santelli walmart is holding its investor day kourtney reagan at hq of all he their headlines. >> investigation is underway they're kicking things off saying investors and consumers should expect retailer to move faster than it has over the past one or two years it has been updated to reflect that acquisition remember walmart has expected it would dilute earnings between 25 to 30 cents this year. the new forecast of the current

full year, fiscal 2019 is for in sta grow of 425. walmart expects its earnings to fall by a low single digit percentage including the acquisition. next year, walmart's net sales is expected the grow 3% and u.s. comp sales to grow between 3.5% to 3%. >> walmart expects their net ecommerce sales to grow the next year that's a deceleration from the current year's expectations of 40% growth it is going to be around where it was the last several years of $11 billion continued to be focused on store remodels and supply chains and technology the retailer is expected to expand grocery pick up in 100

locations. and walmart's ceo brett biggs, just spoke at the meeting, he never wants to raise prices. he did not say they won't. manage any higher costs in a way that makes sense for both customers and shareholders i think we'll ask him questions about that when we get to the q&a. >> it has been an eventful day for walmart the past few years >> courtney reagan is watching walmart for us >> banks are under a little bit of pressure. we'll keep an eye on all of this ahead of netflix and ibm tonight. back in a moment i wanna keep doing what i love,

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u & h and j & j two of the big chargers lagging this morning utx, mcdonald's, caterpillar and energy names as well we'll get stock trading with jim

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impervious to the fang attack. the forecast is negative but basically saying maybe the negatives are in the stock and they're talking about the marnl, decelerates, meaning 2020 this is the first positive i've heard. the number one place to advertise, they think, is on instagram stories, not as lucrative as facebook. but, do you know what? maybe they can pull it off this was the first piece i've read that just says, listen, guys, the disaster is priced in. boy, if you look at the chart you know it's a disastrous situation. >> jim domino's >> couple of stocks acting very punkish. domino's has been one of the greatest winners, greatest performing stock in the period it's down 7 today. it has a history of going down

before it goes higher. the industrial economy is still not acting well. that's what i'm mostly concerned about. >> watching to see if goldman can hang on to the green as well. >> i'm glad that people aren't going crazy ahead of canada. remember, there will be an october 18th and we're still not ready to hit the bars hard i go for cbd. >> you let me know when we're ready. >> okay. >> we'll see you on "mad" tonight, jim, 6:00 p.m. >> thank you. >> bill simon, walmart u.s. ceo and president, will weigh in dow up 212 & you start to panic... don't. because your cto says we've got allies on the outside... ...& security algorithms on the inside... ...& that way you can focus on expanding into eastern europe... ...& that makes the branch managers happy & yes, that's the branch managers happy. at&t provides edge-to-edge intelligence. it can do so much for your business, the list goes on and on.

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will a new wave of quarterly numbers reverse market uncertainty? expectations from netflix, "squawk on the street" 9:00 a.m. eastern. welcome back to "squawk on the street." i'm diana oelick home builders monthly survey, slight beat. the street was looking for unchanged at 67. the index is unchanged from october last year. builders say strong demand and the drop in sky-hylumber prices are adding to the gain lumber has since fallen and canadian rail car eased.

one point to 74 and sales expectations increased one point to 75. buyer traffic saw the largest gain, crossing the line into positive territory despite the uptick in traffic, sales have weakened this year for new and existing homes strong demand but steep price gains with higher mortgage rates have knocked some buyers out of the market all the numbers are up on cnbc.com carl >> diana, thank you very much. i'm carl quintanilla with sara eisen and david faber of post nine dow 232 points, s&p back to 2776 as earnings is powering an attempt at a rally once again. >> our road map starts right there. stocks staging a comeback. positive earnings helping the market recover from last week's big sell-off where to put your money to work next. >> morgan stanley out with results. plus pot stock roller

coaster, ahead of canada's legalization tomorrow. >> more eye-popping numbers, rick >> yeah. we're talking eye-popping. if you have a heart condition, i suggest you sit down 7,136,000 job openings unbelievable we never had a seven handle, get this, until april of 2017, we never had 6 million job openings this series started back in december of 2000 and last month was a whisker under 7 million. they upgraded it to slightly over these are really lofty numbers, carl back to you. >> thank you very much, rick santelli nice setup for us as we start the morning talking about markets. stocks seeing gains on the heels of earnings. coming to the defense of the markets. listen to that. >> if you like the equities when

