it's 5:00 a.m. at cnbc global headquarters. here is the top "five@5. stocks trying to hold on to gains amid back-to-back losses this after the rate cycle hike is far from over shares sinking and dragging the social media sector down after a brutal quarter the stock set to lose a quarter of value. in the uk, the replacement search is on for liz truss a familiar face is ready to lead again. a live report from london.

and the white house reportedly looking to further lockout china from cutting edge technology we are live in beijing with reaction. and national security concerns of elon musk's deal to buy twitter and growing starlink network. it is friday, october 21st, 2022 you are watching "worldwide exchange" here on cnbc good morning i'm seema mody in for brian sullivan let's kick off withthe look at futures. we are down right now after two days of consecutive losses dow jones industrial average is down 144 points. nasdaq lower 108 despite early weakness, dow and s&p and nasdaq coming into the day with 2% gains for the week the question is can we hold on to the gains let's look at the bond market. treasury yields marching higher.

climbing in territory not seen in more than a decade. the 10-year treasury now trading near the highest level since 2008 yields are higher at 4.27% 2-year treasury a bit lower. 4.6% in energy, energy was one of the few sectors that ended higher in yesterday's trade. right now, we are lower. wti crude down 1%. brent down 1% as well. cryptocurrency has beening moving right now let's look at bitcoin. down fractionally. back below $19,000 it has been hard for bitcoin to hold on to that level. ethereum is down as well at 1,278 at this hour. let's go around the world. lower session in asia. shares in hong kong drop to the lowest level since the end of the global financial crisis. other headlines from the region.

bank of japan revealing a second day of bond purchases as yields came under debt following the yen drop to the lowest level in more than 30 years inflation hitting the highest level in eight years in europe, the trading day just getting started. a sea of red dax down 1.5%. this morning's top story shares of snapchat sinking ahead of the open. company reporting sales growth slowed and losses soared in the third quarter as it works through the restructuring effort aimed at challenging with advertising and broader industry slump. for the quarter, snap says revenue rose 6% year on year to just over $1.1 billion slightly below estimate. that marks the slowest pace of growth for snap since it went public in 2017 as for losses, snap says it is up 400% to $360 million compared

to $72 million a year earlier which was in line with estimates. that number includes $155 million charge related to restructuring which includes staff layoffs and slashing investment in augmented reality glasses. sales down 75% this year. ness pinterest down 7% meta down 4% twitter. down over 9% this will be a sector to watch here on friday let's get to another top story. regulator trouble for elon musk. silvana henao has that story >> seema, good morning the biden administration is considering subjecting musk's

deal and purchase of twitter to national security review bloomberg reporting u.s. officials have become concerned in recent weeks by the rush of friendly tweets and cut offs of the starlink satellite in ukraine. investors include a saudi crown prince and crypto exchange and qatar sovereign wealth fund of the deal one option from the report could be the committee on foreign investment in the united states. separately, reports this morning are musk's lawyers are preparing paper work to be completed ahead of the october 20th deadline and relations with musk and twitter have turned cordial. >> thank you back to the broader market and growing expectation for

continued hawkish moves by the federal reserve to get inflation under control. investors expect the central bank to raise rates to 5% next year that is up from expectations of hiking to just over 4.5% before the release of the cpi data last week some think that terminal rate could be higher like larry summers who tweets the hike is already a milestone. joining me now is mark haefele mark, good morning >> good morning. >> it's historic to see the rapid rise we have seen in rates. the question is how high we can go from here >> well, look, the 5% priced in is important to understand for equity investors because when you think about this rates move, what it means is a lot of what has happened to the indices this

year is really just about rates going higher and so we have to be focused now on companies that start reporting lower earnings going forward because that could be another leg down particularly in tech where we think the overvaluation remains. >> for stock and equity investors who are trying to understand what the bond market is telling them, what is the message we're hearing right now especially in the shorter part of the curve with the 2-year treasury at .6%. that's a huge move. >> the bond market is telling us that the fed is serious about using its powers to hike rates and to try to trim inflation and that while the inflation expectations over the longer term remain relatively contained, there's no immediate end in sight that's helping to drive these rates higher. >> how should investors play

