good morning it is 8:00 a.m. in san francisco and "squawk alley" is live ♪ good monday morning. welcome to "squawk alley." obviously we're going to begin with the market sell offs. stocks again lower after coming

off the worst week of the year so far bob pisani is here at post nine to talk about what's important to watch as we approach the middle of the session. >> you'll notice something happened today that didn't last week last week, the low print was at the open oh, we're selling overnight. the market would come in, okay, we'll buy on the dip here m because we don't believe there's going to be a trade war. notice today the low print was not at the open. all of a sudden, we have a low print then it's just lower well that's telling you something right there. that the guys who are saying oh, we don't believe there's going to be any trade war. they have a little less crede bability right now now we have tweets over the weekend, more specific about potential other u.s. tweets. u.s. tariffs very specific retaliatory measures we have rumors they might do other things not boeing jets, but confirmation of that suddenly, this whole trade war thing is getting really real and

nobody particularly believed it. so i have been saying for weeks we've got to be very careful the market is very expensive we're still only 4%. >> what went wrong here, bob and we could be talking about the uber ipo or markets overall. but right now, i'm talk about the markets because people thought we weren't going to get this full blown trade war. everybody saying oh, the u.s. needs a deal, china needs a deal there are plenty of reasons to believe that a deal wasn't going to happen, it was going to fall apart and apparently, the wropg wrong people's guess was priced. >> the articles were about the miscalculations. the chinese kind of miscalculated some of trump commentary about how thing were looking. >> what is this? the kentucky derby aren't there supposed to be -- >> no, the kentucky derby is much better than that. we have much better ways of figuring out the kentucky derby. >> wasn't this supposed to be in

odds somehow >> what the market is doing now, 4% is not anywhere close to where we should be if there's a global trade war. if there's a global trade war, the global growth expectations are too high the earnings eck pexpeck tags ae multiple of the market for the trading is way too high. so i said last week, art and i, we did a whole thing on this if you take the current earnings estimate and just relouis the estimate to an historic average, you get to 26.50 right now but if you start saying wait a minute, it's not just global growth expeck tases to go lower. we have to lower the multiple. we have to lower earnings. so the market's pricing in 5% earnings growth for the next year, forward earnings estimate. if you go to zero, you can go to 2500 easily. take the $161. 2019 numbers are about $161 somewhere around there, higher you price in $161 flat for the

year 2019, 161, you can get to 2500 so that's a problem. so why weren't we closer the elements are they still don't believe it, but you're moving in that direction we are, we keep saying, we're one tweet away from a new high and one tweet away from a 10% correction that's how difficult this whole thing is the risk was to the downside and so far, the bears are getting more credibility >> ever been in a market like that where investors had b to be prepped for such a dramatic tweet? >> we've been in plenty of situations where the market has been overly optimistic, wu never this kind of situation where it's this susceptiblusceptible what becomes important is ly qui

fi and tight spreads you want to watch things like the big etfs last week spy, the biggest in the world, had titanic volume. like 100 million shares a day. now that normally trades 50 to 60, so we're talking about 70, 80, above normal volumes people got in and out like crazy. that's what the market wants to see. people making bets really fast in and out, you want to watch that >> are you unnerved by some of the flow data? hasn't been good this year >> i used to obsessively watch weekly flow data it's difficult to make broad determinations about where the market is going. because it will switch one week over i'll watch over multimonth periods where stuff is going for example, in april, hit big inflows, but i'd be careful about the weekly flip because the etfs are now used for tactical purposes so much that the next can get a complete

revers reversal >> in the last hour, kayla was reported on the u.s. china trade and tariffs. she said june 1st is going to be a key date to watch. given the fact that is when china says it will implement tariffs on $60 billion worth of u.s. goods is there an expectation here i guess in terms of trade or chatter and what investors are look iing at that it's really going to be the next couple of weeks that determines how much this market is going to price in a potential trade war? >> we'll be able to put some flesh ton the bone. before this was all speculation i noted a number of firms last week lowered their global growth ubs did by a quarter point based on vague ideas how this might play out we get now more specific numbers. agricultural tariffs, the tweets the president was talk iing abo over the weekend would target primarily technology in the u.s. that's why apple's down so much.

