hi everybody, a quick check at the mark. the dow is up 92 points. s&p is almost flat mike, thank you very much for being here today that does it for us, right now is "squawk on the street." ♪ good wednesday morning, welcome to "squawk on the street," i am carl quintanilla with david faber and jim cramer is at the independence visitor center in philadelphia we are coming up with big upside revers reversal boeing beats and raises. europe with some 1% gains.

bostic, we'll get new home sales in an hour u.s. markets are raising those early losses the dow pointing to a nearly 100 gain in the open, thanks to boeing more than a 100 companies reported on the busiest week of earnings texas instrument, they're all down microsoft and tesla, after the bell the president fights with the fed, he may regret nominating jay powell it is the biggest risk that the economy faces. the jump is due to boeing. upbeat results and guidance. it happens one day after the wild ride on wall street s&p is in the midst of a five-session losing streak jim, if we are down today on the s&p, that's sixth straight

we have not done that since last week >> i will tell you, carl, yesterday was the wild ride. if you look at the futures right now, we would have made up for everything we were down 20 at 4:00 and europe was down badly and everything came back xylexempt r the fundamentals other than boeing, were not good when you have one company making up for all the others, i don't know how much power do we have i feel a lot of people are going to get out of the opening. there were so many numbers last night in the morning that were sub par. >> we got revenue misses from ups and hilton, texan and illinois tool. we are keeping our eye on the number of the companies that have not been able to sustain the top line >> the texan number that came after the close yesterday, carl, i know jim is on top of this i am sure. i think we are going to talk about it in a bit.

it was bad and a lot of people wondering what it is all about it is going to pressure the chip sector, is it, jim >> i find the call unsatisfying. why are things weak. what is weak with devices and gadgets and all they would say, hey, listen, man, today we'll come back. why is it weak the facts are weak it was unsatisfying. it was the kind of things that made me said thank heaven they have the $18 buy back. at least ast micro blames china. that's more important than boeing if you put st michael in with instrument, i think the companies, a lot of them have to

do with tariffs. the president wants to blame the fed. what does he want to do? have the fed make up for what he's doing it does not seem to work that way. >> he does not want to admit there is significant tariffs out there and screwing up supply change and raising up surprise change for consumers and something gregory hayes spoke yesterday saying consumers are going to pay as only hayes can do way beyond typically what's pr advisers and counsels want him to say he's a straight talker, we know. >> gregg hayes is the guy that put the whole idea that the president wants economic regime change the need for that government to start reacting or let's find another government that was the speech that i think along with the fed saying hey man things are better than ever,

has made it so it is kind of unrear view mirror stiu unrealistic of what the party is saying i know he wants a higher market. hey, terrific but i want a higher market. maybe that's where my intersection with him kind of ends we did get 8.5% on the s&p in this draw down we are down 12 or 14 days. you got your vix at 25 the percentage of names at a 20-day low is getting smaller. >> yes, that's why i felt that the caterpillar call was so upsetting. we are going to do the number. all i am saying, i want it down opening today. for heaven's sakes, you get it down opening and you get a task and boom you can fly up. now, we finish them and then we

can go higher, i just don't like our opening after big down days because everybody bought when it is 500 gets to blow at the top the market comes down so far i wish the fed recognize that the fundamentals would weaken or the president would shut up. >> the one name that we did mention and we did not go into details is boeing. the dow component is going to help the average moving higher potentially, jim they called it a solid quarter themselves in the release. they said solid, what did you think? >> you have to buy planes in dollars. there is a shortage of planes. they can raise prices as much as they want and aerospace was incredibly strong for honeywell

and technology that's the area of the economy is holding up. i do think some part of tech, the cloud will be good texas instrument, they're in every single device. you have to figure out where the weakness is. illino illinois -- 3-m was execution yesterday and horrendous how long can this fellow roman stay at the job when every single business is showing weakness >> the big debate today will be whether texan or macro or micro story. they are in everything >> let's do texas and the chips now and we'll do at&t in the next blog. you referenced this. investors hate uncertainty and analysts are looking to change

their number when they hear the ceo of texas instrument, you reference this this is driven by a slow down and semiconductor, we can't speak to any macro driven event here any of the trade issues are minimal. all we can judge is our customers and the signals they send us and that's what we are basing it on there it is. then everybody else have some questions based on the answer and they don't get it further. have you seen nxp, jim, this morning? oh my, is it ugly given our long history with that stock and what we once thought it is going to be 127.50 deal thank you so much for eliot for arguing and not take the 110 when they have a shot to get it done >> well, david, you have to

admit that you are going to come back and say wait a second, we have a two for one split there? if you are listening to -- if steve liesman is reporting on the fed, i want to strangle them, housing were booming, who do these people talk to david and carl where are they getting information? all they're doing is rear-view mirror of employment they're so out of touch. they should go on the texas instrument call. >> they don't know why w why? i want to know the reason too, don't you? >> they did not tell you texas instrument was a sham. it was a mockery of a sham

>> yeah, i mean the bottom line is hardware makers aretrying t manage inventory risk going into whatever, right? >> right >> tariffs, trade war or something else >> yes >> it is not you would like to have some grandularty here in terms of understanding it the guy says it is not about tariffs. it is not particularly satisfying >> what the heck is it about >> general gloom don't forget they did this gigantic boost in dividend in september. did something happened i would say yes. there is a supply chain break down and people don't know what's going to happen and the u.s. blames brexitbrexit, how at

that >> that's a while away that's a big day for you at the restaurant >> there is a crack in the liberty bell that's a reason to sell. >> i hear it has been there for a little while let's get to at&t before we head to break here because it is als going to be down the calls are going on right now. the loss of direct tv subscribers and wireless, okay, we'll see what the analysts have to say the calls are going on right now, they only added 49,000 direct tv subs that compares to last quarter of 342,000 and the quarter before that, 312,000. they lost 346,000 regular direct tv subs. it is not going the right way. john stevens, the cfo says on the call, we only added 49,000

we have been successful building the base and now we are improving on profitability and scaling back from our promotions and special offers and move towards market pricing in the quarter. margins are getting hurt as a result of the loss of direct tv subs and now the larger question, now you are starting to price it appropriately and you only add 49,000 subs instead of 342,000 last quarter some people are wondering what is the real liability of that product while direct tv continues to bleed sub losses this year. that may be something people are keen on. verizon had a great day yesterday on the strong wire he less number. everyone thou even though it did not go out and buy time warner. what a day it has been >> david, is it now dumb and

smart as oppose to dumb and dumber >> is that a question for the legible -- dumb and dumber >> you are right, it is a good question we'll monitor the at&t call and we'll have more for you as we watch that stock >> the president has ramped up his criticism of jay powell, we'll fill you in on that. the premarket as we look for boeing we'll get to ups and some of these comments from tico am oknd brussels and more when "squawk on the street" continues why bother mastering something? because when you want to create an entirely new feeling, the difference between excellence and mastery, is all the difference in the world. introducing the all-new lexus es. a product of mastery. experience amazing at your lexus dealer.