this what sectors do you still think have the opportunity to move higher to out perform in the environment where rates seem to be only going higher at least for the near term >> right so a couple of elements to this. when i talk to investors around the world, i think there is a lot of negative sentiment around a lot of the geopolitical events and that could set us up for something of a bounce here one of the things we've been doing is looking at options strategies to kind of hedge a little bit of the down side. be prepared if we get a bounce on what is a pretty good earnings season so far when you look out from there, the risk/reward around earnings not coming through say in following quarters and pressure from the higher rates means that you really have to be selective. for us that means focusing on value. where we see value stocks can out perform growth stocks when

you have the high inflation. so that's where i would start. >> biggest piece of economic data on the radar, mark, going into next week i guess it's the jobs report >> the jobs is so important. ultimately, the fed is saying inflation first, jobs second of course, as long as the jobs numbers remain strong, it is probably just going to push out any kind of fed pivot further. that makes it a little risky for equity investors. >> did you see comments from the philadelphia president who said the unemployment rate max could be 4.5%. does that line up with your estimates, mark? >> i think the most important thing to think about here is the fed like other institutions like in the financial crisis, their number one priority is to

protect their institution. for the fed, that means taming inflation. so, really the talk about the second part of the mandate which is managing employment is really secondary at this point. you know, we can guess about inflation, but we know what they're -- we can guess about employment, but we know what they will do about inflation >> the jobs report on november 4th. two weeks from today what is the s&p 500 target, mark with all of this you shared, inflation being herpersistently high where is the stock market ending by december 31st >> i think when you look at longer term next summer markets around here make sense i think what we are looking for is opportunities to start buying around 3300. that begins to get interesting.

>> trading at 3665 mark, thank you for joining us today. have a great day all right. when we come back, more on snap as the shares get set to lose more than a quarter of the value at the open. my next guest says all hope is not lost. plus, we are live in london in the wake of liz truss reignition as prime minister a familiar face returning to 10 downing street. and twitter fires back it will cut work force by 75%. a very bus y hour ahead on "worldwide exchange.

a quick check on markets. dow jones industrial average implied open down 151. nasdaq lower by 111. nasdaq did close lower yesterday. down 34% from the 52-week highs. speaking in the nasdaq, the biggest laggards meta falling on the snap results. down 3.8%. baidu down 2.4%. to a developing story out of the uk liz truss' decision to step down and prime minister just after 44 days on the job. truss says she will remain in place as caretaker prime minister until successor is named. arabile gumede is joining us

from london. arabile, there are names thrown out for truss' successor >> reporter: there are as many as six could take over from liz truss that could happen as soon as we find out and then cut to the top three. liz truss officially announcing that she will step down as prime minister she said a new prime minister will be in place by next week or within the week. that means by next friday, the certainty is they will find a new prime minister leading so d10 downing street she campaigned at 10 downing some of the candidates that are standing by to take helm of 10 downing street you have rishi sunak along with liz truss through to the final stages

he is the former chancellor. you have ben wallace, the defense minister at this point of time. penny mordaunt, who is the leader of the house of commons you will find suella braverman as well. she was home secretary she could throw her hand in the ring as well to try to fight it out. and the big name is boris johnson who may return to 10 downing street even cutting short his holiday according too rumors to come back to get a sense of what is 100 votes. monday is when the nominations close at 3:00 p.m. local time. by that stage, around 350 members of parliament and you need to receive 100 votes to stand in line for nomination with that case, you need to have a top three.

that top three will be whittled down to a number two and the winner being put forward effectively as the prime minister that is set to happen by friday. it was a process that took six weeks when liz truss was put into power here at 10 downing street it is now going to be done in a matter of days >> fascinating to see how this will play out. arabile, rishi sunak has emerged as early favorite. he is the former chancellor. what do we know about the economic policies? what should investors expect if he is the one to take over >> reporter: pretty much his policies are exactly not what liz truss put forward. that is the key element here some measures he had suggested are some of the parts that liz truss' government has put forward. the new chancellor, jeremy hunt, who was put in place not so long ago, has now put forward or taking away or disbanding a host of the medium term budget