it's targeting the apple ecosystem essentially here now you're going to have specific numbers they'll be able to plug into the numbers and we'll get more information, but that's why the market is reacting it's still way too high. so i continue to think that some deal will be made because i think it's in both side's interest to make the deal. i'm still in the majority. but it's a little harder to make you know, the argument these days >> right >> a little harder if we had a dollfor every type >> i'm a glass half full guy >> that's nice we like that about you >> sometimes, the glass is not half full. >> some people say the glass isn't there. those are the ones you want to worry about. >> sometimes, people throw the glass. bob. >> thank you u >> another big story in the market today, shares of uber again falling in its second day of trading following a debut that saw shares drop as much 8%. leslie picker is back at hq with a hook at what welook at what wn

wrong. >> the ipo investor rs looking at paper losses upward of a billion dollars in two days of trading. that's more than the $700 million worth of losses lyft's investors have ub ear's deal was four times as large however. these two deals have spooked the market away from ride hailing companies and their billions of dollars in operating losses, questionable path to profitability. that's the key here that made it so hard for investors to value in this case, the bankers really missed the mark in terms of what the right pace would be despite pick iing a level toward the bottom now to some, that i signalled a cold deal, which caused momentum oriented investors to sit this out and retail or mom and pop investors didn't appear to fill that void. two sources close to the books say about 15% of f the allocation was given to retail more than a typical high profile

tech deal. typically, underwriters wabt to give as little stock because they hold less conviction around the names they buy, but they didn't really do the job b in terms of kind of pushing that stock price higher we'll be watching today to see if morgan stanley is able to prop up the price. each ipo gives one underwriter, morgan stanley, the ability to stabilize the stock, but those efforts can get u serped by heavy volume if things don't turn around, this deal could put a chill over the ipo market especially among companies with a similar pattern of heavy losses, guys. >> incredible story. uber at 38 compare it to recent ipo performance, lyft down more than 30% since its ipo, but it's not all bad. pinterest modestly higher. beyond meat higher with competitor impossible foods announcing a raise cara is at post nine

>> how you doing >> good. any thoughts over the weekend? >> i noted this was going to happen economics matter to these companies. to investors at least. and these are huge losses and it's a question, they're trying to do very hard. it's interesting silicon valley would say oh, this is amazon, which it's not or google, definitely not because it was a very promising company in that regard so there's a lot of people online, tech people, that are trying to do those excuses it's a really difficult business doesn't mean it's not a great brand, a promising area. it's just the pricing is really hard given how their prices are and consumers have been b getting the benefit of that. then secondly, there's a competitor in the market keeping those prices down then there's drivers. >> that sounds so rational where was that viewpoint when they were being valued at we thought 100 plus. >> gosh, carl, ifls saying that, but okay >> is there bitterness among those who got in

>> no, the it's saudis with softbank anyone that got in after 2015 essentially. these companies, they can't fight gravity. i don't know how to u you know, they can't fight gravity of these problems and even though there's a great ceo in charge, the guys who run lyft are terrific it's difficult you wonder maybe they should merge. another b possibility. >> i think investors need to consider, is uber a bell weather or anomaly because six, seven weeks ago before it went public, people talk ed about a $120 million valuation. right now, it's half that. >> right, investors. >> yes but are also invested in other things so have the value of some other things also dropped by half? >> no. they're different businesses you have to look at them differently the way you have to

look at big tech differently >> these other companies, there's big hype and money behind, we work. >> that's a different story. air bnb reminds me of pin tres it's a really interesting area, but still challenged economically no one's challenged like uber. >> how about rework? >> i don't know enough about it, but it seems lofty lofty is what i say. again, is it a real estate company? >> can we take argument that private equity is sophisticated, savvy, rigorous and throw that in the trash >> no, because the money's got to go somewhere. like washing all over the globe. >> saudis got all this money, they got to run it somewhere >> when i got extra money, i don't buy -- >> you did buy that green egg and never use it whatever it's problematic, teasing. it's problematic from an economic point of view and they

have to figure out how to get these other businesses and they have a short amount of time to do that. they're going to have to accept this is a price. >> that's the silver lining here, isn't it >> well, good. that's good and also these trade things, just a bad time. >> so i think that sort of begs the question, one of the things we've been focused on is does this throw cold water op the ipo pipeline but also, what does it do to those future investments by v n venture capitalists in the like in those next start ups? >> start making such massive valuations that's what it is. there's so much money they go straight upwards and you can't make economic sense of it. it doesn't mean again it's not a great interesting business it's just what is the economics of it. >> friend of mine tried to argue that the core app ride in cars bb b to uber what books were to amaz amazon turns out to be more about logistics and freight and -- >> but then the minute they put

