retails. some of the stocks are down 10%. look at the bottom of the ticker, apple. nvid nvidia >> what jim cramer just said is really important you will listen to him right now on "squawk on the street" of what else he has to say. >> you want to sell now. >> make your you join us tomorrow, "squawk on the street" begins right now good tuesday morning, welcome to "squawk on the street," i am carl quintanilla with david faber and jim cramer on the new york stock exchange nasdaq's seventh months low. as we get closer to retesting of october lows analysts is rushing to downgrade tech today

10-yr yield is down for the seventh day as we approach two handles since september. let's get our road map stocks are lower continuing yesterday's losses apple closes in a bare market. amazon is not far off. is the fang trade over >> plus, we got some what of a retail wreck this morning after mo months after the ceos calling it the healthest environment ever retailing are sliding as well. stemming the sell-off, jim takes on what makes be fixed before the stock blood bath stops apple is on track as we said to open down more than 20% from its october high the dow and s&p have slip back jim, dom chu has been doing some work on aggregate fang market cap losses from the highs.

almost a trillion dollars. >> it is what happens when you are not doing well >> facebook, there are real issues here. don't forget before all these things happening, there were slow down issues amazon, people feel they miss the quarter. i did not think they did that was the perception. apple, there is a piece out today, goldman sachs using the price target was below where it was this morning already. alphabet had a good quarter again. people don't seem to care, that's the best of the lot.n netflix, people just decided it is expensive it is not really time to buy adobe. it is still up a lot it is time to buy truliu all these companies are great. they all got too high, they have that in axon acommon and the wo

slowing. there is a great piece of ft >> there is micron and the ligthizer profile. >> i remember when trump was elected, this is going to be a hit in the stock market. part of the pain is in the stock market you will get your tax cut. if you don't understand that and get out of the way the companies that are going to be hit are many of the companies that you liked after the tax cut, i had felt that maybe that would be something i would be worried about. >> it is funny how quickly sentiment has seem to tumble corporate credits suddenly, it has been a while since i pick up

the phone and somebody want to talk to me about corporate credits. it is not that bad it is nothing like 11 years ago. it is certainly an issue it is added to a list of things that investors are concerned about with the slowing and the china trade war and wahatever, the fed and there it is. >> we are having dividend cut. >> l brand, they're telling people they're pretty good you don't slash dividends when things are good. i am looking at century link if you want to get in there, get in there >> you always kind of think when you see a number like that, that can't be sustainable >> you mentioned software yesterday. the worst day since early '16. when it comes to adobe and service now and paypal and mastercard, would you rather buy those or would you buy little v

pfizer >> it is one of the great markets in healthcare. one of the best i have seen. let's not forget that if you are sitting in your non diversity portfol portfolio, you are trying to figure out what the heck are they talking about these are tremendous decline people don't want to give up their quarter or lives >> you know i have talked for quite some time now about hedge funds and so much of faang needed to take their net dos don i am hearing market neutral basically, jim

>> yeah, how did they do >> they're starting to feel the pain the pain is spreading on those taking a lot of risk on the market and therefore selling to those that now even hedge and hedge very well so they thought. >> we are not done yet >> i agree >> kohl's is a pretty good company. matthew is pretty good poor quality number. in another time you would s say -- beat the quarter. target target has 49% comp. >> inventory should -- go up to walmart. walmart was not a line that was bad. it goes down pretty consistently >> i was going to say. guidance raises from l-brand and best buy and kohl's.

it is really not that far off from 5-1 this quarter. >> brian kornell says this is the best ever. i think target is a good company. it will come back. not today. maybe they'll ask for a couple of days. target will be for yield target is not doing badly. the narrative is last good quarter. what are you looking at? i am just saying there is a time when 5.1%, a comparable sales growth would embrace >> we would say bye bye bye. we don't know what the feds are going to do. humor me here, 11% comps the stock got killed they do have 7%, their boots are made in china. well, geez, you can't have anything made in china you can't. you got these two prongs of the october 3rd, judy woodruff

interview that can't be taken b back because there is such a thing like youtube you can't negotiate to sell goods and also call for a regime change >> although i mean the ft had this piece on lighizer today something that you did champion to some degree >> no, i am still there, i like higher stocks. i prefer people to make money than to lose money when he took on the belt to write the initiative, it is meant to undermine the u.s remember the head of china is there. >> yes, he was there >> he's the belt and road initiative is a way to take your country over by charging you too much in debt and you have to

fall and china owns you verses us using exxon exxon does not own you after you put your pipes in. they're talking about godless. remember those days? a lot of people feel the pope brought down the soviet union. >> all to figure out the contour relationship with china over the next two years >> g-20, do you think it will go well >> i don't think it will go well but you never know >> could be the heart of the deal we'll see what happens >> we'll see what happens. >> well, that's great. >> again, i favor being tough on china and i just think there is ways -- the guys are tough on china and pushing trump as tough as pence his last kmecomment. >> well, he's not acting on his

own in this administration, i don't think he is. >> do you think people are looking at whitaker? >> no, they're looking at the deterioration of the economy and how quick it is happening and the fed is looking at one number which is employment number and employment is going to lag being something. really great analysis. really, very good. why is the market sniffing out 40% chance of one more hike by the end of next year 40% chance because they feel that powell sees things. powell, it is really hard to throttle back from his retrospect looking like a p pre-2007 where he got no dated

dependence he still thinks you are good people are very, very worried that it is the last -- marvin ellison, the lows in the note. really, he says he executed p r poorly i hear close under performance stores i hear unemployment. i hear unemployment. when you have closing of stores, you have unemployment. >> you are still adding a lot than subtracting >> steve liesman, great job market i got to tell you something. it is not going to be great. what do you think these sell-offs are about? >> target is still expecting comparable sales growth of 5% per quarter.

>> it does not matter what they are expecting. >> i don't have to go back that long >> they're growing 5%. >> i think tjx >> how do they do it >> how do they do the great ecommerce? walmart when it came out it was superb. this was all last good quarter the nitpicking that matthew brought up that stocks can be down at 12 today it is really painful and a great win. you know when you read the downgrades itself and switching to tech. we are taking by micron and bare its got a full multiple. the numbers are coming down. the numbers should be coming down facebook. >> that's true well, you mention downgrades today of micron.

we got goldman cutting their apple target the micron target cut goes from 120 to 44. yeah, that's almost facetiously. >> they kind of got it wrong >> why the incremental >> yeah, look i am going through -- i was on the urban outfitters it was going pretty good the conference call was bad. it was disjointed. l-brands, they bring a guy from tory burch and trying to fix victoria's secret. but, if getting it under control is a dividend cut of 50%, i don't know and you know what we have not talked about yet today, john lynch comes out, liste listen -- he used to be the biggest industrial

don't give me the oh no. you could have campbell. >> it says everything you need to nknow when campbell soup's earnings is the highlights >> i got these earnings. >> i had a bloody mary on sunday, killer two was decent what's the matter? oh, don't give me the music. i am almost done here. i am not done, okay? >> we'll come back >> all right, we'll come back. i was going to give you new insights sky works is down 37%. apple is horrible. >> so isaac newton >> we are bracing for an extension of monday's sell-off kudlow is own the tape even as we speak take a look at the premarket, more "squawk on the street" from

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i don't see way around it until these problems get fixed i have been highlighting these issues, it fells like ages these have only grown more acute with time which is why we'll be headed lower