policies put in place by the former chancellor and liz truss. then that happened on september 23rd he would look definitely not to be cutting taxes if he was to do so, it would be unfunded a lot of policies focus on growth, but not in the fashion that liz truss has done. he is former chancellor which means he is more ept at soothing the market as why certain policies are put in place or need to be put in place and how they need to work. they also previously not necessarily followed the office of budget responsibility that is liz truss and her former chancellor and now former prime minister effectively rishi sunak would put budget front and center with the economic policies. >> we will watch the story

s arabile, i appreciate your time today. still on deck, a win for president biden and student loan forgiveness program as one supreme court justice says it can proceed for now. we're back after this. >> announcer: today's big number 12.4%. that was the month over month drop in container imports into imagine u.s. ports last month according to data analysis group data that is the sharp decline in what is typically the peak shipping season. to support that village. ♪ ♪ i am peter akwaboah, chief operating officer for technology, operations and firm resilience. when you think about diversity, the employee network group is fundamental to any organization

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estimates. shares are dropping as the company gave weak guidance while announcing a $1 billion stock buyback. finally, svb financial better than expected third quarter earnings it continues to see strength despite market challenges effecting liquidity. rising rates and recession fears. svb expects conditions to persist for the foreseeable future svb is the biggest laggard on the s&p in pre-market action t. is down over 16% let's get a check on the other headlines with phillip mena in new york >> good morning. president biden scored two court wins in the effort to relieve student debt justice amy coney barrett

blocked the plan the biden administration's plan could cost more than $1 trillion and bypasses congress. shortly after, barrett denied the group's request and a federal judge dismissed a similar lawsuit brought by six republican led states. applications are now open for borrowers to have as much as $20,000 in debt canceled on the diamond one big hit set the tone in game two of the alcs. >> he's got two on at the corners in the third bregman sends one deep to left t. is back and it is gone. >> alex bregman's blast put houston up early yankees had the chance to take the lead late in the eighth. kyle tucker robs aaron judge at the wall astros take game two 3-2 mother nature with a stunning show in the sky the orionid meteor shower is at

its peak if you were lucky enough to step outside overnight, you may have gotten a display of space dust from halley's comment. you have a chance to watch until november 22nd. seema. >> a reminder to always look up. phillip, thank you. still ahead. another blow to the ipo pipeline as one offering says thanks, but no thanks. if you haven't already, follow our podcast if you miss "worldwide exchange" check us out on apple or spotify or other podcast apps. we will be right back. we got this. we got this. life is for living. we got this. let's partner for all of it. edward jones i had a bad relationship with my student loan. the interest was costing me... well, us... a fortune. so, i refinanced with sofi.

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futures under pressure as earnings give investors new reasons to sell this morning shares of snap sinking as it hits the lowest level in years the u.s. pushing deeper into the tech decoupling from china a live report from beijing ahead. it is friday, october 21st, 2022 you are watching "worldwide exchange" on cnbc. welcome bacback i'm seema mody in for brian sullivan we are leavower across the boar.

dow jones industrial average indicating a lower open by 190 points s&p 500 is down 25 points. earnings have been front and center and what is happening in the bond market. treasury yields continue to march higher climbing in territory not seen in more than a decade. the 10-year treasury now trading near the highest level since 2008 yielding 4.27%. 2-year treasury at 4.6%. energy is the only sector down less than 10% from the 52-week high oil continuing the downward move brent at $91.60. down .80%. wti down a bit more at .90%. let's get a check of the other top stories with silvana henao for those. >> seema, good morning twitter is reportedly firing back at the report from the washington post for company wide

layoffs once elon musk completes the takeover deal. the company has clarified to staff there are no plans since it signed a deal to be bought by musk the washington post reported that musk would reduce by 75% from the current 7, 500 employees. shares of twitter are plunging in the pre-market as you can see. down nearly 10%. instacart is hitting pause on the plans for ipo this year according to the reports, the firm's ceo revealed the decision in the memo citing market conditions making public offerings tough. instacart filed for paper work for ipo with the s.e.c. this year and still look to be on course to debut on the markets this year. the potential for a major strike by railroad workers in the country is growing more likely again

