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good thursday morning. welcome to "squawk alley." i am carl quintanilla with morgan brennan, jon fortt at post 9 of the new york stock exchange dow is down 193. currently down 52. we are going to begin with faang, swinging sharply with the broader markets. off the lows, time to buy some weakness in the names? joining us, edward corzan. >> the stocks are down, facebook down 35% google down 15%. both are trading below the 250 day average. hedge fund shortage elevated in

faang names, sentiment is weak hedge funds, they're short, facebook, all of them. it is either an opportunity or indication that wall street is about to leave these stocks. >> so what do we do with that information? >> i think for facebook, this is a stock that's been hazardous to your health as an analyst or investor we took the target price down going into the quarter i would be more concerned if advertisers we talked to were pulling back we're not hearing that we're hearing they're still seeing roi, enthusiasticon new instagram stories. i think the rising expenses we can talk about, but basically a lot of investors don't want to own it ahead of earnings next year from low 8s to mid 7s. >> that's the thing with headline type situations, with facebook a lot of negative headlines, but fundamentally it is hard to see what, if anything, has gone sideways with

the company. does this represent the opportunity that a lot of people may have been looking for? i missed it on the way up. now it is pretty cheap >> i mean, close to ten times, every analyst's cut numbers, it has been troubling for investors short term and for us as the community. long term, we see value. i think we have gone back in the last ten years, looked at case studies with adobe, vm wear, great franchises that go through the sell off, ultimately become great long term opportunities. short term there's social fatigue, social cleanup across twitter, facebook, number of names in the group we think the short term is not clear. there's more pressure. long term as anthony pointed out, everyone that talks to the advertiser community wants to spend 80% on facebook because the roi is so strong but they idle back to spend 50%

on facebook because they don't want to be held captive. so we don't hear it from any of the advertisers that are pulling bacterially based on -- materially based on what's happening. clearly needs to be some cleanup, but short term all of the social names have the same overhang going into the third quarter earnings print >> i want to dig into this a little more, anthony you mentioned maybe some price cuts i'm looking at coverage, facebook outperformed, amazon outperformed, alphabet, outperformed, netflix in line. at what point do you think of becoming more neutral or potentially selling out of stocks, especially if you see the beginning of a bigger rotation. >> i think these stocks are so good at what they do, they dominate, and that's hard to say, that evokes the attention of regulators that perk up their ears, so the outgrout of domination of respective

categories, are they getting too powerful what are they doing in response, they're spending, like facebook is, to improve the health and safety and security of the platform and that's cutting into earnings not so much for amazon what i would say is as they spend they continue to grow their competitive moats. as analysts over the longer term should pay higher multiple, as long as there isn't legislation to regulate. we don't see regulation coming we think the drum beat of headlines will be an overhang, but they're dominant, not anti-consumer, which is critical when you look at it through the eyes of the ftc, and think they're building competitive moats for a long time. >> interesting we zero in on facebook as they allow consumers to opt out on privacy, does roi come in, make it less attractive for advertisers. would the stock pop if he gave

up the chairman role >> i don't think so to the second question. i don't think the roi has dropped dramatically from what we can see in some of the conversations. there might be a little shift going on as advertisers want to experiment with amazon, ad business clearly there's more room for amazon to gain share and others to lose share, so i think there's a little more experimenting like you saw a couple years back on twitter and snap we think it is reshifting back to amazon. amazon is the big winner if you see pull back in what's happening with facebook. >> the thing we all struggle with as analysts, stocks are down to what degree is the negative news priced into shares with multiples coming in. for facebook and google, i look at multiples and they're so cheap even on an absolute basis before you factor in their north of 20% revenue growth rate, so we want to maybe get more

neutral if that makes sense on risk reward for stocks but not necessarily at the bottom if this is the bottom. >> seems to me like if you want to separate the chairman and ceo roles at facebook, first of all zuckerberg has absolute control, voting control trying to get him out as chairman, i don't understand the logic there, but he could give up the ceo role pretty easily, give it to sheryl sandberg, remain chief technology officer like bill gates or larry ellison did. would that make investors happy? >> people that are calling for him to be out makeup a small percentage of holder base, less than 1%. he controls the company. he effectively controls 60% of the vote, he is founder, chairman, and ceo. we don't see that changing don't necessarily think that's the best thing for the company so unless he goes rogue like elon musk has, which we don't see for zuckerberg, don't think