on self-driving cars, what's their advantage? they are the reservation system for self-driving cars. really the two of them together when we get to autonomous cars, doesn't google have an advantage? do you really need this reservation there's price war, just what's the price? >> and does google know who's driving? if they, if they want to get in on this game because they've got their open autonomous driving technology, they know where all the cars are on the road because people are log ged into google maps >> google is a very interesting play >> is that even an advantage if they're going up against waymo >> that's going to be decades and decades. not tomorrow but it says there's an advantage to google in this kind of stuff. it seems like. eventually eventually >> turn to facebook. shares under pressure this morning following the call of

chris hughes to break up the tech giant facebook's vp responded over the weekend telling cnn quote, chopping a great american success story into bits won't stop foreign election interference or poison spreading online this as supreme court allows users to see the apple app store. shares of apple down 5%. if you had to pick a break up candidate? >> oh, facebook. google google >> did hughes move the needle? >> he definitely, everyone's been talking about this. just when a foubder does it, it creates attention. i did a long podcast with them on friday where he was more articulate about the reasons he did it and more clear. you know i think it just calls attention to the same thing then the political people are going to jump on they never were here before so whatever i'm very cynical about their motivations. whether they're going anything, but elizabeth warren was here early on i think break ups, i can't believe i'm say iing that

it's the wrong focus i think there's lots of ways through fines, regular lace and through opening up facebook's data that would be amazing. create lot of cool companies >> what do you expect in terms of ftc and finance being negotiated there also the details around what the settle m looks like? >> it's a question of what they add on to it but they break through the guardrails last time so they can't be made of paper ma shay they have to be made of something substantive. no compelling reason for facebook to do anything given how light the government touches. >> on apple, the supreme court has basically said that apple can be sued for the pricing on the app store even though apple doesn't set the prices of every app. the developer gets to set the price, but the plaintiffs have been arguing, hey, the prices are too high apple is taking this big cut it's not fair. go ahead, have the argument in court. how much of a risk is that for

apple? is because i mean i guess the court could say you have to allow people to get their iphone apps from some other source. but i don't know how likely. >> it's a monopoly i'm not a legal scholar here, so it seems like i don't think apple is a monopoly, but others do they have to be. it's a monopoly for certain people say in manhattan, everybody has an iphone. >> it could get the app on an drad it's like arguing mcdonald's has a monopoly on quarter pounder. >> it seems like focus, those are developers don't want to hand over 30%, which i get it. so maybe apple has to think really hard about that the spotify case is more interesting i think. and so the question is how much power does it really have. it's like amazon how much commerce power does it really have? it's a small amount of retail, but it's so large in terms of where everything's going so -- >> incredibly, some of the stuff in the journal today about

amazon getting into failed malls. and turning that into industrial space. >> good for them >> think so? tons of room near big transportation hubs near population centers. >> makes sense what can't jeff bezos do he's a really interesting innovative entrepreneur. >> lunar landings are next >> i'd like that to be the case. >> maybe he could get uber's stock up which i guess goes back to that point, about whether uber should be looked at as amazon or not. >> absolutely. >> overall, just a mood check in the valley whether it's uber, whether it's the supreme court today, whether it's trade has it changed >> very victimizeded very upset you know so funny to watch them puff their chest on. if you watched twitter on friday, they were like thank you, you're so great it was ridiculous. >> about what?

>> uber. remember years ago, uber cab b the only one who was great was mark shuster what los angeles who was great. here's the letter i turned down. ha ha, i'm an idiot. otherwise, they're very upset. >> looks like we got the market at session lows. 615. how much are the china trade talk and tensions that are ratcheting going to affectpplea. maybe boeing some others that have to kind of business and boeing's got its own issues separately. >> by the way, to make it the worst day of the year, you'd need another 40 points we were down 660 on the third of january. so it's not quite yet. the worst day of the year, but we'll see. >> i like that about you sunny character. >> thanks, kara. kara swisher >> all right thanks for joining us. after the break, we continue to

be all over the sell off how investors should be positioning their portfolios and or amid returning volatility we'll be back in just a memont stay with us they don't give two and a half stars to just anybody. here you go. what's this? it's your piano. hold this for a sec. we don't have a piano. no.. but the neighbors do. just ok is not ok. especially when it comes to your network. at&t is america's best wireless network according to america's biggest test. now with 5g evolution. the first step to 5g. more for your thing. that's our thing.

