good morning, it is 8:00 a.m. at san diego qualcomm headquarters, 11:00 a.m. on wall street "squawk alley" is live ♪ ♪

good monday morning. i am carl quintanilla, with mike santoli and jon fortt. bob pisani is covering the action stocks are continuing to sell off. we fell below 2600 on the s&p. >> 2603 is the old inter day low we had a short while ago, several weeks ago. we broke through that as well. that's the closing low, day after thanksgiving some technical, that's part of the problem here late in the day, technical breaches we're seeing two sectors to highlight which i have been talking about for a week one is banks we have 52 week lows on all the major money centers and larger regional banks

energy, down a dollar in oil health care is the market leader that's down 1% industrial is also weaker on top of that. banks' new lows, down 400 on the dow. jpmorgan, morgan stanley, doesn't matter, all at 52 week lows we are going into the european close. often there's a bottom there in the past few weeks, we'll see if that happens as theresa may was talking, we drifted lower as you can see this is 10,600, that's a two year low on the dax. talking points for the markets, it is emphasizing negative talking points over the weekend, robert lighthizer calling out saying they'll hold fast to 90 day deadline on tariff talks we had reports that the u.s. would be issuing an anti-dumping order on chinese aluminum and

alloy sheet metal, that's a negative japan gdp is further into red than people thought, so a little further contraction. china, november trade is lower, exports, imports generally lower. these two reinforce slowing, not disastrous, but slowing global growth story, and the delayed vote on brexit where are we we breached some technical limits 2630, 2800 was the trading range we had been in for the last couple of months we're now essentially below that you see that there and that's part of the problem late in the day. once we broke below that, we broke further. old inter day lows that we saw back to you. >> thank you very much meanwhile, keeping our eyes on apple and qualcomm after a court in china granted injunction for qualcomm against apple they say all iphone sales in china are halted, apple

maintains all are available. tony, any color, clarity on what's going on? >> look, i think it is a little uncertain. certainly the headlines are worwore worry some apple has 50% of revenues from main land china, iphone is 60% of the business. we could have a 3 or 4% of apple revenue impacted however, there's some debate what the injunction means. qualcomm says apple can't sell phones and apple is effectively saying they are selling phones, and cnbc and bloomberg reported that apple is suggesting that the ban doesn't apply to ios 12, which is all new sales today if that's ultimately the case, then the commercial impact is

minimal to none at this point. so that's ultimately the dispute that remains unclear. >> dan, this order from the chinese court was handed down about ten days ago by all accounts iphones have still been for sale. bigger picture does this just increase the risk related to china there have been headlines, reports on social media of some people in china identifying apple as a u.s. brand, so subject to cultural backlash over the trade war, including treatment of the huaway cfo. even if those specific products, the phones, are not band in china now, the heat has been turned up on apple you could argue in this qualcomm patent dispute with that decision >> yeah. feels like they have a bullseye

on their back. it is 10 to 15%. but ultimately if you look at growth, that's 20, 25 incremental growth we continue to think this is more you have to parse it out between ios 12, i think it is older models nonetheless, this is a major white knuckle period not just for investors but apple as they navigate through the tail winds of that. at one point they were seeing, now they turned to head winds in china. >> a lot of stocks and the overall market figuring out when the bad news is priced in. apple is down 2% on this news. it is a little bit of ambiguous impact but what does it tell you about positioning on apple and valuation of apple you have a big up side to the price target at this point >> so look, that's the billion,

trillion dollar question around apple, is the stock inexpensive enough, do we ultimately find bottom here. i think what our research indicated is that historically when apple has experienced down drafts in stock of 15% or more, ultimately earnings is the key driver if those numbers come down, the stock is going to underperform only when they stabilize or go up the stock begins to inflate you could say is this fully captured in valuation? they're trading at average historical relatives over the last five years, so it is not compellingly inexpensive relative to five year history. it is higher than average over the last five years. if south side numbers go lower

and there are a lot of estimate cuts but they have been modest, if this psych emis weak as many -- cycle is weak, the stock won't work in that period, suggesting more down side for apple in the near term >> where are you at now? 210? >> price target is 210 we purposely try not to change price targets often because so much happens in markets given the draw down that we have seen. given how much the overall market that come down, we would reflect that in the price target if estimates on apple were to change, we would also reflect that in the price target >> dan, i know you're not a semiconductor analyst but i wonder with all of the patent related, loyalty related pressure qualcomm was under with a number of oems not paying, a