that he is going anywhere, you know >> couple of interesting levels this morning snap is back below seven and twitter is trying to close above 30 for the first time in a month. 29.98. what do you think about those two names? >> twitter is recovering snap is still losing, so it is clear that we see twitter is on a road to recovery you look at the back half of the year, they have fairly easy comps. recovery of twitter has happened in the international markets, and they said that they're going to keep prices low to get more advertisers into the platform and in the united states they have still a big opportunity they haven't touched the small, mid size business market it is impossible to on load onto twitter in an easy way that we see in other platforms, so we think there's still some tail winds as relates to what's happening in twitter's core

fundamentals, and they're getting better remarks from advertisers. tail of two cities on both names. >> do you go along with that >> the worry, i don't disagree with anything, but the worry for twitter, i look at how much facebook is spending on safety and security, 20,000 people, and ai and machine learning to cleanse out fraudulent users i wonder if twitter needs to spend some of that, not all of what facebook is spending, but as you look at next year, is there an earnings cut because of op ex on health and security and marketing content kind of product, salespeople, the ads ecosystem. my concern on twitter, the reason i don't rate that one by, i'm not sure we get upward earnings revision given that heading into 2019. >> that's a big reason why people in some cases don't want to buy ahead of the print this quarter at least see what it brings next week,

twitter. bren brent, anthony, thank you. speaking of spending on safety and security, facebook gearing up for those coming midterms julia boorstin got a tour of the war room to combat manipulation, she joins us with more >> reporter: facebook invited us to the first ever war room to fight election manipulation, bringing together teams that represent every corner of facebook to track trends on facebook and its apps using artificial intelligence and machine learning that data populating monitors around the room so folks in there can quickly identify and shut down suspicious activity, including efforts at voter suppression, fake accounts, and fake news. >> we have essentially done much scenario planning and war games internally in the war room in order to plan different types of problems that we may see and we practice, we have done drills to see how we can detect that, come to quick decisions and take

quick action >> the room is staffed 20 hours a day, ramping up to 24, 7 next week, representatives from over 20 teams across facebook for what's app and instagram to public policy, data science. the head of elections says the teams identified false news that the brazilian election day was delayed, attempt at voter suppression, were able to pull down the posts before they went viral. >> we'll continue to see efforts to manipulate public debate because we always see that it is why we have the war room built and teams pulled together to find and react to it quickly. >> reporter: the company says the systems now in place would have prevented the russian manipulation in the 2016 election they say it is an arms race to stay ahead of news >> thank you let's get to sara eisen with a news alert on coke >> at the executive level,

coca-cola, the company has a new president and coo, bret smith, head of europe, middle east, africa division, he is the number two under james quincy, the ceo who you may remember used to have the coo role. potentially a future succession plan kathy waller is retiring next year, mid march, and john murphy will become the new cfo. coca-cola moving a bit james quincy is a relatively new ceo, took the job may, 2017, is in the middle of a turnaround plan, making moves like getting into the retail business they report earnings the week after next october 30th. there will be questions about that generally just the board communicating management changes under mr. quincy

morgan >> thank you sara eisen where we stand in the broader markets, dow down triple digits, down 133 points. the s&p down 13, and nasdaq down 75 communications and tech stocks arleinthwae adg e y lower. a lot more "squawk alley" still to come. place, the xfinity xfi gateway.

and it's strengthened by xfi pods, which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. welcome back investors looking to earnings on the market's direction dom chu is back at hq with a

look at how tariffs and trade policy are impacting third quarter reports so far dom? >> morgan, the forward look is what so many analysts and investors are keying on this earnings season. what will companies say about the impact of tariffs on their future performance on the financials it is a little too early to tell just yet this earnings season. you can see about 70 companies reported so far through the early part of the morning. among the names, 21 have explicitly used the word tariff or tariffs in the earnings conference calls or statements gives you an idea how much it is weighing on some companies we picked out a handful of comments to give you an idea of what the ceos and other executives are saying about the impact and how they will deal with the tariff issue. one is auto zone the ceo william rhodes saying in the short term we expect to be able to manage our way through any changes and continue to expect to ultimately pass these

