good morning it is 8:00 a.m. at tesla headquarters in palo alto, california, 11:00 a.m. on wall street, and "squawk alley" is live ♪ ♪ ♪ good thursday morning. welcome to "squawk alley." i am carl quintanilla with morgan brennan and jon fortt quite a session already as we fell about 300 points on the wake of a weak ism number.

dow briefly fell more than a thousand points over three sessions now just around that line. it will be the worst week for the year for the dow as long as it is below 26012 i think. selloff in tech stocks leading to market decline this week. who better to turn to than bob peck who joins us this morning great to have you back. >> thanks for having me again. appreciate it. >> it has been a crazy few weeks in the ipo market. what do you think people are misunderstanding or getting right? >> couple things first of all, benchmark, the s&p up 15% give or take. you look at all tech ipos this year, they are up a little less, around 13% give or take. if you do x, you're up 20%

actually you are okay, what's interesting if you look at first tick to now, tech ipos are down slightly the question is what's driving that what you're hearing or seeing is investors are looking at a couple different things. one, what's the revenue visibility of the companies, is there a backlog of a recurring nature so one of the things we did, we carved up the tech ipos and said who more has the attributes, recurring revenue, good visibility when you look at that, those stocks are up over 30% investors are putting more emphasis on names they can feel comfortable with. >> heavy cloud >> a lot of heavy cloud, software you can have that recurring revenue. other thing that's interesting, we looked at the conviction of portfolio managers we saw if on the first day you pop greater than 40% or didn't, if you popped greater than 40%,

those stocks are up 30%, give or take ones that didn't pop to 40% are flattish to down interesting how investors and portfolio managers are bifurcating the universe where they're putting bets. >> i want to mention the nasdaq has gone positive or at least reached break even no longer on track to be the worst week for the dow but anything could happen. how much of this, bob, might be a revaluing of growth in general? i'm looking at stocks that are toward the low end of where they have been trading for the year, ex-january, that december dip was crazy. i'm looking at vmware, palo alto americas, stitch fix, i don't know of just went public but are behaving like ipo stocks is this is not about ipos, is this about growth? >> one of the names we talked about was shopify.

great stock that had been. all the stocks you mentioned did a screen, they're down double digits, 20, 30% or so. still up for the year, but having retraced a bit. the thing you said about portfolio managers focused on multiples, have they gotten ahead of themselves, still good business executing as we head to we don't know what october is bringing. >> when you look, we have seen in the broadly, creating buying opportunities within internet. where would you see those? >> mark mahaney will be on and let him, but corporations are looking closely at opportunities, particularly as valuations pull back we're still seeing an up tick in m and a. for third quarter, it was flat, down 2%, but year to date, it is

one of the best years, one of the top five years on record strong year in m and a, but companies are looking to take advantage of companies that have fallen back. >> may make you think trade resolution is happening? >> by far the biggest question interest in the election ynext year particularly depending what you're focused on, may be an impasse, but everyone is cautiously optimistic on trade but no one really knows yet. >> let's talk about direct listing. bill gurley was on bringing the heat from the silicon valley perspective, why more direct listings i am trying to figure out what kinds of companies will that work for, news that stacy countrying ham was at the meeting in silicon valley, talking about a way to do a fund raise with a direct listing.

is that the game changer if that happens because a lot of companies do need money when they're coming public. >> great question. bill gurley, highly respected. lot of respect for him one of the top vcs in the valley the way we look at it, we think a lot about this, talk about this with clients, i don't think there's one perfect solution for everybody. what i mean by that, for some, airbnb was reported to be looking at direct listing in 2020 maybe it works for them, don't need cash, they're well known. avoid delusion, that may be a great solution for them. there are others that maybe need primary capital or have a big sum of secondary capital to be sold they need to be cognizant. third part, i go back to jeff bezos and what he did which i thought was amazing, when i was going public, he hand selected

investors. one of the biggest, bill miller. he made partners out of investors versus having speculators or traders he wanted key mutual funds to be there for the long haul in the good and bad that's part of the ipo process that's missed on direct listing. it can be valuable i don't think there's one solution fits all. >> i was talking to frank swif en, he said they're considering direct listing, earliest going public june next year, then the election issue after that. >> sure. >> part of the reason going for direct listing was potentially ability to select more early investors, and there is that angle on the direct listing if you frame it right >> exactly i think slack did a good job having a bunch of one-on-one meetings in addition to analyst's day. spotify had more of the analyst day. i think it is critical, especially for a business.