>> that's jim on "mad" last night outlining ten problems that needs to be fixed >> it is an order of priority? >> yes and facebook's numbers are bad we got to clear up with the g-20 and fed hike i think the most important one frankly is that we have to recognize number four is probably the most important thing. dip buying has failed. beginning september 28, dip buying has seriously failed. data center slowing and people did not want to recognize. the adoption of the cloud, people think it is slowed. diane green is exiting >> chief at alphabet >> we still have a lot of people coming on air that got to buy the dip. that's not working

it has been right since 2008 so you are talking about ten years where it was right by the dip. and now -- look at nvidia being the classic. you had a dip from 260 to 240 and a dip from 200 to 180 and 180 -- i mean this is not a dip. i mean it is k-2 i will jump off k-2. it will be fine. this is what dip buying has done we have to recognize dip buying was the operative way the bulls made money it is not working. every sale with the exception of the sales of the healthcare stock has been right >> you agree bitcoin matters here >> bitcoin turns out to be very important.

intel is still a shortage and the high end nvidia was when you go over the data center, they did not know where their cards went to. there was a big backflow you can return cards by the way. it is $500 a card. you can return them. we didn't realize the chain reaction of bitcoin. a lot of people are getting $5 million in inventory. not that was so important. here we go this is timely yes, bitcoin and ripple, if you say something bad about bitcoin, you can't walk outside there is -- people really thought at nvidia that those

cards being bought by gamers no, that's wrong now, should nvidia be down it is a pretty good company. >> pretty good is that all you got for them >> if the data center is slowing. i was at dream works for the week of the data center theory. this was great look at rometi when she bought red hat. that's to get under the cloud. david just said an element of truth. it is not clear that -- when you look at ecommerce and target and 49%. that's the data center not slowing. it is still putting up a lot of these things >> yes >> you go to cyrus one, amazon data center. they can't build out an update center we have not been able to close

the narrative since september 28th october 3rd is the day for housing and october 4th is the day for international. that's the day that we declare war against. >> we didn't do anything with the soviet union >> they don't want to trade with china. when you trade with china, you are giving them the money to do the initiative that we are trying to stop they want to stop china. i told you what it was like. i told you it was like gold fingers. they don't want to trade with china. they want china to die >> we went through it with the japanese and in the '80s

the prc does not believe in the bible. they are godless >> david >> what? >> does not sound like g-20 will come back with much. >> trump can really change the narrative there. we'll get cramer's "mad dash" and count down to the opening bell it looks like the gain for the year will go red in about seven minutes. minutes. don't go away. if you're waiting patiently for a liver transplant, it could cost you your life. it's time to get out of ne with upmc. at upmc, living-donor transplants put you first.

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before we get trading on tuesday. a short week with the holiday. after a poor day for the market yet, certainly if you are long, you can see the s&p is looking to open. it will raise the gains for the year >> some of these prices -- look, there is going to be something worth buying at the hoopening. not all these companies should be down 10%. >> pepsi or mcdonald's or something else >> wow there is some others that are down look -- i think there is retailer so that you can buy i don't think it is the end of the world. the fed does not tighten and you will wish that you are going to buy. i want to go -- >> yeah, let's get to the "mad dash." >> there is a fellow john lynch, he's talking about the baker use

of ge company fire sales could drive billions of dollars. the pre-larry culp era, i don't know if it is the case he's talking about -- where bhge is marked verses where it is going. >> the sell-office not a large percentage there >> investment down or take a right down >> and these are the questions i don't know the answer by the way. i do think what he does say is why diplomdn't the debt market t positively to the news this is going to trigger an alarm and could trigger another notch down this is all -- this story line that we are at for ge. i am not sure it is the case david, i look to you i don't think ge has dire this

the credit market did not like that yesterday and i think china is trying to put a story to it it could cause a big mark down do you think the old g will market it down >> anything in the market that's going to give pause to investors whether they are on the equity side or credit side is going to get a reaction >> you got stories from the journal about them there are three notches above junk but there is no shortages of these stories that can get downgraded the rating agency right now if they follow through the plan, it is not clear at all that they'll suffer or not. >> i agree with that i think there is an element of subjectivity it is annoying and how about that i think it has a little more faith than this piece would indicate i am bringing out something.

which banks does ge own? start hearing that there >> hey, listen -- david, i am trying to be a distant warning -- hey, they just ran over me with nuclear missiles. >> nelson pelt, not too long ago, the relationship, putting losses on ge >> they did sell some stock in the low 30s. they were able to average down p. it is clearly a very poor investment it is not -- it is $2.5 billion. >> not to mention they had some dividends along the way. a terrible investment and even from here a double does not get

you back >> proctor is a great investment proctor was coming in with a plan for david it is working. i think -- they did not know >> there is the opening bell and the s&p 500 at the cnbc's realtime exchange. it is women's specialty retailer tuache >> if you are jay powell, do you say to yourself what that market needs? a big rate hike or a hawaiian punch? what do you do with that number? do you say we got to push it

back >> multi family was strong do you believe unemployment is going down to 3% >> we need to have e radicradic decrease let's take a look at retailers what was the single biggest thing that they were talking about that was bad level of inventory prices are going to come down. pbh is telling me -- is the market over done on the downside pretty soon. it is. >> come on it is not so badly >> so you are nowhere near -- >> i am looking for things to buy. >> all right recession odds are climbing into the 30s for the next 12 months >> it is a man mad session >> regardless of who made it

though you are not a buyer of commodities and bond spread are sniffing out a recession next year the fed can do things to change that they have to -- it is hard to walk back what powell said that's whooy the kaplan was so good it gave you a little room there. i mean if powell says -- all he has to do is one and win not one and done jay, i know you are watching give me a one and win. i will talk you up >> what? >> nothing >> one and wait. >> okay. that's going to be your slogan >> one and wait. can you believe the team puts up all those points and lost. >> i didn't watch the end. >> just trying to change the narrative. you know why i am saying that?

i want this market to rally while i talk sports. it is very difficult there are things that are down that i am intrigued by i am not kidding that's not -- you're down a thousand points in 30 minutes. i am looking for things to buy shoot me >> well, i would not do that >> okay, let's talk sales first. september 28th, it was a positive read. they report the 27th of november thises t is the biggest problem. it is still up 12% it is still up you hear me? >> yes, still up what the hell are you? >> i don't know. >> look at adobe it is up 20% what am i supposed to do

say this is the level? you see the charts >> you think adobe is vulnerable here >> i think it is vulnerable until it is down >> they are the best way to gauge internet commerce. if the stocks are down for the year, i would tell you to just go buy it. every time i look at a stock that i really like, i mean i have a really good read on twilio >> it is an interesting year where verizon and star is up again. v verizon is up 16% this year. i am going to buy it here. twilio is a great quarter. it was great

you usually would say it was great. >> thank you >> speaking of the quarters and bright spots campbell is up 6%. 20% of the flow is short >> you got to be kidding me? they don't like goldfish campbell, you know what they reduced expectations but they actually did better. the stock is up sharply. >> who would short the stock is that credit issues? its got a 3.5% yield i got a lot of companie companies -- mclaughlin is probably doing it right. they fix the dispute they had with walmart that was hurting them in terms of shelve space. i could imagine -- they addressed a lot of their pricing issues in terms of gaap.

brand name like progressio, the were losing some shares. all of which ends up being a year -- they put up decent numbers.n numbers. net sales and organic sales decrease of 3% sales are going forward of the fresh and international. they got the fight with loeb does he go in and try to accept offers and then potentially they add to these directors for the board. we'll see what happens there a strong quarter for campbell. certainly helping them even though the math was there way

once the family said they were in with management and the current board. there was no shot that loeb had. >> look, coca-cola is up again pepsico started the earning season i like the way loeb is acting. >> if you have things that are wrong at your company like execution has been sloppy and inventory is not right you would come out like ellison saying these are issues and we'll solve it i get encouraged by that he's out there saying we are dpoing to f going to fix it. i am watching as the stock could have a nice rally. i am watching the vix needs to get to 25. i need some retailers need to bounce some of the companies are doing really well.

