really change, and i don't know if it can change that quickly. housing can turn really big-time, and we've seen it. but not so much on jobs, and certainly not so much on wages, right? and rents. rents follow home prices home prices are still up >> thank you, stephanie link we got to run. see becky tonight at 6:00. >> see you tonight see you tomorrow morning right now, it's time for "squawk on the street. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with morgan brennan, mike santoli. jim and david have the morning off. here comes the giveback after the best two-day s&p rally in more than two years. adp with a slight beat road map begins with the best two days for stocks since april 2020 but futures do point to a pullback at the open plus a vienna cut. opec plus expected to announce deep supply cuts, despite calls

and pressure from the u.s. to pump more. and elon musk's aboutface, reviving his $45 billion deal to buy twitter and teasing x, sparking fresh debate about what he plans to do with the service if he eventually owns it the markets on track for a lower open after that big two-day rally. it's good to have santoli back at the desk. four times, we have had back-to-back 2% since 1953 pretty rare. >> i think maybe as much as 5.7% that's the rare part, exactly that magnitude of a gain it has been pretty rare to have that two days in a row, especially to start a quarter, start a month, so people are slicing it it has happened as the market has roared off a very important low. it has also happened, something like it has happened as we keep getting with all of these statistical breakdowns during the 2008 period where you did see these ferocious bear market rallies, sometimes multi-month rallies. i think we have to keep that in mind so i think there's a lot of good tea leaves you could read into

the action itself. the s&p 500 declined below the june lows. it got to 15 times forward earnings it kind of had a lot of atmospherics that you tend to see where the sentiment and positioning got blown out at the end of september now we've gotten the strong bounce and it's going to be tested i think by, whether the fed officials come out and directly talk it down again and then the dollar and yields were stretched and they've eased back, so we have to see if that's a trend or just a blip. >> exactly the dollar index, worst day since june 16th yesterday. fed officials who had a lot of fed speak last week, lot of fed speak so far this week we've got more later today with bostic fed officials have given no indication for the most part of a pivot that would be anything remotely similar to what we've seen come out of australia instead, they're warning that the fight against inflation is going to still require more time, and of course that's going to make this opec meeting and this cut and the fact that we've already seen energy prices

surging in anticipation of it, i think that much closer to watch, carl, because inflation, inflation, inflation, and we know how pervasive higher energy prices are to other aspects of the economy. >> as morgan said, a lot of impact on fed speak last couple days, lot of discussion about brainard talking about negative externalities but then daly comes along, talks about inflation being a toxin. >> unlike it's a great time to be a worker, workers have all this power, i don't see a lot of power if your real wages are falling 9% and so that is sort of an example of why inflation is a corrosive -- if we let it go, it's a corrosive disease it's a toxin that erodes the real purchasing power of people, and actually hurts the less advantaged more. they bear a higher tax because of inflation, and they're the very people that we want in an inclusive economy. >> so, a lot of discussion this morning about some of the

forward-looking indicators jolts was a good example ism employment, which does show a lot of wood getting chopped, but then jpmorgan, for example, comes along today and says, this is not a fed that goes by those numbers. they're better about telling you what's happened than what's happening. just sort of how they're built >> and it speaks to the core inflation discussion and while the market pays very close attention to cpi and certainly fed officials do as well, it's the pce numbers that matter the most housing is a huge component within that measure, not to mention wages, and yes, wage growth is not keeping up with the increase we've seen in prices, but it has been moving higher, and it does speak to core inflation lasting and being stickier, perhaps, longer than at least had previously been anticipated. >> yeah, officials have told us from powell on down and when vice chair brainard recast the inflation fight as the populist thing to do, they were looking for public buy-in to say, yes, we have to moderate employment

because everybody gets hurt by high and persistent inflation, and they've changed their metrics multiple times we're talking about university of michigan sentiment looked out of whack in terms of expectations gasoline prices. all the stuff that moderated doesn't matter until they see several months of actual inflation numbers down, and the other piece of it, though, is, we're closer to where they say we're going. i mean, time has passed. you're in october. we're talking about capping out in the first part of next year you're going to be at 4% at the high end after the november hike most likely. you're in the vicinity of where they think we need to go so, we can talk about a pivot. we can talk about a pause. even if you go by what they're telling us, we're not that far away >> the question is, does something get hurt in the markets? do you have a stress event in the capital markets before that? >> just back to your point, when you have uber saying the driver shortage is over, overnight, and then to your point, the fact that some of that labor data is showing signs of easing,

certainly going to be key for the fed moving forward >> even adp, which comes with a lot of caveats these days. the pay gains for job changers, lowest in the history of their series >> yeah. >> so, we're going to watch all that >> for more on the markets, as we are poised to start this wednesday lower for the major averages, we are joined now by sam, chief investment strategist at cfra research great to have you on today this roaring rally that we've seen over the last two days tha gave the dow and the s&p their best gains in more than two years, does it have footing here, or do you expect that it's not sustainable and this is another one of those relief rallies we've been seeing in this bear market >> good morning, morgan. the first question that i have is, is this really just a relief rally? is it the beginning of a new bull or simply a bounce that will be sold into? a lot of buzz from the technicians on youtube, et cetera, in the last couple of days in terms of the number of

participants, so the breadth was incredibly strong, even talking about a zweig recovery, what to look for in the next ten trading days, et cetera. i would still tend to say that while the last -- five of the last bear markets since 1950 ended in october, i still think we have a ways to go we're down 25%, but bear markets with recessions usually decline about 35%, and they do so over a 15-month period. >> so, what are some of those key factors or data that you're going to be watching for in terms of that leg lower? >> well, i'm looking for the -- a good fibinacci retracement would bring us down on the s&p 500. that would equate to a pe of 14.9, which actually is the average decline that we typically see in pes in bear markets with recessions, basically getting trimmed by

one-third. so, i would tend to see that while we do have these relief rallies, et cetera, i think that we are likely to continue in a downward mode, probably until the first quarter of next year with a number close to 3,200 on the s&p. >> hey, sam, does that selling begin come q3, q4 guidance season or, i mean, what about the seasonality? certainly entering the sweet spot of midterm years. >> oh, sure. well, when you look to history in terms of when is the best of the 16 quarters of the presidential cycle, we are entering that now. fourth quarter of big term year is the second best first quarter of year three is the best but bear markets do tend to alter history. when you look to the 14 bear market years going back to the late 1940s, if we had not reached a bear market bottom by the end of september, then we

traditionally ended up continuing in a downward mode not only for october but also for the year itself. so, essentially, i still think that because we have not -- or likely not hit a bottom, we still have some more erosion to go >> sam, i guess it always depends on exactly what sort of game one is playing in terms of, you know, look, do you want to make sure that you don't buy prematurely if you're going to have to ride the market lower for some period of time? i just wonder what -- what the history might tell us about, once the market's down 20%, 25%, how long out do you have to look before you're basically pretty well assured that you're going to have done well if you have a longer term time horizon >> well, mike, i think what we're basically saying is, can we look for a little bit of sun amongst these dark clouds? and the answer is, absolutely.