costs along to the entire industry, would be affected similarly. another one to watch, a bigger example of a retailer, costco. the cfo saying they're doing a number of things, accelerate shipments ahead of tariff deadlines, reduce commitments on certain items, alternative country sourcing if it's possible, and take advantage of lower pricing on some u.s. items that may be lower in cost because of tariff policy that's costco. one other one to highlight from earlier, danaher they talked about price being one thing to address and looking where we might reduce changes in supply chains and where might we ship to manufacturing to various locations. we have some flexibility in there, particularly associated with consumables as you talk about the way companies are dealing with it, it could be passing along costs, absorbing in profit margins, trying alternative ways to

source in the supply chain, all of these mentioned we will monitor so see what other companies say as earnings season progresses. more updates as things develop back to you. >> good one, dom, thank you. the markets, dow is down 133. watching that. s&p down almost 13 mike santoli back onset, to follow up on what dom said, mike, do you put tech strom and others in a basket, set it aside or does it effect everything >> not quite set it aside. i think it puts investors on alert looking for the head winds. it is across the board more global, more industrial that's where the focus will be now. and i think one of the disconnect is that the s&p 500, stock market is much more global and industrial and much more business to business than the u.s. economy is. the fed looks at the u.s. economy, says stuff we look at

is great on course to raise rates and s&p is leveraged for stuff that isn't as good short term. >> that's a key point you're making, especially when it comes to this earnings season. seems to me the dynamic we are setting up, when you talk about more industrial focused companies, alcoa a great example, their earnings last night as well, costs are rising, maybe in part because of tariffs, but pushing that out in terms of higher prices as well, is it still a net positive many cases with some of the companies so far, csx is another one, costs may be rising but prices are rising faster. >> which is great if it works. there's suspense, see if they can push pricing, if it effects demands. consumer packaged goods, that's a theme, too that's where we're at in terms of basic market debate, we're probably there awhile. later in the cycle, is the fed

friend or foe. how much longer in terms of expectations leading indicators, up again, they peak well or have always before an economic cycle ends. is that assurance or what does it mean for main street versus wall street, too >> how is the year shaping up overall, markets wise, compared to where so many prognosticators expect it. we tend to think of it has been a good year, you look at the charts, i don't know >> s&p up 4% year to date or something, so on track for mid to high single digits, if it glides up from here. i think that's probably not too far out of the zone in terms of overall, but i think that the predominant traits, own financials, leave the growth stuff behind that has not worked. it has still been a growth dependent market and still about tech, even though tech is giving back a lot of outperformance in the overall outlines, if you

came into the year, s&p at 2900, ten year at 3.25 -- >> before i let you go, series of higher inter day lows. >> a bid every day. >> encouraging >> i think on the margin encouraging. it ratifies last week's low a bit. between last week's low and the old january highs, two or three percent from here, it is a lot of fitful rallies. we have expiration tomorrow, so it is staticy. wouldn't surprise me if you have another can't get them down rallies. you might see another bid. >> thanks, mike. when we return, goldman, sachs' george lee sits down with us excsilyluve, talk about where

he sees value in tech stocks "squawk alley" back in three minutes.

goldman, sachs holding a summit in santa barbara, following earnings earlier this week let's get out to will who joins us with another special guest. >> reporter: hey, morgan, thank you very much. we're at the seventh annual builders and innovators conference one of the main men is with us, george lee, chairman of the global tech media and telecom group. >> good morning. pleasure to be here. >> talk about the conference initially. clearly lots of young entrepreneurs are here how does your advice to them between staying private or being public differ from how it would have been ten years ago, what are the valuations and liquidity levels like? >> this is a fabulous conference it is one of our favorites

celebration of entrepreneurship, a driver of the economy. great to be with entrepreneurs at various stages in various industries, get them together, discuss the journey of entrepreneurship as relates to advice, one thing i have seen sentiment shift in the past year or two, the ipo is inspirational in silicon valley and growth companies i think people are excited by opportunities in public markets, valuations have been attractive for issuers, market is consistently open. that's a real theme. people are more intrigued by the ipo path than recent years. >> one that has potential news is that of uber. the other role as cio, you look at companies for goldman, sachs to invest in early on, and uber was one of those picks nice call by the way. >> thank you >> what do you think about the timing is now the right time for uber to go public >> i should resist the