service snap is having a great quarter. >> taking you back to august 22nd when kornell talked about the healthiest consumer environment. >> it is a healthiest consumer environment, i have been doing this for a long time importantly for us, we are building market share visually in every category. >> our kourtney reagan asked about whether or not he stood by that comment he says we see no change and consumers are very healthy comps areaccelerating. >> he better hope so i really like him. i like the format stores i think the target at 3.6% yield is very interesting to me. >> again, all those things are really -- i wish he had not said

it it made it hard for powell that was a huge retail >> powell says it was an extraordinary time >> look, i think what brian cornell -- he just became chairman what cornell is saying it is interpreted by the market now. you have an overall situation where the fed does not say one and wait they don't say one and wait and i think -- he's got way too much inventory and that's something that no one wants to hear. somebody are over reacting target is not that bad it is not. people still go out a little bit. i am not saying it is a recession. i am saying it is a slow down. i am saying that you can change that by the feds saying we'll do one and we'll wait to see if loan demand picks up we'll wait

>> what if we get a hot wage number the first week of december >> i think we'll say that's why they did the hike. he's protecting. i think he's a shrewd guy he can do that. just a second, stop trading, david. texas as the result instrument p >> wow >> building blocks of the economy right there. it is a good company >> it fell off 100 >> verizon would have to go down >> why >> what are you going to do that risk on and risk crap with me? pepsi is down. that could be positive that's what has to happen. the money has to go out of it. >> into which names? >> pepsi and coca-cola

it got to stop palo alto -- i think today could be reversal day. the key to the market, we need positive news in amazon. that's what we need. amazon has got to have some positive news to keep people in some of these etfs amazon is the key to the market. amazon had no evidence of anything being wrong it is back to that level nestor friday remember when she came on and said listen, i really don't like this rally and i think stocks should belower and praying for a recession. if we get good news from amazon. >> what? >> nothing >> i was not going to say anything >> i have something on amazon that i will share later. >> there you go, see if we get any good news for amazon

>> it was just interesting news. >> amazon did not do anything wrong. it was fine. kimberly clark is up that was bad >> remember the arcadia -- did you see the new york post saying they are still in stock. >> general mill is up. >> on that just a quick update they're not - what they are still talking about is significance investment. i report of the actual buy out of the company and not in process and not expected to occur. the post may be picking up on of our continued talk of investment just want to share that. >> you know what i like? i like a big down opening

where -- did we not get that yes. now that we got it, i can't say that's not what i want it is just the problem is it is a long day it is 9:42 between here and 4:00 is a lot of time. >> in fact, by my reckoning is at least over six hours and 17 minutes. >> you are a genius. >> is it incredible? >> we are below the november 15th low >> we are. verizon is the only green down name >> let's get to seema. >> the s&p 500 has had six straight years of faang gangs. that could put an end to that streak the dow is down about 416. let's talk retail. that's what's leading the target

lower. increase investment, supply chains weighing on profit margins and then there is lows it plans to exit some businesses earnings beat. soft guidance expects tough comps this holiday that stock is down over 4% zoning in on tech. take a look at how far faang stock fallen from perspective. facebook is down 40% followed by amazon and apple that's having a spill over across semiconductors, nvidia is down 50% since early october and it is worth noting the selling that we are seeing crypto currency has not evaded. stable earnings growth and defensive characteristics and a

dividend that's higher than s&p 500. it has been fairing relatively well over the past week if you take a look at utilities and verizon. a broader look across assets right now, gold is up and the dollar is actually higher right now, the rates ed's edging down with today's losses, the dow is down about 8% from its recent highs. a lot of focus on the nasdaq about 15% from its recent highs. about 5% away from entering bare market territory back to you. >> a quick diversion to merger and acquisition land if you will allow me a few minutes here. the story that i have been following that i have not reported lately until this moment it is interesting. i am talking about the sale of the regional sports networks by disney they agreed with the doj to sell and not even spin off but they must be sold of the sports

networks that disney is buying from fox a deal that's given to the chinese's approval that we got yesterday. >> thank you for mentioning that >> certainly in the first quarter. the time is coming they'll have time after that to actually close the transaction they're moving ahead in fact, i can tell you first round bids, first round bids were received and here is what we got why is amazon at the bottom of that i am going to get to in a moment in the first round, i am told people familiar of the situation. the banker who are selling this both said no club deals. give us a range of where you think you may come in, you are going to do it separately. so apollo and kkr and blackstone, all participating. as well as some smaller broadcasters sinclair again, they're in there with the

idea that eventually you are going partner. the biggest of all would be fox which did not submit a bid in the first round. we'll get back to that in a second the most interesting potential bidder here is amazon. amazon has bid i am told again by people who are familiar with the situation for all 22 regional sports network. it is also participating and this is allowed by the banks in a club deal for the s network. that's the single largest rsm out there. it is the yankees. and it is 20% owned by the yankees. the yankees, they have the opportunity to buy 80% if there is a change of control they are taking that i am told amazon along with black stone or apart of a group that's joined in the yankees in making a bid to acquire that out

of the family as is their rights amazon is deciding to bid a significant option for sports network. what's the plan? keeping them on cable and collect a fee? if you are out there as a high paying cable customer who does not want these things. the cable company now says now you can get it on prime so we don't need to offer it any longer we can eliminate in the bundle interesting choice perhaps they see opportunities and opportunities for them and the sales of tickets or programming or advertisements where we know they become an important player certainly when it comes to search on the actual amazon platform but many of the merchants need to do that as well so very interesting to note. back to fox before i wrap this up just because they have not participated so far does not mean that fox which owns these

and runs them and knows them better than anybody is not going to ultimately participate. they can end up partnering with a private equity firm and the government can be difficult to sort of figure out or they can choose to participate on their own in the second round of bidding. don't count fox out. though do keep in mind were they to pursue it would limit their ability to do anything else and we take leverage of fox. john malone certainly thinks fox is the best buyer. >> the best buyer is somebody who has other market power, right? >> potentially fox >> potentially fox where they are now >> right >> where they have been grown and nurture because nobody wants to live without the fox network and fox news oh by the way, you got to take regional sports, you know, it is a bundle ye >> yep

>> i think mclaughlin is the best buyer it would be embarrassing disney to pay 15 and turn around and sell it at 8 i think that's reality >> due diligence will commence next week. you are not going to get the second round until the middle, let's call itit, of december, it looks like haven't heard back from amazon yet, no comment from them. it is very interesting. >> just a second you slipped in a key piece of information, which is the government, chinese government. >> yeah, julia boorstin reporting it yesterday, confirmed -- >> just saying that was something -- >> big deal. >> -- we were worried about. >> some saw it as a positive that chinese approved it and others said where is the other deal >> glass half full, half empty it was interesting makes me feel like i like amazon more. >> we'll follow it closely and all the opportunities we may see there. let's check in with rick

santelli and those all-important credit markets. >> thank you, david. twos, threes, tens have all had today could be number six. the two-year bond holding above it's 3.25 better, seven yield closes in a row. they've been a little smaller. one week of tens look at the dollar index can't say the same there it is fighting what you want to know here is that concave rounding action we're getting as we kind of soft land around that 96 level. it's had a nice bounce up around a third of a cent today. everybody is talking about the credit markets and rightly so. although, how they've developed and how the spreads from the etfs have deteriorated isn't like past experiences in many ways it's a little different. they almost shadow box the equities usually the equities are kind of second in that caravan as the