it has only taken an average of three months to start a new bull market, meaning, rising by 20% or more following the end of bear markets and also following these bear markets with recessions. the market was up an average of 47% 12 months later. so, with us being down 25% and many of the bear markets with recessions since world war ii did end below the minus 30% level, really, it was only the mid-70s, early 2000s and then the financial crisis of '07 through '09 that we endured a mega meltdown, which i do not think we're likely to experience so, i would tend to say that once the bottom has been put in place, then the vacuum of valuations gets filled very quickly. >> so, sam, what do investors maybe start to nibble at right now? if you look at history and what's performed better in past bear markets, what do they steer

clear of in expectation of this move lower for the broader market >> well, traditionally, you move away from the defensive, so the defensives, meaning, consumer staples, healthcare, utilities, which hold up the best during a bear market, are the ones that investors flee from and move toward those that were beaten up quite a bit. i think we got a sneak peek yesterday and the day before as to what investors want to gravitate toward in terms of size, it's mid caps. in terms of style, it's value. and in terms of industries or sectors, it's energy, materials, industrials, so looking for companies that have -- that are midcap, that have relatively low pes and good growth potential in the midcap value space, i think, is where you want to be. >> sam stovall, thanks for joining us this morning. >> my pleasure thanks for having me meantime, oil ministers have

arrived at the opec plus meeting. the watch is on for some of these deep supply cuts our brian sullivan is still in vienna, austria, with the latest big day, brian good morning >> yeah, i mean, carl, it really is a big day, and i know the price of oil is not move ago whole lot now, but the price of oil has moved ten bucks a barrel in the last couple days and we are expecting a cut of about 2 million barrels per day. now, the two million barrels is not going to come off the market a lot of opec members are not hitting their quotas anyway. we're talking about maybe a million physical barrels a day actually coming off the market now, are they expected to do it all at once? no all of our sources telling us, this is probably going to be a rolling two million barrels over a certain amount of time, but focus less perhaps on the number and more on the symbolism, guys, of this. opec was an organization a year

ago, year and a half ago, where they were talking about, opec is dead, the uae and saudi arabia are fighting the organization has outlived its course and is done we're seeing the saudi minister arrive, the russian minister arrive, by the way this is opec saying, not only are we aligned, we're aligned with russia. u.s. is going to be very upset about that but also that we are in charge of at least half the global oil market this is, unfortunately, a direct rebuke to the white house who, by all reports, kayla tausche reported the same, was trying desperately to stop this production cut it's happening, guys, and it's happening in a tight market. i have never seen a cut when the market is as tight as this this can only be seen as sending a pretty loud message. >> so many cross currents here when you look at energy stocks, brian, up 9% over the past week,

10% just since the start of this week on this move in crude prices, what does this mean for oil and gas stocks, and of course, what are u.s. oil and gas executives saying? i think back to 2015, 2016, it was a very different dynamic on the world stage where oil was concerned. >> yeah, absolutely, morgan. i was texting and emailing some executives yesterday and this morning. scott sheffield, the pioneer, maybe the most listened to, the only oil and gas ceo i've ever seen at an opec meeting. he said opec is going to defend a hundred dollars on brent so that would be 94, 95 on wti. he thought that was the right move so, what do they think look at oil and gas stocks today. by the way, not to jump in, paul sankey is standing right here, so you actually are an analyst, very quickly, paul, is this good for the u.s. oil and gas sector? >> at face value, it is, but we're worried about the economy and the demand side, brian, so ultimately, if this damages the global economy and ultimately demand for oil, it's actually not as good -- >> will it damage the global economy? >> i think we're worried about it going into winter, definitely >> thank you

impromptu from paul, but that's what you get by being on the ground here. maybe good in the short-term if oil hits back to $100 or $120 a barrel, which is entirely possible, will that crush the global economy and then send oil back down? that's the risk that opec and russia are taking. we're waiting on the press conference, hopefully get more answers about why they're doing it it's a very unusual cut at a very unusual time. >> yeah, hence the jawboning by the white house, brian what a day to have you there you're totally our eyes and ears we'll talk frequently today, brian sullivan in vienna today when we come back, a closer look at elon musk's aboutface on twitter. stock's going to open just north of $51 today take a look at the premarket as we try to give back some esg is responsible investing. who's responsible for building esg into your investments? at pgim, the pursuit is on for outperformance.

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twitter shares soared yesterday, as you know, after news that elon musk will go ahead with that planned $44 billion deal to take the company private. joining us this morning to discuss twitter's outlook, thanks for joining us. you do say it could potentially cease to be a public company by the end of next week i guess the question's going to be, what kinds of restructurings he can do and whether or not they ever do return to the public markets >> thanks for having me. again, what i would say is this does not mean that this deal is

closed at this point, i think let's agree that musk does not deserve a lot of benefit of doubt here but assuming he follows through, assuming that this is -- this time it's for real, then probably the first things -- first order of business is to figure out the management team, figure out who's going to lead this company, and figure out top c-level execs. he's been pretty vocal, criticizing current management team, so that's going to be the first order of business. highly unlikely musk wants to run twitter ton a day-to-day basis. >> right are we talking about pretty aggressive cost-cutting internally >> probably cost-cutting could come secondary, in my opinion. first order of business would just be stemming employee churn and having better employee retention. and the first six months could be whether this is something that he wants to run as a company that wants to come back to public markets or would it be

something that he would ford under this new x.com he did tweet something about a super app that could be part of it if that's the vision, that could mean that this is going to be a piece of the puzzle that musk wants to just play around in the markets. >> there's still a lot of unknowns here, and to your point, a big asterisk around the deal still closing is your expectation, though, that this is a company that, after taking private, after being invested in, could ultimately come back to the public markets what's your thesis >> at this point, knowing what we know right now, twitter is better restructured private and better come back more healthy, better business model, to the public markets it's too large to stay private it already would be under a lot of public scrutiny, given the role that twitter plays in the global media and investment community. so, regardless of whether it's a private or a public company,

there would be public scrutiny, in my opinion, so it's better off restructured in the private markets and coming back as a public company with healthier fundamentals >> what do these dynamics mean in terms of winners and losers for the other social media names? >> in the near term, i think there could be more market share shift away from twitter into smaller companies, into other comparable social media apps i think companies like pinterest or maybe perhaps snap could also be there to win a little bit of extra market share, as twitter figures out its core business model. musk has talked about subscriptions. he's talked about a lot of new things that he would want to play around twitter with so, while that happens, advertisers would want to figure out how do we know allocate our dollars on an incremental basis? so, there is probably some market share shift that's going to happen next year, so pinterest and snap could be kind

of small winners while twitter figures out -- while musk figures out whether this is a subscription business, this is an advertising business, there's a blurring the line between how those two business models kind of evolve as such. >> rohit, the latest story musk is offering is this, you know, all-in-one x app we don't know how serious or how strategic this is. would twitter be the likely candidate to crack that possibility if one company were going to be it >> again, my general bias is having a super app with the focus on investment in europe is going to be hard to pull off there are already winners in every stack of that super app, unlike what we have seen in china, so many companies have tried to be a super app, no matter which cut you want to dig at, so i feel a little bit suspicious as to how he can pull

this off if there's a specific slice of media that he wants to become a super app off, we would love to see that vision, but i think, at the get-go, knowing what we know right now, i feel pulling this off could be a little bit harder twitter as part of a super app is going to be a very hard vision to pull off >> well, reuters citing sources now saying musk and the twitter team have not yet reached an agreement to end litigation, so the suspense is not over quite yet. rohit, thank you great to see you take a look at the premarket here as we kick off a wednesday morning. futures down about 350 on the dow. back in a moment