lot of that was coming out of china. now that you have china one of the first to step up in this qualcomm versus apple battle and at least initially seemed to somewhat back qualcomm, though there's a question how much, how much do you think it changes leverage in the component space not only for apple but others who would be getting components or i should say licensing from qualcomm does this change the landscape in your view >> this is a shot across the bow from what you saw in china the fact that apple front and center was the one in the injunction, i think across the board will send a ripple effect across the semi landscape from the patent issue investors view it as background noise. now that you've seen this, i think you pay closer attention feels like qualcomm starts to get leverage in the situation, but the final story hasn't been written. you have to see how the

injunction plays out, what the next steps are from apple's perspective, i think it came out of left field. they were not expecting it i think thus far it is contained to those older models which is key for apple investors. >> guys, hope to learn more about that developing story later today. talk to you soon. coming up, broader index dids selling -- indexes selling off. the dow down 472 points. the s&p down 1.75% art cashin joins us next on this morning's selloff. "squawk alley" continues after a quick break. ♪ there's no place like home ♪

argh! i'm trying... ♪ yippiekiyay. ♪

mom. ♪ markets again selling off hard this morning following last week's dramatic dropoff for stocks the dow down 467 now let's bring in art cashin, director of floor operations we were kind of making the play that this morning we were at the maybe the lower end of the trading range, maybe bulls can step in and defend it. it pretty much gave way an hour ago. >> it did. it looked like a technical retest or return to recent lows.

and that was beginning to fail then we went, the public falls for it every time, the round number defense oh look, they're going to hold 2600 or 24,000 most of the time none of that works. you know, you've gotten the brexit thing right back full circle as i suggested in preopening comments. i think that will weigh on things i think it was evident by the reception she got in parliament that she's got a tough road ahead, talking about prime minister may we're seeing global markets starting to slip, still talking tariffs and a variety of other things we'll wait and see how it works

out. >> we spoke about the rate hike cycle and your natural dovishness, even goldman is shaving the forecast for '19. >> everybody comes to their senses eventually. >> the argument is that market pricing in one or none is a bit too low. >> well, you know, it could be but let me suggest back to them, suppose we go with december, which everybody assumes we're going to do. and it begins to have negative impact that will certainly make for one and done maybe one and rethink. you've had a couple of people on your air suggesting one other thing i said that they might be considering cutting at the end of 2019, although they think, people i am suggesting thought there would be a couple of rate hikes before, and cutting would be attempts to repair damage

done >> art, felt to me like the dow took a strong leg lower during theresa may's speech what happened to the u.s. index exceptionalism we were experiencing earlier in the year where the u.s. economy was continuing to run and we were shrugging off issues that others overseas seem to be having is this a one day thing or has the dynamic shifted? >> i think the dynamic is shifting i don't think it is fully moved. they're beginning to realize world trade is showing shankiness exports are down, you would say yes, with the tariffs, no, it is not down with the u.s. yet, it is down with europe. we're seeing stuff move around look what happened in paris with mr. macron so you're beginning to see the

calm edge of everything wear off. i think it is going to come into play in the u.s. markets, not only relative to trade but pisani made an interesting point, he was asked over the weekend how much is political, how much is mueller and what not, and i think that will begin to creep in only because it will limit, if not eliminate, the efficacy of the president and what he wants to get done. so it is not so much are they worried about an indictment or impeachment but i think they do come to believe that as this intensifies, it will be more and more difficult for him to get things done through the senate or the house or wherever and that's going to have economic impact. >> and it seems it is one more thing in the abundance of things easy to worry about now, right we had a lot of good stuff

offsetting concerns, whether it was about d.c. or the rest of the world, you could overlook it right now, it is slowdown mode, late cycle it is also the banks i don't know where all of this comes together, brexit and everything else, but they're down another 3% today. they were down before the broad market rolled over do you think that's mostly a brexit play there plus the yield curve? >> the yield curve got their attention, but the brexit is not just moving out of london, it is where do things go from here so we think it is christmas time, santa is making up lists so are the investors unfortunately their lists are thi things to worry about. >> transports are not a brexit story. worst week in seven years. down another 3% today. >> but they are a trade story.