everything felt great, you have to like them more today. the market is actually adjusting to this fear the market is adjusting to the uncertainty. the equity market, overall, is cheaper today than it was in january. >> joining us to discuss, bruce bittles and keith lerner guys, good to see you both bruce, interesting morning you put together some of the bank earnings and nahb and then jolts, gets you 250 points is this the best setup we've seen in a couple of weeks? >> there's no question that after the economy the economic fundamentals are the driving force of this stock market and there doesn't seem to be any end in sight a lot of economists are predicting a slowdown or recession even, going into 2020, but we don't see any evidence of that at all. >> what would you need to see to be more constructive long term

did you get the flush that some were calling for did you think that was necessary? >> no. yeah, i think it was necessary the fundamentals are really strong here. the problem areas are technicals we made a new high in october, on october 3rd, dow, s&p, the nasdaq the small cap stocks were falling. the number of issues hitting new lows was rising. midcap stocks were down on the year so a lot of divergences. not only that, typically bull markets are global in scope and the fact that the foreign markets are all down, or most of them are down for the year is also problematic from a technical perspective. >> indeed. keith, some are still wondering how long that decoupling can exist where the u.s. is not that far off the all-time highs and, i don't know, the philippines stock exchange is down 17.

>> that's right. globally we see much more bear trends in general the u.s. was the last man standing and i think the setup we have in europe is pretty positive. obviously there are some divergences. we had a pretty good flush one indicator we look at on the s&p is the third low eest of th bull market. last time we saw it at this level was august 2011, after the u.s. debt downgrade and august of 2015, after the china concerns both of those turned out to be good buying opportunities. here is an important message it's a process it's not going to work itself overnight. it will be a battle between fear and greed and we'll see some type of fourth quarter rally in midterm elections we've seen the fourth quarter rally in 15 of the last 17 midterm elections. investor expectations, the economy is still pretty firm and

valuations have moved to the lowest since brexit. even though there's issues out there in totality, the bull market remains intact. >> so you're both sounding very bullish, bruce today's jolts' numbers, the dow is up 270, very strong number, 7 million job openings in this country. what about the pockets of weakness, in houseing, autos, th fact that the federal reserve is tightening and trade tensions with china are escalating? how do you square those bearish arguments that seem to be winning the day, at least last week, with that big sell-off >> on profit margins is the concern and certainly the concern is real. the reason i say that is tariffs are certainly problematic going forward, or perhaps even more importantly, these job openings are fantastic, but it probably means wages are going to go up so wages are going up. interest rates are going up. energy costs are going up and you have the strong dollar so at some point, profit margins

are going to be impact ed and i think that's the concern that the markets have raised since the peak in october, early october. >> yeah. i think that's a little -- a bit of a conundrum, keith. we thought the square was related to the fed and rates and wages and here we are with 7 million job openings in the jolts and the dow is up. what's going on? >> areas of weakness in the economy. overall we're talking about profit margins even last week, amidst all these concerns about earnings, talking about the earning estimates tick up if the revenue growth, which is expected to be about 7% this quarter after 10% last quarter moves up, we can absorb some of that up dtick in wages, in labo cost and also we did see a nice pickup in capex, which i should have productivity and contain some of those costs. i'm not here to say this is the beginning of the bull market

we're in the early stages. it's more diverge enter. i don't expect a huge upside when you look at the s&p, for example, and the dividend yield and the buyback yield that's still about 4.7% relative to treasuries and the economy shows very little signs of recession so at this point on a relative basis i still think equities are the place to be. >> one last thing, bruce they asked traders, managers, where the pressure point is on the ten year, the point at which money truly rotates into bonds 37 is the answer out of the survey do you agree does that mean we have a little runway to dance? >> i think we have a little room to go yet. 3.7 to 4% on the ten year is about right. >> gentlemen, thank you. interesting action today appreciate your help bruce, keith, we'll see you next time. >> thank you keeping an eye on the big banks, morgan stanley and goldman sachs both reporting