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taking stock of what appears to be a reversal on this wednesday. europe is giving back about 1% this morning as mike pointed out, you got the dollar index back at 111. vicks, though, still sub-30. eng lln urinesopinbe ifo mut

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives and responsible investing. watching the premarket lower as we said earlier, mike i was surprised. some of the technicians yesterday, last night, tried to argue this was not -- the last couple days, not all short covering, not all calendar, and that resistance still lies north of 3,900 or so >> you're not really going to know if it's more than a reflex bounce until you surmount that into 4,000 it was something like 18 to 1 advancing versus declining stocks it seemed like there was a real flush of genuine buying interest it's hard to pick up exactly what you're covering, what is people feeling underinvested going into a new quarter if the market's going to make a stand near the june lows, as it did.

>> keep our eye on crude, of course we mentioned the opec meeting today. oil trading just above $87 let's get to the opening bell here in the cnbc realtime exchange in the big board, it's empire state realty trust celebrating the empire state building run-up. >> sounds like quite the exercise >> digital financial education platform thrive. brett fills in mike, i tell you, the swings the last four sessions have been remarkable >> it has. first of all, that's kind of the way it is when you have a market under this much stress that got this oversold. there is a little bit of a school of thinkingought, though, that's we have mechanically in this market, it seems very driven by the futures leading, the etfs, the kind of algor algorithmic cross-asset trades

that you get when yields and the dollar do one thing and stocks are meant to do another. you don't want to discount the breadth numbers because it's not that easy to get two days in a row of 90%-plus upside, which we got. but it is something that seems like it happened more frequently and of course, june, a lot of people were giving a lot of credit to that breadth off the lows, saying it really seemed to make a retest unlikely, and we got the retest >> yeah. i mean, we're given back a fraction of the gains from the last couple days and it's pretty incredible to say that when the s&p is down 1% and the dow is also down almost 1%. to your point, every s&p sector is in the red except for energy, given what we're seeing play out in europe right now with this opec plus meeting. that's another incredible swing, another incredible move we've seen over the last couple months to think that three months ago, we were at $120 a barrel and

we've dropped to around $90, and we could be looking at $100 again sooner rather than later >> that's certainly jpmorgan's point. >> and the energy sector, i mean, you could say, well, it's gone nowhere since late march, but the overall market has buckled since then, and it was already at a huge -- had a huge run into march, so it's really held the value and you know, people seem pretty okay with how the companies can operate with crude and naturals gas at these levels >> adam jonas from morgan stanley weighing in with a couple calls one is an upgrade of ford. basically arguing that the company's restructuring, where they created ford blue, is going to better align the capex needs of the ev part of the business he says it's more than just an accounting change. at the same time, he does cut the target on gm he was at $42. he goes down to $30. basically, in his words, morgan, trying to get ahead of what he thinks is going to be a warning to come. also removing the entire valuation of cruise. says the losses there could

potentially double over the next couple years >> that definitely got my attention. certainly, he's been on the forefront in terms of the analysis around those newer technologies where evs and self-driving is concerned, not just at gm but elsewhere too auto complex moving from a risk to a necessity, still not recession bottom buy signal and of course this on a day where we have our own phil le beau reporting that auto loans topping $1,000 are not so unusual anymore, which -- >> a thousand a month. >> thank you, which got my attention. >> it's really somewhat of a microcosm, jonas's call of what we're seeing across the market and the economy when it comes to cyclical stocks. they look really cheap it looks like the market's done a lot of the valuation work based on current and observable earnings, but as jonas points out, in a recession, the earnings kind of go away with these high-cost businesses you can't count on the estimates being okay, and in fact, if you're in a recession or going through one, the stocks tend to look more expensive. cyclical stocks do on a pe

basis, and you have to look toward other things like price to sale. it's kind of a nuanced call or maybe an equivocal call. he's saying, upgrading ford but the price target of $14 is not exactly, you know, showing raging upside potential. and similar with home builders, right? the home building stocks, as a group, trade at six times forward earnings that means the market doesn't really think those earnings are going to be reliably coming through or that that's going to be a peak if they do >> and housing, of course, is one of those cracks we've seen open wider and faster than other aspects of the market in the midst of this fed-tightening cycle. just this morning, mortgage apps, a drop of 14%, lowest since 1997 average 30-year mortgage rate rises to 6.75% that's the highest since 2006. so, we're seeing that affordability puzzle tip dramatically, and we are starting to see potential signs of at least the housing recession take root too. >> yeah. that 30-year fixed up for seven

straight weeks you got to fold in some impact from hurricane ian >> that's true >> into some of that but to see mortgage apps down 14 is just amazing. >> the velocity of the move in mortgage rates is all you really have to know i mean, you know, people can say, oh, we were at 6%, 7%, 30-year fixed rates for years and the market did fine. yeah, of course. but you didn't come from 3% and 2% in a matter of months that's the difference. people's entire pricing equation gets thrown off. so, we just don't know exactly how much activity has to moderate to make the supply-demand look okay. prices have to be the thing to move, i guess, but that happens slowly >> kind of brings us to some calls on the bank this morning atlantic cutting both morgan stanley and goldman-sachs basically on the investment banking slump, which is interesting because just yesterday, citi put a positive catalyst on jpm, suggesting that the q3 prints going to come in better than expected, and that's just a couple weeks away >> i think the capital market side, depending on the bank,

could be okay. volumes have been great. we talk about these fx things, but they have to be taking losses on the fixed income inventories that they have that's something that's a bit of a headwind and just a fee income is just not there. you have balances going down in terms of investor portfolios that's a headwind. to me, it's all a question of, do you bet that we're at rock bottom activity in investment banking? does m&a perk up are they not going to really be saddled by too many of these loss-making credit deals like we're seeing with citrix and potentially twitter? >> i was just going to bring that up. citrix, twitter. i have a whole list going here lumen technologies so far. >> the twitter thing, so many legs to the twitter story. there's the impact, of course, on some of the financiers of the deal lawyers, if this does not end up in a continued trial, are going to lose out on some billable hours. interesting, colorado reuters

this morning, in the wake of yesterday's news, employees at the headquarters were playing the clash, "should i stay or should i go" in the cafeteria. i mean, in for a wild ride >> especially given that, you know, the tech labor market has changed a fair bit since this deal first came out there and the idea that you can just sort of parachute out and have a soft landing for yourself is not too good i think the losses when it comes to the financing of these deals, it's completely manageable in the context of these banks' balance sheets the final deal in a cycle that banks commit to is always going to be the one that you get stung by think about a bank giving you a mortgage rate lock if rates surge, that bank takes a bit of a loss, athlete at least on paper, if they're going to honor the lock, but after that, everything reprices, so i don't think it's hobbling them, but it's not helping >> going back to the tech labor landscape for a moment, though, you have the reports that amazon is freezing corporate hiring in its retail business.