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the president steps up his criticism of fed chair powell in an interview every time we do something great, he raises the interest rates. he added that powell looks like he's happy raising interest rates. as to whether he regrets hiring powell, the president says it is too early to say, maybe. i am unhappy of the fed because unhappy with the fed because

obama had zero interest rate there is that. >> what can i say? i feels like there is a situation as oppose to let's see the data the part that's difficult to fathom that a lot of the company are citing the tariffs every time we do something negative, he would do something negative and that's a better narrati narrative. janet yellen was the guy that kept rates down and he's the one that fired yellen. every time i think about when i fire yellen for powell, i feel what a mistake i make. that would involve him making a mistake and that's not allowed it is like reverse camelot down there. he can't admit he made a

mistake. >> and at least according to the way the journal describes it of the impact of the tariffs, they were for a couple of articles saying these tariffs don't amount much of anything. >> we heard of that before, he's going to be too bothered and wilbur ross told us in march i continue to hear and you run into somebody and manufacturing company. i still wonder if it is going to end up creating any jobs what i continue to hear is so many of our manufactures still importing from china, it is still unclear of what's going to have tariffs on it and what it may not and what beginning of next year and whether you have to change your supply change and the chinese starting to sell of europe and manufactures there and you buy something else from. they say it is confusing and very difficult to understand, jim, how to price your product

and does not necessarily leading to more jobs being created here and at least again from the handful of people i have talked to running small and large manufacturing companies. >> well, look, i hate the term coal mine. i think they used it in "breaking bad," jesse used that machine. listen, we are going to keep the tariff and not pass it on. you will see on the ticker beneath us, that stock is going to be down a lot the question is who's going to eat the tariffs? they want to cut back to 60% who's going to eat that tariffs? one of the companies that's located three blocks here called five below

in other words they have to raise the five below series. who eats who eats >> that's what we need find out. we know the happy meal, the happy meal is jerome powell. >> bloomberg does have a piece up on companies that say they're thinkingof shifting supply chain. we are looking at shifting countries of origin at least for some components. well, that's what president trump won. it can't be done over night. these tariffs that are coming in, it takes a little time for companies to be able to switch takes time for retailers to switch during that period, we'll get some happy rate boost from a happy fed that's smiling as it raises rates and we have a president that's insisting he's still doing good things for his

economy. we have a lot of guys saying the economy is accelerating. wi he has no idea what's happening in washington but it is not good for business all that number is going to tell us a lot or have been in recent months we'll count down to the opening bell green on the dow because of the nice beat and raise out of boeing we'll be back in a moment. this is huntsville, alabama. aka, rocket city, usa. this is a very difficult job. failure is not an option. more than half of employees across the country

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♪ we got about three minutes before we get start with trading here at the nyc. jim is in philly but we'll do a "mad dash" anyway. what do you got? >> apple was down this morning this morning the bernstein expecting upside selling price for iphones and that could mean upside to the earnings that's what brought apple back what you want to do as the market comes in is watch apple who knows what's going to happen with china tonight this is the piece that made it

so not just boeing but the nasdaq started doing recovery. tony is someone who's critical and -- i think it is an even more important from the big upside of boeing the nasdaq is desperately a need of something positive. >> is this the same piece you cited the other day or a different piece? >> no, new piece fresh out of the oven. this tastes great, like a pop tart >> he seems to be getting positive on apple. >> turned intensity it at 93 he says the best days are behind him. why not get positive at 220, right? it is like taking a pencil and turning it upside down, just as

good >> yeah, for sure the market sell-off that we had over the couple of weeks have not dented apple and that's taking a lot of people by surprise and raise some eye brows at the same time. >> right everybody i know keeps on saying when we are hearing china is doing a boycott of apple are you crazy? are they going to cut that off apple is a huge employer there tim cook has done everything that can ever asked for. that's the line in the sand. that would be terrible it is like united technology how are they going to holdup that deal. technology is so many people work in china. >> we'll talk more about what cook said in brussels, tim cook,

recording privacy that was published a couple of weeks ago and he called it 100% lies and went on, and as privacy remains the old concern. at the big board is hewett-pakard and we'll be watching boeing for sure and commercial reservenue is up one. it is a defense of space and security at 18 that helped the quarter and in terms of their revenue guidance, they're looking at potentially at $100 billion for reserve new for the year >> you got to be proud of them they have this fabulous service screen that's making them a lot of money there is no sensation. this is worldwide travel

the futures could give up the ghost here because a lot of people are just incredible decline at texas instrument. we have not mention the complete give up in the bank stocks a lot of that may be, we are getting the snow curve, if we are seeing the highs of the year for interest rates notice oil is going down happy powell does not want to declare that yet that's some of the problems in washington that we have a president who's making fun of the fed chairman and poking fun, hard to believe, right you see these guys behind me, the founding fathers, they must be rolling over their perspective graves, jesus, making fun of the fed? >> tweets this morning after trump's journal interview, the fed has no choice but to raise rates in december unless the sky

falls in on the stock market if they won't hike, powell will be tainted immediately and forever the treasury market will crater how much of that is -- >> i know some of our american companies are talking about a slow down. that would be what you would say if i am trying to rational -- >> we'll just stay on you, it is a good shot. >> i like it especially with the background there >> yeah, gorgeous. >> i can lift that you can touch the liberty bell you can go in and touch the liberty bell i mean what a great country. >> it is a great country >> although not so great if you don't chip stocks. we talked about it texas instruments raising more

questions on the call. investors are taking it out not just that stock but other number related kmchip related and semiconductors and some of the commentary there i look at the 75 shares stock. 127.50 where they went to not get the approval they saw at the chinese gun shovernment and terminating the deal, 75 bucks jim, you do have to wonder though whether qualcomm itself is breathing a sigh of relief that they went with a $30 billion buy back instead of buying nxp >> they're trying to diverse by away from cell phones and communications their cash flow is incredible.