s&p, 2015. we continue to see levels around

that what was initially resistance last year earlier, we tried to pop through it vix hasn't move markedly. nasdaq is down it's interesting when you look at the stocks, even specifically in tech, that are most affected, it's not necessarily the ones with china exposure. we talked about uber, which doesn't have a lot that's down more than 9% others that are down quite a bit, twilio down seven pinterest, down 6.5. zoom down under just 6%. there's this interesting thing, risk offing, where it's not just about china. perhaps about investor appetite for stretched valuations for more risk. for some of those things that seem to be envogue just days ago. >> and we've had guests who said

if you're going to buy into the uber ipo, you're buying into the bull market. i guess there's a case we had there when you look at the moves in that stock. in terms of the selling, very broad-based. all but one sector trading lower. the one that's higher is utilities. so safe havens the other thing i would keep an eye on is treasury yields. you've seen the ten-year treasury note. the yields tick lower. you're seeing a move towards flattening of the yield curve and potential inversion between some of those areas of the curve as well, so just another one to keep an eye on on a day like this the selling broad-based. another example, trade lower despite the fact they're not part to have china trade story >> mike santolli is onset. the cover of the ft is whether or not they meet any tweet in that direction would have an effect >> at this point, yeah the market is kind of reset itself to the point where i do think anything constructive is

going b to be taken as a reflex positive but i think to all your points about how this has just become a general reduce exposure market because it's jumpier and leswas. very methodical. the volatile index is not as high as it was last thursday last thursday and wednesday, the market was clinching up in advance of something big, now it's more about now what we have a break down in talks. seems like some kind of a longer lasting stalemate on trade and then what's it leaves us with is kind of slowish growth and a lack of catalysts to really sink your teeth into. >> if we got constructive things going, right and it looks like they were going back to the way it was two weeks ago. would the market in turn go back to two week levels or have they been burdened ones and now

there's a reset that will be w lower. >> i think it would have to be b a process of building toward that level it's not just about getting trade reset to that point. it's about one of the most bullish things you could have said about the market coin comi into last week was that it refused to go down because people were satisfied with the general macro inputs you've kind of that. so if the muscle memory of that rotation >> but verizon was green until a few moments ago. >> you've got pocket of those things you'd have to rebuild the leadership a little bit. talking about a 5% wiggle at this point we're down 5% in a hurry, but we're not exactly cutting into muscle yet >> one thing that is higher, crude oil. all this political uncertainty, b-52 bombers in the persian gulf today. >> yeah. obviously not a help i think you when ever the market is a little bit unnerve d the wa

it is, it seems like there's a pile on of stuff oh, today, the supreme court has the to say the app store is a violator but to your point on oil, morgan, moving the opposite way of stocks which tells you that's probably a geo political input not operating as a risk asset as it normally does >> the supreme court is saying they can have the argument about whether the app store violates antitrust. not making their call either way, but bob pisani says no trade war being priced in here yet. does the hand get stropger for those who argue that the possibility should be priced in more and the market has further to go? >> i don't know how to quantify that because i don't think we really know what the effect on earnings is going to be and on the multiples going to be. i think a lot of different things could have come along to restart the fear that the psycy

is on borrowed time and look at the treasury yield curve again and we're back in that conversation because we're not going to get that little lift of a trade deal it's going to let us think that global growth is going to look bad. >> finally, i'm reminded of what paul jones told us the year would be characterized by 10% drofts and if it dropped ten, it was natural. no brainer was the word he used. does that fit with what your mystery broker or friends are saying >> i think a sense, maybe that's emerging, that we are in a wide swinging range maybe. it might be premature to make the call paul jones made that call when the market was off its highs down ten from when he was it was not that far >> layup was the word he used. >> it was in tine with thaso th part that was thanomaly. it was straight up because a lot

of things seemed to go right if this is just let's reset sentiment to looking on the negative side. i don't think the overall market was in an overstretched position going into this. people were just feeling too comfortable. that's changed >> thanks and now, european markets set to close in just a minute courtney has a break down of the day's action there >> it's a ripple effect around the world. major averages in europe dragged into the red after china announced those retaliatory measures here in the u.s. with the declines today, italy and spain's major averages trading in correction territory. they're both down more than 10% from recent highs and the ge germman da chrks half a percent. that marked the third biggest week so far this year according