i think we discussed this before, that some of the initial thing about the tariffs and what not, the recent or earlier i should say strong economic reports we had could well have been drawing business in to get ahead of tariffs, let me get busier now, import more stuff, build up my inventory. and now that's stopping and slogan we are seeing response. >> so many times it was big tech and momentum tech that lifted markets when there was a slump lately, seems like so many of these names have their issues, whether it is netflix with interest rates, apple with qualcomm, is that dynamic in the market damaged, the ability to bring those back >> they've clearly gotten

de-faanged you're beginning to see apple, a marvelous company, now it is evident, and they're at risk of being one failed product away from real trouble. and they don't have a failed product yet, but if iphone sales begin to slow, if china against to become a real problem for them, i think that's why you see some of this built in. there's no -- the faang stocks were starting to look like what we called the nifty 50 back when you were in the cradle, there were stocks like polaroid, avon products. they were called one decision stocks the future was so bright, the only decision was to buy it and hold on forever. and within less than ten years, nearly half the nifty 50 were in existence. >> finally, we talked for a few weeks about dips not getting bought today the journal puts it on

a-1. are they late to this? is this a sign the narrative shifts >> no, i think they're somewhat late to it i'm not sure that people are sitting around, having meetings. saying how do we apply this. what happens is the fact that you've added it, started a bounce back, rolled over, had another dip, it is getting your fingers burned time and time again. you know, it is not a philosophical meeting. until they make it work, then i'm in the game. so far no. and we're back at the lows that says buying dips is not smart. >> back at the lows and few points in the s&p, above the closing low from in april and fenn -- and february >> first trip below 2600 since may. and first trip below 24 k on the

dow since june 28th. look at some of the worst performing nes ke, jp, exxonmobile. a lot more "squawk alley" ahead. don't go anywhere. alerts -- wouldn't you like one from the market

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european markets closing in a few minutes. let's get to wilfred frost with a rundown on the markets and update on the fast moving brexit situation. >> reporter: as expected earlier this morning, prime minister theresa may has delayed the crucial vote on her brexit plan that was due to take place tomorrow >> if we went ahead and held the vote tomorrow, the deal would be rejected by a significant margin we will, therefore, defer the

vote schedule for tomorrow and not proceed to divide the house at this time >> reporter: three crucial developments here. we have not been told the date for the fresh deferred vote. that's causing much ire in the house of commons number two, she dodged the question as to whether she was just seeking verbal assurances by european leaders or changing legal techs xt, something that opponents say is crucial if worth negotiating at all and thirdly, took a further leg lower, the pound, when the speaker of the house seemed to suggest he wasn't sure he would let the prime minister delay tomorrow's vote, unless they held a vote to delay the vote. again, a lot of uncertainty, down about .8%.

as we approach the close, european equity markets, significant declines the ftse 100 down less than european counterparts with foreign exporters not falling as much because of the fall in the pound. guys >> wilfred, it is getting later in the day there when are we going to know in terms of whether they have to vote to have a vote or not have a vote tomorrow? >> well, the procedural aspects of the house of commons are somewhat in question the speaker seemed tosuggest i was just about plausible for the prime minister to steam roll it through, but he was very upset with that in mind. another factor comes into play, and that's that every other party, don't forget on her own, the prime minister does not have outright majority, every other party is expressing deep dismay at the delay tactic.

it is plausible they could try to trigger a vote in their own right, even if the speaker does not. a lot of uncertainty remains as we approach end of the day it is 4:30 p.m. here that's why the british pound is at the lowest level since april 2017. >> when the government steps up preparation for no deal brexit, specifically any idea what that means? >> reporter: well, no. and that's somewhat left people in disbelief it has always been a criticism by the hard brexiters that when she has gone into negotiations, it is clear she isn't prepared for no deal and had a weaker negotiating position the two options, no deal or some second referendum to reverse brexit both come more into play if her deal is defeated, which of course it is not approved,