still hiring in things like cloud, but that perhaps is another sign of some softening in certain areas of the market, and kind of goes back to the conversation we had just a couple days ago about inventory as well. and we do know that amazon, under andy jassy, is looking to unwind some of that gangbusters pandemic-era expansion that we've seen in certain aspects of the business but again, speaking to your point, some of the areas within the sector where things are softening a little bit >> yeah. >> the twitter turnover. >> yeah. it's no longer about freezing at warehouse and shipping it's now reaching the corporate -- the core retail and corporate teams. >> although the layoffs in aggregate, they still are only kind of stubbornly going up. that's one of those puzzles that we have to sort out. maybe it's just a lag. >> yeah. speaking of which, meta, shrinking some offices i guess occupancy in their offices had run maybe 65% pre-covid. now 50%. and they're going to try to squeeze more efficiency out of

real estate. interesting, too, because "the journal" front page is about retail fronts having more stores open now than shrink, so there's been some strange cross-currents in sort of brick and mortar occupancy and activity in general. >> it's choppy there was also -- i mean, there's also the report from cvre that since the pandemic began, around 50 u.s. office blocks have been or are being redeveloped into multifamily apartment complexes, speaking to some of the shifting dynamics in terms of what the real estate market is requiring right now. coming out of the pandemic >> i was just going to look at, in terms of the, you know, the market leadership early on is very much energy as well as some staples and stuff that seemed like did not, you know, kind of was not at the center of the rally for the last couple of days and visa is one, too, that's perked up just a little bit. it's in the -- it's in the green right now. and i'm looking at that as a

benchmark for the formerly expensive, very crowded growth stocks that have not really been able to kind of get off the mat. alphabet and microsoft, in theory, are the tells. alphabet's still below the june lows that was one that really did succumb. and even though the nasdaq as a whole was up big over two days, it's not as if that was the whole story in terms of what was driving things higher. so, i think you still have this market where the average stock has done better than the market cap weighted index and the mega caps and it doesn't seem like this little crucible of this rally has changed that just yet. >> just to expand out, at a geopolitical lens to the conversation as well this morning, defense and aerospace stocks are taking a breather here in this broader market downdraft as well, but they have had a pretty strong week, unsurprisingly, so far up until today, in part because they had that l 3 harris deal to buy some military communications assets from satellite operator viasat

but the other thing in focus with this opec meeting that is playing out in vienna right now, is going to be whether there are any ramifications from the u.s. side on things like defense. saudi arabia has historically played this outsize role in foreign military sales for the u.s. defense industry. it's actually the lead importer of u.s.-made weapons, and you have had some lawmakers like u.s. rep ro khanna coming out and saying, this could be an area where you see retaliation keep in mind, under the biden administration, we've already seen some curtailing of certain types of sales to -- of weapons to saudi arabia, just earlier this year, they banned u.s. offensive weapons sales to riyadh, but this is going to be something to keep an eye on, and it's certainly something we did speak to l 3 harris chairman and ceo chris about yesterday. >> about 20%, 22% of our revenue comes from our international customers, our allies. obviously, uk, australia,

canada, far-east, mideast around the globe, so we adjust accordingly. we follow the rules and regulations. and as of today, we continue to support our allies a lot of this acquisition, we talked about the network going across services, going across platforms. not only does that apply to the u.s., it applies to our allies, coalition warfare, and they'll either be part of this process or not we'll have to see how it plays out. >> we will have have to see how it plays out in the meantime, as we start to look toward earnings over the next couple weeks, when it does come to some of these defense manufacture ez, aerospace and defense companies, supply chain, labor, inflation, all the key things we talk about in focus for these names which are historically more defensive within the industrial sector anyway >> you had senator murphy saying the alliance with the saudis needs to be rethought. at the same time, this "times" piece about taiwan and how we're trying to turn it basically into a weapons depot in case china

does get active, pretty fascinating implications for defense there. dow is down 278. let's check bonds this morning we did see the ten-year got 3.7 this morning two-year was about 4.14. we do have bostic this afternoon, and ism services coming up at the top of the hour

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welcome back to "squawk on the street," rick santelli live here at cme hq with breaking news s&p global, pmis on the service side, these are september finals 49.3, 49.3, that usurps 49.2 if we look at the composite, 49.5 in improvement over the mid-month read at 49.3, but still also the third under 50 in a row, and do remember that when you look at the middle one under 50, that was august, up 44.6 on

the composite and 43.7 on services both those numbers were the lowest since may of 2020 so, you could see, we are really starting to reflect some of the slowing that we hear from some of our global trading partners we still have the big services ism at top of the hour make sure you join me. "squawk on the street" will return after a short break what if you were a major transit system with billions of passengers taking millions of trips every year? you aren't about to let any cyberattacks slow you down. so you partner with ibm to build a security architecture to keep your data, network, and applications protected. now you can tackle threats so they don't bring you to a grinding halt. and everyone's going places, including you. let's create cybersecurity

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dow coming off the opening loss, down now 218 let's get to bob pisani. >> good morning, carl. the market giveth and taketh away flrj is having a nice morning here energy is having a nice mor here they had an enormous two-day rally, some up 6%, 7%. they'regiving back some of these gains.

test test test test test >> give me all the cross-currents, gerard what are your top picks going into this earnings' son? >> morgan, what we would do is focus on the regional banks, the balance sheet as we'd like to call it. it's been 15 years since anybody has had to focus on cheap core deposits that's going to the advantage the regional banks have over the larger banks over the next 6-12

months over this elevated interest development they don't have the exposures to the leverage loans or the bridge loans that we might be seeing being hung up over the next three months or so as the big money centers do the regionals, including m&t bank in buffalo, pnc, 5/3, very solid commercial loan books which will benefit from this higher rate environment as well. >> gerard, as for the big guys, a lot of the discussions has centered around expenses, but not in a shrinking way an aggressive playing offense, highing more engineers how do you do that in the face of what we're seeing as softening economic activity. >> carl, you're right. the text spending has been very large. when you look at relative to their asset size they're all spending anywhere from 35 to 40 basis points of

assets on tech they continue the need to do that in hiring those engineers that you've just described as well as buying the software and hardware to execute. this has been around for a number of years and not something they can afford to cut back on as the digital age grows bigger and bigger in the banking system they can partially offset that with downsizing of branches, maybe personnel as well as partial offset of the continued strong tech spending that we expect over the next couple ye years. >> that's going to be one of the things we're listening for as we get into reporting season, gerard, thanks very much. >> thank you a lot more ahead on the market pullback today and the opec plus meeting as the headlines continue to fly out of vienna and we await a press conference s&p down 33 points still close to 3,760