to bank of america, so a key question for investors now, could the latest u.s. tariffs on china be a sign of to come for europe market watchers looking for better sense towards the end of the week saturday, that's the deadline for president trump to decide on potential auto tariffs on the eu analysts expect the administration will extend that cut off time an escalation in u.s. china trade relations alone could put a dent for 2019. some companies absorbing the cost, but the eu says it's finalizing the list of u.s. goods to target in the event that trump imposes those levies on european awe u toes, so see ing the sell off continue today, chip stocks getting hit. ams and tronic among the worst in the stock 600 it's all around the world. morgan, back to you. >> key point there, the fact that trade talks between the

u.s. and number of country rs taking place they are a lot for investors to digest over to sue for a news update. >> good morning, everyone. here's what's happening. russian foreign minister lavrov holding talks in sochi with his counterpart. wang is on a two-day visit ahead of president xi's visit to russia in june secretary of state pompeo will arrive in sochi tomorrow to meet with president putin israel's president granting netanyahu a two-week extension to form a government this as coalition negotiations continue among the country's various political factions amazon is offering its employees a chance to start their own amazon delivery business if they quit their jobs, the company will cover up to $10,000 in start up costs if they are accepted into the program. it will also pay them three months worth of their salary from their previous job. and safety regulators are investigating whether general motors went far enough when it

recalled about 3,000 small pick up trucks in 2016. they will determine if gm should recall about 115,000 chevrolet colorado and gmc canyon pick ups from the 2015 model year after receiving numerous complaints. you're up to date. that's the news update guys, back downtown to you, carl >> sue, thank you. when we come back, watch iing t markets here coming off the worst week for stocks so far. and we'll see if we put in the worst day of the year. stocks down at least down almost 600 points back in a moment

dow down 580 s&p back to 2815 as these tensions between the u.s. and china continue to drag stocks down with china say iing it wil quote never survey rowander on trade. kayla in washington on a big day today for us hey. >> china's vice premier say iin the government won't bend on matters of principle that would create permanent changes. those are final sticking points that the u.s. said was 90% done. president trump trying strong arm china into changing its mind with a series of new tariffs now charge iing 25% on about ha of china's exports to the u.s. and evaluating a tariff on all of the rest.

china punching back saying in about three weeks, it will slap tariffs on $60 billion in u.s. goods from lightbulbs to e peanuts to beef, zeroing in on products from the heartland that president trump has tried to protect. china may be sharpening other tools, too it could stop purchasing farm and energy products, cut back on orders of boeing planes and b possibly dump treasuries no comment from the treasury didn't on its planned auctions for $237 billion in debt this week deutsche bank says the more likely approach is what it calls a slow structural bleed in china's u.s. bond holdings rather than a dumping. as for boeing, a spokesperson telli telling cnbc, we're confident they'll come to an agreement that benefits both u.s. and chinese manufacturers and consumers. when discussions will continue is unclear no plans are confirmed for a u.s. delegation to return and the white house officials are pointing to the g-20 in japan in

late june. japanese officials have said president trump has not yet confirmed his attendance morgan >> thank you in steve liesman joining us now with kevin gentlemen, thanks for joining us steve, we had jimmy on in the last hour and he made an argument that there need needs to be more dynamic modeling around the trade and tariff stuff and what it means for the economy. what do you think? zwl i think it's right there are some reports out today where economists are trying to estimate the impacts and say you know what, we didn't get it right the first time in part because we didn't get the indirect affects right in part, the confidence channel is a big one there's also currency channels and then you have u a big downdraft like today with the equity market. you have to model in what kind of economic impact the big downdraft might have so what you do, you pencil in small numbers for gdp and

they're off setting things sometimes you pencil in small numbers for inflation. so they're rethinking it and most of the numbers on here are pretty dire. in part, in the first place, the decline in estimates for a global growth are the most dire but also the nonaffect u.s. growth >> kevin, i've heard a lot of commentary on air that maybe we're a tweet away from a rally or deeper sell off here from the president. in terms of what we have got frn the president, it's been quite a series of comments suggesting that we could be settle ng for the long haul and there are much bigger things at play. so what is it an investor to do? what would you be advising clients to do? >> well, what we've been advising they will to do is to really look at the portfolio regardless of what happens with trade, you're much later in the cycle here and valuations are not cheap.