nvidia is not down that much these old line analogs, denicvi and the new ones are getting e related to the data center i can't wait to hear what amd says amd and apple are the two, david, sometimes you ask me the key of the market is apple and amd. amd needs to put up good number. logitech were not able to do that last night everyon though i thought it is a good quarter if nvidia holds, that will be a good news. >> we got city taking comcast to

$48 target there is some bullish commentary out there. >> oh, absolutely. they're having a dynamite quarter. and deutsche banks rolled out buyers on comcast. david, he's talking about how sky can lead into an over the top play for comcast, rather amazing, don't you think >> yeah, that's something that has been discussed as a possibility given it is not just the distribution that sky has but the content itself that it has. will there be an ability for comcast to buy more content and given it now it has a platform it can add to and buy something that says hey, we got synergy now. it is not a possibility that others have not thought about, guys, when it comes to the strategy that's going to be

embraced brian roberts is going to join the "squawk" gang tomorrow and we'll talk more about the international strategy this still closes largely a domestic one but perhaps not unhap unhappy about that >> say again >> you do 125% of your business out of this country when this country is saturated, don't you? >> yes >> all right >> ups, we should touch on, guys revenue was a miss they do raise their free cash flow guide, international continues to be a sticky point from these guys in terms of growth >> they always seem to find something that goes wrong. is it remarkable >> you didn't see anything about the italian budget, did you? they continue to under estimate

demand it makes it difficult. they have to spend a lot of money and fedex gets brought downey time. they have to spend more and little worried about revenues because of international it is an unwholly alliance it is not what you want to see, spending more and do little less business overseas is not a recipe to be able to buy a stock. it is a cheap stock. no activist has surfaced. >> interesting point on ups about activism there it is not a name that i have heard in those circles i want to take a look at at&t. we looked at it before the bell, it is down 5%. i think the conference call may still be going on. people are focused to a certain extent on the loss of

subscribers at direct tv the deal is previous to the time warner deal. and, the lack of subscriber gains and direct tv now is over at the top of the product. it has been gaining ground at the 300 plus thousand subs a quarter but only gained 49,000 subs, why? they're focusing on profitability. john stevens and the cfo and donovan, the ceo of at&t communications, l.l.c. they're talking about the promotional company they under took and they're quieting that he says that they have seen seasonal shoppers who shop for shows up a third of a base and

they're going to curate the portfol portfolios away allowing them to be profitable and what they saw is folks jumping promotions from promotions and they go back and forth. it is like a show they buy and they get off they're trying to move away from that it raises the whole prospect of how just profitable in any way this ott platforms really are and whether they'll have to raise price and whether you will have people say maybe the bundle is just as good as economic opportunity for me let's watch it closely that seems something like the market is getting off of and at&t itself is not a wireless company at all, unlike verizon which was up sharply yesterday

on its wireless results. at&t is an entertainment and wireless company directing broad band to its customers and wireless and of course all the shows that time warner has through its cable network and hbo. >> it is not hilarious obviously if you own -- just like raising interest rates, not that hilario hilarious. i mean hey you know what, it was supposed to be a steady-eddie company. people are going to own verizon and buy verizon. we don't need the guaranteed of "game of thrones." i don't think these people realize they have taken on a whole new element of risk and there will be people questioning

the acquisition, david >> although again this is not, the performance is not necessarily about time warner portion of it, jim, as much as it is about their efforts in terms of really stemming the decline of direct tv by adding substantially direct tv now and everyo even though we pointed out the average per customer is different now and trying to change it to make it profitable. >> there is an element of risk time warner is a good company. honestly, i didn't think there was this much risk going into at&t and i don't understand the wi wireless numbers were not that good and entertainment component is not great i am searching reasons to own this stock other than it is a bond i didn't get one this morning. maybe time warner made it so it

is better but it is sure not this quarter sn >> that's where we are right now and the stock price is painful to a lot of people out there >> yeah, looking at the yield, 6-4 on at&t and 7 on ford. jim, i want to ask you about the home builders because we got a hard one yesterday and pulte is up and lennar is up again. >> mortgage rates have hit the high what they're saying is home prices are going down. there will be an element which housing are unaffordable, this is the whole problem with happy pal. they won the fed won. mortgage has gone up so much housing prices are going back down and that's positive for home builders.

i wonder how much home depot can go i think those stocks are under sold that's where i think you got the opportunity here because when powell realizes that he over did it he gets some fed governor walking things back, they have to do the december hike or they're going to review being capped to the president. they won the fed has won. they need to declare victory but they don't want to do that but they should declare victory with the december hike and go back. that's one of the reasons they're getting a real balance here housing and autos got us down. ford is going to be terrible but maybe they'll give you a better forecast >> ford tonight along with other big names like microsoft and tesla. your point about depot is interesting, too what a punishing six-week has

been for hd. >> it is a good company. i know the remodelling is down a little bit because of the home equity loans home depot was down so much. the one thing it has not happened yesterday is the banks. i am also watching fang to see if we'll get a little. north book southern is really good everyone can on union pacific being a big one. i do think banks have to give you some lists soon or we'll think what the heck is happening. >> mike maher's point. dallas is up 105 let's get to bob pisani. good morning, bob. >> good morning guys

flatish outside the dow. look at the sector, industrial is bouncing back and i don't mean it is just boeing energy is doing a little better after a terrible pace yesterday and with oil prices down consumer staples have been holding up well. emerging markets still finding some kind of bottom there. showing you the industrials here, caterpillar is bouncing nicely like union pacific and united rental is doing a little bit better, too. some of the stocks are trying to find the bottom. the flee mathree main etf, we h heavy volume on the upside you are down today of what's going on with the st micro and texas instrument itbt home builder some of the biggest volume in two years. i think we had the biggest volume in three years. that was all upside buying