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good wednesday morning welcome to another hour of "squawk on the street. i'm carl quintanilla with morgan brennan and mike santoli can the bulls hang on to the ball after a couple of 90% updates. dow down 218 right now we've got pmis and a little more economic data. let's get to rick santelli. >> 56.7 is our readout that's better-than-expected. sequentially that follows august at 56.9. that happened to have been the best going back to april these are good numbers, 56.7 the global pmis we had about 15 minutes ago were the weakest, two months ago, since may of 2020, the last time ism services

was under 50 was play of 2020. definitely this is showing a more resilient services sector we want to continue, of course, to monitor that. the biggest swap in the u.s. economy. morgan back to you. >> rick santelli, thank you. we're 30 minutes into the trading session. starting with twitter, moving lower a day after elon musk reversed course on his intent to purchase the company, proposing to take twitter over for $54.20 a share. down 2% right now, trading around 50.82 atlantic equities downgrading goldman and morgan stanley, setting growing concerns over how investment banking activity could be affected by a potential recession. goldman is down almost 3%. morgan staley is down 2% finally bernstein initiating coverage of airbnb with $143

price target the firm saying they're on track to become the largest western travel platform over the next five years stocks down ability 1%. let's turn to the broader markets set to give back some of the week's gains the s&p coming off the best couple days since april 2020 let's bring in charles schwab's liz ann sanders. good to see you. we've seen a lot of financial market volatility, but there's also the issue of instability around the world whether you're a bull or a bear, you've got to take that into account. >> you do certainly. i think that's a clear distinction that the fed has been making. i think for the most part the market understands the fed put, at least as we viewed it in years past, has largely been put to bed, meaning financial market volatility in and of itself is not going to trigger the fed to

step in, to pause, pivot, whatever term you want to use. i think the market understands the concept of that. but financial system instability is a different story we've got plenty of illiquidity, but not quite the distinction in the financial system that would trigger the fed. not to mention the fact that a weaker market, a volatile market, equity market is somewhat a feature of what the fed is trying to do here with tightening financial conditions. it's not really a bug. so i think it would have to get to the point of system instability for that to be a reason for the fed to step in absent the inflation trajectory. >> right, right. important take, especially as people wonder where exactly that put is liz ann, i hope you'll give us one second as we're watching some of the opec headlines in, give us a moment to get to brian sullivan brian. >> hey, carl, thanks very much we're in here, the media room.

this is where the press conference will take place i want to make what i think is an important point on the numbers we've been reporting, this 2 million barrel a day. that's what the headlines say. when is 2 million not 2 million when it comes to opec? here is an open question goldman sachs out a moment ago with this very thing it may be a cut of 600,000 to 700,000 barrels a day if they exemption russia take 2 million minus 1.3, a real barrel cut of around 6 to 7 o 00,000 barrels a day that may be why we're not seeing the oil market rise as much. we're about to go live on the press conference the opec ministers, we expect the saudi prince, expect the opec secretary-general, the uae

representative again, that's probably why we're not seeing the market move as much guys. if they exempt russia, that's what we're waiting on. when we get clarification we'll come back. i'm eve going to go sit down, do the press conference we'll see you guys soon. >> okay. brian sullivan, thank you. we'll keep an eye -- we still have brian okay brian -- >> waiting on the saudi minister to come out. >> all right so we're watching -- >> hey, bob -- >> let's go back to liz ann sonders right now. we'll come back to brian depending what other headlines we get out of vienna liz ann, i want to get your thoughts on what's going on in vienna and this opec meeting and houp it filters back to the market conversation we're having

and the fed's stance in light of inflation data that's come in, however lagging. if you do actually see crude begin to move higher on an output cut. >> brian made a good point about the net increase or decrease in production netting out the exemption of russia is probably why at least today you're not seeing a significant move in the energy market. but clearly, it is not what anybody looking for a lower trajectory in inflation wants to see. yes, it impacts headline, not core inflation the fed ostensibly is more focused on core inflation. the problem is they've also spent a lot of time talking about inflation expectations that i'm pris italy is more biased by what's going on at the headline level than at the core level. even if not explicit and explicit is the core pce getting back to the 2% target, the fed has implicitly had a little bit

more of an eye on headline inflation this time via that expectation, fully conceding that there's nothing the fed can do with its blunt instrument of monetary policy to change the supply and demand dynamics of oil. it filters into their decision making at least in the recent past. >> we want to go back to brian who has more details for us. brian. >> morgan, thanks very much. i was making the commentary, bob mcnally is here, you think it's a true million dollar a day cut? >> i do. it should translate into about a million real cuts. uae, saudi, kuwait, iraq, those would be the real cuts. >> not two, but not six. >> 900 to a million, that's real barrels per day. thank you, bob mcdowd. this is opec math. we're realtime here, guys. there you go maybe 900 to 1 million real

physical barrels off the market which goes to what liz ann is talking about, inflation energy is not part of the economy, it is the economy energy inflation has been driving everything i'm going to drive my behind to my seat now. we'll come back with more updates in a bit thank you for jumping back in. >> okay, brian thank you. always great to get all this information, this context in realtime liz ann, thanks for hanging with us as we do this continental choreography murlt continental choreography i want to get your thoughts, given the conversation we're having, on where it makes sense for investors to be putting money to work right now if it does, given the fact we're negative today in the major averages, but coming off that incredible two-day rally >> i think for more stock-oriented investors who aren't taking a more broader asset allocation approach, we continue to emphasize a few things one, i'm focusing more on factors than sectors or style

boxes, traditional style boxes of picking growth or value at the index level. and there's a bit of a quality wrapper still around the factors we think make sense in this environment. it all relates to what's dear broadly now. so positive earnings revisions, positive earnings surprise in an environment where in the aggregate, those have been deteriorating. strength of balance sheet. interest coverage. high cash, low debt, clearly in a rising interest rate environment that makes a lot of sense. strong return on equity, return on assets. in addition to that quality wrapper, you can also pick up they're sort of hybrid from a factor perspective in terms of growth and value characteristics. at least for the near term, i think that's how you want to position for the stock investors out there. >> liz ann, at least from the

interplay of how the market is acting and then the fundamental side, there's some echoes of last quarter in a way, right the stock market rallies off this low earnings revisions have been negative in terms of the proportion of companies with negative earnings revisions, but the depth of those revisions hasn't necessarily been that pronounced it's almost as if we're waiting on these lagging indicators to kick in. in other words, earnings estimates to come down in a bigger way last quarter, better-than-feared was enough to keep the stock market going for a little while. how do things look coming into this reporting season to you >> i think analysts have been in a tricky situation for the last couple years, in most part due to the unique uncertainties with the pandemic they were way behind the curve obviously in raising estimates, not with criticism to analysts it was at a time during the worst part of the pandemic where you had a record number of companies withdrawing guidance i think there's similar

reticence to lower estimates to reflect the somewhat obvious headwinds facing earnings in this environment maybe we're in that pause as we wait for actual, more concrete commentary from companies. when you look at still high labor costs, when you look at the impact of the dollar with rough estimates of a percent change in the dollar, a half a percent change in earnings when you look at the demand picture, look at the fact that a metric like ism manufacturing, were it not for inventories, which the build in inventories was very easy to argue involuntary in this environment, and you looks at the inventory build and the necessity of price cutting that's already happening in some of the good segments of the economy, it's hard to think we're going to skate through another quarter like second quarter where, all right, we're not taking the medicine yet. even in the second quarter, ex energy, earnings were down 2%. i think the path of least

resistance for the remainder of this year into the first half of next year is still lower we'll start to get more color on that in the next week. >> what would you be looking for in terms of the sequencing of i guess these benchmarks that we're trying to reach, whether it is valuations getting to a certain level, sentiment lining up and then the whole seasonal picture starting to improve. any of that feed into how you think the market is going to react to this next phase of what we get fundamentally >> so if you look at technical breadth, even sentiment in environment, it improved to a pretty significant degree throughout the course of this bear market. it doesn't necessarily give the green light in the near term but most sentiment and valuation as well as breadth indicators, where they sit right now, based on history, do bode well for the market, say, looking a year out. it's still rough seas likely

we're setting up for a better outlook looking ahead a year you've seen the behavioral measures that sentiment cashed down to what were already pretty dour, pessimistic, attitudinal measures of sentiment. you've seen still some technical areas we have to get through, 3900, 4,000 on the s&p, 200-day moving average which is a couple hundred above that again, i don't think we're out of the woods from a valuation perspective we also have, if inflation is starting to decelerate, that is obviously good news for valuations because if, say, cpi continued with an eight handle which is not our expectation, historically that's meant multiples on average had an 11 handle on them an improvement could start to put that upward pressure on multiples, albeit, the e now is putting some pressure on multiples because it's moving in the wrong direction.