won't be approved tomorrow when it gets defeated is another question those two options come into play as we move forward with uncertainty. markets as you can see currently are expecting no deal more likely than remain >> lots of criticism of the prime minister's approach, but as she was at one point pointing out in her speech, a lot less in terms of alternatives to her approach that are likely to get somewhere. is there anything emerging on another approach that's not a no deal brexit or theresa may's negotiated deal that many don't seem to like >> reporter: no, and you ask the right question everyone the last couple of months criticized the prime minister, no one has an alternative. when you look at the rhetoric out of europe, whether it is united statements by the european commission or

individual statements by the individual leaders again, all coming out along the lines of we have been negotiating for years. the prime minister and eu came up with a deal there is no change to the legal text of that withdrawal agreement until parliament votes. and that's the catch twenty two we're in, which way we move from here, uncertain. and that's why the prospects and possibility of default option if nothing is agreed, the default option is no deal. prospects of that ticking up today. the pound ticking down, more than ticking down, slumping significantly. >> got that right. wilfred frost in london on this consequential day in the brexit saga meantime, let's get to contessa brewer for a news update >> hi there. a judge set a wednesday court date for paul manafort after prosecutors with special counsel's office detailed lies they say he told them. it is unclear if manafort will attend his attorneys denied he made false statements. police cars, motorcycles,

decorated with iraqi flags and balloons toured baghdad streets, marking the one year defeat of yis -- isis. a new study suggests getting the flu shot may save your life if you have heart problems danish researchers studied people over a 12 year period those that got that shot were 18% less likely to suffer an early death. the famed fearless girl settling into her new home in front of new york stock exchange she spent a year facing off against wall street charging bull statue. her message to draw attention to the role of corporate women in america. let's get back to "squawk alley. >> thank you very much. as we head to break, look at the major averages, down significantly. dow down 417, although about 100

points up off lows s&p 500 down 1.5%. earlier got down to levels of the closing low for the year in winter and spring. more "squawk alley" to come.

it is another volatile

morning for the markets. stocks hitting session lows after uk prime minister delayed tomorrow's planned brexit vote with us, davglobal market strategists. samir, when you look at how the u. u.s. markets, the dow and s&p reacted to her speech, what does that tell you how the u.s. markets are reacting to global trade worries? >> probably the biggest thing is the market is trying to find a bottom what started in october is a process. in the past we used an analogy like a broken leg. once you have gotten through the first part where you had a first sharp fall, second part is you are trying to set that broken leg. honestly, all of the different political headlines are keeping markets under pressure

at least now we're encouraged that we haven't hit meaningfully big lows yet. >> what do you do as an investor, do you buy the dips? though apparently investors aren't doing as much of that any more >> from our perspective, we think it is a good buying opportunity. it is important to stress it is hard to predict when we find the bottom in the markets. if you look at the range of leading economic indicators, chances of recession near term look low that gives confidence to say we think stocks will be substantially higher in the next 6 to 12 months until we get clarity on risks weighing on the market, what's the new path of rate hikes, we could still be in a volatile situation. >> looking at how the market behaved the last several months, it is perfectly consistent with

the idea that this is kind of a bear market in the making in terms of defensive leadership and the way the top was formed, the fact that rallies can't get traction on the other hand, it could be sorted as a messy correction what would you be looking for to tell one from the other? >> i think one of the first things, does the curve invert. past two cycles, it inverted prior to market peak it gave a false signal in '96 and inverted in '98, and the last one in '05, and now referencing twos versus tens we haven't had that invert yet, let alone a false signal secondly, the credit markets low yield spreads are behind the usual. you would expect those to be higher and do so in a disorderly way. david mentioned leading economic

indicators, those would need to decelerate, almost everything you need to happen to start to say there's something bigger going on >> i am curious about 6 to 12 months makes sense to viewers. do you have a growing client base for whom the horizon is three to five years? what did you tell them are alternatives to equities interesting enough for those folks? >> with interesting rates moving higher it makes sense to have bonds as part of a diversified portfolio, but i also say as valuations get lower in the equity market, again, we're not seeing reductions in earnings estimates in any meaningful way, so really we have 20% plus earnings this year, flat markets. valuations have gotten 20% cheaper. so the forward looking outlook is looking more attractive obviously a diversified portfolio makes sense and bonds