so you have to really look at consistency and durability so regardless of what happens with trade, very strong balance sheet here makes a lot of sense. consistent cash flows. all those things still just mean that much more in light of the uncertainty surrounding trade. >> morgan, i just wonder at what point the credibility of the tweets runs out. >> that's a key question >> you had mnuchin saying we're in the final lap of the trade negotiations the last week or the week before that, that he said that. you've had kudlow come on and say where talks are constructive at what point does the market just disregard those kind of comments, which means that you know for key come taiters on the administration, there may be a lack of credibility, without a net, you could fall and not have the able toy reverse it until you get china being the one this market believes. >> so steve, what do you think

is priced in if there's a global economic slowdown taking place, based on a trade war between the u.s. and china, the market hasn't fully reacted to that. what would it take for that to become more of a narrative versus the tweets? >> i think it's on both sides, jon, because parts of the direness of the first round of tariffs didn't come to pass in because they were off setting things in the economy. what's happening now and you know mike would know more about this than i would, you're unwinding that part of the market where 80% were count ong there being a trade deal that's being unwound and now you're starting to figure out what are the knock on effects to confidence what happens overall to gdp growth if we start to see those lower numbers, if the first quarter gets revised or the second starts coming in weaker, that's when you'll see the market reacting there's another thing you have

to layer on top. at what point does the president start to understand that there's a much bigger negative effect from just these negotiations than there would be potential upside from an actual deal >> when you look at markets, markets have, if you look at the flatness of the yield curve, the belly of the yield curve, global growth expectations, the imf moving towards a more slower growth trajectory. there's not a lot in terms of expectation except for the united states where things seem to be getting better if you got something positive and maybe a lot of what's going on now the posturing and what's going on behind is is scene that is we don't see is much more important. but unfortunately, we don't have access to it those positive things could be a much better catalyst if we get something done, but clearly, what's happening in the last couple of days on the surface doesn't look or feel right and

if the market were to become nervous and freeze up and not provide capital to the real economy, then you could see a s slowdown you can't read too much into one tweet. >> guys, as we're talking, steve, i'd love to get your take on this go pro according to reuters, is reiterating plans to move some production to mexico from china for cameras that are bound for the u.s. they're going to keep production in china for non u.s. bound cameras. this is exactly what the white house is looking for >> yeah. i mean yes and no. i think what the white house is looking for is it wants that production brought back to the united states. that increases pressure on china. >> it's the ideal case >> right >> what the president said >> remember china sells to the world. u.s. is some significant part of that but if it's going to keep the

go pro, i don't know what the plit is in term of its int international versus u.s. selling of products. the other problem you have is just that. that is not a bad outcome maybe longer term, but in the short-term, you have businesses redirecting their supply changes and economists talk about what they call deadweight loss. those are like vice president of global international operations on the phone at 2:00 in the morning trying find another place to produce a market they may or may not be able to source in a different place >> kevin, how long can this trade fight, trade war go on before it really does start to have the kind of effects that some people fear it will have? well, up until now, it's been reasonably okay because there hadn't hasn't been that much done but now with the levying of the 25% tariff on $200 billion of chinese goods, potentially another 300 billion coming down the pike, now you're up about

500, 600 billion which covers all chinese goods. so that would be a the material difference if those additional 300 billion were to come on, but that's probably not going to happen for a while so the biggest effect now would be some kind of loss of confidence in capital markets where if investors were to get very nervous and stay that way for a while, that could with an issue. you have to watch closely about the chinese dumping of u.s. bonds. we don't understand how that would happen given what china's looking to do with their currency. but none the less, this is an environment ripe for rumor which could affect investor psychology and through that channel, the global economy >> yeah, it's comeing from all ore. kevin, steve, thank you. >> meanwhile, nasdaq down more than 3%. near session lows. bertha coombs is there with more >> in the last week, we were

headed very much in the direction and we got some positive tweets, positive news and things looks better at the end of the day we'll see what the momentum is here at the moment, we're looking at a two-month low in particular for the small caps you know the interesting thing is we talk a lot about imports and we talk about multinationals having issues with these trade talks not being resolved, but it's the small caps that are in the worst shape. they did not put in a new high earlier over the last month. and they are back in correction territory here among those sectors that are also following suit, even as the large caps are the biggest losers we've got chip stocks back in correction as well that sector had put in a new high, but we are seeing a big pullback because chips are one of those sectors that are very heavily influenced by these potential chinese tariffs continuing to be so steep.