temptation to talk about any specific company or client i would say uber is a remarkable success, one of a class of companies in silicon valley exerting enormous influence on the world around it. i think the new management team has done some tremendous things, so they have lots of opportunity ahead of them. it is a great company. >> what do you think about the timing more broadly, whether we don't focus necessarily on uber but lyft, airbnb a lot of big companies is there going to be enough liquidity to get those away next year >> absolutely. first of all, there's a remarkable class of companies out there that are in many ways poised to access public markets but at the same time we have been waiting for a lot of them to go public for awhile. we'll see how their plans develop. that having been said, i think there's enormous excitement

around these transformational companies. there's a lot of capital on sidelines to buy growth. that's one of the lessons in the capital markets. you look at the top five companies and technology, their performance, their fundamental performance, remaining growth at scale, i think the prospects for these special companies to succeed in capital markets in coming years is high. >> if they do come in 2019, would that likely be the peak in a three year view of ipo in the tech space >> we had 38 ipo tech this year, surpasses the number last year already. well below peak. there were 150 in the year 2000. and recent peak was 49 in the year 2014. and again, i think '19 will be an active year, whether it represents a peak or not i am not smart enough to know great companies, exciting

pipeline, investors that remain intrigued with the growth generated through alpha and performance. >> switching to media. earnings release for netflix said of the new fox model, it is the right model for traditional broadcast television what do you think. do you think they can only focus on news and sports >> i'm no expert in the media space but i think there's going to be -- this is one of the areas where fusion of technology and traditional approaches to the industry are still playing out and there are a lot of models that can be successful. >> george, final question given the interview coming up with your new ceo, you have been with goldman, sachs -- >> 25 years. >> the change of the gor-- guar is that the moment in your time and what does david bring that

lloyd didn't have. >> there are a lot of big moments in 25 years, the ipo itself, various crises, et cetera i think it is an important moment, one where it causes us all to pause and be grateful to lloyd for his extraordinary leadership and yet be very excited about david who's a fantastic manager and a great person, and his leadership and his era i think will be equally exciting we're all just looking forward. >> thank you for joining us. >> my pleasure >> back to the studio. >> fantastic see you later with david solomon. let's get to the european close, seema mody has that >> hey carl, what's interesting, the selloff in europe accelerated after the shanghai closed down 3% european sectors with heavy exposure to china are being hit, including mining stocks, down 1% as the premier said at a european conference today that downward pressure on the economy has notably increased.

it comes as uk fashion change new look announced plans to close retail operations in china as part of a wider review of its international strategy meanwhile shall the british pound hitting session lows after the uk prime minister theresa may reiterated at a press conference that major issues remain in brexit negotiations the eu, including the border with northern ireland. and big deal in pharma space, novartis buying endocyte. and relating to pressure on the disappearance of jam ar khashoggi, the latest government officials to pull out of the investor conference. the officials joining a growing list of european executives not attending. carl, back to you. >> apparently that's not the

only attendee not going, word from reuters the treasury secretary, steven mnuchin was withdrawn from participation in that conference. we'll watch for details as pompeo recently came out, talked to reporters about his conversation with the president now that he is back from saudi arabia as well there's a tweet from mnuchin just met with real donald trump and we decided i will not be participating in the summit in saudi arabia. >> a lot of mixed messages out of the administration about this, almost every time the president talks about this incident and this issue, he emphasizes that khashoggi was not a u.s. citizen and how much money saudi arabia has agreed to invest in u.s. interests now the treasury secretary pulling out, pompeo saying give them more time to investigate. we'll see where this lands for now, let's get to sue herera with a news update. >> thank you, jon. we have more on what the

secretary said mike pompeo meeting with president trump at the white house on the disappearance of journalist khashoggi he said we welcome turkey's independent investigation, but said the u.s. should give saudi arabia a few more days to wrap up their investigation into the matter >> i told president trump this morning that we ought to give them a few more days to complete that so that we, too, have a complete understanding of the facts surrounding that, at which point we can make decisions how or if the united states should respond. south korean president moon meeting with pope francis at the vatican. his office says the pontiff indicated his willingness to visit north korea if he was invited. if so, it would be the first visit by a pope to that country. and another building stripping the trump name off its entrance "new york times" reporting that residents of trump place on the upper west side of manhattan