credit markets start to get a little crazy look at midseptember start of 2014, the investment grade etf it's been a long time since we've been at these levels mid 2016 for the hyg etf we know there's a difference between etfs and securities although the pairing of the two may a bit more volatile feel during periods of widening spreads. if you look at barclay's, that's their high-yield index you can clearly see we're up 100 bases points awfully quick from 320-ish to 420-ish we'll pay close attention because this is now the new channel of worry for the credit markets. carl, jim, david, back to you. >> all right thank you very much, rick santelli as we said earlier, larry kudlow made some comments to

reporters a few moments ago, mainly saying that the president believes china would like to have a deal, says that the president has an optimistic view on u.s./china talks. those kinds of comments, jim, have lit up some algos in recent days not today. >> look, he's the president of the united states. but if you follow what happened in new guinea, the chinese don't want to deal at all. rolling back initiatives, the 2025 initiative, belt and road initiative he may think they want to deal but there isn't a single sign that they want to deal you could argue in china there was no sign they wanted to deal. maybe that's your hope but i think that he has to study what pence had to say because pence did it in order to make so there could be no deal. >> cessation of any further tariffs, leave the current ones in place, buy some soy beans,

shake hands. no >> if the smarkt domarket is do the president doesn't want that. and maybe he has changed his tune the market is bad. it's just really bad it's bad. >> by the way -- >> it's really bad it's bad. >> i see some things that are over -- for the most part, very early in the day, they try to rally early and you can't rally them until after we see the calls between 1:00 and 2:00. between 2:00 and 2:45 you watch to see if there's any upward momentum i'm looking at amazon. if amazon is up, i think that's very significant someone on twitter was saying, jim, i thought you just said apple was key. no the way it works, the way a rally starts, you pick a start that didn't have any negative news and the one that is most visible is amazon. you can't pick apple goldman just cut numbers

dramatically. >> boeing. >> boeing has bad news you have to try to pick a stock where there's no hair on it today. and see if that bounces. that's how i work. there's hair on facebook, negative stories about netflix i'm not hearing anything that's that positive -- you could watch alphabet if you wanted to but amazon, nothing is really wrong. it hit that level that it hit that friday and see if it bounces. guys on twitter, look, i love you. i've been doing this 40 years. i know how rallies start i know how they start. there's a method to them you just have to find which stocks do not have real negative news and see if they bounce. and then you see the money come out of pepsi and coca-cola at general mills because it's not enough money to drive things itself the other thing you could watch that i mentioned is intuit intuit had maybe one of the great quarters i know brad smith is leading, and he's fantastic to be calm about it acres great quarter and it shouldn't be

down it should be good. >> best buy is up. >> that makes sense. they beat the numbers. kohl's had, last month, regression of months was really, really good. best buy was terrific. they've got clean inventories. it shouldn't be down a lot look, we're looking for a little rationality. we're looking for rationality. and there's a lot of -- like i said, it's not like they're going to come out and say you know what? i've been thinking about it and i was rash with what i said about judy woodward. and it's not like pence is going to come out and say i embrace the chinese and i'm procommunist he isn't but we need to see those stocks where there's no negative news positive news on intuit, no negative news on amazon and if they rally. >> what are you going to have on tonight? >> we're going to have -- i'm going to be talking about big issues, one of the reasons we're having this decline, treasuries, oil, other things.

i've got a guy who invened -- the guy behind siri. i told siri to wake me up at 3:30 siri got it right. >> well done. >> and then i've got dividends you can't trust because holy cow. >> you cannot trust? >> you cannot trust. >> interesting. >> it's overdone you have to wait to see if it bounces. you can't just say, wow, it's overdone. >> s&p down 50 points, officially 10% off the highs top dow stocks of the year right now, merck, pferiz and unh obvious.

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good tuesday morning welcome back to "squawk on the street i'm carl quintanilla with david faber and sara eisen

dow down 480, s&p, 45, as some of the bloodletting continues today. >> our road map will start right there. stock sell-off, 2018 gains evaporating. dow, nasdaq and s&p falling 2%, extending yesterday's steep losses. >> the tech tumble, facebook, amazon pushing the nasdaq to a seven-month low. target shares down 10% some other retailers sliding sharply. >> obviously a bunch of big market stories today full team coverage of the ongoing pain and how to think about these market moves going forward. dom chiu will join us with a data dive into the struggle sector and how chips are fathering today. steve liesman is with us, talking about the fed. and with some stocks down double digits, target is crushed today. courtney reagan will break down the retail earnings for us. >> take a look at the major

indexes so far this year all three averages losing their gains. joining us right now, ben lendell and brian leavitt. good morning, gentlemen. welcome back are we going to have a santa claus rally this year or not >> the stock market will go through a bottoming process and we'll improve toward the end of the year to the beginning of next year. what we need is some greater clarity around trade we need greater clarity around fed policy i'm not making any guarantees. we get the greater clarity around trade this slowdown in economic activity, we're seeing in the housing market, rates are starting to come down. the fed backs off some should create more of a better environment. >> is clarity what you mean? we're getting larry kudlow saying there's optimism around china. that's not really doing it don't we need a change in tone or strategy in the fed

is clarity really going to do the trick? >> you're right about that by clarity i mean i think we're starting to get a better vision of ultimately what this is going to look like i suspect, much like we saw in the beginning of 2016, the federal reserve will be less hawkish and will consider backing off. on the trade side, we'll see the president typically likes to have market movement before the next election and going down a path of ever tightened trade policy probably doesn't get us there. >> does the unemployment rate give the fed cover to do that? >> to take a pause >> yeah. >> i think you're going to get some relief a.m. sot point next year one thing that's interesting about fed communications there's probably an underlying hawkish one as well. based on powell's comments, the

fed's own projections that they're going to slow down and eventually stop in 2020, tw2021 this is going to slow down that's the dovish part the hawkish part of that is they're going to continue into the new year i don't think this is sufficient to trigger the powell put. >> do you disagree with brian that the market can still rally the end of the year? >> a derisking of changing pricing with growth. we went from u.s. growth that was excellent and we're going to u.s. growth that's average next yea year. >> average but not recession >> that's right. we're going to average moreover it's extremely well telegraphed so policy is driving the train here we have fiscal policy waning,

and policy that will have effect on manufacturing firms it's a question of when we price that in fully. >> haven't really talked about italy or spreads in europe or european banks or brexit or anything else that could pop up as a wild card. >> yeah. we've been dealing with italian debt and brexit for a long time. you ask a good question. to me what's going on in the u.s. has been telegraphed. i never believed that they were getting to a higher sustainment of growth. does europe start to head back closer to trend? do we get that convergence europe is a big wild card. a big catalyst would be greater clarity around trade leading to capital flows back to the emerging markets, leading to better emerging market growths that helps european companies and that starts to alleviate political concerns that we have. not that we solve the political

concerns, but the market can start to see -- look, we're going to be dealing with brexit for years as far as the draft proposal we saw recently from theresa may. that doesn't go away what we need is this movement of capital to the dollar to alleviate, to start to support economic activity outside the united states. >> and what if we don't get the greater clarity on trade, which seems to be a strong possibility? >> yeah. >> there's certainly the possibility we'll be at this for years. some say that's what you're going to need to do to finally get what you want from the chinese. >> what would happen in that environment would likely be a persistently strong dollar and headwind to u.s. growth. and u.s. multinationals. >> but then the fed would pause. >> the fed would pause. >> the politics and economics are not in balance the politics all suggest we hop