apple is among the biggest losers today the biggest drawdown showing its second worst day of the year the worst since january 3rd. apple of course has tremendous exposure in china and it has suffered a slowdown already in china in terms of its hand set sales. we'll see if these continuing tensions, continue to impact taking a look at chip names today, they are down heavily as well but i also wanted to take a look at bio techs the sector headed back towards bear market territory. mylan among 20 drugmakers being implicated in a federal lawsuit of price fixing of generic drugs having a big losing day today. that is one we are going to watch very carefully guys, back to you. >> all right thank you, bertha. as the nat dak the half is only a few minutes

away you're going to have your hands full >> no doubt, like you guys, carl we're going to continue to follow this big story. try to answer the question, what is the breaking point for stocks if we keep falling the way we are now, will stocks be able to bounce back if you get a tweet or any advancement in the trade talks? we'll dive into that with our investment committee we'll look at the continued uber crush. at what point if any is that stock worth buying and we'll talk about the one health care stock you might want to take a look at based on our call of the day. coming up about ten minutes or so see you in just a few. >> sounds good, scott. looking forward to it. over to rick santelli. hey, rick. >> thank you you know, there's a lot of markets where the visuals pretty much the tell the entire story one is a product we export that china's pretty fond of soybeans here's a chart of beans back to 2008

right now, they are hovering at level we haven't closed out since the end of 2008. but it doesn't only effect the exports in the commodities right now, tens hovering around 239. 247. down eight basis points. if you up the chart year to date, the feature is 236 is the low r for the year from the end of march so we're not that far away that's the level you want to pay attention to finally, when it comes to the equity markets, it is wrap upd in what's going on with the trade skirmish because china and president trump, the u.s., they direct much of their talk towards each other through the transmission of the marketplace to see how it moves, handicap, who's getting hurt, who's getting hurt more and to that end, we see that we have what is called a triple top in stocks. that's really the key i want to talk about let's do quick work. we have double tops and bottoms.

triple tops and bottoms. here's your double, your triple. one, two, as the market does this, usually you want to see an upside same is true with tops here's the one we're playing closest attention to the triple the reason it's so fascinating and want to spend time is that art cashin, the sage, talked about the trip top today the problem i have, and this is preference in many ways, in the '80s, when people were pre computer and really applying heavy math to try to beta test different models, technicals and all that evolved into electronic trading. double tops are good and thing that is matter how much distance is between each one. but the point of this is we used to have a saying on the floor, there's no such thing as a triple top why would we say that? because of the double top, you try to get to a point and you retest it.

you know, could we take it out when you fail, usually, you get a big move triple tops mean they're not going back to the ones their going back to the well twice. it's like pac man. they take big bites out of this resistance usually triple tops aren't a top you want to bet the ranch on doesn't mean it can't give you some down side the best thing with a triple top is to try to fade it also one other word of caution usually triple tops don't explode when they break out as aggressively as double tops do so unlike baseball, sometimes doubles give you more home runs in the final analysis of trade than triples morgan, back to you. >> rick santelli, thank you. eric chemi is back at hq with more on the biggest laggards >> the dow crossing below the 200-day moving average for the first time since february. keep track of that level industrials and tech leading the way to the down side apple, caterpillar and boeing. those are the three worst stocks

on the dow on a percentage and points performance the three of them alone shaving more than 200 points from the blue chip index. that's 200 out of the 600. those three names, the worst performance on both of those levels no surprise, given their dependence on chinese demand the industrial companies and the technology in the chip sector. you include intel with those three names, those four companies combine each of them, they've all shed more than 10% just since may 3rd when trade tensions escalated take a look at those four names today. that's really going to tell you where the markets are going to go, going forward. if we see them pick up, that might bring the rest of the market up. if they continue to go down we may be looking at 700 or 800 or more for the rest of the day >> eric, thanks. dow down 630 close to session lows here hanging on -- just lost 2810 dow down apple wndo we're back in less than three minutes.