joined three other buildings in the neighborhood in taking down the president's brassy five letter name. you're up to date. that's the news update this hour back downtown to you, carl >> thank you very much, sue herera session lows here. dow down 239, s&p down almost 26 points as we have narrowed losses substantially from the open we'll keep an e teyonhis. back in a moment

let's bring in eamon javers as markets react tomnuchin headlines. >> reporter: what's striking about the secretary's statement is what's not in it. you see the tweet saying just met with the president and secretary pompeo and we have decided i will not be participating in the future investment initiative summit in saudi arabia so he is not going so much attention was focused on whether he would or would not go what's not in the statement here is any indication of why he is not going, right the secretary of the treasury not issuing a message to the saudis or explanation for the reason he is not going when of course the entire world knows it is because the saudis are under suspicion for possible murder of jamal khashoggi, "the washington post" columnist. the question is is the administration trying to send a message to the saudis and world or are they trying to avoid a series of what could be

embarrassing pictures of secretary of the treasury inside saudi arabia with some top saudi officials at a time when they're under suspicion of an event like this we saw mike pompeo saying he believes the saudis need a couple more days to investigate what happened. so the u.s. position here is that the united states does not know what happened to jamal khashoggi, and in fact is willing to allow the saudis to investigate what happened to him, whether or not the saudis themselves murdered him in the saudi consulate in turkey. i asked mike pompeo straight up is jamal khashoggi alive or dead, and pompeo did not respond to that question before returning to the white house >> i realize we don't have a lot of details yet around this, but just in terms of how to think about this, if you have the treasury secretary mnuchin pulling out, saying he is not going to this any more, should we perceive or view that as the u.s. in general is no longer participating in the conference?

>> i think that's right. when you see his tweet, he talks about a meeting with the president and secretary of state. that would appear to be an administration wide decision the question is which lower officials will go or not go, and i don't know the answer as we stand here now it would seem to be if you pull out the secretary of the treasury, you pull out everybody else as well, but maybe that's not the case and shouldn't jump to conclusions based on that the other question, is this designed to send a message to the saudis or is this the treasury secretary and president deciding things are too hot to be in saudi arabia and they're going to simply duck out of the conference and leave it at that, or do we get another statement from the treasury department or white house why they're not doing this, and any indication that this is related to suspicions around the disappearance of "the washington post" columnist. >> all right eamon javers, we continue to follow this. thank you for bringing that to

us meanwhile, is this sending the market a message bob pisani is with us as the dow dips lower, near session lows, bob. what's the cost? >> what we're looking at is three problems number one, there are accelerating concerns about what's happening in china. morgan stanley wasn't helpful for the bulls when they put out a note saying we think auto sales are slowing in china ford volumes could be down 40% year over year, a startling nipple, i don't know how they came to that conclusion, seems pretty large to me china market down 30% for the year add another 3, 4% decline in china, fairly large numbers and have been continuing to go down this month china is number one. number two, the rate thing, back up at 3.20 or 3.21 on the ten year yield and then the question of margin pressures. industrials that you cover, look what is going on, sealed air,

textron, they're talking about higher costs, weaker foreign currency, tariff issues, all of this generically translate into margin pressures you can see what's going on with industrials, they're all being hit. we've had record margins on the s&p 500 that we have seen. it has been holding up really well they have been able to pass on some costs now they're getting louder concerns are how much higher are costs going, and how much longer can they pass that on. margin pressure is an issue. >> this is another way at the divergence question, isn't it? you point to ford in china, this is china's problem, but maybe it is becoming ford's problem you talk about the costs and tariffs, well, maybe that's the pain caused by the policy starting to show up in corporate balance sheets up to this point the u.s. market has seemed to shrug things off

how far a dip before we reevaluate >> i think it is happening today. this is one of the reasons i think the market is down so much if you have 1% revenue growth and then you have 2% growth in costs, you have a major problem. now, we don't have that right now. we have seven or eight percent growth, you can hold up okay but the market is telling you the response to industrials is telling you that that scenario, we're going to have seven or eight percent revenue growth, that's getting smaller, the advantage. the market is trying to say maybe we get 3 or 4% cost growth now revenue at 7%, the margin to avoid compression gets smaller the risks are higher now that's what the market is telling us. >> as you're talking, the president tweets secretary of