s the -- the volume were going up on the earnings, look at the numbers, it is a mixed day here. boeing is a great one and increasing their forecast. at&t, you heard from david, short on earnings than revenues. united parcel service, revenues were short that's not a bad report, texas instrument, that's a little bit of a concern there that raises a real question about the slow down. how real is this slow down concern? i don't see a lot of it? texas instrument is a little bit of a concern the way they trace it and customers seem to be bracing for weaker demand. the pmi, that's another data point. the numbers came out this morning, 52 in change. if you see the comments from the people that's putting this together the slow down in europe is led by a drop in export and linked to trade war and tariffs which appears to darken the global

economic environment and led to increase risk of urgent. there it is. pretty much lays it out. the question is, what's going to calm the markets down. the two things, there are a number of factors, the two things that's moving the market right now is china slowing tariffs and rise of rates. the markets need to believe a few things it has to believe the 10-yr is not going rise dramatically. many are talking about 3.5%. there is no clear definition the market has to believe the fed is not going to be as hawkish as traders have come to believe. it does not mean the fed is going to raise rates into infinity and they'll not accelerate their actual path to rate hikes the beyond housing, modestly

higher rates are not a huge drag on the economy rates rising but the financial conditions are not tight it is not tight right now. the economy is strong but not over heating the fed is not going to over react and people are sort of getting ahead of the skis here i don't think if it is going happen or not but we are getting push back from the polls but we saw it yesterday watch the home building and watch what's going on with the home sector. the dow is up 62 points but that's anoutlier because of boeing carl, back to you. >> thank you, bob pisani >> it was a week ago today that canada legalized recreational marijuana. since then their stocks have fallen canopy is among them down 20% from a week ago. we'll talk with the canopy's ceo. back in a minute

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all eyes on boeing as they beat and raise here's a look at the month to date, hanging on to a -- down about 2% for the month it was obviously positive for much of it meantime, dow gains are fading we're up nine. don't go away, we'll get stop trading with jim in a minute

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i like that housing stocks are better but remember this is not a good day not yesterday. >> happy powell? >> happy powell. >> yeah, because he's happy raising rates. >> he almost looks like he's happy raising rates. >> happy powell. happy powell he raises rates he gets happier so he's happy powell. >> what's on "mad" tonight >> we have michael rubin who owns everything in philadelphia. he's really the only guy that owns anything and bill newlands and rob sands, we'll talk about constellation. maybe they're selling wine and they have the big cannabis situation. ask him to show his shirt because that's his best branding. >> see that, just like the leaning tower of pisa, right come on, this is fabulous here i've got the whole -- i've got

jefferson in my hand, man, madison was pretty good, too happy madison, happy powell. >> it's pisa, not pizza. >> come on, i'm from philadelphia. >> see you tonight, "mad money" 6:00 p.m. eastern time. when we come back, more reaction to this boeing bounce, although it's fade add bit boeing getting a lift on earnings and guidance. back in just a moment. thank you clients? well jd power did just rank them highest in investor satisfaction with full service brokerage firms...again. and online equity trades are only $4.95... i mean you can't have low cost and be full service. it's impossible. it's like having your cake and eating it too. ask your broker if they offer award-winning full service and low costs. how am i going to explain this? if you don't like their answer, ask again at schwab. schwab, a modern approach to wealth management.

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good wednesday morning, welcome back to "squawk on the street." i'll carl quintinilla with sara eisen, david faber at the pink that >> our road map will start with stocks >> busiest week of earnings season continues boeing, at&t, texas instruments, we have you covered. >> and fighting with the fed the president stepping up his attacks on chair jay powell.

we'll take you live to the white house to get more details. let's get to the market's wild ride. big stock movers driving the major averages today ph morgan brennan keeping a close eye on transports, mike santoli with the u.s. grading the markets retest we'll begin with phil. >> the stock is getting a nice pop and it's easy to see why when you look at results from the third quarter. boeing beat on the top and bottom line. how strong was execution check out the free cash flow most were expecting $2.5 billion. it's the commercial size of the business working for boeing. that's the primary reason why the company is raising full year guidance commercial airplane delivers are improving. they had problems with the 737 and the supply chain but they

have been improving that there's no slow down from china. there's been a lot of hand wringing about whether or not the trade tensions between the u.s. and china would lead to a drop in orders or deliveries so if you look at shares of boeing this is a company that is raising its full year guidance by more than a billion dollars in terms of revenue. that's the commercial sides of the business that is in execution mode we're about a half hour away from the earnings call, we'll see what they have to say in terms of what they see with the market but when you look at this quarter, this is about as good as it can be for boeing. >> phil lebeau on boeing which is up though not as much as at the beginning of the session. diana olick has new home sales numbers for us in washington diana? >>. >> a huge miss, the number came

in at 553,000 seasonally adjusted for new home sales in september. the street was looking for 625 and the august number was revised down substantially so a big drop, 5.5% month to month on newly built home sales. this is an incredibly important number because september is when we saw mortgage rates spike and these numbers are based on signed contracts, people out shopping, looking at newly built homes in the show rooms and deciding whether or not they can afford them at this new mortgage rate up over 5% now so clearly they're saying they can't. that big drop, we saw inventory of new homes go up to a 7.1 month supply we were at a 6.1 a month ago so more new homes available but people are not buying them also the median price of a newly-built home, $320,000 in september and that's a drop of 3.4% year over year so builders seeing prices come down whether

it's not the mix of homes selling, lower priced homes are sell thoorg builders are saying, look, we can't get the premiums we had before but clearly mortgage interest rates, that jump playing into the new home sales number that will hit the builders today. back to you guys. >> just the latest in a string of disappointing housing numbers. we're getting new comments from dallas fed president robert kaplan steve liesman has that for us. you know the fight between powell and president trump dallas fed president robert kaplan does not agree with the president. he is saying in an essay the fed has gradually patiently raised rates towards neutral. he says there's no longer a need to stimulate the economy he said the fed will do what he will do is reassess the economy in the spring or summer. he says the fed must balance the risks in raising rates and he sees the funds rate at 2.75% to 3% in 2019 so just doing the