>> right finally, liz ann, i know you're not one of those expecting an imminent fed pivot, you did tweet out a great chart looking at jolts and the monthly change in job openings using a six-month average which is now in territory we would associate with the covid crash powell specifically talked about that ratio of openings per unemployed worker. we were at two, now at 1 2/3 isn't that exactly what he was talking about? >> oh, no question about it. their goal was to hit job openings without a significant hit to the unemployment rate i think we can start checking boxes, but i don't think all the boxes are checked yet. i think what powell has talked about is not just on the inflation trajectory, but changes in the labor market. he wants to see it occur in a sustainable way over a span of time, not just a one off, okay, we've got a big epic drop in openings we'll obviously get more color in the labor market data with

the combination of claims tomorrow and the jobs report on friday i think it would have to be a continued decline in inflation plus some deterioration in the labor market akin to what the fed is looking for, which would allow the fed not to pivot, to the extent you think pivot means to rate cuts, but first step is to just telegraph a less effective pace instead of 75 for november, maybe 50 and seeing the trajectory start to settle down. that's different i think in my language than a pivot, whatever you want to call it. >> pivot is a sloppy term for sure that gets used way too much, including by me just now liz ann, thank you >> thank you still to come this morning, we'll check up with tech investor roger mcnamee on why he thinks musk will turn twitter into a, quote, toxic platform. the biggest laggards on the dow as we got nearly 2% declines on

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welcome back to "squawk on the street." closely watching the opec meeting in vienna. the news conference getting under way now. we'll bring you the headlines as we get them. let's bring in bank of america's francisco blanch talk me through the trajectory in light of this 2 million barrel per day cut headline number

i realize that's a loaded number we're getting so far out of this event. i think we might be having some audio issues with fwrancisco >> i'm back, sorry. >> this is a whirlwind day here on squawk on the streets francisco, i think we have your audio now. talk to me about crude prices from here. >> absolutely. a couple weeks ago we put our -- what that means is opec is going to be proactively reducing supply as prices get into the 80s range. we've also seen the u.s. government talk about potentially refilling the spr as prices come below $80 a barrel i think there's support for prices in this range we think from here on we're likely to see the upside obviously 2 million a day is below expectations

i think one of the big questions is are we going to get a 2 million a barrel real cut or a 2 million a day nominal cut that is essentially readjusted by the fact that opec itself is producing by 3 million barrels a day under their actual quotas. i think if you reallocate those countries that are underproducing and they don't actually cap, you'll get more like a million, 1.2 million actual cut as opposed to the 2 million a day headline they're talking about right now. >> that's still sizable, right we've been hearing about how tight the conditions are on the world market for oil given sanctions on russia, given the fact that it's -- the u.s. is not the wildcard in terms of production the way it once was a couple of years ago. does that still create tight conditions and put upward pressure on energy prices? >> i think it will remember opec actually wants to put pressure on prices because

they're not happy with the levels they see. there's two main things i think that worry opec. first is inflation we've seen obviously headline inflation crossing 10% in europe we've seen headline inflation almost 10% in the u.s. the rest of the world seeing very high inflation. i think opec is worried about that and reserving the value of oil in the context of price increases around the world the other issue that worries them is thermal cool prices which is supposed to be at the bottom of the pecking order in terms of energy supplies is creating a 50% premium, 30% premium depending on the market, to what opec believes is black gold, that is the oil barrels they sell into the market. so two things that really bother them, the cheapness of oil compared to other energy sources and also the inflation aspect. that's why they're cutting, i

believe. >> that's fascinating. we don't talk about coal a lot on our show here isn't coal elevated in terms of price in part because of how high natural gas prices are right now? >> that's right. depends where in the world, but yes. around the world coal prices have risen very aggressively because natural gas is skyrocketing on a global basis the u.s. is the reverse. in the u.s. natural gas prices have been chasing appalachian coal prices higher appalachian coal prices are moving higher because they can be easily exported out of the u.s. remember, there's one energy commodity that europe has actually sanctioned coming out of russia. it's been sanctioned since august and that is coal. that is one of the tightest markets in the planet right now. obviously with natural gas trading at $400 a barrel for an equivalent, coal trading at 100 seems a bit of a bargain

obviously oil is well below that in the case of wti and lower than that in the case of residual fuels that's the really big story there. >> francisco, i get what you're saying in terms of opec's perception that oil is essentially underprized relative to comparables maybe some of that is the strength of the dollars. it's a dollar translation issue. i wonder where do you think they estimate the level of price is for demand, something that tips the global economy to a rougher place. >> the global economy is already in a pretty rough place because we're undergoing the worst energy crisis since the iran revolution in 1979/1980. what's different is that back then we actually had an oil crisis it was a global oil energy crisis driven mostly by crude. this time around essentially an energy crisis that originates in gas and power and is much more

local. europe is really the epicenter of this crisis with the highest gas and power prices in the world. europe is trying to displace all those molecules nthat used to come from russia and trying to find sources of energy all around the world, screening for tons of aluminum and steel, no longer produced in europe, or even fertilizer. really i think the important thing to understand here this is impacting the rest of the world more than it's impacting the u.s. i realize that obviously all the consumers around the world are suffering from high prices the american consumer is much better off than the consumer in the rest of the world. this is partly triggered by the drop from $5.00 national average of gasoline back into the $3.50, $3.75 range. i think -- again, i'm not trying to justify the opec position, but i think they look at it that way and ultimately are trying to preserve the value of the

currency it is a challenging decision because, as you pointed out, many parts of the world are really suffering under these skyrocketing energy prices, particularly gas, power and coal. >> that brings me to gas prices here, francisco. what do you think the impact will be on gas prices here in this country from today's decision and the spread between wholesale and retail price is it wider now than it has been over the long-term average >> not necessarily there's always lax involved. by definition you do have some distortions when prices move so fast but i do think the impact will be significant we'll see $100 a barrel oil next year on average. we could see obviously -- that's crude oil. we could see a meaningful spread to gasoline and diesel i do think the big issue into the end of the year is going to be the russian oil price cap

if that's implemented as it's been currently discussed between the u.s. and europe, we can see further reductions in oil production coming from russia naturally. i think we've heard russian officials talk about that specifically so my concern again is that prices overshoot the biggest in the oil markets is if russian production drops by 30% that could actually have a big impact on consumer prices. let's not forget, russia is trying to use all the tools at their disposal to put pressure on the rest of the world even though it's not working out as well as they anticipated that's what they have. >> this is a high stakes meeting today, higher than usual francisco blanch thanks for joining us. >> thanks. still to come, we'll hit the auto stocks. a new 2340e9 from morgan stanley sending shares of gm lower