none of the businesses go straight up to the right, there are bumps along the way. you want to know investors are behind you and will support you when you hit quarterly bumps. >> online broker stocks sold off, a number of them came out, charles schwab, e*trade, cut commission fees to zero. it speaks to disruption we're seeing in fin tech, are we reaching a tipping point in terms of the financial piece of technology >> it is a great question. fin tech is huge as you know robin hood has been such a disrupter, you've seen other place come along it makes the incumbents think about how can they maintain revenue growth or absolute margins with some of the disruption as they match price cuts, 0% trade fees, how do you make it up so you continue business along. great question, one they're going through. >> one example of disruption

that worked because wework, ridesharing, bitcoin, there is other promised disruption not having a good year. >> funny, we talked of this previously at the heart of that, the unit economics. investors are willing to fund money losing companies if the core of what they do is making money and giving you good return excess profits redeployed into marketing, hit the gas pedal, grow faster. at the heart of the companies, investors are critically focused on what is that unit economics are you making money on the core thing you do >> finally, congratulations to kristin peck. >> thanks. my wife. incoming ceo >> big job >> see you next time to shift gears, some disappointing debuts from recent ipos, part of the sell off story

as you heard us talking about. deirdre bose has more. >> it is a mixed picture uber and lyft between gains and losses, still trading below record lows. and more broadly, look at the biggest losers in recent ipos in the last month mostly enterprise tech names that have been better performers zoom shares, down 20%. pager duty, down 30% still above ipo prices but have taken a dive recently. the average is now 2%. of 23 ipos year to date, half are trading below offer price. last 90 days, average return is negative 2%. based on those numbers, it is not all that surprising if folks

wonder if the ipo window is closing. digging deeper, there's indication it could be for some types of companies and not others since september, debuts from consumer facing names with unclear path to profit and the, peloton, smile direct are the worst performers along with lift and uber there are smaller ipos in health care and enterprise tech still trading above list price data dog, cloud father, ten times genomics we will track these, and you talked about the big one next year, airbnb, could be looking to do a direct listing back to you. >> we'll see what they do. that's one as you said they're all watching thank you. downright compelling that's what our next guest calls opportunity in some of tech this week as stocks slide in a big way to kickoff before.

rbc says four anfag names are buys, he will tell you which one isn't after the break. devices are like doorways

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call, click, or visit a store today. social stocks are on the move snap specifically under a little pressure this morning. julia boorstin has more from l.a. >> good morning. snap shares down 3%, tracking for the worst week since may, following the audience tracker

found the strong quarter ended on a softer note twitter is down less than 1% it has been 5% for the week, it is re-entering correction territory. facebook is actually in the green, up 1% continuing its relative outperformance, shrugging off an eu court ruling that makes it responsible for pulling down content on the platform that violates different eu laws sticking with faang. another big mover, netflix, those shares are down 2% follows a needham analyst note saying they must lower the price. >> let's stick with tech are bargains to be had as valuations drop to start the month? mark mahaney out with a note henry blodget also with us here at post nine good to have you both here mark, on post nine, rare treat

to have you here. >> good to be here. >> i want to ask the top longs netflix, facebook, spotify, uber you've got this ism nonmanufacturing number this morning. to what extent does it impact internet names that are involved directly or customers are? >> i think indirectly, impact is indirect to start off, we're in correction mode, not just across smaller social media names but internet names as a whole. on average, google, facebook, amazon are off about 10% we're in correction mode netflix is worse than that we had this wrong year to date, but we like the stocks haven't had a change in estimates. estimates are the same, price comes down, valuations are more compelling looking at the names, facebook 17 times earnings. google 18 times earnings amazon 24 times free cash flow those are attractive entry points here and now.

>> which looks the least good to you, and to what extent as the story on disney and other companies entering the fray against netflix kind of change a sentiment and story around that stock, even beyond what the numbers are telling you. >> it has dramatically changed sentiment. the sentiment is the lowest in two or three years i am spitting in the wind when i recommend the stock. that's okay. i think there's a belief they'll m miss subscriber numbers. the survey finds most want more than one i think the biggest trend we're missing, we're seeing accelerating declines in paid tv subscribers. creates opportunities for netflix, strongest contents