railroad companies bargaining with workers over details rejected proposproposal a potential strike could happen as soon as november 19th if a new deal cannot be reached, seema. thank you. shares of snap are sinking the social media company beating expectations, but missing on revenue. guidance for the fourth quarter absent for the second straight period company citing platform changes and increased competition as headwinds amid the $155 million restructuring plan the stock leading a collapse for other social media stocks. meta, twitter, pinterest, alphabet down in pre-market. pinterest down 7%. joining me now to talk about this is john blank

strategist at zak. john, do you think the 25% move in snap in pre-market is just justified? >> options market tell you the implied volatility is 17%. this is exactly what the market was expecting. this is a gamed out stock. this shorting thing is putting capitulation on it this is a three-year low, seema. what is fascinating about an $8 share price for snap, this is now in line and better value to sales and price to book with the s&p 500. snap, which is a growth company, although they are not growing now with headwinds are the advertising revenue pricing problem. they have engagement up on the show and daily active users up 20%. when this gets out of the way, which is asking the inflation rateto come down which is the

same sdoirtory i,story, you get entry rate the shares are not cheap, but they issued restrictive stock units out to employees that is an insider trading at large for people to look at. they are putting investors in now. >> what is the rating on the stock? what level would you say is the time to buy? >> absolutely change to a buy right now. you will not see this price. you haven't seen this price in three years, seema you have a three-year low at snap the ipo price is 17. we're at 8 double your money p aat the ipo price. i can get to $30 a share in 18 months, not 12 you will have a lot of headwinds with inflation taking its course

and fed not getting out of the way. we know those stories. snap is a classic stock where you get a great play and great lift on the back end of the story. the market is always forward looking. that is the problem if you don't get in now you put up volatility. it is a gamed out stock. the upside is huge triple your money. >> john, what about the weakness across the social media space meta, opinionpinterest? would you be a buyer based on what you heard from snap last night? >> actually, i might look at pinterest. i think that is an interesting company. i don't like meta. i think meta is behind the curve on these things. their user engagement is lower they are more dated in time. the nice thing about snap is they are embedded in the los angeles ecosystem right now. they have the 13 to 33 demog demographic. they have three quarters of the

group. very hard with that combination of l.a. and demographic not to like this company from the advertiser perspective i think you have to be more discriminatory of the social media names. they all get sold off together with the efts >> your take on earnings season so far we are about to enter a busy week next week >> zacks has a 1% outlook of earnings for the fourth quarter. that's identical to snap's management said for the forecast they will be flat year on year in the fourth. i would point out the fourth quarter of 2022 is year end comps to june of 2021. the last covid era period. i would not be concerned i look at 1% earnings growth

we see beats and raises on outlooks that are lower than normal not to be so concerned outside of the five-year norm. speaking pretty good >> american express out at 7:00 a.m. verizon at 7:30. john, thank you. john blank now to exploring more controls that would limit china's access to some of the most powerful emerging computing technology eunice yoon joins us from beijing. eunice >> reporter: seema, the biden administration is reportedly mulling ex-expansion of export controls this time on quantum computing and artificial intelligence software this is after restrictions on advanced chips for china for exports of the chips, the sale of chip production

equipment and also the support having u.s. persons or so-called u.s. persons supporting the development of the industry here all of these restrictions go into effect as of today. talk of the new tech export controls hit the share prices of chinese chip gear makers some investors picked up chip stocks on the anticipation that the chinese government would be funneling more money in the form of tax breaks or subsidy into the sector tech self reliance has been the theme at the ongoing party congress and xi jinping said this is very important for the future of the country in the next five years and possibly beyond >> the timing is key, eunice it is playing out as the party congress is progressing as the ability to compete amid the new

trade rules. >> reporter: the mood is one of pessimism. i was speaking to a tech executive who feared that these export controls from the u.s. would would be the death of the industry a lot of people have been talking about how short-term with no solution longer term, maybe china could play catch up. that is a big maybe. the designer of china's first cpu who is a delegate at the congress and the founder of the company called moonson he said china needs to double down on the home grown i.t otherwise they would not have control of their fauture. the ceo of the facial recognition company was trying to get chinese tech workers, he said, to really work for the nation in order to grasp key core technology.