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consumer discretionary lower today along with the broader

markets. xly in negative territory led lower by three holdings, amazon, home depot and tesla, which is now down double digits over that period two other names in the auto group to watch today ford and gm moving lower featured in a new note from morgan stanley's adam jonas. >> a valuation call from adam jonas. he's upgrading ford from equal weight to overweight it's valuation that's driving this as you take a look at shares of ford, keep in mind it was at 15 bucks, a little over 15 bucks at the beginning of september it has really fallen off in part because of the warning in regards to ford's business, adam jonas writes the inflation reduction act has potential to improve the return on investment for ford's u.s. onshore ev business so that's what he has to say about ford again, we can't stress this enough he's not changing his price

target, simply saying it's fallen off so much it's time to upgrade the stock as for general motors, he's cutting the price target from 42 down to $30 a share, keeping his rating where it was for general motors and also raising the question, we saw a warning regarding q3 revenue from ford is it possible we might hear the same from general motors that's why the stock is down almost 5% today. really all the auto stocks down from 2.5 to 4% as you take a look at tesla, toyota, honda, they're all in there and under pressure that's the latest on this call from morgan stanley. back to you. >> phil lebeau, thank you. after the break we'll do a deep dive on twitter with former ftc commissioner mow zelle thompson along with tech's roger mcnamee. stocks trading above 50 bucks shar we're back in two.

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ukrainian of firms claim they're retaking more villages from retreating russian forces russian president putin signing laws annexing four ukrainian regions even as the kremlin ak only ins military losses. in england prime minister liz truss is pledging support for ukraine but more were focused on her promise to cut taxes and transform the british economy. take a listen. >> we need to get britain moving we cannot have anymore drift and delay at this vital time i knew that in action would be unconscionable families would have been unable to heat their homes. businesses would have gone bust. jobs would have been lost.

>> the nobel prize for chemistry went to three scientists for developing the so-called click chemistry which helps people speed the design of better medicines. one of the winners is kay berry sharpless. this is his second nobel prize, making him only the fifth person to win twice >> that's incredible seema mody back to shares of twitter lower after elon musk says he'll continue with his purchase of the social media company joining us is mozelle thompson former ftc commissioner and roger mcnamee, elevation partners we'll talk about if this happens, how he restructures it as a private entity. your point is that regulation is going to continue. >> absolutely. you know the genie is already out of the bottle. the ftc is going to continue the look on whether twitter complied

with prior consent orders and the whistle-blower complaints still out there. that's one musk has already talked about that, too. in addition, the ftc may be asked to look at the national security issues that the congress had a hearing about just a couple weeks ago because already meta has said it's taken off chinese and russian sites for essentially election interference so what is twitter doing they're going to be asked about that. >> roger, what's your take, assuming this happens, on how he changes the content structure of the platform and how it's going to collide with what mozelle is talking about? >> carl, i think history shows that musk doesn't have a plan for making twitter a better platform he's been all over the place this has been largely about emotions, and my sense is that he really believes that more

extreme content on twitter is completely reasonable. so as a consequence, i would expect moderation efforts to be reduced, possibly in the name of cost cutting, and that we're going to lose all visibility on what's going on inside the company because it will be private. i think regulators, with all due respect to mozelle on this issue, i think the regulators are moving way, way, way too slowly i think as a private company, the amount of damage that could be done in a very short period of time by twitter would be something that would take years to recover from. we need the national security infrastructure we need the sec, the federal trade commission and department of justice putting their best people on investigating internet platforms. the damage they're doing to democracy, public health and public safety is extreme and getting worse every month. >> there's a lot to unpack there, roger

it is a $44 billion deal you've got a lot of investors coming in in some form or fashion alongside musk you really don't think he has a specific plan that he's going to enact androll out here along those lines, part of the reason he got into this legal drama in the first place was because of the bots. it sounds like he's looking at the platform pretty critically >> i don't know. we saw that huge carb of tweets from the people he's raising money. that id didn't give me any confidence there's a plan here it looked like a like of fan boys in silicon valley it was a broke culture thing hey, man, you're going to buy twitter, cool, i'm in. there wasn't any due diligence as far as i can tell by musk the others were sort of mile in because it seemed like the cool thing to do. to me that's how most of silicon valley operates these days given how much power they have over our culture, how much power

they have over our national security, over public health and democracy, that's just a bad culture to be putting in charge of the most valuable things in our society. >> mozelle, you have thoughts. >> but to your point, morgan, what musk has said about what's material and what's not material to what he was looking at has raised a whole bunch of questions that the sec has to look at how as to whether -- the comments that musk has made in the press and on twitter has actually changed what investors think about how they acted, and that's going to have some consequences that's going to last after this deal closes. >> roger, whatever may come in the way of lack of content moderation or just kind of opening up the gates to different types of users, isn't there a little bit of a market check on what ultimately might happen he's going to have debt service. they obviously have to continue

to run this as a business. he's going to have outside investors. advertisers can decide they want to interact with that content or not. users can stay or go i wonder if this is going to be a real world experiment on the tolerance of users and advertisers or whether, in fact, it's a viable spot in the market >> i think that's a really important point. the key question is how long does it take i think we've learned over the last six years, a period of time when we've seen that facebook and youtube, instagram, twitter, tiktok have all been implicated in undermining public health, democracy and public safety, that advertisers have been willing to go along with that, and so have users. so i think betting on everybody to suddenly change course on twitter -- think about your own line of work how many journalists do you think are really capable of quitting twitter where would they go? how would they build their brands what would politicians do?

what would celebrities do? >> i think that's a reason investors have done so well on this deal because musk messed up his process and left himself vulnerable in delaware chancellory court and twitter took advantage they're going to get $54.20 a share and that deal is going to go through when it does, the question that follows that, is anybody going to check this company? i certainly hope that your hypothesis is correct, but i'm not counting on it because we have six years of experience that says literally exactly the opposite >> roger, i understand your point, but this deal isn't done yet. there's a lot of collateral issues that have to be settled don't forget there's a big cost to what the lawyers have had to spend on this deal because of musk's actions there's also a panoply of shareholders on the activities that have taken place here, who is going to be responsible for that