ever i am sticking with netflix probably the biggest risk reward, best risk reward play three to six months in large cap tech >> he is right about tv viewing. but their own guidance has given people reason to worry and doubt. >> well, i mean, this is where the growth is. this is underlying mark's thesis everywhere else, you're struggling to grow you have to play a multiple for a company growing a few percent a year all these companies are still growing very well and multiples are no longer insane i think we go into recession, tla they're going to get hit but the question i would ask on netflix is when do they penetrate enough of a global market that the subscriber slows is permanent. >> possibly we're at that tipping point now, i don't think

so they have 150, 160 million paid subscribers. i think video screaming is a natural app on every one of those. whoever the netflix is in ten years, it will be five times bigger than netflix of today maybe somebody will surpass netflix, but i doubt it. they have a scale advantage, spend more on content, better brand name, more globally distributed, better partnerships we have a lot of choppiness. you buy that choppiness. that's how you make excess returns. >> i can't help but think, i will use netflix, heaven forbid we go into recession, customers aren't going to spend as much going out, but probably will get home, get under the covers, watch more tv. i think it begs the question, is there anything, netflix or other names that you cover you see as recession proof? >> none of them. some may be more recession resistant. during the great financial crisis, only going back 12 years, google went down to 3%

year to year growth. next recession, they probably go negative rest of advertising would be down 10 to 15, they're all cyclical, but have secular tail winds. netflix, it is inexpensive entertainment. 8.99 a month for high quality, unlimited entertainment. sounds like a good bargain in a recession. >> talk a little uber. get off netflix. one of the top longs i have a number of points of skepticism. >> yeah. >> what the stock has done since the ipo. you did a survey showing drivers seem pretty happy with the app, talked to the ridesharing guy, he said the newer drivers are happy, but the longer they stay, more unhappy a lot moving against them. what keeps you convinced. >> there are two things you didn't mention most don't want to buy stocks in lock up expiration

and the legislation that rolled through california, i think both uber and lyft have to pay more. >> thank you for helping my argument >> having said that, this is a secular growth industry. i think uber has the opportunity to be three, five x bigger they have 70% market share how many businesses have that dominant market share. they're the leading play off ridesharing directly or through investments. they have options in terms of meal delivery and uber freight you get this for two times ev to sale i am willing to do it. if you're willing to take volatility, in 12 months, there's fantastic risk reward on uber. >> thought you were going to say a couple of years. you think they recover in a couple months? uber back to 42 end of the year? >> i don't know, could the stock

go up 30% in three months? lock up expiration is november my guess you'll have funds dip in immediately after first week of november. >> because of supply share supply >> yeah. i think so i also don't think you have a lot of people currently owning that want to sell when it underperformed since the ipo when they gap up, you have more incentive to sell. you don't have that case here. it is underperformed. >> henry >> he makes a good case. i come back to people love the product, all these things that are raised we have seen this for five years, each time the fundamental performance of the company is good, they can raise prices to drivers and on customers, still better than calling taxi i think growth is there. at some point we're going to settle in. mark is right, sentiment is terrible on uber and netflix and that's actually the time to get involved >> your point, people love it because it is cheap.

>> it is way more convenient think way back nobody ever had to get taxi. it is much less convenient than pushing a button they figured out a great service. >> mark, what about the move to beyond driving, chefs, all kinds of things, presenting marketplace for short time work. is this part of making the argument that drivers are core to the platform or trying to be a marketplace for all kinds of temporary workers? >> i am not a lawyer, but it is hard to make the argument drivers aren't core to the platform i know they're making that argument that's a hard argument to make i'm sorry, maybe there's a political motivation behind showing social value of uber to societies. but also they have millions of people, temporary employees. to match them with employers sounds like a win, singles,

doubles. both politically and business wise will take awhile to build up. >> whatever it takes to get on base thanks all of september gains were lost in the first two days of october. boy, a volatile week following a steep drop to today's session. all three major averages are back in the green. dow up 14 points a lot more on isth action to come stay with us - stand up if you are first generation college student.

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welcome back to "squawk alley. the dow just turning negative slightly again now in this volatile session more tariffs on eu exports, the story in europe, the markets there set to close in a moment seema mody has the action overseas. >> that's a big part of the conversation i would like to draw your attention to the uk stock market, extending its slide after a 3% drop yesterday, down nearly 1% today after uk services industry, data

unexpectedly contracted. germany, france avoiding that. a proxy for the business sector as a whole did contract the first time since april of 2013 a reminder that the story in terms of economic front not just tough here but overseas as well. adding to investor caution, $7.5 billion of tariffs on european aircraft, agriculture and other consumer goods set to take effect october 18th autos, industrials are lower however, new tariff list did exclude certain spirits and leather goods. that's why makers of champagne and cognac are up sharply today.