are yielding some of the highest levels in a few years. having a mix of both definitely makes sense for investors. >> so we're still a few weeks off from another major wave of earnings, but we are getting in holiday season data. how much do you expect to have the potential to change the narrative? >> at this point earnings start to lose efficacy in terms of what investors are looking at. they're more focused on guidance a lot of it is coming to sentiment. what reverses that one, you need caution on the part of the fed. we think they're starting to move a little in that direction. we think we thought they would only raise rates three times next year, less than they expect to do, and two, on the trade front, they'll continue to get where they keep coming back to the table, try to de-escalate

tensions we think those will start to reverse that sentiment >> thank you as we head to break, let's look at some laggards. mylan leading the down total 3% loss is not much on a d kehis.ay "squawk alley" continues after a quick break. it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail. finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit. pgim: the global investment management businesses of prudential.

i am scott walker. here's what's coming up top of

the hour the latest on the selloff, including some big bets just placed in the options market on the s&p. we discuss with jim cramer who joins us for the hour. is apple the most broken stock in the market? its fight with qualcomm takes a dramatic turn. and the call of the day, another stock that's fallen on hard times whether it is a buy or time to bail carl, we're about 15 away. see you top of the hour. >> thanks. back above 2600. vix below 25 let's get the santelli exchange. >> i want to welcome john sylvia, dr. john sylvia actually the big discussion, of course, let's get to it. are we in early stages of a recession? how deep is global divergence with regard to the largest economies, and how can the u.s. at this point look down the road

and try to define the big stories, brexit, flattening yield curve, oil prices, germany, italy, japan, quarters of negative gdp. are these all of the land mine's of a global recession in front of us? >> -- landmines of a global recession in front of us >> these are the landmines the question is are we going to hit them or avoid them this is back to uncertainty. we just don't know what the resolution of many of these events are, and therefore the stock market has incredible volatility on a day-to-day basis. i would say you put together a weaker stock market, leading economic market starting to decline, we don't see that now if you get the yield curve inverting, those are signs of recession. we don't have them yet, rick, but volatility in the market dictates we need to watch these

elements >> john, is it different this time in other words, when i look at what's going on with brexit, i'm a very hands on person i look at the ftse and they're down less than other global economies. flattening yield curve, central banks played a large part in valuation of many interest rate levels oil prices down. might be a big event with how the market digested or ran oil waivers. is it good to look at these issues in that light or am i getting to a point where i am making excuses for what's going on in the economy? >> no. rick, it is essential to look at these items in sequence and think about yes, it is different. globalization of trade is under threat with respect to both brexit and china again, the discussion on iphones this morning with respect to china. the fed's manipulation of short

term interest rates. the yield curve has a very different message today than it had in the 1970s and '80s. you have to say the messages we are getting are different today simply because opec is not as unified as it once was the fed and other central banks, including ecb buying corporate bonds does alter the yield curve. >> my final question is if you take the notion that likely we're in a period of volatility, not the precursor of recession, as an investor, what advice would you give, your final thoughts >> if i'm sailing on lake michigan and i have a lot of storm clouds around me, i am striking sail, heading to safe harbor i think that's partly why, rick, ten year treasury rates are below 3% >> excellent john, always interesting speaking with you on the economy, both domestic and

global thank you. jon fortt, back to you >> thank you, rick after the break, more on this qualcomm, apple fight a breakdown of what china's court ruling to anme for the stocks that's next. stay with us ♪ there's no place like home ♪

argh! i'm trying... ♪ yippiekiyay. ♪ mom. ♪

welcome back an update on this legal fight in china between qualcomm and apple where a chinese court has ruled that apple is in violation of three of qualcomm's patents, issued preliminary injunction ia means. are iphones still going to be sold in china for the foreseeable future or not? qualcomm says the order should block the sale of almost all iphones. apple is saying it only refers to certain iphones that were shipping with ios 11 preinstalled of course apple has moved on from that version and, therefore, says all iphones continue to be on sale this is a statement from the general counsel is the qualcomm. the preliminary injunction orders are effective now the orders aren't specific to the operating system installed on the phones. apple made similar arguments on the trial and merits and the court went forward and issued these orders if apple is violating the