accounting between 2.25% now, 2.50% so it's one or two more -- sorry two or three more hikes from here. he says the fiscal stimulus has raised the short-run neutral rate estimate though he's concentrated on the medium and long term. he sees the growth impulse fading in 2019 and 2020. let's put it together and look at the outlook by the market for the federal reserve. 74% chance of a rate hike in december the next 50% market, where the market is more than half betting on the next rate hike is march, 2019, and they're not there for september so the market baking in one -- call it two hikes next year the fed pencilled in three and i think, carl and sara, that's where some of the debate is right now, what the federal reserve is going to be doing next year and what the market should price in now for that, carl. >> huge question, steve, good stuff. steve leaseman, thanks let's get to morgan brennan watching the big movers in

transports >> we had earnings from two dow transport components i'll start with the better of the. two norfolk southern is the leader for better-than-expected results. that's giving lift to other freight railroad stocks. however when you look at the transports, they are lower today and remain in correction territory. that's because of the mixed results from u.p.s u.p.s. reported a 20% increase but its revenues missed streets expectations and the reason? you had softness in the international business the focus here once again as we talked about with the other industrials has been trade and higher costs so you're seeing currency head winds, the company called out turkey and the currency moves we've seen there last quarter on the call you've seen the potential softening of global economic growth and the impacts u.s. policies on trade have had and rising fuel costs. now, on the call in terms of those trade -- that trait discussion, what we heard from

the company is they applaud the negotiations of the u.s./mexico/canada free trade agreement but unresolved issues between china and the u.s. and brexit are focuses for their customers. so some of the major multinational companies are assisting them with contingency planning and helping them to adjust their supply chain. they say they are seeing what they believe is an inventory pull-forward ahead of the 10% tariffs moving to 25% the beginning of next year but that's not the only focus for u.p.s. revenue is still majority from the domestic side of things. the company is expecting peak season forecasts to deliver almost 800 million packages between thanksgiving and new year's day that will be the other focus is how they can pull this off and how profitable they can be in the process. >> like so many other big stocks, the focus is on the negative shares down almost 4%. thank you. morgan brennan on u.p.s.

let's bring in mike santoli on post 9. he's grading the retest we've mean the market what say you >> i would say b-minus i don't know if there's an a-plus in terms of grading and whether the comeback was a true low. i think it's a plausible low let's go through some things it checked off boxes you would have liked to see check to see that maybe the market is setting up far being a reasonable low. we obviously stretch the indexes below those lows in the s&p 500 of october 11. you didn't find aggressive buyers so the market bent but didn't break it stayed above the year-to-date flat line level. that's the good part it's good to see a partial recovery throughout today. i don't think you have any kind of panicky cathartic flush near the lows a lot of measures you would like to see weren't there but you don't always get that. it doesn't always line up so neatly it's a process, not a moment so

you have to look at sectors. so a lot of the beaten-up stuff bounced the hardest. home builders, autos, the hardest-hit retailers, they did get relief and that's an ingredient of what you would like to see in a rebound but still banks weren't doing anything they were underperforming so these things show the bulls have a lot to prove, especially on any rebound from here so i also finally think there is a bit of a watched pot problem here because everybody is sitting here waiting vigil for this magical retest and by the way, guilty as charged. >> i remember going into october some said you often see changes in leadership within the month so are home builders a sign of that or is it a sign of people sniffing out lower sflats. >> it seems to be relief almost like profit taking on the shorts and what led you down will be the first thing to pick up again so i don't know if i'm going to tease that much out of it i think it's the growth stocks that have to come awake again because that will power the

indexes and show you the same bull trend that got us here is still in place. >> not happening today. >> no. >> we'll see microsoft tonight, alphabet tomorrow. >> that's a big one. >> thanks, mike. let's look at a closer look at the markets we got this 8.5% drawdown. you've been skeptical all year do you get less defensive now? >> no, i mean, on the one hand the fed is tight if you look at technical things like the fed funds versus interest on excess reserves or if you look at this cross currency basis, how hard it is to obtain dollars. the fed is pretty tight but the fed really has no choice but they have to keep going until something breaks and what will happen is the market will break before the fed reacts. i'm not stepping into this.

>> what does break mean? what do you mean the market has to break >> well, i would say a major correction, around 15%, would make me more interesting and this market -- >> that gets powell's attention? >> no, i think powell would need a little more than that. he said in the last press conference that unleveraged assets like stocks are of less interest to the fed than leveraged assets like bonds and clo's. i don't know that the fed will be that alarmed by the stock market we just found out last february when former new york fed president said the 10% decline through february was small potatoes. >> that's reassuring david, where are you on this and the degree to which asset price is coming down is doing the fed's work for them. >> i think it is and the fed is watching more closely than that. i think they've got the message from the equity market and maybe

fed officials that have more political biases are happy with what is gong on but i don't think that's the mainstream committee and i believe jay powell made a serious communication error back on october 3 and that's what this whole correction is about. we talked about it last week on this show or one of the other shows on cnbc and this has set the stage for people to think about how they're discounting these earnings which are coming in pretty strong and a decently strong economy but there are breaks in interest rate sensitive sectors and jay just said this comment about being a long way from neutral and it threw the bond market off which threw the stock market off my guess is he walks that back and we are not a long way from neutral and that will be a time for a pause at some point next year and that's a place where we'll see another liftoff in risk afterwards. >> cnbc.com is running a story outlining the neck kpif

commentary on earnings calls about tariffs and trade and it turns out it's adom unanimous theme. why does that seem like a surprise to this market? all the way up there was an escalation in the trade fight between the u.s. and china and stocks brushed it off. feels like now it's coming as a surprise that companies are worried about it, it's impacting cost and demand. >> i think if you're going to be an analyst in this market you have to be a trump whisperer, you have to get inside president trump's head and he's a deal make sore he has a meeting november 3 in buenos aires at the g20 with xi jinping of china. maybe he wants a deal and that would be bullish maybe he's going to ramp up the pressure and get the best deal he can and that would be bearish. nobody knows and that's why the cfos are talking about it because trade and tariffs will be with us for a long time as issues. >> david, we've had some who say