hermez up. they have at least 10% sales exposure to the u.s. one big earnings mover, debeers seeing a drop in sales of diamonds. and that stock is down today >> thank you time for a news update let's go across the deck to sue herera >> indeed. thanks, jon. here's what's happening at this hour lawyers for victims of the las vegas mass shooting are reaching a settlement with mgm resorts. the amount expected to be between 735 and $800 million it is expected to be completed by late 2020 kurt volker, former u.s. special envoy to ukraine is set to testify before three committees behind closed doors he resigned his post friday after he was named in a

whistle-blower complaint involving a phone call between president trump and president of ukraine. senior taliban leaders meeting with pakistan's foreign minister in islam bad as parking lot of a push to revive discussion aimed at an afghan peace deal an iraqi security forces fired live bullets into the air, use tear gas against protesters hours after a curfew was announced. there were two days of protests where at least 19 people have died. that's the news update this hour carl, back downtown to you >> thank you very much. stocks arevil volatile following a 300 point drop to start today's trade in the heels of the ism number. secto sectors to be in if you're interested in protection after the break. back in a moment

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stocks are volatile, mixed picture for major averages, dow down about 25 points, s&p up four, hanging onto gains after big losses earlier in the session. another recession scare has been gripping wall street, but the question investors are asking themselves this morning, is that what's priced into stocks. mike santoli is here with the answer, perhaps, to that very question. >> i can give the answer to that the way you posed it, recession outright is not price into

stocks now, but it is not a surprise to the markets we're talking slow down. maybe profit growth won't be that great look at the comparison of the s&p 500 against the total bond market, you'll see steep underperformance recently compared to tote wial bond markt index. that's a little of the fevered chart of how worried we are about slowdown, underperformance of stocks. i would say implication here, cyclical stocks underperformed, defensive stocks, since july by 6 percentage points. a substantial retrenchment of growth expectations if you trying to figure out what profit growth the current valuation is implying, if you incorporate bond yields and everything, low single digits, maybe a little better again, not expecting all that much in the way of growth at this point now it brings you to the soft landing debate if all you see is lull in growth, stocks probably have

that figured out really we are in a vigil waiting for recession before too long, talking negative profit growth for next year, significantly more down side for stocks at this point >> mike, stay with us. we're going to continue the conversation worst start of fourth quarter since 2009 what's the hedge for red october? joining us, dan suzuki from richard bernstein advisoriers, and tracy mcmillion. good morning to you both dan, i will start with you what do you think with all of the macro uncertainty, what do you think is already priced into stocks, what does it mean for direction from here? >> clearly i don't think a lot is priced in if we are 3 or 4% from the high, things are looking okay to the markets. i think i have been scratching my head for some time at the continuing waeakening fundamentals you can see in the data, the market is seeing through that data.

one mark from the ism and there's a dramatic reaction. i think it isser rat i can, but what's clear in the data, the fundamentals are getting weaker and faster moving stuff, more timely data is pointing to things getting weaker looking forward. that's the biggest risk. bulls point to the consumer holding up strong, but it is a matter of how much personal spending peaked a couple quarters ago. really it peaked last year government spending peaked last year all these things, not just the business cycle everything is slowing. that's the biggest risk, you're not seeing signs of concrete rebound. you're seeing a lot of hope out there. next hope today if you look at fed futures, they're pricing another fed hike. >> cut. >> cut, sorry. maybe that's holding us up i think that hope is way

overdone. >> tracy, do you agree given big moves we have seen to start the month of october historically this month tends to be volatile. are you cautious or are you seeing it as a buying opportunity? >> you're right. october does tend to be volatile in fact, it is the most volatile month followed by september and december fall season tends to be volatile, but there's a lot of data coming out that imply some weakening in the u.s. economy, particularly in manufacturing. saw the manufacturing ism number earlier this week. then got a weaker than expected service number really, we are watching the jobs data, because what's important and holding up growth in the u.s. economy is the u.s. consumer, and should that consumer start to falter, that's where we become more worried,

worry it is more than a slowdown, and potentially leading to some sort of recessionary environment not our base case, but something we're watching closely >> we had big corporate tax cut, now the fed back to easing is there a chance that the market is going to run out of gas at some point? things pushing from behind and then that's something we need to factor in as well? >> sure. we do. we need to make sure that the consumer is confident enough to go out and spend more. when we did see pull back in rates, we saw more activity in the housing market so that's something that could be a positive going forward. we do see gdp growth rates in the 2% range into next year, so that's not a recessionary environment, still a slow growth