there's a lot of determination in the industry, but there's still a big question mark and concern about what it actually means for china. >> adding to the laundry list of worries investing in the region. eu eunice, i appreciate your time eunice yoon in beijing. taking the temperature of transports that is coming up. what this week's earnings from within the sector may signal about the strength of the broader economy. first as we head to break, some of the top trending stories. gm pulling back the curtain on the all-electric pickup truck. automaker taking reservations for the denali which boasts a range of 400 miles and going for $407,000. and taylor swift with bad blood for spotify users.

web site reporting 7800 outages at 1:00 a.m. in new york spotify did not respond to request for comment. "worldwide exchange" is back in a moment icy hot pro. ♪ ice works fast... to freeze your pain and your doubt. ♪ heat makes it last. so you'll never sit this one out. icy hot pro with 2 max-strength pain relievers.

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with its customizable options chain, easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. pre-market action accelerating losses with the dow jones industrial average down 180 points in pre-market trade nasdaq lower 118 this follows two con secsecutive

days of losses s&p laggards at this hour led by svb financial. stock is down 15%. robert half down 10% let's move to transports csx reporting estimates helped by higher prices and fuel surcharges unlike union pacific, csx is sticking with the forecast for the year expecting double digit growth shares are rallying. this comes as the operator tries to lockdown a deal with unions to avoid a strike. let's unpack all of this and what it tells us about the economy with ken hoexter with

bof a securities which company do you think is reflective of what is happening across the transports industry >> i think union pacific set the tone that many of the truckers did which is they are concerned about volumes are trending and they lowered the volume outlook. they are seeing it in different parts of the economy whether it is industrial side. they benefit from grain and coal they are concerned about the economy. lowered their volume outlook csx is focused on operation and improving performance. they take recovers you talked about the contract. they were in better financial shape as it hit with the quarterly results. this leads into what's going on in the economy we do a biweekly survey to see how things are going with the end users. that survey has continued to come down.

we highlighted for the last 13 issues which has been below a key market below 60 on the infusion index. the shippers outlook is deteriorating. they are concerned about future demand that continues to come into recession levels freight recession levels that we saw in 2012 and 2015 and 2019. so shippers are very concerned about the outlook. i think union pacific's view tells you what is going with the economy. csx was able to use its management team to say we have to cut costs >> we have seen a dramatic move in shipping rates. they have come downa lot in recent months. does that tell us inflation has peaked what other data points are you looking? >> when you look at congestion last year that drove pricing to an all-time high whether trucking or ocean shipping you saw at the partsorts with or

100 vessels at the l.a. port we are down to four right now. certify service is improvimprovg demand has come down as well it is not supply has disappeared. demand has fallen. that cleared up the congestion that is pricing in the trucking market fall 34% year to date things are getting cheaper you have to contrast that with labor costs up and maintenance costs up a lot of inflation pressure. union inflation was up over 5% at the gaining of the year, it was 2% >> the message, ken, from the big retailer is people are shopping earlier they are given deals earlier in the year overwever waiting for thanksgiving or christmas. >> you want to go out and buy

early because you wanted to get whatever product you wanted. this year, as you mentioned, wait you will get better and better deals as time goes on. what it means for the shippers is you continue to see the rates come down. spot rates down over 30% in trucking and shipping. you see it down over 70% to get goods from china to the west coast. we are seeing that deflationary pressure on rates, but inf inflationary rates on cost >> lastly, top pick in the space, ken >> we havehave etched toward the railroads. we downgraded every stock in the sector in april so we continue to favor some of the railroads you see the canadians reporting next week. we have one of them as a top pick for the quarter canadian national. return of the grain crop with

improving performance. given the benefit, you got investors looking for growth if you have the grain crop returning in canada, that should aid. >> agriculture has been strong it is helping john deere thank you, ken >> thank you, seema. on deck, investors facing a push and pull with earnings, recession fears and hawkish fed. who will win the day we discuss when "worldwide exchange" returns.