state pompeo returned last night from saudi arabia and turkey, i met with him this morning, wherein the saudi situation was discussed in great detail, including the meeting with the crown prince he is waiting for the result of the investigation being done by the saudis in turkey, gave a news conference to that effect which obviously we heard a few moments ago. >> which begs the question, you mention three buckets in terms of what's effecting stocks saw the leg lower in the dow as we started to get these headlines. geopolitics, the fourth bucket >> might be. watching oil here, oil is down today. you would expect more reaction i wouldn't doubt that it is. but it doesn't seem -- stuff you think moves on a global concern issue like this isn't particularly doing it. it is what we were talking about, rate sensitive industrials are moving and china stocks tells me the three buckets are more of the factor in what's moving markets than the saudi issue. i don't deny saudi is there, look at what's moving. the market is telling you what

they're worried about. >> oil is the other part of the equation jackie is watching reaction to the development regarding mnuchin. >> good morning, carl. this is an issue the oil market has been watching closely. i have been impressed the way the market is taking a measured response, waiting to get concrete facts before it makes a knee jerk reaction the stock market is down you would expect oil prices to be higher the way bob expressed, but losses this morning were steep. oil was trading 68.5, and you can see losses have been paired. i think the news is getting baked in, but it wasn't enough to turn oil prices positive. i think the main factors now driving oil, the stock market, racing rates, and demand will be going down for oil as well right now, the market is well supplied that's why you see a push and pull in prices, staying under

$70. >> thank you for the context coming up, the ceo of public cannabis company cronos after the break. your company is constantly evolving.

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longest running bull market ever is about to end? and the retailer in the call of the day cross hairs, a big cell call by a top name analyst at noon on the halftime report carl, see you in a bit and all over the selloff which intensified that you have been talking about in the last few minutes. >> happened quickly. dow down 336 session lows obviously art cashen was saying it is more about mnuchin and lesson draghi. risks of challenges to rules, focusing on italy, raising the prospect if italy goes forward with their budget against eu rules that the ecb may not be there to protect them. we saw spreads widen that did precede the headline from mnuchin. let's get to rick santelli for the santelli exchange. rick >> carl, it is fascinating that

headlines are hitting the marketplace. what i was going to talk about today, the title was receiving liquidity and the global economy. my bullet points, these issues magnify lack of organic growth when you pull the plug on the bathtub, you see the edges drain first. you also are going to get penalized for high levels of debt and servicing therein and finally, makes a much more complicated scenario for future central bank policies, especially when the policies are reversing older policies look at the chart of italian yields and art cashen comments that the headlines regarding saudi arabia aren't necessarily what's moving the market, it is the fact that mario draghi is not happy italy is trying to in some way incite its economy for

better growth. i understand there have been so many false starts mario draghi should know better than anybody about false starts, so should mr. corono in japan, be mplg gold in your economy takes you so far at some point, maybe the u.s. really was the antagonist in this because their central bank decided, now or never to reverse this and the president doesn't like it mario draghi,doesn't like what italy is doing in the end, central banks did this experiment and in some ways they should get the broom, the garbage can and follow the parade and sweep up after it but in the end, i don't know how it's all going to work out for everybody. and i think that's why we're getting such divergent issues. i mean look at the chinese stock market

i understand its tariff. they're part of the edges as everything starts to drain then everything gets magnified every move in the past that the water covered up starts to shine. just like warren buffett said regarding derivatives. when the tide falls everybody gets to see who has been swimming naked in this instance it isn' individuals, to some extent it's not even kormgscorporations, itg economies, medium-sized economies, emerging market economies i don't see that's going to go away any seem soon, as an investor, how do you deal with it? i look up at the board, i see our yields and i see 275 basis points, although that's probably shrinking. because they're selling italy and buying the bunds, making mario draghi's problem even worse. how does it end up i'm not sure, but i know that our president yesterday talked about trying to save some money that he wouldn't sign another budget like the last one

hopefully many more leaders and many more countries will really think that one through because it sounds like a great idea carl, back to you. >> thank you very much rick santelli now the down is down 384 s&p down 9 of 11, dow is down 8 of 11. e 're back to about 5.5 below threcent record highs. back in a minute here. we perform over 50,000 operations a year in places