environment, that's the environment we think companies will be operating in >> we should remember, seasonality is in our favor. q4 is up almost 80% of the time, average gain 3.5, 4% >> that's working against the idea, maybe working with the idea you see synchroous decline in ceo confidence it comes down to does hard data follow that path or jobs and things like that ism, remember, it is a survey. based on real activity, not pure activity seasonality didn't work last year people have that in their minds. i think it would be a lot to ask to follow the script from a year ago. a year ago, nobody said fourth quarter will be awful. >> talking earnings, the fed, the economy, not talking about all this dysfunction coming out of d.c. now, whether impeachment

or focus on the election next year, et cetera. how much is that factoring into investor sentiment >> given how resilient the market is, not a lot it is starting to factor into corporate confidence that has an impact on the economy. all of the uncertainty, record highs, and duke university has a cfo service saying 67% of them say there will be recession by end of next year they're not the best gdp forecasters, but the fact they're thinking that way has real implications for the way they plan investments. that's start to go weigh on things like ism and what not i think that's the bigger issue. you get this weakness before earnings season kicks off. all of the weak periods kicked off around the meat of earnings season mid april, mid july. now we're coming up with that in mid october. i think that's something to

watch for. so far, early glimpses of bellwether companies tell you global growth is slowing, yet the market is still high that's the biggest risk. if 2015, 2016 is the story, we avoided recession, but the market was down 14%. we have come down 4% >> what does a smart investor do with tech? >> we see some value in information technology, among all sectors in the s&p 500, that's our favorite. that's because we are being cautious here. we are moving up in quality, whether that's in asset classes or in sectors, and we see price to cash flow and other quality factors as being the strongest in information technology here, so that's our favorite sector. >> going to leave it there thank you all for joining us

today. dan, tracie and mike first, rick santelli, what's on your mind >> a lot of movement in the marketplace, much of it was today's service sector ism we'll look at that with the motion of how confidence may figure into current reads on the isms after the break what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade

let's get to rick santelli

for the santelli exchange. >> hi, carl. it has been a wild week. isms have always been popular on trading floors, i have been on trading floors a long time manufacturing, ism, always a market favorite. service sector, really something we paid more attention to since the credit crisis, shouldn't be shocking that is the case. but what this is really about is how uncertainty and economic confidence are related there's little question that many were looking at service sector for one reason, trade, this huge uncertainty, supply chains, decisions about capital spending investment, do you build a new plant, where do you build it, do you hire new people all these issues are tied up after what, 18 months, it will getting to the point where it is just about metastasized everywhere this uncertainty is very real. what we fail to understand is that the reason the service

sector number was weak may have a lot to do with the economic confidence that we have lost you know, i harken back, let's look at a chart of two year note yields took it back four or five days before this tuesday. you can see how sideways it was. then boom. you see the manufacturing, the rate drops boom, today drops again. immediately associated with the glitches in the numbers, and remember, this isn't a quantitative number, it is an important number, but it is about respondents. look at fed fund futures you see a stretch of flatness, then boom, tuesday's number, today's number, you can see. remember, i'm not dabbling in the game of percentages, higher fed fund future move, the more the market wants the fed to ease and make more stimulus ultimately economic slowing in

my opinion whether service sector or manufacturing is underpinned by uncertainty then add real slowing, and real slowing for the most part occurred, but in smaller doses the rest of europe have structural issues. christine lagarde has a plateful, whether it is the auto industry in germany. the point is that in 2016 we saw a similar move in the service sector, ism. but it moved out, and it wasn't because data changed in a binary way, it was because the psychology of the economy changed. morgan, back to you. >> such a key point, rick. thanks for bringing that to us rick santelli. stocks turning around. the dow trying to rebound after an 800 point drop to start the month of october down two-tenths of a percent more on today's market action after this break devices are like doorways