better than expected result this is morning wilfred has been digging through the numbers and listening to the calls. >> why firstly, they've been down more than the rest of the banks index year to date coming into earnings secondly, they're less exposed to areas of softness, loan growth, and thirdly, their performance in investment banking was better than their universal banking rivals morgan stanley saw investment banking rise to 1.5 billion. goldman sachs, to 2 billion. citi, jd morgan and bank of america sold theirs year over year trading in line with expectations for goldman sachs, flat year over ear, with ongoing weakness in fixed income for morgan stanley was up 7% because of their bigger tilt toward equities. strong wealth management performance, bigger performance for morgan stanley and deeper

concentration control. on the goldman sachs call, the new ceo addressed the possible new strategy under new ceo david solman. >> we remain committed on executing the growth opportunities we laid out for you a year ago i will provide an update on these efforts in november. second, we are reviewing all of our businesses, front to back, to ensure that our people and our financial resources are optimally deployed our objective is clear, to improve shareholder returns. this is why david, john and i, along with the rest of the leadership team, will look for new ways to grow our businesses, while improving our operating efficiency for the long term. >> for more on the new strategy, we tune in to closing bell thursday for an exclusive interview with the new ceo david solomon. guys >> i'm wondering if any of the executives on the calls you've

been monitoring have taken questions or have addressed the market action. even with today's gains and better results, financials are lagging the overall index in terms of sector performance. they're supposed to be the biggest beneficiaries. is there any chatter about that and underperformance we've seen in this market >> absolutely and the issue of yie yields and the general theory on that the last couple of days of earnings has been that we haven't seen credit costs spike. loan growth has been a little bit tepid across the banks, which has concerned some, that yields is having an impact, it hasn't been affecting credit costs. that doesn't seem to suggest that the economy is slower than people might expect. as for the equity market volatility, that's been discussed on the morgan stanley call, not yet on the goldman sachs call, which is ongoing short-term volatility is good it drives higher trading revenues

and activity prolonged volatility is not good but we haven't gotten to that stage yet. >> we look forward to that interview, wilf. good stuff wilfred frost. a judge has approved elon musk's settlement for allegations when he said he needed to secure the funding to take tesla private $20 million civil penalty, david, as you know of course, relinquishing the chairman role, at least for a while. >> three years at the very least. question is, who will take that role there's been a lot of speculation. unclear at this point who will be the leading candidates and who would want that job, frankly, because it's not going to be an easy one, given his penchant for acting out. >> has it died down? >> it did. he tweeted it wasn't it's not clear to me, based on what i'm aware of, who will be the leading candidate.

and two independent directors under that settlement, which now is official ruling by the judge. >> we'll watch that today. >> walmart is announcing it's trimming its forecasts for the year we'll check in with former ceo of walmart, bill siemens will join us, talking about the shares rallying in the face of that stocks on the s&p, adobe rallying after those guidance words last night, followed by morgan stanley up left hip 4%. ns with signs of opportunity. but with opportunity comes risk. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, 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.

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click or visit a retail store today. the dow is up a full percentage point almost all dow stocks are higher right now. we're just off session lows, still up 256 points. only dow stock that's lower is verizon. s&p, one percentage point rally here nasdaq taking the lead as tech comes back after a weak day yesterday, up more than 1% the president just tweeting about all of this, saying incredible numbers just out, job openings astonishing. it's all working we are number one in the world by far and that amazing jobs number for

august record number of job openings in this country moving over to walmart the company cuts its full-year earnings outlook, citing the flip cart purchase shares up higher brett biggs speaking at the event last hour, discussing tariffs on the impact of the business. >> dynamic period of time. that includes the current environment around tariffs it's important to remember that two-thirds of our u.s. purchases are made in the u.s. and we import from numerous countries around the world merchant teams are monitoring market pricing and will respond as warranted our goal is to always be the low-price leader we will actively manage pricing and margins through this period. of course, we never want to raise prices and we will minimize impacts on our customers as much as possible while balancing the interest of investors. >> joining us now from palo

alto, u.s. president and ceo bill simon welcome back, bill nice to see you. >> good morning. how are you? >> i'm good. i'm glad it was addressed, the tariff issue some analysts were surprised it didn't come in the guidance. you have to try to figure out if the tariff rate goes up to 25% on chinese imports come january 1 how that impacts walmart's outlook. how do you see it? how much can they pass on to the consumer and how much is it going to hit margins >> i think you heard brett by the way, he's a terrific cfo, talk about it in that clip two-thirds of what they buy is made or grown here in theu it's not as severe as what people in the press would like to think they do import from our countries. i think they'll be able to mitigate a lot of it and the rest they'll be able to move through. >> as far as the other numbers that were discussed, fiscal year guidance cut wait on profitability. u.s. same store sales are