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the sell-off intensifies, the dow down 325, art carbon is here as well, usb director, floor operations a as we watch the mnuchin headline and the draghi headlines regarding rome and the brussels showdown. you said if this had been about mnuchin, then oil would have spiked >> i think so. if it had to do with a worsening of the relationship between the administration and saudi arabia, it would have been natural that oil spike, but i think if you look, the very closing minutes in europe. the italian bond yield shot up and luckily for them they were closing. think it would have done more damage to the equity market there. draghi said that there were high

risks, all of the participants didn't stick by the general eu rules. that was taken as a swipe at the italians running a budget that is kind of outside with the eu wanted to see. i think the viewers want to be careful, a lot of people going around saying it's all about mnuchin. i would give you a dollar to a doughnut that it is not. it is more about -- >> just to explain to viewers, who aren't following italy that closely. their proposed budget would hike social spending, would cut taxes, would boost the deficit. >> they're trying to grow their way out with deficit spending. which would be a great thing for people, a normal country to do but eu is not normal there are rules that confine government's ability to act. not just on the currency, but on their budget and essentially the italians are challenging that saying we need to break out of this low-growth strategy it's not an unreasonable expectation for thome want to do that but draghi reminds them, if you

bust the budget you're breaking our rules and we may not be around this is the threat to help you you want us to bail you out? because you're going to go outside the bounds that's not going to happen i think that's a very -- important reminder of the constraints that they have to operate in >> we're seeing yields on some of these european bonds, italy for example. ticking to multi-year highs, mind you, it has been risk-off here all day the 10-year moving back below 3.2 right now. flight to safety how do we think about this, especially given the fact that global bond yields have been moving in tandem. >> earlier the yield on the 10-year had moved up as bob aptly pointed out somewhat earlier. very close to former highs when this thing broke out in italy, when the italian bonds started to get peppered around that's when they came back with this mild flight to safety and that's why our yields are no

longer up. they're down as people look for the security of u.s. treasury bonds. >> so, bob, flight to safety, that explains why the nasdaq is off more than the dow and the s&p right now? even though i mean -- >> we saw this earlier this is a continuation of a trend. china concerns, higher rates, and margin pressures and so the -- the highest beta stocks are going to move down on that so the semis were weak at the open this is a trend that's been around for a while i don't think we're abandoning the trends we have a new issue with draghi comments and the new threat to italy. by and large on a macro level, china is still a much bigger story that we're dealing with right now. >> the biggest losers, laggards on the s&p 500 are united reynold. snap on, sealed air, even activision are of that they're of a piece >> hand don't ffrgt we've had a market that's had a very shaky

experience for a couple of weeks and when you started down, you begin to do some technical damage we're down here retesting the 200-day moving average in the s&p. that's critical. i think the viewers want to be careful. this thing could take on a life of its own if they break below some of the support levels could you get, not a trap-door effect, but a roll-on effect >> the volume is not particularly strong and this week, the volume has not been that strong. last week we saw wooshs of breathtaking volume just dumping stuff on the market. that's not happening right now so it may be that the buyers are simply stepping back here. we make this distinction all the time that there's a difference between a buyer's strike and seller's trying to go out. buyers are cautious here, therefore prices have to drop to attract them at this point. >> don't go too far, attach a rope to both of you, bob pisani, and art carbon a reminder that steve liesman is

going to talk to gary cohen in the next hour, i'm sure there will be questions about what we're hearing right now and goldman david solomon with wilf, i think it's his first interview since ceo. >> and an eye on investor earnings, kansas city southern and honeywell to name a few. >> let's go to the judge and the half i'm scott wopner, the question is the bull market more at risk today than it's been in the past eight years or have investors become just too fearful of rising rates? your money might hang on the answer this is the halftime report we're getting right after it today with the markets selling off at this hour we want to discuss and debate with our panel today we have with us, one of the biggest stories of the day, joe terra nova lindsay bell is with us, cra's chief investment strategist. let's begin with the markets, stocks are at the low of the

day,