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welcome back uber shares now down 10.5% just today. trading at $37.19. the company suffered a loss of over $600 million of market cap

on its debut on friday making it the worst first day dollar loss of the u.s. ipo. and this is exactly what should be happening according to the author of the "new york times" op-ed y you should root for the uber ipo to fail calling it a verdict on the winner-take-all venture capital model that dominates silicon valley harvard business and law school professor is with us now here at post 9 great to have you. >> thank you >> so you'd argue that softbank's approach has altered market dynamics by just pouring money into these start-ups and now is this justice? has it happened yet or is there more to come >> i think there's probably more to come. the point is no one likes to see blood in the streets but prices are signals. we need a verdict on meg mega venture capital which says it's excessive it's becoming about raising money, not about investing and it's excessive because lots of investors and young people

are looking around for payday and lottery tickets in a way that's distorting their choices. >> what about the argument that amazon is in effect doing this itself under the argument that there are so many industries that are changing massively and they have a huge war chest to pour money into those areas and dominate them, if nobody else steps in to challenge them they'd say we're doing that. >> and they should be doing that that doesn't mean you need to do the megaventure capital model which is writing billion-dollar checks to premature companies who aren't ready for it. and as a consequence, the externalities to the whole koerks system are large which is a way of saying everyone wants to be raising $100 billion fund. everyone wants to be writing checks and it's all about writing checks it's not about doing the hard work of figuring out, wait, what are the good investments and that's the problem for all of us and why we should be rooting for something negative here >> you could argue there have been positive ones out of this model, right and even uber specifically for

the consumer, for inflation. >> you're right. consumers, we've been winning. i've been loving the discounts it's also an unsustainable business model unviable business model. that's not good because everyone starts pursuing unviable business models and everyone is competing on who gets funded, not on the quality of your products and the one who ends up winning is not the high quality product but the one with the access to the stupid money and that is something we don't want to see. and that goes on and on and on and you're right, carl i love it. and i like uber and i admire uber the company but these larger distortions are much more important to the overall economy. >> how much is symptomatic of monetary policy? we've been in a prolonged environment. you can make this argument about venture capital and tech but you see it in other parts of the market, too. reinsurance rates which are much lower than they should be given catastrophic events wi s we've n >> this is reaching for yield and reaching for return. you have to go back to softbank's funders and think, what are they looking for?

they're looking for returns because they have holes in their pension funds or sovereign wealth funds and need big, big promises of returns. what's happening people like cost bank of willing to offer big returns which are kind of irresponsible. then people fall for it and we're into the cycle and we'll have these distortions, on and on you're right the underlying reality is risk is mispriced because of artificially low rates >> if you want to bet on this all falling apart, what's the best way to do it? >> i'm not in the betting game i'm an academic. >> i'm not asking you how you're doing. how would you do it? >> i'd stay away i'd stay away. certainly if you're a retail investor, i'd stay away. you want to be very kind of fundamental in this. so in the book that i just recently had come out, i try to focus on the fundamentals of finance. that's not about chasing companies with $10 billion in operating losses that's about real cash flow. real value creation and what we should all be focused on >> do kids at hbs want to do

this i assume they want to be travis? >> you're right. there's a huge appetite for tech and in part that's what i'm concerned about which is the misallocation of talent. people are like, i don't care how stupid the business model is, but i got a check from softbank but that's not good for them or anybody. our students are wise and come back and realize that, wait a second, this is -- >> really? this is turning out to be a good case study >> i personally think the response to the op-ed that i came out with, people hate to see people root for something bad because it feels negative. i don't want to write something negative but i was surprised how many said, you're right. it's nasty and it's got to stop. that's what the op-ed was trying to get at. >> the book is "how convince works. the guide to thinking smart about the numbers. very pretty book lots of great charts and info in here can't wait to dig into it. mahir, thanks for biths us before we send it off to wapner and the "half," dow down

584. we've seen some intraday selling. when europe closes there's been some tape bombs today. we'll see if any of this is met with intraday buying which recent examples of a 1% gap down did see. keep your eyes peeled to the screen this afternoon. i'm scott wapner we begin with the market sell-off stocks pounded is there a point of no return for your money if things continue to get worse? good to have you with us as we welcome in our investment committee as well on this stormy day outside and in for the stock market joe terranova, stephanie, kevin o'leary is here as well. the cnbc contributor let's start with stocks under that heavy selling pressure. more threats from the president. more retaliation from the chinese. all right, joe, buying opportunity in any way or do you think this is in big danger of getting a lot worse? >> you're not going to lik