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welcome back to "squawk alley. it's good news, bad news for tesla this morning the company did deliver a record 97,000 vehicles in the third quarlter, but did fall short of the street's forecast and elon musk's target of 141,000 shares are falling this morning as a result. phil lebeau has more on this from chicago phil >> morgan, when you look at the numbers within the deliveries, the model 3 component is what everybody is focused on. now in the third quarter, they did increase their model 3

deliveries, though not by a huge amount total deliveries coming in at 79,600 some analysts trimming their model 3 estimates for the fourth quarter based on this saying they're not going to deliver as many asect pected. jm securities out the estimates for tesla. the full year delivery estimates. previously they were expecting 380,000 and they're not going to make 360,000 and next year bringing it back by 24 and 35, by 55,000, 60,000 units that's how much they believe the deliveries will fall short next year keep in mind that in the fourth quarter tesla plans to open its latest plant it's giga factory 3 in shanghai and expects to do deliveries in china from that plant. so, they have a lot to prove over the next 90 days whether a, they can get the plant open and, b, begin some deliveries there

don't expect big volumes out of china and that is part of tesla's plan for the fourth quarter, if you will you look at shares of tesla and the stat to report whether it's later this month or early in november, the automotive gross margins. that's what people are focused on there is a belief that perhaps they were able to raise them a decent amoubt. not a lot, but a decent amount pushing it back up over 20, 21% and that would give support for those who are bullish on this stock. those automotive key margins will be the key stat to watch when the earnings come out >> we'll keel that in mind, phil elon musk is known for these ambitious target he gave one for spacex new rockets and how often does he make these targets and why is the street so surprised when he doesn't? >> well, he is managing tesla far differently than he used to,

morgan in the past he would put something out on twitter and whether an official target or him saying, well, i think we can do this and this would rev up the bulls and say, here we go. this is what elon is plan on doing. he can't do that any more as part of his sec agreement in terms of how he uses social media and really all forms of media for communicating forecasts for the company. so, he has been reined in and that's why it's slightly different. remember, you were talking about what he did with spacex and here's our expectation and when we do human flight to mars that's not a publicly traded company, he can say that who is going to sit there and say that is a ridiculous thing for him to say it is different with tesla being a publicly traded company. >> that was cramer's point thanks a lot, fill lebeau. dow is back 56 points. "squawk alley" is back in three minutes.

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let's turn back to today's whip saw market action bob pisani is with us after being down 1% on the major indices, what happened >> i have an avalanche of people

messaging me saying what happened why did we rally back? we dropped 34 points on the s&p in a matter of minutes ten minutes essentially from 10 to 10:10 this is why you want to look at things the big etfs the hedge fund guys go in and out' but from 10:00, to 10:10 the biggest etf in the world and around 10:10 or so the volume just dropped this told me we were dramatically oversold. the selling pressure finally stopped and the market started to lift. so, number one, i think we were dramatically oever sold and the bears are out there. we all talked that this manufacturing recession is going to somehow translate to a consumer recession the evidence is not there yet, folks. the market is acting like we are already there. the other thing is you'll notice

the yields stop dropping at about the same time. 10:10. this gets into the fed story, as well people hoping, same time exactly that that the markets stop dropping we know the probability of a rate cut went up and it is now 90% for this month it was, i think, 75% yesterday so, absolutely that played into that but if you look at what move, growth stocks. you know, stuff that has been under pressure technology, i don't know if you can put tech intra day but, there, look at that there is your growth sector of the s&p economy. so, here's my point, john. the risk tomorrow is now to the upside if we get a decent number anywhere decent, the bears are going to have a hard time pressing this. the economy is going south dramatically instead, you might get a slower economic growth but no recession story, which is where most people seem to be. maybe at 1.5% and 2% gdp

but we're not in a recession this is where the battlefield is >> is this software or people? the ism i understand why it drops on that. when it comes back is that algorithms versus other algor h algorit algorithms >> maybe reasonable people came in look it's an hour and a half, almost two hours later reasonable people are now trading the market only so far you can blame algorithms algorithms written byhuman beings and they change them around let's not just wave that magic word. >> you don't think 4% off the highs is working ourselves into the latter >> we have been preoccupied with trying to figure out whether this infection in the manufactured economy is going to bleed into the consumer economy and we just put up the notes there before retail sales have been very good so far the numbers are not supportive of the idea that the consumer is going to fall apart. mastercard revenue this is what i watch here.

talk to mastercard do you think they're talking about a consumer that is falling apart. talk to visa they're talking about great numbers overall and wages are improving. there you go, guys >> we'll hear more from costco tonight. >> we'll see what costco does say after the bell that is key in terms of retail let's get to the judge in the half. >> carl, thanks. i'm scott wapner a new read suggests the pillar of this market is starting to crack. it's 12:00 noon it's "halftime report." smart strategies to protect your portfolio from the volatility. netflix giving up its big gains for the year apple and disney rolling out their streaming services and new questions about subscribers and pricing ahead of earnings. is this a make or break moment for the stock? delta airlines getting clipped a long-time bu