orders, qualcomm will seek enforcement through enforcement tribunals part of the chinese court system now this fight moves behind the scenes qualcomm say willing apple is in violation of the order no clear time line >> i keep trying to figure out if down 2% for apple represents, you know, the market saying, look, the stock is already down so much or the impact isn't going to be that great or after it's already down 27%, down another 2% means another thing to worry about >> perhaps more significant is qualcomm being up more than 3% right now up about 3.5% given some of these very legal issues related to royalties and licensing have been what's been weighing down the stock. they were having particular trouble in china now perhaps a light at the end of the tunnel from china but

it's a long tunnel, it appears apple no longer the worst performing dow component that now falls to exxon and jpmorgan the pressure came off just as europe closed about 20 minutes ago. we're back in three nus.mite incredible the t bw screen is on the new iphone xs. and our unlimited plan really takes things to the next level with your choice of the best in tv, movies, or music. it's the perfect holiday upgrade. i know what i'm asking santa for this year. you still write letters to santa? no. please. i send him emails. can i get his email address? oh... i don't feel comfortable sharing it. get the iphone 10 s and our unlimited plan with your choice of the best in tv, movies, or music. more for your thing. that's our thing.

took out some key levels earlier this morning, 24k on the dow for the first time since june and may respectively. the question, mike, at what levels the bulls feel they need to close >> yes 2603 on the s&p was the interday low on this correction we've obviously stretched below that the market came into the week oversold sentiment seemed cooled off. it seemed you had a lot of excuses. the burden of proof is on people who are saying that this is some kind of a base right now >> meantime, of course, the qualcomm news. they say they've won a preliminary injunction against apple in a china court for that we'll turn to tim arcuri tim, thanks for joining us today.

>> sure. >> if i told you imports to china will be halted, wouldn't you expect a bigger drop interday >> not really. this has been out there for a while, as a potential development. if you noodle through the numbers it's revenue so the stock down 2% makes sense when you go through all the numbers >> tim, what does this signal that is new for apple, if anything, could it be a shift in sentiment in china there are headlines about backlash given trade tensions and what's going on and then you have this, a tussle where apple seems to have the upper hand perhaps now that's less clear. >> my view has been qualcomm has

had the upper hand i think the onus is on apple to push the settlement. that's the first point the second point this may or may not be related to the huwei situation. these have been going through the past couple months this was headed into china and qualcomm talking about the potential for getting an injunction now for the past couple of phone calls. if you listen to the tone about getting an injunction was the most definitive i've heard from them on the last call. they may or may not be related it may be coincidental qualcomm has been definitive about this being a strong potential. >> where do you ultimately think this is going to be headed if qualcomm seems to have the

upper hand in this round does it mean the likelihood of a settlement goes higher or how does it finally get resolved >> our view has been headed to a settlement again, as time goes on, i think it's going to be challenging for apple to sort of argue with the courts when there are other companies paying royalties apple should not pay similar royalties. i always felt this would head to a settlement and still think it's the case. >> this reminds me of the apple/samsung fight, apple viewed it as a core values thing for them qualcomm's business model takes

credit for apple innovation. so to what degree because of apple's profile and perhaps more important its cash it can hold its breath longer. >> i think it's true it is a religious war for apple. i think the way they talk about it is in those terms i think there are good points made on both sides i think it will be difficult for apple to sit there and argue that they should not pay royalties in the same way that all the chinese players are paying, the same way samsung is paying qualcomm has gone through this big settlement with the chinese government and sort of come out the other side with an agreement that apple seems to not want to pay in similar terms so i see the arguments on both sides. i think there will be a settlement that makes both sides

happy and also is probably structured so that it does not jeopardize qualcomm's licensing as well. >> tim, thank you. as always, good to talk to you >> thank you >> mike, we'll see you on "closing bell. "jon, see you soon let's get to "the half." i'm scott wapner stocks under heavy selling pressure again this hour and now the new trades suggesting even more pain could be ahead it is noon and this is "the halftime report. >> the dow is again in a correction on pace for its first quarter. the nasdaq, its worst in the decade it's time to take a risk and put money to work. jim cramer joins the team today. plus, just how bruised is apple? the answers now as "the halftime "