on china the economics are not all that clear at the moment. that changes as you continue escalating tariffs as it gets harder for u.s. firms to substitute away from chinese goods. 267 billion that has yet to be announced which might be announced at the beginning of the year, by value that's 35% chinese exports to the u.s that's very difficult to not pass through to consumers to some extent. >> remember, countries that run large fiscal deficits need to fund it somehow. historically, you fund that with the widening of the current account. if you're going to run big fiscal deficits and tight on trade, that's going to be difficult. >> not to mention ongoing treasury supply, which we can talk about another time. this week, too, we've had tudor jones talking about corporate credit, how that's going to be tested in ways we haven't really done this cycle. what do you say about that what do your clients say about it >> i think it's a vulnerability. we look at leverage on corporate balance sheets as being a shock

absorber, which has eroded continue spending, continue hiring if there's a negative shock to earnings, that's dwindled to some extent. the flows associated with balance sheets are pretty good earnings are more than enough to cover spending, at least at this point balance sheets are deteriorating further and pushing vulnerability. something we're watching but not an imminent threat. >> i'm glad carl brought up the credit market. you talk to investors in this market, they say it's definitely changed. there's no flashing alarm bells. you really have to scrutinize the financial health of companies these days versus when it was this massive chase for yield, low-interest rate for environment. where does that take us and what does it signal >> if you look in general the fundamentals of the credit market have not deteriorated significantl

significantly. >> they're pushing maturity in the future no big wall of maturity coming in you don't get credit until the next recession the indicators you need to watch are the ones you always watch. shape of the yield curve as long as we don't get a major policy mistake, it's likely you'll have a credit. >> i think it's useful to distinguish between recession risk and the cycle we're in. >> nice talking to you thank you. could be pricing out rate hikes next year. steve liesman joins us with what to expect and what markets are hinting at good morning, steve. >> a fairly dramatic rethink of the fed now under way while the markets still see the fed hiking in september, the number of hikes and timing of next year being called into question

take a look here december, 73% probability. just fyi, that's down from where we were trading at 90% publicly. well north of the 50% mark then you see june, 58% probability for the first hike in 2019, that was in march we had a great -- i think 60% probability for that first hike and then we had another one coming in september. and we can't even get to 50% for the second hike in october so there you go, folks one for sure and the second one, we don't know. let's take a look at the recent fed to see if the rethink is warranted. patrick harker saying at this point i'm not convinced that the december rate move is the right move but i need to watch the data over the next few weeks that's the most dovish of the comments that have come out. john williams yesterday, quote, we'll be likely raising interest rates somewhat, but it's really in the context of a very strong economy. remember that. i'll come back to that in a second we're not on a preset course

we'll adjust how we do monetary policy to do our best to keep economy going strong with low inflation. very mportant, richard claret, in my interview with him on friday. >> certainly where the economy is today and my projection and the fed's projection of where it's going, being at neutral would make sense. >> or, in my opinion, still sees committed to bringing the fund's rate to neutral. what is that 2.5 to 3.5%. it will require more a stock market selloff or more stock market selloff to keep the fed from hitting three the data will have to whacken. if it does, the fed could pause in the lower range of neutral. if it keeps going strong or above trend and unemployment continues to fall, the higher range is likely. carl >> i was glad to see clarida with you, steve. one of the reasons is he has just been in academics but also with pimco he's very in tune to what's happening. >> excellent point. >> in the markets. and i get your point that

they've got to watch the data over the markets but i think everyone is trying to figure out post yellen how sensitive this fed is to markets and how big of a fit the stock market would have to throw to get them to change their course and blame financial conditions. >> you pose it in an excellent way, sara, in the sense that there's back and forth going on, a chess match, something a little stronger, if you will, between the markets and the fed. the fed has put this goal out there, which is to get to what it sees to be neutral. and i think the market is testing its resolve to getting there. rich clarida, comments by powell we'll have to listen to the fed and watch the data if inflation were to fall or -- i don't think it has to -- it cannot rise but if it falls, that might dissuade the fed. if the unemployment rate starts to tick back up, the fed could

take a pause september, pretty close to a lock not quite. next year, that first hike and second hike is what we'll be looking at closely. >> that's good, steve. thank you. we've got to get to oil. down three bucks futures at a one-year low. jackie is watching that. >> it's a big slide, carl. now we're in jeopardy, just broke $54 a barrel it's a 5.5% slide. we were talking about two factors that would take crude oil down one, of course, we're watching opec december 6th. the second factor, we said, was stocks we saw a little pressure tachlt we're seeing more pressure as the dow broke through 500-point loss that's because demand is in jeopardy companies won't use as much oil. demand goes down and prices go down as well that's why you can see the slide today, guys. >> all right jackie speaking of when steve mentions data, that's one more piece with wti getting awfully close to 54.

overall, guys, getting a little bit of an elevated vix read today, nothing near what cramer would want but 577 points to the down side has not helped at all by kudlowe's comments regarding optimism by the president for a u.s./china deal. something that algos have nibbled at in the past. >> not this time and very much unclear what we're going to get out of that, if anything of course, that is one of the underlying concerns and has been our last guests were discussing that continued tension with china, what it will mean for the u.s. consumer and when it will start to take a bite a serious bite confidence overall, business confidence and unwillingness to make some decisions among some of our multinationals from spending the money. >> the president is going to have to make a decision if the market keeps going down. the g20 is at the end of next week investors are watching it. he watches the market. 2018 gains have evaporated he hasn't talked about the stock

market in a very long time. >> this is what we're back to the trump -- >> not go -- >> wondering at what point does it force him to -- >> if larry kudlow can't come out -- >> or at least start job opening the market. >> if you're going to go into a conflict like this you have to be willing to take the pain to a certain extent to achieve the end goals. it's hard to imagine they would get them if they just say okay, that's it. s&p went down 1.4% for the year. >> they could change the tone, start the actual negotiations. >> something that is at least seen as constructive. >> that's end of next week technology continues to get battered you see that carnage in the nasdaq as well big names are getting rocked as well, target, kohl's, l brands targeting more than 10%. best buy is a winner there, barely courtney reagan, breaking down

the numbers in this ugly reaction. >> there's a lot more than that, sara you would think retailers are putting up really weak quarters. in the big shopping weekend that's coming up that's not the case. expectations are high after a strong retail run, that really started last holiday season. target's earnings missing analyst's estimates. comparable sales, they fell shy. i'll give you that but up 5.1%. digital sales up 49% that's actually the strongest they've ever posted. traffic, up more than 5% in the quarter at target. now the retailer reiterated its four-year forecast it didn't up it. if it performs to its fourth quarter expectations, it will have the strongest annual comparable growth in a decade and all-time high for earnings, but margins are pressured from the cost of fulfillment and bringing in more inventory for what they expect would be a strong holiday quarter so on a target media call i asked ceo brian cornell if he

believes that the consumer is as strong as he has seen and reiterated to me in october. quote, the consumer is very healthy. unemployment is low. gdp is growing he added that traffic is growing. comps are accelerating i asked him again, does that mean you think the consumer is less strong? he said we see no change in the consumer environment now with best buy, ross stores and kohl's, all three of those beat profit, revenue and comps all posted comparable sales up 4.3%, 3% and 2.5% respectively however, ross stores holiday quarter guidance is well below the street kohl's raised the low end of its earnings guidance and you have lowe's and tjx lowe's comparable sales were up but only half as strong as analysts had forecast. it's not all good but it's not all terrible either. when you have to compete with

the likes of amazon, you have to spend money to do it and it's going to hit you on the margin over to you guys. >> courtney reagan, thank you. >> to discuss retail earnings with us, let's bring in key bank markets manager and senior vice president susan anderson ed, give me your take on target to start with. there's a time when 5% same stores sales growth would have been seen as not bad at all. the market disagrees. >> on balance we think target had pretty good results. there was a little bit of disappointment on the comp line and some disappointment on margin courtney pointed out they're investing heavily to compete it does come at a cost. >> and susan, your reaction overall in terms of just in retail, should there be concern at this point? is it being adequately reflected in what we've seen in the down draft in so many of these stocks

the last couple of weeks >> a lot of it is a bit overdone i agree with courtney, though, expectations were high and investors know that holiday is going to be a good holiday we're expecting the jolliest holiday for over a decade now. so i think that investors are already looking out to next year and saying can this momentum continue for the better retailers, we believe that it can. one of them being urban outfitters, which reported a plus 8% comp, beat numbers by 8 cents and we raise d our annual number by 12 cents we see them continuing to benefit as we go into next year, particularly as they're at the forefront of the cycle we're seeing. >> i know you follow l brands. it's one name we haven't focused on yet this morning but one to look at because it's down almost 16%. victoria's secret has been somewhat weak. there's a dividend cut as well give me your take. >> yeah.