this rhetoric from the president is going to stiffen the spine of the fed and perhaps they'll do rate increases to prove they're independent. do you buy into that is it part of the overall view point now? >> i think picking a fight is a big mistake and i think they'll probably view it that way. at least the top of the committee, the chair, vice chair, et cetera the history of the fed fighting the president, whether you go back to phil martin and lbj or nixon and arthur burns, i think the history is the president holds a lot of clout and it's messy to go against him. now i think this rhetoric is more unusual than what we've seen in the past and probably more blow hard than in the past given this president versus others but i would say the fed is going to have to think very carefully about trying to go with the models and suggest that there's some inflation risk. the fed has missed inflation so

badly in the last 10 years, and particularly in the last six years in terms of its 2% target, missed by over 60 basis points on averager if year, the idea that they need a smymmetric 2% inflation target -- that symmetry argument fell by the wayside and got replaced by the overheating argument and i don't know where that communication breakdown came from and i think there are political motivations at the fed and the president is probably right to call them out. >> what if they pause? what if they shock everyone and pause? does that kill the credibility >> i think they have a legitimate story for pausing, the inflation data have not performed the way they thought so why should we believe their models on a forward basis? they've been dead wrong so i think they have a reason to do it they may look like they're kowtowing and that's a problem so the walkback would have to be

over a longer period to preserve it but they have every reason in the toward do it and i think they are coming closer to the end. they've tried to say that in very -- in a complicated and convoluted way, at least when it comes to jay and that's where they'll end up and they may set us up far december n december and that could be what the market looks to in terms of the guidance we get in december. it should be good news for the market. >> we'll find out. bostic and bullard give us more as we keep our eyes open for sped speak good to see you both, barry and david. >> thanks for having me. when we come back, shares of boeing soaring, adding the most points to the dow which is negative 52 right now. the aerospace giant reporting a big deep and gordon bethune will be with us take a look at the

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forecast joining us to discuss what to do with the stock and why boeing is having a winning streak, former continental airlines ceo and cnbc contributor kevin bethune and ken herbert. good morning, gentlemen, welcome to both of you how much do you see boeing's success and numbers, the beat and raise, as just a function of the strong air traffic growth we've been in over the past few years? >> i think it's a continuation of a multiyear streak of innovation and design and technology, reduction in fuel burn and, quite frankly, a strong defense sector so it manifests itself with big wins in the commercial market and now topped off with big wins in defense. >> it's got the stock cooking long term. one question investors are asking, ken, is it boeing-specific or at least aircraft and defense specific

relative to other industrial which is have been a string of disappointments from cat pillar to texas instruments to 3m >> that's a good question -- >> ken, that was to you. we'll get back to you, gordon. >> i would say this relief rally you had coming into the quarter significant concerns around supply chain you're starting to hear more about tariff and trade issues but they haven't yet materialry impacted demand internationally for boeing's commercial products and this quarter was about better-than-expected results on the commercial business which is driven by the 737. the defense business put up weaker margins and the services business was spotty so it's a relief rally driven by, yeah, strong special economize and the cash flows driven by that business continue to surprise. >> gordon, what were you going to say about the macro economic environment and how much boeing is vulnerable?

jim cramer made a good point on twitter that they're not as susceptible the foreign exchange risk because they snell dollars. >> that's been true and jim the right. i'm talking about long term the 787 with composite technology is a stepping tone to continued a vancement vancements because you have to get that lower cost which is a driver for all of us i think they can hold that edge for five to ten years. >> when you talk about boeing having the edge, are you folding in that stuff, too >> sure, because the a-380 was the wrong move it's too big an airplane as was

the a-340 and the twin engine, this new 779 will be the largest twin in the world and it will come home and reduce the cost for available seat mile which is is a heck of a hedge for fuel and gives you price competitiveness in the marketplace so it's just a long-term strategy that is paying off and i think will continue to. >> what is the right valuation if boeing is trading 22 times earnings it's a premium. does it deserve that how high can it go >> it certainly deserves a premium and you look at the scarcity value and boeing benefited from that and other industrials have faced their own issues investors want to focus on free cash flow. the street assumes $35 a share is where we can get steady growth and free cash which gets

know 375 i think the stock is start of reflecting the upside. i'm cautious, you mentioned the new aircraft and they're phenomenal airbus has an advantage on the narrow-body aircraft with its a-321 product. boeing will probably launch a new aircraft next year, the mid-sized aircraft which will reflect a change in sentiment from investors to more investment mode so you couple that we emerging market risk, but boeing is incredibly levered to the emerging markets. one of every three narrow-bodies going to china and india and other parts of asia and the middle east have been growth stories so there is very little margin for error if anything happens in those parts of the world with demand, there's very little margin for error. >> we're trying to figure out whether the u.s. economy has

peaked last time we saw air traffic demand decline was 2009. where does that fit in what early indications would we look for >> i'm not sure those declines are most temporary because as you notice it's recovered strongly the global economy is driving everything but air transportation is what makes the economy run so we're going to see an increase, continuous increase in the utilization of air transportation as it gets less expensive and as models become so versatile you can move them from different marketplaces, long haul, short haul where they can be efficient and not locked into like an a-380 which is only good for long haul high volume traffic. >> gentlemen, we'll leave it there. both of you quite positive gordon bethune and ken herbert. >> thank you very much. >> thanks, vary. when we come back, shares of

at&t getting hit down better than 6%. david will bring us up to speed on the results and the updates from the earnings call a quick check on the major averages, boeing helped with the open but that's faded and then some dow is down 35 and the s&p back 29.

welcome back to "squawk on the street." let's give you a look at shares of at&t. you're getting that look right now. the company reported a miss on earnings adjusted quarterly profits was 90 cents a share however revenue beat the company says it continues to anticipate full-year earnings at the high end of its projected range. you can see what's happening that's not insignificant for a widely held name such as at&t which is now down more than 20% for the year why the reaction well, a lot of it having to do with directv and directv now remember, of course, the directv deal is the one that preceded the time warner deal that $100 billion deal completed not long ago and seems to be moving along okay directv, the sublosses continue apace and they are not making it up with additions to their over-the-top platform directv

now. they added only 49,000 subs, they had been adding subs at a rate of last quarter 342,000 to put that in perspective. whereas directv, they keep losing subs there. 346,000 third quarter, 262,000 second quarter, 187,000 in the first quarter. that seems to be going one way overall the wireless business, 481,000 net pre-paid phone sub ads and wireless revenue grew 5.1% important to point out the company is generating a good amount of cash cash flow from operations was $12.3 billion for the first quarter, up 12%. randa randall stephenson pointing out that pre-cash flow was a healthy