guiding 2.5% to 3% growth. any surprise there in any of the numbers? >> no, no real surprise. if i were an investor in the company today, the question i would be asking is, you know, it's a pretty simple one they've done what -- walmart has ton what they said they would do they shifted their investment portfolio and become more digital. i want to know where it's going to end what happens here? if you look back to 2015 when they announced their earnings, their operating income was $29 billion. in february this year they announced operating income of 20 billion, down 9 billion. now they're saying the next two years they're going to be down mid to high single digits in operating income that means that they paired off about half of their operating income in just three or four years. where does it end? when does it bottom out? better yet when do they get back to where they were in 2015 those are the aens to questions i would like to see and i think a lot of investors would like to see.

>> do you have any guesses, bill, as to the answer to those questions? >> well, right now, you know, there's -- they've stated their strategy and they're executing it, doing a good job of that as long as there's enough investors that like that strategy and it seems to be because they announced, you know, a drop in earnings and their stock is up over a percent today there's enough investors that are buying that story and moving forward. as long as that continues, i think they'll continue the strategy that they're delivering. >> bill, i can remember having done my first documentary on walmart, spending time in bentonville and watching that from buyers in the company and merchants trying to sell to the company. on this china issue, how important is that conversation in terms of walmart pushing and/or even saying, well, could you source it somewhere else can you give us some sense as to the importance of the conversation between walmart and who it's purchasing from when it comes to the likes of dealing

with these tariffs from china? >> sure. it's engrained in the walmart buyers, agents for the customers. sam walton told that story and started that ball rolling a long time ago so they fight for every penny and every dime that they can from the suppliers because they believe they're fighting for the customer so, it doesn't -- it wouldn't surprise me at all if they're saying, where else can you source that from we don't want to take that tariff can you move production somewhere else can we find a way to get it done in the u.s. or in a country without a tariff i know those conversations are happening because that's what's engrained in the company. >> bill, do you think walmart gets any meaningful benefit from the bankruptcy at sears? >> i think that business will get absorbed, as the toys r us business will this holiday season is it meaningful or sustainable? no sears and kmart have been in a decline, long, slow decline -- maybe not so slow -- for a while

now. a lot of that business is already in the process of being sort of accumulated or consolidated by the existing retailers. so i think there will be a short-term bump from it, but i don't think it will be long-term sustainable and certainly not growth. >> grocery pickup. they'll hit 3,000 locations, delivery not quite as many i wonder if you see that area of the business gathering critical mass at this stage. >> i think it's interesting and it certainly is where the business is going to but it will add more pressure on that operating income line because, you know, it's certainly more expensive to deliver or have it packed and picked up than it is for the customer to come in and get it as that business shifts from, you know, the traditional grocery model where the customer shops and cashes out to one where it's picked for them or delivered to their home it will put more pressure on operating margins and operating income for the company. and so that conversation of the

29 billion to the 20 billion to the 16 billion, more pressure. >> which sort of brings us to one last related question. that's transportation and truckers and drivers what do the conversations in bentonville sound like >> one of the best operations in the world and trucking fleet while they're subject to the market dynamics, walmart is able to control a lot of that themselves the job opening numbers today that we keep hearing about, 7 million plus jobs that are open along with amazon's move to $15. so tightening of the labor market, increase in wages. again, my concern for operating income and operating margins for the company, particularly in the u.s., is one that i've looked at you have a business model now that will grow modestly top line and is going to decline high

single digits in operating income where does it end and how does this look going forward? right now i think they're doing a good job transforming into a digital business but now i would like to see them start talking about how they're going to improve profitability. >> the question, bill, is how much leeway does the market give them to invest around e-commerce at a time when operating income could be squeezed by higher wages and other things, right? >> exactly i think that's the dynamic as we've seen this morning from more buyers and sellers, they're apparently getting a fair amount of leeway. >> bill simon, always valuable to have your insight. >> thank you. >> former ceo of walmart u.s. >> appreciate it. >> thank you. volatility reigns supreme, as you know, october historiesically volatile dow up almost 300 after what's been a wild week for the markets. we'll check in with evercore

founder and ceo in a minute. first, brian sullivan joining us from the largest floating oil rig in the gulf with what's already been an incredible week of coverage. brian? >> taking you to the middle east, carl, canada, north dakota, we've taken you to texas. now we are finally here in what may be the greatest wild card in the geopolitical chess game that is oil that is deep water, offshore we are 100 miles off the coast of louisiana on one of the biggest oil platforms in the world. coming up after the break, why companies are reinvesting in offshore, how shell has gotten costs down and production up and what they're going to do to win what is arguably the biggest of all the big boy games. look at this 100 miles off shore, live on cnbc, right after the break.