so i think the stock decline is mostly related to the dividend cut. i think they are doing the right thing and taking that money and paying down debt, particularly in an environment where we'll see interest rates rise. they actually raised numbers for the year, so, you know, numbers are a little bit better than expected the brand is improving sequentially obviously, still a lot under pressure there one thing that investors are forgetting is the bdw brand that continues to outperform, double-digit comps in the quarter. at this level you basically get the brand for free. >> your talking about bath and bodyworks there, right, susan? >> correct. >> victoria's secret, they've got a new boss investors are upset about the dividend cut on december 27bd they'll have the victoria's secret fashion show on abc. last year, ratings dropped 30% maybe people don't want to see perfect-looking models strut down in million dollar bras

anymore. >> yeah. i think they're rethinking everything, as they talked about on the earnings call this morning. they're rethinking the merchandising, marketing, how they go out to consumers so, you know, i think there's probably going to be a little bit of a reworking of the brand. we've seen other brands such as aerie really pop up and likely take some share, particularly from pink, with a much different view of the consumer so, i think it's something that they're going to have to rethin rethink. >> even pink is slowing. how do you pick a company in l brands is there value there when a big brand within it, like victoria's secret, is so far astray ed >> yeah, i -- >> it's certainly something to watch. momentum has been very poor. they are rethinking lots of components of the business, from the dividend, management, marketing. so while we're currently not

advocating for the stock, we think we should pay attention to it right now this could signal some type of bottoming. >> and what are you telling investors overall about your sector right now >> look, we think the consumer is in the best place it's been in a long time what we have to focus on, tho h though, is that gains are beginning to moderate. we've heard that from everyone from amazon all the way down you need to focus on companies that have those internal catalysts. one thing we have right now is under armour better marketing, better products even if the consumer isn't growing as fast next year, these companies have significant catalyst that they account unlock to improve performance. >> is there excuses for these -- when you think of retail, you think of weather, amazon or the weak economy all of that is working in their favor this year. isn't it >> yeah. there really is probably the most amount that we've seen in a very long time for retail. so while september was warmer and we saw weakness during that

month, october turned cold you really can't point to anything that they could put the blame on if they have international exposure, maybe weakness over in europe and slowing china. beyond that it's really a favorable environment for them. >> all right ed, susan, thanks to you both. >> thanks. david, let's talk about one stock that's doing well today, which is campbell's soup for a change, topping analyst expectations the stock is up 7% it had been a big loser this year and there are a lot of short sellers around this. positive report, no doubt, came today and it came a little over a week before the shareholder votes. fending off proxies looking to replace all the members of the board. some of the highlights of the quarter, 2.69 billion in sales, up 25% compared to the same period last year organic sales, key measure of the underlying business fell 3%.

they had costs rising, which weighed on margins here is the key. soup sales volume grew in the month of october so the latter part of the quarter, they actually saw growth in their key business, soup, which had been struggling for years. they also reaffirmed their guidance i talked to keith mclaughlin, the interim ceo. he said we are in the early stages of a turn he pointed out that we are gaining traction in soup and he said that the divestitures, like biscuits, are being very well received and are on track to go through, those sales, by the end of the fiscal year for the first time they're talking about new products and innovations like v8 hydrate, working well with millennials and well yes soup, which is gaining traction snacks are the growth engine of

this company, it's now 50% of the company. you've done a lot of work on this. >> yeah. >> i asked keith whether they were being distracted by this proxy fight, which looks like they're going to win. >> the math is impossible, seeking five directors campbell has offered to take two of those schmidt and hostetter and he wanted somebody from his firm or associated with third point. my guess is there's a settlement to be had here, certainly. but to your point, the math -- it's impossible. he's not going to win. you could go in potentially to the vote, though, and show that a broad majority of the unaffiliated shareholders supported you and then potentially try to get two directors added after. >> he also got momentum on the iss. >> supported all five. glass lewis supported three of five but it's an interesting quarter for campbell. >> it's a good quarter. >> somebody said we're back to being an average food company and average is good right now. >> absolutely.

whether it's been a distraction, mclaughlin told me i put a handful of people on the proxy fig fight, including myself, and that is it he said he met with his entire global team of leaders and said don't get distracted with this focus on the turnaround. we laid it out, deleveraging, focusing on pricing, on better marketing. nobody should be spending time on this. so they're moving forward and they have, at least, to show investors that it's starting to work. >> exactly. as stocks sell off, is business confidence rattleded? it's been high lately but a survey will tell us. and could explain the market pessimism. dow is down 473 points right now. nasdaq down 2% if we're gonna steal christmas,

we're gonna need the element of surprise. go team. [ snow crunching ] [ load crunching ] [ whispers ] this is the loudest snow ever. time for our etf spotlight dom chu taking a look at stocks getting hit today with some exceptions, dom. >> you're right. that semi conductor industry continue to be a key focus for

traders out there. they've arguably been one of the big drivers of the downside action in stocks a big part of that reason we're seeing underperformance in the technology sector overall even in today's session one of the big trader exchange funds is the semi conductor fund, sosx that fund hit a peak back on march 13th, fallen by around 20% since then it is coming down again to working on that three-day losing streak although we are, again, at the best levels of the day, indicating perhaps some deep value index or maybe short covering off these sharper downside moves nearly every stock in the fund has posted a loss since september. nvidia, advanced microdevices are the two biggest gainers over the last couple of years both now down between 40 and 50% on a quarter to date basis alone. micron technology also a hot

spot today by analysts to under drls perform with a $32 price target, citing deterioration and product pricing trends the question becomes how many analysts will start to revise on stock they cover in the semis given these recent back over to you. >> not so pretty in the semis. dom, thanks. cnbc's global cfo survey is out. as president trump's trade standoff with china continues, global cfos are citing trade at the top of their concerns. jackie deangelis is joining us now. >> that's right, sara. the top concern factor u.s. trade policy. they're worried about it 35% said it's their main concern this quarter, when last quarter 45% were worried about consumer demand almost 75% said the impact of these policies are expected to be negative on their businesses

going forward. interesting, though, when asked if they thought congress' top priority should be this in 2019, almost half of them said it should be infrastructure spending while only a quarter said it should be about trade agreements meantime, let's switch to the markets and the fed. 60% said they see a rate hike in december a little more than 40% said three hikes are on the way a notable shift here, more than half said they think the dow will fall back below 23,000. last quarter the majority were unsure the quarter before that, they were optimistic and thought the dow would surpass 27,000 for the first time so some of the confidence definitely waning here on treasuries, all the cfos think the ten-year yield will be above 3% rising rates, falling stocks, trade policy it's keeping them up at night, guys. >> so, jackie, the results of

this are after the midterm elections, correct i thought that gridlock was going to be a confidence boost for ceos, who wouldn't have to worry about regulations in a polarized environment. >> they were concerned about it but less concerned about the impact of trade. the gridlock just stalls things as we move forward and some of the policies that trump has put into place will be helpful the trade policy koss have that negative impact, as they said. >> all right jackie, thank you. >> sure. >> at hq let's get to sue herera now with a news update sue rurks with us? >> thank you, david. good morning, everyone at this hour russia is accusing u.s. senators of trying to meddle in interpoll elections. four u.s. senators have issued a statement, urging president trump. abusing interpoll to try to

settle scores and harass their opposition by issuing warrants for their arrest. commuter train derailed near barcelona, killing one and injuring 44 others a spokesperson said a landslide triggered that crash north of spain has suffered heavy rains in the last few days, causing flooding and land slides. walmart says it's withdrawing its donation to mississippi center cindy hyde-smith, asking for a refund of all campaign donations after "will & grace" actress deborah messing tweeted out about those donations. she has faced criticism after reference to a public hanging. and legally selling pot on the east coast, massachusetts is the tenth state to legal iize marijuana. >> i'll take it.