$6.5 billion that's being added to as a result of completing the time warner deal, the focus here on how you make money from the over-the-top platform when you continue to lose high-paying subs on the directv platform john donovan who runs the wireless business discussed it on the call as well. it's interesting he notes that a lot of customers, or about a third of the base, they jump from promotion to promotion and they spin in the industry. there's something they like on hu hulu then they sign off of that and there's something on youtube they like. so they're learning where and who those customers are, what people are viewing, what they expected he says it was far worse than what they had. not sure what he is referring to given the market is not happy with those numbers overall from directv sub losses and directv lack of additions.

and it contrasts with verizon's quarter which is a wireless company and they had good numbers yesterday and the stock was up sharply, not today for verizon, but it's up over 7% for the year, at&t down 20%. carl >> all right. >> i think we have a live picture here we want to go to saudi arabia because the crown prince mohammed bin salman is expected to have his first public appearance and first time we will hear from him at their showcase investment conference tod today. this is the first time we're hearing from him after the death of jamal khashoggi when he speaks, we'll go to it remember, this entire investment conference known as davos in the desert has been overshadowed by the controversy surrounding khashoggi's death. many high-profile news makers have been scheduled to be there.

everyone from imf chief christine lagarde to steve mnuchin finally at the last minute, jamie dimon and others so not the event they were hoping for here. >> although many looking for money chose not to go but the ones who already have saudi money they felt they had to go then they walked an interesting line where some decided not to appear at the conference but they're still in saudi arabia or not speak at the conference. >> or send your sales reps, not go yourself. >> but generally those doing business with them still went to some extent or i should say they're not stopping doing business with them even if they didn't attend themselves. >> sort of the high-profile top executives had to pull out over the optics of this. >> a.p. now saying erdogan has talked to mbs by telephone which adds another new chapter to the degree to which they communicate.

good morning, everyone, here's what's happening at this hour the secret service says it has intercepted two suspicious packages that were designed to go to secret service protectees. late yesterday one was addressed to the former first lady, hillary clinton, in westchester county, new york, early this morning the other was addressed to the former president obama in washington the white house says it condemns the attempted attacks. and cnn's new york headquarters has been evacuated the nypd says it's due to a suspicious package in the mail room they cannot confirm at this point whether that package is similar to the ones sent to the former president and the former first lady. in brussels, nato's secretary general says russia is in violation of a landmark nuclear treaty and called on moscow to comply with the deal in a transparent and verifiable way. >> all allies agree that the imf treat gee important and that's why we are so concerned about the russian behavior

all allies, of course, agree with the united states that the united states is in full compliance with the treaty. and there is a winner the megamillions jackpot drawing the winning ticket was sold in south carolina it's worth $1.54 billion, just shy of the world record. the earlier estimate was $1.6 billion which would have been a record but sales came in a bit short. i don't think they'll miss the money. that's the news update, i'll send it over to jackie deangelis. the eia out with its weekly number on crude inventories. we saw an increase of 6.35 million barrels on gasoline. so going in opposite directions here but that's typical at this time of the season, gasoline demand continues, crude stocks will build but both were more

extreme than estimates so up about 15 cents since the report came out but a huge drop yesterday in with -- wti so the momentum is to the down side on the u.s. side, 10.9 barrels a day, still on the high side so supplies are still there the concern when it comes to crude is alongside the stock market will demands start to slow down? >> a little pop today, up almost.75% jackie, thanks when we come back, we'll take you live to the white house as the president steps up his attacks on fed chairman jay e dow is down 25 points. "squawk on the street" will be right back

welcome back to "squawk on the street," i'm sara eisen with carl quintinilla and david faber live as always from post 9 at

the new york stock exchange. volatility continues to rock this market. it's been a theme for the entire month of october john ford is out west looking at the big move out from texas instruments as semis are on pace for their worst month in a decade brian sullivan has a check on energy eamon javrs jav javers is folloe president. first, let's start with jon. >> texas instruments down over 4% after a revenue miss. demand is softening everywhere except 5g. texas instruments makes analog chips that translate digital signals into sights and sounds that means they go into everything from tvs and phones that communication equipment is one area that turned in decent

performance versus expectations. it's not as though everything is shrinking, just that growth rates are tailing off. this as the s&p semiconductor is negative for the past 12 months and year to date it comes as we await earnings from chin giant intel storm. intel shares have been declining since june since the company's had trouble supplying pc chips intel is now likely to face questions about softening demand david? >> thanks, jon, jon fortt. oil stocks are the third-worst performer this month. brian sullivan is looking at the energy sector for us. >> they're getting worse today let's look at the xop as a benchmark. the xoi is the big one that has the exxons and chevrons. down again even though the price of oil is up and it's been a month to forget as the price of

oil has gone down investors have lost a lot of money in the stocks, look at the biggest cap names. marathon and hess down 14% and 16%, occidental down 14% that's just in the last three weeks of training. even worse, the smaller more midcap aoil names, wow whiting petroleum down 27% newfield, oasis, liberty oil field services all down. in fact, there's about 80 to 100 stocks i track on a daily basis. two. two of them are up in the month of october cabot oil ands go, i won't mention them so a month to forget for oil price of oil under pressure. we'll watch this developing story as it goes on. we'll see if the saudis keep pumping to keep trump happy and if investors are not happy

back to you. >> all wrapped up in a bunch of different puzzles. brian sullivan watching oil. as for the president, he isn't easing up on his attacks on the fed chair. >> it's been a drum beat against the federal reserve and jay powell the president giving an interview to the "wall street journal" yesterday afternoon and continuing to heap criticism on jay powell saying -- he said he thought jai powell would be more dovish he says he was supposed to be a low interest rate guy. it's turned out he's not so the president there suggesting he's disappointed in his performance. the president complaining about interest rates more generally and comparing his era, the trump era to the obama era saying i'm just saying this, i'm very unhappy with the fed because obama had zero interest rate