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welcome back another busy day for investors with earnings from american express and verizon. both out before the open fed speak from john williams at 9:10 a.m and we have charles evans at 9:40 and then mary daly at 11:30. and the chinese communist

party national congress continues as well through tomorrow. let's get ahead of the trading day. futures are suggesting a lower open dow jones industrial average down 154 points. nasdaq lower by 105. s&p off by 24 points that's the pre-market action joining me is john stoltzfus john, good to have you on. i see you are less bullish on the stock market you revised down the s&p 500 target tell us why? >> seema, thanks for having me on the show. i have to say we are running out of time until the end of the year the 4800 target was too rich from here moving through the elections and into december 31st we reduced it down to 4000 from 4800 with the expectations of the last friday close with a volatile week through the end of

the year we think there will able 10% to 12% upside >> high inflation and earnings what is the main reason you are bringing the forecast down what makes you more cautious >> i think we remain bullish on equities we think where we are right now, there is a lot of unresolved issues related to inflation. the thought is the federal reserve is very much committed to placing inflation in check. we think, you know, we will have two more hikes this year and likely see hikes in the first quarter of next year we don't believe the fed will pause before it finds it feels it is getting inflation in check. we do think the market as traditionally or often happens in fed fund hike cycles, not an easy phrase to say, but fed fund hike cycles, what tends to happen is the market gets a feel

that the fed is probably pretty much done with raising rates before the fed actually either pauses ori begins to cut rates '94 and into '95, that happened. this may reflect that. we saw that also in '09. >> let's turn and see the turn in snap in the pre-market with the earnings report. do you think what we're seeing in shares of snap down 25% is reflective of what we see from other major social media companies as they get set to report >> you know, i think when it comes to social media, social media is in a rough spot whether it has to do with regulation that likely lie s ahead. whether it is related to competition or churn in social media and impact on advertising

and slow economy there are a lot of things going on there we have to say it is not an area we look at when it comes to tech, we look for companies deeply embedded in the lives of business and consumer on a day-to-day basis we find many of those have dividends that can help you weather volatile times in the market get paid while you wait and capital appreciation ahead. >> let's bring in carl riccadonna joining us in the discussion carl, we were discussing earnings movers. curious what your take is so far this earnings season what it is telling us about the broader economy. >> what we can see happening here is a substantial slowdown in the economy at the moment we see it from the gdp data to the economics of company earnings the issue is we know deceleration is continuing and heading to year-end growth rates

at zero. a full stall in the economy. what we are seeing in earnings season and in the host of macro economic indicators simply hasn't caught up or caught down with the economic realities. you know, there's been some strength in the higher quality names in the earnings season higher quality names tend to be first. we're a bit concerned earns will deteriorating. if you don't like what you see now, you really won't like next quarter. >> the two-year above 4.6% what does that tell you? >> that tells us market participants are coming to the view that the federal reserve has more work to be done there are two elements to this first of all, because of the ugliness we have seen in a slew of economic data, including the last cpi report, but more on the inflation front. wage prices and spiraled

dynamics and rent pressure and slow improvement in the supply chain. food inflation is running hot. because of this, any hopes that the fede or curtail the campaign sooner have been diminished it is our view the fed will push 5.25% on the funds rate. that gets you in the direction of what you are seeing on the 2-year treasury. the second dynamic of that is given the persistence and stickiness of the inflation th numbers, if the economy dips into recession, which is now our baseline scenario in the second quarter, the fed will ride out the white knight quickly to the rescue as it has in the past the fed will be slow to start the cutting cycle and also the easing cycle will be more gradual and historically the case. >> john, if recession is

inev inevitable, the best sector to own? >> we look for the sectors that actually sold off this year in anticipation of the recession. looking for improvement as next year develops. what we have to say is look at technology and consumer disc disc disc discretionary and industrials. the result of less than 20% of companies thus far reported in q3 s&p industrials and consumer discretionary and energy are among the best improved when it comes to earnings. >> okay. these are the discussions i love stocks and economy carl and john, thank you for joining me this morning. have a great day we are looking at the dow down 128 in pre-trade that does it for us on "worldwide exchange. "squawk box" is next

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midterms less than three weeks now. it's friday, october 21st, 2022 and "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we're live from the nasdaq market site in times square. it's friday. i'm rebecca quick along with joe kernen and andrew ross sorkin. as joe mentioned, under pressure dow futures off 130 points s&p down 20. nasdaq off 100 this is after a choppy day of trading. stocks were down dow down 90. s&p off .80% nasdaq down .50% for the week, you are looking at a decent week.