markets are in selloff mode as we've been telling you since the opening bell rang. we are off our lows on the s&p right now, sara. >> still, down about 500 points on the dow tech selloff is intensifying tech selloffs at the bottom of the list those darlings continue to be hammered especially the fang names. oil prices at 12-month lows. dollar is stronger and treasuries are stronger. you're seeing a risk-off type of environment across the board. >> every dow name is lower although, facebook is up. >> facebook is up. >> nvidia is up. texas instruments is up. so, some things are getting -- >> not indiscriminate tech selling. >> that's the first time we've seen facebook up in quite some time having suffered yesterday significantly in the session. obviously the 2018 gains are gone how far are we in the downturn mike santoli has been tweeting

about that in the last few minutes and breaks it all down hey, mike. >> two months since the peak now the index retesting those lows from in october, down about 10%. the damage has been pretty comprehensive. the fact that we've broken those uptrends and now the indexes have stayed broken, i think it's relatively significant you're seeing failed rallies rallies we have had have stalled out exactly where you would expect them to it's kind of textbook, bear market characteristics in a lot of ways. you have about half of the s&p 500 down about 20% already, which does imply that's a process that's been happening for a while, a preference for quality and defensive stocks for months now, not just the past two months all of this suggests that the market, perhaps, is in a mode of treating that september 20th high as some significance. credit is now acting up. a lot of this stuff is flaring i think it's significant, though, that we have seen, as sara was mentioning, glamour stocks, favorite children of the

bulls have now been sacrificed to some degree perhaps that suggests we're getting to a later phase now adobe, sales force and pay pal down 6, 8% for no reason except they're also up a lot this year. it shows this market is hunting. we're in a mode of seeing if those october lows might hold two months after the january high we were in a similar place. market was down significantly, was not able to get out of its own way but the uptrends were in tact and you had earnings acceleration in your favor we're in a dicier spot right now. if there's any consolation to say a lot of stocks are already down a lot this is at the point where the weakness is beginning anyway. >> mike, thanks. we'll check in with you in a little while mike santoli on the floor of the exchange this morning. digging deeper into the selloff with founder of grant. i want to know whether you think powell blinked in dallas, which

people say he did. >> i think he's going to blink i'm not sure if that was the moment in allas. >> he will blink >> oh, yeah. >> how will that sound what will he say >> it will be silent in the blinking but the consequences will be important. i think you have to ask, i think, what do corrections correct? what errors is a correction correcting i think the principle error is a sustained period of ultra low, economically low and distortingly low interest rates. credit is comprehensively mispriced and that fundamental error ripples through. and i think you're seeing the correction of those errors in the shape of much higher yields of corporate credit, much lower prices. >> so, talk about how you think that's going to test credit. let's start with investment group. >> yes well, for example, at&t, former aaa ma bell is now $250 billion,

it has more debt than many members of the united nations. and it is showing lower year over year revenue growth it is showing weakening dollar growth and this debt was priced very aggressively it was $176 billion or so coupon debt the rest of it is post-retirement benefits and the like immense amount of debt priced according to the federal reserve's idea of good interest rate i think one might ask why don't we discover interest rates in the marketplace as we do other prices like soy bean prices why don't we discover interest rates in the markets chairman powell, when he blinks, as he will, will be blinking for perhaps that realization in mind. >> to your point, there has been a great deal of corporate debt added, not financial debt but more on the balance. >> every cycle is different.

>> of course, you did point out revenue declines potentially or lack of revenue growth at at&t are you really concerned about names like that? does that concern spillover into other parts of the credit market >> what concerns you also, hopeful in some ways -- the selloff has revealed bargains in some parts of some structures. we've been looking favorably on the ge capital structure for example. >> what part of it >> well, i'll get a subscriber's in a few days. this is a restoration project. for years and years, literally, people felt no need to read -- they got their information as they should get it remember way back when, 2001, a hero in the aftermath of the tech was an accounting professor

for morgan stanley who drew 2,000 people to these belated seminars, how to read a financial document i think security analysis will come back, along with contrition, and i think it's going to be a great time for people who think for a living as opposed to those who don't. >> you think powell is going to take a pause >> yes. >> and if people don't have to worry about rising rates anymore. >> notice every single cycle gets lower rates and more debt and the efficiency of debt is ever lower so they can reset, if they like. but the resetting is not going to restore the kingdom of heaven. >> in order it's not going to be easy money it's still going to be painful >> i think it will be feeling painful depends on how you're positioned. >> what does that mean how do you position? >> if you're holding cash and looking for bargains, i think it's rather hopeful. >> in the credit market you're talking? >> yeah, sure. >> you make the point a lot of

private companies, who have been hugely disruptive and have changed business models have relied on that same money? >> yes. >> what happens to them? >> they don't go public at $120 billion in the case investment bankers are talking. uber is making widening losses we are meant to believe that the so-called independent contractors can buy at retail more efficiently than the yellow cab fleets can in wholesale. i don't see a clear way for profitability. uber has been sustained through the same low cost of capital there's almost $1 trillion of these things out there, these unicorns and, you know -- >> that extends to airbnb, postmates and all these other names we had on the calendar >> many or most of them are profitless and they are sustained by the expectation of

continued low rates and easy access to credit what happens if credit suddenly becomes tighter? i think a lot of these are artificial to some extent. but profitability, more broadly, is in a vulnerable position because it's been sustained by very cheap credit. >> lot of dry powder. >> cheap credit and very contorted accounting private equity owes a lot of its prosperity to this thing called after adjustment and add back and add back so what haven't we touched >> we're late cycle private equity late cycle but private equity has been more aggressive more than i can remember. >> as they would be, it seems to be. >> they have been previously certainly '06 is the time we

rememb remember, and many of those companies, certainly the biggest at that time went bankrupt i'm trying to understand, are you concerned about credit or do you see it as an opportunity >> i'm concerned about it. it's underpriced yields are much too low. it's almost nonexistent in all too many cases and a lot of loss is awaiting the holders of these securities however in the context of bad accounting, over leverage, those who would sift through. >> does bitcoin fall in that category, jim? >> the i was bearish $100. i was more bearish at 20,000. >> i'm sorry you're bearish >> i was bearish at $100 i was more bearish at 20,000 and

thunderstruck at whatever it is. i'm not the right guy to ask about bitcoin. i don't get it. >> how does powell blink, in your words, when they're holding long-term inventory, lots of supply coming online, probably going to break geitner's issuance record. >> certainly we will that will lead to blinking rather than not. u.s. treasury, along with the fed's expected dispositions, two sources of securities are expected to weigh more that's the overall supply of treasuries coming to market, fed and treasury, greatest since the end of world war ii. >> how do you reset in that environment? >> we are going to be data dependent. we are concerned about world growth we're stepping back from time to time of the expected path of adjustments of rates upward. and we're watchful waiting the way to read that is the fed

cannot, as chairman bernanke said, these rates are part of the structure of things. they are part of the structure of corporate debt and investor expectations and they cannot be so easily adjusted. >> you see changes to the rate of the runoff of the balance sheet? >> yes i think the fed will be -- sure. when the fed steps back, citing the difficulties of slowing corporate world growth, i think the fed will be slower to dispose. >> that would be a u-turn. right? >> oh, yes they've done it before wall street journal has called this -- big editorial in the wall street journal two or three days ago saying don't raise. >> you think powell can do it without losing face that he was somehow man handled by the white house? >> carl, that's why they have a pr staff you would be amazed at the language they can craft to present this in the most dignified fashion. >> we're not in a recession. you're talking very gloomy here.