>> roger, you mentioned some of the texts that came out in discovery. i'm always drawn to one between musk and jack dorsey in which dorsey said i intend to fix our mistakes twitter started as a protocol. it should have never been a company. that was the original sin. and then musk says, i'd like to help if i'm able to. >> do you think there's the possibility that they in any way wind this down >> i would be totally stunned. can you imagine spending that kind of money and winding it down maybe. he has enough money to do that but he's borrowing so much from other people and getting so many other investors involved that i think they have to get it going. wouldn't that be a great thing if they shut twitter down? i do think starting again is the right strategy for this category because the need for something like twitter is well established in the market, and the history

is it has not been well managed. there's no reason why it couldn't be well managed and no reason why a thing like twitter couldn't be an incredibly successful public company again. the way they've been doing it and i think sadly they've gone too far to correct it. >> mozelle, say that we don't see twitter wound down say instead -- i know it's been cryptic so far -- we get through the regulatory overhang you're laying out so concisely and musk tries to build out a so-called everything app called x. does that have its own regulatory scrutiny attached to it, given the fact that we haven't seen a super app like that manifest in the u. [. >> absolutely. don't forget there's another side to what's happening in congress right now or people complaining about these sites being too big. so the answer is not necessarily making it bigger in order to get accountability and i think you have a whole

panoply of other challenges. that's a very good point the timing of that it's going to take an awful long time to get to that stage. >> one thing is for sure, you two are coming back many, many times. it's always fun to see you. >> i wouldn't pay any attention to x x is not real. >> hanks, roger. stocks giving back some of yesterday's gains. you see the dow down about 358, s&p 500 off a bit more than 1.5% our next guest joined a couple weeks ago and had this to say. >> when i was an irish altar boy in jersey city, i was told -- because you want to be without worldly goods. >> we are joined by art cashin ubs director of floor operations on the news line art, you've kept alive this

notion out there of sale on hash hosh shana on i don'tyom kippur if you sold, a quick 3% drop we're kind of in the zone right now of where the market did close the day before rosh hashanah wrchlt does it set us up you point out there coincides with a lot of important seasonal and technical stuff that happens right now outside of the religious objectives. >> historically it fits in with things like the crop cycle -- not to bore the viewers, but the panic of 1907 caused by the crop cycle. money going out for harvest. you've got to bring the wheat into the city, so you write a check for a couple of million dollars to bring the wheat in to

make flour out of it that drains money out of the city banks and puts it into the country banks. that was supposed to get solved by the federal reserve apparently nothing has gotten solved by the federal reserve. so far it looks like piety was not particularly profitable this year, but we'll have to give it one more day to be totally clear and see what comes of it i'm more impressed, mike, by the idea that this sharp rally we've had for the preceding two days was a bit of an event risk rally, from the fact that the bank of england went rushing in to avoid the leverage instrument meltdown that looked like might happen, that the u.n. has been telling the central banks, in

particular the fed, ease up a little bit, you could cause not only an international recession, but might cause somebody to go under. part of the move that we saw and it's really a terrific two-day rally. people assuming that the fed and other central banks might pause and we got a hint of that from the reserve bank of australia. that was then. this, however, i think the next item we'll watch for, earnings season coming up in a couple weeks. let's see if people start marking down estimates and where does that go as i wrote in my daily note today, i'm impressed by some other things the tips yield looks like it's discounting a comedown in

inflation significantly, maybe all the way down to what the fed is targeting maybe near 2%. one swallow doesn't make a summer keep an eye on the tips yield here. >> for sure. the market-based inflation indicators are definitely looking a little more denine here, art. you mentioned the kind of removal of some event risk seeming to fuel this two-day rally. also this crescendo of concern over the weekend whether credit suisse was in trouble, where does that leave us when you look at the mechanics of this rally? a lot of people trying to place it in context in terms of the kinds of context of potentially decisive valleys you might get >> it was a very, very impressive rally as we just discussed, the difficulty was, some of it was based on event risks the fear that -- not just one

particular institution or whatever, but the concept that if the fed and the other central blanks were facing something that looked like long-term capital management coming up, that they do have to be careful. we have the most marvelous financial system in history, but it's still quite fragile nobody is more aware of that than the fed so they know they've got to talk tough and bluster about. but i'm sure when they get behind closed doors, they say, well, we've got any area at risk, the banking system, any such thing, because that's the last thing you want, is to start some kind of panic the rally is very impressive ufrl, i wasn't happy with the spark that started it, that event risk routine if we're starting to see

inflation expectations come down, that could give the fed a chance for -- to call discussion with liz ann sonders, less drop the word pivot we don't want to see them actually turn around we want to see them pause we've done what we've done what kind of impact has it had >> right slow and then pause and wait and see, art i guess that's the more rational hope appreciate it. good to catch up with you. as we go to break, let's check crude. talked a lot about the opec meeting this morning and the production cut inventories now, surprise drawdown stockpiles falling 1.4 million barrels. expectations for a build of 1.6, according to street account estimates. we'll watch that energy is the only s&p sector in the green. stay with us

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the street." i'm bertha coombs. the tech sector is down more than 1%. within the group, we're seeing particular weakness in the solar stocks emphase and solar edge are down. chip makers are reversing course after two days of gains. a amv, nvidia. amv off 20% in the last month. now, back downtown to you guys, morgan. >> bertha coombs, thank you. as we head to break, throughout hispanic heritage month, we're celebrating our teammates and contributors here is jane hallie and senior research analyst jessica ramirez. >> i grew up being bilingual

spanish is my first language i learned english in school. i've been privilege d i've been able to travel and improve my language skills. i still struggle with some of it, but i think the idea of making your obstacles your goals, it'll make people see you're working hard. they're looking for that

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with all the major averages lower, we are also focused on the opec decision today. opec cutting oil production by 2 million barrels per day. reaction so far from the biden administration kayla tausche is at the white house with the latest. >> reporter: hi, morgan. earlier this hour, president biden was departing for florida, where he is going to be surveying hurricane damage but he was asked specifically about the opec plus decision, and he told reporters who were gathered that he needed to sea the details of that opec communique, which was just released a few minutes ago, but that he was concerned that a cut was unnecessary, in his words. those kmepts coming after the white house launched an 11th

hour effort in recent days, when it was surprised by news over the weekend that opec was planning a cut of this measure of course, the white house had been touting opec's decision earlier in the summer to increase production, even by a modest amount, as they were, in parallel, drawing down oil from the emergency reserves at home, to try to lower gas prices one of the key statistics that the administration has been pointing to as they try to speak to voters ahead of the midterms in november. that 11th hour effort has failed they had reach red out to partns overseas, companies operating in the sector, and surrogates in the democratic party, trying to get them all to warn the public and warn gulf partners that such a move would have drastic consequences for the global economy and, in their words, would be a disaster. clearly, we can see the campaign did not work we'll see what the administration has to say in response back to you. >> this is very much a developing story kayla tausche, thank you for bringing us the latest mike, it is worth noting we did

see crude, both wti and brent, turn higher, not only because of the headlines and the confirmation of this headline never from opec, but because we saw bigger than expected drawdown in inventories in the u.s. last week, as well. >> yes there's firm economic activity demand side seems s okay yields up, stocks giving back a third of the two-day gains at the moment. >> that'll do it for "squawk on the street." "tech check" starts now. good wednesday morning wel welcome. i'm carl quintanilla with jon fortt and dierdre bosa nasdaq is down 2% and continuing to fall. why one strategist says it is time to get bullish, as others warn a recession could be ahead. plus, a lot more on musk's big capitulation what that means for the man, twitter, and the banks this hour and, finally, your valuation is wrong that's moffat's take on the stock names this week. we have the analyst behind that