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up 1.4%. it's still a group down 8%, though, since the start of october, tracking for its worst monthly performance. nvidia, microchip all down 10% currently in so-called correction territory still down 14% just this month big picture, the stock still far and away the best performer in the s&p 500 this year. that's been the story. big outperformers long term. short term, though, giving it a lot of it back here amid the recent volatility. don't need mike santoli. there's your spotlight. >> he's got nothing on you, sara, nothing. global demand is continuing to rise. that is, as tensions with saudi arabia are heating up. is offshore drilling the answer to keep oil and gas prices in check? you saw brian sullivan a moment

ago. he is live in the gulf and has an exclusive look at one of shell's largest floating oil rigs brian, take it away. >> you know, david, we talked a lot about texas. everyone wants to talk permean nobody has been talking offshore for years until right now. here is why. for years, offshore -- this is the biggest of the big boys' game all the expensive projects, these, like the shell olympus. you need higher oil and lower cost for years, no one did that, especially when oil prices dropped, pretty much everybody abandoned the deep water offshore not anymore. that's where the investment angle lies shell, $3 billion over a couple of platforms launched next year and in 2021, multiple projects here we're on the olympus

that's the sister mars program out there and a few miles off coast is what they call the ursa offshore in general here is 1.85 million barrels a day, guys, 45% more daily production than up in north dakota so the deep water really has been adding to production the last couple of years, but doing it very quietly. why? like we said, it's so expensive here that only the exxons, chevrons and bps have been able to play and even some of them have left. knowing we were coming out here, we specifically asked the ceo how much they've been able to take their cost out of projects like this. >> there's a number of things that have happened, of course, the last few years costs have been coming out of the supply chain as overcapacity has come up and as we have been able to think -- squeeze the

supply chain for the costs to come out of as well. >> now i know we like numbers, guys, here very significantly doesn't help. on the helicopter ride out here i sat next to the deport head of development for shell. 75, 80 bucks three, five years ago was break even now that break even is 40 to 45. the cost has come up so platforms like this have become a lot more profitable for shell and others that's why exxon, by the way, rejoined the bidding in the last round of leases. coming up in a later hit we'll talk about all the other players who are now coming back in the game and where investment angles may lie, very cool day 130 miles or so off the shore in the gulf of mexico. >> brian, very cool shot did you see the training he had to do to get on the chopper out

to the platform in the case of a water emergency landing, as they say? >> no. scary. >> incredible. brian sullivan helping us understand the energy complex a whole lot better scott wapner has a cnbc news update. >> hey, carl secretary of state mike pompeo meeting with saudi arabia's king salman and alleged slaying of writer jamal khashoggi he thanked the king for the meeting. later secretary of state pompeo met with the crowned prince salman, saying that they are strong and old allies will face their challenges together. mr. pompeo thanking the prin iie for visiting with him. trump has long ridiculed

warren's claim of native american heritage. city council voting to ban styrofoam products they will go out of business if they have to use more expensive containers the restriction goes into effect in january that is the cnbc news update. >> scott wapner, thank you when we come back, evercore ceo and founder is with us dow up 213 we're back in a moment

we're keeping our eyes on the markets. they are up rather nicely for all the major averages earlier this morning on "squawk

box," larry fink spoke about fear among investors and the role it's playing in these markets. >> there's a huge commentary that we're at peak earnings, that earnings can only get worse, which we could all debate that we believe we have a couple more good quarters in earnings, but there is that view there's the view that -- i think we're hearing that in europe more than the united states. companies are having margin pressures because of rising wages, which may be a good thing for the overall economy but not for corporate profitability. your seeing modest inflation increases in certain finished goods. some in the united states because of our tariffs in terms of steel and things like that. so, overall, you're seeing more consternation, more fear. >> joining us now at post nine is evercore founder, former deputy treasury secretary and m & a adviser extraordinaire i put that in there for you. roger, nice to see you