sure, it's a slowdown from where we were on growth but still a growing economy. >> growth is not a leading indicator of growth. gdp is not a leading indicator. >> it's the market. >> we'll know more in three years with respect to the state of the business cycle. >> thanks for that come back then jim, thanks. good to see you. jim grant. let's get over to the cme group and check in with rick santelli, get the santelli exchange good morning, rick. >> good morning, carl. i would like to welcome my guest, peter tchur let's get into the hottest topic, credit markets. you said something in your most recent writing you said credit not leading. that is huge credit has been actually super well behaved outside of about the last week and a half so i put it to you directly. why are equities marching first in this parade, really backwards to history

>> really is an equity valuation story. the other thing is i think there are issues with some credits what's happening is you're seeing companies address those issues you're seeing dividend cuts, talk about less stock buybacks so they're repaying bonds. that's what's happening here as companies will protect shareholder value in the long term by addressing any credit concerns credits will be more stable than equities this time around but also gives us real hope this will find a bottom in equities and be able to rebound at some point. this is not a systemic problem like we had in 2007 or 2008. >> nochlt and as much as i agree with that, the problem i see, peter, is that we may be backing into the problem in other words, the most recent angst yesterday is that there's a raft of investment grade securities that might invade the high-yield space your thoughts on that? >> one, there's been very little

issuance in the high-yield space. there's still money in the high-yield space the ability to absorb that is very high. the other thing that's been a shift from 2008 and even 2016, insurance companies, in particular, have the ability to retain double b paper if they want t there's not that forced selling. i don't think you see that cascading selling pressure and many of those companies will be able to repay debt out of free cash flow. i think there's a longer lag between these concerns and anything getting downgraded in material weight. there may be one-off cases but it won't be a big downtrade in credit. >> another thing is some of the ways that entities ensure or buy different derivatives to try to pair some of the drops they have in noninvestment grade, in particular those levels aren't nearly as high the insurance isn't nearly as expensive as it was even in february what conclusions do you draw from that? >> you know, again, i think a

lot of companies did benefit, particularly the smaller companies, from the tax reform look, the russell 2000 isn't getting dragged down as much i think of the high-yield market a little bit like the russell 2000 it's been doing okay relative to the s&p is doing better i think there's not as much interest in shorting, people don't want to get burned it is expensive to short these if you get it wrong. >> peter, thank you very much for your opinions on what is going to probably continue to be a huge topic as the equity markets continue to gyrate >> thank you we're all over it. the nasdaq was down 2.8% at one point, now down 1.2% jon fortt has a look at what's coming up on "squawk alley." >> good morning, sara. a lot of red across the board,

but pure storage which reported earnings last night is up about 2.5% on some strong product news and updated guidance what's good in tech? we're about to find out coming up on "squawk alley. >> see you in about ten minutes. we are off the lows of the day. discussing the price action with apple, the biggest loser down more than 3.5%. >> look what happened to the broader market we talked about it late yesterday on "closing bell." they closed closer to lows than not which set us up for another down day today the selloff now is about the internal damage done to the market in the month of october, the market needs to find its balance. until it does, you'll continue to have the days we have down to 2635, ten points off the lows we tested in october.

i think that's the low it wants to test. in between 2610, 2620. it wants to know the buyers are there, then that will offer stability to the market. until we get there, there's no support here until the mark-- as the market will continue to thrash around. >> you have 30 dow components lower. a broad based selloff. most s&p sectors are lower, utilities turning in the red which pockets are you looking for? >> you have to look at value look what happened when the market was down. tech was getting crushed growth names were getting crushed. proctor gamble, johnson and johnson, coca-cola, names that may not be sexy but they're value and big americana names and names people go to in times of crisis, when they want to be in the market, they want safety and value. >> ten year 305 hasn't been

rattled too much today. >> no, it has not. but what i find interesting, the ten year at 3.05, this disaster started when it went to 3.25 now we're back below the level we were at but the market can't find its own level because of internal damage right now, at 3.05 we should be stabilized a lot of stocks, the tech sector has gotten crushed some names down 30 and 40% they're getting crushed. until that settles down -- >> does that wipe out the seasonality to our favor >> feels like it is wiping it out. >> heard you talk about hope for santa. >> i am always hopeful for santa. i want to think that santa is coming every day we go down another 2 or 3%, santa is further and further away. >> you are hearing two common phrases on wall street

late cycle dynamic and bear market mentality are you seeing evidence? >> bear market mentality, sure in some sectors you have that. but we had a rolling bear market mentality. there have been other sectors through the year that have come under pressure that were individual names in bear market, no one was paying attention to they're paying attention because it is big, sexy growth names that are producing this sense of doom and gloom >> so what theoretically if you work back to flat line or close today, would you want to go back and see 20 -- what's the number? >> 2620 is the level i think we're going to test. get down to 2635 or 4, close to it, my sense is it will test it. i don't think we close flat. i think we rally and hit them again this afternoon >> 250 off the rolows how do you know when there are

real buyers stepping in? >> i think you're going to know there's real buyers. we're in a holiday week. lower volume that's another issue to exacerbate moves, people are away from the desk, on holiday, thanksgiving, nobody is paying attention. when you see volume pick up, you want to see it flush, but you want the flush where sellers are pushing it and buyers are holding. you want to see it increased volume you don't want the flush happen -- you want to see the buyers i think you hit it at 2620 >> even though the lead of drudge is stocks erase gains for the year, oil dives, goldman says boost cash. that's not a low incentive >> listen, it was only goldman, sachs said a month ago oil is going to break it is 50 bucks, half of what they said. i am a contrary player. >> good trader talk, kenny,

thank you. let's get to dom chu for a sector sort. >> to sara's point, we are well off worst levels of the day. we're at the best levels of the day, but firmly in negative territory, s&p down 10% from late september retreat in technology and internet stocks is front and center, we're seeing a bid to some faang names today let's drill down on action in another sector leading the way lower and that is energy stocks. crude oil hitting the lowest levels in over a year at this point. all 29 stocks in the s&p 500 energy sector to correction level or worse what some call a 10% pull back or worse among laggards, debit, marathon oil, apache down more than 3%. back to you. >> thank you very much he is right about some of the

individual names getting bought here the index is repairing some damage s&p, 2666, about half off lows of the session >> another big move people are following in the price of oil. we hit it, but worth mentioning again, wti up more than 4% now below 55 a barrel. lowest price in a month. always concerns whether it is a growth scare, growth slowdown. price of oil worth watching. big economic names like boeing that bear the brunt of selling >> we know how atlanta's bias normally goes. >> they have been lately, larry kudlow said no recession in sight. a lot more on market selloff. "squawk alley" up in a couplof mite nus.e

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