so the president very much regarding this as a competition between himself and his predecessor in terms of who can generate the best economic performance despite the fact that these two presidencies are occurring in very different parts of the economic cycle and i should add, guys, the president also talked about tariffs in that interview with the "wall street journal," suggesting we don't even really have tariffs he said it's basically just steal and aluminum, it's not that much, it's very small so for market participants who are pointing to tariffs as a reason for weakness, he said he thinks ceos are blaming tariffs for their own poor performance and it isn't a real factor in the economy given the small size of the tariffs. >> maybe the ceos and cfos are the next to get blamed eamon, thank you. >> you bet. >> let's get to steve liesman looking at the connection between the markets and the economy or maybe it's a disconnect >> that's a better way to put it usually it's the economists are

the pessimists, traders the optimists. it's been that way for a couple years now but there's a role reversal, traders focus on the bad news they see in earnings while economists keep their eye on upbeat economic data and the question is where the forecast is let's look at the market bears versus the econ bulls. thanks to lynn in our graphics department the bull case has earnings in it up 25% year over year for the third quarter so far unemployment rate 3.7 seen declining. gdp 3% this year and inflation relatively quiet on the right side you have concern about tariffs and two big interest rate sensitive sectors, housing and autos and the fed raising rates would be -- those are four components not to mention the global slowdown let's look at the s&p 500 by sector since the market topped

at the bottom, that's the sector brian sullivan was talking about. energy the leading negative and the ones at the top that you see as the most positive or least negative, some look like recession or growth slowdown trade which is interesting as to how the market has traded since the stop in october 3 where both sides agree a slowdown is coming economists generally see the effects of the tax cuts wearing off next year and the year after and stock watchers know as much as half of these current 20 plus percent earnings gains could be from the tax cult and they debate where growth will go next year i think there are 5ers out there and 10ers out there. and the 10s see double digit earnings growth whereas 5ers see a slowdown around the potential of the economy or the nominal potential of the economy. >> and your point about the tax bill u.p.s. had their tax bill cut

almost in half this weekend. steve, thanks for that dow is down 118 so you're looking at declines from the highs of more anth 200 points, "squawk on the street" is back after this don't go away. (sounds of race cars) the same iot technology on the ibm cloud that helps race teams improve performance and safety. bye. girls, don't wave at strangers. can now be built into everything we drive. when you apply expertise across an industry, bye! you can put smart to work. bye! whooo! want to take your next vacation to new heights?

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industrial stocks tanking after a number of disappointing earnings are there any other so-called siren stocks that could take down the market? find out on tradingnation.cnbc.com more "squawk on the street" is coming up. ♪

whether it's a big thing, small thing, or something unexpected, pnc will be right there when you need us. because when it comes to your finances, if you focus on today, tomorrow has a way of working itself out. bank stocks extending their losses for the year, look at the xlf etf, trading in correction territory, which means down more than 10% from its highs in the past few weeks amid the market volatility joining us for a closer look at banks and what to do is gerard cassidy, banking analyst at rbc capital markets. what is the message the market is telling us from the financials >> i think the market is telling us it's a risk-off market so

bank stocks are considered to be risky. so we're seeing the risk-off names in the banking sector like a u.s. bancorp or m & t bancorp doing better the market is telling us, it's a risk off market. >> does that make sense to you i was talking to mike mayo getting some attention for a note saying he's bullish on all five of his big banks. notable because he hasn't always been. >> very true i would say we're in that camp as well. when we look at what is going on in the banking sector, it is very positive. the numbers reported, and they all finished up yesterday, the last of the top 20 banks came out yesterday and earnings were up over 30%, granted that was tax rate related but we saw double-digit earnings growth and solid credit quality. more importantly, it's the economy. if we get a good print on friday for the real gdp number and the expectation is that it continues to grow next year north of 3%, loan demand will pick up and i

think that will be quite positive for the banks. >> but it hasn't we've got higher rates i know we don't have a steep yield curve but there's been an expectation that a net interest margin would increase, that loan demand would increase with already what's a pretty strong economy. what's the problem >> good question or questions i would say part of the reason is that the tax reform that came in december, if you talk to many tax experts, i think it took many companies two or three quarters to figure out what does it mean for them, so now we've got that behind us we also have great cash balances at many of our companies that don't need to borrow what's interesting is every friday the federal reserve gives us the loan data it's been steadily increasing. granted, it's not 9% or 10%, but it's growing at about 4.5% year over year. we're a mature economy, the banking industry is a mature economy. if we could get nominal gdp growth in loan growth, that would be quite positive for the

banks. >> you mentioned credit quality. junk bond yields might be getting a little interesting there. what would you make of that or different types of subprime loans we used to talk about all the time >> i would say credit in the banking industry is as good as we've ever seen it. >> pristine. >> i would totally agree with that comment because we put safeguards in from the financial crisis, the problems in credit this cycle will not be dominated in the banking sector so there wasn't any real credit deterioration that we have seen so far. >> so when powell talks about leverage loans, he's talking about nonbank assets >> most of the leverage lending is being done outside the banking industry, but you bring up a good point, carl. there is more of it coming into the banking industry in the last two years as they have relieved the banks of some of the restrictions >> another bank analyst in defense of the big banks right now. gerard cassidy, thank you very much. >> thank you, sara. time now to send it over to morgan brennan and get a look at what's coming up on "squawk

alley. >> we're sitting at the lows of the day with the dow down triple digits we are all over this earnings-dominated market. we'll talk about that as we come off of conference calls and look ahead after the bell with big tech names like microsoft. we've got at athnd so much more coming up on "squawk alley."

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welcome back to "squawk on the street." i'm dominic chu. stocks are hovering near the worst levels with technology stocks the worst performers off by a percent or so within that tech sector semi conductors the lowest. that weaker guidance is weighing on amd, micron and nvidia. take a look at smh that index is now tracking for its fifth negative day in the last six and on pace for its worst month in a decade or so, so semis still a very big hot spot in this market, sara. back downtown to you guys.

>> really ugly action in that group. dom, thank you. coming up later today on "the closing bell" which is going to be an exciting show because we're going to get earnings from ford, tesla, microsoft, visa and the aforementioned amd earnings continue to whipsaw this market. we will be all over the numbers, the commentary and the reactions as soon as they cross. 4:00 p.m. will be interesting. >> an interesting day already. the dow obviously reversed a session high of up 114, now down 123. "squawk alley" starts in a moment

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