do you agree with mr. fink's assessment of the market overall? >> i do agree with his assessment of the market but when it comes to the economy itself i think we're still in goldilocks territory inflation is really subdued. we've seen a little tick down in the -- last month on the fed's favorite measure and on average hourly earnings, which went down slightly earnings growth continued to be strong we saw that with goldman sachs and the banks as a whole our evercore isi company surveys that we've been doing for many years and pay attention to show that business is solid but not at peak levels and so i think the economy itself is really solid now the yield can curve also underscores that because the yield curve has steepened, putting to rest, at least for the moment, all the fears that would say no in an imminent slowdown and ten-year maturity

has come down a bit, ten basis points in the last few days. all of those are positive signs for the underlying economy markets, we all know, figuring out the timing of markets is pretty impossible. at least it is for me. i agree with larry's characterization of the feeling among market participants. i tend to focus on the underlying economy and i think it's still, as i said, very solid. >> we've seen industrial companies, at least, hit some headwinds in part because of the continuing tensions with china the concern overall, i think, among some investors is that while dollar amount wise it may not seem that large a number, but the increasing tension between our country and china in a lot of different business opportunities and, therefore, economic growth worldwide. do you agree >> yes what are the risks here from a big picture point of view? one is geopolitical, geofinancial, in particular argentina, turkey, so forth. second is the trade war with china. markets have been looking

through that now for months. if we had a discussion here a year ago or three years ago and said hey, if the u.s. gets into a real trade war with china, what do you think the market reaction would be? i think we would all say to ourselves it would be bad. and a third risk, by the way, is the u.s. fiscal outlook. we saw the deficit with $800 billion ended last month it will be a trillion this year. at some point, it might take two or three years, markets will wake up, look at that and not like it. the trade war ought to be, in theory, a real negative. markets haven't interpreted it that way or embraced it that way but, again, it's one of the risks in terms of market sentiment, ultimately market direction. >> those two things you mentioned specifically, trade war and deficit, do they keep the fed from pausing or recomputing the way some of the equity bulls hope? >> i don't think so. but i don't think the fed path is going to deter the equity markets. if you look back at my

colleague, ed heiman published this i think the fed hiked 30 times or something like that and got ultimately to 5 1/4 and marks were strengthening throughout that entire period it's not exactly the same as today for obvious reasons but i don't think the fed path, which is very much accepted by the markets as it has been a long time, will be the thing that turns the markets negative. >> though there is this question that gets to your goldilocks theory, is money still cheap >> the answer is yes the ten-year is at, what, 3.16 this morning i've been doing this a very long time i believe the 50-year average on the ten-year is 5 to 6%. 3% ten-year -- that's the benchmark. and, by the way, spreads -- i mean, junk bond spreads and so forth are very tight so if markets were concerned

about the direction of the fed or direction of interest rates more generally, those spreads would be widening out, and they're not. >> the deficit you mentioned corporate tax receipts down, what, 30 or so. is it too early to judge the administration's claim that these tax cuts would pay for themselves >> i don't think so. i think it's pretty clear they're not going to pay for themselves but i wouldn't say just because of that the tax cuts are dreadful or something like that, because everything occurs in a conte context, right so there are moments when you want a big tax cut we've all seen that many times historically i happen to think that this tax cut was too large and we didn't need to go to 20% on the corporate rate and so forth and i think they will be allowed to expire on schedule, which was done to allow the whole thing to fit into the reconciliation rules in the congress but i don't believe they're going to pay for themselves, no.

>> when do we get to a point that you were referencing earlier where the market really cares? is it the day in the future where interest rates are higher, interest costs exceed everything else in the budget when does it actually amount to something that the markets actually care about? >> i may be proved wrong in the morning, david, but i don't think that moment is at hand or close. on one level, $800 billion deficit in an economy of our size is not a great big deficit. what's the problem, so to speak? the problem is that at this moment, after an eight or nine-year expansion, we shouldn't be seeing rising deficits we should be seeing falling deficits, of course. ultimately the debt to gdp ratio will hit levels not seen since the very end of world war ii and come close to those levels, by the way. there will come a moment -- again, i'm just not smart enough to know when it is, when the markets look at that and they don't like it. >> you're not alone in that.

m & a. let's talk about that. important part of the business that you do at evercore. third quarter dropped off. are you concerned at all are you still seeing or expect ing a level of activity that we saw in the first half of the year when it comes to companies considering and following through with deals >> i wouldn't want to predict precise levels of u.s. volume or dollar volume versus number of transactions in general, the environment is healthy. why is it healthy? there are four fundamentals which, when they're in place, and have been the last two or three, four years, always spell high transaction volume, rell of itly low interest rates, abundant of credibility, hayek wit valuations and pretty good levels in the developed world of business confidence. those elements are still very strong so, transaction markets are very healthy. goldman sachs report this had morning, strong investment banking revenue. morgan stanley made a positive comment about that, i saw. we would say the same.

so the environment from an m & a point of view continues to be quite healthy. whether total volume for the second half will be equal to, lower than the first half, i don't know yet we have a long way to go you're still seeing a strong flow of strategic transactions, whether it's the l3 harris transaction. we were not involved in that but ultimate strategic deal, comcast sky, which we were involved in, or other such things still strong flow on the strategic side and that's an important bellwether for overall transaction volume and i still think it's healthy. >> roger, are you guys still planning to attend the investment summit in saudi arabia this month with so many businesses pulling out >> well, we are carefully evaluating all the factors there. it's obviously a very fluid situation, as we can see even in the last few hours i honestly don't know the answer to that, sara. >> how do you make that? >> yeah, how do you make the decision >> i'm going to leave it at that it's a tough one but i'm going

to leave it there. >> roger, thank you. >> my pleasure thanks for having me. >> roger altman joining us. >> dow up 303 a couple of seconds ago. hanging on to a level just below that reporting a beat on the top and bottom lines pharma and consumer business take a look where the major averages stand s&p back over the200 day we'll be right back.

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are trading all over the map ahead of canada's full legalization of marijuana, which happens tomorrow pot stocks have been soaring, up more than 800%, as you know, over the past three months speaking of tilray, don't mess tomorrow at brendan kennedy about that historic day in the country of canada. time to send it to jon fortt with a look at what's coming up on "squawk alley." >> talking about haze to the cloud. george curian talks about the state of the cloud and wrehe growth comes from coming up on "squawk alley.

welcome back to "squawk on the street." stocks rallying with other sectors trading in positive territory. health care is the clear winner, 2% following better than expected results from johnson and johnson and united health. on pace for the best day since april. among other names, alexi on and anthem. stocks are surging

art cashen is here to weigh in s&p shows all sectors in the green. what's fueling it? >> positively celebrator, good chunk of it came from the all time record jobs report. i am withholding some celebratory to see if job openings are lack of worker availability and that could have a different meaning elsewhere with upward pressure on wages and other things until i do more digging, i'm putting the champagne bottle on the side. >> are you encouraged by some of the upbeat earnings, j and j, morgan stanley, goldman, sachs this morning >> i think they are. as eric said, standout reports from the health care area and that is certainly helping that group, but we were all obsessed

yesterday with geopolitical event, disappearance and possible death of mr. khashoggi, and that's all dissipated for today. i don't think it is fully resolved we'll be hearing from congress and others they're waiting to see what the white house does so that may come back. it has taken some pressure off the oil markets. remember that people in saudi arabia were talking rather aggressively, if you try sanctions on us, we have ways to respond. you had some media types talking about $100 and $150 oil. that would have a disastrous effect on global trade, so we'll see. today it is all celebration, all parade >> how long does that go on? >> until 3:00 this afternoon. >> then what happens >> then they take a new look at

where things are going from there. for now, the economy is booming and all time record job openings, and it is second tier. i think rick said much earlier that we were all amazed when we got to the six level, now we're at seven. >> it is a milestone thank you. besides watching what the market does at 3:00 p.m., you have to watch "closing bell. we'll get results from netflix, ibm, united continental, csx we will bring numbers and analysis and interview with james kavanaugh, his first interview since taking the role at ibm see you then dow up 331 going to watch to see if the rally can hold and bldui "squawk alley" starts in a couple of minutes.

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♪ ♪ good tuesday morning welcome to "squawk alley." i am carl quintanilla with morgan brennan, jon fortt at post 9 of the new york stock exchange a big rally under way. close to session highs, surging after a good start to earnings season the big question is are stocks still cheap and is now the time to get in. joining us, mark may, who upgraded netflix ahead of earnings due out after close brian white. good to see you. thanks for comin